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Citrix Systems, Inc.
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May 9, 2000
To Our Shareholders,
The Citrix Systems, Inc. annual shareholder meeting on Thursday, May 18, 2000,
is quickly approaching. In our effort to continue adding shareholder value, four
proposals have been submitted for shareholder approval:
1) To elect three class II directors to serve for a three year term
2) To increase from 400,000,000 to 1,000,000,000 the authorized shares of
common stock
3) To approve the amendment of the Corporation's 1995 stock option plan
4) To approve the Corporations 2000 Director and Officer Stock Option and
Incentive Plan
We believe that approval of each of these amendments will enable us to continue
our success at adding value to our shareholder base. Notwithstanding the results
tabulated by a quantitative model instituted by Institutional Shareholder
Services (ISS), we urge you to vote in favor or "FOR" all submitted proposals.
Citrix Systems, Inc., originally founded in 1989, worked through many trials and
tribulations during its first years of operation before taking ownership of the
company to the public markets in the form of an Initial Public Offering in
December of 1995. In our five years as a publicly traded company, our market
capitalization has grown from $150 million to over $10 billion, and our stock
has returned over 2,458%.
The ISS recommendation to vote against Proposal No. 3 & No. 4, sacrifices our
ability to continue to add value to our loyal shareholder base and seriously
jeopardizes our ability to meet the challenges of facing a more competitive
landscape in both the technology field and in competition for recruiting,
retaining, and rewarding talented individuals. ALTHOUGH ISS INITIALLY VOTED
AGAINST PROPOSAL NO. 2, ISS HAS CONFIRMED THAT DUE TO THEIR ERROR, THEY HAVE
SINCE ISSUED A RECOMMENDATION IN FAVOR OR "FOR" PROPOSAL NO. 2.
PROPOSAL NO. 2, INCREASE IN AUTHORIZED COMMON SHARES
The increase in authorized shares will provide a sufficient number of shares for
any of the following corporate purposes:
1) acquiring other businesses in exchange for shares of our Common Stock,
2) entering into collaborative research and development arrangements with
other companies in which Common Stock is part of the consideration,
3) facilitating broader ownership of our Common Stock by effecting a
stock split or a stock dividend
4) raising capital through the sale of common stock or securities
convertible into common stock,
5) attracting and retaining employees by the issuance of additional stock
options
PROPOSAL NO. 3 & NO. 4, STOCK INCENTIVE PLANS
The use of stock options in recruiting, retaining and rewarding the most
talented individuals within the available human resource pool has been critical
to our overall success in terms of stock performance, revenue growth,
profitability, and market leadership position.
Our challenge in this employment market is to ensure that employees, our most
significant asset, are appropriately recognized, rewarded, and encouraged to
stay with the Company, help it grow, and, by doing so, continue to add
shareholder value. The proposed amendment to our 1995 Stock Incentive Plan and
adoption of the new 2000 Director and Officer Plan reflects our philosophy that
stock incentives are a meaningful component of employee compensation, enabling
us to attract the best available candidates and retain our talented employee
base.
Since our public offering in FY 1995,
o Revenues have grown by 2,668% or by 62% when comparing FY 1999 and
1998
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o Net income, not including the effect of amortization and in-process
research and development, has increased by 6,773%, or by 64% when
comparing FY 1999 and 1998.
o We continue to be the premiere provider of application server software
and during 1999 we were added to the S&P 500 and reconfirmed into the
NASDAQ 100.
o As of the end of FY 1999, we have returned 2,458% as compared to 377%
for NASDAQ and 260% for the S&P 500 over the same period.
1995 STOCK PLAN AND 2000 DIRECTOR AND OFFICER STOCK OPTION AND INCENTIVE PLAN
We believe that the ISS recommendation against Proposal No. 3 & 4 fails to take
the following into consideration:
ALL EMPLOYEES PARTICIPATE: Our plan is broad based and covers all employees. To
date, only about one-quarter of the option grants have been made to vice
presidents and above, while three-quarters have been granted to all other
employees. We encourage ownership at every level of the organization and believe
that this has played a key role in our company's success.
CASH COMPENSATION: It has been our practice to pay cash compensation between the
25-50th percentile of our peer group companies, and supplement salaries with
stock options. By doing so, our employees' financial success is directly related
to the financial success of the Company. Our compensation practices drive an
ownership mentality.
VESTING: ISS treated all options as if they were vested today. We believe that
is unfair. Although plan administrators do have discretion on the vesting of a
particular option grant, in nearly every situation to date, vesting occurs
equally over a four year period.
LOW TURNOVER RATE: We have historically experienced very low employee turnover
rate, much lower than technology industry average. According to the 1999 Radford
Benchmark Salary Survey, the employee voluntary turnover rate in the technology
industry is approximately 16%. Our voluntary turnover rate for 1999 was 5%. We
believe stock options are a critical factor in attracting and retaining our
employees.
In summary, we urge you to support us and to vote in favor of Proposal No. 1, 2,
3 & 4. If we can provide any further information regarding this matter, please
do not hesitate to call Scott Davidson, Director, Corporate Treasury, at
954-267-2388 or me at 954-267-3083.
Regards,
/s/ John P. Cunningham
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John P. Cunningham
Chief Financial Officer
Senior Vice President, Finance and Administration
Citrix Systems, Inc.
