<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
VERITAS Software Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(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:
<PAGE> 2
LOGO
VERITAS SOFTWARE CORPORATION
April 3, 1998
Dear VERITAS Stockholder:
On behalf of the Board of Directors, I cordially invite you to attend the
1998 Annual Meeting of Stockholders of VERITAS Software Corporation to be held
at the Company's headquarters located at 1600 Plymouth Street, Mountain View,
California 94043 on Thursday, April 23, 1998 at 8:30 a.m. Pacific Time.
The matters expected to be acted upon at the meeting are described in
detail in the following Notice of Annual Meeting of Stockholders and Proxy
Statement.
Your vote on the business to be considered at this meeting is important,
regardless of the number of shares you own. WHETHER OR NOT YOU PLAN TO ATTEND
THE MEETING, PLEASE COMPLETE, DATE, SIGN AND PROMPTLY RETURN THE ACCOMPANYING
PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE PRIOR TO THE MEETING, SO THAT YOUR
SHARES MAY BE REPRESENTED AT THE MEETING. Returning the proxy does not deprive
you of your right to attend the meeting and to vote your shares in person.
We look forward to seeing you at the meeting.
Sincerely,
LOGO
Mark Leslie
President, Chief Executive Officer and
Co-Chairman of the Board
<PAGE> 3
VERITAS SOFTWARE CORPORATION
1600 PLYMOUTH STREET
MOUNTAIN VIEW, CA 94043
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of VERITAS Software Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of VERITAS
Software Corporation (the "Company") will be held at the Company's headquarters
located at 1600 Plymouth Street, Mountain View, California 94043 on Thursday,
April 23, 1998 at 8:30 a.m. Pacific Time for the following purposes:
1. To elect seven directors of the Company, each to serve until the next
Annual Meeting of Stockholders or until his successor has been elected
and qualified or until such director's earlier resignation or removal;
2. To ratify the Board of Director's selection of Ernst & Young LLP as
independent accountants for the Company for the current fiscal year; and
3. To transact such other business as may properly come before the meeting
or any adjournment or postponement 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 10, 1998 are
entitled to notice of and to vote at the meeting or any adjournment or
postponement thereof.
By Order of the Board of Directors,
LOGO
Mark Leslie
President, Chief Executive Officer and
Co-Chairman
of the Board
Mountain View, California
April 3, 1998
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE SO
THAT YOUR SHARES MAY BE REPRESENTED AT THE MEETING.
<PAGE> 4
VERITAS SOFTWARE CORPORATION
1600 PLYMOUTH STREET
MOUNTAIN VIEW, CA 94043
------------------------
PROXY STATEMENT
------------------------
APRIL 3, 1998
Your proxy, using the enclosed form, is solicited by the Board of Directors
of VERITAS Software Corporation, a Delaware Corporation (the "Company"), for use
at the Annual Meeting of Stockholders of the Company to be held on Thursday,
April 23, 1998 at 8:30 a.m. Pacific Time, at the Company's headquarters located
at 1600 Plymouth Street, Mountain View, California 94043 (the "Meeting"). All
proxies will be voted in accordance with the instructions contained therein. If
no choice is specified, the proxies will be voted in favor of the nominees and
the proposal set forth in the accompanying notice of Meeting and this Proxy
Statement. This Proxy Statement and the accompanying proxy form were first
mailed on or about April 3, 1998 to stockholders entitled to vote at the
Meeting.
VOTING RIGHTS AND SOLICITATION OF PROXIES
The only items of business which the Board of Directors intends to present
at the Meeting are listed in the preceding Notice of Annual Meeting of
Stockholders and are explained in more detail on the following pages.
Only holders of record of the Company's Common Stock at the close of
business on March 10, 1998 (the "Record Date") will be entitled to vote at the
Meeting. A majority of the shares outstanding on the Record Date will constitute
a quorum for the transaction of business at the Meeting. At the close of
business on the Record Date, the Company had 31,098,186 shares of Common Stock
outstanding and entitled to vote. Holders of the Company's Common Stock are
entitled to one vote for each share held as of the Record Date. Shares of Common
Stock may not be voted cumulatively. In the event that a broker, bank,
custodian, nominee or other record holder of the Company's Common Stock
indicates on a proxy that it does not have discretionary authority to vote
certain shares on a particular matter (a "broker non-vote"), those shares will
not be considered present and entitled to vote with respect to that matter,
although they will be counted in determining the presence of a quorum. Directors
will be elected by a plurality of the votes of the shares of Common Stock
present in person or represented by proxy at the Meeting and entitled to vote on
the election of directors. Approval of Proposal No. 2 requires the affirmative
vote of the majority of shares of Common Stock present in person or represented
by proxy at the Meeting that are voted "for" or "against" the proposal. Neither
an abstention nor a broker non-vote will be counted as a vote "for" or "against"
Proposal No. 2. All votes will be tabulated by the inspector of elections
appointed for the Meeting.
The proxy accompanying this Proxy Statement is solicited on behalf of the
Board for use at the Meeting. Stockholders are requested to complete, date and
sign the accompanying proxy card and promptly return it in the enclosed
envelope. All executed, returned proxies that are not revoked will be voted in
accordance with the instructions contained therein; however, returned signed
proxies that give no instructions as to how they should be voted on a particular
proposal will be counted as votes "for" such proposal (or, in the case of the
election of directors, as a vote "for" election to the Board of all the nominees
presented by the Board). In the event that sufficient votes in favor of the
proposals are not received by the date of the Meeting, the persons named as
proxies may propose one or more adjournments of the Meeting to permit further
solicitations of proxies. Any such adjournment would require the affirmative
vote of the majority of the shares present in person or represented by proxy at
the Meeting and entitled to vote. The expenses of soliciting proxies to be voted
at the Meeting will be paid by the Company. Following the original mailing of
the proxies and other soliciting materials, the Company will request that
brokers, custodians, nominees and other record holders of the Company's Common
Stock forward copies of the proxy and other soliciting materials to persons for
whom they hold shares of Common Stock and request authority for the exercise of
proxies. In such cases, the Company, upon the request of the record holders,
will reimburse such holders for their reasonable expenses.
1
<PAGE> 5
The original solicitation of proxies by mail may be supplemented by telephone,
telegram or personal solicitation by directors, officers and regular employees
of the Company.
REVOCABILITY OF PROXIES
Any person signing a proxy in the form accompanying this Proxy Statement
has the power to revoke it before the Meeting or at the Meeting before the vote
pursuant to the proxy. A proxy may be revoked by a writing delivered to the
Company stating that the proxy is revoked, by a subsequent proxy that is signed
by the person who signed the earlier proxy and is presented at the Meeting, or
by attendance at the Meeting and voting in person. Please note, however, that if
a stockholder's shares are held of record by a broker, bank or other nominee and
that stockholder wishes to vote at the Meeting, the stockholder must bring to
the Meeting a letter from the broker, bank or other nominee confirming that
stockholder's beneficial ownership of the shares.
2
<PAGE> 6
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Seven directors will be elected at the Meeting. Each director will serve
until the next annual meeting of stockholders or until a successor is duly
elected and qualified or until such director's earlier resignation or removal.
Shares represented by the accompanying proxy will be voted for the election of
the seven nominees listed below unless the proxy is marked in such a manner as
to withhold authority so to vote. Should any of the nominees listed below become
unavailable at the time of the Meeting to accept nomination for election as a
director, the proxy holders named in the enclosed proxy may vote for substitute
nominees at their discretion. The Company is not aware of any nominee who will
be unable to or will not serve as a director.
NOMINEES FOR DIRECTOR
The names of the nominees and certain information about them as of March
25, 1998 are set forth below:
<TABLE>
<CAPTION>
DIRECTOR
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION SINCE
--------------- --- -------------------- --------
<S> <C> <C> <C>
Mark Leslie............ 52 President, Chief Executive Officer and Co-Chairman of 1988
the Board
Geoffrey W. Squire..... 51 Executive Vice-President and Co-Chairman of the Board 1997
Fred van den Bosch..... 51 Executive Vice President of Engineering 1996
Joseph D. 53 General Partner of Matrix Partners 1987
Rizzi(1)(2)..........
William H. Janeway..... 54 Managing Director of Warburg, Pincus & Company, Inc. 1997
Roel Pieper(1)(2)...... 41 Executive Vice President, Philips Electronics 1992
Steven Brooks.......... 44 Managing Director of Donaldson, Lufkin & Jenrette 1996
</TABLE>
- ---------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
Each of the directors listed above were previously elected at the Company's
Annual Meeting of Stockholders held on April 24, 1997, except that Geoffrey W.
Squire and William H. Janeway were appointed as directors on April 25, 1997.
MARK LESLIE has served as President and Chief Executive Officer of the
Company since 1990 and as a director of the Company since 1988. From 1989 until
1990, he was the principal and owner of Leslie Consulting, a management
consulting firm and from 1984 until 1989, he served as President and Chief
Executive Officer of Rugged Digital Systems, Inc., a computer manufacturer. Mr.
Leslie is also Chairman of the Board of Versant Object Technology Corporation,
an object-oriented database company. Mr. Leslie received a B.A. in Physics and
Mathematics from New York University in 1966 and completed Harvard Business
School's Program for Management Development in 1980.
GEOFFREY W. SQUIRE has been Co-Chairman of the Board of Directors and
Executive Vice-President of the Company since April 1997, when the Company
merged with OpenVision Technologies, Inc. ("OpenVision"). Mr. Squire became a
director of OpenVision in January 1994 and was appointed Chief Executive Officer
of OpenVision in July 1995. From January 1994 to November 1994, Mr. Squire was
Executive Vice President and Chief Executive Officer of International
Operations. From November 1994 to June 1995, Mr. Squire was President and Chief
Operating Officer of OpenVision. From 1984 to 1987, Mr. Squire was Managing
Director and Senior Vice President of Oracle Corporation and, from 1987 to 1990,
Chief Executive Officer of Oracle Europe. In 1990, he was promoted to Executive
Vice President of Oracle Corporation and President of Worldwide Operations. In
July 1992, he was appointed to Oracle's five-person Executive Committee with
responsibility as Chief Executive, International Operations. Mr. Squire has sat
on the Council of the U.K. Computing Services and Software Association since
1990. In 1995, Mr. Squire was elected as the founding President of the European
Information Services Association. Mr. Squire is also a director of
Industri-Mathematik International Corp.
3
<PAGE> 7
FRED VAN DEN BOSCH has served as Executive Vice President, Engineering of
the Company since July 1997. Mr. van den Bosch served as Senior Vice President,
Engineering of the Company from 1991 to July 1997 and was appointed as a
director of the Company in February 1996. From 1970 until 1990, he served in
various positions with Philips Information Systems, including Director of
Technology from 1988 until 1990. Mr. van den Bosch received an M.S. in Applied
Mathematics from the Technical University of Delft (The Netherlands) in 1969.
JOSEPH D. RIZZI has been a director of the Company since 1987. Since 1986,
he has been a general partner of Matrix Partners, a venture capital firm. From
1979 to 1985, he was Chief Executive Officer of Elxsi, a computer company. Mr.
Rizzi received an M.S. in Electrical Engineering from the University of New
Hampshire in 1964.
WILLIAM H. JANEWAY was appointed as a director of the Company on April 25,
1997. Mr. Janeway has been a Managing Director of E.M. Warburg Pincus & Co.,
LLC, since 1988. Prior to Joining E.M. Warburg Pincus & Co., LLC, Mr. Janeway
was the Vice President and Director of Corporate Finance from 1979 to 1988 at F.
Eberstadt & Co., Inc. Mr. Janeway is a director of ECsoft Group, PLC, Vanstar
Corporation, Maxis, Inc., Zilog, Inc., Industri-Mathematik Intl. Corp. and
several privately held companies.
ROEL PIEPER has been a director of the Company since 1992. Mr. Pieper has
served as Executive Vice President of Philips Electronics, The Netherlands,
since January 1998. From 1996 to January 1998, Mr. Pieper was President and
Chief Executive Officer of Tandem Computers Incorporated. From 1993 to 1996 he
served as President and Chief Executive Officer of Ungermann-Bass, Inc., a
global data network integrator and product supplier, and Senior Vice President
of Tandem Computers Incorporated, a manufacturer of fault-tolerant computer
systems and the parent company of Ungermann-Bass, Inc. From November 1991 to
1993, he served as President and Chief Executive Officer of UNIX System
Laboratories, and from January 1991 to November 1991 he served as Executive Vice
President, Marketing and Sales of UNIX System Laboratories. Mr. Pieper served as
Senior Vice President of the Technology Division of Software AG USA, an American
subsidiary of a German software development company, from 1988 to 1989, and then
as Software AG USA's Chief Technology Officer until 1990. Mr Pieper also serves
as a director of General Magic, Inc. and Lincoln National Corporation.
STEVEN BROOKS has been a director of the Company since 1996. From September
1997, Mr. Brooks has served as a Managing Director of Donaldson, Lufkin &
Jenrette Securities Corporation, an investment banking firm. From 1996 to 1997,
Mr. Brooks was a private investor and a consultant to technology companies. From
1994 to 1997, Mr. Brooks served as Managing Director and Head of Global
Technology Investment Banking at the Union Bank of Switzerland Securities, LLC.
From 1988 to 1994, Mr. Brooks was a private investor and consultant to
high-technology firms. From 1986 to 1988, Mr. Brooks served as Managing Partner
of investment banking at Robertson, Stephens & Co., a San Francisco-based
investment bank. Mr. Brooks is a director of Paychex, Inc. a national payroll
processing and business services company; and QRS, an electronic commerce
company, as well as several private companies.
INFORMATION REGARDING THE BOARD OF DIRECTOR'S MEETINGS AND COMMITTEES
The Board of Directors of the Company is responsible for the overall
affairs of the Company. To assist it in carrying out this responsibility, the
Board has delegated certain authority to designated committees, the current
membership and duties of which are as follows:
<TABLE>
<CAPTION>
AUDIT COMMITTEE COMPENSATION COMMITTEE
--------------- ----------------------
<S> <C>
Joseph D. Rizzi Joseph D. Rizzi
Roel Pieper Roel Pieper
</TABLE>
AUDIT COMMITTEE. The Audit Committee satisfies itself as to the
independence and competence of the Company's public accountants. It reviews with
them and with the Company's internal accounting staff the scope and results of
the independent accountants audit work, the Company's annual financial
statements, and the Company's internal accounting and control systems. The Audit
Committee also recommends to the Board
4
<PAGE> 8
the firm of independent public accountants to be selected to audit the Company's
accounts, and makes further inquiries as it deems necessary or desirable to
inform itself as to the conduct of the Company's affairs. The Audit Committee
was established in October 1993 and met once during 1997.
COMPENSATION COMMITTEE. The Compensation Committee reviews and makes
recommendations to the Board regarding the compensation for officers and
compensation guidelines for employees of the Company. The Compensation Committee
met once during fiscal 1997.
The Board does not have a nominating committee or a committee performing
similar functions. The Board met nine times, including telephone conference
meetings, during fiscal 1997. No director, other than Mr. Pieper, attended fewer
than 75% of the aggregate of the total number of meetings of the Board (held
during the time period for which he was a director) and the total number of
meetings held by all committees of the Board on which he served (during the
period that he served).
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION
OF EACH OF THE NOMINATED DIRECTORS
PROPOSAL NO. 2
RATIFICATION OF SELECTION
OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board has selected Ernst & Young LLP as the Company's independent
public accountants to perform the audit of the financial statements of the
Company for the year ending December 31, 1998 and the stockholders are being
asked to ratify such selection. One or more representatives of Ernst & Young LLP
will be present at the Meeting, and will have the opportunity to make a
statement and to respond to appropriate questions.
THE BOARD RECOMMENDS A VOTE
FOR THE RATIFICATION OF THE SELECTION OF ERNST & YOUNG LLP
5
<PAGE> 9
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth certain information, as of February 28,
1998, with respect to the beneficial ownership of the Company's Common Stock by
(i) each stockholder known by the Company to be the beneficial owner of more
than 5% of the Company's Common Stock, (ii) each executive officer named in the
Summary Compensation Table below (the "Named Officers"), (iii) each director and
nominee, (iv) all current executive officers and directors as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) PERCENT OF CLASS
------------------------------------ ------------------------ ----------------
<S> <C> <C>
Warburg Pincus(2).......................... 5,438,868 17.49%
William H. Janeway(2)...................... 5,438,868 17.49%
Nicholas Applegate(3)...................... 2,718,179 8.83%
Pilgrim Baxter and Associates(4)........... 1,858,771 6.04%
Mark Leslie(5)............................. 729,610 2.35%
Geoffrey W. Squire(6)...................... 390,370 1.26%
Fred van den Bosch(7)...................... 244,965 Less than 1%
Paul A. Sallaberry(8)...................... 67,550 Less than 1%
Peter J. Levine(9)......................... 48,415 Less than 1%
Joseph D. Rizzi(10)........................ 76,722 Less than 1%
Steven Brooks(11).......................... 20,438 Less than 1%
Roel Pieper(12)............................ 16,310 Less than 1%
All current executive officers and
directors as a group(11 persons)(13)..... 7,124,448 22.91%
</TABLE>
- ---------------
(1) Based upon information supplied by officers, directors and principal
stockholders, beneficial ownership is determined in accordance with the
rules of the Securities and Exchange Commission that deem shares to be
beneficially owned by any person who has or shares voting power with
respect to such shares. Unless otherwise indicated below, the persons and
entities named in the table have sole voting and sole investment power with
respect to all shares beneficially owned, subject to community property
laws where applicable. Includes shares of Common Stock issuable to the
identified person or entity pursuant to stock options which may be
exercised within sixty days of February 28, 1998. In calculating the
percentage of ownership, such shares are not deemed to be outstanding for
the purpose of computing the percentage of shares of Common Stock owned by
another stockholder.
(2) Warburg, Pincus & Co., the sole general partner of Warburg, has a 20%
interest in the profits of Warburg. E.M. Warburg, Pincus & Co., LLC manages
Warburg. Lionel L. Pincus is the managing partner of Warburg, Pincus & Co.
and the managing member of E.M. Warburg, Pincus & Co., LLC and may be
deemed to control both Warburg, Pincus & Co., and E.M. Warburg, Pincus &
Co., LLC. The members of E.M. Warburg, Pincus & Co., LLC are substantially
the same as the partners of Warburg,
6
<PAGE> 10
Pincus & Co. Mr. Janeway, a director of the Company, is a Managing Director
and member of E.M. Warburg, Pincus & Co., LLC and general partner of
Warburg, Pincus & Co. As such, Mr. Janeway may be deemed to have an
indirect pecuniary interest (within the meaning of Rule 16a-1 under the
Exchange Act) in an indeterminate portion of the shares beneficially owned
by Warburg. Mr. Janeway disclaims beneficial ownership, for purposes of
Section 16 of the Act or otherwise, of such shares. The address of Warburg
is 466 Lexington Avenue, New York, N.Y. 10017.
(3) Represents shares held by Nicholas Applegate Capital Management ("NACM"),
an institutional investment manager, on behalf of various client accounts,
and for which NACM shares voting power and holds sole dispositive power.
The address of NACM is 600 West Broadway, 29th Floor, San Diego, CA
92101-3311.
(4) Represents shares held by Pilgrim, Baxter & Associates ("Pilgrim"), an
institutional investment manager, on behalf of various client accounts, and
for which Pilgrim shares voting power and holds sole dispositive power. The
address of Pilgrim is 1255 Drummers Lane, Suite 300, Wayne, Pennsylvania
19087.
(5) Includes 175,938 shares subject to options which are either immediately
exercisable or may be exercised within 60 days of February 28, 1998. Mr.
Leslie is the President and Chief Executive Officer, as well as a
Co-Chairman of the Board.
(6) Includes 33,225 shares subject to options which are either immediately
exercisable or may be exercised within 60 days of February 28, 1998. Mr.
Squire is the Company's Executive Vice President, as well as a Co-Chairman
of the Board.
(7) Includes 154,618 shares subject to options which are either immediately
exercisable or may be exercised within 60 days of February 28, 1998. Mr.
van den Bosch is the Company's Executive Vice President of Engineering, as
well as a director of the Company.
(8) Includes 46,072 shares subject to options which are either immediately
exercisable or may be exercised within 60 days of February 28, 1998. Mr.
Sallaberry is the Senior Vice President of Worldwide Sales.
(9) Includes 37,125 shares subject to options which are either immediately
exercisable or may be exercised within 60 days of February 28, 1998. Mr.
Levine is the Company's Senior Vice President of OEM Sales and Mergers and
Acquisitions.
(10) Includes 31,500 shares subject to options which are either immediately
exercisable or may be exercised within 60 days of February 28, 1998. Mr.
Rizzi is a director of the Company.
(11) Includes 17,438 shares subject to options which are either immediately
exercisable or may be exercised within 60 days of February 28, 1998. Mr.
Brooks is a director of the Company.
(12) Includes 16,310 shares subject to options which are either immediately
exercisable or may be exercised within 60 days of February 28, 1998. Mr.
Pieper is a director of the Company.
(13) Includes 521,090 shares subject to options which are either immediately
exercisable or may be exercised within 60 days of February 28, 1998.
7
<PAGE> 11
EXECUTIVE COMPENSATION
The following table sets forth all compensation awarded to, earned by or
paid for services rendered to the Company in all capacities during 1995, 1996
and 1997 by the Company's Chief Executive Officer and the Company's four other
most highly compensated executive officers during such period (together, the
"Named Officers"). This information includes the dollar value of base salaries,
commissions and bonus awards, the number of shares subject to stock options
granted and certain other compensation, whether paid or deferred. The Company
does not grant SARs and has no long-term compensation benefits other than stock
options.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------ ------------
SECURITIES
OTHER ANNUAL UNDERLYING
SALARY BONUS COMPENSATION OPTIONS
NAME AND PRINCIPLE POSITION YEAR ($) ($)(1) ($) (#)
--------------------------- ---- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Mark Leslie......................... 1997 $250,000 $326,400 $ 1,200 127,499
President, Chief 1996 $230,000 $170,800 -- 112,500
Executive Officer 1995 $200,000 $180,000 -- 67,500
Geoffrey W. Squire(2)............... 1997 $169,689 $208,875 $18,444 --
Executive Vice President 1996 -- -- -- --
1995 -- -- -- --
Paul A. Sallaberry(2)(3)............ 1997 $284,170 $ 58,485 $ 1,200 52,499
Senior Vice President, 1996 -- -- -- --
Worldwide Sales 1995 -- -- -- --
Fred van den Bosch.................. 1997 $160,000 $140,598 $ 1,200 74,999
Executive Vice President 1996 $145,000 $ 78,082 -- 33,750
of Engineering 1995 $140,000 $110,000 -- 36,000
Peter J. Levine(4).................. 1997 $145,000 $149,270 $ 1,200 52,500
Senior Vice President of 1996 $110,000 $ 48,380 -- 31,500
OEM Sales and Mergers and 1995 $131,118 $ 50,000 -- 22,500
Acquisitions
</TABLE>
- ---------------
(1) Portions of bonuses for services rendered in fiscal year 1995 and 1996 were
paid in fiscal year 1996 and 1997 respectively.
(2) This person joined the Company in April 1997 when the Company merged with
OpenVision Technologies, Inc.
(3) Includes sales commissions paid to Mr. Sallaberry by the Company in the
amount of $170,837 in 1997.
(4) Includes sales commissions paid to Mr. Levine by the Company in the amount
of $31,118 in 1995.
8
<PAGE> 12
The following table sets forth further information regarding the individual
grants of stock options pursuant to the Company's stock option plans during
fiscal 1997 to each of the Named Officers. In accordance with the rules of the
Securities and Exchange Commission, the table sets forth the hypothetical gains
or "option spreads" that would exist for the options at the end of their
respective ten-year term based on assumed annualized rates of compound stock
price appreciation of 5% and 10% from the dates the options were granted to the
end of the respective option terms. Actual gains, if any, on option exercises
are dependent on the future performance of the Company's Common Stock and
overall market conditions. There can be no assurance that the potential
realizable values shown in this table will be achieved.
STOCK OPTION GRANTS IN 1997
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM(3)
------------------------------------------------------ ---------------------------
NUMBER % OF TOTAL
OF OPTIONS
SECURITIES GRANTED
UNDERLYING TO EMPLOYEES EXERCISE
OPTIONS IN FISCAL OR BASE EXPIRATION
NAME GRANTED(1) YEAR PRICE(2) DATE 5% 10%
---- ---------- ------------ ------------- ---------- ------------ ------------
(#) ($/SH) ($) ($)
<S> <C> <C> <C> <C> <C> <C>
Mark Leslie............. 127,499 6.1 32.33 6-19-07 $2,592,595 $6,570,145
Geoffrey W. Squire...... -- -- -- -- -- --
Paul A. Sallaberry...... 52,499 2.5 32.33 6-19-07 $1,067,527 $2,705,324
Fred van den Bosch...... 74,999 3.6 32.33 6-19-07 $1,525,048 $3,864,770
Peter J. Levine......... 52,500 2.5 32.33 6-19-07 $1,067,548 $2,705,375
</TABLE>
- ---------------
(1) Stock options vest over four years at the rate of 1/48th per month, such
vesting to accelerate in the event of an acquisition or merger of the
Company. Stock grants prior to April 20, 1995 are immediately exercisable,
with some purchases being subject to a repurchase in the Company at the
original price that lapses as such shares vest. The options were granted for
a term of ten years, subject to earlier termination upon termination of
employment.
(2) The exercise price of all stock options was equal to the fair market value
of the Company's Common Stock on the date of grant.
(3) The 5% and 10% assumed rates of annual compound stock price appreciation are
mandated by rules of the Securities and Exchange Commission and do not
represent the Company's estimate or projection of future Common Stock
prices.
9
<PAGE> 13
The following table sets forth certain information concerning the exercise
of stock options during 1997 by each of the Named Officers, including the
aggregate amount of gains on the date of exercise. In addition, the table
includes the number of shares covered by both vested and unvested stock options
held on December 31, 1997 by each of the Named Officers. Also reported are
values for "in the money" stock options that represent the positive spread
between the respective exercise prices of outstanding stock options and the fair
market value of the Common Stock as of December 31, 1997 (as determined by the
closing price of the Company's Common Stock on the date as reported by the
Nasdaq National Stock Market ($51.00 per share)).
AGGREGATED OPTION EXERCISES IN FISCAL 1997 AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING
UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
SHARES VALUE YEAR-END (#) AT FISCAL YEAR-END(1)($)
ACQUIRED ON REALIZED -------------------- -------------------------
NAME EXERCISE(#) ($) VESTED UNVESTED VESTED UNVESTED
---- -------------- ---------- -------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Mark Leslie............. 20,000 $ 873,890 162,813 252,187 $6,830,945 $7,686,875
Geoffrey W. Squire...... -- -- 73,525 134,075 $2,545,436 $4,641,677
Paul A. Sallaberry...... 25,495 $1,022,870 44,299 108,886 $1,650,789 $3,056,926
Fred van den Bosch...... 2,000 $ 86,167 138,431 121,312 $6,170,940 $3,495,173
Peter J. Levine......... 21,096 $ 673,049 26,376 85,686 $ 867,307 $2,397,056
</TABLE>
- ---------------
(1) These values have not been, and may never be, realized.
COMPENSATION OF DIRECTORS
Non-employee directors receive a specified number of stock options under
the Directors Plan as a result of their appointment and subsequent service as
directors of the Company.
10
<PAGE> 14
REPORT ON EXECUTIVE COMPENSATION
The VERITAS Compensation Committee ("Veritas Committee"), with input from
the VERITAS CEO, makes all decisions involving the cash and stock compensation
of the executive officers of VERITAS. During 1997, the VERITAS Committee
consisted of the following non-employee directors: Joseph Rizzi, Roel Pieper and
Steven Brooks, none of whom have any interlocking relationships as defined by
the Commission.
General Compensation Policy. The VERITAS Committee acts on behalf of the
Board to establish the general compensation policy of VERITAS for all employees
of VERITAS. The VERITAS Committee typically reviews and sets base salary levels
and target bonuses for the VERITAS CEO and other executive officers and reviews
compensation guidelines for employees of VERITAS at or about the beginning of
each year. The VERITAS Committee administers the Executive Incentive Plan as
well as the VERITAS 1993 Equity Incentive Plan ("1993 Plan"), the 1996 Former
OpenVision Employee Stock Purchase Plan and the VERITAS 1993 Employee Stock
Purchase Plan.
VERITAS' philosophy in compensating executive officers, including the
VERITAS CEO, is to relate compensation to corporate financial performance and
individual performance. Thus, VERITAS' compensation policy, which applies to
executives and certain other management employees of VERITAS, relates a portion
of each individual's total compensation to VERITAS financial objectives set
forth at the beginning of VERITAS' fiscal year and quarterly goals set forth at
the beginning of each quarter. Long-term equity incentives for executive
officers are effected through the granting of stock options under the 1993 Plan.
Stock options generally have value for the executive only if the price of the
VERITAS Common Stock increases above the fair market value on the grant date and
the executive remains in VERITAS' employ for the period required for the shares
to vest.
The base salaries of the executive officers are determined in part by the
VERITAS Committee reviewing certain executive compensation surveys and other
independent information sources as they are available, such as the Radford
Associates. This survey is nationally known for its database of high technology
company compensation practices. In addition, the VERITAS Committee members'
knowledge of the prevailing competitive salaries in the computer software
industry for similar positions is used in setting compensation levels. Practices
of such companies with respect to their stock option grants were also reviewed
and compared. The VERITAS Committee attempted to target total cash compensation
at approximately the 75th percentile of the survey companies.
In preparing the performance graph for this Joint Proxy
Statement/Prospectus, VERITAS used the H & Q Index as its published line of
business index, as VERITAS believes that the H & Q Index is a good indication of
stock price performance with respect to VERITAS' industry. VERITAS believes that
the data contained in the compensation surveys described in the foregoing
paragraph, which includes certain companies on the H & Q Index, is a good
benchmark with respect to executive compensation practices in VERITAS' industry.
Base Compensation. The foregoing information was presented to the VERITAS
Committee in December 1996. The VERITAS committee reviewed the recommendations
and performance and market data outlined above and established a base salary
level to be effective January 1, 1997 for each executive officer, including the
VERITAS CEO. The base salaries were targeted at or below the 75th percentile for
similar sized companies in the high technology industry for all the executive
officers including the VERITAS CEO.
Incentive Compensation. Under the Executive Incentive Plan, cash bonuses
were awarded to an executive officer in the form of both a Profit Bonus and a
Qualitative Bonus.
The Profit Bonus paid to executives is dependent on the net income
specified in VERITAS' operating plan. A net income achievement below 90% of the
plan would not earn any Profit Bonus for the executive officer while a net
income achievement of 90% would entitle the executive officer to 50% of their
bonus. Achievement of 100% of the net income would entitle the executive officer
to 100% of the Profit Bonus, with any intermediate achievement between 90% and
100% earning a proportional amount of the Profit Bonus. At a net income of 110%
of plan, 150% of the Profit Bonus would be earned, with any intermediate
achievement
11
<PAGE> 15
between 100% and 110% earning a proportional amount. At a net income of 120% of
the plan, 250% of the Profit Bonus would be earned. The maximum Profit Bonus an
executive can earn is equal to 250% of their Profit Bonus. In the event that the
VERITAS Committee approves a mid-year update of VERITAS' operating plan, then
the annual net income objective would be the sum of the first two quarters as
specified in the original operating plan, and the second two quarters as
specified in the mid-year update. The Profit Bonuses described in the plan are
subject to VERITAS Committee review, which has the full authority to modify such
bonuses at its discretion.
An executive officer (excluding the VERITAS CEO) may also earn a
Qualitative Bonus based on the executive officer's performance measured against
qualitative goals, which are proposed by the executive officer at the beginning
of each quarter and approved by the VERITAS CEO. The typical targeted quarterly
Qualitative Bonus is in the range of 5% to 10% of the quarterly base salary. In
any one quarter, the Qualitative Bonus could be as little as 0%, or up to a
maximum of 150% of the bonus target, with the annual total not to exceed 125% of
annual bonus target. The VERITAS CEO's subjective judgment of a subordinate's
performance was taken into account in determining whether an individual
executive's goals were satisfied.
Stock Options. In 1997, stock options were granted to executive officers to
aid in the retention of such officers as employees of VERITAS and to align their
interest with those of the Stockholders. Stock options typically have been
granted to executive officers when the executive first joins VERITAS, in
connection with a significant change in responsibilities and, occasionally, to
achieve equity with peers. Stock option positions of executives are reviewed
annually relative to their retention value and additional shares may be granted
to executives by the VERITAS Committee. The VERITAS Committee may, however,
grant additional stock options to executives for other reasons. The number of
shares subject to each stock option granted is based on anticipated future
contribution and ability to impact corporate and/or business unit results, past
performance or consistency within the executive's peer group. In 1997, the
VERITAS Committee considered these factors, as well as the number of options
held by such executive officers as of the date of the grant that remained
unvested. In the discretion of the VERITAS Committee, executive officers may
also be granted stock options under the 1993 Plan to provide greater incentives
to continue their employment with VERITAS and to strive to increase the value of
the VERITAS Common Stock. The stock options generally vest over a four-year
period and are granted with an exercise price equal to the fair market value of
the VERITAS Common Stock on the date of grant.
For 1998, the VERITAS Committee will be considering whether or not to grant
future options under the 1993 Plan to executive officers based on the factors
described above, with particular attention to VERITAS' financial objectives and
the executive officers' success in obtaining financial and operational
objectives established for 1997 and to the number of options currently held by
each executive officer that remain unvested. VERITAS' objectives, which are
considered by VERITAS to be confidential business information, do not
necessarily have an immediate or direct effect on the trading price of the
VERITAS Common Stock.
VERITAS Performance and CEO Compensation. For fiscal 1997, after review of
VERITAS' profit performance, which was 17.3% above operating plan, as measured
against its objectives, the VERITAS Committee determined that Mr. Leslie should
be awarded a Profit Bonus of 133.68% of base salary, or 223% of the target
award, in the amount of $326,400. Mr. Leslie was granted a stock option to
purchase 127,499 shares of VERITAS Common Stock on June 19, 1997. Such stock
option grant began vesting July 1, 1997, and vests monthly over a four-year
period. In granting the stock options to Mr. Leslie, the VERITAS Committee
reviewed Mr. Leslie's prior outstanding option grants and the number of options
that remained unvested. The VERITAS Committee believed that these grants were
appropriate to provide Mr. Leslie with proper incentives for 1998 and take into
account his prior stock holdings.
Compliance with Section 162(m) of the Internal Revenue Code of
1986. VERITAS intends to comply with the requirements of Section 162(m) of the
Code for 1997. The 1993 Plan is currently in compliance with Section 162(m) by
virtue of the inclusion of a limitation on the number of shares that an
executive officer may receive under the 1993 Plan. VERITAS does not expect cash
compensation for 1997 to be affected by the requirements of Section 162(m).
12
<PAGE> 16
Summary. We, the members of the VERITAS Board and the VERITAS Committee,
believe that VERITAS' compensation programs are successful in attracting and
retaining qualified employees and in tying compensation directly to performance
for Stockholders and service to customers. We will continue to monitor closely
the effectiveness and appropriateness of each of the components of compensation
to reflect changes in VERITAS' business environment.
COMPENSATION COMMITTEE
Joseph D. Rizzi
Roel Pieper
Steven Brooks (resigned April 16, 1997)
13
<PAGE> 17
COMPANY STOCK PRICE PERFORMANCE
The stock price performance graph below is required by the SEC and 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, as amended, or under the Exchange Act, except to the
extent that the Company specifically incorporates this information by reference,
and shall not otherwise be deemed soliciting material or filed under such Acts.
The graph below compares the cumulative total stockholder return on the
Common Stock of the Company from December 9, 1993 (the effective date of the
Company's registration statement with respect to the Company's initial public
offering) to December 31, 1997 with the cumulative total return of the S&P 500
Index and the Hambrecht & Quist Technology Index over the same period (assuming
the investment of $100 in the Common Stock of the Company and in each of the
other indices on the date of the Company's initial public offering, and
reinvestment of all dividends).
The comparisons in the graph below are based on historical data and are not
intended to forecast the possible future performance of the Company's Common
Stock.
COMPARISON OF 49 MONTH CUMULATIVE TOTAL RETURN*
AMONG VERITAS SOFTWARE CORPORATION, THE S & P 500 INDEX
AND THE HAMBRECHT & QUIST TECHNOLOGY INDEX
<TABLE>
<CAPTION>
VERITAS HAMBRECHT &
MEASUREMENT PERIOD SOFTWARE QUIST
(FISCAL YEAR COVERED) CORPORATION S & P 500 TECHNOLOGY
<S> <C> <C> <C>
12/9/93 100 100 100
DEC-93 88 100 103
DEC-94 90 102 123
DEC-95 390 140 184
DEC-96 765 172 229
DEC-97 1177 230 268
</TABLE>
* $100 INVESTED ON 12/09/93 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
14
<PAGE> 18
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
From January 1, 1997 to the present, there have not been any (and there are
currently no proposed) (i) transactions in which the amount involved exceeded
$60,000 to which VERITAS or any of its subsidiaries was (or is to be) a party
and in which any executive officer, director, 5% beneficial owner of VERITAS
Common Stock or member of the immediate family of any of the foregoing persons
had (or will have) a direct or indirect material interest, or (ii) business
relationships between VERITAS and any entity, of which a director of VERITAS is
an executive officer or of which a director of VERITAS owns equity interest in
excess of 10%, involving payments for property or services in excess of five
percent of VERITAS consolidated gross revenues for VERITAS 1997 fiscal year
except as already reported or as set forth above under "-- Compensation of
Executive Officers."
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the Company's 1999
Annual Meeting of Stockholders must be received by the Company at its principal
executive offices no later than January 8, 1999 in order to be included in the
Company's Proxy Statement and form of proxy relating to the meeting.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
In accordance with Section 16(a) of the Securities Exchange Act of 1934, as
amended, and the regulations of the Securities and Exchange Commission, the
Company's directors, certain officers, and greater than 10% stockholders are
required to file reports of ownership and changes in ownership with the SEC and
the Nasdaq National Market and to furnish the Company with copies of all such
reports they file.
Based solely on its review of the copies of such forms furnished to the
Company and written representations from certain reporting persons, the Company
is unaware of any failures during fiscal 1997 to file Forms 3, 4 or 5 and any
failures to file such forms in a timely basis.
ADDITIONAL INFORMATION
The Company's Annual Report on Form 10-K is being mailed to stockholders
with this Proxy Statement.
OTHER MATTERS
The Board of Directors does not presently intend to bring any other
business before the Meeting, and so far as is known to the Board, no matters are
to be acted upon at the Meeting other than the matters described above. However,
if any other matter should properly come before the Meeting, the proxy holders
named in the enclosed proxy will vote the shares for which they hold proxies in
their discretion.
By Order of the Board of Directors,
LOGO
Mark Leslie
President, Chief Executive Officer and
Co-Chairman
of the Board
Dated: April 3, 1998
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE SO
THAT YOUR SHARES MAY BE REPRESENTED AT THE MEETING.
15
<PAGE> 19
PROXY
VERITAS SOFTWARE CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
April 23, 1998
THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS OF VERITAS SOFTWARE CORPORATION.
The undersigned hereby appoints Mark Leslie and Kenneth E. Lonchar, or
either of them, each with full power of substitution, to represent the
undersigned at the Annual Meeting of Stockholders of VERITAS Software
Corporation (the "Company') to be held at 8:30 a.m. PDT on Thursday, April 23,
1998 at the Company's headquarters located at 1600 Plymouth Street, Mountain
View, California, 94043 and at any adjournments or postponements thereof, and to
vote the number of shares the undersigned would be entitled to vote if
personally present at the meeting on the following matters;
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE
FOR THE ELECTION OF THE SEVEN NOMINEES AND FOR PROPOSAL 2.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 20
Please mark
exactly as [X]
indicated in
this example.
<TABLE>
<S> <C> <C>
FOR WITHHOLDING
All nominees listed below AUTHORITY
(except as indicated to vote for all
to the contrary below) nominees listed below
1. ELECTION OF DIRECTORS. [ ] [ ]
(Instruction: To withhold authority to vote for
any individual nominee, write that nominee's name
on the space provided below:
Nominees: Mark Leslie Joseph D.Rizzi
Geoffrey W.Squire William H. Janeway
Fred Van den Bosch Steven Brooks
Roel Pieper
------------------------------------------------------
2. TO RATIFY THE SELECTION OF ERNST & YOUNG LLP AS THE FOR AGAINST ABSTAIN
COMPANY'S INDEPENDENT ACCOUNTANTS FOR THE FISCAL
YEAR ENDING DECEMBER 31, 1998. [ ] [ ] [ ]
FOR AGAINST ABSTAIN
3. THE TRANSACTION OF SUCH BUSINESS AS MAY PROPERLY
COME BEFORE THE MEETING OR ANY ADJOURNMENT OR [ ] [ ] [ ]
POSTPONEMENTS OF THE MEETING.
</TABLE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS
DIRECTED. WHEN NO CHOICE IS INDICATED, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF THE SEVEN NOMINEES LISTED IN
PROPOSAL 1 AND FOR PROPOSAL 2. In their discretion, the
proxy holders are authorized to vote upon such other
business as may properly come before the meeting or any
adjournments or postponements thereof to the extent
authorized by Rule 14a-4(c) promulgated under the
Securities Exchange Act of 1934, as amended.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON,
YOU ARE URGED TO COMPLETE, DATE, SIGN AND PROMPTLY MAIL
THIS PROXY IN THE ENCLOSED RETURN ENVELOPE SO THAT YOUR
SHARES MAY BE REPRESENTED AT THE MEETING.
Signature(s) Dated: 1998
--------------------------------------------- ---------,
Please sign exactly as your name(s) appears) on your stock certificate. If
shares of stock stand of record in the names of two or more persons or in the
name of husband and wife, whether as joint tenants or otherwise, both or all
of such persons should sign the proxy. If shares of stock are held at record by
a corporation, the proxy should be executed by the president or vice president
and the secretary or assistant secretary, Executors, administrators or other
fiduciaries who execute the above proxy for a deceased stockholder should give
their full title. Please date the proxy.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
