SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Mark One)
[X] Annual report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended February 28, 2001 or
[_] Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from _________ to
__________.
Commission File Number: 0-26281
RED HAT, INC.
(Exact name of registrant as specified in its charter)
Delaware 06-1364387
(State of Incorporation) (I.R.S. Employer Identification No.)
2600 Meridian Parkway, Durham, North Carolina 27713
(Address of principal executive offices) (Zip Code)
(919) 547-0012
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(g) of the Act: Common Stock,
$.0001 par value
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [_]
Aggregate market value of the voting stock held by non-affiliates of the
Registrant as of February 28, 2001 was approximately $758,772,733, based on the
closing price of $6.4375 for our common stock as reported by The Nasdaq National
Market on February 28, 2001. There were 168,485,899 shares of common stock
outstanding as of February 28, 2001
DOCUMENTS INCORPORATED BY REFERENCE
None.
Explanatory Note
Red Hat, Inc. ("Red Hat" or the "Company") hereby amends the following
items of its Annual Report on Form 10-K for the year ended February 28, 2001
(the "Original Filing"). Each of the below referenced Items in Part III is
hereby amended by deleting the Item in its entirety and replacing it with the
Item set forth herein. Any Item in the Original Filing not expressly changed
hereby shall be as set forth in the Original Filing.
Part III
Item 10. Directors and Executive Officers of the Registrant
Executive Officers and Directors
The information required by this Item regarding the identity, business
experience and certain other information concerning the Company's executive
officers and directors appears under the heading "Executive Officers of Red Hat"
in Part I of the Original Filing.
Section 16(a) Beneficial Ownership Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors, executive officers and holders of more than 10% of the
Company's Common Stock (collectively, "Reporting Persons") to file with the
Securities and Exchange Commission (the "SEC" initial reports of ownership and
reports of changes in ownership of Common Stock of the Company. Such persons are
required by regulations of the SEC to furnish the Company with copies of all
such filings. Based on its review of the copies of such filings received by it
with respect to the fiscal year ended February 28, 2001 and written
representations from certain Reporting Persons, the Company believes that all
Reporting Persons complied with all Section 16(a) filing requirements in the
fiscal year ended February 28, 2001, with the following exception(s): one
Initial Statement of Beneficial Ownership of Securities on Form 3 was filed
late, for Eugene J. McDonald and one Statement of Changes in Beneficial
Ownership of Securities on Form 4 was filed late for Timothy J. Buckley.
Item 11. Executive Compensation
Executive Compensation Summary
The following table sets forth the annual and long-term compensation for
each of the past three fiscal years of each of (i) the Company's Chief Executive
Officer and (ii) each of the Company's four most highly compensated executive
officers who were serving as of February 28, 2001 and whose annual compensation
exceeded $100,000 (collectively, with the Chief Executive Officer, the "Named
Officers"):
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
------------
Annual Compensation(1) Awards
_________________________________ ------
Fiscal Salary Bonus Options/ All Other
Name and Principal Position Year ($) ($)(2) SARs(#) Compensation
- --------------------------- ---- -- ------ ------- -------------
Matthew J. Szulik, President and 2001 233,771 2,312 1,000,000 ---
Chief Executive Officer 2000 170,207 100,000 --- ---
1999 53,958 --- 5,345,140 ---
Timothy J. Buckley, Executive Vice 2001 188,333 101,875 200,000 ---
President and Chief Operating Officer 2000 133,751 --- 2,717,240 38,087 (3)
Kevin B. Thompson, Executive Vice 2001 93,625 11,563 350,000 29,167 (3)
President and Chief Financial Officer
Howard A. Jacobson, Senior Vice 2001 129,875 35,250 200,000 ---
President - Corporate Development
Mark H. Webbink, Senior Vice 2001 110,518 7,813 100,000 ---
President, General Counsel and
Secretary
_________________
(1) Excludes perquisites and other personal benefits, the aggregate annual
amount of which for each officer was less than the lesser of $50,000 or 10%
of the total salary and bonus reported.
(2) Bonuses are reported in the year earned, even if actually paid in a
subsequent year.
(3) Relocation compensation.
Option Grants in Last Fiscal Year
The following table sets forth grants of stock options pursuant to the
Company's 1999 Stock Plan and the Company's 1998 Stock Plan granted during the
fiscal year-ended February 28, 2001 to the Named Officers who are listed in the
Summary Compensation Table above:
OPTION/SAR GRANTS IN LAST FISCAL YEAR/(3)/
Potential Realizable Value at
Assumed Annual Rates of Stock Price
Individual Grants (1)(2) Appreciation for Option Term (4)
------------------------ -------------------------------
Number of
Securities Percent
Underlying of Total Exercise
Options/ Options/SARs or
SARs Granted to Base
Granted Employees in Price Expiration
Name (#) Fiscal Year(3) ($/Sh) Date 5%($) 10%($)
---- --- -------------- ----- ---- ----- ------
Matthew J. Szulik, 1,000,000 13.6 27.3125 6/29/10 17,176,685 43,529,090
President and Chief
Executive Officer
Timothy J. Buckley, Senior 200,000 2.7 27.3125 6/29/10 3,435,337 8,705,818
Vice President and Chief
Operating Officer
Kevin B. Thompson 150,000 4.8 17.8125 9/27/10 1,680,328 4,258,281
200,000 7.031 11/28/10 884,352 2,241,121
Howard A. Jacobson 100,000 2.7 21.75 5/12/10 1,367,846 3,466,390
100,000 20.0625 7/26/10 1,261,720 3,197,446
Mark H. Webbink 25,000 1.4 27.875 5/1/10 438,261 1,110,639
75,000 20.0625 7/26/10 946,290 2,398,084
__________________
(1) No stock appreciation rights ("SARs") were granted by the Company in the
fiscal year ended February 28, 2001.
(2) Stock options were granted under the Company's 1999 Stock Option and
Incentive Plan at an exercise price equal to the fair market value of the
Company's Common Stock on the date of grant.
(3) Represents all options granted to the individual during fiscal 2001 as a
percentage of all options granted to employees during fiscal 2001.
(4) Amounts reported in these columns represent amounts that may be realized
upon exercise of the options immediately prior to the expiration of their
term assuming the specified compounded rates of appreciation (5% and 10%) on
the market value of the Company's Common Stock on the date of option grant
over the term of the options. These numbers are calculated based on rules
promulgated by the Securities and Exchange Commission and do not reflect the
Company's estimate of future stock price growth. Actual gains, if any, on
stock option exercises and Common Stock holdings are dependent on the timing
of such exercise and the future performance of the Company's Common Stock.
There can be no assurance that the rates of appreciation assumed in this
table can be achieved or that the amounts reflected will be received by the
individuals.
Option Exercises and Fiscal Year-End Values
The following table sets forth information with respect to options to
purchase the Company's Common Stock granted under the Company's 1998 Stock
Option Plan, as amended, the Company's 1999 Stock Option and Incentive Plan and
the Company's 1999 Employee Stock Purchase Plan to the Named Officers who are
listed in the Summary Compensation Table above, including (i) the number of
shares of Common Stock purchased upon exercise of options in the fiscal year
ended February 28, 2001; (ii) the net value realized upon such exercise; (iii)
the number of unexercised options outstanding at February 28, 2001; and (iv) the
value of such unexercised options at February 28, 2001:
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR-END OPTION/SAR VALUES
Number of Unexercised Value of
Shares Options at Unexercised
Acquired on February 28, 2001 In-the-Money Options
Exercise (#)(1)(2) Value (#) at February 28, 2001 ($)(3)
Name Realized ($) Exercisable/ Unexercisable Exercisable/ Unexercisable
- ---------------------------------------------------------------------------------------------------------------------
Matthew J. Szulik, 0 0 3,345,140 / 1,000,000 $21,534,339 / $0
President and Chief
Executive Officer........
Timothy J. Buckley, 0 0 2,717,240 / 200,000 $17,492,233 / $0
Executive Vice
President and Chief
Operating Officer........
Kevin B. Thompson, 0 0 0 / 350,000 $ 0 / $0
Executive Vice
President and Chief
Financial Officer........
Howard A. Jacobson, Sr 45,000 1,513,328 75000 / 200,000 $ 482,813 / $0
Vice President -
Corporate Development....
Mark H. Webbink, Sr 0 0 / 100,000 $ 0 / $0
Vice President, General
Counsel, and Secretary...
________________
(1) The number of shares disclosed reflects the 2-to-1 stock split effected by
the Company on August 11, 1999 and the 2-to-1 stock split effected by the
Company on January 10, 2000.
(2) Amounts disclosed in this column do not reflect amounts actually received
by the Named Officers but are calculated based on the difference between
the fair market value of the Company's Common Stock on the date of exercise
and the exercise price of the options. The Named Officers will receive cash
only if and when they sell the Common Stock issued upon exercise of the
options, and the amount of cash received by such individuals is dependent
on the price of the Company's Common Stock at the time of such sale.
(3) Value is based on the difference between the option exercise price and the
fair market value at February 28, 2001, the fiscal year-end ($6.4375 per
share as quoted on the Nasdaq National Market), multiplied by the number of
shares underlying the option.
Executive Employment Arrangements
Matthew Szulik, Red Hat's Chief Executive Officer and President, is a party
to an incentive stock option agreement and a non-qualified stock option
agreement, which provides for the lapsing in full of Red Hat's repurchase right
as to any unvested option shares upon the termination of his employment, either
by Red Hat's successor without cause or by Mr. Szulik for good reason, following
a change in control of Red Hat.
Tim Buckley, Red Hat's Executive Vice President and Chief Operating
Officer, is a party to an incentive stock option agreement and a non-qualified
stock option agreement, which provides for the lapsing in full of Red Hat's
repurchase right as to any unvested option shares upon the termination of his
employment, either by Red Hat's successor without cause or by Mr. Buckley for
good reason, following a change in control of Red Hat.
Kevin Thompson, Red Hat's Executive Vice President and Chief Financial
Officer, is a party to a relocation agreement which provides for the forgiveness
in full of Mr. Thompson's obligation to repay the relocation allowance he
received ratably over four years or upon a change of control of Red Hat.
Compensation Committee Interlocks and Insider Participation
No interlocking relationship exists between the Board of Directors or
Compensation Committee and the board of directors or compensation committee of
any other company, nor has any interlocking relationship existed in the past.
Compensation of Directors
Directors are reimbursed for reasonable out-of-pocket expenses incurred in
attending meetings of the Board of Directors and for meetings of any committees
of the Board of Directors on which they serve. Directors are also eligible to
participate in Red Hat's 1999 Stock Option and Incentive Plan. In accordance
with a policy approved by the Board of Directors in June 1999, upon initial
election or appointment to the Board of Directors, new non-employee Directors
will be granted non-qualified stock options to purchase 40,000 shares of common
stock at a price at least equal to the fair market value of Red Hat's common
stock on the date of grant. These options will vest 33 1/3% one year from
grant date and 8 1/3% at the end of each three-month period thereafter.
Upon re-election, non-employee directors will be granted non-qualified stock
options to purchase 20,000 shares of common stock to vest 33 1/3% one year
from the date of re-election and 8 1/3% at the end of each three-month
period thereafter. Each year of a non-employee director's tenure, the director
will be granted non-qualified stock options to purchase 10,000 shares of common
stock that will be fully vested upon grant. In accordance with this policy, in
July, 2002, Mr. McDonald was granted a non-qualified stock option to purchase
40,000 shares of common stock at a price of $20.0625 per share. In July, 2000,
Mr. Kaiser was granted a non-qualified stock option to purchase 20,000 shares of
common stock at a price of $20.0625 per share, which grant was to correct for an
under granting of Mr. Kaiser's original option grant in August, 1999. In
September, 2000, Mr. Kaiser was granted a non-qualified stock option to purchase
10,000 shares of common stock at a price of $18.00 per share. In August, 2000,
Mr. Hahn was granted a non-qualified stock option to purchase 20,000 shares of
common stock at a price of $18.50 per share. In August, 2000, Mr. Harvey was
granted a non-qualified stock option to purchase 10,000 shares of common stock
at a price of $24.188 per share. In January, 2001, Mr. Wellman was granted a
non-qualified stock option to purchase 40,000 shares of common stock at a price
of $8.656 per share. All of these options will vest as provided above.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth as of April 23, 2001 (unless otherwise
indicated), certain information regarding beneficial ownership of the Company's
Common Stock (i) by each person who is known to beneficially own 5% of the
outstanding Common Stock, (ii) by each director of the Company, (iii) by each
executive officer named in the Summary Compensation Table, and (iv) by all
directors and executive officers of the Company as a group:
Amount and Percent of
Nature of Common
Beneficial Stock
Name and Address (1) Title(s) Ownership(2)(3) Outstanding
-------------------- -------- --------------- -----------
Robert F. Young (4)........................... Chairman of the Board and 17,200,023 9.6
5% Beneficial Owner
Marc Ewing (5)................................ 5% Beneficial Owner 10,062,257 5.6
Matthew Szulik (6)............................ President, Chief Executive 5,361,670 3.0
Officer and Director
Frank Batten, Jr. (7)......................... 5% Beneficial Owner 23,656,228 13.2
c/o Landmark Communications
150 W. Brambleton Avenue
Norfolk, VA 23510-2075
William S. Kaiser (8)......................... Director 843,547 *
Eric Hahn..................................... Director 332,646 *
Kevin Harvey (9).............................. Director 4,042,823 2.3
Eugene J. McDonald............................ Director 1,000 *
F. Selby Wellman.............................. Director 0 *
Timothy J. Buckley (10)....................... Executive Vice President 3,846,540 2.2
and Chief Operating Officer
Kevin B. Thompson............................. Executive Vice President 0 *
and Chief Financial Officer
Howard A. Jacobson (11)....................... Senior Vice President - 128,415 *
Corporate Development
Mark H. Webbink (12).......................... Senior Vice President, 25,500 *
General Counsel, and
Secretary
All executive officers and directors as 33,777,164 18.9
a group (11 persons) (13).....................
_______________
* Less than one percent of the outstanding Common Stock.
(1) Unless otherwise indicated, the address for each beneficial owner is c/o
Red Hat, Inc., 2600 Meridian Parkway, Durham, N.C. 27713.
(2) The persons named in the table have sole voting and investment power with
respect to all shares shown as beneficially owned by them, except as noted
in the footnotes below and subject to community property laws, if
applicable.
(3) The inclusion herein of any shares of Common Stock deemed beneficially
owned does not constitute an admission of beneficial ownership of those
shares.
(4) Includes 6,093,569 shares held of record by Nancy Young, Mr. Young's wife,
593,460 held by the Nancy R. Young GRAT dated April 28, 1999, 400,000
shares held of record by the Young Family Trust dated April 28, 1999 and
2,836,320 shares held of record by trusts for the benefit of Mr. Young's
children. Mr. Young disclaims beneficial ownership of these shares. Also
includes 593,460 shares held of record by the Robert F. Young GRAT dated
April 28, 1999.
(5) Includes 400,000 shares held of record by the Ewing Family Trust dated
April 28, 1999 and 2,025,440 shares held of record by trusts for the
benefit of Mr. Ewing's children. Mr. Ewing disclaims beneficial ownership
of these shares. Also includes 1,186,921 shares held of record by the Marc
Ewing GRAT dated April 28, 1999.
(6) Includes 72,000 shares held of record by trusts for the benefit of Mr.
Szulik's children. Mr. Szulik disclaims beneficial ownership of these
shares. Also includes 52,509 shares held of record by the Matthew J. Szulik
GRAT dated May 26, 1999. Also includes 3,711,902 shares of common stock
issuable upon exercise of stock options.
(7) Includes 2,215,753 shares held of record by the 1988 Batten Trust and
21,440,475 shares held of record by the 1998 Frank Batten, Jr. Grantor
Annuity Trust.
(8) Includes 62,101 shares held by Greylock IX Limited Partnership and 62,101
shares held by Greylock IX GP Limited Partnership. Mr. Kaiser is a general
partner of Greylock IX GP Limited Partnership, the general partner of
Greylock IX Limited Partnership. Mr. Kaiser disclaims beneficial ownership
of these shares. Includes 20,000 shares of common stock issuable upon
exercise of stock options.
(9) Includes 3,565,232 shares held by Benchmark Capital Partners II, L.P. Mr.
Harvey is a managing member of Benchmark Capital Management Co. II, L.L.C.,
the general partner of Benchmark Capital Partners II, L.P. Mr. Harvey
disclaims beneficial ownership of these shares. Includes 20,000 shares of
common stock issuable upon exercise of stock options.
(10) Includes 2,717,240 shares of common stock issuable upon exercise of stock
options.
(11) Includes 100,000 shares of common stock issuable upon exercise of stock
options.
(12) Includes 25,000 shares of common stock issuable upon exercise of stock
options.
(13) Includes 6,594,142 shares of common stock issuable upon exercise of stock
options.
Item 13. Certain Relationships and Related Transactions
As of the date hereof, Kevin B. Thompson is obligated to the Company for a
$200,000 relocation advance. The advance is non-interest bearing and is
forgiven (a) ratably over four years provided Mr. Thompson remains in the
employment of the Company or (b) immediately upon any termination of Mr.
Thompson's employment without cause.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this amendment to be signed on its
behalf by the undersigned, thereunto duly authorized.
RED HAT, INC.
By: /s/ Matthew J. Szulik
----------------------
Matthew J. Szulik
President and Chief Executive Officer
Date: April 26, 2001