<PAGE> 1
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:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
GEOWORKS CORPORATION
- --------------------------------------------------------------------------------
(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)(I) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
GEOWORKS CORPORATION
960 ATLANTIC AVENUE
ALAMEDA, CALIFORNIA 94501
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 14, 1999
To Our Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Annual
Meeting") of Geoworks Corporation, a Delaware Corporation (the "Company"), will
be held on Tuesday, September 14, 1999 at 11:00 a.m. local time at the Company's
principal executive offices, located at 960 Atlantic Avenue, Alameda,
California, for the following purposes:
1. To elect directors to serve until the next Annual Meeting of
Stockholders and until their successors are elected.
2. To ratify the appointment of Ernst & Young L.L.P. as independent
auditors of the Company for the fiscal year ended March 31, 2000.
3. To transact such other business as may properly come before the Annual
Meeting or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on July 21, 1999 are
entitled to notice of and to vote at the Annual Meeting or any adjournment or
postponement thereof.
All stockholders are cordially invited to attend the Annual Meeting in
person. However to ensure your representation at the Annual Meeting, you are
urged to mark, sign, date and return the enclosed proxy card as promptly as
possible in the postage-prepaid envelope enclosed for that purpose. Any
stockholder attending the Annual Meeting may vote in person even if such
stockholder has returned a proxy.
BY ORDER OF THE BOARD OF DIRECTORS
/s/
STEPHEN T. BAKER
Secretary
Alameda, California
August 4, 1999
<PAGE> 3
GEOWORKS CORPORATION
960 ATLANTIC AVENUE
ALAMEDA, CALIFORNIA 94501
------------------------
PROXY STATEMENT
------------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of the Board of Directors of
Geoworks Corporation, a Delaware corporation ("Geoworks" or the "Company"), for
use at the Annual Meeting of Stockholders (the "Annual Meeting") to be held on
Tuesday, September 14, 1999 at 11:00 a.m., local time, or at any adjournment or
postponement thereof, for the purposes set forth herein and in the accompanying
Notice of Annual Meeting of Stockholders. The Annual Meeting will be held at the
Company's principal executive offices, located at 960 Atlantic Avenue, Alameda,
California 94501. The telephone number at that location is (510) 814-1660. Only
holders of record of the Company's Common Stock at the close of business on July
21, 1999 (the "Record Date") will be entitled to vote at the Annual Meeting. At
the close of business on July 21, 1999, the Company had 17,669,292 shares of
Common Stock outstanding and entitled to vote. A majority of the shares
outstanding on the Record Date will constitute a quorum for the transaction of
business. All proxies will be voted in accordance with the instructions
contained therein and, if no choice is specified, the proxies will be voted in
favor of the proposals set forth in the accompanying Notice of Annual Meeting of
Stockholders and this Proxy Statement.
These proxy solicitation materials and the Company's Annual Report to
Stockholders for the year ended March 31, 1999, including financial statements,
were first mailed on or about August 10, 1999 to all stockholders entitled to
vote at the Annual Meeting.
REVOCABILITY OF PROXIES
Any person signing a proxy in the form accompanying this Proxy Statement
has the power to revoke it prior to the Annual Meeting or at the Annual Meeting
prior to the vote pursuant to the proxy. A proxy may be revoked (i) by a writing
delivered to the Company (Attention: Stephen T. Baker, Secretary) stating that
the proxy is revoked, (ii) by a subsequent proxy that is signed by the person
who signed the earlier proxy and is presented at the Annual Meeting or (iii) by
attendance at the Annual Meeting and voting in person. Please note, however,
that if a stockholder's shares are held of record by a broker, bank or other
nominee and that stockholder wishes to vote at the Annual Meeting, the
stockholder must bring to the Annual Meeting a letter from the broker, bank or
other nominee confirming that stockholder's beneficial ownership of the shares.
VOTING RIGHTS
Holders of the Company's Common Stock are entitled to one vote for each
share held as of the above Record Date. Shares of Common Stock may not be voted
cumulatively.
Directors will be elected by a plurality of the votes of the shares of
Common Stock present in person or represented by proxy at the Annual Meeting and
entitled to vote on the election of directors. Approval of Proposal No. 2
requires the affirmative vote of the majority of shares of Common Stock present
in person or represented by proxy at the Annual Meeting entitled to vote. All
votes will be tabulated by the Inspector of Election appointed for the Annual
Meeting who will tabulate affirmative and negative votes, abstentions and broker
non-votes. Abstentions will be counted toward a quorum and have the same effect
as negative votes with regard to the proposal. Broker non-votes will also be
counted toward a quorum but will not be counted for any purpose in determining
whether the proposal has been approved.
<PAGE> 4
SOLICITATION OF PROXIES
The Company will bear the cost of soliciting the enclosed proxies. In
addition, the Company may reimburse brokerage firms and other persons
representing beneficial owners of shares for their expenses in forwarding
solicitation material to such beneficial owners. Solicitation of proxies by mail
may be supplemented by telephone, telegram, facsimile, electronic means or
personal solicitation by directors, officers or regular employees of the
Company. No additional compensation will be paid to such persons for such
activities. In addition, the Company has hired and will pay the fees of a proxy
solicitor estimated to be approximately $6,000.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Proposals of Stockholders of the Company which are intended to be presented
by such stockholders at the Company's 2000 Annual Meeting must be received by
the Company no later than April 6, 2000 in order that they could be included in
the proxy statement and form of proxy relating to that meeting. Stockholders
wishing to bring a proposal before the 2000 Annual Meeting (but not include it
in the Company's proxy material) must provide written notice of such proposal by
July 14, 2000.
PROPOSAL 1 -- ELECTION OF DIRECTORS
DIRECTORS/NOMINEES
The Board of Directors will be comprised of five (5) directors as allowed
by the Company's Bylaws. Unless otherwise instructed, the proxy holders will
vote the proxies received by them for the five (5) nominees named below, all of
whom are currently directors of the Company. In the event that any nominee of
the Company is unable or declines to serve as a director at the time of the
Annual Meeting, the proxies will be voted for any substitute nominee who shall
be designated by the current Board of Directors to fill the vacancy. It is not
expected that any nominee listed below 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 or until his successor has been elected
and qualified.
The names of the nominees, and certain information about them are set forth
below.
<TABLE>
<CAPTION>
DIRECTOR
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION SINCE
--------------- --- -------------------- --------
<S> <C> <C> <C>
John B. Balousek............... 54 Founder, Executive Vice President of Photo Alley 1998
Bernard A. Bianchino........... 50 Chief Business Development Officer of Sprint 1998
Spectrum L.P.
David L. Grannan............... 35 Chief Executive Officer, President of the Company 1999
Gordon E. Mayer................ 41 Chairman of the Board of the Company 1993
Eric E. Schmidt................ 44 Chairman and Chief Executive Officer of Novell, 1993
Inc.
</TABLE>
There are no family relationships between any directors or executive
officers of the Company.
MR. BALOUSEK joined the Company's Board of Directors in December 1998. Mr.
Balousek is currently Executive Vice President and a founder of Photo Alley, a
San Francisco-based start-up company providing electronic commerce services. In
1996, Mr. Balousek was named Chairman and Chief Executive Officer of True North
Technologies, the digital and interactive services company of Foote Cone &
Belding Communication (FCB) parent company, True North Communications. Mr.
Balousek joined the San Francisco office of FCB, one of the nation's leading
advertising agencies in 1979 and was named General Manger of the office in 1986.
Mr. Balousek was named President of FCB West and a Director of the firm in 1989,
and was named President and Chief Operating Officer of the $5 billion agency in
1991. Prior to joining FCB, Mr. Balousek was in brand management at Procter &
Gamble. Mr. Balousek serves as a Director of Transilluminant, a privately held
company. Mr. Balousek holds a B.A. from Creighton University and a master's
degree from Northwestern University.
2
<PAGE> 5
MR. BIANCHINO joined the Company's Board of Directors in July 1998. Since
September 1995, Mr. Bianchino has been Chief Business Development Officer of
Sprint Spectrum L.P., a wireless PCS company. Prior to that, he was Executive
Vice President, General Counsel and Internal Affairs, of Qwest Corporation from
August 1994 to September 1995. Prior to that, he was Vice President,
Law -- General Business for Sprint Corporation and U.S. Sprint from December
1986 to August 1994. Mr. Bianchino holds a B.A. in American citizenship and a
J.D. from Washburn University.
MR. GRANNAN joined the Company in March 1998 as Vice President, Marketing.
The Board of Directors appointed Mr. Grannan as President and Chief Executive
Officer in January 1999. Prior to joining the Company, Mr. Grannan was an Area
Vice President at Sprint PCS from June 1997 to March 1998. Prior to his position
at Sprint PCS, Mr. Grannan worked at Andersen Consulting in the Strategic
Services Communications Industry Group from May 1994 to June 1997, where he
provided strategic services for many organizations. Mr. Grannan began his career
as a Data Communications Officer in the United States Marine Corps (USMC). Mr.
Grannan holds a B.A. from Indiana University and an M.B.A. from the University
of California at Berkeley.
MR. MAYER became Chairman of the Board of Directors of the Company in May
1997. Mr. Mayer served as President from July 1993 to January 1998, and as Chief
Executive Officer from March 1994 to June 1998. Prior to joining Geoworks, he
was an "Entrepreneur in Residence" with Merrill, Pickard, Anderson & Eyre, a
venture capital and investment management firm that manages private investment
funds. From July 1991 to June 1992, Mr. Mayer was President and Chief Executive
Officer of InfoChip, Inc., a developer of data compression hardware and
software. From February 1988 to July 1991, he was Vice President, Sales and
Marketing for Proxim, Inc., a supplier of OEM wireless data communications
products. Mr. Mayer attended Purdue University, where he earned a B.S. and M.S.
in Electrical Engineering.
DR. SCHMIDT joined the Company's Board of Directors in January 1993. Since
March 1997, Dr. Schmidt has been the Chairman and Chief Executive Officer of
Novell, Inc. Prior to that, Dr. Schmidt was the Chief Technology Officer of Sun
Microsystems, Inc., where he had been employed since 1983. Dr. Schmidt holds a
B.S. in Electrical Engineering from Princeton University and a Ph.D. in
Electrical Engineering from the University of California at Berkeley. He is also
a director of Siebel Systems, Inc.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of seven (7) meetings
during the fiscal year ended March 31, 1999. No director attended fewer than 75%
of the meetings of the Board of Directors and its committees upon which such
director served. The Board of Directors has an Audit Committee and a
Compensation Committee. The Board of Directors has no nominating committee or
any committee performing similar functions.
At the fiscal year ended March 31, 1999, the Audit Committee of the Board
of Directors consisted of Mr. Mayer and Mr. Balousek. The Audit Committee held
three (3) meetings during fiscal 1999. The Audit Committee recommends engagement
of the Company's independent auditors, and is primarily responsible for
approving the services performed by the Company's independent auditors and for
reviewing and evaluating the Company's accounting principles and its system of
internal accounting controls.
At the fiscal year ended March 31, 1999, the Compensation Committee of the
Board of Directors consisted of Mr. Bianchino and Mr. Brian P. Dougherty. (Mr.
Dougherty resigned as a director at the end of July 1999 to focus on other
interests, including his position as Chairman and Chief Technology Officer of
Wink Communications, Inc.). The Compensation Committee held twelve (12) meetings
during fiscal 1999. The Compensation Committee reviews and approves the
Company's executive compensation policy, including the salaries and bonuses of
the Company's executive officers, and administers the Company's incentive stock
plans.
3
<PAGE> 6
DIRECTOR COMPENSATION
The Company does not compensate its directors for services as such, except
pursuant to the discretionary grant provisions of its 1994 Stock Plan. During
fiscal 1999, pursuant to such provisions, Dr. Schmidt was granted an option to
purchase 21,875 shares in July 1998; Messrs. Dougherty and Bianchino were each
granted an option to purchase 50,000 shares in July 1998; and Mr. Balousek was
granted an option to purchase 50,000 shares in November 1998.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING FOR THE
NOMINEES SET FORTH HEREIN.
PROPOSAL 2 -- RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young L.L.P., independent
auditors, to audit the financial statements of the Company for the year ending
March 31, 2000, and recommends that the stockholders vote for ratification of
such appointment. In the event of a negative vote on such ratification, the
Board of Directors will reconsider its selection. Ernst & Young L.L.P. has
audited the Company's financial statements since the six month period ended
March 31, 1990. Representatives of Ernst & Young L.L.P. are expected to be
present at the Annual Meeting and will have the opportunity to make a statement
if they so desire. The representatives also are expected to be available to
respond to appropriate questions from stockholders.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING FOR THE
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG L.L.P. AS THE COMPANY'S
INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING MARCH 31, 2000.
4
<PAGE> 7
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to the Company
regarding the beneficial ownership of the Company's Common Stock as of July 21,
1999 by (a) each beneficial owner of more than 5% of the Company's Common Stock,
(b) the Named Executive Officers (as defined below), (c) each director/nominee
of the Company, and (d) all directors and executive officers of the Company as a
group. Except as otherwise indicated, each person has sole voting and investment
power with respect to all shares shown as beneficially owned, subject to
community property laws where applicable.
<TABLE>
<CAPTION>
SHARES PERCENTAGE
BENEFICIAL OWNER BENEFICIALLY OWNED BENEFICIALLY OWNED
---------------- ------------------ ------------------
<S> <C> <C>
Citigroup Travelers Inc.(1)................................. 4,486,065 25%
Amazon.com, Inc.(2)......................................... 1,219,512 7%
Nokia Mobile Phones Ltd.(3)................................. 1,000,000 6%
Gordon E. Mayer(4).......................................... 165,250 *
David L. Grannan(5)......................................... 79,897 *
Stephen T. Baker(5)......................................... 14,583 *
Adam de Boor(5)............................................. 87,749 *
Lars Stenstedt(5)........................................... 57,720 *
Rhonda Jobe(5).............................................. 24,381 *
John B. Balousek(5)......................................... 10,000 *
Eric E. Schmidt(5).......................................... 41,500 *
Bernard A. Bianchino(5)..................................... 31,000 *
Brian P. Dougherty(6)....................................... 50,000 *
All directors and executive officers as a group (10
persons)(7)............................................... 562,080 3%
</TABLE>
- ---------------
* Less than one percent of the outstanding shares of Common Stock.
(1) Based on the Schedule 13G/A filed by Citigroup, Inc. ("Citigroup") dated
April 12, 1999, on behalf of itself, Mutual Management Corp., Smith Barney
Inc. and Salomon Smith Barney Holdings Inc. The address of Citigroup is 388
Greenwich Street, Legal Dept. 20th Floor, New York, New York 10013.
(2) Based on the Schedule 13D filed by Amazon.com, Inc. ("Amazon") dated
February 19, 1999. The address of Amazon is 1516 Second Ave. 4th Floor,
Seattle, WA 98101.
(3) Based on the Schedule 13D filed by Nokia Mobile Phones Ltd. ("Nokia") dated
February 17, 1995. The address of Nokia is P.O. Box 68, Kanslerinkatu 14,
4th Floor, Fin-33721, Tampere, Finland.
(4) Includes 14,000 shares held by Mayer Family Partners LP; 12,500 shares held
by the Mayer Family Revocable Trust dated October 5, 1995; 25,000 shares
held by Custom Technology Growth Fund LLC; 5,000 shares held in trust for
Mr. Mayer's daughter; and 500 shares directly held.
(5) Includes shares issuable pursuant to options exercisable within 60 days of
July 21, 1999.
(6) Includes 20,000 shares held by Brian P. Dougherty and Anna M. Lijphart as
trustees under the 1995 Dougherty Charitable Remainder Unitrust. Mr.
Dougherty served as a director throughout the previous fiscal year. Mr.
Dougherty resigned as a director at the end of July 1999 to focus on other
interests, including his position as Chairman and Chief Technology Officer
of Wink Communications, Inc.
(7) Includes 454,918 shares issuable pursuant to options exercisable within 60
days of July 21, 1999.
5
<PAGE> 8
EXECUTIVE COMPENSATION
The following table sets forth all compensation received for services
rendered to the Company in all capacities, for the last three fiscal years ended
March 31, 1999, by (i) the Company's former and current Chief Executive
Officers, and (ii) the four other most highly compensated executive officers who
were serving as executive officers at the end of fiscal 1999 and on the record
date of July 21, 1999 (collectively, the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION NUMBER OF
---------------------------------- SECURITIES
OTHER UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION OPTIONS/SARS
--------------------------- ---- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Gordon E. Mayer........................... 1999 $ 64,167 -- -- --
Chairman of the Board 1998 $220,000 $26,394 -- 17,500
and former Chief Executive Officer 1997 $220,000 $33,000 -- 130,000
David L. Grannan(2)....................... 1999 $164,737 $39,977 -- 230,000(7)
Chief Executive Officer and President 1998 $ 3,076 -- -- 150,000(7)
David A. Thatcher(3)...................... 1999 $170,955 $57,321 -- 176,000
Former Chief Executive Officer, 1998 $152,500 $23,187 -- 120,000(7)
President and Chief Financial Officer 1997 $ 3,231 -- -- 100,000(7)
Adam de Boor.............................. 1999 $148,875 $22,969 -- 197,800
Vice President and Chief Technology
Officer 1998(4) $101,190 $ 3,640 -- --
1997(4) $ 75,121 $ 3,720 -- --
Lars Stenstedt............................ 1999 $124,582 $41,063 -- 175,700
Vice President, Sales and Business 1998(4) $108,668 $14,856 -- 8,000(7)
Development 1997(4) $121,000 $ 5,000 -- 8,000(7)
Rhonda Jobe(5)............................ 1999 $102,635 $13,725 -- 153,000
Vice President, Marketing 1998 $ 20,323 -- -- 12,000
Stephen T. Baker(6)....................... 1999 $ 65,000 $25,656 -- 260,000
Vice President, Chief Financial Officer
and
Secretary
</TABLE>
- ---------------
(1) Includes cash profit sharing, cash bonuses and recurring commissions earned
for the fiscal year, whether accrued or paid.
(2) In January 1999, Mr. Grannan was appointed Chief Executive Officer and
President. Mr. Grannan joined the Company as Vice President, Marketing in
March 1998.
(3) In January 1999, Mr. Thatcher resigned as President and Chief Executive
Officer.
(4) Prior non-executive position.
(5) Ms. Jobe joined the Company in January 1998.
(6) Mr. Baker joined the Company in October 1998.
(7) During fiscal 1999, a portion of these options were subject to re-pricing
and overall reduction on a 4-for-5 exchange ratio.
6
<PAGE> 9
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information with respect to stock
options granted to each of the Named Executive Officers during the fiscal year
ended March 31, 1999. In accordance with the rules of the Securities and
Exchange Commission, also shown below is the potential realizable value over the
term of the options (the period from the grant date to the expiration date)
based on assumed rates of stock appreciation of 5% and 10%, compounded annually
and rounded to the nearest dollar. These amounts are based on certain assumed
rates of appreciation and do not represent the Company's estimate of future
stock price. Actual gains, if any, on stock option exercises will be dependent
on the future performance of the Common Stock.
OPTION GRANTS IN FISCAL 1999
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------- POTENTIAL REALIZABLE
NUMBER VALUE AT ASSUMED
OF ANNUAL RATE OF
SECURITIES % OF TOTAL STOCK PRICE
UNDERLYING OPTIONS APPRECIATION FOR
OPTIONS GRANTED TO EXERCISE OPTION TERM
GRANTED EMPLOYEES PRICE PER EXPIRATION -----------------------
NAME (1) IN FISCAL 1999 SHARE DATE 5% 10%
---- ---------- -------------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Gordon E. Mayer................ -- -- -- -- -- --
David L. Grannan............... 20,000 0.53% $1.9375 8/27/08 $ 63,123 $ 100,517
120,000 3.19% $3.2500 11/20/08 $ 635,310 $1,011,660
210,000 5.59% $3.6250 1/26/09 $1,240,076 $1,974,682
David A. Thatcher.............. 176,000 4.68% $3.2500 11/20/08 $ 931,788 $1,483,768
Adam de Boor................... 8,800 0.23% $4.1875 5/5/08 $ 60,028 $ 95,589
119,000 3.17% $1.9375 8/27/08 $ 375,586 $ 598,079
70,000 1.86% $3.6250 1/26/09 $ 413,358 $ 658,228
Lars Stenstedt................. 60,000 1.59% $4.1875 5/5/08 $ 409,286 $ 651,743
25,300 0.67% $1.9375 8/27/08 $ 79,852 $ 127,155
6,400 0.17% $3.2500 11/20/08 $ 33,883 $ 53,955
100,000 2.66% $3.6250 1/26/09 $ 590,513 $ 940,325
Rhonda Jobe.................... 73,000 1.94% $3.6250 1/26/09 $ 431,074 $ 686,437
Stephen T. Baker............... 160,000 4.25% $1.8125 11/4/08 $ 472,410 $ 752,260
100,000 2.66% $3.6250 1/26/09 $ 590,512 $ 940,325
</TABLE>
- ---------------
(1) All options have a ten-year term and vest ratably during employment,
generally at 1/48 per month. The terms and conditions governing each stock
option grant, including term, termination, acceleration upon change of
control, exercise price, type, and commencement date, are determined by the
Compensation Committee and approved by the Board of Directors.
7
<PAGE> 10
OPTION EXERCISES AND HOLDINGS
The following table provides information with respect to option exercises
in fiscal 1999 by the Named Executive Officers and the value of such officers'
unexercised options at March 31, 1999:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT FISCAL YEAR-END FISCAL YEAR-END(2)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Gordon E. Mayer............. -- -- 94,708 64,792 -- --
David L. Grannan............ -- -- 41,667 308,333 $ 3,554 $ 20,815
David A. Thatcher........... 58,666 $138,874 -- -- -- --
Adam DeBoor................. 4,000 $ 14,652 62,861 176,739 $95,990 $123,855
Lars Stenstedt.............. -- -- 34,507 168,218 $ 6,422 $ 24,405
Rhonda Jobe................. -- -- 6,541 78,459 -- --
Stephen T. Baker............ -- -- 4,167 255,833 -- $214,960
</TABLE>
- ---------------
(1) Market value of underlying securities on the exercise date, minus the
exercise price.
(2) Value is based on the last reported sale of the Company's Common Stock on
the Nasdaq National Market of $3.156 per share on March 31, 1999 (the last
trading day for fiscal 1999), minus the exercise price of in-the-money
options.
CERTAIN TRANSACTIONS
In February 1999, the Company sold 1,219,512 unregistered shares of its
Common Stock to Amazon.com, Inc. ("Amazon") at $4.10 per share for an aggregate
purchase price of $5,000,000.
In February 1995, the Company sold 1,000,000 unregistered shares of its
Common Stock to Nokia Mobile Phones Ltd. ("Nokia"), then a greater than 5%
stockholder of the Company at an aggregate purchase price of $7,500,000. The
Company agreed to nominate a Nokia representative as one of management's
nominees for the Company's Board of Directors, and to use its best efforts to
cause his election, for so long as Nokia holds at least five percent of the
combined voting power of all outstanding voting stock and desires to hold such
seat on the Board of Directors. The Company also granted Nokia registration
rights with respect to the shares purchased. Such rights are shared by certain
other stockholders of the Company.
In December 1994, the Company and Nokia entered into an Agreement for the
Terms and Conditions Regarding Software Development and Licensing. Under the
Agreement, the Company has licensed certain software technology to Nokia for
incorporation by Nokia into various of its hardware products. In exchange, Nokia
is required to pay certain engineering fees and royalties to the Company. In
fiscal 1999, the Company recognized $257,000 of license revenue from Nokia, and
also received from Nokia research and development fees of $1,179,000.
During fiscal 1994, the Company agreed to lend $220,000 to Gordon E. Mayer,
the Chairman of the Board of Directors of the Company, for the purchase of
330,000 shares of the Company's Common Stock under a promissory note bearing
interest at 5% per annum, compounded semiannually. The loan was secured by a
pledge of Mr. Mayer's shares of the Company's Common Stock and his principal
residence. The note matures in October 2000. As of March 31, 1999, approximately
$67,000 of principal and approximately $8,300 of accrued interest were
outstanding under the note.
8
<PAGE> 11
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee consisted of directors Bianchino and
Dougherty as of March 31, 1999. Mr. Bianchino has never been an officer of the
Company. Mr. Dougherty has previously served the Company as an officer. No
executive officer of the Company served on the compensation committee of another
entity or on any other committee of the board of directors of another entity
performing similar functions during the last fiscal year.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's executive officers and directors, and
persons who own more than ten percent of a registered class of the Company's
equity securities, to file reports of ownership on Form 3 and changes in
ownership on Forms 4 or 5 with the Securities and Exchange Commission (the
"SEC") within specified time periods. Executive officers, directors and 10%
stockholders are also required by the SEC rules to furnish the Company with
copies of all Section 16(a) forms they file. Based solely upon its review of
copies of such forms received by it, or written representations from such
persons that no filings were required for them, the Company believes that during
the year ended March 31, 1999, all Section 16(a) filing requirements applicable
to its executive officers and directors were met.
9
<PAGE> 12
PERFORMANCE GRAPH
The stock price performance graph below is required by the SEC and shall
not be deemed to be incorporated by reference by any general statement
incorporating by reference this Proxy Statement into any filing under the
Securities Act of 1933, as amended, or the Exchange Act, except to the extent
the Company specifically incorporates this information by reference and shall
not otherwise be deemed soliciting material or filed under such Acts.
The following graph shows a comparison of cumulative total stockholder
return, calculated on a dividend reinvested basis, for Geoworks, the Nasdaq
Composite Stock Market Index (US) and the Hambrecht & Quist Software Sector
Index. The graph assumes that $100 was invested in the Company's Common Stock,
the Nasdaq Composite Stock Market Index (US) and the Hambrecht & Quist Software
Sector Index from the date of the Company's initial public offering on June 23,
1994 through March 31, 1999. Note that historic stock price performance is not
necessarily indicative of future stock price performance.
GEOWORKS
H&Q COMPUTER SOFTWARE INDEX
NASDAQ STOCK MARKET -- U.S. INDEX
<TABLE>
<CAPTION>
GEOWORKS H&Q COMPUTER SOFTWARE NASDAQ STOCK MARKET-U.S.
-------- --------------------- ------------------------
<S> <C> <C> <C>
6/23/94 100.00 100.00 100.00
Sep-94 129.17 113.69 110.97
Dec-94 112.50 123.10 109.70
Mar-95 135.42 140.73 119.60
Jun-95 208.33 162.75 136.81
Sep-95 320.83 176.94 153.29
Dec-95 316.67 176.43 155.16
Mar-96 500.00 192.55 162.40
Jun-96 591.67 209.95 175.65
Sep-96 433.33 215.94 181.87
Dec-96 408.33 214.47 190.81
Mar-97 110.42 195.72 180.43
Jun-97 96.87 232.45 213.50
Sep-97 272.92 278.73 249.56
Dec-97 160.42 259.32 233.73
Mar-98 123.95 336.62 273.52
Jun-98 58.33 348.94 280.98
Sep-98 22.40 291.05 253.82
Dec-98 60.42 338.78 329.35
Mar-99 52.60 338.61 368.14
</TABLE>
10
<PAGE> 13
<TABLE>
<CAPTION>
H&Q SOFTWARE NASDAQ STOCK MARKET
MEASUREMENT PERIOD (FISCAL YEAR COVERED) GEOWORKS SECTOR INDEX -- U.S. INDEX
---------------------------------------- -------- ------------ -------------------
<S> <C> <C> <C>
June 23, 1994.................................... $100.00 $100.00 $100.00
September 1994................................... 129.17 113.69 110.97
December 1994.................................... 112.50 123.10 109.70
March 1995....................................... 135.42 140.73 119.60
June 1995........................................ 208.33 162.75 136.81
September 1995................................... 320.83 176.94 153.29
December 1995.................................... 316.67 176.43 155.16
March 1996....................................... 500.00 192.55 162.40
June 1996........................................ 591.67 209.95 175.65
September 1996................................... 433.33 215.94 181.87
December 1996.................................... 408.33 214.47 190.81
March 1997....................................... 110.42 195.72 180.43
June 1997........................................ 96.87 232.45 213.50
September 1997................................... 272.92 278.73 249.56
December 1997.................................... 160.42 259.32 233.73
March 1998....................................... 123.95 336.62 273.52
June 1998........................................ 58.33 348.94 280.98
September 1998................................... 22.40 291.05 253.82
December 1998.................................... 60.42 338.78 329.35
March 1999....................................... 52.60 338.61 368.14
</TABLE>
COMPENSATION COMMITTEE REPORT
INTRODUCTION
The Compensation Committee Report below is required by the SEC and shall
not be deemed to be incorporated by reference by any general statement
incorporating by reference this Proxy Statement into any filing under the
Securities Act of 1933, as amended, or the Exchange Act, except to the extent
the Company specifically incorporates this information by reference and shall
not otherwise be deemed soliciting material or filed under such Acts.
The Compensation Committee of the Board of Directors (the "Committee") is
composed only of non-employee directors. It is responsible for reviewing and
recommending for approval by the Board of Directors the Company's compensation
practices, executive salary levels and compensation programs, both cash-based
and equity-based. The Committee generally determines the base salary levels and
performance-based incentive compensation levels for executives at the end of
each fiscal year, and reviews both those levels and the executives' performance
against those levels on a quarterly basis.
COMPENSATION PHILOSOPHY
The Committee has adopted an executive pay-for-performance philosophy
covering all officers, including the Chief Executive Officer. This philosophy
emphasizes variable compensation in order to align executive compensation with
the Company's business objectives and performance. Further, the overall
compensation philosophy is to attract, retain and reward executives who
contribute both to the short-term and long-term success of the Company, and to
motivate them through incentive compensation tied to performance objectives. The
Committee believes that the interests of its executives are best aligned with
those of the Company and its stockholders when the executives' overall
compensation depends upon the Company's performance, and when the executives are
themselves owners of stock in the Company. The Company encourages broad-based
employee ownership of its stock through stock option and stock purchase programs
in which, as a general rule, all regular employees with three (3) months of
service, whose customary
11
<PAGE> 14
employment is at least twenty (20) hours per week and more than five (5) months
per year are eligible to participate. Pay is sufficiently variable that
above-average performance results in above-average total compensation, and
below-average performance for the Company or the individual results in
below-average total compensation. At the highest level, the focus is on
corporate performance against objectives and individual contributions toward
that performance. Secondarily, the focus is on strategic departmental objectives
in support of the corporate mission, and individual contribution toward and
satisfaction of those objectives.
COMPENSATION PROGRAM
The Company has a comprehensive compensation program which consists of cash
compensation, both fixed and variable, and equity-based compensation. The
program has the following principal components:
Cash-Based Compensation
Base Salary: Base salary is predicated on industry and peer group
comparisons and on performance judgments as to the past and expected future
contribution by the individual executive officer, including, where appropriate,
adjustment for any promotion or substantial increase in responsibilities. Market
information and salary surveys are used as a frame of reference for annual
salary adjustments and starting salaries. Executive officers of the Company are
paid salaries in line with their responsibilities. These salaries are structured
to be within the median range of salaries paid by competitors in comparable
industries. In general, salary increases are made based on median increases in
salaries for similar executives of similar sized companies in the high
technology and wireless communications industries. The Committee's approach to
base compensation is to offer competitive salaries in comparison with market
practices. However, commencing with fiscal 1996, base salary has become a
relatively smaller element in the total executive officer compensation package,
as the Company has introduced greater pay-for-performance programs.
Bonuses: The Company has an incentive program pursuant to which executive
officers and a limited number of key employees may receive periodic cash bonuses
beyond their base salary. The Committee has established for each officer,
including the Chief Executive Officer, a set of performance objectives for the
fiscal year primarily tied to the Company's financial performance, along with a
target bonus tied to those objectives. The objectives, and the performance of
each executive against his or her objectives, are reviewed quarterly, with input
from the Chief Executive Officer. These financial objectives are generally based
on the achievement of sales, revenue, net income or gross margin goals.
Generally, executives may be eligible to receive a bonus of approximately twenty
percent of their base salary if the objectives are fully met to the satisfaction
of the Committee. The Committee also has the discretion to reduce the bonus to
zero percent in the case of performance below expectations, or, conversely, to
increase the bonus in recognition of exemplary contribution to the successful
performance by the Company of its short-term and long-term objectives.
Equity-Based Compensation
Stock Options: Consistent with prevailing compensation practices in high
technology and wireless communications companies, stock options are a key
component of each employee's total compensation package. The Company's practice
is to grant stock options to all full-time, regular employees. Options are
generally granted upon commencement of employment, and vest over four years to
encourage the option holders to continue in the employ of the Company.
Subsequent stock options are granted periodically to provide additional
incentive and in the case of a promotion or substantial increase in
responsibilities, and occasionally to reward exemplary performance. The Company
takes into account the compensation practices of comparable companies in its
salary surveys as well as the past and future expected performance in
determining the size of grants made to executives.
Competition for key employees in the high technology and wireless
communications industries is intense and the use of significant stock options
for retention and motivation of such personnel is pervasive in order to remain
competitive. The Company believes that stock options are a critical component of
the compensation
12
<PAGE> 15
offered by the Company to promote long-term retention of key employees, motivate
high levels of performance and recognize employee contributions to the success
of the Company.
Fiscal 1999 Option Re-pricing Programs. In May and November of 1998, at the
direction of the Board of Directors, the Company re-priced certain options with
an exercise price above the fair market value on May 5, 1998 and November 20,
1998, which had been granted to employees under the Company's 1994 Stock Plan,
Supplemental Stock Option Plan, and 1997 Supplemental Stock Plan (the "Plans")
during the period January 1, 1997 through April 23, 1998 and January 1, 1997
through November 20, 1998. The re-pricing specifically excluded all options
granted to directors and consultants, employees terminated through December 3,
1998, partially exercised options, and in the case of the November 1998
re-pricing, options granted to officers covered by the May 1998 re-pricing. The
November 1998 re-pricing was conditioned on acceptance of a 4-for-5 exchange
ratio resulting in eligible employees receiving 20% fewer options. Eligible
employees electing to participate in the re-pricing were issued new stock option
grants and the corresponding old stock option grants were canceled. The
percentage of shares vested in the new stock option grants were equivalent to
the percentage of shares vested in the corresponding old stock option grants.
The Company re-priced options in order to respond to the substantial increases
in competitive attempts to retain numerous eligible employees who are essential
to the Company's success. Competition for key employees in the high technology
and wireless communications industries is intense and the use of significant
stock options for retention and motivation of such personnel is pervasive. The
Company believes that stock options are a critical component of the compensation
offered in order to promote long-term retention of key employees, motivate high
levels of performance, maintain competitiveness and recognize employee
contribution to the success of the Company.
The following table sets forth certain information concerning the
re-pricing of stock options held by the Named Executive Officers of the Company
through March 31, 1999.
<TABLE>
<CAPTION>
PER SHARE
NUMBER OF MARKET PER SHARE LENGTH OF
SECURITIES PRICE OF EXERCISE PER SHARE ORIGINAL
UNDERLYING STOCK AT PRICE NEW OPTION TERM
OPTIONS TIME OF AT TIME EXERCISE REMAINING
DATE OF REPRICED REPRICING OF REPRICING PRICE AT DATE OF
NAME AND POSITION REPRICING (#) ($/SH) ($/SH) ($/SH) REPRICING
----------------- --------- ---------- --------- ------------ --------- -----------
<S> <C> <C> <C> <C> <C> <C>
David L. Grannan................ 11/20/98 150,000 $3.2500 $ 4.1875 $3.2500 114 months
David T. Thatcher............... 11/20/98 100,000 $3.2500 $ 6.7500 $3.2500 100 months
11/20/98 20,000 $3.2500 $ 8.4688 $3.2500 105 months
11/20/98 100,000 $3.2500 $ 5.8125 $3.2500 111 months
Lars Stenstedt.................. 11/20/98 3,000 $3.2500 $ 6.5313 $3.2500 89 months
11/20/98 5,000 $3.2500 $ 6.5313 $3.2500 99 months
06/03/97 3,000 $6.5313 $29.0000 $6.5313 106 months
06/03/97 5,000 $6.5313 $17.7500 $6.5313 116 months
</TABLE>
CHIEF EXECUTIVE OFFICER COMPENSATION
The Committee uses the factors and criteria described above for
compensation decisions regarding the Chief Executive Officer. During fiscal year
1999, Mr. Grannan's compensation was largely structured on the Company's future
attainment of strategic objectives.
On January 10, 1999, Mr. Grannan was appointed President and Chief
Executive Officer of the Company following the resignation of David A. Thatcher.
Mr. Grannan's salary and bonus for the past fiscal year are reflected in the
Executive Compensation table set forth in this Proxy. Mr. Grannan is eligible to
receive quarterly bonuses in accordance with the financial objectives relating
to bonuses set forth above in this Compensation Committee Report.
The Committee believes that Mr. Grannan's compensation is modest relative
to that of other chief executive officers of publicly-held high technology and
wireless communications companies, but is appropriate in light of the Company's
life stage and continued investment in emerging markets.
13
<PAGE> 16
COMPENSATION LIMITATIONS FOR TAX PURPOSES
The Committee has considered the potential impact of Section 162(m) (the
"Section") of the Code adopted under the federal Revenue Reconciliation Act of
1993. The Section disallows any tax deduction for a publicly-held corporation
for individual compensation exceeding $1 million in any taxable year for any
Named Executive Officer, unless compensation is performance-based. Since the
targeted cash compensation of each of the Named Executive Officers is below the
$1 million threshold and the Committee believes that any options granted under
the Option Plan will meet the requirement of being performance-based under the
regulations under the Section, the Committee believes that the Section will not
reduce any tax deduction available to the Company.
SUMMARY
The Committee believes that a fair and motivating compensation program has
played a critical role in the Company's ability to attract and retain highly
qualified executive officers
Respectfully submitted by
THE COMPENSATION COMMITTEE
OTHER MATTERS
The Company knows of no other matters to be submitted to the Annual
Meeting. If any other matters properly come before the Annual Meeting or any
adjournment or postponement thereof, it is the intention of the persons named in
the enclosed form of Proxy to vote the shares they represent as the Board of
Directors may recommend.
THE BOARD OF DIRECTORS
Dated: August 4, 1999
14
<PAGE> 17
PROXY
GEOWORKS CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 14, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS
The undersigned hereby appoints Stephen T. Baker with power of substitution, to
represent the undersigned at the Annual Meeting of Stockholders of Geoworks
Corporation (the "Company") to be held at 960 Atlantic Avenue, Alameda,
California 94501 on September 14, 1999, at 11:00 a.m., local time, and any
adjournment or postponement thereof, and to vote the number of shares the
undersigned would be entitled to vote if personally present at the meeting on
the following matters:
(SEE REVERSE SIDE)
- --------------------------------------------------------------------------------
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<PAGE> 18
Please mark
your choice
like this [X]
WITHHELD
FOR FOR ALL
1. ELECTION OF DIRECTORS [ ] [ ]
Nominees: John B. Balousek
Bernard A. Bianchino
David L. Grannan
Gordon E. Mayer
Eric E. Schmidt
Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below:
________________________________________________________________
FOR AGAINST ABSTAIN
2. RATIFICATION OF SELECTION OF ERNST & YOUNG LLP
AS THE COMPANY'S INDEPENDENT AUDITORS [ ] [ ] [ ]
The Board of Directors recommends a vote FOR all nominees for election and FOR
Proposal 2.
THIS PROXY WILL BE VOTED AS DIRECTED IN THE ABSENCE OF DIRECTION. THIS PROXY
WILL BE VOTED FOR THE COMPANY'S NOMINEES FOR ELECTION AND FOR PROPOSAL 2.
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment or
postponement thereof to the extent authorized by Rule 14a-4(c) promulgated by
the Securities and Exchange Commission.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
Dated: August 4, 1999
/s/
Stephen T. Baker, Secretary
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING,
PLEASE COMPLETE, DATE, SIGN AND PROMPTLY RETURN
THIS PROXY IN THE ENCLOSED, POSTAGE-PAID ENVELOPE SO
THAT YOUR SHARES MAY BE REPRESENTED AT THE MEETING.
Signature(s) ____________________________________________ Date ______________
Please sign exactly as your name(s) appear(s) on your stock certificate. If
shares are held of record in the names of two or more persons or in the name of
husband and wife, whether as joint tenants or otherwise, both or all such
persons should sign the proxy. If shares of stock are held of record by a
corporation, the proxy may be executed by an officer, agent or proxyholder as
the bylaws of the corporation may prescribe, or in the absence of that
determination, by the Chairman, president or any vice president. Executors,
administrators or other fiduciaries who execute the above proxy for a deceased
stockholder should give their full title. Please date the proxy.
- -------------------------------------------------------------------------------
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