<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:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
THE VANTIVE CORPORATION
(Name of Registrant as Specified In Its Charter)
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 0-11:1
--------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------
5) Total fee paid:
1 Set forth the amount on which the filing fee is calculated and
state how it was determined.
[ ] 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> 2
THE VANTIVE CORPORATION
2455 AUGUSTINE DRIVE
SANTA CLARA, CA 95054
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 1, 1997
To the Stockholders of The Vantive Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of The
Vantive Corporation (the "Company") will be held on Thursday, May 1, 1997, at
9:00 a.m. at The Westin Hotel at 5101 Great America Parkway, Santa Clara,
California, for the following purposes:
1. To elect seven (7) members of the Board of Directors to hold
office until the 1998 Annual Meeting of Stockholders and until
their respective successors are elected and qualified.
2. To consider and vote upon a proposal to amend the Company's
1991 Stock Option Plan to (i) increase the maximum aggregate
number of shares of the Company's Common Stock issuable
thereunder by 1,200,000 shares and (ii) limit the number of
shares of the Company's Common Stock underlying options
granted to any single individual per fiscal year to 800,000
shares;
3. To vote upon a proposal to ratify the appointment of Arthur
Andersen LLP as the Company's independent public accountants
for the year ending December 31, 1997.
4. To transact such other business as may properly come before
the meeting.
Stockholders of record at the close of business on March 16, 1997 are
entitled to notice of, and to vote at, this meeting and any adjournments
thereof. For ten days prior to the meeting, a complete list of the
stockholders entitled to vote at the meeting will be available for examination
by any stockholder for any purpose relating to the meeting during ordinary
business hours at the principal office of The Vantive Corporation.
By Order of the Board of Directors
KATHLEEN A. MURPHY
Secretary
Santa Clara, California
April 4, 1997
STOCKHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND
RETURN IT IN THE ENCLOSED POSTAGE-PREPAID ENVELOPE. PROXIES ARE REVOCABLE, AND
ANY STOCKHOLDER MAY WITHDRAW HIS PROXY AND VOTE IN PERSON AT THE MEETING.
<PAGE> 3
THE VANTIVE CORPORATION
2455 AUGUSTINE DRIVE
SANTA CLARA, CA 95054
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
APRIL 4, 1997
The accompanying proxy is solicited by the Board of Directors of The
Vantive Corporation, a Delaware corporation (the "Company"), for use at the
1997 Annual Meeting of Stockholders to be held May 1, 1997, or any adjournment
thereof, for the purposes set forth in the accompanying Notice of Annual
Meeting. The date of this Proxy Statement is April 4, 1997, the approximate
date on which this Proxy Statement and the accompanying form of proxy were
first sent or given to stockholders.
GENERAL INFORMATION
Annual Report. An annual report for the year ended December 31, 1996,
is enclosed with this Proxy Statement.
Voting Securities. Only stockholders of record as of the close of
business on March 16, 1997 will be entitled to vote at the meeting and any
adjournment thereof. As of that date, there were 24,283,469 shares of Common
Stock of the Company, par value $0.001 per share, issued and outstanding.
Stockholders may vote in person or by proxy. Each holder of shares of Common
Stock is entitled to one vote for each share of stock held on the proposals
presented in this Proxy Statement. The Company's bylaws provide that a
majority of all of the shares of the stock entitled to vote, whether present in
person or represented by proxy, shall constitute a quorum for the transaction
of business at the meeting.
Solicitation of Proxies. The cost of soliciting proxies will be borne
by the Company. In addition to soliciting stockholders by mail and through its
regular employees, the Company may request banks and brokers, and other
custodians, nominees and fiduciaries, to solicit their customers who have stock
of the Company registered in the names of such persons and will reimburse them
for their reasonable, out-of-pocket costs. The Company may use the services of
its officers, directors, and others to solicit proxies, personally or by
telephone, without additional compensation.
Voting of Proxies. All valid proxies received prior to the meeting
will be voted. All shares represented by a proxy will be voted, and where a
stockholder specifies by means of the proxy a choice with respect to any matter
to be acted upon, the shares will be voted in accordance with the specification
so made. If no choice is indicated on the proxy, the shares will be voted in
favor of the proposal. A stockholder giving a proxy has the power to revoke
his or her proxy, at any time prior to the time it is voted, by delivery to the
Secretary of the Company of a written instrument revoking the proxy or a duly
executed proxy with a later date, or by attending the meeting and voting in
person.
1
<PAGE> 4
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of January 18,
1997, with respect to the beneficial ownership of the Company's Common Stock by
(i) each director and director-nominee of the Company, (ii) the Chief Executive
Officer, the four other highest compensated executive officers of the Company
whose salary and bonus for the year ended December 31, 1996 exceeded $100,000,
(iii) all directors and executive officers of the Company as a group and (iv)
each person known by the Company to own more than 5% of the Company's Common
Stock.
<TABLE>
<CAPTION>
Shares Owned (1)
-----------------------------
Name and Address of Number of Percentage of
Beneficial Owners Shares Class
-----------------------------
<S> <C> <C>
DIRECTORS AND EXECUTIVE OFFICERS
John R. Luongo (2) . . . . . . . . . . . . . . . . . . . . . . . 1,634,500 6.7
Roger J. Sippl (3) . . . . . . . . . . . . . . . . . . . . . . . 1,081,644 4.5
c/o Visigenic Software, Inc.
951 Mariner's Island Blvd., Suite 460
San Mateo, CA 94404
William H. Davidow (4) . . . . . . . . . . . . . . . . . . . . . 202,646 *
c/o Mohr, Davidow Ventures
3000 Sand Hill Road
Bldg. 1, Suite 240
Menlo Park, CA 94025
Peter A. Roshko (5) . . . . . . . . . . . . . . . . . . . . . . . 23,850 *
c/o Granite Investments
735 Montgomery Street, Suite 400
San Francisco, CA 94111
Kevin G. Hall (6) . . . . . . . . . . . . . . . . . . . . . . . . 18,150 *
c/o Norwest Equity Partners
3000 Sand Hill Road
Bldg. 3, Suite 105
Menlo Park, CA 94025
Aneel Bhusri (7) . . . . . . . . . . . . . . . . . . . . . . . . 2,000 *
c/o PeopleSoft, Inc.
4440 Rosewood Drive
Pleasanton, CA 94588
Raymond L. Ocampo Jr. (8) . . . . . . . . . . . . . . . . . . . . -- --
John M. Jack (9) . . . . . . . . . . . . . . . . . . . . . . . . 331,200 1.4
Kathleen A. Murphy (10) . . . . . . . . . . . . . . . . . . . . . 279,200 1.1
Christopher W. Lochhead (11) . . . . . . . . . . . . . . . . . . 240,000 *
Michael M. Loo (12) . . . . . . . . . . . . . . . . . . . . . . . 126,390 *
All directors and executive officers as a group
(12 persons) (13) . . . . . . . . . . . . . . . . . . . . . . . 4,039,680 16.0
</TABLE>
2
<PAGE> 5
<TABLE>
<S> <C> <C>
FORMER EXECUTIVE DIRECTOR AND OFFICER
Steven M. Goldsworthy (14) . . . . . . . . . . . . . . . . . . . 1,736,667 7.2
2784 Glorietta Avenue
Santa Clara, CA 95051
5% STOCKHOLDERS
Putman Investments, Inc. (15) . . . . . . . . . . . . . . . . . . 3,501,069 14.5
One Post Office Square
Boston, MA 012109
FMR Corp. (16) . . . . . . . . . . . . . . . . . . . . . . . . . 2,971,797 12.3
82 Devonshire Street
Boston, MA 02109
T. Rowe Price Associates, Inc. . . . . . . . . . . . . . . . . . 1,471,986 6.1
100 E. Pratt Street
Baltimore, MD 21202
</TABLE>
______________
* Represents less than 1%.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that
person, shares of Common Stock subject to options or warrants held by
that person that are currently exercisable, or become exercisable
within 60 days following January 18, 1997, are deemed outstanding.
However, such shares are not deemed outstanding for purposes of
computing the percentage ownership of any other person. All options
held by the individuals named in the table are immediately
exercisable, subject to a right of repurchase in favor of the Company
for all exercised unvested shares. Unless otherwise indicated in the
footnotes to this table, the persons and entities named in the table
have sole voting and sole investment power with respect to all shares
beneficially owned, subject to community property laws where
applicable. Unless otherwise indicated in the table, the individuals
named in the table may be contacted c/o The Vantive Corporation, 2455
Augustine Drive, Santa Clara, CA 95054.
(2) Mr. Luongo is President, Chief Executive Officer and a director of the
Company. Includes 150,000 shares subject to options exercisable
within 60 days of January 18, 1997. Of the shares indicated as owned
by Mr. Luongo, 256,501 shares were subject to a right of repurchase in
favor of the Company as of January 18, 1997.
(3) Mr. Sippl is the Chairman of the Board of Directors of the Company.
Includes 168,718 shares held by his spouse. Mr. Sippl disclaims
beneficial ownership of all such shares. Also includes 6,250 shares
subject to options exercisable within 60 days of January 18, 1997.
(4) Mr. Davidow is a director of the Company. Includes 145,352 shares
held by The Davidow Family Trust dated 7/26/91 of which Mr Davidow is
a trustee. Also includes 51,044 shares held by Mohr, Davidow Ventures
II. Mr. Davidow is a General Partner of Mohr, Davidow Ventures II and
therefore may be deemed to own shares currently owned by Mohr, Davidow
Ventures II. Mr. Davidow disclaims beneficial ownership of all such
shares, except for his proportionate partnership interest therein.
Also includes 6,250 shares subject to options exercisable within 60
days of January 18, 1997.
(5) Mr. Hall is a director of the Company. Includes 6,250 shares subject
to options exercisable within 60 days of January 18, 1997.
(6) Mr. Roshko is a director of the Company. Includes 6,250 shares
subject to options exercisable within 60 days of January 18, 1997.
Mr. Roshko was previously affiliated with Mohr, Davidow Ventures II
and retains a proportionate partnership interest 51,044 shares owned
by Mohr, Davidow Ventures II.
(7) Mr. Bhusri is a director of the Company.
(8) Mr. Ocampo is a director of the Company.
(9) Mr. Jack is Chief Operating Officer of the Company. Includes 330,000
shares subject to options exercisable within 60 days of January 18,
1997. Of the shares indicated as owned by Mr. Jack, 230,958 shares
were subject to a right of repurchase in favor of the Company as of
January 18, 1997.
3
<PAGE> 6
(10) Ms. Murphy is Chief Financial Officer and Secretary of the Company.
Includes 255,778 shares subject to options exercisable within 60 days
of January 18, 1997. Of the shares indicated as owned by Ms. Murphy,
198,293 shares were subject to a right of repurchase in favor of the
Company as of January 18, 1997.
(11) Mr. Lochhead is Executive Vice President of Strategic Marketing of the
Company. Represents shares subject to options exercisable within 60
days of January 18, 1997. Of the shares indicated as owned by Mr.
Lochhead, 205,000 shares were subject to a right of repurchase in
favor of the Company as of January 18, 1997.
(12) Mr. Loo is Vice President, Finance of the Company. Includes 57,240
shares subject to options exercisable within 60 days of January 18,
1997. Of the shares indicated as owned by Mr. Loo, 42,078 shares were
subject to a right of repurchase in favor of the Company as of January
18, 1997.
(13) See Notes (2) through (12). Includes 1,158,018 shares subject to
options exercisable within 60 days of January 18, 1997. Of the shares
indicated as owned by these stockholders, 1,032,830 shares are subject
to a right of repurchase in favor of the Company as of January 18,
1997.
(14) Mr. Goldsworthy resigned as the Company's Chairman of the Board and
Chief Technology Officer in December 1996. Includes 11,667 shares
subject to options exercisable within 60 days of January 18, 1997.
(15) Putnum Investments, Inc., which is a wholly-owned subsidiary of Marsh
& McLennan Companies, Inc., wholly owns two registered investments
advisers: Putman Investment Management, Inc., which is the investment
adviser to the Management, Inc., which is the investment adviser to
the Putnam family of mutual funds and the Putman Advisory Company,
Inc., which is the investment adviser to Putman's institutional
clients. Both subsidiaries have dispository power over the shares as
investment managers, but each of the mutual fund's trustees have
voting power over the shares held by each fund, and the Putman
Advisory Company, Inc. has shared voting power over the shares held by
the institutional clients.
(16) Includes 1,910,597 shares held by Fidelity Management & Research
Company, a wholly-owned subsidiary of FMR Corp., as a result of acting
as investment adviser to several investment companies registered under
the Investment Company Act of 1940 (the "Funds"). Edward C. Johnson
3d, the Chairman of FMR Corp. (through the control of Fidelity by FMR
Corp.) and the Funds each has sole power to dispose of the 1,061,200
shares owned by the Funds. Neither FMR Corp. nor Edward C. Johnson 3d
has the sole power to vote or direct the voting of the shares owned
directly by the Fidelity Funds, which power resides with the Funds'
Boards of Trustees. Fidelity carries out the voting of the shares
under written guidelines established by the Funds' Boards of Trustees.
Also includes 1,061,200 shares held by Fidelity Management Trust
Company, a wholly-owned subsidiary of FMR Corp., as a result of its
serving as investment manager of the institutional accounts. Edward
C. Johnson 3d and FMR Corp. (through the control of Fidelity
Management Trust Company by FMR Corp.), has sole dispositive power
1,061,200 and sole power to vote or to direct the voting of 1,061,200
shares of common stock owned by the institutional account(s) as
reported above. Edward C. Johnson 3d and Abigail P. Johnson own 12.0%
and 24.5% of the outstanding voting common stock of FMR Corp.,
respectively. Various Johnson family members and trusts for the
benefit of Johnson family members own FMR Corp. voting common stock.
These Johnson family members, through their ownership of voting common
stock and the execution of a family shareholder's voting agreement,
form a controlling group with respect to FMR Corp.
4
<PAGE> 7
ELECTION OF DIRECTORS
Seven (7) directors, constituting the Company's full Board, are to be
elected at the Annual Meeting. If elected, the nominees will serve as directors
until the Company's Annual Meeting of Stockholders in 1998, and until their
successors are elected and qualified.
Management's nominees for election to the Board of Directors and
certain information with respect to their age and background are set forth
below. Management knows of no reason why any nominee should be unable or
unwilling to serve. However, if any nominee(s) should for any reason be unable
or unwilling to serve, the proxies will be voted for such substitute nominees
as management may designate.
If a quorum is present and voting, the nominees for directors
receiving the highest number of votes will be elected as directors.
Abstentions and shares held by brokers that are present, but not voted because
the brokers were prohibited from exercising discretionary authority, i.e.,
"broker non-votes," will be counted as present for purposes of determining if a
quorum is present.
<TABLE>
<CAPTION>
DIRECTOR
Name Position With the Company Age SINCE
---- ------------------------- --- --------
<S> <C> <C> <C>
John R. Luongo President, Chief Executive Officer 47 1993
and Director
Roger J. Sippl Chairman of the Board 42 1990
Aneel Bhusri Director 31 1996
William H. Davidow Director 61 1991
Kevin G. Hall Director 38 1994
Raymond L. Ocampo Jr. Director 44 1997
Peter A. Roshko Director 38 1991
</TABLE>
John R. Luongo has been President, Chief Executive Officer and a
director of the Company since June 1993. He was an independent consultant from
November 1992 to June 1993, President, Chief Executive Officer and Chairman of
the Board of Trifox, Inc., a software company, from September 1991 to November
1992, Senior Consultant at Merrill, Pickard, Andersen and Eyre, a venture
capital firm, from September 1990 to June 1991 and Senior Vice President
International Division, at Oracle Corporation from July 1982 to July 1990.
Roger J. Sippl is a co-founder of the Company and has served as a
director of the Company since December 1990 and as Chairman of the Board since
1996. Mr. Sippl is the founder of Visigenic Software, Inc., where he has
served as Chief Executive Officer and Chairman of the Board since January 1993.
Prior to his relationship with Visigenic Software, Inc., Mr. Sippl founded
Informix Corporation in 1980 and served as that company's Chairman of the Board
until 1992.
Aneel Bhusri has served as a director of the Company since December
1996. He served in several capacities with PeopleSoft, Inc. since August 1993,
currently as its Senior Vice President of Product Strategy. From June 1992 to
March 1993, Mr. Bhusri served as an associate at Norwest Venture Capital. From
1988 to 1991, he was a financial analyst in Morgan Stanley's Corporate Finance
Department.
William H. Davidow has served as a director of the Company since July
1991. He has been a General Partner at Mohr, Davidow Ventures since May 1985.
5
<PAGE> 8
Kevin G. Hall has served as a director of the Company since May 1994.
He has served as a General Partner of Norwest Equity Partners, IV since August
1993. Prior to his relationship with Norwest Equity Partners, IV, he served as
a principal in Brentwood Associates, a venture capital firm, from June 1988 to
August 1993.
Raymond L. Ocampo Jr. has served as a director of the Company since
January 1997. He served in several capacities with Oracle Corporation from
July 1986 to November 1996, primarily and most recently as its Senior Vice
President, General Counsel and Corporate Secretary.
Peter A. Roshko has served as a director of the Company since July
1991. Mr. Roshko co-founded and has been a co-Member of Granite Investments,
an investment company, since August 1995. From December 1993 to August 1995.
From December 1993 to August 1995, Mr. Roshko was a General Partner at
Cottonwood Ventures, a venture capital firm. From June 1993 to December 1993,
Mr. Roshko was an independent investor and consultant in the venture capital
industry. Mr. Roshko was a General Partner at Mohr, Davidow Ventures from
March 1987 to June 1993.
During 1996, the Board held nine meetings. No incumbent director
attended fewer than 75% of such meetings of the Board and the Committees on
which he serves.
The Company has an Audit Committee, a Compensation Committee and
Nominating Committee.
The Audit Committee's function is to review with the Company's
independent accountants and management the annual financial statements and
independent accountants' opinion, review the scope and results of the
examination of the Company's financial statements by the independent
accountants, approve all professional services and related fees performed by
the independent accountants, recommend the retention of the independent
accountants to the Board, subject to ratification by the stockholders, and
periodically review the Company's accounting policies and internal accounting
and financial controls. The members of the Audit Committee are Messrs. Davidow
and Sippl. During 1996, the Audit Committee held three meetings.
The Compensation Committee's function is to review and establish
salary levels for executive officers, including the Chief Executive Officer,
and certain other management employees and to grant stock options. The members
of the Compensation Committee are Messrs. Hall, Ocampo and Roshko. During
1996, the Compensation Committee held three meetings. For additional
information concerning the Compensation Committee, see "Compensation Committee
Report On Executive Compensation."
The Nominating Committee's function is to select new members to fill
vacancies on the Board occurring between stockholder meetings and to determine
which candidates will be presented to the stockholders as nominees for
election, subject to approval by the Board. The members of the Nominating
Committee are Messrs. Davidow, Luongo and Sippl. During 1996, the Nominating
Committee held two meetings.
6
<PAGE> 9
EXECUTIVE COMPENSATION AND OTHER MATTERS
The following table sets forth information concerning the compensation
of the Chief Executive Officer of the Company and the four other most highly
compensated executive officers of the Company as of December 31, 1996 whose
total salary and bonus for 1996 exceeded $100,000, for services in all
capacities to the Company, during 1996, 1995 and 1994:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation Compensation
----------------------------------------- Awards
Options
Name and Principal Position Year Salary Bonus (Shares)
--------------------------- ---- -------- ----------- ------------
<S> <C> <C> <C> <C>
John R. Luongo . . . . . . . . . . . . . 1996 $180,452 $ -- 100,000
President and Chief Executive Officer 1995 $180,000 $ -- 124,500
1994 $179,207 $ -- 240,000
John M. Jack (1) . . . . . . . . . . . . 1996 $130,000 $328,161 34,000
Chief Operating Officer 1995 $86,667 $159,843 326,000
Kathleen A. Murphy (2) . . . . . . . . . 1996 $143,045 $35,000 12,800
Chief Financial Officer and 1995 $ 56,167 $ 5,000 285,200
Secretary
Christopher W. Lochhead (3) . . . . . . . 1996 $83,370 $75,000 240,000
Executive Vice President of
Strategic Marketing
Michael M. Loo . . . . . . . . . . . . . 1996 $99,665 $32,500 16,900
Vice President, Finance 1995 $92,771 $10,000 43,000
1994 $85,000 $20,000 --
</TABLE>
______________
(1) Mr. Jack joined the Company in May 1995.
(2) Ms. Murphy joined the Company in August 1995.
(3) Mr. Lochhead joined the Company in June 1996.
7
<PAGE> 10
The following table provides the specified information concerning
grants of options to purchase the Company's Common Stock made during 1996 to
the persons named in the Summary Compensation Table:
<TABLE>
<CAPTION>
OPTION GRANTS IN 1996
Potential Realizable
Value at Assumed Annual
Rates of Stock Price
% of Total Appreciation for Option
Options Term(1)
Options Granted to Exercise -----------------------
Granted Employees in Price Expiration
Name (Shares)(2) Fiscal Year ($/Sh)(2) Date 5% ($) 10% ($)
---- ----------- ------------ --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
John R. Luongo 100,000 6.1% $11.75 3/28/06 $738,951 $1,872,647
John M. Jack 34,000 2.1% $12.75 7/17/06 $272,626 $690,887
Kathleen A. Murphy 12,800 0.8% $12.75 7/17/06 $102,636 $260,099
Christopher W. Lochhead 240,000 14.6% $12.75 7/17/06 $1,924,416 $4,876,850
Michael M. Loo 16,900 1.0% $12.75 7/17/06 $129,818 $328,934
</TABLE>
_________________________________
(1) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. The
assumed 5% and 10% rates of stock price appreciation are mandated by
rules of the Securities and Exchange Commission and do not represent
the Company's estimate or projection of the future Common Stock price.
This table does not take into account any appreciation in the price of
the Common Stock to date.
(2) All options granted in 1996 were granted under the Company's 1991
Stock Option Plan (the "Option Plan"). Under such Option Plan, the
Board of Directors retains discretion to modify the terms, including
the price, of outstanding options. Options granted under the Option
Plan are immediately exercisable, subject to a right of repurchase in
favor of the Company for all exercised unvested shares. All options
were granted at fair market value as determined by the Board of
Directors of the Company on the date of grant. The Company's Common
Stock was not traded publicly at the time of the option grants to the
officers. See also "Management--Termination and Change of Control
Arrangements."
8
<PAGE> 11
The following table provides the specified information concerning
exercises of options to purchase the Company's Common Stock in 1996, and
unexercised options held as of December 31, 1996, by the persons named in the
Summary Compensation Table:
AGGREGATE OPTION EXERCISES IN 1996
AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Value of Unexercised In-the-
Number of Unexercised Options Money Options at
at 12/31/96 12/31/96(1)
----------------------------- -----------------------------
Shares
Acquired on Value
Name Exercise Realized(2) Exercisable Unexercisable Exercisable Unexercisable
- ----- ------------ ----------- ----------- ------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
John R. Luongo . . . . . . -- -- 150,000 -- $3,437,500 --
John M. Jack . . . . . . . 30,000 $640,000 330,000 -- $9,432,000 --
Kathleen A. Murphy . . . . 42,222 $457,777 255,778 -- $6,699,737 --
Christopher W. Lochhead . . -- -- 240,000 -- $4,440,000 --
Michael M. Loo . . . . . . 1,950 $29,250 57,240 -- $1,441,306 --
</TABLE>
________________
(1) Calculated on the basis of the fair market value of the underlying
securities at December 31, 1996 of $31.25 per share, as reported by
the Nasdaq National Market, minus the aggregate exercise price.
(2) "Value Realized" represents the fair market value of the underlying
securities on the exercise date minus the aggregate exercise price of
such options.
TERMINATION AND CHANGE OF CONTROL ARRANGEMENTS
The Option Plan provides that, in the event of (i) a sale or exchange
by the stockholders of all or substantially all of the Company's voting stock
or certain mergers or consolidations to which the Company is a party in which
the stockholders of the Company do not retain beneficial ownership of at least
a majority of the voting stock of the Company or its successor, (ii) the sale,
exchange or transfer of all or substantially all of the assets of the Company
other than to one or more subsidiary corporations, or (iii) a liquidation or
dissolution of the Company, the Board of Directors of the Company may provide
for the acquiring or successor corporation to assume or substitute new options
for the options outstanding under the Option Plan. To the extent that the
options outstanding under the Option Plan are not assumed, substituted for, or
exercised prior to such event, they will terminate. In addition, the Company
has agreed with each of John R. Luongo, John M. Jack, Kathleen A. Murphy and
Christopher W. Lochhead that each will be credited with 12 months of service
for purposes of option vesting in the event of any change in control of the
Company.
DIRECTOR COMPENSATION
Directors do not receive any cash compensation for their services as
members of the Board of Directors, although they are reimbursed for their
expenses in attending Board and committee meetings. In addition, each director
who is not a member of management will receive stock options to purchase 10,000
shares of Common Stock pursuant to the 1995 Outside Directors Stock Option Plan
9
<PAGE> 12
(the "Directors Plan") upon the anniversary of the initial grant to such
director under the Directors Plan.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers, directors and persons who beneficially own more
than 10% of the Company's Common Stock to file initial reports of ownership and
reports of changes in ownership with the Securities and Exchange Commission
("SEC"). Such persons are required by SEC regulations to furnish the Company
with copies of all Section 16(a) forms filed by such person.
Based solely on the Company's review of such forms furnished to the
Company and written representations from certain reporting persons, the Company
believes that all filing requirements applicable to the Company's executive
officers, directors and greater than 10% stockholders were complied with except
for statements of changes in beneficial ownership for the distributions by a
partnership to director Roshko of 15,868 shares in each of February 1996 and
March 1996, respectively, which were reported late.
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<PAGE> 13
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
In 1996, the Compensation Committee (the "Committee") was composed of
Messrs. Hall and Roshko and, until September 1996, Mr. Yogen Dalal, a former
director of the Company. In addition, Mr. Ocampo has served on the Committee
since January 1997. Each of these individuals is a non-employee member of the
Company's Board of Directors. The Committee is responsible for setting and
administering policies governing compensation of executive officers. For all
executive officers, the Committee reviews the performance and compensation
levels for executive officers, sets salary and bonus levels and makes option
grants under the Company's 1991 Stock Option Plan.
COMPENSATION POLICIES GENERALLY.
The goals of the Company's executive officer compensation policies are
to attract, retain and reward executive officers who contribute to the
Company's success, to align executive officer compensation with the Company's
performance and to motivate executive officers to achieve the Company's
business objectives. The Company uses salary, executive officer bonuses and
stock options to achieve these goals. The Committee reviews compensation
surveys and other data to enable the Committee to compare the Company's
compensation package with that of similarly-sized high technology companies in
the Company's geographic area.
SALARY. Base salaries of executive officers other than for Mr. John
Luongo, the Company's President and Chief Executive Officer, and Mr. Steven
Goldsworthy, the Company's former Chief Technology Officer, are reviewed
annually by Mr. Luongo, and adjustments are made, based on individual executive
officer performance, scope of responsibilities and levels paid by
similarly-sized high technology companies in the Company's geographic area.
The base salary of Mr. Goldsworthy was reviewed by the Committee and was based
on similar factors.
BONUSES. The Compensation Committee believes that cash
performance-based compensation incentives build stockholder value and align the
interests of executive officers with the stockholders. In 1996, each of the
Company's executive officers developed goals and objectives for each year in
consultation with Mr. Luongo. Mr. Luongo recommended, and the Committee
reviewed and approved, a cash bonus compensation structure for each such
executive officer based on the individual's overall performance, attainment of
the predetermined financial and other goals, and the Company's performance.
STOCK OPTIONS. The Committee strongly believes that equity ownership
by executive officers provides incentives to build stockholder value and align
the interests of executive officers with the stockholders. The size of an
initial option grant to an executive officer has generally been determined with
reference to similarly-sized high technology companies in the Company's
geographic area for similar positions, the responsibilities and future
contributions of the executive officer, as well as recruitment considerations.
In this regard, during 1996 options were granted to Mr. Christopher Lochhead,
the Company's Executive Vice President of Strategic Marketing, and to Mr. Garry
Hallee, the Company's Senior Vice President of Engineering, upon each such
executive officer commencing employment with the Company. For subsequent
option grants, options have been granted to each executive officer who had not
commenced employment during 1996 on a quarterly basis primarily based on
attainment of predetermined financial and other goals.
In addition, the Company has entered into agreements with each of Mr.
Jack, Ms. Murphy and Mr. Lochhead which provide that, upon a change in control
(as defined in the agreement), these executive officers will be entitled to an
acceleration by twelve months of the vesting of any then exercisable stock
options previously granted under the Company's stock option plan. The
Committee believes the agreements are appropriate because they would allow
these executive officers to implement a change in control without being
distracted by concerns over the loss of their personal
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<PAGE> 14
livelihood. This would provide the Company the strongest possible negotiating
team and help the Company to make a successful transition. See "Termination
and Change of Control Agreements."
CHIEF EXECUTIVE OFFICER COMPENSATION.
The Compensation Committee annually reviews the performance and
compensation of Mr. Luongo. Mr. Luongo has served as the Company's President
and Chief Executive Officer since June 1993. The compensation of Mr. Luongo is
based upon the same criteria outlined above for the other executive officers of
the Company. While the Chief Executive Officer makes recommendations about the
compensation levels, goals and performance of the other executive officers, he
does not participate in discussions regarding his compensation or performance.
In order to increase the portion of his total compensation which was
performance-based, his base salary in 1996 remained substantially unchanged
from his 1995 base salary. In 1996, the Committee awarded Mr. Luongo with a
bonus in the form of options to purchase 100,000 shares of the Company's common
stock, based upon the Committee's assessment of the Company's strong financial
performance and to align the interests of Mr. Luongo with its stockholders.
Upon a change in control (as defined in the agreement), Mr. Luongo
will be entitled to an acceleration by twelve months of the vesting of any then
exercisable stock options previously granted to Mr. Luongo under the Company's
stock option plan. The Committee believes the agreement is appropriate for the
reasons stated above. See "Termination and Change of Control Agreements."
COMPENSATION COMMITTEE
Kevin G. Hall
Raymond L. Ocampo Jr.
Peter Roshko
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<PAGE> 15
COMPARISON OF STOCKHOLDER RETURN
Set forth below is a line graph comparing the annual percentage change
in the cumulative total return on the Company's Common Stock with the
cumulative total return of the Nasdaq Stock Market Index (U.S. companies only)
and the Nasdaq Computer & Data Processing Stocks Index for the period
commencing on August 15, 1995, the first day of trading following the date of
the Company's initial public offering, and ending on December 31, 1996.
COMPARISON OF CUMULATIVE TOTAL RETURN
FROM AUGUST 15, 1995 THROUGH DECEMBER 31, 1996(1):
THE VANTIVE CORPORATION, NASDAQ STOCK MARKET - U.S. INDEX,
NASDAQ COMPUTER & DATA PROCESSING STOCKS INDEX
[GRAPH]
<TABLE>
<CAPTION>
August 15, December 31, December 31,
1995 1995 1996
------------ -------------- --------------
<S> <C> <C> <C>
The Vantive Corporation(2) $100.00 $187.50 $520.83
Nasdaq Computer & Data Processing Stocks Index $100.00 $104.49 $128.85
Nasdaq Stock Market - U.S. Index $100.00 $104.27 $128.30
</TABLE>
________________________
(1) Assumes that $100.00 was invested on August 15, 1995 in
the Company's Common Stock and each index. Stockholder
returns over the indicated period should not be
considered indicative of future stockholder returns.
(2) Reflects a two-for-one stock split in the form a 100% stock
dividend paid in October 1996.
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<PAGE> 16
PROPOSAL TO AMEND THE 1991 STOCK OPTION PLAN
The Board of Directors and the stockholders approved the adoption of
the 1991 Stock Option Plan (the "Option Plan") in October 1991 and October
1992, respectively. Amendments to the Option Plan have been adopted by the
Board and approved by the stockholders from time to time. As of February 28,
1997, the maximum number of shares of the Common Stock of the Company which may
be issued upon the exercise of options granted pursuant to the Option Plan is
7,000,000, of which 3,436,783 shares were outstanding and 355,687 shares
remained available for future stock option grants. The Board of Directors has
amended the Option Plan, subject to stockholder approval (i) to increase by
1,200,000 the maximum aggregate number of shares of the Common Stock of the
Company that may be issued thereunder and (ii) to limit the number of shares of
Common Stock underlying options granted to any single individual per fiscal
year to 800,000.
Effective January 1, 1994, changes were made to the federal corporate
income tax law that limit the ability of public companies to deduct
compensation in excess of $1 million paid annually to the company's CEO and
the four other most highly compensated executive officers. These are
exemptions from this limit -- including compensation based on the attainment of
performance goals established by the Compensation Committee and approved by the
Company's stockholders. Currently, any compensation paid by the Company
pursuant to the Option Plan is excluded from this $1 million limitation.
However, if the stockholders approve the proposed increase to the share reserve
of the Option Plan, the Company will be unable to rely upon this exemption
unless the stockholders also approve a limit on the aggregate number of shares
of stock underlying the options that may be granted after such amendment to any
eligible employee under the Option Plan during a fiscal year.
The Board of Directors believes that approval of the amendments to the
Option Plan is in the best interests of the Company and its stockholders
because the availability of an adequate number of shares reserved for issuance
under the Option Plan and the ability to grant stock options is an important
factor in attracting, motivating and retaining qualified personnel essential to
the success of the Company. Consequently, the Company grants options to each
employee and each employee is eligible for an additional annual grant, based on
his or her performance. The Company has experienced substantial growth in 1995
and 1996 with revenues growing from $10,214,000 in 1994 to $64,274,000 in 1996.
This has required significant growth in the number of full-time employees,
which increased from 84 at January 1, 1995 to 254 at December 31, 1996, and
resulted in options to purchase an aggregate of 3,760,575 shares being granted
during 1995 and 1996. The Company also believes that ensuring the availability
of an adequate number of options will be important if the Company undertakes
acquisitions that involve the retention of employees of the acquired business.
As of February 28, 1997, there were 355,687 shares of Common Stock
available for future grants under the Option Plan.
SUMMARY OF THE PROVISIONS OF THE OPTION PLAN AS AMENDED
The following summary of the Option Plan as amended is qualified in
its entirety by the specific language of the Option Plan, a copy of which is
available to any stockholder upon request.
General. The Option Plan provides for the grant to employees of
incentive stock options within the meaning of section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), and the grant to employees and
consultants of nonstatutory stock options. Currently, a maximum of 7,000,000
of the authorized but unissued shares or treasury shares of the Common Stock of
the Company may be issued upon the exercise of options granted pursuant to the
Option Plan. The Board has amended the Option Plan, subject to stockholder
approval, to increase the number of shares issuable thereunder by 1,200,000
shares. In the event of any stock dividend, stock split, reverse stock split,
recapitalization, combination, reclassification, or like change in the capital
structure of the
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<PAGE> 17
Company, appropriate adjustments will be made to the shares subject to the
Option Plan, to the Option Limit and to outstanding options. To the extent any
outstanding option under the Option Plan expires or terminates prior to
exercise in full or if shares issued upon exercise of an option are repurchased
by the Company, the shares of Common Stock for which such option is not
exercised or the repurchased shares are returned to the Option Plan and become
available for future grant. The Company intends that compensation related to
options granted under the Option Plan qualifies for the "performance-based
compensation" exemption under Section 162(m) of the Code. Section 162(m)
generally limits the deductibility by the Company for federal income tax
purposes of compensation paid to certain executive officers.
Administration. The Option Plan is administered by the Board or a
duly appointed committee of the Board. With respect to the participation of
individuals who are subject to Section 16 of the Securities Exchange Act of
1934 (the "Exchange Act"), the Option Plan must be administered in compliance
with the requirements of Rule 16b-3 under the Exchange Act. Subject to the
provisions of the Option Plan, the Board or the committee determines the
persons to whom options are to be granted, the number of shares to be covered
by each option, whether an option is to be an incentive stock option or a
nonstatutory stock option, the terms of vesting and exercisability of each
option, the type of consideration to be paid to the Company upon exercise of an
option, the term of each option, and all other terms and conditions of the
options. The Board or committee will interpret the Option Plan and options
granted under the Option Plan, and all determinations of the Board or committee
will be final and binding on all persons having an interest in the Option Plan
or any option.
Eligibility. All employees (including officers and directors who are
also employees), consultants, advisors or other independent contractors of the
Company or of any present or future parent or subsidiary corporations of the
Company are eligible to participate in the Option Plan. As of December 31,
1996, the Company had approximately 254 full-time employees, including six
executive officers, and 33 full- time equivalent consultants. Only employees
may be granted incentive stock options. Consultants, advisors, and other
independent contractors may only be granted nonstatutory stock options.
Terms and Conditions of Options. Each option granted under the Option
Plan is evidenced by a written agreement between the Company and the optionee
specifying the number of shares subject to the option and the other terms and
conditions of the option, consistent with the requirements of the Option Plan.
The per share exercise price of an option must equal at least the fair market
value of a share of the Company's Common Stock on the date of grant. The per
share exercise price of any option granted to a person who at the time of grant
owns stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company or any parent or subsidiary corporation of the
Company must be at least 110% of the fair market value of a share of the
Company's Common Stock on the date of grant, and the term of any such option
cannot exceed five years.
Generally, options may be exercised by payment of the exercise price
in cash, by check, or in cash equivalent, by tender of shares of the Company's
Common Stock owned by the optionee having a fair market value not less than the
exercise price, by the assignment of the proceeds of a sale of some or all of
the shares of Common Stock being acquired upon the exercise of the option, or
by any combination of these. However, the Board or committee may restrict the
forms of payment permitted in connection with any option grant or may grant
options permitting payment of the exercise price with a recourse promissory
note.
Options granted under the Option Plan will become exercisable and
vested at such times as specified by the Board or committee. Generally,
options granted under the Option Plan are exercisable on and after the date of
grant, subject to the right of the Company to reacquire at the optionee's
exercise price any unvested shares held by the optionee upon termination of
employment or service with the Company or if the optionee attempts to transfer
any unvested shares. Shares subject to options generally vest in installments
subject to the optionee's continued employment or service. The
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<PAGE> 18
maximum term of options granted under the Option Plan is ten years. Options
are nontransferable by the optionee other than by will or by the laws of
descent and distribution, and are exercisable during the optionee's lifetime
only by the optionee.
Transfer of Control. A "Transfer of Control" will be deemed to occur
upon any of the following events in which the stockholders of the Company do
not retain, directly or indirectly, at least a majority of the beneficial
interest in the voting stock of the Company or its successor: (i) the direct or
indirect sale or exchange by the stockholders of the Company of all or
substantially all of the stock of the Company, (ii) a merger in which the
Company is a party or (iii) the sale, exchange or transfer of all or
substantially all of the assets of the Company. If a Transfer of Control
occurs, the surviving, continuing successor, or purchasing corporation or
parent corporation thereof (the "Acquiring Corporation") will either assume
outstanding options or substitute options for the Acquiring Corporation's stock
for the outstanding options. However, if the Acquiring Corporation elects not
to assume or substitute for outstanding options in connection with a merger
described in clause (ii) above, the Company's Board will provide that any
unexercisable and/or unvested portion of the outstanding options will be
immediately exercisable and vested. Any options which are neither assumed or
substituted for by the Acquiring Corporation nor exercised as of the date of
the Transfer of Control will terminate effective as of such date.
Termination or Amendment. Unless sooner terminated, no options may be
granted under the Option Plan after October 2001. The Board or committee may
terminate or amend the Option Plan at any time, but, without stockholder
approval, the Board may not amend the Option Plan to increase the total number
of shares of Common Stock reserved for issuance thereunder, change the class of
persons eligible to receive options, or expand the class of persons eligible to
receive nonstatutory stock options. No amendment may adversely affect an
outstanding option without the consent of the optionee, unless the amendment is
intended to preserve the option's status as an incentive stock option.
SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES OF THE OPTION PLAN
The following summary is intended only as a general guide as to the
United States federal income tax consequences under current law with respect to
participation in the Option Plan and does not attempt to describe all possible
federal or other tax consequences of such participation. Furthermore, the tax
consequences of options are complex and subject to change, and a taxpayer's
particular situation may be such that some variation of the described rules is
applicable. Optionees should consult their own tax advisors prior to the
exercise of any option and prior to the disposition of any shares of Common
Stock acquired upon the exercise of an option.
Incentive Stock Options. Options designated as incentive stock
options are intended to fall within the provisions of section 422 of the Code.
An optionee recognizes no taxable income for regular income tax purposes as the
result of the grant or exercise of such an option.
For optionees who do not dispose of their shares for two years
following the date the option was granted nor within one year following the
exercise of the option, the gain on sale of the shares (which is the difference
between the sale price and the purchase price of the shares) will be taxed as
long-term capital gain. If an optionee satisfies such holding periods upon a
sale of the shares, the Company will not be entitled to any deduction for
federal income tax purposes. If an optionee disposes of shares within two
years after the date of grant or within one year from the date of exercise (a
"disqualifying disposition"), the difference between the fair market value of
the shares on the determination date (see discussion under "Nonstatutory Stock
Options" below) and the option exercise price (not to exceed the gain realized
on the sale if the disposition is a transaction with respect to which a loss,
if sustained, would be recognized) will be taxed as ordinary income at the time
of disposition. Any gain in excess of that amount will be a capital gain. If
a loss is recognized, there will be no ordinary income, and such loss will he a
capital loss. A capital gain or loss will be long-
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<PAGE> 19
term if the optionee's holding period is more than 12 months. Any ordinary
income recognized by the optionee upon the disposition of the shares should be
deductible by the Company for federal income tax purposes, except to the extent
such deduction is limited by Section 162(m) of the Code.
The difference between the option exercise price and the fair market
value of the shares on the determination date of an incentive stock option (see
discussion under "Nonstatutory Stock Options" below) is an adjustment in
computing the optionee's alternative minimum taxable income and may be subject
to an alternative minimum tax which is paid if such tax exceeds the regular tax
for the year. Special rules may apply with respect to certain subsequent sales
of the shares in a disqualifying disposition, certain basis adjustments for
purposes of computing the alternative minimum taxable income on a subsequent
sale of the shares and certain tax credits which may arise with respect to
optionees subject to the alternative minimum tax.
Nonstatutory Stock Options. Options not designated as incentive stock
options will be nonstatutory stock options. Nonstatutory stock options have no
special tax status. An optionee generally recognizes no taxable income as the
result of the grant of such an option.
Upon exercise of a nonstatutory stock option, the optionee normally
recognizes ordinary income in the amount of the difference between the option
exercise price and the fair market value of the shares on the determination
date (as defined below). If the optionee is an employee, such ordinary income
generally is subject to withholding of income and employment taxes. The
"determination date" is the date on which the option is exercised unless the
shares are not vested and/or the sale of the shares at a profit would subject
the optionee to suit under Section 16(b) of the Exchange Act, in which case the
determination date is the later of (i) the date on which the shares vest, or
(ii) the date the sale of the shares at a profit would no longer subject the
optionee to suit under Section 16(b) of the Exchange Act. Section 16(b) of the
Exchange Act generally is applicable only to officers, directors and beneficial
owners of more than 10% of the Common Stock of the Company. If the
determination date is after the exercise date, the optionee may elect, pursuant
to Section 83(b) of the Code, to have the exercise date be the determination
date by filing an election with the Internal Revenue Service not later than 30
days after the date the option is exercised. Upon the sale of stock acquired
by the exercise of a nonstatutory stock option, any gain or loss, based on the
difference between the sale price and the fair market value on the date of
recognition of income, will be taxed as capital gain or loss. A capital gain
or loss will be long-term if the optionee's holding period is more than 12
months. No tax deduction is available to the Company with respect to the grant
of a nonstatutory option or the sale of the stock acquired pursuant to such
grant.
POTENTIAL LIMITATION ON COMPANY DEDUCTIONS
Section 162(m) of the Code denies a deduction to any publicly held
corporation for compensation paid to certain employees in a taxable year to the
extent that compensation exceeds $1 million for certain executive officers.
Certain kinds of compensation, including qualified "performance-based
compensation," are disregarded for purposes of the deduction limitation. In
accordance with Section 162(m) regulations, compensation attributable to stock
options will qualify as performance-based compensation, provided that: (i) the
stock award plan contains a per employee limitation on the number of shares for
which stock options and stock appreciation rights may be granted during a
specified period; (ii) the per employee limitation is approved by the
stockholders; (iii) the award is granted by a compensation committee comprised
solely of "outside" directors and (iv) the exercise price of the award is no
less than the fair market value of the stock on the date of grant. If the
stockholders approve the amendments to the Option Plan, compensation received
from grants made under the Option Plan will be treated as performance-based
compensation and, therefore, will be excluded for purposes calculating the $1
million deduction limit.
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<PAGE> 20
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
The affirmative vote of a majority of the votes present and entitled
to vote at the Annual Meeting of Stockholders, at which a quorum representing a
majority of all outstanding shares of Common Stock of the Company is present
and voting, either in person or by proxy, is required for approval of this
proposal. Abstentions and broker non-votes will each be counted as present for
purposes of determining the presence of a quorum. Abstentions will have the
same effect as a negative vote on this proposal. Broker non-votes will have no
effect on the outcome of this vote.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
APPROVAL OF (i) THE INCREASE IN THE MAXIMUM AGGREGATE NUMBER OF SHARES OF THE
COMPANY'S COMMON STOCK ISSUABLE UNDER ITS 1991 STOCK OPTION PLAN BY 1,200,000
SHARES AND (ii) THE LIMITATION ON THE NUMBER OF SHARES OF THE COMPANY'S COMMON
STOCK UNDERLYING OPTIONS GRANTED TO ANY SINGLE INDIVIDUAL PER FISCAL YEAR TO
800,000 SHARES.
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<PAGE> 21
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company has selected Arthur Andersen LLP
as independent accountants to audit the financial statements of the Company for
the year ending December 31, 1997. Arthur Andersen LLP has acted as the
Company's independent auditors since the Company's inception. A representative
of Arthur Andersen LLP is expected to be present at the Annual Meeting with the
opportunity to make a statement if the representative desires to do so, and is
expected to be available to respond to appropriate questions.
The affirmative vote of a majority of the votes cast at the Annual
Meeting of Stockholders, at which a quorum representing a majority of all
outstanding shares of Common Stock of the Company is present and voting, either
in person or by proxy, is required for approval of this proposal. Abstentions
and broker non-votes will each be counted as present for purposes of
determining the presence of a quorum. Abstentions have the same effect as a
negative vote on this proposal. Broker non-votes will have no effect on the
outcome of this vote.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE COMPANY'S INDEPENDENT ACCOUNTANTS FOR
THE YEAR ENDING DECEMBER 31, 1997.
STOCKHOLDER PROPOSALS TO BE PRESENTED
AT NEXT ANNUAL MEETING
Proposals of stockholders intended to be presented at the next Annual
Meeting of the Stockholders of the Company must be received by the Company at
its offices at 2455 Augustine Drive, Santa Clara, California, 95054, not later
than December 7, 1997, and satisfy the conditions established by the Securities
and Exchange Commission for stockholder proposals to be included in the
Company's proxy statement for that meeting.
TRANSACTION OF OTHER BUSINESS
At the date of this Proxy Statement, the only business which the Board
of Directors intends to present or knows that others will present at the
meeting is as set forth above. If any other matter or matters are properly
brought before the meeting, or any adjournment thereof, it is the intention of
the persons named in the accompanying form of proxy to vote the proxy on such
matters in accordance with their best judgment.
By Order of the Board of Directors
KATHLEEN A. MURPHY
Secretary
April 4, 1997
19
