BRODERBUND SOFTWARE, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JANUARY 23, 1997
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Broderbund Software, Inc., a Delaware corporation (the "Company"), will be held
on Thursday, January 23, 1997, at 2:00 p.m., local time, at Embassy Suites
Hotel, 101 McInnis Parkway, San Rafael, California 94903, for the following
purposes:
1. To elect directors to serve for the ensuing year and until their
successors are duly elected and qualified.
2. To ratify the adoption of the Company's 1996 Employee Stock Purchase
Plan and the reservation of 250,000 shares of Common Stock thereunder.
3. To approve an increase by 1,500,000 shares in the number of shares
authorized under the Company's 1996 Employee and Consultant Stock
Option Plan.
4. To ratify the appointment of Ernst & Young LLP as independent auditors
for the Company for the 1997 fiscal year.
5. To transact such other business as may properly come before the
meeting or any and all postponements or adjournments thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on November 29, 1996
are entitled to notice of and to vote at the meeting.
All stockholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to sign and
return the enclosed proxy as promptly as possible in the postage-prepaid
envelope enclosed for that purpose. Any stockholder attending the meeting may
vote in person even if he or she has returned a proxy.
THE BOARD OF DIRECTORS
Novato, California
December 10, 1996
IMPORTANT: Whether or not you plan to attend the meeting, you are requested to
complete and promptly return the enclosed proxy in the envelope provided.
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BRODERBUND SOFTWARE, INC.
500 Redwood Boulevard
Novato, California 94947
MEETING TO BE HELD AT
Embassy Suites Hotel
101 McInnis Parkway
San Rafael, California 94903
PROXY STATEMENT
GENERAL
Date and Time
This Proxy Statement is furnished to the stockholders of Broderbund
Software, Inc., a Delaware corporation (the "Company"), in connection with the
solicitation of Proxies by the Board of Directors of the Company for use at the
Annual Meeting of Stockholders to be held at 2:00 p.m., local time, on Thursday,
January 23, 1997, and any and all postponements or adjournments thereof. It is
anticipated that this Proxy Statement and the enclosed Proxy card will be sent
to such stockholders on or about December 10, 1996.
Purposes of the Annual Meeting
The purposes of the Annual Meeting are to (1) elect a Board of Directors of
the Company, (2) ratify the adoption of the Company's 1996 Employee Stock
Purchase Plan (the "Purchase Plan") and the reservation of 250,000 shares of
Common Stock for issuance thereunder, (3) approve an increase by 1,500,000
shares in the number of shares available for grant under the Company's 1996
Employee and Consultant Stock Option Plan (the "Option Plan"), (4) ratify the
appointment of Ernst & Young LLP as the Company's independent auditors for the
current fiscal year, and (5) transact such other business as may properly come
before the meeting or any and all postponements or adjournments thereof.
Revocability of Proxies
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Secretary of the
Company a written notice of revocation or a duly executed proxy bearing a later
date or by attending the Annual Meeting and voting in person.
Record Date and Principal Share Ownership
Stockholders of record as of the close of business on November 29, 1996
(the "Record Date") are entitled to receive notice of and to vote at the Annual
Meeting. At the Record Date, 20,698,509 shares of the Company's Common Stock
were issued and outstanding. For information regarding security ownership by
management and by 5% stockholders, see "Information Concerning the Company--
Share Ownership by Principal Stockholders and Management."
Voting and Solicitation
Each stockholder is entitled to one vote for each share of Common Stock on
all matters presented at the Annual Meeting.
The cost of soliciting proxies will be borne by the Company. The Company
may also reimburse brokerage firms and other persons representing beneficial
owners of shares for their expenses in forwarding solicitation materials to such
beneficial owners. In addition, the Company's directors, officers
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and regular employees, without receiving any additional compensation, may
solicit proxies personally or by telephone or facsimile copy.
Quorum; Abstentions; Broker Non-Votes
The required quorum for the transaction of business at the Annual Meeting
is a majority of the shares of Common Stock issued and outstanding on the Record
Date. Shares that are voted "FOR" or "AGAINST" a matter are treated as being
present at the meeting for purposes of establishing a quorum and are also
treated as votes eligible to be cast by the Common Stock present in person or
represented by proxy at the meeting and "entitled to vote on the subject matter"
(the "Votes Cast") with respect to such matter.
While there is no definitive statutory or case law authority in Delaware as
to the proper treatment of abstentions in the election of directors, the Company
believes that abstentions should be counted for purposes of determining both the
presence or absence of a quorum for the transaction of business and the total
number of Votes Cast with respect to a particular matter. Accordingly,
abstentions will have the same effect as a vote against proposals set forth in
this Proxy Statement. In the absence of controlling precedent to the contrary,
the Company intends to treat abstentions in this manner. In a 1988 Delaware
case, Berlin v. Emerald Partners, the Delaware Supreme Court held that, while
broker non-votes may be counted for purposes of determining the presence or
absence of a quorum for the transaction of business, broker non-votes should not
be counted for the purposes of determining the number of Votes Cast with respect
to the particular proposal on which the broker has expressly not voted. Broker
non-votes with respect to proposals set forth in this Proxy Statement will
therefore not be considered "Votes Cast" and, accordingly, will not affect the
determination as to whether the requisite majority of Votes Cast has been
obtained with respect to a particular matter.
Deadline for Receipt of Stockholder Proposals
Proposals of stockholders of the Company which are intended to be presented
by such stockholders at the Company's 1998 Annual Meeting of Stockholders must
be received by the Company no later than August 12, 1997 in order that they may
be considered for inclusion in the proxy statement and form of proxy relating to
that meeting.
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PROPOSAL ONE:
ELECTION OF DIRECTORS OF THE COMPANY
Directors and Nominees
The Bylaws of the Company provide for a Board of nine directors. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
for management's nine nominees named below, all of whom are presently directors
of the Company. In the event that any nominee of the Company is unable or
declines to serve as a director at the time of the Annual Meeting, the proxies
will be voted for any nominee who shall be designated by the present Board of
Directors to fill the vacancy. It is not expected that any nominee will be
unable or will decline to serve as a director. The term of office of each person
elected as a director will continue until the next Annual Meeting of
Stockholders or until his successor has been elected and qualified.
Name Age Principal Occupation
---- --- --------------------
Douglas G. Carlston (3)......... 49 Chairman of the Board of Directors of
the Company
Edmund R. Auer (1).............. 64 Former President and Chief Operating
Officer of the Company
Gary L. Buckmiller (2).......... 55 Former Executive Vice President of
Jostens Learning Corporation
Scott D. Cook (1)............... 44 Chairman of the Board of Intuit Inc.
Joseph P. Durrett............... 51 Chief Executive Officer of the Company
William P. Egan (2)(3).......... 51 President of Burr, Egan, Deleage & Co.,
Inc.
David E. Liddle, Ph.D.(2)....... 51 President and Chief Executive Officer of
Interval Research Corporation
William M. McDonagh (3)......... 40 President and Chief Operating Officer of
the Company
Lawrence H. Wilkinson (1)(2).... 46 President and Chief Executive Officer of
Global Business Network
(1) Member of the Audit Committee
(2) Member of the Compensation Committee
(3) Member of the Nominating Committee
Mr. Carlston is a founder of the Company and has served as Chairman of the
Board since November 1989. He also served as Chief Executive Officer from
November 1989 until October 1996 and as President from September 1981 until
November 1989.
Mr. Auer joined the Company in April 1987 as Senior Vice President, Chief
Operating Officer and director, and was appointed President in November 1989,
the position he held until his retirement in April 1994.
Mr. Buckmiller has been a director of the Company since October 1988. He
served as Executive Vice President of Jostens Learning Corporation from March
1992 to November 1993 and served in various management positions with Jostens,
Inc. from 1971 to March 1992, most recently as Executive Vice President-
Education and Human Resources.
Mr. Cook has been a director of the Company since July 1995 and previously
served as a director of the Company from April 1993 to December 1994. He has
been Chairman of the Board of Intuit Inc. since 1983 and served as President and
Chief Executive Officer of Intuit Inc. from 1983 to April 1994. Prior to
founding Intuit Inc., Mr. Cook managed consulting assignments in banking,
services and technology for Bain & Company, a corporate strategy consulting
firm. Mr. Cook is also a director of Intuit Inc.
Mr. Durrett has been Chief Executive Officer and a director of the Company
since October 1996. From 1992 to September 1996 he served as President of ADVO,
Inc., a direct marketing company. Prior to that he held senior management
positions at Kraft General Foods and brand management positions at Proctor and
Gamble.
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Mr. Egan has been a director of the Company since 1982. He has been
President of Burr, Egan, Deleage & Co., Inc., a venture capital firm, since
1979. Mr. Egan also serves on the Board of Directors of Cephalon, Inc., a
biotechnology company.
Dr. Liddle has been a director of the Company since April 1993. He has been
President and Chief Executive Officer of Interval Research Corporation, an
information systems, communications and computer science research and
development firm, since March 1992. From November 1991 to March 1992 he served
as Vice President, New Systems Business Development, Personal Systems, at IBM
Corporation. Dr. Liddle also serves on the Board of Directors of Sybase, Inc.
and Ticketmaster Group, Inc.
Mr. McDonagh has been a director of the Company since January 1995. He
joined the Company in 1982 as Controller. In April 1987, he was promoted to Vice
President of Finance and in February 1992, he was appointed Senior Vice
President and Chief Financial Officer. Since April 1994, Mr. McDonagh has served
as President and Chief Operating Officer.
Mr. Wilkinson has been a director of the Company since July 1991. He is the
President and Chief Executive Officer of Global Business Network, a strategic
planning and consulting services company, which he joined in November 1991.
Vote Required
The nine candidates receiving the highest number of affirmative votes of
the shares present or represented and entitled to be voted for them shall be
elected to the Company's Board of Directors, whether or not such affirmative
votes constitute a majority of the shares voted. Votes withheld from any
director are counted for purposes of determining the presence or absence of a
quorum for the transaction of business, but have no other legal effect under
Delaware law.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
NOMINEES LISTED ABOVE.
Board Meetings and Committees
The Board of Directors held a total of five meetings during the fiscal year
ended August 31, 1996.
The Audit Committee, which currently consists of Edmund R. Auer, Scott D.
Cook and Lawrence H. Wilkinson, met twice during the 1996 fiscal year. The Audit
Committee reviews financial statements and the internal financial reporting
system and controls of the Company with the Company's management and independent
auditors, recommends the engagement of the Company's independent auditors, and
reviews other matters relating to the relationship of the Company with its
auditors.
The Compensation Committee, which currently consists of Gary L. Buckmiller,
William P. Egan, David E. Liddle and Lawrence H. Wilkinson, met twice during the
1996 fiscal year. The Compensation Committee makes recommendations to the Board
of Directors to establish the general compensation policy of the Company for all
executive officers of the Company and the administration of the Company's equity
incentive plans and the Bonus Plan for executive officers.
The Nominating Committee, which currently consists of Douglas G. Carlston,
William P. Egan and William M. McDonagh, met once during the 1996 fiscal year.
The Nominating Committee was established to make recommendations as to the
composition of the Board of Directors.
Each present director attended at least 75% of the aggregate of (i) the
total number of meetings of the Board of Directors held during fiscal 1996 and
(ii) the total number of meetings held by all committees of the Board of
Directors during fiscal 1996 on which such person served.
Compensation of Directors
Each non-employee director of the Company is paid $1,000 for each Board
meeting attended and $500 for each committee meeting attended. Under the terms
of the 1996 Employee and Consultant Stock
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Option Plan, each non-employee director elected to the Board after October 9,
1991 automatically receives a nonqualified stock option to purchase 40,000
shares of the Company's Common Stock. In addition, with respect to each
non-employee director who was originally appointed to the Board prior to October
9, 1991 as a representative of a stockholder of the Company with a contractual
right to elect a member to the Board (an "Electing Stockholder"), such
non-employee director shall automatically receive a nonqualified stock option to
purchase 40,000 shares of Common Stock at such time as (a) the Electing
Stockholder disposes of substantially all of its shares of the Company's capital
stock and (b) the Board and such non-employee director determine that the
non-employee director shall continue to serve on the Board. Each option
automatically granted to a non-employee director vests annually over five years.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Company's Board of Directors is composed
of four non-employee directors, Gary L. Buckmiller, William P. Egan, David E.
Liddle and Lawrence H. Wilkinson. No interlocking relationship exists between
the Company's Board of Directors or Compensation Committee and the board of
directors or compensation committee of any other company, nor has any such
interlocking relationship existed in the past.
PROPOSAL TWO:
RATIFICATION OF 1996 EMPLOYEE STOCK PURCHASE PLAN
On January 25, 1996, the Board of Directors of the Company adopted the 1996
Employee Stock Purchase Plan, subject to approval by the stockholders. A total
of 250,000 shares of Common Stock were reserved for issuance under the Purchase
Plan.
At the Annual Meeting, the stockholders are being requested to consider and
ratify the adoption of the Purchase Plan. Such ratification will enable the
Company to continue its policy of encouraging widespread employee stock
ownership as a means to motivate high levels of performance.
Vote Required; Recommendation of Board of Directors
The ratification of the adoption of the 1996 Employee Stock Purchase Plan
and the reservation of 250,000 shares of Common Stock thereunder requires the
affirmative vote of a majority of the shares represented, in person or by proxy,
and voting at the Annual Meeting (which shares voting affirmatively also
constitute at least a majority of the required quorum). An abstention will have
the same effect as a vote against the proposal, and, pursuant to Delaware law, a
broker non-vote will not be treated as voting in person or by proxy on the
proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
Summary of the Purchase Plan
The essential features of the Purchase Plan are outlined below.
Purpose. The general purpose of the Purchase Plan is to provide employees
of the Company and its designated subsidiaries with an opportunity to purchase
Common Stock of the Company through accumulated payroll deductions.
Terms and Conditions. The Purchase Plan is intended to qualify under
Section 423 of the Internal Revenue Code of 1986, as amended (the "Code"), and
was implemented, subject to stockholder approval, with a six month offering
period which commenced on April 15, 1996. Subsequent offering periods will each
have a six month duration (an "Offering Period") commencing on or around October
15 and April 15 of each year. The Purchase Plan will be administered by the
Board of Directors or a committee of
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members of the Board appointed by the Board. Any person who is customarily
employed at least 20 hours per week and more than five months per calendar year
by the Company and/or its designated subsidiaries during the applicable Offering
Period is eligible to participate in the Purchase Plan (an "Employee");
provided, however, that no Employee shall be granted an option under the
Purchase Plan if (i) such Employee, immediately after the grant, would own
capital stock of the Company and/or hold outstanding options to purchase such
stock possessing five percent (5%) or more of the total combined voting power or
value of all classes of the capital stock of the Company or of any subsidiary,
or (ii) such Employee would receive more than $25,000 worth of stock (computed
as of the date of grant) pursuant to the Purchase Plan in any calendar year. The
Purchase Plan permits Employees to purchase Common Stock through payroll
deductions, which deductions may not exceed 10% of an Employee's compensation,
at a price equal to 85% of the mean between the highest and lowest selling
prices for the Company's Common Stock reported on the National Association of
Securities Dealers Automated Quotation System ("Fair Market Value") on the first
day of an Offering Period (the "Enrollment Date") or the last day of such
Offering Period (the "Exercise Date"), whichever is lower; provided, however, an
Employee's payroll deductions may be decreased to zero percent (0%) at such time
during any Offering Period which is scheduled to end during the current calendar
year that the aggregate of all payroll deductions which were previously used to
purchase stock under the Purchase Plan (or another employee stock purchase plan
of the Company) in a prior Offering Period which ended during that calendar year
plus all payroll deductions accumulated with respect to the current Offering
Period or periods equal $21,250. Employees may end their participation in an
offering at any time prior to the end of an Offering Period. Participation ends
automatically on termination of employment with the Company or its designated
subsidiaries. An Employee may not pledge, assign or transfer his or her rights
under the Purchase Plan and any such attempt may be treated by the Company as an
election of such Employee to withdraw from the Purchase Plan. At the Record
Date, the Company employed approximately 620 people, approximately 605 of whom
were eligible to participate in the Purchase Plan.
Adjustments Upon Changes in Capitalization; Corporate Transactions. In the
event of a stock dividend, stock split or other change in capitalization
affecting the Company's Common Stock, appropriate adjustments will be made by
the Company in the number of shares subject to purchase and in the price per
share. In the event of a liquidation or dissolution of the Company, an
employee's participation in the Purchase Plan will be terminated immediately
prior to consummation of such event unless otherwise provided by the Board. In
the event of a sale of all or substantially all of the assets of the Company or
the merger of the Company with or into another corporation, the Offering Period
then in progress shall be shortened by setting a new termination date
immediately prior to the consummation of such transaction.
Amendment and Termination of the Purchase Plan. The Board of Directors may
at any time amend or terminate the Purchase Plan. Except as provided in the
preceding paragraph, (i) no such termination can affect options previously
granted, provided that an Offering Period may be terminated by the Board of
Directors on any Exercise Date if the Board determines that the termination of
the Purchase Plan is in the best interests of the Company and its stockholders,
and (ii) no amendment to the Purchase Plan may make any change in any option
theretofore granted which adversely affects the right of any participant.
Outstanding Stock Issued Under Purchase Plan; Purchase Plan Contingent Upon
Stockholder Approval. As of November 29, 1996, 18,389 shares of the Company's
Common Stock have been issued under the Purchase Plan pursuant to the Offering
Period ending October 14, 1996 (the "Shares").
If stockholder ratification of the Purchase Plan is not received at the
Annual Meeting, the Purchase Plan shall be deemed to be a nonqualified stock
option plan, the Shares shall be deemed to be shares issued upon exercise of
nonqualified stock options, and each Employee who acquired Shares shall be
required to reimburse the Company for withholding taxes on the difference
between the purchase price of the Shares purchased and the fair market value of
such Shares on the date of purchase.
Certain Federal Income Tax Considerations. The Purchase Plan, and the right
of participants to make purchases thereunder, is intended to qualify under the
provisions of Sections 421 and 423 of the Code. Under these provisions, no
income will be taxable to a participant until the shares purchased under the
Purchase Plan are sold or otherwise disposed of. Upon sale or other disposition
of the shares, the
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participant will generally be subject to tax and the amount of the tax will
depend upon the holding period. If the shares are sold or otherwise disposed of
more than two years from the first day of the offering period, the participant
will recognize ordinary income measured as the lesser of (a) the excess of the
fair market value of the shares at the time of such sale or disposition over the
purchase price, or (b) an amount equal to 15% of the fair market value of the
shares as of the first day of the offering period. Any additional gain will be
treated as long-term capital gain. If the shares are sold or otherwise disposed
of before the expiration of this holding period, the participant will recognize
ordinary income generally measured as the excess of the fair market value of the
shares on the date the shares are purchased over the purchase price. Any
additional gain or loss on such sale or disposition will be long-term or
short-term capital gain or loss, depending on the holding period. The Company is
not entitled to a deduction for amounts taxed as ordinary income or capital gain
to a participant except to the extent that it is entitled to a deduction for
ordinary income recognized by participants upon a sale or disposition of shares
prior to the expiration of the holding period described above.
The foregoing is only a summary of the effect of federal income taxation
upon the participant and the Company with respect to the shares purchased under
the Purchase Plan. Reference should be made to the applicable provisions of the
Code. In addition, the summary does not discuss the tax consequences of a
participant's death or the income tax laws of any state or foreign country in
which the participant may reside.
PROPOSAL THREE:
AMENDMENT OF 1996 EMPLOYEE AND CONSULTANT
STOCK OPTION PLAN TO INCREASE AUTHORIZED SHARES
The 1996 Employee and Consultant Stock Option Plan, as amended, was
originally adopted by the Company's Board of Directors and approved by the
Company's stockholders on January 25, 1996. On October 8, 1996, the Board
approved an amendment to the Option Plan to increase the number of shares of
Common Stock authorized for issuance thereunder by 1,500,000 shares. At the
Annual Meeting, the stockholders are being asked to approve the 1,500,000 share
increase in the number of shares of Common Stock authorized for issuance under
the Option Plan.
As of November 29, 1996, options to purchase an aggregate of 4,380,279
shares of Common Stock have been exercised, options to purchase 3,437,481 shares
at a weighted average exercise price of $34.92 share were outstanding and
331,295 shares remained available for future grants under the Option Plan.
Vote Required; Recommendation of Board of Directors
The approval of the 1,500,000 share increase in the number of shares
available for grant under the Option Plan requires the affirmative vote of a
majority of the shares represented, in person or by proxy, and voting at the
Annual Meeting (which shares voting affirmatively also constitute at least a
majority of the required quorum). An abstention will have the same effect as a
vote against the proposal, and, pursuant to Delaware law, a broker non-vote will
not be treated as voting in person or by proxy on the proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
Summary of the Option Plan
The essential features of the Option Plan are outlined below.
Purpose. The purposes of the Option Plan are to furnish incentive to
individuals chosen to receive options, encourage selected employees and
consultants to accept or continue employment with, or consulting to, the Company
or any parent or subsidiary corporation of the Company (an "Affiliate"), and
increase the interest of selected employees and consultants in the Company's
welfare through their participation in the growth in value of the Company's
Common Stock.
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Administration. The Option Plan shall be administered by the Board or,
subject to certain conditions, by the President or the Chief Executive Officer
of the Company; provided, however, that with respect to grants of options to
employees who are also officers or directors of the Company, the Option Plan
shall be administered by (i) the Board if the Board may administer the Option
Plan in compliance with the rules governing a plan intended to qualify
thereunder as a discretionary plan under Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended ("Exchange Act"), or any successor
rule thereto ("Rule 16b-3"), or (ii) a committee designated by the Board to
administer the Option Plan, which committee shall be constituted to comply with
the rules governing a plan intended to qualify under Rule 16b-3 as a
discretionary plan under Rule 16b-3. The Option Plan may be administered by
different bodies with respect to directors, officers who are not directors, and
employees who are neither officers nor directors.
Except with respect to the automatic grant of options to members of the
Board who are neither employees nor consultants of the Company ("Outside
Directors"), the administrators of the Option Plan (the "Administrator") have
the authority to select the persons to receive options, to fix the number of
shares that each optionee may purchase, to set the terms and conditions of each
option, and to determine all other matters relating to the Option Plan.
Eligibility. The Option Plan provides that Nonqualified Stock Options may
be granted to employees, including officers, Outside Directors and consultants
of the Company or any Affiliate. Incentive Stock Options may be granted only to
employees, including officers, of the Company or any Affiliate.
Stock Options. The Option Plan permits the granting of stock options that
either qualify as incentive stock options under Section 422 of the Internal
Revenue Code of 1986, as amended ("Incentive Stock Options" or "ISOs"), or do
not so qualify ("Nonqualified Stock Options" or "NQOs").
Except with respect to the automatic grant of options to Outside Directors,
the term of each option is fixed by the Administrator but may not exceed ten
years from the date of grant or five years from the date of grant in the case of
options granted to the owner of Common Stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company or any
Affiliate.
All options granted under the Option Plan are evidenced by a stock option
agreement between the Company and the optionee to whom such option is granted.
Automatic Grants to Outside Directors. The Option Plan provides for the
automatic grant of a 40,000 share NQO to each Outside Director on the date first
elected to the Board, if such election occurs after October 9, 1991. In
addition, the Option Plan provides that in the event an Outside Director was
originally appointed to the Board as a representative of a stockholder of the
Company with a contractual right to elect a member to the Company's Board of
Directors (an "Electing Stockholder"), and such Electing Stockholder disposes of
substantially all of its shares of the Company's capital stock after October 9,
1991, then upon the determination by the Board and such Outside Director that
the Outside Director shall continue to serve on the Board, such director shall
receive an automatic grant of a 40,000 share NQO. The term of each automatic NQO
grant shall be ten years, shall be exercisable only while the Outside Director
remains a director of the Company (subject to the terms of the Option Plan),
shall have a per share exercise price equal to the fair market value of the
Company's Common Stock on the date of grant, and shall be exercisable in
installments cumulatively with respect to 20% of the shares subject to the NQO
on each one year anniversary of the date of grant.
Option Price. The option exercise price for each share covered by an ISO or
an NQO may not be less than the fair market value of a share of Common Stock on
the date of grant of such option. In the case of ISOs or NQOs granted to the
owner of Common Stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company or any Affiliate, the option
exercise price for each share covered by such option may not be less than 110%
of the fair market value of a share of Common Stock on the date of grant of such
option.
Fair Market Value. The fair market value of a share of Common Stock, as
determined by the Administrator, is the mean between the highest and lowest
selling prices for the stock on the date of grant
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(or if there are no sales for the date of grant , then for the last preceding
business day on which there were sales) as reported in the Wall Street Journal
or similar publication.
Consideration. The consideration to be paid for shares issued upon exercise
of options granted under the Option Plan, including the method of payment, is
determined by the Administrator (and, in the case of ISOs, determined at the
time of grant) and may consist entirely of (1) cash, (2) check, (3) promissory
note, (4) shares of Common Stock which, in the case of shares acquired upon
exercise of an option, have been owned by the optionee for at least six months
and have a fair market value on the date of surrender equal to the aggregate
exercise price of the shares being purchased, (5) delivery of a properly
executed exercise notice together with such other documentation as the
Administrator and the broker, if applicable, shall require to effect an exercise
of the option and delivery to the Company of the sale or loan proceeds required
to pay the exercise price, (6) any combination of the foregoing methods, or (7)
such other consideration and method of payment permitted by applicable laws.
Termination of Relationship. Under the Option Plan, in the event of an
optionee's termination of employment or consulting relationship or service as an
Outside Director for any reason other than death or disability, an option may
thereafter be exercised, to the extent it was exercisable at the date of such
termination, for three months. If an optionee's employment or consulting
relationship or service as an Outside Director is terminated as a result of the
disability or death of the optionee, the optionee, or the optionee's personal
representative or any other person who acquires the option rights from the
optionee by will or the applicable laws of descent and distribution, may, within
twelve months after the termination of employment, consultancy or service as an
Outside Director, exercise such option rights to the extent they were
exercisable on the date of the termination.
Nontransferability of Options. Options granted pursuant to the Option Plan
are nontransferable by the optionee, other than by will or by the laws of
descent and distribution and may be exercised, during the lifetime of the
optionee, only by the optionee.
Adjustment Upon Changes in Capitalization. In the event any change, such as
a stock split or dividend, is made in the Company's capitalization which results
in an increase or decrease in the number of outstanding shares of Common Stock,
an appropriate adjustment shall be made in the number of shares which have been
reserved for issuance under the Option Plan and each option outstanding
thereunder and the exercise price of each outstanding option. The Option Plan
provides that in the event of a merger, consolidation, acquisition, separation,
reorganization, liquidation or like transaction involving the Company, each
option may be assumed or an equivalent option substituted by a successor
corporation. If the successor corporation chooses not to assume the options
under the Option Plan, or if the Board determines that the options should not
continue to be outstanding, then the option rights granted shall terminate (a)
upon any dissolution or liquidation of the Company or similar occurrence, or (b)
upon any merger, consolidation, acquisition, separation, or similar occurrence
where the Company will not be a surviving corporation. Each optionee shall be
mailed a notice at least six days prior to such occurrence and shall have at
least four days after the mailing of such notice to exercise any option rights.
Amendment and Termination. The Board may amend, alter, suspend or
discontinue the Option Plan at any time; provided, however, that no amendment,
alteration, suspension or discontinuation shall be made that would impair the
rights of any optionee under any option theretofore granted, without the
optionee's consent, or that, without the approval of the stockholders, would
increase the number of shares reserved for issuance under the Option Plan,
extend the duration of the Option Plan, or change the class of persons eligible
to receive options granted under the Option Plan.
Certain Federal Income Tax Considerations
Options granted under the Option Plan may be either incentive stock
options, as defined in Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), or nonstatutory stock options.
An optionee who is granted an incentive stock option will not recognize
income either at the time the option is granted or upon its exercise, although
the exercise may subject the optionee to the alternative
9
<PAGE>
minimum tax. Upon a sale or exchange of the shares more than two years after the
grant of the option and one year after its exercise, any gain or loss will be
treated as long-term capital gain or loss. If these holding periods are not
satisfied, the optionee will recognize ordinary income at the time of the sale
or exchange equal to the difference between the exercise price and the lower of
(i) the fair market value of the shares on the date of exercise or (ii) the sale
price of the shares. A different rule for measuring ordinary income upon such a
premature disposition may apply if the optionee is also an officer, director, or
10% stockholder of the Company.
Any gain or loss recognized on such a premature disposition of the shares
in excess of the amount treated as ordinary income will be characterized as
long-term or short-term capital gain or loss, depending on the holding period.
Generally, the Company will be entitled to a deduction in the same amount as the
ordinary income recognized by the optionee at the time of such disposition.
Options that do not qualify as incentive stock options are referred to as
nonstatutory options. An optionee will not recognize income at the time a
nonstatutory option is granted. However, upon its exercise, the optionee will
recognize ordinary income generally measured as the excess of the then fair
market value of the shares over the exercise price. Any ordinary income
recognized in connection with the exercise of a nonstatutory option by an
optionee who is also an employee of the Company will be subject to tax
withholding by the Company. Generally, the Company will be entitled to a tax
deduction in the same amount as the ordinary income recognized by the optionee
upon exercise of a nonstatutory stock option.
Upon resale of the shares by the optionee, any difference between the sale
price and the optionee's purchase price, to the extent not recognized as
ordinary income as described above, will be treated as long-term or short-term
capital gain or loss, depending on the holding period.
The foregoing is only a summary of the effect of federal income taxation
upon the optionee and the Company with respect to the grant and exercise of
options under the Option Plan. It does not purport to be complete, and it does
not discuss the tax consequences of the optionee's death or the income tax laws
of any municipality, state or foreign country in which an optionee may reside.
PROPOSAL FOUR:
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young LLP, independent
auditors, to audit the financial statements of the Company for the 1997 fiscal
year. Such nomination is being presented to the stockholders for ratification at
the Annual Meeting. The affirmative vote of the holders of a majority of the
shares present in person or represented by proxy and entitled to vote at the
Annual Meeting is required to ratify the Board's selection. If the stockholders
reject the nomination, the Board will reconsider its selection.
Ernst & Young LLP (or its predecessor firm) has audited the Company's
financial statements since 1981. The Company has been advised that a
representative of Ernst & Young LLP will be present at the Annual Meeting, will
have the opportunity to make a statement, and is expected to be available to
respond to appropriate questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS VOTE "FOR" RATIFICATION OF THE APPOINTMENT OF ERNST &
YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
10
<PAGE>
INFORMATION CONCERNING THE COMPANY
Share Ownership by Principal Stockholders and Management
The following table sets forth the beneficial ownership of Common Stock of
the Company as of November 29, 1996, by (i) each person known by the Company to
be the beneficial owner of more than 5% of the Company's Common Stock, (ii) the
Company's Chief Executive Officer and the four most highly compensated executive
officers other than the Chief Executive Officer (together, the "Named
Officers"), (iii) each director and (iv) all directors and executive officers as
a group.
Shares Approximate
Beneficially Percent
Name and Address Owned Owned
---------------- ----- -----
Waddell & Reed, Inc.(1) ............ 2,047,800 9.9%
6300 Lamar Avenue
Shawnee Mission, KS 66201-9217
Douglas G. Carlston(2) ............. 2,047,541 9.9%
c/o Broderbund Software, Inc.
500 Redwood Boulevard
Novato, CA 94947
Paul G. Allen(3) ................... 1,160,000 5.6%
c/o Vulcan Northwest
110 110th Avenue, N.E
Bellevue, WA
William M. McDonagh(2) ............. 111,067 *
Edmund R. Auer(2) .................. 77,568 *
Harry R. Wilker(2) ................. 52,516 *
Lawrence H. Wilkinson(2) ........... 40,000 *
Thomas L. Marcus(2) ................ 38,568 *
William P. Egan(2) ................. 28,520 *
David E. Liddle, Ph.D.(2) .......... 24,000 *
Jan L. Gullett(2) .................. 15,937 *
Gary L. Buckmiller(2) .............. 8,100 *
Scott D. Cook(2) ................... 8,000 *
Joseph P. Durrett .................. 4,000 *
All directors and executive officers
as a group (14 persons) (2) ....... 2,483,565 11.8%
- ----------
* Less than one percent (1%).
(1) Based on information received from Waddell & Reed, Inc. and Schedule 13F
filed by Waddell & Reed, as of September 30, 1996, Waddell & Reed
Investment Management Company had sole voting power as to 1,669,200 shares
and Waddell & Reed Asset Management Company had shared voting power as to
378,600 shares.
(2) Includes 81,500, 43,800, 40,000, 30,000, 24,000, 24,000, 15,000, 8,000,
8,000, 7,500, 6,668 and 315,468 shares which Messrs. McDonagh, Wilker,
Wilkinson, Marcus, Egan, Liddle, Gullett, Buckmiller, Cook, Carlston, Auer
and all present directors and executive officers as a group, respectively,
have the right to acquire within 60 days of November 29, 1996 upon the
exercise of stock options. The foregoing numbers do not reflect potential
changes to option exercisability resulting from the Company's option
repricing program described below.
(3) As of November 27, 1996, based on information received from Mr. Allen's
investment company.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's officers and
directors and persons who own more than 10% of a registered class of the
Company's equity securities, to file certain reports regarding ownership of, and
transactions in, the Company's securities with the Securities and Exchange
Commission (the "SEC"). Such officers, directors and 10% stockholders are also
required by SEC rules to furnish the Company with copies of all Section 16(a)
forms that they file.
11
<PAGE>
Based solely on its review of such forms received by it, or written
representations from certain reporting persons, the Company believes that during
fiscal 1996 all Section 16(a) filing requirements applicable to its officers,
directors and 10% stockholders were complied with, except that Forms 4 required
to be filed on behalf of Jan Gullett for transactions occurring in October 1995
and January 1996 were filed late by the Company.
COMPENSATION OF EXECUTIVE OFFICERS
Executive Compensation
The following table sets forth all compensation received for services
rendered to the Company in all capacities during the fiscal years ended August
31, 1996, 1995 and 1994 by the Named Officers.
<TABLE>
<CAPTION>
Long Term
Compensation
------------
Annual Compensation Awards
------------------------------------------- ------
Securities
Other Annual Underlying All Other
Name and Salary Bonus(1) Compensation Options Compensation
Principal Position Year ($) ($) ($) (#) ($)
------------------ ---- ------ ------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Douglas G. Carlston ...... 1996 351,285 55,619 0(3) 37,500 15,470(4)
Chairman of the Board and 1995 308,472 482,409 0(3) 0 14,430
Chief Executive Officer(2) 1994 287,960 159,336 0(3) 0 17,290
William M. McDonagh ...... 1996 304,639 48,233 0(3) 37,500 58,206(5)
President and Chief ...... 1995 248,981 389,373 0(3) 0 14,308
Operating Officer ........ 1994 200,031 110,683 0(3) 50,000 17,168
Harry R. Wilker .......... 1996 226,260 28,659 0(3) 25,000 64,917(6)
Senior Vice President, ... 1995 194,019 260,074 0(3) 5,000 14,430
Broderbund Publishing .... 1994 161,415 76,556 0(3) 28,000 14,924
Jan L. Gullett ........... 1996 226,096 28,638 211,669(7) 95,000 2,477(8)
Senior Vice President, ... 1995 94,431(9) 126,580 30,000(10) 50,000 47(11)
Marketing and Sales ...... 1994 -- -- -- -- --
Thomas L. Marcus ......... 1996 188,167 20,855 0(3) 20,000 51,000(12)
Vice President, Business . 1995 160,711 215,427 0(3) 10,000 14,310
Development and General .. 1994 132,752 52,468 0(3) 15,000 14,311
Counsel
</TABLE>
- ----------
(1) Includes profit sharing bonus accrued in the applicable fiscal year and
paid after the end of the fiscal year.
(2) Mr. Carlston resigned as Chief Executive Officer effective October 1, 1996.
(3) Excludes all perquisites and other amounts which, for any executive
officer, in the aggregate did not exceed the lesser of $50,000 or 10% of
the total annual salary and bonus for such executive officer.
(4) Includes $2,375 in Company matching 401(k) Plan contributions, $174 in
group term life insurance imputed income, and $12,921 in profit sharing
contributions.
(5) Includes $3,132 in Company matching 401(k) Plan contributions, $102 in
group term life insurance imputed income, $12,921 in profit sharing
contributions and $42,051 in payment of surrendered accrued vacation time.
(6) Includes $2,375 in Company matching 401(k) Plan contributions, $288 in
group term life insurance imputed income, $12,921 in profit sharing
contributions and $49,333 in payment of surrendered accrued vacation time.
(7) Represents reimbursement of relocation expenses.
(8) Includes $2,375 in Company matching 401(k) Plan contributions and $102 in
group term life insurance imputed income.
(9) Amount shown reflects pro rata salary subsequent to February 1995 hire
date.
(10) Represents hiring bonus.
(11) Represents group term life insurance imputed income.
(12) Includes $3,133 in Company matching 401(k) Plan contributions, $102 in
group term life insurance imputed income, $12,921 in profit sharing
contributions and $34,844 in payment of surrendered accrued vacation time.
12
<PAGE>
Option Grants in Last Fiscal Year
The following table sets forth, as to the Named Officers, certain
information relating to stock options granted during fiscal 1996.
<TABLE>
<CAPTION>
Individual Grants Potential Realizable
--------------------------------------------------- Value at Assumed
Number of % of Total Annual Rates of
Securities Options Stock Price
Underlying Granted to Exercise Appreciation for
Options Employees or for Option Term(4)
Granted in Fiscal Base Price Expiration ----------------------
Name (#) Year(1) ($/Sh)(2)(3) Date 5%($) 10%($)
---- ----------- ---------- ------------ ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Douglas G. Carlston ...... 37,500 3.6 76.725(5) 10/31/00(5) 461,086 1,335,303
William M. McDonagh ...... 37,500 3.6 69.75 10/31/05 1,644,953 4,168,633
Harry R. Wilker .......... 25,000 2.4 69.75 10/31/05 1,096,635 2,779,088
Jan L. Gullett ........... 25,000 2.4 69.75 10/31/05 1,096,635 2,779,088
Jan L. Gullett ........... 25,000 2.4 48.00 01/31/06 754,674 1,912,491
Jan L. Gullett ........... 45,000 4.3 44.00 04/30/06 1,245,211 3,155,610
Thomas L. Marcus ......... 20,000 1.9 69.75 10/31/05 877,308 2,223,271
</TABLE>
- ----------
(1) The total number of shares subject to options granted to employees in
fiscal 1996 was 1,042,600.
(2) With the exception of the option granted to Douglas G. Carlston, the
exercise price per share is equal to the mean between the highest and
lowest selling prices of the Company's Common Stock on the date of grant.
(3) In November 1996, the Compensation Committee and the Board of Directors,
respectively, decided to reprice certain outstanding stock options issued
to all employees, including executive officers, but not including outside
directors (the "Repricing"). Employees who were granted options between
January 31, 1995 and April 30, 1996 (with certain limited exceptions) have
been offered the opportunity to surrender those grants in exchange for an
equal number of options having an exercise price of $28.75, which is the
mean between the highest and lowest selling prices of the Company's Common
Stock on the date of the Repricing. In exchange, vesting for repriced
options will be restarted as of the date of the Compensation Committee and
Board action.
(4) The Potential Realizable Value is calculated based on the fair market value
on the date of grant, which is equal to the exercise price of options
granted in fiscal 1996, assuming that the stock appreciates in value from
the date of grant until the end of the option term at the annual rate
specified (5% and 10%). Potential Realizable Value is net of the option
exercise price. The assumed rates of appreciation are specified in rules of
the SEC, and do not represent the Company's estimate or projection of
future stock price. Actual gains, if any, resulting from stock option
exercises and Common Stock holdings are dependent on the future performance
of the Common Stock, overall stock market conditions, as well as the option
holders' continued employment through the exercise/vesting period. There
can be no assurance that the amounts reflected in this table will be
achieved. The Potential Realizable Value does not reflect the Repricing.
(5) As Mr. Carlston was the holder of in excess of 10% of the Company's voting
securities on the date of grant of the option, the option expires five
years after the date of grant and the exercise price per share is equal to
110% of the mean between the highest and lowest selling prices of the
Company's Common Stock on the date of grant.
13
<PAGE>
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year End Option Values
The following table provides information with respect to option exercises
in fiscal 1996 by the Named Officers and the value of such officers' unexercised
options at the close of business on August 31, 1996.
<TABLE>
<CAPTION>
Number of Securities
Year End (#) Value of Unexercised
Options at Fiscal In-the-Money Options at
Shares Year End (#) Fiscal Year End ($) (2)
Acquired on Value -----------------------------------------------------------------
Name Exercise (#) Realized($)(1) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Douglas G. Carlston 0 0 0 37,500 0 0
William M. McDonagh 6,000 312,000 72,000 75,500 1,521,999 494,874
Harry R. Wilker ... 10,000 492,250 36,200 53,800 524,700 237,550
Jan L. Gullett .... 0 0 10,000 135,000 0 0
Thomas L. Marcus .. 8,000 412,000 23,000 37,000 436,375 41,438
</TABLE>
(1) Market value of underlying securities based on the closing price of the
Company's Common Stock on the date of exercise, minus the exercise price.
(2) Market value of underlying securities based on the average of the high and
low trading price of $30.25 of the Company's Common Stock on August 30,
1996, minus the exercise price. Such value does not reflect the Repricing.
CERTAIN TRANSACTIONS
In 1988, the Company founded Broderbund Foundation (the "Foundation"), a
non-profit corporation. Douglas G. Carlston and William M. McDonagh serve on the
three-member Board of Directors of the Foundation. Each year, the Company
donates to the Foundation a percentage of its adjusted pre-tax profits as
determined by the Company's Board of Directors. For the preceding three years
the Company has donated approximately 2% of its adjusted pretax profits. The
Foundation makes grants to qualified non-profit organizations at the discretion
of the Foundation's Board of Directors.
Pursuant to an offer letter dated September 26, 1996, Joseph P. Durrett was
hired as Chief Executive Officer of the Company, effective October 1996. Such
offer letter provides, among other terms, that Mr. Durrett will receive a base
salary of $400,000 per year, participate in the Company's executive bonus plan,
and receive an option grant for 300,000 shares as of the date of his
commencement of employment with the Company.
The following Compensation Committee Report on executive compensation shall
not be deemed to be incorporated by reference by any general statement
incorporating by reference this Proxy Statement into any filing under the
Securities Act of 1933, as amended (the "Securities Act"), or under the Exchange
Act, except to the extent that the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
COMPENSATION COMMITTEE REPORT
The Compensation Committee (the "Committee") of the Board of Directors of
the Company is composed of four independent outside directors. There are no
insiders on the Committee and there are no Committee members with interlocking
relationships with the Company or any of its affiliates. The Chief Executive
Officer ("CEO") of the Company is invited to attend and participate in Committee
meetings, except when CEO compensation is being discussed. The CEO may designate
the President (except when the President's compensation is being discussed),
Vice President of Human Resources, Vice President and General Counsel or other
members of management to attend and participate in his stead. Final decisions
regarding executive compensation, including the granting of stock options to
executives, are made by the Board of Directors based on recommendations of the
Committee and decisions regarding stock option grants to senior executives are
made by the Committee. The Committee and the Board of Directors have approved
guidelines under which management grants options to other executives and
non-executive employees.
14
<PAGE>
The Committee reviews base salary levels and target bonuses for the Named
Officers at or about October 1 of each year. The Committee makes recommendations
to the Board of Directors to establish the general compensation policy of the
Company for the Named Officers. The Committee also makes recommendations to the
Board regarding administration of the equity incentive plans, and the Bonus Plan
for the Named Officers. The Committee approves and adopts compensation policies
to assure that the Company can continue to attract, retain and motivate its
executive officers through a balanced compensation program consisting of base
salary, annual incentive bonuses, and long term equity gain. The Committee
believes that the compensation of the Named Officers should be significantly
influenced by the Company's performance. The Committee has the responsibility
for determining the CEO's compensation package annually and recommending it to
the Board of Directors for approval.
Compensation of Executive Group
The Committee seeks to establish total compensation levels that are
competitive in the Company's industry and within the high technology field as a
whole. To this end, the Committee has determined that its executives should
receive total cash compensation targeted at the 50th percentile, or higher
depending on the Company's performance, when compared to the compensation paid
by comparable and competitive employers. In general, the Committee believes that
cash compensation should vary with the current or short-term performance of the
Company, and any long-term awards should be closely aligned with the long-term
interest of the stockholders. Stock options have value for the executive only if
the price of the Company's stock increases above the fair market value on the
grant date and only if the executive remains employed by the Company for the
period required for the options to vest.
To accomplish this result, the Committee reviews reliable industry-specific
compensation survey studies and the advice of compensation consultants to
establish base salary levels for the executive group. Specifically, the
Committee refers to compensation surveys in assessing salary levels for
executives from a comparability viewpoint. From time to time, the Committee
retains the services of an independent compensation consulting organization to
conduct a competitive compensation study for its executive group.
The executive group participates in an annual incentive (bonus) program.
The bonus pool is available to the extent that the Company meets or exceeds
certain financial performance goals as determined by the Board. In the last
fiscal year, the Company's financial performance was not as strong as it had
been in the 1995 fiscal year. Although the Company posted an increase in
year-over-year revenues, the Company's overall profitability declined slightly
in a year-over-year comparison, exclusive of the one-time charge from the
acquisition of T/Maker Company and of a one-time gain relating to a terminated
merger. Accordingly, the executive bonus pool reflected the less successful
financial results in the last fiscal year and were on average 85-90% lower than
the prior year's bonus, when the Company's financial performance was very
strong. The Committee believes that the dramatic reduction in executive bonuses
in the last fiscal year is consistent with the Committee's view that executive
compensation should be closely tied to the Company's overall financial
performance.
The Company maintains a stock option plan to provide long term incentives
to maximize stockholder value by rewarding employees for the financial success
of the Company. Options are generally subject to five (5) year vesting.
Currently, option grants are made to executives in pre-established amounts in
connection with initial hire or a subsequent grade promotion. The
pre-established amounts are determined by referring to industry-specific
compensation survey studies as well as competitive pressures to attract
executive personnel. Executive officers of the Company may also receive annual
option grants.
The total compensation in the last fiscal year for the five most highly
compensated executives is described in this Proxy Statement starting on Page 12
and below for the CEO.
15
<PAGE>
Compensation of Chief Executive Officer
The CEO's base salary of $351,285 in fiscal year 1996 was determined by
reference to competitive compensation survey data and internal salary
structures. Based on the company's financial results, the CEO received a bonus
of $55,619. As discussed above with respect to the overall executive bonus pool,
the CEO's bonus was approximately 88% less than the prior year's bonus,
reflecting the Company's relatively modest financial performance in fiscal year
1996 as compared to fiscal year 1995. In fiscal year 1996, Mr. Carlston received
a stock option grant for 37,500 shares of Common Stock, vesting ratably over
five years. Such option is excluded from the Repricing.
In October 1996, the Company announced the appointment of Joseph P. Durrett
as Chief Executive Officer of the Company. Mr. Carlston remains Chairman of the
Board.
Compensation Committee Members
Gary L. Buckmiller, Chairman
William P. Egan
Lawrence H. Wilkinson
David E. Liddle, Ph.D.
16
<PAGE>
COMPANY STOCK PRICE PERFORMANCE GRAPH
The graph below compares the cumulative total stockholders' return on the
Company's Common Stock since the Company's initial public offering in November
1991 with the NASDAQ-U.S. Index and the Hambrecht & Quist Technology Index over
the same period (assuming the investment of $100 in the Company's Common Stock
and in the two other indices, and reinvestment of all dividends).
The comparisons in the graph below are based on historical data and are not
intended to forecast the possible future performance of the Company's common
stock.
The graph below shall not be deemed to be incorporated by reference by any
general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act or under the Exchange Act, except to the extent
that the Company specifically incorporates this information by reference, and
shall not otherwise be deemed filed under such Acts.
[THE FOLLOWING TABLE WAS REPRESENTED AS A LINE CHART IN THE PRINTED MATERIAL]
H&O Nasdaq Stock
Dates Broderbund Technology Market -- U.S.
- ----- ---------- ---------- --------------
11/25/91 100 100 100
Nov-91 87.50 100.61 100.27
Dec-91 115.00 114.19 112.52
Jan-92 125.00 120.87 119.10
Feb-92 130.00 125.97 121.80
Mar-92 123.75 117.99 116.05
Apr-92 143.75 115.24 111.07
May-92 128.75 115.15 112.51
Jun-92 120.00 108.22 108.11
Jul-92 104.38 113.25 111.94
Aug-92 123.75 108.84 108.52
Sep-92 147.50 112.83 112.56
Oct-92 180.00 118.67 116.99
Nov-92 197.50 126.42 126.30
Dec-92 212.50 131.35 130.95
Jan-93 215.63 136.91 134.68
Feb-93 201.25 128.04 129.65
Mar-93 221.25 129.43 133.40
Apr-93 176.25 122.11 127.71
May-93 192.50 133.14 135.34
Jun-93 195.00 132.22 135.96
Jul-93 173.75 125.50 136.13
Aug-93 180.00 132.17 143.16
Sep-93 198.75 134.57 147.42
Oct-93 282.50 138.26 150.74
Nov-93 253.75 140.03 146.24
Dec-93 172.50 143.34 150.32
Jan-94 182.50 151.79 154.88
Feb-94 201.25 153.56 153.43
Mar-94 205.00 144.64 144.00
Apr-94 171.25 141.75 142.13
May-94 220.00 142.61 142.48
Jun-94 226.25 134.15 137.27
Jul-94 242.50 139.22 140.08
Aug-94 277.50 153.17 149.01
Sep-94 267.50 153.04 148.63
Oct-94 320.00 163.86 151.55
Nov-94 357.50 162.70 146.52
Dec-94 467.50 166.38 146.94
Jan-95 462.50 165.61 147.76
Feb-95 518.75 178.04 155.57
Mar-95 518.75 185.18 160.18
Apr-95 495.00 196.94 165.23
May-95 450.00 202.77 169.49
Jun-95 637.50 224.64 183.22
Jul-95 720.00 244.11 196.69
Aug-95 736.25 248.74 200.67
Sep-95 761.25 255.82 205.29
Oct-95 693.75 259.11 204.11
Nov-95 647.50 257.64 208.91
Dec-95 607.50 249.81 207.80
Jan-96 485.00 255.37 208.82
Feb-96 452.50 265.10 216.78
Mar-96 377.50 254.80 217.50
Apr-96 440.00 282.59 235.54
May-96 421.25 286.53 246.37
Jun-96 322.50 266.50 235.22
Jul-96 328.75 241.15 214.23
Aug-96 301.25 255.45 226.27
Sep-96 290.00 283.77 243.47
Oct-96 281.25 278.94 240.84
OTHER MATTERS
The Company knows of no other matters to be submitted to the Annual
Meeting. If any other matters properly come before the Annual Meeting, it is the
intention of the persons named in the enclosed form of Proxy to vote the shares
they represent as the Board of Directors may recommend.
THE BOARD OF DIRECTORS
Novato, California
December 10, 1996
17
<PAGE>
PROXY CARD PROXY CARD
BRODERBUND SOFTWARE, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS
BRODERBUND SOFTWARE, INC.
The undersigned stockholder of BRODERBUND SOFTWARE, INC., a Delaware
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement, each dated December 10, 1996, and hereby
appoints Douglas G. Carlston and Thomas L. Marcus, and each of them, proxies and
attorneys-in-fact, with full power to each of substitution, on behalf and in the
name of the undersigned, to represent the undersigned at the Annual Meeting of
Stockholders of BRODERBUND SOFTWARE, INC. to be held on January 23, 1997, at
2:00 p.m., at Embassy Suites Hotel, 101 McInnis Parkway, San Rafael, California
94903 and at any adjournments thereof, and to vote all shares of Common Stock
which the undersigned would be entitled to vote if then and there personally
present, on the matters set forth below:
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS INDICATED, WILL
BE VOTED "FOR" THE ELECTION OF DIRECTORS NAMED HEREIN, "FOR" EACH PROPOSAL
LISTED, AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY COME
BEFORE THE MEETING.
<PAGE>
BRODERBUND SOFTWARE, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. |X|
[ ]
1. ELECTION OF DIRECTORS:
For Withheld For All
All All Except
If you wish to withhold authority to vote for any | | | | | |
individual nominee, strike a line through that
nominees name in the list below:
Douglas G. Carlston, Edmund R. Auer, Gary L.
Buckmiller, Scott D. Cook, Joseph P. Durrett,
William P. Egan, David E. Liddle, William M.
McDonagh, Lawrence H. Wilkinson
For Against Abstain
2. PROPOSAL TO RATIFY THE ADOPTION OF THE | | | | | |
COMPANY'S 1996 EMPLOYEE STOCK PURCHASE PLAN
AND THE RESERVATION OF 250,000 SHARES OF
COMMON STOCK THEREUNDER:
For Against Abstain
3. PROPOSAL TO APPROVE THE INCREASE BY 1,500,000 | | | | | |
SHARES IN THE NUMBER OF SHARES AVAILABLE FOR
GRANT UNDER THE COMPANYS 1996 EMPLOYEE AND
CONSULTANT STOCK OPTION PLAN:
For Against Abstain
4. PROPOSAL TO RATIFY THE APPOINTMENT OF ERNST & | | | | | |
YOUNG LLP AS THE INDEPENDENT AUDITORS OF THE
COMPANY FOR THE 1997 FISCAL YEAR and upon
such other matter or matters which may
properly come before the meeting and any
adjournments thereof:
Dated: ___________________ 199__
Signature(s) ___________________
________________________________
NOTE: Please sign as name
appears hereon. Joint owners
should each sign. When signing
as attorney, executor,
administrator, trustee or
guardian, give full title as
such.
