<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:
[ ] 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
SPSS INC.
- --------------------------------------------------------------------------------
(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
[SPSS LOGO]
SPSS INC.
233 SOUTH WACKER DRIVE
CHICAGO, ILLINOIS 60606
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 16, 1999
The 1999 annual meeting of Stockholders of SPSS Inc. will be held at the
headquarters of SPSS at 233 South Wacker Drive, Chicago, Illinois, on Wednesday,
June 16, 1999 at 1:00 p.m. (Chicago time), for the following purposes:
(1) To elect two directors of SPSS to serve until the 2002 annual meeting
of Stockholders;
(2) To ratify the appointment of KPMG LLP as independent auditors of SPSS
for the fiscal year 1999; and
(3) To transact any other business as may be properly brought before the
annual meeting or any adjournment thereof.
Only stockholders of record as of April 30, 1999, are entitled to notice
of, and to vote at, the annual meeting and any adjournment or postponement
thereof. Whether or not you plan to attend the annual meeting, please complete,
sign, date and return the enclosed proxy card in the accompanying envelope as
promptly as possible to ensure that your shares are represented and voted in
accordance with your wishes. Sending in your proxy will not prevent you from
voting in person at the annual meeting.
By Order of the Board of Directors
/s/ Edward Hamburg
----------------------
Edward Hamburg
Secretary of SPSS Inc.
Chicago, Illinois
May 17, 1999
<PAGE> 3
SPSS INC.
233 SOUTH WACKER DRIVE
CHICAGO, ILLINOIS 60606
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 16, 1999
THE ENCLOSED PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF SPSS INC. FOR
USE AT THE ANNUAL MEETING OF STOCKHOLDERS AT 1:00 P.M. (CHICAGO TIME) ON JUNE
16, 1999. Shares of SPSS' common stock, par value $0.01 per share, represented
by a properly executed proxy in the accompanying form, will be voted at the
annual meeting. If no specific instructions are given with regard to matters
being voted upon, the shares represented by a signed proxy card will be voted
according to the recommendations of the Board of Directors (the "Board"). The
Board presently does not intend to bring any matter before the annual meeting
except those referred to in this Proxy Statement and specified in the Notice of
annual meeting, nor does the Board know of any matters which anyone else
proposes to present for action at the annual meeting. However, if any other
matters properly come before the annual meeting, the persons named in the
accompanying proxy, or their duly constituted substitutes acting at the annual
meeting, will be authorized to vote or otherwise act thereon using their
reasonable judgment and discretion; provided, however, that proxies directing a
vote against a proposal may not be voted, pursuant to such discretionary
authority, for a proposal to adjourn the annual meeting to permit further
solicitation with respect to the proposal. The proxy may be revoked at any time
before its exercise by sending written notice of revocation to Edward Hamburg,
Secretary, SPSS Inc., 233 South Wacker Drive, Chicago, Illinois 60606, by
signing and delivering a subsequently dated proxy card or by attending the
annual meeting in person and giving notice of revocation to the Inspector of
Election. This Proxy Statement and the accompanying Notice of Annual Meeting of
Stockholders and proxy card are being mailed to stockholders beginning on or
about May 17, 1999.
April 30, 1999 was the record date for the determination of stockholders
entitled to notice of, and to vote at, the annual meeting. On that date, there
were outstanding and entitled to vote 9,049,985 shares of SPSS common stock,
which is SPSS' only class of voting securities. Each stockholder is entitled to
one vote for each share of SPSS Common stock held of record. For a period of at
least ten days prior to the annual meeting, a complete list of stockholders
entitled to vote at the annual meeting will be available for examination by
stockholders during regular business hours at SPSS' headquarters, 233 South
Wacker Drive, Chicago, Illinois.
One inspector of election, from Harris Trust and Savings Bank, appointed by
the Board of Directors will determine the shares represented at the annual
meeting and the validity of proxies and count all votes. Abstentions and broker
non-votes will be included when determining whether a quorum is present at the
annual meeting. An abstention has the effect of voting against a matter since an
abstention is counted as a share "entitled to vote," but is not included as a
vote for or against such matter. Broker non-votes have no effect since they are
not counted as shares "entitled to vote" and are not included as votes for or
against any proposal.
A plurality of the shares of SPSS common stock present in person or
represented by proxy at the annual meeting is required for the election of
directors. An affirmative vote of a majority of the shares of SPSS common stock
present in person or represented by proxy and entitled to vote at the annual
meeting is required for the approval of all other matters being submitted to the
stockholders for their consideration.
PROPOSAL 1
ELECTION OF DIRECTORS
In accordance with the by-laws of SPSS, the Board of Directors has at
present fixed the number of directors constituting the Board at six. In
accordance with SPSS' Restated Certificate of Incorporation, the directors have
been divided into three classes. The class of directors whose term expires at
the 1999 annual meeting consists of two (2) persons. SPSS proposes to elect two
(2) directors, whom will hold office for a term of three years and until their
successors have been duly elected and qualified. Unless otherwise instructed
<PAGE> 4
by the stockholder, the persons named in the enclosed form of proxy will vote
the shares represented by such proxy for the election of the nominees named in
this Proxy Statement.
SPSS has no reason to believe that the nominees named herein will be
unavailable to serve as directors. However, if such nominees for any reason are
unable to serve or for good cause will not serve, the proxy may be voted for
such substitute nominees as the persons appointed in the proxy may in their
discretion determine. Stockholders may not cumulate their votes in the election
of directors.
The following nominees are currently directors of SPSS:
NORMAN NIE, Chairman of the Board and co-founder of SPSS, designed SPSS'
original statistical software beginning in 1967 and has been a Director and
Chairman of the Board since SPSS' inception in 1975. He served as Chief
Executive Officer of SPSS from 1975 to 1991. In addition to his current
responsibilities as Chairman of the Board, Dr. Nie is a research professor at
Stanford University and a professor emeritus in the Political Science Department
at the University of Chicago. His research specialties include public opinion,
voting behavior and citizen participation. During the past year, he has become a
technology partner in Oak Investment Partners and is a director of several
privately-held companies. He has received three national awards for his books in
these areas. Dr. Nie received his Ph.D. from Stanford University.
BERNARD GOLDSTEIN has been a Director of SPSS since 1987. He is a Director
of Broadview International, LLC, which he joined in 1979. He is a past President
of the Information Technology Association of America, the industry trade
association of the computer service industry, and past Chairman of the
Information Technology Foundation. Mr. Goldstein was a Director of Apple
Computer Inc. until August 1997, and is currently a Director of Franklin
Electronic Publishers, Inc., Sungard Data Systems, Inc., Giga Information Group,
Inc, and several privately held companies. He is a graduate of both the Wharton
School of the University of Pennsylvania and the Columbia University Graduate
School of Business.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR
THE ELECTION OF EACH OF THE DIRECTOR NOMINEES NAMED ABOVE.
INFORMATION CONCERNING EXECUTIVE OFFICERS AND DIRECTORS
The following table shows information as of March 17, 1999 with respect to
each person who is an executive officer or director of SPSS.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Norman Nie........................... 55 Chairman of the Board of Directors
Jack Noonan.......................... 51 Director, President and Chief Executive Officer
Edward Hamburg....................... 47 Executive Vice President, Corporate Operations, Chief
Financial Officer and Secretary
Louise Rehling....................... 55 Executive Vice President, Product Development
Mark Battaglia....................... 39 Executive Vice President, Corporate Marketing
Ian Durrell.......................... 56 Executive Vice President, SPSS Market Research
Susan Phelan......................... 42 Executive Vice President, SPSS Products and Services
Bernard Goldstein(1)(2).............. 68 Director
Merritt Lutz(1)...................... 56 Director
Michael Blair(1)(2).................. 54 Director
</TABLE>
- -------------------------
(1) Member of the Compensation Committee
(2) Member of the Audit Committee
Jack Noonan has served as Director and President and Chief Executive
Officer since joining SPSS in January 1992. Mr. Noonan was President and Chief
Executive Officer of Microrim Corp., a developer of database software products,
from 1990 until December 1991. Mr. Noonan served as Vice President of the
2
<PAGE> 5
Product Group of Candle Corporation, a developer of IBM mainframe system
software, from 1985 to 1990. Mr. Noonan is a Director of ShowCase Corporation,
Napersoft, Inc., and Repository Technologies, Inc. Mr. Noonan holds an
engineering degree from the Rockford School of Business and Engineering in
Rockford, Illinois.
Edward Hamburg, Executive Vice President, Corporate Operations, Chief
Financial Officer and Secretary, was elected Senior Vice President, Corporate
Operations in July 1992, Chief Financial Officer in June 1993 and Secretary in
June 1994. Dr. Hamburg previously served as Senior Vice President, Business
Development, and was responsible for product and technology acquisitions as well
as joint venture opportunities. Dr. Hamburg first joined SPSS in 1978 and served
in a variety of marketing and product management capacities. He joined the
faculty at the University of Illinois at Chicago in 1982, and returned to SPSS
in 1986. Dr. Hamburg received his Ph.D. from the University of Chicago.
Louise Rehling, Executive Vice President, Product Development, oversees
management of all stages of product development. Ms. Rehling joined SPSS in 1982
as Vice President of Development and Services and has served in her current
position since 1987. Ms. Rehling received her BS in Mathematics from the
University of Illinois and her MS in Information Sciences and her MA in
Psychology from the University of Chicago.
Mark Battaglia, Executive Vice President, Corporate Marketing, joined SPSS
in October 1988. Mr. Battaglia served as Vice President of Marketing at London
House, a publisher in the Maxwell Communications family, from June 1987 until
joining SPSS. Mr. Battaglia received his MBA in 1984 from the University of
Chicago.
Ian Durrell, Executive Vice President, SPSS Market Research, joined SPSS in
February 1991. Before that time, he served as head of European marketing for
Unify Corporation, a supplier of relational database management systems, and was
a partner of Partner Development International, a strategic partnering firm from
1987 to 1989. Mr. Durrell graduated from the Royal Military Academy, Sandhurst,
in the United Kingdom.
Susan Phelan, Executive Vice President, SPSS Products and Services, joined
SPSS in 1980 as a sales representative. She assumed her current position in
1987. Ms. Phelan received her MBA from the University of Illinois at Chicago.
Fredric Harman was a Director of SPSS from October 1990 through January 11,
1999. Since June 1994 he has been a General Partner of Oak Investment Partners,
a venture capital firm. He was formerly a General Partner of Morgan Stanley
Venture Partners LP, the General Partner of Morgan Stanley Venture Capital Fund
LP. Mr. Harman joined Morgan Stanley in 1987 as an Associate of Morgan Stanley
Venture Capital Inc. and was named a Vice President in 1992. He is also a
Director of ILOG S.A., Inktomi, and several privately held companies. He
received his MBA from the Harvard University Graduate School of Business and his
MS in Electrical Engineering from Stanford University.
Merritt Lutz has been a Director of SPSS since 1988. He is currently Senior
Advisor of Morgan Stanley Dean Witter & Co. managing the Firm's strategic
technology investments and partnerships. Previously, he was President of Candle
Corporation, a worldwide supplier of systems software from 1989 to November
1993. Mr. Lutz is a Director of Interlink Electronics, Inc. and three privately
held software companies - Algorithmics, Persistence Software, and MicroFrame
Technologies. Mr. Lutz serves on the prestigious Board of Managers at the
University of Rochester-Eastman School of Music and Michigan State University
College of Arts and Letters National Advisory Council. He is a former Director
of Information Technology Association of American and the NASD Industry Advisory
Committee. He holds a bachelors and masters degree from Michigan State
University.
Michael D. Blair has been a Director of SPSS since July 1997. Since April
1974, he has been Chairman, Chief Executive and founder of Cyborg Systems, Inc.,
a human resource management software company. Mr. Blair is a Director of Praxis
International, Computer Corporation of America and Repository Technologies, Inc.
He is a board member of Information Technology Association of America, President
of the Chicago Software Association, a board member of the American Software
Association and a board member of
3
<PAGE> 6
Benefits & Compensation Magazine. Mr. Blair holds a bachelor's degree in
mathematics and physics from the University of Missouri.
SPSS' Board of Directors is divided into three classes serving staggered
three-year terms. Mr. Goldstein and Dr. Nie are serving three-year terms
expiring at the 1999 annual meeting. Mr. Noonan and Mr. Blair are serving
three-year terms expiring at the 2000 annual meeting. Mr. Lutz is serving a
three-year term expiring at the 2001 annual meeting. For a discussion of the
nomination rights granted to specific stockholders of SPSS, see "Related
Transactions -- Stockholders Agreement."
KEY EMPLOYEE
In addition to the executive officers and directors named above, Leland
Wilkinson is a key employee of SPSS. Dr. Wilkinson joined SPSS in September 1994
as part of SPSS' acquisition of SYSTAT, Inc. Dr. Wilkinson was the founder of
SYSTAT and from its inception served as its President and Chief Executive
Officer. He is a recognized authority in statistical analysis generally and the
graphical display of data in particular. Dr. Wilkinson was a member of the
faculty of the University of Illinois at Chicago and currently serves on the
faculty of Northwestern University. He received his Ph.D. from Yale University.
INFORMATION ABOUT THE BOARD OF DIRECTORS
The Board of Directors held five meetings during 1998. The Board of
Directors has two standing committees -- the Audit Committee and the
Compensation Committee. During 1998, no Director attended fewer than 75% of the
aggregate of all meetings of the Board of Directors (other than Mr. Blair), or
all meetings of the Compensation Committee and Audit Committee, held while
serving as a Director.
Audit Committee. In 1998, the Audit Committee consisted of Messrs.
Goldstein, Blair and Harman, each a non-employee director. Among the Committee's
functions are making recommendations to the Board of Directors regarding the
continued engagement of independent auditors, reviewing with the independent
auditors and SPSS' financial management the financial statements and results of
the audit engagement, reviewing the adequacy of SPSS' system of internal
accounting controls, and reviewing and approving audit and nonaudit fees. In
1998, the Audit Committee met once with the Board of Directors as a whole and
with SPSS' independent auditors, KPMG LLP, to discuss audit and accounting
matters.
Compensation Committee. In 1998, the Compensation Committee consisted of
Messrs. Goldstein, Harman, Blair and Lutz, each a non-employee director. The
Committee's primary functions are to make recommendations to the Board of
Directors concerning remuneration arrangements for senior management and to
review and make recommendations concerning the administration of certain Company
benefit plans. The Compensation Committee held one meeting during 1998.
COMPENSATION OF DIRECTORS
For the year ended December 31, 1998, non-employee directors of SPSS were
entitled to receive 5,000 conditional options. Each director was also reimbursed
by SPSS for reasonable expenses incurred in connection with services provided as
a director. During 1998, Dr. Nie received compensation of $80,800 for consultant
work on a part-time basis.
4
<PAGE> 7
EXECUTIVE COMPENSATION
The following tables show (a) the compensation paid or accrued by SPSS to
the Chief Executive Officer, and each of the five most highly compensated
officers of SPSS, other than the CEO, serving on December 31, 1998 (the "named
executive officers") for services rendered to SPSS in all capacities during
1996, 1997, and 1998, (b) information relating to option grants made to the
named executive officers in 1998 and (c) certain information relating to options
held by the named executive officers. SPSS made no grants of freestanding stock
appreciation rights ("SARs") in 1996, 1997, or 1998, nor did SPSS make any
awards in 1996, 1997 or 1998 under any long-term incentive plan.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
-------------------------------------- -------------------------------------------
AWARDS PAYOUTS
------------------------- -------
RESTRICTED SECURITIES
SALARY OTHER ANNUAL STOCK UNDERLYING LTIP ALL
COMPENSATION BONUS COMPENSATION AWARD(S) OPTIONS/SARS PAYOUTS OTHER
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($)(1) (#)(2) ($) ($)
- --------------------------- ---- ------------ ----- ------------ ---------- ------------ ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Jack Noonan,............... 1998 $242,500 $185,679 none none 50,000 none none
President and Chief 1997 $235,000 $132,656 none none 50,000 none none
Executive Officer 1996 $235,000 $185,147 none none 70,000 none none
Ian Durrell,............... 1998 $197,000 $ 27,229 none none 25,000 none none
Executive Vice President, 1997 $197,000 $ 30,933 none none 25,000 none none
SPSS Market Research(3) 1996 $197,000 $ 51,401 none none 25,000 none none
Edward Hamburg,............ 1998 $156,000 $ 82,922 none none 25,000 none none
Executive Vice President, 1997 $156,000 $ 58,027 none none 25,000 none none
Corporate Operations and 1996 $156,000 $ 90,578 none none 25,000 none none
Chief Financial Officer
Louise Rehling,............ 1998 $135,200 $ 66,645 none none 25,000 none none
Executive Vice President, 1997 $135,200 $ 91,357 none none 25,000 none none
Product Development 1996 $135,200 $ 64,808 none none 25,000 none none
Mark Battaglia,............ 1998 $110,000 $ 70,262 none none 25,000 none none
Executive Vice President, 1997 $110,000 $ 54,342 none none 25,000 none none
Corporate Marketing 1996 $110,000 $ 88,432 none none 25,000 none none
Susan Phelan,.............. 1998 $120,000 $ 83,419 none none 25,000 none none
Executive Vice President, 1997 $110,300 $ 57,743 none none 25,000 none none
SPSS Products and 1996 $100,000 $ 76,387 none none 25,000 none none
Services
</TABLE>
- -------------------------
(1) On December 31, 1998, Dr. Hamburg held 10,000 shares, Ms. Rehling held 3,365
shares and Ms. Phelan held 1,986 shares of restricted common stock having a
market value, based on the closing price of the common stock on that date,
of $188,750 for Dr. Hamburg's shares, $63,514 for Ms. Rehling's shares and
$37,486 for Ms. Phelan's shares.
(2) Amounts reflected in this column are for grants of stock options for the
common stock of SPSS. No stock appreciation rights have been issued by SPSS.
(3) Payments and options shown in the table for Mr. Durrell reflect payments and
option grants to Valletta Investments Limited, a consulting company
controlled by Mr. Durrell. Mr. Durrell does not receive any personal
benefits or perquisites, payments of salary and bonus, awards of options or
other compensation from SPSS in his individual capacity.
5
<PAGE> 8
The following table shows the number of options to purchase common stock
granted to each of the named executive officers during 1998.
1998 OPTION/STOCK APPRECIATION RIGHTS GRANTS(1)
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------------- POTENTIAL REALIZABLE
PERCENT VALUE AT ASSUMED ANNUAL
NUMBER OF OF TOTAL RATES OF STOCK PRICE
SECURITIES OPTIONS/SARS LATEST APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR POSSIBLE OPTION TERM(1)
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION ------------------------
NAME GRANTED(#) 1997 ($/SH) DATE 5%($) 10%($)
---- ------------ ------------ ----------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Jack Noonan.............. 50,000 12.71% $19.250 01/01/08 $605,311 $1,533,977
Ian Durrell(3)........... 25,000 6.35% $19.250 01/01/08 $302,656 $ 766,989
Edward Hamburg........... 25,000 6.35% $19.250 01/01/08 $302,656 $ 766,989
Louise Rehling........... 25,000 6.35% $19.250 01/01/08 $302,656 $ 766,989
Mark Battaglia........... 25,000 6.35% $19.250 01/01/08 $302,656 $ 766,989
Susan Phelan............. 25,000 6.35% $19.250 01/01/08 $302,656 $ 766,989
</TABLE>
- -------------------------
(1) The options were granted as of January 2, 1998 and contained
performance-based conditions to their exercisability. These conditions have
been met.
(2) In satisfaction of applicable SEC regulations, the table shows the potential
realizable values of these options, upon their latest possible expiration
date, at arbitrarily assumed annualized rates of stock price appreciation of
five and ten percent over the term of the options. The potential realizable
value columns of the table illustrate values that might be realized upon
exercise of the options at the end of the ten-year period starting with
their vesting commencement dates, based on the assumptions shown above.
Because actual gains will depend upon the actual dates of exercise of the
options and the future performance of the common stock in the market, the
amounts shown in this table may not reflect the values actually realized. No
gain to the named executive officers is possible without an increase in
stock price which will benefit all stockholders proportionately. Actual
gains, if any, on option exercises and common stock holdings are dependent
on the future performance of the common stock and general stock market
conditions. There can be no assurance that the potential realizable values
shown in this table will be achieved, or that the stock price will not be
lower or higher than projected at five and ten percent assumed annualized
rates of appreciation.
(3) Options shown in the table for Mr. Durrell are options granted to Valletta.
6
<PAGE> 9
AGGREGATED OPTION/STOCK APPRECIATION RIGHT EXERCISES IN 1998 AND
YEAR-END OPTION/STOCK APPRECIATION RIGHT VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
YEAR-END YEAR-END
SHARES (#)(1) ($)(1)(2)
ACQUIRED ON VALUE --------------- ---------------------
EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($)(1)(4) UNEXERCISABLE UNEXERCISABLE
---- ----------- --------- ------------- -------------
<S> <C> <C> <C> <C>
Jack Noonan..................... 20,000 $394,000 231,331/97,336 $4,366,373/$1,837,217
Ian Durrell(3).................. 39,333 627,493 54,281/45,719 $ 1,024,554/$ 862,946
Edward Hamburg.................. 3,600 82,208 125,014/45,719 $ 2,359,639/$ 862,946
Louise Rehling.................. 10,000 $214,500 101,947/45,719 $ 1,924,250/$ 862,946
Mark Battaglia.................. None N/A 108,614/45,719 $ 2,050,089/$ 862,946
Susan Phelan.................... 10,000 209,500 96,948/45,719 $ 1,829,894/$ 862,946
</TABLE>
- -------------------------
(1) All information provided is with respect to stock options. No stock
appreciation rights have been issued by SPSS.
(2) These amounts have been determined by multiplying the aggregate number of
options by the difference between $18.875, the closing price of the common
stock on the Nasdaq National Market on December 31, 1998, and the exercise
price for that option.
(3) Options shown in the table for Mr. Durrell are options granted to Valletta.
(4) These amounts have been determined by multiplying the aggregate number of
options exercised by the difference between the closing price of the common
stock on the Nasdaq National Market on the date of exercise and the exercise
price for that option.
EMPLOYMENT AGREEMENTS
SPSS entered into an employment agreement with Jack Noonan on January 14,
1992. This employment agreement provides for a one-year term with automatic
one-year extensions unless Mr. Noonan or SPSS gives a written termination notice
at least 90 days before the expiration of the initial term or any extension. It
also provides for a base salary of $225,000 during the initial term, together
with the same benefits provided to other employees of SPSS. The Board of
Directors annually reviews Mr. Noonan's base compensation and increased it to
$235,000 for 1993, 1994, 1995, 1996 and 1997 and to $242,500 in 1998. If SPSS
terminates Mr. Noonan's employment without cause, SPSS must pay Mr. Noonan an
amount equal to 50% of Mr. Noonan's annual base salary in effect at the time of
termination. This amount is payable in 12 equal monthly installments. However,
if Mr. Noonan finds other employment at a comparable salary SPSS' obligation to
make these payments ceases. The employment agreement requires Mr. Noonan to
refrain from disclosing confidential information of SPSS and to abstain from
competing with SPSS during his employment and for a period of one year after
employment cases. Only Mr. Noonan, Dr. Wilkinson and Mr. Durrell, through a
management services agreement with Valletta described in "Management Services
Agreement" below, are employed through an employment or similar agreement.
However, SPSS does have confidentiality and work-for-hire agreements with many
of its key management and technical personnel.
SPSS entered into an employment agreement with Leland Wilkinson on
September 23, 1994 to be employed by SPSS as Senior Vice President, SYSTAT
Products. The employment agreement continues through December 31, 1999 and
provides for a base annual salary of $135,000 plus a bonus and other fringe
benefits customarily received by other SPSS senior executives. In addition, he
was granted options to purchase an aggregate of 135,000 shares of common stock
at a price of $9.00 per share. The vesting of these options shall occur on the
same schedule as options granted under the Amended 1991 Stock Option Plan. Each
year the Board of Directors will review Dr. Wilkinson with regard to salary and
bonus. Dr. Wilkinson shall participate in the bonus plan to the same extent as
comparable SPSS executives. Either Dr. Wilkinson or SPSS can terminate the
employment agreement before its expiration with termination effective 45 days
after
7
<PAGE> 10
written notice by either party. If the employment agreement is terminated by Dr.
Wilkinson, he shall receive a pro-rata share of his salary and bonus earned
through the date of termination. If the employment agreement is terminated by
SPSS without cause, Dr. Wilkinson is entitled to receive his annual base salary
and bonus until the expiration date of the employment agreement. The employment
agreement requires that Dr. Wilkinson refrain from disclosing any confidential
information of SPSS and that he shall have no right, title or interest in any of
the confidential property, including confidential property that Dr. Wilkinson
has developed or develops during his employment with SPSS. The employment
agreement also requires that Dr. Wilkinson abstain from competing with SPSS
during his employment and for a period of six months thereafter.
MANAGEMENT SERVICES AGREEMENT
SPSS has entered into a management services agreement with Valletta, which
requires that Ian Durrell's services are provided to SPSS. Either Valletta or
SPSS may terminate the agreement at any time upon 30 days' written notice. If
SPSS terminates the agreement under the 30-day notice provision without cause,
Valletta is entitled to termination payments equal to 50% of its annual
compensation then in effect in six equal monthly installments. The agreement
further provides that if specified performance standards are satisfied, Valletta
is to receive annual compensation at a rate established by the Board of
Directors plus incentive compensation. For 1998, Valletta's aggregate
compensation, including bonus, was $224,229. The management services agreement
requires Valletta to refrain from disclosing confidential information about SPSS
and to abstain from competing with SPSS during the term of the management
services agreement and for a period of eighteen months thereafter. Mr. Durrell
has agreed to be bound by the terms and conditions of the management services
agreement and to act as Vice-President, International and to head SPSS'
non-western hemisphere operations.
CONSULTING AGREEMENT
SPSS has entered into a consulting agreement, dated as of January 1, 1997,
with Norman H. Nie Consulting L.L.C., an Illinois Limited Liability Company. Nie
Consulting is to provide thirty (30) hours per month of consulting services on
various matters relating to the business of SPSS. This consulting agreement
provides for a one-year term with automatic one-year extensions unless Nie
Consulting or SPSS gives a written notice of termination at least 30 days prior
to the expiration of the initial term or any extension. SPSS may terminate this
consulting agreement for cause, in which event SPSS shall pay Nie Consulting all
accrued but unpaid compensation. The agreement also provides that Nie Consulting
is to receive annual compensation of $80,800 and reimbursement of reasonable out
of pocket expenses incurred in performing services under the consulting
agreement. The consulting agreement requires that the Nie Consulting refrain
from disclosing confidential information about SPSS during the term of the
consulting agreement and for a period of five years after its expiration. In
addition, the consulting agreement requires that Nie Consulting abstain from
competing with SPSS during his consultancy and for a period of one-year after
the consultancy ceases.
CHANGE OF CONTROL AGREEMENTS
On May 1, 1998, SPSS entered into change of control agreements with its
named executive officers. These agreements provide certain benefits to any one
or more officers who is terminated or constructively terminated following a
change of control. The agreements provide that, if the executive is terminated
without cause or constructively terminated within two years following a change
of control, then the executive may receive benefits including a severance
package equal to the greater of (a) the aggregate cash compensation received in
the immediately preceding fiscal year, or (b) two times the executive's base
salary received in the immediately preceding fiscal year; the accelerated
vesting of all previously unvested options; and participation in the same health
and welfare benefits he or she received at any time within 120 days of the
change of control for eighteen months following that date of such termination.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Goldstein, Harman, Blair and Lutz were directors and members of the
Compensation Committee during the last fiscal year. Messrs. Goldstein, Blair and
Lutz continue to be directors and members of the
8
<PAGE> 11
Compensation Committee. Mr. Harman resigned as a director effective January 11,
1999. None of the members of the Compensation Committee has ever been an officer
or employee of SPSS or any of its subsidiaries.
REPORT OF THE COMPENSATION COMMITTEE
To: The Board of Directors
The Compensation Committee of the Board of Directors is composed entirely
of directors who have never served as officers of SPSS. The Compensation
Committee develops and administers the compensation programs for SPSS' executive
officers. After consideration of the Compensation Committee's recommendations,
the entire Board of Directors reviews and approves the base salaries, bonuses
and the stock option and benefit programs for SPSS' executive officers. In 1998,
the Board approved the Compensation Committee's recommendations in all material
respects.
Compensation Philosophy. SPSS has three principal objectives in its
executive compensation programs:
1. It strives to relate its total compensation for senior management
to the achievement of financial benchmarks designed to build shareholder
value.
2. It rewards outstanding individual performance.
3. It strives to structure its entire compensation package in a manner
which is competitive with other executive compensation packages in the
software industry, so that it will attract and retain highly capable key
executives responsible for the success of SPSS and provide fair
compensation for the responsibilities undertaken by those executives.
These goals are met through a combination of salary, bonuses, stock options and
other benefits. SPSS is committed to increasing the proportion of the senior
executives' compensation which is performance-based, and therefore variable, and
to focus on building shareholder value as the primary measure of performance. To
the extent practicable, the Compensation Committee's objective is to align the
executive officers' financial interests with those of shareholders by focusing
on specific financial objectives that the Compensation Committee believes will
enhance shareholder value and through the grant of additional options pursuant
to SPSS' option plan, the opportunity for management to purchase additional
shares on advantageous terms under SPSS' Employee Stock Purchase Plan and
through present stock ownership and options.
The Compensation Committee focuses principally on SPSS' financial
performance -- specifically operating and net income -- in determining the
amount of bonuses for the executive officers. Therefore, bonuses for these
officers are a function of SPSS' overall financial performance relative to
budgeted goals. In keeping with SPSS' commitment to increasing the proportion of
the senior executives' compensation which is performance-based, base salary
levels are designed to increase in comparatively
small amounts and bonus compensation is designed so that it can increase or
decrease significantly depending on SPSS' overall financial performance.
The Compensation Committee works with the Chief Executive Officer (the
"CEO") to determine the base salary of the other executive officers, to
establish targets for the annual bonus program and to allocate the bonus pool
among the executive officers. Consistent with the Compensation Committee's
philosophy of shifting the proportion of compensation away from fixed to
variable types of compensation, the Compensation Committee has targeted growth
in total compensation to come from the bonus and other incentive forms of
compensation. At the beginning of each year, the Compensation Committee
establishes certain budgeted objectives for operating income. The total amount
allocated to the annual bonus pool is dependent upon the degree to which
budgeted goals are achieved.
Under SPSS' Third Amended and Restated 1995 Equity Incentive Plan, the
Compensation Committee is authorized to make grants of stock options to
executive officers. The Compensation Committee normally approves grants once a
year and occasionally in connection with significant corporate events. During
1998, the Compensation Committee awarded stock options to executive officers. In
determining the size of the option grants, the Compensation Committee considers
the impact of the grants on existing shareholders' stock
9
<PAGE> 12
ownership positions and the prospective value of the options as a performance
incentive. The number of options previously awarded to and held by executive
officers is reviewed and is one factor in determining the size of current option
grants.
The Compensation Committee has established a stock option program for which
only policy-making senior executives of SPSS are eligible. Vesting of the
options granted to the executive officers as of January, 1998 was contingent
upon SPSS achieving certain 1998 revenue and profit levels established by the
Board of Directors. Such options are customarily granted in the first half of
the calendar year after budgetary targets have been established. These options
are earned only if SPSS exceeds, by a significant percentage established by the
Compensation Committee, the budgeted performance goals for SPSS operating and
net income approved by the Board. In the event of a major corporate event, the
Compensation Committee may change these goals.
In addition to SPSS performance, the Compensation Committee also takes into
account exceptional individual performance in determining bonus awards, although
it does not assign a specified percentage of senior executive bonus compensation
to this.
Chief Executive Officer Compensation. The Compensation Committee also
determines the CEO's base salary and bonus, employing largely the same
principles described above, except that the amount of the CEO's bonus is purely
a function of the financial performance of SPSS measured against the operating
and net income goals established by the Compensation Committee and approved by
the Board at the beginning of each year. The Compensation Committee believes
that it has established a total compensation package which compares favorably to
industry standards. The Compensation Committee considers the total salary and
incentive compensation provided to chief executives of similar companies,
although it does not target a specific percentile range within this group of
similar companies' chief executive compensation in determining the CEO's
compensation.
The Compensation Committee recommends stock option grants reflecting the
importance of Mr. Noonan's contribution to SPSS and the importance of aligning
Mr. Noonan's interest in SPSS with that of stockholders. In 1998, Mr. Noonan
received twice the number of stock options received by the other policy-making
senior executives. The Compensation Committee recommended grants to Mr. Noonan
of stock options to acquire 50,000 shares of common stock at $19.25 per share
effective January 2, 1998. These options vest in the same manner as the stock
options as the case may be, for the other senior executives.
Mr. Noonan's bonus is determined in the same manner as the other
policy-making senior executives, except that no portion of Mr. Noonan's bonus is
based on exceptional individual performance. It is the Compensation Committee's
view that the CEO's compensation should be based solely on the financial
performance of SPSS and that, for the CEO, exceptional individual performance is
so closely aligned with SPSS financial performance that the CEO's bonus should
be based solely on overall SPSS financial performance.
Tax Considerations. To the extent readily determinable and as one of the
factors in its consideration of compensation matters, the Compensation Committee
considers the anticipated tax treatment to SPSS and to the executive officers of
various payments and benefits. Some types of compensation payments and their
deductibility (e.g., the spread on exercise of non-qualified options) depend
upon the timing of an executive's vesting or exercise of previously granted
rights. Interpretations of and changes in the tax laws and other factors beyond
the Compensation Committee's control also affect the deductibility of
compensation. For these and other reasons, SPSS will not necessarily and in all
circumstances limit executive compensation to the amount which is permitted to
be deductible as an expense of SPSS under Section 162(m) of the Internal Revenue
Code. The Compensation Committee will consider various alternatives to
preserving the deductibility of
10
<PAGE> 13
compensation payments and benefits to the extent reasonably practicable and to
the extent consistent with its other compensation objectives.
Compensation Committee of SPSS Inc.
Bernard Goldstein
Merritt Lutz
Michael Blair
EQUITY INCENTIVE PLAN
Pursuant to the Third Amended and Restated 1995 Equity Incentive Plan (the
"1995 Equity Incentive Plan"), SPSS may award stock options and a variety of
other equity incentives to directors, officers, other key executives, employees
and independent contractors of SPSS and any of its subsidiaries. The Board is
authorized to delegate to the Compensation Committee the administration of the
Plan. The purpose of the 1995 Equity Incentive Plan is to further the success of
SPSS by attracting and retaining key management and other talent and providing
to such persons incentives and rewards tied to SPSS' business success. The
maximum number of shares of SPSS common stock that may be issued or transferred
to such persons under the 1995 Equity Incentive Plan may not exceed 1,800,000.
PERFORMANCE GRAPH
The following graph shows the changes in $100 invested since December 31,
1993, in SPSS' common stock, the Nasdaq 100 Stocks Index and S&P Computer
Software and Services Index, a specialized industry focus group, assuming that
all dividends were reinvested.
[GRAPH]
<TABLE>
<CAPTION>
12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
<S> <C> <C> <C> <C> <C> <C>
SPSS (NASDAQ: SPSS) $100.00 $141.10 $213.70 $305.48 $210.96 $206.85
NASDAQ 100 Stock Index $100.00 $101.50 $144.67 $270.48 $248.77 $460.98
S&P Computer Software & Services Index $100.00 $117.92 $165.44 $195.81 $357.88 $648.29
</TABLE>
TRANSACTIONS WITH NORMAN NIE
Dr. Nie received 5,000 conditional options for his services as Chairman of
the Board in 1998 and $80,800 for product development work on a part-time basis.
Dr. Nie is a limited partner in Computer Software Development Company, a
research and development limited partnership to which SPSS incurred royalty
expense of $255,000 in 1996, $249,000 in 1997 and $234,000 in 1998.
11
<PAGE> 14
STOCKHOLDERS AGREEMENT
In connection with SPSS' initial public offering, SPSS and the individuals
and entities who were stockholders before the initial public offering entered
into an agreement containing registration rights with respect to outstanding
capital stock of SPSS and granting to each of the Nie Trust and Morgan Stanley
Venture Capital Fund, so long as they own beneficially more than 12.5% of the
capital stock of SPSS, the right to designate one nominee (as part of the
management slate) in each election of directors at which directors of the class
specified for the holder are to be elected. Since the completion of the February
1995 offering, Morgan Stanley Venture Capital Fund owned less than 12.5% and
currently owns no capital stock of SPSS.
As required by the stockholders agreement, the holders of restricted
securities constituting more than seven percent of the outstanding shares at any
time may require SPSS to register under the Securities Act all or any portion of
the restricted securities held by the requesting holder or holders for sale in
the manner specified in the notice. SPSS is not bound to honor the request
unless the proceeds from the registered sale can reasonably be expected to
exceed $5,000,000. SPSS estimates that the cost of complying with demand
registration rights would be approximately $50,000 for a single registration.
All of the stockholders who acquired their shares before the initial public
offering have piggyback registration rights, which entitle them to seek
inclusion of their common stock in any registration by SPSS, whether for its own
account or for the account of other security holders or both (except with
respect to registration on Forms S-4 or S-8 or another form not available for
registering restricted securities for sale to the public). In the event of a
request to have shares included in a registration statement filed by SPSS for
its own account, SPSS' underwriters may generally reduce, pro rata, the amount
of common stock to be sold by the stockholders if the inclusion of all such
securities would be materially detrimental to SPSS' offering.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table shows, as of March 17, 1999, the number and percentage
of shares of common stock beneficially owned by:
- each person known by SPSS to own beneficially more than 5% of the
outstanding shares of the common stock;
- each director of SPSS;
- each named executive officer of SPSS; and
- all directors and executive officers of SPSS as a group.
Unless otherwise indicated in a footnote, each person possesses sole voting and
investment power with respect to the shares indicated as beneficially owned.
The business address for Mr. Lutz is the office of Morgan Stanley Dean
Witter & Co. at 750 Seventh Avenue, 16th floor, New York, New York 10019. The
business address of Mr. Goldstein is the office of Broadview Associates, L.P.,
One Bridge Plaza, Fort Lee, New Jersey 07024. The business address for Michael
Blair is the office of Cyborg Systems, Inc., Two North Riverside Plaza, 12th
floor, Chicago, Illinois 60606. The business address of Fidelity Management &
Research Company is 82 Devonshire Street, Boston, Massachusetts 02109. The
business address for the T. Rowe Price Associates, Inc. is 100 East Pratt
Street,
12
<PAGE> 15
Baltimore, Maryland 21202. The business address of each other person listed
below is 233 South Wacker Drive, Chicago, Illinois 60606.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY OWNED
--------------------
NAME NUMBER PERCENT
---- ------ -------
<S> <C> <C>
Norman H. Nie, individually, as Trustee of the Nie Trust and
as a Director and President of the Norman and Carol Nie
Foundation, Inc.(1)....................................... 1,144,519 12.5%
Fidelity Management & Research Company(2)................... 864,200 9.5%
T. Rowe Price Associates, Inc.(3)........................... 470,200 5.2%
Jack Noonan(4).............................................. 270,396 2.9%
Bernard Goldstein(5)........................................ 48,386 *
Louise Rehling(6)........................................... 119,539 1.3%
Edward Hamburg(7)........................................... 146,541 1.6%
Mark Battaglia(8)........................................... 123,024 1.3%
Susan Phelan(9)............................................. 112,961 1.2%
Ian Durrell(10)............................................. 68,308 *
Merritt M. Lutz(11)......................................... 32,275 *
Michael D. Blair(12)........................................ 6,049 *
All directors and executive officers as a group (10
persons)(13).............................................. 1,879,843 19.5%
</TABLE>
- -------------------------
* The percentage of shares beneficially owned does not exceed 1% of the
common stock.
(1) Includes 82,886 shares which are through options exercisable within 60
days; 110,433 shares held of record by the Norman and Carol Nie Foundation,
Inc.; and 951,200 shares held by the Nie Trust. Dr. Nie shares voting and
investment power over the 110,433 shares held by the Nie Foundation with
Carol Nie.
(2) Fidelity Management & Research Company, a wholly-owned subsidiary of FMR
Corp. and an investment adviser registered under Section 203 of the
Investment Advisers Act of 1940, is the beneficial owner of 864,200 shares
of SPSS common stock as a result of acting as investment adviser to several
investment companies registered under Section 8 of the Investment Company
Act of 1940. The ownership of one investment company, Fidelity Low-Priced
Stock Fund, amounted to 864,200 shares of SPSS common stock. FMR Corp. has
the power to dispose of the shares of SPSS common stock. The Board of
Trustees directs the voting of the shares of SPSS common stock. This
information was taken from FMR Corporation's Schedule 13G, filed on
February 1, 1999.
(3) T. Rowe Price Associates, Inc. is the beneficial owner of 470,200 shares of
SPSS common stock and an investment advisor registered under Section 203 of
the Investment Advisors Act of 1940. This information was taken from T.
Rowe Price's Schedule 13G dated February 12, 1999.
(4) Includes 261,568 shares through options exercisable within 60 days.
(5) Includes 12,942 shares through options exercisable within 60 days.
(6) Includes 200 shares held in the Stella S. Hechtman Trust. Ms. Rehling is
the Trustee and has the voting and investment power over the 200 shares
held in the trust. She disclaims beneficial ownership of these shares.
Includes 115,974 shares through options exercisable within 60 days.
(7) Includes 136,541 shares through options exercisable within 60 days.
(8) Includes 122,641 shares through options exercisable within 60 days.
(9) Includes 110,975 shares through options exercisable within 60 days.
(10) Mr. Durrell is the beneficial owner of these shares, which consist solely
of 68,308 shares through options exercisable within 60 days held of record
by Valletta.
(11) Includes 12,942 shares through options exercisable within 60 days. Mr. Lutz
shares voting and investment power over 6,000 of these shares with Mary C.
Lutz.
(12) Includes 6,049 shares through options exercisable within 60 days.
(13) Includes 930,826 shares through options exercisable within 60 days.
13
<PAGE> 16
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors, upon recommendation of its Audit Committee, has
selected the accounting firm of KPMG LLP to serve as independent auditors of
SPSS with respect to the 1999 fiscal year and proposes the ratification by the
stockholders of such selection. KPMG LLP has served as SPSS' independent
auditors since 1985, is familiar with the business and operations of SPSS and
has offices convenient to SPSS' offices.
Representatives of KPMG LLP will be present at the annual meeting. They
will have the opportunity to make a statement and will be available to respond
to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR
THE RATIFICATION OF THE APPOINTMENT OF
KPMG LLP AS INDEPENDENT AUDITORS FOR FISCAL YEAR 1999.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
SPSS believes that during 1998 its officers, directors and owners of more
than ten percent of its common stock complied with all filing requirements under
Section 16(a) of the Securities and Exchange Act of 1934.
SOLICITATION AND EXPENSES OF SOLICITATION
The expenses of preparing and mailing this Proxy Statement and the
accompanying form of proxy and the cost of solicitation of proxies on behalf of
the Board will be paid by SPSS. Proxies may be solicited by personal interview,
mail or telephone. Brokerage houses, other custodians and nominees will be asked
whether other persons are beneficial owners of the shares which they hold of
record and, if so, they will be supplied with additional copies of the proxy
materials for distribution to such beneficial owners. SPSS will reimburse
parties holding stock in their names or in the names of their nominees for their
reasonable expenses in sending the proxy materials to their principals.
SUBMISSION OF STOCKHOLDER PROPOSALS
FOR THE 2000 ANNUAL MEETING
Stockholder proposals for inclusion in the Proxy Statement to be issued in
connection with the 2000 Annual Meeting of Stockholders must be mailed to the
Secretary, SPSS Inc., 233 South Wacker Drive, Chicago, Illinois 60606, and must
be received by the Secretary on or before January 18, 2000. Additionally, if a
proponent of a stockholder proposal at the 2000 Annual Meeting of Stockholders
fails to provide notice of the intent to make such a proposal by personal
delivery or mail to SPSS on or before April 2, 2000 or by an earlier or later
date, if such date is established by amendment to SPSS' by-laws, then any proxy
solicited by management may confer discretionary authority to vote on such
proposal. SPSS will consider only proposals meeting the requirements of
applicable SEC rules.
14
<PAGE> 17
ANNUAL REPORT
A copy of SPSS' Annual Report on Form 10-K for the Fiscal Year Ended
December 31, 1998 is being mailed with this Proxy Statement to each stockholder
entitled to vote at the annual meeting. STOCKHOLDERS NOT RECEIVING A COPY OF THE
ANNUAL REPORT ON FORM 10-K MAY OBTAIN ONE BY WRITING OR CALLING EDWARD HAMBURG,
SECRETARY, SPSS INC., 233 SOUTH WACKER DRIVE, CHICAGO, ILLINOIS 60606, TELEPHONE
(312) 651-3000.
By order of the Board of Directors
HAMBURG SIG
Edward Hamburg
Secretary of SPSS Inc.
15
<PAGE> 18
- -------------------------------------------------------------------------------
PROXY SPSS INC. PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JUNE 16, 1999
The undersigned stockholder hereby constitutes Jack Noonan and Edward Hamburg
proxies, with full authority and hereby revoking all other proxies heretofore
given with respect to such stock, which may be exercised by either one or both
of them, with power of substitution, to vote and act for the undersigned at the
Annual Meeting of Stockholders of SPSS Inc. to be held at the offices of SPSS,
233 South Wacker Drive, Chicago, Illinois, at 1:00 p.m. (local time) on June 16,
1999, and at any adjournment thereof, as designated herein, and the proxies are
authorized to vote in their discretion upon such other business as may properly
come before the annual meeting.
[ ] Check here for address change. [ ] Check here if you plan to attend
the meeting.
New Address: ___________________
--------------------------------
--------------------------------
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED RETURN ENVELOPE.
(Continued and to be signed on reverse side.)
<PAGE> 19
<TABLE>
<CAPTION>
SPSS Inc.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. //
THE BOARD OF DIRECTORS RECOMMENDS APPROVAL OF ALL PROPOSALS.
FOR ALL (Except
Nominee(s)
FOR WITHHOLD Written Below
<S> <C> <C> <C> <C>
1. ELECTION OF DIRECTORS TO SERVE A TERM EXPIRING IN 2002: // // //
Nominees: Norman Nie
Bernard Goldstein
---------------------------------------------
FOR AGAINST ABSTAIN
2. To ratify the selection of KPMG LLP // // //
as independent auditors for
SPSS for 1999.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1 AND 2.
Dated: ____________________________________, 1999
Signature(s) ____________________________________
- -------------------------------------------------
Please sign exactly as name appears hereon. Joint owners should each sign
personally. Executors, trustees, officers, etc., should indicate their titles
when signing.
</TABLE>
