<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_Confidential,]for Use of the
[_]Preliminary Proxy Statement Commission Only (as Permitted by
Rule 14a-6(e)(2))
[X]Definitive Proxy Statement
[_]Definitive Additional Materials
[_]Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
Legato Systems, Inc.
-----------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
[X]No fee required.
Payment of Filing Fee (Check the appropriate box):
[_]$125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_]$500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_]Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_]Fee paid previously with preliminary materials.
[_]Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
[LOGO OF LEGATO APPEARS HERE]
LEGATO SYSTEMS, INC.
2350 West El Camino Real
Mountain View, California 94040
June 14, 2000
TO THE STOCKHOLDERS OF LEGATO SYSTEMS, INC.
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Legato Systems, Inc. (the "Company"), which will be held at the Crowne Plaza
Hotel, 4290 El Camino Real, Palo Alto, California, on Wednesday, July 12th,
2000, at 9:00 a.m. Pacific Daylight Time.
Details of the business to be conducted at the Annual Meeting are given in
the attached Proxy Statement and Notice of Annual Meeting of Stockholders.
It is important that your shares be represented and voted at the meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, SIGN,
DATE AND PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE. Returning the proxy does NOT deprive you of your right to attend the
Annual Meeting. If you decide to attend the Annual Meeting and wish to change
your proxy vote, you may do so automatically by voting in person at the
meeting.
On behalf of the Board of Directors, I would like to express our
appreciation for your continued interest in the affairs of the Company. We
look forward to seeing you at the Annual Meeting.
Sincerely,
Louis C. Cole
Chairman of the Board, President
and Chief Executive Officer
<PAGE>
[LOGO OF LEGATO APPEARS HERE]
LEGATO SYSTEMS, INC.
2350 West El Camino Real
Mountain View, California 94040
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held July 12, 2000
----------------
The Annual Meeting of Stockholders (the "Annual Meeting") of Legato Systems,
Inc. (the "Company") will be held at the Crowne Plaza Hotel, 4290 El Camino
Real, Palo Alto, California, on Wednesday, July 12th, 2000, at 9:00 a.m.
Pacific Daylight Time for the following purposes:
1. To elect six directors of the Board of Directors to serve until the
next Annual Meeting or until their successors have been duly elected and
qualified;
2. To ratify the appointment of PricewaterhouseCoopers LLP as the
Company's independent public accountants for the fiscal year ending
December 31, 2000; and
3. To transact such other business as may properly come before the
meeting or any adjournments or postponements thereof.
The foregoing items of business are more fully described in the attached
Proxy Statement accompanying this notice.
Only stockholders of record at the close of business on June 1, 2000 are
entitled to notice of, and to vote at, the Annual Meeting and at any
adjournments or postponements thereof. A list of such stockholders will be
available for inspection at the Company's Palo Alto office located at 3210
Porter Drive, Palo Alto, California, during ordinary business hours for the
ten-day period prior to the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS,
Robert V. Gunderson, Jr.
Secretary
Mountain View, California
June 14, 2000
IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE,
SIGN, DATE AND PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE. YOU MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO THE
ANNUAL MEETING. IF YOU DECIDE TO ATTEND THE ANNUAL MEETING AND WISH TO
CHANGE YOUR PROXY VOTE, YOU MAY DO SO AUTOMATICALLY BY VOTING IN PERSON AT
THE MEETING.
<PAGE>
LEGATO SYSTEMS, INC.
2350 West El Camino Real
Mountain View, California 94040
----------------
PROXY STATEMENT
----------------
FOR THE ANNUAL MEETING OF STOCKHOLDERS
To be held July 12, 2000
GENERAL INFORMATION
These proxy materials are furnished in connection with the solicitation of
proxies by the Board of Directors of Legato Systems, Inc., a Delaware
corporation (the "Company"), for the Annual Meeting of Stockholders (the
"Annual Meeting") to be held at the Crowne Plaza Hotel, 4290 El Camino Real,
Palo Alto, California, on Wednesday, July 12th, 2000, at 9:00 a.m. Pacific
Daylight Time, and at any adjournment or postponement of the Annual Meeting.
These proxy materials were first mailed to stockholders on or about June 14th,
2000.
PURPOSE OF MEETING
The specific proposals to be considered and acted upon at the Annual Meeting
are summarized in the accompanying Notice of Annual Meeting of Stockholders.
Each proposal is described in more detail in this Proxy Statement.
VOTING RIGHTS AND SOLICITATION OF PROXIES
The Company's Common Stock is the only type of security entitled to vote at
the Annual Meeting. On June 1, 2000, the record date for determination of
stockholders entitled to vote at the Annual Meeting, there were 86,902,521
shares of Common Stock outstanding. Each stockholder of record on June 1, 2000
is entitled to one vote for each share of Common Stock held by such
stockholder on June 1, 2000. Shares of Common Stock may not be voted
cumulatively. All votes will be tabulated by the inspector of elections
appointed for the meeting, who will separately tabulate affirmative and
negative votes, abstentions and broker non-votes.
Quorum Required
The Company's bylaws provide that the holders of a majority of the Company's
Common Stock issued and outstanding and entitled to vote at the Annual
Meeting, present in person or represented by proxy, shall constitute a quorum
for the transaction of business at the Annual Meeting. Abstentions and broker
non-votes will be counted as present for the purpose of determining the
presence of a quorum.
Votes Required
Proposal 1. Directors are elected by a plurality of the affirmative votes
cast by those shares present in person, or represented by proxy, and entitled
to vote at the Annual Meeting. The six nominees for director receiving the
highest number of affirmative votes will be elected. Abstentions and broker
non-votes will not be counted toward a nominee's total. Stockholders may not
cumulate votes in the election of directors.
Proposal 2. Ratification of the appointment of PricewaterhouseCoopers LLP as
the Company's independent public accountants for the fiscal year ending
December 31, 2000 requires the affirmative vote of a majority of those shares
present in person, or represented by proxy, and cast either affirmatively or
negatively at the Annual Meeting. Abstentions and broker non-votes will not be
counted as having been voted on the proposal.
1
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Proxies
Whether or not you are able to attend the Company's Annual Meeting, you are
urged to complete and return the enclosed proxy, which is solicited by the
Company's Board of Directors and which will be voted as you direct on your
proxy when properly completed. In the event no directions are specified, such
proxies will be voted FOR the Nominees of the Board of Directors (as set forth
in Proposal No. 1), FOR Proposal No. 2, and in the discretion of the proxy
holders as to other matters that may properly come before the Annual Meeting.
You may also revoke or change your proxy at any time before the Annual
Meeting. To do this, send a written notice of revocation or another signed
proxy with a later date to the Secretary of the Company at the Company's
principal executive offices before the beginning of the Annual Meeting. You
may also automatically revoke your proxy by attending the Annual Meeting and
voting in person. All shares represented by a valid proxy received prior to
the Annual Meeting will be voted.
Solicitation of Proxies
The Company will bear the entire cost of solicitation, including the
preparation, assembly, printing, and mailing of this Proxy Statement, the
proxy, and any additional solicitation material furnished to stockholders.
Copies of solicitation material will be furnished to brokerage houses,
fiduciaries, and custodians holding shares in their names that are
beneficially owned by others so that they may forward this solicitation
material to such beneficial owners. In addition, the Company may reimburse
such persons for their costs of forwarding the solicitation material to such
beneficial owners. The original solicitation of proxies by mail may be
supplemented by solicitation by telephone, telegram, or other means by
directors, officers, employees or agents of the Company. No additional
compensation will be paid to these individuals for any such services. The
Company has also retained Beacon Hill Partners, Inc. ("Beacon Hill") to assist
in the solicitation of proxies. Beacon Hill will receive a fee for such
services of approximately $5,000, including out-of-pocket expenses, which will
be paid by the Company. Except as described above, the Company does not
presently intend to solicit proxies other than by mail.
2
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
The persons who are being nominated for election to the Board of Directors
(the "Nominees"), their ages as of June 1, 2000, their positions and offices
held with the Company and certain biographical information are set forth
below. The proxy holders intend to vote all proxies received by them in the
accompanying form FOR the Nominees listed below unless otherwise instructed.
In the event any Nominee is unable or declines to serve as a director at the
time of the Annual Meeting, the proxies will be voted for any nominee who may
be designated by the Board of Directors to fill the vacancy. As of the date of
this Proxy Statement, the Board of Directors is not aware of any Nominee who
is unable or will decline to serve as a director. The six (6) nominees
receiving the highest number of affirmative votes of the shares entitled to
vote at the Annual Meeting will be elected directors of the Company to serve
until the next Annual Meeting or until their successors have been duly elected
and qualified.
<TABLE>
<CAPTION>
Positions and Offices Held with the
Nominees Age Company
-------- --- -----------------------------------
<C> <C> <S>
Chairman of the Board, President and Chief
Louis C. Cole(1).......... 56 Executive Officer
Eric A. Benhamou.......... 44 Director
H. Raymond Bingham(2)(3).. 55 Director
Kenneth A. Goldman........ 50 None
Christopher B. Paisley.... 48 None
David N. Strohm(2)(3)(4).. 52 Director
</TABLE>
--------
(1) Member of Stock Option Committee
(2) Member of Audit Committee
(3) Member of Special Investigation Committee
(4) Member of Compensation Committee
Mr. Cole joined the Company as President, Chief Executive Officer and a
Director in June 1989. Since April 1995, Mr. Cole has also served as Chairman
of the Board. Before joining the Company, from March 1987 until July 1988, Mr.
Cole served as Executive Vice President responsible for all operating
divisions of Novell, Inc., a publicly held manufacturer of computer networking
and software products. Mr. Cole currently serves as a director of Inference
Corp. and Rogue Wave Software, Inc., both publicly held software companies.
Mr. Cole holds a B.S. in mathematics and education from Pennsylvania State
University at Edinboro.
Mr. Benhamou has been a Director of the Company since March 1993. Mr.
Benhamou has been the Chief Executive Officer of 3Com Corporation ("3Com"), a
computer network products company, since September 1990, and has been Chairman
of the Board of 3Com since July 1994. Mr. Benhamou served as the President of
3Com from April 1990 until August 1998. From April 1990 until September 1990,
Mr. Benhamou served as Chief Operating Officer of 3Com. Mr. Benhamou currently
serves as a director of Cypress Semiconductor Corporation ("Cypress"), a
publicly held semiconductor company. Mr. Benhamou holds a Diplome d'Ingenieur
from Ecole Nationale Superieure d'Arts et Metiers in Paris, France, and an
M.S. in electrical engineering from Stanford University.
Mr. Bingham has been a Director of the Company since December 1998. Mr.
Bingham has served as President and Chief Executive Officer of Cadence Design
Systems ("Cadence"), an electronic design automation software company, since
April 1999 and a director of Cadence since November 1997. From 1993 to March
1999, Mr. Bingham served as Executive Vice President and Chief Financial
Officer of Cadence. Prior to joining Cadence, Mr. Bingham served eight years
as Executive Vice President and Chief Financial Officer of Red Lion Hotels and
Inns, an owner and operator of a chain of hotels. Mr. Bingham currently serves
as a director of Onyx Software Corporation, Tenfold Corporation, and
Integrated Measurement Systems, Inc., all publicly held companies. Mr. Bingham
holds a B.A. in economics from Weber State University and an M.B.A. from
Harvard University.
Mr. Goldman has been the Executive Vice President and Chief Financial
Officer of At Home Corporation, also known as Excite@Home ("Excite@Home"), a
global media company offering broadband internet
3
<PAGE>
connectivity, personalized, web-based content and targeted advertising
services, since July 1996. From July 1992 to July 1996, Mr. Goldman served as
Senior Vice President and Chief Financial Officer of Sybase, Inc., a database
software and services company. From 1989 to July 1992, Mr. Goldman served as
Vice President of Finance and Administration and Chief Financial Officer at
Cypress. Mr. Goldman serves on the board of directors of Blaze Software, Inc.,
a publicly held company. He holds a B.S. degree in electrical engineering from
Cornell University and an M.B.A. degree from Harvard University.
Mr. Paisley has been the Senior Vice President, Finance and Chief Financial
Officer of 3Com since August 1996. From the time Mr. Paisley joined 3Com in
September 1985 until July 1996, he served as Vice President, Finance and Chief
Financial Officer. From May 1982 to September 1985, Mr. Paisley was Vice
President of Finance of Ridge Computers, a minicomputer manufacturer. From
June 1977 to May 1982, Mr. Paisley held a variety of finance and accounting
positions at Hewlett-Packard Company, a manufacturer of computer and software
products. Mr. Paisley serves as a director of Aspect Communications
Corporation, a publicly held company. Mr. Paisley holds a B.A. in economics
from the University of California at Santa Barbara and an M.B.A. from the
University of California at Los Angeles.
Mr. Strohm has been a Director of the Company since December 1988. Mr.
Strohm joined Greylock Management Corporation ("Greylock"), a venture capital
management company, in 1980 and is a general partner of several venture
capital funds affiliated with Greylock. Mr. Strohm currently serves as a
director of Switchboard, Inc., DoubleClick, Inc. and ISS Group, Inc., all
publicly held companies. Mr. Strohm holds a B.A. from Dartmouth College and an
M.B.A. from Harvard University.
Messrs. Kevin A. Fong and Phillip E. White have elected not to stand for
reelection.
Board of Directors Meetings and Committees
During the fiscal year ended December 31, 1999, the Board of Directors held
nine (9) meetings. For the fiscal year ended December 31, 1999, each of the
directors (other than Mr. Fong) during the term of their tenure attended or
participated in at least 75% of the aggregate of (i) the total number of
meetings or actions by written consent of the Board of Directors and (ii) the
total number of meetings or actions by written consent of all committees of
the Board of Directors on which each such director served. The Board of
Directors currently has four (4) committees: the Compensation Committee, the
Stock Option Committee, the Audit Committee and the Special Investigation
Committee.
During the fiscal year ended December 31, 1999, the Compensation Committee
of the Board of Directors held one (1) meeting. The Compensation Committee
reviews the performance of the executive officers of the Company, establishes
compensation programs for the officers, and reviews the compensation programs
for other key employees, including salary and cash bonus levels and option
grants under the 1995 Stock Option/Stock Issuance Plan. During the fiscal year
ended December 31, 1999 and through the date of this Proxy Statement, the
members of the Compensation Committee have been Messrs. Fong and Strohm.
Following the Annual Meeting, the Board of Directors will nominate a director
to become a member of the Compensation Committee to fill the vacancy created
by Mr. Fong's resignation.
During the fiscal year ended December 31, 1999, the Stock Option Committee
of the Board of Directors acted by written consent in lieu of a meeting on 53
occasions. The Stock Option Committee approves stock option grants to
employees and consultants of the Company who are not officers, up to a maximum
of 10,000 shares per grant. Mr. Cole was the sole member of the Stock Option
Committee during 1999.
During the fiscal year ended December 31, 1999, the Audit Committee of the
Board of Directors held one (1) meeting. The Audit Committee reviews, acts on
and reports to the Board of Directors with respect to various auditing and
accounting matters, including the selection of the Company's accountants, the
scope of the annual audits, fees to be paid to the Company's accountants, the
performance of the Company's accountants and the accounting practices of the
Company. During fiscal year ended December 31, 1999 through May 12, 2000, the
members of the Audit Committee were Messrs. Fong and White. On May 12, 2000,
Messrs. Fong and White
4
<PAGE>
resigned from the Audit Committee and were replaced by Messrs. Bingham and
Strohm. The Board of Directors intends to nominate Mr. Paisley to become an
additional member of the Audit Committee, pending his election to the Board of
Directors.
On April 5, 2000, the Board of Directors appointed a special investigation
committee (the "Special Investigation Committee") composed of two outside
directors, Messrs. Bingham and Strohm, to investigate, with the assistance of
outside counsel, the facts and circumstances concerning certain side
agreements that a number of the Company's sales representatives, acting
outside their authority, had entered into affecting contracts signed with
resellers in the fourth quarter of fiscal 1999 and whether any other similar
arrangements were entered into with the Company's customers during 1999 that,
if known to the Company, may have had an impact on revenue recognition. The
Special Investigation Committee is not authorized to determine the appropriate
actions to be taken by the Board as to the matters being investigated or to
determine whether the Company should take any action with respect to the
pending securities and derivative actions. The Special Investigation Committee
has completed its investigation into matters affecting the Company's revenue
recognition. On May 17, 2000, the Company filed its annual report on Form 10-K
for the fiscal year ended December 31, 1999, and on June 8, 2000, the Company
filed amendments to its quarterly reports on Form 10-Q for the periods ended
March 31, 1999, June 30, 1999 and September 30, 1999.
Director Compensation
Except for grants of stock options, directors of the Company generally do
not receive compensation for services provided as a director. The Company also
does not pay compensation for committee participation or special assignments
of the Board of Directors.
Non-employee Board members are eligible for option grants pursuant to the
provisions of the Automatic Option Grant Program under the Company's 1995
Stock Option/Stock Issuance Plan. Under the Automatic Option Grant Program,
each individual who first becomes a non-employee Board member after the date
of the Company's initial public offering will be granted an option to purchase
96,000 shares on the date such individual joins the Board, provided such
individual has not been in the prior employ of the Company. In addition, at
each Annual Meeting of Stockholders, each individual who has served as a non-
employee Board member for at least six months prior to such Annual Meeting
will receive an additional option grant to purchase 24,000 shares of Common
Stock, whether or not such individual has been in the prior employ of the
Company. The option price for each option grant under the Automatic Option
Grant Program will be equal to the fair market value per share of Common Stock
on the automatic grant date and each automatic option grant will be
immediately exercisable for all of the option shares. The shares purchasable
under the option will be subject to repurchase at the original exercise price
in the event the optionee's Board service should cease prior to vesting. With
respect to each initial grant, the repurchase right shall lapse and the
optionee shall vest in four (4) equal annual installments from the grant date.
Each annual grant shall vest in two equal and successive annual installments.
Pursuant to the Automatic Option Grant Program, Messrs. Benhamou, Fong, Strohm
and White were each granted options to purchase 96,000 shares of Common Stock
on July 5, 1995 at an exercise price of $2.38 per share, 24,000 shares on May
16, 1996 at an exercise price of $5.47 per share, 24,000 shares on May 15,
1997 at an exercise price of $4.47 per share, 24,000 shares on May 14, 1998 at
an exercise price of $15.24, and 24,000 shares on May 13, 1999 at an exercise
price of $21.97. Mr. Bingham, who joined the Board on December 18, 1998, was
granted an option to purchase 96,000 shares of Common Stock at an exercise
price of $27.53. Pursuant to the Automatic Option Grant Program, each of
Messrs. Benhamou, Bingham and Strohm will, if reelected, be granted options to
purchase 24,000 shares of Common Stock at the 2000 Annual Meeting, and, if
elected, each of Messrs. Goldman and Paisley will be granted options to
purchase 96,000 shares of Common Stock at the 2000 Annual Meeting.
Directors who are also employees of the Company are eligible to receive
options and be issued shares of Common Stock directly under the 1995 Stock
Option/Stock Issuance Plan and are also eligible to participate in the
Company's Employee Stock Purchase Plan and, if an executive officer of the
Company, the Executive Bonus Plan.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES LISTED HEREIN.
5
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of May 31, 2000, certain information with
respect to shares beneficially owned by (i) each person who is known by the
Company to be the beneficial owner of more than five percent of the Company's
outstanding shares of Common Stock, (ii) each of the Company's directors and
the executive officers named in the Summary Compensation Table and (iii) all
current directors and executive officers as a group. Beneficial ownership has
been determined in accordance with Rule 13d-3 under the Exchange Act. Under
this rule, certain shares may be deemed to be beneficially owned by more than
one person (if, for example, persons share the power to vote or the power to
dispose of the shares). In addition, shares are deemed to be beneficially
owned by a person if the person has the right to acquire shares (for example,
upon exercise of an option or warrant) within sixty (60) days of the date as
of which the information is provided; in computing the percentage ownership of
any person, the amount of shares is deemed to include the amount of shares
beneficially owned by such person (and only such person) by reason of such
acquisition rights. As a result, the percentage of outstanding shares of any
person as shown in the following table does not necessarily reflect the
person's actual voting power at any particular date.
<TABLE>
<CAPTION>
Shares Beneficially Owned
as of May 31, 2000(1)(2)
-----------------------------
Number of Percentage of
Beneficial Owner Shares Class
---------------- --------------- -------------
<S> <C> <C>
Fidelity Management & Research................. 8,075,587 9.06%
One Post Office Square
Boston, MA 02109
Louis C. Cole(3)............................... 3,599,608 4.04%
Nora M. Denzel(4).............................. 133,414 *
David Malmstedt(5)............................. 157,242 *
Kent D. Smith(6)............................... 777,389 *
Stephen C. Wise(7)............................. 105,052 *
Eric A. Benhamou(8)............................ 314,000 *
H. Raymond Bingham(9).......................... 96,000 *
Kevin A. Fong(10).............................. 198,992 *
David N. Strohm................................ 448,802 *
Phillip E. White(10)........................... 142,000 *
All current directors and executive officers as
a group (11 persons)(11)...................... 6,014,252 6.76%
</TABLE>
--------
* Less than 1% of the outstanding shares of Common Stock.
(1) Except as indicated in the footnotes to this table and pursuant to
applicable community property laws, the persons named in the table have
sole voting and investment power with respect to all shares of Common
Stock. To the Company's knowledge, the entities named in the table have
sole voting and investment power with respect to all shares of Common
Stock shown as beneficially owned by them.
(2) The number of shares of Common Stock deemed outstanding for each
individual shareholder includes shares issuable pursuant to stock options
that may be exercised within sixty (60) days after May 31, 2000.
(3) Includes options exercisable into 640,040 shares of Common Stock and
2,957,984 shares held by The Louis and Jolene Cole 1988 Revocable Trust,
dated November 7, 1988 (the "Cole Trust"), of which Mr. Cole is a
trustee.
(4) Includes options exercisable into 110,256 shares of Common Stock.
(5) Includes options exercisable into 153,116 shares of Common Stock.
(6) Includes options exercisable into 709,889 shares of Common Stock.
(7) Includes options exercisable into 101,331 shares of Common Stock.
(8) Includes options exercisable into 282,000 shares of Common Stock.
(9) Includes options exercisable into 96,000 shares of Common Stock.
(10) Includes options exercisable into 132,000 shares of Common Stock.
(11) Includes options exercisable into 2,475,965 shares of Common Stock.
6
<PAGE>
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Company's Board of Directors (the
"Compensation Committee" or the "Committee") has the exclusive authority to
establish the level of base salary payable to the Chief Executive Officer
("CEO") and certain other executive officers of the Company and has the
authority to administer the Company's 1995 Stock Option/Stock Issuance Plan
and Employee Stock Purchase Plan. In addition, the Committee has the
responsibility for approving the individual bonus programs to be in effect for
the CEO and certain other executive officers and other key employees each
fiscal year.
For the 1999 fiscal year, the process utilized by the Committee in
determining executive officer compensation levels was based on the subjective
judgment of the Committee. Among the factors considered by the Committee were
the recommendations of the CEO with respect to the compensation of the
Company's key executive officers. However, the Committee made the final
compensation decisions concerning such officers.
General Compensation Policy. The Committee's fundamental policy is to offer
the Company's executive officers competitive compensation opportunities based
upon overall Company performance, their individual contribution to the
financial success of the Company and their personal performance. It is the
Committee's objective to have a substantial portion of each officer's
compensation contingent upon the Company's performance, as well as upon his or
her own level of performance. Accordingly, each executive officer's
compensation package consists of: (i) base salary, (ii) cash bonus awards and
(iii) long-term stock-based incentive awards.
Base Salary. The base salary for each executive officer is set on the basis of
general market levels and personal performance. Each individual's base pay is
positioned relative to the total compensation package, including cash
incentives and long-term incentives.
In preparing the performance graph for this Proxy Statement, the Company has
selected the Hambrecht & Quist Software Sector Index. The companies included
in the Company's informal survey are not necessarily those included in the
Hambrecht & Quist Software Sector Index, because they were determined not to
be competitive with the Company for executive talent or because compensation
information was not available.
Annual Cash Bonuses. Each executive officer has an established cash bonus
target. The annual pool of bonuses for executive officers is distributed on
the basis of the Company's achievement of the financial performance targets
established at the start of the fiscal year and personal objectives
established for each executive. Actual bonuses paid reflect an individual's
accomplishment of both corporate and functional objectives and are based on a
percentage of the individual's base salary. The corporate goals set for the
1999 bonuses are based on the achievement of quarterly and annual revenue and
income targets.
Long-Term Incentive Compensation. During fiscal 1999, the Committee, in its
discretion, made option grants to Messrs. Cole, Chappell, Ferraro, Wise, and
Malmstedt and Ms. Denzel under the 1995 Stock Option/Stock Issuance Plan.
Generally, a significant grant is made in the year that an officer commences
employment and no grant is made in the second year. Thereafter, option grants
may be made at varying times and in varying amounts in the discretion of the
Committee. Generally, the size of each grant is set at a level that the
Committee deems appropriate to create a meaningful opportunity for stock
ownership based upon the individual's position with the Company, the
individual's potential for future responsibility and promotion, the
individual's performance in the recent period and the number of unvested
options held by the individual at the time of the new grant. The relative
weight given to each of these factors will vary from individual to individual
at the Committee's discretion. Applying these principles, a significant grant
was made to Mr. Malmstedt in connection with his commencement of employment
with the Company following the acquisition of Full-Time Software in 1999 and
smaller grants were made to Messrs. Cole, Chappell, Wise, Ferraro and Ms.
Denzel.
Each grant allows the officer to acquire shares of the Company's common
stock at a fixed price per share (the market price on the grant date) over a
specified period of time. The option vests in periodic installments
7
<PAGE>
over a two to four year period, contingent upon the executive officer's
continued employment with the Company. The vesting schedule and the number of
shares granted are established to ensure a meaningful incentive in each year
following the year of grant. Accordingly, the option will provide a return to
the executive officer only if he or she remains in the Company's employ, and
then only if the market price of the Company's Common Stock appreciates over
the option term.
CEO Compensation. The annual base salary for Mr. Cole, the Company's President
and Chief Executive Officer, was increased by 6% by the Committee effective
February 1, 1999. The Committee's decision was made primarily on the basis of
Mr. Cole's performance of his duties.
The remaining components of the Chief Executive Officer's 1999 fiscal year
incentive compensation were entirely dependent upon the Company's financial
performance and provided no dollar guarantees. The bonus paid to the Chief
Executive Officer for the fiscal year was based on the same incentive plan for
all other officers. Specifically, a target incentive was established at the
beginning of the year using an agreed-upon formula based on Company revenue
and profit. Each year, the annual incentive plan is reevaluated with a new
achievement threshold and new targets for revenue and profit. The option grant
made to the Chief Executive Officer during the 1999 fiscal year was based on
the factors discussed above. The bonus award was intended to reflect his years
of service with the Company and to place a significant portion of Mr. Cole's
total compensation at risk, because the bonus will provide little or no
compensation unless Company performance achieves agreed-upon thresholds.
Tax Limitation. Under the Federal tax laws, a publicly-held company such as
the Company will not be allowed a federal income tax deduction for
compensation paid to certain executive officers to the extent that
compensation exceeds $1 million per officer in any year. To qualify for an
exemption from the $1 million deduction limitation, the stockholders approved
a limitation under the Company's 1995 Stock Option/Stock Issuance Plan on the
maximum number of shares of Common Stock for which any one participant may be
granted stock options per calendar year. Because this limitation was adopted,
any compensation deemed paid to an executive officer when he exercises an
outstanding option under the 1995 Stock Option/Stock Issuance Plan with an
exercise price equal to the fair market value of the option shares on the
grant date will qualify as performance-based compensation that will not be
subject to the $1 million limitation. Since it is not expected that the cash
compensation to be paid to the Company's executive officers for the 2000
fiscal year will exceed the $1 million limit per officer, the Committee will
defer any decision on whether to limit the dollar amount of all other
compensation payable to the Company's executive officers to the $1 million
cap.
Compensation Committee
Kevin A. Fong
David N. Strohm
8
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Company's Board of Directors was formed in
September 1992, and the members of the Compensation Committee were Messrs.
Fong and Strohm during the fiscal year ended December 31, 1999. Neither of
these individuals was at any time during 1999, or at any other time, an
officer or employee of the Company. No executive officer of the Company serves
as a member of the board of directors or compensation committee of any entity
that has one or more executive officers serving as a member of the Company's
Board of Directors or Compensation Committee.
9
<PAGE>
STOCK PERFORMANCE GRAPH
The graph set forth below compares the cumulative total stockholder return
on the Company's Common Stock between July 6, 1995 (the date the Company's
Common Stock commenced public trading) and December 31, 1999 with the
cumulative total return of (i) the CRSP Total Return Index for the Nasdaq
Stock Market (U.S. Companies) (the "Nasdaq Stock Market-U.S. Index") and (ii)
the Hambrecht & Quist Software Sector Index (the "H&Q Software Sector Index"),
over the same period. This graph assumes the investment of $100.00 on July 6,
1995 in the Company's Common Stock, the Nasdaq Stock Market-U.S. Index and the
H&Q Software Sector Index, and assumes the reinvestment of dividends, if any.
The comparisons shown in the graph below are based upon historical data. The
Company cautions that the stock price performance shown in the graph below is
not indicative of, nor intended to forecast, the potential future performance
of the Company's Common Stock. Information used in the graph was obtained from
Hambrecht & Quist LLC, a source believed to be reliable, but the Company is
not responsible for any errors or omissions in such information.
Comparison of Cumulative Total Return Among Legato Systems, Inc.,
the Nasdaq Stock Market-U.S. Index and the H&Q Software Sector Index
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
7/6/95 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Legato Systems, Inc..... $100.00 $114.81 $241.67 $325.93 $976.86 $2,038.89
--------------------------------------------------------------------------------
Nasdaq Stock Markets -
U.S. Index............ $100.00 $112.33 $138.14 $169.47 $238.23 $ 442.80
--------------------------------------------------------------------------------
H&Q Software Sector
Index.................. $100.00 $107.76 $131.00 $158.39 $206.92 $ 470.79
</TABLE>
10
<PAGE>
The Company effected its initial public offering of Common Stock on July 5,
1995 at a price of $2.38 per share (as adjusted to reflect the two-for-one
stock splits or stock dividends effected by the Company on July 5, 1996, April
17, 1998 and August 16, 1999 (the "1996 Stock Split", "1998 Stock Split" and
"1999 Stock Split", respectively). The graph above, however, commences with
the closing price of $3.38 per share (as adjusted to reflect the 1996 Stock
Split, the 1998 Stock Split, and the 1999 Stock Split) on July 6, 1995--the
date the Company's Common Stock commenced public trading.
Notwithstanding anything to the contrary set forth in any of the Company's
previous or future filings under the Securities Act of 1933, as amended, or
the Securities Exchange Act of 1934, as amended, that might incorporate this
Proxy Statement or future filings made by the Company under those statutes,
the Compensation Committee Report and Stock Performance Graph shall not be
deemed filed with the Securities and Exchange Commission and shall not be
deemed incorporated by reference into any of those prior filings or into any
future filings made by the Company under those statutes.
11
<PAGE>
EXECUTIVE COMPENSATION AND RELATED INFORMATION
The following Summary Compensation Table sets forth the compensation earned
by the Company's Chief Executive Officer and the four other most highly
compensated executive officers who were serving as such at the end of 1999
(collectively, the "Named Officers"), each of whose aggregate compensation for
1999 exceeded $100,000 for services rendered in all capacities to the Company
and its subsidiaries for that fiscal year.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
----------------
Annual Number of
Compensation Securities
-------------------- Underlying Stock All Other
Name and Principal Position(1) Year Salary ($) Bonus ($) Options (#) Compensation(2)
------------------------------ ---- ---------- --------- ---------------- ---------------
<S> <C> <C> <C> <C> <C>
Louis C. Cole............ 1999 $255,314 $212,633 300,000 $1,410
Chairman of the Board,
President 1998 $240,170 $195,059 200,000 $ 626
and Chief Executive
Officer 1997 $218,334 $107,625 100,000 $1,440
Nora M. Denzel........... 1999 $202,718 $128,762 100,000 $1,368
Senior Vice President, 1998 $181,996 $115,249 -- $ 626
Product Operations 1997 $146,666 $ 84,000 300,000 $ 303
Kent D. Smith............ 1999 $211,680 $133,300 -- $1,381
Executive Vice
President, 1998 $211,260 $154,077 100,000 $ 626
Worldwide Sales, Support 1997 $198,300 $ 86,721 50,000 $ 870
And Corporate Marketing
Stephen C. Wise.......... 1999 $194,964 $123,944 80,000 $1,353
Senior Vice President,
Finance and 1998 $183,400 $102,375 -- $ 626
Administration, Chief
Financial Officer 1997 $165,831 $ 56,470 250,000 $ 558
David Malmstedt.......... 1999 $209,022 $131,764 600,000 $1,405
Former Senior Vice
President 1998 -- -- -- --
of Field Sales
Operations 1997 -- -- -- --
</TABLE>
--------
(1) Salary includes amounts deferred under the Company's 401(k) Plan.
(2) Represents life insurance premiums paid by the Company and Company
matching contributions of up to $1,000 to each Named Officer made to the
Company's 401(k) plan.
12
<PAGE>
The following table contains information concerning the stock option grants
made to each of the Named Officers for 1999. No stock appreciation rights were
granted to these individuals during such year.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable
Individual Grants(1) Value at Assumed
-------------------------------------------- Annual Rates of
Number of % of Total Stock Price
Securities Options Appreciation
Underlying Granted to Exercise for Option Term(2)
Options Employees Price Expiration --------------------
Name Granted in 1999 Per Share Date 5% 10%
---- ---------- ---------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Louis C. Cole........... 300,000 5.56% $ 20.75 2/16/2009 3,914,869 9,921,047
Nora M. Denzel.......... 100,000 1.85% $ 20.75 2/16/2009 1,304,956 3,307,016
Kent D. Smith........... -- -- -- -- -- --
Stephen C. Wise......... 80,000 1.48% $ 20.75 2/16/2009 1,043,965 2,645,612
David Malmstedt......... 22,768(3) .42% $17.563 4/19/2009 251,479 637,297
577,232(3) 10.69% $17.563 4/19/2009 6,375,687 16,157,243
</TABLE>
--------
(1) The options disclosed in the table were granted on February 17, 1999,
except the options disclosed in the table for Mr. Malmstedt were granted
on April 20, 1999. The exercise price for each option may be paid in cash,
in shares of Common Stock valued at fair market value on the exercise date
or through a cashless exercise procedure involving a same-day sale of the
purchased shares. The Company may also finance the option exercise by
loaning the optionee sufficient funds to pay the exercise price for the
purchased shares, together with any federal and state income tax liability
incurred by the optionee in connection with such exercise. The plan
administrator has the discretionary authority to reprice the options
through the cancellation of those options and the grant of replacement
options with an exercise price based on the fair market value of the
option shares on the regrant date. The options have a maximum term of 10
years measured from the option grant date, subject to earlier termination
in the event of the optionee's cessation of service with the Company.
Except as otherwise noted, the options listed in the table become
exercisable for 50% of the shares after two years of service from the
designated vesting date and for the remaining 50% monthly over the one
year thereafter. Under each of the options, the option shares will vest
upon an acquisition of the Company by merger or asset sale, unless the
acquiring company assumes the options. Any options that are assumed or
replaced in the transaction and do not otherwise accelerate at that time
shall automatically accelerate (and any unvested option shares which do
not otherwise vest at that time shall automatically vest) in the event the
optionee's service terminates by reason of an involuntary or constructive
termination within 18 months following the transaction.
(2) The 5% and 10% assumed annual rates of compounded stock price appreciation
are mandated by rules of the Securities and Exchange Commission. There can
be no assurance provided to any executive officer or any other holder of
the Company's securities that the actual stock price appreciation over the
10-year option term will be at the assumed 5% and 10% levels or at any
other defined level. Unless the market price of the Common Stock
appreciates over the option term, no value will be realized from the
option grants made to the executive officers.
(3) These grants to Mr. Malmstedt become exercisable for 20% of the shares
after one year of service from the designated grant date, for an
additional 20% after two years of service from the grant date and for the
remaining 60% monthly over the next twenty-four months. Mr. Malmstedt's
employment with the Company terminated on April 3, 2000.
13
<PAGE>
The following table sets forth information concerning option exercises in
1999 and option holdings as of the end of the 1999 fiscal year with respect to
each of the Named Officers. No stock appreciation rights were outstanding at
the end of that year.
Aggregate Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
ValueRealized Underlying Unexercised In-the-Money Options
Shares (Market Price at Options at FY-End At FY-End(1) ($)
Acquired on Exercise Less ------------------------- -------------------------
Name Exercise ExercisePrice) ($) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Louis C. Cole........... 375,000 14,996,585 606,706 358,334 36,124,585 18,099,055
Nora M. Denzel.......... 146,630 5,320,734 28,370 300,002 1,744,462 17,172,333
Kent D. Smith........... 124,600 5,154,924 693,648 28,752 44,546,472 1,812,745
Stephen C. Wise......... 114,600 4,551,974 30,921 234,079 1,939,217 13,428,210
David Malmstedt......... 22,173 667,477 5,177 629,050 305,769 32,465,780
</TABLE>
--------
(1) Based on the fair market value of the Company's Common Stock at year-end
($68.813) per share, less the exercise price payable for such shares.
Bonus Plan. In 1999, the Company instituted an executive bonus program
pursuant to which bonuses will be paid to executive officers based on
individual and Company performance targets. In addition, certain non-executive
employees will receive quarterly and annual bonuses if the Company meets its
performance targets. The Company's performance targets are based on meeting
revenue and income levels on a quarterly and annual basis.
EMPLOYMENT CONTRACTS AND CHANGE IN CONTROL ARRANGEMENTS
None of the Company's current executive officers have employment or
severance agreements with the Company, and their employment may be terminated
at any time at the discretion of the Board of Directors.
The Compensation Committee has the authority under the 1995 Stock
Option/Stock Issuance Plan to accelerate the exercisability of outstanding
options, or to accelerate the vesting of the shares of Common Stock subject to
outstanding options, held by the Chief Executive Officer and the Company's
other executive officers. Such acceleration may be conditioned on the
optionee's termination of employment (whether involuntarily or through a
forced resignation) and may be conditioned upon the occurrence of a merger,
reorganization or consolidation or upon a hostile take-over of the Company
effected through a tender offer or through a change in the majority of the
Board as a result of one or more contested elections for Board membership.
14
<PAGE>
PROPOSAL NO. 2
RATIFICATION OF INDEPENDENT ACCOUNTANTS
The Company is asking the stockholders to ratify the appointment of
PricewaterhouseCoopers LLP as the Company's independent public accountants for
the fiscal year ending December 31, 2000. The affirmative vote of the holders
of a majority of shares present or represented by proxy and voting at the
Annual Meeting will be required to ratify the appointment of
PricewaterhouseCoopers LLP.
In the event the stockholders fail to ratify the appointment, the Board of
Directors will reconsider its selection. Even if the appointment is ratified,
the Board of Directors, in its discretion, may direct the appointment of a
different independent accounting firm at any time during the year if the Board
of Directors feels that such a change would be in the Company's and its
stockholders' best interests.
PricewaterhouseCoopers LLP has audited the Company's financial statements
since 1989. Its representatives are expected to be present at the Annual
Meeting, will have the opportunity to make a statement if they desire to do
so, and will be available to respond to appropriate questions.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
SELECTION OF PRICEWATERHOUSECOOPERS LLP TO SERVE AS THE COMPANY'S INDEPENDENT
PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER 31, 2000.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company's Certificate of Incorporation limits the liability of its
directors for monetary damages arising from a breach of their fiduciary duty
as directors, except to the extent otherwise required by the Delaware General
Corporation Law. Such limitation of liability does not affect the availability
of equitable remedies such as injunctive relief or rescission.
The Company's Bylaws provide that the Company shall indemnify its directors
and officers to the fullest extent permitted by Delaware law, including in
circumstances in which indemnification is otherwise discretionary under
Delaware law. The Company has also entered into indemnification agreements
with its officers and directors containing provisions that may require the
Company, among other things, to indemnify such officers and directors against
certain liabilities that may arise by reason of their status or service as
directors or officers and to advance their expenses incurred as a result of
any proceeding against them as to which they could be indemnified.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
The members of the Board of Directors, the executive officers of the Company
and persons who hold more than 10% of the Company's outstanding Common Stock
are subject to the reporting requirements of Section 16(a) of the Securities
Exchange Act of 1934, as amended, which require them to file reports with
respect to their ownership of the Company's Common Stock and their
transactions in such Common Stock. Based upon (i) the copies of Section 16(a)
reports that the Company received from such persons for their 1999 fiscal year
transactions in the Common Stock and their Common Stock holdings and (ii) the
written representations received from one or more of such persons that no
annual Form 5 reports were required to be filed by them for the 1999 fiscal
year, the Company believes that all reporting requirements under Section 16(a)
for such fiscal year were met in a timely manner by its executive officers,
Board members and greater than ten-percent stockholders, except that Mr.
Strohm amended a Form 4 reporting one transaction late and Mr. Smith filed a
Form 5 one day late.
15
<PAGE>
FORM 10-K
THE COMPANY WILL MAIL WITHOUT CHARGE, UPON WRITTEN REQUEST, A COPY OF THE
COMPANY'S FORM 10-K REPORT FOR FISCAL YEAR 1999, INCLUDING THE FINANCIAL
STATEMENTS, SCHEDULES AND LIST OF EXHIBITS. REQUESTS SHOULD BE SENT TO LEGATO
SYSTEMS, INC., 2350 WEST EL CAMINO REAL MOUNTAIN VIEW, CALIFORNIA 94040,
ATTN: ROBERT BROWN, CORPORATE FINANCE.
STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Stockholder proposals that are intended to be presented at the 2001 Annual
Meeting that are eligible for inclusion in the Company's proxy statement and
related proxy materials for that meeting under the Company's bylaws must be
received by the Company not later than May 13, 2001, in order to be included.
Such stockholder proposals should be addressed to Legato Systems, Inc.,
2350 West El Camino Real, Mountain View, California 94040, Attn: Company
Secretary.
OTHER MATTERS
The Board knows of no other matters to be presented for stockholder action
at the Annual Meeting. However, if other matters do properly come before the
Annual Meeting or any adjournments or postponements thereof, the Board intends
that the persons named in the proxies will vote upon such matters in
accordance with their best judgment.
BY ORDER OF THE BOARD OF DIRECTORS,
Robert V. Gunderson, Jr.
Secretary
Mountain View, California
June 14, 2000
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, SIGN,
DATE AND PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE. YOU MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO THE ANNUAL MEETING.
IF YOU DECIDE TO ATTEND THE ANNUAL MEETING AND WISH TO CHANGE YOUR PROXY VOTE,
YOU MAY DO SO AUTOMATICALLY BY VOTING IN PERSON AT THE MEETING.
THANK YOU FOR YOUR ATTENTION TO THIS MATTER. YOUR PROMPT RESPONSE WILL GREATLY
FACILITATE ARRANGEMENTS FOR THE ANNUAL MEETING.
16
<PAGE>
PROXY LEGATO SYSTEMS, INC. PROXY
2350 West El Camino Real, Mountain View, CA 94040
This Proxy is Solicited on Behalf of the Board of Directors of Legato Systems,
Inc. for the Annual Meeting of Stockholders to be held July 12, 2000
The undersigned holder of Common Stock, par value $.0001, of Legato
Systems, Inc. (the "Company") hereby appoints Louis C. Cole and Stephen C. Wise,
or either of them, proxies for the undersigned, each with full power of
substitution, to represent and to vote as specified in this Proxy all Common
Stock of the Company that the undersigned stockholder would be entitled to vote
if personally present at the Annual Meeting of Stockholders (the "Annual
Meeting") to be held on Wednesday July 12th, 2000 at 9:00 a.m. local time, at
the Crowne Plaza Hotel, 4290 El Camino Real, Palo Alto, California, and at any
adjournments or postponements of the Annual Meeting. The undersigned stockholder
hereby revokes any proxy or proxies heretofore executed for such matters.
This proxy, when properly executed, will be voted in the manner as directed
herein by the undersigned stockholder. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR THE ELECTION OF THE DIRECTORS, FOR PROPOSAL 2, AND IN THE
DISCRETION OF THE PROXIES AS TO ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE
THE MEETING. The undersigned stockholder may revoke this proxy at any time
before it is voted by delivering to the Corporate Secretary of the Company
either a written revocation of the proxy or a duly executed proxy bearing a
later date, or by appearing at the Annual Meeting and voting in person.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE
DIRECTORS AND "FOR" PROPOSAL 2.
PLEASE MARK, SIGN, DATE AND RETURN THIS CARD PROMPTLY USING THE ENCLOSED
RETURN ENVELOPE. If you receive more than one proxy card, please sign and return
ALL cards in the enclosed envelope.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
(Reverse)
LEGATO SYSTEMS, INC.
[_] Please mark votes
as in this example
1. To elect the following directors to serve for a term ending upon the 2001
Annual Meeting of Stockholders or until their successors are elected and
qualified:
Nominees: Louis C. Cole, Eric A. Benhamou, H. Raymond Bingham, Kenneth A.
Goldman, Christopher B. Paisley and David N. Strohm
FOR WITHHELD For all nominees, except for
nominees written below.
[_] [_] [_]
_______________________
Nominee exception(s).
2. To ratify the appointment of PricewaterhouseCoopers LLP as the Company's
independent accountants for the fiscal year ending December 31, 2000.
FOR AGAINST ABSTAIN
[_] [_] [_]
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the Annual Meeting.
The undersigned acknowledges receipt of the accompanying Notice of Annual
Meeting of Stockholders and Proxy Statement.
Signature:____________________Signature (if held jointly):____________Date:_____
_____________, 2000
Please date and sign exactly as your name(s) is (are) shown on the share
certificate(s) to which the Proxy applies. When shares are held as joint-
tenants, both should sign. When signing as an executor, administrator, trustee,
guardian, attorney-in fact or other fiduciary, please give full title as such.
When signing as a corporation, please sign in full corporate name by President
or other authorized officer. When signing as a partnership, please sign in
partnership name by an authorized person.
