<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-11(c) or Section
240.14a-12
SYBASE, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
Registrant
- --------------------------------------------------------------------------------
(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 Rule 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 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
SYBASE, INC.
------------------
NOTICE OF 2000 ANNUAL MEETING OF STOCKHOLDERS
MAY 25, 2000
TIME: 10:00 a.m., Thursday, May 25, 2000
PLACE: Sybase, Inc.
Eniac Conference Room
1650 - 65th Street, Emeryville, California 94608
BUSINESS: - Election of two Class II directors
- Amendment of the 1996 Stock Plan to increase the share
reserve by 3,000,000
- Amendments of the Employee Stock Purchase Plans to
increase the share reserve by 2,000,000
- Ratification of Ernst & Young LLP as independent
auditors for 2000
- Transaction of other business properly brought before
the meeting
RECORD DATE: You are entitled to vote on these matters if you were a
stockholder of record at the close of business Monday,
April 3, 2000.
PROXY VOTING: If you are not able to attend the meeting in person, you
can vote (1) on the Internet, (2) by telephone, or (3) by
completing the enclosed proxy card and mailing it as soon
as possible in the enclosed envelope. Please see the
instructions printed on your proxy card.
By Order of the Board of Directors
DANIEL R. CARL
Vice President, General Counsel,
and Secretary
Emeryville, California
April 14, 2000
- --------------------------------------------------------------------------------
This Notice of Meeting and accompanying Proxy Statement and proxy card are being
distributed on or about April 17, 2000
<PAGE> 3
SYBASE, INC.
----------
PROXY STATEMENT
GENERAL INFORMATION
Your votes are solicited on behalf of the Sybase, Inc. Board of Directors for
matters to be decided at the 2000 Annual Meeting of Stockholders.
RECORD DATE
You are entitled to vote at the Annual Meeting if you were a Sybase stockholder
on the April 3, 2000 Record Date. On that date, 89,620,385 shares of Common
Stock were issued and outstanding. No Preferred Stock was issued or outstanding.
The closing market price of Sybase Common Stock on the Record Date was $19.75
per share, according to the NASDAQ/National Market System.
HOW TO VOTE OR REVOKE YOUR PROXY
You can vote your shares by telephone, on the Internet, by mail or in person at
the Annual Meeting. Instructions for each voting method appear on your proxy
card. You may revoke your proxy anytime prior to the vote at the Annual Meeting
by (1) notifying Sybase in writing, (2) issuing a later proxy, or (3) voting in
person at the meeting. If you previously granted a proxy, but decide to attend
the meeting in person, your proxy will still be valid unless you instruct
otherwise.
HOW VOTES ARE COUNTED
- - ONE SHARE, ONE VOTE. Each share of Common Stock outstanding on the
Record Date will be entitled to one vote on each proposal presented at the
Annual Meeting, except in the directors' election where votes may be cumulated
at the meeting (see "Cumulative Voting", below). All votes cast at the Annual
Meeting will be tabulated by Equiserve, which will act as the independent
inspector of election.
- - QUORUM. A majority of the shares entitled to vote on the Record Date
(44,810,193 shares) constitutes a quorum required to conduct business at the
Annual Meeting. The meeting will be adjourned unless at least that number of
shares is represented in person or by proxy.
- - VOTES PRESENT. The vote of a majority of shares present at the Annual
Meeting ("Votes Present"), either in person or by proxy, is required to approve
each proposal (other than the election of directors).
WHAT YOUR VOTE MEANS
FOR DIRECTORS. You may vote "FOR", "AGAINST" or "WITHHELD" for each
nominee. A "WITHHELD" vote is counted toward a quorum, but has no other legal
effect. The two director nominees with the greatest number of "FOR" votes (even
if not a majority of Votes Present) will be elected.
CUMULATIVE VOTING. You can cumulate your votes in the election of
directors if you vote in person at the Annual Meeting. This means you can cast
votes equal to the number of shares you hold, multiplied by the number of
directors to be elected. For example, if you hold 100 shares and there are two
directors to be elected, you have 200 votes (100 shares x 2 directors) that can
be cast in any combination you designate (e.g., 150 votes for one nominee, 50
for the other). If you wish to cumulate your votes, you must give us written
notice of your intent to do so at the Annual Meeting prior to the election.
FOR OTHER PROPOSALS. You may vote "FOR", "AGAINST" or "ABSTAIN."
Abstentions are counted toward a quorum. They are also counted as Votes Present
(see "Votes Present", above). Therefore, an abstention has the SAME EFFECT as a
vote "AGAINST". For example, if there are 210 Votes Present, and 99 shares are
voted "FOR" a proposal, 75 are voted "AGAINST", and 36 "ABSTAIN", the proposal
is defeated since it will not pass by a majority of the Votes Present.
- - WHAT IF I DON'T VOTE? If you sign and return your proxy card, but don't
indicate how your shares are to be voted, your shares will be voted "FOR" all of
the Company's nominees for director, and "FOR" all other proposals described in
this Proxy Statement. The Company's proxy holders will have discretion to vote
your shares on any new business submitted for a stockholder vote at the Annual
Meeting.
- - BROKER NON-VOTES. If you hold your shares in "street name", it means
your Sybase stock is held in an account maintained by a broker, bank or other
qualified agent. The stock is registered in the name of the broker for your
benefit. If you do not vote the Sybase stock in your account, your broker may
have the right to vote your shares on certain matters. On other matters, the
broker cannot vote your shares without specific instructions. These are "broker
non-votes". They are counted toward a quorum, but are not counted as Votes
Present (see "Votes Present", above). Therefore, broker non-votes cannot affect
the outcome of voting.
-2-
<PAGE> 4
ELECTION OF DIRECTORS
Two Class II directors to be elected at the Annual Meeting will hold office
until their three-year term expires in 2003. The nominees are: Richard C.
Alberding and Linda K. Yates. Your shares will be voted as you instruct, but if
you submit your proxy without voting instructions, your shares will be voted
"FOR" the election of these two nominees.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF MR. ALBERDING AND
MS. YATES.
BOARD STRUCTURE
The current seven-member Board of Directors is divided into three classes, each
having three-year terms that expire in successive years, as shown below:
-------------------------------------------------------------
CLASS DIRECTOR CURRENT TERM EXPIRES
-------------------------------------------------------------
I John S. Chen 2002
Alan B. Salisbury
-------------------------------------------------------------
II Linda K. Yates 2000
Richard C. Alberding
-------------------------------------------------------------
III L. William Krause
Robert P. Wayman 2001
Cecilia Claudio
-------------------------------------------------------------
BIOGRAPHICAL INFORMATION
JOHN S. CHEN Mr. Chen has been Chairman, President and Chief
Director since 1997 Executive Officer of Sybase, Inc. since November 1998.
Age 44 From February through November 1998, he served as
co-Chief Executive Officer. Mr. Chen joined Sybase in
August 1997 as Chief Operating Officer and served in
that capacity until February 1998. From March 1995 to
July 1997, Mr. Chen was President of the Open
Enterprise Computing Division, Siemens Nixdorf, a
computer and electronics company, and Chief Executive
Officer and Chairman of Siemens Pyramid, a subsidiary
of Siemens Nixdorf. He has also served as a Board
member of Beyond.com since March 1999.
RICHARD C. ALBERDING Mr. Alberding served as an Executive Vice President of
Director since 1993 Hewlett-Packard Company, an electronics and computer
Age 69 manufacturer, before retiring from the company in
Nominee 1991. He had served in various management positions
with HP beginning in 1958. Mr. Alberding is also a
director of Digital Microwave Corp, Paging Network
Inc., JLK Direct Distribution, Inc., Kennametal, Inc.,
Walker Interactive Systems, and PCTEL Inc.
L. WILLIAM KRAUSE Mr. Krause has been President of LWK Ventures, a
Director since 1995 private investment company, since November 1998. Prior
Age 57 to that, beginning in October 1991, he served as
President, Chief Executive Officer and director of
Storm Technology, Inc., a provider of computer
peripherals and software for digital imaging which
filed for protection under the Federal Bankruptcy Laws
in November 1998. He is also a director of Pinnacle
Systems, Inc. and Ramp Networks, Inc.
ALAN B. SALISBURY Mr. Salisbury has been an independent management
Director since 1993 consultant to the IT industry since July 1999. From
Age 62 August 1998 through June 1999, he served as Chairman
of Learning Tree International USA, Inc., a provider
of advanced technology and technical management
training. Mr. Salisbury currently serves as a director
of Learning Tree International.
-3-
<PAGE> 5
ROBERT P. WAYMAN Mr. Wayman has been Chief Financial Officer of
Director since 1995 Hewlett-Packard Company, a computer and electronics
Age 54 company, since 1984, and its Executive Vice President,
Finance and Administration since 1992. He is also a
director of HP and CNF Inc., and is the current
Chairman, Private Sector Council and member of the
Kellogg Advisory Board to Northwestern University
School of Business.
CECILIA CLAUDIO Ms. Claudio has been Senior Vice President and Chief
Director since 1999 Information Officer of Farmers Group, Inc., a large
Age 45 automobile and home insurance company, since 1998.
From 1994 to 1997, she was a faculty member of Harvard
School of Public Health. Ms. Claudio has also held
various senior management positions at Anthem Blue
Cross/Blue Shield, Harvard Pilgrim Health Care, Xerox
Corporation, The Gap Inc. and Olivetti (Worldwide).
LINDA K. YATES Ms. Yates is a founder of Strategos, an international
Director since 2000 strategy consulting firm, where she served as Chief
Age 37 Executive Officer from January 1995 through August
Nominee 1999. Ms. Yates currently serves in various advisory
and board roles with approximately 10 Silicon Valley
start-ups. Prior to founding Strategos in 1995, Ms.
Yates spent six years with the Mac Group/Gemini
Consulting where she served as Vice President and head
of the West Coast from 1992 to 1994.
BOARD OF DIRECTORS AND COMMITTEE MEETINGS
The Board of Directors held nine meetings during 1999. During the year, no
incumbent director attended fewer than 75% of the Board and committee meetings
held during their service as a director or committee member.
The table shows the number of committee meetings held during 1999. It also
identifies committee membership during the year, and each committee's principal
functions.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
BOARD COMMITTEES PRINCIPAL FUNCTIONS
- -------------------------------------------------------------------------------------------------
<S> <C>
AUDIT - recommends and approves services of independent auditors
Mr. Salisbury (Chair) - monitors and evaluates accounting policies
Mr. Wayman - evaluates adequacy of financial reports
Mr. Webber(1) - reviews and directs internal audit policies and functions
Mr. Hindery(1) - 4 meetings in 1999
- -------------------------------------------------------------------------------------------------
COMPENSATION - reviews and approves executive compensation policies and
Mr. Alberding (Chair) programs
Mr. Krause - oversees administration of stock option and purchase plans
Ms. Claudio(2) - 5 meetings in 1999
- -------------------------------------------------------------------------------------------------
STOCK - oversees administration of certain stock option grants to
Mr. Chen (Chair) non-executive employees
- acted by unanimous written consent throughout 1999
- -------------------------------------------------------------------------------------------------
BOARD AFFAIRS - oversees corporate governance standards regarding Board conduct
Mr. Wayman (Chair) and deliberations(3)
Mr. Krause - serves as nominating committee(4)
- 1 meeting in 1999
- -------------------------------------------------------------------------------------------------
</TABLE>
(1) Jeffrey T. Webber resigned from this committee and from the Board of
Directors on November 3, 1999. Leo T. Hindery resigned from this
committee and from the Board of Directors on March 3, 2000.
(2) Ms. Claudio was appointed to this committee on November 3, 1999, after
which there were no further committee meetings for the year.
-4-
<PAGE> 6
(3) The Company's corporate governance standards require the election of one
lead outside director. Mr. Wayman is the current lead outside director,
and has served in such capacity since May 1998. The outside directors
meet separately from management and employee directors in executive
sessions conducted as part of regular Board meetings. They also confer
informally from time to time.
(4) The Board Affairs Committee will consider stockholder recommendations
for Board nominees. Recommendations should be submitted in writing to
Sybase, Inc., attn: Secretary, 6475 Christie Avenue, Emeryville,
California 94608.
DIRECTOR COMPENSATION
For 1999, the Company paid fees to its outside directors according to the table.
All retainers are paid in four quarterly installments, but are discontinued
upon a director's resignation to the extent not already earned. Video and
telephone attendance fees are paid only when meetings exceed one hour.
<TABLE>
<CAPTION>
<S> <C>
Annual retainer $ 20,000
Per Board meeting attended in person $ 1,500
Per Board meeting attended by video or telephone $ 750
Per Committee meeting attended in person $ 750
Per Committee meeting attended by video or telephone $ 375
Additional retainer for committee chairmanship $ 2,000
Additional retainer for lead outside director $ 4,000
</TABLE>
Sybase also reimbursed its outside directors for out-of-pocket travel expenses
associated with attendance at Board and committee meetings.
During 1999, nonemployee directors also received stock option grants under the
Company's 1992 Director Stock Option Plan. Under that plan, each nonemployee
director is eligible to receive (i) an initial stock option grant to purchase
20,000 shares of Common Stock upon his or her appointment to the Board, and (ii)
an annual stock option grant to purchase 16,000 shares of Common Stock. In 1999,
our stockholders approved an amendment to the plan increasing the annual grant
from 12,000 to 16,000 shares. All options granted under the plan vest ratably
over a four-year period. Upon their appointment to the Board, Ms. Claudio and
Mr. Hindery each received an initial stock option grant to purchase 20,000
shares. Ms. Claudio's exercise price was $15.125 and Mr. Hindery's exercise
price was $12.75. Messrs. Alberding, Krause, Salisbury, Wayman, and Webber (who
resigned from the Board on November 3, 1999), each received a 1999 stock option
grant to purchase 12,000 shares at an exercise price of $9.5625 per share. Upon
resigning from the Board on March 3, 2000, Mr. Hindery voluntarily renounced all
of his rights in any vested and unvested stock options under the director plan.
As employee directors, neither Mr. Chen nor Robert S. Epstein (who resigned from
the Board on August 3, 1999), received any compensation, expense reimbursement
or stock option grants for serving as directors, or for attending Board or
Committee meetings.
-5-
<PAGE> 7
STOCK OWNERSHIP OF MANAGEMENT AND BENEFICIAL OWNERS
This table shows how Sybase shares were beneficially owned as of March 10, 2000
by (1) each current director and nominee, (2) each person named in the "Summary
Compensation Table" below, (3) all current directors and officers as a group,
and (4) entities holding more than 5% of Sybase's issued and outstanding shares.
On March 10, 2000. 89,833,095 shares were issued and outstanding.
<TABLE>
<CAPTION>
Approximate
Shares Percent
Beneficially of Class
Owned(1)(4) Owned
--------------- ------------
<S> <C> <C>
Entities affiliated with OppenheimerFunds, Inc.(2) 13,954,100 13.44%
Two World Trade Center, 34th Fl.
New York, NY 10048-0203
Entities affiliated with George Soros and Purnendu
Chatterjee(3) 6,900,500 7.13%
888 Seventh Avenue
New York, NY 10106
John S. Chen 445,049 *
Richard N. LaBarbera 31,068 *
Eric L. Miles 37,291 *
Raj Nathan 55,152 *
Pieter A. Van der Vorst 28,982 *
Richard C. Alberding 63,250 *
Cecilia Claudio 3,500 *
L. William Krause 38,250 *
Alan B. Salisbury 84,250 *
Robert P. Wayman 55,500 *
Linda K. Yates 416 *
Michael S. Gardner(5) 0 *
All executive officers and directors as a group (16 persons) 999,319 1.10%
</TABLE>
- --------------
* Less than one percent.
(1) Unless otherwise noted, each named stockholder has sole voting and
investment power with respect to all beneficially owned securities,
subject to applicable community property laws and to the information
contained in the footnotes to the table.
(2) OppenheimerFunds, Inc., an investment adviser registered under the
Investment Company Act of 1940, shares dispositive power as to 9,054,100
shares with Oppenheimer Global Growth and Income Fund. The latter
Oppenheimer fund has sole voting power with respect to 4,900,000 shares.
-6-
<PAGE> 8
(3) Shares beneficially owned as follows:
<TABLE>
<CAPTION>
SHARES BENEFICIAL OWNERS % OF CLASS
----------- ------------------------------------------------------------------ ----------
<S> <C> <C>
900,000 - Mr. Soros 0.99%
- Stanley Drukenmiller
- Quantum Industrial Partners LDC (managed by QIH Management
Investors, L.P.)
- QIH Management Investors, L.P. (Mr. Soros is sole general
partner; managed by QIH Management, Inc.)
- QIH Management, Inc. (Mr. Soros is sole shareholder;
managed by Soros Fund Management, LLC)
- Soros Fund Management, LLC (Mr. Soros is chairman; Mr.
Drukenmiller is portfolio manager)
6,000,500 - Dr. Chatterjee 6.04%
- Winston Partners, L.P. (as to 1,131,300 shares; general
partner is Chatterjee Fund Management, L.P.)
- Chatterjee Fund Management, L.P. (Dr. Chatterjee is sole
general partner)
- Winston Partners II LDC (as to 1,426,925 shares; managed
by Chatterjee Management Company and Chatterjee Advisors
LLC)
- Winston Partners II LLC (as to 1,400,312 shares; managed
by Chatterjee Management Company and Chatterjee Advisors
LLC)
- Furzedown Trading Limited (as to 2,041,963 shares; managed
by Dr. Chatterjee)
- Chatterjee Management Company (managed and controlled by
Dr. Chatterjee)
- Chatterjee Advisors LLC (managed and controlled by Dr.
Chatterjee)
</TABLE>
(4) Includes the following shares subject to options exercisable within 60
days of March 10, 2000:
<TABLE>
<CAPTION>
<S> <C>
Mr. Alberding 62,250
Mr. Chen 428,541
Ms. Claudio 2,500
Mr. Gardner 0
Mr. Krause 37,250
Mr. LaBarbera 28,748
Mr. Miles 37,291
Dr. Nathan 47,697
Mr. Salisbury 83,250
Mr. Van der Vorst 18,727
Mr. Wayman 54,500
Ms. Yates 416
All executive officers and directors as a 946,496
group
</TABLE>
(5) Mr. Gardner ceased to be an employee and executive officer as of March
26, 1999.
AMENDMENT OF THE 1996 STOCK PLAN
In February 2000, the Board approved an amendment to increase by 3,000,000 the
total number of shares of Common Stock reserved for issuance under the Sybase,
Inc. 1996 Stock Plan ("1996 Stock Plan"). This would increase the total number
of shares reserved for issuance under the plan to 12,727,000. The stockholders
are being asked to approve this amendment at the Annual Meeting.
As of March 10, 2000, options to purchase 4,016,693 shares were outstanding
(i.e., not yet exercised), 1,268,860 shares had been issued, and 4,441,447
shares remained available for grant under the 1996 Stock Plan. On that date,
about 60% of our 4,144 employees held outstanding stock options under all of our
stock option plans. The closing stock price on that date was $28.125 per share,
according to NASDAQ.
-7-
<PAGE> 9
The Board believes increasing the number of reserved shares under the plan by
3,000,000 (about 3.3% of our issued and outstanding shares on March 10, 2000) is
critical in enabling us to continue to
- attract and retain highly-qualified new employees
- promote existing key employees
- motivate high levels of performance
- recognize employee contributions to the Company's success
Without the ability to grant stock options for these purposes, we may not be
able to remain competitive for skilled employees in the high technology
industry, particularly against an increasing number of new Internet and Silicon
Valley start-up ventures vying for the same talent pool. Certain provisions of
the 1996 Stock Plan are summarized below.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE AMENDMENT TO THE
1996 STOCK PLAN.
SUMMARY OF THE 1996 STOCK PLAN
General. The 1996 Stock Plan provides for grants of stock options and stock
purchase rights to regular Sybase employees, including officers. Options granted
under the Plan are either "incentive stock options," as defined in Section 422
of the Internal Revenue Code of 1986, or nonstatutory stock options, which are
all other options.
Plan Administration. The Board or a Board committee administers the 1996 Stock
Plan in accordance with laws and regulations that apply to the Company. The Plan
Administrator may, without stockholder approval, amend the terms of outstanding
stock options in accordance with the plan and applicable law.
Eligibility. Employees of Sybase or its subsidiaries may be granted options
under the 1996 Stock Plan. The Plan Administrator determines which employees
will receive options, and how many options each employee will receive. These
decisions may be based on an employee's duties and responsibilities, the value
of the employee's past services, potential contributions to the Company's
success, and other factors.
Vesting. The Plan Administrator determines the timing of "vesting", or when an
option becomes exercisable for stock. For example, if an employee is granted an
option for 100 shares that vests annually at the rate of 25% per year, then the
employee will have the right after the first year to exercise the option with
respect to 25 shares. Generally, options granted under the 1996 Stock Plan vest
12.5% after six months, and in equal installments over the next 42 months.
However, performance-based options that vest on the achievement of specified
goals have also been granted under the 1996 Stock Plan. These options may vest
over longer or shorter periods of time.
Exercise. Optionees generally can exercise their vested options by notifying the
Plan Administrator in writing and paying the applicable exercise price. That
price generally is equal to the fair market value of the Company's stock on the
date the option is granted. However, it can be as low as 85% of fair market
value under certain circumstances if the option is nonstatutory. During 1999, no
options were granted at an exercise price less than fair market value on the
grant date.
Sybase has agreements with certain brokers to remit the option exercise price to
the Company from the proceeds of a same-day sale of shares. For example, if an
optionee exercises an option for 100 shares at $5, and instructs the broker to
sell the shares immediately at the current market price (e.g., $20 per share),
the broker will pay Sybase the $500 exercise price on behalf of the option
holder (100 shares x $5), then remit the net sales proceeds ($1,500 in this
case) to the option holder.
Annual Grant Limitation. Under the 1996 Stock Plan, no employee may be granted
options to purchase more than 500,000 shares in a single fiscal year. However, a
new employee may be granted up to 500,000 "new-hire" options upon joining
Sybase, which are not counted against the 500,000 annual grant limitation. This
means that a new employee could be granted as many as 1 million options under
the 1996 Stock Plan in the first year of employment.
-8-
<PAGE> 10
Expiration of Options. Unexercised options granted under the 1996 Stock Plan
generally expire (and become unexercisable) not later than 10 years after the
grant date. If an option holder's employment terminates, vesting generally stops
as of the termination date. However, the option holder generally has three
months from that date to exercise any vested unexercised options before they
expire. Longer post-termination exercise periods apply if termination results
from other reasons, such as death or disability. The post-termination exercise
period may be as short as 5 days if an employee is terminated for cause.
Changes in Capitalization; Change of Control. The 1996 Stock Plan provides for
option price and quantity adjustments if the Company declares a stock dividend
or stock split. Also, option vesting is accelerated if Sybase merges with
another corporation that does not either assume the outstanding options or
substitute equivalent options. The Company has employment arrangements with
certain executives that provide for accelerated vesting upon or following a
change of control. See "Executive Compensation - Employment Agreements and
Certain Transactions", below.
Stock Purchase Rights. The 1996 Stock Plan also permits the Company to grant
stock purchase rights in tandem with other awards under the 1996 Stock Plan, or
with cash awards outside the plan. Any rights granted cannot be accepted more
than 6 months from the grant date, and are subject to other limitations outlined
in the 1996 Stock Plan. To date, no stock purchase rights have been granted
under the plan.
Amendment and Termination. The Board may terminate or amend the 1996 Stock Plan
at any time without stockholder approval, except as required by state and
federal law. Currently, amendments to increase the number of shares issuable
under the plan, or to change eligibility standards require stockholder approval.
The 1996 Stock Plan terminates in 2006. However, such termination will not
affect options previously granted under the plan.
UNITED STATES TAX INFORMATION
The following tables summarize certain U.S. income tax consequences relating to
incentive stock options (ISOs) and nonstatutory stock options (NSOs) granted
under the 1996 Stock Plan.
<TABLE>
<CAPTION>
ISO TAX CONSEQUENCES
- -------------------------- -------------------------------------------------------------------------------
<S> <C>
ISO Grant None
ISO Exercise Optionee may be subject to alternative minimum tax
Sale or exchange of All gain or loss is treated as long-term gain or loss
underlying shares more
than (A) 2 years after
grant and (B) 1 year after
exercise
Sale or exchange before - Optionee recognizes ordinary income equal to the lower of: (i) the difference
either (A) or (B) holding between the fair market value of the shares on the exercise date and the exercise
period is satisfied price; or (ii) the difference between the sale price of the shares
and the exercise price.
- Any gain or loss in excess of the ordinary income amount is treated as
long-term or short-term capital gain or loss, depending on the actual holding
period.
- Sybase takes a corresponding compensation deduction for all amounts taxed to
optionee at ordinary income rates.
</TABLE>
<TABLE>
<CAPTION>
NSOS TAX CONSEQUENCES
- -------------------------- -------------------------------------------------------------------------------
<S> <C>
NSO Grant None
NSO Exercise - Optionee will generally recognize ordinary income to the extent the fair
market value of the stock on the exercise date exceeds the exercise price; such
amount will be subject to income tax withholding.
Sale or exchange of - Optionee will recognize long-term or short-term gain or loss, depending on
underlying shares whether the shares are held for more than 1 year from the date of option
exercise.
- Sybase takes a corresponding compensation deduction for all amounts taxed to
optionee at ordinary income rates.
</TABLE>
THESE TABLES ARE INTENDED TO SUMMARIZE THE EFFECTS OF CERTAIN U.S. TAX LAWS, AND
DO NOT REFLECT THE EFFECT OF TAX LAWS OF ANY STATE OR FOREIGN COUNTRY, OR TAX
CONSEQUENCES RELATING TO A PARTICIPANT'S DEATH. REFERENCE SHOULD BE MADE TO
RELEVANT SECTIONS OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.
-9-
<PAGE> 11
AMENDMENT OF
EMPLOYEE STOCK PURCHASE PLAN
In February 2000, the Board approved an amendment to increase by 2,000,000 the
total number of shares reserved for issuance under the Sybase, Inc. Amended and
Restated 1991 Employee Stock Purchase Plan and the Amended and Restated 1991
Foreign Subsidiary Employee Stock Purchase Plan (together, the "ESPP"). The two
plans within the ESPP mirror each other, and apply to U.S. or non-U.S. employees
depending where an employee legally resides.
The proposed amendment would increase the total number of shares reserved for
purchase under the ESPP to 11,800,000. The stockholders are being asked to
approve this amendment at the Annual Meeting.
The ESPP provides Sybase employees with the opportunity to buy the Company's
stock at a discount through voluntary payroll deductions. As of March 10, 2000,
approximately 31% (1,303) of the Company's total worldwide employees
participated in the plans. As of February 29, 2000, the Company had issued and
sold an aggregate of approximately 8,416,015 shares under the ESPP. As of that
date, approximately 1,383,985 shares remained available for purchase.
The Board believes increasing the number of reserved shares under the plan by
2,000,000 (about 2.2% of our issued and outstanding shares on March 10, 2000) is
critical in enabling Sybase to motivate high levels of performance through
increased employee stock ownership of the Company. Certain general provisions of
the ESPP are summarized below.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE AMENDMENT TO THE
ESPP.
SUMMARY OF THE ESPP
General. The ESPP is administered by the Board or a Board committee. Unless
limited by law, all regular employees including officers are eligible to
participate through voluntary payroll deductions ranging from 1% to 10% of
salary. Generally, no participant may purchase more than $25,000 worth of stock
per year (based on the stock's fair market value on the relevant enrollment
dates).
Enrollment Dates. The ESPP has two enrollment dates per year - one occurring on
the first trading day in March, and the other occurring on the first trading day
in September. A 10-day sign-up window precedes each enrollment date. During that
window, employees can enroll in the ESPP, change their payroll percentage
deductions and alter ESPP instructions to their brokers. Employees are
automatically re-enrolled in the ESPP on each enrollment date unless they
withdraw from the plan.
Purchase Periods. There are two consecutive 6-month purchase periods per year,
one starting on the last trading day of February, and the other starting on the
last trading day of August. Employees enrolled on a given enrollment date
participate in the purchase that occurs on the last trading day of the relevant
purchase period. For example, if an employee is an ESPP participant as of the
March enrollment date, the employee participates in the ESPP purchase that
occurs on the last trading day of the following August. If an employee is an
ESPP participant as of the September 1 enrollment date, he participates in the
purchase that occurs on the last trading day of the following February.
Purchase Price. For each ESPP purchase, the stock price is 85% of the lower of
(1) the stock's fair market value on the enrollment date, or (2) the stock's
fair market value on the last trading day of the six-month purchase period.
Using the above example, assume the stock price is $25 on the March 1 enrollment
date. If the stock price is $30 on August 31 (the last trading day of the
relevant purchase period), the employee's purchase price on that date is $21.25
(85% of the March 1 price).
A different pricing formula applies in years when the ESPP runs out of shares
prior to an annual meeting of stockholders at which additional shares are
approved for issuance under the plans. If the annual meeting date occurs after
an enrollment date has occurred, the ESPP stock price at the end of the
six-month purchase period is 85% of the lower of (i) the stock's fair market
value on the annual meeting date, or (ii) the stock's fair market value on the
last day of the purchase period. In 1999, the ESPP ran out of shares prior to
last year's annual meeting of stockholders held on May 27, 1999. On that date,
the stock price was $9.7812, and on August
-10-
<PAGE> 12
31, 1999 (the purchase date) the stock price as $12.50. Accordingly, the
applicable ESPP purchase price on August 31 was $8.314 (85% of the May 27, 1999
price).
Shares Purchased. The number of shares a participant purchases in each purchase
period is determined by dividing the total payroll deductions withheld during
that purchase period, by the purchase price per share (determined as described
above).
Withdrawal; Termination of Employment. A participant may withdraw at any time
without affecting his or her eligibility to re-enroll for future ESPP purchases.
Termination of employment for any reason immediately cancels a participant's
right to participate in the ESPP, even if the employee has enrolled to
participate in an upcoming purchase. In that event, payroll deductions credited
to the participant's account are returned.
Changes in Capitalization. Purchase price, number of shares subject to
outstanding participant rights, and shares reserved under the ESPP are
appropriately adjusted if a change in the Company's capitalization occurs during
a purchase period (e.g., due to a stock split or stock dividend).
Amendment and Termination of the Plan. The Board may amend or terminate the ESPP
at any time. However, certain amendments, including those that increase the
number of shares reserved under the plan, requires stockholder approval. Those
amendments will not become effective unless approved by a majority of the Votes
Present at a stockholder meeting held within 12 months after adoption by the
Board.
UNITED STATES TAX INFORMATION
The table is intended to summarize certain U.S. income tax consequences relating
to purchases and sales made under the ESPP.
<TABLE>
<CAPTION>
ESPP TAX CONSEQUENCES
- ---------------------- --------------------------------------------------------------------------------
<S> <C>
Enrollment in plan None
Share purchase None
Disposition of shares - Participant will generally recognize ordinary income measured as the lesser of
more than (A) 2 years (i) the excess of the fair market value of the shares upon disposition over the
after enrollment and purchase price, or (ii) 15% of the fair market value of the shares on the
(B) 1 year after share participant's enrollment date.
purchase
- Any gain or loss in excess of the ordinary income amount will be treated as
long-term or short-term capital gain or loss, depending on the actual holding
period.
Disposition before - Participant will recognize ordinary income on the difference between (i) the
either (A) or (B) fair market value of the shares on the disposition date, and (ii) the ESPP
holding period is purchase price.
satisfied
- Any gain or loss in excess of the ordinary income amount will be treated as
long-term or short-term capital gain or loss, depending on the actual holding
period.
- Sybase is entitled to a corresponding deduction for amounts taxed as ordinary
income, subject to certain regulatory limitations on deductibility.
</TABLE>
THIS TABLE IS INTENDED TO SUMMARIZE THE EFFECTS OF CERTAIN U.S. TAX LAWS, AND
DOES NOT REFLECT THE EFFECT OF TAX LAWS OF ANY STATE OR FOREIGN COUNTRY, OR TAX
CONSEQUENCES RELATING TO A PARTICIPANT'S DEATH. REFERENCE SHOULD BE MADE TO
RELEVANT SECTIONS OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.
-11-
<PAGE> 13
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board has selected Ernst & Young LLP, independent auditors, to audit the
financial statements of the Company for the year ending December 31, 2000, and
recommends that the stockholders ratify such selection. In the event of a
negative vote, the Board will reconsider its selection. Ernst & Young LLP (or
its predecessor) has audited the Company's annual financial statements since the
inception of the Company. Representatives of Ernst & Young LLP are expected to
be present at the Annual Meeting and will have the opportunity to make a
statement if they desire to do so. They are expected to be available to respond
to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS FOR FISCAL YEAR 2000.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
This table shows summary compensation information earned for the last three
fiscal years by the Chief Executive Officer, the four most highly compensated
executive officers (other than the CEO), and Mr. Gardner, who was an executive
officer until March 1999. These individuals are referred to as "Named Executive
Officers".
<TABLE>
<CAPTION>
Annual Long-Term
Compensation Compensation
----------------------------------------------- ----------------------
Awards Payouts
-------- -------
Number of All
Other Shares LTIP Other
Salary Bonus Annual Underlying Payouts Compensation
Name and Principal Position Year ($)(1) ($)(2) Compensation ($) Options (#) ($)(3) ($)
- --------------------------- ---- ------ ------ ---------------- ----------- ------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
John S. Chen 1999 660,000 636,000 51,073(4) 650,000 269,973 83,765(5)
Chairman of the Board, 1998 525,000 - 67,398(4) 1,000,000(7) - 500(5)
President and Chief 1997 208,333 104,167 30,816(4) 500,000 - 500(5)
Executive Officer
Richard N. LaBarbera 1999 299,999 376,181 - 110,000 90,000 27,376(6)
Senior Vice President & GM 1998 256,250 124,375(14) - 115,000(7) - 500(6)
Enterprise Solutions Division
Eric L. Miles 1999 275,000 46,068 25,000(8) 90,000 82,500 2,948(9)
Senior Vice President & GM 1998 275,000 50,000 - 140,000(7) - -
Business Intelligence 1997 15,689 - - - - -
Division
Raj Nathan 1999 270,000 70,544 95,000 81,000 19,706(10)
Senior Vice President & GM 1998 270,000 - - 105,000(7) - 500(12)
Internet Applications Division 1997 33,750 - - - - -
Pieter A. Van der Vorst 1999 257,667 133,830 - 60,000 36,720 8,846(11)
Vice President and Chief 1998 199,846 - - 63,500(7) - 500(12)
Financial Officer 1997 151,667 - - - - 500(12)
Michael S. Gardner 1999 99,800 - - - - 416,670(13)
(former) Senior Vice President, 1998 305,518 137,421 - 500,000(7) - -
Corporate Marketing
</TABLE>
- --------------
(1) Salary includes amounts earned in the year indicated and deferred
pursuant to the Company's 401(k) plan, or pursuant to the Executive
Deferred Compensation Plan.
-12-
<PAGE> 14
(2) Bonuses for each year include amounts earned for that year, regardless
of when paid. Bonuses paid during the year are excluded if they were
earned for and reported in a prior year.
(3) See "Long-Term Incentive Plans - Awards in Last Fiscal Year", below.
(4) Includes the following amounts for the fiscal years noted:
<TABLE>
<CAPTION>
Equalization
payments for Reimbursement
forfeited 401(k) of Supplemental Tax Return
Automobile contributions from Insurance Premiums Preparation
Year allowance ($) prior employer ($) ($) Fee ($)
---------- ------------- ------------------- ------------------ ------------------
<S> <C> <C> <C> <C>
1999 18,000 8,056 19,285 5,732
1998 18,000 9,009 30,923 9,466
1997 7,500 - 23,316 -
</TABLE>
(5) Includes the following amounts for the fiscal years noted:
<TABLE>
<CAPTION>
Amount
Sybase 401(k) Earned on
Contribution LTIP Payout
Year ($) ($)
---------- -----------------------------------
<S> <C> <C>
1999 1,000 82,765
1998 500 -
1997 500 -
</TABLE>
(6) Includes the following amounts for the fiscal years noted:
<TABLE>
<CAPTION>
Sybase Amount earned on
Year 401(k) Contribution ($) LTIP Payout ($)
------------- ----------------------- ----------------
<S> <C> <C>
1999 1,000 26,376
1998 500 -
</TABLE>
(7) Includes the following repriced options granted in July 1998 in exchange
for cancellation of an equal number of options granted prior to that
time.
<TABLE>
<CAPTION>
Repriced Repriced
Options Options
--------- ---------
<S> <C> <C> <C> <C>
Mr. Chen 750,000 Mr. Nathan 105,000
Mr. LaBarbera 50,000 Mr. Van der Vorst 63,500
Mr. Miles 140,000 Mr. Gardner 250,000
</TABLE>
(8) Reflects $25,000 loan forgiveness (see "Employment Agreements and
Certain Transactions", below).
(9) Earned in 1999 on LTIP payout.
(10) Reflects $1,000 Sybase 401(k) plan contribution, and $18,706 earned on
LTIP payout.
(11) Reflects $1,000 Sybase 401(k) plan contribution, and $7,846 earned on
LTIP payout.
(12) Reflects amount of Sybase 401(k) plan contribution for the fiscal years
indicated.
(13) Amount reflects $415,670 paid pursuant to a Severance Agreement and
General Release between Mr. Gardner and the Company dated March 26,
1999 and $1,000 Sybase 401(k) contribution.
(14) This amount corrects and replaces the amount of $115,313 previously
reported.
-13-
<PAGE> 15
OPTION GRANTS IN LAST FISCAL YEAR
This table shows stock options granted to the Named Executive Officers in 1999.
The table also shows the potential realizable value of those stock options,
assuming 5% and 10% annual rates of stock appreciation over the life of the
options.
<TABLE>
<CAPTION>
Potential Realizable Value
At Assumed Annual Rates
of Stock Price Appreciation For
Individual Grants (1) Option Term ($)(2)
- ----------------------------------------------------------------------------- ----------------------------------
Number of % of Total
Shares Options
Underlying Granted to Exercise
Options Employees Price Per Expiration
Name Granted (#) in 1999 Share ($) Date 5% 10%
- ----------------------- ------------ ------------- ----------- ----------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
John S. Chen 350,000 5.08 $ 9.4375 2/3/09 $ 2,077,318 $5,264,331
300,000 4.35 $ 10.8125 8/11/09 $ 2,039,977 $5,169,702
Richard N. LaBarbera 60,000 0.87 $ 9.4375 2/3/09 $ 356,112 $ 902,457
50,000 0.73 $ 10.8125 8/11/09 $ 339,996 $ 861,617
Eric L. Miles 20,000 0.29 $ 9.4375 2/3/09 $ 118,704 $ 300,819
70,000 1.02 $ 10.8125 8/11/09 $ 475,995 $1,206,263
Raj Nathan 35,000 0.51 $ 9.4375 2/3/09 $ 207,732 $ 526,433
60,000 0.87 $ 10.8125 8/11/09 $ 407,995 $1,033,940
Pieter A. Van der 60,000 0.87 $ 10.8125 8/11/09 $ 407,995 $1,033,940
Vorst
Michael S. Gardner 0 - - - - -
</TABLE>
- -------------
(1) All options in the table have exercise prices equal to the fair market
value of the Company's Common Stock on the date of grant, and have a
10-year term.
(2) The 5% and 10% rates of appreciation are specified by the rules of the
Securities and Exchange Commission and do not represent the Company's
estimates or projections of its future stock prices.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
This table shows stock option exercises by the Named Executive Officers during
1999, and the number and value of unexercised "in-the-money" options held by
them at the end of 1999. "In-the-money" means the option exercise price is
exceeded by the fair market value of the stock.
<TABLE>
<CAPTION>
Number of Value of Unexercised
Shares Underlying In-the-Money
Shares Aggregate Unexercised Options at Options at
Acquired Value Fiscal Year-End(#) Fiscal Year-End ($)(2)
on Realized ----------------------------- ---------------------------------
Name Exercise (#) ($)(1) Exercisable Unexercisable Exercisable Unexercisable
- ------------ ------------ ------------- ------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
John S. Chen 80,000 $ 824,375.00 399,165 920,835 $3,854,698 $7,432,177
Richard N. 0 0 40,937 134,063 $ 383,335 $1,040,728
LaBarbera
Eric L. Miles 30,000 $ 340,000.00 43,542 156,458 $ 430,185 $1,267,940
Raj Nathan 0 0 69,582 130,418 $ 685,835 $1,013,228
Pieter A Van der Vorst 19,000 $ 119,517.43 48,018 140,482 $ 487,827 $1,196,818
Michael S. Gardner 0 0 - - - -
</TABLE>
-14-
<PAGE> 16
- -------------
(1) Amount by which the fair market value of the stock exceeds the option
exercise price on the exercise date.
(2) Based on fair market value of underlying securities on December 31,
1999 ($17.00 per share), minus the exercise price of in-the-money
options.
LONG-TERM INCENTIVE PLANS (LTIP) - AWARDS IN LAST FISCAL YEAR
In May 1998, the Board approved a Key Management Incentive Program (KMIP) under
which retention bonuses were paid to key executives and non-executive employees.
The bonus amount was equal to a percentage of each participant's then-current
base salary. These percentages ranged from 20% for director-level employees to
82% for certain executives. See "Section (b)(ii), Board Compensation Committee
Report on Executive Compensation", below.
Under KMIP, 60% of the bonus amount vested and was paid as of March 31, 1999,
provided the individual was actively employed by Sybase on that date. The
remaining 40% was vested and paid of March 31, 2000 if the employee was actively
employed on that date. No unvested amounts became vested or were paid if a
participant voluntarily resigned or was terminated for cause. Only employees
actively employed at the start of the plan were eligible to participate.
All amounts earned by the Named Executive Officers and other employees
eligible to participate in the Executive Deferred Compensation Plan were
contributed by Sybase to that plan, and invested as instructed by each
participant within the limits of the plan. For additional information regarding
KMIP, see "Section (b)(ii) - Board Compensation Committee Report on Executive
Compensation," below. The following table shows information regarding KMIP
participation by the Named Executive Officers.
<TABLE>
<CAPTION>
Estimated Future
Payouts Under
Non-Stock
Price-Based Plans
------------------------------------------------------------------
Performance or
Other Period
Until Bonus Amount 60% 40% Target and 100%
Maturation or as % of Base Threshold Threshold Maximum
Name Payout (1) Salary (%) ($)(2) ($)(3) Payout ($)
- --------------------- ----------------- --------------- ------------- ---------- -------------------
<S> <C> <C> <C> <C> <C>
John S. Chen 3/31/00 82% $ 269,973 $179,982 449,955
Richard N. LaBarbera 3/31/00 50% $ 90,000 $ 60,000 150,000
Eric L. Miles 3/31/00 50% $ 82,500 $ 55,000 137,500
Raj Nathan 3/31/00 50% $ 81,000 $ 54,000 135,000
Pieter A Van der Vorst 3/31/00 30% $ 36,720 $ 24,480 61,200
Michael S. Gardner - - - - -
</TABLE>
- ----------------
(1) Date final portion of target was paid.
(2) Amount represents 60% of target paid on March 31, 1999.
(3) Amount represents 40% of target paid on March 31, 2000.
1999 EMPLOYEE STOCK PURCHASE PLAN ACTIVITY
The following table presents certain information regarding ESPP shares
purchased during 1999 by the Named Executive Officers, all current executive
officers as a group and all other employees as a group:
-15-
<PAGE> 17
<TABLE>
<CAPTION>
Value on date(s) Number of
of purchase ($)(1) Shares Purchased (#)
------------------- --------------------
<S> <C> <C>
John S. Chen $ 28,535(2) 3,512
Chairman of the Board, President and $ 2,488(3) 199
Chief Executive Officer
Richard N. LaBarbera $ 26,674(2) 3,283
Senior Vice President and General Manager, $ 4,400(3) 352
Enterprise Solutions Division
Eric L. Miles 0 0
Senior Vice President and General Manager,
Business Intelligence Division
Raj Nathan $ 18,127(2) 2,231
Senior Vice President and General Manager, $ 19,988(3) 1,599
Internet Applications Division
Pieter A. Van der Vorst $ 14,641(2) 1,802
Vice President and Chief Financial Officer
Michael S. Gardner 0 0
(former) Senior Vice President, Corporate Marketing
All current executive officers as a group (10 persons) $ 128,050(2) 15,760
$ 49,388(3) 3,951
All other employees as a group $6,327,222(2) 778,735
$6,072,550(3) 485,804
</TABLE>
- ----------------
(1) The purchase price paid by each participant in the ESPP was at least
15% below the fair market value of the stock on the purchase date. See
"Summary of the ESPP - Purchase Price", above.
(2) Fair market value as of February 26, 1999 purchase date ($8.125 per
share).
(3) Fair market value as of August 31, 1999 purchase date ($12.50 per
share).
-16-
<PAGE> 18
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Compensation Committee Report. The Compensation Committee believes the Company's
executive compensation programs should enable the Company to attract and retain
strong performers. These programs are designed to motivate the senior management
team to achieve or exceed key objectives by making individual compensation
directly dependent on the Company's achievement of financial goals and by
providing significant rewards for exceeding those goals. The Committee believes
that strong financial performance, on a sustained basis, is the surest way for
the Company to positively affect long-term stockholder return.
Compensation Program Considerations. The Company takes the following factors
into consideration in designing various executive compensation programs:
(a) Compensation positioning and comparative framework.
In order to attract and retain the talent that it needs to meet
corporate objectives, the Company's executive compensation programs are designed
to deliver overall cash compensation and employee benefits competitive with
comparable technology companies if corporate objectives are achieved and, if
objectives are exceeded, to deliver compensation that is in some cases above
market. Bonuses are tied closely to corporate performance, such that actual
awards vary considerably according to overall Company performance.
The Company uses market compensation information obtained through
technology company surveys, customized surveys, and consulting arrangements to
establish appropriate compensation levels at target, exceptional, or below
target performance. In particular, with respect to 1999 compensation, the
Company used information obtained in a survey of 13 publicly-traded software
companies located primarily in Northern California. The companies in this
survey were selected based on the similarity of technology, annual sales, and
geographic location, and included Sybase's three principal competitors. This
compensation information is also used to evaluate relative market position and
to assist in designing programs that reward executives according to job function
and actual performance.
(b) Mix of compensation.
The Company's executive compensation program has three primary
components. All three are intended to attract and retain outstanding executives
and focus management on achieving or exceeding Company objectives.
(i) Base Salary and Basic Benefits. The Committee believes that
executive salaries and the basic employee benefit package must be sufficiently
competitive to attract and retain key executives. Base pay and annual increases
are determined primarily through an analysis of (A) an individual's salary and
total target compensation relative to salaries for similar positions within the
Company and at other companies, and (B) to a lesser extent, through a subjective
analysis of the individual contributions to the Company's success. Based on this
analysis, the Committee increased the 1999 base salaries of six of the 11
individuals who had been employed by Sybase during 1998. Executive officers
are eligible for participation in the standard health plans, 401(k) savings
plan and employee stock purchase plans offered to Company employees generally.
The Chairman of the Board, Chief Executive Officer, President, all Vice
Presidents and all director-level employees are eligible to defer portions of
their compensation under an Executive Deferred Compensation Plan, subject to
certain conditions.
(ii) Annual, Quarterly and Special Bonuses. The Committee believes one
of the key differentiators of executive compensation should be the variable
portion provided by short-term cash incentive programs. The Company's executive
bonus plan is designed to award bonuses above a target amount if the Company
performs significantly above its stated objectives. If the Company performs
below these objectives, awards may be significantly reduced or even eliminated
if performance falls below defined thresholds. In February 1999, the Committee
established a target incentive bonus amount for each executive. The target
amount varied by individual and ranged between 25% and 80.3% of each executive's
base salary. It also assumed 100% achievement of corporate operating profit
margin objectives. No amounts would be paid unless the Company achieved
specified minimum operating margins. A bonus of up to an additional 100% of
target would be paid based on the degree to which the Company's actual total
revenues for 1999 exceeded 100% of its revenue target.
In May 1998, in response to the Company's first quarter operating
results, the Compensation Committee approved a Key Management Incentive Program
(KMIP) for nearly all of the Company's employees of director level or higher,
including all executive officers. Under the terms of KMIP, a target bonus amount
was designated for each eligible employee, and was expressed as a percentage of
annual base salary: 20% for directors, 30% for vice presidents and up to 82% for
executive officers. Under KMIP, 60% of the target bonus would vest and be paid
on March 31, 1999 and 40% of the target would vest and be paid on March 31,
2000, provided the individual was an active employee on each vesting date. In
the event of a change of control or an involuntary termination for reasons other
than cause, the vesting would be accelerated to the date of such event. If an
eligible employee voluntarily terminated or was terminated for cause, no
unvested amounts would become vested. Amounts paid under KMIP to U.S. employees
would be paid as voluntary employer contributions
-17-
<PAGE> 19
under the Company's Executive Deferred Compensation Plan.
In addition, the Compensation Committee has the right to approve
discretionary executive awards proposed by the President or a member of the
Compensation Committee. Such discretionary awards are based on a subjective
evaluation of an executive officer's contribution to the Company's success and
are not based on predetermined measures of corporate performance or achievement
of specified corporate objectives. No person serving as an executive officer in
1999 received a discretionary bonus for 1999.
(iii) Long-term Incentives. These are provided through initial stock
option grants at date of hire and periodic additional stock option grants.
Executives realize gains only if the stock price increases over the exercise
price of their options, and they exercise their options. Stock options generally
vest over a four-year period and the Committee believes they are instrumental in
focusing executives on sustaining strong financial performance over a number of
years. The initial option grant is designed to be competitive with those of
comparable technology companies for the executive's job level, and to motivate
the executive to make the kinds of decisions and implement strategies and
programs that will contribute to an increase in the Company's stock price over
time. Periodic additional stock options within a competitive range for the job
are granted to reflect the executive's ongoing contributions to the Company's
success, to create an incentive to remain with the Company, and to provide a
long-term incentive to achieve or exceed the Company's financial goals. In
determining the amount of periodic additional grants, if any, for an individual,
the Committee considers such factors as (A) options previously granted, (B)
options outstanding, (C) the vesting schedule of the outstanding options, (D)
the aggregate amount of outstanding options and new awards, and (E) the relative
quantities of options offered by other companies for comparable positions.
Special additional stock options are granted from time to time to executive
officers in connection with promotions, changes in responsibilities or other
factors. For example, as part of the Company's retention efforts in 1999, the
Board approved a one-time special grant of stock options to executive officers
and other key employees. The options granted vest 100%, if at all, two years
from the date of grant.
(c) Other compensation considerations.
Because the Company believes that its benefits programs in general
should be similar for all employees, perquisites are not ordinarily used to
compensate executives. Pursuant to his employment agreement, the Company agreed
to provide Mr. Chen with benefits comparable to the benefits he received from
his prior employer. Accordingly, during 1999, Mr. Chen received an automobile
allowance, additional Company contributions to his 401(k) account, reimbursement
of certain supplemental insurance and health benefits, and reimbursement for tax
return preparation fees.
1999 Compensation for the Chief Executive Officer. In February 1999, the
Compensation Committee established the base salary and target total compensation
for Mr. Chen at a level approximately equal to the average base salary and
average total compensation for the chief executive officers of comparable
technology companies. The total compensation of the Chief Executive Officer is
designed to compensate him at market levels when operating income targets are
met, and above market levels when operating income targets are exceeded. In the
case of Mr. Chen, the full Board of Directors approved the Compensation
Committee's recommendation with respect to Mr. Chen's 1999 total base salary
plus target incentive. The incentive portion of Mr. Chen's compensation
comprised 44.54% of the total. Up to 50% of this portion was dependent on the
achievement of corporate operating profit margin objectives, and up to 50% was
dependent on achievement of prescribed revenue objectives. No amounts would be
paid unless the Company achieved certain minimum revenue and pretax profit
levels. A bonus of up to an additional 100% of target would be paid based on the
degree to which the Company's actual total 1999 revenues and pre-tax profits
exceeded 100% of target. In 1999, the corporate objectives were achieved, and
accordingly, Mr. Chen received a bonus for the year.
The Compensation Committee held five meetings in 1999. At several of the
meetings, the Chief Executive Officer made recommendations to the Compensation
Committee with respect to compensation for other executive officers and with
respect to the structure and terms of the executive incentive programs. However,
the Chief Executive Officer did not participate in the portions of the meetings
during which his specific compensation and awards were deliberated.
Compensation Limitations. Under Section 162(m) of the Internal Revenue
Code, adopted in August 1993, and regulations adopted thereunder by the Internal
Revenue Service, publicly-held companies may be precluded from deducting certain
compensation paid to certain executive officers in excess of $1.0 million in a
year. The regulations exclude from this limit performance-based compensation and
stock options provided certain requirements, such as stockholder approval, are
satisfied. The Company believes that its 1996 Stock Plan qualifies for the
exclusions. The Company does not currently anticipate taking actions necessary
to qualify the Company's executive annual cash bonus plans for the exclusions.
Report Submitted by:
Richard C. Alberding (Chairman)
L. William Krause
-18-
<PAGE> 20
EMPLOYMENT AGREEMENTS AND CERTAIN TRANSACTIONS
JOHN S. CHEN. In July 1997, the Company entered into an employment agreement
with Mr. Chen pursuant to which he became President and Chief Operating Officer
and a director. The agreement provided for an initial annual base salary of
$500,000, target incentive compensation equal to 50% of base salary, grant of a
stock option to purchase 500,000 shares and employee benefits comparable to
those he received from his prior employer. If his employment terminates under
certain circumstances after April 1, 1999, Mr. Chen's agreement provides for a
severance payment equal to 100% of base pay and continuation of employee
benefits for a period of one year.
ERIC L. MILES. In December 1997, Mr. Miles joined Sybase as Senior Vice
President, Product Operations. Mr. Miles' prior employer had extended to him a
loan of $100,000 that became due in connection with his leaving that company to
join Sybase. In connection with his commencement of employment, the Company made
an unsecured loan to Mr. Miles in January 1998 of $100,000 bearing interest at a
rate of 7% per annum, and having terms comparable to those of the loan
previously extended by his prior employer. The maximum amount of indebtedness
outstanding under this loan in 1999 was $87,740. As long as Mr. Miles remains an
employee of Sybase, $25,000 of the indebtedness will be forgiven on each
anniversary of the loan. As of March 31, 2000, $63,472 in total indebtedness was
outstanding under the loan. The loan becomes immediately due and payable in the
event Mr. Miles' employment is terminated for any reason.
RICHARD N. LABARBERA. In December 1997, Mr. LaBarbera joined Sybase as Senior
Vice President, Customer Service and Support. Mr. LaBarbera's prior employer had
extended to him a loan of $200,000 that became due in connection with his
leaving that company to join Sybase. In connection with his commencement of
employment, the Company made an unsecured loan of $200,000 to Mr. LaBarbera in
December 1997 bearing interest at a rate of 6% per annum, due March 1, 2001, and
having terms comparable to those of the loan previously extended by his prior
employer. The maximum amount of indebtedness outstanding under this loan in 1999
was $222,000. Under the terms of the loan, interest will be forgiven and the
note will become interest-free if Mr. LaBarbera serves as an employee of Sybase
for three years or if he is terminated by the Company without cause prior to the
end of such three years. If Mr. LaBarbera voluntarily leaves the Company or is
terminated for cause, the loan becomes immediately due and payable. As of March
31, 2000, $224,000 in total indebtedness was outstanding under the loan.
MICHAEL S. GARDNER. On March 26, 1999, Mr. Gardner entered into a Severance
Agreement and General Release with the Company pursuant to which he was paid a
lump sum severance benefit of $415,670 in accordance with the terms of his
offer letter dated February 12, 1998.
EXECUTIVE CHANGE OF CONTROL AGREEMENTS. The Company has entered into statements
of employment terms with the Company's current Chief Executive Officer, Chief
Financial Officer and General Counsel providing for severance payments equal to
two times annual base salary and up to one year's target incentive compensation
and acceleration of exercisability of 100% of each officer's then unvested
options in the event of a change of control of the Company. The Company has
entered into similar statements of employment terms with all current executive
officers that provide for similar benefits in the event that the officer's
employment is terminated upon or following a change of control.
PERFORMANCE GRAPH
This graph and table compare the cumulative total return on a $100 investment in
our Common Stock with the cumulative total return on a $100 investment (assuming
reinvestment of all dividends) in the Standard & Poor's 500 Stock Index, and the
Chase Hambrecht & Quist Technology Index.
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<PAGE> 21
[GRAPH]
<TABLE>
<CAPTION>
12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Sybase, Inc. $100 $ 69 $ 32 $ 26 $ 14 $ 33
S&P 500(R) $100 $136 $169 $226 $290 $351
Chase H&Q Technology Index $100 $149 $185 $216 $336 $749
</TABLE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act requires our Section 16 officers
and directors, and holders of more than 10% of any class of our equity
securities, to file an initial report of securities ownership on Form 3 and
reports of changes in securities ownership on Form 4 or 5 with the SEC. These
individuals are also required to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on our review of such forms we received, or written notice from
certain reporting persons that no Forms 4 or 5 were required, the Company
believes that all required Section 16(a) filings were made on a timely basis in
1999, except as follows: a Form 5 was filed in February 2000 for Pamela
George to correct an administrative error in her April 1999 Form 3 filing; a
Form 5 was filed in February 2000, and an amended Form 3 will be filed shortly,
for Daniel Carl to correct administrative errors reported in two prior filings;
a Form 4 was filed approximately 2 months late for Nita C. White-Ivy in 1999 to
reflect an earlier sale of ESPP shares.
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<PAGE> 22
OTHER MATTERS
COST OF PROXY SOLICITATION
We will pay the cost of soliciting stockholder proxies. We have retained
Georgeson Shareholder Communications Inc. to assist us in this process for an
estimated $7,000 plus expenses. We may also reimburse brokers and others for
their expenses in forwarding solicitation materials to beneficial owners. No
additional amounts will be paid for any proxies solicited by any of our
directors, officers or employees.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS FOR THE 2001 ANNUAL MEETING
If you want us to consider a proposal for possible inclusion in our Proxy
Statement for our 2001 Annual Meeting of Stockholders, you must deliver your
proposal to Sybase's Secretary at our principal executive offices located at
6475 Christie Ave., Emeryville, California 94608 no later than December 18,
2000. Any such proposal must comply with Securities and Exchange Commission
regulations regarding the inclusion of shareholder proposals in
company-sponsored proxy materials.
If you intend to present a proposal at the 2001 Annual Meeting, but you do not
intend to have it included in our 2001 Proxy Statement, then you must deliver a
copy of your proposal to Sybase's Secretary at our principal executive offices
in accordance with the following procedures:
We must receive your notice not less than 90 days prior to the 2001 Annual
Meeting (unless there is less than 100 days' notice of the meeting date, in
which case notice must be received no later than the tenth day following the day
on which such notice is first given or disclosed). Also, your notice must state
all of the following as to each matter, or the presiding officer may properly
refuse to acknowledge your proposal:
- your name and address, and the nature of the matter
- that you are a stockholder of record and are entitled to vote at
the meeting
- the name and address of your nominee, if any
- whether you will appear in person or by proxy to make the
nomination
- a description of all arrangements between you and the nominee
regarding the nomination
- all other information that would be required in a proxy
statement
The Board of Directors does not know of any other matters to be brought before
this Annual Meeting. However, if any other matters properly come before the
Annual Meeting, the proxy holders named in the enclosed proxy card intend to
vote in accordance with their best judgment on such matters.
THE BOARD OF DIRECTORS
Dated: April 14, 2000
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<PAGE> 23
MAP TO THE OFFICES OF THE COMPANY
-22-
<PAGE> 24
FORM OF PROXY
PROXY
SYBASE, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS ON MAY 25, 2000
The undersigned acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement dated on or about April 14, 2000, and hereby
appoints JOHN S. CHEN, PIETER A. VAN DER VORST and TERESA D. CHUH, or either of
them, with full power of substitution, attorneys and proxy holders to vote, as
indicated on the reverse side, all shares of Common Stock of SYBASE, INC., a
Delaware Corporation (the "Company"), which the undersigned is entitled to vote
at the Annual Meeting of Stockholders to be held on May 25, 2000 at 10:00 a.m.
local time, at the offices of the Company, located at 1650 - 65th Street,
Emeryville, California 94608, and at any adjournment or adjournments thereof,
and to vote all shares of Common Stock which the undersigned would be entitled
to vote, if personally present at such meeting, on the matters set forth on the
reverse side.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
__________________
/ SEE REVERSE /
/ SIDE /
/_________________/
<PAGE> 25
[INSERT TRANSFER AGENT'S INSTRUCTIONS REGARDING
TELEPHONE AND INTERNET VOTING]
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" ALL PROPOSALS
/X/ Please mark
votes as in
this example
IF NOT OTHERWISE DIRECTED, THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF ALL
NOMINEES AND "FOR" THE APPROVAL OF PROPOSALS 2, 3 AND 4 BELOW, AND IN THE
DISCRETION OF THE PROXY HOLDERS ON ALL OTHER MATTERS THAT PROPERLY COME BEFORE
THE MEETING.
1. Election of Class II Directors
NOMINEES: Richard C. Alberding and
Linda K. Yates
FOR WITHHELD
ALL FROM ALL
NOMINEES NOMINEES
[ ] [ ]
MARK HERE ______
FOR ADDRESS / /
CHANGE AND / /
[____] __________________________________ NOTE BELOW /______/
"FOR"all nominees except as noted above
<TABLE>
<S> <C> <C> <C>
2. Amendment to the 1996 Stock Plan to increase For Against Abstain
the total number of shares of Common Stock / / / / / /
reserved thereunder by 3,000,000 shares /_____/ /_____/ /_____/
3. Amendments to the Amended and Restated
1991 Employee Stock Purchase Plan and
Amended and Restated 1991 Foreign Subsidiary For Against Abstain
Employee Stock Purchase Plan to increase / / / / / /
the total number of shares of Common Stock /_____/ /_____/ /_____/
reserved thereunder by 2,000,000 shares.
4. Ratification of Ernst & Young LLP For Against Abstain
as independent accountants for fiscal / / / / / /
year 2000. /_____/ /_____/ /_____/
5. In their discretion, the proxy holders are authorized to vote upon such
other matters that may properly come before the meeting or any adjournment
or adjournments thereof.
</TABLE>
(Please mark, date, and sign exactly as the stockholder(s') name(s) appear(s)
hereon, and return 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 owners should sign.)
Signature:_____________Date:___________Signature:_______________Date:___________
