<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. ________)
Filed by the Registrant / /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
WALL DATA INCORPORATED
- --------------------------------------------------------------------------------
(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
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
==================================================================================================================================
PER UNIT PRICE OR OTHER UNDERLYING
VALUE OF TRANSACTION COMPUTED
AGGREGATE NUMBER PURSUANT TO EXCHANGE ACT RULE 0-11 PROPOSED
TITLE OF EACH CLASS OF OF SECURITIES TO (SET FORTH THE AMOUNT ON WHICH THE MAXIMUM
SECURITIES TO WHICH WHICH TRANSACTION FILING FEE IS CALCULATED AND STATE HOW AGGREGATE VALUE TOTAL FEE
TRANSACTION APPLIES: APPLIES: IT WAS DETERMINED): OF TRANSACTION: PAID
==================================================================================================================================
<S> <C> <C> <C> <C>
==================================================================================================================================
</TABLE>
/ / 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.
Amount previously paid: Filing Party:
----------------------- -----------------
Form, Schedule or
Registration Statement no.: Date Filed:
------------------ -----------------
===============================================================================
<PAGE> 2
WALL DATA LOGO
April 16, 1997
Dear Shareholder:
You are cordially invited to attend the 1997 Annual Meeting of Shareholders
of Wall Data Incorporated (the "Annual Meeting") to be held at 10:00 a.m. on
Thursday, May 29, 1997, at the Hyatt Regency Bellevue, 900 Bellevue Way N.E.,
Bellevue, Washington 98004.
At the Annual Meeting, the shareholders will be asked to elect three
Directors and increase the number of shares authorized under the Wall Data
Employee Stock Purchase Plan. The accompanying Notice of 1997 Annual Meeting of
Shareholders and Proxy Statement describe the matters to be presented at the
Annual Meeting.
The Board of Directors unanimously recommends that shareholders vote for
the election of the nominated Directors and for the amendment to the Employee
Stock Purchase Plan.
Whether or not you plan to attend the Annual Meeting, we hope that you will
have your stock represented by marking, signing, dating and returning your proxy
card in the enclosed envelope as soon as possible. Your stock will be voted in
accordance with the instructions you have given in your proxy card. You may, of
course, attend the Annual Meeting and vote in person even if you have previously
returned your proxy card.
Sincerely,
/S/ JAMES SIMPSON
JAMES SIMPSON
Chairman of the Board and
Chief Executive Officer
IMPORTANT
A proxy card is enclosed. All shareholders are urged to complete and mail
the proxy card promptly. The enclosed envelope for return of the proxy card
requires no postage if mailed in the United States. Any shareholder attending
the Annual Meeting may personally vote on all matters that are considered, in
which event the signed proxy will be revoked.
IT IS IMPORTANT THAT YOUR STOCK BE VOTED
<PAGE> 3
NOTICE OF 1997 ANNUAL MEETING OF SHAREHOLDERS
MAY 29, 1997
To the Shareholder:
The 1997 Annual Meeting of Shareholders of Wall Data Incorporated (the
"Annual Meeting") will be held at the Hyatt Regency Bellevue, 900 Bellevue Way
N.E., Bellevue, Washington 98004, on Thursday, May 29, 1997, at 10:00 a.m., for
the following purposes:
1. To elect three Directors to hold office until the third annual meeting
of shareholders following their election or until their respective
successors are elected and qualified;
2. To approve an amendment increasing by 250,000 the number of shares of
Common Stock reserved for issuance under the Wall Data Employee Stock
Purchase Plan; and
3. To transact such other business as may properly come before the Annual
Meeting and any adjournment or postponement thereof.
The Board of Directors has fixed March 31, 1997 as the record date for
determining shareholders entitled to receive notice of and to vote at the Annual
Meeting or any adjournment or postponement thereof. Only shareholders of record
at the close of business on that date will be entitled to notice of and to vote
at the Annual Meeting.
ALL SHAREHOLDERS ARE INVITED TO ATTEND THE ANNUAL MEETING IN PERSON, BUT
EVEN IF YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING, YOU ARE REQUESTED TO
MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE IN
THE POSTAGE-PAID ENVELOPE PROVIDED TO ENSURE YOUR REPRESENTATION. SHAREHOLDERS
ATTENDING THE ANNUAL MEETING MAY VOTE IN PERSON EVEN IF THEY HAVE PREVIOUSLY
SENT IN A PROXY CARD.
By Order of the Board of Directors
/S/ ALEXANDRA A. BROOKSHIRE
ALEXANDRA A. BROOKSHIRE
Vice President and Secretary
Kirkland, Washington
April 16, 1997
<PAGE> 4
WALL DATA INCORPORATED
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON THURSDAY, MAY 29, 1997
GENERAL
The enclosed proxy is solicited by the Board of Directors of Wall Data
Incorporated, a Washington corporation ("Wall Data" or the "Company"), for use
at the Annual Meeting of Shareholders of Wall Data (the "Annual Meeting") to be
held at 10:00 a.m. on Thursday, May 29, 1997, at the Hyatt Regency Bellevue, 900
Bellevue Way N.E., Bellevue, Washington 98004, and at any adjournment or
postponement thereof.
Wall Data's principal executive offices are located at 11332 N.E. 122nd
Way, Kirkland, Washington 98034-6931.
This Proxy Statement and the accompanying proxy card are being mailed to
the shareholders of Wall Data on or about April 16, 1997.
OUTSTANDING SECURITIES AND VOTING RIGHTS
Only holders of record of Wall Data's common stock, no par value (the
"Common Stock"), at the close of business on March 31, 1997 will be entitled to
vote at the Annual Meeting. On that date, the Company had 9,179,398 shares of
Common Stock outstanding. Each share of Common Stock is entitled to one vote at
the Annual Meeting. Holders of Common Stock are not entitled to cumulate votes
in the election of Directors. Under applicable law and the Company's Articles of
Incorporation and Bylaws, if a quorum is present at the Annual Meeting: (i) the
three nominees for election to the Board of Directors who receive the greatest
number of votes cast for the election of Directors at the Annual Meeting by the
shares present in person or represented by proxy shall be elected Directors and
(ii) the proposed amendment to the Company's Employee Stock Purchase Plan (the
"Purchase Plan") will be approved if a majority of the shares present in person
or represented by proxy vote in favor of the proposal. The presence in person or
by proxy of holders of record of a majority of the outstanding shares of Common
Stock is required to constitute a quorum for the transaction of business at the
Annual Meeting. In the election of Directors, any action other than a vote for
the nominee will have the practical effect of voting against the nominee. With
respect to the proposal to amend the Purchase Plan, abstentions will have the
practical effect of voting against the proposal, and broker nonvotes will have
no effect on the outcome other than to reduce the number of "FOR" votes
necessary to approve the proposal.
PROXY VOTING
Shares for which proxies are properly executed and returned will be voted
at the Annual Meeting in accordance with the directions noted thereon, or, in
the absence of directions to the contrary, will be voted (i) "FOR" the election
of the nominees to the Board of Directors named on the following page and (ii)
"FOR" the amendment to the Purchase Plan. It is not expected that any matters
other than those referred to in this Proxy Statement will be brought before the
Annual Meeting. If, however, other matters are properly presented, the persons
named as proxies will vote in accordance with their discretion with respect to
such matters.
REVOCATION
Any shareholder giving a proxy may revoke it at any time before it is voted
by delivering to the Secretary of the Company a written notice of revocation or
a duly executed proxy card bearing a later date, or by attending the Annual
Meeting and electing to vote in person.
<PAGE> 5
PROPOSAL 1: ELECTION OF DIRECTORS
In accordance with the Company's Bylaws, the Board of Directors has fixed
the number of Directors constituting the Board at eight. Directors generally are
elected for three-year terms, and the Board is divided into three classes, with
one class of Directors elected to a three-year term at each annual meeting of
shareholders. Five of the Directors are serving terms that continue beyond the
1997 Annual Meeting. Of the continuing Directors, three are serving terms that
will not expire until the 1998 Annual Meeting of Shareholders and two are
serving terms that will not expire until the 1999 Annual Meeting of
Shareholders. At the Annual Meeting, three Directors will be elected to hold
office until the 2000 Annual Meeting of Shareholders or until their respective
successors are elected and qualified.
The Board of Directors, based on the recommendation of its Nominating
Committee, has proposed that the following nominees be elected at the Annual
Meeting: John R. Wall, Robert J. Frankenberg and Jeffrey A. Heimbuck. Messrs.
Wall, Frankenberg and Heimbuck will be elected for a three-year term. Unless
otherwise instructed, it is the intention of the persons named on the
accompanying proxy card to vote shares represented by properly executed proxies
for such nominees. Although the Board of Directors anticipates that the three
nominees will be available to serve as Directors of the Company, if any of them
should be unwilling or unable to serve, it is intended that the proxies will be
voted for the election of such substitute nominee or nominees as may be
designated by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH NOMINEE.
NOMINEES FOR THE BOARD OF DIRECTORS
Biographical information regarding each of the nominees for the Board of
Directors is set forth below:
John R. Wall, age 39, has been a Director of the Company since May 1994 and
President of the Company since May 1996. Mr. Wall is the founder of the Company,
was its Executive Vice President from June 1991 to May 1996 and served as
Secretary from January 1993 to May 1994. Mr. Wall was a Director of the Company
from its inception until May 1991 and Chairman of the Board of Directors from
1985 to 1991. He has been the Company's chief technologist and an officer of the
Company since its inception, serving as President from 1982 until 1985 and Vice
President, Research and Development from 1985 to 1991. Mr. Wall served as
chairman of the Washington Software Association from January 1994 through
December 1995 and is a former co-chair of the Washington Software Association
Education Committee. Mr. Wall also serves as a founding Trustee of the
Washington Software Foundation.
Robert J. Frankenberg, age 49, has been a Director of the Company since
December 1996. Mr. Frankenberg was Chief Executive Officer and President of
Novell, Inc. from April 1994 to August 1996, and Chairman of the Board of
Novell, Inc. from August 1994 to August 1996. From February 1991 to April 1994
he was Vice President, General Manager of Hewlett-Packard Company's ("H-P")
Personal Information Products Group. Prior to February 1991 he led H-P's
Information Networks Group and Information Systems Group. Mr. Frankenberg
currently serves on the Board of Directors of America Online Inc., Caere
Corporation, Daw Technologies, Electroglas, and Secure Computing Corporation.
Mr. Frankenberg also serves on the advisory boards of the Sundance Film Festival
and Utah Valley State College, as well as the Board of Trustees of Westminster
College.
Jeffrey A. Heimbuck, age 50, has been a Director of the Company since
December 1996. From July 1992 through July 1996, Mr. Heimbuck was President and
Chief Executive Officer of Inmac Corporation, a catalog marketer of personal
computer products and accessories. Prior to Inmac Corporation, he was President
of Quantum Commercial Products, a division of Quantum Corporation, manufacturer
of Winchester disk drives.
CONTINUING DIRECTORS UNTIL 1998
David F. Millet, age 52, has been a Director of the Company since October
1992. Since 1993, he has served as President of Chatham Venture Corporation, a
private investment firm, and from 1988 to 1993, he was a Vice President of
Chatham Venture Corporation. He is also a director of Thomas Emery & Sons, LLC,
a private investment company, and Chairman and Chief Executive Officer of
Holographix, Inc., a manufac-
2
<PAGE> 6
turer of holographic optical components and systems. Mr. Millet is also a
director of View Tech, Inc., Natural MicroSystems, Inc. and Mohawk Metal
Products, and a general partner of Gateway Partners, L.P.
Steve Sarich, Jr., age 76, has been a Director of the Company since June
1991. He has been President of 321 Investment Co., a venture capital company,
since 1980 and President of C.S.S. Management Co., a management company, since
1986. Mr. Sarich is also a director of Back Technologies, Inc., Cyclops Medical,
Inc., Flo Scan Instrument Company, Omega Environmental Inc. and Multiple Zones
International.
Bettie A. Steiger, age 63, has been a Director of the Company since May
1995. Since June 1988, Ms. Steiger has served in various capacities with Xerox
Corporation ("Xerox"). She has been a Principal for Xerox's Market and
Technology Innovation Group ("MTI") since June 1992; MTI sponsors new business
initiatives for Xerox based on emerging technologies invented at Xerox. From
December 1990 to June 1992, Ms. Steiger was Worldwide Marketing Resident at the
Palo Alto Research Center. Formerly, Ms. Steiger was Vice President, Videotex,
of the Gartner Group and the Executive Director of the Association of
Information and Image Management. She is a founding member of Source
Telecomputing Corporation ("The Source"). Ms. Steiger is also a director of
Alumnae Resources, the International School of Information Management, the
Washington State University President's Foundation and Women's Forum West.
CONTINUING DIRECTORS UNTIL 1999
James Simpson, age 59, has been a Director of the Company since 1988,
Chairman of the Board of Directors since December 1992 and Chief Executive
Officer since 1988. From 1988 to May 1996, Mr. Simpson was President of the
Company. From 1988 to October 1990, Mr. Simpson served as a consultant to the
Company. From 1985 to 1988, Mr. Simpson was President and Chief Executive
Officer of Qume Corporation, a computer peripherals company. He served as Chief
Executive Officer of Durango Systems, Inc., a computer systems company, from
1982 to 1985. During the 11 years prior to joining Durango Systems, Inc., Mr.
Simpson held various management positions with Memorex Corporation, a computer
peripherals and media products company, in the United States, the United Kingdom
and Belgium. He also served as President of the Storage Systems Group, at that
time the largest business unit of Memorex Corporation, from 1979 to 1981.
Henry N. Lewis, age 58, has been a Director of the Company since January
1993 and a director of the Company's United Kingdom subsidiary, Wall Data (U.K.)
Ltd., since its inception in 1990. Since 1976, Mr. Lewis has been a Managing
Director and a principal in Computer Ventures Group Limited, a London-based
investment company investing primarily in the computer industry. Mr. Lewis is
also a director of Action Computer Supplies Limited, Action Computer Supplies
Holdings, p.l.c., AES Limited, and ComputerCall Limited.
COMPENSATION OF DIRECTORS
Directors who are employees of the Company do not receive any fee for their
services as Directors. Directors who are not employees of the Company are paid a
$10,000 annual retainer plus $1,000 per meeting of the Board of Directors and
are reimbursed for their expenses incurred in attending such meetings. Non-
employee Directors who are members of a committee of the Board are paid $1,000
per committee meeting and are reimbursed for their expenses incurred in
attending committee meetings that are not held on the same day as Board
meetings.
Non-employee Directors also receive stock option grants under the Company's
1993 Stock Option Plan for Non-Employee Directors (the "Directors Plan"). Each
new non-employee Director upon election or appointment to the Board of Directors
receives an initial option to purchase 10,000 shares of Common Stock at an
exercise price equal to the fair market value per share of Common Stock on the
grant date. In addition, each non-employee Director automatically receives an
annual grant of options to purchase 2,500 shares of Common Stock at each annual
meeting of shareholders at which he or she is reelected or continues as a
Director at an exercise price per share equal to the fair market value per share
of Common Stock on the grant date. Options granted to non-employee Directors
upon their initial appointment or election will become fully vested and
exercisable four years from the date of grant, with 25% of the total option
becoming fully vested
3
<PAGE> 7
and exercisable on the first anniversary date of the grant and 2.0833% becoming
fully vested and exercisable each month thereafter. The annual options granted
as of each annual meeting of shareholders (including the 1997 Annual Meeting)
will vest and become exercisable upon the date of the next annual meeting of
shareholders.
During 1996, the Company paid $23,400 to Henry N. Lewis in connection with
services that he provided to the Company and its United Kingdom subsidiary from
time to time.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
During 1996, there were seven meetings of the Board of Directors. All
Directors attended at least 75% of the meetings of the Board of Directors and
the committees of which they were members, except that Mr. Frankenberg was
unable to attend the Board of Directors meeting held after his appointment.
The Board of Directors has established an Audit Committee, a Compensation
Committee and a Nominating Committee. Each of these committees is responsible to
the full Board of Directors. The functions performed by these committees are
summarized below.
Audit Committee. The Audit Committee reviews the scope and results of the
annual independent audit of the Company's books and records and reviews the
Company's finance and accounting policies. The members of this committee are Mr.
Lewis and Mr. Millet. The Audit Committee met four times in 1996.
Compensation Committee. The Compensation Committee establishes salaries,
incentives and other forms of compensation for officers and other employees of
the Company. This committee also administers certain of the Company's incentive
compensation plans and recommends the establishment of policies relating to such
plans. The members of this committee are Mr. Millet, Mr. Sarich and Ms. Steiger.
The Compensation Committee met six times in 1996.
Nominating Committee. The Nominating Committee makes recommendations to
the Board of Directors regarding the size and composition of the Board of
Directors and nominees for Director. The members of this committee are Mr.
Simpson, Mr. Lewis and Ms. Steiger. The Nominating Committee met six times in
1996.
4
<PAGE> 8
BENEFICIAL OWNERSHIP OF SHARES
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of March 1, 1997 by (i) each person known by
the Company to own beneficially 5% or more of the Common Stock, (ii) each
Director and nominee for Director of the Company, (iii) each executive officer
of the Company for whom compensation information is given in the Summary
Compensation Table in this Proxy Statement, and (iv) all Directors and executive
officers as a group.
<TABLE>
<CAPTION>
OUTSTANDING
SHARES OF
COMMON STOCK
BENEFICIAL OWNER BENEFICIALLY OWNED PERCENT OF CLASS
--------------------------------------------- ------------------ ----------------
<S> <C> <C>
State of Wisconsin Investment Board(1)....... 867,000 9.5%
P.O. Box 7842
Madison, WI 53707
George B. Bjorman & Associates............... 632,868 6.9%
George Andrew Bjorman and Owen Thomas Barry
III(2)
10100 Santa Monica Boulevard
Los Angeles, CA 90067
Putnam Investments, Inc...................... 484,500 5.3%
Putnam Investment Management, Inc. and The
Putnam Advisory Company, Inc.(3)
One Post Office Square
Boston, MA 02109
Robert J. Frankenberg........................ 0 --
Jeffrey A. Heimbuck.......................... 0 --
Henry N. Lewis(4)............................ 46,584 *
David F. Millet(5)........................... 6,250 *
Steve Sarich, Jr.(6)......................... 177,174 1.9%
James Simpson(7)............................. 480,250 5.1%
Bettie A. Steiger(8)......................... 2,395 *
John R. Wall(9).............................. 403,737 4.3%
Kevin B. Vitale(10).......................... 21,276 *
Alexandra A. Brookshire(11).................. 13,811 *
Richard Van Hoesen........................... 0 --
Richard A. Doerr............................. 0 --
All Directors and executive officers as a
group (11 persons)(12)..................... 1,151,477 11.8%
</TABLE>
- ---------------
* Represents less than 1%.
(1) Based on publicly available information as of December 31, 1996.
(2) Based on publicly available information as of December 31, 1996. George B.
Bjorman & Associates, George Andrew Bjorman and Owen Thomas Barry III share
voting and dispositive power of the 632,868 shares reported and are
beneficial owners of those shares.
(3) Based on publicly available information as of December 31, 1996. Putnam
Investments, Inc., Putnam Investment Management, Inc. and The Putnam
Advisory Company, Inc. share dispositive power of the 484,500 shares
reported and are beneficial owners of those shares. Putnam Investments,
Inc. and The Putnam Advisory Company, Inc. share voting power as to 256,000
of the 484,500 shares.
(4) Includes 40,334 shares of Common Stock held of record by ComputerCall
Limited, a substantial majority of the capital stock of which is owned by
Mr. Lewis and members of his family. Also includes options for 6,250 shares
of Common Stock that are exercisable within 60 days of March 1, 1997.
(5) Represents options for 6,250 shares of Common Stock that are exercisable
within 60 days of March 1, 1997.
5
<PAGE> 9
(6) Includes options for 6,250 shares of Common Stock that are exercisable
within 60 days of March 1, 1997.
(7) Includes options for 309,900 shares of Common Stock that are exercisable
within 60 days of March 1, 1997.
(8) Represents options for 2,395 shares of Common Stock that are exercisable
within 60 days of March 1, 1997.
(9) Includes options for 240,000 shares of Common Stock that are exercisable
within 60 days of March 1, 1997.
(10) Represents options for 21,276 shares of Common Stock that are exercisable
within 60 days of March 1, 1997.
(11) Includes options for 12,811 shares of Common Stock that are exercisable
within 60 days of March 1, 1997.
(12) Includes options for 605,132 shares of Common Stock that are exercisable
within 60 days of March 1, 1997.
EXECUTIVE COMPENSATION
Compensation Summary
The following table sets forth for each of the last three completed fiscal
years the compensation received by (i) the Company's Chief Executive Officer,
(ii) the Company's four other most highly compensated executive officers based
on salary and bonus for the year ended December 31, 1996, and (iii) Mr. Doerr,
who would have been among the most highly compensated executive officers but for
the fact that he was no longer serving as an executive officer on December 31,
1996 (the "named executive officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------
--------------------- SECURITIES ALL OTHER
NAME AND SALARY BONUS UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR ($) ($)(1) OPTIONS(#) ($)(2)
- ------------------------------------------- ---- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
James Simpson.............................. 1996 $300,000 $100,000 100,000(3) $1,350
Chief Executive Officer 1995 300,000 75,000 -0- 1,350
1994 300,000 200,000 25,000 1,406
John R. Wall............................... 1996 193,750 55,000 52,500(3) 198
President 1995 171,250 40,000 -0- 198
1994 152,500 100,000 12,500 195
Kevin B. Vitale............................ 1996 175,000 55,000 30,000 198
Executive Vice President 1995 140,000 40,000 31,500(4) 190
1994 121,250 70,000 -0- 169
Alexandra A. Brookshire.................... 1996 146,250 40,000 7,500 306
Vice President, General 1995 131,250 32,500 25,000(6) 283
Counsel and Secretary (5) 1994 84,154 45,000 25,000 -0-
Richard Van Hoesen......................... 1996 108,815 30,000 75,000 194
Vice President and Chief Financial Officer
(7)
Richard A. Doerr........................... 1996 138,542 45,280 -0- 65,178
Former Vice President, Worldwide Sales, 1995 120,032 39,725 50,000 540
Service and Distribution(8)
</TABLE>
- ---------------
(1) For all officers except Mr. Doerr, such amounts represent payments under the
Company's Management Incentive Plan, in which certain of the Company's
officers and other employees participate. With respect to Mr. Doerr, in
1995, $10,000 represents payments under the Company's Management Incentive
Plan and $29,725 represents sales incentive bonuses, and in 1996, the entire
bonus amount represents sales incentive bonuses.
6
<PAGE> 10
(2) For all officers except Mr. Doerr, amounts represent only group term life
premiums paid by the Company. With respect to Mr. Doerr, in 1996, $58,333
represents a severance payment, $6,161 represents a payment for accrued
vacation and $684 represents a group term life premium paid by the Company,
and, in 1995, the entire amount represents a group term life premium paid by
the Company.
(3) Options granted in 1996 include the repricing of options granted in 1994
that were canceled in connection with the repricing. See "--Option
Repricing."
(4) Options granted in 1995 represent the repricing of options granted in 1993
that were canceled in connection with the repricing. See "--Option
Repricing."
(5) Ms. Brookshire's employment with the Company commenced April 18, 1994.
(6) Options granted in 1995 represent the repricing of options granted in 1994
that were canceled in connection with the repricing. See "--Option
Repricing."
(7) Mr. Van Hoesen's employment with the Company commenced May 20, 1996.
(8) Mr. Doerr's employment with the Company commenced March 24, 1995 and
terminated on October 15, 1996.
Option Grants in 1996
The following table sets forth information concerning the grant of stock
options during 1996 to the named executive officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
--------------------------------------------------- POTENTIAL REALIZABLE
NUMBER OF VALUE AT ASSUMED
SECURITIES PERCENT OF FAIR ANNUAL RATES OF STOCK
UNDERLYING TOTAL OPTIONS MARKET PRICE APPRECIATION FOR
OPTIONS GRANTED TO EXERCISE VALUE ON OPTION TERM(2)(3)
GRANTED EMPLOYEES IN PRICE DATE OF EXPIRATION ----------------------
NAME (#) FISCAL YEAR ($/SH) GRANT DATE 5%($) 10%($)
- ------------------------- ---------- ------------- -------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
James Simpson(4)......... 25,000 3.3% $18.75 $14.63 1/23/06 $127,018 $ 479,911
75,000 10.1% 15.38 15.38 4/17/06 725,430 1,838,382
John R. Wall(5).......... 12,500 1.7% 18.75 14.63 1/23/06 63,509 239,956
40,000 5.4% 15.38 15.38 4/17/06 386,896 980,470
Kevin B. Vitale.......... 30,000 4.0% 15.38 15.38 4/17/06 290,172 735,353
Alexandra A.
Brookshire............. 7,500 1.0% 15.38 15.38 4/17/06 72,543 183,838
Richard Van Hoesen....... 65,000 8.7% 20.88 20.88 5/20/06 853,536 2,163,027
10,000 1.3% 5.00 20.88 5/20/06 290,113 491,573
Richard A. Doerr......... -0- -- -- -- -- -- --
</TABLE>
- ---------------
(1) Other than as described in footnotes (4) and (5) below, options become fully
vested and exercisable four years from the date of grant, with 25% of the
total option becoming fully vested and exercisable on the first anniversary
date of the grant and 2.0833% becoming fully vested and exercisable each
month thereafter so long as employment with the Company continues. Upon the
occurrence of certain business combination transactions, the exercisability
of the options is accelerated. Options granted to Mr. Van Hoesen also
contain a provision concerning a change in control. See "Employment
Contracts and Termination of Employment and Change of Control
Arrangements--Option Plans."
(2) The dollar amounts under these columns are the result of calculations at the
5% and 10% rates required by applicable regulations of the Securities and
Exchange Commission (the "SEC") and, therefore, are not intended to forecast
possible future appreciation, if any, of the Common Stock price. Assumes all
options are exercised at the end of their respective 10-year terms. Actual
gains, if any, on stock option exercises depend on the future performance of
the Common Stock and overall stock market conditions, as well as the option
holders' continued employment through the vesting period. The amounts
reflected in this table may not be achieved.
7
<PAGE> 11
(3) The increase in the market value of the holdings of all of the Company's
shareholders, over a 10-year period based on 9,132,980 shares of Common
Stock outstanding as of December 31, 1996, at assumed annual rates of
appreciation of 5% and 10% from a base price of $15.125 per share (the
closing market price as of December 31, 1996), would be $86,873,191 and
$220,153,722, respectively.
(4) The option for 25,000 shares represents the repricing of options granted in
1994 that were canceled in connection with the repricing. See "--Option
Repricing." The option for 25,000 shares becomes fully vested and
exercisable two years from the date of grant, with 40% of the total option
becoming fully vested and exercisable on the first anniversary date of the
grant and the remainder becoming fully vested and exercisable on the second
anniversary date of the grant. The option for 75,000 shares becomes fully
vested and exercisable three years from the date of grant, with 33 1/3% of
the total option becoming fully vested and exercisable on the first
anniversary date of the grant and 2.7775% becoming fully vested and
exercisable each month thereafter.
(5) The option for 12,500 shares represents the repricing of options granted in
1994 that were canceled in connection with the repricing. See "--Option
Repricing." The Option for 12,500 shares becomes fully vested and
exercisable two years from the date of grant, with 40% of the total option
becoming fully vested and exercisable on the first anniversary date of the
grant and the remainder becoming fully vested and exercisable on the second
anniversary date of the grant.
Option Exercises in 1996 and Fiscal Year-End Option Values
The following table sets forth information concerning the exercise of stock
options during 1996 by the named executive officers, and their options
outstanding at fiscal year-end.
AGGREGATED OPTION EXERCISES IN 1996 AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
ACQUIRED ON VALUE YEAR-END(#) FISCAL YEAR-END($)(1)
EXERCISE REALIZED --------------------------- ---------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------ ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James Simpson................. -0- -0- 264,900 100,000 $ 3,954,957 $ --
John R. Wall.................. -0- -0- 225,000 52,500 3,359,250 --
Kevin B. Vitale............... -0- -0- 11,152 50,348 -- --
Alexandra A. Brookshire....... -0- -0- 8,854 23,646 -- --
Richard Van Hoesen............ -0- -0- -0- 75,000 -- 101,300
Richard A. Doerr.............. -0- -0- 17,708 -0- -- --
</TABLE>
- ---------------
(1) Amounts equal the closing price of the Common Stock on December 31, 1996
($15.13 per share), less the option exercise price, multiplied by the number
of shares exercisable or unexercisable.
8
<PAGE> 12
Option Repricing
The following table sets forth information regarding any repricing of stock
options held by any named executive officer during the period commencing March
15, 1993 (the date on which the Company became a reporting company pursuant to
the Securities Exchange Act of 1934, as amended (the "Exchange Act")), and
ending December 31, 1996.
<TABLE>
<CAPTION>
LENGTH OF
ORIGINAL
OPTION
NUMBER OF TERM
SECURITIES MARKET PRICE NEW REMAINING
UNDERLYING OF STOCK AT EXERCISE PRICE EXERCISE AT DATE
OPTIONS TIME OF AT TIME OF PRICE OF
NAME DATE REPRICED(#) REPRICING($) REPRICING($) ($/SH) REPRICING
- ------------------------------ ------- ----------- ------------ -------------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
James Simpson................. 1/23/96 25,000 $14.63 $34.25 $18.75(1) 8 years,
10 months
John R. Wall.................. 1/23/96 12,500 14.63 34.25 18.75(1) 8 years,
10 months
Kevin B. Vitale............... 7/7/95 31,500 15.32 20.63 15.32(2) 8 years
Alexandra A. Brookshire....... 7/21/95 25,000 18.75 35.00 18.75(2) 8 years,
9 months
Richard Van Hoesen............ -- -- -- -- -- --
Richard A. Doerr.............. -- -- -- -- -- --
</TABLE>
- ---------------
(1) Options were granted with an exercise price equal to the fair market value
on July 21, 1995 (the date of the repricing of Ms. Brookshire's option)
based on the average of the high and low sales prices of the Common Stock as
quoted on the Nasdaq National Market, which was higher than the fair market
value on the date of grant.
(2) Options were granted with an exercise price equal to the fair market value
on the grant date based on the average of the high and low sales prices of
the Common Stock as quoted on the Nasdaq National Market.
Report on Option Repricing
In July 1995, the Compensation Committee of the Board of Directors approved
a plan pursuant to which certain officers and employees were allowed to exchange
options with exercise prices in excess of the then current fair market value for
new options having exercise prices equal to the then current fair market value
of the Common Stock. Certain employees and officers exchanged their options as
of July 7, 1995, and Ms. Brookshire exchanged her options as of July 21, 1995.
Recipients of the repriced options did not receive credit for vesting under the
original options; instead, vesting of the repriced options began anew and the
options generally vest over four years from the date of the repricing. Mr.
Simpson and Mr. Wall did not participate in the July 1995 repricing exchange.
After continued monitoring of the Company's operations, in January 1996, the
Compensation Committee approved the exchange by Mr. Simpson and Mr. Wall of
options for 25,000 and 12,500 shares, respectively, of Common Stock with
exercise prices in excess of the then fair market value of the Common Stock for
new options having exercise prices equal to the July 21, 1995 fair market value
of the Common Stock, which was above the fair market value at the date of the
repricing.
Stock options are intended to provide incentives to the Company's officers
and employees. The Compensation Committee believes that such equity incentives
are a significant factor in the Company's ability to attract, retain and
motivate key employees who are critical to the Company's long-term success. The
Compensation Committee further believes that, at their original exercise prices,
the disparity between the exercise price of these options and recent market
prices for the Common Stock did not provide meaningful incentives to the
employees holding the options. A review of other companies in the software
industry indicates that some of these companies have been confronted with this
problem and have made similar adjustments in option prices to motivate their
employees.
9
<PAGE> 13
The Compensation Committee approved the repricing of options as a means of
ensuring that optionees will continue to have meaningful equity incentives to
work toward the Company's success. The adjustment was deemed by the Compensation
Committee to be in the best interests of the Company and its shareholders.
The Compensation Committee
David F. Millet
Steve Sarich, Jr.
Bettie A. Steiger
Compensation Committee Report on Executive Compensation
The Company's executive compensation program is administered by the
Compensation Committee, which is comprised of three non-employee Directors. The
Compensation Committee works with management to develop compensation plans for
the Company and is responsible for determining the compensation of each
executive officer and recommending such compensation to the Board of Directors.
The Company's executive compensation program is designed to align executive
compensation with the Company's business objectives and the executive's
individual performance, and to enable the Company to attract, retain and reward
executive officers who contribute, and are expected to continue to contribute,
to the Company's long-term success. In establishing executive compensation, the
Compensation Committee is guided by the following principles: (i) the total
compensation for executive officers should be sufficiently competitive with the
compensation paid by other high-growth companies in the software industry for
officers in comparable positions so that the Company can attract and retain
qualified executives and (ii) individual compensation should include components
that reflect the financial performance of the Company and the performance of the
individual.
The compensation of the Company's executive officers consists of a
combination of base salary, bonuses and equity-based compensation. In general,
the Company's compensation program attempts to limit increases in salaries and
favors bonuses based on operating profit and individual merit. The Compensation
Committee believes that executive compensation should be designed to motivate
executives to increase shareholder value, and further believes that executive
officers can best increase shareholder value through the Company's operating
profit by conceiving, developing and positioning the best products in the
Company's chosen markets.
Compensation payments in excess of $1 million to the Chief Executive
Officer or other four most highly compensated executive officers are subject to
a limitation on deductibility for the Company under Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"). Certain
performance-based compensation is not subject to the limitation on
deductibility. The Compensation Committee does not expect cash compensation in
1997 to its Chief Executive Officer or any other executive officer to be in
excess of $1 million. The Company's 1993 Restated Stock Option Plan is designed
to qualify for the performance-based exception to the $1 million limitation on
deductibility of compensation payments.
Base Salary. The Compensation Committee sets the base salary for executive
officers by reviewing the salaries for comparable positions in high-growth
companies in the Company's industry, the historical compensation levels of the
Company's executives and the executive's individual performance in the preceding
year (based on the factors discussed under "Merit Bonus Program" below). The
Compensation Committee utilizes salary surveys for reference purposes, but its
salary determinations are not subject to specific criteria. In addition,
executive officers whose primary responsibilities are in the area of sales and
marketing are entitled to receive commissions based primarily on the Company's
revenues or a specific portion of those revenues. For 1995 and 1996, base salary
for Mr. Wall also reflected the Company's obligations under his employment
agreement. See "Employment Contracts and Termination of Employment and Change of
Control Arrangements." In 1996, the base salaries of the executive officers as a
group were increased, based in part on the individual contributions of the
executives, at an average rate of approximately 11%.
Merit Bonus Program. Each year the Compensation Committee adopts a
management incentive plan that reflects the Compensation Committee's belief that
a portion of each executive officer's and other
10
<PAGE> 14
manager-level participant's compensation should be tied to the achievement by
the Company of its profit goals and by each executive officer of his or her
individual objectives as determined by the Compensation Committee. The 1996
Management Incentive Plan (the "1996 Incentive Plan") set operating profit goals
and a merit bonus pool based on the 1996 operating plan approved by the Board of
Directors. Under the 1996 Incentive Plan, executive officers are entitled to
receive a bonus of between 40 and 50% of base salary if the Company achieved its
profit goals for 1996 and the individual executive met or exceeded his or her
objectives. In addition, the 1996 Incentive Plan prescribed both an increase and
a decrease in the merit bonus pool as a function of the Company's actual
operating profit and the fulfillment of the specific management objectives for
each executive. Performance goals for the executive officers are comprised of
(i) financial goals relating to Company revenues, operating profit, and other
income statement and balance sheet items and (ii) qualitative goals relating to
product development, quality and positioning. The Compensation Committee does
not assign relative weights to these goals, but instead considers them on a
subjective basis.
At the end of 1996, the merit bonus pool was allocated to individual
executives based on the executive's performance relative to his or her
performance objectives. Based on the Company's 1996 operating profit, the bonus
pool was funded for executive officers at approximately 29% of base salary. The
executive officers received bonuses equal to approximately 30% of their base
salaries. This higher rate reflects, in part, the exceptional performance of
some individual executives under the 1996 Incentive Plan.
Stock-Based Compensation. Awards of stock options under the Company's
stock option plans are designed to more closely tie the long-term interests of
the Company's executives with those of its shareholders and to assist in the
retention of executives. The Compensation Committee selects the executive
officers, if any, to receive stock options and determines the number of shares
subject to each option. The Compensation Committee's determination of the size
of option grants is generally intended to reflect an executive's position with
the Company and his or her contributions to the Company. Options generally have
a four-year vesting period to encourage key employees to continue in the
Company's employ. The Compensation Committee reviews the outstanding unvested
options of the key executives from time to time and may grant additional options
to encourage the retention of key executives. In 1996, a total of 75,000 options
were granted to a new executive officer, a total of 152,500 were granted to
existing executive officers as a group and other options were granted in
connection with the repricing. See "--Option Repricing" and "--Report on Option
Repricing."
Chief Executive Officer Compensation. The compensation for the Company's
Chief Executive Officer, Mr. Simpson, was determined based on the same policies
and criteria as the compensation for the other executive officers. The
Compensation Committee reviewed Mr. Simpson's annual base salary and did not
increase it from its 1994 and 1995 level of $300,000. The Compensation Committee
continued to utilize the 1996 Incentive Plan to tie Mr. Simpson's compensation
to shareholder value by encouraging him to meet and exceed the goals set forth
in the Company's operating profit plan. The Compensation Committee also took
into consideration the factors considered for other executive officers, as
discussed under "Merit Bonus Program" above, in awarding a bonus of 33% of base
salary, or $100,000, for 1996. The Compensation Committee made two stock option
grants to Mr. Simpson in 1996: a grant for 25,000 shares on January 23, 1996
representing the repricing of options granted to him in 1994 (as described in
"--Report on Option Repricing") and a grant for 75,000 shares on April 17,
1996.
The Compensation Committee
David F. Millet
Steve Sarich, Jr.
Bettie A. Steiger
11
<PAGE> 15
STOCK PRICE PERFORMANCE
The graph set forth below compares cumulative total return on the Common
Stock with the cumulative total return of the Nasdaq Total U.S. Index and the
Nasdaq Computer and Data Processing Index, resulting from an initial assumed
investment of $100 in each and assuming the reinvestment of any dividends, for
the period beginning on the date of the Company's initial public offering on
March 15, 1993 and ending on December 31, 1996. Stock price performance shown in
the Performance Graph for the Common Stock is historical and not necessarily
indicative of future price performance.
PERFORMANCE GRAPH
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
WALL DATA, NASDAQ TOTAL U.S. INDEX AND
NASDAQ COMPUTER AND DATA PROCESSING INDEX
<TABLE>
<CAPTION>
NASDAQ COMPUTER
MEASUREMENT PERIOD AND DATA NASDAQ TOTAL U.S.
(FISCAL YEAR COVERED) PROCESSING INDEX INDEX WALL DATA
<S> <C> <C> <C>
3/15/93 100 100 100
12/31/93 100 112 176
12/31/94 122 109 175
12/31/95 185 155 73
12/31/96 229 190 66
</TABLE>
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL
ARRANGEMENTS
Mr. Wall's Employment Agreement
Mr. Wall had a two-year employment agreement with the Company that
commenced November 4, 1994 and expired on November 4, 1996, which provided that
he would be employed as the Company's Executive Vice President. In the event
that the Company terminated Mr. Wall's employment without cause during the term
of the agreement, Mr. Wall would have been entitled to receive (i) severance pay
equal to the lesser of six months' annual base salary and the annual base salary
Mr. Wall would have received if his employment had continued until the end of
the term of the agreement and (ii) any unpaid annual base salary that had
accrued as of the effective date of termination. In the event Mr. Wall would
have terminated his employment for any reason or his employment would have been
terminated by the Company for any reason within 180 days of a "change of
control" (as defined in the agreement), Mr. Wall would have received severance
pay in an amount equal to the total cash compensation paid to him during the 12
months immediately preceding such change of control, subject to reduction under
certain circumstances.
Option Plans
Upon a merger (other than a merger of the Company in which the holders of
Common Stock immediately prior to the merger have the same proportionate
ownership of common stock in the surviving corporation immediately after the
merger), consolidation, acquisition of property or stock, separation,
12
<PAGE> 16
reorganization (other than a mere reincorporation or the creation of a holding
company) or liquidation of the Company, as a result of which the Company's
shareholders receive cash, stock or other property in exchange for or in
connection with their shares of Common Stock, options granted under the 1983 and
the 1993 Restated Stock Option Plans will terminate (with certain exceptions),
but the optionee would have the right immediately prior to any such merger,
consolidation, acquisition of property or stock, separation, reorganization or
liquidation to exercise his or her option in whole or in part whether or not the
vesting requirements set forth in the option agreement have been satisfied.
CERTAIN TRANSACTIONS
The Company and its subsidiaries purchased certain software, supplies and
services from Action Computer Supplies Limited ("Action Computer"), in which
Henry N. Lewis and members of his family hold controlling interests. Payments in
1996 for such purchases aggregated approximately $123,200. The Company also sold
certain software, supplies and services to Action Computer for payments in 1996
aggregating approximately $76,400. The Company believes that these purchases and
sales were on terms no less favorable to the Company than could have been
obtained from unaffiliated third parties.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's Directors and
executive officers, and persons who own more than 10% of a registered class of
the Company's securities, to file with the SEC initial reports of ownership and
reports of changes in ownership of Common Stock and other equity securities of
the Company. Officers, Directors and greater-than-10% shareholders are required
by SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, the Company believes that, during the year ended December
31, 1996, its officers, Directors and greater-than-10% shareholders complied
with all Section 16(a) filing requirements, with the exception of Kevin B.
Vitale, whose Form 5 for 1995 was inadvertently filed late due to an
administrative error by the Company.
PROPOSAL 2: AMENDMENT OF THE PURCHASE PLAN
General. The Purchase Plan was adopted by the Board of Directors and
approved by the Company's shareholders in January 1993, and amendments to the
Purchase Plan were adopted by the Board of Directors in March 1996 and approved
by the Company's shareholders in May 1996. The Purchase Plan is intended to
qualify under Section 423 of the Code. The Company currently has reserved
150,000 shares of Common Stock for issuance under the Purchase Plan, of which
48,082 shares remain available.
Proposed Amendment. The Board of Directors approved an amendment to the
Purchase Plan to increase the number of shares of Common Stock authorized
thereunder from 150,000 shares to 400,000 shares. The proposed amendment is
intended to provide additional incentives to the Company's employees by
reserving additional shares. The Company's shareholders are being asked to
approve this amendment to the Purchase Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 2.
Description of the Purchase Plan. Under the Purchase Plan, an eligible
employee may purchase shares of Common Stock from the Company through payroll
deductions ranging from 1% to 10% of the total of his or her base compensation,
overtime, bonuses and commissions (except that a participant may elect to
exclude the amount of any bonuses and commissions), at a price per share equal
to the lesser of (i) 85% of the fair market value of the Common Stock as of the
first business day of each six-month offering period under the Purchase Plan and
(ii) 85% of the fair market value of the Common Stock as of the last business
day of each six-month offering period under the Purchase Plan. The administrator
of the Purchase Plan may establish a different purchase price for any offering,
which price may not be less than the price set forth in the preceding sentence.
The offering periods commence on approximately February 16 and August 16 of each
year, or the
13
<PAGE> 17
administrator of the Purchase Plan may establish a different term for one or
more offerings and different beginning and ending dates for offerings. In 1996,
39,397 shares were purchased under the Purchase Plan, none of which were
purchased by executive officers or Directors.
The Purchase Plan is administered by the Compensation Committee of the
Board of Directors. The Compensation Committee has the power to make and
interpret all rules and requirements as it deems necessary to administer the
Purchase Plan and has broad authority to amend such plan, except for certain
amendments requiring shareholder approval.
All regular-status employees of the Company and its subsidiaries who
customarily work 20 or more hours per week and five or more months in any
calendar year, and who have been employed by the Company for at least three
months, are eligible to participate in the Purchase Plan. As of February 12,
1997, 699 of the Company's employees were eligible to participate in the
Purchase Plan. A participant is not eligible to continue his or her
participation in the Purchase Plan in the event such participant's employment is
voluntarily or involuntarily terminated, or if such participant owns or will
own, as a result of such participation, shares possessing 5% or more of the
total combined voting power or value of all classes of stock of the Company or
of any related corporation. Non-employee Directors of the Company are not
eligible to participate in the Purchase Plan.
An eligible employee may elect to participate in the Purchase Plan only by
means of payroll deductions. There will be consecutive six-month offerings under
the Purchase Plan, on approximately February 16 and August 16 of each year,
until the earlier of (i) termination of the Purchase Plan and (ii) the date that
all shares authorized to be delivered under the Purchase Plan have been so
delivered.
A participant may elect to contribute a stated percentage of his or her
compensation at a rate of not less than 1% or more than 10% of his or her base
pay during each payroll period in the purchase period. No participant may,
however, purchase more than $25,000 fair market value of Common Stock in any
calendar year under the Purchase Plan.
Participants have no right to acquire shares of the Company upon
termination of their employment. Upon termination of a participant's employment
for any reason on or prior to the last business day of the offering, the balance
in the participant's account shall be paid to the participant or his or her
estate.
The Board of Directors or the Compensation Committee may at any time
suspend, amend or terminate the Purchase Plan; provided, however, that the Board
may not amend the Purchase Plan without appropriate shareholder approval if such
approval is required by Section 423 of the Code, Rule 16b-3 under the Exchange
Act, or any successor rule or other applicable law.
Neither payroll deductions credited to a participant's account nor any
rights with regard to the purchase of shares of Common Stock under the Purchase
Plan may be assigned, transferred, pledged or otherwise disposed of in any way
by the participant, other than by will or the laws of descent and distribution.
The Company may treat any such act as an election to withdraw from the Purchase
Plan.
As of March 31, 1997, the last reported price per share of Common Stock on
the Nasdaq National Market was $16.00.
Federal Income Tax Consequences. The Company intends that the Purchase
Plan qualify as an "employee stock purchase plan" under Section 423 of the Code.
As such, a qualified participant will not be subject to federal income tax on
the discounted price of shares of Common Stock purchased pursuant to the
Purchase Plan at the time such participant receives such shares. The participant
will, however, be subject to federal income tax at the time he or she disposes
of such shares.
If a participant holds the shares of Common Stock purchased pursuant to the
Purchase Plan for at least one year from the date such shares were transferred
to him or her and two years from commencement of the offering in which such
shares were purchased, and if the participant has been an employee of the
Company at all times from such commencement of the offering through the date
that is three months before the purchase date, the participant generally will be
subject to federal income tax on the subsequent disposition of such shares or
his or her death at ordinary income rates on the lesser of (i) the excess of the
fair market value of the
14
<PAGE> 18
shares as of the first business day of the six-month offering period in which
such shares were purchased over the price paid for such shares and (ii) the
excess of the fair market value of such shares as of the date of disposition
over the price paid for such shares. Any additional gain will be taxed as
capital gain. The Company will not be entitled to take a deduction for any
amount under these circumstances.
If, however, a participant disposes of shares of Common Stock within the
periods described above, the participant will be subject to federal income tax
at the time of disposition on the excess of the fair market value of such shares
as of the date of purchase over the purchase price paid for such shares at
ordinary income tax rates. Any additional gain will be taxed as capital gain.
The Company will be entitled to take a deduction equal to the ordinary income
recognized by the participant.
AUDITORS
The Board of Directors has appointed Ernst & Young LLP as independent
public accountants for the fiscal year ending December 31, 1997. Representatives
of Ernst & Young LLP are expected to attend the Annual Meeting and will have an
opportunity to make a statement or to respond to appropriate questions from
shareholders.
EXPENSES OF SOLICITATION
The accompanying proxy is solicited by and on behalf of the Board of
Directors, and the entire cost of such solicitation will be borne by the
Company. W. F. Doring & Co., Jersey City, New Jersey will distribute proxy
materials to beneficial owners and may solicit proxies by personal interview,
mail, telephone and telegram, and will request brokerage houses and other
custodians, nominees and fiduciaries to forward soliciting material to the
beneficial owners of the Common Stock held on the record date by such persons.
The Company will pay W. F. Doring & Co. a fee of $4,000 to cover its services
and will reimburse W. F. Doring & Co. for payments made to brokers and other
nominees for their expenses in forwarding solicitation materials. Solicitation
may be by personal interview, telephone and telegram by Directors, officers and
other employees of the Company without special compensation.
OTHER MATTERS
The Company knows of no other matters that are likely to be brought before
the Annual Meeting. If, however, other matters not now known or determined
properly come before the Annual Meeting, the persons named in the enclosed proxy
card or their substitutes will vote such proxy in accordance with their
discretion with respect to such matters.
PROPOSALS OF SHAREHOLDERS
For proposals of shareholders to be considered for inclusion in the Proxy
Statement and proxy for the 1998 Annual Meeting of Shareholders, such proposals
must be received by the Secretary of Wall Data by December 17, 1997.
15
<PAGE> 19
ANNUAL REPORT
Copies of the Company's 1996 Summary Annual Report and Form 10-K for the
fiscal year ended December 31, 1996 are being mailed with this Proxy Statement
to each shareholder of record. Shareholders not receiving such documents may
obtain them without charge by writing or calling Investor Relations, Wall Data
Incorporated, 11332 N.E. 122nd Way, Kirkland, Washington 98034-6931, telephone
(800) 755-9255.
By Order of the Board of Directors
/s/ ALEXANDRA A. BROOKSHIRE
ALEXANDRA A. BROOKSHIRE
Vice President and Secretary
Kirkland, Washington
April 16, 1997
16
<PAGE> 20
PROXY
WALL DATA INCORPORATED
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 29, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints James Simpson, John R. Wall and Alexandra A.
Brookshire, and each of them, as Proxies, with full power of substitution, and
hereby authorizes them to represent and to vote, as designated below, all the
shares of Common Stock of Wall Data Incorporated held of record by the
undersigned on March 31, 1997, at the Annual Meeting of Shareholders to be held
on May 29, 1997, or any adjournment or postponement thereof.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
- -------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
<PAGE> 21
Please mark
your votes as
indicated in
this example. [ X ]
1. ELECTION OF DIRECTORS. Election of the following nominees to serve as
Directors for three-year terms or until their respective successors
are elected and qualified:
FOR all nominees WITHHOLD AUTHORITY to vote for all nominees
[ ] [ ]
Nominees: John R. Wall
Robert J. Frankenberg
Jeffrey A. Heimbuck
INSTRUCTION: To withhold authority to vote for any individual nominee,
print nominee's name in the following space:
-------------------------
2. EMPLOYEE STOCK PURCHASE PLAN. Approve an amendment to the Wall Data
Incorporated Employee Stock Purchase Plan to increase the number of
shares issuable pursuant to such plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting. This Proxy, when properly
executed, will be voted in the manner directed by the undersigned.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR ALL NOMINEES" IN
ITEM 1 AND "FOR" IN ITEM 2.
YOUR VOTE IS IMPORTANT. PROMPT RETURN OF
THIS PROXY CARD WILL HELP SAVE THE EXPENSE
OF ADDITIONAL SOLICITATION EFFORTS.
Signature(s)_______________________________________________ Dated________, 1997
Please sign exactly as your name appears on your stock certificate. When shares
are held jointly, each person should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. An
authorized person should sign on behalf of corporations, partnerships and
associations and give his or her title.
_______________________________________________________________________________
- FOLD AND DETACH HERE -
