<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
[Amendment No. ]
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
THE MACNEAL-SCHWENDLER 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/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
/ / 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>
THE MACNEAL-SCHWENDLER CORPORATION
------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 14, 1995
------------------------
To the Stockholders of
THE MACNEAL-SCHWENDLER CORPORATION
The Annual Meeting of Stockholders of The MacNeal-Schwendler Corporation
(the "Company") will be held at 815 Colorado Boulevard, Fifth Floor, Los
Angeles, California 90041 on Wednesday, June 14, 1995 at 2:00 p.m., Los Angeles
time, for the following purposes:
1. To elect two directors to Class I of the Company's Board of Directors in
accordance with Article III, Section 3 of the Company's By-laws.
2. To approve the adoption of an amendment to the Company's 1991 Stock
Option Plan.
3. To ratify the appointment of Ernst & Young as independent auditors of
the Company.
4. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The Board of Directors has fixed the close of business on April 21, 1995 as
the record date for the determination of stockholders entitled to receive notice
of and vote at the 1995 Annual Meeting or any adjournment thereof.
By Order of the Board of Directors
Louis A. Greco
SECRETARY AND CHIEF FINANCIAL OFFICER
April 28, 1995
YOUR VOTE IS IMPORTANT
STOCKHOLDERS WHO DO NOT EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON ARE
URGED TO DATE, FILL IN, SIGN AND MAIL THE ENCLOSED PROXY IN THE ACCOMPANYING
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE>
THE MACNEAL-SCHWENDLER CORPORATION
815 COLORADO BOULEVARD
LOS ANGELES, CALIFORNIA 90041
------------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
JUNE 14, 1995
------------------------
Your proxy on the enclosed Proxy Card is solicited by the management of the
Company for use at the Annual Meeting of Stockholders (the "1995 Annual
Meeting") to be held on June 14, 1995 or at any adjournment thereof. This Proxy
Statement and the accompanying Proxy Card are being mailed to stockholders on or
about April 28, 1995.
Each properly executed proxy received prior to the 1995 Annual Meeting will
be voted as directed, but if not otherwise specified, such proxies will be voted
for the election of the nominees for Class I of the Company's Board of Directors
named in this Proxy Statement, for the adoption of the proposed amendment to the
Company's 1991 Stock Option Plan (the "1991 Plan") described in this Proxy
Statement and for ratification of the appointment of Ernst & Young as the
Company's independent accountants for the current fiscal year. As for any other
business which may properly come before the 1995 Annual Meeting and be submitted
to a vote of stockholders, proxies received by the Board of Directors will be
voted in accordance with the best judgment of the designated proxyholders.
Each stockholder giving a proxy may revoke it at any time before it is
exercised. A proxy may be revoked by filing with the Secretary of the Company at
815 Colorado Boulevard, Los Angeles, California 90041, a written revocation or a
properly executed proxy bearing a later date. A proxy may also be revoked if the
person who executed the proxy attends the meeting in person and so requests,
although attendance at the 1995 Annual Meeting will not in itself constitute a
revocation of the proxy.
The Company will bear the costs of preparing, assembling and mailing the
Notice, Proxy Statement and Proxy Card for the 1995 Annual Meeting. The
solicitation of proxies for the 1995 Annual Meeting will be made primarily by
mail. However, if necessary to ensure satisfactory representation at the
meeting, additional solicitation may take place by telephone, telegraph and
personal interview by officers and employees of the Company. No such officer or
employee will receive additional compensation for such services. The Company
will, upon request, reimburse persons holding shares in their names as
custodians, nominees or fiduciaries for expenses they may incur in obtaining
instructions from beneficial owners of such shares. The Company has retained
Chemical Trust Company of California to assist in the solicitation of proxies on
its behalf for a fee of approximately $7,000, plus out-of-pocket expenses.
The Company has fixed the close of business on April 21, 1995, as the record
date for the determination of stockholders entitled to notice of and to vote at
the 1995 Annual Meeting and any adjournment thereof. Shares of the Company's
Common Stock, par value $.01 per share (the "Common Stock"), of which 13,380,282
were outstanding on April 21, 1995, are the only voting securities of the
Company. A majority of the Company's outstanding shares of Common Stock as of
April 21, 1995 must be represented in person or by proxy to constitute a quorum
for the 1995 Annual Meeting. Each share of Common Stock entitles the holder
thereof to one vote on each matter to be voted on at the 1995 Annual Meeting.
1. ELECTION OF DIRECTORS
One of the purposes of the 1995 Annual Meeting is the election of two
persons to Class I of the Company's Board of Directors in accordance with
Article III, Section 3 of the Company's By-laws. Pursuant to Article III,
Section 3 of the Company's By-laws, the Board of Directors have set the number
of directors on the Board at eight and have divided the Board into three
classes, designated Class I, Class II and Class III.
1
<PAGE>
Class I presently consists of three directors, but will be reduced to two
members effective with the 1995 Annual Meeting. Dr. John M. Hedgepeth, a current
member of Class I, has declined to stand for re-election to the Board of
Directors at the 1995 Annual Meeting.
Unless otherwise instructed, proxy holders will vote the shares for which
they received proxies for the election of the Company's two nominees named below
to Class I of the Board of Directors. All of such nominees are currently serving
as Class I directors of the Company. The Company does not contemplate that any
of the following nominees will become unavailable prior to the Annual Meeting,
but if any such persons should become unavailable, it is expected that proxies
will be voted for such other nominee or nominees as may be recommended to the
Board of Directors by the Nominating Committee.
NOMINEES FOR DIRECTORS
At the 1995 Annual Meeting, the term of incumbent directors in Class I will
expire and the directors listed below will stand for re-election in accordance
with Article III, Section 3 of the Company's By-laws. The directors elected to
Class I of the Company's Board of Directors at the 1995 Annual Meeting will
serve for a three-year term ending at the Annual Meeting of Stockholders to be
held in 1998 and until their respective successors are elected and qualified.
The following table sets forth certain information, furnished to the Company by
the respective persons named below, about the directors standing for re-election
at the 1995 Annual Meeting:
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE LAST FIVE YEARS SINCE
- ----------------------- --- -------------------------------------------------------------------- ---------
<S> <C> <C> <C>
Paul B. MacCready 69 Chairman (1971 to present) and former Chief Executive Officer (1971 1992
to 1994), AeroVironment, Inc., a provider of services and products
relating to pollution control, alternative energy and
energy-efficient vehicles; director, Lindbergh Fund; director,
Museum of Flying; creator of the Gossamer aircraft.
Frank Perna 57 Chairman and Chief Executive Officer, EOS, a privately held provider 1994*
of power supplies for electrical equipment and notebook computers
(1994 to present); director, PDA Engineering (1990 to 1994). Mr.
Perna was a member of the Board of Directors of PDA Engineering at
the time it was acquired by the Company. President and Chief
Executive Officer, MagneTek, Inc., a publicly held provider of
electrical equipment and services to utilities and industrial
customers (1990 to 1993).
<FN>
- ------------------------
*In accordance with the By-laws of the Company, Mr. Perna was elected by the
Board of Directors on September 14, 1994.
</TABLE>
PROXIES GIVEN WITHOUT INSTRUCTIONS WILL BE VOTED
FOR THE NOMINEES LISTED ABOVE.
2
<PAGE>
CONTINUING DIRECTORS
The following table sets forth certain information, furnished to the Company
by the respective persons named below, about the directors who comprise Class II
and Class III of the Company's Board of Directors.
The following Class II directors are currently serving until the 1996 Annual
Meeting and until their respective successors are elected and qualified:
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE LAST FIVE YEARS SINCE
- ------------------------- --- ----------------------------------------------------------------------- ---------
<S> <C> <C> <C>
Bernard J. Bannan 74 President and Chief Executive Officer, Binley, Inc. (formerly BJB 1986
Enterprises), a privately held investment management company, since
1984. Dr. Bannan is also a director of Intercole, Inc. (1986 to
present); Dr. Bannan previously served as a director of Fairchild
Space & Defense Corporation (1989 to 1991).
Harold Harrigian 60 Partner and Director of Corporate Finance Department of Crowell, Weedon 1986
& Co., an investment banking and securities firm, since 1984. Mr.
Harrigian is also a director of First Mortgage Corporation (1992 to
present).
George N. Riordan 61 Managing Director, George Riordan & Co., investment bankers (February 1983
1991 to present); Managing Director of Dean Witter Reynolds, Inc., an
investment banking firm (1989 to February 1991). Mr. Riordan is also a
director of Pancho's Mexican Buffet, Inc. (1993 to present) and Lewis
Galoob Toys, Inc. (1994 to present).
</TABLE>
The following Class III directors are currently serving until the 1997
Annual Meeting and until their respective successors are elected and qualified:
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE LAST FIVE YEARS SINCE
- ------------------------- --- ----------------------------------------------------------------------- ---------
<S> <C> <C> <C>
Richard H. MacNeal* 72 Chairman of the Board (1965 to present) and President (September 1991 1963
to October 1993) and Chief Executive Officer (1991 to present) of the
Company.
Dale D. Myers 73 President, Dale Myers and Associates, an aerospace and energy 1990
consulting firm (1989 to present, 1984 to 1986). Dr. Myers is also
director of General Science Corporation, a subsidiary of Science
Applications International Corporation (April 1993 to present).
Arthur H. Reidel 44 Private consultant (March 1995 to present); Vice President, Business 1993
Development, Viewlogic Systems, Inc., a publicly held software firm
(October 1994 to March 1995); President and Chief Executive Officer,
Sunrise Test Systems, Inc., a privately-held software firm (1992 to
September 1994) (Viewlogic Systems, Inc. acquired Sunrise Test
Systems, Inc. in September 1994); Vice President, Weitek Corporation
(1991 to 1992); General Partner, ABS Ventures, L.P. (1984 to 1991).
<FN>
- ------------------------
*Richard H. MacNeal is the father of Bruce E. MacNeal, a Vice President of the
Company.
</TABLE>
MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES:
During the fiscal year ended January 31, 1995, the Board of Directors held
fourteen meetings. The Board of Directors has three committees: the Audit,
Compensation and Nominating Committees. Drs. Hedgepeth and Myers and Messrs.
Riordan and Reidel sit on the Audit Committee, which held four meetings in the
fiscal year ended January 31, 1995. The Audit Committee is responsible for
assisting the Board in fulfilling its responsibilities as they relate to the
Company's accounting policies, internal controls,
3
<PAGE>
and financial reporting practices, and for maintaining a line of communication
between the Board and the Company's independent accountants, Ernst & Young.
Reports of such meetings are provided to the Board together with any Committee
recommendations.
Messrs. Harrigian and Riordan and Dr. Bannan comprise the Compensation
Committee, which met six times in the fiscal year ended January 31, 1995. The
Compensation Committee reviews all officers' compensation and recommends to the
Board, as necessary, stock options to be awarded, changes in salary or profit
sharing, and the amount of yearly bonuses to be awarded to employees.
Drs. Bannan, Myers and MacCready sit on the Nominating Committee, which met
five times in the fiscal year ended January 31, 1995. The Nominating Committee
is responsible for nominating directors to serve on the Board of Directors of
the Company. The Nominating Committee will not consider nominees recommended by
the stockholders.
Each director attended at least 75% of the total number of meetings of the
Board and committees of which he was a member, except for Mr. Perna, who was
only a director for a portion of the year.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of April 21, 1995 the names, addresses,
and holdings of those persons known to the Company to be beneficial owners of
more than 5% of its Common Stock, the names and holdings of each nominee for
director, the names and holdings of each executive officer named in the Summary
Compensation Table ("named executive officers") and the holdings of all
executive officers and directors as a group:
<TABLE>
<CAPTION>
AMOUNT BENEFICIALLY
OWNED AND NATURE OF
BENEFICIAL PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP (1) CLASS (2)
- ----------------------------------------------------------- ------------------- -----------
<S> <C> <C>
Richard H. MacNeal......................................... 1,334,600 10.0%
815 Colorado Boulevard
Los Angeles, CA 90041
Brinson Partners, Inc...................................... 983,400(3) 8.7%
209 South LaSalle
Chicago, IL 60604
Bernard J. Bannan.......................................... 15,000(4) *
Harold Harrigian........................................... 7,250 *
John M. Hedgepeth (5)...................................... 29,900 *
Paul B. MacCready.......................................... 5,000 *
Dale D. Myers.............................................. 7,200(6) *
Frank Perna................................................ 452 *
Arthur H. Reidel........................................... 2,000 *
George N. Riordan.......................................... 7,500 *
Kenneth Blakely............................................ 9,500 *
Thomas C. Curry............................................ 2,721 *
Louis A. Greco............................................. 47,200 *
Bruce E. MacNeal........................................... 40,500 *
Dennis A. Nagy............................................. 69,980 *
Larry D. McArthur.......................................... 0 *
Richard C. Miller.......................................... 0 *
All directors and executive officers as a group
(14 persons).............................................. 1,578,803(7) 11.8%
<FN>
- ------------------------
* Holdings represent less than 1% of all shares outstanding.
(1) Unless otherwise indicated, (i) beneficial ownership is direct, and (ii)
the person indicated has sole voting and investment power over the shares
of common stock indicated. The amounts shown in this
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
column include shares issuable upon conversion of the Company's 7 7/8%
Convertible Subordinated Debentures due 2004 (the "Debentures") or exercise
of options which are exercisable on or within 60 days of April 21, 1995, in
the following amounts: Richard H. MacNeal, 173,457; Bernard J. Bannan,
4,000; Harold Harrigian, 6,000; John M. Hedgepeth, 6,000; Paul B.
MacCready, 4,000; Dale D. Myers, 4,000; Frank Perna, 452; Arthur H. Reidel,
2,000; George N. Riordan, 6,000; Kenneth Blakely, 9,500; Thomas C. Curry,
1,721; Louis A. Greco, 40,488; Bruce E. MacNeal, 10,500 and Dennis A. Nagy,
62,980.
(2) All expressions of percent of class held assume that the Debentures and
options, if any, of the particular person or group in question, and no
others, have been exercised.
(3) Based upon information set forth in a Schedule 13G filed under the
Securities Exchange Act of 1934 by Brinson Partners, Inc. ("Brinson") in
February 1995. Brinson and Brinson Trust Company, an operating subsidiary
of Brinson, exercised, as of December 31, 1994, voting power and investment
discretion with respect to 412,956 and 570,444 shares, respectively, or a
combined total of [7.4]% of the Company's outstanding Common Stock.
(4) 11,000 shares are held in trust by Dr. Bannan.
(5) Dr. Hedgepeth served as a Director from 1973 to 1980 and 1983 to 1995. He
has declined to stand for re-election to the Board of Directors at the 1995
Annual Meeting.
(6) 3,200 shares are held in trust by Dr. Myers and his wife, Marjorie W.
Myers.
(7) Includes 331,098 shares issuable upon exercise of options granted the
directors and executive officers of the Company which are exercisable on or
within 60 days of April 21, 1995. See footnote 1 above.
</TABLE>
5
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION. The following table and accompanying notes show for
the Chief Executive Officer and the four next highest paid executive officers of
the Company as of January 31, 1995, the indicated compensation paid by the
Company to such persons during the last fiscal year and, to the extent required
by applicable rules, the preceding two fiscal years. As required by applicable
rules, the table also includes such compensation information for the Company's
former Chief Operating Officer and its former Vice President, Marketing.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS (1)
ANNUAL COMPENSATION --------------
----------------------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL FISCAL COMPENSATION OPTIONS COMPENSATION
POSITION YEAR SALARY ($) BONUS ($)(2) ($)(3) (#)(4) ($)(5)
- -------------------------- ------------ ---------- ------------ ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard H. MacNeal, 1995 $ 325,000 $ 121,904 $ -- 103,500 $ 61,546
Chairman and Chief 1994 $ 315,625 $ 59,386 -- 161,457(10) $ 30,000
Executive Officer 1993 $ 300,000 $ 117,000 -- 12,000 $ 30,000
Dennis A. Nagy, 1995 $ 210,000 $ 78,769 $ -- 65,000 $ 38,546
Senior Vice President, 1994 $ 193,542 $ 36,105 -- 51,000(10) $ 21,574
Operations 1993 $ 166,750 $ 65,033 -- 3,000 $ 21,574
Louis A. Greco, 1995 $ 185,000 $ 69,631 $ -- 45,000 $ 33,546
Chief Financial Officer 1994 $ 181,250 $ 34,172 -- 37,488(10) $ 23,028
1993 $ 174,681 $ 68,126 -- 3,000 $ 22,243
Bruce E. MacNeal, 1995(6) $ 132,812 $ -- $ -- 25,000 $ 16,374
Vice President
Thomas Curry, 1995(6) $ 81,033 $ 46,886 $ -- 130,000 $ 8,111
President
Larry D. McArthur, (7) 1995 $ 173,622 $ -- $ -- 37,250 $ 685,798(8)
former Chief Operating 1994 $ 87,163 $ 48,437 $ -- 131,000(10) $ 6,467
Officer
Richard C. Miller, (7) 1995 $ 191,638 $ 63,609 $ -- 14,750 $ 321,546(9)
former Vice President, 1994 $ 61,664 $ 19,081 -- 41,000(10) 0
Marketing
<FN>
- ------------------------
(1) The Company did not make any payments or awards that would be classifiable
under the "Restricted Stock Award" and "LTIP Payout" columns otherwise
required to be included in the Table by the applicable Securities and
Exchange Commission ("SEC") disclosure rules.
(2) Annual bonus amounts are earned and accrued during the fiscal years
indicated, and paid subsequent to the end of each fiscal year.
(3) The amounts included in this column for each of the named executives do not
include the value of certain perquisites which in the aggregate did not
exceed the lower of $50,000 or 10% of each named executive's aggregate
1993, 1994 or 1995 salary and bonus compensation.
(4) Unless otherwise noted, represents shares of stock underlying options
granted under the 1991 Plan. There were no individual grants of stock
options in tandem with stock appreciation rights ("SAR's") or freestanding
SAR's made during the fiscal years ended January 31, 1992, 1993 or 1994 to
the above-named executives.
(5) Unless otherwise noted, the amounts shown constitute Company contributions
on behalf of the named individuals to (i) The MacNeal-Schwendler
Corporation Profit Sharing Plan ("PSP") and (ii) The MacNeal-Schwendler
Corporation Supplemental Retirement and Deferred Compensation Plan
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
("SERP") in the following amounts: Richard H. MacNeal-1995: $19,046 to PSP,
$42,500 to SERP; 1994: $30,000 to PSP, 0 to SERP; 1993: $30,000 to PSP, 0
to SERP; Dennis A. Nagy - 1995: $19,046 to PSP, $19,500 to SERP; 1994:
$21,574 to PSP, 0 to SERP; 1993: $21,574 to PSP. 0 to SERP; Louis A. Greco
-1995: $19,046 to PSP, $14,500 to SERP; 1994: $23,028 to PSP, 0 to SERP;
1993: $22,243 to PSP, 0 to SERP; Bruce E. MacNeal - 1995: $16,374 to PSP, 0
to SERP; Thomas Curry -1995; $5,275 to PSP, $2,836 to SERP; Larry D.
McArthur - 1995: $19,046 to PSP, $0 to SERP; 1994: $6,467 to PSP, 0 to
SERP; Richard C. Miller - 1995: $19,046 to PSP, $0 to SERP; 1994: 0 to PSP,
0 to SERP. For information regarding additional "Other Compensation" paid
to Mr. McArthur and Mr. Miller in Fiscal 1995, see notes 8 and 9 below.
(6) Messrs. Bruce E. MacNeal and Thomas Curry were appointed executive officers
of the Company in fiscal 1995.
(7) Mr. MacArthur served as Chief Operating Officer of the Company from October
1, 1993 to September 30, 1994. Mr. Miller served as Vice President
Marketing of the Company from October 1, 1993 to December 31, 1994. See
"Severance Packages."
(8) Includes $666,752 paid to Mr. McArthur pursuant to a Settlement and General
Release Agreement dated November 4, 1994 between the Company and Mr.
McArthur. See "Severance Packages -- Larry D. McArthur."
(9) Includes $302,500 paid to Mr. Miller pursuant to a letter agreement dated
October 20, 1994 between the Company and Mr. Miller. See "Severance
Packages -- Richard C. Miller."
(10) Includes 6,000 shares of stock underlying options granted under the
Company's now expired 1983 Incentive Stock Option Plan for Key Employees.
</TABLE>
OPTION GRANTS. The following table sets forth certain information
concerning stock options granted to the named executive officers for fiscal year
1995:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------------------------
PERCENT OF TOTAL
OPTIONS GRANTED GRANT DATE
OPTIONS TO EMPLOYEES IN EXERCISE EXPIRATION PRESENT
NAME GRANTED (#) (1)(2) FISCAL YEAR 1995 PRICE ($/SH) (3) DATE VALUE ($)
- --------------------------------------------- ------------------ ---------------- ---------------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Richard H. MacNeal........................... 3,500(4) 0.5% $ 11.00 12/7/1999 $ 9,552(10)
100,000(5) 14.6% $ 11.00 12/7/2004 $ 282,390(11)
Dennis A. Nagy............................... 5,000(4) 0.7% $ 11.00 12/7/1999 $ 13,645(10)
60,000(6) 8.8% $ 11.00 12/7/2004 $ 169,434(11)
Louis A. Greco............................... 5,000(4) 0.7% $ 11.00 12/7/1999 $ 13,645(10)
40,000(6) 5.9% $ 11.00 12/7/2004 $ 112,956(11)
Bruce E. MacNeal............................. 5,000(4) 0.7% $ 11.00 12/7/1999 $ 13,645(10)
20,000(5) 2.9% $ 11.00 12/7/2004 $ 56,478(11)
Thomas Curry................................. 60,000(6) 8.8% $ 11.00 12/7/2004 $ 169,434(11)
70,000(7) 10.3% $ 10.375 1/11/2000 $ 180,178(12)
Larry D. McArthur............................ 37,250(8) 5.5% $ 14.25 9/30/1996 $ 99,421(13)
Richard C. Miller............................ 14,750(9) 2.2% $ 14.25 12/31/1996 $ 39,368(13)
<FN>
- ------------------------
(1) Unless otherwise noted, represents options to purchase shares of Common
Stock granted on December 7, 1994 under the 1991 Plan that become
exercisable one year after the date of grant. Options under the 1991 Plan
are nontransferable other than by will or the laws of descent and
distribution or certain exceptions under Rule 16b-3 of the Securities
Exchange Act of 1934. Options are exercisable only during an optionee's
term of employment, and for three months after termination of employment if
as a result of permanent disability or retirement or resignation approved
by the Board. Vesting may be
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
accelerated in certain events related to changes in control of the Company,
unless the Compensation Committee, prior to such change in control,
determines otherwise. Under the terms of the 1991 Plan, the Compensation
Committee retains discretion, subject to limits in the 1991 Plan, to modify
the terms of outstanding options and to regrant and reprice options. The
1991 Plan is administered by the Compensation Committee of the Board.
(2) The 1991 Plan provides, under certain circumstances, for the grant of
"reload options" if an optionee uses already-owned shares of Common Stock
to pay for the exercise of any options. The reload provision permits the
grantee the right to purchase the same number of shares of the Company's
common stock as the grantee used to exercise any options at an exercise
price equal to the fair market value of a share of Common Stock on the date
of exercise of the initial option to which the reload relates.
(3) Options granted at an exercise price equal to the fair market value on the
date of grant.
(4) Incentive stock options.
(5) Nonqualified stock options.
(6) Represents nonqualified stock options to purchase shares of Common Stock
granted on December 7, 1994 under the 1991 Plan that are exercisable in
installments, with 25% of the options becoming exercisable one year after
the date of grant and with an additional 25% of the options becoming
exercisable on each successive anniversary date, with full vesting
occurring on the fourth anniversary date.
(7) Represents nonqualified stock options to purchase shares of Common Stock
granted on January 11, 1995 under the 1991 Plan that expire five years
after the date of grant.
(8) Represent nonqualified stock options to purchase shares of Common Stock
originally granted on October 1, 1993 to Mr. McArthur under the 1991 Plan
and amended, as of September 30, 1994, to (i) become exercisable on October
1, 1994 and (ii) expire on September 30, 1996. See "Severance Packages --
Larry D. McArthur."
(9) Represent nonqualified stock options to purchase shares of Common Stock
originally granted on October 1, 1993 to Mr. Miller under the 1991 Plan and
amended, as of October 20, 1994, to (i) become exercisable on October 1,
1994 and (ii) expire on December 31, 1996. See "Severance Packages --
Richard C. Miller."
(10) Grant Date Present Value determined under Black-Scholes Valuation Method.
The estimated values under the Black-Scholes model are based on the
following assumptions: the risk-free rate of return is 7.5%, the expected
dividend yield is 5.8%, the expected volatility is 0.36 and the expected
term is five years. The actual value, if any, an executive may realize will
depend on the excess of the stock price over the exercise price on the date
the option is exercised. Therefore, there is no assurance that the value
realized by an executive will be at or near the value estimated by the
Black-Scholes model.
(11) Grant Date Present Value determined under Black-Scholes Valuation Method.
The estimated values under the Black-Scholes model are based on the
following assumptions: the risk-free rate of return is 7.5%, the expected
dividend yield is 5.8%, the expected volatility is 0.36 and the expected
term is ten years. The actual value, if any, an executive may realize will
depend on the excess of the stock price over the exercise price on the date
the option is exercised. Therefore, there is no assurance that the value
realized by an executive will be at or near the value estimated by the
Black-Scholes model.
(12) Grant Date Present Value determined under Black-Scholes Valuation Method.
The estimated values under the Black-Scholes model are based on the
following assumptions: the risk-free rate of return is 7.5%, the expected
dividend yield is 5.8%, the expected volatility is 0.36 and the expected
term is five years. The actual value, if any, an executive may realize will
depend on the excess of the stock price over the exercise price on the date
the option is exercised. Therefore, there is no assurance that the value
realized by an executive will be at or near the value estimated by the
Black-Scholes model.
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
(13) Grant Date Present Value determined under Black-Scholes Valuation Method.
The estimated values under the Black-Scholes model are based on the
following assumptions: the risk-free rate of return is []%, the expected
dividend yield is 5.8%, the expected volatility is 0.36 and the expected
term is two years. The actual value, if any, an executive may realize will
depend on the excess of the stock price over the exercise price on the date
the option is exercised. Therefore, there is no assurance that the value
realized by an executive will be at or near the value estimated by the
Black-Scholes model.
</TABLE>
OPTION EXERCISES. The following table sets forth information regarding
stock options exercised by the named executives during fiscal 1995 and the value
of in-the-money unexercised options held by the named officers as of January 31,
1995.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS OPTIONS AT FY-END
AT FY-END (#) ($)(1)
------------------- -----------------------
SHARES ACQUIRED VALUE EXERCISABLE (E)/ EXERCISABLE (E)/
NAME ON EXERCISE (#) REALIZED UNEXERCISABLE (U) UNEXERCISABLE (U)
- ---------------------------------------- --------------- --------- ------------------- -----------------------
<S> <C> <C> <C> <C>
Richard H. MacNeal...................... 0 0 173,457/103,500 0/38,813
Dennis A. Nagy.......................... 0 0 61,000/65,000 11,625/24,375
Louis A. Greco.......................... 0 0 40,488/45,000 0/16,875
Bruce E. MacNeal........................ 0 0 10,500/25,000 3,489/9,375
Thomas Curry............................ 0 0 0/130,000 0/92,500
Larry D. McArthur....................... 0 0 37,250/0 0/0
Richard C. Miller....................... 0 0 14,750/0 0/0
<FN>
- ------------------------
(1) Based on closing price of the Company's Common Stock on January 31, 1995
($11.375 per share) minus the exercise price of "in-the-money" options.
</TABLE>
SEVERANCE AGREEMENTS. The Company has entered into severance agreements
with each of the named executive officers as well as with certain other key
employees. These severance agreements provide that, if the Company or the
employee terminates the employee's employment with the Company (other than as a
result of death or disability) for any reason within two years after a change of
control of the Company, the employee will receive a severance payment. Under the
severance agreements, a change in control is defined to include the following
transactions unless approved by a majority of the Board of Directors: (i) any
person or group becomes the beneficial owner of 20% or more of the combined
voting power of the Company's then outstanding securities, (ii) the election in
a contest for election of a majority of the Board of Directors who were not
directors prior to such contest, (iii) the stockholders approve the dissolution
or liquidation of the Company, (iv) the stockholders approve a merger,
consolidation or other reorganization of the Company, as a result of which less
than 50% of the outstanding voting securities of the resulting entity are owned
by former stockholders of the Company, or (v) the stockholders approve the sale
of all or substantially all of the assets of the Company to a person or entity
which is not a subsidiary of the Company. The amount of such severance payment,
for each of the named executive officers with severance agreements, will be a
cash payment of two and one-half times the average of the last five years of
such employee's total cash compensation. Other key employees with severance
agreements (totaling 84 employees) will receive at least one times the average
of the last five years of such employee's total cash compensation, provided the
employee has been employed by the Company at least five years, increasing
ratably to a maximum of two times the average of the last five years of such
employee's total cash compensation if employed by the Company for ten years or
more. The severance payments will be reduced to the extent any payment is not
deductible by the Company for federal income tax purposes under Section 280G of
the Code. The severance agreements are automatically renewed annually unless the
Company gives written notice that it does not wish to extend them. In addition,
the agreements will continue in effect for three years after a change of control
of the Company.
SEPARATION AGREEMENT. The Company has entered into a Separation Agreement
with Thomas Curry which provides for certain payments to Mr. Curry upon his
termination of employment with the Company. If
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<PAGE>
Mr. Curry resigns his position, dies or otherwise terminates his employment with
the Company, or if the Company terminates Mr. Curry's employment for "cause,"
Mr. Curry receives the pro rata share of his base salary then in effect plus any
accrued vacation time. "Cause" includes dishonesty, fraud, theft, embezzlement,
conviction of a misdemeanor involving moral turpitude or of any felony, failure
to perform duties in a manner satisfactory to the Chief Executive Officer after
being advised in writing of a performance deficiency, unauthorized absence from
work for a period of five or more consecutive work days, violation of Company
policy or procedure, inability to perform the essential functions of the job for
a period of 180 days due to any physical or mental disability, competing with
the Company while in its employ, or violation of the terms of a non-disclosure
agreement signed by Mr. Curry upon his employment. If the Company terminates for
reasons other than "cause," the Company must continue to pay Mr. Curry the base
salary he was receiving at the time of termination for a period of 18 months
from the effective date of the termination. The Company must also continue Mr.
Curry's participation in the Company's health benefit plans for up to eighteen
months after the termination date and reimburse Mr. Curry's outplacement fees
(up to $35,000). The Separation Agreement also requires the Company in such
circumstances to amend 70,000 options previously granted to Mr. Curry under the
1991 Plan to allow (i) full vesting as of the termination date and (ii) exercise
of those options for a period of twelve months from the termination date.
The 1991 Plan provides, under certain circumstances, for options to vest
upon a change in control. See "Compensation of Executive Officers -- Option
Grants in Last Fiscal Year."
SEVERANCE PACKAGES.
LARRY D. MCARTHUR. On November 4, 1994, the Company entered into a
Settlement and General Release Agreement (the "Settlement Agreement") with Larry
D. McArthur. The Settlement Agreement provided for the Company to pay Mr.
McArthur $310,000 in satisfaction of all obligations of the Company to Mr.
McArthur pursuant to an Employment Agreement between Mr. McArthur and the
Company dated October 1, 1993. The Company also agreed to amend 37,250 options
previously granted to Mr. McArthur under the 1991 Plan to allow such options to
vest as of October 1, 1994 and expire on September 30, 1996. In addition, the
Company agreed to continue Mr. McArthur's participation in the Company's health
benefit plans for up to twelve months from September 30, 1994, reimburse Mr.
McArthur's relocation benefits (up to $50,000) and certain of Mr. McArthur's
outplacement fees and legal fees in connection with negotiation of the
Settlement Agreement (up to $35,000 and $40,000, respectively). The Company also
agreed to pay Mr. McArthur $238,000 in compromise and liquidation of any and all
personal injury claims by Mr. McArthur.
RICHARD C. MILLER. On October 20, 1994, the Company entered into a letter
agreement with Richard C. Miller (the "Letter Agreement.") The Letter Agreement
provided for the Company to pay Mr. Miller a lump sum severance payment of
$277,500, equivalent to 18 months of Mr. Miller's base salary. The Company also
agreed to pay Mr. Miller's accrued vacation through December 31, 1994 and amend
14,750 options previously granted to Mr. Miller under the 1991 Plan to allow
such options to vest as of October 20, 1994 and expire on December 31, 1996. In
addition, the Company agreed to continue Mr. Miller's participation in the
Company's health benefit plans for up to twelve months and reimburse Mr.
Miller's outplacement fees (up to $25,000).
COMPENSATION OF DIRECTORS
Directors who are not also officers of the Company are paid $12,500 per
year, $1,550 per Board meeting attended, and $775 per committee or telephone
meeting attended.
The Company does not additionally compensate employee directors. All other
directors are reimbursed for all expenses incurred in connection with attendance
at meetings of the Board and the performance of Board duties. Expense
reimbursement typically includes transportation costs and, when required,
overnight hotel expenses for those directors who reside outside the Los Angeles
metropolitan area.
10
<PAGE>
Mr. Reidel and Dr. Myers also perform ad hoc consulting services to the
Company on an informal basis. In fiscal 1995, the Company paid Mr. Reidel $6,000
and Dr. Myers $7,000 (plus reimbursement of each director's expenses) pursuant
to such arrangements.
On June 10, 1992, the stockholders approved the 1991 Plan, including the
Non-Employee Director Program. The Non-Employee Director Program provides for
option grants to members of the Board of Directors who are not officers or
employees of the Company or its subsidiaries. Upon stockholder approval, each
eligible director received a non-discretionary grant of nonqualified stock
options for the purchase of 2,000 shares of the Company's common stock at an
exercise price of $8.00 per share. In addition, eligible directors receive an
annual grant of options to purchase 2,000 shares of Common Stock on the first
business day of each calendar year through 2001. There was a grant as of the
first business day in calendar 1995 at an exercise price of $10.50. Subsequent
grants will occur on such day in each subsequent year through 2001. All options
granted under the Plan become exercisable in full 12 months after the award date
and expire on the fifth anniversary of the award date. Vesting may be
accelerated in certain events related to changes in control of the Company. The
purchase price payable upon the exercise of a director's option equals the fair
market value of the Common Stock on the award date.
A maximum of 200,000 shares of Company Common Stock may be issued upon the
exercise of options under the Non-Employee Director Program.
The 1991 Plan, including the Non-Employee Director Program, is proposed to
be amended. See "2. Adoption of Amendment to the 1991 Plan." If the proposed
amendment to the 1991 Plan is adopted, (i) eligible directors will receive a one
time grant of options to purchase 10,000 shares of Common Stock plus an annual
grant of options to purchase 3,000 shares of Common Stock on the first business
day of each calendar year through 2001 and (ii) an aggregate of 500,000 shares
of Common Stock will be eligible for issue of options under the Non-Employee
Director Program.
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS HAS FURNISHED THE
FOLLOWING REPORT ON EMPLOYEE COMPENSATION. SUCH REPORT WILL NOT BE DEEMED TO BE
INCORPORATED BY REFERENCE BY ANY GENERAL STATEMENT INCORPORATING THIS PROXY
STATEMENT INTO ANY FILING BY THE COMPANY UNDER THE SECURITIES ACT OF 1933 OR
UNDER THE SECURITIES ACT OF 1934, EXCEPT TO THE EXTENT THAT THE COMPANY
SPECIFICALLY INCORPORATES THIS INFORMATION BY REFERENCE AND SHALL NOT OTHERWISE
BE DEEMED SOLICITING MATERIAL OR BE DEEMED FILED UNDER SUCH ACTS.
The Compensation Committee of the Board of Directors reviews and establishes
the general compensation policies of the Company, and administers the Company's
various compensation plans, including its stock option plans and annual salary
and bonus plans.
Each year, the Committee undertakes a comprehensive review of the
compensation plans and levels of compensation of the Company's Chief Executive
Officer, Dr. Richard MacNeal, and the other senior executive officers of the
Company. The purposes of this review are to assure that compensation is
appropriately tied to performance and that salary and potential bonus
compensation levels are appropriate. In undertaking this review, the Committee
considers the compensation levels of the Company's executive officers in light
of the performance of the Company over the past fiscal year and other historical
periods, the performance of certain other relevant companies and the level of
compensation paid to the executive officers of each of the other relevant
companies. No particular weighting is given to the various factors. Other
relevant companies include a diversified group of publicly traded high
technology software companies providing similar products and services, but not
every company in the S&P Software/Computer Services Index. Performance measures
for the Company and relevant companies reviewed by the Committee included return
on equity and cash flow return on sales.
Members of the Committee review this information as well as compensation
surveys provided by various compensation consulting firms. Based upon extensive
discussions and a thorough review of the available data, the Committee
determines the annual salaries of Dr. MacNeal and of the Company's other
11
<PAGE>
senior executive officers, the performance targets and bonus levels, and stock
option award levels. The decisions made in mid-1994 by the Committee resulted in
rankings for senior executives, including Dr. MacNeal, within an approximate
range of 50th to 75th percentile, as to cash compensation, even though the
Committee did not adopt a policy of targeting specific compensation percentile
rankings against a peer group of executives.
The compensation policy of the Company, which is endorsed by the Committee,
is that a significant portion of the compensation of upper management should be
contingent upon the performance of the Company, and/or the individual
contributions of each senior manager. As a result, the annual compensation of
all executive officers includes a bonus component subject to Company
performance. Performance is measured against the annual budgeted operating
income before the effects of capitalized software. A significant portion of
senior executive officers' compensation is therefore considered to be "at risk."
Compensation of all senior executive officers is also reviewed with the Board.
For Dr. MacNeal and all other senior officers, approximately 25% of total
expected compensation is at risk.
BASE SALARY. Dr. MacNeal's base salary for the period from June 1, 1994 to
May 31, 1995 was set at $325,000 per annum and was determined by the Committee
in connection with the comprehensive review described above. The Committee
subjectively considered the Company's performance, the performance of Dr.
MacNeal, compensation of CEO's of other relevant companies discussed above and
the performance of such companies and the proportion of compensation that would
be "at risk" in setting Dr. MacNeal's salary. No particular weighting was given
to the various factors, but the Committee strove to achieve fair and reasonable
compensation based upon such factors. The base salaries for the period from June
1, 1994 to May 31, 1995 for the remaining senior executive officers were
similarly reviewed and set, with consideration also given to the relationship of
such salaries to the salary of Dr. MacNeal.
ANNUAL BONUS. Based upon the comprehensive review of other relevant
companies described above, the Committee established an expected annual
compensation objective for Dr. MacNeal and the other senior executive officers
consisting of a base salary component and an incentive component. Under the
Company's Executive Bonus Plan, Dr. MacNeal and the other senior executive
officers' expected bonus was set at 37.5% of their annual base salary with a
range of potential bonus payouts varying from zero to 75% of base salary
dependent upon Company performance. The actual bonus earned by Dr. MacNeal and
the other senior executive officers in fiscal 1995 amounted to 37.5% of base
salary and was based on the Company's performance for the fiscal year ended
January 31, 1995 and the positive financial effects of the Company's acquisition
in fiscal 1995 of PDA Engineering.
The Company's performance is generally measured for purposes of bonus
determination against annual budgeted operating income, before the effects of
capitalized software. The annual budget is approved by the Board at the
beginning of the fiscal year. Dr. MacNeal's bonus and that of the other
executive officers for the next fiscal year is expected to be based 100% upon
the performance of the total company as described above.
STOCK OPTIONS. During fiscal 1995, the Committee authorized all stock
option grants under the 1991 Plan. In conjunction with the comprehensive review
of Company performance versus the performance of other relevant companies
discussed above, in December 1994 the Committee assigned option awards to Dr.
MacNeal and other executive officers based on their respective expected fiscal
1995 compensation levels, their individual performance during the 1995 fiscal
year, and the length of service with the Company.
SEVERANCE PACKAGES. During fiscal 1995, the Committee authorized severance
packages for Larry D. McArthur, former Chief Operating Officer of the Company,
and Richard C. Miller, former Vice President, Marketing of the Company. The
severance arrangements with these executives were negotiated by management of
the Company and presented to the Committee for approval. In connection with the
approval of these packages, the Committee authorized the amendment of the terms
of options previously granted to each of Messrs. McArthur and Miller under the
1991 Plan. The Committee found the severance packages, and the amendment of the
option terms contained in each package, to be in the best interest of the
Company and unanimously approved each of the severance agreements.
12
<PAGE>
In December 1994, the United States Internal Revenue Service issued revised
proposed regulations affecting all publicly held United States corporations (the
"Regulations") interpreting the recently enacted limitation on the tax
deductibility of compensation in excess of $1 million for certain executive
officers. In general, the Compensation Committee considers the anticipated tax
treatment to the Company and to its executives of various payments and benefits.
However, the Committee will not necessarily limit executive compensation to that
which is deductible under the Regulations. The Committee will consider various
alternatives for preserving the deductibility of compensation payments and
benefits to the extent reasonably practicable and to the extent consistent with
its other compensation objectives.
No member of the Committee is a former or current officer or employee of the
Company or any of its subsidiaries, or is employed by a company whose Board of
Directors includes a member of the management of the Company.
Compensation Committee:
Harold Harrigian, Chairman
Bernard J. Bannan
George N. Riordan
13
<PAGE>
PERFORMANCE GRAPH
The following graph provides a five year comparison of cumulative total
returns for the Company, the Standard & Poor's Software/Computer Services Index
and American Stock Exchange (AMEX) Market Value Index. The comparison covers the
five-year period from the first day of the Company's 1991 fiscal year to the
last day of the Company's 1995 fiscal year and assumes that $100 was invested at
the beginning of the period in the Company's Common Stock and in each index.
THE MACNEAL-SCHWENDLER CORPORATION
STOCK PRICE PERFORMANCE
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
FY 1990 FY 1991 FY 1992 FY 1993 FY 1994 FY 1995
<S> <C> <C> <C> <C> <C> <C>
MSC 100 154.85 132.06 192.18 169.6 156.34
S&P SOFTWARE INDEX 100 87.52 130.52 152.94 197.93 224.71
AMEX INDEX 100 93.63 115.43 113.37 135.37 118.14
</TABLE>
Cumulative total returns assumes reinvestment of dividends on the date such
dividends were declared.
THE STOCK PRICE PERFORMANCE DEPICTED IN THE ABOVE GRAPH IS NOT NECESSARILY
INDICATIVE OF FUTURE PRICE PERFORMANCE. THE PERFORMANCE GRAPH WILL NOT BE DEEMED
TO BE INCORPORATED BY REFERENCE BY ANY GENERAL STATEMENT INCORPORATING THIS
PROXY STATEMENT INTO ANY FILING BY THE COMPANY UNDER THE SECURITIES ACT OF 1933
OR UNDER THE SECURITIES ACT OF 1934, EXCEPT TO THE EXTENT THAT THE COMPANY
SPECIFICALLY INCORPORATES THIS INFORMATION BY REFERENCE, AND SHALL NOT OTHERWISE
BE DEEMED SOLICITING MATERIAL OR BE DEEMED FILED UNDER SUCH ACTS.
2. ADOPTION OF AMENDMENT TO 1991 PLAN
THE AMENDMENT. At the Annual Meeting, stockholders will be asked to approve
an amendment, adopted by the Board of Directors on March 15, 1995, to the 1991
Plan (the "Amendment"). The Amendment has the following effects:
INCREASED NUMBER OF SHARES SUBJECT TO THE 1991 PLAN. The Amendment would
increase the authorized number of shares of Common Stock subject to the 1991
Plan by 1,800,000 shares (an additional 1,500,000 in the Key Employee Program
and 300,000 in the Non-Employee Director Program). At the time the 1991 Plan was
adopted, an aggregate of 1,200,000 shares of Common Stock was set aside for
delivery under the 1991 Plan, of which a maximum of 1,000,000 shares may be
delivered under the Key Employee Program and a maximum of 200,000 shares may be
delivered under the Non-Employee Director Program. As of January 31, 1995, no
shares had been issued under the Key Employee Program, 890,000 shares were
subject to outstanding but unexercised options granted thereunder and, assuming
approval of the Amendment, a total of 1,610,000 shares (plus shares which become
available through expiration, cancellation or termination of outstanding but
unexercised options and subject to adjustments pursuant to the 1991 Plan) were
available
14
<PAGE>
thereunder. As of January 31, 1995, 18,000 shares had been issued under the
Non-Employee Director Program, 100,000 shares were subject to outstanding but
unexercised options granted thereunder and, assuming approval of the Amendment,
a total of 382,000 shares (plus shares which become available through
expiration, cancellation or termination of outstanding but unexercised options
and subject to adjustments pursuant to the 1991 Plan) were available thereunder.
INCREASED FORMULA FOR GRANTS TO NON-EMPLOYEE DIRECTORS. The Amendment would
increase the amount of the formula awards to non-employee directors so that such
individuals receive annual nondiscretionary grants of nonqualified stock options
to purchase 3,000 shares of Common Stock over the remaining term of the 1991
Plan. Directors currently receive annual grants of nonqualified stock options to
purchase 2,000 shares of Common Stock. In addition, upon effectiveness of the
Amendment each current non-employee director would receive a one-time
nonqualified stock option to purchase 10,000 shares of Common Stock and each
non-employee director elected or appointed to the board after the effectiveness
of the Amendment would receive a one-time nonqualified stock option to purchase
10,000 shares of Common Stock upon each such director's initial election or
appointment.
REISSUE OF SHARES UNDER THE KEY EMPLOYEE PROGRAM. The Amendment would
authorize the reissue of an indeterminate number of shares delivered to pay the
exercise price or delivered or offset to pay withholding taxes in respect of the
exercise of options granted under the Key Employee Program. Such shares will,
however, be available only for grants of nonqualified stock options to persons
other than executive officers or directors. The 1991 Plan currently provides
that shares offset to pay withholding taxes in respect of the exercise of
options granted under the Key Employee Program are not available for future
grant thereunder.
LIMITS ON GRANTS TO ANY INDIVIDUAL. The Amendment also imposes a maximum
limit (1,000,000 shares) on the number of shares of Common Stock issuable under
options that during any calendar year are granted to any participant in the Key
Employee Program. This change is prompted by certain tax law requirements
relating to the deductibility of compensation paid under options plans.
SUMMARY DESCRIPTION OF THE 1991 PLAN. The 1991 Plan was approved by the
Company's stockholders at the 1992 Annual Meeting and has been amended since
that time principally in response to changing rules and interpretations of the
Securities and Exchange Commission and its staff under Section 16 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). The purposes
of the 1991 Plan are to promote the interests of the Company and its
stockholders, to improve the long-term financial performance of the Company, and
to attract and retain outside directors, members of management and key
individuals by providing competitive financial incentives.
The 1991 Plan consists of two parts: the Key Employee Program which allows
discretionary awards of nontransferable incentive stock options and nonqualified
stock options to officers, key employees and certain other individuals who
perform significant services for the Company and its subsidiaries; and the Non-
Employee Director Program which provides for initial grants and automatic annual
grants of nontransferable nonqualified stock options to non-employee directors.
Dr. MacNeal is eligible for the Key Employee Program. All other Directors are
eligible only for the Non-Employee Director Program.
The following summary of the 1991 Plan, as changed to reflect the Amendment,
is qualified in its entirety by reference to the text of the 1991 Plan. A copy
of the 1991 Plan is available for review at the principal executive offices of
the Company and will be furnished to stockholders without charge upon written
request directed to Louis A. Greco, Secretary, The MacNeal-Schwendler
Corporation, 815 Colorado Boulevard, Los Angeles, California 90041-1777. For
additional information regarding certain options and other benefits granted to
certain directors and officers of the Company, see "Election of Directors --
Compensation of Executive Officers" above.
The closing price of the Common Stock on April 21, 1995 was $14.75.
KEY EMPLOYEE PROGRAM
SHARES ISSUABLE UNDER THE KEY EMPLOYEE PROGRAM. A maximum of 2,500,000
shares of Common Stock may be issued upon the exercise of options under the Key
Employee Program. Shares relating to options
15
<PAGE>
granted under the Key Employee Program that are not exercised or are cancelled
typically will again be available for purposes of the Key Employee Program. In
addition, the Key Employee Program authorizes the reissue of an indeterminate
number of shares delivered to pay the exercise price or delivered or offset to
pay withholding taxes in respect of the exercise of an option granted thereunder
to persons who are not executive officers or directors of the Company. The
2,500,000 shares represent approximately 18.7% of the Common Stock issued and
outstanding on April 21, 1995.
ELIGIBILITY. Persons entitled to receive awards under the Key Employee Plan
include key employees and officers of the Company and its subsidiaries and
certain other individuals who perform services for the Company and its
subsidiaries similar to those performed by key employees (collectively,
"Eligible Employees"). There are presently approximately 620 Eligible Employees
who may participate in the Key Employee Program. Members of the Board of
Directors who are not officers or employees of the Company or its subsidiaries
are not eligible to participate in the Key Employee Program.
ADMINISTRATION. The Key Employee Program is administered by the
Compensation Committee of the Board of Directors (the "Committee"). All
Committee members must be "disinterested persons" within the meaning of Rule
16b-3(c) of the Securities and Exchange Commission, and under the 1991 Plan no
option may be granted to any Committee member except under the Non-Employee
Director Program. The Committee has full authority to authorize option awards to
Eligible Employees under the 1991 Plan. The Committee determines and designates
those Eligible Employees who are to be granted options under the 1991 Plan, the
number of shares to be subject to such options and the terms and conditions of
the options granted, subject to the express provisions of the 1991 Plan. The
Committee also has authority to interpret and construe the provisions of the
1991 Plan and to amend awards, subject to vested rights.
GRANT OF AWARDS. The Committee may in its discretion grant one or more
incentive stock options and/ or nonqualified stock options to any Eligible
Employee. Each option confers the right to purchase shares of Common Stock at a
future date. The purchase price per share of Common Stock covered by an option
granted under the Key Employee Program is determined by the Committee on the
date of grant of such option. The purchase price per share for an incentive
stock option must be at least equal to the fair market value of the Common Stock
on the award date. Nonqualified stock options may be granted at an exercise
price which is less than the fair market value of the Common Stock on the award
date. For a summary of the differences in the tax treatment of the two types of
Options, see "Federal Income Tax Consequences" below. Because the grant of
options is discretionary, the amount of options that would have been received by
Eligible Employees for the last fiscal year if the Amendment had been in effect
are not determinable.
EXERCISE OF OPTIONS. Unless the Committee otherwise provides, no option
granted under the Key Employee Program may be exercised until at least one year
after the initial award date, subject to acceleration as described below, and,
thereafter, such options become exercisable in one or more installments in the
manner and at the time or times specified by the Committee. Generally, once
exercisable, an option remains exercisable until its expiration or earlier
termination. No option may be exercised more than ten years after the date it is
granted or such shorter period as the Committee may determine. Subject to such
limitation, the Committee may extend or accelerate the exercisability of an
option in any circumstances it deems appropriate (including circumstances
related to a change in control or reorganization). Payment for the exercise of
an option may be made (i) in cash, (ii) in shares of Common Stock already owned
by the option holder, (iii) partly in cash and partly in shares of Common Stock,
or (iv) by delivery of a notice instructing the Company to deliver the shares
being purchased to a broker, subject to the broker's delivery of cash to the
Company equal to the purchase price.
REGRANTS AND REPRICING. The Committee may grant to an option holder, if he
or she is otherwise eligible, a new or modified option in lieu of an option
granted prior thereto, for a number of shares, at an exercise price, and for a
term, which in any of such respects is greater or lesser than that under the
earlier option, or may effect similar results by cancellation and regrant,
amendment, substitution or otherwise, subject only to the general limitations
under the 1991 Plan or under applicable law. Certain of such changes may require
the consent of the holder of the option.
16
<PAGE>
RELOAD OPTIONS. The Committee may authorize an option holder who uses
already-owned shares of Common Stock to pay for the exercise of options to
simultaneously receive a new "reload" option. Subject to certain limitations
specified in the 1991 Plan, such reload options would give the option holder the
right to purchase the same number of shares of Common Stock as such option
holder used to pay for the exercise of the earlier options. The exercise price
of the reload option would be equal to the fair market value of a share of
Common Stock on the date of exercise of the initial option to which the reload
feature relates. The reload option would only be exercisable if (i) the option
holder is an Eligible Employee n the exercise date, (ii) the exercise occurs at
least six months after its date of grant and (iii) the initial option to which
the reload option relates has not expired. The Committee may also authorize the
grant of additional reload options for the number of shares of Common Stock used
to pay for the exercise of any prior reload option.
TERMINATION OF EMPLOYMENT. The Committee may provide in the option
agreements (which need not be the same) or otherwise, the extent, if any, to
which options will remain exercisable by an Eligible Employee or the Eligible
Employee's personal representative or beneficiary after an Eligible Employee's
employment by the Company terminates for any reason, including voluntary or
involuntary termination, retirement, disability or death, and the extent, if
any, to which the exercisability of options may be accelerated or extended upon
termination of employment.
LIMITS ON GRANTS TO ANY INDIVIDUAL. The maximum number of shares of Common
Stock that are issuable under options that during any calendar year are granted
to any Eligible Employee participating in the Key Employee Program may not
exceed 1,000,000, subject to certain adjustments.
NON-EMPLOYEE DIRECTOR PROGRAM
SHARES ISSUABLE UNDER THE NON-EMPLOYEE DIRECTOR PROGRAM. A maximum of
500,000 shares of Common Stock may be issued upon the exercise of options under
the Non-Employee Director Program. Shares relating to options granted under the
Non-Employee Director Program that are not exercised will again be available for
purposes of the Non-Employee Director Program. The 500,000 shares represent
approximately 3.7% of the Common Stock issued and outstanding on April 21, 1995.
ADMINISTRATION. The Non-Employee Director Program provides for automatic
grants to members of the Board of Directors who are not officers or employees of
the Company or its subsidiaries.
GRANTS OF AWARDS. Only nonqualified stock options will be awarded under the
Non-Employee Director Program. On March 15, 1995, subject to approval of the
Amendment by stockholders, each current non-employee director received a
one-time nonqualified stock option to purchase 10,000 shares of Common Stock and
each non-employee director elected or appointed to the board after the
effectiveness of the Amendment will receive a one-time nonqualified stock option
to purchase 10,000 shares of Common Stock upon each such director's initial
election or appointment. In addition, each eligible director will receive an
annual nondiscretionary grant of a nonqualified stock option to purchase 3,000
shares of Common Stock. The first of such annual grants will be made on the
first business day in 1996 to the non-employee directors then in office.
Subsequent grants will occur on such day in each subsequent year through 2001.
Prior to adoption of the Amendment, non-employee directors have received
initial grants of nonqualified stock options to purchase 2,000 shares and annual
grants to purchase 2,000 shares of Common Stock. If the Amendment had been
adopted effective as of February 1, 1994, the non-employee directors would have
received in fiscal 1995 additional nonqualified stock options to purchase 95,000
shares of Common Stock. The purchase price per share of Common Stock covered by
an option granted under the Non-Employee Director Program is the fair market
value of the Common Stock on the date of grant of such option. The exercise
prices of options granted under the annual grant provision of the Non-Employee
Director Program in 1994 and 1995 were $12.625 and $10.50, respectively. The
precise value of the options to be granted is not determinable by any reliable
means known to the Board.
EXERCISE OF OPTIONS. Options awarded under the Non-Employee Director
Program become exercisable in full 12 months after the award date and expire on
the fifth anniversary of the award date. Payment for the exercise of an option
may be made (i) in cash, (ii) in shares of Common Stock already owned by the
option
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holder, (iii) partly in cash and partly in shares of Common Stock, or (iv) to
the extent permitted by applicable law, by delivery of a notice instructing the
Company to deliver the shares being purchased to a broker, subject to the
broker's delivery of cash to the Company equal to the purchase price. Any shares
of Common Stock used for such payment must have been held by the director for at
least six months prior to such exercise date.
TERMINATION OF DIRECTORSHIP. When a non-employee director's services as a
member of the Board of Directors terminate for any reason, the director's
options, to the extent they are exercisable on such date, shall remain
exercisable for six months after the date of such termination or until the
expiration of their stated term, whichever occurs first. Any option which is not
exercisable on the date of termination of such services will terminate.
AMENDMENTS AND MISCELLANEOUS
ADJUSTMENT AND ACCELERATION. The number and kind of shares available under
the 1991 Plan, as well as the number and price of shares subject to outstanding
options granted thereunder and other share amounts or limits under the 1991
Plan, are subject to adjustment in the event of certain reorganizations or
mergers, or a combination, recapitalization, stock split, stock dividend, or
other similar events. Upon the occurrence of a change in control, each option
granted under the 1991 Plan to an Eligible Employee participant will immediately
become exercisable, unless the Committee, prior to such change in control,
determines otherwise. Generally speaking, a change in control occurs under the
1991 Plan when (i) 20% or more of the combined voting power in the election of
directors of the Company's then outstanding securities is acquired by any entity
or group, (ii) a majority of the directors are replaced in a proxy contest,
(iii) the stockholders approve the dissolution or liquidation of the Company or
an agreement to merge, consolidate or otherwise reorganize (other than with a
subsidiary), as a result of which less than 50% of the voting securities of the
surviving entity are owned by stockholders of the Company prior to such
reorganization, or (v) the stockholders approve the sale of substantially all of
the Company's business and/or assets (other than to a subsidiary).
TERMINATION OF OR CHANGES TO THE 1991 PLAN. The authority to grant new
options under the 1991 Plan will terminate on December 11, 2001, unless the 1991
Plan is terminated prior to that time by the Board of Directors. The Board of
Directors may terminate or amend the 1991 Plan at any time, but no amendment
may, without the approval of the stockholders, (i) materially increase the
benefits accruing to recipients of awards, (ii) materially increase the
aggregate number of shares which may be issued under the 1991 Plan, or (iii)
materially modify the requirements of eligibility for participation. No
amendment, suspension or termination of the 1991 Plan will, without the written
consent of the participant, materially adversely affect any rights or benefits
of such participant or obligations of the Company under any then outstanding
award granted under the 1991 Plan. Amendments to the 1991 Plan that are
permitted without stockholder approval could increase the costs to the Company
of the 1991 Plan, although the amount thereof is not determinable. No guidelines
have been established relating to the nature of the amendments that may be made
to the 1991 Plan without stockholder approval.
1991 PLAN NOT EXCLUSIVE. The 1991 Plan does not limit the authority of the
Board of Directors or the Committee to grant awards or authorize any other
compensation, with or without reference to Common Stock, under any other plan or
authority. Stockholder approval of the Amendment, however, will not be deemed to
constitute approval of any such other compensatory awards.
FEDERAL INCOME TAX CONSEQUENCES. The federal income tax consequences of the
1991 Plan under current federal law, which is subject to change, are summarized
in the following discussion which deals with the general tax principles
applicable to the 1991 Plan. State and local consequences are beyond the scope
of this summary.
NONQUALIFIED STOCK OPTIONS. No taxable income will be recognized by an
Eligible Employee or non-employee director who receives an award under the 1991
Plan (a "Participant") upon the grant of a nonqualified stock option under the
1991 Plan. Upon the exercise of a nonqualified stock option, the Participant
will recognize ordinary income in an amount equal to the excess of the fair
market value of the
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Common Stock over the option exercise price, and the Company will be entitled to
a corresponding deduction. Upon a subsequent disposition of the Common Stock,
the Participant will recognize short-term or long-term capital gain or loss,
depending on how long the Common Stock is held. The Company will not be entitled
to any further deduction at that time.
INCENTIVE STOCK OPTIONS. A Participant who is granted an incentive stock
option under the 1991 Plan will not recognize taxable income either on the date
of grant or on the date of its exercise, provided that, in general, the exercise
occurs during employment or within three months after termination of employment.
However, any appreciation in share value after the date of grant will be
includable in the Participant's federal alternative minimum taxable income at
the time of exercise for purposes of determining liability for the alternative
minimum tax. If Common Stock acquired pursuant to an incentive stock option is
not sold or otherwise disposed of within two years from the date of grant of the
option nor within one year after the date of exercise, any gain or loss
resulting from disposition of the Common Stock will be treated as long-term
capital gain or loss. If stock acquired upon the exercise of an incentive stock
option is disposed of prior to the expiration of such holding periods (a
"Disqualifying Disposition"), the Participant will recognize ordinary income in
the year of such disposition in an amount equal to the excess of the fair market
value of the Common Stock on the date of exercise over the exercise price or, if
less, the excess of the amount realized on the Disqualifying Disposition over
the exercise price. Any remaining gain or any net loss will be treated as a
short-term or long-term capital gain or loss, depending upon how long the Common
Stock is held. Unlike the case in which a nonqualified stock option is
exercised, the Company will not be entitled to a tax deduction upon either the
grant or exercise of an incentive stock option or upon disposition of the Common
Stock acquired pursuant to such exercise, except to the extent that the
Participant recognizes ordinary income in a Disqualifying Disposition.
ACCELERATED PAYMENTS. If, as a result of certain changes in control of the
Company, a recipient's options become immediately exercisable, the additional
economic value, if any, attributable to the acceleration may be deemed a
"parachute payment." The additional value will generally be deemed a parachute
payment if such value, when combined with the value of other payments which are
deemed to result from the change in control, equals or exceeds a threshold
amount equal to 300% of the recipient's average annual taxable compensation over
the five calendar years preceding the year in which the change in control
occurs. In such case, the excess of the total parachute payments over such
recipient's average annual taxable compensation will be subject to a 20%
nondeductible excise tax in addition to any income tax payable. The Company will
not be entitled to a deduction for that portion of any parachute payment which
is subject to the excise tax.
SECTION 162(M) LIMITS ON DEDUCTIBILITY. Section 162(m) of the Internal
Revenue Code of 1986, as amended, limits the amount which may be deducted by the
Company with respect to compensation paid to the Chief Executive Officer and the
four other most highly compensated executives to $1 million per tax year for
each individual, unless such excess compensation is "performance-based" or is
otherwise exempt from Section 162(m). The applicable conditions of an exemption
for a performance-based compensation plan include, among others, a requirement
that the stockholders approve the material terms of the plan. Stock options that
may be granted under the 1991 Plan (other than any nonqualified stock options
granted at below market value exercise prices) are intended to qualify for the
exemption for performance-based compensation under Section 162(m).
STOCKHOLDERS SHOULD NOTE THAT BECAUSE EMPLOYEE DIRECTORS ARE ELIGIBLE TO
RECEIVE OPTIONS AND NON-EMPLOYEE DIRECTORS WILL RECEIVE (SUBJECT TO STOCKHOLDER
APPROVAL) OPTIONS UNDER THIS PROPOSAL, THE DIRECTORS HAVE A PERSONAL INTEREST IN
ITS APPROVAL. HOWEVER, THE MEMBERS OF THE BOARD ALSO BELIEVE THAT THE AMENDMENT
TO THE 1991 PLAN IS IN THE BEST INTEREST OF THE COMPANY AND ITS STOCKHOLDERS.
Adoption of the Amendment requires the affirmative vote of the holders of
the shares of the Company's Common Stock represented in person or by proxy and
entitled to vote at the 1995 Annual Meeting, assuming the presence of a quorum.
If it is not approved, the Amendment will not be adopted.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE
APPROVAL OF THE AMENDMENT TO THE 1991 PLAN.
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3. RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The Company's Board of Directors has selected Ernst & Young to serve as the
Company's independent accountants during the current fiscal year. A
representative of Ernst & Young is expected to be present at the 1995 Annual
Meeting to make such statements as he or she may desire and will be available to
answer appropriate questions from stockholders.
Services provided by Ernst & Young to the Company and its subsidiaries
during the fiscal year ended January 31, 1995 included the examination of the
Company's consolidated financial statements, services related to filings with
the Securities and Exchange Commission and consultation on various tax and
accounting matters.
Ratification of the appointment of Ernst & Young will require the
affirmative vote of at least a majority of the shares of the Company's Common
Stock represented in person or by proxy and entitled to vote at the 1995 Annual
Meeting, assuming the presence of a quorum.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS
VOTE FOR RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG
AS THE COMPANY'S INDEPENDENT ACCOUNTANTS.
VOTES REQUIRED
The nominees for election as directors who receive the vote of a plurality
of the shares entitled to be voted at the Annual Meeting, a quorum being
present, shall become directors at the conclusion of the tabulation of the
votes. Approval of the amendment to the 1991 Plan and ratification of the
appointment of the auditors each requires the vote of a majority of the shares
represented at the Annual Meeting and entitled to vote on any matter. A majority
of the Company's outstanding shares of Common Stock as of April 21, 1995 must be
represented in person or by proxy to constitute a quorum for the 1995 Annual
Meeting.
Votes cast by proxy or in person at the annual meeting will be counted by
the persons appointed by the Company to act as election inspectors for the
meeting. The election inspectors will treat shares represented by proxies that
reflect abstentions as shares that are present and entitled to vote for purposes
of determining the presence of a quorum and for purposes of determining the
outcome of any matter submitted to the stockholders for a vote. Abstentions,
however, do not constitute a vote "for" or "against" any matter and thus will be
disregarded in the calculation of a plurality.
The election inspectors will treat shares referred to as "broker non-votes"
(i.e., shares held by brokers or nominees as to which instructions have not been
received from the beneficial owners or persons entitled to vote that the broker
or nominee does not have discretionary power to vote on a particular matter) as
shares that are present and entitled to vote for purposes of determining the
presence of a quorum. However, for purposes of determining the outcome of any
matter as to which the broker has physically indicated on the proxy for such
shares that it does not have discretionary authority to vote on a particular
subject, those shares will be treated as not present and not entitled to vote
with respect to that matter (even though those shares are considered entitled to
vote for quorum purposes and may be entitled to vote on other matters).
Any unmarked proxies, including those submitted by brokers or nominees, will
be voted as indicated in the accompanying proxy card and as summarized elsewhere
in this Proxy Statement.
OTHER MATTERS
OTHER BUSINESS
The Board of Directors has no present intention of bringing before the 1995
Annual Meeting for action any matters other than those listed in the Notice of
Annual Meeting and discussed above in this Proxy Statement, and management is
not aware of any matters which may be presented by others. If any other
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<PAGE>
business properly comes before the meeting, however, the proxy confers
discretionary authority to vote with respect to such matters, and the persons
named in the Proxy Card will vote on such matters, if any, in accordance with
their best judgment.
PROPOSALS OF SECURITY HOLDERS
It is expected that the Company's 1996 Annual Meeting will be held on or
about June 13, 1996. Stockholders desiring to submit proposals for inclusion in
the Company's proxy materials for, and for action at, that meeting will be
required to submit them to the Company on or before December 30, 1995 (120 days
before April 29, 1996). Any such stockholder proposal must also be proper in
form and substance in accordance with the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder, in order to be so
included. Proposals should be submitted to Mr. Louis A. Greco, Secretary, The
MacNeal-Schwendler Corporation, 815 Colorado Boulevard, Los Angeles, California
90041.
ANNUAL REPORT TO SHAREHOLDERS
Enclosed with this Proxy Statement is the Annual Report of the Company for
the fiscal year ended January 31, 1995. The enclosed Annual Report is included
for the convenience of stockholders only and should not be viewed as part of the
proxy solicitation material.
EXHIBITS TO ANNUAL REPORT ON FORM 10-K
If any person who was a beneficial owner of Common Stock of the Company on
the record date for the 1995 Annual Meeting desires additional information, a
copy of the exhibits to the Company's Report on Form 10-K will be furnished upon
receipt of a written request and payment of copying charges. The request should
identify the person requesting the exhibits as a stockholder of the Company as
of April 21, 1995. Requests should be directed to Mr. Louis A. Greco, Secretary,
The MacNeal-Schwendler Corporation, 815 Colorado Boulevard, Los Angeles,
California 90041.
By Order of the Board of Directors
Louis A. Greco
SECRETARY AND CHIEF FINANCIAL OFFICER
April 28, 1995
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THE MACNEAL-SCHWENDLER CORPORATION
Annual Meeting of Stockholders June 14, 1995
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE MACNEAL-SCHWENDLER CORPORATION
The undersigned hereby appoints R.H. MacNeal and George N. Riordan, and each
of them, proxyholders, each with full power of substitution to vote for the
undersigned at the Annual Meeting of Stockholders of The MacNeal-Schwendler
Corporation to be held on June 14, 1995, and at any adjournments thereof, with
respect to the following matters, which were more fully described in the Proxy
Statement dated April 28, 1995, (the "Proxy Statement"), receipt of which is
hereby acknowledged by the undersigned.
THIS PROXY WILL BE VOTED AS DIRECTED. UNLESS OTHERWISE DIRECTED, THIS PROXY
WILL BE VOTED FOR THE REELECTION OF THE TWO DIRECTOR NOMINEES AND FOR EACH OF
THE OTHER PROPOSALS.
See Reverse Side
<PAGE>
Please mark
x your choices
like this
- ------
Common
The Board of Directors recommends that you vote FOR the nominees on Proposal 1
and FOR Proposals 2 and 3.
FOR all nominees WITHHOLD
listed below (except AUTHORITY to vote
as marked to the for all nominees
contrary below.) listed below.
/ / / /
(1) The election of the nominees for director specified in the Proxy Statement
to Class I of the Board of Directors.
Paul B. MacCready, Frank Perna
(INSTRUCTION: To withhold authority to vote for any nominee, line through his
name.)
FOR AGAINST ABSTAIN
(2) Approval of the Amendment to the 1991 Plan. / / / / / /
To approve the Amendment to the 1991 Plan.
FOR AGAINST ABSTAIN
/ / / / / /
(3) Ratification of Accountants. To ratify the appointment of Ernst & Young
to serve as the Company's independent accountants for the fiscal year
ending January 31, 1996.
(4) Such other matters as may properly come before the meeting or any
adjournment thereof. As to such other matters, the undersigned hereby
confers discretionary authority.
Dated: , 1995
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- ---------------------------------------------------------------------------
(Please Print Name)
- ---------------------------------------------------------------------------
(Signature of Holder of Common Stock)
- ---------------------------------------------------------------------------
(Signature if Held Jointly)
NOTE: Please sign exactly as your name is printed. Each joint tenant should
sign. Executors, administrators, trustees and guarantors should give full
titles when signing. Corporations and partnerships should sign in full
corporate or partnership name by authorized person. Please mark, sign,
date and return your Proxy promptly in the enclosed envelope, which
requires no postage if mailed in the United States.
