SCHEDULE 14A INFORMATION
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 sec. 240.14a-11(c) or sec. 240.14a-12
STAC, INC.
(Name of Registrant as Specified In Its Charter)
STAC, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box)
/X/ No fee required.
/ / 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:
___________________________________________________________________________
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>
STAC, INC.
12636 High Bluff Drive, 4th Floor
San Diego, California 92130-2093
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 10, 1998
TO THE STOCKHOLDERS OF STAC, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Annual
Meeting") of Stac, Inc., a Delaware corporation (the "Company"), will be held on
Tuesday, March 10, 1998 at 10:00 a.m. local time, at the Doubletree Hotel - Del
Mar, 11915 El Camino Real, San Diego, California, for the following purposes:
1. To elect directors to serve for the ensuing year and until their
successors are elected;
2. To ratify the selection of Price Waterhouse LLP as the Company's
independent accountants for the fiscal year ending September 30, 1998;
and
3. To transact such other business as may properly come before the
meeting or any continuation, adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. The Board of Directors of the Company has
fixed the close of business on January 16, 1998, as the record date for the
determination of Stockholders entitled to notice of and to vote at this Annual
Meeting and at any adjournment or postponement thereof.
` By Order of the Board of Directors
/s/ John R. Witzel
-------------------------------------------
John R. Witzel, Secretary
San Diego, California
January 28, 1998
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF
MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE
GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE
NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER
NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE RECORD
HOLDER A PROXY ISSUED IN YOUR NAME.
<PAGE>
STAC, INC.
12636 High Bluff Drive, 4th Floor
San Diego, California 92130-2093
---------------
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
March 10, 1998
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed proxy is solicited on behalf of the Board of Directors (the
"Board of Directors" or the "Board") of Stac, Inc., a Delaware corporation (the
"Company"), for use at the Annual Meeting of Stockholders to be held on Tuesday,
March 10, 1998 at 10:00 a.m. local time (the "Annual Meeting"), or at any
adjournment or postponement thereof, for the purposes set forth herein and in
the accompanying Notice of Annual Meeting. The Annual Meeting will be held at
the Doubletree Hotel - Del Mar, 11915 El Camino Real, San Diego, California. The
Company intends to mail this proxy statement and accompanying proxy card on or
about January 28, 1998 to all stockholders entitled to vote at the Annual
Meeting.
Solicitation
The Company will bear the entire cost of solicitation of proxies, including
preparation, assembly, printing and mailing of this proxy statement, the proxy
and any additional information furnished to stockholders. Copies of solicitation
materials will be furnished to banks, brokerage houses, fiduciaries and
custodians holding in their name shares of the Company's common stock (the
"Common Stock") beneficially owned by others to forward to such beneficial
owners. The Company may reimburse persons representing beneficial owners of
Common Stock for their costs of forwarding solicitation materials to such
beneficial owners. Original solicitation of proxies by mail may be supplemented
by telephone, telegram or personal solicitation by directors, officers or other
regular employees of the Company. No additional compensation will be paid to
directors, officers or other regular employees for such services. Except as
described above, the Company does not intend to solicit proxies other than by
mail.
Voting Rights and Outstanding Shares
Only holders of record of Common Stock at the close of business on January
16, 1998 will be entitled to notice of and to vote at the Annual Meeting. At the
close of business on January 16, 1998, the Company had outstanding and entitled
to vote 26,068,747 shares of Common Stock. Each holder of record of Common Stock
on such date will be entitled to one vote for each share held on all matters to
be voted upon at the Annual Meeting.
All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Broker non-votes are counted towards a
quorum, but are not counted for any purpose in determining whether a matter has
been approved.
Revocability of Proxies
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary of the Company at the Company's principal executive office, 12636 High
Bluff Drive, 4th Floor, San Diego, California 92130-2093, a written notice of
revocation or a duly
2.
<PAGE>
executed proxy bearing a later date, or it may be revoked by attending the
meeting and voting in person. Attendance at the meeting will not, by itself,
revoke a proxy.
Stockholder Proposals
Proposals of Stockholders that are intended to be presented at the
Company's 1999 Annual Meeting of Stockholders must be received by the Company
not later than September 15, 1998. The Bylaws currently provide that a
stockholder must have given such timely notice in writing to the Secretary of
the Company in order to properly bring any business before the Annual Meeting,
including nominations of persons for election to the Board of Directors. A
stockholder's notice for nomination of persons to the Board of Directors must
set forth: (i) as to each person, if any, whom the stockholder proposes to
nominate for election or re-election as a director, (A) the name, age, business
address and residence address of the person, (B) the principal occupation or
employment of the person, (C) the class and number of shares of the Company
which are beneficially owned by the person, (D) a description of all
arrangements or understandings between the stockholder and each nominee and any
other person or persons (naming such person or persons) pursuant to which the
nominations are to be made by the stockholder and (E) any other information
relating to such person that is required to be disclosed in solicitations of
proxies for election of directors, or is otherwise required, in each case
pursuant to Regulation 14A under the Securities and Exchange Act of 1934, as
amended (including without limitation such person's written consent to being
named in the proxy statement, if any, as a nominee and to serving as a director
if elected); and (ii) as to the stockholder giving notice, the information
required to be provided pursuant to the Bylaws.
PROPOSAL 1
ELECTION OF DIRECTORS
There are five (5) nominees for the five (5) Board positions presently
authorized by the Board of Directors in accordance with the Company's
Certificate of Incorporation. Each director to be elected will hold office until
the next annual meeting of stockholders and until his successor is elected and
has qualified, or until such director's earlier death, resignation or removal.
Each nominee is currently a director of the Company. Each nominee's background
is outlined below.
Shares represented by executed proxies will be voted, if authority to do so
is not withheld, for the election of the five (5) nominees named below. In the
event that any nominee should be unavailable for election as a result of an
unexpected occurrence, such shares will be voted for the election of such
substitute nominee as management may propose. Each person nominated for election
has agreed to serve if elected and management has no reason to believe that any
nominee will be unable to serve.
Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF EACH NAMED NOMINEE.
3.
<PAGE>
Nominees
The names of the nominees and certain information about them are set forth
below:
<TABLE>
<CAPTION>
Principal Occupation/
Name Age Position Held with the Company
---- --- ------------------------------
<S> <C> <C>
Gary W. Clow................................ 43 Chairman of the Board of Directors and Chief
Executive Officer
Douglas L. Whiting, Ph.D.................... 41 Vice President of Technology and Director
Charles H. Gaylord, Jr...................... 52 Director
Robert W. Johnson, Ph.D..................... 48 Director
Antonio Perez............................... 52 Director
</TABLE>
Mr. Clow has been Chairman of the Board of Directors and Chief Executive
Officer since March 1992 and a director since 1983. Mr. Clow also served as
President of the Company from 1986 through 1996. Mr. Clow previously was a Vice
President at Dynamic Instruments, a measurement systems company for the defense
industry, and a Senior Software Engineer at the Portable Products Division of
the Communications Sector at Motorola, Inc. Mr. Clow received an M.A.S. in
Computer Systems from Florida Atlantic University and an M.S. in Electrical
Engineering from the California Institute of Technology.
Dr. Whiting has been Vice President of Technology since 1985 and has served
as a director since 1983. He also was President of the Company from 1984 to
1986. Dr. Whiting received a Ph.D. in Computer Science from the California
Institute of Technology.
Mr. Gaylord has served as a director since April 1995. He is currently a
private technology investor and a director of HNC Software Inc., a publicly held
software company. From December 1993 to September 1994, Mr. Gaylord served as
Executive Vice President of Intuit Inc., a personal and small business finance
software company, following the acquisition of ChipSoft, Inc., a tax preparation
company, by Intuit. Prior to that acquisition, from June 1990 to December 1993,
he served first as President and Chief Executive Office and a director of
ChipSoft and then as Chairman of the Board of Directors and Chief Executive
Officer. Mr. Gaylord holds Bachelor of Science and Master of Science degrees in
aerospace engineering from Georgia Institute of Technology and a Master of
Business Administration from Harvard University.
Dr. Johnson has served as a director since 1983. He has been a private
investor since July 1988. From 1983 to July 1988, he was first a principal and
subsequently a general partner of Southern California Ventures, a private
venture capital firm. He is a director of Proxima Corporation and ViaSat, Inc.,
both publicly held technology companies. Mr. Johnson holds undergraduate and
graduate degrees from Stanford University and Harvard University.
Mr. Perez has served as a Vice President of Hewlett-Packard Company and
General Manager of its Inkjet Products Group since 1995. From 1991 to 1995 Mr.
Perez held General Manager positions within Hewlett-Packard. He joined
Hewlett-Packard in 1975. Mr. Perez holds a Bachelor of Science degree in
electrical engineering from Madrid University in Spain, and International
Business and Marketing Diplomas from Institut European D'Administration des
Affaires (Insead) in France.
Background of Executive Officers Not Described Above
John T. Ticer, age 39, has been President and Chief Operating Officer of
the Company since February 1997. From February 1996 to January 1997 he was
Director of Business Alliances for Tivoli Systems, a subsidiary of IBM
Corporation, and from August 1995 to January 1996 was Director of Strategic
Investments at IBM. From April 1995 to August 1995 Mr. Ticer was Director of
Corporate Development at Legent Corporation. Mr. Ticer held various director
level positions at Landmark Systems Corporation from December 1992 to April
1995.
4.
<PAGE>
James T. Nicol, age 44, has been Vice President of Product Development
since July 1996. From August 1995 to July 1996, he was on assignment to Lotus
Corporation as a director-level development manager tasked with the transition
of the groupware capability from IBM to Lotus. From December 1983 to August
1995, he held a variety of system software development positions in IBM, from
system software engineer to Senior Product Manager in the areas of database,
application development, and groupware.
James M. Priest, age 40, has been Vice President of Sales and Marketing
since July 1997 and from December 1996 to June 1997, was Vice President of
Service Operations. From January 1992 to December 1996 he was Director of
International Sales/Operations for Daimler Benz InterServices in Munich,
Germany. From October 1988 to January 1992 he was Senior Customer Support and
Sales Manager -- West for COMDISCO, Inc.
John R. Witzel, age 43, has been Vice President of Finance of the Company
since May 1995 and Chief Financial Officer of the Company since September 1988.
He was also Vice President of Finance and Operations of the Company from
September 1989 through April 1995. Mr. Witzel was previously Controller of
Celerity Computing, a computer manufacturer, from September 1987 to September
1988. Mr. Witzel has been a certified public accountant and received an M.B.A.
from Syracuse University.
Board Committees and Meetings
During the fiscal year ended September 30, 1997 the Board of Directors held
eleven (11) meetings. The Board has an Audit Committee and a Compensation
Committee.
The Audit Committee meets with the Company's independent accountants at
least annually to review the results of the annual audit and discuss the
financial statements, recommend to the Board the independent accountants to be
retained and receive and consider the accountants' comments as to controls,
adequacy of staff and management performance and procedures in connection with
audit and financial controls. During the fiscal year ended September 30, 1997
the Audit Committee was composed of two (2) non-employee directors: Dr. Johnson
and Mr. Jennings, a former director. The Audit Committee met four (4) times in
fiscal 1997.
The Compensation Committee makes recommendations concerning salaries and
incentive compensation, awards stock options to employees and consultants under
the Company's stock option plans and otherwise determines compensation levels
and performs such other functions regarding compensation as the Board may
delegate. During the fiscal year ended September 30, 1997 the Compensation
Committee was composed of two (2) members: Mr. Gaylord and Mr. Russell J.
Robelen, who had served as a director since March 1990, and later in the year
Messrs. Gaylord and Perez. This committee met four (4) times during fiscal 1997.
The Board of Directors has delegated to Messrs. Clow and Whiting the
authority to grant stock options under the Company's 1992 Stock Option Plan to
employees of the Company that are not officers, directors or 10% Stockholders of
the Company, so long as such grants are in accordance with guidelines that have
been approved by the Board of Directors.
During the fiscal year ended September 30, 1997, all Board Members attended
at least 75% of the aggregate of the meetings of the Board, except Mr. Perez,
who had other commitments in place when he was elected to the Board in April
1997. Each Board Member attended 75% or more of the aggregate of the meetings of
the committees on which he served, held during the period he was a committee
member.
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Price Waterhouse LLP as the Company's
independent accountants for the fiscal year ending September 30, 1998 and has
further directed that management submit the selection of independent accountants
for ratification by the stockholders at the Annual Meeting. Price Waterhouse LLP
has audited the Company's financial statements since 1989. Representatives of
Price Waterhouse LLP are expected to be
5.
<PAGE>
present at the Annual Meeting, will have an opportunity to make a statement if
they so desire and will be available to respond to appropriate questions.
Stockholder ratification of the selection of Price Waterhouse LLP as the
Company's independent public accountants is not required by the Company's Bylaws
or otherwise. However, the Board is submitting the selection of Price Waterhouse
LLP to the stockholders for ratification as a matter of good corporate practice.
If the stockholders fail to ratify the selection, the Audit Committee of the
Board will reconsider whether or not to retain that firm. Even if the selection
is ratified, the Audit Committee and the Board in their discretion may direct
the appointment of a different independent accounting firm at any time during
the year if they determine that such a change would be in the best interests of
its stockholders.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2.
6.
<PAGE>
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership
of the Company's Common Stock as of December 31, 1997 by: (i) each nominee for
director, (ii) each of the executive officers named in the Summary Compensation
Table below under the heading "Executive Compensation;" (iii) all executive
officers and directors of the Company as a group; and (iv) all those known by
the Company to be beneficial owners of more than five percent of its Common
Stock.
<TABLE>
<CAPTION>
Number of Shares Percentage Beneficially
Owned (1)
<S> <C> <C>
Microsoft Corporation.............................................. 2,458,746 9.4%
One Microsoft Way
Redmond, WA 98052-6399
Gary W. Clow (2)................................................... 1,776,066 6.7%
Robert W. Johnson (3).............................................. 1,774,500 6.8%
Douglas L. Whiting (4)............................................. 1,574,166 6.0%
Charles H. Gaylord (5)............................................. 27,500 *
Antonio Perez...................................................... 0 *
John R. Witzel (6)................................................. 350,500 1.3%
James T. Nicol .................................................... -- *
John T. Ticer...................................................... -- *
All directors and officers as a group (9 persons) ................. 5,502,732 20.5%
</TABLE>
- ----------
* Less than one percent.
(1) This table is based upon information supplied by officers, directors and
principal stockholders and Schedules 13D and 13G, if any, filed with the
Securities and Exchange Commission (the "Commission"). Unless otherwise
indicated in the footnotes to this table and subject to community property
and marital property laws where applicable, each of the stockholders named
in this table has sole voting and investment power with respect to the
shares indicated as beneficially owned. Applicable percentages are based on
26,218,747 shares outstanding on December 31, 1997, adjusted as required by
rules promulgated by the Commission.
(2) Includes 14,100 shares held of record by Mr. Clow's minor daughter, of
which Mr. Clow disclaims beneficial ownership, and 234,166 shares issuable
upon exercise of options held by Mr. Clow that are exercisable within 60
days of December 31, 1997.
(3) Includes 1,759,000 shares held by the Robert W. Johnson Revocable Trust, of
which Dr. Johnson is Trustee and 7,500 shares issuable upon exercise of
options held by Mr. Johnson that are exercisable within 60 days of December
31, 1997.
7.
<PAGE>
(4) Includes 1,397,500 shares held by the Whiting Family Trust, of which Mr.
Whiting serves as Trustee and 176,666 shares issuable upon exercise of
options held by Mr. Whiting that are exercisable within 60 days of December
31, 1997.
(5) Includes 15,000 shares held of record by the Gaylord Family Trust UTD
12/30/93, of which Mr. Gaylord serves as Co-Trustee and 12,500 shares
issuable upon exercise of options held by Mr. Gaylord that are exercisable
within 60 days of December 31, 1997.
(6) Includes 142,500 shares issuable upon exercise of options held by Mr.
Witzel that are exercisable within 60 days of December 31, 1997.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers, and persons who own more than
ten percent of a registered class of the Company's equity securities, to file
with the Commission initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Officers,
directors and greater than ten percent stockholders are required by Commission
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
To the best of the Company's knowledge, based solely on a review of the
copies of such reports furnished to the Company and written representations that
no other reports were required, during the fiscal year ended September 30, 1997,
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with.
EXECUTIVE COMPENSATION
Compensation of Directors
Non-employee directors of the Company will be compensated for their
services on the Board in accordance with the following policy: Each non-employee
director will be paid an annual retainer of $4,000 plus an additional sum of
$1,000 for each meeting of the Board attended in person (other than by
telephone) by such director. In addition, each non-employee director that is a
member of one or more committees of the Board will be paid an additional amount
equal to $500 for each such committee meeting attended in person (other than by
telephone) by such director where such meeting is held on a date other than the
date of any meeting of the Board.
The members of the Board of Directors are eligible for reimbursement for
their expenses incurred in connection with attendance at Board meetings in
accordance with Company policy.
Non-employee directors of the Company ("Non-Employee Directors") are
eligible to receive grants under the Company's 1992 Non-Employee Directors'
Stock Option Plan, as amended (the "Directors' Plan"). Under the Directors'
Plan, each person who is elected after December 1, 1994 for the first time by
the Board or stockholders of the Company to serve as a Non-Employee Director and
who has not previously served as a member of the Board will, upon the date of
such election, be granted an option (on the terms and conditions set forth in
the Directors' Plan) to purchase twenty-five thousand (25,000) shares of the
Company's Common Stock (hereinafter referred to as an "Initial Election
Option"). In addition, each person who is re-elected after December 1, 1994 by
the Board or stockholders of the Company to serve as a Non-Employee Director
will, upon the date of each such re-election, be granted an option (on the terms
and conditions set forth in the Directors' Plan) to purchase ten thousand
(10,000) shares of the Company's Common Stock (hereinafter referred to as a
"Re-Election Option"). All options granted under the Directors' Plan are
intended by the Company not to qualify as incentive stock options under the
Internal Revenue Code of 1986, as amended. The exercise price of options granted
under the Directors' Plan will be equal to the fair market value of the
Company's Common Stock on the date of grant.
Options granted under the Directors' Plan are subject to vesting as
follows: Initial Election Options will vest in five equal installments of 5,000
shares each, with the first such installment vesting immediately prior to the
8.
<PAGE>
first Annual Meeting of Stockholders after the date of grant and each additional
installment vesting immediately prior to the date of each subsequent Annual
Meeting of Stockholders of the Company, so long as the optionee has, during the
entire year prior to such vesting date, continuously served as a Non-Employee
Director of the Company or any Affiliate of the Company. Re-Election Options
will vest in four equal installments of 2,500 shares each, with 2,500 shares
vesting immediately prior to the date of each Annual Meeting of Stockholders of
the Company following the date of grant, so long as the optionee has, during the
entire year prior to such vesting date, continuously served as a Non-Employee
Director of the Company or any Affiliate of the Company.
To date, 105,000 options have been granted, net of cancellations, and 5,000
options have been exercised under the Directors' Plan.
9.
<PAGE>
Compensation of Executive Officers
Summary of Compensation
The following table shows, for the fiscal years ending September 30, 1997,
September 30, 1996 and September 30, 1995, compensation awarded or paid to, or
earned by the Company's Chief Executive Officer and its other four most highly
compensated executive officers at September 30, 1997 (the "Named Executive
Officers"):
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation (1) Awards
------------------------------------- ------------
Securities
Underlying
Name and Principal Position Year Salary Bonus Options(2)
- --------------------------- ---- ------ ----- ------------
<S> <C> <C> <C> <C>
Gary W. Clow.................................... 1997 $175,000 $16,188 280,000
Chief Executive Officer 1996 $175,000 $6,563 --
1995 $175,000 $1,444 --
John T. Ticer (3)............................... 1997 $126,923 $34,654 200,000
President and Chief Operating Officer
James T. Nicol (4).............................. 1997 $140,000 $15,920 100,000
Vice President of Research and Development 1996 20,833 -- --
Douglas L. Whiting.............................. 1997 $140,000 $14,000 160,000
Vice President of Technology 1996 $125,000 $5,859 --
1995 $125,000 $31,261 --
John R. Witzel.................................. 1997 $140,000 $9,450 120,000
Vice President of Finance 1996 $125,000 $4,063 --
1995 $125,000 $1,032 --
</TABLE>
- ----------
(1) As permitted by rules established by the Commission, no amounts are shown
with respect to certain "perquisites" where such amounts do not exceed the
lesser of 10% of bonus plan salary or $50,000.
(2) Options of Messrs. Ticer and Nicol were repriced in 1997 and are treated as
new grants. Previously granted options were cancelled concurrently with the
repricing. The Company has not issued any stock appreciation rights (SARs).
(3) Mr. Ticer joined the Company in February 1997. He was also paid $79,972 in
relocation expenses and associated income taxes in fiscal 1997.
(4) Mr. Nicol joined the Company in August 1996. He was also paid $83,875 in
relocation expenses and associated income taxes in fiscal 1996.
Stock Option Grants and Exercises
The Company grants options to its executive officers under its 1992 Plan.
As of December 31, 1997, options to purchase a total of 2,737,684 shares have
been granted and were outstanding under the 1992 Plan,
10.
<PAGE>
options to purchase 774,764 shares had been exercised under the 1992 Plan and
1,487,552 shares remained available for future option grants under the 1992
Plan.
The following tables show for the fiscal year ended September 30, 1997,
certain information regarding options granted to, exercised by, and held at year
end by, the Named Executive Officers. All option grants were made pursuant to
the Company's 1992 Stock Option Plan.
Option Grants In Fiscal 1997
<TABLE>
<CAPTION>
Potential Realizable Value At
Assumed Annual Rates of Stock
Individual Grants Price Appreciation For Option Term(3)
--------------------------------------------------------- -------------------------------------
Percent
of Total
Number of Options
Securities Granted to Exercise Market
Underlying Employees of Base Price On
Option In Fiscal Price Date Of Expiration
Name Granted(#)(1) 1997(2) ($/Sh) Grant($) Date 0% 5%($) 10%($)
---- ------------- ------- ------ -------- ---- -- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gary W. Clow .................... 280,000 8.3% 8.00 4.125 6/12/07 -- 1,408,736 3,569,888
John Ticer ...................... 200,000 6.0% 3.563 3.563 2/2/07 -- 448,091 1,135,511
James Nicol ..................... 100,000 3.0% 3.563 3.563 8/1/06 -- 224,046 567,756
Douglas L. Whiting .............. 160,000 4.8% 6.50 6.50 1/28/07 -- 654,056 1,657,448
John R. Witzel .................. 120,000 3.6% 6.50 6.50 1/28/07 -- 490,542 1,243,086
</TABLE>
- ----------
(1) Repriced options of Messrs. Ticer and Nicol are treated as new grants.
Options vest over a four year period, or longer. One half of unvested
options will vest upon a change of control, as defined in the separate
agreements with each Officer, unless the acquiring Company assumes the
options or substitutes similar options. The Board of Directors may reprice
options under the terms of the 1992 Plan. On July 22, 1997, certain options
previously granted to Messrs. Ticer and Nicol were repriced from $6.50 and
$7.875 to $3.563, respectively.
(2) Based on options to purchase 3,354,024 shares granted in fiscal 1997,
before cancellations due to repricings and forfeitures.
(3) The potential realizable value is based on the term of the option at its
time of grant (10 years). It is calculated by assuming that the stock price
on the date of the grant appreciates at the indicated annual rate,
compounded annually for the entire term of the option and that the option
is exercised and sold on the last day of its term for the appreciated stock
price. These amounts represent certain assumed rates of appreciation only,
in accordance with the rules of the SEC, and do not reflect the Company's
estimate or projection of future stock price performance. Actual gains, if
any, are dependent on the actual future performance of the Company's Common
Stock and no gain to the optionee is possible unless the stock price
increases over the option term, which will benefit all stockholders.
11.
<PAGE>
Aggregated Option Exercises in Fiscal 1997
and 1997 Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Shares Underlying Value of Unexercised
Unexercised Options Held at In-the-Money Options at
Shares September 30, 1997(2) September 30, 1997(3)
Acquired on Value --------------------------------- -----------------------------------
Name Exercise(#) Realized($)(1) Exerciseable(#) Unexerciseable(#) Exerciseable($) Unexerciseable($)
---- ----------- -------------- --------------- ----------------- --------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Gary W. Clow -- -- 205,000 210,000 270,000 --
James Nicol -- -- -- 100,000 -- 118,750
John Ticer -- -- -- 200,000 -- 237,500
Douglas L. Whiting -- -- 160,000 120,000 240,000 --
John R. Witzel 2,000 14,250 243,000 90,000 712,875 --
</TABLE>
- --------
(1) Represents the fair market value of the underlying shares on the date of
exercise less the exercise price. For purposes of this table, "fair market
value" is determined based on the average of the highest and lowest selling
prices on the applicable date as reported on the Nasdaq National Market
System.
(2) Includes both "in-the-money" and "out-of-the-money" options.
(3) Represents the fair market value per share of the underlying shares on the
last day of the fiscal year ($4.75), less the exercise or base price.
12.
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE OF THE
BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION(1)
Overview and Philosophy
Stac's Compensation Committee of the Board of Directors (the "Committee")
is currently composed of two (2) outside directors, Messrs. Gaylord and Perez.
Among other things, the Committee reviews and approves annual executive officer
compensation. In general, the compensation policies adopted by the Committee are
designed to (i) attract and retain executives capable of leading the Company to
meet its business objectives and (ii) motivate the Company's executives to
enhance long-term stockholder value.
Executive Officer Compensation
The Company's executive officer compensation program is comprised of base
salary, annual cash incentive compensation in the form of a bonus and long-term
incentive compensation in the form of stock option grants.
Base Salary
In establishing base salaries, the Committee first considers a number of
surveys and compensation levels at comparably sized companies in comparable
industries, including companies in the software industries. Each survey is
weighted based on the Committee's determination of the comparability to Stac of
the companies within the survey. The companies included in the surveys are not
necessarily the same as the companies included in the market indices included in
the performance graph in this Proxy Statement. Although the compensation surveys
referred to above and the market indices included in the performance graph are
broad and include companies in related industries, the surveys and indices were
created for difference purposes and accordingly are not compatible.
Based on the data generated in the surveys, the Committee then sets a
target base salary level applicable to all executive officers. The Committee
then considers the level of responsibility, experience, and contributions of
each executive officer. The Committee then sets each officer's base salary
taking into account the target salary and the Committee's evaluation of
individual performance. For fiscal 1997, executive officer base salaries were
generally below the median base salary levels determined through the surveys.
Annual Cash Incentive Bonus
The Company pays bonuses to its executive officers based primarily on the
Committee's subjective determination of the Company's performance and individual
contributions. In considering bonus awards for fiscal 1997, the Committee
considered, among other things, the Company's revenue growth and profitability
as compared to internal targets, comparable companies and data regarding
non-salary cash compensation obtained from the surveys referred to above. In
total, bonuses paid to executive officers during fiscal 1997 were below the
median bonus levels paid by comparable companies as determined through the
surveys referred to above.
Stock Option Grants
The Company grants stock option grants to its executive officers in order
to provide long-term incentives to executive officers and align executive
officers and stockholder long-term interests by creating a direct link between
executive compensation and stockholder return. Stock options are granted at an
option price equal to the fair market value of the Company's Common Stock on the
date of the grant. In order to facilitate long-term
- ----------
(1) The material in this report is not "soliciting material," is not deemed
filed with the SEC and is not to be incorporated by reference in any filing of
the Company under the Securities Act of 1933 as amended, or the Securities
Exchange Act of 1934, as amended, whether made before or after the date hereof
and irrespective of any general incorporation language in any such filing.
13.
<PAGE>
incentives through the option grants, options are generally subject to ratable
vesting over three to five years and are exercisable for ten years.
Executive officer awards are subjectively determined by the Committee after
considering stock option grant data taken from the compensation surveys referred
to above, as well as the level of responsibility, experience and contributions
of each executive officer. In determining the size of individual grants, the
Committee also considers the number of shares subject to the options previously
granted to each executive officer, including the number of such shares that have
vested and that remain unvested.
Section 162(m) of the Internal Revenue Code (the "Code") limits the Company
to a deduction for federal income tax purposes of no more than $1 million of
compensation paid to certain Named Executive Officers in a taxable year.
Compensation above $1 million may be deducted if it is "performance-based
compensation" within the meaning of the Code. The Compensation Committee has
determined that stock options granted under the Company's 1992 Stock Option Plan
with an exercise price at least equal to the fair market value of the Company's
common stock on the date of grant shall be treated as "performance-based
compensation."
Option Repricing
In July 1997, the Board of Directors approved the participation of certain,
but not all, executive officers of the Company in an option exchange program.
Under the program, outstanding options held by the directors were eligible to be
exchanged for new options to purchase the same number of shares at a lower
price. Because options are a key component of the Company's long-term incentive
program, the Committee determined that the exchange was necessary in order to
retain such officers.
OPTION REPRICING INFORMATION
The following table shows certain information concerning the repricing of
options received by the Named Executive Officers since its initial public
offering of Common Stock on May 7, 1992.
OPTION REPRICINGS
<TABLE>
<CAPTION>
Number of Length of
Securities Market Original
Underlying Price of Option Term
Options Stock at Exercise Price Remaining at
Name Date Repriced(#) Time of at Time of New Exercise Date of
Repricing($) Repricing($) Price($) Repricing
------------ ------------ -------- ---------
<S> <C> <C> <C> <C> <C> <C>
John Ticer 7/22/97 200,000 3.563 6.50 3.563 9.5 yrs.
President
James T. Nicol 7/22/97 100,000 3.563 7.875 3.563 9 yrs.
Vice President of Research
and Development
</TABLE>
Chief Executive Officer Salary
The Committee considers with particular care the compensation of the
Company's Chief Executive Officer, Gary W. Clow. Mr. Clow's compensation for the
fiscal year ended September 30, 1997 was determined based on the factors
discussed above as supplemented with information provided by an executive
compensation consultant
14.
<PAGE>
retained by the Committee, and was set at $175,000, which was equal to his
salary for the previous year. As described above, he was paid a special bonus of
$16,188 compared to a bonus of $6,563 paid in the prior year.
COMPENSATION COMMITTEE
Charles Gaylord
Antonio Perez
15.
<PAGE>
PERFORMANCE MEASUREMENT COMPARISON
The following graph compares total stockholder returns of the Company for
the five years since September 30, 1992 to two indices: The Nasdaq CRSP Total
Return Index for the Nasdaq Stock Market (U.S. companies) (the "Nasdaq-US") and
the Nasdaq CRSP Total Return Index for Computer Software Stocks (SIC 737) (the
"Nasdaq-Industry"). The total return for the Company's stock and for each index
assumes the reinvestment of dividends, although dividends have never been
declared on the Company's stock, and is based on the returns of the component
companies weighted according to their capitalization as of the end of each
quarterly period. The Nasdaq-US tracks the aggregate price performance of all
equity securities of U.S. companies traded on the Nasdaq National Market (the
"NNM"). The Nasdaq-Industry tracks the aggregate price performance of equity
securities of computer software companies traded on the NNM. The Company's
Common Stock is traded on the NNM and is a component of both the Nasdaq-US and
the Nasdaq-Industry.(1)
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Comparison of Cumlative Total Return on Investment Since
September 30, 1992
Annual Values
(a) (b) (c)
NASDAQ NASDAQ
U.S. Cos. Ind. Index
Close on date: Stac Cos. Index (SIC 737)
-----------------------------------------------------
9/30/92 $ 100.00 $ 100.00 $ 100.00
12/31/92 $ 152.00 $ 116.34 $ 113.31
3/31/93 $ 112.00 $ 118.52 $ 118.74
6/30/93 $ 72.00 $ 120.80 $ 118.81
9/30/93 $ 92.00 $ 130.98 $ 119.32
12/31/93 $ 120.00 $ 133.56 $ 119.92
3/31/94 $ 184.00 $ 127.94 $ 121.62
6/30/94 $ 212.00 $ 121.96 $ 119.02
9/30/94 $ 170.00 $ 132.06 $ 132.50
12/30/94 $ 164.00 $ 130.55 $ 145.63
3/31/95 $ 184.00 $ 142.32 $ 163.94
6/30/95 $ 236.00 $ 162.80 $ 194.31
9/29/95 $ 300.00 $ 182.41 $ 212.26
12/29/95 $ 460.00 $ 184.63 $ 221.79
3/29/96 $ 336.00 $ 193.24 $ 232.18
6/28/96 $ 360.00 $ 209.02 $ 258.07
9/30/96 $ 256.00 $ 216.45 $ 263.20
12/31/96 $ 212.00 $ 227.09 $ 273.68
3/31/97 $ 152.00 $ 214.78 $ 254.04
6/30/97 $ 114.02 $ 254.15 $ 325.78
9/30/97 $ 152.00 $ 297.14 $ 356.25
Stac's closing stock price on September 30, 1997 was $4.75 per share. The
last sales price for the Company's Common Stock as reported by Nasdaq on
December 31, 1997 was $4.625 per share.
- ----------
(1) The material in this report is not "soliciting material," is not deemed
filed with the SEC and is not to be incorporated by reference in any filing of
the Company under the Securities Act of 1933 as amended, or the Securities
Exchange Act of 1934, as amended, whether made before or after the date hereof
and irrespective of any general incorporation language in any such filing.
16.
<PAGE>
CERTAIN TRANSACTIONS
The Company has entered into indemnity agreements with certain officers and
directors which provide, among other things, that the Company will indemnify
such officer or director, under the circumstances and to the extent provided for
therein, for expenses, damages, judgments, fines and settlements he may be
required to pay in actions or proceedings which he is or may be made a party by
reason of his position as a director, officer or other agent of the Company, and
otherwise to the full extent permitted under Delaware law and the Company's
Bylaws.
In addition, the Company's Certificate of Incorporation provides that to
the fullest extent permitted by Delaware law, the Company's directors will not
be liable for monetary damages for breach of the directors' fiduciary duty of
care to the Company and its stockholders. This provision in the Certificate of
Incorporation does not eliminate the duty of care, and in appropriate
circumstances equitable remedies such as an injunction or other forms of
non-monetary relief would remain available under Delaware law. Each director
will continue to be subject to liability for breach of the director's duty of
loyalty to the Company, for acts or omissions not in good faith or involving
intentional misconduct or knowing violations of law, for acts or omissions that
the director believes to be contrary to the best interests of the Company or its
stockholders, for any transaction from which the director derived an improper
personal benefit, for acts or omissions involving a reckless disregard for the
director's duty to the Company or its stockholders when the director was aware
or should have been aware of a risk of serious injury to the Company or its
stockholders, for acts or omissions that constitute an unexcused pattern of
inattention that amounts to an abdication of the director's duty to the Company
or its stockholders, for improper transactions between the director and the
Company, and for improper distributions to stockholders and loans to directors
and officers. This provision also does not affect a director's responsibilities
under any other laws, such as the federal securities laws or state or federal
environmental laws.
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented for
consideration at the Annual Meeting. If other matters are properly brought
before the meeting, it is the intention of the persons named in the accompanying
proxy to vote the shares represented thereby on such matters in accordance with
their best judgment.
By Order of the Board of Directors
/s/ John R. Witzel
John R. Witzel
Secretary
January 28, 1998
A copy of the Company's Annual Report to the Securities and Exchange
Commission on Form 10-K for the fiscal year ended September 30, 1997 is
available without charge upon written request to the Corporate Secretary, Stac,
Inc., 12636 High Bluff Drive, 4th Floor, San Diego, California 92130-2093.
17.
<PAGE>
STAC, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON TUESDAY, MARCH 10, 1998
The undersigned hereby appoints Gary W. Clow and John R. Witzel, and each of
them, as attorneys and proxies of the undersigned, with full power of
substitution, to vote all of the shares of stock of Stac, Inc. which the
undersigned may be entitled to vote at the Annual Meeting of Stockholders of
Stac, Inc. to be held at the Doubletree Hotel-Del Mar, 11915 El Camino Real, San
Diego, California on Tuesday, March 10, 1998 at 10:00 a.m. local time, and at
any and all postponements, continuations and adjournments thereof, with all
powers that the undersigned would possess if personally present, upon and in
respect of the following matters and in accordance with the following
instructions, with discretionary authority as to any and all other matters that
may properly come before the meeting.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR ALL
NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSAL 2, AS MORE SPECIFICALLY DESCRIBED
IN THE PROXY STATEMENT. IF SPECIFIC INSTRUCTIONS ARE INDICATED, THIS PROXY WILL
BE VOTED IN ACCORDANCE THEREWITH.
MANAGEMENT RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTOR LISTED ON OTHER
SIDE.
(Continued on other side)
-----------
SEE REVERSE
SIDE
-----------
<PAGE>
- --------------------------------------------------------------------------------
|X| Please mark you votes as in this example
FOR all nominees WITHHELD
listed (except as AUTHORITY
marked to the to vote for all
contrary below). nominees listed.
1. Election of Directors to hold |_| |_|
office until the next Annual
Meeting of Stockholders and until
their successors are elected.
Nominees: Gary W. Clow, Douglas Whiting, Ph.D., Charles H. Gaylord, Jr.,
Robert W. Johnson and Antonio Perez
To withhold authority to vote for any nominee(s)' name(s) below:
_______________________________________
MANAGEMENT RECOMMENDS A VOTE FOR PROPOSAL 2.
FOR AGAINST ABSTAIN
2. To Ratify The Selection Of Price |_| |_| |_|
Waterhouse LLP As The Independent
Auditors Of The Company For The
Fiscal Year Ended September 30,
1998
Please vote, date and promptly return this proxy in the enclosed return
envelope which is postage prepaid if mailed in the United States.
SIGNATURE(S) _______________________________________ DATED ______________, 1998
Please sign exactly as your name appears hereon. If the stock is registered in
the names of two or more persons, each should sign. Executors, administrators,
trustees, guardians and attorneys-in-fact should add their titles. If signer is
a corporation, please give full corporate name and have a duly authorized
officer sign, stating title. If signer is a partnership, please sign in
partnership name by authorized person.
