<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Platinum technology, 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:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
LOGO
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 19, 1998
----------------
To the Stockholders of
PLATINUM technology, inc.:
The Annual Meeting of Stockholders (the "Annual Meeting") of PLATINUM
technology, inc. (the "Company") will be held at 10:00 a.m., Chicago time, on
Tuesday, May 19, 1998, at the Company's principal executive offices, 1815
South Meyers Road, Oakbrook Terrace, Illinois 60181, for the following
purposes:
(1) To elect two Class II directors to the Company's Board of Directors;
(2) To ratify the appointment by the Company's Board of Directors of KPMG
Peat Marwick LLP as the independent auditors of the Company's financial
statements for the year ending December 31, 1998; and
(3) To transact such other business as may properly come before the
meeting or any adjournments thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on March 23, 1998 as
the record date for determining stockholders entitled to notice of, and to
vote at, the Annual Meeting.
By order of the Board of Directors,
/s/ Larry S. Freedman
Larry S. Freedman
Senior Vice President, General
Counsel and Secretary
Oakbrook Terrace, Illinois
April 20, 1998
ALL STOCKHOLDERS ARE URGED TO ATTEND THE MEETING IN PERSON OR BY PROXY.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE COMPLETE, SIGN
AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED
POSTAGE PAID ENVELOPE FURNISHED FOR THAT PURPOSE. YOUR PROXY CAN BE WITHDRAWN
AT ANY TIME BEFORE IT IS VOTED.
<PAGE>
PLATINUM TECHNOLOGY, INC.
1815 SOUTH MEYERS ROAD
OAKBROOK TERRACE, ILLINOIS 60181
(630) 620-5000
----------------
PROXY STATEMENT
----------------
The accompanying proxy is solicited by the Board of Directors (the "Board of
Directors" or "Board") of PLATINUM technology, inc., a Delaware corporation
(the "Company"), for use at its Annual Meeting of Stockholders (the "Annual
Meeting") to be held at 10:00 a.m., Chicago time, on Tuesday, May 19, 1998 at
the Company's principal executive offices, 1815 South Meyers Road, Oakbrook
Terrace, Illinois 60181, and at any adjournments thereof. This Proxy Statement
and accompanying form of proxy were first released to stockholders on or about
April 20, 1998.
RECORD DATE AND OUTSTANDING SHARES. The Board of Directors has fixed the
close of business on March 23, 1998 as the record date (the "Record Date") for
the determination of stockholders entitled to notice of, and to vote at, the
Annual Meeting or any adjournments thereof. As of the Record Date, the Company
had outstanding 64,844,098 shares of its Common Stock, par value $.001 per
share ("Common Stock"). Each of the outstanding shares of Common Stock is
entitled to one vote on all matters coming before the Annual Meeting.
VOTING OF PROXIES. Andrew J. Filipowski and Michael P. Cullinane, the
persons named as proxies on the proxy card accompanying this Proxy Statement,
were selected by the Board of Directors to serve in such capacity. Each of
Messrs. Filipowski and Cullinane is an executive officer and director of the
Company. The shares represented by each executed and returned proxy will be
voted, and such vote will be in accordance with the directions indicated
thereon or, if no direction is indicated, in accordance with the
recommendations of the Board of Directors contained in this Proxy Statement.
The Board of Directors does not presently intend to bring any business before
the Annual Meeting other than the specific proposals referred to in this Proxy
Statement and specified in the Notice of Annual Meeting, and so far as is
known to the Board of Directors, no other matters are to be brought before the
Annual Meeting. As to any other business that may properly come before the
Annual Meeting, however, it is intended that proxies, in the form enclosed,
will be voted in respect thereof in accordance with the judgment of the
persons voting such proxies. Each stockholder giving a proxy has the power to
revoke it at any time before the shares it represents are voted. Revocation of
a proxy is effective upon receipt by the Secretary of the Company of either
(i) an instrument revoking the proxy or (ii) a duly executed proxy bearing a
later date. Additionally, a stockholder may revoke a previously executed proxy
by voting in person at the Annual Meeting (although attendance at the Annual
Meeting will not, by itself, revoke a proxy).
REQUIRED VOTE. The vote of a plurality of the shares voted in person or by
proxy is required to elect the nominees for Class II directors. The
affirmative vote of a majority of the shares voted affirmatively or
negatively, in person or by proxy, is required to ratify the appointment of
KPMG Peat Marwick LLP as the independent auditors of the Company's financial
statements for the year ended December 31, 1998. Stockholders will not be
allowed to cumulate their votes in the election of directors.
QUORUM; ABSTENTIONS AND BROKER NON-VOTES. The required quorum for the
transaction of business at the Annual Meeting will be a majority of the shares
of Common Stock issued and outstanding on the Record Date. Abstentions and
broker non-votes will be included in determining the presence of a quorum.
Neither abstentions nor broker non-votes will have any effect on the voting on
either of the two proposals referred to in this Proxy Statement.
ANNUAL REPORT TO STOCKHOLDERS. The Company's Annual Report to Stockholders
for the year ended December 31, 1997, containing financial and other
information pertaining to the Company, is being furnished to stockholders
simultaneously with this Proxy Statement.
1
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's Board of Directors consists of seven directors. Article Fifth
of the Company's Certificate of Incorporation provides that the Board of
Directors shall be classified with respect to the terms for which its members
shall hold office by dividing the members into three classes. At the Annual
Meeting, two directors of Class II will be elected, each to be elected for a
term of three years expiring at the annual meeting of stockholders in the year
2001. All of the nominees are presently serving as directors of the Company.
The five directors whose terms of office do not expire in 1998 will continue
to serve after the Annual Meeting until such time as their respective terms of
office expire or their successors are duly elected and qualified. See "Other
Directors" below.
If at the time of the Annual Meeting any of the nominees should be unable or
decline to serve, the persons named in the proxy will vote for such substitute
nominee or nominees as the Board of Directors recommends, or vote to allow the
vacancy created thereby to remain open until filled by the Board, as the Board
recommends. The Board of Directors has no reason to believe that any nominee
will be unable or will decline to serve as a director if elected.
NOMINEES
The names of the nominees for the position of Class II director, together
with certain information concerning such nominees, are set forth below:
<TABLE>
<CAPTION>
POSITION SERVED AS
NAME AGE WITH COMPANY DIRECTOR SINCE
---- --- ------------ --------------
<S> <C> <C> <C>
Arthur P. Frigo(1)(2)........................ 56 Director 1997
Gian Fulgoni(1).............................. 50 Director 1991
</TABLE>
- --------
(1) Member of Audit Committee.
(2) Member of Compensation Committee.
Mr. Frigo is a private investor and was the owner and Chairman of M.B.
Walton, a consumer products company, until its recent sale. He also serves on
the Board of Directors of Modagratics, The Levy Organization, Maxrad,
Precision Extrusions, LaRabida Children's Hospital and the Landmark
Preservation Council of Illinois.
Mr. Fulgoni is Chief Executive Officer and a director of Information
Resources, Inc. ("IRI"), which provides a variety of information services
(primarily to consumer packaged goods companies) and computer decision support
services. He was elected Chief Executive Officer of IRI in 1991. From 1991 to
April 1995, Mr. Fulgoni also served as Chairman of IRI, from 1989 to 1991 he
served as its Vice Chairman, and from 1981 to 1989 he was its President.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR ALL OF THE
NOMINEES FOR ELECTION AS CLASS II DIRECTORS.
2
<PAGE>
OTHER DIRECTORS
The following persons will continue to serve as directors of the Company
after the Annual Meeting until their terms of office expire (as indicated
below) or until their successors are elected and qualified.
<TABLE>
<CAPTION>
SERVED AS TERM
NAME AGE POSITION WITH COMPANY DIRECTOR SINCE EXPIRES
- ---- --- --------------------- -------------- -------
<S> <C> <C> <C> <C>
Andrew J. Filipowski.... 47 President, Chief Executive Officer and 1987 2000
Chairman of the Board of Directors
Michael P. Cullinane.... 48 Executive Vice President, Chief 1991 1999
Financial Officer, Treasurer and
Director
Paul L. Humenansky...... 40 Executive Vice President-Product 1991 1999
Development, Chief Operations Officer
and Director
James E. Cowie(1)(2).... 43 Director 1989 2000
Steven D. Devick(1)(2).. 46 Director 1989 2000
</TABLE>
- --------
(1) Member of Audit Committee.
(2) Member of Compensation Committee.
Mr. Filipowski, a founder of the Company, has been President, Chief
Executive Officer and Chairman of the Board of Directors since the Company's
formation in April 1987. Mr. Filipowski is also a director of Mastering, Inc.,
System Software Associates, Inc. and Platinum Entertainment, Inc., a publicly
held integrated music recording and publishing company.
Mr. Cullinane joined the Company in March 1988 as Senior Vice President and
Chief Financial Officer, and was named Executive Vice President in March 1995.
He has also served as the Company's Treasurer since April 1989 and served as
its Secretary from April 1989 until October 1995. Mr. Cullinane is also a
director of Platinum Entertainment, Inc.
Mr. Humenansky, a founder of the Company, was appointed Chief Operations
Officer of the Company effective January 1993. Mr. Humenansky also serves as
Executive Vice President--Product Development, a position he has held since
the Company's formation in April 1987. Mr. Humenansky is also a director of
Platinum Entertainment, Inc.
Mr. Cowie has been a General Partner of Frontenac Company, a Chicago-based
venture capital firm, since February 1989. Mr. Cowie is also a director of
Mastering, Inc., US Servis, Inc. and 3Com Corporation.
Mr. Devick is currently the President, Chief Executive Officer and Chairman
of the Board of Directors of Platinum Entertainment, Inc., which he co-founded
in 1992. He is also the Chief Executive Officer of a number of other entities,
including DDE, Inc. and Platinum Development, a real estate development firm.
DIRECTOR COMPENSATION
All non-employee directors of the Company are paid an annual fee of $2,500
and an attendance fee of $1,000 for each Board meeting attended and $500 for
each Committee meeting attended if such Committee meeting is not held in
conjunction with a meeting of the full Board. In addition, each non-employee
director participates in the Amended and Restated PLATINUM technology, inc.
1993 Directors' Stock Option Plan (the "Directors' Plan"). Pursuant to the
Directors' Plan, each non-employee director is granted, on the date of each
annual meeting after which such director continues to serve on the Board of
Directors, an option to purchase 10,000 shares of Common Stock at the fair
market value of the Common Stock on such date. The Company provides no
retirement benefits to non-employee directors. Directors who are also
employees of the Company receive no additional compensation from the Company
for services rendered in their capacity as directors.
MEETINGS
During the year ended December 31, 1997, the Board of Directors held six
formal meetings. Each of the Company's current directors, other than Mr.
Fulgoni, attended at least 75% of the aggregate of the total number of
meetings held during 1997 by the Board and the total number of meetings held
during 1997 by Committees on which he served.
3
<PAGE>
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has established an Audit Committee and a Compensation
Committee. Both the Audit Committee and the Compensation Committee are
currently composed entirely of directors who are not officers or employees of
the Company. The Company does not have a standing nominating committee.
The Audit Committee generally has responsibility for recommending
independent auditors to the Board of Directors for selection, reviewing the
plan and scope of the annual audit, reviewing the Company's audit and control
functions and reporting to the full Board of Directors regarding all of the
foregoing. The Audit Committee held one formal meeting in 1997.
The Compensation Committee generally has responsibility for recommending to
the Board guidelines and standards relating to the determination of executive
compensation, reviewing the Company's executive compensation policies and
reporting to the Board of Directors regarding the foregoing. The Compensation
Committee also has responsibility for administering the Company's incentive
compensation plans, which includes establishing performance goals and related
cash incentive award opportunities and determining the number (if any) of
options to be granted to the Company's executive officers pursuant to such
plans, and reporting to the Board of Directors regarding the foregoing. The
Compensation Committee conferred by telephone on a number of occasions and
held two formal meetings in 1997.
EXECUTIVE OFFICERS
The table below identifies the executive officers of the Company who are not
identified in the tables under "Election of Directors--Nominees" and "Other
Directors."
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Thomas A. Slowey.. 37 Executive Vice President--Sales
Paul A. Tatro..... 41 Executive Vice President--International Operations
</TABLE>
Mr. Slowey has served as Executive Vice President--Sales since joining the
Company in March 1988.
Mr. Tatro joined the Company in October 1987 as Director of Education and
was appointed Senior Vice President--Field Support and Affiliates in January
1990, a position he held until March 1995, when he was named Executive Vice
President--International Operations.
The Board of Directors elects executive officers of the Company annually,
and such executive officers, subject to the terms of certain employment
agreements, serve at the discretion of the Board. Messrs. Filipowski,
Cullinane and Humenansky each have employment agreements with the Company. See
"Executive Compensation--Employment Agreements." There are no family
relationships among any of the directors or executive officers of the Company.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 of the Securities Exchange Act of 1934, as amended (the "Act"),
requires the Company's officers (as defined under Section 16) and directors
and persons who own greater than 10% of a registered class of the Company's
equity securities to file reports of ownership and changes in ownership with
the Securities and Exchange Commission (the "Commission"). Except as set forth
below, based solely on a review of the forms it has received and on written
representations from certain reporting persons that no such forms were
required for them, the Company believes that, during 1997, all Section 16
filing requirements applicable to its officers, directors and greater than 10%
beneficial owners were complied with by such persons.
Mr. Filipowski inadvertently failed to timely file a Form 4 for a
transaction occurring in December 1996 and a Form 4 for a transaction
occurring in December 1997. These transactions were reported on Mr.
Filipowski's 1997 Form 5.
Mr. Humenansky inadvertently failed to timely file a Form 4 for a
transaction occurring in December 1996, which transaction was reported on Mr.
Humenansky's 1997 Form 5.
4
<PAGE>
EXECUTIVE COMPENSATION
The following table provides information concerning the annual and long-term
compensation for services in all capacities to the Company for the years ended
December 31, 1997, 1996 and 1995 of those persons who were at December 31,
1997 (i) the Chief Executive Officer and (ii) the four other executive
officers of the Company (collectively, with the Chief Executive Officer, the
"Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
------------------ ------------
NAME AND PRINCIPAL POSITION AWARDS (1)
- --------------------------- ------------
SECURITIES
UNDERLYING ALL OTHER
SALARY OPTIONS COMPENSATION ($)
YEAR ($) BONUS ($) (#)(2) ----------------
---- -------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Andrew J. Filipowski, 1997 $772,000 $154,400 500,000 $264,590(3)
President, Chief Executive Officer 1996 702,000 -- -- 222,010
and Chairman of the Board 1995 520,000 -- 400,000 54,736
Paul L. Humenansky, 1997 $508,000 $101,600 300,000 $108,001(4)
Chief Operations Officer and 1996 462,000 -- -- 90,904
Executive Vice President-- 1995 330,000 -- 250,000 5,128
Product Development
Michael P. Cullinane, 1997 $490,000 $ 98,000 250,000 $ 97,150(5)
Executive Vice President, Chief 1996 445,500 -- -- 83,036
Financial Officer and Treasurer 1995 330,000 -- 150,000 6,624
Thomas A. Slowey, 1997 $300,000 $ 60,000 125,000 $ 22,313(6)
Executive Vice President--Sales 1996 273,000 -- -- 22,171
1995 210,000 -- 75,000 1,500
Paul A. Tatro, 1997 $300,000 $ 60,000 100,000 $ 21,192(7)
Executive Vice President-- 1996 273,000 -- -- 21,923
International Operations 1995 210,000 -- 75,000 1,500
</TABLE>
- --------
(1) None of the Named Officers had any restricted stock holdings as of
December 31, 1996.
(2) Except for an option to purchase 25,000 shares of Common Stock granted to
Mr. Slowey in January 1997 (the "Slowey Option"), these options were
granted in 1996, subject to stockholder approval of an amendment (the
"Incentive Plan Amendment") to the PLATINUM technology, inc. Employee
Incentive Compensation Plan (the "Incentive Plan"), which approval was
obtained at the Company's 1997 annual meeting of stockholders. The Slowey
Option was also granted subject to stockholder approval of the Incentive
Plan Amendment.
(3) Includes $1,600 in Company matching contributions pursuant to the PLATINUM
technology, inc. 401(k) Savings Plan (the "Savings Plan"), $122,494 in
premiums paid by the Company for term life and disability insurance,
$15,723 in premiums paid by the Company for the term portion of split-
dollar life insurance, and $124,773 representing the dollar value of the
benefit to the Named Officer of the remainder of the premiums paid by the
Company for the split-dollar life insurance.
(4) Includes $1,600 in Company matching contributions pursuant to the Savings
Plan, $23,832 in premiums paid by the Company for term life and disability
insurance, $4,544 in premiums paid by the Company for the term portion of
split-dollar life insurance, and $78,025 representing the dollar value of
the benefit to the Named Officer of the remainder of the premiums paid by
the Company for the split-dollar life insurance.
(5) Includes $1,600 in Company matching contributions pursuant to the Savings
Plan, $28,125 in premiums paid by the Company for term life and disability
insurance, $4,946 in premiums paid by the Company for the term portion of
split-dollar life insurance, and $62,479 representing the dollar value of
the benefit to the Named Officer of the remainder of the premiums paid by
the Company for the split-dollar life insurance.
5
<PAGE>
(6) Includes $1,600 in Company matching contributions pursuant to the Savings
Plan, $931 in premiums paid by the Company for the term portion of split-
dollar life insurance, and $19,782 representing the dollar value of the
benefit to the Named Officer of the remainder of the premiums paid by the
Company for the split-dollar life insurance.
(7) Includes $1,600 in Company matching contributions pursuant to the Savings
Plan, $1,069 in premiums paid by the Company for the term portion of
split-dollar life insurance, and $18,523 representing the dollar value of
the benefit to the Named Officer of the remainder of the premiums paid by
the Company for the split-dollar life insurance.
OPTION GRANTS IN 1997. The following table provides information on grants of
stock options during fiscal 1997 to the Named Officers. No stock appreciation
rights were granted to the Named Officers during fiscal 1997.
OPTION GRANTS IN 1997
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM(1)
------------------------- ----------------------
PERCENT OF TOTAL EXERCISE
NUMBER OF SECURITIES OPTIONS GRANTED OR BASE
UNDERLYING OPTIONS TO EMPLOYEES IN PRICE EXPIRATION
NAME GRANTED (#)(2) FISCAL YEAR(3) ($/SH) DATE 5% ($) 10% ($)
- ---- -------------------- ---------------- -------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Andrew J. Filipowski.... 500,000 13.6% $13.6250 10/10/06 $4,284,345 $10,857,371
Paul L. Humenansky...... 300,000 8.2 13.6250 10/10/06 2,570,607 6,514,422
Michael P. Cullinane.... 250,000 6.8 13.6250 10/10/06 2,142,172 5,428,685
Thomas A. Slowey........ 100,000 2.7 13.6250 10/10/06 856,869 2,171,474
25,000 0.7 13.5625 01/08/07 213,235 540,378
Paul A. Tatro........... 100,000 2.7 13.6250 10/10/06 856,869 2,171,474
</TABLE>
- --------
(1) Potential realizable value is presented net of the option exercise price
but before any federal or state income taxes associated with exercise.
These amounts represent certain assumed rates of appreciation only. Actual
gains will be dependent on the future performance of the Common Stock and
the option holder's continued employment throughout the vesting period.
The amounts reflected in the table may not necessarily be achieved.
(2) Except for the Slowey Option, these options were granted in 1996, subject
to stockholder approval of the Incentive Plan Amendment, which approval
was obtained at the Company's 1997 annual meeting of stockholders. The
Slowey Option was granted in January 1997, subject to stockholder approval
of the Incentive Plan Amendment. These options are all non-qualified stock
options. Subject to certain restrictions, these options become exercisable
in four equal annual installments, beginning on October 10, 1997, the
first anniversary of the date of grant.
(3) The percentages shown do not reflect options granted in 1997 by companies
acquired by the Company.
6
<PAGE>
AGGREGATED OPTION EXERCISES IN 1997 AND YEAR-END 1997 OPTION VALUES. The
following table provides information on the Named Officers' option exercises
in 1997 and unexercised options at December 31, 1997.
AGGREGATED OPTION EXERCISES IN 1997 AND YEAR-END 1997 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING
UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT IN-THE-MONEY OPTIONS AT
ACQUIRED YEAR-END 1997 (#) YEAR-END 1997 ($)(1)
ON EXERCISE VALUE ------------------------- -------------------------
NAME (#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Andrew J. Filipowski.... -- $ -- 2,082,500 675,000 $37,805,540 $8,862,784
Paul L. Humenansky...... 50,000 831,250 697,500 412,500 10,042,188 5,407,813
Michael P. Cullinane.... 81,500 1,915,250 617,500 300,000 10,197,438 4,012,500
Thomas A. Slowey........ 45,000 670,814 207,782 131,250 3,055,877 1,732,031
Paul A. Tatro........... 46,984 464,690 274,750 156,250 4,639,866 2,099,219
</TABLE>
- --------
(1) The value per option is calculated by subtracting the exercise price from
the closing price of the Common Stock on the Nasdaq National Market on
December 31, 1997, which was $28.25.
EMPLOYMENT AGREEMENTS. Effective March 1, 1991, the Company entered into
employment agreements with Messrs. Filipowski, Cullinane and Humenansky. These
agreements were amended and restated as of January 1, 1996 with respect to
Messrs. Filipowski and Cullinane and October 28, 1997 with respect to Mr.
Humenansky. Mr. Filipowski's employment agreement provides for an initial base
salary of $702,000 plus bonus compensation. Mr. Cullinane's employment
agreement provides for an initial base salary of $445,500 plus bonus
compensation. Mr. Humenansky's employment agreement provides for an initial
base salary of $508,000 plus bonus compensation. Each of the employment
agreements provides that the base salary is subject to review in accordance
with the Company's normal practice for executive salary review and cannot be
reduced without the consent of the executive. The agreements provide that all
bonus arrangements for Messrs. Filipowski, Cullinane and Humenansky are
established by the Compensation Committee of the Board of Directors. All of
the employment agreements also provide for continuation of salary, bonuses and
fringe benefits during the "Payout Period" (as defined below) following the
executive's termination of employment with the Company for any reason other
than "Good Cause," as defined in such agreements, or if the termination occurs
within a certain time period before or after a "Change in Control" (as defined
below) of the Company. The Payout Period under the employment agreements for
Messrs. Filipowski and Cullinane is five years from the date of termination.
The Payout Period under Mr. Humenansky's employment agreement is three years
from the date of termination, unless termination is the result of a "Change in
Control," in which case, the Payout Period is five years. Under these
agreements, a "Change in Control" of the Company includes (a) certain
reorganizations, consolidations or mergers of the Company, (b) certain
transfers of all or substantially all of the assets of the Company, (c) the
approval by the Company's stockholders of a plan of liquidation or dissolution
and (d) a change in the Company's Board of Directors such that a majority of
the members of the Company Board are not "continuing" directors. In addition,
under the employment agreements for Messrs. Filipowski and Cullinane, a
"Change in Control" includes a person's becoming the beneficial owner of stock
representing more than the greater of (i) 25% of the combined voting power of
the Company's then outstanding securities or (ii) the percentage of the
combined voting power of the Company's then outstanding securities which
equals (A) 10% plus (B) the percentage of the combined voting power of the
Company's outstanding securities held by such person on the effective date of
their employment agreements. Under Mr. Humenansky's employment agreement, a
person's acquiring 20% or more of (a) the outstanding shares of the Common
Stock or (b) the combined voting power of the Company's then outstanding
securities constitutes a "Change in Control," with certain exceptions.
7
<PAGE>
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Company is engaged in a highly competitive and dynamic industry. The
Company's success depends in large part on its ability to attract, motivate
and retain talented and dedicated senior executives. Andrew Filipowski, the
Company's Chief Executive Officer, and the other four executive officers are
initial founders or early employees of the Company and constitute the core of
senior management that has led the Company from its inception only ten years
ago through its many achievements to date. The Compensation Committee believes
this management team is responsible, to a significant degree, for the
Company's successes to date and deserves to be highly compensated and rewarded
for the Company's achievements. The basic philosophy of the Compensation
Committee is to provide superior compensation for superior management
performance and only average compensation for average performance. The
Committee also believes that the Company should continue to provide incentives
to this management team to increase stockholder value and to position the
Company to meet the challenges of the marketplace in both near- and long-term
horizons.
In setting compensation, individual contributions of particular executives
are measured against certain objective factors, as well as subjective factors,
which are considered important. Generally, the compensation of all executive
officers is comprised of a fixed base salary plus a variable cash incentive
award based upon Company performance. In addition, stock options are granted
to provide the opportunity for additional compensation based upon the
performance of the Company's stock over time.
BASE SALARIES
In 1991, Messrs. Filipowski, Humenansky and Cullinane entered into
employment agreements with the Company. These agreements were amended and
restated as of January 1, 1996 with respect to Messrs. Filipowski and
Cullinane and October 28, 1997 with respect to Mr. Humenansky. The amended and
restated employment agreements provide for initial base salaries of $702,000
and $445,000 for Messrs. Filipowski and Cullinane, respectively, and $508,000
for Mr. Humenansky, and these salaries are subject to upward adjustment by the
Compensation Committee. For 1997, the Compensation Committee elected to
increase the base salaries of each of Messrs. Filipowski and Cullinane by
approximately 10% over the initial base salaries set forth in their respective
employment agreements, which amounts they received in 1996. Mr. Humenansky was
paid the initial base salary established in his amended and restated
employment agreement, which similarly reflected an increase of 10% over the
amount he received in 1996. The Compensation Committee also increased the base
salaries of the Company's other executive officers by 10% for 1997. The
Compensation Committee determined to make these salary increases for Mr.
Filipowski and the other executive officers to reflect the Company's growth,
and related increases in responsibilities, in the prior year. The increases
were also based upon the Compensation Committee's subjective determination
that such increases were appropriate to maintain a salary structure
competitive with other high growth corporate technology companies. In making
this determination, the Compensation Committee relied upon its members'
personal knowledge and business experience. The Company did not retain an
independent compensation consulting firm for these purposes, in part because
the 1997 base salaries represented only a modest increase over the prior year.
CASH INCENTIVE AWARDS
For 1997, each of the Named Officers, including Mr. Filipowski, was awarded
the opportunity to earn quarterly and annual cash incentive awards (bonuses)
pursuant to a program established under the Incentive Plan. Under this
program, all cash incentive awards were contingent upon the Company's meeting
or exceeding certain targets established near the beginning of 1997 for (i)
revenues and (ii) earnings per share excluding the effect of certain charges
and before payment of executive bonuses ("Adjusted EPS"). The Compensation
Committee set different targets for (a) Mr. Filipowski, (b) Messrs. Cullinane
and Humenansky and (c) the Company's other executive officers. Because the
threshold targets were met, all of the Named Officers received cash incentive
awards for 1997. Each of these awards represented a percentage of the
particular executive officer's base salary, with the specific percentage being
based upon the extent to which the Company exceeded the applicable revenue and
Adjusted EPS targets. The Named Officers did not receive any cash incentive
awards for 1996, due to the Company's performance in that year.
8
<PAGE>
STOCK OPTIONS
In addition to cash bonus compensation based upon the Company's performance,
the Compensation Committee typically grants stock options on an annual basis
to provide long-term incentives to executive officers which are directly tied
to the performance of the Company's stock. Stock options are granted at no
less than fair market value on the date of grant and are exercisable in annual
installments beginning one year after the date of grant. Vesting periods are
used to encourage key employees to continue in the employ of the Company and
to emphasize long-term performance. The Compensation Committee has
historically granted significant options to the Company's key executives based
upon its belief that it is necessary in a highly competitive environment to
provide key personnel the opportunity for significant continuing equity
participation and incentive to create stockholder value over a long-term
investment horizon.
In determining whether to grant options in 1997 to Mr. Filipowski and the
Company's other executive officers, the Compensation Committee considered a
number of factors, including the Company's performance in 1996 and the total
number and value of options (including exercisable and unexercisable options)
already held by each of the executive officers, but did not assign any
specific weight to any particular factor. After evaluating these factors, the
Compensation Committee determined that, except for the Slowey Option, no
option awards to the executive officers were necessary in 1997. The Slowey
Option was awarded to Mr. Slowey in January 1997 to recognize his contribution
to the Company's 1996 growth in software license sales. Other than the Slowey
Option, the options reported for 1997 in the tables under "Summary
Compensation Table" and "Option Grants in 1997" were awarded by the
Compensation Committee in 1996, subject to stockholder approval at the
Company's 1997 annual meeting of the Incentive Plan Amendment, which approval
was obtained.
COMPLIANCE WITH SECTION 162(M)
The Compensation Committee currently intends for all compensation paid to
the Named Officers to be tax deductible to the Company pursuant to Section
162(m) ("Section 162(m)") of the Internal Revenue Code of 1986, as amended
(the "Code"). Section 162(m) provides that compensation paid to the Named
Officers in excess of $1,000,000 cannot be deducted by the Company for Federal
income tax purposes unless, in general, such compensation is performance-
based, is established by a committee of outside directors and is objective and
the plan or agreement providing for such performance-based compensation has
been approved in advance by stockholders. Consistent with this intention, the
Incentive Plan was submitted and approved by the Company's stockholders, and
since such approval, the Compensation Committee has provided all cash
incentive award opportunities pursuant to the Incentive Plan. In the future,
however, the Board may determine to adopt a compensation program that does not
satisfy the conditions of Section 162(m) if in the Board's judgment, after
considering the additional costs of not satisfying 162(m), such program is
appropriate.
COMPENSATION COMMITTEE
Steven D. Devick
James E. Cowie
Arthur P. Frigo
9
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Cowie, Devick and Frigo were the members of PLATINUM's Compensation
Committee during 1997. Mr. Filipowski is an executive officer of Platinum
Venture Partners, Inc. ("PVP") and is the sole director of, and makes
compensation decisions for, PVP. Mr. Devick is an executive officer of
Platinum Entertainment, Inc. ("PEI"), and Messrs. Filipowski, Humenansky and
Cullinane, all of whom are executive officers of PLATINUM, are directors of
PEI. Messrs. Filipowski and Cullinane are also members of the compensation
committee of PEI.
The Company and Mastering, Inc. ("Mastering") have entered into an Agreement
and Plan of Merger dated as of February 18, 1998 (the "Merger Agreement"),
pursuant to which the Company has agreed to acquire Mastering. An amendment to
the Merger Agreement (the "Amendment") was executed by the parties on April 7,
1998. Mr. Filipowski, the President, Chief Executive Officer and Chairman of
the Board of the Company, and Mr. Cowie, a director of the Company, are both
also directors of Mastering. Mr. Filipowski holds options to purchase 34,800
shares of common stock of Mastering (which were granted to him in his capacity
as a director of Mastering) and, through Platinum Venture Partners I L.P. and
Platinum Venture Partners II L.P. (together referred to as the "Platinum
Ventures"), indirectly owns approximately 22,000 shares of common stock of
Mastering. Mr. Cowie holds options to purchase 34,800 shares of common stock
of Mastering (granted to him in his capacity as a director of Mastering).
Neither Mr. Filipowski nor Mr. Cowie participated in the original
deliberations or vote of the Board of Directors or the board of directors of
Mastering with respect to the Merger Agreement. Mr. Filipowski participated in
the deliberations of the Board of Directors regarding the Amendment, but
excused himself from the vote on the Amendment. Mr. Cowie did not participate
in the deliberations or vote of the Board of Directors on the Amendment, and
neither Mr. Filipowski nor Mr. Cowie participated in the deliberations or vote
of the board of directors of Mastering on the Amendment. The Platinum Ventures
own a total of approximately 335,000 shares of common stock of Mastering. Mr.
Filipowski is the President, Chief Executive Officer and a stockholder of PVP,
the general partner of each of the Platinum Ventures, and is a limited partner
of each of the Platinum Ventures. Additionally, each of the other executive
officers and directors of the Company indirectly owns shares of common stock
of Mastering (collectively totalling more than 20,000 shares).
10
<PAGE>
PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total returns for the
Company, the Nasdaq Stock Market-U.S. Index and the H&Q Software Sector Index
for the last five years. The comparison assumes $100 was invested on December
31, 1992 in the Common Stock, the Nasdaq Stock Market-U.S. Index and the H&Q
Software Sector Index and assumes the reinvestment of all dividends, if any.
<TABLE>
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG PLATINUM TECHNOLOGY, NASDAQ-U.S. INDEX AND H&Q SOFTWARE SECTOR INDEX
<CAPTION>
Measurement Period PLATINUM NASDAQ-U.S. H&Q SOFTWARE
(Fiscal Year Covered) TECHNOLOGY INDEX SECTOR INDEX
- ------------------- ---------- ----------- ------------
<S> <C> <C> <C>
Measurement Pt-
12/31/92 $100 $100 $100
FYE 12/31/93 $ 53.09 $114.80 $107.35
FYE 12/31/94 $111.73 $112.21 $134.81
FYE 12/31/95 $ 90.74 $158.70 $193.23
FYE 12/31/96 $ 67.28 $195.19 $234.89
FYE 12/31/97 $139.51 $239.53 $284.01
</TABLE>
CERTAIN TRANSACTIONS
See the discussion under "Compensation Committee Interlocks and Insider
Participation" above for a description of certain transactions involving the
Company and its executive officers and directors.
11
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT AND
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of April 15, 1998, unless otherwise
indicated below, certain information with respect to the beneficial ownership
of the Common Stock by (i) each person known by the Company to own
beneficially more than 5% of the outstanding shares of the Common Stock, (ii)
each director of the Company, (iii) each of the Named Officers and (iv) all
executive officers and directors of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT
BENEFICIAL OF
NAME AND ADDRESS OWNERSHIP(1) CLASS
---------------- ------------ -------
<S> <C> <C>
Andrew J. Filipowski(2)................................ 4,433,042 6.6%
T. Rowe Price Associates, Inc.(3)...................... 5,741,400 8.9
The Prudential Insurance Company of America(4)......... 5,324,850 8.2
Jennison Associates Capital Corp.(5)................... 5,261,600 8.1
Michael P. Cullinane(6)................................ 709,742 1.1
Paul L. Humenansky(7).................................. 706,541 1.1
Steven D. Devick(8).................................... 108,350 *
Thomas A. Slowey(9).................................... 285,365 *
Paul A. Tatro(10)...................................... 248,782 *
Gian Fulgoni(11)....................................... 25,966 *
James E. Cowie(12)..................................... 38,966 *
Arthur P. Frigo........................................ 90,200 *
All Executive Officers and Directors as a Group (9
persons)(13).......................................... 6,646,954 9.7
</TABLE>
- --------
*Less than one percent
(1) Unless otherwise indicated below, the persons in the above table have
sole voting and investment power with respect to all shares shown as
beneficially owned by them.
(2) Includes (a) 2,082,500 shares which may be acquired pursuant to the
exercise of stock options held by Mr. Filipowski within 60 days of April
15, 1998, (b) 189,000 shares held by a foundation established by Mr.
Filipowski and (c) 391,549 shares held by the Platinum Ventures. Mr.
Filipowski disclaims beneficial ownership of the shares held by the
foundation. Mr. Filipowski disclaims beneficial ownership of the shares
held by the Platinum Ventures, except to the extent of his pecuniary
interest. The address of Mr. Filipowski is c/o PLATINUM technology, inc.,
1815 South Meyers Road, Oakbrook Terrace, Illinois 60181.
(3) As reported on a Schedule 13G/A filed with the Securities and Exchange
Commission (the "Commission") on February 10, 1998 (the "Price 13G")
jointly by T. Rowe Price Associates, Inc. ("Price Associates") and T.
Rowe Price Science and Technology Fund, Inc. ("Price Fund"). According to
the Price 13G, Price Associates has sole voting power with respect to
156,500 shares and sole dispositive power with respect to all 5,741,400
shares, and Price Fund has sole voting power with respect to 2,500,000
shares. The address of Price Associates and Price Fund is 100 E. Pratt
Street, Baltimore, Maryland 21202.
(4) As reported on a Schedule 13G/A filed with the Commission on February 9,
1998 (the "Prudential 13G") by the Prudential Insurance Company of
America ("Prudential"). According to the Prudential 13G, Prudential has
sole voting power and sole dispositive power with respect to 6,900
shares, shared voting power with respect to 4,601,650 shares and shared
dispositive power with respect to 5,317,950 shares. The address of
Prudential is 751 Broad Street, Newark, New Jersey 07102-3777.
(5) As reported on a Schedule 13G/A filed with the Commission on February 12,
1998 (the "Jennison 13G") by Jennison Associates Capital Corp.
("Jennison"). According to the Jennison 13G, Jennison has sole voting
power with respect to 6,600 shares, shared voting power with respect to
4,538,700 shares and shared
12
<PAGE>
dispositive power with respect to all 5,261,600 shares. The address of
Jennison is 466 Lexington Ave., New York, New York 10017.
(6) Includes (a) 617,500 shares which may be acquired pursuant to the
exercise of stock options held by Mr. Cullinane within 60 days of April
15, 1998 and (b) 6,211 shares allocated to his account under the
Company's Stock Purchase Plan.
(7) Includes (a) 697,500 shares which may be acquired pursuant to the
exercise of stock options held by Mr. Humenansky within 60 days of April
15, 1998 and (b) 5,364 shares allocated to his account under the
Company's Stock Purchase Plan.
(8) Includes 15,966 shares which may be acquired pursuant to the exercise of
stock options held by Mr. Devick within 60 days of April 15, 1998.
(9) Includes (a) 281,000 shares which may be acquired pursuant to the
exercise of stock options held by Mr. Slowey within 60 days of April 15,
1998 and (b) 3,167 shares allocated to his account under the Company's
Stock Purchase Plan.
(10) Includes (a) 207,782 shares which may be acquired pursuant to the
exercise of stock options held by Mr. Tatro within 60 days of April 15,
1998, and (b) 41,000 shares held as co-trustee, with his wife, of trusts
for their benefit.
(11) Represents shares which may be acquired pursuant to the exercise of stock
options held by Mr. Fulgoni within 60 days of April 15, 1998.
(12) Includes 15,966 shares which may be acquired pursuant to exercise of
stock options held by Mr. Cowie within 60 days of April 15, 1998.
(13) Includes 3,950,780 shares which may be acquired pursuant to the exercise
of stock options within 60 days of April 15, 1998.
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF AUDITORS
The Company's Board of Directors, upon the recommendation of the Company's
Audit Committee, has appointed KPMG Peat Marwick LLP, independent certified
public accountants, as auditors of the Company's financial statements for the
year ending December 31, 1998. KPMG Peat Marwick LLP has acted as auditors for
the Company since 1987.
The Board has determined to afford stockholders the opportunity to express
their opinions on the matter of auditors and, accordingly, is submitting to
stockholders at the Annual Meeting a proposal to ratify the Board's
appointment of KPMG Peat Marwick LLP. If a majority of the shares voted
affirmatively or negatively at the Annual Meeting, in person or by proxy, are
not voted in favor of the ratification of the appointment of KPMG Peat Marwick
LLP, the Board of Directors will interpret this as an instruction to seek
other auditors.
It is expected that representatives of KPMG Peat Marwick LLP will be present
at the meeting and will be available to respond to appropriate questions. They
will be given an opportunity to make a statement if they desire to do so.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE INDEPENDENT
AUDITORS OF THE COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDING DECEMBER
31, 1998.
13
<PAGE>
MISCELLANEOUS MATTERS
SOLICITATION. The cost of this proxy solicitation will be borne by the
Company. The Company has engaged a proxy solicitation firm, Morrow & Co.,
Inc., to assist in the required search for beneficial owners of the Common
Stock and in the distribution of proxy materials. The Company may also request
banks, brokers, fiduciaries, custodians, nominees and certain other record
holders to send proxies, proxy statements and other materials to their
principals at the Company's expense. Such banks, brokers, fiduciaries,
custodians, nominees and other record holders will be reimbursed by the
Company for their reasonable out-of-pocket expenses of solicitation. The
Company does not anticipate that costs and expenses incurred in connection
with this proxy solicitation will exceed an amount normally expended for a
proxy solicitation for an election of directors in the absence of a contest.
PROPOSALS OF STOCKHOLDERS. Proposals of stockholders for presentation at the
Company's 1999 annual meeting of stockholders (the "1999 Annual Meeting") must
be received by the Secretary of the Company no later than December 21, 1998 to
be considered for inclusion in the Company's proxy statement and proxy for the
1999 Annual Meeting.
ADDITIONAL INFORMATION. The Company will furnish, without charge, a copy of
its Annual Report on Form 10-K for its year ended December 31, 1997, as filed
with the Commission, upon the written request of any person who is a
stockholder as of the Record Date. Requests for such materials should be
directed to PLATINUM technology, inc., 1815 South Meyers Road, Oakbrook
Terrace, Illinois 60181, Attention: Investor Relations.
By order of the Board of Directors
/s/ Larry S. Freedman
Larry S. Freedman
Senior Vice President, General
Counsel and Secretary
Oakbrook Terrace, Illinois
April 20, 1998
14
<PAGE>
PROXY PROXY
PLATINUM TECHNOLOGY, INC.
1815 SOUTH MEYERS ROAD
OAKBROOK TERRACE, ILLINOIS 60181
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 19, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder(s) hereby appoints Andrew J. Filipowski and
Michael P. Cullinane, and each of them, with full power of substitution, as
attorneys and proxies for and in the name and place of the undersigned, and
hereby authorizes each of them to represent and to vote all of the shares of
Common Stock of PLATINUM technology, inc. ("PLATINUM") held of record by the
undersigned as of March 23, 1998 which the undersigned is entitled to vote at
the Annual Meeting of Stockholders (the "Annual Meeting"), to be held on May
19, 1998 at the principal executive offices of PLATINUM, 1815 South Meyers
Road, Oakbrook Terrace, Illinois 60181, at 10:00 a.m., Chicago time, and at any
adjournments thereof.
THIS PROXY, WHEN PROPERLY EXECUTED AND RETURNED IN A TIMELY MANNER, WILL BE
VOTED AT THE ANNUAL MEETING AND AT ANY ADJOURNMENTS THEREOF IN THE MANNER
DESCRIBED HEREIN. IF NO CONTRARY INDICATION IS MADE, THIS PROXY WILL BE VOTED
FOR ALL NOMINEES LISTED IN PROPOSAL 1, FOR PROPOSAL 2 AND IN ACCORDANCE WITH
THE JUDGMENT OF THE PERSONS NAMED AS PROXIES HEREIN ON ANY OTHER MATTERS THAT
MAY PROPERLY COME BEFORE THE ANNUAL MEETING.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
(Continued and to be signed and dated on reverse side.)
<PAGE>
PLATINUM TECHNOLOGY, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [x]
[ ]
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR ALL NOMINEES
LISTED IN PROPOSAL 1 AND FOR PROPOSAL.
1. Election of Directors (terms to expire in 2001)
Nominees: Arthur P. Frigo Gian Fulgoni
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH THE NOMINEE'S NAME ABOVE.
For All
Except As
Withhold Marked to
For Authority the
All For All Contrary
[_] [_] [_]
2. Proposal to ratify the appointment of KPMG Peat Marwick LLP as the
independent auditors of PLATINUM's financial statements.
For Against Abstain
[_] [_] [_]
3. Each of the persons named as proxies herein is authorized, in such person's
discretion, to vote upon such other matters as may properly come before the
Annual Meeting.
MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW. [_]
This Proxy must be signed exactly as your name appears hereon. When shares are
held by joint tenants, both should sign. Attorneys, executors, administrators,
trustees and guardians should indicate their capacities. If the signer is a
corporation, please print full corporate name and indicate capacity of duly
authorized officer executing on behalf of the corporation. If the signer is a
partnership or limited liability company, please print full partnership or
limited liability company name and indicate capacity of duly authorized person
executing on behalf of the partnership or limited liability company.
Signature(s)____________________________________________________________________
________________________________________________________________________________
Date _______________________________________________________________ , 1998
