<PAGE> 1
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
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
COMPUTERVISION CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(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 (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.:
3) Filing Party:
4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
COMPUTERVISION CORPORATION
100 CROSBY DRIVE
BEDFORD, MASSACHUSETTS 01730
(617) 275-1800
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 10, 1997
------------------------
The Annual Meeting of Stockholders of Computervision Corporation (the
"Company") will be held on Tuesday, June 10, 1997 at 1:00 p.m. at the offices of
Hale and Dorr, 26th Floor, 60 State Street, Boston, Massachusetts to consider
and act upon the following matters:
1. To elect three Class II Directors for a three-year term and to
elect one Class I Director for a two-year term.
2. To ratify the selection by the Board of Directors of Arthur
Andersen LLP as the Company's independent auditors for the current
fiscal year.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Stockholders of record at the close of business on Friday, April 18, 1997
are entitled to vote at the meeting or at any adjournment thereof. The stock
transfer books of the Company will remain open.
By Order of the Board of Directors
/s/ ANTHONY N. FIORE, JR.
---------------------------------
ANTHONY N. FIORE, JR.
Secretary
Bedford, Massachusetts
May 19, 1997
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER
TO ASSURE REPRESENTATION OF YOUR SHARES AT THE MEETING. NO POSTAGE NEED BE
AFFIXED IF MAILED IN THE UNITED STATES.
<PAGE> 3
COMPUTERVISION CORPORATION
100 CROSBY DRIVE
BEDFORD, MASSACHUSETTS 01730
------------------------
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
JUNE 10, 1997
------------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Computervision Corporation (the "Company")
for use at the Annual Meeting of Stockholders to be held on June 10, 1997 and at
any adjournment of that meeting. All shares of Common Stock will be voted in
accordance with the instructions contained in the accompanying proxy, and if no
choice is specified, the proxies will be voted in favor of the proposals set
forth in the Notice of Meeting. Any proxy may be revoked by a stockholder at any
time before it is exercised by written request to Anthony N. Fiore, Jr.,
Secretary of the Company, by executing a proxy bearing a later date, or by
voting in person at the meeting.
The Company's Annual Report for the year ended December 31, 1996 is being
mailed to stockholders with the mailing of this Notice and Proxy Statement on or
about May 19, 1997.
A copy of the Company's Annual Report on Form 10-K as amended on Form
10-K/A for the fiscal year ended December 31, 1996, as filed with the Securities
and Exchange Commission, except for exhibits, will be furnished without charge
to any stockholder upon written request to Investor Relations, Computervision
Corporation, 100 Crosby Drive, Bedford, MA 01730. Exhibits will be provided upon
written request and payment of an appropriate processing fee.
VOTING SECURITIES AND VOTES REQUIRED
On April 18, 1997, the record date for the determination of stockholders
entitled to notice of and to vote at the meeting, there were outstanding and
entitled to vote an aggregate of 63,575,158 shares of common stock of the
Company, $.01 par value per share ("Common Stock"). Each share is entitled to
one vote.
The holders of a majority of the shares of Common Stock issued and
outstanding and entitled to vote at the Annual Meeting shall constitute a quorum
for the transaction of business at the Annual Meeting. Shares of Common Stock
present in person or represented by proxy (including shares which abstain or do
not vote with respect to one or more of the matters presented for stockholder
approval) will be counted for purposes of determining whether a quorum exists at
the Annual Meeting.
The affirmative vote of the holders of a plurality of the shares of Common
Stock voted at the meeting is required for the election of directors. The
affirmative vote of the holders of a majority of the shares of Common Stock
voted at the meeting is required to ratify the appointment of Arthur Andersen
LLP as the Company's independent auditors.
Shares which abstain from voting as to a particular matter, and shares held
in "street name" by brokers or nominees who indicate on their proxies that they
do not have discretionary authority to vote such shares as to a particular
matter, will not be counted as votes cast in favor of such matter, and also will
not be counted as shares voting on such matter. Accordingly, abstentions and
"broker non-votes" will have no effect on the voting on a matter that requires
the affirmative vote of the holders of a certain percentage of the shares of
Common Stock voting on a matter.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of the close of
business on April 18, 1997, with respect to the beneficial ownership of the
Company's Common Stock by (i) each person known by the Company to own
beneficially more than 5% of the outstanding shares of Common Stock; (ii) each
director
<PAGE> 4
and nominee for director; (iii) each executive officer named in the Summary
Compensation Table under the heading "Compensation of Executive Officers" below
and (iv) all directors and executive officers of the Company as a group.
The number of shares beneficially owned by each director or executive
officer is determined under rules of the Securities and Exchange Commission, and
the information is not necessarily indicative of beneficial ownership for any
other purpose. Under such rules, beneficial ownership includes any shares as to
which the individual has sole or shared voting power or investment power and
also any shares which the individual has the right to acquire within 60 days
after April 18, 1997 through the exercise of any stock option or other right.
Unless otherwise indicated, each person has sole investment and voting power (or
shares such power with his or her spouse) with respect to the shares set forth
in the following table.
The inclusion herein of any shares deemed beneficially owned does not
constitute an admission of beneficial ownership of those shares. To the
knowledge of the Company, neither of the two new nominees as Directors, Sanjiv
Ahuja and Henry Ancona, own any shares of Common Stock of the Company.
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF SHARES COMMON STOCK
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED OUTSTANDING
------------------------------------------------------ ------------------ ------------
<S> <C> <C>
M.D. Sass Associates, Inc.(1).........................
1185 Avenue of the Americas
New York, NY 10036 9,999,344(1) 15.73%
Merrill Lynch & Co., Inc.(2)..........................
800 Scudders Mill Road
Plainsboro, NJ 08536 4,954,933(2) 7.79%
Credit Suisse First Boston, Inc.(3)...................
11 Madison Avenue
New York, NY 10010 3,513,200(3) 5.53%
Kemper Investments, Inc.(4)...........................
222 South Riverside Plaza
Chicago, IL 60606 3,322,249(4) 5.23%
Jean-Serge G. Bertoncini.............................. 10,000(5) *
Norman A. Bolz........................................ 68,200(5) *
Kevin J. Burns........................................ 10,000(5) *
Barry F. Cohen, Ph.D. ................................ 189,000(6) *
Kathleen A. Cote...................................... 388,914(6) *
John F. Cunningham.................................... 148,200(5) *
Anthony N. Fiore, Jr. ................................ 148,954(6) *
William A. Foniri..................................... 91,714(6) *
Eugene M. Freedman.................................... 40,000(5) *
Lawrence L. Landry.................................... 48,400(5) *
Russell E. Planitzer.................................. 999,894(6) 1.55%
Attilio Rimoldi....................................... 167,500(6) *
James B. Rubin(1)(7).................................. 10,489,341(1)(7) 16.50%
Andrew G.C. Sage II................................... 102,200(5)(8) *
Douglas P. Smith...................................... 50,320(6) *
All executive officers and directors as a group (17
persons)............................................ 12,866,183(5)(6) 19.60%
</TABLE>
- ---------------
* Less than one percent.
(1) Represents shares held by M.D. Sass Associates, Inc. and affiliated groups
as follows: 2,263,935 shares held by M.D. Sass Re/Enterprise Partners, L.P.;
2,767,672 shares held by M.D. Sass Re/Enterprise International, Ltd.;
801,548 shares held by M.D. Sass Parallex Partners, L.P.; 89,884 shares held
by M.D. Sass Associates, Inc. Employee Profit Sharing Plan; 463,146 shares
held by M.D. Sass Re/Enterprise-II,
2
<PAGE> 5
L.P.; 3,005,759 shares held by various third party managed accounts; and
607,400 shares held by Corporate Renaissance Group, Inc.
(2) Represents shares held by Merrill Lynch & Co., Inc. on behalf of itself and
its wholly owned subsidiaries, Merrill Lynch Group, Inc., Princeton
Services, Inc., Fund Asset Management, L.P., and Merrill Lynch Phoenix Fund,
Inc., as reported in a Schedule 13G filed with the Securities and Exchange
Commission as of January 23, 1997. All shares are subject to shared voting
and dispositive power. According to such report, Merrill Lynch Group, Inc.
and Princeton Services, Inc. share voting power and dispositive power with
respect to 4,644,700 shares and Fund Asset Management, L.P. and Merrill
Lynch Phoenix Fund, Inc. share voting power and dispositive power with
respect to 3,353,600 shares.
(3) Represents shares held indirectly by Credit Suisse First Boston, Inc. for
its wholly owned subsidiary, Credit Suisse First Boston Corporation as
reported in a Schedule 13G filed with the Securities and Exchange Commission
as of February 13, 1997.
(4) Represents shares held by Zurich Kemper Investments, Inc. in its capacity as
investment advisor to various clients, as reported in a Schedule 13G filed
with the Securities and Exchange Commission as of February 13, 1997. All
shares are subject to shared voting and dispositive power.
(5) Includes shares issuable pursuant to director stock options exercisable
within 60 days after April 18, 1997 (10,000 shares for Mr. Bertoncini,
45,800 shares for Mr. Bolz, 10,000 for Mr. Burns, 27,200 shares for Mr.
Cunningham, 10,000 shares for Mr. Freedman, 38,400 shares for Mr. Landry and
27,200 shares for Mr. Sage).
(6) Includes shares issuable pursuant to employee stock options exercisable
within 60 days after April 18, 1997 (172,000 shares for Mr. Cohen, 320,900
shares for Ms. Cote, 141,500 shares for Mr. Fiore, 88,560 shares for Mr.
Foniri, 977,850 shares for Mr. Planitzer, 137,500 shares for Mr. Rimoldi and
50,320 shares for Mr. Smith).
(7) Includes 489,997 shares held by the J.B. Rubin & Co. Defined Contribution
Plan and by a family member of Mr. Rubin. Mr. Rubin is the Trustee of the
Plan and may be deemed to share in the voting and dispositive power held by
the Plan and by his family member.
(8) Includes 25,000 shares of Common Stock transferred without consideration to
Mr. Sage by Lehman Brothers, by whom Mr. Sage was employed for 40 years.
Lehman Brothers has served as the Company's financial advisor with respect
to various financing and business transactions during the past five years.
No fees were paid to Lehman Brothers for its services in 1996.
ELECTION OF DIRECTORS
The Company has a classified Board of Directors consisting of three
classes. There are three Class I Directors, four Class II Directors and three
Class III Directors. The terms of the Class I, Class II and Class III Directors
will expire on the date of the annual meeting of stockholders in 1999, 1997 and
1998, respectively. Each year the stockholders are asked to elect members of a
class of directors for a term of three years and until their respective
successors are duly elected and qualified.
The persons named in the enclosed proxy will vote for the nominees named
below, unless the proxy is marked otherwise. Two of the current Class II
Directors, Norman A. Bolz and John F. Cunningham, have advised the Board of
Directors that they do not wish to stand for reelection. Sanjiv Ahuja has been
nominated to succeed Mr. Cunningham. The number of Class II directors will be
reduced to three. The other two current Class II Directors, Kathleen A. Cote and
Andrew G.C. Sage II, have been nominated for reelection.
In addition, Mr. Lawrence J. Landry, a Class I Director, has advised the
Board of his decision to resign as Director immediately prior to the Annual
Meeting of Stockholders in 1997. To fill the vacancy which will result from his
resignation, the Board of Directors has nominated Henry Ancona for election as a
Class I Director, whose term will expire in 1999.
3
<PAGE> 6
The two new nominees for election as Directors were selected after
consultation with the Company's largest stockholder to add technology and
business advising capabilities to the Board.
Each of the nominees has indicated his willingness to serve as a Director,
if elected. If any nominee should be unable to serve, the person acting under
the proxy may vote the proxy for a substitute nominee. The Board of Directors
has no reason to believe that any of the nominees will be unable to serve if
elected.
NOMINEES AND OTHER MEMBERS OF THE BOARD OF DIRECTORS
Set forth below are the name and age of each member of the Board of
Directors (including those who are nominees for election as Directors), and the
positions and offices held by each member, his or her principal occupation and
business experience during the past five years, the names of other publicly held
companies of which such member serves as a director and the year of the
commencement of his or her term as a director of the Company.
NOMINEES FOR TERMS EXPIRING IN 2000 (CLASS II DIRECTORS)
KATHLEEN A. COTE, age 48, became a director in July 1996.
Ms. Cote has been President and Chief Executive Officer of the Company
since November 1996 and President and Chief Operating Officer from November 1995
to November 1996. Ms. Cote has been with the Company since November 1986 serving
in various positions including Vice President, Marketing and Services, Vice
President, Customer Service and Vice President, Manufacturing. Ms. Cote is also
a director of Bay Networks, Inc., a network management products company.
ANDREW G.C. SAGE II, age 71, became a director in December 1991.
Mr. Sage is Chairman of Robertson-Ceco Corporation, a manufacturer of
pre-engineered metal buildings. From November 1992 to December 1993 he was the
President and Chief Executive Officer of Robertson-Ceco. Prior to that time, Mr.
Sage was a consultant in general business and financial management for over five
years and he was employed by Lehman Brothers for 40 years where his last
position was President. Mr. Sage is a member of the Executive Committee and the
Nominating Committee.
SANJIV AHUJA, age 40.
Mr. Ahuja has been President and Chief Operating Officer of Bell
Communications Research Incorporated ("Bellcore"), a leading provider of
communications software and consulting services, since January 1, 1997. He is
also serving as Group President, Software Systems of Bellcore, a position he has
held since 1994. From 1979 to 1994, Mr. Ahuja was employed by IBM Corporation,
where his latest positions were Director of Enterprise Management Platforms,
Networking Software Division from 1993 to 1994, and Manager, Network Management
Services from 1991 to 1993.
4
<PAGE> 7
NOMINEE FOR TERM EXPIRING IN 1999 (CLASS I DIRECTOR)
HENRY ANCONA, age 52.
Mr. Ancona has been Executive Vice President, Business Development of
Polaroid Corporation, a manufacturer of photographic and digital imaging
products, since April, 1997; he previously served in various executive positions
at Polaroid from 1994 to 1996. He was employed by Digital Equipment Corporation
from 1972 to 1994, his latest positions being Vice President, Corporate Business
Planning in 1994 and Vice President, Information Systems and Applications from
1989 to 1994.
DIRECTORS WHOSE TERMS EXPIRE IN 1998 (CLASS III DIRECTORS)
JEAN-SERGE G. BERTONCINI, age 60, became a director in November 1994.
Mr. Bertoncini has been a Group Vice President and Chief Information
Officer of PSA/Peugeot-Citroen since 1986. Prior to that time, he was Vice
President, Information Services at Automobiles Peugeot and Executive Director,
Management Organization Services for Chrysler Europe. Mr. Bertoncini is also a
director of Credipar, a financing entity formed by PSA and Sovac, a branch of
Lazard & Co.
KEVIN J. BURNS, age 47, became a director in November 1994.
Mr. Burns has been the Chairman of the Board of Intersolv, Inc., a provider
of client server software tools which accelerate the delivery of business
information systems, since 1990. He was also the Chief Executive Officer from
1986 to 1996 and President from 1986 to 1995. From 1981 through 1986, Mr. Burns
was Executive Vice President of Sage Software, Inc., a predecessor to Intersolv,
Inc.
RUSSELL E. PLANITZER, age 53, became a director in August 1989.
Mr. Planitzer has been Chairman of the Board of Directors of the Company
since 1989, President from April 1993 to November 1995 and Chief Executive
Officer from April 1993 to November 1996. Mr. Planitzer was a General Partner of
J.H. Whitney & Co. ("Whitney"), a private investment banking firm, for over five
years prior to his resignation in November 1991. Mr. Planitzer served on the
Board of Directors of DR Holdings Inc. of Delaware ("DR Holdings") from June
1989 to May 1992, was Chief Financial Officer of DR Holdings from June 1989 to
August 21, 1992 and was Chief Executive Officer of DR Holdings from March 1992
to August 21, 1992. DR Holdings commenced a case under chapter 11 of the U.S.
Bankruptcy Code on August 26, 1992 and was liquidated in August 1994. Mr.
Planitzer is also a director of Intersolv, Inc. Mr. Planitzer is a member of the
Executive Committee and the Nominating Committee.
DIRECTORS WHOSE TERMS EXPIRE IN 1999 (CLASS I DIRECTORS)
EUGENE M. FREEDMAN, age 65, became a director in January 1995.
Mr. Freedman has been Senior Advisor to the Chief Executive Officer and a
director of Monitor Company, Inc., an international business strategy and
consulting firm, since January 1995. From 1965 to 1994, he was a partner with
Coopers & Lybrand LLP (US) and served in several senior executive positions, the
most recent being Chairman and Chief Executive Officer, United States, from 1991
to September 1994 and Chairman, Coopers & Lybrand International, from 1992
through October 1994. Mr. Freedman is also a director of The Limited, Inc., a
retailer of apparel and personal care products. Mr. Freedman is the Chairman of
the Audit and Finance Committee.
JAMES B. RUBIN, age 43, became a director in April 1997.
Mr. Rubin has been the Senior Managing Director of the Restructured
Securities Management Company and Sass Lamle Rubin & Company, divisions of M.D.
Sass Investors Services, Inc., since 1989. Restructured
5
<PAGE> 8
Securities Management Company provides investment management services dedicated
to opportunities presented by corporate reorganizations. Sass Lamle Rubin &
Company serves as financial advisor for creditor and equity constituencies of
financially distressed companies. From 1986 to 1989, Mr. Rubin was the principal
of J. B. Rubin and Company, a financial advisor to and chair of creditor and
equity committees in bankruptcies and reorganizations. Mr. Rubin is a director
of Seaman Furniture Company, Inc. and Chief Executive Officer and Chairman of
the Board of Ranger Industries, Inc. Mr. Rubin is also Senior Vice President and
a director of Corporate Renaissance Group, Inc., a registered business
development company, with respect to which M.D. Sass Investors Services, Inc.
serves as investment adviser.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During 1996, the Board of Directors held eleven meetings. Each director
attended at least 75% of the meetings of the Board of Directors which were held
during his tenure and of all committees of the Board of Directors of which he
was a member, with the exception of Mr. Bertoncini who attended 73% of the
meetings of the Board of Directors which were held during his tenure. During
1996, the Board of Directors had an Audit and Finance Committee, a Compensation
Committee, an Executive Committee and a Nominating Committee.
The Executive Committee provides advice and counsel to the Chief Executive
Officer from time to time and acts for the Board when action is required between
Board meetings. The Executive Committee held no meetings in 1996.
The Audit and Finance Committee, among other responsibilities, recommends
to the Board of Directors the selection of independent accountants; reviews the
general scope of the Company's annual audit; reviews and approves the fees
proposed by the independent accountants for audit and non-audit services;
reviews and approves any major accounting policy changes; and reviews the
Company's internal audit procedures and personnel. The finance responsibilities
include the review of the Company's financing plans and alternatives, including
making recommendations to management as to financing decisions or opportunities
for the Company. The Audit and Finance Committee held ten meetings in 1996 (of
which six were telephonic).
The Compensation Committee, among other responsibilities, reviews,
determines and approves the compensation, including salaries, bonuses, stock
options and other officer perquisites, for the Chief Executive Officer and
certain other executive officers and key employees; complies with the reporting
requirements with respect to executive compensation applicable to the Company
under any regulations adopted by the Securities and Exchange Commission; and
administers the various stock plans of the Company, including the construction
and interpretation of the terms and provisions thereof. The Compensation
Committee held ten meetings in 1996 (of which four were telephonic).
The Nominating Committee recommends to the Board of Directors nominees for
election to the Board of Directors; reviews the qualifications of potential
candidates; and makes the initial contact with such candidates. The Nominating
Committee met once during 1996. The Nominating Committee will consider nominees
recommended by the stockholders of the Company. The names of such nominees must
be forwarded to Anthony N. Fiore, Jr., Secretary, Computervision Corporation,
100 Crosby Drive, Bedford, Massachusetts 01730. The Nominating Committee held
one meeting in 1996.
COMPENSATION OF DIRECTORS -- STANDARD ARRANGEMENTS. Directors who are not
employees of the Company ("Non-employee Directors") receive an annual fee of
$25,000 and $1,500 for each Board or Committee meeting they attend in person
(plus reimbursement for travel and out-of-pocket expenses). They receive $500
for each telephonic meeting of less than two hours and $1,500 for each
telephonic meeting of two hours or more they attend. Directors who are employees
receive no additional compensation for serving on the Board. Non-employee
Directors also participate in the 1995 Director Option Plan under which they
were granted options for 6,600 shares for each full year of service completed at
January 30, 1995 and will be granted an option for an additional 6,000 shares
each July 1 they continue to serve as a director. The options granted in January
1995 vest ratably over three years and the options granted annually on July 1
vest one year from the date of the grant. All options expire ten years from the
date of grant.
6
<PAGE> 9
Together with option grants under the prior 1993 Director Stock Option
Plan, as of April 18, 1997, the Directors held options to purchase the following
number of shares at option prices ranging from $3.25 to $10.44: Mr.
Bertoncini -- 20,000 shares; Mr. Bolz -- 45,800 shares; Mr. Burns -- 22,000
shares; Mr. Cunningham -- 45,800 shares; Mr. Freedman -- 22,000 shares; Mr.
Landry -- 63,000 shares; and Mr. Sage -- 45,800 shares.
COMPENSATION OF DIRECTORS -- OTHER ARRANGEMENTS. Mr. Cunningham, who
served as Chairman of the Compensation Committee in 1996, rendered consulting
services to the Company during 1996 concerning management succession strategy,
for which he was paid at the rate of $1,500 per day. In 1996, he received
$3,000. Mr. Sage and his consulting firm rendered consulting services to the
Company during 1996, primarily regarding the strategic direction of the Company
and product development, for which they were paid $19,053.10. In 1997, Mr. Sage
may continue to provide services as requested by the Company, for which he will
be paid $3,200 per day.
7
<PAGE> 10
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth certain information regarding compensation
paid during each of the Company's last three fiscal years to the Company's Chief
Executive Officer, former Chief Executive Officer, the other four most highly
paid executive officers and one former executive officer, based on salary and
bonuses earned during 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------------------
----------------------------------------- RESTRICTED SECURITIES
OTHER STOCK UNDERLYING ALL OTHER
SALARY BONUS ANNUAL AWARDS OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR $(1) $(2) COMPENSATION $ $(3) (#) $(4)
- ---------------------------- ---- -------- ---------- -------------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Russell E. Planitzer........ 1996 $785,056 $1,732,738(5) 0 0 227,400 $ 9,500
Chairman and former Chief 1995 785,050 1,208,115 0 0 200,000 9,240
Executive Officer 1994 677,077 700,200 373,527(6) $385,000 787,000(7) 9,240
Kathleen A. Cote............ 1996 430,767 170,000 0 0 314,000 9,500
President and Chief 1995 307,691 250,425 0 0 200,000 9,240
Executive Officer 1994 267,415 137,587 0 128,500 320,000(7) 9,240
Barry F. Cohen, Ph.D........ 1996 300,000 115,000 0 0 60,000 9,500
Senior Vice President, 1995 300,000 247,388 0 0 0 9,240
Human Development and 1994 268,511 162,540(8) 0 128,500 200,000 0
Organizational
Productivity
Anthony N. Fiore, Jr. ...... 1996 250,142 43,750 0 0 30,000 9,500
Vice President, Business 1995 250,142 203,256 0 0 77,000 9,240
Operations and General 1994 217,038 112,575 0 0 118,000(7) 9,240
Counsel
William A. Foniri........... 1996 241,346 43,750 0 0 50,000 9,500
Vice President, Chief 1995 190,319 83,403 0 0 120,000 9,240
Financial Officer and 1994 143,844 50,000 0 0 60,000(7) 9,240
Treasurer
Attilio Rimoldi(9).......... 1996 306,624 30,000 113,036(10) 0 60,000 0
Senior Vice President, 1995 300,000 227,849 23,200(10) 0 0 0
Research and Development 1994 150,000 147,000 0 128,500 237,500 600,000(11)
Douglas P. Smith(12)........ 1996 203,051 103,120(13) 0 0 30,000 19,078(14)
former Vice President, 1995 255,358 205,875 0 0 85,800 9,240
Finance 1994 383,813 106,875 0 0 83,600(7) 9,240
</TABLE>
- ---------------
(1) Amounts shown include salary deferred at the election of the named
executive officer under the Company's 401(k) Capital Accumulation Plan (the
"401(k) Plan"). The Company did not pay the named executive officers any
compensation other than the amount disclosed in the table.
(2) Except as otherwise noted, amounts shown are the awards made under the
Company's Management Incentive Plan for the respective fiscal years. Bonus
awards for 1996 have been accrued but not paid.
(3) In September 1994 the Company made restricted stock awards to four
executive officers (150,000 shares to Mr. Planitzer and 50,000 shares to
each of Ms. Cote, Mr. Cohen and Mr. Rimoldi), valued at the grant date
price of $2.57 per share. The restricted stock vested ratably over twelve
months beginning September 30, 1994 so long as the holder remained employed
by the Company. All shares are now fully vested. Although this stock is
eligible to receive dividends, the Company is not currently paying
dividends on its Common Stock.
(4) Except as otherwise noted, amounts shown are the Company's matching
contributions made under the Company's 401(k) Plan.
(5) Amount shown includes (a) an award of $215,875 under the Company's
Management Incentive Plan, (b) a $400,000 bonus as required under the terms
of Mr. Planitzer's former employment agreement and (c) the payment of
$1,113,500 which represents one-half of a performance bonus paid to Mr.
Planitzer on October 31, 1996 as required under the terms of Mr.
Planitzer's employment agreement. For additional information regarding Mr.
Planitzer's continuing relationship with the Company, see "Employment and
Severance Agreements."
8
<PAGE> 11
(6) Amount shown includes $371,501 to reimburse Mr. Planitzer for certain costs
and the loss associated with the sale of his New York residence which was
reimbursed by the Company as required under the terms of Mr. Planitzer's
employment agreement and $2,026 in relocation expenses reimbursed by the
Company.
(7) Amount shown includes new stock options granted in January 1994 in exchange
for the cancellation of stock options for an equivalent number of shares
under an option repricing program (697,000 shares for Mr. Planitzer,
176,000 shares for Ms. Cote, 88,000 for Mr. Fiore, 26,400 for Mr. Foniri
and 26,400 for Mr. Smith).
(8) Amount includes a $25,000 bonus for a special project Mr. Cohen completed
successfully.
(9) Mr. Rimoldi became an employee in July 1994. Prior to that time, he served
as a consultant to the Company. Mr. Rimoldi left the Company in February
1997.
(10) Amount shown consists of relocation costs reimbursed by the Company.
(11) Amount shown consists of payment of $450,000 to Mr. Rimoldi's consulting
firm in 1994 in satisfaction of the remaining portion of the firm's three
year worldwide consulting contract with the Company and $150,000 for
consulting services provided in 1994 prior to Mr. Rimoldi becoming an
employee.
(12) Mr. Smith left the Company in September 1996. Since that time, he has
served as a consultant to the Company pursuant to an agreement signed in
October 1996 and further described under the caption "Employment and
Severance Agreements."
(13) Amount shown includes $50,000 which represents the first quarterly
installment of a $200,000 special bonus for services rendered by Mr. Smith
in connection with the proposed sale of the Company's Open Service
Solutions Business, payable pursuant to Mr. Smith's separation agreement
signed in September 1996 and further described under the caption
"Employment and Severance Agreements."
(14) Amount shown includes $6,250 which represents first quarterly installment
of $25,000 annual consulting fee paid pursuant to two year agreement signed
in October 1996 and further described under the caption "Employment and
Severance Agreements" and $3,328 in imputed interest on loan further
described under the caption "Transactions with Officers and Directors."
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information regarding options granted under
the Company's 1992 Stock Option Plan during the fiscal year ended December 31,
1996 to the executive officers named in the Summary Compensation Table.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------------------------------------------
NUMBER OF
SECURITIES PERCENT OF TOTAL
UNDERLYING OPTIONS GRANTED EXERCISE PRICE GRANT DATE
OPTIONS TO EMPLOYEES IN PER EXPIRATION PRESENT
NAME GRANTED(#)(1) IN FISCAL YEAR(2) SHARE($/SHR)(3) DATE VALUE($/SHR)(4)
- ----------------------------------- ------------- ----------------- ---------------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Russell E. Planitzer............... 227,400 9.7% $ 11.065 2/19/06 $1,498,591
Kathleen A. Cote................... 114,000 4.9 11.065 2/19/06 751,453
200,000 8.5 7.19 9/03/06 875,624
Barry F. Cohen..................... 60,000 2.6 11.065 2/19/06 395,502
Anthony N. Fiore Jr. .............. 30,000 1.3 11.065 2/19/06 197,751
William A. Foniri.................. 40,000 1.7 11.065 2/19/06 263,668
10,000 0.4 7.38 7/22/06 44,851
Attilio Rimoldi.................... 60,000 2.6 11.065 2/19/06 395,502
Douglas P. Smith................... 30,000 1.3 11.065 2/19/06 197,751
</TABLE>
- ---------------
(1) All executives listed in the Summary Compensation Table received option
grants in 1996. All options granted to the named officers vest over a four
year period, with 25% becoming exercisable on a cumulative basis each year
commencing one year after the date of grant at an exercise price equal to
the fair market value of the Common Stock on the date of grant. The Board of
Directors may accelerate the vesting of any option and may extend the
exercise date of any option granted under the 1992 Stock Option Plan.
9
<PAGE> 12
(2) The Company granted options to purchase a total of 2,350,500 shares of
Common Stock to its employees in the fiscal year ended December 31, 1996. As
of April 18, 1997, previously granted options to purchase 5,796,100 shares
had been cancelled since the beginning of the plan (August 1992).
(3) The exercise price may be paid in cash, in shares of Common Stock then held
by the optionee, or in a combination of cash and shares.
(4) Calculated using the Black-Scholes option valuation model. Calculations for
the named executive officers are based upon a ten-year option term, assume a
risk free rate of return based on quoted yields at grant date for U.S.
Treasury bonds with a term equal to the expected option term (5.770% in
February 1996, 6.834% in July 1996 and 6.939% in September 1996), a
volatility factor of 0.6146 based on daily changes in the Company's stock
price since the date of the initial public offering in August 1992 and no
annual dividend yield. The expected days to exercise is assumed to be three
years after vesting. The actual value, if any, an executive may realize from
the exercise of stock options will be determined based on the excess of the
stock price over the exercise price on the date the option is exercised.
There is no assurance that the value received by an executive will be at or
near the value estimated by the Black-Scholes model, or that any value will
be realized.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUE TABLE
The following table set forth information concerning each exercise of stock
options during the fiscal year ended December 31, 1996 by each of the executive
officers named in the Summary Compensation Table and the number and value of
unexercised options held by each such named executive officer at December 31,
1996.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT DECEMBER 31, 1996(#) AT DECEMBER 31, 1996($)(1)
ACQUIRED ON VALUE -------------------------------- --------------------------
NAME EXERCISE (#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ------------------------ ------------ ----------- -------------------------------- --------------------------
<S> <C> <C> <C> <C>
Russell E. Planitzer.... 0 0 863,000/501,400 $4,015,450/$1,303,320
Kathleen A. Cote........ 20,000 $ 192,400 283,600/580,400 1,184,188/ 1,023,192
Barry F. Cohen.......... 0 0 140,000/220,000 840,220/ 947,580
Anthony N. Fiore, Jr.... 20,800 172,896 112,600/121,600 513,446/ 423,583
William A. Foniri....... 0 0 75,840/174,160 267,427/ 181,865
Attilio Rimoldi......... 30,000 294,395 102,500/227,500 577,580/ 974,500
Douglas P. Smith........ 70,000 566,064 31,000/164,800 185,097/ 710,750
</TABLE>
- ---------------
(1) Market value of shares covered by in-the-money options on December 31, 1996,
less option exercise price. Options are in-the-money if the market value of
the shares covered thereby is greater than the option exercise price. The
average of the high and low prices of the Common Stock on the New York Stock
Exchange on December 31, 1996 was $9.13.
PENSION PLAN
Prior to April 1, 1990, each full-time United States employee of the
Company with at least one year of service was eligible to receive benefits under
the Company's Pension Plan. Effective April 1, 1990, all benefit accruals ceased
and no new participants were admitted to the Pension Plan. Participants in the
Pension Plan continue to vest (generally upon completion of five years of
service) in their benefits accrued as of April 1, 1990. Participants with vested
benefits are entitled to receive, upon termination of employment after reaching
age 65, an annual pension payment in an amount equal to the greater of (i) $216
multiplied by the number of the participant's years of previous service with the
Company, or (ii) 1.25% of the participant's compensation for 1988 multiplied by
the number of the participant's years of service with the Company through 1988,
plus, for each additional year of pension service after 1988, 1.25% of the
participant's compensation for such year of pension service, which benefit is
reduced under certain circumstances. Of the executive officers listed in the
Summary Compensation Table, only Ms. Cote, Mr. Fiore, Mr. Foniri and Mr. Smith
have a vested pension
10
<PAGE> 13
benefit. Messrs. Planitzer, Cohen and Rimoldi are not plan members. The annual
pension benefit, on a straight-life basis, payable at age 65 is $7,269 for Ms.
Cote, $1,349 for Mr. Fiore, $9,574 for Mr. Foniri and $5,012 for Mr. Smith.
EMPLOYMENT AND SEVERANCE AGREEMENTS
On June 11, 1996, the Company entered into a new employment agreement with
Mr. Planitzer pursuant to which he served as a full-time employee of the Company
as Chief Executive Officer and Chairman of the Board during the period
commencing June 11, 1996 and ending on October 31, 1996 at an annual base salary
of $785,000. The agreement provides that (a) during the period November 1, 1996
through June 30, 1997, Mr. Planitzer shall serve as a part-time employee of the
Company and, in such capacity, shall serve as Chairman of the Board and as a
Director of the Company at an annual base salary of $785,000 (inclusive of his
compensation for services as a Director) and (b) during the period July 1, 1997
through June 30, 1998, Mr. Planitzer shall serve as a consultant to the Company
and continue to serve as Chairman of the Board and as a Director of the Company
at the rate of $250,000 per year. In his capacity as a part-time employee, Mr.
Planitzer is required to devote up to 60% of his business time to his duties as
Chairman and as a Director of the Company. In his capacity as a consultant to
the Company, Mr. Planitzer is obligated to devote up to 30 days per year in the
performance of consulting services. The agreement also provides for the payment
of a performance bonus in the aggregate amount of $2,227,000, one-half of which
was paid to Mr. Planitzer on October 31, 1996 and the remaining one-half of
which is payable on the earlier of (a) June 30, 1997 provided that Mr. Planitzer
continues to serve as Chairman of the Board of Directors of the Company through
such date and (b) the termination of his employment (other than for cause),
including a termination at the election of Mr. Planitzer due to the Company's
failure to make any payment due him under his agreement. The agreement provides
that all outstanding stock options granted to Mr. Planitzer as of June 30, 1996
shall vest and become immediately exerciseable and payments to which he is
entitled under the terms of the agreement shall be accelerated and paid upon any
of the following events: his removal without cause as Chairman of the Board of
Directors or the mutual agreement of the Company and Mr. Planitzer to such
removal; the termination of his employment by death or disability; or his
voluntary termination of employment due to the Company's failure to make any
payment due him under the terms of the agreement. Mr. Planitzer's agreement also
provides for the continued payment of salary through the remaining term of the
agreement and the acceleration of the performance bonus in the event his
employment is terminated for reasons other than death, disability, cause or a
termination by Mr. Planitzer (except for a termination by Mr. Planitzer due to
the Company's failure to make any payment due to him under his agreement). Mr.
Planitzer is entitled to reimbursement for taxes paid on certain of the
foregoing payments. Mr. Planitzer's agreement prohibits him from competing with
the Company during his employment and, at the Company's option, for one year
following his termination.
On September 4, 1996, the Company entered into an amended and restated
employment agreement with Ms. Cote which provides for employment through August
31, 1999, subject to annual renewal thereafter by the Company at its option, and
participation in the Company's Management Incentive Plan. Ms. Cote's current
salary is $600,000. Ms. Cote's agreement also provides for severance payments
ranging from biweekly base salary for a period of six months to biweekly base
salary and bonus for the remaining term of the employment agreement, depending
on the circumstances of the termination (other than a termination at the
election of Ms. Cote). Ms. Cote's agreement prohibits her from competing with
the Company during her employment and while she is receiving severance benefits
from the Company.
In September 1996, Mr. Smith left the Company and resigned from his
position as Chief Financial Officer of the Company pursuant to the terms of a
separation agreement with the Company (the "Separation Agreement"). The
Separation Agreement provides for (a) Mr. Smith's retention as a consultant for
a period of two years commencing September 30, 1996 at the rate of $25,000 per
year payable in equal monthly installments at the beginning of each month, (b)
the payment of a $200,000 special bonus for Mr. Smith's services rendered in
connection with the proposed sale of the Company's Open Service Solutions
business payable in equal monthly installments at the beginning of each month,
(c) accelerated vesting of stock options that would have vested in 1999 and 2000
to vest in 1997 and 1998, respectively, (d) repayment of $31,770 owed to the
Company, such repayment to be made through management or other bonus payments or
through
11
<PAGE> 14
the gain on the exercise of stock options, (e) full vesting in the Company's
Pension Plan as of September 27, 1996, the date Mr. Smith's employment with the
Company terminated and (f) confirmation of the terms of Mr. Smith's
participation in the Company's Management Incentive Plan for 1996. In October
1996, Mr. Smith entered into a standard form of consulting agreement with the
Company under the terms contemplated by the Separation Agreement.
In September 1996, the Company entered into retention agreements with the
executive officers named in the Summary Compensation Table, other than Mr.
Planitzer and Mr. Smith. Mr. Rimoldi's right to receive benefits pursuant to the
retention agreement entered into between Mr. Rimoldi and the Company terminated
at the time he left the Company. The retention agreements continue through
December 31, 1999 and shall be automatically extended for one additional year
unless a change in control of the Company has occurred, in which case the
agreements shall continue in effect for a period of not less than 24 months
beyond the month in which such change occurred. The agreements generally provide
for a continuation of salary and certain health and life insurance benefits in
the event of termination of employment by the Company (other than for cause,
disability or death) or by the executive officer (for good reason, as defined in
the retention agreements) within two years after a change of control of the
Company has occurred. In the case of Ms. Cote and Mr. Cohen, the agreements
provide for severance payments over a three year period in an amount equal to
2.99 times the sum of (a) the higher of the annual base salary in effect as of
the date of termination or immediately prior to a change in control and (b) 100%
of the average annual incentive bonus payable by the Company for the two fiscal
years ending immediately prior to the fiscal year in which the change of control
occurs. In the case of Mr. Fiore and Mr. Foniri, the agreements provide for
severance payments over an eighteenth month period in an amount equal to 1.5
times the sum of (a) the higher of the annual base salary in effect as of the
date of termination or immediately prior to a change in control and (b) 50% of
the average annual incentive bonus payable by the Company for the two fiscal
years ending immediately prior to the fiscal year in which the change of control
occurs.
Under the provisions of their employment arrangements with the Company, all
of the executive officers named in the Summary Compensation Table, other than
Mr. Planitzer, Ms. Cote and Mr. Smith whose arrangements are described above,
have continuation of salary protection for one year if their employment with the
Company is terminated other than for death, disability or cause. Mr. Rimoldi,
who left the Company in February 1997, is currently receiving salary protection
payments pursuant to his employment arrangement.
REPORT OF THE COMPENSATION COMMITTEE
The Company's executive compensation program is administered by the
Compensation Committee, composed of three non-employee directors, and is
designed to retain and reward executives who are responsible for leading the
Company in achieving its business objectives. The Compensation Committee has
authority to determine the compensation for all executive officers, including
the Chief Executive Officer, and all decisions relating to compensation of all
of the Company's executive officers are reported to the full Board of Directors.
This report is submitted by the Compensation Committee and addresses the
Company's compensation policies for fiscal 1996 as they affected Mr. Planitzer
and Ms. Cote, in their respective capacities as Chief Executive Officer of the
Company during 1996, and the other executive officers of the Company named in
the Summary Compensation Table.
COMPENSATION PHILOSOPHY
The objectives of the executive compensation program are to align
compensation with strategic business objectives and individual performance,
motivate and reward high levels of performance, recognize and reward the
achievement of team and/or individual goals and provide cost- and tax-effective
compensation while enabling the Company to attract, retain and reward executive
officers who contribute to the long-term success of the Company.
12
<PAGE> 15
The Company's executive compensation philosophy is to tie a significant
portion of executive compensation to the performance of the Company and is based
on the following:
To ensure that executive salaries are competitive, the Committee reviews
industry, peer group and national surveys of comparable companies, and
particularly a group of 20 comparable companies in the software industry,
including most of the companies in the Performance Graph's Computer
Software & Services Index. With the assistance of independent compensation
consultants, the Committee seeks to set the annual base salaries of its
executives at levels competitive with those paid on average to executives
of companies in the industry and other comparably-sized companies. It
seeks, however, to provide its executives with opportunities for enhanced
compensation through annual bonus awards and stock options, designed to
provide 75th percentile total compensation when warranted by excellent
performance.
- The Committee believes that an executive compensation program that ties
bonus awards to performance and achievement of the Company's financial
objectives serves both as an influential motivator to its executives and
as an effective instrument for aligning their interests with those of the
stockholders of the Company.
- The Committee also believes that a substantial portion of the
compensation of the Company's executives should be linked to the success
of the Company's stock in the marketplace. This linkage is achieved
through the Company's stock option program which also serves to more
fully align the interests of management with those of the Company's
stockholders.
COMPENSATION PROGRAM
Annual compensation for the Company's executives consists of three
principal elements -- base salary, incentive compensation and stock programs.
ANNUAL BASE SALARY
The Compensation Committee sets the annual base salary for executives by
reviewing compensation for competitive positions in the market, the historical
compensation levels of executives, and judgments as to past and expected future
contributions of the executives. Currently, the annual base salaries of the
Company's executives are at levels approximately equivalent to those of
executives of companies with whom the Company compares itself. Increases in
annual salaries are based on a review and evaluation of executive salary levels
relative to performance and to other companies.
INCENTIVE COMPENSATION
The award of incentive compensation is governed by the provisions of the
Company's Management Incentive Plan (the "Incentive Plan"). Under the Incentive
Plan, each year Company performance goals and individual performance objectives
are set. Upon becoming eligible under the Plan, each participant is assigned a
bonus award target equal to a specified percentage of his or her annual base
salary. A portion of a participant's bonus award target is earned separately for
achievement of the Company goals and for achievement of the individual
objectives. For 1996, Mr. Planitzer, Ms. Cote and the other executives named in
the Summary Compensation Table earned 70% of their bonus based on corporate
performance and 30% based on individual performance.
If neither the Company goals nor the individual performance objectives are
met, no bonus is earned. The Committee may in its discretion award a bonus at
less than the target level for partial achievement of either the Company goals
or individual objectives. Bonuses awarded therefore may vary depending on the
Committee's subjective evaluation of the executive's performance and
contributions to the Company's operations.
For 1996, the Company performance goals consisted of specific targets based
upon earnings per share and the level of software revenue growth. Individual
performance objectives were set for the Chief Executive Officer and each of the
Company's executives.
13
<PAGE> 16
In addition, certain over-achievement goals were established under the Plan
for 1996 based upon specific targets for earnings per share and software revenue
growth. Depending on the level of over-achievement, a participant could earn up
to two times his or her bonus award target.
STOCK PROGRAMS
Total compensation at the executive level also includes long-term
incentives offered in the form of stock options and, in certain circumstances,
restricted stock grants.
Stock options are designed to promote the identity of long-term interests
between the Company's employees and stockholders and assist in the retention of
employees. In selecting executives eligible to receive stock option grants and
determining the amount of such grants, the Compensation Committee, in its
discretion, evaluates the following factors: (i) the job level of the executive,
(ii) option grants awarded by competitors to executives at a comparable job
level, and (iii) past, current and prospective service to the Company rendered,
or to be rendered, by the executive. It has generally been the Company's
practice to fix the exercise price of the option grants at 100% of the fair
market value of the Common Stock on the date of grant, although the Company may
grant options at a below-market exercise price. Current amounts and terms of
options already held by each executive were also considered in making option
grants in 1996.
While the value realizable from exercisable options is dependent upon the
Company's performance as reflected in the market price of the Company's Common
Stock at any particular point in time, the decision as to whether such value
will be realized through the exercise of an option in any particular year is
primarily determined by each individual executive and not by the Compensation
Committee.
CHIEF EXECUTIVE OFFICERS' 1996 COMPENSATION
In anticipation of Ms. Cote becoming Chief Executive Officer of the
Corporation on November 1, 1996, the Company amended the employment agreements
for both Mr. Planitzer and Ms. Cote.
On June 11, 1996, the Company entered into a new employment agreement with
Mr. Planitzer which provides that during the period commencing June 11, 1996 and
ending on October 31, 1996, Mr. Planitzer will serve as a full-time employee of
the Company as Chief Executive Officer and Chairman of the Board of the Company.
During the period commencing November 1, 1996 and ending June 30, 1997, Mr.
Planitzer shall be a part-time employee of the Company and, in such capacity,
will serve as Chairman of the Board and as a Director of the Company. From July
1, 1997 ending on June 30, 1998, Mr. Planitzer shall serve as a consultant to
the Company and continue to serve as Chairman of the Board and as a Director of
the Company. During the full and part-time employment periods, Mr. Planitzer
shall continue to receive his annual base salary of $785,000 per year. During
the consulting period, Mr. Planitzer will receive a consultant fee of $250,000
per year (inclusive of his compensation for services as a Director). In
addition, for his services rendered to the Company prior to the date of the
Agreement, and as an inducement for him to perform services to the Company, the
Company agreed to pay Mr. Planitzer a performance bonus in the aggregate amount
of $2,227,000, payable in equal installments on October 1, 1996 and June 30,
1997. For additional information regarding Mr. Planitzer's continuing
relationship with the Company, see "Employment and Severance Agreements".
On September 4, 1996 the Company entered into an Amended and Restated
Employment Agreement with Ms. Cote which provides that Ms. Cote would become
Chief Executive Officer on November 1, 1996 at a base salary of $600,000. The
Agreement has a three-year term which is renewable by the Company at its option
on an annual basis. Otherwise, the agreement contains the same provisions that
were contained in Ms. Cote's prior agreement. (See "Employment and Severance
Agreements".)
In addition, the Company entered into a Retention Agreement with Ms. Cote
as with all other corporate officers and certain key executives of the Company.
The Retention Agreement provides for the continuation of salary and certain
health and life insurance benefits for a three-year period upon the termination
of her employment after a change of control of the Company.
14
<PAGE> 17
Using the same principles applied to the determination of incentive
compensation for the Company's executive officers, and reflecting the 70/30
weighting of corporate and individual performance objectives, the Company
awarded bonuses for 1996 of $215,875 to Mr. Planitzer and $170,000 to Ms. Cote.
In 1996, Mr. Planitzer was also granted options for the purchase of 227,400
shares of the Company's Common Stock at a price of $11.065 per share, the fair
market value of the Company's Common Stock on the date of grant. Upon her
election as Chief Executive Officer, Ms. Cote was granted options for the
purchase of 200,000 shares of the Company's Common Stock at a price of $7.19 per
share, the fair market value of the Common Stock on the date of grant.
TAX CONSIDERATIONS
Under recent amendments to the Internal Revenue Code, beginning in 1994
certain executive incentive compensation (exceeding $1 million per year) paid to
the five most highly paid executives of the Company is not deductible for
federal income tax purposes unless the executive incentive compensation is
awarded under an objective, performance-based plan approved by the stockholders
of the Company. Although the Committee believes that the ability to claim such
tax deductions is of value to the Company, the Committee also believes that
discretion in making bonus awards remains an important ingredient in determining
appropriate incentive compensation for the Company's executives. Consequently,
the Committee has determined not to amend its Management Incentive Plan to
remove the element of discretion for 1997. For 1997, only two executives, Ms.
Cote as Chief Executive Officer and Mr. Planitzer as Chairman, are likely to
have compensation over $1 million and the effect of the loss of such tax
deduction is minimal given the loss carry forwards available to the Company.
However, the Committee intends to structure its executive stock options so that
they comply with the performance-based requirements of the new tax law and to
continue to review the merits of complying with the regulations for
deductibility.
Compensation Committee
John F. Cunningham
Lawrence L. Landry
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Planitzer, the Company's Chairman, is a director and serves on the
Compensation Committee of Intersolv, Inc., whose chairman is Kevin J. Burns, a
director of the Company.
15
<PAGE> 18
COMPARATIVE STOCK PERFORMANCE
The graph below compares the cumulative total stockholder return on the
Common Stock of the Company for the period from the date of the Company's
Initial Public Offering of Common Stock (August 14, 1992) to the present with
the cumulative total return on the S&P 500 Index and the S&P Computer Software
and Services Index over the same period. The graph assumes the investment of
$100 in the Company's Common Stock on August 14, 1992, and in the S&P 500 Index
and the S&P Computer Software and Services Index on July 31, 1992, reinvestment
of all dividends and gives values as of December 31 of each year.
<TABLE>
<CAPTION>
S&P Computers
Measurement Period Computervision (Software &
(Fiscal Year Covered) Corporation S&P 500 Services)
<S> <C> <C> <C>
8/14/92 $100 $100 $100
Dec-92 48 104 119
Dec-93 30 115 152
Dec-94 33 116 179
Dec-95 128 160 252
Dec-96 78 196 392
</TABLE>
CERTAIN TRANSACTIONS
TRANSACTIONS WITH OFFICERS AND DIRECTORS
For payments made to Directors of the Company, see "Meetings and Committees
of the Board of Directors -- Compensation of Directors -- Standard Arrangements"
and "-- Other Arrangements".
During 1996, the Company loaned $28,000 on an interest-free basis to Mr.
Smith, former Chief Financial Officer of the Company, as part of his
compensation arrangement. Under the terms of Mr. Smith's separation agreement
with the Company, the principal amount together with an outstanding employee
payable of approximately $3,800 is required to be paid in full, on a first
dollar basis, through management or other bonus payments or through the gain on
the exercise of stock options.
In July 1996, the Company loaned $200,000 on an interest-free basis to Rock
S. Gnatovich, Vice President, Worldwide Marketing to facilitate his purchase of
a house. The terms of the loan state that $25,000 of principal is to be forgiven
on each of the first four anniversary dates of the loan so long as he continues
to be employed by the Company. The remaining $100,000 of principal will be
repaid by the deduction of $25,000 each year from any bonus payments due Mr.
Gnatovich as a participant in the Company's Management Incentive Plan. Any
outstanding balance, less any amounts previously forgiven, is due in full on
termination of his employment with the Company. The Company holds a second
mortgage on Mr. Gnatovich's house.
16
<PAGE> 19
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on its review of copies of reports filed by reporting persons
of the Company pursuant to Section 16(a) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), or written representations from certain
reporting persons that no Form 5 filing was required for such person, the
Company believes that all filings required to be made by reporting persons of
the Company were timely made in accordance with the requirements of the Exchange
Act except that Mr. Cunningham did not timely report on Form 4 a purchase of the
Company's common stock by him and a purchase of the Company's common stock by
his wife. The appropriate filings on Form 4 were made in August 1996.
RATIFICATION OF SELECTION OF AUDITORS
Subject to approval by the stockholders, the Board of Directors has
selected the firm of Arthur Andersen LLP, independent public accountants, as
auditors of the Company for the year ending December 31, 1997. Representatives
of Arthur Andersen LLP are expected to be present at the Annual Meeting of
Stockholders. They will have an opportunity to make a statement if they desire
to do so and will also be available to respond to appropriate questions from
stockholders.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS AUDITORS OF THE
COMPANY FOR THE YEAR ENDING DECEMBER 31, 1997.
OTHER MATTERS
The Board of Directors does not know of any other matters which may come
before the meeting. However, if any other matters are properly presented at the
meeting, it is the intention of the persons named in the accompanying proxy to
vote, or otherwise to act, in accordance with their judgment on such matters.
All costs of solicitation of proxies will be borne by the Company. In
addition to solicitations by mail, the Company's directors, officers and regular
employees, without additional remuneration, may solicit proxies by telephone and
personal interviews. Brokers, custodians and fiduciaries will be requested to
forward proxy soliciting material to the owners of stock held in their names,
and the Company will reimburse them for their out-of-pocket expenses.
DEADLINE FOR SUBMISSION OF STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the 1998 Annual
Meeting of Stockholders must be received by the Company at its principal
executive offices not later than December 30, 1997 for inclusion in the Proxy
Statement for that meeting.
By order of the Board of Directors
/s/ ANTHONY N. FIORE, JR.
------------------------------
ANTHONY N. FIORE, JR.
Secretary
May 19, 1997
THE BOARD OF DIRECTORS HOPES THAT STOCKHOLDERS WILL ATTEND THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. STOCKHOLDERS WHO ATTEND
THE MEETING MAY VOTE THEIR STOCK PERSONALLY EVEN THOUGH THEY HAVE SENT IN THEIR
PROXIES.
17
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[COMPUTERVISION LOGO]
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1. To elect three Class II Directors FOR all nominees [ ] WITHHOLD AUTHORITY to vote [ ] EXCEPTIONS* [ ]
and one Class I Director listed below for all nominees listed below
Nominees for Class II Directors: Kathleen A. Cote, Andrew G. C. Sage II and Sanjiv Ahuja.
Nominee for Class I Director: Henry Ancona.
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE EXCEPTIONS BOX AND WRITE THAT NOMINEE'S NAME ON
THE FOLLOWING LINE:
*Exceptions ___________________________________________________________________________________________________________________
2. To ratify the selection of Arthur Andersen LLP as the Company's independent
auditors.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
CHECK HERE FOR [ ]
CHANGE ADDRESS
CHECK HERE IF YOU PLAN [ ]
TO ATTEND THE MEETING
Please sign name exactly as it appears hereon. When
signing as attorney, executor, administrator, trustee,
or guardian, please give full title. If more than one
trustee, all should sign. All joint owners must sign.
Dated: _______________________________________, 1997
____________________________________________________
Signature
____________________________________________________
Signature if held jointly
Votes MUST Be Indicated
Sign, Date and Return the Proxy Card Promptly Using the Enclosed Envelope. (X) in Black or Blue Ink. [ ]
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COMPUTERVISION CORPORATION
ANNUAL MEETING OF STOCKHOLDERS - JUNE 10, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking all prior proxies, hereby appoints Russell E.
Plantizer and Anthony N. Fiore, Jr., and each or either of them, with full
power of substitution, as proxies to represent and vote as designated hereon
all shares of stock of Computervision Corporation which the undersigned would
be entitled to vote if personally present, at the Annual Meeting of
Stockholders Computervision Corporation to be held at the offices of Hale and
Dorr, 60 State Street, 26th Floor, Boston, Massachusetts on Tuesday, June 10,
1997 at 1:00 p.m. and at any adjournment thereof.
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING, OR ANY ADJOURNMENT THEREOF.
UNLESS OTHERWISE INSTRUCTED, THIS PROXY WILL BE VOTED IN FAVOR OF
PROPOSALS 1 AND 2.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
COMPUTERVISION CORPORATION
P.O. BOX 11207
NEW YORK, N.Y. 10203-0207
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