SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant[ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 204.14a-12
PARAMETRIC TECHNOLOGY CORPORATION
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(Name of Registrant as Specified In Its Charter)
PARAMETRIC TECHNOLOGY CORPORATION
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of Securities to which transaction applies:
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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:
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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.
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PRELIMINARY FILING
PARAMETRIC TECHNOLOGY CORPORATION
128 TECHNOLOGY DRIVE
WALTHAM, MA 02154
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 8, 1996
The Annual Meeting of Stockholders of Parametric Technology
Corporation, a Massachusetts corporation (the "Company"), will be held at the
offices of the Company, 128 Technology Drive, Waltham, MA 02154 on Thursday,
February 8, 1996 at 9:00 a.m., local time, to consider and act upon the
following matters:
1. To elect two Class III directors to serve for the ensuing three
years.
2. To approve an amendment to the Company's Articles of Organization
to increase the number of authorized shares of the Company's
common stock from 75,000,000 to 215,000,000.
3. To approve amendments to the Company's 1987 Incentive Stock
Option Plan (the "Stock Option Plan") to increase the number of
shares of the Company's common stock authorized for issuance
under the Stock Option Plan by 3,000,000 shares, and to change
the designation of persons eligible to receive options under the
Stock Option Plan to include consultants.
4. To approve the Company's 1996 Director Stock Option Plan (the
"1996 Director Plan").
5. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Stockholders of record at the close of business on December 15, 1995
will be entitled to vote at the meeting or any adjournment thereof. The stock
transfer books of the Company will remain open.
By Order of the Board of Directors,
MARTHA L. DURCAN, Clerk
Waltham, Massachusetts
December 29, 1995
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE
AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN
ORDER TO ENSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF
THE PROXY IS MAILED IN THE UNITED STATES.
PRELIMINARY FILING
PARAMETRIC TECHNOLOGY CORPORATION
128 TECHNOLOGY DRIVE
WALTHAM, MA 02154
PROXY STATEMENT FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 8, 1996
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Parametric Technology Corporation, a
Massachusetts corporation (the "Company"), for use at the Annual Meeting of
Stockholders to be held on February 8, 1996 and at any adjournment of that
meeting (the "Annual Meeting"). All proxies will be voted in accordance with
the stockholders' instructions contained therein. If no choice is specified,
proxies will be voted in favor of the matters set forth in the accompanying
Notice of Annual Meeting. Any proxy may be revoked by a stockholder at any time
before its exercise by delivery of a written revocation or subsequently dated
proxy to the Clerk of the Company or by voting in person at the Annual Meeting.
On December 15, 1995, the record date for the determination of
stockholders entitled to vote at the Annual Meeting, there were outstanding and
entitled to vote an aggregate of [ ] shares of common stock of
the Company (the "Common Stock"). Stockholders are entitled to one vote per
share on all matters.
The Company's Annual Report for the fiscal year ended September 30,
1995 is being mailed to stockholders with the mailing of this Notice and Proxy
Statement on or about December 29, 1995.
VOTES REQUIRED
The affirmative vote of the holders of a plurality of the shares of
Common Stock represented and voting at the Annual Meeting is required for the
election of directors. The affirmative vote of the holders of a majority of the
shares of Common Stock outstanding and entitled to vote as of the record date is
required for the approval of an amendment to the Company's Articles of
Organization to increase the number of authorized shares of the Company's Common
Stock. The affirmative vote of the holders of a majority of the shares of
Common Stock represented and entitled to vote at the Annual Meeting is required
(i) for the approval of an increase in the number of shares of Common Stock
authorized for issuance under the Company's 1987 Incentive Stock Option Plan
(the "Stock Option Plan"), and to change the designation of persons eligible to
receive options under the Stock Option Plan to include consultants, and (ii) for
the approval of the Company's 1996 Director Stock Option Plan (the "1996
Director Plan").
Shares of Common Stock represented in person or by proxy at the Annual
Meeting (including shares which abstain from or do not vote with respect to one
or more of the matters presented at the Annual Meeting and broker non-votes, as
described below) will be tabulated by the inspectors of election appointed for
the Annual Meeting and will determine whether or not a quorum is present. The
inspectors of election will treat abstentions as shares that are present and
entitled to vote for purposes of determining the number of shares that are
present and entitled to vote with respect to any particular matter, but will not
count abstentions as a vote in favor of such matter. Accordingly, an abstention
from voting on a matter by a stockholder present in person or represented by
proxy at the Annual Meeting with respect to any matter requiring a majority of
the shares represented and entitled to vote has the same legal effect as a vote
"against" the matter even though the stockholder or interested parties analyzing
the results of the voting may interpret such vote differently. If a broker
holding stock in "street name" indicates on the proxy that it does not have
discretionary authority as to certain shares to vote on a particular matter,
those shares will not be considered as present and entitled to vote at the
Annual Meeting with respect to the matter. Accordingly, a "broker non-vote" on a
matter has no effect on the voting on that matter. Neither an abstention nor a
broker non-vote will be treated as voting on a matter requiring a plurality of
the shares represented and voting. Since the increase in the number of
authorized shares of Common Stock requires the affirmative vote of a majority of
the shares of Common Stock outstanding and entitled to vote, any shares not
voted in favor of the action, including abstentions and broker non-votes, will
have the same effect as a vote "against" the matter.
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information, as of October 31,
1995, with respect to the beneficial ownership of the Company's Common Stock by
(i) each person known by the Company to own beneficially more than 5% of the
outstanding shares of Common Stock based upon information provided to the
Company; (ii) each director and nominee for director; (iii) each executive
officer named in the Summary Compensation Table; and (iv) all directors and
executive officers of the Company as a group.
Number of Shares Percentage of Common
Beneficially Owned(1)(2) Stock Outstanding(3)
------------------ -----------------
FMR Corp.(4) 7,237,380 11.49%
82 Devonshire Street
Boston, MA 02109-3614
Amerindo Investment Advisors Inc.(5) 6,440,296 10.22%
One Embarcadero Center, Suite 2300
San Francisco, CA 94111
American Express Financial Advisors Inc.(6) 4,294,000 6.82%
IDS Tower 10
Minneapolis, MN 55440
Robert N. Goldman 10,000 *
Donald K. Grierson 0 *
Oscar B. Marx, III (7) 500 *
Michael E. Porter 3,100 *
Noel G. Posternak 50,000 *
Steven C. Walske 664,000 1.05%
C. Richard Harrison(8) 292,922 *
Michael E. McGuinness(8) 73,900 *
Martha L. Durcan(8) 5,704 *
James F. Kelliher(8) 10,436 *
Mark J. Gallagher(8) 78,740 *
All directors, nominees for director and
executive officers as a group (15 persons) 1,419,192 2.24%
_________________
* Less than 1% of outstanding shares of Common Stock.
(1) The inclusion herein of any shares deemed beneficially owned does not
constitute an admission of beneficial ownership of those shares. Unless
otherwise indicated, each stockholder referred to above has sole voting and
investment power with respect to the shares listed.
2
(2) The amounts listed include the following shares of Common Stock that may be
acquired on or prior to December 30, 1995 through the exercise of options:
Mr. Goldman, 10,000 shares; Mr. Posternak, 30,000 shares; Mr. Walske,
85,000 shares; Mr. Harrison, 210,000 shares; Mr. McGuinness, 73,500 shares;
Ms. Durcan, 5,250 shares; Mr. Kelliher, 10,000 shares; and all directors
and executive officers as a group, 460,155 shares.
(3) For purposes of determining the percentage of Common Stock outstanding, the
number of shares deemed outstanding is 62,997,238 shares outstanding as of
October 31, 1995 and any shares subject to options held by the person or
entity in question that are exercisable on or prior to December 30, 1995.
(4) Information provided in a Schedule 13G filed with the Company on May 8,
1995. Investor has sole voting power with respect to 189,600 shares and
shared voting power with respect to 0 shares. FMR Corp. disclaims
beneficial ownership of 72,000 of such shares held by Fidelity
International Limited ("FIL"). Prior to June 30, 1980, FIL was a majority-
owned subsidiary of Fidelity Management & Research Company ("Fidelity"), a
wholly-owned subsidiary of FMR Corp. On that date, the shares of FIL held
by Fidelity were distributed, as a dividend, to the shareholders of FMR
Corp. FIL currently operates as an entity independent of FMR Corp. and
Fidelity.
(5) Information provided in a Schedule 13G filed with the Company on September
7, 1995.
(6) Information provided in a Schedule 13G filed with the Company on February
13, 1995. Investor has sole voting power with respect to 0 shares and
shared voting power with respect to 952,800 shares. Investor has shared
investment power with respect respect to 4,294,000 shares.
(7) The amount listed is held by the O.B. Marx, III Revocable Trust.
(8) The amounts listed include the following shares of Common Stock owned by
the named person jointly with his or her spouse: Mr. Harrison, 82,922
shares; Mr. McGuinness, 294 shares; Ms. Durcan, 454 shares; Mr. Kelliher,
436 shares; and Mr. Gallagher, 18,944 shares.
ELECTION OF DIRECTORS
The Company's Board of Directors is divided into three classes, with
members of each class holding office for staggered three-year terms. There are
currently three Class I directors, two Class II directors and two Class III
directors, whose terms expire, respectively, at the 1997, 1998 and 1996 Annual
Meetings of Stockholders (in all cases subject to the election and qualification
of their successors and to their earlier death, resignation or removal). At
each Annual Meeting of Stockholders, directors are elected for a term of three
years to succeed those directors whose terms then expire. The two Class III
directors elected at the Annual Meeting will be elected to serve until the 1999
Annual Meeting of Stockholders (subject to the election and qualification of
their successors and to their earlier death, resignation or removal).
The persons named in the enclosed proxy will vote to elect C. Richard
Harrison and Robert N. Goldman as Class III directors, unless authority to vote
for the election of either or both of the nominees is withheld by marking the
proxy to that effect. Each of the nominees is currently a Class III director of
the Company.
Each of the nominees has indicated his willingness to serve, if
elected; however, if either nominee should be unable or unwilling to stand for
election, proxies may be voted for a substitute nominee designated by the Board
of Directors.
The table on the following page sets forth, for each nominee as a
Class III director and for each director of the Company whose term continues
after the Annual Meeting, his name and age, his positions and offices with the
Company, his principal occupations and business experience for the past five
years, the names of other publicly-held companies of which he is a director, the
year since which he has served as a director of the Company, if applicable, and
the year his term as a director of the Company will expire.
3
Name, Age, Principal Occupation, Director
Business Experience and Directorships Since Term Expires
------------------------------------- ----- ------------
NOMINEES FOR CLASS III DIRECTORS:
C. Richard Harrison, age 40 1994 1999
President and Chief Operating Officer of the Company since August
1994; Senior Vice President of Sales and Distribution of the Company
from September 1991 to August 1994; Vice President of Sales and
Distribution of the Company from May 1987 to September 1991.
Robert N. Goldman, age 46 1991 1999
President and Chief Executive Officer of Object Design Inc., a software
developer since November, 1995; Chairman of the Board of Trinzic Corp.,
a software developer, from June 1986 to August 1995; Chief Executive
Officer of Trinzic Corp. from June 1986 to October 1992; President of
Trinzic Corp. from June 1986 to January 1991; director of Intersolv, Inc.
and SystemSoft Corporation.
CONTINUING DIRECTORS:
CLASS I DIRECTORS
Donald K. Grierson, age 61 1987 1997
President and Chief Executive Officer of ABB Vetco Gray, Inc., an oil
services business, since May 1991; Chairman of the Board of ABB Vetco Gray,
Inc. from November 1990 to May 1991; private investor and business
consultant from December 1985 to November 1990;
director of Alpha Technology, Inc.
Oscar B. Marx, III, age 56 (1) 1995 1997
President and Chief Executive Officer of TMW Enterprises, a
start-up venture in the autoparts industry, since July 1995; President
and Chief Executive Officer of Electro - Wire Products, Inc., an
electrical distribution company, from June 1994 to July 1995;
Vice President - Automotive Components Group of Ford Motor
Company from January 1988 to June 1994.
Noel G. Posternak, age 59 1989 1997
Senior Partner in the law firm of Posternak, Blankstein & Lund
since 1980.
CLASS II DIRECTORS
Michael E. Porter, age 48 1995 1998
Professor at Harvard Business School since 1973; director of
Thermo Quest Corporation and Alpha Beta Technologies, Inc.
Steven C. Walske, age 43 1986 1998
Chairman of the Board of Directors of the Company since August
1994; Chief Executive Officer of the Company since December
1986; President of the Company from December 1986 to August 1994;
director of Synopsys, Inc., Video Server, Inc. and Logic Works, Inc.
__________________
(1) On September 15, 1995, the Board of Directors increased the number of
directors of the Company from six to seven and elected Mr. Marx as a Class
I director of the Company to serve until the 1997 Annual Meeting.
4
BOARD AND COMMITTEE MEETINGS
The Board of Directors held six meetings during the fiscal year ended
September 30, 1995. Each director attended at least 75% of the aggregate of the
total number of meetings of the Board of Directors and of other meetings held by
all committees of the Board of Directors on which he then served.
The Board of Directors has an Audit Committee which meets with the
Company's independent accountants and reports on such meetings to the Company's
Board of Directors. The Audit Committee reviews the performance of the
independent accountants in the annual audit and in assignments unrelated to the
audit, reviews fees of the independent accountants, discusses the Company's
internal accounting control policies and procedures and considers and recommends
the selection of the Company's independent accountants. The Audit Committee met
four times during the fiscal year ended September 30, 1995. The fiscal 1995
Audit Committee members were Messrs. Goldman, Porter and Posternak (Chairman).
The current members of the Audit Committee are Messrs. Goldman, Marx and Porter
(Chairman).
The Board of Directors has a Compensation Committee which provides
recommendations to the Board of Directors regarding executive and employee
compensation and administers the Company's bonus programs, the Stock Option Plan
and the Company's 1991 Employee Stock Purchase Plan (the "Purchase Plan"). The
Compensation Committee met twice during the fiscal year ended September 30,
1995. The fiscal 1995 Compensation Committee members were Messrs. Goldman
(Chairman) and Porter. Messrs. Goldman (Chairman) and Porter also constitute the
Officers' Stock Option Committee, which grants stock options under the Company's
Stock Option Plan to employee directors and officers subject to Section 16
(collectively "Section 16 Officers") of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). The Officers' Stock Option Committee met four
times during the fiscal year ended September 30, 1995. As of November 17, 1995,
Mr. Posternak replaced Mr. Porter on both committees.
DIRECTOR COMPENSATION
During the fiscal year ended September 30, 1995, directors who were
not employees of the Company received the following directors' fees in
consideration of their services as directors of the Company: an annual retainer
in the amount of $10,000 and $2,000 per Board of Directors meeting whether
attended in person or by telephone conference, as well as reimbursement of
travel expenses. Additionally, members of the Audit Committee of the Board of
Directors received a fee of $1,000 per meeting of the Audit Committee whether
attended in person or by telephone conference. Directors who are also employees
of the Company do not receive any compensation for their services as directors
of the Company.
On February 4, 1992, the stockholders approved the 1992 Director Stock
Option Plan of the Company (the "1992 Director Plan"), which authorizes the
granting of non-qualified stock options for the purchase of a maximum of 320,000
shares (subject to future adjustment for stock splits and similar capital
changes) of Common Stock to non-employee directors of the Company. Options to
purchase an aggregate of 40,000 shares of Common Stock were automatically
granted to each of Messrs. Goldman, Grierson and Posternak on February 4, 1992.
In addition, any new director elected to the Board of Directors on or before the
date of the 1996 Annual Meeting of Stockholders who is an eligible director
shall automatically be granted, on the effective date of such election, options
to purchase an aggregate of 40,000 shares of Common Stock. Accordingly, options
to purchase 40,000 shares of Common Stock were automatically granted to Messrs.
Porter (Class II director) and Marx (Class I director) upon their election as
directors of the Company on February 9, 1995 and September 15, 1995,
respectively. Options granted under the 1992 Director Plan shall become
exercisable in four equal annual installments commencing one year following the
date of grant if and only if the optionee is a director of the Company on such
anniversary date. The options have a term of ten years and an exercise price
equal to the last sale price of the Common Stock as reported by the Nasdaq Stock
Market's National Market (the "Nasdaq Stock Market") on the date of grant. The
option exercise price is payable in cash or in shares of Common Stock having an
aggregate fair market value, at the time of such payment, equal to the total
option price for the number of shares of Common Stock for which payment is then
being made, or a combination thereof. As of September 30, 1995, options granted
under the 1992 Director Plan were outstanding for the purchase of 70,000, 40,000
and 40,000 shares of Common Stock at exercise prices of $17.5625, $37.250 and
$60.25, respectively. Unless amended, no options will be granted under the 1992
Director Plan after the date of the 1996 Annual Meeting of Stockholders.
5
COMPENSATION OF EXECUTIVE OFFICERS
The following table provides certain information for the fiscal years
ended September 30, 1995, 1994 and 1993 concerning compensation paid to or
accrued for (i) the Company's Chief Executive Officer, (ii) the other four most
highly compensated executive officers who were serving as executive officers of
the Company on September 30, 1995 and whose salary and bonus for fiscal year
1995 exceeded $100,000, and (iii) one additional individual who ceased serving
as an executive officer prior to September 30, 1995.
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
-------------
Awards
------
Annual Compensation Shares Underlying All Other
---------------------
Name and Principal Position Year Salary($)(1) Bonus($)(2) Options(#) Compensation($)(3)
--------------------------- ---- --------- -------- ---------- ---------------
Steven C. Walske 1995 300,000 500,000 300,000 4,620
Chairman of the Board 1994 300,000 426,400 100,000 4,620
of Directors and Chief 1993 250,000 400,000 200,000 4,497
Executive Officer
C. Richard Harrison 1995 250,000 500,000 300,000 3,968
President and Chief 1994 60,000 497,165 200,000 3,000
Operating Officer 1993 60,000 651,683 80,000 3,000
Michael E. McGuinness 1995 60,000 498,362 75,000 6,590
Senior Vice President of 1994 50,000 130,343 50,000 6,100
Sales and Distribution 1993 50,000 290,912 0 6,100
Martha L. Durcan 1995 90,000 33,000 5,000 3,876
Vice President of Administration, 1994 76,731 9,900 18,000 3,731
Corporate Counsel and Clerk 1993 70,502 0 3,000 404
James F. Kelliher 1995 93,865 30,000 11,000 3,699
Vice President of Finance 1994 122,923 0 5,000 3,746
and Assistant Treasurer 1993 84,500 3,000 9,000 3,325
Mark J. Gallagher(4) 1995 175,000 130,000 0 4,620
Former Senior Vice President of 1994 155,000 74,100 130,000 4,620
Finance and Administration, Chief 1993 140,000 70,000 60,000 4,497
Financial Officer and Treasurer
(resigned June 30, 1995)
__________________
(1) Salary includes amounts deferred pursuant to the Parametric Technology
Corporation 401(k) Savings Plan.
(2) Amounts shown, except for those discussed below relating to Messrs.
Harrison and McGuinness, are the awards made under the Company's incentive
plans, which amounts are earned and accrued during the fiscal years
indicated and paid subsequent to the end of each fiscal year. Amounts shown
for Mr. McGuinness are comprised of sales commissions based on revenue.
Amounts shown for Mr. Harrison for fiscal years 1994 and 1993 are comprised
of sales commissions based on revenue and a cash bonus for meeting his
stretch goal in fiscal year 1993. Mr. McGuinness, in fiscal years 1995,
1994 and 1993, and Mr. Harrison, in fiscal years 1994 and 1993, were not
entitled to receive awards under the Company's incentive plans.
(3) Amounts shown are the Company's matching contributions made under the
Parametric Technology Corporation 401(k) Savings Plan, except that the
figures shown for Mr. McGuinness also include $3,600 for his automobile
allowance.
6
STOCK OPTION GRANTS IN FISCAL YEAR 1995
The following table provides information regarding options granted
under the Company's Stock Option Plan during the fiscal year ended September 30,
1995 to the executive officers named in the Summary Compensation Table.
Individual Grants
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Number of Potential Realizable Value
Shares Percentage of Total at Assumed Annual Rates
Underlying Options Granted Exercise of Stock Price Appreciation
Options to Employees in Price Per Expiration for Option Term(3)
Name Granted (#)(1) Fiscal Year (%)(2) Share ($) $Date 5%($)(4) 10% ($)(4)
- ---- ----------- --------------- --------- ----- ----- -------
Steven C. Walske 300,000 9.7500% 43.625 5/10/05 8,230,658 20,858,104
C. Richard Harrison 300,000 9.7500% 43.625 5/10/05 8,230,658 20,858,104
Michael E. McGuinness 30,000 37.250 2/09/05
10,000 43.625 5/10/05
35,000 60.250 9/15/05
------
75,000 2.4374% 2,303,327 5,837,082
Martha L. Durcan 5,000 0.1625% 43.625 5/10/05 137,178 347,635
James F. Kelliher 3,000 34.750 11/17/04
8,000 37.250 2/09/05
-----
11,000 0.3575% 252,973 641,083
Mark J. Gallagher 0
_________________
(1) All options granted to the named executive officers are exercisable in four
equal annual installments, commencing one year after the date of grant.
The Stock Option Plan provides that the exercise price of each option must
be at least 100% of the fair market value of the Company's Common Stock on
the date the option is granted. The exercise price may be paid in cash or,
subject to certain limitations for shares previously acquired upon exercise
of options, in shares of Common Stock, or in a combination of cash and
shares. Pursuant to employment agreements, the options held by Mr. Walske
and Mr. Harrison become exercisable (i) in full upon a "change in control"
of the Company (as described under the section entitled "Employment
Agreements") or upon the individual's death or disability, and (ii) for the
number of shares for which they would have been exercisable had the
optionee's employment continued for an additional year after the
termination of the optionee's employment without "cause" or after a "change
in status".
(2) During the fiscal year ended September 30, 1995, the Company granted
options under the Stock Option Plan to its employees to purchase a total of
3,077,050 shares of Common Stock and cancelled options to purchase 289,525
shares of Common Stock.
(3) The dollar amounts under these columns are the result of calculations at
the 5% and 10% appreciation rates set by the Securities and Exchange
Commission and, therefore, are not intended to forecast possible future
appreciation, if any, in the price of the Common Stock. No gain to the
optionees is possible without an increase in the price of the Common Stock,
which will benefit all stockholders proportionately.
7
(4) In order to realize the potential values over the option term set forth in
the 5% and 10% columns of this table, the per share price of the Common
Stock would be as follows:
Date of Exercise Price Prices at: Percentage Increases at:
------- -------------- ---------- ------------------------
Grant per Share 5% 10% 5% 10%
----- --------- -- --- -- ---
11/17/94 $34.750 $56.60 $90.13 63% 159%
2/09/95 $37.250 $60.68 $96.62 63% 159%
5/10/95 $43.625 $71.06 $113.15 63% 159%
9/15/95 $60.250 $98.14 $156.27 63% 159%
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1995 AND FY-END OPTION VALUES
The following table sets forth information regarding stock options
exercised by the named executive officers during fiscal 1995 and the value of
in-the-money unexercised options held by them as of September 30, 1995.
Number of Shares Value of Unexercised
Underlying Unexercised In-the-Money Options
Shares Options at FY-End (#) at FY-End($)(2)
--------------------- ---------------
Acquired on Value Exercisable/ Exercisable/
Name Exercise Realized ($)(1) Unexercisable Unexercisable
- ---- -------- --------------- ------------- -------------
Steven C. Walske 225,000 5,390,125 215,000/ 11,684,375/
525,000 12,890,625
C. Richard Harrison 20,000 617,067 220,000/ 10,387,183/
490,000 11,656,250
Michael E. McGuinness 13,000 394,313 68,500/ 3,121,031/
122,500 2,503,594
Martha L. Durcan 4,000 79,063 4,500/ 146,563/
21,000 603,313
James F. Kelliher 1,000 34,188 7,250/ 249,563/
21,750 647,063
Mark J. Gallagher 64,150 2,209,775 80,850/ 2,920,931/
142,500 4,780,313
_________________
(1) Market value of the underlying shares on the date of exercise less the
option exercise price.
(2) Market value of shares covered by in-the-money options on September 30,
1995, less the option exercise price. Options are in-the-money if the
market value of the shares covered thereby is greater than the option
exercise price.
8
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors is composed of
two outside directors. The two outside directors also serve as the Officers'
Stock Option Committee to grant stock options to Section 16 Officers. The
compensation for the Company's executive officers is set by the Board of
Directors, after consideration of the Compensation Committee's recommendations.
Compensation Objectives
The basic philosophy underlying the Company's compensation programs is
to align executive compensation with increases in stockholder value. Several key
objectives are reflected within this basic philosophy, one of which is to enable
the Company to attain its annual market penetration and financial targets.
Another key objective is to ensure that a major portion of each executive's cash
compensation is linked to significant improvements in the Company's financial
performance. The third key objective is to make it possible for the Company to
attract, retain and reward executives who are responsible for leading the
Company in achieving or exceeding corporate performance goals.
Executive Compensation Programs
The Company's executive compensation programs, which contain no
special perquisites, consist of three principle elements: base salary, cash
bonus and stock options. The Company's objective is to emphasize incentive
compensation in the form of bonuses and stock option grants, rather than base
salary. The Board of Directors sets the annual base salary for executives, after
consideration of the recommendations of the Compensation Committee. Prior to
making its recommendations, the Compensation Committee reviews historical
compensation levels of the executives, evaluations of past performance and
assessments of expected future contributions of the executives. In making the
determinations regarding base salaries, the Company considers generally
available information regarding salaries prevailing in the industry but does not
utilize any particular indices.
The Company maintains incentive plans (the "IPs") under which
executive officers (including the Chief Executive Officer), other than those
participating in sales activities, are paid cash bonuses subsequent to the end
of each fiscal year. Executive officers who do not participate in the IPs are
paid a commission based on revenue and receive a special cash bonus if they meet
their respective stretch goals. The bonuses under the IPs are dependent
primarily on the Company's financial performance and achievement of corporate
objectives established by the Board of Directors prior to the start of each
fiscal year.
The IPs for fiscal 1995 set forth three performance factors including,
for each participating executive officer, earnings per share and revenue. The
third factor for two of the participating officers (including the Chief
Executive Officer) was based upon the number of software seats licensed, and for
the remaining two participating officers, on other individual performance goals.
Three different target levels were established for each performance factor and a
gross target bonus corresponding to each of the three target levels was set. A
weight was then assigned to each of the performance factors and the actual bonus
earned was calculated using a formula which weighed the three performance
factors. If the Company failed to meet the minimum profitability target for
fiscal 1995, the executives would not have been eligible to receive a cash
bonus. The various elements of the bonus calculation formula were set by the
Board of Directors, after consideration of the Compensation Committee's
recommendation.
Total compensation for executive officers also includes long-term
incentives offered by stock options, which are generally provided through
initial stock option grants at the date of hire and periodic additional stock
option grants. Stock options are instrumental in promoting the alignment of
long-term interests between the Company's executive officers and stockholders
due to the fact that executives realize gains only if the stock price increases
over the fair market value at the date of grant and the executives exercise
their options. In determining the amount of such grants, the Officers' Stock
Option Committee evaluates the job level of the executive, responsibilities to
be assumed in the upcoming fiscal year, responsibilities of each executive in
prior years and the size of awards made to each such officer in prior years
relative to the Company's overall performance. It has been the Company's
practice to fix the exercise price of options, which generally become
exercisable in equal annual installments over a period of four years commencing
one year after the date of grant, at 100% of
9
the fair market value on the date of grant. Therefore, the long-term value
realized by executives through option exercises can be directly linked to the
enhancement of stockholder value.
Chief Executive Officer Compensation
The Chief Executive Officer's performance was evaluated, and his
compensation determined, in accordance with the factors described above
applicable to executive officers generally. For the fiscal year ended September
30, 1995, the Chief Executive Officer earned a cash bonus of $500,000, which
represented 63% of his total cash compensation (base salary plus cash bonus) and
a 17% increase over the cash bonus earned in fiscal 1994. This amount reflects
the increases in earnings per share of 40.4% (excluding non-recurring charges),
revenue of 47.7%, and the number of software seats licensed of 34.7% over the
prior year.
During the fiscal year ended September 30, 1995, the Officers' Stock
Option Committee granted to the Chief Executive Officer an option to purchase
300,000 shares of the Company's Common Stock. The amount of the grant reflects
the senior position held by the Chief Executive Officer within the Company, the
significant contributions made by the Chief Executive Officer to the Company in
fiscal 1995 and those anticipated to be made by him in the future, and the
strong results achieved by the Company during a period in which the senior
management team was re-engineered and the Company made its first acquisitions.
Compensation Deductibility
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), imposes a limit on tax deductions for annual compensation in excess of
one million dollars paid by a corporation to its chief executive officer and the
other four most highly compensated executive officers of a corporation. This
provision excludes certain forms of "performance based compensation" from the
compensation taken into account for the purposes of that limit. The Company's
Stock Option Plan was amended in November 1994 to limit the number of options
which may be granted to any single individual under the Stock Option Plan in
order to qualify for the exclusion on deductibility. Accordingly, none of the
compensation paid by the Company in fiscal 1995 was subject to the limitation on
deductibility. The Compensation Committee will continue to assess the impact of
Section 162(m) of the Code on its compensation practices and determine what
further action, if any, is appropriate.
Compensation Committee
Robert N. Goldman, Chairman
Michael E. Porter
10
STOCK PERFORMANCE GRAPH
The Stock Performance Graph set forth below compares the cumulative
stockholder return on the Common Stock of the Company from September 28, 1990 to
September 29, 1995, with the cumulative total return of the Nasdaq (U.S.
Companies) Index and the Nasdaq Computer & Data Processing Index over the same
period. The Stock Performance Graph assumes that the value of the investment in
the Company's Common Stock and each of the comparison groups was $100 on
September 28, 1990 and assumes the reinvestment of dividends. The Company has
never declared a dividend on the Common Stock of the Company. The stock price
performance depicted in the graph below is not necessarily indicative of future
price performance.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG PARAMETRIC TECHNOLOGY
CORPORATION, NASDAQ (U.S. COMPANIES) INDEX AND NASDAQ COMPUTER
AND DATA PROCESSING INDEX
[GRAPH APPEARS HERE]
_________________________________________________
PTC: Parametric Technology Corporation
Nasdaq: Nasdaq (U.S. Companies) Index
NC&D: Nasdaq Computer & Data Processing Index
_________________________________________________
9/28/90 9/30/91 9/30/92 9/30/93 9/30/94 9/29/95
------- ------- ------- ------- ------- -------
Parametric Technology Corporation $100 $255 $729 $1,262 $1,036 $1,917
Nasdaq (U.S. Companies) Index 100 157 176 231 233 321
Nasdaq Computer & Data Processing Index 100 196 231 275 306 492
11
EMPLOYMENT AGREEMENTS
Agreement with Mr. Walske
The Company has entered into an agreement with Mr. Walske which
provides for certain benefits for him in the event of a termination of his
employment under certain circumstances and upon the occurrence of certain
events. Under the agreement, in the event the Company elects to terminate Mr.
Walske's employment (other than for "cause", as defined in the agreement), or
effects a "change in status" of Mr. Walske (which, as defined in the agreement,
includes a diminution in title, responsibilities or compensation), Mr. Walske
shall be entitled to receive (i) during the six-month period following such an
event (or until such earlier date as he commences employment with another
company), a salary at a rate equal to two times the highest annual salary
(excluding bonuses) received by him in the prior six months, and (ii) provided
he remains employed with the Company for such six-month period, a bonus equal to
Mr. Walske's most recent fiscal year-end bonus. The agreement also provides that
the outstanding options held by Mr. Walske under the Stock Option Plan shall
become exercisable (i) in full upon a "change in control" of the Company, which
in general includes (a) any person becoming the beneficial owner of 50% or more
of the voting power of the Company, (b) a change in a majority of the Company's
directors, or (c) the approval by the stockholders of a merger or consolidation
in which the Company's stockholders do not have majority voting power of the
surviving entity, a liquidation of the Company or a sale or disposition of all
or substantially all of the Company's assets, or upon the death or disability of
Mr. Walske, and (ii) for such number of shares of Common Stock for which they
would have been exercisable had Mr. Walske's employment continued for one year
following a termination of his employment without "cause" or a "change in
status" of Mr. Walske.
Agreement with Mr. Harrison
The Company has entered into an agreement with Mr. Harrison which
provides for certain benefits for him in the event of a termination of his
employment under certain circumstances and upon the occurrence of certain
events. The benefits provided under this agreement are substantially similar to
those provided to Mr. Walske discussed above under this section except for the
following: in the event the Company elects to terminate the employment of Mr.
Harrison without "cause", or effects a "change in status" of Mr. Harrison, there
is no provision for a bonus to be paid to Mr. Harrison.
Agreement with Mr. Gallagher
Mr. Gallagher resigned his position as Senior Vice President of
Finance and Administration, Chief Financial Officer and Treasurer effective June
30, 1995. The Company entered into an agreement with Mr. Gallagher to continue
to employ him at an annual salary of $175,000 for a term which ended on October
19, 1995. Mr. Gallagher also received a pro-rated bonus under the Company's IPs
for his contributions during fiscal 1995 of $130,000.
SECTION 16(A) REPORTING DELINQUENCY
During the fiscal year ended September 30, 1995, Donald K. Grierson, a
director of the Company, filed his Statement of Changes in Beneficial Ownership
on Form 4 after the date on which such form was required to be filed with the
Securities and Exchange Commission by Section 16(a) of the Exchange Act.
12
APPROVAL OF AMENDMENT TO THE ARTICLES OF ORGANIZATION INCREASING AUTHORIZED
SHARES OF COMMON STOCK
The Board of Directors of the Company recommends that the stockholders
approve an amendment to Article 3 of the Company's Articles of Organization to
increase the number of authorized shares of Common Stock from 75,000,000 to
215,000,000. As of October 31, 1995, the Company had a total of 62,997,238
shares of Common Stock issued and outstanding, 8,299,347 shares reserved for
issuance under its Stock Option Plan, 639,668 shares reserved for issuance under
its Purchase Plan, 240,000 shares reserved for issuance under its 1992 Director
Plan, and 381,671 shares reserved for issuance under a stock option plan assumed
in one of the Company's acquisitions.
The Board of Directors believes that it is important to ensure that
the Company will continue to have an adequate number of authorized and unissued
shares of Common Stock available for future use. If this amendment is adopted by
the stockholders, the additional authorized Common Stock would be available for
issuance from time to time in the future for such corporate purposes, including
stock splits and stock dividends, financings, and acquisitions, as the Board may
deem advisable, without the necessity of further stockholder action. The
issuance of additional shares of Common Stock, while providing desirable
flexibility in carrying out corporate purposes, could have the effect of making
it more difficult for a third party to acquire, or of discouraging a third party
from acquiring, a majority of the outstanding voting stock of the Company. In
addition, the issuance of additional shares of Common Stock could also lead to
the dilution of existing stockholders. The Company may from time to time be
reviewing potential acquisition candidates but has no present commitments or
agreement with respect to any transactions involving the issuance of additional
shares of Common Stock. The Board of Directors of the Company believes that the
amendment to the Articles of Organization is in the best interest of the Company
and its stockholders and recommends a vote FOR the proposal to approve the
amendment to the Articles of Organization.
APPROVAL OF AMENDMENT TO THE 1987 INCENTIVE STOCK OPTION PLAN
On November 17, 1995, the Board of Directors adopted, subject to
stockholder approval, amendments to the Stock Option Plan to (i) increase the
number of shares of Common Stock which may be issued under the Stock Option Plan
by 3,000,000 shares, and (ii) change the designation of persons eligible to
receive options under the Stock Option Plan to include consultants.
Success of the Company depends, in large part, on its ability to
attract, retain and motivate key employees and consultants with experience and
ability. The Board of Directors of the Company believes that the opportunity to
receive options under the Stock Option Plan provides an important incentive to
employees and consultants of the Company and that the Stock Option Plan will
assist the Company in attracting and retaining competent personnel. Accordingly,
the Board of Directors of the Company believes that the amendments to the Stock
Option Plan are in the best interests of the Company and its stockholders and
recommends a vote FOR the proposal to approve the amendments to the Stock Option
Plan.
OPTION PLAN ACTIVITY
As of October 31, 1995, options to purchase an aggregate of 13,096,653
shares under the Stock Option Plan had been exercised and options to purchase
7,042,062 shares were outstanding. Without taking into account the proposed
amendment to the Stock Option Plan, 1,257,285 shares of Common Stock remained
available for future stock option grants under the Stock Option Plan as of
October 31, 1995. The closing price of the Company's Common Stock on October 31,
1995 as reported by the Nasdaq Stock Market was $66.875 per share.
In addition to those options granted to key employees under the Stock
Option Plan, options to purchase an aggregate of 29,000 shares of Common Stock
have been granted, subject to stockholder approval, to consultants of the
Company on November 17, 1995 as compensation for services to be performed on
behalf of the Company and include an option to purchase 4,000 shares of Common
Stock granted to Michael Porter, a director of the Company, for services to be
performed pursuant to a consulting agreement between Mr. Porter and the Company.
The exercise price of such options is $67.00, which was 100% of the fair market
value on the date of grant.
13
SUMMARY OF THE STOCK OPTION PLAN
The Stock Option Plan currently provides for the granting of options
for the purchase of shares of Common Stock of the Company to employees of the
Company and certain of its subsidiaries. Options granted under the Stock Option
Plan may be either incentive stock options within the meaning of Section 422 of
the Code, or non-qualified stock options. The purpose of the Stock Option Plan
is to encourage ownership of Common Stock by key employees of the Company and to
provide additional incentive to promote the growth, development and financial
success of the Company's business. Grants to any individual under the Stock
Option Plan are limited in any fiscal year to 1,000,000 shares.
The Stock Option Plan is administered by the Compensation Committee of
the Board of Directors. Subject to the provisions of the Stock Option Plan, the
Compensation Committee (and with respect to grants to Section 16 Officers, the
Officers' Stock Option Committee) has the authority to select the employees to
whom options are granted and determine the terms of each option, including (i)
the number of shares of Common Stock covered by the option, (ii) when the option
becomes exercisable (generally in four equal annual installments, commencing one
year after the date of grant), (iii) the option exercise price, and (iv) the
duration of the option. The Stock Option Plan provides that the exercise price
of each option must be at least 100% of the fair market value of the Company's
Common Stock on the date the option is granted and that the duration of an
option may not be more than ten years from the date of grant. During the
lifetime of the optionee, his or her option is exercisable only by him or her
and is not transferable except by will or by the laws of descent and
distribution and, in the case of Section 16 Officers, except as otherwise
permitted by Rule 16b-3 (or any successor provision) under the Exchange Act.
Both incentive stock options and non-qualified stock options may be
granted to employees of the Company and certain of its subsidiaries. The
Compensation Committee or the Officers' Stock Option Committee selects the
employees to whom options will be granted and determines the terms of each
option, as described above. In making such determination, the Compensation
Committee takes into account several factors including, but not limited to, the
responsibilities of the employee, his or her present and potential contributions
to the success of the Company and anticipated years of future service of the
employee. As of October 31, 1995, approximately 2,000 employees were eligible to
receive options under the Stock Option Plan. In fiscal 1995, the Company granted
options under the Stock Option Plan to approximately 1,100 of its eligible
employees to purchase a total of 3,077,050 shares. Options are exercisable only
during an optionee's term of employment, and for twelve months after termination
of employment as a result of death or permanent disability or for three months
after termination as a result of retirement. The options terminate upon a
reorganization, consolidation or merger of the Company if the Company is not the
survivor, and the survivor does not assume the options or issue substitute
options therefor, or upon the dissolution or liquidation of the Company, if an
optionee is given the right, prior to termination, to exercise any options held.
The Board of Directors or the Compensation Committee may terminate or
modify the Stock Option Plan at any time, provided that (i) the approval of the
stockholders of the Company is obtained to increase the aggregate number of
shares which may be issued under the Stock Option Plan, change the designation
of the employees or class of employees eligible to receive options under the
Stock Option Plan or materially increase the benefits accruing to participants
in the Stock Option Plan; (ii) neither the Board of Directors nor the
Compensation Committee takes any action to impair an optionee's rights or
increase his or her obligations with respect to any outstanding options without
the written consent of such optionee; and (iii) neither the Board of Directors
nor the Compensation Committee takes any action to cause any incentive stock
option granted under the Stock Option Plan to fail to qualify as an incentive
stock option under Section 422 of the Code.
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the federal income tax treatment of
incentive stock options and non-qualified stock options granted under the Stock
Option Plan.
Incentive Stock Options. An optionee does not realize taxable income
upon the grant or exercise of an incentive stock option under the Stock Option
Plan. If no disposition of shares issued to an optionee pursuant to the exercise
of an incentive stock option is made by the optionee within two years from the
date of grant or within one year from the date of exercise, then (a) upon sale
of such shares, any amount realized in excess of the option price (the amount
paid for the shares) is taxed to the optionee as long-term capital gain and any
loss sustained will be a long-term capital loss and (b) no deduction is allowed
to the Company for federal income tax purposes. The exercise of incentive stock
options gives rise to an adjustment in computing alternative minimum taxable
income that may result in alternative minimum tax liability for the optionee.
14
If shares of Common Stock acquired upon the exercise of an incentive
stock option are disposed of prior to the expiration of the two-year and one-
year holding periods described above (a "disqualifying disposition") then (a)
the optionee realizes ordinary income in the year of disposition in an amount
equal to the excess (if any) of the fair market value of the shares at exercise
(or, if less, the amount realized on a sale of such shares) over the option
price thereof and (b) the Company is entitled to deduct such amount. Any further
gain realized is taxed as a short-term or long-term capital gain and does not
result in any deduction to the Company. A disqualifying disposition in the year
of exercise will generally avoid the alternative minimum tax consequences of the
exercise of an incentive stock option.
Non-qualified Stock Options. No income is realized by the optionee at
the time a non-qualified option is granted. Upon exercise, (a) ordinary income
is realized by the optionee in an amount equal to the difference between the
option price and the fair market value of the shares on the date of exercise and
(b) the Company receives a tax deduction for the same amount. Upon disposition
of the shares, appreciation or depreciation after the date of exercise is
treated as a short-term or long-term capital gain or loss and will not result in
any deduction by the Company.
APPROVAL OF 1996 DIRECTOR STOCK OPTION PLAN
On November 17, 1995, the Board of Directors of the Company adopted,
subject to stockholder approval, the 1996 Director Plan of the Company which
will cover an aggregate of up to 90,000 shares of Common Stock. The 1996
Director Plan will replace the current 1992 Director Plan of the Company, which
expires on the date of the 1996 Annual Meeting of Stockholders. The purpose of
the 1996 Director Plan is to attract and retain qualified persons, who are not
also officers or employees of the Company (the "Eligible Directors"), to serve
as directors of the Company and to encourage stock ownership in the Company by
such directors. Stockholder approval of the 1996 Director Plan is required.
The Board of Directors believes that the adoption and approval of the 1996
Director Plan is in the best interests of the Company and its stockholders and
recommends a vote FOR this proposal.
ADMINISTRATION AND ELIGIBILITY
The 1996 Director Plan authorizes the grant of non-qualified stock
options to purchase up to a maximum of 90,000 shares (subject to future
adjustment for stock splits and similar capital changes) of Common Stock to
Eligible Directors. On the date of the Annual Meeting, Messrs. Goldman (subject
to his election as a Class III director at the Annual Meeting), Grierson, Marx,
Posternak and Porter will be eligible to participate in the 1996 Director Plan.
Awards made under the 1996 Director Plan are intended to be "formula awards"
within the meaning of Rule 16b-3 of the Exchange Act. Grants of options under
the 1996 Director Plan are automatic as described below. However, all questions
of interpretations with respect to the 1996 Director Plan are determined by the
Board of Directors.
PURCHASE TERMS AND PRICE
Options to purchase 10,000 shares of Common Stock under the 1996
Director Plan are automatically granted to each Eligible Director at the time of
initial election to the Board of Directors at an annual meeting or otherwise. In
addition, immediately following the Annual Meeting of Stockholders each year,
each Eligible Director continuing in office after such meeting will
automatically be granted options to purchase 2,500 shares of Common Stock. The
options become exercisable in four equal annual installments commencing one year
following the date of grant, but only if the option holder is a director on that
anniversary date. Options have a term of ten years and an exercise price equal
to the fair market value of the Common Stock on the grant date, which will be
the closing price of the Company's Common Stock as reported by the Nasdaq Stock
Market on the date of grant. The closing price of the Company's Common Stock on
October 31, 1995 as reported by the Nasdaq Stock Market was $66.875. The
exercise price may be paid in cash, certified or bank check or, if the option so
provides, in shares of Common Stock, or a combination thereof.
FEDERAL INCOME TAX CONSEQUENCES
No taxable income will be recognized by the optionee upon the grant of
a stock option under the 1996 Director Plan. The optionee must recognize as
ordinary income in the year in which the option is exercised the amount by which
the fair market value of the purchased shares on the date of exercise exceeds
the exercise price. The Company will be entitled to a
15
business expense deduction equal to the amount of ordinary income recognized by
the optionee. Any additional gain or loss recognized upon the subsequent
disposition of the purchased shares will be a capital gain or loss, and will be
a long-term gain or loss if the shares are held for more than one year.
OPTIONS TO BE GRANTED
In accordance with the terms of the 1996 Director Plan, each of the
five directors and nominees for director who are eligible to participate in the
1996 Director Plan will automatically receive options to purchase 2,500 shares
of Common Stock. The grant to Mr. Goldman is subject to his election by the
stockholders as a Class III director at the Annual Meeting. The exercise price
of these options will be equal to the closing price of the Company's Common
Stock as reported by the Nasdaq Stock Market on the date of grant.
AMENDMENT AND MERGER OF PRIOR PLAN
The 1996 Director Plan constitutes an amendment and restatement of the
Company's 1992 Director Plan, which, if the 1996 Director Plan is approved by
the stockholders, will be superseded by the 1996 Director Plan. No additional
options will be granted under the 1992 Director Plan, but the rights and
privileges of holders of outstanding options under the 1992 Director Plan will
not be adversely affected by the foregoing action. For a description of the
grants under the 1992 Director Plan to the Company's current directors, see
"Director Compensation".
INFORMATION CONCERNING INDEPENDENT ACCOUNTANTS
On November 17, 1995 the Board of Directors of the Company upon
recommendation of its Audit Committee approved a change in the Company's
independent accountants from Price Waterhouse LLP to Coopers & Lybrand L.L.P.
effective for the fiscal year ending September 30, 1996.
Price Waterhouse LLP has served as the Company's independent
accountants for the four most recent fiscal years. During these periods, the
Company did not have any disagreements with Price Waterhouse LLP on any matter
of accounting principles or practices, financial statement disclosure or
auditing scope or procedure, nor did any reports issued by Price Waterhouse LLP
contain an adverse opinion or a disclaimer of opinion, nor were such reports
qualified or modified as to uncertainty, audit scope or accounting principles.
Representatives of Coopers & Lybrand L.L.P. and Price Waterhouse LLP
are expected to be present at the Annual Meeting. They will have the opportunity
to make a statement if they desire to do so and will also be available to
respond to appropriate questions from stockholders.
OTHER MATTERS
The Board of Directors does not know of any other matters which may
come before the Annual Meeting. However, if any other matters are properly
presented to the Annual Meeting, it is the intention of the persons named in the
accompanying proxy to vote, or otherwise act, in accordance with their judgment
on such matters.
All costs of solicitation of proxies will be borne by the Company.
Such costs will include a $7,500 fee to Georgeson & Company Inc., which has been
retained to assist with proxy solicitations. The Company's directors, officers
and regular employees, without additional remuneration, may solicit proxies by
telephone, telegraph and personal interviews. Brokers, custodians and
fiduciaries will be requested to forward proxy soliciting material to the owners
of stock held in their names, and the Company will reimburse them for their
reasonable out-of-pocket expenses incurred in connection with the distribution
of proxy materials.
Proposals of stockholders intended to be presented at the 1997 Annual
Meeting of Stockholders must be received by the Company at its principal office
in Waltham, Massachusetts not later than August 31, 1996 for inclusion in the
proxy
16
statement for that meeting. In order to curtail controversy as to the date
on which a proposal was received by the Company, proponents should submit their
proposals by Certified Mail-Return Receipt Requested.
By Order of the Board of Directors,
MARTHA L. DURCAN, Clerk
December 29, 1995
THE BOARD OF DIRECTORS HOPES THAT STOCKHOLDERS WILL ATTEND THE
MEETING. WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE,
SIGN AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. A PROMPT
RESPONSE WILL GREATLY FACILITATE ARRANGEMENTS FOR THE MEETING AND YOUR
COOPERATION WILL BE APPRECIATED. STOCKHOLDERS WHO ATTEND THE MEETING MAY VOTE
THEIR STOCK PERSONALLY EVEN THOUGH THEY HAVE SENT IN THEIR PROXIES.
17
PRELIMINARY FILING
PARAMETRIC TECHNOLOGY CORPORATION
PROXY FOR 1996 ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 8, 1996
The undersigned, having received notice of and the Proxy Statement relating
to the 1996 Annual Meeting of Stockholders to be held on February 8, 1996, at
9:00 a.m. at 128 Technology Drive, Waltham, MA 02154, and revoking all prior
proxies, hereby appoint(s) Edwin J. Gillis and Martha L. Durcan, and each of
them acting singly, with full power of submission, as proxies to represent and
vote on behalf of the undersigned, as designated below, all shares of common
stock, $ .01 par value per share, (the "Common Stock") of Parametric Technology
Corporation (the "Company") which the undersigned would be entitled to vote if
personally present at the 1996 Annual Meeting of Stockholders and any
adjournment or adjournments thereof (the "Annual Meeting"). IN THEIR DISCRETION,
THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME
BEFORE THE ANNUAL MEETING.
1. Election of directors NOMINEES: C.Richard Harrison, Robert N. Goldman
[ ] FOR [ ] WITHHELD
For, except vote withheld from the following nominee:_________________
2. To approve an amendment to the Company's Articles of Organization to
increase the number of authorized shares of the Company's Common Stock
from 75,000,000 to 215,000,000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To approve amendments to the Company's 1987 Incentive Stock Option Plan
(the "Stock Option Plan") to increase the number of shares of the
Company's Common Stock authorized for issuance under the Stock Option
Plan by 3,000,000 shares, and to change the designation of persons
eligible to receive options under the Stock Option Plan to include
consultants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. To approve the Company's 1996 Director Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
This Proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. IF A CHOICE IS NOT SPECIFIED WITH RESPECT
TO ANY PROPOSAL LISTED ABOVE, THIS PROXY WILL BE VOTED FOR SUCH PROPOSAL.
Attendance of the undersigned at the Annual Meeting will not be deemed to revoke
this Proxy unless the undersigned shall revoke this Proxy in writing or shall
vote in person at the Annual Meeting.
EACH STOCKHOLDER SHOULD SIGN THIS PROXY PROMPTLY AND RETURN IT IN THE
ENCLOSED ENVELOPE. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE COMPANY.
Date: _______________________
_________________________________________
_________________________________________
IN SIGNING, PLEASE WRITE NAME(S) EXACTLY
AS APPEARING ON YOUR STOCK CERTIFICATE.
IF SHARES ARE HELD JOINTLY, EACH JOINT
OWNER SHOULD PERSONALLY SIGN. WHEN
SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN,
PLEASE GIVE FULL TITLE AS SUCH. IF A
CORPORATION, PLEASE SIGN FULL CORPORATE
NAME BY PRESIDENT OR OTHER AUTHORIZED
OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN
PARTNERSHIP NAME BY AUTHORIZED PERSON.