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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant þ | |
Filed by a Party other than the Registrant o | |
Check the appropriate box: |
o Preliminary Proxy Statement | |
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
þ Definitive Proxy Statement | |
o Definitive Additional Materials | |
o Soliciting Material Pursuant to §240.14a-12 |
Callidus Software Inc.
Payment of Filing Fee (Check the appropriate box):
þ No fee required. | |
o 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: |
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. |
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4) Date Filed: |
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Sincerely, | |
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TIME AND DATE: | 10:00 a.m., Pacific Time, on June 7, 2005 | |
PLACE: | Callidus Software Inc. 160 West Santa Clara Street, Suite 1300 San Jose, CA 95113 | |
ITEMS OF BUSINESS: | (1) To elect our Class II directors; | |
(2) To ratify the appointment of KPMG LLP as our independent auditors for the fiscal year ending December 31, 2005; and | ||
(3) To transact such other business as may properly come before the meeting or any adjournment or postponement thereof. | ||
WHO CAN VOTE: | You are entitled to vote if you were a stockholder of record at the close of business on the record date, April 18, 2005. | |
VOTING BY PROXY: | Please submit a proxy as soon as possible so that your shares can be voted at the annual meeting in accordance with your instructions. For specific instructions on voting, please refer to the instructions on the enclosed proxy card. | |
2004 ANNUAL REPORT: | A copy of our annual report is enclosed. | |
DATE OF MAILING: | This notice, the attached proxy statement, the accompanying proxy card and our annual report are first being mailed to stockholders on or about May 2, 2005. |
By Order of the Board of Directors | |
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Ronald J. Fior, | |
Secretary |
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• | receive notice of the meeting; and | |
• | vote at the meeting and any adjournments or postponements of the meeting. |
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• | are present and vote in person at the annual meeting; or | |
• | have properly submitted a proxy card. |
• | vote in favor of all nominees; | |
• | vote to withhold votes as to all nominees; or | |
• | withhold votes as to specific nominees. |
• | vote in favor of the ratification; | |
• | vote against the ratification; or | |
• | abstain from voting on the ratification. |
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Class I (2007) (1) | Class II (2005) | Class III (2006) | ||
David B. Pratt | R. David Spreng | Michael A. Braun | ||
George B. James | Terry L. Opdendyk | John R. Eickhoff | ||
William B. Binch |
(1) | Excludes Robert H. Youngjohns, our President and Chief Executive Officer-elect, who will be joining Callidus and our Board of Directors effective May 31, 2005. See “Information Concerning Future Director Appointee” on page 6 of this proxy statement. |
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• | periodically reviewed and made any necessary updates to the charters for our Audit, Compensation and Nominating and Corporate Governance Committees; | |
• | established disclosure control policies and procedures in accordance with the requirements of the Sarbanes-Oxley Act of 2002 and the rules and regulations of the SEC; | |
• | established a procedure for receipt and treatment of anonymous and confidential complaints or concerns regarding audit or accounting matters; and | |
• | established a code of business conduct and ethics applicable to our officers, directors and employees. |
• | Director Independence — Independent directors shall constitute at least a majority of our Board of Directors. | |
• | Monitoring Board Effectiveness — The corporate governance guidelines require that the Board of Directors, led by the Nominating and Corporate Governance Committee, conduct an annual self-evaluation of the functioning of the Board of Directors and the Board committees. | |
• | Chairman of the Board — Our Chairman of the Board, who is selected from among our independent directors, presides over all meetings of the Board of Directors and serves as a liaison between our Chief Executive Officer and our independent directors. | |
• | Executive Sessions of Independent Directors — The non-employee directors regularly meet without management present, and such sessions are led by Mr. Braun, our Chairman of the Board. | |
• | Board Access to Independent Advisors — Our Board of Directors as a whole, and each of its committees separately, have authority to retain such independent consultants, counselors or advisors to the Board or its committees as each shall deem necessary or appropriate. | |
• | Board Committees — All members of the Audit, Compensation, and Nominating and Corporate Governance Committees are required to be independent in accordance with applicable NASDAQ criteria. |
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• | have the sole authority to appoint, retain, compensate, oversee and terminate the independent auditors; | |
• | review and approve the scope of the annual internal and external audit; | |
• | review and pre-approve the engagement of our independent auditors to perform audit and non-audit services and the related fees; | |
• | review the integrity of our financial reporting process; | |
• | review our financial statements and disclosures and filings with the Securities and Exchange Commission; | |
• | review funding and investment policies; | |
• | review disclosures from our independent auditors regarding Independence Standards Board Standard No. 1; and | |
• | review and assess annually our Audit Committee’s performance and the adequacy of its charter. |
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• | overseeing our compensation and benefits policies generally; | |
• | evaluating the performance of our executives and reviewing our management succession plans; | |
• | overseeing and setting executive compensation; | |
• | producing an annual report on executive compensation for inclusion in our annual proxy statement; | |
• | approving and reviewing any employment, severance and change of control agreements with our senior executives, as well as any other compensation arrangements; and | |
• | reviewing and assessing annually our Compensation Committee’s performance and the adequacy of its charter. |
• | making recommendations to our Board of Directors regarding nominees to the Board of Directors proposed for election by our stockholders as well as individuals to be considered to fill any vacancies that may occur on the Board of Directors; | |
• | evaluating and recommending to our Board of Directors any revisions to our corporate governance guidelines; | |
• | establishing criteria for membership on the Board of Directors and its committees, including criteria as to director independence; | |
• | overseeing the process for evaluating the performance of our Board of Directors and its committees; | |
• | evaluating the current composition, organization and governance of our Board of Directors and its committees, determining future requirements and making recommendations to our Board of Directors for approval; | |
• | reviewing and recommending director compensation; and |
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• | reviewing and evaluating annually the Nominating and Corporate Governance Committee’s performance, including compliance with its charter. |
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Long-Term | |||||||||||||||||||||
Compensation | |||||||||||||||||||||
Annual Compensation | Securities | ||||||||||||||||||||
Underlying | All Other | ||||||||||||||||||||
Name and Principal Position | Period | Salary ($) | Bonus ($) | Options (#) | Compensation ($) | ||||||||||||||||
David B. Pratt | 2004 | (1) | 249,230 | 0 | 270,000 | 0 | |||||||||||||||
Interim President, Chief Executive Officer | |||||||||||||||||||||
Reed D. Taussig | 2004 | (2) | 125,000 | 150,000 | 0 | 125,962 | |||||||||||||||
Former President, Chief Executive | 2003 | 250,000 | 125,000 | 300,000 | 0 | ||||||||||||||||
Officer, Chairman of the Board | 2002 | 222,188 | 25,000 | 300,000 | 0 | ||||||||||||||||
Christopher W. Cabrera | 2004 | 237,500 | 27,195 | 100,000 | 0 | ||||||||||||||||
Senior Vice President, Operations | 2003 | 200,000 | 224,140 | 60,000 | 0 | ||||||||||||||||
2002 | 197,500 | 98,855 | 75,000 | 0 | |||||||||||||||||
Ronald J. Fior | 2004 | 215,000 | 30,000 | 80,000 | 0 | ||||||||||||||||
Vice President, Finance; Chief | 2003 | 200,000 | 102,500 | 60,000 | 0 | ||||||||||||||||
Financial Officer | 2002 | (3) | 58,333 | 10,000 | 210,000 | 0 | |||||||||||||||
Richard D. Furino | 2004 | 200,000 | 61,997 | 160,000 | 0 | ||||||||||||||||
Vice President, Client Services | 2003 | (4) | 24,839 | 10,000 | 60,000 | 0 | |||||||||||||||
Robert W. Warfield | 2004 | 215,000 | 30,000 | 50,000 | 0 | ||||||||||||||||
Senior Vice President, Research and | 2003 | 200,000 | 102,500 | 192,000 | 0 | ||||||||||||||||
Development; Chief Technology Officer | 2002 | 200,000 | 27,500 | 45,000 | 0 |
(1) | Mr. Pratt began serving as our Interim President and Chief Executive Officer in June 2004. The 2004 salary figures shown in the table above therefore reflect only the portion of 2004 during which Mr. Pratt was employed by us. These figures exclude the fees Mr. Pratt received as a non-employee director for the first part of 2004, which are described under “Director Compensation.” |
(2) | Mr. Taussig left his position as our President, Chief Executive Officer and Chairman of the Board on June 23, 2004. The 2004 salary and bonus figures shown in the table above therefore reflect only the portion of 2004 during which Mr. Taussig was employed by us. The amount set forth under “All Other Compensation” reflects amounts paid under his separation agreement described below. |
(3) | Mr. Fior joined Callidus and began serving as our Vice President, Finance and Chief Financial Officer on September 16, 2002. The 2002 salary and bonus figures shown in the table above therefore reflect only the portion of 2002 during which Mr. Fior was employed by us. |
(4) | Mr. Furino joined Callidus and began serving as our Vice President, Client Services on November 17, 2003. The 2003 salary and bonus figures shown in the table above therefore reflect only the portion of 2003 during which Mr. Furino was employed by us. |
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Individual Grant | ||||||||||||||||||||||||
Potential Realizable | ||||||||||||||||||||||||
Number of | Percent of | Value of Assumed | ||||||||||||||||||||||
Securities | Total | Annual Rates of Stock | ||||||||||||||||||||||
Underlying | Options | Exercise | Price Appreciation for | |||||||||||||||||||||
Options | Granted to | or Base | Option Term | |||||||||||||||||||||
Granted | Employees | Price | Expiration | |||||||||||||||||||||
Name (1) | (#) | in 2004(2) | ($/Sh) | Date | 5% ($) | 10% ($) | ||||||||||||||||||
David B. Pratt(3) | 30,000 | 1.99 | % | 7.22 | 6/01/2014 | 136,219 | 345,205 | |||||||||||||||||
David B. Pratt(4) | 120,000 | 7.96 | % | 3.65 | 7/30/2014 | 275,456 | 698,059 | |||||||||||||||||
David B. Pratt(4) | 120,000 | 7.96 | % | 4.54 | 11/30/2014 | 342,622 | �� | 868,271 | ||||||||||||||||
Christopher W. Cabrera(5) | 50,000 | 3.32 | % | 3.92 | 9/01/2014 | 123,263 | 312,374 | |||||||||||||||||
Christopher W. Cabrera(3) | 50,000 | 3.32 | % | 15.35 | 2/03/2014 | 482,677 | 1,223,197 | |||||||||||||||||
Ronald J. Fior(5) | 80,000 | 5.31 | % | 3.92 | 9/01/2014 | 197,221 | 499,798 | |||||||||||||||||
Richard D. Furino(6) | 60,000 | 3.98 | % | 16.59 | 2/18/2014 | 626,002 | 1,586,411 | |||||||||||||||||
Richard D. Furino(5) | 100,000 | 6.64 | % | 3.92 | 9/01/2014 | 246,527 | 624,747 | |||||||||||||||||
Robert W. Warfield(5) | 50,000 | 3.32 | % | 3.92 | 9/01/2014 | 123,263 | 312,374 |
(1) | In the event of a change of control of Callidus, all of the officers named in this chart will be entitled to additional vesting as described below in “Employment Contracts, Change of Control Arrangements and Severance Agreements — Change of Control Arrangements.” |
(2) | The percentage of total options granted was based on aggregate grants of options to purchase 1,506,863 shares of our common stock made to all of our employees and named executive officers in 2004. |
(3) | These options vest as to 25% of the shares subject to the option on the one year anniversary of the date of grant and as to one forty-eighth of the shares subject to the option each month thereafter. |
(4) | These options vest at a rate of 20,000 shares per month. |
(5) | These options will fully vest three years from the date of grant; however, vesting will accelerate at the end of any period of 22 consecutive trading days in which (i) the average closing price is equal to or exceeds a “target stock price” and (ii) the closing price for at least 15 trading days within the 22-day period is equal to or exceeds a “target stock price.” The rate of the accelerated vesting will increase depending upon which of several escalating “target stock prices” is reached under the foregoing sentence as follows: a $5 target stock price will result in 20% cumulative vesting; an $8 target stock price will result in 40% cumulative vesting; an $11 target stock price will result in 60% cumulative vesting; a $13 target stock price will result in 80% cumulative vesting; and a $16 target stock price will result in 100% cumulative vesting. |
(6) | These options vest at a rate of one forty-eighth of the shares subject to the option each month. |
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Number of | ||||||||||||||||||||||||
Securities Underlying | Value of Unexercised | |||||||||||||||||||||||
Unexercised Options at | In-the-Money Options at | |||||||||||||||||||||||
Shares | December 31, 2004 (#) | December 31, 2004(1) ($) | ||||||||||||||||||||||
Acquired on | Value | |||||||||||||||||||||||
Name | Exercise (#) | Realized ($) | Exercisable | Unexercisable | Exercisable | Unexercisable | ||||||||||||||||||
David B. Pratt | — | — | 140,000 | 130,000 | 295,800 | 135,000 | ||||||||||||||||||
Reed D. Taussig | 440,000 | 1,603,062 | 138,468 | — | 260,441 | — | ||||||||||||||||||
Christopher W. Cabrera | 40,000 | 171,650 | 173,445 | 161,565 | 663,027 | 378,779 | ||||||||||||||||||
Ronald J. Fior | — | — | 214,688 | 135,312 | 616,726 | 704,544 | ||||||||||||||||||
Richard D. Furino | — | — | 28,749 | 191,251 | — | 197,000 | ||||||||||||||||||
Robert W. Warfield | — | — | 295,583 | 249,417 | 1,445,620 | 931,710 |
(1) | Based on $5.89 per share, which was the closing price of our common stock on December 31, 2004, minus the exercise price, multiplied by the number of shares issuable upon the exercise of the option. |
Change of Control Arrangements |
Employment Agreement with David B. Pratt |
Separation Agreement with Reed D. Taussig |
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Separation Agreement with Christopher W. Cabrera |
Severance Agreements with Executive Officers |
Equity Compensation Plan Information |
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Number of Securities | ||||||||||||
Remaining Available | ||||||||||||
for Future Issuance | ||||||||||||
Number of Securities | Under Equity | |||||||||||
to be Issued upon | Weighted Average | Compensation Plans | ||||||||||
Exercise of | Exercise Price of | (Excluding Securities | ||||||||||
Outstanding Options, | Outstanding Options, | Reflected in | ||||||||||
Warrants and Rights | Warrants and Rights | First Column) | ||||||||||
Equity compensation plans approved by stockholders(1)(2) | 4,882,456 | $ | 3.92 | 2,919,034 | ||||||||
Equity compensation plans not approved by stockholders | — | — | — | |||||||||
Total | 4,882,456 | $ | 3.92 | 2,919,034 |
(1) | The number of shares of common stock available under the 2003 Employee Stock Purchase Plan increases on July 1 of each year by the lesser of (i) 1,200,000 shares, (ii) 2.0% of the outstanding shares of common stock on the last day immediately preceding such date or (iii) an amount determined by the Board. |
(2) | The number of shares available under the 2003 Stock Incentive Plan increases on July 1 of each year by the lesser of (i) 2,800,000 shares, (ii) 5.0% of the outstanding shares of common stock on the last day immediately preceding such date or (iii) an amount determined by the Board. |
• | each person known by us to own beneficially more than 5% of our common stock; | |
• | each of the directors and named executive officers individually; and | |
• | all directors and executive officers as a group. |
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Shares Beneficially | |||||||||
Owned | |||||||||
Name | Number | Percent | |||||||
Crosspoint Venture Partners(1) | 6,766,701 | 25.92 | % | ||||||
2925 Woodside Road | |||||||||
Woodside, CA 94062 | |||||||||
Onset Ventures(2) | 2,221,724 | 8.50 | |||||||
2400 Sand Hill Road, Suite 150 | |||||||||
Menlo Park, CA 94025 | |||||||||
Amvescap PLC(3) | 2,843,229 | 10.89 | |||||||
111 Devonshire Square | |||||||||
London EC2M 4YR | |||||||||
England | |||||||||
Crescendo Ventures(4) | 1,878,459 | 7.19 | |||||||
480 Cowper Street, Suite 300 | |||||||||
Palo Alto, CA 94301 | |||||||||
The Goldman Sachs Group, Inc. and affiliates(5) | 1,337,640 | 5.12 | |||||||
85 Broad Street | |||||||||
New York, New York 10014 | |||||||||
Cannell Capital LLC(6) | 1,311,733 | 5.03 | |||||||
150 California Street | |||||||||
Fifth Floor | �� | ||||||||
San Francisco, CA 94111 | |||||||||
William B. Binch(7) | 0 | * | |||||||
Michael A. Braun(8) | 85,393 | * | |||||||
John R. Eickhoff(9) | 23,000 | * | |||||||
George B. James(10) | 87,374 | * | |||||||
Terry L. Opdendyk(11) | 2,221,724 | 8.50 | |||||||
R. David Spreng(12) | 1,878,459 | 7.19 | |||||||
David B. Pratt(13) | 240,000 | * | |||||||
Reed D. Taussig(14) | 10,800 | * | |||||||
Christopher W. Cabrera | 0 | * | |||||||
Ronald J. Fior(15) | 175,461 | * | |||||||
Richard D. Furino(16) | 69,583 | * | |||||||
Robert W. Warfield (17) | 462,613 | 1.75 | |||||||
All directors and executive officers as a group (15 persons)(18) | 5,340,716 | 19.58 |
* | Less than 1%. |
(1) | Based on Schedule 13G filed with the Securities and Exchange Commission on March 2, 2005 and a stockholder’s questionnaire submitted by Crosspoint Venture Partners. The affiliates of Crosspoint Venture Partners are Crosspoint Venture Partners 1997, L.P., Crosspoint Venture Partners LS 1999, Crosspoint Venture Partners LS 2000, Crosspoint Venture Partners 2000 Q, L.P. and Crosspoint Venture Partners 2000, L.P. The general partner of Crosspoint Venture Partners 1997 L.P. is Crosspoint Associates 1997, L.L.C., a Delaware limited liability company. The general partners of Crosspoint Associates 1997 are John B. Mumford, Rich Shapero, Seth Neiman, Robert A. Hoff and Donald B. Milder. John B. Mumford has sole voting power over the partnership’s Callidus holdings. The general partner of Crosspoint Venture Partners LS 1999 is Crosspoint Associates 1999, L.L.C., a Delaware limited liability company. The general partners of Crosspoint Associates 1999 are John B. Mumford, Rich Shapero, Seth Neiman, Robert A. Hoff and Donald B. Milder. John B. Mumford has sole voting power over the partnership’s Callidus holdings. The general partner of Crosspoint Venture Partners LS 2000 is Crosspoint Associates 2000, L.L.C., a Delaware limited liability company. The general partners |
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of Crosspoint Associates 2000 are John B. Mumford, Rich Shapero, Seth Neiman, James Dorrian and Robert A. Hoff. John B. Mumford has sole voting power over the partnership’s Callidus holdings. The general partner of Crosspoint Venture Partners 2000 Q, L.P., a Delaware limited partnership is Crosspoint Associates 2000, L.L.C. The general partner of Crosspoint Venture Partners 2000 L.P., a Delaware limited partnership is Crosspoint Associates 2000, L.L.C. | ||
(2) | Based on Schedule 13G filed with the Securities and Exchange Commission on February 3, 2005 and a stockholder’s questionnaire submitted by ONSET Ventures. Includes 34,333 shares of common stock that may be acquired upon exercise of common stock options exercisable within 60 days after March 31, 2005. The affiliates of ONSET Ventures are ONSET Venture Services Corporation, ONSET Enterprise Associates II, L.P., ONSET Enterprise Associates III, L.P., ONSET Standby Fund, L.P., GS PEP I ONSET Standby Fund, L.P., and GS PEP I Offshore ONSET Standby Fund, L.P. The general partner of ONSET Enterprise Associates II, L.P. is OEA II Management, L.P. The general partners of OEA II Management, L.P. are Terry L. Opdendyk and Robert F. Kuhling, Jr. The general partner of ONSET Enterprise Associates III, L.P. is OEA III Management, L.L.C. The managing directors of OEA III Management, L.L.C. are Terry L. Opdendyk and Robert F. Kuhling, Jr. ONSET Standby Fund, L.P., GS PEP I ONSET Standby Fund, L.P. and GS PEP I Offshore ONSET Standby Fund, L.P. are collectively known as the “ONSET Standby Funds”. The general partner of the ONSET Standby Funds is ONSET Standby Management, L.L.C. The managing directors of ONSET Standby Management, L.L.C. are Terry L. Opdendyk, Robert F. Kuhling, Jr., F. Leslie Bottorff, Mark G. Hilderbrand and Susan A. Mason. Terry L. Opdendyk, in his capacity as a general partner of ONSET Ventures, may be deemed to have shared voting or dispositive power over these shares. Mr. Opdendyk disclaims this beneficial ownership, except to the extent of his pecuniary interest therein. | |
(3) | Based on Schedule 13G filed with the Securities and Exchange Commission on February 15, 2005 by Amvescap PLC to report the ownership of shares of our common stock by its subsidiary INVESCO Private Capital, Inc. and a stockholder’s questionnaire submitted by INVESCO Private Capital, Inc. The affiliates of INVESCO Private Capital, Inc. are Chancellor V, L.P., Chancellor V-A, L.P., Citiventure 2000, L.P. and Euromedia Venture Fund (the “INVESCO Funds”). The general partner of Chancellor V, L.P. is IPC Direct Associates V, LLC. The managing member of IPC Direct Associates V, LLC is INVESCO Private Capital, Inc. The general partner of Chancellor V-A, L.P. is IPC Direct Associates V, LLC. The managing member of IPC Direct Associates V, LLC is INVESCO Private Capital, Inc. The general partner of Citiventure 2000, L.P. is IPC Direct Associates V, LLC. The managing member of IPC Direct Associates V, LLC is INVESCO Private Capital, Inc. The managing partner of Euromedia Venture Fund is IPC EuroMedia Associates, LLC. The managing member of IPC EuroMedia Associates, LLC is INVESCO Private Capital, Inc. The managing directors who make up the investment committee for each of the INVESCO Funds are Johnston Evans, Alessandro Piol, Parag Saxena, Howard Goldstein, Esfandiar Lohrasbpour and Alan Kittner. | |
(4) | Based on a stockholder’s questionnaire submitted by Crescendo Ventures. Includes 31,000 shares of common stock that may be acquired upon exercise of common stock options exercisable within 60 days after March 31, 2005. The affiliates of Crescendo Ventures are Crescendo World Fund, LLC, Eagle Ventures WF, LLC and Wessel German American Venture Partners GbR. Crescendo World Fund is managed by its managing member (not a general partner), Crescendo Ventures — World Fund, LLC, whose managing member is R. David Spreng. Crescendo Ventures — World Fund, LLC also has non-managing members. Eagle Ventures WF, LLC, is managed by a board of governors and managers, rather than a general partner. R. David Spreng is the Chief Manager, with authority to direct the voting of Eagle Ventures WF, LLC. Wessel German American Venture Partners, GbR is managed by Crescendo Capital Management, LLC, whose managing member is R. David Spreng. It has two managing partners, Rolf Dienst and Wessel Ventures GmbH. Voting is directed by Crescendo Capital Management, LLC. R. David Spreng, in his capacity as a managing general partner of Crescendo Ventures may be deemed to have shared voting or dispositive power over these shares. Mr. Spreng disclaims this beneficial ownership, except to the extent of his pecuniary interest therein. | |
(5) | Based on Schedule 13G filed with the Securities and Exchange Commission on February 14, 2005 and a stockholder’s questionnaire submitted by The Goldman Sachs Group, Inc. The affiliates of The |
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Goldman Sachs Group, Inc. (“GSG”) are Stone Street Fund 1998, L.P., Bridge Street Fund 1998, L.P., and Stone Street Fund 1999, L.P. Stone Street Fund 1999, L.P., Stone Street Fund 1998, L.P. and Bridge Street Fund 1998, L.P. are investment partnerships of which affiliates of GSG are the general partner, managing general partner or investment manager. The general partner of the Stone Street Fund 1999, L.P is Stone Street Fund 1999, L.L.C., and the general partner of the Stone Street Fund 1998, L.P. and Bridge Street Fund 1998, L.P. is Stone Street 1998, L.L.C. The Chairman and President of Stone Street 1999, L.L.C. and Stone Street 1998, L.L.C. is Peter M. Sacerdote. The Chief Executive Officer of GSG is Henry M. Paulson, Jr. and its President is John A. Thain. GSG disclaims beneficial ownership of the shares owned by such investment partnerships to the extent attributable to partnership interests held therein by persons other than GSG and its affiliates. GSG and each of such investment partnerships shares voting and investment power with certain of its respective affiliates. | ||
(6) | Based on Schedule 13G filed with the Securities and Exchange Commission on February 17, 2005. The affiliates of Cannell Capital, LLC are The Anegada Master Fund Limited, The CuttyHunk Fund Limited, Tonga Partners, L.P., GS Cannell Portfolio, LLC, and Pleiades Investment Partners, L.P. Cannell Capital LLC is managed by its managing member, J. Carlo Cannell. | |
(7) | Mr. Binch was appointed to our Board of Directors in March 2005 and received an option grant in connection with his appointment. Mr. Binch began serving as a director in April 2005. No shares subject to this option will become exercisable within 60 days after March 31, 2005. | |
(8) | Includes 81,643 shares of common stock that may be acquired upon the exercise of stock options exercisable within 60 days after March 31, 2005. | |
(9) | Includes 23,000 shares of common stock that may be acquired upon the exercise of stock options exercisable within 60 days after March 31, 2005. |
(10) | Includes 72,374 shares of common stock that may be acquired upon the exercise of stock options exercisable within 60 days after March 31, 2005. |
(11) | Includes 34,333 shares of common stock that may be acquired upon the exercise of stock options exercisable within 60 days after March 31, 2004. Also represents 2,127,031 shares of common stock beneficially owned by affiliates of ONSET Ventures. |
(12) | Includes 31,000 shares of common stock that may be acquired upon the exercise of stock options exercisable within 60 days after March 31, 2005. Also represents 1,847,459 shares of common stock beneficially owned by affiliates of Crescendo Ventures, of which Mr. Spreng may be deemed, in his capacity as a managing general partner of Crescendo Ventures, to have shared voting or dispositive power. Mr. Spreng disclaims beneficial ownership of these shares, except to the extent of his pecuniary interest therein. |
(13) | Includes 220,000 shares of common stock that may be acquired upon the exercise of stock options exercisable within 60 days after March 31, 2005. |
(14) | Includes 3,600 shares of common stock beneficially owned by Kathryn E. Taussig, 3,600 shares of common stock beneficially owned by Madeline G. Taussig, and 3,600 shares of common stock beneficially owned by Olivia J. Taussig, as to all of which Mr. Taussig may be deemed in his capacity as their father to have shared voting or dispositive power. |
(15) | Includes 157,770 shares of common stock that may be acquired upon the exercise of stock options exercisable within 60 days after March 31, 2005. |
(16) | Includes 69,583 shares of common stock that may be acquired upon the exercise of stock options exercisable within 60 days after March 31, 2005. |
(17) | Includes 402,613 shares of common stock that may be acquired upon the exercise of stock options exercisable within 60 days after March 31, 2005. |
(18) | See footnotes (7)-(17) above. |
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• | The Committee has reviewed and discussed the audited financial statements with Callidus’ management and KPMG LLP (“KPMG”), Callidus’ independent auditors; | |
• | The Committee has also discussed with KPMG the matters required to be discussed by Statements on Auditing Standards No. 61, as modified or supplemented; | |
• | The Committee has received the written disclosures and the letter from KPMG required by Independence Standards Board Standard No. 1, as modified or supplemented, and has discussed with KPMG its independence from Callidus. The Committee also considered whether the provision of non-audit services by the independent auditors was compatible with maintaining the accountants’ independence and has discussed with them their independence; and | |
• | Based on the review and discussions referred to above and relying thereon, the Committee has recommended to the Board of Directors that the audited financial statements be included in Callidus’ annual report on Form 10-K for the fiscal year ended December 31, 2004, for filing with the Securities and Exchange Commission. |
THE AUDIT COMMITTEE | |
George B. James, Chair | |
R. David Spreng | |
John R. Eickhoff |
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Executive Compensation Policies |
Compensation Elements |
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Chief Executive Officer Compensation |
Policy on Deductibility of Compensation |
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THE COMPENSATION COMMITTEE | |
Michael A. Braun, Chair | |
R. David Spreng |
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![(PERFORMANCE GRAPH)](https://capedge.com/proxy/DEF 14A/0000950134-05-008376/f07762def0776202.gif)
11/20/2003 | 12/31/2003 | 12/31/2004 | ||||||||||
Callidus Software Inc. | $ | 100.00 | $ | 101.84 | $ | 33.91 | ||||||
NASDAQ National Market Composite Index | $ | 100.00 | $ | 98.89 | $ | 104.85 | ||||||
S&P 500 Index | $ | 100.00 | $ | 106.17 | $ | 117.72 | ||||||
NASDAQ Computer & Data Processing Index | $ | 100.00 | $ | 107.09 | $ | 120.94 |
(1) | The graph assumes (i) that $100 was invested in our common stock at the closing price of our common stock on November 20, 2003, (ii) that $100 was invested in each of the NASDAQ National Market Composite Index, the NASDAQ Computer & Data Processing Index and the S&P 500 Index on October 31, 2003 at the closing price of the respective index on such date and (iii) that all dividends received were reinvested. To date, no cash dividends have been declared or paid on our common stock. |
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(2) | Callidus has elected to change the industry index used in its stock performance graph. Future stock performance graphs will use the NASDAQ Computer & Data Processing Index as the industry index, replacing the S&P 500 Index. Callidus believes the NASDAQ Computer & Data Processing Index is more representative of peer software companies and will thus facilitate greater comparability between Callidus and its peers. As required by regulations of the Securities and Exchange Commission applicable to such changes, the stock performance graph above contains both the S&P 500 Index and the NASDAQ Computer & Data Processing Index. |
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THE BOARD OF DIRECTORS | |
![]() | |
Ronald J. Fior, | |
Secretary |
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• | assist the Board in its oversight of |
• | the integrity of the financial statements of the Company; | |
• | the qualifications, independence and performance of the Company’s independent auditors; | |
• | the performance of the Company’s internal audit function; and | |
• | compliance by the Company with legal and regulatory requirements; |
• | prepare the Audit Committee report that Securities and Exchange Commission rules require to be included in the Company’s annual proxy statement. |
Independent Auditors |
• | The Audit Committee has the sole authority to appoint, compensate, retain, oversee and terminate the work of any accounting firm engaged for the purpose of preparing or issuing an audit report or |
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performing other audit, review or attest services for the Company (subject, if applicable, to shareholder ratification), including sole authority to approve all audit engagement fees and terms and permissible non-audit services to be provided by the accountants. Each such accounting firm must report directly to the Audit Committee. | ||
• | The Audit Committee shall pre-approve the audit services and non-audit services before the accountant is engaged to render such services to be provided by the Company’s independent auditors. The Audit Committee may consult with management in the decision making process, but may not delegate this authority to management. The Audit Committee may delegate its authority to pre-approve services to one or more Audit Committee members, provided that such designees present any such approvals to the full Audit Committee at the next Audit Committee meeting. | |
• | The Audit Committee shall review and approve the scope and staffing of the independent auditors’ annual audit plan(s). | |
• | The Audit Committee shall evaluate the independent auditors’ qualifications, performance and independence, and shall present its conclusions with respect to the independent auditors to the full Board on at least an annual basis. As part of such evaluation, at least annually, the Audit Committee shall: |
• | obtain and review a report or reports from the Company’s independent auditors: |
• | describing the independent auditors’ internal quality-control procedures; | |
• | describing any material issues raised by (i) the most recent internal quality-control review or peer review of the auditing firm, or (ii) any inquiry or investigation by governmental or professional authorities, within the preceding five years, regarding one or more independent audits carried out by the auditing firm; and any steps taken to deal with any such issues; | |
• | describing all relationships between the independent auditors and the Company; consistent with Independence Standards Board Standard No. 1; and | |
• | assuring that Section 10A of the Securities Exchange Act of 1934 has not been implicated; |
• | review and evaluate the senior members of the independent auditor team(s), particularly the partners on the audit engagement teams; | |
• | consider whether the audit engagement team partners should be rotated more frequently than is required by law, so as to assure continuing auditor independence; | |
• | consider whether the independent auditors should be rotated, so as to assure continuing auditor independence; and | |
• | obtain the opinion of management and the internal auditors of the independent auditors’ performance. |
• | The Audit Committee shall establish policies for the Company’s hiring of current or former employees of the independent auditors. |
Internal Auditors |
• | At least annually, the Audit Committee shall evaluate the performance, responsibilities, budget and staffing of the Company’s internal audit function and review the internal audit plan. Such evaluation shall include a review of the responsibilities, budget and staffing of the Company’s internal audit function with the independent auditors. | |
• | At least annually, the Audit Committee shall evaluate the performance of the senior officer or officers responsible for the internal audit function of the Company, and make recommendations to the Board and management regarding the responsibilities, retention or termination of such officer or officers. |
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Financial Statements; Disclosure and Other Risk Management and Compliance Matters |
• | The Audit Committee shall review with management, the internal auditors and the independent auditors, in separate meetings if the Audit Committee deems it appropriate: |
• | the annual audited financial statements, including the Company’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, prior to the filing of the Company’s Form 10-K; | |
• | the quarterly financial statements, including the Company’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, prior to the filing of the Company’s Form 10-Q; | |
• | any analyses or other written communications prepared by management, the internal auditors and/or the independent auditors setting forth significant financial reporting issues and judgments made in connection with the preparation of the financial statements, including analyses of the effects of alternative GAAP methods on the financial statements; | |
• | the critical accounting policies and practices of the Company; | |
• | related-party transactions and off-balance sheet transactions and structures; | |
• | any major issues regarding accounting principles and financial statement presentations, including any significant changes in the Company’s selection or application of accounting principles; | |
• | the Company’s practices with respect to the use of non-GAAP financial information in its public disclosures; and | |
• | regulatory and accounting initiatives or actions applicable to the Company (including any SEC investigations or proceedings). |
• | The Audit Committee shall review, in conjunction with management, the Company’s policies generally with respect to the Company’s earnings press releases and with respect to financial information and earnings guidance, provided to analysts and rating agencies, including in each case the type and presentation of information to be disclosed and paying particular attention to the use of non-GAAP financial information. | |
• | The Chairman of the Audit Committee shall review any of the Company’s financial information and earnings guidance provided to analysts and ratings agencies, and may review any of the Company’s other financial disclosure, such as earnings press releases, as the Chairman deems appropriate. | |
• | The Audit Committee shall, in conjunction with the CEO and CFO of the Company, review the Company’s internal controls over financial reporting and disclosure controls and procedures. The review of internal control over financial reporting shall include whether there are any significant deficiencies or material weaknesses in the design or operation of internal control over financial reporting that are reasonably likely to affect the Company’s ability to record, process, summarize and report financial information and any fraud involving management or other employees with a significant role in internal control over financial reporting. | |
• | The Audit Committee shall review and discuss with the independent auditors any audit problems or difficulties and management’s response thereto, including those matters required to be discussed with the Audit Committee by the auditors pursuant to Statement on Auditing Standards No. 61, as amended, such as: |
• | any restrictions on the scope of the independent auditors’ activities or access to requested information; | |
• | any accounting adjustments that were noted or proposed by the auditors but were “passed” (as immaterial or otherwise); |
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• | any communications between the audit team and the audit firm’s national office regarding auditing or accounting issues presented by the engagement; | |
• | any management or internal control letter issued, or proposed to be issued, by the auditors; and | |
• | any significant disagreements between the Company’s management and the independent auditors. |
• | The Audit Committee shall have sole authority over the resolution of any disagreements between management and the independent auditor regarding the Company’s financial reporting. | |
• | The Audit Committee shall review the Company’s policies and practices with respect to risk assessment and risk management, including discussing with management the Company’s major financial risk exposures and the steps that have been taken to monitor and control such exposures. | |
• | The Audit Committee shall review all related party transactions and determine whether such transactions are appropriate for the Company to undertake. If so, the Committee is authorized to approve such transactions. | |
• | The Audit Committee shall establish procedures for: |
• | the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and | |
• | the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters. |
• | The Audit Committee shall review any significant complaints regarding accounting, internal accounting controls or auditing matters received pursuant to such procedures. | |
• | The Audit Committee shall prepare the Audit Committee report that Securities and Exchange Commission rules require to be included in the Company’s annual proxy statement. |
Reporting to the Board |
• | The Audit Committee shall report to the Board periodically. This report shall include a review of any issues that arise with respect to the quality or integrity of the Company’s financial statements, the Company’s compliance with legal and regulatory requirements, the qualifications, independence and performance of the Company’s independent auditors, the performance of the internal audit function, any funding requirements for the outside auditors, Audit Committee and any advisors retained by the Audit Committee to assist it in its responsibilities and any other matters that the Audit Committee deems appropriate or is requested to be included by the Board. | |
• | At least annually, the Audit Committee shall evaluate its own performance and report to the Board on such evaluation. | |
• | The Audit Committee shall periodically review and assess the adequacy of this charter and recommend any proposed changes to the Nominating and Corporate Governance Committee. |
• | Compensation to any accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company; | |
• | Compensation to any advisers employed by the Audit Committee; and |
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• | Ordinary administrative expenses of the Audit Committee that are necessary or appropriate in carrying out its duties. |
II. | Qualified Legal Compliance Committee Functions |
• | The QLCC shall adopt written procedures for the confidential receipt, retention and consideration of any report of evidence of a material violation under Part 205 (a “report”). | |
• | Upon receipt of a report, the QLCC shall: |
• | inform the Company’s general counsel (“CLO”) and chief executive officer (“CEO”) of such report unless such notification would be futile; and |
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• | determine whether an investigation is necessary regarding any report of evidence of a material violation by the Company, its officers, directors, employees or agents. |
• | If the QLCC determines an investigation is necessary or appropriate, the QLCC shall: |
• | notify the audit committee or the full board of directors; and | |
• | initiate an investigation, which may be conducted either by the CLO or by outside attorneys; and | |
• | retain such expert personnel as the committee deems necessary. |
• | At the conclusion of any such investigation, the QLCC shall: |
• | recommend that the Company implement an appropriate response to the evidence of a material violation, which appropriate response may include: |
• | a finding that no material violation has occurred, is ongoing or is about to occur; | |
• | the adoption of appropriate remedial measures, including appropriate steps or sanctions to stop any material violations that are ongoing, to prevent any material violation that has yet to occur, and to remedy or otherwise appropriately address any material violation that has already occurred and to minimize the likelihood of its recurrence; or | |
• | the retention or direction of an attorney to review the reported evidence of a material violation and either (i) the Company has substantially implemented any remedial recommendations made by such attorney after a reasonable investigation and evaluation of the reported evidence or (ii) the attorney advises the Company that such attorney may, consistent with his or her professional obligations, assert a colorable defense on behalf of the Company or its officers, directors, employees or agents, in any investigation or judicial or administrative proceeding relating to the reported evidence of a material violation; and |
• | inform the CLO, the CEO and the Board of the results of any such investigation initiated by the QLCC and the appropriate remedial measures to be adopted. |
• | The QLCC may take all other appropriate action, including the authority to notify the Securities and Exchange Commission, if the Company fails in any material respect to implement an appropriate response that the QLCC has recommended for adoption by the Company. | |
• | The QLCC shall report to the Board periodically, but no less frequently than once a year, which report will include a review of the report(s) received, the investigations conducted, conclusions reached and responses recommended by the QLCC and any other matters that the QLCC deems appropriate or is requested to be included by the Board. | |
• | At least annually, the QLCC shall evaluate its own performance and report to the Board on such evaluation. | |
• | At least annually, the QLCC shall review and assess the adequacy of this charter and recommend any proposed changes to the Nominating and Corporate Governance Committee. |
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ANNUAL MEETING OF STOCKHOLDERS OF
CALLIDUS SOFTWARE INC.
June 7, 2005
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
âPlease detach and mail in the envelope provided.â
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF DIRECTORS AND “FOR” PROPOSAL 2.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HEREþ
1. | To elect two Directors to serve until the 2008 annual meeting of stockholders: |
o | FOR ALL NOMINEES | |
o | WITHHOLD AUTHORITY FOR ALL NOMINEES | |
o | FOR ALL EXCEPT (See instructions below) |
NOMINEES
¡ William B. Binch
¡ Terry L. Opdendyk
INSTRUCTION: | To withhold authority to vote for any individual nominee(s), mark“FOR ALL EXCEPT”and fill in the circle next to each nominee you wish to withhold, as shown here: l |
To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method. | o |
FOR | AGAINST | ABSTAIN | ||||||
2. | To ratify the appointment of KPMG LLP as our independent auditors for the fiscal year ending December 31, 2005. | o | o | o | ||||
3. | To transact such other business as may properly come before the meeting or any adjournment or postponement thereof. |
The shares represented by this proxy card will be voted in accordance with your instructions if the card is signed and returned. If your card is signed and returned without instructions, your shares will be voted in favor of all director nominees and in favor of proposal 2. If you do not mail a proxy card or attend the annual meeting and vote by ballot, your shares will not be voted.
In the event that any other matter may properly come before the annual meeting, or any adjournment or postponement thereof, each proxy is authorized to vote on such matter in his discretion. You hereby revoke all previous proxies given to vote at the annual meeting or any adjournment or postponement thereof. By signing and returning this proxy card, you also hereby acknowledge the receipt of the notice of annual meeting of stockholders, proxy statement and 2004 annual report of Callidus Software Inc.
Signature of Stockholder | Date: | Signature of Stockholder | Date: |
Note: | Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. |
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CALLIDUS SOFTWARE INC.
Notice of Annual Meeting of Stockholders
To be held June 7, 2005
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
You are cordially invited to attend the 2005 annual meeting of stockholders of Callidus Software Inc., a Delaware corporation, which will be held on June 7, 2005 at 10:00 a.m., local time, at the offices of Callidus Software Inc., 160 West Santa Clara Street, Suite 1300, San Jose, California, 95113. Whether or not you plan to attend the annual meeting, we ask that you sign and return the enclosed proxy card as promptly as possible to ensure that your shares will be represented. A self-addressed envelope has been enclosed for your convenience. If you attend the meeting, you may withdraw any previously given proxy and vote your shares in person.
By signing and returning this proxy card, you are hereby appointing Ronald J. Fior and Brian E. Cabrera, and each of them acting individually, as proxies, with the powers you would possess if personally present, and with full power of substitution, to vote all of your shares in Callidus Software Inc. at the annual meeting and at any adjournment or postponement thereof, upon all matters that may properly come before the meeting, including the matters described in the proxy statement.
(Continued and to be signed on the reverse side)