SOFTWARE PUBLISHING CORPORATION
------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
January 23, 1996
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Software Publishing Corporation, a Delaware corporation (the "Company"), will be
held on Tuesday, January 23, 1996 at 1:00 p.m., local time, at the Hyatt Sainte
Claire Hotel located at 302 South Market Street, San Jose, California 95113, for
the following purposes:
1. To elect directors to serve for the ensuing year and until
their successors are elected.
2. To ratify the appointment of KPMG Peat Marwick L.L.P. as
independent accountants for the Company for the fiscal year ending
September 30, 1996.
3. To transact such other business as may properly come before
the meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on November 30,
1995 are entitled to notice of and to vote at the meeting and any adjournment
thereof.
All stockholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to mark,
sign, date and return the enclosed proxy card as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Any stockholder attending
the meeting may vote in person even if he or she has returned a proxy.
Sincerely,
Mark A. Bertelsen,
Secretary
Santa Clara, California
December 11, 1995
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IMPORTANT: WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO
COMPLETE AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED.
- --------------------------------------------------------------------------------
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<PAGE>
SOFTWARE PUBLISHING CORPORATION
----------------------------
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed Proxy is solicited on behalf of Software Publishing
Corporation (the "Company") for use at the Annual Meeting of Stockholders to be
held on Tuesday, January 23, 1996 at 1:00 p.m., local time, or at any
adjournment thereof, for the purposes set forth herein and in the accompanying
Notice of Annual Meeting of Stockholders. The Annual Meeting will be held at the
Hyatt Sainte Claire Hotel, 302 South Market Street, San Jose, California. The
principal executive offices of the Company are located at 111 North Market
Street, San Jose, California 95113, and its telephone number at that location is
(408) 537-3000.
These proxy solicitation materials were mailed on or about December 13,
1995, together with the Company's 1995 Annual Report to Stockholders, to all
stockholders entitled to vote at the meeting.
Record Date and Principal Stockholders
Stockholders of record at the close of business on November 30, 1995
(the "Record Date") are entitled to notice of and to vote at the meeting. At the
Record Date, 12,528,490 shares of the Company's Common Stock were issued and
outstanding. For information regarding security ownership by management of the
Company's Common Stock, see "OTHER INFORMATION--Share Ownership by Principal
Stockholders and Management." The closing sales price of the Company's Common
Stock on the Nasdaq National Market on the Record Date was $3.25 per share.
Revocability of Proxies
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before its use by delivering to the Company a
written notice of revocation or a duly executed proxy bearing a later date or by
attending the meeting and voting in person.
Voting and Solicitation
Every stockholder voting in the election of directors may cumulate such
stockholder's votes and give one candidate a number of votes equal to the number
of directors to be elected multiplied by the number of shares held by such
stockholder, or distribute the stockholder's votes on the same principle among
as many candidates as the stockholder may select, provided that votes cannot be
cast for more candidates than the number of directors to be elected (6).
However, no stockholder shall be entitled to cumulate votes unless the
candidate's name has been placed in nomination prior to the voting and the
stockholder, or any other stockholder, has given notice at the meeting prior to
the voting of the intention to cumulate the stockholder's votes. On all other
matters, each share has one vote.
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<PAGE>
The cost of soliciting proxies will be borne by the Company. The
Company may reimburse brokerage firms and other persons representing beneficial
owners of shares for their expenses in forwarding solicitation material to such
beneficial owners. Proxies may also be solicited by certain of the Company's
directors, officers, and regular employees, without additional compensation,
personally or by telephone, telegram or letter.
Quorum; Abstentions; Broker Non-Votes
The required quorum for the transaction of business at the Annual
Meeting is a majority of the shares of Common Stock outstanding on the Record
Date. Shares that are voted "FOR," "AGAINST," or "WITHHELD" from a matter are
treated as being present at the meeting for purposes of establishing a quorum
and are also treated as votes eligible to be cast by the Common Stock present in
person or represented by proxy at the Annual Meeting and "entitled to vote on
the subject matter" (the "Votes Cast") with respect to such matter.
While there is no definitive statutory or case law authority in
Delaware as to the proper treatment of abstentions in the election of directors
(Proposal No. 1), the Company believes that abstentions should be counted for
purposes of determining both the presence or absence of a quorum for the
transaction of business and the total number of Votes Cast with respect to a
particular matter. In the absence of controlling precedent to the contrary, the
Company intends to treat abstentions in this manner. In a 1988 Delaware case,
the Delaware Supreme Court held that, while broker non-votes may be counted for
purposes of determining the presence or absence of a quorum for the transaction
of business, broker non-votes should not be counted for purposes of determining
the number of Votes Cast with respect to the particular proposal on which the
broker has expressly not voted. Broker non-votes with respect to proposals set
forth in this Proxy Statement will therefore not be considered "Votes Cast" and,
accordingly, will not affect the determination as to whether the requisite
majority of Votes Cast has been obtained with respect to a particular matter.
Deadline for Receipt of Stockholder Proposals
Proposals of stockholders of the Company which are intended to be
presented by such stockholders at next year's Annual Meeting must be received by
the Company no later than August 13, 1996 in order that they may be included in
the proxy statement and form of proxy relating to that meeting.
Fiscal Year End
The Company's fiscal year ends September 30.
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<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
Nominees
A Board of six directors is to be elected at the meeting. Deborah A.
Coleman is not standing for re-election as a director. Unless otherwise
instructed, the proxy holders will vote the proxies received by them for the
Company's nominees named below, all of whom (except Miriam K. Frazer) are
presently directors of the Company. Miriam K. Frazer has been nominated to fill
the vacancy created by Ms. Coleman not standing for re-election. In the event
that any nominee of the Company is unable or declines to serve as a director at
the time of the Annual Meeting, the proxies will be voted for any nominee who
shall be designated by the present Board of Directors to fill the vacancy. In
the event that additional persons are nominated for election as directors, the
proxy holders intend to vote all proxies received by them in such a manner in
accordance with cumulative voting (if applicable) as will assure the election of
as many of the nominees listed below as possible, and, in such event, the
specific nominees to be voted for will be determined by the proxy holders. The
Company is not aware of any nominee who will be unable or will decline to serve
as a director. The term of office of each person elected as a director will
continue until the next Annual Meeting of Stockholders or until a successor has
been elected and qualified.
The names of the nominees, and certain information about them, are set
forth below.
Director
Name Age Principal Occupation Since
--------- --- -------------------- --------
Irfan Salim ................... 43 President and Chief Executive
Officer of the Company 1993
Fred M. Gibbons................ 46 Chairman of the Board of the Company 1980
Mark A. Bertelsen.............. 51 Managing Partner, Wilson, Sonsini, 1991
Goodrich & Rosati, P.C.
Miriam K. Frazer............... 39 Vice President, Finance and Chief
-----
Financial Officer of the Company
Michael M. Gilbert............. 51 Vice President of Engineering 1993
Octel Communications Corporation
Bernee D.L. Strom.............. 48 President
USA Digital Radio 1995
There are no family relationships among any directors or officers of
the Company.
Mr. Salim has served as President and Chief Executive Officer of the
Company since April 1994. He served as President and Chief Operating Officer
from October 1992 to April 1994, and as Vice President and General Manager of
the International Division from April 1989 to October 1992. From October 1988 to
March 1989, Mr. Salim was a consultant with Beyond Inc., an international
marketing software consulting firm, which he co-founded. Prior to that, Mr.
Salim was employed by Lotus Development Corporation, a computer software
manufacturer, as Vice President and General Manager PS Spreadsheet Division from
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<PAGE>
October 1987 to October 1988, and as Vice President and General Manager,
International Division from March 1984 to September 1987.
Mr. Gibbons has served as Chairman of the Board of Directors of the
Company since October 1992. He also served as Chairman of the Board of Directors
from August 1987 to December 1987. He served as Chief Executive Officer of the
Company from December 1987 to April 1994, as President from December 1987 to
October 1992 and as President and Chief Executive Officer of the Company from
May 1980 to August 1987. In addition, Mr. Gibbons served as acting Chief
Financial Officer of the Company from March 1987 through October 1987 and from
November 1989 through March 1990.
Mr. Bertelsen, the Managing Partner of Wilson, Sonsini, Goodrich &
Rosati, P.C., the Company's outside corporate counsel, has been a member of that
law firm for more than five years. He has served as Secretary of the Company
since April 1990 and served as Assistant Secretary from October 1987 to April
1990. Mr. Bertelsen is also a director of Autodesk, Inc.
Ms. Frazer has served as the Vice President, Finance and Chief
Financial Officer of the Company since August 1993, and served as Assistant
Secretary of the Company since November 1993. Prior to that, Ms. Frazer was
employed by Telematics International, Inc., a networking and communications
hardware and software design and manufacturing company, as Chief Financial
Officer from April 1990. Corporate Secretary from May 1990 until July 1993, and
as Vice President, Corporate Communications and Treasurer from June 1989 until
March 1990.
Dr. Gilbert has been employed with Octel Communications Corporation,
since 1994 as Vice President of Engineering. From 1989 to 1994, he was employed
by Echelon Corporation, a control and communications technologies company, as
Vice President and Chief Technology Officer. From 1985 until joining Echelon, he
served as Director of CBX Engineering and Planning at IBM Corporation, ROLM
Systems Division.
Ms. Strom is President of USA Digital Radio, a partnership of CBS,
Gannett and Westinghouse, which has developed and is establishing its technology
as a worldwide standard for digital radio broadcasting. Concurrently, she is
President and Chief Executive Officer of the Strom Group, a management
consulting and business advisory firm. From 1989 to 1992, she was a principal
and founder of the Gemstar Development Corporation, the manufacturer of VCR
Plus+ Instant Programmer. Ms. Strom also founded and was Chief Executive Officer
of MBS Technologies, Inc., a computer software publisher. She currently serves
as Chairman of Quantum Development Corporation. Ms. Strom is also a director of
DDL Electronics, Inc. and is an advisory board member at the J.L. Kellogg
Graduate School of Management at Northwestern University.
Required Vote
The six nominees receiving the highest number of affirmative votes of
the shares present or represented and entitled to be voted for them shall be
elected as directors. Votes withheld from any director are counted for purposes
of determining the presence or absence of a quorum for the transaction of
business, but have no legal effect under Delaware law.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
THE ELECTION OF THE NAMED NOMINEES.
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<PAGE>
Board Meetings and Committees
The Board of Directors of the Company held a total of six meetings and
took action by written consent 13 times during the fiscal year ended September
30, 1995. No director participated in fewer than 75% of all such meetings and
actions of the Board of Directors and the committees, if any, upon which such
director served.
The Board of Directors has an Audit Committee and a Compensation
Committee. It does not have a Nominating Committee or a committee performing the
functions of a Nominating Committee.
The Audit Committee of the Board of Directors, which consisted of
directors Coleman and Bertelsen met five times during fiscal year 1995. The
Audit Committee recommends engagement of the Company's independent accountants,
and is primarily responsible for reviewing and approving the scope of the audit
and other services performed by the Company's independent accountants and for
reviewing and evaluating the Company's accounting principles and its systems of
internal accounting controls.
The Compensation Committee of the Board of Directors, which consisted
of directors Gilbert and Bertelsen held three meetings during fiscal year 1995.
The Compensation Committee reviews and approves the Company's executive
compensation policy.
Compensation of Directors
Each of the directors who is not an employee of the Company receives an
annual retainer of $9,000 and a fee of $500 (reduced from $750 in prior years)
for each meeting of the Board and each meeting of a committee of the Board
attended. Non-employee directors also participate in the Company's stock option
plans. Currently, a single nonstatutory option to purchase 15,000 shares of the
Company's Common Stock is automatically granted under one of the stock option
plans to each non-employee director upon the appointment or election of such
non-employee director to the Board of Directors of the Company, regardless of
whether such appointment or election is by the Board of Directors or the
stockholders, and thereafter on the first market day of each fiscal year until
the maximum number of shares available for non-employee directors is reached.
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<PAGE>
PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected KPMG Peat Marwick L.L.P. ("KPMG
Peat Marwick"), independent accountants, to audit the financial statements of
the Company for the fiscal year ending September 30, 1996. KPMG Peat Marwick has
audited the Company's financial statements since the fiscal year ended September
30, 1995. Representatives of KPMG Peat Marwick are expected to be present at the
meeting with the opportunity to make a statement if they desire to do so, and
are expected to be available to respond to appropriate questions.
Required Vote
The receipt of the affirmative vote of a majority of the shares
represented, in person or by proxy, and voting at the Annual Meeting, which
shares voting affirmatively also constitute at least a majority of the required
quorum, is required to approve the appointment of the independent accountants.
In the event that the stockholders do not approve the selection of KPMG Peat
Marwick, the appointment of the independent accountants will be reconsidered by
the Board of Directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE RATIFICATION OF
THE APPOINTMENT OF KPMG PEAT MARWICK AS THE COMPANY'S INDEPENDENT ACCOUNTANTS.
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OTHER INFORMATION
Share Ownership by Principal Stockholders and Management
The following table sets forth the beneficial ownership of Common Stock
of the Company as of November 30, 1995 by: (a) each director and each nominee
for director; (b) each of the officers named in the Summary Compensation Table
("Named Officers"); and (c) all directors and executive officers as a group. The
number and percentage of shares beneficially owned is determined under rules of
the Securities and Exchange Commission ("SEC"), and the information is not
necessarily indicative of beneficial ownership for any other purpose. Under such
rules, beneficial ownership includes any shares as to which the individual has
sole or shared voting power or investment power and also any shares which the
individual has the right to acquire within 60 days of November 30, 1995 through
the exercise of any stock option or other right. The persons named in the table
have sole voting and investment power with respect to all shares of Common Stock
shown as beneficially owned by them, subject to community property laws where
applicable and the information contained in the footnotes to this table. A total
of 12,528,490 shares of the Company's Common Stock were issued and outstanding
as of November 30, 1995.
Shares Beneficially Owned
--------------------------
Name Number Percent
------------------------------ -------- -------
Irfan Salim(1) .......................................260,930 2.0%
Fred M. Gibbons(2)....................................280,625 2.1%
Mark A. Bertelsen(3).................................. 16,875 *
Deborah A. Coleman(3)................................. 16,875 *
Michael M. Gilbert(3)................................. 11,250 *
Bernee D.L. Strom(3).................................. 1,875 *
Miriam K. Frazer(4)................................... 71,794 *
David MacDonald(3)....................................100,875 *
Robert T. Iguchi(5)................................... 61,444 *
Bradford D. Peppard (6)............................... 17,500 *
All directors and officers as a group 13 persons(7)...885,275 6.6%
- -------------------------
* Less than 1%
(1) Includes 250,500 shares issuable upon the exercise of outstanding
options which were exercisable at the Record Date or within 60 days
thereafter.
(2) Includes 1,875 shares issuable upon the exercise of outstanding options
which were exercisable at the Record Date or within 60 days thereafter.
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<PAGE>
(3) Represents shares issuable upon the exercise of outstanding options
which were exercisable at the Record Date or within 60 days thereafter.
(4) Includes 65,000 shares issuable upon the exercise of outstanding
options which were exercisable at the Record Date or within 60 days
thereafter.
(5) Includes 57,125 shares issuable upon the exercise of outstanding
options which were exercisable at the Record Date or within 60 days
thereafter.
(6) Includes 12,500 shares issuable upon the exercise of outstanding
options which were exercisable at the Record Date or within 60 days
thereafter.
(7) Includes 534,750 shares issuable upon the exercise of outstanding
options which were exercisable at the Record Date or within 60 days
thereafter.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and directors, and persons who
own ten percent or more of a registered class of the Company's equity
securities, to file with the SEC initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
Officers, directors and ten percent or more stockholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company or written representations that no other
reports were required, during the fiscal year ended September 30, 1995, all
officers, directors, and ten percent stockholders complied with all Section
16(a) filing requirements, except that Bernee D.L. Strom filed one late Form 3
and Fred M. Gibbons filed one late Form 4.
Compensation Committee Interlocks and Insider Participation
The Company's Compensation Committee is composed of directors Bertelsen
and Gilbert. Mr. Bertelsen is a member and Managing Partner of the law firm of
Wilson, Sonsini, Goodrich & Rosati, P.C., outside corporate counsel to the
Company. No other interlocking relationship exists between the Company's Board
of Directors or Compensation Committee and the board of directors or
compensation committee of any other company, nor has any such interlocking
relationship existed in the past.
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<PAGE>
<TABLE>
COMPENSATION OF EXECUTIVE OFFICERS
Executive Compensation Table
The following table sets forth certain information concerning the
compensation of the Company's Chief Executive Officer and each of the four other
most highly compensated executive officers (collectively the "Named Officers")
for services in all capacities to the Company, during fiscal years 1993, 1994,
and 1995.
<CAPTION>
Long-Term
Compensation
Awards
Annual Compensation
Name and Year Ending -------------------------- Options/SARs All Other
Principal Position 9/30 Salary Bonus (#) Compensation (1)
- ----------------------------------------- ---------- -------- ---------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
Irfan Salim............................. 1995 $254,960 $30,000(4) -- $ 90,729(3)
President and Chief Executive Officer(2) 1994 286,981 -- 475,000 180,830(5)
1993 310,334 -- 138,000(6) 195,819(7)
Miriam K. Frazer........................ 1995 167,798 20,000(4) -- 75,247(8)
Vice President and Chief Financial 1994 147,128 12,500(9) 120,000 27,716(10)
Officer 1993 18,080(11) 12,500(9) 60,000 4,771(12)
Robert T. Iguchi........................ 1995 151,645 -- -- --
Vice President, North American Sales 1994 75,807 -- 130,000(14) 7,138(15)
and Service(13) 1993 -- -- -- --
David MacDonald......................... 1995 170,364 -- -- 109,760(16)
Vice President International Operations 1994 127,395 18,048(17) 120,000 24,019(18)
1993 129,155(19) 23,362(17) 11,000(20) 34,458(21)
Bradford D. Peppard..................... 1995 36,787(22) 12,500(9) 100,000 3,942(23)
Vice President, Marketing 1994 -- -- -- --
1993 -- -- -- --
<FN>
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(1) Includes payments made under the Company's Profit Sharing Plan in
fiscal 1993.
(2) During fiscal 1994, Mr. Salim served as Chief Operating Officer until
April 1994 at which time he became Chief Executive Officer.
(3) Includes $49,959 in relocation expenses and $40,770 associated with a
tax gross-up payment.
(4) Represents special bonus for extraordinary effort and accomplishment
related to restructuring.
(5) Includes $84,439 in relocation expenses, $95,391 associated with a tax
gross-up payment and $1,000 associated with reimbursement for
professional services.
(6) Includes options for 75,500 shares which were repriced and replaced on
October 14, 1992.
(7) Includes $165,454 in relocation expenses, $12,230 associated with a tax
gross-up payment, $1,000 associated with reimbursement for professional
services, $2,918 allowable under United Kingdom retirement planning
program and $5,967 car allowance.
(8) Includes $47,196 in relocation expenses, and $28,051 associated with
tax gross-up payment.
(9) Represents employee signing bonus payable in six month increments.
(10) Includes $10,500 in relocation expenses, $1,530 associated with
reimbursement for professional services and $15,686 associated with
medical leave.
(11) Ms. Frazer was employed by the Company in August 1993. Her annual
salary rate for fiscal year 1993 was $175,000.
(12) Includes $2,929 in relocation expenses, $642 associated with a tax
gross-up payment and $1,200 associated with medical insurance
reimbursements.
(13) Mr. Iguchi was appointed an officer of the Company on April 1, 1994.
The salary and bonus compensation figures represent payments made from
that point forward. Mr. Iguchi full year fiscal 1994 salary and bonus
were $146,604 and $10,000, respectively.
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(14) Represents options granted on or after April 1, 1994. See note (13).
(15) Includes $7,138 associated with a tax gross-up payment.
(16) Includes $82,555 in severance expense, $8,255 allowable under United
Kingdom retirement planning program and $18,950 car allowance.
(17) Represents bonus based on a leveraged compensation plan.
(18) Includes $17,649 in car allowance and $6,370 allowable under United
Kingdom retirement planning program.
(19) Mr. MacDonald was appointed an officer of the Company on October 27,
1992. The salary and bonus compensation figures represent payments made
from that point forward. Mr. MacDonald's full fiscal 1993 salary and
bonus were $137,700 and $24,908, respectively.
(20) Represents options granted on or after October 27, 1992. See note (19).
(21) Includes $23,868 in car allowance and $6,885 allowable under United
Kingdom retirement planning program.
(22) Mr. Peppard was employed by the Company in July 1995. His annual salary
rate for fiscal year 1995 was $150,000.
(23) Includes $3,942 in relocation expenses.
</FN>
</TABLE>
<TABLE>
Option Grants in Last Fiscal Year
The following table sets forth details regarding stock options granted
to the Named Officers in fiscal year 1995. The Company granted no SARs in fiscal
year 1995.
<CAPTION>
Individual Grants Potential Realizable Value at
--------------------------------------------------------------------- Assumed Annual Rates of
Percent of Stock Price Appreciation for
Total Options Option Term(3)
Options Granted to Exercise or ----------------------------------
Granted Employees in Base Price Expiration
Name (#)(1) Fiscal Year(2) ($/Sh) Date 5%($) 10%($)
- ------------------------ ------- -------------- ----------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Irfan Salim............. 0 0.0% $ -- -- $ -- $ --
Miriam K. Frazer........ 0 0.0% $ -- -- $ -- $ --
Robert T. Iguchi........ 0 0.0% $ -- -- $ -- $ --
David MacDonald......... 0 0.0% $ -- -- $ -- $ --
Bradford D. Peppard..... 100,000 12.5% $ 3.375 8/1/02 $ 137,396 $ 320,192
<FN>
- -------------------------
(1) All options in this table have exercise prices equal to the fair market
value on the date of grant. The options generally become exercisable
over a period of four years and expire seven years from the original
date of grant. These options were granted under the Company's 1987,
1989, and 1991 Stock Option Plans.
(2) The Company granted options for 799,750 shares to employees in fiscal
1995 under the 1987, 1989 and 1991 Plans.
(3) Potential realizable value assumes that the stock price increases from
the date of grant until the end of the option term (generally seven
years) at the annual rate specified (5% and 10%). Annual compounding
results in total appreciation of 41% (at 5% per year) and 95% (at 10%
per year) for options with a seven year term. If the price of the
Company's Common Stock were to increase at such rates from the price at
1995 Fiscal Year End ($4.375 per share) over the next seven years, the
resulting stock price at 5% and 10% appreciation would be $6.17 and
$8.53 respectively. The assumed annual rates of appreciation are
specified in SEC rules and do not represent the Company's estimate or
projection of future stock price growth. The Company does not
necessarily agree that this method can properly determine the value of
an option.
</FN>
</TABLE>
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<TABLE>
Fiscal Year End Option Values
The following table sets forth certain information concerning
unexercised options held as of September 30, 1995 by the Named Officers. No
options or SARs were exercised during the fiscal year ending September 30, 1995
by any Named Officers.
<CAPTION>
Number of Unexercised Value of In-the-Money
Options at FY End (#) Options at FY End ($)(1)
-------------------------------- -------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
-------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Irfan Salim ..................................... 250,500 362,500 $50,000 $150,000
Miriam K. Frazer................................. 65,000 115,000 $12,500 $ 37,500
Robert T. Iguchi................................. 56,938 99,875 $10,000 $ 30,000
David MacDonald.................................. 100,875 96,625 $10,000 $ 30,000
Bradford D. Peppard.............................. 0 100,000 $0 $100,000
<FN>
- -------------------------
(1) Market value of underlying securities based on the closing price of the
Company's Common Stock on September 30, 1995 on the Nasdaq National
Market of $4.375 minus the exercise price.
</FN>
</TABLE>
Management Continuity Agreements
In February 1994, the Company entered into management continuity agreements
(the "Agreements") with Irfan Salim, Miriam K. Frazer, Robert T. Iguchi and
David MacDonald. The Company entered into a similar Agreement with Bradford D.
Peppard in July, 1995. The Agreements terminate upon the earlier of five years
from their execution or 18 months after a Change of Control of the Company.
Under the terms of the Agreements, in the event there is a "Change of Control"
of the Company, which is defined in the Agreements to include, among other
things, a merger or sale of assets of the Company or a reconstitution of the
Company's Board of Directors, the exercisability and vesting of all options are
accelerated. The Agreements further provide that in the event an employee is
"involuntarily terminated" within 18 months after the Change of Control, the
employee receives (i) 24 months severance pay and continued health and medical
benefits in the case of the President and Chief Executive Officer, and (ii) 12
months severance pay and continued health and medical benefits in the case of
all other covered employees. Severance benefits to which an employee may become
entitled under the Agreements are reduced by the value associated with the
accelerated vesting of the employee's options upon the change of control. The
purpose of the Agreements is to assure that the Company will have the continued
dedication of its senior management team by providing such individuals with
certain compensation arrangements, competitive with those of other corporations,
to provide sufficient incentive to the individuals to remain with the Company,
to enhance their financial security as well as protect them against unwarranted
termination in the event of a Change of Control.
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<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee") is
currently comprised of two outside directors and is responsible for setting and
administrating the policies governing annual compensation of the executive
officers of the Company. These policies are based upon the philosophy that the
ability to attract, retain and provide appropriate incentives to the Company's
executive officers is essential to the long-term success of the Company. The
Committee applies this philosophy in determining compensation for Company
executive officers in three areas: salary, bonuses, and stock options.
Base Salary
Salary structure for the Company's executive officers is reviewed on an
annual basis at or about the beginning of the fiscal year, comparing executive
salary ranges against market data of companies that compete for the same talent
pool (predominantly high-technology and other software companies) and with other
companies with similar annual revenue to Software Publishing Corporation. As the
Company's revenue has declined, so have the comparatives utilized for parity.
The Committee also takes into account the overall level of performance of the
Company. As recommended by the Chief Executive Officer, all executive salaries
for fiscal year 1996 remained at fiscal year 1995 levels with the exception of
the salary of the Chief Financial Officer, which was increased by 7% over the
previous year's salary. The Chief Executive Officer's salary for fiscal year
1996 remained the same.
Executive Bonus Plan
The Compensation Committee awards bonuses to the Company's executive officers
pursuant to an Executive Bonus Plan established at the beginning of each fiscal
year. Executive bonuses are determined based upon pre-determined Company and
individual performance objectives. Performance to these measures has been
historically evaluated on an annual basis, but for fiscal year 1996, it will be
measured on a semiannual basis. The bonus is based on (i), achievement of
revenue and profit objectives (which if not achieved negate any potential
bonus), (ii), a percentage of base pay and (iii) a variable percentage based on
each executive officer's achievement of key business objectives during the
fiscal year. The Chief Executive Officer makes recommendations for the remaining
executives officers, and the Compensation Committee makes a recommendation to
the Board of Directors relative to any bonus for the Chief Executive Officer.
The Board approved two executive bonuses this year in recognition of achievement
during fiscal year 1994: a $30,000 bonus to the Chief Executive Officer and a
$20,000 bonus to the Chief Financial Officer. No other executive bonuses were
awarded.
Long Term Compensation
All officers participate in the Company's stock option plans. Stock option
grants to executive officers are based on current responsibilities, individual
performance, and competitive practices. These options are granted to provide
long-term incentive that correlates to the growth, success, and profitability of
the Company, thus aligning the interest of the Company's executives with its
stockholders. Options are exercisable in the future at the fair market value of
the Company's Common Stock as of the date of the
-12-
<PAGE>
grant, so that an executive officer granted an option is rewarded only in the
event there is appreciation in the price of the Company's stock.
Due to the decline of the Company's stock value (and thus any existing
options) and the decision to generally hold executive compensation flat, the
Committee has relied heavily on stock option grants as the best tool to retain
and motivate executives. It is our belief that this form of incentive most
closely ties reward to the interest and benefit of the Company's stockholders.
Summary
The Committee believes that the compensation decisions contained here reflect
the Company's performance and are consistent with the long term interests of the
stockholders.
The foregoing constitutes the report of the Compensation Committee of the Board
of Directors for the Company's fiscal year ended September 30, 1995.
Mark A. Bertelsen
Michael M. Gilbert, Chairman
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<PAGE>
STOCK PERFORMANCE GRAPH
Five-Year Stockholder Return Comparison
The graph below compares the cumulative total return on the Company's Common
Stock for the five fiscal year period commencing October 1, 1990 and ending
September 29, 1995 compared to the CRSP Total Return Index for the Nasdaq Stock
Market (U.S. companies) and the CRSP Total Return Index for the Nasdaq Computer
and Data Processing Services Stocks (SIC 737). The stock price performance shown
on the graph below is not necessarily indicative of future price performance.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
Among Software Publishing Corporation, Nasdaq U.S. Market
and Nasdaq Computer & Data Processing Indexes
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
Software Publishing Corporation $100 $ 86 $ 45 $ 29 $ 21 $ 21
Nasdaq U.S. Market $100 $157 $176 $231 $233 $321
Nasdaq Computer & Data
Processing Services Stocks $100 $196 $231 $275 $306 $492
- -------------------------
* Assumes $100 invested on October 1, 1990 in the Company's Common Stock
and in each index listed above.
** The total return for the Company's Common Stock and the indices used
assumes the reinvestment of dividends. No dividends have been declared
on the Company's Common Stock.
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<PAGE>
OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting. If any
other matters properly come before the meeting, it is the intention of the
persons named in the enclosed proxy to vote the shares they represent as the
Board of Directors may recommend.
It is important that your shares be represented at the meeting, regardless of
the number of shares which you hold. You are, therefore, urged to complete,
date, execute, and return, at your earliest convenience, the accompanying proxy
card in the envelope which has been enclosed.
THE BOARD OF DIRECTORS
<PAGE>
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SOFTWARE PUBLISHING CORPORATION
1996 ANNUAL MEETING OF STOCKHOLDERS
The undersigned stockholder of SOFTWARE PUBLISHING CORPORATION, a Delaware
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement, each dated December 11, 1995, and hereby
appoints Fred M. Gibbons and Irfan Salim, or either of them, proxies and
attorneys-in-fact, with full power to each of substitution, on behalf and in the
name of the undersigned, to represent the undersigned at the Annual Meeting of
Stockholders of Software Publishing Corporation to be held on January 23, 1996,
at 1:00 p.m., local time, at the Hyatt Sainte Claire Hotel located at 302 South
Market Street, San Jose, California 95113, and at any adjournment or
adjournments thereof, and to vote all shares of Common Stock which the
undersigned would be entitled to vote if then and there personally present, on
the matters set forth on the reverse side of this card:
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)
<PAGE>
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO CONTRARY -----------------
DIRECTION IS INDICATED, WILL BE VOTED FOR THE ELECTION OF
DIRECTORS, FOR THE RATIFICATION OF THE APPOINTMENT OF KPMG I plan to attend
PEAT MARWICK AS INDEPENDENT ACCOUNTANTS AND AS SAID PROXIES the meeting.
DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY COME
BEFORE THE MEETING. [ ]
-----------------
1. ELECTION OF DIRECTORS
FOR all nominees WITHHOLD NOMINEES: Irfan Salim; Fred M.
listed to the right AUTHORITY Gibbons; Mark A. Bertelsen; Miriam
(except as marked to vote for all K. Frazer; Michael M. Gilbert;
to the contrary) nominees listed Bernee D.L. Strom
to the right (INSTRUCTION: To withhold authority
to vote for any individual nominee,
write that nominee's name in the
space provided below.)
------------------------------------
[ ] [ ]
2. Proposal to ratify the appointment of
KPMG Peat Marwick as the independent
accountants of the Company for fiscal
1996:
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
DATED: , 199
--------------------- ---
------------------------------------
(Signature)
------------------------------------
(Signature)
(This Proxy should be marked, dated
and signed by the stockholder(s)
exactly as his or her name appears
hereon, and returned promptly in the
enclosed envelope. Persons signing
in a fiduciary capacity should so
indicate. If shares are held by
joint tenants or as community
property, both should sign. When
signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such. If a
corporation, please sign in full
corporate name by President or other
authorized Officer. If a
partnership, please sign in
partnership name by authorized
person.)
---------------------------------------------
"PLEASE MARK INSIDE BLUE BOXES SO THAT DATA
PROCESSING EQUIPMENT WILL RECORD YOUR VOTES"
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