<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / 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 240.14a-11(c) or 240.14a-12
BROADVISION, 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 pur-
suant 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:
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<PAGE>
BROADVISION, INC.
333 DISTEL CIRCLE
LOS ALTOS, CA 94022
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 28, 1997
TO THE STOCKHOLDERS OF BROADVISION, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
BROADVISION, INC., a Delaware corporation (the "Company"), will be held on
Monday, May 28, 1997 at 2:00 p.m. local time at the Company's offices at 333
Distel Circle, Los Altos, California 94022 for the following purposes:
1. To elect directors to serve for the ensuing year and until their
successors are elected.
2. To ratify the selection of KPMG Peat Marwick LLP as independent auditors
of the Company for its fiscal year ending December 31, 1997.
3. To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on April 9, 1997, as
the record date for the determination of stockholders entitled to notice of and
to vote at this Annual Meeting and at any adjournment or postponement thereof.
By Order of the Board of Directors
/s/ Pehong Chen
Pehong Chen
CHAIRMAN OF THE BOARD, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
Mountain View, California
April 23, 1997
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF
MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE
GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE
NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER
NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE RECORD
HOLDER A PROXY ISSUED IN YOUR NAME.
<PAGE>
BROADVISION, INC.
333 DISTEL CIRCLE
LOS ALTOS, CA 94022
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of
BroadVision, Inc., a Delaware corporation (the "Company"), for use at the Annual
Meeting of Stockholders to be held on May 28, 1997, at 2:00 p.m. local time (the
"Annual Meeting"), or at any adjournment or postponement thereof, for the
purposes set forth herein and in the accompanying Notice of Annual Meeting. The
Annual Meeting will be held at the Company's offices at 333 Distel Circle, Los
Altos, California 94022. The Company intends to mail this proxy statement and
accompanying proxy card on or about April 25, 1997, to all stockholders entitled
to vote at the Annual Meeting.
SOLICITATION
The Company will bear the entire cost of solicitation of proxies, including
preparation, assembly, printing and mailing of this proxy statement, the proxy
and any additional information furnished to stockholders. Copies of solicitation
materials will be furnished to banks, brokerage houses, fiduciaries and
custodians holding in their names shares of Common Stock beneficially owned by
others to forward to such beneficial owners. The Company may reimburse persons
representing beneficial owners of Common Stock for their costs of forwarding
solicitation materials to such beneficial owners. Original solicitation of
proxies by mail may be supplemented by telephone, telegram or personal
solicitation by directors, officers or other regular employees of the Company.
No additional compensation will be paid to directors, officers or other regular
employees for such services.
VOTING RIGHTS AND OUTSTANDING SHARES
Only holders of record of Common Stock at the close of business on April 9,
1997 will be entitled to notice of and to vote at the Annual Meeting. At the
close of business on April 9, 1997 the Company had outstanding and entitled to
vote 20,225,365 shares of Common Stock.
Each holder of record of Common Stock on such date will be entitled to one
vote for each share held on all matters to be voted upon at the Annual Meeting.
All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Broker non-votes are counted towards a
quorum, but are not counted for any purpose in determining whether a matter has
been approved.
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary of the Company at the Company's principal executive office, 333 Distel
Circle, Los Altos, California 94022, a written notice of revocation or a duly
executed proxy bearing a later date, or it may be revoked by attending the
meeting and voting in person. Attendance at the meeting will not, by itself,
revoke a proxy.
<PAGE>
STOCKHOLDER PROPOSALS
Proposals of stockholders that are intended to be presented at the Company's
1998 Annual Meeting of Stockholders must be received by the Company not later
than January 31, 1998 in order to be included in the proxy statement and proxy
relating to that Annual Meeting.
PROPOSAL 1
ELECTION OF DIRECTORS
There are four nominees for the Board of Directors. Each director to be
elected will hold office until the next annual meeting of stockholders and until
his successor is elected and has qualified, or until such director's earlier
death, resignation or removal. Each nominee listed below is currently a director
of the Company. Dr. Chen was appointed by the Company's sole incorporator, and
each of the other directors was elected by the Board.
Shares represented by executed proxies will be voted, if authority to do so
is not withhold, for the election of the four nominees named below. In the event
that any nominee should be unavailable for election as a result of an unexpected
occurrence, such shares will be voted for the election of such substitute
nominee as management may propose. Each person nominated for election has agreed
to serve if elected and management has no reason to believe that any nominee
will be unable to serve.
Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF EACH NAMED NOMINEE.
NOMINEES
The names of the nominees and certain information about them are set forth
below:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION/
NAME AGE POSITION HELD WITH THE COMPANY
- ------------------------------ --- -------------------------------------------------------
<S> <C> <C>
Pehong Chen................... 39 Chairman of the Board of Directors, President and Chief
Executive Officer
David L. Anderson............. 53 General Partner, Sutter Hill Ventures
Yogen K. Dalal................ 46 General Partner, Mayfield Fund
Koh Boon Hwee................. 46 Executive Chairman, Wuthelam Group of Companies
</TABLE>
PEHONG CHEN has served as Chairman of the Board, President, Chief Executive
Officer and a director of the Company since its incorporation in May 1993. From
1992 to 1993, Dr. Chen served as the Vice President of Multimedia Technology at
Sybase, a supplier of client-server software products. From 1989 to 1992, Dr.
Chen served as President of Gain Technology, a provider of multimedia
applications development systems, which was acquired by Sybase. He received a
B.S. in Computer Science from National Taiwan University, an M.S. in Computer
Science from Indiana University, and a Ph.D. in Computer Science from the
University of California at Berkeley.
DAVID L. ANDERSON has served as a director of the Company since November
1993. Since 1974, Mr. Anderson has been a general partner of Sutter Hill
Ventures, a California Limited Partnership, a venture capital firm. Mr. Anderson
currently serves on the Board of Directors of Cytel Corporation, Dionex
Corporation, Molecular Devices Corporation, and Neurex Corporation. He holds a
B.S. in Electrical Engineering from the Massachusetts Institute of Technology
and an M.B.A. from Harvard University.
2
<PAGE>
YOGEN K. DALAL has served as a director of the Company since November 1993.
He joined Mayfield Fund ("Mayfield"), a venture capital firm, in September 1991
and has been a general partner of several venture capital funds affiliated with
Mayfield since November 1992. Dr. Dalal holds a B.S. in Electrical Engineering
from the India Institute of Technology, Bombay, and a M.S. and a Ph.D. in
Electrical Engineering and Computer Science from Stanford University.
KOH BOON HWEE has served as a director of the Company since February 1996.
Since 1991, Mr. Koh has been Executive Chairman of the Wuthelam Group of
Companies, a diversified Singapore company with subsidiaries engaged in, among
other things, real estate development, hotel management, and high technology.
Since 1992, he has also served as Chairman of the Board of Singapore
Telecommunications, Ltd. Mr. Koh holds a B.S. in Mechanical Engineering from the
University of London and an M.B.A. from Harvard University.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF EACH NAMED NOMINEE.
BOARD COMMITTEES AND MEETINGS
During the fiscal year ended December 31, 1996 the Board of Directors held
eight meetings. The Board has an Audit Committee and a Compensation Committee.
The Audit Committee meets with the Company's independent auditors at least
annually to review the results of the annual audit and discuss the financial
statements; recommends to the Board the independent auditors to be retained; and
receives and considers the accountants' comments as to controls, adequacy of
staff and management performance and procedures in connection with audit and
financial controls. The Audit Committee is composed of two non-employee
directors: Mr. Anderson and Gregory Smitherman. Mr. Smitherman is not standing
for reelection. The Audit Committee met two times during such fiscal year.
The Compensation Committee makes recommendations concerning salaries and
incentive compensation, awards stock options to employees and consultants under
the Company's stock option plans and otherwise determines compensation levels
and performs such other functions regarding compensation as the Board may
delegate. The Compensation Committee is composed of three non-employee
directors: Messrs. Anderson, Dalal and Koh. It met 12 times during such fiscal
year.
During the fiscal year ended December 31, 1996, each Board member attended
75% or more of the aggregate of the meetings of the Board and of the committees
on which he served, held during the period for which he was a director or
committee member, respectively.
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected KPMG Peat Marwick LLP as the Company's
independent auditors for the fiscal year ending December 31, 1997 and has
further directed that management submit the selection of independent auditors
for ratification by the stockholders at the Annual Meeting. KPMG Peat Marwick
LLP was retained by the Company in December 1995 and has audited the Company's
financial statements since its inception in 1993. Representatives of KPMG Peat
Marwick LLP are expected to be present at the Annual Meeting, will have an
opportunity to make a statement if they so desire and will be available to
respond to appropriate questions.
Stockholder ratification of the selection of KPMG Peat Marwick LLP as the
Company's independent auditors is not required by the Company's By-laws or
otherwise. However, the Board is submitting the selection of KPMG Peat Marwick
LLP to the stockholders for ratification as a matter of good corporate practice.
If the stockholders fail to ratify the selection, the Audit Committee and the
Board will reconsider
3
<PAGE>
whether or not to retain that firm. Even if the selection is ratified, the Audit
Committee and the Board in their discretion may direct the appointment of
different independent auditors at any time during the year if they determine
that such a change would be in the best interests of the Company and its
stockholders.
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote at the Annual Meeting will
be required to ratify the selection of KPMG Peat Marwick LLP.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2.
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership
of the Company's Common Stock as of February 28, 1997 by: (i) each director and
nominee for director; (ii) each of the executive officers named in the Summary
Compensation Table employed by the Company in that capacity on February 28,
1997; (iii) all executive officers and directors of the Company as a group; and
(iv) all those known by the Company to be beneficial owners of more than five
percent of its Common Stock.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP(1)
---------------------------
NUMBER OF PERCENT OF
BENEFICIAL OWNER SHARES TOTAL
- ------------------------------------------------------------------------------ ------------ -------------
<S> <C> <C>
Pehong Chen(2)................................................................ 6,170,000 30.8
c/o BroadVision, Inc.
333 Distel Circle
Los Altos, CA 94022
Mayfield VII(3)............................................................... 2,500,000 12.5
2800 Sand Hill Road
Menlo Park, CA 94025
Sutter Hill Ventures, a California Limited Partnership(4)..................... 2,441,263 12.2
755 Page Mill Road
Suite A-200
Palo Alto, CA 94304
Itochu Corporation(5)......................................................... 1,550,000 7.7
5-1, Kita-Aoyama, 2-Chome
Minao-ku, Tokyo 107-77
Japan
David L. Anderson(4).......................................................... 2,441,263 12.2
Yogen K. Dalal(3)............................................................. 2,502,500 12.5
Robert A. Runge(6)............................................................ 277,000 1.4
Clark W. Catelain............................................................. 200,000 *
Koh Boon Hwee(7).............................................................. 193,541 *
Randall C. Bolten(8).......................................................... 161,990 *
All Directors and Executive Officers as a group (7 persons)(9)................ 11,946,294 59.7
</TABLE>
- ------------------------
* Less than one percent
(1) This table is based upon information supplied by officers, directors and
principal stockholders and Schedules 13D and 13G filed with the Securities
and Exchange Commission (the "SEC"). Unless
4
<PAGE>
otherwise indicated in the footnotes to this table and subject to community
property laws where applicable, the Company believes that each of the
stockholders named in this table has sole voting and investment power with
respect to the shares indicated as beneficially owned. Applicable
percentages are based on 20,004,798 shares outstanding on February 28, 1997,
adjusted as required by rules promulgated by the SEC.
(2) Includes 300,000 shares of Common Stock held in trust by independent
trustees for the benefit of Dr. Chen's children. Dr. Chen disclaims
beneficial ownership of such shares. Also includes 500,000 shares of Common
Stock issuable upon the exercise of a stock option exercisable within 60
days of February 28, 1997, subject to repurchase of unvested shares.
(3) Includes 2,385,000 shares held by Mayfield VII and 115,000 shares held by
Mayfield Associates Fund II. Mr. Dalal, a director of the Company, is a
general partner of the general partner of Mayfield VII and Mayfield
Associates Fund II, and therefore may be deemed to beneficially own the
shares currently owned by such entities. Mr. Dalal disclaims beneficial
ownership of the shares held by such entities, except to the extent of his
pecuniary interest therein.
(4) Includes 1,547,722 shares of Common Stock owned by Sutter Hill Ventures, a
California Limited Partnership ("Sutter Hill"), over which Mr. Anderson, a
director of the Company, shares voting and investing power with four other
general partners of Sutter Hill Management Company, L.P., the general
partner of Sutter Hill. Includes 893,541 shares of Common Stock held of
record by the five general partners of Sutter Hill Management Company, L.P.
and their related family entities. Mr. Anderson disclaims beneficial
ownership of the shares of Common Stock held by the other persons and
entities associated with Sutter Hill, except to the extent of his pecuniary
interest therein.
(5) Includes 925,000 shares of Common Stock held by Itochu Corporation, 500,000
shares of Common Stock held by Itochu International, Inc. and 125,000 shares
of Common Stock held by Itochu Techno-Science Corporation.
(6) Includes 175,000 issuable upon the exercise of stock options exercisable
within 60 days of February 28, 1997, subject to repurchase of unvested
shares.
(7) Includes 64,433 shares of Common Stock held by Seven Seas Group Ltd., in
which Mr. Koh holds a controlling interest, and 50,000 shares of Common
Stock issuable upon the exercise of a stock option exercisable within 60
days of February 28, 1997, subject to repurchase of unvested shares.
(8) Includes 40,000 shares of Common Stock held in trust by Mr. Bolten and his
wife for their benefit.
(9) Includes the information contained in the notes above, as applicable.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "1934 Act")
requires the Company's directors and executive officers, and persons who own
more than 10% of a registered class of the Company's equity securities, to file
with the SEC initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Officers, directors and
greater than 10% stockholders are required by SEC regulation to furnish the
Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1996, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than 10% beneficial owners were complied with; except that 10 reports,
covering an aggregate of 12 transactions, were filed late by Mayfield Fund and
affiliated persons, Dr. Chen and Mr. Dalal, and an initial report of ownership
was filed late by Mayfield Fund and affiliated persons and Mr. Dalal.
5
<PAGE>
EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
Directors currently do not receive any cash compensation from the Company
for their services as members of the Board of Directors, although they are
reimbursed for certain expenses in connection with attendance at Board and
Committee meetings.
In February 1996, Dr. Chen was granted an option to purchase up to 500,000
shares of Series D Preferred Stock of the Company at an exercise price of $4.00
per share, which option was converted into an option to purchase Common Stock
upon completion of the Company's initial public offering. The shares subject to
Dr. Chen's option vest ratably on a monthly basis over a 60-month period
commencing April 1, 1995. In February 1996, Mr. Koh was granted an option to
purchase 50,000 shares of the Company's Common Stock at an exercise price of
$0.80 per share. The shares subject to Mr. Koh's option vest over a 60-month
period, commencing on February 1, 1996, with 20% of such shares vesting after
one year, and 1/60 of the shares vesting each month thereafter for the next 48
months.
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY OF COMPENSATION
The following table shows, for the fiscal years ended December 31, 1995 and
1996, compensation awarded or paid to, or earned by, the Company's Chief
Executive Officer and its four other most highly compensated executive officers
at December 31, 1996 whose salary and bonus for the year ended December 31, 1996
exceeded $100,000 (the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL -----------
COMPENSATION(1) SECURITIES
---------------------- UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#)
- ----------------------------------------------- --------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Pehong Chen(2) ................................ 1996 161,115 8,000 500,000
Chairman of the Board, President and 1995 120,000 -- --
Chief Executive Officer
Randall C. Bolten ............................. 1996 128,129 19,225 --
Vice President, Finance and 1995 39,825 6,600 160,000
Chief Financial Officer
Robert A. Runge ............................... 1996 119,350 24,400 60,000
Vice President, Marketing 1995 36,906 4,950 215,000
Clark W. Catelain ............................. 1996 144,070 13,800 --
Vice President, Engineering 1995 76,442 5,980 200,000
</TABLE>
- ------------------------
(1) Includes amounts earned but deferred at the election of the Named Executive
Officers under the Company's 401(k) plan.
(2) Represents amount earned but deferred at the election of Dr. Chen from May
1995 through December 1995. Prior to April 1995, Dr. Chen was not paid a
salary for his services to the Company.
6
<PAGE>
STOCK OPTION GRANTS AND EXERCISES
The Company grants options to its executive officers under its 1996 Equity
Incentive Plan (the "1996 Plan"). As of February 28, 1997, options to purchase a
total of 3,127,000 shares were outstanding under the 1996 Plan and options to
purchase 1,873,000 shares remained available for grant thereunder.
The following tables show for the fiscal year ended December 31, 1996,
certain information regarding options granted to, exercised by, and held at year
end by, the Named Executive Officers:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------------------
PERCENT OF POTENTIAL REALIZABLE VALUE AT
NUMBER OF TOTAL OPTIONS DEEMED ASSUMED ANNUAL RATES OF STOCK
SECURITIES GRANTED TO EXERCISE VALUE FOR PRICE APPRECIATION FOR
UNDERLYING EMPLOYEES IN PRICE PER DATE OF OPTION TERM(4)
OPTIONS FISCAL SHARE GRANT EXPIRATION -------------------------------
NAME GRANTED(#) YEAR(%)(1) ($/SH)(2) ($)(3) DATE 0%($) 5%($) 10%($)
- ------------------------ ----------- ------------- ----------- ----------- ----------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Pehong Chen(5).......... 500,000 19.4 4.00 -- 2/27/06 -- 814,445 1,296,870
Robert A. Runge(6)...... 60,000 2.3 0.80 $ 2.30 2/27/06 90,000 176,787 309,936
</TABLE>
- ------------------------
(1) Based on options to purchase 2,576,000 shares granted in 1996.
(2) The exercise price per share of each option was equal to the fair market
value of the Common Stock on the date of grant as determined by the Board of
Directors.
(3) The deemed value for the date of grant was determined after the date of
grant solely for financial accounting purposes.
(4) The potential realizable value is based on the term of the option at its
time of grant (10 years). It is calculated by assuming that the stock price
on the date of grant appreciates at the indicated annual rate, compounded
annually for the entire term of the option and that the option is exercised
and sold on the last day of its term for the appreciated stock. The 0%, 5%
and 10% columns represent assumed rates of appreciation only, in accordance
with the rules of the SEC, and do not reflect the Company's estimate or
projection of future stock price performance. Actual gains, if any, are
dependent on the actual future performance of the Company's Common Stock and
no gain to the optionee is possible unless the stock price increases over
the option term, which will benefit all stockholders.
(5) The option, which was for the purchase of Series D Preferred Stock,
converted into an option to purchase Common Stock of the Company upon the
completion of the Company's initial public offering. The option, which was
granted outside the Company's Equity Incentive Plan, has a term of 10 years,
subject to earlier termination in certain events related to termination of
employment, is immediately exercisable and vests ratably on a monthly basis
over a 60-month period.
(6) The option, which was granted under the Company's Stock Option Plan (which
was later amended and restated as the Equity Incentive Plan) has a term of
10 years, subject to earlier termination in certain events related to
termination of employment, is immediately exercisable and vests over a
60-month period, with 20% of the shares vesting after one year, and 1/60 of
the shares vesting each month thereafter.
7
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES OF UNEXERCISED OPTIONS
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FY-END(#)(2) AT FY-END($)(3)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------ ----------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Pehong Chen............. -- -- 175,000 325,000 678,125 1,259,375
Randall C. Bolten(4).... 160,000 512,000 -- -- -- --
Robert A. Runge(4)...... 100,000 218,000 -- 175,000 -- 1,316,325
</TABLE>
- ------------------------
(1) Value realized is based on the per share deemed values of the Company's
Common Stock on the date of exercise, determined after the date of grant
solely for financial accounting purposes, minus the exercise price, without
taking into account any taxes that may be payable in connection the
transaction.
(2) Reflects vested and unvested shares at December 31, 1996. Dr. Chen's option
and options granted under the Company's Equity Incentive Plan are
immediately exercisable, but are subject to the Company's right to
repurchase unvested shares on termination of employment.
(3) Fair market value of the Company's Common Stock at December 31, 1996
($7.875) minus the exercise price of the options.
(4) Reflects shares acquired upon the early exercise of stock options, some of
which are subject to a right of repurchase by the Company.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION(1)
The Compensation Committee of the Board of Directors (the "Committee") is
composed of the non-employee directors identified at the end of this report.
None of these non-employee directors has any interlocking or other type of
relationship that would call into question his independence as a committee
member. The Committee is responsible for setting and administering the policies
which govern annual performance, and determines the compensation of the Chief
Executive Officer ("CEO") and other executive officers of the Company.
COMPENSATION PHILOSOPHY
The objectives of the Company's executive compensation policies are to
attract, retain and reward executive officers who contribute to the Company's
success, to align the financial interests of executive officers with the
performance of the Company, to ensure a direct relationship between executive
pay and stockholder value, to motivate executive officers to achieve the
Company's business objectives and to reward individual performance. During 1996,
the Company used base salary, annual incentives and long-term incentives under
the 1996 Plan to achieve these objectives. In carrying out these objectives, the
Committee considers the following:
- THE LEVEL OF COMPENSATION PAID TO EXECUTIVE OFFICERS IN POSITIONS OF
COMPANIES SIMILARLY SITUATED IN SIZE AND PRODUCTS. To ensure that pay is
competitive, the Committee, from time to time, compares the Company's
executive compensation packages with those offered by other companies in
the same or
- ------------------------
(1) The material in this report and under the caption "Performance Measurement
Comparison" are not "soliciting material," are not deemed filed with the SEC
and are not to be incorporated by reference in any filing of the Company
under the Securities Act of 1933, as amended, or the Exchange Act whether
made before or after the date of this Proxy Statement and irrespective of
any general incorporation language therein.
8
<PAGE>
similar industries or with other similar attributes. Compensation surveys
used by the Company typically include public and private companies
comparable in size, products or industry to the Company.
- THE INDIVIDUAL PERFORMANCE OF EACH EXECUTIVE OFFICER. Individual
performance includes meeting individual performance objectives,
demonstration of job knowledge, skills, teamwork and acceptance of the
Company's core values.
- CORPORATE PERFORMANCE. Corporate performance is evaluated by factors such
as performance relative to competitors, performance relative to business
conditions and progress in meeting the Company's objectives and goals as
typically reflected in the annual operating plan.
- THE RESPONSIBILITY AND AUTHORITY OF EACH POSITION RELATIVE TO OTHER
POSITIONS WITHIN THE COMPANY.
The Committee does not quantitatively weigh these factors but considers all of
these factors as a whole in establishing executive compensation. The application
given each of these factors in establishing the components of executive
compensation follows.
BASE SALARY
Base salaries are established for each executive officer at levels that are
intended to be competitive with salaries for comparable positions at other
software and computer industry companies of similar size and products. The
Company seeks to pay salaries to executive officers that are commensurate with
their qualifications, duties and responsibilities and that are competitive in
the marketplace. In conducting periodic compensation reviews, the Committee
considers each individual executive officer's achievements in meeting Company
financial and business objectives during the prior fiscal year, as well as the
executive officer's performance of individual responsibilities and the Company's
financial position and overall performance. The Committee periodically considers
the low, midpoint and upper ranges of base salaries published by compensation
surveys in establishing base salaries of each executive officer.
ANNUAL INCENTIVE
Annual bonus incentives for executives are intended to reflect the Company's
belief that management's contribution to stockholder returns comes from
achieving operating results that maximize the Company's earnings and cash flow
over a multi-year time horizon. The Company believes that the achievement of its
performance objectives depends on (i) its ability to deliver outstanding
products and services to its customers, (ii) its success in establishing and
maintaining a position of strength in its chosen markets and (iii) its short-
and long-term profitability, as well as the quality of that profitability. For
purposes of annual incentive compensation, progress toward these performance
objectives is measured against the results anticipated in the Company's annual
operating plan, which is approved by the Board of Directors.
The 1996 incentive compensation for executive officers other than the Chief
Executive Officer was based in part on the achievement of total Company results
consistent with the Company's 1996 operating plan, as well as achievement of
other objectives in the 1996 operating plan specific to such officers'
individual areas of management responsibility.
The Company believes that this incentive compensation structure closely
links the incentives paid to its executives with the results necessary to create
long-term value for stockholders.
LONG-TERM INCENTIVE
The Compensation Committee also endorses the position that stock ownership
by management is beneficial in aligning management and stockholder interests in
enhancing stockholder value. In that regard, stock options also are used to
retain executives and motivate results to improve long-term stock
9
<PAGE>
market performance. Stock options are granted at the prevailing market value and
will have value only if the Company's stock price increases. As part of its
periodic review of compensation, the Compensation Committee reviews the stock
option holdings of the Company's officers and senior executives, and recommends
additional stock option grants as appropriate.
The Compensation Committee determines the number of options to be granted to
executive management based on (i) competitive practice within the comparison
group used in determining base salary, (ii) historical performance of the
executive and (iii) the amount of prior grants held by the executives, as well
as the number of vested versus unvested options. When using comparative data,
the Company targets its option grants in the mid to high range of comparable
companies.
Section 162(m) of the Code limits the Company to a deduction for federal
income tax purposes of no more than $1.0 million of compensation paid to certain
Named Executive Officers in a taxable year. Compensation above $1.0 million may
be deducted if it is "performance-based compensation" within the meaning of the
Code. Stock options granted under the Company's 1996 Equity Incentive Plan with
an exercise price at least equal to the fair market value of the Company's
common stock on the date of grant are considered to be "performance-based
compensation."
CEO COMPENSATION
During the fiscal year ended December 31, 1996, Dr. Chen served as Chairman,
President and Chief Executive Officer throughout the year, and he continues to
hold such offices.
Dr. Chen's base salary, annual incentives and long-term incentives were
determined in accordance with the criteria described in the "Base Salary,"
"Annual Incentive" and "Long-Term Incentive" sections of this report. Dr. Chen's
base salary in 1996 was $161,115. See "Summary Compensation Table." This amount,
together with a potential annual incentive tied to the achievement of 1996
revenue and net income targets, was estimated to provide an annual cash
compensation level which would be competitive with the mid to high range of
compensation paid by comparable software companies. Based on Dr. Chen's and the
Company's operating performance in 1996, Dr. Chen earned an incentive bonus of
$8,000. In addition, in recognition of Dr. Chen's leadership and outstanding
performance in building the Company's business and as an incentive for his
continued commitment to the Company, the Board of Directors granted Dr. Chen a
special option to purchase 500,000 shares of the Company's Series D Preferred
Stock at a price of $4.00 per share, which option converted into an option to
purchase shares of the Company's Common Stock upon the completion of the
Company's initial public offering.
CONCLUSION
Through the plans described above, a significant portion of the Company's
executive compensation programs and Dr. Chen's compensation are contingent on
Company performance and realization of benefits closely linked to increases in
long-term stockholder value. The Company remains committed to this philosophy of
pay for performance, recognizing that the competitive market for talented
executives and the volatility of the Company's business may result in highly
variable compensation for a particular time period.
COMPENSATION COMMITTEE
David L. Anderson
Yogen K. Dalal
Koh Boon Hwee
10
<PAGE>
PERFORMANCE MEASUREMENT COMPARISON
The following graph shows the total stockholder return of an investment of
$100 in cash on December 31, 1996 for (i) the Company's Common Stock, (ii)
Nasdaq Index and (iii) the Hambrecht & Quist Internet Index (the "H&Q Internet
Index"). All values assume reinvestment of the full amount of all dividends and
are calculated as of December 31 of each year:
<TABLE>
<CAPTION>
H&Q
INTERNET
BROADVISION NASDAQ INDEX
----------- ----------- -------------
<S> <C> <C> <C>
6/21/96........................... 100.00 100.00 100.00
6/30/96........................... 98.25 100.82 100.14
7/31/96........................... 77.19 91.93 81.89
8/31/96........................... 78.95 97.11 88.08
9/30/96........................... 110.53 104.38 97.38
10/31/96.......................... 105.26 103.92 86.94
11/30/96.......................... 96.49 109.97 92.36
12/31/96.......................... 110.53 109.83 88.56
</TABLE>
CERTAIN TRANSACTIONS
In April 1996, Seven Seas Group Ltd., in which Mr. Koh holds a controlling
interest, purchased 62,500 shares of the Company's Series E Preferred Stock at a
price of $8.00 per share in a private financing. The Series E Preferred Stock
converted into 64,433 shares of Common Stock upon completion of the Company's
initial public offering.
In February 1996, Dr. Chen was granted an option to purchase 500,000 shares
of Series D Preferred Stock of the Company at an exercise price of $4.00 per
share. The shares subject to Dr. Chen's option vest ratably on a monthly basis
over a 60-month period commencing April 1, 1995. The option converted into an
option to purchase Common Stock upon completion of the Company's initial public
offering.
The Company has entered into indemnity agreements with certain officers and
directors of the Company which provide, among other things, that the Company
will indemnify such officer or director, under the circumstances and to the
extent provided for therein, for expenses, judgments, fines and settlements that
he may be required to pay in actions or proceedings which he is or may be made a
party by reason of his position as a director, officer or other agent of the
Company, and otherwise to the fullest extent permitted under Delaware law and
the Company's By-laws.
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters are properly brought
before the meeting, it is the intention of the persons named in the accompanying
proxy to vote on such matters in accordance with their best judgment.
By Order of the Board of Directors
/s/ Pehong Chen
Pehong Chen
CHAIRMAN OF THE BOARD, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
April 23, 1997
11
<PAGE>
BROADVISION, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 28, 1997
The undersigned hereby appoints Pehong Chen and Randall C. Bolten, and
each of them, as attorneys and proxies of the undersigned, with full power of
substitution, to vote all of the shares of stock of BroadVision, Inc. which
the undersigned may be entitled to vote at the Annual Meeting of Stockholders
of BroadVision, Inc. to be held at the company's offices at 333 Distel
Circle, Los Altos, California 94022 on Wednesday, May 28, 1997 at 2:00 p.m.,
local time, and at any and all postponements, continuations and adjournments
thereof, with all powers that the undersigned would possess if personally
present, upon and in respect of the following matters and in accordance with
the following instructions, with discretionary authority as to any and all
other matters that may properly come before the meeting.
(CONTINUED ON OTHER SIDE)
<PAGE>
/ X / PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
MANAGEMENT RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTOR LISTED BELOW.
PROPOSAL 1:
To elect directors, to hold office until the next Annual Meeting of
Stockholders and until their successors are elected.
FOR all nominees listed (except as marked to the contrary below). / /
TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE(S), WRITE SUCH NOMINEE(S)'
NAME(S) BELOW:
WITHHOLD AUTHORITY
to vote for all nominees listed below. / /
NOMINEES: Pehong Chen, David L. Anderson, Yogen Dalal, Koh Boon Hwee
PROPOSAL 2:
To ratify selection of KPMG Peat Marwick LLP as independent auditors of the
Company for its fiscal year ending December 31, 1997. To withhold authority
to vote for any nominee(s), write such nominee(s), name(s) below:
FOR AGAINST ABSTAIN
/ / / / / /
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR ALL
NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSAL 2, AS MORE SPECIFICALLY
DESCRIBED IN THE PROXY STATEMENT. IF SPECIFIC INSTRUCTIONS ARE INDICATED,
THIS PROXY WILL BE VOTED IN ACCORDANCE THEREWITH.
PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED RETURN
ENVELOPE WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES.
SIGNATURE(S) _____________________________________
_____________________________________ DATED _________, 1997
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. IF THE STOCK IS REGISTERED IN THE
NAMES OF TWO OR MORE PERSONS, EACH SHOULD SIGN. EXECUTORS, ADMINISTRATORS,
TRUSTEES, GUARDIANS AND ATTORNEYS-IN-FACT SHOULD ADD THEIR TITLES. IF SIGNER
IS A CORPORATION, PLEASE GIVE FULL CORPORATE NAME AND HAVE A DULY AUTHORIZED
OFFICER SIGN, STATING TITLE. IF SIGNER IS A PARTNERSHIP, PLEASE SIGN IN
PARTNERSHIP NAME BY AUTHORIZED PERSON.
