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
/ / Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Under Rule 14a-12
MANUGISTICS GROUP, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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/X/ No fee required
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1) Title of each class of securities to which transaction applies:
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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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/ / 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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[MANUGISTICS LEVERGED INTELLIGENCE]
MANUGISTICS GROUP, INC.
9715 Key West Avenue
Rockville, Maryland 20850
June 28, 2002
Dear Shareholders:
It is my pleasure to invite you to the 2002 Annual Meeting of Shareholders
of Manugistics Group, Inc. to be held on Thursday, July 25, 2002 at 9:00 a.m.,
Eastern Daylight Time, at the Bethesda Marriott, 5151 Pooks Hill Road,
Bethesda, Maryland.
Whether or not you plan to attend, and regardless of the number of shares
you own, it is important that your shares be represented at the Annual
Meeting. You are accordingly urged to complete, sign, date and return your
proxy promptly in the enclosed envelope. Your return of a proxy in advance
will not affect your right to vote in person at the Annual Meeting.
I hope that you will attend the Annual Meeting. The officers and directors
of the Company look forward to seeing you at that time.
Very truly yours,
/s/ Gregory J. Owens
-----------------------------------------
Gregory J. Owens
Chairman of the Board and Chief Executive
Officer
[MANUGISTICS LEVERGED INTELLIGENCE]
MANUGISTICS GROUP, INC.
9715 Key West Avenue
Rockville, Maryland 20850
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Thursday, July 25, 2002
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To our Shareholders:
The Annual Meeting of Shareholders (the "Meeting") of Manugistics Group,
Inc. (the "Company") will be held on Thursday, July 25, 2002 at 9:00 a.m.
E.D.T. at the Bethesda Marriott, 5151 Pooks Hill Road, Bethesda, Maryland for
the following purposes:
1. to elect two Class I Directors, each for a term of three years and
until their respective successors have been elected and qualified; and
2. to transact such other business as may properly come before the
Meeting.
Shareholders of record at 5:00 p.m. E.D.T. on June 10, 2002 are entitled to
receive notice of and to vote at the Meeting.
You are invited to attend the Meeting. Please carefully read the attached
Proxy Statement for information regarding the matters to be considered and
acted upon at the Meeting. We hope that you will attend the Meeting.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING IN PERSON, YOU ARE
URGED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE
ENCLOSED RETURN POSTAGE-PAID ENVELOPE. No postage need be affixed to the
return envelope if mailed in the United States. If you attend the Meeting, you
may withdraw your proxy and vote in person by ballot.
By Order of the Board of Directors
/s/ Susan E. Pendery
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Susan E. Pendery
Acting Secretary
Rockville, Maryland
June 28, 2002
MANUGISTICS GROUP, INC.
9715 Key West Avenue
Rockville, Maryland 20850
_______________________
PROXY STATEMENT
This Proxy Statement and the accompanying Notice of Annual Meeting of
Shareholders and Proxy Card are being furnished in connection with the
solicitation by the Board of Directors of Manugistics Group, Inc. (the
"Company") of proxies to be voted at the Annual Meeting of Shareholders
scheduled to be held on Thursday, July 25, 2002, at 9:00 a.m. E.D.T., at the
Bethesda Marriott, 5151 Pooks Hill Rd., Bethesda, Maryland, and any
adjournment or postponement thereof (the "Meeting"). This Proxy Statement and
the enclosed Proxy Card are being furnished on or about June 28, 2002, to all
holders of record of the Company's Common Stock (the "Common Stock") as of
5:00 p.m. E.D.T. on June 10, 2002. A copy of the Company's 2002 Annual Report
to Shareholders, including consolidated financial statements for the fiscal
year ended February 28, 2002, accompanies this Proxy Statement.
At the Meeting, shareholders will elect two Class I directors, each to serve
for a term of three years.
VOTING SECURITIES AND RECORD DATE
The Board of Directors has fixed 5:00 p.m. E.D.T. on June 10, 2002 as the
record date (the "Record Date") for determination of shareholders entitled to
notice of and to vote at the Meeting. As of the Record Date, there were
69,595,958 shares of Common Stock issued and outstanding and there were no
other voting securities of the Company outstanding. The presence at the
Meeting, in person or by proxy, of a majority of the outstanding shares of
Common Stock, or 34,797,980 shares, shall constitute a quorum for the Meeting.
Each outstanding share of Common Stock entitles the record holder thereof to
one vote. Abstentions and broker non-votes are not counted as votes cast on
any matter to which they relate, but are counted in determining the presence
of a quorum.
Election of Directors. Assuming the presence of a quorum, a plurality of the
votes cast at the Meeting is required to elect each of the nominees for
director. Abstentions and broker non-votes will not be taken into account in
determining the outcome of the election.
VOTING RIGHTS AND SOLICITATION OF PROXIES
Eligible shareholders of record may vote at the Meeting in person or by
means of the enclosed Proxy Card. You may specify your voting choices by
marking the appropriate boxes on the Proxy Card. The proxy solicited hereby,
if properly signed and returned to the Company and not revoked prior to or at
the Meeting, will be voted in accordance with the instructions specified
thereon. If you properly sign and return your Proxy Card, but do not specify
your choices, your shares will be voted by the proxy holders as recommended by
the Board of Directors.
The Board of Directors encourages you to complete and return the Proxy Card
even if you expect to attend the Meeting. You may revoke your proxy at any
time before it is voted at the Meeting by giving written notice of revocation
to the Secretary of the Company, by submission of a proxy bearing a later date
or by attending the Meeting in person and casting a ballot.
The proxy holders, Gregory J. Owens and Raghavan Rajaji, will vote all
shares of Common Stock represented by Proxy Cards that are properly signed and
returned by shareholders. The Proxy Card also authorizes the proxy holders to
vote the shares represented with respect to any matters not known at the time
this Proxy Statement was printed that may properly be presented for
consideration at the Meeting. You must return a signed Proxy Card if you want
the proxy holders to vote your shares of Common Stock.
The cost of soliciting proxies will be borne by the Company. Following the
mailing of proxy solicitation materials, proxies may be solicited by
directors, officers and employees of the Company and its subsidiaries
personally, by telephone or otherwise. Such persons will not receive any fees
or other compensation for such solicitation. In addition, the Company will
reimburse brokers, custodians, nominees and other persons holding shares of
Common Stock for others for their reasonable expenses in sending proxy
materials to the beneficial owners of such shares and in obtaining their
proxies.
PROPOSAL 1 -- ELECTION OF DIRECTORS
The Second Amended and Restated By-Laws of the Company (the "By-Laws")
provide that the Company's business shall be managed by a Board of Directors
of not less than six and not more than nine directors, with the number of
directors to be fixed by the Board of Directors from time to time. The By-Laws
also provide that the Company's Board of Directors is divided into three
classes: Class I, Class II and Class III, each class being as nearly equal in
number as possible. The directors in each class serve terms of three years and
until their respective successors have been elected and qualified. The term of
office of one class of directors expires each year in rotation so that one
class is elected at each annual meeting of shareholders for a three-year term.
In December 2000, the Board of Directors increased the number of directors
which shall constitute the entire Board of Directors from nine to ten in
connection with the Company's acquisition of privately-held Talus Solutions,
Inc. ("Talus"). Under the terms of the merger agreement between the Company
and Talus, the Company agreed to cause two additional individuals to be
elected to the Company's Board of Directors: (i) one representative of General
Atlantic Partners, LLC and its affiliates who, in the aggregate, constituted
Talus' largest shareholder group, and (ii) an individual selected by the
Company from among the members of Talus' Board of Directors. The Board of
Directors then appointed Esther Dyson as a Class I director to a term expiring
2002, to fill the vacancy created by the resignation of Jack A. Arnow and also
appointed Steven A. Denning, Executive Managing Member of General Atlantic
Partners, LLC, as a Class II director to a term expiring 2003, to fill the
newly created directorship. (In January 2002, the By-Laws were amended to
provide that there shall not be more than nine directors.)
There are presently three directors in Class I, four directors in Class II
and two directors in Class III. The term of the three Class I directors, J.
Michael Cline, Esther Dyson and Lynn C. Fritz, will expire at the Meeting. The
other six directors will remain in office for the remainder of their
respective terms, as indicated below.
At the Meeting, two Class I directors are to be elected. Each of the two
director nominees, Messrs. Cline and Fritz, is presently a director of the
Company. One of the Class I directors, Esther Dyson, has informed the Board
that she will not stand for reelection to the Board in order to pursue other
activities. Each nominee has consented to being named as a nominee for
director of the Company and has agreed to serve if elected. In the event that
any nominee should become unavailable or unable to serve as a director, the
persons named as proxies on the Proxy Card will vote for the person(s) the
Board of Directors recommends.
Although there will be one vacancy in Class I upon the expiration of Esther
Dyson's term as a director, proxies may not be voted for more than two
nominees. The Board of Directors will consider suitable candidates to fill the
vacancy, whether recommended by management or identified in connection with
acquisitions of other companies or businesses which the Company may make in
the future. The Board does not presently have any candidates to fill the
vacancy under active consideration.
Candidates for election to the Board of Directors at annual meetings of
shareholders are nominated by the Nominating Committee of the Board.
Shareholders are also entitled to nominate director candidates for the Board
of Directors in accordance with the procedures set forth in the By-Laws.
Shareholders may nominate candidates for election to the Board of Directors if
notice of such nomination is given to the Secretary of the Company 60 days in
advance of an annual meeting, if the meeting is to be held on a day within 30
days prior to the anniversary of the preceding year's annual meeting, or 90
days in advance of the annual meeting if the annual meeting is held on or
after the anniversary of the preceding year's annual meeting. With respect to
annual meetings held 30 days or more prior to the anniversary of the preceding
year's annual meeting and special meetings, notice of the nomination must be
received no later than the close of business on the tenth day after the public
announcement of the date of such meeting. The shareholder's notice must set
forth as to each nominee (i) the nominee's name, age, and business and
residence address, (ii) the nominee's principal occupation, (iii) the class
and number of shares of the Company's stock beneficially owned by the nominee,
and (iv) such other information regarding such nominee that is required to be
disclosed under the SEC's proxy rules relating to elections of directors
(including the nominee's written consent to serve if elected). In addition,
the notice must give the name and address of the shareholder giving the notice
as they appear on the Company's books and the class and number of shares of
the Company beneficially owned by the shareholder.
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Set forth below is certain information regarding each nominee for Class I
director, and each Class II and Class III director, each of whose term of
office will continue after the Meeting.
Nominees for Class I Directors
J. Michael Cline, 42, has served as a director of the Company since 1996.
Since December 1999, Mr. Cline has served as Managing Partner of Accretive
Technology Partners LLC, a private investment firm, which he founded, with a
primary focus on enterprise software and business process outsourcing
businesses. From 1989 until December 1999, Mr. Cline was a managing member of
General Atlantic Partners, LLC (or its predecessor in interest) a private
equity investment firm focused on information technology, media and
communications investments on a global basis. Prior to 1989, Mr. Cline was an
associate with McKinsey & Company, Inc., a global strategic consulting firm.
Mr. Cline serves on the boards of FirePond Inc., an enterprise software
company and Exult, Inc. a web enabled human resources company.
Lynn C. Fritz, 60, has served as a director of the Company since 1995. Mr.
Fritz has been Director General of the Fritz Institute, a disaster relief
management firm, since January 2001. From 1986 through May 2001, Mr. Fritz
served as Chairman and Chief Executive Officer of Fritz Companies, Inc., a
publicly-held company that specializes in freight forwarding and customhouse
brokerage on a global basis. Mr. Fritz had been employed by Fritz Companies,
Inc. since 1965.
A plurality of the votes cast is required to elect each of the above
nominees for election as a Class I Director.
The Board of Directors recommends that shareholders vote FOR the election of
each of the nominated Class I Directors.
Incumbent Class II Directors -- to Continue in Office for Terms Expiring in
2003
Steven A. Denning, 53, has served as a director of the Company since 2000.
Since 1995, Mr. Denning has been the Executive Managing Member of General
Atlantic Partners, LLC, a private equity investment firm focused on
information technology, process outsourcing and communications investments on
a global basis, and has been with General Atlantic since 1980. He serves on
the boards of SRA International, Inc., a provider of information technology
services and solutions to the US federal government, Eclipsys Corporation, a
healthcare information technology corporation, Exult, Inc., a human resources
business processing outsourcing company, EXE Technologies, Inc., a provider of
supply chain execution software and services, and The Thomson Corporation, a
global leader in providing integrated information solutions to business and
professional customers.
Gregory J. Owens, 42, has served as Chairman of the Board of the Company
since March 2001 and has served as a director of the Company since June 1999.
He has served as Chief Executive Officer of the Company since April 1999, and
served as President of the Company from April 1999 through November 2000. From
1993 to 1999, Mr. Owens served as the Global Managing Partner for the
Accenture Supply Chain Practice. Mr. Owens serves on the board of Serena
Software, Inc., an Enterprise Change Management software provider.
Joseph H. Jacovini, 61, has served as a director of the Company since 1986.
He is a partner in Dilworth Paxson LLP, based in Philadelphia, Pennsylvania,
where he has practiced law since 1965. He has served as Chairman of that firm
since 1997, having served as Co-Chairman since 1995. Mr. Jacovini also served
as Chairman of that firm's Corporate Department during 1993-97. Mr. Jacovini
has been a Trustee of Drexel University since 1990.
Thomas A. Skelton, 54, has served as a director of the Company since 1992.
Since November 1999, Mr. Skelton has been the principal of Skelton &
Associates, LLC, through which he serves as an investor in and advisor to
computer software and services companies. He served as President and Chief
Operating Officer of Cambar Software, Inc. in Charleston, South Carolina from
August 1997 to November 1999. From April 1996 to April 1997, he was President
of Knowledge Systems Corporation. From January 1995 to March 1996, he was
Division President of Global Software, Inc. in Raleigh, North Carolina. From
1983 to 1994, Mr. Skelton worked in various management capacities with
Manugistics, Inc., (formerly STSC, Inc.), the principal operating subsidiary
of the Company, where he last served as Chief Operating Officer and Executive
Vice President.
3
Incumbent Class III Directors -- to Continue in Office for Terms Expiring in
2004
Hau L. Lee, 49, has served as a director of the Company since 2000. Mr. Lee
has been a member of the faculty at Stanford University since 1983, serving as
the Thomas Ford Faculty Scholar from 1993 through 1996, as the Kleiner
Perkins, Mayfield, Sequoia Capital Professor in the School of Engineering
since 1996 and as a Professor of Operations, Information and Technology
Management in the Graduate School of Business since 1998. He also served as an
Adjunct Professor in the Department of Industrial Engineering and Engineering
Management at Hong Kong University of Science and Technology in 1996. Mr. Lee
has also undertaken numerous independent consulting engagements since 1995.
William G. Nelson, 68, has served as a director of the Company since 1986.
Since 1990, Mr. Nelson has served as Chairman and Chief Executive Officer of
Harris Data Service of Wisconsin, Inc., a provider of business application
software to mid-size organizations. From September 1996 until October 2000,
Mr. Nelson served as the Chairman of the Board of Directors of Geac Computer
Corporation, Limited; from September 1996 until April 1999, he also served as
its Chief Executive Officer and President. From December 1991 to December
1994, Mr. Nelson was President and Chief Executive Officer of Pilot Software,
Inc. From April 1990 to December 1991, Mr. Nelson served in several executive
capacities at OnLine Software International, Inc., including President, Chief
Operating Officer and Chief Executive Officer. Mr. Nelson serves on the board
of directors of Catalyst International, Inc., a provider of supply chain
software, and HealthGate Data Corp., a provider of healthcare information.
Compensation of Directors
The Company does not pay fees or other compensation (other than the grant of
stock options) to directors for serving on the Board of Directors or
committees of the Board. Directors are reimbursed for their reasonable out-of-
pocket expenses incurred in connection with attendance at meetings of the
Board of Directors and committees thereof.
Under the Company's Second Amended and Restated 1998 Stock Option Plan (the
"SOP"), outside, i.e., non-employee directors, receive an annual option grant
to purchase 32,000 shares of Common Stock. Any director who is appointed or
elected to the Board at any time other than an annual meeting of shareholders
will receive a percentage of the annual grant on the date of his or her
election based on the number of fiscal quarters ending from the date of the
appointment or election until the next annual meeting. These options vest
quarterly over a four year period. In addition, in January 2000, a one-time
grant to purchase 16,000 shares of Common Stock was made to each outside
director serving on January 13, 2000, which options vest quarterly over four
years. The SOP further provides that any director who is newly appointed or
elected to the Board may also receive a grant to purchase up to 32,000 shares
of Common Stock at the discretion of the Board. Any such option so granted at
the discretion of the Board shall vest and become exercisable, with respect to
25% of the shares, one year from the date of grant, and with respect to the
remaining 75% of the shares, quarterly over the following 12 quarters.
Board of Directors' Meetings and Committees
During fiscal 2002, the Board of Directors held thirteen meetings, including
four regularly scheduled meetings and nine additional meetings. The Board of
Directors has established standing Audit, Compensation and Nominating
committees, each of which is composed solely of non-employee members of the
Board of Directors, except for the Nominating Committee, of which Gregory J.
Owens, the Company's Chairman and Chief Executive Officer, is a member. The
membership of each of these standing committees is determined from time to
time by the Board.
The Audit Committee, which presently consists of Joseph H. Jacovini,
Chairman, Lynn C. Fritz and William G. Nelson, each of whom meets the criteria
for "independence" under NASD Rule 4200, held eleven meetings during fiscal
2002. The committee operates under a written charter adopted by the Board of
Directors and recommends to the Board of Directors a firm of independent
certified public accountants to audit the books and accounts of the Company
and its subsidiaries for the fiscal year for which they are appointed. In
addition, the committee reviews and approves the scope and cost of all
services (including non-audit services) provided by the firm selected to
conduct the audit. The committee also monitors the effectiveness of the audit
effort and the
4
Company's financial reporting, and periodically reviews the Company's accounting
policies and financial and operating controls. The committee meets with the
Company's independent accountants, with and without management present, to
discuss the results of their audits and reviews, their evaluations of the
Company's internal controls, and the overall quality of the Company's financial
reporting. The committee meets at least twice quarterly, and more often as
needed, with management and the independent accountants to review the Company's
quarterly earnings releases before dissemination to the public and to review the
financial information to be included in the Company's quarterly and annual
reports (i.e., Forms 10-Q and 10-K), and to recommend inclusion of the financial
information therein, before filing with the Securities and Exchange Commission.
The information contained in this Proxy Statement with respect to the Audit
Committee charter and the independence of the members of the Audit Committee
shall not be deemed to be "soliciting material" or to be "filed" with the
Securities and Exchange Commission, nor shall such information be incorporated
by reference into any future filing under the Securities Act of 1933, as
amended (the "Securities Act"), or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), except to the extent that the Company
specifically incorporates it by reference in such filing.
The Compensation Committee, which presently consists of William G. Nelson,
Chairman, J. Michael Cline and Steven A. Denning, held four meetings during
fiscal 2002. The committee is responsible for the approval and administration
of the compensation program for Gregory J. Owens, the Company's Chief
Executive Officer. The committee was also responsible for the grant of options
to the Company's executive officers under the Company's various stock option
plans and administered the plans.
The Nominating Committee, which consists of Lynn C. Fritz, Chairman, Joseph
H. Jacovini and Gregory J. Owens, met once during fiscal 2002. The committee
nominates, for election at annual or special meetings of the shareholders of
the Corporation, candidates to serve on the Board of Directors. It also
nominates, for the approval of the full Board of Directors, candidates to fill
vacancies on the Corporation's Board of Directors. Members of the committee
also discuss informally from time to time potential candidates for membership
on the Board.
5
OWNERSHIP OF MANUGISTICS GROUP, INC. STOCK
The following table sets forth certain information, as of May 31, 2002, with
respect to the beneficial ownership of shares of Common Stock by (i) each
shareholder known by the Company to be the beneficial owner of more than five
percent (5%) of the outstanding shares of Common Stock; (ii) each director of
the Company; (iii) each executive officer named in the Summary Compensation
Table appearing below under "Executive Compensation"; and (iv) all executive
officers and directors as a group. Except as indicated in the footnotes to the
table, the persons and entities named in the table have sole voting and
investment power with respect to all shares of Common Stock which they
respectively own beneficially.
The address of each person who is an officer or director of the Company is
9715 Key West Avenue, Rockville, MD 20850.
Number of Shares Percent
Name and Address of Beneficial Owner Beneficially Owned(1) of Class
------------------------------------ --------------------- --------
Gregory J. Owens(2) ........................ 3,131,466 4.3
Richard F. Bergmann(3) ..................... 549,692 *
Terrence A. Austin(4) ...................... 209,938 *
Raghavan Rajaji (5) ........................ 299,220 *
Gregory C. Cudahy (6) ...................... 0 0
J. Michael Cline(7) ........................ 94,000 *
Steven A. Denning(8) ....................... 586,704 *
Esther Dyson(9) ............................ 14,700 *
Lynn C. Fritz(10) .......................... 124,000 *
Joseph H. Jacovini(11) ..................... 168,000 *
Hau L. Lee(12) ............................. 46,500 *
William G. Nelson(13) ...................... 280,000 *
Thomas A. Skelton(14) ...................... 1,062,286 1.5
William M. Gibson(15) ...................... 9,388,272 13.5
Brown Capital Management, Inc.(16) ......... 6,729,000 9.7
Putnam Investments, LLC(17) ................ 6,724,963 9.7
Credit Suisse Asset Management, LLC(18) .... 5,676,042 8.2
Directors and executive officers as a group
(17 persons)(19).......................... 6,933,726 9.3
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* Less than 1% of the outstanding Common Stock.
(1) Beneficial ownership is based on 69,595,646 outstanding shares of Common
Stock as of May 31, 2002. Under applicable rules promulgated under the
Securities Exchange Act of 1934, as amended, a person is deemed to be the
beneficial owner of shares of Common Stock if, among other things, he or
she directly or indirectly has or shares voting power or investment power
with respect to such shares. A person is also considered to beneficially
own shares of Common Stock which he or she does not actually own but has
the right to acquire presently or within the next sixty (60) days, by
exercise of stock options or otherwise.
(2) Includes 3,130,166 shares issuable upon exercise of options of which
160,000 are held in grantor retained annuity trusts of which Mr. Owens is
the trustee, and 1,300 shares held in a retirement plan.
(3) Includes 549,292 shares issuable upon exercise of options.
(4) Includes 208,938 shares issuable upon exercise of options and 1,000 shares
held with his wife.
(5) Includes 297,188 shares issuable upon exercise of options, 2,032 shares
held in an employee stock purchase plan.
(6) Mr. Cudahy resigned as an executive officer of the Company effective as of
May 1, 2002.
(7) Includes 94,000 shares issuable upon exercise of options.
(8) Consists of 11,000 shares issuable upon exercise of options held by
Mr.Denning and a total of 575,704 shares beneficially owned by General
Atlantic Partners, LLC ("GAP LLC") and its affiliated investment entities
as follows: General Atlantic Partners 49, L.P. ("GAP 49") owns 211,116
shares of Common Stock, General Atlantic Partners 57, L.P. ("GAP 57") owns
261,742 shares of Common Stock, GAP Coinvestment Partners, L.P. ("GAPCO
I") owns 49,729 shares of Common Stock, and GAP Coinvestment Partners II,
L.P. ("GAPCO II") owns 53,117 shares of Common Stock. Mr. Denning is the
Executive Managing
6
Member of GAP LLC and the Managing General Partner of each of GAPCO I and
GAPCO II. GAP LLC is the general partner of GAP 49 and GAP 57. The managing
members of GAP LLC (other than Klaus Esser) are also the general partners
of GAPCO I and GAPCO II. GAP 49, GAP 57, GAP LLC, GAPCO I and GAPCO II (the
"GAP Group") are a "group" within the meaning of Rule 13d-5 of the
Securities Exchange Act of 1934, as amended. Mr. Denning disclaims
beneficial ownership of such shares of Common Stock except to the extent of
his pecuniary interest therein. The address of the GAP Group and Mr.
Denning is c/o General Atlantic Service Corporation, 3 Pickwick Plaza,
Greenwich, Connecticut 06830.
(9) Includes 11,000 shares issuable upon exercise of options.
(10) Includes 124,000 shares issuable upon exercise of options.
(11) Includes 99,328 shares issuable upon exercise of options, 2,672 shares
held by his wife and 36,000 shares held in a retirement savings plan.
(12) Includes 46,500 shares issuable upon exercise of options.
(13) Includes 64,000 shares issuable upon exercise of options and 216,000
shares in which Mr. Nelson shares voting and investment power.
(14) Includes 126,000 shares issuable upon exercise of options, 23,976 shares
held by his wife and 50,000 shares held in a family limited partnership.
(15) Includes 18,000 shares issuable upon exercise of options, 903,000 shares
held by his wife, 660,300 shares held in a non-profit corporation, with
respect to which Mr. Gibson shares voting and dispositive control, and
7,806,972 shares held in a family limited partnership. Mr. Gibson serves
as the sole general partner of the limited partnership and, in such
capacity, has sole voting and dispositive control of the shares held in
the partnership. Mr. Gibson's address is 780 Godfrey Road, Villanova, PA
19085.
(16) Based solely on information provided to the Company by or on behalf of
Brown Capital Management, Inc., all of the shares of Common Stock are
owned by various investment advisory clients of Brown Capital Management,
Inc., or Brown, 1201 N. Calvert Street, Baltimore, MD 21202, which is
deemed to be a beneficial owner of those shares pursuant to Rule 13d-3
under the Securities Exchange Act of 1934, due to Brown's discretionary
power to make investment decisions over such shares for its clients and
Brown's ability to vote such shares. In all cases, persons other than
Brown have the right to receive, or the power to direct the receipt of,
dividends from, or the proceeds from the sale of the shares. No individual
client of Brown holds more than five percent of the outstanding shares of
Common Stock.
(17) Based solely on information provided to the Company by or on behalf of the
named beneficial owner, includes 6,125,147 shares, including 15,320 shares
issuable upon conversion of the Company's 5% subordinated convertible
notes due 2007, beneficially owned by Putnam Investment Management, LLC,
One Post Office Square, Boston, MA 02109, as a result of its serving as
investment advisor to various investment companies registered under
Section 8 of the Investment Company Act of 1940; and 599,816 shares,
beneficially owned by The Putnam Advisory Company, LLC, One Post Office
Square, Boston, MA 02109, as a result of its serving as investment advisor
for various institutional accounts.
(18) Based solely on information provided to the Company by or on behalf of the
named beneficial owner, Credit Suisse Asset Management, LLC, 466 Lexington
Avenue, New York, NY 10017, such shares are owned solely as a result of
its serving as an investment advisor to its various clients.
(19) Includes 5,125,956 shares issuable upon exercise of options.
7
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth summary information regarding compensation
paid or accrued by the Company for services during fiscal years 2002, 2001 and
2000 to the Company's Chief Executive Officer and each of the four most highly
compensated executive officers other than the Chief Executive Officer whose
individual total salary and bonus on an annual basis exceeded $100,000 for
fiscal 2002 (the "Named Executives"). Each of the Named Executives (other than
Gregory C. Cudahy) joined the Company during fiscal 2000. Accordingly, the
annual compensation reported for each of them (other than for Mr. Cudahy) in
fiscal 2000 is for a partial year. Gregory C. Cudahy joined the Company during
fiscal 2001; accordingly, the annual compensation reported for him in fiscal
2001 is for a partial year.
Long-Term
Annual Compensation
Compensation Awards
----------------------------------- ------------
Other Securities
Annual Underlying All Other
Name and Principal Position Year Salary Bonus Compensation Options (#) Compensation
--------------------------- ---- -------- -------- ------------ ------------ ------------
Gregory J. Owens ................................. 2002 $351,563 $285,939 $ 89,914(1) 1,000,000 $ 7,831(2)
Chief Executive Officer 2001 375,000 375,000 132,649(3) -0- 14,657(4)
2000 318,270 288,531 -- 6,000,000 57,235(5)
Richard F. Bergmann .............................. 2002 256,250 299,050 -- 210,000 3,938(6)
President 2001 250,000 500,000 -- 410,000 3,938(6)
2000 177,083 250,000 -- 860,000 1,947(7)
Terrance A. Austin ............................... 2002 209,375 243,750 -- 85,000 126,491(8)
Executive Vice President, 2001 200,000 275,090 -- 80,000 3,245(9)
President, European Operations 2000 141,667 212,836 -- 480,000 662(10)
Raghavan Rajaji .................................. 2002 257,813 135,000 -- 75,000 70,010(11)
Executive Vice President and 2001 275,000 180,000 -- 30,000 39,609(12)
Chief Financial Officer 2000 60,465 31,500 -- 520,000 -0-
Gregory C. Cudahy (13) ........................... 2002 187,500 262,500 -- 200,000 2,897(14)
Former Executive Vice President, 2001 75,000 175,000 -- 200,000 347(15)
Pricing and Revenue Optimization
---------------
(1) Includes $72,314 for use of a charter plane leased by the Company.
(2) Represents $657 for additional life insurance premiums, $4,624 for
additional long term disability insurance premiums and a $2,550 employer
contribution to the Company's 401(k) Plan.
(3) Includes $49,014 for use of a charter plane leased by the Company, and
$35,000 for a golf club membership initiation fee.
(4) Represents $6,826 for housing and relocation expenses, $657 for additional
life insurance premiums, $4,624 for additional long term disability
insurance premiums and a $2,550 employer contribution to the Company's
401(k) Plan.
(5) Represents $51,047 for housing and relocation expenses, $5,250 for
additional life and disability insurance premiums and a $938 employer
contribution to the Company's 401(k) Plan.
(6) Represents $1,388 for additional life insurance premiums and a $2,550
employer contribution to the Company's 401(k) Plan.
(7) Represents $1,322 for additional life and disability insurance premiums
and a $625 employer contribution to the Company's 401(k) Plan.
(8) Represents $123,246 for housing and relocation expenses overseas, $695 for
additional life insurance premiums and a $2,550 employer contribution to
the Company's 401(k) Plan.
(9) Represents $695 for additional life insurance premiums and a $2,550
employer contribution to the Company's 401(k) Plan.
(10) Represents the value of additional life and disability insurance premiums
paid by the Company.
8
(11) Represents $64,203 for housing and relocation expenses, $3,257 for
additional life insurance premiums and a $2,550 employer contribution to
the Company's 401(k) Plan.
(12) Represents $33,802 for housing and relocation expenses, $3,257 for
additional life insurance premiums and a $2,550 employer contribution to
the Company's 401(k) Plan.
(13) Mr. Cudahy resigned as an executive officer of the Company effective as of
May 1, 2002.
(14) Represents $347 for additional life insurance premiums and a $2,550
employer contribution to the Company's 401(k) Plan.
(15) Represents $347 for additional life insurance premiums.
Stock Options
The following table sets forth certain information concerning the grant of
options to the Chief Executive Officer and other Named Executives in fiscal
2002. The Company has not granted any stock appreciation rights ("SARs").
Option Grants in Last Fiscal Year
Potential Realizable
Value
at Assumed Annual
Number of Percent of Rate of Stock Price
Securities Total Options Appreciation for Option
Underlying Granted to Exercise or Term
Options Employees in Base Expiration ------------------------
Name Granted (#) Fiscal Year Price($/sh) Date 5% 10%
---- ----------- ------------- ----------- ---------- ---------- -----------
Gregory J. Owens ........................... 1,000,000(1) 18.49% $ 6.380 10/8/11 $4,012,348 $10,168,077
Richard F. Bergmann ........................ 210,000(1) 3.88% 6.380 10/8/11 842,593 2,135,296
Terrance A. Austin ......................... 85,000(1) 1.57% 6.380 10/8/11 341,050 864,287
Raghavan Rajaji ............................ 75,000(1) 1.39% 6.380 10/8/11 300,926 762,606
Gregory C. Cudahy .......................... 100,000(1) 1.85% 6.380 10/8/11 401,235 1,016,808
100,000(2) 1.85% 11.775 11/30/11 740,523 1,876,632
---------------
(1) Each option vests in 48 equal monthly installments over a four year period
beginning on November 8, 2001. The options have an exercise price equal to
the fair market value of the Common Stock on the date of grant.
(2) Each option vests in 48 equal monthly installments over a four year period
beginning on December 30, 2001. The options have an exercise price equal to
the fair market value of the Common Stock on the date of grant.
The following table summarizes the value realized upon exercise of
outstanding stock options during fiscal 2002 and the value of the outstanding
options held by the Chief Executive Officer and the other Named Executives.
Aggregated Option Exercises in Fiscal 2002 and
Fiscal Year-End Option Values
Number of Securities
Underlying Unexercised Value of Unexercised
Options at Fiscal In-the-Money Options at
Number of Year-Ended Fiscal Year-End(2)
Shares Acquired Value ---------------------------- ---------------------------
Name on Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable
---- --------------- ----------- ----------- ------------- ----------- -------------
Gregory J. Owens ................... 600,000 $11,504,033 2,524,333 3,566,667 $14,815,969 $23,396,518
Richard F. Bergmann ................ 160,000 2,933,009 468,667 745,833 2,426,733 3,426,810
Terrance A. Austin ................. 15,000 270,408 150,083 297,917 1,042,982 1,808,788
Raghavan Rajaji .................... 20,000 288,516 247,500 297,500 620,489 1,182,108
Gregory C. Cudahy .................. 6,000 81,000 165,250 498,750 22,760 714,260
---------------
(1) Computed by multiplying the number of shares of Common Stock acquired upon
exercise of options by the difference between (i) the per share fair market
value of the Common Stock on the date of exercise and (ii) the exercise
price per share.
(2) Computed by multiplying the number of options by the difference between (i)
the per share market value of the Common Stock on February 28, 2002 of
$12.96 and (ii) the exercise price per share.
9
Employment Agreements
In fiscal 2000, the Company entered into employment agreements with Messrs.
Owens, Bergmann, Austin and Rajaji in connection with the commencement of
their employment with the Company under which each receives a minimum annual
base salary. Under the agreements, Messrs. Owens, Bergmann and Austin are each
eligible for a bonus of up to 100% of their respective annual base salaries;
Mr. Rajaji is eligible for an annual bonus of up to $180,000; 50% of these
bonuses is based upon the financial performance of the Company, and 50% is
based upon satisfaction of management objectives. (As stated below in the
Report of the Compensation Committee of the Board of Directors on Executive
Compensation, the maximum annual incentive cash bonus Mr. Owens is eligible to
receive was increased in fiscal 2002.) In addition, Messrs. Bergmann and
Austin are eligible to receive an additional quarterly bonus equal to 25% of
their respective annual base salaries based upon significant participation in
revenue generation as determined quarterly. The Company also provides to each
of Messrs. Owens, Bergmann, Austin and Rajaji certain benefits, including
medical, life and disability insurance, participation in the Employee Stock
Purchase Plan, and fringe benefits.
Under the respective agreements, if the Company terminates the executive's
employment other than for cause, the Company will make severance payments to
the executive in the amount of his base salary and benefits during the six
month period (a twelve month period for Mr. Owens) commencing on the
termination date. The severance payments to the executive will cease if he
obtains alternative employment during the six month period (a twelve month
period for Mr. Owens) commencing on the termination date. In addition, for a
period of six months beginning on the date of the termination of the
executive's employment for any reason other than cause, the vesting of his
options will continue. Some or all of the executive's options may immediately
vest in the event of a change of control of the Company. In addition, Mr.
Austin will have the option to terminate his employment and receive the
severance benefits described above under certain circumstances if his job
status is diminished.
The information set forth in the following Report of the Audit Committee of
the Board of Directors, the Report of the Compensation Committee of the Board
of Directors and in the Performance Graph shall not be deemed incorporated by
reference into any existing or future filings under the Securities Act or the
Exchange Act, which incorporate by reference this Proxy Statement, except to
the extent that the Company specifically incorporates such information by
reference.
Report of the Audit Committee of the Board of Directors
The Audit Committee of the Board of Directors of the Company oversees the
Company's auditing, accounting and financial reporting processes generally on
behalf of the Board of Directors. The Audit Committee is comprised of three
independent directors, each of whom meets the criteria for "independence"
under NASD Rule 4200, and operates under a written charter adopted by the
Board of Directors, and reviewed by the Audit Committee on an annual basis. (A
copy of the charter is attached as Exhibit A, which is identical to the copy
of the charter which appeared in the Company's Proxy Statement for its 2001
Annual Meeting of Shareholders).
Management has the primary responsibility for the financial statements and
the accounting and financial reporting process, including the system of
internal controls. The Audit Committee has reviewed and discussed with
management the Company's audited consolidated financial statements for the
fiscal year ended February 28, 2002, including a discussion of the
applicability and quality of accounting principles, the reasonableness of
significant judgments, and the clarity of disclosures in the financial
statements. The Audit Committee is not providing any expert or special
assurance as to the Company's financial statements.
The Company's independent accountants are responsible for expressing an
opinion on the conformity of the Company's audited consolidated financial
statements with accounting principles generally accepted in the United States
of America. The Audit Committee has reviewed and discussed with the Company's
independent accountants the Company's audited consolidated financial
statements for the fiscal year ended February 28, 2002. The Audit Committee is
not providing any professional certification as to the independent
accountants' work product.
In addition, the Audit Committee has discussed with the Company's
independent accountants the matters required to be discussed by Statement on
Auditing Standards No. 61, as amended, "Communications with Audit Committees,"
relating to the conduct of the audit. The Audit Committee has received the
written disclosures from
10
the independent accountants required by Independence Standards Board Standard
No. 1, "Independence Discussions with Audit Committees," and has discussed
with the independent accountants their independence.
Based on the Audit Committee's review of the Company's audited consolidated
financial statements for the fiscal year ended February 28, 2002, and the
review and discussions described in the foregoing paragraphs of this report,
the Audit Committee recommended to the Board of Directors that such audited
consolidated financial statements be included in the Company's Annual Report
on Form 10-K for the fiscal year ended February 28, 2002, for filing with the
Securities and Exchange Commission.
Audit Committee
Joseph H. Jacovini, Chairman
Lynn C. Fritz
William G. Nelson
Report of the Compensation Committee of the Board of Directors on Executive
Compensation
In fiscal 2002, the Compensation Committee of the Board of Directors was
directly responsible for the approval and administration of a compensation
program for Gregory J. Owens, the Company's Chief Executive Officer. The
Compensation Committee was also responsible for the grant of options to the
Company's executive officers under the Company's various stock option plans
and administered the plans. The Compensation Committee consisted of three
outside directors of the Company.
In fiscal 2002, Mr. Owens was responsible for the implementation of the
Company's compensation programs for the other executive officers of the
Company, including those named in the Summary Compensation Table. These
compensation programs were developed by Mr. Owens and reviewed with the Board
of Directors prior to fiscal 2002.
Objectives and Policies
The objectives of the Company's executive compensation programs, as
respectively implemented by the Compensation Committee and by Mr. Owens, were
to:
o Attract and retain highly qualified executives to lead and manage
the Company by providing competitive total compensation packages;
o Reward executives based on the business performance of the Company
and upon individual performance;
o Provide executives with incentives designed to maximize the long-
term performance of the Company and to align further their interests
with those of the shareholders of the Company; and
o Assure that objectives for corporate and individual performance are
established and measured.
Compensation of Executive Officers
In fiscal 2002, the Company's compensation programs consisted of cash
compensation and the award of stock options. Cash compensation consisted of
base salary and cash bonuses awarded based upon the attainment of certain
performance award targets or sales revenue goals.
Base Salary
Base salaries for executive officers of the Company (including the Chief
Executive Officer) have historically been determined by evaluating the
responsibilities associated with their respective positions, the experience of
the officers and by reference to salaries paid in the competitive marketplace
to executive officers with comparable ability and experience. Individual
salary increases are reviewed annually and, in fiscal year 2002, the review
was based primarily on competitive market forces affecting compensation for
executive officers and the Company's financial performance. At the close of
fiscal 2002, there were ten executive officers, including Mr. Owens.
In fiscal 2002, annual base salaries, cash bonuses and stock option awards
were determined by Mr. Owens for the other executive officers. Base salaries
were not increased for the executive officers in fiscal 2002, with the
exception of Mr. Bergmann's base salary, which was increased from $250,000 to
$300,000 to reflect his strong
11
performance generally as President of the Company. (The salary of one other
executive officer was increased in connection with his promotion to a higher
office in fiscal year 2002.)
Performance Awards
Executive officers are eligible to receive an annual incentive cash bonus,
in an amount up to 100% of the executive officer's base salary, payable
quarterly, based 50% on the corporate performance award targets of the Company
and 50% upon management objectives established for each executive officer. The
corporate performance award targets consist of specific operational and
financial goals to be reached by the Company during the course of the fiscal
year. These goals were recommended by senior management and reviewed by the
Board of Directors and were modified through the same process in the Company's
third fiscal quarter in response to worsening economic conditions and adverse
changes in the Company's financial performance. These goals consist of
expected software license revenue, expected total revenue, and net corporate
financial results. In formulating these goals, senior management considered,
among other factors, growth in the economy as projected by various economists
and industry growth expectations as published by AMR Research and others.
The cash bonuses based on management objectives were payable under a plan
developed jointly by Mr. Owens and each executive officer and approved by Mr.
Owens. The plan set forth non-financial performance measurements such as
improvements in productivity, development and introduction of new products,
improvement of product quality, relationships with customers and leadership
and management development.
Each executive officer is also eligible to receive performance awards in the
form of stock option grants which are recommended by Mr. Owens to the
Compensation Committee for approval. In fiscal 2002, Mr. Owens based his
recommendations primarily on his evaluation of the performance of such
executive officer, competitive market forces affecting executive compensation
and on the size of previous option grants to such executive officer, together
with the number of options held by executive officers at the beginning of
fiscal 2002. These stock option grants were also intended to serve as a strong
long-term retention incentive.
Sales Revenue Awards
Certain of the executive officers who shared responsibility for sales were
also eligible to receive cash bonuses, in amounts up to 100% of the executive
officer's annual base salary, for attaining pre-determined sales revenue
goals. These bonuses, to the extent awarded, were payable quarterly.
One-time Bonus
The Compensation Committee awarded a one-time mid-year bonus of $50,000 to
Mr. Bergmann, the Company's President, in recognition of his strong
performance generally. The Board of Directors ratified the grant of the bonus
to Mr. Bergmann.
Chief Executive Officer's Compensation and Corporate Performance for Fiscal
2002
In determining the compensation program of Mr. Owens, the Company's Chief
Executive Officer, including base salary, cash bonuses and stock option grants
for fiscal 2002, the Compensation Committee considered specific corporate
performance goals, such as profitability, revenue targets and software license
revenue growth. Other non-financial objectives similar to those set forth
above for other executive officers were also included in establishing Mr.
Owens' compensation program.
Mr. Owens was eligible to receive an annual incentive cash bonus of up to
$500,000, an amount equal to 133% of his annual base salary, payable 50% based
on the corporate performance award targets set for the other executive
officers referred to above and 50% based upon management objectives. The
component of the cash bonus based on management objectives was payable under a
plan submitted by Mr. Owens and approved by the Compensation Committee. For
fiscal 2002, Mr. Owens received an incentive cash bonus in an amount equal to
approximately 56% of his annual base salary.
Mr. Owens' initial annual base salary was set in fiscal 2000 upon his
employment with the Company. His base salary has not been increased
subsequently.
In October 2001, in recognition of a number of factors, including Mr. Owens'
strong performance generally, and the fact that Mr. Owens' base salary had not
been increased since he joined the Company in April 1999, the
12
Compensation Committee granted to Mr. Owens options to purchase a total of
1,000,000 shares of the Company's common stock under the SOP. The Committee
also awarded to Mr. Owens a one-time cash bonus of $75,000, payable November
1, 2001, and increased the maximum performance cash bonus he was eligible to
receive in fiscal 2002 from $375,000 to $500,000. These actions, which were
ratified by the Board of Directors, were also intended to provide strong long-
term retention incentives to Mr. Owens.
Except as described above in this report, no specific weight or relative
importance was assigned to the various specific factors and detailed
compensation information considered respectively by the Committee and Mr.
Owens. Accordingly, the Company's compensation policies and practices relating
to base salaries, cash bonuses and stock option awards, including Mr. Owens,
may, to that extent, be deemed informal and subjective.
Compensation Committee
William G. Nelson, Chairman
Steven A. Denning
J. Michael Cline
13
Stock Performance Graph
The following graph compares the cumulative total return to shareholders of
the Common Stock with the cumulative total return of the Nasdaq Stock Market
(US) Index and of the Nasdaq Computer and Data Processing Stocks Index from
February 28, 1997 to the end of the last fiscal year (February 28, 2002). The
graph assumes that the value of the investment in the Common Stock and each
index was $100 on February 28, 1997 and that all dividends were reinvested.
The Company has not paid any cash dividends on its Common Stock and does not
intend to do so in the foreseeable future. The performance graph is not
necessarily indicative of future performance.
1997 1998 1999 2000 2001 2002
---- ---- ---- ---- ---- ----
Manugistics Group, Inc. $100 $253 $ 50 $361 $394 $165
Nasdaq Stock Market (U.S. Companies) $100 $139 $191 $389 $187 $147
Nasdaq Computer and Data Processing Stocks $100 $153 $253 $528 $224 $178
Agreements with Employees
All employees of the Company and its subsidiaries, including executive
officers, are required to sign a Conditions of Employment Agreement upon
joining the Company and its subsidiaries. This agreement restricts the ability
of the Company's employees (other than those employed by the Company in
California) to compete with the Company and its subsidiaries during his or her
employment with the Company and for a period of twelve months thereafter, and
contains certain confidentiality and invention assignment provisions.
Certain Business Relationships
New Roads
In August 2000, the Company entered into a software license agreement with
New Roads, Inc. ("New Roads") pursuant to which it was obligated to pay $1.6
million to the Company over a period of twelve months, $300,000 of which was
paid. At that time, one of the Company's outside directors, J. Michael Cline,
had an indirect ownership interest through various investment vehicles of
approximately 22% in New Roads. He controlled a total of approximately 43% of
the outstanding New Roads common stock through these investment vehicles. Mr.
Cline also served (and continues to serve) on the Board of Directors of New
Roads, but does not
14
serve as one of its executive officers. In May 2001, New Roads assigned the
software license agreement to an unrelated third party who paid the full amount
of the license fee to the Company, which reimbursed New Roads for the $300,000
previously paid.
Talus Solutions, Inc.
The Company acquired Talus Solutions, Inc. ("Talus") in a stock-for-stock
merger on December 21, 2000. The Company and Talus had a common director, J.
Michael Cline, on their respective boards. (Mr. Cline continues to serve on
the Company's Board of Directors and has been renominated for election as a
Class I director at the Meeting.) In connection with the merger, Steven A.
Denning was appointed to serve on the Company's Board of Directors. Mr.
Denning then was, and continues to serve as, the Executive Managing Member of
General Atlantic Partners, LLC ("GAP LLC"), which, prior to the merger, was
one of Talus' principal shareholders through four of its affiliated investment
limited partnerships.
On the effective date of the merger, the options to purchase a total of
25,000 shares of Talus common stock held by Mr. Cline were converted into
options to purchase a total of 3,700 shares of Common Stock in accordance with
the terms of the merger. In addition, Mr. Cline then owned indirectly
approximately 2.2% of the outstanding shares of Talus capital stock as a
result of his interest in General Atlantic Partners, LLC and certain of its
affiliates, who then were Talus stockholders. These shares were converted into
shares of Common Stock in the merger. The shares of the Company's Common Stock
which he then owned indirectly had a value of approximately $6.57 million
based on the closing price of $42.61 per share of the Company's common stock
on December 21, 2000.
At the effective time of the merger, the Company deposited with an escrow
agent 15% of the shares of Common Stock which were otherwise issuable to each
of the Talus stockholders. A total of 1,053,730 escrowed shares are being held
to secure the indemnification obligations of Talus and its former stockholders
for certain losses incurred by the Company as a result of any breach of the
representations, warranties, covenants or agreement of Talus which are
contained in the merger agreement and as a result of certain identified
contingencies. The Company has asserted certain claims for indemnification
against these shares. The representatives of the former Talus shareholders
have disputed these claims.
Each of Messrs. Cline and Denning has an indirect economic interest in the
escrowed shares of Common Stock. Based on the closing price of the Common
Stock on June 21, 2002 of $5.56 per share, each of their respective economic
interests in the escrowed shares had a value on that date of less than
$200,000. Of the four limited partnerships affiliated with GAP LLC which own
escrowed shares, Mr. Denning is Managing General Partner of two of the limited
partnerships; GAP LLC itself (of which Mr. Denning is the Executive Managing
Member) is the general partner of the other two limited partnerships.
William M. Gibson
William M. Gibson resigned from his position as Chairman and as a member of
the Company's Board of Directors effective February 2001. In connection with
his resignation from the Board, the Company and Mr. Gibson agreed that the
Company would continue to employ Mr. Gibson on a part-time basis as an advisor
to the Chairman and Chief Executive Officer until July 31, 2001, and that he
would continue to receive employee health and insurance benefits until that
date. In addition, the stock options previously granted to him continued to
vest as scheduled through July 31, 2001. The Company also granted to Mr.
Gibson limited piggyback registration rights relating to a total of up to
2,000,000 shares of Common Stock. These rights enable Mr. Gibson to require
the Company to register the shares for resale under the Securities Act of 1933
in an underwritten offering of equity securities by the Company or other
selling shareholders.
Joseph H. Jacovini
Joseph H. Jacovini, a director of the Company, is a partner and Chairman of
Dilworth Paxson LLP, counsel to the Company, which firm rendered legal
services to the Company in fiscal 2002.
15
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's executive officers,
directors and persons who own more than ten percent (10%) of the Common Stock
(collectively, "Reporting Persons") to file initial reports of ownership and
reports of changes of ownership of the Common Stock with the Securities and
Exchange Commission ("SEC") and the Nasdaq Stock Market. Reporting Persons are
required to furnish the Company with copies of all forms that they file under
Section 16(a). Based solely upon a review of the copies of such forms received
by the Company or written representations from Reporting Persons, the Company
believes that, with respect to fiscal 2002, all Reporting Persons complied
with all applicable filing requirements under Section 16(a).
SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors, upon the recommendation of the Audit Committee, has
selected Deloitte & Touche LLP, independent accountants, as auditors of the
Company to examine and report to shareholders on the consolidated financial
statements of the Company and its subsidiaries for the fiscal year ending on
February 28, 2003. Deloitte & Touche LLP currently serves as the Company's
independent accountants, and has been the Company's independent accountants
since 1988. Representatives of Deloitte & Touche LLP will be present at the
Meeting and will be given an opportunity to make a statement. They also will
be available to respond to appropriate questions from shareholders. The Audit
Committee of the Board of Directors has determined that the provision of the
services set forth in the "Financial Information System Design and
Implementation Fees" and "All Other Fees" sections below is compatible with
maintaining the independence of Deloitte & Touche LLP with respect to the
Company for the fiscal year ended February 28, 2002.
Audit Fees
Principal Accounting Firm Fees
Aggregate fees billed to the company for the fiscal year ended February 28,
2002 by the Company's principal accounting firm, Deloitte & Touche LLP, the
member firms of Deloitte Touche Tohmatsu, and their respective affiliates
(collectively, "Deloitte & Touche"), which includes Deloitte Consulting:
Audit Fees $500,000(a)
Financial Information Systems
Design and Implementation Fees $ 0
Audit Related Fees $310,000(b)
Other Fees $630,000(c)
--------
All Other Fees $940,000(d)
---------------
(a) Audit fees include audit and quarterly review procedures.
(b) Audit related fees include consents for registration statements, foreign
statutory audits, and employee benefit plan audits.
(c) Other fees include fees for software implementation services, unrelated to
financial information systems design and implementation services, provided
by Deloitte Tohmatsu Consulting and foreign tax services. Deloitte & Touche
LLP has recently announced its intent to separate Deloitte Consulting from
the firm.
(d) The audit committee has considered whether the provision of these services
is compatible with maintaining Deloitte & Touche LLP's independence, and
concluded that these are compatible.
16
SUBMISSION OF SHAREHOLDER PROPOSALS FOR THE
2003 ANNUAL MEETING OF SHAREHOLDERS
Shareholder proposals submitted for inclusion in the Proxy Statement for the
2003 Annual Meeting of Shareholders must be received by the Company at the
Company's corporate headquarters address and must be submitted in accordance
with Rule 14a-8 of the Exchange Act on or before February 28, 2003.
Under the Company's By-Laws, shareholder proposals which are not submitted
for inclusion in the Company's Proxy Statement for the 2003 Annual Meeting of
Shareholders must be received by the Secretary of the Company: (i) 60 days in
advance of such meeting if the meeting is to be held on a day which is within
30 days preceding the anniversary of the 2002 Meeting, or (ii) 90 days in
advance of such meeting if the meeting is to be held on a day which is on or
after the anniversary of the 2002 Meeting. Shareholder proposals not submitted
for inclusion in the Company's proxy statement relating to an annual meeting
to be held 30 days or more prior to the anniversary of the preceding year's
annual meeting or relating to a special meeting must be received no later than
the close of business on the tenth day following public announcement of the
meeting date. All notices must briefly describe the business desired to be
brought before the meeting, the shareholder's name and address as appearing on
the Company's books, the class and number of shares owned and any material
interest of the shareholder in such matter.
OTHER BUSINESS
The Board of Directors does not intend to bring any other matter before the
Meeting and does not know of any other business which others will present for
consideration at the Meeting. Except as the Board of Directors may otherwise
permit, only the business set forth and discussed in the Notice of Annual
Meeting of Shareholders and this Proxy Statement may be acted on at the
Meeting. If any other business does properly come before the Meeting, the
proxy holders will vote on such matters according to their discretion.
By Order of the Board of Directors
/s/ Susan E. Pendery
------------------------
Susan E. Pendery
Acting Secretary
ALL SHAREHOLDERS ARE URGED TO COMPLETE, SIGN, DATE, AND RETURN THE
ACCOMPANYING PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE. THANK YOU FOR
YOUR PROMPT ATTENTION TO THIS MATTER.
17
APPENDIX A
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
OF MANUGISTICS GROUP, INC.
CHARTER
I. PURPOSE AND RESPONSIBILITIES
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities with respect to: (i)
the financial statements of the Corporation; (ii) the Corporation's system of
internal controls; and (iii) the Corporation's auditing, accounting and
financial reporting processes generally. The Committee's primary duties and
responsibilities are to:
o Serve as an independent and objective monitor of the Corporation's
financial reporting process and internal control system.
o Review and evaluate the audit efforts of the Corporation's independent
accountants and Chief Financial Officer ("CFO") and the Corporation's
internal audit staff.
o Provide for open, ongoing communication among the independent accountants,
management, the CFO and internal audit staff and the Board of Directors
concerning the Corporation's financial, audit and accounting issues and
affairs.
The Committee's responsibility is oversight, and it recognizes that the
Corporation's management is responsible for preparing the Corporation's
financial statements. Additionally, the Committee recognizes that management,
the CFO and the internal audit staff as well as the independent accountants
have more knowledge and more detailed information about the Corporation than
do the members of the Committee; consequently, in carrying out its oversight
responsibilities, the Committee is not providing any expert or special
assurance as to the Corporation's financial statements or any professional
certification as to the independent accountants' work product.
II. COMPOSITION
The Committee shall consist of not less than three independent members who
shall be appointed by the Board of Directors at the annual organizational
meeting of the Board of Directors; the Board of Directors shall appoint one
member of the Committee to serve as Chairman of the Committee. Members of the
Committee shall be financially literate or become financially literate within
a reasonable period of time after appointment to the Committee and at least
one member of the Committee shall have accounting, related financial
management expertise, or any other comparable experience or background that
results in the individual's financial sophistication. No member of the
Committee shall be employed or otherwise affiliated with the Corporation's
independent accountants. In the event that a Committee member faces a
potential or actual conflict of interest with respect to a matter before the
Committee, that Committee member shall be responsible for alerting the
Committee Chairman, and if the affected committee member is the Committee
Chairman, shall advise the remaining members of the Committee. In the event
that the Committee Chairman, or the remaining members of the Committee, as the
case may be, concur that a potential or actual conflict of interest exists,
the effected Committee member shall not participate in the matter before the
Committee.
III. MEETINGS
The Committee shall meet at least four times annually, or more frequently as
circumstances dictate. The Committee shall meet at least annually, and more
often as warranted, with the CFO and the independent accountants in separate
executive sessions to discuss any matters that the Committee or any of these
parties believes should be discussed privately. The Committee shall maintain a
high degree of independence both in establishing its agenda and in evaluating
the performance of the independent accountants, CFO and internal audit staff
and management.
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IV. RESPONSIBILITIES AND DUTIES
The following actions shall be taken by the Committee in carrying out its
oversight responsibility. These actions are set forth as a guide with the
understanding that the action taken may vary depending on the circumstances.
o Review the performance of the independent accountants and recommend to the
Board of Directors the appointment, retention or discharge of the
independent accountants as auditors of the Company and to perform the
annual audit, which accountants shall be ultimately accountable to the
Board of Directors, through the Audit Committee, as representatives of the
shareholders of the Corporation. On an annual basis, review and approve
the audit and non-audit fees and services provided by the independent
accountants.
o Review with the CFO and independent accountants the financial information
contained in the Corporation's Quarterly Report on Form 10-Q prior to its
filing.
o Review with the CFO and the independent accountants, at the completion of
the annual audit, the following items to be included in the Annual Report
on Form 10-K for the last fiscal year and prior to its filing:
(1) the Corporation's annual consolidated financial statements and related
footnotes;
(2) the independent accountant's audit of the consolidated financial
statements and their report thereon;
(3) any significant changes required in the independent accountants'
examination plan;
o Review with the CFO and the independent accountants, at the completion of
the annual audit:
(1) any serious difficulties or disputes with management encountered
during the course of the audit; and
(2) any other matters related to the conduct of the audit which are to be
communicated to the Committee under generally accepted auditing
standards including, items set forth in Statement on Auditing
Standards No. 61 -- Communication with Audit Committees ("SAS 61") or
other such auditing standards that may in time modify, supplement or
replace SAS 61.
o On an annual basis, the Committee should ensure receipt of, and review
with the independent accountants, a written statement required by
Independence Standards Board (ISB) Standard No. 1, as such standard may be
modified or supplemented, and discuss with the accountants their
independence. The Committee will recommend that the Board of Directors
take appropriate action on any disclosed relationships that may reasonably
bear on the independence of the accountants and satisfy itself that the
Corporation has engaged independent accountants as required by the federal
securities acts.
o Prepare an Audit Committee Report for inclusion in all proxy and
information statements relating to votes of shareholders occurring after
December 15, 2000. The Audit Committee Report must state whether the
Committee:
(1) has reviewed and discussed the audited consolidated financial
statements with management;
(2) has discussed with the independent accountants the matters required to
be discussed by SAS 61, as may be modified, supplemented or replaced;
(3) has received the written disclosures from the independent accountants
required by ISB Standard No. 1, as may be modified or supplemented,
and has discussed with the accountants their independence;
(4) has recommended to the Board of Directors, based on the review and
discussions referred to in items (l) through (3) above, that the
Corporation's consolidated financial statements be included in the
Annual Report on Form 10-K for the last fiscal year for filing with
the Securities and Exchange Commission;
(5) has adopted a written charter for the audit committee (and include a
copy of the Charter as an appendix to the company's proxy statements
at least once every three years); and
(6) is comprised of independent members.
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o Review and reassess the adequacy of the audit committee charter on an
annual basis. The charter will be included as an appendix to the annual
stockholders' meeting proxy statement triennially or in the next annual
stockholders' meeting proxy statement after any significant amendment to
the charter.
o In consultation with the independent accountants and the CFO, review the
adequacy and quality of the Corporation's financial reporting processes
and system of internal control.
o Review and concur in the appointment, replacement, reassignment or
dismissal of the CFO.
o Review the performance of the CFO and the internal audit staff, including
the objectivity and authority of its reporting, the proposed audit plans
for the coming year, and the coordination of such plans with the
independent accountants.
o Review legal and regulatory matters that may have a material impact on the
Corporation's consolidated financial statements, related compliance
policies and programs, and reports received from regulators.
V. GENERAL
In addition to the activities described above, the Committee will perform
such other functions as necessary or appropriate under law, the Corporation's
charter or By-laws, and the resolutions and other directives of the Board of
Directors.
The Committee shall have the power to conduct or authorize inquiries and
investigations into any matters within its scope of responsibilities and shall
be empowered to retain independent counsel, accountants, or others to assist
it in the conduct of any inquiry or investigation.
The duties and responsibilities of a member of the Committee are in addition
to those duties generally pertaining to a member of the Board of Directors.
The Committee will report its actions to the Board of Directors with such
recommendations as the Committee may deem appropriate.
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1216-PS-02
DETACH HERE ZMAN42
PROXY
MANUGISTICS GROUP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
MANUGISTICS GROUP, INC. FOR THE ANNUAL MEETING OF SHAREHOLDERS TO
BE HELD ON JULY 25, 2002
The undersigned, hereby revoking any contrary proxies previously given
relating to these shares, hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders and Proxy Statement in connection with the 2002 Annual
Meeting of Shareholders of Manugistics Group, Inc. (the "Annual Meeting") to be
held on Thursday, July 25, 2002 at 9:00 A.M. E.D.T. at the Bethesda Marriott
Hotel, 5151 Pooks Hill Road, Bethesda, Maryland, and hereby appoints Gregory J.
Owens and Raghavan Rajaji, and each of them (with full power to act alone), the
attorneys and proxies of the undersigned, with full power of substitution to
each, to vote all shares of the Common Stock of MANUGISTICS GROUP, INC.
registered in the name provided herein which the undersigned is entitled to vote
at the Annual Meeting, and at any adjournment(s) or postponement(s) thereof,
with all the powers the undersigned would have if personally present. Without
limiting the general authorization hereby given, said proxies are, and each of
them hereby is, instructed to vote or act as follows on the reverse side hereof
on the proposals set forth in said Proxy Statement. In their discretion, the
proxies are authorized to vote upon such other matters as may properly come
before the Annual Meeting.
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SEE REVERSE CONTINUED AND TO BE COMPLETED, SIGNED AND DATED SEE REVERSE
SIDE ON REVERSE SIDE SIDE
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MANUGISTICS GROUP, INC.
C/O EQUISERVE
P.O. BOX 43068
PROVIDENCE, RI 02940
DETACH HERE ZMAN41
|X| Please mark
votes as in
this example.
This Proxy when executed will be voted in the manner directed herein. If no
direction is made, this Proxy will be voted FOR the election of the two (2)
nominees for Class I Directors listed below.
1. Election of Class I Directors.
Nominees: (01) J. Michael Cline and (02) Lynn C. Fritz
FOR WITHHELD
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For all nominees except as noted above
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT | |
Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
Signature:______________ Date:_______ Signature:______________ Date:____________