SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment no. 1)
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
[X] Definitive Proxy Statement Commission Only (as permitted by
[ ] Definitive Additional Materials Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
ELECTRONICS FOR IMAGING, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transactions applies:
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(2) Aggregate number of securities to which transactions applies:
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(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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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.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing party:
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(4) Date filed:
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ELECTRONICS FOR IMAGING, INC.
2855 Campus Drive
San Mateo, California 94403
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on May 7, 1998
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
ELECTRONICS FOR IMAGING, INC., a Delaware corporation (the "Company"), will be
held on May 7, 1998 at 9:00 AM, Pacific Daylight Time, at 331 Lakeside Drive,
Foster City, California 94404 for the following purposes:
1. To elect six (6) directors to serve for the ensuing year or until their
successors are duly elected and qualified.
2. To approve an amendment to the Company's 1990 Stock Plan to increase
the number of shares of Common Stock authorized for issuance thereunder
by 1,000,000 shares.
3. To ratify the appointment of Price Waterhouse LLP as independent
accountants of the Company for the fiscal year ending December 31,
1998.
4. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on March 23, 1998 are
entitled to notice of and to vote at the Annual Meeting and at any adjournment
or postponement thereof.
All stockholders are cordially invited to attend the Annual Meeting in
person. However, to assure your representation at the Annual Meeting, you are
urged to mark, sign, date and return the enclosed proxy for that purpose. Any
stockholder attending the Annual Meeting may vote in person even if he or she
has returned a proxy.
Sincerely,
/s/ Eric Saltzman
-----------------------------
Eric Saltzman
Secretary
San Mateo, California
April 2, 1998
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YOUR VOTE IS IMPORTANT
IN ORDER TO ASSURE YOUR REPRESENTATION AT THE MEETING,
YOU ARE REQUESTED TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY
AS PROMPTLY AS POSSIBLE AND RETURN IT IN THE ENCLOSED ENVELOPE.
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<PAGE>
ELECTRONICS FOR IMAGING, INC.
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
General
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of ELECTRONICS FOR IMAGING, INC., a Delaware
corporation (the "Company"), for use at the Annual Meeting of Stockholders to be
held Thursday, May 7, 1998 at 9:00 AM, Pacific Daylight Time ("the Annual
Meeting"), or at any adjournment or postponement thereof. The Annual Meeting
will be held at 331 Lakeside Drive, Foster City, California 94404. The Company
intends to mail this proxy statement and accompanying proxy card on or about
April 2, 1998.
At the Annual Meeting, the stockholders of the Company will be asked: (1)
to elect six directors to serve for the ensuing year or until their successors
are duly elected and qualified; (2) to approve an amendment to the 1990 Stock
Plan; (3) to ratify the appointment of Price Waterhouse LLP as independent
accountants for the year ending December 31, 1998; and (4) to transact such
other business as may properly come before the meeting. All proxies which are
properly completed, signed and returned to the Company prior to the Annual
Meeting will be voted.
Voting Rights and Outstanding Shares
Stockholders of record at the close of business on March 23, 1998 (the
"Record Date") are entitled to notice of and to vote at the Annual Meeting. As
of March 23, 1998, the Company had outstanding and entitled to vote 52,600,667
shares of Common Stock. Each holder of record of Common Stock on such date will
be entitled to one vote per each share on all matters to be voted upon by the
stockholders and are not entitled to cumulate votes for the election of
directors.
All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Broker non-votes are counted towards a
quorum, but are not counted for any purpose in determining whether a matter has
been approved.
In the event that sufficient votes in favor of the proposals are not
received by the date of the Annual Meeting, the persons named as proxies may
propose one or more adjournments of the Annual Meeting to permit further
solicitation of proxies. Any such adjournment will require the affirmative vote
of the holders of a majority of the outstanding shares present in person or by
proxy at the Annual Meeting.
Solicitation
The cost of preparing, assembling, printing and mailing the Proxy
Statement, the Notice of Annual Meeting and the enclosed proxy, as well as the
cost of soliciting proxies relating to the Annual Meeting will be borne by the
Company. The Company will request banks, brokers, dealers and voting trustees or
other nominees to solicit their customers who are beneficial owners of shares
listed of record in names of nominees, and will reimburse them for the
reasonable out-of-pocket expenses of such solicitations. The original
solicitation of proxies by mail may be supplemented by telephone, telegram and
personal solicitation by directors, officers and regular employees of the
Company or, at the Company's request by Corporate Investor Communications, Inc.
No additional compensation will be paid to directors, officers or other regular
employees of the Company for such services, but Corporate Investor
Communications, Inc. will be paid its customary fee, estimated to be about
$6,000, if it renders solicitation services.
Revocability of Proxies
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Company at the
Company's principal executive office, 2855 Campus
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Drive, San Mateo, California 94403, a written notice of revocation or a duly
executed proxy bearing a later date or it may be revoked by attending the
Annual Meeting and voting in person. Attendance at the Annual Meeting will not,
by itself, revoke a proxy.
Stockholder Proposals To Be Presented at Next Annual Meeting
Proposals from stockholders that are intended to be presented by such
stockholders at the Company's 1999 Annual Meeting must be received by the
Company no later than December 2, 1998, in order that they may be included in
the proxy statement and proxy relating to that Annual Meeting.
PROPOSAL ONE
ELECTION OF DIRECTORS
Nominees
A board of six (6) directors is to be elected at the Annual Meeting. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
for management's six nominees named below. In the event that any management
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 shall be designated by
the present Board of Directors to fill the vacancy. In the event that additional
persons are nominated for election as directors, the proxy holders intend to
vote all proxies received by them in such a manner as will assure the election
of as many of the nominees listed below as possible, and, in such event, the
specific nominees to be voted for will be determined by the proxy holders. The
Company is not aware of any nominee who will be unable or will decline to serve
as a director. The term of office for each person elected as a director will
continue until the next Annual Meeting of Stockholders or until his successor
has been elected and qualified.
<TABLE>
The names of the nominees, each of whom is currently a director of the
Company, and certain information about them are set forth below:
<CAPTION>
Name of Nominee and Principle Occupation Age Director Since
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<S> <C> <C>
Efraim Arazi ................................................................ 60 1988
Chairman of the Board of the Company and President and Chief Executive
Officer of Imedia Corporation (a video compression technology company).
Dan Avida ................................................................... 34 1994
President and Chief Executive Officer of the Company.
Gill Cogan .................................................................. 45 1992
General Partner of Weiss, Peck & Greer (investment company) and
General Partner of Weiss, Peck & Greer Venture Partners II, L.P.
(a venture capital firm).
Dan Maydan .................................................................. 62 1996
President of Applied Materials Inc. (a semiconductor manufacturing
equipment company).
Jean-Louis Gassee ........................................................... 54 1990
Chief Executive Officer of Be Inc. (a personal computer technology company).
Thomas I. Unterberg ......................................................... 67 1990
Managing Director of C.E. Unterberg Towbin (an investment banking firm).
</TABLE>
Mr. Arazi is the founder of the Company and has served as Chairman of the
Board since the Company's inception in November 1988. Mr. Arazi is currently
President and Chief Executive Officer of Imedia Corporation. Mr. Arazi served as
Chief Executive Officer of the Company from inception to July 1995 and as
President from inception until July 1991 and from July 1992 to October 1994.
From November 1971 to June 1988, Mr. Arazi served as chief executive officer of
Scitex Corporation Ltd., which was
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founded by Mr. Arazi, and from November 1971 to September 1985 and from April
1986 to June 1988, Mr. Arazi served as President of Scitex. Mr. Arazi was
affiliated with Scitex's predecessor, Scientific Technologies Ltd. Prior to
1968, Mr. Arazi was a principal engineer at Itek Corporation, an aerospace
reconnaissance corporation, specializing in the photo and electro-optical
imagery fields.
Mr. Avida has served as President of the Company since October 1994 and as
Chief Executive Officer since July 1995. Mr. Avida served as Chief Operating
Officer from October 1994 to July 1995. Mr. Avida served as Vice President,
Research and Development from July 1993 until October 1994. From August 1991 to
July 1993 Mr. Avida served as Vice President, Hardware Systems and from January
1991 to August 1991, he served as the Company's Director of Hardware Systems.
From December 1989 to January 1991, he was project manager and from July 1989 to
December 1989, Mr. Avida was employed by the Company as an engineer. From 1984
to July 1989, he served in the Israeli Defense Forces as a project manager and,
later, as a section leader responsible for the development of high-technology
projects. Mr. Avida is a graduate of Technion, Israel Institute of Technology,
from which he received his degree in Computer Engineering.
Mr. Cogan has been a principal of Weiss, Peck & Greer, L.L.C., an
investment company, and is also a general partner of Weiss, Peck & Greer Venture
Partners, L.P. From 1986 to 1990, Mr. Cogan was a partner of Adler & Company, a
venture capital group handling technology-related investments. From 1983 to
1985, he was chairman and chief executive officer of Formtek, an imaging and
data management computer company, whose products were based upon technology
developed at Carnegie-Mellon University. Mr. Cogan is currently a director of
Harmonic Lightwaves Inc., Integrated Packaging Assembly Corporation, Micro
Linear Corporation, Number Nine Visual Technology, P-Com, Inc. and several
private companies. Mr. Cogan holds a B.S. in Physics and an M.B.A. from the
University of California at Los Angeles.
Mr. Gassee is currently chief executive officer of Be Inc., which he joined
in 1990. Mr. Gassee served as the president of Apple Products, a division of
Apple Computer, Inc. ("Apple"), a manufacturer of personal computers and related
software, from August 1988 to February 1990. From June 1987 to August 1988, Mr.
Gassee served as senior vice president of research and development of Apple, and
from June 1985 to June 1987, he served as vice president of product development.
He was also the founding general manager for Apple Computer France, SARL. Before
joining Apple, Mr. Gassee was president and general manager of the French
subsidiary of Exxon Business Systems. In addition, Mr. Gassee has held several
management positions with Data General Corporation, including general manager
for France, area manager for Latin countries and marketing manager for Europe.
He also spent six years with Hewlett-Packard Company, where he served in several
positions, including sales manager of Europe. Mr. Gassee is a director of Laser
Master Technologies and 3Com Corporation.
Dr. Maydan has been President of Applied Materials Inc. since January 1994
and a member of that company's Board of Directors since June 1992. From March
1990 to January 1994, Dr. Maydan served as Applied Material's Executive Vice
President, responsible for all of the company's product lines as well as new
product development. Dr. Maydan is also Co-Chairman of Applied Komatsu
Technology, a joint venture formed in September 1993 with Komatsu, Ltd., to
manufacture and market systems for the flat panel display industry. Before
joining Applied Materials in September 1980, Dr. Maydan spent thirteen years in
various positions with Bell Laboratories. Dr. Maydan received his B.S. and M.S.
degrees in electrical engineering from Technion, Israel Institute of Technology
and his Ph.D. in physics from Edinburgh University.
Mr. Unterberg is the co-founder and has served as a managing director of
C.E. Unterberg Towbin, an investment banking firm, since June 1989. He was a
managing director of Shearson Lehman Hutton Inc. from January 1987 to January
1989. Prior to that, he was chairman of the board, chief executive officer and
senior managing director of L.F. Rothschild, Unterberg, Towbin Holdings, Inc.
and was associated with such firm or its predecessors from 1956. Mr. Unterberg
is also a director of AES Corporation, Systems & Computer Technology Corporation
and ECCS, Inc.
Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote.
The Company's Board of Directors recommends a vote "FOR" all six nominees
listed above.
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COMMITTEES OF THE BOARD OF DIRECTORS
Meetings of Board of Directors and Committees
The Board of Directors of the Company held a total of four (4) meetings
during 1997. Each director attended 75% or more of the aggregate meetings of the
Board of Directors and of the committees thereof, if any, upon which such
director served during 1997. The Board of Directors has an Audit Committee and a
Compensation Committee.
The Audit Committee consists of Director Cogan and Director Maydan. The
Audit Committee conducted no meetings during 1997. The Audit Committee approves
the engagement of and the services to be performed by the Company's independent
accountants and reviews the Company's accounting principles and its system of
internal accounting controls.
The Compensation Committee consists of Directors Gassee and Unterberg and
undertook its actions by unanimous written consent during 1997. The Compensation
Committee reviews and approves the Company's executive compensation policy and
administers the Company's stock plans.
The Board of Directors does not have a nominating committee or any
committee performing similar functions.
Outside members of the Board of Directors receive no cash compensation for
serving on the Board of Directors other than reimbursement of reasonable
expenses incurred in attending Board meetings. However, Mr. Gassee has been
granted options to purchase 600,000 shares of the Company's Common Stock under
the 1989 Stock Plan, of which options to purchase 127,500 shares remain
outstanding and exercisable, and Mr. Maydan has been granted options to purchase
30,000 shares of the Company's Common Stock under the 1990 Stock Plan, of which
22,500 shares remain outstanding. See "Proposal Two--Amendment to the 1990 Stock
Plan."
PROPOSAL TWO
AMENDMENT TO THE 1990 STOCK PLAN
Background
The Company has adopted two stock plans, the 1989 Stock Plan (the "1989
Plan"), and the 1990 Stock Plan (the "1990 Plan" and, together with the 1989
Plan, the "Stock Plans"). The Stock Plans are administered by the Board of
Directors or a committee appointed by the Board. The Stock Plans provide for
grants to employees, consultants and directors of the Company or any parent or
subsidiary (as defined in the Stock Plans) of the Company.
The 1989 Plan was established by the Board of Directors in March 1989 and
1,425,000 shares of Common Stock were reserved for issuance upon the exercise of
options and stock purchase rights. The 1989 Plan was designed for use by the
Company while it was a private company. No options or stock purchase rights have
been issued under the 1989 Plan since November 30, 1992.
The 1990 Plan was established by the Board of Directors in June 1990 and
825,000 shares of Common Stock were reserved for issuance upon the exercise of
options and stock purchase rights under the 1990 Plan.
On May 2, 1992 and July 30, 1992, the Board of Directors and stockholders
of the Company, respectively, approved amendments to the Stock Plans whereby the
825,000 shares of Common Stock then available for issuance under 1990 Plan were
reallocated and made available under the 1989 Plan. As a result, 2,250,000
shares of Common Stock were available for issuance under the 1989 Plan. The 1990
Plan was further amended to reserve an additional 450,000 shares of Common Stock
for issuance upon the exercise of options and stock purchase rights under the
1990 Plan.
On July 29, 1993 and May 6, 1994, the Board of Directors and stockholders
of the Company, respectively, approved amendments to the Stock Plans whereby
213,534 shares of Common Stock available for issuance under the 1989 Plan were
reallocated and made available for issuance under the 1990 Plan.
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On March 25, 1994 and May 6, 1994, the Board of Directors and stockholders
of the Company, respectively, also approved amendments to the Stock Plans
whereby an additional 128,919 shares of Common Stock available for issuance
under the 1989 Plan were reallocated and made available for issuance under the
1990 Plan. As a result of these amendments, 1,907,547 shares of Common Stock
were made available under the 1989 Plan and 792,453 shares of Common Stock were
made available under the 1990 Plan. At the same time, the Board of Directors and
stockholders of the Company approved amendments to the 1990 Plan (i) to increase
the number of shares reserved for issuance thereunder by an additional 750,000
shares, to a total of 1,542,453 shares, and (ii) to limit to 500,000 the number
of shares of Common Stock that may be subject to awards under the 1990 Plan to
any employee in any fiscal year, in order to preserve the ability of the Company
to deduct for federal income tax purposes the compensation expense relating to
such awards in accordance with new Section 162(m) of the Internal Revenue Code
of 1986, as amended (the "Code").
On April 28, 1994 and May 4, 1995, the Board of Directors and stockholders
of the Company, respectively, approved an amendment to the Stock Plans to
provide that the exercise price of options to purchase Common Stock shall not be
less than 100% of the fair market value of the Common Stock on the date of the
grant.
On March 28, 1995 and May 4, 1995, the Board of Directors and stockholders
of the Company, respectively, also approved amendments to the Stock Plans
whereby 83,834 shares of Common Stock available for issuance under the 1989 Plan
were reallocated and made available for issuance under the 1990 Plan.
Additionally, the Board of Directors and stockholders approved an amendment to
the 1990 Plan to increase the number of shares reserved for issuance thereunder
by an additional 950,000 shares. As a result of these amendments, 1,823,713
shares of Common Stock were made available under the 1989 Plan and 2,576,287
shares of Common Stock were made available under the 1990 Plan for issuance upon
the exercise of options and stock purchase rights under the Stock Plans.
On October 25, 1995, the Board of Directors approved a two-for-one stock
split in the form of a stock dividend, payable on November 30, 1995 to
stockholders of record on November 20, 1995. As a result of this action,
3,647,426 shares of Common Stock were made available under the 1989 Plan and
5,152,574 shares of Common Stock were made available under the 1990 Plan for
issuance upon the exercise of options and stock purchase rights under the Stock
Plans.
On March 21, 1996 and May 2, 1996, the Board of Directors and stockholders
of the Company, respectively, approved an amendment to the 1990 Plan to increase
the number of shares reserved for issuance thereunder by an additional 950,000
shares. As a result of this amendment, 3,647,426 shares of Common Stock were
made available under the 1989 Plan and 6,102,574 shares of Common Stock were
made available under the 1990 Plan for issuance upon the exercise of options and
stock purchase rights under the Stock Plans.
On January 21, 1997, the Board of Directors approved a two-for-one stock
split in the form of a stock dividend, payable on February 20, 1997 to
stockholders of record on February 10, 1997. As a result of this action,
7,294,852 shares of Common Stock were made available under the 1989 Plan and
12,205,148 shares of Common Stock were made available under the 1990 Plan for
issuance upon the exercise of options and stock purchase rights under the Stock
Plans.
As of February 27, 1998, 35,132 shares of Common Stock and 1,446,449 shares
of Common Stock were available for grant under the 1989 Plan and the 1990 Plan
respectively after giving effect to the Stock Split.
Proposed Amendment
On March 30, 1998, the Board of Directors approved an amendment to the 1990
Plan to increase the number of shares reserved for issuance thereunder by an
additional 1,000,000 shares. As a result of this amendment, the Board of
Directors has reserved an aggregate of 7,294,852 shares of Common Stock under
the 1989 Plan and 13,205,148 shares of Common Stock under the 1990 Plan. This
amendment is subject to stockholder approval.
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As of February 27, 1998, 13,241,088 and 13,535,285 options to purchase
shares of Common Stock had been granted under the 1989 Plan and 1990 Plan,
respectively, and a total of 10,343,332 options had been exercised under both
Stock Plans. As of February 27, 1998, 7,675,087 options were outstanding under
the Plans at an average per share exercise price of $20.70.
The Stock Plans are long-term incentive plans for all employees. These
plans are intended to align stockholder and employee interests by creating a
direct link between long-term rewards and the value of the Company's shares. The
Board of Directors believes that long-term stock ownership by executive officers
and all employees is an important factor in achieving above-average growth in
share value and in retaining valued employees. Since the value of a stock option
bears a direct relationship to the Company's stock price, the Board further
believes that stock options motivate both executive officers and employees to
manage the Company in a manner which will benefit all stockholders.
The Board of Directors is seeking approval of the amendment to the 1990
Plan to increase the number of shares of Common Stock authorized for issuance
thereunder by 1,000,000 shares. The Board of Directors of the Company believes
this amendment is necessary to properly incentivize the Company's current and
future employees. A vote of a majority of the Company's stockholders present in
person or by proxy is required to approve the amendment to the 1990 Plan. The
holders of Common Stock are entitled to one vote per share. Abstentions from
voting have the same effect as negative votes and broker non-votes are
disregarded in the calculation of the number of votes.
The Company's Board of Directors unanimously recommends a vote "FOR"
the amendment to the 1990 Plan.
The essential features of the 1990 Plan are outlined below, with particular
focus on options granted under the 1990 Plan, as stock purchase rights are no
longer granted under the 1990 Plan. Neither options nor stock purchase rights
are currently granted under the 1989 Plan.
Administration
The 1990 Plan provides for administration by the Board of Directors of the
Company or by a committee of the Board. The 1990 Plan is currently being
administered by the Compensation Committee. Members of the Compensation
Committee receive no additional compensation for their services in connection
with the administration of the 1990 Plan. References herein to the Board include
the Compensation Committee, as applicable.
Eligibility
The 1990 Plan provides that non-statutory options may be granted to all
employees and consultants of the Company. Incentive stock options may only be
granted to employees. The Board selects the optionees and determines the number
of shares to be subject to each option. The 1990 Plan currently provides that
the number of shares of Common Stock that may be subject to awards under the
1990 Plan to any employee in any fiscal year shall be limited to 2,000,000
shares (adjusted to reflect all stock splits) in order to preserve the ability
of the Company to deduct for federal income tax purposes the compensation
expense relating to such awards in accordance with Section 162(m) of the Code.
In addition, there is a limit on the aggregate market value of shares of
$100,000 subject to all incentive stock options granted to a single person which
are exercisable for the first time in any one calendar year.
Terms of Options
Each option is evidenced by a stock option agreement between the Company
and the person to whom such option is granted and is subject to the following
additional terms and conditions:
(a) Exercise of the Options: The Board determines when options granted
under the 1990 Plan may be exercised. An option is exercised by giving
written notice of exercise to the Company, specifying the number of full
shares of Common Stock to be purchased and tendering payment to the Company
of the purchase price. Payment for shares issued upon exercise of an option
may consist of cash, check, promissory note, exchange of shares of the
Company's Common Stock or such other consideration as determined by the
Board and as permitted under Section 152 of the Delaware
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General Corporation Law. Payment may also be made by delivering a properly
executed exercise notice together with irrevocable instructions to a broker
to promptly deliver to the Company the amount of sale or loan proceeds to
pay the exercise price.
(b) Exercise Price: The exercise price under the 1990 Plan is
determined by the Board of Directors or its committee and, subject to
stockholder approval, may not be less than 100% of the fair market value of
the Company's Common Stock on the date the option is granted. However, in
the case of stock options granted to any person who owns 10% or more of the
combined voting power of the Company's Common Stock, the per share exercise
price must be no less than 110% of the fair market value of the Company's
Common Stock. At March 23, 1998, the closing price for the Company's Common
Stock as reported on the NASDAQ National Market System was $26.125 per
share. In the event of a decline in the value of the Company's Common
Stock, the Board has the authority to reduce the exercise price of
outstanding options, whether incentive or non-statutory, to the then
current fair market value of the Company's Common Stock.
(c) Termination of Employment: The 1990 Plan provides that if the
optionee ceases to serve as an employee or consultant (as the case may be)
for any reason other than death or disability, options may be exercised not
later than ninety days after such termination (or within such shorter
period as determined by the Board at the time of grant and specified in the
option agreement) and may be exercised only to the extent the options were
exercisable on the date of termination. If the optionee could not exercise
the option within such ninety day period without incurring short swing
trading liability due to the applicable rules adopted by the Securities and
Exchange Commission under Section 16 of the Securities and Exchange Act of
1934, then the time within which the option may be exercised shall (if the
optionee requests in writing) be extended up to a maximum of seven months
after such date of termination. In no event, however, may an option be
exercised more than ten years after the date of grant.
(d) Death or Disability: If an optionee should die or become disabled
while in the service of the Company, such options may be exercised in full
at any time within twelve months after the date of death or date of
termination due to disability, but only to the extent that the options were
exercisable on the date of death or date of termination due to disability.
In no event, however, may an option be exercised more than ten years after
the date of grant.
(e) Termination of Options: Options granted under the 1990 Plan expire
10 years from the date of grant, unless otherwise provided in the option
agreement. However, incentive stock options granted to an optionee who,
immediately before the grant of such options, owned more than 10% of the
total combined voting power of all classes of stock of the Company or a
parent or subsidiary corporation, may not have a term of more than five
years. No option may be exercised by any person after such expiration.
(f) Nontransferability of Options: An option is nontransferable by the
optionee other than by will or the laws of descent and distribution, and is
exercisable only by the optionee during his or her lifetime or, in the
event of death, by a person who acquires the right to exercise the option
by bequest or inheritance or by reason of death of the optionee.
(g) Acceleration of Options: In the event of a merger or consolidation
in which the Company is not the surviving entity, the Board is obligated to
either accomplish an assumption or a substitution of options or give 15
days notice of the acceleration of the optionee's right to exercise his
outstanding options in full at any time within 15 days of such notice.
(h) Other Provision: The option agreement may continue such other
terms, provisions and conditions not inconsistent with the 1990 Plan as may
be determined by the Board.
Adjustment Upon Changes in Capitalization
In the event any change (such as a stock split or dividend) is made in the
Company's capitalization which results in an increase or decrease in the number
of outstanding shares of Common Stock without receipt of consideration by the
Company, an appropriate adjustment shall be made in the exercise price
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and in the number of shares subject to each option and the maximum number of
shares that may be awarded during any fiscal year. In the event of the proposed
dissolution or liquidation of the Company, the board must notify the optionees
at least 15 days prior to such proposed action and all outstanding options not
previously exercised shall automatically terminate unless otherwise provided by
the Board.
Amendment and Termination
The Board may amend the 1990 Plan at any time or from time to time or may
terminate it without approval of the stockholders, provided, however, that
stockholder approval is required for any amendment which increases the number of
shares that may be issued under the 1990 Plan, materially changes the standards
of eligibility, or materially increases the benefits which may accrue to
participants under the 1990 Plan. However, no action by the Board or
stockholders may alter or impair any option previously granted under the 1990
Plan without the consent of the optionee. In any event, the 1990 Plan will
terminate in 2000.
Tax Information
Options granted under the 1990 Plan may be either "incentive stock
options," as defined in Section 422 of the Code or "non-statutory options."
Incentive Stock Options. An optionee who is granted an incentive stock
option will not recognize taxable income either at the time the option is
granted or upon its exercise, although the exercise may subject the optionee to
the alternative minimum tax. Upon the sale or exchange of the shares more than
two years after grant of the option and one year after exercising the option,
any gain or loss will be treated as capital gain or loss. If these holding
periods are not satisfied, the optionee will recognize ordinary income at the
time of sale or exchange equal to the difference between the exercise price and
the lower of (i) the fair market value of the shares at the date of the option
exercise or (ii) the sale price of the shares. A different rule for measuring
ordinary income upon such a premature disposition may apply if the optionee is
also an officer, director, or 10% stockholder of the Company. Generally, the
Company will be entitled to a deduction in the same amount as the ordinary
income recognized by the optionee. Any gain or loss recognized on such a
premature disposition of the shares in excess of the amount treated as ordinary
income will be characterized as long-term, mid-term or short-term capital gain
or loss, depending on the holding period.
Non-Statutory Stock Options. Options which do not qualify as incentive
stock options are referred to as non-statutory options. An optionee will not
recognize any taxable income at the time he or she is granted a non-statutory
option. However, upon its exercise, the optionee will recognize taxable income
generally measured as the excess of the then fair market value of the shares
purchased over the purchase price. Any taxable income recognized in connection
with an option exercise by an optionee who is also an employee of the Company
will be subject to tax withholding by the Company. Upon resale of such shares by
the optionee, any difference between the sales price and the optionee's purchase
price, to the extent not recognized as taxable income as described above, will
be treated as a long-term, mid-term or short-term capital gain or loss,
depending on the holding period. Generally, the Company will be entitled to a
tax deduction in the same amount as the ordinary income recognized by the
optionee with respect to shares acquired upon exercise of a non-statutory
option.
Potential Limitation on Company Deductions. Section 162(m) denies a
deduction to any publicly held corporation for compensation paid to certain
employees in a taxable year to the extent that compensation exceeds $1 million
for a covered employee. It is possible that compensation attributable to awards
granted in the future under the 1990 Plan, when combined with all other types of
compensation received by a covered employee from the Company, may cause this
limitation to be exceeded in any particular year.
Certain kinds of compensation, including qualified "performance-based
compensation," are disregarded for purposes of the deduction limitation. In
accordance with Treasury regulations issued under Section 162(m), compensation
attributable to stock options will qualify as performance-based compensation,
provided that the option is granted by a compensation committee comprised solely
of "outside
8
<PAGE>
directors" and either: (i) the option plan contains a per-employee limitation
on the number of shares for which options may be granted during a specified
period, the per-employee limitation is approved by the stockholders, and the
exercise price of the option is no less than the fair market value of the stock
on the date of grant; or (ii) the option is granted (or exercisable) only upon
the achievement (as certified in writing by the compensation committee) of an
objective performance goal established in writing by the compensation committee
while the outcome is substantially uncertain, and the option is approved by
stockholders.
The foregoing is only a summary of the effect of federal income taxation
upon the optionee and the Company with respect to the grant and exercise of
options under the 1990 Plan, does not purport to be complete, and does not
discuss the tax consequences of the optionee's death or the income tax laws of
any municipality, state or foreign country in which an optionee may reside.
Participation in the 1990 Plan
The grant of stock options under the 1990 Plan is subject to the discretion
of the Board and as of the date of this proxy statement, there has been no
determination by the Board with respect to future grants of options. See
"Executive Compensation" for information with respect to the number of options
granted to the executive officers named therein.
PROPOSAL THREE
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected Price Waterhouse LLP, independent
accountants, to audit the consolidated financial statements of the Company for
the fiscal year ending December 31, 1998, and recommends that stockholders vote
for ratification of such appointment. Price Waterhouse LLP has audited the
Company's financial statements since 1992. Notwithstanding the selection, the
Board, at its discretion, may direct the appointment of new independent
accountants at any time during the year, if the Board feels that such a change
would be in the best interests of the Company and its stockholders. In the event
of a negative vote of such ratification, the Board of Directors will reconsider
its selection.
Representatives of Price Waterhouse LLP are expected to be present at the
meeting with the opportunity to make a statement if they desire to do so and are
expected to be available to respond to appropriate questions.
Stockholder ratification of the selection of Price Waterhouse LLP as the
Company's independent auditors is not required by the Company's Bylaws or
otherwise. However, the Board is submitting the selection of Price Waterhouse
LLP to the stockholders for ratification as a matter of good corporate practice.
If the stockholders fail to ratify the selection, the Audit Committee and the
Board will reconsider whether or not to retain that firm. Even if the selection
is ratified, the Audit Committee and the Board in their discretion may direct
the appointment of different independent auditors at any time during the year if
they determine that such a change would be in the best interests of the Company
and its stockholders.
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote at the Annual Meeting will
be required to ratify the selection of Price Waterhouse LLP.
The Company's Board of Directors unanimously recommends a vote "FOR"
the ratification of the
appointment of Price Waterhouse LLP as independent accountants.
9
<PAGE>
SECURITY OWNERSHIP
<TABLE>
Except as otherwise indicated below, the following table sets forth certain
information regarding beneficial ownership of Common Stock of the Company as of
March 23, 1998 by (i) each person known by the Company to be the owner of more
than 5% of the outstanding shares of Common Stock, (ii) each director, (iii)
each executive officer listed in the Summary Compensation Table, and (iv) all
executive officers and directors as a group.
<CAPTION>
Common Stock
------------------------
No. of Percent
Name of Beneficial Owner (1) Shares Owned
- ------------------------------------------------------------------------- ----------- ----------
<S> <C> <C>
FMR Corporation ......................................................... 7,841,800 14.9%
82 Devonshire Street
Boston, Massachussetts 02109
T. Rowe Price Associates ................................................ 6,111,300 11.6%
100 East Pratt Street
Baltimore, MD 21202
J&W Seligman & Company .................................................. 5,308,400 10.0%
100 Park Avenue
New York, NY 10017
Dan Avida (2) ........................................................... 774,800 1.5%
Jeffrey Lenches (3) ..................................................... 252,992 *
Thomas Unterberg ........................................................ 204,000 *
Jean-Louis Gassee (3) ................................................... 127,500 *
Fred Rosenzweig (4) ..................................................... 39,500 *
Eric Saltzman (3) ....................................................... 10,000 *
Dan Maydan (5) .......................................................... 9,060 *
Efraim Arazi ............................................................ -- --
Gill Cogan .............................................................. -- --
All executive officers and directors as a group (9 persons) (6) ......... 1,417,852 2.7%
<FN>
- ------------
* Less than one percent.
(1) This table is based upon information supplied by officers, directors and
principal stockholders and Schedules 13D and 13G filed with the Commission.
Unless otherwise indicated in the footnotes to this table and subject to
community property laws where applicable, each of the stockholders named in
this table has sole voting and investment power with respect to the shares
indicated as beneficially owned. Applicable percentages are based on
52,600,667 shares outstanding on March 23, 1998, adjusted as required by
rules promulgated by the Securities and Exchange Commission (the "SEC").
(2) Includes 705,236 shares of Common Stock issuable upon exercise of options
granted to Mr. Avida under the 1989 Plan and the 1990 Plan which are
exercisable within 60 days of March 23, 1998.
(3) Consists solely of Common Stock issuable upon the exercise of options
granted under the 1989 and/or 1990 Plans which are exercisable within 60
days of March 23, 1998.
(4) Includes 29,500 shares of Common Stock issuable upon exercise of options
granted to Mr. Rosenzweig under the 1990 Plan which are exercisable within
60 days of March 23, 1998.
(5) Includes 7,500 shares of Common Stock issuable upon exercise of options
granted to Mr. Maydan under the 1990 Plan which are exercisable within 60
days of March 23, 1998.
(6) Includes an aggregate of 1,132,728 shares of Common Stock issuable upon the
exercise of options granted to executive officers and directors under the
1989 and/or 1990 Plans which are exercisable within 60 days of March 23,
1998.
</FN>
</TABLE>
10
<PAGE>
Compliance With Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers, directors and persons who beneficially own more than ten
percent of a registered class of the Company's equity securities, to file
reports of security ownership and changes in such ownership with the Securities
and Exchange Commission (the "SEC"). Officers, directors and greater than ten
percent beneficial owners also are required by rules promulgated by the SEC to
furnish the Company with copies of all Section 16(a) forms they file.
Based solely upon a review of the copies of such forms furnished to the
Company, or written representations that no Form 5 filings were required, the
Company believes that during the period from January 1, 1997 to December 31,
1997, all Section 16(a) filing requirements applicable to officers, directors or
greater than ten percent beneficial owners were complied with.
EXECUTIVE OFFICERS
The following table lists certain information regarding executive officers
as of March 23, 1998.
Name Age Position
- ------------------------- --- ----------------------------------------------
Dan Avida ............... 34 President and Chief Executive Officer
Jeffrey Lenches ......... 50 Executive Vice President
Fred Rosenzweig ......... 42 Vice President, Manufacturing and Support
Eric Saltzman ........... 35 Vice President, Strategic Relations, General
Counsel and Corporate Secretary
Information regarding Dan Avida is listed under "Election of Directors."
Mr. Lenches has served as Executive Vice President since October 1994. From
August 1993 to October 1994, he served as Vice President--Sales. From July 1991
to August 1993 he served as Vice President--Fiery Sales, and from July 1990 to
July 1991, he was Director of Sales. Mr. Lenches served as Western regional
sales manager and national VAR and OEM sales manager at Tektronix, Inc. from
1987 to 1990. Mr. Lenches holds a B.B.A. from Ohio University and an M.B.A. from
Pepperdine University.
Mr. Rosenzweig has served as Vice President, Manufacturing and Support
since January 1995. From May 1993 to January 1995, Mr. Rosenzweig served as
Director of Manufacturing. From July 1992 to May 1993, he was a plant general
manager at Tandem Computers Corporation. From October 1989 to July 1992, Mr.
Rosenzweig served as a systems and peripheral test manager at Tandem Computers
Corporation. Mr. Rosenzweig holds a B.S. in Metallurgical Engineering from
Pennsylvania State University and an M.B.A. from the University of California at
Berkeley.
Mr. Saltzman has served as Vice President, Strategic Relations since
October 1995. From January 1994 to October 1995, Mr. Saltzman served as Director
of Commercial Affairs and General Counsel. From June 1991 to December 1993, Mr.
Saltzman was a Senior Corporate Associate at Cooley Godward LLP. Mr. Saltzman
holds a B.A. from Swarthmore College and a J.D. from Stanford Law School.
11
<PAGE>
EXECUTIVE COMPENSATION
Compensation of Executive Officers
<TABLE>
The following table sets forth certain summary information regarding
compensation paid by the Company for services rendered during the fiscal years
ended December 31, 1997, 1996 and 1995 to all individuals serving as the
Company's Chief Executive Officer during the last complete fiscal year and its
four most highly compensated executive officers other than the Chief Executive
Officer.
Summary Compensation Table
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
--------------------------------------- ------------- All Other
Salary Bonus Number Of Compensation
Name and Principal Position Year ($) (1) ($) (1) Options ($)
- ------------------------------------- ------ ------------------ ------------------ ------------- ------------------
<S> <C> <C> <C> <C> <C>
Dan Avida ........................... 1997 375,000 212,810(3) 90,000 179,876(2)
President and 1996 350,000 188,149(4) 150,000 6,000(8)
Chief Executive Officer 1995 275,000 160,840(5) 200,000 6,000(8)
Jeffrey Lenches ..................... 1997 255,000 135,597(6) 26,000 6,000(8)
Executive Vice President 1996 217,000 116,871(6) 44,000 6,000(8)
1995 177,125 127,116(6) 80,000 6,000(8)
Fred Rosenzweig ..................... 1997 210,000 85,124(3) 26,000 4,600(8)
Vice President, Manufacturing 1996 157,000(7) 56,448(4) 44,000 4,800(8)
and Support 1995 122,750 25,853(5) 114,000 4,800(8)
Eric Saltzman ....................... 1997 185,000 59,992(3) 17,000 4,800(8)
Vice President, Strategic Relations, 1996 143,750(7) 46,110(4) 30,000 4,800(8)
General Counsel and Corporate 1995 113,375 10,044(5) 54,000 1,000(8)
Secretary
<FN>
- ------------
(1) Amounts shown include cash and non-cash compensation earned and received by
executive officers as well as amounts earned but deferred at the election
of those officers.
(2) Consists of a $173,876 payment to compensate for personal tax consequences
on conversion of previously granted incentive stock options to
non-statutory stock options at the Company's request and a $6,000
automobile allowance.
(3) Represents bonuses accrued in 1997 under the Executive Bonus Plan and paid
in March 1998.
(4) Represents bonuses accrued in 1996 under the Executive Bonus Plan and paid
in January 1997.
(5) Represents bonuses accrued in 1995 under the Executive Bonus Plan and paid
in January 1996.
(6) Represents sales commissions.
(7) Includes salary accrued in 1996 and paid in 1997.
(8) Automobile allowance.
</FN>
</TABLE>
Executive Incentive Plans
The Compensation Committee of the Company's Board of Directors has adopted
a bonus plan for its executive officers. Target bonuses under the Bonus Plan
have been established based on a factor of the individual's annual salary and
are 72%, 50%, 50% and 40% for Messrs. Avida, Lenches, Rosenzweig and Saltzman,
respectively. Under the bonus plan, the target bonus established for all
participants is based on the individual's and the Company's performances.
Payment of target bonuses related to the Company's performance is contingent
upon the achievement of certain minimum operating profit and revenue goals. If
minimum operating profit and revenue goals are not achieved, bonus awards based
on individual performance could still be made.
Compensation of Directors
The members of the Board of Directors do not receive cash compensation for
serving on the Board of Directors other than reimbursement of reasonable
expenses incurred in attending Board meetings.
12
<PAGE>
Outside members of the Board of Directors have received stock option grants
pursuant to the Stock Plans upon initially joining the Board of Directors. See
"Committees of the Board of Directors -- Meetings of Board of Directors and
Committees" and "Proposal Two -- Amendment to the 1990 Stock Plan."
During the last fiscal year, the Company granted no options to outside
directors of the Company.
STOCK OPTION GRANTS AND EXERCISES
The following table sets forth information regarding stock option grants
made during the fiscal year ended December 31, 1997 to each of the executive
officers named in the Summary Compensation Table.
<TABLE>
Option Grants in Fiscal Year Ended December 31, 1997
<CAPTION>
Individual Grants
------------------------------------------------------------------
Potential Realizable
% of Total Fair Value at Assumed Annual Rates
Number Options Market of Stock Price Appreciation for
Of Options Granted to Exercise Value on Option Term (3)
Granted Employees Price Date of Expiration ---------------------------------
(1) in 1997 Per Share Grant Date (2) 0% 5% 10%
----------------- ------------ ----------- ---------- ------------ ----- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Dan Avida ............... 90,000 (4) 5.6% $ 47.25 $ 47.25 7/1/07 -- $2,674,374 $6,777,390
Jeffrey Lenches ......... 26,000 (4) 1.6% 47.25 47.25 7/1/07 -- 772,597 1,957,913
Fred Rosenzweig ......... 26,000 (4) 1.6% 47.25 47.25 7/1/07 -- 772,597 1,957,913
Eric Saltzman ........... 17,000 (4) 1.1% 47.25 47.25 7/1/07 -- 505,160 1,280,174
<FN>
- ------------
(1) Options granted in 1997 are exercisable starting 12 months after the grant
date, with 25% of the option shares becoming exercisable on the first
anniversary of July 15, 1997, with full vesting occurring on the fourth
anniversary date.
(2) The options have a term of 10 years, subject to earlier termination in
certain events related to termination of employment.
(3) The 5% and 10% assumed rates of appreciation are mandated by the rules of
the SEC and do not represent the Company's estimate or projection of its
future Common Stock price.
(4) These options were granted on July 1, 1997.
</FN>
</TABLE>
The following table sets forth information regarding exercises of stock
options during the fiscal year ended December 31, 1997 by each of the executive
officers named in the Summary Compensation Table.
<TABLE>
Aggregated Option Exercises in Fiscal Year Ended
December 31, 1997 and Fiscal Year End Option Values
<CAPTION>
Number of Value of Unexercised
Unexercised Options In-the-Money Options
Shares at 12/31/97 at 12/31/97 (2)
Acquired on Value ------------------------------- ------------------------------
Name Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable
- --------------------- ------------- ------------- ------------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Dan Avida ........... 118,188 $5,480,663 705,236 302,500 $6,917,174 $381,250
Jeffrey Lenches ..... 140,008 5,857,887 252,992 99,000 2,751,907 152,500
Fred Rosenzweig ..... 68,500 2,884,195 11,000 128,500 -- 506,000
Eric Saltzman ....... 43,500 1,815,616 -- 89,000 -- 373,875
<FN>
- ------------
(1) This amount represents the market value of the underlying securities on the
exercise date minus the exercise price of such options.
(2) This amount represents the market value of the underlying securities
relating to "in-the-money" options at December 31, 1997 minus the exercise
price of such options.
</FN>
</TABLE>
13
<PAGE>
EMPLOYMENT AGREEMENTS
The Company entered into employment agreements with Messrs. Avida, Lenches,
Rosenzweig in July 1995 and with Mr. Saltzman in October 1995 whereby each
executive's employment shall continue to be "at will." The employment agreements
state an annual base salary, subject to any increases annually as the Company's
Board shall authorize from time to time in connection with an annual review and
provides for such performance bonus amounts under the Executive Incentive Plan
as the Company's Board authorizes. In addition, the employment agreements
contain certain provisions that take effect upon a change in control of the
Company. Upon a change of control, all unvested options granted in 1994 will
automatically be accelerated and the executive shall have the right to exercise
all or a portion of such stock options so vested. Vesting of the options will be
adjusted to the extent necessary such that "parachute payments" do not exceed
the maximum that each executive may receive under the Internal Revenue Code
before being required to pay an excise tax. Any unvested options shall be
assumed by the successor of the Company and vesting shall continue while the
executive remains an employee of the successor of the Company. If the
executive's employment is involuntary or constructively terminated other than
for cause prior to the date vesting of such options is completed, the executive
shall be retained as a consultant to the successor of the Company at a specified
rate per hour for the period necessary to allow the remaining options held by
the executive to vest in full, but in no event to exceed six months. If the
executive's employment is involuntarily or constructively terminated other than
for cause within a period beginning 90 days before and ending 18 months after a
change of control, the executive will be entitled to a lump sum severance
payment in an amount equal to one-half of his then current annual salary and
bonus. Each employment agreement terminates upon the earlier of (i) the date
that all obligations of the parties thereunder have been satisfied, (ii) October
1, 1999, or (iii) eighteen (18) months after a change of control.
REPORT OF THE COMPENSATION COMMITTEE
The Report of the Compensation Committee shall not be deemed to be
incorporated by reference by any general statement incorporating by reference
this proxy statement into any filing under the Securities Act of 1933 (the
"Securities Act") or under the Securities Exchange Act of 1934 (the "Exchange
Act"), except to the extent that the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
acts.
General. The responsibilities of the Compensation Committee are to
administer the Company's various incentive plans, including the Stock Plans, and
to set compensation policies applicable to the Company's executive officers.
Base Salary. Individual salaries are determined based on individual
experience, performance and breadth of responsibility within the Company. The
Compensation Committee reviews these factors for each executive officer each
year. In addition, the Compensation Committee considers executive officers'
salaries for relative competitiveness within the Company's sector of the
computer industry.
Commissions and Bonuses. The Company established a bonus plan for its
executive officers. See "Executive Compensation--Executive Incentive Plans."
Stock Options. The Stock Plans are long-term incentive plans for all
employees. These plans are intended to align stockholder and employee interests
by creating a direct link between long-term rewards and the value of the
Company's shares. The Compensation Committee believes that long-term stock
ownership by executive officers and all employees is an important factor in
achieving above average growth in share value and in retaining valued employees.
Since the value of an option bears a direct relationship to the Company's stock
price, the Compensation Committee believes that options motivate executive
officers and employees to manage the Company in a manner which will benefit all
stockholders.
The Stock Plans authorize the Compensation Committee to award stock options
to employees at any time. Options are generally granted at the time of initial
employment with the Company, and at later dates at the discretion of the
Compensation Committee. The size of initial and subsequent grants are determined
by a number of factors including comparable grants to executive officers and
employees by other
14
<PAGE>
companies which compete in the Company's industry. The exercise price per share
of the stock options is equal to the prevailing market value of a share of the
Company's Common Stock on the date the options are granted.
CEO Salary. The Compensation Committee has set Mr. Avida's base salary for
1998 at $375,000. The Compensation Committee believes that the Company's success
is dependent in part upon the efforts of its chief executive officer, and as a
result, the Company entered into a four-year employment agreement with Mr. Avida
in July, 1995 (see "Employment Agreements").
Submitted by:
Jean-Louis Gassee
Member of the Compensation Committee
Thomas I. Unterberg
Member of the Compensation Committee
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Jean-Louis Gassee has served on the Compensation Committee of the Board of
Directors from its formation in August 1992 through December 31, 1997. Thomas I.
Unterberg has served on the Compensation Committee of the Board of Directors
from his appointment in February 1995 through December 31, 1997.
15
<PAGE>
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG ELECTRONICS FOR IMAGING, INC., H&Q TECHNOLOGY INDEX AND
NASDAQ COMPOSITE INDEX
The stock price performance graph below includes information required by
the SEC and shall not be deemed incorporated by reference by any general
statement incorporating by reference this proxy statement into any filing under
the Securities Act or under the Exchange Act, except to the extent the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed soliciting material or filed under such Acts.
The following graph demonstrates a comparison of cumulative total returns
based upon an initial investment of $100 in the Company's Common Stock as
compared with the Hambrecht & Quist Technology Index and the NASDAQ Composite
Index. The stock price performance shown on the graph below is not necessarily
indicative of future price performance and only reflects the Company's relative
stock price for the period commencing on October 2, 1992 (the date the Company's
Common Stock began trading on the NASDAQ National Market System) and ending on
December 31, 1997.
[The following descriptive data is supplied in accordance with Rule 304(d) of
Regulation S-T]
Investment Value
-----------------------------------------
Date EFII H&Q Technology NASDAQ Comp.
------ ----- -------------- ------------
10/2/92 $ 100 $ 100 $ 100
12/31/92 $ 132 $ 120 $ 118
12/31/93 $ 110 $ 131 $ 136
12/30/94 $ 183 $ 151 $ 132
12/29/95 $ 583 $ 226 $ 184
12/31/96 $1,097 $ 272 $ 226
12/31/97 $ 443 $ 284 $ 275
16
<PAGE>
OTHER MATTERS
The Company knows of no other matters to be submitted at the meeting. If
any other matters properly come before the meeting, it is the intention of the
persons named in the enclosed form of proxy to vote the shares they represent as
the Board of Directors may recommend.
By Order of the Board of Directors
/s/ Eric Saltzman
-----------------------------
Eric Saltzman
Secretary
Dated: April 2, 1998
17
<PAGE>
1149 PS 98
<PAGE>
Appendix A
DETACH HERE
PROXY
This Proxy is solicited on behalf of the Board of Directors of
ELECTRONICS FOR IMAGING, INC.
ANNUAL MEETING OF STOCKHOLDERS
MAY 7, 1998
The undersigned stockholder of ELECTRONICS FOR IMAGING, INC., a Delaware
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement, each dated April 2, 1998, and hereby appoints
Efraim Arazi and Dan Avida, or either of them, his or her proxies and
attorneys-in-fact, with full power to each of substitution, on behalf and in the
name of the undersigned, to represent the undersigned at the 1998 Annual Meeting
of Stockholders of ELECTRONICS FOR IMAGING, INC. to be held on Thursday, May 7,
1998 at 9:00 a.m., Pacific Daylight Time, at Electronics for Imaging, Inc., 331
Lakeside Drive, Foster City, California 94404, and at any adjournment or
adjournments thereof, and to vote all shares of Common Stock that the
undersigned would be entitled to vote if then and there personally present, on
the matters set forth on the reverse.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE
SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE SIDE
<PAGE>
[X] Please mark
votes as in
this example
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED,
WILL BE VOTED FOR THE ELECTION OF DIRECTORS, FOR THE AMENDMENT TO THE 1998 STOCK
PLAN, FOR THE RATIFICATION OF THE APPOINTMENT OF PRICE WATERHOUSE LLP AS
INDEPENDENT AUDITORS AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS
MAY PROPERLY COME BEFORE THE MEETING.
<TABLE>
<CAPTION>
<S> <C>
1. Election of Directors: 2. Proposal to approve an amendment FOR AGAINST ABSTAIN
Nominess: Efraim Arazi, Dan Avida, Gill Cogan, Jean-Louis to the 1990 Stock Plan [ ] [ ] [ ]
Gassee, Dan Maydan, Thomas I. Unterberg.
FOR WITHHELD
ALL [ ] [ ] FROM ALL 3. Proposal to ratify the appointment of FOR AGAINST ABSTAIN
NOMINEES NOMINEES Price Waterhouse LLP as [ ] [ ] [ ]
independent auditors of the
Company for the fiscal year ending
December 31, 1998.
[ ] _________________________________________
For all nominees except as noted above 4. In their discretion, upon such other matter or matters that
may properly come before the meeting or any adjournments
thereof.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
This Proxy should be marked, dated and signed by the
stockholder(s) exactly as his or her name appears on this
proxy card, and returned promptly in the enclosed envelope.
When signing as attorney, executor, administrator, trustee, or
guardian, please give full title as such. If a corporation,
please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in
partnership name by authorized person. If shares are held by
joint tenants or as community property each should sign.
Signature: _________________________________ Date: ___________________ Signature: ______________________________ Date: _____________
</TABLE>
