SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
METASOLV, INC.
--------------
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
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(1) Title of each class of securities to which transaction applies:
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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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[_] 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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(4) Date Filed:
[LOGO] METASOLV(R) SOFTWARE
METASOLV, INC.
5560 Tennyson Parkway
Plano, Texas 75024
April 18, 2002
TO THE STOCKHOLDERS OF METASOLV, INC.
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
MetaSolv, Inc., which will be held at MetaSolv's headquarters located at 5560
Tennyson Parkway, Plano, Texas 75024, on Tuesday, May 21, 2002, at 10:00 a.m.
Details of the business to be conducted at the Annual Meeting are given in
the attached Proxy Statement and Notice of Annual Meeting of Stockholders.
It is important that your shares be represented and voted at the meeting.
WHETHER OR NOT YOU PLAN TO ATTEND the Annual Meeting, please COMPLETE, sign,
date and PROMPTLY return the ACCOMPANYING proxy in the ENCLOSED POSTAGE-PAID
envelope. Returning the proxy does NOT deprive you of your right to attend the
Annual Meeting. If you decide to attend the Annual Meeting and wish to change
your proxy vote, you may do so automatically by voting in person at the meeting.
On behalf of the Board of Directors, I would like to express our
appreciation for your continued interest in the affairs of MetaSolv. We look
forward to seeing you at the Annual Meeting.
Sincerely,
/s/ James P. Janicki
James P. Janicki
Chief Executive Officer and Director
YOUR VOTE IS IMPORTANT
All stockholders are invited to attend the Annual Meeting in person. However,
to ensure your representation at the meeting, you are urged to complete,
sign, date and return, in the enclosed postage paid envelope, the enclosed
Proxy as promptly as possible. Returning your Proxy will help MetaSolv assure
that a quorum will be present at the meeting and avoid the additional expense
of duplicate proxy solicitations. You may revoke your Proxy at any time prior
to the Annual Meeting. Any stockholder attending the meeting may vote in
person even if he or she has returned the Proxy.
[LOGO] METASOLV(R) SOFTWARE]
METASOLV, INC.
5560 Tennyson Parkway
Plano, Texas 75024
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held May 21, 2002
The Annual Meeting of Stockholders of MetaSolv, Inc. will be held at
MetaSolv's headquarters, located at 5560 Tennyson Parkway, Plano, Texas, 75024,
on Tuesday, May 21, 2002, at 10:00 a.m. for the following purposes:
1. To elect three directors to the Board of Directors to serve until
their three-year term expires or until their successors have been duly
elected and qualified or until their earlier death, resignation, or removal
from office; and
2. To transact such other business as may properly come before the
meeting or any adjournments or postponements thereof.
The foregoing items of business are more fully described in the attached
Proxy Statement.
Only stockholders of record at the close of business on April 1, 2002 are
entitled to notice of, and to vote at, the Annual Meeting and at any
adjournments or postponements thereof. A list of such stockholders will be
available for inspection at MetaSolv's headquarters located at 5560 Tennyson
Parkway, Plano, Texas, during ordinary business hours for the ten-day period
prior to the Annual Meeting, and also at the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ Jonathan K. Hustis
Jonathan K. Hustis
Vice President--Business Services,
General Counsel and Corporate
Secretary
Plano, Texas
April 18, 2002
METASOLV, INC.
5560 Tennyson Parkway
Plano, Texas 75024
-----------------
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
To be held May 21, 2002
-----------------
These proxy materials are furnished in connection with the solicitation of
proxies by the Board of Directors of MetaSolv, Inc., a Delaware corporation
(the "Company"), for the Annual Meeting of Stockholders (the "Annual Meeting")
to be held at the Company's headquarters, located at 5560 Tennyson Parkway,
Plano, Texas 75024, on Tuesday, May 21, 2002, at 10:00 a.m., and at any
adjournment or postponement of the Annual Meeting. These proxy materials were
first mailed to stockholders on or about April 19, 2002.
PURPOSE OF MEETING
The specific proposals to be considered and acted upon at the Annual Meeting
are summarized in the accompanying Notice of Annual Meeting of Stockholders.
Each proposal is described in more detail in this Proxy Statement.
VOTING RIGHTS AND SOLICITATION OF PROXIES
The Company's Common Stock, par value $0.005 per share ("Common Stock"), is
the only type of security entitled to vote at the Annual Meeting. On April 1,
2002, the record date for determination of stockholders entitled to vote at the
Annual Meeting, there were 37,166,546 shares of Common Stock outstanding. Each
stockholder of record on April 1, 2002 is entitled to one vote for each share
of Common Stock held by such stockholder. Shares of Common Stock may not be
voted cumulatively. All votes will be tabulated by the inspector of election
appointed for the meeting, who will separately tabulate affirmative and
negative votes, abstentions and broker non-votes.
Quorum Required
The Company's bylaws provide that the holders of a majority of the Common
Stock issued and outstanding and entitled to vote at the Annual Meeting,
present in person or represented by proxy, shall constitute a quorum for the
transaction of business at the Annual Meeting. Abstentions and broker non-votes
will be counted as present for the purpose of determining the presence of a
quorum.
Votes Required
Directors are elected by a plurality of the affirmative votes cast by those
shares present in person, or represented by proxy, and entitled to vote at the
Annual Meeting. The three nominees for director receiving the highest number of
affirmative votes will be elected. Abstentions and broker non-votes will not be
counted toward a nominee's total. Stockholders may not cumulate votes in the
election of directors.
Proxies
Whether or not you are able to attend the Annual Meeting, you are urged to
complete and return the enclosed proxy, which is solicited by the Company's
Board of Directors and which will be voted as you direct on your proxy when
properly completed. In the event no directions are specified, such proxies will
be voted, FOR the Nominees to the Board of Directors (as set forth in the
Proposal), and in the discretion of the proxy holders as to other matters that
may properly come before the Annual Meeting. You may also revoke or change your
proxy at any time before the Annual Meeting. To do this, send a written notice
of revocation or another signed proxy with a later date to the Secretary of the
Company at the Company's principal executive offices before the beginning of
the Annual Meeting. You may also automatically revoke your proxy by attending
the Annual Meeting and voting in person. All shares represented by a valid
proxy received prior to the Annual Meeting will be voted.
Solicitation of Proxies
The solicitation of proxies is made by the Company's Board of Directors. The
Company will bear the entire cost of solicitation, including the preparation,
assembly, printing, and mailing of this Proxy Statement, the proxy, and any
additional soliciting material furnished to stockholders. Copies of
solicitation material will be furnished to brokerage houses, fiduciaries, and
custodians holding shares in their names that are beneficially owned by others
so that they may forward this solicitation material to such beneficial owners.
In addition, the Company may reimburse such persons for their costs of
forwarding the solicitation material to such beneficial owners. The original
solicitation of proxies by mail may be supplemented by solicitation by
telephone, telegram, or other means by directors, officers, employees or agents
of the Company. No additional compensation will be paid to these individuals
for any such services. Except as described above, the Company does not
presently intend to solicit proxies other than by mail.
PROPOSAL
ELECTION OF DIRECTORS
The Company currently has authorized seven directors. In accordance with the
terms of the Company's Certificate of Incorporation, the Board of Directors is
divided into three classes: Class I, whose term will expire at the 2003 Annual
Meeting; Class II, whose term will expire at the 2004 Annual Meeting; and Class
III, whose term will expire at the 2002 Annual Meeting. At the 2002 Annual
Meeting, three directors will be elected to serve until the Annual Meeting to
be held in 2005 or until such directors' respective successors are elected and
qualified, or until their earlier death, resignation, or removal from office.
The Board of Directors has selected three nominees as the nominees for Class
III. Board of Directors nominee James P. Janicki and nominee John W. White are
currently directors of the Company. The proxy holders intend to vote all
proxies received by them in the accompanying form for the nominees for
directors listed below. In the event a 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 for
the nominees listed below. As of the date of this Proxy Statement, the Board of
Directors is not aware of any nominee who is unable or will decline to serve as
a director.
The Company's Bylaws currently authorize seven directors. David R. Semmel
resigned his position as a member of the Board of Directors in May 2001. The
Board of Directors intends to maintain a composition of seven directors and is
currently assessing potential candidates to fill Mr. Semmel's vacated position.
For purposes of this Proxy Statement there are only three candidates being
nominated for election to the Board of Directors. Stockholders may not vote for
more than the number of nominees set forth in this Proxy Statement.
Nominees for Term Ending in 2005
Set forth below is information regarding the nominees, including their ages,
the period during which they have served as directors, and information
furnished by them as to principal occupations and directorships held by them in
corporations whose shares are publicly registered.
Director
Name Since Age
---- ----- ---
John E. Berndt.. -- 61
James P. Janicki 1994 46
John W. White... 1998 62
John E. Berndt retired from Sprint Corporation on September 30, 2000. From
1998 to September 2000, Mr. Berndt was President of Sprint International, an
operating unit of Sprint Corporation. From 1997 to 1998, Mr. Berndt was
President of Flour Daniel Telecom, an operating company of Flour Daniel, Inc.
Mr. Berndt was President of AT&T New Business Development/Multimedia Ventures
from 1993 until the spin-off of Lucent Technologies, Inc. from AT&T occurred in
1997. Mr. Berndt serves as a director and member of the Audit and
2
Compensation Committees of Telular Corporation, a designer, developer and
manufacturer of products for the cellular fixed wireless telecommunications
industry and Calence, Inc., a privately-held communications networking
consulting company. Mr. Berndt also serves as a member of the advisory board of
Manugistics Group, Inc., a supply chain management and revenue optimization
company.
James P. Janicki co-founded the Company in July 1992 and since such time has
served in various capacities. Mr. Janicki was appointed Chief Executive Officer
in May 1999. He served as President of the Company until January 2001 and has
served as a director of the Company since April 1994. From June 1982 to July
1992, Mr. Janicki was at Texas Instruments where he served in many capacities,
including as manager of the Texas Instruments' CASE consulting practice from
July 1987 to August 1990 and as manager of the Template software business from
August 1990 until July 1992. Texas Instruments develops and manufactures
semiconductors and other products in the electrical and electronics industry.
John W. White has been a member of the Company's Board of Directors since
December 1998 and Chairman of the Board of Directors since August 1999. Mr.
White was Vice President and Chief Information Officer for Compaq Computer, a
developer and marketer of computer hardware and software, from February 1994 to
October 1998, where he served as a member of the executive management team,
overseeing Compaq's worldwide information systems activities. Prior to February
1994, Mr. White was President of the Information Technology Group and Chief
Information Officer for Texas Instruments. Mr. White serves as a director and
member of the Compensation Committee of Citrix, a provider of server-based
computing solutions.
Directors
Set forth below is information regarding the continuing directors of the
Company, including their ages, the period in which they have served as
directors, and information furnished by them as to principal occupations and
directorships held by them in corporations whose shares are publicly registered.
Director
Name Since Term Ending Age
---- ----- ----------- ---
Lawrence J. Bouman........ 2000 2004 55
Royce J. Holland.......... 2000 2003 54
Thomas Curtis Holmes, Jr.. 2001 2004 40
Mr. Bouman has served as a director of the Company since November 2000.
Since January 1999, Mr. Bouman has served as a technology advisor and
independent consultant to several private communications and technology
companies. From October 1995 to June 1998, Mr. Bouman was Senior Vice President
and Chief Technology Officer of LCI International, Inc., a communications
services provider. From June 1998 to January 1999, Mr. Bouman served as a
member of the acquisition transition team following Qwest Communications
International, Inc.'s acquisition of LCI International. Prior to 1995, Mr.
Bouman held several senior positions with MCI Telecommunications Corporation.
From September 1999 to October 2000, Mr. Bouman served as a director of
Net-Tel, a competitive local exchange carrier. Mr. Bouman resigned as a
director on October 2, 2000 and Net-Tel filed for bankruptcy on November 3,
2000. Mr. Bouman serves as a director of Broadwing, Inc., a communications
services provider.
Royce J. Holland has served as a director of the Company since May 2000. Mr.
Holland co-founded Allegiance Telecom, a telecommunications services provider,
in 1997 and has served as its Chairman of the Board and CEO since then.
Previously, Mr. Holland was at MFS Communications Company, Inc., a
communications services provider, as a Co-founder and a Director from its
inception in 1988, and also as President from 1990, through the completion of
its merger with WorldCom in December 1996. In January 1993, President George
Bush appointed Mr. Holland to the National Security Telecommunications Advisory
Committee. Mr. Holland has over twenty-five years experience in the
telecommunications, independent power and engineering/construction industries.
He also serves as a director of the following publicly traded companies: Choice
One Communications, a communications provider and CSG Systems International, a
provider of customer care and billing solutions.
3
Mr. Holmes has served as President and Chief Operating Officer of the
Company since January 2001 and as a director since May 2001. From December 1996
to December 2000, Mr. Holmes served as Vice President and General Manager of
the Intelligent Network Unit of Lucent Technologies, Inc., where his
responsibilities included strategic planning, product marketing, product
management, development and deployment of enhanced services applications. From
July 1994 to December 1996, Mr. Holmes served as Applications Group Director
for Operations Support Systems for Lucent Technologies/AT&T Network Systems.
Board of Directors Meetings and Committees
During 2001, the Board of Directors held seven meetings and acted by written
consent on two occasions. For the fiscal year, each of the directors during the
term of his tenure attended or participated in at least 75% of the aggregate of
(i) the total number of meetings or actions by written consent of the Board of
Directors and (ii) the total number of meetings held by all committees of the
Board of Directors on which each such director served. The Board of Directors
has three standing committees, the Audit Committee, the Compensation Committee
and the Nominating Committee.
During 2001, the Audit Committee of the Board of Directors held seven
meetings and acted by written consent on one occasion. The Audit Committee
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
independent accountants, the scope of the annual audits, fees to be paid to the
independent accountants, the performance of the Company's independent
accountants and the accounting practices of the Company. The members of the
Audit Committee are John D. Thornton and Messrs. Holland and White. The Board
of Directors has adopted a written charter for the Audit Committee. Each member
of the Audit Committee is an "independent director," as such term is defined in
Rule 4200(a)(14) of The Nasdaq Marketplace Rules.
During 2001, the Compensation Committee held no formal meetings, but acted
by written consent on five occasions. The Compensation Committee is responsible
for (i) establishing compensation programs designed to attract, motivate and
retain key executives responsible for the Company's success; (ii) administering
and maintaining such programs in a manner that will benefit the long-term
interests of the Company and its stockholders; and (iii) determining the
compensation of the Company's Chief Executive Officer and other executive
officers. The members of the Compensation Committee are Messrs. Holland and
Thornton.
During 2001, the Nominating Committee held no formal meetings. The
Nominating Committee is responsible for proposing candidates for nomination to
the Board of Directors to fill vacancies on the board. The members of the
Nominating Committee are Mr. Bouman and Mr. White. Nominations by stockholders
of persons for election to the Board of Directors may be made by giving
adequate notice to the Company's Secretary. To be adequate, the nomination
notice must be delivered to the Secretary not less than sixty days nor more
than ninety days prior to the first anniversary of the preceding year's Annual
Meeting. The Nominating Committee will consider persons recommended by
stockholders.
Director Compensation
Non-employee directors receive $1,500 for each Board of Directors or
standing committee meeting attended in person, and $200 per meeting attended by
teleconference. All directors are reimbursed for reasonable expenses incurred
by them in attending Board of Directors and committee meetings.
Each non-employee director (other than venture capital investors and
founders who hold Company stock) is granted an option to purchase up to 20,000
shares of the Common Stock under the Company's Long-Term Incentive Plan on the
date he or she is elected to the Board of Directors and is granted an
additional option to purchase up to 10,000 shares of the Common Stock under the
Long-Term Incentive Plan for each successive year of the non-employee
director's board term. Each option will have an exercise price equal to the
fair market value of the Common Stock on the date of grant, will have a term to
be determined by the Compensation Committee and will generally terminate within
a specified time, as defined in the Long-Term Incentive Plan, following the
date the option holder ceases to be a director. Each continuing non-employee
director will receive an additional award of an option to purchase up to 20,000
shares upon each subsequent election to the Board of Directors.
4
Each option is immediately exercisable, but the unvested shares under the
option are subject to repurchase by the Company at the original exercise price
per share upon the director's cessation of service as a director. With respect
to the option grant of 20,000 shares upon a non-employee director's initial
election or re-election to the Board of Directors, 10,000 of the shares are
immediately vested and not subject to repurchase, and the repurchase right
lapses and the remaining 10,000 option shares vest in a series of substantially
equal monthly installments over the director's first twelve months of service.
With respect to the option grants of 10,000 shares for each successive year of
the non-employee director's board term, the repurchase right lapses and the
option shares vest in a series of substantially equal monthly installments over
the twelve months following each such grant.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
ELECTION OF EACH OF THE NOMINEES LISTED HEREIN.
5
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of February 28, 2002, certain information
with respect to shares beneficially owned by (i) each person who is known by
the Company to be the beneficial owner of more than five percent of the
Company's outstanding shares of Common Stock, (ii) each of the Company's
directors and the executive officers named in the Summary Compensation Table
and (iii) all current directors and executive officers as a group. Unless
otherwise indicated, each person named below has an address in care of the
Company's principal executive offices. Beneficial ownership has been determined
in accordance with Rule 13d-3 under the Exchange Act. Under this rule, certain
shares may be deemed to be beneficially owned by more than one person (if, for
example, persons share the power to vote or the power to dispose of the
shares). In addition, shares are deemed to be beneficially owned by a person if
the person has the right to acquire shares (for example, upon exercise of an
option or warrant) within sixty days of the date as of which the information is
provided. In computing the percentage ownership of any person, the amount of
shares is deemed to include the amount of shares beneficially owned by such
person (and only such person) by reason of such acquisition rights. As a
result, the percentage of outstanding shares of any person as shown in the
following table does not necessarily reflect the person's actual voting power
at any particular date. Applicable percentage of ownership as of February 28,
2002 is based upon 37,159,186 shares of Common Stock outstanding.
Shares Beneficially Owned
as of February 28, 2002
------------------------
Number of Percentage
Beneficial Owner Shares of Class
- ---------------- ------ --------
John D. Thornton................................................. 4,822,778 12.98%
Entities affiliated with Austin Ventures (1)
Michael J. Watters (2)........................................... 3,076,633 8.28
William N. Sick, Jr.............................................. 4,480,322 12.06
Business Resources International, Inc. (3)
Private Capital Management, L.P. (4)............................. 2,004,800 5.40
Massachusetts Financial Services Company (5)..................... 2,245,005 6.04
James P. Janicki (6)............................................. 1,615,002 4.18
T. Curtis Holmes, Jr. (7)........................................ 730,690 1.93
Royce W. Holland (8)............................................. 71,000 *
John W. White (9)................................................ 61,667 *
Lawrence J. Bouman (10).......................................... 66,600 *
Joseph W. Pollard (11)........................................... 573,473 1.53
Glenn A. Etherington (12)........................................ 402,195 1.07
Jonathan K. Hustis (13).......................................... 301,996 *
All directors and executive officers as a group (12 persons) (14) 9,002,966 22.10
- --------
* Less than 1%
(1) Includes 31,005 shares held by John Thornton Family I, Ltd., 1,226,618
shares held by Austin Ventures IV-A, L.P., 2,573,382 shares held by Austin
Ventures IV-B, L.P., 957,922 shares held by Austin Ventures VI, L.P.,
26,942 shares held by Austin Ventures VI Affiliates Fund, L.P. and 4,909
shares held by AV Partners IV, L.P. Mr. Thornton, one of our directors, is
a Partner of AV Partners IV, L.P., which is the general partner of Austin
Ventures IV-A, L.P. and Austin Ventures IV-B, L.P., and a general partner
of AV Partners VI, L.P., which is the general partner of Austin Ventures
VI, L.P. and Austin Ventures VI Affiliates Fund, L.P. Mr. Thornton
disclaims beneficial ownership of the shares held by John Thornton Family
I, Ltd., Austin Ventures IV-A, L.P., Austin Ventures IV-B, L.P., Austin
Ventures VI, L.P., Austin Ventures VI Affiliates Fund, L.P. and AV Partners
IV, L.P. except to the extent of his pecuniary interest therein arising
from his partnership interest in John Thornton Family I, Ltd., AV Partners
IV, L.P. and AV Partners VI, L.P., as the case may be.
6
(2) Consists of shares held by The Watter's Children Trust, the Michael and
Carole Watters Charitable Remainder Trust and MCDA International
Partnership, Ltd. The address of Mr. Watters is 101 E. Park Blvd., Suite
600, Plano, Texas 75024. Information with respect to such beneficial
ownership was obtained from a Schedule 13G filed with the Securities and
Exchange Commission and reflects shares beneficially owned by Mr. Watters
as of December 31, 2001.
(3) Includes 2,333,967 shares held by Business Resources International, Inc.,
229,536 shares held by Jill Melanie Sick 1991 Trust, 229,536 shares held by
David Louis Sick 1991 Trust, 114,818 shares held by Louis Pitchlyn Williams
1992 Trust and 16,875 shares held by Jill M. Sick.
(4) The address of Private Capital Management, L.P. is 8889 Pelican Bay Blvd.,
Naples, Florida 34108. Information with respect to such beneficial
ownership was obtained from a Schedule 13G filed with the Securities and
Exchange Commission and reflects shares beneficially owned by Private
Capital Management, L.P. as of December 31, 2001.
(5) The address of Massachusetts Financial Services is 500 Boylston Street,
Boston, Massachusetts 02116. Information with respect to such beneficial
ownership was obtained from a Schedule 13G/A filed with the Securities and
Exchange Commission and reflects shares beneficially owned by Massachusetts
Financial Services Company as of December 31, 2001.
(6) Consists of (i) 111,230 shares held of record by Mr. Janicki and his spouse
as joint tenants and (ii) 1,503,772 shares subject to stock options held by
Mr. Janicki that are exercisable within sixty days of February 28, 2002. Of
the shares beneficially owned by Mr. Janicki and his spouse, 463,272 are
currently subject to a right of repurchase.
(7) Includes 728,498 shares subject to stock options held by Mr. Holmes that
are exercisable within sixty days of February 28, 2002, 497,248 of which
are currently subject to a right of repurchase.
(8) Consists of 70,000 shares subject to stock options held by Mr. Holland that
are exercisable within sixty days of February 28, 2002, 30,000 of which are
currently subject to a right of repurchase.
(9) Consists of 61,667 shares subject to stock options held by Mr. White that
are exercisable within sixty days of February 28, 2002, 28,333 of which are
currently subject to a right of repurchase.
(10) Consists of 60,000 shares subject to stock options currently held by Mr.
Bouman that are exercisable within sixty days of February 28, 2002, 30,000
of which are currently subject to a right of repurchase.
(11) Includes 1,000 shares held by Mr. Pollard's minor child. Also, includes
208,989 shares subject to stock options held by Mr. Pollard that are
exercisable within sixty days of February 28, 2002, 198,858 of which are
currently subject to a right of repurchase.
(12) Includes 364,312 shares subject to stock options held by Mr. Etherington
that are exercisable within sixty days of February 28, 2002, 275,958 of
which are currently subject to a right of repurchase.
(13) Includes 224,479 shares subject to stock options held by Mr. Hustis that
are exercisable within sixty days of February 28, 2002, 197,916 of which
are currently subject to a right of repurchase.
(14) Includes 3,575,877 shares subject to stock options that are exercisable
within sixty days of February 28, 2002. Of the shares beneficially owned
by all directors and executive officers as a group, 2,075,745 are
currently subject to a right of repurchase.
COMPENSATION COMMITTEE REPORT
Responsibilities and Composition of the Committee
The Compensation Committee of the Company's Board of Directors (the
"Committee") is responsible for (i) establishing compensation programs designed
to attract, motivate and retain key executives responsible for the Company's
success; (ii) administering and maintaining such programs in a manner that will
benefit the long-term interests of the Company and its stockholders; and (iii)
determining the compensation of the Company's Chief
7
Executive Officer and other executive officers. The Committee is composed of
two directors, currently Mr. Holland and Mr. Thornton. Neither of these
directors has ever served as an employee of the Company.
This report describes the philosophy that underlies the cash and
equity-based components of the Company's executive compensation program. It
also describes the details of each element of the program, as well as the
rationale for compensation paid to the Company's Chief Executive Officer and
its executive officers in general.
For the 2001 fiscal year, the process used by the Committee in determining
executive officer compensation levels was based on the subjective judgment of
the Committee. Although the recommendations of the Company's Chief Executive
Officer were considered, the Committee made the final compensation decisions
concerning each officer.
Compensation Philosophy and Objectives
The Committee believes that the Company's executive officer compensation
should be determined according to a competitive framework and based on overall
financial results, individual contributions and teamwork that help build value
for the Company's stockholders. Within this overall philosophy, the Committee
bases the compensation program on the following principles:
. Compensation levels for executive officers are benchmarked to the outside
market, using published industry data relevant to the officers'
positions. Compensation decisions are made by referring to information
regarding two groups of companies: companies with which the Company is
expected to compete for executive talent; and companies within the
industry groups with which the Company can expect to compete for
investors. The Company obtained salary information on these companies
through Culpepper & Associates, Inc., an independent organization that
provides comprehensive salary survey data for U.S. high technology and
software companies. The benchmark companies against whom the Committee
gauged the Company's executive compensation may occasionally overlap
those contained in the Morgan Stanley Index, which was used for
comparison in the stock performance graph. The Committee, however, does
not consider other companies' performance in awarding executive
compensation. Nor does the Committee refer to the Morgan Stanley Index as
a guide for such compensation. Rather, the Committee examines several
factors when setting salaries for executive officers, including:
. the compensation of officers at software and technology companies
generally;
. the revenues of comparable software companies;
. the types of software products sold by the comparable companies;
. the geographic location of the comparable companies;
. the primary sales method utilized by the comparable companies in
selling their software products;
. whether the comparable companies are publicly or privately held; and
. the job responsibilities of the officers in the comparable companies.
. The total compensation opportunity is targeted to be in the 75th
percentile of these companies; incremental amounts may be earned above or
below that level depending upon corporate and individual performance. The
Committee considers it essential to the vitality of the Company that the
total compensation opportunity for executive officers remains competitive
with similar companies in order to attract and retain the talent needed
to manage and build the Company's business.
. Compensation is tied to performance. A significant part of the total
compensation opportunity is at risk, to be earned only if specific goals
are met.
. Incentive compensation is designed to reinforce the achievement of both
short- and long-term corporate objectives.
8
Compensation of Executive Officers Generally
The Company's executive compensation program is designed to link executive
pay to Company performance and to provide an incentive to executives to manage
the Company with a principal view to enhancing stockholder value.
Generally, the Company's executive compensation program makes a significant
portion of each executive's cash compensation contingent upon growth and
improvement in the Company's results of operations, with the potential to earn
exceptional rewards for exceptional performance. More specifically, the program
is designed to provide compensation for meeting and exceeding internal goals
and to provide incentives to increase the market value of the Common Stock. The
program also is designed to attract and retain talented executives who are
essential to the Company's long-term success within a highly competitive
industry that demands unique talents, skills and capabilities.
Compensation criteria are evaluated annually to ensure they are appropriate
and consistent with the business objectives that are important in meeting the
Company's earnings per share, operating profit and revenue goals and in
enhancing stockholder value. The Company's executive compensation policies and
programs are intended to (i) provide rewards contingent upon Company and
individual performance, (ii) link executive compensation to sustainable
increases in stockholder value, (iii) promote teamwork among executives and
other Company employees, (iv) effect retention of a strong management team, and
(v) encourage personal and professional development and growth.
The primary components of the Company's executive compensation program are
salary, performance bonuses and stock options.
Base Salary. The Committee reviews the salary of each of its executive
officers annually. The Committee's review takes into consideration the
Company's revenue, earnings per share and operating profits and the duties and
performance of each executive. In making salary recommendations or decisions,
the Committee exercises its discretion and judgment based on the foregoing
criteria, without applying a specific formula to determine the weight of each
factor considered. The Committee also considers equity and fairness when
comparing base salaries of executives.
Incentive Bonuses. The Company has established a bonus system for executive
officers based on financial performance criteria, including revenue growth,
profitability and percentage performance compared to established targets.
During 2001 executive officers could earn annual bonuses targeted between 45%
and 70% of their respective base salaries. The bonus payable, if any, is paid
semi-annually and is contingent upon the attainment of six-month objectives
determined by the Committee. Other senior managers have similar bonus
arrangements. Bonuses were determined based on the achievement of the financial
and operational goals for the Company in the following areas:
. revenue achievement;
. operating income; and
. achievement of departmental objectives.
The Company and each executive accomplished the majority of these goals for
the first half of 2001, and therefore each executive received 82% of the target
bonus (66% of the maximum possible bonus) for such period. No bonuses were paid
for the second half of 2001.
Stock Options and Equity Compensation. The Committee believes that granting
stock options and other forms of equity compensation to executive officers and
other key employees is an important method of enhancing long-term profitability
and stockholder value. The Committee views the Long-Term Incentive Plan as a
vehicle to attract and retain experienced employees and to align the employee's
economic incentives with those of the Company's stockholders. Under the
Long-Term Incentive Plan, the Committee may grant options and other forms of
equity compensation to executive officers who are expected to contribute
materially to the
9
Company's future success. In determining the size of stock option and other
equity grants, the Committee focuses primarily on the Company's performance and
the perceived role of each executive in accomplishing such performance
objectives, as well as the satisfaction of individual performance objectives.
In addition, the Committee examines the option holdings of the executives and
the competitive market for qualified executives. The Committee's primary
objectives in granting awards are the retention of its executives and to
incentivize officers to improve the Company's performance.
The Committee intends to continue using stock options and other forms of
equity compensation as the primary long-term incentive for the Company's
executive officers. Because they generally provide rewards to executives only
to the extent the Company's stock price increases after the options or other
equity awards are granted, the Committee feels that stock options and other
equity awards granted under the Long-Term Incentive Plan are an appropriate
means to provide executives with incentives that closely align their interests
with those of stockholders and thereby encourage them to promote the ongoing
success of the Company.
Policy on Deductibility of Compensation
It is the responsibility of the Committee to address the provisions of
Section 162(m) of the Internal Revenue Code which, except in the case of
"performance-based compensation" and certain other types of compensation,
limits to $1,000,000 the amount of the Company's federal income tax deduction
for compensation paid to the Chief Executive Officer and the other four most
highly paid executive officers. In that regard, the Committee must determine
whether any actions with respect to Section 162(m) should be taken by the
Company. At this time, the Committee has determined that the Section 162(m)
deduction limitation does not apply because the Company continues to fall
(through December 31, 2002)within the extended reliance period for corporations
that become publicly held in connection with an initial public offering. The
Committee will continue to monitor the reliance period and will take
appropriate action when it is warranted in the future.
Chief Executive Officer Compensation
The Chief Executive Officer's salary, bonus and long-term awards follow the
policies set forth above. For the 2001 fiscal year, Mr. Janicki's base salary
was $275,000. Mr. Janicki earned a bonus in the amount of $78,797 in 2001. He
also received $2,625 in matching contributions under the Company's 401(k) Plan.
Mr. Janicki's salary was not linked to any set corporate or personal
performance goals. Mr. Janicki's bonus was tied to the same financial and
operational goals for the Company as the bonuses for all executives.
Mr. Janicki's bonus reflects the Company's accomplishment of the majority of
the financial and operational goals for the first half of 2001.
The foregoing report has been approved by all of the members of the
Committee.
THE COMPENSATION COMMITTEE
Royce J. Holland
John D. Thornton
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Neither of the members of the Compensation Committee is currently or has
been, at any time since the formation of the Company, an officer or employee of
the Company. No executive officer serves as a member of the board of directors
or compensation committee of any entity that has one or more executive officers
serving as a member of the Company's Board of Directors or Compensation
Committee.
Mr. Royce Holland, a director of the Company and member of the Compensation
Committee, is Chairman of the Board, CEO and a 5% stockholder of Allegiance
Telecom, a customer of the Company. Purchases by Allegiance from the Company in
fiscal year 2001 accounted for $896,788 in revenue to the Company.
10
REPORT OF THE AUDIT COMMITTEE
The Audit Committee reviews the Company's financial reporting process on
behalf of the Board of Directors. Management has the primary responsibility for
the financial statements and the reporting process. The Company's independent
auditors are responsible for expressing an opinion on the conformity of our
audited financial statements to generally accepted accounting principles.
In this context, the Audit Committee has reviewed and discussed with
management and the independent auditors the audited financial statements. The
Audit Committee has discussed with the independent auditors the matters
required to be discussed by Statement on Auditing Standards No. 61
(Communication with Audit Committees). In addition, the Audit Committee has
received from the independent auditors the written disclosures required by
Independence Standards Board No. 1 (Independence Discussions with Audit
Committees) and discussed with them their independence from the Company and its
management.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors, and the Board has approved,
that the audited financial statements be included in the Company's Annual
Report on SEC Form 10-K for the year ended December 31, 2001, for filing with
the Securities and Exchange Commission.
THE AUDIT COMMITTEE
Royce J. Holland
John D. Thornton
John W. White
Audit and Non-Audit Fees
The following table presents fees for professional audit services rendered
by KPMG LLP for the audit of the Company's annual financial statements for
2001, and fees billed for other services rendered by KPMG LLP in 2001.
Audit fees, excluding audit related fees and all other fees. $154,600
--------
Financial information systems design and implementation (1). $ 0
--------
All other fees:
Audit related fees (2).................................. 17,000
Other non-audit services (3)............................ 42,000
--------
Total all other fees........................................ $ 59,000
========
- --------
(1) There were no financial information systems design and implementation
services provided.
(2) Audit related fees consisted principally of audits of financial statements
of certain employee benefit plans, audits of certain businesses acquired
during the year, review of registration statements and issuance of consents.
(3) Other non-audit fees consisted of tax compliance services.
The Audit Committee has considered whether the provision of the services
covered under "Audit and Non-Audit Fees" is compatible with maintaining the
principal accountant's independence.
11
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected KPMG LLP as the Company's independent
auditors for the fiscal year ending December 31, 2002. The Board of Directors,
in its discretion, may direct the appointment of a different independent
accounting firm at any time during the year if the Board of Directors feels
that such a change would be in the Company's and its stockholders' best
interests. KPMG LLP has audited the Company's financial statements for each of
the fiscal years ended December 31, 1997 through December 31, 2001. KPMG LLP's
representatives are expected to be present at the Annual Meeting, will have the
opportunity to make a statement if they desire to do so, and will be available
to respond to appropriate questions.
12
MANAGEMENT COMPENSATION`
General
The following table sets forth all compensation awarded or earned by the
Company's Chief Executive Officer and the four other most highly paid executive
officers during the last three fiscal years (the "Named Executive Officers"):
Summary Compensation Table
Long-Term
Annual Compensation Compensation
----------------------------- ------------
Securities
Fiscal Other Annual Underlying All Other
Name and Principal Position Year Salary Bonus Compensation Options(#) Compensation(1)
--------------------------- ------ -------- --------- ------------ ------------ ---------------
James P. Janicki................... 2001 $265,625 $ 78,797 $ 0 250,000 2,625
Chief Executive Officer 2000 198,750 153,457 2,885(2) 0 2,625
1999 183,750 100,328 0 200,000 6,290
T. Curtis Holmes, Jr............... 2001 245,353 59,213 181,052(3) 700,000 2,625
President and Chief Operating 2000 0 0 0 0 0
Officer 1999 0 0 0 0 0
Glenn A. Etherington............... 2001 197,688 40,052 0 75,000 2,625
Chief Financial Officer 2000 179,438 100,965 0 55,000 2,625
1999 89,798 50,287 68,750(4) 320,000 0
Joseph W. Pollard.................. 2001 197,500 43,973 0 125,000 0
Vice President - Sales 2000 178,125 119,236 0 47,500 0
1999 158,125 98,828 0 120,000 6,290
Jonathan K. Hustis................. 2001 171,688 34,517 0 77,750 2,625
Vice President - Business Services 2000 146,813 83,857 0 42,250 2,625
and General Counsel 1999 132,833 66,021 1,947(2) 80,000 7,235
- --------
(1) Represents contributions made by the Company to all of our Named Executive
Officers under our 401(k)/ profit sharing plan.
(2) Represents payment in lieu of accrued vacation time.
(3) Represents a one-time relocation bonus in the amount of $160,000 and moving
expenses paid to a third party of $21,052.
(4) Represents relocation expenses reimbursed by the Company.
13
Executive Option Grants
The following table contains information concerning the stock option grants
made to each of the Named Executive Officers in 2001.
Option Grants in Fiscal 2001
Individual Grants
----------------------------------------------
Potential Realizable Value
Number of Percentage of at Assumed Annual Rates
Securities Total Options of Stock Price Appreciation
Underlying Granted to Exercise for Option Term(3)
Options Employees in Price Per Expiration ---------------------------
Name Granted(1) Fiscal 2001(2) Share Date 5% 10%
---- ---------- -------------- --------- ---------- ------------ -----------
James P. Janicki..... 250,000 7.0% $8.78 5/1/06 $ 606,438 $ 1,340,069
T. Curtis Holmes, Jr. 625,000 17.4% 9.88 1/8/06 1,706,039 3,769,899
75,000 2.1% 7.88 1/8/06 163,282 360,811
Glenn A. Etherington. 75,000 2.1% 8.78 5/1/06 181,931 402,021
Joseph W. Pollard.... 125,000 3.5% 8.78 5/1/06 303,219 670,035
Jonathan K. Hustis... 77,750 2.2% 8.78 5/1/06 188,602 416,762
- --------
(1) Generally, most of the shares under the options listed in the table are
immediately exercisable, but are subject to repurchase by the Company at
the original exercise price paid per share upon the optionee's cessation of
service prior to vesting in such shares. The repurchase right lapses and
the optionee vests in 25% of the option shares upon completion of twelve
months of service from the vesting start date, and in the balance in a
series of equal annual installments over the next three years of service.
Of the option shares granted to Mr. Holmes, 659,496 are immediately
exercisable and 40,504 are exercisable one year prior to the vesting in
such shares, but in both cases such shares are subject to repurchase by the
Company at the original exercise price paid per share upon Mr. Holmes'
cessation of service prior to vesting in such shares. The repurchase right
lapses and Mr. Holmes vests in 25% of such option shares upon completion of
twelve months of service from the vesting start date, and in the balance in
a series of equal annual installments over the next three years of service.
The option shares listed in the table above will vest upon the dissolution
or liquidation of the Company, or on certain reorganizations where there is
no plan to convert or exchange the options into option shares of the
surviving entity. Each of the options has a five-year term, subject to
earlier termination in the event of the optionee's cessation of service
with the Company.
(2) Based upon options to purchase an aggregate of 3,588,950 shares of Common
Stock granted to employees of the Company in 2001 under the Long-Term
Incentive Plan.
(3) The potential realizable value is calculated based on the term of the
option at the time of grant (five years). Annual stock price appreciation
of 5% and 10% is assumed pursuant to rules promulgated by the Securities
and Exchange Commission and does not represent the Company's prediction of
its stock price performance. The potential realizable values at 5% and 10%
appreciation are calculated by assuming that the estimated fair market
value on the date of grant appreciates at the indicated rate for the entire
term of the option and that the option is exercised at the exercise price
and sold on the last day of its term at the appreciated price.
Option Exercises and Holdings
The following table sets forth information concerning stock options
exercised by the Named Executive Officers during 2001, as well as the value of
unexercised options held by such persons on December 31, 2001. The values for
in-the-money options (which represent the positive spread between the exercise
price of any existing stock options and $7.86 per share, the closing price of
the Common Stock as reported by the Nasdaq National Market on December 31,
2001) also are included.
14
Aggregate Option Exercises in Fiscal 2001
and Fiscal Year-End Option Values
Number of Securities
Underlying Unexercised Value of Unexercised In-the-
Shares Options at Money Options at
Acquired December 31, 2001(2) December 31, 2001
Upon Value ---------------------- ----------------------------
Name Exercise Realized(1) Vested Unvested Vested Unvested
---- -------- ----------- --------- -------- ---------- ----------
James P. Janicki..... 150,000 $2,530,350 1,040,500 450,000 $7,549,813 $1,086,000
T. Curtis Holmes, Jr. -- -- -- 700,000 -- --
Glenn A. Etherington. 20,000 152,540 88,354 308,250 314,083 808,320
Joseph W. Pollard.... 78,256 565,182 11,875 286,881 0 717,178
Jonathan K. Hustis... 40,000 381,300 26,563 217,437 67,360 642,980
- --------
(1) Calculated as the difference between the fair market value of the Common
Stock at the time of the option exercise and the exercise price.
(2) Some of the unvested options are immediately exercisable, but any shares
purchased under those options will be subject to repurchase by the Company,
at the original exercise price paid per share, upon the optionee's
cessation of service with the Company, before vesting in such shares. For
those immediately exercisable options, the heading "Vested" refers to
shares no longer subject to repurchase; the heading "Unvested" refers to
shares subject to repurchase as of December 31, 2001. Those option shares
that are not immediately exercisable will vest and typically become
exercisable as to 25% of the stock upon completion of twelve months of
service from the vesting start date, with the balance vesting in a series
of equal annual installments over the next three years of service.
Termination and Change in Control Arrangements
James P. Janicki's employment agreement provides for his employment as Chief
Executive Officer and Chief Technology Officer of the Company at an annual base
salary of $275,000 in 2001, with a bonus of up to 75% of his base salary in
2001 pursuant to the terms of the Company's performance bonus plan. T. Curtis
Holmes, Jr.'s employment agreement provides for his employment as President and
Chief Operating Officer of the Company at an annual base salary of $250,000 in
2001, with a bonus of up to 60% of his base salary in 2001 pursuant to the
terms of the Company's performance bonus plan. Glenn A. Etherington's
employment agreement provides for his employment as Chief Financial Officer of
the Company at an annual base salary of $200,000 in 2001, with a bonus of up to
50% of his base salary in 2001 pursuant to the terms of the Company's
performance bonus plan. Joseph W. Pollard's employment agreement provides for
his employment as Vice President - Sales of the Company at an annual base
salary of $200,000 in 2001, with a bonus of up to 55% of his base salary in
2001 pursuant to the terms of the Company's performance bonus plan. Jonathan K.
Hustis' employment agreement provides for his employment as General Counsel,
Vice President - Business Services and Corporate Secretary of the Company at an
annual base salary of $175,000 in 2001, with a bonus of up to 50% of his base
salary in 2001 pursuant to the terms of the Company's performance bonus plan.
Each of the Named Executive Officers' compensation is subject to annual review
by the Compensation Committee of the Board of Directors. Under the employment
agreements, each Named Executive Officer is subject to noncompetition,
nonsolicitation and nondisclosure covenants.
The employment agreement for each Named Executive Officer provides severance
benefits in the event that his employment is terminated (1) by the Company
other than for cause, or (2) by a Named Executive Officer for good reason
(e.g., a change in his status, title, position or responsibilities; the
Company's requiring him to be based outside of the location of the Company's
corporate headquarters; or any material breach by the Company of a provision of
the employment agreement). Upon such termination without cause or with good
reason, the Named Executive Officer shall receive an amount equal to one times
his base salary plus his annual target performance bonus. In addition, any
stock options granted up to the date of termination vest immediately upon
termination.
15
The employment agreement for each Named Executive Officer also provides
severance benefits in the event that, at any time during the twenty-four month
period following a change in control of the Company, (1) his employment is
terminated by the Company without cause, or by the Named Executive Officer for
good reason (which includes the reasons set forth above, and also the failure
by the Company to continue in effect the Named Executive Officer's compensation
or employee benefits in which he was participating prior to the change in
control, or the failure of the Company to obtain an agreement from its
successor to assume the employment agreement), or (2) his employment agreement
is not renewed by the Company. Upon such termination, and in lieu of the
severance benefits described in the preceding paragraph, the Named Executive
Officer shall receive an amount equal to two times his base salary plus two
times his annual target performance bonus. In addition, any stock options
granted up to the date of termination vest immediately upon termination, and
the Named Executive Officer shall have one year following the date of
termination to exercise any unexercised options held by him. A change in
control is defined to include the acquisition by any person or group of, or the
completion by any person or group of a tender or exchange offer for, more than
50% of the outstanding voting securities of the Company; a merger or
consolidation of the Company which results in those stockholders prior to such
merger or consolidation holding less than 50% of the total voting securities of
the surviving or resulting entity; a transfer of substantially all of the
property or assets of the Company; or the election to the Board of Directors of
the Company, without the recommendation or approval of the incumbent Board of
Directors, of the lesser of three directors, or directors constituting a
majority of the number of the directors of the Company then in office.
Each of the Named Executive Officers received options in 2001 to purchase
shares of Common Stock. Under the terms of their respective option agreements,
in addition to the vesting rights set forth above, if their employment
terminates after a change in control occurs, they also will immediately vest in
all shares that otherwise would have vested during the twenty-four months
following the date their employment terminates.
16
STOCK PERFORMANCE GRAPH
The graph set forth below compares the cumulative total stockholder return
on the Common Stock between November 18, 1999 and December 31, 2001 with the
cumulative total return of the Nasdaq National Market Composite Index and the
Morgan Stanley High Tech Index (the "MS High Tech Index") over the same period.
This graph assumes an investment of $100.00 on November 18, 1999 in the Common
Stock, in the Nasdaq National Market Composite Index and the MS High Tech
Index, and assumes the reinvestment of dividends, if any.
The comparisons shown in the graph below are based upon historical data. The
Company cautions that the stock price performance shown in the graph below is
not indicative of, nor intended to forecast, the potential future performance
of the Common Stock. Information used in the graph was obtained from Morgan
Stanley Dean Witter, a source believed to be reliable, but the Company is not
responsible for any errors or omissions in such information.
COMPARISON OF CUMULATIVE TOTAL RETURN*
AMONG METASOLV, INC.,
THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE MORGAN STANLEY HIGH TECH INDEX
[PERFORMANCE CHART]
- --------
*$100 INVESTED ON 11/18/99 IN STOCK OR INDEX--INCLUDING REINVESTMENT OF
DIVIDENDS. FISCAL YEAR ENDING DECEMBER 31.
11/18/99 12/31/99 03/31/00 06/30/00 09/29/00 12/29/00 03/30/01 06/29/01 09/28/01 12/31/01
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
MetaSolv, Inc................... $100.00 $430.26 $310.86 $231.58 $215.13 $48.03 $74.34 $41.74 $31.58 $41.36
Nasdaq National Market Composite
Index.......................... 100.00 121.58 136.62 118.49 109.73 73.81 54.98 64.57 44.78 58.27
Morgan Stanley High Tech Index.. 100.00 117.60 135.63 129.75 121.48 85.34 66.96 74.00 47.74 64.75
The Company effected its initial public offering of its Common Stock on
November 17, 1999 and trading of the Common Stock commenced on November 18,
1999. The price to the public on November 18, 1999 was $19 per share.
17
Notwithstanding anything to the contrary set forth in any of the Company's
previous or future filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that might incorporate this Proxy
Statement or future filings made by the Company under those statutes, the
Compensation Committee Report and Stock Performance Graph shall not be deemed
filed with the Securities and Exchange Commission and shall not be deemed
incorporated by reference into any of those prior filings or into any future
filings made by the Company under those statutes.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company's Certificate of Incorporation limits the liability of its
directors for monetary damages arising from a breach of their fiduciary duty as
directors, except to the extent otherwise required by the DGCL. Such limitation
of liability does not affect the availability of equitable remedies such as
injunctive relief or rescission.
The Company's Bylaws provide that the Company shall indemnify its directors
and officers to the fullest extent permitted by Delaware law, including in
circumstances in which indemnification is otherwise discretionary under
Delaware law. The Company has also entered into indemnification agreements with
its officers and directors containing provisions that may require the Company,
among other things, to indemnify such officers and directors against certain
liabilities that may arise by reason of their status or service as directors or
officers and to advance their expenses incurred as a result of any proceeding
against them as to which they could be indemnified.
Mr. Royce Holland, a director of the Company, is Chairman of the Board, CEO
and a 5% stockholder of Allegiance Telecom, a customer of the Company.
Purchases by Allegiance from the Company in fiscal year 2001 accounted for
$896,788 in revenue to the Company.
The Company paid approximately $64,800 to Seven Continents Travel in 2001
for business travel expenses. In addition, an indeterminable amount was
indirectly paid to Seven Continents Travel by the Company through
reimbursements to employees who utilized Seven Continents' services. Seven
Continents Travel was then owned by Rosemary Janicki, who is the mother of the
Company's chief executive officer. Ms. Janicki disposed of her interest in
Seven Continents Travel in December 2001.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The members of the Company's Board of Directors, the executive officers of
the Company and persons who hold more than 10% of the Company's outstanding
Common Stock are subject to the reporting requirements of Section 16(a) of the
Securities Exchange Act of 1934, as amended, which require them to file reports
disclosing their ownership of the Common Stock and their transactions in such
Common Stock. Based upon the copies of Section 16(a) reports that the Company
received from such persons for their 2001 fiscal year transactions in the
Common Stock and their Common Stock holdings, the Company believes that all
reporting requirements under Section 16(a) for such fiscal year were met in a
timely manner by its executive officers, Board of Directors members and greater
than ten-percent stockholders.
FORM 10-K
THE COMPANY WILL MAIL TO YOU WITHOUT CHARGE, UPON WRITTEN REQUEST, A COPY OF
ITS FORM 10-K REPORT FOR 2001. REQUESTS SHOULD BE SENT TO METASOLV, INC., 5560
TENNYSON PARKWAY, PLANO, TEXAS 75024, ATTN: JONATHAN K. HUSTIS, GENERAL
COUNSEL. A COPY OF THE COMPANY'S FORM 10-K REPORT FOR 2001 IS ALSO AVAILABLE ON
ITS INTERNET WEBSITE AT WWW.METASOLV.COM.
18
STOCKHOLDER PROPOSALS FOR 2003 ANNUAL MEETING
Stockholder proposals that are intended to be presented at the 2003 Annual
Meeting that are eligible for inclusion in the Company's proxy statement and
related proxy materials for that meeting under the applicable rules of the
Securities and Exchange Commission must be received in writing by the Company's
Secretary not later than December 21, 2002 in order to be included. Such
stockholder proposals should be addressed to MetaSolv, Inc., 5560 Tennyson
Parkway, Plano, Texas 75024, Attn: Jonathan K. Hustis, Corporate Secretary.
OTHER MATTERS
The Board of Directors knows of no other matters to be presented for
stockholder action at the Annual Meeting. However, if other matters do properly
come before the Annual Meeting or any adjournments or postponements thereof,
the Board of Directors intends that the persons named in the proxies will vote
upon such matters in accordance with their best judgment.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ Jonathan K. Hustis
Jonathan K. Hustis
Vice President--Business Services,
General Counsel and Corporate
Secretary
Plano, Texas
April 18, 2002
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, SIGN,
DATE AND PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE. YOU MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO THE ANNUAL MEETING.
IF YOU DECIDE TO ATTEND THE ANNUAL MEETING AND WISH TO CHANGE YOUR PROXY
VOTE, YOU MAY DO SO AUTOMATICALLY BY VOTING IN PERSON AT THE MEETING.
THANK YOU FOR YOUR ATTENTION TO THIS MATTER. YOUR PROMPT RESPONSE WILL
GREATLY FACILITATE ARRANGEMENTS FOR THE ANNUAL MEETING.
19
PROXY PROXY
METASOLV, INC.
5560 Tennyson Parkway, Plano, Texas 75024
This Proxy is Solicited on Behalf of the Board of Directors of MetaSolv, Inc.
for the Annual Meeting of Stockholders to be held May 21, 2002
The undersigned holder of Common Stock, par value $.005, of MetaSolv,
Inc.(the "Company") hereby appoints Jonathan K. Hustis and Glenn A. Etherington,
or either of them, proxies for the undersigned, each with full power of
substitution, to represent and to vote as specified in this Proxy all Common
Stock of the Company that the undersigned stockholder would be entitled to vote
if personally present at the Annual Meeting of Stockholders (the "Annual
Meeting") to be held on Tuesday, May 21, 2002 at 10:00 a.m. local time, at the
Company's headquarters located at 5560 Tennyson Parkway, Plano, Texas 75024, and
at any adjournments or postponements of the Annual Meeting. The undersigned
stockholder hereby revokes any proxy or proxies heretofore executed for such
matters.
This proxy, when properly executed, will be voted in the manner asdirected
herein by the undersigned stockholder. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR THE ELECTION OF THE DIRECTORS (AS SET FORTH IN PROPOSAL 1) AND IN
THE DISCRETION OF THE PROXIES AS TO ANY OTHER MATTERS THAT MAY PROPERLY COME
BEFORE THE MEETING. The undersigned stockholder may revoke this proxy at any
time before it is voted by delivering to the Corporate Secretary of the Company
either a written revocation of the proxy or a duly executed proxy bearing a
later date, or by appearing at the Annual Meeting and voting in person.
PLEASE MARK, SIGN, DATE AND RETURN THIS CARD PROMPTLY USING THE ENCLOSED
RETURN ENVELOPE. If you receive more than one proxy card, please sign and return
ALL cards in the enclosed envelope.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE DIRECTORS
(AS SET FORTH IN PROPOSAL 1). Please mark |X|
your vote as
indicated in
this example
1. To elect the following directors to serve for a term ending upon the 2005
Annual Meeting of Stockholders or until their successors are elected and
qualified:
FOR the nominees WITHHOLD
listed below AUTHORITY
(except as marked to vote for all nominee(s)
to the contrary below) listed below
|_| |_|
Nominees: 01 John E. Berndt, 02 James P. Janicki and 03 John W. White
Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
____________________________________________________________
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting.
The undersigned acknowledges receipt of the accompanying Notice of Annual
Meeting of Stockholders and Proxy Statement.
Dated:________________________________________________, 2002
Signature___________________________________________________
____________________________________________________________
Signature (if held jointly)
Please date and sign exactly as your name(s) is (are) shown on the share
certificate(s) to which the Proxy applies. When shares are held as joint
tenants, both should sign. When signing as an executor, administrator, trustee,
guardian, attorney-in fact or other fiduciary, please give full title as such.
When signing as a corporation, please sign in full corporate name by President
or other authorized officer. When signing as a partnership, please sign in
partnership name by an authorized person.
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