<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
LOGO
August 19, 1999
Dear Shareholder:
You are cordially invited to attend the 1999 Annual Meeting of Shareholders
of Wall Data Incorporated (the "Annual Meeting") to be held at 10:00 a.m. on
Wednesday, September 22, 1999, at the Hyatt Regency Hotel, 900 Bellevue Way,
Bellevue, Washington 98004.
At the Annual Meeting, the shareholders will be asked to elect two
Directors. The accompanying Notice of 1999 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.
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/ KEVIN B. VITALE
President
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 1999 ANNUAL MEETING OF SHAREHOLDERS
SEPTEMBER 22, 1999
To the Shareholders:
The 1999 Annual Meeting of Shareholders of Wall Data Incorporated (the
"Annual Meeting") will be held at the Hyatt Regency Hotel, 900 Bellevue Way,
Bellevue, Washington 98004, on Wednesday, September 22, 1999, at 10:00 a.m., for
the following purposes:
1. To elect two Directors, both of whom will hold office until the third
annual meeting of shareholders following their election, or until their
respective successors are elected and qualified; and
2. 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 July 26, 1999 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/ CRAIG E. SHANK
Vice President and Secretary
Kirkland, Washington
August 19, 1999
<PAGE> 4
WALL DATA INCORPORATED
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON WEDNESDAY, SEPTEMBER 22, 1999
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 Wednesday, September 22, 1999, at the Hyatt Regency Hotel,
900 Bellevue Way, 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 August 24, 1999.
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 July 26, 1999 will be entitled to
notice of and to vote at the Annual Meeting. On that date, the Company had
10,152,621 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, the two 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 will
be elected Directors. 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. Absentions and
broker non-votes will have no effect on the proposal to elect the Directors.
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 "FOR" the election of
the nominees to the Board of Directors named on the following page. It is not
expected that any matters other than those referred to in this Proxy Statement
will be brought before the Annual Meeting. If other matters are properly
presented, however, 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.
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
1999 Annual Meeting. Of the continuing Directors, two are serving terms that
will not expire until the 2000 Annual Meeting of Shareholders
<PAGE> 5
and three are serving terms that will not expire until the 2001 Annual Meeting
of Shareholders. At the Annual Meeting, two Directors will be elected to hold
office until the 2002 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 for three-year terms: Henry N. Lewis and Kevin B. Vitale. 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 two
nominees will be available to serve as Directors of the Company, if any of them
should be unwilling or unable to serve, the holders of the proxies may vote the
proxies for the election of a 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:
DIRECTORS TO SERVE UNTIL 2002
Kevin B. Vitale, age 41, has been a Director and Chief Operating Officer of
the Company since July 1997. Mr. Vitale served as Executive Vice President of
the Company from April 1996 to July 1997 and Vice President, Operations and
Services from July 1993 to April 1996. Prior to joining the Company, Mr. Vitale
was Vice President, Corporate Quality and Customer Service of NetFRAME Systems
Incorporated from July 1989 to July 1993. Mr. Vitale also serves as a director
and the chairman of the Long Range Planning Committee for the Washington
Software Association and as a director of DataChannel, Inc., an Internet
technology company. He is also a founding member of the Technical Support
Alliance Network ("TSANet"), where he served as a board member and Treasurer for
the past four years.
Henry N. Lewis, age 60, has been a Director of the Company since January
1993. 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. and CVG
Investments Limited.
CONTINUING DIRECTORS UNTIL 2000
Robert J. Frankenberg, age 52, has been Chairman of the Board since August
1997 and a Director of the Company since December 1996. Since June 1997, Mr.
Frankenberg has been President and Chief Executive Officer of Encanto Networks,
Inc., a company that develops and markets Internet products. 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 Caere
Corporation, Daw Technologies, Inc. Electroglas, Inc., National Semiconductor
Corporation and Secure Computing Corporation. Mr. Frankenberg also serves on the
advisory board of the Sundance Film Festival and the Board of Trustees of
Westminster College.
Jeffrey A. Heimbuck, age 52, 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. Prior to Inmac Corporation, he was
President of Quantum Commercial Products, a division of Quantum Corporation,
manufacturer of Winchester disk drives.
CONTINUING DIRECTORS TO SERVE UNTIL 2001
David F. Millet, age 54, has been a Director of the Company since October
1992. Since 1997, he has served as Managing Director of Gemini Investors, a
private investment firm, and since 1988, he has also
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<PAGE> 6
served as President of Chatham Venture Corporation, an investment advisory
company. He is also President and a director of Thomas Emery & Sons, LLC, a
private investment company, and Chairman of Holographix, Inc., a manufacturer of
holographic optical components and systems. Mr. Millet is also a director of
View Tech, Inc., National Telemanagement Corporation and Mohawk Metal Products.
Steve Sarich, Jr., age 78, 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 Cyclopss Corporation and Flo Scan
Instrument Company.
Bettie A. Steiger, age 65, has been a Director of the Company since May
1995. She is President and Founder of Steiger Associates, a consulting firm
which specializes in business management and strategic marketing. From June
1988, Ms. Steiger served in various capacities at Xerox Corporation ("Xerox").
She served as a Principal for Xerox's Market and Technology Innovation Group
("MTI") from June 1992 until July 1998. 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 Xerox's Palo Alto
Research Center. Formerly, Ms. Steiger was Vice President, Videotex, of the
Gartner Group and the Executive Director of the Association for Information and
Image Management. She is a founding member of Source Telecomputing Corporation
("The Source"). Ms. Steiger is also a director of Alumnae Resources, ISIM, Inc.,
PubWeb.com, Inc., and B-Linked, Inc.
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 and $500 per telephonic meeting
of the Board of Directors and are reimbursed for their expenses incurred in
attending meetings. Non-employee Directors who are members of a committee of the
Board are paid $1,000 per committee meeting and $500 per telephonic meeting and
are reimbursed for their expenses incurred in attending committee meetings. In
addition, Mr. Frankenberg receives an annual cash retainer of $50,000 per year
for his services as Chairman of the Board.
Non-employee Directors are compensated for service on the Boards of
Directors of subsidiaries of the Company. They are paid an annual retainer of
$10,000 and $1,000 per day for attending subsidiary Board or committee meetings
that are not held on the same day as a Company Board or Committee meeting at
which the Director is in attendance. The Company compensates Directors for
services rendered at the request of the Company other than at or in preparation
for Board of Directors meetings or Committee meetings at the rate of $1,000 per
diem. In the fiscal year ending April 30, 1999, no payments were made for such
services.
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 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
1999 Annual Meeting) will vest and become exercisable upon the date of the next
annual meeting of shareholders. Options granted under the Directors Plan
generally expire five years from the grant date.
In addition, in consideration of Mr. Frankenberg's assumption of the
position of Chairman of the Board, Mr. Frankenberg received a one-time option
under the Directors Plan to purchase 30,000 shares of Common Stock at an
exercise price equal to the fair market value per share of Common Stock on
October 28, 1997, the grant date. This option vests over three years, one-third
at each anniversary date, so long as Mr. Frankenberg
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<PAGE> 7
continues serving as Chairman of the Board. This option terminates six years
from the date of grant, except that early termination shall be based on Mr.
Frankenberg's service as the Company's outside Chairman of the Board rather than
on his service as a director.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
During the last fiscal year, there were six meetings of the Board of
Directors. All Directors attended at least 75% of the meetings of the Board of
Directors and of the committees of which they were members.
The Board of Directors has established an Acquisition Committee, 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.
Acquisition Committee. The Acquisition Committee formulates the Company's
acquisition strategy for review and approval by the Board of Directors. The
members of this committee are Mr. Frankenberg, Mr. Wall and Mr. Vitale. The
Acquisition Committee met once in the last fiscal year.
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, Mr. Heimbuck and Mr. Millet. The Audit Committee met four times in the
last fiscal year.
Compensation Committee. The Compensation Committee administers certain of
the Company's incentive compensation plans and establishes certain policies
relating to such plans and other compensation and benefit matters. This
committee also establishes salaries, incentives and other forms of compensation
for executive officers. The members of this committee are Ms. Steiger, Mr.
Frankenberg, Mr. Millet and Mr. Sarich. The Compensation Committee met six times
in the last fiscal year.
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. Lewis and Ms.
Steiger. The Nominating Committee met once in the last fiscal year. The
Nominating Committee does not consider nominees recommended by security holders.
4
<PAGE> 8
BENEFICIAL OWNERSHIP OF SHARES
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of July 1, 1999 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)......... 1,200,700 11.8%
P.O. Box 7842
Madison, WI 53707
George B. Bjurman & Associates,................ 632,868 6.2%
George Andrew Bjurman
and Owen Thomas Barry III(2)
10100 Santa Monica Boulevard
Los Angeles, CA 90067
Dimensional Fund Advisors, Inc.(3)............. 522,500 5.1%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Robert J. Frankenberg(4)....................... 29,947 *
Jeffrey A. Heimbuck(5)......................... 9,947 *
Henry N. Lewis(6).............................. 47,365 *
David F. Millet(7)............................. 12,031 *
Steve Sarich, Jr.(8)........................... 147,901 1.5%
Bettie A. Steiger(9)........................... 10,781 *
Kevin B. Vitale(10)............................ 80,250 *
John R. Wall(11)............................... 457,694 4.5%
Richard P. Fox(12)............................. 44,397 *
Barry Horn..................................... 0 *
Craig E. Shank(13)............................. 13,933 *
All Directors and executive officers as a group
(11 persons)(14)............................. 585,541 8.4%
</TABLE>
- ---------------
* Represents less than 1%.
(1) Based on publicly available information as of April 30, 1999.
(2) Based on publicly available information as of April 30, 1999. George B.
Bjurman & Associates, George Andrew Bjurman and Owen Thomas Barry III share
voting and dispositive power of the 632,868 shares and are beneficial
owners of those shares.
(3) Based on publicly available information as of April 30, 1999.
(4) Represents options for 29,947 shares of Common Stock that are exercisable
within 60 days of July 1, 1999.
(5) Represents options for 9,947 shares of Common Stock that are exercisable
within 60 days of July 1, 1999.
(6) Includes 40,334 shares of Common Stock held of record by CVG Investments
Limited, a substantial majority of the capital stock of which is owned by
Mr. Lewis and members of his family. Also includes options for 7,031 shares
of Common Stock that are exercisable within 60 days of July 1, 1999.
(7) Includes 5,000 shares of Common Stock held of record by Chatham Venture
Corporate Profit Sharing Plan & Trust, held indirectly by Mr. Lewis. Also
includes options for 7,031 shares of Common Stock that are exercisable
within 60 days of July 1, 1999.
(8) Includes options for 7,031 shares of Common Stock that are exercisable
within 60 days of July 1, 1999.
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<PAGE> 9
(9) Represents options for 10,781 shares of Common Stock that are exercisable
within 60 days of July 1, 1999.
(10) Represents options for 80,250 shares of Common Stock that are exercisable
within 60 days of July 1, 1999.
(11) Includes options for 78,957 shares of Common Stock that are exercisable
within 60 days of July 1, 1999.
(12) Includes options for 24,397 shares of Common Stock that are exercisable
within 60 days of July 1, 1999.
(13) Includes options for 13,333 shares of Common Stock that are exercisable
within 60 days of July 1, 1999.
(14) Includes options for 268,705 shares of Common Stock that are exercisable
within 60 days of July 1, 1999.
EXECUTIVE COMPENSATION
Compensation Summary
The following table sets forth the compensation received by the Company's
Chief Executive Officer and each of the four other most highly compensated
executive officers (the "named executive officers") for the following periods:
(1) the fiscal year ended April 30, 1999 ("Fiscal 1999"), (2) the four-month
period from January 1, 1998 through April 30, 1998 transitioning the Company's
fiscal year from a calendar year to a fiscal year ending April 30 (the "1998
Four-Month Period"), (3) the fiscal year ended December 31, 1997 ("Fiscal 1997")
and (4) the fiscal year ended December 31, 1996 ("Fiscal 1996").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
1998 FOUR-MONTH PERIOD AND LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
--------------------------- -------------------------
SECURITIES ALL OTHER
NAME AND SALARY BONUS UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR ($) ($)(1) OPTIONS(#) ($)(2)
------------------ ------ -------- ------- ---------- ------------
<S> <C> <C> <C> <C> <C>
John R. Wall................................ 1999 $333,333 $ 101 117,000 $1,112
President and Chief Officer(3) 4 mos 75,000 -0- -0- 602
1997 218,750 40,689 80,000 306
1996 193,750 55,000 52,500(4) 198
Kevin B. Vitale............................. 1999 280,417 101 74,000 1,112
Chief Operating Officer 4 mos 70,000 -0- -0- 602
1997 203,750 37,976 65,000 306
1996 175,000 55,000 30,000 198
Richard P. Fox.............................. 1999 200,000 101 10,000 1,671
Vice President Finance, 4 mos 43,747 -0- -0- 64
Chief Financial Officer and Treasurer(5)
Barry Horn.................................. 1999 154,799 81,947 -0- 1,694
Vice President Worldwide Sales(6) 4 mos 58,333 -0- 10,000 950
1997 43,750 32,108 40,000 216
Craig E. Shank.............................. 1999 185,000 101 -0- 234
Vice President, General 4 mos 54,110 -0- 40,000 602
Counsel and Secretary(7)
</TABLE>
- ---------------
(1) For all officers except Mr. Horn, such amounts represent payments under the
Company's Holiday Bonus Program, in which all of the Company's employees
participate. With respect to Mr. Horn, $81,846 represents sales incentive
bonuses and $101 represents a holiday bonus.
(2) For all officers, amounts represent group term life premiums paid by the
Company during Fiscal 1999, the 1998 Four-Month Period, Fiscal 1997 and
Fiscal 1996, a $500 travel benefit for each of the officers' spouses during
the 1998 Four-Month Period and a $777 travel benefit for each of the
officers' spouses, with the exception of Mr. Shank's spouse, during Fiscal
1999.
(3) Mr. Wall resigned his position as President and Chief Executive and resigned
from the board of directors in August, 1999.
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<PAGE> 10
(4) Options granted in 1996 include the repricing of options granted in 1994
that were canceled in connection with an exchange of options with exercise
prices in excess of the then fair market value for new options with exercise
prices equal to the then fair market value.
(5) Mr. Fox's employment with the Company commenced April 8, 1998.
(6) Mr. Horn's employment with the Company commenced on October 3, 1997 and
terminated on February 26, 1999.
(7) Mr. Shank's employment with the Company commenced March 30, 1998.
Stock Option Grants During Fiscal 1999
The following table sets forth information concerning the grant of stock
options during Fiscal 1999 to the named executive officers.
OPTION GRANTS DURING FISCAL 1999
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
--------------------------------------------------
NUMBER OF PERCENT OF POTENTIAL REALIZABLE VALUE AT
SECURITIES TOTAL FAIR ASSUMED ANNUAL RATES OF
UNDERLYING OPTIONS MARKET STOCK PRICE APPRECIATION FOR
OPTIONS GRANTED EXERCISE VALUE ON OPTION TERM(4)(5)
GRANTED TO EMPLOYEES PRICE DATE OF EXPIRATION -----------------------------
NAME (#) IN FISCAL 1999 ($/SH) GRANT DATE 5%($) 10%($)
---- ---------- -------------- -------- -------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
John R. Wall......... 75,000(1) 9.1% $13.69 -- -- $ 645,718 $1,636,375
42,000(2) 5.1 13.69 -- -- 1,097,488 2,088,145
Kevin B. Vitale...... 50,000(1) 6.0 13.69 -- -- 430,478 1,090,917
24,000(2) 2.9 13.69 -- -- 786,418 1,446,857
Richard P. Fox....... 10,000(3) 1.2 13.69 -- -- 86,096 218,183
Barry Horn........... -- -- -- -- -- -- --
Craig E. Shank....... -- -- -- -- -- -- --
</TABLE>
- ---------------
(1) Option becomes fully vested and exercisable four years from December 16,
1998, with 25% of the total option becoming fully vested and exercisable on
December 16, 1999 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.
(2) Option becomes fully vested and exercisable four years from May 20, 1998,
with 25% of the total option becoming fully vested and exercisable on May
20, 1999 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.
(3) Option becomes fully vested and exercisable four years from April 8, 1998,
with 25% of the total option becoming fully vested and exercisable on April
8, 1999 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.
(4) The dollar amounts under these columns are the result of calculations at the
5% and 10% rates required by applicable regulations of the SEC and are
therefore 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.
(5) The increase in the market value of the holdings of all of the Company's
shareholders over a 10-year period, based on 10,151,162 shares of Common
Stock outstanding as of April 30, 1999, at assumed annual rates of
appreciation of 5% and 10% from a base price of $15.625 per share (the
closing market price as of April 30, 1999), would be $99,750,176 and
$252,786,530, respectively.
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<PAGE> 11
Option Exercises During Fiscal 1999
The following table sets forth information concerning the exercise of stock
options during Fiscal 1999 by the named executive officers, and their options
outstanding at the end of Fiscal 1999.
AGGREGATED OPTION EXERCISES DURING FISCAL 1999 AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
SHARES FISCAL YEAR-END(#) AT FISCAL YEAR-END($)(1)
ACQUIRED ON VALUE ---------------------------- ----------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John R. Wall......... 225,000 $3,076,875 62,499 227,834 $48,590 $397,364
Kevin B. Vitale...... -0- -0- 68,276 168,976 48,025 285,498
Richard P. Fox....... -0- -0- 18,750 56,250 11,953 35,859
Barry Horn........... -0- -0- 13,332 36,668 -0- 4,375
Craig E. Shank....... -0- -0- 10,833 29,167 4,739 12,761
</TABLE>
- ---------------
(1) Amounts equal the closing price of the Common Stock on April 30, 1999
($15.625 per share), less the option exercise price, multiplied by the
number of shares exercisable or unexercisable.
Compensation Committee Report on Executive Compensation
The Company's executive compensation program is administered by the
Compensation Committee, which is comprised of four 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 reporting 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 favors bonuses based on operating profit and
individual merit as opposed to salary increases. 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. The Compensation Committee has also focused on maintaining total
compensation packages that are adequate to retain executives for the Company.
Compensation payments in excess of $1 million to the Chief Executive
Officer or the 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 fiscal 1999 to its
Chief Executive Officer or any other executive officer to be in excess of $1
million. The Company's 1993 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
8
<PAGE> 12
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. For 1995 and 1996, base salary for Mr. Wall also reflected the
Company's obligations under his employment agreement. See "Employment Contracts,
Termination of Employment and Change of Control Arrangements." In fiscal 1999,
the base salaries of the executive officers as a group were increased, based in
part on the individual contributions of the executives and in part on the need
to retain key executives, at an average rate of approximately 16.6%.
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 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 performance goals.
The 1999 Executive Incentive Plan (the "1999 Incentive Plan"), set operating
profit goals and a merit bonus pool. In addition, the 1999 Incentive Plan
provided for both an increase and a decrease in the merit bonus pool as a
function of the Company's actual operating profit. Under the 1997 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 Fiscal 1999 and the
individual executive met or exceeded his or her performance expectations. Based
on the Company's performance during Fiscal 1999, the bonus pool was not funded
and the executive officers did not receive a bonus.
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 fiscal 1999, a total of 201,000
options were granted to the executive officers.
Chief Executive Officer Compensation. The compensation for Mr. Wall, the
Company's former Chief Executive Officer, was determined based on the same
policies and criteria as the compensation for the other executive officers. The
Compensation Committee reviewed Mr. Wall's base salary and increased it to
$325,000 from its 1998 level of $219,000. The Compensation Committee continued
to utilize the 1999 Incentive Plan to tie Mr. Wall'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 granted to Mr. Wall
options to purchase 117,000 shares in fiscal 1999.
The Compensation Committee
Bettie A. Steiger
Robert J. Frankenberg
David F. Millet
Steve Sarich, Jr.
9
<PAGE> 13
STOCK PRICE PERFORMANCE
The graph set forth below compares the cumulative total return on the
Common Stock with the cumulative total returns 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 April 30, 1999. 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 AND DATA
PROCESSING INDEX NASDAQ TOTAL U.S. INDEX WALL DATA
------------------------ ----------------------- ---------
<S> <C> <C> <C>
3/15/93 100.00 100.00 100.00
12/31/93 100.00 112.00 176.00
12/31/94 122.00 109.00 175.00
12/31/95 185.00 155.00 73.00
12/31/96 229.00 190.00 66.00
12/31/97 281.00 233.00 60.00
4/30/98 374.00 277.00 68.00
4/30/99 571.00 376.00 69.00
</TABLE>
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL
ARRANGEMENTS
In January 1999, the Company entered into Employment and Change of Control
Agreements with each of Messrs. Wall, Vitale, Fox and Shank (the "Executives").
Each agreement provides that the Executive will be employed by the Company for a
term of two years, with an automatic renewal for successive one-year terms
unless cancelled upon twelve months' notice. Termination without cause or for
good reason entitles the Executives to receive (1) two times base salary for
Messrs. Wall and Vitale and one times base salary for Messrs. Fox and Shank, (2)
a percentage of base salary equal to the Executive Incentive Plan percentage for
the prior fiscal year and (3) COBRA premiums for eighteen months. In the event
of termination due to change of control, the Executives will receive the
benefits above, except that the salary multiple for Messrs. Wall and Vitale is
two and one-half and for Messrs. Fox and Shank is one and one-half.
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,
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 Amended and Restated Stock Option Plans will terminate (with certain
exceptions), but the optionee will 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.
10
<PAGE> 14
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On April 14, 1999, the Company loaned $860,000 to John R. Wall, the
Company's former CEO, which loan is to be repaid by Mr. Wall in accordance with
the terms of a promissory note by Mr. Wall in favor of the Company (the "Note").
The Note accrues interest at a rate of 5.28% per year. The accrued interest is
due on April 15, 2000, April 15, 200l and April 15, 2002, and the principal
amount of the Note and any unpaid interest is due on April 15, 2003. As of
August 18, 1999, the entire principal amount remained outstanding.
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, 1997, its executive officers, Directors and greater-than-10% shareholders
complied with all Section 16(a) filing requirements.
AUDITORS
The Board of Directors has appointed Ernst & Young LLP as independent
public accountants for the fiscal year ending April 30, 1999. 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. William F. Doring & Co. 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
William F. Doring & Co. a fee of approximately $4,000, plus reasonable expenses,
to cover its services and will reimburse William F. Doring & Co. for payments
made to brokers and other nominees for their expenses in forwarding solicitation
materials. Solicitation may be made by personal interview, telephone and
telegram by Directors, officers and other employees of the Company without
special compensation to those persons.
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 2000 Annual Meeting of Shareholders, such proposals
must be received by the Secretary of Wall Data by April 14, 2000.
11
<PAGE> 15
ANNUAL REPORT
Copies of the Company's 1999 Annual Report and Form 10-K for the fiscal
year ended April 30, 1999 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 NE 122nd Way, Kirkland, WA 98034-6931, telephone (800) 755-9255.
By Order of the Board of Directors
/s/ CRAIG E. SHANK
Vice President and Secretary
Kirkland, Washington
August 19, 1999
12
<PAGE> 16
PROXY
WALL DATA INCORPORATED
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF SHAREHOLDERS--SEPTEMBER 22, 1999
The undersigned hereby appoint(s) Kevin B. Vitale and Craig E. Shank and each of
them as proxies, with full power of substitution, to represent and vote as
designated all shares of Common Stock of Wall Data Incorporated held of record
by the undersigned on July 26, 1999 at the Annual Meeting of Shareholders of the
Company to be held at the Hyatt Regency Hotel, 900 Bellevue Way, Bellevue,
Washington, at 10:00 a.m. on Wednesday, September 22, 1999, or any adjournment
or postponement thereof, with authority to vote upon the matters listed on the
other side of this proxy card and with discretionary authority as to any other
matters that may properly come before the meeting.
IMPORTANT--PLEASE DATE AND SIGN ON THE OTHER SIDE.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 17
Please mark
your vote as [X]
indicated in
this example
- --------------------------------------------------------------------------------
The Board of Directors recommends a vote "FOR the Nominees"
- --------------------------------------------------------------------------------
FOR WITHHOLD AUTHORITY
ELECTION OF DIRECTORS all nominees to vote for all nominees
[ ] [ ]
Nominees: Kevin B. Vitale
Henry N. Lewis
INSTRUCTION: To withhold authority SHARES REPRESENTED BY THIS PROXY WILL
for any individual nominee, print BE VOTED AS DIRECTED BY THE SHAREHOLDER
the nominee's name in the following IN THE SPACE PROVIDED. IF NO DIRECTION
space: IS GIVEN, THIS PROXY WILL BE VOTED "FOR
- ------------------------------------- THE NOMINEES".
Signature(s)_____________________________________ Date ___________________
Please sign exactly as your name appears hereon. Attorneys, trustees, executors
and the other fiduciaries acting in a representative capacity should sign their
names and give their titles. An authorized person should sign on behalf of
corporations, partnerships, associations, etc., and give his or her title. If
your shares are held by two or more persons, each person must sign. Receipt of
the notice of meeting and proxy statement is hereby acknowledged.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
