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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:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
Applix, Inc.
(Name of Registrant as Specified In Its Charter)
Applix, Inc.
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act
Rule 0-11 (Set forth the amount on which the filing fee is calculated and
state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] 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:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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APPLIX, INC.
112 TURNPIKE ROAD
WESTBORO, MASSACHUSETTS 01581-2831
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD
ON FRIDAY, MAY 5, 2000
The Annual Meeting of Stockholders of Applix, Inc. (the "Company") will be
held at the offices of Hale and Dorr LLP, 60 State Street, Boston, Massachusetts
on Friday, May 5, 2000 at 10:00 a.m., local time, to consider and act upon the
following matters:
1. To elect two Class III Directors for a term of three years.
2. To approve an amendment to the Company's 1994 Equity Incentive
Plan, providing for an increase from 3,490,157 to 4,490,157 in the number
of shares of Common Stock issuable thereunder.
3. To approve the Company's 2000 Director Stock Option Plan.
4. To ratify the selection of PricewaterhouseCoopers LLP as the
Company's independent auditors for the current fiscal year.
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 March 17, 2000 will be
entitled to notice of and to vote at the meeting or any adjournment thereof.
By Order of the Board of Directors,
Patrick J. Rondeau, Clerk
Westboro, Massachusetts
April 3, 2000
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL 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.
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APPLIX, INC.
112 TURNPIKE ROAD
WESTBORO, MASSACHUSETTS 01581-2831
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS ON MAY 5, 2000
INTRODUCTION
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Applix, Inc. (the "Company") for use at the
Annual Meeting of Stockholders to be held on May 5, 2000, and at any adjournment
of that meeting. All proxies will be voted in accordance with the stockholders'
instructions, and, if no choice is specified, the proxies will be voted in favor
of the matters set forth in the accompanying Notice of Meeting. Any proxy may be
revoked by a stockholder at any time before its exercise by delivery of written
revocation or a subsequently dated proxy to the Clerk of the Company or by
voting in person at the Annual Meeting.
The Company's Annual Report for the fiscal year ended December 31, 1999 is
being mailed to stockholders, along with these proxy materials, on or about
April 3, 2000.
QUORUM REQUIREMENT
At the close of business on March 17, 2000, the record date for the
determination of stockholders entitled to notice of and to vote at the Annual
Meeting, there were outstanding and entitled to vote an aggregate of 11,252,833
shares of Common Stock of the Company, constituting all of the outstanding
voting stock of the Company. Holders of Common Stock are entitled to one vote
per share.
The holders of a majority of the number of shares of Common Stock issued,
outstanding and entitled to vote at the Annual Meeting shall constitute a quorum
for the transaction of business at the Annual Meeting. Shares of Common Stock
represented in person or by proxy (including shares that abstain or otherwise do
not vote with respect to one or more of the matters presented for stockholder
approval) will be counted for purposes of determining whether a quorum is
present at the Annual Meeting.
VOTES REQUIRED
The affirmative vote of the holders of a plurality of the votes cast by the
holders of Common Stock is required for the election of directors. The
affirmative vote of the holders of a majority of the votes represented by the
shares of Common Stock present and voting on the matter is required for the
approval of the amendment to the 1994 Equity Incentive Plan, the approval of the
2000 Director Stock Option Plan and the ratification of the selection of
PricewaterhouseCoopers LLP as the Company's independent auditors for the current
fiscal year.
Shares that abstain from voting as to a particular matter, and shares held
in "street name" by a broker or nominee that indicates on a proxy that it does
not have discretionary authority to vote as to a particular matter, will not be
voted in favor of such matter, and also will not be counted as shares voting on
such matter. Accordingly, abstentions and "broker non-votes" will have no effect
on the voting on a matter that requires the affirmative vote of a certain
percentage of the votes cast or the shares voting on that matter (such as the
election of Class III Directors, the approval of the amendment to the 1994
Equity Incentive Plan, the approval of the 2000 Director Stock Option Plan and
the ratification of the selection of independent auditors).
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BENEFICIAL OWNERSHIP OF VOTING STOCK
The following table sets forth the beneficial ownership of the Company's
Common Stock as of December 31, 1999 (1) by each holder of 5% or more of the
Company's outstanding Common Stock, (2) by each director, (3) by each of the
executive officers named in the Summary Compensation Table set forth below (the
"Named Executive Officers") and (4) by all current directors and executive
officers as a group.
NUMBER OF SHARES PERCENTAGE OF
BENEFICIALLY OUTSTANDING
OWNED(1) COMMON STOCK(2)
---------------- ---------------
5% Holders
Brad Fire(3)................................................ 1,000,000 8.97%
Directors
Jitendra S. Saxena(4)....................................... 496,616 4.36%
Paul J. Ferri(5)............................................ 32,840 *
Alain J. Hanover(6)......................................... 26,168 *
David C. Mahoney(7)......................................... 22,834 *
Other Named Executive Officers
Barry Zane(8)............................................... 54,900 *
Edward Terino(9)............................................ 35,000 *
Craig Cervo(10)............................................. 58,734 *
James J. Waldron............................................ 542 *
All current directors and executive officers as a group (9
persons)(11).............................................. 850,090 7.38%
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* Less than 1%.
(1) Each person has sole investment and voting power with respect to the shares
indicated as beneficially owned, except as otherwise noted. The inclusion
herein of any shares as beneficially owned does not constitute an admission
of beneficial ownership. In accordance with Securities and Exchange
Commission ("SEC") rules, each person listed is deemed to beneficially own
any shares issuable upon the exercise of stock options held by him or her
that were exercisable on December 31, 1999 or within 60 days after December
31, 1999; any reference in these footnotes to options refers only to such
options.
(2) Number of shares deemed outstanding includes 11,151,836 shares outstanding
as of December 31, 1999, plus any shares subject to outstanding stock
options held by the person or group in question.
(3) Based on representations made to the Company by Mr. Fire on January 28,
2000.
(4) Includes 219,600 shares subject to stock options held by Mr. Saxena.
(5) Includes 25,834 shares subject to stock options held by Mr. Ferri.
(6) Includes 5,000 shares subject to stock options held by Mr. Hanover.
(7) Comprised of 22,834 shares subject to stock options held by Mr. Mahoney.
(8) Includes 25,500 shares subject to stock options held by Mr. Zane.
(9) Comprised of 10,000 shares subject to stock options held by Mr. Terino.
(10) Comprised of 58,734 shares subject to stock options held by Mr. Cervo.
(11) Includes a total of 367,502 shares subject to stock options held by the
current directors and executive officers as a group.
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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 two Class I Directors, whose terms expire at the 2001 Annual Meeting
of Stockholders; one Class II Director, whose term expires at the 2002 Annual
Meeting of Stockholders; and one Class III Director, whose term expires at this
Annual Meeting of Stockholders (in all cases subject to the election and
qualification of their successors or to their earlier death, resignation or
removal).
The persons named in the enclosed proxy will vote to elect each of David C.
Mahoney and Peter Gyenes as Class III Directors, unless authority to vote for
the election of the nominees is withheld by marking the proxy to that effect.
Mr. Mahoney is currently Class III Director of the Company and Mr. Gyenes has
been nominated as Class III Director by the Board of Directors. Each of Mr.
Mahoney and Mr. Gyenes has indicated his willingness to serve, if elected, but
if either person should be unable or unwilling to stand for election, proxies
may be voted for a substitute nominee designated by the Board of Directors.
Proxies may not be voted for a greater number of persons than the number of
nominees named herein.
Set forth below are the names and certain information with respect to each
director of the Company, including the nominees for Class III Directors.
Class I Directors (holding office for a term expiring at the 2001 Annual
Meeting):
Mr. Ferri, age 61, has been a director of the Company since its inception
in 1983. He has been the managing general partner of Matrix Partners, a venture
capital firm, since 1982. Mr. Ferri also serves as a director of Sycamore
Networks, Inc.
Mr. Saxena, age 54, is a founder of the Company and has been a director and
Chief Executive Officer of the Company since its inception in 1983. Mr. Saxena
has served as Chairman of the Company since April 1997, and served as its
President from its inception until April 1997, and from July 1997 to present
Class II Director (holding office for a term expiring the 2002 Annual Meeting):
Mr. Hanover, age 51, has been a director of the Company since July 1992. He
has been the President and Chief Executive Officer of InCert Software Corp., a
computer software development and distribution company, since October 1997. Mr.
Hanover served as Chairman of the Board of Directors and Chief Executive of
Viewlogic Systems, Inc., an engineering software company, from 1984 until May
1997.
Class III Directors (in the case of Mr. Mahoney, holding office for a term
expiring at this Annual Meeting; each nominated for a term expiring at the 2003
Annual Meeting):
Mr. Mahoney, age 55, has been a director of the Company since October 1992.
Mr. Mahoney has been Chief Executive Officer of Dataware Technologies,
Incorporated since January 1999. Mr. Mahoney served as President and Chief
Executive Officer of Sovereign Hill Software, Inc. from January 1998 to December
1998, when it merged with Dataware Technologies. He served as president of
Falcon Group Consulting from May 1997 to January 1998. He has been a director of
Banyan Systems, Inc., a networking software company, since 1983. Mr. Mahoney
served as Banyan's Chairman of the Board and Chief Executive Officer from 1983
until May 1997.
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Mr. Gyenes, age 54, served at Ardent Software, Inc. as Chairman, President
and Chief Executive Officer from April 1997 until the sale of Ardent to Informix
Software in March 2000. He served as Ardent's Executive Vice President of
Worldwide Sales and International Operations from May 1996 to March 1997. Mr.
Gyenes served as President and CEO of Racal InterLan, Inc. from April 1995 to
May 1996. Mr. Gyenes is a member of the Board of Directors of Informix Software,
Cornerstone Internet Solutions and Axis Computer Systems, a software supplier
for manufacturing companies. Mr. Gyenes is also a member of the Board of
Trustees of the Massachusetts Software and Internet Council.
BOARD AND COMMITTEE MEETINGS
The standing Audit Committee of the Board of Directors is responsible for
reviewing financial reports, accounting procedures and the scope and results of
the annual audit of the Company's financial statements. The Audit Committee met
once during 1999. The current members of the Audit Committee are Messrs. Saxena,
Ferri and Hanover.
The standing Compensation Committee of the Board of Directors is
responsible for reviewing compensation issues and making decisions concerning
the compensation (including stock option grants) of the Company's executive
officers. The Compensation Committee met once during 1999. The current members
of the Compensation Committee are Messrs. Ferri and Mahoney.
The Board of Directors met six times during 1999, and acted twice by
written consent in lieu of a meeting. Each director attended at least 75% of the
aggregate number of Board meetings and the number of meetings held by all
committees on which he then served.
COMPENSATION OF DIRECTORS
Except as described below, directors of the Company do not receive
compensation for their services as directors, but outside directors are
reimbursed for expenses incurred in connection with attendance at Board
meetings. The Company may in the future adopt a compensation policy for outside
directors.
Through January 1, 2000, each director of the Company who was not an
employee of the Company was eligible to receive options pursuant to the 1996
Director Stock Option Plan, as amended (the "1996 Director Plan"). Pursuant to
the 1996 Director Plan, (1) each outside director received an option to
purchase 2,500 shares of Common Stock on May 10, 1996, the date of approval of
the 1996 Director Plan by the stockholders of the Company and (2) each outside
director received an option to purchase 2,500 shares of Common Stock on February
15 of 1997 and 1998 and January 1 of 1999 and 2000. Upon approval of the 2000
Director Stock Option Plan (the "2000 Director Plan") by the stockholders at
this Annual Meeting (1) each outside director shall receive an option to
purchase 1,500 shares of Common Stock on the date of such approval, (2) each
outside director shall receive an option to purchase 4,000 shares of Common
Stock on January 1 of each year beginning 2001, so long as he or she continues
to serve as a director and provided he or she attended at least 75% of the
meetings of the Board or any committees on which he or she served in the
preceding year and (3) each outside director initially elected to the Board
after the adoption of the 2000 Director Plan will receive an option to purchase
10,000 shares of Common Stock upon such director's initial election to the
Board. Such options have an exercise price equal to the fair market value of the
Common Stock on the date of grant; become exercisable on the first anniversary
of the date of grant (or upon an earlier change in control of the Company),
provided the optionee continues to serve as a director of the Company on such
date; and expire seven years from the date of grant or 90 days after the
optionee ceases to serve as a director.
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION
The following Summary Compensation Table sets forth certain information
concerning the compensation for each of the last three fiscal years of (1) the
CEO of the Company, (2) the three most highly compensated executive officers
other than the CEO whose total annual salary and bonus exceeded $100,000 and who
were serving as executive officers at the end of 1999, and (3) one executive
officer who would have been among the four most highly compensated executive
officers other than the CEO had he been serving at the end of 1999.
LONG-TERM
COMPENSATION
----------------
AWARDS(2)
ANNUAL COMPENSATION(1) ----------------
--------------------------- NUMBER OF SHARES
FISCAL UNDERLYING STOCK
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS(3)
--------------------------- ------ -------- ------- ----------------
Jitendra S. Saxena................................... 1999 $250,000 $40,248 100,000
Chairman , Chief Executive Officer and President 1998 $220,000 0 80,000
1997 $205,000 0 254,000(4)
Edward Terino........................................ 1999 $127,787 $ 6,708 140,000
Senior Vice President, Finance, Chief 1998 0 0 0
Financial Officer and Treasurer(5) 1997 0 0 0
Craig Cervo.......................................... 1999 $165,000 $13,416 25,000
Vice President, Product Development 1998 $155,000 0 30,000
1997 143,000 97,800(6)
Barry M. Zane........................................ 1999 $160,000 $13,416 15,000
Vice President, Technology 1998 150,000 0 30,000
1997 143,000 0 91,000(7)
Jay Waldron.......................................... 1999 $187,927 0 0
President and Chief Operating Officer(8) 1998 175,000 0 60,000
1997 150,000 0 196,000(9)
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(1) Other compensation in the form of perquisites and other personal benefits
has been omitted, in accordance with the rules of the SEC, as the aggregate
amount of such perquisites and other personal benefits constituted less than
the lesser of $50,000 or 10% of the total annual salary and bonus for each
executive officer in each fiscal year covered.
(2) The Company did not make any restricted stock awards, grant any stock
appreciation rights or make any long-term incentive plan payouts during any
fiscal year covered.
(3) The option grants for 1997 include options originally granted in February
1997, intended to comprise part of the executive officers' overall
compensation package for 1997, and grants in December 1997, intended to
comprise part of the executive officers' overall compensation package for
1998.
(4) Includes options to purchase an aggregate of 204,000 shares of Common Stock
that were granted in April 1997 in replacement of an option for 50,000
shares granted in February 1997 and options for a total of 154,000 shares
granted in prior years.
(5) Mr. Terino joined the Company in April 1999.
(6) Includes options to purchase an aggregate of 72,800 shares of Common Stock
that were granted in April 1997 in replacement of an option for 5,000 shares
granted in February 1997 and options for a total of 67,800 shares granted in
prior years.
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(7) Includes options to purchase an aggregate of 66,000 shares of Common Stock
that were granted in April 1997 in replacement of an option for 10,000
shares granted in February 1997 and options for a total of 56,000 shares
granted in prior years.
(8) Mr. Waldron was employed by the Company through July 1999.
(9) Includes options to purchase an aggregate of 96,000 shares of Common Stock
that were granted in 1997 in replacement of an option for 70,000 shares
granted in February, 1997 and options for a total of 26,000 shares granted
in prior years.
OPTIONS GRANTS
The following table sets forth information regarding the granting of
options during 1999 to the Named Executive Officers:
POTENTIAL
INDIVIDUAL GRANTS REALIZABLE VALUE
------------------------------------------------ AT ASSUMED
PERCENT OF ANNUAL RATES OF
NUMBER OF TOTAL STOCK PRICE
SHARES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(2)
OPTIONS EMPLOYEES PRICE PER EXPIRATION -------------------
EXECUTIVE OFFICER GRANTED IN FY SHARE(1) DATE 5% 10%
----------------- ---------- ---------- --------- ---------- ------- ---------
Jitendra S. Saxena.................. 100,000 9.6% $14.00 01/01/07 569,941 1,328,204
Edward Terino....................... 100,000 9.6% 4.16 04/01/06 169,191 394,287
40,000 3.8% 14.00 01/01/07 227,976 531,282
Craig Cervo......................... 25,000 2.4% 14.00 01/01/07 142,485 332,051
Barry M. Zane....................... 15,000 1.4% 14.00 01/01/07 85,491 199,231
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(1) Options are incentive stock options, become exercisable over a five-year
period and generally terminate three months following termination of the
executive officer's employment with the Company or on the expiration date,
whichever occurs earlier. The exercise price of each option is equal to the
fair market value per share of the Common Stock on the date of grant.
(2) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on assumed rates of stock price appreciation of 5% and 10%
compounded annually from the date the respective options were granted to
their expiration date. The grants shown are net of the option exercise
price, but do not include deductions for taxes or other expenses associated
with the exercise of the option or the sale of the underlying shares. The
actual gains, if any, on the exercises of stock options will depend on the
future performance of the Common Stock, the optionholder's continued
employment through the option period, and the date on which the options are
exercised.
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OPTION EXERCISES AND HOLDINGS
The following table sets forth certain information concerning each exercise
of stock options during 1999 by the Named Executive Officers and the number and
value of unexercised options held by each of the Named Executive Officers on
December 31, 1999:
---------------------------
NUMBER OF SHARES
NUMBER OF UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT IN-THE-MONEY OPTIONS AT
ACQUIRED ON VALUE FISCAL YEAR-END FISCAL YEAR-END(2):
NAME EXERCISE REALIZED(1) EXERCISABLE / UNEXERCISABLE EXERCISABLE / UNEXERCISABLE
---- ----------- ----------- --------------------------- ---------------------------
Jitendra S. Saxena....... 24,002 0 197,800/317,800 $2,723,388/$3,488,788
Edward Terino............ 0 0 10,000/130,000 139,062/ 1,414,058
Craig Cervo.............. 30,000 533,927 53,234/105,900 780,506/ 1,205,206
Barry Zane............... 67,366 685,710 18,000/ 94,500 199,125/ 1,181,344
James J. Waldron......... 89,000 453,225 0/ 0 0/ 0
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(1) Represents the difference between the exercise price and the fair market
value of the Common Stock on the date of exercise.
(2) Represents the fair market value of the Common Stock on December 31, 1999
($18.0625 per share), less the option exercise price.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
GENERAL
The Company's executive compensation program is administered by the
Compensation Committee of the Board of Directors (the "Committee"), which
throughout 1999 was comprised of two non-employee directors (Messrs. Ferri and
Mahoney). The Committee is responsible for determining the salaries of,
establishing bonus programs for, and granting stock options to, the Company's
executive officers. In making decisions regarding executive compensation, the
Committee receives and considers input from the Company's Chief Executive
Officer.
The Committee has three general goals in determining executive
compensation. First, the Committee seeks to provide incentive for, and to
reward, the attainment of objectives that inure to the benefit of the Company
and its stockholders. Second, the Committee seeks to compensate executives in a
manner that enables the Company to attract and retain talented executives who
can contribute to the success of the Company. Third, the Committee seeks to set
the compensation of each executive at a level that it believes is fair, based on
both the executive's relative contribution to the Company and the compensation
levels of similarly situated executives in comparable companies.
The Company's executive compensation consists of three principal elements:
salary, bonuses and stock option grants.
In establishing base salaries for executive officers, the Committee
considers numerous factors such as the executive's responsibilities, the
executive's importance to the Company, the executive's performance in the prior
year, historical salary levels of the executive, and the salaries of executives
at certain other companies whose business and/or financial situation is similar
to that of the Company. To the extent it deems it appropriate, the Committee
also considers general economic conditions within the area and within the
industry. The base salaries of each of the Company's four executive officers at
the beginning of 1999 represented an approximately 11% increase over their base
salaries for 1998.
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The Committee believes that it is important to tie a significant portion of
the compensation of executive officers to the attainment of corporate success,
thus aligning the objectives and rewards of Company executives with those of the
stockholders of the Company. For 1999, the Committee established a bonus program
for executive officers that was based 50% on operating income goals and 50% on
profitability goals. Of the total amount of the bonus, 25% was tied to
achievement of the goals in the first half of 1999, 25% was tied to achievement
of the goals in the second half of 1999, and 50% was tied to achievement of the
goals for the entire year. Under this program, each executive officer was
assigned a target bonus, which ranged from $50,000 to $150,000 (in the case of
Mr. Saxena). If the Company's operating income for 1999 was less than 80% of the
operating income in the Company's 1999 operating plan, none of the target bonus
would be paid to any executive. If the Company's operating income for 1999 was
at least 80% of its targeted operating income, each executive officer would
receive such percentage of each portion of his target bonus as was equal to the
Company's operating income or revenues as a percentage of target operating
income or revenues, as the case may be (e.g., if the Company's operating income
was 105% of target operating income, each executive would receive 105% of the
portion of his target bonus that was tied to operating income). Based on 1999
performance, bonuses of 107% of the target bonuses for the first half of 1999
were paid to each executive officer and no bonuses were paid for the second half
of 1999 or the full year.
The Committee also uses stock options as a significant element of the
compensation package of executive officers, because it believes options provide
an incentive to executives to maximize stockholder value and because they
compensate executives only to the extent that the Company's stockholders receive
a return on their investment. Moreover, because options granted to executive
officers generally become exercisable over a five-year period and terminate upon
or shortly after the termination of the executive's employment with the Company,
stock options serve as a means of retaining these executives. In determining the
total number of shares of Common Stock to be covered by option grants to
executive officers in a given year, the Committee takes into account the number
of outstanding shares of Common Stock, the number of shares reserved for
issuance under the Company's option plan, recommendations of management
concerning option grants to employees below executive level, the Company's
projected hiring needs for the coming year and the recent performance of the
Company. In making individual stock option grants to executives, the Committee
considers the same factors considered in the determination of base salary
levels, as well as the stock and option holdings of each executive and the
remaining vesting schedule of such executive's options.
SECTION 162(M)
Under Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Tax Code"), certain executive compensation in excess of $1.0 million paid to
the CEO and the four most highly-paid executives of the Company other than the
CEO will not be deductible by the Company for federal income tax purposes unless
the compensation is awarded under a performance-based plan approved by the
stockholders of the Company. In general, the Company's stock option plans are
structured and administered in a manner intended to comply with the
performance-based exception to Section 162(m), thus excluding from the Section
162(m) compensation limitation that income recognized by executives pursuant to
stock options. The Committee intends to review periodically the potential effect
of Section 162(m) and may in the future decide to structure certain other
executive compensation programs so that they comply with the performance-based
requirements of Section 162(m).
Compensation Committee
Paul J. Ferri
David C. Mahoney
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STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on the
Common Stock of the Company between December 30, 1994 and December 31, 1999 with
the cumulative total return of (1) the CRSP Total Return Index for the Nasdaq
Stock Market (U.S.) (the "Nasdaq Composite Index") and (2) the Standard and
Poor's Computer (Software & Services) Index (the "S&P Computer Index"), over the
same period. This graph assumes the investment of $100.00 on December 30, 1994
in the Company's Common Stock and assumes any dividends are reinvested.
NASDAQ COMPOSITE
APPLIX, INC. INDEX S&P COMPUTER INDEX
------------ ---------------- ------------------
December 30, 1994 100.00 100.00 100.00
December 29, 1995 419.00 141.00 141.00
December 31, 1996 337.00 174.00 218.00
December 31, 1997 81.00 213.00 304.00
December 31, 1998 60.00 300.00 551.00
December 31, 1999 278.00 542.00 1020.00
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PROPOSAL TO APPROVE AN AMENDMENT TO THE
1994 EQUITY INCENTIVE PLAN
The Company's 1994 Equity Incentive Plan (the "Incentive Plan") currently
authorizes awards of restricted stock and grants of incentive and nonstatutory
stock options to employees, officers and employee directors of, and consultants
and advisors to, the Company and its subsidiaries to purchase up to 3,490,157
shares of the Company's Common Stock. On March 17, 2000, the Board of Directors
of the Company adopted, subject to stockholder approval, an amendment (the
"Amendment") to the Incentive Plan, providing for an increase from 3,490,157 to
4,490,157 in the number of shares of the Company's Common Stock available for
issuance under the Incentive Plan.
The Board of Directors believes that awards under the Incentive Plan,
including stock options, have been and will continue to be an important
compensation element in attracting and retaining key employees who are expected
to contribute to the Company's growth and success. THE BOARD OF DIRECTORS OF THE
COMPANY BELIEVES THAT THIS AMENDMENT IS IN THE BEST INTERESTS OF THE COMPANY AND
ITS STOCKHOLDERS AND RECOMMENDS A VOTE IN FAVOR OF THIS PROPOSAL.
SUMMARY OF THE INCENTIVE PLAN
The Incentive Plan was adopted by the Company's Board of Directors in April
1994, approved by its stockholders in May 1994 and amended in April 1997, May
1998 and May 1999. The Incentive Plan will terminate in April 2004, unless
earlier terminated according to the terms of the Incentive Plan.
Stock options entitle the optionee to purchase Common Stock from the
Company for a specified exercise price during a period specified in the
applicable option agreement. Restricted stock awards under the Incentive Plan
entitle the recipient to purchase Common Stock from the Company under terms
which provide for vesting over a period of time and a right of repurchase in
favor of the Company of the unvested portion of the Common Stock subject to the
award upon the termination of the recipient's employment or other relationship
with the Company. As option grants and stock awards under the Incentive Plan are
discretionary, the Company cannot now determine the number of options to be
granted or awards to be made to any particular executive officer, executive
officers as a group, or non-executive officers and employees as a group. The
maximum number of shares with respect to which options or restricted stock
awards may be granted to any employee under the Incentive Plan in one calendar
year may not exceed 65,000 shares of Common Stock.
The Incentive Plan is administered by both the Board of Directors and its
Compensation Committee, which select the persons to whom restricted stock awards
and stock options are granted and determine the number of shares of Common Stock
covered by each award or option, its purchase price or exercise price, its
vesting schedule and (in the case of stock options) its expiration date.
As of February 28, 2000, 2,892,502 shares of Common Stock were issuable
pursuant to stock options outstanding under the Incentive Plan and 140,008
additional shares remained available for future option grants or restricted
stock awards under the Incentive Plan. The outstanding stock options generally
become exercisable over a five-year period, are nontransferable, and expire
either seven or 10 years after the date of grant (subject to earlier termination
in the event of the termination of the optionee's employment with the Company).
To date, no restricted stock awards have been made under the Incentive Plan. As
of February 28, 2000, 329 employees of the Company were eligible to receive
options or restricted stock awards under the Incentive Plan.
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FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the United States federal income tax
consequences that generally will arise with respect to awards granted under the
Incentive Plan and with respect to the sale of Common Stock acquired under the
Incentive Plan.
INCENTIVE STOCK OPTIONS
In general, a participant will not recognize taxable income upon the grant
or exercise of an incentive stock option. Instead, a participant will recognize
taxable income with respect to an incentive stock option only upon the sale of
Common Stock acquired through the exercise of the option ("ISO Stock"). The
exercise of an incentive stock option may, however, subject the participant to
the alternative minimum tax.
Generally, the tax consequences of selling ISO Stock will vary with the
length of time that the participant has owned the ISO Stock at the time it is
sold. If the participant sells ISO Stock after having owned it for at least two
years from the date the option was granted (the "Grant Date") and one year from
the date the option was exercised (the "Exercise Date"), then the participant
will recognize long-term capital gain in an amount equal to the excess of the
sale price of the ISO Stock over the exercise price.
If the participant sells ISO Stock for more than the exercise price prior
to having owned it for at least two years from the Grant Date and one year from
the Exercise Date (a "Disqualifying Disposition"), then all or a portion of the
gain recognized by the participant will be ordinary compensation income and the
remaining gain, if any, will be a capital gain. This capital gain will be a
long-term capital gain if the participant has held the ISO Stock for more than
one year prior to the date of sale.
If a participant sells ISO Stock for less than the exercise price, then the
participant will recognize capital loss in an amount equal to the excess of the
exercise price over the sale price of the ISO Stock. This capital loss will be a
long-term capital loss if the participant has held the ISO Stock for more than
one year prior to the date of sale.
NONSTATUTORY STOCK OPTIONS
As in the case of an incentive stock option, a participant will not
recognize taxable income upon the grant of a nonstatutory stock option. Unlike
the case of an incentive stock option, however, a participant who exercises a
nonstatutory stock option generally will recognize ordinary compensation income
in an amount equal to the excess of the fair market value of the Common Stock
acquired through the exercise of the option ("NSO Stock") on the Exercise Date
over the exercise price.
With respect to any NSO Stock, a participant will have a tax basis equal to
the exercise price plus any income recognized upon the exercise of the option.
Upon selling NSO Stock, a participant generally will recognize capital gain or
loss in an amount equal to the difference between the sale price of the NSO
Stock and the participant's tax basis in the NSO Stock. This capital gain or
loss will be a long-term capital gain or loss if the participant has held the
NSO stock for more than one year prior to the date of the sale.
TAX CONSEQUENCES TO THE COMPANY
The grant of an award under the Incentive Plan will have no tax
consequences to the Company. Moreover, in general, neither the exercise of an
incentive stock option nor the sale of any Common Stock acquired under the
Incentive Plan will have any tax consequences to the Company. The Company
generally will be entitled to a business-expense deduction, however, with
respect to any ordinary compensation income recognized by a participant under
the Incentive Plan, including as a result of the exercise of a nonstatutory
stock option or a Disqualifying Disposition. Any such deduction will be subject
to the limitations of Section 162(m) of the Tax Code.
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PROPOSAL TO APPROVE THE 2000 DIRECTOR
STOCK OPTION PLAN
On December 17, 1999, the Board of Directors adopted, subject to
stockholder approval, the Company's 2000 Director Plan. The purpose of the 2000
Director Plan is to encourage ownership of stock of the Company by Directors,
whose continued services are essential to the Company's future progress, and to
provide them with an incentive to continue as Directors of the Company. The
Board of Directors of the Company believes that the 2000 Director Plan will
enhance the ability of the Company to attract and retain qualified Directors and
will provide further incentive to Directors as a result of their equity interest
in the Company. THE BOARD OF DIRECTORS OF THE COMPANY BELIEVES THAT THE APPROVAL
OF THE 2000 DIRECTOR PLAN IS IN THE BEST INTERESTS OF THE COMPANY AND ITS
STOCKHOLDERS AND RECOMMENDS A VOTE IN FAVOR OF THIS PROPOSAL.
SUMMARY OF PLAN
A total of up to 50,000 shares of Common Stock may be issued upon the
exercise of options granted under the 2000 Director Plan. Any shares subject to
options granted pursuant to the 2000 Director Plan which terminate or expire
unexercised will be available for future grants under the 2000 Director Plan.
Only directors of the Company who are not employees of the Company or any
subsidiary ("Outside Directors") will be eligible to receive options under the
2000 Director Plan. The Company currently has three Outside Directors (which
number may change in the future). All options granted under the 2000 Director
Plan will be non-statutory stock options not entitled to special tax treatment
under Section 422 of the Tax Code.
The 2000 Director Plan provides for the automatic grant of stock options
under the following circumstances: (i) an option for 1,500 shares of Common
Stock will automatically be granted to each Outside Director upon the approval
of the 2000 Director Plan by the stockholders of the Company, (ii) an option for
10,000 shares of Common Stock will automatically be granted to each Outside
Director who is initially elected to the Board of Directors after the approval
of the 2000 Director Plan by the stockholders of the Company, upon his or her
initial election to the Board of Directors (an "Election Grant"); and (iii) on
January 1 of each year (beginning January 1, 2001), an option for 4,000 shares
of Common Stock will automatically be granted to each Outside Director, provided
he or she attended at least 75% of the meetings of the Board of Directors or any
committees on which he or she served in the preceding year. The exercise price
of each option granted under the 2000 Director Plan will be equal to the fair
market value of the Common Stock on the date of grant. Each option will become
exercisable (or "vest"), with respect to Election Grants, in two equal annual
installments on the first and second anniversary of the date of grant, and with
respect to all other options, on the first anniversary of the date of grant,
provided in each case that the optionee continues to serve as a director on such
date. In the event a "Change in Control Event" (as defined in the 2000 Director
Plan) occurs, all outstanding options will become vested in full. In general, an
optionee may exercise his option, to the extent vested, only while he or she is
a director of the Company and for up to 90 days thereafter. Unexercised options
expire seven years after the date of grant. Options are not transferable or
assignable other than upon the death of the optionee or pursuant to a qualified
domestic relations order (as defined in the Tax Code). The Board of Directors
may suspend, discontinue or amend the 2000 Director Plan.
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the United States federal income tax
consequences that generally will arise with respect to options granted under the
2000 Director Plan and with respect to the sale of Common Stock acquired under
the 2000 Director Plan.
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TAX CONSEQUENCES TO PARTICIPANTS
A participant will not recognize taxable income upon the grant of an option
under the 2000 Director Plan. Nevertheless, a participant generally will
recognize ordinary compensation income upon the exercise of the option in an
amount equal to the excess of the fair market value of the Common Stock acquired
through the exercise of the option (the "Option Stock") on the exercise date
over the exercise price.
A participant will have a tax basis for any Option Stock equal to the
exercise price plus any income recognized with respect to the option. Upon
selling Option Stock, a participant generally will recognize capital gain or
loss in an amount equal to the difference between the sale price of the Option
Stock and the participant's tax basis in the Option Stock. This capital gain or
loss will be a long-term capital gain or loss if the participant has held the
Option Stock for more than one year prior to the date of the sale and will be a
short-term capital gain or loss if the participant has held the Option Stock for
a shorter period.
TAX CONSEQUENCES TO THE COMPANY
The grant of an option under the 2000 Director Plan will have no tax
consequences to the Company. The Company generally will be entitled to a
business-expense deduction, however, with respect to any ordinary compensation
income recognized by a participant under the 2000 Director Plan.
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected the firm of PricewaterhouseCoopers LLP
as the Company's independent auditors for the current fiscal year.
PricewaterhouseCoopers has served as the Company's independent auditors since
1993. Although stockholder approval of the Board of Directors' selection of
PricewaterhouseCoopers is not required by law, the Board of Directors believes
that it is advisable to give stockholders an opportunity to ratify this
selection. If this proposal is not approved at the Annual Meeting, the Board of
Directors may reconsider its selection.
Representatives of PricewaterhouseCoopers are expected to be present at the
Annual Meeting and 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
MATTERS TO BE CONSIDERED AT THE MEETING
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.
SOLICITATION OF PROXIES
All costs of solicitation of proxies will be borne by the Company. In
addition to solicitations by mail, the Company's directors, officers and
employees, without additional remuneration, may solicit proxies by telephone,
telegraph and personal interviews, and the Company reserves the right to retain
outside agencies for the purpose of soliciting proxies. Brokers, custodians and
fiduciaries will be requested to forward proxy soliciting material to the owners
of stock held in their names, and, as required by law, the Company will
reimburse them for their out-of-pocket expenses in this regard.
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STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be included in the Company's proxy
statement for the 2001 Annual Meeting of Stockholders must be received by the
Company at its principal office not later than December 4, 2000.
Stockholders who wish to make a proposal at the 2001 Annual Meeting --
other than one that will be included in the Company's proxy materials -- must
notify the Company no later than February 17, 2001. If a stockholder who wishes
to present a proposal fails to notify the Company by this date, the proxies that
management solicits for the meeting will have discretionary authority to vote on
the stockholder's proposal if it is properly brought before the meeting.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on its review of copies of reports filed by the directors and
executive officers of the Company pursuant to Section 16(a) of the Exchange Act
or written representations from certain persons required to file reports under
Section 16(a) of the Exchange Act that no Form 5 filing was required for such
person, the Company believes that during 1999 all filings required to be made by
its Reporting Persons were timely made in accordance with the requirements of
the Exchange Act, except that Mr. Hanover filed a late Report on Form 4 for a
transaction that occurred in July 1999.
by Order of the Board of Directors,
Patrick J. Rondeau, Clerk
April 3, 2000
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. 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.
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APPLIX, INC.
ANNUAL MEETING OF STOCKHOLDERS -- MAY 5, 2000
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY.
The undersigned, having received notice of the Annual Meeting and
management's Proxy Statement therefor, and revoking all prior proxies, hereby
appoint(s) Edward Terino and Patrick J. Rondeau, and each of them (with full
power of substitution), as proxies of the undersigned to attend the Annual
Meeting of Stockholders of Applix, Inc. (the "Company") to be held on Friday,
May 5, 2000 and any adjourned sessions thereof, and there to vote and act upon
the following matters in respect of all shares of Common Stock of the Company
which the undersigned would be entitled to vote or act upon, with all powers the
undersigned would possess if personally present.
Attendance of the undersigned at the meeting or at any adjourned
session thereof will not be deemed to revoke this proxy unless the undersigned
shall affirmatively indicate thereat the intention of the undersigned to vote
said shares in person. If the undersigned hold(s) any of the shares of the
Company in a fiduciary, custodial or joint capacity or capacities, this proxy is
signed by the undersigned in every such capacity as well as individually.
In their discretion, the named Proxies are authorized to vote upon such
other matters as may properly come before the meeting, or any adjournment
thereof.
1. To elect the following individuals as Class III Directors:
David C. Mahoney FOR [ ] WITHHOLD AUTHORITY [ ]
Peter Gyenes FOR [ ] WITHHOLD AUTHORITY [ ]
2. To approve an amendment to the Company's 1994 Equity Incentive Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. To approve the Company's 2000 Director Stock Option Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. To ratify the selection of PricewaterhouseCoopers LLP as the Company's
independent auditors for the current fiscal year.
FOR [ ] AGAINST[ ] ABSTAIN [ ]
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PROXY PROXY
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
UNDERSIGNED. IF NO DIRECTION IS GIVEN WITH RESPECT TO ANY ELECTION TO OFFICE OR
PROPOSAL SPECIFIED ABOVE, THIS PROXY WILL BE VOTED FOR SUCH ELECTION TO OFFICE
OR PROPOSAL.
--------------------------------------
Signature(s)
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Printed Name(s)
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Date
Please sign name(s) exactly as appearing hereon. When signing as
attorney, executor, administrator or other fiduciary, please give your full
title as such. Joint owners should each sign personally. If a corporation, sign
in full corporate name, by authorized officer. If a partnership, please sign in
partnership name, by authorized person.