SCHEDULE 14A INFORMATION
------------------------
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934 (Amendment No. __)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
Seagate Technology, Inc.
- ----------------------------------------------------------
(Name of Registrant as specified in its charter)
Seagate Technology, Inc.
- --------------------------------------------------------
(Name of person(s) filing proxy statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6(j)(2).
[_] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[_] 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: ____________________________ (A)
(4) Proposed maximum aggregate value of transaction: ________________________
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(A) 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: _________________________________________________
PRELIMINARY COPY
FILED SEPTEMBER 4, 1996
SEAGATE TECHNOLOGY, INC.
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER 24, 1996
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of SEAGATE
TECHNOLOGY, INC. (the "Company"), a Delaware corporation, will be held on
Thursday, October 24, 1996 at 10:00 a.m., local time, at Seascape Resort &
Conference Center, One Seascape Resort Drive, Aptos, California 95003 for the
following purposes:
1. To elect directors to serve for the ensuing year and until their
successors are elected.
2. To approve an amendment to the Company's Certificate of Incorporation
for the purpose of increasing the authorized number of shares of
common stock reserved for issuance thereunder by Four Hundred Million
(400,000,000) shares to an aggregate of Six Hundred Million
(600,000,000) shares.
3. To ratify the appointment of Ernst & Young LLP as independent auditors
of the Company for the fiscal year ending June 27, 1997.
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on August 30, 1996 are
entitled to notice of and to vote at the meeting.
All stockholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to mark,
sign, date and return the enclosed Proxy as promptly as possible in the postage-
prepaid envelope enclosed for that purpose. Any stockholder attending the
meeting may vote in person even if he or she has returned a Proxy.
Sincerely,
Donald L. Waite
Secretary
Scotts Valley, California
September 20, 1996
YOUR VOTE IS IMPORTANT.
IN ORDER TO ASSURE YOUR REPRESENTATION AT THE MEETING,
YOU ARE REQUESTED TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY
AS PROMPTLY AS POSSIBLE AND RETURN IT IN THE ENCLOSED ENVELOPE.
PRELIMINARY COPY
FILED SEPTEMBER 4, 1996
SEAGATE TECHNOLOGY, INC.
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PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of SEAGATE TECHNOLOGY, INC. (the
"Company") for use at the Annual Meeting of Stockholders to be held Thursday,
October 24, 1996 at 10:00 a.m., local time, or at any adjournment thereof, for
the purposes set forth herein and in the accompanying Notice of Annual Meeting
of Stockholders. The Annual Meeting will be held at Seascape Resort &
Conference Center, One Seascape Resort Drive, Aptos, California 95003. The
Company's principal executive offices are located at 920 Disc Drive, Scotts
Valley, California 95066, and its telephone number at that location is (408)
438-6550.
These proxy solicitation materials and the Annual Report to Stockholders
for the fiscal year ended June 28, 1996, including financial statements, were
first mailed on or about September 20, 1996 to all stockholders entitled to vote
at the meeting.
RECORD DATE AND PRINCIPAL SHARE OWNERSHIP
Stockholders of record at the close of business on August 30, 1996 are
entitled to notice of and to vote at the meeting. The Company has one series of
Common Stock outstanding, designated Common Stock, $.01 par value. At the record
date, 106,914,785 shares of the Company's Common Stock were issued and
outstanding. No shares of the Company's Preferred Stock were outstanding.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Company a written
notice of revocation or a duly executed proxy bearing a later date or by
attending the meeting and voting in person.
VOTING AND SOLICITATION
Every stockholder voting for the election of directors (Proposal One) may
cumulate such stockholder's votes and give one candidate a number of votes equal
to the number of directors to be elected multiplied by the number of shares held
by such stockholder, or distribute such stockholder's votes on the same
principle among as many candidates as the stockholder may select, provided that
votes cannot be cast for more than seven (7) candidates. However, no
stockholder shall be entitled to cumulate votes for any individual unless such
individual's name has been placed in nomination prior to the voting and the
stockholder, or any other stockholder, has given notice at the meeting, prior to
the voting, of the intention to cumulate the stockholder's votes. On all other
matters, each share of Common Stock has one vote. A quorum comprising the
holders of the majority of the outstanding shares of Common Stock on the record
date must be present or represented for the transaction of business at the
Annual Meeting. Abstentions and broker non-votes will be counted in
establishing the quorum.
The cost of soliciting votes will be borne by the Company. The Company has
retained Corporate Investor Communications, Inc. to provide proxy solicitation
services in connection with the meeting at an estimated cost of $6,000. In
addition, the Company may reimburse brokerage firms and other persons
representing beneficial owners of shares for their expenses in forwarding
solicitation material to such beneficial owners. Proxies may also be solicited
by certain of the Company's directors, officers and regular employees, without
additional compensation, personally or by telephone, facsimile or other means.
-2-
SECURITY OWNERSHIP BY PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of Common Stock of the Company as of August 30, 1996 by (i) each
person known by the Company to own beneficially more than 5% of the outstanding
shares of Common Stock, (ii) each director of the Company, (iii) each of the
executive officers named in the table under "Executive Compensation and Other
Matters -- Executive Compensation -- Summary Compensation Table" and (iv) all
directors and executive officers as a group:
Approximate
Common Stock Percent
Name Owned Owned (1)
- ---------------------------------- ------------ -----------
Wellington Management Group (2)... 11,038,108 10.3%
75 State Street
Boston, MA 02109
Sanford C. Bernstein & Co. (3).... 8,297,266 7.8%
767 Fifth Avenue
New York, NY 10153
Alan F. Shugart(4)................ 518,144
Robert A. Kleist(5)............... 100,973 *
Laurel L. Wilkening(6)............ 38,548 *
Kenneth E. Haughton(5)............ 36,264 *
Thomas P. Stafford(7)............. 20,623 *
Lawrence Perlman(8)............... 6,041 *
Gary B. Filler(9)................. 3,542 *
Bernardo A. Carballo(10).......... 226,250 *
Donald L. Waite(11)............... 156,844 *
Ronald D. Verdoorn(12)............ 147,563 *
Brendan C. Hegarty(13)............ 102,427 *
All directors and executive
officers as a group (16
persons)(14)..................... 1,836,272 1.7%
* Less than 1%
(1) Applicable percentage of ownership is based on 106,914,785 shares of
Common Stock outstanding as of August 30, 1996 together with applicable
options for such stockholder. Beneficial ownership is determined in
accordance with the rules of the Securities and Exchange Commission, and
includes voting and investment power with respect to shares. Shares of
Common Stock subject to options currently exercisable or
-3-
exercisable within 60 days after August 30, 1996 are deemed outstanding for
computing the percentage ownership of the person holding such options, but
are not deemed outstanding for computing the percentage of any other
person.
(2) Reflects ownership as of August 8, 1996, as reported on Schedule 13G filed
with the Securities and Exchange Commission by Wellington Management Co.
("WMC"), which, in its capacity as investment advisor, may be deemed to
beneficially own such shares. Such shares are owned by a variety of
investment advisory clients of WMC, which clients receive dividends and the
proceeds from the sale of such shares. No such client is known by WMC to
have such interest with respect to more than five percent of the class
except Vanguard/Windsor Funds, Inc. WMC has shared dispositive power with
respect to all shares beneficially owned and shared voting power with
respect to 270,200 of such shares. The Company does not have any
additional knowledge as to where dispositive or voting power with respect
to such shares resides.
(3) Reflects ownership as of June 30, 1996 based upon information provided by a
representative of Sanford C. Bernstein & Co. The Company does not have
knowledge as to where dispositive or voting power with respect to such
shares resides.
(4) Includes 45,000 shares of Common Stock which may be acquired within 60 days
after August 30, 1996 through the exercise of stock options.
(5) Includes 24,164 shares of Common Stock which may be acquired within 60 days
after August 30, 1996 through the exercise of stock options.
(6) Represents 38,348 shares of Common Stock which may be acquired within 60
days after August 30,1996 through the exercise of stock options.
(7) Represents 20,623 shares of Common Stock which may be acquired within 60
days after August 30, 1996 through the exercise of stock options.
(8) Represents 6,041 shares of Common Stock which may be acquired within 60
days after August 30, 1996 through the exercise of stock options.
(9) Represents 3,542 shares of Common Stock which may be acquired within 60
days after August 30, 1996 through the exercise of stock options.
(10) Includes 149,750 shares of Common Stock which may be acquired within 60
days after August 30, 1996 through the exercise of stock options.
(11) Includes 37,642 shares of Common Stock which may be acquired within 60 days
after August 30, 1996 through the exercise of stock options.
(12) Includes 63,750 shares of Common Stock which may be acquired within 60
days after August 30, 1996 through the exercise of stock options.
(13) Includes 25,313 shares of Common Stock which may be acquired within 60
days after August 30, 1996 through the exercise of stock options.
(14) Includes 700,864 shares of Common Stock which may be acquired within 60
days after August 30, 1996 through the exercise of stock options.
-4-
STOCKHOLDER PROPOSALS TO BE PRESENTED AT NEXT ANNUAL MEETING
Proposals of stockholders which are intended to be presented by such
stockholders at the Company's 1997 Annual Meeting must be received by the
Secretary of the Company at the Company's principal executive offices no later
than May 23, 1997 in order that they may be included in the proxy statement and
form of proxy relating to that meeting.
PROPOSAL ONE
ELECTION OF DIRECTORS
GENERAL
A board of seven (7) directors is to be elected at the meeting. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
for Management's seven (7) nominees named below, all of whom are presently
directors of the Company. In the event that any Management nominee is unable or
declines to serve as a director at the time of the Annual Meeting, the proxies
will be voted for any nominee who shall be designated by the present Board of
Directors to fill the vacancy. In the event that additional persons are
nominated for election as directors, the proxy holders intend to vote all
proxies received by them in such a manner (in accordance with cumulative voting)
as will assure the election of as many of the nominees listed below as possible,
and, in such event, the specific nominees to be voted for will be determined by
the proxy holders. The Company is not aware of any nominee who will be unable
or will decline to serve as a director. The term of office for each person
elected as a director will continue until the next Annual Meeting of
Stockholders or until his or her successor has been elected and qualified.
VOTE REQUIRED
If a quorum is present and voting, the seven nominees receiving the highest
number of votes will be elected to the Board of Directors. Votes withheld from
any director, are counted for the purposes of determining the presence or
absence of a quorum for the transaction of business, but have no other effect
under Delaware law.
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NOMINEES
The names of the nominees, each of whom is currently a director of the
Company, and certain information about them are set forth below:
Director
Name of Nominee Age Principal Occupation Since
- ----------------------------- --- -------------------------------- --------
Alan F. Shugart 65 President, Chief Executive 1979
Officer and Chairman of
the Board of Directors of
the Company
Gary B. Filler 55 Senior Vice President and 1985
Chief Financial Officer of
Diamond Multimedia Systems,
Inc. (multimedia and
graphics company)
Kenneth E. Haughton 68 Consultant, Engineering 1986
Robert A. Kleist 67 President, Chief Executive 1981
Officer and a Director of
Printronix, Inc. (computer
printer manufacturer)
Lawrence Perlman 58 Chairman of the Board of 1989
Directors and Chief
Executive Officer of
Ceridian Corp. (formerly
Control Data Corporation)
(information services and
defense electronics
company)
Thomas P. Stafford 65 Vice Chairman of Stafford, 1988
Burke and Hecker, Inc. (a
consulting firm)
Laurel L. Wilkening 51 Chancellor, University of 1993
California, Irvine
Except as set forth below, each of the nominees has been engaged in his or her
principal occupation described above during the past five years. There is no
family relationship between any director or executive officer of the Company.
-6-
Mr. Shugart has been President of the Company since September 1991 and has
been Chief Executive Officer since the Company's inception in 1979. Mr. Shugart
also served as Chief Operating Officer of the Company from September 1991 until
March 1995. In addition, Mr. Shugart served as Chairman of the Board of
Directors of the Company from inception until September 1991 and was reappointed
Chairman of the Board of Directors in October 1992. Mr. Shugart is currently a
Director of Valence Technology, Inc. and SanDisk Corporation.
Mr. Filler has been Senior Vice President and Chief Financial Officer of
Diamond Multimedia Systems, Inc. since January 1995 and has resigned from the
company effective October 1, 1996. From June 1994 to January 1995, Mr. Filler
was a business consultant and private investor. From February 1994 until June
1994 he served as Executive Vice President and Chief Financial Officer of ASK
Group, Inc., a computer systems company. Mr. Filler was Chairman of the Board
of Directors of the Company from September 1991 until October 1992. From
October 1990 until September 1991, Mr. Filler served as Vice Chairman of the
Board of Directors of the Company.
Dr. Haughton is also a director of Solectron Corporation.
Mr. Perlman was appointed Chairman of the Board of Directors of Ceridian
Corp. in November 1992. Mr. Perlman previously held several executive positions
at Control Data Corporation including Chairman of the Board of Directors and
Chief Executive Officer of Imprimis Technology Incorporated ("Imprimis"). Mr.
Perlman is also a Director of Computer Network Technology Corporation, Valspar
Corporation, and Bio-Vascular, Inc.
General Stafford, a former astronaut, also serves as Director of
Allied-Signal Corporation, Pacific Scientific, Inc., Tremont, Inc., CMI, Inc.,
Fisher Scientific International, Inc., Wackenhut, Inc., Wheelabrator
Technologies, Inc., and Tracor, Inc.
Dr. Wilkening has served as Chancellor of the University of California,
Irvine since July 1993. From September 1988 to June 1993 she was Provost and
Vice President of Academic Affairs at the University of Washington. From May
1991 to January 1993, Dr. Wilkening also served as Chair of the Space Policy
Advisory Board of the National Space Council.
-7-
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of sixteen meetings
during fiscal 1996. No director attended fewer than 75% of the meetings of the
Board of Directors and committees thereof, if any, upon which such director
served. The Board of Directors has an Audit Committee, an Executive Personnel
and Organization Committee, a Strategic Planning Committee and a Stock Option
Committee.
The Audit Committee, which consists of directors Filler, Wilkening and
Haughton, met twice during fiscal 1996. The Audit Committee reviews and approves
the scope of the audit performed by the Company's independent auditors as well
as the Company's accounting principles and internal accounting controls. In
fiscal 1996 the Board of Directors as a whole recommended engagement of the
Company's independent auditors.
The Executive Personnel and Organization Committee, which consists of
directors Kleist, Stafford and Perlman, met four times during fiscal 1996. This
Committee reviews the structure and performance of senior management, as well as
the Company's plans for management succession, recommends to the Board of
Directors candidates for nomination to the Board, administers the Company's
stock option and stock purchase plans and reviews and approves the Company's
compensation policies and distributions to officers under the Company's
Performance-Based Executive Compensation Plan. The Executive Personnel and
Organization Committee will consider nominees to the Board of Directors
recommended by stockholders. Stockholders making such recommendations should
follow the procedures outlined above under "Information Concerning Solicitation
and Voting -- Stockholder Proposals to be Presented at Next Annual Meeting."
The Strategic Planning Committee, which consists of directors Filler,
Perlman and Shugart, held a total of four meetings during fiscal 1996. This
committee the Company's strategic plans and consults with the Company's
management with respect to its proposed acquisitions, strategic investments and
other such matters.
The Stock Option Committee, which consists of directors Perlman and
Shugart, was appointed in August 1995. This Committee reviews and approves stock
option grants to non-officer employees and consultants by written consent on a
periodic basis, normally weekly. Prior to August 1995 all stock option grants
were reviewed and approved by the Executive Personnel and Organization
Committee.
-8-
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Executive Personnel and Organization Committee currently consists of
directors Kleist, Stafford and Perlman.
During fiscal 1996, there were no required disclosures.
-9-
PROPOSAL TWO
APPROVAL OF AMENDMENT TO CERTIFICATE OF INCORPORATION TO INCREASE
AUTHORIZED SHARES
GENERAL
The Company's Restated Certificate of Incorporation, as amended, as
currently in effect (the "Certificate"), provides that the Company is authorized
to issue two classes of stock, consisting of 200,000,000 shares designated as
Common Stock, $0.01 par value per share, and 1,000,000 shares designated
Preferred Stock, $0.01 par value per share.
On September __, 1996, the Board of Directors of the Company authorized an
amendment to the Certificate (the "Certificate Amendment"), subject to
stockholder approval, to increase the authorized number of shares of Common
Stock by 400,000,000 shares to a total of 600,000,000 shares. Under the
proposed amendment, subparagraph (a) of Article 4 of the Certificate would be
amended to read as follows:
"The Corporation is authorized to issue two classes of shares to
be designated, respectively, "Preferred Stock" and "Common Stock."
The total number of shares which the Corporation shall have the
authority to issue is Six Hundred One Million (601,000,000), of
which One Million (1,000,000) shall be Preferred Stock and Six
Hundred Million (600,000,000) shall be Common Stock. The Preferred
Stock and the Common Stock shall each have a par value of $0.01
per share, and the aggregate par value of all shares of Preferred
Stock is $10,000 and of all shares of Common Stock is $6,000,000."
The stockholders are being asked to approve such Certificate Amendment.
The authorized but unissued shares of Common Stock would be available for
issuance from time to time for such purposes and for such consideration as the
Board of Directors may determine to be appropriate without further action by the
stockholders, except for those instances in which applicable law or stock
exchange rules require stockholder approval.
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PURPOSE AND EFFECT OF THE AMENDMENT
The Board of Directors believes that it is in the Company's best interests
to increase the number of authorized shares of Common Stock in order to have
additional authorized but unissued shares available for issuance to meet
business needs as they arise without the expense and delay of a special meeting
of stockholders. The Board of Directors believes that the availability of such
shares will provide the Company with the flexibility to issue Common Stock for
proper corporate purposes which may be identified by the Board of Directors in
the future. For example, such shares may be issued in the event the Board of
Directors determines that it is necessary or appropriate to permit a future
stock dividend or stock split, to raise additional capital, to acquire another
corporation or its business or assets, to establish a strategic relationship
with a corporate partner or to issue shares under management incentive or
employee benefit plans.
While the Board of Directors has not authorized or taken any action with
respect to the issuance of any such shares and has no present agreement,
arrangement or understanding with respect to the issuance of any such shares,
the Board is currently contemplating a stock dividend or stock split of the
outstanding Common Stock. The Board's decision to approve a stock dividend or
stock split will be based upon market and other factors deemed relevant by the
Board from time to time. If the Board of Directors were to decide to approve a
stock dividend or stock split, the number of shares of Common Stock currently
authorized may not be adequate. Although there can be no assurance that a stock
dividend or stock split will be authorized, the contemplation of a stock
dividend or stock split was an important factor to the Board in determining the
size of the proposed increase in the authorized shares in that a stock dividend
or stock split would proportionately reduce the number of authorized but
unissued shares.
The Board does not intend to authorize the issuance of any such shares
except upon terms the Board deems to be in the best interests of the Company.
-11-
If the Certificate Amendment is approved by the stockholders, the Board of
Directors does not intend to solicit further stockholder approval prior to the
issuance of any additional shares of Common Stock, except as may be required by
applicable law or stock exchange rules. The increase in authorized Common Stock
will not have any immediate effect on the rights of the existing stockholders.
To the extent that the additional authorized shares are issued in the future,
they will decrease the existing stockholders' percentage equity ownership and,
depending on the price at which they are issued, could be dilutive to the
existing stockholders. Holders of the Company's securities have no statutory
preemptive rights with respect to issuances of Common Stock.
The Company last increased its authorized Common Stock from 81,000,000
shares to 200,000,000 shares in April 1990.
Of the 200,000,000 currently authorized shares of Common Stock, 106,715,092
shares were issued and outstanding as of June 28, 1996 and an aggregate of
37,717,990 shares of Common Stock were reserved for issuance as follows:
11,850,012 shares were reserved for issuance upon exercise of outstanding
options; 4,025,819 shares were reserved for future grant under the 1991
Incentive Stock Option Plan (the "1991 Plan"); 490,000 shares were reserved for
future grant under the Directors' Option Plan (the "Directors' Plan"); 239,750
shares were reserved for future grant under the Executive Stock Plan; 1,913,707
shares were reserved for future issuance under the Employee Stock Purchase Plan;
10,314,286 shares were reserved for issuance upon conversion of the Company's
outstanding 5% Convertible Subordinated Debentures due 2003; 5,696,777 shares
were reserved for issuance upon conversion of the Company's outstanding 6 1/2%
Convertible Subordinated Debentures due 2002; and 3,187,639 shares were reserved
for issuance upon conversion of the Company's outstanding 6 3/4% Convertible
Subordinated Debentures due 2001.
The Company intends to apply to the New York Stock Exchange for the
listing of any additional shares of Common Stock if and when such shares are to
be issued.
-12-
POTENTIAL ANTI-TAKEOVER EFFECT
The increase in the authorized number of shares of Common Stock and the
subsequent issuance of such shares could have the effect of delaying or
preventing a change-of-control of the Company without further action by the
stockholders. Shares of authorized and unissued Common Stock could (within the
limits imposed by applicable law) be issued in one or more transactions that
would make a change-of-control of the Company more difficult, and therefore less
likely. Any such issuance of additional stock could have the effect of diluting
the earnings per share and book value per share of outstanding shares of Common
Stock, and such additional shares could be used to dilute the stock ownership or
voting rights of a person seeking to obtain control of the Company. The Company
has previously adopted certain measures that may have the effect of helping to
resist an unsolicited takeover attempt, including (i) provisions in the 1991
Plan providing for the acceleration of exercisability of outstanding options in
the event of a sale of assets or merger, unless otherwise determined by the
Board of Directors; (ii) provisions of the Certificate authorizing the Board to
issue up to 1,000,000 shares of Preferred Stock with terms, provisions and
rights fixed by the Board and (iii) provisions in the Company's bylaws regarding
cumulative voting. Prior to December 1994, the Company also had a Stockholder
Rights Plan, the effect of which was to make more difficult certain attempts to
acquire control of the Company. In December 1994, the Board of Directors
terminated the Company's Stockholder Rights Plan.
REQUIRED VOTE
The adoption of the Certificate Amendment requires the affirmative vote of
not less than a majority of the votes entitled to be cast by all shares of
Common Stock issued and outstanding on the Record Date. The effect of an
abstention is the same as that of a vote against the proposal. If the
Certificate Amendment is not so approved, the Company's authorized capital stock
will not change.
RECOMMENDATION
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION FOR THE PURPOSE OF
INCREASING THE AUTHORIZED NUMBER OF SHARES OF COMMON STOCK.
-13-
PROPOSAL THREE
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young LLP, independent
auditors, to audit the consolidated financial statements of the Company for the
fiscal year ending June 27, 1997 and recommends that stockholders vote for
ratification of such appointment. Notwithstanding the selection, the Board, in
its discretion, may direct the appointment of new independent auditors at any
time during the year, if the Board feels that such a change would be in the best
interests of the Company and its stockholders. In the event of a negative vote
on ratification, the Board of Directors will reconsider its selection.
Ernst & Young LLP has audited the Company's financial statements annually
since 1980. Representatives of Ernst & Young LLP are expected to be present at
the meeting with the opportunity to make a statement if they desire to do so and
are expected to be available to respond to appropriate questions.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS.
-14-
EXECUTIVE COMPENSATION AND OTHER MATTERS
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table sets forth certain information
regarding the compensation of the Chief Executive Officer of the Company and the
four other most highly compensated executive officers of the Company (the "Named
Officers").
ANNUAL COMPENSATION LONG TERM COMPENSATION AWARDS
------------------------------------- ---------------------------------------
SECURITIES UNDERLYING
RESTRICTED OPTIONS GRANTED (#)(13)
FISCAL SALARY OTHER ANNUAL STOCK -------------------------
NAME AND PRINCIPAL POSITION YEAR ($)(1) BONUS($) COMPENSATION ($) AWARDS ($) COMPANY SUBSIDIARY
- --------------------------- ------ ------ -------- ---------------- ---------- --------- -------------
Alan F. Shugart 1996 $680,781 $447,000 $312,558(2) $7,704,750(10) 120,000 30,000
Chairman, President, and 1995 600,018 522,700 375,724(3) -- 120,000 --
Chief Executive Officer 1994 603,858 334,200 249,564(4) -- 120,000 --
Bernardo A. Carballo 1996 $440,778 $373,000 $294,660(5) $3,929,423(11) 60,000 20,000
Executive Vice President, 1995 333,078 373,500 258,249(6) -- 60,000 --
Sales, Marketing, Product 1994 329,128 222,600 167,753(7) -- 60,000 --
Line Management and
Customer Service
Brendan C. Hegarty 1996 $468,278 $373,000 $289,234(5) $3,929,423(11) 60,000 20,000
Executive Vice President 1995 394,238 373,500 272,185(6) -- 60,000 --
and Chief Operating 1994 365,544 212,000 150,175(8) -- 60,000 --
Officer, Components
Group
Ronald D. Verdoorn 1996 $457,701 $373,000 $261,805(5) $3,929,423(11) 60,000 20,000
Executive Vice President, 1995 342,309 373,500 260,932(6) -- 60,000 --
and Chief Operating 1994 328,932 222,600 241,702(9) -- 60,000 --
Officer, Storage
Products Group
Donald L. Waite 1996 $457,701 $373,000 $276,729(5) $3,852,375(12) 60,000 20,000
Executive Vice President, 1995 400,005 373,500 257,049(6) -- 60,000 --
Chief Administrative 1994 383,447 222,600 163,286(7) -- 60,000 --
Officer and Chief
Financial Officer
-15-
(1) Fiscal Year 1994 included 27 bi-weekly pay periods while fiscal years 1995
and 1996 included 26 bi-weekly pay periods.
(2) Includes deferred payments under the Performance-Based Executive
Compensation Plan of $298,000.
(3) Includes deferred payments under the Performance-Based Executive
Compensation Plan of $348,500.
(4) Includes deferred payments under the Performance-Based Executive
Compensation Plan of $222,700.
(5) Includes deferred payments under the Performance-Based Executive
Compensation Plan of $249,000.
(6) Includes deferred payments under the Performance-Based Executive
Compensation Plan of $248,300.
(7) Includes deferred payments under the Performance-Based Executive
Compensation Plan of $148,500.
(8) Includes deferred payments under the Performance-Based Executive
Compensation Plan of $141,400.
(9) Includes deferred payments under the Performance-Based Executive
Compensation Plan of $148,500 and equalization allowance of $62,592.
(10) Pursuant to the Company's Executive Stock Plan, in November 1995 stock
purchase rights to purchase 150,000 shares of Common Stock at an exercise
price of $0.01 per share were granted to, and in March 1996 exercised by
Mr. Shugart. The amount shown in the table represents the dollar value (net
of the consideration paid) of the award of restricted stock, calculated by
multiplying the closing market price of the Company's Common Stock on the
date of grant by the number of shares awarded. As of June 28, 1996, Mr.
Shugart held 150,000 unvested shares of stock having a value of $6,750,000
based upon the fair market value of the Common Stock on June 28, 1996 of
$45.00 per share. All of such unvested shares are subject to repurchase by
the Company at the original purchase price in the event of a termination of
Mr. Shugart's employment with the Company. The shares are released from the
Company's repurchase option after five years from date of grant. See
"Report of the Executive Personnel and Organization Committee of the Board
of Directors-Stock Options and Restricted Stock Awards" for further
information on vesting provisions. Mr. Shugart will receive the same
dividends on all shares of restricted stock as all other stockholders;
however, the Company does not anticipate paying any cash dividends in the
foreseeable future.
(11) Pursuant to the Company's Executive Stock Plan, in November 1995 stock
purchase rights to purchase 76,500 shares of Common Stock at an exercise
price of $0.01 per share were granted to, and in March 1996 exercised by
Messrs. Carballo and Verdoorn, and Dr. Hegarty. The amount shown in the
table represents the dollar value (net of the consideration paid) of the
award of restricted stock, calculated by multiplying the closing market
price of the Company's Common Stock on the date of grant by the number of
shares awarded. As of June 28, 1996, each of these Executive Officers held
76,500 unvested shares of stock having a value of $3,442,500 based upon the
fair market value of the Common Stock on June 28, 1996 of $45.00 per share.
All of such unvested shares are subject to repurchase by the Company at the
original purchase price in the event of a termination of employment with
the Company. The shares are released from the Company's repurchase option
after ten years from date of grant. See "Report of the Executive Personnel
and Organization Committee of the Board of Directors-Stock Options and
Restricted Stock Awards" for further information on vesting provisions.
They will receive the same dividends on all shares of restricted stock as
all other stockholders; however, the Company does not anticipate paying any
cash dividends in the foreseeable future.
(12) Pursuant to the Company's Executive Stock Plan, in November 1995 stock
purchase rights to purchase 75,000 shares of Common Stock at an exercise
price of $0.01 per share were granted to, and in March 1996 exercised by
Mr. Waite. The amount shown in the table represents the dollar value (net
of the consideration paid) of the award of restricted stock, calculated by
multiplying the closing market price of the Company's Common Stock on the
date of grant by the number of shares awarded. As of June 28, 1996, Mr.
Waite held 75,000 unvested shares of stock having a value of $3,375,000
based upon the fair market value of the Common Stock on June 28, 1996 of
$45.00 per share. All of such unvested shares are subject to repurchase by
the Company at the original purchase price in the event of a termination of
Mr. Waite's employment with the Company. The shares are released from the
Company's repurchase option after five years from date of grant. See
"Report of the Executive Personnel and Organization Committee of the Board
of Directors-Stock Options and Restricted Stock Awards" for further
information on vesting provisions. Mr. Waite will receive the same
dividends on all shares of restricted stock as all other stockholders;
however, the Company does not anticipate paying any cash dividends in the
foreseeable future.
(13) The Stock Options listed in the table include options to purchase Common
Stock of the Company and options to purchase Common Stock of a subsidiary,
Seagate Software Inc. ("Seagate Software"). The Company's subsidiary,
Seagate Software, granted stock options to purchase Seagate Software Common
Stock to virtually all of the Seagate Software employees and certain
Seagate Technology, Inc. employees, including Named Officers, pursuant to
the Seagate Software Inc. 1996 Stock Option Plan (the "Software Stock
Plan"). See "Executive Officer Compensation - Stock Options" below for
additional information regarding options to purchase stock of Seagate
Software granted in fiscal 1996.
-16-
OPTION GRANTS IN FISCAL 1996
The following tables provide information concerning each grant of options
to purchase the Company's Common Stock and Seagate Software's Common Stock made
during fiscal year 1996 to the Named Officers in the Summary Compensation Table:
INDIVIDUAL GRANTS FOR SEAGATE TECHNOLOGY, INC.
-----------------------------------------------------------------
% OF POTENTIAL REALIZABLE
NUMBER OF TOTAL VALUE AT ASSUMED
SECURITIES OPTIONS ANNUAL RATES OF STOCK
UNDERLYING GRANTED TO EXERCISE PRICE APPRECIATION FOR
OPTIONS EMPLOYEES OR BASE EXPIRA- OPTION TERM (1)
GRANTED IN FISCAL PRICE TION ----------------------------
NAME (#) (2) YEAR ($/SH)(3)(4) DATE 5% ($) 10% ($)
- ---------------------------------------------------------------------------------------------------------------------------------
Alan F. Shugart............. 30,000 .4222% $ 43.75 07/27/05 $ 825,424 $2,091,787
30,000 .4222 47.00 10/25/05 886,741 2,247,177
30,000 .4222 56.50 01/24/06 1,065,976 2,701,393
30,000 .4222 58.00 05/01/06 1,094,277 2,773,112
Bernardo A. Carballo........ 15,000 .2111% $ 43.75 07/27/05 $ 412,712 $1,045,893
15,000 .2111 47.00 10/25/05 443,371 1,123,588
15,000 .2111 56.50 01/24/06 532,988 1,350,697
15,000 .2111 58.00 05/01/06 547,138 1,386,556
Brendan C. Hegarty.......... 15,000 .2111% $ 43.75 07/27/05 $ 412,712 $1,045,893
15,000 .2111 47.00 10/25/05 443,371 1,123,588
15,000 .2111 56.50 01/24/06 532,988 1,350,697
15,000 .2111 58.00 05/01/06 547,138 1,386,556
Ronald D. Verdoorn.......... 15,000 .2111% $ 43.75 07/27/05 $ 412,712 $1,045,893
15,000 .2111 47.00 10/25/05 443,371 1,123,588
15,000 .2111 56.50 01/24/06 532,988 1,350,697
15,000 .2111 58.00 05/01/06 547,138 1,386,556
Donald L. Waite............. 15,000 .2111% $ 43.75 07/27/05 $ 412,712 $1,045,893
15,000 .2111 47.00 10/25/05 443,371 1,123,588
15,000 .2111 56.50 01/24/06 532,988 1,350,697
15,000 .2111 58.00 05/01/06 547,138 1,386,556
- -----------------------------
(1) Potential realizable value is based on the assumption that the Common
Stock of the Company appreciates at the annual rate shown (compounded
annually) from the date of grant until the expiration of the ten year
option term. These numbers are calculated based on the requirements
promulgated by the Securities and Exchange Commission and do not
reflect the Company's estimate of future stock price growth.
(2) All stock options granted in fiscal year 1996 begin to vest one year
after the date of grant, with 25% of the shares covered thereby vesting at
that time and with an additional 25% of the option shares vesting at
the end of each year thereafter, with full vesting occurring on the
fourth anniversary of the date of grant. Optionees are permitted, with
certain limitations, to exercise stock options as to unvested shares, but
Common Stock purchased thereby is subject to repurchase by the Company
until such vesting conditions are met. Under the 1991 Plan, the
Board retains discretion to modify the terms, including the price, of
outstanding options.
(3) Options were granted at an exercise price equal to the fair market value of
the Company's Common Stock, as determined by reference to the closing price
reported on the New York Stock Exchange on the last trading day prior to
the date of grant.
(4) Exercise price and tax withholding obligations may be paid in cash, by
delivery of already-owned shares subject to certain conditions,
utilization of deferred compensation subject to certain limitations (see
Report of the Executive Personnel and Organization Committee of the Board
of Directors - Performance-Based Awards) or pursuant to a cashless
exercise procedure under which the optionee provides irrevocable
instructions to a brokerage firm to sell the purchased shares and to
remit to the Company, out of the sale proceeds, an amount equal to the
exercise price plus all applicable withholding taxes.
INDIVIDUAL GRANTS FOR SEAGATE SOFTWARE
-----------------------------------------------------------------
% OF
NUMBER OF TOTAL
SECURITIES OPTIONS POTENTIAL REALIZABLE
UNDERLYING GRANTED TO EXERCISE VALUE AT ASSUMED
OPTIONS EMPLOYEES OR BASE ANNUAL RATES OF STOCK
GRANTED IN FISCAL PRICE EXPIRATION PRICE APPRECIATION FOR
NAME (#) (2) YEAR ($/SH)(3) DATE OPTION TERM (1)
- ---------------------------------------------------------------------------------------------------------------------------------
Alan F. Shugart............. 30,000 .9153% $4.00 04/04/06 $75,467 $191,249
Bernardo A. Carballo........ 20,000 .6102 $4.00 04/04/06 $50,312 $127,499
Brendan C. Hegarty.......... 20,000 .6102 $4.00 04/04/06 $50,312 $127,499
Ronald D. Verdoorn.......... 20,000 .6102 $4.00 04/04/06 $50,312 $127,499
Donald L. Waite............. 20,000 .6102 $4.00 04/04/06 $50,312 $127,499
- -----------------------------
(1) Potential realizable value is based on the assumption that the Common Stock
of the Company appreciates at the annual rate shown (compounded annually)
from the date of grant until the expiration of the ten year option term.
These numbers are calculated based on the requirements promulgated by the
Securities and Exchange Commission and do not reflect the Company's
estimate of future stock price growth.
(2) All stock options granted in fiscal year 1996 begin to vest starting one
year after the date of grant, with 20% of the shares covered thereby
vesting at that time, with an additional 20% of the option shares vesting
at the end of the second year thereafter, with 30% of the option shares
vesting at the end of the third year thereafter, with full vesting of the
remaining 30% occurring on the fourth anniversary of the date of grant.
Under the Seagate Software Plan, the Board retains discretion to modify the
terms, including the price, of outstanding options.
(3) Options were granted at an exercise price equal to the fair market value of
the Company's Common Stock on grant date, as determined by the Board of
Directors of Seagate Software Inc.
-17-
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
The following table sets forth certain information regarding the exercise
of stock options in the last fiscal year by the persons named in the Summary
Compensation Table and the value of options held by such individuals at the end
of the fiscal year.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR-END (#) AT FISCAL YEAR-END ($) (2)
------------------------------ ------------------------------
EXERCISABLE/ EXERCISABLE/ EXERCISABLE/ EXERCISABLE/
SHARES ACQUIRED VALUE UNEXERCISABLE UNEXERCISABLE UNEXERCISABLE UNEXERCISABLE
NAME ON EXERCISE (#) REALIZED ($)(1) SEAGATE SOFTWARE SEAGATE SOFTWARE
- -------------------------- --------------- -------------- ------------ ------------- ------------ -------------
Alan F. Shugart........... 183,625 $7,289,949 0/ 0/ $0/ $0/
285,000 30,000 $3,377,333 0
Bernardo A. Carballo...... 27,500 $ 774,375 132,250/ 0/ 4,071,780/ 0/
118,750 20,000 1,176,090 0
Brendan C. Hegarty........ 27,812 $ 855,639 7,813/ 0/ 191,969/ 0/
118,750 20,000 1,176,090 0
Ronald D. Verdoorn........ 27,994 $1,331,710 46,250/ 0/ 1,055,780/ 0/
118,750 20,000 1,176,090 0
Donald L. Waite........... 0 $ 0 78,350/ 0/ 2,172,255/ 0/
118,750 20,000 1,176,090 0
(1) Market value of the Company's Common Stock at the exercise date minus the
exercise price.
(2) Market value of the Company's Common Stock at fiscal year-end minus the
exercise price. No Seagate Software stock options held by Named Officers
were in-the-money at 1996 fiscal year end. The fair market value of Seagate
Software common stock at 1996 fiscal year end, as determined by the Seagate
Software Board of Directors, was $4.00 per share.
EMPLOYMENT CONTRACTS AND CHANGE-OF-CONTROL ARRANGEMENTS
The Company currently has no employment contracts with any of the
executive officers named in the "Summary Compensation Table" above and the
Company has no compensatory plan or arrangement with such executive officers
where the amount to be paid exceeds $100,000 and which are activated upon
resignation, termination or retirement of any such executive officer upon a
change of control of the Company.
The Company's 1991 Plan provides that in the event of a "change of
control" of the Company, the Board of Directors may, in its discretion, provide
that (i) all options granted under the 1991 Plan that are outstanding as of the
date of such change of control will become immediately vested and fully
exercisable and (ii) to the extent exercisable and vested, the value of all
outstanding options, unless otherwise determined by the Board prior to any
change of control, will be cashed out at the change of control price reduced by
the exercise price applicable to such options. The Company's Executive Stock
Plan provides that in the event of a "change of control" of the Company, if
constructive termination of an executive occurs within the two-year period
following such change of control, then there shall be released from the
Company's repurchase option that percentage of the executive's unreleased shares
determined by dividing (i) the number of months that have elapsed from the date
of grant to the date of such termination, by (ii) one hundred twenty (120) or
sixty (60), as applicable.
-18-
COMPENSATION OF DIRECTORS
Non-employee members of the Board of Directors receive an annual retainer
of $30,000 and a fee of $3,000 per Board meeting attended (excluding telephonic
Board meetings), and $2,000 per Committee meeting attended, if such meeting is
on a day other than the day of a meeting of the Board of Directors. Each of the
persons serving as the Chairman of the Audit Committee and the Executive
Personnel and Organization Committee receives an additional annual retainer of
$8,000. Non-employee members of the Strategic Planning Committee receive an
annual retainer of $6,000. The Company also reimburses the directors for certain
expenses incurred by them in their capacities as directors or in connection with
attendance at Board meetings.
The Company's Directors' Plan provides for the grant of non-statutory
options to purchase shares of the Company's Common Stock to non-employee
directors. Under the Directors' Plan the timing of option grants, amount of the
grants, exercise price and restrictions on exercise of the options are
established in the plan. The exercise price of options granted under the
Directors' Plan may not be less than 100% of the fair market value of the Common
Stock on the date of grant. The options become exercisable cumulatively for
1/48th of the shares subject to the option at the end of each full month that
the optionee remains a director following the date of grant. Options granted
under the Directors' Plan expire five years from the date of grant and may be
exercised only while the optionee is serving as a member of the Company's Board
of Directors, within six months after termination by death or disability or
within three months after termination as a director except by death or
disability. Effective on October 24, 1996, the term of options granted under the
Directors' Plan will be changed for all future options from five years to ten
years from the date of grant. Pursuant to the Directors' Plan, each new non-
employee director is granted an option to purchase 40,000 shares of Common Stock
upon the date on which such person first becomes a director. On November 1 of
each year, each non-employee director is granted an additional option to
purchase 10,000 shares of Common Stock; provided, however, that no such
additional grant is made to a non-employee director who has received an initial
option grant in the preceding six months. On November 1, 1995, each of the non-
employee directors, Messrs. Kleist, Filler, Stafford and Perlman and Drs.
Haughton and Wilkening was granted an option to purchase 10,000 shares of the
Company's Common Stock at an exercise price of $44.625 per share.
-19-
On April 1, 1996, each of the non-employee directors, Messrs Kleist,
Filler, Stafford and Perlman and Drs. Haughton and Wilkening was granted an
option to purchase 20,000 shares of Seagate Software Inc. Common Stock at an
exercise price of $4.00 per share. The options become exercisable cumulatively
as follows: first and second anniversaries of grant date 30% each year; and on
the third and fourth anniversaries of the grant date 20% each year. Options
granted under the Seagate Software Stock Plan expire ten years from grant date.
-20-
REPORT OF THE EXECUTIVE PERSONNEL AND ORGANIZATION COMMITTEE OF THE
BOARD OF DIRECTORS
The Executive Personnel and Organization Committee (the "Committee") of the
Board of Directors reviews and approves the Company's executive compensation
policies. The following is the report of the Committee describing compensation
policies and rationale applicable to the Company's executive officers with
respect to the compensation paid to such executive officers for
the fiscal year ended June 28, 1996.
The Company's executive compensation policies are designed (i) to provide
competitive levels of overall compensation in order to attract and retain the
most qualified executives in the industry, (ii) to motivate executive officers
to achieve the Company's business objectives and (iii) to reward executive
officers for their achievements on behalf of the Company. To achieve these
goals, the Committee and the Board of Directors have established an executive
compensation program primarily consisting of three integrated components - Base
Salary, Performance-Based Awards, and Stock Options and Restricted Stock Awards.
Base Salary. The base salary component of total compensation is designed to
-----------
be competitive at approximately the 50th percentile for similar companies in
terms of industry group, technology, complexity, and company size. Company size
reflects both sales and market capitalization.
During fiscal 1993, the committee on behalf of the Board worked with
management to develop an executive salary structure based on an extensive
competitive analysis including two published national pay surveys and proxy
statement pay comparisons for selected companies. Between the survey companies
and the proxy comparison companies, several from the "Peer Group" used in the
Performance Graph below were included. Working with Frederick W. Cook & Co.,
independent consultants to the Committee, the Committee and management updated
the analysis in fiscal 1996. Frederick W. Cook & Co. also acted as consultants
to the Committee during the 1993 analysis.
From fiscal 1993 to fiscal 1996, Seagate's annual sales increased by more
than 250% and its market capitalization increased by approximately 800%. The
effect of this substantial growth combined with general market movement in pay
levels resulted in a significant adjustment in the executive salary structure to
maintain Seagate's stated competitive objective, i.e., 50th percentile versus
similar companies.
-21-
To implement the updated salary structure, individual salaries for the
Company's executive officers were increased during fiscal 1996 by an average of
16.44% above fiscal 1995. The Committee exercised its discretion in determining
individual salaries taking into account individual performance, future
leadership potential, relative duties and responsibilities, and other factors.
No specific formula was applied to determine the weighting of these factors.
The Chief Executive Officer's (the "CEO") base salary was increased
during fiscal 1996 by 25% from $600,000 to $750,000. His former salary had been
in place since fiscal 1994, reflecting Seagate's general policy of reviewing the
base salaries of executives over a period of 18-to-24 months. Thus, the amount
of the increase reflects general market movement over two fiscal years,
adjustment for Seagate's growth from the salary structure put in place in fiscal
1992 to the updated structure put in place in fiscal 1996, and the Committee's
assessment of the CEO's individual performance contributions.
Performance-Based Awards. All executive officers, including the CEO,
------------------------
participate in the Company's Performance-Based Executive Compensation Plan (the
"Plan"). The Plan compensates executive officers in the form of quarterly
awards. Awards under the Plan are intended to reflect the Committee's belief
that a significant portion of the annual compensation of each executive officer
should be contingent upon the performance of the Company and the individual
contribution of each executive officer. Awards under the Plan, including the
CEO's, are contingent upon attainment of specific Company profitability
performance objectives as measured by the Company's computation of a return on
adjusted assets, with the performance objectives established by the Committee at
the time of their approval of the budget for the fiscal year. The actual payout
of each quarterly award varies with Company performance such that above-average
performance results in above-average compensation and below-average performance
results in below-average compensation. In addition, consideration is given to
the relative contribution of each individual within the executive group in
attainment of that performance.
Under the Plan, 60% of the award is paid in cash. The remaining 40% is
deferred and may be used solely, except in the event of the death of the
executive, to satisfy a portion of the exercise price of certain stock options
granted under the 1991 Plan. As a result, 40% of each award earned is at risk to
the executive officer until stock options held by such executive officer vest
and are exercised. If a participant's employment with the Company is terminated
prior to the end of a fiscal quarter, other
-22-
than by death or disability of the executive, the Plan provides that he or she
shall not be eligible for an award for that fiscal quarter and any deferred
accumulated awards relating to unvested stock options are forfeited. In fiscal
1996, the awards under the Plan represented approximately 52.25% of the CEO's
total cash compensation, including deferred awards, and ranged from 50.50% to
62.31% of the total cash compensation, including deferred awards, of the other
executive officers. The Company's fiscal 1996 results were judged by the
Committee to be above average. Based upon the Company's performance during
fiscal 1996, and the executive officers' individual contributions, awards under
the Plan were made to executive officers, including the CEO, in three of the
four fiscal quarters. The CEO's individual contributions to the Company were his
leadership role in establishing and retaining a strong management team, his
strategic focus on the business to position it for growth and diversification,
and his work in communicating the Company's vision, strategy and performance.
Stock Options and Restricted Stock Awards. The grant of stock options and
-----------------------------------------
restricted awards to executive officers creates a direct link between
compensation and long-term increases in stockholder value. The Committee
believes that stock option grants provide an incentive that focuses the
executive officers' attention on managing the Company from the perspective of an
owner with an equity stake in the business. Options and awards are subject to
vesting provisions to encourage executive officers to remain employed with the
Company. With respect to executive officers, stock option grants normally occur
on a quarterly basis. The size of each option grant is based upon the executive
officer's responsibilities, relative position with the Company and the
Committee's judgment with respect to the executive's impact on stockholder
value.
Options of Seagate Technology Inc: During fiscal 1996, the CEO received
four quarterly stock option grants of 30,000 shares, the five executive vice
presidents received four quarterly grants of 15,000 shares, one executive vice
president received an initial grant of 64,000 shares and two quarterly grants of
15,000 shares, two executive officers received four quarterly grants of 10,000
shares each and the remaining executive officer received an initial grant of
34,459 shares and two quarterly grants of 7,000 shares.
Options of Seagate Software Inc: Options to purchase common stock of
Seagate Software granted under the Software Stock Plan had exercise prices not
less than the estimated fair market value on the grant date, as determined by
the Board of Directors of Seagate Software Inc. Subject to certain conditions,
these options become exercisable cumulatively as follows: first and second
anniversaries of grant date 20% each year; and on third and fourth anniversaries
-23-
of grant date 30% each year. No option under the Software Stock Plan may be
exercised after 10 years from date of grant. During fiscal 1996, the CEO
received one grant of 30,000 shares, and each of the Named Officers received
20,000 shares under the Software Stock Plan. The other executive officers
received grants ranging from 8,000 to 20,000 shares.
Restricted Stock Awards: Seagate has no pension or other retirement
benefits for executive officers. During fiscal 1996, the Committee considered
whether or not such benefits might be appropriate, primarily as a vehicle for
long-term employment retention of experienced individuals. Several alternative
arrangements were considered including the use of corporate-owned life
insurance. After thoroughly analyzing the alternatives, the Committee
determined that it could best combine the retention objectives for providing
retirement benefits with the advantages of stock-based incentives and executive
stock ownership by granting restricted stock with extended future vesting, in
lieu of some type of guaranteed pension.
As a result, special one-time restricted stock grants were made to
executive officers. The special restricted stock grants were made under the
shareholder-approved Executive Stock Plan, where the Committee has the authority
to set the vesting schedule. Special restricted stock awards made during fiscal
1996 vest 100%, i.e., "cliff vesting," at the end of ten years; except for the
CEO and Chief Administrative Officer ("CAO") who vest 100% at the end of five
years. There may be pro-rata vesting under certain circumstances including
death, disability, termination by the Company other than for cause, and
constructive termination following a change of control. In addition, if an
executive voluntarily resigns on or after attaining age 65 the Board may grant
pro-rata vesting. The size of the special restricted stock awards was
established by the Committee taking into account what would be representative
equivalent retirement benefit values under alternative arrangements based on
reasonable stock-price growth-rate assumptions.
Impact of Section 162(m) of the Internal Revenue Code. The Committee has
-----------------------------------------------------
considered the potential impact of Section 162(m) of the Internal Revenue Code
on the compensation paid to the Company's executive officers. Section 162(m)
disallows a tax deduction for any publicly-held corporation for individual
compensation exceeding $1.0 million in any taxable year for any of the executive
officers named in the proxy statement, unless compensation is performance-based.
In general, it is the Company's policy to qualify, to the maximum extent
possible, its executives' compensation for deductibility under applicable tax
laws. As a result, the Committee submitted the Performance-Based Executive
Compensation Plan to the stockholders for ratification and obtained approval at
the 1994
-24-
Annual Meeting of Stockholders in order to qualify for deductibility
the compensation realized in connection with payments under this plan. In
addition, at the 1993 Annual Meeting of Stockholders, the stockholders approved
certain amendments to the 1991 Plan to preserve the Company's ability to deduct
the compensation expense relating to stock options granted under such plan.
In approving the amount and form of compensation for the Company's
executive officers, the Committee will continue to consider all elements of the
cost to the Company of providing such compensation, including the potential
impact of Section 162(m).
MEMBERS OF THE EXECUTIVE PERSONNEL AND ORGANIZATION COMMITTEE:
ROBERT A. KLEIST
LAWRENCE PERLMAN
THOMAS P. STAFFORD
PERFORMANCE GRAPH
Set forth below is a line graph comparing the annual percentage change
in the cumulative return to the stockholders of the Company's Common Stock with
the cumulative return of the S&P 500 Index (the "S&P 500"), of a peer group
constructed by the Company (the "Peer Group") and of the Hambrecht & Quist
Computer Hardware Index for the period commencing July 1, 1991 and ending on
June 30, 1996. The Peer Group is composed of Komag, Inc., Quantum Corporation,
Read-Rite Corporation and Western Digital Corporation. Returns for the Peer
Group are weighted based on market capitalization at the beginning of each
fiscal year.
The Company is replacing the Peer Group index with the Hambrecht & Quist
Computer Hardware Index because three of the companies in the Peer Group last
year no longer exist as independent companies. The Company believes, therefore,
that it would be more appropriate to compare itself to a more broadly-based
index. Both indexes are displayed below because SEC regulations require the old
and new index to be presented in the year of transition.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
H&Q
SEAGATE PEER GROUP S&P 500 COMPUTER HARDWARE
Jun-91 100 100 100 100
Jun-92 198 114 113 106
Jun-93 212 87 129 85
Jun-94 263 117 131 83
Jun-95 527 231 165 146
Jun-96 600 200 208 172
-25-
(1) The graph assumes that $100 was invested on July 1, 1991 in the Company's
Common Stock and in the S&P 500, the Peer Group, and the Hambrecht & Quist
Computer Hardware Index, and that all dividends were reinvested. No
dividends have been declared or paid on the Company's Common Stock.
Stockholder returns over the indicated period should not be considered
indicative of future stockholder returns.
(2) The Company operates on a 52/53 week fiscal year which ends on the Friday
closest to June 30. Accordingly the last trading day of the Company's
fiscal year may vary. For consistent presentation and comparison to the
S&P 500 and Peer Group shown herein, the Company has calculated its stock
performance graph assuming a June 30 year end.
The information contained above under the captions entitled "Report of
the Executive Personnel and Organization Committee of the Board of Directors"
and "Performance Graph" shall not be deemed to be "soliciting material" or to be
"filed" with the Securities and Exchange Commission, nor shall such information
be incorporated by reference into any filing under the Securities Act of 1933 or
Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates it by reference into such filing.
CERTAIN TRANSACTIONS WITH MANAGEMENT
During the fiscal year ended June 28, 1996, the Company paid Monterey
Airplane Company, a company 100% owned by Alan F. Shugart, Chairman of the Board
of Directors, President and Chief Executive Officer, and his wife, the amount of
$1,099,555 for chartered aviation services.
The Company believes that the terms of such transactions were no less
favorable than those which could be obtained from entities unrelated to the
Company.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who own
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more than ten percent of a registered class of the Company's equity securities
to file reports of ownership and changes in ownership with the Securities and
Exchange Commission ("SEC") and the New York Stock Exchange. Executive officers,
directors and greater than ten percent stockholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file. Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons, the Company believes
that, during the period from July 1, 1995 to June 28, 1996, all filing
requirements applicable to its executive officers and directors were complied
with.
OTHER MATTERS
The Company knows of no other matters to be submitted at the meeting. If
any other matters properly come before the meeting, it is the intention of the
persons named in the enclosed form of Proxy to vote the shares they represent as
the Board of Directors may recommend.
THE BOARD OF DIRECTORS
Dated: September 20, 1996
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PRELIMINARY COPY
FILED SEPT. 4, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SEAGATE TECHNOLOGY, INC.
1996 ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 24, 1996
The undersigned stockholder of SEAGATE TECHNOLOGY, INC., a Delaware
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement, each dated September 20, 1996, and hereby
appoints Alan F. Shugart, Gary B. Filler and Robert A. Kleist, and each of them,
proxies and attorneys-in-fact, with full power to each of substitution, on
behalf and in the name of the undersigned, to represent the undersigned at the
1996 Annual Meeting of Stockholders of SEAGATE TECHNOLOGY, INC. to be held on
October 24, 1996 at 10:00 a.m., local time, at Seascape Resort & Conference
Center, One Seascape Resort Drive, Aptos, California 95003, and at any
adjournment or adjournments thereof, and to vote all shares of Common Stock
which the undersigned would be entitled to vote if then and there personally
present, on the matters set forth below:
1. ELECTION OF DIRECTORS:
[_] FOR all nominees listed below [_] WITHHOLD
(except as indicated)
IF YOU WISH TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THAT NOMINEE'S NAME IN THE LIST BELOW:
Alan F. Shugart; Robert A. Kleist; Gary B. Filler;
Kenneth E. Haughton; Thomas P. Stafford; Lawrence Perlman;
Laurel L. Wilkening.
2. PROPOSAL TO APPROVE AN AMENDMENT TO THE COMPANY'S CERTIFICATE OF
INCORPORATION FOR THE PURPOSE OF INCREASING THE AUTHORIZED NUMBER OF
SHARES OF STOCK RESERVED FOR ISSUANCE THEREUNDER BY 400,000,000 SHARES
TO AN AGGREGATE OF 600,000,000 SHARES.
[_] FOR [_] AGAINST [_] ABSTAIN
3. PROPOSAL TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS THE
INDEPENDENT AUDITORS OF THE COMPANY FOR FISCAL 1997:
[_] FOR [_] AGAINST [_] ABSTAIN
and, in their discretion, upon such other matter or matters which may properly
come before the meeting or any adjournment or adjournments thereof.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED,
WILL BE VOTED FOR THE ELECTION OF DIRECTORS, FOR THE AMENDMENT TO INCREASE THE
AUTHORIZED NUMBER OF SHARES OF COMMON STOCK, FOR THE RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS AND AS SAID PROXIES
DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
Dated: __________________, 1996
_______________________________
Signature
_______________________________
Signature
(This Proxy should be marked, dated and signed by the stockholder(s) exactly as
his or her name appears hereon, and returned promptly in the enclosed envelope.
Persons signing in a fiduciary capacity should so indicate. If shares are held
by joint tenants or as community property, both should sign.)