<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Material
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Silicon Graphics, Inc.
----------------------
(Name of Registrant as Specified in its Charter)
Sandra M. Escher
----------------
(Name of Person Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
---------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------------------
[X] 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:
$125
-----------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
Preliminary Proxy Statement
-----------------------------------------------------------------
3) Filing Party:
Silicon Graphics, Inc., Sandra M. Escher
-----------------------------------------------------------------
4) Date Filed:
September 1, 1994
-----------------------------------------------------------------
<PAGE>
[ L O G O ]
September 21, 1994
DEAR SILICON GRAPHICS STOCKHOLDER:
You are cordially invited to attend the Annual Meeting of Stockholders of
Silicon Graphics, Inc. to be held on Tuesday, November 1, 1994 at 2:00 p.m. at
the Company's headquarters, 2011 North Shoreline Boulevard, Mountain View,
California 94043-1389.
The Notice of Annual Meeting and Proxy Statement accompany this letter and
provide an outline of the business to be conducted at the meeting. In addition
to the specific matters to be voted on at the meeting, there will be a report on
the progress of the Company and an opportunity for stockholders to ask
questions.
We hope you will be able to join us. To ensure your representation at the
meeting, we urge you to return the enclosed proxy promptly. Your vote is very
important.
Sincerely,
<TABLE>
<S> <C>
EDWARD R. MCCRACKEN THOMAS A. JERMOLUK
CHAIRMAN AND CHIEF PRESIDENT AND CHIEF
EXECUTIVE OFFICER OPERATING OFFICER
</TABLE>
<PAGE>
SILICON GRAPHICS, INC.
-------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 1, 1994
TO THE STOCKHOLDERS OF SILICON GRAPHICS, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of SILICON
GRAPHICS, INC. (the "Company"), a Delaware corporation, will be held on Tuesday,
November 1, 1994, at 2:00 p.m., local time, at the Company's principal offices
at 2011 North Shoreline Boulevard, Mountain View, California 94043-1389, for the
following purposes:
1. To elect two Class II directors of the Company to serve for a
three-year term.
2. To approve an amendment to the Company's Restated Certificate of
Incorporation to increase the number of authorized shares of Common Stock to
500,000,000 shares.
3. To ratify the appointment of Ernst & Young, LLP, as independent
auditors of the Company for the fiscal year ending June 30, 1995.
4. To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
These matters are more fully described in the Proxy Statement accompanying
this Notice.
Only stockholders of record at the close of business on September 2, 1994
are entitled to notice of and to vote at the meeting.
We invite all stockholders to attend the meeting in person. However, to
ensure your representation at the meeting, please sign and return the enclosed
Proxy as promptly as possible in the envelope provided. Any stockholder
attending the meeting may vote in person even if he or she has returned a Proxy.
Sincerely,
William M. Kelly
SECRETARY
Mountain View, California
September 21, 1994
<PAGE>
SILICON GRAPHICS, INC.
------------
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of Silicon Graphics, Inc. (the
"Company") for use at the Annual Meeting of Stockholders to be held on Tuesday,
November 1, 1994, at 2:00 p.m., local time, or at any adjournment thereof, for
the purposes set forth herein and in the accompanying Notice of Annual Meeting
of Stockholders. The Annual Meeting will be held at the principal offices of the
Company, 2011 North Shoreline Boulevard, Mountain View, California 94043-1389.
The Company's telephone number at that location is 415-960-1980.
These proxy solicitation materials will be mailed on or about September 27,
1994 to all stockholders entitled to vote at the meeting.
RECORD DATE AND PRINCIPAL SHARE OWNERSHIP
Stockholders of record at the close of business on September 2, 1994 are
entitled to notice of and to vote at the meeting. At the record date,
141,104,197 shares of the Company's Common Stock, $0.001 par value, were issued
and outstanding and 35,000 shares of the Company's Series A Preferred Stock,
$0.001 par value (the "Series A Preferred Stock"), were issued and outstanding.
Each share of Common Stock is entitled to one vote and each share of Series A
Preferred Stock is entitled to 80 votes. All information in this Proxy Statement
reflects a two-for-one stock split effected in the form of a stock dividend on
the Common Stock in December 1993.
As of August 31, 1994, the following persons were known by the Company to be
the beneficial owners of more than 5% of the Company's Common Stock or Series A
Preferred Stock:
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF SHARES
SHARES OF OF SERIES A PERCENT
COMMON STOCK PREFERRED STOCK OF TOTAL
BENEFICIALLY BENEFICIALLY PERCENT VOTING
OWNED OWNED OF CLASS POWER
-------------- ----------------- ----------- -----------
<S> <C> <C> <C> <C>
NKK U.S.A. Corporation...................................... -- 35,000 100.0 1.9
32 Loockerman Square
Suite L-100
Dover, DE 19901
FMR Corp. (1)............................................... 14,420,100 -- 10.2 10.0
82 Devonshire Street
Boston, MA 02109-3614
<FN>
- - ------------------
(1) As reported on Schedule 13G dated September 8, 1994 filed with the
Securities and Exchange Commission, FMR Corp. ("FMR") and its Chairman,
Edward C. Johnson 3d, share beneficial ownership of these shares with
Fidelity Management & Research Company ("Fidelity") as to 13,305,100 of
such shares (representing 9.4% of the class and 9.2% of total voting power)
and with Fidelity Management Trust Company ("Trust") as to 1,115,000 of
such shares. Fidelity serves as an investment adviser to a number of
investment companies, including Fidelity Magellan Fund ("Fund"), which is
the beneficial owner of 7,895,000 of such shares (representing 5.6% of the
class and 5.5% of total voting power). Each of FMR, Mr. Johnson, Fidelity,
the Fund and the Trust has dispositive power over all of the shares
beneficially owned by such persons and FMR, Mr. Johnson and the Trust share
voting power with respect to 763,800 shares. Mr. Johnson, together with
family members and trusts for the benefit of family members, form a
controlling group with respect to FMR.
</TABLE>
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Secretary of the
Company at its principal offices a written notice of revocation or a duly
executed proxy bearing a later date or by attending the meeting and voting in
person.
<PAGE>
VOTING AND SOLICITATION
Every stockholder voting on the election of directors may cumulate votes and
give one candidate a number of votes equal to the number of directors to be
elected multiplied by the number of shares of Common Stock held by such
stockholder (treating each share of Series A Preferred Stock as 80 shares of
Common Stock), or distribute the stockholder's votes on the same principle among
as many candidates as the stockholder may select. However, no stockholder may
cumulate votes unless the candidate's name has been placed in nomination prior
to the voting and the stockholder, or any other stockholder, has given notice at
the meeting, prior to the voting, of the intention to cumulate votes. On all
other matters, each share of Common Stock has one vote, and each share of Series
A Preferred Stock has 80 votes. Except as otherwise required by law, the Series
A Preferred Stock votes with the Common Stock as one class.
The cost of soliciting proxies will be borne by the Company. The Company may
retain the services of a proxy solicitation firm to aid in the solicitation of
proxies from brokers, bank nominees and other institutional owners, on terms
customary for such services. The Company estimates that it will pay Georgeson &
Company Inc., a proxy solicitation firm, a fee expected not to exceed $9,000 for
its services and will reimburse the firm for certain out-of-pocket expenses
expected not to exceed an additional $6,000. In addition, the Company may
reimburse brokerage firms and other persons representing beneficial owners for
their expenses in forwarding solicitation materials to such beneficial owners.
Proxies may also be solicited by certain of the Company's directors, officers
and employees, without additional compensation, personally or by telephone or
otherwise.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
The required quorum for the transaction of business at the Annual Meeting is
a majority of the shares entitled to vote at the meeting ("Voting Stock").
Shares that are voted "For" or "Against" a matter are treated as being present
at the meeting for purposes of establishing a quorum and are also treated as
votes eligible to be cast by the Voting Stock present in person or represented
by proxy at the Annual Meeting and entitled to vote on the subject matter (the
"Votes Cast") with respect to such matter.
The Company will count abstentions for purposes of determining whether a
quorum is present at the Annual Meeting for the transaction of business and
(other than broker non-votes) the total number of Votes Cast with respect to a
particular matter. In the absence of controlling precedent to the contrary, the
Company intends to treat abstentions in this manner. Broker non-votes with
respect to the proposals set forth in this proxy will not be considered Votes
Cast and, therefore, will not affect the determination as to whether the
requisite majority of Votes Cast has been obtained with respect to a particular
matter.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS FOR 1995 ANNUAL MEETING
Proposals of stockholders intended to be presented at the Company's 1995
Annual Meeting must be received by the Company no later than May 25, 1995, in
order to be included in the proxy statement and form of proxy relating to that
meeting.
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
DIRECTORS AND NOMINEES FOR DIRECTOR
The Company's Board of Directors currently consists of eleven persons,
divided into three classes serving staggered terms of office. Currently there
are three directors in Class I and four directors in each of Class II and Class
III. Following the Annual Meeting, at which two Class II directors are to be
elected, the Board will consist of nine directors, comprised of three directors
in Class I, two directors in Class II and four directors in Class III. Each
director elected at the 1994 Annual Meeting of Stockholders will serve until the
term of that director's class expires, or until his or her successor has been
duly elected and qualified. The term of the Class II directors elected at this
meeting will expire at the Annual Meeting of Stockholders in 1997.
Unless otherwise instructed, the proxy holders will vote the proxies
received by them for the Company's two nominees named below, each of whom is
currently a director of the Company. In the event that any nominee of the
Company becomes unavailable or declines to serve as a director at the time of
the Annual Meeting, the proxy holders will vote the proxies in their discretion
for any nominee who is designated by the current Board to fill the vacancy. It
is not expected that any nominee will be unavailable. In the event that
additional persons are
2
<PAGE>
nominated for election as directors, the proxy holders intend to vote all
proxies received by them in such manner in accordance with cumulative voting as
will ensure the election of as many of the nominees listed below as possible,
and, in such event, the specific nominees to be voted for will be determined by
the proxy holders.
The names of the nominees for director and certain information about each of
them are set forth below. The names of, and certain information about, the
current directors with unexpired terms are also set forth below.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE PRINCIPAL OCCUPATION SINCE
- - ---------------------------------- ---- --------------------------------------------------------------------------- --------
<S> <C> <C> <C>
Nominees for Class II Directors
- - ----------------------------------
Robert R. Bishop 51 President, Silicon Graphics World Trade Corporation 1993
James A. McDivitt 65 Senior Vice President, Government Operations and International, Rockwell 1987
International Corporation
Continuing Class I Directors
- - ----------------------------------
C. Richard Kramlich 59 Managing General Partner, New Enterprise Associates (a venture capital 1984
firm)
Edward R. McCracken 50 Chairman and Chief Executive Officer, Silicon Graphics, Inc. 1984
Lucille Shapiro 54 Professor and Chairman of the Department of Developmental Biology, Stanford 1993
University School of Medicine
Continuing Class III Directors
- - ----------------------------------
Allen F. Jacobson 67 Former Chairman of the Board and Chief Executive Officer, Minnesota Mining 1992
& Manufacturing Corporation (3M)
Thomas A. Jermoluk 38 President and Chief Operating Officer, Silicon Graphics, Inc. 1993
Mark W. Perry 51 President and Chief Executive Officer, ViewStar Corporation 1992
James G. Treybig 53 President and Chief Executive Officer, Tandem Computers Incorporated 1992
</TABLE>
Except as indicated below, each nominee or incumbent director has been
engaged in the principal occupation set forth above during the past five years.
There are no family relationships among directors or executive officers of the
Company.
Mr. Jacobson is the former Chairman of the Board and Chief Executive Officer
of 3M Corporation, and held that position until he retired on October 31, 1991.
Mr. Jacobson remains a director of 3M Corporation and is also a director of
Abbott Laboratories, Deluxe Corporation, Mobil Corporation, Northern States
Power Company, Potlatch Corporation, Prudential Insurance Company of America,
Sara Lee Corporation, U S WEST, Inc. and Valmont Industries, Inc.
Mr. Jermoluk became an Executive Vice President of the Company in 1991, was
named Chief Operating Officer in 1992, and President in 1994. Mr. Jermoluk, who
joined the Company in 1986, was the Company's Vice President and General
Manager, Advanced Systems Division from 1988 to 1991.
Mr. Kramlich is also a director of Ascend Communications, Chalone Inc.,
Macromedia, Sierra Monitor Corporation, SyQuest Technology, Inc. and Telebit
Corporation.
Mr. Perry has been the President and Chief Executive Officer of ViewStar
Corporation, a software company, since June 1994. Mr. Perry served as the Vice
Chairman of the Company from April 1992 to November 1993 and has served as a
consultant to the Company since November 1993. Prior to April 1992, Mr. Perry
held several positions with the Company, most recently as Executive Vice
President, a position he had held since March 1988. Mr. Perry is also a director
of Exabyte Corporation.
3
<PAGE>
Dr. Shapiro has been Professor and Chairman of the Department of
Developmental Biology, Stanford University School of Medicine, since 1989 and
Professor of Genetics, Stanford University School of Medicine since 1990. Prior
to 1989, Dr. Shapiro was Professor and Chairman of the Department of
Microbiology, College of Physicians and Surgeons of Columbia University.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held four meetings during fiscal 1994.
The Board has three committees: an Audit Committee, a Compensation and Human
Resources Committee, which also performs the functions of a nominating
committee, and an Open Architecture Committee.
The Audit Committee consists of three non-employee directors, Allen F.
Jacobson, C. Richard Kramlich, and Lucille Shapiro, and held seven meetings
during fiscal 1994. Glenn M. Mueller, a director of the Company until his death
in April 1994, was also a member of the Audit Committee. It recommends
engagement of, and is primarily responsible for approving the services performed
by, the Company's independent auditors. The Committee also is responsible for
reviewing and evaluating the Company's accounting principles and its system of
internal accounting controls.
The Compensation and Human Resources Committee consists of three
non-employee directors, James A. McDivitt, C. Richard Kramlich and Joseph A.
Mollica, and held five meetings during fiscal 1994. During fiscal 1994, the
Committee's responsibilities included recommending, subject to the Board's
approval, executive compensation, including stock option grants; administering
the Company's stock incentive plans; approving employee stock option grants;
identifying and evaluating candidates to fill vacancies on the Board and making
recommendations regarding the size and composition of the Board. Candidates for
director suggested by stockholders will be considered by the Committee. Such
suggestions should include the candidate's name and qualifications and may be
submitted in writing to the Secretary, Silicon Graphics, Inc., 2011 North
Shoreline Boulevard, Mountain View, CA 94043-1389. No interlocking relationship
exists between the Company's Board of Directors or Compensation and Human
Resources Committee and the board of directors or compensation committee of any
other company, nor has any such interlocking relationship existed in the past.
The Open Architecture Committee consists of Robert C. Miller, Mark W. Perry
and James G. Treybig, and held three meetings during fiscal 1994. The purpose of
the Open Architecture Committee is to represent the Board in an ongoing dialogue
with representatives of the business partners who comprise the advisory board to
MIPS Technologies, Inc., the Company's subsidiary, in order to foster the
openness and availability of the MIPS technology.
No director serving for the full fiscal year attended fewer than 75% of the
aggregate number of meetings of the Board of Directors and meetings of the
Committees of the Board on which he or she served.
DIRECTOR COMPENSATION
Employee directors, and, by agreement with the Company, Mr. Miller, are not
compensated for their service on the Board of Directors or on committees of the
Board.
Under the Company's current compensation policy for non-employee directors,
each non-employee director receives a fee of $5,000 per quarter, $1,000 for each
Board of Directors' meeting attended, and $1,000 for each committee meeting
attended. In addition, the chairman of each committee receives an additional
$1,000 per committee meeting attended.
Each non-employee director also is eligible for the grant of nonstatutory
stock options under the Company's Directors' Stock Option Plan (the "Directors'
Plan"). Under the Directors' Plan, each non-employee director is granted an
option to purchase 30,000 shares of Common Stock on the date on which he or she
first becomes a director. In addition, on November 1 of each year, each
non-employee director is granted an option to purchase an additional 10,000
shares of Common Stock. On November 1, 1993, Allen F. Jacobson, C. Richard
Kramlich, James A. McDivitt, Joseph A. Mollica, Lucille Shapiro and James G.
Treybig each were automatically granted options to purchase 10,000 shares at an
exercise price of $22.375 per share. By agreement with the Company, Mr. Perry
has waived the grant of stock options under the Directors' Plan.
4
<PAGE>
All options under the Directors' Plan are granted at 100% of the fair market
value of the Common Stock on the date of grant. The Directors' Plan provides for
neither a maximum nor a minimum number of option shares that may be granted to
any one non-employee director, but restricts the number of shares that may be
included in any grant and the method of making a grant. Options granted under
the Directors' Plan become exercisable in installments on the first three
anniversary dates following the date of grant, so long as the optionee remains a
director of the Company.
PROPOSAL NO. 2 -- AMENDMENT TO THE RESTATED
CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK
On August 2, 1994, the Board of Directors approved, subject to stockholder
approval, an amendment to the Company's Restated Certificate of Incorporation to
increase the number of authorized shares of Common Stock from the present
200,000,000 shares to 500,000,000 shares.
Of the 200,000,000 shares presently authorized, as of September 2, 1994,
there were 141,104,197 shares issued and outstanding, 39,512,976 shares reserved
for issuance upon the exercise or grant of stock options under the Company's
stock option plans and for issuance under the Company's Employee Stock Purchase
Plan, and 8,808,204 shares reserved for issuance upon conversion of the
Company's Series A Preferred Stock and Zero Coupon Convertible Subordinated
Debentures due 2013. As a result of these arrangements, approximately 95% of the
Company's authorized shares of Common Stock are issued or reserved. In addition,
the number of shares reserved for issuance under the Company's 1993 Long-Term
Incentive Stock Plan will automatically be increased in each of the next three
fiscal years by 3.5% of the number of shares outstanding at June 30, 1995, 1996
and 1997. The actual number of shares to be issued in the event the Series A
Preferred Stock is converted will vary depending on the common stock price at
the time of conversion.
The Board of Directors has from time to time approved stock splits in the
form of stock dividends in order to maintain an appropriate trading price for
the Common Stock and to enhance liquidity for the Company's stockholders.
Two-for-one stock splits have been effected in two of the last three fiscal
years. Although there are presently no plans for a further stock split, and
there can be no assurance that any further stock split will occur, the Board
believes that it is prudent to have sufficient authorized stock to permit a
future stock split and to meet future business needs, including equity-based
financings, acquisitions and the issuance of stock options and other stock-based
incentives under the Company's employee benefit plans.
The proposed amendment, if adopted, would make an additional 300,000,000
shares of Common Stock available from time to time without further stockholder
approval, unless such approval is required by law or by rules and regulations of
the New York Stock Exchange or any other stock exchange upon which the Common
Stock may be listed. There are no present plans, agreements, commitments or
understandings with regard to the issuance of the proposed additional shares.
Stockholders do not have and will not have preemptive rights to purchase any of
the additional shares.
If the amendment is approved, the first paragraph of Article FOURTH of the
Company's Restated Certificate of Incorporation will be modified to read as
follows:
The total number of shares of all classes of stock which the Corporation has
authority to issue is Five Hundred Two Million (502,000,000) shares,
consisting of Five Hundred Million (500,000,000) shares of Common Stock,
$0.001 par value, (the "Common Stock") and Two Million (2,000,000) shares of
Preferred Stock, $0.001 par value (the "Preferred Stock").
VOTE REQUIRED
Approval of this proposal requires the affirmative votes of a majority of
the holders of shares entitled to vote at the Annual Meeting.
RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THE AMENDMENT TO THE RESTATED
CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF
COMMON STOCK.
5
<PAGE>
PROPOSAL NO. 3 -- RATIFICATION OF
APPOINTMENT OF INDEPENDENT AUDITORS
The Company's Board of Directors has appointed the firm of Ernst & Young,
LLP, independent auditors, to audit the financial statements of the Company for
the fiscal year ending June 30, 1995. In the event of a majority vote against
approval, the Board will reconsider its selection. Under any circumstances, the
Board retains the corporate authority to change the auditors at a later date.
Ernst & Young, LLP, has audited the Company's financial statements since the
fiscal year ended June 30, 1982. Representatives of Ernst & Young, LLP, are
expected to be present at the meeting with the opportunity to make a statement
if they so desire, and are expected to be available to respond to appropriate
questions.
RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THE APPOINTMENT OF ERNST &
YOUNG, LLP, AS THE COMPANY'S INDEPENDENT AUDITORS FOR FISCAL YEAR 1995.
6
<PAGE>
OTHER INFORMATION
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the beneficial ownership of Common Stock of
the Company as of September 2, 1994 by each director, by each of the executive
officers named in the table under "Executive Officer Compensation" below, and by
all directors and executive officers as a group:
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
SHARES PERCENT OF TOTAL
BENEFICIALLY COMMON VOTING
NAME OWNED(1)(2) STOCK POWER
- - --------------------------------------------------------- ----------- --------------- ---------------
<S> <C> <C> <C>
Robert R. Bishop......................................... 3,791,048 3% 3%
Allen F. Jacobson........................................ 32,200 * *
Thomas A. Jermoluk....................................... 183,074 * *
C. Richard Kramlich...................................... 93,480 * *
Edward R. McCracken...................................... 2,050,376 1% 1%
James A. McDivitt........................................ 158,104 * *
Robert C. Miller......................................... 241,239 * *
Joseph A. Mollica........................................ 90,300 * *
Mark W. Perry(3)......................................... 61,602 * *
Lucille Shapiro.......................................... 3,400 * *
James G. Treybig......................................... 30,200 * *
Gary L. Lauer............................................ 133,208 * *
Michael Ramsay........................................... 438,792 * *
All executive officers and directors as a group (22
persons)................................................ 8,988,380 6% 6%
<FN>
- - ------------------
* Less than 1%.
(1) Unless otherwise indicated, the persons named have sole voting and
investment power over the shares shown as being beneficially owned by them,
subject to community property laws, where applicable.
(2) The table includes the following shares issuable on exercise of options
that were exercisable on September 2, 1994, or within 60 days thereafter:
Mr. Bishop, 4 shares; Mr. Jacobson, 30,200 shares; Mr. Jermoluk, 174,304
shares; Mr. Kramlich, 90,100 shares; Mr. McCracken, 1,648,620 shares; Mr.
McDivitt, 90,100 shares; Mr. Miller, 16,251 shares; Dr. Mollica, 90,100
shares; Mr. Perry, 22,412 shares; Dr. Shapiro, 3,400 shares; Mr. Treybig,
30,200 shares; Mr. Lauer, 133,204 shares; Mr. Ramsay, 427,204 shares; and
all directors and executive officers as a group, 4,377,633 shares.
(3) Includes an aggregate of 15,710 shares held in the name of Mr. Perry's wife
as to which he may be deemed to have shared voting and investment power.
</TABLE>
7
<PAGE>
EXECUTIVE OFFICER COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and equity compensation paid to the
Chief Executive Officer and each of the four other most highly compensated
executive officers of the Company (determined at the end of the fiscal year) for
the three fiscal years ended June 30, 1994.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION(1) AWARDS
FISCAL ---------------------- -------------
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS
- - ---------------------------------------------------------- ----------- ---------- ---------- -------------
<S> <C> <C> <C> <C>
Edward R. McCracken,...................................... 1994 $ 699,500 $ 556,875 200,000
Chairman and Chief 1993 636,043 310,000 200,000
Executive Officer 1992 571,871 123,125 200,000
Thomas A. Jermoluk,....................................... 1994 $ 504,082 $ 407,087 160,000
President and Chief 1993 413,422 210,250 200,000
Operating Officer 1992 319,725 63,000 150,000
Robert R. Bishop,......................................... 1994 $ 320,884 $ 295,429 --
President, Silicon Graphics 1993 319,210 215,954 --
World Trade Corporation 1992 280,513 110,555 --
Gary L. Lauer,............................................ 1994 $ 243,178 $ 295,119 100,000
Senior Vice President, 1993 209,262 163,700 100,000
North American Field Organization 1992 190,229 82,450 80,000
Michael Ramsay,........................................... 1994 $ 327,601 $ 209,250 100,000
President, Silicon Studio, Inc. 1993 287,028 115,875 120,000
1992 250,979 22,250 100,000
<FN>
- - ------------------
(1) The Company has no pension, retirement, annuity or similar benefit plan.
</TABLE>
OPTION GRANTS IN FISCAL 1994
The following table provides details regarding stock options granted to the
named executive officers in fiscal 1994 under the Company's 1993 Long-Term
Incentive Stock Plan.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
INDIVIDUAL GRANTS(1) AT
- - -------------------------------------------------------------------------------------------- ASSUMED ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK PRICE APPRECIATION
SECURITIES OPTIONS FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(2)
OPTIONS EMPLOYEES IN PRICE EXPIRATION --------------------------
NAME GRANTED FISCAL YEAR ($/SHARE) DATE 5% 10%
- - ------------------------------------ ----------- ----------------- --------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Edward R. McCracken................. 200,000 3.4% $ 22.875 12/20/04 $ 2,877,193 $ 7,291,372
Thomas A. Jermoluk.................. 160,000 2.7% 22.875 12/20/04 2,301,754 5,833,097
Robert R. Bishop.................... -- -- -- -- -- --
Gary L. Lauer....................... 100,000 1.7% 22.875 12/20/04 1,438,596 3,645,686
Michael Ramsay...................... 100,000 1.7% 22.875 12/20/04 1,438,596 3,645,686
<FN>
- - ------------------
(1) The options in this table were granted in December 1993 under the 1993
Long-Term Incentive Stock Plan and have exercise prices equal to the fair
market value on the date of grant. The options become exercisable at a rate
of 2% per month over a period of fifty months and expire ten years from the
date of grant. No other options were granted to the named executive
officers during fiscal 1994.
(2) Potential realizable value assumes that the stock price increases from the
date of grant until the end of the option term (10 years) at the annual
rate specified (5% and 10%). The 5% and 10% assumed annual rates of
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
appreciation are mandated by SEC rules and do not represent the Company's
estimate or projection of the future Common Stock price. The Company does
not agree that the value of an option can properly be determined by this
method.
</TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table shows stock options exercised by named executive
officers during fiscal 1994, including the aggregate value of gains on the date
of exercise. In addition, the table shows the shares covered by both exercisable
and non-exercisable stock options as of fiscal year-end, and the values for
unexercised options based on the year-end price of the Company's Common Stock.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
SHARES NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS AT
ACQUIRED OPTIONS AT JUNE 30, 1994 JUNE 30, 1994(2)
ON VALUE -------------------------- ----------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - ------------------------------- --------- ------------ ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Edward R. McCracken............ -- -- 1,568,616 528,000 $ 25,581,574 $ 4,323,494
Thomas A. Jermoluk............. 261,300 $ 4,765,422 203,100 450,400 $ 2,398,433 $ 3,715,121
Robert R. Bishop............... -- -- -- -- -- --
Gary L. Lauer.................. 85,200 $ 7,913,023 110,800 190,000 $ 1,172,336 $ 1,024,986
Michael Ramsay................. 100,000 $ 1,856,876 435,200 244,800 $ 6,735,347 $ 1,780,899
<FN>
- - ------------------
(1) The amounts in this column reflect the difference between the closing
market price on the date of exercise and the option exercise price and may
not represent amounts actually realized by the named individuals.
(2) The amounts in this column reflect the difference between the closing
market price of the Common Stock on June 30, 1994, which was $22.125, and
the option exercise price. The actual value of unexercised options
fluctuates with market activity.
</TABLE>
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act ("Section 16(a)") requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership on Form 3 and changes in ownership on Forms 4 or 5 with the Securities
and Exchange Commission (the "SEC") and the New York Stock Exchange. Such
officers, directors and ten percent stockholders are also required by SEC rules
to furnish the Company with copies of all Forms 3, 4 and 5 they file. The
Company believes that during the fiscal year ended June 30, 1994, its officers,
directors and ten percent stockholders complied with all applicable Section
16(a) filing requirements. In making this statement, the Company has relied on
the written representations of its directors and officers and a review of the
copies of such forms furnished to the Company.
9
<PAGE>
CERTAIN TRANSACTIONS
The Company has entered into Employment Continuation Agreements (the
"Continuation Agreements") with its executive officers. The Continuation
Agreements are intended to encourage the continued employment of key management
personnel in the event of a potential change in control of the Company. Under
the Continuation Agreements, each executive officer (i) agrees to remain an
employee of the Company, (ii) is entitled to a termination payment equal to two
years of his or her compensation if employment with the Company is terminated
within twenty-four months after such a change in control and (iii) is granted
full vesting of options effective after such a change in control.
James G. Treybig, a current director of the Company, is the President and
Chief Executive Officer of Tandem Computers Incorporated ("Tandem"), an OEM
distributor of the Company's products. During the year ended June 30, 1994, the
Company recognized revenue of approximately $35,811,000 from Tandem primarily
from system sales and related software and technology licenses. The Company
believes that the terms of its transactions with Tandem are no more favorable to
either party than would be obtained or available from an independent third
party.
NKK U.S.A. Corporation, a wholly-owned subsidiary of NKK Corporation, is the
holder of all of the Company's outstanding Series A Preferred Stock, which it
purchased in 1990 for $35 million in cash. The Series A Preferred Stock receives
a 3% cumulative annual dividend and a preference upon liquidation in the amount
of the purchase price. NKK and the Company's Japanese subsidiary have entered
into a distribution agreement pursuant to which NKK has become a distributor and
value-added reseller of the Company's products in Japan. During the fiscal year
ended June 30, 1994, NKK purchased approximately $15,716,000 in goods from the
Company. The Company believes that the terms of its transactions with NKK are no
more favorable to either party than would be obtained or available from an
independent third party.
In July 1993, Tom Whiteside joined the Company as a Vice President and
President of the Company's subsidiary, MIPS Technologies, Inc. In connection
with Mr. Whiteside's relocation to California, in September 1993 the Company
loaned him $250,000 for the purchase of a primary residence (the "Residential
Loan") and agreed to pay him a housing allowance of $988 per month for 60
months. The Residential Loan is secured by a second mortgage, is non-interest
bearing and will be forgiven at the rate of $4,167 per month over a 60-month
period. Mr. Whiteside also receives a monthly payment in an amount equal to the
taxes associated with the forgiveness of the Residential Loan, which equaled
$1,827 per month during fiscal 1994. In addition, the Company made Mr. Whiteside
a non-interest bearing bridge loan in the amount of $125,000, which was secured
by a deed of trust and repaid in full in December 1993. In the event that the
Company terminates Mr. Whiteside's employment prior to the end of the 60-month
periods for the Residential Loan and housing allowance, the Company has agreed
to pay Mr. Whiteside the remaining balance of the loan and allowance, and the
taxes associated with the accelerated payment. The largest principal amount
outstanding to Mr. Whiteside during fiscal 1994 was $375,000, of which $204,167
was outstanding as of September 2, 1994.
In November 1993, Mark W. Perry, a director of the Company, resigned his
position as an officer and employee of the Company. The Company has retained Mr.
Perry as a consultant through October 31, 1995, during which term, Mr. Perry's
medical and life insurance benefits continue in effect and his stock options
continue to vest and to be exercisable in accordance with their terms. From
November 1993 through May 1994, the Company paid Mr. Perry $13,000 per month in
connection with certain consulting services.
In January 1994, James C. Clark resigned as Chairman and a director of the
Company. In connection with his resignation, the Company retained Mr. Clark as a
consultant through July 1994 for which he received no compensation. Options
previously granted to Mr. Clark continued to vest through March 1994. In
addition, the Company gave Mr. Clark title to certain business-related equipment
with a book value of $47,610.
In February 1994, R.L. Smith McKeithen resigned his position as an officer
of the Company and terminated his employment as of April 30, 1994. The Company
has retained Mr. McKeithen as a consultant through April 30, 1995 for a fee of
$205,000. In addition, during the term of the consulting agreement, Mr.
McKeithen's medical benefits continue in effect and his stock options continue
to vest and to be exercisable in accordance with their terms. The Company also
paid for continued life insurance coverage for Mr. McKeithen.
10
<PAGE>
REPORT OF THE COMPENSATION
AND HUMAN RESOURCES COMMITTEE
OF THE BOARD OF DIRECTORS
The Compensation and Human Resources Committee of the Board of Directors
recommends, subject to the Board's approval, compensation for executive officers
and stock option grants to the Chief Executive Officer. The Committee
administers the Company's stock incentive plans and approves stock option grants
for all other employees. The Committee is currently composed of three
independent, non-employee directors who have no interlocking relationships as
defined by the SEC.
COMPENSATION PHILOSOPHY
The Company operates in the competitive and rapidly changing environment of
high technology businesses. The Committee seeks to establish compensation
policies that allow the Company flexibility to respond to changes in its
business environment. The Company's compensation philosophy is based on the
belief that achievement in this environment is enhanced by the coordinated
efforts of all individuals working toward common objectives. The goals of the
Company's compensation program are to align compensation with the Company's
business objectives and performance, to foster teamwork and to enable the
Company to attract, retain and reward employees who contribute to the Company's
long-term success.
COMPENSATION COMPONENTS
The Company's executive officers are compensated with a salary, and are
eligible for bonus and stock option awards. The Committee assesses the past
performance and anticipated future contribution, and considers the total
compensation (earned or potentially available), of each executive officer in
establishing each element of compensation.
SALARY. The salaries of the executive officers, including the Chief
Executive Officer, are determined annually by the Committee with reference to
several surveys of salaries paid to executives with similar responsibilities at
comparable companies, generally in the high technology industry. The peer group
for each executive officer is composed of executives whose responsibilities are
similar in scope and content. The Company seeks to set executive compensation
levels that are competitive with the average levels of peer group compensation.
BONUS. The Committee reviews and approves an executive bonus plan for each
fiscal year. Each individual's bonus is computed as a percentage of salary.
Individual targets are established for each officer, based on the scope of his
or her responsibility, and the bonus is computed as a percentage of that target,
based on the Company's performance in achieving revenue and profitability
objectives. For fiscal 1994, the bonus targets for executive officers ranged
from 35% to 55% of salaries, with bonuses to be computed within a range of 33%
to 150% of those targets, based on the Company's performance. Because the
Company met and exceeded the performance objectives established for the fiscal
1994 plan, the maximum bonuses were paid for fiscal 1994. An additional bonus of
up to 10% of salary also may be awarded in the discretion of the Chief Executive
Officer to recognize the contributions and efforts of individual executive
officers. The Committee also establishes a variable compensation plan each
fiscal year for executives, including Messrs. Bishop and Lauer, who have primary
responsibility for sales functions, pursuant to which they receive variable
quarterly compensation based on the performance of their functional areas in
achieving revenue, profitability and other operating objectives.
STOCK OPTIONS. Stock option awards are designed to align the interests of
executives with the long-term interests of the stockholders. The Committee
approves option grants subject to vesting periods (usually 50 months) to retain
executives and encourage sustained contributions. The exercise price of most
options is the market price on the date of grant. These options will acquire
value only to the extent that the price of the Company's Common Stock increases
relative to the market price at the date of grant.
In its tax year beginning July 1, 1994, the Company will be subject to U.S.
tax legislation adopted in 1993 that could limit the deductibility of certain
compensation payments to its executive officers. The Company believes that any
compensation expense incurred in connection with the exercise of stock options
granted under its 1993 Long-Term Incentive Stock Plan will continue to be
deductible as performance-based compensation. The Company does not have a policy
requiring the Committee to qualify all compensation for deductibility
11
<PAGE>
under Section 162(m) of the Internal Revenue Code of 1986, as amended. However,
the Committee considers the net cost to the Company in making all compensation
decisions and will continue to evaluate the impact of this legislation on its
compensation programs.
CHIEF EXECUTIVE OFFICER'S COMPENSATION
Mr. McCracken's salary, bonus and stock option grants for fiscal 1994
reflect the Committee's evaluation of his overall leadership of the Company. The
Committee considered, among other factors, the continued strong year-to-year
growth of revenues and profitability at levels above industry averages for
fiscal 1994, the Company's increasing market share in key segments, the creation
of several new ventures to exploit important developing markets, and the
strategic management of the Company's research and development program as a
foundation for product innovation.
In January 1994, the Committee reviewed Mr. McCracken's salary, considering
the Company's interim financial results as compared to industry averages, Mr.
McCracken's individual performance and his salary level relative to those for
comparable positions, primarily in the high technology industry. Based on this
review, the Committee increased Mr. McCracken's annualized salary from $650,000
to $700,000, effective January 1, 1994.
At the beginning of fiscal 1994, the Committee established a target bonus
amount for Mr. McCracken under the fiscal 1994 executive bonus plan described
above. Based on the Company's strong financial performance during fiscal 1994,
which exceeded the revenue and profitability objectives established at the
outset of the year, Mr. McCracken received a bonus for fiscal 1994 equal to
82.5% of his salary.
In December 1993, Mr. McCracken was granted an option to purchase 200,000
shares of the Company's Common Stock at the market price on that date, vesting
over a 50-month period. In keeping with the Company's overall philosophy
regarding the grant of stock options as a long-term incentive, the Committee
based its grant on an evaluation of Mr. McCracken's overall leadership of the
Company, the number of unvested options held by him, and competitive data for
comparable positions within the high technology industry.
COMPENSATION AND
HUMAN RESOURCES COMMITTEE
James A. McDivitt, CHAIRMAN
C. Richard Kramlich
Joseph A. Mollica
12
<PAGE>
COMPANY STOCK PRICE PERFORMANCE GRAPH
In accordance with SEC rules, the Company is required to present a table
showing a line-graph presentation comparing cumulative, five-year returns on an
indexed basis with a broad equity market index and either a nationally
recognized industry standard or an index of peer companies selected by the
Company. The Company has selected the S&P 500 Index for the broad equity index
and the Hambrecht & Quist ("H&Q") Technology Index as an industry standard for
the five fiscal year period commencing June 30, 1989 and ending June 30, 1994.
The stock price performance shown on the graph below is not necessarily
indicative of future price performance.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
Silicon Graphics,
Inc. H&Q Technology Index S&P 500 Index
<S> <C> <C> <C>
Jun-89 100 100 100
Sep-89 136.23 105.07 109.803
Dec-89 169.57 102.23 111.139
Mar-90 200.72 105.52 106.906
Jun-90 217.39 114.54 112.592
Sep-90 152.17 82.85 96.248
Dec-90 156.52 93.46 103.849
Mar-91 231.16 121.28 118.001
Jun-91 164.49 115.23 116.724
Sep-91 247.1 120.1 121.976
Dec-91 262.32 138.16 131.169
Mar-92 239.13 142.76 126.955
Jun-92 194.2 130.93 128.354
Sep-92 217.39 136.51 131.392
Dec-92 331.88 158.92 137.024
Mar-93 330.43 156.6 142.044
Jun-93 433.33 159.97 141.685
Sep-93 498.55 162.82 144.327
Dec-93 573.91 173.43 146.692
Mar-94 559.42 175 140.188
Jun-94 513.04 162.3 139.716
</TABLE>
- - ------------------
* Assumes $100 invested on June 30, 1989 in the Company's Common Stock, the S&P
500 Stock Index and the H&Q Technology Index, with reinvestment of dividends.
OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting. If any
other matters properly come before the meeting, it is the intention of the
persons named in the enclosed form of proxy to vote the shares they represent as
the Company or Management may recommend.
<TABLE>
<S> <C>
Dated: September 21, 1994 BY ORDER OF THE BOARD OF DIRECTORS
William M. Kelly
SECRETARY
</TABLE>
13
<PAGE>
[FRONT]
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
SILICON GRAPHICS, INC.
1994 ANNUAL MEETING OF STOCKHOLDERS
The undersigned stockholder of Silicon Graphics, Inc., a Delaware
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement, each dated September 21, 1994, and hereby
appoints Edward R. McCracken and William M. Kelly, or either of them, proxies
and attorneys-in-fact, with full power to each of substitution, on behalf and in
the name of the undersigned, to represent the undersigned at the 1994 Annual
Meeting of Stockholders of Silicon Graphics, Inc. to be held on November 1,
1994, at 2:00 p.m. local time, at the Company's principal offices, 2011 North
Shoreline Boulevard, Mountain View, California, and at any adjournment(s)
thereof, and to vote all shares of Common Stock which the undersigned would be
entitled to vote if then and there personally present, on the matters set forth
below.
This proxy will be voted as directed, or, if no contrary direction is
indicated, will be voted FOR the election of directors, FOR the amendment to the
Company's Restated Certificate of Incorporation to increase the number of
authorized shares of Common Stock, FOR the ratification of the appointment of
Ernst & Young as independent auditors, and as said proxies deem advisable on
such other matters as may properly come before the meeting.
<PAGE>
[BACK]
[X] Please mark votes as in this example.
1. ELECTION OF DIRECTORS
Nominees for Class II directors: Robert R. Bishop, James A. McDivitt
FOR WITHHELD
[__] [__]
[__] ______________________________________
For all nominees except as noted above
2. PROPOSAL TO APPROVE THE AMENDMENT TO THE COMPANY'S RESTATED CERTIFICATE OF
INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF THE COMPANY'S
COMMON STOCK TO 500,000,000 SHARES.
FOR AGAINST WITHHELD
[__] [__] [__]
3. PROPOSAL TO RATIFY THE APPOINTMENT OF ERNST & YOUNG AS THE INDEPENDENT
AUDITORS OF THE COMPANY.
FOR AGAINST WITHHELD
[__] [__] [__]
In their discretion, the proxies are authorized to vote upon such other
matter or matters which may properly come before the meeting and any
adjournment(s) thereof.
Signature: ____________________________ Date: _______________
Signature: ____________________________ Date: _______________
(This Proxy should be marked, dated, signed by the stockholder(s) exactly as his
or her name appears hereon, and returned promptly in the enclosed envelope.
Persons signing in a fiduciary capacity should so indicate. If shares are held
by joint tenants or as community property, both should sign.)
[__] MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW
