<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
SILICON GRAPHICS, INC.
- --------------------------------------------------------------------------------
(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:
-----------------------------------------------------------------------
(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]
September 23, 1999
DEAR SILICON GRAPHICS STOCKHOLDER:
You are cordially invited to attend the Annual Meeting of Stockholders of
Silicon Graphics, Inc. to be held on Wednesday, October 27, 1999 at 2:00 p.m. at
the Hotel Sofitel, 223 Twin Dolphin Drive, Redwood City, California 94065.
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 matters to be voted on, 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,
/s/ Robert R. Bishop
Robert R. Bishop
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
<PAGE>
SILICON GRAPHICS, INC.
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 27, 1999
---------------------
TO THE STOCKHOLDERS OF SILICON GRAPHICS, INC.:
The Annual Meeting of Stockholders of SILICON GRAPHICS, INC. will be held on
Wednesday, October 27, 1999, at 2:00 p.m., local time, at the Hotel Sofitel, 223
Twin Dolphin Drive, Redwood City, California, for the following purposes:
1. To elect two Class I directors of the Company to serve for a three-year
term and to elect two Class III directors to serve for a two-year term.
2. To ratify the appointment of Ernst & Young LLP as independent auditors
of the Company for the fiscal year ending June 30, 2000.
3. To consider and vote on a stockholder proposal concerning the annual
election of the entire Board of Directors.
4. To transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.
The Proxy Statement accompanying this Notice describes these matters more
fully.
The close of business on September 1, 1999 is the record date for notice and
voting.
We invite all stockholders to attend the meeting in person. Even if you plan
to attend, 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,
/s/ WILLIAM M. KELLY
William M. Kelly
SECRETARY
Mountain View, California
September 23, 1999
<PAGE>
SILICON GRAPHICS, INC.
------------------------
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
Silicon Graphics, Inc. is soliciting the enclosed proxy for use at the
Annual Meeting of Stockholders to be held on Wednesday, October 27, 1999, 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 Hotel Sofitel, 223 Twin Dolphin Drive,
Redwood City, California 94065. The Company's principal offices are located at
1600 Amphitheatre Parkway, Mountain View, California 94043-1351 and its
telephone number at that location is 650-960-1980.
These proxy solicitation materials will be mailed on or about September 23,
1999 to all stockholders entitled to vote at the meeting.
RECORD DATE AND PRINCIPAL SHARE OWNERSHIP
At the record date, there were issued and outstanding 182,932,011 shares of
the Company's Common Stock, $0.001 par value, 17,500 shares of the Company's
Series A Preferred Stock, $0.001 par value, and one share of the Company's
Series E Preferred Stock, $0.001 par value. Each share of Common Stock is
entitled to one vote; each share of Series A Preferred Stock is entitled to 80
votes; and the outstanding share of the Company's Series E Preferred Stock is
entitled to 59,902 votes.
As of September 1, 1999, the following persons were known by the Company to
be the beneficial owners of more than 5% of any class of the Company's voting
securities:
<TABLE>
<CAPTION>
NUMBER OF PERCENT
SHARES OF TOTAL
CLASS OF BENEFICIALLY PERCENT VOTING
SECURITIES OWNED OF CLASS POWER
------------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
Trimark Financial Corporation (1)........................... Common Stock 21,879,600 11.96% 11.87%
One First Canadian Place, Suite 5600
Toronto, Ontario M5X 1E5
The Capital Group Companies, Inc. (2)....................... Common Stock 16,320,000 8.92% 8.85%
333 South Hope Street, 52(nd) Floor
Los Angeles, CA 90071
NKK U.S.A. Corporation...................................... Series A 17,500 100.0% *
450 Park Avenue Preferred Stock
New York, NY 10022
Montreal Trust Company...................................... Series E 1 100.0% *
of Canada, as Trustee (3) Preferred Stock
151 Front Street West, Suite 605
Toronto, Ontario M5J 2N1
</TABLE>
- ------------------------
* Less than 1%.
(1) As reported on a Schedule 13G/A dated February 1, 1999, these shares are
beneficially owned by various entities and individuals associated with the
Trimark family of mutual funds.
(2) As reported on a Schedule 13G dated February 8, 1999, these shares are
beneficially owned by Capital Research and Management Company, an investment
adviser owned by The Capital Group Companies, Inc.
(3) See "Voting and Solicitation" for a description of the Series E Preferred
Stock.
<PAGE>
REVOCABILITY OF PROXIES
Any proxy given in response 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.
VOTING AND SOLICITATION
The Company's certificate of incorporation provides for cumulative voting
for the election of directors. Stockholders may allocate among one or more
candidates the number of votes equal to the number of directors to be elected
multiplied by the number of shares or equivalent shares of Common Stock held.
However, no stockholder may cumulate votes unless prior to the voting the
candidate's name has been placed in nomination and a stockholder has given
notice at the meeting of the intention to cumulate votes.
On all other matters, each share of Common Stock has one vote, each share of
Series A Preferred Stock has 80 votes, and the Series E Preferred Stock has
59,902 votes. Except as otherwise required by law, the Series A and the Series E
Preferred Stock vote with the Common Stock as one class.
Montreal Trust Company of Canada holds the Series E Preferred Stock as
trustee under a voting trust for the benefit of holders of Exchangeable Shares
issued in connection with the Company's acquisition of Alias Research Inc. in
June 1995. Each holder of Exchangeable Shares (other than the Company and its
affiliates) will receive a proxy on which it can give Montreal Trust voting
instructions for a number of Series E Preferred Stock votes equal to the number
of Exchangeable Shares owned by that holder. Montreal Trust will only cast votes
for which it receives instructions.
The Company will pay the cost of soliciting proxies. The Company will pay
Georgeson Shareholder Communications Inc., a proxy solicitation firm, a fee
expected not to exceed $9,000 for its services in the solicitation of proxies
from brokers, bank nominees and other institutional owners and will reimburse
the firm for certain out-of-pocket expenses expected not to exceed an additional
$14,000. The Company may also reimburse intermediaries for their expenses in
forwarding solicitation materials to beneficial owners. The Company's directors,
officers and employees may also solicit proxies, without additional
compensation.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
The quorum required for the transaction of business at the Annual Meeting is
a majority of the shares or equivalent shares of Common Stock outstanding on the
record date. All shares voted, whether "For" or "Against" or abstentions, will
count for purposes of establishing a quorum and, except as described below, for
determining the number of votes cast with respect to a matter.
In the absence of controlling precedent to the contrary, the Company intends
not to consider broker non-votes in determining whether the requisite majority
of votes cast has been obtained with respect to a particular matter.
INTERNET OR TELEPHONE VOTING
FOR SHARES DIRECTLY REGISTERED IN THE NAME OF THE STOCKHOLDER. Stockholders
with shares registered directly with Equiserve, the Company's transfer agent,
may vote by telephone by calling 877-779-8683 or may vote on the Internet at the
following address on the World Wide Web: http://www.eproxyvote.com/sgi.
FOR SHARES REGISTERED IN THE NAME OF A BROKERAGE FIRM OR BANK. A number of
brokerage firms and banks are participating in a program for shares held in
"street name" that offers telephone and Internet voting options. This program is
different from the program provided by Equiserve for shares registered in the
name of the stockholder. If your shares are held in an account at a brokerage
firm or bank participating
2
<PAGE>
in this program, you may vote those shares by calling the telephone number
referenced on your voting form. If your shares are held in an account at a
brokerage firm or bank participating in the street name program, you already
have been offered the opportunity to elect to vote using the Internet. Votes
submitted via the Internet through the street name program must be received by
midnight (Eastern Time) on October 26, 1999. The giving of such a proxy will not
affect your right to vote in person should you decide to attend the annual
meeting.
The telephone and Internet voting procedures are designed to authenticate
stockholders' identities, to allow stockholders to give their voting
instructions and to confirm that stockholders' instructions have been recorded
properly. The Company has been advised by counsel that the telephone and
Internet voting procedures that have been made available through Equiserve and
the street name program are consistent with the requirements of applicable law.
Stockholders voting via the Internet through either of these programs should
understand that there may be costs associated with electronic access, such as
usage charges from Internet access providers and telephone companies, that must
be borne by the stockholder.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Proposals of stockholders intended to be presented at the Company's 2000
Annual Meeting must be received by the Company no later than May 26, 2000, in
order to be included in the proxy materials for that meeting.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
DIRECTORS AND NOMINEES FOR DIRECTOR
The Company's Board of Directors currently consists of six persons, divided
into three classes serving staggered terms of office. As a result of Mr. Richard
Belluzzo's resignation from the Board in August 1999, the Company will
re-classify the board membership structure in order to equalize the membership
size of the three classes. Mr. Shapiro, who is up for re-election this year,
will be elected as a Class III director and serve a two-year term. Mr. Bishop,
who was elected as a Class II director in 1997, will be re-elected as a Class
III director to serve a two-year-term. Following the Annual Meeting, at which
two Class I directors are to be elected and two Class III directors are to be
elected, the Board will be comprised of two directors in Class I, two in Class
II and two in Class III. The Board has adopted an amendment to the bylaws to
reduce the number of directors from seven to six.
Each Class I director elected at the 1999 Annual Meeting of Stockholders
will serve until his or her term expires at the Annual Meeting of Stockholders
in 2002, or until his or her successor has been duly elected and qualified, and
each Class III director elected at the 1999 Annual Meeting of Stockholders will
serve until his or her term expires at the Annual Meeting of Stockholders in
2001, or until his or her successor has been duly elected and qualified.
Unless otherwise instructed, the proxy holders will vote for the four
nominees named below. Each nominee is currently a director of the Company. In
the unexpected event that any such nominee becomes unavailable or declines to
serve, the proxy holders will vote the proxies in their discretion for any
nominee designated by the Board to fill the vacancy. If additional persons are
nominated, the proxy holders intend
3
<PAGE>
to cumulate their votes if necessary to elect 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.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE PRINCIPAL OCCUPATION SINCE
- ------------------------------ --- -------------------------------------------- -----------
<S> <C> <C> <C>
NOMINEES FOR CLASS I DIRECTORS
C. Richard Kramlich 64 General Partner, New Enterprise Associates 1984
(a venture capital firm)
Lucille Shapiro, Ph.D. 59 Professor of Developmental Biology, Stanford 1993
University School of Medicine
NOMINEES FOR CLASS III
DIRECTORS
Robert R. Bishop 56 Chairman and Chief Executive Officer, 1993
Silicon Graphics, Inc.
Robert B. Shapiro 61 Chairman and Chief Executive Officer, 1996
Monsanto Company
CONTINUING CLASS II DIRECTORS
Robert A. Lutz 67 Chairman, President and Chief Executive 1995
Officer, Exide Corporation
James A. McDivitt 70 Former Senior Vice President, Government 1987
Operations and International, Rockwell
International Corporation
</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. Bishop was appointed the Chairman of the Board and Chief Executive
Officer of Silicon Graphics, Inc. in the fall of 1999. From July 1995 to
February 1999, he was the Chairman of the Board of Silicon Graphics World Trade
Corporation. Prior to July 1995, Mr. Bishop served as President of Silicon
Graphics World Trade Corporation, a position he had held since July 1986.
Mr. Kramlich is also a director of Chalone Inc., Com21, Inc., Healtheon
Corporation, Juniper Networks, Inc. and Lumisys, Inc.
Mr. Lutz was appointed Chairman, President and Chief Executive Officer of
Exide Corporation in December 1998. Mr. Lutz was Vice Chairman of Chrysler
Corporation from 1997 until his retirement in 1998. From 1991 to 1997, he was
President of Chrysler and also served as its Chief Operating Officer and a
member of the Office of the Chairman from 1993 to 1997. Mr. Lutz also serves as
a director of ASCOM Holdings AG and Northrop Grumman.
Mr. McDivitt was Senior Vice President, Government Operations and
International, of Rockwell International Corporation until his retirement in
April 1995.
Dr. Shapiro is also a director of SmithKline Beecham plc.
Mr. Shapiro has been the Chairman and Chief Executive Officer of Monsanto
Company since 1997, having previously served as its Chairman, President and
Chief Executive Officer since 1995 and its President and Chief Operating Officer
since 1993. He also served as Executive Vice President and Advisory Director,
Monsanto Company, and President, The Agricultural Group of Monsanto Company
between 1990 and 1993. In addition to serving as a director of Monsanto Company,
Mr. Shapiro is a director of Citigroup Inc. and Rockwell International
Corporation.
4
<PAGE>
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held four meetings during fiscal 1999.
The Board has an Audit Committee and a Compensation and Human Resources
Committee, which also performs the functions of a nominating committee.
The Audit Committee currently consists of two non-employee directors. During
fiscal 1999, the chairman of the Audit Committee, Allen Jacobson, retired and
the remaining two members were Mr. Lutz, who acted as Chairman of the Committee,
and Dr. Shapiro. The Committee held seven meetings during fiscal 1999. It
recommends engagement of, and approves 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. At the beginning of fiscal 1999, the members of the
Compensation and Human Resources Committee were Mr. Kramlich (chair), Mr.
Shapiro and James G. Treybig. Mr. Treybig resigned from the Board and Committee
effective October 27, 1998. Mr. McDivitt was appointed to the Committee on April
21, 1999. The Compensation and Human Resources Committee held two meetings
during fiscal 1999. The Committee's responsibilities include approving
compensation arrangements for senior executives, and recommending such
arrangements to the Board for the chief executive officer; 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 Corporate Secretary, Silicon Graphics, Inc., 1600
Amphitheatre Parkway, Mountain View, CA 94043-1351.
No director 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 during fiscal 1999, except for Mr. Shapiro, who attended two of
the four Board meetings.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation and Human Resources Committee during fiscal
1999 were Mr. Kramlich, Mr. Shapiro, Mr. Treybig and Mr. McDivitt. 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.
DIRECTOR COMPENSATION
Employee directors are not compensated for their service on the Board of
Directors.
Each non-employee director receives a fee of $5,000 per quarter and $1,000
for each Board and committee meeting attended. The chair of each committee
receives an additional $1,000 for each committee meeting attended.
Under the Directors' Stock Option Plan, each non-employee director is
automatically 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 the date of
the annual stockholders meeting in each year, each non-employee director
receives an option to purchase an additional 10,000 shares of Common Stock. On
October 27, 1998, each of the Company's non-employee directors was automatically
granted an option to purchase 10,000 shares at an exercise price of $9.5625 per
share.
5
<PAGE>
All options under the directors' plan are granted at the fair market value
of the Common Stock on the date of grant. Options become exercisable in
installments on the first three anniversary dates following the date of grant,
so long as the optionee remains a director.
Under the Silicon Graphics Non-Qualified Deferred Compensation Plan,
non-employee directors may elect in advance to defer all or a portion of their
cash compensation. Directors that participate in the deferral plan may direct
the investment of the assets in their deferral accounts among a variety of
mutual funds or may make an irrevocable election to credit the deferred fees to
a stock credit account based on the value of the Company's Common Stock.
Directors may elect to receive payment of their deferred compensation in a lump
sum or in annual installments not to exceed ten years, except in the case of
amounts in the stock credit account, which are distributed in a lump sum based
on the value of the Company's Common Stock at the time the director's service
terminates.
In April 1998, the Compensation and Human Resources Committee approved a
$1,000 per diem reimbursement program for non-employee directors who perform
services for the Company outside the scope of normal board duties at the
specific request of the Chief Executive Officer. During fiscal 1999, Mr.
McDivitt received $2,000 for services he performed on behalf of the Company.
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed Ernst & Young LLP, independent
auditors, to audit the consolidated financial statements of the Company for the
fiscal year ending June 30, 2000. In the event of a majority vote against
approval, the Board will reconsider its selection, and in any event is entitled
to change 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, and 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 2000.
PROPOSAL NO. 3
STOCKHOLDER PROPOSAL ON
ANNUAL ELECTION OF ENTIRE BOARD OF DIRECTORS
Alan G. Hevesi, Comptroller of the City of New York, One Centre Street, New
York, New York 10007-2341, submitted this proposal on behalf of the New York
City Police Department Pension Fund, owner of 113,082 shares as of March 26,
1999. In accordance with applicable proxy regulations, the proposed resolution
and supporting statement, for which the Company and the Board of Directors
accept no responsibility, are set forth below.
STOCKHOLDER RESOLUTION
BE IT RESOLVED, that the stockholders of Silicon Graphics, Inc. request that
the Board of Directors take the necessary steps to declassify the Board of
Directors and establish annual elections of directors, whereby directors would
be elected annually and not by classes. This policy would take effect
immediately, and be applicable to the re-election of any incumbent director
whose term, under the current classified system, subsequently expires.
6
<PAGE>
PROPONENT'S SUPPORTING STATEMENT
We believe that the ability to elect directors is the single most important
use of the shareholder franchise. Accordingly, directors should be accountable
to shareholders on an annual basis. The election of directors by classes, in our
opinion, minimizes accountability and precludes the full exercise of the rights
of shareholders to approve or disapprove annually the performance of a director
or directors.
In addition, since only one-third of the Board of Directors is elected
annually, we believe that classified boards could frustrate, to the detriment of
long-term shareholder interest, the efforts of a bidder to acquire control or a
challenger to engage successfully in a proxy contest.
We urge your support for the proposal which requests the Board of Directors
to take the necessary steps to repeal the classified board and establish that
all directors be elected annually.
RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS VOTING "AGAINST" THE STOCKHOLDER PROPOSAL
TO DECLASSIFY THE BOARD OF DIRECTORS.
The Board believes that it is in the best interests of the Company and its
stockholders to have a classified board. The Company's industry is highly
competitive and subject to considerable market volatility as well as significant
merger and acquisition activity. The Board believes that a classified board is
an appropriate measure to reduce the ability of a third party to effect a
sudden, unsolicited bid for control of the Company or other unsolicited action
that might not be in the best interests of the Company and its stockholders.
Having a board of directors with staggered terms may place the Company in a
better position to negotiate more favorable terms in such transactions, and it
may provide the Board with more time to consider alternatives that might result
in greater stockholder value.
The Board also believes that directors elected to three-year terms are just
as accountable to stockholders as directors elected annually. All directors are
required to uphold their fiduciary duties to the Company and its stockholders,
regardless of the length of their term of office. Directors who have experience
with the Company and knowledge about its business are a valuable resource for
the Company and its stockholders, and electing only one-third of the directors
each year helps maintain such continuity and consistency, while still affording
an opportunity for stockholders to effect change.
Approval of this proposal would require the affirmative vote of a majority
of the shares represented in person or by proxy at the meeting and entitled to
vote. However, approval of the proposal would not automatically eliminate the
classified board because this proposal is only a recommendation. Eliminating the
classified board would require action by the Board to amend the Company's
Certificate of Incorporation and bylaws, which currently provide for a
classified board.
7
<PAGE>
OTHER INFORMATION
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the beneficial ownership of Common Stock of
the Company as of September 1, 1999 by each director or nominee director, by
each of the current and former executive officers named in the table under
"Executive Officer Compensation" below, and by all such persons and all current
executive officers as a group:
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF PERCENT OF
BENEFICIALLY COMMON TOTAL VOTING
NAME OWNED(1) STOCK POWER
- -------------------------------------------------- ----------------- ------------- ---------------
<S> <C> <C> <C>
Richard E. Belluzzo............................... 1,264,099 * *
Robert R. Bishop.................................. 3,771,107 2.06% 2.05%
C. Richard Kramlich(2)............................ 105,980 * *
Robert A. Lutz.................................... 100,100 * *
James A. McDivitt................................. 205,104 * *
Lucille Shapiro................................... 42,100 * *
Robert B. Shapiro................................. 51,100 * *
Kenneth L. Coleman................................ 503,217 * *
Steven J. Gomo.................................... 178,525 * *
William M. Kelly.................................. 299,875 * *
Keith H. Watson................................... 142,310 * *
All executive officers and directors as a group 6,814,753
(14 persons).................................... 3.68% 3.65%
</TABLE>
- ------------------------
* 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. The table includes the
following shares issuable on exercise of options that were exercisable on
September 1, 1999, or within 60 days thereafter, Mr. Belluzzo, 1,260,000
shares; Mr. Bishop, 63 shares; Mr. Kramlich, 40,100 shares; Mr. Lutz, 50,100
shares; Mr. McDivitt, 40,100 shares; Dr. L. Shapiro, 40,100 shares; Mr. R.
Shapiro, 50,100 shares; Mr. Coleman, 441,600 shares; Mr. Gomo, 96,201
shares; Mr. Kelly, 248,300 shares; Mr. Watson, 79,200 shares; and all
directors and executive officers as a group, 2,458,246 shares.
(2) Includes 32,500 shares owned by NEA Partners VIII, Limited Partnership, of
which Mr. Kramlich is a general partner. Mr. Kramlich disclaims beneficial
ownership of such portion of the NEA Partners VIII shares in which he has no
actual pecuniary interest.
8
<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, executive compensation 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 highly competitive and rapidly changing high
technology industry. The Committee seeks to establish compensation policies that
allow the Company flexibility to respond to changes in its business environment.
The goals of the Company's compensation program are to align compensation with
the Company's overall business objectives and performance, to foster teamwork
and to enable the Company to attract, retain and reward employees who contribute
to its long-term success.
EXECUTIVE COMPENSATION COMPONENTS
Compensation for the Company's executive officers generally consists of base
salary and annual incentive plans, combined with restricted stock and stock
option awards. The Committee assesses the past performance and anticipated
future contribution of each executive officer in establishing the total amount
and mix of 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, primarily 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.
ANNUAL INCENTIVE. The Committee annually reviews and approves an executive
incentive plan. A target, expressed as a percentage of salary, is established
for each officer, based on the scope of his or her responsibility. For fiscal
1999, the targets for executive officers ranged from 50% to 100% of salary. The
actual payment amount is computed as a percentage of that target, based on the
Company's performance in achieving specified objectives. For fiscal 1999, these
objectives included the achievement by the company of certain revenue growth and
operating profit goals. No payments were made under the fiscal 1999 incentive
plan.
An additional bonus of up to 15% of salary also may be awarded in the
discretion of the Chief Executive Officer to recognize the contributions and
efforts of individual executive officers. Mr. Kelly, Mr. Gomo, Mr. Coleman and
Mr. Vrolyk each received such a bonus, approved by Mr. Belluzzo and the
Committee, to reflect their respective contributions.
STOCK OPTIONS AND RESTRICTED STOCK AWARDS. Stock option and restricted
stock 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. Restricted stock awards are also subject to
vesting, based generally on the passage of time and in some instances subject to
accelerated vesting if certain stock price appreciation targets are attained.
9
<PAGE>
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Mr. Belluzzo was SGI's Chairman and Chief Executive Officer from January
1998 through his resignation in August 1999. Robert R. Bishop, a director and
former executive officer of SGI, has succeeded Mr. Belluzzo as Chairman and
Chief Executive Officer.
Mr. Belluzzo's fiscal 1999 base salary was $990,000, unchanged since he
joined SGI. He did not receive a bonus or an additional stock grant in fiscal
1999 and will not receive additional compensation as a result of his
resignation. When he joined SGI in 1998, Mr. Belluzzo was granted options to
purchase 3,000,000 shares of common stock at an exercise price of $11.25, the
fair market value at the date of grant. The unvested portion of this option
(1,860,000 shares) was cancelled upon his resignation and the vested portion
will terminate to the extent it is not exercised within 90 days of his
resignation.
Mr. Bishop joined the Company as Chairman and Chief Executive Officer at an
initial base salary of $800,000. Mr. Bishop will participate in the fiscal 2000
executive incentive program with a target of 185% of base salary if SGI achieves
its specified financial objectives.
SECTION 162(m)
The Company is subject to Section 162(m) of the U.S. Internal Revenue Code,
adopted in 1993, which limits the deductibility of certain compensation payments
to its executive officers. The Company does not have a policy requiring the
Committee to qualify all compensation for deductibility under this provision.
The Committee's current view is that any non-deductible amounts will be
immaterial to the Company's financial or tax position, and that the Company
derives substantial benefits from the flexibility provided by the current
system, in which the selection and quantification of performance targets are
modified from year to year to reflect changing conditions. However, the
Committee considers the net cost to the Company in making all compensation
decisions and will continue to evaluate the impact of this provision on its
compensation programs. 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, including the grant to Mr. Bishop described
above, will continue to be deductible as performance-based compensation.
COMPENSATION AND HUMAN RESOURCES COMMITTEE
C. Richard Kramlich, CHAIRMAN
Robert B. Shapiro
James A. McDivitt
10
<PAGE>
EXECUTIVE OFFICER COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and equity compensation for the
three fiscal years ended June 30, 1999 for Richard E. Belluzzo, Chief Executive
Officer through fiscal 1999, and each of the four other most highly compensated
executive officers of the Company (determined at the end of fiscal 1999).
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
ANNUAL COMPENSATION (1)
--------------------------------- AWARDS
OTHER --------------------------
FISCAL ANNUAL RESTRICTED ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMP ($) OPTIONS (#) STOCK ($)(5) COMP ($)
- --------------------------------------------- ------ ---------- ---------- -------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Richard E. Belluzzo (2)...................... 1999 $990,000 -- $136,609 -- -- --
Former Chairman and Chief Executive Officer 1998 $426,462 $1,000,000 45,567 3,000,000 -- $1,250,000
1997 -- -- -- -- -- --
Keith H. Watson (3).......................... 1999 $450,000 $ 350,000 $19,640 70,000 -- --
Former Executive Vice President, Worldwide 1998 90,340 850,000 3,740 185,000 $ 813,690 --
Sales and Marketing 1997 -- -- -- -- -- --
William M. Kelly............................. 1999 $457,000 $ 50,000 $18,630 120,000 -- --
Senior Vice President, Corporate Operations 1998 457,945 46,000 19,969 100,000 $ 633,724 --
1997 360,481 64,094 17,029 105,000 340,600 --
Steven J. Gomo (4)........................... 1999 $400,000 $ 60,000 $176,038 90,000 -- --
Senior Vice President and Chief Financial 1998 138,462 750,000 38,954 200,000 $1,068,675 --
Officer 1997 -- -- -- -- -- --
Kenneth L. Coleman........................... 1999 $400,000 $ 50,000 $39,489 110,000 -- --
Senior Vice President, Global Sales, Service 1998 400,000 -- 48,124 80,000 $ 487,480 --
and Marketing 1997 365,000 63,875 56,637 50,000 --
</TABLE>
- ------------------------------
(1) The Company has no pension, retirement, annuity or similar benefit plan.
Other compensation generally includes relocation assistance and executive
perquisites.
(2) On joining SGI in January 1998, Mr. Belluzzo received a one-time bonus as
well as the $1.25 million annuity shown as "All Other Compensation" which
was purchased by SGI to compensate him for long-term compensation
arrangements foregone when he left his prior employer. He also received
relocation assistance in fiscal 1998 and fiscal 1999 in the amount of
$38,730 and $104,028, respectively. The unvested portion of his initial
stock option grant was cancelled on his resignation in August 1999. Mr.
Belluzzo did not receive any separation payment in connection with his
resignation from SGI.
(3) Mr. Watson joined the Company in April 1998 and received a one-time bonus as
well as a commitment for a minimum fiscal 1999 bonus.
(4) Mr. Gomo joined SGI in February 1998 and received a one-time bonus, subject
to repayment on a prorated basis if he terminates his employment prior to
February 2000. He also received relocation assistance in fiscal 1998 and
fiscal 1999 in the amount of $35,445 and $156,172, respectively.
(5) Values based on the closing market price of the Common Stock on the date of
grant. The aggregate number of shares of restricted stock held at June 30,
1999 and the value of those shares based on the June 30, 1999 closing price
of $16.375 per share were: Mr. Watson, 45,000 shares, $736,830; Mr. Gomo,
56,250 shares, $921,037.50; Mr. Kelly, 38,500 shares, $630,399 and Mr.
Coleman, 20,000 shares, $327,480. These restricted stock awards vest in four
annual installments, with the exception of Mr. Watson's restricted stock
award which vests 25% on the first anniversary of the date of grant and the
remainder on the second anniversary. In July 1997, Messrs. Kelly and Coleman
were granted restricted stock awards that vest in July 2000 or in earlier
installments on the attainment of stock price appreciation targets.
11
<PAGE>
OPTION GRANTS IN FISCAL 1999
The following table provides details regarding all stock options granted to
the named executive officers in fiscal 1999.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS(1) VALUE
-------------------------------------------------------- AT ASSUMED ANNUAL RATES
NUMBER OF % OF TOTAL OF STOCK PRICE
SECURITIES OPTIONS APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM(2)
OPTIONS EMPLOYEES PRICE EXPIRATION ------------------------
NAME GRANTED IN FISCAL YEAR ($/SHARE) DATE 5% 10%
- ------------------------------------- ----------- ----------------- ----------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Richard E. Belluzzo.................. -- -- -- -- -- --
Keith H. Watson...................... 70,000 * $ 15.00 1/20/09 $ 660,339 $ 1,673,430
William M. Kelly..................... 80,000 * 11.187 7/28/08 562,861 1,426,400
40,000 * 15.00 1/20/09 377,337 956,245
Steven J. Gomo....................... 90,000 * 15.00 1/20/09 849,008 2,151,552
Kenneth L. Coleman................... 60,000 * 11.187 7/28/08 422,146 1,069,800
50,000 * 15.00 1/20/09 471,671 1,195,307
</TABLE>
- ------------------------
* Less than 1%.
(1) The options in this table were granted 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.
(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 appreciation
are mandated by SEC rules and do not represent the Company's estimate or
projection of the future Common Stock price. The Company believes that this
method does not accurately illustrate the potential value of a stock option.
OPTION EXERCISES IN FISCAL 1999 AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
SHARES NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS AT
ACQUIRED OPTIONS AT JUNE 30, 1999 JUNE 30, 1999(1)
ON VALUE ------------------------- ---------------------------
NAME EXERCISES REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------------- ------------- ------------- ---------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Richard E. Belluzzo................ -- -- 1,020,000 1,980,000 $ 5,227,500 $ 10,147,500
Keith H. Watson.................... -- -- 58,800 196,200 155,313 461,250
William M. Kelly................... -- -- 226,300 252,000 132,550 756,200
Steven J. Gomo..................... -- -- 73,001 216,999 148,377 400,373
Kenneth L. Coleman................. -- -- 422,800 205,300 1,618,723 584,650
</TABLE>
- ------------------------
(1) The amounts in this column reflect the difference between the closing market
price of the Common Stock on June 30, 1999, which was $16.375, and the
option exercise price. The actual value of unexercised options fluctuates
with the market price of the Common Stock.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act 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 SEC and the New York Stock
Exchange, and to give the Company copies of these filings. Based on the written
representations of its directors and officers and a review of the copies of such
forms furnished to the Company during the fiscal
12
<PAGE>
year ended June 30, 1999, the Company believes that its officers, directors and
ten percent stockholders complied with all Section 16(a) filing requirements,
with the exception of one late filing on a Form 5 by Mr. Kelly reflecting the
surrender of stock to satisfy a tax withholding obligation on vesting of
restricted stock.
CERTAIN TRANSACTIONS
NKK U.S.A. Corporation, a wholly-owned subsidiary of NKK Corporation, holds
all of the Company's outstanding Series A Preferred Stock, which it purchased in
1990. The Series A Preferred Stock carries a 3% cumulative annual dividend and
an aggregate liquidation preference of $17,500,000, and is convertible into
Common Stock. NKK is a distributor and value-added reseller of the Company's
products in Japan. The Company believes that the terms of its transactions with
NKK are no more favorable to either party than would be available from an
unaffiliated party.
ARRANGEMENTS WITH EXECUTIVE OFFICERS
EMPLOYMENT CONTINUATION AGREEMENTS. The Company has entered into employment
continuation agreements with its executive officers with the goal of encouraging
the continued employment of key executives in the event of a potential change in
control of the Company. Under the agreements, each executive officer (i) 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 (ii) is granted full vesting of options and
restricted stock effective after such a change in control.
MANAGEMENT RETENTION AGREEMENTS. In November 1997, in connection with
management transitions, the Company entered into retention agreements with
certain senior executives, including Mr. Coleman and Mr. Kelly. Under the
agreements, which terminate in December 1999, each executive officer is entitled
to (i) a severance payment equal to two years of his or her compensation if
employment with the Company is involuntarily terminated on or prior to December
31, 1998 or one year if terminated between December 31, 1998 and December 31,
1999, and (ii) continued vesting of options and restricted stock for one year
following such termination. These agreements also include an agreement not to
solicit the Company's employees to leave their employment for one year following
the termination of his or her employment for any reason.
MANAGEMENT INDEBTEDNESS. The Company loaned Mr. Baskett, Senior Vice
President, $500,000 at an interest rate of 7.13% annually for residential
improvements in January of 1997. The loan is secured by a second mortgage and
Mr. Baskett's options to purchase Common Stock and is due on the fifth
anniversary, or earlier if Mr. Baskett leaves the Company's employ or sells the
residence. Payments of principal are to be made in connection with the sale of
shares of the Company's Common Stock. The largest amount of indebtedness
outstanding on this loan during fiscal 1999 was $359,983.
The Company loaned Mr. Gomo $200,000 interest-free as a bridge loan for the
purchase of a primary residence in July 1998. The loan was secured by a second
mortgage on investment property owned by Mr. Gomo. The loan was paid in full on
October 30, 1998.
The Company loaned Mr. Kelly $400,000 at an interest rate of 7.45% annually
for residential improvements in July 1997. The loan is secured by a second
mortgage and Mr. Kelly's options to purchase Common Stock and is due on the
fifth anniversary, or earlier if Mr. Kelly leaves the Company's employ or sells
the residence. Payments of principal are to be made in connection with the sale
of shares of the Company's Common Stock. The largest amount of indebtedness
outstanding on this loan during fiscal 1999 was $461,820
The Company loaned Mr. Watson $118,649 at an interest rate of 5.51% annually
in April 1998 to facilitate the exercise of options to purchase stock of his
former employer. The loan was paid in full on October 30, 1998.
13
<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, 1994 and ending June 30, 1999.
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>
SGI S&P500 H&Q
<S> <C> <C> <C>
30-Jun-1994 100.0000 100.0000 100.0000
31-Aug-1994 118.6441 107.0273 114.1319
31-Oct-1994 137.2881 106.3205 122.0468
30-Dec-1994 140.8192 103.3763 123.8417
28-Feb-1995 156.4972 109.7058 132.4796
28-Apr-1995 169.4915 115.8552 146.4817
30-Jun-1995 180.2260 122.6169 166.9985
31-Aug-1995 190.9604 126.4726 184.8727
31-Oct-1995 149.7175 130.8889 192.5000
29-Dec-1995 124.8588 138.6387 185.5066
29-Feb-1996 112.9944 144.1533 196.8483
30-Apr-1996 133.8983 147.2460 209.7683
28-Jun-1996 108.4746 150.9510 195.1235
30-Aug-1996 105.0847 146.7554 191.1665
31-Oct-1996 83.6158 158.7481 204.0326
31-Dec-1996 115.2542 166.7319 223.0448
28-Feb-1997 109.0395 178.0044 227.5917
30-Apr-1997 67.2316 180.3723 244.6843
30-Jun-1997 67.7966 199.2347 289.7429
29-Aug-1997 124.0113 202.4600 337.7495
31-Oct-1997 66.3842 205.8703 306.1533
31-Dec-1997 55.6497 218.4325 295.7714
27-Feb-1998 68.0791 236.1942 356.1482
30-Apr-1998 59.0396 250.2420 369.9058
30-Jun-1998 54.8023 255.2142 368.5667
31-Aug-1998 40.9605 215.4726 317.0774
30-Oct-1998 50.8475 247.2978 350.9572
31-Dec-1998 58.1921 276.6854 455.6467
26-Feb-1999 72.0339 278.7337 481.5530
30-Apr-1999 57.6271 300.5335 518.3630
30-Jun-1999 74.0113 308.9810 586.3696
</TABLE>
- ------------------------
* Assumes $100 invested on June 30, 1994 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 23, 1999 BY ORDER OF THE BOARD OF DIRECTORS
/s/ WILLIAM M. KELLY
William M. Kelly
SECRETARY
</TABLE>
14
<PAGE>
SILICON GRAPHICS, INC.
ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 27, 1999 AT 2:00 P.M.
HOTEL SOFITEL
223 TWIN DOLPHIN DRIVE
REDWOOD CITY, CA 94065
DRIVING DIRECTIONS
FROM SOUTH
Take Highway 101 North. Exit Holly Street, follow sign for Redwood Shores
Parkway. At second traffic signal, turn left on Twin Dolphin Drive. Hotel is
1/2 mile on right side.
FROM NORTH
Take Highway 101 South. Exit Ralston/Belmont, follow sign for Marine World
Parkway. At second traffic signal, turn right on Twin Dolphin Drive. Hotel
is 1/2 mile on left side.
FROM EAST BAY VIA HIGHWAY 92 (SAN MATEO BRIDGE)
Take Highway 92 West to Highway 101 South. Exit Ralston/Belmont, follow sign
for Marine World Parkway. At second traffic signal, turn right on Twin
Dolphin Drive. Hotel is 1/2 mile on left side.
0561-PS-99
<PAGE>
To Our Stockholders:
Recently, many of you elected to access our Annual Report and Proxy Statement in
an electronic format on the World Wide Web instead of receiving the traditional
paper copies.
The 1999 Silicon Graphics Annual Report and Proxy Statement are now available on
our web site at http://www.sgi.com/company_info/investors/annual.html.
The PDF files on our web site can be viewed and printed using
Adobe-Registered Trademark- Acrobat-Registered Trademark- Reader software.
If you do not have this software, it is available for free download at
http://www.adobe.com. There may be costs associated with electronic access,
such as usage charges from Internet access providers and telephone companies.
These costs must be borne by the stockholder. Please call EquiServe at
800-730-6001 if you elected to receive the electronic version but have
decided that you would like a paper copy mailed to you.
Please sign and return the proxy card below to ensure your representation at our
annual meeting of stockholders to be held on October 27, 1999.
Thank you for your continued support.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
SILICON GRAPHICS, INC.
1999 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 23, 1999, and hereby
appoints Robert R. Bishop 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 1999 Annual Meeting
of Stockholders of Silicon Graphics, Inc. to be held on October 27, 1999, at
2:00 p.m. local time at the Hotel Sofitel, 223 Twin Dolphin Drive, Redwood City,
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 ratification of the
appointment of Ernst & Young LLP as independent auditors, AGAINST the
stockholder proposal to declassify the Board of Directors, and as said proxies
deem advisable on such other matters as may properly come before the meeting.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE>
[X] Please mark votes as in this example.
THIS PROXY WILL BE VOTED AS DIRECTED, OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR THE ELECTION OF DIRECTORS, FOR THE APPROVAL OF
PROPOSAL 2 SET FORTH BELOW, AGAINST THE APPROVAL OF PROPOSAL 3 SET FORTH
BELOW, AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE MEETING.
1. ELECTION OF DIRECTORS
Nominees for Class I Directors: C. Richard Kramlich and Lucille Shapiro,
PhD.
Nominees for Class III Directors: Robert R. Bishop and Robert B Shapiro
FOR WITHHELD
[__] [__]
[__] ________________________________________________
For all nominees except as noted above
2. PROPOSAL TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS THE INDEPENDENT
AUDITORS OF THE COMPANY FOR FISCAL YEAR 2000
FOR AGAINST ABSTAIN
[__] [__] [__]
3. STOCKHOLDER PROPOSAL TO DECLASSIFY THE BOARD OF DIRECTORS
FOR AGAINST ABSTAIN
[__] [__] [__]
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
<PAGE>
To Our Stockholders:
Recently, many of you elected to access our Annual Report and Proxy Statement in
an electronic format on the World Wide Web instead of receiving the traditional
paper copies.
The 1999 Silicon Graphics Annual Report and Proxy Statement are now available on
our web site at http://www.sgi.com/company_info/investors/annual.html.
The PDF files on our web site can be viewed and printed using
Adobe-Registered Trademark- Acrobat-Registered Trademark- Reader software. If
you do not have this software, it is available for free download at
http://www.adobe.com. There may be costs associated with electronic access,
such as usage charges from Internet access providers and telephone companies.
These costs must be borne by the stockholder. Please call EquiServe at
800-730-6001 if you elected to receive the electronic version but have
decided that you would like a paper copy mailed to you.
Please sign and return the proxy card below to ensure your representation at our
annual meeting of stockholders to be held on October 27, 1999.
Thank you for your continued support.
INSTRUCTION TO TRUSTEE
SILICON GRAPHICS, INC. ANNUAL MEETING
TO: MONTREAL TRUST COMPANY OF CANADA, AS TRUSTEE, C/O BOSTON EQUISERVE
The undersigned holder of Exchangeable Non-Voting Shares of Silicon
Graphics Limited hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement dated September 23, 1999 of Silicon Graphics,
Inc. ("SGI"). I hereby direct you, as Trustee under the Voting Trust and
Exchange Agreement relating to the Exchangeable Shares, to cast as I have
indicated on the reverse side the number of Series E Preferred Stock votes (the
"Directed Votes") that I am entitled as a holder of Exchangeable Shares to
direct you to vote at the SGI 1999 Annual Meeting of Stockholders to be held on
October 27, 1999 at 2:00 p.m. local time at the Hotel Sofitel, 223 Twin Dolphin
Drive, Redwood City, California, and at any adjournment(s) thereof. You may cast
my Directed Votes in person or by proxy unless I have requested on the reverse
side that you deliver a proxy for such votes to me or my specified
representative. Unless I have so requested a proxy for my Directed Votes, you
may vote according to your discretion (or that of your proxy holder) on any
other matter that may properly come before the meeting.
This proxy will be voted as directed, or, if no contrary direction is
indicated, will be voted FOR the election of directors, FOR ratification of the
appointment of Ernst & Young LLP as independent auditors, AGAINST the
stockholder proposal to declassify the Board of Directors, and as said proxies
deem advisable on such other matters as may properly come before the meeting.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE>
[X] Please mark votes as in this example.
THIS PROXY WILL BE VOTED AS DIRECTED, OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR THE ELECTION OF A DIRECTOR, FOR THE APPROVAL
OF PROPOSAL 2 SET FORTH BELOW, AGAINST THE APPROVAL OF PROPOSAL 3 SET FORTH
BELOW, AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE MEETING.
1. ELECTION OF DIRECTORS
Nominees for Class I Directors: C. Richard Kramlich and Lucille Shapiro,
PhD.
Nominees for Class III Directors: Robert R. Bishop and Robert B. Shapiro
FOR WITHHELD
[__] [__]
[__] _____________________________________________________
For all nominees except as noted above
2. PROPOSAL TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS THE INDEPENDENT
AUDITORS OF THE COMPANY FOR FISCAL YEAR 2000
FOR AGAINST ABSTAIN
[__] [__] [__]
3. STOCKHOLDER PROPOSAL TO DECLASSIFY THE BOARD OF DIRECTORS
FOR AGAINST ABSTAIN
[__] [__] [__]
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.
[__] MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW
[__] Mark this box only to request a proxy for your Directed Votes. A proxy is
necessary only if you wish to appear at the meeting in person to cast your
Directed Votes or if you want to authorize a specific person other than the
Trustee (or its proxy) to cast your Directed Votes. You must provide the
name, mailing address and phone number of the person to be authorized to
cast your Directed Votes, even if you are requesting the proxy for your own
use. _____________________________________________________
(This Instruction to Trustee should be marked, dated and signed by the
stockholder or his attorney authorized in writing, or, if the stockholder is a
corporation, by any officer or attorney thereof duly authorized, and the
corporate seal affixed.)
Signature: _______________________________________ Date: ________________
Signature: _______________________________________ Date: ________________
<PAGE>
<TABLE>
<S><C>
- ------------------- ------------------
VOTE BY TELEPHONE VOTE BY INTERNET
- ------------------- ------------------
It's fast, convenient, and immediate! It's fast, convenient, and your vote is immediately
Call Toll-Free on a Touch-Tone Phone confirmed and posted.
1-877-PRX-VOTE (1-877-779-8883).
[ILLEGIBLE] [ILLEGIBLE]
YOUR VOTE IS IMPORTANT! YOUR VOTE IS IMPORTANT!
Call 1-877-PRX-VOTE anytime! Go to http://www.eproxyvote.com/sgi anytime!
DO NOT RETURN YOUR PROXY CARD IF YOU ARE VOTING BY TELEPHONE OR INTERNET
- -----------------------------------------------------------------------------------------------------------------------------------
[DETACH HERE]
/X/ PLEASE MARK
VOTES AS IN
THIS EXAMPLE
1. ELECTION OF DIRECTORS
NOMINEES FOR CLASS I DIRECTORS: C. Richard Kramlich and 2. Proposal to ratify the appointment of FOR AGAINST ABSTAIN
Lucille Shapiro, PhD. Ernst & Young LLP as the / / / / / /
NOMINEES FOR CLASS III DIRECTORS: Robert R. Bishop and independent auditors of the Company
Robert B. Shapiro for Fiscal year 2000.
-----------------------
3. Stockholder proposal to declassify the / / / / / /
FOR NOMINEE: / / / / WITHHELD Board of Directors.
FROM
NOMINEES 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.
--------------------------------------
For al nominees except as noted above This proxy will be voted as directed, or, if no contrary
direction is indicated, will be voted FOR, the election of
directors, FOR the approval of proposal 2 set forth above
AGAINST the approval of proposal 3 set forth above, and as
held proxies deem advisable on such other matters as may
properly come before the meeting.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT / /
This Proxy should be marked, dated, signed by the stockholder(s)
exactly as his 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
community property, both should sign.
Signature: Date: Signature: Date
----------------------------- ----------- ------------------------- --------------
</TABLE>
