<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment no. )
Filed by the Registrant [X]
Filed by a party other than the Registrant [_]
[_] Confidential, for Use of the
Check the appropriate box: Commission Only (as permitted by
Rule 14a-6(e)(2))
[_] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Quantum Corporation
(Name of Registrant as Specified In Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions 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.:
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(3) Filing party:
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(4) Date filed:
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<PAGE>
[QUANTUM LOGO APPEARS HERE]
QUANTUM CORPORATION
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
July 23, 1999
----------------
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Quantum
Corporation (the "Company" or "Quantum"), a Delaware corporation, will be held
on Friday, July 23, 1999 at 11:00 a.m., local time, at Quantum Corporation's
corporate headquarters, 500 McCarthy Boulevard, Milpitas, California 95035,
for the following purposes:
1. To elect six directors to serve until the next Annual Meeting of
Stockholders or until their successors are elected and qualified;
2. To ratify the appointment of Ernst & Young LLP as independent auditors
of the Company for the fiscal year ending March 31, 2000; and
3. 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 June 4, 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 ensure your representation at the meeting, you are urged to vote,
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 previously returned a Proxy.
Sincerely,
/s/ Richard L. Clemmer
Richard L. Clemmer
Executive Vice President, Finance
and Chief Financial Officer
Milpitas, California
June 23, 1999
<PAGE>
QUANTUM CORPORATION
----------------
PROXY STATEMENT
----------------
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed Proxy is solicited on behalf of Quantum Corporation (the
"Company" or "Quantum") for use at the Annual Meeting of Stockholders to be
held Friday, July 23, 1999 at 11:00 a.m., or at any adjournment thereof (the
"Annual Meeting" or "Meeting"), for the purposes set forth herein and in the
accompanying Notice of Annual Meeting of Stockholders. The Annual Meeting will
be held at the Company's headquarters located at 500 McCarthy Boulevard,
Milpitas, California 95035. The Company's telephone number is (408) 894-4000.
These proxy solicitation materials were mailed on or about June 23, 1999 to
all stockholders entitled to vote at the Meeting.
Record Date; Outstanding Shares
Stockholders of record at the close of business on June 4, 1999 (the "Record
Date") are entitled to notice of and to vote at the Meeting. At the Record
Date, 167,739,218 shares of the Company's Common Stock, $0.01 par value, were
issued and outstanding. The closing price of the Company's Common Stock on the
Record Date, as reported by the Nasdaq National Market, was $19.00 per share.
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 or its
transfer agent 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
On all matters other than the election of directors, each share has one
vote. See "ELECTION OF DIRECTORS--REQUIRED VOTE."
The cost of soliciting proxies will be borne by the Company. The Company has
retained the services of Corporate Investor Communications, Inc. (the
"Solicitor") to aid in the solicitation of proxies. The Company estimates that
it will pay the Solicitor a fee not to exceed $7,000 for its services and will
reimburse the Solicitor for reasonable out-of-pocket expenses. In addition,
the Company may reimburse brokerage firms and other persons representing
beneficial owners of shares for their expenses in forwarding solicitation
material to such beneficial owners. Proxies may also be solicited by certain
of the Company's directors, officers and regular employees, without additional
compensation, personally or by telephone, telegram, telefax, email or
otherwise.
Deadline for Receipt of Stockholder Proposals
Proposals of stockholders of the Company which are intended to be presented
by such stockholders at the Company's 1999 Annual Meeting must be received by
the Company no later than February 18, 2000 in order that they may be
considered for possible inclusion in the proxy statement and form of proxy
relating to that meeting.
<PAGE>
Quorum; Abstentions; Broker Non-Votes
The required quorum for the transaction of business at the Annual Meeting is
a majority of the votes eligible to be cast by holders of shares of Common
Stock issued and outstanding on the Record Date. Shares that are voted "FOR",
"AGAINST" or "ABSTAIN" on a matter are treated as being present at the meeting
for purposes of establishing a quorum and are also treated as shares entitled
to vote (the "Votes Cast") at the Annual Meeting with respect to such matter.
While there is no definitive statutory or case law authority in Delaware as
to the proper treatment of abstentions, the Company believes that abstentions
should 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 a matter (other than the election of directors). In the
absence of controlling precedent to the contrary, the Company intends to treat
abstentions in this manner. Accordingly, with the exception of the proposal
for the election of directors, abstentions will have the same effect as a vote
against the proposal. Because directors are elected by a plurality vote,
abstentions in the election of directors have no impact once a quorum exists.
In a 1988 Delaware case, Berlin v. Emerald Partners, the Delaware Supreme
Court held that, while broker non-votes may be counted for purposes of
determining the presence or absence of a quorum for the transaction of
business, broker non-votes should not be counted for purposes of determining
the number of Votes Cast with respect to the particular proposal on which the
broker has expressly not voted. Broker non-votes with respect to proposals set
forth in this Proxy Statement will therefore be counted only for purposes of
determining the presence or absence of a quorum and will not be considered
Votes Cast. Accordingly, broker non-votes will not affect the determination as
to whether the requisite majority of Votes Cast has been obtained with respect
to a particular matter.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's executive officers,
directors and persons who own more than 10% 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 (the "SEC"). Such
executive officers, directors and ten-percent stockholders are also required
by SEC rules to furnish the Company with copies of all forms that they file
pursuant to Section 16(a). Based solely on its review of the copies of such
reports received by the Company, or on written representations from certain
reporting persons that no other reports were required for such persons, the
Company believes that, during the fiscal year ended March 31, 1998, all
Section 16(a) filing requirements applicable to its executive officers,
directors and ten-percent stockholders were complied with except for one late
Form 4 filing made by Richard L. Clemmer for transactions occuring in August
1998.
2
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
Nominees
A board of six (6) directors is to be elected at the Annual Meeting. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
for management's nominees named below. Each nominee has consented to be named
a nominee in the proxy statement and to continue to serve as a director if
elected. In the event that any management nominee becomes unable or declines
to serve as a director, 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 be nominated at the time of the Annual Meeting, the
proxy holders intend to vote all proxies received by them in such a manner (in
accordance with cumulative voting) as will ensure the election of as many of
the nominees listed below as possible (or, if new nominees have been
designated by the Board of Directors, in such a manner as to elect such
nominees). In such event, the specific nominees for whom such votes will be
cumulated will be determined by the proxy holders. The Company is not aware of
any reason that any nominee will be unable or will decline to serve as a
director. The term of office of each person elected as a director will
continue until the next Annual Meeting of Stockholders or until a successor
has been elected and qualified. There are no arrangements or understandings
between any director or executive officer and any other person pursuant to
which he is or was to be selected as a director or officer of the Company.
The Board of Directors' key roles include, but are not limited to, selection
and evaluation of the Chief Executive Officer and other members of senior
management, advising the Chief Executive Officer and the management team on
strategic goals and directions for the Company, approval of material
acquisitions or strategic partnerships that support the Company's goals and
providing general guidance and counsel to senior management. The criteria used
by the Company in nominating directors include: a nominee's knowledge and
familiarity with high technology companies, a nominee's prior board experience
and a nominee's personal characteristics, including objectivity, integrity and
independence of judgment. The Company believes its current board members meet
each of these criteria.
The names of the nominees, all of whom are currently directors of the
Company, and certain information about them as of June 4, 1999, are set forth
below.
<TABLE>
<CAPTION>
Director
Name of Nominee Age Since Principal Occupation Since
--------------- --- -------- --------------------------
<C> <C> <C> <S>
Stephen M. Berkley....... 55 1987 President of SMB Associates, 1992
David A. Brown+.......... 54 1988 Retired management consultant to
various high technology companies
Michael A. Brown......... 40 1995 President and Chief Executive Officer
of Quantum, 1995; Chairman of the
Board of Quantum, 1998
Robert J. Casale*+....... 60 1993 Retired Group President, Brokerage
Information Services Group of
Automatic Data Processing, Inc.,
1988
Edward M. Esber, Jr.*+... 47 1988 Chairman of the Board of Solopoint,
Inc., 1998
Steven C. Wheelwright*+.. 54 1989 Professor of Management and Senior
Associate Dean at the Graduate
School of Business Administration,
Harvard University, 1989
</TABLE>
- --------
* Member of Audit Committee.
+ Member of Compensation Committee. Mr. David Brown was elected to the
Compensation Committee effective April 1, 1999.
3
<PAGE>
Except as set forth below, each of the nominees has been engaged in his
principal occupation described above during the past five years. There is no
family relationship between any director or executive officer of the Company.
Mr. Stephen M. Berkley joined the Company in October 1981 as Vice President,
Marketing. In October 1983, he became the founding President and Chief
Executive Officer of Plus Development Corporation, previously a wholly-owned
subsidiary of the Company ("Plus"), where he continued to serve as such until
July 1988. From May 1987 to March 1992, he served as Chairman of the Board and
Chief Executive Officer of Quantum. From April 1992 to July 1993, Mr. Berkley
served as Chairman of the Board and Chief Executive Officer of both Quantum
and Plus. From April 1992 to August 1993 and again from August 1995 to May
1998, Mr. Berkley served as Chairman of the Board of Quantum. Mr. Berkley
served as Chairman of the Board and Chief Executive Officer of Coactive
Computer Corporation, a computer networking company ("Coactive"), from
February 1993 to June 1993 and from June 1993 to July 1994 he served solely as
Chairman of the Board of Coactive. Mr. Berkley has served as a consultant to
various high technology firms since May 1992. Mr. Berkley is also a member of
the Board of Directors of Edify Corporation.
Mr. David A. Brown, a founder of the Company, has been with the Company
since its inception in February 1980. Initially, Mr. Brown served as Vice
President of Engineering of the Company. In 1983, he co-founded Plus and
became its Executive Vice President of Operations. He returned to Quantum in
September 1986 to lead the engineering organization and direct Quantum's
effort in the 3 1/2-inch disk drive market. From May 1987 to April 1990, Mr.
Brown served as President of the Company and from April 1990 to February 1992,
he served as its Vice Chairman of the Board of Directors and Chief Operating
Officer. Mr. Brown served as Chief Executive Officer of Visioneer
Communications, a communications company, from June 1993 to December 1993.
Mr. Brown has also been a management consultant and board member for various
high technology companies since February 1992.
Mr. Michael A. Brown was named President and Chief Executive Officer of
Quantum Corporation in September 1995 and has served as Chairman of the Board
of Quantum since May 1998. From August 1993 to September 1995, Mr. Brown was
President of the Company's Desktop and Portable Storage Group. Mr. Brown
served as Executive Vice President of the Company from February 1992 to August
1993 and as Vice President of Marketing from June 1990 to February 1992. From
February 1986 to June 1990, Mr. Brown held various marketing positions in the
Company.
Mr. Robert J. Casale served as Group President of the Brokerage Information
Services Group of Automatic Data Processing, Inc., an information services
company, from February 1988 to October 1997. Mr. Casale also served as a
Director of Automatic Data Processing, Inc. From 1986 to February 1988, he was
a Managing Director with Kidder Peabody and Company, Inc. He is a former
member of the Board of Directors of Compression Laboratories and Tricord
Systems and is a current member of the Board of Directors of The BISYS Group,
Inc. and Provident Life Insurance, Inc.
Mr. Edward M. Esber, Jr. has served as Chairman of the Board of Solopoint,
Inc., a personal communications management products company ("Solopoint"),
since March 1998. From October 1993 to March 1998, he served as a director of
Solopoint and also served as President and Chief Executive Officer of
Solopoint from October 1995 to March 1998. He served as Chairman, President
and Chief Executive Officer of Creative Insights, Inc., a computer toys
company, from March 1994 to June 1995. From May 1993 to May 1994, he was
President and Chief Operating Officer of Creative Labs, Inc., a multimedia
company. From February 1991 to May 1993, he was President of the Esber Group,
a consulting firm. Mr. Esber is also a member of the Board of Directors of
Borealis Corporation, Integrated Circuit Systems, Inc. and Socket
Communications Inc.
Mr. Steven C. Wheelwright has served as a Professor of Management and Senior
Associate Dean at the Graduate School of Business Administration, Harvard
University since August 1988 and has served as a director of Quantum since
March 1989. Mr. Wheelwright also served in the same position at Harvard from
August 1985 to August 1986. From August 1986 to August 1988, Mr. Wheelwright
served as a professor at Stanford
4
<PAGE>
University. Mr. Wheelwright is also a member of the Board of Directors of T.J.
International Corporation, Franklin-Covey Co. and Heartport, Inc.
Board Meetings and Committees
The Board of Directors of the Company held a total of six (6) meetings
during the fiscal year ended March 31, 1999. During the fiscal year ended
March 31, 1999, no director attended fewer than 75% of the meetings of the
Board of Directors or the meetings of committees, if any, upon which such
director served.
The Audit Committee of the Board of Directors, which was formed in March
1983, currently consists of Mr. Esber, Chairman of the Committee, Mr.
Wheelwright and Mr. Casale. The Audit Committee, which generally meets prior
to quarterly earnings releases, recommends engagement of the Company's
independent auditors and is primarily responsible for approving the services
performed by the Company's independent auditors and for reviewing and
evaluating the Company's accounting principles and its systems of internal
accounting controls. The Audit Committee held a total of four (4) meetings
during the fiscal year ended March 31, 1999.
The Compensation Committee, which was formed in November 1988, is currently
composed of Mr. Wheelwright, Chairman of the Committee, Mr. Brown, Mr. Esber
and Mr. Casale. The Compensation Committee, which generally meets in
conjunction with Board meetings and as deemed necessary by the Board of
Directors, reviews and approves the Company's executive compensation policy
and makes recommendations concerning the Company's employee benefit policies.
The Compensation Committee held a total of five (5) meetings during the fiscal
year ended March 31, 1999.
The Board of Directors does not have a nominating committee nor any
committee performing such function.
Director Compensation
During the year ended March 31, 1999, each director who was not an employee
("Outside Director") received an annual retainer of $34,000 per year. Certain
directors were paid an additional $4,000 per year for chairing the Audit
Committee of the Board and $10,000 per year for chairing the Compensation
Committee of the Board. In addition, each Outside Director was paid $1,250 per
day for any Board meeting attended. Outside Directors serving on Board
committees receive $1,000 per committee meeting for meetings held on days when
there was no regularly scheduled Board meeting. Outside Directors may also
receive consulting fees for projects completed at the request of management.
Employee directors are not compensated for their service on the Board of
Directors or on committees of the Board.
Options may be granted to Outside Directors under the Company's 1996 Board
of Directors Stock Option Plan ("Director Plan"), which was approved by the
Company's stockholders at the 1996 Annual Meeting of Stockholders. The Board,
in its discretion, selects Outside Directors to whom options may be granted,
the time or times at which such options may be granted, the number of shares
subject to each grant and the period over which such options become
exercisable. All options granted to Outside Directors under the Director Plan
contain the following provisions: the exercise price per share of Common Stock
is 100% of the fair market value of the Company's Common Stock on the date the
option is granted; the term of the option may be no more than ten years from
the date of grant; and the option may be exercised only while the Outside
Director remains a director or within 90 days after the date he or she ceases
to be a director of the Company; upon a proposed liquidation or dissolution of
the Company, the options will terminate immediately prior to such action; and
in the event of a merger or sale of substantially all of the Company's assets,
each option may be assumed or an equivalent option substituted by the
successor corporation. The Board may at any time amend, alter, suspend or
discontinue the Director Plan, subject to stockholder approval in certain
circumstances.
5
<PAGE>
During fiscal 1999, the Company's Outside Directors, Mr. Berkley, Mr. David
Brown, Mr. Casale, Mr. Esber and Mr. Wheelwright each received an option to
purchase 12,500 shares of Common Stock at an exercise price of $14.9375 per
share.
Compensation Committee Interlocks and Insider Participation
The members of the Company's Compensation Committee are Steven C.
Wheelwright, Chairman of the Committee, David A. Brown, Edward M. Esber, Jr.
and Robert J. Casale. None of the members of the Compensation Committee of the
Board of Directors is currently or has been, at any time since the formation
of the Company, an officer or employee of the Company except for Mr. Brown who
is a former employee of the Company. Mr. David Brown is a non-voting member of
the Compensation Committee with respect to matters involving Chief Executive
Officer compensation. During fiscal year 1999, no executive officer of the
Company (i) served as a member of the compensation committee (or other board
committee performing similar functions or, in the absence of any such
committee, the board of directors) of another entity, one of whose executive
officers served on the Company's Compensation Committee, (ii) served as a
director of another entity, one of whose executive officers served on the
Company's Compensation Committee, or (iii) served as a member of the
compensation committee (or other board committee performing similar functions
or, in the absence of any such committee, the board of directors) of another
entity, one of whose executive officers served as a director of the Company.
Required Vote
Each stockholder voting for the election of directors 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 votes to which
the stockholder's shares are entitled. Alternatively, a stockholder may
distribute the stockholder's votes on the same principle among as many
candidates as the stockholder thinks fit, provided that votes cannot be cast
for more than six candidates. However, no stockholder shall be entitled to
cumulate votes for a candidate unless such candidate's name has been properly
placed in nomination according to the Company's Bylaws and notice of the
intention to cumulate votes is given to the Company and other stockholders at
least twenty (20), and no more than sixty (60), days prior to the Annual
Meeting. The proxy holders may exercise discretionary authority to cumulate
votes and to allocate such votes among management's nominees in the event that
additional persons are nominated at the Annual Meeting for election of
directors.
If a quorum is present and voting, the six nominees for director receiving
the highest number of votes will be elected to the Board of Directors. Votes
withheld from any director are counted for purposes of determining the
presence or absence of a quorum, but have no other legal effect under Delaware
law. See "INFORMATION CONCERNING SOLICITATION AND VOTING--Quorum; Abstentions;
Broker Non-Votes."
MANAGEMENT RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES LISTED ABOVE.
6
<PAGE>
PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors of the Company has selected Ernst & Young LLP as the
Company's independent auditors to audit the financial statements of the
Company for the fiscal year ending March 31, 2000. The Board of Directors
recommends that stockholders vote for ratification of such appointment. In the
event of a negative vote or ratification, the Board of Directors will
reconsider its selection. A representative of Ernst & Young LLP is expected to
be available at the Annual Meeting with the opportunity to make a statement if
such representative desires to do so, and is expected to be available to
respond to appropriate questions.
MANAGEMENT RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE APPOINTMENT OF
ERNST & YOUNG LLP AS THE INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING MARCH
31, 2000.
7
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation
The following table shows, as to any person serving as Chief Executive
Officer during fiscal 1999 and each of the four other most highly compensated
executive officers whose salary plus bonus exceeded $100,000 (the "Named
Executive Officers"), information concerning compensation paid for services to
the Company in all capacities during the fiscal year ended March 31, 1999, as
well as the total compensation paid to each such individual for the Company's
previous two fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation(1)
-------------------------------------- ----------------------------------
Restricted Securities
Other Annual Stock Underlying All Other
Compensation Awards Options/ Compensation
Year Salary ($) Bonus ($) ($)(2) ($)(3) SARs (#) ($)(4)
---- ---------- --------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Michael A. Brown(5)........ 1999 791,770 275,000 0 0 280,000 4,991
President, Chief Executive
Officer 1998 721,828 248,765 0 0 200,000 3,636
and Chairman of the Board 1997 644,540 633,813 0 0 200,000 2,466
Richard L. Clemmer(6)...... 1999 484,111 120,000 177,583(7) 0 84,000 5,005
Executive Vice President,
Finance, 1998 465,083 112,799 0 0 40,000 4,782
Chief Financial Officer, 1997 245,773 202,931 0 0 315,000 1,558
and Secretary
W. Curt Francis(8)......... 1999 243,462 50,000 0 0 58,000 4,831
Vice President, Corporate 1998
Development 1997
John B. Gannon(9).......... 1999 340,648 85,000 119,074(10) 1,062,000 124,000 4,523
President, Hard Disk Drive
Group 1998
1997
Peter van Cuylenburg(11)... 1999 467,733 160,000 0 0 180,000 0
President, DLT & Storage
Systems 1998 422,404 150,000 0 0 80,000 0
Group 1997 192,310 156,878 0 263,138 200,000 0
</TABLE>
- --------
(1) The Company has not granted any stock appreciation rights and does not
have any Long-Term Incentive Plans as that term is defined in regulations
promulgated by the SEC.
(2) Other annual compensation in the form of perquisite and other personal
benefits, securities or property has been omitted in those cases where the
aggregate amount of such compensation is the lesser of either $50,000 or
10% of the total annual salary and bonus reported for such executive
officer.
(3) Mr. Gannon's restricted stock grant in fiscal 1999 consisted of 50,000
shares which vest as follows: 27,500 shares vested on May 1, 1999, 10,000
shares vest on May 1, 2000 and 12,500 shares vest on May 1, 2000. Mr. van
Cuylenburg's restricted stock grant in fiscal 1997 consisted of 30,000
shares which vest as follows: 6,000 shares vested on October 1, 1997,
9,000 shares vested on October 1, 1998 and 15,000 shares vest on October
1, 1999. As of March 31, 1999, 15,000 shares of Mr. van Cuylenburg's grant
had vested. The aggregate value on March 31, 1999, determined in
accordance with the rules of the SEC, of the vested and unvested shares of
restricted stock held by Mr. Gannon and Mr. van Cuylenburg were $899,500
and $539,700, respectively. The aggregate value is based on $18.00 per
share, the fair market value of the Company's Common Stock as of March 31,
1999. Shares of restricted stock are entitled to receive dividends payable
on Quantum Common Stock when, as and if declared by the Board of Directors
of the Company. Cash dividends have not been paid on Quantum Common Stock.
(4) Represents amounts contributed by the Company to the defined benefit
contribution plan approved under Internal Revenue Code Section 401(k) and
maintained by the Company for each executive officer, except as expressly
indicated otherwise.
8
<PAGE>
(5) Mr. Brown was elected Chairman of the Board on May 28, 1998.
(6) Mr. Clemmer joined the Company on August 29, 1996.
(7) Represents reimbursement of expenses associated with relocation to
Milpitas, California of $43,833 and loan forgiveness of $133,750.
(8) Mr. Francis joined the Company on May 22, 1998.
(9) Mr. Gannon joined the Company on May 15, 1999.
(10) Represents reimbursement of expenses associated with relocation to
Milpitas, California.
(11) Mr. van Cuylenburg joined the Company on September 23, 1996.
Stock Option Grants and Exercises
The following table shows, as to each Named Executive Officer, information
concerning stock options granted during the fiscal year ended March 31, 1999.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
------------------------------------------------
Potential Realizable
Number Value at Assume
of Securities Percent of Annual Rate of Stock
Underlying Total Options Price Appreciation
Option Granted to Exercise for Option Terms(2)
Granted Employees in Price Expiration ---------------------
Name (#)(1) Fiscal Year ($/share) Date 5% ($) 10% ($)
---- ------------- ------------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Michael A. Brown....... 200,000(3) 2.27% 23.4375 5/01/08 2,947,944 7,470,668
President, Chief
Executive Officer 80,000(4) 0.91% 20.25 2/19/09 1,018,809 2,581,862
and Chairman of the
Board
Richard L. Clemmer..... 60,000(3) 0.68% 23.4375 5/01/08 884,383 2,241,200
Executive Vice
President, Finance 24,000(4) 0.27% 20.25 2/19/09 305,642 774,558
and Chief Financial
Officer
W. Curt Francis........ 50,000(5) 0.57% 21.25 5/22/08 668,200 1,693,351
Vice President
Corporate, 8,000(4) 0.09% 20.25 2/19/09 101,881 258,186
Development
John B. Gannon......... 100,000(6) 1.14% 21.25 5/22/08 1,336,401 3,386,703
President, Hard Disk
Drive Group 24,000(4) 0.27% 20.25 2/19/09 305,643 774,559
Peter van Cuylenburg... 75,000(3) 0.85% 23.4375 5/01/08 1,105,488 2,801,500
President, DLT &
Storage Systems 30,000(4) 0.34% 20.25 2/19/09 382,053 968,199
Group 75,000(7) 0.85% 23.4375 5/01/08 1,105,488 2,801,500
</TABLE>
- --------
(1) The exercise price of each option is determined by the Compensation
Committee of the Board of Directors and in 1999 was not less than 100% of
the fair market value of the Common Stock on the date of grant. The
options expire not more than ten years from the date of grant, and may be
exercised only while the optionee provides services to the Company or
within such period of time following termination of services as is
determined by the Compensation Committee.
(2) Potential realizable value is based on an assumption that the stock price
of the Common Stock appreciates at the annual rate shown (compounded
annually) from the date of grant until the end of the ten-year option
term. These numbers are calculated based on the regulations promulgated by
the SEC based on an arbitrarily assumed annualized compound rate of
appreciation of the market price of 5% and 10%, less the exercise price,
from the date the option was granted to the end of the option term. Actual
gains, if any, on option exercises are dependent on the future performance
of the Company's Common Stock.
(3) These options granted to Messrs. Brown, Clemmer, and van Cuylenburg vest
as follows: 1/48 of the shares subject to the option vest each month
beginning on April 1, 1998.
(4) The options vest as follows: 1/48 of the shares subject to the option vest
each month beginning on April 1, 1999.
(5) The options granted Messr. Francis vest as follows: 1/4 of the shares
subject to the option vest on June 1, 1999 and 1/36 of the remaining
shares subject to the option vest each month beginning on July 1, 1999.
(6) The options granted to Messr. Gannon vest as follows: 1/2 of the shares
subject to the option vest on May 1, 2001 and 1/2 of the shares subject to
the option vest on May 1, 2002.
9
<PAGE>
(7) This option granted to Mr. Van Cuylenburg vests as follows: 1/2 of the
shares subject to the option vest January 1, 2003 and 1/2 of the shares
subject to the option vest on January 1, 2004, subject to vesting
acceleration upon achievement of certain milestones.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of
Securities Underlying Value of Unexercised
Unexercised Options In-the-Money
Shares Held at Fiscal Year-End Options Held at Fiscal
Acquired on Value (#) Year-End ($)(2)
Exercise Realized ------------------------- -------------------------
Name (#) ($)(1) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Michael A. Brown........ -- -- 924,348 482,504 6,285,666 1,116,633
President, Chief
Executive Officer and
Chairman of the Board
Richard L. Clemmer...... 58,020 209,884 159,740 209,210 1,219,870 1,140,270
Executive Vice
President, Finance and
Chief Financial Officer
W. Curt Francis......... -- -- -- 58,000 0 0
Vice President,
Corporate Development
John B. Gannon.......... -- -- -- 124,000 0 0
President, Hard Disk
Drive Group
Peter van Cuylenburg.... -- -- 176,350 283,650 1,116,307 732,443
President, DLT &
Storage Systems Group
</TABLE>
- --------
(1) Total value realized is calculated based on fair market value of the
Company's Common Stock at the close of business on the date of exercise,
less the exercise price.
(2) Total value of unexercised options based on the fair market value of the
Company's Common Stock at the close of business on March 31, 1999 of
$18.00, less the exercise price.
Employment Terms, Termination of Employment and Change-In-Control Arrangements
The Company has entered into agreements (the "Agreements") with certain
officers, including the officers named in the Summary Compensation Table,
whereby in the event there is a "change of control" of the Company, which is
defined in the Agreements to include, among other things, a merger or sale of
assets of the Company or a reconstitution of the Company's Board of Directors,
the exercisability and vesting of all stock-based compensation awards granted
to the officers shall be accelerated. Under the Agreements, upon a change of
control, 50% of the unvested shares or options to purchase shares held by an
officer become exercisable and the remaining 50% of such unvested shares or
options to purchase shares become vested and exercisable upon the earlier of
the date of the first anniversary of the change of control or upon such
officer's "Involuntary Termination" after the change of control. Under the
Agreements, "Involuntary Termination" is defined to include, among other
things, any termination without "cause" by the Company of the employee without
such employee's express written consent or a significant reduction of or
addition to the employee's duties. Additionally, such officers receive twelve
(12) months severance pay and continued health and medical benefits during the
severance period. The purpose of the Agreements is to assure that the Company
will have the continued dedication of its officers by providing such
individuals with certain compensation arrangements, competitive with those of
other corporations, to provide sufficient incentive to the individuals to
remain with the Company, to enhance their financial security, as well as
protect them against unwarranted termination in the event of a change of
control.
10
<PAGE>
COMPENSATION COMMITTEE REPORT
Introduction
The Compensation Committee of the Board of Directors (the "Committee") for
fiscal 1999 was made up of Outside Directors of the Company. The Committee
generally determines base salary levels and determines targets under the All-
Inclusive Bonus Plan ("AIB Plan") for executive officers of the Company at the
start of the fiscal year. Each year the Committee evaluates the Company's
compensation practices and equity programs based on comparisons with other
companies in the industry, and compares the Company's performance to a group
of peer companies in making determinations with respect to compensation plans.
Compensation Philosophy
The Company's executive compensation policies are designed to attract and
retain experienced and qualified executive officers critical to the success of
the Company, and to provide incentive for such individuals to maximize the
Company's corporate performance and strategic objectives. The target level of
an executive officer's total compensation package is intended to be
competitive at the 50th percentile in average performance years and above
average when the Company's performance is above average with executives in the
Company's industry, taking into account corporate performance and individual
achievement. With respect to Section 162(m) of the Code (which limits
deductibility of executive compensation exceeding $1 million per individual
per year unless certain conditions are met), the Company has qualified its
Chief Executive Officer's AIB Plan and the 1993 Long-Term Incentive Plan for
an exemption from Section 162(m). The Company will continue to evaluate its
other compensation programs in light of Section 162(m), although it has no
current plans to qualify any of its other compensation programs for
exemptions.
Compensation Plans
The principal components of executive compensation are described below:
Base Compensation. Base salaries for executive officers are set by the
Committee, in consultation with the Chief Executive Officer, after considering
factors such as the competitive environment, experience levels, position and
responsibility, corporate performance and overall contribution levels of the
individuals. The Company obtains competitive salary information from
independent survey sources of peer companies in competition for similar
management talent, which includes both direct competitors of the Company and
other companies in the high technology industry which have similar size and
performance profiles. Most of the companies included in these surveys are also
included in the Hambrecht & Quist Technology Index (see PERFORMANCE GRAPH).
This survey data is then analyzed by independent consultants and the Company
to provide the necessary information to the Committee.
All-Inclusive Bonus Plan. The AIB Plan provides for cash bonuses to be paid
to all employees of the Company subject to the Company meeting certain
performance targets set by the Committee at the beginning of the fiscal year.
The purposes of the AIB Plan are to (i) tie compensation to achievement of
performance measures that provide an optimum return on total capital in the
current fiscal year (ii) drive long-term stockholder value creation and (iii)
ensure that payments are targeted to provide a competitive level of
compensation, taking into account the Company's performance against its peers
in the disk drive and related storage industries. The overall business
performance did not provide a payout under the AIB Plan. After considering
business and market conditions and the Company's results, the committee felt
that a payout slightly above threshold was appropriate for fiscal 1999. The
approved pool available for bonuses was set at the target level determined by
the AIB Plan.
Long-Term Incentive Compensation. Another component of the total
compensation package for the Company's executive officers is in the form of
stock option awards. The Company's 1993 Long-Term Incentive Plan provides for
long-term incentive compensation for employees of the Company, including
executive officers. An important objective of the 1993 Long-Term Incentive
Plan is to align the interest of executive officers with those of stockholders
by providing an equity interest in the Company, thereby providing incentive
for such executive officers to maximize stockholder value. Option awards
directly tie executive compensation to the
11
<PAGE>
performance of the Company's stock. The Committee is responsible for
determining, subject to the terms of such plan, the individuals to whom grants
should be made, the timing of grants, the exercise or purchase price per share
and the number of shares subject to each grant. Grants are determined based on
the individual's position in the Company, comparative market data, and the
number of unvested shares already held by each officer. The option program
also utilizes vesting periods to encourage retention of executive officers and
reward long-term commitment to the Company.
Company Performance and Chief Executive Officer Compensation
The process of determining the compensation for the Company's Chief
Executive Officer and the factors taken into consideration in such
determination are generally the same as the process and factors used in
determining the compensation of all of the Company's executive officers.
During 1999, the Company increased the Chief Executive Officer's base salary
based on an analysis of salaries paid by peer companies and the Chief
Executive Officer's individual performance. In fiscal year 1999, the Company
did not meet its return on total capital target threshold. No payments were
made to the Chief Executive Officer from the Chief Executive Officer's Annual
Incentive Plan. The Committee approved a discretionary bonus for fiscal 1999
to reflect the Chief Executive's Officer's performance in achieving his
individual objectives to better position the Company for future growth and
profitability.
MEMBERS OF THE COMPENSATION COMMITTEE
Steven C. Wheelwright
Edward M. Esber, Jr.
Robert J. Casale
THE FOREGOING COMPENSATION COMMITTEE REPORT SHALL NOT BE DEEMED TO BE
"SOLICITING MATERIAL" OR TO BE FILED WITH THE SEC, NOR SHALL SUCH INFORMATION
BE INCORPORATED BY REFERENCE INTO ANY PAST OR FUTURE FILING UNDER THE
SECURITIES ACT OR THE EXCHANGE ACT, EXCEPT TO THE EXTENT THE COMPANY
SPECIFICALLY INCORPORATES IT BY REFERENCE INTO SUCH FILING.
12
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total return to stockholders of
the Company's Common Stock at March 31, 1999 since March 31, 1994 to the
cumulative total return over such period of (i) Standard & Poors 500 Index, and
(ii) the Hambrecht & Quist Technology Index. The graph assumes the investment
of $100 on March 31, 1994 in the Company's Common Stock and each of such
indices and reflects the change in the market price of the Company's Common
Stock relative to the noted indices at March 31, 1995, 1996, 1997, 1998 and
1999. The performance shown is not necessarily indicative of future price
performance.
CUMULATIVE TOTAL RETURN
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG QUANTUM CORPORATION, S&P 500 INDEX AND PEER GROUP
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
Measurement Period QUANTUM S&P HAMBRECHT &
(Fiscal Year Covered) CORPORATION 500 INDEX QUIST TECHNOLOGY
- ------------------- ----------- --------- ----------------
<S> <C> <C> <C>
Measurement Pt- 3/94 $100 $100 $100
FYE 3/95 $91 $130 $116
FYE 3/96 $110 $177 $153
FYE 3/97 $236 $205 $183
FYE 3/98 $260 $306 $271
FYE 3/99 $220 $428 $321
</TABLE>
THE INFORMATION CONTAINED IN THE STOCK PERFORMANCE GRAPH SHALL NOT BE DEEMED
TO BE "SOLICITING MATERIAL" OR TO BE FILED WITH THE SEC, NOR SHALL SUCH
INFORMATION BE INCORPORATED BY REFERENCE INTO ANY FUTURE FILING UNDER THE
SECURITIES ACT OR THE EXCHANGE ACT, EXCEPT TO THE EXTENT THE COMPANY
SPECIFICALLY INCORPORATES IT BY REFERENCE INTO SUCH FILING.
13
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of June 4, 1999 certain information with
respect to the beneficial ownership of the Company's Common Stock by (i) each
person known by the Company to be the beneficial owner of more than 5% of the
outstanding shares of Common Stock, (ii) each of the Company's directors,
(iii) the Named Executive Officers and (iv) all directors and executive
officers as a group.
<TABLE>
<CAPTION>
Number of
Shares Approximate
Beneficially Percentage
Name Owned(1) Owned(2)
---- ------------ -----------
<S> <C> <C>
Sanford C. Bernstein & Co., Inc. .............. 16,784,702(3) 10%
767 Fifth Avenue
New York, NY 10153
FMR Corp....................................... 16,334,110(3) 9.7%
82 Devonshire Street
Boston, MA 02109-3014
Michael A. Brown............................... 1,102,195(4) *
Stephen M. Berkley............................. 498,833(5) *
Richard L. Clemmer............................. 285,725(6) *
Peter van Cuylenburg........................... 240,513(7) *
Robert J. Casale............................... 88,750(8) *
David A. Brown................................. 78,750(8) *
John B. Gannon................................. 53,289(9) *
Edward M. Esber, Jr. .......................... 45,000(10) *
Steven C. Wheelwright.......................... 31,000(8) *
W. Curt Francis................................ 15,249(11) *
All directors and executive officers as a group
(16 persons).................................. 2,567,737(12) 1.5%
</TABLE>
- --------
*Less than 1%.
(1) Except pursuant to applicable community property laws or as indicated in
the footnotes to this table, to the Company's knowledge, each stockholder
identified in the table possesses sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by such
stockholder.
(2) Applicable percentage ownership based on 167,739,218 shares of Common
Stock outstanding as of June 4, 1999, together with applicable options
for such stockholder. Beneficial ownership is determined in accordance
with the rules of the SEC, based on factors including voting and
investment power with respect to shares. Shares of Common Stock subject
to options currently exercisable, or exercisable within 60 days after
June 4, 1999 are not deemed outstanding for computing the percentage
ownership of any other person.
(3) Based on most recent public information available to the Company as of
June 4, 1999.
(4) Includes 1,058,513 shares subject to stock options which were exercisable
at June 4, 1999 or within sixty (60) days thereafter.
(5) Includes 490,833 shares subject to stock options which were exercisable
at June 4, 1999 or within sixty (60) days thereafter.
(6) Includes 204,969 shares subject to stock options which were exercisable
at June 4, 1999 or within sixty (60) days thereafter.
(7) Includes 215,828 shares subject to stock options which were exercisable
at June 4, 1999 or within sixty (60) days thereafter.
(8) Represents shares subject to stock options which were exercisable at June
4, 1999 or within sixty (60) days thereafter.
(9) Includes 2,000 shares subject to stock options which were exercisable at
June 4, 1999 or within sixty (60) days thereafter.
14
<PAGE>
(10) Includes 8,750 shares subject to stock options which were exercisable at
June 4, 1999 or within sixty (60) days thereafter.
(11) Includes 15,249 shares subject to stock options which were exercisable at
June 4, 1999 or within sixty (60) days thereafter.
(12) Includes an aggregate of 2,305,577 shares subject to stock options held by
directors and executive officers which were exercisable at June 4, 1999 or
within sixty (60) days thereafter.
CERTAIN TRANSACTIONS
During fiscal 1999, the Company granted options to its executive officers and
directors. The Company intends to grant options to its executive officers and
directors in the future. See "PROPOSAL ONE--Director Compensation" and
"EXECUTIVE COMPENSATION--Stock Option Grants and Exercises."
The Company issued a forgivable loan to Richard L. Clemmer on April 28, 1998,
in the amount of $250,000 at an annual interest rate of 7% and $125,000 of such
loan was outstanding on June 4, 1999. The Company issued a forgivable loan to
W. Curt Francis on May 21, 1998, in the amount of $150,000 at an annual
interest rate of 7% and $112,500 of such loan was outstanding of June 4, 1999.
The Company issued a forgivable loan to John B. Gannon on May 15, 1998, in the
amount of $300,000 at an annual interest rate of 7% and $225,000 of such loan
was outstanding as of June 4, 1999. The Company issued a forgivable loan to
Jerald L. Maurer on December 2, 1998, in the amount of $250,000 at an annual
interest rate of 8% and $250,000 of such loan was outstanding as of June 4,
1998.
The Company has entered into indemnification agreements with its executive
officers, directors and certain significant employees containing provisions
that are in some respects broader than the specific indemnification provisions
contained in the General Corporation Law of Delaware. These agreements provide,
among other things, for indemnification of the executive officers, directors
and certain significant employees in proceedings brought by third parties and
in stockholder derivative suits. Each agreement also provides for advancement
of expenses to the indemnified party.
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: June 23, 1999
15
<PAGE>
PROXY PROXY
QUANTUM CORPORATION
Annual Meeting of Stockholders - July 23, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder(s) of Quantum Corporation, a Delaware
corporation, hereby acknowledge(s) receipt of the Proxy Statement dated June
23, 1999, and hereby appoints Michael A. Brown and Richard L. Clemmer, 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 Annual Meeting of Stockholders of Quantum Corporation, to
be held July 23, 1999 at 11:00 a.m., Pacific Standard Time, at Quantum
Corporation, 500 McCarthy Boulevard, Milpitas, California 95035, and at any
adjournment or adjournments thereof, and to vote (including cumulatively, if
required) 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 side:
PLEASE MARK, SIGN AND DATE THIS PROXY AND RETURN IT PROMPTLY
IN THE ENCLOSED ENVELOPE.
(Continued, and to be signed and dated on reverse side)
<PAGE>
QUANTUM CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
THE DIRECTORS RECOMMEND A VOTE "FOR" ITEMS 1 AND 2
1. Proposal to elect Stephen M. Berkley, FOR AGAINST ABSTAIN
David A. Brown, Michael A. Brown, Robert J. [_] [_] [_]
Casale, Edward M. Esber, Jr. and Steven C.
Wheelwright to the Board of Directors.
2. Proposal to ratify the appointment of Ernst & FOR AGAINST ABSTAIN
Young as independent auditors for the fiscal [_] [_] [_]
year ending March 31, 2000.
3. and in their discretion, upon such other matters which may properly come
before the meeting or any adjournment or adjournments thereof.
The shares represented by this proxy when properly executed will be voted in the
manner directed herein by the undersigned Stockholder(s). If no direction is
made, this proxy will be voted FOR items 1 and 2. If any other matters properly
come before the meeting, or if cumulative voting is required, the persons named
in this proxy will vote, in their discretion.
Check here if address change is noted.
[_]
________________________________________
________________________________________
Dated: ___________________________, 1999
Signature(s) ___________________________________________________________________
________________________________________________________________________________
PLEASE SIGN exactly as name appears at left. Joint owners should each sign.
Executors, administrators, trustees, etc., should do indicate when signing. If
signer is a corporation, please sign full name by duly authorized officer.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
VOTE BY MAIL Mark, sign and date your proxy card and return it in the
postage-paid envelope we have provided.
THANK YOU FOR VOTING!
