<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
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-11(c) or Section
240.14a-12
Great Plains Software, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
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>
GREAT PLAINS SOFTWARE, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
SEPTEMBER 15, 1999
TO OUR SHAREHOLDERS:
The Annual Meeting of Shareholders of Great Plains Software, Inc. (the
"Company") will be held on Wednesday, September 15, 1999, at 10:30 a.m. central
time at the Ramada Plaza Suites, 1635 42nd Street S.W., Fargo, North Dakota, for
the following purposes:
1. To elect two directors to serve for three-year terms or until their
respective successors are elected and qualify;
2. To approve the appointment of PricewaterhouseCoopers LLP as the
Company's independent auditors for the fiscal year ending May 31,
2000;
3. To approve an increase of 2,500,000 shares in the number of shares
authorized under the 1997 Stock Incentive Plan; and
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Holders of record of the Company's Common Stock as of the close of business
on July 26, 1999 are entitled to notice of and to vote at the meeting and any
adjournment thereof.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE, WHICH
NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU LATER DESIRE TO REVOKE
YOUR PROXY, YOU MAY DO SO AT ANY TIME BEFORE IT IS EXERCISED.
By Order of the Board of Directors
/s/ Bradley J. Burgum
-----------------------------------
Bradley J. Burgum
Secretary
August 9, 1999
<PAGE>
GREAT PLAINS SOFTWARE, INC.
1701 S.W. 38TH STREET
FARGO, NORTH DAKOTA 58103
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
SEPTEMBER 15, 1999
This Proxy Statement is furnished in connection with the solicitation
of the enclosed proxy by the Board of Directors of Great Plains Software, Inc.
(the "Company") for use at the Annual Meeting of Shareholders (the "Annual
Meeting") to be held on Wednesday, September 15, 1999, at 10:30 a.m., central
time, at the Ramada Plaza Suites, 1635 42nd Street S.W., Fargo, North Dakota,
and at any adjournment thereof, for the purposes set forth in the Notice of
Annual Meeting of Shareholders. This Proxy Statement and the form of proxy
enclosed are being mailed to shareholders with the Company's Annual Report to
shareholders commencing on or about August 9, 1999.
SOLICITATION OF PROXIES
The Company is paying the costs of solicitation, including the cost of
preparing and mailing this Proxy Statement. Proxies are being solicited
primarily by mail, but in addition, the solicitation by mail may be followed by
solicitation in person, or by telephone or facsimile, by regular employees of
the Company without additional compensation. The Company will reimburse brokers,
banks and other custodians and nominees for their reasonable out-of-pocket
expenses incurred in sending proxy materials to the Company's shareholders.
VOTING RIGHTS AND PROCEDURES
Only shareholders of record of the Common Stock of the Company at the
close of business on July 26, 1999 will be entitled to vote at the Annual
Meeting. As of that date, a total of 15,465,963 shares of Common Stock were
outstanding, each share being entitled to one vote. There is no cumulative
voting.
The presence at the Annual Meeting, in person or by proxy, of the
holders of a majority of the shares of Common Stock will constitute a quorum for
the transaction of business at the Annual Meeting. If a shareholder returns a
proxy withholding authority to vote the proxy with respect to a nominee for
director, then the shares of the Common Stock covered by such proxy shall be
deemed present at the Annual Meeting for purposes of determining a quorum and
for purposes of calculating the vote with respect to such nominee, but shall not
be deemed to have been voted for such nominee. If a shareholder abstains from
voting as to any matter, then the shares held by such shareholder shall be
deemed present at the meeting for purposes of determining a quorum and for
purposes of calculating the vote with respect to such matter, but shall not be
deemed to have been voted in favor of such matter. If a broker returns a
"non-vote" proxy, indicating a lack of authority to vote on such matter, then
the shares covered by such non-vote shall be deemed present at the Annual
Meeting for purposes of determining a quorum but shall not be deemed to be
present and entitled to vote at the Annual Meeting for purposes of calculating
the vote with respect to such matter.
Shares of the Company's Common Stock represented by proxies in the
accompanying form will be voted in the manner directed by a shareholder. If no
direction is given, the proxy will be voted for the election of the nominees for
director named in this Proxy Statement, for approval of the appointment of
PricewaterhouseCoopers LLP as the Company's independent auditors and for a
2,500,000 share increase in the number of shares authorized for issuance under
the 1997 Stock Incentive Plan.
1
<PAGE>
A shareholder may revoke a proxy at any time prior to its exercise by
giving to an officer of the Company a written notice of revocation of the
proxy's authority, by submitting a duly elected proxy bearing a later date or by
delivering a written revocation at the Annual Meeting.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of July 26, 1999 by (i) each person
who is known by the Company to own beneficially more than 5% of the Common
Stock, (ii) each director, (iii) each executive officer of the Company named in
the Summary Compensation Table under the heading "Executive Compensation" below
and (iv) all directors and executive officers of the Company as a group.
Beneficial ownership is determined in accordance with rules of the Securities
and Exchange Commission (the "Commission"), and includes generally voting or
investment power with respect to securities. Shares of Common Stock subject to
options currently exercisable or exercisable within 60 days of July 26, 1999 are
deemed outstanding for purposes of computing the percentage beneficially owned
by the person holding such options but are not deemed outstanding for purposes
of computing the percentage beneficially owned by any other person. Except as
otherwise noted, the persons or entities named have sole voting and investment
power with respect to all shares shown as beneficially owned by them.
<TABLE>
<CAPTION>
Percentage of
Number of Shares Outstanding
Beneficially Owned Shares
------------------ ------
<S> <C> <C>
Frederick W. Burgum (1) 2,455,665 15.9%
Douglas J. Burgum (2) 1,721,467 11.1%
T. Rowe Price Associates, Inc. (3) 1,555,100 10.1%
Pilgrim Baxter & Associates, Ltd. (4) 1,038,000 6.7%
Essex Investment Mgmt (5) 789,208 5.1%
Bradley J. Burgum (6) 513,325 3.3%
Steven K. Sydness (7) 102,905 *
Jodi A. Uecker-Rust (8) 53,434 *
Terri F. Zimmerman (9) 56,228 *
Darren C. Laybourn (10) 37,210 *
J.A. Heidi Roizen (11) 22,000 *
William V. Campbell (12) 21,000 *
Joseph S. Tibbetts, Jr. (13) 12,500 *
All directors and executive officers
as a group (11 persons) (14) 5,014,224 31.9%
</TABLE>
- ------------------------------------------------
* Less than 1%
(1) Includes 11,000 shares issuable pursuant to options and shares held by
certain members of Frederick W. Burgum's household that are beneficially
owned by Mr. Burgum. His address is 1701 S.W. 38th Street, Fargo, North
Dakota 58103.
(2) Includes 50,066 shares issuable pursuant to options and shares held by
certain members of Douglas J. Burgum's household that are beneficially
owned by Mr. Burgum. His address is 1701 S.W. 38th Street, Fargo, North
Dakota 58103.
2
<PAGE>
(3) Based on Section 13G filed on June 8, 1999. The address of T.Rowe Price
Associates, Inc. is 100 E. Pratt Street, Baltimore, Maryland, 21202.
(4) Based on Section 13G filed on February 9, 1999. The address of Pilgrim
Baxter & Associates, Ltd. is 825 Duportail Road, Wayne, PA 19087
(5) Based on Section 13G filed on January 8, 1999. The address of Essex
Investment Management is 125 High Street, 29th Floor, Boston, MA
02110-2702.
(6) Includes 11,000 shares issuable pursuant to options and shares held by
certain members of Bradley J. Burgum's household that are beneficially
owned by Mr. Burgum.
(7) Includes 25,001 shares issuable pursuant to options and shares held by
certain members of Steven K. Sydness's household that are beneficially
owned by Mr. Sydness.
(8) Includes 5,999 shares issuable pursuant to options.
(9) Includes 45,332 shares issuable pursuant to options.
(10) Includes 18,833 shares issuable pursuant to options.
(11) Includes 21,000 shares issuable pursuant to options.
(12) Includes 21,000 shares issuable pursuant to options.
(13) Includes 12,500 shares issuable pursuant to options.
(14) Includes 231,864 shares issuable pursuant to options.
ELECTION OF DIRECTORS
The Board of Directors of the Company is composed of six members
divided into three classes. The members of each class are elected to serve
three-year terms with the term of office of each class ending in successive
years. Douglas J. Burgum and Frederick W. Burgum are the directors in the class
whose term expires at the Annual Meeting. The Board of Directors has nominated
Messrs. Douglas J. Burgum and Frederick W. Burgum for election to the Board of
Directors at the Annual Meeting for terms of three years, and each has indicated
a willingness to serve. The other directors of the Company will continue in
office for their existing terms. J. A. Heidi Roizen and Joseph S. Tibbetts, Jr.
serve in the class whose term expires in 2000 and Bradley J. Burgum and William
V. Campbell serve in the class whose term expires in 2001. Upon the expiration
of the term of a class of directors, directors in such class will be elected for
three-year terms at the annual meeting of shareholders in the year in which such
term expires. The affirmative vote of a majority of the shares of Common Stock
present and entitled to vote at the Annual Meeting is necessary to elect the
nominees for director.
The persons named as proxies in the enclosed form of proxy will vote
the proxies received by them for the election of Messrs. Douglas J. Burgum and
Frederick W. Burgum, unless otherwise directed. In the event that any nominee
becomes unavailable for election at the Annual Meeting, the persons named as
proxies in the enclosed form of proxy may vote for a substitute nominee in their
discretion as recommended by the Board of Directors.
3
<PAGE>
Information concerning the incumbent directors is set forth below.
J. A. Heidi Roizen
(Term expiring in 2000).......
Ms. Roizen, 41 years of age, has served as a director of the
Company since February 1997. Ms. Roizen's career has
included roles as an entrepreneur, CEO, large corporation
executive, and most recently as a corporate director and
advisor to leading technology companies. Ms. Roizen serves
on the Boards of Directors of Preview Systems, Softbook
Press, and the Software Development Forum. She also serves
as a mentor capitalist to the portfolio companies of
SOFTBANK Technology Ventures. She is an advisory board
member of Time Domain Corporation, WhoWhere (a division of
Lycos), Garage.com and the Microsoft Silicon Valley
Developer Center. She is also a member of the Stanford Board
of Trustees Nominating Committee. Prior to this, Ms. Roizen
was VP of Worldwide Developer Relations for Apple Computer
(Nasdaq: AAPL). Before joining Apple, she served for 13
years as CEO of T/Maker Company, a successful software
developer and publisher. Heidi is a past president of the
Software Publisher's Association and has served as a Public
Governor of the Pacific Exchange. She has been recognized as
one of the 100 most influential people in the microcomputer
industry by MicroTimes, Personal Computing Magazine, and
Upside Magazine. She has a BA and an MBA from Stanford
University.
Joseph S. Tibbetts, Jr.
(Term expiring in 2000).......
Mr. Tibbetts, 46 years of age, has served as a director of
the Company since October 1996. He has served as Senior
Vice-President, Finance and Administration and Chief
Financial Officer of Lightbridge, Inc., a publicly-held
company based in Burlington, Massachusetts, since May 1998.
He served as Vice President, Finance and Administration,
Chief Financial Officer and Treasurer of SeaChange
International, Inc., a publicly-held company based in
Maynard, Massachusetts, from June 1996 to March 1998. From
November 1976 to June 1996, Mr. Tibbetts was employed as a
Certified Public Accountant by Price Waterhouse LLP. He
became a Partner of the firm in 1986 and the National
Director of its Software Services Group in 1991. Mr.
Tibbetts holds a B.S. in Business Administration from the
University of New Hampshire and is a graduate of the
Stanford Business School Executive Program for Growing
Companies.
Bradley J. Burgum
(Term expiring in 2001)...........
Mr. Burgum, 47 years of age, has served as a director of the
Company since 1984 and as Secretary since January 1996. Mr.
Burgum has practiced law in Casselton, North Dakota for 22
years and is currently a shareholder and President of the
Burgum & Irby Law Firm, P.C. He has served on the Board of
Directors for the Arthur Companies, Inc., a privately-held
diversified agribusiness corporation, since 1974. Mr. Burgum
holds a B.S. in Business Economics from North Dakota State
University and a J.D. from the University of North Dakota
School of Law. Mr. Burgum is a Certified Public Accountant.
4
<PAGE>
William V. Campbell
(Term expiring in 2001)...........
Mr. Campbell, 58 years of age, has served as a director of
the Company since March 1997. Mr. Campbell is Chairman of
the Board of Intuit, Inc., a publicly-held company based in
Palo Alto, California. Mr. Campbell served as both President
and Chief Executive Officer of Intuit Inc. from April 1994
to June, 1998. Prior to joining Intuit Inc., Mr. Campbell
was President and Chief Executive Officer of GO Corporation,
a pen-based computing software company, from January 1991 to
December 1993. He was the founder, President and Chief
Executive Officer of Claris Corporation, a software
subsidiary of Apple Computer, Inc., from 1987 to January
1991. Mr. Campbell has also held senior executive positions
at Apple Computer, Inc. and senior management positions at
Kodak and J. Walter Thompson, an advertising agency in New
York. Mr. Campbell has also recently joined the Board of
Directors of Apple Computer, Inc. Mr. Campbell also serves
on the Board of Directors of SanDisk, Inc. Mr. Campbell
holds both a B.S. and a M.S. in Economics from Columbia
University. He is presently a director of the National
Football Foundation and Hall of Fame.
Douglas J. Burgum
(Nominee with new term
expiring in 2002)...
Mr. Burgum, 43 years of age, has served as President of the
Company since March 1984, Chief Executive Officer since
September 1991 and Chairman of the Board since January 1996.
Mr. Burgum was an early investor in the Company, and he
initially served as Vice President and a director from March
1983 to March 1984. Before joining the Company, Mr. Burgum
was a management consultant in the Chicago office of
McKinsey & Company, Inc. Mr. Burgum holds a B.U.S. from
North Dakota State University and an M.B.A. from the
Stanford University Graduate School of Business.
Frederick W. Burgum
(Nominee with new term
expires in 2002)...
Mr. Burgum, 53 years of age, has served as a director of the
Company since 1988. Mr. Burgum has been Chairman of the
Board of the Arthur Companies, Inc. since 1984 and has
served as its Chief Executive Officer since June 1992. He
has served as Senior Vice President and a director of the
First State Bank of North Dakota since 1972. Mr. Burgum is a
veteran of the United States Army and holds a B.Ph. from the
University of North Dakota.
Douglas J. Burgum and Bradley J. Burgum are brothers, and Frederick W.
Burgum is their cousin.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF MESSRS.
DOUGLAS J. BURGUM AND FREDERICK W. BURGUM AS DIRECTORS OF THE COMPANY.
5
<PAGE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS.
During the 1999 fiscal year, the Board of Directors held six meetings.
During the fiscal year, each director holding office during the fiscal year
attended at least 75% of the total number of meetings of the Board of Directors
and committees of the Board on which he or she served. The Board of Directors
has an Audit Committee and a Compensation Committee, which are described below.
Messrs. Bradley Burgum and Tibbetts are members of the Audit Committee. The
Audit Committee is responsible for nominating the Company's independent
accountants for approval by the Board of Directors, reviewing the scope, results
and costs of the audit with the Company's independent accountants and reviewing
the financial statements of the Company. The Audit Committee held four meetings
during the 1999 fiscal year.
Messrs. Frederick Burgum and Campbell and Ms. Roizen are members of the
Compensation Committee. The Compensation Committee is responsible for
determining the compensation and benefits for the executive officers of the
Company and for administering the Company's stock plans. The Compensation
Committee held three meetings during the 1999 fiscal year.
COMPENSATION OF DIRECTORS
Each non-employee director of the Company receives $1,000 for each
meeting of the Board of Directors and $500 for each committee meeting
attended, and an annual retainer of $6,000 paid in quarterly installments.
The Company also reimburses non-employee directors for expenses incurred in
attending Board meetings. Non-employee directors of the Company also receive
stock options under the Company's Outside Directors' Stock Option Plan (the
"Directors' Plan"). Each non-employee director was granted a non-qualified
stock option to purchase 3,000 shares at an exercise price of $16.00 per
share. In addition, an option to purchase 4,000 shares of Common Stock will
be granted to each incumbent non-employee director on the date of each annual
meeting of shareholders beginning with the Annual Meeting (vesting
immediately). The Directors' Plan also provides that each non-employee
director initially elected to the Board after June 19, 1997 will receive a
non-qualified stock option to purchase 15,000 shares of Common Stock upon
such initial election (vesting in three equal installments on each of the
three 12-month anniversaries following the date of grant). Options granted
under the Directors' Plan have an exercise price equal to the fair market
value of the Common Stock as of the date of grant, and such options expire
five years from the date of grant.
Directors who are also employees of the Company are not separately
compensated for any services provided as a director.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Overview
The Compensation Committee of the Board of Directors (the "Committee")
is composed of three outside directors and is responsible for developing and
approving the Company's compensation program for the Chief Executive Officer and
the other executive officers of the Company. In addition, the Committee
administers the Company's 1997 Stock Incentive Plan and annual cash incentive
compensation program. The overall objective of the Company's executive
compensation program is to provide total compensation that will attract and
retain highly qualified executives.
6
<PAGE>
COMPENSATION PHILOSOPHY
The philosophy of the Committee regarding the compensation of the executive
officers consists of the following premises:
- - Base salary and benefits should be competitive with other software and
technology companies of comparable size.
- - Incentive compensation should be directly related to the Company's
achievement of specified financial and other performance targets.
- - Long-term ownership of the Company's Common Stock should provide an
important link between the executives and shareholders of the Company by
creating incentives for the executives to realize the long-term goal of
increasing shareholder value.
EXECUTIVE OFFICER COMPENSATION PROGRAM
BASE SALARY AND BENEFITS
In order to attract and retain executives, the Company strives to offer
competitive salaries and employee benefits, including its 1997 Stock Purchase
Plan, health care plans, Section 401(k) Profit Sharing Plan and other
employee benefit programs. The Committee sets base salary levels for
executives by comparison to industry compensation data for other software and
technology companies with revenues in the same range as those of the Company.
The Committee generally sets base salaries between the 25th percentile and
75th percentile, taking into account the executive's experience and level of
responsibility.
ANNUAL INCENTIVE COMPENSATION
The Company's annual incentive program allows an executive officer (other
than the Chief Executive Officer) to earn additional cash compensation in an
amount up to 30% to 40% of base salary (depending upon the specific plan
approved for each executive officer) if target level performance goals are met.
The Chief Executive Officer may earn an additional amount up to 60% of base
salary if target level performance goals are met, 25% of which is discretionary.
The total incentive compensation payable for other executive officers is based
85% on objective performance criteria and 15% on discretionary performance
criteria, as determined by the Committee. Threshold, target and maximum goals
are set by the Committee for each of the following objective performance
criteria: operating income, revenue, revenue per employee and customer
satisfaction. Incentive compensation is paid only if the threshold level of
operating income is attained, which reflects the Committee's philosophy that
incentive compensation payments are merited only if the Company meets base level
profitability goals. Once the threshold level of operating income is reached,
incentive compensation is paid based on actual operating income, revenue,
revenue per employee and customer satisfaction as measured against the
threshold, target and maximum goals for each of such performance criteria.
Threshold performance results in payment of 25% of the target level bonus. A
maximum incentive bonus equal to 150% of the target level bonus can be earned if
performance meets or exceeds the maximum goal for each performance criterion
used under the plan. The operating income and revenue goals are based on both
quarterly and annual performance, while the other goals are based solely on
annual performance. The discretionary criteria for the executive officers (other
than the Chief Executive Officer) are established by the Committee in
conjunction with the Chief Executive Officer. In fiscal 1999, the total
incentive compensation which is capable of being earned by the executive
officers as a percentage of base salary was between 30% and 60%.
7
<PAGE>
STOCK OPTION PROGRAM
Stock options are awarded in the Committee's discretion to executive
officers based upon historical and potential contributions to the success of the
Company, an evaluation of market survey data with respect to grants of stock
options by comparable companies and consideration of the number of stock options
already held by each executive officer. Generally, stock options have an
exercise price equal to the fair market value of the Common Stock on the date of
grant.
CHIEF EXECUTIVE OFFICER COMPENSATION
In fiscal 1999, Douglas J. Burgum received a base salary of $306,000, an
amount representing approximately the 75th percentile of base salaries for chief
executive officers of other software and technology companies with revenues
comparable to those of the Company. Mr. Burgum was paid approximately $116,000
of incentive compensation under the Company's annual incentive compensation
program, which represented approximately 85% of his target bonus for the fiscal
year. Approximately 20% of the amount of incentive compensation paid to Mr.
Burgum was based upon discretionary criteria as determined by the Committee,
primarily Mr. Burgum's leadership during the fiscal year.
Tax Deductibility of Executive Compensation
The Company's 1997 Stock Incentive Plan complies with Section 162(m) of the
Internal Revenue Code of 1986, as amended, in order that compensation resulting
from stock options and certain other awards under such plan will not be counted
toward the $1,000,000 limit on the deductibility of compensation under Section
162(m). Section 162(m) should not affect the deductibility of compensation paid
to the Company's executive officers for the foreseeable future.
William V. Campbell
Frederick W. Burgum
J. A. Heidi Roizen
Members of the Compensation Committee
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth all compensation awarded to, earned by or
paid for services rendered to the Company in all capacities during each of the
fiscal years ended May 31, 1999, 1998 and 1997, by the Company's Chief Executive
Officer and the four other most highly compensated executive officers.
8
<PAGE>
ANNUAL COMPENSATION SHARES
<TABLE>
<CAPTION>
Long Term
Compen-
sations
Awards
-----------
Annual Compensation Shares All Other
---------------------------------- Underlying Compen-
Name and Principal Position Year Salary Bonus Other(1) Options sation(2)
- ---------------------------------- ------- ------------ ----------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Douglas J. Burgum 1999 $ 306,000 $116,283 $ 0 0 $2,500
Chairman of the Board, 1998 $ 265,000 $154,625 $ 0 50,000 $2,920
President, and Chief 1997 $ 252,000 $150,472 $ 0 53,333 $3,145
Executive Officer
Terri F. Zimmerman 1999 $ 180,000 $37,363 $ 0 0 $3,061
Chief Financial Officer 1998 $ 150,000 $55,918 $ 0 0 $2,574
and Executive Vice President 1997 $ 135,000 $45,757 $ 0 40,000 $2,691
Steven K. Sydness 1999 $ 168,750 $25,666 $ 0 0 $3,112
Executive Vice President, 1998 $ 143,000 $42,428 $ 0 0 $2,535
Worldwide Sales and Marketing 1997 $ 125,000 $50,812 $ 0 10,000 $2,687
Jodi A. Uecker-Rust 1999 $ 153,750 $27,429 $ 0 0 $3,053
Executive Vice President, 1998 $ 132,000 $48,960 $ 0 10,000 $2,529
Organizational Development 1997 $ 125,000 $45,174 $ 0 6,667 $2,682
Darren C. Laybourn (3) 1999 $ 180,000 $39,238 $ 0 0 $2,555
Vice President,
Research and Development
</TABLE>
- ---------------------------
(1) In accordance with the rules of the Commission, other compensation in the
form of perquisites and other personal benefits has been omitted because
the aggregate amount of such perquisites and other personal benefits
constituted less than the lesser of $50,000 or 10% of the total of annual
salary and bonuses in each fiscal year for each of the executive officers
named above.
(2) The amounts reported represent the Company's contributions to its 401(k)
Profit Sharing Plan on behalf of the executive officers.
(3) Mr. Laybourn became an executive officer of the Company on July 15, 1998.
9
<PAGE>
STOCK OPTIONS
The following table summarizes stock options granted to the executive
officers named in the Summary Compensation Table above during the Company's
fiscal year ended May 31, 1999.
<TABLE>
<CAPTION>
Option Grants in Fiscal Year 1999
Individual Grants
----------------------------------------------
% of Total Potential Realizable
Number of Options Value at Assumed
Securities Granted to Annual Rates of Stock
Underlying Employees Exercise Price Appreciation
Options in Fiscal Price Per Expiration for Option Term (3)
Name Granted Year (1) Share (2) Date 5% 10%
- --------------------- ------------ ------------ --------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Douglas J. Burgum 0 0.0% $ 0.00 -- $ 0 $ 0
Terri F. Zimmerman 0 0.0% $ 0.00 -- $ 0 $ 0
Steven K. Sydness 0 0.0% $ 0.00 -- $ 0 $ 0
Jodi A. Uecker-Rust 0 0.0% $ 0.00 -- $ 0 $ 0
Darren C. Laybourn 0 0.0% $ 0.00 -- $ 0 $ 0
</TABLE>
- -----------------------
(1) In fiscal 1999, the Company granted other employees options to purchase an
aggregate of 374,484 shares of Common Stock.
(2) The exercise price may be paid in cash or in shares of Common Stock with a
market value equal to the exercise price.
(3) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. The 5% and
10% assumed annual rates of compounded stock price appreciation are
mandated by rules of the Commission and do not represent the Company's
estimate or projection of the Company's future Common Stock prices. These
amounts represent certain assumed rates of appreciation in the value of the
Company's Common Stock from the fair value on the date of grant. Actual
gains, if any, on stock option exercises are dependent on the future
performance of the Common Stock and overall stock market conditions.
10
<PAGE>
YEAR-END OPTION TABLE
The following table sets forth certain information concerning options to
purchase Common Stock exercised by the executive officers named in the Summary
Compensation Table above during fiscal year 1999 and the number and value of
unexercised stock options held by such officers as of May 31, 1999.
<TABLE>
<CAPTION>
Aggregated Option Exercises in Fiscal Year 1999
and Fiscal Year-End Option Values
Number of Shares
Underlying Value of Unexercised
Shares Unexercised Options In-the-Money Options
Acquired Value At Fiscal Year-end at Fiscal Year-end (1)
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- --------------------- ------------ ------------- ------------ -------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Douglas J. Burgum 0 $ 0 37,566 65,767 $1,022,433 $1,660,581
Terri F. Zimmerman 8,000 $ 226,700 39,332 34,002 $1,260,276 $1,085,832
Steven K. Sydness 1,000 $ 28,338 16,334 12,667 $ 538,606 $ 411,168
Jodi A. Uecker-Rust 0 $ 0 8,666 12,001 $ 252,388 $ 252,637
Darren C. Laybourn 0 $ 0 15,633 17,200 $ 477,923 $ 445,914
</TABLE>
- -----------------------
EMPLOYMENT AGREEMENT
The Company's CFO, Terri F. Zimmerman resigned in July, 1999 to take a
similar position with a non-competitive technology company based in Minneapolis,
Minnesota. The Company had an agreement with Ms. Zimmerman pursuant to which she
would have received a severance payment equal to her annual base salary in the
event her employment with the Company was involuntarily terminated following a
merger, acquisition or other similar event involving the Company, if such
termination occurred on or prior to September 5, 1999. Such severance payment
would have been reduced by any income earned by Ms. Zimmerman from any other
source during such one-year period.
STOCK PERFORMANCE GRAPH
The following chart compares the cumulative total stockholder return on the
Company's Common Stock for the period of June 19, 1997 through May 31, 1999 with
cumulative total return on the Nasdaq National Market (U.S. Companies) Index and
the cumulative total return for the Nasdaq Computer & Data Processing Services
Index. The comparison assumes that $100 was invested on June 19, 1997 in the
Company's Common Stock and in both of the comparison indices, and assumes
reinvestment of dividends, if any. The Company has historically reinvested
earnings in the growth of its business and has not paid cash dividends on its
Common Stock.
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<PAGE>
COMPARISON OF CUMULATIVE RETURNS
[GRAPHIC]
PLOT POINTS
<TABLE>
<CAPTION>
6/19/97 8/29/97 11/28/97 2/27/98 6/29/98 8/31/98 11/30/98 2/26/99 6/28/99
------- ------- -------- ------- ------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GPSI 100 165 141 208 228 211 245 263 236
NASDAQ 100 110 111 123 123 104 136 160 173
SIC 737 100 107 109 125 127 118 159 196 204
</TABLE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors and persons who beneficially own more than 10%
of the Company's Common Stock to file initial reports of ownership and reports
of changes in ownership with the Commission. Such executive officers, directors
and greater than 10% beneficial owners are required by the regulations of the
Commission to furnish the Company with copies of all Section 16(a) reports they
file.
Based solely on a review of the copies of such reports furnished to the
Company and written representations from the executive officers and directors,
the Company believes that all Section 16(a) filing requirements applicable to
its executive officers and directors and greater than 10% beneficial owners were
met, except as to one late filing by Terri Zimmerman with respect to one
transaction and two late filings by Brian Carey with respect to two
transactions. All filings are current as of August 9, 1999.
APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed PricewaterhouseCoopers LLP as
independent auditors for the Company for the fiscal year ending May 31, 2000. A
proposal to approve the appointment of PricewaterhouseCoopers LLP will be
presented at the Annual Meeting. Representatives of PricewaterhouseCoopers LLP
are expected to be present at the Annual Meeting, will have an opportunity to
make a statement if they desire to do so, and will be available to answer
appropriate questions from shareholders. If the appointment of
PricewaterhouseCoopers LLP is not approved by the shareholders, the Board of
Directors is not obligated to appoint other auditors, but the Board of Directors
will give consideration to such unfavorable vote.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
12
<PAGE>
PROPOSAL TO INCREASE SHARES AUTHORIZED
UNDER 1997 STOCK INCENTIVE PLAN
The Board of Directors has adopted, subject to shareholder approval, an
amendment to the 1997 Stock Incentive Plan (the "Incentive Plan") to increase
the number of shares of Common Stock available for issuance pursuant to
awards granted thereunder from 1,000,000 to 3,500,000. The Board of Directors
believes that stock options have been, and will continue to be an important
compensation element in attracting and retaining key employees. As of May 31,
1999, only 491,522 shares remained available for grant under the Incentive
Plan. The Board of Directors estimates that the Company will need to grant
options in the aggregate of approximately 500,000 shares per year during
fiscal 2000 and fiscal 2001.
The market value of a share of Common Stock on July 26, 1999 was $ 44.313
per share.
SUMMARY OF THE INCENTIVE PLAN
The Incentive Plan provides for the granting of (a) stock options,
including "incentive stock options" ("Incentive Stock Options") meeting the
requirements of Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"), and stock options that do not meet such requirements
("Nonqualified Stock Options"), (b) stock appreciation rights ("SARs"), (c)
restricted stock and restricted stock units, (d) performance awards, (e)
dividend equivalents and (f) other stock-based awards. If the proposed amendment
is approved by the shareholders, the Company will have reserved 3,500,000 shares
of Common Stock for issuance under the Incentive Plan. The Incentive Plan is
administered by the Compensation Committee of the Board of Directors (the
"Committee"). The Committee has the authority to establish rules for the
administration of the Incentive Plan; to select the key employees to whom awards
are granted; to determine the types of awards to be granted and the number of
shares of Common Stock covered by such awards; and to set the terms and
conditions of such awards. Awards may provide that upon the grant or exercise
thereof the holder will receive shares of Common Stock, cash or any combination
thereof, as the Committee shall determine.
In order to meet the requirements of Section 162(m) of the Code, the
Incentive Plan contains a limitation on the number of options that may be
granted to any single optionee in any one calendar year.
The exercise price per share under any stock option or the grant price of
any SAR cannot be less than 100% of the fair market value of the Common Stock on
the date of the grant of such option or SAR. Options may be exercised by payment
in full of the exercise price, either in cash or, at the discretion of the
Committee, in whole or in part by the tendering of shares of Common Stock or
other consideration having a fair market value on the date the option is
exercised equal to the exercise price.
13
<PAGE>
The holder of an SAR is entitled to receive the excess of the fair market
value (calculated as of the exercise date or, if the Committee shall so
determine, as of any time during a specified period before or after the exercise
date) of a specified number of shares over the grant price of the SAR.
The holder of restricted stock may have all of the rights of a shareholder
of the Company, including the right to vote the shares subject to the restricted
stock award and to receive any dividends with respect thereto, or such rights
may be restricted. Restricted stock may not be transferred by the holder until
the restrictions established by the Committee lapse. Holders of restricted stock
units have the right, subject to any restrictions imposed by the Committee, to
receive shares of Common Stock (or a cash payment equal to the fair market value
of such shares) at some future date. Upon termination of the holder's employment
during the restriction period, restricted stock and restricted stock units shall
be forfeited, unless the Committee determines otherwise.
If any shares of Common Stock subject to any award or to which
an award relates are not purchased or are forfeited, or if any such award
terminates without the delivery of shares or other consideration, the shares
previously used for such awards become available for future awards under the
Incentive Plan.
The Board of Directors may amend, alter or discontinue the Incentive Plan
at any time, provided that shareholder approval must be obtained for any change
that absent such shareholder approval, (i) would violate any rules or
regulations of the National Association of Securities Dealers, Inc. or any
securities exchange applicable to the Company, or (ii) would cause the Company
to be unable, under the Code, to grant Incentive Stock Options under the
Incentive Plan.
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the principal federal income tax consequences
generally applicable to awards under the Incentive Plan. The grant of an option
or SAR is not expected to result in any taxable income for the recipient. The
holder of an Incentive Stock Option generally will have no taxable income upon
exercising the Incentive Stock Option (except that a liability may arise
pursuant to the alternative minimum tax), and the Company will not be entitled
to a tax deduction when an Incentive Stock Option is exercised. Upon exercising
a Nonqualified Stock Option, the optionee must recognize ordinary income equal
to the excess of the fair market value of the shares of Common Stock acquired on
the date of exercise over the exercise price, and the Company will be entitled
at that time to a tax deduction for the same amount. Upon exercising a SAR, the
amount of any cash received and the fair market value on the exercise date of
any shares of Common Stock received are taxable to the recipient as ordinary
income and deductible by the Company. The tax consequence to an optionee upon a
disposition of shares acquired through the exercise of an option will depend on
how long the shares have been held and upon whether such shares were acquired by
exercising an Incentive Stock Option or by exercising a Nonqualified Stock
Option, or SAR. Generally, there will be no tax consequence to the Company in
connection with the disposition of shares acquired under an option, except that
the Company may be entitled to a tax deduction in the case of a disposition of
shares acquired under an Incentive Stock Option before the applicable Incentive
Stock Option holding periods set forth in the Code have been satisfied.
With respect to other awards granted under the Incentive Plan that are
payable in cash or shares of Common Stock that are either transferable or not
subject to substantial risk of forfeiture, the holder of such an award must
recognize ordinary income equal to the excess of (a) the cash or the fair market
value of the shares of Common Stock received (determined as of the date of such
receipt) over (b) the amount (if any) paid for such shares of Common Stock by
the holder of the award, and the Company will be entitled at that time to a
deduction for the same
14
<PAGE>
amount. With respect to an award that is payable in shares of Common Stock
that are restricted as to transferability and subject to substantial risk of
forfeiture, unless a special election is made pursuant to the Code, the
holder of the award must recognize ordinary income equal to the excess of (i)
the fair market value of the shares of Common Stock received (determined as
of the first time the shares become transferable or not subject to
substantial risk of forfeiture, whichever occurs earlier) over (ii) the
amount (if any) paid for such shares of Common Stock by the holder, and the
Company may be entitled at that time to a tax deduction for the same amount.
Special rules may apply in the case of individuals subject to Section 16(b)
of the 1934 Act. In particular, unless a special election is made pursuant to
the Code, shares received pursuant to the exercise of a stock option or SAR may
be treated as restricted as to transferability and subject to a substantial risk
of forfeiture for a period of up to six months after the date of exercise.
Accordingly, the amount of any ordinary income recognized, and the amount of the
Company's tax deduction, are determined as of the end of such period.
The affirmative vote of the holders of the majority of the shares of the
Company's Common Stock represented at the meeting and entitled to vote on this
matter is necessary for approval of the proposed amendment to the Incentive
Plan. Proxies will be voted in favor of such proposal unless otherwise
specified.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE
PROPOSAL TO INCREASE THE NUMBER OF SHARES AUTHORIZED UNDER THE INCENTIVE PLAN.
PROPOSALS FOR THE 2000 ANNUAL MEETING
Any proposal by a shareholder to be presented at the 2000 Annual Meeting of
Shareholders must have been received at the Company's executive offices, 1701
S.W. 38th Street, Fargo, North Dakota 58103, no later than the close of business
on April 11, 2000. Proposals should be sent to the attention of the Secretary.
OTHER MATTERS
The Company is not aware of any other matters which may come before the
Annual Meeting. If other matters are properly presented at the Annual Meeting,
it is the intention of the persons named as proxies in the enclosed proxy to
vote in accordance with their judgment as to the best interests of the Company.
By Order of the Board of Directors
Bradley J. Burgum
Secretary
August 9, 1999
15
<PAGE>
PROXY
GREAT PLAINS SOFTWARE, INC.
1999 ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Douglas J. Burgum and Tami L. Reller proxies
(each with the power to act alone and with the power of substitution), to vote,
as designated below, all shares of Common Stock of Great Plains Software, Inc.
which the undersigned is entitled to vote at the 1999 Annual Meeting of
Shareholders of Great Plains Software, Inc. to be held on Wednesday, September
15, 1999 at 10:30 a.m. central time at the Ramada Plaza Suites, 1635 42nd Street
S.W., Fargo, North Dakota 58103, and any adjournment thereof, and hereby revokes
all former proxies.
1. ELECTION OF DIRECTORS. NOMINEES: Douglas J. Burgum and Frederick W. Burgum
/ / VOTE FOR all nominees listed above, / / WITHHOLD AUTHORITY
except those whose names are written below: to vote for all nominees
listed above
2. PROPOSAL TO APPROVE THE APPOINTMENT OF PricewaterhouseCoopers LLP AS
INDEPENDENT AUDITORS OF THE COMPANY.
/ / FOR / / AGAINST / / ABSTAIN
(Continued, and to be signed and dated on the reverse side)
<PAGE>
(Continued from other side)
3. PROPOSAL TO APPROVE AN INCREASE OF 2,500,000 SHARES IN THE NUMBER OF SHARES
AUTHORIZED UNDER THE 1997 STOCK INCENTIVE PLAN.
/ / FOR / / AGAINST / / ABSTAIN
4. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
MATTERS THAT MAY PROPERLY COME BEFORE THE ANNUAL METING OR ANY ADJOURNMENT
OR ADJOURNMENTS THEREOF.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF DIRECTORS AND FOR PROPOSALS 2 AND 3.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY IN THE ENCLOSED ADDRESSED
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
Please sign exactly as your name appears hereon.
Jointly owned shares will be voted as directed if one
owner signs unless another owner instructs to the contrary,
in which case the shares will not be voted. If signing
in a representative capacity, please indicate title and authority.
Dated: , 1999
----------------
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Signature
