<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>
PEOPLESOFT, 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
PEOPLESOFT, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 25, 1999
TO THE STOCKHOLDERS OF PEOPLESOFT, INC.:
NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of Stockholders of
PeopleSoft, Inc., a Delaware corporation (the "Company"), will be held at 10:00
a.m., local time, on Tuesday, May 25, 1999, at the Carr America Visitor's Center
located at 4400 Rosewood Drive, Pleasanton, California 94588, for the following
purposes:
1. To elect three (3) Class I directors to serve two-year terms.
2. To approve amendments to the 1992 Directors Stock Option Plan, as set
forth in the accompanying proxy statement.
3. To ratify the appointment of Ernst & Young LLP as independent auditors
of the Company for the year ending December 31, 1999.
4. To transact such other business as may properly come before the meeting
or any postponements or adjournments 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 29, 1999 are
entitled to notice of and to vote at the Annual Meeting.
All stockholders are cordially invited to attend the Annual Meeting in
person. However, to ensure your representation at the Annual Meeting, you are
urged to mark, sign, date and return the enclosed proxy card as promptly as
possible in the postage prepaid envelope enclosed for that purpose. YOU MAY
REVOKE YOUR PROXY IN THE MANNER DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT AT
ANY TIME BEFORE IT HAS BEEN VOTED AT THE ANNUAL MEETING. ANY STOCKHOLDER
ATTENDING THE ANNUAL MEETING MAY VOTE IN PERSON EVEN IF HE OR SHE HAS RETURNED A
PROXY.
By Order of the Board of Directors,
/s/David A. Duffield
David A. Duffield, President and
Chief Executive Officer
Pleasanton, California
April 15, 1999
IMPORTANT: WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO
COMPLETE AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED.
<PAGE> 3
MAPS TO
CARR AMERICA VISITOR'S CENTER IN PLEASANTON
AND LOCATION OF STOCKHOLDER MEETING ROOM
MAPS TO CARR AMERICA VISITOR'S CENTER
TO PLEASANTON
From the San Francisco Airport - Take Rt. 101 South to Rt. 92 East over the
San Mateo Toll Bridge. Take I-880 North to I-238 East and follow signs to I-580
East towards Stockton.
From the Oakland Airport - Take I-880 South to I-580 East towards Stockton.
From the San Jose Airport - Take Rt. 101 South to I-880 North. After
approximately 20 miles on I-880 North, follow the signs to I-580 East towards
Stockton.
From Walnut Creek - Take I-680 South through San Ramon, then take I-580
East towards Stockton/Tracy.
TO CARR AMERICA VISITOR'S CENTER
The Annual meeting will be held in the Auditorium at the Carr America
Visitor Center at:
4400 Rosewood Drive
Pleasanton, California
On I-580, approximately 1 mile east of the I-680 Interchange, take the
Hacienda Exit turning right on Hacienda Drive. Turn left on Owens Drive. Turn
left onto Rosewood Drive, take the second right and the visitor's center will be
straight ahead. Park anywhere. Upon entering the visitor's center the Auditorium
will be straight ahead.
<PAGE> 4
PEOPLESOFT, INC.
PROXY STATEMENT FOR THE
1999 ANNUAL MEETING OF STOCKHOLDERS
------------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of
PeopleSoft, Inc. (the "Company") for use at the Annual Meeting of Stockholders
to be held on Tuesday, May 25, 1999 at 10:00 a.m., local time, or at any
adjournment or postponement thereof, for the purposes set forth herein and in
the accompanying Notice of Annual Meeting of Stockholders. The Annual Meeting
will be held at the Carr America Visitor's Center located at 4400 Rosewood
Drive, Pleasanton, California 94588. The Company's telephone number is (925)
225-3000. When proxies are properly dated, executed, and returned, the shares
they represent will be voted at the Annual Meeting in accordance with the
instructions of the stockholder. If no specific instructions are given, the
shares will be voted for the election of the nominees for directors set forth
herein, for the amendment to the 1992 Directors stock option plan, for the
ratification of the appointment of Ernst & Young as independent auditors as set
forth herein, and at the discretion of the proxy holders upon such other
business as may properly come before the meeting or any adjournment or
postponement thereof.
These proxy solicitation materials and the Annual Report to Stockholders
for the year ended December 31, 1998, including financial statements, were first
mailed on or about April 19, 1999, to all stockholders entitled to vote at the
Annual Meeting.
RECORD DATE AND VOTING SECURITIES
Stockholders of record at the close of business on March 29, 1999 ("Record
Date") are entitled to notice of and to vote at the Annual Meeting. At the
Record Date, 238,205,481 shares of the Company's Common Stock, $.01 par value,
were issued and outstanding. No shares of the Company's Preferred Stock were
outstanding.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by (i) filing a
written notice of revocation bearing a later date than the proxy with the
Secretary of the Company at or before the taking of the vote at the Annual
Meeting, (ii) duly executing a later dated proxy relating to the same shares and
delivering it to the Secretary of the Company at or before the taking of the
vote at the Annual Meeting or (iii) attending the Annual Meeting and voting in
person (although attendance at the Annual Meeting will not in and of itself
constitute a revocation of a proxy). Any written notice of revocation or
subsequent proxy should be delivered to PeopleSoft, Inc. at 4460 Hacienda Drive,
Pleasanton, California 94588, Attention: Secretary of the Company, or
hand-delivered to the Secretary of the Company at or before the taking of the
vote at the Annual Meeting.
VOTING AND SOLICITATION
Each stockholder is entitled to one vote for each share of Common Stock
owned on all matters presented at the Annual Meeting. Stockholders do not have
the right to cumulate votes in the election of directors.
The Company will retain Corporate Investor Communications, Inc. ("CIC") to
assist in its solicitation of proxies from brokers, nominees, institutions and
individuals. The Company will pay CIC's solicitation fee of $8,500 plus
reasonable out-of-pocket expenses. Arrangements will also be made with
custodians, nominees and fiduciaries for forwarding of proxy solicitation
materials to beneficial owners of shares held as of the
<PAGE> 5
Record Date by such custodians, nominees and fiduciaries. The Company will
reimburse such custodians, nominees and fiduciaries for reasonable expenses
incurred in connection therewith. In addition, proxies may be solicited by
directors, officers and employees of the Company in person or by telephone,
telegram or other means of communication. No additional compensation will be
paid for such services.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
The required quorum for the transaction of business at the Annual Meeting
is a majority of the votes eligible to be cast by holders of shares of Common
Stock issued and outstanding on the Record Date. Shares that are voted "FOR",
"AGAINST" or "ABSTAINED" on a matter are treated as being present at the Annual
Meeting for purposes of establishing a quorum and are also treated as shares
entitled to vote at the Annual Meeting (the "Votes Cast") with respect to such
matter.
While there is no definitive statutory or case law authority in Delaware as
to the proper treatment of abstentions, the Company believes that abstentions
should be counted for purposes of determining both (i) the presence or absence
of a quorum for the transaction of business and (ii) the total number of Votes
Cast with respect to a proposal (other than the election of directors). In the
absence of controlling precedent to the contrary, the Company intends to treat
abstentions in this manner. Accordingly, abstentions will have the same effect
as a vote against the proposal.
In a 1988 Delaware case, Berlin v. Emerald Partners, the Delaware Supreme
Court held that, while broker non-votes should be counted for purpose of
determining the presence or absence of a quorum for the transaction of business,
broker non-votes should not be counted for purposes of determining the number of
Votes Cast with respect to the particular proposal on which the broker has
expressly not voted. Accordingly, the Company intends to treat broker non-votes
in this manner. Thus, a broker non-vote will not affect the outcome of the
voting on a proposal.
STOCKHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
The Company currently intends to hold its 2000 Annual Meeting of
Stockholders in mid-May 2000 and to mail Proxy Statements relating to such
meeting in mid-April 2000. The date by which stockholder proposals must be
received by the Company so that they may be considered for inclusion in the
Proxy Statement and form of proxy for its 2000 Annual Meeting of Stockholders is
December 10, 1999 and the date by which stockholders proposals must be received
by the Company so that they may be presented at the 2000 Annual Meeting is March
1, 2000. Such stockholder proposals should be submitted to PeopleSoft, Inc. at
4460 Hacienda Drive, Pleasanton, California 94588, Attention: Secretary of the
Company.
2
<PAGE> 6
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of March 22, 1999 (except as noted below)
certain information with respect to the beneficial ownership of the Company's
Common Stock by (i) each person known by the Company to own beneficially more
than 5% of the outstanding shares of Common Stock, (ii) each director of the
Company, (iii) each executive officer named in the Summary Compensation Table,
and (iv) all directors and executive officers as a group. Except as otherwise
noted below, the Company knows of no agreements among its stockholders which
relate to voting or investment power of its Common Stock.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
BENEFICIALLY OWNED(L)
DIRECTORS, NAMED EXECUTIVE OFFICERS AND -----------------------------------
FIVE PERCENT STOCKHOLDERS NUMBER PERCENTAGE OWNERSHIP
--------------------------------------- ------------ --------------------
<S> <C> <C>
OFFICERS
David A. Duffield(2).......................... 49,361,080 20.5%
4460 Hacienda Drive, Pleasanton, CA 94588
Aneel Bhusri(4)............................... 238,782 *
Jim Bozzini(3)(4)............................. 201,735 *
Albert W. Duffield(4)......................... 2,528,068 1.0%
Margaret L. Taylor(4)......................... 814,855 *
DIRECTORS
George J. Still, Jr.(4)....................... 183,130 *
Edgar F. Codd(4).............................. 183,000 *
Cyril J. Yansouni(4).......................... 68,000 *
A. George "Skip" Battle(4).................... 45,866 *
All directors and executive officers as a
group(5).................................... 53,943,799 22.4
5% SHAREHOLDERS AT 12/31/98(6)
Capital Research & Management................. 16,952,000 7.0
333 South Hope Street, Los Angeles, CA 90071
</TABLE>
- ---------------
* Less than 1%
(1) Applicable percentage of ownership is based on 238,078,138 shares of Common
Stock outstanding as of March 22, 1999 together with applicable options for
such stockholder. Beneficial ownership is determined in accordance with the
rules of the Securities and Exchange Commission, and includes voting and
investment power with respect to shares. Shares subject to options currently
exercisable or exercisable within 60 days after March 22, 1999 are deemed
outstanding for computing the percentage ownership of the person holding
such options, but are not deemed outstanding for computing the percentage
ownership of any other person.
(2) Includes 264,000 shares subject to stock options held by David A. Duffield
that are exercisable within 60 days of March 20, 1999 and 49,097,080 shares
held by trusts, or accounts of which David A. Duffield is trustee or
director.
(3) Includes 105,200 shares subject to stock options held by Jim Bozzini and
20,560 shares subject to stock options held by Mr. Bozzini's wife,
respectively, that are exercisable within 60 days of March 20, 1999 and
75,975 shares held by trusts, or accounts of which Jim Bozzini is trustee or
director.
(4) Includes the following numbers of shares issuable upon exercise of options
that are exercisable on or within 60 days of March 22, 1999: Aneel Bhusri:
179,200; Jim Bozzini: 125,760; Albert W. Duffield: 1,207,000; Margaret L.
Taylor: 435,262; George J. Still, Jr.: 181,000; Edgar F. Codd: 0; Cyril J.
Yansouni: 68,000; and A. George "Skip" Battle: 42,800.
(5) Includes 2,792,022 shares subject to stock options held by directors and
officers (12 persons) that are exercisable within 60 days of March 22, 1999.
(6) Shares beneficially owned are determined solely from information reported on
a Schedule 13G as of December 31, 1998.
3
<PAGE> 7
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act and regulations of the Securities and
Exchange Commission (the "SEC") thereunder require the Company's executive
officers and directors, and persons who own more than 10% of a registered class
of the Company's equity securities, to file reports of initial ownership and
changes in ownership with the SEC. Based solely on its review of copies of such
forms received by the Company, or on written representations from certain
reporting persons that no other reports were required for such persons, the
Company believes that, during or with respect to the period from January 1, 1998
to December 31, 1998, all of the Section 16(a) filing requirements applicable to
its executive officers, directors and 10% stockholders were complied with,
except with respect to the July 1998 Form 4 report for Mr. Alfred J. Castino and
the August 1998 Form 4 report for Mr. Albert Duffield, which were filed late or
amended.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
NOMINEES
The Company's Board of Directors currently consists of six persons serving
staggered two-year terms. Three Class I directors will be elected at the Annual
Meeting for a term of two years. Three Class II directors (Mr. Albert W.
Duffield, Mr. Cyril J. Yansouni and Mr. A. George Battle) were elected at last
year's annual meeting for a term of two years.
Unless otherwise instructed, the proxy holders will vote the proxies
received by them for the three nominees named below, all of whom are presently
directors of the Company. In the event that any such nominee is unable or
declines to serve as a director at the time of the Annual Meeting, the proxies
will be voted for a nominee who shall be designated by the present Board of
Directors to fill the vacancy. In the event that additional persons are
nominated for election as directors, the proxy holders intend to vote all
proxies received by them in such a manner as will assure the election of as many
of the nominees listed below as possible, and, in such event, the specific
nominees to be voted for will be determined by the proxy holders. The Company is
not aware of any nominee who will be unable or will decline to serve as a
director. Each director elected at this Annual Meeting will serve a term of two
years or until such director's successor has been duly elected and qualified.
VOTE REQUIRED
The three nominees receiving the highest number of affirmative votes of the
shares entitled to be voted shall be elected to the Board of Directors as Class
I Directors. An abstention will have the same effect as a vote withheld for the
election of directors, and pursuant to Delaware law, a broker non-vote will not
be treated as voting in person or by proxy on the proposal. The names of the
nominees and related information as of March 22, 1999 are set forth below.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES LISTED BELOW.
<TABLE>
<CAPTION>
DIRECTOR
NAME OF NOMINEE AGE POSITION(S) WITH THE COMPANY SINCE
--------------- --- ---------------------------- --------
<S> <C> <C> <C>
NOMINEES FOR CLASS I DIRECTOR
David A. Duffield(3) 58 Chairman of the Board of Directors, 1987
President and Chief Executive
Officer
Aneel Bhusri 33 Vice Chairman of the Board of 1999
Directors
George J. Still, Jr.(1)(2)(3) 40 Director 1991
</TABLE>
4
<PAGE> 8
<TABLE>
<CAPTION>
DIRECTOR
AGE POSITION(S) WITH THE COMPANY SINCE
--- ---------------------------- --------
<S> <C> <C> <C>
DIRECTORS WHOSE TERMS CONTINUE
Albert W. Duffield 56 Director and Senior Vice President 1991
Cyril J. Yansouni(l)(2) 56 Director 1992
A. George "Skip" Battle(1)(2) 55 Director 1995
</TABLE>
- ---------------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
(3) Member of the Nominating Committee.
NOMINEES FOR CLASS I DIRECTOR
Mr. David Duffield is a founder of the Company and has served as Chairman
of the Board, Chief Executive Officer and President since the Company's
incorporation in August 1987. Prior to that time, he was a founder and Chairman
of the Board of Integral, a vendor of human resource and financial applications
software, from April 1972 through April 1987. During a portion of that time, Mr.
Duffield also served as Integral's Chief Executive Officer. Mr. Duffield is also
the co-founder of Information Associates (now a subsidiary of Systems and
Computer Technology), where he was employed between 1968 and 1972. From 1964 to
1968, Mr. Duffield worked at IBM, a computer systems manufacturer, as a
marketing representative and systems engineer. He holds a B.Sc. in Electrical
Engineering and an M.B.A. from Cornell University.
Mr. Aneel Bhusri became Vice Chairman and director of the Company in March
1999. He joined PeopleSoft in 1993, and has served as Senior Vice President,
Product Strategy, Marketing and Business Development for the past several years.
Mr. Bhusri previously served as an associate at Norwest Venture Partners, where
he identified emerging software companies for investment. He also spent several
years in Morgan Stanley's corporate finance organization working with the firm's
high-tech clients. He holds a masters in business administration from Stanford
University and bachelors of science and arts in Electrical Engineering and
Economics from Brown University. In addition to PeopleSoft, Mr. Bhusri currently
sits on the Board of Marimba, Inc.
Mr. George Still became a director of the Company in April 1991. He has
been a partner of Norwest Venture Capital, a venture capital investment fund,
since 1989. From July 1984 to October 1989, he was a general partner with The
Centennial Funds, a venture capital investment fund. Mr. Still holds a B.Sc. in
Business Administration from Pennsylvania State University and an M.B.A. from
Dartmouth College. Mr. Still is on the board of directors of 3DFX Inc., Verio,
Inc., and numerous private companies.
DIRECTORS WHOSE TERMS CONTINUE
Mr. Albert Duffield joined the Company in June 1990 as Vice President of
Sales, and was appointed Vice President of Operations in September 1991, Vice
President of Sales and Marketing in February 1993, Senior Vice President of
Sales and Marketing in November 1993, Senior Vice President of Worldwide
Operations in January 1994, and Senior Vice President working in a strategic
role for the Company in March 1999. He was elected to the Board of Directors in
April 1991. Prior to joining the Company, Mr. Duffield served as Chief Operating
Officer of Data Design Associates, a division of Integral Systems, Inc., from
June 1989 through June 1990. Prior to the acquisition of Data Design Associates
by Integral Systems, Inc. in September 1989, he served as its Senior Vice
President of Sales and Marketing from October 1981 through June 1989. From 1970
to 1981, Mr. Duffield worked at IBM in various sales, sales management and staff
management positions. He holds a B.Sc. in Hotel/Business Administration from
Cornell University and an M.B.A. from Rutgers University. Albert Duffield and
David Duffield are brothers.
Mr. Cyril Yansouni became a director of the Company in October 1992. Since
March 1991, he has served as Chief Executive Officer and Chairman of Read-Rite
Corporation, a supplier of thin film magnetic
5
<PAGE> 9
recording heads. From January 1989 to February 1991, he served in various senior
management capacities at Unisys, a manufacturer of computer systems, most
recently as an Executive Vice President. Mr. Yansouni was President of
Convergent Technologies, a manufacturer of computer systems, from October 1986
until its acquisition by Unisys in December 1988. From June 1967 to October
1986, Mr. Yansouni served in a variety of technical and management positions at
Hewlett-Packard Company, including Vice President and General Manager of the PC
Group. He holds an M.S.E.E. from Stanford University and a B.Sc. in electrical
and mechanical engineering from the Catholic University of Louvain, Belgium. Mr.
Yansouni is also a director of Informix Software, Inc. and Raychem Corporation.
A. George "Skip" Battle became a director of the Company in December 1995.
Mr. Battle served from 1968 until his retirement in June 1995 in various roles
of increasing responsibility with Andersen Consulting. At the time of his
retirement, Mr. Battle was Managing Partner of Market Development. He was also a
member of Andersen Consulting's Executive Committee, Global Management Council
and Partner Income Committee. Prior to his position as Managing Partner of
Market Development, he served as Managing Partner of North American Planning and
Operations. Mr. Battle holds a B.A. in Economics with highest distinction from
Dartmouth College and an M.B.A. from the Stanford Business School where he held
McCarthy and University Fellowships. Mr. Battle is a director of Barra, Inc. and
Fair Isaac Company, and he is also currently a Senior Fellow at the Aspen
Institute.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of four regular meetings
and two special meetings during 1998. No directors attended fewer than 75% of
the total number of meetings of the Board of Directors or committees of the
Board of Directors held in 1998. The Board of Directors has an Audit Committee,
Compensation Committee and Nominating Committee.
The Audit Committee, which currently consists of Messrs. Battle, Yansouni
and Still, held a total of five regular meetings during 1998. The Audit
Committee is primarily responsible for approving the services performed by the
Company's independent auditors and for reviewing and evaluating the Company's
accounting principles and its system of internal accounting controls. The
Compensation Committee, which currently consists of Messrs. Battle and Yansouni
as voting members and Mr. Still as a non-voting member, held two meetings in
1998. The Compensation Committee reviews and approves the Company's executive
compensation policies and plans. The Nominating Committee was established in May
1997 and consists of Messrs. David Duffield and Still. The Nominating Committee
was established to evaluate future board members and held two meetings during
1998.
BOARD COMPENSATION
Directors do not receive any cash compensation for their services as
members of the Board of Directors, however, non-employee directors are entitled
to receive a $500 travel allowance for each meeting they attend. Non-employee
directors are automatically granted annual options to purchase 4,000 shares of
the Company's Common Stock pursuant to the terms of the Company's 1992
Directors' Stock Option Plan (the "Directors' Plan"). Pursuant to the Directors'
Plan, Messrs. Battle, Codd, Still and Yansouni were each granted an option to
purchase 4,000 shares of Common Stock at an exercise price of $39.00 per share
in January 1998. Officers are appointed by and serve at the discretion of the
Board of Directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Neither Messrs. Battle nor Yansouni (the voting members of the Company's
Compensation Committee), is an executive officer of any entity for which any
executive officer of the Company serves as a director or a member of the
compensation committee.
6
<PAGE> 10
PROPOSAL NO. 2
AMENDMENT TO THE 1992 DIRECTORS STOCK OPTION PLAN
The Company's 1992 Directors Stock Option Plan (the "Option Plan") was
approved by the Board of Directors in September 1992 and by the stockholders in
November 1992. The Option Plan provides for the granting to Directors of
incentive stock options within specific guidelines. The proposed changes to the
plan give discretion to the Board of Directors regarding the number of options,
date of grant and vesting schedule for such grants. Under the existing plan,
terms for option grants regarding the number of options, date of grant, and
vesting schedule are fixed by the terms of the plan.
Under the existing plan, Board members are granted a "First Option" of
20,000 shares upon joining the board. These options are granted at 100% of the
fair market value on the grant date; the options vest 20% per year on each
anniversary date of the grant for the next five years. The existing option plan
also prescribes a "Subsequent Option" of 4,000 shares for each year that an
individual continues to serve on the Board. The grant date for shares for each
"Subsequent Option" is January 1 of that calendar year and the options are
granted at 100% of the fair market value on the grant date. The "Subsequent
Options" vest 100% on the fifth anniversary of their grant date.
The proposed changes to the plan, remove the restrictions on grant date,
number of shares, and vesting schedule of the options granted, and give power to
the Board of Directors to determine in its discretion: (i) the Outside Directors
to whom Options may be granted hereunder; (ii) the number of shares of Common
Stock to be covered by each Option granted; (iii) the terms and conditions, of
any Option granted. Such terms and conditions include, the term of the Option
(up to a maximum of 10 years), the time or times when Options may be exercised
(which may be immediate), any vesting acceleration or waiver of forfeiture
restrictions, and any restriction or limitation regarding any Option or the
shares of Common Stock relating thereto, based in each case on such factors as
the Board shall determine.
The Board believes that the proposed amendments are in the best interests
of the Company. The Board believes that the Company faces intense competition in
its attempts to attract and retain high quality directors. In addition, recently
announced changes in the accounting treatment of stock option grants to
non-employee directors may make the Company's current approach to such grants
less desirable than alternative approaches. The Board believes that the proposed
amendments, which provide the Board with discretionary authority to specify the
terms and conditions of director stock option grants, will enhance the Company's
ability to offer current and potential directors competitive stock option grants
while limiting adverse accounting consequences.
VOTE REQUIRED
The affirmative vote of a majority of the Votes Cast will be required to
approve the amendments of the 1992 Directors Stock Option Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENTS TO THE
DIRECTORS STOCK OPTION PLAN.
PROPOSAL NO. 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young LLP, independent
auditors, to audit the consolidated financial statements of the Company for the
fiscal year ending December 31, 1999, and recommends that the stockholders vote
for ratification of such appointment. In the event of a negative vote on such
ratification, the Board of Directors will reconsider its selection.
Ernst & Young LLP has audited the Company's financial statements since
1989. Its representatives are expected to be present at the Annual Meeting with
the opportunity to make a statement if they desire to do so and are expected to
be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
7
<PAGE> 11
EXECUTIVE COMPENSATION
All securities underlying options and related per share information has
been adjusted to reflect two-for-one splits of the Company's Common Stock in
1996 and 1997.
SUMMARY COMPENSATION TABLE
The following table sets forth the annual and long-term compensation earned
in each of the last three years by the Company's Chief Executive Officer and
each of the other four most highly compensated executive officers (the "Named
Executive Officers"):
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------------- ----------------------
NAME AND OTHER ANNUAL SEC. UNDERLYING
PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION(2) OPTIONS(#)(3)
------------------ ---- -------- -------- --------------- ----------------------
<S> <C> <C> <C> <C> <C>
David A. Duffield................ 1998 $250,000 $103,950 $ 2,090 --
President and Chief 1997 242,000 228,079 12,015 --
Executive Officer 1996 220,000 125,796 4,482 120,000
Aneel Bhusri..................... 1998 181,500 76,485 10,720 540,000
Vice Chairman and Director 1997 137,500 127,246 3,220 100,000
1996 125,000 112,511 3,095 80,000
Jim Bozzini...................... 1998 150,000 193,125 11,220 104,000
Senior Vice President of 1997 111,029 162,500 5,720 44,000
Worldwide Services 1996 115,000 102,126 10,220 48,000
Albert W. Duffield............... 1998 260,000 104,006 11,909 --
Senior Vice President and 1997 211,750 198,441 2,311 60,000
Strategic Advisor 1996 192,500 122,220 5,750 100,000
Margaret L. Taylor............... 1998 260,000 108,615 3,620 210,000
Senior Vice President of 1997 211,750 201,700 9,566 60,000
eBusiness 1996 192,500 122,364 7,845 100,000
</TABLE>
- ---------------
(1) Payments of bonuses are made pursuant to the Company's Executive Bonus Plan.
(2) Includes Company funded health benefit credits, and Company matching
contributions to a non-qualified deferred compensation plan.
(3) On November 19, 1998, the Compensation Committee authorized an offer to all
employees of the Company holding stock options with exercise prices in
excess of $22.00 to cancel and replace such options with new options with an
exercise price equivalent to the closing market price of the Company's
Common Stock on the Nasdaq National Market on December 14, 1998. Employees
who accepted the offer are subject to a six month extension of the vesting
term of such option and a six month black out period during which repriced
options may not be exercised. For purposes of the Executive Compensation
table, and in accordance with the applicable regulations of the Securities
and Exchange Commission, the repriced options are reflected as new grants in
1998. The following amounts represent the share amounts subject to new
options actually granted to the indicated officers in 1998: Mr. Bhusri
250,000, Mr. Bozzini 50,000; and Ms. Taylor 75,000.
8
<PAGE> 12
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END VALUES
The following table sets forth, for each of the Named Executive Officers,
certain information concerning the exercise of stock options during 1998,
including the year-end value of unexercised options:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED VALUE OPTIONS AT FISCAL YEAR-END(#) AT FISCAL YEAR-END(1)($)
NAME ON EXERCISE(#) REALIZED(L)($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- -------------- -------------- ----------------------------- -------------------------
<S> <C> <C> <C> <C>
David A. Duffield..... -- $ -- 640,000/280,000 $9,887,947/$3,674,048
Aneel Bhusri.......... 58,400 2,443,787 96,800/464,400 1,049,162/2,198,425
Jim Bozzini........... 62,000 2,429,712 55,600/168,400 648,813/1,012,225
Albert W. Duffield.... 1,200,000 35,393,754 864,000/711,000 14,412,082/9,936,251
Margaret L. Taylor.... 244,944 10,685,304 751,806/496,600 12,788,736/6,086,412
</TABLE>
- ---------------
(1) Calculated by determining the difference between the closing price of the
Company's Common Stock as reported on the Nasdaq National Market on the date
of exercise or at December 31, 1998 ($18.9375), as applicable, and the
exercise price of such options.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth each grant of stock options made during the
year ended December 31, 1998 to each of the Named Executive Officers:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------
% OF TOTAL POTENTIAL REALIZABLE
OPTIONS VALUE AT ASSUMED
NUMBER OF GRANTED ANNUAL RATE OF STOCK
SECURITIES TO PRICE APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE OPTION TERM(5)
OPTIONS IN FISCAL PRICE EXPIRATION ------------------------
NAME GRANTED(1)(2)(#) YEAR(3) ($/SHARE)(4) DATE 5%($) 10%($)
---- ---------------- ---------- ------------ ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
David A. Duffield....... -- --% $ -- n/a $ -- $ --
Aneel Bhusri............ 250,000 1.00% 35.00 1/31/08 5,502,828 13,945,247
250,000(6) 1.00% 17.00 1/31/08 2,672,802 6,773,405
40,000(7) 0.02% 17.00 1/31/07 427,648 1,083,745
Jim Bozzini............. 50,000 0.20% 35.00 1/31/08 1,100,566 2,789,049
50,000(6) 0.20% 17.00 1/31/08 534,560 1,354,681
4,000(7) 0.01% 17.00 1/31/07 42,765 108,374
Albert W. Duffield...... -- -- -- n/a -- --
Margaret L. Taylor...... 75,000 0.30% 35.00 1/31/08 1,650,848 4,183,574
75,000(6) 0.30% 17.00 1/31/08 801,841 2,032,022
60,000(7) 0.02% 17.00 1/31/07 641,473 1,625,617
</TABLE>
- ---------------
(1) These options vest in five equal annual installments commencing one year
from the date of grant.
(2) On November 19, 1998, the Compensation Committee authorized an offer to all
employees of the Company holding stock options with exercise prices in
excess of $22.00 to cancel and replace such options with new options with an
exercise price equivalent to the closing market price of the Company's
Common Stock on the Nasdaq National Market on December 14, 1998. Employees
who accepted the offer are subject to a six month extension of the vesting
term of such option and a six month black out period during which repriced
options may not be exercised. For purposes of the Summary compensation
Table, and in accordance with the applicable regulations of the Securities
and Exchange Commission, the repriced options are reflected as new grants in
1998. The following amounts represent the share amounts subject to new
options actually granted to the indicated officers in 1998: Mr. Bhusri
250,000; Mr. Bozzini 50,000; and Ms. Taylor 75,000.
9
<PAGE> 13
(3) An aggregate of 12,039,503 options to purchase shares of the Company's
Common Stock were granted to employees in 1998. 12,794,245 shares from 1998
and previous year's option grants were re-priced from their original
exercise prices to an exercise price of $17.00 on December 14, 1998.
(4) The exercise price and the tax withholding obligations related to exercise
may be paid by delivery of shares that are already owned or by offset of the
underlying shares, subject to certain conditions. All of the options have an
exercise price equal to 100% of the fair market value of the Company's
Common Stock on the date of grant.
(5) This column shows the hypothetical gains or "option spreads" of the options
granted based on assumed annual compound stock price appreciation rates of
5% and 10% over the full ten-year term of the option. The 5% and 10% assumed
rates of appreciation are mandated by the rules of the Securities and
Exchange Commission and do not represent the Company's estimated or
projected future prices of the Company's Common Stock.
(6) These options were originally issued January 31, 1998 with an exercise price
of $35.00 per share. The exercise price was revised (re-pricing) on December
14, 1998 to $17.00 per share.
(7) These options were originally issued January 31, 1997 with an exercise price
of $27.25 per share. The exercise price was revised (re-pricing) on December
14, 1998 to $17.00 per share.
TEN YEAR REPRICING TABLE
On November 19, 1998, the Compensation Committee authorized an offer to all
employees of the Company holding stock options with exercise prices in excess of
$22.00 to cancel and replace such options with new options with an exercise
price equivalent to the closing market price of the Company's Common Stock on
the Nasdaq National Market on December 14, 1998. Employees who accepted the
offer are subject to a six month extension of the vesting term of such option
and a six month black out period during which repriced options may not be
exercised. The following table provides certain information regarding the
repricing of options held by any person who served as an executive officer of
the Company during the last ten completed fiscal years.
<TABLE>
<CAPTION>
NUMBER OF LENGTH OF ORIGINAL
SECURITIES MARKET PRICE OPTION TERM
UNDERLYING OF STOCK EXERCISE PRICE NEW REMAINING AT
OPTIONS AT TIME OF AT TIMING OF EXERCISE DATE
NAME AND POSITION DATE REPRICED(#) REPRICING($) REPRICING($) PRICE($) OF REPRICING
----------------- -------- ----------- ------------ -------------- --------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Margaret L. Taylor...... 12/14/98 60,000 $17.00 $27.25 $17.00 8 yrs. 50 days
Senior Vice President 12/14/98 75,000 $17.00 $35.00 $17.00 9 yrs. 50 days
of eBusiness
Jim Bozzini............. 12/14/98 4,000 $17.00 $27.25 $17.00 8 yrs. 50 days
Senior Vice President 12/14/98 50,000 $17.00 $35.00 $17.00 9 yrs. 50 days
Worldwide Services
Aneel Bhusri............ 12/14/98 40,000 $17.00 $27.25 $17.00 8 yrs. 50 days
Vice Chairman 12/14/98 250,000 $17.00 $35.00 $17.00 9 yrs. 50 days
Howard T. Gwin.......... 12/14/98 25,000 $17.00 $46.50 $17.00 9 yrs. 139 days
Senior Vice President
Worldwide Sales and
Marketing
Alfred J. Castino....... 12/14/98 40,000 $17.00 $29.88 $17.00 8 yrs. 292 days
Chief Financial 12/14/98 40,000 $17.00 $31.44 $17.00 8 yrs. 323 days
Officer
And Senior Vice 12/14/98 30,000 $17.00 $37.69 $17.00 9 yrs. 231 days
President
</TABLE>
10
<PAGE> 14
REPORT OF THE COMPENSATION COMMITTEE
The following is the Report of the Compensation Committee of the Company,
describing the compensation policies and rationale applicable to the Company's
executive officers with respect to the compensation paid to such executive
officers for the year ended December 31, 1998. The information contained in the
report shall not be deemed to be "soliciting material" or to be "filed" with the
Securities and Exchange Commission nor shall such information be incorporated by
reference into any future filing under the Securities Act of 1933, as amended
(the "Securities Act") or the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), except to the extent that the Company specifically incorporates
it by reference into such filing.
The Compensation Committee (the "Committee") of the Board of Directors
of the Company is charged with the responsibility of reviewing all aspects
of the Company's executive compensation programs and administering the
Company's Stock Option Plan. In 1998, the voting members of the Committee
were Messrs. Battle and Yansouni, both of whom are non-employee Directors
of the Company. Mr. Still is a non-voting member of the Committee and is a
non-employee Director of the Company.
The Company's executive compensation programs are designed to attract
and retain executives who will contribute to the Company's long-term
success, to reward executives for achieving the Company's financial goals,
and to link executive compensation and stockholder interests through
equity-based plans. The Committee believes that strong financial
performance, on a sustained basis, is the most certain avenue through which
the Company can positively affect long-term stockholder return.
Furthermore, the Company believes that, in order to attract and retain the
most qualified executives in the industry, its compensation policies must
be competitive with other companies in the software industry, particularly
those of smaller or similar size and those located within the greater San
Francisco Bay Area.
Beginning in 1994, the Internal Revenue Code limited the federal
income tax deductibility of compensation paid to the Company's chief
executive officer and to each of the four most highly compensated executive
officers. For this purpose, compensation can include, in addition to cash
compensation, the difference between the exercise price of stock options
and the value of the underlying stock on the date of exercise. The Company
may deduct compensation with respect to any of these individuals only to
the extent that during any fiscal year such compensation does not exceed $1
million or meets certain other conditions (such as shareholder approval).
Considering the Company's current compensation plans and policy, the
Company and Compensation Committee believe that, for the near future, there
is little risk that the Company will lose any significant tax deduction
relating to executive compensation. If the deductibility of executive
compensation becomes a significant issue, the Company's compensation plans
and policy will be modified to maximize the deduction of compensation if
the Company and the Compensation Committee determine that such action is in
the best interests of the Company.
The Company's executive compensation programs consist of base salary,
annual cash incentive compensation, long-term incentive compensation in the
form of stock options, and various benefits, including health and welfare
plans generally available to all full-time employees of the Company. In
addition, the Company's executives are eligible to participate in a
non-qualified deferred compensation plan whereby participants may elect to
defer part or all of their base and incentive cash compensation, which in
turn is invested in insurance contracts that contain a broad range of
investment alternatives. Under the non-qualified plan, the Company provides
matching contributions, subject to a maximum amount of $10,000 in 1998 (the
same amount as provided under the 401(k) Plan), based on a participant's
years of service and actual contributions. Matching contributions vest
ratably after two through five years of service, and any unvested matching
contributions are forfeited upon termination of employment. Although the
executives are eligible to participate under the Company's qualified 401(k)
Plan, they are not eligible for a matching Company contribution under that
plan.
Compensation is reviewed and adjusted annually based principally on an
evaluation of individual contributions to corporate goals, comparable
market salary data, growth in the Company's size and complexity, internal
compensation equity considerations, increases or decreases in an
executive's span of
11
<PAGE> 15
responsibilities, and the Company's performance. Based on these factors,
Mr. David A. Duffield's base pay was increased by 10% and 3% in 1997 and
1998, respectively, and the base pay of the other named executive officers
was increased by an aggregate of 10% and 20% in 1997 and 1998,
respectively.
The Company's annual management incentive bonus plan was initially
established in 1991 and covers the Chief Executive Officer and the other
senior executive officers. In 1998, such executives could earn up to a
maximum of 100% of their base salary in additional incentive compensation.
The Board feels that the relatively lower level of targeted base salary and
relatively higher level of incentive compensation most effectively aligns
the interests of management with that of the shareholders. Subject to the
Company attaining a minimum target level of operating profitability, up to
80% of a person's base salary could be earned pursuant to an objective
formula based component and up to 20% could be awarded under a subjective
component, subject to a maximum total limit of 100% of a person's base
salary. If the Company's operating profit margin was below a minimum target
level, no incentive compensation could be earned. The formula based
component was based on a combination of the Company's operating profit
margin and certain other financial measures. In setting these operating
profit targets, the Company considered its historical performance and
underlying business model, and external as well as internal expectations
related to 1998 operating profits. Within the minimum and maximum operating
profit targets, incentive compensation was computed based on a weighted
combination of financial factors, including the Company's contracting
activity, total revenues, capital expenditures, accounts receivable days
sales outstanding (DSO), earnings per share (EPS) and organization expense
budget management. The financial factors were derived from one or a
combination of 1998 budget data, historical performance, or median
expectations of a group of brokerage firm analysts who publish earnings
forecasts for the Company and otherwise actively follow the Company.
Subjective bonuses were determined by the Company's CEO, Mr. David A.
Duffield, except for his subjective bonus which was determined by the
Committee. The Committee believes that the 1998 plan reflects the Company's
philosophy that no incentive compensation payments are merited for periods
during which the Company generally fails to meet analyst's expectations,
and that the maximum level of performance should be based on an aggressive
internal budget prepared by the Company which establishes challenging
operational goals for the Company.
Grants of stock options may be awarded to individual executives based
on their actual and potential contributions to the achievement of the
Company's long-term goals. The magnitude of such grants was based on merit
and an evaluation of market survey data on executive stock option granting
practices. After giving effect to the Company's two-for-one stock split in
December 1997 and excluding the 1998 issuance of repriced options, the
total stock options granted to executives in 1998 and 1997 were 505,000 and
384,000, respectively.
In November 1998, following a sharp, sustained drop in the price of
the Company's Common Stock, the Committee became concerned with the effect
of the price drop on employees and officers holding stock options with
higher and, in many cases, significantly higher, exercise prices. The
Compensation Committee approved an offer to all current employees holding
stock options with exercise prices in excess of $22.00 to cancel and
replace such options with new options with an exercise price equivalent to
the closing market price of the Company's Common Stock on the Nasdaq
National Market on December 14, 1998. Employees who accepted the offer are
subject to a six month extension of the vesting term of such option and a
six month black out period during which repriced options may not be
exercised. This action was motivated by the desire to preserve the
Company's talented employee base in light of the loss of incentive value
represented by stock options with considerably higher exercise prices than
the prevailing market stock price and intensely competitive environment for
qualified employees and officers. In particular, the Committee considered
the extremely intense competition for qualified employees in the San
Francisco bay area employment market. Given the variety of employment
alternatives in both established and start-up high-technology companies,
the Committee concluded that repricing out-of-the-money options could
assist the Company in retaining and motivating its employees and management
team.
12
<PAGE> 16
In 1998, Mr. David A. Duffield earned a base salary of $250,000 and
cash incentives of $103,950. Cash incentives for 1998 approximated 42% of
his base salary and were based on attaining the goals described above. In
January 1998, Mr. Duffield received an option grant of 100,000 shares. This
grant was primarily based on the performance of the Company and Mr.
Duffield's significant contribution to that performance in terms of both
leadership and strategic vision. Mr. Duffield rescinded this grant later in
1998 to allow these options to be distributed to other key employees or
management team members.
Compensation Committee
A. George "Skip" Battle
Cyril J. Yansouni
George J. Still
CERTAIN TRANSACTIONS WITH MANAGEMENT
The Company and a limited liability company ("LLC") entered into agreements
in 1995 and 1997, whereby the LLC will provide up to $9.6 million to fund the
development of a suite of student information and administration system
applications ("SIS Software") with the Company assuming exclusive responsibility
for the distribution of the SIS Software. Substantially all of the LLC's funds
were provided equally by Mr. David A. Duffield and the Student Loan Marketing
Association ("Sallie Mae"), an independent strategic business partner. The
Company has no contractual obligation to provide funds to the LLC and does not
have a right to acquire any of the LLC's equity interests. The Company will pay
the LLC a royalty based on fees received from the licensing of the SIS Software
until the later of five years from the commercial release of the SIS Software or
$17 million in cumulative royalties have been paid to the LLC. The royalty rate
was determined based on negotiations between the Company and Sallie Mae. All
ownership rights and interests in the SIS Software will transfer to the Company,
upon the later of five years from the commercial release of the SIS Software or
when $17 million in cumulative royalties have been paid to the LLC. The SIS
Software became generally available for sale in December 1997, and the Company
recorded $3.3 million and $8.1 million in royalty expense in the years ended
1997 and 1998, respectively. The LLC reimbursed the Company $2.0 million, $2.4
million, $3.2 million and $2.0 million in 1995, 1996, 1997 and 1998,
respectively, for development funding advanced by the Company.
In October 1998, Albert W. Duffield borrowed $1,600,000 from the Company.
The loan accrues interest at 7% per annum and is expected to be repaid in April
1999.
13
<PAGE> 17
COMPANY PERFORMANCE
The following graph compares the cumulative total return on a percentage
basis to stockholders on the Company's Common Stock since November 18, 1992 (the
date the Company first became subject to the reporting requirements of the
Exchange Act) to the cumulative total return over such period of (i) the Nasdaq
National Market (U.S. Companies) Index ("Nasdaq -- Total"), and (ii) the Nasdaq
Computer and Data Processing Services Group Index ("Nasdaq -- Software"). The
information contained in the Performance Graph shall not be deemed to be
"soliciting material" or to be "filed" with the Securities and Exchange
Commission, nor shall such information be incorporated by reference into any
future filing under the Securities Act or the Exchange Act, except to the extent
that the Company specifically incorporates it by reference into such filing.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
PEOPLESOFT, INC., NASDAQ -- SOFTWARE, AND NASDAQ -- TOTAL
<TABLE>
<CAPTION>
PEOPLESOFT, INC. NASDAQ - SOFTWARE NASDAQ - TOTAL
---------------- ----------------- --------------
<S> <C> <C> <C>
'12/31/93' 183.824 104.799 118.906
'12/31/94' 444.118 127.272 116.232
'12/31/95' 1011.770 193.800 164.404
'12/31/96' 2255.880 239.197 202.170
'12/31/97' 3670.590 293.852 247.956
'12/31/98' 1782.350 524.606 349.383
</TABLE>
OTHER MATTERS
The Company knows of no other matters to be addressed at the Annual
Meeting. If any other matters are properly addressed at the Annual Meeting, it
is the intention of the persons named in the accompanying proxy to vote the
shares represented in the manner as the Board of Directors may recommend.
THE BOARD OF DIRECTORS
/s/David A. Duffield
By: David A. Duffield, President and
Chief Executive Officer
Dated: April 15, 1999
14
<PAGE> 18
EXHIBIT A
SUMMARY OF 1992 DIRECTORS STOCK OPTION PLAN, AS AMENDED
PURPOSE OF THE PLAN. The purpose of the Directors' Stock Option Plan is to
attract and retain the best available personnel for service as Directors of the
Company, to provide additional incentive to the Outside Directors of the Company
to serve as Directors, and to encourage their continued service on the Board.
TYPE OF OPTIONS. All options granted under the plan are "nonstatutory stock
options".
STOCK SUBJECT TO THE PLAN. The maximum aggregate number of Shares which may
be optioned and sold under the Plan is 2,400,000 Shares (the "Pool") of Common
Stock. The Shares may be authorized, but unissued, or reacquired Common Stock.
If an Option should expire or become unexercisable for any reason without
having been exercised in full, the unpurchased Shares which were subject thereto
are, unless the Plan shall have been terminated, made available for future grant
under the Plan. If Shares which were acquired upon exercise of an Option are
subsequently repurchased by the Company, such Shares are not returned to the
Plan and are not available for future grant under the Plan.
ADMINISTRATION OF AND GRANTS OF OPTIONS UNDER THE PLAN. The Plan is
administered by the Board. All decisions, determinations and interpretations of
the Board are final and binding on all Optionees and any other holders of any
Options granted under the Plan.
ELIGIBILITY. Options may be granted only to Outside Directors. All Options
are granted at the discretion of the Board. An Outside Director who has been
granted an Option may, if he or she is otherwise eligible, be granted an
additional Option or Options in accordance with such provisions.
The Plan does not confer upon any Optionee any right with respect to
continuation of service as a Director or nomination to serve as a Director, nor
does it interfere in any way with any rights which the Director or the Company
may have to terminate his or her directorship at any time.
TERM OF PLAN; EFFECTIVE DATE. The Plan became effective on January 1, 1993.
TERM OF OPTION. The maximum term of each Option is ten (10) years from the
date of grant thereof, or such shorter period as determined by the Board and set
forth in the applicable option agreement.
EXERCISE PRICE AND CONSIDERATION. The per Share exercise price for the
Shares issued pursuant to exercise of an Option is 100% of the fair market value
per Share on the date of grant of the Option. The fair market value is
determined by the Board in its discretion; provided, however, that where there
is a public market for the Common Stock, the fair market value per Share is the
mean of the bid and asked prices of the Common Stock in the over-the-counter
market on the date of grant, as reported in The Wall Street Journal (or, if not
so reported, as otherwise reported by the National Association of Securities
Dealers Automated Quotation ("NASDAQ") System) or, in the event the Common Stock
is traded on the NASDAQ National Market System or listed on a stock exchange,
the fair market value per Share is the closing price on such system or exchange
on the date of grant of the Option, as reported in The Wall Street Journal.
FORM OF CONSIDERATION. The consideration to be paid for the Shares to be
issued upon exercise of an Option consists entirely of cash, check, other Shares
of Common Stock having a fair market value on the date of surrender equal to the
aggregate exercise price of the Shares as to which said Option is exercised.
Exercise of an Option in any manner decreases the number of Shares which
thereafter may be available, both for purposes of the Plan and for sale under
the Option, by the number of Shares as to which the Option is exercised.
TERMINATION OF STATUS AS A DIRECTOR. If an Outside Director ceases to serve
as a Director, he or she may, but only within three (3) months after the date he
or she ceases to be a Director of the Company, exercise his or her Options to
the extent that he or she was entitled to exercise it at the date of such
termination. To the extent that such Outside Director was not entitled to
exercise an Option at the date of such termination, or
A-1
<PAGE> 19
does not exercise such Option (which he or she was entitled to exercise) within
the time specified, the Options terminate.
DISABILITY OF OPTIONEE. In the event a Director is unable to continue his
or her service as a Director with the Company as a result of his or her total
and permanent disability (as defined in Section 22(e)(3) of the Internal Revenue
Code), he or she may, but only within six (6) months from the date of such
termination, exercise his or her Option to the extent he or she was entitled to
exercise it at the date of such termination. To the extent that he or she was
not entitled to exercise the Option at the date of termination, or if he or she
does not exercise such Option (which he or she was entitled to exercise) within
the time specified, the Options terminate.
DEATH OF OPTIONEE. In the event of the death of an Optionee during the term
of the Option who is, at the time of his or her death, a Director of the Company
and who has been in Continuous Status as a Director since the date of grant of
the Option, the Option may be exercised, at any time within six (6) months
following the date of death, by the Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or inheritance, but only to
the extent of the right to exercise that would have accrued had the Optionee
continued living and remained in Continuous Status as Director for six (6)
months after the date of death.
NONTRANSFERABILITY OF OPTIONS. Options under the Plan may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner other
than by will or by the laws of descent or distribution. The designation of a
beneficiary by an Optionee does not constitute a transfer. An Option may be
exercised during the lifetime of an Optionee only by the Optionee or a
transferee permitted by this Section.
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER. Subject to any
required action by the stockholders of the Company, the number of shares of
Common Stock covered by each outstanding Option, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options have yet been granted or which have been returned to the Plan
upon cancellation or expiration of an Option, as well as the price per share of
Common Stock covered by each such outstanding Option, are proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company.
In the event of the proposed dissolution or liquidation of the Company, the
Option will terminate immediately prior to the consummation of such proposed
action. In the event of a proposed sale of all or substantially all of the
assets of the Company, or the merger of the Company with or into another
corporation, the Option may be assumed or an equivalent option may be
substituted by such successor corporation or a parent or subsidiary of such
successor corporation. In the event the successor corporation does not agree to
assume the Option or to substitute an equivalent option, the Optionee has the
right to exercise the Option as to some or all of the Optioned Stock, including
Shares as to which the Option would not otherwise be exercisable.
AMENDMENT AND TERMINATION. The Board may amend or terminate the Plan from
time to time in such respects as the Board may deem advisable; provided that, to
the extent necessary and desirable to comply with Rule 16b-3 under the Exchange
Act (or any other applicable law or regulation), the Company must obtain
approval of the stockholders of the Company to Plan amendments to the extent and
in the manner required by such law or regulation.
CONDITIONS UPON ISSUANCE OF SHARES. Shares can not be issued pursuant to
the exercise of an Option unless the exercise of such Option and the issuance
and delivery of such Shares pursuant thereto complies with all relevant
provisions of law, including, without limitation, the Securities Act of 1933, as
amended, the Exchange Act, the rules and regulations promulgated thereunder,
state securities laws, and the requirements of any stock exchange upon which the
Shares may then be listed, and are further subject to the approval of counsel
for the Company with respect to such compliance.
A-2
<PAGE> 20
RESERVATION OF SHARES. The Company, during the term of this Plan, must at
all times reserve and keep available such number of Shares as are sufficient to
satisfy the requirements of the Plan.
OPTION AGREEMENT. Options are evidenced by written option agreements in
such form as the Board approves.
A-3
<PAGE> 21
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
PEOPLESOFT, INC.
1999 ANNUAL MEETING OF STOCKHOLDERS
The undersigned stockholder of PeopleSoft, Inc., a Delaware corporation
(the "Company"), hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement, each dated April 15, 1999, and hereby appoints
Alfred J.Castino and David A. Duffield, or either of them, proxies and
attorneys-in-fact, with full power to each of substitution, on behalf and in the
name of the undersigned, to represent the undersigned at the 1999 Annual Meeting
of Stockholders of PeopleSoft, Inc. to be held on May 25, 1999 at 10:00 a.m.
local time, at the Carr America Visitor's Center at 4400 Rosewood Drive,
Pleasanton, California, and at any adjournment(s) thereof, and to vote all
shares of Common Stock which the undersigned would be entitled to vote if then
and there personally present, on the matters set forth below.
THIS PROXY WILL BE VOTED AS DIRECTED, OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR THE ELECTION OF THE NOMINEES FOR DIRECTORS, FOR THE
AMENDMENTS TO THE 1992 DIRECTORS STOCK OPTION PLAN, AND FOR THE RATIFICATION OF
THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS, AND AS SAID
PROXIES DEEM ADVISABLE ON SUCH MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE (SEE REVERSE SIDE)
<PAGE> 22
X Please mark votes as in this example.
1. To elect three (3) Class I directors to serve two-year terms.
Class I Nominees: David A. Duffield, Aneel Bhusri, and George J. Still Jr.
___ FOR ALL NOMINEES ___ WITHHELD FROM ALL NOMINEES
___ For all nominees except as noted above
2. To approve amendments to the 1992 Directors Stock Option Plan, as set forth
in the accompanying proxy statement.
___ FOR ___ AGAINST ___ ABSTAIN
3. To ratify the appointment of Ernst & Young LLP as independent auditors of
the Company for the year ending December 31, 1999.
___ FOR ___ AGAINST ___ ABSTAIN
4. To transact such other business as may properly come before the meeting or
any postponements or adjournments thereof.
Mark here for address change and note at left __.
TO ENSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, PLEASE MARK, SIGN
AND DATE THIS PROXY AND RETURN IT AS PROMPTLY AS POSSIBLE.
This proxy should be marked, dated and signed by each shareholder exactly as
such shareholder's name appears hereon, and returned promptly in the enclosed
envelope. Persons signing in a fiduciary capacity should so indicate. A
corporation is requested to sign its name by its President or other authorized
officer, with the office held designated. If the shares are held by joint
tenants or as community property, both holders should sign.
Signature: Date:
----------------------- --------------------
Signature: Date:
----------------------- --------------------
<PAGE> 23
<TABLE>
<S> <C>
TWO NEW WAYS TO VOTE N
N
N
N
VOTE BY TELEPHONE N
IT'S FAST, CONVENIENT, AND YOUR VOTE IS IMMEDIATELY N
CONFIRMED AND POSTED. N
USING A TOUCH-TONE PHONE N
CALL THE TOLL-FREE NUMBER SHOWN ON THE VOTING N
INSTRUCTION FORM. N
JUST FOLLOW THESE 4 EASY STEPS: N
N
1. READ THE ACCOMPANYING PROXY STATEMENT AND VOTING N
INSTRUCTION FORM. N
2. CALL THE TOLL-FREE NUMBER SHOWN ON YOUR VOTING N
INSTRUCTION N
FORM.
3. ENTER YOUR 12 DIGIT CONTROL NUMBER LOCATED ON YOUR
VOTING
INSTRUCTION FORM.
4. FOLLOW THE SIMPLE RECORDED INSTRUCTIONS.
YOUR VOTE IS IMPORTANT!
CALL 24 HOURS A DAY
DO NOT RETURN VOTING FORM IF YOU ARE VOTING BY TELEPHONE OR INTERNET
<CAPTION>
<S> <C>
TWO NEW WAYS TO VOTE LOGO
VOTE BY INTERNET
VOTE BY TELEPHONE IT'S FAST, CONVENIENT, AND YOUR VOTE IS IMMEDIATELY
IT'S FAST, CONVENIENT, AND YOUR VOTE IS IMMEDIATELY CONFIRMED AND POSTED AND YOU CAN GET ALL FUTURE
CONFIRMED AND POSTED. MATERIALS BY INTERNET.
USING A TOUCH-TONE PHONE WWW.PROXYVOTE.COM
CALL THE TOLL-FREE NUMBER SHOWN ON THE VOTING JUST FOLLOW THESE 4 EASY STEPS:
INSTRUCTION FORM.
JUST FOLLOW THESE 4 EASY STEPS: 1. READ THE ACCOMPANYING PROXY STATEMENT AND VOTING
INSTRUCTION FORM.
1. READ THE ACCOMPANYING PROXY STATEMENT AND VOTING 2. GO TO WEBSITE WWW.PROXYVOTE.COM
INSTRUCTION FORM. 3. ENTER YOUR 12 DIGIT CONTROL NUMBER LOCATED ON YOUR
2. CALL THE TOLL-FREE NUMBER SHOWN ON YOUR VOTING VOTING
INSTRUCTION INSTRUCTION FORM.
FORM. 4. FOLLOW THE SIMPLE INSTRUCTIONS.
3. ENTER YOUR 12 DIGIT CONTROL NUMBER LOCATED ON YOUR YOUR VOTE IS IMPORTANT!
VOTING GO TO WWW.PROXYVOTE.COM
INSTRUCTION FORM. 24 HOURS A DAY
4. FOLLOW THE SIMPLE RECORDED INSTRUCTIONS.
YOUR VOTE IS IMPORTANT!
CALL 24 HOURS A DAY
DO NOT RETURN VOTING FORM IF YOU ARE VOTING BY TELEP DO NOT RETURN VOTING FORM IF YOU ARE VOTING BY TELEPHONE
OR INTERNET
</TABLE>
