<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
Gartner Group, Inc.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
[GARTNER LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To our Stockholders:
The Annual Meeting of Stockholders of Gartner Group, Inc. will be held on
Thursday, January 25, 2001, at 10:00 A.M., local time, at the Ritz-Carlton
Hotel, 280 Vanderbilt Beach Road, Naples, Florida.
At the Annual Meeting, stockholders will be asked to:
1. ELECT DIRECTORS. The Class A Common Stockholders will elect one Class II
director for a three-year term. The Class B Common Stockholders will elect
two Class II directors for a three-year term.
2. CHANGE OUR NAME. You will vote on amending our Certificate of Incorporation
to change our name from "Gartner Group, Inc." to "Gartner, Inc."
3. RATIFY AUDITORS. You will vote on ratifying the appointment of KPMG LLP as
our independent auditors for the 2001 fiscal year.
4. TRANSACT OTHER BUSINESS. You will transact any other business that properly
comes before the meeting.
These items of business are more fully described in the accompanying Proxy
Statement.
Stockholders of record as of December 13, 2000 are entitled to vote at the
meeting.
To assure your representation at the meeting, you can vote your shares by
signing, dating and returning the enclosed proxy card in the enclosed
postage-prepaid envelope. You may also vote your shares by telephone or over the
Internet by following the instructions on your proxy card. If you attend the
meeting in person, you may vote at the meeting, even if you already returned a
proxy.
By Order of the Board of Directors,
Cathy S. Satz
Corporate Secretary
Stamford, Connecticut
December 29, 2000
IMPORTANT: WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE VOTE BY
COMPLETING AND RETURNING THE ENCLOSED PROXY CARD OR BY FOLLOWING THE TELEPHONE
OR INTERNET VOTING INSTRUCTIONS ON THE PROXY CARD.
<PAGE> 3
GARTNER GROUP, INC.
56 TOP GALLANT ROAD
STAMFORD, CT 06904
PROXY STATEMENT
FOR THE
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JANUARY 25, 2001
This Proxy Statement is sent to you because the Board of Directors of Gartner
Group, Inc. is soliciting your proxy to vote at the Annual Meeting of
Stockholders. The Annual Meeting will be held on Thursday, January 25, 2001, at
10:00 A.M. local time at the Ritz Carlton Hotel, 280 Vanderbilt Beach Road,
Naples, Florida.
This Proxy Statement and the accompanying Notice and form of Proxy will be
mailed on or about December 29, 2000.
PURPOSE OF MEETING
The proposals to be acted upon at the Annual Meeting are summarized in the
accompanying Notice of Annual Meeting. Each proposal is described in more detail
in this Proxy Statement, under the headings "PROPOSAL ONE," "PROPOSAL TWO" and
"PROPOSAL THREE," on pages 3 and 6.
INFORMATION CONCERNING SOLICITATION AND VOTING
REVOCABILITY OF PROXIES
If you give a proxy pursuant to this solicitation, you may revoke it at any
time before its use. To revoke a proxy you may (i) deliver written notice of
revocation or an executed proxy bearing a later date to the Corporate Secretary,
Gartner Group, Inc., P.O. Box 10212, 56 Top Gallant Road, Stamford, Connecticut
06904, or (ii) attend the Annual Meeting and vote in person.
RECORD DATE AND NUMBER OF SHARES OUTSTANDING
Only stockholders of record at the close of business on December 13, 2000 may
vote at the Annual Meeting. As of December 13, 2000, there were 54,014,498
shares of Class A Common Stock and 40,689,648 shares of Class B Common Stock
outstanding.
VOTING OF PROXIES
At the Annual Meeting, the individuals named on the enclosed proxy card will
vote your proxy in accordance with the instructions indicated, if it is properly
executed and received prior to the vote at the Annual Meeting. If you do not
give voting instructions on your proxy, the individuals named will vote your
shares as the Board recommends. If any matter not described in this Proxy
Statement is properly presented at the Annual Meeting, the individuals named
will vote using their best judgment.
QUORUM
ELECTION OF COMMON A DIRECTOR. A quorum to elect the Common A director is
constituted by the presence, in person or by proxy, of Class A Common
Stockholders representing a majority of the aggregate number of shares entitled
to vote.
ELECTION OF COMMON B DIRECTORS. A quorum to elect the Common B directors is
constituted by the presence, in person or by proxy, of Class B Common
Stockholders representing a majority of the aggregate number of shares entitled
to vote.
ALL OTHER MATTERS. A quorum for all other purposes is constituted by the
presence, in person or by proxy, of Class A Common Stockholders and Class B
Common Stockholders representing a majority of the aggregate number of shares
entitled to vote. Abstentions and broker non-votes will be considered present to
determine the presence of a quorum.
VOTE REQUIRED
ELECTION OF COMMON A DIRECTOR. The election of the Common A director will
require the affirmative vote of a plurality of the
<PAGE> 4
shares of Class A Common Stock voting. Each share of Class A Common Stock is
entitled to one vote. Votes withheld will have no effect on the election of the
Common A director.
ELECTION OF COMMON B DIRECTORS. The election of the Common B directors will
require the affirmative vote of a plurality of the shares of Class B Common
Stock voting. Each share of Class B Common Stock is entitled to one vote.
However, any Class B Common Stockholder who owns more than 15% of the
outstanding Class B Common Stock cannot vote all of his or her Class B Common
Stock in the election of Common B directors unless such holder owns an
equivalent percentage of Class A Common Stock. For example, if a Class B Common
Stockholder owns shares representing 17% of the Class B Common Stock and shares
representing 5% of the Class A Common Stock, the stockholder may vote shares
representing only 5% of the Class B Common Stock. Votes withheld will have no
effect on the election of the Common B directors.
APPROVAL OF NAME CHANGE. Each share of Class A Common Stock and Class B
Common Stock is entitled to one vote. The Class A Common Stockholders and the
Class B Common Stockholders will vote together as a single class. The
affirmative vote of a majority of the shares of Class A Common Stock and Class B
Common Stock outstanding is required for the approval of the proposal to change
our name. Abstentions and broker non-votes will be counted as votes against this
proposal.
RATIFICATION OF AUDITORS AND ALL OTHER MATTERS. Each share of Class A Common
Stock and Class B Common Stock is entitled to one vote. The Class A Common
Stockholders and the Class B Common Stockholders will vote together as a single
class. The affirmative vote of a majority of the shares of Class A Common Stock
and Class B Common Stock present in person or represented by proxy is required
to ratify the appointment of KPMG LLP as our independent auditors for fiscal
2001 and for the approval of any other matters that may properly come before the
Annual Meeting. Abstentions will be counted as a vote against these matters.
Broker non-votes will have no effect on the votes.
SOLICITATION OF PROXIES
We will pay the cost for the solicitation of proxies for the Annual Meeting,
including the cost of the mailing. We will request that brokerage houses and
other custodians mail proxy materials to their customers. We will reimburse
brokerage houses and other custodians for reasonable out-of-pocket expenses
incurred in the mailing.
We have retained Mellon Investor Services, at an estimated cost of $8,500,
plus out-of-pocket expenses, to assist us in the solicitation of proxies.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS FOR 2002 ANNUAL MEETING
If you want to make a proposal for consideration at next year's annual
meeting and have it included in next year's proxy materials, we must receive
your proposal by August 31, 2001. If you want to nominate a director or make a
proposal for consideration at next year's annual meeting without having the
nomination or proposal included in the proxy materials, we must receive your
nomination or proposal at least 90 days prior to the 2002 Annual Meeting.
However, if we give less than 100 days' notice of the 2002 Annual Meeting, we
must receive your nomination or proposal at least ten days after we give the
notice. If we do not receive your proposal by the appropriate deadline, then any
such nomination or proposal may not be brought before the 2002 Annual Meeting.
Nominations and proposals should be addressed to the Corporate Secretary,
Gartner Group, Inc., P.O. Box 10212, 56 Top Gallant Road, Stamford, Connecticut
06904.
2
<PAGE> 5
PROPOSAL ONE:
ELECTION OF DIRECTORS
GENERAL INFORMATION ABOUT OUR BOARD OF DIRECTORS
The Board's ten directors are divided into three classes: Class I, Class II
and Class III, with each director serving a three-year term. All the directors
in each class, each of which constitutes approximately one-third of the
directors, stand for election in the year their term expires. Since our
Certificate of Incorporation provides that the holders of the Class B Common
Stock are entitled to elect at least 80% of the directors, each director is
further designated as a Common A director or a Common B director. The Class A
Common Stockholders are entitled to elect two directors and the Class B Common
Stockholders are entitled to elect eight directors.
In April 2000, John P. Imlay and Charles B. McQuade, each a Class I director
whose term would have expired at the 2003 Annual Meeting, retired from the
Board. Glenn Hutchins and Roger McNamee were appointed by the Board to fill the
vacancies resulting from the retirement of Mr. Imlay and Mr. McQuade. Mr.
Hutchins' and Mr. McNamee's terms expire at the 2003 Annual Meeting.
At the Annual Meeting, three Class II directors, one of whom is designated a
Common A director and two of whom are designated Common B directors, will be
elected. At the 2002 Annual Meeting, four Class III directors, one of whom is
designated a Common A director and three of whom are designated Common B
directors, will be elected. At the 2003 Annual Meeting, three Class I directors,
all of whom are designated Common B directors, will be elected.
NOMINEES; RECOMMENDATION OF THE BOARD
The three nominees listed below are currently directors and have indicated
their willingness to serve another term. However, if any nominee is unable or
unexpectedly declines to serve as a director at the Annual Meeting, proxies will
be voted for the nominee designated by the present Board to fill the vacancy.
Each person elected as a director will continue to be a director until the 2004
Annual Meeting or until a successor has been elected.
THE BOARD RECOMMENDS THAT THE CLASS A COMMON STOCKHOLDERS VOTE "FOR" THE
NOMINEE LISTED BELOW:
- Manuel A. Fernandez
THE BOARD RECOMMENDS THAT THE CLASS B COMMON STOCKHOLDERS VOTE "FOR" THE
NOMINEES LISTED BELOW:
- Anne Sutherland Fuchs
- Dennis G. Sisco
There is no family relationship among any of our directors or executive
officers. Mr. Fernandez' and Mr. Fleisher's employment agreements each provide
that we will include them on our slate of nominees to be elected to the Board
during the term of the respective agreement. See "Executive Compensation -
Employment Agreements with Named Executive Officers" on pages 11 and 12. In
addition, Mr. Hutchins and Mr. McNamee currently serve as directors pursuant to
an agreement entered into in connection with the issuance of our convertible
notes in April 2000. See "Certain Relationships and Transactions - Relationship
with Silver Lake Partners, L.P." on page 21. There are no other arrangements
between any director or nominee and any other person pursuant to which the
director or nominee was selected.
INFORMATION ABOUT NOMINEES FOR ELECTION AS CLASS II DIRECTORS:
COMMON A DIRECTOR:
MANUEL A. FERNANDEZ, age 54, has been Chairman of the Board since April 1996
and a director since January 1991. Mr. Fernandez has been a Managing Member of
SI Ventures Associates, a venture capital fund of which we are an affiliate,
since January 1999 and a Managing Director of SI Venture Fund II, L.L.P., a
venture capital fund of which we are an affiliate, since October 1999.
Previously, he served as our Chief Executive Officer from April 1991 through
December 1998, and as our President from January 1991 through September 1997.
Prior to joining us, he was President and Chief Executive Officer of Dataquest,
Incorporated, then a wholly-owned subsidiary of Dun & Bradstreet Corporation, an
international research, consulting and analysis company. Before joining
Dataquest, Mr. Fernandez was President and Chief Executive Officer of Gavilan
Computer Corporation, a laptop computer manufacturer, and Zilog, Incorporated, a
semiconductor manufacturing company. Mr. Fernandez holds a bachelor's degree in
electrical engineering from the University of Florida, and completed
post-graduate work in solid state engineering at the University of Florida and
in business
3
<PAGE> 6
administration at Florida Institute of Technology. Mr. Fernandez is also on the
board of directors of The Black & Decker Corporation, Brunswick Corporation and
Click Commerce, Inc.
COMMON B DIRECTORS:
ANNE SUTHERLAND FUCHS, age 53, has been a director since July 1999. She has
been a senior executive of Hearst Management since September 1994, and is
currently Senior Vice President and Group Publishing Director of Hearst
Magazines with primary responsibility for the organization's Women's Group of
Magazines. Prior to joining Hearst, Ms. Fuchs was a senior executive at Conde
Nast Publications Ltd., where she served as Senior Vice President and Director
of the International Division from March 1994 to September 1994 and as Publisher
of Vogue Magazine from January 1991 to March 1994. Prior to joining Conde Nast,
Ms. Fuchs held executive and publisher positions with a number of companies in
the publishing industry, including The New York Times Company and Hachette
Publications (including predecessors Diamandis Communications, Inc. and CBS
Magazines). Ms. Fuchs is on the Board of Trustees of the Whitney Museum and The
Arts and Science Board of Overseers of New York University, is involved with
numerous other civic and charitable organizations and has received numerous
awards for her activities. She holds a B.A. degree from New York University and
honorary doctorate degrees from Birmingham-Southern College and Centenary
College.
DENNIS G. SISCO, age 54, has been a director since October 1990. Since
January 1998, he has been a partner in Behrman Capital, a private equity firm.
From January 1997 through December 1997, he served as the President of Storm
Ridge Capital, a venture capital firm. From December 1988 to February 1997, Dun
& Bradstreet Corporation and Cognizant Corporation employed him in various
capacities, most recently as Executive Vice President of Cognizant Corporation
with responsibility for several operating units and business development. Mr.
Sisco is a member of the Board of Trustees of Western Maryland College. Mr.
Sisco also serves as a director of Mercator Software, Inc. and several private
companies. Mr. Sisco holds a B.A. degree from Western Maryland College.
BELOW IS INFORMATION ABOUT THE OTHER MEMBERS OF THE BOARD:
CLASS III COMMON A DIRECTOR (TERM EXPIRES AT THE 2002 ANNUAL MEETING):
WILLIAM O. GRABE, age 62, has been a director since April 1993. He has been
with General Atlantic Partners, an investment firm, since April 1992 and a
General Partner since January 1994. Prior to his affiliation with General
Atlantic, Mr. Grabe retired from IBM Corporation as a Vice President and
Corporate Officer. Mr. Grabe is a director of Compuware Corporation, Exact
Holding N.V., FirePond, Inc., Meta4 N.V. and TDS Informationstechnologie AG. Mr.
Grabe is also a member of the UCLA Foundation Board of Trustees and a Trustee of
Outward Bound USA, and is on the board of directors of several privately held
software and services companies. Mr. Grabe holds a B.S. degree in engineering
from New York University and a M.B.A. degree from the University of California
at Los Angeles.
CLASS III COMMON B DIRECTORS (TERM EXPIRES AT THE 2002 ANNUAL MEETING):
MICHAEL D. FLEISHER, age 36, has been a director and our Chief Executive
Officer since October 1999. From October 1999 to April 2000, Mr. Fleisher also
served as our President. From February 1999 to October 1999, he served as Chief
Financial Officer and Executive Vice President, Finance and Administration. Mr.
Fleisher joined us in April 1993 and has held several other management
positions, including Executive Vice President and President, Emerging Business;
Vice President, Business Development; and Director, Strategic Planning. Prior to
joining us, Mr. Fleisher worked at Bain Capital, Inc. where he was involved in
the buyout of Gartner by management and Bain Capital from Saatchi and Saatchi in
October 1990. Prior to Bain Capital, Mr. Fleisher was a consultant with Bain and
Company. Mr. Fleisher is on the board of directors of TEN-TV.com. Mr. Fleisher
holds a B.S. degree in economics from the Wharton School of the University of
Pennsylvania.
MAX D. HOPPER, age 66, has been a director since January 1994. In 1995, he
founded Max D. Hopper Associates, Inc., a consulting firm specializing in
creating benefits from the strategic use of advanced information systems. He is
the retired chairman of the SABRE Technology Group and served as Senior Vice
President for American Airlines, both units of AMR Corporation. Mr. Hopper
serves on the board of directors of ACCRUESoftware, Inc., Exodus Communications,
Inc., Metrocall, Inc., Payless Cashways Inc., United Stationers, Inc. and USDATA
Corporation, Inc. Mr. Hopper holds a bachelor's degree in mathematics from the
University of Houston.
KENNETH ROMAN, age 70, has been a director since July 1999. Mr. Roman has
been an independent consultant since 1991. He is the former Chairman and Chief
Executive Officer of The Ogilvy Group (and Ogilvy & Mather Worldwide), where he
worked for 26 years, and a former Executive Vice President of American Express
Company. Mr. Roman is currently on the board of directors of Brunswick
Corporation and Compaq Computer Corporation. He is also Vice Chairman of The New
York Botanical Garden and serves on the
4
<PAGE> 7
boards of Memorial Sloan-Kettering Cancer Center and the National Organization
on Disability. He holds an A.B. degree from Dartmouth College.
CLASS I COMMON A DIRECTORS:
There are currently no Common A directors in Class I.
CLASS I COMMON B DIRECTORS (TERM EXPIRES AT THE 2003 ANNUAL MEETING):
GLENN H. HUTCHINS, age 45, has been a director since April 2000. Mr. Hutchins
has been a managing member of Silver Lake Partners, L.P., a technology private
equity firm, since February 1999. Prior to Silver Lake, from 1994 to 1999, Mr.
Hutchins was a Senior Managing Director of The Blackstone Group, where he
focused on private equity investing. Mr. Hutchins is a director of Datek Online
Holdings, Island ECN and Seagate Technologies. He is also a director and vice
chairman of the board of CARE, Inc. and a trustee of Lawrenceville School. Mr.
Hutchins graduated from Harvard College, Harvard Business School and Harvard Law
School.
ROGER B. MCNAMEE, age 44, has been a director since April 2000. Mr. McNamee
is a co-founder of Silver Lake Partners, L.P., a technology private equity firm,
and has served as its managing member since 1999. In addition, he has been a
co-founder and managing director of the Integral Capital Partners group of funds
since 1991. Prior to founding Integral Capital Partners, Mr. McNamee worked for
nine years at T. Rowe Price Associates in a variety of research and portfolio
management positions. Mr. McNamee holds a B.A. degree from Yale University and a
M.B.A. degree from the Amos Tuck School of Business Administration at Dartmouth
College.
STEPHEN G. PAGLIUCA, age 45, has been a director since July 1990. He is a
founding partner of Information Partners Capital Fund, L.P., a venture capital
fund, and has served as its Managing Partner since 1989. He is also a Managing
Director of Bain Capital, Inc., an investment firm with which Information
Partners is associated. Prior to 1989, Mr. Pagliuca was a partner at Bain &
Company, where he managed client relationships in the information services,
software, credit services and health care industries. He is on the board of
directors of the Corporate Executive Board, Dade International, DexterUs and
Dynamic Details. Mr. Pagliuca, a Certified Public Accountant, holds a B.A.
degree from Duke University and a M.B.A. degree from Harvard Business School.
COMPENSATION OF DIRECTORS
Each outside director receives $40,000 per year. Committee chairs receive an
additional $1,500 per year. Up to 50% of this compensation is payable in cash
and the balance is payable in shares of Class A Common Stock. The shares awarded
to each outside director are credited to an account on a quarterly basis. The
number of shares credited is based on the fair market value of the stock on the
first market trading day of the quarter. Payment of the shares is deferred until
the director ceases to be a director.
Under our 1993 Director Stock Option Plan, outside directors receive an
option to purchase 15,000 shares of Class A Common Stock on the date they become
an outside director. Outside directors also receive an option to purchase 7,000
shares of Class A Common Stock on March 1 of each year, if the individual has
been an outside director for at least six months. Options are granted at the
fair market value of the stock on the grant date. Each option becomes
exercisable in three equal installments on each of the first three anniversaries
of the grant date. Each option has a term of five years and will expire 90 days
after the individual ceases to be an outside director, unless such cessation is
due to permanent disability or death, in which case the option will expire 180
or 365 days, respectively, after the individual ceases to be an outside
director.
BOARD MEETINGS HELD DURING FISCAL 2000
The Board held eight meetings and acted by written consent one time during
fiscal 2000. During fiscal 2000, each director attended at least 75 percent of
the board meetings held while such director served as a director.
COMMITTEES
The Board has three committees: the Audit Committee, the Compensation
Committee and the Corporate Governance Committee. The Board currently has no
nominating committee or committee performing a similar function. During fiscal
2000, each director attended at least 75 percent of the committee meetings held
while such director served on such committee.
The Audit Committee, which currently consists of Messrs. Hutchins, McNamee
and Pagliuca, held three meetings during fiscal
5
<PAGE> 8
2000. See "Audit Committee Report" on page 18 for more information.
The Compensation Committee, which currently consists of Messrs. Grabe and
Sisco and Ms. Fuchs, held five meetings and acted by written consent one time
during fiscal 2000. See "Compensation Committee Report on Executive
Compensation" on page 7 for more information.
The Corporate Governance Committee, which currently consists of Messrs.
Fernandez, Hopper and Roman, held seven meetings during fiscal 2000. The
Corporate Governance Committee reviews issues regarding our governance.
PROPOSAL TWO:
TO CHANGE OUR NAME TO "GARTNER, INC."
We are seeking stockholder approval to amend our Certificate of Incorporation
to change our legal name from "Gartner Group, Inc." to "Gartner, Inc."
We updated our branding during fiscal 2000 by dropping the "GG" logo and
referring to ourselves as "Gartner." We did this to promote and strengthen the
Gartner brand, which is critical to our ability to attract and retain clients
and to differentiate us from competitors. We also did this in response to the
numerous current and potential clients and others who commonly refer to us as
"Gartner." To avoid confusion, we have determined that our legal name should
match our brand.
THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE CHANGE OF OUR NAME.
PROPOSAL THREE:
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Audit Committee, with Board approval, has selected KPMG LLP as our
independent public accountants to audit our consolidated financial statements
for the 2001 fiscal year. If our stockholders do not ratify the selection of
KPMG, the Board will reconsider its selection.
KPMG has audited our financial statements since September 1996. A
representative of KPMG will be at the Annual Meeting, will have the opportunity
to make a statement and will answer appropriate questions.
THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE RATIFICATION OF THE APPOINTMENT
OF KPMG LLP.
6
<PAGE> 9
EXECUTIVE OFFICERS
Listed below are the names, ages and titles of our executive officers:
<TABLE>
<CAPTION>
NAME AGE TITLE
---- --- -----
<S> <C> <C>
Manuel A. Fernandez 54 Chairman of the Board
Michael D. Fleisher 36 Chief Executive Officer
William R. McDermott 39 President
Regina M. Paolillo 42 Executive Vice President, Corporate
Services and Chief Financial Officer
Robert E. Knapp 42 Executive Vice President and Chief
Marketing Officer
</TABLE>
MR. FERNANDEZ has been Chairman of the Board since April 1996. For more
information on Mr. Fernandez' business experience, see the description provided
under "Election of Directors," on page 3.
MR. FLEISHER has been Chief Executive Officer since October 1999. For more
information on Mr. Fleisher's business experience, see the description provided
under "Election of Directors," on page 4.
MR. MCDERMOTT has been President since April 2000. Prior to joining us, Mr.
McDermott spent 17 years at Xerox, most recently as president and corporate
officer of Xerox's U.S. major accounts operation. Mr. McDermott serves on the
board of directors of Bradley Company, Students in Free Enterprise and Welfare
to Work Partnership. He holds a B.S. degree from Dowling College, a M.B.A.
degree from Northwestern University and is a graduate of the Executive
Development Program at the Wharton School of the University of Pennsylvania.
MS. PAOLILLO has been Executive Vice President, Corporate Services (formerly
known as Finance and Administration) and Chief Financial Officer since October
1999. From February 1999 to October 1999, she served as Executive Vice President
and General Manager of our Technology Management Group. Ms. Paolillo joined us
in April 1993 and has held several other management positions, including
President and Chief Operating Officer of our measurement division; Senior Vice
President and Controller; Vice President, Product Delivery and Administration;
and Director of Operations. Prior to joining us, Ms. Paolillo served as Chief
Operating Officer and Chief Financial Officer at Productivity, Inc. and held
executive and management positions at Citibank, Page America, Bristol-Myers and
Price Waterhouse. Ms. Paolillo holds a B.S. degree from the University of New
Haven and is a Certified Public Accountant.
MR. KNAPP has been Executive Vice President and Chief Marketing Officer since
August 2000. From 1993 to July 2000, Mr. Knapp was a chief client officer at
Siegelgale, a branding and e-services firm based in New York, where he directed
all strategy and consulting services for the firm worldwide. Prior to
Siegelgale, Mr. Knapp held various positions at Lotas Minard Patton McIver, BBDO
and Lintas Worldwide. Mr. Knapp holds a B.B.A. degree from the University of
Miami.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is responsible for establishing and administering
our executive compensation plans, subject to Board approval of major new
compensation programs and the Chief Executive Officer's compensation. The
Compensation Committee also administers our employee stock purchase plan and
stock option plans. In discharging these responsibilities, the Committee
consults with outside compensation consultants, attorneys and other specialists.
Our compensation philosophy is that cash compensation should be substantially
linked to our short-term performance and longer-term incentives, such as stock
options and stock ownership, should be aligned with our objective to enhance
stockholder value. We believe that the use of stock options and stock ownership
links the interest of our officers and employees to the interest of our
stockholders. In addition, the total compensation package must be competitive
with other companies in our industry to ensure that we continue to attract,
retain and motivate key executives who are critical to our long-term success.
Compensation for our executive officers consists of three principal
components: base salary, cash bonuses and stock options.
7
<PAGE> 10
Base Salary. Base salaries are determined by evaluating the responsibilities
of the position and the experience and performance of the individual, with
reference to the competitive marketplace for executive talent, including a
comparison to base salaries for comparable positions based on periodic surveys
of the industry.
Cash Bonuses. Under our executive cash bonus plan, cash bonuses are
determined based upon our achievement against specified financial performance
objectives and the executive officer's achievement of individual performance
objectives. This plan emphasizes our belief that when we are successful, the
executives should be appropriately compensated. Conversely, if we are not
profitable, no bonuses are paid absent extraordinary circumstances. Each
executive officer's portion of the total bonus pool is determined by a formula
that is specified at the start of the fiscal year based on the executive's base
salary and the Committee's assessment of the executive's contributions.
Stock Plans. The principal equity compensation component of executive
compensation is options granted under our stock option plans. Stock options are
generally granted at the commencement of employment, with additional options
granted from time to time for promotions and performance. The Compensation
Committee believes that stock options provide a retention incentive for
executive officers and also aligns their personal objectives with long-term
stock price appreciation.
CEO Compensation. Mr. Fleisher's compensation package for fiscal 2000
consisted primarily of the three major components described above. Mr. Fleisher
did not receive any material compensation or benefits in fiscal 2000 that we did
not provide to all executive officers. Mr. Fleisher's compensation package was
designed to provide for a higher proportion of his compensation to be dependent
on our performance as compared to other executive officers. The Committee has
also sought to provide our chief executive officer an incentive to promote
long-term stockholder value through higher levels of participation in our stock
option plans.
Other elements of executive compensation include eligibility for company-wide
medical benefits, participation in a company-wide life insurance program,
including a supplemental life insurance program, and a long-term disability
insurance program. Executives are also eligible to participate in a 401(k) plan
under which we provide matching contributions to all employees. We have a profit
sharing plan under which a specified percentage of operating profit is set aside
for equal distribution among all employees, including executives. Executives,
along with all other employees, are also eligible to participate in a payroll
deduction employee stock purchase plan pursuant to which our Class A Common
Stock may be purchased at 85 percent of the lower of the fair market value of
the Class A Common Stock at the beginning or end of each six-month offering
period (up to a maximum stock value of the lesser of $25,000 per calendar year
or 10 percent of salary).
COMPENSATION COMMITTEE OF THE
BOARD OF DIRECTORS
Anne Sutherland Fuchs
William O. Grabe
Dennis G. Sisco
8
<PAGE> 11
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table provides information about compensation paid by us during
the fiscal years ended September 30, 1998, 1999 and 2000, to (i) each person who
served as Chief Executive Officer during fiscal 2000, (ii) each of the four
other most highly compensated executive officers during fiscal 2000, and (iii)
one former executive officer who would have been one of the other most highly
compensated executive officers if he had been an executive officer at the end of
fiscal 2000 (collectively, the "Named Executive Officers"):
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION AWARDS
ANNUAL -----------------------------
COMPENSATION(1) RESTRICTED SECURITIES ALL
FISCAL --------------- STOCK UNDERLYING OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($)(2) AWARDS(3) OPTIONS COMPENSATION(4)
--------------------------- ------ ---------- ------------ ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
CURRENT EXECUTIVE OFFICERS
Manuel A. Fernandez ............... 2000 $400,000 $894,000 ------- 100,000 $ 43,856
Chairman of the Board 1999 400,000 100,000 $2,175,000 79,000 105,325
1998 400,000 320,000 ------- 60,000 42,277
Michael D. Fleisher (5) ........... 2000 450,000 777,514 ------- 500,000 10,362
Chief Executive Officer 1999 250,000 45,000 1,212,500 522,000 60,714
1998 230,000 130,000 ------- 60,000 9,785
William R. McDermott (6) .......... 2000 151,541 375,000 650,000 750,000 336,315
President
Regina M. Paolillo (7) ............ 2000 297,917 539,498 ------- 500,000 11,982
Executive Vice President and 1999 250,000 31,250 606,250 55,000 63,465
Chief Financial Officer
Robert E. Knapp (8) ............... 2000 49,376 75,000 ------- 250,000 60,625
Executive Vice President and
Chief Marketing Officer
FORMER EXECUTIVE OFFICERS
William T. Clifford (9) ........... 2000 5,682 325,000 ------- ------- 313
Former President and 1999 375,000 325,000 2,425,000 60,000 1,565,512
Chief Executive Officer 1998 300,000 150,000 ------- 120,000 26,518
Richard E. Eldh, Jr. (10) ......... 2000 223,847 360,000 ------- 500,000 86,588
Former Executive Vice President, 1999 250,000 37,500 525,000 49,000 55,158
Worldwide Sales
</TABLE>
-----------------
(1) The amounts shown exclude certain perquisites and other personal benefits,
such as car allowances. These amounts, in the aggregate, did not exceed the
lesser of $50,000 or 10 percent of the total annual salary and bonus for
each executive officer.
(2) The amounts shown include bonus awards earned for performance in the fiscal
year noted even though such amounts are payable in the subsequent year. For
Messrs. Fernandez, Fleisher and Eldh and Ms. Paolillo, the amount shown
includes 75 percent of the retention bonus approved in fiscal 1999 but not
earned until fiscal 2000 (the other 25 percent was earned in fiscal 1999).
The amounts shown exclude bonus awards paid in the fiscal year noted but
earned in prior years.
(3) The amounts shown represent the value of the restricted stock awards
calculated by multiplying the fair market value of our Class A Common Stock
on the grant date by the number of shares awarded. The restricted stock
awards vest in six equal installments with the first installment vesting
two years after the grant date and the balance vesting annually during the
next five years. Restricted stock awards are subject to forfeiture upon
termination of employment. Holders of restricted stock may vote the
restricted shares and receive dividends paid on such shares. Restricted
stock holdings as of September 30, 2000, and their value on such date,
based on the fair market value of our Class A Common Stock on September 30,
2000, were: Mr. Fernandez -
9
<PAGE> 12
100,000 shares ($1,162,500); Mr. Fleisher - 50,000 shares ($581,250); Mr.
McDermott - 50,000 shares ($581,250); Ms. Paolillo - 25,000 shares
($290,625); Mr. Clifford - 50,000 shares ($581,250). and Mr. Eldh - 4,166
shares ($48,430). The number of restricted shares listed for Messrs.
Clifford and Eldh are based on the number of shares of restricted stock
that they will vest in pursuant to the terms of their respective separation
agreements. See "Employment Agreements with Named Executive Officers" on
page 17 for more information.
(4) For fiscal 2000, the amount shown represents (i) premiums paid for life
insurance as follows: Mr. Fernandez - $37,956; Mr. Fleisher - $4,462; Ms.
Paolillo - $6,082; and Mr. Eldh - $6,235; (ii) matching and profit sharing
contributions under our 401(k) plan as follows: Mr. Fernandez - $5,900; Mr.
Fleisher - $5,900; Mr. McDermott - $1,515; Ms. Paolillo - $5,900; Mr. Knapp
- $1,625; Mr. Clifford - $313; and Mr. Eldh - $4,200; (iii) $234,800 paid
on Mr. McDermott's behalf for relocation from upstate New York to Fairfield
County, Connecticut, (iv) $100,000 sign on bonus paid to Mr. McDermott and
$59,000 sign on bonus paid to Mr. Knapp, and (v) severance payments to Mr.
Eldh totaling $360,435, to be paid in fiscal 2000 and 2001. For fiscal
1999, the amount shown for Mr. Clifford includes an aggregate of $1,400,000
of severance payments that were paid in fiscal 2000 and will be paid in
fiscal 2001.
(5) Mr. Fleisher was appointed President and Chief Executive Officer in October
1999.
(6) Mr. McDermott was appointed President in April 2000.
(7) Ms. Paolillo was appointed Executive Vice President and Chief Financial
Officer in October 1999.
(8) Mr. Knapp was appointed Executive Vice President and Chief Marketing
Officer in August 2000.
(9) Mr. Clifford resigned as President and Chief Executive Officer in October
1999.
(10) Mr. Eldh resigned as Executive Vice President, Worldwide Sales in July
2000.
OPTIONS GRANTED IN FISCAL 2000 TO THE NAMED EXECUTIVE OFFICERS
The following table provides information regarding stock options granted to
the Named Executive Officers during fiscal 2000. (1)
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------------ VALUE AT ANNUAL RATES OF
NUMBER OF % OF TOTAL OPTIONS STOCK PRICE APPRECIATION
SECURITIES GRANTED TO EXERCISE FOR OPTION TERM (2)
UNDERLYING EMPLOYEES PRICE EXPIRATION ---------------------------
NAME OPTIONS IN FISCAL YEAR PER SHARE DATE 5% 10%
----- ---------- ------------------ --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Manuel A. Fernandez .... 100,000 0.55% $13.0000 04/14/10 $ 817,563 $ 2,071,865
Michael D. Fleisher .... 500,000 2.75% 10.3130 11/09/09 3,242,895 8,218,133
William R. McDermott ... 750,000 4.12% 13.0000 04/14/10 6,131,723 15,538,989
Regina M. Paolillo ..... 500,000 2.75% 10.3130 11/09/09 3,242,895 8,218,133
Robert E. Knapp ........ 250,000 1.37% 13.6875 08/15/10 2,151,999 5,453,587
William T. Clifford .... -- -- -- -- -- --
Richard E. Eldh, Jr .... 500,000 2.75% 10.3130 11/09/09 3,242,895 8,218,133
</TABLE>
(1) Each of these options was granted pursuant to our 1991 Stock Option Plan
and is subject to the terms of the plan. Twenty-five percent of the options
become exercisable on the first anniversary of the grant date and 2.08
percent of the options become exercisable monthly thereafter.
(2) Shown are the hypothetical gains or option spreads that would exist for the
respective options. These gains are based on assumed rates of annual
compounded stock price appreciation on our Class A Common Stock of 5% and
10% from the date the option was granted over the option term. The 5% and
10% assumed rates of appreciation are mandated by the rules of the
Securities and Exchange Commission and do not represent our estimate or
projection of future increases in the price of our Class A Common Stock.
10
<PAGE> 13
OPTIONS EXERCISED IN FISCAL 2000 BY THE NAMED EXECUTIVE OFFICERS AND FISCAL 2000
YEAR-END OPTION VALUES
The following table provides information regarding options exercised by
each Named Executive Officer during fiscal 2000, the number of unexercised
options at fiscal year-end, and the value of unexercised "in the money" options
at fiscal year-end.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END (1)
ACQUIRED VALUE --------------------------- --------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Manuel A. Fernandez .... -- -- 197,334 190,166 $177,480 --
Michael D. Fleisher .... 36,800 $495,474 262,134 942,166 165,731 $656,000
William R. McDermott ... -- -- -- 750,000 -- --
Regina M. Paolillo ..... 9,280 93,060 81,600 550,000 273,741 656,000
Robert E. Knapp ........ -- -- -- 250,000 -- --
William T. Clifford .... 85,520 838,115 255,000 132,500 532,400 --
Richard E. Eldh, Jr .... 6,400 70,899 69,250 544,250 258,930 656,000
</TABLE>
----------------------
(1) The values for "in-the-money" options represent the difference between the
exercise price of the options and the closing price of our Class A Common
Stock on September 30, 2000, which was $11.625 per share.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee currently consists of Messrs. Grabe and Sisco and
Ms. Fuchs. No member of the compensation Committee is a current or former
officer or employee of us or any of our subsidiaries. None of our executive
officers has served on the board of directors or on the compensation committee
of any other entity that had an executive officer serving on our Board or our
Compensation Committee.
EMPLOYMENT AGREEMENTS WITH NAMED EXECUTIVE OFFICERS
Mr. Fernandez entered into an employment agreement effective November 12,
1998, as amended by Addendum No. l to Employment Agreement dated April 2000 (the
"Fernandez Agreement"). Under the Fernandez Agreement, Mr. Fernandez will serve
as Chairman of the Board through October 1, 2001 (or later if extended by the
parties). During the term of the Fernandez Agreement, Mr. Fernandez will be
included on our slate of nominees to be elected to the Board.
The Fernandez Agreement provides for a base salary of $400,000 for fiscal
years 2000 and 2001 and a salary of $200,000 thereafter. Mr. Fernandez is
entitled to participate in our executive bonus program, and his bonus will be
payable at the same time and in the same proportion as any bonus is payable to
our Chief Executive Officer. Mr. Fernandez' target bonus for fiscal years 2000
and 2001 is between $400,000 and $800,000 and is between $100,000 and $200,000
thereafter.
Mr. Fernandez' employment is at will and may be terminated by him or us upon
sixty days' notice. If, during the term of the Fernandez Agreement, we terminate
Mr. Fernandez' employment involuntarily without Business Reasons (as defined in
the Fernandez Agreement), a Constructive Termination (as defined in the
Fernandez Agreement) occurs, Mr. Fernandez' employment is terminated due to
death or disability or Mr. Fernandez voluntarily terminates his employment or
resigns as Chairman of the Board, Mr. Fernandez will be entitled to receive (a)
his base salary for the balance of the fiscal year in which the termination
occurs, payable in accordance with our regular payroll schedule; (b) his minimum
target bonus for the fiscal year in which the termination occurs, plus any
unpaid bonus from the prior fiscal year, payable on the termination date; (c)
following the end of the fiscal year in which the termination occurs, a pro rata
share (based on the proportion of the year during which he was employed) of the
bonus that would have been payable in excess of the minimum target bonus for the
year in which the termination occurs; (d) until Mr. Fernandez reaches age 65,
(i) group health benefits and life and disability insurance coverage pursuant to
our standard programs for himself, his spouse and any children under age 19 or
under age 25 if the child is a full-time student, and (ii) life and disability
insurance coverage pursuant to the programs in effect for Mr. Fernandez on the
date the addendum was signed; (e) acceleration in full of vesting of all
outstanding stock options, restricted stock and other equity arrangements
subject to vesting, and all options and other exercisable rights which have an
exercise price less than the fair market value of the securities for which they
are exercisable on the date of the addendum, will remain exercisable for the
longest period available to a continuing employee under the applicable plan or
agreement; and (f) automobile
11
<PAGE> 14
benefits for one year. Upon Mr. Fernandez' death or disability prior to age 65,
the benefits under (d)(i) above will continue for his spouse and children until
he would have reached age 65.
If a Change in Control (as defined in the Fernandez Agreement) occurs on or
prior to October 1, 2001, in addition to his salary and vacation accrued through
the termination date, upon the Change in Control Mr. Fernandez will be entitled
to receive three times the greater of (i) Mr. Fernandez' average annual
compensation (salary plus bonus) for those three of the last seven fiscal years
in which such compensation was highest, or (ii) $800,000. If Mr. Fernandez
violates his non-competition obligations to us, he will be required to repay any
amounts received under the previous sentence with respect to any period
following the termination date during which the non-competition obligation is
violated. If a Change in Control occurs at any time, Mr. Fernandez will also be
entitled to receive (a) the balance of any unpaid bonus from the prior fiscal
year, payable upon the Change in Control; (b) acceleration in full of vesting of
all outstanding stock options, restricted stock and other equity arrangements
subject to vesting, which will remain exercisable for the longest period
available to a continuing employee under the applicable plan or agreement; (c)
until Mr. Fernandez reaches age 65, (i) group health benefits and life and
disability insurance coverage pursuant to our standard programs for himself, his
spouse and any children under age 19 or under age 25 if the child is a full-time
student, and (ii) life and disability insurance coverage pursuant to the
programs in effect for Mr. Fernandez on the date the addendum was signed; (d)
automobile benefits for one year; (e) forgiveness of all outstanding principal
and interest due under indebtedness incurred to purchase shares of our stock.,
and (f) any Gross-Up Payments (as defined in the Fernandez Agreement) for Mr.
Fernandez' excise tax liabilities. Upon Mr. Fernandez' death or disability prior
to age 65, the benefits under clause (c)(i) above will continue for his spouse
and children until he would have reached age 65.
In addition to any of the foregoing benefits, upon termination of Mr.
Fernandez' employment, for any reason, including expiration, Mr. Fernandez will
be entitled to receive (a) $200,000 per year for ten years, payable in equal
monthly installments, for which we will purchase an annuity to make the balance
of the payments due to Mr. Fernandez or his estate upon any Change in Control;
(b) his office furnishings and equipment including, cellular phones, computers,
printers and copiers; and (c) until Mr. Fernandez reaches age 65, technical
office support services, including, voice mail, e-mail, internet access and
other connectivity services. Provided the termination is not for death or
disability, Mr. Fernandez will make himself available to us to provide advice
and guidance, as we may reasonably request.
Mr. Fleisher entered into an Employment Agreement effective October 7, 1999
(the "Fleisher Agreement"). Under the Fleisher Agreement, he will continue to
serve as Chief Executive Officer through October 1, 2002, and thereafter for
subsequent one-year periods unless either party provides ninety days' written
notice of its intention not to renew. During the term of the Fleisher Agreement,
Mr. Fleisher will be included on our slate of nominees to be elected to the
Board.
The Fleisher Agreement provides for a base salary of $450,000 for fiscal
2000, and thereafter the base salary is subject to annual adjustments by our
Board or Compensation Committee, in their sole discretion, except as noted
below. Mr. Fleisher is entitled to participate in our executive bonus program
and our Board or Compensation Committee will establish the annual target bonus
in their discretion, and the bonus will be payable based on achievement of
specified company and individual objectives. Mr. Fleisher's target bonus for
fiscal 2000 was between $450,000 and $900,000. Mr. Fleisher's salary and target
bonus will not be decreased other than for a reduction consistent with a general
reduction of pay across the executive staff as a group as an economic or
strategic measure due to poor financial performance.
Mr. Fleisher's employment is at will and may be terminated by him or us upon
sixty days' notice. If, during the term of the Fleisher Agreement, we terminate
Mr. Fleisher's employment involuntarily without Business Reasons (as defined in
the Fleisher Agreement) or a Constructive Termination (as defined in the
Fleisher Agreement) occurs, in addition to his salary and vacation accrued
through the Termination Date (as defined in the Fleisher Agreement), Mr.
Fleisher will be entitled to receive (a) his base salary for three years
following the Termination Date at the current rate, payable in accordance with
our regular payroll schedule; (b) his minimum target bonus for the fiscal year
in which the termination occurs, plus any unpaid bonus from the prior fiscal
year, payable on the Termination Date; (c) following the end of the fiscal year
in which the termination occurs, a pro rata share (based on the proportion of
the year during which he was employed) of the bonus that would have been payable
in excess of the minimum target bonus for the year in which the termination
occurs; (d) following the end of the first fiscal year following the fiscal year
in which the Termination Date occurs Mr. Fleisher's minimum target bonus for
such following fiscal year (or, if the target bonus for such year was not
previously set, then Mr. Fleisher's minimum target bonus for the fiscal year in
which the Termination Date occurred), (e) acceleration in full of vesting of all
outstanding stock options, restricted stock and other equity arrangements
subject to vesting; (f) the ability to exercise all options received (i) on
September 30, 1999, (ii) on November 7, 1999, (iii) in the future, and (iv) in
the past which have an exercise price equal to or less than the fair market
value of the securities for which they are exercisable on the date of the
Fleisher Agreement, for one year following the Termination Date or for such
longer period as may be provided in the applicable plan or
12
<PAGE> 15
agreement; (g) the ability to exercise all other options for ninety days
following the Termination Date or for such longer period as may be provided in
the applicable plan or agreement; (h) group health benefits pursuant to our
standard programs for himself, his spouse and any children for three years after
the Termination Date; and (i) automobile benefits for one year. We will not be
required to continue to pay the bonus specified in clauses (b) (c) and (d) above
if Mr. Fleisher violates his non-competition obligations to us.
If Mr. Fleisher's employment is terminated due to his disability, in addition
to his base salary and vacation accrued through the Termination Date Mr.
Fleisher will be entitled to receive (a) base salary for three years after the
Termination Date at the rate then in effect; (b) his minimum target bonus for
the fiscal year in which the termination occurs, plus any unpaid bonus from the
prior fiscal year, payable on the Termination Date; (c) following the end of the
fiscal year in which the termination occurs, any bonus that would have been
payable in excess of the minimum target bonus for the year in which the
termination occurs; (d) acceleration in full of vesting of all outstanding stock
options, and all options will remain exercisable for one year after the
Termination Date; and (e) group health benefits pursuant to our standard
programs for himself, his spouse and any children for three years after the
Termination Date. We may deduct from the salary specified in clause (a) above,
any payments received by Mr. Fleisher under any disability benefit program
maintained by us.
If Mr. Fleisher's employment is terminated due to his death, Mr. Fleisher's
representatives will receive (a) his salary through the Termination Date, (b) a
pro rata share of his minimum target bonus for the year in which death occurs,
based on the proportion of the fiscal year during which Mr. Fleisher was an
employee, plus unpaid bonus from the prior fiscal year; (c) acceleration of all
options, restricted stock and other equity arrangements subject to vesting; (d)
the ability to exercise all options received (i) on September 30, 1999, (ii) on
November 7, 1999, (iii) in the future, and (iv) in the past which have an
exercise price equal to or less than the fair market value of the securities for
which they are exercisable on the date of the Fleisher Agreement, for one year
following the Termination Date or for such longer period as may be provided in
the applicable plan or agreement; (e) the ability to exercise all other options
for ninety days following the Termination Date or such longer period as may be
provided in the applicable plan or agreement; (f) to the extent COBRA is
applicable to us, continuation of group health benefits pursuant to our standard
programs in effect from time-to-time, for Mr. Fleisher's spouse and any children
for eighteen months, or longer as applicable under our policies; provided the
estate makes the appropriate election and payments, and (f) any benefits payable
to Mr. Fleisher or his representatives upon death under insurance or other
programs maintained by us for Mr. Fleisher's benefit.
If a Change in Control (as defined in the Fleisher Agreement) occurs during
the term of the Fleisher Agreement, in addition to his salary and vacation
accrued through the Change in Control, upon the Change in Control, Mr. Fleisher
will be entitled to receive (a) three times his base salary then in effect; (b)
three times his minimum target bonus for the fiscal year in which the Change in
Control occurs (plus any unpaid bonus from the prior fiscal year); (c)
acceleration in full of vesting of all outstanding stock options, restricted
stock and other equity arrangements subject to vesting; (d) the ability to
exercise all options received (i) on September 30, 1999, (ii) on November7,
1999, (iii) in the future, and (iv) in the past which have an exercise price
equal to or less than the fair market value of the securities for which they are
exercisable on the date of the Fleisher Agreement, for one year following the
Change in Control or for such longer period as may be provided in the applicable
plan or agreement; (e) the ability to exercise all other options for ninety days
following the Change in Control or such longer period as may be provided in the
applicable plan or agreement; (f) group health benefits pursuant to our standard
programs for himself, his spouse and any children for three years after the
Change in Control; and (g) any Gross-Up Payments (as defined in the Fleisher
Agreement) for Mr. Fleisher's excise tax liabilities.
Mr. McDermott entered into an employment agreement effective April 20, 2000
(the "McDermott Agreement"). Under the McDermott Agreement, he will continue to
serve as President through April 30, 2003, and thereafter for subsequent
one-year periods unless either party provides ninety days' written notice of its
intention not to renew.
The McDermott Agreement provides for a base salary of $400,000 for fiscal
2000 (prorated for the months employed), and thereafter the base salary is
subject to annual adjustment by the Board or the Compensation Committee, in
their sole discretion. Mr. McDermott is entitled to participate in our executive
bonus program and the Board or the Compensation Committee will establish the
annual target bonus in their discretion, and the bonus will be payable based on
achievement of specified company and individual objectives. Mr. McDermott's
bonus for fiscal 2000 was $375,000, plus a sign-on bonus of $100,000 and Mr.
McDermott's target bonus for fiscal 2001 is between $300,000 and $600,000. Mr.
McDermott's salary and bonus target will not be decreased other than for a
reduction consistent with a general reduction of pay across the executive staff
as a group as an economic or strategic measure due to poor financial
performance.
Mr. McDermott's employment is at will and may be terminated by him or us upon
sixty days' notice. If, during the term of the McDermott Agreement, we terminate
Mr. McDermott's employment involuntarily without Business Reasons (as defined in
the
13
<PAGE> 16
McDermott Agreement) or if a Constructive Termination (as defined in the
McDermott Agreement) occurs, in addition to his salary and vacation accrued
through the Termination Date (as defined in the McDermott Agreement), Mr.
McDermott will be entitled to receive (a) his base salary for three years
following the Termination Date at the current rate, payable in accordance with
our regular payroll schedule; (b) his minimum target bonus for the fiscal year
in which the termination occurs, plus any unpaid bonus from the prior fiscal
year, payable on the termination date; (c) following the end of the fiscal year
in which the termination occurs, a pro rata share (based on the proportion of
the year during which he was employed) of the bonus that would have been payable
in excess of the minimum target bonus for the year in which the termination
occurs; (d) following the end of the first fiscal year following the fiscal year
in which the Termination Date occurs, Mr. McDermott's minimum target bonus for
such following fiscal year (or, if the target bonus for such year was not
previously set, then Mr. McDermott's minimum target bonus for the fiscal year in
which the Termination Date occurred), (e) acceleration in full of vesting of all
outstanding stock options, restricted stock and other equity arrangements
subject to vesting, and all options and other exercisable rights will remain
exercisable for one year after the Termination Date; (f) group health benefits
pursuant to our standard programs for himself, his spouse and any children for
three years after the Termination Date; and (g) automobile benefits for one
year. We will not be required to continue to pay the bonus specified in clauses
(b) (c) and (d) above if Mr. McDermott violates his non-competition obligations
to us.
If Mr. McDermott's employment is terminated due to his disability, in
addition to his base salary and vacation accrued through the Termination Date
Mr. McDermott will be entitled to receive (a) base salary for three years after
the Termination Date at the rate then in effect; (b) his minimum target bonus
for the fiscal year in which the termination occurs, plus any unpaid bonus from
the prior fiscal year, payable on the Termination Date; (c) following the end of
the fiscal year in which the termination occurs, any bonus that would have been
payable in excess of the minimum target bonus for the year in which the
termination occurs; (d) acceleration in full of vesting of all outstanding stock
options, and all options will remain exercisable for one year after the
Termination Date; and (e) group health benefits pursuant to our standard
programs for himself, his spouse and any children for three years after the
Termination Date. We may deduct from the salary specified in clause (a) above,
any payments received by Mr. McDermott under any disability benefit program
maintained by us.
If Mr. McDermott's employment is terminated due to his death, Mr. McDermott's
representatives shall receive (a) Mr. McDermott's salary through the Termination
Date, (b) a pro rata share of Mr. McDermott's minimum target bonus for the year
in which death occurs, based on the proportion of the fiscal year during which
Mr. McDermott was an employee, plus any unpaid bonus from the prior fiscal year,
(c) acceleration of all options, restricted stock and other equity arrangements
subject to vesting, all of which may be exercised for one year following the
Termination Date, (d) to the extent COBRA is applicable to us, continuation of
group health benefits pursuant to our standard programs in effect from
time-to-time, for Mr. McDermott's spouse and any children for eighteen months,
or longer as applicable under our policies, provided the estate makes the
appropriate election and payments and (e) any benefits payable to Mr. McDermott
or his representatives upon death under insurance or other programs maintained
by us for Mr. McDermott's benefit.
If a Change in Control (as defined in the McDermott Agreement) occurs during
the term of the McDermott Agreement, in addition to his salary and vacation
accrued through the Termination Date, upon the Change in Control, Mr. McDermott
will be entitled to receive (a) three times his base salary then in effect; (b)
three times his target bonus for the fiscal year in which the Change in Control
occurs (plus any unpaid bonus from the prior fiscal year); (c) acceleration in
full of vesting of all outstanding stock options, restricted stock and other
equity arrangements subject to vesting, and all options and other exercisable
rights will remain exercisable for one year after the Change in Control; (d)
group health benefits pursuant to our standard programs for himself, his spouse
and any children for three years after the Termination Date; and (e) any
Gross-Up Payments (as defined in the McDermott Agreement) for Mr. McDermott's
excise tax liabilities.
Ms. Paolillo entered into an employment agreement effective July 1, 2000 (the
"Paolillo Agreement"). Under the Paolillo Agreement, she will continue to serve
as Executive Vice President and Chief Financial Officer through September 30,
2003, and thereafter for subsequent one-year periods unless either party
provides ninety days' written notice of its intention not to renew.
The Paolillo Agreement provides for a base salary at the rate of $350,000 for
the balance of fiscal 2000 and for fiscal 2001, and thereafter the base salary
is subject to annual adjustment by the Board or the Compensation Committee, in
their sole discretion. Ms. Paolillo is entitled to participate in our executive
bonus program and the Board or the Compensation Committee will establish the
annual target bonus range in their discretion, and the bonus will be payable
based on achievement of specified company and individual objectives. Ms.
Paolillo's target bonus for fiscal 2000 and fiscal 2001 is between $300,000 and
$600,000. Ms. Paolillo's salary and bonus target will not be decreased other
than for a reduction consistent with a general reduction of pay across the
executive staff as a
14
<PAGE> 17
group as an economic or strategic measure due to poor financial performance.
Ms. Paolillo's employment is at will and may be terminated by her or us upon
sixty days' notice. If, during the term of the Paolillo Agreement, we terminate
her employment involuntarily without Business Reasons (as defined in the
Paolillo Agreement) or if a Constructive Termination (as defined in the Paolillo
Agreement) occurs, in addition to her base salary and vacation accrued through
the Termination Date (as defined in the Paolillo Agreement), Ms. Paolillo will
be entitled to receive (a) base salary for three years after the Termination
Date at the rate then in effect; (b) her minimum target bonus for the fiscal
year in which the termination occurs, plus any unpaid bonus from the prior
fiscal year, payable on the Termination Date; (c) following the end of the
fiscal year in which the termination occurs, a pro rata share (based on the
proportion of the year during which she was employed) of the bonus that would
have been payable in excess of the minimum target bonus for the year in which
the termination occurs; (d) following the end of the first fiscal year following
the fiscal year in which the Termination Date occurs, Ms. Paolillo's minimum
target bonus for such following fiscal year (or, if the target bonus for such
year was not previously set, then Ms. Paolillo's minimum target bonus for the
fiscal year in which the Termination Date occurred), (e) acceleration in full of
vesting of all outstanding stock options, restricted stock and other equity
arrangements subject to vesting, and all options and other exercisable rights
will remain exercisable for one year after the Termination Date; (f) group
health benefits pursuant to our standard programs for herself, her spouse and
any children for three years after the Termination Date; and (g) automobile
benefits for one year. We will not be required to continue to pay the salary or
bonus specified in clauses (a) through (d) above if Ms. Paolillo violates her
non-competition obligations to us.
If Ms. Paolillo's employment is terminated due to her disability, in addition
to her base salary and vacation accrued through the Termination Date Ms.
Paolillo will be entitled to receive (a) base salary for three years after the
Termination Date at the rate then in effect; (b) her minimum target bonus for
the fiscal year in which the termination occurs, plus any unpaid bonus from the
prior fiscal year, payable on the Termination Date; (c) following the end of the
fiscal year in which the termination occurs, any bonus that would have been
payable in excess of the minimum target bonus for the year in which the
termination occurs; (d) acceleration in full of vesting of all outstanding stock
options, and all options will remain exercisable for one year after the
Termination Date; and (e) group health benefits pursuant to our standard
programs for herself, her spouse and any children for three years after the
Termination Date. We may deduct from the salary specified in clause (a) above,
any payments received by Ms. Paolillo under any disability benefit program
maintained by us.
If Ms. Paolillo's employment is terminated due to her death, Ms. Paolillo's
representatives will receive (a) Ms. Paolillo's salary through the Termination
Date, (b) a pro rata share of Ms. Paolillo's minimum target bonus for the year
in which death occurs, based on the proportion of the fiscal year during which
Ms. Paolillo was an employee, plus any unpaid bonus from the prior fiscal year,
(c) acceleration of all options, restricted stock and other equity arrangements
subject to vesting, all of which may be exercised for one year following the
Termination Date, (d) to the extent COBRA is applicable to us, continuation of
group health benefits pursuant to our standard programs in effect from
time-to-time, for Ms. Paolillo's spouse and any children for eighteen months, or
longer as applicable under our policies, provided the estate makes the
appropriate election and payments and (e) any benefits payable to Ms. Paolillo
or her representatives upon death under insurance or other programs maintained
by us for Ms. Paolillo's benefit.
If a Change in Control (as defined in the Paolillo Agreement) occurs during
the term of the Paolillo Agreement, in addition to her salary and vacation
accrued through the Termination Date, upon the Change in Control, Ms. Paolillo
will be entitled to receive (a) three times her base salary then in effect; (b)
three times her minimum target bonus for the fiscal year in which the Change in
Control occurs (plus any unpaid bonus from the prior fiscal year); (c)
acceleration in full of vesting of all outstanding stock options, restricted
stock and other equity arrangements subject to vesting, and all options and
other exercisable rights will remain exercisable for one year after the Change
in Control, (d) group health benefits pursuant to our standard programs for
herself, her spouse and any children for three years after the Termination Date;
and (e) any Gross-Up Payments (as defined in the Paolillo Agreement) for Ms.
Paolillo's excise tax liabilities. If Ms. Paolillo voluntarily terminates her
employment (other than in the case of a Constructive Termination), then in
addition to salary and accrued vacation through the Termination Date, Ms.
Paolillo will be entitled to receive the following: (i) salary for eighteen
months following the Termination Date, at the rate then in effect, (ii) the
right to vest in all stock options, restricted stock or other equity
arrangements subject to vesting while salary continues to be paid and the right
to exercise all stock options held by Ms. Paolillo for thirty days following the
last date on which salary is paid (or such longer period as may be provided in
the applicable stock option plan or agreement), but only to the extent vested as
of the last date on which salary is paid, (iii) to the extent COBRA will be
applicable to the Company, continuation of group health plan benefits pursuant
to the Company's standard programs as in effect from time to time.
Mr. Knapp entered into an employment agreement effective August 7, 2000 (the
"Knapp Agreement"). Under the Knapp Agreement, he will continue to serve as
Executive Vice President and Chief Marketing Officer through September 30, 2003,
and
15
<PAGE> 18
thereafter for subsequent one-year periods unless either party provides ninety
days' written notice of its intention not to renew.
The Knapp Agreement provides for a base salary of $320,000 for fiscal 2000
(pro-rated for the months employed), and thereafter the base salary is subject
to annual adjustments by the Board or the Compensation Committee, in their sole
discretion. Mr. Knapp is entitled to participate in our executive bonus program
and the Board or the Compensation Committee will establish the annual target
bonus in their discretion, which will be payable based on achievement of
specified company and individual objectives. Mr. Knapp's target bonus for fiscal
2000 was between $250,000 and $500,000 (pro-rated for the months employed), plus
a sign-on bonus of $59,000. Mr. Knapp's salary and bonus target will not be
decreased other than for a reduction consistent with a general reduction of pay
across the executive staff as a group as an economic or strategic measure due to
poor financial performance.
Mr. Knapp's employment is at will and may be terminated by him or us upon
sixty days' notice. If, during the term of the Knapp Agreement, we terminate Mr.
Knapp's employment involuntarily without Business Reasons (as defined in the
Knapp Agreement) or if a Constructive Termination (as defined in the Knapp
Agreement) occurs, in addition to his salary and vacation accrued through the
Termination Date (as defined in the Knapp Agreement), Mr. Knapp will be entitled
to receive (a) his base salary for one and one-half years following the
Termination Date at the current rate, payable in accordance with our regular
payroll schedule; (b) his minimum bonus for the fiscal year in which the
termination occurs, plus any unpaid bonus from the prior fiscal year, payable on
the termination date; (c) following the end of the fiscal year in which the
termination occurs, a pro rata share (based on the proportion of the year during
which he was employed) of the bonus that would have been payable in excess of
the target bonus for the year in which the termination occurs; (d) following the
end of the first fiscal year following the fiscal year in which the Termination
Date occurs, Mr. Knapp's minimum target bonus for such following fiscal year
(or, if the target bonus for such year was not previously set, then Mr. Knapp's
minimum target bonus for the fiscal year in which the Termination Date
occurred), (e) acceleration in full of vesting of all outstanding stock options,
restricted stock and other equity arrangements subject to vesting, and all
options and other exercisable rights will remain exercisable for one year after
the Termination Date; (f) group health benefits pursuant to our standard
programs for himself, his spouse and any children for one and one half years
after the Termination Date; and (g) automobile benefits for one year. We will
not be required to continue to pay the salary or bonus specified in clauses (a)
through (d) above if Mr. Knapp violates his non-competition obligations to us.
If Mr. Knapp's employment is terminated due to his disability, in addition to
his base salary and vacation accrued through the Termination Date Mr. Knapp will
be entitled to receive (a) base salary for three years after the Termination
Date at the rate then in effect; (b) his minimum target bonus for the fiscal
year in which the termination occurs, plus any unpaid bonus from the prior
fiscal year, payable on the Termination Date; (c) following the end of the
fiscal year in which the termination occurs, any bonus that would have been
payable in excess of the minimum target bonus for the year in which the
termination occurs; (d) acceleration in full of vesting of all outstanding stock
options, and all options will remain exercisable for one year after the
Termination Date; and (e) group health benefits pursuant to our standard
programs for himself, his spouse and any children for one and one half years
after the Termination Date. We may deduct from the salary specified in clause
(a) above, any payments received by Mr. Knapp under any disability benefit
program maintained by us.
If Mr. Knapp's employment is terminated due to his death, Mr. Knapp's
representatives will receive (a) Mr. Knapp's salary through the Termination
Date, (b) a pro rata share of Mr. Knapp's minimum bonus for the year in which
death occurs, based on the proportion of the fiscal year during which Mr. Knapp
was an employee, plus any unpaid bonus from the prior fiscal year, (c)
acceleration of all options, restricted stock and other equity arrangements
subject to vesting, all of which may be exercised for one year following the
Termination Date, (d) to the extent COBRA is applicable to us, continuation of
group health benefits pursuant to our standard programs in effect from
time-to-time, for Mr. Knapp's spouse and any children for eighteen months, or
longer as applicable under our policies, provided the estate makes the
appropriate election and payments and (e) any benefits payable to Mr. Knapp or
his representatives upon death under insurance or other programs maintained by
us for Mr. Knapp's benefit.
If a Change in Control (as defined in the Knapp Agreement) occurs during the
term of the Knapp Agreement, in addition to his salary and vacation accrued
through the Termination Date, upon the Change in Control, Mr. Knapp will be
entitled to receive (a) one and one-half times his base salary then in effect;
(b) one and one-half times his target bonus for the fiscal year in which the
Change in Control occurs (plus any unpaid bonus from the prior fiscal year); (c)
acceleration in full of vesting of all outstanding stock options, restricted
stock and other equity arrangements subject to vesting, and all options and
other exercisable rights will remain exercisable for one year after the Change
in Control, (d) group health benefits pursuant to our standard programs for
himself, his spouse and any children for one and one-half years after the
Termination Date, and (e) any Gross-Up Payments (as defined in the Knapp
Agreement) for Mr. Knapp's excise tax liabilities.
16
<PAGE> 19
We entered into a Mutual Separation Agreement with Mr. Clifford as of
September 30, 1999 (the "Clifford Separation Agreement"). Pursuant to the
Clifford Separation Agreement, Mr. Clifford resigned as a director, President
and Chief Executive Officer as of October 7, 1999 and we agreed to (a) pay Mr.
Clifford his base salary of $375,000 per year for two years (the "Severance
Period"), payable in monthly installments according to regular payroll
practices; (b) pay Mr. Clifford his target bonus of $325,000 for fiscal 1999 and
an additional bonus of $325,000 in fiscal 2000; (c) permit Mr. Clifford's stock
options to vest during the Severance Period and to be exercisable for ninety
days thereafter; (d) permit 25,000 shares of Mr. Clifford's restricted stock to
vest on October 26, 2000 and an additional 25,000 shares to vest on October 26,
2001; (e) permit Mr. Clifford to continue to participate in our group medical
and dental programs and life and disability insurance programs in accordance
with the terms of such plans as applicable to employees generally, until the
sooner of the conclusion of the Severance Period or his eligibility for these
benefits at a new employer; and (vi) permit Mr. Clifford to retain his portable
computer and cellular telephone issued by us, with continued service at Mr.
Clifford's expense. If at any time prior to the conclusion of the Severance
Period, we are subject to a Change in Control (as defined in the Clifford
Separation Agreement), then Mr. Clifford's stock options will vest in full and
such options may be exercised for at least ninety days following the Change in
Control. If Mr. Clifford violates his non-competition or non-solicitation
obligations, we will not be required to continue to make the payments under (a)
and (b) above, Mr. Clifford will be obligated to repay any amounts received
under (a) and (b) above, and Mr. Clifford's vesting in the shares of restricted
stock will cease.
We entered into a Mutual Separation Agreement with Mr. Eldh as of June 1,
2000 (the "Eldh Separation Agreement"). Pursuant to the Eldh Separation
Agreement, Mr. Eldh resigned as Executive Vice President, Worldwide Sales as of
July 31, 2000 and we agreed to (a) pay Mr. Eldh his base salary of $300,000 per
year for fourteen months (the "Severance Period") in monthly installments
according to regular payroll practices; (b) pay Mr. Eldh his bonus for fiscal
2000, at a target amount of $250,000, based on achievement of our performance
objectives; (c) permit Mr. Eldh to (i) vest in 25% of the unvested options to
purchase 500,000 shares of our Class A Common Stock, granted to Mr. Eldh in
November 1999 on September 30, 2000 and permit the balance to vest 1/36th per
month thereafter until the options are 50% vested, (ii) continue to vest in his
other stock options during the Severance Period in accordance with their terms,
and (iii) exercise all vested options for up to one year after the conclusion of
the Severance Period; (d) permit Mr. Eldh to vest in his 25,000 shares of
restricted stock until the conclusion of the Severance Period in accordance with
their terms; (e) permit Mr. Eldh to continue to participate in our group medical
and dental programs and life and disability insurance programs in accordance
with the terms of such plans as applicable to employees generally, until the
sooner of the conclusion of the Severance Period or his eligibility for such
benefits at a new employer; (f) permit Mr. Eldh to continue to participate in
all other employee and executive benefit plans (other than stock and option
plans) until the sooner of the conclusion of the Severance Period or the date
Mr. Eldh accepts alternative employment; and (g) permit Mr. Eldh to retain his
portable computer and cellular telephone issued by us, with continued service at
Mr. Eldh's expense. If at any time prior to the conclusion of the Severance
Period, we are subject to a Change in Control (as defined in the Eldh Separation
Agreement), then the vesting of Mr. Eldh's stock options and restricted stock
will accelerate and vest in full (to the extent they would have vested at the
conclusion of the Severance Period) and such options may be exercised for at
least ninety days following the Change in Control. If Mr. Eldh violates his
non-competition or non-solicitation obligations, we will not be required to
continue to make the payments under (a) and (b) above, Mr. Eldh will be
obligated to repay any amounts received under (a) and (b) above, and Mr. Eldh's
vesting in the shares of restricted stock will cease.
17
<PAGE> 20
AUDIT COMMITTEE REPORT
The Board has appointed an Audit Committee consisting of three directors.
Each of the members of the Audit Committee is "independent" as defined under the
New York Stock Exchange's listing standards. The Board has adopted a written
charter with respect to the Audit Committee's roles and responsibilities. A copy
of the charter is attached as Exhibit A to this Proxy Statement.
The Audit Committee oversees our internal and independent auditors and
assists the Board in fulfilling its oversight responsibilities on matters
relating to accounting, financial reporting, internal controls and auditing by
meeting regularly with the independent auditors, internal auditing and operating
and financial management personnel. The Audit Committee periodically reviews our
internal auditing, accounting and financial controls and our policies governing
compliance with laws, regulations, rules of ethics and conflicts of interest.
In fulfilling its oversight responsibilities, the Audit Committee reviewed
and discussed our audited financial statements for the fiscal year ended
September 30, 2000 with our management and KPMG LLP, our independent auditors.
The Audit Committee also discussed with KPMG the matters required to be
discussed by Statement on Auditing Standards No. 61 (Communications with Audit
Committees). This included a discussion of the independent auditors' judgments
as to the quality, not just the acceptability, of our accounting principles, and
such other matters that generally accepted auditing standards require to be
discussed with the Audit Committee. The Audit Committee also received the
written disclosures and the letter from KPMG required by Independence Standards
Board Standard No. 1 (Independence Discussion with Audit Committees) and the
Audit Committee discussed the independence of KPMG with that firm.
Based on the Audit Committee's review and discussions noted above, the Audit
Committee recommended to the Board that, and the Board approved, the audited
financial statements be included in our Annual Report on Form 10-K for the
fiscal year ended September 30, 2000 for filing with the Securities and Exchange
Commission.
The Audit Committee and the Board also have recommended, subject to
stockholder approval, the selection of KPMG as our independent auditors for
fiscal 2001.
AUDIT COMMITTEE OF THE
BOARD OF DIRECTORS
Glenn H. Hutchins
Roger B. McNamee
Stephen G. Pagliuca
18
<PAGE> 21
COMPARISON OF TOTAL CUMULATIVE STOCKHOLDER RETURN
The following graph compares our Class A Common Stock performance to the
performance of Standard & Poor's Stock 500 Index ("S&P 500"), Standard & Poor's
Stock 400 Index ("S&P 400") and the Chase H&Q Technology Index for the fiscal
year ended September 30, 2000. The comparison assumes $100.00 was invested on
September 30, 1995 in our Class A Common Stock and in each of the foregoing
indices and assumes the reinvestment of dividends, if any. The total return for
our Class A Common Stock was (29.66%) during the Performance Period as compared
with a total return during the same period of 166.83% for the S&P 500, 156.53%
for the S&P 400, and 376.91% for the Chase H&Q Technology Index.
The comparisons in the graph below are provided in response to disclosure
requirements of the Securities and Exchange Commission and are not intended to
forecast or be indicative of future performance of our Class A Common Stock.
[LINE GRAPH]
19
<PAGE> 22
OTHER INFORMATION
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table provides certain information, based on our review of
information on file with the Securities and Exchange Commission and our stock
records, with respect to beneficial ownership of the Class A Common Stock and
Class B Common Stock as of November 30, 2000 by (i) each person (or group of
affiliated persons) which is known by us to own beneficially more than five
percent of the Class A Common Stock or Class B Common Stock, (ii) each of our
directors, (iii) each Named Executive Officer, and (iv) all directors and
current executive officers as a group. Except as indicated in the footnotes to
this table, the persons named in the table have sole voting and investment power
with respect to all shares shown as owned beneficially by them, subject to
community property laws where applicable.
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF NUMBER OF PERCENT OF
NAME OF BENEFICIAL OWNERS CLASS A SHARES CLASS A CLASS B SHARES CLASS B
-------------------------- -------------- ---------- -------------- ----------
<S> <C> <C> <C> <C>
IMS Health Incorporated (1) ............................ 6,909,457 12.8% -- --
200 Nyala Farms Road, Westport, CT 06880
Lazard Freres & Co., L.L.C. (2) ........................ 5,791,352 10.7% -- --
30 Rockefeller Plaza, New York, NY 10020
Wellington Management Company, LLP (3) ................. 5,507,700 10.2% -- --
75 State Street, Boston, MA 02109
Manuel A. Fernandez (4) ................................ 1,122,020 2.1% -- --
Michael D. Fleisher (5) ................................ 521,426 * 3,000 *
William O. Grabe (6) ................................... 87,334 * -- --
Max D. Hopper (7) ...................................... 29,334 * -- --
Glenn H. Hutchins ...................................... -- -- -- --
Roger B. McNamee ....................................... -- -- -- --
Stephen G. Pagliuca (8) ................................ 52,334 * -- --
Dennis G. Sisco (9) .................................... 24,334 * 1,089 *
Anne Sutherland Fuchs (10) ............................. 5,000 * -- --
Kenneth Roman (11) ..................................... 10,000 * -- --
William R. McDermott ................................... 50,000 * -- --
Regina M. Paolillo (12) ................................ 244,542 * -- --
Robert E. Knapp ........................................ -- -- --
William T. Clifford (13) ............................... 448,334 * -- --
Richard E. Eldh, Jr. (14) .............................. 238,739 * -- --
All current directors, director nominees and
executive officers as a group (13 persons) (15) ..... 2,146,324 4.0% 4,089 *
</TABLE>
* Less than 1%
------------------------
(1) Includes 6,792,081 shares of Class A Common Stock held by IMS Health
Incorporated and 117,376 shares of Class A Common Stock held by IMS Health
Licensing Associates, L.P., in which IMS Health has a majority interest.
Excludes a warrant to purchase 599,400 shares of Class A Common Stock which
expired on December 1, 2000.
(2) The shares shown as beneficially owned by Lazard Freres & Co. L.L.C. were
those reported as beneficially owned by it in its Schedule 13G filed with
the Securities and Exchange Commission on November 6, 2000. Such schedule
indicates that Lazard has sole voting power with respect to 4,628,445
shares and sole dispositive power with respect to all 5,791,352 shares.
(3) The shares shown as beneficially owned by Wellington Management Company,
LLP were those reported as beneficially owned by it as of August 31, 2000
in its Schedule 13G filed with the Securities and Exchange Commission on
September 8, 2000. Such schedule indicates that Wellington has shared
voting power with respect to 2,829,100 shares and shared dispositive power
with respect to all 5,507,700 shares.
20
<PAGE> 23
(4) Includes 247,335 shares issuable upon the exercise of stock options that
are exercisable within 60 days of November 30, 2000 and includes 765,746
shares indirectly owned by Mr. Fernandez.
(5) Includes 422,384 shares issuable upon the exercise of stock options that
are exercisable within 60 days of November 30, 2000. Also includes 1 share
held by a member of Mr. Fleisher's family, as to which he disclaims
beneficial ownership.
(6) Includes 13,334 shares issuable upon the exercise of stock options that are
exercisable within 60 days of November 30, 2000.
(7) Includes 13,334 shares issuable upon the exercise of stock options that are
exercisable within 60 days of November 30, 2000.
(8) Includes 13,334 shares issuable upon the exercise of stock options that are
exercisable within 60 days of November 30, 2000, and includes 10,000 shares
that are indirectly owned by Mr. Pagliuca.
(9) Includes 19,334 shares issuable upon the exercise of stock options that are
exercisable within 60 days of November 30, 2000.
(10) Consists of 5,000 shares issuable upon the exercise of stock options that
are exercisable within 60 days of November 30, 2000.
(11) Includes 5,000 shares issuable upon the exercise of stock options that are
exercisable within 60 days of November 30, 2000.
(12) Includes 206,600 shares issuable upon the exercise of stock options that
are exercisable within 60 days of November 30, 2000.
(13) Includes 310,000 shares issuable upon the exercise of stock options that
are exercisable within 60 days of November 30, 2000.
(14) Includes 194,250 shares issuable upon the exercise of stock options that
are exercisable within 60 days of November 30, 2000.
(15) Includes 945,655 shares issuable upon the exercise of stock options that
are exercisable within 60 days of November 30, 2000.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
our executive officers and directors and persons who own more than 10% of either
class of our common stock to file reports of ownership and changes of ownership
with the Securities and Exchange Commission and to furnish us with copies of the
reports they file. Based solely on our review of the reports received by us, or
written representations from certain reporting persons, we believe that with
respect to fiscal 2000 all reports were timely filed, except as follows: Mr.
Knapp filed a late Form 3 to report his ownership upon becoming a reporting
person, Mr. Fleisher filed one late Form 4 to report three transactions that
occurred on the same day, and Mr. Fernandez filed one late Form 4 to report the
grant of options. Based solely on our review of the reports received by us, or
written representations from certain reporting persons, we believe that with
respect to fiscal 1999 all reports were timely filed, except as disclosed in our
Proxy Statement for our 2000 Annual Meeting, and except that Mr. John Neeson, a
former officer, did not file a Form 5 or provide a written representation that
none was required to be filed.
CERTAIN RELATIONSHIPS AND TRANSACTIONS
RELATIONSHIP WITH SILVER LAKE PARTNERS, L.P.
On April 17, 2000, we issued and sold an aggregate of $300 million principal
amount of our unsecured 6% Convertible Junior Subordinated Promissory Notes due
April 17, 2005 to Silver Lake Partners, L.P. and certain of Silver Lake's
affiliates and to Integral Capital Partners IV, L.P. and one of its affiliates.
After April 17, 2003, the principal amount of each Note plus all accrued
interest may, at the election of the holder, be converted into shares of Class A
Common Stock, subject to our right, under certain circumstances, to redeem the
Notes for cash. In connection with the issuance of the Notes, we agreed that
Silver Lake would recommend two nominees for director and we would include the
Silver Lake nominees on our slate of nominees to be elected to the Board. This
obligation exists while Silver Lake owns the Notes, Convertible Preferred Stock
or Class A Common Stock that, on an "as converted" basis, represents at least 20
percent of the shares of Class A Common Stock into which the Notes were
convertible on April 17, 2000. Mr. Hutchins and Mr. McNamee are each a nominee
of Silver Lake.
Mr. McNamee is a managing member of Silver Lake and a manager of the general
partner of some of the affiliates of Silver Lake and receives compensation from
those affiliates. In addition, Mr. McNamee is a Managing Director of the general
partner of Integral Capital Partners IV, L.P. and its affiliate and receives
compensation from those entities. Mr. Hutchins is a managing member of Silver
Lake and a managing member of the general partner of Silver Lake and is a member
of some of the affiliates of Silver Lake and receives compensation from those
affiliates.
Silver Lake has contracted to purchase research services from us during
fiscal 2000 and fiscal 2001 (from September 1, 2000 to
21
<PAGE> 24
August 31, 2001) for $135,000.
RELATIONSHIP WITH SI VENTURE ASSOCIATES, L.L.C.
Mr. Fernandez and we are members of SI Venture Associates, L.L.C. ("Fund I"),
a venture capital fund. Mr. Fernandez is a managing member. Fund I has engaged a
management company (the "SI Management Company") to provide administrative
services. Mr. Fernandez is one of the owners of the SI Management Company. Fund
I pays an annual management fee, based on the aggregate capital commitments, to
its managing members. The managing members have assigned their management fees
to the SI Management Company. The members may also receive carried interest
distributions representing a portion of the profits of Fund I. As of June 1999,
Fund I will not raise additional capital.
Mr. Fernandez receives an allocative share of the carried interest and a pro
rata share of the distributions made by Fund I to its members, and receives a
salary from the management company. During fiscal 2000, distributions, including
carried interest, totaling $4,926,506 were made consisting of $315,069 in cash
and equity securities valued at $4,611,437 on the date of distribution. From the
distributions we received $315,069 in cash and $3,777,625 in equity securities
and Mr. Fernandez received $347,813 in equity securities. During fiscal 2000,
Fund I paid $293,758 in management fees to the SI Management Company. Although
he is entitled to receive a salary from the SI Management Company, Mr. Fernandez
did not receive a salary in fiscal 2000.
RELATIONSHIP WITH SI VENTURE FUND II, L.P.
We are a limited partner in a venture capital fund, SI Venture Fund II, L.P.
("Fund II"). Fund II is controlled by its general partner, a limited liability
company of which Mr. Fernandez and we are members (the "General Partner"). The
General Partner is entitled to a carried interest representing a portion of the
profits of Fund II. Each member of the General Partner, including Mr. Fernandez,
is entitled to receive allocated portions of this carried interest in the form
of distributions. During fiscal 2000, distributions, including carried interest,
totaling $536,510 were made consisting solely of equity securities. From the
distributions, we received $146,146 in equity securities and as a general
partner of the management company, Mr. Fernandez received $36,166 in equity
securities.
In addition, the General Partner is entitled to receive a management fee each
year based on the total amount of committed capital of Fund II. The General
Partner has engaged SI Management Company to provide management services on
behalf of the General Partner, and the General Partner has assigned its right to
receive the management fee to the SI Management Company. During fiscal 2000,
Fund II paid $2,029,892 in management fees to the SI Management Company.
Although he is entitled to receive a salary from the SI Management Company, Mr.
Fernandez did not receive a salary in fiscal 2000.
LOANS TO EXECUTIVE OFFICERS
On April 14, 2000, with the Board of Directors' approval, we provided a
$400,000 loan to Mr. McDermott, of which $200,000 was advanced on April 14, 2000
and $200,000 was advanced on May 15, 2000. Amounts outstanding bear interest at
6.71% and, if not paid sooner, are due on December 15, 2007.
On July 6, 2000, with the Board of Directors' approval, we provided a
$400,000 loan to Ms. Paolillo. Amounts outstanding bear interest at 6.52% and,
if not paid sooner, are due on December 15, 2007.
22
<PAGE> 25
OTHER MATTERS
We know of no other matters to be submitted at the Annual Meeting. If any
other matters properly come before the Annual Meeting, it is the intention of
the individuals named in the enclosed proxy card to vote the shares they
represent as the Board may recommend.
MISCELLANEOUS
You may vote by the Internet or by telephone. To vote by the Internet or by
telephone, please refer to the instructions on the enclosed proxy card. The
Internet and telephone voting procedures are designed to authenticate your
identity, to give voting instructions, and to confirm that your instructions
have been recorded properly. If you vote by Internet you should understand that
there may be costs associated with electronic access, such as usage charges from
Internet service providers and telephone companies, that must be paid by you.
Our Annual Report for the fiscal year ended September 30, 2000 is being
mailed to our stockholders of record concurrently with this Proxy Statement. Our
Annual Report is not part of this Proxy Statement.
Upon written request of any person solicited hereunder, our Report on Form
10-K for the fiscal year ended September 30, 2000 as filed with the Securities
and Exchange Commission may be obtained, without charge, by writing to Investor
Relations, Gartner Group, Inc., P.O. Box 10212, 56 Top Gallant Road, Stamford,
Connecticut 06904.
THE BOARD OF DIRECTORS
GARTNER GROUP, INC.
Stamford, Connecticut
December 29, 2000
23
<PAGE> 26
EXHIBIT A
TO PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
GARTNER GROUP, INC.
AUDIT COMMITTEE CHARTER
I. STATEMENT OF POLICY
The Audit Committee (the "Committee") shall be, through regular and special
meetings with management, the supervisor of the Company's internal auditors and
the Company's independent auditors, assist the Board of Directors (the "Board")
in fulfilling its oversight responsibilities on matters relating to accounting,
financial reporting, internal control, auditing, regulatory compliance and other
matters as the Board or the Committee Chairperson deems appropriate.
The Committee shall:
- Serve as an independent party to monitor the Company's financial
reporting process and internal control system.
- Review the audit efforts of the Company's internal auditors and the
audit conducted by the Company's independent auditors.
- Provide an open avenue of communication among the independent
accountants, management and the Board of Directors.
The Committee's role is one of oversight. The Company's management is
responsible for preparing the Company's financial statements and the independent
auditors are responsible for auditing the financial statements. The independent
auditors are ultimately accountable to the Board and the Committee. However, in
carrying out its oversight responsibilities, the Committee is not providing any
expert or special assurance as to the Company's financial statements or any
professional certification as to the independent auditors' work.
The Committee will fulfill its responsibilities by carrying out the activities
enumerated in Sections III and IV.
II. COMMITTEE MEMBERSHIP
The Committee shall consist of at least three "independent directors," as such
term is defined in the New York Stock Exchange, Inc. ("NYSE") Listed Company
Manual or by another relevant listing authority from time to time, one of whom
shall act as Chairperson. The Committee and the Chairperson shall be appointed
by the Board, upon recommendation from the Corporate Governance Committee. If a
Chairperson is not designated or present, the members of the Committee may
designate a Chairperson by majority vote. The composition of the Committee shall
meet the independence and other requirements of the Audit Committee Policy of
the NYSE, which, among other things, prohibits any officer or employee of the
Company from serving on the Committee.
Each Committee member shall have no relationship to the Company that, in the
opinion of the Board of Directors, would interfere with the exercise of his or
her independent judgment as a member of the Committee. Each member of the
Committee shall have a basic understanding of finance and accounting practices,
and at least one member of the Committee must have accounting or related
financial management expertise as the foregoing qualifications are interpreted
by the Board in its business judgment.
III. MEETINGS OF THE COMMITTEE
The Committee will meet regularly at least four times each fiscal year and more
frequently as appropriate. The Committee shall have separate direct lines of
communication between itself and management, the internal auditors and the
independent auditors and shall meet with each of them to discuss any matters the
Committee deems necessary or appropriate. The Committee or its Chairperson
should meet quarterly with management, the supervisor of the internal auditors
and the independent auditors. The Committee shall report to the Board of
Directors from time to time as appropriate.
24
<PAGE> 27
IV. RESPONSIBILITIES
A. DOCUMENTS AND REPORTS REVIEW.
1. AUDITED FINANCIAL STATEMENTS. The Committee shall review and discuss
with management and the independent auditors the audited financial
statements to be included in the Company's Annual Report on Form
10-K (or the Annual Report to Shareholders if distributed prior to
the filing of the Annual Report on Form 10-K).
2. INTERIM FINANCIAL STATEMENTS. The Committee, through its Chairman or
the Committee as a whole, will review with management and the
independent auditors, the Company's interim financial results to be
included in the Company's Quarterly Report on Form 10-Q.
B. INDEPENDENT AUDITORS. The Board of Directors, in consultation with the
Audit Committee, has the ultimate authority to select, evaluate and,
where in its business judgment it deems appropriate, replace the outside
independent auditors. The Committee shall:
1. Subject to Board approval, nominate the independent auditors to be
proposed for shareholder approval in any proxy statement, and
evaluate and, where appropriate, recommend the replacement of the
independent auditors.
2. (a) Ensure that the independent auditors provide the Committee
annually with a formal written statement delineating all
relationships between the independent auditors and the Company,
(b) Discuss with the independent auditors any disclosed
relationships or services that may impact the objectivity and
independence of the independent auditors, and
(c) Recommend that the Board take appropriate action in response to
the independent auditors' report to satisfy itself of the
independent auditors' independence.
3. Review the proposed scope of the annual independent audit of the
Company's financial statements and the associated fees, as well as
any significant variations in the actual scope of the independent
audit and the associated fees.
C. FINANCIAL REPORTING PROCESSES. The Committee shall review and discuss
with management, the internal audit function and the independent
auditors:
1. The quality and adequacy of the Company's internal accounting
controls and the Company's financial reporting processes.
2. The proposed scope of the annual audit plan for internal audit and
the coordination of that scope with independent auditors.
3. The audit risk assessment process.
4. Results of the internal auditors' examinations.
5. Report relating to reportable conditions in the internal control
structure and financial reporting practices.
6. Changes in the Company's accounting policies and practices.
7. The nature of any unusual or significant commitments or contingent
liabilities together with the underlying assumptions and estimates
of management. In connection with the foregoing, the Committee
should review with the General Counsel legal and regulatory matters
that may have a material impact on the financial statements.
8. The effects of changes in accounting standards that may materially
affect the Company's financial reporting practices.
D. GENERAL.
1. The Committee shall review the adequacy of this Charter on an annual
basis. The Committee will recommend to the Board any modifications
to this Charter which the Committee deems appropriate for approval
by the Board.
2. On an as needed basis, the Committee shall review such other matters
as the Board or the Committee considers appropriate.
3. The Committee may receive presentations from management personnel on
key functional activities of the Company, including information
technology, taxes, treasury, risk management, and legal.
4. The Committee may cause an investigation to be made into any matter
within the scope of its responsibility. The Committee may engage
independent resources to assist in its investigations as it deems
necessary.
5. The Committee Chairperson shall make regular reports to the Board on
the Committee's activities and shall cause minutes of the
Committee's meetings to be kept.
25
<PAGE> 28
GARTNER GROUP, INC.
Proxy for the Annual Meeting of Stockholders
To Be Held on January 25, 2001
Class A Common Stock
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
I acknowledge receipt of the Notice of the Annual Meeting of Stockholders and
Proxy Statement of Gartner Group, Inc., each dated December 29, 2000. I appoint
Michael D. Fleisher and Regina M. Paolillo, and each of them, Proxies and
attorneys-in-fact, with full power to each of substitution, to represent me at
Gartner's Annual Meeting, to be held on January 25, 2001, at 10:00 a.m. local
time, and at any adjournments, and to vote all shares of my Class A Common Stock
as I specify on the reverse side of this card.
THE PROXYHOLDERS WILL VOTE THE SHARES REPRESENTED BY THIS PROXY AS SPECIFIED. IF
NO SPECIFICATION IS INDICATED, THE PROXYHOLDERS WILL VOTE THE SHARES REPRESENTED
BY THIS PROXY "FOR" THE PROPOSALS AND FOR SUCH OTHER MATTERS AS MAY PROPERLY
COME BEFORE THE MEETING AS THE PROXYHOLDERS DEEM ADVISABLE.
--------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
<PAGE> 29
Please mark
your votes as /X/
indicated in
this example
1. Election of Director
FOR the nominee WITHHOLD
listed below AUTHORITY
(except as marked to vote for the nominee
to the contrary) listed below
/ / / /
Nominee: (01) Manuel A. Fernandez
2. Change of Name
To vote for an amendment to the certificate of incorporation to change the
legal name of the company to "Gartner, Inc."
FOR AGAINST ABSTAIN
/ / / / / /
3. Ratification of Auditors
To ratify the appointment of KPMG LLP as independent auditors for the 2001
fiscal year.
FOR AGAINST ABSTAIN
/ / / / / /
4. Other
To vote or otherwise represent the shares on other business which may
properly come before the meeting or any adjournments, according to their
discretion.
Mark here for address change and note at left. / /
Date: _______________________________________
Signature:____________________________________
Signature:____________________________________
Note: Please sign exactly as your name appears on your stock certificate. If
shares are held jointly, each holder should sign. Executors, administrators,
trustees, guardians, attorneys and agents should sign using their full title.
Corporations should sign using the full corporate name by the authorized
officer.
--------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
[PHONE ICON] VOTE BY TELEPHONE OR INTERNET [COMPUTER ICON]
QUICK *** EASY *** IMMEDIATE
YOUR VOTE IS IMPORTANT! - YOU CAN VOTE IN ONE OF THREE WAYS:
1. TO VOTE BY PHONE: CALL TOLL-FREE 1-800-840-1208 ON A TOUCH TONE TELEPHONE 24
HOURS A DAY-7 DAYS A WEEK
THERE IS NO CHARGE TO YOU FOR THIS CALL. - HAVE YOUR PROXY CARD IN HAND.
YOU WILL BE ASKED TO ENTER A CONTROL NUMBER, WHICH IS LOCATED IN THE BOX IN THE
LOWER RIGHT HAND CORNER OF THIS FORM
OPTION 1: To vote as the Board of Directors recommends on ALL proposals, press 1
WHEN ASKED, PLEASE CONFIRM BY PRESSING 1.
OPTION 2: If you choose to vote on each proposal separately, press 0. You will
hear these instructions:
Proposal 1 - To vote FOR the nominee, press 1; to WITHHOLD
authority, press 9 To WITHHOLD AUTHORITY FOR AN INDIVIDUAL
nominee, press 0 and listen to the instructions
Proposal 2 - To vote FOR, press 1; AGAINST, press 9; ABSTAIN,
press 0.
WHEN ASKED, PLEASE CONFIRM BY PRESSING 1.
The instructions are the same for all remaining proposals.
OR
2. VOTE BY INTERNET: Follow the instructions at our Website Address:
http://www.eproxy.com/IT
OR
3. VOTE BY PROXY: Mark, sign and date your proxy card and return promptly in
the enclosed envelope.
NOTE: IF YOU VOTE BY INTERNET OR TELEPHONE, THERE IS NO NEED TO RETURN YOUR
PROXY CARD.
THANK YOU FOR VOTING.
<PAGE> 30
GARTNER GROUP, INC.
Proxy for the Annual Meeting of Stockholders
To Be Held on January 25, 2001
Class B Common Stock
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
I acknowledge receipt of the Notice of the Annual Meeting of Stockholders and
Proxy Statement of Gartner Group, Inc., each dated December 29, 2000. I appoint
Michael D. Fleisher and Regina M. Paolillo, and each of them, Proxies and
attorneys-in-fact, with full power to each of substitution, to represent me at
Gartner's Annual Meeting, to be held on January 25, 2001, at 10:00 a.m. local
time, and at any adjournments, and to vote all shares of my Class B Common Stock
as I specify on the reverse side of this card.
THE PROXYHOLDERS WILL VOTE THE SHARES REPRESENTED BY THIS PROXY AS SPECIFIED. IF
NO SPECIFICATION IS INDICATED, THE PROXYHOLDERS WILL VOTE THE SHARES REPRESENTED
BY THIS PROXY "FOR" THE PROPOSALS AND FOR SUCH OTHER MATTERS AS MAY PROPERLY
COME BEFORE THE MEETING AS THE PROXYHOLDERS DEEM ADVISABLE.
--------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
<PAGE> 31
Please mark
your votes as /X/
indicated in
this example
1. Election of Director
FOR the nominee WITHHOLD
listed below AUTHORITY
(except as marked to vote for the nominee
to the contrary) listed below
/ / / /
Nominees: (01) Anne Sutherland Fuchs and (02) Dennis G. Sisco
(Instruction: To withhold authority to vote for any individual nominee,
write that nominee's name on the space provided below.)
------------------------------------------------------
2. Change of Name
To vote for an amendment to the certificate of incorporation to change the
legal name of the company to "Gartner, Inc."
FOR AGAINST ABSTAIN
/ / / / / /
3. Ratification of Auditors
To ratify the appointment of KPMG LLP as independent auditors for the 2001
fiscal year.
FOR AGAINST ABSTAIN
/ / / / / /
4. Other
To vote or otherwise represent the shares on other business which may
properly come before the meeting or any adjournments, according to their
discretion.
Mark here for address change and note at left. / /
Date: _______________________________________
Signature:____________________________________
Signature:____________________________________
Note: Please sign exactly as your name appears on your stock certificate. If
shares are held jointly, each holder should sign. Executors, administrators,
trustees, guardians, attorneys and agents should sign using their full title.
Corporations should sign using the full corporate name by the authorized
officer.
--------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
[PHONE ICON] VOTE BY TELEPHONE OR INTERNET [COMPUTER ICON]
QUICK *** EASY *** IMMEDIATE
YOUR VOTE IS IMPORTANT! - YOU CAN VOTE IN ONE OF THREE WAYS:
1. TO VOTE BY PHONE: CALL TOLL-FREE 1-800-840-1208 ON A TOUCH TONE TELEPHONE 24
HOURS A DAY-7 DAYS A WEEK
THERE IS NO CHARGE TO YOU FOR THIS CALL. - HAVE YOUR PROXY CARD IN HAND.
YOU WILL BE ASKED TO ENTER A CONTROL NUMBER, WHICH IS LOCATED IN THE BOX IN THE
LOWER RIGHT HAND CORNER OF THIS FORM
OPTION 1: To vote as the Board of Directors recommends on ALL proposals, press 1
WHEN ASKED, PLEASE CONFIRM BY PRESSING 1.
OPTION 2: If you choose to vote on each proposal separately, press 0. You will
hear these instructions:
Proposal 1 - To vote FOR ALL the nominees, press 1; to
WITHHOLD AUTHORITY FOR ALL NOMINEES, press 9; To WITHHOLD
AUTHORITY FOR AN INDIVIDUAL nominee, press 0 and listen to the
instructions
Proposal 2 - To vote FOR, press 1; AGAINST, press 9; ABSTAIN,
press 0.
WHEN ASKED, PLEASE CONFIRM BY PRESSING 1.
The instructions are the same for all remaining proposals.
OR
2. VOTE BY INTERNET: Follow the instructions at our Website Address:
http://www.eproxy.com/IT.B
OR
3. VOTE BY PROXY: Mark, sign and date your proxy card and return promptly in
the enclosed envelope.
NOTE: IF YOU VOTE BY INTERNET OR TELEPHONE, THERE IS NO NEED TO RETURN YOUR
PROXY CARD.
THANK YOU FOR VOTING.
