<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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:
[ ] 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 Section 240.14a-11(c) or Section 240.14a-12
MANGUISTICS 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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (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:
-------------------------------------------------------------------------
Notes:
<PAGE>
[LOGO]
MANUGISTICS GROUP, INC.
2115 East Jefferson Street
Rockville, Maryland 20852
June 28, 1999
Dear Shareholders:
It is my pleasure to invite you to the 1999 Annual Meeting of Shareholders
of Manugistics Group, Inc. to be held on Friday, July 23, 1999 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/ Gregory J. Owens
Gregory J. Owens
Chief Executive Officer and
President
<PAGE>
[LOGO]
MANUGISTICS GROUP, INC.
2115 East Jefferson Street
Rockville, Maryland 20852
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Friday, July 23, 1999
----------------
To our Shareholders:
The Annual Meeting of Shareholders (the "Meeting") of Manugistics Group, Inc.
(the "Company") will be held on Friday, July 23, 1999 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 three Class I 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 Company's 1998 Stock
Option Plan of Manugistics Group, Inc. to increase the number of shares
of Common Stock authorized to be issued thereunder by 3,000,000 shares;
3. To consider and vote upon a proposal to amend the Company's 1998 Stock
Option Plan of Manugistics Group, Inc. to increase the number of shares
of Common Stock for which options may be issued to any employee in any
calendar year from 250,000 shares to 1,000,000 shares; and
4. 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 25, 1999 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
Vice President, General Counsel and
Secretary
Rockville, Maryland
June 28, 1999
<PAGE>
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 23, 1999, 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 2, 1999, 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 25, 1999. A copy of the Company's 1999 Annual Report
to Shareholders, including consolidated financial statements for the fiscal
year ended February 28, 1999, accompanies this Proxy Statement.
At the Meeting, shareholders will elect three Class I directors, each to
serve for a term of three years. Shareholders will also act upon proposals to
amend the Company's 1998 Stock Option Plan to increase the number of shares of
Common Stock authorized to be issued thereunder by 3,000,000 shares and to
increase the number of shares of Common Stock for which options may be issued
to any employee in any calendar year.
VOTING SECURITIES AND RECORD DATE
The Board of Directors has fixed 5:00 p.m. E.D.T. on May 25, 1999 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
27,029,958 shares of Common Stock issued and outstanding and there were no
other voting securities of the Company outstanding. The presence at the
Meeting, in person or by proxy, of a majority of the outstanding shares of
Common Stock, or 13,514,980 shares, shall constitute a quorum for 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.
Assuming the presence of a quorum, directors shall be elected by a plurality
of the votes cast at the Annual Meeting for the election of directors. The
three nominees who receive the most votes will be elected. Abstentions and
broker non-votes will not be taken into account in determining the outcome of
the election.
To be approved, each of the proposals to amend the Company's 1998 Stock
Option Plan must receive the affirmative vote of a majority of the shares of
Common Stock present in person or represented by proxy at the Meeting and
entitled to vote thereon. Abstentions of shares present at the Meeting will be
counted in determining the presence of a quorum and in determining whether
either of such proposals is approved. Accordingly, abstentions will have the
effect of votes in opposition to the proposals. Broker non-votes will be
counted in determining the presence of a quorum, but are not entitled to vote
on the proposals. Accordingly, broker non-votes will not have the effect of
votes in opposition to the proposals and will not affect the outcome of the
vote on either of the proposals.
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 in person and casting a ballot.
<PAGE>
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.
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.
2
<PAGE>
PROPOSAL 1 -- ELECTION OF DIRECTORS
The Amended and Restated 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 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.
In June 1999, the Board of Directors increased the number of directors which
shall constitute the entire Board of Directors from seven to eight. The Board
of Directors then appointed Gregory J. Owens, Chief Executive Officer and
President of the Company, as a Class II director to fill the newly created
vacancy. There are presently three directors in Class I, three 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 three Class I directors, Jack A. Arnow, Lynn
C. Fritz and J. Michael Cline will expire at the Meeting. The other five
directors will remain in office for the remainder of their respective 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, three Class I directors are to be elected. Each of the
director nominees is presently a director 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 I
director and each Class II and Class III director, each of whose term of
office will continue after the Meeting.
Nominees for Class I Directors
Jack A. Arnow, 71, has served as a director of the Company since 1986. Mr.
Arnow is an independent investor.
Lynn C. Fritz, 57, has served as a director of the Company since January
1995. Since 1986, 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. Mr. Fritz has been
employed by Fritz Companies, Inc. since 1965.
J. Michael Cline, 39, 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 (or its predecessor in interest) ("GAP LLC"), 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 had acquired a significant
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 of privately-held software and
information technology companies.
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 I Directors nominated above.
The Board of Directors recommends that shareholders vote FOR the election of
each of the nominated Class I Directors.
3
<PAGE>
Incumbent Class II Directors -- to Continue in Office for Terms Expiring in
2000
Gregory J. Owens, 39, has served as a director of the Company since June
1999. He was appointed Chief Executive Officer and President of the Company in
April 1999. From 1993 to April 1999, Mr. Owens served as the Global Managing
Partner for the Andersen Consulting Supply Chain Practice, the largest supply
chain consulting practice with over $1.4 billion in revenue. Mr. Owens joined
Andersen Consulting in 1990.
Joseph H. Jacovini, 58, has served as a director of the Company since 1986.
He is a partner in Dilworth Paxson LLP, based in Philadelphia, Pennsylvania,
where he has practiced law since 1965. He has served as Chairman of that firm
since 1997, having served as Co-Chairman since 1995. Mr. Jacovini also served
as Chairman of that firm's Corporate Department during 1993-97. 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, 51, has served as a director of the Company since April
1992. Mr. Skelton has served as President and Chief Operating Officer of
Cambar Software, Inc. in Charleston, South Carolina since August 1997. From
April 1996 to April 1997, he was President of Knowledge Systems Corporation.
From January 1995 to March 1996, he was 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.
Incumbent Class III Directors -- to Continue in Office for Terms Expiring in
2001
William M. Gibson, 54, has served as Chairman of the Board of Directors of
the Company since its formation in 1986. From 1986 until April 1999, Mr.
Gibson also served as Chief Executive Officer and President of the Company.
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, 65, has served as a director of the Company since 1986.
Since September 1996, Mr. Nelson has served as the Chairman of the Board of
Directors of Geac Computer Corporation, Limited; from September 1996 until
April 1999, he also served as its Chief Executive Officer and President. From
March 1994 until December 1998, Mr. Nelson also served as a director of
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
The Company, with the exception of a one-time stock option grant in 1991,
prior to 1994, the Company did not pay 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 1998 Stock Option Plan provides for the granting of
options to purchase 5,000 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, 1999 ("fiscal 1999"),
options to purchase shares under the 1998 Stock Option Plan were granted to
Messrs. Arnow, Cline, Fritz, Jacovini, Nelson, and Skelton. (Options to
purchase shares of Common Stock had previously been granted to outside
directors under the 1994 Outside Directors Non-Qualified Stock Option Plan.)
4
<PAGE>
Board of Directors' Meetings and Committees
The Board of Directors held eleven meetings, including four regularly
scheduled meetings and seven additional meetings during fiscal 1999. The Board
of Directors has established a standing Audit Committee and a Compensation
Committee, 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 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 seven meetings during fiscal 1999. 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 one meeting during fiscal 1999.
The committee is responsible for the approval and administration of the
compensation program for the Company's President and Chief Executive Officer.
The committee and the Board of Directors also review the compensation programs
for the other executive officers of the Company, for which programs the Chief
Executive Officer is responsible. The committee is also responsible for the
grant of options to the Company's employees under the Company's 1998 Stock
Option Plan as well as the administration of the 1998 Stock Option Plan and
the various other plans under which options had been granted prior to July
1998.
5
<PAGE>
OWNERSHIP OF MANUGISTICS GROUP, INC. STOCK
The following table sets forth certain information, as of May 31, 1999, 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>
Number of Shares Percent
Name and Address of Beneficial Owner Beneficially Owned(1) of Class
- ------------------------------------ --------------------- --------
<S> <C> <C>
William M. Gibson(2)........................... 5,451,459 20.2
Gregory J. Owens(3)............................ 100,650 *
Kenneth S. Thompson(4)......................... 668,511 2.5
Joseph E. Broderick(5)......................... 181,202 *
Keith J. Enstice(6)............................ 62,933 *
Mary Lou Fox(7)................................ 283,419 1.0
Jack A. Arnow(8)............................... 103,000 *
J. Michael Cline(9)............................ 2,406,148 8.9
Lynn C. Fritz (10)............................. 40,700 *
Joseph H. Jacovini(11)......................... 77,000 *
William G. Nelson(12).......................... 281,000 1.0
Thomas A. Skelton(13).......................... 643,279 2.4
General Atlantic Partners(14).................. 2,381,148 8.8
Directors and executive officers as a group (12
persons)...................................... 9,430,098 33.9
</TABLE>
- --------
* Less than 1% of the outstanding Common Stock.
(1) Beneficial ownership is based on 27,030,258 outstanding shares of Common
Stock as of May 31, 1999. Under applicable rules promulgated under the
Securities Exchange Act of 1934, as amended, 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 162,709 shares issuable upon exercise of options, 567,800 shares
of Common Stock held by his wife, and 380,000 shares held in a non-profit
corporation, with respect to which Mr. Gibson shares voting and
dispositive control. Excludes 46,200 shares of Common Stock held by his
daughter, of which Mr. Gibson disclaims beneficial ownership.
(3) Includes 100,000 shares issuable upon exercise of options and 650 shares
held in a retirement plan.
(4) Includes 147,445 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.
(5) Includes 142,329 shares issuable upon exercise of options and 600 shares
held in a joint account with his mother.
(6) All shares issuable upon exercise of options.
(7) Includes 222,969 shares issuable upon exercise of options.
(8) Includes 35,000 shares issuable upon exercise of options.
(9) Includes 25,000 Shares issuable upon exercise of options and the
2,381,148 shares which are held as described in note 14.
(10) Includes 40,000 shares issuable upon exercise of options.
6
<PAGE>
(11) Includes 1,336 shares held by his wife, 28,000 shares of Common Stock
held of record by Prudential Bank & Trust Co. in a retirement savings
plan for Mr. Jacovini and 27,664 shares issuable upon exercise of
options.
(12) Includes 83,000 shares issuable upon exercise of options.
(13) Includes 35,000 shares issuable upon exercise of options, 14,617 shares
held by his wife, 18,033 shares held by his wife as custodian for his
children, 7,016 shares held by his brother as trustee for his children
and 39,146 shares held for Mr. Skelton's benefit in an exchange fund.
(14) Consists of 959,547 shares of common stock held by General Atlantic
Partners 50, L.P. ("GAP 50"), 1,036,870 shares of common stock held by
General Atlantic Partners 26, L.P. ("GAP 26") and 384,731 held by GAP
Coinvestment Partners, L.P. ("GAPCO"). General Atlantic Partners, LLC
("GAP LLC") is the general partner of GAP 50 and GAP 26. Mr. Cline is a
managing member of GAP LLC. The managing members of GAP LLC are also the
general partners of GAPCO. Mr. Cline is a general partner of GAPCO. Mr.
Cline disclaims beneficial ownership of such shares except to the extent
of his pecuniary interest therein.
7
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth summary information regarding compensation
paid by the Company for services during fiscal years 1999, 1998 and 1997 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 $100,000 for
fiscal 1999 (the "Named Executives").
<TABLE>
<CAPTION>
Long-Term
Annual Compensation
Compensation Awards
------------------ Securities
Name and Principal Underlying All Other
Position in FY 1999 Year Salary($) Bonus($) Options(#) Compensation(1)
------------------- ---- --------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
William M. Gibson(2)..... 1999 $173,333 $ -0- 11,473 $ 850
President, Chief
Executive 1998 305,000 305,000 127,620 3,796
Officer and Chairman of 1997 290,000 260,000 23,316 2,327
the Board of Directors
Kenneth S. Thompson(3)... 1999 225,000 -0- 7,900 5,111
Executive Vice
President, 1998 196,667 190,000 31,666 2,493
Supply Chain Products
Division 1997 175,000 175,000 12,718 2,378
Joseph E. Broderick(4)... 1999 201,667 -0- 7,712 20,831(5)
Executive Vice
President, 1998 191,667 185,000 31,190 2,491
Client Sales and
Services Division 1997 170,000 170,000 -0- 54,610(6)
Mary Lou Fox............. 1999 175,000 -0- 5,737 5,478
Senior Vice President, 1998 152,500 152,500 23,334 2,432
Consumer Products
Marketing Division 1997 140,000 140,000 10,598 2,343
and Professional
Services Division
Keith J. Enstice(6)...... 1999 165,000 -0- 6,094 17,496(8)
Senior Vice President, 1998 162,000 162,000 28,286 2,181
Field Operations
Division, 1997 150,000 150,000 11,022 2,535
Americas
</TABLE>
- --------
(1) Except as otherwise indicated in Notes 5, 6 and 8 to this table, the
amounts shown constitute 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 (the "401(k) Plan")
(2) Mr. Gibson's annual salary reflects that he voluntarily elected not to
receive his $320,000 annual salary after September 15, 1998. He resigned
as an executive officer effective April, 1999.
(3) Mr. Thompson resigned as an executive officer effective May, 1999.
(4) Mr. Broderick became an officer of the Company on December 29, 1995. He
resigned as an executive officer effective January, 1999.
(5) The amounts constitute severance payments in the amount of $18,333 in
fiscal 1999 and a $2,498 contribution by the Company to Mr. Broderick's
account under the 401(k) Plan for fiscal 1999.
(6) These amounts constitute housing and relocation expenses paid by the
Company in the amount of $53,107 in fiscal 1997, and a $1,503 contribution
by the Company to Mr. Broderick's account under the 401(k) Plan for fiscal
1997.
(7) Mr. Enstice resigned as an executive officer effective January, 1999.
(8) The amounts constitute severance payments in the amount of $15,000 in
fiscal 1999 and a $2,496 contribution by the Company to Mr. Enstice's
account under the 401(k) Plan for fiscal 1999.
Stock Options
The following table sets forth certain information concerning the grant of
options to the Chief Executive Officer and the other Named Executives in
fiscal 1999. The Company has not granted any stock appreciation rights
("SARs").
8
<PAGE>
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential
Realizable Value
at Assumed Annual
Rates of Stock
Number of Percent of Price
Securities Total Options Appreciation for
Underlying Granted to Exercise or Option Term
Options Employees in Base Expiration -----------------
Name Granted(#) Fiscal Year Price($/sh) Date 5% 10%
---- ---------- ------------- ----------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
William M. Gibson....... 11,473(1) .37% $42.08 03/24/03 $ 77,302 $223,976
Kenneth S. Thompson..... 7,900(1) .25% 38.25 03/24/08 190,036 481,589
Joseph E. Broderick..... 7,712(1) .25% 38.25 03/24/08 185,514 470,129
Mary Lou Fox............ 5,737(1) .18% 38.25 03/24/08 138,005 349,731
Keith J. Enstice........ 6,094(1) .20% 38.25 03/24/08 146,593 371,494
</TABLE>
- --------
(1) Each option was granted pursuant to the Company's Executive Incentive
Stock Option Plan 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 $42.08 while the option
price is $38.25 for the other Named Executives.
The following table summarizes the value realized upon exercise of
outstanding stock options and the value of the outstanding options held by the
Chief Executive Officer and the other Named Executives.
Aggregated Option Exercises in Fiscal 1999 and
Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at Fiscal In-the-Money Options at
Value Year-End(#) Fiscal Year-End($)(2)
Shares Acquired Realized ------------------------- -------------------------
Name on Exercise(#) ($)(1) Exercisable Unexercisable Exercisable Unexercisable
---- --------------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William M. Gibson....... 0 $ 0 43,846 118,846 $ 10,360 $ 8,635
Kenneth S. Thompson..... 0 0 34,373 138,010 101,663 315,591
Joseph E. Broderick..... 12,000 637,693 132,604 91,405 435,643 210,656
Mary Lou Fox............ 40,500 1,354,699 118,433 88,536 729,426 191,531
Keith J. Enstice........ 122,904 1,157,099 12,583 72,819 8,096 130,593
</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 26, 1999
and (ii) the exercise price per share.
Employment Agreements
In April 1999, the Company and Gregory Owens entered into an employment
agreement whereby he became the Chief Executive Officer and President of each
of the Company and Manugistics, Inc. Under the employment agreement, Mr. Owens
receives an annual base salary of $375,000, and he may receive a bonus of up
to 100% of his annual base salary. Fifty percent of Mr. Owens's bonus is based
upon the financial performance of the Company, and fifty percent is based upon
satisfaction of management objectives. In addition, the Company will pay to
Mr. Owens an additional first year bonus of $50,000. The Company also granted
to Mr. Owens an option to purchase two million shares of the Company's Common
Stock (subject to anti-dilution adjustment under certain circumstances) at a
price of $7.81 per share. This option vests in equal monthly
9
<PAGE>
increments over a five year period. Mr. Owens may also receive options to
purchase up to a total of one million additional shares of the Company's
Common Stock if the closing price of the Company's Common Stock meets and
maintains certain targets. Some or all of Mr. Owens's options may immediately
vest in the event of a change of control of the Company.
Under the employment agreement, the Company also provides to Mr. Owens
certain benefits, including medical, life and disability insurance, relocation
and travel expenses, participation in the Employee Stock Purchase Plan, and
fringe benefits. If the Company terminates Mr. Owens's employment other than
for cause, the Company will make severance payments to Mr. Owens in the amount
of his base salary and benefits during the twelve month period commencing on
the termination date. The severance payments to Mr. Owens will cease if he
obtains alternative employment during the twelve month period commencing on
the termination date. In addition, for a period of six months beginning on the
date of the Company's termination of Mr. Owens's employment for any reason
other than cause, the Company will continue the monthly vesting of Mr. Owens's
options.
Severance Agreements
Joseph Broderick resigned as Executive Vice President, Client Sales and
Service Division, effective as of January 31, 1999. The Company and Mr.
Broderick entered into a severance agreement under which Mr. Broderick is
entitled to receive from the Company the following benefits: (i) a severance
payment of up to a total of $165,000, payable in up to 39 weekly installments;
(ii) health and other employee benefits for up to a total of 39 weeks; and
(iii) continued vesting of stock options for up to a total of 39 weeks. Under
the severance agreement, Mr. Broderick agreed not to compete with the Company
for the period which expires six months after the last payment made to Mr.
Broderick under his severance agreement.
Keith Enstice resigned as Senior Vice President, Field Operations Division,
Americas, effective as of January 31, 1999. The Company and Mr. Enstice
entered into a severance agreement under which Mr. Enstice is entitled to
receive from the Company the following benefits: (i) a severance payment of up
to a total of $45,000, payable in up to 26 weekly installments, (for the
period ending April 30, 1999); (ii) health and other employee benefits for up
to a maximum of 26 weeks; and (iii) continued vesting of stock options for up
to 26 weeks. Under the severance agreement, Mr. Enstice agreed not to compete
with the Company for the period which expires six months after the last
payment made to Mr. Enstice under his severance agreement.
Ken Thompson resigned as Executive Vice President, Supply Chain Products
Division, effective as of May 29, 1999. The Company and Mr. Thompson entered
into a severance agreement under which Mr. Thompson is entitled to receive
from the Company the following benefits: (i) a severance payment of up to a
total of $168,750, payable in up to 39 weekly installments; (ii) health and
other employee benefits for up to 39 weeks; and (iii) continued vesting of
stock options for up to 39 weeks. Under the severance agreement, Mr. Thompson
agreed not to compete with the Company for the period which expires three
months after the last payment made to Mr. Thompson under his severance
agreement.
The information set forth in the following Report and Performance Graph
shall not be deemed incorporated by reference into any existing or future
filings under the Securities Act of 1933, as amended (the "Securities Act"),
or the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which
incorporate by reference this Proxy Statement, except to the extent that the
Company specifically incorporates such information by reference.
10
<PAGE>
Report of the Compensation Committee of the Board of Directors on Executive
Compensation
In fiscal 1999, the Compensation Committee of the Board of Directors was
directly responsible for the approval and administration of the compensation
program for William M. Gibson, the Company's then Chief Executive Officer,
President and Chairman of the Board of Directors. The Compensation Committee
was also responsible for the grant of options to the Company's employees under
the Company's various stock option plans and administered the plans. In fiscal
1999, the Compensation Committee consisted of three outside directors of the
Company, Jack A. Arnow, William G. Nelson and Thomas A. Skelton.
In fiscal 1999, Mr. Gibson was 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, were
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 1999, the components of the Company's executive compensation
program included annual base salary and short-term incentive bonus plans. In
fiscal 1999, 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, 11,473 shares; Kenneth S. Thompson, 7,900 shares;
Joseph E. Broderick, 7,712 shares; Mary Lou Fox, 5,737 shares; and Keith J.
Enstice, 6,094 shares.
Base Salaries
In fiscal 1999, base salaries for executive officers (including the Chief
Executive Officer) were 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 Culpepper and Associates Survey and the Information
Technology Association of America Compensation Survey. Individual salary
increases, which are reviewed annually, were 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.
In fiscal 1999, base salaries were set by Mr. Gibson for the other executive
officers. No specific weight of relative importance was 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 were based on such factors and detailed
investigation.
11
<PAGE>
Short-Term Incentive Plans
During fiscal 1999, 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 1999 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.
No cash bonuses were awarded to the named executive officers under the
Executive Plan during fiscal 1999.
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.
12
<PAGE>
Chief Executive Officer's Compensation and Corporate Performance for Fiscal
1999
In determining the base salary for fiscal 1999 of Mr. Gibson, the Company's
then 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 1999 the Compensation
Committee noted that the Company's financial results for fiscal year 1998 were
stronger than those for fiscal 1997. The Compensation Committee took
particular note of Mr. Gibson's contributions toward achieving those results.
The Compensation Committee also discussed the continued leadership role that
Mr. Gibson is providing strategically and as a spokesperson for the supply
chain segment of the application software industry.
Based on the above considerations, the Compensation Committee increased Mr.
Gibson's annual base salary for fiscal 1999 by approximately 4.9%, from
$305,000 to $320,000. This increase was reviewed and unanimously ratified by
the Board of Directors. Commencing in September 1998, Mr. Gibson voluntarily
elected not to receive his base salary, and no cash bonus was paid to Mr.
Gibson for fiscal 1999.
Compensation Committee
Jack A. Arnow
William G. Nelson
Thomas A. Skelton
13
<PAGE>
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 February 28, 1994 to fiscal year end (February 28, 1999). 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 February 28, 1994
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.
.
1994 1995 1996 1997 1998 1999
- ------------------------------------------------------------------------------
Manugistics Group, Inc. $100 $72 $102 $214 $541 $107
Nasdaq Stock Market
(U.S. Companies) $100 $101 $141 $169 $231 $300
Nasdaq Computer and
Data Processing Stocks $100 $120 $183 $215 $322 $505
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 six months thereafter, and
contains certain confidentiality and invention assignment provisions.
Certain Business Relationships
Joseph H. Jacovini, a director of the Company, is a partner and Chairman of
Dilworth Paxson LLP, counsel to the Company, which firm rendered legal
services to the Company in fiscal 1999.
14
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of 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 1999, all Reporting Persons complied
with all applicable filing requirements under Section 16(a).
15
<PAGE>
PROPOSAL 2 -- TO APPROVE AN AMENDMENT TO THE
1998 STOCK OPTION PLAN OF MANUGISTICS GROUP, INC.
In February 1999, the Board of Directors adopted a proposal to amend the
1998 Stock Option Plan of Manugistics Group, Inc. ("SOP") by increasing the
number of shares of Common Stock reserved for issuance under the SOP by
3,000,000 shares, from 2,237,900 shares to 5,237,900 shares, subject to
shareholder approval.
As of May 31, 1999, options to purchase a total of 973,475 shares of Common
Stock were outstanding under the SOP. Additional options to purchase a total
of 1,264,425 shares of Common Stock are presently available for issuance under
the SOP. The Board of Directors believes that the proposed increase in the
number of shares of Common Stock which may be issued under the SOP is
necessary to ensure that sufficient shares will be available to support the
Company's continuing efforts to attract and retain highly qualified employees.
Certain additional information regarding the adoption of the SOP and options
presently outstanding under the SOP, together with a description of the
principal provisions of the SOP is set forth below under "Certain Information
Regarding the SOP."
To be approved, the Proposal must receive the affirmative vote of a majority
of the shares of the Common Stock present in person or represented by proxy at
the Meeting and entitled to vote thereon.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE AMENDMENT
OF THE SOP.
16
<PAGE>
PROPOSAL 3 -- TO APPROVE AN AMENDMENT TO THE
1998 STOCK OPTION PLAN OF MANUGISTICS GROUP, INC.
In June 1999, the Board of Directors adopted a proposal to amend the SOP by
increasing the number of shares of Common Stock for which options may be
granted to any employee in any calendar year from 250,000 shares to 1,000,000
shares, subject to shareholder approval. The Board of Directors believes that
the proposed increase in the number of shares of Common Stock for which
options may be so granted is necessary to support the Company's continuing
efforts to attract and retain highly qualified employees.
Certain additional information regarding the adoption of the SOP and options
presently outstanding under the SOP, together with a description of the
principal provisions of the SOP, is set forth below under "Certain Information
Regarding the SOP."
To be approved, the Proposal must receive the affirmative vote of a majority
of the shares of the Common Stock present in person or represented by proxy at
the Meeting and entitled to vote thereon.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE AMENDMENT
OF THE SOP.
17
<PAGE>
CERTAIN INFORMATION REGARDING THE SOP.
The SOP became effective upon its adoption at the Annual Meeting of
Shareholders held in July 1998. Upon its effectiveness, all of the Company's
other stock option plans were terminated as to unissued options only, and the
SOP was funded with the shares (in the total amount of 2,237,900 shares)
issuable upon exercise of those unissued options. (Each of the Company's other
stock option plans will remain in effect until all outstanding options issued
thereunder are exercised, expire by their terms, or are canceled.) As a
result, the adoption of the SOP did not result in (and the Company had not
sought) any increase in the total number of shares available to be issued
under the Company's stock option plans. The SOP was adopted to allow all
future option grants to be made pursuant to a single option plan, easing the
administrative burden on the Company and simplifying the granting of options.
The SOP grants the Committee administering the SOP greater flexibility in
determining the specific terms and conditions of a particular option grant,
thereby enhancing the Company's efforts to attract and retain highly qualified
employees, senior management outside directors and consultants.
As of May 31, 1999, options to purchase a total of 973,475 shares of Common
Stock were outstanding under the SOP. These options have exercise prices
ranging from $6.0625 to $26.3125 per share. Additional options to purchase a
total of 1,264,425 shares of Common Stock may be issued under the SOP. The
Company proposes that the number of shares of Common Stock which may be issued
upon exercise of options granted under the SOP be increased to a level
sufficient to enable the Company to continue to attract and retain highly
qualified personnel, including senior management.
On June 21, 1999, the closing price of the Common Stock was $12.9375 per
share, as reported by the Nasdaq Stock Market. Options to purchase a total of
906,376 shares outstanding under the SOP on that date had exercise prices per
share equal to or lower than $12.9375. Of these "in the money" options,
options to purchase a total of 205,055 shares of Common Stock are presently
exercisable.
Summary of the SOP.
The description that follows is an overview of the material provisions of
the SOP. The description, however, does not purport to be a complete
description of all the provisions of the SOP. 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.
Purposes. The purposes of the SOP are to advance the interests of the
Company and its shareholders by strengthening the ability of the Company to
attract, retain and reward highly qualified officers and other employees, to
motivate officers and other selected employees to achieve business objectives
established to promote the long-term growth, profitability and success of the
Company, and to encourage ownership of the Common Stock of the Company by
participating officers and other selected employees. The SOP authorizes
incentive and non-qualified stock options. In addition, the SOP is intended as
an additional incentive to directors of the Company who are not employees of
the Company or an Affiliate to serve on the Board of Directors and devote
themselves to the future success of the Company by providing them with an
opportunity to acquire or increase their proprietary interest in the Company
through the receipt of options to acquire Common Stock. The SOP is also
intended as an additional incentive to selected consultants to the Company to
devote themselves to the success of the Company by providing them with similar
benefits.
Administration. The SOP is administered by a Committee of the Board of
Directors, which Committee shall consist of not less than two members of the
Board, each of whom is a "Non-Employee Director" (as defined in Rule 16b-3
under the Exchange Act). No person shall receive a discretionary grant or
award under the SOP or any other stock plan of the company while a member of
the Committee. The Committee selects employees and directors of, and
consultants to, the Company or its subsidiaries to whom discretionary grants
of options may be made, the times at which options may be granted, whether the
options are incentive or non-qualified, the number of shares which may be
purchased upon the exercise of options and all other terms and conditions of
each option. Subject to the terms and conditions and within the limitations of
the SOP, the
18
<PAGE>
Committee may modify outstanding options granted under the SOP.
Notwithstanding the foregoing, no modification of an option shall, without the
consent of the optionee, impair any rights under any option theretofore
granted under the SOP. The Committee also has the full power to construe and
interpret the SOP and make any determination of fact incident to the SOP;
promulgate, amend and rescind rules and regulations relating to the
implementation, operation and administration of the SOP; and make all other
determinations and take all other actions as the Committee may deem necessary
or advisable for the administration and operation of the SOP.
Eligibility and Limitations. All full-time employees of the Company or its
subsidiaries (including officers, whether or not they are directors) are
eligible to receive incentive stock options and/or non-qualified options
granted under the SOP. In addition, 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 a continuation of such persons' terms as directors, other than
directors who are also employees of the Company, are eligible to receive non-
qualified options under the SOP. Finally, all consultants to the Company or
its subsidiaries are eligible to receive non-qualified options under the SOP.
As of May 31, 1999, there were approximately 810 employees and 6 non-employee
directors eligible to participate in the SOP. The SOP also contains certain
limitations required by the Internal Revenue Code of 1986, as amended (the
"Code"), [on the number of shares issuable to any employee in any calendar
year and on the timing of the exercise of options by employees in each
calendar year (based upon the value of the options so exercised).]
Shares Reserved for Issuance. At May 31, 1999, a total of 2,237,900 shares
of Common Stock are reserved for issuance under the SOP. If the Proposal is
approved, 5,237,900 shares will be reserved for issuance under the SOP.
Option Price. The exercise price of an option shall not be less than one
hundred percent (100%) of the fair market value per share of the Common Stock
of the Company as of the date of the grant unless otherwise required by the
Code, or any other applicable law. Subject to the foregoing, the Committee
shall have full authority and discretion in fixing the option price.
Terms and Exercise of Options. An option shall be exercisable at such time
or times and subject to such terms and conditions as shall be determined by
the Committee at the date of grant. Options may be exercised by an optionee
only during the period in which the optionee is employed by the Company or its
subsidiaries, except that the Committee may permit the exercise of any option
for any period following the optionee's termination of employment not in
excess of the original term of the option on such terms and conditions as it
shall deem appropriate. If any option is subject to any vesting requirements,
the Committee may provide for the acceleration of the time in which such
option may be exercised. Notwithstanding the foregoing, if an employee is
terminated involuntarily without cause within one (1) year after a
consolidation or merger in which the Company is not the surviving corporation,
all outstanding options will be exercisable as of the date of such
consolidation or merger. In no event shall an option granted under the SOP be
exercisable 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
Committee, in Common Stock or other property held by the optionee.
Options to Directors. 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 SOP.
Each eligible director of the Company shall receive an option to purchase
5,000 shares after the first annual meeting at which a director is initially
elected to the board and 5,000 shares at each annual meeting thereafter, so
long as the director remains a member of the board. Options shall be priced at
their fair market value. Except as set forth herein, each option received by a
director shall vest and become exercisable one calendar year from the date the
option is granted. However, any director leaving the board for any reason
prior to the one year anniversary of the grant will become immediately vested
on the date of departure as to twenty-five percent (25%) of the shares subject
to the option during that year for
19
<PAGE>
each fiscal quarter that has ended since the date of the annual grant.
However, such shares that vest will not be exercisable until the first
anniversary of the date of grant. If a director's term of office is terminated
by 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 shares subject to the
option during that year for each fiscal quarter that has ended since the date
of the grant, and such shares will be deemed to be exercisable on the date of
such vesting. The executor or administrator of such director's estate shall
have the right to exercise the shares that are so exercisable pursuant to such
option within one year of the date of death of the director. After this one
year period, the option shall terminate. All options to directors shall be
subject to the general terms and conditions set forth in the SOP.
Options to Consultants. The Committee may grant options to consultants to
the Company on such terms and conditions as are determined by the Committee,
generally similar to those set forth above for options to employees, except
that any restrictions required to be set forth only in options to employees
need not be set forth in options to consultants, at the discretion of the
Committee. Options to consultants will be subject to all of the general terms
and conditions set forth in the SOP.
Transferability of Grants. No option granted under the SOP, and no right or
interest therein, shall be transferable in any manner except by will or the
laws of descent and distribution, shall not be subject to any lien or other
claim of any creditor of an optionee, or subject to any lien, encumbrance or
claim of any third person made in respect of or through any optionee, however
arising. During the lifetime of an optionee, options are exercisable, only by,
and shares of Common Stock issued upon the exercise of options will be issued
only to the optionee or his or her legal representative. However, the
Committee may, in its sole discretion, authorize optionees to designate
beneficiaries with the authority to exercise options granted to an optionee in
the event of his or her death or disability. The Committee may, in its sole
discretion, also authorize an optionee to transfer all or a portion of any
non-qualified option, but in no event shall any transfer be made to any person
or persons other than such optionee's parents, spouse or other lifetime
partner, children or grandchildren, siblings, or children of siblings, or a
trust for the exclusive benefit of one or more such persons, which transfer
must be made as a gift and without any consideration. The Committee may also,
in its sole discretion, provide for the transferability of a particular grant
pursuant to a qualified domestic relations order. All other transfers and any
retransfers by a permitted transferee are prohibited and shall be null and
void. Each option which becomes the subject of a permitted transfer and the
optionee to whom it was granted shall continue to be subject to the same terms
and conditions as were in effect immediately prior to such permitted transfer,
including responsibility for any withholding taxes incurred as a result of any
exercise of an option.
Change in Control. A dissolution or liquidation of the Company or merger of
consolidation in which the Company is not the surviving corporation, shall
cause each outstanding option to terminate, provided that each optionee shall
have the right immediately prior to such event to exercise such option in
whole or in part without regard to any vesting requirements or installment
provisions in his or her option grant agreement. Notwithstanding the above, 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 Internal Revenue Code of 1986, as amended.
Adjustment Upon Changes In Capital Structure. In the event of any change in
the capital structure, capitalization or Common Stock of the Company, such as
a stock dividend, stock split, recapitalization, merger, consolidation, split-
up, combination or exchange of shares or other form of reorganization or any
other change affecting the Common Stock, such proportionate adjustment, if
any, as the Board of Directors in its discretion may deem appropriate to
reflect such change shall be made with respect to the maximum number of shares
of Common Stock which may be issued pursuant to the SOP, the number of shares
of Common Stock subject to any outstanding option, the per share exercise
price in respect to any outstanding option, the number of shares of Common
Stock which are the subject of grants and outstanding under the SOP, and any
other term or condition of any grant affected by any such change.
20
<PAGE>
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 such shares to
the optionee following the exercise of such option.
Effective Date and Term of SOP. The effective date of the SOP is July 24,
1998, and it shall remain in effect until July 23, 2008 unless sooner
terminated by the Board of Directors.
Grant of Options. Options may be granted pursuant to the SOP from time to
time until such time as all shares of Common Stock available under the SOP
have been made subject to an option grant. If any outstanding option granted
under the SOP 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 SOP.
Continued Employment. The grant of an option pursuant to the SOP 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 optionee or the
Company upon the grant of a non-qualified stock option pursuant to the SOP. On
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, and the Company may claim a tax deduction of like amount. There are no
tax consequences to the optionee or the Company upon the grant of an incentive
stock option pursuant to the SOP, nor on the exercise of an incentive stock
option. Assuming that an optionee holds the stock received pursuant to the
exercise of such option for the required holding period under the Code, the
optionee will receive capital gain treatment upon the sale of the stock
received pursuant to the exercise of the option, but the Company will not
receive a tax deduction.
Resale of Shares. The shares issuable upon exercise of options which have
already been granted, and shares which are presently reserved for issuance
under the SOP have previously been registered on a Registration Statement on
Form S-8 under the Securities Act of 1933, as amended (the "Securities Act").
In the event that the amendment to the SOP is approved by the shareholders of
the Company, the Company intends to register the additional shares issuable
upon exercise of options granted under the SOP on a Registration Statement on
Form S-8 under the Securities Act. Participants who are affiliates of the
Company may not resell the shares acquired under the SOP under the Form S-8
Registration Statement. Such resales may either be pursuant to a resale
prospectus or be effected in accordance with Rule 144 under the Securities Act
(unless otherwise exempt from registration under the Securities Act).
Amendments. The Board of Directors of the Company may suspend or discontinue
the SOP or revise or amend the SOP with respect to any shares at the time not
subject to options, except that, without approval of the shareholders of the
Company, no such revision or amendment shall cause options which are intended
to be incentive stock options to fail to so qualify, cause the SOP or any
transaction thereunder to fail to meet the requirements of Rule 16b-3 of the
Exchange Act, or violate applicable law.
Plan Benefits. As of June 21, 1999, the aggregate market value of the
967,276 shares of Common Stock issuable upon exercise of options then
outstanding under the SOP was approximately $12,514,133, based on a price per
share of Common Stock of $12.9375 on that date.
As noted above, the number of options, and the terms and conditions of a
specific option grant under the SOP are determined by the Committee from time
to time in its discretion, subject to the terms of the SOP and the
requirements of applicable law. Accordingly, the number of options, and their
respective terms and conditions, to be received by or allocated to persons
eligible to receive options under the SOP are not presently determinable,
except with respect to options to be granted to directors who are not also
employees of the Company ("Non-Employee Directors"). As more fully described
above, each Non-Employee Director shall annually receive an option to purchase
5,000 shares of Common Stock (see "Options to Directors," above). The
21
<PAGE>
table below shows the number of options which were granted under the SOP
during the fiscal year ended February 28, 1999, in addition to showing the
total number of options granted under the SOP from its inception to date.
<TABLE>
<CAPTION>
Options Options
Granted to Granted During
Date Fiscal 1999
---------- --------------
<S> <C> <C>
William M. Gibson.................................... -0- -0-
President, Chief Executive Officer
and Chairman of the Board of Directors
Kenneth S. Thompson.................................. -0- -0-
Former Executive Vice President,
Supply Chain Products Division
Joseph E. Broderick.................................. -0- -0-
Former Executive Vice President,
Client Sales and Service Division
Mary Lou Fox......................................... -0- -0-
Senior Vice President,
Consumer Products Marketing Division
and Professional Service Division
Keith J. Enstice..................................... -0- -0-
Former Senior Vice President,
Field Operations Division, Americas
Executive officers as a group........................ 104,000 74,000
Non-employee directors as a group.................... 30,000 30,000
Non-executive officer employees as a group........... 1,804,110 1,699,760
</TABLE>
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, 2000 ("fiscal year 2000"). 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, 1999.
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.
SUBMISSION OF SHAREHOLDER PROPOSALS FOR THE 2000 ANNUAL MEETING OF
SHAREHOLDERS
Shareholder proposals submitted for inclusion in the Proxy Statement for the
2000 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 8, 2000.
Under the Company's By-laws, shareholder proposals which are not submitted
for inclusion in the Company's Proxy Statement for the 2000 Annual Meeting of
Shareholders must be received by the Secretary of the Company: (i) 60 days in
advance of such meeting if the meeting is to be held on a day which is within
30 days preceding the anniversary of the 1999 annual meeting, or (ii) 90 days
in advance of such meeting if the
22
<PAGE>
meeting is to be held on a day which is on or after the anniversary of the 1999
annual meeting. The 1999 Annual Meeting of Shareholders is scheduled to be held
on July 23, 1999.
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
Vice President, 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.
23
<PAGE>
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 23, 1999
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 in connection with the 1999 Annual
Meeting of Shareholders of Manugistics Group, Inc. (the "Annual Meeting") to be
held on Friday, July 23, 1999 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.
<TABLE>
<CAPTION>
<S><C>
--------------- ---------------
| SEE REVERSE | CONTINUED AND TO BE COMPLETED, SIGNED AND DATED | SEE REVERSE |
| SIDE | ON REVERSE SIDE | SIDE |
--------------- ---------------
</TABLE>
<PAGE>
[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 three (3)
nominees for Class I Directors listed below and FOR Proposals 2 and 3.
1. Election of Class I Directors
Nominees: Jack A. Arrow, Lynn C. Fritz and J. Michael Cline
FOR WITHHELD
[ ] [ ]
[ ]
______________________________________
For all nominees except as noted above
2. Approval of an amendment to the Company's FOR ABSTAIN AGAINST
1998 Stock Option Plan to increase the number [ ] [ ] [ ]
of shares of Common Stock authorized to be issued
thereunder by 3,000,000 to 5,237,900 shares.
3. Approval of an amendment to the Company's 1998 FOR ABSTAIN AGAINST
Stock Option Plan to increase the number of shares [ ] [ ] [ ]
of Common Stock for which options may be issued to
any employee in any calendar year under the Plan
from 250,000 shares to 1,000,000 shares.
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:_______________________
