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 under Rule 14a-12
Extensity, Inc.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box)
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
1. Title of each class of securities to which transaction applies:
--------------------------------------------------------------------------------
2. Aggregate number of securities to which transaction applies:
--------------------------------------------------------------------------------
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
--------------------------------------------------------------------------------
4. Proposed maximum aggregate value of transaction:
--------------------------------------------------------------------------------
5. Total fee paid:
--------------------------------------------------------------------------------
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
6. Amount Previously Paid:
--------------------------------------------------------------------------------
7. Form, Schedule or Registration Statement No.:
--------------------------------------------------------------------------------
8. Filing Party:
--------------------------------------------------------------------------------
9. Date Filed:
--------------------------------------------------------------------------------
EXTENSITY, INC.
2200 Powell Street
Suite 300
Emeryville, CA 94608
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 1, 2001
TO THE STOCKHOLDERS OF EXTENSITY, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
EXTENSITY, INC., a Delaware corporation (the "Company"), will be held on Friday,
June 1, 2001 at 9:00 a.m. local time at the Holiday Inn Baybridge, 1800 Powell
Street, Emeryville, CA 94608 for the following purposes:
1. To elect directors to serve for the ensuing year and until their
successors are elected. The nominees for election are Robert A.
Spinner, Sharam I. Sasson, Christopher D. Brennan, John R. Hummer,
David A. Reed, Ted E. Schlein and Maynard G. Webb.
2. To ratify the selection of PricewaterhouseCoopers LLP as independent
auditors of the Company for its fiscal year ending December 31, 2001.
3. To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on April 6,
2001, as the record date for the determination of stockholders entitled to
notice of and to vote at this Annual Meeting and at any adjournment or
postponement thereof.
By Order of the Board of Directors
/s/ Kenneth R. Hahn
---------------------------------------
KENNETH R. HAHN
Secretary
Emeryville, California
April 24, 2001
--------------------------------------------------------------------------------
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF
MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE
GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE
NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER
NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE RECORD
HOLDER A PROXY ISSUED IN YOUR NAME.
--------------------------------------------------------------------------------
EXTENSITY, INC.
2200 Powell Street
Suite 300
Emeryville, CA 94608
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
June 1, 2001
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of
Extensity, Inc., a Delaware corporation (Extensity or the "Company"), for use at
the Annual Meeting of Stockholders to be held on June 1, 2001, at 9:00 a.m.
local time (the "Annual Meeting"), or at any adjournment or postponement
thereof, for the purposes set forth herein and in the accompanying Notice of
Annual Meeting. The Annual Meeting will be held at the Holiday Inn Baybridge,
1800 Powell Street, Emeryville, CA 94608. The Company intends to mail this proxy
statement and accompanying proxy card on or about April 24, 2001, to all
stockholders entitled to vote at the Annual Meeting.
SOLICITATION
The Company will bear the entire cost of solicitation of proxies,
including preparation, assembly, printing and mailing of this proxy statement,
the proxy card and any additional information furnished to stockholders. Copies
of solicitation materials will be furnished to banks, brokerage houses,
fiduciaries and custodians holding in their names shares of Common Stock
beneficially owned by others to forward to such beneficial owners. The Company
may reimburse persons representing beneficial owners of Common Stock for their
costs of forwarding solicitation materials to such beneficial owners. Original
solicitation of proxies by mail may be supplemented by telephone, telegram or
personal solicitation by directors, officers or other regular employees of the
Company.
VOTING RIGHTS AND OUTSTANDING SHARES
Only holders of record of Common Stock at the close of business on
April 6, 2001 will be entitled to notice of and to vote at the Annual Meeting.
At the close of business on April 6, 2001 the Company had outstanding and
entitled to vote 24,337,201 shares of Common Stock. Each holder of record of
Common Stock on such date will be entitled to one vote for each share held on
all matters to be voted upon at the Annual Meeting.
All votes will be tabulated by the inspector of election appointed for
the meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Broker non-votes are counted towards a
quorum, but are not counted for any purpose in determining whether a matter has
been approved.
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power
to revoke it at any time before it is voted. It may be revoked by filing with
the Secretary of the Company at the Company's principal executive office, 2200
Powell Street, Suite 300, Emeryville, CA 94608, a written notice of revocation
or a duly executed proxy bearing a later date, or it may be revoked by attending
the meeting and voting in person. Attendance at the meeting will not, by itself,
revoke a proxy.
STOCKHOLDER PROPOSALS
The deadline for submitting a stockholder proposal for inclusion in the
Company's proxy statement and form of proxy for the Company's 2002 annual
meeting of stockholders pursuant to the Company's Bylaws is January 18, 2002.
Stockholders wishing to submit proposals or director nominations that are not to
be included in such proxy statement and proxy must do so not less than ninety
(90) days prior to the anniversary date of the immediately preceding annual
meeting of stockholders. Stockholders are also advised to review the Company's
Bylaws, which contain additional requirements with respect to advance notice of
stockholder proposals and director nominations.
PROPOSAL 1
ELECTION OF DIRECTORS
There are seven nominees for the seven Board positions presently
authorized in the Company's Bylaws. Each director to be elected will hold office
until the next annual meeting of stockholders and until his successor is elected
and has qualified, or until such director's earlier death, resignation or
removal. Each nominee listed below is currently a director of the Company, no
directors having been elected by the stockholders, and seven directors, Robert
A. Spinner, Sharam I. Sasson, Christopher D. Brennan, John R. Hummer, David A.
Reed, Ted E. Schlein and Maynard G. Webb, having been elected by the Board.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF EACH NAMED NOMINEE.
NOMINEES
The names of the nominees and certain information about them are set
forth below:
NAME AGE PRINCIPAL OCCUPATION/POSITION HELD WITH THE COMPANY
Robert A. Spinner 43 President, Chief Executive Officer and Director
Sharam I. Sasson 46 Chairman of the Board of Directors and Founder
Christopher D. Brennan 44 President, Chief Executive Officer and Director of Mobileum, Inc.
John R. Hummer 52 Managing Member of Hummer Winblad Venture Partners
David A. Reed 53 Managing Partner of Causeway Capital Partners L.P.
Ted E. Schlein 36 General Partner of Kleiner, Perkins, Caufield & Byers
Maynard G. Webb 45 President of eBay Technologies
Robert A. Spinner has served as Extensity's President, Chief Executive
Officer and as director since April 1999. Prior to joining Extensity, from
January 1995 to January 1999, Mr. Spinner served as Senior Vice President of
Worldwide Sales and International Operations at Clarify, Inc., a provider of
integrated sales and service solutions for the front office. From October 1988
to December 1994, Mr. Spinner served as Director of Western Regional Sales at
Sybase, Inc., a relational database management software company. Mr. Spinner has
also held technical positions at Applied Data Research, Inc. and Chevron
Corporation. Mr. Spinner received a B.A. in mathematics from Washington
University.
Sharam I. Sasson is the founder and Chairman of the Board of Directors
of Extensity and has served as a director since our inception in 1995. Mr.
Sasson served as our President and Chief Executive Officer until March 1999.
Prior to founding Extensity, Mr. Sasson was an executive at Scopus Technology, a
provider of enterprise customer information management systems which he
co-founded in 1991. Mr. Sasson has also served as a research scientist at
Lockheed Missile and Space Company and as a developer of structural modeling
software at PMB/Bechtel Corporation. Mr. Sasson received a B.S. in civil
engineering from Queen Mary College, University of London, an M.S. in structural
engineering from City University in London, and an M.Eng. from the University of
California at Berkeley.
Christopher D. Brennan has served as a director of Extensity since
January 2000. Mr. Brennan is currently the President, Chief Executive Officer
and a director of Mobileum, Inc., a private provider of software infrastructure
platforms for wireless applications, which he joined in April 2000. From April
1999 to April 2000, Mr. Brennan served as Chief Financial Officer of Genesys
Telecommunications Laboratories, a provider of interaction management software
applications. Genesys Telecommunications Laboratories is an independent
wholly-owned subsidiary of Alcatel subsequent to its acquisition in January
2000. Prior to joining Genesys, Mr. Brennan was Chief Financial Officer and
Corporate Secretary of Diamond Lane Communications, a provider of digital
subscriber line high speed access products, from September 1997 to April 1999.
Diamond Lane was acquired by Nokia. From April 1994 to July 1997, Mr. Brennan
held various senior executive positions, including President, Chief Operating
Officer and Chief Financial Officer of UB Networks, a wholly-owned subsidiary of
Tandem Computers that merged with Newbridge Networks. Mr. Brennan holds a B.S.
in Commerce from the University of Louisville, School of Business Administration
where he also serves as a member of the National Visiting Committee.
2
John R. Hummer has served as a director of Extensity since January
1996. Mr. Hummer is a managing member of Hummer Winblad Venture Partners, a
venture capital firm, which he co-founded in 1989. Mr. Hummer played
professional basketball for the Buffalo Braves and Seattle Supersonics. Mr.
Hummer holds a B.A. in English from Princeton and an MBA from Stanford
University.
David A. Reed has served as a director of Extensity since April 2001.
Mr. Reed is the Managing Partner of Causeway Capital Partners L.P., a private
family investment partnership, which he joined in October 2000. From 1974 to
September 2000, Mr. Reed held various positions with Ernst & Young LLP, an
accounting firm, most recently as Senior Vice Chair - Global Accounts,
Industries, Sales and Marketing. Mr. Reed serves as a director of Texas
Industries, a public company, that manufactures cement and structural steel, and
various private companies. Mr. Reed also serves as a Strategic Advisor to
Stephens Inc., a firm specializing in investment banking, private capital
management and merchant banking. Mr. Reed holds a B.B.A. from Texas Tech
University.
Ted E. Schlein has served as a director of Extensity since May 1997.
Mr. Schlein is a general partner at Kleiner Perkins Caufield & Byers, a venture
capital firm, which he joined in November 1996. Mr. Schlein also manages the
KPCB Java Fund, formed to invest in Java technology-based companies and related
Internet, intranet, networking and communications companies. From June 1986 to
October 1996, Mr. Schlein served in a variety of executive positions at Symantec
Corporation, a provider of Internet security technology and business management
technology solutions, most recently as Vice President, Networking and
Client/Server Solutions. Mr. Schlein holds a B.S. in economics from the
University of Pennsylvania.
Maynard G. Webb has served as a director of Extensity since November
1999. Mr. Webb is currently President of eBay Technologies, which he joined in
August 1999. Prior to his tenure at eBay, Mr. Webb was Senior Vice President and
Chief Information Officer at Gateway, Incorporated from July 1998 to August
1999. From February 1995 to July 1998, Mr. Webb served as Vice President and
Chief Information Officer at Bay Networks. Mr. Web also serves as a director of
Niku Corporation, a public company, that provides Internet software products.
Mr. Webb holds a B.A. in criminal justice from Florida Atlantic University.
Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote at the meeting. Shares represented by
executed proxies will be voted, if authority to do so is not withheld, for the
election of the seven nominees named above. In the event that any nominee should
be unavailable for election as a result of an unexpected occurrence, such shares
will be voted for the election of such substitute nominee as management may
propose. Each person nominated for election has agreed to serve if elected, and
management has no reason to believe that any nominee will be unable to serve.
BOARD COMMITTEES AND MEETINGS
During the fiscal year ended December 31, 2000 the Board of Directors
held six meetings and acted by unanimous written consent six times. The Board
has an Audit Committee and a Compensation Committee.
The Audit Committee meets with the Company's independent auditors at
least annually to review the results of the annual audit and discuss the
financial statements; recommends to the Board the independent auditors to be
retained; oversees the independence of the independent auditors; evaluates the
independent auditors' performance; and receives and considers the independent
auditors' comments as to controls, adequacy of staff and management performance
and procedures in connection with audit and financial controls. The Audit
Committee is composed of three directors: Messrs. Brennan, Hummer and Schlein.
It met two times during such fiscal year and did not act by unanimous written
consent. All members of the Company's Audit Committee are independent (as
independence is defined in Rule 4200(a)(14) of the NASD listing standards). The
Audit Committee has adopted a written Audit Committee Charter that is attached
hereto as Appendix A.
The Compensation Committee makes recommendations concerning salaries
and incentive compensation, awards stock options to employees and consultants
under the Company's stock option plans and otherwise determines compensation
levels and performs such other functions regarding compensation as the Board may
delegate. The Compensation Committee is composed of three outside directors:
Messrs. Brennan, Hummer and Schlein. It met one time during such fiscal year and
did not act by unanimous written consent. The Compensation Committee has adopted
a written Compensation Committee Charter that is attached hereto as Appendix B.
3
During the fiscal year ended December 31, 2000, each Board member
attended 75% or more of the aggregate of the meetings of the Board and of the
committees on which he served, held during the period for which he was a
director or committee member, respectively.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS 1
The Audit Committee of the Board is responsible for providing
independent, objective oversight of the Company's accounting functions and
internal controls. The Audit Committee is composed of independent directors, and
acts under a written charter. Each of the members of the Audit Committee is
independent as defined in Rule 4200(a)(14) of the NASD listing standards. A copy
of the Audit Committee Charter is attached to this Proxy Statement as Appendix
A.
The responsibilities of the Audit Committee include recommending to the
Board an accounting firm to be engaged as the Company's independent accountants.
Additionally, and as appropriate, the Audit Committee reviews and evaluates, and
discusses and consults with Company management, Company internal audit
personnel, and the independent accounts regarding the following:
o the plan for, and the independent accounts' report on, each audit
of the Company's financial statements;
o the Company's financial disclosure documents, including all
financial statements and reports filed with the SEC or sent to
stockholders;
o changes in the Company's accounting practices, principles, controls
or methodologies, or in the Company's financial statements;
o significant developments in accounting rules;
o the adequacy of the Company's internal accounting controls, and
accounting, financial and auditing personnel; and
o the establishment and maintenance of an environment at the Company
that promotes ethical behavior.
The Audit Committee is responsible for recommending to the Board that
the Company's financial statements be included in the Company's annual report.
The Committee took a number of steps in making this recommendation for 2000.
First, the Audit Committee discussed with PricewaterhouseCoopers LLP, the
Company's independent accountants for 2000, those matters PricewaterhouseCoopers
communicated to and discussed with the Audit Committee under applicable auditing
standards, including information regarding the scope and results of the audit.
These communications and discussions are intended to assist the Audit Committee
in overseeing the financial reporting and disclosure process. Second, the Audit
Committee discussed PricewaterhouseCoopers' independence with
PricewaterhouseCoopers and received written disclosure from
PricewaterhouseCoopers concerning independence as required under applicable
independence standards for auditors of public companies. This discussion and
disclosure informed the Audit Committee of PricewaterhouseCoopers' independence,
and assisted the Audit Committee in evaluating such independence. Finally, the
Audit Committee reviewed and discussed, with Company management and
PricewaterhouseCoopers, the Company's audited consolidated balance sheets at
December 31, 2000 and 1999, and consolidated statements of income, cash flows
and stockholders' equity for the three years ended December 31, 2000, 1999 and
1998. Based on the discussions with PricewaterhouseCoopers concerning the audit,
the independence discussions, and the financial statement review, and such other
matters deemed relevant and appropriate by the Audit Committee, the Audit
Committee recommended to the Board that these financial statements be included
in the Company's 2000 Annual Report on Form 10-K.
From the members of the Audit Committee:
Christopher D. Brennan (chair)
John R. Hummer
Ted E. Schlein
--------------------------
1 The material in this report is not "soliciting material," is not "filed" with
the SEC, and is not to be incorporated by reference into any filing of the
Company under the 1933 or 1934 Act.
4
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected PricewaterhouseCoopers LLP as the
Company's independent auditors for the fiscal year ending December 31, 2001 and
has further directed that management submit the selection of independent
auditors for ratification by the stockholders at the Annual Meeting.
PricewaterhouseCoopers LLP has audited the Company's financial statements since
1997. Representatives of PricewaterhouseCoopers LLP are expected to be present
at the Annual Meeting, will have an opportunity to make a statement if they so
desire and will be available to respond to appropriate questions.
Stockholder ratification of the selection of PricewaterhouseCoopers LLP
as the Company's independent auditors is not required by the Company's Bylaws or
otherwise. However, the Board is submitting the selection of
PricewaterhouseCoopers LLP to the stockholders for ratification as a matter of
good corporate practice. If the stockholders fail to ratify the selection, the
Audit Committee and the Board will reconsider whether or not to retain that
firm. Even if the selection is ratified, the Audit Committee and the Board in
their discretion may direct the appointment of different independent auditors at
any time during the year if they determine that such a change would be in the
best interests of the Company and its stockholders.
The affirmative vote of the holders of a majority of the shares present
in person or represented by proxy and entitled to vote at the Annual Meeting
will be required to ratify the selection of PricewaterhouseCoopers LLP.
Abstentions will be counted toward the tabulation of votes cast on proposals
presented to the stockholders and will have the same effect as negative votes.
Broker non-votes are counted towards a quorum, but are not counted for any
purpose in determining whether this matter has been approved.
AUDIT FEES. During the fiscal year ended December 31, 2000, the
aggregate fees billed by PricewaterhouseCoopers LLP for the audit of the
Company's financial statements for such fiscal year and for the reviews of the
Company's interim financial statements was $155,655.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES During the
fiscal year ended December 31, 2000, PricewaterhouseCoopers LLP did not bill any
fees for information technology consulting.
ALL OTHER FEES. During fiscal year ended December 31, 2000, the
aggregate fees billed by PricewaterhouseCoopers LLP for professional services
other than audit and information technology consulting fees was $16,700.
The Audit Committee has determined the rendering of all other non-audit
services by PricewaterhouseCoopers LLP is compatible with maintaining the
auditor's independence.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2.
5
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
ownership of the Company's Common Stock as of February 28, 2001, except as
otherwise indicated, by: (i) each nominee for director; (ii) each of the
executive officers named in the Summary Compensation Table; (iii) all executive
officers and directors of the Company as a group; and (iv) all those known by
the Company to be beneficial owners of more than five percent of its Common
Stock.
BENEFICIAL OWNERSHIP (1)
NUMBER OF PERCENT OF
BENEFICIAL OWNER SHARES TOTAL
DIRECTORS AND EXECUTIVE OFFICERS
Robert A. Spinner(2)............................................ 1,200,570 4.8%
Sharam I. Sasson(3)............................................. 1,577,000 6.5%
Christopher D. Brennan(4)....................................... 59,333 *
John R. Hummer(5)............................................... 982,399 4.0%
David A. Reed(6)................................................ 50,000 *
Ted. E. Schlein(7).............................................. 2,964,040 12.2%
Maynard G. Webb(8).............................................. 52,000 *
Kenneth R. Hahn(9).............................................. 118,920 *
Elizabeth A. Ireland(10)........................................ 182,965 *
Eric C. Ruud(11)................................................ 204,522 *
David A. Yarnold(12)............................................ 217,260 *
All executive officers and directors as a group (14 persons) (13) 8,116,953 32.0%
5% STOCKHOLDERS
Berkeley International Capital Limited(14)...................... 1,147,898 4.7%
Capital Group International, Inc.(15)........................... 1,530,800 6.3%
Franklin Resources, Inc.(16).................................... 1,509,559 6.2%
Entities affiliated with Kleiner Perkins Caufield & Byers(7).... 2,909,040 12.0%
Sharam I. Sasson(3)............................................. 1,577,000 6.5%
Entities affiliated with TCW Asset Management Company(17)....... 2,273,507 9.4%
----------------------------------------
* Less than 1% of the outstanding shares of common stock
(1) This table is based upon information supplied by officers, directors
and principal stockholders and Schedules 13D and 13G filed with the
Securities and Exchange Commission (the "SEC"). Unless otherwise
indicated in the footnotes to this table and subject to community
property laws where applicable, the Company believes that each of the
stockholders named in this table has sole voting and investment power
with respect to the shares indicated as beneficially owned. Applicable
percentages are based on 24,268,352 shares outstanding on February 28,
2001, adjusted as required by rules promulgated by the SEC.
(2) Includes 804,933 shares held by the Spinner Family Trust U/D/T dated
August 3, 1999. Also includes 10,000 shares held by the Jacqueline
Nicole Spinner Trust UTA dated August 3, 1999, 10,000 shares held by
the Amanda Spinner Trust UTA dated August 3, 1999 and 10,000 shares
held by the Samantha Sidney Spinner Trust UTA dated August 3, 1999, as
to which shares Mr. Spinner disclaims beneficial ownership. Includes
316,418 shares subject to a right of repurchase in favor of Extensity
which lapses over a period of time, and 365,637 shares of our common
stock issuable upon exercise of options within 60 days of February 28,
2001.
(3) Includes 1,106,378 shares held by the Sasson Family Trust U/D/T dated
December 28, 1994, 225,311 shares held by the Fariba J. Sasson Annuity
Trust I U/I dated October 19, 1999 and 225,311 shares held by the
Sharam I. Sasson Annuity Trust I U/I dated October 19, 1999. Also
includes 10,000 shares held by the DAS Trust UTA
6
dated September 24, 1998 and 10,000 shares held by the EIS Trust UTA
dated September 24, 1998, as to which shares Mr. Sasson disclaims
beneficial ownership.
(4) Includes 50,000 shares issuable upon exercise of options within 60 days
of February 28, 2001.
(5) Includes 407,575 shares are held by Hummer Winblad Venture Partners II,
L.P. and 213,320 shares are held by Hummer Winblad Venture Partners
III, L.P. Mr. Hummer disclaims beneficial ownership of the shares held
by funds affiliated with Hummer Winblad Venture Partners, except to the
extent of his pecuniary interest therein. Mr. Hummer is the sole
natural person who exercises voting and/or dispositive powers for the
shares held by the entities affiliated with Hummer Winblad Venture
Partners. Includes 50,000 shares issuable upon exercise of options
within 60 days of February 28, 2001.
(6) Mr. Reed was elected to the Company's Board of Directors on April 12,
2001. Upon his election, Mr. Reed received a stock option grant for
50,000 shares of the Company's Common Stock. Such options vest 25%
after the first year and on a monthly basis thereafter and are
immediately exercisable.
(7) Includes 900,010 shares held by Kleiner Perkins Caufield & Byers VIII,
72,725 shares held by KPCB Information Sciences Zaibatsu Fund II,
52,096 shares held by KPCB VIII Founders Fund and 1,884,209 shares held
by KPCB Java Fund LP. Mr. Schlein disclaims beneficial ownership of the
shares held by funds affiliated with Kleiner Perkins Caufield & Byers,
except to the extent of his pecuniary interest therein. The following
natural persons exercise voting and/or dispositive powers for the
shares held by the KPCB Information Sciences Zaibatsu Fund II, L.P.:
Brook Byers, John Doerr, Vinod Khosla, Joseph Lacob, Kevin Compton, W.
S. McKinsey and William Hearst. The following natural persons exercises
voting and/or dispositive powers for the shares held by the KPCB Java
Fund L.P., Kleiner Perkins Caufield & Byers VIII, L.P. and Kleiner
Perkins Caufield & Byers VIII Founder's Fund, L.P.: Brook Byers, John
Doerr, James Lally, Floyd Kvamme, Vinod Khosla, Joseph Lacob, Bernard
Lacroute, Kevin Compton, W. S. McKinsey and William Hears. Includes
50,000 shares issuable upon exercise of options within 60 days of
February 28, 2001 and 5,000 shares directly held by Mr. Schlein.
(8) Includes 50,000 shares issuable upon exercise of options within 60 days
of February 28, 2001.
(9) Includes 32,958 shares issuable upon exercise of options within 60 days
of February 28, 2001 and 43,188 subject to a right of repurchase in
favor of Extensity which lapses over a period of time.
(10) Includes 44,375 shares issuable upon exercise of options within 60 days
of February 28, 2001 and 34,375 shares subject to a right of repurchase
in favor of Extensity which lapses over a period of time.
(11) Includes 36,458 shares issuable upon exercise of options within 60 days
of February 28, 2001 and 34,376 shares subject to a right of repurchase
in favor of Extensity which lapses over a period of time. On April 12,
2001, Mr. Ruud announced that he will resign from the Company effective
July 13, 2001.
(12) Includes 112,500 shares issuable upon exercise of options within 60
days of February 28, 2001 and 15,382 shares subject to a right of
repurchase in favor of Extensity which lapses over a period of time.
(13) Includes an aggregate of 1,010,469 shares issuable upon exercise of
options within 60 days of February 28, 2001 and an aggregate of 563,144
shares subject to a right of repurchase in favor of Extensity which
lapses over a period of time.
(14) Ronald William Green and Arthur Trueger are the sole natural persons
who exercise voting and/or dispositive powers for the shares held by
Berkeley International Capital Limited.
(15) Capital Group International, Inc. and Capital Guardian Trust Company
(the "Capital Entities") share beneficial ownership of 1,530,800 shares
of common stock. The address for the Capital Entities is 11100 Santa
Monica Boulevard, Los Angeles, CA 90025.
(16) Consists of 986,000 shares held by Franklin Advisers, Inc. and 523,559
shares held by Franklin Management, Inc. Franklin Resources, Inc. is
the parent holding company for Franklin Advisers, Inc. and Franklin
7
Management, Inc. Charles B. Johnson and Rupert H. Johnson, Jr. are the
principal stockholders of Franklin Resources, Inc. The address for
these entities is 777 Mariners Island Boulevard, San Mateo, CA 94404.
(17) TCW Group, Inc. and Robert Day share voting and dispositive power over
the 2,273,507 shares. The address for the TCW Group, Inc. is 865 South
Figueroa Street, Los Angeles, CA 90017.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "1934 Act")
requires the Company's directors and executive officers, and persons who own
more than ten percent of a registered class of the Company's equity securities,
to file with the SEC initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Officers,
directors and greater than ten percent stockholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 2000, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with.
EXECUTIVE OFFICERS OF THE COMPANY
The names of the executive officers of the Company and certain
information about them are set forth below:
NAME AGE POSITION
Robert A. Spinner 43 President and Chief Executive Officer and Director
Sharam I. Sasson 46 Chairman of the Board of Directors and Founder
Kenneth R. Hahn 34 Chief Financial Officer
Elizabeth A. Ireland 42 Vice President of Marketing
Allen F. Nordgren 55 Vice President of Professional Services
Mark K. Oney 43 Vice President of Engineering
Eric C. Ruud 41 Vice President of International Operations
Donald E. Smith 42 Vice President of Hosted Operations
David A. Yarnold 40 Vice President of North American Sales
Biographical information about Messrs. Spinner and Sasson is set forth
under Proposal 1 above.
Kenneth R. Hahn was appointed Extensity's Chief Financial Officer in
December 1999, has served as Vice President of Finance and Administration since
January 1999 and previously served as Corporate Controller from January 1998 to
January 1999. From September 1995 to December 1997, Mr. Hahn was employed as a
management consultant with The Boston Consulting Group, a strategy consulting
firm. Mr. Hahn attended the Stanford Graduate School of Business, where he
earned an MBA and was named an Arjay Miller Scholar. Mr. Hahn also held various
positions at PriceWaterhouse LLP, most recently as an Audit Manager. He received
a B.A. in business administration from California State University, Fullerton
and is a Certified Public Accountant and a Certified Management Accountant.
Elizabeth A. Ireland has served as Extensity's Vice President of
Marketing since January 1998. Prior to joining Extensity, Ms. Ireland was
employed at MapInfo Corporation, a software company, from 1989 to October 1997,
most recently as Vice President and General Manager of Internet Business.
Additional positions held by Ms. Ireland at MapInfo Corporation include Vice
President of Marketing and Business Development and Vice President of
Information Products. Ms. Ireland received a B.S. in business administration
from the University of South Carolina and is a Certified Public Accountant.
Allen F. Nordgren has served as Extensity's Vice President of
Professional Services since November 1997. Prior to joining Extensity, Mr.
Nordgren was employed from June 1996 to November 1997 at Logica, Inc., a systems
integrator, as Vice President and General Manager of Western U.S. Operations.
From October 1992 to May 1996, Mr. Nordgren was employed at Sybase, most
recently as Practice Director of Professional Services for the Northwest Region.
Mr. Nordgren attended Bernard Baruch University and served four years in the
U.S. Military.
8
Mark K. Oney has served as Extensity's Vice President of Engineering
since July 1999. Prior to joining Extensity, from May 1999 to June 1999, Mr.
Oney served as the Vice President of Engineering for Ringer Software, a consumer
information Internet company. From September 1998 through January 1999, Mr. Oney
was a co-founder of and served as Vice President of Software Engineering for
Crag Technologies, Inc., a developer and supplier of data storage solutions.
Crag Technologies was acquired by Western Digital Corporation in February 1999.
From July 1997 through May 1998, Mr. Oney was a co-founder of and served as Vice
President of Software Engineering for Ridge Technologies, a Windows NT storage
company which was acquired by Adaptec, Inc., in May 1998. Prior to founding
Ridge, from May 1988 through June 1997, Mr. Oney served in a variety of
engineering and management roles at Apple Computer, Inc., most recently as
Director of Software Development for the PowerBook line of business. Mr. Oney
received a B.S. in electrical engineering from Rochester Institute of
Technology.
Eric C. Ruud has served as Extensity's Vice President of International
Operations since January 2001 and prior to that position he served as Vice
President of Sales from June 1997 to January 2001. Mr. Ruud announced that he
will resign from the Company effective July 14, 2001. Prior to joining
Extensity, from September 1995 to June 1997, Mr. Ruud served as Sales Director
for Documentum, a provider of document management solutions. From September 1992
to June 1995, Mr. Ruud served as District Sales Manager at Sybase. Mr. Ruud has
also worked at System Industries and Xerox Corporation. Mr. Ruud received a B.S.
from the University of Utah.
Donald E. Smith has served as Extensity's Vice President of Hosted
Operations since January 2000. Mr. Smith co-founded Clarify, Inc. in 1990, and
held various management positions at Clarify until January 2000, including Vice
President of Sales and Engineering and Director of Quality Assurance, Product
Design and Customer Support. Mr. Smith received a B.S.E.E. from the University
of Nebraska at Lincoln.
David A. Yarnold has served as Extensity's Vice President of North
American Sales since January 2001 and prior to that position he served as Vice
President of Business Development form August 1999 to January 2001. Prior to
joining Extensity, from January 1996 to July 1999, Mr. Yarnold was employed at
Clarify, Inc., most recently as Vice President of Northern American Sales. From
January 1993 to October 1995, Mr. Yarnold served as Regional Vice President of
Platinum Software Corporation, a financial software provider. Mr. Yarnold
received a B.S. in accounting from San Francisco State University and is a
Certified Public Accountant.
EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
Directors currently do not receive any cash compensation from the
Company for their services as members of the Board of Directors. The members,
however, are eligible for reimbursement for their expenses incurred in
connection with attendance at Board meetings in accordance with Company policy.
Each non-employee director of the Company is eligible to receive stock
option grants under the 1996 Stock Option Plan (the "1996 Plan"). Only
non-employee directors of the Company or an affiliate of such directors (as
defined in the Code) are eligible to receive options under the 1996 Plan.
Options granted under the 1996 Plan are intended by the Company not to qualify
as incentive stock options under the Code.
The exercise price of options granted under the 1996 Plan is not less
than the fair market value of the Common Stock subject to the option on the date
of the option grant. Options granted under the 1996 Plan may be early exercised
at any date after the date of the option grant, subject to the Company's
repurchase rights. The term of options granted under the 1996 Plan is ten years.
In the event of a merger of the Company with or into another corporation or a
consolidation, acquisition of assets or other change-in-control transaction
involving the Company, each option either will continue in effect, if the
Company is the surviving entity, or will be assumed or an equivalent option will
be substituted by the successor corporation, if the Company is not the surviving
entity. In the event that the successor corporation refuses to assume or
substitute for each option, the options granted shall fully vest.
Options granted to directors are at the discretion of the Board of
Directors. During the last fiscal year, the Company granted options covering
150,000 shares to three of its non-employee directors, at an exercise price per
share of $9.00. The Board of Directors determined the fair market value of such
Common Stock on the date of grant was $9.00 per share. As of February 28, 2001,
no options had been exercised under the 1996 Plan.
9
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY OF COMPENSATION
The following table shows for the fiscal years ended December 31, 1998,
1999 and 2000, compensation awarded or paid to, or earned by, the Company's
Chief Executive Officer and its other four most highly compensated executive
officers at December 31, 2000 (the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation Awards
----------------------------------------- ----------------------------------
Other
Name and Principal Salary Bonus Annual Securities Underlying
Position Year ($) ($) Compensation($) Options/ SARs(#)
------------------------ ------- ---------- ---------- ------------------- ----------------------------------
Robert A. Spinner 2000 275,000 -- 440,000
President and Chief 1999 210,417 -- 1,266,070
Executive Officer and 1998 -- -- --
Director
------------------------ ------- ---------- ---------- ------------------- ----------------------------------
Kenneth R. Hahn
Chief Financial Officer 2000 168,750 48,625 70,000
1999 127,500 29,000 80,000
1998 75,449 10,000 90,000
------------------------ ------- ---------- ---------- ------------------- ----------------------------------
Elizabeth A. Ireland 2000 178,750 49,893 50,000
Vice President of 1999 151,218 45,000 110,000
Marketing 1998 135,872 40,000 150,000
------------------------ ------- ---------- ---------- ------------------- ----------------------------------
Eric C. Ruud 2000 140,000 106,375 10,000 40,000
Vice President of 1999 125,000 213,697 50,000
International 1998 125,000 107,675 50,000
Operations
------------------------ ------- ---------- ---------- ------------------- ----------------------------------
David Yarnold 2000 206,500 62,812 40,000
Vice President of 1999 68,990 0 225,000
North American Sales 1998 -- -- --
------------------------ ------- ---------- ---------- ------------------- ----------------------------------
Mr. Spinner joined the Company as its President and Chief Executive
Officer in April 1999. Mr. Yarnold joined the Company in August 1999.
STOCK OPTION GRANTS AND EXERCISES
The Company grants options to its executive officers under its 1996
Stock Option Plan (the "1996 Plan"). As of February 28, 2001, options to
purchase a total of 3,832,362 shares were outstanding under the 1996 Plan and
options to purchase 1,178,561 shares remained available for grant thereunder.
The term of options granted under the 1996 Plan is ten years. In the event of a
merger of the Company with or into another corporation or a consolidation,
acquisition of assets or other change-in-control transaction involving the
Company, each option either will continue in effect, if the Company is the
surviving entity, or will be assumed or an equivalent option will be substituted
by the successor corporation, if the Company is not the surviving entity. In the
event that the successor corporation refuses to assume or substitute for each
option, the options granted shall fully vest.
10
The following tables show for the fiscal year ended December 31, 2000,
certain information regarding options granted to, exercised by, and held at year
end by, the Named Executive Officers:
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
-----------------------------------------
% OF TOTAL
NUMBER OF OPTIONS/
SECURITIES SARS POTENTIAL REALIZABLE VALUE
UNDERLYING GRANTED TO AT ASSUMED ANNUAL RATES OF
OPTIONS/ EMPLOYEES EXERCISE OR STOCK PRICE APPRECIATION FOR
SARS IN FISCAL BASE PRICE EXPIRATION OPTION TERM
NAME GRANTED (#) YEAR ($/SH) DATE 5% ($) 10% ($)
------------------------- ------------ ---------- ---------- ------------- ---------- ------------
Robert A. Spinner..... 440,000 15.6% $14.50 10/12/10 $4,012,348 $10,168,077
Kenneth R. Hahn....... 25,000 0.8 9.00 1/17/10 141,501 358,592
45,000 1.6 14.50 10/12/10 410,354 1,039,917
Elizabeth A. Ireland.. 50,000 1.7 14.50 10/12/10 455,949 1,155,463
Eric C. Ruud.......... 40,000 1.4 14.50 10/12/10 364,759 924,371
David A. Yarnold...... 30,000 1.0 29.75 7/11/10 561,289 1,422,415
10,000 0.3 14.50 10/12/10 91,190 231,093
--------------------------------------------------------------------------------
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR, AND FY-END OPTION/SAR VALUES
VALUE OF UNEXERCISED
IN-THE-MONEY
NUMBER OF SECURITIES OPTIONS/SARS AT FY-
UNDERLYING UNEXERCISED END ($)
SHARES OPTIONS/SARS AT FY-END -------------------
ACQUIRED ON (#) EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) VALUE REALIZED ($) 2 UNEXERCISABLE3, 4 UNEXERCISABLE3, 5
------------------------- ------------ -------------------- ---------------------- -------------------
Robert A. Spinner..... -- -- 35,875/769,762 --/1,875,027
Kenneth R. Hahn....... 21,000 157,500 22,291/106,709 --/18,687
Elizabeth A. Ireland.. -- -- 35,208/124,792 94,416/172,344
Eric C. Ruud.......... 32,292 461,614 14,583/93,125 --/101,254
David A. Yarnold...... -- -- --/152,500 --/598,050
EMPLOYMENT SEVERANCE AND CHANGE OF CONTROL AGREEMENTS
In February 1999, the Company and Mr. Spinner entered into an
employment agreement providing that, if Mr. Spinner's employment is terminated
without cause or constructively terminated, he will be entitled to receive, as
severance, six months continuation of salary. Furthermore, pursuant to the
employment agreement, in the event that Mr. Spinner's employment is terminated
without cause or constructively terminated within one year of an acquisition of
the Company or similar corporate event, 50% of Mr. Spinner's then remaining
unvested stock and options will become fully vested.
-------------------------------
2 Value realized is based on the fair market value of the Company's Common Stock
on the date of exercise minus the exercise price without taking into account any
taxes that may be payable in connection with the transaction.
3 Reflects shares vested and unvested at December 31, 2001. Certain options
granted under the 1996 Plan are immediately exercisable, but are subject to the
Company's right to repurchase unvested shares on termination of employment.
4 Includes both "in-the-money" and "out-of-the-money" options. "In-the-money"
options are options with exercise prices below the market price of the Company's
Common Stock at December 31, 2001.
5 Fair market value of the Company's Common Stock at December 31, 2001 ($6.02)
minus the exercise price of the options.
11
In August 1999, the Company and Mr. Yarnold entered into an employment
agreement providing that in the event that Mr. Yarnold's employment is
terminated without cause or constructively terminated within one year of an
acquisition of the Company or similar corporate event, Mr. Yarnold will be
entitled to receive, as severance, six months continuation of salary and nine
months of accelerated vesting of Mr. Yarnold's then remaining unvested stock and
options.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION 6
Thc Compensation Committee is currently composed of three outside
directors: Messrs. Brennan, Hummer and Schlein. The Compensation Committee is
responsible for establishing the Company's compensation programs for all
employees, including executives. For executive officers, the Compensation
Committee evaluates performance and determines compensation policies and levels.
A copy of the Compensation Committee Charter is attached to this Proxy Statement
as Appendix B.
COMPENSATION PHILOSOPHY
The goals of the compensation program are to align compensation with
business objectives and performance and to enable the Company to attract and
retain the highest quality executive officers and other key employees, reward
them for the Company's progress and motivate them to enhance long-term
stockholder value. Key elements of this philosophy are as follows:
o Thc Company pays competitively with comparable technology
companies, both inside and outside its industry, with which
the Company competes for talent. To ensure that compensation
is competitive, the Company compares its practices with
workforce management companies and sets its parameters based
on this comparison.
o The Company maintains short- to long-term incentive
opportunities sufficient to provide motivation to achieve
specific operating goals and to generate rewards that bring
total compensation to competitive levels.
o The Company provides significant equity-based incentives for
executives and other key employees to ensure that they are
motivated over the long term to respond to the Company's
business challenges and opportunities as owners and not just
as employees.
BASE SALARY. The Compensation Committee annually reviews each executive
officer's base salary. When reviewing base salaries, the Compensation Committee
considers individual and corporate performance, levels of responsibility, prior
experience, breadth of knowledge and competitive pay practices. Base salaries
for executive officers were increased by 3% to 12% for fiscal 2000 compared to
fiscal 1999. The increases were due to fiscal 1999 financial performance and the
need to remain within the range of competitive salaries for comparable
companies.
Thc Company has also adopted the Management By Objective Bonus Plan
(the "MBO Bonus Plan") for employees of the Company, including all executive
officers. Cash bonuses are paid on a quarterly basis based upon achievement of
certain specified corporate goals and individual goals. The Compensation
Committee determines the percentage of salary to be paid on an individual basis.
Amounts reflected as "bonuses" in the "Summary Compensation Table"
above, were paid based on the criteria set forth in the MBO Bonus Plan.
LONG-TERM INCENTIVES. The Company's long-term incentive program
consists of the 1996 Stock Option Plan ("Stock Plan") and the 2000 Nonstatutory
Stock Option Plan ("Nonstatutory Plan"). In fiscal 2000, the Company granted
955,000 stock options to its executive officers under the Stock Plan, and no
shares have been awarded under the Nonstatutory Plan. The Compensation Committee
awarded these grants in order to provide significant links between executive
compensation and stockholder interests. Such grants were intended to provide
incentive to successfully
--------------------------------
6 "The material in this report is not "soliciting material," is not deemed
"filed" with the SEC, and is not to be incorporated by reference into any
filing of the Company under the 1933 Act or 1934 Act, whether made before or
after the date hereof and irrespective of any general incorporation language
contained in such filing.
12
complete the Company's initial public offering, to successfully achieve certain
specified revenue and profitability targets and to maximize stockholder value
over the next several years. The Stock Plan utilizes a combination of vesting
plans designed to enhance the long-term goals of the Company. The options have a
time-based vesting provision which encourages employees to remain with the
Company. The Stock Plan options vest 25% after the first year and on a monthly
basis thereafter, which the Company believes provides a strong incentive for
employees to remain with the Company. Through option grants, executives and
employees receive significant equity incentives to build long-term stockholder
value. Grants are made at 100% of fair market value on the date of grant.
Executives receive value from these grants only if the Company's Common Stock
appreciates over the long-term.
Future grants will be made under both Plans. Employees will also be
allowed to participate in the Employee Stock Purchase Plan (the "ESPP").
CORPORATE PERFORMANCE AND CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Spinner's base salary and bonus are based on the Company achieving
several key objectives. For fiscal year 2000, these objectives included
achieving specified financial performance for the Company, the completion of the
Company's initial public offering, the successful transition to new technology
and an increase in market share. Mr. Spinner's base salary during fiscal 2000 as
President and Chief Executive Officer was $275,000. The Compensation Committee
offered Mr. Spinner a base salary of $300,000 in his initial employment offer in
February of 1999, however, he declined the $300,000 salary and elected a lower
salary of $275,000 for fiscal year 2000. Mr. Spinner was also eligible for a
$100,000 performance bonus payable in two installments on March 31, 2000 and
September 30, 2000. The Compensation Committee recommended that Mr. Spinner be
awarded this bonus based on meeting his objectives, however, Mr. Spinner
declined this bonus electing to contribute the money to the Company's working
capital. In fiscal 2000, Mr. Spinner received an additional stock option grant
for 440,000 shares of Common Stock. The vesting commencement date of these
grants is January 1, 2003, and these options shall vest monthly over a twenty
four month period following the vesting commencement date. The Board of
Directors approved this grant as an additional incentive for Mr. Spinner to
continue to provide his services to the Company and to build long-term
stockholder value.
LIMITATION ON DEDUCTION OF COMPENSATION PAID TO CERTAIN EXECUTIVE OFFICERS
Section 162(m) of the Internal Revenue Code (the "Code") limits the
Company to a deduction for federal income tax purposes of no more than $1
million of compensation paid to certain Named Executive Officers in a taxable
year. Compensation above $1 million may be deducted if it is "performance-based
compensation" within the meaning of the Code.
The statute containing this law and the applicable proposed Treasury
regulations offer a number of transitional exceptions to this deduction limit
for pre-existing compensation plans, arrangements and binding contracts. As a
result, the Compensation Committee believes that at the present time it is quite
unlikely that the compensation paid to any Named Executive Officer in a taxable
year which is subject to the deduction limit will exceed $1 million. Therefore,
the Compensation Committee has not yet established a policy for determining
which forms of incentive compensation awarded to its Named Executive Officers
shall be designed to qualify as "performance-based compensation." The
Compensation Committee intends to continue to evaluate the effects of the
statute and any final Treasury regulations and to comply with Code Section
162(m) in the future to the extent consistent with the best interests of the
Company.
CONCLUSION
Through the plans described above, a significant portion of the
Company's executive compensation program, including Mr. Spinner's compensation,
is contingent on Company performance, and realization of benefits is closely
linked to increases in long-term stockholder value. The Company remains
committed to this philosophy of pay for performance, recognizing that the
competitive market for talented executives and the volatility of the Company's
business may result in highly variable compensation for a particular time period
From the members of the Compensation Committee:
Christopher D. Brennan
John R. Hummer
Ted E. Schlein
13
PERFORMANCE MEASUREMENT COMPARISON (1)
The following graph shows the total stockholder return of an investment
of $100 in cash on January 27, 2000 for (i) the Company's Common Stock, (ii) the
JP Morgan H&Q Technology Index and (iii) the Nasdaq Stock Market - U.S. Index.
All values are calculated as of the end of each calendar month during 2000:
--------------------------------------------------------------------------------
EXTENSITY
JP MORGAN H&Q TECHNOLOGY INDEX
NASDAQ STOCK MARKET -U.S. INDEX
[PERFORMANCE GRAPH]
JP MORGAN H&Q INDEX PRODUCTS AND SERVICES:
2001 PROXY PERFORMANCE GRAPH DATA
MONTHLY DATA SERIES
SCALED PRICES: Stock and index prices scaled to 100 at 1/27/00
DATES Extensity JP Morgan H&Q Technology Nasdaq Stock Market -U.S.
----- --------- ------------------------ -------------------------
1/27/00 100.00 100.00 100.00
Jan-00 289.38 98.00 97.47
Feb-00 362.50 125.26 115.99
Mar-00 240.00 115.55 113.60
Apr-00 61.25 103.07 95.55
May-00 85.94 90.62 84.03
Jun-00 171.25 103.79 98.77
Jul-00 80.94 97.15 93.42
Aug-00 112.50 114.27 104.46
Sep-00 105.00 101.90 90.88
Oct-00 63.75 92.62 83.38
Nov-00 39.06 66.30 64.29
Dec-00 30.08 66.22 60.90
--------------------------------------------------------------------------------
(1) This Section is not "soliciting material," is not deemed "filed"
with the SEC and is not to be incorporated by reference in any filing
of the Company under the 1933 Act or the 1934 Act whether made before
or after the date hereof and irrespective of any general incorporation
language in any such filing.
14
CERTAIN TRANSACTIONS
At February 28, 2001, the Company had loans outstanding in the
principal amount of $250,000.00 to Mr. Smith and $94,999.50 to Mr. Oney, each of
whom are executive officers of the Company. Mr. Smith's loan was entered into in
January 2000 and Mr. Oney's loan was entered into in August 1999. The loans were
entered into for the purpose of assisting each such officer with the early
exercise of certain of their stock option grants. Each such loan is evidenced by
a full recourse promissory note secured either by shares of the Company's Common
Stock or other collateral securing each such loan valued in excess of the
principal balance of each such loan. Interest on Mr. Smith's loan is compounded
semiannually at a rate of 6.12% per annum. Interest on Mr. Oney's loan is
compounded semiannually at a rate of 5.87% per annum. Since the commencement of
fiscal 2000, the largest aggregate indebtedness of Mr. Smith and Mr. Oney under
such loans was $326,500 and $122,418, respectively, including principal and
accrued interest.
The Company has entered into indemnity agreements with certain officers
and directors which provide, among other things, that the Company will indemnify
such officer or director, under the circumstances and to the extent provided for
therein, for expenses, damages, judgments, fines and settlements such officer or
director may be required to pay in actions or proceedings which he or she is or
may be made a party by reason of his or her position as a director, officer or
other agent of the Company, and otherwise to the fullest extent permitted under
Delaware law and the Company's Bylaws.
15
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented
for consideration at the Annual Meeting. If any other matters are properly
brought before the meeting, it is the intention of the persons named in the
accompanying proxy to vote on such matters in accordance with their best
judgment.
By Order of the Board of Directors
BY /S/ KENNETH R. HAHN
--------------------------
KENNETH R. HAHN
Secretary
April 24, 2001
A COPY OF THE COMPANY'S ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000 IS AVAILABLE WITHOUT
CHARGE UPON WRITTEN REQUEST TO: CORPORATE SECRETARY, EXTENSITY, INC., 2200
POWELL STREET, SUITE 300, EMERYVILLE, CA 94608.
16
APPENDIX A
AUDIT COMMITTEE CHARTER
EXTENSITY, INC.
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
PURPOSE:
The Audit Committee (the "Committee") of Extensity, Inc.
(the "Company") is appointed by the Board of Directors (the "Board") to assist
the Board in fulfilling its oversight responsibilities. The Committee's primary
duties and responsibilities are to:
o Monitor the integrity of the Company's financial reporting process and
systems of internal controls regarding finance, accounting, and legal
compliance.
o Monitor the independence and performance of the Company's independent
auditors and internal auditing department.
o Provide an avenue of communication among the independent auditors,
management, the internal auditing department, and the Board.
The Committee has the authority to conduct any investigation
appropriate to fulfilling its responsibilities, and it has direct access to the
independent auditors as well as anyone in the organization. The Committee has
the ability to retain, at the Company's expense, special legal, accounting, or
other consultants or experts it deems necessary in the performance of its
duties.
COMPOSITION:
The Committee shall consist of at least three (3) members of the Board
of Directors. The members of the Committee shall satisfy the independence and
experience requirements of the Nasdaq National Market.
Functions and Authority:
The operation of the Committee shall be subject to the Bylaws of the
Company, as in effect from time to time, and Section 141 of the Delaware General
Corporation Law. The Committee shall be charged with the following functions:
1. To recommend annually to the Board of Directors the firm of
certified public accountants to be employed by the Company as its independent
auditors for the ensuing year, which firm is ultimately accountable to the
Committee and the Board, as representatives of the Company's stockholders.
2. To review the engagement of the independent auditors, including
the scope, extent and procedures of the audit and the compensation to be paid
therefor, and all other matters the Committee deems appropriate.
3. To evaluate, together with the Board, the performance of the
independent auditors and, if so determined by the Committee, recommend that the
Board replace the independent auditors.
4. To review and approve all professional non-audit services provided
to the Company by its independent auditors and to consider the possible effect
of such services on the independence of the auditors.
5. To have familiarity, through the individual efforts of its
members, with the accounting and reporting principles and practices applied by
the Company in preparing its financial statements, including, without
limitation, the policies for recognition of revenues in financial statements.
6. To review, with the senior management of the Company and the
independent auditors, prior to the release of earnings and prior to filings with
the Securities and Exchange Commission the financial annual information to be
included in the financial statements in the Company's Annual Report on Form
10-K, including their judgment about the quality, not just acceptability, of
accounting principles, the reasonableness of significant judgments and the
clarity of the disclosures in the financial statements. Also, the Committee
shall discuss the results of the annual audit and any other matters required to
be communicated to the Committee by the independent auditors under generally
accepted auditing standards.
7. To assist and to interact with the independent auditors so that
they may carry out their duties in the most efficient and cost effective manner.
8. To evaluate the cooperation received by the independent auditors
during their audit examination, including their access to all requested records,
data and information, and to elicit the comments of management regarding the
responsiveness of the independent auditors to the Company's needs.
9. To review with the senior management of the Company and the
independent auditors prior to the release of earnings and/or prior to filing of
the Company's Quarterly Report on Form 10-Q, the Company's balance sheet, profit
and loss statement and statements of cash flows and stockholders' equity for
each interim period, and any changes in accounting policy that have occurred
during the interim. Also, the Committee shall discuss the results of the limited
quarterly review and any other matters required to be communicated to the
Committee by the independent auditors under generally accepted auditing
standards.
10. To receive written statements from the independent auditors
delineating all relationships between the auditors and the Company consistent
with Independence Standards Board Standard No. 1, to consider and discuss with
the auditors any disclosed relationships or services that could affect the
auditors' objectivity and independence, and if so determined by the Committee,
take, or recommend that the Board take, appropriate action to oversee the
independence of the auditors.
11. On at least an annual basis, review with the Company's counsel,
any legal matters that could have a significant impact on the organization's
financial statements, the Company's compliance with applicable laws and
regulations, and inquiries received from regulators or governmental agencies.
12. To consult with the independent auditors and to discuss with the
senior management of the Company the scope and quality of internal accounting
and financial reporting controls in effect.
13. To meet with the independent auditors and senior management in
separate executive sessions to discuss any matters that the Committee, the
independent auditors or senior management believe should be discussed privately
with the Committee.
14. To prepare the report required by the rules of the Securities and
Exchange Commission ("SEC") to be included in the Company's annual proxy
statement.
15. To review and assess the adequacy of this charter periodically and
recommend any proposed changes to the Board for approval as well as have the
document published at least every three years in accordance with SEC
regulations.
16. To investigate any matter brought to its attention within the
scope of its duties, with the power to retain outside counsel and a separate
accounting firm for this purpose if, in its judgment, such investigation or
retention is appropriate.
17. To perform such other functions and to have such power as may be
necessary or appropriate in the efficient and lawful discharge of the foregoing.
18. To report to the Board from time to time, or whenever it shall be
called upon to do so.
MEETINGS:
The Committee will hold at least three (3) regular meetings per year
and additional meetings as the Committee deems appropriate.
MINUTES AND REPORTS:
Minutes of each meeting of the Committee shall be prepared and
distributed to each director of the Company promptly after each meeting.
APPENDIX B
COMPENSATION COMMITTEE CHARTER
EXTENSITY, INC.
CHARTER OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
PURPOSE:
The Purpose of the Compensation Committee (the "Committee") of the
Board of Directors (the "Board") of Extensity, Inc., a Delaware corporation (the
"Company"), shall be to recommend to the Board the type and level of
compensation for officers and employees of the Company, to administer the stock
option plans adopted by the Company (the "Stock Option Plans") and to perform
such other functions as may be deemed necessary or convenient in the efficient
and lawful discharge of the foregoing.
COMPOSITION:
The Committee shall be comprised of a minimum of two (2) members of the
Board, all of whom shall be non-employee directors. The members of the Committee
and its Chairperson will be appointed by and serve at the discretion of the
Board.
FUNCTIONS AND AUTHORITY:
The operation of the Committee shall be subject to the Bylaws of the
Company, as in effect from time to time, and Section 141 of the Delaware General
Corporation Law. The Committee shall have the full power and authority to carry
out the following responsibilities:
1. To administer and grant stock options under the various incentive
compensation and benefit plans, including the Stock Option Plans.
2. Recommend to the Board the compensation levels for directors,
officers, employees and consultants of the Company including, but not limited to
annual salary, bonus, stock options, and other direct or indirect benefits.
3. Review on a periodic basis the operation of the Company's executive
compensation programs to determine whether they are properly coordinated and to
establish and periodically review policies for the administration of executive
compensation programs.
4. Perform such other functions and have such other powers as may be
necessary or convenient in the efficient discharge of the foregoing.
5. To report to the Board from time to time, or whenever it shall be
called upon to do so.
MEETINGS:
The Committee will hold at least one (1) regular meeting per year and
additional meetings as the Chairperson or Committee deem appropriate. Officers
of the Company may attend these meetings at the invitation of the Committee.
MINUTES AND REPORTS:
Minutes of each meeting of the Committee shall be kept and distributed
to each member of the Committee, members of the Board who are not members of the
Committee and the Secretary of the Company. The Committee shall report to the
Board from time to time, or whenever so requested by the Board.
1974-PA-01
------------------------------
COMPANY #
------------------------------
CONTROL #
------------------------------
EXTENSITY, Inc.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 1, 2001
The undersigned hereby appoints Robert A. Spinner and Kenneth R. Hahn,
and each of them, as attorneys and proxies of the undersigned, with full power
of substitution, to vote all of the shares of stock of Extensity, Inc. which the
undersigned may be entitled to vote at the Annual Meeting of Stockholders of
Extensity, Inc. to be held at the Holiday Inn Baybridge, 1800 Powell Street,
Emeryville, California on Friday, June 1, 2001 at 9:00 a.m. (local time), and at
any and all postponements, continuations and adjournments thereof, with all
powers that the undersigned would possess if personally present, upon and in
respect of the following matters and in accordance with the following
instructions, with discretionary authority as to any and all other matters that
may properly come before the meeting.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR
ALL NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSAL 2, AS MORE SPECIFICALLY
DESCRIBED IN THE PROXY STATEMENT. IF SPECIFIC INSTRUCTIONS ARE INDICATED, THIS
PROXY WILL BE VOTED IN ACCORDANCE THEREWITH.
(Please Sign on Reverse Side)
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
EXTENSITY, INC.
JUNE 1, 2001
Mark, sign and date your proxy card and return it in the postage-paid envelope
we've provided or return it to Extensity, Inc., 2200 Powell Street, Suite 300,
Emeryville, California 94608.
---------------PLEASE DETACH HERE AND MAIL IN ENVELOPE PROVIDED-----------------
MANAGEMENT RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTOR LISTED BELOW.
PROPOSAL 1: To elect directors to hold office until the 2002 Annual Meeting of
Stockholders and until their successors are elected.
|_| FOR all nominees listed below (except as marked to the contrary below).
|_| WITHHOLD AUTHORITY to vote for all nominees listed below.
NOMINEES: Robert A. Spinner, Sharam I. Sasson, Christopher D. Brennan, John R.
Hummer, David A. Reed, Ted E. Schlein and Maynard G. Webb
TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE(S) WRITE SUCH NOMINEE(S)' NAME(S)
BELOW:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
MANAGEMENT RECOMMENDS A VOTE FOR PROPOSAL 2.
PROPOSAL 2: To ratify selection of PricewaterhouseCoopers LLP as independent
auditors of the Company for its fiscal year ending December 31,
2001.
|_| FOR |_| AGAINST |_| ABSTAIN
Signature(s) Dated
------------------------------------------- --------------------
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS HEREON. IF THE STOCK IS REGISTERED IN
THE NAMES OF TWO OR MORE PERSONS, EACH SHOULD SIGN. EXECUTORS, ADMINISTRATORS,
TRUSTEES, GUARDIANS AND ATTORNEYS-IN-FACT SHOULD ADD THEIR TITLES. IF SIGNER IS
A CORPORATION, PLEASE GIVE FULL CORPORATE NAME AND HAVE A DULY AUTHORIZED
OFFICER SIGN, STATING TITLE. IF SIGNER IS A PARTNERSHIP, PLEASE SIGN IN
PARTNERSHIP NAME BY AUTHORIZED PERSON.