<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
MANUGISTICS GROUP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
[MANUGISTICS(R) LOGO]
MANUGISTICS GROUP, INC.
2115 EAST JEFFERSON STREET
ROCKVILLE, MARYLAND 20852
July 3, 1997
Dear Shareholders:
It is my pleasure to invite you to the 1997 Annual Meeting of Shareholders
of Manugistics Group, Inc. to be held on Friday, July 25, 1997 at 9:00 a.m.,
Eastern Daylight Time, at the Bethesda Marriott, 5151 Pooks Hill Road, Bethesda,
Maryland.
Whether or not you plan to attend, and regardless of the number of shares
you own, it is important that your shares be represented at the Annual Meeting.
You are accordingly urged to complete, sign, date and return your proxy promptly
in the enclosed envelope. Your return of a proxy in advance will not affect your
right to vote in person at the Annual Meeting.
I hope that you will attend the Annual Meeting. The officers and directors
of the Company look forward to seeing you at that time.
Very truly yours,
/s/ WILLIAM M. GIBSON
WILLIAM M. GIBSON
Chairman of the Board,
President and
Chief Executive Officer
<PAGE> 3
[MANUGISTICS(R) LOGO]
MANUGISTICS GROUP, INC.
2115 EAST JEFFERSON STREET
ROCKVILLE, MARYLAND 20852
------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
FRIDAY, JULY 25, 1997
------------------------------
To our Shareholders:
The Annual Meeting of Shareholders (the "Meeting") of Manugistics Group,
Inc. (the "Company") will be held on Friday, July 25, 1997 at 9:00 a.m. E.D.T.
at the Bethesda Marriott, 5151 Pooks Hill Road, Bethesda, Maryland for the
following purposes:
1. To elect two Class II Directors, each for a term of three years and
until their respective successors have been elected and qualified;
2. To consider and vote upon a proposal to amend the Manugistics Group,
Inc. Amended and Restated Certificate of Incorporation to increase the
number of shares of Common Stock that the Company is authorized to issue
from 30,000,000 shares to 100,000,000 shares;
3. To consider and vote upon a proposal to amend the Employee Stock Option
Plan to increase the number of shares of Common Stock authorized to be
issued thereunder by 1,000,000 shares;
4. To consider and vote upon a proposal to amend the 1994 Outside Directors
Non-Qualified Stock Option Plan to increase the number of shares of
Common Stock authorized to be issued thereunder by 80,000 shares; and
5. To transact such other business as may properly come before the Meeting.
Shareholders of record at 5:00 p.m. E.D.T. on May 26, 1997 are entitled to
receive notice of and to vote at the Meeting.
You are invited to attend the Meeting. Please carefully read the attached
Proxy Statement for information regarding the matters to be considered and acted
upon at the Meeting. We hope that you will attend the Meeting.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING IN PERSON, YOU ARE
URGED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED
RETURN POSTAGE-PAID ENVELOPE. No postage need be affixed to the return envelope
if mailed in the United States. If you attend the Meeting, you may withdraw your
proxy and vote in person by ballot.
By Order of the Board of Directors
/s/ HELEN A. NASTASIA
HELEN A. NASTASIA
General Counsel and Secretary
Rockville, Maryland
July 3, 1997
<PAGE> 4
MANUGISTICS GROUP, INC.
2115 EAST JEFFERSON STREET
ROCKVILLE, MARYLAND 20852
------------------------------
PROXY STATEMENT
This Proxy Statement and the accompanying Notice of Annual Meeting of
Shareholders and Proxy Card are being furnished in connection with the
solicitation by the Board of Directors of Manugistics Group, Inc. (the
"Company") of proxies to be voted at the Annual Meeting of Shareholders
scheduled to be held on Friday, July 25, 1997, at 9:00 a.m. E.D.T., at the
Bethesda Marriott, 5151 Pooks Hill Rd., Bethesda, Maryland, and any adjournment
or postponement thereof (the "Meeting"). This Proxy Statement and the enclosed
Proxy Card are being furnished on or about July 7, 1997, to all holders of
record of the Company's Common Stock (the "Common Stock") as of 5:00 p.m. E.D.T.
on May 26, 1997. A copy of the Company's 1997 Annual Report to Shareholders,
including consolidated financial statements for the fiscal year ended February
28, 1997, accompanies this Proxy Statement.
At the Meeting, shareholders will elect two Class II directors, each to
serve for a term of three years. Shareholders will also act upon proposals to
amend the Manugistics Group, Inc. Amended and Restated Certificate of
Incorporation to increase the number of authorized shares of Common Stock
available to be issued and to amend two of the Company's existing stock option
plans.
Except as otherwise indicated, all information in this Proxy Statement
gives effect to the stock dividend of one share of Common Stock for each share
held, paid on June 11, 1997 to shareholders of record on May 23, 1997.
VOTING SECURITIES AND RECORD DATE
The Board of Directors has fixed 5:00 p.m. E.D.T. on May 26, 1997 as the
record date (the "Record Date") for determination of shareholders entitled to
notice of and to vote at the Meeting. As of the Record Date, there were
10,919,005 shares of Common Stock issued and outstanding and there were no other
voting securities of the Company outstanding. Shares of Common Stock issued in
payment of the stock dividend on June 11, 1997 are not eligible to be cast at
the meeting. Each outstanding share of Common Stock entitles the record holder
thereof to one vote. Abstentions and broker non-votes are not counted as votes
cast on any matter to which they relate.
VOTING RIGHTS AND SOLICITATION OF PROXIES
Eligible shareholders of record may vote at the Meeting in person or by
means of the enclosed Proxy Card. You may specify your voting choices by marking
the appropriate boxes on the Proxy Card. The proxy solicited hereby, if properly
signed and returned to the Company and not revoked prior to or at the Meeting,
will be voted in accordance with the instructions specified thereon. If you
properly sign and return your Proxy Card, but do not specify your choices, your
shares will be voted by the proxy holders as recommended by the Board of
Directors.
The Board of Directors encourages you to complete and return the Proxy Card
even if you expect to attend the Meeting. You may revoke your proxy at any time
before it is voted at the Meeting by giving written notice of revocation to the
Secretary of the Company, by submission of a proxy bearing a later date or by
attending the Meeting and casting a ballot.
The proxy holders, William M. Gibson and Peter Q. Repetti, will vote all
shares of Common Stock represented by Proxy Cards that are properly signed and
returned by shareholders. The Proxy Card also authorizes the proxy holders to
vote the shares represented with respect to any matters not known at the time
this Proxy Statement was printed that may properly be presented for
consideration at the Meeting. YOU MUST RETURN A SIGNED PROXY CARD IF YOU WANT
THE PROXY HOLDERS TO VOTE YOUR SHARES OF COMMON STOCK.
1
<PAGE> 5
The cost of soliciting proxies will be borne by the Company. Following the
mailing of proxy solicitation materials, proxies may be solicited by directors,
officers and employees of the Company and its subsidiaries personally, by
telephone or otherwise. Such persons will not receive any fees or other
compensation for such solicitation. In addition, the Company will reimburse
brokers, custodians, nominees and other persons holding shares of Common Stock
for others for their reasonable expenses in sending proxy materials to the
beneficial owners of such shares and in obtaining their proxies.
PROPOSAL 1 -- ELECTION OF DIRECTORS
The By-Laws of the Company (the "By-Laws") provide that the Company's
business shall be managed by a Board of Directors of not less than five and not
more than nine directors, with the number of directors to be fixed by the Board
of Directors from time to time. The Board of Directors has fixed the number of
directors which shall constitute the entire Board of Directors at seven.
The By-Laws also provide that the Company's Board of Directors is divided
into three classes: Class I, Class II and Class III, each class being as nearly
equal in number as possible. The directors in each class serve terms of three
years and until their respective successors have been elected and have
qualified. There are presently three directors in Class I, two directors in
Class II and two directors in Class III.
The term of office of one class of directors expires each year in rotation
so that one class is elected at each annual meeting of shareholders for a three
year term. The term of the two Class II directors, Joseph H. Jacovini and Thomas
A. Skelton will expire at the Meeting. The other five directors will remain in
office for the remainder of their terms, as indicated below.
Director candidates are nominated by the Board of Directors. Shareholders
are also entitled to nominate director candidates for the Board of Directors in
accordance with the procedures set forth in the By-Laws.
At the Meeting, two Class II directors are to be elected. Both of the
director nominees are presently directors of the Company. Each nominee has
consented to being named as a nominee for director of the Company and has agreed
to serve if elected. The directors will be elected to serve for three year terms
and until their successors have been elected and have qualified. In the event
that any nominee should become unavailable or unable to serve as a director, the
persons named as proxies on the Proxy Card will vote for the person(s) the Board
of Directors recommends.
Set forth below is certain information regarding each nominee for Class II
director and each Class I and Class III director, each of whose term of office
will continue after the Meeting.
NOMINEES FOR CLASS II DIRECTORS
JOSEPH H. JACOVINI, 56, has served as a director of the Company since 1986.
He is a partner in Dilworth, Paxson, Kalish & Kauffman, LLP based in
Philadelphia, Pennsylvania, where he has practiced law since 1965. He has served
as Co-Chairman of that firm since 1995 and as Chairman of that firm's Corporate
Department since 1993. Mr. Jacovini has been a Trustee of Drexel University
since 1990. He also served as a member of the Board of the Philadelphia Regional
Port Authority from 1992 to early 1995 and as its Chairman, as well as Vice
Chairman of the Ports of Philadelphia and Camden, Inc., during 1994-95.
THOMAS A. SKELTON, 49, has served as a director of the Company since April
1992. Mr. Skelton served as President of Knowledge Systems Corporation from
April 1996 to April 1997. From January 1995 to March 1996, he was the Division
President of Global Software, Inc. in Raleigh, North Carolina. From 1983 to
1994, Mr. Skelton worked in various management capacities with Manugistics,
Inc., the principal operating subsidiary of the Company. In May 1983, he joined
STSC, Inc. (now Manugistics, Inc.) as Vice President of Sales; he became Senior
Vice President in 1986, Executive Vice President in March 1991 and Chief
Operating Officer in March 1992.
The affirmative vote of a majority of the outstanding shares of Common
Stock present or represented and entitled to vote at the Meeting is required to
elect each of the Class II Directors nominated above.
2
<PAGE> 6
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE ELECTION
OF EACH OF THE NOMINATED CLASS II DIRECTORS.
INCUMBENT CLASS I DIRECTORS -- TO CONTINUE IN OFFICE FOR TERMS EXPIRING IN 1999
JACK A. ARNOW, 69, has served as a director of the Company since 1986. Mr.
Arnow is an independent investor.
LYNN C. FRITZ, 55, has served as a director of the Company since January
1995. Since 1965, Mr. Fritz has been Chairman and Chief Executive Officer of
Fritz Companies, Inc., a publicly-held company that specializes in freight
forwarding and customhouse brokerage on a global basis.
J. MICHAEL CLINE, 37, was elected to serve as a director of the Company in
July 1996. Since 1989, Mr. Cline has been a managing member of General Atlantic
Partners, LLC ("GAP LLC") (or its predecessor in interest), a private investment
firm with a primary focus on software and related information technologies. Mr.
Cline was nominated as a director to the Company's Board of Directors pursuant
to the request of GAP LLC, which acquired an 8.8% ownership interest in the
Company in 1996. Prior to 1989, Mr. Cline was an associate with McKinsey &
Company, Inc., a global strategic consulting firm. Mr. Cline serves on a number
of boards including Scopus Technology, Inc., a company that specializes in
client server customer service management systems; FICS, the leading company in
electronic banking, electronic services delivery and reporting systems; SQRIBE
Technologies Corp., a company that focuses on reporting tools; and Richter
Systems International Inc., a company that engages in the retail systems
business.
INCUMBENT CLASS III DIRECTORS -- TO CONTINUE IN OFFICE FOR TERMS EXPIRING IN
1998
WILLIAM M. GIBSON, 52, has served as President, Chief Executive Officer and
Chairman of the Board of Directors of the Company since its formation in 1986.
From 1983 until 1986, when it was purchased by the Company, Mr. Gibson served as
President, Chief Executive Officer and Chairman of the Board of Directors of
STSC, Inc. (now Manugistics, Inc., the principal operating subsidiary of the
Company). He joined STSC, Inc. as Executive Vice President and Chief Operating
Officer in 1982.
WILLIAM G. NELSON, 63, has served as a director of the Company since 1986.
Since September 1996, Mr. Nelson has served as the President, Chief Executive
Officer and Chairman of the Board of Directors of Geac Computer Corporation,
Limited. He also serves as a director to HRP Inc. and Project Software &
Development, Inc. From December 1991 to December 1994, Mr. Nelson was President
and Chief Executive Officer of Pilot Software, Inc. From April 1990 to December
1991, Mr. Nelson served in several executive capacities at OnLine Software
International, Inc., including President, Chief Operating Officer and Chief
Executive Officer.
COMPENSATION OF DIRECTORS
To date, the Company, with the exception of a one-time stock grant in 1991,
has not paid fees or other compensation to directors for serving on the Board of
Directors or committees of the Board. Directors are reimbursed for their
reasonable out-of-pocket expenses incurred in connection with attendance at
meetings of the Board of Directors and committees thereof. The 1994 Outside
Directors Non-Qualified Stock Option Plan provides for the granting of options
to purchase 10,000 shares of Common Stock to each outside, i.e., non-employee,
director on an annual basis based on their length of service for that fiscal
year. In the fiscal year ended February 28, 1997 ("fiscal year 1997"), options
to purchase shares under this plan were granted to Messrs. Arnow, Cline, Fritz,
Jacovini, Nelson, and Skelton.
BOARD OF DIRECTORS' MEETINGS AND COMMITTEES
The Board of Directors held seven meetings, including four regularly
scheduled meetings and three additional meeting during fiscal year 1997. The
Board of Directors has established standing Audit and Compensation committees,
each of which is composed of non-employee members of the Board of Directors. The
membership of each of these standing committees is determined from time to time
by the Board. The
3
<PAGE> 7
Board of Directors has not established a nominating committee; the entire Board
of Directors votes on nominations of directors for the Company.
THE AUDIT COMMITTEE, which presently consists of Lynn C. Fritz, Joseph H.
Jacovini and J. Michael Cline, held four meetings during fiscal year 1997. The
committee selects, subject to approval of the Board of Directors, a firm of
independent certified public accountants to audit the books and accounts of the
Company and its subsidiaries for the fiscal year for which they are appointed.
In addition, the committee reviews and approves the scope and cost of all
services (including nonaudit services) provided by the firm selected to conduct
the audit. The committee also monitors the effectiveness of the audit effort and
the Company's financial reporting, and reviews the Company's financial and
operating controls.
THE COMPENSATION COMMITTEE, which presently consists of Jack A. Arnow,
William G. Nelson and Thomas A. Skelton, held two meetings during fiscal year
1997. The committee is responsible for the approval and administration of the
compensation program for William M. Gibson, the Company's President, Chief
Executive Officer and Chairman of the Board of Directors. The committee is also
responsible for the grant of options to the Company's employees under the
Company's various stock option plans and administers the plans.
4
<PAGE> 8
OWNERSHIP OF MANUGISTICS GROUP, INC. STOCK
The following table sets forth certain information, as of May 31, 1997,
with respect to the beneficial ownership of shares of Common Stock by (i) each
shareholder known by the Company to be the beneficial owner of more than five
percent (5%) of the outstanding shares of Common Stock; (ii) each director of
the Company; (iii) each executive officer named in the Summary Compensation
Table appearing below under "Executive Compensation"; and (iv) all executive
officers and directors as a group. Except as indicated in the footnotes to the
table, the persons and entities named in the table have sole voting and
investment power with respect to all shares of Common Stock which they
respectively own beneficially.
The address of each person who is an officer or director of the Company is
2115 East Jefferson Street, Rockville, MD 20852.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF NUMBER OF SHARES PERCENT
BENEFICIAL OWNER BENEFICIALLY OWNED(1) OF CLASS
---------------------- --------------------- --------
<S> <C> <C>
William M. Gibson(2)....................................... 5,794,530 26.5
Kenneth S. Thompson(3)..................................... 681,846 3.1
Joseph E. Broderick(4)..................................... 60,300 *
Keith J. Enstice(5)........................................ 151,162 *
Mary Lou Fox(6)............................................ 187,900 *
Peter Q. Repetti (7)....................................... 27,356 *
Jack A. Arnow(8)........................................... 112,000 *
J. Michael Cline(9)........................................ 10,000 *
Lynn C. Fritz (10)......................................... 25,000 *
Joseph H. Jacovini(11)..................................... 62,000 *
William G. Nelson(12)...................................... 266,000 1.2
Thomas A. Skelton(13)...................................... 681,826 3.1
General Atlantic Partners, LLC(14)......................... 1,838,000 8.4
Directors and executive officers as a group (12 persons)... 8,059,920 36.9%
</TABLE>
- ------------------------------
*Less than 1% of the outstanding Common Stock.
(1) Beneficial ownership is based on 21,855,010 outstanding shares of Common
Stock as of May 31, 1997. Under applicable rules of the Securities and
Exchange Commission (the "SEC"), a person is deemed to be the beneficial
owner of shares of Common Stock if, among other things, he or she directly
or indirectly has or shares voting power or investment power with respect
to such shares. A person is also considered to beneficially own shares of
Common Stock which he or she does not actually own but has the right to
acquire presently or within the next sixty (60) days, by exercise of stock
options or otherwise.
(2) Includes 6,130 shares issuable upon exercise of options, 581,000 shares of
Common Stock held by his wife and 200,000 shares held in a non-profit
corporation, with respect to which Mr. Gibson shares voting and dispositive
control.
(3) Includes 18,780 shares issuable upon exercise of options. Excludes 6,408
shares of Common Stock held by Mr. Thompson's wife of which he disclaims
beneficial ownership.
(4) Includes 41,254 shares issuable upon exercise of options.
(5) All shares issuable upon exercise of options.
(6) Includes 153,900 shares issuable upon exercise of options.
(7) Includes 23,100 shares issuable upon exercise of options.
(8) Includes 44,000 shares issuable upon exercise of options.
(9) All shares issuable upon exercise of options. Excludes shares beneficially
owned by General Atlantic Partners, LLC, of which Mr. Cline is a managing
member.
(10) All shares issuable upon exercise of options.
(11) Includes 4,000 shares held by his wife and 38,000 shares of Common Stock
held of record by Prudential Bank & Trust Co. in a retirement savings plan
for Mr. Jacovini. Excludes 20,000 shares issuable upon exercise of options
beneficially owned by Dilworth, Paxson, Kalish & Kauffman, LLP of which Mr.
Jacovini is Co-Chairman and a partner, as to which shares Mr. Jacovini has
disclaimed any beneficial interest; subsequent to May 31, 1997, Mr.
Jacovini acquired beneficial ownership of 12,664 of such shares.
(12) Includes 68,000 shares issuable upon exercise of options.
(13) Includes 26,000 shares issuable upon exercise of options, 27,288 shares
held by his wife and 17,244 shares held by his wife for his children.
(14) The address of General Atlantic Partners, LLC ("GAP LLC") is 3 Pickwick
Plaza, Greenwich, CT 06830. Share amounts include 1,583,314 shares of
Common Stock held by General Atlantic Partners 26, L.P., of which GAP LLC
is the general partner and 254,686 shares of Common Stock held by GAP
Coinvestment Partners, L.P. ("GAPCO"). The managing members of GAP LLC are
the general partners of GAPCO. J. Michael Cline disclaims beneficial
ownership of all such shares of common stock except to the extent of his
pecuniary interest therein.
5
<PAGE> 9
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth summary information regarding compensation
paid by the Company for services during fiscal years 1997, 1996 and 1995 to the
Company's Chief Executive Officer and each of the four most highly compensated
executive officers other than the Chief Executive Officer whose individual total
salary and bonus on an annual basis exceeded $100,000 for fiscal year 1997 (the
"Named Executives").
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL ------------
COMPENSATION SECURITIES
-------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#) COMPENSATION(1)
- ------------------------------------------ ---- --------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
William M. Gibson 1997 $ 290,000 $260,000 23,316 $ 2,327
President, Chief Executive 1996 275,000 46,500 -0- 2,248
Officer and Chairman of 1995 262,000 21,000 -0- 2,230
the Board of Directors
Kenneth S. Thompson 1997 175,000 175,000 12,718 2,378
Executive Vice President, 1996 150,000 40,000 100,000 2,250
Supply Chain Products 1995 137,000 42,775 18,000 2,281
Division
Joseph E. Broderick(2) 1997 170,000 170,000 -0- 54,610(3)
Executive Vice President, 1996 28,987 -0- 241,200 3,011(3)
Client Sales and Services Division 1995 -- -- -- --
Mary Lou Fox 1997 140,000 140,000 10,598 2,343
Senior Vice President, 1996 125,000 40,000 60,000 2,240
Consumer Products Marketing Division 1995 109,333 42,250 18,000 1,976
and Professional Services Division
Keith J. Enstice 1997 150,000 150,000 11,022 2,535
Senior Vice President, 1996 130,000 42,000 40,000 2,290
Field Operations Division, 1995 120,000 29,000 18,000 2,264
Americas
</TABLE>
- ------------------------------
(1) The amount shown constitutes the Company's contributions to the respective
accounts of the named individuals under the Company's 1991 Amended and
Restated 401(k) Retirement Savings Plan.
(2) Mr. Broderick became an officer of the Company on December 29, 1995.
(3) These amounts constitute housing and relocation expenses paid by the Company
in the amount of $3,011 and $53,107 in fiscal years 1996 and 1997,
respectively, and a $1,503 contribution by the Company to Mr. Broderick's
401(k) account for fiscal year 1997.
6
<PAGE> 10
STOCK OPTIONS
The following table sets forth certain information concerning the grant of
options to the Chief Executive Officer and other Named Executives in fiscal year
1997. The Company has not granted any stock appreciation rights ("SARs").
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
NUMBER OF PERCENT OF RATES OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION FOR OPTION
UNDERLYING GRANTED TO EXERCISE OR TERM
OPTIONS EMPLOYEES IN BASE EXPIRATION ------------------------
NAME GRANTED(#) FISCAL YEAR PRICE($/SH) DATE 5% 10%
- -------------------------- ---------- --------------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
William M. Gibson......... 23,316(1) 1.87% $ 8.010 05/17/06 $ 117,446 $ 297,631
Kenneth S. Thompson....... 12,718(1) 1.02% 7.282 05/17/06 58,240 147,590
Joseph E. Broderick....... -0- -- -0- -- -0- -0-
Mary Lou Fox.............. 10,598(1) .85% 7.282 05/17/06 48,531 122,988
Keith J. Enstice.......... 11,022(1) .89% 7.282 05/17/06 50,473 127,909
</TABLE>
- ------------------------------
(1) Each of the indicated options was granted pursuant to the Company's
Executive Incentive Stock Option Plan on May 17, 1996 and vests at a rate of
25% per annum. The options have an exercise price equal to the fair market
value of the Common Stock on the date of grant. Under the terms of this
plan, the option price of any option granted to an individual who possesses
more than 10% of the total combined voting power of all classes of Common
Stock of the Corporation must be at least 110% of the fair market value of
the Common Stock on the date of grant, thus Mr. Gibson's option price is
$8.010 while the option price is $7.282 for the other Named Executives.
The following table summarizes the value realized upon exercise of
outstanding stock options and the value of the outstanding options held by the
Chief Executive Officer and the other Named Executives.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1997 AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
VALUE YEAR-END(#) FISCAL YEAR-END($)(2)
SHARES ACQUIRED REALIZED --------------------------- ---------------------------
NAME ON EXERCISE(#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William M. Gibson......... 0 $ 0 300 23,316 $ 4,069 $ 199,425
Kenneth S. Thompson....... 0 0 11,100 121,718 140,794 1,314,101
Joseph E. Broderick....... 0 0 60,300 180,900 681,750 2,045,250
Mary Lou Fox.............. 16,000 257,483 155,000 79,598 2,348,054 859,425
Keith J. Enstice.......... 6,000 68,912 143,906 60,022 2,181,574 645,860
</TABLE>
- ------------------------------
(1) Computed by multiplying the number of shares of Common Stock acquired upon
exercise of options by the difference between (i) the per share fair market
value of the Common Stock on the date of exercise and (ii) the exercise
price per share.
(2) Computed by multiplying the number of options by the difference between (i)
the per share market value of the Common Stock on February 28, 1997 and (ii)
the exercise price per share.
7
<PAGE> 11
The information set forth in the following Report and Performance Graph
shall not be deemed incorporated by reference into anything incorporating by
reference this Proxy Statement or future filings generally into any filings
under the Securities Act of 1933, as amended, or the Securities Exchange Act of
1934, as amended, except to the extent that the Company specifically
incorporates such information by reference.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION
The Compensation Committee of the Board of Directors is directly
responsible for the approval and administration of the compensation program for
William M. Gibson, the Company's Chief Executive Officer, President and Chairman
of the Board of Directors. The Compensation Committee is also responsible for
the grant of options to the Company's employees under the Company's various
stock option plans and administers the plans. In fiscal year 1997, the
Compensation Committee consisted of three outside directors of the Company, Jack
A. Arnow, William G. Nelson and Thomas A. Skelton.
Mr. Gibson is responsible for the approval and administration of
compensation programs for the other executive officers of the Company, including
those named in the Summary Compensation Table, subject to review and approval by
the Compensation Committee and the Board of Directors.
Objectives and Policies
The objectives of the Company's executive compensation program, as
respectively implemented by the Compensation Committee and by Mr. Gibson, are
to:
- Attract and retain highly qualified executives to lead and manage the
Company by providing competitive total compensation packages;
- Reward executives based on the business performance of the Company;
- Provide executives with incentives designed to maximize the long-term
performance of the Company; and
- Assure that objectives for corporate and individual performance are
established and measured.
For fiscal year 1997, the components of the Company's executive
compensation program included annual base salary and short-term incentive bonus
plans. In fiscal year 1997, stock options to purchase shares of the Company's
Common Stock were awarded as a long-term incentive to executive officers of the
Company as follows: William M. Gibson, 23,316 shares; Kenneth S. Thompson,
12,718 shares; Mary Lou Fox, 10,598 shares; and Keith J. Enstice, 11,022 shares.
Base Salaries
Base salaries for executive officers (including the Chief Executive
Officer) are determined by evaluating the responsibilities associated with their
respective positions and the experience of the officers and by reference to
salaries paid in the competitive marketplace to executive officers with
comparable ability and experience following review of compensation information
available in certain widely-known surveys and databases, including the
internationally recognized Information Technology Association of America
Compensation Survey. Individual salary increases, which are reviewed annually,
are based on the Company's financial performance in the prior fiscal year and
the attainment of individual objectives during the prior fiscal year. In the
case of operating executive officers, other factors considered include the
financial results of the officer's business unit as well as non-financial
performance measures, such as improvements in productivity, development and
introduction of new products, improvement of product quality, relationships with
customers and leadership and management development.
Base salaries are set by Mr. Gibson for the other executive officers. No
specific weight of relative importance is assigned to the various factors and
compensation information considered. Accordingly, the Company's executive
compensation policies and practices may be deemed informal and subjective,
although they are based on such factors and detailed investigation.
8
<PAGE> 12
Short-Term Incentive Plans
During fiscal year 1997, the Company maintained a short-term incentive plan
for executive officers, the Executive Annual Incentive Plan (the "Executive
Plan"). This plan provides for the award of cash bonuses to participants based
on fiscal year 1997 performance.
The Executive Plan is intended to (i) recognize the contribution of members
of management toward attainment of the Company's objectives by granting awards
based on the contribution of individual employees in meeting the objectives of
the individual's specific business unit; (ii) give additional incentive to
executives covered by the Executive Plan to increase the profitability of the
Company; and (iii) assist in attracting and retaining highly talented
executives. Under the Executive Plan, executives may receive awards based on
individual performance or on the total Company performance to be determined in
accordance with the terms of the Executive Plan. Discretionary awards may also
be made under the Executive Plan by the President of the Company in amounts not
greater than ten percent (10%) of the base salary of the participant.
Responsibility for the administration of the Executive Plan resides with the
President of the Company and is subject to the review and approval of the
Compensation Committee and the Board of Directors.
The Compensation Committee decided to award the executive officers, other
than the CEO, bonuses in an amount equal to their base salaries based on their
contributions to the achievement of certain Company earnings objectives
specified under the Executive Plan.
Long-Term Incentive Plans
The Company historically has provided long-term incentive compensation to
attract, motivate and retain executive officers through grants of stock options
under the Company's Executive Incentive Stock Option Plan. The Compensation
Committee believes that this form of compensation closely aligns the interests
of executive officers with those of the Company's shareholders and provides a
major incentive in building shareholder value. The Compensation Committee
designates the employees who shall be granted options and the amount and terms
of the options granted. The number of stock options granted to each individual
is based on his or her salary range, position, level of responsibility, and
performance during the relevant fiscal year. All grants are made with an
exercise price not less than the fair market value of the Common Stock on the
date of grant.
Chief Executive Officer's Compensation and Corporate Performance for Fiscal Year
1997
In determining the base salary for fiscal year 1997 of Mr. Gibson, the
Company's Chief Executive Officer, President and Chairman of the Board of
Directors, the Compensation Committee considered the overall performance of the
Company, Mr. Gibson's individual performance, his salary level relative to
salary ranges for comparable positions in other companies and his length of
service to the Company. The Compensation Committee also considered the
recommendation of Mr. Gibson as to his proposed compensation. The Compensation
Committee's determination was not subject to precise criteria or formulas.
Accordingly, the determination may be deemed informal and subjective although
based on such detailed considerations.
In determining Mr. Gibson's base salary for fiscal year 1997 the
Compensation Committee noted that the Company's financial results for fiscal
year 1996 were significantly stronger than those for the prior fiscal year. The
Compensation Committee took particular note of Mr. Gibson's contributions in
meeting those results. The Compensation Committee also noted that under Mr.
Gibson's leadership, the Company has become and continues to be the leading
provider of software and services for supply chain management.
Based on the foregoing considerations, the Compensation Committee increased
Mr. Gibson's annual base salary for fiscal year 1997 by approximately 5%, from
$275,000 to $290,000. This increase was reviewed and unanimously ratified by the
Board of Directors.
9
<PAGE> 13
Under the Executive Plan applicable in fiscal year 1997, the Compensation
Committee awarded to Mr. Gibson an incentive cash bonus of $260,000 an amount
equal to approximately 90% of his base salary for fiscal year 1997. The
Compensation Committee based the award on Mr. Gibson's contributions to the
achievement of specific Company earnings objectives targeted under the Executive
Plan. This bonus was reviewed and unanimously ratified by the Board of
Directors.
Compensation Committee
Jack A. Arnow
William G. Nelson
Thomas A. Skelton
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total return to shareholders of
the Common Stock with the cumulative total return of the Nasdaq Stock Market
(US) Index from the date of the Company's initial public offering (August 13,
1993) to fiscal year end (February 28, 1997). In addition, the graph also
compares the Company's performance to that for Nasdaq Computer and Data
Processing Stocks. The graph assumes that the value of the investment in the
Common Stock and each index was $100 on August 13, 1993 and that all dividends
were reinvested. The Company has not paid any cash dividends on its Common Stock
and does not intend to do so in the foreseeable future. The performance graph is
not necessarily indicative of future performance.
<TABLE>
<CAPTION>
NASDAQ Stock NASDAQ Computer
Measurement Period Market (US and Data
(Fiscal Year Covered) MANUGISTICS Companies) Processing Stocks
<S> <C> <C> <C>
8/13/93 100.0 100.0 100.0
2/28/94 143.9 110.6 113.4
2/28/95 103.7 112.2 136.4
2/29/96 146.3 156.3 207.4
2/28/97 307.3 186.4 244.1
</TABLE>
AGREEMENTS WITH EMPLOYEES
All employees of the Company and its subsidiaries, including executive
officers, are required to sign a Conditions of Employment Agreement upon joining
the Company and its subsidiaries. This agreement restricts the ability of the
employee to compete with the Company and its subsidiaries during his or her
employment with the Company and for a period of one (1) year thereafter, and
contains certain confidentiality and invention assignment provisions.
10
<PAGE> 14
CERTAIN BUSINESS RELATIONSHIPS
Joseph H. Jacovini, a director of the Company, is a partner with Dilworth,
Paxson, Kalish & Kauffman, LLP, counsel to the Company, which firm rendered
legal services to the Company in fiscal year 1997.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's executive officers, directors and
persons who own more than ten percent (10%) of the Common Stock (collectively,
"Reporting Persons") to file initial reports of ownership and reports of changes
of ownership of the Common Stock with the Securities and Exchange Commission
("SEC") and the Nasdaq Stock Market. Reporting Persons are required to furnish
the Company with copies of all forms that they file under Section 16(a). Based
solely upon a review of the copies of such forms received by the Company or
written representations from Reporting Persons, the Company believes that, with
respect to fiscal year 1997, all Reporting Persons complied with all applicable
filing requirements under Section 16(a).
PROPOSAL 2 -- APPROVAL OF INCREASE IN THE
AUTHORIZED SHARES OF COMMON STOCK
On May 8, 1997, the Company's Board of Directors adopted and recommended
that the stockholders of the Company approve an amendment to Article Four of the
Company's Amended and Restated Certificate of Incorporation to increase the
number of authorized shares of Common Stock of the Company from 30,000,000
shares to 100,000,000 shares. The proposed amendment would replace Article Four
in its entirety as follows:
FOURTH. The total number of shares of all classes of stock which the
Corporation is authorized to issue is One Hundred Four Million Six Hundred
Twenty Thousand Two Hundred Fifty Three (104,620,253) shares, consisting
of: (i) Four Million Six Hundred Twenty Thousand Two Hundred Fifty-Three
(4,620,253) shares of Preferred Stock, par value $0.01 per share (the
"Preferred Stock") and (ii) One Hundred Million (100,000,000) shares of
Common Stock, par value $.002 per share (the "Common Stock").
The Company is currently authorized to issue 30,000,000 shares of Common
Stock. As of May 26, 1997, the record date for the Annual Meeting, 21,838,010
shares of Common Stock were issued and outstanding (a total of 10,919,005 shares
being issued on June 11, 1997 in payment of the one-for-one stock dividend), and
approximately 7,720,000 shares of Common Stock were (or will be) reserved for
issuance upon exercise of outstanding stock options and for options that may be
granted in the future under the Company's various stock option plans (assuming
the approval by shareholders of the respective amendments to the Employee Stock
Option Plan and the 1994 Outside Directors Non-Qualified Stock Option Plan
described in this Proxy Statement), and the Company's Employee Stock Purchase
Plan.
The Board of Directors of the Company believes that it is advisable to have
available authorized but unissued shares of Common Stock in an amount adequate
to provide for the future needs of the Company. The additional shares will be
available for issuance from time to time by the Company in the discretion of the
Board of Directors, without further stockholder action (except as may be
required for a particular transaction by applicable law, requirements of
regulatory agencies or by Nasdaq rules), for any proper corporate purpose
including, among other things, future acquisitions, stock dividends, stock
splits, convertible debt financing and equity financings. Holders of Common
Stock do not have preemptive rights with respect to the future issuance of any
shares of Common Stock.
The Company has no present plans, understandings or agreements for the
issuance or use of the proposed additional shares of Common Stock, other than
for possible issuance in the future in connection with the Company's stock
option plans and Employee Stock Purchase Plan. The additional authorized shares
of Common Stock will allow the Company to maintain the flexibility to issue
shares of Common Stock in the future without the potential expense or delay
incident to obtaining the approval of the Company's shareholders by means of a
special meeting of shareholders at such time.
11
<PAGE> 15
Issuing additional shares of Common Stock may have the effect of diluting
the stock ownership of persons seeking to obtain control of the Company and,
accordingly, of making a change in control of the Company more difficult or less
likely. The proposed amendment to the Company's Amended and Restated Certificate
of Incorporation is not being recommended in response to any specific effort, of
which the Company is aware, to obtain control of the Company.
If the proposed amendment to the Company's Amended and Restated Certificate
of Incorporation is approved, a Certificate of Amendment will be filed with the
Secretary of State of Delaware as promptly as practicable thereafter. The
amendment would be effective upon the date of filing.
The affirmative vote of a majority of the outstanding shares of Common
Stock present, or represented and entitled to vote at the Meeting is required to
approve the amendment to the Certificate of Incorporation.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE PROPOSED
AMENDMENT TO THE CERTIFICATE OF INCORPORATION.
PROPOSAL 3 -- APPROVAL OF AMENDMENT TO THE
EMPLOYEE STOCK OPTION PLAN
In June 1997, the Board of Directors adopted proposals to amend the
Company's Employee Stock Option Plan (the "ESOP") by increasing the number of
shares of Common Stock reserved for issuance under the ESOP by 1,000,000 subject
to shareholder approval. The reason for the proposed increase in the number of
shares of Common Stock reserved for issuance is to ensure that sufficient shares
are available for issuance upon the exercise of stock option grants made under
the ESOP which would support the Company's efforts to attract and retain highly
qualified employees.
The description that follows is an overview of the material provisions of
the ESOP. The description, however, does not purport to be a complete
description of all the provisions of the ESOP. Any shareholder who wants to
obtain a copy of the actual plan document may do so upon written request to the
Corporate Secretary at the Company's executive offices in Rockville, Maryland.
DESCRIPTION OF THE ESOP AND OPTION TERMS
PURPOSE. The purpose of the ESOP is to provide employees with the
opportunity to own shares of the Company's stock and to provide incentive to
employees to remain employed with the Company. The Board of Directors believes
that the proposed amendment will help the Company attract and retain highly
qualified employees.
GENERAL; ELIGIBILITY. The ESOP provides for the granting of non-qualified
stock options to all full-time employees (including officers whether or not they
are directors) and consultants upon employment with the Company or its
subsidiaries and to certain individuals who were previously employees of the
Company. The purpose of the ESOP is to encourage stock ownership by employees of
the Company and its subsidiaries so that such employees can acquire or increase
their interest in the success of and be encouraged to remain in the employ of
the Company or its subsidiaries. Currently, there are approximately 620
employees eligible to participate in the ESOP. The stock subject to options
under the ESOP are shares of the authorized but unissued or reacquired Common
Stock. As proposed to be amended, the aggregate number of shares which may be
issued in the future under options shall not exceed 1,565,804 shares of Common
Stock. A participant is not required to exercise any stock options which are
granted to such participant pursuant to the ESOP.
ADMINISTRATION. The ESOP is administered by the Compensation Committee of
the Board of Directors, which Compensation Committee shall for purposes of
administering the ESOP consist of not less than two members of the Board who are
"disinterested persons" as defined in Rule 16(b)-3(c)(2)(i) of the Exchange Act.
As of the date of this Proxy Statement, Jack A. Arnow, William G. Nelson and
Thomas A. Skelton comprise the Compensation Committee. No person while a member
of the Compensation Committee shall receive a discretionary grant or award under
the ESOP or any other stock plan of the Company. The Compensation Committee
shall automatically award employees a specific number of options on the date of
12
<PAGE> 16
employment depending upon their job title and upon attaining certain promotions.
In addition, the Compensation Committee may select employees of the Company to
whom discretionary grants of options are made, the times at which options are
granted and the number of shares which may be purchased upon the exercise of
options.
TERMS AND CONDITIONS OF GRANT. Options granted under the ESOP will have an
option price of not less than 100% of the fair market value of the Common Stock
on the day of the grant. As long as the Common Stock is traded in the
over-the-counter market, such fair market value shall be deemed to be the
average of the high and low prices of the Common Stock in the over-the-counter
market on the date previous to the date the option is granted, as reported by
the National Association of Securities Dealers, Inc. All options granted under
the ESOP shall vest and become exercisable in installments of twenty-five
percent (25%) per year commencing twelve (12) months after the date of the grant
of the option, so that the option will be fully exercisable four (4) years from
the date of the grant. During the lifetime of the optionee the option shall be
exercisable only by the optionee and shall not be assigned, pledged or otherwise
disposed of by the optionee and no other person shall acquire any rights
therein. Except as set forth below, options may be exercised by an optionee only
during the period in which the optionee is employed by the Company or its
subsidiaries, but in no event more than ten (10) years after the date of the
grant. Options are exercisable by payment in full for the shares of Common Stock
being purchased, such payment to be made in cash, by check, or at the discretion
of the Compensation Committee, in Common Stock or other property held by the
optionee.
If the optionee dies while in the employ of the Company or a subsidiary,
the option shall remain exercisable by the executors or administrators of the
optionee's estate, or by any person who shall have acquired the option directly
from the optionee by bequest or inheritance for a period of ninety (90) days
from the date of death to the extent that the options were currently exercisable
as of the date of death. Options are not transferable other than by will or the
laws of descent and distribution. If the optionee becomes disabled while in the
employ of the Company or a subsidiary, the option will remain exercisable by the
optionee for a period of ninety (90) days from the date of the event that is the
cause of the disability to the extent that the option was currently exercisable
as of the date of disability, at which time the option will terminate. However,
if the optionee returns to work within a one year period from the date of
disability the option will be restored for all vesting purposes as if the
disability had never occurred.
RECAPITALIZATION. Subject to any required action by the shareholders of
the Company, the number of shares of Common Stock covered by each outstanding
option, and the price per share thereof, shall be proportionately adjusted for
any increase or decrease in the number of issued shares of Common Stock
resulting from a subdivision or consolidation of shares or the payment of a
stock dividend on the Common Stock or any other increase or decrease in the
number of such shares effected without receipt of consideration by the Company.
If the Company is the surviving company in a merger or consolidation, each
outstanding option shall pertain to and apply to the securities to which a
holder of the number of shares of Common Stock subject to the option would be
entitled. A dissolution or liquidation of the Company or a merger or
consolidation in which the Company is not the surviving corporation, shall cause
each outstanding option to terminate, provided that each optionee shall, in such
event, if a period of twelve (12) months from the date of the granting of the
option shall have expired, have the right immediately prior to such dissolution
or liquidation, or merger or consolidation in which the Company is not the
surviving corporation, to exercise his option in whole or in part without regard
to the installment provisions of the ESOP. Notwithstanding the above provisions,
an option will not terminate if assumed by the surviving or acquiring
corporation, or its parent, upon a merger or consolidation under circumstances
which are not deemed a modification of the option within the meaning of Section
424 of the Code.
To the extent that such adjustments relate to the Common Stock, such
adjustments shall be made by the Compensation Committee, whose determination
shall be conclusive.
13
<PAGE> 17
RIGHTS AS A SHAREHOLDER. An optionee or a permitted transferee of an
option shall have no rights as a shareholder with respect to any shares of
Common Stock covered by the option until the date of the issuance of a stock
certificate to the optionee for such shares following the exercise of such
option.
EFFECTIVE DATE AND TERM OF PLAN; SHAREHOLDER APPROVAL. The effective dates
of the amendments to the ESOP are July 25, 1997, and its term is ten (10) years.
However, no option granted after the effective date may be exercised unless the
amendment of the ESOP is approved by the vote of a majority of the outstanding
shares of the Common Stock present or represented and entitled to vote at the
Meeting.
MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS. Subject to the terms and
conditions and within the limitations of the ESOP, the Compensation Committee
may modify outstanding options granted under the ESOP, or accept the surrender
of outstanding options (to the extent not theretofore exercised). The
Compensation Committee shall not, however, modify any outstanding options so as
to specify a lower price or accept the surrender of outstanding options and
authorize the granting of new options in substitution therefor specifying a
lower price. Notwithstanding the foregoing, no modification of an option shall,
without the consent of the optionee, alter or impair any rights or obligations
under any option theretofore granted under the ESOP.
CONFIDENTIALITY AGREEMENT. As a condition of the optionee's acceptance of
the option, the Compensation Committee may provide that the optionee shall agree
to be bound by a confidentiality agreement with the Company containing such
terms as the Compensation Committee and Board of Directors shall deem advisable.
GRANT OF OPTIONS. Options may be granted pursuant to the ESOP from time to
time until such times as all shares of Common Stock available under the ESOP
have been made subject to an option grant. If any outstanding option granted
under the ESOP for any reason expires or is terminated, the shares of Common
Stock allocable to the option may again be subject to an option under the ESOP.
CONTINUED EMPLOYMENT. The grant of an option pursuant to the ESOP shall
not be construed to imply or to constitute evidence of any agreement, expressed
or implied, on the part of the Company or any subsidiary to continue to employ
an employee, or to affect the right of the Company or any subsidiary to
terminate the employment of any employee or to alter the responsibilities,
duties or authority of any employee.
TAX CONSEQUENCES. There are no tax consequences to the participant or the
Company upon the grant of a nonqualified stock option pursuant to the ESOP. On
exercising a nonqualified stock option, the optionee realizes ordinary income to
the extent that the market value of the Common Stock exceeds the exercise price,
and the Company may claim a tax deduction of like amount.
AMENDMENTS. The Board of Directors of the Company may, insofar as
permitted by law, from time to time, with respect to any shares at the time not
subject to options, suspend or discontinue the ESOP or revise or amend the ESOP,
except that, without approval of the shareholders, no such revision or amendment
shall materially increase the number of shares of Common Stock which may be
issued pursuant to the ESOP, materially increase the benefits accruing to
participants under the ESOP, or otherwise materially modify the requirements for
eligibility.
PLAN BENEFITS
The table below shows the number of options granted under the ESOP during
fiscal year 1997 to the group listed. Outside directors are not eligible to
receive options under the ESOP. The number of options to be granted under the
ESOP during fiscal year 1998 cannot be determined at this time because the
number of
14
<PAGE> 18
options granted depends on the number of new employees that are hired and the
number of employees that are promoted, neither of which can be determined at
this time.
EMPLOYEE STOCK OPTION PLAN -- NUMBER OF OPTIONS GRANTED DURING FISCAL YEAR 1997
<TABLE>
<CAPTION>
OPTIONS
NAME AND POSITION GRANTED
----------------------------------------------------------------- ---------
<S> <C>
All executive officers as a group (6 persons).................... 30,000
Non-executive officer employees as a group (approximately 494
persons)....................................................... 1,109,600
</TABLE>
As of May 31, 1997 the aggregate market value of Common Stock underlying
the total number of options outstanding under the ESOP was approximately
$103,978,298 and the aggregate market value of the Common Stock underlying the
total number of options that remain to be issued under the ESOP was
approximately $18,846,931 based on a price per share of the Common Stock of
$33.31 as of such date. If the proposed amendment to the ESOP is approved by the
shareholders, the aggregate market value of the Common Stock underlying the
additional options that could be issued under the ESOP will be approximately
$33,310,000 based on a price per share of the Common Stock of $33.31 as of May
31, 1997.
The affirmative vote of a majority of the outstanding shares of the Common
Stock present, or represented and entitled to vote at the Meeting is required to
approve the amendment to the ESOP.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE PROPOSED
AMENDMENT TO THE ESOP.
PROPOSAL 4 -- APPROVAL OF AMENDMENT TO THE
1994 OUTSIDE DIRECTORS NON-QUALIFIED STOCK OPTION PLAN
In June 1997, the Board of Directors adopted a proposal to amend the
Company's 1994 Outside Directors Non-Qualified Stock Option Plan (the "DSOP") by
increasing the number of shares of Common Stock reserved for issuance under the
DSOP by 80,000 shares, subject to shareholder approval. The reason for the
proposed increase in the number of shares of Common Stock reserved for issuance
is to ensure that sufficient shares are available for issuance upon the exercise
of stock option grants made under the DSOP which would support the Company's
efforts to attract and retain highly qualified outside directors.
The description that follows is an overview of the material provisions of
the DSOP. The description, however, does not purport to be a complete
description of all the provisions of the DSOP. Any shareholder who wants to
obtain a copy of the actual plan document may do so upon written request to the
Corporate Secretary at the Company's executive offices in Rockville, Maryland.
GENERAL. The purpose of the DSOP is to encourage stock ownership by
outside directors of the Company, to provide an incentive for the outside
directors to contribute to the growth and prosperity of the Company and to
assist the Company in attracting and retaining outside directors through the
grant of options to purchase shares of the Company's Common Stock.
ADMINISTRATION. The DSOP is administered by the Stock Option Committee of
the Board of Directors.
ELIGIBILITY. All persons who are elected to the Board of Directors of the
Company at an annual meeting of shareholders and who remain as directors at each
annual meeting of shareholders thereafter by virtue of the continuation of such
persons' terms as directors, other than directors who are also employees of the
Company, are eligible to receive options under the DSOP.
SHARES RESERVED FOR ISSUANCE. As proposed to be amended, the aggregate
number of shares which may be issued in the future under options shall not
exceed 147,500 shares of Common Stock.
PRICE. The exercise price per share of the Common Stock subject to the
option shall be the fair market value per share of the Common Stock on the date
of the grant. As long as the Common Stock is being traded in the
over-the-counter market, such fair market value shall be deemed to be the
average of the high and low
15
<PAGE> 19
prices of the Common Stock in the over-the-counter market on the date previous
to the date the option is granted, as reported by Nasdaq.
VESTING SCHEDULE. Except as set forth below, one hundred percent (100%) of
the options granted will vest and become exercisable one calendar year from the
date of the grant. However, any director that ceases service on the Board for
any reason prior to the one (1) year anniversary of the date of the grant will
become vested on the date of termination in a percentage of the grant determined
by the number of fiscal quarters that have ended since the date of grant. For
each fiscal quarter ended prior to the date of termination, the director shall
be vested in twenty-five percent (25%) of the options granted under the DSOP for
that year. Any director elected or appointed to the Board of Directors at any
time other than an annual meeting of shareholders shall receive a percentage of
the amount of the annual grant based on the number of fiscal quarters ending
after his or her appointment or election, until the next annual meeting of
shareholders. Each fiscal quarter ending after the date of the appointment or
election of a director until the next annual meeting of shareholders would
entitle the director to twenty-five percent (25%) of the annual grant to each
director for that year. The grant would become exercisable on the date of the
one (1) year anniversary of the most recent annual grant to the Board of
Directors. Options must be exercised within ten (10) years of the date of grant.
TERMS AND CONDITIONS OF GRANT. Each eligible director shall automatically
receive an option for 10,000 shares of Common Stock annually on the date of the
annual meeting of shareholders for services to be performed during the following
year.
DEATH OF OPTIONEE AND TERMINATION OF OPTION. If a director's term ceases
because of the death of the director, the director will be deemed to be vested
on the date of death as to twenty-five percent (25%) of the options granted
under the DSOP during that year for each fiscal quarter that has concluded since
the date of the grant. Options vested on the date of death of a director will be
deemed to be exercisable on the date of such vesting. The executor or
administrator of the director's estate shall have the right to exercise all or
any part of the options which were exercisable by the director on the date of
death within ninety (90) days of the date of the death of the director. After
this ninety (90) day period, the option will terminate.
The options are not transferable except by laws of descent and distribution
or by will following the death of a director.
RECAPITALIZATION. If the number of outstanding shares of the Common Stock
is changed by a stock dividend, stock split, combination, reclassification or
similar change in the capital structure of the Company, the number of shares of
the Common Stock subject to the plan, and the number of shares and the exercise
price per share for each outstanding option, will be proportionately adjusted,
subject to any required action by the Board of Directors or shareholders of the
Company.
In the event that the Company or the shareholders of the Company enter into
an agreement to dispose of all or substantially all of the assets or Common
Stock of the Company by means of sale, merger, reorganization, liquidation or
otherwise, the Board may, in its absolute discretion and notwithstanding
anything contained in the DSOP to the contrary, make provision for or direct
that the options granted under the DSOP shall become immediately exercisable
with respect to the full number of shares subject to the option and shall
terminate not later than the date of the sale, merger, reorganization or
liquidation, as the case may be, or that the options granted under the DSOP have
been converted and changed into options to purchase a comparable amount of
securities of the entity with which the Company has entered into such agreement.
RIGHTS AS A SHAREHOLDER. An option holder shall have no rights as a
shareholder with respect to shares of Common Stock subject to an option until
the date of the issuance of the Common Stock to the option holder.
CONTINUATION AS A DIRECTOR. Neither the DSOP nor any option granted
pursuant to such plan shall confer upon any director any right to continue as a
director of the Company or limit in any respect the right of the Company or the
shareholders to terminate his or her position as a director or to nominate or
fail to reelect such person.
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<PAGE> 20
EFFECTIVE DATE AND TERM OF PLAN; STOCKHOLDER APPROVAL. The effective date
of the DSOP is July 25, 1997 and its term is ten (10) years.
TAX CONSEQUENCES. There are no tax consequences to the participant or the
Company upon the grant of a nonqualified stock option pursuant to the DSOP. Upon
exercising a non-qualified stock option, the optionee realizes ordinary income
to the extent that the market value of the Common Stock exceeds the exercise
price on the date of exercise, and the Company may claim a tax deduction of like
amount.
AMENDMENTS. The Board of Directors of the Company may suspend or
discontinue the DSOP or revise or amend the DSOP with respect to any shares at
the time not subject to options, except that, without approval of the
shareholders, no such revision or amendment shall materially increase the number
of shares of Common Stock which may be issued pursuant to the DSOP, materially
increase the benefits accruing to the participants under the DSOP, or otherwise
materially modify the requirements for eligibility. No amendment, suspension or
termination of the DSOP shall, without an option holder's consent, alter or
impair any rights or obligations under any option already granted, and such
option shall remain in full force and effect.
The affirmative vote of a majority of the outstanding shares of Common
Stock present or represented and entitled to vote at the Meeting is required to
approve the amendment to the DSOP.
THE BOARD OF DIRECTORS RECOMMEND THAT SHAREHOLDERS VOTE FOR THE PROPOSED
AMENDMENT TO THE DSOP.
SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors, upon the recommendation of the Audit Committee, has
selected Deloitte & Touche LLP, independent accountants, as auditors of the
Company to examine and report to shareholders on the consolidated financial
statements of the Company and its subsidiaries for the fiscal year ending on
February 28, 1998 ("fiscal year 1998"). Deloitte & Touche LLP currently serves
as the Company's independent accountants, and has been the Company's independent
accountants since the fiscal year ended February 28, 1997. Representatives of
Deloitte & Touche LLP will be present at the Meeting and will be given an
opportunity to make a statement. They also will be available to respond to
appropriate questions from shareholders.
SHAREHOLDER PROPOSALS
Shareholder proposals submitted for inclusion in the Proxy Statement for
the 1998 Annual Meeting of Shareholders must be received by the Company at the
Company's corporate headquarters address and must be submitted in accordance
with Rule 14a-8 of the Exchange Act on or before March 4, 1998.
OTHER BUSINESS
The Board of Directors does not intend to bring any other matter before the
Meeting and does not know of any other business which others will present for
consideration at the Meeting. Except as the Board of Directors may otherwise
permit, only the business set forth and discussed in the Notice of Annual
Meeting of Shareholders and this Proxy Statement may be acted on at the Meeting.
If any other business does properly come before the Meeting the proxy holders
will vote on such matters according to their discretion.
By Order of the Board of Directors
/s/ HELEN A. NASTASIA
HELEN A. NASTASIA
General Counsel and Secretary
ALL SHAREHOLDERS ARE URGED TO COMPLETE, SIGN, DATE, AND RETURN THE
ACCOMPANYING PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE. THANK YOU FOR
YOUR PROMPT ATTENTION TO THIS MATTER.
17
<PAGE> 21
PROXY
MANUGISTICS GROUP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
MANUGISTICS GROUP, INC. FOR THE ANNUAL MEETING OF SHAREHOLDERS TO
BE HELD ON JULY 25, 1997
The undersigned, hereby revoking any contrary proxies previously given
relating to these shares, hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders and Proxy Statement dated July 3, 1997 in connection
with the 1997 Annual Meeting of Shareholders of Manugistics Group, Inc. (the
"Annual Meeting") to be held on Friday, July 25, 1997 at 9:00 A.M. E.D.T. at
the Bethesda Marriott Hotel, 5151 Pooks Hill Road, Bethesda, Maryland, and
hereby appoints William M. Gibson and Peter Q. Repetti, and each of them (with
full power to act alone), the attorneys and proxies of the undersigned,
with full power of substitution to each, to vote all shares of the Common Stock
of MANUGISTICS GROUP, INC. registered in the name provided herein which the
undersigned is entitled to vote at the Annual Meeting, and at any
adjournment(s) or postponement(s) thereof, with all the powers the undersigned
would have if personally present. Without limiting the general authorization
hereby given, said proxies are, and each of them hereby is, instructed to vote
or act as follows on the reverse side hereof on the proposals set forth in said
Proxy Statement. In their discretion, the proxies are authorized to vote upon
such other matters as may properly come before the Annual Meeting.
CONTINUED AND TO BE COMPLETED, SIGNED AND DATED ON REVERSE SIDE
-----------
SEE REVERSE
SIDE
-----------
<PAGE> 22
[X] Please mark votes as in this example
This Proxy when executed will be voted in the manner directed herein. If no
direction is made this Proxy will be voted FOR the election of the two (2)
nominees for Class II Directors listed below and FOR Proposals 2, 3, and 4.
1. Election of Class II Directors
Nominees: Joseph H. Jacovini
and Thomas A. Skelton
FOR WITHHOLD
[ ] [ ]
[ ] ____________________________________
For nominee except as noted above
2. Approval of an amendment to the Company's Amended and Restated Certificate
of Incorporation to increase the number of shares of Common Stock that the
Company is authorized to issue from 30,000,000 to 100,000,000.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Approval of an amendment to the Employee Stock Option Plan to increase the
number of shares of Common Stock authorized to be issued thereunder by
1,000,000.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. Approval of an amendment to the 1994 Outside Directors Non-Qualified
Stock Option Plan to increase the number of shares of Common Stock
authorized to be issued thereunder by 80,000.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
Please sign exactly as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
Signature: Date:
---------------------------------------------------- -----------
Signature: Date:
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