SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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
[X] Definitive proxy statement Rule 14a-6(e)(2))
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Activision, Inc.
- -----------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- -----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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:
Activision
3100 Ocean Park Boulevard
Santa Monica, California 90405
August 16, 1999
Dear Stockholder:
You are cordially invited to attend the 1999 Annual Meeting of
Stockholders of Activision, Inc. The meeting will be held on Thursday,
September 23, 1999, beginning at 9:00 a.m. at the Peninsula Hotel, 9882 South
Santa Monica Blvd., Beverly Hills, California 90212.
Information about the meeting and the matter on which the stockholders
will act is included in the Notice of Annual Meeting of Stockholders and
Proxy Statement which follow. Also included is a Proxy Card and postage paid
return envelope.
It is important that your shares be represented at the Annual Meeting.
Whether or not you plan to attend, we hope that you will complete and return
your Proxy Card in the enclosed envelope as promptly as possible.
Sincerely,
/s/ Robert A. Kotick
-----------------------------
Robert A. Kotick
Chairman and
Chief Executive Officer
/s/ Brian G. Kelly
-----------------------------
Brian G. Kelly
Co-Chairman
Activision
3100 Ocean Park Boulevard
Santa Monica, California 90405
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held September 23, 1999
To the Stockholders of Activision, Inc.
The 1999 Annual Meeting of Stockholders of Activision, Inc. (the
"Company") will be held at the Peninsula Hotel, 9882 South Santa Monica
Blvd., Beverly Hills, California 90212, on Thursday, September 23, 1999 at
9:00 a.m., local time, for the following purposes:
1. To elect six directors of the Company to hold office for one year
terms and until their respective successors are duly elected and
qualified.
2. To transact such other business as may properly come before the
meeting or any adjournment(s) or postponement(s) thereof.
The foregoing items of business are described more fully in the Proxy
Statement accompanying this Notice.
The Board of Directors of the Company has fixed the close of business on
July 26, 1999 as the record date for determining the stockholders entitled to
receive notice of, and to vote at, the Annual Meeting.
STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
YOUR VOTE IS IMPORTANT. ACCORDINGLY, YOU ARE URGED TO COMPLETE, SIGN,
DATE AND RETURN THE ACCOMPANYING PROXY CARD PROMPTLY IN THE ENVELOPE
PROVIDED, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING. NO POSTAGE
IS REQUIRED IF THE PROXY CARD IS MAILED IN THE UNITED STATES. STOCKHOLDERS
WHO ARE PRESENT AT THE ANNUAL MEETING MAY WITHDRAW THEIR PROXY AND VOTE IN
PERSON IF THEY SO DESIRE. IT IS IMPORTANT THAT YOUR PROXY CARD BE RETURNED
PROMPTLY IN ORDER TO AVOID THE ADDITIONAL EXPENSE OF FURTHER SOLICITATION.
By Order of the Board of Directors,
/s/ Lawrence Goldberg
---------------------------
Lawrence Goldberg
Secretary
August 16, 1999
Santa Monica, California
Activision
3100 Ocean Park Boulevard
Santa Monica, California 90405
--------------------------------------------------
PROXY STATEMENT
for the
Annual Meeting of Stockholders
to be held on September 23, 1999
--------------------------------------------------
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors (the "Board") of Activision, Inc., a Delaware
corporation (the "Company"), of proxies from the holders (the "Stockholders")
of the Company's issued and outstanding shares of common stock, $.000001 par
value per share (the "common stock"), to be used at the Annual Meeting of
Stockholders to be held on Thursday, September 23, 1999, at the Peninsula
Hotel, 9882 South Santa Monica Blvd., Beverly Hills, California 90212, at
9:00 a.m., local time, and at any adjournment(s) or postponement(s) of such
meeting (the "Annual Meeting"), for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders.
This Proxy Statement and enclosed proxy card are first being mailed to
the Stockholders of the Company on or about August 16, 1999.
At the Annual Meeting, the Stockholders will be asked to consider and
vote upon the following:
1. The election of six directors of the Company ("Directors") to hold
office for one year terms and until their respective successors are
duly elected and qualified.
2. Such other business as may properly come before the Annual Meeting.
Only the holders of record of the Company's common stock at the close of
business on July 26, 1999 (the "record date") are entitled to notice of, and
to vote at, the Annual Meeting. Each share of common stock is entitled to
one vote on all matters. As of the record date, 23,531,091 shares of the
Company's common stock were outstanding.
A majority of the outstanding shares of common stock entitled to vote at
the Annual Meeting must be represented at the Annual Meeting in person or by
proxy to constitute a quorum for the transaction of business at the Annual
Meeting. A plurality of all the votes cast at the Annual Meeting is
sufficient to elect a Director.
The common stock represented by all properly executed proxy cards
returned to the Company will be voted at the Annual Meeting as indicated or,
if no instruction is given, in favor of the election of the Directors. As to
any other business which may properly come before the Annual Meeting, all
properly executed proxy cards returned to the Company will be voted by the
persons named therein in accordance with their best judgment. The Company
does not presently know of any other business which may come before the
Annual Meeting. Any person giving a proxy has the right to revoke it at any
time before it is exercised (a) by filing with the Secretary of the Company a
duly signed revocation or a proxy bearing a later date or (b) by electing to
vote in person at the Annual Meeting. Mere attendance at the Annual Meeting
will not serve to revoke a proxy.
In order that your shares of common stock may be represented at the
Annual Meeting, you are requested to:
-- indicate your instructions on the proxy card;
-- date and sign the proxy card;
-- mail the proxy card promptly in the enclosed envelope; and
-- allow sufficient time for the proxy card to be received on or
before 11:00 a.m. on September 15, 1999.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT, AND, IF
GIVEN OR MADE, SUCH INFORMATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED AND THE DELIVERY OF THIS PROXY STATEMENT SHALL, UNDER NO
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
PROPOSAL 1
ELECTION OF DIRECTORS
Six Directors are to be elected to serve until the Company's next Annual
Meeting of Stockholders and until their respective successors are duly
elected and qualified. Except where otherwise instructed, proxies solicited
by this Proxy Statement will be voted for the election of each of the six
nominees listed below, all of whom are presently members of the Board. Each
nominee has consented to be named in this Proxy Statement and to serve as a
Director if elected. However, if any nominee shall become unable to stand
for election as a Director at the Annual Meeting, an event not now
anticipated by the Board, the proxy will be voted for a substitute designated
by the Board or, if no substitute is selected by the Board prior to or at the
Annual Meeting, for a motion to reduce the membership of the Board to the
number of nominees available. All Directors serve for one year terms. There
is no family relationship between any nominee and any other nominee or
Executive Officer of the Company.
Directors/Nominees
The names of the nominees, and certain information about them (including
their terms of service), are set forth below:
Director
Name of Nominee Age Principal Occupation Since
--------------- --- -------------------- -----
Harold A. Brown (1) 47 Partner, Gang, Tyre, Ramer 1996
& Brown, Inc.
Barbara S. Isgur (1)(2) 57 Sr. Vice President, Stratagem 1991
Brian G. Kelly 36 Co-Chairman of the Company 1995
Robert A. Kotick 36 Chairman and Chief Executive 1991
Officer of the Company
Steven T. Mayer (1)(2) 54 Consultant 1991
Robert J. Morgado (2) 56 Chairman, Maroley Media Group 1997
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
Mr. Brown has been a Director of the Company since November 1996. Mr.
Brown is a partner in the law firm of Gang, Tyre, Ramer & Brown, Inc. He has
been with Gang, Tyre, Ramer & Brown, Inc. since 1976 and a partner since
1980. He graduated Order of the Coif from Boalt Hall (UC Berkeley) Law
School in 1976. Since 1984, he has served as Executive Director of the
Entertainment Law Institute at the University of Southern California and has
been a member of the Board, Treasurer and Chairman of the Finance and Audit
Committee of the Geffen Playhouse since 1996. In addition, Mr. Brown has
been a member of the Hebrew Union College Los Angeles Board of Overseers
since 1994. Gang, Tyre, Ramer & Brown, Inc. has from time to time performed
legal services for the Company.
Ms. Isgur has been a Director of the Company since February 1991. From
1993 until 1999, she was a Senior Vice President of Stratagem, an investment
banking firm specializing in the software industry. Ms. Isgur also served as
President of BSI Consulting from 1990 to 1993. She served as a Vice
President of Needham & Co., a high technology investment banking firm, from
1989 to 1990. During 1988, Ms. Isgur served as a Vice President at
Manufacturers Hanover Securities. From 1985 to 1988, she was a principal of
D.H. Brown Associates. Ms. Isgur was a Vice President and microcomputer
industry analyst at Paine Webber, Incorporated from 1981 to 1985.
Mr. Kelly has been a Director of the Company since July 1995. He has
served as Co-Chairman of the Company since October 1998. He previously
served as President from July 1997 to October 1998 and Chief Operating
Officer from July 1995 to October 1998. He also served as Chief Financial
Officer of the Company from February 1991 until July 1997 and Secretary of
the Company from May 1991 until October 1997. Mr. Kelly served as Vice
President-Finance of International Consumer Technologies Corporation ("ICT")
from December 1990 to January 1995 and as director of ICT from February 1994
to January 1995. In January 1995, ICT was merged with and into a subsidiary
of the Company. Mr. Kelly holds a law degree from Fordham Law School and a
B.A. degree in accounting from Rutgers University, and is a certified public
accountant.
Mr. Kotick has been a Director of the Company since February 1991. He
has served as Chairman and Chief Executive Officer of the Company since
February 1991. Mr. Kotick was Chairman and Chief Executive Officer of
Leisure Concepts, Incorporated, a public company in the licensing and
merchandising business, from June 1990 to December 1990. He was also a
founder of ICT and acted as its President as well as a Director from its
inception in 1986 to January 1995.
Mr. Mayer has been a Director of the Company since February 1991. Mr.
Mayer is an independent multimedia consultant to a number of major
corporations. From 1984 until December 1992, Mr. Mayer was Chairman of the
Board of Digital F/X, Incorporated, a manufacturer of video production
equipment. Mr. Mayer was a founder of Atari Corporation in 1973, and served
as a Division President of Warner Communications-Entertainment Software until
1985, when he left to start Take One Partners, Incorporated, the predecessor
to Digital F/X.
Mr. Morgado has been a Director of the Company since February 1997. Mr.
Morgado is Chairman of Maroley Media Group, a media entertainment investment
company he established in 1995. From 1985 to 1995, he was the Chairman and
Chief Executive Officer of the Warner Music Group, Inc. Mr. Morgado serves
on the Board of Trustees of the New School for Social Research and is the
Chairman of the Board of Governors of the Mannes College of Music. Mr.
Morgado also is Chairman of the Board of World Communications, Inc., a
position he has held since January 1997; he also has been a member of the
Board of Nest Entertainment since January 1996.
The Board recommends that you vote FOR the election
of each nominee for Director.
Board of Directors Meetings and Committees
The Board held four meetings and acted three times by unanimous written
consent during the Company's full fiscal year ended March 31, 1999. In such
fiscal year, each incumbent Director attended all of the meetings of the
Board and of each committee thereof of which he or she was a member, except
that Mr. Kotick did not attend one meeting of the Board of Directors.
The Board has established an Audit Committee and a Compensation
Committee. The Board does not have a nominating committee or a committee
performing the functions of a nominating committee.
During the fiscal year ended March 31, 1999, the Audit Committee was
composed of Ms. Isgur and Mr. Mayer and on June 25, 1998, the Board voted to
expand the committee to three and added Mr. Brown as a member. The function
of the Audit Committee is to recommend to the Board the independent public
accountants to be engaged by the Company and to review the Company's general
policies and procedures with respect to audits and accounting and financial
controls, the scope and results of the auditing engagement and the extent to
which the Company has implemented changes suggested by the internal audit
staff and the independent public accountants. The Audit Committee also
reviews the terms of material related party transactions. No member of the
Audit Committee is an employee of the Company. The Audit Committee met twice
during the fiscal year ended March 31, 1999.
During the fiscal year ended March 31, 1999, the Compensation Committee
was composed of Ms. Isgur and Mr. Mayer and on June 25, 1998, the Board voted
to expand the committee to three and added Mr. Morgado as a member. The
Compensation Committee reviews and makes recommendations to the Board
concerning the Company's executive compensation policy. The Compensation
Committee also serves as the committee to administer the Company's 1991 Stock
Option and Stock Awards Plan, the 1998 Incentive Plan and the 1999 Incentive
Plan (collectively, the "Plans"). No member of the Compensation Committee is
an employee of the Company. The Compensation Committee met once during the
fiscal year ended March 31, 1999. See "Compensation Committee Interlocks and
Insider Participation in Compensation Decisions" and "Compensation Committee
Report on Executive Compensation."
Executive Officers
None of the Executive Officers of the Company are related, and each
holds office at the pleasure of the Board. As of July 26, 1999, the
Executive Officers of the Company were as set forth below.
Executive Officers
Robert A. Kotick, has been a Director of the Company since 1991 and
Chairman and Chief Executive Officer of the Company since February 1991.
Biographical information regarding Mr. Kotick is set forth under "Nominees
for Election as Directors."
Brian G. Kelly, has been a Director of the Company since 1995 and Co-
Chairman of the Company since October 1998. Biographical information
regarding Mr. Kelly is set forth under "Nominees for Election as Directors."
Ronald Doornink, 45, has served as President and Chief Operating Officer
since October 1998. Mr. Doornink joined Activision from ConAgra Snack Food
Company where, for three years, he served as President of the Hunt-Wesson
Snack Food division. During the thirteen years preceding that, Mr. Doornink
was employed with Procter & Gamble Company, serving most recently as Managing
Director, Global Strategic Planning for the Paper Sector. Mr. Doornink holds
an MBA degree from Columbia University and an undergraduate degree in
Economics from the Hogere Economische School of Arnhem in The Netherlands.
Robert J. Dewar, 44, has served as Executive Vice President,
International Publishing since June 1999. He also served as Senior Vice
President, International Publishing from July 1997 until June 1999 and
Managing Director of the Company's European operations from October 1996
until July 1997. From 1989 until 1996, Mr. Dewar was employed with
Electronic Arts, most recently as Vice President and Chief Operating Officer
of Electronic Arts Europe. From 1987 until 1989, Mr. Dewar was the Finance
and Operational Director of Mirrorsoft, the software publishing arm of
Maxwell Communications Corporation. From 1985 until 1987, he worked as the
Financial and Operational Director for Nationwide Refrigeration Supplies.
Mr. Dewar holds a degree in Business Studies and Economics from Dundee
University and is qualified as a Chartered Accountant.
Lawrence Goldberg, 40, has served as Executive Vice President of the
Company since June 1999, Secretary since October 1997 and General Counsel
since August 1994 . Mr. Goldberg also served as Senior Vice President,
Business Affairs from July 1997 to June 1999 and as Vice President, Business
Affairs from August 1994 to July 1997. Mr. Goldberg was an attorney at
Rosenfeld, Meyer and Susman from 1986 to 1994 and a partner from 1991 to
1994. From 1984 until 1986, Mr. Goldberg was an attorney at O'Melveny &
Myers. Mr. Goldberg received his law degree from the University of
California at Los Angeles and he holds a B.S. degree in Industrial and Labor
Relations from Cornell University.
Mitchell H. Lasky, 37, has served as Executive Vice President, Worldwide
Studios since June 1999. Previously, Mr. Lasky served as Senior Vice
President, Studios from July 1997 until June 1999 and Vice President,
Business Development from April 1996 until July 1997. From 1995 until 1996,
Mr. Lasky was founder and Chief Executive Officer of Serum, a start-up
developer of multiplayer internet games. From 1993 to 1995, Mr. Lasky was a
Senior Counsel for Disney Interactive. From 1988 to 1993, he was an attorney
for Irell & Manella. Mr. Lasky received his law degree from the University
of Virginia and he holds a B.S. degree in History and Literature from Harvard
University.
Barry J. Plaga, 37, has served as Executive Vice President since June
1999 and as Chief Financial Officer since July 1997. Mr. Plaga also served
as Senior Vice President from July 1997 until June 1999 and Vice President,
Finance from February 1991 until July 1997. In addition, Mr. Plaga was
Controller of ICT and Disc Company, Inc. ("TDC"), a former wholly owned
subsidiary of ICT, from January 1991 until January 1995. Mr. Plaga holds a
Masters degree in Accounting and a B.S. degree in Business Administration
from the University of Southern California, and is a certified public
accountant.
Ronald L. Scott, 38, has served as Executive Vice President, North
American Publishing since June 1999. Previously, Mr. Scott served as Senior
Vice President, North American Sales from July 1997 until June 1999 and as
Vice President of North and Latin American Sales and Distribution from July
1996 until July 1997. From 1987 until 1996, Mr. Scott served in various
capacities with The Nestle Food Company, most recently as Director of
Business Development. From 1984 until 1987, Mr. Scott was employed by the
Procter and Gamble Distributing Co. Mr. Scott holds a B.S. degree in
Economics and Mathematics from Occidental College.
Richard A. Steele, 43, has served as Executive Vice President,
Distribution since June 1999. Previously, Mr. Steele served as Managing
Director of the Company's European Distribution Operations from November 1997
until June 1999. From 1985 until November 1997, Mr. Steele was employed by
CentreSoft (acquired by the Company as a subsidiary of Combined Distribution
Holdings, Ltd., in November 1997), most recently as Managing Director. Mr.
Steele holds a B.A. degree in English and Related Literature from the
University of York.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information, as of July 26, 1999, with
respect to the beneficial ownership of the Company's common stock by: (i)
each stockholder known by the Company to be the beneficial owner of more than
5% of the Company's common stock; (ii) each Director and nominee; (iii) each
Executive Officer named in the Summary Compensation Table below; and (iv) all
Executive Officers and Directors as a group. Unless otherwise noted, the
persons named in the table have sole voting and investment power with respect
to all shares shown as beneficially owned by him, her or it.
Shares Beneficially Owned
-------------------------
Percent of
Number Right to Outstanding
Beneficial Owner and Address Owned Acquire(1) Shares(2)
- ---------------------------- ------ ---------- ---------
J.&W. Seligman & Co. 2,575,668 - 10.7
Incorporated (3)
100 Park Avenue
New York, New York 10017
Robert A. Kotick (4) 976,358 1,150,106 8.6
Franklin Resources, Inc. (5) 1,735,873 - 7.3
777 Mariners Island Blvd
P.O. Box 7777
San Mateo, California 94403-777
Brian G. Kelly (6) 305,552 1,267,892 6.3
Wellington Management
Company, LLP (7) 1,380,000 - 5.9
75 State Street
Boston, Massachusetts 02109
Louis J.K.J. Reytenbagh (8) 1,362,500 - 5.8
John T. Baker, IV (9) 1,143 - *
Ronald Doornink 10,000 56,706 *
Lawrence Goldberg 1,667 177,000 *
Barry J. Plaga 67,943 104,808 *
Steven T. Mayer, Director 28,428 44,167 *
Barbara S. Isgur, Director - 44,167 *
Harold A. Brown, Director - 19,252 *
Robert J. Morgado, Director - 19,252 *
All Directors and Executive
Officers as a Group
(14 persons) 1,677,277 3,259,062 18.8
_________________________________________________________________________
* Percent of class less than 1%.
(1) Shares that can be acquired within 60 days through the exercise of
options or warrants.
(2) Percent of outstanding shares with respect to each of Wellington
Management Company, LLP and Louis J.K.J. Reytenbagh was computed based
on 23,531,091 shares of the Company's common stock outstanding as of
July 26, 1999, which does not assume the exercise of any outstanding
Director or employee warrants or options. Percent of outstanding shares
with respect to each of J.&W. Seligman & Co. Incorporated and Franklin
Resources, Inc. was computed based on 23,531,091 shares of the Company's
common stock outstanding as of July 26, 1999 and the number of shares of
the Company's common stock issuable upon conversion of the Company's
6 3/4% convertible subordinated notes due 2005 held by such entity.
Percent of outstanding shares with respect to Messrs. Kotick, Kelly,
Doornink, Goldberg, Plaga and Baker, and all Directors and Executive
Officers as a Group, was computed based on 23,531,091 shares of the
Company's common stock outstanding as of July 26, 1999 and, in each such
person's case, the number of shares of the Company's common stock
issuable upon the exercise of the warrants or options exercisable within
60 days held by such individual or, in the case of all Directors and
Executive Officers as a Group, the number of shares of the Company's
common stock issuable upon the exercise of the warrants or options
exercisable within 60 days held by all such individuals, but does not
include the number of shares of common stock issuable upon the exercise
of any other outstanding Director or employee warrants or options.
(3) The number of shares owned by J.W. Seligman and Co., Incorporated is
based on ownership data publicly available as of July 19, 1999 and J.W.
Seligman and Co., Incorporated's Schedule 13G/A dated January 31, 1999.
Includes 549,668 common shares issuable upon conversion of $10,375,000
of the Company's 6 3/4% convertible subordinated notes due 2005.
(4) Includes 37,481 shares owned directly by Delmonte Investments, L.L.C.,
of which such individual is a controlling person, and 96,092 shares
issuable upon the exercise of currently exercisable options issued to
such individual as part of the January 1995 merger with ICT in exchange
for options to purchase shares of ICT stock previously held by such
person. Does not include an additional 64,500 shares transferred by Mr.
Kotick to an irrevocable trust for the benefit of his minor children
with respect to which Mr. Kotick disclaims beneficial ownership.
(5) The number of shares owned by Franklin Resources, Inc. is based on
ownership data publicly available as of July 19, 1999 and Franklin
Resources, Inc.'s Schedule 13G/A dated December 31, 1998. Includes
158,940 common shares issuable upon conversion of $3,000,000 of the
Company's 6 3/4% convertible subordinated notes due 2005.
(6) Includes 37,481 shares owned directly by Delmonte Investments, L.L.C.,
of which such individual is a controlling person, and 73,833 shares
issuable upon the exercise of currently exercisable options issued to
such individual as part of the January 1995 merger with ICT in exchange
for options to purchase shares of ICT stock previously held by such
person.
(7) The number of shares owned by Wellington Management Company, LLP is
based on ownership data publicly available as of July 19, 1999 and
Wellington Management Company, LLP's Schedule 13G dated March 31, 1998.
(8) The number of shares owned by Louis J.K.J. Reytenbagh is based on Louis
J.K.J. Reytenbagh's Schedule 13G dated April 1, 1999.
(9) The number of shares owned by Mr. Baker is based on information obtained
from Company records as of September 30, 1998.
COMMON SHARE PRICE PERFORMANCE GRAPH
The graph below compares the Company's cumulative total stockholder
return on its common stock in the period from April 1, 1994, through March
31, 1999, with the total cumulative return of the NASDAQ Market Index and
Hambrecht & Quist High Technology Index over the same period.
The comparisons in the graph below are based on historical data and are
not intended to forecast the possible future performance of the Company's
common stock.
The graph below shall not be deemed to be incorporated by reference by
any general statement incorporating by reference this Proxy Statement into
any filing under the Securities Act of 1933, as amended, or under the
Securities Exchange Act of 1934, as amended, except to the extent that the
Company specifically incorporates this information by reference, and shall
not otherwise be deemed filed under such Acts.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
ACTIVISION NASDAQ H&Q TECHNOLOGY
---------- ------- --------------
3/31/94 $100.0 $100.0 $100.0
3/31/95 $69.6 $109.9 $129.0
3/31/96 $152.2 $148.1 $177.1
3/31/97 $130.4 $164.3 $226.1
3/31/98 $124.6 $246.9 $351.8
3/31/99 $143.5 $331.0 $492.2
Director and Executive Officer Compensation
Compensation of Directors
Each Director who was not an employee of the Company was compensated at
the rate of $10,000 per year for his or her regular services as a Director,
with an additional $1,000 for each Board meeting attended in person, $750 for
each Board meeting attended via conference telephone, $750 for each meeting
of a committee of the Board of which such Director is a member attended in
person and $500 for each meeting of a committee of the Board of which such
Director is a member attended via conference telephone.
Executive Compensation
The following table sets forth certain information with respect to the
annual and long-term compensation for services in all capacities to the
Company for the fiscal years ended March 31, 1999, 1998 and 1997, of those
persons who were at March 31, 1999 (i) the Chief Executive Officer of the
Company, (ii) the Company's four other most highly compensated Executive
Officers whose salary and bonus exceeded $100,000, or (iii) individuals who
would have been one of the four most highly compensated Executive Officers
but for the fact such individuals were not serving as Executive Officers of
the Company at March 31, 1999 (collectively, the "Named Executives").
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation
Compensation Securities
Name and Fiscal ------------------- Other Underlying
Principal Position Year Salary Bonus Compensation Options (#)
- ------------------ ---- --------- --------- ------------ -----------
Robert A. Kotick 1999 $297,500 - 500(3) 1,228,951
Co-Chairman, Chief 1998 225,475 - 475(3) 125,000
Executive Officer 1997 192,975 - 475(3) 68,821
and Director
Brian G. Kelly 1999 $297,500 - $3,950(4) 1,258,951
Co-Chairman and 1998 225,060 - 475(3) 637,000
Director 1997 176,000 - 475(3) 58,021
Ronald Doornink (1) 1999 $122,000 - $20,833(5) 200,000
President and Chief - - - - -
Operating Officer - - - - -
Lawrence Goldberg 1999 $200,000 - $500(3) 34,000
Executive Vice 1998 165,010 $15,000 475(3) 125,328
President, General 1997 151,941 - 408(3) 15,000
Counsel and
Secretary
Barry J. Plaga 1999 $185,000 - $396(3) 33,000
Executive Vice 1998 149,850 $15,000 475(3) 67,054
President and 1997 137,829 - 450(3) 40,228
Chief Financial
Officer
John T. Baker, IV (2) 1999 $195,246 - $1,970(6) 500
Senior Vice 1998 160,017 $15,000 475(3) 140,562
President, 1997 139,050 - 408(3) 15,000
Corporate
Development
(1) Mr. Doornink commenced employment with the Company in October 1998.
(2) Mr. Baker's employment with the Company was terminated on March 30,
1999.
(3) Represents the Company's contribution to the Executive Officer's 401(k)
plan.
(4) Represents the Company's contribution of $500 to the Executive Officer's
401(k) plan and the discount of $3,450 recognized on the purchase of
common stock pursuant to the Company's employee stock purchase plan.
(5) Represents scheduled forgiveness of indebtedness with respect to a loan
made upon commencement of employment.
(6) Represents the Company's contribution of $500 to the Executive Officer's
401(k) plan and discount of $1,470 recognized on the purchase of common
stock pursuant to the Company's employee stock purchase plan.
The following table sets forth information regarding individual grants
of options to purchase the Company's common stock during the Company's 1999
fiscal year to each of the Named Executives. All such grants were made
pursuant to the Plans with the exception of certain options granted to
Messrs. Kelly and Kotick, as described below in footnote (4). In accordance
with the rules of the Securities and Exchange Commission ("SEC"), the table
sets forth the hypothetical gains or "option spreads" that would exist for
the options at the end of their respective ten year terms based on assumed
annualized rates of compound stock price appreciation of 5% and 10% from the
dates the options were granted to the end of the respective ten year option
terms. Actual gains, if any, on option exercises are dependent on the future
performance of the Company's common stock. The hypothetical gains shown in
this table are not intended to forecast possible future appreciation, if any,
of the stock price.
<PAGE>
<TABLE>
<CAPTION>
Option Grants in Last Fiscal Year
Potential Realizable Value at Assumed Annual
Individual Grants Rates of Stock Price Appreciation for
---------------------------------------------- Option Term of 10 YearS (12)
% of Total ----------------------------------------------
Options 5% 10%
Securities Granted to Exercise ------------------- ----------------------
Underlying Employees or Base Price Price
Options In Fiscal Price Expiration Per Aggregate Per Aggregate
Name (#) Year(1) ($/Share) Date Share Value Share Value
---- --- ------- --------- ---- ----- ----------- ----- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert A. Kotick 150,000 2.71% $9.44 (2) 06/05/08 $15.37 $889,800 $24.48 $2,256,300
108,951 1.97% $9.50 (3) 06/05/08 $15.47 $650,437 $24.64 $1,649,518
1,000,000 18.06% $10.50 (4) 01/12/09 $17.10 $6,600,000 $27.23 $16,730,000
Brian G. Kelly 150,000 2.71% $9.44 (2) 06/05/08 $15.37 $889,800 $24.48 $2,256,300
108,951 1.97% $9.50 (3) 06/05/08 $15.47 $650,437 $24.64 $1,649,518
1,000,000 18.06% $10.50 (4) 01/12/09 $17.10 $6,600,000 $27.23 $16,730,000
Ronald Doornink 200,000 3.61% $10.31 (5) 10/26/08 $16.80 $1,297,400 $26.75 $3,287,400
Lawrence Goldberg 1,000 .02% $10.88 (6) 09/14/08 $17.71 $6,835 $28.21 $17,335
33,000 .60% $10.56 (7) 03/04/09 $17.21 $219,368 $27.40 $555,638
Barry J. Plaga 33,000 .60% $10.56 (8) 03/04/09 $17.21 $219,368 $27.40 $555,538
John T. Baker, IV 500 .01% $10.25 (8) 10/02/08 $16.70 $3,225 $26.59 $8,170
</TABLE>
(1) Options to purchase an aggregate of approximately 5,538,000 shares of
the common stock were granted during the fiscal year ended March 31,
1999 and options to purchase approximately 9,949,000 shares of the
common stock were outstanding as of March 31, 1999. No stock
appreciation rights were granted to any of the Named Executives during
the last fiscal year.
(2) Stock options were granted at an exercise price equal to the low bid
price of the Company's common stock on June 5, 1998 and vest ratably in
two equal annual installments beginning on the first anniversary date
after the date of grant.
(3) Stock options were granted at an exercise price greater than the low bid
price of the Company's common stock on June 5, 1998 and vested in full
on such date.
(4) Stock options were granted at an exercise price equal to the low bid
price of the Company's common stock on March 23, 1999. These options
were not granted pursuant to any of the Plans and were approved by the
Compensation Committee of the Board of Directors. The options vest in
five equal annual installments beginning on the date of grant.
(5) Stock options were granted at an exercise price equal to the low bid
price of the Company's common stock on October 26, 1998. Options to
acquire 25,000 shares of the Company's common stock vest on the date of
grant, and the remaining 175,000 options vest in three equal annual
installments beginning on the first anniversary date after the date of
grant.
(6) Stock options were granted at an exercise price equal to the low bid
price of the Company's common stock on October 2, 1998 and vested in
full on such date.
(7) Stock options were granted at an exercise price equal to the low bid
price of the Company's common stock on September 14, 1998 and vested in
full on such date.
(8) Stock options were granted at an exercise price equal to the low bid
price of the Company's common stock on March 4, 1999 and vest in three
equal annual installments beginning on the first anniversary date after
the date of grant.
(9) Based on 22,604,927 shares of common stock outstanding as of March 31,
1999 and the low bid price as of such date of $11.50 per share, holders
of common stock as of such date would realize hypothetical gains over
the ten year period comparable to the option terms reflected in the
above table of $163,485,347, assuming a 5% annualized stock appreciation
rate, and $414,303,968, assuming a 10% annualized stock appreciation
rate.
The following table sets forth information concerning the exercise of
stock options during fiscal year 1999 by each of the Named Executives and the
number and value at the fiscal year ended March 31, 1999 of unexercised
options held by said individuals.
<PAGE>
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTIONS VALUES
Number of Securities Value of Unexercised
Number of Underlying Unexercised In-the-Money
Shares Options at FY-End Options at FY-End(2)
Acquired on Value ----------------------------------------------------------------
Name Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable
- ---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert A. Kotick - - 1,000,606 1,038,500 $2,400,147 $2,124,925
Brian G. Kelly - - 1,120,152 1,034,820 $3,549,947 $2,120,425
Ronald Doornink - - 25,000 175,000 $51,550 $360,850
Lawrence Goldberg 8,000 $78,090 131,968 72,860 $416,165 $153,618
John T. Baker, IV - - 115,100 - $252,279 -
Barry J. Plaga 40,986 $168,010 66,334 53,962 $285,410 $119,046
</TABLE>
(1) Market value on the date of exercise, less option exercise price.
(2) Based on the fair market value of the Company's common stock at the
close of business on March 31, 1999 of $12.375, less the exercise price
of the options.
Employment Agreements
On January 12, 1999, the Company entered into employment agreements with
Robert A. Kotick and Brian G. Kelly providing for their employment as
Chairman and Chief Executive Officer, and as Co-Chairman, respectively, of
the Company. The contracts are identical in all material respects. The
employment agreements terminate on March 31, 2004. Each executive is
entitled to an annual base salary of $297,500 for the fiscal year ended March
31, 1999 and $350,000 for the fiscal year ending March 31, 2000. Thereafter,
on April 1 of each fiscal year of their employment period beginning on April
1, 2000, each executive's annual base salary shall be automatically increased
to an amount equal to one hundred ten percent (110%) of his annual base
salary for the prior fiscal year, which amount may be further increased based
upon a performance appraisal and salary review. Each executive also is
entitled to receive an annual bonus, beginning with the fiscal year ending
March 31, 2000, based upon the Company achieving financial and business
objectives to be mutually agreed upon by the executives and the Board of
Directors prior to the beginning of each fiscal year. Each executive is
entitled to receive additional performance bonuses in the discretion of the
Board of Directors.
Pursuant to the employment agreements, on March 23, 1999, the Company
granted to each of Messrs. Kotick and Kelly options to purchase up to an
aggregate of 1,000,000 shares of the Company's common stock at a purchase
price of $10.50 per share. Each of the options expires on January 12, 2009,
unless earlier terminated. The options vest in five equal annual
installments of 200,000 options per year, commencing on March 23, 1999,
subject to earlier vesting as described below.
Under the terms of the employment agreements, the Company is required to
purchase and maintain a renewable term life insurance policy or policies for
a period of ten years covering each of the lives of Messrs. Kotick and Kelly
in an amount equal to $3,000,000, naming each executive's estate or any other
designee of each executive as beneficiary of such policy or policies.
In the event an executive dies during the term of his employment
agreement, the Company will pay to such executive's estate a death benefit in
an amount equal to his then annual salary through the date of death; any
unpaid annual bonus and performance bonus for any prior fiscal year; his pro
rata portion of the annual bonus for the fiscal year in which the date of
death occurs; and an amount equal to 200% of his annual salary for the fiscal
year ended immediately prior to his date of death. If an executive resigns
or is terminated for "cause" (as defined in the employment agreements), he is
be entitled to receive an amount equal to his then annual salary through the
date of termination and any unpaid annual bonus and performance bonus for any
prior fiscal year. In the event an executive's employment is terminated by
him for "good reason" (as defined in the employment agreements) or by the
Company without cause, the executive is entitled to receive an amount equal
to his then annual salary through the date of termination; any unpaid annual
bonus and performance bonus for any prior fiscal year; his pro rata portion
of the annual bonus and performance bonus for the fiscal year in which the
date of termination occurs; an amount (the "Severance Payment") equal to the
dollar amount of the annual salary and annual bonus paid or payable to the
executive under his employment agreement for the Company's most recent fiscal
year immediately prior to his termination multiplied by the greater of (A)
three, or (B) the number of months remaining in the term of the agreement had
his employment not been terminated, divided by twelve. In addition, in the
event an executive's employment is terminated due to death or disability or
terminated for good reason by him or without cause by the Company, then all
options to purchase Company common stock then held by him shall immediately
vest and become exercisable until the later of the fifth anniversary of the
date of such termination or January 12, 2009. The post-termination
compensation described in this paragraph is collectively referred to below as
"Termination Compensation."
If Mr. Kotick or Mr. Kelly is an employee of the Company at the moment
immediately prior to a "Change of Control" (as defined in the employment
agreements), the Company is required to pay the executive additional
compensation ("Change of Control Compensation") in the form of cash equal to,
on the date of a Change of Control and with respect to all options to acquire
shares of Company common stock granted to him prior to the date of the Change
of Control (the "Outstanding Options"), the product of (A) the number of
shares of Company common stock underlying each of the Outstanding Options and
(B) the amount, if any, that the exercise price of any Outstanding Options or
the Closing Share Value, whichever is less, exceeds the Initial Share Value
(each as defined in the employment agreements). In the event that the
Closing Share Value is greater than the exercise price of any such
Outstanding Options, then the executives shall have the right to either (x)
retain the Outstanding Options, (y) exercise the Outstanding Options, or (z)
forfeit the Outstanding Options and receive, in exchange therefor, cash equal
to the number of shares of Company common stock underlying the Outstanding
Options multiplied by the amount that the Closing Share Value exceeds the
exercise price of the Outstanding Options. Upon a Change of Control, all
Outstanding Options then held by each of the executives shall immediately
vest and become exercisable for a period of ten years following the date of
the Change of Control, without regard to the executive's continued employment
with the Company and without regard to the terms of any option agreement or
option certificate applicable to any Outstanding Options. In the event an
executive resigns during the six month period following the three month
anniversary of the Change of Control, he is entitled to receive in addition
to the foregoing, an amount equal to his pro rata portion of the annual bonus
and performance bonus for the fiscal year in which the Change of Control
occurs, computed through the date of termination; and the Severance Payments.
In addition, if in the opinion of the executive's respective tax counsel he
has or will receive any compensation or recognize any income which
constitutes an "excess parachute payment" under the Internal Revenue Code of
1986, as amended, then the Company shall pay him an additional amount equal
to the sum of all taxes payable by him in connection with such excess
parachute payment as well as taxes payable by him in connection with such
additional amount.
The executives' employment agreements also contain a two (2) year "non-
compete" and "non-solicitation" clause. This clause does not apply in the
event that the Company fails to pay the executive his Termination
Compensation or his Change of Control Compensation or otherwise fails to
comply with its obligations under the employment agreements during the two
year non-competition and non-solicitation period.
On October 19, 1998, the Company entered into an employment agreement
with Ronald Doornink providing for his employment as President and Chief
Operating Officer of the Company. The employment agreement terminates on
March 31, 2001. Mr. Doornink is entitled to an annual base salary of
$280,000 for the fiscal year ended March 31, 1999, $300,000 for the fiscal
year ending March 31, 2000, and $320,000 for the fiscal year ending March 31,
2001. The foregoing annual base salaries may be increased based upon a
performance appraisal and salary review, and Mr. Doornink's annual base
salary for the fiscal year ending March 31, 2000 was increased to $315,000 as
a result of such appraisal and review. Mr. Doornink also is entitled to
receive an annual bonus, beginning with the fiscal year ended March 31, 1999,
based on the Company achieving specified financial and business objectives.
Pursuant to the employment agreement, the Company granted to Mr. Doornink
options to purchase up to an aggregate of 200,000 shares of the Company's
common stock at a purchase price of $10.31 per share. Each of the options
terminate on October 26, 2008, unless earlier terminated. 25,000 of such
options were immediately vested and the remaining 175,000 options vested in
three equal annual installments, commencing on October 27, 1999, subject to
earlier vesting as described below.
If Mr. Doornink's employment with the Company is terminated without
cause (as such term is defined under California law) on or prior to March 31,
2000, then Mr. Doornink is entitled to receive his annual base salary as
stated in the employment agreement through March 31, 2001. If Mr. Doornink's
employment with the Company is terminated without cause after March 31, 2001,
then Mr. Doornink is entitled to receive "continuation payments" at a rate
equal to his annual base salary in effect at the time of termination for a
period of time expiring on the earlier of the date upon which Mr. Doornink
accepts employment with another employer and the first anniversary of the
termination date. In such event, Mr. Doornink also is entitled to receive a
pro rata portion of the annual performance bonus for the fiscal year during
which the termination occurs.
If there is a "Change of Control" (as defined in the employment
agreement) during the first twelve months of Mr. Doornink's employment and
the per share consideration to be received by the Stockholders upon
consummation of the transaction causing such Change of Control (the
"Transaction Price") is $15.31 per share or greater, then 50% of the stock
options granted to Mr. Doornink pursuant to his employment agreement that
have not yet vested as of the date of the Change of Control shall instead
vest on such date, and the remaining 50% of such unvested options shall
instead vest on the first anniversary of the date of the Change of Control.
If there is a Change of Control during the first twelve months of Mr.
Doornink's employment and the Transaction Price is less than $15.31 per
share, or if there is a Change of Control after the first twelve months of
Mr. Doornink's employment and Mr. Doornink is an employee at the time of the
Change of Control, then all of the stock options granted to Mr. Doornink
pursuant to his employment agreement that have not yet vested as of the date
of the Change of Control shall instead vest on such date.
On March 4, 1999, the Company entered into an employment agreement with
Mr. Goldberg providing for his employment as Senior Vice President and
General Counsel of the Company. The employment agreement commenced on April
1, 1999 and terminates on April 1, 2001. Mr. Goldberg is entitled to an
annual base salary of $220,000 for the fiscal year ending March 31, 2000 and
$240,000 for the fiscal year ending March 31, 2001. The foregoing annual
base salaries may be increased at the discretion of the Board of Directors.
Mr. Goldberg also is entitled to receive an annual bonus for each fiscal year
of the term based on the Company achieving specified financial and business
objectives.
Pursuant to the employment agreement, the Company granted to Mr.
Goldberg options to purchase an aggregate of up to 33,000 shares of the
Company's common stock at a purchase price of $10.56 per share. Each of the
options terminate on March 4, 2009, unless earlier terminated. The options
vest in three equal annual installments of 11,000 per year, commencing on
March 4, 2000. In the event of a Change of Control (as defined in the stock
option certificate), all of the options which have not yet vested as of the
date of the Change of Control shall instead vest on such date.
On March 4, 1999, the Company entered into an employment agreement with
Mr. Plaga providing for his employment as Senior Vice President and Chief
Financial Officer of the Company. The employment agreement commenced on
April 1, 1999 and terminates on April 18, 2001. Mr. Plaga is entitled to an
annual base salary of $190,000 during the fiscal year ending March 31, 2000
and $195,000 during the remainder of the term. The foregoing annual base
salaries may be increased at the discretion of the Board of Directors. Mr.
Plaga also is entitled to receive an annual bonus for each fiscal year of the
term based on the Company achieving specified financial and business
objectives.
Indebtedness of Management
In May 1998, the Company provided a loan to Mr. Goldberg in the amount
of $96,030, a loan to Mr. Baker in the amount of $72,000 and a loan to Mr.
Plaga in the amount of $67,500. Each of such loans bears interest at the
rate of 6.75% per annum and was evidenced by a promissory note with a
maturity date of April 1, 1999. In June 1999, the Company extended the
maturity date of Mr. Goldberg's and Mr. Plaga's loans until April 1, 2000.
In July 1998, the Company provided a loan to each of Mr. Kotick and Mr.
Kelly in the amount of $249,750. Such loans were subject to the same terms
and conditions as the loans made to Messrs. Goldberg, Baker and Plaga in May
1998. In July 1999, the Company extended the maturity date of Mr. Kelly's
and Mr. Kotick's loans until April 1, 2000.
In October 1998, the Company provided a loan to Mr. Doornink in the
amount of $100,000. The loan bears interest at the rate of 6.75% per annum
and is evidenced by a promissory note with a maturity date of October 27,
2000. However, the principal amount of the loan and all accrued interest on
such principal amount is reduced on a monthly basis by $4,167 per month,
provided that Mr. Doornink remains continuously employed by the Company on
the applicable reduction date.
In June 1999, the Company provided a loan to Ronald Scott in the amount
of $165,000 and a loan to Richard Steele in the amount of $184,843. Each of
such loans bears interest at the rate of 6.75% per annum and is evidenced by
a promissory note with a maturity date of April 1, 2000.
In July 1999, the Company provided a loan to each of Mr. Kotick and Mr.
Kelly in the amount of $196,500, and a loan to Mr. Doornink in the amount of
$102,781. Such loans were subject to the same terms and conditions as the
loans made to Messrs. Scott and Steele in June 1999.
Compensation Committee Interlocks and Insider Participation in Compensation
Decisions
The members of the Company's Compensation Committee for fiscal 1999 were
Barbara Isgur, Steven Mayer and, as of June 25, 1998, Robert Morgado. All
members are non-employee Directors of the Company and none have any direct or
indirect material interest in or relationship with the Company outside of his
or her position as a Director. To the Company's knowledge, there were no
other interrelationships involving members of the Compensation Committee or
other Directors of the Company requiring disclosure.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
Although all final decisions regarding compensation of senior executive
officers, other than those relating to grants of awards under the Plans,
which are made by the Compensation Committee, are made by the Board, the
Board takes into consideration the recommendations of its Compensation
Committee in making such decisions. The Compensation Committee is
responsible for conducting annual reviews of the compensation package
provided to the Company's Chief Executive Officer and all other Executive
Officers of the Company, as well as the general compensation policies of the
Company. Such annual review includes a comparison of the Company's executive
compensation, corporate performance, growth, share appreciation and total
return to the Stockholders with that of similar companies, and a comparison
of actual comparable performance with internal targets and plans. In
addition, the Compensation Committee in preparing its recommendations to the
Board with respect to executive compensation will generally take into account
and give substantial weight to the Chief Executive Officer's recommendations
relating to compensation to be paid to Executive Officers other than himself.
The Compensation Committee's objective is to provide compensation that is
fair and equitable to both the employee and the Company and that provides
appropriate incentives to the employee. Consideration is given to the
employee's overall responsibilities, professional qualifications, business
experience, job performance, technical expertise and their resultant combined
value to the Company's long-term performance and growth.
The Company's Executive Officer compensation program, administered by
the Compensation Committee of the Board of Directors, is based upon the
following guiding principles:
1. Competitive pay and benefits that allow the Company to attract
and retain people with the skills critical to the long-term
success of the Company.
2. Motivate and reward individual and team performance in
attaining business objectives and maximizing Stockholder
value.
3. Emphasize the granting of equity-based awards over cash
compensation so as to align the interests of Executive
Officers with those of the Stockholders.
The key elements of the Company's executive compensation package consist
of base salary, annual bonus, stock options and restricted stock. The
Company's policies with respect to each of these elements are discussed
below. In addition, while the elements of compensation described below are
considered separately, the Compensation Committee also considers and will
continue to review the full compensation package provided by the Company to
the individual, including severance, pension, insurance and other benefits.
Base Salaries. An Executive Officer's base salary is determined by
evaluating the responsibilities of the position held, the individual's
experience and the competitive marketplace for executive talent. The base
salary, taken in the context of the executive's entire compensation package,
is intended to be competitive with base salaries paid to Executive Officers
with comparable qualifications, experience and responsibilities at other
similar companies.
Annual Bonuses. In addition to a base salary, each Executive Officer is
eligible for an annual cash bonus. The Compensation Committee will, in
determining the amount of annual cash bonuses, if any, to be paid to
Executive Officers, review the performance of the Company and, if
appropriate, the common stock during the fiscal year then ended, and non-
financial performance measures such as the respective executive's
performance, effort and role in promoting the long-term growth of the
Company, as well as such other matters as the Compensation Committee may deem
appropriate. Financial factors include, among other things, revenue growth
of the Company and profitability of the Company and its individual business
units. The Compensation Committee will consider the grant of restricted
stock, stock options or other forms of equity-based incentives in lieu of
cash bonuses.
Stock Options and Restricted Stock. The purpose of long-term awards,
currently in the form of stock options and grants of restricted stock, is to
align the interests of the Executive Officers with the interests of the
Stockholders. Additionally, long-term awards offer Executive Officers an
incentive for the achievement of superior performance over time and foster
the retention of key management personnel. The Compensation Committee favors
the granting of equity-based awards over cash compensation for such reasons
and also believes that the granting of stock options and restricted stock
better motivates Executive Officers to exert their best efforts on behalf of
the Company and the Stockholders. In determining annual stock option grants,
the Compensation Committee bases its decision on the individual's performance
and potential to improve Stockholder value.
Compensation of Chief Executive Officer. With respect to the base
salary paid to Mr. Kotick, the Company's Chief Executive Officer, in the
fiscal year ended March 31, 1999, the Compensation Committee conducted an
informal survey of the base salaries of Chief Executive Officers of several
other computer software companies similar to the Company and the
qualifications, experience and responsibilities of such Chief Executive
Officers. As a result of such comparison, Mr. Kotick's annual base salary
was increased from $297,500 to $350,000 effective April 1, 1999. In
addition, as a result of the review by the Compensation Committee of
compensation arrangements for executives at other companies, the Committee
approved the terms of an employment contract between the Company and Mr.
Kotick, summarized above under "Employment Agreements," and a grant to Mr.
Kotick on March 23, 1999 of options to purchase 1,000,000 shares of the
Company's common stock at an exercise price of $10.50 per share. At the
beginning of fiscal year 1999, Mr. Kotick and the Compensation Committee had
established certain statistical and other performance objectives, including
objectives relating to earnings per share growth and achievement of the
annual operating plan, capital related activities, mergers and acquisitions
activities and other strategic objectives, to serve as the basis for a
performance bonus to be determined and awarded after the end of the fiscal
year. In fiscal 2000, the Compensation Committee determined that Mr. Kotick
had substantially achieved the established objectives and granted to Mr.
Kotick a bonus in the form of options to purchase an aggregate of 159,509
shares of the Company's common stock at an exercise price of $10.25 per
share.
Federal Tax Implications for Executive Compensation. It is the
responsibility of the Compensation Committee of the Board to address the
issues raised by the recent change in Federal tax law which makes certain
non-performance-based compensation to executives of public companies,
including the Company, in excess of $1,000,000 non-deductible beginning in
1994. In this regard, the Compensation Committee is obligated to determine
whether any actions with respect to this new limit need to be taken by the
Company. At the present time, it is not anticipated that any Executive
Officer of the Company will receive any compensation in excess of this
amount.
COMPENSATION COMMITTEE
Barbara S. Isgur
Steven T. Mayer
Robert J. Morgado
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and 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,
1999, all filing requirements pursuant to Section 16(a) of the Securities
Exchange Act of 1934, as amended, applicable to the Company's officers,
Directors and greater than 10% beneficial owners were complied with, except
that Mr. Doornink failed to file a Form 3 on a timely basis, Mr. Plaga failed
to file one Form 4 on a timely basis with respect to one transaction, and Mr.
Kotick and Mr. Kelly each failed to file a Form 5 on a timely basis with
respect to a number of exempt option grants and, in the case of Mr. Kotick, a
gift.
INDEPENDENT PUBLIC ACCOUNTANTS
KPMG Peat Marwick, LLP ("KPMG") has been selected as the Company's
independent public accountants for the fiscal year ending March 31, 2000 and
served as the Company's independent public accountants for the fiscal years
ending March 31, 1998 and 1999. Representatives of KPMG are expected to be
present at the Annual Meeting with the opportunity to make a statement if
they desire to do so, and they are expected to be available to respond to
appropriate questions.
STOCKHOLDER PROPOSALS
Proposals of Stockholders intended to be presented at the Annual Meeting
of Stockholders to be held in 2000 must be received by the Company at its
principal executive offices no later than April 1, 2000 for inclusion in the
Company's proxy statement and form of proxy relating to that meeting. Any
stockholder proposal submitted outside the processes of Rule 14a-8 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), for
presentation at the Annual Meeting of Stockholders to be held in 2000 will be
considered untimely for purposes of Rules 14a-4 and 14a-5 under the Exchange
Act if notice of such shareholder proposal is received by the Company after
July 2, 2000.
FINANCIAL AND OTHER INFORMATION
The Company's Annual Report for the fiscal year ended March 31, 1999,
including financial statements, accompanies this Proxy Statement. The Annual
Report is not a part of the proxy solicitation materials.
EXPENSES OF SOLICITATION
The cost of soliciting proxies will be borne by the Company. Brokers
and nominees should forward soliciting materials to the beneficial owners of
the common stock held of record by such persons, and the Company will
reimburse them for their reasonable forwarding expenses. In addition to the
use of the mail, proxies may be solicited by Directors, officers and regular
employees of the Company, who will not be specially compensated for such
services, by means of personal calls upon, or telephonic or telegraphic
communications with Stockholders or their personal representatives.
OTHER MATTERS
The Board knows of no matters other than those described in this Proxy
Statement which are likely to come before the Annual Meeting. If any other
matters properly come before the Annual Meeting, the persons named in the
accompanying proxy card intend to vote the proxies received by them in
accordance with their best judgment with respect to all such matters.
STOCKHOLDERS ARE URGED TO FORWARD THEIR PROXY CARDS WITHOUT DELAY. A PROMPT
RESPONSE WILL BE GREATLY APPRECIATED.
By Order of the Board of Directors,
/s/ Lawrence Goldberg
-----------------------------------
Lawrence Goldberg
Secretary
ACTIVISION, INC.
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
The undersigned stockholder of Activision, Inc., a Delaware corporation
(the "Company"), hereby appoints Robert A. Kotick and Brian G. Kelly and each
of them, as proxy for the undersigned, with full power of substitution, to
vote and otherwise represent all the shares of common stock of the Company
that the undersigned is entitled to vote at the Annual Meeting of
Stockholders of the Company to be held on Thursday, September 23, 1999 at the
Peninsula Hotel, 9882 South Santa Monica Blvd., Beverly Hills, California
90212, and at any adjournment(s) or postponement(s) thereof, with the same
effect as if the undersigned were present and voting such shares, on the
matters and in the manner set forth below and as further described in the
accompanying Proxy Statement. The undersigned hereby revokes any proxy
previously given with respect to such shares.
The undersigned acknowledges receipt of the Notice of Annual Meeting of
Stockholders and the accompanying Proxy Statement and Annual Report.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH
THE SPECIFICATIONS MADE. IF THIS PROXY IS EXECUTED BUT NO SPECIFICATION IS
MADE, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED FOR EACH OF THE
NOMINEES AND THE PROPOSALS AND IN THE DISCRETION OF THE PROXY HOLDERS ON ANY
OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT(S)
OR POSTPONEMENT(S) THEREOF.
1. The election of the following persons as Directors of the Company
to serve for the respective terms as set forth in the accompanying Proxy
Statement.
HAROLD A. BROWN / / WITHHELD as to such nominee
/ / FOR such nominee
BARBARA S. ISGUR / / WITHHELD as to such nominee
/ / FOR such nominee
BRIAN G. KELLY / / WITHHELD as to such nominee
/ / FOR such nominee
ROBERT A. KOTICK / / WITHHELD as to such nominee
/ / FOR such nominee
STEVEN T. MAYER / / WITHHELD as to such nominee
/ / FOR such nominee
ROBERT J. MORGADO / / WITHHELD as to such nominee
/ / FOR such nominee
2. To vote and otherwise represent the shares on any other matters
which may properly come before the meeting or any adjournment(s) or
postponement(s) thereof, in their discretion.
/ / MARK HERE IF YOU PLAN TO ATTEND THE
MEETING
Please sign exactly as name appears
hereon and date. If the shares are
held jointly, each holder should
sign. When signing as an attorney,
executor, administrator, trustee,
guardian or as an officer signing for
a corporation, please give full title
under signature.
Dated ________________________, 1999
____________________________________
Signature
____________________________________
Signature, if held jointly
Votes must be indicated by filling in (x) in black or blue ink.
Sign, Date and Return the Proxy Card Promptly Using the Enclosed
Envelope.
