<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT /X/ FILED BY A PARTY OTHER THAN THE REGISTRANT / /
- --------------------------------------------------------------------------------
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
VIDEOSERVER, INC.
(Name of Registrant as Specified In Its Charter)
VIDEOSERVER, INC.
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
VideoServer Logo
April 11, 1997
Dear Shareholder:
You are cordially invited to attend the 1997 Annual Meeting of Shareholders
of VideoServer, Inc., which will be held at The Marriott, Burlington,
Massachusetts 01803, on Wednesday, May 14, 1997 at 9:00 a.m., EDT.
The Notice of Annual Meeting of Shareholders and a Proxy Statement, which
describe the formal business to be conducted at the meeting, follow this letter.
The Company's Annual Report to Shareholders is also enclosed for your
information.
Please promptly mark, sign, and return the enclosed proxy card in the
prepaid envelope so that your shares can be voted at the meeting in accordance
with your instructions. Your shares cannot be voted unless you date, sign, and
return the enclosed proxy card or attend the annual meeting in person.
Regardless of the number of shares you own, your careful consideration of, and
vote on, the matters before the shareholders is important.
Very truly yours,
/s/ Robert L. Castle
ROBERT L. CASTLE
President and
Chief Executive Officer
<PAGE> 3
VIDEOSERVER, INC.
63 THIRD AVENUE
BURLINGTON, MASSACHUSETTS 01803
------------------------
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
------------------------
To Our Shareholders:
The Annual Meeting of Shareholders ("the Meeting") of VideoServer, Inc., a
Delaware corporation (the "Company"), will be held on Wednesday, May 14, 1997 at
9:00 a.m., EDT, at The Marriott, Burlington, Massachusetts 01803. The purposes
of the Meeting shall be:
1. To elect one Class II director to hold office for a three year term and
until his/her successor has been duly elected and qualified.
2. To ratify the appointment of the firm of Ernst & Young LLP, as auditors
for the Company for the fiscal year ending December 31, 1997.
Shareholders of record on the books of the Company at the close of business
on April 1, 1997 will be entitled to notice of and to vote at the Meeting.
Please sign, date, and return the enclosed proxy card in the envelope
enclosed at your earliest convenience. If you return the proxy, you may
nevertheless attend the Meeting and vote your shares in person.
All shareholders of the Company are cordially invited to attend the
Meeting.
By order of the Board of Directors,
/s/ Paul L. Criswell
PAUL L. CRISWELL
Assistant Secretary
Burlington, Massachusetts
April 11, 1997
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. WHETHER OR
NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN, DATE, AND MAIL THE ENCLOSED
PROXY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED FROM WITHIN
THE UNITED STATES.
<PAGE> 4
VIDEOSERVER, INC.
63 THIRD AVENUE
BURLINGTON, MASSACHUSETTS 01803
------------------------
PROXY STATEMENT
------------------------
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 14, 1997
Proxies enclosed with this Proxy Statement are solicited by the Board of
Directors of VideoServer, Inc., a Delaware corporation (the "Company"), for use
at the Annual Meeting of Shareholders (the "Meeting") to be held on Wednesday,
May 14, 1997 at 9:00 a.m., EDT, at The Marriott, Burlington, Massachusetts
01803, and any adjournments thereof.
Shares represented by duly executed proxies in the form enclosed herewith
received by the Company prior to the Meeting will be voted as instructed in the
proxy on each matter submitted to the vote of shareholders. If any duly-executed
proxy is returned without voting instructions, the persons named as proxies
thereon intend to vote all shares represented by such proxy FOR the election of
the nominee for director named below and FOR the ratification of selection of
auditors described in this Proxy Statement.
Any shareholder may revoke a proxy at any time prior to its exercise by
delivering a later-dated proxy or written notice of revocation to the Secretary
of the Company at the address of the Company set forth above, or by voting in
person at the Meeting. If a shareholder does not intend to attend the Meeting,
any proxy or notice should be returned for receipt by the Company not later than
the close of business on May 13, 1997. The persons named in the proxies are
employees of the Company. The Company will bear the cost of solicitation of
proxies relating to the Meeting.
Only shareholders of record as of the close of business on April 1, 1997
(the "Record Date") will be entitled to notice of and to vote at the Meeting and
any adjournments thereof.
As of the Record Date, there were 12,636,886 shares (excluding treasury
shares) of the Company's Common Stock, $.01 par value (the "Common Stock"),
issued and outstanding. Such shares of Common Stock are the only voting
securities of the Company. Shareholders are entitled to cast one vote for each
share of Common Stock held of record on the Record Date.
The Board of Directors of the Company (the "Board of Directors") is not
aware of any other matters to be presented at the Meeting. If any other matter
should be presented at the Meeting upon which a vote properly may be taken,
shares represented by all duly executed proxies received by the Company will be
voted with respect thereto in accordance with the best judgment of the persons
named in the proxies. An Annual Report to Shareholders, containing financial
statements for the fiscal year ended December 31, 1996, preceded or accompanies
this Proxy Statement. This Proxy Statement and the proxy enclosed herewith were
first mailed to shareholders on or about April 11, 1997.
The mailing address of the Company's principal executive offices is 63
Third Avenue, Burlington, Massachusetts 01803.
1
<PAGE> 5
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of April 1, 1997 (i) by each person
who is known by the Company to own beneficially more than five percent (5%) of
the Company's Common Stock, (ii) by each of the Company's directors, (iii) by
each of the Named Executive Officers (as defined under "Summary Compensation"
below) and (iv) by all directors and executive officers as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED
-----------------------
DIRECTORS, OFFICERS AND 5% SHAREHOLDERS NUMBER PERCENT
--------------------------------------------------------------- --------- -------
<S> <C> <C>
Pilgrim Baxter & Associates Ltd.(1)............................ 1,325,200 10.48%
11255 Drummers Lane, Suite 300 Wayne, Pennsylvania 19087
Bessemer Venture Partners II L.P.(2)........................... 1,035,596 8.19%
c/o Bessemer Venture Partners 125 Old Country Road, Suite 205
Westbury, New York 11590
Chancellor LGT Asset Management Inc.(3)........................ 675,000 5.34%
1166 Avenue of the Americas New York, New York 10036
Paul Ferri(4).................................................. 20,660 *
William E. Foster(5)........................................... 21,250 *
Steven C. Walske(6)............................................ 18,250 *
Robert L. Castle(7)............................................ 222,639 1.7%
Rubin Gruber(8)................................................ 39,112 *
Jules L. DeVigne(9)............................................ 14,106 *
Derek M. James(10)............................................. 31,171 *
Stephen J. Nill(11)............................................ 39,036 *
All executive officers and directors as a group (12
persons)(12)................................................. 447,513 3.5%
</TABLE>
- ---------------
* Less than 1%
(1) Based on information contained in Schedule 13D filed by Pilgrim Baxter &
Associates on February 16, 1997.
(2) Does not include an aggregate of 179,079 shares of Common Stock held by
the following persons related to Bessemer Venture Partners II L.P. as to
which shares Bessemer Venture Partners II L.P. does not possess voting or
investment power: Brimstone Island Co., L.P., (25,000 shares); Robert
Buescher (21,936); William Burgin (47,125 shares); Christopher Gabrieli
(60,343 shares); and G. Felda Hardymon (24,675 shares).
(3) Based on information contained in Schedule 13D filed by Chancellor LGT
Asset Management Inc. on February 7, 1997.
(4) Includes 8,250 shares that Mr. Ferri has the right to acquire within 60
days of April 1, 1995 by the exercise of stock options.
(5) Includes 8,250 shares that Mr. Foster has the right to acquire within 60
days of April 1, 1997 by the exercise of stock options.
(6) Includes 8,250 shares that Mr. Walske has the right to acquire within 60
days of April 1, 1997 by the exercise of stock options.
(7) Includes 67,001 shares that Mr. Castle has the right to acquire within 60
days of April 1, 1997 by the exercise of stock options.
(8) Includes 280 shares of Common Stock held by Cambridge Investments
Associates and 22,401 shares Mr. Gruber has the right to acquire within 60
days of April 1, 1997 by the exercise of stock options. Mr. Gruber is a
general partner of Cambridge Investments Associates. Mr. Gruber disclaims
beneficial
2
<PAGE> 6
ownership of the shares owned by Cambridge Investments Associates except
to the extent of his pecuniary ownership therein.
(9) Includes 13,001 shares that Mr. DeVigne has the right to acquire within 60
days of April 1, 1997 by the exercise of stock options.
(10) Includes 29,876 shares that Mr. James has the right to acquire within 60
days of April 1, 1997 by the exercise of stock options.
(11) Includes 31,376 shares that Mr. Nill has the right to acquire within 60
days of April 1, 1997 by the exercise of stock options.
(12) Includes 220,032 shares that directors and executive officers of the
Company have the right to acquire within 60 days of April 1, 1997 by the
exercise of stock options.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
CONCERNING DIRECTORS AND EXECUTIVE OFFICERS
SUMMARY COMPENSATION
The following table sets forth information concerning the annual and
long-term compensation in each of the last three fiscal years for the Company's
Chief Executive Officer and the next four most highly compensated executive
officers (the "Named Executive Officers").
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM
---------------------- COMPENSATION ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#) COMPENSATION($)
- ---------------------------------- ---- --------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Robert L. Castle(5)............... 1996 192,718 90,000 60,000
President and 1995 170,000 75,000 37,500 --
Chief Executive Officer 1994 165,000 40,000 -- 3,649(1)
Jules L. DeVigne.................. 1996 120,000 147,779 (2) 20,000
Vice President of 1995 120,000 119,744 (2) 15,000 --
Worldwide Sales 1994 120,000 76,654 (2) -- --
Rubin Gruber(5)................... 1996 156,283 24,750 32,000
Vice President of Business 1995 150,032 47,283 25,000 --
Development 1994 141,578 11,776 -- 9,472(1)
Derek James(5).................... 1996 145,493 36,850 25,000
Chief Technology Officer 1995 141,741 46,357 20,000 --
1994 128,260 11,776 -- 5,018(1)
Stephen J. Nill................... 1996 149,940 51,150 25,000
Vice President of Finance and 1995 145,801 45,871 2,500 --
Chief Financial Officer, 1994 81,667 11,776 87,500(3) 20,000(4)
Treasurer, and Secretary
</TABLE>
- ---------------
(1) Consists of payments for accrued vacation.
(2) Amounts shown primarily represent commissions paid by the Company.
(3) Represents options granted to Mr. Nill upon his commencement of employment
in June, 1994.
(4) Represents payment by the Company related to Mr. Nill's prior employment
for cash and other compensation that he had foregone by joining the
Company.
(5) On July 20, 1992, the Company issued 550,000 shares of restricted Common
Stock to Robert L. Castle. As of December 31, 1993, 40% of such shares were
vested and the remainder vested thereafter at the rate of 5% per fiscal
quarter. On March 28, 1991, the Company issued 625,000 and 375,000 shares
of Common Stock, subject to a vesting schedule, to Rubin Gruber and Derek
James, respectively, founders of the Company. As of such date, 30% of such
stock was vested, 5% vested on December 31, 1991, and
3
<PAGE> 7
the remainder vested thereafter at the rate of 5% per fiscal quarter. On
December 31, 1996, all such shares of restricted stock were fully vested.
OPTIONS GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning individual stock
option grants made to each of the Named Executive Officers during fiscal 1996.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
----------------------------------------------------- ANNUAL RATES OF
PERCENT OF STOCK PRICE
TOTAL APPRECIATION FOR
OPTIONS GRANTED EXERCISE OPTION TERM(1)
OPTIONS TO EMPLOYEES IN PRICE EXPIRATION --------------------
NAME GRANTED(#) FISCAL YEAR ($/SH)(2) DATE 5% 10%
- ---------------------------- ---------- --------------- --------- ---------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Robert L. Castle............ 60,000 7.7% $ 19.25 3/25/02 $392,810 891,153
Jules L. DeVigne............ 20,000 2.6% $ 19.25 3/25/02 $130,937 297,051
Rubin Gruber................ 32,000 4.1% $ 19.25 3/25/02 $209,499 475,282
Derek M. James.............. 25,000 3.2% $ 19.25 3/25/02 $163,671 371,314
Stephen J. Nill............. 25,000 3.2% $ 19.25 3/25/02 $163,671 371,314
</TABLE>
- ---------------
(1) Potential gains are net of exercise price, but before taxes associated with
exercise. These amounts represent certain assumed rates of appreciation
only, based on the Securities and Exchange Commission rules. Actual gains,
if any, on stock option exercises are dependent on the future performance
of the Common Stock, the timing of such exercises and the optionholder's
continued employment through the vesting period. The amounts reflected in
this table may not accurately reflect or predict the actual value of the
stock options.
(2) All options were granted at fair market value as determined by the Board of
Directors of the Company on the date of the grant.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth information concerning each exercise of
stock options by the each of the Named Executive Officers during fiscal 1996 and
the value of unexercised "in-the-money" options at the end of that fiscal year.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
SHARES NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED ON VALUE OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END(1)
NAME EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE(#) EXERCISABLE/UNEXERCISABLE($)
- ----------------------- ----------- ----------- ---------------------------- ----------------------------
<S> <C> <C> <C> <C>
Robert L. Castle....... -- -- 50,625/96,875 2,032,500/2,752,500
Jules L. DeVigne....... 27,000 1,046,500 750/44,750 25,500/1,432,500
Rubin Gruber........... -- -- 14,375/50,125 535,438/1,375,813
Derek M. James......... -- -- 22,000/47,375 872,500/1,419,813
Stephen J. Nill........ 10,000 283,125 17,500/57,250 694,750/1,861,500
</TABLE>
- ---------------
(1) Based on the closing price on the NASDAQ National Market System for a share
of Common Stock on December 31, 1996 of $42.50.
OTHER BENEFIT PLANS
The Company currently provides certain benefits to its eligible employees
(including its executive officers) through the benefit plans described below:
1991 Stock Incentive Plan. The Company maintains the VideoServer, Inc.
Amended and Restated 1991 Stock Incentive Plan (the "Stock Incentive Plan") to
attract and retain the best available personnel for positions of substantial
responsibility and to provide additional incentives to certain employees and
consultants to contribute to the success of the Company. The Stock Incentive
Plan is administered by a committee of the Board of Directors that consists of
independent directors.
4
<PAGE> 8
1995 Employee Stock Purchase Plan. The Company maintains the 1995 Employee
Stock Purchase Plan (the "Employee Plan") to provide incentive to employees and
to encourage ownership of Common Stock by all eligible employees of the Company
and its subsidiaries. Employees of the Company may participate in the Employee
Plan by authorizing payroll deductions generally over a six month period, with
the proceeds being used to purchase shares of Common Stock for the participant
at a discounted price. The Employee Plan is intended to be an "employee stock
purchase plan" under Section 423 of the Internal Revenue Code.
Savings Plan. The Company sponsors a savings plan for its employees which
has been qualified under Section 401(k) of the Internal Revenue Code. Eligible
employees are permitted to contribute to the 401(k) plan through payroll
deductions within statutory and plan limits. Contributions from the Company are
made at the discretion of the Board of Directors. As of December 31, 1996, the
Company had made no contributions to the plan. Beginning in 1997, the Board of
Directors has authorized the Company to commence with a matching of a portion of
its employees' contributions to the plan.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the
Compensation Committee of the Board of Directors (the "Committee"). The
Committee, which is composed of two independent directors, establishes and
administers the Company's executive compensation policies and plans and
administers the Company's stock option and other equity-related employee
compensation plans. The Committee considers internal and external information in
determining officers' compensation, including outside survey data.
Compensation Philosophy
The Company's compensation policies for executive officers are based on the
belief that the interests of executives should be closely aligned with those of
the Company's shareholders. The Compensation policies are designed to achieve
the following objectives:
- Offer compensation opportunities that attract highly qualified
executives, reward outstanding initiative and achievement, and retain
the leadership and skills necessary to build long-term shareholder
value.
- Maintain a significant portion of executives' total compensation at
risk, tied to both the annual and long-term financial performance of the
Company and the creation of shareholder value.
- Further the Company's short and long-term strategic goals and values by
aligning compensation with business objectives and individual
performance.
Compensation Program
The Company's executive compensation program has three major integrated
components, base salary, annual incentive awards, and long term incentives.
Base Salary. Base salary levels for executive officers are determined
annually by reviewing the competitive pay practices of networking companies of
similar size and market capitalization, the skills, performance level, and
contribution to the business of individual executives, and the needs of the
Company. Overall, the Committee believes that base salaries for executive
officers are approximately competitive with median base salary levels for
similar positions in these networking companies.
Annual Incentive Awards. The Company's executive officers are eligible to
receive annual cash bonus awards designed to motivate executives to attain
short-term and longer-term corporate and individual management goals. The
Committee establishes the annual incentive opportunity for each executive
officer in relation to his or her base salary. Awards under this program are
based on the attainment of specific Company performance measures established by
the Compensation Committee early in the fiscal year, and by the achievement of
specified individual objectives and the degree to which each executive officer
contributes to the overall success of the Company and the management team. For
1996, the formula for these bonuses was determined as a function of sales growth
and pre-tax income objectives, thus establishing a direct link between executive
pay and Company profitability. The Company's financial performance in 1996
exceeded the objectives set by the Committee.
5
<PAGE> 9
Long Term Incentives. The Committee believes that stock options are an
excellent vehicle for compensating its officers and employees. The Company
provides long term incentives through its Amended and Restated 1991 Stock
Incentive Plan, the purpose of which is to create a direct link between
executive compensation and increases in shareholder value. Stock options are
granted at fair market value and vest in installments, generally over five
years. When determining option awards for an executive officer, the Committee
considers the executive's current contribution to Company performance, the
anticipated contribution to meeting the Company's long-term strategic
performance goals, and industry practices and norms. Long-term incentives
granted in prior years and existing levels of stock ownership are also taken
into consideration. Because the receipt of value by an executive officer under a
stock option is dependent upon an increase in the price of the Company's Common
Stock, this portion of the executive's compensation is directly aligned with an
increase in shareholder value.
Chief Executive Officer Compensation
Mr. Castle's base salary, annual incentive award and long-term incentive
compensation are determined by the Committee based upon the same factors as
those employed by the Committee for executive officers generally. Mr. Castle's
current annual base salary is $210,000 subject to annual review and increase by
the Committee. Mr. Castle may also be entitled to an annual cash bonus depending
on the Company's achievement of certain performance objectives, including
certain growth milestones in sales and earnings during a fiscal year, as
compared to the preceding fiscal year. Any such cash bonus will be computed on a
formula basis established by the Committee. For the year ended December 31,
1996, Mr. Castle was paid a cash bonus of $90,000.
Section 162(m) of the Internal Revenue Code limits the tax deduction to $1
million for compensation paid to certain executives of public companies. Having
considered the requirements of Section 162(m), the Committee believes that
grants made pursuant to the Company's Amended and Restated 1991 Stock Incentive
Plan meet the requirement that such grants be "performance based" and are,
therefore, exempt from the limitations on deductibility. Historically, the
combined salary and bonus of each executive officer has been well below the $1
million limit. The Committee's present intention is to comply with Section
162(m) unless the Committee feels that required changes would not be in the best
interest of the Company or its shareholders.
Respectfully submitted by the Compensation Committee,
Paul J. Ferri
Steven C. Walske
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee was formed on February 1, 1995. Prior to that
date, the Board of Directors carried out compensation related functions. No
member of the Compensation Committee was or is an officer or employee of the
Company or any of its subsidiaries.
COMPENSATION OF DIRECTORS
In April 1995, the Company's Board of Directors and shareholders approved
the Amended and Restated 1994 Non-Employee Director Stock Option Plan (the
"Director Plan"). The Director Plan provides that each non-employee director of
the Company be granted an option to acquire 15,000 shares of common stock on the
date that person becomes a director, but, in any event, not earlier than the
effective date of the Director Plan, and annually be granted, beginning with the
January 1 falling at least 12 months after a Director's initial grant, an option
to purchase an additional 3,000 shares. Options are granted at a price equal to
the fair market value on the date of grant. The option becomes exercisable over
a four-year period, and the term of the option is ten years from the date of
grant.
Pursuant to the Director Plan, on January 1, 1996 Messrs. Ferri, Foster,
and Walske were each granted an option to acquire 3,000 shares at an exercise
price of $32.00 per share.
6
<PAGE> 10
SECTION 16(A) -- BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934, as amended,
requires the Company's officers, directors, and persons who own more than ten
percent (10%) of a registered class of the Company's equity securities to file
reports of ownership on Forms 3, 4, and 5 with the Securities and Exchange
Commission and the Company. Based on the Company's review of copies of such
forms, the following persons made late filings during the year ended December
31, 1995: Mr. Frank Winiarski, an executive officer of the Company, filed a Form
4 due July 10, 1996, reporting one transaction on November 7, 1996, and a Form 4
due December 10, 1996, reporting two transactions on February 6, 1997; Mr. Jack
O'Neil, an executive officer of the Company, filed a Form 4 due August 10, 1996,
reporting one transaction on March 18, 1997; Mr. Steven Walske, a Director of
the Company, filed a Form 5 due February 14, 1997, reporting one transaction on
April 9, 1997; and Bessemer Venture Partners II L.P. and related persons filed
14 late Forms 4 reporting 10 transactions on March 21, 1997.
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total returns for VideoServer's
Common Stock with the comparable return for the NASDAQ Stock Market Index and
the NASDAQ Electronic Components Stock Index (SIC Code 367), as calculated by
the Center for Research in Security Prices by the University of Chicago,
Graduate School of Business, for the period beginning May 25, 1995 and ending
December 31, 1996.
<TABLE>
<CAPTION>
Measurement Period NASDAQ Stock
(Fiscal Year Covered) VideoServer, Inc. SIC Code 367 Market Index
<S> <C> <C> <C>
5/25/95 100 100 100
6/30/95 229 109 106
9/29/95 207 118 119
12/29/95 185 102 121
3/29/96 149 101 126
6/28/96 229 116 137
9/30/96 204 140 142
12/31/96 250 176 148
</TABLE>
This graph assumes the investment of $100 in VideoServer's Stock, the
NASDAQ Index and the NASDAQ Electronic Components Stock Index as of May 25, 1995
(the date on which VideoServer's Common Stock was first registered with the SEC)
and assumes dividends were reinvested. Additional measurement points are at the
remaining quarter ends thereafter during the years ended December 31, 1995 and
December 31, 1996.
7
<PAGE> 11
PROPOSAL NO. 1 -- ELECTION OF DIRECTOR
The Board of Directors is divided into three classes. Each class serves a
three-year term. The Class II Director's term will expire at the Meeting. All
directors will hold office until their successors have been duly elected and
qualified.
The Board's nominee for Class II Director is William E. Foster. Shares
represented by all proxies received by the Board of Directors and not marked so
as to withhold authority to vote for Mr. Foster will be voted FOR the election
of the nominee. Mr. Foster will be elected to hold office until the Annual
Meeting of Shareholders to be held in 2000 and until his successor is duly
elected and qualified. The nominee has indicated his willingness to serve, if
elected; however, if he should be unable or unwilling to serve, the proxies will
be voted for the election of a substitute nominee designated by the Board of
Directors or for fixing the number of directors at a lesser number.
The following table sets forth for the nominee to be elected at the Meeting
and for each director whose term of office will extend beyond the Meeting, his
age, the position(s) currently held by each nominee or director with the
Company, the year such nominee or director was first elected a director, the
year each nominee's or director's term will expire, and the class of director of
each nominee or director.
<TABLE>
<CAPTION>
YEAR TERM CLASS OF
NOMINEE OR DIRECTOR'S NAME AGE POSITION(S) HELD DIRECTOR SINCE WILL EXPIRE DIRECTOR
- ------------------------------ --- ------------------------------- -------------- ----------- --------
<S> <C> <C> <C> <C> <C>
William E. Foster............. 52 Director 1994 1997 II
Rubin Gruber.................. 52 Vice President of Business 1991 1998 III
Development, and Director
Steven C. Walske.............. 45 Director 1994 1998 III
Robert L. Castle.............. 47 President, Chief Executive 1992 1999 I
Officer, and Director
Paul J. Ferri................. 58 Director 1991 1999 I
</TABLE>
William E. Foster has been a Director of the Company since November 1994.
Mr. Foster is a founder and has been Chairman of the Board and Chief Executive
Officer of Stratus Computer, Inc., a manufacturer of continuously available
computer platforms, since 1980. Mr. Foster also serves as a director of Avid
Technology, Inc.
Rubin Gruber was a founder of the Company and has served as a Director
since the inception of the Company and as Vice President of Business Development
since February 1992. Mr. Gruber served as President of the Company from the
Company's inception until February 1992, and as Treasurer from the Company's
inception until June 1995. He was a founder and served as President of Span
Communications, Inc., a development stage company, from August 1989 to August
1990. Previously, Mr. Gruber was a founder and served as President of both
Cambridge Telecommunications, Inc., a manufacturer of networking equipment, and
Davox Corporation, a developer of terminals supporting concurrent voice and data
applications, and as a Senior Vice President of Bolt, Beranek and Newman
Communications Corporation, a manufacturer of data communications equipment.
Steven C. Walske has been a Director of the Company since July 1994. He has
been Chairman of the Board and Chief Executive Officer of Parametric Technology
Corporation, a supplier of mechanical design and manufacturing software, since
August 1994. Previously, he had been President and Chief Executive Officer of
Parametric since 1986. Mr. Walske also serves as a director of Synopsys, Inc.,
and Logic Works, Inc.
Robert L. Castle has served as President of the Company since February
1992, as a Director since March 1992, and as Chief Executive Officer of the
Company since March 1993. Prior to joining the Company, Mr. Castle was employed
for eight years at FileNet Corporation, a supplier of document imaging
equipment, in various positions including Senior Vice President of Marketing
from October 1990 to February 1992 and Vice President of Marketing from December
1987 to October 1990. Previously, Mr. Castle held marketing and
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general management positions at Basic Four Corp., a developer of software
applications, and Sycor, Inc., a developer and manufacturer of data-entry
terminals.
Paul J. Ferri has been a Director of the Company since March 1991. He has
served as a General Partner of Matrix Partners, a venture capital firm, since
1982. Mr. Ferri also serves as a director of Applix, Inc.; BancTec. Inc.;
Cascade Communications Corp.; Stratus Computer Inc.; and Tech Force Corp.
BOARD MEETINGS AND COMMITTEES
The Board of Directors held a total of six meetings during the year ended
December 31, 1996. During that period, the Audit Committee of the Board held two
meetings and the Compensation Committee of the Board held seven meetings. Each
of the directors attended at least seventy-five percent (75%) of the meetings of
the Board of Directors and committees of the Board on which the director served
during the year.
The Compensation Committee consists of Messrs. Ferri and Walske. The
Compensation Committee determines the compensation of the Company's senior
management and administers the Company's stock option plans. The Audit Committee
comprises Messrs. Ferri, Foster, and Walske. The Audit Committee recommends
engagement of the Company's independent auditors, consults with the Company's
auditors concerning the scope of the audit, reviews the results of their
examination, reviews and approves any material accounting policy changes
affecting the Company's operating results, and reviews the Company's financial
controls.
The Board of Directors has no standing nominating committee.
CERTAIN TRANSACTIONS
There were no transactions to be reported in this section for the year
ended December 31, 1996.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION OF
THE NOMINEE LISTED ABOVE.
PROPOSAL NO. 2 -- RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has appointed the firm of Ernst & Young LLP,
independent certified public accountants, to serve as auditors for the fiscal
year ending December 31, 1997. Ernst & Young LLP has served as the Company's
auditors since 1993. It is expected that a member of the firm of Ernst & Young
LLP will be present at the Meeting and will be available to make a statement and
to respond to appropriate questions. If the shareholders do not ratify the
selection of Ernst & Young LLP, the Board of Directors may consider selection of
other independent certified public accountants to serve as independent auditors,
but no assurances can be made that the Board of Directors will do so or that any
other independent certified public accountants would be willing to serve.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE RATIFICATION
OF THE APPOINTEES.
VOTING PROCEDURES
The affirmative vote of a plurality of the shares of the Company's Common
Stock present or represented at the Meeting and entitled to vote is required for
the election of the Class II Director and the affirmative vote of a majority of
such shares is required for the ratification of the appointment of the Company's
auditors. For purposes of determining whether a proposal has received a majority
vote, abstentions will be included in the vote totals, with the results that an
abstention will have the same effect as a negative vote. In instances where
brokers are prohibited from exercising discretionary authority for beneficial
holders who have not returned a proxy (so-called "broker non-votes"), those
shares will not be included in the vote totals and, therefore, will have no
effect on the outcome of the vote. Shares that abstain or for which the
authority to vote is withheld on certain matters will, however, be treated as
present for quorum purposes on all matters.
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OTHER BUSINESS
The Board of Directors knows of no business which will be presented for
consideration at the Meeting other than that stated above. If other business
should come before the Meeting, the persons named in the proxies solicited
hereby, each of whom is an employee of the Company, may vote all shares subject
to such proxies with respect to any such business in the best judgment of such
persons.
SHAREHOLDER PROPOSALS
It is currently contemplated that the 1998 Annual Meeting of Shareholders
will be held on or about May 13, 1998. Proposals of shareholders intended for
inclusion in the proxy statement to be furnished to all shareholders entitled to
vote at the next annual meeting of the Company must be received at the Company's
principal executive offices not later than December 12, 1997. It is suggested
that proponents submit their proposals by certified mail, return receipt
requested.
Dated: April 11, 1997
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DETACH HERE
VIDEOSERVER, INC.
This Proxy is Solicited on Behalf of the Board of
P Directors of the Company for its Annual Meeting
May 14, 1997
R
The undersigned hereby appoints Paul L. Criswell and Stephen J. Nill
O as proxies, each with full power of substitution, and hereby authorizes
them or either of them to represent and to vote as designated below all
X the shares of Common Stock of VideoServer, Inc., held of record by the
undersigned on April 1, 1997, at the Annual Meeting of Stockholders to
Y be held at The Marriott, Burlington, Massachusetts on May 14, 1997 and
at any adjournments or postponements thereof.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS
GIVEN, THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF DIRECTOR AND
"FOR" THE OTHER PROPOSAL.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
-------------
SEE REVERSE
SIDE
-------------
<PAGE> 15
DETACH HERE
PLEASE MARK
[X] VOTES AS IN
THIS EXAMPLE.
1. Election of one Class II Director
NOMINEES: William E. Foster
WITHHELD
FOR FROM
NOMINEE NOMINEE
[ ] [ ]
FOR AGAINST ABSTAIN
2. Ratification of Appointment of
Independent Accountants. [ ] [ ] [ ]
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
MARK HERE
FOR ADDRESS [ ]
CHANGE AND
NOTE AT LEFT
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY FORM PROMPTLY USING THE ENCLOSED
SELF-ADDRESSED ENVELOPE.
Please sign exactly as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such. If shares are held of record by a corporation, please sign
in full corporate name by president or other authorized officer. Partnerships
should sign in partnership name by an authorized signatory.
Signature: Date: Signature: Date:
