SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or
Rule 14a-12
/ / Confidential, for Use of the Commission Only (as Permitted
by Rule 14a-6(e)(2))
COMPUTRON SOFTWARE, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, If Other Than Registrant)
Payment of filing fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
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(2) Aggregate number of securities to which transaction
applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or
schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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COMPUTRON SOFTWARE, INC.
301 ROUTE 17 NORTH
RUTHERFORD, NEW JERSEY 07070
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 14, 2000
TO OUR STOCKHOLDERS:
The annual meeting of stockholders (the "Annual Meeting") of Computron
Software, Inc. (the "Company") will be held at The Crowne Plaza, 2 Harmon Plaza,
Secaucus, New Jersey 07094, telephone number (201) 348-6900 on June 14, 2000, at
10:00 a.m. for the following purposes:
(1) To elect eight directors to serve until the next Annual Meeting or until
their respective successors shall have been duly elected and qualified;
(2) To ratify the appointment of KPMG LLP as the Company's independent
auditors for 2000; and
(3) To transact such other business as may properly come before the Annual
Meeting.
Only stockholders of record at the close of business on May 5, 2000 are
entitled to notice of and to vote at the Annual Meeting. A list of stockholders
eligible to vote at the meeting will be available for inspection at the meeting
and for a period of ten days prior to the meeting during regular business hours
at the corporate headquarters at the address above.
Whether or not you expect to attend the Annual Meeting, your proxy vote is
important. To assure your representation at the Annual Meeting, please sign and
date the enclosed proxy card and return it promptly in the enclosed envelope,
which requires no additional postage if mailed in the United States. A copy of
the Company's Annual Report for the year 1999 is enclosed.
By Order of the Board of Directors,
John A. Rade
Chief Executive Officer and President
Rutherford, New Jersey
April 26, 2000
IT IS IMPORTANT THAT THE ENCLOSED PROXY CARD
BE COMPLETED AND RETURNED PROMPTLY
COMPUTRON SOFTWARE, INC.
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
JUNE 14, 2000
This Proxy Statement is furnished to stockholders of record of Computron
Software, Inc. (the "Company") as of the close of business on May 5, 2000 in
connection with the solicitation of proxies by the Board of Directors of the
Company (the "Board of Directors" or "Board") for use at the Annual Meeting of
Stockholders to be held on June 14, 2000 (the "Annual Meeting").
Shares cannot be voted at the meeting unless the owner is present in person
or by proxy. All properly executed and unrevoked proxies in the accompanying
form that are received in time for the meeting will be voted at the meeting or
any adjournment thereof in accordance with instructions thereon, or if no
instructions are given, will be voted "FOR" the election of the named nominees
as Directors of the Company, "FOR" the approval of the Company's independent
public accountants, and will be voted in accordance with the best judgment of
the persons appointed as proxies with respect to other matters which properly
come before the Annual Meeting. Any person giving a proxy may revoke it by
written notice to the Company at any time prior to exercise of the proxy. In
addition, although mere attendance at the Annual Meeting will not revoke the
proxy, a stockholder who attends the meeting may withdraw his or her proxy and
vote in person. Abstentions and broker non-votes will be counted for purposes of
determining the presence or absence of a quorum for the transaction of business
at the Annual Meeting. Abstentions will be counted as votes "AGAINST" in
tabulations of the votes cast on each of the proposals presented at the Annual
Meeting, whereas broker non-votes will not be counted and therefore will not
affect the vote with respect to any such proposal.
The Annual Report of the Company (which does not form a part of the proxy
solicitation materials), including the Annual Report on Form 10-K with the
financial statements of the Company for the fiscal year ended December 31, 1999,
is being distributed concurrently herewith to stockholders. The expense of this
proxy solicitation will be borne by the Company. In addition to solicitation by
mail, proxies may be solicited in person or by telephone, telegraph or other
means by directors or employees of the Company or its subsidiaries without
additional compensation. The Company will reimburse brokerage firms and other
nominees, custodians and fiduciaries for costs incurred by them in mailing proxy
materials to the beneficial owners of shares held of record by such persons.
The mailing address of the principal executive offices of the Company is 301
Route 17 North, Rutherford, New Jersey 07070. This Proxy Statement and the
accompanying form of proxy are being mailed to the stockholders of the Company
on or about May 12, 2000.
VOTING SECURITIES
The Company has only one class of voting securities, its common stock, par
value $0.01 per share (the "Common Stock"). At the Annual Meeting, each
stockholder of record at the close of business on May 5, 2000 will be entitled
to one vote for each share of Common Stock owned on that date as to each matter
presented at the Annual Meeting. On April 7, 2000 there were 24,760,679 shares
of Common Stock outstanding. A list of stockholders eligible to vote at the
Annual Meeting will be available for inspection at the Annual Meeting and for a
period of ten days prior to the Annual Meeting during regular business hours at
the principal executive offices of the Company at the address specified above.
PROPOSAL 1
ELECTION OF DIRECTORS
Unless otherwise directed, the persons appointed in the accompanying form of
proxy intend to vote at the Annual Meeting for the election of the eight
nominees named below as Directors of the Company to serve until the next Annual
Meeting or until their successors are duly elected and qualified. If any nominee
is unable to be a candidate when the election takes place, the shares
represented by valid proxies will be voted in favor of the remaining nominees.
The Board of Directors does not currently anticipate that any nominee will be
unable to be a candidate for election.
The Board of Directors currently has eight members, all of whom, other than
Messrs. Burch and Weber (who in October 1999 were elected by the Board to fill
vacancies), were elected to the Board of Directors by the stockholders at the
1999 annual stockholders meeting, and all of whom are nominees for election.
Each director shall serve until the next Annual Meeting or until their
respective successors shall have been duly elected and qualified. The
affirmative vote of a majority of the Company's outstanding Common Stock
represented and voting at the Annual Meeting is required to elect the Directors.
NOMINEES FOR ELECTION AS DIRECTORS
The following information with respect to the principal occupation or
employment, other affiliations and business experience of each nominee during
the last five years has been furnished to the Company by such nominee. Except as
indicated, each of the nominees has had the same principal occupation for the
last five years.
ELIAS TYPALDOS, 49, a founder of the Company, has been Senior Vice
President, Research and Development and a director since the Company's formation
in 1978. He has served as Chairman of the Board of Directors since March 1997.
JOHN A. RADE, 65, joined the Company as a Director, President and Chief
Executive Officer in February 1997. Prior to joining the Company, Mr. Rade, was
from April 1995, a Vice President of American Management Systems, Inc. an
international consulting company, and was also still active at S-Cubed
International, a company in the client server system development and consulting
market, which he founded in February 1990.
GENNARO VENDOME, 53, a founder of the Company, has been a Vice President and
a director since the Company's formation in 1978. Mr. Vendome was Treasurer of
the Company from 1981 until 1991 and Secretary of the Company from 1982 until
1991.
ROBERT MIGLIORINO, 50, has been a director since 1991. Mr. Migliorino is a
founding partner of the venture capital partnership Canaan Partners, which,
until recently, was, through its affiliates, a principal stockholder of the
Company. Prior to establishing Canaan Partners in 1987, he spent 15 years with
General Electric Co. in their Drive Systems, Industrial Control, Power Delivery,
Information Services and Venture Capital businesses.
WILLIAM E. VOGEL, 62, has been a director since August 1996. Since 1971,
Mr. Vogel has been Chief Executive Officer of Centennial Financial Group, Inc.,
which is in the health insurance business. Mr. Vogel has also been the Chief
Executive Officer of W.S. Vogel Agency, Inc., a life insurance brokerage general
agency, since 1961.
EDWIN T. BRONDO, 52, has been a director since May 1997. Mr. Brondo is
currently a director of Elligent Consulting Group, Inc. From August 1998 to
March 2000, Mr. Brondo was Executive Vice President and Chief Financial Officer
of Elligent. Elligent may be deemed to be an affiliate of the Company by virtue
of the relationship of Elligent with a major stockholder of the Company.
Mr. Brondo was Chief Administrative Officer and Senior Vice President of First
Albany Companies, Inc. from June 1993 until December 1997. From June 1992 to
June 1993 he was a Financial Management Consultant
2
at Comtex Information Systems, Inc., a software consulting firm. He also held
positions at Goldman, Sachs & Co., Morgan Stanley & Co., Inc. and Bankers Trust
Company.
DANIEL H. BURCH, 48, has been a director since October 1999. Mr. Burch is
the President and founder of MacKenzie Partners, Inc., a proxy solicitation and
mergers and acquisitions firm. From January 1990 to the founding of MacKenzie
Partners in February 1992, Mr. Burch was Executive Vice President at Dewe
Rogerson & Company, an investor and public relations firm.
EUGENE M. WEBER, 49, has been a director since October 1999. Mr. Weber is
the Managing Partner of Weber Capital Management, LLC, an investment management
firm, the successor to Bluewater Capital Management, Inc., which Mr. Weber
founded in 1995. From 1994 to 1995, Mr. Weber was an independent consultant to
Westpool Investment Trust plc, a stockholder of the Company, and from 1983 to
1994 he was with Weiss, Peck and Greer, LLC, an investment management firm,
becoming partner in 1987. Mr. Weber is a member of the Board of Directors of
Chyron Corporation, a designer and manufacturer of digital equipment for the
broadcast industry.
COMMITTEES OF THE BOARD OF DIRECTORS
The Audit Committee of the Board of Directors reviews, acts on and reports
to the Board of Directors with respect to various auditing and accounting
matters, including the selection of the Company's auditors, the scope of the
annual audits, fees to be paid to the auditors, the performance of the Company's
auditors and the accounting practices of the Company. The Audit Committee met
six times during 1999. Messrs. Migliorino, Vogel, Brondo, and Weber are the
members of the Audit Committee.
The Compensation Committee of the Board of Directors determines the salaries
and incentive compensation of the senior officers of the Company and administers
the Company's stock option plans. The Compensation Committee held one formal
meeting during 1999. Messrs. Vogel and Burch are the members of the Compensation
Committee.
ATTENDANCE AT BOARD AND COMMITTEE MEETINGS
During fiscal year 1999, the Board of Directors held seven meetings. During
fiscal year 1999, each incumbent Director attended at least 75% of the number of
meetings held of the Board of Directors and Committees on which he served. In
addition to formal meetings, the Board of Directors and the Audit and
Compensation Committees meet frequently on an informal basis.
COMPENSATION OF DIRECTORS
CASH COMPENSATION. Directors do not receive a fee for attending Board of
Directors or committee meetings, but are reimbursed for expenses incurred in
connection with performing their respective duties as Directors of the Company.
STOCK OPTION GRANT. Under the Company's 1998 Stock Option Plan, each
non-employee Director first elected or appointed to the Board of Directors after
June 1998 will automatically be granted an option for 20,000 shares of Common
Stock on the date of his or her election or appointment to the Board of
Directors. In addition, at each Annual Meeting of Stockholders commencing with
the 1998 meeting, each non-employee director with at least twelve months of
service on the Board of Directors who will continue to serve as a non-employee
Director following the meeting will automatically be granted an option for
10,000 shares of Common Stock. Each option granted under the automatic grant
program will have an exercise price equal to 100% of the fair market value of
the Common Stock on the automatic grant date, a maximum term of ten years,
subject to earlier termination upon the optionee's cessation of Board of
Director service, and will vest in successive equal annual installments on the
first four anniversaries of the date of grant. However, each outstanding option
will immediately vest upon (i) certain changes in the ownership or control of
the Company or (ii) the death or disability of the optionee while serving on the
Board of Directors. Pursuant to the automatic option grant program,
Messrs. Migliorino, Vogel and Brondo will each receive a 10,000-share option
grant on the date of the Annual Meeting, if such individuals are reelected.
3
EXECUTIVE OFFICERS AND INFORMATION
REGARDING EXECUTIVE OFFICER COMPENSATION
EXECUTIVE OFFICERS
The executive officers of the Company as of March 31, 2000 were as follows:
NAME AGE POSITION
- ---- -------- ------------------------------------------
John A. Rade.............................. 65 President, Chief Executive Officer and
Director
Michael R. Jorgensen...................... 47 Executive Vice President, Chief Financial
Officer and Treasurer
Elias Typaldos............................ 49 Senior Vice President, Research and
Development and Chairman of the Board
Rick Hartung.............................. 45 Senior Vice President, North America
Robert T. Hewitt.......................... 52 Senior Vice President, Corporate
Operations
Paul Abel................................. 46 Vice President, Secretary and General
Counsel
Gennaro Vendome........................... 53 Vice President and Director
Thomas V. Manobianco...................... 43 Vice President, Professional Services
William G. Levering III................... 40 Vice President, Corporate Controller and
Chief Accounting Officer
INFORMATION CONCERNING EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
MICHAEL R. JORGENSEN joined the Company as Executive Vice President and
Chief Financial Officer, Treasurer and Secretary in February 1997. Prior to
joining the Company, from June 1993 to December 1996, Mr. Jorgensen was Senior
Vice President and Chief Financial Officer of Ground Round Restaurants, Inc., a
publicly-held chain of family restaurants. Prior to that, from March 1992, to
April 1993, he was Vice President/Finance-Middle East of Alghanim Industries.
Mr. Jorgensen was Chief Financial Officer of International Proteins Corporation
from May 1988 to September 1991. Prior to 1991, Mr. Jorgensen served in a senior
financial role with several multinational companies in the finance,
manufacturing and information technology/software industries.
RICK HARTUNG joined the Company in December 1998, as Senior Vice President
of Sales and Marketing for North America, and was named Senior Vice President,
North America in July 1999. In 1998, prior to joining the Company, Mr. Hartung
was Vice President of Sales for Systems Consulting Company. From 1992 to 1997,
Mr. Hartung was Vice President of Sales for Marcam Corporation.
ROBERT T. HEWITT joined the Company as Vice President, Product Development
in April 1996, and was appointed to Senior Vice President, Corporate Operations
in July 1999. From June 1988 to April 1996, Mr. Hewitt was Senior Vice
President, Product Development at Financial Technologies International, Inc., a
software development company.
PAUL ABEL joined the Company in April 1997 as Secretary and Corporate
Counsel and was promoted to Vice President, Secretary and General Counsel in
June 1998. From October 1996 to March 1997, Mr. Abel served as Project Manager
for Charles River Computers, an IT systems integrator. From 1983 to
September 1996, Mr. Abel was an attorney with Matsushita Electric Corporation of
America, an electronic products manufacturer/distributor.
THOMAS V. MANOBIANCO joined the Company in January 1995 as a member of the
consulting organization. In February 1999 he became Vice President of
Professional Services. From January 1989 to January 1995, Mr. Manobianco was
employed by Andersen Consulting as a manager in the systems integration
practice.
WILLIAM G. LEVERING III joined the Company as Revenue Controller in
June 1996, was promoted to Corporate Controller in February 1997 and became Vice
President, Corporate Controller in July 1998. The title of Chief Accounting
Officer was added to Mr. Levering's responsibilities in July 1999. Prior to
joining the Company, Mr. Levering was a Senior Manager with the international
accounting firm of KPMG LLP. Mr. Levering was employed by KPMG LLP from
August 1982 to June 1996, and is a Certified Public Accountant.
4
SUMMARY COMPENSATION TABLE
The following table sets forth the annual and long-term compensation
received for the three fiscal years ended December 31, 1999, by the Company's
Chief Executive Officer who served in such capacity in the fiscal year 1999, and
the four most highly compensated executive officers of the Company, other than
the CEO, whose total compensation during fiscal year 1999 exceeded $100,000 and
who were serving as executive officers as of fiscal year ended December 31, 1999
or served during fiscal year 1999 (collectively, the "Named Executive
Officers"):
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
----------------------------------- -----------------------------
SECURITIES ALL
FISCAL OTHER ANNUAL RESTRICTED STOCK UNDERLYING OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARDS (1) OPTION COMPENSATION
- --------------------------- -------- -------- -------- ------------- ---------------- ---------- -------------
John A. Rade(2).................. 1999 $275,000 $125,000 -- -- -- $ 22,770(3)
Chief Executive Officer 1998 250,008 100,000 -- -- 88,000 20,714(3)
and President 1997 229,174 200,000 -- 25,000 600,000 4,393(3)
Michael R. Jorgensen(4)..........
Executive Vice President, 1999 180,000 95,000 -- -- -- 12,679(5)
Chief Financial Officer and 1998 165,000 10,000 -- -- 72,500 10,774(5)
Treasurer 1997 147,548 85,000 -- -- 150,000 --
Elias Typaldos................... 1999 289,224 -- -- -- -- 18,787(6)
Senior Vice President, 1998 289,224 -- -- -- -- 7,056(6)
Research and Development 1997 264,224 -- -- -- -- 16,264(6)
Rick Hartung(7)..................
Senior Vice President, 1999 180,000 90,000 -- -- 50,000 8,879(8)
North America 1998 12,346 -- -- -- 200,000 --
Gennaro Vendome.................. 1999 166,920 -- 87,548(9) -- -- 7,842(10)
Vice President, Eastern 1998 166,920 -- 55,927(9) -- -- 7,842(10)
Region 1997 151,920 -- 39,678(9) -- -- 7,959(10)
- ------------------------------
(1) Represents the fair value on the grant date of a restricted stock award of
25,000 shares of common stock. The fair value of such shares on
December 31, 1999 was $87,500.
(2) Mr. Rade joined the Company on February 1, 1997.
(3) Includes premiums on life and disability insurance and matching
contributions to the Company's 401(k) plan of $1,000, $5,000 and $4,800 for
1997, 1998 and 1999 respectively. In addition, 1998 includes $10,800 and
1999 includes $9,150 of an auto allowance.
(4) Mr. Jorgensen joined the Company in February 1997.
(5) Includes premiums on life and disability insurance and matching
contributions to the Company's 401(k) plan of $5,000 for 1998 and $4,800 for
1999, as well as an auto allowance of $4,800 for 1998 and $6,800 for 1999.
(6) Includes for 1997, 1998 and 1999, respectively, matching contributions to
the Company's 401(k) plan in the amount of $1,071, $2,000 and $2,000, and
premiums on life and disability insurance. In addition, the Company provided
an automobile to the officer and amounts included in compensation was
$10,050, $0, and $11,730 for 1997, 1998 and 1999 respectively.
(7) Mr. Hartung joined the Company in December 1998.
(8) Includes premiums on life and disability insurance and matching
contributions to the Company's 401(k) plan of $3,000, as well as an auto
allowance of $4,800.
(9) Includes for 1997, 1998 and 1999 respectively, commissions of $35,295 and
$52,002 and $85,844 and amounts for auto allowance of $4,383, $3,925 and
$1,704.
(10) Includes for 1997, 1998 and 1999 respectively, premiums on life and
disability insurance, and matching contributions to the Company's 401(k)
plan of $1,035 in 1997, $2,000 in 1998 and $2,000 in 1999.
5
1995 STOCK OPTION PLAN
The 1995 Stock Option Plan was adopted by the Board of Directors and
approved by the Stockholders in June 1995. The Board of Directors and
Stockholders approved certain amendments to the 1995 Stock Option Plan in 1997.
1998 STOCK OPTION PLAN
The 1998 Stock Option Plan was adopted by the Board of Directors, and
approved by the Stockholders in June 1998. No options were granted to employees
or officers during 1998 and 1999 under this plan. However, options were granted
to the non-employee directors.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
OPTION GRANTS IN FISCAL 1999
--------------------------------------------------------------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
NUMBER OF PERCENT OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM (1)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION -----------------------
NAME GRANTED (#) FISCAL YEAR ($/SHARE) DATE 5% 10% ($)
- ---- ----------- ------------- ----------- ---------- -------- --------
John A. Rade...................... -- -- -- -- -- --
Michael R. Jorgensen.............. -- -- -- -- -- --
Elias Typaldos.................... -- -- -- -- -- --
Rick Hartung...................... 50,000(2) 9.6 0.63 10 years 51,310 130,029
Genarro Vendome................... -- -- -- -- -- --
- --------------------------
(1) The dollar amounts under these columns are the result of calculations at the
hypothetical rates of appreciation of 5% and 10% as prescribed by the
Securities and Exchange Commission. The Company expresses no opinion
regarding whether future appreciation, if any, will be realized and
expressly disclaims any representations to that effect.
(2) Options are exercisable twenty five percent on each anniversary of the
original grant date.
6
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth certain information with respect to the Named
Executive Officers regarding stock option holdings as of December 31, 1999. No
stock options were exercised by such persons in fiscal year 1999. No stock
appreciation rights were exercised by any Named Executive Officer during fiscal
year 1999 and no stock appreciation rights were outstanding as of December 31,
1999.
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
FISCAL YEAR-END AT FISCAL YEAR-END(1)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
John A. Rade................................... 258,667 429,333 $646,668 $1,073,333
Michael R. Jorgensen........................... 102,917 119,583 236,459 257,291
Elias Typaldos................................. -- -- -- --
Rick Hartung................................... 25,000 225,000 50,000 493,750
Gennaro Vendome................................ -- -- -- --
- ------------------------
(1) Based on the fair market value of the Company's Common Stock using the
closing selling price on the American Stock Exchange of $3.50 per share of
Common Stock at December 31, 1999, less the exercise price payable for such
shares.
EMPLOYMENT AND SEVERANCE AGREEMENTS
The Company typically has employment agreements with all its employees
including the Named Executive Officers, which detail initial annual salary,
stock options, benefits and severance agreements, if applicable. The Named
Executive Officers' severance agreements range from six months to one year.
401(K) PLAN
The Company participates in a tax-qualified employee savings and retirement
plan (the "401(k) Plan") which covers all of the Company's employees with three
months of service who are at least 21 years of age. Pursuant to the 401(k) Plan,
employees may elect to reduce their current compensation by up to the
statutorily prescribed annual limit and have the amount of such reduction
contributed to the 401(k) Plan. The 401(k) Plan requires matching contributions
by the Company on behalf of all participants in the 401(k) Plan. During 1999,
the Company made matching contributions in the amount of 50% of the first six
percent contributed by each employee. The 401(k) Plan is intended to qualify
under Section 401 of the Internal Revenue Code of 1986, as amended, so that
contributions by employees or by the Company to the 401(k) Plan, and income
earned on plan contributions, are not taxable to employees until withdrawn from
the 401(k) Plan, and so that contributions by the Company, if any, will be
deductible by the Company when made. The trustee under the 401(k) Plan, at the
direction of each participant, invests the assets of the 401(k) Plan in a number
of investment options.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal year 1999, Messrs. Gregory Kopchinsky, Vogel, and Burch served
as members of the Company's Compensation Committee. Mr. Kopchinsky resigned from
the Board of Directors effective October 1999. Mr. Burch became a Director and a
member of the Compensation Committee effective October 1999.
7
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee of the Board of Directors advises the Chief
Executive Officer and the Board of Directors on matters of the Company's
compensation philosophy and the compensation of executive officers. The
Compensation Committee also is responsible for the administration of the
Company's Option Plans under which option grants may be made to executive
officers and other employees. The Compensation Committee has reviewed and is in
accord with the compensation paid to executive officers in fiscal year 1999.
GENERAL COMPENSATION POLICY. The fundamental policy of the Compensation
Committee is to provide the Company's executive officers with competitive
compensation opportunities based upon their contribution to the development and
financial success of the Company and their personal performance. It is the
Compensation Committee's objective to have a portion of each executive officer's
compensation contingent upon the Company's performance as well as upon such
executive officer's own level of performance. Accordingly, the compensation
package for each executive officer is comprised of two elements: (i) base salary
which reflects individual performance and is designed primarily to be
competitive with salary levels in the industry and (ii) long-term stock-based
incentive awards which strengthen the mutuality of interests between the
executive officers and the Company's stockholders.
FACTORS. The principal factors which the Compensation Committee considered
with respect to each executive officer's compensation package for fiscal year
1999 are summarized below. The Compensation Committee may, however, in its
discretion apply entirely different factors in advising the Chief Executive
Officer and the Board of Directors with respect to executive compensation for
future years.
BASE SALARY. The suggested base salary for each executive officer is
determined on the basis of the following factors: experience, personal
performance, the salary levels in effect for comparable positions within and
without the industry and internal base salary comparability considerations. The
weight given to each of these factors differs from individual to individual, as
the Compensation Committee deems appropriate.
From time to time, the Compensation Committee may advocate cash bonuses when
such bonuses are deemed to be in the best interest of the Company.
LONG-TERM INCENTIVE COMPENSATION. Long-term incentives are provided through
grants of stock options. The grants are designed to align the interests of each
executive officer with those of the stockholders and to provide each individual
with a significant incentive to manage the Company from the perspective of an
owner with an equity stake in the Company. Each option grant allows the
individual to acquire shares of the Company's Common Stock at a fixed price per
share (generally, the market price on the grant date) over a specified period of
time (up to ten years). Each option generally becomes exercisable in
installments over a four-year period, contingent upon the executive officer's
continued employment with the Company. Accordingly, the option grant will
provide a return to the executive officer only if the executive officer remains
employed by the Company during the vesting period, and then only if the market
price of the underlying shares appreciates.
The number of shares subject to each option grant is set at a level intended
to create a meaningful opportunity for stock ownership based on the executive
officer's current position with the Company, the base salary associated with
that position, the size of comparable awards made to individuals in similar
positions within the industry, the individual's potential for increased
responsibility and promotion over the option term and the individual's personal
performance in recent periods. The Compensation Committee also considers the
number of unvested options held by the executive officer in order to maintain an
appropriate level of equity incentive for that individual. However, the
Compensation Committee does not adhere to any specific guidelines as to the
relative option holdings of the Company's executive officers.
8
CEO COMPENSATION. In advising the Board of Directors with respect to the
compensation payable to the Company's Chief Executive Officer, the Compensation
Committee seeks to achieve two objectives: (i) establish a level of base salary
competitive with that paid by companies within the industry which are of
comparable size to the Company and by companies outside of the industry with
which the Company competes for executive talent and (ii) to make a significant
percentage of the total compensation package contingent upon the Company's
performance and stock price appreciation.
The suggested base salary established for Mr. Rade on the basis of the
foregoing criteria was intended to provide a level of stability and certainty
each year. Accordingly, this element of compensation was not affected to any
significant degree by Company performance factors. Mr. Rade also received a
guaranteed bonus for 1999 and was eligible to receive (but did not receive) an
additional performance-measured bonus. Upon his employment by the Company,
Mr. Rade was granted 25,000 shares of restricted stock and two stock options.
The first stock option for 300,000 shares shall vest in three equal annual
installments, and the other stock option for 300,000 shares shall vest either
upon the earlier to occur of the completion of seven years of service with the
Company or the achievement of certain performance-measured milestones. The
Company granted Mr. Rade 88,000 additional options due to antidilution
provisions contained in the original stock option agreement related to certain
stock issuances. 50% of these additional options vest in the manner of the first
stock option and 50% vest in the manner of the other stock option.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M). As a result of
Section 162(m) of the Internal Revenue Code of 1986, as amended, which was
enacted into law in 1993, the Company will not be allowed a federal income tax
deduction for compensation paid to certain executive officers, to the extent
that compensation exceeds $1 million per officer in any one year. This
limitation will apply to all compensation paid to the covered executive officers
which is not considered to be performance based. Compensation which does qualify
as performance-based compensation will not have to be taken into account for
purposes of this limitation. The Option Plans contain certain provisions which
are intended to assure that any compensation deemed paid in connection with the
exercise of stock options granted under that plan with an exercise price equal
to the market price of the option shares on the grant date will qualify as
performance-based compensation.
The Compensation Committee does not expect that the compensation to be paid
to the Company's executive officers for the 2000 fiscal year will exceed the
$1 million limit per officer. Because it is very unlikely that the cash
compensation payable to any of the Company's executive officers in the
foreseeable future will approach the $1 million limit, the Compensation
Committee has decided at this time not to take any other action to limit or
restructure the elements of cash compensation payable to the Company's executive
officers. The Compensation Committee will reconsider this decision should the
individual compensation of any executive officer ever approach the $1 million
level.
THE COMPENSATION COMMITTEE
Daniel H. Burch
William E. Vogel
April 26, 2000
9
PERFORMANCE GRAPH
Set forth below is a table comparing the annual percentage change in the
Company's cumulative total stockholder return on its Common Stock from
August 24, 1995 (the date public trading of the Company's stock commenced) to
the last day of the Company's last completed fiscal year (as measured by
dividing (i) the sum of (A) the cumulative amount of dividends for the
measurement period, assuming dividend reinvestment, and (B) the excess of the
Company's share price at the end over the price at the beginning of the
measurement period, by (ii) the share price at the beginning of the measurement
period) with the cumulative total return so calculated of the Nasdaq Stock
Market-US Index and a stock index comprised of companies in a line of business
similar to the Company during the same period.
COMPARISON OF 52 MONTH CUMULATIVE TOTAL RETURN(1) AMONG COMPUTRON
SOFTWARE, INC., THE HAMBRECHT & QUIST COMPUTER SOFTWARE INDEX AND THE AMEX
MARKET VALUE INDEX.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
8/24/95 12/95 12/96 12/97 12/98 12/99
COMPUTRON SOFTWARE, INC. 100 103 9 14 5 20
AMEX MARKET VALUE 100 106 107 134 144 184
HAMBRECHT & QUIST COMPUTER SOFTWARE 100 103 125 151 198 450
DOLLARS
- ------------------------
(1) $100 invested on 8/24/95 in Computron Software, Inc. Common Stock and on
7/31/95 in The Hambrecht & Quist Computer Software Index and the Amex Market
Value Index, including reinvestment of dividends. Fiscal year ending
December 31, 1999.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, which might incorporate future filings made by
the Company under those statutes, the preceding Compensation Committee Report on
Executive Compensation and the Company Stock Performance Graph will not be
incorporated by reference into any of those prior filings, nor will such report
or graph be incorporated by reference into any future filings made by the
Company under those statutes.
10
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of April 7, 2000 by (i) each Director
and nominee for Director, (ii) each of the Named Executive Officers, (iii) each
person known by the Company to be the beneficial owner of more than 5% of the
Company's Common Stock and (iv) all executive officers and Directors as a group.
The information concerning beneficial owners of more than 5% of the Company's
Common Stock is based on filings with the Securities and Exchange Commission on
Schedules 13(D), 13(G) and on Forms 3, 4, and 5; and certain other information
obtained by the Company.
NUMBER OF SHARES OF COMMON STOCK
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED (1) PERCENTAGE OF SHARES OUTSTANDING (1)
- ------------------------ -------------------------------- ------------------------------------
Elias Typaldos...................... 3,276,424 (2) 13.23%
John A. Rade........................ 533,567 (3) 2.15
Gennaro Vendome..................... 1,579,247 (4) 6.38
Eugene M. Weber..................... 1,795,875 (5) 7.25
Robert Migliorino................... 70,680 (6) *
William Vogel....................... 42,250 (7) *
Edwin T. Brondo..................... 61,000 (8) *
Daniel H. Burch..................... 0 (9) *
Michael R. Jorgensen................ 158,541 (10) *
Rick Hartung........................ 25,100 (11) *
Andreas Typaldos.................... 4,068,084 (12) 16.43
London Merchant Securities PLC...... 1,786,500 (5) 7.22
Lion Investments Limited............ 1,786,500 (5) 7.22
Westpool Investment Trust PLC....... 1,786,500 (5) 7.22
The Weber Family Trust.............. 1,795,875 (5) 7.25
Angela G. Weber..................... 1,795,875 (5) 7.25
All Current Directors and Executive
Officers As a Group (14
persons).......................... 7,567,818 (13) 30.56%
- --------------------------
*Represents beneficial ownership of less than one percent of the Common
Stock outstanding.
(1) Applicable percentage of ownership as of April 7, 2000 is based upon
24,760,679 shares of Common Stock outstanding. 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.
Gives effect to the shares of Common Stock issuable within 60 days of
April 7, 2000 upon exercise of all options and other rights beneficially
owned by the indicated stockholders on that date.
(2) Includes (i) 327,521 shares owned by the Elias Typaldos Grantor Retained
Annuity Trust dated October 13, 1994, (ii) 1,147,750 shares held by the
Elias Typaldos Family Limited Partnership, (iii) 331,938 shares owned by the
Judith Typaldos Grantor Retained Annuity Trust dated October 13, 1994 and
(iv) 47,313 shares held by Judith Typaldos. Mr. Typaldos' business address
is the Company's principal executive offices.
(3) Includes 458,667 shares of Common Stock which may be purchased within
60 days of April 7, 2000 upon the exercise of stock options granted on
March 3, 1997. On March 3, 1997, Mr. Rade also received unvested stock
option grants for 229,333 shares, which will vest upon the earlier to occur
of the completion of seven years of service with the Company or the
achievement of certain milestones as measured by the performance of and
trading volume of the Company's Common Stock.
(4) Includes (i) 89,407 shares held by Carol Vendome, (ii) 149,062 shares held
by the Vendome Grantor Retained Annuity Trust dated January 24, 1995,
(iii) 151,297 shares held by the Carol Vendome Grantor Retained Annuity
Trust dated January 24, 1995, (iv) 5,655 shares held by Carol Vendome as
custodian for Laura Vendome, and (v) 109,095 shares held by the Vendome
Family Limited Partnership. Mr. Vendome's business address is the Company's
principal executive offices.
11
(5) This number represents the number of shares beneficially owned by London
Merchant Securities PLC; Lion Investments Limited; Westpool Investment Trust
PLC; the Weber Family Trust; Eugene M. Weber; and Angela G. Weber as a
"group" under Section 13(d) of the Securities Exchange Act of 1934. The
number includes 125,000 shares of Common Stock issuable upon exercise of
warrants by Lion Investments Limited; 250,000 shares of Common Stock
issuable upon exercise of warrants by Westpool Investment Trust PLC; and
1,875 shares of Common Stock issuable upon exercise of warrants by the Weber
Family Trust. Lion Investments Limited and Westpool Investment Trust PLC are
investment companies wholly-owned by London Merchant Securities PLC. Eugene
M. Weber and Angela G. Weber are trustees of the Weber Family Trust. Of the
total number of shares beneficially owned, Lion Investments Limited has sole
voting and sole dispositive power over 625,000 shares; Westpool Investment
Trust PLC has sole voting and sole dispositive power over 1,250,000 shares;
London Merchant Securities has shared voting and shared dispositive power
over 1,786,500 shares; and the Weber Family Trust, Eugene M. Weber, and
Angela G. Weber have sole voting and sole dispositive power over 9,375
shares. The address for London Merchant Securities PLC, Lion Investments
Limites and Westpool Investment Trust PLC is Carlton House, 33 Robert Adam
Street, London W1M 5AH England. The address for Eugene Weber and The Eugene
Weber Family Trust is 50 California Street, Suite 3200, San Francisco, CA
94111.
(6) Includes 29,250 shares of Common Stock which may be purchased within
60 days of April 7, 2000 upon exercise of stock options.
(7) Includes (i) 4,000 shares held by the William E. Vogel IRA and (ii) 30,750
shares of Common Stock which may be purchased within 60 days of April 7,
2000 upon exercise of stock options.
(8) Includes (i) 1,500 shares held by Pamela R. Brondo, Mr. Brondo's wife, as
custodian for Edwin T. Brondo, Jr. UTMA/NY and (ii) 22,500 shares of Common
Stock which may be purchased within 60 days of April 7, 2000 upon exercise
of stock options.
(9) No options vest within 60 days of April 7, 2000 relating to the exercise of
stock options.
(10) This number represents the number of shares of Common Stock which may be
purchased by Mr. Jorgensen within 60 days of April 7, 2000 upon the exercise
of stock options.
(11) Includes 25,000 shares of Common Stock which may be purchased within
60 days of April 9, 1999 upon exercise of stock options.
(12) Includes (i) 680,504 shares owned by the Andreas Typaldos GRAT dated
September 29, 1993; (ii) 11,047 shares owned by Renee Typaldos,
Mr. Typaldos' wife, (iii) 755,504 shares owned by the Renee Typaldos GRAT
dated September 29, 1993,and (iv) 1,758,279 shares held by the Andreas
Typaldos Family Limited Partnership. Mr. Typaldos' business address is
Elligent Consulting Group, Inc., 152 West 57(th) Street, New York, NY 10019.
(13) Includes 752,341 shares of Common Stock which may be purchased within
60 days of April 7, 2000 upon the exercise of stock options.
SECTION 16(A) BENEFICIAL OWNERSHIP COMPLIANCE
Under the securities laws of the United States, the Company's Directors,
Executive Officers, and any persons holding more than ten percent of the
Company's Common Stock are required to report their ownership of the Company's
Common Stock and any changes in that ownership to the Securities Exchange
Commission and the American Stock Exchange. Specific due dates for these reports
have been established and the Company is required to report in this Proxy
Statement any failure to file by these dates during fiscal year 1999. Based
solely on its review of such forms received by it from such persons for their
fiscal year 1999 transactions, the Company believes that all filing requirements
applicable to such officers, directors, and greater than ten percent beneficial
owners were complied with, except that the following filings were not timely
made but were filed in April 2000: Form 5 Annual Statements of Changes in
Beneficial Ownership relating to stock options granted to Messrs. Migliorino and
Vogel in June 1999 and to Messrs. Burch and Weber in November 1999.
12
CERTAIN TRANSACTIONS
During the year ended December 31, 1999, the Company recorded as expense
approximately $387,000 related to work performed by Mergence Technology
Corporation on behalf of the Company, which sum includes royalties paid to
Mergence in connection with the Company's licensing to its customers of certain
software owned by Mergence. Mergence is the successor-in-interest to S-Cubed
International's rights and obligations under certain contracts with the Company.
Mr. Rade, who joined the Company as Chief Executive Officer and President in
February 1997, founded S-Cubed International in February 1990 and currently
beneficially owns 42% of the outstanding stock of Mergence. The Company believes
that the amounts paid to Mergence are comparable to the amounts the Company
would have otherwise paid for comparable services from an unaffiliated party.
The Company entered into a Consulting Agreement dated September 29, 1997
with Andreas Typaldos, the Company's former chairman and principal stockholder.
The Agreement provides for consulting services during the period of December 1,
1997 through November 30, 2000, in exchange for $300,000 for each of the first
two years and $250,000 for the third year.
13
PROPOSAL 2
PROPOSED RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed KPMG LLP to serve as its independent
public accountant for fiscal year 2000. KPMG LLP served as the Company's
independent public accountant and auditor during fiscal year 1999. In the event
that ratification of this selection of auditors is not approved by the
affirmative vote of a majority of shares having voting power present in person
or represented by proxy at the meeting, the selection of independent auditors
will be reconsidered by the Board of Directors.
A member of KPMG LLP is expected to be in attendance at the Annual Meeting
with the opportunity to make a statement and respond to questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT
OF KPMG LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
14
STOCKHOLDER PROPOSALS
In accordance with regulations issued by the Securities and Exchange
Commission, stockholder proposals intended for presentation at the 2001 Annual
Meeting of Stockholders must be received by the Secretary of the Company no
later than January 1, 2001, if such proposals are to be considered for inclusion
in the Company's proxy statement. In addition, if a stockholder does not advise
the Company by March 31, 2001, that the stockholder intends to submit a proposal
to the Company's stockholders that will not be included in the Company's proxy
statement, the proxies named in the Company's form of proxy may exercise their
discretionary authority in voting on the stockholder's proposal.
OTHER MATTERS
Management knows of no matters that are to be presented for action at the
meeting other than those set forth above. If any other matters properly come
before the meeting, the persons named in the enclosed form of proxy will vote
the shares represented by proxies in accordance with their best judgment on such
matters.
Proxies will be solicited by mail and may also be solicited in person or by
telephone by some regular employees of the Company. The Company may also
consider the engagement of a proxy solicitation firm. Costs of the solicitation
will be borne by the Company.
By Order of the Board of Directors,
John A. Rade
President and Chief Executive Officer
Rutherford, New Jersey
April 26, 2000
15
(FORM OF PROXY)
COMPUTRON SOFTWARE, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS--JUNE 14, 2000
(THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY)
The undersigned stockholder of Computron Software, Inc. hereby appoints John A.
Rade, President and Chief Executive Officer and Michael R. Jorgensen, Executive
Vice President, Chief Financial Officer and Treasurer and each of them, with
full power of substitution, proxies to vote the shares of stock which the
undersigned could vote if personally present at the Annual Meeting of
Stockholders of Computron Software, Inc. to be held at The Crowne Plaza, 2
Harmon Plaza, Secaucus, New Jersey 07094, telephone number (201) 348-6900 on
June 14, 2000, at 10:00 a.m. or any adjournment thereof.
1. ELECTION OF DIRECTORS (for terms as described in the Proxy Statement)
FOR all nominees below WITHHOLD AUTHORITY
/ / (except as marked to the contrary) / / to vote for all nominees
below
(1) Elias Typaldos; (2) John A. Rade; (3) Gennaro Vendome; (4) Daniel H. Burch;
(5) Robert Migliorino; (6) William E. Vogel; (7) Edwin T. Brondo; and (8) Eugene M. Weber
INSTRUCTION: To withhold authority to vote for an individual nominee, write the nominee's
name in the space provided below.
2. APPROVAL OF KPMG LLP AS THE COMPANY'S INDEPENDENT AUDITORS
/ / FOR / / AGAINST / / ABSTAIN WITH RESPECT TO
as described in the Proxy Statement.
3. IN THEIR DISCRETION UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE PERSONS
NOMINATED BY MANAGEMENT AS DIRECTORS AND FOR PROPOSAL 2.
NOTE: Please date and sign exactly as your name appears on the envelope in which this
material was mailed. If shares are held jointly, each stockholder should sign. Executors,
administrators, trustees, etc. should use full title and, if more than one, all should
sign. If the stockholder is a corporation, please sign full corporate name by an
authorized officer. If the stockholder is a partnership, please sign full partnership
name by an authorized person.
_________________________________
_________________________________
Signature(s) of Stockholder
Dated:___________________________