0001012870-01-502476.txt : 20011030
0001012870-01-502476.hdr.sgml : 20011030
ACCESSION NUMBER: 0001012870-01-502476
CONFORMED SUBMISSION TYPE: DEF 14A
PUBLIC DOCUMENT COUNT: 1
CONFORMED PERIOD OF REPORT: 20011130
FILED AS OF DATE: 20011026
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: OPENWAVE SYSTEMS INC
CENTRAL INDEX KEY: 0001082506
STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372]
IRS NUMBER: 943219054
STATE OF INCORPORATION: DE
FISCAL YEAR END: 0630
FILING VALUES:
FORM TYPE: DEF 14A
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-16073
FILM NUMBER: 1767746
BUSINESS ADDRESS:
STREET 1: 800 CHESAPEAKE DRIVE
CITY: REDWOOD CITY
STATE: CA
ZIP: 94063
BUSINESS PHONE: 6505620200
MAIL ADDRESS:
STREET 1: 800 CHESAPEAKE DRIVE
CITY: REDWOOD CITY
STATE: CA
ZIP: 94063
FORMER COMPANY:
FORMER CONFORMED NAME: PHONE COM INC
DATE OF NAME CHANGE: 19990504
FORMER COMPANY:
FORMER CONFORMED NAME: UNWIRED PLANET INC
DATE OF NAME CHANGE: 19990324
DEF 14A
1
ddef14a.txt
DEFINITIVE PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Checkthe appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of
[X] Definitive Proxy Statement the Commission Only (as
[_] Definitive Additional Materials permitted by Rule 14a-6(e)(2))
[_] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
OPENWAVE SYSTEMS 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)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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[LOGO] OPENWAVE LOGO
1400 SEAPORT BOULEVARD
REDWOOD CITY, CALIFORNIA 94063
-----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 30, 2001
-----------------
To the stockholders of Openwave Systems Inc.:
Notice Is Hereby Given that the Annual Meeting of Stockholders of Openwave
Systems Inc., a Delaware corporation (the "Company"), will be held on Friday,
November 30, 2001, at 8:30 a.m. PST at the Company's offices located at 1400
Seaport Boulevard, Redwood City, California 94063 for the following purposes:
(1) To elect two members of the Board of Directors, each to serve a
three-year term or until his successor has been elected and qualified.
(2) To ratify the selection of KPMG LLP as independent auditors of the
Company for its fiscal year ending June 30, 2002.
(3) To approve an amendment to the 1999 Openwave Systems Inc. Employee Stock
Purchase Plan to increase the number of shares reserved for issuance thereunder
by an additional 2 million shares.
(4) To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on October 1, 2001,
as the record date for the determination of stockholders entitled to notice of
and to vote at this Annual Meeting and at any adjournment or postponement
thereof.
By Order of the Board of Directors
/s/ Steve Peters
Steve Peters
Secretary
Redwood City, California
November 1, 2001
All stockholders are cordially invited to attend the meeting in person. Whether
or not you expect to attend the meeting, please complete, date, sign and return
the enclosed proxy as promptly as possible in order to ensure your
representation at the meeting. A return envelope (which is postage prepaid if
mailed in the United States) is enclosed for that purpose. You may also choose
to vote by the Internet or by telephone. Please refer to the enclosed proxy
card for instructions. Even if you have given your proxy, you may still vote in
person if you attend the meeting. Please note, however, that if your shares are
held of record by a broker, bank or other nominee and you wish to vote at the
meeting, you must obtain from the record holder a proxy issued in your name.
OPENWAVE SYSTEMS INC.
1400 SEAPORT BOULEVARD
REDWOOD CITY, CALIFORNIA 94063
-----------------
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
November 30, 2001
-----------------
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed proxy is solicited on behalf of the Board of Directors of
Openwave Systems Inc., a Delaware corporation (the "Company"), for use at the
Annual Meeting of Stockholders to be held on Friday, November 30, 2001 at 8:30
a.m. PST (the "Annual Meeting"), or at any adjournment or postponement thereof,
for the purposes set forth herein and in the accompanying Notice of Annual
Meeting. The Annual Meeting will be held at the Company's offices located at
1400 Seaport Boulevard, Redwood City, California 94063. The Company intends to
mail this proxy statement and accompanying proxy card on or about November 1,
2001, to all stockholders entitled to vote at the Annual Meeting.
Solicitation
The Company will bear the entire cost of solicitation of proxies, including
preparation, assembly, printing and mailing of this proxy statement, the proxy
and any additional information furnished to stockholders. Copies of
solicitation materials will be furnished to banks, brokerage houses,
fiduciaries and custodians holding in their names shares of common stock
beneficially owned by others to forward to such beneficial owners. The Company
may reimburse persons representing beneficial owners of common stock for their
costs of forwarding solicitation materials to such beneficial owners. Original
solicitation of proxies by mail may be supplemented by telephone, Internet or
personal solicitation by directors, officers or other regular employees of the
Company. No additional compensation will be paid to directors, officers or
other regular employees for such services.
Voting Rights and Outstanding Shares
Only holders of record of common stock at the close of business on October
1, 2001, will be entitled to notice of and to vote at the Annual Meeting. At
the close of business on October 1, 2001, the Company had outstanding and
entitled to vote 173,603,977 shares of common stock.
Each holder of record of common stock on such date will be entitled to one
vote for each share held on all matters to be voted upon at the Annual Meeting.
All votes will be tabulated by the Inspector of Elections (the "Inspector")
appointed for the meeting, who will separately tabulate affirmative and
negative votes, abstentions and broker non-votes. The Inspector will also
determine whether or not a quorum is present. Abstentions will be counted
towards the tabulation of votes cast on proposals presented to the stockholders
and will have the same effect as negative votes. Broker non-votes are counted
towards a quorum, but are not counted for any purpose in determining whether a
matter has been approved.
Any proxy which is returned using the form of proxy enclosed and which is
not marked as to a particular item will be voted FOR the election of directors,
FOR ratification of the appointment of the designated independent auditors, FOR
approval of the amendment to the 1999 Openwave Systems Inc. Employee Stock
1
Purchase Plan, formerly named the Phone.com 1999 Employee Stock Purchase Plan
(the "Openwave Purchase Plan") and as the proxy holders deem advisable on other
matters that may come before the meeting, as the case may be with respect to
the item not marked. If a broker indicates on the enclosed proxy or its
substitute that it does not have discretionary authority as to certain shares
to vote on a particular matter ("broker non-votes"), those shares will not be
considered as present with respect to that matter.
Voting Electronically via the Internet or by Telephone
Stockholders whose shares are registered in their own names may vote either
via the Internet or by telephone. Specific instructions to be followed by any
registered stockholder interested in voting via Internet or by telephone are
set forth on the enclosed proxy card.
If your shares are registered in the name of a bank or brokerage firm, you
have the option to vote your shares electronically over the Internet or by
telephone. Please refer to your proxy card for instructions. If your proxy card
does not reference Internet or telephone information, please complete and
return the proxy card in the self-addressed, postage paid envelope provided.
Stockholders who elected to receive the 2001 Proxy Statement and Annual Report
over the Internet will be receiving an e-mail on or about November 1, 2001 with
information on how to access stockholder information and instructions for
voting.
Revocability of Proxies
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary of the Company at the Company's principal executive office, 1400
Seaport Boulevard, Redwood City, California 94063, a written notice of
revocation or a duly executed proxy bearing a later date, or it may be revoked
by attending the meeting and voting in person. Attendance at the meeting will
not, by itself, revoke a proxy.
Stockholder Proposals
For a stockholder's proposal to be included in the Company's Proxy Statement
for the 2002 Annual Meeting of Stockholders, the stockholder must follow the
procedures of Rule 14a-8 under the Securities Exchange Act of 1934, as amended,
and the proposal must be received by the Company not later than August 2, 2002.
To be timely, stockholder proposals submitted outside the processes of Rule
14a-8 must be received by the Company after September 1, 2002 and before
November 10, 2002 unless the Annual Meeting is called for a date earlier than
September 30, 2002 or later than January 29, 2003, in which case such proposal
must be received not later than the close of business on the 10th day following
the day on which notice of the date of the meeting is mailed or public
disclosure of the date of the meeting is made, whichever occurs first.
2
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Board of Directors is currently comprised of five directors.
The Amended and Restated Certificate of Incorporation divides the Board into
three classes; Class I, Class II and Class III, with members of each class
serving staggered three-year terms. One class of directors is elected by the
stockholders at each annual meeting to serve a three-year term or until their
successors are duly elected and qualified. The Class II directors, Roger Evans
and Bernard Puckett, will stand for reelection at the Annual Meeting. The Class
I director, Donald Listwin, will stand for reelection at the 2002 annual
meeting and the Class III directors, John MacFarlane and Andrew Verhalen, will
stand for reelection at the 2003 annual meeting. If any nominee for any reason
is unable to serve, or for good cause will not serve, as a director, the
proxies may be voted for such substitute nominee as the proxy holder may
determine. We are not aware of any nominee who will be unable to serve, or for
good cause will not serve, as a director.
Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote.
Nominees
The names of the nominees for election as Class II directors at the Annual
Meeting and of the incumbent Class I and Class III directors, and certain
information about them as of June 30, 2001, are set forth below:
Name Age Positions and Offices Held With the Company
---- --- -------------------------------------------
Nominees for election as Class II directors
for a term expiring in 2004:
Roger Evans/ (1) (2)/...................... 56 Director
Bernard Puckett/(2)/....................... 56 Director
Incumbent Class I director for a term
expiring in 2002:
Donald Listwin/(3)/........................ 42 Chairman of the Board, Chief Executive Officer and
President
Incumbent Class III director for a term
expiring in 2002:
John MacFarlane............................ 35 Chief Technology Officer and Director
Andrew Verhalen/(1) (2)/................... 45 Director
--------
(1) Member of the Compensation Committee
(2) Member of the Audit Committee
(3) Member of the Stock Option Committee
Business Experience of Directors
Roger Evans has served as a Director (serving as director of Phone.com prior
to the merger of Phone.com and Software.com) since 1995. Mr. Evans has been
associated with Greylock Partners venture capital firm since 1989, and has
served as a general partner since January 1991. At Greylock Partners, Mr. Evans
focuses on the data communication industry. He also serves as a director of
Copper Mountain Networks and several other privately-held companies. Mr. Evans
is a graduate of Cambridge University.
Donald Listwin has served as our Chairman of the Board since 2001. Mr.
Listwin has over 20 years of experience in the networking industry, including
10 years at Cisco Systems. While at Cisco, he led many growth
3
strategies, such as entry into IBM Internetworking, the access market, and the
service provider market. He also spearheaded Cisco's strategy to build the
company's "New World" communications network created to support the service
provider market. Mr. Listwin serves on the Board of Directors of JDS Uniphase,
TIBCO and MarketItRight.com. He also is Chairman of the Board of Directors for
NetAid, a worldwide Internet-based program designed to empower individuals
toward the goal of eradicating poverty in developing nations. Mr. Listwin holds
a B.S. in Electrical Engineering from the University of Saskatchewan, Canada.
John MacFarlane has served as a Director since 2000. Prior to the merger of
Phone.com and Software.com, Mr. MacFarlane was the founder, CEO and Director of
Software.com. Before forming Software.com, he was with Harris Corporation,
working in the Defense Communications division on military communications
systems. Mr. MacFarlane has also worked for the U.S. Navy on optical signal
processing. Mr. MacFarlane received his B.S. in Electrical Engineering from
Rensselaer Polytechnic Institute and his M.S. in Electrical Engineering from
the University of California at Santa Barbara.
Bernard Puckett has served as a Director of the Company since 2000. Prior to
the merger of Phone.com and Software.com, Mr. Puckett was a director of
Software.com from July 1997 to 2000. From January 1994 to January 1996, Mr.
Puckett was President and CEO of Mobile Telecommunications Technologies. From
1967 to 1994, Mr. Puckett was at IBM Corp., where he held a variety of
positions including, Senior Vice President, Corporate Strategy and Development
and Vice President and General Manager, Applications Software. Mr. Puckett
serves on the boards of directors of P-COM, R.R. Donnelley & Sons Company,
Iomega Corporation and IMS Health. Mr. Puckett received his B.S. in mathematics
from the University of Mississippi.
Andrew Verhalen has served as a Director of the Company (serving as director
of Phone.com prior to the merger of Phone.com and Software.com) since 1995. Mr.
Verhalen is a general partner of Matrix Partners, a venture capital firm, which
he joined in 1992. From 1986 to 1991, Mr. Verhalen worked at 3Com Corporation,
a network equipment manufacturer, initially as a Vice President of Marketing,
then as Vice President and General Manager of the Network Adapter Division.
Prior to joining 3Com, he worked for five years in the Microprocessor Group at
Intel Corporation, in various marketing, management and strategic planning
roles. He currently is a director of Copper Mountain Networks, WatchGuard
Technologies, Blue Martini Software, Inc., Turnstone Systems, Inc. and several
private technology companies. Mr. Verhalen holds a B.S. degree in Electrical
Engineering, an M. Eng. degree in Electrical Engineering and an M.B.A. degree
from Cornell University.
Board Committees and Meetings
During the fiscal year ended June 30, 2001 the Board of Directors held
eleven meetings. During this period, each Board member attended 75% or more of
the aggregate of the meetings of the Board and of the committees on which he
served that were held during the period for which he was a director or
committee member, respectively.
The Board has three committees: an Audit Committee, a Compensation Committee
and a Stock Option Committee.
The Audit Committee reviews our internal accounting procedures and considers
and reports to the Board of Directors with respect to other auditing and
accounting matters, including the selection of our independent auditors, the
scope of annual audits, fees to be paid to our independent auditors and the
performance of our independent auditors. The Audit Committee consists of three
non-employee directors: Roger Evans, Bernard Puckett and Andrew Verhalen. The
Audit Committee met six times during the fiscal year ended June 30, 2001.
The Compensation Committee reviews certain salaries, benefits and stock
option grants for the Company's executive officers, directors and certain
employees and consultants. The Compensation Committee also administers our
stock option and other employee benefit plans. The Compensation Committee
consists of two
4
non-employee directors: Roger Evans and Andrew Verhalen. The Compensation
Committee acted by unanimous written consent on twenty-two separate occasions
and met once during the fiscal year ended June 30, 2001.
The Stock Option Committee has concurrent authorization with the
Compensation Committee to make option grants under the Company's stock option
plans to eligible individuals other than executive officers of the Company and
within certain limitations prescribed by the Board of Directors. This committee
consists of Mr. Listwin. The Stock Option Committee acted by written consent on
thirty-eight separate occasions.
Director Compensation
We reimburse our non-employee directors for all out-of-pocket expenses
incurred in the performance of their duties as directors of the Company. We
currently do not pay fees to our directors for attendance at meetings or for
their services as members of the board of directors.
In the fiscal year ended 2001, non-employee directors were eligible to
participate in the Openwave Systems Inc. 1999 Directors' Stock Option Plan (the
"Directors' Stock Plan"), and each to receive an automatic grant of an option
to purchase 5,000 shares at the first board meeting of each calendar quarter.
These options were granted at an exercise price equal to the fair market value
on the date of grant and were 100% vested at the time of the grant.
Recommendation of the Board of Directors
The Board of Directors recommends that the stockholders vote FOR the
election of each of the named nominees.
5
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected KPMG LLP as the Company's independent
auditors for the fiscal year ending June 30, 2002 and has further directed that
management submit the selection of independent auditors for ratification by the
stockholders at the Annual Meeting. KPMG LLP has audited the Company's
financial statements since December 1994. Representatives of KPMG LLP are
expected to be present at the Annual Meeting, will have an opportunity to make
a statement if they so desire and will be available to respond to appropriate
questions.
Stockholder ratification of the selection of KPMG LLP as the Company's
independent auditors is not required by the Company's Bylaws or otherwise.
However, the Board is submitting the selection of KPMG LLP to the stockholders
for ratification as a matter of good corporate practice. If the stockholders
fail to ratify the selection, the Audit Committee and the Board will reconsider
whether or not to retain that firm. Even if the selection is ratified, the
Audit Committee and the Board in their discretion may direct the appointment of
different independent auditors at any time during the year if they determine
that such a change would be in the best interests of the Company and its
stockholders.
Audit Fees
Aggregate fees billed by KPMG LLP for the audit of the Company's financial
statements for the fiscal year ended June 30, 2001 and for reviews of the
Company's interim financial statements during such period were approximately
$400,000.
Financial Information Systems And Implementation Fees
There were no fees billed by KPMG LLP for financial information systems and
implementation for the fiscal year ended June 30, 2001.
All Other Fees
The aggregate fees billed by KPMG LLP for all other professional fees for
the fiscal year ended June 30, 2001 were approximately $2,632,000. Other
professional services included services rendered in connection with
registration statements related to merger and acquisition transactions, comfort
letters and consents and consultation on accounting standards or transactions.
These services did not include information technology consulting fees.
The Audit Committee has determined the rendering of non-audit services by
KPMG LLP is compatible with maintaining the auditor's independence.
Recommendation of the Board of Directors
The Board of Directors recommends that the stockholders vote FOR the
ratification of the appointment of KPMG LLP as the independent auditors of the
Company for its fiscal year ending June 30, 2002.
6
PROPOSAL 3
INCREASE IN NUMBER OF SHARES AVAILABLE UNDER EMPLOYEE STOCK PURCHASE PLAN
In March 1999, the Company adopted the Openwave Purchase Plan. A total of
1,200,000 shares of common stock were initially reserved for issuance under the
Openwave Purchase Plan. The Openwave Purchase Plan provides for an automatic
annual increase on the first day of the Company fiscal years beginning in 2000
through 2004 equal to the lesser of 1,000,000 shares or 1% of the Company's
outstanding common stock on the last day of the immediately preceding fiscal
year. For the fiscal year commencing on July 1, 2001, the number of shares
issuable under the Openwave Purchase Plan automatically increased by 1,000,000
shares of common stock. In addition to the automatic increase described in the
previous sentence, this proposal requests that stockholders increase the number
of shares reserved for issuance under the Openwave Purchase Plan by an
additional 2 million shares of common stock.
Pursuant to the terms of the merger agreement with Software.com, Inc., the
1999 Software.com, Inc. Employee Stock Purchase Plan was suspended after April
30, 2001. As a result, there is a need to increase the number of shares
reserved for issuance under the Openwave Purchase Plan to cover all eligible
employees of the Company now covered under the Openwave Purchase Plan.
The Openwave Purchase Plan is intended to qualify under Section 423 of the
Internal Revenue Code and contains four six-month purchase periods within
twenty-four month offering periods. Eligible employees may purchase common
stock through payroll deductions of up to 20% of compensation. The price of
common stock purchased under the Openwave Purchase Plan is the lower of 85% of
the fair market value of the Company's common stock on the first business day
of each offering period and the last day of each purchase period.
For the fiscal year ended June 30, 2001, employees purchased 779,425 shares
of common stock at an average price of $13.72 per share under the Openwave
Purchase Plan. As of June 30, 2001, 1,778,963 shares remained available for
future issuance under the Openwave Purchase Plan.
Distribution of the additional 2 million shares are not yet determinable, as
distribution depends on the level of participation. Therefore, no new plan
benefits table has been provided.
Vote Required
The affirmative vote of a majority of all of the votes cast at the Annual
Meeting is required to approve the proposed amendment to the Plan for purposes
of Section 423 of the Internal Revenue Code of 1986, as amended. Abstentions
and broker non-votes as to this proposal will have no effect on the outcome of
the vote.
Recommendation of the Board of Directors
The Board of Directors recommends that the stockholders vote FOR the
amendment to the Employee Stock Purchase Plan to increase the number of shares
reserved for issuance thereunder by 2 million shares.
7
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership
of the Company's common stock as of September 30, 2001 by: (a) each nominee for
director; (b) each of the executive officers and individuals named in the
Summary Compensation Table; (c) all executive officers and directors of the
Company as a group; and (d) all those known by the Company to be beneficial
owners of more than five percent of its common stock.
Except as indicated in the footnotes to this table and under applicable
community property laws, to our knowledge, the persons named in the table have
sole voting and investment power with respect to all shares of common stock.
For the purposes of calculating percent ownership, as of September 30, 2001,
173,599,935 shares were issued and outstanding, and, for any individual who
beneficially owns shares represented by options exercisable on or before
November 30, 2001, these shares are treated as if outstanding for that person,
but not for any other person. Unless otherwise indicated, the address of each
of the individuals named below is: c/o Openwave Systems Inc., 1400 Seaport
Boulevard, Redwood City, California 94063.
The following table indicates those owners and their total number of
beneficially-owned shares, including shares subject to options exercisable
within 60 days of September 30, 2001:
Beneficial Ownership/(1)/
-----------------------
Percent
Number of of
Beneficial Owner Shares Total
---------------- ---------- -------
Alan Black/(2)/......................................................... 471,221 *
Roger Evans/(3)/........................................................ 287,511 *
Donald Listwin/(4)/..................................................... 450,544 *
John MacFarlane/(5)/.................................................... 7,893,503 4.55%
Michael Mulica.......................................................... 30,576 *
Bernard Puckett/(6)/.................................................... 164,293 *
Allen Snyder/(7)/....................................................... 51,006 *
Andrew Verhalen/(8)/.................................................... 250,152 *
All directors and executive officers as a group (8 persons)............. 9,598,806 5.53%
FMR Corp./(9)/.......................................................... 11,261,608 6.49%
Alain Rossmann/(10) (11)/............................................... 5,737,782 3.31%
--------
* Less than 1% of the outstanding shares of common stock.
(1) This table is based upon information supplied by officers, directors and
principal stockholders and Schedules 13D and 13G, if any, filed with the
Securities and Exchange Commission. Unless otherwise indicated in the
footnotes to this table and subject to community property laws where
applicable, the Company believes that each of the stockholders named in
this table has sole voting and investment power with respect to the shares
indicated as beneficially owned. Applicable percentages are based on
173,599,935 outstanding shares on September 30, 2001 adjusted as required
by rules promulgated by the SEC.
(2) Includes 230,003 shares held by The Alan J. Black Community Trust dated
June 1994. Also includes 211,218 shares issuable upon exercise of
outstanding options exercisable on or before November 30, 2001.
(3) Includes 5,132 shares held by Evans Children's Trust u/a/d 12/20/93. Also
includes 20,000 shares issuable upon exercise of outstanding options
exercisable on or before November 30, 2001.
(4) Includes 11,500 shares held by Baleri Fund, LLC, a limited liability
company of which Mr. Listwin and his wife are the sole members.
(5) Includes 540,005 shares issuable upon exercise of outstanding options
exercisable on or before November 30, 2001.
(6) Includes 140,136 shares issuable upon exercise of outstanding options
exercisable on or before November 30, 2001.
8
(7) Includes 50,000 shares issuable upon exercise of outstanding options
exercisable on or before November 30, 2001.
(8) Includes 103 shares held by Matrix IV Entrepreneurs Fund L.P. and 1,892
shares held by Matrix Partners IV, L.P. (collectively, the "Matrix
Entities"). Mr. Verhalen disclaims beneficial ownership of shares held by
the Matrix Entities, except to the extent of his pecuniary interest
therein. Also, includes 86,666 shares issuable upon exercise of
outstanding options exercisable on or before November 30, 2001.
(9) The business address of FMR Corp. is 82 Devonshire Street, Boston, MA
02109. As reported in Schedule 13G, dated September 10, 2001, FMR Corp., a
parent company, has sole power to vote of 339,970 shares and sole power to
dispose of or to direct the disposition with respect to 11,261,608 shares.
Various persons have the right to receive or the power to direct the
receipt of dividends from, or the proceeds from the sale of, the common
stock of the Company. No one person's interest in the common stock of the
Company is more than five percent of the total outstanding common stock.
(10) Includes 300,000 shares held by a grantor retained annuity trust, and
149,664 shares held by Platane Investments Limited. Mr. Rossmann is the
manager of Platane Investments Limited, and disclaims beneficial ownership
of these shares except to the extent of his pecuniary interest therein.
(11) According to information contained in a Form 4 filed with the SEC on May
31, 2001 and Form 144 filings as of September 30, 2001.
Section 16 Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers, and
persons who own more than ten percent of a registered class of the Company's
equity securities, to file with the SEC initial reports of ownership and
reports of changes in ownership of common stock and other equity securities of
the Company. Officers, directors and greater than ten percent stockholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and representations that no other reports were
required, during the fiscal year ended June 30, 2001, all Section 16(a) filing
requirements applicable to its officers, directors and greater than ten percent
beneficial owners were complied with, except as set forth below. Mr. Verhalen
did not file timely reports in connection with certain acquisitions with the
liquidation of assets of NetCentric Corporation in which the Matrix Entities
received shares, and as a result of stock distributions made by the Matrix
Entities. Mr. Verhalen disclaims beneficial ownership of shares held by the
Matrix Entities, except to the extent of his pecuniary interest therein. Mr.
Mulica filed a late Form 4 in May 2001 in which he reported: (a) he was granted
an option to purchase 20,000 shares of common stock on July 19, 2000 under the
Company's 1996 Stock Option Plan; (b) exercised the option on August 7, 2000;
and (c) sold the 20,000 shares of common stock on May 31, 2001.
9
MANAGEMENT
Executive Officers
Our executive officers and their ages as of June 30, 2001 are as follows:
Name Age Position
---- --- --------
Donald Listwin..... 42 Chairman of the Board, Chief Executive Officer and
President
John MacFarlane.... 35 Chief Technology Officer and Director
Alan Black......... 41 Senior Vice President, Corporate Affairs and Chief
Financial Officer
Michael Mulica..... 38 Senior Vice President, Office of Customer Operations,
Sales
Allen Snyder....... 47 Senior Vice President, Office of Customer Operations,
Customer Advocacy
Kevin Kennedy*..... 45 Chief Operating Officer
--------
* Kevin Kennedy became an executive officer as of August 23, 2001.
For biographical summaries of Donald Listwin and John MacFarlane, see
"Election of Directors." The address of each executive officer is: c/o Openwave
Systems Inc., 1400 Seaport Boulevard, Redwood City, CA 94063.
Alan Black has served as Senior Vice President, Corporate Affairs and Chief
Financial Officer since November 2000. Prior to the merger of Phone.com and
Software.com, he was the Vice President of Finance and Administration, Chief
Financial Officer, and Treasurer of Phone.com. Prior to joining Phone.com, Mr.
Black served as Chief Financial Officer at Vicor, Inc., a provider of Internet
information capture and delivery systems for financial services firms. He also
spent time at KPMG LLP. Mr. Black holds a Bachelor's of Commerce and a graduate
diploma in Public Accountancy from McGill University. He is a member of the
California Society of Certified Public Accountants and the Canadian Institute
of Chartered Accountants.
Michael Mulica has served as Senior Vice President, Office of Customer
Operations, Sales since November 2000. Prior to the merger of Phone.com and
Software.com, Mr. Mulica was the Senior Vice President of Worldwide Sales,
Consulting and Support for Phone.com. Before joining the Company, he served as
President of Global Sales and Marketing for Adaptive Broadband, Inc. and Vice
President of Worldwide Sales for Motorola's Wireless Alliance Group. Prior to
Motorola, Mr. Mulica spent six years at Tandem Computer. Mr. Mulica holds an
M.B.A. from the J.L. Kellogg Graduate School of Management at Northwestern
University and a B.S. degree in Business from Marquette University.
Allen Snyder has served as Senior Vice President, Office of Customer
Operations, Customer Advocacy since December 2000. Mr. Snyder has over 25 years
of experience in the high-tech industry, including 19 years of management
leadership in customer service, software support, and professional services.
Before joining the Company, he served as Senior Vice President, Oracle Support
Services, Americas and was Vice President of Operations, Worldwide Services at
Digital Equipment Corporation. Mr. Snyder serves on the Board of Directors of
Storability Inc. and Equel Corporation. Mr. Snyder is a graduate of the United
States Air Force's combined Electrical Engineering and Computer Technologies
program. He received an ASEE from USAF/Allegheny College and is a graduate of
Northeastern University's Executive Management Development Program.
Kevin Kennedy has served as Chief Operating Officer since August 2001. Prior
to joining the Company, Mr. Kennedy spent seven years at Cisco Systems and 17
years at Bell Laboratories where he was responsible for
10
establishing vision, shaping strategy, and driving the execution and timely
delivery of innovative, value-added solutions. In 1987, Mr. Kennedy was a
congressional fellow to the US House of Representatives Committee on Science,
Space and Technology, assisting Congress in understanding technology policy and
U.S. high-technology competitiveness. Mr. Kennedy currently serves as a Telecom
Fund Technical Advisor to Pictet & Cie, a technical advisor to Cisco Systems,
and sits on the Quantum Board of Directors. Mr. Kennedy holds a B.S. Degree in
Mechanical Engineering from Lehigh University in Pennsylvania, a M.S. and Ph.D.
from Rutgers University in New Jersey. He has taught at Rutgers and published
more than 30 technical articles on computational methods and issues of
technology management.
Compensation of Executive Officers
Summary Compensation Table
The following table indicates information concerning compensation of our
Chief Executive Officer and our four most highly compensated executive officers
other than the Chief Executive Officer whose salary and bonus exceeded $100,000
for the fiscal years ended June 30, 1999, 2000 and 2001.
Long-Term Compensation
-------------------------
Annual
Compensation Awards
------------------- -------------------------
Restricted Securities
Fiscal Stock Underlying All Other
Year Salary ($) Bonus ($) Award(s) ($) Options (#) Compensation ($)
Name and Principal Position ------ ---------- --------- ------------ ----------- ----------------
Donald Listwin/(1)/.................. 2001 202,724 -- 5,408,000/(2)/ -- 135/(3)/
Chairman, President 2000 -- -- -- -- --
and Chief Executive Officer 1999 -- -- -- -- --
John MacFarlane...................... 2001 176,667 -- -- -- 182/(3)/
Chief Technology Officer 2000 -- -- -- -- --//
1999 -- -- -- -- --
Michael Mulica....................... 2001 230,000 758,320 -- 420,000 150/(3)/
Senior Vice President, 2000 146,667 771,560/(4)/ -- 936,667/(5)/ 576/(3)/
Office of Customer Operations, Sales 1999 -- -- -- -- --
Alan Black........................... 2001 215,000 15,159 250,000 180/(3)/
Chief Financial Officer and 2000 170,500 -- -- -- 576/(3)/
Senior Vice President, Corporate 1999 155,000 -- -- 100,000 917/(3)/
Affairs
Allen Snyder/(6)/.................... 2001 115,051 150,000 -- 300,000 150/(3)/
Senior Vice President, 2000 -- -- -- -- --
Office of Customer Operations, 1999 -- -- -- -- --
Customer Advocacy
Alain Rossmann/(7)/.................. 2001 319,345 21,837 -- -- 203/(3)/
2000 275,000 -- -- -- 576/(3)/
1999 200,000 -- -- -- 1,092/(3)/
--------
(1) Employment commenced in September 2000.
(2) Consists of a grant of 200,000 shares of common stock with a fair market
value of $27.04 per share. Mr. Listwin cancelled options to purchase
6,000,000 shares of the Company's common stock in April 2001. In
consideration of the cancellation, the Company agreed to grant Mr. Listwin,
on a date on or between six months and one day to seven months after the
cancellation date, an option to purchase 5,800,000 shares of common stock
at fair market value on the date of grant. The replacement option shall
have the same vesting schedule as the cancelled options. Because no
replacement option grant was made during the Company's fiscal year ended
June 30, 2001, the information required by Item 402(i)((1) of Regulation
S-K is not applicable.
11
(3) Consists of life insurance premiums paid by the Company.
(4) Consists of sales commissions.
(5) Includes option grant for 50,000 shares of common stock with an exercise
price of $55.16, which was one-half of the fair market value on the grant
date.
(6) Employment commenced in January 2001.
(7) Mr. Rossmann resigned as Chief Executive Officer of the Company in
September 2000, and his position as a director and Chairman of the Board of
the Company in June 2001.
Option Grants In Last Fiscal Year
The following table provides information concerning grants of options to
purchase our common stock made during the fiscal year ended June 30, 2001 to
the named executive officers.
The potential realizable values are based on an assumption that the price of
our common stock will appreciate at the compounded annual rate shown from the
date of grant until the end of the option term. These values do not take into
account amounts required to be paid as income taxes under the Internal Revenue
Code and any applicable state laws or option provisions providing for
termination of an option following termination of employment,
non-transferability or vesting. These amounts are calculated based on the
requirements promulgated by the Securities and Exchange Commission and do not
reflect our estimate of future stock price growth of the shares of our common
stock.
Potential Realizable Value at
Number of Percent of Assumed Annual Rates of
Securities Total Options Stock Price Appreciation for
Underlying Granted to Option Term
Option Employees in Exercise Price Expiration -----------------------------
Name Granted (#) Fiscal Year (%)/(1)/ ($/Share) Date 5% 10%
---- ----------- ------------------- -------------- ---------- ---------- ----------
Donald Listwin/(2)/.... -- -- -- -- -- --
John MacFarlane........ -- -- -- -- -- --
Alan Black............. 250,000 1.4 35.00-97.13 7/10-1/11 11,765,242 29,815,435
Michael Mulica......... 420,000 2.3 1.00-84.69 7/10-1/11 11,527,742 26,645,702
Allen Snyder........... 300,000 1.7 27.56 1/8/11 5,200,172 13,178,257
Alain Rossmann......... -- -- -- -- -- --
--------
(1) Shares underlying options granted totaled approximately 23.9 million shares
of which 6 million options were granted to and subsequently cancelled by
Mr. Listwin and not included in percentage calculation.
(2) Please see footnote 2 to Summary Compensation Table.
Aggregated Option Exercises In Last Fiscal year and Fiscal Year-End Option
Values
The following table describes for the named executive officers the
exercisable and unexercisable options held by them as of June 30, 2001.
Number of Securities
Underlying Unexercised Value of Unexercised In-The-
Options Held At Fiscal Money Options at Fiscal
Shares Year-End (#) Year-End ($)
Acquired on Value ------------------------- ----------------------------
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ ------------ ----------- ------------- ----------- -------------
Donald Listwin..... -- -- -- -- -- --
John MacFarlane.... 318,072 26,940,734 497,245 553,609 16,125,655 17,953,539
Alan Black......... -- -- 36,562 313,438 466,162 2,641,587
Michael Mulica..... 20,000 1,532,500 341,176 995,491 -- --
Allen Snyder....... -- -- -- 300,000 -- 2,141,250
Alain Rossmann..... -- -- -- -- -- --
12
The "Value of Unexercised In-the-Money Options at Fiscal Year End" is based
on a value of $34.70 per share, the fair market value of our common stock as of
June 30, 2001, less the per share exercise price, multiplied by the number of
shares issued upon exercise of the option. All options were granted under the
1995 plan (formerly the Software.com, Inc. 1995 Stock Plan) and the 1996 plan
(formerly the Phone.com, Inc. 1996 Stock Plan).
Employment Agreements and Change of Control Agreements with Executive Officers.
Except as described below, we have not entered into employment agreements
with our named executive officers, and their employment may be terminated at
any time at the discretion of our Board of Directors.
Pursuant to an employment agreement entered into between the Company and
Donald Listwin, Mr. Listwin earns an annual base salary of $250,000. Mr.
Listwin is also eligible for annual incentive compensation equal to at least
50% of his annual base salary with an opportunity to earn up to two times the
target amount if he attains objectives established by the Compensation
Committee.
If Mr. Listwin's employment is terminated for any reason other than for
cause, death, or disability or as a result of an "involuntary termination," he
will be entitled to severance pay consisting of his annual base salary and
target bonus amount, 50% of his then unvested stock options and restricted
stock will become completely vested and exercisable, and the Company will
provide health insurance and life insurance benefits for one year following the
termination unless another employer provides Mr. Listwin with comparable
coverage. If Mr. Listwin is terminated for any reason other than for cause,
death, or disability or as a result of an "involuntary termination" within 18
months following a "change in control" transaction, he will be entitled to
receive the severance pay and benefits described above, except that 100%,
rather than 50%, of his then unvested stock options and restricted stock will
become completely vested and exercisable. For purposes of Mr. Listwin's
employment agreement, "involuntary termination" includes a greater than 10%
reduction in Mr. Listwin's base salary, target amount and benefits, unless all
executive officers receive similar reductions, a material change in Mr.
Listwin's status or his responsibilities, the Company's failure to retain Mr.
Listwin as its CEO, the Company's failure to nominate Mr. Listwin for
re-election as a member of the Company's board of directors, or a job
relocation that increases Mr. Listwin's commute by more than thirty miles.
The Company has entered into an employment agreement with Kevin Kennedy
dated August 28, 2001, pursuant to which the Company agreed to pay Mr. Kennedy
a severance payment if he is terminated other than for cause. The severance
payment is equal to 12 months of target pay if terminated within the first 24
months of employment and 6 months of target pay and benefits, if terminated
thereafter, excluding continuous vesting of options. Pursuant to the amendment,
Mr. Kennedy earns a base salary of $375,000 per year and is eligible for an
aggregate performance bonus of $985,000 in the fiscal year ended June 30, 2002,
the payment of which is contingent upon achieving objectives established by the
Compensation Committee and an aggregate performance bonus of $824,000 including
a gross-up for tax purposes in the fiscal year ended June 30, 2003 and a
performance bonus of $200,000 including a gross-up for tax purposes in the
fiscal year ended June 30, 2004.
The Company has entered into an employment agreement with Michael Mulica
dated October 4, 1999, and subsequently amended on July 24, 2000, March 16,
2001 and July 26, 2001, pursuant to which the Company is committed to provide
to Mr. Mulica his salary and benefit package through June 30, 2002, if Mr.
Mulica is terminated for any reason other than for "cause". The term "cause" as
defined in this agreement is (i) gross negligence or willful misconduct in the
performance of his duties to the Company; (ii) repeated unexplained or
unjustified absence from the Company; (iii) a material and willful violation of
any federal or state law; (iv) commission of any act of fraud with respect to
the Company; or (v) conviction of a felony or a crime involving moral turpitude
causing material harm to the standing and reputation of the Company, in each
case as determined by the Board of Directors of the Company. Pursuant to the
July 26, 2001, amendment, Mr. Mulica earns a base salary of $300,000 per year
and is eligible for a target bonus of between 75% to 100% of the base, the
payment of which is contingent upon meeting certain revenue goals established
by the Compensation
13
Committee. The Company made a $400,000 unsecured loan to Mr. Mulica, in August
2001. The loan is evidenced by a promissory note and payable over four years in
four equal annual installments. Interest under the note accrues at 4.99% but
accrued interest is forgiven on an annual basis contingent upon Mr. Mulica's
continued employment.
The Company has entered into an employment agreement with Allen Snyder dated
December 19, 2000, amended as of July 26, 2001, pursuant to which the Company
agreed to pay Mr. Snyder a severance payment if he is terminated other than for
cause. The severance payment is equal to 12 months of target pay if terminated
within the first 24 months of employment and 6 months of target pay and
benefits thereafter, excluding continued vesting of options. Pursuant to the
amendment, Mr. Snyder earns a base salary of $275,000 per year and is eligible
for a target bonus of 75% of his base, the payment of which is contingent upon
achieving objectives established by the Compensation Committee.
The Company made a $300,000 unsecured loan to Mr. Black, in August 2001,
which loan is evidenced by a promissory note and payable over four years in
four equal annual installments. Interest under the note accrues at 4.99% but
accrued interest is forgiven on an annual basis contingent upon Mr. Black's
continued employment.
The Company has entered into "change of control" agreements with the
following employees who were executive officers as of June 30, 2001: Alan
Black, Donald Listwin, Michael Mulica, and Allen Snyder. Mr. Listwin's change
of control agreement is part of his employment agreement and these terms are
described above. Mr. Black, Mr. Mulica, and Mr. Snyder's change of control
agreements provide that if the officer's employment is terminated as a result
of an "involuntary termination" other than for cause within 18 months following
a change of control transaction, the vesting of any then unvested stock option
or restricted stock held by the employee shall be automatically accelerated so
that the option or restricted stock becomes completely vested and exerciseable.
For purposes of these agreements, "involuntary termination" includes a
significant reduction in facilities or perquisites, a reduction in base salary,
a material reduction in employee benefits, a relocation of the employee that is
more than 30 miles from the employee's then-present location, the failure of
successors to the Company to assume the change of control agreement, the
purported termination of the employee other than for disability or cause, or
any act or circumstances that would constitute a constructive termination under
California case law or statute. In addition, the Company has entered into a
"change of control" agreement with Kevin Kennedy as of August 28, 2001. Mr.
Kennedy's change of control agreement is part of his employment agreement and
these terms are described above.
Limitation of Liability and Indemnification
Our certificate of incorporation includes provisions that eliminate the
personal liability of our directors for monetary damages for breach of
fiduciary duty as a director, except for liability:
. for any breach of the director's duty of loyalty to us or our
stockholders;
. for acts or omissions not in good faith or that involved intentional
misconduct or a knowing violation of law;
. under Section 174 of the Delaware General Corporation Law; or
. for any transaction from which the director derives an improper personal
benefit.
Our certificate of incorporation and bylaws further provide for the
indemnification of our directors and officers to the fullest extent permitted
by Section 145 of the Delaware General Corporation Law, including circumstances
in which indemnification is otherwise discretionary. Indemnification for
liabilities arising under the Securities Act may be permitted to directors,
officers and controlling persons of the Company under the foregoing provisions,
or otherwise. The Company has been advised that in the opinion of the
Securities and Exchange Commission this indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
14
We have entered into agreements to indemnify our directors and executive
officers in addition to the indemnification provided for in our charter and
bylaws. These agreements, among other things, provide for indemnification of
our directors and executive officers for expenses, judgments, fines and
settlement amounts incurred by any of these people in any action or proceeding
arising out of his or her services as a directors or executive officer or at
our request. We believe that these provisions and agreements are necessary to
attract and retain qualified people as directors and executive officers.
TRANSACTIONS WITH MANAGEMENT AND DIRECTORS
Since July 1, 2000, there has not been, nor is there currently proposed, any
transaction or series of similar transactions to which we were or are to be a
party in which the amount involved exceeds $60,000 and in which any director,
executive officer or holder of more than 5% of our common stock, or an
immediate family member of any of the foregoing, had or will have a direct or
indirect interest other than:
. compensation arrangements, which are described above; and
. the transactions described below.
We have entered into indemnification agreements with our officers and
directors containing provisions requiring us to, among other things, indemnify
our officers and directors against liabilities that may arise by reason of our
status or service as officers or directors (other than liabilities arising from
willful misconduct of a culpable nature) and to advance their expenses incurred
as a result of any proceeding against them as to which they could be
indemnified.
15
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS ON
EXECUTIVE COMPENSATION
The Company's executive compensation program presently is administered by
the two-member Compensation Committee of the Board of Directors (the
"Committee") set forth below. These Committee members are not employees of the
Company.
Section 162 Policy:
Section 162(m) of the Internal Revenue Code of 1986, as amended, generally
provides that publicly held companies may not deduct compensation paid to
certain of its top executive officers to the extent such compensation exceeds
$1 million per officer in any year. However, pursuant to regulations issued by
the Treasury Department, certain limited exemptions to Section 162(m) apply
with respect to "performance-based" compensation. As summarized below under the
heading "Chief Executive Officer Compensation", the Compensation Committee of
the Board granted Mr. Listwin 200,000 restricted shares of the Company's common
stock on April 12, 2001, that will not qualify as "performance based
compensation" under Section 162(m). As a result, Section 162(m) will limit the
amount of compensation that the Company will be able to deduct in connection
with Mr. Listwin's grant of 200,000 shares of restricted stock. The Company
does not expect that any other amount of compensation paid to its executive
officers in fiscal year 2001 will fail to be deductible on account of Section
162(m).
Compensation Philosophy:
The objectives of the Company's executive compensation policies are to
attract, retain and reward executive officers who contribute to the Company's
success, to align the financial interests of executive officers with the
performance of the Company, to strengthen the relationship between executive
pay and stockholder value, to motivate executive officers to achieve the
Company's business objectives and to reward individual performance. The
Company's executive compensation package consists of three components: base
salary and related benefits; quarterly cash bonus incentives; and equity-based
compensation incentives.
The first component of the Company's executive compensation package is base
salary and related benefits. Each executive officer receives a base salary and
benefits based on competitive compensation information and his responsibilities
and performance. The second component of the Company's executive compensation
package is a quarterly management-by-objectives bonus. Each year, the Company
establishes bonus compensation formulas for each such officer based on certain
individual performance criteria. This arrangement provides each executive
officer with the opportunity to earn a cash bonus according to the extent to
which he meets his particular individual performance criteria. The third
component of the Company's executive compensation package is stock options,
which the Company believes are important as an incentive tool designed to more
closely align the interests of the executive officers of the Company with the
long-term interests of the Company's stockholders and to encourage its
executive officers to remain with the Company. Generally, the Company grants
stock options at fair market exercise prices, as determined at the time of
grant.
The Company's Stock Option Plans have been established to provide all
employees of the Company with an opportunity to share, along with the
stockholders of the Company, in the long-term performance of the Company.
Grants are made to certain employees upon commencement of employment and,
occasionally, following a significant change in job responsibilities, scope or
title. Periodic grants of stock options are generally made annually to eligible
employees. Stock options granted under the Plans generally have a four-year
vesting schedule and generally expire ten years from the date of grant. In
addition, a portion of the options granted to the Company's executive officers
are performance-based options. The Compensation Committee periodically
considers the grant of stock-based compensation to all executive officers. Such
grants are made on the basis of a quantitative and qualitative analysis of
individual performance, the Company's financial performance, and the
executive's existing options.
16
Chief Executive Officer Compensation
Donald Listwin's 2001 bonus and salary were set by the Committee with due
regard to his industry experience, competitive salary information and current
market conditions. The amount of Mr. Listwin's total compensation was based on
the Company's 2001 results and his individual performance with respect to
meeting previously established performance objectives measured both quarterly
and annually.
Mr. Listwin cancelled his option to purchase 6,000,000 shares of the
Company's common stock. In exchange for the cancelled options, the Compensation
Committee of the Board granted Mr. Listwin a right to a future grant of an
option to purchase 5,800,000 shares of the Company's common stock (the "Future
Grant"), provided that he continues as an employee of the Company through and
including the grant date of the Future Grant.
The Future Grant will be made on a date that falls between six and seven
months from the April 12 cancellation date and will have an exercise price set
at the then fair market value of the common stock. The new options will have
the same vesting schedule and vesting commencement date as the cancelled
options. The Company expects that there will be no accounting charges to the
Company as a result of the Future Grant to Mr. Listwin.
On April 12, 2001, the Compensation Committee of the Board granted Mr.
Listwin 200,000 restricted shares of the Company's common stock. 29,166 of the
restricted shares vested on May 12, 2001, and the remaining 170,834 shares in
equal monthly installments through October 12, 2004. On the date of grant the
Company recorded stock-based compensation expense of approximately $800,000 and
deferred compensation related to the restricted stock grants of $4.6 million.
Compensation Committee
Roger Evans and Andrew Verhalen
REPORT OF THE
AUDIT COMMITTEE REPORT
OF THE BOARD OF DIRECTORS
The Audit Committee is comprised of three outside directors, all of whom are
independent under Rule 4200(a)(15) of the National Association of Securities
Dealers' ("NASD") listing standards. In fiscal 2001, the Board of Directors
approved and adopted a written charter, which sets forth the Audit Committee's
duties and responsibilities and reflects new SEC regulations and NASD rules. A
copy of the charter is attached as Appendix A to this Proxy Statement.
The Audit Committee has reviewed and discussed the Company's audited
financial statements for the fiscal year ended 2001 with management and with
the Company's independent auditors, KPMG LLP. The Audit Committee has discussed
with KPMG LLP the matters required to be discussed by Statement on Auditing
Standards ("SAS") No. 61, as amended by SAS No. 89 and SAS No. 90, relating to
the conduct of the audit. The Audit Committee has received the written
disclosures and the letter from KPMG LLP required by Independence Standards
Board Standard No. 1, Independence Discussions with Audit Committees, and has
discussed with KPMG LLP their independence. The Audit Committee has considered
the compatibility of the provision of non-audit services with maintaining the
auditor's independence.
Based on the Audit Committee's review of the audited financial statements
and the review and discussions described in the foregoing paragraph, the Audit
Committee recommended to the Board of Directors that the audited financial
statements for the fiscal year ended 2001 be included in the Company's Annual
Report on Form 10-K for the fiscal year ended June 30, 2001 for filing with the
SEC.
Audit Committee
Roger Evans
Bernard Puckett
Andrew Verhalen
17
PERFORMANCE MEASUREMENT COMPARISON
The following graph compares the cumulative total stockholder return data
for the Company's (formerly Phone.com) common stock since June 11, 1999, the
date of its initial public offering of common stock, to the cumulative return
over such period of (i) The Nasdaq Stock Market (U.S.) Index and (ii) S&P
Communications Services Index. The graph assumes that $100 was invested on June
11, 1999, the date on which the Company completed the initial public offering
of its common stock, in the common stock of the Company and in each of the
comparative indices. The graph further assumes that such amount was initially
invested in the common stock of the Company at the closing price of $20.06 per
share (on which date the initial public offering price was $8 per share) and
reinvestment of any dividends. The stock price performance on the following
graph is not necessarily indicative of future stock price performance.
COMPARISON OF CUMULATIVE TOTAL RETURN ON INVESTMENT
[PERFORMANCE GRAPH APPEARS HERE]
--------
* Assumes $100 invested on June 11, 1999 in stock or index, including
reinvestment of dividends through the fiscal year ended June 30, 2001.
6/11/99 6/30/99 6/30/00 6/30/01
------- ------- ------- -------
Openwave Systems Inc....................................... $100.00 $139.58 $324.65 $172.98
The Nasdaq Stock Market (U.S.) Index....................... $100.00 $108.40 $160.06 $ 87.22
S&P Communications Services Index.......................... $100.00 $104.19 $ 62.16 $ 88.24
18
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters are properly brought
before the meeting, it is the intention of the persons named in the
accompanying proxy to vote on such matters in accordance with their best
judgment.
By Order of the Board of Directors
/s/ Steve Peters
Steve Peters
Secretary
November 1, 2001
A copy of the Company's Annual Report to the Securities and Exchange
Commission on Form 10-K for the fiscal year ended June 30, 2001 has been
included within the package of materials sent to you as well as a copy of the
Company's 2001 Annual Report to Stockholders.
19
Exhibit A
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
Purpose Of The Committee
The Committee's purpose is to provide assistance to the Board in fulfilling
its legal and fiduciary obligations with respect to matters involving the
accounting, auditing, financial reporting and internal control functions of the
Corporation and its subsidiaries.
Composition Of The Committee
The Committee shall be comprised of three or more directors as determined
from time to time by resolution of the Board. The Board shall designate the
Chairman of the Committee, provided that if the Board does not so designate a
Chairman, the members of the Committee, by majority vote, may designate a
Chairman. Each member of the Committee shall be qualified to serve on the
Committee pursuant to the requirements of the Nasdaq.
Meetings of the Committee
The Committee shall meet with such frequency and at such intervals, as it
shall determine is necessary to carry out its duties and responsibilities. The
Committee, in its discretion, may ask members of management or others to attend
its meetings (or portions thereof) and to provide pertinent information as
necessary. The Committee will meet privately with the corporation's independent
auditors, and with management, as it considers necessary. The Committee shall
maintain minutes of its meetings and records relating to those meetings,
provide copies of such minutes to the Board and otherwise report to the Board
of Directors on significant issues.
Duties and Responsibilities of the Committee
In carrying out its duties and responsibilities, the Committee's policies
and procedures should remain flexible, so that it may be in a position to best
react or respond to changing circumstances or conditions. While there is no
"blueprint" to be followed by the Committee in carrying out its duties and
responsibilities, the following should be considered within the authority of
the Committee:
a) Make recommendations to the Board as to the selection of the firm of
independent auditors to audit the financial statements of the
Corporation and its subsidiaries for each fiscal year;
b) Review and approve the Corporation's independent auditors' annual
engagement letter, including the proposed fees contained therein;
c) Review the performance of the Corporation's independent auditors and
make recommendations to the Board regarding the replacement or
termination of the independent auditors when circumstances warrant;
d) Oversee the independence of the Corporation's independent auditors by,
among other things:
(1) Requiring the independent auditors to deliver to the Committee on a
periodic basis a formal written statement delineating all
relationships between the independent auditors and the Corporation;
and
(2) Actively engaging in a dialogue with the independent auditors with
respect to any disclosed relationships or services that may impact
the objectivity and independence of the independent auditors and
recommending that the Board take appropriate action in to satisfy
itself of the auditors' independence;
A-1
e) Instruct the Corporation's independent auditors that they are ultimately
accountable to the Committee and the Board, and that the Committee and
the Board are responsible for the selection, evaluation and termination
of the Corporation's independent auditors;
f) Review and accept, if appropriate, the annual audit plan of the
Corporation's independent auditors, including the scope of audit
activities, and monitor such plan's progress and results during the
year;
g) Review prior to the earnings release the results of the year-end audit
of the Corporation, including any comments or recommendations of the
Corporation's independent auditors prior to the earnings release;
h) Review with management and the Corporation's independent auditors such
accounting policies (and changes therein) of the Corporation, including
any financial reporting issues which could have a material impact on the
Corporation's financial statements, as are deemed appropriate for review
by the Committee prior to any interim or year-end filings with the SEC
or other regulatory body;
i) Confirm that the Corporation's interim financial statements included in
Quarterly Reports on Form 10-Q have been reviewed by the Corporation's
independent auditors. Discuss the results of the quarterly review with
the Corporation's independent auditors prior to the earnings release;
j) Review the adequacy and effectiveness of the Corporation's accounting
and internal control policies and procedures through inquiry and
discussions with the Corporation's independent auditors and management
of the Corporation;
k) Review with management the Corporation's administrative, operational and
accounting internal controls, and evaluate whether the Corporation is
operating in accordance with its prescribed policies, procedures and
codes of conduct;
l) Receive periodic reports from the Corporation's independent auditors and
management of the Corporation to assess the impact on the Corporation of
significant accounting or financial reporting developments that may have
a bearing on the Corporation;
m) Establish and maintain free and open means of communication between and
among the Board, the Committee, the Corporation's independent auditors,
the Corporation's internal auditing department and management, including
providing such parties with appropriate opportunities to meet privately
with the Committee;
n) Review and reassess annually the adequacy of the Committee's charter;
o) Meet annually with the general counsel, and outside counsel when
appropriate, to review legal and regulatory matters, including any
matters that may have a material impact on the financial statements of
the Corporation;
p) Prepare the report required by the rules of the SEC to be included in
the Corporation's annual proxy statement;
q) Review the Corporation's policies relating to the avoidance of conflicts
of interest and review past or proposed transactions between the
Corporation and members of management as well as policies and procedures
with respect to officers' expense accounts and perquisites, including
the use of corporate assets. The Committee shall consider the results of
any review of these policies and procedures by the Corporation's
independent auditors;
r) Review the Corporation's program to monitor compliance with the
Corporation's Code of Conduct, and meet periodically with the
Corporation's Compliance Officer to discuss compliance with the Code of
Conduct;
s) Obtain from the Corporation's independent auditors any information
pursuant to Section 10A of the Securities Exchange Act of 1934;
t) Secure independent expert advice, including retaining independent
counsel, accountants, consultants or others, to assist the Committee in
fulfilling its duties and responsibilities;
A-2
u) Evaluate the need for the Corporation to establish an internal audit
function;
v) Perform a self assessment annually of audit committee performance;
w) Review succession planning for key financial and accounting personnel;
x) Report regularly to the Board on its activities, as appropriate; and
z) Perform such additional activities, and consider such other matters,
within the scope of its responsibilities, as the Committee or the Board
deems necessary or appropriate.
* * *
While the Committee has the duties and responsibilities set forth in this
charter, the Committee is not responsible for planning or conducting the audit
or for determining whether the Corporation's financial statements are complete
and accurate and are in accordance with generally accepted accounting
principles. Similarly, it is not the responsibility of the Committee to resolve
disagreements, if any, between management and the independent auditors or to
ensure that the Corporation complies with all laws and regulations and its Code
of Conduct.
A-3
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OPENWAVE SYSTEMS INC.
c/o U.S.Stock Transfer Corp.
P.O.Box 27032
Glendale,California 91225-9924
VOTING INSTRUCTIONS
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VOTE BY INTERNET - www.proxyvoting.com/ows
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Use the internet to transmit your voting instructions and for electronic
delivery of information up until 11:59 P.M. Eastern Time the day before the
meeting date. Have your proxy card in hand when you access the web site. You
will be prompted to enter your Control Number, which is located near your name
and address on the proxy card, to obtain your records and to create an
electronic voting instruction form.
VOTE BY TELEPHONE -- 1-888-426-7035
Use any touch-tone telephone to transmit your voting instructions up until 11:59
P.M. Eastern Time the day before the meeting date. Have your proxy card in hand
when you call. You will be prompted to enter your Control Number, which is
located near your name and address on the proxy card, then follow the
instructions provided to you.
VOTE BY MAIL
Mark,sign and date your proxy card and return it in the postage-paid envelope we
have provided or return it to Openwave Systems Inc., c/o U.S. Stock Transfer
Corp., P.O.Box 27032, Glendale, California 91225-9924.
DO NOT RETURN YOUR PROXY CARD IF YOU ARE VOTING BY TELEPHONE OR INTERNET.
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
OPENWAVE SYSTEMS INC.
FOR THE 2001 ANNUAL MEETING OF THE STOCKHOLDERS
NOVEMBER 30, 2001
The undersigned stockholder of Openwave Systems Inc., a Delaware corporation
(the "Company"), hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement, each dated November 1, 2001 and the 2001
Annual Report to Stockholders and hereby appoints Donald Listwin, Alan Black and
Steve Peters, and each of them, proxies, with full power to each of
substitution, on behalf and in the name of the undersigned, to represent the
undersigned at the 2001 Annual Meeting of Stockholders of the Company to be held
on November 30, 2001 at 8:30 a.m., local time, at the Company's principal
executive office located at 1400 Seaport Boulevard, Redwood City, California
94063 U.S.A., and at any adjournment thereof, and to vote all shares of common
stock that the undersigned would be entitled to vote if then and there
personally present on the matters set forth below.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED,
WILL BE VOTED FOR THE ELECTION OF THE NOMINATED DIRECTORS, FOR RATIFICATION OF
--- ---
SELECTION OF KPMG LLP AS THE COMPANY'S INDEPENDENT AUDITORS, FOR THE AMENDMENT
---
OF THE COMPANY'S 1999 EMPLOYEE STOCK PURCHASE PLAN AND AS SAID PROXIES DEEM
ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
1. ELECTION OF CLASS II DIRECTORS:
NOMINEES:Roger Evans 01, Bernard Puckett 02
[_] FOR ALL NOMINEES
[_] WITHHELD FROM ALL NOMINEES
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(INSTRUCTION): TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED ABOVE.
CONTINUED ON REVERSE SIDE
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2. RATIFY SELECTION OF KPMG LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR ITS
FISCAL YEAR ENDING JUNE 30, 2002.
[_] FOR [_] AGAINST [_] ABSTAIN
3. APPROVAL OF AMENDMENT TO THE COMPANY'S 1999 EMPLOYEE STOCK PURCHASE PLAN.
[_] FOR [_] AGAINST [_] ABSTAIN
[_] MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT
[_] MARK HERE IF YOU PLAN TO ATTEND THE MEETING
This Proxy should be marked, dated and signed by the stockholder(s) exactly as
his or her name appears hereon, and returned promptly in the enclosed envelope.
Person signing in a fiduciary capacity should so indicate. If shares are held by
joint tenants or as community property, both should sign.
Dated:_______________________,2001
__________________________________
Signature
__________________________________
Signature
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