<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:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting material pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
ORACLE CORPORATION
------------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------------------------
(NAME OF PERSON(S) FILING PROXY STATEMENT IF OTHER THAN THE REGISTRANT)
Payment of filing fee (Check the appropriate box):
[X] No fee required
[_] $125 per Exchange Act Rule O-11(c)(1)(ii), 14a-6(i)(1) or Item 22(a) of
Schedule 14A.
[_] 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 O-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------------------
[_] Fee paid previously by written preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid: ______________________________________________
(2) Form Schedule or Registration Statement No.: _________________________
(3) Filing party: ________________________________________________________
(4) Date filed: __________________________________________________________
<PAGE>
[ORACLE LOGO APPEARS HERE]
500 ORACLE PARKWAY
REDWOOD CITY, CALIFORNIA 94065
September 3, 1998
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 19, 1998, 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 1998. 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 OR VOTE ELECTRONICALLY VIA THE
INTERNET OR TELEPHONE. See Voting Via the Internet or By Telephone in the
Proxy Statement for more details. Please note that there are separate Internet
and telephone voting arrangements depending upon whether shares are registered
in your name or in the name of a bank or broker. Returning the proxy or voting
electronically 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 APPEARS 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 19, 1998, 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 1999 Bonus
Plan.
3. 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 50,000,000 shares.
4. 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 30,000,000 shares.
5. To ratify the appointment of Arthur Andersen LLP as independent public
accountants for the Company for the current fiscal year.
6. To transact any other business that may properly come before the
meeting.
Stockholders of record at the close of business on August 21, 1998 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/ Daniel Cooperman
DANIEL COOPERMAN
Senior Vice President, General Counsel
& Secretary
Redwood City, California
September 3, 1998
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE
AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE OR
VOTE ELECTRONICALLY VIA THE INTERNET OR TELEPHONE.
<PAGE>
PROXY STATEMENT
SEPTEMBER 3, 1998
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 Monday October 19, 1998, 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 21, 1998, the
record date, will be entitled to vote at the Annual Meeting. At the close of
business on the record date, the Company had 971,850,052 shares of Common
Stock outstanding and entitled to vote. A majority, 485,925,027, 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 3, 1998. 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 $12,500,
plus reasonable 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 eight 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.
DIRECTORS
The following incumbent directors are being nominated for re-election to the
Board: Lawrence J. Ellison, Donald L. Lucas, Michael J. Boskin, Raymond J.
Lane, Jeffrey O. Henley, Jack F. Kemp, Jeffrey Berg and Richard A. McGinn.
1
<PAGE>
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, 54, 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. Mr.
Ellison is Co-Chairman of California's Council on Information Technology and
is also a director of Apple Computer, Inc. and SuperGen, Inc.
MR. LUCAS, 68, 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
Committee on Compensation and Management Development (the "Compensation
Committee") since 1989 and a member of the Nominating Committee since December
1996. He was Chairman of the Board from October 1980 through March 1990. He
has been a venture capitalist since 1960. He also serves as a director of
Cadence Design Systems, Inc., Coulter Pharmaceutical, Inc., Macromedia, Inc.,
Transcend Services, Inc. and Tricord Systems, Inc.
DR. BOSKIN, 52, has been a director of the Company since May 1994. He has
been a member of the Finance and Audit Committee and the Nominating Committee
since July 1994 and a member of the Compensation Committee since July 1995. He
was appointed Chairman of the Compensation Committee by the Board in July
1997. Dr. Boskin has been a professor of economics at Stanford University
since 1971 and is Chief Executive Officer and President of Boskin & Co., Inc.,
a consulting firm. He was Chairman of the President's Council of Economic
Advisers from February 1989 until January 1993. Dr. Boskin also serves as a
director of Exxon Corporation, First Health Group, Inc., and Airtouch
Communications, Inc.
MR. LANE, 51, has been President and Chief Operating Officer of the Company
since July 1996. Mr. Lane served as Executive Vice President and President of
Worldwide Operations from October 1993 to June 1996, and has been a director
of the Company 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.
MR. HENLEY, 53, has been Executive Vice President and Chief Financial
Officer of the Company since March 1991 and has been a director since June
1995. Before 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. KEMP, 63, has served as a director of the Company since February 1997
and previously served as a director of the Company from February 1995 until
September 1996. Mr. Kemp has been Co-Director of Empower America from 1993 to
the present. Mr. Kemp was the Secretary of Housing and Urban Development from
February 1989 until January 1992. Mr. Kemp also serves as a director of
American Bankers Insurance Group, Inc., Carson, Inc., Everen Capital
Corporation, and The Sports Authority, Inc.
MR. BERG, 51, has been a director of the Company since March 1997. He has
been a member of the Finance and Audit Committee since April 1997. Mr. Berg
has been an agent in the entertainment industry for over 25 years and the
Chairman and Chief Executive Officer of International Creative Management,
Inc., a talent agency
2
<PAGE>
for the entertainment industry, since 1985. Mr. Berg is also a director of
Excite, Inc. He served as Co-Chair of the California Information Technology
Council and was President of the Executive Board of the College of Letters and
Sciences at the University of California at Berkeley.
MR. MCGINN, 51, has been a director of the Company since March 1997. Mr.
McGinn has served as the Chairman of the Board of Lucent Technologies, Inc.,
since February 1998 and has been its Chief Executive Officer since October
1997. He has been President since February 1996, and was Chief Operating
Officer from February 1996 to October 1997. Lucent Technologies previously was
the communications and technology subsidiary of AT&T that was spun off in
April 1996. Mr. McGinn served as Executive Vice President of AT&T and Chief
Executive Officer of AT&T Network Systems from October 1994 to April 1996. He
served as President and Chief Operating Officer of AT&T Network Systems from
August 1993 to October 1994 and as a Senior Vice President from August 1992 to
August 1993. Mr. McGinn also serves as a director of the American Express
Company.
DIRECTOR COMPENSATION
The Company currently pays Messrs. Kemp, Berg and McGinn an annual retainer
of $30,000 each. Dr. Boskin currently is paid an annual retainer of $60,000
and Mr. Lucas currently is paid an annual retainer of $120,000 in connection
with their additional board committee duties. Non-employee members of the
Board also receive directors' fees of (1) $1,500 for each regularly scheduled
Board meeting attended, (2) $3,000 for each meeting of the Finance and Audit
Committee attended, and (3) $2,000 per day for each special meeting or
committee meeting attended. 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 18,000 shares of Common Stock on May 31st of each year provided such
director has served on the Board for at least six months; and in lieu of the
latter option grant, options to purchase 40,000 shares of Common Stock on May
31st of each year 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 and
options to purchase 25,000 shares of Common Stock on May 31st of each year to
the director who serves as chairman of the Compensation Committee, provided
such director has served as a member of such committee for at least one year.
Messrs. Ellison, Lane and Henley are employees of the Company and are not
separately compensated as directors of the Company.
BOARD OF DIRECTORS' MEETINGS AND COMMITTEES
The Board of Directors met four times at regularly scheduled meetings and
twice at special meetings during fiscal year 1998. During that same period,
the Board acted two times by unanimous written consent. Standing committees of
the Board currently include, among others, an Executive Committee, a Finance
and Audit Committee, a Committee on Compensation and Management Development
(the "Compensation Committee") and a Nominating Committee. Each incumbent
director has attended at least 75% of all Board meetings and applicable
committee meetings.
Messrs. Ellison, Lucas and Henley are presently the members of the Executive
Committee. The Executive Committee did not meet during fiscal year 1998, and
during that same period acted nine 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 beyond certain financial limits, 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 Berg and Dr. Boskin are presently the members of the
Finance and Audit Committee. The Finance and Audit Committee met four times
during fiscal year 1998. The function of the Finance and Audit
3
<PAGE>
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.
Dr. Boskin and Mr. Lucas are presently the members of the Compensation
Committee. The Compensation Committee met five times during fiscal year 1998,
and during that same period acted twenty-nine 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, to administer the
Company's stock plans and approve stock option awards and to oversee the
career development of senior management.
Dr. Boskin and Mr. Lucas are presently the members of the Nominating
Committee. The Nominating Committee met once during fiscal year 1998. 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.
4
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of August 21, 1998,
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 BENEFICIAL OWNERSHIP(1) CLASS
------------------------------------ ----------------------- -------
<S> <C> <C>
Lawrence J. Ellison(2)
500 Oracle Parkway, Redwood City, CA 94065...... 228,306,692 23.3%
Raymond J. Lane(3).............................. 3,109,869 *
Jeffrey O. Henley(4)............................ 2,225,214 *
Donald L. Lucas(5).............................. 200,001 *
Michael J. Boskin(6)............................ 123,609 *
Robert W. Shaw(7)............................... 121,875 *
Barry M. Ariko(8)............................... 106,509 *
Jack Kemp(9).................................... 38,733 *
Jeffrey Berg(10)................................ 18,750 *
Richard A. McGinn(11)........................... 18,750 *
All current executive officers and directors
as a group (14 persons)(12).................... 234,896,406 23.8%
</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, if applicable.
(2) Includes 7,848,375 shares subject to currently exercisable options or
options exercisable within 60 days.
(3) Includes 3,091,193 shares subject to currently exercisable options or
options exercisable within 60 days.
(4) Includes 2,220,313 shares subject to currently exercisable options or
options exercisable within 60 days.
(5) 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 187,501 shares subject to currently exercisable options or
options exercisable within 60 days.
(6) Includes 123,609 shares subject to currently exercisable options or
options exercisable within 60 days.
(7) Includes 121,875 shares subject to currently exercisable options or
options exercisable within 60 days.
(8) Includes 103,125 shares subject to currently exercisable options or
options exercisable within 60 days.
(9) Includes 18,750 shares subject to currently exercisable options or
options exercisable within 60 days.
(10) Includes 18,750 shares subject to currently exercisable options or
options exercisable within 60 days.
(11) Includes 18,750 shares subject to currently exercisable options or
options exercisable within 60 days.
(12) Includes all shares described in notes (2)-(11) above and 549,156
additional shares subject to currently exercisable options or options
exercisable within 60 days.
5
<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, 1998) (hereinafter referred to as the "named
executive officers") for the fiscal years ended May 31, 1998, 1997, and 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------------- OPTIONS/SARS
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) (#)(1)
--------------------------- ---- ---------- ---------- ------------
<S> <C> <C> <C> <C>
Lawrence J. Ellison................... 1998 $ 999,987 $ 530,000 0
Chairman and 1997 $ 999,985 $1,850,000 2,400,000
Chief Executive Officer 1996 $1,000,007 $1,330,875 1,050,000
Raymond J. Lane....................... 1998 $ 974,991 $ 206,250 0
President and Chief 1997 $ 883,334 $1,395,000 4,125,000
Operating Officer 1996 $ 700,008 $ 825,119 525,000
Robert W. Shaw(2)..................... 1998 $ 555,600 $ 335,826 75,000
Executive Vice President, 1997 $ 525,600 $ 495,540 375,000
Worldwide Consulting Services and
Vertical Markets 1996 $ 405,600 $ 430,000 262,500
Barry M. Ariko(2)..................... 1998 $ 508,485 $ 360,725 575,000
Executive Vice President, 1997 $ 435,600 $ 429,875 0
Canada and Latin America 1996 $ 345,600 $ 328,474 202,500
Jeffrey O. Henley..................... 1998 $ 645,000 $ 113,437 0
Executive Vice President 1997 $ 591,666 $ 852,000 825,000
and Chief Financial Officer 1996 $ 499,292 $ 588,656 525,000
</TABLE>
- --------
(1) All figures in this column reflect options to purchase common stock and
adjustments, to the extent applicable, for two 3-for-2 stock splits
effective April 16, 1996 and August 15, 1997, respectively.
(2) Messrs. Shaw and Ariko are no longer employees of the Company.
6
<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 1998:
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------
PERCENT OF POTENTIAL REALIZABLE VALUE AT
TOTAL ASSUMED ANNUAL RATES OF
NUMBER OF OPTIONS/SARS STOCK PRICE APPRECIATION
SECURITIES GRANTED TO FOR OPTION TERM
UNDERLYING EMPLOYEES IN EXERCISE OR --------------------------------
OPTIONS/SARS FISCAL YEAR BASE PRICE EXPIRATION
NAME GRANTED(1) 1998 ($/SH) DATE 5%($) 10%($)
---- ------------ ------------ ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Lawrence J. Ellison..... 0 0 $ 0 0 $ 0 $ 0
Raymond J. Lane......... 0 0 $ 0 0 $ 0 $ 0
Robert W. Shaw.......... 75,000(2) .4243% $34.71 07/11/07 $1,637,090 $4,148,707
Barry M. Ariko.......... 187,500(3) 1.061% $22.75 07/11/07 $2,541,058 $6,362,220
200,000(4) 1.131% $19.94 01/23/08 $2,507,717 $6,355,048
Jeffrey O. Henley....... 0 0 $ 0 0 $ 0 $ 0
</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) Option granted on July 11, 1997.
(3) Option granted on July 11, 1997 but later repriced from $34.71 to $22.75
on December 12, 1997 in connection with the Company's stock repricing for
non-executive officers and directors. Mr. Ariko did not become an
executive officer of the Company until February 1998.
(4) Option granted on January 23, 1998.
The following table sets forth information with respect to the named
executive officers concerning exercises of options during fiscal year 1998 and
unexercised options held as of the end of fiscal year 1998.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-THE-
OPTIONS/SARS AT FISCAL MONEY OPTIONS/SARS AT FISCAL
SHARES ACQUIRED VALUE YEAR-END (#) YEAR-END ($)
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- --------------- ------------ ------------------------- ----------------------------
<S> <C> <C> <C> <C>
Lawrence J. Ellison..... 0 $ 0 7,810,875/2,578,125 $129,935,611/$2,892,566
Raymond J. Lane......... 200,000 $6,819,180 2,997,443/3,482,813 $ 24,006,255/$1,446,287
Robert W. Shaw.......... 133,122 $2,924,463 131,252/ 512,811 $ 39,083/$ 824,711
Barry M. Ariko.......... 23,343 $ 627,932 164,532/ 488,750 $ 1,277,299/$1,310,785
Jeffrey O. Henley....... 250,000 $8,386,085 2,201,563/1,007,813 $ 29,105,348/$1,446,287
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee currently consists of Dr. Boskin and Mr. Lucas.
No member of the Compensation Committee was an officer or employee of the
Company or any of its subsidiaries during fiscal year 1998. 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.
7
<PAGE>
REPORT OF COMMITTEE ON COMPENSATION AND MANAGEMENT DEVELOPMENT
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 Committee on Compensation and Management
Development
The Committee on Compensation and Management Development (the "Compensation
Committee") consists of the following non-employee members of the Company's
Board of Directors: Michael J. Boskin and Donald L. Lucas.
The Compensation Committee reviews and determines the Company's executive
compensation objectives and policies, administers the Company's stock plans
and grants stock options and monitors and oversees the career development of
management personnel. The Board of Directors recently expanded the charter of
the Compensation Committee to include overseeing management career development
and accordingly changed the Compensation Committee's name. The Compensation
Committee's purview was expanded, in part, to help the Company attract,
develop and retain talented executive personnel in an extremely competitive
market.
Within the Silicon Valley, competition for executive talent is especially
intense in the information technology industry. With this perspective, the
Compensation Committee reviews and sets the compensation of the Company's
Chief Executive Officer and the other members of the Company's executive
management committee.
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
8
<PAGE>
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 against
which the Company compares its compensation are not 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 Compensation 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
1998 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 Compensation 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. Fiscal year 1998 executive bonus
payments for Messrs. Ellison, Lane, Henley and Roux were based upon earnings
per share and revenue growth and decreased based on the Company's revenue
growth changes in relation to the revenue growth of one or more of the
Company's competitors designated by the Committee. The executive bonus
payments for Messrs. Shaw and Ariko were based upon certain components of the
Company's revenues, margins and marketshare as well as leadership.
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.
9
<PAGE>
During fiscal year 1998, 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 executive officers.
Mr. Ellison's salary for fiscal year 1998, as compared to fiscal year 1997,
effectively remained unchanged and his bonus for fiscal year 1998 decreased
71% compared to the previous fiscal year. The decrease in Mr. Ellison's bonus
reflects the application of the fiscal year 1998 bonus plan, as adopted by the
stockholders of the Company on October 13, 1997, to the Company's financial
results for fiscal year 1998.
Stock Option Repricing
In December 1997, the Company reduced the exercise price of approximately
20% of the outstanding common stock options held by the Company's employees to
the fair market value per share as of the date of the reduction in price. The
Company repriced these employee stock options in an effort to retain employees
at a time when a significant percentage of employee stock options had exercise
prices that were above fair market value. The Company believes that stock
options are a valuable tool in compensating and retaining employees. Executive
officers and directors were excluded from this repricing.
The Company has not repriced stock options in the past ten years, except as
described above. The following table sets forth certain information concerning
the repricing of the options of any executive officer during the last ten
fiscal years:
TEN-YEAR OPTION REPRICING
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES MARKET PRICE EXERCISE LENGTH OF ORIGINAL
UNDERLYING OF STOCK AT PRICE AT NEW OPTION TERM
OPTIONS TIME OF TIME OF EXERCISE REMAINING AT DATE
NAME DATE REPRICED REPRICING REPRICING PRICE OF REPRICING
---- -------- ---------- ------------ --------- -------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Barry M. Ariko.......... 12/12/97(1) 187,500 $22.75 $34.71 $22.75 9 years
7 months
</TABLE>
- --------
(1) Mr. Ariko was not an executive officer of the Company at the time of this
repricing. He became an executive officer in February 1998 and terminated
his employment with the Company in August 1998.
Submitted by: Michael J. Boskin
Donald L. Lucas
10
<PAGE>
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, 1993 and ending May 31, 1998, 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 5 YEAR CUMULATIVE TOTAL RETURN*
Among Oracle Corporation, the S&P 500 Index
and the Hambrecht & Quist Technology Index
LOGO
[PERFORMANCE GRAPH APPEARS HERE]
CUMULATIVE TOTAL RETURN
-------------------------------------------------
5/93 5/94 5/95 5/96 5/97 5/98
---- ---- ---- ---- ---- ----
ORACLE CORPORATION....... 100 164 250 357 503 382
S & P 500 ............... 100 104 125 161 208 272
H & QUIST TECHNOLOGY .... 100 108 159 225 270 325
*$100 invested on 5/31/93 in Stock or Index--
including reinvestment of dividends.
Fiscal year ending May 31.
11
<PAGE>
TRANSACTIONS AND LEGAL ACTIONS INVOLVING MANAGEMENT
From June 1, 1997 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 1998, the Company purchased from nCUBE approximately
$13,000 of computer equipment and maintenance and related services. Since the
end of fiscal year 1998, the Company has placed an order for and plans to
purchase an additional $565,000 in computer equipment from nCUBE. 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. 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 recently entered into an agreement with MindQ LLC, a
company in which Mr. Ellison owns a controlling interest, which allows the
Company to resell some of MindQ LLC's existing software courses as well as
certain additional software courses that will be developed by MindQ LLC at its
cost.
During fiscal year 1998, the Company leased two aircraft from Tentacle
Corporation and Wing and a Prayer, Incorporated (formerly Joubini Aviation,
Inc.), both of which are owned by Mr. Ellison. The aggregate amount paid to
these entities for use of the aircraft in fiscal year 1998 was $472,980. The
Company believes that the amounts paid for the use of the aircraft and the
pilots are within the range charged by third-party commercial charter
companies for similar model aircraft. The Company and Mr. Ellison are also
negotiating an indemnity agreement pursuant to which Mr. Ellison would
indemnify the Company up to $250,000,000 in the event that Joubini Aviation
Inc.'s aviation insurance policy does not provide full coverage to the
Company.
The Company paid Barry M. Ariko, a former executive officer of the Company,
$277,800 in connection with his termination of employment with the Company in
August 1998.
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, 1998, all the Reporting Persons complied with
all applicable filing requirements.
12
<PAGE>
PROPOSAL NO. 2
ADOPTION OF THE EXECUTIVE OFFICERS 1999 BONUS PLAN
On July 13, 1998 and August 24, 1998, the Compensation Committee unanimously
approved the adoption of the Executive Officers 1999 Bonus Plan (the "Bonus
Plan"), and the Board directed that the Bonus Plan be submitted to the
stockholders at the 1998 Annual Meeting. Targets set at the July 13, 1998
meeting and in the August 24, 1998 written consent 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 1999 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.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
APPROVAL OF ADOPTION OF THE EXECUTIVE OFFICERS 1999 BONUS PLAN.
DESCRIPTION OF THE EXECUTIVE OFFICERS 1999 BONUS PLAN
HISTORY. The Compensation Committee approved the adoption of the Executive
Officers 1999 Bonus Plan (the "Bonus Plan") at a meeting held on July 13, 1998
and a written consent dated August 24, 1998.
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 Compensation
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 Compensation 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 Compensation Committee. If the Company reports a
profit for its fiscal year 1999, Mr. Ellison will receive a bonus of $300,000
and Mr. Lane will receive a bonus of $100,000. As an additional part of the
Bonus Plan, Messrs. Ellison, Lane, Henley, Roux and Bloom will receive awards
based upon the Company's earnings per share and revenue growth. Such awards
will be based upon the Company's level of achievement of the foregoing
performance criteria and will consist of a percentage of base salary
(including, in Mr. Ellison's and Mr. Lane's cases, the profitability bonus, if
any, described above) tied to a matrix of the Company's performance criteria.
The Compensation 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 Compensation 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 changes in
relation to the revenue growth of one or more of the Company's competitors
designated by the Compensation Committee. With respect to fiscal year 1999,
such determinations were made
13
<PAGE>
by the Committee at a meeting held on July 13, 1998 and a written consent
dated August 24, 1998. The details of the formula have not been included in
this Proxy Statement to maintain the confidentiality of the Company's earnings
and revenues expectations.
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. The maximum bonus payment that any
executive officer could receive under the Bonus Plan would be four times the
sum of his base salary and, in Mr. Ellison's and Mr. Lane's cases, the
profitability bonus, if any. In the past, bonus payments have ranged from
about one-eighth to three times base compensation. The most highly paid
executive officer's base compensation for this purpose is $1,300,000.
AMENDMENT AND TERMINATION. The Committee may terminate the Bonus Plan, in
whole or in part, suspend the Bonus Plan, in whole or in part from time to
time, and 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.
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).
14
<PAGE>
PROPOSAL NO. 3
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 13, 1998, which increases
the number of shares reserved for issuance thereunder by a total of 50,000,000
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.
PLAN ACTIVITY
As of August 21, 1998, options to purchase an aggregate of 8,192,796 shares
of Common Stock issued under the 1991 Plan had been exercised, and options to
purchase 83,151,108 shares were outstanding. Without taking into account the
proposed amendment to the 1991 Plan, 23,136,990 shares remained available for
future grants as of August 21, 1998.
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 1998. The following table sets forth additional
information with respect to options granted under the 1991 Plan during fiscal
year 1998 to certain groups:
<TABLE>
<CAPTION>
WEIGHTED AVERAGE OPTIONS
IDENTITY OF GROUP EXERCISE PRICE GRANTED
----------------- ---------------- ----------
<S> <C> <C>
All executive officers as a group (9 persons)...... $27.9119 1,447,500
Non-executive officer employees as a group
(approximately 3,686 persons)..................... $23.6379(1) 16,230,012
</TABLE>
- --------
(1) Reflects the repricing of certain stock options granted to employees that
were not executive officers or directors of the Company.
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 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 with a total of 33,750,000 shares of the Company's Common Stock reserved
for issuance thereunder. The 1991 Plan was amended by the Board of Directors
to increase the number of shares reserved for issuance thereunder by
27,000,000 on July 19, 1993, and
15
<PAGE>
such amendment was approved by the stockholders on October 11, 1993. The 1991
Plan was amended by the Compensation Committee to limit the number of options
that can be granted to any individual during any year to 6,750,000 on May 31,
1994, and such amendment was approved by the stockholders on October 10, 1994.
The 1991 Plan was amended by the Board of Directors to increase the number of
shares reserved for issuance thereunder by 27,000,000 on July 17, 1995, and
such amendment was approved by the stockholders on October 9, 1995. The 1991
Plan was amended by the Board of Directors to increase the number of shares
reserved for issuance thereunder by 51,000,000 on July 15, 1996, and such
amendment was approved by the stockholders on October 14, 1996.
In connection with the acquisition of Datalogix International, Inc.
("Datalogix"), on December 9, 1996, the Company amended the 1991 Plan to
provide for the assumption of options granted under the Datalogix Amended and
Restated 1992 Incentive Stock Plan and 1986 Key Employees' Stock Option Plan.
In connection with the acquisition of Treasury Services Corporation ("TSC"),
on July 14, 1997, the Company amended the 1991 Plan to provide for the
assumption of options granted by TSC in connection with the acquisition of
each of Datalogix and TSC. With respect to these assumed options, if there are
conflicts between the terms of the Datalogix or TSC plans and the 1991 Plan,
then the terms of the Datalogix or TSC plan, as appropriate, shall govern. If
any provision of the 1991 Plan may be deemed to provide an additional benefit
to the holder of these assumed options, then such provision shall not apply
with respect to those assumed options.
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. Subject to the terms of the 1991 Plan, the Compensation 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 Compensation 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 52 subsidiary
corporations eligible to participate in the 1991 Plan. As of August 21, 1998,
approximately 36,000 full-time employees were eligible to receive options
under the 1991 Plan, except those who are not eligible due to local 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 Compensation Committee determines whether an option
granted under the 1991 Plan will be an ISO or a NQSO. The 1991 Plan limits the
aggregate 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 Plans.
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 Compensation 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 Compensation 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 Compensation Committee may also grant rights to purchase
stock under such terms and conditions as it may determine. In addition, the
Compensation Committee may grant stock bonus awards payable in cash or Common
Stock based upon reasonable performance criteria the Compensation Committee
deems appropriate.
16
<PAGE>
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 6,750,000 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
Compensation Committee determines that such limitation is not required to
qualify options and SARs as performance-based compensation, the Compensation
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 Compensation 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 Compensation 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 Compensation Committee. The Compensation
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 Compensation 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 Plans 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 Compensation 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 Compensation Committee, 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 Compensation Committee in its sole discretion.
DEFERRALS. The Compensation 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.
17
<PAGE>
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. If termination is on account of death or disability, any
outstanding option, to the extent exercisable on the termination date, must be
exercised by the earlier of 12 months following such date 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
Compensation 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 13d-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.
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.
18
<PAGE>
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 more than one year
after the date the option was exercised and for more than 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 20% 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 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
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<PAGE>
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.
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PROPOSAL NO. 4
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 approved by the Board on July 13, 1998, which
increases the number of shares reserved for issuance thereunder by a total of
30,000,000 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 21, 1998, and without taking into account the proposed
amendment to the 1992 Purchase Plan, the Company had issued and sold an
aggregate of 27,968,888 shares of Common Stock pursuant to the 1992 Purchase
Plan, and 10,151,065 shares remained eligible for purchase under the 1992
Purchase Plan.
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 1998 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>
NUMBER OF
INDIVIDUAL AND POSITION OR GROUP DOLLAR VALUE ($)(1) SHARES PURCHASED
-------------------------------- ------------------- ----------------
<S> <C> <C>
Raymond J. Lane............................ $ 21,480 686
President and Chief Operating Officer
Robert W. Shaw............................. $ 21,480 686
Executive Vice President, Worldwide
Consulting Services and Vertical Markets
Barry M. Ariko............................. $ 21,480 686
Executive Vice President, Canada and Latin
America
Jeffrey O. Henley.......................... $ 21,480 686
Executive Vice President and Chief
Financial Officer
All executive officers as a group (9
persons).................................. $ 165,074 6,527
Non-executive officer employees as a group
(approximately 12,360 persons)............ $127,096,526 5,431,340
</TABLE>
- --------
(1) Market value on date of purchase. The purchase price paid by each
participant in the 1992 Purchase Plan is at least 15% below the market
value. See "Description of the 1992 Purchase Plan."
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<PAGE>
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, with a total of 13,500,000 shares of the Company's Common
Stock reserved for issuance thereunder (approximately 619,953 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 13,500,000 the total number of shares reserved for
issuance thereunder. The 1992 Purchase Plan was amended by the Board of
Directors on July 15, 1996, and such amendment was approved by the Company's
stockholders on October 14, 1996, to increase by 10,500,000 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 administers the 1992 Purchase Plan for all
employees. Members of the Compensation Committee are not eligible to
participate in the 1992 Purchase Plan. The administration, interpretation,
application or adjudication by the Compensation Committee of the 1992 Purchase
Plan is, to the full extent permitted by law, final, conclusive and binding on
all participants. Members of the Compensation 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
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 52 subsidiaries of the Company are currently eligible to
participate in the 1992 Purchase Plan. As of August 21, 1998, approximately
36,000 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
22
<PAGE>
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.
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.
23
<PAGE>
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.
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 or death
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
24
<PAGE>
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 20%. 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.
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.
25
<PAGE>
PROPOSAL NO. 5
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 year 1999. Arthur Andersen LLP has audited the Company's financial
statements for its last eleven 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 1999 Annual Meeting of Stockholders
must be received by May 6, 1999. If the Company is not notified of a
stockholder proposal by July 20, 1999, then the proxies held by management of
the Company may provide the discretion to vote against such stockholder
proposal, even though such proposal is not discussed in the Proxy Statement.
Stockholder proposals should be addressed to Daniel Cooperman, Senior Vice
President, General Counsel and Secretary, Oracle Corporation, Mailstop 5op7,
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.
VOTING VIA THE INTERNET OR BY TELEPHONE
Stockholders voting via the Internet should understand that there may be
costs associated with electronic access, such as usage charges from Internet
access providers and telephone companies, that must be borne by the
stockholder.
SHARES REGISTERED DIRECTLY IN THE NAME OF THE STOCKHOLDER
Stockholders with shares registered directly with Boston Equiserve, the
Company's transfer agent, may vote telephonically by calling Boston Equiserve
at (888) 807-7699 or you may vote via the Internet at the following address on
the World Wide Web:
www.equiserve.com/proxy/
26
<PAGE>
SHARES REGISTERED IN THE NAME OF A BROKERAGE FIRM OR BANK
A number of brokerage firms and banks are participating in a program
provided through ADP Investor Communication Services that offers telephone and
Internet voting options. This program is different from the program provided
by Boston Equiserve for shares registered in the name of the stockholder. If
your shares are held in an account at a brokerage firm or bank participating
in the ADP program, you may vote those shares telephonically by calling the
telephone number referenced on your voting form or you may vote via the
Internet at the following address on the World Wide Web:
www.proxyvote.com
By Order of the Board of Directors,
/s/ Daniel Cooperman
DANIEL COOPERMAN
Senior Vice President, General Counsel
& Secretary
ALL STOCKHOLDERS ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE
ACCOMPANYING PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE OR TO VOTE
ELECTRONICALLY VIA THE INTERNET OR TELEPHONE. THANK YOU FOR YOUR PROMPT
ATTENTION TO THIS MATTER.
27
<PAGE>
[RECYCLE LOGO APPEARS HERE]
4290-PS98
<PAGE>
ORACLE CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 19, 1998
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 19, 1998, 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 set forth on the reverse 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 EIGHT NOMINEES FOR ELECTION, TO APPROVE THE ADOPTION OF THE EXECUTIVE
OFFICERS 1999 BONUS 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.
<PAGE>
(Continued from other side)
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, Michael J.
Boskin, Raymond J. Lane, Jeffrey O. Henley, Jack F. Kemp,
Jeffrey Berg and Richard McGinn.
(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
OFFICERS 1999 BONUS PLAN
_FOR _AGAINST _ABSTAIN
3. PROPOSAL TO APPROVE THE ADOPTION OF AN AMENDMENT TO THE
COMPANY'S 1991 LONG-TERM EQUITY INCENTIVE PLAN
_FOR _AGAINST _ABSTAIN
4. PROPOSAL TO APPROVE THE ADOPTION OF AN AMENDMENT TO THE
COMPANY'S EMPLOYEE STOCK PURCHASE PLAN (1992)
_FOR _AGAINST _ABSTAIN
5. PROPOSAL TO RATIFY THE APPOINTMENT OF INDEPENDENT PUBLIC
ACCOUNTANTS
_FOR _AGAINST _ABSTAIN
6. 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.
Please sign exactly as the name or names appear on stock certificate (as
indicated hereon). If the shares are issued in the names of two or more
persons, all such persons should sign the proxy. A proxy executed by a
corporation should be signed in its name by its authorized officers.
Executors, administrators, trustees, and partners should indicate their
positions when signing.
Dated: ___________________, 1998
________________________________
________________________________
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.
