<PAGE> 1
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT /X/ FILED BY A PARTY OTHER THAN THE REGISTRANT / /
- --------------------------------------------------------------------------------
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting Material Pursuant to 14a-11(c) or 14a-12
HYPERION SOFTWARE CORPORATION
(Name of Registrant as Specified In Its Charter)
THE BOARD OF DIRECTORS OF REGISTRANT
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(3)
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which 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:(1)
4) Proposed maximum aggregate value of transaction:
/ / 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
[Hyperion Software Logo]
October 8, 1996
Dear Stockholder:
You are invited to attend the Annual Meeting of Stockholders of Hyperion
Software Corporation to be held at 9:00 A.M., Wednesday, November 13, 1996 at
the Hyatt Regency Greenwich, 1800 East Putnam Avenue, Old Greenwich,
Connecticut.
The notice of meeting and proxy statement that follow describe the business
to be conducted at the meeting. Whether or not you plan to attend this meeting
in person, we urge you to sign and return the enclosed proxy so that your shares
will be represented and voted at the meeting. If you so desire, you can withdraw
your proxy and vote in person at the Annual Meeting.
Cordially,
/s/ James A. Perakis
-----------------------------
James A. Perakis
Chairman and CEO
<PAGE> 3
HYPERION SOFTWARE CORPORATION
900 LONG RIDGE ROAD
STAMFORD, CONNECTICUT 06902
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TO THE STOCKHOLDERS OF HYPERION SOFTWARE CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Hyperion
Software Corporation, a Delaware corporation (the "Company"), will be held on
Wednesday, November 13, 1996 at 9:00 A.M., at the Hyatt Regency Greenwich, 1800
East Putnam Avenue, Old Greenwich, Connecticut, for the following purposes:
1. To elect two members to the Board of Directors to serve for a three-year
term as Class II Directors.
2. To ratify the selection of the firm of Ernst & Young LLP as independent
auditors for the fiscal year ending June 30, 1997.
3. To transact such other business as may properly come before the meeting
and any adjournments thereof.
Only stockholders of record at the close of business on September 30, 1996,
the record date fixed by the Board of Directors, are entitled to notice of and
to vote at the meeting and any adjournment thereof.
By Order of the Board of Directors,
/s/ Craig M. Schiff
-----------------------------
Craig M. Schiff
Corporate Secretary
Stamford, Connecticut
October 8, 1996
------------------------
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO
SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED STAMPED ENVELOPE BY RETURN
MAIL.
<PAGE> 4
HYPERION SOFTWARE CORPORATION
900 LONG RIDGE ROAD
STAMFORD, CONNECTICUT 06902
PROXY STATEMENT
OCTOBER 8, 1996
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Hyperion Software Corporation (the
"Company") for use at the Annual Meeting of Stockholders of the Company to be
held at 9:00 A.M., Wednesday, November 13, 1996 at the Hyatt Regency Greenwich,
1800 East Putnam Avenue, Old Greenwich, Connecticut, and any adjournments
thereof (the "Meeting").
Only stockholders of record at the close of business on September 30, 1996
will be entitled to notice of and to vote at the Meeting. As of that date,
17,093,860 shares of Common Stock, par value $.01 per share, of the Company
("Common Stock") were outstanding and entitled to vote at the Meeting.
Stockholders are entitled to cast one vote for each share of Common Stock held
of record at the close of business on September 30, 1996 on each matter
submitted to a vote at the Meeting. Any stockholder may revoke a proxy at any
time prior to its exercise by filing a later-dated proxy or a written notice of
revocation with the Corporate Secretary, or by voting in person at the Meeting.
If a stockholder is not attending the Meeting, any proxy or notice should be
returned in time for receipt no later than the close of business on the day
preceding the Meeting.
At the Meeting, proposals to elect Messrs. Arese Lucini and Papone as Class
II Directors and to ratify the selection of the firm of Ernst & Young LLP as the
Company's independent auditors for the fiscal year ending June 30, 1997 will be
subject to a vote of stockholders. Where a choice has been specified on the
proxy with respect to the foregoing matters, the shares represented by the proxy
will be voted in accordance with the specifications, and will be voted FOR the
proposal if no specification is indicated. The persons named as attorneys in the
proxies are directors and/or officers of the Company.
The Board of Directors of the Company knows of no other matters to be
presented at the Meeting. If any other matter should be presented at the Meeting
upon which a vote properly may be taken, shares represented by all proxies
received by the Board of Directors will be voted with respect thereto in
accordance with the judgment of the persons named in the proxies.
An Annual Report to Stockholders, containing audited financial statements
of the Company for the fiscal year ended June 30, 1996, is being mailed together
with this proxy statement to all stockholders entitled to vote. This proxy
statement and the accompanying notice and form of proxy were first sent or given
to stockholders on or about the date hereof.
All share and per share information in this Proxy Statement has been
adjusted as of each date given to reflect a two-for-one stock split effected in
the form of a stock dividend in December 1995.
<PAGE> 5
PRINCIPAL HOLDERS OF VOTING SECURITIES
- --------------------------------------------------------------------------------
The following table sets forth, as of September 10, 1996, certain information
regarding beneficial ownership of the Company's Common Stock (i) by each person
who, to the knowledge of the Company, beneficially owned more than 5 percent of
the shares of Common Stock of the Company outstanding at such date; (ii) by each
director of the Company; (iii) by each Named Officer of the Company (as defined
below under the caption "COMPENSATION INFORMATION CONCERNING DIRECTORS AND
OFFICERS -- Executive Compensation Summary"); and (iv) by all current executive
officers and directors of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT
NAME AND ADDRESS OWNERSHIP(1) OF CLASS
- ---------------- ------------ --------
<S> <C> <C>
James A. Perakis(2)................................................. 991,376 5.6%
c/o Hyperion Software Corporation
900 Long Ridge Road
Stamford, CT 06902
Crown-Glynn Affiliated Entities(3).................................. 898,720 5.3%
c/o Crown Advisors Ltd.
67 East Park Place
Morristown, NJ 07960
Marco Arese Lucini(4)............................................... 171,450 1.0%
Gary G. Greenfield(5)............................................... 11,334 *
Harry S. Gruner(6).................................................. 38,666 *
William W. Helman IV(7)............................................. 28,666 *
Aldo Papone(8)...................................................... 25,333 *
Robert W. Thomson(9)................................................ 18,000 *
Peter F. DiGiammarino(10)........................................... 25,000 *
Craig M. Schiff(11)................................................. 225,500 1.3%
David M. Sample(12)................................................. 184,863 1.1%
Lucy Rae Ricciardi(13).............................................. 167,344 *
Terence W. Rogers................................................... -- --
All current executive officers and directors as a group (11 persons) 1,887,532 10.3%
(14)..............................................................
</TABLE>
- ---------------
* less than 1%.
(1) The persons and entities named in the table have sole voting and investment
power with respect to all shares shown as beneficially owned by them,
except as noted below.
(2) Includes options to purchase 600,000 shares of Common Stock.
(3) Based upon an amended Schedule 13G filing dated February 15, 1996 and
information provided by Crown-Glynn Associates. Such amount represents
shares owned by a group of 13 entities and 7 individuals affiliated with
Crown-Glynn Associates, (collectively, the "Crown-Glynn Affiliated
Entities") none of which individually directly owns 5% or more of the
outstanding Common Stock of the Company.
(4) Includes options to purchase 8,000 shares of Common Stock.
(5) Consists of options to purchase Common Stock.
2
<PAGE> 6
(6) Includes options to purchase 20,666 shares of Common Stock.
(7) Includes options to purchase 20,666 shares of Common Stock.
(8) Includes options to purchase 21,333 shares of Common Stock.
(9) Includes options to purchase 14,000 shares of Common Stock.
(10) Consists of options to purchase Common Stock.
(11) Includes options to purchase 169,500 shares of Common Stock.
(12) Includes options to purchase 168,000 shares of Common Stock.
(13) Includes options to purchase 150,000 shares of Common Stock.
(14) Includes options to purchase 1,208,499 shares of Common Stock.
3
<PAGE> 7
ELECTION OF DIRECTORS
- --------------------------------------------------------------------------------
Pursuant to the Company's Amended and Restated Certificate of Incorporation (the
"Certificate of Incorporation"), the Company's Board of Directors is divided
into three classes -- Class I, II and III Directors. Each director is elected
for a three year term of office, with one class of directors being elected at
each annual meeting of stockholders. Each director holds office until his
successor is elected and qualified or until his earlier death, resignation or
removal.
The nominees for Class II Directors, Messrs. Arese Lucini and Papone, are
presently serving as directors of the Company. Shares represented by all proxies
received by the Board of Directors and not so marked as to withhold authority to
vote for any individual director (by writing that individual director's name
where indicated on the proxy) or for all directors will be voted (unless one or
both nominees are unable or unwilling to serve) FOR the election of the nominees
for Class II Directors named below. The Board of Directors knows of no reason
why such nominees would be unable or unwilling to serve, but if such should be
the case, proxies may be voted for the election of some other person.
The information below sets forth the current members of the Board of
Directors, including the nominees for Class II Directors:
NOMINEES TO SERVE AS DIRECTORS FOR A TERM EXPIRING AT THE 1999 ANNUAL MEETING OF
STOCKHOLDERS (CLASS II DIRECTORS):
Marco Arese Lucini
Mr. Arese Lucini, age 46, served as Vice President -- International
from June 1988 to December 1992 and has served as a director of the Company
since August 1985; he is a member of the Audit Committee. From 1979 to June
1988, Mr. Arese Lucini served as Managing Director of Fienco S.p.A., a
software company based in Milan, Italy.
Aldo Papone
Mr. Papone, age 64, has served as a director of the Company since
April 1994; he is a member of the Compensation and Stock Option Committees.
He has been a Senior Advisor to the American Express Company since 1991.
During 1989 and 1990, he was Chairman and Chief Executive Officer of the
American Express Travel Related Services Company. Mr. Papone is currently a
director of the American Express Company, Springs Industries, Inc. and The
Body Shop International plc.
Note: Mr. Helman, a Class II director on the date hereof, has decided not
to stand for reelection to the Board of Directors at the expiration of his
Class II director term.
DIRECTORS SERVING FOR A TERM EXPIRING AT THE 1998
ANNUAL MEETING OF STOCKHOLDERS (CLASS III DIRECTORS):
Harry S. Gruner
Mr. Gruner, age 37, has served as a director of the Company since
October 1989; he is a member of the Compensation and Stock Option
Committees. He has been a general partner of JMI Equity Fund, L.P., a
private equity investment partnership, since November 1992. From August
1986 to October 1992, Mr. Gruner was a principal of Alex. Brown & Sons
Incorporated, which firm served as the lead manager of the Company's
initial public offering in October 1991. Mr. Gruner is also a director of
Brock International, Inc., a developer, marketer and supporter of software
systems; Jackson Hewitt, Inc., an income tax processing company; the META
Group, Inc., a syndicated information technology research
4
<PAGE> 8
company; Optika Imaging Systems, Inc., a developer and marketer of imaging
software; and several privately held companies.
Robert W. Thomson
Mr. Thomson, age 46, has served as a director of the Company since
1981. Mr. Thomson is the founder of the Company. He served as its Chief
Executive Officer until September 1985 and as President until December
1987. He has also served as a software consultant for International
Interactive Media, Ltd. ("IIM") since 1987. Mr. Thomson is the sole
stockholder of IIM. Since January 1988, Mr. Thomson has provided consulting
services to the Company pursuant to an agreement between the Company and
IIM.
DIRECTORS SERVING FOR A TERM EXPIRING AT THE 1997
ANNUAL MEETING OF STOCKHOLDERS (CLASS I DIRECTORS):
James A. Perakis
Mr. Perakis, age 52, has served as Chief Executive Officer and as a
director of the Company since September 1985 and as President of the
Company from December 1987 to May 1996. Mr. Perakis is also Chairman of the
Board of Directors and a member of the Compensation Committee. From 1983 to
September 1985, Mr. Perakis served as Senior Vice President and General
Manager of Chase Decision Systems, a division of Interactive Data
Corporation, a developer and marketer of mainframe software for planning
and financial applications. From 1979 to 1983, Mr. Perakis was Chief
Financial Officer of Interactive Data Corporation, a supplier of data and
software to financial and corporate markets. Mr. Perakis is also a director
of MapInfo Corporation, a publicly held company which develops, markets and
supports desktop mapping software, mapping application development tools
and geographic and demographic information products.
Peter F. DiGiammarino
Mr. DiGiammarino, age 43, was appointed President and Chief Operating
Officer, as well as a member of the Board of Directors in May 1996. Prior
to joining the Company, Mr. DiGiammarino was Vice President and Business
Area Manager at American Management Systems, Inc. ("AMS"), a consulting and
systems development firm. Mr. DiGiammarino also served as a member of AMS's
operating group. Mr. DiGiammarino joined AMS in 1977.
Gary G. Greenfield
Mr. Greenfield, age 41, was elected to the Board in June 1992; he is a
member of the Audit Committee. He currently serves as President, Chief
Operating Officer and a director of INTERSOLV Inc., a publicly held company
which is a leading provider of software development solutions for
client/server and object-oriented development, software configuration
management and data warehousing. Mr. Greenfield joined Sage Software (which
merged with INDEX Technology in 1991 to form INTERSOLV Inc.) in 1987 as
Vice President of Marketing. Prior to that he served as President of Frey
Associates Inc., a provider of artificial intelligence software and
services.
5
<PAGE> 9
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors of the Company met five times during the fiscal year
ended June 30, 1996. The Board of Directors has a standing Audit Committee, a
standing Compensation Committee and a standing Stock Option Committee. In
September 1996, Mr. Papone was appointed a member of the Compensation and Stock
Option Committees. The Audit Committee, which oversees the accounting and
financial functions of the Company, including matters relating to the
appointment and activities of the Company's independent auditors, met twice
during fiscal year 1996. Messrs. Arese Lucini and Greenfield are the members of
the Audit Committee. The Compensation Committee of the Company, which
establishes and administers the Company's executive compensation programs, met
twice during fiscal year 1996. Messrs. Perakis, Gruner, Helman and Papone are
the current members of the Compensation Committee. The Stock Option Committee,
which administers the Company's 1991 Stock Plan and 1991 Employee Stock Purchase
Plan, met four times during fiscal year 1996. Messrs. Gruner, Helman and Papone
are the current members of the Stock Option Committee. The Company does not have
a standing Nominating Committee. Each of the directors attended at least 75
percent of the aggregate of all meetings of the Board of Directors and of all
committees on which he serves.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Perakis, a member of the Compensation Committee, is also the Chief Executive
Officer of the Company.
6
<PAGE> 10
COMPENSATION INFORMATION CONCERNING DIRECTORS AND OFFICERS
- --------------------------------------------------------------------------------
<TABLE>
EXECUTIVE COMPENSATION SUMMARY
The following table sets forth information concerning the compensation for
services in all capacities to the Company, for the fiscal years ended June 30,
1996, 1995 and 1994, of those persons who were at June 30, 1996 (i) the Chief
Executive Officer; (ii) each of the four most highly compensated executive
officers of the Company who earned more than $100,000 in salary and bonus in
fiscal year 1996; and (iii) an additional individual who would have been one of
the four most highly compensated executive officers of the Company but for the
fact that the individual was not serving as an executive officer of the Company
at the end of fiscal year 1996 (with the Chief Executive Officer, collectively,
the "Named Officers"):
<CAPTION>
LONG-TERM
COMPENSATION(2)
ANNUAL COMPENSATION(1) ---------------
------------------------- OPTIONS/
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(3) AWARDS(#)
- --------------------------- ----- --------- ----------- ---------------
<S> <C> <C> <C> <C>
James A. Perakis 1996 $270,000 $100,000 --(4)
Chairman and Chief Executive Officer 1995 257,000 103,000 --
1994 234,000 95,000 200,000
Peter F. DiGiammarino 1996 $ 15,000 $250,000 325,000
President and Chief Operating Officer 1995 -- -- --
1994 -- -- --
David M. Sample 1996 $200,000 $ 90,000 20,000
Senior Vice President 1995 175,000 166,000 20,000
1994 160,000 240,000 40,000
Lucy Rae Ricciardi 1996 $165,000 $ 55,000 20,000
Senior Vice President 1995 142,000 49,000 --
and Chief Financial Officer 1994 125,000 46,000 30,000
Craig M. Schiff 1996 $154,000 $ 40,000 20,000
Senior Vice President 1995 144,000 48,000 --
and Corporate Secretary 1994 136,000 40,000 30,000
Terence W. Rogers 1996 $240,000 -- 25,000
Former Executive Vice President (5) 1995 226,000 $ 86,000 --
1994 188,000 71,000 --
<FN>
- ---------------
(1) Excludes perquisites and other personal benefits, the aggregate annual
amount of which for each officer was less than the lesser of $50,000 or 10
percent of the total of annual salary and bonus reported.
(2) The Company did not grant any restricted stock awards or stock appreciation
rights or make any long term incentive plan payouts during fiscal 1996.
(3) Bonuses are reported in the year earned, even if actually paid in a
subsequent year.
(4) On September 19, 1996, the Stock Option Committee granted 150,000 stock
option shares to Mr. Perakis, priced at the then fair market value and which
vest over a three year period.
(5) Mr. Rogers resigned as Executive Vice President on March 8, 1996 and
terminated employment with the Company on June 30, 1996.
</TABLE>
7
<PAGE> 11
EMPLOYMENT AGREEMENTS
In May 1996, the Company entered into an employment agreement with Peter F.
DiGiammarino for the three-year period ending July 15, 1999. The agreement will
renew automatically for additional one-year terms thereafter unless terminated
by either party upon advance notice. Pursuant to the agreement, Mr. DiGiammarino
serves as the President and Chief Operating Officer of the Company and will
receive an initial annual base salary of $250,000, subject to annual increases
made in the discretion of the Board of Directors. The Company has agreed to pay
up to $150,000 for expenses incurred in connection with Mr. DiGiammarino's
relocation. In addition to his base salary and certain fringe benefits, Mr.
DiGiammarino is eligible to receive an incentive bonus at the end of each fiscal
year during the term of the agreement. The bonus shall be based upon several
factors, including the achievement of certain agreed upon targets relating to
Mr. DiGiammarino's individual performance and the Company's general performance.
This annual bonus is guaranteed to be 50 percent of Mr. DiGiammarino's base
salary for his initial year of employment, with up to an additional 50 percent
of base salary available to be awarded at the discretion of the Board and based
upon the extent to which performance targets are exceeded.
Pursuant to Mr. DiGiammarino's agreement, he has been paid a one-time
advance of $250,000, one twenty-fourth of which will be forgiven by the Company
with each month of his continued employment. If Mr. DiGiammarino's employment is
terminated by the Company, then the full amount of the advance is forgiven,
except under certain circumstances. Under the agreement, Mr. DiGiammarino also
was granted a fully vested option to purchase 25,000 shares of Common Stock of
the Company priced at $13.75 per share, the fair market value share price at the
hire date. In addition, Mr. DiGiammarino was granted an option to purchase
300,000 shares of Common Stock of the Company priced at $13.75 per share, such
shares to vest over four years.
Additionally, under certain involuntary employment termination events, or
under certain voluntary employment termination events following a change in
control of the Company, Mr. DiGiammarino shall have the right to receive, as
severance pay, (i) one year's base salary; and (ii) the pro rata portion of any
performance bonus earned. Upon such termination, all options granted to Mr.
DiGiammarino which then are due to vest within fourteen months shall become
immediately vested.
8
<PAGE> 12
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
The following table sets forth information concerning options granted
during the fiscal year ended June 30, 1996 to the Named Officers as reflected in
the Executive Compensation Summary table above:
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------------- VALUE AT
PERCENT OF ASSUMED ANNUAL RATES
TOTAL OF STOCK PRICE
OPTIONS/SARS APPRECIATION FOR
GRANTED TO EXERCISE OR OPTION TERM(1)
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION ------------------------
NAME GRANTED(#) FISCAL YEAR ($/SHARE) DATE 5%($) 10%($)
---- ------------- ------------- ------------ ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
James A. Perakis (2)......... -- -- -- -- -- --
Peter F. DiGiammarino (3).... 300,000 25.47% $13.75 5/29/06 $2,594,190 $6,574,188
Peter F. DiGiammarino (4).... 25,000 2.12% $13.75 5/29/06 $ 216,183 $ 547,849
Lucy Rae Ricciardi (3)....... 20,000 1.70% $23.75 10/31/05 $ 327,393 $ 802,678
David M. Sample (3).......... 20,000 1.70% $23.75 10/31/05 $ 327,393 $ 802,678
Craig M. Schiff (3).......... 18,000 1.53% $23.75 10/31/05 $ 294,654 $ 722,410
Terence W. Rogers (3)........ 25,000 2.12% $23.75 10/31/05 $ 409,242 $1,003,347
<FN>
- ---------------
(1) Amounts reported in this column represent hypothetical amounts that may be
realized upon exercise of the options immediately prior to the expiration of
their term, assuming the specified compounded rates of appreciation of the
Company's Common Stock over the term of the options. These amounts are
calculated based on rules promulgated by the Securities and Exchange
Commission and do not reflect the Company's estimate of future stock price
growth. Actual gains, if any, on stock option exercises and Common Stock
holdings are dependent on the timing of such exercise and the future
performance of the Company's Common Stock. There can be no assurances that
the rates of appreciation assumed in this table can be achieved or that the
amounts reflected will be received by the individuals.
(2) On September 19, 1996, the Stock Option Committee granted 150,000 stock
option shares to Mr. Perakis, priced at the then fair market value and which
vest over a three year period.
(3) These options have terms of ten years from the date of grant and become
exercisable as to 25 percent of the shares covered thereby on each
anniversary of the date of grant until such options are fully exercisable.
These options do not qualify as incentive stock options under Section 422 of
the Internal Revenue Code.
(4) These options have terms of ten years from the date of the grant and are
fully vested on the grant date. These options do not qualify as incentive
stock options under Section 422 of the Internal Revenue Code.
</TABLE>
9
<PAGE> 13
OPTION EXERCISES AND FISCAL YEAR-END VALUES
Shown below is further information with respect to options to purchase the
Company's Common Stock granted to the Named Officers, including (i) the number
of shares of Common Stock purchased upon exercise of options in 1996; (ii) the
net value realized upon such exercise; (iii) the number of unexercised options
outstanding at June 30, 1996; and (iv) the value of such unexercised options at
June 30, 1996:
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND OPTION VALUES OF UNEXERCISED OPTIONS
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS IN-THE-MONEY OPTIONS/SARS
AT JUNE 30, 1996(#) AT JUNE 30, 1996($)(2)
SHARES ACQUIRED VALUE ---------------------------- ----------------------------
NAME ON EXERCISE(#) REALIZED($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ---------------- --------------- ------------ -------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
James A. Perakis...... 300,000(3) $6,631,400(3) 533,332 66,668 $4,681,552 $208,671
Peter F. DiGiammarino.. -- -- 25,000 300,000 -- --
Craig M. Schiff....... 40,000 $ 901,900 165,000 33,000 $1,256,400 $ 20,700
Lucy Rae Ricciardi.... 20,000 $ 461,900 145,000 35,000 $1,040,100 $ 20,700
David M. Sample....... 14,000 $ 316,750 155,500 57,500 $1,051,965 $ 55,725
Terence W. Rogers..... 50,000 $ 625,280 25,000 -- $ 84,500 --
<FN>
- ---------------
(1) Amounts disclosed in this column may not reflect amounts actually received
by the Named Officers but are calculated based on the difference between the
fair market value of the Company's Common Stock on the date of exercise and
the exercise price of the options. Named Officers will receive cash only if
and when they sell the Common Stock issued upon exercise of the options and
the amount of cash received by such individuals is dependent on the price of
the Company's Common Stock at the time of such sale.
(2) Value is based on the difference between the option exercise price and the
fair market value at fiscal year-end 1996 ($12.38 per share) multiplied by
the number of shares underlying the option.
(3) Of the 300,000 shares acquired by Mr. Perakis, 100,000 shares were
subsequently sold for a gain of $2,190,560. Mr. Perakis continues to hold
the remaining 200,000 shares as part of his 5.6% beneficial ownership of the
Company (see "Principal Holders of Voting Securities" on page 2).
</TABLE>
10
<PAGE> 14
REPORT ON EXECUTIVE COMPENSATION BY THE COMPENSATION
AND STOCK OPTION COMMITTEES OF THE BOARD OF DIRECTORS
- --------------------------------------------------------------------------------
To Our Stockholders:
The Compensation and Stock Option Committees of the Board of Directors
(together, the "Committee") with the exception of Mr. Perakis, who is a member
of the Compensation Committee, are comprised of directors who are not employees
of the Company. The Committee is responsible for establishing and administering
the Company's executive compensation programs. The Committee, excluding Mr.
Perakis, develops annual and long-term objectives for Mr. Perakis and
establishes his compensation.
The philosophy underlying the development and administration of the
Company's executive compensation policies is the alignment of the interests of
executive management with those of the stockholders. Key elements of this
philosophy are:
- Providing the executive with a base salary that is competitive with
executive base salaries for comparable companies in its industry and
geographical area. This enables the Company to attract and retain highly
qualified executive officers.
- Establishing a discretionary incentive compensation program that
delivers bonus pay commensurate with (i) the Company's performance, as
measured by operating, financial and strategic objectives; and (ii) the
executive's performance, as measured against organizational and
management objectives and the degree to which teamwork and Company
values are fostered.
- Providing significant equity-based incentives for executives, in the
form of stock options, to ensure that they are motivated over the long
term to respond to the Company's business challenges and opportunities
from an ownership standpoint.
Base salaries of the six highest paid executives are listed on the
Executive Compensation Summary table found on page 7. Executive base salaries
were established in employment agreements between the Company and the executive
officer. On an annual basis, the Committee reviews these salaries and, while it
is not required to, it may in its discretion increase the base salaries.
Increases typically have been based on merit, and have also been made when
necessary so that base salaries remain competitive when compared to other
software companies of comparable size and relative geographical location. (In
the performance graph that follows this report, the Company's performance is
compared to that of companies classified under SIC Code 7372 -- prepackaged
software companies.) The amount of increases in base salaries also depends upon
the Committee's subjective judgment as to the executive's contribution to
Company performance, both in terms of performance against goals and changes in
job content and responsibilities. The Committee, from time to time, has used
outside compensation consultants regarding salary increases.
The incentive compensation program is a vehicle by which executives can
earn additional compensation, depending upon Company and individual performance
relative to specified annual objectives. Each year the CEO establishes, with the
approval of the Committee, a list of objectives for each department and for the
Company as a whole. The departmental objectives generally represent specific
tasks and qualitative objectives, such as the implementation of specified
programs, the timing and caliber of deliverables, or the strengthening of
specified aspects of department performance, rather than quantitative targets.
At the end of the year, a bonus may be paid to each executive officer depending
upon the relative success of their department in achieving its goals for that
year, and, more importantly, on Company-wide growth in revenues and net income.
The Board of Directors believes such growth is critical to the Company's
fundamental goal of building stockholder value. The amount of the bonus is not
determined pursuant to any formula, but rather is established subjectively by
the Committee in its discretion.
11
<PAGE> 15
The purpose of stock option grants is to align executives' interests with
stockholder goals -- to provide additional incentives to executive officers and
other key employees to work, not just for the near term but as well for the long
term, to maximize stockholder value. Accordingly, executives are considered each
year for stock option grants, and it is the Company's policy to weight total
compensation heavily toward equity compensation through stock options. Options
are generally granted at fair market value and, with respect to options granted
since the Company's initial public offering, become exercisable ratably over 3
to 4 year periods. The actual number of stock options granted to executives is
not determined pursuant to any formula, but rather they are awarded subjectively
by the Committee in its discretion.
COMPANY PERFORMANCE AND CEO COMPENSATION
Mr. Perakis' base compensation was established pursuant to the terms of an
employment agreement which provides for annual increases in base salary, at the
discretion of the Committee, not to exceed 10 percent in any year. In 1995, the
Committee (without the participation of Mr. Perakis) increased Mr. Perakis' base
salary by approximately 10 percent, and in 1996 increased it by an additional 5
percent, pursuant to his current employment agreement. Mr. Perakis' employment
agreement also provides for the payment of an annual performance bonus, and
stipulates that, prior to September 30 of each year, Mr. Perakis must submit to
the independent members of the Committee for their approval a formula on which
Mr. Perakis' bonus, if any, for such fiscal year will be based. In approving any
formula, the Committee (without the participation of Mr. Perakis) must take into
account the Company's progress in meeting its business plan, including
profitability and revenue growth projections as well as the compensation
packages of chief executive officers of comparable companies of similar size in
the software industry. Mr. Perakis was awarded a bonus of 37 percent of his base
salary (three quarters of his targeted bonus rate) for fiscal 1996, because the
Committee concluded that the Company achieved 75 percent of the goals relating
to the Company's business plan for 1996, including operating, financial and
strategic objectives.
Over the past five years the Company has realized significant year-to-year
growth in revenues and solid earnings. As a result of the Company's performance
and his individual contribution, Mr. Perakis was granted, at fair market value,
the stock options reflected in the Executive Compensation Summary table on page
7. The grant of options was not subject to a discrete weighting of specific
criteria.
MEMBERS OF THE COMMITTEE:
HARRY S. GRUNER (Compensation and Stock Option Committees)
WILLIAM W. HELMAN IV (Compensation and Stock Option Committees)
ALDO PAPONE (Compensation and Stock Option Committees)
JAMES A. PERAKIS (Compensation Committee Only)
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<PAGE> 16
DIRECTOR COMPENSATION
Each non-employee director (which excludes any director who personally
receives more than $100,000 annually, or who controls any entity which receives
more than $100,000 annually, for providing goods or services to the Company
under a separate agreement or retainer) is paid $10,000 per year and is also
being paid $1,250 for each meeting of the Board of Directors attended. In
addition, each member of the Board of Directors is reimbursed for expenses
incurred in connection with each Board or Committee meeting attended.
Non-employee Directors also receive stock options under the Company's 1991
Non-Employee Director Stock Plan (the "Director Plan"). See "COMPENSATION
INFORMATION CONCERNING DIRECTORS AND OFFICERS -- Non-Employee Director Stock
Options" for a discussion of the Director Plan.
NON-EMPLOYEE DIRECTOR STOCK OPTIONS
Each non-employee director of the Company is eligible to participate in the
Company's 1991 Non-Employee Director Stock Option Plan (the "Director Plan").
The Director Plan authorizes the grant of options for a maximum of 200,000
shares of Common Stock. The number of shares of Common Stock issuable under the
Director Plan or subject to outstanding options is subject to adjustment for
changes in the Company's Common Stock. Each non-employee director automatically
receives a fully vested option for 4,000 shares on his or her first anniversary
date as a director of the Company and a fully vested option for 4,000 shares on
each successive anniversary of such date. Additionally, once a non-employee
director has served as a director for a period of two years, he or she shall
receive a one-time grant of options to purchase 10,000 shares of Common Stock,
subject to a three-year, pro rata vesting schedule; provided that this provision
shall not apply to directors who: (a) once served as an officer of the Company;
(b) directly or indirectly beneficially own, or have or share voting or
investment power over, greater than one percent of the outstanding voting stock
of the Company; or (c) received, upon election to the Board of Directors of the
Company after November 1, 1991, a special one-time stock option grant.
The exercise price per share of options granted under the Director Plan is
100 percent of the fair market value of the Company's Common Stock on the date
the option is granted. Options expire on the tenth anniversary of the date of
the option grant. Options may not be assigned or transferred except by will or
by the laws of descent or distribution and are exercisable only while the
optionee is serving as a director of the Company or within 90 days after the
optionee ceases to serve as a director of the Company (except that if a director
dies or becomes disabled while serving as a director of the Company, the option
is exercisable until the scheduled expiration date of the option).
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<PAGE> 17
PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the cumulative
total stockholder return on the Company's Common Stock during the period from
the Company's initial public offering on October 25, 1991 through June 30, 1996,
with the cumulative total return on the S&P 500 Index and the Company's Peer
Group. The comparison assumes $100 was invested on October 25, 1991 in the
Company's Common Stock at the initial offering price, in the S&P 500 Index and
with the Company's Peer Group, and assumes reinvestment of dividends, if any.
<TABLE>
COMPARISON OF FIVE YEAR*
CUMULATIVE TOTAL RETURN**
AMONG HYPERION SOFTWARE CORPORATION ("HYPERION"),
S&P 500 INDEX AND THE COMPANY'S PEER GROUP***
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) HYPERION S&P 500 PEER GROUP
--------------------- -------- ------- ----------
<S> <C> <C> <C>
1991 100.00 100.00 100.00
1992 134.00 108.00 96.00
1993 156.00 123.00 151.00
1994 172.00 125.00 146.00
1995 362.00 157.00 238.00
1996 198.00 198.00 297.00
<FN>
- ---------------
* Prior to October 25, 1991, the Company's Common Stock was neither
publicly-traded nor registered under Section 12 of the Securities Exchange
Act of 1934. Comparative data is provided only for the period since that
date.
** Cumulative Total Return assumes reinvestment of dividends.
*** Peer Group is based on SIC Code 7372 -- prepackaged software companies.
The stock price performance shown on the graph above is not necessarily
indicative of future price performance. Information used in the graph was
obtained from Research Data Group, a source believed to be reliable, however,
the Company is not responsible for any errors or omissions in such information.
</TABLE>
14
<PAGE> 18
CERTAIN TRANSACTIONS
- --------------------------------------------------------------------------------
The Company paid consulting fees of approximately $286,400 in fiscal 1996 to IIM
pursuant to a consulting agreement that expires on December 31, 1997. Robert W.
Thomson, a director of the Company, is the sole stockholder of IIM. The
consulting agreement provides that Mr. Thomson will carry out IIM's duties under
the agreement. Such duties include advisory functions related to development of
enhancements to existing software products of the Company. Under the agreement,
Mr. Thomson is required to devote up to 35 hours per week for no more than 46
weeks per year to the performance of IIM's duties.
The Company has adopted a policy whereby all transactions between the
Company and its principal officers, directors and affiliates must be on terms no
less favorable to the Company than could be obtained from unrelated third
parties and will be approved by a majority of the disinterested members of the
Company's Board of Directors.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
- --------------------------------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than 10 percent of a registered
class of the Company's equity securities (collectively "Reporting Persons"), to
file reports of ownership and changes in ownership with the Securities and
Exchange Commission (the "SEC") and The Nasdaq National Market. Officers,
directors and greater than 10 percent stockholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain Reporting Persons that no Forms 5 were
required for those persons, the Company believes that during fiscal year 1996
all Reporting Persons complied with all Section 16(a) filing requirements.
RATIFICATION OF SELECTION OF AUDITORS
- --------------------------------------------------------------------------------
The Board of Directors has selected the firm of Ernst & Young LLP to serve as
independent auditors for the fiscal year ending June 30, 1997. Ernst & Young LLP
has served as the Company's independent auditors since fiscal year 1985. It is
expected that a member of the firm will be present at the Meeting with the
opportunity to make a statement if so desired and will be available to respond
to appropriate questions. The Board of Directors recommends a vote FOR the
ratification of this selection.
VOTE REQUIRED
- --------------------------------------------------------------------------------
Only stockholders of record as of September 30, 1996 will be entitled to vote at
the Meeting and any adjournments thereof. As of that date 17,093,860 shares of
Common Stock of the Company were issued and outstanding. The holders of Common
Stock are entitled to one vote per share on any proposal presented at the
Meeting. Stockholders may vote in person or by proxy. Execution of a proxy will
not in any way affect a stockholder's right to attend the Meeting and vote in
person. Any stockholder giving a proxy has the right to revoke it by written
notice to the Corporate Secretary at anytime before it is exercised, or by
voting in person at the Meeting.
The representation in person or by proxy of at least a majority of the
outstanding shares of Common Stock entitled to vote at the Meeting is necessary
to constitute a quorum for the transaction of business. Votes withheld from any
nominee for election as a director, abstentions and broker "non-votes" are
counted as present or represented for purposes of determining the presence or
absence of a quorum for the Meeting. A "non-vote" occurs when a broker holding
shares for a beneficial owner votes on one proposal, but does not vote
15
<PAGE> 19
on another proposal because, in respect of such other proposal, the broker does
not have discretionary voting power and has not received instructions from the
beneficial owner.
Voting at the Meeting shall be conducted as follows. In the election of
directors, the nominees receiving the highest number of affirmative votes of the
shares present or represented and entitled to vote at the Meeting shall be
elected as directors. On all other matters being submitted to stockholders, an
affirmative vote of a majority of the shares present or represented at the
Meeting and voting on each such matter is required for approval. Abstentions and
broker "non-votes" are not counted in determining whether a majority vote is
obtained on any proposal voted on at the Meeting. An automated system
administered by the Company's transfer agent tabulates the votes. The vote on
each matter submitted to stockholders is tabulated separately.
The persons named as attorneys in the proxies are directors and/or officers
of the Company. All properly executed proxies returned in time to be counted at
the Meeting will be voted as stated above under "Election of Directors." Any
stockholder giving a proxy has the right to withhold authority to vote for any
individual nominee to the Board of Directors by writing that nominee's name in
the space provided on the proxy. In addition to the election of directors, the
stockholders will consider and vote upon a proposal to ratify the selection of
auditors, all as further described above. Where a choice has been specified on
the proxy with respect to the foregoing matters, the shares represented by the
proxy will be voted in accordance with the specifications and will be voted FOR
if no specification is indicated.
The Board of Directors of the Company knows of no other matters to be
presented at the Meeting. If any other matter should be presented at the Meeting
upon which a vote properly may be taken shares represented by all proxies
received by the Board of Directors will be voted with respect thereto in
accordance with the judgment of the persons named as attorneys in the proxies.
STOCKHOLDER PROPOSALS
- --------------------------------------------------------------------------------
Proposals of stockholders intended for inclusion in the proxy statement to be
furnished to all stockholders entitled to vote at the next annual meeting of
stockholders of the Company must be received at the Company's principal
executive offices not later than June 17, 1997. In order to curtail controversy
as to the date on which a proposal was received by the Company, it is suggested
that proponents submit their proposals by Certified Mail -- Return Receipt
Requested.
EXPENSES AND SOLICITATION
- --------------------------------------------------------------------------------
The cost of solicitation of proxies will be borne by the Company, and in
addition to soliciting stockholders by mail through its regular employees, the
Company may request banks, brokers and other custodians, nominees and
fiduciaries to solicit their customers who have stock of the Company registered
in the names of a nominee and, if so, will reimburse such banks, brokers and
other custodians, nominees and fiduciaries for their reasonable out-of-pocket
costs. Solicitation by officers and employees of the Company may also be made of
some stockholders in person or by mail, telephone or telegraph following the
original solicitation. The Company may retain a proxy solicitation firm to
assist in the solicitation of proxies in connection with the Meeting. If the
Company retains a proxy solicitation firm, it will pay such firm customary fees,
expected to be approximately $15,000, plus expenses.
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<PAGE> 20
HYPERION SOFTWARE CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD NOVEMBER 13, 1996
SOLICITED BY MANAGEMENT
The undersigned hereby appoints James A. Perakis, Craig M. Schiff and Lucy Rae
Ricciardi, and each of them singly, with full power of substitution, as proxies
to vote all shares of stock of Hyperion Software Corporation (the "Company") of
which the undersigned is entitled to vote at the Annual Meeting of Stockholders
of the Company to be held on Wednesday, November 13, 1996 at 9:00 A.M., at the
Hyatt Regency Greenwich, 1800 East Putnam Avenue, Greenwich, Connecticut, and
at any adjournments thereof, upon matters set forth in the Notice of Annual
Meeting dated October 8, 1996, a copy of which had been received by the
undersigned.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
/X/ PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
FOR WITHHELD
1. Election of / / / / NOMINEES: Marco Arese Lucini
Directors Aldo Papone
(Instruction: To vote against one of these as Class II Directors to serve a
nominees, check "For" and write the name three-year term.
of the nominees being voted against on the
space provided below)
__________________________________________
FOR AGAINST ABSTAIN
2. To ratify the selection of the firm of Ernst / / / / / /
& Young LLP as the independent auditors
of the Company for the fiscal year ending
June 30, 1997.
FOR AGAINST ABSTAIN
3. To transact such other business as may / / / / / /
properly come before the Annual Meeting
and any adjournments thereof.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED. IF NO
DIRECTION IS GIVEN, THEY WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND FOR
PROPOSALS IN ITEMS 2 AND 3.
SIGNATURE(S):_________________________________________________DATE____________
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full titles as such.
