SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
Amendment No. 1
(Mark One)
[ x ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
[FEE REQUIRED]
For the fiscal year ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
[NO FEE REQUIRED]
For the transition period from ___________to_________________
Commission File Number 1-9189
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CHEYENNE SOFTWARE, INC.
-----------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3175893
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(State or other jurisdiction (I.R.S.Employer Identification No.)
of incorporation or organization)
3 Expressway Plaza, Roslyn Heights, NY 11577
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 465-4000
--------------------
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
- ------------------- -------------------
Common Stock, par value $.01 per share American Stock Exchange
Series A Junior Participating Preferred American Stock Exchange
Stock Purchase Rights
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes: X No:_____
-----
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment of this Form 10-K. [ ]
As of September 17, 1996, the aggregate market value of Common Stock
held by non-affiliates of the Registrant, computed by reference to the closing
price ($20.25) as reported by the American Stock Exchange on September 17, 1996
was $756,238,558.
The aggregate number of Registrant's outstanding shares on September 17,
1996 was 37,698,236 shares of Common Stock, $0.01 par value (excluding 2,343,900
shares of treasury stock).
DOCUMENTS INCORPORATED BY REFERENCE:
None
<PAGE>
The undersigned registrant hereby amends the previously filed Annual Report
on Form 10-K for the fiscal year ended June 30, 1996 by adding the disclosure
required by the following items of Form 10-K: Item 10. Directors and Executive
Officers of the Registrant; Item 11. Executive Compensation; Item 12. Security
Ownership of Certain Beneficial Owners and Management; and Item 13. Certain
Relationships and Related Transactions.
PART III
Item 10. Directors and Executive Officers of the Registrant.
The directors and executive officers of Cheyenne Software, Inc. (the
"Company"), their ages, and their positions and terms of office with the Company
are set forth below. The directors of the Company are elected to serve until the
next annual meeting of stockholders of the Company and until their successors
are elected and have qualified.
<TABLE>
<CAPTION>
Director
Name Age Position Since
- ---- --- -------- -----
<S> <C> <C> <C>
ReiJane Huai(1) 37 Chairman of the Board, President, and
Chief Executive Officer of the Company 1993
Elliot Levine 60 Executive Vice President, Senior
Financial Officer, and Treasurer
of the Company
Alan Kaufman 58 Executive Vice President - Sales and
Secretary of the Company
Yuda Doron 44 Executive Vice President
Doris A. Granatowski 46 Executive Vice President
Rino Bergonzi(1)(2) 52 Director of the Company 1994
Richard F. Kramer(2)(4) 52 Director of the Company 1987
Bernard Rubien(3)(4) 78 Director of the Company 1985
Ginette Wachtel(1)(3)(4) 61 Director of the Company 1987
<FN>
(1) Member of the Executive Committee of the Company.
(2) Member of the Audit Committee of the Company.
2
<PAGE>
(3) Member of the Compensation Committee of the Company.
(4) Member of the Option Committee of the Company.
</FN>
</TABLE>
ReiJane Huai became a director and President and Chief
Executive Officer of the Company on October 7, 1993. He was elected Chairman of
the Board of the Company effective May 20, 1994. He served as Vice
President-Engineering of the Company from March 1990 through October 7, 1993.
From August 1988 to March 1990, he served as a director of engineering of the
Company. From August 1987 to August 1988, he was a systems engineer for AT&T
Bell Laboratories. He served as manager of research and development at the
Company from June 1985 to August 1987.
Elliot Levine became Executive Vice President of the Company
on October 7, 1993. He served as a Vice President of the Company from March 1990
through October 7, 1993. He has been Senior Financial Officer of the Company
since March 1990 and Treasurer of the Company since December 1991. From
September 1989 to March 1990, he served as a consultant to the Company.
Alan Kaufman became Secretary of the Company in August 1988
and Executive Vice President -- Sales on October 7, 1993. He served as a Vice
President of the Company from February 1987 through October 7, 1993. From April
1986 to February 1987, he served as director of marketing of the Company.
Yuda Doron became Executive Vice President of the Company
effective June 1, 1995. He served as President of Cheyenne Communications, Inc.,
a wholly owned subsidiary of the Company ("Cheycomm") from July 1, 1993 through
June 8, 1995. From April 5, 1993 to July 1, 1993, he served as a consultant to
the Company. From January 1993 to July 1993, Mr. Doron was a Vice President of
Business Development at Elron Corp. From July 1988 to December 1992, he served
as a division manager at Texas Instruments, Inc.
Doris A. Granatowski became a Vice President of the Company on November 16,
1994, and Executive Vice President on December 14, 1995. From September, 1994,
to October 1994, Ms. Granatowski served as Vice President, Operations,
Technology Group of Henry Schein, Inc. From 1988 to July, 1994, Ms. Granatowski
was the Managing Director of Imrex Systems International Ltd. and Senior Vice
President of Imrex Computer Systems, Inc.
Richard F. Kramer has been a director of the Company since
1987. He is Chief Executive Officer and Treasurer of FAXplus, Inc., a
telecommunications and computer products marketing company he founded in 1988.
He also is President of Corporate Development, Inc., a marketing and consulting
firm he founded in 1987.
Rino Bergonzi has been a director of the Company since April 21, 1994. Mr.
Bergonzi has been Vice President and Division Executive of Corporate Information
Technology Services at AT&T Corp. since November 1993. From 1985 to 1993, Mr.
Bergonzi was Vice
3
<PAGE>
President of United Parcel Service Information Services. In January 1995,
he became a director of Enteractive, Inc., a multimedia software company.
Bernard Rubien has been a director of the Company since June
1985.
Ginette Wachtel has been a director of the Company since 1987.
She served as a Senior Vice President of Application Development of Marsh &
McClennan, Inc., an insurance brokerage firm and insurance holding company,
through September 30, 1993, and was an officer of such company since 1984. She
currently provides consulting services in the computer systems area.
Board Meetings and Committees
The Board has a standing Audit Committee, a standing Compensation
Committee, a standing Executive Committee, and a standing Option Committee. The
Audit Committee reviews the Company's financial accounting procedures, internal
controls, and the reports of the Company's independent auditors. The Audit
Committee met twice in the fiscal year ended June 30, 1996. The members of the
Audit Committee are Mr. Kramer and Mr. Bergonzi. The Compensation Committee
makes recommendations to the Board concerning compensation arrangements for
directors, executive officers, and certain other senior management of the
Company. The Compensation Committee did not meet in the fiscal year ended June
30, 1996. The members of the Compensation Committee are Ms. Wachtel and Mr.
Rubien. The Executive Committee is authorized to exercise the powers of the
Board when the Board does not meet. The Executive Committee did not meet during
the fiscal year ended June 30, 1996. The members of the Executive Committee are
Ms. Wachtel, Mr. Bergonzi, and Mr. Huai. The Option Committee administers the
Company's 1989 Stock Incentive Plan and Non-Qualified Plan (as defined herein).
The Option Committee met three times in the fiscal year ended June 30, 1996. The
Option Committee members are Mr. Kramer, Mr. Rubien, and Ms. Wachtel.
The Board held twelve meetings in the fiscal year ended June
30, 1996. Each director attended at least seventy-five (75%) percent of the
aggregate of (i) the total number of meetings of the Board plus (ii) the total
number of meetings held by all committees of the Board on which the director
served.
There is no family relationship between any director or executive officer
of the Company.
4
<PAGE>
Item 11. Executive Compensation.
Summary of Cash and Certain Other Compensation
The following table shows, for the three most recently ended
fiscal years, the compensation paid or accrued for those years to the Chief
Executive Officer of the Company and to each of the four most highly compensated
executive officers of the Company other than the Chief Executive Officer whose
aggregate annual salary and bonus paid in compensation for services rendered in
all the capacities in which they served exceeded $100,000 for the Company's last
fiscal year (the "Named Executives"):
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term Compensation
----------------------
Annual Compensation Awards Payouts
------------------- ------ -------
Name and Other Restricted Securities All Other
Principal Annual Stock Underlying LTIP Compensation
Position Year Salary($) Bonus($) Compensation($)(7) Awards($) Options Payouts($) ($) (8)
- -------- ---- --------- -------- ------------------ --------- ------- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ReiJane Huai - Chairman, 1994 180,625 -0- 3,364,171 -0- 262,500 -0- 11,313
President, and Chief 1995 205,000 -0- 169,130 -0- 200,000 -0- 19,036
Executive Officer(1)(2) 1996 212,500 -0- 4,181,533 -0- -0- -0- 19,167
Elliot Levine - Executive 1994 170,833 -0- 3,918,556 -0- 187,500 -0- 23,400
Vice President, Senior 1995 180,000 -0- 707,939 -0- 100,000 -0- 23,281
Financial Officer and 1996 180,000 -0- 653,544 -0- -0- -0- 25,087
Treasurer(1)(3)
Alan Kaufman - Executive 1994 165,000 -0- 2,769,264 -0- 187,500 -0- 8,255
Vice President - Market- 1995 180,000 -0- -0- -0- 100,000 -0- 8,090
ing and Secretary(1)(4) 1996 180,000 -0- -0- -0- -0- -0- 12,009
Yuda Doron - Executive 1994 125,000 -0- -0- -0- -0- -0- 4,694
Vice President(1)(5) 1995 134,653 25,000 -0- -0- 240,000 -0- 7,822
1996 187,680 -0- -0- -0- -0- -0- 8,360
Doris A. Granatowski - 1994 -0- -0- -0- -0- -0- -0- 0
Executive Vice 1995 109,375 10,000 -0- -0- 25,000 -0- 4,500
President(1)(6) 1996 179,166 -0- -0- -0- 70,000 -0- 9,440
<FN>
(1) All of the executive employment agreements discussed herein provide
that the executive officers receive the fringe benefits generally
available to all employees of the Company and contain non-disclosure
and non-competition provisions for the benefit of the Company.
5
<PAGE>
(2) On September 5, 1991, Mr. Huai entered into a three-year employment
agreement with the Company to serve as Vice President-Engineering. The
agreement provides for a base annual salary of $140,000, with increases
of $5,000 per annum under certain circumstances, and for a death
benefit and severance payments equal to 50% of his current base salary.
On October 7, 1993, the term of Mr. Huai's agreement was extended to
September 5, 1997 and was further amended to provide that Mr. Huai
shall serve as President and Chief Executive Officer of the Company at
a base salary of $205,000 per annum. On April 29, 1996, the Board
increased Mr. Huai's annual base salary to $250,000, effective May 1,
1996. As amended, the agreement no longer provides for $5,000 increases
in base salary each year. Upon termination of his status as Chairman of
the Company, Mr. Huai is entitled to lifetime medical benefits from the
Company.
(3) On September 1, 1992, Mr. Elliot Levine entered into a three-year
employment agreement with the Company to serve as a Vice President,
Senior Financial Officer, and Treasurer of the Company. Mr. Levine's
agreement provides for a base annual salary of $150,000, with increases
of $10,000 per annum under certain circumstances. Mr. Levine's
agreement provides for a death benefit and severance provision equal to
100% of his current base salary and provides for continuation of his
spouse's major medical insurance benefits for a period of five years
after his death. Mr. Levine also receives reimbursement in the amount
of $12,000 per annum for split dollar life insurance premiums and
$8,000 per annum for automobile expenses. On October 7, 1993, Mr.
Levine's agreement was amended to provide that Mr. Levine shall serve
as Executive Vice President, Senior Financial Officer, and Treasurer at
a base salary of $180,000 per annum. As amended, the agreement no
longer provides for $10,000 increases in base salary each year. On
October 24, 1994, Mr. Levine's agreement was amended to provide for
$13,500 per annum in reimbursement to Mr. Levine for split dollar life
insurance premiums. On August 30, 1995, Mr. Levine's agreement was
amended to provide for (a) an extension of the employment term to
August 31, 1998, (b) $10,000 per annum in reimbursement to Mr. Levine
for automobile expenses, (c) a death benefit of 150% of his current
base salary, and (d) a continuation of his spouse's major medical
insurance benefits for a period of ten (10) years after his death.
(4) Mr. Alan Kaufman entered into a three-year employment
agreement with the Company, effective January 1, 1993, to serve as a
Vice President and Secretary of the Company. The agreement provides
for a base annual salary of $140,000, with increases of $5,000 per
annum under certain circumstances. Mr. Kaufman's employment agreement
contains a death benefit and severance provision equal to 100% of his
current base salary and provides for continuation of his spouse's
major medical insurance benefits for a period of five years after his
death. Mr. Kaufman also receives reimbursement in an amount equal to a
maximum of $8,000 per annum for automobile expenses. On October 7,
1993, Mr. Kaufman's agreement was amended to provide that Mr. Kaufman
shall serve as Executive Vice President and Secretary of the Company
at a base salary of $180,000 per annum. As amended, the agreement no
longer provides for $5,000 increases in base salary each year. On
December 30, 1995, Mr. Kaufman's agreement was amended to provide for
(a) an extension of the employment period to December 31, 1998, (b)
$13,000 per annum in reimbursement to Mr. Kaufman for automobile
expenses, (c) reimbursement annually of $13,500 for life insurance
premiums, (d) a death benefit of 150% of his current base salary and
(e) continuation of his spouse's major medical insurance benefits for
a period of ten (10) years after his death.
(5) On September 29, 1993, Mr. Doron entered into a three-year employment
agreement with Cheycomm, to serve as Cheycomm's President. The
agreement provided for a base salary of $125,000 per annum, a death and
disability benefit equal to up to 50% of his base salary, payments not
to exceed $1,708 per annum for a portion of life insurance policy
premiums and $3,723 per annum for a portion of disability policy
premiums, and $3,600 per annum for automobile expenses. On June 8,
1995, Mr. Doron entered into a new three-year employment agreement to
serve as Executive Vice President of the Company and General Manager of
the Netware Division. The agreement provides for a base salary of
$180,000 per annum, a severance provision equal to 100% of his current
base salary, payments not to exceed $2,562 per annum for a portion of
life insurance policy premiums, and $5,585 per annum for a portion of
6
<PAGE>
disability policy premiums. Mr. Doron also receives reimbursement
in the amount of $3,600 per annum for automobile expenses. On April
29, 1996 the Board increased Mr. Doron's annual base salary to
$225,000, effective May 1, 1996.
(6) On November 16, 1994, Ms. Granatowski entered into an employment
agreement through December 31, 1996 with the Company to serve as a
Vice President of the Company. The agreement provides for a base
salary of $175,000. Ms. Granatowski's employment agreement contains a
death benefit equal to 100%, and a severance provision equal to 30%,
of her current base salary. Ms. Granatowski also receives $7,200 per
annum for automobile expenses. On December 14, 1995, the Board
promoted Ms. Granatowski to Executive Vice President. On April 29,
1996, the Board increased Ms. Granatowski's annual base salary to
$200,000, effective May 1, 1996.
(7) Includes information regarding value realized (market value on date of
exercise less exercise price) on stock options previously granted under
the Company's option plans and exercised during the three fiscal years
ended June 30, 1996 by the Named Executives.
(8) Includes car allowances, 401(k) matching contributions by the
Company, and miscellaneous perquisites. Car allowances for fiscal 1996
for the Named Executives were as follows: Mr. Huai - $16,726, Mr.
Levine - $9,661, Mr. Kaufman - $9,669, Ms. Granatowski - $7,200, and
Mr. Doron - $3,600. 401(k) matching contributions for fiscal 1996 for
the Named Executives were as follows: Mr. Huai - $2,441, Mr. Levine -
$2,310, Mr. Kaufman - $2,310, Ms. Granatowski - $2,240, and Mr. Doron
- $2,787. Reimbursement for split dollar life insurance premiums for
fiscal 1996 were as follows: for Mr. Levine - $13,116 and for Mr.
Doron - $1,974.
</FN>
</TABLE>
Stock Option Grants
The following table sets forth information concerning the
grant of stock options made during the fiscal year ended June 30, 1996 to Ms.
Granatowski, the only Named Executive receiving option grants during the fiscal
year ended June 30, 1996:
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants(1)
--------------------
Potential Realizable Value
at Assumed Annual Rate of
Percent of Stock Price Appreciation
Number of Total for Option Term(2)
Securities Options/ ------------------------
Underlying SARs
Options/ Granted to
SARs Employees Exercise or
Granted in Fiscal Base Price Expiration
Name (#) Year ($/Sh) Date 5%($) 10%($)
- ---- ---------- -------- ---------- ---------------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
ReiJane Huai (3) 0 N/A N/A N/A N/A
Elliot Levine 0 N/A N/A N/A N/A N/A
Alan Kaufman 0 N/A N/A N/A N/A N/A
Yuda Doron (4) 0 N/A N/A N/A N/A N/A
Doris A. Granatowski 60,000 5.0% $23.25 November 6, 2002 $568,200 $1,323,600
10,000 0.8% $20.50 May 30, 2003 $83,500 $194,500
<FN>
(1) The options in the table were granted on November 6, 1995 (in the case
of the 60,000 options granted to Ms. Granatowski) and May 30, 1996 (in
the case of the 10,000 options granted to Ms.
7
<PAGE>
Granatowski) under the Company's 1989 Incentive Stock Option Plan (the
"Incentive Plan") and have exercise prices equal to the fair market
value of the Common Stock on the date of grant. The options become
exercisable in 25% increments on the second and third anniversary dates
of the grant date, and the remaining 50% becomes exercisable on the
fourth anniversary date of the grant date.
(2) The potential realizable value assumes that the stock price
increases from the date of grant until the end of the option term (7
years) at the annual rate of 5% and 10%. The assumed annual rates of
appreciation are computed in accordance with the rules and regulations
of the Securities and Exchange Commission (the "Commission"). No
assurance can be given that the annual rates of appreciation assumed
for the purposes of the table will be achieved, and actual results may
be lower or higher. The closing price of the Common Stock on the
American Stock Exchange on June 28, 1996 was $19.25.
(3) During the current fiscal year, on September 17, 1996, the Company
granted Mr. Huai 150,000 options under the Company's 1987 Non-Qualified
Stock Option Plan (the "Non-Qualified Plan") to purchase Common Stock
at an exercise price of $20.25. Half of the options granted vest on the
first anniversary of the grant and the remaining half vest on the
second anniversary of the grant. The options expire on the seventh
anniversary of the grant.
(4) During the current fiscal year, on September 17, 1996, the Company
granted Mr. Doron 120,000 options under the Non-Qualified Plan to
purchase Common Stock at an exercise price of $20.25. Half of the
options granted vest on the first anniversary of the grant and the
remaining half vest on the second anniversary of the grant. The options
expire on the seventh anniversary of the grant.
</FN>
</TABLE>
Stock Option Exercises
The following table sets forth information concerning the exercise of
stock options during the fiscal year ended June 30, 1996 by each of the Named
Executives and the value of unexercised options at the fiscal year-end:
<TABLE>
<CAPTION>
AGGREGATE OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
Shares Number of Unexercised Value of Unexercised
Acquired Option/SARs at In-the-Money Option/SARs at
on Value FY-End (#) FY-End ($) (1)
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ----------- ----------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
ReiJane Huai 224,705 4,181,533 241,667 220,833 433,333 866,667
Elliot Levine 52,500 653,544 158,333 129,167 216,667 433,333
Alan Kaufman -0- -0- 158,333 129,167 216,667 433,333
Yuda Doron -0- -0- 120,000 120,000 780,000 780,000
Doris A. Granatowski -0- -0- -0- 95,000 -0- 165,625
<FN>
(1) Based on the fair market value per share of the Common Stock at year
end, minus the exercise or base price of "in-the-money" options. The
closing price of the Common Stock on the American Stock Exchange on
June 28, 1996 was $19.25.
</FN>
</TABLE>
8
<PAGE>
Compensation of Directors
Directors of the Company who are not employees of the Company
receive a directors' fee of $10,000 per annum, payable in installments of $2,500
per quarter, and a $1,000 fee for each Board meeting attended, plus expenses.
Directors do not receive any fee for attending meetings of committees of the
Board. The Company's 1992 Stock Option Plan for Outside Directors provides for
automatic annual grants of options for 16,875 shares of Common Stock on each
January 1 to directors who are not also employees of the Company. All options
granted under the 1992 Stock Option Plan for Outside Directors are immediately
exercisable, and the exercise price per share of each option will be equal to
the fair market value of the shares of Common Stock on the date of grant.
Former Chairmen of the Company (including Mr. Huai, upon
termination of his status as Chairman) are entitled to lifetime medical benefits
from the Company.
Employment Agreements
The Company's employment agreements with the Named Executives
are described in the footnotes to the Summary Compensation Table appearing
above.
Change of Control Employment Agreements
As of May 20, 1996, the Company has entered into individual Change of
Control Employment Agreements (the "Agreements") with each of the Named
Executives.1 Each Agreement provides for the continued employment of the
Named Executive during the three-year period (the "Employment Period") upon
the occurrence (the "Effective Date") of a Change of Control (as defined in
the Agreements). During the Employment Period, the Company is obligated to
pay to the Named Executive a monthly base salary equal to or greater than
the highest monthly base salary paid to the Named Executive by the Company
during the previous year, an annual bonus in cash at least equal to the
highest aggregate bonus paid to the Named Executive in any of the three
calendar years prior to the Effective Date (the "Highest Annual Bonus"),
and incentive, savings, welfare benefit, fringe benefit and retirement plan
participation at least equal to the most favorable which were in effect
during the 120-day period prior to the Effective Date.
If a Named Executive's employment is terminated during the
Employment Period or in connection with or in anticipation of a Change of
Control by the Company for any reason other than death, disability or Cause (as
defined in the Agreements), or if the
- --------
1 The Company also entered into similar agreements with certain other officers
of the Company. Those agreements generally have the same provisions as the
Agreements described herein, but in some cases provide for smaller payments and
fewer benefits upon a termination of employment following a Change of Control.
9
<PAGE>
Named Executive terminates his employment for Good Reason (as defined in the
Agreements) or voluntarily during the 30-day period beginning on the first
anniversary of the Effective Date, the Company must pay to the Named Executive a
lump sum severance payment equal to the sum of (a) the Named Executive's base
salary through the date of termination, (b) a pro-rata bonus for the year of
termination based upon the Highest Annual Bonus, (c) three times the sum of the
Named Executive's base salary, Highest Annual Bonus and annual car allowance and
(d) unpaid deferred compensation and vacation pay. In addition, such Named
Executive is entitled to payment in cash or stock equal to the spread on any
then-unvested options (but not in excess of the fair market value of the
options), to continued employee welfare benefits for three years after the date
of termination, and to outplacement services. Finally, if any payment or
distribution by the Company to the Named Executive is subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code, as amended (the "Code"),
the Company will make an additional payment to the Named Executive in an amount
such that after the payment of all income and excise taxes, the Named Executive
will be in the same after-tax position as if no excise tax under Section 4999 of
the Code had been imposed.
Benefits under the Agreements are in lieu of severance amounts
payable under a Named Executive's employment agreement.
Compensation Committee Interlocks
and Insider Participation
During the fiscal year ended June 30, 1996, the Compensation
Committee consisted of Ms. Wachtel and Mr. Rubien. During fiscal 1996, none of
the executive officers of the Company served on the board of directors or on the
compensation committee of any other entity, any of whose officers served either
on the Board or on the Compensation Committee of the Company.
Compensation Committee
Report on Executive Compensation
Introduction
The Compensation Committee of the Board (the "Committee") is
composed of non-employee directors, and is responsible for determining and
administering the Company's compensation policies for the remuneration of the
Company's senior management. The Committee annually evaluates individual and
corporate performance from both a short-term and long-term perspective, and its
recommendations regarding all members of senior management are subject to the
approval of the full Board.
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Philosophy
The Company's executive compensation program is designed to
reward and retain highly qualified executives, and to encourage the achievement
of business objectives and superior corporate performance. The program seeks to
foster a performance-oriented environment, to enhance management's long-term
focus on maximizing stockholder value through equity-based incentives, and to
adjust the variable portion of an executive's compensation based upon corporate
and individual performance. In determining an executive's compensation,
consideration is given to the employee's total compensation package, overall
corporate financial performance, and the employee's role in attaining such
results.
Components of Executive Compensation
Historically, the Company's executive employees have received
cash-based and equity-based compensation.
Cash-Based Compensation: Base salary represents the primary
cash component of an executive employee's compensation, and is determined by
evaluating the responsibilities associated with an employee's position at the
Company and the employee's overall level of experience. In addition, the
Committee, in its discretion, may award bonuses. However, the Committee and the
Board believe that the Company's management and employees are best motivated
through stock option awards rather than solely through cash incentives.
Equity-Based Compensation: Equity-based compensation
principally has been in the form of stock options granted pursuant to the
Incentive Plan and the Non- Qualified Plan. The Committee believes that stock
options represent an important component of a well-balanced compensation
program. Because stock option awards provide value only in the event of share
price appreciation, stock options enhance management's focus on maximizing
long-term stockholder value. Stock options serve to align the interests of
executive officers closely with the stockholders because of the direct benefit
executive officers receive from improved stock performance. Stock options
provide a direct relationship between an executive's compensation and the
stockholders' interests. Option awards to employees are based upon the
evaluation of each employee's overall past and expected future contributions to
the success of the Company.
Compensation of the Chief Executive Officer
The philosophy and policies of the Compensation Committee generally
applicable to the Company's senior management are also applicable to the
Chief Executive Officer.
11
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Section 162(m)
It is the Company's policy to seek to qualify compensation
paid to executive officers for deductibility under Section 162(m) of the
Internal Revenue Code. This section of the Code prohibits the Company from
deducting compensation to its Chief Executive Officer and its four other highest
paid executive officers that is in excess of $1,000,000 per individual in any
fiscal year, unless the compensation is "performance based." None of the Chief
Executive Officer and the four other highest paid executive officers of the
Company had cash compensation in excess of $1,000,000 for the fiscal year ended
June 30, 1996.
Bernard Rubien
Ginnette Wachtel
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") requires the Company's executive officers and
directors, and persons who own more than ten percent of a registered class of
the Company's equity securities (the "Ten Percent Stockholders"), to file
reports of ownership on Form 3 and reports of changes in ownership on Form 4 or
Form 5 with the Commission. Executive officers, directors and the Ten Percent
Stockholders are required to furnish the Company with copies of such reports.
Based solely on its review of the copies of such Forms received by the Company,
or written representations that no other reports were required, the Company
believes that during the fiscal year ended June 30, 1996, the Company's
executive officers, directors, and Ten Percent Stockholders complied with all
applicable Section 16(a) filing requirements.
Comparative Stock Performance Graph
The following is a graph comparing the annual percentage
change in the cumulative total shareholder return of the Company's common stock
with the cumulative total returns of the S&P 500 Index and The Peer Group
Weighted Average Index for the Company's last five (5) fiscal years. The
comparison assumes $100 was invested in the Common Stock, the S&P 500 Index and
a peer group index at the close of business on June 28, 1991 (the Company's
fiscal year end), and that all the dividends were reinvested. The Peer Group is
comprised of the following companies: Banyan Systems, Inc., Computer Associates
International, Inc., Informix Corp., Microsoft Corp., Novell, Inc., Oracle
Systems Corp., Sterling Software, Inc. and Symantec Corp.
12
<PAGE>
<TABLE>
<CAPTION>
Comparison of Five-Year Cumulative Total Returns among
Cheyenne Software, Inc., S&P 500 Index and Peer Group Index
6/28/91 6/30/92 6/30/93 6/30/94 6/30/95 6/28/96
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Cheyenne Software, Inc. 100.00 154.7 590.7 239.1 527.3 541.4
Peer Group Weighted 100.00 167.6 231.2 258.5 433.1 573.0
Average
S&P 500 Comp-Ltd 100.00 113.4 128.9 130.7 164.8 207.6
</TABLE>
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Security Ownership of Certain Beneficial Owners
As of October 8, 1996, to the knowledge of the Company, no person owned
beneficially (as defined in Rule 13d-3 under the Exchange Act) more than 5% of
the shares of the Company's outstanding Common Stock.
Security Ownership of Directors and Executive Officers
The following table sets forth, as of October 8, 1996, for each of (i) each
member of the Board, the Company's Chief Executive Officer and each of the next
four most highly compensated executive officers of the Company and (ii) all
directors and executive officers as a group, the number of shares and percentage
of outstanding shares of Common Stock of the Company beneficially owned. Each
person named in the table has sole investment power and sole voting power with
respect to the shares of the Common Stock set forth opposite such person's name,
except as otherwise indicated.
13
<PAGE>
<TABLE>
<CAPTION>
Name and Address of Number of Shares Percentage of Common
Beneficial Owner Beneficially Owned(1)(3) Stock Outstanding(2)(3)
- ---------------- ------------------------ -----------------------
<S> <C> <C>
ReiJane Huai, Chairman of the Board,
President and Chief Executive Officer 506,484 (4) 1.33%
Rino Bergonzi, Director 36,250 (5) *
Richard F. Kramer, Director 101,250 (6) *
Bernard Rubien, Director 50,625 (7) *
Ginette Wachtel, Director 67,500 (8) *
Yuda Doron, Executive Vice President 180,500 (9) *
Doris A. Granatowski, Executive Vice President 6,250 (10) *
Alan Kaufman, Executive Vice President
and Secretary 220,833 (11) *
Elliot Levine, Executive Vice President,
Senior Financial Officer and Treasurer 343,833 (12) *
All executive officers and directors as a group
(11 persons) 1,544,420 (13) 4.08%
* Less than 1%.
<FN>
(1) Includes shares of Common Stock issuable pursuant to options
exercisable within sixty (60) days.
(2) Based upon (i) 37,711,424 shares of Common Stock outstanding (excluding
2,343,900 shares of treasury stock), plus, when appropriate (ii) the
number of shares of Common Stock which may be acquired by the named
person or by all persons included in the group pursuant to the exercise
of options exercisable within sixty (60) days.
(3) All shares of Common Stock have been adjusted to reflect the
1992, 1993, and 1994 three-for-two stock splits paid in the form of
50% stock dividends with respect to the issued and outstanding shares
of Common Stock (the "1992 Stock Split", "1993 Stock Split", and "1994
Stock Split", respectively). The 1992 Stock Split was paid on March
25, 1992 to stockholders of record at the close of business on March
3, 1992; the 1993 Stock Split was paid on April 8, 1993 to
stockholders of record at the close of business on March 12, 1993; and
the 1994 Stock Split was paid on March 29, 1994 to stockholders of
record at the close of business on March 1, 1994.
(4) Consists of 177,317 shares of Common Stock currently held by Mr. Huai,
and 329,167 shares of Common Stock acquirable pursuant to the exercise
of non-qualified stock options granted under the Non-Qualified Plan.
14
<PAGE>
(5) Consists of 2,500 shares of Common Stock owned by the wife of Rino
Bergonzi and 33,750 shares of Common Stock acquirable pursuant to the
exercise of non-qualified stock options granted under the Company's
1992 Stock Option Plan for Outside Directors. Mr. Bergonzi disclaims
beneficial ownership of the shares owned by his wife.
(6) Consists of 33,750 shares of Common Stock currently held by Mr. Kramer
and 67,500 shares of Common Stock acquirable pursuant to the exercise
of non-qualified stock options granted under the Company's 1992 Stock
Option Plan for Outside Directors.
(7) Consists of 50,625 shares of Common Stock acquirable pursuant to the
exercise of non-qualified stock options granted under the Company's
1992 Stock Option Plan for Outside Directors.
(8) Consists of 67,500 shares of Common Stock acquirable pursuant to the
exercise of non-qualified stock options granted under the Company's
1992 Stock Option Plan for Outside Directors.
(9) Consists of 500 shares of Common Stock owned by the wife of Mr. Doron,
and 180,000 shares of Common Stock acquirable pursuant to the
exercise of non-qualified stock options granted under the
Non-Qualified Plan. Mr. Doron disclaims beneficial ownership of the
shares owned by his wife.
(10) Consists of 6,250 shares of Common Stock acquirable pursuant to the
exercise of incentive stock options granted under the Incentive Plan.
(11) Consists of 220,833 shares of Common Stock acquirable pursuant to the
exercise of non-qualified stock options granted under the Non-Qualified
Plan.
(12) Consists of 123,000 shares of Common Stock currently held by Mr.
Levine, and 220,833 shares of Common Stock acquirable pursuant to the
exercise of non-qualified stock options granted under the Non-Qualified
Plan.
(13) Includes an aggregate of 353,212 shares of Common Stock currently held
by certain executive officers and directors of the Company, and
1,191,208 shares of Common Stock acquirable pursuant to the exercise of
options which are exercisable within sixty (60) days.
</FN>
</TABLE>
Item 13. Certain Relationships and Related Transactions.
None.
15
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
CHEYENNE SOFTWARE, INC.
Dated: October 21, 1996 By: /S/ Elliot Levine
-------------------------
Elliot Levine,Executive Vice President
Senior Financial Officer and Treasurer
(principal financial and accounting
officer)
16
<PAGE>
