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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT [X] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
- --------------------------------------------------------------------------------
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
ASPEN TECHNOLOGY, INC.
(Name of Registrant as Specified In Its Charter)
Not Applicable
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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ASPEN TECHNOLOGY, INC.
[ASPEN TECHNOLOGY, INC. LOGO]
NOTICE OF 1998 ANNUAL MEETING OF STOCKHOLDERS
Dear Stockholder:
We invite you to attend our 1998 Annual Meeting of Stockholders, which is
being held as follows:
DATE: Tuesday, December 15, 1998
TIME: 3 P.M.
LOCATION: Aspen Technology, Inc.
Fourth Floor
Ten Canal Park
Cambridge, Massachusetts 02141
At the Annual Meeting, we will ask you and our other stockholders to:
- elect two directors to three-year terms; and
- consider any other business properly presented at the Annual
Meeting.
You may vote on these matters in person or by proxy. Whether you plan to
attend the Annual Meeting or not, we ask that you complete and return the
enclosed proxy card promptly in the enclosed addressed, stamped envelope, so
that your shares will be represented and voted at the meeting in accordance with
your wishes. If you attend the Annual Meeting, you may withdraw your proxy and
vote your shares in person. Only stockholders of record at the close of business
on October 26, 1998 may vote at the Annual Meeting.
By order of the Board of Directors,
/s/ Stephen J. Doyle
STEPHEN J. DOYLE
Secretary
Cambridge, Massachusetts
November 20, 1998
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PROXY STATEMENT
FOR THE
ASPEN TECHNOLOGY, INC.
1998 ANNUAL MEETING OF STOCKHOLDERS
TABLE OF CONTENTS
PAGE
----
INFORMATION ABOUT THE ANNUAL MEETING
This Proxy Solicitation..................................... 2
How to Vote................................................. 2
Quorum Required to Transact Business........................ 2
Availability of Auditors.................................... 3
DISCUSSION OF PROPOSAL
Proposal to Elect Two Directors............................. 3
Other Matters............................................... 4
Stockholder Proposals for 1999 Annual Meeting............... 4
INFORMATION ABOUT DIRECTORS
Background Information About Directors Continuing in
Office.................................................... 4
Meetings of the Board of Directors.......................... 5
Committees of the Board of Directors........................ 5
Compensation Committee Interlocks and Insider
Participation............................................. 5
Compensation of Directors................................... 6
Related Party Transactions.................................. 6
INFORMATION ABOUT EXECUTIVE OFFICERS
Background Information About Executive Officers............. 6
Compensation of Executive Officers
Summary Compensation Table for Fiscal 1996, 1997 and
1998................................................... 8
Option Grants in Fiscal 1998.............................. 9
Aggregated Option Exercises in Fiscal 1998 and Option
Values at June 30, 1998................................ 10
Change in Control Agreements.............................. 10
Report of the Compensation Committee on Executive
Compensation for Fiscal 1998........................... 11
INFORMATION ABOUT COMMON STOCK OWNERSHIP AND PERFORMANCE
Stock Owned by Directors, Executive Officers and
Greater-than-5% Stockholders.............................. 12
Compliance with Reporting Requirements...................... 13
Performance Graph........................................... 14
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INFORMATION ABOUT THE ANNUAL MEETING
THIS PROXY SOLICITATION
We have sent you this proxy statement and the enclosed proxy card because
AspenTech's Board of Directors is soliciting your proxy to vote at the Annual
Meeting (including any adjournment or postponement of the Annual Meeting).
- This proxy statement summarizes information about the proposal to be
considered at the Annual Meeting and other information you may find
useful in determining how to vote.
- The proxy card is the means by which you actually authorize another
person to vote your shares in accordance with your instructions.
We will pay the cost of soliciting these proxies. Our directors, officers
and employees may solicit proxies in person or by mail, telephone or telegraph.
We will reimburse brokers and other nominee holders of shares for expenses they
incur in forwarding proxy materials to beneficial owners of those shares. We
have not retained the services of any proxy solicitation firm to assist us in
this solicitation.
We are mailing this proxy statement and the enclosed proxy card to
stockholders for the first time on or about November 20, 1998. In this mailing,
we are including a copy of our 1998 Annual Report to Stockholders and our Annual
Report on Form 10-K for the fiscal year ended June 30, 1998, as filed with the
Securities and Exchange Commission.
HOW TO VOTE
You are entitled to one vote at the Annual Meeting for each share of common
stock registered in your name at the close of business on October 26, 1998. The
proxy card states the number of shares you are entitled to vote at the Annual
Meeting.
You may vote your shares at the Annual Meeting in person or by proxy:
- To vote in person, you must attend the Annual Meeting, and then
complete and submit the ballot provided at the Annual Meeting.
- To vote by proxy, you must complete and return the enclosed proxy
card. Your proxy will be valid only if you sign, date and return it
before the Annual Meeting. By completing and returning the proxy
card, you will direct the designated persons to vote your shares at
the Annual Meeting in the manner you specify in the proxy card. If
you complete all of the proxy card except the voting instructions,
then the designated persons will vote your shares for the election
of the nominated directors. If any other business properly comes
before the meeting, then the designated persons will have the
discretion to vote in any manner.
If you complete and return a proxy, you may revoke it at any time before it
is exercised by taking one of the following actions:
- send written notice to Stephen Doyle, the Secretary of the Company,
at the address of the Company set forth on the Notice appearing
before this proxy statement;
- send us another signed proxy with a later date; or
- attend the Annual Meeting, notify the Secretary that you are
present, and then vote in person.
QUORUM REQUIRED TO TRANSACT BUSINESS
At the close of business on October 26, 1998, 24,740,637 shares of common
stock were outstanding. Our by-laws require that a majority of our common stock
be represented, in person or by proxy, at the Annual Meeting in order to
constitute the quorum we need to transact business. We will not count
abstentions and broker non-votes in determining whether a quorum exists.
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AVAILABILITY OF AUDITORS
Arthur Andersen LLP has been selected by our Board of Directors as
independent public accountants to audit our financial statements for the fiscal
year ending June 30, 1999. Arthur Andersen LLP have served as our auditors since
1982. We expect that representatives of Arthur Andersen LLP will attend the
Annual Meeting, will have an opportunity to make a statement if they desire to
do so, and will be available to respond to appropriate questions.
DISCUSSION OF PROPOSAL
PROPOSAL TO ELECT TWO DIRECTORS
The only proposal on the agenda for the Annual Meeting is the election of
two persons to serve as Class II directors for three-year terms beginning at the
Annual Meeting and ending at the 2001 Annual Meeting of Stockholders. Our Board
of Directors currently has six members, divided into three classes of two
members each. Each class of directors serves a three-year term. We stagger these
terms so that the term of only one class expires each year.
Our Board of Directors has nominated Joseph F. Boston and Gresham T.
Brebach, Jr. for re-election as Class II directors. Brief biographies of the
nominees, as of October 28, 1998, follow. You will find information about the
nominees' holdings of common stock on page 12.
JOSEPH F. BOSTON.............. A founder of the Company, Dr. Boston has served
as President of the Company since 1984 and as a
director of the Company since 1981. Dr. Boston
served as both the Principal Engineer and as an
Associate Project Manager from 1977 to 1981 of
the ASPEN Project at M.I.T. Dr. Boston holds a
B.S. in Chemical Engineering from Washington
University and a Ph.D. in Chemical Engineering
from Tulane University. Dr. Boston is 61 years
old.
GRESHAM T. BREBACH, JR........ Mr. Brebach has served as a director of the
Company since August 1995 and currently serves
as a member of the Compensation Committee.
Since February 1997, Mr. Brebach has been
President and Chief Executive Officer of
Nextera Enterprises, L.L.C., a consulting
company. From January 1995 to February 1997,
Mr. Brebach was Executive Vice
President--Client Services of Renaissance
Solutions Inc., a supplier of management
consulting and client/server systems
integration services. From August 1994 to
December 1994, Mr. Brebach operated Brebach and
Associates, a consulting firm. From April 1993
to August 1994, Mr. Brebach served as Executive
Vice President of Digital Consulting at Digital
Equipment Corporation. From December 1989 to
April 1993, Mr. Brebach was a Director in the
Consumer and Industrial Products sector of
McKinsey & Company, a management consulting
firm. Mr. Brebach holds a B.S. in Engineering
and an M.B.A. in Business Administration from
the University of Illinois. Mr. Brebach is 57
years old.
If for any reason either Dr. Boston or Mr. Brebach becomes unavailable for
election, the persons designated in the proxy card may vote the proxy for the
election of a substitute. Dr. Boston and Mr. Brebach both have consented to
serve as directors if elected, and our Board of Directors has no reason to
believe that either nominee will become unavailable for election.
The two nominees receiving the greatest number of votes cast will be
elected as directors. We will not count abstentions or broker non-votes when we
tabulate votes cast for the election of directors.
OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF DR.
BOSTON AND MR. BREBACH.
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OTHER MATTERS
Neither we nor our Board of Directors intends to propose any matters at the
Annual Meeting other than the election of two directors. Neither we nor our
Board knows of any matters to be proposed by others at the Annual Meeting.
STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
A stockholder who intends to present a proposal at the 1999 Annual Meeting
of Stockholders for inclusion in our 1999 proxy statement must submit the
proposal by June 30, 1999. In order for the proposal to be included in the proxy
statement, the stockholder submitting the proposal must meet certain eligibility
standards and must comply with certain procedures established by the Securities
and Exchange Commission, and the proposal must comply with the requirements as
to form and substance established by applicable laws and regulations. The
proposal must be mailed to our Secretary at the address of the Company set forth
on the Notice appearing before this proxy statement.
INFORMATION ABOUT DIRECTORS
BACKGROUND INFORMATION ABOUT DIRECTORS CONTINUING IN OFFICE
The Class I and Class III directors will continue in office following the
Annual Meeting, and their terms will expire in 1999 (Class III) or 2000 (Class
I). Brief biographies of these directors, as of October 28, 1998, follow. You
will find information about their holdings of common stock on page 12.
DOUGLAS R.BROWN ................ Mr. Brown has served as a director of the
Class III Director Company since 1986 and currently serves as a
member of the Compensation Committee. Since
January 1996, Mr. Brown has been the President
and Chief Executive Officer and a director of
Advent International Company, a venture capital
investment firm. Mr. Brown was the Chief
Investment Officer of Advent International
Company from December 1993 to December 1995 and
Senior Vice President and Managing
Director--Europe of Advent International
Company from since June 1990 to September 1994.
Mr. Brown holds an S.B. in Chemical Engineering
from M.I.T. and an M.B.A. from the Harvard
Graduate School of Business Administration.
Since May 1997, Mr. Brown has served as a
director of Ionics, Incorporated, a separations
technology company. Mr. Brown is 44 years old.
LAWRENCE B. EVANS .............. The principal founder of the Company, Dr. Evans
Class I Director has served as Chairman of the Board and Chief
Executive Officer of the Company since 1984. He
also served as Treasurer of the Company from
1984 through February 1995 and as President
from the inception of the Company until 1984.
Dr. Evans served as Professor of Chemical
Engineering at M.I.T. from 1962 to 1990 and was
the principal investigator for the ASPEN
Project at M.I.T., which lasted from 1976 to
1981. Dr. Evans holds a B.S. in Chemical
Engineering from the University of Oklahoma and
an M.S.E. and Ph.D. in Chemical Engineering
from the University of Michigan. Dr. Evans is
64 years old.
JOAN C. MCARDLE ............... Ms. McArdle has served as a director of the
Class I Director Company since July 1994 and currently serves as
a member of the Audit and Compensation
Committees. Since 1985 she has been a Vice
President of Massachusetts Capital Resource
Company, a Boston-
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based investment company. Ms. McArdle holds an
A.B. in English from Smith College. Ms. McArdle
is 47 years old.
ALISON ROSS ................... Ms. Ross has been a director of the Company
Class III Director since February 1996, and currently serves as a
member of the Audit Committee. Ms. Ross is the
President of Smart Finance & Co., an investment
banking consulting firm she founded in January
1995. Smart Finance & Co. provides advisory
services to the Company from time to time (see
"Related Party Transactions" on page 6). From
September 1992 to January 1995, Ms. Ross was a
Principal of Montgomery Securities. From
September 1991 through August 1992, Ms. Ross
served as Special Assistant to the Secretary of
the Cabinet in the Executive Office of the
President of the United States, as part of a
one-year appointment as a White House Fellow.
Ms. Ross holds an S.B. in Economics and an S.M.
in Management from M.I.T. Ms. Ross is 38 years
old.
MEETINGS OF THE BOARD OF DIRECTORS
Our Board of Directors held seven meetings during the fiscal year ended
June 30, 1998. All directors attended at least 75% of the meetings of our Board.
COMMITTEES OF THE BOARD OF DIRECTORS
Our Board of Directors has appointed an Audit Committee and a Compensation
Committee. Our Board has not appointed a standing Nominating Committee.
The Audit Committee met three times during the fiscal year ended June 30,
1998. The Audit Committee:
- reviews the scope and results of the annual audit of our
consolidated financial statements conducted by our independent
accountants;
- reviews the scope of other services provided by our independent
accountants;
- reviews proposed changes in our financial and accounting standards
and principles and in our policies and procedures for our internal
accounting, auditing and financial controls; and
- makes recommendations to our Board of Directors on the engagement of
the independent accountants.
The Audit Committee consists of Joan McArdle and Alison Ross, both of whom
attended all meetings of the Audit Committee in fiscal year ended June 30, 1998.
The Compensation Committee met one time and acted by unanimous written
consent six times during the fiscal year ended June 30, 1998. The Compensation
Committee administers our compensation programs, including our 1995 Stock Option
Plan, 1995 Employees' Stock Purchase Plan and 1996 Special Stock Option Plan.
The Compensation Committee also performs other duties that our Board of
Directors periodically assigns to it. The Compensation Committee consists of
Gresham Brebach, Douglas Brown and Joan McArdle, each of whom attended all
meetings of the Compensation Committee in fiscal year ended June 30, 1998.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Gresham Brebach, Douglas Brown and
Joan McArdle, none of whom has ever been an employee of the Company. The
Committee is advised by Richard M. Harter, an advisor and the Assistant
Secretary of the Company, who participates in the deliberations but does not
vote on actions taken by the Committee. No executive officer of the Company
serves as a member of the board of directors or compensation committee of any
entity which has one or more executive officers serving as members of our Board
of Directors or Compensation Committee.
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COMPENSATION OF DIRECTORS
Generally we pay our directors who are not full-time employees of our
company an annual fee of $15,000 for their services, plus $1,500 for each
regular meeting they attend. Additionally, our 1995 Directors Stock Option Plan
provides that each non-employee director will be granted an option to purchase
24,000 shares of common stock at fair market value upon his or her initial
election as a director (or December 18, 1995, for previously elected directors)
and an option to purchase 8,000 shares of common stock at fair market value
following any annual meeting if such director continues to serve as a
non-employee director. One-sixteenth of the options granted upon initial
election vests at the end of each calendar quarter, but only if the optionee
continues to be a director on the vesting date. Subsequent options to purchase
8,000 shares become exercisable in four quarterly installments, beginning with
the third anniversary of the grant date, but only if the optionee continues to
be a director on the vesting date.
For fiscal 1998, our Board of Directors voted to issue options to directors
instead of paying the cash fees described above. As of the date on which this
proxy statement was filed with the Securities and Exchange Commission, our board
had not granted or established the terms of these additional options.
RELATED PARTY TRANSACTIONS
Since April 1995, Smart Finance & Co., of which Alison Ross is the sole
owner, has provided investment banking consulting services to the Company. Ms.
Ross is a Class III director. During the fiscal year ended June 30, 1998, we
paid to Smart Finance & Co. consulting fees totalling $71,418 (excluding expense
reimbursements) for services rendered during fiscal 1998 under a consulting
agreement and additional fees of $172,250 for services provided in connection
with a private debt offering by the Company in June 1998.
William Blair & Company, L.L.C., the beneficial owner of more than five
percent of the common stock outstanding as of October 26, 1998, was one of the
three initial purchasers of $86,250,000 of our 5 1/4% Convertible Subordinated
Debentures due June 15, 2005. The Company believes that William Blair received
gross fees of approximately $450,000 in connection with the offering of the
Debentures, before deducting its allocated expenses of the initial purchasers
collectively or deducting its separate expenses.
The Company has a policy that transactions with affiliated entities or
persons will be on terms no less favorable than could be obtained from unrelated
parties and that all transactions between the Company and its officers,
directors, principal stockholders and affiliates will be approved by a majority
of our independent directors.
INFORMATION ABOUT EXECUTIVE OFFICERS
BACKGROUND INFORMATION ABOUT EXECUTIVE OFFICERS
Brief biographies of our executive officers, as of October 28, 1998,
follow. You will find information about their holdings of common stock on page
12.
LAWRENCE B. EVANS .............. You will find background information about Dr.
Chairman of the Board and Evans on page 4.
Chief Executive Officer
JOSEPH F. BOSTON ............... You will find background information about Dr.
President Boston on page 3.
DAVID L. MCQUILLIN ............. Mr. McQuillin has served as Executive Vice
Executive Vice President, President, Worldwide Sales & Marketing of th
Worldwide Sales & Marketing Company since June 1997. Prior to joining the
Company, Mr. McQuillin was employed by
Honeywell, Inc. as Vice President, Eastern
Region from January 1997 to May 1997, Vice
President, Southeast Region from July 1995 to
December 1996 and as Director and General
Manager, European Region from 1992 to June
1995. From 1989 to 1992, Mr. McQuillin was
President and Chief Executive Officer of
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Aeonic Systems, Inc. Mr. McQuillin holds a B.S.
in Applied Science from Miami University. Mr.
McQuillin is 41 years old.
MARY A. PALERMO ............... Ms. Palermo has served as Executive Vice
Executive Vice President, President, ACO/IMD Divisions of the Company
ACO/IMD Divisions since September 1998. She joined the Company in
November 1987 as Director of Finance, and was
promoted to Vice President and Chief Financial
Officer in May 1989 and to Senior Vice
President, Finance and Chief Financial Officer
in June 1993. She then served as Executive Vice
President, Finance and Chief Financial Officer
of the Company from December 1995 to August
1998. From 1979 to 1982, Ms. Palermo held
several positions at Arthur Andersen & Co. Ms.
Palermo holds a B.S. in Accounting from Boston
College and is a C.P.A. Ms. Palermo is 41 years
old.
LISA W. ZAPPALA ............... Ms. Zappala has served as Senior Vice President
Senior Vice President and and Chief Financial Officer of the Company
Chief Financial Officer since September 1998. Ms. Zappala served as
Treasurer of the Company from February 1995 to
August 1998. She served as Director of
Financial Operations of the Company from
January 1993 to February 1995. From 1981 to
January 1993, Ms. Zappala held several
positions at Arthur Andersen & Co. Ms. Zappala
holds a B.S. in Accounting from Boston College
and is a C.P.A. Ms. Zappala is 38 years old.
STEPHEN J. DOYLE .............. Mr. Doyle has served as Senior Vice President,
Senior Vice President, General Counsel, Chief Legal Officer and
General Counsel, Secretary of the Company since September 1998.
Chief Legal Officer Mr. Doyle served as Vice President, General
and Secretary Counsel and Chief Legal Officer of the Company
from September 1996 to September 1998, and
began serving as the Secretary of the Company
in October 1997. From July 1994 to September
1996, Mr. Doyle was a partner in Mirick,
O'Connell, DeMallie & Lougee concentrating in
technology and international business law From
1986 to June 1994, Mr. Doyle was International
Counsel to Prime Computer Inc. (renamed
Computervision Corporation) and from 1981 to
1985 was International Attorney for the Bank of
Boston. From 1978 to 1981, Mr. Doyle was an
attorney in private practice. Mr. Doyle holds
an A.B. from Georgetown University and J.D. and
M.B.A. degrees from the University of Denver.
Mr. Doyle is 45 years old.
In addition, we expect that David Mushin will be elected as Senior Vice
President of Operations of the Company in November 1998 and, as a result, will
become an executive officer. Background information about Mr. Mushin, as of
October 28, 1998, follows:
DAVID MUSHIN .................. Since January 1996, Mr. Mushin has served as
Senior Vice President and General Manager,
Information Management Division, of the
Company. From 1991 to January 1996, he served
as Vice President and General Manager of Plant
Operations. Mr. Mushin holds a Masters in
Chemical Engineering from the University of
Cambridge, England. Mr. Mushin is 42 years old.
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COMPENSATION OF EXECUTIVE OFFICERS
Summary Compensation Table for Fiscal 1996, 1997 and 1998
The following table summarizes certain information with respect to the
annual and long-term compensation that we paid for the past three fiscal years
to the following persons (the "Named Officers"):
- Lawrence Evans, our only chief executive officer in fiscal 1998;
- Joseph Boston, David L. McQuillin, Mary Palermo and Joel Rosen, our
four most highly compensated executive officers (other than Dr.
Evans) who continued to serve as executive officers at June 30,
1998; and
- Herbert Britt, who served as our Senior Vice President and Chief
Technical Officer throughout fiscal 1998 and who continues to hold
that office, but who was deemed to be an executive officer only for
the first portion of fiscal 1998. Mr. Britt would have been included
as one of the four most highly compensated executive officers
described in the preceding clause, except that he was not an
executive officer at June 30, 1998.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION -------------
-------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION(1) OPTIONS(#)(2) COMPENSATION($)(3)
--------------------------- ---- --------- -------- --------------- ------------- ------------------
Lawrence B. Evans............ 1998 $290,000 $ -- $ -- 7,886(4) $ --
Chairman of the Board and 30,000(5)
Chief Executive Officer 1997 265,000 -- -- 80,000(6) 174
1996 239,000 133,000 -- 50,000(7) 348
Joseph F. Boston............. 1998 230,000 -- -- 4,263(4) --
President 18,000(5)
1997 210,000 -- -- 40,000(6) 174
1996 190,000 88,000 -- 32,000(7) 348
David L. McQuillin(8)........ 1998 360,000 -- 50,000(5) --
Executive Vice President, 1997 14,615 -- -- 50,000(9) --
Worldwide Sales & Marketing 1996 -- -- -- -- --
Mary A. Palermo.............. 1998 220,000 -- -- 4,476(4) --
Executive Vice President 30,000(5)
1997 190,000 -- -- 50,000(6) 174
1996 166,000 83,000 -- 40,000(7) 348
Joel B. Rosen(10)............ 1998 235,000 -- -- 3,836(4) --
Executive Vice President 1997 210,000 -- -- 50,000(6) 174
1996 190,000 77,000 -- 40,000(7) 348
Herbert I. Britt............. 1998 190,000 -- -- 3,836(4) --
Senior Vice President 10,000(5)
and Chief Technical Officer 1997 210,000 -- -- 30,000(6) 174
1996 190,000 77,000 -- 32,000(7) 348
- ---------------
(1) Other annual compensation in the form of perquisites and other personal
benefits has been omitted because the aggregate amount of such perquisites
and other personal benefits was less than $50,000 and constituted less than
ten percent of the Named Officers' respective total annual salaries and
bonuses during each of the years reported.
(2) Each option has a maximum term of ten years, subject to earlier termination
in the event of the optionee's cessation of service with the Company. Each
option is exercisable during the holder's lifetime only by the holder; it
is exercisable by the holder only while the holder is an employee or
advisor of the Company and for a certain limited period of time thereafter
in the event of termination of employment. The exercise price may be paid
in cash or in shares of common stock valued at fair market value on the
exercise date.
(footnotes continued on following page)
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(3) Represents long-term insurance premiums paid by us on behalf of the Named
Officers. Insurance coverage was changed in mid-fiscal 1997 and the
premiums paid for the insurance are no longer considered taxable income to
the Named Officers.
(4) Options were granted on September 12, 1997 under our 1995 Stock Option
Plan. These options were fully vested upon grant.
(5) Options were granted on December 22, 1997 under our 1995 Stock Option Plan.
One-sixteenth of the options granted vests at the end of each calendar
quarter.
(6) Options were granted on August 2, 1996 under our 1995 Stock Option Plan.
One-sixteenth of the options granted vests at the end of each calendar
quarter.
(7) Options were granted on October 24, 1995 and January 8, 1996 under our 1988
Non-Qualified Stock Option Plan and our 1995 Stock Option Plan,
respectively. One-sixteenth of the options granted vests at the end of each
calendar quarter.
(8) Mr. McQuillin joined the Company in June 1997. His salary for fiscal 1998
includes $120,000 of sales commissions.
(9) Options were granted on May 20, 1997 under our 1995 Stock Option Plan.
One-sixteenth of the options granted vests at the end of each calendar
quarter.
(10) Mr. Rosen resigned from the Company in August 1998.
Option Grants in Fiscal 1998
The following table sets forth certain information regarding the options we
granted to the Named Officers during the fiscal year ended June 30, 1998.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
----------------------------------------------------- POTENTIAL REALIZABLE
NUMBER VALUE AT ASSUMED
OF ANNUAL RATES OF STOCK
SECURITIES PERCENT OF TOTAL PRICE APPRECIATION FOR
UNDERLYING OPTIONS GRANTED EXERCISE OPTION TERM(1)
OPTIONS TO EMPLOYEES IN PRICE EXPIRATION -----------------------
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
---- ---------- ---------------- -------- ---------- ---------- ----------
Lawrence B. Evans.......... 7,886 0.38% $31.125 9/11/07(2) $ 175,237 $ 424,425
30,000 1.44 29.250 12/21/07(3) 686,239 1,612,493
Joseph F. Boston........... 4,263 0.20 31.125 9/11/07(2) 94,729 229,435
18,000 0.86 29.250 12/21/07(3) 411,743 967,496
David L. McQuillin......... 50,000 2.40 29.250 12/21/07(3) 1,143,731 2,687,488
Mary A. Palermo............ 4,476 0.21 31.125 9/11/07(2) 99,463 240,899
30,000 1.44 29.250 12/21/07(3) 686,239 1,612,493
Joel B. Rosen.............. 3,836 0.18 31.125 9/11/07(2) 85,241 206,454
Herbert I. Britt........... 3,836 0.18 31.125 9/11/07(2) 85,241 206,454
10,000 0.48 29.250 12/21/07(3) 288,746 537,498
- ---------------
(1) The amounts shown represent hypothetical gains that could be achieved for
the respective options if exercised at the end of their option terms. These
gains are based on assumed rates of stock appreciation of five percent and
ten percent, compounded annually from the date the respective options were
granted to the date of their expiration. The gains shown are net of the
option price, but do not include deductions for taxes or other expenses that
may be associated with the exercise. Actual gains, if any, on stock option
exercises will depend on future performance of the common stock, the
optionholders' continued employment through the option period, and the date
on which the options are exercised.
(2) Option grant pursuant to our 1995 Stock Option Plan. These options were
fully vested upon grant.
(footnotes continued on following page)
9
12
(3) Option grant pursuant to our 1995 Stock Option Plan. One-sixteenth of the
options granted vests at the end of each calendar quarter. The
exercisability of these options is accelerated upon the occurrence of a
change in control of the Company.
Aggregated Option Exercises in Fiscal 1998 and Option Values at June 30, 1998
The following table sets forth information as to options exercised during
the fiscal year ended June 30, 1998, and unexercised options held at the end of
such fiscal year, by the Named Officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
SHARES NUMBER OF SHARES OF COMMON VALUE OF UNEXERCISED
ACQUIRED STOCK UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
ON VALUE OPTIONS AT JUNE 30, 1998(#) JUNE 30, 1998($)(2)
NAME EXERCISE(#) REALIZED($)(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- -------------- ---------------------------- -------------------------
Lawrence B. Evans.... -- -- 76,076/91,810 $2,045,933/$2,271,046
Joseph F. Boston..... -- -- 42,853/51,410 1,183,733/ 1,293,351
David L. McQuillin... -- -- 21,875/78,125 427,344/ 1,547,656
Mary A. Palermo...... 12,000 430,275 190,982/70,824 8,091,377/ 1,756,147
Joel B. Rosen........ 18,000 641,850 173,444/44,574 7,363,141/ 1,198,334
Herbert I. Britt..... -- -- 37,051/38,785 1,058,506/ 1,021,554
- ---------------
(1) The values in this column are based on the last reported sale prices of the
common stock on the respective dates of exercise as reported by the Nasdaq
National Market, less the respective option exercise prices.
(2) The closing sale price for the common stock as reported by the Nasdaq
National Market on June 30, 1998 was $50.50. Value is calculated on the
basis of the difference between the option exercise price and $50.50,
multiplied by the number of shares of common stock underlying the option.
Change in Control Agreements
On August 12, 1997, we entered into Change in Control Agreements with
Lawrence Evans, our Chairman of the Board and Chief Executive Officer; Joseph
Boston, our President; David McQuillin, our Executive Vice President, Worldwide
Sales & Marketing; Mary Palermo, our Executive Vice President; and Stephen
Doyle, our Vice President, General Counsel, Chief Legal Officer and Secretary.
Each agreement is for an initial term of five years and is automatically renewed
thereafter on a yearly basis unless our Board of Directors ends the
self-renewing feature at least sixty days before the next renewal. In the event
of both a change in control and termination of employment (excluding termination
for cause but including constructive termination), each of these executive
officers will be entitled to a severance payment equal to three times salary
plus bonus plus cost of benefits. A "change in control" is generally defined as
any 1 person or group purchasing 25% of the outstanding stock. Each agreement
provides that the payment will be increased in the event that it would subject
the executive to excise tax as a parachute payment under Section 280G of the
Internal Revenue Code of 1986. The increase would be equal to an amount
necessary for the executive to receive after payment of such tax cash in an
amount equal to the amount the executive would have received in the absence of
such tax. However, the increased payment will not be made if the total severance
payment, if so increased, would not exceed 110% of the highest amount (the
"reduced amount") that could be paid without causing an imposition of the excise
tax. In that event, in lieu of an increased payment, the total severance payment
will be reduced to such reduced amount.
We may enter into similar Change in Control Agreements in the future with
other officers of the Company.
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Report of the Compensation Committee on Executive Compensation for Fiscal 1998
The following is the report of the Compensation Committee of our Board of
Directors. The report describes the compensation policies and rationales that
the Compensation Committee used to determine the compensation paid to our
executive officers for the year ended June 30, 1998.
Purpose of the Compensation Committee. The Committee is responsible for
determining compensation levels for the executive officers for each fiscal year
based upon a consistent set of policies and procedures.
Elements of the Compensation Program. Each executive officer's
compensation package has three elements:
- base compensation, which reflects individual performance and is
designed primarily to be competitive with salary levels in a
comparative group;
- bonus compensation, payable in cash and based on achievement of
financial performance goals established by the Compensation
Committee; and
- stock options, designed to assure long-term alignment with the
interests of stockholders.
Both the base compensation and the bonus compensation were established based on
the two prior years' compensation, which had been established after review of a
report from Towers, Perrin, Forster & Crosby, Inc., consultants in management
compensation, for fiscal 1996. Towers, Perrin had analyzed the base compensation
and bonus compensation of executive officers of the Company against similar
amounts paid by comparable corporations. Towers, Perrin noted in that report for
fiscal 1996 that the base compensation and bonus compensation of the executive
officers of the Company were generally below the averages for executives of the
comparable group of corporations. In assessing the information contained in the
report, the Compensation Committee considered the nature of the business, the
size and the profitability of comparable companies. Stock options were granted
in amounts deemed by the Compensation Committee to be appropriate to increase
alignment with stockholder interests and to serve as a means to retain the
services of the executive officers. No cash bonuses were paid to executive
officers for fiscal 1998.
Section 162(m) Limitations. The cash compensation to be paid to our
executive officers for the fiscal year ending June 30, 1998 is not expected to
exceed the $1,000,000 limit per officer imposed on the tax deductibility of such
compensation by Section 162(m) of the Internal Revenue Code of 1986. Because our
1995 Stock Option Plan limits the maximum number of shares of common stock for
which any one participant may be granted stock options, has been approved by the
stockholders, and is administered by the Compensation Committee, any
compensation deemed paid to an executive officer when he or she exercises an
outstanding option under that Plan will qualify as performance-based
compensation and will not count toward (or beyond) the $1,000,000 limitation.
COMPENSATION COMMITTEE
Gresham T. Brebach, Jr.
Douglas R. Brown
Joan C. McArdle
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INFORMATION ABOUT COMMON STOCK OWNERSHIP AND PERFORMANCE
STOCK OWNED BY DIRECTORS, EXECUTIVE OFFICERS AND GREATER-THAN-5% STOCKHOLDERS
The following table sets forth certain information as of October 26, 1998,
with respect to the beneficial ownership of the common stock by (i) each person
that we know owns of record or beneficially more than 5% of the outstanding
common stock, (ii) the Named Officers, (iii) each director and nominee for
director, and (iv) all current executive officers and directors as a group. As
of October 26, 1998, there were 24,740,637 shares of common stock outstanding.
SHARES
BENEFICIALLY OWNED(2)
---------------------
NAME AND ADDRESS OF BENEFICIAL OWNER(1) NUMBER PERCENT
--------------------------------------- ------ -------
Thomas E. Baker(3).......................................... 1,887,820 7.6%
c/o Chesapeake Decision Sciences, Inc.
200 South Street
New Providence, New Jersey 07974
Janus Capital Corporation(4)................................ 1,578,200 6.4
100 Fillmore Street, Suite 300
Denver, Colorado 80206
William Blair & Company, L.L.C.(5).......................... 1,450,869 5.9
222 West Adams Street, 34th Floor
Chicago, Illinois 60606
Lawrence B. Evans(6)........................................ 887,308 3.6
Joseph F. Boston(7)......................................... 327,634 1.3
Mary A. Palermo(8).......................................... 213,863 *
Joel B. Rosen(9)............................................ 181,385 *
Herbert I. Britt(10)........................................ 156,071 *
David L. McQuillin(11)...................................... 28,368 *
Gresham T. Brebach, Jr.(12)................................. 22,000 *
Douglas R. Brown(12)........................................ 22,000 *
Joan C. McArdle(13)......................................... 22,000 *
Alison Ross(12)............................................. 11,999 *
All executive officers and directors as a group (10
persons)(14).............................................. 1,716,557 6.9
- ---------------
* Less than 1%.
(1) Unless otherwise noted, the address of each person or group is in care of
the Company, Ten Canal Park, Cambridge, Massachusetts 02141.
(2) Unless otherwise noted, each person or group identified possesses sole
voting and investment power with respect to shares subject to community
property laws where applicable. Shares not outstanding but deemed
beneficially owned by virtue of the right of a person or group to acquire
them within sixty days of October 26, 1998 are treated as outstanding only
for purposes of determining the number of and percent owned by such person
or group.
(3) Includes 17,822 shares held by Mr. Baker's wife and 71,287 shares held by a
trust for the benefit of Mr. Baker's children. Also includes 103,034 shares
and 24,782 shares held in the Chesapeake Decision Sciences, Inc. Employee
Stock Ownership Plan and Trust effective January 1, 1987, as amended and
restated effective January 1, 1989 on behalf of Mr. Baker and Mr. Baker's
wife, respectively.
(4) The number of shares reported as beneficially owned by Janus Capital
Corporation, an investment adviser, is based on information contained in a
Schedule 13G filed with the Securities and Exchange Commission on February
13, 1998.
(footnotes continued on following page)
12
15
(5) The number of shares reported as beneficially owned by William Blair &
Company, L.L.C., a broker-dealer and investment adviser, is based on
information contained in a Schedule 13G filed with the Securities and
Exchange Commission on February 17, 1998. William Blair has sole voting
power with respect to 594,000 shares of common stock and sole dispositive
power with respect to 1,450,869 shares of common stock.
(6) Includes 86,076 shares subject to stock options exercisable within sixty
days of October 26, 1998. Also includes 200 shares held by Beverley Evans,
wife of Mr. Evans, as to which shares Mr. Evans disclaims beneficial
interest.
(7) Includes 48,748 shares subject to stock options exercisable within sixty
days of October 26, 1998.
(8) Includes 198,483 shares subject to stock options exercisable within sixty
days of October 26, 1998.
(9) Includes 179,070 shares subject to stock options exercisable within sixty
days of October 26, 1998.
(10) Includes 41,551 shares subject to stock options exercisable within sixty
days of October 26, 1998.
(11) Includes 28,125 shares subject to stock options exercisable within sixty
days of October 26, 1998.
(12) Consists of shares subject to stock options exercisable within sixty days
of October 26, 1998.
(13) Consists of shares subject to stock options exercisable within sixty days
of October 26, 1998. Excludes 175,000 shares held by Massachusetts Capital
Resource Company, of which Ms. McArdle is Vice President; Ms. McArdle
disclaims beneficial interest of those 175,000 shares.
(14) Includes shares subject to stock options and warrants exercisable within
sixty days of October 26, 1998 as described in notes (6), (7), (8), (11),
(12) and (13) above.
COMPLIANCE WITH REPORTING REQUIREMENTS
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
our executive officers and directors, and persons who own more than ten percent
of a registered class of our equity securities, to file changes in ownership on
Form 4 or 5 with the Securities and Exchange Commission. These executive
officers, directors and ten-percent stockholders are also required by Securities
and Exchange Commission rules to furnish the Company with copies of all Section
16(a) reports they file. Based solely on our review of the copies of these
forms, we believe that all Section 16(a) reports applicable to our executive
officers, directors and ten-percent stockholders with respect to reportable
transactions during the fiscal year ended June 30, 1998 were filed on a timely
basis.
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16
PERFORMANCE GRAPH
The following graph compares the cumulative total return to stockholders of
the common stock for the period from November 1, 1994 (the initial date of the
registration of the common stock under the Securities Exchange Act of 1934) to
June 30, 1998, to the cumulative total return of the NASDAQ Stock Market (US)
Index and the NASDAQ Computer & Data Processing Index for the same period.
COMPARISON OF 44 MONTH CUMULATIVE TOTAL RETURN*
AMONG ASPEN TECHNOLOGY, INC., THE NASDAQ STOCK MARKET (US) INDEX
AND THE NASDAQ COMPUTER & DATA PROCESSING INDEX
[PERFORMANCE CHART]
10/27/CUMULATIVE TOTAL RETURN 6/98
Aspen Technology, Inc. AZPN $100 $196 $423 $579 $777
Nasdaq Stock Market (US) INAS 100 123 157 191 342
Nasdaq Computer & Data Processing INAD 100 136 181 229 346
* $100 invested on October 27, 1994 in stock or index, including reinvestment of
dividends. Fiscal year ending June 30.
14
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ASPEN TECHNOLOGY, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR
1998 ANNUAL MEETING OF STOCKHOLDERS
The undersigned hereby authorizes and appoints Stephen J. Doyle and
Lisa W. Zappala, and each them, as proxies with full power of substitution in
each, to vote all shares of common stock, par value $.10 per share, of Aspen
Technology, Inc. held of record by the undersigned as of the close of business
on Monday, October 26, 1998, at the Annual Meeting of Stockholders to be held at
principal corporate offices of Aspen Technology, Inc. located at Fourth Floor,
Ten Canal Park, Cambridge, Massachusetts 02141, and at any adjournments thereof,
on all matters that may properly come before said meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED ON THE
REVERSE OR, IN THE ABSENCE OF SUCH DIRECTION, FOR THE SPECIFIED NOMINEES IN THE
PROPOSAL AND IN ACCORDANCE WITH THE JUDGMENT OF THE PROXIES UPON OTHER MATTERS
THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS THEREOF.
(To be signed on reverse side)
18
[X] Please mark your vote as in this example.
PROPOSAL: Election of two Class II directors
NOMINEES: JOSEPH F. BOSTON
GRESHAM T. BREBACH, JR.
[ ] FOR the nominees listed above [ ] WITHHOLD AUTHORITY to vote
(except as marked to the for the nominees listed
contrary below) above
Instructions: To withhold authority to vote for an individual nominee,
write the name of the nominee on the line below:
--------------------------------------------------------
THE DIRECTORS RECOMMEND A VOTE FOR EACH NOMINEE.
PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED ENVELOPE,
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
Signature:___________________________ Signature: ______________________________
(IF HELD JOINTLY)
Dated: ___________________________, 1998
NOTE: This Proxy Card must signed exactly as the name of the stockholder(s)
appears on the label above. Executors, administrators, trustees, etc.
should give full title as such. If the signatory is a corporation,
please sign full corporate name by duly authorized officer.
