SCHEDULE 14A INFORMATION
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WONDERWARE CORPORATION
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(Name of Registrant as Specified In Its Charter)
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<PAGE>
WONDERWARE CORPORATION
100 Technology Drive
Irvine, California 92618
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 12, 1997
TO THE STOCKHOLDERS OF WONDERWARE CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Wonderware Corporation, a Delaware corporation (the "Company"), will be held on
Monday, May 12, 1997 at 10:00 a.m. local time at The Sutton Place Hotel, 4500
MacArthur Blvd., Newport Beach, California for the following purpose:
1. To elect directors to serve for the ensuing year and until their successors
are elected.
2. To approve an amendment to the Company's Employee Stock Purchase Plan to,
among other things, increase the aggregate number of shares of Common Stock
authorized for issuance under such plan to 700,000 shares.
3. To ratify the selection of Deloitte & Touche LLP as independent auditors of
the Company for its fiscal year ending December 31, 1997.
4. To transact such other business as may properly come before the meeting or
any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on March 17,
1997 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/ Sam M. Auriemma
Sam M. Auriemma
Secretary
Irvine, California
April 3, 1997
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>
WONDERWARE CORPORATION
100 Technology Drive
Irvine, California 92618
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 12, 1997
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed proxy is solicited on behalf of the Board of Directors of
Wonderware Corporation, a Delaware corporation (the "Company"), for use at the
Annual Meeting of Stockholders to be held on Monday, May 12, 1997 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 of Stockholders. The Annual Meeting will be held at The Sutton
Place Hotel, 4500 MacArthur Blvd., Newport Beach, California. The Company
intends to mail this Proxy Statement and accompanying proxy card on or about
April 3, 1997 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 names shares of 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.
Voting Rights and Outstanding Shares
Only holders of record of Common Stock at the close of business on
March 17, 1997 will be entitled to notice of and to vote at the Annual Meeting.
At the close of business on March 17, 1997, the Company had outstanding and
entitled to vote 14,018,732 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, 100
Technology Drive, Irvine, California 92618, a written notice of revocation or a
duly 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.
<PAGE>
Stockholder Proposals
Proposals of stockholders that are intended to be presented at the
Company's 1998 Annual Meeting of Stockholders must be received by the Company
not later than December 4, 1997 to be included in the proxy statement and proxy
relating to that Annual Meeting.
PROPOSAL 1
ELECTION OF DIRECTORS
There are five nominees for the five Board positions presently
authorized in the Company's Bylaws. 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 listed below is currently a director of the Company and
was elected by the stockholders at the 1996 Annual Meeting of Stockholders.
Shares represented by executed proxies will be voted, if authority to
do so is not withheld, for the election of the five 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.
Nominees
The names of the nominees and certain information about them are set
forth below:
Name Age Principal Occupation
------------------- --- --------------------------------------
Roy H. Slavin 51 Chairman of the Board of Directors,
President and Chief Executive Officer
of the Company
F. Rigdon Currie 66 Special Limited Partner, MK Global
Ventures
Harvard H. Hill, Jr. 60 General Partner, Houston Venture
Partners, Ltd.
Jay L. Kear 59 Independent management consultant
John E. Rehfeld 56 Former President and Chief Executive
Officer of Proxima Corporation
Mr. Slavin became a director of the Company in July 1995. He currently is
Chairman of the Board, President and Chief Executive Officer of the Company.
From October 1993 to June 1995, he was President and Chief Executive Officer of
Siemens Industrial Automations, Inc., a manufacturer of industrial automation
components and systems. From January 1986 to September 1993, he was President
and Chief Executive Officer of Potter & Brumfield Inc. (A Siemens Company), a
manufacturer of electronic components.
Mr. Currie became a director of the Company in September 1989. He was a General
Partner of Pacific Venture Partners, a venture capital investment firm, from
July 1983 to December 1995 and has been a Special Limited Partner of MK Global
Ventures, also a venture capital investment firm, since February 1988. He
currently serves on the Board of Directors of Document Technologies, Inc.,
Document Imaging Systems Corp., QMS, Inc. and several privately held companies.
Mr. Hill became a director of the Company in September 1989. He has been a
General Partner of Houston Venture Partners, Ltd., a venture capital investment
firm, since 1986 and is also the Managing General Partner of Houston Partners,
which is the General Partner of Private Equity Investments, an
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investment firm. He currently serves on the Board of Directors of Raymond James
Financial, Inc., and several privately held companies.
Mr. Kear became a director of the Company in September 1989. Since February
1993, he has been an independent management consultant specializing in advising
high technology companies. From February 1989 to January 1993, Mr. Kear was
employed by the Noorda Family Trust to assist in the management of its
investment portfolio. Mr. Kear currently serves on the Board of Directors of
Javelin Systems.
Mr. Rehfeld became a director of the Company in April 1992. He was President and
Chief Executive Officer of Proxima Corporation, a supplier of desktop multimedia
computer projection systems, from February 1996 to March 1997 and also served as
a director of Proxima Corporation. From April 1993 to February 1996, Mr. Rehfeld
was President and Chief Executive Officer of Etak, Inc., a supplier of digital
mapping data and a subsidiary of the News Corporation. From February 1989 to
April 1993, Mr. Rehfeld was President of Seiko Instruments USA Inc., a
manufacturer of electronic instruments.
Board Committees and Meetings
During the fiscal year ended December 31, 1996, the Board of Directors held
six meetings. The Board has an Audit Committee, a Compensation Committee and a
Nominating Committee.
The Audit Committee recommends to the Board the independent auditors to be
retained by the Company, meets with the auditors at least annually to review the
results of the annual audit and discuss the financial statements, and receives
and considers the auditors' comments as to controls, adequacy of staff and
management performance and procedures in connection with audit and financial
controls. The Audit Committee is composed of two directors: Messrs. Hill and
Rehfeld. It met once during 1996.
The Compensation Committee makes recommendations concerning salaries and
incentive compensation, awards stock options to employees and consultants under
the Company's stock option plan and otherwise determines compensation levels and
performs such other functions regarding compensation as the Board may delegate.
The Compensation Committee is composed of three directors: Messrs. Currie, Kear
and Rehfeld. It met twice during 1996.
The Nominating Committee develops and maintains a current list of the
functional needs for directors, interviews, evaluates, nominates and recommends
individuals for membership on the Company's Board and formally reviews with each
Board member, on an annual basis, whether it is desirable for such person to
continue to serve on the Board. No procedure has been established for the
consideration of nominees recommended by stockholders. The Nominating Committee
is composed of two directors: Messrs. Currie and Kear. The Nominating Committee
did not meet formally during 1996.
During the fiscal year ended December 31, 1996, each Board member attended
75% or more of the aggregate of the meetings of the Board and of the committees
on which he served, held during the period for which he was a director or
committee member, respectively.
PROPOSAL 2
APPROVAL OF EMPLOYEE STOCK PURCHASE PLAN, AS AMENDED
In May 1993, the Board of Directors adopted the Employee Stock Purchase
Plan (the "Purchase Plan") authorizing the issuance of 300,000 shares of the
Company's Common Stock. The stockholders of the Company approved the adoption of
the Purchase Plan in June 1993. At December 31, 1996, an aggregate of 241,758
shares had been issued under the Purchase Plan and only 58,242 shares remained
for the grant of future rights under the Plan. In March 1997, the Compensation
Committee of the Board of Directors of the Company adopted, and the Board
ratified, amendments to the Purchase Plan to increase the number of shares
authorized for issuance under the Purchase Plan to 700,000 shares. This
amendment is intended to afford the Company greater flexibility in providing
employees with stock incentives and ensures that the Company can continue to
provide such incentives at levels determined appropriate by the Board.
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<PAGE>
Stockholders are requested in this Proposal 2 to approve the Purchase Plan,
as amended. The affirmative vote of the holders of a majority of the shares
present in person or represented by proxy and entitled to vote at the meeting
will be required to approve the Purchase Plan, as amended. Abstentions will be
counted toward 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 this matter has been approved.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 2.
The essential features of the Purchase Plan, as amended, are outlined below:
Purpose
The purpose of the Purchase Plan is to provide a means by which
employees of the Company (and any parent or subsidiary of the Company designated
by the Board of Directors to participate in the Purchase Plan) may be given an
opportunity to purchase Common Stock of the Company through payroll deductions,
to assist the Company in retaining the services of its employees, to secure and
retain the services of new employees, and to provide incentives for such persons
to exert maximum efforts for the success of the Company. Approximately 404 of
the Company's approximately 410 employees are eligible to participate in the
Purchase Plan.
The rights to purchase Common Stock granted under the Purchase Plan are
intended to qualify as options issued under an "employee stock purchase plan" as
that term is defined in Section 423(b) of the Code.
Administration
The Purchase Plan is administered by the Board of Directors, which has
the final power to construe and interpret the Purchase Plan and the rights
granted under it. The Board has the power, subject to the provisions of the
Purchase Plan, to determine when and how rights to purchase Common Stock of the
Company will be granted, the provisions of each offering of such rights (which
need not be identical), and whether any parent or subsidiary of the Company
shall be eligible to participate in such plan. The Board is authorized to
delegate administration of such plan to a committee of not less than two Board
members. The Board has delegated administration of the Purchase Plan to the
Compensation Committee of the Board. The Board may abolish any such committee at
any time and revest in the Board the administration of the Purchase Plan. As
used herein with respect to the Purchase Plan, the "Board" refers to the
Compensation Committee as well as to the Board of Directors itself.
Offerings
The Purchase Plan is implemented by offerings of rights to all eligible
employees from time to time by the Board. Generally, each such offering is of
six months' duration.
Eligibility
Any person who is customarily employed at least 20 hours per week and
five months per calendar year by the Company (or by any parent or subsidiary of
the Company designated from time to time by the Board) on the first day of an
offering period is eligible to participate in that offering under the Purchase
Plan, provided such employee has been in the continuous employ of the Company
for such continuous period preceding the first day of the offering period as the
Board may require, which period shall not be equal to or greater than two years.
The Board may provide that officers of the Company who are "highly compensated"
as defined in the Code are not eligible to be granted rights under the Purchase
Plan.
Notwithstanding the foregoing, no employee is eligible for the grant of
any rights under the Purchase Plan if, immediately after such grant, the
employee would own, directly or indirectly, stock possessing 5% or more of the
total combined voting power or value of all classes of stock of the Company or
of any parent or
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subsidiary of the Company (including any stock which such employee may purchase
under all outstanding rights and options), nor will any employee be granted
rights that would permit him to buy more than $25,000 worth of stock (determined
at the fair market value of the shares at the time such rights are granted)
under all employee stock purchase plans of the Company in any calendar year.
Participation in the Plan
Eligible employees become participants in the Purchase Plan by
delivering to the Company, prior to the date selected by the Board as the
offering date for the offering, an agreement authorizing payroll deductions of
up to 15% of such employees' base total compensation during the purchase period.
Purchase Price
The purchase price per share at which shares are sold in an offering
under the Purchase Plan is the lower of (a) 85% of the fair market value of a
share of Common Stock on the date of commencement of the offering, or (b) 85% of
the fair market value of a share of Common Stock on the last day of the purchase
period.
Payment of Purchase Price; Payroll Deductions
The purchase price of the shares is accumulated by payroll deductions
over the offering period. A participant may reduce, increase or begin payroll
deductions after the beginning of any purchase period only as provided for in
the offering. A participant may make additional payments into his or her account
only if specifically provided for in the offering and only if the participant
has not had the maximum amount withheld during the purchase period All payroll
deductions made for a participant are credited to his or her account under the
Purchase Plan and deposited with the general funds of the Company.
Purchase of Stock
By executing an agreement to participate in the Purchase Plan, the
employee is entitled to purchase shares under such plan. In connection with
offerings made under the Purchase Plan, the Board specifies a maximum number of
shares any employee may be granted the right to purchase and the maximum
aggregate number of shares which may be purchased pursuant to such offering by
all participants. If the aggregate number of shares to be purchased upon
exercise of rights granted in the offering would exceed the maximum aggregate
number of shares available under the offering, the Board will make a pro rata
allocation of shares available in a uniform and equitable manner. Unless the
employee's participation is discontinued, his right to purchase shares is
exercised automatically at the end of the purchase period at the applicable
price. See "Withdrawal" below.
Withdrawal
While each participant in the Purchase Plan is required to sign an
agreement authorizing payroll deductions, the participant may withdraw from a
given offering by terminating his or her payroll deductions and by delivering to
the Company a notice of withdrawal from the Purchase Plan. Such withdrawal may
be elected at any time prior to the end of the applicable purchase period except
as otherwise provided by the Board in the offering.
Upon any withdrawal from an offering by the employee, the Company will
distribute to the employee his or her accumulated payroll deductions without
interest, less any accumulated deductions previously applied to the purchase of
stock on the employee's behalf during such offering, and such employee's
interest in the offering will be automatically terminated. The employee is not
entitled to again participate in such offering. An employee's withdrawal from an
offering will not have any effect upon such employee's eligibility to
participate in subsequent offerings under the Purchase Plan.
5
<PAGE>
Termination of Employment
Rights granted pursuant to any offering under the Purchase Plan
terminate immediately upon cessation of an employee's employment for any reason,
and the Company will distribute to such employee all of his or her accumulated
payroll deductions, without interest.
Restrictions on Transfer
Rights granted under the Purchase Plan are not transferable and may be
exercised only by the person to whom such rights are granted.
Duration, Amendment and Termination
The Board may suspend or terminate the Purchase Plan at any time.
Unless terminated earlier, such plan will terminate in May 2003.
The Board may amend the Purchase Plan at any time. Any amendment of the
Purchase Plan must be approved by the stockholders within 12 months of its
adoption by the Board if the amendment would (a) increase the number of shares
of Common Stock reserved for issuance under the Purchase Plan, or (b) modify the
requirements relating to eligibility for participation in the Purchase Plan.
Rights granted before amendment or termination of the Purchase Plan
will not be altered or impaired by any amendment or termination of such plan
without consent of the person to whom such rights were granted.
Effect of Certain Corporate Events
In the event of a dissolution, liquidation or specified type of merger
of the Company, (i) the surviving corporation may assume the rights under the
Purchase Plan or substitute similar rights, (ii) such rights may continue in
full force and effect, or (iii) the exercise date of any ongoing offering will
be accelerated such that the outstanding rights may be exercised immediately
prior to, or concurrent with, any such event.
Stock Subject to Purchase Plan
If rights granted under the Purchase Plan expire, lapse or otherwise
terminate without being exercised, the Common Stock not purchased under such
rights again becomes available for issuance under the Purchase Plan.
Federal Income Tax Information
Rights granted under the Purchase Plan are intended to qualify for the
favorable federal income tax treatment accorded rights granted under an employee
stock purchase plan which qualifies for such treatment under provisions of
Section 423 of the Code.
A participant will be taxed on amounts withheld for the purchase of
shares as if such amounts were actually received. Other than this, no income
will be taxable to a participant until disposition of the shares acquired, and
the method of taxation will depend upon the holding period of the purchased
shares.
If the stock is disposed of at least two years after the beginning of
the offering period and at least one year after the stock is transferred to the
participant, then the lesser of (a) the excess of the fair market value of the
stock at the time of such disposition over the exercise price or (b) the excess
of the fair market value of the stock as of the beginning of the offering period
over the exercise price (determined as of the beginning of the offering period)
will be treated as ordinary income. Any further gain or any loss will be taxed
as a long-term capital gain or loss. Capital gains currently are generally
subject to lower tax rates than ordinary income. The maximum capital gains rate
for federal income tax purposes is 28% while the maximum ordinary rate is
effectively 39.6% at the present time.
If the stock is sold or disposed of before the expiration of either of
the holding periods described above, then the excess of the fair market value of
the stock on the exercise date over the exercise price will be treated as
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<PAGE>
ordinary income at the time of such disposition, and the Company may, in the
future, be required to withhold income taxes relating to such ordinary income
from other payments made to the participant. The balance of any gain will be
treated as capital gain. Even if the stock is later disposed of for less than
its fair market value on the exercise date, the same amount of ordinary income
is attributed to the participant, and a capital loss is recognized equal to the
difference between the sales price and the fair market value of the stock on
such exercise date. Any capital gain or loss will be long- or short-term
depending on whether the stock has been held for more than one year.
There are no federal income tax consequences to the Company by reason
of the grant or exercise of rights under the Purchase Plan. The Company is
entitled to a deduction to the extent amounts are taxed as ordinary income to a
participant (subject to the requirement of reasonableness, the provisions of
Section 162(m) of the Code and the satisfaction of a tax reporting obligation).
The following table presents certain information with respect to shares
purchased under the Purchase Plan during the fiscal year ended December 31, 1996
by (i) the Named Executive Officers, (ii) all executive officers as a group and
(iii) all non-executive officer employees as a group. Non-employee directors are
not eligible to purchase shares under the Purchase Plan.
New Plan Benefits
Employee Stock Purchase Plan
---------------------------------
Name and Principal Position Dollar Value(1) Number of Shares
Purchased
Roy H. Slavin $ 19,995 1,289
Chairman of the Board, President and
Chief Executive Officer
Sam M. Auriemma -- --
Vice President, Finance, Chief Financial
Officer and Secretary
Joseph Cowan 20,694 1,604
Vice President, Marketing
Jeffrey Kissling 3,749 580
Vice President, Development
Lawrence T. Whelan 17,421 1,254
Vice President, International Sales
Ronald C. Mehaffey 12,662 1,138
Vice President, Product Development
Gary J. Wilson 20,324 1,561
Vice President, North American Sales
All Executive Officers as a Group 100,957 7,909
All Non-Executive Officer Employees as a
Group 1,756,753 137,736
(1) Fair market value on the date of purchase multiplied by the number of
shares purchased.
PROPOSAL 3
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected Deloitte & Touche LLP as the Company's
independent auditors for the fiscal year ending December 31, 1997 and has
further directed that management submit the selection of independent auditors
for ratification by the stockholders at the Annual Meeting. Deloitte & Touche
LLP has audited the Company's financial statements since December 1992.
Representatives of Deloitte & Touche LLP are expected to be 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 Deloitte & Touche LLP as the
Company's independent auditors is not required by the Company's Bylaws or
otherwise. However, the Board is submitting the selection of Deloitte & Touche
LLP to the stockholders for ratification as a matter of good corporate practice.
If the
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stockholders fail to ratify the selection, the Audit Committee and the
Board will reconsider whether 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 the
Company and its stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 3.
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, 1996 by: (i) each director and
nominee for director; (ii) each of the Named Executive Officers; (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.
Beneficial Ownership (1)
----------------------------
Number of Percent of
Beneficial Owner Shares Total
Jeffrey Kissling (2) 50,185 *
Jay L. Kear (3) 46,000 *
F. Rigdon Currie (4) 28,064 *
John E. Rehfeld (5) 18,000 *
Roy H. Slavin (6) 12,289 *
Gary J. Wilson (7) 10,861 *
Lawrence T. Whelan (8) 6,654 *
Joseph Cowan (9) 4,540 *
Ronald C. Mehaffey (10) 2,588 *
Harvard H. Hill, Jr. (11) 2,500 *
Sam M. Auriemma -- --
All executive officers and directors as a group
(12 persons) (12) 172,263 1.2%
- ----------------
* 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 "SEC"). Unless otherwise indicated
in the footnotes to this table and subject to community property laws where
applicable, the Company believes that 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
13,865,966 shares outstanding on December 31, 1996, adjusted as required by
rules promulgated by the SEC.
(2) Includes 600 shares beneficially owned by Mr. Kissling's minor children.
(3) Includes 46,000 shares subject to options exercisable within 60 days of
December 31, 1996.
(4) Includes 5,564 shares held in a trust of which Mr. Currie and his wife,
Patricia Johnson, are trustees. Includes 22,500 shares subject to options
exercisable within 60 days of December 31, 1996.
(5) Includes 18,000 shares subject to options exercisable within 60 days of
December 31, 1996.
(6) Includes 1,000 shares held in a trust of which Mr. Slavin is a trustee and
as to which Mr. Slavin has sole voting and investment power.
(7) Includes 9,300 shares subject to options exercisable within 60 days of
December 31, 1996.
(8) Includes 5,400 shares subject to options exercisable within 60 days of
December 31, 1996.
(9) Includes 2,608 shares subject to options exercisable within 60 days of
December 31, 1996.
(10) Includes 1,450 shares held by Mr. Mehaffey's wife, Marva L. Mehaffey.
(11) Includes 2,500 shares subject to options exercisable within 60 days of
December 31, 1996.
(12) Includes 108,012 shares subject to options held by officers and directors
and exercisable within 60 days of December 31, 1996. See Notes (2) through
(5), (7) through (9) and (11).
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Compliance with Section 16(a) of the Securities Exchange Act of 1934, As Amended
Section 16(a) of the Exchange Act 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 SEC 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 SEC regulation to furnish the Company with
copies of all Section 16(a) forms they file.
To 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 December 31, 1996, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with; except that one
report, covering an aggregate of one transaction, was filed late by Mr.
Mehaffey.
EXECUTIVE COMPENSATION
Compensation of Directors
Commencing in April 1994, each Non-Employee Director received a per-meeting
fee of $1,000 for attendance, in person or telephonicly, at regularly scheduled
Board meetings; no additional compensation is paid for committee meetings. In
addition, one director, Jay L. Kear, receives $1,500 per day for service as a
consultant. In the fiscal year ended December 31, 1996, $12,000 in aggregate
compensation was paid by the Company to directors of the Company who were not
otherwise employed by the Company or any affiliate of the Company ("Non-Employee
Directors") for attendance at regularly scheduled meetings. The members of the
Board of Directors are eligible for reimbursement for their expenses incurred in
connection with attendance at Board and committee meetings in accordance with
Company policy.
Non-Employee Directors are also eligible for grants of options under the
1994 Non-Employee Directors' Stock Option Plan, as amended (the "Directors'
Plan"). The Directors' Plan provides for the granting of stock options only to
Non-Employee Directors. Option grants under the Directors' Plan are intended by
the Company not to qualify as incentive stock options under the Code and are
nondiscretionary. Under the Directors' Plan, on the date of each annual meeting
of stockholders of the Company, each Non-Employee Director is granted an option
to purchase 10,000 shares of Common Stock which vests 25% on the date one year
after the date of grant and 6.25% for each full three-month period thereafter,
provided that the optionee has, during the period beginning on the date of grant
for such option and ending on such vesting date, continuously served as a
Non-Employee Director or as an employee of or consultant to the Company or any
affiliate of the Company.
During 1996, the Company granted options covering 10,000 shares of Common
Stock to each eligible Non-Employee Director, each at an exercise price per
share of $21.125, the fair market value of the Common Stock on the date of grant
(based on the closing sales price reported on the NASDAQ National Market for the
date of grant). As of January 31, 1997, options to purchase an aggregate of
55,000 shares had been granted under the Directors' Plan, and 2,500 options had
been exercised.
In November 1995, Mr. Kear entered into a consulting agreement with the
Company. Pursuant to the agreement, Mr. Kear provides assistance to the Chief
Executive Officer in connection with management reorganization issues, for which
he receives a consulting fee of $1,500 per day. In 1996, Mr. Kear received
$4,708 in consulting fees for services performed for the Company.
Compensation of Executive Officers
The following table shows for the fiscal years ending December 31,
1996, 1995 and 1994, compensation awarded or paid to, or earned by the Company's
Chief Executive Officer, its other four most highly
9
<PAGE>
compensated executive officers at December 31, 1996, and two former executive
officers who departed from the Company during fiscal year 1996 (collectively,
the "Named Executive Officers"):
<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term
Compensation
Annual Compensation (1) Awards (2)
- ------------------------------------------------- ---------------------------------------- ------------
Shares
Other Annual Underlying
Name and Principal Position Year Salary Bonus Compensation Options (3)
- ------------------------------------------------ -------- ----------- ---------- -------------- ------------
<S> <C> <C> <C> <C> <C>
Roy H. Slavin 1996 $320,600 $ 37,734 $ 50,000 (4) 400,000
Chairman of the Board, President 1995 $103,000 $ 70,645 $450,501 (5) 200,000
and Chief Executive Officer 1994 -- -- -- --
Sam M. Auriemma 1996 $113,719 $ 14,880 -- 45,000
Vice President, Finance, Chief 1995 -- -- -- --
Financial Officer and Secretary 1994 -- -- -- --
Joseph Cowan 1996 $142,761 $ 13,440 $109,521 (6) 16,900
Vice President, Marketing 1995 $ 77,147 $ 30,060 -- 16,900
1994 $ 72,100 $ 34,963 -- 8,100
Jeffrey Kissling 1996 $118,333 $ 13,440 -- 35,000
Vice President, Development 1995 $ 23,333 $ 673 -- --
1994 -- -- -- --
Lawrence T. Whelan (7) 1996 $140,600 $ 13,440 -- 20,000
Former Vice President, International Sales 1995 $ 87,032 $ 44,461 $ 15,373 (8) 10,000
1994 $ 34,125 $ 13,628 -- 15,000
Ronald C. Mehaffey (9 ) 1996 $131,730 $ 13,440 $ 48,892 (10) 45,000
Former Vice President, Product 1995 -- -- -- --
Development 1994 -- -- -- --
Gary J. Wilson (11) 1996 $144,107 -- -- 5,000
Former Vice President, North American 1995 $ 91,699 $ 45,589 -- --
Sales 1994 $ 86,690 $ 53,325 -- 15,000
- ---------------
<FN>
(1) Includes amounts earned but deferred at the election of the executive
officer.
(2) None of the Named Executive Officers held restricted stock at December 31,
1996.
(3) Of the options to purchase an aggregate of 566,900 shares of Common Stock
granted to the Named Executive Officers as a group in 1996, options to
purchase only 185,000 shares of Common Stock were original option grants,
and the remaining option grants were repricings of options previously
granted to such Named Executive Officers. See "REPORT OF THE COMPENSATION
COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION--Option
Repricing" and "Option Repricing Information."
(4) Includes a signing bonus of $50,000.
(5) Includes a relocation allowance of $56,081 and $394,420 in loans forgiven
by the Company.
(6) Includes a relocation allowance of $21,521 and $88,000 in loans forgiven by
the Company.
(7) Mr. Whelan's employment with the Company terminated on January 3, 1997.
(8) Includes a relocation allowance of $15,373.
(9) Mr. Mehaffey's employment with the Company terminated on December 6, 1996.
(10) Includes a relocation allowance of $48,892.
(11) Mr. Wilson's employment with the Company terminated on September 9, 1996.
</FN>
</TABLE>
10
<PAGE>
STOCK OPTION GRANTS AND EXERCISES
The Company grants options to its executive officers under the 1989
Stock Option Plan, as amended (the "1989 Plan"). As of December 31, 1996,
options to purchase a total of 1,550,659 shares were outstanding under the 1989
Plan and options to purchase 903,382 shares remained available for grant
thereunder.
The following tables show for the fiscal year ended December 31, 1996,
certain information regarding options granted to, exercised by and held at year
end by the Named Executive Officers:
<TABLE>
<CAPTION>
Option Grants in Fiscal 1996*
Individual Grants
-----------------------------------------------------
Number % of Total Potential
of Shares Options Realizable Value at
Underlying Granted to Assumed Annual Rates
Options Employees Exercise of Stock Price Appreciation
Granted in Fiscal Price Expiration for Option Term (4)
Name (#) (1) (2) 1996 (3) ($/sh) Date (2) 5% ($) 10% ($)
----------- ---------- --------- ---------- ---------------------------
<S> <C> <C> <C> <C> <C> <C>
Roy H. Slavin 100,000 7.6% $15.25 cancelled -- --
200,000 15.2% $9.75 8/30/06 $1,226,345 $3,107,798
100,000 7.6% $9.75 8/30/06 $ 613,172 $1,553,899
Sam M. Auriemma 20,000 1.5% $22.50 cancelled -- --
20,000 1.5% $9.75 8/30/06 $ 122,634 $ 310,780
5,000 0.4% $9.75 8/30/06 $ 30,658 $ 77,695
Joseph Cowan 16,900 1.3% $9.75 8/30/06 $ 103,626 $ 262,609
Jeffrey Kissling 10,000 0.8% $21.125 cancelled -- --
10,000 0.8% $9.75 8/30/06 $ 61,317 $ 155,390
15,000 1.1% $9.75 8/30/06 $ 91,976 $ 233,085
Lawrence T. Whelan (5) 5,000 0.4% $21.125 cancelled -- --
10,000 0.8% $9.75 8/30/06 $ 61,317 $ 155,390
5,000 0.8% $9.75 8/30/06 $ 30,659 $ 77,695
Ronald C. Mehaffey (6) 10,000 0.8% $16.00 cancelled -- --
10,000 0.8% $21.125 cancelled -- --
10,000 0.8% $9.75 cancelled -- --
10,000 0.8% $9.75 cancelled -- --
5,000 0.4% $9.75 cancelled -- --
Gary J. Wilson (7) 5,000 0.4% $21.125 4/21/06 $ 66,427 $ 168,339
- ---------------
<FN>
* Of the options to purchase an aggregate of 566,900 shares of Common Stock
granted to the Named Executive Officers as a group in 1996, options to purchase
only 185,000 shares of Common Stock were original option grants, and the
remaining option grants were repricings or amendments of options previously
granted to such Named Executive Officers. See "REPORT OF THE COMPENSATION
COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION--Option Repricing"
and "Option Repricing Information."
(1) All options granted to the Named Executive Officers (or repriced or
amended) in 1996 and remaining outstanding at December 31, 1996 vest 50%
two years from the date of grant, and 25% for each full year thereafter.
(2) The Board of Directors may reprice outstanding options under the terms of
the 1989 Plan.
(3) Based on options to purchase an aggregate of 1,313,100 shares granted in
1996. (Includes options to purchase an aggregate of 566,900 shares of
Common Stock granted to the Named Executive Officers as a group in 1996, of
which options to purchase only 185,000 shares of Common Stock were original
option grants, and and the remainder of which represented repricings or
amendments of options previously granted to such Named Executive Officers
in connection with the Company's option repricing program. See "REPORT OF
THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION--Option Repricing" and "Option Repricing Information.") This
number is not necessarily indicative of the number of shares subject to
options to be granted in the future.
(4) The potential realizable value is calculated based on the term of the
option (ten years) and the fair market value at the time of its grant
(which, in each case, is equal to the exercise price).
11
<PAGE>
(5) Mr. Whelan's options ceased vesting as of his termination, and the vested
portion of his options will expire if unexercised by April 3, 1997.
(6) All of Mr. Mehaffey's options terminated unvested following the termination
of his employment.
(7) Mr. Wilson's options ceased vesting as of March 9, 1997, and the vested
portion of his options will expire if unexercised by June 9, 1997.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Aggregated Option Exercises in Fiscal 1996 and Value of Options at End of Fiscal 1996
Number of Shares Value of Unexercised
Underlying Unexercised In-the-Money
Options at End Options at End of
Shares Acquired Value Realized of Fiscal 1996 (#) Fiscal 1996 ($) (2)
Name on Exercise ($) (1) Exercisable/Unexercisable Exercisable/Unexercisable
- ----- ----------------- ---------------- -------------------------- -------------------------
<S> <C> <C> <C> <C>
Roy H. Slavin -- -- 0/300,000 $0/$0
Sam M. Auriemma -- -- 0/25,000 $0/$0
Joseph Cowan -- -- 2,284/19,816 $0/$0
Jeffrey Kissling -- -- 0/25,000 $0/$0
Lawrence T. Whelan (3) -- -- 4,800/21,600 $0/$0
Ronald C. Mehaffey (4) -- -- 0/0 $0/$0
Gary J. Wilson (5) -- -- 8,100/12,800 $11,271/$6,069
- -------------------
<FN>
(1) Value realized is based on the fair market value of the Company's Common
Stock on the date of exercise minus the exercise price and does not
necessarily indicate that the optionee sold such stock.
(2) Fair market value of the Company's Common Stock at December 31, 1996
($8.89) minus the exercise price of the options.
(3) Mr. Whelan's options ceased vesting as of his termination, and the vested
portion of his options will expire if unexercised by April 3, 1997.
(4) All of Mr. Mehaffey's options terminated unvested.
(5) Mr. Wilson's options ceased vesting as of March 9, 1997, and the vested
portion of his options will expire if unexercised by June 9, 1997.
</FN>
</TABLE>
EMPLOYMENT AGREEMENTS
Pursuant to an employment agreement between the Company and Roy H.
Slavin entered into in November 1995, Mr. Slavin's annual salary and bonus are
determined by the Compensation Committee of the Board of Directors. To assist
Mr. Slavin in his purchase of a home in connection with his relocation to
Southern California, a loan by the Company to Mr. Slavin in the amount of
$394,420 was made and subsequently forgiven by the Company in 1995. Mr. Slavin
also received a relocation allowance of $56,081 pursuant to the agreement. Under
the terms of the agreement, options to purchase 200,000 shares of the Company's
Common Stock under the 1989 Plan were granted to Mr. Slavin at an exercise price
of $37.75, the market price of the Common Stock as of July 31, 1995. Such
options originally vested at the rate of 24% one year from the date of grant and
2 percent per month thereafter. On August 31, 1996, the terms of these options
were revised such that the exercise price was reduced to $9.75 (the market price
of the Common Stock on August 30, 1996) and the vesting schedule was revised so
that 50 percent of the options vest two years from August 31, 1996 and 25
percent per year thereafter. See "Option Repricing Information." Either Mr.
Slavin or the Company may terminate this employment relationship at will.
In August 1996, the Compensation Committee of the Board of Directors
authorized severance protection agreements covering all officers of the Company.
Under the agreement covering the Chief Executive Officer of the Company, such
officer will receive 2.5 times his annual average salary over the last three
years in the event that he is either terminated other than for cause, or a
change of control of the Company occurs and he decides not to continue his
employment with the Company. The agreements covering officers other than the
Chief Executive Officer have essentially the same terms as the agreement with
the Chief Executive Officer except that the payment will be one times the
officer's average annual salary over the last three years. Under all of the
12
<PAGE>
severance agreements, in the event of a change of control of the Company, all
unvested stock options held by the officers shall immediately vest and become
exercisable.
Pursuant to an agreement between the Company and Gary J. Wilson entered
into in September 1996, Mr. Wilson resigned as Vice President, North American
Sales as of September 9, 1996. Pursuant to this agreement, Mr. Wilson was paid
$11,667 per month, and Mr. Wilson's unvested options continued to vest, until
March 9, 1997.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee") during
1997 was composed of Messrs. Currie, Kear and Rehfeld; none of the members of
the Committee is a current or former officer or employee of the Company. The
Committee is responsible for setting and administering the Company's policies
governing employee compensation and administering the Company's employee benefit
plans, including the 1989 Plan and the Employee Stock Purchase Plan.
COMPENSATION COMMITTEE REPORT(1)
Compensation Philosophy
The compensation policies adopted by the Committee are designed to (i)
align compensation with business objectives and performance; (ii) attract,
retain and reward executive officers and other key employees who contribute to
the long-term success of the Company and (iii) motivate the Company's executive
officers and other key employees to enhance long-term stockholder value. Key
elements of this philosophy are:
- The Company's salaries must be competitive with leading
software companies with which the Company competes for highly
qualified and experienced executives. To date, the Committee
has relied on its members' experience in working with other
comparable software companies to ensure executive salaries are
competitive. Since becoming a public company in July 1993, the
Company has retained the services of an executive compensation
consulting firm to regularly compare the Company's salaries to
these companies and assist the Company in setting its salary
parameters.
- The Company maintains annual incentive programs sufficient to
provide motivation to achieve specific operating goals and to
generate rewards that bring total compensation to competitive
levels.
- The Company provides significant equity-based incentives for
executives and other key employees to ensure that they are
motivated over the long term to respond to the Company's
business challenges and opportunities as stockholders as well
as employees.
The Committee's objective is to set executive compensation within a
range which the Committee believes is comparable to the average range of
compensation set by companies of comparable size in the software industry. The
group of comparable companies is not necessarily the same as the companies
included in the market indices included in the performance graph on page 18 of
this Proxy Statement. The primary components of executive compensation are base
salary, short- and long-term cash incentives and long-term equity incentives.
Each year, the Compensation Committee reviews the criteria upon which all
aspects of employee compensation are based.
Base Salary. The Committee annually reviews each executive officer's
base salary. When reviewing base salaries, the Committee considers a number of
subjective criteria, including individual and Company performance, levels of
responsibility, prior experience and competitive pay practices. The Committee
does not make individual salary decisions according to specific criteria and
does not ascribe specific weights to the factors it considers.
13
<PAGE>
Annual Incentives. In fiscal 1996, the Company awarded year-end bonuses
to its executive officers, non-executive officers and certain other employees.
The actual bonuses paid to each individual were determined by multiplying a
predetermined amount (which is a graduated percentage of salary dependent on
employee level, typically 5-15%) by a percentage determined by the Compensation
Committee to be a fair adjustment of the predetermined amount based on actual
Company performance during the year. In addition, selected other employees
received "spot" bonus awards during the year based on achievement of specific
operational goals.
Long-Term Incentives. The Company's long-term incentive program
consists of options granted under the 1989 Plan, other stock options and the
Purchase Plan. Option grants include vesting periods to encourage key employees
to continue in the employ of the Company. Through option grants, executives
receive significant equity incentives to build long-term stockholder value.
Grants are generally made at 100% of fair market value on the date of grant.
Section 162(m) of the Code limits the Company to a deduction for
federal income tax purposes of no more than $1 million of compensation paid to
certain 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 1989 Plan with an exercise price at least equal to the fair market value of
the Common Stock on the date of grant will be treated as performance-based
compensation under the final Treasury regulations promulgated under Section
162(m) of the Code.
Executive officers receive value from these grants only if the Common
Stock appreciates over the long term. The amount of individual option grants is
determined based in part on competitive practices at comparable software
companies and on the Company's philosophy of significantly linking executive
compensation with stockholder interests. In determining the size of individual
grants, the Committee also considers the number of shares subject to options
previously granted to each executive officer, including the number of shares
that have vested and that remain unvested. The Committee believes that option
grants by the Company to its executive officers and employees are comparable to
the average range for comparable companies. In 1996, the Committee granted
options to purchase 575,900 shares of the Company's Common Stock to eight
executive officer(s), of which options to purchase only 194,000 shares of Common
Stock were original option grants, and of which the remaining option grants were
repricings or amendments of options previously granted to such Named Executive
Officers. See "--Option Repricing" and "Option Repricing Information."
Option Repricing
In January 1996, the Company implemented an option exchange program
applicable to all employees of the Company, excluding executive officers. In
August 1996, the Company implemented an option exchange program applicable to
the Company's executive officers other than the Chief Executive Officer.
Concurrently therewith, the Compensation Committee amended Mr. Slavin's
outstanding option to purchase 200,000 shares of Common Stock under the 1989
Plan and exchanged Mr. Slavin's outstanding option to purchase 100,000 shares of
Common Stock under the 1989 Plan to reduce, in each case, the exercise price of
such options to equal the fair market value of the Common Stock on the date of
amendment or exchange. As a result of these actions, the number of shares
subject to each exchanged or amended option remained the same, but in each case
the exercise price was reduced to equal the market price of the common stock on
the date of such exchange or amendment. In addition, the vesting of the options
was revised so that 50 percent of the options vest two years from the date of
the exchange or amendment of such option and 25 percent vest each year
thereafter. At the times these repricings were effected, substantially all of
the options then outstanding under the 1989 Plan, including those held by
executive officers, had exercise prices significantly above the current market
price of the Company's Common Stock. In light of the decline in the Company's
Common Stock Price and because options are a key component of the Company's
long-term incentive program, the Committee determined that repricing of options
held by executive officers was necessary in order to retain such employees. For
additional details regarding the effect of such repricing programs on options
held by the Named Executive Officers, see "Option Repricing Information."
14
<PAGE>
Corporate Performance and Chief Executive Officer Compensation
Mr. Slavin's base salary for 1996 as President and Chief Executive
Officer was $320,600. In setting the base salary for Mr. Slavin, the Committee
took into account (i) the terms of Mr. Slavin's employment agreement with the
Company which stipulated an increase in his 1996 base salary over his starting
salary, (ii) the expanded scope of Mr. Slavin's responsibilities, including his
duties as Chairman of the Board, and (iii) the Board's confidence in Mr. Slavin
to lead the Company's continued development. Mr. Slavin's annual salary was
estimated to provide an annual base compensation level at the average as
compared to a selected group of other software companies. Based on the Company's
performance, Mr. Slavin also received annual incentive payments totaling
$37,734. This payment represented a significant reduction from the target bonus
to reflect the Company's 1996 financial performance. In addition, in August
1996, the Committee amended Mr. Slavin's outstanding option to purchase 200,000
shares of Common Stock under the 1989 Plan and exchanged Mr. Slavin's
outstanding option to purchase 100,000 shares of Common Stock under the 1989
Plan to reduce, in each case, the exercise price of such options to equal the
fair market value of the Common Stock on the date of amendment or exchange.
Other than such amended and repriced options, Mr. Slavin received no original
options grants during 1996. See "--Option Repricing" above and "Option Repricing
Information."
Conclusion
Through the programs described above, a significant portion of the
Company's compensation program and the compensation of the Company's Chief
Executive Officer are contingent on Company performance, and realization of
benefits is closely linked to increases in long-term stockholder value. The
Company remains committed to this philosophy of pay for performance, recognizing
that the competitive market for talented executives and the volatility of the
Company's business may result in highly variable compensation for a particular
time period.
COMPENSATION COMMITTEE
F. Rigdon Currie
Jay L. Kear
John E. Rehfeld
(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 into any
filing of the Company under the Securities Act of 1933, as amended (the
"Securities Act") or Exchange Act, whether made before or after the date
hereof and irrespective of any general incorporation language contained in
such filing.
15
<PAGE>
OPTION REPRICING INFORMATION
The following table shows certain information concerning the repricing
of options received by the Named Executive Officers since the Company's initial
public offering in July 1993. See also "REPORT OF THE COMPENSATION COMMITTEE OF
THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION--Option Repricing."
<TABLE>
<CAPTION>
Length of
Number of Market Price Exercise Original
Securities of Stock at Price at Time Option Term
Underlying Time of of Repricing Remaining at
Options Repricing or or Date of
Repriced or Amendment Amendment New Exercise Repricing or
Name Date Amended (#) ($) ($) Price ($) Amendment
- ---- ------------ ----------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Roy H. Slavin 8/31/96 200,000 $9.75 $37.75 $9.75 9 years
8/31/96 100,000 $9.75 $15.25 $9.75 9.5 years
Sam M. Auriemma 8/31/96 20,000 $9.75 $22.50 $9.75 9.5 years
Joseph Cowan 8/31/96 16,900 $9.75 $17.125 $9.75 9.25 years
Jeffrey Kissling 8/31/96 10,000 $9.75 $21.125 $9.75 9.5 years
Lawrence T. Whelan (1) 8/31/96 10,000 $9.75 $27.00 $9.75 8.5 years
8/31/96 5,000 $9.75 $21.125 $9.75 9.5 years
Ronald C. Mehaffey (2) 8/31/96 10,000 $9.75 $16.00 $9.75 9.5 years
8/31/96 10,000 $9.75 $21.125 $9.75 9.5 years
Gary J. Wilson (3) -- -- -- -- -- --
- ------------------
<FN>
(1) Mr. Whelan's options ceased vesting as of his termination, and the vested
portion of his options will expire if unexercised by April 3, 1997.
(2) All of Mr. Mehaffey's options were cancelled as of December 31, 1996.
(3) Mr. Wilson's options ceased vesting as of March 9, 1997, and the vested
portion of his options will expire if unexercised by June 9, 1997.
</FN>
</TABLE>
16
<PAGE>
PERFORMANCE MEASUREMENT COMPARISON (1)
The following graph shows a comparison of cumulative total returns of
an investment of $100 in cash for the Company, the Center for Research in
Securities Prices Index for the NASDAQ Stock Market (United States Companies)
(the "CRSP NASDAQ U.S. Index") and the Center for Research in Securities Prices
Index for the NASDAQ Computer and Data Processing Stocks (the "CRSP NASDAQ
Computer Index") for the period that commenced July 23, 1993 (the date on which
the Common Stock was first traded on the NASDAQ National Market System) and
ended on December 31, 1996. The graph assumes that all dividends have been
reinvested.
COMPARISON OF CUMULATIVE TOTAL RETURNS
(Wonderware Corporation, CRSP NASDAQ U.S. Index, CRSP NASDAQ Computer Index)
[GRAPHIC OMITTED, Illustration of returns listed below]
<TABLE>
<CAPTION>
- ----------------------------------------- --------- --------- --------- --------- ----------
Index Description 7/23/93 12/31/93 12/31/94 12/31/95 12/31/96
- ----------------------------------------- --------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
Wonderware Corporation 100.000 158.929 241.071 121.429 63.507
CRSP Index for the NASDAQ Stock Market 100.000 110.427 107.943 152.532 187.753
(United States Companies)
CRSP Index for the NASDAQ Computer and 100.000 109.824 133.338 203.394 250.746
Data Processing Stocks
- ----------------------------------------- --------- --------- --------- --------- ----------
</TABLE>
(1) This Section is not "soliciting material," is not deemed filed with the
SEC, and is not to be incorporated by reference into any filing of the
Company under the Securities Act or the Exchange Act whether made before or
after the date hereof and irrespective of any general incorporation
language in such filing.
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.
The Company has entered into certain additional transactions with its
directors and executive officers, as described under the captions "Executive
Compensation--Compensation of Directors" and "Executive Compensation--Employment
Agreements."
17
<PAGE>
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented
for consideration at the Annual Meeting. If any other matters are properly
brought before the meeting, it is the intention of the persons named in the
accompanying proxy to vote on such matters in accordance with their best
judgment.
By Order of the Board of Directors
/s/ Sam M. Auriemma
Sam M. Auriemma
Secretary
April 3, 1997
A COPY OF THE COMPANY'S ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996 IS AVAILABLE WITHOUT
CHARGE UPON WRITTEN REQUEST TO: SAM M. AURIEMMA, SECRETARY, WONDERWARE
CORPORATION, 100 TECHNOLOGY DRIVE, IRVINE, CALIFORNIA 92618.
18
<PAGE>
PROXY
WONDERWARE CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 12, 1997
The undersigned stockholder of Wonderware Corporation, a Delaware
corporation, hereby acknowledges the receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement with respect to the Annual Meeting of
Stockholders of Wonderware Corporation to be held at the Sutton Place Hotel at
4500 MacArthur Blvd., Newport Beach, California on Monday, May 12, 1997 at 10:00
a.m. and hereby appoints Roy H. Slavin and Sam M. Auriemma, and each of them, as
attorneys and proxies of the undersigned, each with power of substitution and
revocation, and each with all powers that the undersigned would possess if
personally present to vote the shares of stock of Wonderware Corporation which
the undersigned may be entitled to vote at such meeting and any and all
continuations and adjournments thereof, as set forth below, and in their
discretion upon any other matters that may properly come before the meeting.
THIS PROXY WILL BE VOTED AS SPECIFIED OR IF NO CHOICE IS SPECIFIED, FOR
THE ELECTION OF THE NOMINEES, FOR PROPOSALS 2 AND 3, AND AS SAID PROXIES DEEM
ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
(IMPORTANT - TO BE VOTED, SIGNED AND DATED ON REVERSE SIDE) [SEE REVERSE SIDE]
<PAGE>
[WONDERWARE CORPORATION LOGO]
April 3, 1997
You are cordially invited to attend the Annual Meeting of Stockholders to be
held at 10:00 a.m. on Monday, May 12, 1997 at the Sutton Place Hotel at 4500
MacArthur Blvd., Newport Beach, California. Detailed information as to the
business to be transacted at the meeting is contained in the accompanying Notice
of Annual Meeting and Proxy Statement.
Regardless of whether you plan to attend the meeting, it is important that your
shares be voted. Accordingly, we ask that you sign and return your proxy as soon
as possible in the envelope provided. If you do plan to attend the meeting,
please mark the appropriate box on the proxy.
Sincerely,
Roy H. Slavin
Chairman of the Board, President and
Chief Executive Officer
DETACH HERE
[X] Please mark votes as in this example.
1: Election of directors to hold office until the next Annual
Meeting of Stockholders and until their successors are elected.
Nominees: F. Rigdon Currie, Harvard H. Hill, Jr., Jay L. Kear, John E.
Rehfeld and Roy H. Slavin
[ ] FOR ALL NOMINEES
[ ] WITHHELD FROM ALL NOMINEES
[ ]
For all nominees except as noted above
2: To approve the Employee Stock Purchase Plan, as amended.
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
2: To ratify selection of Deloitte & Touche LLP as independent
auditors for the fiscal year ending December 31, 1997.
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
[ ] MARK HERE FOR CHANGE OF ADDRESS AND NOTE AT LEFT
[ ] MARK HERE IF YOU PLAN TO ATTEND THE MEETING
PLEASE VOTE, SIGN, DATE AND PROMPTLY
RETURN THIS CARD.
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.
Signature:_________________Date:_____ Signature:____________________Date:_____
