<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
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Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the
Commission Only (as Permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Landmark Systems Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
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0-11.
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(3) Per unit price or other underlying value of transaction computed
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<PAGE> 2
LANDMARK SYSTEMS CORPORATION
12700 SUNRISE VALLEY DRIVE
RESTON, VIRGINIA 20191
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 16, 2000
---------------------
To our stockholders:
NOTICE IS HEREBY GIVEN that the 2000 annual meeting of stockholders of
Landmark Systems Corporation will be held at the principal executive offices of
Landmark Systems Corporation, located at 12700 Sunrise Valley Drive, Reston,
Virginia 20191, on Tuesday, May 16, 2000, at 3:30 p.m., local time, for the
following purposes:
1. to elect seven directors of the Company for terms expiring at the
2001 annual meeting of stockholders;
2. to ratify the selection by the Board of Directors of
PricewaterhouseCoopers LLP as independent accountants of the Company for
the Company's fiscal year ending December 31, 2000; and
3. to transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
Only stockholders of record at the close of business on March 31, 2000 will
be entitled to notice of, and to vote at, the annual meeting or any adjournment
or postponement thereof.
By order of the Board of Directors,
FREDERICK S. ROLANDI, III
Secretary
Dated: April 14, 2000
YOUR VOTE IS VERY IMPORTANT.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING,
PLEASE SIGN AND DATE THE ENCLOSED PROXY AND MAIL IT
PROMPTLY IN THE POSTAGE-PAID ENVELOPE PROVIDED.
<PAGE> 3
LANDMARK SYSTEMS CORPORATION
12700 SUNRISE VALLEY DRIVE
RESTON, VIRGINIA 20191
---------------------
MEETING OF STOCKHOLDERS
MAY 16, 2000
---------------------
PROXY STATEMENT
---------------------
GENERAL INFORMATION
PROXY SOLICITATION
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Landmark Systems Corporation (the
"Company") for use at the 2000 annual meeting of stockholders to be held at the
principal executive offices of the Company, located at 12700 Sunrise Valley
Drive, Reston, Virginia, 20191, on Tuesday, May 16, 2000, at 3:30 p.m., local
time. The purpose of the annual meeting and the matters to be acted upon are set
forth in the accompanying notice of annual meeting.
The Company is mailing its annual report for the fiscal year ended December
31, 1999, together with this proxy statement and the enclosed proxy, to
stockholders entitled to vote at the annual meeting. The annual report does not
form any part of the material for the solicitation of proxies.
The Company will pay the cost of all proxy solicitation. In addition to the
solicitation of proxies by use of the mails, officers and other employees of the
Company and its subsidiaries may solicit proxies by personal interview,
telephone and telegram. None of these individuals will receive compensation for
such services, which will be performed in addition to their regular duties. The
Company also has made arrangements with brokerage firms, banks, nominees and
other fiduciaries to forward proxy solicitation material for shares held of
record by them to the beneficial owners of such shares. The Company will
reimburse such persons for their reasonable out-of-pocket expenses in forwarding
such material.
This proxy statement and the enclosed proxy are first being mailed to the
Company's stockholders on or about April 24, 2000.
VOTING AND REVOCABILITY OF PROXIES
A proxy for use at the annual meeting and a return envelope are enclosed.
Shares of the Company's common stock, par value $0.01 per share (the "Common
Stock"), represented by a properly executed proxy, if such proxy is received in
time and not revoked, will be voted at the annual meeting in accordance with the
instructions indicated in such proxy. If no instructions are indicated, such
shares will be voted "FOR" the election of the seven director nominees named in
the proxy and "FOR" the ratification of the selection by the Board of Directors
of PricewaterhouseCoopers LLP as the Company's independent accountants for
fiscal year 2000. Discretionary authority is provided in the proxy as to any
matters not specifically referred to therein. Management is not aware of any
other matters that are likely to be brought before the annual meeting. If any
such matters properly come before the annual meeting, however, the persons named
in the proxy are fully authorized to vote thereon in accordance with their
judgment and discretion.
A stockholder who has given a proxy may revoke it at any time prior to its
exercise at the annual meeting by (1) giving written notice of revocation to the
Secretary of the Company, (2) properly submitting to the Company a duly executed
proxy bearing a later date or (3) voting in person at the annual meeting. All
written notices of revocation or other communications with respect to revocation
of proxies should be addressed as
<PAGE> 4
follows: Landmark Systems Corporation, 12700 Sunrise Valley Drive, Reston,
Virginia, 20191, Attention: Corporate Secretary.
VOTING PROCEDURE
All holders of record of the Common Stock of the Company at the close of
business on March 31, 2000 will be eligible to vote at the annual meeting. Each
holder of Common Stock is entitled to one vote at the annual meeting for each
share held by such stockholder. As of March 31, 2000 there were 12,927,901
shares of Common Stock outstanding.
The presence, in person or by proxy, of a majority of the outstanding
shares of Common Stock entitled to vote will constitute a quorum for the
transaction of business. Votes cast in person or by proxy, abstentions and
broker non-votes (as hereinafter defined) will be tabulated by the inspectors of
election and will be considered in the determination of whether a quorum is
present at the annual meeting. The inspectors of election will treat shares
represented by executed proxies which abstain as shares that are present and
entitled to vote for purposes of determining the approval of such matter. If,
with respect to any shares, a broker or other nominee submits a proxy indicating
that instructions have not been received from the beneficial owners or the
persons entitled to vote and that such broker or other nominee does not have
discretionary authority to vote such shares (a "broker non-vote") on one or more
proposals, those shares will not be treated as present and entitled to vote for
purposes of determining the approval of any such proposal.
2
<PAGE> 5
SECURITY OWNERSHIP
The following table sets forth, as of March 31, 2000, information regarding
the beneficial ownership of the Common Stock by (i) each person known to the
Company to be the beneficial owner of more than 5% of the Common Stock, (ii)
each director and each nominee to the Board of Directors, (iii) each of the
executive officers of the Company named in the Summary Compensation Table under
"Executive Compensation," and (iv) all directors and executive officers of the
Company as a group. Except as indicated, each person identified in the following
table has sole voting and investment power with respect to the shares shown. The
number of shares of Common Stock outstanding as of March 31, 2000 was
12,927,901. Beneficial ownership of the Common Stock has been determined for
this purpose in accordance with Rules 13d-3 and 13d-5 under the Securities
Exchange Act of 1934, as amended, which provide, among other things, that a
person is deemed to be the beneficial owner of the Common Stock if such person,
directly or indirectly, has or shares voting power or investment power in
respect of such stock or has the right to acquire such ownership within sixty
days. Accordingly, the amounts shown in the table do not purport to represent
beneficial ownership for any reason other than compliance with Securities and
Exchange Commission reporting requirements.
<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES OF OUTSTANDING
COMMON STOCK SHARES
NAME OF BENEFICIAL OWNER(1) BENEFICIALLY OWNED BENEFICIALLY OWNED
--------------------------- ------------------------ ------------------
<S> <C> <C>
Patrick H. McGettigan(2)........................ 3,547,500 27.4%
Katherine K. Clark(3)........................... 2,147,036 16.6
Ralph E. Alexander(6)........................... 14,833 *
John D. Hunter(3)............................... 224,120 1.7
Andrew L. McCasker(3)(5)........................ 29,474 *
Roger A. Philips(3)(5).......................... 31,825 *
Jeffrey H. Bergman(3)........................... 423,542 3.4
T. Eugene Blanchard(3).......................... 34,500 *
Patrick W. Gross(3)............................. 31,650 *
Sudhakar V. Shenoy(3)........................... 6,000 *
James P. Donehey(3)............................. 0 *
Dennis Bowman(3)................................ 0 *
Daniel C. Carayiannis(3)........................ 18,245 *
All directors and executive officers as a group
(13 persons)(3)............................... 6,573,017 49.3
Lord, Abbett & Co.(4)........................... 2,030,030 15.7
</TABLE>
- ---------------
* Represents holdings of less than 1%.
(1) Unless otherwise specified in the footnotes to this table, the address of
each person set forth in the above table is 12700 Sunrise Valley Drive,
Reston, Virginia 20191.
(2) Includes 34,000 shares held by The Patrick H. McGettigan Foundation, of
which Mr. McGettigan and his two adult children are the trustees. The
trustees of this foundation share voting power.
(3) Includes shares which may be acquired within 60 days of March 31, 2000
pursuant to outstanding options by the person or persons listed, as follows:
Ms. Clark, 29,375; Mr. Hunter, 26,875; Mr. McCasker, 25,063; Mr. Philips,
19,125; Mr. Bergman, 13,500; Mr. Blanchard, 31,500; Mr. Gross, 31,500; Mr.
Shenoy, 6,000; Mr. Carayiannis, 16,250; all directors and officers as a
group, 172,500.
(4) Stock ownership is based on a Schedule 13G/A filed on February 8, 2000.
Lord, Abbett & Co. is an Investment Advisor registered under Section 203 of
the Investment Company Act of 1940. The address of Lord, Abbett & Co. is 90
Hudson Street, Jersey City, NJ 07302.
(5) Mr. McCasker and Mr. Philips separated from the Company during 2000. As they
are no longer officers of the Company, shares owned by them have been
excluded from "All directors and executive officers as a group".
(6) Mr. Alexander resigned his position as President and Chief Operating Officer
in November 1999.
3
<PAGE> 6
ELECTION OF DIRECTORS
(PROPOSAL 1)
NOMINEES FOR ELECTION AS DIRECTORS
The Company's Articles of Incorporation and Bylaws provide that the Board
of Directors (the "Board") is to be elected at the annual meeting of the
stockholders. The number of directors of the Board is currently seven.
If elected, the director nominees will serve a one-year term to expire at
the 2001 annual meeting of stockholders or until their successors are elected
and qualified or their earlier resignation or removal. The six incumbent
directors standing for election to the Board are Patrick H. McGettigan,
Katherine K. Clark, T. Eugene Blanchard, Dennis J. Bowman, Patrick W. Gross and
Sudhakar V. Shenoy. James P. Donehey has also been nominated to serve as a
director.
Approval of the nominees requires the affirmative vote of a plurality of
the votes cast at the annual meeting. In the event that any nominee should
become unable or unwilling to serve as a director, it is the intention of the
persons named in the proxy to vote for the election of such substitute nominee
for the office of director as the Board of Directors may recommend. It is not
anticipated that any nominee will be unable or unwilling to serve as a director.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS OF THE
COMPANY VOTE "FOR" THE ELECTION OF THE NOMINEES TO SERVE AS DIRECTORS.
Biographical information concerning each of the nominees is presented on
the following pages.
NOMINEES FOR ELECTION FOR 2000 TERM
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE
---- --- --------
<S> <C> <C>
Patrick H. McGettigan....................... 58 1982
Katherine K. Clark.......................... 43 1983
T. Eugene Blanchard......................... 69 1997
Patrick W. Gross............................ 55 1997
Sudhakar V. Shenoy.......................... 52 1999
Dennis J. Bowman............................ 46 1999
James P. Donehey............................ 51 N/A
</TABLE>
PATRICK H. MCGETTIGAN, a co-founder of the Company, has served as Chairman
of the Board of Directors since 1982. Mr. McGettigan is the author of the
Company's initial product, The Monitor for CICS. Mr. McGettigan served as
President of the Company from 1982 to 1989 and as Chief Executive Officer from
1982 to 1994. Prior to founding the Company, Mr. McGettigan held a variety of
technical and systems programming positions over a 17-year career at Blue Cross
and Blue Shield of the National Capital Area.
KATHERINE K. CLARK, a co-founder of the Company, has headed product
development, technical support, finance and human resources at various times
over the Company's history, has been a director of the Company since 1983 and
from November 1993 to September 1997 was President of the Company. In 1994, Ms.
Clark assumed her current role as Chief Executive Officer of the Company and was
re-appointed President in November 1999. She is responsible for day-to-day
operations as well as for the long-term strategic direction of the Company.
T. EUGENE BLANCHARD has been associated with the Company as a member of the
Company's Advisory Board since 1993 and was elected to the Board in March 1997.
(The Advisory Board was terminated in October 1997.) Mr. Blanchard serves as
Chairman of the Company's Audit Committee. From 1979 to February 1997, Mr.
Blanchard served as Senior Vice President, Chief Financial Officer and a
director of
4
<PAGE> 7
DynCorp, a provider of technical and professional services to government
agencies and the airline industry. Mr. Blanchard continues to serve as a
director of DynCorp.
DENNIS J. BOWMAN is the Senior Vice President and Chief Information Officer
of Circuit City Stores, specialty retailing. He was elected to serve as a
director effective June 4, 1999. Mr. Bowman, who has served in senior-level
management positions with other retail organizations, is an honors graduate of
the Harvard School of Business Administration.
JAMES P. DONEHEY was the Senior Vice President and Chief Information
Officer Of Capital One Financial Corporation, an information based marketing
company, where he was employed from November 1994 through February 2000. From
1987 to 1994, Mr. Donehey worked for the investment banking firm of Goldman
Sachs, as Vice President/Regional Office Administrative Manager and then served
as Executive Director/Firmwide Systems in Europe. Mr. Donehey has also held
various positions in the IT field for Duff & Phelps, Inc., LaSalle Partners, and
A.B. Dick Company.
PATRICK W. GROSS has been associated with the Company as a member of the
Advisory Board since 1993 and was elected to the Board in March 1997. Mr. Gross
is a founder of American Management Systems, Inc. ("AMS"), an international
business and information technology consulting firm, and has served as a
principal executive officer and a director of AMS since its founding in 1970.
Mr. Gross is currently Chairman of the Executive Committee of AMS, and also
serves as a director of Capital One Financial Corporation and Computer Network
Technology Corporation.
SUDHAKAR V. SHENOY was elected to serve as a director of the Company
effective April 1, 1999. He has served as Chairman and Chief Executive Officer
of Information Management Consultants, Inc., a private systems and software
development firm, since 1981.
BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
The Board held five meetings during the Company's 1999 fiscal year. Each
director attended at least 75% of the aggregate of the total number of meetings
of the Board held during the period he or she served as a director and the total
number of meetings held by each committee of the Board on which he or she served
(during the period for which he or she served). In addition, during 1999 the
Board took action two times by unanimous written consent.
The Board has a standing Audit Committee and a standing Compensation
Committee. The Board has no standing nominating committee or other committee
performing a similar function.
The Audit Committee, which met four times during 1999, consists of Messrs.
Bergman, Blanchard and Shenoy. The Committee is responsible for recommending to
the full Board the selection of the Company's independent public accountants,
reviewing the scope of the plans and the results of the audit engagement,
reviewing the independence of the public accountants, considering the range of
audit and non-audit fees, reviewing the adequacy of the Company's internal
accounting controls and exercising oversight with respect to the Company's code
of conduct and other policies and procedures regarding adherence with legal
requirements. All members of the Audit Committee are independent as defined in
Rule 4200(a)(15) of the NASD listing standards.
The Compensation Committee, which met two times in 1999, consists of
Messrs. Blanchard, Bowman and Gross. The Compensation Committee is responsible
for establishing salaries, bonuses and other compensation for, and administering
the Company's stock option and stock purchase plans as they relate to, the
Company's elected officers. The salary, bonus and other compensation for Ms.
Clark is subject to ratification by the Board.
Each director, other than those who are employees of the Company, receives
from the Company $12,000 per year, payable ratably on a quarterly basis; and
$4,000 per year for serving as the chairperson of a Board committee, payable
ratably on a quarterly basis. Directors who are not employees of the Company are
not eligible to participate in any of the Company's stock incentive or stock
purchase plans other than the 1996 Advisory Board and Directors Stock Incentive
Plan (the "Board Plan"). Under the Board Plan, nonqualified
5
<PAGE> 8
stock options are granted to members of the Board who are not employees of the
Company (each, a "designee"). Designees as of the effective date of the Board
Plan received a nonqualified stock option to purchase the greater of 6,000
shares of Common Stock or the difference between 24,000 shares of Common Stock
and the number of shares of Common Stock subject to any option previously
granted to such designee by the Company. As of the date of each annual
stockholders meeting, each designee who has not previously received a grant
during the calendar year receives a nonqualified stock option to purchase 6,000
shares of Common Stock. The exercise price of each option is set at the fair
market value of the Company's Common Stock on the date of grant. The options
vest over a four-year period.
In May 1999, the Company granted options to purchase 6,000 shares of Common
Stock to each of Messrs. Bergman, Blanchard and Gross pursuant to the Board
Plan.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation paid to the Chief Executive
Officer of the Company and to each of the other four most highly compensated
executive officers and one additional individual who would have been one of the
four most highly compensated executives had he been employed with the Company at
December 31, 1999 (the "Named Executive Officers") for fiscal years 1997, 1998
and 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------
---------------------------------------- NUMBER OF
OTHER ANNUAL SECURITIES ALL OTHER
NAME AND SALARY BONUS COMPENSATION UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($) OPTIONS (#) ($)
------------------ ---- -------- ------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Katherine K. Clark (1)....... 1999 $246,746 $37,500 -- 30,000 $1,185,928(2)
Chief Executive Officer.... 1998 $230,833 $52,500 -- 10,000 --
1997 $210,000 $ 5,000 -- 22,500 --
Ralph E. Alexander (1)....... 1999 $191,574 $16,822 -- 30,000 $1,279,371(2)
President and Chief 1998 $216,667 $52,500 -- 25,625 $ 125,250(2)
Operating..................
Officer.................... 1997 $175,000 $ 5,000 -- 22,500 --
John D. Hunter............... 1999 $210,000 $45,417 -- 65,000 $ 848,521(2)
Vice President, 1998 $200,000 $35,833 -- 10,000 --
Mainframe...............
Products................... 1997 $200,000 $ 5,000 -- 22,500 $ 221,250(2)
Daniel Carayiannis........... 1999 $120,000 $111,543(6) -- 50,000 $ 2,108(3)
Vice President, Sales...... 1998 $ 26,848 $15,554 -- 30,000 --
1997 $ -- $ -- -- -- --
Roger A. Philips............. 1999 $110,000 $96,369(4) -- 65,000 $ 90,629(5)
Vice President,............ 1998 $102,500 $69,433 -- 10,000 $ 30,192(2)
International.............. 1997 $100,000 $43,578 -- 15,000 --
Andrew L. McCasker........... 1999 $157,500 $36,333 -- 65,000 --
Vice President, 1998 $142,500 $28,667 -- 30,000 $ 61,819(2)
Distributed.............
Products................... 1997 $125,625 $ 4,000 -- 20,250 --
</TABLE>
- ---------------
(1) Ms. Clark has served as President since November 1999; she also served as
President from November 1993 to September 1997. Mr. Alexander served as
President from September 1997 to November 1999.
(2) Represents the amount recognized as taxable income in connection with the
exercise of non-qualified stock options equal to the difference between the
fair market value of the underlying securities at the date of exercise and
the exercise price.
6
<PAGE> 9
(3) Represents the cost of a sales incentive award.
(4) Includes sales commissions in 1999, 1998, and 1997 of $80,702, $57,266, and
$41,578.
(5) Represents the amount recognized as taxable income to Mr. Philips, in
connection with the exercise of non-qualified stock options in 1999, equal
to the difference between the fair market value of the underlying securities
at the date of exercise and the exercise price equal to $86,480 and the cost
of a sales incentive award of $4,149.
(6) Includes sales commission in 1999 and 1998 of $100,643 and $15,554.
STOCK OPTION GRANTS IN FISCAL YEAR 1999
The following table sets forth information concerning all stock options
granted during 1999 to the Named Executive Officers.
OPTION GRANTS IN FISCAL YEAR 1999
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
----------------------------------------------- VALUE AT ASSUMED
% OF TOTAL ANNUAL RATE OF STOCK
NUMBER OF OPTIONS PRICE APPRECIATION FOR
SECURITIES GRANTED TO OPTION TERM
UNDERLYING EMPLOYEES EXERCISE -----------------------
OPTIONS IN PRICE EXPIRATION 5% 10%
NAME GRANTED 1998(1) ($/SH) DATE ($) ($)
---- ---------- ---------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Katherine K. Clark.............. 30,000 2.31 $12.8750 2/15/09 $242,911 $615,583
Chief Executive Officer
Ralph E. Alexander.............. 30,000 2.31 $12.8750 2/15/09 $242,911 $615,583
President and Chief Operating
Officer
John D. Hunter.................. 20,000 1.54 $12.8750 2/15/09 $161,940 $410,389
Vice President, Mainframe 45,000 3.46 $ 8.1875 11/19/09 231,708 587,194
Products
Daniel C. Carayiannis........... 5,000 0.40 $12.8750 2/15/09 $ 40,485 $102,597
Vice President, North American 45,000 3.46 $ 8.1875 11/19/09 231,708 587,194
Sales
Roger A. Philips................ 20,000 1.54 $12.8750 2/15/09 $161,940 $410,389
Vice President, International 45,000 3.46 $ 8.1875 11/19/09 231,708 587,194
Andrew L. McCasker.............. 20,000 1.54 $12.8750 2/15/09 $161,940 $410,389
Vice President, Distributed 45,000 3.46 $ 8.1875 11/19/09 231,708 587,194
Products
</TABLE>
- ---------------
(1) Based on an aggregate of 1,300,402 options granted in 1999.
7
<PAGE> 10
The following table sets forth information concerning the exercise of stock
options during fiscal year 1999 by the Named Executive Officers and the number
and value of unexercised stock options at December 31, 1999.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1999 AND
1999 FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
NUMBER OF OPTIONS AT FISCAL OPTIONS AT FISCAL
SHARES VALUE YEAR-END (#) YEAR-END ($)
ACQUIRED ON REALIZED --------------------------- ---------------------------
NAME EXERCISE ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Katherine K. Clark....... 222,720 $1,185,928 13,750 48,750 $ 76,960 $ 86,025
Chief Executive Officer
Ralph E. Alexander....... 22,000 $1,279,371 -- -- -- --
President and Chief
Operating Officer
John D. Hunter........... 124,282 $ 848,521 13,750 83,750 $ 76,960 $187,298
Vice President,
Mainframe Products
Daniel C. Carayiannis.... -- -- 15,000 95,000 $ 64,695 $295,358
Vice President North
American Sales
Roger A. Philips......... 17,350 $ 86,480 40,375 87,125 $248,372 $209,026
Vice President,
International
Andrew L. McCasker....... -- -- 64,499 108,501 $381,137 $277,269
Vice President,
Distributed Products
</TABLE>
EXECUTIVE EMPLOYMENT CONTRACTS
Mr. Ralph E. Alexander, the Company's former President, had an employment
agreement with the Company which was for a term of three years beginning on
April 9, 1997. Mr. Alexander voluntarily terminated his employment with the
Company in November 1999. Mr. Alexander and the Company were released from the
employment agreement upon Mr. Alexander's departure; no payments were made or
were required to be made to Mr. Alexander by the Company under the employment
agreement after Mr. Alexander's employment ended.
REPORT OF THE COMPENSATION COMMITTEE AND THE BOARD
OF DIRECTORS OF LANDMARK SYSTEMS CORPORATION
ON EXECUTIVE COMPENSATION
In accordance with the rules of the Securities and Exchange Commission, the
Compensation Committee and the Board offer this report regarding the executive
compensation policy and compensation program for the Chief Executive Officer and
other executive officers of the Company in effect for fiscal year 1999. This
report, as well as the Performance Graph on page 13, are not soliciting
materials, are not deemed filed with the Securities and Exchange Commission and
are not incorporated by reference in any filing of the Company under the
Securities Act of 1933, as amended, or the Exchange Act, whether made before or
after the date of this proxy statement and irrespective of any general
incorporation language in any such filing.
OVERVIEW AND PHILOSOPHY
The Company's Compensation Committee is composed of Patrick W. Gross, T.
Eugene Blanchard and Dennis J. Bowman, who are non-employee directors of the
Company. Among other responsibilities, the
8
<PAGE> 11
Compensation Committee is responsible for establishing salaries, bonuses and
other compensation for, and administering the Company's stock option and stock
purchase plans as they relate to, the Company's officers. The salaries, bonuses
and other compensation for Ms. Clark are subject to ratification by the Board.
In general, the compensation policies adopted by the Compensation Committee are
intended to attract and retain executives capable of enabling the Company to
meet its business objectives and motivate the Company's executives to enhance
long-term stockholder value.
EXECUTIVE OFFICER COMPENSATION
The Company's executive officer compensation program is comprised of base
salary, annual cash incentive compensation in the form of a cash bonus and
long-term incentive compensation in the form of stock option grants.
The Compensation Committee intends to periodically review whether changes
in the executive compensation program are appropriate. In general, the
Compensation Committee intends to continue its present practice of recommending
that annual executive cash compensation (base salary and bonus) and option
grants be set at levels above the median levels in the software industry,
adjusted for the size of the Company, its stage of development, the highly
competitive and innovative nature of the software industry and the level of
responsibility, experience, performance and significant achievements of the
executive officers.
BASE SALARY
Over the past few years the Company has moved executive officer base salary
to competitive levels relative to the various markets from which the Company
attracts executive talent. Competition for senior level talent in the software
industry, particularly in the Northern Virginia market, continues to be high.
Because of this condition and due to the continuing growth of the Company, the
base salary for executive officers generally is set above the median level of
comparable companies.
CASH INCENTIVE BONUS
The Company pays periodic bonuses to its executive officers based primarily
upon the Company's performance, taking into consideration, in certain instances,
individual performance and the other factors noted above.
STOCK OPTION GRANTS
The Company broadly grants stock options in order to provide long-term
incentives and align employee and stockholder long-term interests by creating a
direct link between compensation and stockholder return. Stock options are
granted at an option price equal to the fair market value of the Company's
Common Stock on the date of grant. In order to facilitate long-term incentives
through the option grants, options are subject to vesting over four years, with
25% of the shares vesting at the end of each of the first, second, third, and
fourth years following the date of grant. During 1999, 33.8% of the total
options granted by the Company were granted to executive officers of the
Company, including 23.5% of the total options granted to the Named Executive
Officers.
The option vesting period is designed to encourage employees to work with a
long-term view of the Company's welfare and to establish their long-term
affiliation with the Company. It is also designed to reduce employee turnover
and to retain the trained skills of valued staff.
Because a primary purpose of granting options is to provide incentives for
future performance and to secure retention of valued employees, the Committee
considers each individual's previously granted shares and the number of unvested
shares when granting additional stock options.
Section 162(m) of the Code limits the Company to a deduction for federal
income tax purposes of no more than $1 million of compensation paid to certain
Named Executive Officers in a taxable year. Compensation above $1 million may be
deducted if it is "performance-based compensation" within the meaning of the
Code. The Compensation Committee has determined that stock options granted by
the
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<PAGE> 12
Compensation Committee under the Company's Stock Incentive Plans with an
exercise price at least equal to the fair market value of the Company's Common
Stock on the date of grant shall be treated as "performance-based compensation."
CHIEF EXECUTIVE OFFICER COMPENSATION
During 1999, Katherine K. Clark, a founder of the Company and its Chief
Executive Officer, also assumed the role of President. During 1999, Ms. Clark
received a base salary of $246,570, a bonus of $37,500, and a nonqualified stock
option grant of 30,000 shares. During 1999, the Compensation Committee evaluated
the compensation provided to Ms. Clark.
<TABLE>
<S> <C>
BOARD OF DIRECTORS: COMPENSATION COMMITTEE:
Patrick H. McGettigan Patrick W. Gross
Katherine K. Clark T. Eugene Blanchard
Ralph E. Alexander Dennis J. Bowman
Jeffrey H. Bergman
T. Eugene Blanchard
Patrick W. Gross
Sudhakar V. Shenoy
Dennis J. Bowman
</TABLE>
RATIFICATION OF THE SELECTION OF INDEPENDENT ACCOUNTANTS
(PROPOSAL 2)
In February 2000, the Board approved the selection of
PricewaterhouseCoopers LLP as independent accountants of the Company for the
fiscal year ending December 31, 2000. Audit services performed for the Company
during fiscal year ended December 31, 1999 included examination of the Company's
financial statements. PricewaterhouseCoopers LLP has informed the Company that
it has no material direct or indirect interest in the Company.
Price Waterhouse LLP, prior to its merger with Coopers & Lybrand LLP in
1998, served as the Company's independent accountants since 1985.
Representatives of PricewaterhouseCoopers LLP are expected to be present at the
annual meeting and will be afforded the opportunity to make a statement if they
so desire and to respond to appropriate questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS OF THE
COMPANY VOTE "FOR" THE RATIFICATION OF THE SELECTION OF PRICEWATERHOUSECOOPERS
LLP AS THE COMPANY'S INDEPENDENT ACCOUNTANTS.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION AND CERTAIN TRANSACTIONS
During 1999, T. Eugene Blanchard and Patrick W. Gross, none of whom is an
employee of the Company, served on the Compensation Committee of the Board. In
December 1999, Dennis J. Bowman, who also is not an employee of the Company, was
elected to serve on the Compensation Committee. No member of the Compensation
Committee serves as a member of the board of directors or compensation committee
of any entity that has one or more executive officers serving as a member of the
Company's Board or the Compensation Committee.
10
<PAGE> 13
STOCKHOLDER RETURN PERFORMANCE GRAPH
The following graph and table show the cumulative total stockholder return
on the Company's Common Stock compared to the Nasdaq Stock Market (U.S.) Index
and the Nasdaq Computer & Data Processing Index for the period between November
18, 1997 (the date the Company's Common Stock began trading on the Nasdaq
National Market) and December 31, 1999 (the last trading day in fiscal year
1999). The graph assumes $100 was invested (1) in the Company's Common Stock,
(2) in the Nasdaq Stock Market (U.S.) Index and (3) in the Nasdaq Computer &
Data Processing Index, and assumes reinvestment of dividends.
COMPARISON OF 25 MONTH CUMULATIVE TOTAL RETURN*
AMONG LANDMARK SYSTEMS CORPORATION,
THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE NASDAQ COMPUTER & DATA PROCESSING INDEX
<TABLE>
<CAPTION>
LANDMARK SYSTEMS NASDAQ STOCK MARKET NASDAQ COMPUTER &
CORPORATION (U.S.) DATA PROCESSING
---------------- ------------------- -----------------
<S> <C> <C> <C>
11/18/97 100.00 100.00 100.00
12/97 129.00 99.00 96.00
3/98 134.00 116.00 127.00
6/98 123.00 119.00 141.00
9/98 116.00 108.00 133.00
12/98 159.00 139.00 173.00
1/99 191.00 159.00 208.00
2/99 146.00 145.00 185.00
3/99 129.00 156.00 207.00
4/99 163.00 160.00 197.00
5/99 138.00 156.00 192.00
6/99 148.00 170.00 215.00
7/99 113.00 168.00 204.00
8/99 108.00 175.00 214.00
9/99 116.00 174.00 222.00
10/99 125.00 187.00 235.00
11/99 120.00 207.00 268.00
12/99 149.00 252.00 364.00
</TABLE>
* $100 INVESTED ON 11/18/97 IN STOCK OR ON 10/31/97
IN INDEX -- INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
The Nasdaq Stock Market (U.S.) Index has been selected as a broad equity
market index. The Nasdaq Computer & Data Processing Index was selected because
the Company believes that the index fairly represents the companies generally
engaged in the line of business similar to that of Landmark.
SECTION 16(A) BENEFICIAL
OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers and persons who own more than 10% of a registered class of
the Company's equity securities to file with the Securities and Exchange
Commission and the Nasdaq Stock Market initial reports of ownership and reports
of changes in ownership of Common Stock and other equity securities of the
Company. In addition, under Section 16(a), trusts for which a reporting person
is a trustee and a beneficiary (or for which a member of his immediate family is
a beneficiary) may have a separate reporting obligation with regard to ownership
of the Common Stock and other equity securities of the Company. Such reporting
persons are required by rules of the Securities and Exchange Commission to
furnish the Company with copies of all Section 16(a) reports they
11
<PAGE> 14
file. In 1999, the Company received Section 16(a) reports and written
representations that certain reports were not required. The Company believes
that during 1999 all reports that were required to be filed under Section 16 of
the Exchange Act were timely filed, except as follows: (i) on behalf of Sudakar
Shenoy, who was elected to the Board of Directors effective April 1999, the
Company failed to timely report his initial stock option grant on a Form 3,
which report has subsequently been filed; (ii) the following Directors, T.
Eugene Blanchard and Patrick W. Gross, were automatically granted stock option
grants under the Directors Stock Incentive Plan as of the date of the 1997 and
1998 annual meetings, however the Company failed to timely file on their behalf,
which reports were subsequently filed; (iii) on behalf of Katherine K. Clark,
the Company failed to timely report an exercise of stock options on a Form 4,
which report has subsequently been filed.
STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Pursuant to rules of the Securities and Exchange Commission, stockholder
proposals intended to be presented at the 2001 annual meeting of stockholders
must be received by the Secretary of the Company on or before December 14, 2000
in order to be included in the Company's proxy statement and form of proxy
relating to that meeting. Proposals should be sent to 12700 Sunrise Valley
Drive, Reston, Virginia 20191. The submission by a stockholder of a proposal for
inclusion in the proxy statement does not guarantee that it will be included.
Any stockholder proposal not included in the proxy materials disseminated by the
management of the Company for the Company's 2001 annual meeting in accordance
with Rule 14a-8 under the Securities Exchange Act of 1934 (the "Exchange Act")
will be considered untimely for the purposes of Rules 14a-4 and 14a-5 under the
Exchange Act if notice of the proposal is received after March 4, 2001.
Management proxies will be authorized to exercise discretionary authority with
respect to any stockholder proposal not included in the Company's proxy
materials unless (a) the Company receives notice of such proposal by March 4,
2001, and (b) the conditions set forth in Rule 14-4(c)(2)(i)-(iii) under the
Exchange Act are met.
By order of the Board of Directors,
Frederick S. Rolandi, III
Secretary
Dated: April 14, 2000
STOCKHOLDERS ARE REMINDED TO SIGN AND DATE THE ENCLOSED PROXY AND MAIL IT
PROMPTLY IN THE POSTAGE-PAID ENVELOPE PROVIDED.
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<PAGE> 15
----------------------------------
WHEN PROXY IS OKAYED PLEASE SIGN
& DATE IT ABOVE
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
LANDMARK SYSTEMS CORPORATION
MAY 16, 2000
\/PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED\/
- -------------------------------------------------------------------------------
A [X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE
FOR all nominees WITHHOLD
listed at right (except AUTHORITY
as marked to the to vote for all nominees
contrary below) listed at right
1. Election of [ ] [ ] NOMINEES: Patrick H. McGettigan
Directors: Katherine K. Clark
T. Eugene Blanchard
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO Patrick W. Gross
VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE THAT Sudhakar V. Shenoy
NOMINEE'S NAME ON THE SPACE PROVIDED Dennis J. Bowman
BELOW. James P. Donehey
- -----------------------------------------------
FOR AGAINST ABSTAIN
2. Ratification of selection of [ ] [ ] [ ]
PricewaterhouseCoopers LLP as
independent accountants.
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT OR
POSTPONEMENT THEREOF.
If you plan to attend meeting, please check here. [ ]
Change of Address and or Comments mark here. [ ]
(PLEASE SIGN, DATE AND RETURN THIS PROXY IN THE ENCLOSED POSTAGE
PREPAID ENVELOPE.)
SIGNATURE SIGNATURE DATED
-------------------------- --------------------- ---------
NOTE: The signature on this Proxy should correspond exactly with stockholder's
name as printed above. In the case of joint tenancies, co-executors or co-
trustees, both should sign. Persons signing as Attorney, Executor,
Administrator, Trustee or Guardian should give their full title.
- -------------------------------------------------------------------------------
<PAGE> 16
----------------------------------
WHEN PROXY IS OKAYED PLEASE SIGN
& DATE IT ABOVE
- -------------------------------------------------------------------------------
LANDMARK SYSTEMS CORPORATION
12700 SUNRISE VALLEY DRIVE
RESTON, VIRGINIA 20191
PROXY/ VOTING INSTRUCTION CARD
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF LANDMARK
SYSTEMS CORPORATION FOR THE ANNUAL MEETING OF STOCKHOLDERS ON MAY 16, 2000
The undersigned appoints Katherine K. Clark and Frederick S. Rolandi, and
each of them, with full power of substitution in each, the proxies of the
undersigned, to represent the undersigned and vote all shares of Landmark
Systems Corporation Common Stock which the undersigned may be entitled to vote
at the Annual Meeting of Stockholders to be held on May 16, 2000, and at any
adjournment or postponement thereof, as indicated on the reverse side.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL
BE VOTED FOR PROPOSALS 1 AND 2.
-------------
SEE REVERSE
(CONTINUED AND TO BE DATED AND SIGNED ON THE REVERSE SIDE.) SIDE
-------------
- ------------------------------------------------------------------------------
