<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant / /
Filed by a Party other than the Registrant /X/
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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
- --------------------------------------------------------------------------------
(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/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (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:
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(4) Date Filed:
_
<PAGE> 2
PARCPLACE-DIGITALK, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 23, 1996
The Annual Meeting of Stockholders of ParcPlace-Digitalk, Inc. will be held
on Friday, August 23, 1996, at 8:00 a.m., local time, at the Company's offices
located at 999 East Arques Avenue, Sunnyvale, California for the following
purposes, as more fully described in the accompanying Proxy Statement:
1. To elect directors of the Company.
2. To approve amendments to the Company's 1993 Stock Plan, including an
increase in the number of shares authorized for issuance thereunder.
3. To approve an amendment to the Company's 1993 Employee Stock Purchase
Plan to increase the number of shares authorized for issuance
thereunder.
4. To confirm the appointment of Ernst & Young as the independent
auditors of the Company for the fiscal year ending March 31, 1997.
5. To transact such other business as may properly come before the
meeting.
Stockholders of record at the close of business on June 27, 1996 are
entitled to vote at the Annual Meeting and are cordially invited to attend the
meeting. However, to ensure your representation at the meeting, you are urged
to mark, sign, date and return the enclosed proxy as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. If you attend the meeting,
you may vote in person even if you return a proxy.
FOR THE BOARD OF DIRECTORS
William P. Lyons
President and Chief Executive Officer
Sunnyvale, California
July 12, 1996
IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE AND PROMPTLY
RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED. IF YOU ATTEND THE MEETING,
YOU MAY VOTE IN PERSON, EVEN IF YOU RETURN A PROXY.
<PAGE> 3
PARCPLACE-DIGITALK, INC.
PROXY STATEMENT FOR 1996
ANNUAL MEETING OF STOCKHOLDERS
INFORMATION CONCERNING VOTING AND PROXY SOLICITATION
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of
ParcPlace-Digitalk, Inc. ("ParcPlace-Digitalk" or the "Company") for use at the
Annual Meeting of Stockholders to be held on Friday, August 23, 1996 at 8:00
a.m., local time. The Annual Meeting will be held at the Company's offices
located at 999 East Arques Avenue, Sunnyvale, California.
This Proxy Statement was mailed to stockholders on or about July 12, 1996.
RECORD DATE AND STOCK OWNERSHIP
Stockholders of record at the close of business on June 27, 1996, the
record date for the Annual Meeting, are entitled to vote at the meeting. At the
record date, 11,689,021 shares of the Company's Common Stock were issued and
outstanding.
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock of the Company as of the record date as to each
person who is known to the Company to beneficially own more than five percent of
the outstanding shares of its Common Stock. Information regarding the
beneficial ownership of management is set forth later in this Proxy Statement.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY PERCENT
NAME AND ADDRESS OWNED OWNED
---------------- ------------ -------
<S> <C> <C>
State of Wisconsin Investment Board 630,000 5.5%
Lake Terrace
121 E. Wilson St.
Madison, WI 53702
</TABLE>
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before its use by delivering to the Secretary of
the Company a written notice of revocation or a duly executed proxy bearing a
later date or by attending the meeting and voting in person.
VOTING AND SOLICITATION
Each stockholder is entitled to one vote for each share held as of the
record date. Stockholders do not have the right to cumulate their votes in the
election of directors.
The required quorum for the transaction of business at the Annual Meeting
is a majority of the shares of Common Stock outstanding on the record date. The
Company intends to include abstentions and broker non-votes as present or
represented for purposes of establishing a quorum for the transaction of
business, but to exclude broker non-votes from the calculation of shares
entitled to vote with respect to any proposal for which authorization to vote
was withheld.
<PAGE> 4
The cost of soliciting proxies will be borne by the Company. The Company
expects to reimburse brokerage firms and other persons representing beneficial
owners of shares for their expense in forwarding solicitation material to such
beneficial owners. The Company may retain a proxy solicitor to assist in the
solicitations of proxies, for which the Company would expect to pay an estimated
fee of $6,000 plus reimbursement of expenses. Proxies also may be solicited by
certain of the Company's directors, officers and regular employees, without
additional compensation, in person or by telephone or facsimile.
PROPOSAL NO. 1:
ELECTION OF DIRECTORS
A board of five directors will be elected at the Annual Meeting. Unless
otherwise instructed, the proxy holders will vote all proxies for the five
nominees named below, all of whom are presently directors of the Company. If any
nominee is unable or declines to serve as a director at the time of the Annual
Meeting, the proxies will be voted for any nominee who shall be designated by
the present Board of Directors to fill the vacancy. It is not expected that any
nominee will be unable or will decline to serve as a director. The term of
office of each person elected as a director will continue until the next Annual
Meeting of Stockholders. There are no family relationships between any of the
directors or executive officers of the Company.
The Board of Directors recommends a vote FOR the nominees listed below:
<TABLE>
<CAPTION>
NAME OF NOMINEE Age Principal Occupation
--------------- --- --------------------
<S> <C> <C>
James C. Anderson 57 Senior Executive, Office of Technology, ParcPlace-Digitalk, Inc.
John B. Carrington 52 Former CEO of Digitalk, Inc.
Jos C. Henkens 43 General Partner, Advanced Technology Ventures
Philip C. Kantz 52 President and Chief Operating Officer, Trans Ocean Ltd
William P. Lyons 51 President and Chief Executive Officer of the Company
</TABLE>
James C. Anderson, a founder of Digitalk, Inc. ("Digitalk"), has been a
director of the Company since September 1995, and also is the Senior Executive,
Office of Technology of the Company. He was Chairman of the Board of Digitalk, a
provider of software development tools based on the Smalltalk language, from its
inception in 1983 until the merger with the Company in August 1995. Mr. Anderson
was also President and Chief Executive Officer of Digitalk from its inception
until September 1991 and January 1994, respectively. Prior to founding Digitalk,
he was a principal consultant at Computer Sciences Corporation for more than 15
years.
John B. Carrington has been a director of the Company since September
1995. He was President and a director of Digitalk from September 1991 and Chief
Executive Officer from January 1994 until the merger with the Company in August
1995. Prior to joining Digitalk, he was Chairman of the Board and Chief
Executive Officer of Cogensys Corporation, co-founded State of the Art, Inc.,
and held senior positions with the Del Mar Group, Harte-Hanks Communications,
and Honeywell.
Jos C. Henkens has been a director of the Company since March 1988. Mr.
Henkens has been a general partner of Advanced Technology Ventures, a venture
capital investment firm, since 1983. He is also a director of Actel
Corporation, Credence Systems Corporation and a variety of private companies.
Philip C. Kantz has been President, Chief Operating Officer and a
director of Trans Ocean Ltd, a diversified worldwide transportation services
company, since October 1995. From February 1994 through January 1995, Mr. Kantz
served as President and Chief Executive Officer and a director of Transcisco
Industries, Inc., an industrial services company. From 1992 to 1993 he was
interim President and Chief Executive Officer of Genetrix, Inc., a biotechnology
services business, and from 1988 to 1991 he was President and Chief Executive
Officer of Itel Containers International Corporation, a subsidiary of Itel
Corporation, then engaged in the leasing of intermodal cargo containers.
Previously, Mr. Kantz was President of the Transportation and Industrial Funding
Corporation and Senior Vice President and General Manager of GE Capital from
1986 to 1988. He currently serves as a director of 3Com Corporation, Trans Ocean
Ltd, Falcon Building Products, Inc. and Search Systems Corporation.
William P. Lyons has been President, Chief Executive Officer and director
of the Company since April 1992. From 1988 until November 1991, Mr. Lyons held a
variety of general management and senior executive positions at
2
<PAGE> 5
Ashton-Tate, a desktop database company, including Vice President of the PC
Applications Group, President, and, most recently, Chairman of the Board and
Chief Executive Officer. From 1969 until 1988, he worked at IBM, most recently
as Vice President of Software Marketing of its National Distribution Division.
He is also a director of FileNet Corporation.
COMPENSATION OF OUTSIDE DIRECTORS
The Company pays its outside directors a fee, for each meeting attended,
of $1,000 for each meeting of the Board of Directors and $500 for each meeting
of a committee. Under the Company's 1995 Director Stock Option Plan, outside
directors also are granted, upon election to the Board, an option to purchase
20,000 shares of Common Stock and, assuming at least six months have elapsed
since the initial grant, are granted on June 30 of each year an option to
purchase an additional 5,000 shares of Common Stock. The initial grants vest
monthly over four years and the subsequent grants vest monthly over one year
beginning four years after the date of grant. All the options have an exercise
price equal to 100% of the fair market value of the Common Stock on the date of
grant.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held 7 meetings during the fiscal
year ended March 31, 1996. No nominee attended fewer than 75% of the meetings of
the Board of Directors or of committees on which such person served. The board
of directors has a Compensation Committee that makes recommendations concerning
salaries and incentive compensation for employees of the Company and an Audit
Committee that reviews the results and scope of the audit and other services
provided by the Company's independent auditors. The Compensation Committee,
which is presently comprised of directors Carrington and Henkens, held 3
meetings in fiscal 1996. The Audit Committee, which is also presently comprised
of directors Carrington and Henkens, held 1 meeting in fiscal 1996. The Board of
Directors does not have a nominating committee or a committee performing the
functions of a nominating committee.
PROPOSAL NO. 2:
AMENDMENT OF 1993 STOCK PLAN
The Board of Directors in June 1996 adopted amendments to the Company's
1993 Stock Plan (i) to increase the number of shares available for issuance
under the plan by 425,000 shares, and (ii) to impose certain limits on the
number of shares as to which options may be granted to any one individual under
the plan, as described below under "Limits on Grants". The amendments are hereby
submitted to the Company's stockholders for approval.
The affirmative vote of a majority of the shares of ParcPlace Common
Stock present or represented and voting at the meeting is required to adopt this
proposal. The Board of Directors recommends a vote "FOR" amendment of the 1993
Stock Plan.
DESCRIPTION OF 1993 STOCK PLAN
The purposes of the 1993 Stock Plan, which provides a means for employees
and consultants to acquire stock of the Company, are to attract and retain
qualified personnel and to provide additional incentives for employees and
consultants to exert maximum efforts for the success of the Company.
Number of Shares. Under the 1993 Stock Plan, as amended, the total
number of shares of Common Stock authorized for issuance is 1,925,000 plus any
number of shares forfeited under the now-terminated 1989 Stock Option Plan
(described below) by expiration or cancellation of options under such plan. As
of March 31, 1996, 193,980 shares forfeited under the 1989 Stock Option Plan had
been added to the 1993 Stock Plan.
Administration. The 1993 Stock Plan is administered by the Board of
Directors of the Company or a committee appointed by the Board of Directors. Any
such committee must consist of directors who are not employees or consultants of
the Company or any subsidiary of the Company, and must have at least two
members. The 1993 Stock Plan is currently administered by the Compensation
Committee of the Board of Directors. By delegated authority, options covering a
limited number of shares may be granted by the Chief Executive Officer of the
Company to any person who is not also an officer or member of the Board of
Directors of the Company.
Eligibility. The 1993 Stock Plan provides that stock options and stock
purchase rights may be granted to employees, officers, directors and consultants
of the Company and its majority-owned subsidiaries, although only employees may
be granted options that are designated as incentive stock options. As of March
31, 1996,
3
<PAGE> 6
approximately 325 persons were eligible to participate in the 1993 Stock Plan.
The Board of Directors, its committee or the Chief Executive Officer selects the
optionees and determines the number of shares to be subject to each option or
stock purchase right. In making such determination, there is taken into account
the duties and responsibilities of the employee, the value of the employee's
services, the employee's present and potential contribution to the success of
the Company, the anticipated number of years of future service of the employee
and other relevant factors.
Exercise Price; Market Value. The exercise price of options and stock
purchase rights granted under the plan must be at least 85% of the market price
of Common Stock on the date of grant, and in the case of incentive stock options
must be at least 100% of such market price. In the case of an incentive stock
option granted to an optionee who owns more than 10% of the voting power or
value of all classes of stock of the Company, the exercise price must be at
least 110% of such market price. Payment of the exercise price may, depending on
the terms of the option agreement, consist of cash, check, surrender of shares
of Common Stock owned by the optionee, or such other consideration as determined
by the Board of Directors or its committee. On March 31, 1996, the closing price
of the Company's Common Stock as reported on the Nasdaq National Market was
$9.125.
Exercisability. Options granted under the plan generally become
exercisable over 48 months. Each option may be exercised, during the lifetime
of the optionee, only by such optionee.
Duration of Options. Options granted under the plan may have a maximum
term of ten years from the date of grant. An option granted to an optionee who,
immediately before the grant of such option, owns more than 10% of the voting
power or value of all classes of stock of the Company, may not have a term of
more than five years. If an optionee's employment or consulting relationship
with the Company is terminated for any reason, the option must be exercised
within a specified period of time, and thereafter the option shall terminate. In
the event of such early termination, the option may be exercised only to the
extent it was exercisable on the date of termination.
Changes in Capitalization. In the event of changes in the Common Stock by
reason of stock dividends, split-ups or combinations of shares,
reclassifications, recapitalizations, mergers, consolidations, reorganizations
or liquidations, the Board or its committee shall make such adjustments in the
option price and the number and class of shares subject to options outstanding
under the plan as it shall deem appropriate. In the event of the proposed
dissolution or liquidation of the Company, outstanding options shall terminate
immediately prior to the consummation of the proposed action unless the Board or
its committee provides otherwise. In the event of the merger of the Company with
or into another corporation, or the sale of all or substantially all of the
Company's assets, each outstanding option and purchase right shall be assumed or
an equivalent option or right shall be substituted by the successor corporation
or its parent or subsidiary. The Board or its committee may, in lieu of such
assumption or substitution, make outstanding options and rights fully
exercisable for a period of fifteen days, after which the options and rights
will terminate.
Amendment and Termination. The 1993 Stock Plan will terminate in
December 2003, unless terminated earlier by the Board of Directors of the
Company. The Board may from time to time amend or terminate the plan as it
deems advisable, although certain amendments require approval of the
stockholders. Any amendment or termination of the plan will not affect
outstanding options unless the optionee and the Company agree in writing.
Limits on Grants. Under Section 162(m) of the Internal Revenue Code,
adopted in 1993, the deductibility of compensation paid to certain executive
officers may be restricted if it exceeds $1 million in one year, although
performance-based compensation is excluded from the restriction. In order to
preserve the Company's ability to deduct compensation related to stock options
granted under the plan, the Board of Directors in June 1996 adopted an amendment
to the plan providing that no employee may be granted, in any fiscal year of the
Company, options to purchase more than 250,000 shares of Common Stock, except
that the Company may make a one-time grant of up to 500,000 shares in connection
with an employee's initial employment which shall not count against the first
limitation. If in the future such limitations are required to preserve the
deductibility of compensation related to stock options, the Board of Directors
or its committee may modify or eliminate these limitations.
Tax Information Regarding Stock Options. An optionee who is granted an
incentive stock option will not recognize taxable income either at the time the
option is granted or at the time it is exercised, although exercise of the
option may subject the optionee to the alternative minimum tax. The Company will
not be allowed a deduction for federal income tax purposes as a result of the
exercise of an incentive stock option regardless of the applicability of the
alternative minimum tax. Upon the sale or exchange of the shares at least two
years after grant of the option and one year after exercise of the option, any
gain will be treated as long-term capital gain. If these holding periods are not
satisfied at the time of sale, the optionee will recognize ordinary income equal
to the difference between the exercise price and the lower of (i) the fair
market value of the stock at the date of the option exercise or (ii) the sale
price of the
4
<PAGE> 7
stock, and the Company will be entitled to a deduction in the same amount.
(Different rules may apply upon a premature disposition by an optionee who is an
officer, director or 10% stockholder of the Company.) Any additional gain or
loss recognized on such a premature disposition of the shares will be
characterized as capital gain or loss. If the Company grants an incentive stock
option and as a result of the grant the optionee has the right in any calendar
year to exercise for the first time one or more incentive stock options for
shares having an aggregate fair market value (under all plans of the Company and
determined for each share as of the date the option to purchase the share was
granted) in excess of $100,000, then the excess shares must be treated as
non-statutory options.
An optionee who is granted a non-statutory stock option will also not
recognize any taxable income upon the grant of the option. However, upon
exercise of a non-statutory stock option, the optionee will recognize ordinary
income for tax purposes measured by the excess of the then fair market value of
the shares over the exercise price. Any taxable income recognized by an optionee
who is an employee of the Company will be subject to tax withholding by the
Company. Upon resale of the shares by the optionee, any difference between the
sales price and the fair market value at the time of exercise, to the extent not
recognized as ordinary income as described above, will be treated as capital
gain or loss. The Company will be entitled to a deduction for federal income tax
purposes equal to the amount of ordinary income recognized by the optionee.
PROPOSAL NO. 3:
AMENDMENT OF EMPLOYEE STOCK PURCHASE PLAN
The Company's 1993 Employee Stock Purchase Plan (the "Purchase Plan")
provides employees of the Company with an opportunity to purchase Common Stock
of the Company through accumulated payroll deductions. The Board of Directors
of the Company amended the Purchase Plan in June 1996 to increase the number of
shares authorized for issuance under the plan by 150,000 shares to a new total
of 450,000 shares.
The affirmative vote of a majority of the shares of ParcPlace Common
Stock present or represented and voting at the meeting is required to adopt this
proposal. The Board of Directors recommends a vote "FOR" amendment of the 1993
Employee Stock Purchase Plan.
DESCRIPTION OF 1993 EMPLOYEE STOCK PURCHASE PLAN
Status of Shares. As of March 31, 1996, 198,303 shares had been issued
under the Purchase Plan and 101,697 shares remained available for future
issuance.
Operation of the Purchase Plan. Under the Purchase Plan, the Company
withholds a percentage of each salary payment to participating employees over
offering periods of six months or longer as determined by the Board of Directors
or its committee. Presently, the offering periods are twelve months long. The
offering periods are divided into six-month purchase periods and the accumulated
amounts deducted are used to purchase shares of Common Stock at the end of each
six-month purchase period. The price at which stock is purchased under the
Purchase Plan is equal to 85% of the fair market value of the Common Stock on
the first day of the applicable offering period or the last day of the current
purchase period, whichever is lower. Employees may end their participation in
the offering at any time during the offering period, and participation ends
automatically on termination of employment with the Company.
Eligibility; Administration. Employees are eligible to participate in the
Purchase Plan if their customary employment is at least 20 hours per week and
more than five months per calendar year. As of March 31, 1996, approximately 325
employees were eligible to participate in the Purchase Plan. Payroll deductions
may not exceed 10% (or such other maximum percentage between 5% and 15% as the
Board of Directors or its committee determines) of an employee's compensation,
including overtime, bonuses, commissions, incentive payments and other
compensation. No employee may purchase more than $25,000 worth of stock in any
offering period. The Purchase Plan is currently administered by the Board of
Directors.
Amendment and Termination. The Board of Directors may amend the Purchase
Plan from time to time or may terminate it or any offering period under it,
without approval of the shareholders. However, to the extent necessary and
desirable to comply with Rule 16b-3 under the Securities Exchange Act (or any
other applicable law or regulation), the Company shall obtain approval of the
shareholders with respect to plan amendments to the extent and in the manner
required by such law or regulation. In the event of a merger or sale of
substantially all of the assets of the Company, the Board may shorten the
offering period or permit the assumption of outstanding rights to purchase
Common Stock. Unless earlier terminated by the Board of Directors, the Purchase
Plan will terminate by its own terms in December 2003.
5
<PAGE> 8
Tax Consequences of Purchase Plan Transactions. The Purchase Plan, and the
right of participants to make purchases thereunder, is intended to qualify under
the provisions of Sections 421 and 423 of the Code. Under these provisions, no
income is taxable to a participant until the shares purchased under the Plan are
sold or otherwise disposed of. Upon sale or other disposition of the shares, the
participant will generally be subject to tax, depending in part on how long the
shares are held by the participant. If the shares are sold or otherwise disposed
of more than two years from the first day of the offering period, the
participant will recognize ordinary income measured as the lesser of (a) the
excess of the fair market value of the shares at the time of such sale or
disposition over the purchase price, or (b) an amount equal to 15% of the fair
market value of the shares as of the first day of the offering period. Any
additional gain will be treated as long-term capital gain. If the shares are
sold or otherwise disposed of before the expiration of this holding period, the
participant will recognize ordinary income generally measured as the excess of
the fair market value of the shares on the date the shares were purchased by the
participant over the participant's purchase price. Any additional gain or loss
on the sale or disposition will be capital gain or loss. The Company is not
entitled to a deduction for amounts taxed as ordinary income or capital gain to
a participant except to the extent of ordinary income recognized by participants
upon a sale or disposition of shares prior to the expiration of the holding
period described above.
PROPOSAL NO. 4:
CONFIRMATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young, independent auditors,
to audit the financial statements of the Company for the year ending March 31,
1997 and recommends that the stockholders vote FOR confirmation of such
selection. In the event of a negative vote, the Board of Directors will
reconsider its selection. Ernst & Young has audited the Company's annual
financial statements since its inception. Representatives of Ernst & Young are
expected to be present at the Annual Meeting with the opportunity to make a
statement if they desire to do so, and are expected to be available to respond
to appropriate questions.
6
<PAGE> 9
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock of the Company as of the record date as to (i)
each director, (ii) each officer named in the Summary Compensation Table below
and (iii) all directors and executive officers as a group. The persons named in
the table, to the Company's knowledge, have sole voting and investment power
with respect to the shares owned by them, subject to community property laws.
<TABLE>
<CAPTION>
Shares Approximate
Beneficially Percent
NAME Owned Owned(1)
---- ------------ -----------
<S> <C> <C>
James C. Anderson.............................................. 390,081 3.3%
John B. Carrington............................................. 174,688 1.5%
Jos C. Henkens (2)............................................. 498,711 4.3%
Advanced Technology Ventures
2884 Sand Hill Road, Suite 100
Menlo Park, CA 94025
Philip C. Kantz (3)............................................ 47,000 *
William P. Lyons (4)........................................... 487,299 4.0%
Carolyn V. Aver (5)............................................ 46,695 *
Richard H. Dym (6)............................................. 32,546 *
Adele J. Goldberg (7).......................................... 257,316 2.2%
William G. Wesemann (8)........................................ 22,186 *
All directors and executive officers as
a group (12 persons) (9)..................................... 2,093,299 17.0%
</TABLE>
* Less than 1%.
(1) Percent of the outstanding shares of Common Stock, treating as
outstanding all shares issuable on exercise of options held by the
particular beneficial owner that are included in the first column.
(2) Includes 361,598 shares held by Advanced Technology Ventures II and
130,331 shares held by Advanced Technology Ventures III, as well as 532
shares held by Mr. Henkens and 6,250 shares subject to options
exercisable as of 60 days after the record date by Mr. Henkens. Mr.
Henkens is a general partner of Advanced Technology Ventures. Mr.
Henkens disclaims beneficial ownership of the shares held by Advanced
Technology Ventures, except to the extent of his proportionate interest
therein.
(3) Includes 45,000 shares that are held by a trust for which Mr. Kantz is
executor and as to which he thereby has voting control but no pecuniary
interest.
(4) Includes 395,475 shares subject to options exercisable as of 60 days
after the record date.
(5) Includes 37,385 shares subject to options exercisable as of 60 days after
the record date.
(6) Includes 32,546 shares subject to options exercisable as of 60 days after
the record date.
(7) Includes 52,985 shares subject to options exercisable as of 60 days after
the record date.
(8) Includes 20,750 shares subject to options exercisable within 60 days
after the record date.
(9) Includes 597,582 shares subject to options exercisable as of 60 days
fter the record date, held by the 9 directors and officers listed above
and by 2 officers not listed above.
7
<PAGE> 10
EXECUTIVE COMPENSATION INFORMATION
COMPENSATION TABLES
The following table sets forth the compensation paid by the Company
during the fiscal years ended March 31, 1994, 1995 and 1996, to the Chief
Executive Officer, the four other most highly compensated executive officers of
the Company, based on fiscal 1996 salary and bonus, and one additional officer
who was among the most highly compensated but was not serving as an executive
officer at the end of fiscal 1996:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
------------
AWARDS OF
FISCAL ANNUAL COMPENSATION OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS(2) (# OF SHARES) COMPENSATION(3)
--------------------------- ---- --------- -------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
William P. Lyons 1996 $200,000 $50,000 10,000 $1,066
President and Chief Executive Officer 1995 $188,333 - 60,000 $1,066
1994 $180,000 $115,200 115,000 $11,104
James C. Anderson 1996 (4) $218,287 $21,500 4,273 $69
Senior Executive, Office of Technology
Carolyn V. Aver 1996 $143,750 $22,500 14,500 $253
Vice President and Chief Financial Officer 1995 $129,167 - 12,500 $254
1994 $125,000 $50,000 62,500 $103
Richard H. Dym 1996 $195,809 $13,000 10,100 $644
Vice President of International Operations 1995 $132,140 - 11,500 $2,406
1994 $115,008 $36,800 56,250 $620
Adele J. Goldberg 1996 $169,200 - - $199,103
Chairman of the Board of Directors (5) 1995 $171,250 - 40,000 $1,036
1994 $165,000 $115,200 57,500 $20,317
William G. Wesemann 1996 $220,863 $17,000 13,400 $2,106
Vice President of North American Sales (6) 1995 $70,822 $25,000 83,000 $302
</TABLE>
(1) The amounts shown as Mr. Wesemann's salary include commission payments of
$50,863 in fiscal 1996 and $8,924 in fiscal 1995. The amounts shown as
Mr. Dym's salary include commission payments of $68,934 in fiscal 1996
and $14,015 in fiscal 1995.
(2) The executive bonus plans for each fiscal year established executive
bonus awards as the product of a target percentage of base salary times
an individual performance multiplier times a Company performance
multiplier. The amount shown for Mr. Wesemann in fiscal 1995 represents
a one-time incentive bonus based on achievement of specific near-term
objectives.
(3) Except as noted in the following sentences, the amounts shown as other
compensation represent life insurance premiums. The amount shown for Mr.
Lyons in fiscal 1994 includes a cash-out of accrued vacation pay of
$10,038. The amount shown for Mr. Dym in fiscal 1995 includes a
travel-savings incentive of $1,772. The amount shown for Dr. Goldberg in
fiscal 1996 includes severance and consulting payments of $198,000, in
fiscal 1995 includes a travel-savings incentive of $287, and in fiscal
1994 includes a cash-out of accrued vacation pay of $19,673. The amount
shown for Mr. Wesemann in fiscal 1996 includes a travel-savings incentive
of $1,229 and an insurance dual coverage waiver reimbursement of $600,
and in fiscal 1995 includes an insurance dual coverage waiver
reimbursement of $200.
(4) Mr. Anderson was an executive officer of Digitalk from its inception
until the merger with the Company in August 1995, and is presently an
executive officer of the Company. In order to show Mr. Anderson's
complete compensation for the fiscal year, the compensation shown for Mr.
Anderson in fiscal 1996 includes compensation paid by Digitalk prior to
the merger.
(5) Ms. Goldberg resigned as an executive officer of the Company in September
1995 and resigned from the Board of Directors in March 1996.
(6) Mr. Wesemann joined the Company in November 1994 and resigned in May
1996.
8
<PAGE> 11
The following table sets forth information regarding grants of stock
options made during the fiscal year ended March 31, 1996 to the persons named in
the Summary Compensation Table above:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
% OF TOTAL STOCK PRICE APPRECIATION
OPTIONS GRANTED EXERCISE FOR OPTION TERM(3)
OPTIONS TO EMPLOYEES IN OR BASE EXPIRATION --------------------------
NAME GRANTED(1) LAST FISCAL YEAR PRICE(2) DATE 5% 10%
---- ---------- ---------------- -------- ---------- -- ---
<S> <C> <C> <C> <C> <C> <C>
William P. Lyons 10,000 (4) 0.6% $6.875 11/08/05 $43,237 $109,570
James C. Anderson 4,273 (4) 0.3% $6.875 11/08/05 $18,475 $46,819
Carolyn V. Aver 10,000 0.6% $10.00 8/31/05 $62,889 $159,374
4,500 (4) 0.3% $6.875 11/08/05 $19,456 $49,306
Richard H. Dym 7,500 0.4% $10.00 8/31/05 $47,167 $119,531
2,600 (4) 0.2% $6.875 11/08/05 $11,241 $28,488
Adele J. Goldberg - - - - - -
William G. Wesemann 10,000 0.6% $10.00 8/31/05 $62,889 $159,374
3,400 (4) 0.2% $6.875 11/08/05 $14,700 $37,254
</TABLE>
(1) The Board of Directors has the discretion, subject to plan limits, to
modify the terms of outstanding options and to reprice the options.
Except as noted, the listed options vest over four years, subject to
agreements providing for acceleration in the event of termination of
employment in connection with a change in control of the Company.
(2) All options were granted with an exercise price equal to the fair market
value of the Common Stock as determined by the Board of Directors on the
date of grant. In determining the fair market value of the Common Stock,
for which no trading market existed, the Board of Directors took into
consideration such factors as the most recent sale prices and preferences
of Preferred Stock (all of which has since converted to Common Stock),
recent results of operations, and other relevant data. The exercise
price and tax withholding obligations related to exercise may in some
cases, be paid by delivery of other shares or by offset of the shares
subject to the options.
(3) Amounts represent hypothetical gains that could be achieved for the
respective options at the end of the 10-year option term. The assumed 5%
and 10% rates of stock appreciation are mandated by rules of the
Securities and Exchange Commission and do not represent the Company's
estimate or projection of the future Common Stock price. This table does
not take into account any appreciation in the price of the Common Stock
to date, which exceeds the hypothetical gains shown in the table.
(4) These options were granted in connection with the Company's revised
executive bonus plan for fiscal 1996, under which the options would have
no vesting for five years unless certain plan targets were achieved.
Because the applicable Company and individual targets were achieved, the
options will vest in full on September 30, 1996.
The following table sets forth, for each person named in the Summary
Compensation Table above, information regarding the exercise of stock options
during the fiscal year ended March 31, 1996 and the year-end value of
unexercised options:
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END VALUES
VALUE(2) OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT YEAR-END: OPTIONS AT YEAR-END:
ACQUIRED ON VALUE -------------------------------- --------------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE(3) EXERCISABLE UNEXERCISABLE(3)
---- ----------- ----------- ----------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
William P. Lyons - - 373,388 116,776 $2,595,130 $77,719
James C. Anderson - - - 4,273 - $9,614
Carolyn V. Aver - - 34,374 41,626 $171,042 $90,208
Richard H. Dym - - 30,187 34,663 $149,583 $77,923
Adele J. Goldberg 143,239 $1,279,840 48,089 58,961 $82,942 -
William G. Wesemann - - 20,750 75,650 - $7,650
</TABLE>
(1) Calculated on the basis of the fair market value of the Common Stock on
the date of exercise, minus the per share exercise price, multiplied by
the number of shares underlying the option.
(2) Based on a fair market value of $9.125, which was the closing price of the
Common Stock on March 31, 1996.
(3) Shares subject to certain options may be purchased prior to vesting but
will be subject to repurchase until vested.
9
<PAGE> 12
During the fiscal year ended March 31, 1996, the Company approved a stock
option repricing program in which Mr. Wesemann, who is named in the Summary
Compensation Table above, could have participated had he remained with the
Company for the 6-month minimum retention period for the repricing program.
However, Mr. Wesemann resigned from the Company before meeting the minimum
retention period.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee of the Company's Board of Directors (the
"Committee") consists of directors John B. Carrington and Jos C. Henkens. The
Committee is responsible for establishing policies and programs that determine
the compensation of the Company's executive officers, as well as supervising and
making recommendations to the Board on general compensation matters. The
Committee also has exclusive authority to grant stock options to executive
officers of the Company under its 1993 Stock Plan.
Compensation Philosophy and Policies
The Committee's compensation philosophy is designed to align each
executive's compensation, and therefore the executive's motivation, with that of
the stockholders through both cash and equity incentives. The Company seeks to
attract and retain executive officers of the highest quality by paying salaries
competitive in the industry and ensuring that its executives are rewarded for
their contributions to the Company.
The Committee favors a high-risk/high-reward compensation system, which
emphasizes bonus compensation as a relatively high percentage of base salary.
In addition, executives are encouraged to hold a continuing significant equity
interest in the Company. The Committee believes that broad- based employee
equity ownership provides an important incentive for employee contribution to
the Company's success.
Elements of Compensation
The components of officer compensation include cash compensation, stock
ownership through stock options and participation in a payroll-deduction stock
purchase plan, participation in a 401(k) plan (without matching employer
contributions), supplemental life insurance, and other standard benefits. There
are essentially no other officer perquisites.
Cash compensation consists of base salary, bonuses, and sales
commissions. Base salary is determined on the basis of the level of
responsibility, expertise and experience of the employee, taking into account
competitive conditions in the industry. Cash bonuses awarded to officers and
other key employees are typically based on a target percentage of salary,
adjusted for achievement of revenue and profit goals by the Company and
individual performance evaluations. Compensation of sales executives also
includes sales commissions.
Ownership of the Company's Common Stock is a key element of executive
compensation. Officers and other employees of the Company are eligible to
participate in the 1993 Stock Plan (the "Option Plan") and the 1993 Employee
Stock Purchase Plan (the "ESPP"). The Option Plan permits the Board of Directors
or any committee delegated by the Board to grant stock options to employees on
such terms as the Board or such committee may determine. The Compensation
Committee presently has sole authority to grant stock options to executive
officers of the Company. In determining the size of the stock option grant to an
officer or other employee, the Committee takes into account equity participation
by comparable employees within the Company, external competitive circumstances,
and other relevant factors. The ESPP permits employees to acquire Common Stock
of a Company through payroll deductions and promotes broad-based equity
ownership throughout the Company.
Fiscal 1996 Executive Compensation
Executive compensation for fiscal 1996 included base salary and bonus,
and for sales personnel, sales commissions. Under the executive bonus plan in
place for the year, target bonuses were established with percentage achievement
levels based upon a combination of both Company performance, as determined by
revenue and profit before tax, and individual performance. Because of the merger
with Digitalk in the middle of the fiscal year, the executive bonus plan was
amended such that no bonuses would be paid for the first half of the fiscal
year, and revenue and profit targets for the remainder of the fiscal year were
adjusted for the merger and pro-rated for the portion of the year remaining.
Also, in connection with the revised plan, stock options were granted to each
executive officer, with an exercise price equivalent to the fair market value of
the stock on the date of grant, with no vesting for five years unless the plan
targets were achieved. At the end of the year, upon applying the formula in the
plan to performance for the second half of the fiscal year, cash bonuses were
awarded and the bonus plan options will by their terms
10
<PAGE> 13
become exercisable as of September 30, 1996. In addition to the executive bonus
plan, certain executive officers were granted stock options during the fiscal
year, with exercise prices equivalent to the fair market value of the stock on
the date of grant.
Chief Executive Officer Compensation for Fiscal 1996
William P. Lyons joined the Company as its President, Chief Executive
Officer and Director in April 1992. Mr. Lyons' base salary was established at
that time based on a review of a number of factors, including compensation
packages awarded to chief executives of comparable companies, competitive
conditions in the industry, alignment of the chief executive's compensation with
growth in value of the Company's stock and other relevant factors. No increase
from that initial base salary was made until October 1994, at which time Mr.
Lyons' base salary was increased based on factors substantially identical to
those applied in April 1992, and no additional increases have been made since
that time. Mr. Lyons' bonus has been determined in accordance with the Company's
executive bonus plan.
Tax Deductibility of Executive Compensation
Under Section 162(m) of the Internal Revenue Code, adopted in 1993, the
deductibility of compensation paid to certain executive officers may be limited
if it exceeds $1 million in one year, although performance-based compensation is
excluded from the limitation. Because the targeted cash compensation for each of
the Company's officers is well below the $1 million threshold and, subject to
the amendments described in this proxy statement, options granted under the
Option Plan should meet the Section's requirements for being performance-based,
the Section is not expected to reduce the tax deduction available to the
Company. The Company's policy is to qualify to the extent reasonable its
executive officers' compensation for deductibility under applicable tax laws.
Summary
The Compensation Committee sets policy and administers the Company's cash
and equity incentive programs for the purpose of attracting and retaining highly
skilled executives who will promote the success of the Company's business.
COMPENSATION COMMITTEE OF
THE BOARD OF DIRECTORS
John B. Carrington
Jos C. Henkens
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Neither member of the Compensation Committee is a present or former
employee or officer of the Company, although Mr. Carrington was President and
Chief Executive Officer of Digitalk prior to the merger with the Company in
August 1995. No officer of the Company served as either a member of a
compensation committee of, or as a director of, another company as to which
there was interlocking participation on the Compensation Committee of the
Company.
11
<PAGE> 14
STOCK PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total stockholder
returns for the Company's Common Stock, the Nasdaq Stock Market index for U.S.
companies, and the Nasdaq Computer and Data Processing Services Stocks index.
The graph assumes the investment of $100 on February 1, 1994, the date of the
Company's initial public offering. The data regarding the Company assumes an
investment at the initial public offering price of $15.50 per share of the
Company's Common Stock. The performance shown is not necessarily indicative of
future performance.
COMPARISON OF 26-MONTH CUMULATIVE TOTAL RETURN
AMONG PARCPLACE-DIGITALK, THE NASDAQ STOCK MARKET (U.S. COMPANIES),
AND NASDAQ COMPUTER AND DATA PROCESSING SERVICES STOCKS
Proxy Stock Perf. Data
<TABLE>
<CAPTION>
Comp & Relative Performance Difference
PPD NASDAQ DP Svcs PPD NASDAQ C & DP Svcs PPD NASDAQ C & DP Svcs
Stock Price Index ParcPlace-D Nasdaq Stock Nasdaq Computer & Data Processing Services
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2/1/94 15.500 256.413 425.183 2/1/94 100.000 100.000 100.000 29.032 -6.685 -3.031
3/31/94 20.000 299.529 412.295 3/31/94 129.032 93.415 96.969 -30.645 10.531 33.747
5/31/94 123.925 95.170 102.593
7/31/94 118.817 96.926 108.218
9/30/94 113.710 98.681 113.842
11/30/94 108.602 100.436 119.467
1/31/95 103.495 102.191 125.091
3/31/95 15.250 266.532 555.780 3/31/95 98.387 103.946 130.715 -39.516 37.152 54.514
5/31/95 91.801 110.138 139.801
7/31/95 85.215 116.330 148.887
9/30/95 78.629 122.522 157.973
11/30/95 72.043 128.714 167.058
1/31/96 65.457 134.906 176.144
3/31/96 9.125 361.794 787.566 3/31/96 58.871 141.098 185.230
</TABLE>
12
<PAGE> 15
CERTAIN TRANSACTIONS AND REPORTS
Pursuant to the Delaware General Corporation Law ("Delaware Law"), the
Company has adopted provisions in its Certificate of Incorporation that
eliminate the personal liability of its directors and officers to the Company
and its stockholders for monetary damages for breach of the directors' fiduciary
duties in certain circumstances. The Company's Bylaws require the Company to
indemnify its directors, officers, employees and other agents to the fullest
extent permitted by law. The Company has entered into indemnification agreements
with each of its current directors and executive officers that provide for
indemnification to the fullest extent permitted by Delaware Law, including in
circumstances in which indemnification and the advancement of expenses are
discretionary under Delaware Law. The Company believes that the limitation of
liability provisions in its Certificate of Incorporation and the indemnification
agreements will enhance the Company's ability to continue to attract and retain
qualified individuals to serve as directors and officers. There is no pending
litigation or proceeding involving a director, officer or employee of the
Company to which the indemnification agreements would apply. The Company has
entered into agreements with each of its executive officers providing for
acceleration of their options in the event of termination of employment in
connectionwith a change in control of the Company.
REPORTS UNDER SECTION 16 OF THE SECURITIES EXCHANGE ACT
Section 16 of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers, and persons who own more than
10% of the Company's Common Stock, to file reports of changes in ownership with
the Securities and Exchange Commisssion ("SEC") and the Nasdaq National Market.
Such persons are required by SEC regulations to furnish the Company with copies
of all Section 16 forms they file. Based on its review of copies of such forms
furnished to the Company on written representations of such persons, the Company
believes that all Section 16 filing requirements were met during fiscal 1994 by
such persons.
STOCKHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
Proposals that are intended to be presented by stockholders of the
Company at the 1997 Annual Meeting of Stockholders must be received by the
Company no later than March 14, 1997, in order that they may be included in the
proxy statement and form of proxy relating to that meeting.
OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting. If
any other matters properly come before the meeting, it is the intention of the
persons named in the accompanying form of proxy to vote the shares they
represent as the Board of Directors may recommend.
AVAILABILITY OF FORM 10-K
THE COMPANY WILL MAIL WITHOUT CHARGE TO ANY STOCKHOLDER UPON WRITTEN
REQUEST A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K, INCLUDING THE
FINANCIAL STATEMENTS, SCHEDULES AND A LIST OF EXHIBITS. REQUESTS SHOULD BE SENT
TO INVESTOR RELATIONS, PARCPLACE-DIGITALK, INC., 999 EAST ARQUES AVENUE,
SUNNYVALE, CALIFORNIA 94086.
13
<PAGE> 16
PROXY PARCPLACE-DIGITALK, INC. PROXY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
1996 ANNUAL MEETING OF STOCKHOLDERS
The undersigned stockholder of ParkPlace-Digitalk, Inc. hereby appoints William
P. Lyons and Carolyn V. Aver, each with full authority and each with the power
to appoint a substitute, as Proxies to represent the undersigned at the annual
meeting of stockholders to be held on August 23, 1996, and to vote, as
designated below, all shares of Common Stock held on the record date for the
meeting. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting.
/ / Check here if you plan to attend the meeting.
PLEASE MARK, SIGN AND DATE THIS PROXY CARD ON THE REVERSE SIDE AND RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side.)
<PAGE> 17
PARCPLACE-DIGITALK, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. /X/
1. Election of Directors.
Nominees: James C. Anderson, John B. Carrington, Jos C. Henkens, Phillip
C. Kantz and William P. Lyons. (To withhold authority to vote for any
individual nominee, strike a line through the nominee's name in the list
above.)
FOR WITHHOLD FOR ALL
ALL ALL EXCEPT
(name crossed out)
/ / / / / /
2. Proposal to approve amendments to the 1993 Stock Plan, including an
increase in the number of shares authorized for issuance thereunder.
FOR AGAINST ABSTAIN
/ / / / / /
3. Proposal to approve an amendment to the 1993 Employee Stock Purchase Plan
to increase the number of shares authorized for issuance thereunder.
FOR AGAINST ABSTAIN
/ / / / / /
4. Proposal to confirm the appointment of Ernst & Young as the Company's
independent auditors for the 1997 fiscal year.
FOR AGAINST ABSTAIN
/ / / / / /
Unless a contrary direction is indicated, this proxy will be voted FOR ALL
nominees listed under proposal 1 and FOR Proposals 2, 3 and 4.
/ / Check here for address change and note on label.
Dated: , 1996
----------------
Signature(s)
---------------------------------
----------------------------------------------
Please sign exactly as name appears hereon.
Joint owners should each sign personally.
Executors, trustees, etc. should indicate their
titles when signing.
