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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 Rule 14a-11(c) or Rule 14a-12
SEAGATE TECHNOLOGY, INC.
(Name of Registrant as Specified in its Charter)
SEAGATE TECHNOLOGY, INC.
(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:
<PAGE>
SEAGATE TECHNOLOGY, INC.
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held November 2, 1999
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
Tuesday, November 2, 1999 at 10:00 a.m., local time, at the IMAX Theatre, San
Jose Tech Museum of Innovation, 210 South Market Street, San Jose, California
95113, for the following purposes:
1. To elect directors to serve for the ensuing year or until their
successors are elected.
2. To approve the adoption of the 1999 Stock Option Plan and the
reservation of 10,500,000 shares of Common Stock for issuance
thereunder.
3. To ratify the appointment of Ernst & Young LLP as independent auditors
of the Company for the fiscal year ending June 30, 2000.
4. To consider and take action on a stockholder proposal regarding
employment practices and policies in Northern Ireland.
5. 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 September 10, 1999
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. Instead of submitting your proxy vote with the paper
Proxy Card, you may vote electronically via the Internet or by telephone.
Please see "Information Concerning Solicitation and Voting--Voting by
Telephone or the Internet" and the attached Proxy Card for further details.
Please note that there are separate Internet or telephone voting arrangements
depending on whether shares are registered in your name or in the name of a
broker or bank. The telephone and Internet voting procedures are designed to
authenticate stockholder identities, to allow stockholders to give their
voting instructions and to confirm that stockholders' instructions have been
recorded properly.
Sincerely,
Thomas F. Mulvaney
Secretary
Scotts Valley, California
October 4, 1999
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 Tuesday,
November 2, 1999 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 the IMAX Theatre, San Jose
Museum of Innovation, 210 South Market Street, San Jose, California 95113. The
Company's principal executive offices are located at 920 Disc Drive, Scotts
Valley, California 95066, and its telephone number at that location is (831)
438-6550.
These proxy solicitation materials, the Annual Report on Form 10-K for the
fiscal year ended July 2, 1999, including financial statements and the Summary
Annual Report, were first mailed on or about October 4, 1999 to all
stockholders entitled to vote at the meeting.
Record Date and Principal Share Ownership
Stockholders of record at the close of business on September 10, 1999 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, 210,806,303 shares of the Company's Common Stock were issued and
outstanding. No shares of the Company's Preferred Stock were issued or
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 has given notice, 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 D.F. King & Co., Inc. to provide proxy solicitation services in
connection with the meeting at an estimated cost of $7,000. 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 other employees, without additional
compensation, personally or by telephone, facsimile or other means.
<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 September 10, 1999 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
Stock Percent
Name Owned Owned (1)
- ---- ---------- ---------
<S> <C> <C>
Sanford C. Bernstein (2)................................. 19,244,554 9.1%
767 5th Avenue
New York, NY 10153
Barclays Global Investors, N.A. (2)...................... 13,223,474 6.3%
45 Fremont Street
San Francisco, CA 94105-2204
Stephen J. Luczo (3)..................................... 870,679 *
Robert A. Kleist (4)..................................... 260,573 *
Lawrence Perlman (5)..................................... 212,590 *
Gary B. Filler (6)....................................... 188,366 *
Kenneth E. Haughton (7).................................. 113,644 *
Thomas P. Stafford (8)................................... 105,158 *
Laurel L. Wilkening (9).................................. 64,257 *
William D. Watkins (10).................................. 400,312 *
Bernardo A. Carballo (11)................................ 572,985 *
Donald L. Waite (12)..................................... 415,002 *
Alan F. Shugart (6)...................................... 190,000 *
Townsend H. Porter Jr. (13).............................. 162,321 *
All directors and executive officers as a group (15
persons) (14)........................................... 4,155,442 *
</TABLE>
- --------
*Less than 1%
(1) Applicable percent of ownership is based on 210,806,303 shares of Common
Stock outstanding as of September 10, 1999 together with applicable
options for such stockholder. Beneficial ownership is determined in
accordance with the rules of the Securities and Exchange Commission (the
"Commission"), and includes voting and investment power with respect to
shares. Shares of Common Stock subject to options currently exerciseable
or exerciseable within 60 days after September 10, 1999 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 reported on Schedule 13F showing ownership as of
June 30, 1999 as filed with the Securities and Exchange Commission.
(3) Includes 447,500 shares of Common Stock which may be acquired within 60
days after September 10, 1999 through the exercise of stock options.
(4) Includes 75,088 shares of Common Stock which may be acquired within 60
days after September 10, 1999 through the exercise of stock options.
(5) Includes 199,256 shares of Common Stock which may be acquired within 60
days after September 10, 1999 through the exercise of stock options.
(6) Represents shares of Common Stock which may be acquired within 60 days
after September 10, 1999 through the exercise of stock options.
(7) Includes 54,464 shares of Common Stock which may be acquired within 60
days after September 10, 1999 through the exercise of stock options.
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(8) Includes 71,178 shares of Common Stock which may be acquired within 60
days after September 10, 1999 through the exercise of stock options.
(9) Includes 52,857 shares of Common Stock which may be acquired within 60
days after September 10, 1999 through the exercise of stock options.
(10) Includes 192,688 shares of Common Stock which may be acquired within 60
days after September 10, 1999 through the exercise of stock options.
(11) Includes 394,500 shares of Common Stock which may be acquired within 60
days after September 10, 1999 through the exercise of stock options.
(12) Includes 185,000 shares of Common Stock which may be acquired within 60
days after September 10, 1999 through the exercise of stock options.
(13) Includes 75,000 shares of Common Stock which may be acquired within 60
days after September 10, 1999 through the exercise of stock options.
(14) Includes 2,494,003 shares of Common Stock which may be acquired within 60
days after September 10, 1999 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 2000 Annual Meeting must be received by the
Secretary of the Company at the Company's principal executive offices no later
than May 28, 2000 in order that they may be included in the proxy statement
and form of proxy relating to that meeting. The attached proxy card grants the
proxy holders discretionary authority to vote on any matter raised at the
Annual Meeting. If a stockholder intends to submit a proposal at the Company's
Annual Meeting in 2000, which is not eligible for inclusion in the proxy
statement relating to that meeting, the stockholder must give notice to the
Company in accordance with the requirements set forth in the Securities
Exchange Act of 1934, as amended, no later than August 8, 2000. If such a
stockholder fails to comply with the foregoing notice provision, the proxy
holders will be allowed to use their discretionary voting authority when and
if the proposal is raised at the Company's Annual Meeting in 2000.
Voting by Telephone or the Internet
For Shares Directly Registered in the Name of the Stockholder. Stockholders
with shares registered directly with Harris Bank may vote telephonically by
calling Harris Bank at (888) 426-7035 or via the Internet at the following
address on the World Wide Web:
www.harrisbank.com/wproxy
For Shares Registered in the Name of a Brokerage Firm or Bank. A number of
brokerage firms and banks are participating in a program provided through ADP
Investor Communication Services that offers telephone and Internet voting
options. This program is different from the program provided by Harris Bank
for shares registered in the name of the stockholder. If your shares are held
in an account at a brokerage firm or bank participating in the ADP program,
you may vote these shares telephonically by calling the telephone number
referenced on your proxy card. If your shares are held in an account at a
brokerage firm or bank participating in the ADP program, you already have been
offered the opportunity to elect to vote via the Internet. Votes submitted via
the Internet through the ADP program must be received by 12:00 a.m. midnight
(EST) on November 1, 1999. The giving of such proxy will not affect your right
to vote in person should you decide to attend the Annual Meeting.
The telephone and Internet voting procedures are designed to authenticate
stockholder identities, to allow stockholders to give their voting
instructions and to confirm that stockholders' instructions have been recorded
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properly. The Company believes that the telephone and Internet voting
procedures that have been made available through Harris Bank and ADP Investor
Communications Services are consistent with the requirements of applicable
law. Stockholders voting via the Internet through either Harris Bank or ADP
Investor Communication Services should understand that there may be costs
associated with electronic access, such as usage charges from Internet access
providers and telephone companies, that must be borne by the stockholder.
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 the seven (7) nominees named below, all of whom are presently directors of
the Company. In the event that any 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
all directors, 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.
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
- --------------- --- -------------------- --------
<S> <C> <C> <C>
Stephen J. Luczo........ 42 President, Chief Executive Officer and Director of the Company
and Chairman of the Board of Directors, Seagate Software Inc. 1998
Gary B. Filler.......... 58 Co-Chairman of the Board of Directors of the Company and
Financial Consultant 1985
Kenneth E. Haughton..... 71 Engineering Consultant 1986
Robert A. Kleist........ 71 President, Chief Executive Officer and a Director of Printronix, Inc.
(computer printer manufacturer) 1982
Lawrence Perlman........ 61 Co-Chairman of the Board of Directors of the Company and
Chairman of the Board of Directors and Chief Executive Officer of
Ceridian Corporation (technology-based services company) 1989
Thomas P. Stafford...... 69 Vice Chairman of Stafford, Burke and Hecker, Inc. (a consulting firm) 1988
Laurel L. Wilkening..... 54 Independent Consultant 1993
</TABLE>
4
<PAGE>
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. Luczo joined the Company in October 1993 as Senior Vice President,
Corporate Development. In March 1995, he was appointed Executive Vice
President, Corporate Development and Chief Operating Officer of Seagate
Software, Inc. ("Seagate Software"), a majority-owned subsidiary of the
Company. In July 1997, he was appointed Chairman of the Board of Seagate
Software. Mr. Luczo was promoted to President of the Company in September
1997. Mr. Luczo was Chief Operating Officer of the Company from September 1997
until August 1998. In July 1998, Mr. Luczo was promoted to Chief Executive
Officer and appointed to the Board of Directors of the Company. Prior to
joining the Company he was Senior Managing Director of the Global Technology
Group of Bear, Stearns & Co. Inc., an investment banking firm, from February
1992 to October 1993. He serves as a director of VERITAS Software Corporation
and Gadzoox Networks, Inc.
Mr. Filler was appointed Co-Chairman of the Board of Directors of the
Company in July 1998. Mr. Filler has been a financial consultant since
September 1996. He was Senior Vice President and Chief Financial Officer of
Diamond Multimedia Systems, Inc., a multimedia and graphics company from
January 1995 to September 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 also serves as a director
of Sento Corporation and Seagate Software.
Dr. Haughton is also a director of Solectron Corporation.
Mr. Perlman was appointed Co-Chairman of the Board of Directors of the
Company in July 1998. Mr. Perlman is also a director of Computer Network
Technology Corporation, Valspar Corporation, AMDOCS Limited and Seagate
Software, Inc., a subsidiary of the Company. He was a regent of the University
of Minnesota from 1992 to 1995.
General Stafford, a former astronaut, also serves as Director of Allied-
Signal Corporation, CMI, Inc., Wackenhut Inc., Timet, Inc. and Tremont, Inc.
Dr. Wilkening served as Chancellor of the University of California, Irvine
from July 1993 to June 1998. 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 full Board of Directors of the Company held a total of nine meetings
during fiscal 1999. 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, an Executive Committee, a Stock Option Committee
and a Technology Committee. The Board of Directors nominates candidates to
stand for annual election to the Board and to fill vacancies as they may
occur.
The Audit Committee, which consists of directors Filler, Haughton and
Kleist, met four times during fiscal 1999. Mr. Filler is the Chairman of this
committee. 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 1999 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 Wilkening, Stafford and Perlman, met four times during fiscal 1999.
Mr. Perlman is the Chairman of this committee. This Committee reviews the
structure and performance of senior management, as well as the Company's plans
for management
5
<PAGE>
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 also 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 Executive Committee, which consists of directors Filler, Perlman and
Luczo held six meetings during fiscal 1999. Mr. Luczo is the Chairman of this
committee. During intervals between meetings of the Board of Directors, this
committee may exercise all the powers of the Board of Directors to manage the
business and affairs of the Company.
The Stock Option Committee, which consists of directors Luczo and Perlman,
reviews and approves stock option grants to non-officer employees and
consultants of the Company. This committee held no meetings in fiscal 1999 but
performed its activities through actions by written consent.
The Technology Committee, which consists of directors Kleist, Wilkening and
Haughton held three meetings during fiscal 1999. Dr. Haughton is the Chairman
of this committee. This committee reviews corporate-wide technology matters
including research, development and engineering.
Compensation Committee Interlocks and Insider Participation
The Executive Personnel and Organization Committee currently consists of
directors Wilkening, Stafford and Perlman. During fiscal 1999, there were no
transactions requiring disclosure hereunder.
6
<PAGE>
PROPOSAL TWO
TO APPROVE THE ADOPTION OF THE 1999 STOCK OPTION PLAN
The Board of Directors has determined that it is in the best interests of
the Company and its stockholders to adopt the 1999 Stock Option Plan (the
"1999 Plan"). In August 1999, the Board of Directors adopted the 1999 Plan and
reserved 10,500,000 shares of Common Stock for issuance under the 1999 Plan
subject to stockholder approval. As of the date of these proxy materials, no
options had been granted pursuant to the 1999 Plan.
The 1999 Plan authorizes the Company's Board of Directors to grant stock
options to eligible employees, outside directors and consultants of Seagate
Technology and its subsidiaries. The 1999 Plan is structured to allow the
Company's Board of Directors broad discretion in creating equity incentives in
order to assist Seagate Technology and its subsidiaries in attracting,
retaining and motivating the best available personnel for the successful
conduct of Seagate Technology's business. The Company has a longstanding
practice of linking key employee compensation to corporate performance,
because the Company's Board of Directors believes that this increases employee
motivation to improve stockholder value. The Company has, therefore,
consistently included equity incentives as a significant component of
compensation for a broad range of employees of the Company and its
subsidiaries. The Board of Directors believes this practice has enabled the
Company to attract and retain the talent its business continues to require.
The Company's Board of Directors also believes that the remaining shares
available for grant under the Company's existing 1991 Stock Option Plan are
insufficient to accomplish the purposes of that plan, which are similar to
those described above. The Company anticipates that it will need to hire
additional technical and management employees during the remainder of fiscal
2000 and fiscal 2001 and that it will be necessary to offer equity incentives
to attract and motivate these individuals, particularly in the competitive job
market in Silicon Valley. In addition, in order to retain the services of
valuable employees as Seagate Technology matures, the Company anticipates that
it will be necessary to grant additional options to current employees as older
options become fully vested.
Vote Required.
The affirmative vote of a majority of the Votes Cast will be required by law
to approve the adoption of the 1999 Plan and the reservation of shares
thereunder. For this purpose, "Votes Cast" are defined to be a majority of the
shares outstanding at the Record Date. Votes that are cast against the
proposal will be counted for purposes of determining both (i) the presence or
absence of a quorum and (ii) the total number of Votes Cast with respect to
the proposal. Abstentions will be counted for purposes of determining both (i)
the presence or absence of a quorum for the transaction of business and (ii)
the total number of Votes Cast with respect to the proposal. Broker non-votes
will be counted for purposes of determining the presence or absence of a
quorum for the transaction of business, but will not be counted for purposes
of determining the number of Votes Cast with respect to this proposal.
The Company's Board of Directors unanimously recommends a vote "FOR" the
approval of the 1999 Stock Plan.
Summary of the 1999 Plan
The essential features of the 1999 Plan are outlined below.
Purpose
The purpose of the 1999 Plan is to attract and retain the best available
personnel for positions of substantial responsibility with the Company, to
provide additional incentive to the employees, outside directors and
consultants of the Company and its subsidiaries and to promote the success of
the Company's business.
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Administration
The 1999 Plan may generally be administered by the Board or a Committee
appointed by the Board (as applicable, the "Administrator"). The Administrator
may make any determinations deemed necessary or advisable for the 1999 Plan.
Eligibility
The number of shares reserved for issuance under the 1999 Plan will be
increased by any shares issued under the 1999 Plan that are returned to the
Company or cancelled and any shares that are tendered to the Company by an
optionee as payment of the exercise price of an option or of any withholding,
payroll or other taxes incurred in connection with the exercise of an option;
provided, however, that the total number of shares with respect to which
"incentive stock options," as defined in Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"), may be granted shall not exceed
10,500,000.
Options granted under the 1999 Plan may be either incentive stock options as
defined in the Code, or nonstatutory stock options. Nonstatutory stock options
may be granted under the 1999 Plan to employees, non-employee directors and
consultants of the Company and any parent or subsidiary of the Company.
Incentive stock options may be granted only to employees. The Administrator,
in its discretion, selects the employees and consultants to whom options may
be granted, the time or times at which such options shall be granted, and the
exercise price and number of shares subject to each such grant.
Limitations
Section 162(m) of the Code places limits on the deductibility for federal
income tax purposes of compensation paid to certain executive officers of the
Company. In order to preserve the Company's ability to deduct the compensation
income associated with options granted to such persons, the 1999 Plan provides
that no employee may be granted, in any fiscal year of the Company, options to
purchase more than 3,000,000 shares of Common Stock. Notwithstanding this
limit, however, in connection with such individual's initial employment with
the Company, he or she may be granted options to purchase up to an additional
3,000,000 shares of Common Stock.
Terms and Conditions of Options
Each option is evidenced by a stock option agreement between the Company and
the optionee, and is subject to the following terms and conditions:
(a) Exercise Price. Other than for options that may be granted in connection
with a merger or other corporate transaction, the exercise price of options
granted under the 1999 Plan may not be less than 100% of the fair market value
of the Common Stock on the date such option is granted. The fair market value
of the Common Stock is generally determined by reference to the closing sale
price for the Company's Common Stock (or the closing bid if no sales were
reported) on the New York Stock Exchange on the last market trading day prior
to the date the option is granted.
(b) Exercise of Option; Form of Consideration. The Administrator determines
when options become exercisable, and may in its discretion, accelerate the
vesting of any outstanding option. The means of payment for shares issued upon
exercise of an option is specified in each option agreement. The 1999 Plan
permits payment to be made by cash, check, promissory note, other shares of
Common Stock of the Company (with some restrictions), cashless exercises, any
other form of consideration permitted by applicable law, or any combination
thereof.
(c) Term of Option. The Administrator determines the option term. However,
the term of an incentive stock option may be no more than 10 years from the
date of grant. No option may be exercised after the expiration of its term.
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(d) Termination of Service. If an optionee's service with the Company
terminates for any reason other than death, disability, or retirement then the
optionee generally may exercise the option within 90 days of such termination
to the extent that the option is vested on the date of termination, but in no
event later than the expiration of the term of such option as set forth in the
option agreement. If an optionee's service terminates due to the optionee's
death, the optionee's estate or the person who acquires the right to exercise
the option by bequest or inheritance generally may exercise the option, to the
extent the option was vested on the date of termination, within 24 months from
the date of such termination. If an optionee's service terminates due to the
optionee's disability, the optionee generally may exercise the option, to the
extent the option was vested on the date of termination, within 12 months from
the date of such termination. If an optionee's service terminates due to
retirement, the optionee generally may exercise the option, to the extent the
option was vested on the date of termination, within three years from the date
of such termination.
(e) Nontransferability of Options. Unless otherwise determined by the
Administrator, options granted under the 1999 Plan are not transferable other
than by will or the laws of descent and distribution, and may be exercised
during the optionee's lifetime only by the optionee.
(f) Other Provisions. The stock option agreement may contain other terms,
provisions and conditions which are not inconsistent with the 1999 Plan as may
be determined by the Administrator.
Adjustments upon Changes in Capitalization. In the event that the stock of
the Company changes by reason of any stock split, reverse stock split, stock
dividend, combination, reclassification or other similar change in the capital
structure of the Company effected without the receipt of consideration,
appropriate adjustments shall be made in the number and class of shares of
stock subject to the 1999 Plan, the number and class of shares of stock
subject to any option outstanding under the 1999 Plan, and the exercise price
of any such outstanding option.
In the event of a liquidation or dissolution of the Company any unexercised
options will terminate. The Administrator may, in its sole discretion, provide
that each optionee shall have the right to exercise all or any part of the
option, including shares as to which the option would not otherwise be
exercisable.
In connection with any merger of the Company with or into another
corporation or the sale of all or substantially all of the assets of the
Company, each outstanding option may be assumed or an equivalent option
substituted by the successor corporation. If the successor corporation refuses
to assume the options or to substitute substantially equivalent options, the
optionee shall have the right to exercise the option as to all the optioned
stock, including shares not otherwise vested or exercisable. In such event,
the Administrator shall notify the optionee that the option is fully
exercisable for 15 days from the date of such notice and that the option
terminates upon expiration of such period.
Change of Control. In the event of a change of control of the Company,
except as otherwise determined by the Board of Directors, any options
outstanding on the date of such change of control that are not yet exercisable
and vested on such date shall become fully vested and exercisable, and such
options shall, except as otherwise determined by the Board of Directors, be
terminated in exchange for a cash payment equal to the "change of control"
price as defined in the 1999 Plan. A change of control is defined in the 1999
Plan as (i) the acquisition of at least 50% of the Company by a "person" (as
defined in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934);
(ii) certain changes in the composition of the Board of Directors of the
Company, (iii) a merger or consolidation where the Company's stockholders do
not own at least 50% of the surviving entity's voting power after the
transaction, or (iv) the sale or disposition of substantially all of the
Company's assets.
Amendment and Termination of the 1999 Plan. The Board of Directors may
amend, alter, suspend or terminate the 1999 Plan, or any part thereof, at any
time and for any reason. However, the Company shall obtain stockholder
approval for any amendment to the 1999 Plan to the extent necessary and
desirable to comply with applicable law. No such action by the Board of
Directors or stockholders may alter or impair any option previously granted
under the 1999 Plan without the written consent of the optionee. Unless
terminated earlier, the 1999 Plan shall terminate ten years from the date the
1999 Plan was adopted by the Board of Directors.
9
<PAGE>
Federal Income Tax Consequences
Incentive Stock Options. An optionee who is granted an incentive stock
option does not recognize taxable income at the time the option is granted or
upon its exercise, although the exercise is an adjustment item for alternative
minimum tax purposes and may subject the optionee to alternative minimum tax.
Upon a disposition of the shares received upon exercise of the incentive stock
option more than two years after grant of the option and one year after
exercise of the option, any gain or loss is treated as long-term capital gain
or loss. Net capital gains on shares held more than 12 months may be taxed at
a maximum federal rate of 20%. Capital losses are allowed in full against
capital gains and to a maximum loss of $3,000 against other income. If these
holding periods are not satisfied, the optionee recognizes ordinary income at
the time of disposition equal to the difference between the exercise price and
the lower of (i) the fair market value of the shares at the date of the option
exercise or (ii) the sale price of the shares. Any gain or loss recognized on
such a premature disposition of the shares in excess of the amount treated as
ordinary income is treated as long-term or short-term capital gain or loss,
depending on the holding period. A different rule for measuring ordinary
income upon such a premature disposition may apply if the optionee is also an
officer, director or 10% stockholder of the Company.
Nonstatutory Stock Options. An optionee does not recognize any taxable
income at the time he or she is granted a nonstatutory stock option. Upon
exercise, the optionee recognizes taxable income generally measured by the
excess of the then fair market value of the shares over the exercise price.
Any taxable income recognized in connection with an option exercised by an
employee of the Company is subject to tax withholding by the Company. Unless
limited by Section 162(m) of the Code, the Company is entitled to a deduction
in the same amount as the ordinary income recognized by the optionee. Upon a
disposition of such shares by the optionee, any difference between the sale
price and the optionee's exercise price, to the extent not recognized as
taxable income as provided above, is treated as long-term or short-term
capital gain or loss, depending on the holding period. Net capital gains on
shares held more than 12 months may be taxed at a maximum federal rate of 20%.
Capital losses are allowed in full against capital gains and to a maximum loss
of $3,000 against other income.
The foregoing is only a summary of the effect of federal income taxation
upon optionees and the Company with respect to the grant and exercise of
options under the 1999 Plan. It does not purport to be complete, and does not
discuss the tax consequences of the employee's or consultant's death or the
provisions of the income tax laws of any municipality, state or foreign
country in which the employee or consultant may reside.
Participation in the 1999 Plan.
The future grant of options under the 1999 Plan to executive officers,
including the officers named in the Summary Compensation Table on page 14 of
these proxy materials is subject to the discretion of the Administrator. As of
the date of these proxy materials, there has been no determination by the
Administrator with respect to future awards under the 1999 Plan. The table of
option grants set forth on page 16 of these proxy materials under "Executive
Compensation--Option Grants in Fiscal 1999" provides information with respect
to the grant of options to the officers named in the Summary Compensation
Table in the fiscal year ended July 2, 1999 under the Seagate Technology, Inc.
1991 Stock Option Plan (the "1991 Plan"). No options to those persons have
been granted under the 1999 Plan as of the date of these proxy materials.
Information regarding options granted to the Company's non-employee directors
is set forth under the heading "Executive Compensation--Director
Compensation." No options under the 1999 Plan have been granted to non-
employee directors as of the date of these proxy materials. During fiscal
1999, all current executive officers of the Company as a group and all other
individuals as a group received options to purchase 1,982,500 and 12,551,774
shares, respectively, under the 1991 Plan. As of the record date,
approximately 3,500 employees of the Company were eligible to participate in
the 1991 Plan and the 1999 Plan.
10
<PAGE>
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 30, 2000 and recommends that stockholders vote for
ratification of such appointment. Notwithstanding the selection, the Board of
Directors, in its discretion, may direct the appointment of new independent
auditors at any time during the year, if the Board of Directors 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.
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 Annual Meeting with the opportunity to make a statement if they desire to
do so and are expected to be available to respond to questions.
The Company's Board of Directors unanimously recommends a vote "FOR" the
ratification of the appointment of Ernst & Young LLP as independent auditors.
PROPOSAL FOUR
STOCKHOLDER PROPOSAL REGARDING EMPLOYMENT PRACTICES
AND POLICIES IN NORTHERN IRELAND
General
At the Annual Meeting, the stockholders of the Company are being asked to
consider and take action on a proposal included in these materials at the
request of several stockholders of the Company concerning the Company's
employment practices and policies for its Northern Ireland operations. The
Company received the following proposal from the New York City Employees
Retirement System, the New York City Police Pension Fund, the New York City
Teachers' Retirement System and the New York City Fire Department Pension Fund
(collectively the "Funds"). The proposal is co-sponsored by Christian Brothers
Investment Services, Inc. ("CBIS"), The Sisters of Mercy of the Americas
Regional Community of Detroit (the "SMRD") and Immaculate Heart Missions, Inc.
("IHM"), (collectively with the Funds, the "Co-sponsors"). The Co-sponsors
have indicated that they will cause a resolution to act on the proposal to be
introduced from the floor at the Company's 1999 Annual Meeting of
Stockholders. The addresses of the Funds, CBIS, SMRD and IHM and the number of
shares owned by each Fund, CBIS, SMRD and IHM are available from the Secretary
of the Company and the Securities and Exchange Commission upon receipt of any
written or oral request.
The Funds submitted the same proposal that was presented to the stockholders
at the Company's 1998 Annual Meeting of Stockholders. The Company's
stockholders did not approve the proposal presented at the last annual
meeting. The number of votes in favor of, against, abstaining and broker
nonvotes with respect to last year's proposal were 30,151,139, 112,824,047,
9,745,868 and 52,266,293, respectively.
For the reasons set forth below, the Company's Board of Directors unanimously
recommends
a vote "AGAINST" the Co-Sponsors' proposal.
Vote Required
The affirmative vote of not less than a majority of the Votes Cast will be
required to approve the adoption of this proposal. The "Votes Cast" are
defined under Delaware law to be the shares of the Company's Common Stock
present in person or represented by proxy at the Annual Meeting and entitled
to vote on the subject matter. Votes that are cast against the proposal will
be counted for purposes of determining (i) the presence or absence of a quorum
for the transaction of business and (ii) the total number of Votes Cast with
respect to the proposal.
11
<PAGE>
Abstentions are counted for purposes of determining both (i) the presence or
absence of a quorum and (ii) the total number of Votes Cast with respect to
the proposal. Broker non-votes are counted for the purpose of determining the
presence or absence of a quorum, but are not counted for purposes of
determining the number of Votes Cast with respect to this proposal.
The Funds' Proposal
The text of the resolution and the supporting statement submitted by the
Funds is as follows:
"WHEREAS, Seagate Technology, Inc. operates a wholly-owned subsidiary in
Northern Ireland, Seagate Technology;
WHEREAS, the on-going peace process in Northern Ireland encourages us to
search for means for establishing justice and equality;
WHEREAS, employment discrimination in Northern Ireland has been cited by the
International Commission of Jurists as being one of the major causes of the
communal strife in that country;
WHEREAS, Dr. Sean MacBride, founder of Amnesty International and Nobel Peace
laureate, has proposed several equal opportunity employment principles to
serve as guidelines for corporations in Northern Ireland. These include:
1. Increasing the representation of individuals from under-represented
religious groups in the workforce including managerial, supervisory,
administrative, clerical and technical jobs.
2. Adequate security for the protection of minority employees both at the
workplace and while traveling to and from work.
3. The banning of provocative religious or political emblems from the
workplace.
4. All job openings should be publicly advertised and special recruitment
efforts should be made to attract applicants from under-represented
religious groups.
5. Layoff, recall, and termination procedures should not, in practice,
favor particular religious groupings.
6. The abolition of job reservations, apprenticeship restrictions, and
differential employment criteria, which discriminate on the basis of
religion or ethnic origin.
7. The development of training programs that will prepare substantial
numbers of current minority employees for skilled jobs, including the
expansion of existing programs and the creation of new programs to
train, upgrade, and improve the skills of minority employees.
8. The establishment of procedures to assess, identify and actively recruit
minority employees with potential for further advancement.
9. The appointment of a senior management staff member to oversee the
company's affirmative action efforts and the setting up of timetables to
carry out affirmative action principles.
RESOLVED, the Shareholders request the Board of Directors to:
1. Make all possible lawful efforts to implement and/or increase activity
on each of the nine MacBride Principles."
Supporting Statement by the Funds
"We believe that our company benefits by hiring from the widest available
talent pool. An employee's ability to do the job should be the primary
consideration in hiring and promotion decisions.
12
<PAGE>
Implementation of the MacBride Principles by Seagate Technology will
demonstrate its concern for human rights and equality of opportunity in its
international operations.
Please vote your proxy FOR these concerns."
Recommendation of the Board of Directors of Seagate Technology, Inc.
The Company's policy and practice worldwide is to provide equal opportunity
employment in all locations without regard to race, color, religious belief,
sex, age, national origin, citizenship status, marital status, sexual
orientation or disability.
Northern Ireland is no exception. Through its established equal employment
opportunity program, the Company's operations in Northern Ireland comply
substantially with the practices outlined in the nine items included in the
Co-sponsors' proposal (the "MacBride Principles"). The Company is an equal
opportunity employer in all job advertisements. Hiring procedures are based on
the experience and qualifications needed to satisfy individual job
requirements. Equal opportunity is observed for all employees in training,
advancement, layoff and recall procedures. The display of potentially
offensive or intimidating religious or political emblems at the Company's
facilities is not permitted. The Company provides security for all employees
at work.
The Board of Directors believes that adoption of this proposal is not in the
best interests of the Company's stockholders. The Company has already taken
the steps necessary to provide equal employment opportunity in Northern
Ireland, regardless of religious affiliation. The Company adheres to both the
letter and the spirit of the "Fair Employment (Northern Ireland) Act of 1989"
as well as the "Code of Practice" promulgated by such act. The Company is also
registered with the Fair Employment Commission of Northern Ireland.
There are several differences between the Company's policies and practices
and the MacBride Principles. For example, one of the MacBride Principles asks
employers to consider explicitly and be responsible implicitly for physical
security arrangements for employees while traveling to and from work. The
Company is unable to provide such arrangements outside of its facilities and
therefore has not implemented that principle. Another of the MacBride
Principles would require the Company to consider an employee's religion as a
criterion for layoffs in order to achieve an overall result that layoffs do
not favor particular groups. In order to accommodate this principle, the
Company would be required to disadvantage one group over another on the basis
of religion, in violation of the Company's worldwide employment policies and
practices.
The Board of Directors reaffirms the Company's commitment to fair employment
in Northern Ireland but opposes the proposal because it is unnecessary and,
insofar as it calls for actions such as security arrangements outside of plant
facilities, impractical and not possible to implement at any reasonable cost.
Spaces are provided in the accompanying form of proxy for specifying "For,"
"Against" or "Abstention" as to this proposal, which is identified as Proposal
4.
For the reasons set forth above, the Company's Board of Directors unanimously
recommends
a vote "AGAINST" the Co-sponsors' proposal.
13
<PAGE>
EXECUTIVE COMPENSATION AND OTHER MATTERS
Executive Compensation
The following Summary Compensation Table sets forth certain information
regarding the compensation of the current Chief Executive Officer and
President of the Company, the former Chief Executive Officer of the Company
and the four next most highly compensated executive officers of the Company
(together with the current and former Chief Executive Officers, collectively
the "Named Officers") whose compensation each exceeded $100,000 in the fiscal
year ended July 2, 1999.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation Awards
--------------------------------- -----------------------------------
Securities
Underlying Options
Other Annual Restricted Granted (#)(1)
Name and Principal Fiscal Salary Bonus Compensation Stock --------------------
Position Year ($) ($) ($) Awards ($) Company Subsidiary
------------------ ------ -------- -------- ------------ ---------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Stephen J. Luczo........ 1999 $834,434 $850,000(2) $247,344(3) -- 1,100,000 --
Chief Executive Officer
and President 1998 618,272 -- 19,804 $2,974,150(9) 450,000 150,000
of the Company and
Chairman of the 1997 500,011 547,000 439,294(4) -- 100,000 80,000
Board, Seagate Software
Inc.
Alan F. Shugart......... 1999 $750,000 $ -- $255,650(5) -- -- --
Former Chairman of the
Board of 1998 750,006 -- 13,919 -- 290,000 70,000
Directors and Chief
Executive Officer 1997 750,006 658,000 529,478(6) -- 200,000 --
William D. Watkins...... 1999 $605,787 $575,000(2) $ 61,505 $1,079,600(10) 480,000 --
Executive Vice
President and 1998 500,011 -- 13,922 -- 225,000 --
Chief Operating Officer 1997 323,095 547,000 438,229(4) -- 100,000 --
Bernardo A. Carballo.... 1999 $560,592 $295,000(2) $259,665(7) -- 260,000 --
Executive Vice
President, Worldwide 1998 500,011 -- 67,735 -- 140,000 --
Sales, Marketing,
Product Line 1997 500,011 547,000 455,352(4) -- 100,000 --
Management and Customer
Service
Operations
Donald L. Waite......... 1999 $500,011 $300,000(2) $233,001(8) -- 260,000 --
Executive Vice 1998
President and 500,011 -- 12,121 -- 120,000 --
Chief Administrative
Officer 1997 500,011 547,000 452,650(3) -- 100,000 --
Townsend H. Porter, Jr.. 1999 $415,390 $250,000(2) $ -- -- 260,000 --
Executive Vice
President, Product and 1998 396,138 -- -- -- 195,000 --
Technology Development
and 1997 19,750 21,000 19,757 $3,377,890(11) 100,000 20,000
Chief Technical Officer
</TABLE>
- --------
(1) The stock options listed in the table include options to purchase Common
Stock of the Company and options to purchase Common Stock of Seagate
Software. The options to purchase the Company's Common Stock were granted
under the 1991 Plan and the options to purchase Seagate Software Common
Stock were granted under the Seagate Software 1996 Stock Option Plan (the
"Software Stock Plan").
(2) These amounts represent payments under the Company's Performance-Based
Executive Compensation Plan earned in fiscal 1999 and paid in fiscal
2000.
(3) Includes deferred payments under the Performance-Based Executive
Compensation Plan of $216,672.
(4) Includes deferred payments under the Performance-Based Executive
Compensation Plan of $366,000.
(5) Represents deferred payments under the Performance-Based Executive
Compensation Plan.
(6) Includes deferred payments under the Performance-Based Executive
Compensation Plan of $438,000.
(7) Includes deferred payments under the Performance-Based Executive
Compensation Plan of $245,650.
(8) Includes deferred payments under the Performance-Based Executive
Compensation Plan of $214,075.
(9) Pursuant to the Company's Executive Stock Plan, in September 1997 the
Company granted rights to purchase 85,000 shares of Common Stock at an
exercise price of $0.01 per share to Mr. Luczo. Mr. Luczo exercised such
rights in November 1997. 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 July 2, 1999, Mr. Luczo held 238,000 unvested shares of
restricted stock having a value of $6,381,375 based upon the fair market
value of the
14
<PAGE>
Common Stock on July 2, 1999 of $26.8125 per share. All of such unvested
shares are subject to repurchase by the Company at the original purchase
price in the event Mr. Luczo's employment with the Company is terminated.
The shares will be released from the Company's repurchase option seven
years after the 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.
Luczo 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.
(10) Pursuant to the Company's Executive Stock Plan, the Company granted
rights to purchase 40,000 shares of Common Stock at an exercise price of
$0.01 per share to Mr. Watkins in August 1998. Mr. Watkins exercised such
rights in November 1998. 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 July 2, 1999, Mr. Watkins held 183,724 unvested shares of
restricted stock having a value of $4,926,100 based upon the fair market
value of the Common Stock on July 2, 1999 of $26.8125 per share. All of
such unvested shares are subject to repurchase by the Company at the
original purchase price in the event Mr. Watkins' employment with the
Company is terminated. The shares will be released from the Company's
repurchase option seven years after the 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.
(11) Pursuant to the Company's Executive Stock Plan, the Company granted
rights to purchase 50,000 shares of Common Stock at an exercise price of
$0.01 per share to Mr. Porter in June 1997. Mr. Porter exercised such
rights in June 1997. The Company also granted Mr. Porter rights to
purchase 36,000 shares of Common Stock at an exercise price of $0.01 per
share in September 1997, and he exercised such rights in November 1997.
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 July 2, 1999, Mr.
Porter held 86,000 unvested shares of restricted stock having a value of
$2,305,875 based upon the fair market value of the Common Stock on July
2, 1999 of $26.8125 per share. All of such unvested shares are subject to
repurchase by the Company at the original purchase price in the event Mr.
Porter's employment with the Company is terminated. The shares will be
released from the Company's repurchase option seven years after the date
of grant. See "Report of the Executive Personnel and Organization
Committee of the Board of Directors--Stock Options and Restricted Stock
Awards" for further information on vesting provisions.
15
<PAGE>
Option Grants in Fiscal 1999
The following table provides information concerning each grant of options to
purchase the Company's Common Stock made during fiscal year 1999 to the Named
Officers:
<TABLE>
<CAPTION>
Individual Grants
------------------------------------------------
Potential Realizable
Value at Assumed
Number of % of Total Annual Rates of Stock
Securities Options Exercise Price Appreciation for
Underlying Granted to or Base Option Term (1)
Options Employees in Price Expiration ----------------------
Name Granted (#)(2) Fiscal Year ($/Sh)(5) Date 5% 10%
- ---- -------------- ------------ --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Stephen J. Luczo........ 250,000 1.8533% $21.750 7/29/08 $3,419,615 $ 8,665,975
250,000 1.8533 32.000 7/29/08 857,115 6,103,475
600,000(3) 4.4481 20.375 8/28/08 7,688,237 19,483,502
William D. Watkins...... 20,000 0.1482% $21.750 7/29/08 $ 273,569 $ 693,278
40,000 0.2965 26.875 8/18/08 676,062 1,713,273
300,000(3) 2.2240 20.375 8/28/08 3,844,118 9,741,751
120,000(4) 0.8896 30.625 3/22/09 2,311,188 5,857,004
Bernardo A. Carballo.... 20,000 0.1482% $21.750 7/29/08 $ 273,569 $ 693,278
240,000(3) 1.7792 20.375 8/28/08 3,075,295 7,793,401
Donald L. Waite......... 20,000 0.1482% $21.750 7/29/08 $ 273,569 $ 693,278
240,000(3) 1.7792 20.375 8/28/08 3,075,295 7,793,401
Townsend H. Porter...... 20,000 0.1482% $21.750 7/29/08 $ 273,569 $ 693,278
240,000(3) 1.7792 20.375 8/28/08 3,075,295 7,793,401
</TABLE>
- -------
(1) Potential realizable value is based on the assumption that the Common
Stock of the Company 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) These stock options 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 and the 1998 Nonstatutory Stock
Plan (the "1998 Plan"), the Board retains discretion to modify the terms,
including the price, of outstanding options. All options reported in the
above table were granted at fair market value on the date of grant except
for Mr. Luczo's grant at $32.00 which was granted at approximately 150% of
fair market value on the date of grant.
(3) These stock options begin to vest two years 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 fifth anniversary of the
date of grant.
(4) Represents a performance-based option to purchase the Company's Common
Stock. This option may not be exercised for at least one year from the
date of grant and vests 40,000 shares at the end of 12 months, 40,000
shares at the end of 24 months, and 40,000 shares at the end of 36 months.
Vesting of 50% of the shares subject to the option will occur sooner if
the Company's stock price as reported on the New York Stock Exchange
appreciates to at least $45 for 60 consecutive trading days relative to
the time based vesting set forth in the prior sentence. Vesting will
accelerate with respect to the remaining 50% of the shares subject to the
option if the stock price of the Company's Common Stock appreciates to at
least $55 for 60 consecutive trading days. The formula for determining
whether the stock price has increased is the average closing prices for 60
consecutive trading days. See "Report of the Executive Personnel and
Organization Committee of the Board of Directors--Stock Options and
Restricted Awards" for further information on vesting provisions.
(5) Exercise price and tax withholding obligations may be paid in cash,
through delivery of already-owned shares subject to certain conditions, by
utilization of deferred compensation subject to certain limitations or
pursuant to a cashless exercise procedure under which the optionee
provides irrevocable instructions to a brokerage firm to sell the
purchased shares and to remit to the Company or out of the sale proceeds.
16
<PAGE>
Aggregated Option Exercises in Last Fiscal Year
And Fiscal Year-End Option Values
The following table sets forth certain information regarding the exercise of
stock options of the Company and Seagate Software in fiscal 1999 by the Named
Officers in the Summary Compensation Table and the value of options held by
such individuals at the end of the fiscal year.
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised In-
Unexercised the-Money Options at Fiscal
Options at Fiscal Year-End (#) Year-End ($)(2)
----------------------------------- ---------------------------
Value
Shares Acquired Realized
on Exercise (#) ($)(1) Exercisable/ Exercisable/ Exercisable/ Exercisable/
Technology/ Technology/ Unexercisable Unexercisable Unexercisable Unexercisable
Name Software Software Technology Software Technology Software
---- --------------- ----------- ---------------- --------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Stephen J. Luczo........ 120,000/ $3,055,000/ 230,000/ 13,541/ $1,357,188/ $ 608,812/
104,789 $4,851,979 1,567,500 131,670 6,059,063 5,861,709
Alan F. Shugart......... 495,000/ 6,827,333/ 137,500/ 0/ 0/ 0/
100,000 4,075,640 427,500 0 1,261,875 0
William D. Watkins...... 83,392/ 1,697,414/ 137,439/ 833/ 360,617/ 40,842/
15,000 735,450 779,445 4,167 2,737,900 204,308
Bernardo A. Carballo.... 100,000/ 2,420,310/ 349,500/ 833/ 5,198,844/ 40,842/
15,000 735,450 470,000 4,167 1,995,938 204,308
Donald L. Waite......... 107,500/ 2,971,560/ 140,000/ 0/ 263,125/ 0/
0 0 450,000 0 1,947,188 0
Townsend H. Porter Jr. . 15,000/ 225,938/ 55,000/ 1,083/ 12,188/ 50,434/
7,750 359,983 485,000 11,167 1,963,125 518,184
</TABLE>
- --------
(1) Market value of the Company's Common Stock or Seagate Software's Common
Stock, as the case may be, on the exercise date minus the exercise price.
(2) Market value of the Company's Common Stock or Seagate Software's Common
Stock, as the case may be, at fiscal year-end minus the exercise price. No
public market exists for the Common Stock of Seagate Software. The fair
market value of Seagate Software common stock on July 2, 1999 as
determined by the Seagate Software Board of Directors, was $53.00 per
share.
Employment Contracts, Change-Of-Control Arrangements and Separation Agreements
In the fiscal year ended July 2, 1999, the Company entered into Management
Retention Agreements (the "Retention Agreements") with each of Messrs. Luczo,
Watkins, Carballo, Waite and Porter (each an "Employee" and collectively, the
"Employees"). The Retention Agreements provide that the Company may terminate
the employee's employment at any time with or without cause; provided,
however, that if within 24 months following a Change of Control (as defined
below) an Employee's employment is (i) involuntarily terminated by the Company
other than for cause, (ii) constructively terminated or (iii) terminated due
to the Employee's disability or death, such Employee is entitled to receive
the following severance benefits:
. a cash payment equal to 200% of the Employee's Annual Compensation,
other than Messrs. Luczo and Watkins who are entitled to a payment of
300%, where Annual Compensation is defined as an amount equal to the sum
of the Employee's (i) annual salary at the highest rate in effect during
the immediately preceding 12 months and (ii) the highest annual bonus
including quarterly bonus amounts and deferred amounts awarded during
the past three fiscal years,
. acceleration of vesting of all the Employee's outstanding stock options,
. acceleration of vesting of a pro rata percentage of the Employee's
restricted stock, which is determined by dividing the number of months
that have elapsed from the restricted stock grant date to the date of
17
<PAGE>
employment termination by the number of months between the grant date
and the date when all restricted shares would otherwise have vested
based on the employee's continued employment with the Company,
. continued coverage in the Company's health, dental and life insurance
coverage at the Company's expense for the employee, and the employee's
dependents if the dependents were covered immediately prior to the
employee's termination, until either three (3) years in the case of
Messrs. Luczo and Watkins, and two (2) years in the case of Messrs.
Carballo, Waite and Porter from the date of termination or the date that
the employee and his dependents become covered under another employer's
group health, dental or life insurance plans that provide comparable
coverage and benefits and
. a bonus equal to a pro rata share (based on the number of days elapsed
during the fiscal year in which termination occurs) of the Employee's
targeted bonus under the Company's executive bonus plan for the fiscal
year in which termination occurs.
At the Employee's option, he may also purchase the Company-owned automobile
in such Employee's possession at the vehicle's wholesale Kelly Blue Book
value.
The Retention Agreements further provide that if on the effective date of a
Change of Control a successor to the Company fails to assume any stock option
or restricted stock held by the Employee, 100% of the unvested portion of any
stock option issued by the Company or an affiliate to the Employee will
automatically become fully vested. In addition the Employee's unvested
restricted shares will vest pro rata as of the Change of Control.
With respect to the Retention Agreements, a "Change of Control" would occur if
any of the following events were to occur:
(i) Any person (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) becomes the beneficial owner (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly of securities of the Company
representing 40% or more of the total voting power of the Company's then
outstanding voting securities.
(ii) There is a change in the composition of the Board of Directors of
the Company occurring within a two year period as a result of which fewer
than a majority of the directors are (1) directors as of the date of the
Retention Agreements or (2) nominated or elected by an affirmative vote of
at least a majority of the incumbent directors at the time of such election
or nomination (excluding those directors whose election is in connection
with an actual or threatened proxy contest).
(iii) There is a merger, reorganization, consolidation or other corporate
transaction involving the Company in which the stockholders of the Company
immediately prior to the transaction do not hold at least 50% of the
surviving entities immediately after such transaction.
(iv) All or substantially all of the assets of the Company are sold,
liquidated or otherwise distributed.
The Retention Agreements require the Company to pay the excise tax, as well
as the federal, state and excise tax on the Company's payment for the excise
tax, on any benefit received under the Retention Agreements if that benefit
qualifies as a "parachute payment" within the meaning of the Code.
In consideration of the payments to be made by the Company under the
Retention Agreements, each Employee has agreed not to (i) act as an employee,
agent, consultant, advisor, officer or director of any corporation,
partnership, person or other entity during his employment with the Company and
continuing until 24 months after his employment with the Company terminates,
(ii) participate or engage in the development, production, sale, marketing or
servicing of any business enterprise that is in competition with the Company's
product lines or business activities and (iii) solicit, employ or interfere in
any other manner with the employment relationships with the Company and its
current or prospective employees.
18
<PAGE>
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 1999 Plan provides
that in the event of a change of control of the Company, except as otherwise
determined by the Board of Directors, any options outstanding on the date of
such change of control that are not yet exercisable and vested on such date
shall become fully vested and exercisable, and such options shall, except as
otherwise determined by the Board of Directors, be terminated in exchange for
a cash payment equal to the "change of control" price as defined in the 1999
Plan. A change of control is defined in the 1999 plan as (i) the acquisition
of at least 50% of the Company by a "person" (as defined in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934); (ii) certain changes in the
composition of the Board of Directors of the Company, (iii) a merger or
consolidation where the Company's stockholders do not own at least 50% of the
surviving entity's voting power after the transaction, or (iv) the sale or
disposition of substantially all of the Company's assets. 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) 84
months in the case of awards that vest at the end of 7 years or 60 months in
the case of awards that vest at the end of 5 years.
Compensation of Non-Employee 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 Co-Chairmen of the Board of Directors, Messrs. Filler and Perlman, receive
an additional annual retainer of $75,000. Each of the non-employee Directors
serving as the chairmen of the Audit Committee, the Executive Personnel and
Organization Committee and the Technology Committee receives an additional
annual retainer of $8,000. 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. Messrs. Filler and Perlman are
members of the Board of Directors of Seagate Software. They do not receive any
additional fees for their service on Seagate Software's Board of Directors.
Non-employee Directors have the option to forfeit some or all of their
$30,000 annual retainer for the right to receive at market stock options to
purchase the Company's Common Stock. These stock options are calculated as
follows: (amount of retainer forfeited X 4)/fair market value as of the
effective date of the grant. Messrs. Haughton, Kleist and Perlman elected to
participate and each converted $30,000 into stock options to purchase 3,966
shares of Common Stock of the Company at $30.25 per share. Dr. Wilkening
elected to participate and converted $7,500 into stock options to purchase 991
shares of Common Stock of the Company at $30.25 per share.
The Company's Directors' Option Plan (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. Options granted
under the Directors' Plan become exercisable as to 1/48th of the shares
subject to the option at the end of each full month following the date of
grant that the optionee remains a director of the Company. Options granted
under the Directors' Plan expire ten years from the date of grant and may be
exercised while the optionee is serving as a member of the Company's Board of
Directors, within twelve months after termination by death, within three
months after termination for cause or within five years after termination for
any other reason, but cannot be exercised after
19
<PAGE>
the ten year term expires. Pursuant to the Directors' Plan, each new non-
employee Director is granted an option to purchase 50,000 shares of Common
Stock upon the date on which such person first becomes a director
(the "Initial Option").
Prior to November 1998, each Outside Director automatically received an
option to purchase 4,000 Shares of Common Stock (the "Quarterly Option") on
each February 1, May 1, August 1 and November 1 following the grant of the
Initial Option; provided, however, that no Quarterly Option was granted to an
Outside Director who received an Initial Option in the preceding six months.
Effective November 1998, the terms of the plan were amended such that each
Outside Director automatically receives an option to purchase 5,000 Shares of
Common Stock on each February 1, May 1, August 1 and November 1 following the
grant of the Initial Option; provided, however, that no Quarterly Option was
granted to an Outside Director who received an Initial Option in the preceding
six months. On August 3, 1998, the non-employee Directors each were granted an
option to purchase 4,000 shares of the Company's Common Stock at an exercise
price of $22.625 per share. On November 2, 1998, each of the non-employee
Directors was granted an option to purchase 5,000 shares of the Company's
Common Stock at an exercise price of $26.25 per share. On February 1, 1999,
each of the non-employee Directors was granted an option to purchase 5,000
shares of the Company's Common Stock at an exercise price of $40.6875 per
share. On May 3, 1999, each of the non-employee Directors was granted an
option to purchase 5,000 shares of the Company's Common Stock at an exercise
price of $27.875 per share.
The Co-Chairmen of the Board of Directors, Messrs. Filler and Perlman, each
received an option to purchase 75,000 shares of the Company's Common Stock per
year as part of their compensation for services. On July 29, 1998, upon
appointment as co-chairman, Messrs. Filler and Perlman each received options
to purchase 75,000 shares of the Company's Common Stock at an exercise price
of $21.75 per share. On April 28, 1999, each co-chairman received options to
purchase 75,000 shares of the Company's Common Stock at an exercise price of
$28.9375 per share.
Seagate Technology Exchange Offer
On June 9, 1999, the Company completed an exchange offer for 1.699 shares of
its Common Stock for one share of Seagate Software Common Stock. All holders
of Seagate Software Common Stock as of March 31, 1999 were entitled to
participate in the exchange offer. Based on information provided by the
exchange agent, approximately 3.3 million shares of Seagate Software Common
Stock were tendered of which approximately 3.1 million were exchanged into
approximately 5.3 million shares of the Company's Common Stock.
The following Directors and Named Officers of the Company exchanged the
number of shares of Common Stock of Seagate Software set forth opposite his or
her name:
<TABLE>
<CAPTION>
Director or Seagate Software Seagate Technology
Officer Shares Exchanged Shares Issued
----------- ---------------- ------------------
<S> <C> <C>
Gary B. Filler.......................... 20,937 35,571
Lawrence Perlman........................ 20,937 35,571
Kenneth E. Haughton..................... 15,000 25,485
Robert A. Kleist........................ 15,000 25,485
Laurel L. Wilkening..................... 15,000 25,485
Thomas P. Stafford...................... 15,000 25,485
Stephen J. Luczo........................ 104,789 178,036
William D. Watkins...................... 15,000 25,485
Bernardo A. Carballo.................... 15,000 25,485
Donald L. Waite......................... 12,000 20,388
Townsend H. Porter, Jr.................. 7,750 13,167
</TABLE>
20
<PAGE>
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 July 2, 1999.
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 support these
goals, the Committee and the Board of Directors have established an executive
compensation program primarily consisting of four integrated components--Base
Salary, Performance-Based Awards, Stock Options and Restricted Stock Awards.
Base Salary. The base salary component of each executive's total
compensation is designed to be competitive and fall within approximately the
50th percentile for similar companies in terms of industry group, technology,
complexity and company size. Company size reflects both revenues and market
capitalization.
The Committee, on behalf of the Board, works with management to maintain an
executive salary structure based on extensive competitive analyses including
two published national pay surveys and proxy statement pay comparisons for
selected companies. Several of the companies appearing in either the survey
companies or the proxy comparison companies, are also companies that are
included in the Hambrecht & Quist Computer Hardware Index used in the
Performance Graph for this proxy statement. The Committee has engaged
Frederic W. Cook & Co. to conduct the competitive analyses and act as an
independent consultant to the Committee on executive compensation matters.
The Committee uses its discretion in determining individual salary amounts
for executive officers and does not apply any specific formula. Generally,
executive officer salaries, including the Chief Executive Officer ("CEO"), are
reviewed on a periodic basis every 18-24 months. Three of the six Named
Officers received promotional salary increases during fiscal 1999. Those
persons included Mr. Luczo who was promoted to CEO, Mr. Watkins who was
promoted to Chief Operating Officer ("COO") and Mr. Porter who was promoted to
Chief Technology Officer ("CTO"). In addition, Mr. Carballo received a regular
salary increase.
Performance-Based Awards. All executive officers, including the CEO,
participate in the Company's Performance-Based Executive Compensation Plan
(the "Compensation Plan"). Awards under the Compensation Plan are intended to
reflect the Committee's belief that a significant portion of the annual
compensation of each executive officer should be contingent upon the financial
performance of the Company and the individual contribution of each executive
officer. Awards under the Compensation Plan, including those to the CEO, are
contingent upon attainment of specific financial performance goals by the
Company, with an earnings per share ("EPS") threshold and profitability
targets established by the Committee at the time of the approval of the budget
for the fiscal year. The Committee's objective is to create an aggregate
incentive fund upon achievement in excess of the specified goals that, when
combined with Company salaries, is adequate to provide executive officers with
above-median total annual compensation. In the alternative, the Committee's
objective is to also set goals such that underachievement of financial goals
results in an aggregate fund that provides below-median total annual
compensation. The Committee allocates portions of the earned incentive fund
among individual executive officers considering each individual's relative
contributions to the Company's performance.
For fiscal 1999, the Compensation Plan was designed to focus on overall
annual profits above an EPS threshold. Earned awards were determined and
distributed at year-end, unlike prior fiscal years when awards were determined
and distributed on a quarterly basis. In fiscal 1999 Company financial
performance was not adequate to fund aggregate median competitive awards. As a
result, after making adjustments for individual contributions, total annual
compensation for all of the Named Officers, including the CEO, was below
median competitive levels.
21
<PAGE>
Stock Options and Restricted Stock Awards. The Committee believes that 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
incentives that focus the executive officers' attention on managing the
Company from the perspective of an owner with an equity stake in the business.
Options and restricted stock awards are subject to vesting provisions to
encourage executive officers to remain employed with the Company. The
Committee establishes option grant guidelines to be used to determine the size
of each executive officer's refresher option grants. The guidelines take into
account option grant values for similar positions at comparison companies.
Also considered are the individual contributions, past option grant history,
unvested shares and other relevant factors such as the Committee's judgement
with respect to the individual's impact on shareholder value. It has been the
Company's practice for several years to make normal option grants on a
quarterly schedule.
Options of Seagate Technology Inc.: During the first quarter of fiscal 1999,
Mr. Luczo received an option to purchase 500,000 shares upon his promotion to
CEO of the Company. One half of these shares were options with an exercise
price equal to 100% of market value on the date of grant. The other half of
the shares were an option with an exercise price of $32.00 per share which was
equal to approximately 150% of market value on the date of grant, and thus
would not become valuable until there was at least 50% growth in the Company's
stock price. The 500,000 share grant to Mr. Luczo was made with Treasury
shares of the Company's Common Stock. The grant was not made under the 1991
Stock Option Plan because the annual individual grant limit would have been
exceeded, therefore precluding the Committee from making the one-time grant
which it believed to be important for future incentive and retention purposes.
Other executive officers received normal quarterly grants for the first
quarter of fiscal 1999 from the 1991 Stock Option Plan, including the Named
Officers who were each granted options to purchase 20,000 shares at an
exercise price equal to the fair market value of the Company's Common Stock on
the date of grant. These options vest in four 25% annual installments
beginning one year from the grant date.
Prior to making option grants for the second quarter of fiscal 1999, the
Committee determined it was necessary to provide executive officers with a
more significant link to stockholder-value creation during the critical
transition of CEO responsibilities, and to have strong retention during this
period. Consequently, the Committee granted options in the second quarter of
fiscal 1999 to executive officers representing normal grants for the next 12
quarters. In other words, executive officers, including Mr. Luczo, received
front-loaded normal grants for three years and are not expected to receive
additional normal grants until the second quarter of fiscal 2002.
The front-loaded grants included 600,000 shares for Mr. Luczo, 300,000
shares for Mr. Watkins and 240,000 shares each for Messrs. Carballo, Porter
and Waite. These stock options begin to vest two years 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 fifth anniversary of the date
of grant. Mr. Luczo's grant was made from Treasury shares, and other executive
officers received their grants from the 1991 Plan.
In addition to the previously described option grants, Mr. Watkins received
promotional option grants of 120,000 shares from the 1991 Stock Option Plan.
Of these, 40,000 shares were granted in the first quarter of fiscal 1999 and
vest the same as normal quarterly options. The remaining 80,000 shares were
granted in the third quarter of fiscal 1999 and vest in three 33.3% annual
installments beginning one year from the grant date; or sooner if the
performance events occur. Vesting of Mr. Watkins' option will be accelerated
with respect to 50% of the shares subject to such option if the average price
of the Company's Common Stock exceeds approximately 155% of the grant price
for 60 consecutive trading days. The remaining 50% of the shares will vest
early if the average price of the Company's Common Stock exceeds approximately
190% of the grant price for 60 consecutive trading days.
Restricted Stock Awards: The Company does not provide any 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
22
<PAGE>
alternative arrangements were 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 type of guaranteed pension.
As a result, special one-time restricted stock grants were made to each
executive officer. The special restricted stock grants were made under the
1991 Executive Stock Plan. Restricted stock awards were subject to vesting in
full (i.e., "cliff vesting") at the end of ten years with the exception of the
awards to Mr. Waite which would vest in full at the end of five years. Pro-
rata vesting was provided for certain circumstances including death,
disability, termination of employment by the Company other than for cause and
constructive termination following a change of control. In addition, if an
executive officer voluntarily resigns on or after attaining age 65 the Board
can grant pro-rata vesting. The Committee established the size of the
restricted stock awards by taking into account the value of representative,
equivalent retirement benefit values under alternative arrangements based on
reasonable stock-price growth-rate assumptions.
During fiscal 1999, the Committee approved three major changes that impacted
the restricted stock awards. The Committee determined that it would not, as a
matter of course, make future restricted stock awards, except for special
circumstances on an individual basis. With the consent of the affected
executives, the committee amended outstanding restricted stock awards to
shorten the vesting from 10 years to seven years; provided, however, that
after five years of vesting, if the average closing stock price of the
Company's Common Stock exceeded $50 for 60 consecutive trading days, then
vesting would be accelerated. The Committee also sought and obtained the
consent of the executive officers holding restricted stock awards to eliminate
pro-rata vesting upon termination of employment by the Company.
Mr. Watkins received an additional promotional restricted stock award of
40,000 shares during fiscal 1999 to adjust his total shares commensurate with
his increased responsibilities as COO. There were no other additional
restricted stock awards made to any of the other Named Officers, including Mr.
Luczo, during fiscal 1999.
Impact of Section 162(m) of the Internal Revenue Code. The Committee has
considered the potential impact of Section 162(m) of the 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 million in any taxable year for any of the Named
Officers, including the CEO, unless compensation is performance-based. In
general, it is the Company's policy to qualify 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 Stock Option Plan to preserve the Company's ability to deduct the
compensation expense relating to stock options granted under such Plan. All
options granted to executive officers during fiscal 1999 were granted under
the 1991 Stock Option Plan except the options granted to Mr. Luczo, as
previously described.
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:
Lawrence Perlman - Chairman
Thomas P. Stafford
Laurel L. Wilkening
23
<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") and of the
Hambrecht & Quist Computer Hardware Index for the period commencing July 2,
1994 and ending on July 2, 1999.
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
6/94 6/95 6/96 6/97 6/98 6/99
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Seagate $100 $200 $228 $357 $242 $259
- -----------------------------------------------------------------------------------------
H & Q Computer Hardware $100 $176 $207 $317 $406 $763
- -----------------------------------------------------------------------------------------
S & P 500 $100 $126 $159 $214 $231 $342
</TABLE>
- --------
(1) The graph assumes that $100 was invested on July 2, 1994 in the Company's
Common Stock and in the S&P 500, 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 and the Hambrecht & Quist Computer Hardware Index shown herein,
the Company has calculated its stock performance graph assuming a June 30
year-end.
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 Exchange Act, except to the extent that the Company
specifically incorporates it by reference into such filing.
Certain Transactions with Management
In August 1998, the Company entered into a Separation Agreement and Release
(the "Separation Agreement") with Alan F. Shugart in connection with the
termination of Mr. Shugart's employment as Chief Executive Officer and
Chairman of the Board of Directors of the Company and his resignation as a
member of the Company's Board of Directors. Pursuant to the Separation
Agreement, Mr. Shugart will receive monthly
24
<PAGE>
payments at an annual rate of $750,000 until July 19, 2001. In addition, the
Company's right to repurchase 145,000 shares of unvested restricted Common
Stock of the Company held by Mr. Shugart lapsed and such shares became fully
vested. In addition, until July 19, 2001, the Company will continue to provide
Mr. Shugart medical and group insurance benefits comparable to those provided
to its senior executives. Mr. Shugart has agreed, subject to certain
limitations, to render up to 30 hours of consulting services per fiscal
quarter to the Company until July 19, 2001 (the "Consultancy Period").
Vested options held by Mr. Shugart to purchase 440,000 shares of the
Company's Common Stock at exercise prices ranging from $9.375 to $47.75 will
remain exercisable during the Consultancy Period and for the ninety-day period
thereafter and unvested options to purchase 620,000 shares of the Company's
Common Stock at exercise prices ranging from $11.8125 to $47.75 will continue
to vest during the Consultancy Period. Mr. Shugart exercised vested options to
purchase 270,000 shares of the Company's Common Stock on or prior to October
17, 1998, and no remaining shares subject to vested options that were not
exercised as of that date were canceled. Previously earned deferred bonus
amounts of $1,142.275 will remain available to Mr. Shugart to reduce the
exercise price of options to purchase the Company's Common Stock to the extent
such options vest and are exercised. To date, Mr. Shugart has utilized
$642,025 of such deferred compensation to exercise options for the Company's
Common Stock. In addition, unvested options held by Mr. Shugart to purchase
88,000 shares of Seagate Software Common Stock at exercise prices ranging from
$4.00 to $12.75 became immediately vested on the effective date of the
Separation Agreement and will remain exercisable during the Consultancy Period
and for the ninety-day period thereafter. On June 9, 1999, Mr. Shugart elected
to purchase these shares and exchange the 88,000 shares for shares of Common
Stock of the Company.
Mr. Shugart has also agreed that, until July 19, 2001, he will not (i)
compete with the Company, (ii) solicit employees to leave the Company or
otherwise interfere with the employment relationships existing between the
Company and its employees, (iii) induce any customer, supplier, distributor or
other business relation of the Company to cease doing business with the
Company or interfere with the business relationship between the Company and
any such customer, suppler, distributor or other business relation, or (iv)
until January 19, 2002, disparage, defame or slander the Company or any of its
officers, directors or products. During the period ending January 2002, the
Company has agreed that its directors and current officers will refrain from
disparagement, defamation or slander of Mr. Shugart. Finally, the Company and
Mr. Shugart have released each other from, and agreed not to sue each other
for, any claim, duty, obligation or cause of action relating to any matters of
any kind that either of them may possess against the other arising from any
omissions, acts or facts that occurred prior to the effective date of the
Separation Agreement.
In September 1998, the Company entered into a Separation Agreement and
Release (the "Hegarty Separation Agreement") with Brendan C. Hegarty in
connection with the termination of Mr. Hegarty's employment as the Company's
Executive Vice President, Recording Heads Group. Mr. Hegarty agreed, subject
to certain limitations, to render consulting services to the Company until
February 29, 2000 (the "Hegarty Consultancy Period"). Pursuant to the Hegarty
Separation Agreement, Mr. Hegarty will receive monthly payments at an annual
rate of $500,004 until February 29, 2000. Mr. Hegarty received title to his
Company car and continued use of a Company provided residence until May 31,
1999. In addition, until February 29, 2000, the Company will continue to
provide Mr. Hegarty medical and group insurance benefits comparable to those
provided to its senior executives.
Pursuant to the terms of the Hegarty Separation Agreement, the Company's
right to repurchase 43,350 shares of unvested restricted Common Stock of the
Company held by Mr. Hegarty lapsed and such shares became fully vested.
However, the Company repurchased 109,650 shares of unvested restricted Common
Stock of the Company held by Mr. Hegarty at the original purchase price of the
shares, $548.25. Vested options held by Mr. Hegarty to purchase 168,126 shares
of the Company's Common Stock at exercise prices ranging from $6.375 to $47.75
will remain exercisable during the Hegarty Consultancy Period and for the
ninety-day period thereafter and unvested options to purchase 440,500 shares
of the Company's Common Stock at exercise prices ranging from $11.8125 to
$47.75 will continue to vest during the Hegarty Consultancy Period. Mr.
Hegarty
25
<PAGE>
agreed to exercise and did exercise vested options to purchase 70,626 shares
of the Company's Common Stock on or prior to December 29, 1998, at which time
any vested options with exercise prices on $17.00 per share or less held by
Mr. Hegarty were cancelled. With respect to an option to purchase 95,000
shares of the Company's Common Stock at $24.375 (the "Performance Grant"), Mr.
Hegarty also is entitled to exercise that option with respect to 30% of the
shares subject to the Performance Grant if the market price of the Company's
Common Stock is $36.00 and an additional 30% if the market price of the
Company's Common Stock is $42.00, or higher for 60 consecutive trading days
during the Hegarty Consultancy Period. Mr. Hegarty is not entitled to exercise
the remaining 40% of the shares subject to the Performance Grant. In addition,
unvested restricted Seagate Software Common Stock held by Mr. Hegarty
immediately vested in full on the effective date of the Hegarty Separation
Agreement.
Mr. Hegarty also agreed that until September 30, 2000 he will not (i) enter
into a competing business or hold any ownership interest in, manage, accept
employment with or provide consulting services to any direct competitor of the
Company and/or its affiliated companies or (ii) solicit employees to leave the
Company or otherwise interfere with the employment relationships existing
between the Company and its employees. Mr. Hegarty also agreed that he would
not disparage, defame or slander the Company or any of its officers, directors
or products. Mr. Hegarty is obligated to give the Chief Executive Officer of
the Company written notice upon acceptance of any other employment during the
Hegarty Consultancy Period. Mr. Hegarty agreed to refrain from disparagement,
defamation or slander of the Company, its current or former directors,
officers, agents or employees or its business, operation or products. Finally,
the Company and Mr. Hegarty released each other from, and agreed not to sue
each other for, any claim, duty, obligation or cause of action relating to any
matters of any kind that either of them may possess against the other arising
from any omissions, acts or facts that occurred prior to the effective date of
the Hegarty Separation Agreement.
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 4, 1998 to July 2, 1999, 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: October 4, 1999
26
<PAGE>
Annex A
SEAGATE TECHNOLOGY, INC.
1999 STOCK OPTION PLAN
1. Purposes of the Plan. The purposes of this 1999 Stock Option Plan are:
--------------------
. to atract and retain the best available personnel for positions of
substantial responsibility,
. to provide additional incentive to Employees, Directors and
Consultants, and
. to promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options, as determined by the Administrator at the time of
grant.
2. Definitions. As used herein, the following definitions shall apply:
-----------
(a) "Administrator" means the Board or any of its Committees as shall
-------------
be administering the Plan, in accordance with Section 4 of the Plan.
(b) "Applicable Laws" means the requirements relating to the
---------------
administration of stock option plans under U. S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Options are, or will be, granted under
the Plan.
(c) "Board" means the Board of Directors of the Company.
-----
(d) "Code" means the Internal Revenue Code of 1986, as amended.
----
(e) "Committee" means a committee of Directors appointed by the Board
---------
in accordance with Section 4 of the Plan.
(f) "Common Stock" means the common stock of the Company.
------------
(g) "Company" means Seagate Technology, Inc., a Delaware corporation.
-------
(h) "Consultant" means any person, including anadvisor, engaged by the
----------
Company or a Parent or Subsidiary to render services to such entity.
(i) "Director" means a member of the Board.
--------
(j) "Disability" means total and permanent disability as defined in
----------
Section 22(e)(3) of the Code.
<PAGE>
(k) "Employee" means any person, including Officers and Directors,
--------
employed by the Company or any Parent or Subsidiary of the Company. A Service
Provider shall not cease to be an Employee in the case of (i) any leave of
absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any successor.
For purposes of Incentive Stock Options, no such leave may exceed ninety days,
unless reemployment upon expiration of such leave is guaranteed by statute or
contract. If reemployment upon expiration of a leave of absence approved by the
Company is not so guaranteed, on the 181st day of such leave any Incentive Stock
Option held by the Optionee shall cease to be treated as an Incentive Stock
Option and shall be treated for tax purposes as a Nonstatutory Stock Option.
Neither service as a Director nor payment of a director's fee by the Company
shall be sufficient to constitute "employment" by the Company.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as
------------
amended.
(m) "Fair Market Value" means, as of any date, the value of Common
-----------------
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of determination, as reported in
The Wall Street Journal or such other source as the Administrator deems
reliable;
(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock on the last market trading day prior to the day of
determination, as reported in The Wall Street Journal or such other source as
the Administrator deems reliable; or
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the
Administrator.
(n) "Incentive Stock Option" means an Option intended to qualify as an
----------------------
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(o) "Nonstatutory Stock Option" means an Option not intended to
-------------------------
qualify as an Incentive Stock Option.
(p) "Notice of Grant" means a written or electronic notice evidencing
---------------
certain terms and conditions of an individual Option grant. The Notice of Grant
is part of the Option Agreement.
(q) "Officer" means a person who is an officer of the Company within
-------
the meaning of Section 16 of the Exchange Act and the rules and regulations
promuigated thereunder.
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<PAGE>
(r) "Option" means a stock option granted pursuant to the Plan.
------
(s) "Option Agreement" means an agreement between the Company and an
----------------
Optionee evidencing the terms and conditions of an individual Option grant. The
Option Agreement is subject to the terms and conditions of the Plan.
(t) "Optioned Stock" means the Common Stock subject to an Option.
--------------
(u) "Optionee" means the holder of an outstanding Option granted
--------
under the Plan.
(v) "Parent" means a "parent corporation," whether now or hereafter
------
existing, as defined in Section 424(e) of the Code.
(w) "Plan" means this Seagate Technology, Inc. 1999 Stock Option
----
Plan.
(x) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any
----------
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.
(y) "Retirement" means the Optionee has reached the age of 55 years
----------
and has five (5) years of continuous service with the Company or one of its
subsidiaries and the Optionee elects to terminate his/her relationship as a
Service Provider with the Company.
(z) "Section 16(b)" means Section 16(b) of the Exchange Act.
-------------
(aa) "Service Provider" means an Employee, Director or Consultant.
----------------
(bb) "Share" means a share of the Common Stock, as adjusted in
-----
accordance with Section 12 of the Plan.
(cc) "Subsidiary" means a "subsidiary corporation", whether now or
----------
hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to adjustment as provided in
-------------------------
Section 12 of the Plan, the maximum aggregate number of Shares that may be
issued pursuant to the Plan shall be 10,500,000, plus (i) any Shares issued
under the Plan that are forfeited back to the Company or cancelled, and (ii) any
Shares that are tendered, whether by physical delivery or by attestation, to the
Company by a Service Provider as full or partial payment of the exercise price
of any Option granted pursuant to the Plan, or in payment of any applicable
withholding for federal, state, city, local or foreign income, payroll or other
taxes incurred in connection with the exercise of any Option granted under the
Plan; provided, however, that the total number of Shares with respect to which
Incentive Stock Options may be granted shall not exceed 10,500,000. The Shares
may be authorized and unissued shares or issued shares which have been
reacquired by the Company.
A-3
<PAGE>
4. Administration of the Plan.
--------------------------
(a) Procedure.
---------
(i) Multiple Administrative Bodies. The Plan may be administered
------------------------------
by different Committees with respect to different groups of Service Providers.
(ii) Section 162(m). To the extent that the Administrator
--------------
determines it to be desirable to qualify Options granted hereunder as
"performance-based compensation" within the meaning of Section 162(m) of the
Code, the Plan shall be administered by a Committee of two or more "outside
directors" within the meaning of Section 162(m) of the Code.
(iii) Rule 16b-3. To the extent desirable to qualify transactions
----------
hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder
shall be structured to satisfy the requirements for exemption under Rule 16b-3.
(iv) Other Administration. Other than as provided above, the Plan
--------------------
shall be administered by (A) the Board or (B) a Committee, which committee shall
be constituted to satisfy Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions of the
---------------------------
Plan, and in the case of a Committee, subject to the specific duties delegated
by the Board to such Committee, the Administrator shall have the authority, in
its discretion:
(i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom Options may be
granted hereunder;
(iii) to determine the number of shares of Common Stock to be
covered by each grant hereunder;
(iv) to approve forms of agreement for use under the Plan;
(v) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any Option granted hereunder. Such terms and
conditions include, but are not limited to, the exercise price, the time or
times when Options may be exercised (which may be based on performance
criteria), any vesting acceleration or waiver of forfeiture restrictions, and
any restriction or limitation regarding any Option or the shares of Common Stock
relating thereto, based in each case on such factors as the Administrator, in
its sole discretion, shall determine;
(vi) to determine whether, to what extent and under what
circumstances Common Stock and other amounts payable with respect to an award
under this Plan shall be deferred either automatically or at the election of the
participant (including providing for and determining the amount (if any) of any
deemed earnings on any deferred amount during any deferral period);
A-4
<PAGE>
(vii) to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan;
(viii) to prescribe, amend and rescind rules and regulations
relating to the Plan, including rules and regulations relating to sub-plans
established for the purpose of qualifying for preferred tax treatment under
foreign tax laws;
(ix) to modify or amend each Option (subject to Section 14(c) of
the Plan), including the discretionary authority to extend the post-termination
exercisability period of Options longer than is otherwise provided for in the
Plan;
(x) to allow Optionees to satisfy withholding tax obligations
by electing to have the Company withhold from the Shares to be issued upon
exercise of an Option that number of Shares having a Fair Market Value equal to
(or less than) the amount required to be withheld. The Fair Market Value of the
Shares to be withheld shall be determined on the date that the amount of tax to
be withheld is to be determined. All elections by an Optionee to have Shares
withheld for this purpose shall be made in such form and under such conditions
as the Administrator may deem necessary or advisable;
(xi) to authorize any person to execute on behalf of the Company
any instrument required to effect the grant of an Option previously granted by
the Administrator;
(xii) to make all other determinations deemed necessary or
advisable for administering the Plan.
(c) Effect of Administrator's Decision. The Administrator's
----------------------------------
decisions, determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options.
5. Eligibility. Nonstatutory Stock Options may be granted to Service
-----------
Providers. Incentive Stock Options may be granted only to Employees.
6. Limitations.
-----------
(a) Each Option shall be designated in the Option Agreement as either
an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 6(a), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.
(b) Neither the Plan nor any Option shall confer upon an Optionee any
right with respect to continuing the Optionee's relationship as a Service
Provider with the Company, nor shall they interfere in any way with the
Optionee's right or the Company's right to terminate such relationship at any
time, with or without cause.
A-5
<PAGE>
(c) The following limitations shall apply to grants of Options:
(i) No Service Provider shall be granted, in any fiscal year of
the Company, Options to purchase more than 3,000,000 Shares.
(ii) In connection with his or her initial service, a Service
Provider may be granted Options to purchase up to an additional 3,000,000 Shares
that shall not count against the limit set forth in subsection (i) above.
(iii) The foregoing limitations shall be adjusted proportionately
in connection with any change in the Company's capitalization as described in
Section 12.
7. Term of Plan. Subject to Section 18 of the Plan, the Plan shall become
------------
effective upon its adoption by the Board. It shall continue in effect for a
term of ten (10) years unless terminated earlier under Section 14 of the Plan.
8. Term of Option. The term of each Option shall be stated in the Option
--------------
Agreement. In the case of an Incentive Stock Option, the term shall be ten (10)
years from the date of grant or such shorter term as may be provided in the
Option Agreement.
9. Option Exercise Price and Consideration.
---------------------------------------
(a) Exercise Price. The per share exercise price for the Shares to be
--------------
issued pursuant to exercise of an Option shall be no less than 100% of the Fair
Market Value per Share on the date of grant, as determined by the Administrator.
Notwithstanding the foregoing, Options may be granted with a per Share exercise
price of less than 100% of the Fair Market Value per Share on the date of grant
pursuant to a merger or other corporate transaction.
(b) Waiting Period and Exercise Dates. At the time an Option is
---------------------------------
granted, the Administrator shall fix the period within which the Option may be
exercised and shall determine any conditions that must be satisfied before the
Option may be exercised.
(c) Form of Consideration. The Administrator shall determine the
---------------------
acceptable form of consideration for exercising an Option, including the method
of payment. In the case of an Incentive Stock Option, the Administrator shall
determine the acceptable form of consideration at the time of grant. Such
consideration may consist entirely of:
(i) cash;
(ii) check;
(iii) promissory note;
(iv) other Shares which (A) in the case of Shares acquired upon
exercise of an Option, have been owned by the Optionee for more than six months
on the date of surrender, and (B) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised;
A-6
<PAGE>
(v) consideration received by the Company under a cashless
exercise program implemented by the Company in connection with the Plan;
(vi) a reduction in the amount of any Company liability to the
Optionee, including any liability attributable to the Optionee's participation
in any Company-sponsored deferred compensation program or arrangement;
(vii) any combination of the foregoing methods of payment; or
(viii) such other consideration and method of payment for the
issuance of Shares to the extent permitted by Applicable Laws.
10. Exercise of Option.
------------------
(a) Procedure for Exercise; Rights as a Shareholder. Any Option
-----------------------------------------------
granted hereunder shall be exercisable according to the terms of the Plan and at
such times and under such conditions as determined by the Administrator and set
forth in the Option Agreement. Unless the Administrator provides otherwise,
vesting of Options granted hereunder shall be tolled during any unpaid leave of
absence. An Option may not be exercised for a fraction of a Share.
An Option shall be deemed exercised when the Company receives:
(i) written or electronic notice of exercise (in accordance with the Option
Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan. Shares issued
upon exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the Shares are issued (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company), no right
to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
The Company shall issue (or cause to be issued) such Shares promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the Shares are issued, except as
provided in Section 12 of the Plan.
Exercising an Option in any manner shall decrease the number of
Shares thereafter available, both for purposes of the Plan and for sale under
the Option, by the number of Shares as to which the Option is exercised.
(b) Termination of Relationship as a Service Provider. If an
-------------------------------------------------
Optionee ceases to be a Service Provider, other than upon the Optionee's death
or Disability, the Optionee may exercise his or her Option within such period of
time as is specified in the Option Agreement to the extent that the Option is
vested on the date of termination (but in no event later than the expiration of
the term of such Option as set forth in the Option Agreement). In the absence of
a specified time in the Option Agreement, the Option shall remain exercisable
for three (3) months following the Optionee's termination. If, on the date of
termination, the Optionee is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall revert to the Plan.
If,
A-7
<PAGE>
after termination, the Optionee does not exercise his or her Option within the
time specified by the Administrator, the Option shall terminate, and the Shares
covered by such Option shall revert to the Plan.
(c) Disability of Optionee. If an Optionee ceases to be a Service
----------------------
Provider as a result of the Optionee's Disability, the Optionee may exercise his
or her Option within such period of time as is specified in the Option Agreement
to the extent the Option is vested on the date of termination (but in no event
later than the expiration of the term of such Option as set forth in the Option
Agreement). In the absence of a specified time in the Option Agreement, the
Option shall remain exercisable for twelve (12) months following the Optionee's
termination. If, on the date of termination, the Optionee is not vested as to
his or her entire Option, the Shares covered by the unvested portion of the
Option shall revert to the Plan. If, after termination, the Optionee does not
exercise his or her Option within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.
(d) Death of Optionee. If an Optionee dies while a Service Provider,
-----------------
the Option may be exercised within such period of time as is specified in the
Option Agreement (but in no event later than the expiration of the term of such
Option as set forth in the Notice of Grant), by the Optionee's estate or by a
person who acquires the right to exercise the Option by bequest or inheritance,
but only to the extent that the Option is vested on the date of death. In the
absence of a specified time in the Option Agreement, the Option shall remain
exercisable for twenty-four (24) months following the Optionee's termination.
If, at the time of death, the Optionee is not vested as to his or her entire
Option, the Shares covered by the unvested portion of the Option shall
immediately revert to the Plan. The Option may be exercised by the executor or
administrator of the Optionee's estate or, if none, by the person(s) entitled to
exercise the Option under the Optionee's will or the laws of descent or
distribution. If the Option is not so exercised within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.
(e) Retirement of Optionee: In the event of an Optionee's Retirement,
----------------------
the Optionee may exercise his or her Option at any time within three (3) years
from the date of such Retirement, but only to the extent that the Optionee was
entitled to exercise it at the date of such Retirement (but in no event later
than the expiration of the term of such Option as set forth in the Notice of
Grant).
11. Transferability of Options.
--------------------------
(a) Unless determined otherwise by the Administrator, an Option may
not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any
manner other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee. If the
Administrator makes an Option transferable, such Option shall contain such
additional terms and conditions as the Administrator deems appropriate.
(b) An Optionee may file a written designation of a beneficiary who
is to receive any options that remain unexercised in the event of the Optionee's
death. If a participant is married and the designated beneficiary is not the
spouse, spousal consent shall be required for such designation to be effective.
A-8
<PAGE>
(c) Such designation of beneficiary may be changed by the Optionee at
any time by written notice, subject to the above spousal consent conditions. In
the event of the death of the Optionee and in the absence of a beneficiary
validly designated under the Plan who is living at the time of such Optionee's,
the Company shall deliver such options to the executor or administrator of the
estate of the Optionee, or if no such executor or administrator has been
appointed (to the knowledge of the Company), the Company, in its discretion, may
deliver such options to the spouse or to any one or more dependents or relatives
of the participant, or if no spouse, dependent or relative is known to the
Company, then to such other person as the Company may designate.
12. Adjustments Upon Changes in Capitalization, Dissolution, Merger or
------------------------------------------------------------------
Asset Sale.
- ----------
(a) Changes in Capitalization. Subject to any required action by the
-------------------------
shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option, and the number of shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per share of Common Stock covered
by each such outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option.
(b) Dissolution or Liquidation. In the event of the proposed
--------------------------
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for an Optionee to
have the right to exercise his or her Option until ten (10) days prior to such
transaction as to all of the Optioned Stock covered thereby, including Shares as
to which the Option would not otherwise be exercisable.
(c) Merger or Asset Sale. Subject to the provisions of paragraph (d)
--------------------
hereof, in the event of a merger of the Company with or into another
corporation, or the sale of substantially all of the assets of the Company, each
outstanding Option shall be assumed or an equivalent option substituted by the
successor corporation or a Parent or Subsidiary of the successor corporation. In
the event that the successor corporation refuses to assume or substitute for the
Option, the Optionee shall fully vest in and have the right to exercise the
Option as to all of the Optioned Stock, including Shares as to which it would
not otherwise be vested or exercisable. If an Option becomes fully vested and
exercisable in lieu of assumption or substitution in the event of a merger or
sale of assets, the Administrator shall notify the Optionee in writing or
electronically that the Option shall be fully vested and exercisable for a
period of fifteen (15) days from the date of such notice, and the Option shall
terminate upon the expiration of such period. For the purposes of this
paragraph, the Option shall be considered assumed if, following the merger or
sale of assets, the option confers the right to
A-9
<PAGE>
purchase or receive, for each Share of Optioned Stock subject to the Option
immediately prior to the merger or sale of assets, the consideration (whether
stock, cash, or other securities or property) received in the merger or sale of
assets by holders of Common Stock for each Share held on the effective date of
the transaction (and if holders were offered a choice of consideration, the type
of consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the merger or sale of
assets is not solely common stock of the successor corporation or its Parent,
the Administrator may, with the consent of the successor corporation, provide
for the consideration to be received upon the exercise of the Option , for each
Share of Optioned Stock subject to the Option , to be solely common stock of the
successor corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the merger or sale of
assets.
(d) Change in Control. In the event of a "Change in Control" of the
-----------------
Company, as defined in paragraph (e) below, then the following acceleration and
valuation provisions shall apply:
(i) Except as otherwise determined by the Board, in its
discretion, prior to the occurrence of a Change in Control, any Options
outstanding on the date such Change in Control is determined to have occurred
that are not yet exercisable and vested on such date shall become fully
exercisable and vested;
(ii) Except as otherwise determined by the Board, in its
discretion, prior to the occurrence of a Change in Control, all outstanding
Options, to the extent they are exercisable and vested (including Options that
shall become exercisable and vested pursuant to subparagraph (i) above), shall
be terminated in exchange for a cash payment equal to the Change in Control
Price (reduced by the exercise price applicable to such Options). These cash
proceeds shall be paid to the Optionee or, in the event of death of an Optionee
prior to payment, to the estate of the Optionee or to a person who acquired the
right to exercise the Option by bequest or inheritance.
(e) Definition of "Change in Control." For purposes of this Section
----------------------------------
12, a "Change in Control" means the happening of any of the following:
(i) When any "person," as such term is used in Sections 13(d)
and 14(d) of the Exchange Act (other than the Company, a Subsidiary or a Company
employee benefit plan, including any trustee of such plan acting as trustee) is
or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing fifty
percent (50%) or more of the combined voting power of the Company's then
outstanding securities entitled to vote generally in the election of directors;
or
(ii) The shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation that would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, of the shareholders
of the Company approve an agreement for the sale or disposition by the Company
of all or substantially all the Company's assets; or
A-10
<PAGE>
(iii) A change in the composition of the Board of Directors of
the Company, as a result of which fewer than a majority of the directors who
either (A) are directors of the Company as of the date the Plan is approved by
the shareholders, or (B) are elected, or nominated for election, to the Board of
Directors of the Company with the affirmative votes of at least a majority of
the Incumbent Directors at the time of such election or nomination (but shall
not include an individual whose election or nomination is in connection with an
actual or threatened proxy contest relating to the election of directors to the
Company).
(f) Change in Control Price. For purposes of this Section 12, "Change
-----------------------
in Control Price" shall be, as determined by the Board, (i) the highest Fair
Market Value of a Share within the 60-day period immediately preceding the date
of determination of the Change in Control Price by the Board (the "60-Day
Period"), or (ii) the highest price paid or offered per Share, as determined by
the Board, in any bona fide transaction or bona fide offer related to the Change
in Control of the Company, at any time within the 60-Day Period, or (iii) some
lower price as the Board, in its discretion, determines to be a reasonable
estimate of the fair market value of a Share.
13. Date of Grant. The date of grant of an Option shall be, for all
-------------
purposes, the date on which the Administrator makes the determination granting
such Option , or such other later date as is determined by the Administrator.
Notice of the determination shall be provided to each Optionee within a
reasonable time after the date of such grant.
14. Amendment and Termination of the Plan.
-------------------------------------
(a) Amendment and Termination. The Board may at any time amend,
-------------------------
alter, suspend or terminate the Plan.
(b) Shareholder Approval. The Company shall obtain shareholder
--------------------
approval of any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws.
(c) Effect of Amendment or Termination. No amendment, alteration,
----------------------------------
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
Termination of the Plan shall not affect the Administrator's ability to exercise
the powers granted to it hereunder with respect to Options granted under the
Plan prior to the date of such termination.
15. Conditions Upon Issuance of Shares.
----------------------------------
(a) Legal Compliance. Shares shall not be issued pursuant to the
----------------
exercise of an Option unless the exercise of such Option and the issuance and
delivery of such Shares shall comply with Applicable Laws and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.
(b) Investment Representations. As a condition to the exercise of an
--------------------------
Option , the Company may require the person exercising such Option to represent
and warrant at the time of any such exercise that the Shares are being purchased
only for investment and without any present
A-11
<PAGE>
intention to sell or distribute such Shares if, in the opinion of counsel for
the Company, such a representation is required.
16. Inability to Obtain Authority. The inability of the Company to obtain
-----------------------------
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.
17. Reservation of Shares. The Company, during the term of this Plan,
---------------------
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
18. Shareholder Approval. The Plan shall be subject to approval by the
--------------------
shareholders of the Company within twelve (12) months after the date the Plan is
adopted. Such shareholder approval shall be obtained in the manner and to the
degree required under Applicable Laws.
A-12
<PAGE>
This Proxy is solicited on behalf of the Board of Directors
SEAGATE TECHNOLOGY, INC.
1999 ANNUAL MEETING OF STOCKHOLDERS
November 2, 1999
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 October 4, 1999, and hereby
appoints Stephen J. Luczo, 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
1999 Annual Meeting of Stockholders of SEAGATE TECHNOLOGY, INC. to be held on
November 2, 1999, at 10:00 a.m., local time, at the IMAX Theatre, San Jose Tech
Museum of Innovation, 210 South Market Street, San Jose, California 95113 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 on the reverse.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR THE ELECTION OF DIRECTORS, FOR THE ADOPTION OF THE
1999 STOCK OPTION PLAN, FOR THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG
LLP AS INDEPENDENT AUDITORS, AGAINST THE ADOPTION AND IMPLEMENTATION OF THE
STOCKHOLDER PROPOSAL REGARDING EMPLOYMENT PRACTICES AND POLICIES IN NORTHERN
IRELAND AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY
COME BEFORE THE MEETING.
(Continued and to be signed on the other side.)
- -------------------------------------------------------------------------------
<PAGE>
SEAGATE TECHNOLOGIES, 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:
Nominees: 01- Gary B. Filler; 02- Kenneth E. Haughton;
03- Robert A. Kleist; 04- Stephen J. Luczo; 05- Lawrence Perlman;
06- Thomas P. Stafford; 07- Laurel L. Wilkening.
For All
[ ] FOR [ ] Withheld [ ] Except
2. TO APPROVE THE ADOPTION OF THE 1999 STOCK OPTION PLAN AND THE
RESERVATION OF 10,500,000 SHARES OF COMMON STOCK FOR ISSUANCE
THEREUNDER.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS THE INDEPENDENT
AUDITORS OF THE COMPANY FOR FISCAL 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. TO CONSIDER AND ACT UPON A STOCKHOLDER PROPOSAL REGARDING EMPLOYMENT
PRACTICES AND POLICIES IN NORTHERN IRELAND.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
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 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.)
Dated: _________________, 1999
_______________________________
Signature
_______________________________
Signature
- --------------------------------------------------------------------------------
CONTROL NUMBER
NOW YOU CAN VOTE YOUR SHARES BY TELEPHONE OR INTERNET!
QUICK * EASY * IMMEDIATE * AVAILABLE 24 HOURS A DAY * 7 DAYS A WEEK
SEAGATE TECHNOLOGY, INC. encourages you to take advantage of the new and
convenient ways to vote your shares. This year you may vote by mail, or choose
one of the two methods described below. Your telephone or Internet vote
authorizes the named proxies to vote your shares in the same manner as if you
marked, signed, and returned your proxy card. To vote by telephone or Internet,
read the accompanying proxy statement and ballot and then follow these easy
steps;
-----------------------------------------------------------
TO VOTE BY PHONE Call toll free 1-888-426-7035 any time on a touchtone
telephone. There is NO CHARGE to you for the call.
Enter the 6-digit Control Number located above.
Option #1: To vote as the Board of Directors recommends on
ALL proposals; Press 1
When asked, please confirm your vote pressing 1
Option #2: If you choose to vote on each proposal
separately, press 0 and follow the simple
recorded instructions.
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TO VOTE BY INTERNET Go to the website www.harrisbank.com/wproxy
Enter the 6-digit Control Number located above.
Follow the simple instructions on the screen.
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If you vote by telephone or the Internet DO NOT mail back the proxy card.
THANK YOU FOR VOTING!
