UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
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:
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¨ Preliminary Proxy Statement |
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x Definitive Proxy Statement |
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¨ Definitive Additional Materials |
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| ¨ Soliciting Material
Pursuant to§ 240.14a-11(c) or § 240.14a-12 |
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| ¨ Confidential, For Use of
the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Parametric Technology 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)(1) and 0-11:
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(1)
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Title of
each class of securities to which transaction applies:
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(2)
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Aggregate
number of securities to which transaction applies:
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(3)
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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)
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Proposed
maximum aggregate value of transaction: $
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¨ Fee paid previously with preliminary
materials
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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.
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(1)
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Amount
previously paid:
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(2)
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Form,
Schedule or Registration Statement no.:
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Notes:
PARAMETRIC TECHNOLOGY CORPORATION
128 TECHNOLOGY DRIVE
WALTHAM, MA 02453
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
To be held on February 10, 2000
We will hold the Annual Meeting of Stockholders of Parametric
Technology Corporation (“PTC”) at the Boston-Newton Marriott
Hotel, 2345 Commonwealth Avenue, Newton, MA 02466 on Thursday, February
10, 2000 at 9:00 a.m., local time. At this year’s Annual Meeting,
we will ask you to:
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1.
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Elect three
Class I directors to serve for the next three years.
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2.
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Amend PTC
’s Articles of Organization to increase the number of shares of
common stock PTC is authorized to issue from 350,000,000 to
500,000,000.
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3.
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Approve PTC
’s 2000 Employee Stock Purchase Plan in order to obtain
beneficial tax treatment for participants.
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4.
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Approve PTC
’s 2000 Equity Incentive Plan.
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5.
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Consider
other business that may further or relate to the
foregoing.
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You may vote at the Annual Meeting if you were a PTC stockholder
at the close of business on December 15, 1999. Along with this Proxy
Statement, we are sending you PTC’s 1999 Annual Report to
Stockholders, including our Annual Report on Form 10-K with our
consolidated financial statements.
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By Order of the Board
of Directors,
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DAVID R. FRIEDMAN,
Senior Vice President, General Counsel and Clerk
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Waltham, Massachusetts
January 10, 2000
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE
COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE
ENCLOSED ENVELOPE, OR VOTE BY TELEPHONE OR ON THE INTERNET, IN ORDER TO
ENSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE IS REQUIRED IF THE
PROXY IS MAILED IN THE UNITED STATES.
TABLE OF CONTENTS
PROXY STATEMENT FOR THE PARAMETRIC TECHNOLOGY
CORPORATION
2000 ANNUAL MEETING OF STOCKHOLDERS
INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
Why Did You Send Me this Proxy Statement?
As a stockholder, you have a right to attend and vote at the
Parametric Technology Corporation (PTC) 2000 Annual Meeting of
Stockholders. If you attend the Annual Meeting, you may vote your
shares directly. However, if you do not attend, you may vote by proxy,
which allows you to direct another person to vote your shares at the
meeting on your behalf. The PTC Board of Directors is soliciting your
proxy to encourage your participation in voting at the meeting and to
obtain your support on each of the proposals presented.
There are two parts to our proxy solicitation: this proxy
statement and the enclosed voting instruction form (which may also be
called a “proxy card”). The proxy statement explains the
matters to be voted on at the Annual Meeting and PTC’s reasons for
proposing them. You use the voting instruction form to authorize your
shares to be voted as you wish.
To vote, simply complete, sign and return the form, and your
shares will be voted as you direct. If you wish, in most cases, you may
vote by telephone or via the Internet instead.
We will begin mailing this proxy statement on January 10, 2000
to all stockholders entitled to vote. If you owned PTC common stock at
the close of business on December 15, 1999, you are entitled to vote.
On that date, there were 274,178,008 shares of PTC common stock
outstanding. PTC common stock is our only class of voting
stock.
How Many Votes Do I Have?
You have one vote for each share of PTC common stock that you
owned at the close of business on December 15, 1999. Your proxy card or
other voting instruction form indicates the number.
When you return your voting instruction form, or vote by
telephone or via the Internet, before the meeting, you are giving your
“proxy” to the individuals we have designated to vote your
shares as you direct at the meeting. If you sign the form but do not
make specific choices, they will vote your shares for each agenda item
as recommended by the Board. If any matter not listed in the Notice of
Meeting is presented at the Annual Meeting, they will vote your shares
in accordance with their best judgment. At the time we began printing
this Proxy Statement, we knew of no matters that needed to be acted on
at the meeting other than those discussed in this Proxy
Statement.
Whether you plan to attend the Annual Meeting or not, we urge
you to complete, sign and date the enclosed voting instruction form and
to return it promptly in the envelope provided. Returning the form will
not affect your right to attend the Annual Meeting and
vote.
How Do I Vote by Telephone or Via the Internet?
Instead of submitting your vote by mail on the enclosed voting
instruction form, you may vote by telephone or via the Internet. Please
note that there are separate telephone and Internet arrangements
depending on whether you are a registered stockholder (that is, if you
hold your stock in your own name) or you hold your shares in
“street name” (that is, in the name of a brokerage firm or
bank which holds your securities account). In either case, you must
follow the procedures described on your voting instruction
form.
The telephone and Internet voting procedures are designed to
authenticate stockholders’ identities, to allow stockholders to
give their voting instructions and to confirm that stockholders’
instructions have been recorded properly. Stockholders voting via the
Internet should understand that there might be costs associated with
electronic access, such as usage charges from Internet access providers
and telephone companies, that must be borne by the
stockholder.
We encourage you to vote via the Internet. If you do so, please
authorize us to deliver future annual reports and proxy statements to
you via e-mail. This lowers costs and speeds delivery.
Yes. You may change your mind after you send in your voting
instructions by following any of these procedures. For a registered
stockholder to revoke a proxy:
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Send in
another signed voting instruction form with a later date;
or
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Send a
letter revoking your proxy to PTC’s Clerk at the address
indicated on page 19 under “Information About Stockholder
Proposals”; or
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Attend the
Annual Meeting, notify us in writing that you are revoking your proxy
and vote in person.
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A holder of stock in street name must follow the procedures
required by the brokerage firm or bank to revoke a proxy. You should
contact that firm directly for more information on these
procedures.
If you plan to attend the Annual Meeting and wish to vote in
person, we will give you a ballot when you arrive. If your shares are
held in street name, you must bring an account statement or letter from
the brokerage firm or bank showing that you were the direct or indirect
(beneficial) owner of the shares on December 15, 1999 in order to be
admitted to the meeting. To be able to vote, you will need to obtain a
“legal proxy” from the holder of record.
What Is the Effect of Broker Non-Votes and Abstentions?
If your shares are held in street name, the broker or bank may
vote your shares on all four proposals even if it does not receive
instructions from you. Because the proposal to increase our authorized
common stock must be approved by vote of a majority of the shares
outstanding, if you abstain from voting or if your broker or bank does
not vote on the proposal, it will count as a vote against that
proposal. However, because the directors elected at the meeting will be
those receiving the highest number of votes and the stock plans may be
approved by vote of a majority of the shares actually voting, if you
abstain from voting or if your broker or bank does not vote on any of
those proposals, it will not count as a vote against those
proposals.
We maintain a policy of keeping all the proxies, ballots and
voting tabulations confidential. The Inspectors of Election will
forward to management any written comments that you make on the proxy
card without providing a shareholder name.
What Are the Costs of Soliciting these Proxies?
PTC will pay all the costs of soliciting these proxies. Although
we are mailing these proxy materials, our directors and employees may
also solicit proxies by telephone, by fax or other electronic means of
communication, or in person. In addition, Georgeson Shareholder
Services is assisting us with the solicitation of proxies for a fee of
approximately $7,500, plus out-of-pocket expenses. We will reimburse
banks, brokers, nominees and other fiduciaries for the expenses they
incur in forwarding the proxy materials to you.
How Do I Obtain an Annual Report on Form 10-K?
A copy of our Annual Report on Form 10-K for the year ended
September 30, 1999, was included with this Proxy Statement and is
available on our Web site at www.ptc.com. If you would like another
copy, we will send you one without charge. Please write to:
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Parametric
Technology Corporation
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Where Can I Find the Voting Results?
We will publish the voting results on PTC’s Website at
www.ptc.com following the Annual Meeting and in our Form 10-Q
for the second quarter of 2000, which we file with the SEC in May
2000.
Whom Should I Call If I Have Any Questions?
If you have any questions about the Annual Meeting or your
ownership of PTC common stock, please contact PTC Investor Relations by
telephone at (781) 398-5000 or e-mail at [email protected].
DISCUSSION OF PROPOSALS RECOMMENDED BY THE BOARD OF
DIRECTORS
The board has nominated three current directors—Donald K.
Grierson, Oscar B. Marx, III and Noel G. Posternak —for new,
three-year terms and recommends that you vote for their re-election.
The Board has approved an increase of 150,000,000 in the number of
shares of common stock that PTC is authorized to issue, and recommends
that you vote for that increase. In addition, the board has approved a
new Employee Stock Purchase Plan and recommends that you vote to
approve the plan in order to obtain certain beneficial tax treatment
for employees participating in that plan under Section 423 of the
Internal Revenue Code. The board has also approved a new Equity
Incentive Plan and recommends that you vote for approval of that
plan.
Proposal 1: Elect Three Directors
The first proposal on the agenda for the Annual Meeting will be
electing three Class I directors for three-year terms beginning at this
Annual Meeting and expiring at the 2003 Annual Meeting. (For a
description of the three classes of directors, see “Information
About The Directors” beginning on page 11.) The three nominees who
receive the most votes will be elected.
The following table contains background information about each
of the Class I director nominees. For a description of their holdings
of PTC’s stock, see “How Much Stock is Owned by Directors and
Officers?” beginning on page 10.
Name, Age, Principal
Occupation, Business Experience and
Directorships
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Director
Since
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Term
Expires
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| Class I Director
Nominees |
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| Donald K. Grierson,
age 65 |
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1987 |
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2000 |
Chief Executive Officer and
President of ABB Vetco Gray, Inc., an oil services
business, since May 1991; also director of Alpha
Technologies Group, Inc. |
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Name, Age, Principal
Occupation, Business Experience and
Directorships
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Director
Since
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Term
Expires
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| Oscar B. Marx, III,
age 61 |
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1995 |
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2000 |
Chief Executive Officer and
President of TMW Enterprises Inc., an auto parts business,
since July 1995; Chief Executive Officer and
President of Electro—Wire Products,
Inc., an electrical distribution company, from June
1994 to July 1995; Vice President |
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—Automotive Components Group of Ford Motor Company from
January 1988 to
June 1994; also director of Amerigon Inc., Smtek
International, Inc. and Tesma
International Inc. |
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| Noel G. Posternak,
age 63 |
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1989 |
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2000 |
Senior Partner in the law
firm of Posternak, Blankstein & Lund, L.L.P. since 1980
practicing in the area of securities law and
corporate finance. |
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The Board of Directors recommends that you vote FOR the election
of Donald K. Grierson, Oscar B. Marx, III and Noel G. Posternak as
Class I directors.
Proposal
2:
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Approve an Amendment to Our Articles of Organization
to Increase the Number of Authorized Shares of Common Stock We May
Issue from 350,000,000 to 500,000,000
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Our Board of Directors recommends that you approve the amendment
to our Articles of Organization to increase the number of shares of
common stock that we may issue from 350,000,000 to 500,000,000. The
Board believes that increasing the number of authorized shares is
essential to ensure that PTC continues to have an adequate number of
shares of common stock available for future issuance. As of December
15, 1999, there were 274,178,008 shares of PTC common stock
outstanding, 58,119,919 shares reserved for issuance under PTC’s
employee stock option plans, 1,477,497 shares reserved for issuance to
former employees of companies we have acquired in order to replace
their prior stock options, 2,185,805 shares reserved for issuance under
our employee stock purchase plan and 740,000 shares reserved for
issuance under our director compensation plans. In addition, we are
asking the stockholders to approve our 2000 Equity Incentive Plan
providing for the issuance of up to 11,500,000 shares.
At the 1997 Annual Meeting, our stockholders approved an
increase in the number of authorized shares of common stock from
215,000,000 to 350,000,000. That increase permitted our Board to
declare a two-for-one stock split of the common stock on February 12,
1998. Among other things, the 1997 increase also permitted us to make
important acquisitions to expand our product and solution offerings, as
well as to provide competitive compensation to key employees in a very
tight market.
If the stockholders approve this increase, our Board would be
able to issue stock for any valid corporate purpose that it may deem
advisable, including stock splits and stock dividends, financings,
funding employee benefit plans and acquisitions. Any of these actions
could be taken without further stockholder approval, except to the
extent required by state law or Nasdaq requirements for the particular
transaction. Although the availability of additional shares of common
stock provides desirable flexibility in carrying out corporate
purposes, such availability, as well as the availability of preferred
stock that the Board may issue on such terms as it selects, could have
the effect of making it more difficult for a third party to acquire a
majority of our outstanding voting stock. In addition, the issuance of
additional shares of common stock could lead to the dilution of
existing stockholders.
While we have no current plan to do another stock split, the
proposed increase would give the Board flexibility to do so if
conditions warrant. Although on occasion we may review potential
acquisition candidates, we have no present commitments or agreements
for any transactions involving the issuance of additional shares of
common stock.
The Board of Directors believes that the amendment to the
Articles of Organization is in the best interest of PTC and its
stockholders and recommends a vote FOR approval of the
amendment.
Proposal
3:
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Approve Our 2000 Employee Stock Purchase Plan in
Order to Obtain Beneficial Tax Treatment for Participants
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Our Board of Directors approved PTC’s 2000 Employee Stock
Purchase Plan (the “2000 ESPP”) on September 16, 1999. The
first offering period commenced on October 1, 1999 and will end on
March 31, 2000. We are requesting that the stockholders approve the
2000 ESPP for purposes of qualifying it under Section 423 of the
Internal Revenue Code (“Section 423”). This will permit our
employees to benefit from the favorable tax treatment described below.
The Board of Directors believes this provides a potentially significant
benefit to employees and is in the interests of PTC and its
stockholders generally.
Why the 2000 Employee Stock Purchase Plan is
Important
The 2000 ESPP gives our employees the opportunity and incentive
to invest in PTC by purchasing shares of our common stock through
convenient payroll deductions. The plan is intended to promote stock
ownership among employees, which should lead to increased
identification with stockholders’ interests. It also serves an
important compensation function. We previously used the 1991 Employee
Stock Purchase Plan to achieve these goals, but that plan has expired.
The Board reserved a total of 2,000,000 shares of common stock for
issuance under the 2000 ESPP, subject to adjustment for stock splits
and similar capital changes. The closing price of our common stock on
November 30, 1999, as reported by the Nasdaq Stock Market, was
$22.6875.
The following is a summary of the plan’s principal
features. A copy of the plan is printed as Appendix A to this Proxy
Statement.
General
The 2000 ESPP is intended to qualify as an “employee stock
purchase plan” under Section 423, although if it does not qualify
because the stockholders do not give approval, that will not affect the
employees’ rights to purchase shares. Rights to purchase shares of
common stock under the plan are granted at the discretion of a
committee appointed by our Board of Directors, which also determines
the frequency and duration of individual offerings under the plan and
the date(s) when stock may be purchased. Offerings may last up to
twenty-seven months, but we currently expect that each will last six
months, the same offering period as under the 1991 Employee Stock
Purchase Plan. All employees of PTC and its subsidiaries who have
worked for a specified amount of time are eligible to participate in
the 2000 ESPP.
Eligible employees participate voluntarily and may withdraw from
any offering at any time before stock is purchased. Participation
terminates automatically upon termination of employment for any reason.
The purchase price per share in any offering is 85% of the lower of the
fair market value of the common stock on the first day or last day of
the offering, and may be paid through regular payroll deductions, lump
sum cash payments or a combination of both, as determined by the
committee. An employee’s purchases in any year are limited to the
lessor of $25,000 worth of stock, determined by the fair market value
of the common stock at the time the offering begins, or 15% of the
employee’s base pay (or such lesser percentage as the Board of
Directors may fix). The 2000 ESPP terminates on September 30,
2009.
Federal Income Tax Consequences Relating to the 2000 Employee
Stock Purchase Plan
If the stockholders approve Section 423 treatment for the 2000
ESPP, participants will not realize taxable income at the commencement
of an offering or at the time shares are purchased under the 2000 ESPP.
Furthermore, if a participant holds shares purchased under the 2000
ESPP for at least two years from the offering commencement date, then
upon sale of the shares, the participant will be treated as having
received taxable compensation income of 15% of the fair market value of
the stock at the commencement of the offering (or, if less, any amount
realized on sale of such shares in excess of the purchase price). No
deduction will be allowed to us for Federal income tax purposes upon
the purchase of shares or, if the participant waits the prescribed
period to sell, upon sale. However, if the participant does not wait
the prescribed period to sell, he or she will be treated as having
received taxable compensation income upon sale equal to the excess of
the fair market value of the stock on the date of purchase over the
actual purchase price, and we will be allowed to deduct that amount. In
either case, any difference over or under the participant’s tax
cost (the purchase price plus the amount of taxable compensation income
that the participant recognizes upon sale of the shares) will be
treated as capital gain or loss.
Assuming stockholder approval, if a participant dies during the
two-year holding period while owning shares purchased under the 2000
ESPP, 15% of the fair market value of the stock at the commencement of
the offering period (or, if less, the fair market value of such shares
on the date of death in excess of the purchase price) is taxed to the
participant as ordinary income in the year of death, and we would not
be allowed a deduction for Federal income tax purposes.
If the stockholders do not approve our 2000 ESPP, a participant
will be treated as having received taxable compensation income at the
time of purchase equal to the excess of the fair market value of the
stock on the date of purchase over the actual purchase price, and we
will be allowed to deduct that amount.
The Board of Directors believes that the 2000 ESPP serves
important goals for PTC and recommends that you vote FOR approval of
the plan.
Proposal 4: Approve Our 2000 Equity
Incentive Plan
The 2000 Equity Incentive Plan (the “2000 Equity Plan
”) is another important element of PTC’s program to align
employee motivation with our stockholders’ interests and to
provide appropriate equity compensation to employees. The plan was
approved by the Board of Directors on September 16, 1999, although it
will not be implemented until approved by the stockholders.
Why the 2000 Equity Incentive Plan is
Important
We believe that the 2000 Equity Plan is essential for us to be
able to attract, retain and motivate key personnel. Competition for
top-notch software developers, sales personnel and other skilled
employees has become more intense as Internet and other high tech
companies proliferate at a rapid pace. Stock options and other equity
grants historically have been a critical element of compensation and
incentive for PTC employees. Indeed, in fiscal 1999, we granted options
to approximately 77% of our employees. Equity incentives are equally
common and important among our competitors and throughout the high
technology industry, and the strength of the U.S. economy has only made
equity more appealing to employees. Therefore, we continue to consider
it crucial that we have in place appropriate equity plans for granting
stock compensation to our employees. The 2000 Equity Plan will permit
us to continue granting necessary stock compensation while expanding
the types of equity awards we can grant, providing flexibility not
available to us under our current plans.
Options also benefit us in a number of other ways. For example,
they tie compensation to our performance; they conserve cash and reduce
fixed costs; in most cases they result in no charge to reported
earnings, either upon grant or exercise; they produce no dilution to
earnings per share without an increase in the stock price that benefits
shareholders generally; the exercise of options increases our capital;
and we are entitled to a tax deduction upon the exercise of
nonstatutory stock options or the disqualifying disposition of
incentive stock options.
The following is a summary of the plan’s principal
features. A copy of the plan is printed as Appendix B to this Proxy
Statement.
General
| Common Stock
available under
2000 Equity Plan
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We have reserved
11,500,000 shares of our common stock for issuance under the 2000
Equity Plan. No awards have yet been made under the 2000 Equity
Plan.
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| Administration
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The 2000 Equity Plan
is administered by a committee composed of two members of our Board
who meet certain tests under the tax and securities laws for
independence from PTC management. If there are not at least two such
members, then the entire Board serves as the committee for purposes
of the 2000 Equity Plan.
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| Types of
Awards
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Under the 2000 Equity
Plan, the committee may award stock options, stock appreciation
rights, restricted and common stock.
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| Eligibility
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The committee may
make awards to employees, directors and consultants of our company
and its subsidiaries based upon their anticipated contribution to the
achievement of our objectives and other relevant matters. Because the
awards will be within the discretion of the committee, it is not
possible to predict to whom awards will be granted under the 2000
Equity Plan, or the amount of any awards.
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| Stock
Options and Their Terms
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The committee may
award incentive stock options qualifying under Section 422 of the
Internal Revenue Code (“ISOs”) and nonstatutory stock
options. The committee determines the terms of the option awards,
including the amount, exercise price, vesting schedule and term,
which may not exceed ten years. The per share exercise price of an
option may not be less than the fair market value of a share of
common stock on the date of grant, except that a nonstatutory stock
option granted to a newly hired employee or consultant may have a
lower exercise price so long as it is not less than 100% of fair
market value on the date the person accepts PTC’s offer of
employment or the date employment begins, whichever is
lower.
A participant may pay the exercise price of an option
in cash or, if permitted by the committee, other consideration,
including by surrendering common stock he or she holds.
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| Stock
Appreciation Rights
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The committee may
grant stock appreciation rights, or “SARs,” which are
rights to receive any excess in value of shares of common stock over
the exercise price. We expect that these would be granted primarily
to non-U.S. employees who may be subject to adverse stock option
taxation rules. The Committee shall determine at or after the time of
grant whether SARs are settled in cash, common stock or other
securities of PTC, awards or other property and may define the manner
of determining the excess in value of the shares of common
stock.
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| Restricted
and Common Stock
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The committee may
make awards of common stock subject to certain restrictions during a
specified period, such as the participant’s continued service
with the company or the company’s achieving certain financial
goals. The participant generally will forfeit the shares if the
specified conditions are not met. PTC holds the shares during the
restriction period, and the participant cannot transfer the shares
before termination of that period. The participant is, however,
entitled to vote the shares and receive any dividends during the
restriction period. The committee may also award common stock without
restrictions to recognize outstanding achievements or as a supplement
to restricted stock awards when the company’s performance
exceeds established financial goals. The committee determines what,
if anything, the participant must pay to receive such a stock award,
but the number of shares that may be granted under the 2000 Equity
Plan for less than fair market value is limited to 10% of the shares
authorized under the plan.
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| Limitations
on Individual Grants
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The committee may not
in any calendar year grant to any person options or stock
appreciation rights representing more than 2,000,000 shares of common
stock, nor more than 500,000 shares of performance-based restricted
or unrestricted stock awards. These limits are subject to adjustment
for changes in the company’s structure or capitalization that
affect the number of shares of common stock outstanding.
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| Termination
of Service
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The committee
determines the effect on an award of the disability, death,
retirement or other termination of service of a participant in the
2000 Equity Plan.
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| Transferability
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The committee has the
authority to permit participants to transfer any award, provided that
ISOs may be transferable only to the extent permitted by the tax
code.
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| Change in
Capitalization
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If there is a change
in the company’s capitalization that affects its outstanding
common stock, the aggregate number of shares that are reserved for
issuance under the plan, as well as the number of shares subject to
outstanding options, SARs and restricted and common stock awards,
together with option and SAR exercise prices, will be adjusted by the
committee to preserve the benefits intended to be provided under the
plan.
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| Change in
Control
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The committee may act
to preserve a participant’s rights under an award in the event
of a change in control of the company by, among other things,
accelerating any time period relating to the exercise or payment of
the award, causing the award to be assumed by another entity or
providing for compensating payments to the participant.
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| Amendment or
Repricing of Outstanding Awards
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The committee may
amend or terminate any outstanding award, for which the respective
participant’s consent would be required unless the amendment
would not materially and adversely affect the participant. However,
the committee may not, without stockholder approval, amend any
outstanding option to reduce the exercise price or replace it with an
option at a lower exercise price.
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| Amendment of
the Plan
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The Board of
Directors may amend, suspend or terminate the 2000 Equity Plan,
subject to any stockholder approval it deems necessary or
appropriate. For example, under provisions currently applicable to
PTC, the board may not increase the number of shares of common stock
issuable under the plan (except in the case of a recapitalization,
stock split or similar event) without stockholder
approval.
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Federal Income Tax Consequences Relating to Stock
Options
Incentive Stock Options. A
participant does not realize taxable income upon the grant or exercise
of an ISO under the 2000 Equity Plan.
If a participant does not dispose of shares received upon
exercise of an ISO for at least two years from the date of grant and
one year from the date of exercise, then (a) upon sale of the shares,
any amount realized in excess of the exercise price is taxed to the
participant as long-term capital gain and any loss sustained will be a
long-term capital loss and (b) we may not take a deduction for Federal
income tax purposes. The exercise of ISOs gives rise to an adjustment
in computing alternative minimum taxable income that may result in
alternative minimum tax liability for the participant.
If shares of common stock acquired upon the exercise of an ISO
are disposed of before the end of the one and two-year periods
described above (a “disqualifying disposition”) then the
participant realizes ordinary income in the year of disposition in an
amount equal to the excess (if any) of the fair market value of the
shares at exercise (or, if less, the amount realized on a sale of such
shares) over the exercise price. We would be entitled to deduct that
amount. Any further gain realized by the participant would be taxed as
a short-term or long-term capital gain and would not result in any
deduction for the company. A disqualifying disposition in the year of
exercise will generally avoid the alternative minimum tax consequences
of the exercise of an ISO.
Nonstatutory Stock Options. No
income is realized by the participant at the time a nonstatutory option
is granted. Upon exercise, the participant realizes ordinary income in
an amount equal to the difference between the exercise price and the
fair market value of the shares on the date of exercise. We would
receive a tax deduction for the same amount. Upon disposition of the
shares, appreciation or depreciation after the date of exercise is
treated as a short-term or long-term capital gain or loss and will not
result in any deduction by the company.
A participant who receives any accelerated vesting or exercise
of options or stock appreciation rights or accelerated lapse of
restrictions on restricted stock in connection with a change in control
might be deemed to have received an “excess parachute payment
” under federal tax law. In such cases, the participant may be
subject to an excise tax and the company may be denied a tax
deduction.
The Board of Directors recommends that you vote FOR the approval
of the 2000 Equity Incentive Plan.
While the Notice of Meeting calls for transaction of any other
business that may further or relate to the matters described in the
Notice, the Board of Directors does not know of any other matters that
may come before the meeting. However, if any other matters are properly
presented to the Annual Meeting, the persons named in the accompanying
proxy will vote, or otherwise act, in accordance with their judgment on
such matters.
INFORMATION ABOUT PTC COMMON STOCK OWNERSHIP
Which Stockholders Own at Least 5% of PTC?
The following table shows all persons we know to be beneficial
owners of at least 5% of PTC common stock as of October 31, 1999.
“Beneficial owners” of PTC common stock are those who have
the power to vote or to sell that stock. Our information is based in
part on reports filed with the Securities and Exchange Commission by
each of the firms listed in the table below. If you wish, you may
obtain these reports from the SEC.
| |
|
Number of
Shares
Beneficially Owned(1)
|
|
Percentage of
Common
Stock Outstanding(2)
|
| Putnam Investments,
Inc.(3) |
|
32,852,944 |
|
12.1 |
% |
|
One Post Office Square |
|
|
|
|
|
|
Boston, MA 02109 |
|
|
|
|
|
|
| T. Rowe Price
Associates, Inc.(4) |
|
30,035,414 |
|
11.1 |
% |
|
100 E. Pratt Street |
|
|
|
|
|
|
Baltimore, MD 21202 |
|
|
|
|
|
|
| Oak Associates,
ltd.(5) |
|
20,589,000 |
|
7.6 |
% |
|
3875 Embassy Parkway |
|
|
|
|
|
|
Akron, OH 44333 |
|
|
|
|
|
The footnotes
for this table appear below the next table.
How Much Stock is Owned by Directors and Officers?
The following table shows the PTC common stock beneficially
owned by PTC’s directors and executive officers named in the
Summary Compensation Table, as well as all current directors and
executive officers as a group, as of October 31, 1999.
| |
|
Number
of Shares
Beneficially Owned(1)(6)
|
|
|
Percentage of
Common
Stock Outstanding(2)
|
| Robert N.
Goldman |
|
35,000 |
|
|
|
* |
|
| Donald K.
Grierson |
|
25,000 |
|
|
|
* |
|
| C. Richard
Harrison(7) |
|
3,261,598 |
|
|
|
1.2 |
% |
| Oscar B. Marx,
III(8) |
|
183,100 |
|
|
|
* |
|
| Michael E.
Porter |
|
439,240 |
|
|
|
* |
|
| Noel G.
Posternak |
|
55,000 |
|
|
|
* |
|
| Steven C.
Walske(9) |
|
3,364,000 |
|
|
|
1.2 |
% |
| James P.
Baum |
|
179,974 |
|
|
|
* |
|
| Barry
Cohen |
|
157,742 |
|
|
|
* |
|
| Edwin J.
Gillis |
|
1,060,548 |
|
|
|
* |
|
All directors,
nominees for director, and executive officers as a
group (12 persons) |
|
8,992,689 |
|
|
|
3.2 |
% |
*
|
Less than 1%
of outstanding shares of common stock.
|
(1)
|
This
describes shares as beneficially owned based on information available
to us and applicable regulations. This does not constitute an
admission by any stockholder that he or she beneficially owns the
shares listed. Unless otherwise indicated, each stockholder referred
to above has sole voting and investment power over the shares
listed.
|
(2)
|
For purposes
of determining the percentage of common stock outstanding, the number
of shares deemed outstanding includes the 271,068,732 shares
outstanding as of October 31, 1999 and any shares subject to options
held by the person or entity in question that are exercisable on or
before December 30, 1999.
|
(3)
|
Putnam
Investments, Inc. (“PI”) has filed a SEC Schedule 13G
reporting the above stock ownership as of January 26, 1999, a copy of
which has been sent to PTC. Stock reported as being beneficially
owned by PI consists of stock held in client accounts of subsidiaries
of PI that are registered investment advisors. PI and its
subsidiaries share voting power with respect to 517,761 shares and
share investment power with respect to all such shares. One of those
entities, Putnam Investment Management, Inc., One Post Office Square,
Boston, MA 02109, reports beneficial ownership of 30,539,944 of the
shares beneficially owned by PI, over which it has shared investment
power and no voting power.
|
(4)
|
These shares
are owned by various individual and institutional investors
(including T. Rowe Price Science and Technology Fund, 100 E. Pratt
Street, Baltimore, MD, which owns 14,000,000 shares, or 5.2% of the
outstanding shares), for which T. Rowe Price Associates, Inc. (
“Price Associates”) serves as investment adviser. Price
Associates has sole investment power for the entire holding of
30,035,414 shares and sole voting power with respect to 3,333,822
shares. Price Associates disclaims beneficial ownership of all such
shares.
|
(5)
|
Oak
Associates, ltd. (“Oak”) has filed a SEC Schedule 13G
reporting the above stock ownership as of February 12, 1999, a copy
of which has been sent to PTC. Oak is a registered investment
advisor, in which capacity it has sole voting power and shared
investment power over all such shares.
|
(6)
|
The amounts
listed include the following shares of common stock that may be
acquired on or before December 30, 1999 through the exercise of
options: Mr. Porter, 419,000 shares; Mr. Marx, 175,000 shares; Mr.
Posternak, 55,000 shares; Mr. Goldman, 35,000 shares; Mr. Grierson,
15,000 shares; Mr. Walske, 2,090,000 shares; Mr. Harrison, 2,884,740
shares; Mr. Gillis, 1,051,000 shares; Mr. Cohen, 157,742 shares; Mr.
Baum 173,897 shares; and all directors and executive officers as a
group, 7,283,129 shares.
|
(7)
|
9,160 shares
are held jointly by Mr. Harrison with his spouse.
|
(8)
|
8,000 shares
are held by the O.B. Marx, III Revocable Trust. 100 shares are
custodial shares held by Mr. Marx’s spouse for a minor
relative.
|
(9)
|
25,000
shares are held by a foundation of which Mr. Walske is co-trustee
with shared voting and investment powers. Mr. Walske disclaims
beneficial ownership of these shares.
|
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires
that our insiders—our directors, executive officers and
10%-or-greater stockholders—file reports with the SEC on their
initial beneficial ownership of PTC common stock and any subsequent
changes. They must also provide us with copies of the
reports.
Based on our review of all reports furnished to us, we believe
that all of our insiders complied with their filing requirements for
1999.
INFORMATION ABOUT THE DIRECTORS
Our Board of Directors is divided into three classes with
staggered three-year terms. There are currently three Class I
directors, two Class II directors and two Class III directors, whose
terms expire, respectively, at the 2000, 2001 and 2002 Annual Meetings
of Stockholders. The Class I directors, who are described on pages 3
and 4, are nominated for re-election at this Annual Meeting. The Class
II and III directors will continue in office following the Annual
Meeting. The following table contains some information about each of
the Class II and III directors. You will find information on director
holdings of PTC stock in the section called “How Much Stock is
Owned by Directors and Officers?” beginning on page
10.
Name, Age, Principal Occupation,
Business Experience and Directorships
|
|
Director
Since
|
|
Term
Expires
|
| Class II
Directors |
|
|
|
|
| |
|
| Michael E. Porter,
age 52 |
|
1995 |
|
2001 |
Professor at Harvard
Business School since 1973; also director
of R&B Falcon Corporation and
ThermoQuest Corporation. |
|
|
|
|
| |
|
| Steven C. Walske, age
47 |
|
1986 |
|
2001 |
Chairman of the Board
of Directors of PTC since August
1994; Chief Executive Officer of PTC
since December 1986;
President of PTC from December 1986 to
August 1994;
also director of Synopsys,
Inc. |
|
|
|
|
| |
|
| Class III
Directors |
|
|
|
|
| |
|
| C. Richard Harrison,
age 44 |
|
1994 |
|
2002 |
President and Chief
Operating Officer of PTC since August
1994; Senior Vice President of Sales and
Distribution of PTC
from September 1991 to August
1994. |
|
|
|
|
| |
|
| Robert N. Goldman,
age 50 |
|
1991 |
|
2002 |
Chief Executive
Officer and President of Object Design, Inc., a software
developer, since November 1995; Chairman
of the Board of Trinzic
Corporation, a software developer, from
June 1986 to August 1995;
also director of Citrix Systems, Inc. and
Object Design, Inc. |
|
|
|
|
PTC’s Board usually meets four times per year in regularly
scheduled meetings, but will meet more often if necessary. The Board
met six times during 1999. All directors attended 100% of the Board
meetings.
Are Our Directors Independent?
Each non-employee member of the Board of Directors is an
“independent director” under the current rules of the Nasdaq
Stock Market. None is, or has ever been, an employee of PTC or any
subsidiary, although we have hired Professor Porter from time to time
as a speaker and organizer of executive management seminars on our
behalf. The terms of that arrangement for fiscal 1999 are described in
“Certain Business Relationships” on page 14. The Nasdaq Stock
Market has proposed new rules to govern the qualifications of the
members of our Audit Committee. Under the proposed rules, Professor
Porter would not be considered “independent” as a result of
his speaking and organizing activities for us. However, our Board has
determined that these activities do not interfere with his ability to
exercise independent judgment in carrying out his responsibilities and
that, in light of Professor’s Porter’s unique knowledge,
background and financial acumen, his continued membership on the Audit
Committee is required in the best interests of PTC and its
stockholders.
The Committees of the Board
The Board has three standing committees: the Audit, Compensation
and Stock Option Committees.
The Audit Committee
The Audit Committee considers and recommends the selection of
our independent accountants, reviews the performance of the independent
accountants in the annual audit and in assignments unrelated to the
audit and reviews the fees of the independent accountants. The
Committee also meets privately, outside the presence of PTC management,
with the independent accountants to discuss our internal accounting
control policies and procedures and reports on such meetings to our
Board of Directors. The Audit Committee’s mandate is set out in a
charter that is reviewed and approved by the Board of
Directors.
Messrs. Marx, Porter (Chairman), and Posternak currently serve
as members of the Audit Committee. This committee met six times during
fiscal 1999. Mr. Porter was unable to attend two of the six
meetings.
The Compensation and Stock Option Committees
The Compensation Committee provides recommendations to the Board
of Directors regarding executive and employee compensation and
administers PTC’s bonus programs, stock option plans and employee
stock purchase plans. Each year, as the SEC requires, the Committee
reports to you on executive compensation. The Committee’s report
for 1999 is printed below on pages 16 and 17.
Messrs. Goldman (Chairman) and Grierson currently serve as
members of the Compensation Committee. This committee met twice during
fiscal 1999.
During fiscal 1999, Messrs. Goldman (Chairman) and Grierson also
constituted the Officers’ Stock Option Committee, which grants
stock options to executive officers of the company. The Officers’
Stock Option Committee met once during fiscal 1999.
How We Compensate Our Directors
| Annual Cash
Fee
|
|
We compensate
directors who are not employees of PTC or our subsidiaries with an
annual cash fee of $10,000 per year.
|
|
| Annual Stock
Option Award
|
|
We also grant each
non-employee director 15,000 stock options on the date of each annual
meeting. These options have an exercise price equal to the fair
market value of our stock on the Nasdaq Stock Market on the date of
grant. The options vest annually in four equal parts beginning on the
first anniversary of the grant date and expire ten years from the
grant date. The options stop vesting when the director no longer
serves on the PTC board.
|
|
| Stock Option
Award to
New Board Members
|
|
We grant each new
non-employee director 40,000 stock options at the time of initial
election to the Board on the same terms as the annual option grants
described above.
|
|
| Meeting
Fees
|
|
We also pay each
non-employee director meeting fees of:
$2,000 for attendance at each Board meeting;
and
$1,000 for attendance at each meeting of the Audit or
Compensation Committee held.
|
|
| Expenses
|
|
PTC reimburses all
directors for travel and other related expenses incurred in attending
Board and committee meetings.
|
|
| Directors
who are PTC Employees
|
|
We do not compensate
our employees for service as a director.
|
|
Information About Certain Insider Relationships
Compensation Committee Interlocks and Insider
Participation
Robert N. Goldman serves on both the Compensation Committee and
the Officers’ Stock Option Committee of the Board of Directors.
During a portion of our last fiscal year, Steven C. Walske, PTC’s
Chairman and Chief Executive Officer, served on the Board of Directors
of Object Design, Inc., a software development company whose Chief
Executive Officer and President is Mr. Goldman. Mr. Walske resigned
from the Object Design, Inc. Board on February 23, 1999.
Certain Business Relationships
Professor Michael E. Porter has a consulting arrangement with
PTC under which he aids in the development of and participates in a
series of executive management seminars sponsored by PTC. In lieu of
his customary honoraria for these services, in 1999 Mr. Porter received
an option to purchase 100,000 shares of PTC’s common stock at an
exercise price of $14.1875 per share, the fair market value of our
common stock on the date of grant. The option became exercisable as to
50% of the shares on each of April 5, 1999 and July 5,
1999.
The spouse of David R. Friedman, our Senior Vice President,
General Counsel and Clerk, is a partner in the law firm of Jackson,
Lewis, Schnitzler & Krupman, which has provided legal services to
PTC since before Mr. Friedman became an executive officer. We incurred
approximately $118,330 in fees for such services during the fiscal year
ended September 30, 1999 and anticipate engaging Jackson, Lewis during
fiscal 2000.
INFORMATION ABOUT EXECUTIVE COMPENSATION
The tables on pages 14 and 15 show salaries, bonuses and other
compensation paid during the last three fiscal years, options granted
in fiscal 1999, options exercised in fiscal 1999 and option values as
of year-end fiscal 1999 for the Chief Executive Officer and our next
four most highly compensated executive officers.
Summary Compensation Table
Name and Principal
Position
|
|
Year
|
|
Annual
Compensation
|
|
Long-Term
Compensation
Awards
|
|
All Other
Compensation($)(3)
|
|
|
Salary($)(1)
|
|
Bonus($)(2)
|
|
Shares Underlying
Options(#)
|
| Steven C.
Walske |
|
1999 |
|
375,000 |
|
200,000 |
|
500,000 |
|
5,000 |
| Chairman of the Board
of Directors |
|
1998 |
|
345,000 |
|
0 |
|
1,000,000 |
|
5,000 |
| and Chief Executive
Officer |
|
1997 |
|
345,000 |
|
385,000 |
|
1,200,000 |
|
4,750 |
| |
| C. Richard
Harrison |
|
1999 |
|
375,000 |
|
200,000 |
|
500,000 |
|
5,000 |
| President and Chief
Operating Officer |
|
1998 |
|
345,000 |
|
0 |
|
1,000,000 |
|
5,000 |
| |
|
1997 |
|
290,000 |
|
385,000 |
|
1,200,000 |
|
4,750 |
| |
| Edwin J.
Gillis |
|
1999 |
|
280,000 |
|
210,000 |
|
300,000 |
|
5,000 |
| Executive Vice
President, |
|
1998 |
|
250,000 |
|
150,000 |
|
400,000 |
|
5,000 |
| Chief Financial
Officer and Treasurer |
|
1997 |
|
250,000 |
|
225,000 |
|
400,000 |
|
4,750 |
| |
| Barry
Cohen(4) |
|
1999 |
|
250,000 |
|
150,000 |
|
200,000 |
|
2,885 |
| Executive Vice
President, Marketing |
|
1998 |
|
179,500 |
|
1,203,107 |
|
420,000 |
|
0 |
| |
| James P.
Baum |
|
1999 |
|
150,000 |
|
150,000 |
|
200,000 |
|
3,727 |
| Executive Vice
President, |
|
1998 |
|
110,250 |
|
70,000 |
|
234,000 |
|
5,000 |
| Research and
Development |
|
1997 |
|
87,500 |
|
42,000 |
|
180,000 |
|
3,640 |
(1)
|
Salary
includes amounts deferred pursuant to our 401(k) Savings
Plan.
|
(2)
|
Amounts
shown are earned and accrued during the fiscal years indicated and
paid after the end of each fiscal year. The bonus paid to Mr. Cohen
in fiscal 1998 includes $1,103,117 that was paid in connection with
his severance arrangement with Computervision Corporation following
our merger with them in January 1998.
|
(3)
|
Amounts
shown are our matching contributions made under the 401(k) Savings
Plan.
|
(4)
|
Mr. Cohen
joined PTC in January 1998.
|
Option Grants in Fiscal 1999
| |
|
Individual
Grants
|
| |
|
|
|
Percentage
of Total
Options
Granted to |
|
|
|
|
|
Potential
Realizable Value
at Assumed Annual
Rates of Stock Price
Appreciate for
Option Term(2)
|
Name
|
|
Number of Shares
Underlying Options
Granted(#)(1)
|
|
Employees
for Fiscal
Year(%)
|
|
Exercise
Price
Per Share($)
|
|
Expiration
Date
|
|
5%($)(3)
|
|
10%($)(3)
|
| Steven C.
Walske |
|
500,000 |
|
3.25 |
|
15.5625 |
|
9/16/09 |
|
4,893,100 |
|
12,401,300 |
| C. Richard
Harrison |
|
500,000 |
|
3.25 |
|
15.5625 |
|
9/16/09 |
|
4,893,600 |
|
12,401,300 |
| Edwin J.
Gillis |
|
300,000 |
|
1.95 |
|
15.5625 |
|
9/16/09 |
|
2,936,160 |
|
7,440,780 |
| Barry
Cohen |
|
200,000 |
|
1.30 |
|
15.5625 |
|
9/16/09 |
|
1,957,440 |
|
4,960,520 |
| James P.
Baum |
|
200,000 |
|
1.30 |
|
15.5625 |
|
9/16/09 |
|
1,957,440 |
|
4,960,520 |
(1)
|
The exercise
price of each option is 100% of the fair market value of our common
stock on the date the option was granted. The exercise price may be
paid in cash or, subject to certain limitations for shares previously
acquired upon exercise of options, in shares of common stock, or in a
combination of cash and shares. All options granted to the named
executive officers are exercisable in four equal annual installments,
commencing one year after the date of grant and may become
exercisable sooner as described in “Employment Agreements With
Executive Officers” on page 18.
|
(2)
|
The dollar
amounts under these columns are the result of calculations at the 5%
and 10% appreciation rates set by the SEC and, therefore, are not
intended to forecast possible future appreciation, if any, in the
price of our common stock. No gain to the optionees is possible
without an increase in the price of our common stock, which will
benefit all stockholders proportionately.
|
(3)
|
In order to
realize the potential values over the ten-year option term set forth
in the 5% and 10% columns of this table, the per share price of the
common stock at the end of the option term would be as
follows:
|
Date of
Grant
|
|
Exercise Price
per Share ($)
|
|
Prices
at:
|
|
Percentage
Increases at:
|
|
|
5%($)
|
|
10%($)
|
|
5%
|
|
10%
|
| 9/16/99 |
|
15.5625 |
|
25.35 |
|
40.37 |
|
63 |
|
159 |
Aggregated Option Exercises During Fiscal 1999 and Year-End
Option Values
Name
|
|
Shares
Acquired
on Exercise(#)
|
|
Value
Realized($)(1)
|
|
Number of Shares
Underlying Unexercised
Options at FY-End(#)
|
|
Value of
Unexercised
In-the-Money Options
at FY-End($)(2)
|
|
|
|
Exercisable/Unexercisable
|
|
Exercisable/Unexercisable
|
| Steven C.
Walske |
|
0 |
|
0 |
|
2,040,000/ |
|
3,206,961/ |
| |
|
|
|
|
|
2,050,000 |
|
2,671,875 |
|
| C. Richard
Harrison |
|
0 |
|
0 |
|
2,834,740/ |
|
6,908,629/ |
| |
|
|
|
|
|
2,050,000 |
|
2,671,875 |
|
| Edwin J.
Gillis |
|
0 |
|
0 |
|
1,026,000/ |
|
356,250/ |
| |
|
|
|
|
|
900,000 |
|
1,068,750 |
|
| Barry
Cohen |
|
0 |
|
0 |
|
157,742/ |
|
106,875/ |
| |
|
|
|
|
|
521,930 |
|
320,625 |
|
| James P.
Baum |
|
0 |
|
0 |
|
165,897/ |
|
94,250/ |
| |
|
|
|
|
|
473,499 |
|
267,188 |
(1)
|
Market value
of the underlying shares on the date of exercise less the option
exercise price.
|
(2)
|
Market value
of shares covered by in-the-money options on September 30, 1999
($13.50) less the option exercise price. Options are in-the-money if
the market value of the shares covered thereby is greater than the
option exercise price.
|
Report of the Compensation Committee
The Compensation Committee of the Board of Directors consists of
two outside directors. The two outside directors also serve as the
Officers’ Stock Option Committee to grant stock options to
executive officers. The compensation for our executive officers is set
by our Board of Directors, after consideration of the Compensation
Committee’s recommendations.
Executive Compensation Programs
Our executive compensation programs, which contain no special
perquisites, consist of three principal elements: base salary, cash
bonus and stock options. Our objective is to emphasize incentive
compensation in the form of bonuses and stock option grants, rather
than base salary. Our Board of Directors sets the annual base salary
for executives after consideration of the recommendations of the
Compensation Committee. Prior to making its recommendations, the
Compensation Committee reviews historical compensation levels of the
executives, evaluates past performance and assesses expected future
contributions of the executives. In making the determinations regarding
base salaries, the Committee considers generally available information
regarding salaries prevailing in the industry but does not tie salaries
to any particular indices.
We maintain incentive plans under which executive officers
(including the Chief Executive Officer) are paid cash bonuses after the
end of each fiscal year. The bonuses under the incentive plans are
based in part on our achievement of certain financial targets
established by our Board of Directors before the start of each fiscal
year.
The incentive plans for fiscal 1999 set forth several
performance factors including, for each participating officer, earnings
per share and revenue. Because PTC’s earnings per share did not
reach the target for the year, Messrs. Walske and Harrison were not
eligible to receive a cash bonus under our incentive plans in 1999.
However, in order to acknowledge and reward them for their significant
contributions to PTC in 1999 and to bring their total compensation more
in line with that of their peers in the industry, the Compensation
Committee increased their salary for fiscal 2000 and awarded them
non-incentive plan bonuses for fiscal 1999. Messrs. Baum, Cohen and
Gillis received portions of their bonuses under their specific
incentive plans as a result of achievements unrelated to earnings per
share and revenue targets. Mr. Baum was also awarded an additional
non-incentive plan bonus in recognition of his special contributions in
1999.
Total compensation for executive officers also includes
long-term incentives offered by stock options, which are generally
provided through initial stock option grants at the date of hire and
periodic additional stock option grants. Stock options are instrumental
in promoting the alignment of long-term interests between our executive
officers and stockholders due to the fact that executives realize gains
only if the stock price increases over the fair market value at the
date of grant and the executives exercise their options. In determining
the amount of such grants, the Officers’ Stock Option Committee
considered the contributions of each executive to our overall success
in fiscal 1999, the responsibilities to be assumed in the upcoming
fiscal year, the appropriate incentives for the promotion of our
long-term growth and grants to other executives in the industry holding
comparable positions as well as the executive’s position within
our company. It has been our practice to fix the exercise price of
options, which generally become exercisable in equal annual
installments over a period of four years commencing one year after the
date of grant, at 100% of the fair market value on the date of grant.
Therefore, the long-term value realized by executives through option
exercises can be directly linked to the enhancement of stockholder
value.
Compensation Deductibility
Section 162(m) of the Internal Revenue Code of 1986, as amended
(the “Code”), imposes a limit on tax deductions for annual
compensation in excess of one million dollars paid by a corporation to
its chief executive officer and the other four most highly compensated
executive officers of the corporation. This provision excludes certain
forms of “performance based compensation,” including stock
options, from the compensation taken into account for the purposes of
that limit. The Committee believes that, although it is desirable for
executive compensation to be tax deductible whenever in the Committee
’s judgment that would be consistent with the objectives pursuant
to which the particular compensation is paid, we should compensate our
executive officers fairly in accordance with the guidelines discussed
in this report and not be unduly limited by the anticipated tax
treatment. Accordingly, the total compensation paid to an executive
officer in any year may exceed the amount
that is deductible. The Compensation Committee will continue to assess
the impact of Section 162(m) of the Code on its compensation practices
and determine what further action, if any, is appropriate.
Chief Executive Officer Compensation
Mr. Walske’s performance was evaluated, and his
compensation determined, in accordance with the factors described above
applicable to executive officers generally. For the fiscal year ended
September 30, 1999, Mr. Walske’s base salary was increased $30,000
after remaining unchanged in 1998. The Committee recommended and the
Board approved a $25,000 salary increase for fiscal 2000. As discussed
above, Mr. Walske was awarded a non-incentive plan cash bonus in the
amount of $200,000 in 1999. In addition, the Officers’ Stock
Option Committee granted Mr. Walske options to purchase 500,000 shares
of PTC’s common stock. The amount of his bonus and option grant
reflect Mr. Walske’s overall contribution to PTC during fiscal
1999 in positioning PTC for future growth and the significant
contributions that PTC anticipates he will make in the future, as well
as the factors applicable to executive officers generally described
above.
|
Robert N. Goldman,
Chairman
|
The Stock Performance Graph set forth below compares the
cumulative stockholder return on our common stock from September 30,
1994 to September 30, 1999, with the cumulative total return of the
Nasdaq (U.S. Companies) Index and the Nasdaq Computer & Data
Processing Index (approximately 540 companies) over the same period.
The Stock Performance Graph assumes that the value of the investment in
PTC common stock and each of the comparison groups was $100 on
September 30, 1994 and assumes the reinvestment of dividends. We have
never declared a dividend on our common stock. The stock price
performance depicted in the graph below is not necessarily indicative
of future price performance.
[GRAPH APPEARS HERE]
|
|
9/30/94 |
|
9/30/95 |
|
9/29/96 |
|
9/30/97 |
|
9/30/98 |
|
9/30/99 |
| Parametric Technology Corporation
(PTC) |
|
$100 |
|
$185 |
|
$297 |
|
$265 |
|
$121 |
|
$162 |
| Nasdaq (U.S. Companies) Index
(Nasdaq) |
|
100 |
|
138 |
|
164 |
|
225 |
|
229 |
|
372 |
| Nasdaq Computer &
Data Processing Index (NC&D) |
|
100 |
|
160 |
|
199 |
|
269 |
|
349 |
|
586 |
Employment Agreements with Executive Officers
Agreement with Mr. Walske
Mr. Walske has an agreement that provides him with certain
benefits in the event of a termination of his employment under certain
circumstances and upon the occurrence of certain events. If we elect to
terminate his employment (other than for “cause,” as defined
in the agreement), or cause a “change in status” (which, as
defined in the agreement, includes a diminution in title,
responsibilities or compensation), he is entitled to receive (i) during
the six-month period following such an event (or until such earlier
date as he commences employment with another company), a salary at a
rate equal to two times the highest annual salary (excluding bonuses)
received by him in the prior six months and (ii) provided he remains
employed with us for such six-month period, a bonus equal to his most
recent fiscal year-end bonus. The agreement also provides that the
outstanding options he holds under our option plans become exercisable
(i) in full upon a “change in control” (which in general
includes (a) any person or entity becoming the beneficial owner of 50%
or more of the voting power of PTC, (b) a change in a majority of our
directors or (c) the approval by the stockholders of a merger or
consolidation in which our stockholders do not have majority voting
power of the surviving entity, our liquidation or a sale or disposition
of all or substantially all of our assets or upon the death or
disability of Mr. Walske) and (ii) for the number of shares of Common
Stock for which they would have otherwise become exercisable had his
employment continued for one year following a termination of his
employment without “cause” or a “change in status.
”
Agreement with Mr. Harrison
Mr. Harrison has an agreement with PTC that provides him with
certain benefits in the event of a termination of his employment under
certain circumstances and upon the occurrence of certain events. The
benefits provided under this agreement are substantially similar to
those described above for Mr. Walske, except for the following: in the
event we elect to terminate his employment without “cause,”
or effect a “change in status,” there is no provision for a
bonus to be paid to Mr. Harrison.
Agreements with Messrs. Cohen and Gillis
PTC has entered into similar agreements with Messrs. Cohen and
Gillis which provide that (i) in the event we terminate their
employment without “cause,” they are entitled to receive,
during the six-month period following notice of termination (or until
such earlier date as they commence employment with another company), a
salary at a rate equal to the highest annual salary (excluding bonuses)
received in the prior six months and (ii) in the event of a change in
control of PTC, their outstanding options under PTC’s option plans
become exercisable in full.
INFORMATION ABOUT OUR AUDITORS
PricewaterhouseCoopers LLP served as PTC’s independent
accountants for fiscal 1999 and has reported on our 1999 consolidated
financial statements. The Board of Directors has re-appointed
PricewaterhouseCoopers LLP for fiscal year 2000. Representatives of
PricewaterhouseCoopers LLP are expected to be present at our Annual
Meeting. They will have the opportunity to make a statement if they
desire to do so and will also be available to respond to appropriate
questions from stockholders.
INFORMATION ABOUT STOCKHOLDER PROPOSALS
If you wish to submit proposals to be presented at the 2001
Annual Meeting of Stockholders, we must receive them on or before
September 12, 2000 to be included in our proxy statement for that
meeting. Please address your proposals to: David R. Friedman, Clerk,
Parametric Technology Corporation, 128 Technology Drive, Waltham,
Massachusetts 02453. In order to curtail controversy as to the date on
which PTC receives a proposal, you should submit your proposals by
Certified Mail-Return Receipt Requested.
Proxies may confer discretionary authority to vote on any matter
of which we receive notice after November 27, 2000, without the matter
being described in the proxy statement.
|
By Order of the Board
of Directors,
|
|
DAVID R. FRIEDMAN,
Senior Vice President, General Counsel and Clerk
|
January 10, 2000
THE BOARD OF DIRECTORS HOPES THAT STOCKHOLDERS WILL ATTEND
THE MEETING. WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING
ENVELOPE OR VOTE BY TELEPHONE OR ON THE INTERNET. A PROMPT RESPONSE
WILL GREATLY FACILITATE ARRANGEMENTS FOR THE MEETING AND YOUR
COOPERATION WILL BE APPRECIATED.
PARAMETRIC TECHNOLOGY CORPORATION
2000 EMPLOYEE STOCK PURCHASE PLAN
1. Purpose.
This 2000
Employee Stock Purchase Plan (the “Plan”) is adopted by
Parametric Technology Corporation (the “Company”) to provide
Eligible Employees who wish to become shareholders of the Company an
opportunity to purchase shares of Common Stock, par value $.01 per
share, of the Company (“Common Stock”). The Plan is intended
to qualify as an “employee stock purchase plan” under Section
423 of the Internal Revenue Code of 1986, as amended (the “Code
”), and the provisions of the Plan shall be construed so as to
extend and limit participation in a manner consistent with the
requirements of Section 423; provided that, if and to the extent
authorized by the Board, the fact that the Plan does not comply in all
respects with the requirements of Section 423 shall not affect the
operation of the Plan or the rights of Employees hereunder.
2. Certain
Definitions.
As used in this
Plan:
|
(a) “Board”
means the Board of Directors of the Company, and “Committee
” means the Compensation Committee of the Board or such other
committee as the Board may appoint from time to time to administer
the Plan.
|
|
(b) “Coordinator
” means the officer of the Company or other person charged with
day-to-day supervision of the Plan as appointed from time to time by
the Board or the Committee.
|
|
(c) “Designated
Beneficiary” means a person designated by an Employee in the
manner prescribed by the Committee or the Coordinator to receive
certain benefits provided in this Plan in the event of the death of
the Employee.
|
|
(d) “Eligible
Employee” with respect to any Offering hereunder means any
Employee who, as of the Offering Commencement Date for such
Offering:
|
|
(i) has been a
Full-time Employee of the Company or any of its Subsidiaries for not
less than 80 days; and
|
|
(ii) would not,
immediately after any right to acquire Shares in such Offering is
granted, own stock or rights to purchase stock possessing five
percent (5%) or more of the total combined voting power or value of
all classes of stock of the Company or of any subsidiary corporation,
determined in accordance with Section 423.
|
|
(e) “Employee
” means an employee (as that term is used in Section 423) of the
Company or any of its Subsidiaries.
|
|
(f) “Fair Market
Value” of a Share shall mean the fair market value of a shares
of Common Stock, as determined by the Committee.
|
|
(g) “Full-time
Employee” is an Employee whose customary employment is for more
than (i) 20 hours per week and (ii) five months, in the calendar year
during which the respective Offering Commencement Date
occurs.
|
|
(h) “Offering
” is an offering of Shares pursuant to Section 5 of the
Plan.
|
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(i) “Offering
Commencement Date” means the date on which an Offering under the
Plan commences, and “Offering Termination Date” means the
date on which an Offering under the Plan terminates.
|
|
(j) “Purchase Date
” means each date on which the rights granted under the Plan may
be exercised for the purchase of Shares.
|
|
(k) “Section 423
” and subdivisions thereof refer to Section 423 of the Code or
any successor provision(s).
|
|
(l) “Shares”
means the shares of Common Stock issuable under the Plan.
|
|
(m) “Subsidiary
” means a subsidiary corporation, as defined in Section 424 of
the Code, of the Company the Employees of which are designated by the
Board of Directors or the Committee as eligible to participate in the
Plan.
|
3. Administration of the
Plan.
The Committee
shall administer, interpret and apply all provisions of the Plan as it
deems necessary or appropriate, subject, however, at all times to the
final jurisdiction of the Board of Directors. The Board may in any
instance perform any of the functions of the Committee hereunder. The
Committee may delegate administrative responsibilities to the
Coordinator, who shall, for matters involving the Plan, be an ex
officio member of the Committee. Determinations made by the Committee
and approved by the Board of Directors with respect to any provision of
the Plan or matter arising in connection therewith shall be final,
conclusive and binding upon the Company and upon all participants,
their heirs or legal representatives.
4. Shares Subject to the
Plan.
The maximum
aggregate number of Shares that may be purchased upon exercise of
rights granted under the Plan shall be 2,000,000 plus the number of
shares, if any, previously approved by the Company’s stockholders
for issuance under the Company’s 1991 Employee Stock Purchase Plan
that remain unissued as of the termination of the final offering under
that plan. Appropriate adjustments in such amount, the number of Shares
covered by outstanding rights granted hereunder, the securities that
may be purchased hereunder, the Exercise Price, and the maximum number
of Shares or other securities that an employee may purchase (pursuant
to Section 8 below) shall be made to give effect to any mergers,
consolidations, reorganizations, recapitalizations, stock splits, stock
dividends or other relevant changes in the capitalization of the
Company occurring after the effective date of the Plan; provided that
any fractional Share otherwise issuable hereunder as a result of such
an adjustment shall be adjusted downward to the nearest full Share. Any
agreement of merger or consolidation involving the Company will include
appropriate provisions for protection of the then existing rights of
participating employees under the Plan. Either authorized and unissued
Shares or treasury Shares may be purchased under the Plan. If for any
reason any right under the Plan terminates in whole or in part, Shares
subject to such terminated right may again be subjected to a right
under the Plan.
5. Offerings;
Participation.
(a)
From time to time, the Company, by action of the Committee, will
grant rights to purchase Shares to Eligible Employees pursuant to one
or more Offerings, each having an Offering Commencement Date, an
Offering Termination Date, and one or more Purchase Dates as designated
by the Committee. No Offering may last longer than twenty-seven (27)
months or such longer period as may then be consistent with Section
423. The Committee may limit the number of Shares issuable in any
Offering, either before or during such Offering.
(b)
Participation in each Offering shall be limited to Eligible
Employees who elect to participate in such Offering in the manner, and
within the time limitations, established by the Committee. No person
otherwise eligible to participate in any Offering under the Plan shall
be entitled to participate if he or she has elected not to participate.
Any such election not to participate may be revoked only with the
consent of the Committee.
(c)
An Employee who has elected to participate in an Offering may
make such changes in the level of payroll deductions as the Committee
may permit from time to time, or may withdraw from such Offering, by
giving written notice to the Company before any Purchase Date. No
Employee who has withdrawn from participating in an Offering may resume
participation in the same Offering, but he or she may participate in
any subsequent Offering if otherwise eligible.
(d)
Upon termination of a participating Employee’s employment
for any reason, including retirement but excluding death or disability
(as defined in Section 22(e)(3) of the Code) while in the employ of the
Company or a Subsidiary, such Employee will be deemed to have withdrawn
from participation in all pending Offerings.
(e)
Upon termination of a participating Employee’s employment
because of disability or death, the Employee or his or her Designated
Beneficiary, if any, as the case may be, shall have the right to elect,
with respect to each Offering in which the Employee was then
participating, by written notice given to the Coordinator within 30
days after the date of termination of employment (but not later than
the next applicable Purchase Date for each Offering), either (i) to
withdraw from such Offering or (ii) to exercise the Employee’s
right to purchase Shares on the next Purchase Date of such Offering to
the extent of the accumulated payroll deductions or other contributions
in the Employee’s account as the date of termination of
employment. If no such election with respect to any Offering is made
within such period, the Employee shall be deemed to have withdrawn from
such Offering on the date of termination of employment. The foregoing
election is not available to any person, such as a legal
representative, as such, other than the Employee of a Designated
Beneficiary.
6. Exercise
Price.
The rights
granted under the Plan shall be exercised and Shares shall be purchased
at a price per Share (the “Exercise Price”) determined by the
Committee from time to time; provided that the Exercise Price shall not
be less than eighty-five percent (85%) of the Fair Market Value of a
Share on (a) the respective Offering Commencement Date or (b) the
respective Purchase Date, whichever is lower.
7. Exercise of Rights; Method of
Payment.
(a)
Participating Employees may pay for Shares purchased upon
exercise of rights granted hereunder through regular payroll
deductions, by lump sum cash payment, by delivery of shares of Common
Stock valued at Fair Market Value on the date of delivery, or a
combination thereof, as determined by the Committee from time to time.
No interest shall be paid upon payroll deductions or other amounts held
hereunder (whether or not used to purchase Shares) unless specifically
provided for by the Committee. All payroll deductions and other amounts
received or held by the Company under this Plan may be used by the
Company for any corporate purpose, and the Company shall not be
obligated to segregate such amounts.
(b)
Subject to any applicable limitation on purchases under the Plan,
and unless the Employee has previously withdrawn from the respective
Offering, rights granted to a participating Employee under the Plan
will be exercised automatically on the Purchase Date of the respective
Offering coinciding with the Offering Termination Date, and the
Committee may provide that such rights may at the election of the
Employee be exercised on one or more other Purchase Dates designated by
the Committee within the period of the Offering, for the purchase of
the number of whole Shares that may be purchased at the applicable
Exercise Price with the accumulated payroll deductions or other amounts
contributed by such Employee as of the respective Purchase Date.
Fractional Shares will not be issued under the Plan, and any amount
that would otherwise have been applied to the purchase of a fractional
Share shall be retained and applied to the purchase of Shares in the
following Offering unless the respective Employee elects otherwise. The
Company will deliver to each participating Employee a certificate
representing the shares of Common Stock purchased within a reasonable
time after the Purchase Date.
(c)
Any amounts contributed by an Employee or withheld from the
Employee’s compensation that are not used for the purchase of
Shares, whether because of such Employee’s withdrawal from
participation in an Offering (voluntarily, upon termination of
employment, or otherwise) or for any other reason, except as provided
in Section 7(b), shall be repaid to the Employee or his or her
Designated Beneficiary or legal representative, as applicable, within a
reasonable time thereafter unless the Employee is eligible to and does
elect to apply such amounts to the purchase of Shares in the next
Offering to commence after the date of withdrawal.
(d)
The Company’s obligation to offer, sell and deliver Shares
under the Plan at any time is subject to (i) the approval of any
governmental authority required in connection with the authorized
issuance or sale of such Shares, (ii) satisfaction of the listing
requirements of any national securities exchange or securities market
on which the Common Stock is then listed, and (iii) compliance, in the
opinion of the Company’s counsel, with all applicable federal and
state securities and other laws.
8. Limitations on Purchase
Rights.
(a)
Any provision of the Plan or any other employee stock purchase
plan of the Company or any subsidiary (collectively, “Other Plans
”) to the contrary notwithstanding, no Employee shall be granted
the right to purchase Common Stock (or other stock of the Company and
any subsidiary) under the Plan and all Other Plans at a rate that
exceeds an aggregate of $25,000 (or such other maximum as may be
prescribed from time to time by Section 423) in Fair Market Value of
such stock (determined at the time the rights are granted) for each
calendar year in which any such right is outstanding.
(b)
An Employee’s participation in any one or a combination of
Offerings under the Plan shall not exceed such additional limits as the
Committee may from time to time impose.
9. Tax
Withholding.
Each
participating Employee shall pay to the Company or the applicable
Subsidiary, or make provision satisfactory to the Committee for payment
of, any taxes required by law to be withheld in respect of the purchase
or disposition of Shares no later than the date of the event creating
the tax liability. In the Committee’s discretion and subject to
applicable law, such tax obligations may be paid in whole or in part by
delivery of Shares to the Company, including Shares purchased under the
Plan, valued at Fair Market Value on the date of delivery. The Company
or the applicable Subsidiary may, to the extent permitted by law,
deduct any such tax obligations from any payment of any kind otherwise
due to the Employee or withhold Shares purchased hereunder, which shall
be valued at Fair Market Value on the date of withholding.
10. Participant’s Rights as
Shareholders and Employees.
(a)
No participating Employee shall have any rights as a shareholder
in the Shares covered by a right granted hereunder until such right has
been exercised, full payment has been made for such Shares, and the
Share certificate is actually issued.
(b)
Each Employee is an employee-at-will (that is to say that either
the Employee or the Company or any Subsidiary may terminate the
employment relationship at any time for any reason or no reason at all)
unless and only to the extent provided in a written employment
agreement for a specified term executed by the chief executive officer
of the Company or his duly authorized designee or the authorized
signatory of any Subsidiary. Neither the adoption, maintenance, nor
operation of the Plan nor any grant of rights hereunder shall confer
upon any Employee any right with respect to the continuance of his/her
employment with the Company or any Subsidiary nor shall they interfere
with the rights of the Company or Subsidiary to terminate any Employee
at any time or otherwise change the terms of employment, including,
without limitation, the right to promote, demote or otherwise re-assign
any Employee from one position to another within the Company or any
Subsidiary.
11. Rights Not
Transferable.
Rights under the
Plan are not assignable or transferable by a participating Employee
other than by will or the laws of descent and distribution and, during
the Employee’s lifetime, are exercisable only by the Employee. The
Company may treat any attempted inter vivos assignment as an
election to withdraw from all pending Offerings.
12. Amendments to or Termination
of the Plan.
The Board shall
have the right to amend, modify or terminate the Plan at any time
without notice, subject to any stockholder approval that the Board
determines to be necessary or advisable; provided that the rights of
Employees hereunder with respect to any ongoing or completed Offering
shall not be adversely affected.
13. Governing
Law.
Subject to
overriding federal law, the Plan shall be governed by and interpreted
consistently with the laws of the Commonwealth of
Massachusetts.
14. Effective Date and
Term.
This Plan will
become effective October 1, 1999, and no rights shall be granted
hereunder after September 30, 2009.
PARAMETRIC TECHNOLOGY CORPORATION
2000 EQUITY INCENTIVE PLAN
1. Purpose.
The purpose of
the Parametric Technology Corporation 2000 Equity Incentive Plan (the
“Plan”) is to attract and retain directors and key employees
and consultants of the Company and its Affiliates, to provide an
incentive for them to achieve performance goals, and to enable them to
participate in the growth of the Company by granting Awards with
respect to the Company’s Common Stock. Certain capitalized terms
used herein are defined in Section 9 below.
2. Administration.
The Plan shall
be administered by the Committee; provided, that the Board may in any
instance perform any of the functions of the Committee hereunder. The
Committee shall select the Participants to receive Awards and shall
determine the terms and conditions of the Awards. The Committee shall
have authority to adopt, alter and repeal such administrative rules,
guidelines and practices governing the operation of the Plan as it
shall from time to time consider advisable, and to interpret the
provisions of the Plan. The Committee’s decisions shall be final
and binding. To the extent permitted by applicable law, the Committee
may delegate to one or more executive officers of the Company the power
to make Awards to Participants who are not Reporting Persons or Covered
Employees and all determinations under the Plan with respect thereto,
provided that the Committee shall fix the maximum amount of such Awards
for all such Participants and a maximum for any one
Participant.
3. Eligibility.
All directors
and all employees and consultants of the Company or any Affiliate
capable of contributing to the successful performance of the Company
are eligible to be Participants in the Plan. Incentive Stock Options
may be granted only to persons eligible to receive such Options under
the Code.
4. Stock Available for
Awards.
(a)
Amount. Subject to adjustment under
subsection (b), Awards may be made under the Plan for up to 11,500,000
shares of Common Stock, provided that no more than 10% of the maximum
number of shares authorized from time to time to be issued hereunder
may be granted as Restricted Stock or unrestricted stock Awards for
consideration less than 100% of the Fair Market Value of the Common
Stock on the date of the respective grant. If any Award expires or is
terminated unexercised or is forfeited or settled in a manner that
results in fewer shares outstanding than were awarded, the shares
subject to such Award, to the extent of such expiration, termination,
forfeiture or decrease, shall again be available for award under the
Plan. Common Stock issued through the assumption or substitution of
outstanding grants from an acquired company shall not reduce the shares
available for Awards under the Plan. Shares issued under the Plan may
consist of authorized but unissued shares or treasury
shares.
(b)
Adjustment. In the event that the
Committee determines that any stock dividend, extraordinary cash
dividend, recapitalization, reorganization, merger, consolidation,
split-up, spin-off, combination, exchange of shares or other
transaction affects the Common Stock such that an adjustment is
required in order to preserve the benefits intended to be provided by
the Plan, then the Committee (subject in the case of Incentive Stock
Options to any limitation required under the Code) shall equitably
adjust any or all of (i) the number and kind of shares in respect of
which Awards may be made under the Plan, (ii) the number and kind of
shares subject to outstanding Awards and (iii) the exercise price with
respect to any of the foregoing, provided that the number of shares
subject to any Award shall always be a whole number, and if considered
appropriate, the Committee may make provision for a cash payment with
respect to an outstanding Award.
(c)
Limit on Individual Grants. The
maximum number of shares of Common Stock subject to Options and Stock
Appreciation Rights that may be granted to any Participant in the
aggregate in any calendar year shall not exceed 2,000,000, and the
maximum number of shares of Common Stock that may be granted as
Restricted Stock or unrestricted stock Awards, with respect to which
performance goals apply under Section 7 below, to any Participant in
the aggregate in any calendar year shall not exceed 500,000, subject to
adjustment under subsection (b).
5. Stock Options.
(a)
Grant of Options. Subject to the
provisions of the Plan, the Committee may grant options (“Options
”) to purchase shares of Common Stock (i) complying with the
requirements of Section 422 of the Code or any successor provision and
any regulations thereunder (“Incentive Stock Options”) and
(ii) not intended to comply with such requirements (“Nonstatutory
Stock Options”). The Committee shall determine the number of
shares subject to each Option and the exercise price therefor, which
shall not be less than 100% of the Fair Market Value of the Common
Stock on the date of grant, provided that a Nonstatutory Stock Option
granted to a new employee or consultant in connection with the hiring
of such person may have a lower exercise price so long as it is not
less than 100% of Fair Market Value on the date the person accepts the
Company’s offer of employment or the date employment commences,
whichever is lower. No Options may be granted hereunder more than ten
years after the effective date of the Plan.
(b)
Terms and Conditions. Each Option
shall be exercisable at such times and subject to such terms and
conditions as the Committee may specify in the applicable grant or
thereafter. The Committee may impose such conditions with respect to
the exercise of Options, including conditions relating to applicable
federal or state securities laws, as it considers necessary or
advisable.
(c)
Payment. No shares shall be
delivered pursuant to any exercise of an Option until payment in full
of the exercise price therefor is received by the Company. Such payment
may be made in whole or in part in cash or, to the extent permitted by
the Committee at or after the grant of the Option, by delivery of a
note or other commitment satisfactory to the Committee or shares of
Common Stock owned by the optionee valued at their Fair Market Value on
the date of delivery, or such other lawful consideration, including a
payment commitment of a financial or brokerage institution, as the
Committee may determine.
6. Stock Appreciation
Rights.
(a)
Grant of SARs. Subject to the
provisions of the Plan, the Committee may grant rights to receive any
excess in value of shares of Common Stock over the exercise price (
“Stock Appreciation Rights” or “SARs”). The
Committee shall determine at the time of grant or thereafter whether
SARs are settled in cash, Common Stock or other securities of the
Company, Awards or other property, and may define the manner of
determining the excess in value of the shares of Common
Stock.
(b)
Exercise Price. The Committee shall
fix the exercise price of each SAR or specify the manner in which the
price shall be determined. An SAR may not have an exercise price less
than 100% of the Fair Market Value of the Common Stock on the date of
the grant, provided that such an SAR granted to a new employee or
consultant in connection with the hiring of such person may have a
lower exercise price so long as it is not less than 100% of Fair Market
Value on the date the person accepts the Company’s offer of
employment or the date employment commences, whichever is
lower.
7. Stock Awards.
(a)
Grant of Restricted or Unrestricted Stock Awards.
The Committee may grant shares of Common Stock subject
to forfeiture (“Restricted Stock”) and determine the duration
of the period (the “Restricted Period”) during which, and the
conditions under which, the shares may be forfeited to the Company and
the
other terms and conditions of such Awards. Shares of Restricted Stock may
not be sold, assigned, transferred, pledged or otherwise encumbered,
except as permitted by the Committee, during the Restricted Period.
Shares of Restricted Stock shall be evidenced in such manner as the
Committee may determine. Any certificates issued in respect of shares
of Restricted Stock shall be registered in the name of the Participant
and unless otherwise determined by the Committee, deposited by the
Participant, together with a stock power endorsed in blank, with the
Company. At the expiration of the Restricted Period, the Company shall
deliver such certificates to the Participant or if the Participant has
died, to the Participant’s Designated Beneficiary. The Committee
also may make Awards of shares of Common Stock that are not subject to
restrictions or forfeiture, on such terms and conditions as the
Committee may determine from time to time.
(b)
Performance Goals. The Committee
may establish performance goals for the granting of Restricted Stock or
unrestricted stock Awards or the lapse of risk of forfeiture of
Restricted Stock. Such performance goals may be based on earnings per
share, revenues, sales or expense targets of the Company or any
subsidiary, division or product line thereof, stock price, or such
other business criteria as the Committee may determine. Shares of
Restricted Stock or unrestricted stock may be issued for no cash
consideration, such minimum consideration as may be required by
applicable law or such other consideration as the Committee may
determine.
8. General Provisions Applicable to
Awards.
(a)
Documentation. Each Award under the
Plan shall be evidenced by a writing delivered to the Participant or
agreement executed by the Participant specifying the terms and
conditions thereof and containing such other terms and conditions not
inconsistent with the provisions of the Plan as the Committee considers
necessary or advisable to achieve the purposes of the Plan or to comply
with applicable tax and regulatory laws and accounting
principles.
(b)
Committee Discretion. Each type of
Award may be made alone, in addition to or in relation to any other
Award. The terms of each type of Award need not be identical, and the
Committee need not treat Participants uniformly. Except as otherwise
provided by the Plan or a particular Award, any determination with
respect to an Award may be made by the Committee at the time of grant
or at any time thereafter.
(c)
Dividends and Cash Awards. In the
discretion of the Committee, any Award under the Plan may provide the
Participant with (i) dividends or dividend equivalents payable (in cash
or in the form of Awards under the Plan) currently or deferred with or
without interest and (ii) cash payments in lieu of or in addition to an
Award.
(d)
Termination of Service. The
Committee shall determine the effect on an Award of the disability,
death, retirement or other termination of service of a Participant and
the extent to which, and the period during which, the Participant
’s legal representative, guardian or Designated Beneficiary may
receive payment of an Award or exercise rights thereunder.
(e)
Change in Control. In order to
preserve a Participant’s rights under an Award in the event of a
change in control of the Company (as defined by the Committee), the
Committee in its discretion may, at the time an Award is made or at any
time thereafter, take one or more of the following actions: (i) provide
for the acceleration of any time period relating to the exercise or
payment of the Award, (ii) provide for payment to the Participant of
cash or other property with a Fair Market Value equal to the amount
that would have been received upon the exercise or payment of the Award
had the Award been exercised or paid upon the change in control, (iii)
adjust the terms of the Award in a manner determined by the Committee
to reflect the change in control, (iv) cause the Award to be assumed,
or new rights substituted therefor, by another entity, or (v) make such
other provision as the Committee may consider equitable to Participants
and in the best interests of the Company.
(f)
Transferability. In the discretion
of the Committee, any Award may be made transferable upon such terms
and conditions and to such extent as the Committee determines, provided
that Incentive Stock Options may be transferable only to the extent
permitted by the Code. The Committee may in its discretion waive any
restriction on transferability.
(g)
Withholding Taxes. The Participant
shall pay to the Company, or make provision satisfactory to the
Committee for payment of, any taxes required by law to be withheld in
respect of Awards under the Plan no later than the date of the event
creating the tax liability. The Company and its Affiliates may, to the
extent permitted by law, deduct any such tax obligations from any
payment of any kind due to the Participant hereunder or otherwise. In
the Committee’s discretion, the minimum tax obligations required
by law to be withheld in respect of Awards may be paid in whole or in
part in shares of Common Stock, including shares retained from the
Award creating the tax obligation, valued at their Fair Market Value on
the date of retention or delivery.
(h)
Foreign Nationals. Awards may be
made to Participants who are foreign nationals or employed outside the
United States on such terms and conditions different from those
specified in the Plan as the Committee considers necessary or advisable
to achieve the purposes of the Plan or to comply with applicable
laws.
(i)
Amendment of Award. The Committee
may amend, modify or terminate any outstanding Award, including
substituting therefor another Award of the same or a different type,
changing the date of exercise or realization and converting an
Incentive Stock Option to a Nonstatutory Stock Option, provided that
the Participant’s consent to such action shall be required (a) if
such action would terminate, or reduce the number of shares issuable
under, an Option, unless any time period relating to the exercise of
such Option or the eliminated portion, as the case may be, is
accelerated before such termination or reduction, in which case the
Committee may provide for the Participant to receive cash or other
property equal to the net value that would be received upon exercise of
the terminated Option or the eliminated portion, as the case may be,
and (b) in any other case, unless the Committee determines that the
action, taking into account any related action, would not materially
and adversely affect the Participant. The Committee shall not, without
further approval of the stockholders of the Company, authorize the
amendment of any outstanding Option to reduce the exercise price.
Furthermore, no Option shall be canceled and replaced with Options
having a lower exercise price without approval of the stockholders of
the Company.
9. Certain
Definitions.
“Affiliate
” means any business entity in which the Company owns directly or
indirectly 50% or more of the total voting power or has a significant
financial interest as determined by the Committee.
“Award
” means any Option, Stock Appreciation Right or Restricted Stock
granted under the Plan.
“Board
” means the Board of Directors of the Company.
“Code”
means the Internal Revenue Code of 1986, as amended from time to time,
or any successor law.
“Committee
” means one or more committees each comprised of not less than two
members of the Board appointed by the Board to administer the Plan or a
specified portion thereof. Unless otherwise determined by the Board, if
a Committee is authorized to grant Awards to a Reporting Person or a
Covered Employee, each member shall be a “non-employee director
” within the meaning of Rule 16b-3 under the Exchange Act or an
“outside director” within the meaning of Section 162(m) of
the Code, respectively.
“Common
Stock” or “Stock” means the Common Stock, $.01 par
value, of the Company.
“Company
” means Parametric Technology Corporation, a Massachusetts
corporation.
“Covered
Employee” means a “covered employee” within the meaning
of Section 162(m) of the Code.
“Designated
Beneficiary” means the beneficiary designated by a Participant, in
a manner determined by the Committee, to receive amounts due or
exercise rights of the Participant in the event of the Participant
’s death. In the absence of an effective designation by a
Participant, “Designated Beneficiary” means the Participant
’s estate.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended from
time to time, or any successor law.
“Fair
Market Value” means, with respect to Common Stock or any other
property, the fair market value of such property as determined by the
Committee in good faith or in the manner established by the Committee
from time to time.
“Participant
” means a person selected by the Committee to receive an Award
under the Plan.
“Reporting
Person” means a person subject to Section 16 of the Exchange
Act.
10. Miscellaneous.
(a)
No Right To Employment. No person
shall have any claim or right to be granted an Award. Each employee of
the Company or any of its Affiliates is an employee-at-will (that is to
say that either the Participant or the Company or any Affiliate may
terminate the employment relationship at any time for any reason or no
reason at all) unless and only to the extent provided in a written
employment agreement for a specified term executed by the chief
executive officer of the Company or his duly authorized designee or the
authorized signatory of any Affiliate. Neither the adoption,
maintenance, nor operation of the Plan nor any Award hereunder shall
confer upon any employee or consultant of the Company or of any
Affiliate any right with respect to the continuance of his/her
employment by or other service with the Company or any such Affiliate
nor shall they interfere with the rights of the Company (or Affiliate)
to terminate any employee at any time or otherwise change the terms of
employment, including, without limitation, the right to promote, demote
or otherwise re-assign any employee from one position to another within
the Company or any Affiliate.
(b)
No Rights As Stockholder. Subject
to the provisions of the applicable Award, no Participant or Designated
Beneficiary shall have any rights as a stockholder with respect to any
shares of Common Stock to be issued under the Plan until he or she
becomes the holder thereof. A Participant to whom Common Stock is
awarded shall be considered the holder of the Stock at the time of the
Award except as otherwise provided in the applicable Award.
(c)
Effective Date. The Plan shall be
effective on the date it is approved by the stockholders.
(d)
Amendment of Plan. The Board may
amend, suspend or terminate the Plan or any portion thereof at any
time, subject to such stockholder approval as the Board determines to
be necessary or advisable to comply with any tax or regulatory
requirement.
(e)
Governing Law. The provisions of
the Plan shall be governed by and interpreted in accordance with the
laws of the Commonwealth of Massachusetts.
TO VOTE BY MAIL, PLEASE DETACH THE
PROXY CARD HERE
.................................................................
........................................................................
........................................................................
..................................
PARAMETRIC TECHNOLOGY CORPORATION
PROXY FOR 2000 ANNUAL MEETING OF STOCKHOLDERS
SOLICITED BY THE BOARD OF DIRECTORS
FEBRUARY 10, 2000
The undersigned, having received notice of and
the Proxy Statement relating to the 2000 Annual Meeting of Stockholders
to be held on February 10, 2000 at 9:00 a.m. at the Boston-Newton
Marriott Hotel, 2345 Commonwealth Avenue, Newton, MA 02466, and
revoking all prior proxies, hereby appoint(s) Edwin J. Gillis and David
R. Friedman, and each of them acting singly, with full power of
substitution, as proxies to represent and vote on behalf of the
undersigned, as designated below, all shares of common stock, $.01 par
value per share, of Parametric Technology Corporation (PTC) that the
undersigned would be entitled to vote if personally present at the 2000
Annual Meeting of Stockholders and any adjournment or adjournments
thereof (the "Annual Meeting"). The proxies are authorized
to vote in their discretion upon such other matters as may properly
come before the Annual Meeting.
This Proxy when properly executed will be voted
in the manner directed herein by the undersigned stockholder. If a
choice is not specified with respect to any of the above proposals,
this proxy will be voted FOR such proposal.
Attendance of the undersigned at the Annual
Meeting will not be deemed to revoke this Proxy unless the undersigned
shall revoke this Proxy in writing and shall vote in person at the
Annual Meeting.
EACH STOCKHOLDER SHOULD SIGN THIS PROXY PROMPTLY
AND RETURN IT IN THE ENCLOSED ENVELOPE. THIS PROXY IS SOLICITED ON
BEHALF OF THE BOARD OF DIRECTORS OF PTC.
| HAS YOUR ADDRESS CHANGED?
|
|
DO YOU HAVE COMMENTS? |
| ________________________________________________ |
|
___________________________________________________ |
| ________________________________________________ |
|
___________________________________________________ |
__________________
SEE REVERSE SIDE
__________________
P R O X Y
Instructions for Voting Your
Proxy
Parametric Technology Corporation is now offering
stockholders of record three alternative ways of voting your
proxies:
| . By
Telephone (using a touch-tone telephone) |
| . Through
the Internet (using a browser) |
| . By Mail (traditional method)
|
Your telephone or Internet vote authorizes the
named proxies to vote your shares in the same manner as if you had
returned your proxy card. We encourage you to use these cost effective
and convenient ways of voting, 24 hours a day, 7 days a week.
____________________
TELEPHONE VOTING Available only until
5:00 p.m. Eastern time on February 9, 2000
________________
- This method of voting is available
for residents of the U.S. and Canada
- On a touch tone telephone, call
TOLL FREE 1-800-848-7964, 24 hours a day, 7 days a
week
- You will be asked to enter ONLY the
CONTROL NUMBER shown below
- Have your proxy card ready, then follow
the simple recorded instructions.
- Your vote will be confirmed and cast as
you directed
___________________
INTERNET VOTING Available only until 5:00
p.m. Eastern time on February 9, 2000
________________
- Visit our Internet voting Website at
http://www.cybervote.georgeson.com
- Enter the COMPANY NUMBER AND
CONTROL NUMBER shown below and follow the
instructions on your screen
- You will incur only your usual Internet
charges, if applicable.
__________________
VOTING BY MAIL
_______________
- Mark, sign and date the attached
proxy card and return it in the postage-paid envelope
enclosed
- If you vote by telephone or the Internet,
please do not mail your proxy card.
| |
________________________
COMPANY NUMBER
________________________
|
|
________________
CONTROL NUMBER ____________________
|
|
TO VOTE BY MAIL, PLEASE DETACH THE
PROXY CARD HERE
...........................................................
........................................................................
........................................................................
.........................................
[X] Votes must be indicated, as
in Example to the left, in
Black or Blue Ink.
|
| THE DIRECTORS RECOMMEND A
VOTE "FOR" ALL NOMINEES LISTED IN ITEM 1 AND "FOR
" ITEMS 2, 3 AND 4.
|
|
| |
FOR ALL
Nominees Listed
|
WITHHOLD AUTHORITY to vote
for all
|
FOR ALL EXCEPT*
|
| 1. Election of Directors: |
| |
|
|
|
Donald K. Grierson, Oscar
B. Marx, III and
Noel G. Posternak (INSTRUCTION: To withhold
authority to vote for any individual nominee,
mark the "FOR ALL EXCEPT" box and write that
nominee's name on the space provided. *Exceptions________________________________
|
[_]
|
[_]
|
[_]
|
| |
FOR
|
AGAINST
|
ABSTAIN
|
| 2.
Approve Increase in PTC's Authorized Shares of
|
[_]
|
[_]
|
[_]
|
common stock to 500,000,000.
|
| |
FOR
|
AGAINST
|
ABSTAIN
|
| 3. Approve PTC's 2000 Employee
Stock Purchase Plan. |
[_]
|
[_]
|
[_]
|
| |
|
|
|
| |
FOR
|
AGAINST
|
ABSTAIN
|
| 4. Approve PTC's 2000 Equity Incentive Plan.
|
[_]
|
[_]
|
[_]
|
| |
|
|
|
DATE:____________________________________________________
____________________________, 2000
_________________________________________________________
__________________________________
_________________________________________________________
__________________________________
SIGNATURE(S)
Please sign name(s) exactly as appearing on your
stock certificate. If shares are held jointly, each joint owner should
personally sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation,
please sign full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by
authorized person.
