<PAGE>
SCHEDULE 14(A) INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant [X]
Filed by a party other than the registrant [_]
Check the appropriate box:
[X] Preliminary proxy statement
[_] Definitive proxy statement
[_] Definitive additional materials
[_] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Oracle Corporation
-----------------------------------------------------
(Name of Registrant as Specified in its Charter)
Oracle Corporation
-----------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
---------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------
[_] 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>
[ORACLE LOGO GOES HERE]
500 Oracle Parkway
Redwood City, California 94065
September 11, 1996
To our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders of
Oracle Corporation (the "Company"). The Annual Meeting will be held on Monday,
October 14, 1996, at 1:30 p.m., in the Grand Ballroom of the Hotel Sofitel,
located at 223 Twin Dolphin Drive, Redwood City, California.
The actions expected to be taken at the Annual Meeting are described in
detail in the attached Proxy Statement and Notice of Annual Meeting of
Stockholders.
Included with the Proxy Statement is a copy of the Company's Annual Report
on Form 10-K for fiscal year 1996. We encourage you to read the Form 10-K. It
includes information on the Company's operations, markets, products and
services, as well as the Company's audited financial statements.
Please use this opportunity to take part in the affairs of the Company by
voting on the business to come before this meeting. WHETHER OR NOT YOU PLAN TO
ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING
PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE. Returning the proxy does NOT
deprive you of your right to attend the meeting and to vote your shares in
person for the matters acted upon at the meeting.
We look forward to seeing you at the Annual Meeting.
Sincerely,
/s/ Lawrence J. Ellison
-------------------------------------
LAWRENCE J. ELLISON
Chairman of the Board and Chief
Executive Officer
<PAGE>
[ORACLE LOGO GOES HERE]
500 ORACLE PARKWAY
REDWOOD CITY, CALIFORNIA 94065
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To our Stockholders:
The Annual Meeting of Stockholders of the Company will be held on Monday,
October 14, 1996, at 1:30 p.m., in the Grand Ballroom of the Hotel Sofitel,
located at 223 Twin Dolphin Drive, Redwood City, California, for the following
purposes:
1. To elect a Board of Directors to serve for the ensuing year.
2. To approve the adoption of the Company's Executive Officers 1997 Bonus
Plan.
3. To approve an amendment to the Company's Certificate of Incorporation
increasing the number of authorized shares of the Company's Common Stock from
1,000,000,000 to 2,000,000,000 shares.
4. To approve an amendment to the Company's 1993 Directors' Stock Option
Plan, among other things, increasing certain option grants to non-employee
directors.
5. To approve an amendment to the Company's 1991 Long-Term Equity Incentive
Plan increasing the number of shares of the Company's Common Stock reserved
for issuance thereunder by 34,000,000 shares.
6. To approve an amendment to the Company's Employee Stock Purchase Plan
(1992) increasing the number of shares of the Company's Common Stock reserved
for issuance thereunder by 7,000,000 shares.
7. To ratify the appointment of Arthur Andersen LLP as independent public
accountants for the Company for the current fiscal year.
8. To transact any other business that may properly come before the meeting.
Stockholders of record at the close of business on August 30, 1996 will be
entitled to notice of and to vote at the Annual Meeting and at any
continuation or adjournment thereof.
By Order of the Board of Directors,
/s/ Raymond L. Ocampo Jr.
_____________________________________
RAYMOND L. OCAMPO JR.
Senior Vice President, General
Counsel & Corporate Secretary
Redwood City, California
September 11, 1996
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE
AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
<PAGE>
PROXY STATEMENT
SEPTEMBER 11, 1996
The accompanying proxy is solicited on behalf of the Board of Directors (the
"Board") of Oracle Corporation, a Delaware corporation (the "Company"), for
use at the Annual Meeting of Stockholders of the Company (the "Annual
Meeting"). The Annual Meeting will be held on October 14, 1996, at 1:30 p.m.,
in the Grand Ballroom of the Hotel Sofitel, located at 223 Twin Dolphin Drive,
Redwood City, California. All holders of record of Common Stock, par value
$0.01 per share (the "Common Stock"), on August 30, 1996, the record date,
will be entitled to vote at the Annual Meeting. At the close of business on
the record date, the Company had [657,512,126] shares of Common Stock
outstanding and entitled to vote. A majority, [328,756,064], of these shares
of Common Stock will constitute a quorum for the transaction of business at
the Annual Meeting. This Proxy Statement, the accompanying proxy, and the
Company's Annual Report on Form 10-K were first mailed to stockholders on or
about September 11, 1996. The Company's Annual Report on Form 10-K contains
the information required by Rule 14a-3 of the Rules of the Securities and
Exchange Commission (the "SEC").
VOTING RIGHTS AND SOLICITATION OF PROXIES
Stockholders are entitled to one vote for each share of Common Stock held.
Shares of Common Stock may not be voted cumulatively.
Any person signing a proxy in the form accompanying this Proxy Statement has
the power to revoke it either before the meeting at which the matter voted by
proxy is acted upon or at the meeting before the vote on the matter. A proxy
may be revoked by a later proxy that is signed by the person who signed the
earlier proxy and presented at the meeting or by attendance at the meeting and
voting in person.
The expense of printing and mailing proxy material will be borne by the
Company. In addition to the solicitation of proxies by mail, solicitation may
be made by certain directors, officers, and other employees of the Company by
personal interview, telephone, or facsimile. No additional compensation will
be paid for such solicitation. The Company also has retained Corporate
Investor Communications, Inc. ("CIC") to assist in the solicitation of
proxies. CIC will receive a fee for such services of approximately $11,500
plus out-of-pocket expenses, which will be paid by the Company. The Company
will request brokers and nominees who hold shares of Common Stock in their
names to furnish proxy material to beneficial owners of the shares and will
reimburse such brokers and nominees for their reasonable expenses incurred in
forwarding solicitation materials to such beneficial owners.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
At the Annual Meeting, the stockholders will elect directors to hold office
until the next annual meeting of stockholders and until successors have been
duly elected and qualified or until any such director's earlier resignation or
removal. Shares represented by the accompanying proxy will be voted for the
election of the six nominees recommended by the Board of Directors, unless the
proxy is marked in such a manner as to withhold authority to vote or as to
vote for one or more alternate candidates. If any nominee for any reason is
unable to serve or will not serve, the proxies may be voted for such
substitute nominee as the proxyholder may determine. The Company is not aware
of any nominee who will be unable to or for good cause will not serve as a
director.
Jack F. Kemp has indicated that he intends to resign from the Board of
Directors in September 1996. James A. Abrahamson has indicated that he will
resign from the Board of Directors effective October 14, 1996. The Company
anticipates that at the Board Meeting prior to the Annual Meeting, the Board
will be reduced from eight to six members. As a result, the Company expects
that the six nominees recommended by the Board of Directors should fill all
available positions on the Board of Directors.
1
<PAGE>
DIRECTORS
The following incumbent directors are being nominated for re-election to the
Board: Lawrence J. Ellison, Donald L. Lucas, Delbert W. Yocam, Michael J.
Boskin, Raymond J. Lane and Jeffrey O. Henley.
REQUIRED VOTE
Directors are elected by a plurality of votes cast. Votes withheld and
broker non-votes are not counted toward a nominee's total.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR THE ELECTION OF EACH OF THE NOMINATED DIRECTORS.
MR. ELLISON, 52, has been Chief Executive Officer and a director of the
Company since he co-founded the Company in May 1977, and was President of the
Company until June 1996. Mr. Ellison has been Chairman of the Board since June
1995 and was Chairman of the Board from April 1990 until September 1992. He
has been a member of the Executive Committee since 1986. Mr. Ellison is also a
director of NeXT Computer, Inc., is Co-Chairman of California's Council on
Information Technology and is a member of President Clinton's Export Council.
MR. LUCAS, 66, has been a director of the Company since March 1980. He has
been Chairman of the Executive Committee since 1986 and Chairman of the
Finance and Audit Committee since 1987. Mr. Lucas has been a member of the
Compensation Committee since 1989. He was Chairman of the Board from October
1980 through March 1990. He has been a venture capitalist since 1960. He is
also a director of Cadence Design Systems, Inc., Amati Communications
Corporation, Macromedia, Inc., Racotek, Inc., Transcend Services, Inc. and
Tricord Systems, Incorporated.
MR. YOCAM, 52, has been a director of the Company and has been a member of
the Finance and Audit Committee since March 1992. He has been a member of the
Compensation Committee since May 1993. Mr. Yocam has been an independent
consultant from November 1994 to the present. Mr. Yocam was President, Chief
Operating Officer and a director of Tektronix, Inc. from September 1992 until
November 1994. He was an independent consultant from November 1989 until
September 1992. Mr. Yocam was with Apple Computer, Inc. from November 1979
through November 1989, serving in a variety of executive management positions
including Chief Operating Officer from August 1986 to August 1988 and
President of Apple Pacific, Inc., a subsidiary of Apple Computer, Inc., from
August 1988 to November 1989. Mr. Yocam is also a director of Adobe Systems
Incorporated, Castelle, Inc., Integrated Measurement Systems, Inc. and Sapiens
International Corp.
DR. BOSKIN, 50, has been a director of the Company since May 1994. He has
been a member of the Finance and Audit Committee since July 1994 and a member
of the Compensation Committee since July 1995. Dr. Boskin has been a professor
of economics at Stanford University since 1971 and principal of Boskin & Co.,
a consulting firm, since 1980. He was Chairman of the President's Council of
Economic Advisers from February 1989 until January 1993. Dr. Boskin is also a
director of Exxon Corporation, HealthCare COMPARE Corp. and Airtouch
Communications, Inc.
MR. LANE, 49, has been President and Chief Operating Officer since July
1996. Mr. Lane served as Executive Vice President of the Company and President
of Worldwide Operations from October 1993 to June 1996, and has been a
director since June 1995. He served as a Senior Vice President of the Company
and President of Oracle USA from June 1992 to September 1993. Before joining
Oracle, Mr. Lane was a Senior Vice President and Managing Partner of the
Worldwide Information Services Group at Booz-Allen & Hamilton from July 1986
to May 1992. He served on the Booz-Allen & Hamilton Executive Committee from
April 1987 to May 1992, and on its Board of Directors from April 1991 to May
1992. Mr. Lane is also a member of the Board of Trustees of Carnegie-Mellon
University.
2
<PAGE>
MR. HENLEY, 51, has been Executive Vice President and Chief Financial
Officer of the Company since March 1991 and has been a director since June
1995. Prior to joining Oracle, he served as Executive Vice President and Chief
Financial Officer of Pacific Holding Company, a privately-held company with
diversified interests in manufacturing and real estate, from August 1986 to
February 1991. Mr. Henley is also a director of Tricord Systems, Inc., a
computer hardware company.
DIRECTOR COMPENSATION
The Company currently pays Messrs. Yocam, Kemp and Abrahamson and Dr. Boskin
directors' fees of (1) $1,000 for each regularly scheduled Board meeting
attended, (2) $3,000 for each meeting of the Finance and Audit Committee
attended, (3) $2,000 per day for each special meeting or committee meeting
attended, and (4) an annual retainer of $30,000. Mr. Lucas was paid an annual
retainer of $100,000 in fiscal year 1996 and will be paid an annual retainer
of $120,000 in fiscal year 1997. Dr. Boskin had a one-time consulting project
with the Company pursuant to which he was paid $25,000 during fiscal year
1996. Messrs. Ellison, Lane and Henley are officers of the Company and are not
separately compensated as directors of the Company. Non-employee members of
the Board also participate in the Company's 1993 Directors' Stock Option Plan,
which provides for the following grants of options to purchase Common Stock of
the Company to non-employee members of the Board: options to purchase 50,000
shares of Common Stock as of the date an individual becomes a non-employee
director; options to purchase 15,000 shares of Common Stock on May 31 of each
year (proposed to be increased to 18,000 shares--see Proposal No. 4 below)
provided such director has served on the Board for at least six months;
options to purchase 35,000 shares of Common Stock on May 31 of each year
(proposed to be increased to 40,000 shares--see Proposal No. 4 below) to the
director (or directors) who serves as chairman of either the Executive
Committee or the Finance and Audit Committee (or both) provided such director
has served in such capacity for at least one year.
BOARD OF DIRECTORS' MEETINGS AND COMMITTEES
The Board of Directors met four times at regularly scheduled meetings during
fiscal year 1996 and during that same period acted four times by unanimous
written consent. Standing committees of the Board currently include, among
others, an Executive Committee, a Finance and Audit Committee, a Compensation
Committee and a Nominating Committee. Each incumbent director has attended at
least 75% of all Board meetings and applicable committee meetings, except Mr.
Kemp, who attended 50% of all Board meetings.
Messrs. Ellison, Lucas and Henley are presently the members of the Executive
Committee. The Executive Committee did not meet during fiscal year 1996, and
during that same period acted two times by unanimous written consent. Unless
otherwise determined by the Board, the Executive Committee is generally vested
with all the powers of the Board of Directors, except that the Executive
Committee cannot take action to have the Company expend over $10,000,000 to
acquire another company, liquidate the Company, sell all or substantially all
of the Company's assets, merge the Company with another company where the
Company is not the surviving entity, or take any other action not permitted to
be delegated to a committee under Delaware law or the Company's Bylaws.
Messrs. Lucas and Yocam and Dr. Boskin are presently the members of the
Finance and Audit Committee. The Finance and Audit Committee met four times
during fiscal year 1996. The function of the Finance and Audit Committee is to
review financial and auditing issues of the Company, including the Company's
choice of independent public accounting firms, and to make recommendations to
the Board of Directors.
Messrs. Lucas and Yocam and Dr. Boskin are presently the members of the
Compensation Committee. The Compensation Committee met one time during fiscal
year 1996, and during that same period acted twenty-four times by unanimous
written consent. The function of the Compensation Committee is to review and
set the compensation of the Company's Chief Executive Officer and certain of
its most highly compensated officers, including salary, bonuses and other
incentive plans, stock options, and other forms of compensation, and to
administer the Company's stock plans.
3
<PAGE>
Mr. Abrahamson and Dr. Boskin are presently the members of the Nominating
Committee. The Nominating Committee did not meet during fiscal year 1996, and
during the same period acted two times by unanimous written consent. The
function of the Nominating Committee is to recommend qualified candidates for
election as officers and directors of the Company. Stockholders wishing to
recommend candidates for consideration by the Nominating Committee may do so
by writing to the Secretary of the Company and providing the candidate's name,
biographical data and qualifications.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of August 15, 1996,
with respect to the beneficial ownership of the Company's Common Stock by: (i)
each stockholder known by the Company to be the beneficial owner of more than
5% of the Company's Common Stock; (ii) each director; (iii) each executive
officer named in the Summary Compensation Table; and (iv) all current
executive officers and directors as a group.
<TABLE>
<CAPTION>
PERCENT
AMOUNT AND NATURE OF OF
NAME AND ADDRESS OF BENEFICIAL OWNER OVER 5% BENEFICIAL OWNERSHIP(1) CLASS
-------------------------------------------- ---------------------- -------
<S> <C> <C>
Lawrence J. Ellison(2)
500 Oracle Parkway, Redwood City, CA 94065.. 150,793,128 22.8%
Dirk A. Kabcenell(3)........................ 1,358,552 *
Jeffrey O. Henley(4)........................ 1,136,226 *
Raymond J. Lane(5).......................... 894,931 *
David J. Roux(6)............................ 114,021 *
Donald L. Lucas(7).......................... 83,749 *
Michael J. Boskin(8)........................ 32,342 *
Delbert W. Yocam(9)......................... 18,280 *
James A. Abrahamson......................... 17,482 *
Jack Kemp(10)............................... 14,062 *
All current executive officers and directors
as a group (12 persons)(11)................ 154,753,632 23.3%
</TABLE>
- - --------
*Less than 1%
(1) Unless otherwise indicated below, each person listed had sole voting and
sole investment power with respect to all shares beneficially owned,
subject to community property laws where applicable.
(2) Includes 3,782,250 shares subject to currently exercisable options or
options exercisable within 60 days.
(3) Includes 682,499 shares subject to currently exercisable options or
options exercisable within 60 days, including 43,125 shares subject to
options owned by Mr. Kabcenell's wife. Includes 26,235 shares owned by
Mr. Kabcenell's wife.
(4) Includes 1,134,375 shares subject to currently exercisable options or
options exercisable within 60 days.
(5) Includes 885,190 shares subject to currently exercisable options or
options exercisable within 60 days.
(6) Includes 112,500 shares subject to currently exercisable options or
options exercisable within 60 days.
(7) Includes 15,000 shares owned of record by Mr. Lucas or his successor
trustee under a trust agreement for the benefit of Mr. Lucas and his
wife. Includes 68,749 shares subject to currently exercisable options or
options exercisable within 60 days.
(8) Includes 32,342 shares subject to currently exercisable options or
options exercisable within 60 days.
(9) Includes 18,280 shares subject to currently exercisable options or
options exercisable within 60 days.
(10) Includes 14,062 shares subject to currently exercisable options or
options exercisable within 60 days.
(11) Includes all shares described in notes (2)-(10) above.
4
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides certain summary information concerning
compensation paid by the Company to the Company's Chief Executive Officer and
each of the four other most highly compensated executive officers of the
Company (determined as of May 31, 1996) (hereinafter referred to as the "named
executive officers") for the fiscal years ended May 31, 1996, 1995, and 1994:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
-------------------------- AWARDS ALL OTHER
NAME AND PRINCIPAL OTHER ANNUAL OPTIONS/SARS(1) COMPENSATION
POSITION YEAR SALARY($) BONUS($) COMPENSATION (#) (2) ($)
------------------ ---- ---------- ---------- ------------ --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Lawrence J. Ellison..... 1996 $1,000,007 $1,330,875 $ 0 700,000 $ 0
Chairman and Chief 1995 $1,099,992 $2,243,098 $ 0 675,000 $ 0
Executive Officer 1994 $1,015,008 $1,394,610 $ 0 450,000 $189
Raymond J. Lane......... 1996 $ 700,008 $ 825,119 $ 0 350,000 $ 0
President and Chief 1995 $ 700,008 $1,427,426 $ 0 337,500 $ 0
Operating Officer 1994 $ 514,992 $ 707,610 $ 0 675,000 $189
Jeffrey O. Henley....... 1996 $ 499,992 $ 588,656 $ 0 350,000 $ 0
Executive Vice 1995 $ 499,992 $1,019,590 $ 0 337,500 $ 0
President and Chief 1994 $ 364,992 $ 501,510 $ 0 225,000 $189
Financial Officer
Dirk A. Kabcenell....... 1996 $ 349,992 $ 358,313 $ 0 0 $ 0
Executive Vice 1995 $ 341,665 $ 713,713 $ 0 300,000 $ 0
President, Product 1994 $ 247,756 $ 150,000 $ 0 112,500 $189
Division
David J. Roux(3)........ 1996 $ 349,992 $ 350,000 $90,881(4) 50,000 $ 0
Executive Vice 1995 $ 240,058 $ 250,000 $ 0 225,000 $ 0
President, Corporate
Development
</TABLE>
- - --------
(1) All figures in this column reflect options to purchase common stock.
(2) All amounts in this column reflect premiums paid for group term life
insurance.
(3) Mr. Roux joined the Company in September 1994.
(4) Consists of relocation expenses.
5
<PAGE>
STOCK OPTIONS
The following table sets forth information concerning the grant of stock
options to each of the named executive officers in fiscal year 1996:
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK PRICE
INDIVIDUAL GRANTS APPRECIATION FOR OPTION TERM
-------------------------------------- ---------------------------------------
PERCENT OF
TOTAL
NUMBER OF OPTIONS/SARS
SECURITIES GRANTED TO
UNDERLYING EMPLOYEES IN EXERCISE OR
OPTIONS/SARS FISCAL YEAR BASE PRICE EXPIRATION
NAME GRANTED(1) 1996 ($/SH) DATE 5%($) 10%($)
---- ------------ ------------ ----------- ------------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Lawrence J. Ellison..... 700,000(2) 5.66% $33.25 5/31/06 $ 14,637,522 $ 37,094,356
Raymond J. Lane......... 350,000(2) 2.83% $33.25 5/31/06 $ 7,318,761 $ 18,547,178
Jeffrey O. Henley....... 350,000(2) 2.83% $33.25 5/31/06 $ 7,318,761 $ 18,547,178
Dirk A. Kabcenell....... 0 0% -- -- -- --
David J. Roux........... 50,000(2) 0.40% $33.25 5/31/06 $ 1,045,537 $ 2,649,597
</TABLE>
- - --------
(1) Each option granted vests at the rate of 25% per annum. Options will
become immediately exercisable if 50% of the voting stock of the Company
is acquired in a transaction or series of transactions expressly
disapproved by the Board. Each option was granted under the Company's 1991
Long-Term Equity Incentive Plan and has an exercise price equal to the
fair market value of the Common Stock on the date of grant.
(2) Each of the indicated options was granted on May 31, 1996.
The following table sets forth information with respect to the named
executive officers concerning exercises of options during fiscal year 1996 and
unexercised options held as of the end of fiscal year 1996:
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
SECURITIES UNDERLYING VALUE OF UNEXERCISED
OPTIONS/SARS AT FISCAL IN-THE-MONEY OPTIONS/SARS
SHARES ACQUIRED VALUE REALIZED YEAR-END (#) AT FISCAL YEAR-END ($)
NAME ON EXERCISE (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- --------------- -------------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Lawrence J. Ellison..... 627,750 $16,743,317 3,782,250/843,750 $109,147,997/$12,029,698
Raymond J. Lane......... 728,436(1) $18,390,377(1) 547,689/984,376 $ 10,650,998/$20,142,978
Jeffrey O. Henley....... 150,000 $ 4,377,706 1,134,375/421,875 $ 30,946,598/$ 6,014,849
Dirk A. Kabcenell....... 90,000 $ 1,997,703 502,128/405,371 $ 13,038,117/$ 7,549,134
David J. Roux........... 0 $ 0 56,250/168,750 $ 760,939/$ 2,282,816
</TABLE>
- - --------
(1) 548,436 shares with a value realized of $14,042,885 were exercised
pursuant to a divorce decree for the benefit of Mr. Lane's former spouse.
TERMINATION OF EMPLOYMENT ARRANGEMENTS
Mr. Roux has an agreement with the Company that provides him with up to
twelve months salary of $29,166.67 per month if his employment is terminated
without cause and he has not obtained other employment.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee currently consists of Messrs. Lucas and Yocam and
Dr. Boskin. No member of the Compensation Committee was an officer or employee
of the Company or its subsidiary during fiscal year
6
<PAGE>
1996. None of the executive officers of the Company has served on the Board of
Directors or on the compensation committee of any other entity, any of whose
officers served either on the Board of Directors or on the Compensation
Committee of the Company.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON
EXECUTIVE COMPENSATION
Notwithstanding anything to the contrary set forth in any of the Company's
previous or future filings under the Securities Act of 1933 or the Securities
Exchange Act of 1934 (the "Exchange Act") that might incorporate this Proxy
Statement or future filings with the Securities and Exchange Commission, in
whole or in part, the following report and the Performance Graph which follows
shall not be deemed to be incorporated by reference into any such filing.
Membership and Role of the Compensation Committee
The Compensation Committee (the "Committee") consists of the following non-
employee members of the Company's Board of Directors: Donald L. Lucas, Delbert
W. Yocam and Michael J. Boskin.
The Committee reviews and determines the Company's executive compensation
objectives and policies and administers the Company's stock plans. The
Committee reviews and sets the compensation of the Company's Chief Executive
Officer and the four most highly compensated executive officers other than the
Chief Executive Officer.
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), places a limit of $1,000,000 on the amount of compensation that may
be deducted by the Company in any year with respect to certain of the
Company's highest paid executives. Certain performance based compensation that
has been approved by stockholders is not subject to the deduction limit. The
Company intends to qualify certain compensation paid to executive officers for
deductibility under the Code, including Section 162(m). However, the Company
may from time to time pay compensation to its executive officers that may not
be deductible.
Executive Compensation Program
OBJECTIVES
The Objectives of the Company's executive compensation program are to:
--Attract and retain highly talented and productive executives.
--Provide incentives for superior performance by paying above-average
compensation.
--Align the interests of executive officers with the interests of the
Company's stockholders by basing a significant portion of compensation
upon the Company's performance.
COMPONENTS
The Company's executive compensation program combines the following three
components, in addition to the benefit plans offered to all employees: base
salary; annual bonus; and long-term incentive compensation consisting of stock
option grants.
It is the Company's policy to set base salary levels, annual bonuses and
long-term incentive compensation above an average of select corporations to
which the Company compares its executive compensation. The Company selects
such corporations on the basis of a number of factors, such as their size and
complexity, the nature of their businesses, the regions in which they operate,
the structure of their compensation programs (including the extent to which
they rely on bonuses and other contingent compensation) and the availability
of compensation information. The corporations with whom the Company compares
its compensation are not
7
<PAGE>
necessarily those included in the indices used to compare the stockholder
return in the Stock Performance Chart. Further, the corporations selected for
such comparison may vary from year to year based upon market conditions and
changes in both the Company's and the corporations' businesses over time. The
Company believes that above-average compensation levels are necessary to
attract and retain high caliber executives necessary for the successful
conduct of the Company's business.
Each component of the Company's executive compensation program serves a
specific purpose in meeting the Company's objectives. The components of the
Company's executive compensation program are described below, except for any
limitations arising from certain provisions of employment agreements that the
Company enters into upon hiring an executive.
Base salary. The Committee annually reviews the salaries of the Company's
executives. When setting base salary levels, in a manner consistent with the
objectives outlined above, the Committee considers competitive market
conditions for executive compensation, Company performance and individual
performance.
The measures of individual performance considered in setting fiscal year
1996 salaries included, to the extent applicable to an individual executive
officer, a number of quantitative and qualitative factors such as the
Company's historical and recent financial performance in the principal area of
responsibility of the officer (including such measures as gross margin, net
income, sales, customer count and market share), the individual's progress
toward non-financial goals within his area of responsibility, individual
performance, experience and level of responsibility and other contributions
made to the Company's success. The Committee has not found it practicable, nor
has it attempted, to assign relative weights to the specific factors used in
determining base salary levels, and the specific factors used may vary among
individual officers. As is typical for most corporations, payment of base
salary is not conditioned upon the achievement of any specific, pre-determined
performance targets.
Annual bonus. The Company's cash bonus program seeks to motivate executives
to work effectively to achieve the Company's financial performance objectives
and to reward them when objectives are met. Executive bonus payments are based
upon earnings per share and revenue growth and are increased or decreased if
the Company's revenue growth for certain products changes in relation to the
revenue growth of one or more of the Company's competitors designated by the
Committee.
Long-term incentive compensation. The Company believes that option grants
(1) align executive interests with stockholder interests by creating a direct
link between compensation and stockholder return, (2) give executives a
significant, long-term interest in the Company's success, and (3) help retain
key executives in a competitive market for executive talent.
The Company's 1990 Executive Officers Stock Option Plan and 1991 Long-Term
Equity Incentive Plan authorize the Committee to grant stock options to
executives. Option grants are made from time to time to executives whose
contributions have or will have a significant impact on the Company's long-
term performance. The Company's determination of whether option grants are
appropriate each year is based upon individual performance measures
established for each individual. Options are not necessarily granted to each
executive during each year. Generally, options granted to executive officers
vest in equal annual installments over a period of four years and expire ten
years from the date of grant.
Benefits. The Company believes that it must offer a competitive benefit
program to attract and retain key executives.
During fiscal year 1996 the Company provided medical and other benefits to
its executive officers that are generally available to the Company's other
employees.
Compensation of the Chief Executive Officer. The Chief Executive Officer's
compensation plan includes the same elements and performance measures as the
plans of the Company's other senior executives.
8
<PAGE>
Mr. Ellison's salary for fiscal year 1996, as compared to fiscal year 1995,
decreased 9% and bonus for fiscal year 1996 decreased 41% compared to the
previous fiscal year. The decrease in Mr. Ellison's salary resulted from the
Company's attempt to reduce the amount of compensation that is not tax
deductible due to Section 162(m) of the Code. The decrease in Mr. Ellison's
bonus reflects the application of the fiscal year 1996 bonus plans, as adopted
by the stockholders of the Company on October 9, 1995, to the Company's
results for fiscal year 1996.
Submitted by: Donald L. Lucas
Delbert W. Yocam
Michael J. Boskin
STOCK PERFORMANCE CHART
The graph below compares the cumulative total stockholder return on the
Company's Common Stock with the cumulative total return on the Standard &
Poor's 500 Index and the Hambrecht & Quist ("H&Q") Technology Index for the
five fiscal years commencing May 31, 1991 and ending May 31, 1996, assuming an
investment of $100 and the reinvestment of any dividends.
The comparisons in the graph below are based upon historical data and are
not indicative of, nor intended to forecast, future performance of the
Company's Common Stock.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG ORACLE CORPORATION, THE S & P 500 INDEX
AND THE HAMBRECHT & QUIST TECHNOLOGY INDEX
LOGO
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
5/91 5/92 5/93 5/94 5/95 5/96
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
ORACLE CORPORATION ORCL 100 198 557 913 1390 1988
S&P 500 1500 100 110 123 128 154 197
H&Q TECHNOLOGY 1HQT 100 111 128 137 195 275
</TABLE>
9
<PAGE>
TRANSACTIONS AND LEGAL ACTIONS INVOLVING MANAGEMENT
From June 1, 1995 to the present, there have been no transactions between
the Company and any executive officer, director, 5% beneficial owner of the
Company's Common Stock, or member of the immediate family of the foregoing
persons in which one of the foregoing individuals or entities had an interest
of more than $60,000, except for the following:
As previously announced, the Company develops and licenses software products
which may be used with a computer manufactured by nCUBE, a manufacturer of
massively-parallel supercomputers. Mr. Ellison owns a controlling interest in
nCUBE. During fiscal year 1996, the Company purchased from nCUBE approximately
$300,000 of computer equipment and maintenance and related services. The
Company has loaned nCUBE certain computer hardware (used primarily to
facilitate communications between the Company and nCUBE and for development
work requested by the Company) and nCUBE has loaned certain computer hardware
to the Company. In exchange for software development services rendered by the
Company for the nCUBE operating system valued at approximately $1 million, the
Company received from nCUBE certain computer hardware equipment valued at
approximately the same amount. The Company has also entered into a reseller
agreement with nCUBE entitling nCUBE to distribute certain software which the
Company has a license to distribute. The Company also has entered into a
consulting services agreement with nSOF Parallel Software, Ltd., in which
Mr. Ellison owns a controlling interest.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers and
directors and persons who own more than 10% of the Company's Common Stock
(collectively, "Reporting Persons") to file reports of ownership and changes
in ownership with the SEC and NASDAQ. Reporting Persons are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely on its review of the copies of such forms received or written
representations from Reporting Persons, the Company believes that with respect
to the fiscal year ended May 31, 1996 all Reporting Persons complied with all
applicable filing requirements, except that Messrs. Ellison, Lucas, Boskin,
Yocam, Kemp, Lane, Henley, Williams and Roux each made one late filing as a
result of an administrative timing error on the part of the Company with
respect to stock option grants issued to each of these individuals in May
1996. None of these stock option grants are exercisable before May 24, 1997.
PROPOSAL NO. 2
ADOPTION OF THE EXECUTIVE OFFICERS 1997 BONUS PLAN
On July 15, 1996, the Compensation Committee unanimously approved the
adoption of the Executive Officers 1997 Bonus Plan (the "Bonus Plan"), and the
Board directed that the Bonus Plan be submitted to the stockholders at the
1996 Annual Meeting. Targets set at the July 15, 1996 meeting for the
applicable performance period shall be null and void and no payments pursuant
thereto may be made if the Bonus Plan is not approved by the stockholders of
the Company.
The purpose of the Bonus Plan is to motivate executives to achieve the
Company's financial performance objectives and to reward them when those
objectives are met.
REQUIRED VOTE
Approval of the adoption of the Executive Officers 1997 Bonus Plan requires
the affirmative vote of the holders of a majority of shares of Common Stock
present or represented and entitled to vote at the Annual Meeting. Abstentions
and broker non-votes will be counted as present for purposes of determining
whether a quorum is present, and broker non-votes will not be treated as
entitled to vote on this matter at the Annual Meeting.
10
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
APPROVAL OF ADOPTION OF THE EXECUTIVE OFFICERS 1997 BONUS PLAN.
DESCRIPTION OF THE EXECUTIVE OFFICERS 1997 BONUS PLAN
HISTORY. The Compensation Committee (the "Committee") approved the adoption
of the Executive Officers 1997 Bonus Plan (the "Bonus Plan") on July 15, 1996.
PURPOSE. The purpose of the Bonus Plan is to motivate executives to achieve
the Company's financial performance objectives and to reward them when those
objectives are met.
ADMINISTRATION. The Bonus Plan will be administered by the Committee
consisting of no fewer than two members of the Board, all of which members
qualify as "outside directors" within the meaning of Section 162(m) of the
Internal Revenue Code ("Code Section 162(m)").
ELIGIBILITY. Participants in the Bonus Plan are chosen solely at the
discretion of the Committee. All officers of the Company are eligible to
participate in the Bonus Plan. No person is automatically entitled to
participate in the Bonus Plan in any plan year.
DETERMINATION OF AWARDS. Under the Bonus Plan, participants will be eligible
to receive awards based upon the attainment and certification of performance
criteria established by the Committee. The performance criteria are earnings
per share and revenue growth. Awards are based upon the Company's level of
achievement of the foregoing performance criteria and consist of a percentage
of base salary tied to a matrix of the Company's performance criteria. The
Committee adopts the performance criteria within 90 days after the start of
each fiscal year or in advance of such other date as may be permitted under
Code Section 162(m). The Committee also adopts at the same time a mathematical
formula for the fiscal year which is applied to either reduce or increase an
award if the Company's revenue growth for certain products changes in relation
to the revenue growth of one or more of the Company's competitors designated
by the Committee. With respect to the Company's current fiscal year, such
determinations were made by the Compensation Committee at a meeting held on
July 15, 1996. In order for participants to achieve a comparable bonus
percentage of base salary as was awarded in fiscal year 1996, the Company will
have to substantially outperform its fiscal year 1997 budget and/or outperform
the revenue growth of one or more of selected key competitors.
PAYMENT OF AWARDS. All awards will be paid in cash as soon as is practicable
following determination of the award, unless the Committee has, prior to the
grant of an award, received and approved, in its sole discretion, a request by
a participant to defer receipt of an award in accordance with the Bonus Plan.
ESTIMATE OF BENEFITS. The amounts that will be paid pursuant to the Bonus
Plan are not currently determinable.
AMENDMENT AND TERMINATION. The Committee may terminate the Bonus Plan, in
whole or in part, may suspend the Bonus Plan, in whole or in part from time to
time, and may amend the Bonus Plan from time to time, including the adoption
of amendments deemed necessary or desirable to correct any defect or supply
omitted data or reconcile any inconsistency in the Bonus Plan or in any award
granted thereunder so long as stockholder approval has been obtained if
required in order for awards under the Bonus Plan to qualify as "performance-
based compensation" under Code Section 162(m). No amendment, termination, or
modification of the Bonus Plan may in any manner affect awards theretofore
granted without the consent of the participant unless the Committee has made a
determination that an amendment or modification is in the best interests of
all persons to whom awards have been previously granted, but in no event may
such amendment or modification result in an increase in the amount of
compensation payable pursuant to such award.
TERMINATION OF EMPLOYMENT. Should the participant's employment with the
Company terminate for any reason during the plan year, the participant will
not be eligible to receive an award under the Bonus Plan.
11
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES. Under present federal income tax law,
participants will realize ordinary income equal to the amount of the award
received in the year of receipt. That income will be subject to applicable
income and employment tax withholding by the Company. The Company will receive
a deduction for the amount constituting ordinary income to the participant,
provided that the Bonus Plan satisfies the requirements of Code Section
162(m), which limits the deductibility of nonperformance-related compensation
paid to certain corporate executives (and otherwise satisfies the requirements
for deductibility under federal income tax law).
PROPOSAL NO. 3
AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION
On July 15, 1996, the Board authorized an amendment of the Company's
Certificate of Incorporation to increase the number of authorized shares of
Common Stock, par value $.01 per share ("Common Stock"), from 1,000,000,000 to
2,000,000,000. The stockholders are being asked to approve this proposed
amendment. As of August 15, 1996, 656,936,173 shares of Common Stock were
issued and outstanding and 74,387,140 shares were reserved for issuance under
the Company's stock plans and employee stock purchase plan.
The Board believes that the proposed increase is desirable so that, as the
need may arise, the Company will have more flexibility to issue shares of
Common Stock without the expense and delay of a special stockholders' meeting,
in connection with possible future stock dividends or stock splits, equity
financings, future opportunities for expanding the business through
investments or acquisitions, management incentive and employee benefit plans
and for other general corporate purposes.
Authorized but unissued shares of the Company's Common Stock may be issued
at such times, for such purposes and for such consideration as the Board of
Directors may determine to be appropriate without further authority from the
Company's stockholders, except as otherwise required by applicable law or
stock exchange policies.
The increase in authorized Common Stock will not have any immediate effect
on the rights of existing stockholders. However, the Board will have the
authority to issue authorized Common Stock without requiring future
stockholder approval of such issuances, except as may be required by
applicable law or exchange regulations. To the extent that the additional
authorized shares are issued in the future, they will decrease the existing
stockholders' percentage equity ownership and, depending upon the price at
which they are issued, could be dilutive to the existing stockholders. The
holders of Common Stock have no preemptive rights.
The increase in the authorized number of shares of Common Stock and the
subsequent issuance of such shares could have the effect of delaying or
preventing a change in control of the Company without further action by the
stockholders. Shares of authorized and unissued Common Stock could (within the
limits imposed by applicable law) be issued in one or more transactions which
would make a change in control of the Company more difficult, and therefore
less likely. Any such issuance of additional stock could have the effect of
diluting the earnings per share and book value per share of outstanding shares
of Common Stock, and such additional shares could be used to dilute the stock
ownership or voting rights of a person seeking to obtain control of the
Company. The Company has previously adopted certain measures that may have the
effect of helping to resist an unsolicited takeover attempt.
REQUIRED VOTE
The approval of the adoption of the amendment to the Company's Certificate
of Incorporation requires the affirmative vote of a majority of the
outstanding shares of the Company's Common Stock. Abstentions and broker non-
votes are not affirmative votes and, therefore, will have the same effect as a
vote against the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL
OF THE AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION.
12
<PAGE>
PROPOSAL NO. 4
AMENDMENT OF THE 1993 DIRECTORS' STOCK OPTION PLAN
The Company's 1993 Directors' Stock Option Plan (the "1993 Plan") is
intended to provide equity incentives to non-employee members of the Board to
encourage their continued service on the Board and to enable the Company to
attract and retain the best qualified individuals for service on the Board.
In order to allow the Company to attract and retain the best qualified
directors and in order to enjoy the increased flexibility permitted by changes
as of August 15, 1996 to certain rules under Section 16 of the Securities
Exchange Act of 1934 (the "New Rules"), the Board has adopted amendments to
the 1993 Plan. At the Annual Meeting, the stockholders are being asked to
approve the adoption of amendments to the 1993 Plan, as adopted by the Board
on July 15, 1996 and August 15, 1996, as follows:
1. To increase the number of shares purchasable upon exercise of options
granted annually to non-employee directors by 3,000 to 18,000 shares.
2. To increase the number of shares purchasable upon exercise of options
granted to each non-employee director that is the Chairman of the Finance
and Audit Committee and/or the Executive Committee by 5,000 to 40,000
shares.
3. To provide for a one-time grant of options as of the date of the
Annual Meeting to Mr. Lucas to purchase 5,000 shares of Common Stock and to
each of Messrs. Yocam and Boskin to purchase 3,000 shares of Common Stock.
4. To eliminate certain provisions of the 1993 Plan that are no longer
necessary under the New Rules: (1) Section 5(d)(iii), which referred to
changes to Rule 16b-3 proposed in May 1991 that are now superseded by
current law, (2) Section 5(d)(iv), which limits the number of stock options
that may be granted to any individual non-employee director to 675,000
shares of Common Stock, and (3) the last sentence of Section 14(a), which
permits amendments to the 1993 Plan to be made only once every six months.
The text of Sections 5(d)(iii), 5(d)(iv) and 14(a), prior to the proposed
amendments, are set forth on Exhibit A hereto.
REQUIRED VOTE
Approval of the adoption of the 1993 Plan requires the affirmative vote of
the holders of a majority of shares of Common Stock present or represented and
entitled to vote at the Annual Meeting. Abstentions and broker non-votes will
be counted as present for purposes of determining whether a quorum is present,
and broker non-votes will not be treated as entitled to vote on this matter at
the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE
1993 DIRECTORS' STOCK OPTION PLAN.
DESCRIPTION OF 1993 PLAN AND OPTION TERMS
The following is a summary of the principal provisions of the 1993 Plan, but
it is not intended to be a complete description of all of the terms and
provisions of the 1993 Plan. A copy of the 1993 Plan will be furnished to any
stockholder upon written request to the Corporate Secretary of the Company at
the principal executive offices of the Company in Redwood City, California.
PURPOSE. The purpose of the 1993 Plan is to provide equity incentives to
non-employee directors to encourage their continued service on the Board and
to enable the Company to attract and retain the best qualified individuals for
service on the Board.
ADMINISTRATION. The 1993 Plan may be administered by the Board or by a
committee appointed by the Board. The Board has designated the Compensation
Committee (the "Committee") as administrator of the 1993 Plan.
13
<PAGE>
ELIGIBILITY. Options may be granted only to non-employee directors.
EXERCISE PRICE. The option exercise price for an option granted under the
1993 Plan shall be the fair market value of the shares of Common Stock covered
by the option on the date the option is granted.
OPTION GRANTS. The 1993 Plan provides for an automatic grant of an option to
purchase fifty thousand (50,000) shares as of the date any individual becomes
a non-employee director. The 1993 Plan provides for an automatic grant of an
option to purchase fifteen thousand (15,000) shares (proposed to be changed to
eighteen thousand (18,000) shares) to each non-employee director each year on
May 31, provided that such director has served on the Board for at least six
months. Finally, the 1993 Plan provides that each non-employee director who
has served as a chairman of either the Executive Committee or the Finance and
Audit Committee for at least one year (and who continues to serve in that
capacity on the date of grant) shall automatically receive each year on May 31
an additional grant of an option to purchase thirty-five thousand (35,000)
shares (proposed to be changed to forty thousand (40,000) shares).
GRANT LIMITS. No individual director may be granted options to purchase more
than an aggregate of 675,000 shares under the 1993 Plan. This limitation is
proposed to be eliminated.
LIMITATION. Each automatic grant of options to purchase 35,000 shares to a
chairman of either the Executive Committee or the Finance and Audit Committee
made after the Company becomes subject to Rule 16b-3 of the Exchange Act, as
amended, shall be conditioned upon the Company receiving on or before the date
of grant either an opinion of counsel or a no-action letter issued by the
staff of the Securities and Exchange Commission to the Company stating that
the grant is an exempt grant under such rule and the recipient of the grant
remains a "disinterested" person within the meaning of such rule. This
limitation is proposed to be eliminated.
VESTING. Each option shall vest and become exercisable at the rate of
twenty-five percent (25%) of the amount granted on each anniversary of the
date of grant.
TERM. Options granted under the 1993 Plan expire 10 years following the date
of grant, unless earlier terminated under the circumstances described below.
PAYMENT UPON EXERCISE. Subject to authorization by the Committee at the time
that an option is granted, payment of the exercise price of such option may be
made by any of the following methods or any combination thereof: (1) by cash
or check; (2) by a same-day sale commitment from an optionee and a qualified
broker-dealer; (3) through a margin commitment from the optionee and a
qualified broker; and (4) where permitted by law, by tender of a full recourse
promissory note secured by collateral other than the shares.
RESIGNATION. In the event an optionee shall cease to be a director, each
unexercised option held by such optionee shall automatically terminate three
months after the optionee ceases being a director, except that the Board may,
in its sole discretion, extend such period by up to three months.
DISABILITY. In the event an optionee is unable to serve as a director as a
result of total disability, each unexercised option held by such optionee
shall automatically terminate six months after the date such optionee is first
unable to serve as a director.
DEATH. In the event an optionee dies during the term of an option and is a
director at the time of his death or has been a director within three months
of his death and has been a director since the date of grant of an option,
such option shall automatically terminate six months following the date of
death.
TRANSFERABILITY. During an optionee's lifetime, an option may be exercised
only by the optionee. No option may be sold, pledged, assigned, hypothecated,
transferred or disposed of in any manner other than by will or by the laws of
descent or distribution.
14
<PAGE>
CAPITAL CHANGES. If the number of outstanding shares of Common Stock of the
Company is changed by a stock dividend, stock split, reverse stock split,
combination, reclassification or similar change in the capital structure of
the Company without consideration, the number of shares of Common Stock
available for option grants under the 1993 Plan and the number of shares and
the exercise price per share for each outstanding option will be
proportionately adjusted, subject to any required action by the Board or
stockholders of the Company.
In the event of a dissolution or liquidation of the Company, a merger in
which the Company is not the surviving corporation, the sale of all of the
assets of the Company, or certain related transactions, all options
outstanding under the 1993 Plan shall accelerate and become exercisable in
full prior to and shall expire upon consummation of such transaction. In the
event 50% of the outstanding voting securities of the Company become
beneficially owned by a person in a transaction or series of transactions
expressly disapproved by the Board, then all options outstanding under the
1993 Plan shall accelerate and become exercisable in full.
TERMINATION AND AMENDMENT OF 1993 PLAN. Options may be granted under the
1993 Plan at any time through May 24, 2003. The Committee may at any time
terminate or suspend the 1993 Plan. The Board or the Committee may amend the
1993 Plan in its discretion; provided that no amendment may be made more than
once every six months that would change the amount, price, timing or vesting
of the options, other than to comport with changes in the Internal Revenue
Code of 1986, as amended (the "Code"), or the Employee Retirement Income
Security Act of 1974, as amended (such proviso is proposed to be eliminated);
and provided that, to the extent necessary to comply with Rule 16b-3 under the
Exchange Act, or any other applicable law or regulation, the Company shall
obtain approval of the Company's stockholders to amend the 1993 Plan to the
extent and in the manner required by such law or regulation. Subject to
certain limitations, the Board shall have the authority at any time to make
additional shares available for grant under the 1993 Plan, subject to
obtaining stockholder approval to the extent required.
FEDERAL INCOME TAX CONSEQUENCES. Options granted under the 1993 Plan are
nonqualified stock options for federal income tax purposes. For a summary of
the federal income tax consequences of participation in the 1993 Plan, see
"Proposal No. 5--Amendment to the 1991 Long-Term Equity Incentive Plan--
Certain United States Federal Income Tax Information--Tax Treatment of the
Optionee--Nonqualified Stock Options."
ERISA. The Company believes that the 1993 Plan is not subject to any of the
provisions of the Employee Retirement Income Security Act of 1974.
PROPOSAL NO. 5
AMENDMENT TO THE 1991 LONG-TERM EQUITY INCENTIVE PLAN
At the Annual Meeting, the stockholders are being asked to approve the
adoption of an amendment to the Company's 1991 Long-Term Equity Incentive Plan
(the "1991 Plan"), as adopted by the Board on July 15, 1996, which increases
the number of shares reserved for issuance thereunder by a total of 34,000,000
shares of Common Stock.
The 1991 Plan is intended to provide additional compensation and incentives
to eligible individuals whose present and potential contributions are
important to the continued success of the Company, to afford such persons an
opportunity to acquire a proprietary interest in the Company and to enable the
Company to continue to attract and retain the best available talent for the
successful conduct of its business.
REQUIRED VOTE
Approval of the adoption of the amendment to the 1991 Plan requires the
affirmative vote of the holders of a majority of shares of Common Stock
present or represented and entitled to vote at the Annual Meeting. Abstentions
and broker non-votes will be counted as present for purposes of determining
whether a quorum is present, and broker non-votes will not be treated as
entitled to vote on this matter at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO THE
1991 LONG-TERM EQUITY INCENTIVE PLAN.
15
<PAGE>
PLAN ACTIVITY
As of August 15, 1996, options to purchase an aggregate of 9,339,953 shares
of Common Stock issued under the 1991 Plan had been exercised, and options to
purchase 38,172,628 shares were outstanding. Without taking into account the
proposed amendment to the 1991 Plan, 10,987,419 shares remained available for
future grants as of August 15, 1996.
The table under the caption "Option/SAR Grants in Last Fiscal Year" provides
information with respect to the grant of options under the 1991 Plan to the
Chief Executive Officer and the next four most highly compensated executive
officers during fiscal year 1996. The following table sets forth additional
information with respect to options granted under the 1991 Plan during fiscal
year 1996 to certain groups:
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
IDENTITY OF GROUP EXERCISE PRICE OPTIONS GRANTED
----------------- ---------------- ---------------
<S> <C> <C>
All executive officers as a group (7
persons).............................. $33.375 1,465,000
Non-executive officer employees as a
group
(approximately 2,103 persons)......... $31.60 10,908,225
</TABLE>
DESCRIPTION OF THE 1991 PLAN AND OPTION TERMS
The following is a summary of the principal provisions of the 1991 Plan, but
it is not intended to be a complete description of all of the terms and
provisions of the 1991 Plan. A copy of the 1991 Plan will be furnished to any
stockholder upon written request to the Corporate Secretary of the Company at
the principal executive offices of the Company in Redwood City, California.
HISTORY. The 1991 Plan was adopted by the Company's Board of Directors on
July 31, 1991 and was approved by the Company's stockholders on October 14,
1991, and a total of 22,500,000 shares of the Company's Common Stock were
reserved for issuance thereunder. On October 11, 1993, the 1991 Plan was
amended by the stockholders to increase the number of shares reserved for
issuance thereunder by 18,000,000. On October 10, 1994, the 1991 Plan was
amended by the stockholders to limit the number of options that can be granted
to any individual during any year to 4,500,000. On October 9, 1995, the 1991
Plan was amended by the stockholders to increase the number of shares reserved
for issuance thereunder by 18,000,000.
PURPOSE. The purpose of the 1991 Plan is to provide additional compensation
and incentive to eligible employees, officers, directors, advisors and
consultants whose present and potential contributions are important to the
continued success of the Company, to afford such persons an opportunity to
acquire a proprietary interest in the Company and to enable the Company to
continue to enlist and retain the best available talent for the successful
conduct of its business.
ADMINISTRATION. The 1991 Plan is currently administered by the Compensation
Committee (the "Committee"). Subject to the terms of the 1991 Plan, the
Committee determines the persons who are to receive awards, the number of
shares subject to each award, the terms and conditions of such awards and the
dates of grants. The Committee also has the authority to construe and
interpret any of the provisions of the 1991 Plan or any options granted
thereunder. Such interpretations are binding on the Company and on the
participants.
ELIGIBILITY. All officers, directors (who are also employees or consultants
of the Company), employees, advisors and consultants of the Company (or any
subsidiary or affiliate of the Company) are eligible to receive awards under
the 1991 Plan. The Company currently has approximately 57 subsidiary
corporations eligible to participate in the 1991 Plan. As of July 31, 1996,
approximately 24,650 full-time employees were eligible to receive options
under the 1991 Plan, except those who are not eligible due to local securities
laws.
OPTION AWARDS. Both incentive stock options ("ISOs"), as defined in Section
422(b) of the Code, and nonqualified stock options ("NQSOs"), may be granted
under the 1991 Plan. The Committee determines whether an option granted under
the 1991 Plan will be an ISO or a NQSO. The 1991 Plan limits the aggregate
16
<PAGE>
fair market value (determined as of the time the option is granted) of the
shares with respect to which ISOs are exercisable for the first time by the
optionee during any calendar year to not more than $100,000. There is no
similar limit on NQSOs granted under the 1991 Plan.
OTHER AWARDS. In addition to stock options, certain other awards may be
granted under the 1991 Plan, although no such rights or awards have been
granted to date under the 1991 Plan. The Committee may grant Stock
Appreciation Rights ("SAR") together with related options, entitling the
holder upon exercise to receive an amount in any combination of cash or Common
Stock (as determined by the Committee) equal in value to the excess of the
fair market value of the shares covered by such SAR on the date of exercise
over the aggregate exercise price of the related option for such shares. The
Committee may also grant rights to purchase stock under such terms and
conditions as it may determine. In addition, the Committee may grant stock
bonus awards payable in cash or Common Stock based upon reasonable performance
criteria the Committee deems appropriate.
PERFORMANCE-BASED COMPENSATION LIMITS. No employee shall be granted in any
fiscal year of the Company options and SARs to acquire in the aggregate more
than 4,500,000 shares of Common Stock. The foregoing limitation, which shall
adjust proportionately in connection with any change in the Company's
capitalization, is intended to satisfy the requirements applicable to options
and SARs intended to qualify as performance-based compensation within the
meaning of Internal Revenue Code Section 162(m). In the event that the
Committee determines that such limitation is not required to qualify options
and SARs as performance-based compensation, the Committee may modify or
eliminate such limitation.
TERMS OF THE OPTIONS. Each option granted pursuant to the Plan is evidenced
by a stock option grant (the "Grant") issued by the Company. An exercise
notice and agreement (the "Exercise Notice") is to be completed by the
optionee at the time an option is exercised. The Company does not receive any
consideration from an optionee at the time an option is granted. The form of
the Grant and the Exercise Notice may be amended by the Committee from time to
time, subject to the terms of the 1991 Plan.
Options may be granted under the 1991 Plan until July 30, 2001.
Subject to the provisions of the 1991 Plan, the Committee may determine the
vesting schedule of each option and other terms and conditions of
exercisability. Options granted under the 1991 Plan typically vest in four
equal annual installments starting from the date of grant, although vesting of
an option may be accelerated by the Committee. The Committee also has the
discretion to modify, extend or renew outstanding awards and to issue new
awards in exchange for surrender of outstanding awards. The Committee also may
cause the Company to purchase for cash or shares of Common Stock any option
issued under the 1991 Plan.
Generally, ISOs and NQSOs granted under the 1991 Plan must be exercised
within ten years of the option grant date. Any ISO granted to a person owning
10% or more of the total combined voting power of all classes of stock of the
Company or of any subsidiary of the Company (a "Ten Percent Stockholder") must
be exercised within five years of the option grant date.
The Committee determines the exercise price of each option granted, which is
set forth in the Grant. Under the 1991 Plan, the exercise price of a NQSO
granted to an employee may be less than the fair market value per share of the
Company's Common Stock on the date the option is granted. In the case of an
ISO, or in the case of an NQSO granted to a person other than an employee, the
price shall be no less than 100% of the fair market value of a share of Common
Stock at the time such option is granted, subject to certain conditions set
forth in the 1991 Plan; provided that, in the case of an ISO granted to a ten
percent stockholder, the price shall be no less than 110% of the fair market
value of the Common Stock on the date the option is granted. The exercise
price of options granted under the 1991 Plan, including all applicable
withholding taxes, must be paid: (1) in cash; (2) by surrender of shares of
the Company's Common Stock owned by the optionee for at least six months (or,
in the case of payment of withholding taxes, by having the Company withhold
from the shares to be issued upon exercise) having a fair market value on the
date of surrender equal to the exercise price of the option (or the amount of
the withholding obligation); (3) where permitted by applicable law and
approved by the Committee,
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in its sole discretion, by tender of a promissory note; (4) by cancellation of
indebtedness of the Company to the optionee; (5) by waiver of compensation due
to or accrued by the optionee for services rendered; (6) by a same-day sale
commitment from the optionee and a qualified broker; (7) by a margin
commitment from the optionee and a qualified broker; or (8) by any combination
of the foregoing, where approved by the Committee in its sole discretion.
DEFERRALS. The Committee may also permit participants to elect to defer
receipt of benefits under the 1991 Plan or make automatic deferrals. The
Committee may also provide and determine the amount of any deemed earnings for
amounts deferred under the 1991 Plan.
NONTRANSFERABILITY AND TERMINATION OF OPTIONS. Options granted under the
Plan may not be transferred by the optionee other than by will or by the laws
of descent and distribution. During the lifetime of the optionee, an option
may be exercised only by the optionee or his or her legal representative.
If an optionee's employment or other association with the Company or a
subsidiary is terminated for any reason other than death or disability, any
outstanding option, to the extent (and only to the extent) that it was
exercisable on the date of such termination, must be exercised by the optionee
the earlier of three months following such termination or the expiration of
the option.
CAPITAL CHANGES. If the number of outstanding shares of Common Stock of the
Company is changed by a stock dividend, stock split, reverse stock split,
combination, reclassification or similar change in the capital structure of
the Company without consideration, the number of shares of Common Stock
available for option grants under the 1991 Plan, the number of shares and the
exercise price per share for each outstanding option and the annual limitation
noted above will be proportionately adjusted, subject to any required action
by the Board or stockholders of the Company.
In general, in the event of a merger or consolidation in which the Company
is not the surviving corporation, or the sale of all or substantially all of
the assets of the Company, the vesting of all awards granted pursuant to the
1991 Plan will accelerate and the awards will become exercisable in full prior
to the consummation of such event, at such times and on such conditions as the
Committee determines, unless the successor corporation assumes the outstanding
awards or substitutes substantially equivalent awards. In addition, if an
employee's employment or other association with the Company's successor is
terminated without cause within 12 months after consummation of a merger,
consolidation or sale of assets, awards under the 1991 Plan will accelerate
and become immediately and fully exercisable upon such termination.
Notwithstanding the above, if 50% or more of the outstanding voting
securities of the Company becomes beneficially owned (as defined in Rule 14d-3
promulgated by the SEC) by a person (as defined in Section 2(2) of the
Securities Act of 1933 and in Section 13(d)(3) of the Securities Exchange Act
of 1934) in a transaction or series of transactions expressly disapproved by
the Board, then all outstanding awards shall become immediately exercisable
with no further act or action required by the Board or the Committee.
AMENDMENT AND TERMINATION. The Committee may amend or terminate the 1991
Plan at any time and in any respect, except that the Committee cannot, without
the approval of the stockholders of the Company, amend the 1991 Plan in any
manner that requires stockholder approval pursuant to the Code or the
regulations thereunder or pursuant to Rule 16b-3 of the Exchange Act. No
amendment of the 1991 Plan may adversely affect any outstanding option or
unexercised portion thereof without the optionee's written consent. Subject to
the specific terms of the 1991 Plan, the Committee may accelerate any award or
option, reduce any applicable exercise price or waive any conditions or
restrictions pursuant to such award or option at any time.
If an option granted pursuant to the 1991 Plan expires or terminates for any
reason without being exercised in whole or in part, the shares released from
such option or award will again become available for grant and purchase under
the 1991 Plan.
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CERTAIN UNITED STATES FEDERAL INCOME TAX INFORMATION
GENERAL. The following is a general summary as of the date of this Proxy
Statement of the United States federal income tax consequences associated with
participation in the 1991 Plan. The federal tax laws may change and the
federal, state and local tax consequences for any participant will depend upon
his or her individual circumstances. This information may not be applicable to
employees of foreign subsidiaries or to participants who are not residents of
the United States. All participants have been and are encouraged to seek the
advice of a qualified tax advisor regarding the tax consequences of
participation in the 1991 Plan. Any tax effects that accrue to foreign
employees as a result of participation in the 1991 Plan will be subject to the
tax laws of the countries in which such employees reside.
TAX TREATMENT OF THE OPTIONEE.
Incentive Stock Options. The optionee will recognize no income upon grant of
an ISO and incur no tax on its exercise unless the optionee is subject to the
alternative minimum tax described below. If the optionee holds the stock
acquired upon exercise of an ISO (the "ISO Shares") for one year after the
date the option was exercised and for two years after the date the option was
granted, the optionee generally will realize long-term capital gain or loss
(rather than ordinary income or loss) upon disposition of the ISO Shares. This
gain or loss will be equal to the difference between the amount realized upon
such disposition and the amount paid for the ISO Shares.
If the optionee disposes of ISO Shares prior to the expiration of either of
the above required holding periods (a "disqualifying disposition"), the gain
realized upon such disposition, up to the difference between the fair market
value of the ISO Shares on the date of exercise and the option exercise price,
will be treated as ordinary income and reported on the employee's W-2 form.
Income tax withholding on this income is optional. Any additional gain will be
long-term or short-term capital gain, depending upon whether or not the ISO
Shares were held for more than one year following the date of exercise by the
optionee. A disposition of ISO Shares for this purpose includes not only a
sale or exchange, but also a gift or other transfer of legal title (with
certain exceptions). Long-term capital gain is taxed at a maximum federal
income tax rate of 28% rather than the 39.6% maximum rate applicable to other
income.
Alternative Minimum Tax. Generally, the difference between the fair market
value of stock purchased by exercise of an ISO (generally measured as of the
date of exercise) and the amount paid for that stock upon exercise of the ISO
is an adjustment to income for purposes of the alternative minimum tax. An
alternative minimum tax adjustment applies unless a disqualifying disposition
of the ISO Shares occurs in the same calendar year as exercise of the ISO. The
alternative minimum tax (imposed to the extent it exceeds the taxpayer's
regular tax) is 26% of an individual taxpayer's alternative minimum taxable
income for alternative minimum taxable income up to $175,000 and 28%
thereafter. Alternative minimum taxable income is determined by adjusting
regular taxable income for certain items, increasing that income by certain
tax preference items and reducing this amount by the applicable exemption
amount ($45,000 in the case of a joint return, subject to reduction under
certain circumstances).
Nonqualified Stock Options. An optionee will not recognize any taxable
income at the time an NQSO is granted. However, upon exercise of an NQSO the
optionee will include in income as compensation an amount equal to the
difference between the fair market value of the shares on the date of exercise
(in most cases) and the optionee's purchase price. The included amount will be
treated as ordinary income and reported on an employee's W-2 form, or in the
case of a non-employee, on a 1099 form and will be subject to income tax and
FICA withholding by the Company (either by payment in cash or withholding out
of the optionee's salary) if the optionee is an employee. Upon the sale of the
shares by the optionee, any subsequent appreciation or depreciation in the
value of the shares will be treated as short term or long term capital gain or
loss depending upon whether or not the optionee held the shares for more than
one year following exercise of the NQSO.
Tax Treatment of Insiders. Optionees who are officers or directors of the
company subject to Section 16(b) of the Securities Exchange Act may be subject
to special federal income tax treatment upon exercise of their
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options. In general, such optionees will be subject to tax with respect to
income recognized upon exercise of their options upon the later to occur of
(1) the date such income normally would be recognized under the principles
described above, or (2) the expiration of the six-month forfeiture period
under Section 16(b), unless such an optionee makes the election under Section
83(b) of the Internal Revenue Code to be taxed as of the date specified in
(1). The amount of income will be measured by reference to the value of the
shares acquired upon exercise as of the applicable date. Optionees subject to
this special treatment should consult their own tax advisors for further
information.
TAX TREATMENT OF THE COMPANY. The Company will be entitled to a deduction in
connection with the exercise of an NQSO by a domestic optionee to the extent
that the optionee recognizes ordinary income provided that the deduction is
not disallowed under the provisions of Section 162(m) of the Code. The Company
will be entitled to a deduction in connection with the disposition of ISO
Shares only to the extent that the optionee recognizes ordinary income on a
disqualifying disposition of the ISO Shares and will not be entitled to any
deduction upon exercise of an ISO.
ERISA. The Company believes that the 1991 Plan is not subject to any of the
provisions of the Employee Retirement Income Security Act of 1974.
PROPOSAL NO. 6
AMENDMENT TO THE EMPLOYEE STOCK PURCHASE PLAN (1992)
At the Annual Meeting, the stockholders are being asked to approve the
adoption of an amendment to the Company's Employee Stock Purchase Plan (1992)
(the "1992 Purchase Plan"), as adopted by the Board on July 15, 1996, which
increases the number of shares reserved for issuance thereunder by a total of
7,000,000 shares of Common Stock. The following is a summary of the principal
provisions of the 1992 Purchase Plan, but it is not intended to be a complete
description of all of the terms and provisions of the 1992 Purchase Plan. A
copy of the 1992 Purchase Plan will be furnished to any stockholder upon
written request to the Secretary of the Company at the principal executive
offices of the Company in Redwood City, California.
The purpose of the 1992 Purchase Plan is to provide employees of the
Company, and of subsidiaries that have not been excluded by the Board of
Directors as ineligible to participate in the 1992 Purchase Plan, with an
opportunity to purchase Common Stock of the Company at a discount from the
market price, through payroll deductions, and to thereby provide an incentive
for continued employment.
REQUIRED VOTE
The approval of the adoption of the amendment to the 1992 Purchase Plan
requires the affirmative vote of the holders of a majority of shares of Common
Stock present or represented and entitled to vote at the Annual Meeting.
Abstentions and broker non-votes will be counted as present for purposes of
determining whether a quorum is present, and broker non-votes will not be
treated as entitled to vote on this matter at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL
OF THE AMENDMENT TO THE EMPLOYEE STOCK PURCHASE PLAN (1992).
PLAN ACTIVITY
As of August 15, 1996, and without taking into account the proposed
amendment to the 1992 Purchase Plan, the Company had issued and sold an
aggregate of 11,941,738 shares of Common Stock pursuant to the 1992 Purchase
Plan, and 6,471,564 shares remained eligible for purchase under the 1992
Purchase Plan.
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Participation in the 1992 Purchase Plan is voluntary and is dependent upon
each eligible employee's election to participate and his or her determination
as to the level of payroll deductions. Accordingly, future purchases under the
1992 Purchase Plan are not determinable. The following table sets forth
certain information regarding shares purchased during fiscal year 1996 under
the 1992 Purchase Plan by each of the named executive officers, all current
executive officers as a group and all non-executive officer employees as a
group:
<TABLE>
<CAPTION>
INDIVIDUAL AND DOLLAR NUMBER OF
POSITION OR GROUP VALUE($)(1) SHARES PURCHASED
----------------- ----------- ----------------
<S> <C> <C>
Raymond J. Lane, President and Chief
Operating Officer.......................... $ 30,663 976
Jeffrey O. Henley, Executive Vice President
and Chief Financial Officer................ $ 61,363 2,176
Dirk A. Kabcenell, Executive Vice President,
Product Division........................... $ 25,290 805
David J. Roux, Executive Vice President,
Corporate Development...................... $ 40,785 1,521
All executive officers as a group (7
persons)................................... $ 227,973 7,928
Non-executive officer employees as a group
(approximately 11,128 persons)............. $88,397,315 3,109,805
</TABLE>
- - --------
(1) Market value on date of purchase. The purchase price paid by each
participant in the 1992 Purchase Plan is 15% below the market value. See
"Description of the 1992 Purchase Plan."
DESCRIPTION OF THE 1992 PURCHASE PLAN
HISTORY. The 1992 Purchase Plan was adopted by the Company's Board of
Directors on August 24, 1992 and was approved by the Company's stockholders on
October 12, 1992, and a total of 9,000,000 shares of the Company's Common
Stock were reserved for issuance thereunder (approximately 413,302 additional
shares were carried over from a predecessor to the 1992 Purchase Plan). The
1992 Purchase Plan was amended by the Company's Board of Directors on July 19,
1993 and such amendment was approved by the Company's stockholders on October
11, 1993, to increase by 9,000,000 the total number of shares reserved for
issuance thereunder.
PURPOSE. The purpose of the 1992 Purchase Plan is to provide employees of
the Company, and of subsidiaries that have not been excluded by the Board of
Directors as ineligible to participate in the 1992 Purchase Plan, with an
opportunity to purchase Common Stock of the Company at a discount from the
market price, through payroll deductions, and to thereby provide an incentive
for continued employment.
ADMINISTRATION. The 1992 Purchase Plan may be administered by the Board of
Directors, or by a committee of the Board appointed by the Board. Currently,
the Compensation Committee (the "Committee") administers the 1992 Purchase
Plan for all employees. Members of the Committee are not eligible to
participate in the 1992 Purchase Plan. The administration, interpretation,
application, or adjudication by the Committee of the 1992 Purchase Plan is, to
the full extent permitted by law, final, conclusive, and binding on all
participants. Members of the Committee do not receive any additional
compensation for administering the 1992 Purchase Plan other than compensation
for their services as Board members.
In the event that insufficient shares are available under the 1992 Purchase
Plan for a full allocation of shares to all participants during a given
Offering Period (as defined below), the Board, in its discretion, shall (i)
make a pro rata allocation of the shares remaining available for issuance and
return to each participant any cash remaining in his or her account, or (ii)
increase the number of shares that may be issued under the 1992 Purchase Plan,
subject to stockholder approval.
ELIGIBILITY. All employees of the Company, or of any subsidiary of the
Company that has not been excluded by the Board as ineligible to participate
in the 1992 Purchase Plan, are eligible to participate in the 1992 Purchase
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Plan except the following: (i) employees who are customarily employed for less
than 20 hours per week; (ii) employees who are customarily employed for less
than five months in a calendar year; and (iii) employees who own or hold
options to purchase or who, as a result of participation in the 1992 Purchase
Plan, would own stock or hold options to purchase, stock possessing 5% or more
of the total combined voting power or value of all classes of stock of the
Company, determined pursuant to Section 424(d) of the Code.
Approximately 57 subsidiaries of the Company are currently eligible to
participate in the 1992 Purchase Plan. As of July 31, 1996, approximately
24,650 employees were eligible to participate in the 1992 Purchase Plan. Non-
employee directors, members of the Committee, and Mr. Ellison are not eligible
to participate in the 1992 Purchase Plan.
OFFERING PERIODS AND ENROLLMENT. Each offering of Common Stock under the
1992 Purchase Plan is for a period of six months. Offering Periods commence on
the first day of October and April of each year. The first day of each
Offering Period is the "Offering Date" for such Offering Period. The
Committees may change the duration of Offering Periods without stockholder
approval, subject to certain limitations set forth in the 1992 Purchase Plan.
Eligible employees may elect to participate in any Offering Period by
submitting appropriate enrollment forms to the Company on or before the 15th
day of the last month before the Offering Period. Once enrolled, a participant
automatically will participate in each succeeding Offering Period unless he or
she withdraws from the Offering Period or the 1992 Purchase Plan. Upon
enrollment, a participant authorizes payroll deductions of up to 10% of the
participant's base salary or wages, bonuses, overtime, shift premiums, draws
against commissions, and commissions received during an Offering Period. After
a participant sets the rate of payroll deductions for an Offering Period, he
or she may increase or decrease the rate for any subsequent Offering Period,
but may only decrease the rate for the current Offering Period. Only one
change may be made during an Offering Period, unless otherwise approved by the
Committee. No interest accrues on payroll deductions. All payroll deductions
received or held by the Company under the 1992 Purchase Plan may be used by
the Company for any corporate purpose, and the Company is not obligated to
segregate such payroll deductions.
PURCHASE OF STOCK. The number of whole shares a participant may purchase in
any Offering Period is determined by dividing the total amount of payroll
deductions withheld from the participant during the Offering Period by the
price per share determined as described below. The purchase takes place
automatically on the Exercise Date. Any cash balance remaining in a
participant's account following the purchase will be carried forward without
interest to the next Offering Period, subject to certain limited exceptions.
No participant may purchase more than 200% of the number of shares
determined by using 85% of the fair market value of a share of the Company's
Common Stock on the Offering Date. In addition, a participant is not permitted
to make additional payroll deductions under the 1992 Purchase Plan once such
participant has made contributions for the purpose of purchasing shares under
the 1992 Purchase Plan or any other employee stock purchase plan in the amount
of $21,250 in a calendar year.
PURCHASE PRICE. The purchase price of shares purchased in any Offering
Period will be 85% of the lesser of (a) the fair market value of the shares on
the Offering Date or (b) the fair market value of the shares on the Exercise
Date.
WITHDRAWAL. A participant may withdraw from the 1992 Purchase Plan or any
Offering Period by giving written notice to the Company. If notice is received
by the 15th day of the last month of an Offering Period, payroll deductions
for that Offering Period will cease and all deductions credited to the
participant's account will be returned promptly, without interest. If notice
is received after such date, the funds in the participant's account will be
used to purchase stock on the Exercise Date. No payroll deductions will be
made for any succeeding Offering Period unless the employee enrolls in a new
Offering Period.
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TERMINATION OF EMPLOYMENT. If a participant's employment terminates for any
reason (including death, disability, or retirement) or if a participant
becomes ineligible to participate in the 1992 Purchase Plan, in either case
prior to or on the 15th day of the last month of an Offering Period, his or
her payroll deductions will be discontinued, and any amounts that were
deducted from the participant's pay during the current Offering Period will be
refunded to the participant (or to the participant's beneficiary or personal
representative, in case of death) without interest. If a participant's
employment terminates or a participant becomes ineligible to participate after
the 15th day of the last month of an Offering Period, the funds in the
participant's account will be used to purchase stock on the Exercise Date.
CAPITAL CHANGES. Subject to any required action by the stockholders of the
Company, the number of shares of Common Stock purchasable at the end of any
current Offering Period, the number of shares of Common Stock authorized for
issuance under the 1992 Purchase Plan, and the price per share of Common Stock
purchasable at the end of any current Offering Period will be proportionately
adjusted for any increase or decrease in the number of outstanding shares of
Common Stock resulting from a stock split, reverse stock split, combination,
or reclassification of the Common Stock, or a dividend payable in the capital
stock of the Company (but only on the Common Stock) or any other increase or
decrease effected without receipt of consideration by the Company.
In the event of a dissolution or liquidation of the Company, the Offering
Period will terminate unless otherwise provided by the Committee, and the
Company shall return to participants, to the extent permitted by law, any
amounts, without interest, remaining in all payroll deduction accounts.
In the event of a sale of all or substantially all of the assets of the
Company, or the merger of the Company with or into another corporation, each
option under the 1992 Purchase Plan shall be assumed or an equivalent option
shall be substituted by such successor corporation, unless the Committee
determines, in the exercise of its sole discretion and in lieu of such
assumption or substitution, to shorten an Offering Period then in progress by
setting a new Exercise Date.
RESALE OF SHARES. Generally, the 1992 Purchase Plan does not impose any
restrictions on the resale of shares of Common Stock purchased thereunder.
Furthermore, the Company has or will have a Form S-8 Registration Statement on
file with the SEC, which satisfies most federal securities laws requirements
with respect to the resale of such shares. However, the shares may be subject
to resale restrictions imposed by state securities laws. In addition,
participants who are affiliates of the Company may not resell under the Form
S-8 Registration Statement any shares purchased under the 1992 Purchase Plan.
Such resales must either be described in a separate prospectus (or, in certain
instances, registered in a separate registration statement) or be effected in
accordance with Rule 144 or another available exemption under the 1933 Act.
AMENDMENT OR TERMINATION OF PLAN. The Committee may at any time and for any
reason terminate or amend the 1992 Purchase Plan. Generally, no such
termination may affect options previously granted, provided that an Offering
Period may be terminated by the Committee on any Exercise Date if the
Committee determines that the termination of the 1992 Purchase Plan is in the
best interests of the Company and its stockholders. Generally, no amendment
may make any change in any option previously granted that adversely affects
the rights of any participant.
CERTAIN UNITED STATES FEDERAL INCOME TAX INFORMATION
GENERAL. The following is a general summary as of the date of this Proxy
Statement of the United States federal income tax consequences associated with
participation in the 1992 Purchase Plan. The federal tax laws may change and
the federal, state and local tax consequences for any participant will depend
upon his or her individual circumstances. This information may not be
applicable to employees of foreign subsidiaries or to participants who are not
residents of the United States. All participants have been and are encouraged
to seek the advice of a qualified tax advisor regarding the tax consequences
of participation in the 1992 Purchase Plan. Any tax effects that accrue to
foreign employees as a result of participation in the 1992 Purchase Plan are
governed solely by the tax laws of the countries in which such employees
reside.
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<PAGE>
The 1992 Purchase Plan is intended to qualify as an "employee stock purchase
plan" within the meaning of Section 423 of the Code. The 1992 Purchase Plan is
not qualified under Section 401(a) of the Code.
TAX TREATMENT OF THE PARTICIPANT. Assuming the 1992 Purchase Plan qualifies
under Section 423 of the Code, participants will not recognize income for
federal income tax purposes either upon enrollment in the 1992 Purchase Plan
or upon purchase of shares thereunder. All tax consequences of purchasing
shares under the 1992 Purchase Plan are deferred until the participant sells
or otherwise disposes of the shares or dies.
If shares are disposed of after being held for more than one year after the
applicable Exercise Date and more than two years from the applicable Offering
Date, or if the participant dies while owning the shares, the participant
realizes ordinary income to the extent of the lesser of: (i) 15% of the fair
market value of the shares on the Offering Date or (ii) the amount by which
the fair market value of the shares on the date of disposition exceeds the
purchase price. Any additional gain upon the disposition of shares is treated
as long-term capital gain. In general, a disposition includes a sale,
exchange, gift or transfer of legal title, but does not include a transfer on
death to an estate or a transfer by bequest or inheritance. If the shares are
sold after the holding periods described above and the sale price is less than
the purchase price, there is no ordinary income, and the participant
recognizes a capital loss equal to the difference between the sale price and
the purchase price.
If the shares are disposed of, including by sale or gift (but not death,
bequest or inheritance) within either the one-year or two-year holding periods
described above (a "disqualifying disposition"), the participant realizes
ordinary income at the time of such disqualifying disposition to the extent
that the fair market value of the shares at the Exercise Date exceeded the
purchase price. This excess will constitute ordinary income in the year of the
disqualifying disposition even if no gain is realized on the sale or if a
gratuitous transfer is made. The difference, if any, between the sales
proceeds and the fair market value of the shares at the Exercise Date is a
capital gain or loss.
Long-term capital gain (gain on property held for more than one year) is
taxed for federal tax purposes at a maximum rate of 28%. Capital gains may be
offset by capital losses and up to $3,000 of capital losses may be offset
annually against ordinary income. Capital losses in excess of $3,000 annually
are deductible only against capital gains or may be carried forward.
Ordinary income recognized by a participant upon a disqualifying disposition
constitutes taxable compensation that will be reported on a W-2 form. The
Company takes the position that this income is not subject to withholding.
Optionees who are officers or directors of the company subject to Section
16(b) of the Securities Exchange Act may be subject to special federal income
tax treatment upon exercise of their options. In general, such optionees will
be subject to tax with respect to income recognized upon exercise of their
options upon the later to occur of (1) the date such income normally would be
recognized under the principles described above, or (2) the expiration of the
six-month forfeiture period under Section 16(b), unless such an optionee makes
the election under Section 83(b) of the Internal Revenue Code to be taxed as
of the date specified in (1). The amount of income will be measured by
reference to the value of the shares acquired upon exercise as of the
applicable date. Optionees subject to this special treatment should consult
their own tax advisors for further information.
TAX TREATMENT OF THE COMPANY. The Company will be entitled to a deduction
for federal income tax purposes to the extent that a participant recognizes
ordinary income on a disqualifying disposition of the shares, but not if a
participant meets the holding period requirements. The Company will treat any
transfer of record ownership of shares, including a transfer to a broker or
nominee or into "street name," as a disposition, unless it is notified to the
contrary. In order to enable the Company to learn of disqualifying
dispositions and ascertain the amount of the deductions to which it is
entitled, participants are required to notify the Company in writing of the
date and terms of any disposition of shares purchased under the 1992 Purchase
Plan.
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<PAGE>
ERISA. The Company believes that the 1992 Purchase Plan is not subject to
any of the provisions of the Employee Retirement Income Security Act of 1974.
PROPOSAL NO. 7
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Company has engaged Arthur Andersen LLP as its principal independent
public accountants to perform the audit of the Company's financial statements
for fiscal 1997. Arthur Andersen LLP has audited the Company's financial
statements for its last nine fiscal years. The Board of Directors expects that
representatives of Arthur Andersen LLP will be present at the Annual Meeting,
will be given an opportunity to make a statement at the meeting if they desire
to do so, and will be available to respond to appropriate questions.
REQUIRED VOTE
The ratification of the selection of Arthur Andersen LLP requires the
affirmative vote of the holders of a majority of shares of Common Stock
present or represented and entitled to vote at the Annual Meeting. Abstentions
and broker non-votes will be counted as present for purposes of determining
whether a quorum is present, and broker non-votes will not be treated as
entitled to vote on this matter at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
RATIFICATION OF THE SELECTION OF ARTHUR ANDERSEN LLP
STOCKHOLDER PROPOSALS
Stockholder proposals for inclusion in the Company's Proxy Statement and
form of proxy relating to the Company's 1997 Annual Meeting of Stockholders
must be received by May 14, 1997. Stockholder proposals should be addressed to
Raymond L. Ocampo Jr., Senior Vice President, General Counsel and Corporate
Secretary, Oracle Corporation, Box 659507, Redwood City, California 94065.
OTHER BUSINESS
The Board of Directors does not presently intend to bring any other business
before the meeting, and, so far as is known to the Board of Directors, no
matters are to be brought before the meeting except as specified in the notice
of the meeting. As to any business that may properly come before the meeting,
however, it is intended that proxies, in the form enclosed, will be voted in
respect thereof in accordance with the judgment of the persons voting such
proxies.
By Order of the Board of Directors,
/s/ Raymond L. Ocampo Jr.
_____________________________________
Raymond L. Ocampo Jr.
Senior Vice President, General
Counsel & Corporate Secretary
ALL STOCKHOLDERS ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE
ACCOMPANYING PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE. THANK YOU FOR
YOUR PROMPT ATTENTION TO THIS MATTER.
25
<PAGE>
EXHIBIT A
1993 DIRECTORS' STOCK OPTION PLAN
(underlined provisions are proposed to be eliminated)
5. OPTION GRANTS
(D) LIMITATIONS
(iii) NOTWITHSTANDING THE PROVISIONS OF SECTION 5(C)(II) HEREOF, EACH
GRANT DESCRIBED IN THAT SUBPARAGRAPH MADE AFTER THE DATE THAT THE
COMPANY BECOMES SUBJECT TO NEW RULE 16B-3 UNDER THE EXCHANGE ACT,
AS AMENDED EFFECTIVE MAY 1, 1991 ("NEW RULE 16B-3"), SHALL BE
CONDITIONAL UPON THE COMPANY RECEIVING ON OR PRIOR TO THE DATE OF
THE GRANT EITHER AN OPINION OF COUNSEL OR A NO-ACTION LETTER
ISSUED BY THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION TO
THE COMPANY STATING THAT THE GRANT IS AN EXEMPT GRANT UNDER NEW
RULE 16B-3 UNDER THE EXCHANGE ACT AS THEN APPLICABLE TO THE
COMPANY AND THE RECIPIENT OF THE GRANT REMAINS A "DISINTERESTED"
PERSON WITHIN THE MEANING OF NEW RULE 16B-3.
(iv) NOTWITHSTANDING THE PROVISIONS OF SECTIONS 5(B) AND (C), NO
INDIVIDUAL OUTSIDE DIRECTOR SHALL BE GRANTED OPTIONS TO PURCHASE
MORE THAN AN AGGREGATE OF 675,000 SHARES UNDER THIS PLAN.
14. AMENDMENT AND TERMINATION OF THE PLAN.
(A) AMENDMENT. The Board or the Committee may amend the Plan from time to
time in such respects as the Board or the Committee, as the case may
be, may deem advisable; provided that, to the extent necessary to
comply with Rule 16b-3 under the Exchange Act (or any other applicable
law or regulation), the Company shall obtain approval of the Company's
stockholders to amend the Plan to the extent and in the manner required
by such law or regulation. NOTWITHSTANDING THE FOREGOING, THE
PROVISIONS SET FORTH IN SECTIONS 5 AND 6 OF THIS PLAN (AND ANY OTHER
SECTIONS OF THIS PLAN THAT AFFECT THE FORMULA AWARD TERMS REQUIRED TO
BE SPECIFIED IN THIS PLAN BY RULE 16B-3) SHALL NOT BE AMENDED MORE THAN
ONCE EVERY SIX MONTHS, OTHER THAN TO COMPORT WITH CHANGES IN THE CODE,
THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR THE
RULES THEREUNDER.
26
<PAGE>
ORACLE CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 14, 1996
The undersigned hereby appoints LAWRENCE J. ELLISON, RAYMOND J. LANE and
JEFFREY O. HENLEY, or any of them, each with power of substitution, as proxies
to represent the undersigned at the Annual Meeting of Stockholders of ORACLE
CORPORATION, to be held on Monday, October 14, 1996, at 1:30 p.m., in the Grand
Ballroom of the Hotel Sofitel, 223 Twin Dolphin Drive, Redwood City, California,
and any adjournment thereof, and to vote the number of shares the undersigned
would be entitled to vote if personally present on the following matters:
1. ELECTION OF DIRECTORS
FOR all nominees listed below (except as marked to the contrary below):
-----
WITHHOLD AUTHORITY to vote for all nominees listed below:
-----
Nominees: Lawrence J. Ellison, Donald L. Lucas, Delbert W. Yocam,
Michael J. Boskin, Raymond J. Lane and Jeffrey O. Henley.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below)
- - -------------------------
2. PROPOSAL TO APPROVE THE ADOPTION OF THE COMPANY'S EXECUTIVE OFFICER
1997 BONUS PLAN
[_] FOR [_] AGAINST [_] ABSTAIN
3. PROPOSAL TO APPROVE THE ADOPTION OF AN AMENDMENT TO THE COMPANY'S
CERTIFICATE OF INCORPORATION
[_] FOR [_] AGAINST [_] ABSTAIN
4. PROPOSAL TO APPROVE THE ADOPTION OF AMENDMENTS TO THE COMPANY'S 1993
DIRECTORS' STOCK OPTION PLAN
[_] FOR [_] AGAINST [_] ABSTAIN
5. PROPOSAL TO APPROVE THE ADOPTION OF AN AMENDMENT TO THE COMPANY'S 1991
LONG-TERM EQUITY INCENTIVE PLAN
[_] FOR [_] AGAINST [_] ABSTAIN
6. PROPOSAL TO APPROVE THE ADOPTION OF AN AMENDMENT TO THE COMPANY'S
EMPLOYEE STOCK PURCHASE PLAN (1992)
[_] FOR [_] AGAINST [_] ABSTAIN
7. PROPOSAL TO RATIFY THE APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
[_] FOR [_] AGAINST [_] ABSTAIN
8. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting or any
adjournment thereof.
(Continued and to be signed on reverse side)
<PAGE>
(Continued from other side)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THIS PROXY WILL BE
VOTED AS DIRECTED. IN THE ABSENCE OF DIRECTION, THIS PROXY WILL BE VOTED FOR THE
SIX NOMINEES FOR ELECTION, TO APPROVE THE ADOPTION OF THE EXECUTIVE OFFICERS
1997 BONUS PLAN, TO APPROVE THE ADOPTION OF THE AMENDMENT TO THE COMPANY'S
CERTIFICATE OF INCORPORATION, TO APPROVE THE AMENDMENT TO THE COMPANY'S 1993
DIRECTORS' STOCK OPTION PLAN, TO APPROVE THE AMENDMENT TO THE 1991 LONG-TERM
EQUITY INCENTIVE PLAN, TO APPROVE THE AMENDMENT TO THE EMPLOYEE STOCK PURCHASE
PLAN (1992) AND FOR THE RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP.
PROXY INSTRUCTIONS
1. Please sign exactly as the name or names appear on stock certificate (as
indicated hereon).
2. If the shares are issued in the names of two or more persons, all such
persons should sign the proxy.
3. A proxy executed by a corporation should be signed in its name by its
authorized officers.
4. Executors, administrators, trustees, and partners should indicate their
positions when signing.
Dated: , 1996
---------------
---------------------------
---------------------------
Signatures
STOCKHOLDERS ARE URGED TO DATE, MARK, SIGN, AND RETURN THIS PROXY IN THE
ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED WITHIN THE UNITED STATES.
