| UNITED STATES | OMB APPROVAL |
| SECURITIES AND EXCHANGE OMMISSION | OMB Number: 3235-0059 |
| Washington, D.C. 20549 | Expires: January 31, 2008 |
| SCHEDULE 14A | Estimated average burden hours per response... 14 |
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 o | |
Check the appropriate box: | |
o | Preliminary Proxy Statement |
x | Definitive Proxy Statement |
o | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
o | Definitive Additional Materials |
o | Soliciting Material Pursuant to Rule §240.14a-12 |
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
x | No fee required. | |
o | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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: | |
SEC 1913 (04-05) Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number. | ||
o | Fee paid previously with preliminary materials. | |
o | 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: | |
![](https://capedge.com/proxy/DEF 14A/0001206774-05-001275/webmethodslogo.jpg)
![](https://capedge.com/proxy/DEF 14A/0001206774-05-001275/davidmitchell-sig.jpg)
President and Chief Executive Officer
![](https://capedge.com/proxy/DEF 14A/0001206774-05-001275/billrussell-sig.jpg)
Non-Executive Chairman of the Board
WHETHER OR NOT YOU PLAN TO ATTEND OUR ANNUAL MEETING, PLEASE VOTE BY TELEPHONE, VIA THE INTERNET OR BY COMPLETING, SIGNING AND RETURNING THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE. |
![](https://capedge.com/proxy/DEF 14A/0001206774-05-001275/webmethodsletterhead.jpg)
1. | Electing three persons as Class III directors to hold office until the annual meeting of stockholders in 2008; |
2. | Ratifying the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm for webMethods, Inc. for the fiscal year ending March 31, 2006; and |
3. | Transacting such other business as may properly come before the meeting or any continuation or postponement of that meeting. |
![](https://capedge.com/proxy/DEF 14A/0001206774-05-001275/douglaswmcnitt-sig.jpg)
Secretary
Fairfax, Virginia
July 22, 2005
![](https://capedge.com/proxy/DEF 14A/0001206774-05-001275/webmethodslogo.jpg)
FOR THE 2005 ANNUAL MEETING OF STOCKHOLDERS
Stockholders Entitled to Vote
Vote Required to Approve the Proposals
Votes Needed for a Quorum, Effect of Abstentions and Broker Non-Votes
How to Vote the Proxy
• | By mail: Complete, date and sign the accompanying proxy and promptly mail it in the return envelope provided. |
• | By telephone: Call the toll-free number indicated on the enclosed proxy and follow the recorded instructions. |
• | Via the Internet: Go to the website indicated on the enclosed proxy and follow the instructions provided. |
Solicitation of Proxies
Other Business
Stockholder Proposals and Nominations for Presentation at the 2006 Annual Meeting of Stockholders
2
Communications with the Board of Directors
Householding of Proxy Materials
3
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Directors and Nominees
Nominees for election as Class III directors at the meeting to serve for a term expiring in 2008:
Name | Age | Current Position with webMethods | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Jerry J. Jasinowski (1)(2) | 66 | Director | ||||||||
David Mitchell | 40 | Director, President and Chief Executive Officer | ||||||||
Vincent J. Mullarkey (3) | 57 | Director |
(1) | Member of the Corporate Governance and Nominating Committee. |
(2) | Member of the Audit Committee. |
(3) | Chairman of the Audit Committee. |
4
Required Vote
The Board recommends a vote “FOR” the election of
each nominee to serve as a director of webMethods.
The incumbent Class I directors, whose terms expire at our 2006 annual meeting of stockholders, and certain information about them, are set forth below.
Name | Age | Current Position with webMethods | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
R. James Green | 55 | Director | ||||||||
William A. Halter (1)(2) | 44 | Director | ||||||||
Bill Russell (1) | 53 | Non-executive Chairman of the Board |
(1) | Member of the Compensation Committee. |
(2) | Member of the Corporate Governance and Nominating Committee. |
5
May 2002, he served as Vice President and General Manager of HP’s Software Solutions Organization, and, from 1997 to September 1999, as Vice President and General Manager of HP’s Enterprise Systems Group. Prior to that, he served as general manager of HP’s technical computing group and general manager of HP’s computer systems organization for Europe, Middle East and Africa. Mr. Russell also served on the board of HP Japan, Ltd. Mr. Russell also serves as a director of Cognos, Inc. and several private companies. He holds a B.S.C. degree from University of Edinburgh.
Name | Age | Current Position with webMethods | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
James P. Gauer (1) | 53 | Director | ||||||||
Jack L. Lewis | 60 | Director | ||||||||
Gene Riechers (2) | 50 | Director |
(1) | Chairman of the Corporate Governance and Nominating Committee. |
(2) | Member of the Audit Committee and Chairman of the Compensation Committee. |
Board of Directors’ Meetings and Committees
6
Director Independence and Board Committees
DIRECTORS | COMMITTEES | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Audit Committee | Compensation Committee | Corporate Governance and Nominating Committee | |||||||||||||
Independent, Non-Management Directors (1) | |||||||||||||||
James P. Gauer | Chairman | ||||||||||||||
William A. Halter | Member | Member | |||||||||||||
Jerry J. Jasinowski (2) | Member | Member | |||||||||||||
Vincent J. Mullarkey (2)(3) | Chairman | ||||||||||||||
Gene Riechers (2)(3) | Member | Chairman | |||||||||||||
Bill Russell | Member | ||||||||||||||
Directors Who Currently are Officers of webMethods or its Subsidiaries | |||||||||||||||
Jack L. Lewis (4) | |||||||||||||||
David Mitchell (5) | |||||||||||||||
Directors Who Were Employees or Officers of webMethods Since March 2002 | |||||||||||||||
R. James Green (6) |
(1) | The Board of Directors determined in July 2005, based upon the unanimous recommendation of the Corporate Governance and Nominating Committee, whether directors met the criteria for “independence” set forth in NASD Rule 4200(a)(15), the stricter criteria for “independence” as it relates to members of audit committees, as set forth in NASD Rule 4350(d)(2), and the criteria for “audit committee financial expert,” as defined in the Exchange Act and the rules and regulations promulgated by the SEC thereunder. |
(2) | Meets the stricter criteria for “independence” as it relates to members of audit committees, as set forth in NASD Rule 4350(d)(2). |
(3) | Qualifies as an “audit committee financial expert,” as defined in the Exchange Act and the rules and regulations promulgated by the SEC thereunder. |
(4) | Mr. Lewis serves as Secretary or as a director of certain webMethods subsidiaries. |
(5) | Mr. Mitchell is President and Chief Operating Officer of webMethods. |
(6) | Mr. Green served as Chief Technology Officer and Executive Vice President of webMethods from August 2000 through March 2003, and as webMethods’ Chief Scientist from April 2003 to September 2003. |
7
8
Code of Ethics
9
Compensation Committee Interlocks and Insider Participation
Director Compensation
Position | Annual Fee | Initial Stock Option Grant | Annual Stock Option Grant | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Non-executive Chairman of the Board | $ | 107,500 | — | 25,000 shares | ||||||||||
Service as a non-management member of the Board of Directors | 25,000 | 55,188 shares | 15,000 shares | |||||||||||
Audit Committee | ||||||||||||||
Chairman | 10,000 | — | — | |||||||||||
Member | 5,000 | — | — | |||||||||||
Compensation and Corporate Governance and Nominating Committees and designated temporary committees | ||||||||||||||
Chairman | 7,500 | — | — | |||||||||||
Member | 5,000 | — | — |
10
the pro-rata portion of such annual grant for the portion of the year prior to the next annual meeting of stockholders. In August 2004, annual stock option grants to purchase 15,000 shares were made to James P. Gauer, R. James Green, William A. Halter, Jerry J. Jasinowski, Jack L. Lewis, Gene Riechers and Bill Russell. In May 2005, an initial stock option grant to purchase 55,188 shares and the pro-rata portion of an annual stock option grant, which covered 3,750 shares, were made to Vincent J. Mullarkey upon his election to the Board of Directors. All such stock option grants were made at fair market value on the date of such grant.
PROPOSAL NO. 2
RATIFICATION OF SELECTION OF
AN INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Fiscal Year 2005 | Fiscal Year 2004 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
AUDIT FEES: consists of fees for audit of consolidated financial statements and review of interim financial statements, fees related to Sarbanes-Oxley Act compliance, fees billed in relation to required statutory audits of certain foreign subsidiaries and fees for assistance with SEC filings. | $ | 1,839,736 | $ | 593,388 | ||||||
AUDIT RELATED FEES: consists of fees billed in fiscal year 2005 in relation to restatement of financial statements and in fiscal year 2004 in relation to an audit for an acquisition and other audit-related work. | 254,768 | 57,351 | ||||||||
TAX FEES: consists of fees billed in relation to preparation and review of income tax returns of foreign subsidiaries and advice on tax matters. | 132,886 | 155,131 | ||||||||
ALL OTHER FEES: consists of fees billed in relation to maintaining certain foreign subsidiaries and fee for accounting rule subscription service. | 9,383 | 78,831 | ||||||||
TOTAL FEES | $ | 2,236,773 | $ | 884,701 |
11
The Board recommends a vote “FOR” the ratification
of the selection of PricewaterhouseCoopers LLP.
REPORT OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
12
Vincent J. Mullarkey, Chairman (1)
Jerry J. Jasinowski
Gene Riechers
(1) | Mr. Mullarkey joined the Audit Committee in May 2005 after the conclusion of fiscal year 2005. |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
• | each person known by webMethods to own beneficially more than five percent (5%) of webMethods, Inc. common stock; |
• | each director of webMethods; |
• | each of the individuals named in the Summary Compensation Table in this proxy statement; and |
• | all current directors and executive officers of webMethods, Inc. as a group. |
13
Shares Beneficially Owned | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Name of Beneficial Owner | Number | Percent | |||||||||
Artisan Partners Limited Partnership (1) | 3,681,700 | 6.9 | % | ||||||||
Wentworth Hauser & Violich, Inc. (2) | 3,481,490 | 6.5 | |||||||||
James P. Gauer (3) | 150,581 | * | |||||||||
R. James Green (4) | 439,177 | * | |||||||||
William A. Halter (5) | 66,792 | * | |||||||||
Jerry J. Jasinowski (6) | 100,788 | * | |||||||||
Jack L. Lewis (7) | 195,837 | * | |||||||||
David Mitchell (8) | 761,280 | 1.4 | |||||||||
Vincent J. Mullarkey (9) | 8,349 | * | |||||||||
Gene Riechers (10) | 136,439 | * | |||||||||
Bill Russell (11) | 108,938 | * | |||||||||
Rich Chiarello (12) | 160,936 | * | |||||||||
Kristin Weller Muhlner (13) | 308,632 | * | |||||||||
Mary Dridi (14) | 546,336 | 1.0 | |||||||||
Douglas W. McNitt (15) | 554,839 | 1.0 | |||||||||
All directors and executive officers of webMethods as a group (14 persons) (16) | 3,569,548 | 6.3 |
* | Less than one percent. |
(1) | Based solely upon a Schedule 13F for the period ended March 31, 2005, which provides information on ownership of securities. The principal address of Artisan Partners Limited Partnership is 875 East Wisconsin Avenue, Suite 800, Milwaukee, Wisconsin 53202. |
(2) | Based solely upon a Schedule 13F for the period ended March 31, 2005, which provides information on ownership of securities. The principal address of Wentworth Hauser & Violich, Inc. is 353 Sacramento Street, Suite 600, San Francisco, California 94111. |
(3) | Includes 5,265 shares issuable to the director under the Director Plan and 100,188 shares subject to option exercise within 60 days of July 7, 2005. |
(4) | Includes 359,855 shares held by a family trust and 79,322 shares subject to option exercise within 60 days of July 7, 2005. |
(5) | Includes 66,792 shares subject to option exercise within 60 days of July 7, 2005. |
(6) | Includes 100,188 shares subject to option exercise within 60 days of July 7, 2005. |
(7) | Includes (a) 3,557 shares issuable to the director under the Director Plan, (b) 54,198 shares subject to option exercise within 60 days of July 7, 2005, (c) 50,000 shares held of record by various trusts for which his spouse is trustee and (d) 88,082 shares held by a family trust for which Mr. Lewis is trustee. Mr. Lewis disclaims beneficial ownership of shares held by trusts for which his spouse is trustee. |
(8) | Includes 731,862 shares subject to option exercise within 60 days of July 7, 2005. |
(9) | Includes 8,349 shares subject to option exercise within 60 days of July 7, 2005. |
(10) | Includes 6,126 shares issuable to the director under the Director Plan and 100,188 shares subject to option exercise within 60 days of July 7, 2005. |
(11) | Includes 108,938 shares subject to option exercise within 60 days of July 7, 2005. |
(12) | Includes 160,936 shares subject to option exercise within 60 days of July 7, 2005. |
(13) | Includes 1,100 shares owned by Ms. Muhlner’s spouse and 306,720 shares subject to option exercise within 60 days of July 7, 2005. |
(14) | Includes 4,598 shares held by trusts for children and 518,818 shares subject to option exercise within 60 days of July 7, 2005. |
(15) | Includes 554,791 shares subject to option exercise within 60 days of July 7, 2005. |
(16) | Includes 2,921,914 shares subject to options exercisable within 60 days of July 7, 2005 held by any member of that group. |
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
14
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
Annual Compensation | Long-Term Compensation | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Awards | |||||||||||||||||||||||||||
Name and Principal Position | Year Ended March 31 | Salary | Bonus | Other Annual Compensation (a) | Securities Underlying Options/SARs | All Other Compensation | |||||||||||||||||||||
David Mitchell | 2005 | $ | 334,501 | $ | 0 | — | 860,000 | — | |||||||||||||||||||
President and Chief Executive Officer | 2004 | $ | 250,012 | $ | 0 | — | 67,600 | — | |||||||||||||||||||
(after October 2, 2004) | 2003 | $ | 250,013 | $ | 92,944 | — | 36,000 | — | |||||||||||||||||||
Phillip Merrick | 2005 | $ | 190,525 | $ | 0 | — | 435,500 | $ | 181,002 | (b) | |||||||||||||||||
Chairman and Chief Executive Officer | 2004 | $ | 187,250 | $ | 0 | — | 80,000 | (c) | $ | 2,224 | (d) | ||||||||||||||||
(to October 2, 2004) | 2003 | $ | 187,250 | $ | 23,406 | — | 38,000 | (c) | $ | 2,045 | (d) | ||||||||||||||||
Richard Chiarello | 2005 | $ | 350,000 | $ | 227,242 | — | 525,000 | — | |||||||||||||||||||
Executive Vice President, Worldwide Operations | |||||||||||||||||||||||||||
Kristin Weller Muhlner | 2005 | $ | 250,001 | $ | 0 | — | 172,000 | — | |||||||||||||||||||
Executive Vice President, | 2004 | $ | 180,012 | $ | 0 | — | 76,400 | — | |||||||||||||||||||
Product Development | 2003 | $ | 169,995 | $ | 32,979 | — | 13,000 | — | |||||||||||||||||||
Mary Dridi | 2005 | $ | 220,001 | $ | 0 | — | 22,000 | — | |||||||||||||||||||
Chief Financial Officer, Executive Vice | 2004 | $ | 167,362 | $ | 0 | — | 190,000 | — | |||||||||||||||||||
President and Treasurer | 2003 | $ | 149,812 | $ | 73,833 | — | 34,500 | — | |||||||||||||||||||
Douglas W. McNitt | 2005 | $ | 220,001 | $ | 0 | — | 22,000 | — | |||||||||||||||||||
General Counsel, Executive Vice | 2004 | $ | 167,362 | $ | 15,000 | — | 142,000 | — | |||||||||||||||||||
President and Secretary | 2003 | $ | 149,812 | $ | 26,217 | — | 34,500 | — |
(a) | In accordance with the rules of the SEC, the compensation described in this table does not include medical, group life insurance or other benefits received by the Named Officers which are available generally to all salaried employees of webMethods, and certain perquisites and other personal benefits received by the Named Officers that do not exceed the lesser of either $50,000 or 10% of any such Officer’s salary and bonus disclosed in this table. |
(b) | Consists of $178,615 in payments pursuant to consulting arrangement entered into after resignation of employment and payment of taxable insurance policy premium. |
(c) | Does not include an option grant of 15,000 made to each member of the Board of Directors in each of August 2002 and August 2003 as consideration for service as a director during the following twelve months. |
(d) | Consists of taxable insurance policy premium. |
15
STOCK OPTION GRANTS IN FISCAL YEAR 2005
INDIVIDUAL GRANTS | Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Term | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Number of Securities Underlying Options Granted | Percentage of Total Options Granted in Fiscal Year 2005 | Exercise Price ($/Share) | Expiration Date | 5% | 10% | |||||||||||||||||||||
David Mitchell | 350,000(1) | 5.72 | $10.35 | April 11, 2014 | $ | 2,276,593 | $ | 5,768,426 | |||||||||||||||||||
35,000(2) | 0.57 | $ 9.69 | April 21, 2014 | $ | 213,142 | $ | 540,058 | ||||||||||||||||||||
475,000(1) | 7.76 | $ 5.50 | Oct. 1, 2014 | $ | 1,642,987 | $ | 4,163,652 | ||||||||||||||||||||
Phillip Merrick | 35,500(2) | 0.58 | $ 9.69 | April 21, 2014 | $ | 216,187 | $ | 547,774 | |||||||||||||||||||
400,000(1) | 6.53 | $ 9.69 | April 21, 2014 | $ | 2,435,908 | $ | 6,172,097 | ||||||||||||||||||||
Rich Chiarello | 375,000(3) | 6.13 | $ 9.54 | April 1, 2014 | $ | 2,249,871 | $ | 5,701,614 | |||||||||||||||||||
150,000(1) | 2.45 | $ 6.10 | Dec. 3, 2014 | $ | 575,439 | $ | 1,458,274 | ||||||||||||||||||||
Kristin Weller Muhlner | 150,000(1) | 2.45 | $10.35 | April 11, 2014 | $ | 975,683 | $ | 2,472,183 | |||||||||||||||||||
22,000(2) | 0.36 | $ 9.69 | April 21, 2014 | $ | 133,975 | $ | 339,465 | ||||||||||||||||||||
Mary Dridi | 22,000(2) | 0.36 | $ 9.69 | April 21, 2014 | $ | 133,975 | $ | 339,465 | |||||||||||||||||||
Douglas W. McNitt | 22,000(2) | 0.36 | $ 9.69 | April 21, 2014 | $ | 133,975 | $ | 339,465 |
(1) | Vesting of stock option occurs ratably over the 48 months following the option grant date. |
(2) | Stock option was granted under webMethods’ 2004 annual performance grant program, with vesting occurring ratably over the 48 months following the option grant date. |
(3) | Vesting of stock option occurs over four years with first 25% vesting on first anniversary of grant date and remainder vesting in 36 monthly increments. |
16
STOCK OPTION EXERCISES IN FISCAL YEAR 2005 AND VALUES AT END OF FISCAL YEAR 2005
Number of Securities Underlying Unexercised Options at March 31, 2005 | Value of Unexercised In-the-Money Options at March 31, 2005 | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Shares Acquired on Exercise | Value Realized (1) | Vested | Unvested | Vested | Unvested | |||||||||||||||||||||
David Mitchell | 0 | 0 | 619,434 | 776,820 | $ | 0 | $ | 0 | |||||||||||||||||||
Phillip Merrick | 0 | 0 | 153,345 | 0 | $ | 355,275 | $ | 0 | |||||||||||||||||||
Rich Chiarello | 0 | 0 | 9,374 | 515,626 | $ | 0 | $ | 0 | |||||||||||||||||||
Kristin Weller Muhlner | 35,000 | $197,987 | 267,211 | 191,394 | $ | 252,419 | $ | 0 | |||||||||||||||||||
Mary Dridi | 0 | 0 | 480,129 | 169,856 | $ | 372,597 | $ | 0 | |||||||||||||||||||
Douglas W. McNitt | 0 | 0 | 528,353 | 130,147 | $ | 0 | $ | 0 |
(1) | Represents the difference between the exercise price of the stock option and the fair market value of webMethods, Inc. common stock on the date of exercise. |
EMPLOYMENT AGREEMENTS AND CHANGE OF CONTROL ARRANGEMENTS
17
under the agreement or any other agreement with or for the benefit of the executive, webMethods will pay an additional amount to the executive so that the net proceeds of the payment to the executive, after deduction of applicable excise taxes, any applicable federal, state and local income taxes and employment taxes, and any applicable interest and penalties is equal to the excise tax applicable to the payments to the executive under such agreement or any other agreement with or for the benefit of the executive. |
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
Executive Compensation Programs
18
objectives, initiatives and appropriate levels of compensation. The Compensation Committee also considers information and advice from independent compensation consultants engaged from time to time to review and advise on market data, trends, salary practices of peer companies and best practices in executive compensation. webMethods considers “peer companies” to include public companies with generally comparable annual total revenue that operate primarily in the business integration or related infrastructure software markets.
19
the Compensation Committee considers the executive officer’s position with webMethods, the executive’s duties, responsibilities and functions and the stock-based incentive award practices of the peer group in which webMethods competes for executive talent. The Compensation Committee also considers and grants additional stock options to executive officers as part of the annual stock option program and, from time to time, for promotions or as believed appropriate for further incentive or retention purposes. In those instances, the Compensation Committee considers the factors stated above and the executive’s performance and contributions, as well as the executive’s existing level of stock-based incentive awards, including the actual and relative holdings of stock options by the executive, the exercise prices of those options, the percentage of those stock options that are vested and the remaining vesting period for the unvested options.
Compensation of the Chief Executive Officer
Deductibility of Executive Compensation
20
believes that, because the cash compensation paid to webMethods’ executive officers is expected to be below $1.0 million and the stock options granted to them are expected to meet the requirements for performance-based exceptions, Section 162(m) will not affect the tax deductions available to webMethods with respect to the compensation of its executive officers. The Compensation Committee tries, to the extent reasonable, to qualify its executive officers’ compensation for deductibility under applicable tax laws. However, webMethods may pay non-deductible compensation to its executive officers from time to time.
Gene Riechers (Chairman)
William A. Halter
Bill Russell
STOCK PRICE PERFORMANCE GRAPH
![](https://capedge.com/proxy/DEF 14A/0001206774-05-001275/d17459chart.jpg)
21
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
![](https://capedge.com/proxy/DEF 14A/0001206774-05-001275/douglaswmcnitt-sig.jpg)
Secretary
July 22, 2005
Fairfax, Virginia
22
| VOTE BY INTERNET -www.proxyvote.com |
|
|
| ELECTRONIC DELIVERY OF FUTURE SHAREHOLDER COMMUNICATIONS |
|
|
| VOTE BY PHONE - 1-800-690-6903 |
|
|
| VOTE BY MAIL |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | WBMTH1 | KEEP THIS PORTION FOR YOUR RECORDS |
|
| DETACH AND RETURN THIS PORTION ONLY |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
webMethods, Inc. |
|
| ||||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||
| The Board of Directors unanimously recommends that you vote FOR the Board of Director nominees and FOR Proposal 2. |
|
|
| ||||||||||||||||||||
|
|
|
|
| ||||||||||||||||||||
| Vote On Directors |
| For | Withhold | For All |
| To withhold authority to vote for any individual nominee, mark “For All Except” and write the nominee’s number on the line below. |
| ||||||||||||||||
|
|
|
|
|
|
| ||||||||||||||||||
| 1. | Election of Directors |
|
|
|
|
|
| ||||||||||||||||
|
| Nominees: 01) Jerry J. Jasinowski |
|
| 0 | 0 | 0 | |||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||
|
|
|
| |||||||||||||||||||||
|
|
|
|
| ||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
| Vote on Proposals |
|
|
| For | Against | Abstain |
| ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
| 2. | Proposal to ratify the appointment of PricewaterhouseCoopers LLP as independent registered public accounting firm for webMethods, Inc. for the fiscal year ending March 31, 2006. |
| 0 | 0 | 0 |
| |||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
|
| In accordance with their judgment, the proxies are authorized to vote upon such other matters as may properly come before the 2005 annual meeting of stockholders of webMethods, Inc. or any continuation or postponement thereof. |
|
| ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
| This Proxy must be signed exactly as your name appears hereon. If more than one name appears, all persons so designated should sign. Attorneys, executors, administrators, trustees and guardians should indicate their capacities. If the signer is a partnership, corporation or other legal entity, please print full partnership, corporate or entity name and indicate capacity of duly authorized person executing on behalf of it. |
|
|
|
|
| ||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
| For comments, please check this box and write them on the back where indicated | 0 |
|
|
|
| ||||||||||||||||||
|
|
|
|
|
|
| ||||||||||||||||||
|
|
|
|
|
|
| ||||||||||||||||||
| WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN THIS PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE PRIOR TO THE MEETING. |
|
|
|
| |||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||
|
|
|
|
|
|
| ||||||||||||||||||
|
|
|
|
|
|
| ||||||||||||||||||
| Signature [PLEASE SIGN WITHIN BOX] | Date |
| Signature (Joint Owners) | Date |
| ||||||||||||||||||
| |||||||
FORM OF PROXY | |||||||
| |||||||
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS | |||||||
| |||||||
| The undersigned hereby appoints David Mitchell and Douglas W. McNitt or either of them, as proxies, each with full powers of substitution, and hereby authorizes them to represent and to vote, as designated on the reverse side, all shares of Common Stock, $0.01 par value, of webMethods, Inc. held of record by the undersigned on July 7, 2005, at the annual meeting of stockholders of webMethods, Inc. to be held on August 30, 2005, and at any continuations or postponements thereof. |
| |||||
| |||||||
| This Proxy, when properly executed and returned in a timely manner, will be voted at the 2005 annual meeting of stockholders of webMethods, Inc. and any continuations or postponements thereof in the manner described herein. If no contrary indication is made, the proxy will be voted FOR the Board of Director nominees, FOR Proposal 2 and in accordance with the judgment of the persons named as proxies herein on any other matters that may properly come before the 2005 annual meeting of stockholders of webMethods, Inc. |
| |||||
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED ENVELOPE. | |||||||
|
|
|
|
| |||
|
|
|
|
|
| ||
|
|
|
|
| |||
|
|
|
|
| |||
|
|
|
|
| |||
|
|
|
|
| |||
| |||||||
(If you noted any Comments above, please mark corresponding box on the reverse side.) | |||||||
| |||||||
CONTINUED AND TO BE SIGNED AND DATED ON THE REVERSE SIDE | |||||||
| |||||||