<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
INFORMIX 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.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
And 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[LOGO]
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 6, 1999
10:00 A.M.
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Informix
Corporation, a Delaware corporation ("Informix" or the "Company"), will be held
on Thursday, May 6, 1999, at 10:00 a.m., local time, at Hyatt Rickey's, 4219 El
Camino Real, Palo Alto, California for the following purposes:
1. To elect one (1) director to Class III of the Company's Board of
Directors to serve until the expiration of his term or until his
successor is duly elected or appointed and qualified;
2. To ratify the appointment of KPMG LLP as independent auditors for the
Company for the fiscal year ending December 31, 1999; and
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. Only holders of Common Stock of the Company
of record at the close of business on March 15, 1999 are entitled to notice of
and to vote at the meeting. Holders of shares of the Company's Series B
Convertible Preferred Stock are entitled to notice of, but not to vote at, the
meeting.
All stockholders are cordially invited to attend the meeting in person. To
assure that holders of Common Stock are represented at the meeting, however,
such holders are urged to mark, sign, date and return the enclosed Proxy as
promptly as possible in the postage-prepaid envelope enclosed for that purpose.
HOLDERS OF COMMON STOCK MAY REVOKE THEIR PROXY IN THE MANNER DESCRIBED IN THE
ACCOMPANYING PROXY STATEMENT AT ANY TIME BEFORE IT HAS BEEN VOTED AT THE ANNUAL
MEETING. ANY HOLDER OF COMMON STOCK ATTENDING THE ANNUAL MEETING MAY VOTE IN
PERSON EVEN IF HE OR SHE HAS RETURNED A PROXY.
For the Board of Directors
INFORMIX CORPORATION
/s/ Gary Lloyd
Gary Lloyd
SECRETARY
Menlo Park, California
April 6, 1999
YOUR VOTE IS IMPORTANT. IN ORDER TO ASSURE THEIR REPRESENTATION AT THE
MEETING, HOLDERS OF COMMON STOCK ARE REQUESTED TO COMPLETE, SIGN AND
DATE THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE AND
RETURN IT IN THE ENCLOSED ENVELOPE.
<PAGE>
INFORMIX CORPORATION
----------------
PROXY STATEMENT
FOR THE 1999 ANNUAL MEETING OF STOCKHOLDERS
---------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of
INFORMIX CORPORATION, a Delaware corporation ("Informix" or the "Company"), for
use at the Annual Meeting of Stockholders (the "Annual Meeting") to be held on
Thursday, May 6, 1999, at 10:00 a.m., local time, or at any adjournment or
postponement thereof, for the purposes set forth herein and in the accompanying
Notice of Annual Meeting of Stockholders. The Annual Meeting will be held at
Hyatt Rickey's, 4219 El Camino Real, Palo Alto, California. The Company's
principal executive offices are located at 4100 Bohannon Drive, Menlo Park,
California 94025, and its telephone number at that address is (650) 926-6300.
When proxies are properly dated, executed and returned, the shares of Common
Stock they represent will be voted at the Annual Meeting in accordance with the
instructions of the stockholder. If no specific instructions are given, the
shares will be voted: (i) for the election of the nominee for Class III director
of the Company's Board of Directors set forth herein; (ii) for the ratification
of the appointment of KPMG LLP as independent auditors as set forth herein; and
(iii) at the discretion of the proxy holders, upon such other business as may
properly come before the Annual Meeting or any adjournment or postponement
thereof.
These proxy solicitation materials and the Annual Report to Stockholders for
the year ended December 31, 1998, including financial statements, were first
mailed on or about April 6, 1999 to all stockholders entitled to vote at the
Annual Meeting.
RECORD DATE AND SHARES OUTSTANDING
The holders of Common Stock of the Company of record at the close of
business on March 15, 1999 (the "Record Date") are entitled to notice of, and to
vote at, the Annual Meeting. At the Record Date, the Company had issued and
outstanding and entitled to vote 189,146,546 shares of Common Stock, $0.01 par
value. In addition, at the record date, the Company also had issued and
outstanding 22,800 shares of Series B Convertible Preferred Stock, $0.01 par
value (the "Series B Preferred"). The holders of the Series B Preferred are
entitled to notice of, but not to vote at, the Annual Meeting.
REVOCABILITY OF PROXIES
Any proxy given pursuant to the solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by: (i) filing
with the General Counsel of the Company at or before the taking of the vote at
the Annual Meeting a written notice of revocation bearing a later date than the
proxy; (ii) duly executing a later dated proxy relating to the same shares and
delivering it to the General Counsel of the Company at or before the taking of
the vote at the Annual Meeting; or (iii) attending the Annual Meeting and voting
in person (although attendance at the Annual Meeting will not in and of itself
constitute a revocation of a proxy). Any written notice of revocation or
subsequent proxy should be delivered to Informix Corporation at 4100 Bohannon
Drive, Menlo Park, California 94025, Attention: General Counsel, Legal
Department, or hand-delivered to the General Counsel, Legal Department at or
before the taking of the vote at the Annual Meeting.
<PAGE>
VOTING
Each share of Common Stock outstanding on the Record Date is entitled to one
vote. Stockholders' votes will be tabulated by persons appointed by the Board of
Directors to act as inspectors of election for the Annual Meeting. Abstentions
are considered shares present and entitled to vote and, therefore, have the same
legal effect as a vote against a matter presented at the Annual Meeting. Any
shares held in street name for which the broker or nominee receives no
instructions from the beneficial owner, and as to which such broker or nominee
does not have discretionary voting authority under applicable New York Stock
Exchange rules, will be considered as shares not entitled to vote and will
therefore not be considered in the tabulation of the votes but will be
considered for purposes of determining the presence of a quorum. Holders of
shares of the Series B Preferred are not entitled to vote such shares at the
Annual Meeting.
SOLICITATION OF PROXIES
The expense of soliciting proxies in the enclosed form will be borne by the
Company. In addition, the Company may reimburse banks, brokerage firms and other
custodians, nominees and fiduciaries representing beneficial owners of shares
for their expenses in forwarding soliciting materials to such beneficial owners.
Proxies may also be solicited by certain of the Company's directors, officers
and employees, personally or by telephone, telegram, facsimile or other means of
communication. No additional compensation will be paid for such services.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Stockholders are entitled to present proposals for action at a forthcoming
meeting if they comply with the requirements of the proxy rules promulgated by
the Securities and Exchange Commission (the "Commission"). Proposals of
stockholders of the Company intended to be presented for consideration at the
Company's 2000 Annual Meeting of Stockholders must be received by the Company no
later than December 7, 1999 in order that they may be included in the proxy
statement and form of proxy related to that meeting.
PROPOSAL ONE
ELECTION OF DIRECTORS
The Company's Amended and Restated Certificate of Incorporation and Amended
Bylaws provide that the Board of Directors shall be divided into three classes,
each class consisting, as nearly as possible, of one-third of the total number
of directors, with each class having a three-year term. Vacancies on the Board
may be filled only by persons elected: (i) by the affirmative vote of the
holders of the then-outstanding shares of voting stock of the Company entitled
to vote generally in the election of directors and voting together as a single
class; or (ii) by a majority of the remaining directors. A director elected by
the Board to fill a vacancy (including a vacancy created by an increase in the
Board of Directors) shall serve for the remainder of the full term of the class
of directors in which the vacancy occurred and until such director's successor
is duly elected and qualified.
There are currently seven members of the Board of Directors. Class I
presently consists of three directors who are serving three-year terms expiring
in 2000. Class II presently consists of two directors who are serving three-year
terms expiring in 2001. Class III presently consists of two directors whose
three-year terms will expire as of the Annual Meeting. Albert F. Knorp, Jr., a
Class III director, has decided not to stand for re-election. At each annual
meeting of stockholders, directors elected to succeed those in the class whose
terms expire will be elected for three-year terms so that the term of one class
of directors will expire each year. In each case, a director serves for the
designated term and until his or her respective successor is duly elected and
qualified, or until any such director's death, resignation or removal.
One Class III director is to be elected at this Annual Meeting to serve a
three-year term expiring in 2002. The Nominating Committee of the Board of
Directors has nominated Robert J. Finocchio, Jr., for
2
<PAGE>
election to the Class III board seat (the "Class III Nominee"). Shares
represented by the accompanying proxy will be voted for the Class III Nominee,
unless the proxy is marked in such a manner as to withhold authority so to vote.
If the nominee is unable or declines to serve as a director at the time of the
Annual Meeting, the proxy may be voted for a substitute nominee designated by
the present Board of Directors to fill the vacancy. It is not presently expected
that the Class III Nominee will be unable or will decline to serve as a
director.
The name of the Class III Nominee and the Company's other current directors
and certain information about them as of April 6, 1999 are set forth below.
Information as to the stock ownership of each director and all current directors
and executive officers of the Company as a group is set forth below under
"Security Ownership of Management and Certain Beneficial Owners."
<TABLE>
<CAPTION>
NAME OF NOMINEE AGE POSITION(S) WITH THE COMPANY DIRECTOR SINCE
- ---------------------------------------- --------- ---------------------------------------------- ---------------
<S> <C> <C> <C>
CLASS I DIRECTORS
Leslie G. Denend (3).................. 58 Director 1997
George Reyes (2)...................... 44 Director 1998
Cyril J. Yansouni (1)(2)(3)........... 56 Director 1991
CLASS II DIRECTORS
James L. Koch(1)(2)(3)................ 55 Director 1991
Thomas A. McDonnell(1)(2)............. 53 Director 1988
CLASS III DIRECTORS
Albert F. Knorp, Jr.(2)(3)............ 63 Assistant Secretary and Director 1984
*Robert J. Finocchio, Jr.............. 47 Chairman, President and Chief Executive 1997
Officer
</TABLE>
- ------------------------
* Nominee for Class III Director
(1) Member of Compensation Committee
(2) Member of Audit Committee
(3) Member of Nominating Committee
LESLIE G. DENEND has served as a member of the Company's Board of Directors
since December 1997. From December 1997 to April 30, 1998, Mr. Denend has served
as President of Network Associates, Inc., a provider of network security and
management software, that resulted from the merger of McAfee Associates, Inc.
and Network General Corporation ("Network General"). From June 1993 to December
1997, Mr. Denend served as President and Chief Executive Officer of Network
General. He also served as Network General's Senior Vice President of Products
from February 1993 to June 1993. From November 1990 to December 1992, he was
President of Vitalink Communications, a manufacturer of networking products.
From January 1989 to October 1990, Mr. Denend served in a variety of positions
at 3Com Corporation, a global data networking company, most recently as
Executive Vice President for Product Operations. Mr. Denend is also a director
of Rational Software Inc., a provider of component-based development software
systems, Proxim, Inc., a designer of wireless local area networking products,
California Microwave, Inc., a U.S. supplier of satellite earth station and
microwave radio infrastructure products and information and collection systems,
and AltoCom, Inc., a startup company specializing in DSP software for
communications. Mr. Denend is a graduate of the United States Air Force Academy
and holds an M.B.A. and Ph.D. in economics, public policy and business from
Stanford University. Mr. Denend was also a Fulbright Scholar in economics at
Bonn University.
GEORGE REYES has served as a member of Informix's Board of Directors since
July 1998. Since March 1988, Mr. Reyes has served in a variety of positions at
Sun Microsystems, Inc., a supplier of enterprise network computing products,
most recently as its Vice President and Corporate Controller, a position Mr.
Reyes has held since April 1994. Mr. Reyes serves as a member of the Advisory
Board of the
3
<PAGE>
Leavey School of Business Administration at Santa Clara University. Mr. Reyes
holds a B.A. in accounting from the University of South Florida and an M.B.A. in
Finance from Santa Clara University.
CYRIL J. YANSOUNI has served as a member of the Company's Board of Directors
since May 1991. Since March 1991, Mr. Yansouni has been the Chief Executive
Officer and Chairman of the Board of Directors of Read-Rite Corporation, a
manufacturer of thin film magnetic recording heads. He also is a member of the
Advisory Board of both the Leavey School of Business Administration at Santa
Clara University and the San Jose State University School of Engineering. Mr.
Yansouni is a director of PeopleSoft, Inc., a provider of client/server business
software, and Raychem Corporation, an international manufacturer and marketer of
products for electronics, industrial and telecommunications applications. Mr.
Yansouni holds a B.S. in electrical and mechanical engineering from the
University of Louvain, Belgium and an M.S. in electrical engineering from
Stanford University. In addition, he attended the executive management program
at Stanford University.
JAMES L. KOCH has served as a member of the Company's Board of Directors
since May 1991. Since July 1990, Mr. Koch has served in various positions at
Santa Clara University. Since February 1997, Mr. Koch has been its Director of
the Center for Science, Technology and Society and, since July 1990, a Professor
of Management. In addition, from July 1990 to July 1996, Mr. Koch served as Dean
of the Leavey School of Business Administration at Santa Clara University. Mr.
Koch holds a B.A. in business administration from San Francisco State University
and an M.B.A. and Ph.D. in business administration from the University of
California, Los Angeles.
THOMAS A. MCDONNELL has served as a member of the Company's Board of
Directors since February 1988. Since 1971, Mr. McDonnell has served as Chief
Executive Officer of DST Systems, Inc. ("DST"), a transfer agent for mutual
funds, stocks and bonds, and since October 1984 as a director of DST. Mr.
McDonnell is also President of DST, a position he has held since 1973; Mr.
McDonnell also served as Treasurer of DST from 1973 to September 1995. From
August 1983 to November 1995, Mr. McDonnell was Executive Vice President and a
director of Kansas City Southern Industries, Inc., a holding company and the
former parent of DST. Mr. McDonnell is also director of BHA Group, Inc., a
manufacturer of pollution control devices, Cerner Corporation, a provider of
software and technology to the health care industry, Computer Sciences
Corporation, an information technology company, Euronet Services, Inc., an
operator of automatic teller machines, Janus Capital Corporation, a registered
investment advisor, and Nellcor-Puritan-Bennett Corporation, a medical device
company. Mr. McDonnell holds a B.S. and B.A. in accounting from Rockhurst
College and an M.B.A. from the Wharton School of the University of Pennsylvania.
ALBERT F. KNORP, JR. has served as a member of the Company's Board of
Directors since 1984 and as its Assistant Secretary since 1985. Mr. Knorp is a
general partner in Seaport Ventures, L.P., a family partnership. Since November
1994, Mr. Knorp has been of counsel to the law firm of Gray Cary Ware &
Freidenrich. He had previously been a partner in the law firm of Lewis, Knorp,
Walsh & Kavalaris. Mr. Knorp holds a B.A. in social sciences from Stanford
University and an L.L.B. from Santa Clara University.
ROBERT J. FINOCCHIO, JR. has served as the Company's Chairman, President and
Chief Executive Officer since July 1997. From December 1988 until May 1997, Mr.
Finocchio was employed with 3Com Corporation where he held various positions,
most recently serving as President, 3Com Systems. Prior to his employment with
3Com Corporation, Mr. Finocchio held various executive positions in sales and
service with Rolm Communications, a telecommunications and networking company,
most recently as Vice President of Rolm Systems Marketing. Mr. Finocchio also
serves as a director of Latitude Communications, a teleconferencing company, and
UpShot Corporation, a web technology company. Mr. Finocchio is also a Regent of
Santa Clara University. Mr. Finocchio holds a B.S. in economics from Santa Clara
University and an M.B.A. from the Harvard Business School.
There is no family relationship among any of the directors or executive
officers of the Company.
4
<PAGE>
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
The Class III director will be elected by a plurality of the votes of the
shares present and entitled to vote at the Annual Meeting and entitled to vote
on the election of directors. THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED
THE CLASS III NOMINEE AND RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ELECTION OF
THE NOMINEE.
BOARD AND COMMITTEE MEETINGS
The Company's Board of Directors held 14 meetings during the fiscal year
ended December 31, 1998. No incumbent director during fiscal 1998 attended fewer
than seventy-five percent (75%) of the aggregate of (i) the total number of
meetings of the Board of Directors held during the period for which such person
was a director and (ii) the total number of meetings held by all committees of
the Board of Directors on which such person served (during the period such
person served). The Board of Directors has standing Audit, Compensation and
Nominating Committees.
The members of the Audit Committee during fiscal 1998 were Albert F. Knorp,
Jr., James L. Koch, Thomas A. McDonnell, Cyril J. Yansouni and, since August 13,
1998, George Reyes. The Audit Committee held five meetings during fiscal 1998.
The purposes of the Audit Committee are to: review with the Company's management
and independent accountants such matters as internal accounting controls and
procedures, the plan and results of the annual audit and suggestions of the
independent accountants for improvements in accounting procedures; nominate
independent accountants; and provide such additional information as the
committee may deem necessary to make the Board of Directors aware of significant
financial matters which require the Board's attention.
The members of the Compensation Committee during fiscal 1998 were James L.
Koch, Thomas A. McDonnell and Cyril J. Yansouni. The Compensation Committee held
five meetings during fiscal 1998. The purposes of the Compensation Committee are
to: review and approve the compensation to be paid or provided to certain of the
Company's executive officers; and to administer the Company's 1994 Stock Option
and Award Plan (the "1994 Plan") and 1998 Non-Statutory Stock Option Plan (the
"1998 Plan"). Robert J. Finocchio, Jr., Chairman, President and Chief Executive
Officer of the Company, participates in all discussions regarding the
compensation of certain executives of the Company but is excluded from
discussions regarding his own compensation.
The members of the Nominating Committee during fiscal 1998 were Leslie G.
Denend, Albert F. Knorp, Jr., Thomas L. Koch and Cyril J. Yansouni. The
Nominating Committee held one meeting during fiscal 1998. The purpose of the
Nominating Committee is to seek qualified candidates for nomination and
appointment to the Board of Directors. During fiscal 1999, the Nominating
Committee nominated Robert J. Finocchio, Jr., for re-election to the Board as a
Class III director. The Nominating Committee will consider the names and
qualifications of candidates for the Board submitted by stockholders in
accordance with the procedures set forth in "Deadline for Receipt of Stockholder
Proposals for 2000 Annual Meeting" above and in the Bylaws of the Corporation.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee during fiscal 1998 were James L.
Koch, Thomas A. McDonnell and Cyril J. Yansouni. Messrs. Koch, McDonnell and
Yansouni were not at any time during the Company's 1998 fiscal year or at any
other time an officer or employee of the Company. No executive officer of the
Company serves as a member of the board of directors or compensation committee
of any entity which has one or more executive officers serving as a member of
the Company's Board of Directors or Compensation Committee.
DIRECTOR COMPENSATION
Employee directors do not receive any additional compensation for serving as
a director. For fiscal 1998, the Company paid each non-employee director a
quarterly fee of $2,000 and an additional fee of
5
<PAGE>
$1,000 for each Board meeting attended. In addition, members of the Audit and
Compensation Committees received $500 for each committee meeting attended;
members of the Nominating Committee do not receive additional compensation for
their attendance at committee meetings. For fiscal 1999, the outside directors
will continue to receive the same compensation as they received in 1998. The
Company reimburses each director, whether or not an employee, for out-of-pocket
expenses, including travel expenses, incurred in connection with attending Board
meetings. In addition, from time to time, the Company invites the directors'
spouses to accompany the directors to board meetings and, when invited, the
Company also pays the travel expenses incurred by the spouses. In 1998, the
Company incurred no travel expenses for directors' spouses.
The Company's 1989 Outside Directors Stock Option Plan (the "Director Plan")
provides for the grant of options to non-employee directors pursuant to an
automatic, nondiscretionary grant mechanism. Each non-employee director is
automatically granted an option to purchase 15,000 shares of Common Stock upon
initial election to the Board of Directors and an additional option to purchase
15,000 shares upon re-election. Each such option is granted at the fair market
value of Common Stock on the date of grant. Because directors serve three year
terms, options granted under the Director Plan become exercisable over three
years with one-third of the shares vesting on each anniversary of the grant
date.
6
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock and Series B Preferred Stock as of
December 31, 1998 by: (i) each person or entity who is known by the Company to
own beneficially 5% or more of the Company's outstanding Common Stock or Series
B Preferred Stock, as the case may be; (ii) each director of the Company; (iii)
the Company's Chairman, President and Chief Executive Officer; (iv) each of the
Company's four most highly compensated executive officers other than its Chief
Executive Officer who were serving as officers of the Company at the end of the
fiscal year ended December 31, 1998 and whose salary and bonus for fiscal 1998
exceeded $100,000 (the individuals specified in subsections (iii) and (iv)
hereof are referred to herein as the "Named Executive Officers"); and (vi) all
directors and current executive officers of the Company as a group.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
BENEFICIALLY OWNED(2)
---------------------------
PERCENT OF
NAME AND ADDRESS OF STOCKHOLDER(1) NUMBER CLASS
- ---------------------------------------------------------------------------------------- ------------ -------------
<S> <C> <C>
COMMON STOCK
5% STOCKHOLDERS
None
DIRECTORS AND CURRENT EXECUTIVE OFFICERS
Leslie G. Denend (3).................................................................. 5,000 *
Robert J. Finocchio, Jr. (4).......................................................... 503,849 *
Jean Yves F. Dexmier (5).............................................................. 150,000 *
James F. Hendrickson (6).............................................................. 374,894 *
Stephen E. Hill (7)................................................................... 126,749 *
Albert F. Knorp, Jr. (8).............................................................. 159,268 *
James L. Koch (9)..................................................................... 94,225 *
Thomas A. McDonnell (10).............................................................. 150,000 *
Wesley Raffel (11).................................................................... 85,114 *
George Reyes (12)..................................................................... -- *
Cyril J. Yansouni (13)................................................................ 45,000 *
All current directors and executive officers as a group (21 persons) (14)............. 2,636,995 1%
SERIES B PREFERRED STOCK
5% STOCKHOLDERS
CC Investments, LDC (15)(16).......................................................... 3,500 15%
C/o Fund Services
Corporate Centre, West Bay Road
P.O. Box 31106, SMB
Grand Cayman, Cayman Islands BVI
Marshall Capital (Proprietary Convertible Investment Group Inc.) (15)(17)............. 12,800 55%
C/o Credit Suisse First Boston
11 Madison Avenue, 3rd Floor
New York, New York 10010
Capital Ventures International (15)(18)............................................... 7,000 30%
1 Capital Place
P.O. Box 1787
Georgetown, Grand Cayman, Grand Cayman Islands BVI
</TABLE>
- ------------------------
* Less than 1%.
(1) Unless otherwise indicated, the address for each listed stockholder is c/o
Informix Corporation, 4100 Bohannon Drive, Menlo Park, California 94025.
Except as otherwise indicated, and subject to applicable community property
laws, the persons named in the table have sole voting and investment power
with respect to all shares of Common Stock held by them.
(2) For figures related to holdings of Common Stock, applicable percentage
ownership is based on 193,763,247 shares of Common Stock outstanding as of
December 31, 1998, together with applicable options or warrants for such
stockholder. Such outstanding Common Stock share figure assumes the
7
<PAGE>
conversion of the outstanding Series B Preferred into 5,825,000 shares of
Common Stock based on an assumed conversion price of $4.00 per share (the
price used in the Company's Form S-1 Registration Statement). Beneficial
ownership is determined in accordance with the rules of the Commission and
generally includes voting or investment power with respect to securities,
subject to community property laws, where applicable. Shares of Common
Stock subject to options or warrants that are presently exercisable or
exercisable within 60 days of December 31, 1998 or shares of Preferred
Stock which shares are presently convertible or convertible within 60 days
of December 31, 1998 are deemed to be beneficially owned by the person
holding such options or warrants for the purpose of computing the
percentage of ownership of such person but are not treated as outstanding
for the purpose of computing the percentage of any other person.
(3) Includes 5,000 shares of Common Stock held issuable upon exercise of
outstanding options which are presently exercisable or will become
exercisable within 60 days of December 31, 1998. Mr. Denend is a member of
the Company's Board of Directors.
(4) Includes 100 shares of Common Stock held by Mr. Finocchio's minor son. Mr.
Finocchio is the Company's Chairman, President and Chief Executive Officer.
Also includes 500,000 shares of Common Stock held issuable upon exercise of
outstanding options which are presently exercisable or will become
exercisable within 60 days of December 31, 1998.
(5) Includes 150,000 shares of Common Stock held issuable upon exercise of
outstanding options which are presently exercisable or will become
exercisable within 60 days of December 31, 1998. Mr. Dexmier is the
Company's Executive Vice President, Field Operations.
(6) Includes 372,875 shares of Common Stock held issuable upon exercise of
outstanding options which are presently exercisable or will become
exercisable within 60 days of December 31, 1998. Mr. Hendrickson is the
Company's Vice President, Customer Services, and Lenexa (Kansas) Site
General Manager.
(7) Includes 121,000 shares of Common Stock issuable upon exercise of
outstanding options which are presently exercisable or will become
exercisable within 60 days of December 31, 1998. Mr. Hill resigned as the
Company's Vice President and General Manager, Tools Business Unit, on
December 31, 1998.
(8) Includes 30,000 shares of Common Stock issuable upon exercise of
outstanding options which are presently exercisable or will become
exercisable within 60 days of December 31, 1998. Also includes 129,268
shares of Common Stock held by Seaport Ventures, L.P., of which Mr. Knorp
is a general partner. Mr. Knorp disclaims beneficial ownership of all
shares held by Seaport Ventures, L.P. except to the extent of his pecuniary
interest therein. Mr. Knorp, a Class III director and a member of the Audit
and Nominating Committees, has determined not to stand for re-election to
the Board.
(9) Includes 92,000 shares of Common Stock issuable upon exercise of
outstanding options which are presently exercisable or will become
exercisable within 60 days of December 31, 1998. Mr. Koch is a member of
the Company's Board of Directors.
(10) Includes 95,000 shares of Common Stock issuable upon exercise of
outstanding options which are presently exercisable or will become
exercisable within 60 days of December 31, 1998. Mr. McDonnell is a member
of the Company's Board of Directors.
(11) Includes 81,250 shares of Common Stock issuable upon exercise of
outstanding options which are presently exercisable or will become
exercisable within 60 days of December 31, 1998. Mr. Raffel is the
Company's Vice President and General Manager, i.Informix.
(12) Mr. Reyes is a member of the Company's Board of Directors.
(13) Includes 45,000 shares of Common Stock issuable upon exercise of
outstanding options which are presently exercisable or will become
exercisable within 60 days of December 31, 1998. Mr. Yansouni is a member
of the Company's Board of Directors.
(14) Includes 1,913,619 shares of Common Stock issuable upon exercise of
outstanding options which are presently exercisable or will become
exercisable within 60 days of December 31, 1998.
(15) The Series B Preferred is convertible into Common Stock of the Company
based on a conversion rate that is dependent upon the trading price of the
Company's Common Stock. At the time that shares of Series B Preferred are
converted into Common Stock of the Company, the Series B Stockholders will
be issued warrants to purchase additional shares of Common Stock of the
Company. The number of shares of Common Stock purchasable in connection
with the exercise of
8
<PAGE>
the Series B Warrants is generally determined according to the number of
shares of Common Stock issuable upon conversion of the Series B Preferred.
The first day such stockholder was able to elect to convert shares of the
Series B Preferred and exercise the Series B Warrants was May 19, 1998.
The Series B Preferred shares are non-voting securities and holders of
Series B Preferred shares are not generally entitled to vote such shares
at the Annual Meeting or otherwise, prior to the conversion of such shares
into Common Stock.
(16) Assuming the conversion of such shares of Series B Preferred based on an
assumed conversion price of $4.00 (the price used in the Company's Form
S-1 Registration Statement), such stockholder would hold 875,000 shares of
the Company's Common Stock and warrants to purchase an additional 175,000
shares of Common Stock. Such warrants are issuable upon the conversion of
the underlying Series B Preferred and are immediately thereafter
exercisable.
(17) Assuming the conversion of such shares of Series B Preferred based on an
assumed conversion price of $4.00 (the price used in the Company's Form
S-1 Registration Statement), such stockholder would hold 3,200,000 shares
of the Company's Common Stock and warrants to purchase an additional
640,000 shares of Common Stock. Such warrants are issuable upon the
conversion of the underlying Series B Preferred and are immediately
thereafter exercisable.
(18) Assuming the conversion of such shares of Series B Preferred based on an
assumed conversion price of $4.00 (the price used in the Company's Form
S-1 Registration Statement), such stockholder would hold 1,750,000 shares
of the Company's Common Stock and warrants to purchase an additional
350,000 shares of Common Stock. Such warrants are issuable upon the
conversion of the underlying Series B Preferred and are immediately
thereafter exercisable.
9
<PAGE>
EXECUTIVE COMPENSATION
The following table summarizes the total compensation awarded to, earned by,
or paid for services rendered to the Company in all capacities during each of
the fiscal years ended December 31, 1998, 1997 and 1996, respectively, by each
of the Named Executive Officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL -------------
COMPENSATION(1) SECURITIES
--------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY BONUS OPTIONS (#) COMPENSATION
- ---------------------------------------------------- ----------- ---------- --------- ------------- -------------
<S> <C> <C> <C> <C> <C>
CURRENT EXECUTIVE OFFICERS
Robert J. Finocchio, Jr. (2)...................... 1998 $ 459,940 -- 500,000 $ 2,000(12)
Chairman, President and Chief Financial 1997 185,278 -- 1,500,000 5,000(13)
Officer 1996 -- -- -- --
Jean Yves F. Dexmier (3).......................... 1998 350,157 $ 34,145 100,000(7) 4,036(14)
Executive Vice President, Field 1997 86,174 87,500 -- 540
Operations 1996 -- -- -- --
James F. Hendrickson (4).......................... 1998 228,837 23,799 25,000(8) 6,050(15)
Vice President, Customer Services And 1997 192,667 39,600 83,560(9) 5,977
Lenexa Site General Manager 1996 179,667 -- 30,000 6,013
Stephen E. Hill (5)............................... 1998 248,633 -- 100,000 2,907(16)
Vice President and General Manager, 1997 163,667 33,400 56,000(10) 2,533
Tools Business Unit 1996 154,569 -- 30,000 2,500
Wesley Raffel (6)................................. 1998 258,702 14,355 0(11) 2,918(17)
Vice President and General Manager, 1997 69,129 -- 325,000 2,191
i.Informix 1996 -- -- -- --
</TABLE>
- ------------------------
(1) Other than the salary and bonus described herein, the Company did not pay
any executive officer named in the Summary Compensation Table any fringe
benefits, perquisites or other compensation in excess of 10% of such
executive officer's salary and bonus during fiscal 1998, 1997 or 1996.
(2) Mr. Finocchio became Chairman, President and Chief Executive Officer in
July 1997. Accordingly, he received no reportable income from the Company
for fiscal 1996.
(3) Mr. Dexmier became Executive Vice President, Field Operations in January
1999. Mr. Dexmier served as the Company's Executive Vice President and
Chief Financial Officer from October 1997 to January 1999. Accordingly, he
received no reportable income for fiscal 1996.
(4) Mr. Hendrickson became Vice President, Customer Services in July 1992 and
Lenexa (Kansas) Site General Manager in February 1995.
(5) Mr. Hill resigned as the Company's Vice President and General Manager,
Tools Business Unit, on December 31, 1998.
(6) Mr. Raffel has served as Informix's Vice President and General Manager,
i.Informix since August 1998. Mr. Raffel joined Informix in September 1997
as Vice President, North American Field Operations. Accordingly, he
received no reportable income for fiscal 1996.
(7) In January 1999, the Company granted Mr. Dexmier an additional option under
the 1994 Plan to acquire 200,000 shares of Common Stock, subject to equal
installments over four years.
(8) In January 1999, the Company granted Mr. Hendrickson an additional option
under the 1994 Plan to acquire 75,000 shares of Common Stock, subject to
equal installments over four years.
(9) Includes options to purchase 56,000 shares that Mr. Hendrickson elected to
reprice under the Company's November 1997 option repricing program. In
connection with such repricing, Mr. Hendrickson forfeited the right to
purchase 14,000 shares of Common Stock under options previously granted to
him. See "Report of the Compensation Committee of the Board of Directors-
Stock Options."
10
<PAGE>
(10) Fiscal 1997 figure includes 56,000 shares that Mr. Hill elected to reprice
under the Company's November 1997 option repricing program. In connection
with such repricing, Mr. Hill forfeited the right to purchase 14,000
shares of Common Stock under options previously granted to him.
(11) In January 1999, the Company granted Mr. Raffel an additional option under
the 1994 Plan to acquire 50,000 shares of Common Stock, subject to equal
installments over four years.
(12) Represents $2,000 in matching contributions under the Company's 401(k)
Plan by the Company in fiscal 1998.
(13) Represents reimbursement by the Company of $5,000 in legal fees incurred
in connection with the negotiation of Mr. Finocchio's Employment
Agreement. See "Employment Agreements and Change in Control Arrangements
with Named Executive Officers."
(14) Represents $4,036 and $540 in group life insurance paid by the Company in
fiscal 1998 and 1997, respectively, and $2,000 in matching contributions
under the Company's 401(k) Plan by the Company in fiscal 1998.
(15) Represents $4,050, $4,050 and $4,013 in group life insurance paid by the
Company in fiscal 1998, 1997 and 1996, respectively, and $2,000, $1,927
and $2,000 in matching contributions under the Company's 401(k) plan paid
by the Company in fiscal 1998, 1997 and 1996, respectively.
(16) Represents $907, $533 and $500 in group life insurance paid by the Company
in fiscal 1998, 1997 and 1996, respectively; and $2,000, $2,000 and $2,000
in matching contributions under the Company's 401(k) plan paid by the
Company in fiscal 1998, 1997 and 1996, respectively.
(17) Represents $918 and $191 in group life insurance paid by the Company in
fiscal 1998 and 1997, respectively, and $2,000 and $2,000 in matching
contributions under the Company's 401(k) Plan by the Company in fiscal
1998 and 1997, respectively.
11
<PAGE>
STOCK OPTION GRANTS
The following table provides information relating to stock options awarded
to each of the Named Executive Officers during the fiscal year ended December
31, 1998.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
---------------------------------------------------- VALUES AT ASSUMED
NUMBER OF PERCENT OF ANNUAL RATES OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTIONS TERM(1)
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION --------------------------
GRANTED FISCAL 1998(2) SHARE(3) DATE(4) 5% 10%
---------- ---------------- --------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
CURRENT EXECUTIVE OFFICERS
Robert J. Finocchio, Jr.............. 500,000 4.03% $ 5.0938 1/08/08 $ 1,601,732 $ 4,059,103
Jean-Yves F. Dexmier................. 100,000 .81 5.75 1/22/08 361,614 916,402
James F. Hendrickson................. 25,000 .20 4.0313 9/3/08 63,382 160,621
Stephen E. Hill...................... 100,000 .81 6.50 1/29/08 408,782 1,035,933
Wesley Raffel........................ -- -- -- -- -- --
</TABLE>
- ------------------------
(1) Potential realizable value is based on the assumption that the Common Stock
of the Company appreciates at the annual rate shown (compounded annually)
from the date of grant until the expiration of the ten year option term.
These numbers are calculated based on the requirements promulgated by the
Commission and do not reflect the Company's estimate of future stock price
growth.
(2) Based on options to acquire 12,414,574 shares granted under the 1994 Plan,
the Director Plan, the 1997 Non-Statutory Stock Option Plan and the 1998
Plan during fiscal 1998. Unless otherwise specified herein, all options
granted to the Named Executive Officers were under the 1994 Plan.
(3) Options were granted at an exercise price equal to not less than the fair
market value of the Company's Common Stock on the date of grant as reported
on the Nasdaq National Market. The exercise price may be paid in cash,
check, by delivery of already-owned shares of the Company's Common Stock
subject to certain conditions or pursuant to a cashless exercise procedure
under which the optionee provides irrevocable instructions to a brokerage
firm to sell the purchased shares and to remit to the Company, out of the
sale proceeds, an amount equal to the exercise price plus all applicable
withholding taxes.
(4) Twenty-five percent (25%) of the shares issuable upon exercise of options
granted under the 1994 Plan become vested on the first anniversary of the
date of grant, and the remaining shares vest over three years at the rate of
25% of the shares subject to option vesting on each successive anniversary
of the option grant date. Unless otherwise specified, options granted to
Named Executive Officers in fiscal 1998, including options granted outside
the 1994 Plan, are subject to the Company's standard four year vesting
schedule described above.
12
<PAGE>
OPTION EXERCISES AND FISCAL 1998 YEAR-END VALUES
The following table sets forth certain information regarding the exercise of
stock options by the Named Executive Officers during the fiscal year ended
December 31, 1998 and stock options held as of December 31, 1998 by the Named
Executive Officers.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
SHARES DECEMBER 31, 1998 AT DECEMBER 31, 1998(2)
ACQUIRED OR VALUE ------------------------- ---------------------------
EXERCISED REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------ ------------ ---------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
CURRENT EXECUTIVE OFFICERS
Robert J. Finocchio, Jr...... -- -- 375,000 1,625,000 $ 0 $ 2,390,600
Jean-Yves F.
Dexmier (3)................ -- -- 125,000 475,000 390,625 1,584,375
James F.
Hendrickson (4)............ -- -- 372,875 65,625 1,662,724 217,868
Stephen E. Hill (5).......... -- -- 121,000 0 232,794 --
Wesley Raffel (6)............ -- -- 81,250 243,750 192,969 578,906
</TABLE>
- ------------------------
(1) Market value at the time of exercise less the applicable exercise price.
(2) Based on the closing sales price of $9.875 of the underlying securities as
of December 31, 1998 as reported on the Nasdaq National Market minus the
exercise price.
(3) In January 1999, the Company granted Mr. Dexmier an additional option to
purchase 200,000 shares of Common Stock under the 1994 Plan, subject to
vesting in equal installments over four years.
(4) In January 1999, the Company granted Mr. Hendrickson an additional option to
purchase 75,000 shares of Common Stock under the 1994 Plan, subject to
vesting in equal installments over four years.
(5) In view of Mr. Hill's resignation, effective December 31, 1998, all of Mr.
Hill's unexercised options will expire on March 31, 1999.
(6) In January 1999, the Company granted Mr. Raffel an additional option to
purchase 50,000 shares of Common Stock under the 1994 Plan, subject to
vesting in equal installments over four years.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
NOTWITHSTANDING ANY STATEMENT TO THE CONTRARY IN ANY OF THE COMPANY'S
PREVIOUS OR FUTURE FILINGS WITH THE COMMISSION, THIS REPORT OF THE COMPENSATION
COMMITTEE OF THE BOARD OF DIRECTORS IS NOT "SOLICITING MATERIAL," SHALL NOT BE
DEEMED "FILED" WITH THE COMMISSION AND SHALL NOT BE INCORPORATED BY REFERENCE
INTO ANY SUCH FILINGS.
The Compensation Committee of the Board of Directors (the "Committee")
establishes the general compensation policies of the Company and the
compensation plans and the specific compensation levels for senior executives,
including the Company's Chief Executive Officer.
GENERAL COMPENSATION PHILOSOPHY
The primary objectives of the Company's executive compensation policies
include the following:
- To attract, motivate and retain a highly qualified executive management
team;
- To link executive compensation to the Company's financial performance as
well as to defined individual management objectives established by the
Committee;
- To compensate competitively with the practices of similarly situated
technology companies; and
- To create management incentives designed to enhance stockholder value.
13
<PAGE>
The Company competes in an aggressive and dynamic industry and, as a result,
believes that finding, motivating and retaining quality employees, particularly
senior managers, sales personnel and technical personnel, are key factors to the
Company's future success. The Committee's compensation philosophy seeks to align
the interests of stockholders and management by tying compensation to the
Company's financial performance, either directly in the form of salary and
bonuses paid in cash or indirectly in the form of appreciation of stock options
and stock purchase rights granted to employees through the Company's equity
incentive programs.
The Committee reviews the reasonableness of compensation paid to executive
officers of the Company and how the overall level of compensation paid to
executive officers compares to that paid by other companies that compete with
the Company for executive employees (the "Comparison Companies").
The Comparison Companies are a group of companies in the high technology and
software industry that are either the source of executive employees for the
Company or which offer employment to candidates from the Company. The Comparison
Companies are generally headquartered in the same geographic area as the Company
and have similar international presences.
CASH COMPENSATION
Cash compensation for the Company's senior executives consists of a fixed
base salary and an annual bonus. The Company's goal is to provide cash
compensation targeted at the 50th percentile of that provided by the Comparison
Companies for base pay and to provide a total cash compensation through
incentive bonuses at the 75th percentile for superior performance.
In connection with determining annual bonuses, the Committee established a
bonus target for each executive officer and certain other key management
employees under the Company's Executive Incentive Compensation Plan (the
"EICP"). In setting annual goals for executive bonuses, the Committee used the
corporate business plan. The target bonus for an executive is intended to relate
to his or her potential impact on corporate results, and the percentage of the
target bonus actually received is based on the corporate objectives actually
achieved. In 1998, the corporate financial objectives were operating profit and
revenue, which are of equal importance. The financial objectives are reviewed by
the Committee each year and those used in a particular year are intended to
reflect those areas most necessary to maximize the return to investors.
Depending on the employee's level, target compensation under the EICP ranges
from 20% to 60% of the employee's base salary. If the Company's financial
objectives are exceeded it is possible for the actual bonus amount to exceed the
target amount. The Committee attempted to set aggressive but realizable
objectives that would result, directly or indirectly, in increased revenues and
improved operating profit. In order to achieve the purposes of the plan, the
Committee communicates corporate objectives and the corresponding bonus targets
to executives at the beginning of each fiscal year. Mr. Finocchio, the Company's
President and Chief Executive Officer, has never participated in the EICP.
EQUITY INCENTIVE PROGRAMS
Long-term equity incentives, including stock options and performance shares
granted pursuant to the Company's 1994 Plan and 1998 Plan, help to align the
economic interests of the Company's management and employees with those of its
stockholders. Stock options are a particularly strong incentive because they are
valuable to employees only if the fair market value of the Company's Common
Stock increases above the exercise price, which is generally set at the fair
market value of the Company's Common Stock on the date the option is granted.
However, in exceptional circumstances where the fair market value of the
Company's Common Stock has declined over time to a point where the market price
is significantly lower than the exercise price of substantially all of the
Company's outstanding options, the Committee may recommend to the full Board of
Directors that such outstanding options be repriced so that the exercise price
of such options is adjusted to equal the fair market value of the Company's
Common stock on the date of such repricing. During fiscal 1997, the Committee
recommended and the Board of Directors approved an option repricing on two
occasions. Certain current and former executive officers participated
14
<PAGE>
in the first option repricing, but were not authorized to participate in the
second option repricing. See "Stock Options" below.
In addition to aligning executive and stockholder incentives through
establishing an exercise price for options equal to the fair market value of the
Company's Common Stock on the date such exercise price is determined, in order
to promote the long-term economic interests of the Company, employees must
remain employed with the Company for a fixed period of time for their options to
vest fully. In general, option shares granted under the 1994 Plan and 1998 Plan
vest in equal annual installments over four years. The number of options granted
to each executive officer is determined by the Committee. In making its
determination, the Committee considers the executive officer's position at the
Company, his or her individual performance, the number of options held by the
executive officer, with particular attention to the executive officer's unvested
option position, and other factors.
The Committee may also grant performance shares under the 1994 Plan from
time to time to certain executive officers. The Committee generally grants such
performance shares subject to the Company's obtainment of specific financial
milestones, such as percentage increases in the Company's revenues. Such vesting
milestones for performance shares granted under the 1994 Plan are designed to be
of sufficient duration to align the interests of the executive officer receiving
such shares with the long term financial performance of the Company. In
addition, the Company may impose certain additional restrictions on the vesting
of performance shares, including requiring the grantee to remain an employee of
the Company for a fixed time before the performance shares will vest.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
Generally, in determining the Chief Executive Officer's compensation, the
Committee considers comparative financial and compensation data of the
Comparison Companies. On June 18, 1997, the Company entered into an at-will
employment agreement with Mr. Finocchio, the Company's Chairman, President and
Chief Executive Officer, which provides for an annual base salary of $460,000,
subject to annual review concerning increases. However, Mr. Finocchio has chosen
not to be considered for an increase in annual base salary since he began
employment with the Company. Pursuant to the agreement, the Company also granted
Mr. Finocchio options to purchase 1,500,000 shares of Common Stock at an
exercise price per share of $10.8125, subject to vesting in equal annual
installments over four years. Of the 1,500,000 option shares Mr. Finocchio
received under his employment agreement, 1,000,000 were issued under the 1994
Plan and 500,000 were issued under the Company's 1997 Non-Statutory Stock Option
Plan. In January 1998, the Company granted Mr. Finocchio an additional option
under the 1994 Plan to acquire 500,000 shares of Common Stock, subject to
vesting in equal annual installments over four years. Mr. Finocchio's employment
agreement provides that in the event of a merger or change in control of the
Company, the exercisability of Mr. Finocchio's options will accelerate so as to
become fully vested. In addition, Mr. Finocchio does not participate in the
EICP.
The Company will continue to grant stock options (and may grant performance
shares) to the Chief Executive Officer based primarily on the Company's
evaluation of his ability to influence the Company's long-term growth and
profitability. The Committee determines the size of the option grant based on
its estimate of the equity incentive value of the Chief Executive Officer's
existing unvested option position.
COMPENSATION OF OTHER EXECUTIVES
Using salary data supplied by outside consultants and other publicly
available data from the Comparison Companies, the Chief Executive Officer
recommends to the Committee base salaries for executive officers that are within
the range of salaries for persons holding similar positions at the Comparison
Companies. The Chief Executive Officer and the Committee also consider factors
such as the Company's performance (financial and otherwise) relative to the
Comparison Companies and the individual officer's performance during the most
recent fiscal year and potential to contribute to the Company in the future. For
fiscal 1998, the base salaries established by the Committee for the Company's
executive officers tended to be approximately in the 50th percentile of surveyed
companies. Cash bonuses for the executive officers
15
<PAGE>
are based on the Company's financial results. Executive officer bonus targets
during fiscal 1998 were generally consistent with bonuses paid to officers
performing similar functions at the Comparison Companies. For fiscal 1998, the
Committee had placed its sole emphasis on financial performance relative to EICP
goals in determining bonus payments.
The Company also determines stock option and performance share grants for
executive officers based on similar criteria as those used for determining stock
option grants for the Chief Executive Officer with particular attention to the
incentive effect of additional option grants for executive officers whose prior
grants are substantially vested.
TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION
The Committee has studied Section 162(m) of the Internal Revenue Code and
related regulations of the Internal Revenue Service, which limit the federal
income tax deductibility of compensation paid to the Company's Chief Executive
Officer and to each of the four most highly compensated executive officers other
than the Chief Executive Officer. The Company generally may deduct compensation
paid to such officer only if the compensation does not exceed $1 million during
any fiscal year or to the extent compensation is "performance-based" as
contemplated in Section 162(m). The Company has qualified its 1994 Plan as a
performance-based plan and, therefore, compensation realized in connection with
options granted under the 1994 Plan is exempt under the statute. The Committee
does not believe that the other components of the Company's compensation will be
likely in the aggregate to exceed $1 million for any executive officer in fiscal
1999 and, therefore, has concluded that no further action with respect to
qualifying such compensation for deductibility is necessary at this time. The
Committee will continue to evaluate the advisability of qualifying the
deductibility of such compensation in the future.
STOCK OPTIONS
In September 1997, the Company's Board of Directors authorized the repricing
of outstanding options to purchase Common Stock under the Company's stock option
plans. Employees, including Named Executive Officers, were eligible to
participate only if they remained actively employed at the effective date of the
repricing and were only permitted to exchange options outstanding prior to May
1, 1997. The repricing/option exchange was effective November 21, 1997 (the
"Repricing Effective Date"). The repricing program offered eligible employees
the opportunity to exchange eligible outstanding options with exercise prices in
excess of the closing sales price of the Company's Common Stock on the Repricing
Effective Date for a new option with an exercise price equal to such price.
Other than the exercise price, each new option issued upon exchange has terms
substantially equivalent to the surrendered option, including with respect to
the number of shares, vesting terms and expiration. Options issued in connection
with the exchange may not be exercised for a period of one year from the
Repricing Effective Date, however. In addition, officers of the Company
participating in the option exchange were required to forfeit 20% of the shares
subject to each option being surrendered. The exercise price for repriced
options was $7.1563, the closing sales price of the Company's Common Stock on
the Repricing Effective Date. In December 1997, the Company's Board of Directors
authorized a second option repricing to be effective January 9, 1998 (the
"Second Repricing Effective Date") based upon the closing sales price of the
Company's Common Stock as of the Second Repricing Effective Date ($5.094). Under
the terms of the second repricing, each employee, excluding officers and
directors of the Company, could elect to exchange any option outstanding as of
May 1, 1997 for a new option with an exercise price equal to the closing sales
price on the Second Repricing Effective Date. Options exchanged in the second
repricing may not be exercised for a period of one year from the Second
Repricing Effective Date.
THE COMPENSATION COMMITTEE
James L. Koch
Thomas A. McDonnell
Cyril J. Yansouni
16
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors and persons who own more than 10% of a
registered class of the Company's equity securities to file reports of ownership
on Form 3 and changes in ownership on Form 4 or 5 with the Commission. Such
officers, directors, and 10% shareholders are also required by SEC rules to
furnish the Company with copies of all Section 16(a) reports they file.
Based solely on its review of the copies of such forms received by it or
written representations from certain reporting persons, the Company believes
that, during the fiscal year ended December 31, 1998 all Section 16(a) filing
requirements applicable to its officers, directors, and 10% stockholders were
satisfied on a timely basis. In making these statements, the Company has relied
upon the written representations of its officers and directors.
EMPLOYMENT AGREEMENTS AND CHANGE IN CONTROL ARRANGEMENTS WITH NAMED EXECUTIVE
OFFICERS
On July 18, 1997, the Company entered into an at-will employment agreement
with Mr. Finocchio, the Company's Chairman, President and Chief Executive
Officer. The agreement provides for an annual base salary of $460,000, subject
to annual review concerning increases. Pursuant to the agreement, the Company
granted Mr. Finocchio an option to purchase 1,000,000 shares of Common Stock
under the 1994 Plan at an exercise price per share of $10.8125, subject to
vesting in equal annual installments over four years and an option under the
Company's 1997 Non-Statutory Stock Option Plan to acquire an additional 500,000
shares of Common Stock also at an exercise price of $10.8125, and also subject
to vesting under the same terms as the grant under the 1994 Plan. In January
1998, the Company granted Mr. Finocchio an additional option under the 1994 Plan
to acquire 500,000 shares of Common Stock, subject to vesting in equal annual
installments over four years. In the event of a merger or change in control of
the Company, the exercisability of Mr. Finocchio's options will accelerate so as
to become fully vested. See "Report of the Compensation Committee of the Board
of Directors--Compensation of Chief Executive Officer" and "Stock Option
Grants--Options Granted in Last Fiscal Year."
On September 24, 1997, the Company entered into an at-will employment letter
agreement with Jean-Yves F. Dexmier, the Company's Executive Vice President,
Field Operations, which provides for an annual base salary of $350,000 and an
annual cash bonus based on the achievement of individual and Company performance
objectives. In the event Mr. Dexmier is terminated without cause after Mr.
Dexmier's first twelve months with the Company, he shall be entitled to receive
as severance an amount equal to six months base salary. In connection with his
employment, the Company granted Mr. Dexmier an option under the 1994 Plan to
acquire 500,000 shares of Common Stock at an exercise price of $6.8125, subject
to vesting in equal annual installments over four years. For information
regarding additional stock option grants received by Mr. Dexmier during the last
fiscal year see "Stock Option Grants--Options Granted in Last Fiscal Year."
On September 18, 1997, the Company entered into an at-will employment letter
agreement with Wesley Raffel, the Company's Vice President and General Manager,
i.Informix, which provides for an annual base salary of $250,000 and an annual
cash bonus based on the achievement of individual and Company performance
objectives. In the event of a change in the Chief Executive Officer or a change
in ownership of the Company where Mr. Raffel's employment is terminated in
connection with such event, Mr. Raffel will be entitled to receive severance in
an amount equal to one year of base salary. In connection with his employment,
the Company granted Mr. Raffel an option under the 1994 Plan to acquire 325,000
shares of Common Stock at an exercise price of $7.3438, subject to vesting in
equal annual installments over four years.
In October 1997, the Company entered into Change of Control Agreements (the
"Change of Control Agreements") with Messrs. Dexmier, Raffel and certain other
executive officers. The Change of Control Agreements, which are substantially
similar for each such executive officer, provide that in the event a
17
<PAGE>
change in control of the Company occurs, the exercisability of each executive
officer's options will accelerate so as to become fully vested.
Other than the employment arrangements described above, the Company does not
have employment agreements with any current Named Executive Officer or director.
For a description of other employment agreements and change in control
arrangements see "Certain Transactions."
The Company has also adopted a Rights Agreement, commonly referred to as a
poison pill. The Company's Board of Directors has declared a dividend of one
Purchase Right (each a "Right" and collectively the "Rights") under the
Company's Rights Agreement for each share of the Company's Common Stock
outstanding on September 17, 1991 or thereafter issued. When exercisable, each
Right initially entitles the holder to purchase one share of Common Stock at a
specified price. The Rights become exercisable on the earlier of: (i) the tenth
day (or such later date as may be determined by a majority of the Company's
Directors not affiliated with the acquiring person or group (the "Continuing
Directors")) after a person or group has acquired, or obtained the right to
acquire, beneficial ownership of 20% of more of the Company's outstanding Common
Stock or (ii) the tenth business day (or such later date as may be determined by
a majority of the Continuing Directors) following the consummation of, or
announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in beneficial ownership by a person or group
of 20% or more of the Company's outstanding Common Stock. If an acquiror obtains
20% or more of the Company's outstanding Common Stock (other than in certain
permitted transactions), and unless the Rights are earlier redeemed, the holder
of each unexercised Right will have the right to receive shares of the Company's
Common Stock having a value equal to two times the purchase price. Similarly,
unless the Rights are earlier redeemed, after the tenth day following certain
acquisition transactions, proper provision must be made so that holders of
Rights (other than those beneficially owned by an acquiring person, which will
thereafter be void) will thereafter have the right to receive, upon exercise,
shares of common stock of the acquiring company having a value equal to two
times the purchase price. The Rights Agreement has been amended so as to prevent
holders of the Series A-1 Preferred and the holders of the Series B Preferred
from being deemed acquiring persons under the Rights Agreement by virtue of
their beneficial ownership of securities issued or issuable in connection with
the sale and issuance of Preferred Stock. The Rights expire on July 25, 2005 or
on their earlier exchange, redemption or expiration in connection with certain
permitted transactions.
CERTAIN TRANSACTIONS
In June 1993, the Company made a loan in the principal amount of $150,000 to
Myron (Mike) Saranga, the Company's former Senior Vice President, Product
Management and Development, in connection with his accepting employment by the
Company. The loan was originally due and payable in full on the earliest of June
2, 1995, the date Mr. Saranga sold certain residential real property located in
Connecticut, or the date Mr. Saranga's employment with the Company was
terminated. In June 1995, Mr. Saranga and the Company amended the loan to
increase the interest rate of 3.56% per annum to 6.55% per annum and to provide
that $30,000 of principal, and accrued interest, would be forgiven on June 2,
1996 and each anniversary thereafter until the loan was no longer outstanding,
provided that Mr. Saranga had remained an employee of the Company. The loan
continued to provide that the full amount of unpaid principal and accrued
interest would become immediately due and payable on the date Mr. Saranga's
employment with the Company is terminated for any reason. In June 1997 and June
1996, respectively, the Company forgave $35,568 and $39,825 of principal and
interest on the loan under the promissory note, respectively (such forgiveness
amounts were not grossed up to satisfy tax obligations). In October 1998, Mr.
Saranga resigned as the Company's Senior Vice President, Product Management and
Development, and paid $60,000 of the outstanding loan. The Company forgave the
balance of $1,562.
On November 17, 1997, the Company issued 160,000 shares of Series A-1
Preferred and the Series A-1 Warrant in cancellation of and exchange for all of
the outstanding Series A Convertible Preferred Stock and the Series A Warrant
previously issued in connection with a Subscription Agreement, dated August 12,
18
<PAGE>
1997, between Fletcher International Limited ("Fletcher") and the Company. The
issuance of the Series A-1 Preferred in exchange for the Series A Preferred was
effected in reliance on the exemption under Section 3(a)(9) of the Securities
Act. On February 13, 1998, Fletcher exercised the Series A-1 Warrant with
respect to 60,000 shares of Series A-1 Preferred and simultaneously converted
220,000 shares of Series A-1 Preferred into 12,769,908 shares of Common Stock.
On November 25, 1998, Fletcher exercised their remaining warrants to purchase
80,000 additional shares of the Series A-1 Preferred into 4,642,525 shares of
the Company's Common Stock. As a result of these conversions, no Series A-1
Preferred Stock or Series A-1 Preferred warrants were outstanding at December
31, 1998.
In November 1997, the Company sold 50,000 shares of newly authorized Series
B Convertible Preferred Stock ("Series B Preferred"), at a face value of $1,000
per share, which shares are generally not entitled to vote on corporate matters,
to private investors for aggregate proceeds of $50.0 million (excluding a $1.00
million fee paid to a financial advisor, The Shemano Group, Inc. ("Shemano"), of
the Company, as described below). In connection with the sale, the Company also
agreed to issue a warrant to such investors upon conversion of such Series B
Preferred to purchase 20% of the shares of Common Stock into which the Series B
Preferred is convertible, but no less than 1,500,000 shares at a per share
exercise price of $7.84. On June 10, 1998, a holder of the Series B Preferred
Stock converted 500 shares of Series B Preferred into 80,008 shares of the
Company's Common Stock. In connection with such conversion, the Company also
issued such Series B Preferred Stockholder a warrant to purchase up to 66,000
shares of Common Stock at a purchase price of $7.84 per share. During the third
and fourth quarters of fiscal 1998, holders of the Series B Preferred converted
a total of 26,200 shares of Series B Preferred into 6,391,639 shares of the
Company's Common Stock. In connection with such conversions, the Company also
issued such Series B Preferred Stockholders warrants to purchase up to 1,428,319
shares of Common Stock at a purchase price of $7.84 per share and paid cash
dividends in the amount of $1,170,068 to such stockholders. The Company reserved
22.8 million shares of Common Stock for issuance upon conversion of the Series B
Preferred and upon exercise of the Series B Warrants.
In connection with the issuance of the Series B Preferred in November 1997,
the Company paid Shemano a fee of $1,000,000 for financial advisory services
provided in connection with such financing. In November 1997, the Company also
issued Shemano 100,000 shares of its Common Stock in connection with the
financing. The Company also issued Shemano a warrant in May 1998 to purchase up
to an additional 50,000 shares of Common Stock because as of May 15, 1998, the
closing sales price of the Company's Common Stock was less than $12.50 (the
"Shemano Warrant"). The Shemano Warrant is exercisable according to the same
terms as the Series B Warrants. In February 1998, the Company and Shemano
entered into a letter agreement pursuant to which the Company agreed to
repurchase from Shemano the 100,000 shares of Common Stock issued in connection
with the issuance of the Series B Preferred. The repurchase price would be
determined based on the then-prevailing price on The Nasdaq Stock Market and
would be payable in cash. The Company's obligation to repurchase such shares
terminated upon the Commission declaring the registration statement covering
such shares and the shares purchasable upon exercise of the Shemano Warrant
effective on May 12, 1998.
In October 1997, the Company entered into Change of Control Agreements with
Messrs. Dexmier and Raffel and Karen Blasing, the Company's Vice President,
Business Development Finance. The Change of Control Agreements, which are
substantially similar for each such executive officer, provide that in the event
a change in control of the Company occurs, the exercisability of each executive
officer's options will accelerate so as to become fully vested.
In January 1998, the Company entered into an at-will employment letter with
Susan T. Daniel, the Company's Vice President, Human Resources, which provides
for an annual base salary of $230,000 and an annual cash bonus based on the
achievement of individual and Company performance objectives. Ms. Daniel will
also receive $7,500 annually her first two years of employment if she remains
employed with the Company on the anniversary date of her employment with the
Company. In connection with her employment, the Company granted Ms. Daniel an
option under the 1994 Plan to acquire 200,000 shares of
19
<PAGE>
Common Stock at a per share exercise price of $7.4688, subject to vesting in
equal installments over four years. In the event of a change of ownership of the
Company within Ms. Daniel's first two years of employment with the Company where
Ms. Daniel's employment is terminated within 90 days of the change of control
event other than for cause, she will be entitled to receive severance in an
amount equal to one year base salary. In the event of a change in control of the
Company, the exercisability of Ms. Daniel's options will accelerate so as to
become fully vested.
In January 1998, the Company entered into an at-will employment letter with
Gary Lloyd, the Company's Vice President, Legal, General Counsel and Secretary,
which provides for an annual base salary of $200,000 and an annual cash bonus
based on the achievement of individual and Company performance objectives. In
connection with his employment, the Company granted Mr. Lloyd an option under
the 1994 Plan to acquire 150,000 shares of Common Stock at a per share exercise
price of $5.7500, subject to vesting in equal installments over four years. In
the event of a change in control of the Company, the exercisability of Mr.
Lloyd's options will accelerate so as to become fully vested.
On March 18, 1998, the Company entered into an at-will employment letter
agreement with Diane L. Fraiman, the Company's Vice President, Corporate
Marketing, which provides for an annual base salary of $250,000 and an annual
cash bonus based on the achievement of individual and Company performance
objectives. Pursuant to her employment letter, Ms. Fraiman received a $135,000
"relocation bonus" which Ms. Fraiman will be required to repay in full if she
terminates her employment with the Company prior to the first anniversary of her
commencement date. Ms. Fraiman will be required to repay half that amount if she
terminates her employment after the first anniversary date but prior to the
second anniversary date. According to her employment letter, Ms. Fraiman will
also be reimbursed for relocation costs. In connection with her employment with
the Company, the Company granted Ms. Fraiman an option to acquire 200,000 shares
of Common Stock at an exercise price of $8.531 per share, subject to vesting in
equal installments over four years. In the event of a change in control of the
Company, Ms. Fraiman's options will accelerate so as to become fully vested.
On December 16, 1998, the Company entered into an at-will employment letter
with Howard A. Bain, III, the Company's Executive Vice President, Chief
Financial Officer. The agreement provides for an annual base salary of $335,000,
subject to annual review concerning increases. Pursuant to the agreement, the
Company granted Mr. Bain an option to purchase 350,000 shares of Common Stock
under the 1994 Plan at an exercise price per share of $12.50, subject to vesting
in equal installments over four years. In the event of a merger or change of
control of the Company within six months after the effective date of such stock
grant, the exercisability of Mr. Bain's options will accelerate as to two year's
additional vesting. If such change in control takes place after such six month
period, the exercisability of Mr. Bain's options will accelerate so as to become
fully vested.
On July 14, 1998, the Company entered into an at-will employment letter with
Richard Snook, the Company's Vice President, Europe, Middle East & Africa. The
agreement provides for an annual base salary of 375,000 pounds sterling. Of this
amount, 105,000 pounds sterling is subject to a separate incentive agreement.
Pursuant to the agreement, the Company granted Mr. Snook an option to purchase
300,000 shares of Common Stock, subject to vesting in equal installments over
four years. In the event of a merger of change in control of the Company, the
exercisability of Mr. Snook's options will accelerate so as to become fully
vested.
Albert F. Knorp, Jr., a Class III director, and a member of the Audit and
Nominating Committees, has determined not to stand for re-election to the Board.
Mr. Knorp has been of counsel to the law firm of Gray Cary Ware & Freidenrich,
since November 1994. The Company has retained Gray Cary Ware & Freidenrich for
trademark related work.
Pursuant to both Article VI of the Company's Bylaws and Section 6 of the
Indemnification Agreement the Company enters into with its executive officers
and directors, the Company advances expenses incurred by indemnified parties in
connection with the investigation, defense, settlement or appeal of threatened,
20
<PAGE>
pending or completed action or suits against such parties in their capacity as
an agent of the Company. Under both the Bylaws and the Indemnification
Agreement, the indemnified party will repay the Company for any advanced
expenses if it is ultimately determined that the indemnified party is not
entitled to be indemnified by the Company. As of December 31, 1998, the Company
had received invoices for legal fees of approximately $2,903,803 incurred by
certain of its current and former executive officers and/or directors in
connection with certain actions and suits alleging various violations of federal
securities laws and state corporate laws.
COMPANY PERFORMANCE
NOTWITHSTANDING ANY STATEMENT TO THE CONTRARY IN ANY OF THE COMPANY'S
PREVIOUS OR FUTURE FILINGS WITH THE COMMISSION, THIS COMPANY PERFORMANCE GRAPH
IS NOT "SOLICITING MATERIAL," SHALL NOT BE DEEMED "FILED" WITH THE COMMISSION
AND SHALL NOT BE INCORPORATED BY REFERENCE INTO ANY SUCH FILINGS. The following
graph shows a five-year comparison of cumulative total return for the Company's
Common Stock through December 31, 1998 relative to the Nasdaq Stock Market Index
(US) and the Hambrecht & Quist Software Sector Index.
INFORMIX
H&Q COMPUTER SOFTWARE SECTOR INDEX
NASDAQ STOCK MARKET--U.S. INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
DATES INFORMIX NASDAQ STOCK MARKET U.S. H&Q COMPUTER SOFTWARE SECTOR
<S> <C> <C> <C>
Dec-93 100 100 100
Jan-94 76.47 103.03 104.05
Feb-94 110.59 102.07 106.55
Mar-94 97.65 95.8 102.38
Apr-94 77.06 94.55 103.53
May-94 75.59 94.79 110.75
Jun-94 72.94 91.32 105.79
Jul-94 94.71 93.19 106.1
Aug-94 111.18 99.13 114.66
Sep-94 130.59 98.88 115.99
Oct-94 129.41 100.82 124.35
Nov-94 135.29 97.48 122.96
Dec-94 151.18 97.75 125.59
Jan-95 151.76 98.31 123.63
Feb-95 177.65 103.51 138.28
Mar-95 161.76 106.58 143.58
Apr-95 185.29 109.94 149.29
May-95 198.82 112.77 150.73
Jun-95 238.82 121.91 166.04
Jul-95 278.82 130.87 174.9
Aug-95 263.53 133.53 175.27
Sep-95 305.88 136.6 180.52
Oct-95 274.12 135.81 184.01
Nov-95 260.58 139 185.76
Dec-95 282.35 138.26 180
Jan-96 314.12 138.94 183.79
Feb-96 331.76 144.22 187.56
Mar-96 248.24 144.7 196.44
Apr-96 248.24 156.7 218.27
May-96 214.12 163.9 219.95
Jun-96 211.76 156.51 214.19
Jul-96 205.29 142.55 195.73
Aug-96 211.76 150.54 198.78
Sep-96 262.35 162.05 220.31
Oct-96 208.82 160.26 212.75
Nov-96 223.53 170.17 227.94
Dec-96 191.76 170.01 218.81
Jan-97 195.29 182.1 226.4
Feb-97 164.11 172.03 210.73
Mar-97 142.35 160.79 199.68
Apr-97 68.82 165.82 203.23
May-97 84.71 184.61 232.34
Jun-97 84.71 190.27 237.15
Jul-97 106.47 210.35 263.19
Aug-97 85.29 210.03 274.22
Sep-97 65.88 222.44 284.37
Oct-97 64.11 210.92 278.51
Nov-97 62.35 211.98 280.21
Dec-97 44.71 208.58 264.57
Jan-98 61.18 215.16 274.05
Feb-98 73.52 235.36 317.35
Mar-98 80 244.05 343.44
Apr-98 93.09 248.2 344.77
May-98 64.12 234.57 331.55
Jun-98 74.41 251.12 356
Jul-98 61.47 248.47 336.08
Aug-98 32.94 199.75 259.02
Sep-98 47.06 227.34 296.94
Oct-98 47.94 236.63 286.08
Nov-98 50.88 259.94 317.95
Dec-98 92.94 293.21 345.63
</TABLE>
Assumes $100 invested on the last trading day of December 1993 at the
closing sales price in the Company's Common Stock, the Nasdaq Stock Market Index
(US) and the Hambrecht & Quist Software Sector Index. Total return assumes
reinvestment of dividends for the Nasdaq Stock Market Index (US) and the
Hambrecht & Quist Software Sector Index. The Company has never paid dividends on
its Common Stock and has no present plans to do so.
The Nasdaq Stock Market Index (US) was prepared by the Center for Research
in Security Prices and includes all United States Nasdaq Stock Market companies.
The H&Q Software Sector Index is a subset of the H&Q Technology Index and is
comprised of publicly traded stocks considered by H&Q as representative of the
software marketplace as a whole.
21
<PAGE>
PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected KPMG LLP ("KPMG"), independent
accountants, to audit the financial statments of the Company for the current
fiscal year ending December 31, 1999. The Company expects that a representative
of KPMG will be present at the Annual Meeting, will have the opportunity to make
a statement if he of she desires to do so and will be available to answer any
appropriate questions.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
On May 20, 1998, the Company filed a current report on Form 8-K (the "Form
8-K") regarding its dismissal of Ernst & Young LLP as its independent
accountants and the engagement of KPMG as the Company's independent accountants.
The contents of that report are as follows:
FORM 8-K FILED ON MAY 20, 1998
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
On May 12, 1998, the Company's Board of Directors approved a resolution (i)
to dismiss Ernst & Young LLP ("E&Y") as the Company's independent accountants,
effective upon management's notification of E&Y of the dismissal; and (ii)
concurrent with such notification, to engage KPMG LLP ("KPMG") as the Company's
independent accountants upon such terms as may be negotiated by management.
On May 13, 1998, the Company's management notified E&Y of the dismissal. On
May 19, 1998, the Company engaged KPMG as the Company's independent accountants.
E&Y's reports with respect to the Company's financial statements for the
fiscal years ended December 31, 1996 and 1997 did not contain an adverse opinion
or a disclaimer of opinion and were not qualified as to uncertainty, audit scope
or accounting principles.
In connection with the audits of the Company's financial statements for each
of the two fiscal years ended December 31, 1996 and 1997 and in the subsequent
interim period, except as described in the next paragraph, there were no
disagreements with E&Y on any matter of accounting principles or practices,
financial statement disclosure or auditing scope and procedures which, if not
resolved to the satisfaction of E&Y would have caused E&Y to make reference to
the matter in their report.
E&Y advised the Company that it disagreed with the Company's recognition of
revenue resulting from software license transactions with industrial
manufacturers which occurred during the first quarter ended March 31, 1998. The
disagreement was resolved to the satisfaction of E&Y with the result that
approximately $6.2 million in revenue has been deferred and will be recognized
over a period which the Company expects to be approximately two years. The
Company intends to file immediately an amendment to its quarterly report on Form
10-Q for the quarter ended March 31, 1998 to restate its financial results for
the period. The Audit Committee has discussed the accounting of these
transactions with management and E&Y.
The Company has authorized E&Y to respond fully to the inquiries of KPMG as
the successor independent accountants of the Company. Prior to accepting its
engagement as the Company's successor independent accountants, KPMG had the
opportunity to discuss with E&Y the subject matter of the disagreement described
above and other matters relevant to the Company. KPMG has not offered any report
or advice to the Company concerning such disagreement that was important to the
Company's decision in reaching a resolution.
During the Company's fiscal years ended December 31, 1996 and 1997, and
through March 31, 1998, the following reportable events occurred:
In connection with the restatement of the Company's financial statements for
fiscal years ended December 31, 1996, 1995 and 1994, and the quarter ended March
30, 1997, a number of conditions which collectively represented a material
weakness in the Company's internal accounting controls were identified. These
conditions included a deterioration in the Company's accounting controls at
corporate and
22
<PAGE>
regional management levels, and a relative failure to stress the importance of
these controls; an inappropriate level of influence, principally by the sales
organization, over the revenue recognition process; and an apparent lack of
clarity and consistent understanding within the Company of the application of
the Company's revenue recognition policies to large, complex reseller license
transactions. The Company is implementing a plan to strengthen the Company's
internal accounting controls. This plan includes updating the Company's revenue
recognition policies regarding accounting and reporting for large, complex
reseller license transactions, developing and conducting educational programs to
help implement such policies, changing the Company's corporate and regional
accounting and reporting structure and re-establishing an internal audit
function reporting to the Company's Board of Directors.
On April 29, 1998, E&Y informed the Audit Committee of the Board that it
considered that, in connection with the audit of the Company's fiscal 1997
consolidated financial statements, the lack of appropriate resources in the
accounting and controlling departments of the Company constituted a reportable
condition.
RESPONSE OF ERNST & YOUNG
On May 29, 1998 E&Y furnished the Company with the following response letter
concerning the information contained in the Form 8-K, which response letter the
Company filed with the Commission on Form 8-K/A on June 2, 1998.
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Gentlemen:
We have read Item 4 of Form 8-K dated May 20, 1998, of Informix Corporation
and believe it is not complete as to reportable events as described in Item
304(a)(1)(v) of Regulation S-K. We believe the ninth paragraph of Item 4
included on page 3 therein should be replaced by the following two sentences. On
April 29, 1998, E&Y informed the Audit Committee of the Board that, in
connection with the audit of the Company's fiscal 1997 consolidated financial
statements, the lack of appropriate resources, analyses, and process structure
in the accounting and financial reporting departments of the Company resulted in
delays in closing the books, numerous and material amounts of post-closing
entries and audit adjustments required to be recorded by the Company, and
difficulty in accumulating accurate information necessary for financial
statement disclosure in a timely manner. E&Y considers this condition to be a
material weakness.
We are in agreement with the statements contained in the first sentence of
the second paragraph, the third paragraph, the fourth paragraph, the first
sentence of the fifth paragraph, the first part of the second sentence of the
fifth paragraph through and including the words "has been deferred", the fourth
sentence of the fifth paragraph as it relates to our Firm, the first sentence of
the sixth paragraph, the seventh paragraph, the first and second sentence of the
eighth paragraph, and the first sentence of the tenth paragraph on pages 2 and 3
therein. In addition, we have no basis to agree or disagree with other
statements of the registrant contained therein.
Regarding the registrant's statements concerning the lack of internal
controls to prepare financial statements, included in the eighth and ninth
paragraphs of Item 4 on page 2 and 3 therein, we had considered such matters in
determining the nature, timing and extent of procedures performed in our audit
of the registrant's consolidated financial statements for the years ended
December 31, 1997, 1996, 1995, and 1994.
/s/ Ernst & Young LLP
23
<PAGE>
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
The affirmative votes of the holders of a majority of the shares of Company
stock present or represented and voting at the Annual Meeting will be required
to approve this proposal. THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THIS
PROPOSAL AND RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE RATIFICATION OF THE
SELECTION OF KPMG LLP.
24
<PAGE>
OTHER MATTERS
The Company knows of no other matters to be submitted at the meeting. If any
other matters properly come before the Annual Meeting, it is the intention of
the persons named in the enclosed proxy card to vote the shares they represent
as the Board of Directors may recommend.
It is important that your shares be represented at the meeting, regardless
of the number of shares which you hold. Therefore, the Company urges you to
mark, sign, date, and return the accompanying proxy card as promptly as possible
in the postage-prepaid envelope enclosed for that purpose.
For the Board of Directors
INFORMIX CORPORATION
/s/ Gary Lloyd
Gary Lloyd
SECRETARY
April 6, 1999
25
<PAGE>
PROXY
INFORMIX CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Robert J. Finocchio, Jr. and Gary Lloyd
and either of them, as attorneys of the undersigned with full power of
substitution, to vote all shares of stock which the undersigned is entitled
to vote at the Annual Meeting of Stockholders of Informix Corporation, to be
held at the Hyatt Rickey's, 4219 El Camino Real, Palo Alto, California, on
Thursday, May 6, 1999 at 10:00 a.m., local time, and at any continuation or
adjournment thereof, with all the powers which the undersigned might have if
personally present at the meeting.
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting and Proxy Statement, dated April 6, 1999, and hereby expressly
revokes any and all proxies heretofore given or executed by the undersigned
with respect to the shares of stock represented by this Proxy and by filing
this Proxy with the Secretary of the Corporation, gives notice of such
revocation.
THIS PROXY MAY BE REVOKED AT ANY TIME PRIOR TO THE TIME IT IS VOTED.
PLEASE COMPLETE, DATE AND SIGN THIS PROXY AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE.
--------------- ---------------
SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
--------------- ---------------
<PAGE>
/X/ PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING:
1. ELECTION OF CLASS III DIRECTOR:
NOMINEE: Robert J. Finocchio, Jr.
FOR WITHHELD
/ / / /
2. To ratify the appointment of KPMG FOR AGAINST ABSTAIN
LLP as the Corporation's independent / / / / / /
accountants for the 1999 fiscal year.
In their discretion, the proxies are authorized to vote upon such
other matter(s) which may properly come before the meeting and any
adjournment(s) thereof.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT / /
THIS PROXY WILL BE VOTED AS DIRECTED, OR, IF NO DIRECTION IS INDICATED, WILL
BE VOTED FOR THE LISTED NOMINEE IN THE ELECTION OF CLASS III DIRECTOR AND FOR
THE RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS INDEPENDENT ACCOUNTANTS
FOR THE 1999 FISCAL YEAR.
Please date and sign exactly as your name or names appear hereon, Corporate
or partnership proxies should be signed in full corporate or partnership name
by an authorized person. Persons signing in a fiduciary capacity should
indicate their full titles in such capacity, if shares are held by joint
tenants or as community property, both should sign.
Signature: ______________________________ Date: __________
Signature: ______________________________ Date: __________
<PAGE>
1670-PS-99
