<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 Rule 14a-11(c) or Rule 14a-12
Intersolv, 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)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
N/A
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
N/A
- --------------------------------------------------------------------------------
(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):
N/A
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
N/A
- --------------------------------------------------------------------------------
(5) Total fee paid:
N/A
- --------------------------------------------------------------------------------
[ ] 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:
N/A
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
[INTERSOLV LOGO]
9420 KEY WEST AVENUE
ROCKVILLE, MARYLAND 20850
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 24, 1997
The Annual Meeting of Stockholders of INTERSOLV, Inc. (the "Company" or
"INTERSOLV") will be held at the Company's headquarters, at 9420 Key West
Avenue, Rockville, Maryland, at 10:30 a.m., Eastern Daylight Savings Time, to
consider and act upon the following matters:
1. To elect four directors of the Company;
2. To consider and vote upon a proposal to approve the addition of
1,000,000 shares of Common Stock to the Company's 1992 Stock Option
Plan;
3. To consider and vote upon a proposal to approve the adoption of
amendments to the Company's 1992 Stock Option Plan to (i) increase the
number of non-statutory stock options which will be automatically
granted annually to non-employee directors from 3,333 to 5,000, (ii)
provide for the granting of an additional 15,000 non-statutory stock
options to non-employee directors (a) upon their initially being elected
or appointed to the Board of Directors and (b) upon each occasion of
their being elected to two additional consecutive full terms on the
Board of Directors, and (iii) provide for a one-time transition grant of
10,000 non-statutory stock options to all existing non-employee
directors who are not eligible to receive the grant described in clause
(ii) above;
4. To consider and vote on a proposal to approve an increase in the Common
Stock subject to the Company's 1992 Employee Stock Purchase Plan from
640,000 to 1,200,000;
5. To ratify the selection of Coopers & Lybrand L.L.P. as the Company's
independent auditors for fiscal year 1998; and
6. To transact such other business as may properly come before the meeting
or any adjournments of the meeting.
The Board of Directors fixed the close of business on July 31, 1997, as the
record date for determination of stockholders entitled to notice of and to vote
at the meeting or any adjournment thereof.
All stockholders are cordially invited to attend the meeting.
By Order of the Board of Directors,
/s/ KENNETH A. SEXTON
KENNETH A. SEXTON,
Secretary
August 25, 1997
REGARDLESS OF WHETHER 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. NO POSTAGE NEED BE AFFIXED IF
MAILED IN THE UNITED STATES.
<PAGE> 3
INTERSOLV, INC.
9420 KEY WEST AVENUE
ROCKVILLE, MARYLAND 20850
------------------------------
PROXY STATEMENT
------------------------------
ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 24, 1997
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of INTERSOLV, Inc. (the "Company" or
"INTERSOLV") for the Annual Meeting of Stockholders (the "Annual Meeting") to be
held at the Company's headquarters, on Wednesday, September 24, 1997, at 10:30
a.m., Eastern Daylight Savings Time, and at any adjournments of the Annual
Meeting. All proxies will be voted in accordance with the instructions contained
therein, and if no choice is specified, the proxies will be voted in favor of
the proposals set forth in the Notice of Annual Meeting. Any proxy may be
revoked by a stockholder at any time before it is exercised by giving written
notice to that effect to the Secretary of the Company, by delivering to the
Company a duly executed proxy bearing a later date or by attending the Annual
Meeting and voting in person.
The Board of Directors has fixed July 31, 1997, as the record date for
determining stockholders who are entitled to notice of and to vote at the Annual
Meeting. At the close of business on July 31, 1997, there were outstanding and
entitled to vote 20,879,889 shares of Common Stock of the Company, par value
$.01 per share ("Common Stock"). Each share is entitled to one vote.
All costs of this 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,
facsimile and personal interviews. Brokers, custodians and fiduciaries will be
requested to forward proxy soliciting material to the owners of stock held in
their names. The Company will reimburse banks and brokers for their reasonable
out-of-pocket expenses incurred in connection with the distribution of proxy
material. The Company has retained Morrow & Company, 909 Third Avenue, New York,
New York 10022-4799, to assist in soliciting proxies, for which services they
will be paid a fee of $5,000, plus handling, postage and out-of-pocket expenses.
In addition, proxies may be solicited by employees of the Company personally, by
telephone, telegram or mail.
The Company's Annual Report for the fiscal year ended April 30, 1997, is
being mailed to stockholders with this Proxy Statement and the accompanying
proxy on or about August 25, 1997.
VOTES REQUIRED
The affirmative vote of the holders of a plurality of the shares of Common
Stock present or represented by proxy at the Annual Meeting is required for the
election of directors. The affirmative vote of a majority of the shares of
Common Stock present or represented by proxy at the Annual Meeting is required
for the approval of each of the other matters to be voted upon at the Annual
Meeting. A majority of the shares of Common Stock outstanding is required to be
present or represented by proxy at the Annual Meeting in order to have the
quorum necessary to take action at the Annual Meeting.
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the judge of elections appointed for the Annual Meeting. The judge of elections
will treat abstentions as Common Stock that is
<PAGE> 4
present and entitled to vote for purposes of determining the presence of a
quorum, but as not voted for purposes of determining the approval of any matter
submitted to stockholders for a vote. If a broker indicates on a proxy that such
broker does not have discretionary authority as to certain Common Stock to vote
on a particular matter, such shares will not be considered as present and
entitled to vote with respect to that matter.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The first table sets forth each person known by the Company to own
beneficially more than 5% of the outstanding Common Stock. The second table sets
forth to the Company's knowledge the beneficial ownership by each director,
nominee and certain executive officers, individually, and all directors and
executive officers as a group, of Common Stock as of June 30, 1997.
PRINCIPAL STOCKHOLDERS
<TABLE>
<CAPTION>
PERCENTAGE
SHARES OF OF
NAME AND ADDRESS COMMON STOCK COMMON STOCK
OF BENEFICIAL OWNER BENEFICIALLY OWNED OUTSTANDING
-------------------- ------------------ ------------
<S> <C> <C>
State of Wisconsin Investment.......................... 1,170,000 5.6%
121 E. Wilson Street
Madison, WI 53702
Emerging Growth Management LLC......................... 1,096,400 5.3%
One Embercadero Center
Suite 2410
San Francisco, CA 94111 (1)
Travelers Group Inc.................................... 1,062,433 5.1%
Smith Barney Holdings Inc.
388 Greenwich Street
New York, NY 10013
</TABLE>
2
<PAGE> 5
DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
SHARES OF PERCENTAGE
COMMON STOCK OF
NAME OF BENEFICIALLY COMMON STOCK
BENEFICIAL OWNER OWNED (2)(3) OUTSTANDING
----------------- ------------ ------------
<S> <C> <C>
Panos Anastassiadis....................................... 136,608 0.7%
Michel Berty.............................................. 3,333 0.0%
Kevin J. Burns............................................ 252,974(4) 1.2%
Richard A. Carpenter...................................... 198,184 0.9%
C. Thomas Faulders, III................................... -- --
Robert N. Goldman......................................... 25,999 0.1%
Gary G. Greenfield........................................ 284,196(5) 1.3%
Russell E. Planitzer...................................... 24,999 0.1%
R. Craig Roos............................................. 3,333 0.0%
Charles O. Rossotti....................................... 24,471 0.1%
Kenneth A. Sexton......................................... 88,624 0.4%
Frank A. Sola............................................. 10,666 0.1%
Gary M. Wright............................................ 8,145 0.0%
All directors and executive officers as a group (13
persons)................................................ 1,061,537 4.9%
</TABLE>
- ---------------
(1) Based upon a Schedule 13D filed June 3, 1997. Represents shares owned by a
group of three entities and five persons, only one of which (Emerging Growth
Management LLC) individually directly owns more than 5% of the outstanding
Common Stock. The other two entities, EEGO Fund, L.P., Laser Fund, L.P.,
have shared voting and dispositive power over 152,500 and 120,000 shares,
respectively. Four individuals, Jacqueline M. Keyser, Thomas D. Henwood,
Christopher F. Jackson and David Spiller have sole voting and dispositive
powers over 2,600, 86,100, 3,200 and 1,000 shares, respectively.
(2) Except as otherwise specifically noted, the number of shares stated as being
owned beneficially includes shares believed to be held beneficially by
spouses, minor children and grandchildren. The inclusion of shares deemed
beneficially owned in this Proxy Statement, however, does not constitute an
admission that the named stockholders are direct or indirect beneficial
owners of such shares.
(3) Includes 122,500, 3,333, 139,270, 15,999, 25,999, 277,039, 24,999, 3,333,
15,999, 82,500, 10,666, 6,250 and 727,887 shares subject to option which are
held by Messrs. Anastassiadis, Berty, Burns, Carpenter, Goldman, Greenfield,
Planitzer, Roos, Rossotti, Sexton, Sola, Wright and all directors and
executive officers as a group, respectively, and are exercisable within 60
days after June 30, 1997.
(4) Includes 58,500 shares held by Mr. Burns' wife, 23,500 of such shares are
held as custodian for his children, as to which shares Mr. Burns disclaims
beneficial ownership.
(5) Includes 1,100 shares held by Mr. Greenfield as custodian for his daughter,
as to which shares Mr. Greenfield disclaims beneficial ownership.
3
<PAGE> 6
ELECTION OF DIRECTORS
The Company has a classified Board of Directors consisting of three Class A
directors, three Class B directors and four Class C directors, who will serve
until the Annual Meetings of Stockholders to be held in 1999, 2000 and 1998,
respectively, and until their respective successors are elected and qualified.
Mr. Greenfield and Mr. Burns are employee directors and the remaining eight
directors are non-employee directors. At each Annual Meeting, directors are
elected for a full term of three years to succeed those directors whose terms
expire at the Annual Meeting date.
The persons named in the proxy will vote, unless the proxy is marked
otherwise, to elect as Class B directors Messrs. Berty, Planitzer and Roos, and
as a Class C Director Mr. Faulders. The proxy may not be voted for more than
three Class B directors and one Class C director. If a nominee is unable to
serve, the person acting under the proxy may vote the proxy for the election of
a substitute. It is not presently contemplated that any nominee will be unable
to serve. The terms of Class B directors elected at the Annual Meeting will
expire in 2000. The term of the Class C director elected at the Annual Meeting
will expire in 1998.
The following information relates to the nominees listed above and to the
other directors of the Company whose terms of office will extend beyond the
Annual Meeting.
NOMINEES
CLASS B DIRECTORS WITH TERMS TO EXPIRE IN 2000:
MICHEL BERTY DIRECTOR SINCE 1997
Mr. Berty, 58, founded MYB Consultant, Inc. in April 1997. From 1972 to
1997, Mr. Berty was employed by the Cap Gemini Group and served as Chairman and
Chief Executive Officer of the Cap Gemini America from 1993 to 1997. Mr. Berty
is also a Chairman of the Board of ZMAX and on the boards of directors of
Computron, Mastech, Sapiens and Level 8.
RUSSELL E. PLANITZER DIRECTOR SINCE 1982
Mr. Planitzer, 53, has been Chairman of Computervision Corporation since
1989. He was also Chief Executive Officer of Computervision Corporation from
1993 to 1996. He was a partner of J.H. Whitney & Co., a venture capital firm,
from 1981 to 1991.
R. CRAIG ROOS DIRECTOR SINCE 1997
Mr. Roos, 51, is the former chairman and Chief Executive Officer of LOCATE,
which was sold to MobileMedia Communications in 1996. From 1983 to 1996, Mr.
Roos served in the capacity of Chief Executive Officer, Chief Financial Officer
and board member of LOCATE, as well as from 1993 to 1995, as Chairman of
MobileMedia Corporation and MobileMedia Communications, Inc. Mr. Roos also
serves as an advisor or board member of AccessLine Technologies, Inc. and the
American Paralysis Association.
CLASS C DIRECTOR WITH TERM EXPIRING IN 1998:
THOMAS FAULDERS, III INITIAL ELECTION
Mr. Faulders, 47, has been Executive Vice President and Chief Financial
Officer of BDM International, Inc. since April 1995. Prior to joining BDM, Mr.
Faulders was Vice President and Chief Financial
4
<PAGE> 7
Officer of COMSAT Corporation from 1992 to 1995. From 1985 to 1992, Mr. Faulders
was a senior executive with MCI Communications Corporation.
OTHER DIRECTORS
CLASS C DIRECTORS WITH TERMS EXPIRING IN 1998:
ROBERT N. GOLDMAN DIRECTOR SINCE 1986
Mr. Goldman, 48, was elected President and Chief Executive Officer of
Object Design, Inc. in November, 1995. He has been a director of Object Design
since August, 1995. Prior to joining Object Design, Mr. Goldman was Chairman of
Trinzic Corporation from 1992 to 1995. Trinzic was formed by the merger of Aion
Corporation and AICorp in 1992. From 1986 to 1992, Mr. Goldman served as
President and Chief Operating Officer of AICorp, a supplier of artificial
intelligence software. From 1983 to 1986, Mr. Goldman served as President and
Chief Operating Officer of Cullinet Software. Mr. Goldman is a member of the
Board of Directors of Citrix Systems, Inc., Parametric Technology Corporation
and Systemsoft Corporation.
GARY G. GREENFIELD DIRECTOR SINCE 1992
Mr. Greenfield, 42, was elected President and Chief Executive Officer in
October 1996. Mr. Greenfield has served as President of the Company since 1995.
From 1992 to 1997 he was also the Company's Chief Operating Officer. From 1989
to 1992 he was Executive Vice President, Product Operations. He served as Vice
President, Marketing from 1987 to 1988, served as Senior Vice President, Product
Services and Operations from 1988 to 1989 and briefly served as Chief Financial
Officer in 1991. Mr. Greenfield is also a director of Hyperion Software, a
manufacturer of financial application software products.
CHARLES O. ROSSOTTI DIRECTOR SINCE 1991
Mr. Rossotti, 56, has served as Chairman of American Management Systems,
Inc., a software and services company, since 1989. From 1989 to 1993, he was
also Chief Executive Officer of American Management Systems.
CLASS A DIRECTORS WITH TERMS EXPIRING IN 1999:
KEVIN J. BURNS DIRECTOR SINCE 1986
Mr. Burns, 48, was elected Chairman of the Board of the Company in 1990.
From 1986 to 1996 Mr. Burns was Chief Executive Officer of the Company. From
1986 to 1995 Mr. Burns also served as President of the Company. From 1984 to
1986 he was Executive Vice President and Chief Operating Officer, and from 1982
to 1984, he was Executive Vice President of the Software Products Division of
the Company. Mr. Burns is also a director of Computervision Corporation and FTP
Software
RICHARD A. CARPENTER DIRECTOR SINCE 1991
Mr. Carpenter, 54, served as Vice Chairman of the Board from March to
October, 1991. In October 1991, he became President of Carpenter Associates, a
consulting firm. He served as Chief Executive Officer of Index Technology
Corporation ("Index") from 1983 to 1991, and Chairman of the Board of Index from
1990 to 1991.
5
<PAGE> 8
FRANK A. SOLA DIRECTOR SINCE 1994
Mr. Sola, 53, is Chairman and Chief Executive Officer of Net Collaborative,
Inc., a consulting firm specializing in Internet integration services. From 1987
to 1996, Mr. Sola was President and owner of The Syndetics Corporation, Inc. Mr.
Sola was a Vice President of Cullinet Software, Inc. in 1986. From 1976 to 1985,
Mr. Sola served as President and Chief Operating Officer of Computer Partners,
Inc.
There is no family relationship between any of the directors or officers.
There are no arrangements between any director or officer and any other person
pursuant to which he was selected as a director or officer.
The Board of Directors has a standing Audit Committee which held four
meetings during the fiscal year ended April 30, 1997. During such time, the
Audit Committee was composed of Mr. Norman Bolz, who is not standing for
reelection as a director, and Mr. Roos. The principal functions of the Audit
Committee are to make recommendations to the Board of Directors regarding the
engagement of the Company's independent auditors, review and approve any major
accounting policy changes affecting the Company's operating results, review the
arrangements for and scope of the independent audit and results of the audit and
assure that the auditors are in fact independent.
The Board of Directors has a standing Management Development and
Compensation Committee, composed of Messrs. Goldman, Planitzer and Rossotti,
which held five meetings during the fiscal year ended April 30, 1997. The
principal function of the Management Development and Compensation Committee is
to make recommendations to the Board of Directors as to compensation
arrangements, including the granting of stock options.
The Board of Directors does not have a nominating committee.
During the fiscal year ended April 30, 1997, the Board of Directors held
five meetings. All directors attended at least 75% of the meetings which
occurred while they served on the Board of Directors. All directors attended at
least 75% of the meetings of committees on which they served.
DIRECTOR COMPENSATION
The Company pays each non-employee Board member an annual retainer of
$15,000, plus $1,500 and out-of-pocket expenses for attendance at each Board
meeting. Non-employee directors also receive $500 for attendance at each Board
committee meeting if such meeting is not held on the day of a Board meeting.
Further, should any non-employee director be requested by the Company to perform
consulting services on the Company's behalf, then such director shall be
entitled to receive a fee equal to $1,500 per day for such services.
Non-employee directors currently are granted an option to purchase 3,333
shares of Common Stock at fair market value as of the date of the first meeting
of directors following each election or appointment of the director, and at each
subsequent first meeting of directors following each Annual Meeting of
Stockholders during such director's term. Each such option shall vest
immediately upon its being granted.
Directors who are officers or employees of the Company do not receive
additional compensation for serving as a director or committee member.
Currently, such employee directors are Mr. Greenfield and Mr. Burns.
6
<PAGE> 9
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information with respect to the compensation
paid by the Company to each of the executive officers during the past three
fiscal years, ending April 30.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
NAME AND FISCAL ------------------------------- STOCK OPTIONS
PRINCIPAL POSITION YEAR SALARY BONUS OTHER AWARDED
- -------------------------------------------- ------ -------- ------- -------- -------------
($) ($) ($) (#)
<S> <C> <C> <C> <C> <C>
Gary G. Greenfield.......................... 1997 275,000 68,612 27,500 200,000
President and Chief Executive Officer 1996 265,000 85,993 130,000
1995 215,000 258,000 105,000
Kevin J. Burns.............................. 1997 275,000 68,612 27,500 100,000
Chairman of the Board 1996 275,000 89,238 130,000
1995 220,000 300,000 105,000
Kenneth A. Sexton........................... 1997 175,000 31,188 17,500 23,000
Senior Vice President, Finance & 1996 175,000 32,450 20,000
Administration, Chief Financial Officer 1995 160,000 96,000 15,000
and Secretary
Panos Anastassiadis......................... 1997 200,000 38,350 33,000
Senior Vice President, Worldwide 1996 166,000 86,,362 80,000
Distribution 1995 135,000 113,600 20,000
Gary M. Wright (1).......................... 1997 150,000 100,069 20,000
Senior Vice President, Worldwide Service 1996 104,875 33,825 25,000
</TABLE>
- ------------------------------
(1) Mr. Wright joined the Company in fiscal 1996.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth the stock options granted to the Company's
executive officers during the fiscal year ended April 30, 1997.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------
OPTIONS % OF TOTAL GRANT
GRANTED ON OPTIONS GRANTED EXERCISE DATE
COMMON TO EMPLOYEES IN PRICE PER EXPIRATION PRESENT
NAME STOCK FISCAL 1997 SHARE (1) DATE VALUE (3)
- ------------------------------------- ---------- --------------- --------- ---------- ----------
# (%) ($/SHARE) ($)
<S> <C> <C> <C> <C> <C>
Gary G. Greenfield................... 200,000 22.63 7.75 (2) $1,059,200
Kevin J. Burns....................... 100,000 11.32 7.75 (2) $529,600
Kenneth A. Sexton.................... 23,000 2.6 7.75 (2) $121,808
Panos Anastassiadis.................. 33,000 3.73 7.75 (2) $174,768
Gary M. Wright....................... 20,000 2.26 7.75 (2) $105,920
</TABLE>
- ------------------------------
(1) The exercise price is the market price on the date the options were granted.
(2) These grants consisted of a combination of both Incentive and Non-Qualified
stock options, and were made on September 25, 1996. Incentive Stock Options
expire ten years from their date of grant, while Non-Qualified Stock Options
expire ten years and one month from their date of grant. All options granted
become exercisable in equal, quarterly installments, commencing with the
first anniversary of the grant date.
(3) Grant date present value is determined using a modified Black-Scholes option
pricing model. The estimated values under the model are based on
assumptions, including an expected volatility of 62.8%, a risk-free rate of
return of 6.6%, no dividend yield and a time to exercise of seven years, and
may not be indicative of actual value. The actual value, if any, the option
holder may realize will depend on the excess of the actual market price of
the stock over the exercise price on the date the option is exercised. There
is no assurance that the value that may be realized by the option holder
will be at or near the value estimated by the Black-Scholes model.
7
<PAGE> 10
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
The following table sets forth certain information regarding the exercise
of stock options during the last fiscal year by the Company's executive
officers.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT FISCAL YEAR END FISCAL YEAR END (2)
ACQUIRED ON VALUE ---------------------------- ----------------------------
NAME EXERCISE REALIZED (1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------- ----------- ------------ ----------- ------------- ----------- -------------
(#) ($) (#) (#) ($) ($)
<S> <C> <C> <C> <C> <C> <C>
Gary G. Greenfield....... 0 0 226,529 400,511 72,278 56,824
Kevin J. Burns........... 0 0 117,510 271,760 36,574 24,480
Kenneth A. Sexton........ 0 0 78,750 49,250 12,656 4,219
Panos Anastassiadis...... 0 0 114,375 111,125 27,422 9,141
Gary M. Wright........... 0 0 6,250 38,750 0 0
</TABLE>
- ------------------------------
(1) The amount "realized" reflects the appreciation on the date of exercise
(based on the excess of the fair market value of the shares on the date of
exercise over the exercise price). However, because the executive officers
may keep the shares they acquired upon the exercise of the options (or sell
them at a different price), these amounts do not necessarily reflect cash
realized upon the sale of those shares.
(2) "In-the-Money Options" are options outstanding at the end of the last fiscal
year for which the fair market value of the Common Stock at the end of the
last fiscal year ($7.625 per share) exceeded the exercise price of the
options.
EXECUTIVE EMPLOYMENT AGREEMENTS
The Company has entered into executive employment agreements with Messrs.
Burns, Greenfield, and Sexton providing for (i) annual base salaries, (ii)
participation in bonus plans, stock options and stock incentive plans as adopted
by the Company, and (iii) other customary benefits, including death and
disability payments. Following is a summary of the pertinent provisions of the
agreements.
The terms for Messrs. Greenfield and Sexton are for three years expiring
July 31, 2000, and are automatically extended for one year each August 1 after
July 31, 1998, unless either the Company or the executive gives notice that the
agreement is not to be extended. If there is a change of control of the Company,
as defined in Mr. Greenfield and Mr. Sexton's agreements, the agreements shall
be automatically extended for a three year term commencing on the effective date
of the change of control. The term for Mr. Burns expires September 30, 1999,
unless either the Company or Mr. Burns gives notice as allowed by the agreement.
At any time, the Company may terminate the executive for cause, as defined in
the agreements. If the executive's termination of employment is (i) by the
Company other than for cause or disability, (ii) by the executive for good
reason or (iii) during the first year following a change of control, the Company
shall be obligated to make a lump sum payment to the executive. The lump sum
payments to Messrs. Greenfield and Sexton will be based on a multiple (the
"Multiple") of their monthly base salary and bonus (as defined in their
agreements) computed on a monthly basis. The Multiples for calculating the lump
sum payments for Messrs. Greenfield and Sexton are eighteen and six,
respectively. The lump sum payment to Mr. Burns will be the remaining unpaid
salary and bonus as defined in his agreement. In addition, if the executive's
employment is so terminated or if there is a change of control, all outstanding
stock options held by the executive shall vest. If payments to the executive
would subject the executive to an excise tax under the Internal Revenue Code
relating to payments after a change of control, the payments shall be grossed up
so that the Company will make additional payments to the executive equal to the
amount of the excise tax.
8
<PAGE> 11
During the 18 months following termination of employment described above
(except termination for cause), (i) Mr. Greenfield and Mr. Sexton shall provide
consulting services to the Company and be subject to certain non-competition
covenants and (ii) Mr. Burns shall be subject to certain non-competition
covenants. For such consulting services and non-competition agreement, the
Company shall pay Mr. Greenfield and Mr. Sexton a lump sum equal to eighteen
times their monthly base salary and bonus (as defined in their agreements)
computed on a monthly basis. Mr. Burns shall not receive additional
consideration for his non-competition agreement.
The annual compensation and target incentive compensation for each affected
officer for fiscal year 1998 is as follows: Mr. Greenfield has a base salary of
$275,000, with a target incentive compensation amount equal to his base salary.
Mr. Sexton has a base salary of $175,000, and a target incentive compensation of
$125,000. As of July 31, 1997, Mr. Burns' unpaid salary and bonus for the
remaining period covered by his agreement is $689,583. The annual base salary
and target incentive compensation may be increased from time to time as
determined by the Board of Directors, in its discretion, upon a review that
shall take place at least annually.
REPORT OF THE MANAGEMENT DEVELOPMENT AND
COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Management Development and Compensation Committee of the Board of
Directors (the "Committee"), consisting entirely of non-employee directors,
approves all policies under which compensation is paid or awarded to the
Company's executive officers. The Committee was composed of Messrs. Robert N.
Goldman, Russell E. Planitzer and Charles O. Rossotti.
COMPENSATION PHILOSOPHY
The Company's executive compensation program is premised on the belief that
the interest of executives should be closely aligned with those of INTERSOLV's
stockholders. INTERSOLV's executive management compensation program is also
designed to attract and retain superior executive talent. Based on this
philosophy, a significant portion of each executive's total compensation is
placed at-risk and linked to the accomplishment of specific annual and long-term
financial and strategic results and to appreciation in the Common Stock. The
portion of compensation at-risk for the Company's executives is intended to be
greater than the portion at-risk for executive officers at comparable companies
in the industry.
COMPENSATION PLAN
Each year the Committee conducts a review of the Company's executive
compensation program. This review includes a consideration of reports based on
independent compensation consultants' assessment of the competitiveness of the
Company's executive compensation, and a comparison of the Company's executive
compensation to a peer group of the Company's most direct competitors for
executive talent. The Committee reviews the selection of peer companies used for
compensation analysis. The compensation review permits an ongoing evaluation of
the link between the Company's performance and its executive compensation in the
context of the compensation programs of other public companies.
The Committee approves the compensation of the executive officers,
including the Chief Executive Officer and other individuals whose compensation
is detailed in this proxy statement, and sets policies with respect to the
executive compensation program. This is intended to ensure consistency
throughout the executive compensation program.
9
<PAGE> 12
The key elements of the Company's executive compensation program consist of:
1. base annual salary,
2. incentive compensation,
3. stock options, and
4. supplemental executive benefits
The Committee's policies with respect to each of these elements, including
the basis for the compensation paid Mr. Greenfield, are discussed below.
BASE ANNUAL SALARIES
Base annual salaries for executive officers are initially determined by
evaluating the responsibilities of the position, the experience and knowledge of
the individual, and the competitive marketplace for executive talent, including
a comparison to base annual salaries for comparable positions at peer companies.
Annual salary adjustments are determined by evaluating the performance of
each executive officer, taking into account new responsibilities. Individual
performance ratings take into account such factors as achievement of the
Company's strategic plan and attainment of specific individual objectives.
In determining Mr. Greenfield's base salary for fiscal 1997, the Committee
did not employ a formula or other mathematical calculation, but based its
determination upon a subjective evaluation of base salaries of chief executive
officers of peer companies, the Company's performance in fiscal 1997, and the
assessment by the Committee of Mr. Greenfield's individual performance. Based
upon this evaluation, the Committee increased Mr. Greenfield's base salary 4%
from $265,000 to $275,000.
INCENTIVE COMPENSATION
The Company maintains an Incentive Compensation Plan (the "IC Plan"), which
provides for the payment of incentive compensation to most employees of the
Company not receiving sales commissions. Executive officers participate in the
IC Plan, which is a pay-for-performance plan designed to compensate participants
for achieving certain levels of performance for key objectives established in
the Company's annual financial plan. The targeted incentive compensation for
executive officers ranges from approximately 50% to 100% of base salary,
depending upon the executive officer's position.
Annually, the Committee approves targeted levels and minimum threshold
levels of performance for key objectives affecting the executive officers'
incentive compensation. No incentive compensation is paid when results are below
the threshold level. As actual results approach targeted levels, the incentive
compensation payout increases at an accelerated rate. For executive officers,
the incentive compensation objectives are based primarily on revenue and
earnings of the Company and their operating unit. Incentive compensation payouts
are paid quarterly based on results compared with quarterly, six month and
annual objectives.
Mr. Greenfield's incentive compensation is based on the Company's overall
revenue and earnings performance. Mr. Greenfield received incentive compensation
of $68,612 in fiscal 1997, which constituted 25% of his maximum targeted
incentive compensation, as compared with $85,993 in fiscal 1996. The formulas
for fiscal 1996 and 1997 were materially the same.
10
<PAGE> 13
STOCK OPTIONS
The third component of executive officers' compensation is the Company's
1992 Stock Option Plan, pursuant to which the Company has granted to executive
officers options to purchase shares of Common Stock.
Stock options are designed to align the interests of executives with those
of the stockholders. Stock options are granted at an exercise price equal to the
market price of the Common Stock on the date of grant, vest in equal
installments over four years and are exercisable within ten years from the date
of grant. This plan is designed to provide incentives for the creation of value
for the Company's stockholders over the long term because the full benefit of
the compensation package cannot be realized unless stock price appreciation
occurs over a number of years.
During fiscal 1994, the Committee adopted a formal framework to govern the
granting of stock options. The framework adopted was based on the result of a
comprehensive evaluation of the Company's stock option program compared with
other public companies in the industry. An independent compensation consultant
assisted the Committee in this evaluation process.
Under the framework adopted, targeted ownership levels were specified for
approximately 100 employees in the Company, including executive officers, who
are expected to have an impact on long-term stockholder value. The framework
provides for key employees to achieve targeted ownership percentages over a
ten-year period through a series of option grants. The framework calls for
option grants for 33% of the target in the first year and the remainder in five
equal annual grants thereafter. Under the framework, executive officers and key
employees could acquire up to approximately 20% of the Common Stock over a ten
year period. Fiscal 1996 grants under the program took into consideration
options granted under the previous program for the prior four years.
For the fiscal year ended April 30, 1997, Mr. Greenfield was granted
options for 200,000 shares. Under the framework, Mr. Greenfield' targeted
ownership is 4% of the Common Stock.
SUPPLEMENTAL EXECUTIVE BENEFITS
The Company provides to selected senior executives a supplemental executive
benefits spending allowance equivalent to 10 percent of base annual salary. This
allowance is to be applied towards the selection of four benefits options:
financial/estate planning and tax preparation services, retirement supplement,
supplemental health and welfare insurance and/or legal services. Depending upon
whether the particular executive chooses to spend these funds for supplemental
retirement savings, he may be eligible for a tax deferred election.
CONCLUSION
Through these programs, a significant portion of the Company's executive
compensation is linked directly to individual and Company performance in
furtherance of strategic goals, as well as stock price appreciation. The
Committee intends to continue the policy of linking executive compensation to
Company performance and stockholder return.
MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE
Russell E. Planitzer, Chairman of
Committee
Robert N. Goldman
Charles O. Rossotti
11
<PAGE> 14
STOCK PRICE PERFORMANCE
The following graph assumes $100 invested on April 30, 1992 (the end of the
fiscal year) in the Common Stock, in the S&P 500 Index and the S&P Computer
Software & Services Index.
COMPARISON OF TOTAL RETURN AMONG
INTERSOLV, COMPUTER SOFTWARE & SERVICES INDEX AND S&P 500 INDEX
<TABLE>
<CAPTION>
Measurement Period S&P Computer
(Fiscal Year Covered) Intersolv S&P 500 Index Software &
<S> <C> <C> <C>
30-Apr-92 100 100 100
30-Apr-93 46 106 126
30-Apr-94 69 109 148
30-Apr-95 88 124 218
30-Apr-96 70 158 306
30-Apr-97 49 193 451
31-Jul-97 81 230 551
</TABLE>
PROPOSED AMENDMENTS TO THE COMPANY'S
1992 STOCK OPTION PLAN
The Board of Directors believes that the Company's long-standing policy of
encouraging stock ownership by its officers, directors and key employees,
through the granting of stock options, is a key element in the Company's growth
and success by enhancing its ability to attract and retain high quality
personnel. The level of competition for highly qualified employees is unusually
intense in the software industry. The Board of Directors therefore continues to
believe that a competitive stock option program is an important factor in
recruiting, retaining and motivating officers and key employees.
PROPOSED AMENDMENT TO INCREASE SHARES OF COMMON STOCK SUBJECT TO THE OPTION PLAN
The 1992 Stock Option Plan (the "Option Plan") currently authorizes the
grant of options to purchase a maximum of 3,000,000 shares of Common Stock,
subject to adjustment for stock splits and similar capital changes. As of April
30, 1997, 289,917 shares of Common Stock have been issued upon the exercise of
options granted pursuant to the Option Plan and 2,451,970 shares of Common Stock
have been reserved in anticipation of the possible exercise of options
previously granted pursuant to the Option Plan. Options to
12
<PAGE> 15
purchase 323,583 shares are currently outstanding under the Company's 1982 Stock
Option Plan. The 1982 Stock Option Plan has expired and no further options may
be granted under it. Assuming that all of the above-described options were
granted and exercised, the shares of Common Stock issued would constitute
approximately 15% of the Company's currently outstanding Common Stock.
The Board of Directors proposes that the Option Plan be amended to increase
the number of shares of Common Stock available for grant under the Option Plan
from 3,000,000 shares to 4,000,000 shares. The Board of Directors believes that
equity participation is a key element in its overall compensation program and
has developed a formal framework to govern the granting of stock options to key
employees. In order to continue the framework for granting options, the
additional 1,000,000 shares must be made available for grant under the Option
Plan. If the amendment to the Option Plan is approved by the Company's
stockholders, all of the Company's outstanding options, if granted and
exercised, would constitute approximately 19% of the Company's currently
outstanding Common Stock.
PROPOSED AMENDMENT TO APPROVE THE ADOPTION OF AMENDMENTS TO THE OPTION PLAN
REGARDING THE GRANTING OF OPTIONS TO NON-EMPLOYEE DIRECTORS
Section 2(c)(ii) of the Option Plan currently provides that each
non-employee director shall be granted a non-statutory stock option to purchase
3,333 shares of Common Stock of the Company at the first meeting of directors
following each election or appointment of the director, and at each subsequent
first meeting of directors following each Annual Meeting of Stockholders during
such director's term. Each option granted pursuant to Section 2(c)(ii) vests
immediately upon its being granted, (ii) has an exercise price of no less than
the then fair market value and has a term of ten years plus thirty days from the
date on which the option was granted, subject to earlier termination as provided
in the Option Plan.
The Board of Directors believes that it is necessary amend the Option Plan
to (i) increase the number of non-statutory stock options which will be
automatically granted annually to non-employee directors pursuant to Section
2(c)(ii) from 3,333 to 5,000, (ii) provide for the granting of an additional
15,000 non-statutory stock options to non-employee directors (a) upon their
initially being elected or appointed to the Board of Directors and (b) upon each
occasion of their being elected to two additional consecutive full terms on the
Board of Directors, and (iii) provide for a one-time transition grant of 10,000
non-statutory stock options to all existing non-employee directors who are not
eligible to receive the grant described in clause (ii) above. The grant
described in clause (iii) above is intended to make the transition to the
amended Option Plan more equitable for the Company's existing directors.
The purpose of the amendments is to make the Company's stock option program
more competitive with other public companies in the software industry. The Board
of Directors believes the stock option program enhances the Company's ability to
attract and retain high-quality directors. The Board of Directors also believes
that a larger grant, along with a lengthening of the vesting period for certain
options will achieve a closer link between the financial rewards received and
stockholders' value. Based on this view, Section 2(c)(ii) of the Plan is
proposed to be deleted in its entirety and replaced with the following:
(ii) (A) Each non-employee director shall be granted a non-statutory stock
option to purchase 5,000 shares of Common Stock of the Company at the
first meeting of directors following each election or appointment of
the director, and at each subsequent first meeting of directors
following each Annual Meeting of stockholders during such director's
term. Each option granted pursuant to this clause (ii)(A) shall vest
immediately upon its being granted. The exercise price for such
options granted to the directors pursuant to this clause (ii)(A) shall
be no less than the then fair market
13
<PAGE> 16
value and the term shall be ten years plus thirty days from the date
on which the option was granted, subject to earlier termination as
provided in the Plan.
(B) Each non-employee director shall be granted a non-statutory stock
option to purchase 15,000 shares of Common Stock of the Company (a) upon
him or her initially being elected or appointed to the Board and (b)
upon each occasion of him or her being elected to two additional
consecutive full terms on the Board. Each option granted pursuant to
this clause (ii)(B) shall vest in equal annual installments over three
years. The exercise price for such options granted to directors pursuant
to this clause (ii)(B) shall be no less than the then fair market value
and the term shall be ten years plus thirty days from the date on which
the option was granted, subject to earlier termination as provided in
the Plan.
(C) At the first meeting of the Board following the approval of this
clause (ii)(C), each non-employee director who is not eligible to
receive the grant described in clause (ii)(B) above shall receive a
one-time transition grant of 10,000 non-statutory options. The exercise
price for such options granted to directors pursuant to this clause
(ii)(C) shall be no less than the then fair market value and the term
shall be ten years plus thirty days from the date on which the option
was granted, subject to earlier termination as provided in the Plan.
OPTION PLAN DESCRIPTION
The Option Plan is administered by the Management Development and
Compensation Committee of the Board of Directors (the "Committee").
Both incentive stock options intended to qualify under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code") and non-statutory options
may be granted under the Option Plan. All officers and employees of the Company
are eligible to receive incentive stock options and non-statutory stock options.
The Option Plan also currently provides for the mandatory grant to each
non-employee director of non-statutory options to purchase 3,333 shares of
Common Stock at fair market value as of the date of the first meeting of
directors following each election or appointment of the director and at each
subsequent first meeting of directors following each annual meeting of
stockholders during such director's term. As of June 30, 1997, approximately 182
employees were participating in the Option Plan. In addition, 8 non-employee
directors were also participating in the Option Plan as of June 30, 1997.
The Committee selects (except for the mandatory annual grant to
non-employee directors) the optionees and determines (i) the number of shares
subject to each option, (ii) when the option becomes exercisable, (iii) the
exercise price, which cannot be less than 100% of the fair market value and (iv)
the duration of the options, which cannot exceed ten years for incentive options
and ten years and thirty days for non-statutory options. No option recipient may
be granted incentive stock options first exercisable in any one year to the
extent that the aggregate fair market value of the shares would exceed $100,000,
though such a recipient may receive additional non-statutory options. Payment of
the option exercise price, at the Committee's discretion, may be made in cash,
notes, shares of Common Stock or any combination thereof. Options are not
transferable other than by will or the laws of descent and distribution and are
exercisable during the lifetime of the optionee only while he or she is in the
employ of the Company or within three months after termination of employment. If
termination is due to death, the option is exercisable for a one year period
after death.
The Board of Directors may at any time amend the terms of the Option Plan,
except that no such amendment to the Option Plan may be made without the
approval of stockholders if such amendment would (i) materially increase the
benefits accruing to participants under the Option Plan, (ii) materially
increase the
14
<PAGE> 17
number of shares which may be issued under the Option Plan or (iii) materially
modify the requirements as to eligibility for participation under the Option
Plan.
A participant in the Option Plan who holds an option that qualifies as an
incentive stock option and exercises such option in accordance with its terms
and the terms of the Option Plan will recognize no income for Federal income tax
purposes upon either the grant or the exercise of such option. However, the
amount by which the fair market value of the shares received on exercise of an
incentive stock option exceeds the exercise price will be an item of tax
preference for purpose of calculating the alternative minimum tax in the
participant's tax year in which such option is exercised. The gain will be
taxable to the participant upon the sale of shares acquired upon exercise of an
incentive stock option as long-term capital gain provided that the shares are
held by the participant for at least one year from the date of exercise of such
options.
If a participant sells any shares acquired pursuant to the exercise of an
incentive stock option before the date that is at least one year from the date
of exercise of such option, the participant will be required to recognize
ordinary income equal to the lesser of (i) the fair market value of the Common
Stock on the date of exercise, less the exercise price of the option, or (ii)
the amount realized on the disposition of the Common Stock, less the exercise
price of the option, and the Company will have a deduction in that amount. The
amount by which the proceeds of the sale exceed the fair market value of the
Common Stock on the date of exercise will be treated as capital gain (long-term
or short-term depending on the length of the holding period since the date of
exercise) of the participant.
A participant in the Option Plan who holds a non-statutory stock option and
exercises such option will recognize ordinary income equal to the excess of the
fair market value of the shares received over the exercise price, and the
Company will have a deduction in that amount on the date of exercise. Any gain
recognized by a participant upon a sale of such shares in excess of the amount
treated as ordinary income will be treated as capital gain (long-term or
short-term depending on the length of the holding period since the date of
exercise) of the participant.
The Option Plan was drafted to obtain the benefits of the exemption from
Section 16(b) of the Securities Exchange Act of 1934 (the "Exchange Act")
provided by rule 16b-3. Section 16(b) of the Exchange Act provides, among other
things, that an officer who purchases and sells the stock of the corporation
which employs him within a six month period is liable to the corporation for the
difference between the purchase price and sale price. Rule 16b-3 promulgated
under the Exchange Act provides that the acquisition of a stock option and the
exercise of such option by an officer of a corporation pursuant to a stock
option plan which meets certain requirements (one of which is stockholder
approval of the Plan) does not constitute a "transaction" subject to Section
16(b) of the Exchange Act.
15
<PAGE> 18
The following table summarizes the option grants proposed to be made
pursuant to the framework to the following persons under the Option Plan in the
fiscal year ending April 30, 1998.
NEW PLAN BENEFITS (1)
INTERSOLV, INC. 1992 STOCK OPTION PLAN
<TABLE>
<CAPTION>
NUMBER OF
NAME AND POSITION DOLLAR VALUE (2) OPTIONS
- ----------------------------------------------------------------- ---------------- ---------
<S> <C> <C>
Gary G. Greenfield............................................... $1,855,000 265,000
President and Chief Executive Officer
Kevin J. Burns................................................... None None
Chairman of the Board
Kenneth A. Sexton................................................ $525,000 75,000
Senior Vice President, Finance and Administration,
Chief Financial Officer and Secretary
Panos Anastassiadis.............................................. $630,000 90,000
Senior Vice President, Worldwide Distribution
Gary M. Wright................................................... $280,000 40,000
Senior Vice President, Worldwide Service
Executive Group.................................................. $3,290,000 470,000
Non-Executive Director Group..................................... $1,243,788 130,000(3)
Non-Executive Officer Employee Group............................. Presently Presently
Unknown Unknown
</TABLE>
- ------------------------------
(1) Assumes that the proposed Option Plan amendment to increase the shares of
Common Stock subject to the Option Plan has been adopted by the stockholders
at the Annual Meeting and is in effect during fiscal 1998.
(2) Present value is determined using a Black-Scholes option pricing model. The
estimated values under the model are based on assumptions, including an
exercise price of $10.25 per share for employees and $14.00 per share for
non-employee directors, an expected volatility of 62.8%, a risk-free rate of
return of 6.6%, no dividend yield and a time to exercise of seven years, and
may not be indicative of actual value. The actual value, if any, the option
holder may realize will depend on the excess of the actual market price of
the stock over the exercise price on the date the option is exercised. There
is no assurance that the value that may be realized by the option holder
will be at or near the value estimated by the modified Black-Scholes model.
(3) Assumes that the proposed Option Plan amendment regarding the granting of
options to non-employee directors is in effect during fiscal 1998 and that
(i) one grant of 5,000 non-statutory options is made to each non-employee
director, (ii) one grant of 15,000 non-statutory options is made to each of
Mr. Faulders and Mr. Planitzer, and (iii) grants of 10,000 non-statutory
options are made to each of the six other non-employee directors.
Approval of the proposed amendment to the Option Plan requires the vote of
holders of a majority of the outstanding Common Stock present and voting at the
Annual Meeting.
The Board of Directors recommends that stockholders vote FOR the approval
of the proposed amendment to the Option Plan.
16
<PAGE> 19
PROPOSAL TO AUTHORIZE AN INCREASE IN THE
COMMON STOCK SUBJECT TO THE COMPANY'S
1992 EMPLOYEE STOCK PURCHASE PLAN
The 1992 Employee Stock Purchase Plan (the "Purchase Plan") fosters the
Company's goal of recruiting and retaining key employees in the highly
competitive software industry. The Company believes that participation in the
Purchase Plan by all employees fosters commitment and more closely ties
compensation and stockholder objectives by focusing employees on stockholder
return.
PROPOSED AMENDMENT
As of June 30, 1997, all Common Stock available under the Purchase Plan has
been issued. Under the Purchase Plan, the last granting period for 1997 was
required to begin on July 1, 1997, and unless additional shares of Common Stock
are added to the Purchase Plan, the operation of the Purchase Plan will be
interrupted. Because of the important part that the Purchase Plan plays in
recruiting and retaining key employees, the Board of Directors determined that
the operation of the Purchase Plan should not be interrupted, and, subject to
stockholder approval, have adopted an amendment to the Purchase Plan authorizing
the addition of 560,000 shares of Common Stock to the Purchase Plan effective
July 1, 1997. The Board of Directors believes that the additional shares should
be sufficient to meet foreseeable demand for several years.
PURCHASE PLAN DESCRIPTION
The Purchase Plan currently authorizes the grant of rights to purchase a
maximum of 640,000 shares of Common Stock (subject to adjustment for stock
splits and similar capital changes) to eligible employees. Each employee of the
Company, or of a subsidiary of the Company, having at least three months of
continuous service on the date of grant of a right is eligible to participate in
the Purchase Plan. Any employee who, immediately after the grant of a right, is
determined to own 5% or more of the Common Stock, however, would not be eligible
to participate. The Purchase Plan is administered by the Management Development
and Compensation Committee of the Board of Directors.
Rights are granted twice yearly, on January 1 and July 1, and are
exercisable effective on the succeeding June 30 or December 31. Eligible
employees may purchase shares of Common Stock through accumulation of payroll
deductions (of not less than 1% nor more than 10% of compensation, as defined in
the Purchase Plan) at a purchase price which is 85% of fair market value at the
beginning or end of each six-month offering period, whichever is lower. Of the
approximately 750 eligible employees, 400 participants were enrolled in the
Purchase Plan as of July 1, 1997. On July 1, 1997, the closing price for the
Common Stock was $9.25. The Purchase Plan has a term of ten years.
The Board of Directors may at any time amend or terminate the Purchase Plan
except that no amendment may be made without the approval of the holders of a
majority of the Company's outstanding Common Stock, if such amendment would (i)
materially increase the benefits accruing to participants under such plan, (ii)
materially increase the number of shares which may be issued under such plan, or
(iii) materially modify the requirements as to eligibility for participation
under such plan. Any required approval of the stockholders of the Company must
be obtained within 12 months after the date the amendment is adopted by the
Board of Directors.
The Purchase Plan is intended to qualify as an "employee stock purchase
plan" as defined in Section 423 of the Internal Revenue Code. Under such a plan,
an employee is not required to pay any federal income tax when the employee
joins the plan, or when an offering of rights ends and the employee purchases
shares of
17
<PAGE> 20
Common Stock. The employee is, however, required to pay federal income tax on
the difference, if any, between the price at which the employee sells the shares
and the price the employee paid for them. In order for transactions pursuant to
the Purchase Plan to continue to be entitled to the tax treatment described
above, the addition of Common Stock to the Purchase Plan must be approved by the
stockholders of the Company within 12 months after the date of the approval of
the additional of shares to the Purchase Plan by the Board of Directors.
The following table shows certain information regarding the purchase of
Common Stock during the last fiscal year pursuant to the Purchase Plan and
benefits that will be received under the Purchase Plan in the next fiscal year,
if such plan is approved.
18
<PAGE> 21
NEW PLAN BENEFITS
INTERSOLV, INC. 1992 STOCK PURCHASE PLAN
<TABLE>
<CAPTION>
RECEIVED IN FISCAL YEAR MAY BE RECEIVED IN FISCAL YEAR
ENDED APRIL 30, 1997 ENDED APRIL 30, 1998
--------------------------------- ---------------------------------
DOLLAR VALUE DOLLAR VALUE
NAME AND POSITION (1) SHARES ACQUIRED (2) SHARES ACQUIRED
- ------------------------------ --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Gary G. Greenfield............ $3,132 2,257 $4,369 3,107
President and Chief
Executive Officer
Kevin J. Burns................ $3,749 2,702 $2,427 1,726
Chairman of the Board
Kenneth A. Sexton............. $3,089 2,226 $3,088 2,196
Senior Vice President,
Finance and Administration,
Chief Financial Officer and
Secretary
Panos Anastassiadis........... $3,252 2,344 $3,530 2,510
Senior Vice President,
Worldwide Distribution
Gary Wright................... $1,322 953 $2,649 1,884
Senior Vice President,
Worldwide Service
Executive Group............... $14,544 10,482 $16,063 11,423
Non-Executive Director Not Applicable Not Applicable Not Applicable Not Applicable
Group.......................
Non-Executive Officer Employee $267,274 192,594 $430,964 308,545
Group.......................
</TABLE>
- ------------------------------
(1) The dollar value for the Fiscal 1997 grants is based on a value of the
Company's Common Stock of $9.25 per share.
(2) The dollar value for the Fiscal 1998 grants is based on the assumption that
the value of the Company's Common Stock will be $9.375 per share.
Approval of the proposed amendment to the Option Plan requires the vote of
holders of a majority of the outstanding Common Stock present and voting at the
Annual Meeting.
The Board of Directors recommends that stockholders vote FOR the adoption
of the proposed addition of 560,000 shares of Common Stock to the Purchase Plan.
19
<PAGE> 22
PROPOSAL TO RATIFY SELECTION OF THE
COMPANY'S AUDITORS
The Board of Directors, upon the recommendation of its Audit Committee, has
determined that the selection of Coopers & Lybrand L.L.P. as the Company's
independent auditors for the fiscal year ending April 30, 1998, is in the best
interest of the Company and recommends that stockholders ratify the selection at
the Annual Meeting. If such selection is not so ratified, it will be
reconsidered by the Audit Committee and the Board. Coopers & Lybrand L.L.P.
acted as the Company's auditors for the fiscal year ended April 30, 1997.
A representative of Coopers & Lybrand L.L.P. is expected to be present at
the Annual Meeting and will have the opportunity to make a statement and is
expected to be available to respond to questions from stockholders.
The Board of Directors recommends that stockholders vote FOR the approval
of Coopers & Lybrand as the Company's independent auditors for the fiscal year
ending April 30, 1998.
OTHER MATTERS
The Board of Directors does not know of any other matters that may come
before the Annual Meeting; however, if any other matters are properly presented
to the Annual Meeting, it is the intention of the persons named in the
accompanying proxy to vote, or otherwise act, in accordance with their judgment
on such matters.
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 office
in Rockville, Maryland, not later than May 22, 1998 for inclusion in the proxy
statement for that meeting.
By Order of the Board of Directors
/s/ KENNETH A. SEXTON
KENNETH A. SEXTON,
Secretary
August 25, 1997
THE BOARD OF DIRECTORS HOPES THAT STOCKHOLDERS WILL ATTEND THE ANNUAL
MEETING. REGARDLESS OF WHETHER YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE,
DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. A PROMPT
RESPONSE WILL GREATLY FACILITATE ARRANGEMENTS FOR THE ANNUAL MEETING, AND YOUR
COOPERATION WILL BE APPRECIATED. STOCKHOLDERS WHO ATTEND THE ANNUAL MEETING MAY
VOTE THEIR STOCK PERSONALLY EVEN THOUGH THEY HAVE SENT IN THEIR PROXIES.
20
<PAGE> 23
DETACH HERE
PLEASE MARK
[X] VOTES AS IN
THIS EXAMPLE.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION
IS GIVEN FOR A PROPOSAL SET FORTH BELOW, THIS PROXY WILL BE
VOTED "FOR" PROPOSALS 1, 2, 3, 4 AND 5
<TABLE>
<S> <C>
1. Vote FOR all nominees listed below (except where FOR AGAINST ABSTAIN
indicated to the contrary below). 2. To approve the addition of 1,000,000 [ ] [ ] [ ]
shares of common stock subject to
NOMINEES: Michel Berty, Russell E. Planitzer, the Company's 1992 Stock Option
R. Craig Roos, C. Thomas Faulders, III Plan.
FOR WITHHELD
[ ] [ ] 3. To approve the adoption of amend- [ ] [ ] [ ]
ments to the Company's 1992 Stock
MARK HERE FOR Option Plan regarding the granting
ADDRESS CHANGE [ ] of options to non-employee directors.
[ ] AND NOTE BELOW
------------------------------------------ 4. To approve an increase in the common [ ] [ ] [ ]
(INSTRUCTION: To withhold authority to vote for stock subject to the Company's 1992
any individual nominee, print that nominee's Employee Stock Purchase Plan from
name on the above line.) 640,000 to 1,200,000 shares.
5. To ratify the selection of Coopers & [ ] [ ] [ ]
Lybrand LLP as the Company's indep-
endent auditor for the 1998 fiscal
year.
6. In connection with all other business as may properly come
before the meeting or any adjournments of the meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
Please mark, sign and date the proxy and return it promptly
using the enclosed reply envelope. Please sign your name
exactly as your name appears hereon. When shares are held by
joint tenants, both should sign. When signing as a corporate
officer, please give your full title and the full name of the
corporation.
Signature Date Signature Date
---------------------------------- ------------------ -------------------------------- --------------
</TABLE>
<PAGE> 24
DETACH HERE
INTERSOLV, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 24, 1997
The undersigned, a stockholder of Intersolv, Inc., a Delaware corporation
(the "Company"), hereby appoints as his or her proxies with power of
substitution and revocation Gary G. Greenfield and Kenneth A. Sexton or either
of them, to vote all Company stock registered in the name of the undersigned at
the Company's Annual Meeting of Stockholders to be held at the Company's
headquarters located at 9420 Key West Avenue, Rockville, Maryland 20850 on
Wednesday, September 24, 1997 at 10:30 a.m. and at any adjournments of said
meeting, on the matters set forth in the notice of said meeting and as stated
hereon. The proxies are further authorized to vote at their discretion upon
such other business as may properly come before the meeting or any adjournments
thereof.
-------------
SEE REVERSE
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
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