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 (AMENDMENT NO. )
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 pursuant to Rule 14a-12
STELLENT, 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)
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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] 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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STELLENT, INC.
7777 GOLDEN TRIANGLE DRIVE
EDEN PRAIRIE, MINNESOTA 55344
(952) 903-2000
July 28, 2003
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
Stellent, Inc. to be held at the Marriott Southwest Hotel, 5801 Opus Parkway,
Minnetonka, Minnesota 55343, commencing at 3:30 p.m., Central Daylight Time, on
Wednesday, August 27, 2003.
The Secretary's Notice of Annual Meeting and the Proxy Statement, that
follow, describe the matters to come before the meeting. During the meeting, we
will also review the activities of the past year and items of general interest
regarding the Company.
We hope that you will be able to attend the meeting in person and we look
forward to seeing you. Please mark, date and sign the enclosed proxy and return
it in the accompanying envelope as quickly as possible, even if you plan to
attend the meeting. If you later desire to revoke the proxy, you may do so at
any time before it is exercised.
Sincerely,
/s/ Robert F. Olson
Robert F. Olson
Chairman of the Board,
Chief Executive Officer and President
STELLENT, INC.
7777 Golden Triangle Drive
Eden Prairie, Minnesota 55344
---------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
---------------------------------------------------------------
TO THE SHAREHOLDERS OF STELLENT, INC.:
Please take notice that the Annual Meeting of Shareholders of Stellent,
Inc. will be held, pursuant to due call by the Board of Directors of the
Company, at the Marriott Southwest Hotel, 5801 Opus Parkway, Minnetonka,
Minnesota 55343 at 3:30 p.m. on Wednesday, August 27, 2003, or at any
adjournment or adjournments thereof, for the purpose of considering and taking
appropriate action with respect to the following:
1. To elect five directors.
2. To ratify the appointment of Grant Thornton LLP as independent auditors
of the Company for the fiscal year ending March 31, 2004.
3. To transact any other business as may properly come before the meeting
or any adjournments thereof.
Pursuant to due action of the Board of Directors, shareholders of record on
July 16, 2003, will be entitled to vote at the meeting or any adjournments
thereof.
A PROXY FOR THE MEETING IS ENCLOSED HEREWITH. YOU ARE REQUESTED TO FILL IN AND
SIGN THE PROXY, WHICH IS SOLICITED BY THE BOARD OF DIRECTORS, AND MAIL IT
PROMPTLY IN THE ENCLOSED ENVELOPE.
By Order of the Board of Directors
STELLENT, INC.
[Gregg A. Waldon]
Gregg A. Waldon
Executive Vice President,
Chief Financial Officer,
Treasurer and Secretary
Dated: July 28, 2003
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE SIGN AND DATE THE PROXY
CARD EXACTLY AS YOUR NAME(S) APPEARS ON THE CARD AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE.
PROXY STATEMENT
OF
STELLENT, INC.
7777 Golden Triangle Drive
Eden Prairie, Minnesota 55344
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Annual Meeting of Shareholders to be Held
Wednesday, August 27, 2003
---------------------------------------------------------------
INTRODUCTION
The Board of Directors of Stellent, Inc. (the "Company") furnishes this
Proxy Statement in connection with its solicitation of proxies for use at the
Annual Meeting of the Shareholders to be held at the Marriott Southwest Hotel,
5801 Opus Parkway, Minnetonka, Minnesota 55343 on August 27, 2003 at 3:30 p.m.,
and at any adjournment thereof.
All shares represented by properly executed proxies received in time will
be voted at the meeting and, where the manner of voting is specified on the
proxy, will be voted in accordance with such specifications. Shares represented
by properly executed proxies on which no specification has been made will be
voted (i) for the election of the nominees for director named herein and (ii) in
favor of ratification of Grant Thornton LLP as the Company's independent
auditors for the fiscal year ending March 31, 2004, and will be deemed to grant
discretionary authority to vote upon any other matters properly coming before
the meeting. Proxies cannot be voted for a greater number of persons than the
number of nominees named.
Any shareholder who executes and returns a proxy may revoke it at any time
prior to the voting of the proxies by giving written notice to the Secretary of
the Company, by executing a later-dated proxy, or by attending the meeting and
giving oral notice to the Secretary of the Company.
The affirmative vote of the holders of a majority of the outstanding shares
of common stock of the Company present and entitled to vote is required for the
election of each nominee to the Board of Directors of the Company (the "Board")
and for approval of each proposal included in this Proxy Statement. For this
purpose, a shareholder who abstains with respect to a proposal is considered to
be present and entitled to vote on such proposal at the meeting and is in effect
casting a negative vote, but a shareholder (including a broker) who does not
give authority to a proxy to vote, or withholds authority to vote, on a proposal
shall not be considered present and entitled to vote on such proposal.
The Board has fixed the close of business on July 16, 2003 (the "Record
Date") as the date for determining the holders of outstanding shares of its
common stock entitled to notice of, and to vote at, the meeting. On that date,
there were 21,793,506 shares of the Company's common stock issued and
outstanding. Each such share of common stock is entitled to one vote at the
meeting. The Notice of Annual Meeting, this Proxy Statement and the form of
proxy are first being mailed to shareholders of the Company on or about July 28,
2003.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Five directors are to be elected at the meeting, each director to hold
office until the next Annual Meeting of Shareholders, or until his successor is
elected and qualified. All of the persons listed below are now serving as
directors of the Company. All of the persons listed below have consented to
serve as a director, if elected. Proxies solicited by the Board will, unless
otherwise directed, be voted to elect the five nominees names below to
constitute the entire Board.
The Company's Bylaws provide that the Board will consist initially of five
directors. The Board previously increased its size to six directors. The
Company's Bylaws further provide that any vacancies on the Board may be filled
by vote of the remaining directors. Because the shareholders are being asked to
elect only five directors at the meeting, it is possible that the existing
directors may elect a sixth director to fill the vacancy after the meeting.
Proxies cannot be voted for a greater number of persons than the number of
nominees named.
The Nominating Committee proposed to the Board for election the nominees
listed below:
ROBERT F. OLSON, age 47, founded our business and has served as the Chairman of
the Board of the Company and the predecessor company continuously since 1990. He
also served as our Chief Executive Officer from October 2000 to July 2001, and
as our President and Chief Executive Officer from 1990 to October 2000 and since
April 2003. From 1987 to 1990, he served as the General Manager of the Greatway
Communications Division of Anderberg-Lund Printing Company, an electronic
publishing sales and service organization. Prior to that time, Mr. Olson held
management and marketing positions in several electronic publishing service
organizations.
KENNETH H. HOLEC, age 48, has served as a director of the Company since February
1998. Mr. Holec served as the interim President and Chief Executive Officer of
PeopleClick, Inc., a provider of enterprise-class workforce management solutions
to manage employees, from January 2002 through April 2003. He served as
President and Chief Executive Officer of ShowCase Corporation, a supplier of
data warehousing systems, from November 1993 to February 2001. From 1985 to
1993, Mr. Holec served as President and Chief Executive Officer of Lawson
Associates, Inc., a developer of financial and human resource management
software products. Mr. Holec is also a director of Cysive, Inc. and SPSS Inc.
PHILIP E. SORAN, age 47, has served as a director since April 2003. He has
served as the President and Chief Executive Officer of Compellent Technologies,
Inc., a network strategy company, since March 2002. From July 1995 through
August 2001, Mr. Soran served as President and Chief Executive Officer of
XIOtech Corporation, a provider of network storage solutions. XIOtech
Corporation was acquired by Seagate Technology in January 2000, at which time it
became a wholly-owned subsidiary of Seagate.
RAYMOND A. TUCKER, age 58, has served as a director of the Company since
November 2001. He has served as Senior Vice President and Chief Financial
Officer for H.B. Fuller Company, a manufacturer of adhesives, sealants, and
coatings, since June 1999 and currently anticipates retiring in August 2003. Mr.
Tucker was previously employed with Bayer Corporation, a global provider of a
wide range of products including pharmaceuticals, diagnostics, health care
products, agricultural products and chemicals, serving as their Senior Vice
President from 1997 to 1999; its Vice President of Finance and Administration
for the Industrial Chemicals Division from 1992 to 1997; its Business Director
of Enamels and Ceramics from 1989 to 1991; its Business Manager of Inorganic
Chemicals from 1987 to 1988 and its Controller and Manager of Administration for
the Industrial Chemicals Division from 1978 to 1986.
STEVEN C. WALDRON, age 54, has served as a director of the Company since
February 1998. He has served as Chief Executive Officer of Pinnacle Energy, a
provider of alternative energy, since September 2002. He served as President and
Chief Executive Officer of SPS Commerce, Inc., a provider of e-commerce software
and transaction processing services, from November 1997 to March 2001. From 1992
to March 1995, he was President of Innovex, Inc., a diversified technology
company. Prior to that time, Mr. Waldron served as President and Chief Executive
Officer of Norstan, Inc., a supplier of telecommunications hardware and
software.
2
None of the above nominees is related to any other nominee or to any
executive officer of the Company.
If any nominee should withdraw or otherwise become unavailable for reasons
not presently known, the proxies that would have otherwise been voted for such
nominee will be voted for such substitute nominee as may be selected by the
Board.
THE BOARD AND ITS COMMITTEES
The Board met six times and took action, by written action in lieu of a
meeting, eight times during the year ended March 31, 2003.
During the year ended March 31, 2003, each director attended more than 75
percent of the meetings of the Board and Board committees on which he serves.
Members of the Board who are not employees of the Company are eligible to
receive stock option grants under the Company's 1997 Director Stock Option Plan.
Options to purchase 50,000 shares of the Company's common stock were granted to
each of Messrs. Holec, Tucker and Waldron under the plan during the fiscal year
ended March 31, 2003. In addition, options to purchase 40,000 shares of the
Company's common stock were granted to Michael W. Ferro, Jr., a former director
of the Company.
Effective April 1, 2003 the Board established a director compensation
policy under which each member of the Board who is not an employee of the
Company annually will receive $25,000 in cash and the grant of an option to
purchase 20,000 shares of common stock of the Company, subject to the
availability of such shares under the applicable stock option plans of the
Company. The Chair of the Audit Committee will receive an additional $10,000 in
cash annually and the Chair of each other committee will receive an additional
$5,000 in cash annually. Under the compensation policy, each member of the Board
who is not an employee of the Company will receive an additional fee of $2,000
per day for miscellaneous work as a director above and beyond normal board
requirements.
The Board has an Audit Committee, a Compensation Committee and a Corporate
Governance and Nominating Committee. Following is a description of the functions
performed by these committees.
Audit Committee
In accordance with its Charter, the Company's Audit Committee consists of
at least three independent non-employee directors. The Audit Committee currently
consists of Messrs. Tucker, as chairman, Holec, Soran and Waldron. All members
of the Audit Committee are "independent" as that term is defined in the
applicable listing standards of The Nasdaq Stock Market. The Audit Committee
oversees the Company's financial reporting process by, among other things,
reviewing accounting and auditing principles and procedures of the Company with
a view toward providing for adequate internal controls and reliable financial
records, reviewing and reassessing the Audit Committee Charter annually,
recommending and taking action to oversee the independence of the independent
auditors, selecting and appointing the independent auditors and approving all
fees of, as well as the provision of any non-audit services by, the Company's
independent auditors. The Audit Committee met twice during the year ended March
31, 2003. The responsibilities of the Audit Committee are set forth in the Audit
Committee Charter, adopted by the Board in August 2000, and amended and restated
most recently on April 28, 2003. A copy of the Audit Committee Charter, as
amended and restated, is included as Exhibit A to this Proxy Statement.
The Company is currently reviewing pending or proposed, but not yet
effective, recent rules released by the Securities and Exchange Commission (the
"Commission") under the Sarbanes-Oxley Act of 2002 and by the National
Association of Securities Dealers regarding composition and function of audit
committees, and will make any changes required in the composition or function of
the Audit Committee and to the Audit Committee Charter as necessary to comply
with the new rules by the applicable effective date.
3
Compensation Committee
The Company also maintains a Compensation Committee to provide
recommendations concerning salaries, stock options and incentive compensation
for officers and employees of the Company. The Compensation Committee
administers the Company's InfoAccess, Inc. 1990 Stock Option Plan, 1995 Stock
Option Plan, 1994-1997 Employee Stock Option and Compensation Plan, 1999
Employee Stock Option and Compensation Plan, 2000 Stock Incentive Plan, 2000
Employee Stock Incentive Plan and Employee Stock Purchase Plan. The members of
the Compensation and Stock Option Committee are Messrs. Holec, as chairman,
Soran, Tucker and Waldron. The Compensation Committee met twice, during the year
ended March 31, 2003.
Corporate Governance and Nominating Committee
The Corporate Governance and Nominating Committee monitors and recommends
to the Board corporate governance principles and business conduct guidelines,
including overseeing the process for selecting director candidates, recommending
to the Board director nominees and reviewing and recommending as necessary,
changes in the size and composition of the Board and its committees. The
Corporate Governance and Nominating Committee members are Messrs. Waldron, as
chairman, Holec, Soran and Tucker. The Corporate Governance and Nominating
Committee met once during the year ended March 31, 2003. The Corporate
Governance and Nominating Committee will consider persons recommended by
shareholders in selecting nominees for election to the Board. Shareholders who
wish to suggest qualified candidates should write to: Stellent, Inc., 7777
Golden Triangle Drive, Eden Prairie, Minnesota 55344, Attention: Corporate
Governance and Nominating Committee, c/o Secretary. All recommendations should
state in detail the qualifications of such persons for consideration by the
Corporate Governance and Nominating Committee and should be accompanied by an
indication of the person's willingness to serve.
REPORT OF THE AUDIT COMMITTEE
The role of the Audit Committee is one of oversight of the Company's
management and outside auditors in regard to the Company's financial reporting
and internal controls with respect to accounting and financial reporting. The
Audit Committee also considers and pre-approves any non-audit services provided
by the Company's outside auditors to ensure that no prohibited non-audit
services are provided by the outside auditors and that the outside auditors'
independence is not compromised. By its Charter, the Audit Committee consists of
at least three independent non-employee directors. The Audit Committee currently
consists of four independent non-employee directors of the Company. In
performing its oversight function, the Audit Committee relied upon advice and
information received in its discussions with the Company's management and
independent auditors.
The Audit Committee has (i) reviewed and discussed the Company's audited
financial statements as of and for the fiscal year ended March 31, 2003 with the
Company's management; (ii) discussed with the Company's independent auditors the
matters required to be discussed by Statement on Auditing Standards No. 61
regarding communication with audit committees; (iii) received the written
disclosures and the letter from the Company's independent auditors required by
Independence Standards Board Standard No. 1 (Independence Discussions with Audit
Committees); and (iv) discussed with the Company's independent auditors their
independence from the Company and has considered the compatibility of non-audit
services with the auditors' independence.
Based on the review and discussions with management and the Company's
independent auditors referred to above, the Audit Committee recommended to the
Board that the audited financial statements
4
be included in the Company's Annual Report on Form 10-K for the fiscal year
ended March 31, 2003 for filing with the Commission.
AUDIT COMMITTEE
Raymond A. Tucker, Chairman
Kenneth H. Holec
Philip E. Soran
Steven C. Waldron
5
PRINCIPAL SHAREHOLDERS
The Company has outstanding one class of voting securities, common stock,
$0.01 par value, of which 21,793,506 shares were outstanding as of the close of
business on the Record Date. Each share of common stock is entitled to one vote
on all matters put to a vote of shareholders.
The following table sets forth, as of July 16, 2003, certain information
regarding the beneficial ownership of shares of common stock by each director of
the Company, each of the executive officers listed in the Summary Compensation
Table, each person known to the Company to be the beneficial owner of more than
5% of the outstanding shares and all directors and executive officers as a
group. Except as otherwise indicated, each shareholder has sole voting and
investment power with respect to the shares beneficially owned.
NUMBER OF SHARES PERCENTAGE OF
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED OUTSTANDING SHARES
------------------------ ------------------ ------------------
Robert F. Olson(1) 2,255,764 10.2%
Becker Capital Management, Inc.(2) 2,109,900 9.7%
SAFECO Common Stock Trust(3) 1,409,003 6.5%
SAFECO Asset Management Company(3) 2,207,503 10.1%
SAFECO Corporation(3) 2,207,503 10.1%
T. Rowe Price Associates, Inc.(4) 1,370,300 6.3%
Vernon J. Hanzlik(5) 311,657 1.4%
Frank A. Radichel(6) 94,896 *
Daniel P. Ryan(7) 145,205 *
Gregg A. Waldon(8) 193,538 *
Michael S. Rudy(9) 53,332 *
Kenneth H. Holec(10) 143,647 *
Philip E. Soran(9) 5,000 *
Raymond A. Tucker(11) 49,999 *
Steven C. Waldron(9) 63,332 *
All directors and executive officers as a group (9
persons)(12) 2,921,381 13.4%
-------------------------
* Less than 1%.
(1) Includes 85,714 shares owned by Mr. Olson's spouse, of which Mr. Olson
disclaims beneficial ownership. Mr. Olson's address is 7777 Golden Triangle
Drive, Eden Prairie, Minnesota 55344.
(2) Based on information reported to the Company on June 30, 2003. The
principal business address of Becker Capital Management, Inc. is 1211 SW
5th Avenue, Suite 2185, Portland, Oregon 97204. Becker Capital Management,
Inc. has sole voting and investment power with respect to all of the
shares.
(3) Based on information reported to the Commission in a Schedule 13G filed by
SAFECO Common Stock Trust, SAFECO Asset Management Company and SAFECO
Corporation on February 13, 2002. The principal business address of SAFECO
Common Stock Trust is 4854 154th Place NE, Redmond, Washington 98052. The
principal business address of SAFECO Asset Management Company is 601 Union
Street, Suite 2500, Seattle, Washington 98101. The principal business
address of SAFECO Corporation is Safeco Plaza, Seattle, Washington 98185.
Each of SAFECO Asset Management Company and SAFECO Corporation share
beneficial ownership over the same 1,409,003 shares listed as beneficially
owned by SAFECO Common Stock Trust, which 1,409,003 shares are included in
the 2,207,503 shares listed as beneficially owned by each of SAFECO Asset
Management Company and SAFECO Corporation. Each of SAFECO Common Stock
Trust, SAFECO Asset Management Company and SAFECO Corporation has shared
voting power and shared investment power with respect to all of the shares
listed above next to their respective names. Both SAFECO Asset Management
Company and SAFECO Corporation disclaim beneficial ownership of all of the
shares.
6
(4) Based on information reported to the Company on June 27, 2003. The
principal business address of T. Rowe Price Associates, Inc. is 100 E.
Pratt Street, Baltimore, Maryland 21202. T. Rowe Price Associates, Inc. has
sole voting power with respect to 288,100 shares and sole investment power
with respect to all of the shares.
(5) Includes 279,907 shares issuable upon exercise of options and includes
5,000 shares owned by Mr. Hanzlik's spouse.
(6) Includes 94,646 shares issuable upon exercise of the options.
(7) Includes 135,205 shares issuable upon exercise of the options.
(8) Includes 183,538 shares issuable upon exercise of options.
(9) Represents shares issuable upon exercise of options.
(10) Includes 43,337 shares issuable upon exercise of options and includes 875
shares owned by Mr. Holec's spouse and 9,440 shares owned by Mr. Holec's
children.
(11) Includes 39,998 shares issuable upon exercise of the options.
(12) Includes the shares issuable upon exercise of the options described in the
footnotes above.
7
COMPENSATION OF EXECUTIVE OFFICERS
The following table presents the compensation for each of the last three
fiscal years of each person who served as the Company's Chief Executive Officer
in the fiscal year ended March 31, 2003 and each of the four other most highly
compensated executive officers of the Company for the fiscal year ended March
31, 2003 (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
FISCAL --------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#) COMPENSATION($)(3)
--------------------------- ------ --------- -------- ---------- ------------------
Vernon J. Hanzlik 2003 240,000 -- 260,000 21,231
Chief Executive Officer 2002 210,833 85,000 110,000 6,583
and President(1) 2001 190,000 100,000 100,000 6,664
Gregg A. Waldon 2003 165,000 -- 160,000 12,043
Executive Vice President, 2002 165,000 40,000 60,000 13,913
Chief Financial Officer, 2001 150,000 40,000 50,000 19,142
Treasurer and Secretary
Daniel P. Ryan 2003 175,000 -- 135,000 3,876
Executive Vice President 2002 175,000 45,000 60,000 5,847
of Marketing and Business 2001 165,000 60,000 50,000 5,122
Development
Frank A. Radichel 2003 150,000 -- 110,000 9,998
Executive Vice President 2002 150,000 22,500 40,000 6,402
of Research and Development 2001 120,000 10,000 35,000 5,053
Michael S. Rudy(2) 2003 150,000 123,536 75,000 6,563
Vice President of Canada 2002 115,000 109,256 20,000 506
2001 20,923 -- 50,000 --
-------------------------
(1) Mr. Hanzlik served as Chief Executive Officer and President before Mr. Olson
resumed the role on March 31, 2003.
(2) Mr. Rudy joined the Company on January 30, 2001. Annual bonus includes sales
commissions.
(3) Represents term life insurance premiums, vehicle allowances, and 401(k)
contributions.
8
The following table provides certain information concerning grants of stock
options during the fiscal year ended March 31, 2003 to the Named Executive
Officers. In accordance with the rules of the Commission, the table sets forth
the potential realizable value over the terms of the options (the period from
the grant date to the expiration date) based on assumed rates of stock
appreciation of five percent and ten percent, compounded annually. These amounts
do not represent the Company's estimate of future stock price. Actual realizable
values, if any, of stock options will depend on the future performance of the
common stock.
OPTION GRANTS IN LAST FISCAL YEAR
% OF POTENTIAL VALUE AT
NUMBER OF OPTIONS ASSUMED ANNUAL RATES OF
SHARES GRANTED TO STOCK PRICE APPRECIATION
UNDERLYING EMPLOYEES EXERCISE FOR OPTION TERM(1)
OPTIONS IN FISCAL PRICE PER EXPIRATION ------------------------
GRANTED(#) YEAR 2003 SHARE($) DATE 5%($) 10%($)
---------- ---------- --------- ---------- -------- ----------
Vernon J. Hanzlik 150,000(2) 6.08 6.28 05/21/2012 592,419 1,501,305
110,000(2) 4.46 4.47 02/25/2013 309,227 783,643
Gregg A. Waldon 100,000(2) 4.05 6.28 05/21/2012 394,946 1,000,870
60,000(2) 2.43 4.47 02/25/2013 168,670 427,442
Daniel P. Ryan 75,000(2) 3.04 6.28 05/21/2012 296,209 750,653
60,000(2) 2.43 4.47 02/25/2013 168,670 427,442
Frank A. Radichel 50,000(2) 2.03 6.28 05/21/2012 197,473 500,435
60,000(2) 2.43 4.47 02/25/2013 168,670 427,442
Michael S. Rudy 50,000(2) 2.03 6.28 05/21/2012 197,473 500,435
25,000(2) 1.01 4.47 02/25/2013 70,279 178,101
-------------------------
(1) The potential realizable value is based on the term of the option at the
time of grant (ten years) and on the assumption that the fair value of the
common stock appreciates at the indicated rate for the entire term of the
option and that the option is exercised at the exercise price.
(2) Except as noted below, the listed options become exercisable with respect to
one-third of the shares covered thereby on each of the first three
anniversaries of the date of grant. The options each have a maximum term of
ten years, subject to earlier termination in the event of the optionee's
cessation of service with the Company. In the event of a (i) dissolution or
liquidation of the Company, (ii) merger, consolidation or other
reorganization involving the Company where the Company is not the surviving
entity, or (iii) an event changing control of the Company (as defined in the
Company's incentive plans), the listed options will become exercisable in
full.
9
The following table summarizes option exercises during the year ended March
31, 2003 and provides information regarding the number of all unexercised stock
options held by the Named Executive Officers as of March 31, 2003, the end of
the Company's last fiscal year:
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SHARES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
SHARES YEAR END(#) AT FISCAL YEAR END($)(2)
ACQUIRED ON VALUE ---------------------------- ----------------------------
EXERCISE REALIZED ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- --------------- ----------- ------------- ----------- -------------
Vernon J. Hanzlik -- -- 214,283 381,252 132,399 --
Gregg A. Waldon -- -- 103,331 251,669 -- --
Daniel P. Ryan -- -- 88,331 201,669 -- --
Frank A. Radichel -- -- 73,480 153,334 47,308 --
Michael S. Rudy -- -- 33,333 111,667 -- --
-------------------------
(1) Calculated on the basis of the fair market value of the underlying shares of
common stock on the date of exercise minus the exercise price.
(2) Calculated on the basis of the fair market value of the underlying shares of
common stock at March 31, 2003, as reported by The Nasdaq National Market,
of $4.22 per share, minus the per share exercise price, multiplied by the
number of shares underlying the option.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee consists of Messrs. Holec, Soran,
Tucker and Waldron. There were no "interlocks" within the meaning of the rules
and regulations of the Commission.
EMPLOYMENT AGREEMENTS
Vernon J. Hanzlik
In October 2001, the Company entered into an employment agreement with
Vernon J. Hanzlik as President and Chief Executive Officer of the Company, which
terminated on March 31, 2003. Mr. Hanzlik received an annual base salary of
$240,000, plus annual performance bonuses of up to $160,000.
Effective March 31, 2003, the Company and Mr. Hanzlik entered into a
separation agreement under which the employment agreement between Mr. Hanzlik
and the Company was terminated and Mr. Hanzlik resigned as President and Chief
Executive Officer of the Company. In consideration for his resignation from the
Company, his covenant to enter into a consulting agreement with the Company,
non-disclosure and non-competition covenants and the release of any claims he
may have against the Company, the Company agreed to pay to Mr. Hanzlik $240,000,
and to continue to provide certain health care benefits through April 1, 2004,
subject to certain limitations.
On April 1, 2003, the Company entered into an employment agreement with Mr.
Hanzlik under which he agreed to serve as a Business Development Specialist with
the Company through March 31, 2005. Mr. Hanzlik receives a base salary of
$120,000 during the first year of the agreement, subject to changes during the
second year of the agreement. Mr. Hanzlik has agreed not to compete with the
Company during his employment and for a period of one year following his
termination of employment.
Gregg A. Waldon
In April 2003, the Company entered into an employment agreement with Gregg
A. Waldon as Executive Vice President, Chief Financial Officer, Treasurer and
Secretary of the Company, which continues for an indefinite term until
terminated by the Company, Mr. Waldon resigns or Mr. Waldon
10
becomes disabled or dies. Mr. Waldon receives an annual base salary of $195,000,
subject to annual increases, plus annual performance bonuses of up to $80,000,
subject to annual review by the Board of Directors. Mr. Waldon has agreed not to
compete with the Company during his employment and for a period of one year
following his termination of employment. In the event of Mr. Waldon's death,
disability, termination of employment without cause or termination of employment
following a change in control due to his relocation, a material reduction of his
duties or responsibilities or a material reduction of his base salary, other
than pursuant to a general reduction in the base salary of all executives of the
Company, Mr. Waldon will receive lump sum severance pay equal to one year of his
then current salary.
Daniel P. Ryan
In April 2003, the Company entered into an employment agreement with Daniel
P. Ryan as Executive Vice President of Marketing and Business Development of the
Company, which continues for an indefinite term until terminated by the Company,
Mr. Ryan resigns or Mr. Ryan becomes disabled or dies. Mr. Ryan receives an
annual base salary of $195,000, subject to annual increases, plus annual
performance bonuses of up to $80,000, subject to annual review by the Board of
Directors. Mr. Ryan has agreed not to compete with the Company during his
employment and for a period of one year following his termination of employment.
In the event of Mr. Ryan's death, disability, termination of employment without
cause or termination of employment following a change in control due to his
relocation, a material reduction of his duties or responsibilities or a material
reduction of his base salary, other than pursuant to a general reduction in the
base salary of all executives of the Company, Mr. Ryan will receive lump sum
severance pay equal to six months of his then current salary.
Frank A. Radichel
In April 2003, the Company entered into an employment agreement with Frank
A. Radichel as Executive Vice President of Research and Development of the
Company, which continues for an indefinite term until terminated by the Company,
Mr. Radichel resigns or Mr. Radichel becomes disabled or dies. Mr. Radichel
receives an annual base salary of $195,000, subject to annual increases, plus
annual performance bonuses of up to $60,000, subject to annual review by the
Board of Directors. Mr. Radichel has agreed not to compete with the Company
during his employment and for a period of one year following his termination of
employment. In the event of Mr. Radichel's death, disability, termination of
employment without cause or termination of employment following a change in
control due to his relocation, a material reduction of his duties or
responsibilities or a material reduction of his base salary, other than pursuant
to a general reduction in the base salary of all executives of the Company, Mr.
Radichel will receive lump sum severance pay equal to six months of his then
current salary.
11
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board (the "Committee") generally has
made decisions on compensation of the Company's executives. Each member of the
Committee is a non-employee director. All decisions by the Committee relating to
the compensation of the Company's executive officers are reviewed by the full
Board. Pursuant to rules designed to enhance disclosure of the Company's
policies toward executive compensation, set forth below is a report prepared by
the Committee addressing the compensation policies for the Company for the year
ended March 31, 2003 as they affected the Company's executive officers.
The Committee's executive compensation policies are designed to provide
competitive levels of compensation that integrate pay with the Company's annual
objectives and long-term goals, reward above-average corporate performance,
recognize individual achievements, and assist the Company in attracting and
retaining qualified executives. Executive compensation is set at levels that the
Committee believes to be consistent with others in the Company's industry.
There are three elements in the Company's executive compensation program,
all determined by individual and corporate performance. They are:
- Base salary compensation;
- Annual incentive compensation; and
- Stock options.
Total compensation opportunities are competitive with those offered by
employers of comparable size, growth and profitability in the Company's
industry.
Base salary compensation is determined by the potential impact the
individual has on the Company, the skills and experiences required by the job,
and the performance and potential of the incumbent in the job.
Annual incentive compensation for executives of the Company is based
primarily on corporate operating earnings and revenue growth and the Company's
positioning for future results, but also includes an overall assessment by the
Committee of executive management's performance, as well as market conditions.
Awards of stock grants under the Company's stock incentive plans (the
"Plans") are designed to promote the identity of long-term interests between the
Company's executives and its shareholders and assist in the retention of
executives and other key employees. The Plans also permit the Committee to grant
stock options to other key personnel.
The Committee surveys employee stock option programs of companies with
similar capitalization to the Company prior to recommending the grant of options
to executives. While the value realizable from exercisable options is dependent
upon the extent to which the Company's performance is reflected in the market
price of the Company's common stock at any particular point in time, the
decision as to whether such value will be realized in any particular year is
determined by each individual executive and not by the Committee. Accordingly,
when the Committee recommends that an option be granted to an executive, that
recommendation does not take into account any gains realized that year by that
executive as a result of his or her individual decision to exercise an option
granted in a previous year.
The Committee evaluates the performance and establishes the base salary of
the Chief Executive Officer on an annual basis based in part on the compensation
criteria discussed above and the Committee's assessment of his past performance
and its expectation as to his future contributions in leading the Company. In
addition, the Committee considers significant accomplishments made by the
Company during the prior year and other performance factors, such as the
effectiveness of the Chief Executive Officer in establishing the Company's
strategic direction and growth objectives. Any incentive compensation is
entirely dependent on the accomplishment by the Company of certain corporate
goals approved by the Board. Factors considered by the Committee in determining
the Chief Executive Officer's base salary and
12
cash bonus, if any, are not subject to any specific weighting factor or formula.
In determining the Chief Executive Officer's base salary for fiscal year 2003,
as reported in the Summary Compensation Table, the Committee considered the
comparative compensation criteria and performance factors discussed above.
Section 162(m) of the Internal Revenue Code generally disallows a tax
deduction to public companies for compensation over $1 million paid to the
corporation's chief executive officer or any of the four other most highly
compensated executive officers. Compensation is not subject to the deduction
limit if certain requirements are met, including that the compensation be
performance-based. The Company intends to structure the performance-based
portion of the compensation of its executive officers in a manner that complies
with the statute to mitigate any disallowance of deductions.
COMPENSATION COMMITTEE
Kenneth H. Holec, Chairman
Philip E. Soran
Raymond A. Tucker
Steven C. Waldron
13
COMPARATIVE STOCK PERFORMANCE GRAPH
The comparative stock performance graph below compares the cumulative
shareholder return on the common stock of the Company for the period from March
31, 1998 through March 31, 2003 with the cumulative total return on (i) the CRSP
Total Return Index for the Nasdaq Stock Market (US) and (ii) the Nasdaq Computer
& Data Processing Services Stocks Index. The table assumes the investment of
$100 in the Company's common stock, the CRSP Total Return Index for the Nasdaq
Stock Market (US) and the Nasdaq Computer & Data Processing Services Stocks
Index on March 31, 1998, and the reinvestment of all dividends through the last
trading day of the years ended March 31, 1999, March 31, 2000, March 31, 2001,
March 31, 2002 and March 31, 2003.
[PERFORMANCE GRAPH]
-----------------------------------------------------------------------------------------------------------------------------
MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1998 1999 2000 2001 2002 2003
-----------------------------------------------------------------------------------------------------------------------------
Stellent, Inc. $100.000 $132.000 $736.000 $383.008 $154.080 $67.520
-----------------------------------------------------------------------------------------------------------------------------
CRSP Total Return Index for the Nasdaq
Stock Market (US) $100.000 $135.079 $250.991 $100.601 $101.323 $74.375
-----------------------------------------------------------------------------------------------------------------------------
Nasdaq Computer & Data Processing
Services Stocks Index $100.000 $162.851 $293.392 $ 99.731 $101.578 $73.961
-----------------------------------------------------------------------------------------------------------------------------
14
PROPOSAL NO. 2
APPOINTMENT OF AUDITORS
Grant Thornton LLP, independent certified public accountants, have been the
auditors for the Company since February 1998. Upon recommendation of the Audit
Committee, the Board of Directors again has selected Grant Thornton LLP to serve
as the Company's auditors for the fiscal year ending March 31, 2004, subject to
ratification by the shareholders. While it is not required to do so, the Board
of Directors is submitting the selection of that firm for ratification in order
to ascertain the view of the shareholders. If the selection is not ratified, the
Board of Directors will reconsider its selection.
A representative of Grant Thornton LLP will be present at the meeting and
will be afforded an opportunity to make a statement if such representative so
desires and will be available to respond to appropriate questions during the
meeting.
Audit Fees
During the fiscal year ended March 31, 2003, the Company paid the following
fees to Grant Thornton LLP:
FINANCIAL INFORMATION SYSTEMS
AUDIT FEES DESIGN AND IMPLEMENTATION FEES ALL OTHER FEES
---------- ------------------------------ --------------
$366,000 $0 $138,000
The audit fees above include fees for the year-end audit of the Company and
related expenses, as well as quarterly reviews and on-going assistance with
accounting and financial reporting matters.
All other fees include tax services, an audit of an employee benefit plan,
and assistance with acquisitions and other regulatory filings.
The Audit Committee considered whether the auditors' provision of non-audit
services to the Company is compatible with the auditor's independence.
SHAREHOLDER PROPOSALS
Any shareholder proposal intended to be presented at the 2004 Annual
Meeting of Shareholders and desired to be included in the Company's Proxy
Statement for that meeting must be received by the Company at its principal
executive office no later than March 30, 2004 in order to be included in such
Proxy Statement. Any other shareholder proposal intended to be presented at the
2004 Annual Meeting of Shareholders received by the Company on or before May 29,
2004.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership of such securities with the Commission and
Nasdaq. Officers, directors and greater than ten per cent shareholders are
required by Commission regulations to furnish the Company with copies of all
Section 16(a) forms they file.
Based solely on review of the copies of such forms furnished to the
Company, the Company believes that during the fiscal year ended March 31, 2003
its officers, directors and greater than ten percent beneficial owners complied
with all applicable Section 16(a) filing requirements except that each of the
following inadvertently was late in filing one report covering one transaction:
Robert F. Olson, Michael W. Ferro, Jr., Kenneth H. Holec, Raymond A. Tucker and
Steven A. Waldron, each a director of the Company at the time the filing was
due, and Michael S. Rudy, an executive officer of the Company at the time the
filing was due.
15
ADDITIONAL MATTERS
The Annual Report of the Company for the fiscal year ended March 31, 2003,
including financial statements, is being mailed with this Proxy Statement.
As of the date of this Proxy Statement, management knows of no matters that
will be presented for determination at the meeting other than those referred to
herein. If any other matters properly come before the meeting calling for a vote
of shareholders, it is intended that the proxies named therein in accordance
with their best judgment will vote the shares represented by the proxies
solicited by the Board of Directors.
The Company will pay the cost of soliciting proxies in the accompanying
form. In addition to solicitation by the use of mails, certain directors,
officers and regular employees of the Company may solicit proxies by telephone,
telegram or personal interview, and may request brokerage firms and custodians,
nominees and other record holders to forward soliciting materials to the
beneficial owners of stock of the Company and will reimburse them for their
reasonable out-of-pocket expenses in so forwarding such materials.
SHAREHOLDERS WHO WISH TO OBTAIN A COPY OF THE COMPANY'S 10-K ANNUAL REPORT
FILED WITH THE COMMISSION FOR THE FISCAL YEAR ENDED MARCH 31, 2003 MAY DO SO
WITHOUT CHARGE BY WRITING TO GREGG A. WALDON, SECRETARY, AT THE COMPANY'S
OFFICES, 7777 GOLDEN TRIANGLE DRIVE, EDEN PRAIRIE, MINNESOTA 55344.
16
EXHIBIT A
STELLENT, INC.
AMENDED AND RESTATED AUDIT COMMITTEE CHARTER
PURPOSE
There shall be an Audit Committee (the "Committee") of the Board of
Directors of Stellent, Inc., a Minnesota corporation (the "Company").
The Committee shall have responsibility to oversee the Company's management
and outside auditors in regard to corporate accounting and financial reporting.
The Committee has the authority to conduct any investigation it deems
appropriate, with full access to all books and records, facilities, personnel
and outside advisors of the Company. The Committee is empowered to retain
outside counsel, auditors or other experts in its discretion.
ORGANIZATION
The Committee shall consist of at least three directors. Each director
appointed to the Committee shall:
a) not be disqualified from being an "independent director" within the
meaning of Rule 4200 of the NASD Manual, and shall have no relationship
with the Company which, in the opinion of the Board, would interfere
with the exercise of independent judgment; and
b) be able to read and understand fundamental financial statements,
including the Company's balance sheet, income statement and cash flow
statement. If a director is not capable of understanding such
fundamental financial statements, he or she must become able to do so
within a reasonable period of time after appointment to the Committee.
At least one member of the Committee shall have past employment experience
in finance or accounting, requisite professional certification in accounting or
any other comparable experience or background which results in the director's
financial sophistication.
RESPONSIBILITIES
The Committee recognizes that the preparation of the Company's financial
statements and other financial information is the responsibility of the
Company's management and that the auditing, or conducting limited reviews, of
those financial statements and other financial information is the responsibility
of the Company's outside auditors. The Committee's responsibility is to oversee
the financial reporting process.
The Company's management, and its outside auditors, in the exercise of
their responsibilities, acquire greater knowledge and more detailed information
about the Company and its financial affairs than the members of the Committee.
Consequently, the Committee is not responsible for providing any expert or other
special assurance as to the Company's financial statements and other financial
information or any professional certification as to the outside auditors' work,
including without limitation their reports on, and limited reviews of, the
Company's financial statements and other financial information. In addition, the
Committee is entitled to rely on information provided by the Company's
management and the outside auditors with respect to the nature of services
provided by the outside auditor and the fees paid for such services.
In carrying out its oversight responsibilities, the Committee shall:
a) review and reassess the adequacy of the Audit Committee Charter
annually;
b) require that the outside auditors provide the Committee with a formal
written statement delineating all relationships between the outside
auditors and the Company, consistent with
17
Independence Standards Board Standard No. 1, and discuss with the outside
auditors their independence;
c) actively engage in a dialogue with the outside auditors regarding any
disclosed relationships or services that may impact the objectivity and
independence of the outside auditors;
d) take, or recommend that the full Board take, appropriate action to
oversee the independence of the outside auditors;
e) review and consider the matters identified in Statement on Auditing
Standards No. 61, as amended by Statement on Auditing Standards No. 90
and as otherwise amended, with the outside auditors and management;
f) review and discuss the Company's audited financial statements that are
to be included in the Company's Form 10-K with the outside auditors and
management and determine whether to recommend to the Board of Directors
that the financial statements be included in the Company's Form 10-K
for filing with the Securities and Exchange Commission;
g) review, or the Committee's Chairman shall review, any matters
identified by the outside auditors pursuant to Statement on Auditing
Standards No. 71 regarding the Company's interim financial statements.
Any such review shall occur prior to the filing of such interim
financial statements on the Company's Form 10-Q;
h) discus with management the Company's regular earnings releases, as well
as the Company's approach to earning guidance;
i) review the terms of proposed engagements of the outside auditors
relating to services to the Company (other than those services rendered
in respect of the audit or review of the Company's annual or quarterly
financial statements) prior to such engagements;
j) prepare, in accordance with the rules promulgated by the Securities and
Exchange Commission, the report of the Committee required to be
included in the Company's Proxy Statement; and
k) consider whether the provision of the services by the outside auditors
(other than those services rendered in respect of the audit or review
of the Company's annual or quarterly financial statements) is
compatible with maintaining the outside auditor's independence.
The outside auditors are ultimately accountable to the Board and the
Committee, as representatives of the shareholders. The Board and the Committee
have ultimate authority and responsibility to select, evaluate and, where
appropriate, replace the outside auditors, and, if applicable, to nominate the
outside auditors to be proposed for approval by the shareholders in any proxy
statement.
18
STELLENT, INC.
ANNUAL MEETING OF SHAREHOLDERS
WEDNESDAY, AUGUST 27, 2003
3:30 PM
MARRIOTT SOUTHWEST HOTEL
MINNETONKA, MINNESOTA
STELLENT, INC.
7777 GOLDEN TRIANGLE DRIVE, EDEN PRAIRIE, MN 55344 PROXY
--------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. It will be voted on
the matters set forth on the reverse side of this form as directed by the
shareholder, but if no direction is made in the space provided, it will be voted
FOR the election of all nominees to the Board of Directors and FOR the
ratification of Grant Thornton LLP as independent auditors for the fiscal year
2004.
By signing the proxy, you revoke all prior proxies and appoint Robert F. Olson
and Gregg A. Waldon, and each of them, with full power of substitution, to vote
your shares on the matters shown on the reverse side and any other matters which
may come before the Annual Meeting and all adjournments.
See reverse for voting instructions.
- Please detach here -
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3.
1. Election 01 Robert F. Olson [ ] Vote FOR [ ] Vote WITHHELD
of directors: 02 Philip E. Soran all nominees from all nominees
03 Kenneth H. Holec (except as
04 Raymond A. Tucker marked)
05 Steven C. Waldron
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR -----------------------------
ANY INDICATED NOMINEE, WRITE THE NUMBER(S) OF THE | |
NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.) -----------------------------
2. Ratification of the appointment of Grant For Against Abstain
Thornton LLP as independent auditors for the [ ] [ ] [ ]
Company for fiscal year March 31, 2004.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION
IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL.
Address Change? Mark Box [ ]
Indicate changes below:
Date
-------------------
-----------------------------------
| |
| |
-----------------------------------
Signature(s) in Box
Please sign exactly as your name(s)
appear on Proxy. If held in joint
tenancy, all persons must sign.
Trustees, administrators, etc.,
should include title and authority.
Corporations should provide full
name of corporation and title of
authorized officer signing the
proxy.