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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
EXABYTE CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(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:
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[LOGO OF EXABYTE CORPORATION]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on May 4, 1998
To the Stockholders:
The 1998 Annual Meeting of Stockholders will be held at the following time and
place:
TIME: Monday, May 4, 1998
9:00 a.m. Mountain Standard Time
PLACE: Exabyte Corporate Headquarters
1685 38th Street
Boulder, Colorado 80301
PURPOSE: To elect two directors;
To approve the Board's selection of Price Waterhouse
LLP as our independent accountants for fiscal 1998;
and
To conduct any other business that has been properly
brought before the meeting.
(The accompanying Proxy Statement describes these items in greater detail.)
You are entitled to notice of this Annual Meeting and may vote at this Annual
Meeting only if you were a stockholder of record at the close of business on
March 16, 1998. Whether or not you plan to attend the annual meeting, please
sign, date and return the enclosed proxy at your earliest convenience. This
will ensure your representation at the Annual Meeting.
By order of the Board of Directors
[SIGNATURE OF STEPHEN F. SMITH]
Stephen F. Smith
Corporate Secretary
Boulder, Colorado
March 31, 1998
A RETURN ENVELOPE, WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES,
IS ENCLOSED. YOU MAY ATTEND THE ANNUAL MEETING AND VOTE IN PERSON. RETURNING
THE ENCLOSED PROXY WILL NOT PREVENT YOU FROM ATTENDING THE MEETING AND
VOTING YOUR SHARES IN PERSON, HOWEVER, IF YOUR SHARES ARE HELD BY A BANK,
BROKER, OR OTHER INTERMEDIARY, AND YOU WISH TO VOTE IN PERSON, YOU MUST
BRING A PROXY ISSUED IN YOUR NAME OR A LETTER FROM THE BANK OR BROKER
CONFIRMING YOUR BENEFICIAL OWNERSHIP.
<PAGE>
EXABYTE CORPORATION
----------------
PROXY STATEMENT
----------------
GENERAL
Our Board of Directors (the "Board") is soliciting the enclosed proxy to use
at the Annual Meeting of Stockholders, including any adjourned or postponed
meeting (the "Annual Meeting"), for the purposes stated in this Proxy
Statement and the accompanying Notice of Annual Meeting. The Annual Meeting
will be held on May 4, 1998 at 9:00 a.m. at Exabyte's corporate headquarters,
1685 38th Street, Boulder, Colorado 80301.
We intend to mail this Proxy Statement and the enclosed proxy card on or
about March 31, 1998 to all stockholders of record as of March 16, 1998.
SOLICITATION
We will pay all costs of proxy solicitation, including the costs of
preparing, assembling, printing and mailing this Proxy Statement, the proxy
card and any additional information furnished to the stockholders. In addition
to solicitation by mail, proxies may be solicited by telephone, facsimile,
telegram, in person or otherwise, by Exabyte directors, officers or employees
without additional compensation. We may reimburse banks, brokerage houses,
fiduciaries, custodians and other intermediaries for their costs of forwarding
the proxy materials to beneficial owners.
RECORD DATE, VOTING RIGHTS AND SHARES OUTSTANDING
You are entitled to vote at the Annual Meeting only if you are a stockholder
of record at the close of business on March 16, 1998. On this date, 22,465,318
shares of common stock were outstanding and entitled to vote. Each stockholder
of record is entitled to one vote for each share held on all matters submitted
for a vote. The persons named as proxy holders on the proxy card will vote
your shares as you indicate on the enclosed proxy card. If you do not specify
on your proxy card how you want your shares voted, the proxy holders will vote
your shares "FOR" all of the nominees for directors named in Proposal 1 and
"FOR" Proposal 2.
A quorum is necessary to hold a valid meeting. A quorum will be reached when
the holders of at least a majority of the outstanding shares of common stock
are present in person or represented by proxy at the Annual Meeting. If you
mark your proxy card "ABSTAIN" on any proposal, your shares will still be
counted towards a quorum, but your vote on that proposal will have the same
effect as a vote against the proposal. Broker non-votes will also be counted
towards a quorum, but otherwise will have no effect on the outcome of the
proposal. (Broker non-votes occur when brokers do not vote on some matters
because they have not been authorized to vote on that matter by the beneficial
owners of the shares.)
REVOCABILITY OF PROXIES
You may revoke your proxy at any time before it is voted at the Annual
Meeting by:
. filing a written notice of revocation with the Corporate Secretary;
. filing another executed proxy, which bears a later date, with the
Corporate Secretary; or
. attending the Annual Meeting and voting in person. Please note that
simply attending the Annual Meeting will NOT revoke your proxy.
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STOCKHOLDER PROPOSALS
We know of no additional business to be presented for vote at the Annual
Meeting that is not already included in this Proxy Statement. However, if
additional business is properly presented for a vote at the Annual Meeting,
the proxy holders intend to vote on that business in accordance with their
best judgment.
If you would like to present a proposal for possible inclusion in the
Company's proxy statement for the 1999 Annual Meeting of Stockholders, we must
receive it no later than December 2, 1998. To present other director
nominations or stockholder proposals at the meeting, you must provide us with
advance written notice in accordance with our By-laws (a copy of which is
available from the Corporate Secretary upon request.)
PROPOSAL 1
ELECTION OF DIRECTORS
GENERAL
There are currently seven directors on the Board. The Board is divided into
three classes. One class is elected at each annual meeting of stockholders for
a three-year term. Any vacancies on the Board (including a vacancy created by
an increase in the size of the Board) can be filled by either a majority vote
of the stockholders or a majority vote of the remaining directors. Any
director elected to fill a vacancy serves for the remainder of the term of the
class in which he was elected.
Directors are elected at the Annual Meeting by a plurality of the shares
voted, which means that, for the Annual Meeting, the two nominees for director
who receive the most affirmative votes will be elected. The proxy holders will
vote for the nominees listed below, unless otherwise directed on the proxy
card. If any of the nominees become unavailable for election, the proxy
holders will vote for a substitute nominee selected by management, or the
Board may reduce the number of directors to be elected at the meeting. The
persons nominated for election have agreed to serve if elected. Management has
no reason to believe that they will not be able to serve.
There are currently three directors in the class whose term expires in 1998.
Two of these directors, Mr. Bruce Holland and Mr. Tom Washing, have decided to
retire from the Board at the end of their term. We would like to express our
appreciation for their many years of dedicated service to the Board. The other
director, Mr. Peter Behrendt, is being nominated for reelection. One nominee,
Mr. A. Laurence Jones, is being nominated for election for the first time. If
elected, the nominees would serve until the 2001 Annual Meeting, and until a
successor is elected and qualified (or until the director's earlier death,
resignation or removal). We are submitting nominations to fill only two of the
three positions available in this class as the Board intends to reduce the
number of directors in this class from three to two. You may not vote for more
than two nominees. The directors in the other two classes are not up for
election this year.
BOARD COMMITTEES AND MEETINGS
During fiscal 1997 (ended January 3, 1998), the Board held eight regular
meetings (including telephone board meetings). The Board has three standing
committees: an Audit Committee, a Compensation Committee and a Stock Option
Committee.
The Audit Committee meets with our independent auditors at least once a year
to review the results of the annual audit and discuss the financial
statements. The Audit Committee recommends to the Board the independent
accountants to be retained and considers the auditors' comments on controls,
adequacy of staff and management performance, and other audit and financial
control procedures. The Audit Committee, which is currently composed of
Messrs. Washing, Perry and Sorenson, met two times during fiscal 1997.
The Compensation Committee determines officer and director compensation
(including salaries, incentive compensation and stock options) as well as
compensation levels for other employees and performs other functions related
to compensation that the Board assigns to it. The Compensation Committee,
currently composed of Messrs. Perry, Pardun, Holland, Sorenson and Washing,
met two times during fiscal 1997.
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The Stock Option Committee has the authority to grant options to employees
who are not officers or directors. The Stock Option Committee, currently
composed of Messrs. Behrendt, Holland, Pardun and Washing, met five times
during fiscal 1997.
Each director attended at least 75% of the Board meetings and committee
meetings (for those committees on which he served) that were held during his
directorship in fiscal 1997.
Biographical information for each nominee is provided below, followed by
biographical information for each director whose term will continue after the
Annual Meeting.
NOMINEES FOR ELECTION FOR A THREE-YEAR TERM EXPIRING AT THE 2001 ANNUAL
MEETING OF STOCKHOLDERS
Peter D. Behrendt
Mr. Peter D. Behrendt, age 59, joined the Company in July 1987 as President,
Chief Operating Officer and director. Mr. Behrendt was the Company's Chairman
of the Board from January 1992 until January 1998. He served as President
until January 1997, Chief Operating Officer until December 1994 and Chief
Executive Officer from July 1990 until January 1997. Prior to joining the
Company, Mr. Behrendt held various executive positions during 26 years with
IBM, including Director of quality and product assurance for the information
systems and communications group and Product Manager of the electronic
typewriter business. Mr. Behrendt was also responsible for product and
business planning for IBM's disk and tape offerings. Mr. Behrendt currently
serves as a director of Western Digital Corporation and Infocus Systems
Corporation.
A. Laurence Jones
Mr. A. Laurence Jones, age 44, is currently an independent Operating
Affiliate of McCown DeLeeuw and Co., a leverage buy-out investment firm, and
has served in that capacity since joining the firm in January 1998.
Previously, Mr. Jones served as President and Chief Executive Officer of
Neodata Service, Inc., a direct marketing company, from 1993 to 1998. Mr.
Jones also served as President and Chief Executive Officer of GovPX, Inc. from
1991 to 1993 and Senior Vice President and Corporate Officer of Automatic Data
Processing from 1987 to 1991. Prior to 1987, Mr. Jones spent ten years at Wang
Laboratories, where he held various technical and managerial positions,
including that of Chief Executive Officer of a financial information services
division. Mr. Jones is also a director of CCI/Triad, SARCOM, RSP Manufacturing
and Hand Technologies.
THE BOARD RECOMMENDS A VOTE IN FAVOR OF EACH NAMED NOMINEE
DIRECTORS CONTINUING IN OFFICE UNTIL THE 1999 ANNUAL MEETING
Ralph Z. Sorenson
Dr. Ralph Z. Sorenson, age 64, has served as a director of Exabyte since
January 1993. Dr. Sorenson is currently a Professor Emeritus at the College of
Business and Administration at the University of Colorado at Boulder. From
July 1992 to June 1993, he was Dean of the College of Business and
Administration. Dr. Sorenson served as Adjunct Professor of Management at the
Harvard Business School from 1989 to 1992, teaching management policy and
practice. From 1981 to 1989, Dr. Sorenson was Chairman, President and Chief
Executive Officer of Barry Wright Corporation, a diversified industrial
company engaged in the design and manufacture of industrial products for
improving productivity and integrating filing systems for the office. Prior to
1981, he was President of Babson College in Wellesley, Massachusetts. Dr.
Sorenson also serves as a director of Eaton Vance Corporation, Houghton
Mifflin Company, Polaroid Corporation and Whole Foods Market Incorporated.
Thomas E. Pardun
Mr. Thomas E. Pardun, age 53, has served as a director of Exabyte since
April 1995. Mr. Pardun has been President of U.S. West International, Asia-
Pacific, a subsidiary of U.S. West, Inc., since May 1996. From April 1993
until May 1996, Mr. Pardun was President and Chief Executive Officer of U.S.
West Multimedia
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Communications, Inc. Previously, Mr. Pardun was Vice President and General
Manager of business and government services at U.S. West Communications from
January 1990 to April 1993. He served as Vice President of marketing and
planning for U.S. West Communications from June 1988 through December 1989.
Mr. Pardun was President of U.S. Sprint's Central Group, Sprint's West
Division, and Senior Vice President of business development for Sprint in
Kansas City. Prior to his association with Sprint, Mr. Pardun held a variety
of management positions with IBM Corporation. Mr. Pardun also serves as a
director of Western Digital Corporation and the Denver Center for the
Performing Arts.
DIRECTORS CONTINUING IN OFFICE UNTIL THE 2000 ANNUAL MEETING
Mark W. Perry
Mr. Mark W. Perry, age 54, has served as a director of Exabyte since March
1994. Mr. Perry has served as a General Partner of New Enterprise Associates,
a venture capital firm, since January 1996. From May 1994 to December 1995,
Mr. Perry served as President and Chief Executive Officer and then as Chairman
of Viewstar Corporation, a provider of business process automation
client/server software. Prior to joining Viewstar, Mr. Perry was employed by
Silicon Graphics, Inc., a manufacturer of visual computing systems, serving
as: Vice Chairman from April 1992 until May 1994; Executive Vice President
responsible for worldwide sales, marketing and service, business development
and administration in 1991 and 1992; Executive Vice President responsible for
the product divisions, including research and development, manufacturing,
marketing and software applications, from 1988 through 1990; and Vice
President of Finance and Administration and Chief Financial Officer from 1985
to 1988. Prior to his association with Silicon, Mr. Perry was Executive Vice
President and Chief Operating Officer of Sonoma Vineyards, Windsor, California
from 1982 to 1985 and a partner at Arthur Young & Company, San Francisco,
California, from 1977 to 1982. Mr. Perry is a Certified Public Accountant. Mr.
Perry is also a director of: Arbor Software Corporation; Agora Digital;
Avirnex Communications Group; Be, Inc.; Big Book, Inc.; Cogit, Inc.; Optitek,
Inc.; Silicon Spice, Inc.; and Warp Speed Communications.
William L. Marriner
Mr. William L. Marriner, age 45, joined the Company in March 1987 as Vice
President of finance and administration and Chief Financial Officer. He was
subsequently promoted to Senior Vice President in July 1991 and Executive Vice
President in December 1994 and continued to serve as Chief Financial Officer
until December 1997. Mr. Marriner was elected acting President and Chief
Executive Officer in January 1997, President, Chief Executive Officer and
director in July 1997 and Chairman of the Board in January 1998. Prior to
joining the Company, Mr. Marriner held various positions at Storage Technology
Corporation from 1978 to 1987, including Vice President of Pacific and Latin
American operations, manager of business planning and administration for
international operations and Assistant to the President.
PROPOSAL 2
APPROVAL OF INDEPENDENT
ACCOUNTANTS SELECTION
The Board has selected Price Waterhouse LLP as Exabyte's independent
accountants for fiscal 1998 (ending January 2, 1999). The Board has directed
that management submit this selection for approval by the stockholders at the
Annual Meeting.
Price Waterhouse LLP has audited our financial statements since Exabyte was
first incorporated. We expect a representative of Price Waterhouse LLP to be
present at the Annual Meeting to make a statement if he so desires and to
respond to any appropriate questions.
Stockholder approval of the selection of the accountants is not required by
our By-laws or otherwise. However, the Board is submitting the selection of
Price Waterhouse LLP to the stockholders for approval
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because it believes it is good corporate practice to do so. If the
stockholders fail to approve this proposal, the Board will consider whether to
retain Price Waterhouse LLP, but the final decision rests entirely with the
Board. Additionally, the Board may appoint a different independent auditing
firm at any time during the year if the Board determines that it would be in
the best interest of Exabyte and its stockholders.
The affirmative vote of a majority of the shares voted is required to
approve the selection of Price Waterhouse LLP.
THE BOARD RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 2
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
our directors and executive officers, and persons who own more than 10% of
Exabyte's common stock, to file with the Commission initial reports of
ownership and reports of changes in ownership. Officers, directors and greater
than 10% stockholders are required by Commission regulations to furnish us
with copies of all Section 16(a) forms they file.
Mr. David Riegel inadvertently failed to timely file his Form 4 to report
that he purchased 4,500 shares in January 1997 on behalf of the trust held in
his and his wife's name.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table provides certain information regarding the ownership of
Exabyte's common stock as of March 2, 1998 by: (i) each director; (ii) each
executive officer named in the Summary Compensation Table who was employed by
Exabyte in that capacity as of March 2, 1998; (iii) all of Exabyte's executive
officers and directors as a group; and (iv) all those known to be beneficial
owners of more than five percent of Exabyte's common stock:
<TABLE>
<CAPTION>
BENEFICIAL
OWNERSHIP(1)
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NUMBER OF PERCENT OF
BENEFICIAL OWNER SHARES TOTAL
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<S> <C> <C>
First Pacific Advisors, Inc.(2)........................... 2,802,900 12.5%
11400 West Olympic Boulevard
Suite 1200
Los Angeles, CA 90064
Brinson Partners, Inc.(3)................................. 1,148,100 5.1%
209 South LaSalle Street
Suite 107
Chicago, IL 60604-1295
William L. Marriner(4)(5)................................. 261,865 1.2%
Peter D. Behrendt(4)(6)................................... 524,840 2.3%
Bruce M. Holland(4)....................................... 18,800 *
Thomas E. Pardun(4)....................................... 12,700 *
Mark W. Perry(4).......................................... 22,200 *
Ralph Z. Sorenson(4)...................................... 23,400 *
Thomas G. Washing(4)(7)................................... 31,396 *
Mark W. Canright(4)....................................... 101,200 *
Stephen F. Smith(4)....................................... 20,094 *
All executive officers and directors as a group (9
persons)(8).............................................. 1,016,495 4.5%
</TABLE>
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* Less than one percent.
(1) This table is based upon information supplied by officers, directors,
principal stockholders and Schedules 13D and 13G, if any, filed with the
Securities and Exchange Commission (the "Commission"). Unless otherwise
indicated in the footnotes to this table and subject to community property
laws where applicable, each of the stockholders named in this table has
sole power to vote and dispose of the shares indicated as beneficially
owned. Applicable percentages are based on 22,479,913 shares outstanding
on March 2, 1998, adjusted as required by rules of the Commission.
(2) Based on a Schedule 13G filed with the Commission on February 5, 1998.
First Pacific Advisors, Inc., a subsidiary of United Asset Management
Corporation, manages the FPA Family of Funds. It has shared voting power
with respect to 822,900 shares and shared dispositive power with respect
to 2,802,900 shares.
(3) Based on a Schedule 13G filed with the Commission on February 15, 1998.
Brinson Partners, Inc. is an Investment Advisor registered under section
203 of the Investment Advisors Act of 1940. It has shared voting and
dispositive powers with respect to all shares held.
(4) Includes shares issuable upon the exercise of outstanding stock options
that are exercisable within 60 days of March 2, 1998, as follows: Mr.
Marriner, 178,900 shares; Mr. Behrendt, 283,500 shares; Mr. Holland,
18,400 shares; Mr. Pardun, 11,700 shares; Mr. Perry, 18,200 shares; Mr.
Sorenson, 23,400 shares; Mr. Washing, 18,400 shares; Mr. Canright, 101,200
shares; and Mr. Smith, 19,180 shares.
(5) Includes 25,000 shares held by Mr. Marriner's spouse.
(6) Includes 4,420 shares held by Mr. Behrendt's spouse as custodian for the
benefit of his children.
(7) Includes 2,500 shares held by Mr. Washing's spouse as to which he
disclaims beneficial ownership.
(8) Includes shares described in the notes above, as applicable.
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COMPENSATION COMMITTEE REPORT/1/
COMPENSATION COMMITTEE POLICIES
The Compensation Committee (the "Committee") is composed of Exabyte's five
non-employee directors. The Committee is responsible for establishing and
administering the policies that govern compensation of executive officers. Due
to the increasingly competitive demand for superior executive talent, the
Company's executive compensation program has been designed to attract, retain,
motivate and appropriately reward executive officers capable of leading the
Company to meet its business objectives and to enhance long-term stockholder
value. Compensation for the Company's executive officers includes the
following key elements:
. base salary;
. incentive bonus awards; and
. stock option awards (long-term compensation).
Base salary is determined primarily as a function of competitive salary
levels. The Committee annually reviews the executive officers' salaries and
compares them with the salary levels of executives in similar capacities and
industries. The Committee then establishes salary levels for the Company's
executive officers based in large part on the results of that review.
In establishing an executive officers' bonus plan opportunity, the Committee
takes into account each executive officer's position and level of
responsibility. Incentive bonus award payouts are based upon the Company's
performance as measured by actual achievement against the annual operating
plan approved by the Board of Directors during the previous fiscal year.
In establishing an executive officer's level of stock option grant, the
Committee takes into account the executive officer's performance during the
previous fiscal year, his potential to influence the operations of the Company
in the future and the performance of the Company during the previous fiscal
year. In particular, the Committee looks at criteria such as the Company's:
. financial performance;
. stock performance;
. long-term strategic decisions; and
. response to a rapidly changing competitive environment.
The Committee does not base its considerations on any single performance
factor nor does it specifically assign relative weights to factors, but rather
considers a mix of factors and evaluates the Company and individual
performances against that mix.
BASE SALARY: Executive officers' base salaries for the current year are
determined annually at the first Committee meeting of that year. To determine
the salary level for each executive officer, the Committee evaluates that
officer's position and the Radford Study results (described below).
The Radford Study contains the results of independent surveys comparing the
compensation paid to executive officers of companies with revenues between
$200 million and $500 million. One survey also includes a separate comparison
of 40 companies that are in the computer/peripherals business, including some
of the Company's competitors. The Committee considers the companies included
in the Radford Study, particularly
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/1/ The material in this report is not "soliciting material," is not deemed
"filed" with the Commission and is not to be incorporated by reference in any
filing of the Company under the Securities Act of 1933, as amended (the
"Securities Act") or the Exchange Act, whether made before or after the date
hereof and irrespective of any general incorporation language in any such
filing.
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those listed in the smaller survey, to be similar to the Company and,
therefore, a relevant competitive framework for purposes of compensation
decisions. There is little correlation between the companies included in the
Radford Study and the companies included in the industry group index that was
used in the Performance Graph.
After careful consideration of the Radford Study and each executive
officer's position in January 1997, the Committee approved a 5% increase in
base salary for each of the executive officers. These adjusted salaries are at
the lower range of those salaries reflected in the Radford Study.
INCENTIVE BONUS AWARD: The annual incentive bonus plan for the executive
officers is determined at the first Committee meeting of each year and any
amounts due under such plan are paid to the executive officers in February of
the following year. Potential bonus levels represent a percentage of each
executive officer's base salary. The amount of bonus paid depends on the level
of attainment of pre-tax income targets established by the annual operating
plan, which is adopted by the Board at the first meeting of each year.
Under the 1997 bonus plan, executive officers were eligible to receive up to
100% of their potential bonus to the extent that the Company attained pre-tax
income levels targeted in the 1997 annual operating plan. However, no bonus
was payable under the 1997 bonus plan unless the Company achieved at least 50%
of such targeted pre-tax income levels. To the extent that the pre-tax income
levels exceeded target, executive officers were eligible to receive up to 200%
of bonus. Because the Company did not achieve at least 50% of the pre-tax
income levels targeted in the 1997 annual operating plan, no bonuses were paid
to executive officers under the 1997 bonus plan.
STOCK OPTION AWARDS: The third component of executive compensation is the
award of stock options. The Committee has used the grant of options under the
Incentive Stock Plan to underscore the common interests of stockholders and
management. Options granted to executive officers are intended to provide a
continuing financial incentive to maximize long-term value to stockholders and
to motivate executive officers to focus on long-term strategic objectives.
In determining the size of an option to be granted to an executive officer,
the Committee takes into account the executive officer's position and level of
responsibility within the Company, the executive officer's existing stock
options and unvested option holdings, the potential reward to the executive
officer if the stock price appreciates in the public market, as well as the
results of the Radford Study. The Committee believes that long-term incentive
compensation should constitute a significant component of compensation for
executive officers.
In addition to the factors listed above, in January 1997, the Committee also
assessed each executive officer's individual performance during 1996 and his
potential to influence the operations of the Company in the future. As a
result of these factors, the Committee granted options at levels ranging from
20,000 to 80,000 shares to executive officers to purchase common stock. The
exercise price for each grant is equal to the closing price of the stock on
the date of grant. The Company's option grants vest over 50 months and are
only of value to the extent vested, and only if the stock price has
appreciated above the exercise price.
CHIEF EXECUTIVE OFFICER COMPENSATION
On January 16, 1997, Mr. Peter Behrendt resigned as Chief Executive Officer
and President of the Company, at which time the Company initiated a search for
his successor. In anticipation of Mr. Behrendt's continuing service to the
Company as an employee while the Company engaged in a search for his successor
and as Chairman of the Board, the Committee authorized a 5% raise in Mr.
Behrendt's salary for 1997 to $427,453. For the same reasons, the Committee
also granted Mr. Behrendt an option to acquire 50,000 shares. As of July 11,
1997, Mr. Behrendt resigned as an employee of the Company and, as part of his
termination package, was engaged by the Company as a consultant to the Company
from July 1997 through the end of 1997 at a consulting rate during this period
equal to 80% of his previous salary as an employee. As of the end of the term
of his consulting agreement, Mr. Behrendt has no affiliation with the Company
other than non-employee director and is currently paid by the Company as a
non-employee director.
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The Board appointed Mr. William Marriner acting Chief Executive Officer and
President in January 1997. Because of the interim nature of the appointment,
the Committee did not raise Mr. Marriner's salary to the level generally given
to the position of Chief Executive Officer and President. The Committee
instead awarded Mr. Marriner, who retained his position as Chief Financial
Officer until December 1, 1997, an option to acquire 80,000 shares, 50,000 of
which were granted in recognition of his appointment as acting Chief Executive
Officer and President. Consistent with the actions taken with respect to other
executive officers, the Committee authorized a 5% raise in Mr. Marriner's base
salary for 1997 to $245,000. On July 8, 1997, Mr. Marriner was appointed Chief
Executive Officer and President of the Company. Mr. Marriner's base salary was
then adjusted to $300,000 to reflect the change in his position and the
increase in his responsibilities. The Committee also granted Mr. Marriner an
option to acquire an additional 50,000 shares in recognition of his new
responsibilities, as well as prior accomplishments, which included the
divisional restructuring of the Company and the establishment of a new senior
management team.
For the reasons discussed in the Incentive Bonus Award section above,
neither Mr. Behrendt nor Mr. Marriner was awarded a bonus under the 1997 bonus
plan.
DEDUCTIBILITY OF COMPENSATION
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), generally imposes on the Company an annual corporate deduction
limitation of $1 million on the compensation of certain executive officers.
Compensation in excess of $1 million may be deducted if it is "performance-
based compensation" within the meaning of the Code. The Company has not
adopted a policy with respect to the treatment of all forms of compensation
under Section 162(m) of the Code. However, the Compensation Committee has
determined that stock options and rights granted under the Incentive Stock
Plan with an exercise price at least equal to the fair market value of the
Company's common stock on the date of grant should, where practicable, be
treated as "performance-based compensation." To that end, the Incentive Stock
Plan provides that no employee may be granted stock options under the
Incentive Stock Plan during a calendar year to purchase in excess of 500,000
shares of common stock.
<TABLE>
<S> <C> <C>
COMPENSATION COMMITTEE: Mark W. Perry, Chairman
Ralph Z. Sorenson *Thomas G. Washing
Thomas E. Pardun *Bruce M. Holland
</TABLE>
- --------
*Not standing for re-election.
COMPENSATION OF DIRECTORS
Each director who is not an employee of Exabyte receives $15,000 as an
annual retainer for his services as a director. In addition, non-employee
directors receive $1,500 for each Board meeting they attend in person and $250
for each committee meeting they attend in person and each telephone Board
meeting in which they participate. Non-employee directors received an
aggregate of $115,750 for their services rendered to Exabyte during fiscal
1997. Non-employee directors are also reimbursed for out-of-pocket travel
expenses in connection with their attendance at Board meetings.
Non-employee directors also receive options under the Incentive Stock Plan.
On January 27th of each fiscal year, each non-employee director who has been a
non-employee director for at least three months is automatically granted an
option to purchase 5,000 shares of common stock. Each newly elected non-
employee director, upon initial election to the Board, receives an option to
purchase 10,000 shares. The exercise price of these options equals the fair
market value of the stock on the date of grant. The options vest at the rate
of 2% per month beginning one month following the date of grant. During fiscal
1997, options covering an aggregate of 25,000 shares were granted to non-
employee directors as a group with a weighted average exercise price per share
of $10.0694.
9
<PAGE>
As of July 11, 1997, Mr. Behrendt resigned as an employee of Exabyte and was
engaged as a consultant through December 31, 1997, in addition to his role as
Chairman of the Board. Mr. Behrendt was paid for his consulting services
during this period per the terms of a consulting agreement (the "Agreement").
The Agreement established Mr. Behrendt's consulting rate at 80% of his salary
level immediately prior to July 11, 1997. The Agreement further provided that
Mr. Behrendt's stock options continued to vest through December 31, 1997 or
until each respective option was fully vested, whichever was earlier. Any
stock options that were not exercised within 90 days of July 11, 1997 were
amended to expire on the earlier of July 11, 2000 or the expiration date of
each respective grant. Mr. Behrendt also received a lump sum payment equal to
the cost for a six-month period of COBRA benefits representing coverage
comparable to the coverage he was receiving as an employee of Exabyte as well
as the cost of obtaining equivalent disability and life insurance. Amounts
paid to Mr. Behrendt under the Agreement are reflected in the Summary
Compensation Table.
10
<PAGE>
SUMMARY OF COMPENSATION
The following table provides, for fiscal 1997 (ended January 3, 1998),
fiscal 1996 (ended December 28, 1996), and fiscal 1995 (ended December 30,
1995), certain summary information concerning compensation paid to or earned
by Exabyte's Chief Executive Officer, each of the other executive officers at
the end of fiscal 1997, and two former executive officers (collectively, the
"Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL SALARY ($) BONUS ($) OPTIONS COMPENSATION
POSITION YEAR (1)(2) (3) (#)(4) ($)(5)
- ------------------ ---- ---------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
William L. Marriner(6).. 1997 266,442 0 130,000 4,820
Chairman of the Board, 1996 225,696 32,201 30,000 4,570
Chief Executive Officer 1995 224,932 0 30,000 4,489
& President
Mark W. Canright(7)..... 1997 197,359 87,719(7) 20,000 5,914
Senior Vice President 1996 189,195 167,264(7) 20,000 5,664
of Sales and Customer 1995 189,980 149,209(7) 20,000 5,326
Support
Stephen F. Smith(8)..... 1997 147,182 0 5,000 5,081
Vice President, Chief
Financial Officer,
General Counsel &
Secretary
Peter D. Behrendt(9).... 1997 437,554 0 50,000 3,617
Former Chairman of the 1996 408,860 72,666 65,000 8,700
Board, Chief Executive 1995 406,680 0 65,000 7,826
Officer & President
David L. Riegel(10)..... 1997 267,146 0 0 2,852
Former Executive Vice 1996 229,743 53,966 30,000 7,458
President & Chief 1995 230,371 0 30,000 7,101
Operating Officer
</TABLE>
- --------
(1) Includes amounts earned but deferred at the election of the Named
Executive Officers under our 401(k) plan.
(2) As permitted by Commission rules, we have not shown amounts for certain
perquisites where the amounts do not exceed the lesser of 10% of bonus
plus salary or $50,000.
(3) Bonus amounts shown are paid to Named Executive Officers in February of
the following year.
(4) We have not granted any SARs or restricted stock awards.
(5) Includes matching payments by Exabyte under our 40l(k) plan for 1997 as
follows: Mr. Marriner, $4,000; Mr. Canright, $4,000; Mr. Smith, $3,679;
Mr. Behrendt, $0; and Mr. Riegel $0. Also includes the dollar value of
executive life insurance premiums paid by Exabyte in 1997 for the benefit
of the Named Executive Officers as follows: Mr. Marriner, $820; Mr.
Canright, $1,914; Mr. Smith, $1,402; Mr. Behrendt, $3,617; and Mr. Riegel
$2,852.
(6) Since January 26, 1998, Mr. Marriner has served as Chairman of the Board;
since July 8, 1997, he has served as Chief Executive Officer and
President and until December 1, 1997, he served as Executive Vice
President and Chief Financial Officer.
(7) Includes $87,719 in commissions paid to Mr. Canright for 1997; $140,276
in commissions paid to Mr. Canright for 1996 and $149,209 in commissions
paid to Mr. Canright for 1995.
(8) Mr. Smith has served as Vice President & Chief Financial Officer since
December 1, 1997. Prior to that date, Mr. Smith did not serve as an
executive officer of Exabyte.
(9) Until January 16, 1997, Mr. Behrendt served as President and Chief
Executive Officer; until January 26, 1998, Mr. Behrendt served as
Chairman of the Board. Amount shown under "Salary" includes compensation
paid to Mr. Behrendt after July 11, 1997, as a consultant.
(10) Mr. Riegel retired on September 15, 1997.
11
<PAGE>
EXECUTIVE OFFICER SEVERANCE PROGRAM
We have a Severance Program under which officers and other specified
employees are eligible to receive severance payments in the event their
employment at Exabyte is terminated within one year after certain changes in
control of Exabyte. The amounts payable under the Severance Program vary
depending upon the position of the terminated officer or employee. The
Severance Program limits the amount payable to twelve months of compensation
and further provides for the accelerated vesting of outstanding stock options
held by the terminated officer or employee.
INCENTIVE STOCK PLAN
The Board adopted the Incentive Stock Plan in January 1987. As a result of a
series of amendments, as of March 2, 1998 there were 9,500,000 shares of
common stock authorized for issuance under the Incentive Stock Plan. The
Incentive Stock Plan provides for the grant of both incentive (which generally
have a favorable tax treatment) and non-statutory stock options to our
employees, directors and consultants. These grants are made at the discretion
of the Board. The Incentive Stock Plan also provides for the non-discretionary
grant of non-statutory stock options to our non-employee directors.
As of March 2, 1998, options to purchase 3,382,800 shares were outstanding
under the Incentive Stock Plan and 2,395,480 shares were available for future
grant.
STOCK OPTION GRANTS
The following table contains information for fiscal 1997 concerning the
grant of stock options under the Incentive Stock Plan to the Named Executive
Officers:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT ASSUMED ANNUAL
RATES OF STOCK
PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM(3)
----------------------------------------- -----------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES EXERCISE
GRANTED IN FISCAL PRICE EXPIRATION
NAME (#)(1) YEAR(2) ($/SH) DATE 5% ($) 10% ($)
- ---- ---------- ---------- -------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
William L. Marriner..... 50,000 4.5 10.250 1/16/07 322,308 816,793
30,000 2.7 10.250 1/16/07 193,385 490,075
50,000 4.5 13.750 7/08/07 432,365 1,095,697
Mark W. Canright........ 20,000 1.8 10.250 1/16/07 128,923 326,717
Stephen F. Smith........ 5,000 0.5 12.375 2/12/07 38,912 98,612
Peter D. Behrendt....... 50,000 4.5 10.250 7/11/00 94,987 201,905
David L. Riegel......... 0 -- -- -- -- --
</TABLE>
- --------
(1) The Company does not have a plan that provides for the issuance of SARs.
Options under the Incentive Stock Plan generally vest at the rate of 2%
of the total grant per month, beginning one month from the date of grant,
for a period of 50 months. Options may be either non-statutory or
incentive stock options. The exercise price of options granted under the
Incentive Stock Plan must be at least equal to the fair market value of
the common stock subject to the option on the date of grant. Options
granted to executive officers and certain members of management are
subject to an agreement with the Company which provides that, upon a
change of control, options will fully vest unless the Board directs
otherwise. The Board may not reprice options granted under the Incentive
Stock Plan.
(2) Based on options granted to employees for fiscal 1997 to purchase 957,000
shares.
(3) The potential realizable value is based on the term of the option at the
date of grant (10 years in every case with the exception of Mr. Behrendt's
stock option). It is calculated by assuming that the stock price on the
date of grant appreciates at the indicated annual rate, compounded
annually for the entire term, and that the option is exercised and sold on
the last day of the option term for the appreciated stock price. These
amounts represent certain assumed rates of appreciation only, in
accordance with the rules of the Commission, and do not reflect our
estimate or projection of future stock price performance. Actual gains, if
any, are dependent on the actual future performance of our common stock.
The amounts reflected in this table may never be achieved.
12
<PAGE>
OPTION EXERCISES AND HOLDINGS
The following table provides information concerning the exercise of options
during fiscal 1997 and unexercised options held as of the end of fiscal 1997
for the Named Executive Officers:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FY-END(#)(2) AT FY-END($)(3)
SHARES ACQUIRED VALUE ------------------------- -------------------------
NAME ON EXERCISE(#) REALIZED($)(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- --------------- -------------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
William L. Marriner..... 0 0 159,200/141,000 0/0
Mark W. Canright........ 0 0 92,820/36,480 1,500/0
Stephen F. Smith........ 0 0 15,350/8,950 0/0
Peter D. Behrendt....... 123,800 1,148,470 283,200/106,800 0/0
David L. Riegel......... 0 0 0/0 0/0
</TABLE>
- --------
(1) Value realized is based on the fair market value of Exabyte's common stock
on the date of exercise (based on the closing sales price reported on the
Nasdaq National Market) less the exercise price. The optionee may not have
actually sold the shares to realize any gain.
(2) Includes both "in-the-money" and "out-of-the-money" options. "In-the-
money" options are options with exercise prices below the market price of
Exabyte's common stock on January 2, 1998.
(3) Fair market value of Exabyte's common stock on January 2, 1998 ($7.00,
based on the closing sales price reported on the Nasdaq National Market)
less the exercise price of the option.
13
<PAGE>
PERFORMANCE GRAPH(1)
COMPARISON OF CUMULATIVE TOTAL RETURN ON INVESTMENT
AMONG EXABYTE CORPORATION,
NASDAQ COMPOSITE INDEX AND THE
NASDAQ COMPUTER MANUFACTURER STOCKS INDEX
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
- ---------------------------------FISCAL YEAR ENDING-----------------------------
COMPANY 1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C>
EXABYTE CORPORATION 100 96.58 117.12 80.14 73.97 38.36
NASDAQ MARKET INDEX 100 119.95 125.94 163.35 202.99 248.30
NASDAQ COMPUTER
MANUFACTURER STOCKS INDEX 100 115.43 140.01 192.02 260.29 330.89
</TABLE>
ASSUMES $100 INVESTED ON DECEMBER 27, 1991
ASSUMES DIVIDEND REINVESTMENT
FISCAL YEAR ENDED JANUARY 3, 1998
- --------
(1) The material in this chart is not "soliciting material," is not deemed
"filed" with the Commission and is not to be incorporated by reference in
any filing of the Company under the Securities Act or the Exchange Act,
whether made before or after the date hereof and irrespective of any
general incorporation language in any such filing.
14
<PAGE>
OTHER MATTERS
The Board knows of no other proposals that will be presented for
consideration at the Annual Meeting. If any other proposals are properly
brought before the Annual Meeting, the proxy holders intend to vote on such
proposals in accordance with their best judgment.
By Order of the Board of Directors
[SIGNATURE OF STEPHEN F. SMITH]
Stephen F. Smith
Corporate Secretary
A COPY OF THE COMPANY'S ANNUAL REPORT TO THE SECURITIES AND EXCHANGE
COMMISSION ON FORM 10-K FOR THE FISCAL YEAR ENDED JANUARY 3, 1998 IS
AVAILABLE WITHOUT CHARGE UPON WRITTEN REQUEST TO: VIRGINIA ILGES, EXABYTE
CORPORATION, 1685 38TH STREET, BOULDER, COLORADO 80301.
15
<PAGE>
PROXY
EXABYTE CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 4, 1998
The undersigned hereby appoints William L. Marriner and Stephen F. Smith, and
each of them, as attorneys and proxies of the undersigned, with full power of
substitution, to vote all of the shares of stock of Exabyte Corporation (the
"Company") which the undersigned may be entitled to vote at the Annual Meeting
of Stockholders of the Company to be held at the Company's principal executive
offices, 1685 38th Street, Boulder, Colorado 80301 on Monday, May 4, 1998 at 9
a.m., and at any and all continuations, postponements and adjournments thereof,
with all powers that the undersigned would possess if personally present, upon
and in respect of the following matters and in accordance with the following
instructions, with discretionary authority as to any and all matters that may
properly come before the meeting.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR THE
NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSAL 2 AS MORE SPECIFICALLY DESCRIBED
IN THE PROXY STATEMENT. IF SPECIFIC INSTRUCTIONS ARE INDICATED, THIS PROXY WILL
BE VOTED IN ACCORDANCE THEREWITH.
- ----------- -----------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
- ----------- -----------
<PAGE>
- ----- PLEASE MARK
X VOTES AS IN
- ----- THIS EXAMPLE
PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED RETURN ENVELOPE
WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES.
1. To elect two directors to hold office until the 2001
Annual Meeting of Stockholders.
NOMINEES: Peter D. Behrendt and A. Laurence Jones
FOR WITHHELD
[_] [_]
[_] _________________________________________
For both nominees except as noted above
FOR AGAINST ABSTAIN
2. To ratify the selection of Price [_] [_] [_]
Waterhouse LLP as independent
accountants of the Company for the
fiscal year ending January 2, 1999.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [_]
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS HEREON. IF
THE STOCK IS REGISTERED IN THE NAMES OF TWO OR MORE
PERSONS, EACH SHOULD SIGN. EXECUTORS,
ADMINISTRATORS, TRUSTEES, GUARDIANS AND ATTORNEYS-
IN-FACT SHOULD ADD THEIR TITLES. IF SIGNER IS A
CORPORATION, PLEASE GIVE FULL CORPORATE NAME AND
HAVE A DULY AUTHORIZED OFFICER SIGN, STATING TITLE.
IF SIGNER IS A PARTNERSHIP, PLEASE SIGN IN
PARTNERSHIP NAME BY AUTHORIZED PERSON.
Signature:_______________ Date:________ Signature:_______________ Date:________
