[LOGO]
NOTICE OF 1994 ANNUAL MEETING OF STOCKHOLDERS
AND PROXY STATEMENT
RETURN OF PROXY
Please complete, sign, date and return the enclosed proxy
promptly in the enclosed addressed envelope even if you plan to
attend the meeting. Postage need not be affixed to the enclosed
envelope if mailed in the United States. If you attend the meeting
and vote in person, the proxy will not be used. The immediate
return of your proxy will be of great assistance in preparing for
the meeting and is therefore urgently requested.
<PAGE>
[LOGO]
Dear Fellow Stockholder:
It's my pleasure to invite you to attend the Concurrent
Computer Corporation 1994 annual meeting of stockholders to be held
at the Oyster Point Hotel, Red Bank, New Jersey, at 2:00 p.m., on
Thursday, November 3, 1994.
Your vote is important. To be sure your shares are voted at
the meeting, even if you plan to attend the meeting in person,
please sign and return the enclosed proxy card today. This will not
prevent you from voting your shares in person if you are able to
attend. Your cooperation is appreciated since a majority of the
outstanding Common Stock must be represented, either in person or
by proxy, to constitute a quorum.
If you plan to attend, please mark the enclosed proxy card in
the designated space and return it today.
We look forward to meeting with you and sharing our views on
the progress of Concurrent Computer Corporation.
JOHN T. STIHL
Chairman of the Board, President
and Chief Executive Officer
Oceanport, New Jersey
October 1, 1994
<PAGE>
[LOGO]
NOTICE OF 1994 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD THURSDAY, NOVEMBER 3, 1994
The 1994 Annual Meeting of Stockholders of Concurrent Computer
Corporation will be held at the Oyster Point Hotel, Red Bank, New
Jersey, at 2:00 p.m., on Thursday, November 3, 1994. The Annual
Meeting is being held to consider and act upon the following
matters:
1. To elect directors.
2. To approve an amendment to the Company's 1991 Stock
Option Plan to increase the aggregate number of shares
which may be issued under the plan by 850,000.
3. To ratify the selection by the Board of Directors of
Coopers & Lybrand L.L.P. as the Company's independent
auditors for the fiscal year ending June 30, 1995.
5. To transact such other business as may properly come
before the meeting or any adjournment of the meeting.
The Board of Directors has established September 23, 1994 as
the record date for the determination of stockholders entitled to
vote at the annual meeting. Only holders of Common Stock of record
at the close of business on that date will be entitled to vote. A
list of stockholders as of the record date will be available for
inspection by stockholders at the Company's headquarters, 2
Crescent Place, Oceanport, New Jersey during regular business hours
in the ten-day period prior to the Annual Meeting and at the place
of the Annual Meeting on the day of the meeting. The stock transfer
books of the Company will remain open.
All stockholders are cordially invited to attend the meeting.
By order of the Board of Directors,
KEVIN J. DELL
Vice President, Chief Legal Officer
and Assistant Secretary
October 1, 1994
<PAGE>
CONCURRENT COMPUTER CORPORATION
2 Crescent Place, Oceanport, New Jersey 07757
PROXY STATEMENT
This proxy statement and the proxy card are first being sent
to stockholders on or about October 1, 1994, and are furnished in
connection with the solicitation of proxies to be voted at the 1994
Annual Meeting of Stockholders of Concurrent Computer Corporation
(the "Company" or "Concurrent") to be held at the Oyster Point
Hotel, Red Bank, New Jersey, at 2:00 p.m. on Thursday, November 3,
1994.
Solicitation of Proxies
The enclosed proxy is solicited by the Board of Directors of
the Company and will be voted at the Annual Meeting and any
adjournments thereof by the proxy holders (John T. Stihl, Chairman
of the Board, President and Chief Executive Officer; Kevin J. Dell,
Vice President, Chief Legal Officer and Assistant Secretary of the
Company) (the "Proxy Holders"). All proxies will be voted in
accordance with the instructions contained in the proxy, and if no
choice is specified, the proxies will be voted in favor of the
proposals set forth in the Notice of Annual Meeting (the "Notice"),
including the nominees for directors. Any proxy may be revoked by
a stockholder at any time before it is exercised by delivering to
the Company a later dated proxy or a written notice of revocation,
or by voting in person at the meeting.
All costs of solicitation of proxies will be borne by the
Company. In addition to solicitations by mail, the Company's
Directors, officers and employees, without additional remuneration,
may solicit proxies by telephone and personal interviews. Brokers,
custodians and fiduciaries will be requested to forward proxy
soliciting material to the owners of stock held in their names, and
the Company will reimburse them for their related out-of-pocket
expenses.
Voting Information
Only the holders of Common Stock of record at the close of business
on September 23, 1994 are entitled to vote at the meeting. On that
date 30,208,396 shares of Common Stock were outstanding, each of
which entitles the holder to one vote on each matter properly to
come before the meeting. A majority of the outstanding shares will
constitute a quorum at the meeting. Abstentions and broker non-
votes are counted for purposes of determining the presence or
absence of a quorum for the transaction of business. All matters,
other than the election of directors, will be decided by the
affirmative vote of a majority of the shares present or represented
at the meeting and entitled to vote on that matter. Abstentions
are counted in tabulations of the votes cast on proposals presented
to stockholders and, consequently, have the same affect as a vote
against a proposal, whereas broker non-votes are not counted in
tabulations of the votes cast and, consequently, have no affect on
determining whether a proposal has been approved. With regard to
the election of directors, votes may be cast in favor or withheld.
Assuming the presence of a quorum, the seven nominees for Director
receiving the highest number of votes cast by stockholders entitled
to vote for the election of Directors shall be elected.
l995 Stockholder Proposals
Proposals of stockholders intended to be presented at the 1995
Annual Meeting of Stockholders (expected to be held in November
1995) must be received by the Secretary of the Company at 2
Crescent Place, Oceanport, New Jersey, 07757 not later than June
30, 1995 to be considered for inclusion in the proxy statement for
that meeting if appropriate for consideration under applicable
securities laws. The Company will consider responsible
recommendations by stockholders of candidates to be nominated as
directors of the Company. All such recommendations must be in
writing and addressed to the Secretary of the Company. By accepting
a stockholder recommendation for consideration, the Company does
not undertake to adopt or take any other action concerning the
recommendation or to give the proponent its reasons for any action
or failure to act.
<PAGE>
ELECTION OF DIRECTORS
(Item 1 of Notice)
At the time of this proxy statement, the size of the Board of
Directors is seven Directors. Leonard N. Hecht and Phillip W.
Arneson have advised the Board of their decision not to stand for
re-election. The Board of Directors has nominated the remaining
five Directors for re-election (Messrs. Clowe, Dewey, Handel,
Rifenburgh and Stihl) and two new nominees for election (Messrs.
Brunner and Sparacino) to the Board of Directors. All the nominees
have agreed to serve if elected. Directors are elected to hold
office until the 1995 Annual Meeting and until their successors
have been elected and qualified. Unless a contrary direction is
indicated on the proxy card, the Proxy Holders will vote the
proxies received by them for the nominees or, in the event of a
contingency not presently foreseen, for the election of such
substitute nominee(s), if any, as the Board of Directors may
propose. There are no arrangements or understandings between any
nominee and any other person pursuant to which he was or is to be
selected as a Director or nominee.
The Board of Directors recommends a vote "FOR" the nominees.
Information on each nominee's principal occupation and
business experience for at least the last five years and the name
of other publicly held companies in which he serves as a director
is set forth below.
Michael A. Brunner. Age 61. President, AT&T Federal Systems
(1986-1992). Responsible for AT&T's $2.5 billion communications,
computer and systems integrations business with the federal
government. Prior positions with AT&T included Vice President,
Eastern Region; Area Sales Director North East, and Marketing
Director, Network Services. Currently an Information Technology
consultant and member of the Board of Directors of several private
companies. He is also Chairman of the Advisory Board, Leonhard
Center for Excellence in Engineering Education at Pennsylvania
State University.
Kevin N. Clowe. Age 43 and a Director since December 1991. Mr.
Clowe has been employed since 1986 at the American International
Group, Inc. ("AIG"), an international insurance and financial
services company. He is currently Assistant Treasurer and a
corporate officer of AIG. He also holds the following positions
with certain affiliates of AIG: Vice President and Director of
American International Fund Distributors, a broker dealer; Vice
President of AIG Capital Corp., a merchant banking/investment
manager. In 1992, he became a director of Rexene Corporation, a
publicly held chemical manufacturing company.
C. Forbes Dewey, Jr. Age 59. Mr. Dewey is one of the founders
of the Company and is and has been a Director since its
organization in 1981. He is and has been a Professor of Mechanical
Engineering at the Massachusetts Institute of Technology since
1969. Since 1984, he has been an Associate in Pathology at Brigham
and Women's Hospital in Boston, Massachusetts. He is a director of
Celadon Corporation, a privately held software company.
Morton E. Handel. Age 59 and a Director since June 1991. Mr.
Handel is currently President of S&H Consulting, Ltd., a privately
held investment and consulting company. From 1988 to 1990, he
served as Chairman of the Board and Chief Executive Officer of
Coleco Industries, Inc., a publicly held company and formerly a
manufacturer of toys and games. Prior to that time, and from 1983,
he served as Executive Vice President and, from 1974 to 1983, as
Chief Financial Officer of Coleco.
Richard P. Rifenburgh. Age 62 and a Director since June 1991.
Mr. Rifenburgh is Chairman of the Board of Moval Management
Corporation, a privately held company specializing in restoring
companies in financial distress. In June 1992 he became director
and in August 1992, Chairman of the Board, of Ross Cosmetics
Distribution Centers Inc. (now known as TRISTAR CORP.), a publicly
held company and distributor of cosmetics. From February 1989 until
1991, he was the Chairman of the Board and Chief Executive Officer
of MiniScribe Corporation, a publicly held company and a
manufacturer of disc drives for personal computers. From 1987 to
1990, he was a General Partner at Hambrecht & Quist Venture
Partners, a venture capital organization. From 1988 to 1990, he was
Chairman of the Board and Chief Executive Officer of Ironstone
Group, Inc., a publicly held holding company where he also served
as President from 1988 to 1989. From 1986 to 1987, he was Chairman
of the Board and Chief Executive Officer of GCA Corporation, a
publicly held company and a manufacturer of semiconductor
manufacturing equipment. He has since 1976 been a director of
Library Bureau, Inc., a publicly held company and manufacturer of
library furniture. In 1964, he founded and later became Chairman of
the Board through 1974 of Mohawk Data Sciences Corporation, a
publicly held company and a manufacturer of computer equipment. He
also served in 1975 and 1976 as Chairman of the Board of the
Communications and Computer Industry Association.
Robert R. Sparacino. Age 66. President, Sparacino Associates,
Inc. (SAI) since 1982. SAI offers management and venture capital
consulting services primarily for high technology business. Mr.
Sparacino's experience includes four years as General Partner of a
$125 million venture capital fund, focused primarily on investments
in technology companies; twelve years in executive management
positions with Xerox Corporation, including Corporate Senior Vice
President, Senior Vice President - Information Products Group; and
nine years in engineering and research and development positions
with General Motors Corporation, including Director of Engineering
and Director of Research and Development of one of its major
aerospace divisions. He has earned a Sc.D. from MIT. He is a
member of the Board of Directors of TRISTAR CORP., a publicly held
company and distributor of cosmetics.
John T. Stihl, Chairman. Age 61 and a Director since June
1991. In August 1993 he was elected to the positions of Chairman of
the Board, President and Chief Executive Officer. As of September
19, 1994, he is serving as acting Chief Financial Officer until
that position is filled. In May 1991, he joined the Company as
Executive Vice President and in April 1992 he was elected President
and Chief Operating Officer. In 1988, after retiring as a Major
General from the United States Air Force, he was elected President
and Chief Executive Officer of G&H Technology, Inc., a subsidiary
of Penn Central Corporation which designs, develops, manufactures
and markets electromechanical components for the defense and
aerospace industries. His experience includes over 20 years in high
level executive positions with the United States Air Force managing
large scale telecommunications, computer and air traffic control
operations, including from 1986 to 1988, commander (CEO) of the
58,000 persons worldwide Air Force Communications Command,
headquartered at Scott Air Force Base, Illinois. Prior to his
retirement, he had been an officer in the United States Air Force
since 1955.
As noted above, Mr. Rifenburgh served as a member of the Board
of Directors and as an executive officer of Miniscribe Corporation
from 1989 to 1991 and of Ironstone Group, Inc. from 1988 to 1990;
and as a director of Library Bureau, Inc. since 1976. Mr. Sparacino
served as a member of the Board of Directors of Miniscribe from
1989 to 1991. Miniscribe filed for reorganization under Chapter 11
of the U.S. Bankruptcy Code in 1990 and Ironstone and Library
Bureau similarly filed for reorganization in 1991 and 1993,
respectively. Miniscribe subsequently converted its reorganization
into a liquidation under Chapter 7 of the U.S. Bankruptcy Code and
is currently in liquidation. Ironstone completed its reorganization
in August 1993. Library Bureau continues in reorganization.
Corporate Governance
Concurrent is a corporation created and chartered under the
laws of Delaware. It is governed by a Board of Directors and its
Committees. As permitted under Delaware law and the Certificate of
Incorporation and By-laws of the Company, the Board of Directors
has established and delegated certain authority and responsibility
to four committees: the Executive Committee; the Audit Committee;
the Finance Committee; and the Management Resources Committee. The
Board annually reviews the membership of and the authority and
responsibility delegated to each Committee at the organizational
meeting of Directors immediately following the Annual Meeting of
Stockholders. From time to time as required, the Chairman of the
Board has the authority from the Board of Directors to establish a
nominating committee to recommend nominees to fill vacancies on the
Board, newly created directorships, and expired terms of directors.
The current members of the Executive Committee are Messrs.
Stihl (Chairman), Handel and Rifenburgh. The Committee has, to the
extent legally permitted, the power and authority of the Board of
Directors in periods between meetings of the full Board. No
meetings of the Executive Committee were held during the Company's
fiscal year ended June 30, 1994. All matters that could have been
addressed by the Committee during the fiscal year were addressed by
the full Board of Directors.
The current members of the Audit Committee are Messrs.
Rifenburgh (Chairman), Clowe and Dewey. The current principal
responsibilities of the Committee are to review the Company's
financial statements contained in filings with the Commission,
matters relating to the examination of the Company by its
independent auditors, accounting procedures and controls, and the
use and security of the Company's liquid assets through the review
of the Treasurer's function, and to recommend the appointment of
independent accountants to the Board for its consideration and
approval subject to ratification by the stockholders. The Audit
Committee held four meetings during the Company's fiscal year ended
June 30, 1994.
The current members of the Finance Committee are Messrs.
Handel (Chairman), Clowe, Hecht, Rifenburgh and Stihl. The current
principal responsibilities of the Committee are to review, appraise
and recommend actions relating to the Company's capital structure,
to review the Company's compliance with financial covenants in its
financing documents, and to review capital needs and expenditures,
risk-management programs and financial performance of the
retirement savings plan. The Finance Committee held five meetings
during the Company's fiscal year ended June 30, 1994.
The current members of the Management Resources Committee are
Messrs. Arneson (Chairman), Handel and Hecht. The current
principal responsibilities of the Committee are to make
recommendations with respect to executive officer and senior
management compensation and incentive compensation programs and,
subject to limitations, to administer the Company's stock option
plans, stock purchase plan and stock bonus plan, including the
issuance of stock in connection with the Company's retirement
savings plan and incentive bonus plans, and to review management
development and succession programs. The Management Resources
Committee held seven meetings during the fiscal year ended June 30,
1994.
During the fiscal year ended June 30, 1994, the Board of
Directors held seven meetings. All nominees attended at least 75%
of the aggregate number of meetings of the Board of Directors and
the Committees of which they were members held during their tenure.
Director Compensation
Non-employee Directors receive a $12,500 annual retainer
payable upon election as Director of the Company at the Annual
Meeting of Stockholders at the beginning of each fiscal year (and
a pro rata amount to any non-employee who becomes a Director of the
Company thereafter, payable at the time of becoming a Director),
and $1,750 per meeting (including supplemental meetings in person
with management where the business to be conducted cannot be
reasonably accomplished during any scheduled meeting times and is
necessary in furtherance of the required duties of a Director --
representing $1,750 in fees for one supplemental meeting involving
one Director in fiscal year 1994) not to exceed $1,750 per day for
attendance at Board, Committee and supplemental meetings regardless
of the number of meetings attended on a given day, payable
following such meetings. Non-employee Directors who serve as
chairman of Committees of the Board of Directors receive $2,500 per
annum, payable quarterly at the end of a quarter. No compensation
is paid to Messrs. Stihl and Carter for services as a Director.
On their date of election, Messrs. Clowe, Handel, and
Rifenburgh were each granted options to purchase 3,000 shares of
Common Stock at an exercise price equal to 100% of the fair market
value of the Common Stock on the date of grant (i.e., $5.00 for
Messrs. Handel, and Rifenburgh and $5.90 for Mr. Clowe). Mr. Dewey
was granted an option to purchase 10,000 shares of Common Stock at
an exercise price equal to par value, $0.01, upon his election in
1981 which, as a result of the Company's one-for-ten reverse stock
split in February 1992, represents an option to purchase 1,000
shares at an exercise price of $0.10 per share. Messrs. Handel,
and Rifenburgh elected to participate in a Stock Option
Cancellation and New Grant Program during fiscal year 1994.
Pursuant to the terms of the Program, each elected to cancel the
prior stock options granted to them and received a new stock option
grant to purchase 3,000 shares with an exercise price of $3.3125,
the fair market value of a share of Common Stock on August 25,
1993, the effective date of grant. The new stock options have the
same vesting schedule as the canceled stock options (i.e., vesting
over the three-year period from the August 25, 1993 date of grant,
one-third on the first anniversary thereof, and monthly
thereafter). The Company's Stock Option Plan provides for the
automatic grant, upon the election of a non-employee to the Board
of Directors, of an option to purchase 3,000 shares of Common Stock
at an exercise price equal to the fair market value of a share of
Common Stock on the date of grant.
Executive Compensation
The following table sets forth information with respect to the
compensation of the current and former chief executive officer and
each of the other four most highly compensated executive officers
of the Company for fiscal year 1994 for services in all capacities
to the Company for fiscal years 1992, 1993 and 1994.
<TABLE>
Summary Compensation Table
<CAPTION>
Annual Compensation Long Term Compensation
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Awards Payouts
Name Restricted
and Current Stock Options/ LTIP All Other
Principal Fiscal Salary Bonus Other Award(s) SARs Payouts Compensation
Position Year ($) ($)(a) ($)(b) ($) (#)(c) ($) ($)(d)
J.T. Stihl (e) 1994 324,960 0 56,875 0 328,750 0 17,384
Chairman, 1993 219,177 93,985 N/A 0 45,200 0 5,927
President and 1992 187,256 83,400 N/A 0 15,000 0 1,949
Chief Executive
Officer
D.R. Brown (e) 1994 88,423 0 0 0 0 0 8,717
Former chairman 1993 376,604 229,142 N/A 0 244,000 0 2,352
and chief 1992 354,636 437,450 N/A 0 0 0 11,696
executive officer
C.M. Carter (f) 1994 205,940 0 23,625 0 83,155 0 3,661
Former senior vice 1993 183,072 84,976 N/A 0 29,000 0 5,070
president and 1992 166,526 65,606 N/A 0 0 0 4,531
secretary
J.P. McCloskey(g) 1994 205,800 0 20,530 0 41,780 0 3,994
Former vp finance, 1993 196,687 90,081 N/A 0 29,000 0 5,807
treasurer, chief 1992 191,891 68,419 N/A 0 0 0 5,374
financial officer
T.D. Robinson 1994 150,986 0 16,000 0 65,145 0 2,174
Vice President, 1993 109,638(h) 36,287 N/A 0 N/A N/A N/A
Field Operations 1992 N/A N/A N/A N/A N/A N/A N/A
David S. Cowie(i) 1994 133,670 0 14,000 0 62,024 0 0
Vice President, 1993 N/A N/A N/A N/A N/A N/A N/A
Development & 1992 N/A N/A N/A N/A N/A N/A N/A
Engineering
</TABLE>
(a) Shows awards of incentive compensation under the Company's
Executive Bonus Plan (EBP). No incentive compensation under the
EBP for fiscal year 1994 was earned or paid.
(b) Shows the dollar value of shares of Common Stock granted in
respect of achievement of corporate performance commitments for
the quarters ended March 31 and June 30, 1994, based on the
$2.125 closing sale price of a share on August 19, 1994, the
effective date of grant.
(c) Includes for certain persons new stock option grants resulting
from the election to participate in the Stock Option
Cancellation and New Grant Program held for a limited time
during fiscal year 1994 and new stock option grants in
consideration of the eight-month deferral of executive officer
annual merit salary increases from January 1, 1994 to September
1, 1994. Pursuant to the terms of the Program, participants
elected to cancel certain stock options previously granted to
them and received a new stock option grant for the purchase of
the same number of shares as the canceled stock option, with an
exercise price of $3.3125, the fair market value of a share of
Common Stock on August 25, 1993, the effective date of grant.
The grant of the new stock option starts a new vesting schedule
for that option with vesting over the same vesting period as the
canceled stock option (e.g., five-year, three-year, one-year).
Named persons participating in the Program for the aggregate
number of stock options indicated were Messrs. Stihl (10,000)
and Cowie (2,449). The number of stock options granted to the
named persons in consideration of the annual merit salary
increase eight-month deferral were: Stihl (8,625), Brown (0),
Carter (5,175), McCloskey (3,800), Robinson (2,625) and Cowie
(3,450). Also includes performance based restricted stock
options granted in June 1994 upon approval by the Board of
Directors of a Long-Term Incentive Compensation Plan for
executive officers. The named persons received stock options to
purchase the following number of shares: Stihl (100,000); Brown
(0); Carter (50,000); McCloskey (30,000); Robinson (40,000); and
Cowie (35,000).
(d) Represents the Company's annual contribution for the prior
fiscal year in cash and/or shares of Common Stock, based on the
value of such shares at the time of contribution, to such person
under the Company's Retirement Savings Plan, a defined
contribution plan. For Mr. Brown, includes an estimated $4,000
per year of imputed income on the balance amount in a "split
dollar" life insurance trust funded by the Company. For Mr.
Stihl, includes $7,775 paid by the Company as the premium for $1
million in term life insurance.
(e) On August 25, 1993, Mr. Stihl was elected to the positions of
Chairman of the Board, President and Chief Executive Officer
upon the voluntary resignation of Denis R. Brown as Director,
Chairman and Chief Executive Officer. Prior to this election,
Mr. Stihl served as President and Chief Operating Officer of the
Company.
(f) During fiscal year 1994, Mr. Carter was elected to the positions
of Senior Vice President, Operations and Secretary in August
1993. Prior to August 1993, he served as Vice President,
General Counsel and Secretary, Corporate Development of the
Company. Accepted an offer to join a company in an unrelated
industry and a former executive officer of Concurrent, stepping
down as an employee of Concurrent, effective September 23, 1994.
(g) Accepted an offer to join a company in an unrelated industry and
a former executive officer of Concurrent, stepping down as an
employee of Concurrent, effective September 16, 1994.
(h) Partial year; joined the Company as Vice President, Worldwide
Customer Services in September 1992. Excludes $65,502 in
relocation expenses paid by the Company in accordance with its
relocation policies.
(i) Elected an executive officer in August 1993.
OPTION GRANTS
The following table shows all grants in fiscal year 1994 of
stock options under the Company's 1991 Restated Stock Option Plan
(the "Stock Option Plan") to the executive officers named in the
Summary Compensation Table. No stock appreciation rights were granted
during fiscal year 1994.
<TABLE>
Option Grants In Last Fiscal Year
<CAPTION>
Potential Realizable Value
Options Percent of Total at Assumed Annual
Name Granted Options Granted Exercise or Rates of Stock Price
to Employees in Base Price Expiration Appreciation for Option term
Fiscal Year ($/share)(a) Date 5% 10%
<S> <C> <C> <C> <C> <C>
J.T. Stihl 10,100(b) $3.3125 8/25/2003 21,040 53,321
200,000(c) $3.3125 8/25/2003 416,643 1,055,854
10,000(d) $3.3125 8/25/2003 20,832 52,793
8,625(e) $1.625 1/01/2004 8,814 22,337
100,000(f) $1.7813 6/23/2004 112,025 283,893
--------
328,725 18.5%
D.R. Brown 0 0% - - - -
C.M. Carter(j) 7,980(b) $3.3125 8/25/2003 16,624 42,129
20,000(g) $3.3125 8/25/2003 41,664 105,585
5,175(e) $1.625 1/01/2004 5,289 13,402
50,000(f) $1.7813 6/23/2004 56,012 141,947
-------
83,155 4.7%
J.P. McCloskey(j) 7,980(b) $3.3125 8/25/2003 16,624 42,129
3,800(e) $1.625 1/01/2004 3,883 9,841
30,000(f) $1.7813 6/23/2004 33,607 85,168
--------
41,780 2.4%
T.D. Robinson 2,520(b) $3.3125 8/25/2003 5,250 13,304
2,625(e) $1.625 1/01/2004 2,683 6,798
20,000(h) $1.625 1/28/2004 20,439 51,797
40,000(f) $1.7813 6/23/2004 44,810 113,557
--------
65,145 3.7%
D.S. Cowie 1,125(b) $3.3125 8/25/2003 2,344 5,939
100(d) $3.3125 8/25/2003 208 528
2,349(d) $3.3125 8/25/2003 4,893 12,401
20,000(i) $3.3125 8/25/2003 41,664 105,585
3,450(e) $1.625 1/01/2004 3,529 8,935
35,000(f) $1.7813 6/23/2004 39,209 99,363
--------
62,024 3.5%
</TABLE>
- ----------------------------------------------
(a) Represents the fair market value of a share of Common Stock on
the effective date of grant.
(b) Annual Grant Program (10% of previously granted stock options
other than stock options granted under the Company's Long-Term
Incentive Compensation Plan).
(c) Upon election to additional positions of Chairman and CEO
(continuing as President).
(d) Participation in Cancellation and New Grant Program (see
Repricing Table below).
(e) In consideration of eight-month deferral of annual merit salary
increase from January 1994 to September 1994.
(f) Long Term Incentive Compensation Plan grant; exercisability
restricted until achievement of defined objectives.
(g) Upon election to additional position of Senior Vice President,
Operations (continuing as Secretary).
(h) Upon election to position of Vice President, Field Operations.
(i) Upon election to position of Vice President, Development &
Engineering.
(j) All outstanding stock options terminated without exercise
effective the effective date of resignation (McCloskey,
September 16, 1994; Carter, September 23, 1994).
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table provides information as to the unexercised
options to purchase the Company's Common Stock granted in fiscal year
1994 and prior fiscal years to the named executive officers and the
value of options held by them at fiscal year-end. None of the named
executive officers exercised any options during fiscal year 1994.
Fiscal Year-End Option Values
Number of Unexercised Value of Unexercised
Options at Fiscal In-the-Money Options
Year-End at Fiscal Year-End (a)
Name Exercisable(b) Unexercisable Exercisable Unexercisable
- ---------------------------------------------------------------------
J.T. Stihl 116,245 303,687 $0 $11,526
D.R. Brown 0 0 $0 $0
C.M. Carter (c) 78,046 89,026 $0 $ 5,979
J.P. McCloskey (c) 74,046 51,651 $0 $ 3,761
T.D. Robinson 14,879 80,266 $0 $ 9,404
D.S. Cowie 8,695 60,174 $0 $ 4,142
(a) Based on the fair market value of the Company's Common Stock on
that date ($1.875).
(b) Includes options exercisable within 60 days of Fiscal Year-End.
(c) All outstanding stock options terminated without exercise
effective the effective date of resignation (McCloskey,
September 16, 1994; Carter, September 23, 1994)
<PAGE>
STOCK OPTION CANCELLATION AND NEW GRANT PROGRAM
In August 1993, the Board of Directors approved a Stock Option
Cancellation and New Grant Program. All employee and Director
optionees were eligible to participate. The objective of the Program
was to provide these option holders additional opportunity and
incentive to achieve business plan goals. The new stock options have
an exercise price equal to the fair market value of a share of Common
Stock on the effective date of grant and a new vesting schedule
commencing the August 25, 1993 effective date of grant comparable to
the vesting period of the canceled stock option (e.g., one-year,
three-year and five-year).
<TABLE>
Ten-Year Option/SAR Repricings
Number of
Securities Market Price
Underlying of Stock at Exercise Price Length of Original
Options/SARs Time of at time of Option Term
Repriced or Repricing or Repricing or New Remaining at Date
Amended Amendment Amendment Exercise of Repricing of
Name Date # (a) $ (a) $ (a) Price $ (a) Amendment
<S> <C> <C> <C> <C> <C> <C>
J.T. Stihl 08/25/93 10,000 $ 3.3125 $ 3.75 $ 3.3125 9.7 years
C.M. Carter 11/22/89 15,000 $25.625 $49.375 $25.625 8.7 years
11/15/90 15,000 $ 1.875 $25.625 $ 1.875 9.0 years
J.P. McCloskey 11/22/89 15,000 $25.625 $49.375 $25.625 8.7 years
11/15/90 15,000 $ 1.875 $25.625 $ 1.875 9.0 years
D.S. Cowie 11/22/89 1,081 $25.625 $45.00 $25.625 8.9 years
11/22/89 264 $25.625 $47.50 $25.625 9.7 years
11/15/90 1,345 $ 1.875 $25.625 $ 1.875 9.0 years
08/25/93 100 $ 3.3125 $ 4.375 $ 3.3125 9.8 years
08/23/93 2,349 $ 3.3125 $ 4.375 $ 3.3125 9.8 years
K.J. Dell 11/22/89 400 $25.625 $45.00 $25.625 8.9 years
11/22/89 750 $25.625 $47.50 $25.625 9.7 years
11/15/90 1,150 $ 1.875 $25.625 $ 1.875 9.0 years
11/15/89 1,000 $ 1.875 $17.50 $ 1.875 9.4 years
08/25/93 1,000 $ 3.3125 $ 4.375 $ 3.3125 7.8 years
08/25/93 100 $ 3.3125 $ 4.375 $ 3.3125 7.8 years
08/25/93 5,499 $ 3.3125 $ 4.375 $ 3.3125 7.8 years
</TABLE>
(a) For transactions prior to February 7, 1992, the number of
securities, market price and exercise price have been adjusted
to reflect the one-for-ten reverse stock split effective that
date.
Severance Arrangements
The Company has entered into employment agreements with its
executive officers. With the exception of the employment agreements
with Mr. Stihl and except as described below, these agreements
contain generally the same terms and provide for a base salary to be
reviewed for increase annually with such increases as shall be
awarded in the discretion of the Board of Directors. The agreements
also provide for an annual bonus opportunity in a target amount to be
established by the Board of Directors at the recommendation of the
Management Resources Committee, the actual amounts to be paid
depending upon the degree of achievement of various objectives
reasonably consistent with the Company's business plan to be
established annually by the Board of Directors.
Employment under the employment agreements with executive
officers of the Company may be terminated by either the Company or
the respective executive officer at any time. In the event the
executive officer voluntarily resigns (except as described below) or
is terminated for cause, compensation under the employment agreements
will end. In the event an agreement, other than the agreement with
Mr. Stihl the terms of which differ, is terminated directly by the
Company without cause or in certain circumstances constructively by
the Company, the terminated employee will receive severance
compensation for a one-year period, in an annualized amount equal to
the respective employee's base salary then in effect plus an amount
equal to the then most recent annual bonus paid or, if determined,
payable, to such employee. Any compensation earned by the former
executive officer for subsequent employment during the period for
which severance compensation is payable will offset such severance
compensation amount by one dollar for every two dollars in subsequent
employment compensation.
Upon his election to the additional positions of Chairman of the
Board and Chief Executive Officer on August 25, 1993, the Company
entered into an agreement with Mr. Stihl which provides that he serve
as Chairman of the Board, President and Chief Executive Officer. It
also provides for a base annual salary of not less than $350,000, as
may be adjusted based on annual merit increases, plus an annual bonus
opportunity in a target amount not less than 65% of annual base
salary. The actual amount of the bonus opportunity to be paid depends
on the degree of achievement of various objectives established
annually by the Board of Directors reasonably consistent with the
Company's annual business plan. The agreement also provides that the
Company pay the premiums associated with portable, renewable term
life insurance providing a death benefit of $1 million on the life of
Mr. Stihl.
The Agreement further provides that either Mr. Stihl or the
Company may terminate the employment relationship at any time. In the
event Mr. Stihl voluntarily resigns (except following certain events
constituting constructive termination), retires or is terminated for
cause, compensation under the agreement would end and no further
compensation would be owed or payable. In the event the agreement is
terminated directly by the Company without cause, or in the event Mr.
Stihl terminates his employment following certain specified events
constituting constructive termination by the Company (including a
demotion or election to positions other than his current positions),
he would be entitled to receive severance compensation for a two-year
period commencing upon such termination in an annualized amount equal
to his annual base salary then in effect without offset.
Management Resources Committee Report on Executive Compensation
To: The Board of Directors
Compensation Overview and Philosophy
The Company's primary objective is to maximize stockholder value
over time by developing and implementing a comprehensive business
strategy. The Management Resources Committee's (MRC) primary
objective is to review compensation programs, employee benefit
plans, and personnel policies applicable to officers and other
members of senior management of the Company to assure that they
support the Company's objectives and are in the long range
interests of the stockholders. The MRC reviews performance of
executive officers and recommends appropriate compensation,
including cash and incentive compensation, and stock option grants
for approval by the Board. The MRC meets at least quarterly. The
MRC's overall compensation philosophy is to provide rewards that
(1) are linked to the achievement of Company and individual
performance objectives, (2) align employee interests with the
interests of its stockholders, (3) are sufficient to attract and
retain needed, high-quality employees, and (4) provide a mix of
cash and potential stock ownership tied to the immediate and long
term business strategy. The MRC solicits and analyzes periodic
reports from independent consultants retained by management
regarding the appropriateness of compensation levels.
Executive Officer Compensation
The MRC uses the following key principles in structuring, reviewing
and revisiting compensation targets and packages of executive
officers:
. Long-Term and At-Risk Focus so that a significant portion of
executive officer pay is focused toward the achievement of
long-term strategic objectives and maximization of
stockholder value.
. Management Development programs designed to successfully
attract and retain individuals who can maximize the creation
of stockholder value, and motivate employees to attain
Company and individual performance objectives.
. Equity At-Risk Link of Company performance and individual
rewards to instill ownership (stockholder) thinking.
. Recognition of Individual Contributions toward achievement of
specific business objectives as well as overall Company
results.
. Competitive Position of both base salary and total
compensation with the high technology computer industry.
COMPONENTS OF EXECUTIVE COMPENSATION
The four components of executive compensation are (1) base salary,
(2) annual incentive (bonus) awards, (3) equity participation and
(4) long term incentive compensation.
BASE SALARY. Base salary is determined based on competitive
factors and individual and Company performance. It is targeted to
be at approximately the average of the high technology computer
industry for comparable positions of responsibility. Annual
increases are intended to be consistent with individual and Company
performance and competitive with industry trends.
ANNUAL INCENTIVE (BONUS) AWARDS. At the start of each fiscal year,
the MRC establishes Company performance objectives for the fiscal
year and target bonus opportunities for each executive officer
based on the achievement of Company and individual performance
objectives. The target bonus opportunity is a percentage of base
salary initially established at the time the person became an
executive officer, generally 30 to 50% for executive officers other
than the chief executive officer and 65% for the chief executive
officer. The target bonus opportunity is reviewed periodically for
increase based on level of responsibility, potential contribution
to the achievement of Company objectives and competitive practices.
Under recent plans, the target bonus is earned 75% based on the
achievement of Company performance objectives set annually, for
example, the achievement of a certain level of before tax income or
profitability, and 25% based on the achievement of individual
performance objectives tied to the Company's annual business plan.
Minimum thresholds of achievement are also established. Actual
awards are determined at the end of the fiscal year based on
achievement of the established Company and individual performance
objectives.
EQUITY PARTICIPATION. Equity participation is in the form of
annual stock option grants with exercise prices equal to fair
market value of a share of Common Stock at the effective date of
grant. Participation is limited to executive officers and
employees at or above a minimum grade level eligible for
participation in the Concurrent Incentive Plan (an annual incentive
(bonus) award plan). The target amount for annual equity
participation stock option grants, if any, is 10% of the stock
options previously granted to the eligible participant (other than
stock options granted under the Company's Long Term Incentive
Compensation Plan).
LONG TERM INCENTIVE COMPENSATION. Long term incentive compensation
is distributed through the Company's Long-Term Incentive
Compensation Plan (the "LTIC Plan"). The LTIC Plan was recommended
by the MRC and approved by the Board in June 1994. The objective
of the LTIC Plan is to provide a strong recruitment and retention
device for employee executive officers that provides an incentive
for achievement of long-term financial strategic success of the
Company. Cycles for determining LTIC performance objectives and
incentive compensation are recommended by the MRC for approval by
the Board. Target performance objectives for each fiscal year
during the cycle and extraordinary performance objectives for the
cycle are recommended by the MRC for approval by the Board. The
performance objectives are based on one or more discrete financial
objectives that are consistent with the Company's five-year
strategic plan. The current cycle is the three fiscal years ending
June 30, 1997. The performance objectives for the cycle are based
on revenue and net income. Incentive compensation under the LTIC
Plan is in the form of stock options for the achievement of target
performance objectives and stock grants for the achievement of
extraordinary performance objectives. The aggregate incentive
compensation opportunity for achievement of all target performance
objectives for the cycle is a percentage of annual base salary.
For the current cycle, the percentage for executive officers other
than the Chairman, President and CEO, ranges from 30 to 40%. The
percentage for the Chairman, President and CEO is 50%. Stock
options based on the incentive compensation opportunity for
achievement of all target performance objectives are granted at the
beginning of the cycle. The right to exercise the stock option is
earned based on achievement of the target performance objectives.
The right to exercise that portion of the stock option earned
through achievement of the target performance objectives vests 60%
on the date the Board approves the financial statements for the
last fiscal year in the cycle (i.e., for the initial three-year
cycle, the financial statements for the fiscal year ending June 30,
1997) and 40% on the last day of the fiscal year following the last
fiscal year of the cycle (i.e., for the initial three-year cycle,
June 30, 1998). Except in certain limited circumstances, an
employee must be an employee of the Company at the time of vesting
in order to be receive any incentive compensation earned during the
cycle.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Stihl joined the Company in May of 1991 and has played a
significant role in the development and implementation of the
Company's strategic plan. Mr. Stihl was elected Chairman,
President, and Chief Executive Officer at the August 1993 meeting
of the Board of Directors. In accordance with the compensation
philosophy and process described above, upon his election Mr.
Stihl's annual base salary was set at $350,000 with an annual bonus
target of 65%. He was also granted an equity participation stock
option to purchase 200,000 shares of Common Stock at an exercise
price per share of $3.3125, the fair market value on the date of
grant. The option vests over a five-year period (20% on the
anniversary of the date of grant and monthly thereafter). In June
1994, at the MRC's recommendation the Board granted performance
based stock options to Mr. Stihl to purchase 100,000 shares of
Common Stock under the LTIC Plan for the initial three year cycle
ending June 30, 1997. Similar grants were made to other executive
officers. Based on corporate performance results against targeted
objectives, no annual incentive (bonus) award for fiscal year 1994
was paid to Mr. Stihl or any other executive officer of the
Company. At the Committee's recommendation, in August 1994 the
Board made a one-time grant of shares of Common Stock to executive
officers for achievement of committed corporate performance
objectives for the quarters ended March 31 and June 30, 1994. Mr.
Stihl received a one-time grant of 26,675 shares.
Mr. Brown received base salary only through his August 23, 1993
termination date at the annual rate of $389,200. No further
compensation was paid thereafter.
STOCK OPTION CANCELLATION AND NEW GRANT PROGRAM
Upon the Committee's recommendation, in August 1993 the Board of
Directors approved a Stock Option Cancellation and New Grant
Program. All employee and Director optionees were eligible to
participate. The objective of the Program was to provide these
option holders additional opportunity and incentive to achieve
business plan goals. The new stock options have an exercise price
equal to the fair market value of a share of Common Stock on the
effective date of grant and a new vesting schedule commencing the
August 25, 1993 effective date of grant comparable to the vesting
period of the canceled stock option (e.g., one-year, three-year and
five-year).
CONCLUSION
The MRC believes the executive compensation policies and programs
serve the interest of the stockholders and the Company. The MRC
also believes the base salary amounts, bonus awards, equity
participation grants, and long term incentive compensation for
executive officers have been linked to and are commensurate with
Company performance and individual efforts in achieving the
strategic goals of the Company.
MANAGEMENT RESOURCES COMMITTEE MEMBERS
Phillip W. Arneson, Chairman
Morton E. Handel
Leonard N. Hecht
<PAGE>
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the total
returns (assuming reinvestment of dividends) of the Company's
Common Stock, the NASDAQ Stock Market (U.S. companies) and a peer
group of companies determined by the Company. The graph assumes
$100 invested on June 30, 1989 in Concurrent Common Stock and each
of the indices.
COMPARISON OF FIVE YEAR-CUMULATIVE TOTAL RETURNS
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, to the knowledge of the
Company, the only beneficial owners of more than 5% of the
Company's Common Stock as a group as of September 23, 1994.
Percentage of
Name and Address Number of Common Stock
of Beneficial Owner Shares Owned (a) Outstanding (a)
Wellington Management Company 2,995,200 9.9%
75 State Street
Boston, MA 02109
Bear Stearns & Co., Inc. 2,432,801 8.1%
245 Park Avenue
New York, NY 10167
Teachers Insurance and Annuity 1,596,938 5.3%
Association of America (b)
730 Third Avenue
New York, NY 10017-3206
(a) Assumes for such beneficial owner the exercise of warrants to
purchase shares of Common Stock granted in connection with the
"lock-up" through January 21, 1994 of the shares of Common
Stock held by such beneficial owner, including shares issued
upon exercise of the warrants (121,877 warrants held by Bear
Stearns and 80,000 warrants held by Teachers). Does not assume
the exercise of warrants by any other warrant holder.
(b) In August 1992, in an arms-length transaction Concurrent
transferred all its interests in its Westford, Massachusetts
facility to an affiliate of Teachers Insurance and Annuity
Association of America, in exchange for consideration
including cancellation of $11,000,000 in mortgage indebtedness
plus accrued interest. As part of the transaction, the Company
leased back a portion of the facility and continued its
existing operations from the facility.
The following table sets forth for each nominee for Director,
and each of the persons named in the executive compensation table,
his name, and the number of shares and percentage of Common Stock
of the Company which he reported were beneficially owned by him as
of June 30, 1994, including the number of shares of Common Stock he
has the right to purchase during the 60 days thereafter (through
August 29, 1994) upon the exercise of existing stock options.
Common Stock
Beneficially Percentage of
Owned Directly Common Stock
Name or Indirectly Outstanding (a)
Denis R. Brown 3,516 *
Michael A. Brunner 0 *
C. Michael Carter 90,674 (b) *
Kevin N. Clowe 3,000 *
David S. Cowie 8,695 (c) *
C. Forbes Dewey, Jr. 14,601 (d) *
Morton E. Handel 1,000 *
James P. McCloskey 88,730 (e) *
Richard P. Rifenburgh 13,000 *
Thomas D. Robinson 15,543 (f) *
Robert R. Sparacino 0 *
John T. Stihl 123,001 (g) *
Directors and executive
officers as a group
(16 persons) 384,556 (h) 1.3%
___________________
(a) Assumes the exercise of all outstanding stock options held by
current directors and executive officers as a group
exercisable within 60 days of June 30, 1994.
(b) Includes options to purchase 78,046 shares of Common Stock of
the Company currently exercisable or which become exercisable
within 60 days of June 30, 1994. Does not include options to
purchase 89,026 shares of Common Stock of the Company which
become exercisable after such 60-day period. Excludes 117
shares held in trust for two of Mr. Carter's children, as to
both of which holdings he disclaims beneficial ownership.
(c) Represents options to purchase 8,695 shares of Common Stock of
the Company currently exercisable or which become exercisable
within 60 days of June 30, 1994. Does not include options to
purchase 60,170 shares of Common Stock of the Company which
become exercisable after such 60-day period.
(d) Excludes 10 shares held by Mr. Dewey's wife and 26 shares held
in trust for Mr. Dewey's son, as to both of which holdings he
disclaims beneficial ownership. Includes options to purchase
5,491 shares of Common Stock of the Company which are
currently exercisable.
(e) Includes options to purchase 74,046 shares of Common Stock of
the Company currently exercisable or which become exercisable
within 60 days of June 30, 1994. Does not include options to
purchase 51,651 shares of Common Stock of the Company which
become exercisable after such 60-day period.
(f) Includes options to purchase 14,879 shares of Common Stock of
the Company currently exercisable or which become exercisable
within 60 days of June 30, 1994. Does not include options to
purchase 80,266 shares of Common Stock of the Company which
become exercisable after such 60-day period.
(g) Includes options to purchase 116,245 shares of Common Stock of
the Company currently exercisable or which become exercisable
within 60 days of June 30, 1994. Does not include options to
purchase 303,867 shares of Common Stock of the Company which
become exercisable after such 60-day period.
(h) Includes options to purchase 321,476 shares of Common Stock of
the Company currently exercisable or which become exercisable
within 60 days of June 30, 1994. Does not include options to
purchase 828,111 shares of Common Stock of the Company which
become exercisable after such 60-day period.
* Less than 1% of the Company's outstanding Common Stock.
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who beneficially own
more than ten percent of a registered class of the Company's equity
securities ("ten percent stockholders"), to file reports of
ownership of the Company's securities and changes in such ownership
with the Securities and Exchange Commission (the "Commission) and
the National Association of Securities Dealers, Inc. Officers,
directors and ten percent stockholders are required by the
Commission's regulations to furnish the Company with copies of all
Section 16(a) forms they file.
Based solely upon its review of copies of such filings received by
it and written representations from certain reporting persons that
no Form 5 was required for those persons, the Company believes that
during its fiscal year ended June 30, 1994 all filing requirements
applicable to its officers, directors and ten percent stockholders
were complied with.
APPROVAL OF AMENDMENT TO STOCK OPTION PLAN
(Item 2 of Notice)
The Company has a Stock Option Plan providing for the grant of
incentive stock options to employees and non-qualified stock options
(NSOs) to employees, non-employee directors and consultants. The
Stock Option Plan is administered by the MRC and, in certain cases,
the Board. Under the plan, the MRC may award, in addition to stock
options, shares of Common Stock on a restricted basis. The plan also
specifically provides for stock appreciation rights and authorizes
the MRC to provide, either at the time of the grant of an option or
otherwise, that the option may be cashed out upon terms and
conditions to be determined by the Committee. The MRC determines the
option price, exercise period and other terms and conditions of
options at the time of each grant which are then reflected in the
stock option agreement between the Company and the optionee.
Generally, stock option agreements provide for (i) an exercise price
equal to the fair market value of a share of Common Stock on the
effective date of grant, (ii) a five-year vesting schedule and (iii)
a change of control provision providing for the acceleration of the
vesting of stock options in connection with a change of control and
involuntary termination of employment without cause and obligating
the Company to repurchase such options under certain circumstances.
Stock options may not be transferred or assigned, except by will or
the laws of descent and distribution. The plan currently limits the
grant of options to non-employee directors to the grant of the right
to purchase 3,000 shares upon their initial election to the Board of
Directors and does not provide for future grants. Generally, all
options granted to non-employee directors of the Company are
immediately exercisable. Shares purchased upon exercise of such
options are subject to repurchase by the Company to the extent not
vested in the event and at the time the option holder ceases to be a
director. The plan terminates on January 31, 2002. Stockholders have
previously approved the purchase of up to 3,164,725 shares under the
plan.
The Plan is designed to create a long-term mutuality of interest
between employees and the stockholders of the Company by encouraging
ownership of the Company's Common Stock and providing employees with
participation in the Company's long-term performance. To achieve that
goal the Board of Directors, on MRC recommendation, authorized grants
to all employees for fiscal year 1991 and 1992. In addition,
commencing in fiscal year 1992 the Board authorized an annual grant
program for executive officers and key employees with a target grant
based on achievement of performance objectives equal to approximately
10% of the stock options previously granted to executive officers and
key employees. An increase in the number of shares available for
issuance under the Plan of 1,000,000 was approved by stockholders at
the November 4, 1993 Annual Meeting of Stockholders to meet the
normal requirements of the business, for new hires, promotions and
the annual grant program for fiscal years 1994, 1995 and 1996. The
Company considers that numbers of shares sufficient for those
purposes. An additional 850,000 shares available for issuance under
the Plan is needed to cover stock options granted in consideration of
the eight-month deferral of annual merit salary increases for all
employees worldwide.
To save needed cash for operations, the Board of Directors, by
resolution adopted August 25, 1993, determined to defer annual merit
salary increases for all employees worldwide for eight months. In
consideration of the deferral, the Board of Directors granted stock
options to affected employees. The total number of stock options
granted was approximately 850,000. The number of stock options
granted to each affected employee was determined by a formula
percentage of current annual base salary based on the last
performance review on record. At its meeting on August 19, 1994,
the Board of Directors adopted an amendment to the Plan to increase
the maximum number of shares authorized for issuance under the Plan
by 850,000. A copy of the amendment is attached as Exhibit A.
Stockholder approval is sought in order to meet the requirements
of (i) the provisions of Code Section 422, which requires stockholder
approval of any increase in the number of shares that may be issued
under an incentive stock option plan, and (ii) the provisions of Rule
16b-3 which, in the case of certain option plans that have been
approved by stockholders, prevent the grant of options to Directors,
officers and certain other affiliates from being deemed "purchases"
for purposes of the profit recapture provisions of Section 16(b) of
the Securities Exchange Act of 1934, as amended. The officers and
directors of the Company who may receive such stock options will
benefit from such approval.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
The following is a brief summary of the federal income tax
consequences under the Stock Option Plan based on federal income tax
laws currently in effect.
An optionee will not recognize income upon the grant of an option
which does not qualify as an incentive stock option. The optionee
will recognize ordinary income upon the exercise of such a non-
qualified option, in which event the Company will receive a tax
deduction equal to the amount of income recognized provided that the
applicable withholding requirements are satisfied. The amount of such
ordinary income and deduction is the excess, if any, of the fair
market value on the exercise date of the shares of Common Stock
acquired over the aggregate exercise price paid. Any ordinary income
recognized by an optionee upon the exercise of a non-qualified option
will increase the optionee's tax basis of the shares of Common Stock
received. Upon a subsequent sale or exchange of such shares of Common
Stock, the optionee will recognize capital gain or loss to the extent
of the difference between the selling price of such shares and the
optionee's tax basis in such shares. Such gain or loss will be long-
term or short-term capital gain or loss, depending on an optionee's
holding period of such shares of Common Stock.
An optionee will not recognize income upon either the grant of
an incentive stock option or upon the optionee's exercise of the
incentive stock option. The optionee will recognize gain or loss
depending on his or her basis in the stock (which is generally equal
to the exercise price paid for the shares), upon the sale or other
disposition of shares of Common Stock acquired upon exercise of an
incentive stock option. If certain statutory holding periods are met,
such gain or loss will be long-term capital gain or loss and the
Company will not be entitled to any deduction. If the holding periods
are not met, the optionee may be required to recognize ordinary
income and the Company will be entitled to a tax deduction equal to
the amount of ordinary income recognized, provided that applicable
withholding tax requirements are satisfied. The amount of ordinary
income required to be recognized on such a disqualifying disposition
of shares acquired on exercise of an incentive stock option is the
difference between the exercise price and the lesser of (i) the fair
market value of the shares at the time of exercise or (ii) the amount
realized on the disposition.
Incentive stock options will be treated as non-qualified options
to the extent that the aggregate fair market value of the shares of
Common Stock (determined at the time the options are granted)
purchasable by the exercise of incentive stock options which become
exercisable for the first time during a calendar year (whether as a
result of acceleration of exercisability or otherwise) exceeds
$100,000.
An optionee who exercises an incentive stock option may be
subject to the alternative minimum tax since, for purposes of the
alternative minimum tax, the spread between the fair market value of
the Common Stock acquired on exercise of an incentive stock option
and the exercise price therefor is included in the optionee's
alternative minimum taxable income. However, the alternative minimum
tax attributable to including such incentive stock option income
would be available as a credit to be carried forward as a credit
against regular tax liability.
The grant of restricted stock will not result in compensation
income for the participant or in a deduction for the Company for
federal income tax purposes, assuming the shares are subject to
restrictions resulting in a "substantial risk of forfeiture" as
intended by the Company. Otherwise, the participant will recognize
compensation income when the restrictions lapse. The amount of such
income will be the value of the shares on that date less any required
purchase price. In all cases, the Company will be entitled to a tax
deduction to the extent that, and at the time that, the participant
realizes compensation income. Income tax withholding will be
required.
RATIFICATION OF AUDITORS
(Item 3 of Notice)
Upon the recommendation of the Audit Committee, the Board of
Directors has selected the firm of Coopers & Lybrand L.L.P.,
independent public accountants, as auditors of the Company for the
fiscal year ending June 30, 1995 and is submitting the selection to
stockholders for ratification.
Representatives of Coopers & Lybrand L.L.P. are expected to be
present at the Annual Meeting of Stockholders. They will have an
opportunity to make a statement if they desire to do so and will also
be available to respond to appropriate questions from stockholders.
The Board of Directors recommends a vote "FOR" this proposal.
OTHER MATTERS
(Item 4 of Notice)
The Board of Directors does not know of any other matters which
may come before the meeting. However, if any other matters are
properly presented to the meeting, it is the intention of the Proxy
Holders to vote, or otherwise to act, in accordance with their
judgment on such matters.
October 1, 1994
<PAGE>
Exhibit A
AMENDMENT TO 1991 STOCK OPTION PLAN
(SUBJECT TO STOCKHOLDER APPROVAL)
The first paragraph of Section 5 of the 1991 Stock Option Plan
is hereby amended, effective upon stockholder approval, to read in
its entirety as follows:
"SECTION 5. STOCK SUBJECT TO PLAN. The total number of shares of
Stock reserved and available for distribution pursuant to Awards
under the Plan shall be [4,014,725] shares of Stock. Such shares may
consist, in whole or in part, of authorized and unissued shares or
treasury shares."
