SCHEDULE 14(A)
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<Table>
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material under Rule 14a-2
</Table>
FORRESTER RESEARCH, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(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:
------------------------------------------------------------------------
FORRESTER RESEARCH, INC.
400 TECHNOLOGY SQUARE
CAMBRIDGE, MASSACHUSETTS 02139
GEORGE F. COLONY
CHAIRMAN OF THE BOARD
AND CHIEF EXECUTIVE OFFICER
April 14, 2003
To Our Stockholders:
You are cordially invited to attend the 2003 Annual Meeting of Stockholders
of Forrester Research, Inc., which will be held on Tuesday, May 13, 2003, at the
offices of Ropes & Gray, One International Place, Boston, Massachusetts at 10:00
a.m. (local time).
On the following pages, you will find the formal notice of the Annual
Meeting and our proxy statement. When you have finished reading the proxy
statement, please promptly mark, sign, date and return the enclosed proxy card
to ensure that your shares will be represented.
We hope that many of you will be able to attend in person. I look forward
to seeing you there.
Sincerely yours,
/s/ George F. Colony
GEORGE F. COLONY
Chairman of the Board
and Chief Executive Officer
FORRESTER RESEARCH, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 13, 2003
Notice is hereby given that the 2003 Annual Meeting of Stockholders of
Forrester Research, Inc. will be held at the offices of Ropes & Gray, One
International Place, Boston, Massachusetts at 10:00 a.m. (local time) on
Tuesday, May 13, 2003 for the following purposes:
1. To elect one Class III director to serve until the 2006 Annual Meeting
of Stockholders;
2. To transact such other business as may properly come before the meeting
and any adjournments thereof.
The foregoing items of business are more fully described in the proxy
statement accompanying this notice.
Stockholders of record at the close of business on April 9, 2003 are
entitled to notice of and to vote at the meeting. A list of stockholders
entitled to vote at the meeting will be open to examination by stockholders at
the meeting and during normal business hours from May 1, 2003 to the date of the
meeting at our offices, located at 400 Technology Square, Cambridge,
Massachusetts 02139.
If you are unable to be present personally, please sign and date the
enclosed proxy and return it promptly in the enclosed envelope.
By Order of the Board of Directors
TIMOTHY J. MOYNIHAN, ESQ.
Secretary
Cambridge, Massachusetts
April 14, 2003
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. PLEASE SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE WHETHER OR NOT YOU PLAN TO
ATTEND THE MEETING IN PERSON.
FORRESTER RESEARCH, INC.
ANNUAL MEETING OF STOCKHOLDERS
MAY 13, 2003
PROXY STATEMENT
The Board of Directors of Forrester Research, Inc., a Delaware corporation,
is soliciting the enclosed proxy card from our stockholders. The proxy will be
used at our 2003 Annual Meeting of Stockholders and at any adjournments thereof.
You are invited to attend the meeting to be held at 10:00 a.m. (local time) on
Tuesday, May 13, 2003 at the offices of Ropes & Gray, One International Place,
Boston, Massachusetts. This proxy statement was first mailed to stockholders on
or about April 14, 2003.
This proxy statement contains important information regarding our annual
meeting. Specifically, it identifies the proposal upon which you are being asked
to vote, provides information that you may find useful in determining how to
vote and describes voting procedures.
We use several abbreviations in this proxy statement. We refer to our Board
of Directors as the "Board" and our fiscal year ended on December 31, 2002 as
"fiscal 2002."
WHO MAY ATTEND AND VOTE?
Stockholders who owned our common stock at the close of business on April
9, 2003 are entitled to notice of and to vote at the annual meeting. We refer to
this date in this proxy statement as the "record date." As of the record date,
we had 22,486,852 shares of common stock issued and outstanding. Each share of
common stock is entitled to one vote on each matter to come before the meeting.
HOW DO I VOTE?
If you are a stockholder of record of our common stock, you may vote:
- In person. If you attend the meeting, you may deliver your completed
proxy card in person or fill out and return a ballot that will be
supplied to you at the meeting.
- By Mail. If you choose to vote by mail, simply mark your proxy card,
date and sign it, and return it in the postage-paid envelope provided.
By signing and returning the proxy card according to the enclosed
instructions, you are enabling the individuals named on the proxy card (known as
"proxies") to vote your shares at the meeting in the manner you indicate. We
encourage you to sign and return the proxy card even if you plan to attend the
meeting. In this way, your shares will be voted even if you are unable to attend
the meeting. Your shares will be voted as you direct on the proxy card. If a
proxy card is signed and received by our Secretary, but no instructions are
indicated, then the proxy will be voted "FOR" the election of the nominee for
director.
WHAT DOES THE BOARD OF DIRECTORS RECOMMEND?
The Board recommends that you vote FOR the election of the nominee for
Class III director identified in Proposal One.
If you submit the proxy card but do not indicate your voting instructions,
the persons named as proxies on your proxy card will vote in accordance with the
recommendations of the Board.
WHAT VOTE IS REQUIRED FOR EACH PROPOSAL?
A majority of the shares entitled to be cast on a particular matter,
present in person or represented by proxy, constitutes a quorum as to any
proposal. The nominee for election of the Class III director at the meeting who
receives the greatest number of votes properly cast for the election of
directors will be elected. As a result, shares that withhold authority as to the
nominee recommended by the Board will have no effect on
the outcome. Brokers who hold shares for customers will have discretion to vote
their shares without instructions from the beneficial owner, and thus, there
will be no broker non-votes.
If you hold shares in "street name" (that is, through a bank, broker, or
other nominee), the bank, broker, or other nominee will provide you with
separate voting instructions on the form you receive from them. If you hold
shares in "street name" and would like to attend the annual meeting and vote in
person, you will need to bring an account statement or other acceptable evidence
of ownership of our common stock as of the close of business on the record date.
Alternatively, in order to vote, you may contact the person in whose name your
shares are registered and obtain a proxy card from that person and bring it to
the annual meeting.
MAY I CHANGE MY VOTE AFTER I RETURN MY PROXY CARD?
Yes. You may revoke a proxy any time before it is voted by:
- returning to us a newly signed proxy card bearing a later date;
- delivering a written instrument to our Secretary revoking the proxy card;
or
- if you are the shareholder of record, attending the annual meeting and
voting in person.
WHO WILL BEAR THE COST OF PROXY SOLICITATION?
We will bear the expense of soliciting proxies. Our officers and regular
employees (who will receive no compensation in addition to their regular
salaries) may solicit proxies. In addition to soliciting proxies through the
mail, our officers and regular employees may solicit proxies personally, as well
as by mail, telephone, and telegram from brokerage houses and other
stockholders. We will reimburse brokers and other persons for reasonable charges
and expenses incurred in forwarding soliciting materials to their clients.
2
PROPOSAL ONE:
ELECTION OF DIRECTORS
Our Board of Directors is divided into three classes of approximately equal
size. The members of each class are elected to serve a three-year term with the
term of office of each class ending in successive years. Robert M. Galford is
the Class III director whose term expires at this annual meeting. The Board has
nominated him to serve as a Class III director until the 2006 annual meeting.
The proxies intend to vote each share for which a proper proxy card has
been returned and not revoked in favor of the Class III director named above. If
you wish to withhold the authority to vote for the election of the nominee, your
returned proxy card must be marked to that effect.
It is expected that Mr. Galford will be able to serve, but if he is unable
to serve, the proxies reserve discretion to vote, or refrain from voting, for a
substitute nominee or nominees.
NOMINEE FOR CLASS III DIRECTOR -- TERM EXPIRING 2006
Robert M. Galford, age 50, a Class III director, became a director of
Forrester in November 1996. Mr. Galford has been a managing partner of the
Center for Executive Development, an executive education provider, in Boston,
since April 2001. From 1999 to 2001, he was the executive vice president and
chief people officer at Digitas, Inc., a technology and marketing services firm.
From 1994 to 1999, he consulted to professional services firms and taught in the
Executive Programs at the Kellogg School of Management at Northwestern
University and Columbia University's Graduate School of Business. Before joining
Columbia's Executive Programs, he taught at Boston University from 1993 to 1994.
Prior to his work in executive education, Mr. Galford was vice president of the
MAC Group, and its successor firm, Gemini Consulting, both of which are
management consulting firms, from 1991 to 1994.
OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF THE NOMINEE
NAMED ABOVE.
CLASS II DIRECTORS CONTINUING IN OFFICE UNTIL 2004
Henk W. Broeders, age 50, a Class II director, became a director of
Forrester in May 1998. Mr. Broeders has been the Chairman of the Executive Board
of Cap Gemini N.V., a management consulting firm located in the Netherlands,
since January 2001. Cap Gemini N.V. is the Dutch subsidiary of the global CGEY
organization. From 1992 to 1998, Mr. Broeders served as a general manager of
IQUIP Informatica B.V., a software company in the Netherlands.
George R. Hornig, age 48, a Class II director, became a director of
Forrester in November 1996. Mr. Hornig has been a managing director and chief
operating officer of the Private Equity Division at Credit Suisse First Boston,
an investment banking firm, since 1999. He was an executive vice president of
Deutsche Bank Americas Holding Corporation, a diversified financial services
holding company, and several of its affiliated entities, from 1993 to 1998. He
is also director of Unity Mutual Life Insurance Company, U.S. Timberlands
Company, L.P., and Veridian Corporation.
CLASS I DIRECTORS CONTINUING IN OFFICE UNTIL 2005
George F. Colony, age 49, a Class I director, is the founder of Forrester
and since 1983, he has served as Chairman of the Board and Chief Executive
Officer. He also has served as Forrester's President since September 2001, and
he previously was Forrester's President from 1983 to 2000.
Michael H. Welles, age 48, a Class I director, became a director of
Forrester in November 1996. Mr. Welles is chief operating officer and founder of
S2 Security Corporation, an IP-based facility security systems start-up. He
previously served as vice president and general manager of the platforms
business with NMS Communications, an OEM infrastructure supplier to the telecom
industry, from 2000 to 2002. He previously served as vice president of news
operations and engineering for Individual.com, NewsEdge Corporation, and
Individual, Inc., a group of news solutions companies, from 1997 to 2000, and
before that, as a general manager at Lotus Development Corporation, a software
company, from 1991 to 1997.
3
INFORMATION WITH RESPECT TO THE BOARD OF DIRECTORS
BOARD MEETINGS AND COMMITTEES
Our Board of Directors held eight meetings during fiscal 2002. Each
director attended at least 75 percent of the aggregate of the meetings of the
Board of Directors and of each committee of which he is a member. The Board of
Directors currently has two standing committees, the Audit Committee and the
Compensation Committee. The Board of Directors does not have a Nominating
Committee or a committee performing similar functions.
Our Audit Committee consists of three members: George R. Hornig, Henk W.
Broeders, and Michael H. Welles, each of whom is "independent" under the rules
of the Nasdaq Stock Market. The Audit Committee held five meetings during fiscal
2002. The Audit Committee reviews our results of operations with our officers
responsible for accounting matters and meets with our independent auditors. The
Board of Directors adopted a written charter with respect to the Audit
Committee's roles and responsibilities in 2001. See "Report of the Audit
Committee of the Board of Directors" on page 10 for more information.
Our Compensation Committee consists of two members: Robert M. Galford and
Michael H. Welles, each of whom is "independent" under the rules of the Nasdaq
Stock Market. The Compensation Committee held one meeting during fiscal 2002.
The Compensation Committee has authority to administer our stock option plans,
approve salaries and bonuses and other compensation matters for our officers,
and review annual compensation for all other officers and significant employees.
See "Report of the Compensation Committee of the Board of Directors" on page 8
for more information.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Messrs. Galford and Welles, none of
whom is or has been an executive officer or employee of Forrester. None of our
executive officers serves as a member of the board of directors or the
compensation committee of any entity in which Messrs. Galford or Welles serve as
executive officers.
DIRECTOR COMPENSATION
EXPENSE REIMBURSEMENT
Members of our Board of Directors are reimbursed for their expenses
incurred in connection with attending any meeting. We do not pay a retainer for
the services of the members of the Board.
AMENDED AND RESTATED 1996 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
Under the Amended and Restated 1996 Stock Option Plan for Non-Employee
Directors, following each annual meeting of stockholders, our four existing
non-employee directors receive an option to purchase 12,500 shares of our common
stock at an exercise price equal to the fair market value on that date. These
options vest in four equal annual installments. After last year's annual
meeting, our four non-employee directors received an option to purchase 12,500
shares of our common stock at an exercise price of $18.75 per share. Each newly
elected, non-employee director will receive an option to option to purchase
6,000 shares of our common stock at an exercise price equal to the fair market
value on the date he or she is first elected as a director. These options vest
in four equal annual installments.
The Compensation Committee of the Board of Directors also has the authority
under the plan to grant stock options to non-employee directors in such amounts
and on such terms as it shall determine at the time of grant. No such awards
have been made.
4
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table and notes provide information about the beneficial
ownership of our outstanding common stock as of April 1, 2003 by:
(i) each person who we know beneficially owns more than 5% of our
common stock;
(ii) each of the executive officers named below in the Summary
Compensation Table;
(iii) each member of our Board of Directors; and
(iv) our directors and executive officers as a group.
Except as otherwise indicated, each of the stockholders named in the table
below has sole voting and investment power with respect to the shares of our
common stock beneficially owned.
<Table>
<Caption>
COMMON STOCK
BENEFICIALLY OWNED
----------------------------
SHARES PERCENTAGE OF
BENEFICIALLY OUTSTANDING
NAME OF BENEFICIAL OWNER OWNED(1) SHARES
- ------------------------ ------------ -------------
George F. Colony, c/o Forrester Research, Inc.,............. 8,062,198 35.5%
400 Technology Square,
Cambridge, MA, 02139(2)
Richard C. Belanger(3)...................................... 58,168
Neil Bradford(4)............................................ 134,582 *
Stanley H. Dolberg.......................................... -- *
Emily Nagle Green(5)........................................ 135,386 *
Timothy M. Riley(6)......................................... 53,140 *
Robert M. Galford(7)........................................ 35,775 *
Henk W. Broeders(8)......................................... 27,209 *
George R. Hornig(9)......................................... 24,542 *
Michael H. Welles(10)....................................... 53,875 *
Directors and executive officers as a group (14 persons).... 8,719,479 38.4%
</Table>
- ---------------
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and includes voting or investment power
with respect to the shares. Shares subject to options currently exercisable
or exercisable within 60 days of April 1, 2003 are included as beneficially
owned.
(2) Includes (a) 1,446 shares issuable on the exercise of options currently
exercisable or exercisable within 60 days, (b) 1,580 shares held by Mr.
Colony's wife as to which Mr. Colony disclaims beneficial ownership, and
(c) 95,000 shares that are subject to options Mr. Colony granted to one
employee.
(3) Includes 58,168 shares issuable on the exercise of options currently
exercisable or exercisable within 60 days.
(4) Includes 72,916 shares issuable on the exercise of options currently
exercisable or exercisable within 60 days.
(5) Includes 119,250 shares issuable on the exercise of options currently
exercisable or exercisable within 60 days.
(6) Includes 53,140 shares issuable on the exercise of options currently
exercisable or exercisable within 60 days.
(7) Includes 2,400 shares held in trust for Mr. Galford's children as to which
Mr. Galford disclaims beneficial ownership and 33,375 shares issuable on
the exercise of options currently exercisable or exercisable within 60
days.
5
(8) Includes 27,209 shares issuable on the exercise of options currently
exercisable or exercisable within 60 days.
(9) Includes 24,542 shares issuable on the exercise of options currently
exercisable or exercisable within 60 days.
(10) Includes 53,875 shares issuable on the exercise of options currently
exercisable or exercisable within 60 days.
* Less than 1%.
EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
The following table shows the compensation paid or awarded during fiscal
2002 to our Chief Executive Officer and each of our four most highly compensated
executive officers as of December 31, 2002. In addition, we have included
information for Stanley H. Dolberg as, based on compensation he received during
fiscal 2002, he would have been one of our most highly compensated executive
officers as of December 31, 2002 if he had been serving as one of our executive
officers as of that date. We refer to these officers as the "named executive
officers".
SUMMARY COMPENSATION TABLE
<Table>
<Caption>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION(1) SECURITIES
----------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION
- --------------------------- ---- ---------- ---------- ------------ ------------
George F. Colony....................... 2002 $241,667 $ 82,614 -- --
Chairman of the Board and 2001 $250,000 $ 77,500 100 --
Chief Executive Officer 2000 $241,667 $210,833 200 --
Richard C. Belanger.................... 2002 $203,000 $ 46,609 20,000 --
Chief Technology Officer 2001 $210,000 $ 34,099 100 --
2000 $200,000 $122,300 200 --
Neil Bradford.......................... 2002 $200,000 $ 40,850 25,000 --
Managing Director, Global 2001 $151,338 $ 17,850 100 --
2000 $145,522 $ 37,612 200 --
Stanley H. Dolberg..................... 2002 $123,063 $ 24,241 20,000 $103,646(2)
Vice President, Strategy 2001 $220,004 $ 47,380 100 --
2000 $200,000 $125,750 200 --
Emily Nagle Green...................... 2002 $216,333 $ 40,684 25,000 --
Managing Director, Forrester N.A 2001 $220,004 $ 45,569 100 --
2000 $200,000 $121,350 200 --
Timothy M. Riley....................... 2002 $206,500 $ 46,784 20,000 --
Vice President, Strategic Growth 2001 $210,000 $ 35,018 100 --
2000 $200,000 $129,675 200 --
</Table>
- ---------------
(1) No named executive officer received perquisites or other personal benefits
in excess of the lesser of $50,000 or 10% of his salary and bonus
(2) Mr. Dolberg left Forrester on July 24, 2002, and his salary and bonus
reflect all such payments made to him through July 24, 2002. We paid an
additional $103,646 in severance benefits, which is set forth as other
compensation.
6
OPTIONS GRANTED AND OPTIONS EXERCISED IN THE LAST FISCAL YEAR
The following tables set forth certain information about stock options
granted to, and exercised and held by, the named executive officers during
fiscal 2002.
OPTION GRANTS IN LAST FISCAL YEAR
<Table>
<Caption>
POTENTIAL
REALIZABLE VALUE
% OF TOTAL AT ANNUAL RATES
NUMBER OF OPTIONS OF STOCK PRICE
SECURITIES GRANTED TO APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE OPTION TERM(2)
OPTIONS IN FISCAL PRICE EXPIRATION ------------------
NAME GRANTED (#) YEAR ($/SHARE) DATE 5% ($) 10% ($)
- ---- ----------- ---------- --------- ---------- -------- -------
George F. Colony............. -- -- -- -- -- --
Richard C. Belanger.......... 20,000(1) 2.2% $16.28 01/29/12 204,534 518,443
Neil Bradford................ 25,000(1) 2.7% $16.28 01/29/12 255,668 648,053
Stanley H. Dolberg........... 20,000(1) 2.2% $16.28 01/29/12 204,534 518,443
Emily Nagle Green............ 25,000(1) 2.7% $16.28 01/29/12 255,668 648,053
Timothy M. Riley............. 20,000(1) 2.2% $16.28 01/29/12 204,534 518,443
</Table>
- ---------------
(1) The exercise price of the options granted is equal to the fair market value
of our common stock on the date of grant. Pursuant to the terms set forth in
the option certificate, the option becomes exercisable in four equal
installments on the first, second, third, and fourth anniversaries from the
date of grant. All options expire approximately 10 years from the date of
grant. Because Mr. Dolberg left Forrester on July 24, 2002, options granted
to him in 2002 expired on that date.
(2) The amounts shown on this table represent hypothetical gains that could be
achieved for the respective options if exercised at the end of the option
term. These gains are based on assumed rates of stock appreciation of 5% and
10%, compounded annually from the date the respective options were granted
to their expiration date. The gains shown are net of the option exercise
price, but do not include deductions for taxes or other expenses associated
with the exercise. Actual gains, if any, on stock option exercises will
depend on the future performance of our common stock, the holder's continued
employment through the option period, and the date on which the options are
exercised.
AGGREGATED OPTION EXERCISES IN 2002 AND
FISCAL YEAR-END OPTION VALUES
<Table>
<Caption>
FISCAL YEAR-END OPTION VALUES
---------------------------------------------------------
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL AT FISCAL
SHARES YEAR-END (#): YEAR-END ($)(1):
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE (#) REALIZED ($)(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------ --------------- ----------- ------------- ----------- -------------
George F. Colony............. 10,054 $ 34,756 1,446 800 $ 3,919 --
Richard C. Belanger.......... 12,000 $ 92,807 53,186 30,800 $140,980 $38,800
Neil Bradford................ -- -- 66,666 25,300 -- --
Stanley H. Dolberg........... 52,335 $210,440 -- -- -- --
Emily Nagle Green............ 10,000 $ 62,986 113,000 35,800 $263,840 $38,800
Timothy M. Riley............. 30,000 $226,973 48,140 30,800 $156,244 $38,800
</Table>
- ---------------
(1) Based upon the market price of $15.57 per share, which was the closing price
per share of our common stock on the Nasdaq National Market on the last
trading day of fiscal 2002 less the option exercise price per share.
(2) Represents the difference between the fair market value of the stock at the
time of the exercise and the exercise price of the stock options.
7
EMPLOYMENT AND SEVERANCE AGREEMENTS
We entered into a severance agreement with Stanley H. Dolberg dated July
24, 2002 in connection with the termination of his employment. Under the
agreement, Mr. Dolberg received six months of base salary, plus one-half of his
annualized target bonus for that period, payable in accordance with our normal
payroll practices.
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of December 31, 2002, about our
equity compensation plans that were in effect on that date.
<Table>
<Caption>
NUMBER OF SECURITIES
NUMBER OF SECURITIES WEIGHTED-AVERAGE REMAINING AVAILABLE FOR
TO BE ISSUED UPON EXERCISE PRICE OF FUTURE ISSUANCE UNDER
EXERCISE OF OUTSTANDING EQUITY COMPENSATION PLANS
OUTSTANDING OPTIONS, OPTIONS, WARRANTS (EXCLUDING SECURITIES
WARRANTS AND RIGHTS AND RIGHTS REFLECTED IN COLUMN (A))
-------------------- ----------------- -------------------------
PLAN CATEGORY (A) (B) (C)
- ------------- -------------------- ----------------- -------------------------
Equity compensation plans approved by
shareholders(1)...................... 4,204,000 $20.99 4,011,000(3)
--------- ------ ---------
Equity compensation plans not approved
by shareholders(2)................... -- -- --
--------- ------ ---------
Total.................................. 4,204,000 $20.99 4,011,000
--------- ------ ---------
</Table>
- ---------------
(1) The approved plans are Forrester's 1996 Amended and Restated Equity
Incentive Plan (the "1996 plan"), 1996 Amended and Restated Stock Option
Plan for Non-Employee Directors, and 1996 Employee Stock Purchase Plan, as
amended.
(2) We do not have any equity compensation plans that have not been approved by
our shareholders.
(3) Of these shares available for issuance, all those available under the 1996
Plan may be issued as restricted stock.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Following Forrester's initial public offering, the Board of Directors
appointed a Compensation Committee consisting of Robert M. Galford and Michael
H. Welles, neither of whom is an executive officer or employee of Forrester. The
Compensation Committee is responsible for reviewing with management the
compensation of Forrester's directors, officers, employees, and agents, making
recommendations to the Board of Directors, and administering Forrester's stock
plans.
Forrester's culture emphasizes certain key values -- including client
service, quality, and creativity -- that it believes are critical to its
continued growth. To encourage achievement of these key values, Forrester places
great emphasis on individual excellence, and employees at all levels, as well as
executive officers, are encouraged to take initiative and lead individual
projects that enhance Forrester's effectiveness. Forrester's compensation
philosophy bases cash compensation on individual achievement, teamwork, and
Forrester's short-term performance. This philosophy aligns employees' incentives
with Forrester's objective of enhancing stockholder value over the long term
through long-term incentives, principally stock options. Compensation must also
be competitive with other companies in the industry so that Forrester can
continue to attract, retain, and motivate key employees who are critical to the
long-term success of Forrester.
Compensation for Forrester's executive officers in 2002 consisted of three
principal components: base salary, cash bonuses, and stock options.
Base Salary. Base salaries of executive officers were determined by
evaluating the responsibilities of the position, the experience and performance
of the individual, and formal and informal industry comparisons.
8
Cash Bonuses. Cash bonuses were determined based upon performance against
individual and team goals and are funded by Forrester's overall performance
against key business objectives.
Stock Options. The principal equity compensation component of executive
compensation is stock options granted under Forrester's 1996 Amended and
Restated Equity Incentive Plan. Prior to 1996, Forrester had not issued stock
options to executive officers or employees. In 1996, Forrester granted stock
options, some of which vested upon consummation of Forrester's initial public
offering and others of which vested over three years, to executive officers and
other employees based on seniority and the position held with Forrester, and
granted stock options, which vested over three years, to new executive officers
who joined Forrester in 1996. Stock options generally will be granted when an
executive joins Forrester, with additional options granted from time to time for
promotions and performance. The Compensation Committee believes that stock
option participation helps to motivate and retain executives and also aligns
management's incentives with long-term stock price appreciation. In determining
the size of awards for 2002, the Compensation Committee considered formal and
informal surveys of businesses, like Forrester, that rely heavily on the quality
of their analysts, and that recognize that equity compensation is a key
retention incentive.
Mr. Colony's compensation package in 2002 as Chief Executive Officer
consisted of the same benefits program as other executive officers, including
base salary, cash bonus, and other executive and employee benefit programs. In
deciding the size of his cash bonus, the Compensation Committee considered
Forrester's performance, including revenues, operating income, bookings, and
agreement value, although no single factor was more important than any other.
Section 162(m) of the Internal Revenue Code limits the deductibility of
compensation paid to certain executive officers in excess of $1 million unless
the compensation is performance based. To the extent consistent with its
performance goals, it is Forrester's policy to structure compensation
arrangements with its executive officers to preserve the deductibility of that
compensation in light of Section 162(m).
COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
Robert M. Galford
Michael H. Welles
9
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Board of Directors has appointed an Audit Committee composed of three
outside directors: Messrs. Hornig, Welles, and Broeders. Each of the members of
the Audit Committee is "independent" as defined under the Nasdaq Stock Market
listing standards.
The Audit Committee oversees our independent public auditors and assists
the Board of Directors in fulfilling its oversight responsibilities on the
matters relating to accounting, financial reporting, internal controls, and
auditing by meeting regularly with the independent auditors and operating and
financial personnel. The Audit Committee periodically reviews our accounting and
financial controls and our policies governing compliance with laws, regulations,
rules of ethics and conflicts of interest.
In fulfilling its oversight responsibilities, the Audit Committee reviewed
and discussed our audited financial statements for the fiscal year ended
December 31, 2002 with our management and Deloitte & Touche LLP, our independent
public auditors. The Audit Committee also discussed with Deloitte & Touche LLP
the matters required by Statement of Auditing Standards No. 61 (Communications
with Audit Committees). This included a discussion of the independent auditors'
judgments as to the quality, not just the acceptability, of our accounting
principles, and such other matters that generally accepted auditing standards
require to be discussed with the Audit Committee. The Audit Committee also
received the written disclosure letter from Deloitte & Touche LLP required by
Independence Standards Board Standard No. 1 (Independence Discussion with Audit
Committees) and the Audit Committee discussed the independence of Deloitte &
Touche LLP with that firm.
Based on the Audit Committee's review and discussions noted above, the
Audit Committee recommended to the Board of Directors that, and the Board of
Directors approved, the audited financial statements be included in our Annual
Report on Form 10-K for the fiscal year ended December 31, 2002 for filing with
the Securities and Exchange Commission.
AUDIT COMMITTEE OF THE
BOARD OF DIRECTORS
George R. Hornig, Chairman
Michael H. Welles
Henk W. Broeders
10
STOCK PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total return on
our common stock to the cumulative total return on the Nasdaq Stock Market Index
of U.S. Companies and the Russell 2000 index for the period commencing December
31, 1997 and ending on December 31, 2002. The chart data assumes in each case
that $100 was invested on December 31, 1997 and that all dividends were
reinvested. The stock performance graph is not necessarily indicative of future
stock performance.
COMPARISON OF CUMULATIVE TOTAL RETURNS
[STOCK PERFORMANCE GRAPH]
<Table>
<Caption>
- --------------------------------------------------------------------------------------
12/31/97 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02
- --------------------------------------------------------------------------------------
Forrester Research,
Inc.............. $100.00 $192.31 $302.75 $440.11 $177.05 $136.88
Nasdaq Stock Market
(U.S.
Companies)....... $100.00 $140.99 $261.48 $157.42 $124.89 $ 86.33
Russell 2000....... $100.00 $ 96.55 $115.50 $110.64 $111.78 $ 87.66
</Table>
OTHER INFORMATION
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act requires our officers and
directors, and persons who own more than 10% of our common stock to file reports
of ownership and changes in ownership on Forms 3, 4 and 5 with the Securities
and Exchange Commission. Officers, directors and greater than 10% beneficial
stockholders are required by SEC regulation to furnish to us copies of all Forms
3, 4 and 5 they file. Based solely on our review of copies of such forms which
we received, we believe that all of our officers, directors and greater than 10%
beneficial owners complied on a timely basis with all filing requirements with
respect to transactions during fiscal 2002.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Indemnification Agreement with Mr. Colony. At the time of our initial
public offering, we entered into an indemnification agreement with Mr. Colony
relating to each parties' respective tax liabilities. Mr. Colony will continue
to be liable for personal income taxes on our income for all periods prior to
the time we ceased to be an S corporation (at the closing of the offering). The
agreement generally provides that we will indemnify Mr. Colony for any increase
in his taxes (including interest and penalties) resulting from adjustments
initiated
11
by taxing authorities and from payments made to Mr. Colony under the agreement,
and Mr. Colony will pay us an amount equal to any reduction in his tax liability
resulting from adjustments initiated by taxing authorities. The agreement also
provides that if we are determined to have been a C corporation for tax purposes
at any time we reported our income as a S corporation, Mr. Colony will make a
capital contribution to us in an amount necessary to hold us harmless from any
taxes and interest arising from such determination up to the amount of
distributions made by us to Mr. Colony prior to the termination of our S
corporation election less any taxes and interest attributable to such
distributions.
Registration Rights and Non-Competition Agreement. At the time of our
initial public offering, we entered into a registration rights and
non-competition agreement with Mr. Colony which provides that if Mr. Colony's
employment with us is terminated he will not compete with us for the one year
period after the date of such termination. The agreement also provides that in
the event we propose to file a registration statement under the Securities Act
of 1933, as amended, with respect to an offering by us for our own account or
the account of another person, or both, Mr. Colony shall be entitled to include
shares held by him in such a registration, subject to the right of the managing
underwriter of any such offering to exclude some or all of such shares from such
registration if and to the extent the inclusion of the shares would adversely
affect the marketing of the shares to be sold by us. The agreement also provides
that Mr. Colony may require us to register shares under the Securities Act with
a fair market value of at least $5 million, except that we are not required to
effect such registration more than twice or at certain times described in the
agreement. The agreement also provides that we will pay all expenses incurred in
connection with such registration.
INDEPENDENT PUBLIC AUDITORS
Deloitte & Touche LLP audited our financial statements for the fiscal year
ended December 31, 2002. We expect that representatives of Deloitte & Touche LLP
will attend the Annual Meeting, will have an opportunity to make a statement,
and will be available to respond to appropriate questions. Our Board of
Directors has not yet selected an accounting firm to serve as our independent
public auditors for the year ending December 31, 2003. Our Audit Committee will
consider the re-appointment of Deloitte & Touche LLP at its April 2003 meeting.
REPLACEMENT OF INDEPENDENT PUBLIC AUDITORS
On April 1, 2002, our Audit Committee recommended, and our Board of
Directors decided, to no longer engage Arthur Andersen LLP ("Andersen") as our
independent public auditors and engaged Deloitte & Touche LLP to serve as our
independent public auditors for the fiscal year 2002.
Andersen's reports on our consolidated financial statements for each of the
years ended December 31, 2001 and December 31, 2000 did not contain an adverse
opinion or disclaimer of opinion, nor were they qualified or modified as to
uncertainty, audit scope, or accounting principles. During the years ended
December 31, 2001 and December 31, 2000 and through April 1, 2002, there were no
disagreements with Andersen on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure which, if not
resolved to Andersen's satisfaction, would have caused it to make reference to
the subject matter in connection with its report on our consolidated financial
statements for such years. There were no reportable events as defined in Item
304(a)(1)(v) of Regulation S-K.
We provided Andersen with a copy of the foregoing disclosures. A letter
from Andersen dated April 5, 2002 and addressed to the Securities and Exchange
Commission (the "SEC") is included as Exhibit 16.1 to our Current Report on Form
8-K filed with the SEC on April 5, 2002 and states that Andersen agrees with
such disclosure.
During the years ended December 31, 2001 and December 31, 2000 and through
April 1, 2002, we did not consult Deloitte & Touche LLP with respect to the
application of accounting principles to a specified transaction, either
completed or proposed, or the type of audit opinion that might be rendered on
our consolidated financial statements, or any other matter that was either the
subject of a disagreement (as
12
defined in Item 304(a)(1)(iv) of Regulation S-K) or a reportable event (as
described in Item 304(a)(1)(v) of Regulation S-K).
FEES
Fees billed to us by Deloitte & Touche LLP for services rendered during the
fiscal year 2002 or related to the audit of the fiscal year 2002 financial
statements are set forth below:
AUDIT FEES
The aggregate fees billed by Deloitte & Touche LLP for the audit of our
financial statements for the year ended December 31, 2002 and for the quarterly
reviews of our 2002 interim financial information were approximately $129,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
There were no fees billed by Deloitte & Touche LLP for professional
services rendered for information technology services relating to financial
information systems design and implementation for the fiscal year ended December
31, 2002.
ALL OTHER FEES
Deloitte & Touche LLP billed aggregate fees of approximately $84,000 for
services rendered other than the services described above under Audit Fees and
Financial Information Systems Design and Implementation Fees. These fees related
primarily to tax compliance and consulting services.
The Audit Committee has considered whether the provision of all non-audit
services is compatible with maintaining Deloitte & Touche LLP's independence.
STOCKHOLDER PROPOSALS
Stockholder proposals to be considered at the Annual Meeting of
Stockholders in 2004 must be received by December 16, 2003, to be considered for
inclusion in our proxy materials for that meeting.
Stockholders who wish to make a proposal at the 2004 annual meeting, other
than proposals included in the proxy materials, must notify us between February
11, 2004 and March 12, 2004. If the stockholder does not notify us by March 12,
2004, the proxies will have discretionary authority to vote on a stockholder's
proposal brought before the meeting.
OTHER BUSINESS
The Board of Directors has no knowledge of any other matter that may come
before the annual meeting and does not, itself, currently intend to present any
other such matter. However, if any such other matters properly come before the
meeting or any adjournment of the meeting, the persons named as proxies will
have discretionary authority to vote the shares represented by the accompanying
proxy in accordance with their own judgment.
FORM 10-K
A copy of our Annual Report has been mailed with this Proxy Statement. Our
2002 annual report on Form 10-K filed with the Securities and Exchange
Commission is available to stockholders without charge by writing to Forrester
Research, Inc., Investor Relations, 400 Technology Square, Cambridge,
Massachusetts 02139.
13
Appendix A
DETACH HERE
PROXY
FORRESTER RESEARCH, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY FOR AN ANNUAL MEETING, MAY 13, 2003
The undersigned appoints George F. Colony and Timothy J. Moynihan, Esq.,
and each of them, as proxies, each with the power of substitution, and
authorizes them to represent and vote all shares of common stock of Forrester
Research, Inc. held by the undersigned at the Annual Meeting of Stockholders to
be held at the offices of Ropes & Gray, One International Place, Boston,
Massachusetts 02110 at 10:00 a.m. on Tuesday, May 13, 2003, or any adjournments
thereof, for the following purposes set forth on the reverse side.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY
THE UNDERSIGNED STOCKHOLDER(S). IF NO CONTRARY DIRECTION IS MADE, THE PROXY
WILL BE VOTED FOR THE ELECTION OF THE DIRECTOR.
SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
FORRESTER RESEARCH, INC.
C/O EQUISERVE TRUST COMPANY N.A.
P.O. BOX 8694
EDISON, NJ 08818-8694
DETACH HERE IF YOU ARE RETURNING YOUR PROXY CARD BY MAIL
ZFRRC1
/X/ Please mark / /
votes as in
this example.
1. To elect one Class III director to serve until the 2006 Annual
Meeting of Stockholders;
Nominees: (01) Robert M. Galford
FOR WITHHELD
/ / THE / / FROM THE
NOMINEE NOMINEE
2. To transact such other business as may properly come before the
meeting and any adjournments thereof.
MARK HERE IF YOU PLAN TO ATTEND THE MEETING / /
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT / /
Please sign exactly as your name appears hereon. Where shares are
held jointly, both holders should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full
title as such.
Signature: ________________________________ Date: _________________________
Signature: ________________________________ Date: _________________________