GARTNER INC.
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
o Preliminary Proxy Statement o Confidential, For Use of the
Commission only (as permitted
by Rule 14a-6(e)(2))
þ Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to Rule 240.14a-12
GARTNER, INC.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
þ No fee required.
o 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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Aggregate number of securities to which transaction applies: |
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule
0-11: |
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Proposed maximum aggregate value of transaction: |
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Total fee paid: |
o Fee paid previously with preliminary materials.
o 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.
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Amount Previously Paid: |
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Form, Schedule or Registration Statement No.: |
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Filing Party: |
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Date Filed: |
May 24, 2005
Dear Stockholder:
On behalf of the Board of Directors and Management of Gartner,
Inc., I invite you to attend our Annual Meeting of Stockholders.
The meeting will be held on June 29, 2005, at
10:00 a.m. local time, at our corporate headquarters at
56 Top Gallant Road, Stamford, Connecticut 06902.
At our Annual Meeting, holders of our Class A and
Class B Common Stock will each be asked to vote on the
following:
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(1) |
Election of 4 directors (3 for our Class B Common
Stock and 1 for our Class A Common Stock); |
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A proposal to amend and restate our restated certificate of
incorporation to reclassify our Class A Common Stock and
Class B Common Stock into a single class of common stock; |
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(3) |
A proposal to eliminate the classification of our Board of
Directors; |
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(4) |
A proposal to amend and restate our 2003 Long Term Incentive
Plan; and |
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(5) |
A proposal to amend our option plans to allow us to buy back
certain outstanding options that are out of the
money. |
It is important that your stock is represented, regardless of
the number of shares you hold. After reading the enclosed Proxy
Statement, please vote your proxy in accordance with the
instructions provided.
If you have any questions about the meeting, please contact our
Investor Relations Department at (203) 316-6537.
Sincerely,
Eugene A. Hall
Chief Executive Officer
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
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Date: |
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June 29, 2005 |
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Time: |
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10:00 a.m. local time |
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Location: |
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56 Top Gallant Road
Stamford, Connecticut 06902 |
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Matter To Be Voted On: |
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(1) Election of 4 directors (3 for our
Class B Common Stock and 1 for our Class A Common
Stock); |
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(2) A proposal to amend and restate our restated
certificate of incorporation to reclassify our Class A
Common Stock and Class B Common Stock into a single class
of common stock; |
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(3) A proposal to eliminate the classification of our Board
of Directors; |
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(4) A proposal to amend and restate our 2003 Long Term
Incentive Plan; and |
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(5) A proposal to amend our option plans to allow us to buy
back certain outstanding options that are out of the
money. |
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Record Date: |
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May 12, 2005 You are eligible to vote if you
were a stockholder of record on this date |
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Voting Methods: |
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By Internet
By Telephone
By Proxy Card
In Person |
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Importance Of Vote: |
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Submit a proxy as soon as possible to ensure that your shares
are represented |
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Voting promptly will ensure that we have a quorum at the meeting
and will save us proxy solicitation expenses |
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If you own shares of both our Class A and Class B
Common Stock, you will need to vote separately for each class of
stock |
By Order of the Board of Directors,
Lewis G. Schwartz
Corporate Secretary
Stamford, Connecticut
May 24, 2005
Table of Contents
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A-1 |
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GARTNER, INC.
56 Top Gallant Road
Stamford, CT 06902
PROXY STATEMENT
For the Annual Meeting of Stockholders
to be Held June 29, 2005
SUMMARY
The summary information provided below in question and
answer format is for your convenience. This summary may
not contain all the information that may be important to you. To
better understand the items being voted on, you should read
carefully this entire document, including the appendices.
WHEN AND WHERE IS THE ANNUAL MEETING?
The Annual Meeting will take place on June 29, 2005, at
10:00 a.m. local time, at our corporate headquarters, 56
Top Gallant Road, Stamford, Connecticut 06902. We intend to
distribute this Proxy Statement and the accompanying Notice of
Annual Meeting and form of proxy to our stockholders on or about
May 31, 2005.
WHAT MATTERS WILL BE VOTED ON AT THE ANNUAL MEETING?
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(1) |
The holders of our Class A Common Stock will vote on the
election of William O. Grabe as a director to hold office for a
term of three years. The holders of our Class B Common
Stock will vote on the election of Eugene A. Hall, Max D. Hopper
and James C. Smith as directors to hold office for a term of
three years. |
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(2) |
The holders of our Class A and Class B Common Stock
will vote on the proposal to amend and restate our restated
certificate of incorporation to reclassify our Class A
Common Stock and Class B Common Stock into a single class
of common stock. |
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(3) |
The holders of our Class A and Class B Common Stock
will vote on the proposal to amend and restate our restated
certificate of incorporation to eliminate our classified board
structure. |
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(4) |
The holders of our Class A and Class B Common Stock
will vote on the proposal to amend and restate our 2003 Long
Term Incentive Plan. |
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(5) |
The holders of our Class A and Class B Common Stock
will vote on the proposal for us to buy back certain of our
outstanding stock options that are out of the money. |
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(6) |
The holders of our Class A and Class B Common Stock
will transact any other business that is brought properly before
the Annual Meeting. |
WHO IS ENTITLED TO VOTE?
Stockholders of record at the close of business on May 12,
2005, which is the Record Date, are entitled to
notice of, and to vote at, the Annual Meeting.
IF YOUR BROKER HOLDS YOUR SHARES IN STREET NAME,
HOW WILL YOUR BROKER VOTE?
If your shares are held in street name, you should
have received voting instructions with these materials from your
broker or other nominee. We urge you to instruct your broker or
other nominee how to vote your shares by following those
instructions. If you do not give your broker or nominee
instructions on how to vote your shares, they will not be voted
with respect to the proposals to amend and restate our restated
certificate of incorporation (Proposals 2 and 3), the
proposal to amend our 2003 Long Term Incentive Plan
(Proposal 4) or the proposal to buy back our options
(Proposal 5). These broker non-votes will be
counted for purposes of determining whether a quorum is present,
but will be treated as votes not cast with respect to all of the
proposals.
CAN YOU REVOKE OR CHANGE YOUR VOTE AFTER YOU SUBMIT A
PROXY?
Yes. To revoke or change your vote you can:
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give written notice of revocation to: Corporate Secretary,
Gartner, Inc., 56 Top Gallant Road, P.O. Box 10212,
Stamford, Connecticut 06904-2212 prior to the Annual
Meeting; or |
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submit another timely proxy by the Internet, telephone or
mail; or |
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attend the Annual Meeting and vote in person. If your shares are
not held in your name, to vote at the meeting you must obtain a
proxy executed in your favor from the holder of record. |
WHO CAN ANSWER YOUR QUESTIONS?
If you have questions about this Proxy Statement or the Annual
Meeting, please call our Investor Relations Department at
(203) 316-6537.
YOU SHOULD READ CAREFULLY THIS PROXY STATEMENT
(INCLUDING THE APPENDICES) IN ITS ENTIRETY.
2
GENERAL INFORMATION
THE ANNUAL MEETING
Our Board of Directors is soliciting proxies to be used at our
Annual Meeting of Stockholders to be held on June 29, 2005.
This Proxy Statement and the accompanying Notice of Annual
Meeting and form of proxy are being made available to our
stockholders on or about May 31, 2005.
PURPOSE OF MEETING
The proposals to be acted upon at the Annual Meeting are
summarized in the accompanying Notice of Annual Meeting. These
proposals are described in more detail in this Proxy Statement,
beginning on page 5.
INFORMATION CONCERNING VOTING AND SOLICITATION OF PROXIES
WHO CAN VOTE?
Only stockholders of record at the close of business on
May 12, 2005 may vote at the Annual Meeting. As of
May 12, 2005, there were 89,638,271 shares of our
Class A Common Stock and 22,612,954 shares of our
Class B Common Stock outstanding.
HOW YOU CAN VOTE
You may vote using one of the following methods:
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Internet. You may vote by the Internet by going to
the website for Internet voting listed on your proxy card. If
you vote by the Internet, you should not return your proxy card. |
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Telephone. You may vote by telephone by calling the
toll-free telephone number listed on your proxy card. If you
vote by telephone, you should not return your proxy card. |
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Mail. You may vote by mail by marking your proxy
card, dating and signing it, and returning it in the
postage-paid envelope provided. |
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In Person. You may vote your shares in person by
attending the Annual Meeting. |
If you own both Class A and Class B Common Stock, you
will need to vote separately for each class of stock.
If a broker holds your shares in street name, the
broker is required to vote those shares in accordance with your
instructions. If you do not give instructions to the broker,
under the rules of the New York Stock Exchange, the broker is
not allowed to vote your shares with respect to the amendment
and restatement of our restated certificate of incorporation,
the amendment and restatement of our 2003 Long Term Incentive
Plan or our buyback of certain options.
All shares that have been voted properly by an unrevoked proxy
will be voted at the Annual Meeting in accordance with your
instructions. If you sign your proxy card, but do not give
voting instructions, the shares represented by that proxy will
be voted as our Board of Directors recommends.
If any other matters are brought properly before the Annual
Meeting, the persons named as proxies in the enclosed proxy card
will have the discretion to vote on those matters for you. As of
the date of this Proxy Statement, we did not know of any other
matter to be raised at the Annual Meeting.
HOW TO REVOKE YOUR PROXY OR CHANGE YOUR VOTE
You can revoke your proxy or change your vote before your proxy
is voted at the Annual Meeting by:
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giving written notice of revocation to: Corporate Secretary,
Gartner, Inc., 56 Top Gallant Road, P.O. Box 10212,
Stamford, Connecticut 06904-2212; or |
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submitting another timely proxy by the Internet, telephone or
mail; or |
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attending the Annual Meeting and voting in person. If your
shares are held in the name of a bank, broker or other holder of
record, to vote at the Annual Meeting you must obtain a proxy
executed in your favor from the holder of record. Attendance at
the Annual Meeting will not, by itself, revoke your prior proxy. |
HOW MANY VOTES YOU HAVE
Each Class A and Class B Common stockholder has one
vote for each share of Class A or Class B Common Stock
that he or she owned on the Record Date for all matters being
voted on.
QUORUM
A quorum to approve the proposals is constituted by the
presence, in person or by proxy, of holders of our Class A
and Class B Common Stock representing a majority of the
aggregate number of shares of Class A and Class B
Common Stock entitled to vote. Abstentions and broker non-votes
will be considered present to determine the presence of a quorum.
VOTES REQUIRED
Election of Common A Director by Class A Common
Stockholders. The one nominee for Common A Director
receiving the highest vote total will be elected. Abstentions
and broker non-votes will have no effect on the election of the
Common A Director. (See General Information About Our
Board Of Directors on page 5).
Election of Common B Directors by Class B Common
Stockholders. The three nominees for Common B
Director receiving the highest vote totals will be elected.
Abstentions and broker non-votes will have no effect on the
election of the Common B Directors. (See General
Information About Our Board Of Directors on page 5).
Proposal to Amend and Restate our Restated Certificate of
Incorporation to combine our Class A and Class B
Common Stock. To pass, this proposal must receive a
for vote of:
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A majority of the outstanding shares of Class A Common
Stock and Class B Common Stock, voting together as a single
class, |
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A majority of the outstanding shares of Class A Common
Stock voting separately, and |
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A majority of the outstanding shares of Class B Common
Stock voting separately. |
Abstentions and broker non-votes will have the effect of a
negative vote with respect to this proposal.
Proposal to Amend and Restate our Restated Certificate of
Incorporation to eliminate our classified Board. To
pass, this proposal must receive a for vote of a
majority of the outstanding shares of Class A Common Stock
and Class B Common Stock, voting together as a single
class. Abstentions and broker non-votes will have the effect of
a negative vote with respect to this proposal.
Proposal to amend and restate our 2003 Long Term Incentive
Plan. To pass, this proposal must receive a
for vote of a majority of the votes cast on the
proposal by shares of Class A Common Stock and Class B
Common Stock, voting together as a single class. Abstentions
will have the effect of a negative vote with respect to this
proposal and broker non-votes will have the effect of votes not
cast with respect to this proposal.
Proposal to buy back certain stock options that are out
of the money. To pass, this proposal must receive a
for vote of a majority of the votes cast on the
proposal by shares of Class A Common Stock and Class B
Common Stock, voting together as a single class. Abstentions
will have the effect of a negative vote with respect to this
proposal and broker non-votes will have the effect of votes not
cast with respect to this proposal.
4
PROPOSAL ONE
ELECTION OF DIRECTORS
GENERAL INFORMATION ABOUT OUR BOARD OF DIRECTORS
Each of our directors is elected for a three-year staggered
term. Our Boards ten directors are divided into three
classes: Class I, Class II and Class III. Each
director is further designated as a Common A Director or a
Common B Director. Holders of our Class A Common Stock
elect two directors and holders of our Class B Common Stock
elect eight directors. One class of directors is elected at each
Annual Meeting.
The following table shows our current directors, when each class
of directors is elected, how many of those directors are Common
A or Common B Directors and how each director is classified:
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Class I: Term Expires 2006 and every 3 years thereafter
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0 |
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None |
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3 |
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Bingle, Hutchins, Pagliuca |
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Class II: Term Expires 2007 and every 3 years
thereafter
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1 |
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Webb |
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2 |
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Fuchs, Ubben |
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Class III: Term Expires 2005 and every 3 years
thereafter
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1 |
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Grabe |
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3 |
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Hall, Hopper, Smith |
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NOMINEES
All of the nominees listed below are currently directors and
have agreed to serve another term. If any nominee is unable or
declines unexpectedly to stand for election as a director at the
Annual Meeting, proxies will be voted for a nominee designated
by the present Board to fill the vacancy. Each person elected as
a director will continue to be a director until the 2008 Annual
Meeting or until a successor has been elected.
RECOMMENDATION OF OUR BOARD
OUR BOARD RECOMMENDS THAT OUR CLASS A COMMON
STOCKHOLDERS VOTE FOR THE NOMINEE LISTED BELOW:
OUR BOARD RECOMMENDS THAT OUR CLASS A COMMON
STOCKHOLDERS VOTE FOR THE NOMINEES LISTED BELOW:
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Eugene A. Hall |
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Max D. Hopper |
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James C. Smith |
None of our directors or executive officers is related to
another director or executive officer by blood, marriage or
adoption. Mr. Halls employment agreement provides
that we will include him on the slate of nominees to be elected
to our Board during the term of his agreement. See
Executive Compensation Employment Agreements
with Executive Officers on page 41.
Messrs. Bingle and Hutchins serve as directors pursuant to
an agreement we entered into in connection with the issuance of
our convertible notes in April 2000. See Certain
Relationships and Transactions Relationship with
Silver Lake Partners, L.P. on page 48. There are no
other arrangements between any director or nominee and any other
person pursuant to which the director or nominee was selected.
5
INFORMATION ABOUT NOMINEES FOR ELECTION AS CLASS III
DIRECTORS
Class III Common A Director
William O. Grabe, 66, has been a director since
April 1993. Mr. Grabe is a Managing Member of General
Atlantic Partners, LLC, a private equity firm, where he has
worked since April 1992. Prior to his affiliation with General
Atlantic, Mr. Grabe retired from IBM Corporation as an IBM
Vice President and Corporate Officer. Mr. Grabe is a
director of AI Metrix, Inc., Bottomline Technologies, Compuware
Corporation, Digital China Holdings Limited, LHS Telekom
GMBH & Co. KG, Lifecare, Inc. and Patni Computer
Systems Ltd. Mr. Grabe is a trustee of the Cancer Research
Institute and Outward Bound USA. Mr. Grabe is on the Board
of Visitors of the UCLA Graduate School of Business.
Mr. Grabe holds a bachelors degree from New York
University and an M.B.A. degree from the University of
California at Los Angeles.
Class III Common B Directors
Eugene A. Hall, 48, has been our Chief Executive
Officer and a director since August 2004. Prior to joining us,
Mr. Hall was a senior executive at Automatic Data
Processing, serving most recently as President, Employers
Services Major Accounts Division, a $2 billion human
resources and payroll services business with 8,000 associates.
Prior to joining ADP in 1998, Mr. Hall spent 16 years
at McKinsey & Company, rising to the level of Director
(senior partner). Mr. Hall holds a B.S. in Mechanical
Engineering from the Massachusetts Institute of Technology
(M.I.T.) and received an M.B.A. degree from Harvard Business
School.
Max D. Hopper, 70, has been a director since
January 1994. In 1995, he founded Max D. Hopper Associates,
Inc., a consulting firm specializing in creating benefits from
the strategic use of advanced information systems. He is the
retired chairman of the SABRE Technology Group and served as
Senior Vice President for American Airlines, both units of AMR
Corporation. Mr. Hopper is a director of Perficient, Inc.
and United Stationers, Inc. Mr. Hopper holds a
bachelors degree from the University of Houston.
James C. Smith, 64, has been a director since
October 2002 and Chairman of the Board since August 2004. Until
its sale in 2004, Mr. Smith was Chairman of the Board of
First Health Group Corp., a national health benefits company.
Prior to that, Mr. Smith was the Chief Executive Officer of
First Health from January 1984 through January 2002 and
President of First Health from January 1984 to January 2001.
Mr. Smith is a Director of Reliant Pharmaceuticals and an
Advisory Director to CIC Partners, a private equity investment
group. Mr. Smith holds a bachelors degree from
Northeastern University.
INFORMATION ABOUT THE MEMBERS OF OUR BOARD WHOSE TERMS OF
OFFICE DO NOT EXPIRE AT THE ANNUAL MEETING
Class I Common B Directors (Term Expires at the 2006
Annual Meeting)
Michael J. Bingle, 33, has been a director since
October 2004. Mr. Bingle is a managing director of Silver
Lake Partners, a private equity firm. He joined Silver Lake
Partners in January 2000. From 1996 to 2000, Mr. Bingle was
a principal with Apollo Management, L.P., a private investment
partnership. From 1994 to 1996, Mr. Bingle was an
investment banker at Goldman, Sachs & Co., an
investment banking firm. Mr. Bingle holds a B.S.E. in
Biomedical Engineering from Duke University. Mr. Bingle was
nominated to the Board pursuant to an agreement with Silver Lake
Partners. See Certain Relationships and Related
Transactions - Relationship with Silver Lake Partners,
L.P.
Glenn H. Hutchins, 49, has been a director since
April 2000. Mr. Hutchins is a managing director of Silver
Lake Partners, a private equity firm he co-founded in January
1999. From 1994 to 1999, Mr. Hutchins was a Senior Managing
Director of The Blackstone Group, where he focused on private
equity investing. Mr. Hutchins is a director of Ameritrade
Holding Corp. and Seagate Technology. Mr. Hutchins holds an
A.B. degree from Harvard College, an M.B.A. degree from
Harvard Business School and a J.D. degree from Harvard Law
School. Mr. Hutchins was nominated to the Board pursuant to
an agreement with Silver Lake Partners. See Certain
Relationships and Related Transactions Relationship
with Silver Lake Partners, L.P.
6
Stephen G. Pagliuca, 50, has been a director since
July 1990. Mr. Pagliuca is a founding partner of
Information Partners Capital Fund, L.P., a venture capital fund,
and has served as its Managing Partner since 1989. He is also a
Managing Director of Bain Capital, Inc., an investment firm with
which Information Partners is associated. Prior to 1989,
Mr. Pagliuca was a partner at Bain & Company,
where he managed client relationships in the information
services, software, credit services and health care industries.
Mr. Pagliuca is a director of Ameritrade Holding Corp. and
Instinet Group Incorporated. Mr. Pagliuca, a certified
public accountant, holds a bachelors degree from Duke
University and an M.B.A. degree from Harvard Business School.
Class II Common A Director (Term Expires at the 2007
Annual Meeting)
Maynard G. Webb, Jr., 49, has been a director
since October 2001. Since June 2002, Mr. Webb has been
Chief Operating Officer of eBay, Inc., an online marketplace.
Prior to that he was President of eBay Technologies, a division
of eBay, Inc., from August 1999 through June 2002. From July
1998 to August 1999, Mr. Webb was Senior Vice President and
Chief Information Officer at Gateway, Inc. From February 1995 to
July 1998, Mr. Webb was Vice President and Chief
Information Officer at Bay Networks, Inc. Mr. Webb holds a
bachelors degree from Florida Atlantic University.
Class II Common B Directors (Term Expires at the 2007
Annual Meeting)
Anne Sutherland Fuchs, 58, has been a director
since July 1999. On January 1, 2003, Ms. Fuchs became
a consultant to private equity firms. Prior to this,
Ms. Fuchs was employed by LVMH Moët Hennessy Louis
Vuitton, a global luxury products conglomerate, where she served
as Executive Vice President of LVMH from March to December 2002
and as the global chief executive at Phillips de Pury &
Luxembourg, LVMHs auction house subsidiary, from July 2001
to February 2002. From 1994 to 2001, Ms. Fuchs worked for
Hearst Magazines, where she was most recently the Senior Vice
President and Group Publishing Director. Prior to joining
Hearst, Ms. Fuchs held executive and publisher positions
with a number of companies. Ms. Fuchs is Chair of the
Commission on Womens Issues for New York City.
Ms. Fuchs holds a bachelors degree from New York
University and two honorary doctorate degrees.
Jeffrey W. Ubben, 43, has been a director since
June 2004. Mr. Ubben is a co-founder and Managing Partner
of ValueAct Capital, an investment partnership. From 1995 to
2000, Mr. Ubben was a Managing Partner of Blum Capital.
Prior to that, he was a portfolio manager for Fidelity
Investments from 1987 to 1995. Mr. Ubben is a director of
Martha Stewart Living Omnimedia, Inc., Per-Se Technologies, Inc.
and Mentor Corporation. Mr. Ubben holds a bachelors
degree from Duke University and an M.B.A. degree from the
J. L. Kellogg Graduate School of Management at
Northwestern University.
COMPENSATION OF DIRECTORS
Directors who are also employees, and directors who we appoint
at the request of another entity because of the relationship
between that entity and us, receive no fees for their services
as directors. All other directors receive the following
compensation for their services:
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Annual Fee: |
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$50,000 per director and an additional $60,000 for our
non-executive Chairman, payable in four equal quarterly
installments, on the first day of each quarter. Up to 50% of the
fee may be paid in cash and the balance is paid in our
Class A Common Stock equivalents. All payments in stock
equivalents are credited to an account based on the fair market
value of the stock on the last day of the preceding quarter.
Payment of the stock equivalents, which may be in cash or shares
of Class A Common Stock, is deferred until the director
ceases to be a director. |
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Annual Committee Chair Retainer: |
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$5,000 for the chair of each of our Compensation and Governance
Committees. $10,000 for the chair of our Audit Committee.
Amounts are payable in the same manner as the Annual Fee. |
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Attendance Fee for Board Meetings: |
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None; however, we do reimburse directors for their expenses to
attend meetings. |
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Committee Member Retainer: |
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$5,000 for each of our Compensation and Governance Committee
members. $10,000 for each Audit Committee member. Committee
chairs receive both a committee chair and a committee member
retainer. |
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Initial Option Grant: |
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15,000 shares of our Class A Common Stock upon
becoming a director. |
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Annual Option Grant: |
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7,000 shares of our Class A Common Stock on
March 1 of each year if the director has served for at
least six months. |
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Option Vesting and Term: |
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Option grants vest in 3 equal installments on the first three
anniversaries of grant and remain exercisable until
10 years from the date of grant (5 years for those
issued prior to the adoption of our 2003 Long-Term Incentive
Plan). If the director ceases to be a director, the option
expires in 90 days, unless the director is permanently
disabled or dies while serving as a director, in which cases the
option may be exercised for 6 months or one year,
respectively, but in no event beyond its regular term. |
BOARD MEETINGS HELD DURING 2004
Our Board held twelve meetings during 2004 and acted three times
by written consent. During 2004, each director attended at least
75 percent of the Board and committee meetings held while
such director served as a director and committee member, except
that Mr. Pagliuca did not attend five Audit Committee
meetings and Mrs. Fuchs did not attend one of the three
Governance Committee meetings held during 2004. At each Board
meeting the non-management directors meet in executive session.
Prior to the appointment of our non-executive Chairman of the
Board in August 2004, the appointments of a presiding director
for such sessions were left to the directors discretion.
After his appointment in August 2004, James C. Smith, our
non-executive Chairman of the Board, presided over these
executive sessions.
BOARD INDEPENDENCE
Our Board Governance Guidelines are available at
www.gartner.com/investor. Under these guidelines, the
Governance Committee and the full Board annually assess the
independence of the non-management directors of the Board by
reviewing the financial and other relationships between the
directors and us. This review is designed to determine whether
these directors are independent, as defined under the standards
of the New York Stock Exchange. The Governance Committee and the
Board have determined that all of our non-management directors
are independent under those standards.
Stockholders and other interested parties may communicate with
any of our directors, including our non-management directors, by
writing to them c/o Corporate Secretary, Gartner, Inc.,
56 Top Gallant Road, P.O. 10212, Stamford, CT 06904.
The Corporate Secretary reserves the right to not forward to our
directors any abusive, threatening or otherwise inappropriate
materials.
DIRECTOR ATTENDANCE AT ANNUAL MEETING
The Boards policy regarding director attendance at the
Annual Meeting is that they are welcome to attend, and that we
will make all appropriate arrangements for directors that choose
to attend. In 2004, only Mr. Fleisher attended the Annual
Meeting.
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DIRECTOR STOCK OWNERSHIP GUIDELINES
The Board believes directors should have a financial interest in
Gartner. Accordingly, each director is required to own at least
10,000 shares of our stock. New directors also have three
years from election or appointment to comply with the
policy 25% within one year of election or
appointment; 50% within two years of election or
appointment and 100% within three years of election or
appointment.
CODE OF ETHICS
Our Code of Ethics is available at
www.gartner.com/investor.
COMMITTEES
Our Board has three standing committees: Audit Committee,
Compensation Committee and Governance Committee. All Committee
members are non-management directors who, in the opinion of our
Board, are independent as defined under the standards of the New
York Stock Exchange. We have adopted a written committee charter
for each of our Audit Committee, Compensation Committee, and
Governance Committee. Each of these documents is available on
our website at www.gartner.com/investor.
Our Audit Committee currently consists of Messrs. Hopper,
Pagliuca and Smith. Our Board has determined that
Mr. Pagliuca qualifies as an Audit Committee Financial
Expert as defined by the rules of the Securities and Exchange
Commission. During 2004, the Audit Committee held seven
meetings. Our Audit Committee reviews reports of our financial
results, audits and internal controls. It also oversees the work
of our internal auditors and our independent auditors and
approves all related fees and compensation and reviews their
selection with the Board of Directors. The committee also
reviews the procedures of our independent registered public
accounting firm for ensuring their independence with respect to
the services performed for us. The committee also reports to
stockholders as required by the Securities and Exchange
Commission (please see page 43).
Our Compensation Committee consists of Messrs. Bingle,
Ubben and Webb and held six meetings during 2004. The
Compensation Committee has responsibility for administering and
approving all elements of compensation for the Chief Executive
Officer and certain other senior management positions. It also
approves, by direct action or through delegation, participation
in and all equity awards, grants, and related actions under the
provisions of our equity incentive plans. The committee also
reports to stockholders on executive compensation items as
required by the Securities and Exchange Commission (please see
page 37).
Our Governance Committee consists of Ms. Fuchs and
Messrs. Grabe and Hutchins and held three meetings during
2004. Our Governance Committee reviews issues regarding our
governance, reviews and implements policies for our Board,
reviews the size of our Board and criteria for membership,
nominates potential members for election to the Board,
recommends the assignment of directors to our Boards
committees and reviews the performance of our Chief Executive
Officer and our Board members. Candidates may come to the
attention of the Governance Committee through current Board
members, stockholders or other persons. These candidates are
evaluated at regular or special meetings of the Governance
Committee on their merits in light of the needs of the Board.
Stockholders wishing to recommend director candidates for
consideration by the committee may do so by writing to the
Chairman of the committee, giving the recommended
candidates name, biographical data, and qualifications.
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PROPOSAL TWO
PROPOSAL TO AMEND AND RESTATE OUR RESTATED CERTIFICATE
OF
INCORPORATION TO RECLASSIFY OUR TWO CLASSES OF COMMON
STOCK
INTO A SINGLE CLASS OF COMMON STOCK
Our Board of Directors has authorized, and recommends for
approval, an amendment and restatement of our restated
certificate of incorporation to reclassify our Class A
Common Stock and Class B Common Stock into a single class
of common stock with each share of Class A Common Stock and
each share of Class B Common Stock being reclassified into
one share of common stock. Because this is a summary of the
proposed amendment, it may not contain all of the information
that is important to you. You should read the proposed amendment
and restatement of our restated certificate of incorporation
attached as Appendix A-1 to this proxy statement carefully
before you decide how to vote.
The proposed amendment must be approved by (i) holders of a
majority of the outstanding shares of Class A Common Stock
and Class B Common Stock voting together as a single class,
(ii) holders of a majority of our outstanding shares of
Class A Common Stock voting separately and
(iii) holders of a majority of our outstanding shares of
Class B Common Stock voting separately. The proposed
amendment and restatement of our restated certificate of
incorporation is set forth in Appendix A-1 to this proxy
statement, with deletions indicated by strike-outs and additions
indicated by underlining. If this proposal is approved by the
requisite vote of stockholders, an amended and restated
certificate of incorporation will be filed with the State of
Delaware, and this amended and restated certificate of
incorporation will become effective on the date of filing. We
expect to file the proposed amended and restated certificate of
incorporation with the Secretary of State as soon as practicable
after obtaining stockholder approval.
If both of the proposed amendments to our restated certificate
of incorporation (Proposals 2 and 3) as set forth in
Appendix A-1 and Appendix A-2 to this proxy statement
are approved, our certificate of incorporation will be amended
and restated to reflect all such changes and will be filed with
the State of Delaware.
Background of the Dual-Class Structure and the
Proposal
The dual-class common stock structure was created in connection
with the distribution by IMS Health Incorporated to its
stockholders of the shares it held in Gartner. The creation of
the dual-class structure and various other changes to our
restated certificate of incorporation were approved by our
stockholders at a special meeting held on July 16, 1999,
and the distribution was effected by IMS Health on that same
day. The adoption of the dual-class structure was undertaken in
order for IMS Health to obtain a ruling from the Internal
Revenue Service that the distribution would be tax-free to IMS
Health and its stockholders for U.S. federal income tax
purposes. In order to receive the letter ruling and ensure that
our Class B Common Stock could be distributed to IMS Health
stockholders on a tax-free basis, we were required to make
certain changes to our capital structure and corporate
governance. These changes included an amendment to our restated
certificate of incorporation to provide for:
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Class A Common Stock, the holders of which (together with
the holders of voting preferred stock, if any) are entitled to
elect 20% of our directors, voting as a class; and |
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Class B Common Stock, the holders of which are entitled to
elect 80% of our directors, voting as a class. |
Since the adoption of the dual-class structure, the Class A
Common Stock has generally traded on the New York Stock Exchange
at a premium to the Class B Common Stock. This premium
fluctuated between a discount of 4.82% and a premium
of 5.91% during the two-year period ending May 12,
2005, with an average premium of 1.71%. The trading volume of
the Class A Common Stock is approximately 3.44 times
that of the Class B Common Stock.
From time to time over the last few years, our management has
discussed with its advisors the possibility of combining our two
classes of common stock into one class. On April 19, 2005,
the Board of Directors formally considered a proposal to
reclassify the Class A Common Stock and the Class B
Common Stock into
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a single class of common stock. The Board of Directors reviewed
the history of the dual-class structure. After consideration of
the issues, the Board of Directors determined that the proposed
amendment to the restated certificate of incorporation and the
resulting reclassification is fair to and in the best interests
of Gartner and its subsidiaries, and has authorized and
recommended stockholder approval of the proposed amendment.
Reasons for the Amendment
In determining to recommend stockholder approval of the proposed
amendment to our restated certificate of incorporation, the
Board of Directors considered a number of factors, including the
following:
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simplification of our capital structure; |
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reduction in investor confusion resulting from the dual-class
structure, including confusion as to the calculation of our
total market capitalization; |
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improvement in the liquidity and trading efficiencies of our
common stock; |
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reduction in certain administrative expenses resulting from the
dual-class structure; |
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reduction in the complexity of corporate governance related to
the election of directors; and |
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alignment of voting rights with the economic risks of ownership
of our common stock. |
The Board of Directors also considered the following factors in
connection with its authorization and recommendation of the
proposed amendment:
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the holders of the Class A Common Stock and the holders of
the Class B Common Stock currently have the same economic
rights, with the special voting rights for the election and
removal of directors representing the only material difference
between the Class A Common Stock and the Class B
Common Stock; |
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in a merger or reorganization transaction, each holder of a
share of Class A Common Stock and each holder of a share of
Class B Common Stock is currently entitled to receive the
same kind and amount of shares, securities or other property,
except that the holders of Class A Common Stock and
Class B Common Stock could be offered different kinds of
shares if the only difference would be the special voting rights
for the election and removal of directors; |
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the historical trading price and trading volume differentials of
the Class A Common Stock and Class B Common Stock; |
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the historical trading price and trading volume differentials
between the two classes of publicly traded stock of other
companies with dual-class capital structures; |
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the exchange ratios adopted by other companies that have
eliminated their dual-class structures; |
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the trend of publicly-held companies away from dual-class
capital structures, consistent with the policies of the New York
Stock Exchange and the other major stock exchanges in favor of
one vote per share common stock capitalization; |
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the opinion of Perseus Advisors, LLC to the effect that the
exchange ratio of one share of Class A Common Stock for one
share of the new common stock is fair, from a financial point of
view, to the holders of Class A Common Stock; |
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the opinion of Banc of America Securities LLC to the effect that
the exchange ratio of one share of Class B Common Stock for
one share of the new common stock is fair, from a financial
point of view, to the holders of Class B Common
Stock; and |
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the proposed amendment is not expected to result in taxable
income to Gartner or to the holders of Class A Common Stock
or Class B Common Stock. |
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The Board of Directors also considered that the reclassification
would increase the relative power to elect representatives to
our Board of Directors of current holders of Class A Common
Stock, particularly:
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Silver Lake Partners, L.P. and its affiliates (Silver
Lake) who will own approximately 33.6% of our common
stock on a combined basis and have contractual rights to appoint
two directors pursuant to an Amended and Restated
Securityholders Agreement dated April 13, 2000 in addition
to any directors they may otherwise be able to elect as a result
of their share ownership; and |
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ValueAct Capital Master Fund, L.P. and ValueAct Capital Partners
Co-Investment, L.P. and their affiliates who will own
approximately 15.2% of our common stock on a combined basis. |
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This discussion of information and factors considered by the
Board of Directors is not intended to be exhaustive, but
includes the material factors considered by the Board of
Directors in making their decision. Our Board did not assign
relative weights to the specific factors they considered in
reaching their decision to approve the proposed amendment. In
considering the factors described above, individual members of
the Board of Directors may have given different weight to
different factors. Although one of the potential benefits that
our Board of Directors considered was the administrative cost
savings that may result from a simplified capital structure, we
cannot assure you that the reclassification of our shares into a
single class of common stock will result in any material cost
savings. We also cannot assure you when or if the other
potential benefits will be realized.
Opinion of Perseus Advisors, LLC, Financial Advisor to the
Board of Directors
Gartner retained Perseus Advisors, LLC (Perseus) to
act as its financial advisor and to provide an opinion to the
Board of Directors of Gartner in connection with the proposed
reclassification of the Class A Common Stock and the
Class B Common Stock into a single class of new Gartner
common stock. Perseus is a nationally recognized investment
banking and advisory firm. Perseus is regularly engaged in the
valuation of businesses and their securities in connection with
mergers and acquisitions, private placements, and valuations for
corporate and other purposes. We selected Perseus to act as our
financial advisor on the basis of Perseus experience in
transactions similar to the proposed reclassification, and its
reputation in the technology industry and financial community.
At the meeting of the Gartner Board of Directors on
April 19, 2005, Perseus rendered its oral opinion,
subsequently confirmed in writing, that, as of that date and
based on and subject to the various considerations set forth in
the opinion, including the various assumptions and limitations
set forth therein, the exchange ratio of one share of
Common Stock for each share of Class A Common Stock was
fair, from a financial point of view, to the holders of
Class A Common Stock.
The full text of the Perseus opinion, which sets forth, among
other things, assumptions made, procedures followed, matters
considered, and limitations on the scope of the review
undertaken by Perseus in rendering its opinion, is attached as
Appendix B-1 to this Proxy Statement. Stockholders are
urged to read the Perseus opinion carefully and in its entirety.
The Perseus opinion does not constitute a recommendation to any
stockholder as to how such holder should vote with respect to
this proposal or any other matter.
In rendering its opinion, Perseus, among other things:
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Reviewed certain publicly available business and historical
financial information relating to Gartner; |
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Reviewed Gartners restated certificate of incorporation
and bylaws as they relate to the rights and privileges of both
the Class A Common Stock and Class B Common Stock and
held discussions with our outside counsel regarding such rights
and privileges; |
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Reviewed the historical trading performance and trading
liquidity of the Class A Common Stock and the Class B
Common Stock; |
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Reviewed the historical trading performance and trading
liquidity for other dual-class companies; |
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Compared the financial terms of the proposed reclassification
and the exchange ratio thereof with the publicly available
financial terms of selected recent reclassification transactions
that Perseus deemed relevant and the exchange ratios used in
such transactions; |
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Reviewed the historical trading performance, trading liquidity
and post-announcement stock price performance for securities in
such relevant reclassification transactions; |
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Held discussions with certain members of the management of
Gartner with respect to certain aspects of the proposed
reclassification and the strategic and other reasons behind the
decision of Gartner to engage in the proposed reclassification; |
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Reviewed the proposed amendment to Gartners restated
certificate of incorporation related to reclassifying the
Class A Common Stock and the Class B Common Stock into
a single class of Common Stock; |
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Reviewed a draft, dated April 8, 2005, of this proxy
statement provided to Perseus; |
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Reviewed and analyzed the current and pro forma ownership of
Gartner; and |
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Performed such other analyses and considered such other factors
as they deemed appropriate. |
In preparing its opinion, Perseus assumed and relied upon,
without independent verification, the accuracy and completeness
of the information reviewed by it for the purposes of the
opinion. Perseus did not make any independent valuation or
appraisal of the assets, liabilities or technology of Gartner,
nor was it furnished with any such appraisals. Perseus also
assumed that the reclassification would qualify as a tax-free
exchange and reclassification for United States federal income
tax purposes.
Perseus opinion and presentation to the Board of Directors
were among many factors taken into consideration by the Board of
Directors in making its determination to recommend the proposed
reclassification and the transactions contemplated thereby.
Consequently, Perseus opinion as described above should
not be viewed as determinative of the opinion of the Board of
Directors or management with respect to the proposed
reclassification. The exchange ratio in the proposed
reclassification was determined by the Board of Directors and
was not based on recommendations from Perseus. Perseus did not
advise Gartner with respect to alternatives to the proposed
reclassification or Gartners underlying decision to
proceed with or effect the proposed reclassification.
Perseus opinion is necessarily based on economic, market
and other conditions as in effect on, and the information made
available to it as of, the date of its opinion. Accordingly,
although subsequent developments may affect its opinion, Perseus
does not assume any obligation to update, revise or reaffirm its
opinion.
Gartner has agreed to pay Perseus a fee in connection with its
opinion. Perseus engagement letter also calls for Gartner
to reimburse Perseus for its reasonable out-of-pocket expenses,
and Gartner has agreed to indemnify Perseus and its partners,
directors, officers, agents, consultants, employees, and
controlling persons against particular liabilities, including
liabilities under the federal securities laws. The Board of
Directors was aware of this fee structure and took it into
account in considering Perseus opinion and in approving
the proposed reclassification.
Perseus or its affiliates have provided and in the future may
provide financial advisory and financing services to Gartner and
have received or in the future may receive fees for the
rendering of these services.
Opinion of Banc of America Securities LLC, Financial Advisor
to the Board of Directors
Gartner retained Banc of America Securities LLC to act as
financial advisor to the Board of Directors of Gartner solely to
provide an opinion in connection with the proposed
reclassification of the Class B Common Stock and the
Class A Common Stock into a single class of new Gartner
common stock. Banc of America Securities is a nationally
recognized investment banking firm. Banc of America Securities
is regularly engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions,
negotiated underwritings, secondary distributions of listed and
unlisted securities, private placements and valuations for
corporate and other purposes. Gartner selected Banc of America
Securities to act as its financial advisor on the
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basis of Banc of America Securities experience in
transactions similar to the proposed reclassification, and its
reputation in the technology industry and investment community.
On April 19, 2005, at a meeting of the Gartner Board of
Directors held to evaluate the proposed reclassification, Banc
of America Securities delivered to the Board of Directors of
Gartner its oral opinion, which was confirmed by delivery of a
written opinion dated April 19, 2005, to the effect that,
as of that date and based on and subject to the various
considerations set forth in the opinion, including the various
assumptions and limitations set forth therein, the exchange
ratio in the proposed reclassification was fair, from a
financial point of view, to the holders of Class B Common
Stock. Banc of America Securities opinion and presentation
to the Board of Directors were among many factors taken into
consideration by the Board of Directors in making its
determination to recommend the proposed reclassification and the
transactions contemplated thereby. Consequently, the analyses
described below should not be viewed as determinative of the
opinion of the Board of Directors or management with respect to
the proposed reclassification. The exchange ratio in the
proposed reclassification was determined by the Board of
Directors and was not based on recommendations from Banc of
America Securities. Neither Gartner nor the Board of Directors
limited the investigations made or procedures followed by Banc
of America Securities in rendering its opinion. Banc of America
Securities did not advise Gartner with respect to alternatives
to the proposed reclassification or Gartners underlying
decision to proceed with or effect the proposed reclassification.
The full text of Banc of America Securities written
opinion, dated April 19, 2005, to the Board of Directors of
Gartner, which describes, among other things, the assumptions
made, procedures followed, matters considered and limitations on
the review undertaken, is attached as Appendix B-2 to this
proxy statement and is incorporated herein in its entirety. You
should read this opinion carefully and in its entirety in
connection with this proxy statement. In addition, we have also
included the following summary of Banc of America
Securities opinion, which is qualified in its entirety by
reference to the full text of the opinion.
Banc of America Securities opinion is directed to the
Board of Directors of Gartner and does not constitute a
recommendation to any stockholder on how to vote with respect to
the proposed reclassification. The opinion addresses only the
fairness of the exchange ratio in the proposed reclassification,
from a financial point of view, to the holders of Class B
Common Stock. The opinion does not constitute an opinion as to
the prices at which Class A Common Stock, Class B
Common Stock or the new Gartner common stock will actually trade
at any time and the opinion does not address the relative
fairness of the consideration to be received by the holders of
Class B Common Stock or the holders of Class A Common
Stock. Furthermore, the opinion does not address the relative
merits of the proposed reclassification compared to other
business strategies considered by or available to the Board of
Directors, nor does it address the Board of Directors
decision to proceed with the proposed reclassification.
In rendering its opinion, Banc of America Securities, among
other things:
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reviewed publicly available business and financial information
of Gartner; |
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reviewed Gartners Restated Certificate of Incorporation,
as well as a draft, dated April 8, 2005, of Gartners
Amended and Restated Certificate of Incorporation; |
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reviewed the reported prices and trading activity for the
Class A Common Stock and Class B Common Stock from
April 18, 2000 to April 18, 2005; |
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reviewed the reported prices and trading activity for selected
companies with two classes of publicly traded stock from
April 18, 2000 to April 18, 2005; |
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reviewed the financial terms of selected recent reclassification
transactions that Banc of America Securities deemed relevant; |
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reviewed the historical trading performance, trading activity,
and post-announcement stock price performance for securities in
the selected recent reclassification transactions; |
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reviewed the current ownership structure of Gartner, as well as
the ownership structure of Gartner following consummation of the
proposed reclassification; |
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reviewed a draft, dated April 8, 2005, of this proxy
statement provided to Banc of America Securities; |
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discussed with management of Gartner the rationale for the
proposed reclassification and for the original creation of the
dual class structure; and |
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performed such other analyses and considered such other factors
as Banc of America Securities deemed appropriate. |
Banc of America Securities assumed and relied upon, without
independent verification, the accuracy and completeness of the
financial and other information reviewed by it for the purposes
of its opinion. Banc of America Securities assumed that the
proposed reclassification will qualify as a tax-free exchange
and reclassification for United States Federal income tax
purposes. Banc of America Securities also assumed that the final
Amended and Restated Certificate of Incorporation will not
differ in any material respect from the draft, dated
April 8, 2005, and that the proposed reclassification will
be consummated as provided in the draft proxy statement, dated
April 8, 2005.
In addition, for purposes of its opinion, Banc of America
Securities:
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relied on advice of counsel and tax advisors to Gartner as to
all legal and tax matters with respect to Gartner and the
proposed reclassification; and |
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did not assume responsibility for making an independent
evaluation, appraisal or physical inspection of any of the
assets or liabilities, contingent or otherwise, of Gartner, nor
did Banc of America Securities receive any appraisals. |
Banc of America Securities opinion is necessarily based on
economic, market and other conditions as in effect on, and the
information made available to it as of, the date of its opinion.
Accordingly, although subsequent developments may affect its
opinion, Banc of America Securities does not assume any
obligation to update, revise or reaffirm its opinion.
Gartner has agreed to pay Banc of America Securities a fee in
connection with its opinion. Banc of America Securities
engagement letter also calls for Gartner to reimburse Banc of
America Securities for its reasonable out-of-pocket expenses,
and Gartner has agreed to indemnify Banc of America Securities,
its affiliates, and their respective partners, directors,
officers, agents, consultants, employees, and controlling
persons against particular liabilities, including liabilities
under the federal securities laws. The Board of Directors was
aware of this fee structure and took it into account in
considering Banc of America Securities opinion and in
approving the proposed reclassification.
Banc of America Securities or its affiliates have provided and
in the future may provide financial advisory and financing
services to Gartner and have received or in the future may
receive fees for the rendering of these services. An affiliate
of Banc of America Securities serves as agent bank and is a
lender under Gartners senior credit facility and has
received fees for the rendering of such services. In the
ordinary course of our businesses, Banc of America Securities
and its affiliates may actively trade the debt and equity
securities or loans of Gartner for its own account or for the
accounts of customers, and accordingly, Banc of America
Securities and its affiliates may at any time hold long or short
positions in such securities or loans.
Conditions Precedent to Effectiveness of the Amendment
The effectiveness of the proposed amendment to our restated
certificate of incorporation and the resulting reclassification
of our Class A Common Stock and Class B Common Stock
into a single class of common stock are conditioned upon each of
the following:
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approval of the proposed amendment by the holders of a majority
of the outstanding shares of our Class A Common Stock and
the Class B Common Stock, voting together as a single class; |
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approval of the proposed amendment by the holders of a majority
of the outstanding shares of our Class A Common Stock,
voting as a separate class; |
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approval of the proposed amendment by the holders of a majority
of the outstanding shares of our Class B Common Stock,
voting as a separate class; and |
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receipt of authorization to list the single class of common
stock on the New York Stock Exchange. |
If any of the above conditions are not satisfied, we will not
file the proposed amendment with the Delaware Secretary of State
and the reclassification of our Class A Common Stock and
Class B Common Stock into a single class of common stock
will not occur.
Reservation of Rights
The Board of Directors reserves the right to abandon the
adoption of the proposed amendment to our restated certificate
of incorporation without further action by the stockholders at
any time before the filing of the amended and restated
certificate of incorporation with the Delaware Secretary of
State, even if the amendment has been approved by the
stockholders at the annual meeting and all other conditions to
such adoption have been satisfied. Although the Board of
Directors does not currently anticipate exercising its rights to
abandon the proposed amendment nor does it contemplate specific
events that would trigger abandonment, the Board of Directors
will defer or abandon the proposed amendment if, in its business
judgment, the combination of the Class A Common Stock and
the Class B Common Stock are no longer in the best
interests of Gartner or its stockholders. The Board of Directors
will also abandon the proposed amendment if any of the
conditions described under Conditions Precedent to
Effectiveness of the Amendment fail to occur and will not
proceed with the reclassification of our Class A Common
Stock and Class B Common Stock in such case without seeking
further stockholder approval.
Certain Effects of the Amendment
If the proposed amendment is approved and filed, each share of
our outstanding Class A Common Stock and Class B
Common Stock will automatically be reclassified into a share of
a single class of common stock. If we adopt the proposed
amendment to our restated certificate of incorporation, it will
have the following effects, among others, on the holders of
Class A Common Stock and Class B Common Stock and on
our company:
Voting Power of Holders of Our Class A Common Stock and
Class B Common Stock
Election and Removal of Directors
The holders of Class A Common Stock currently vote with the
holders of any outstanding voting preferred stock to elect 20%
of the members of our Board of Directors, and the holders of
Class B Common Stock currently vote to elect 80% of the
members of our Board of Directors. After the adoption of the
proposed amendment, the holders of Class A Common Stock and
the holders of Class B Common Stock will be holders of a
single class of common stock and will vote together for the
election of all of our directors.
Our restated certificate of incorporation currently provides
that our directors may only be removed by the holders of the
class of common stock that appointed such director. After
adoption of the proposed amendment, each of our directors may be
removed by a vote of our stockholders voting as a single class.
All Other Matters
As to all other matters on which stockholders are entitled to
vote, the proposed amendment will have no impact on the voting
power of holders of Class A Common Stock and Class B
Common Stock. On such matters, the holders of Class A
Common Stock and Class B Common Stock are currently
entitled to cast approximately 79.9% and 20.1%,
respectively, of the votes entitled to be cast. After the
adoption of the proposed amendment, the current holders of
Class A Common Stock and the current holders of
Class B Common Stock will be entitled to cast
approximately 79.9% and 20.1%, respectively, of the
votes entitled to be cast based on the shares outstanding on
May 12, 2005.
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Economic Interest of Holders of Class A Common Stock and
Class B Common Stock
The proposed amendment will have no impact on the economic
equity interest of holders of Class A Common Stock and
Class B Common Stock, including with regard to dividends,
liquidation rights or redemption. The shares held by the holders
of our Class A Common Stock and Class B Common Stock
currently represent 79.9% and 20.1%, respectively, of
the total outstanding shares of common stock. After the adoption
of the proposed amendment, the shares of new common stock held
by current holders of Class A Common Stock and Class B
Common Stock would be 79.9% and 20.1%, respectively.
Interest of Silver Lake Partners, L.P., and Its Affiliates
The reclassification will increase the relative voting power of
current holders of Class A Common Stock with respect to the
election and removal of directors, particularly Silver Lake, who
will own approximately 33.6% of our common stock on a combined
basis and who have contractual rights to appoint two directors
pursuant to the Amended and Restated Securityholders Agreement
dated April 13, 2000, in addition to any other directors
they may otherwise be able to elect as a result of their share
ownership. Silver Lake Partners, L.P., Silver Lake Investors,
L.P. and Silver Lake Technology Investors, L.L.C. own
37,740,128 shares of Class A Common Stock. Silver Lake
Technology Associates, L.L.C. is the General Partner of each of
Silver Lake Partners, L.P. and Silver Lake Investors, L.P.
Glenn H. Hutchins and Michael J. Bingle, each of whom
serves on our Board of Directors, are Managing Members and
Officers of Silver Lake Technology Associates, L.L.C. and Senior
Members of Silver Lake Technology Investors, L.L.C. As such,
Mr. Hutchins and Mr. Bingle could be deemed to have
shared voting or dispositive power over these shares.
Mr. Hutchins and Mr. Bingle, however, disclaim
beneficial ownership in these shares, except to the extent of
their pecuniary interests.
Capitalization
The proposed amendment will have no impact on the total issued
and outstanding shares of common stock. As of May 12, 2005,
there were 112,251,225 shares of common stock issued and
outstanding, consisting of 89,638,271 shares of
Class A Common Stock and 22,612,954 shares of
Class B Common Stock. After the adoption of the proposed
amendment, there will be approximately 112,251,225 shares
of the new common stock outstanding. In addition, the amendment
will not increase our total number of authorized shares of
common stock. The amendment authorizes the issuance of
250,000,000 shares of new common stock, which is the
combined total number of shares of Class A Common Stock and
Class B Common Stock currently authorized by our restated
certificate of incorporation.
Market Price of Common Stock
After the adoption of the proposed amendment, the market price
of shares of our new common stock will depend, as before the
amendment, on many factors including our future performance,
general market conditions and conditions in the industries in
which we operate. Accordingly, we cannot predict the price at
which our new common stock will trade following the amendment,
just as we could not predict the prices at which Class A
Common Stock and Class B Common Stock would trade following
the creation of the dual-class structure. On May 12, 2005,
the per-share closing prices of our Class A Common Stock
and Class B Common Stock on the New York Stock Exchange
were $9.32 and $9.20, respectively.
New York Stock Exchange Listing of New Common Stock, CUSIP
Numbers
After the effective date, if authorization is received from the
New York Stock Exchange, our new common stock will retain the
Class A Common Stocks ticker symbol on the New York
Stock Exchange and will accordingly be listed on such exchange
under the ticker symbol IT. We will cause our
Class B Common Stock to be delisted from the Stock Exchange
after the effective date. Furthermore, our new common stock will
have a new CUSIP security identification number.
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Operations
The proposed amendment will have no impact on our operations.
Resale of New Common Stock
Shares of our new common stock may be sold in the same manner as
the Class A Common Stock and Class B Common Stock may
currently be sold. Our affiliates will continue to be subject to
the restrictions specified in Rule 144 under the Securities
Act of 1933, as amended.
Rights Agreement
Under our existing stockholder rights agreement, each
outstanding share of our Class A Common Stock and
Class B Common Stock currently includes an associated
preferred stock purchase right. These rights trade with the
outstanding shares of Class A Common Stock and Class B
Common Stock. The rights become exercisable upon the acquisition
by a person or affiliate group of 20% or more of all our total
outstanding shares or 20% of the outstanding shares of either
our Class A or Class B Common Stock.
The rights agreement will be amended to make the rights
applicable to the new common stock and to delete references to
the Class A Common Stock and Class B Common Stock.
After the adoption of the proposed amendment, each share of new
common stock will include an identical associated preferred
stock purchase right that will trade with such share. As with
the rights included with the currently outstanding shares of
Class A Common Stock and Class B Common Stock, these
rights will become exercisable upon the acquisition by a person
or affiliated group of 20% or more of the outstanding shares of
our new common stock.
Stock Incentive Plans and Employee Stock Purchase Plans
Outstanding options to purchase Class A Common Stock and
other awards with respect to Class A Common Stock issued
under employee stock-based incentive plans will be reclassified
into options and awards for the same number of shares of new
common stock upon the same terms as in effect before the
reclassification.
Certain Federal Income Tax Consequences
We have summarized below certain federal income tax consequences
of the proposed amendment based on the Internal Revenue Code of
1986, as amended and currently in effect. This summary does not
discuss all aspects of federal income taxation that may be
relevant to you in light of your individual circumstances. In
addition, this summary is included for general information
purposes only and is not intended to constitute advice regarding
the federal income tax consequences of the proposed amendment.
You are urged to consult your own tax advisor with respect to
the tax consequences of the proposed amendment, including tax
reporting requirements and tax consequences under state, local
or foreign law.
We believe that as a result of the proposed amendment:
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no gain or loss will be recognized for federal income tax
purposes by any of the holders of our Class A Common Stock
or any of the holders of our Class B Common Stock upon the
reclassification and conversion of shares of our Class A
Common Stock and Class B Common Stock into shares of new
common stock; |
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a stockholders basis in its shares of new common stock
will be the same as the stockholders aggregate basis in
the Class A Common Stock and Class B Common Stock
surrendered; |
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a stockholders holding period for the new common stock
will include such stockholders holding period for the
Class A Common Stock and Class B Common Stock
surrendered, provided that each share of Class A Common
Stock and Class B Common Stock was held by such stockholder
as a capital asset as defined in Section 1221 of the
Internal Revenue Code on the effective date of the
amendment; and |
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no gain or loss will be recognized for federal income tax
purposes by Gartner upon the reclassification and conversion of
shares of our Class A Common Stock and Class B Common
Stock into shares of new common stock. |
Accounting Considerations
Management currently expects that the proposed amendment will
not have any material effect on our earnings or book value per
share.
Financial Information
The information set forth in Part II, Item 6;
Part II, Items 7 and 7A; and Part II, Item 8
of our Annual Report on Form 10-K for the fiscal year ended
December 31, 2004 are incorporated herein by reference.
Independent Registered Public Accounting Firm
Representatives of KPMG LLP are expected to be present at the
Annual Meeting, will have the opportunity to make a statement if
they desire to do so and are expected to be available to respond
to appropriate questions.
Class A and Class B Common Stock Certificates
If the proposed amendment is approved and filed, your existing
certificates representing shares of Class A Common Stock
and Class B Common Stock will automatically represent an
equal number of shares of new common stock. Accordingly, it will
not be necessary for record holders of Class A Common Stock
or Class B Common Stock holding certificated shares to
exchange their existing certificates for new certificates.
However, if they so desire, such holders may at any time after
the effective date exchange their existing certificates for
certificates representing shares of our new common stock by
contacting our transfer agent.
Voting Eligibility and Vote Required for Approval of the
Reclassification
All holders of record of shares of Class A Common Stock or
Class B Common Stock on the record date are entitled to
cast one vote per share with regard to the proposed amendment.
Approval of the proposed amendment requires (1) the
affirmative vote of a majority of the outstanding shares of our
Class A Common Stock and Class B Common Stock, voting
as a single class, (2) the affirmative vote of a majority
of the outstanding shares of our Class A Common Stock,
voting separately and (3) the affirmative vote of a
majority of the outstanding shares of our Class B Common
Stock, voting separately. If you do not provide instructions as
to the way your shares should be voted on the proposed
amendment, proxies solicited by our Board of Directors will be
voted in favor of the proposed amendment.
No Appraisal Rights
Holders of our Class A Common Stock and Class B Common
Stock do not have appraisal rights under Delaware state law or
under our restated certificate of incorporation or bylaws in
connection with the amendment.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
APPROVAL OF THE PROPOSED AMENDMENT.
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PROPOSAL THREE
PROPOSAL TO AMEND AND RESTATE OUR RESTATED CERTIFICATE
OF INCORPORATION TO ELIMINATE THE CLASSIFIED STRUCTURE OF THE
BOARD OF DIRECTORS
Our restated certificate of incorporation (Article V)
currently provides for the classification of our Board of
Directors into three classes, with each class being elected
every three years, and contains provisions relating to such
classification concerning the filling of director vacancies and
the removal of directors. The Board of Directors has determined
that the restated certificate of incorporation should be amended
to repeal these provisions and to make certain conforming
changes as appropriate and has unanimously adopted resolutions
approving such amendments, declaring their advisability and
recommending such amendments to our stockholders.
The proposed amendment must be approved by holders of a majority
of the outstanding shares of Class A Common Stock and
Class B Common Stock voting together as a single class.
If the proposed amendment is approved by our stockholders, the
classified Board structure will be eliminated, the current term
of office of each director will end at the 2006 Annual Meeting
of Stockholders, and all directors will thereafter be elected
for one-year terms at each Annual Meeting of Stockholders.
Furthermore, any director chosen as a result of a newly created
directorship or to fill a vacancy on the Board of Directors will
hold office until the next Annual Meeting of Stockholders.
If the proposed amendment is not approved by stockholders, the
Board of Directors will remain classified, and the four
directors elected at the 2005 Annual Meeting will be elected for
a three-year term expiring in 2008. All other directors will
continue in office for the remainder of their full three-year
terms, subject to their earlier retirement, resignation, removal
or death.
The Boards Governance Committee and the full Board have
regularly considered the merits of the classified board
structure, taking a variety of perspectives into account. While
the Board believes that the classified Board structure has
promoted continuity and stability and reinforced a commitment to
a long-term point of view, it recognizes the growing sentiment
of stockholders that the annual election of directors would
increase the Boards accountability to our stockholders. In
light of corporate governance trends and stockholder sentiment,
the Board, upon the recommendation of the Governance Committee,
has determined that the classified board structure should be
eliminated.
The proposed amendment to our restated certificate of
incorporation is set forth in Appendix A-2 to this proxy
statement, with deletions indicated by strike-outs and additions
indicated by underlining. If this proposal is approved by the
requisite vote of stockholders, an amendment to the restated
certificate of incorporation will be filed with the State of
Delaware.
If both of the proposed amendments to our restated certificate
of incorporation (Proposals 2 and 3) as set forth in
Appendix A-1 and Appendix A-2 to this proxy statement
are approved, our restated certificate of incorporation will be
amended and restated to reflect all such changes and will be
filed with the State of Delaware.
Reservation of Rights
The Board of Directors reserves the right to abandon the
adoption of the proposed amendment to our restated certificate
of incorporation without further action by the stockholders at
any time before the filing of the amended and restated
certificate of incorporation with the Delaware Secretary of
State, even if the amendment has been approved by the
stockholders at the annual meeting and all other conditions to
such adoption have been satisfied. Although the Board of
Directors does not currently anticipate exercising its rights to
abandon the proposed amendment nor does it contemplate specific
events that would trigger abandonment, the Board of Directors
will defer or abandon the proposed amendment if, in its business
judgment, eliminating the classified Board structure is no
longer in the best interests of Gartner or its stockholders.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
APPROVAL OF THE PROPOSED AMENDMENT.
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PROPOSAL FOUR
PROPOSAL TO AMEND AND RESTATE OUR 2003 LONG-TERM
INCENTIVE PLAN
Our Board originally adopted, and the stockholders approved, the
adoption of the Gartner, Inc. 2003 Long-Term Incentive Plan (the
Plan) in 2003. On April 19, 2005, our Board
adopted an amended and restated Plan. We are asking for
stockholder approval of the amendment and restatement of the
Plan. The Plan, as amended, is intended to assist us in
achieving our goals of increasing profitability and stockholder
value by providing our employees, directors and consultants an
opportunity to purchase shares of our Class A Common Stock.
In the event that Proposal 2 (reclassification of our
Class A and Class B Common Stock into a single class
of Common Stock) passes, all references herein to Class A
Common Stock will mean the new single class of common stock
created by that reclassification.
The amendments to the Plan are subject to approval by our
stockholders and will not become effective until the amended
Plan is approved by our stockholders. The Plan, as amended,
includes the following nine amendments, as well as some
nonmaterial changes to the Plan:
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(1) |
An increase to the number of shares available under the Plan by
an additional 11,000,000 shares of Class A Common
Stock. |
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(2) |
The addition of restricted stock units as an award available for
grant under the Plan. |
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(3) |
The extension of the term of the Plan until April 19, 2015,
unless sooner terminated by our Board. |
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(4) |
The ability to grant discretionary awards under the Plan to our
outside directors (that is, our non-employee members of our
Board), in addition to employees and consultants, and the
removal of automatic stock option awards to our outside
directors. Although we plan to continue to make regular initial
and annual grants to our directors, as specified on
page 26, this change to the Plan will allow us more
flexibility to respond to changing best practices in the area of
director equity compensation, and adjust the non-employee
director compensation program as appropriate. |
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(5) |
The addition of a provision granting the committee of our Board
administering the Plan the power to delegate its authority under
the Plan to one or more directors or officers, except with
respect to grants to certain officers. |
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(6) |
The removal of the restriction against granting more than
2,000,000 shares of our Class A Common Stock pursuant
to restricted stock, restricted stock units, long-term
performance awards measured by the value of our Class A
Common Stock or stock appreciation rights granted without
related options. The number of shares requested (as indicated in
(1), above) was determined after careful consideration of the
potential dilutive effects that the issuance of awards may have
on our stockholders. During our analysis, it was determined that
it was more appropriate to limit the aggregate number of new
shares requested, rather than to request more shares, while
specifying a sub-limit on certain grant types. |
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(7) |
A change to the limits on awards a participant may receive each
fiscal year for purposes of Section 162(m) of the Internal
Revenue Code, as amended (the Code) to provide that
no participant may receive options or stock appreciation rights
covering in the aggregate more than 2,000,000 shares of our
Class A Common Stock during any fiscal year, and no
participant may receive restricted stock units, restricted stock
awards or, to the extent payable in or measured by the value of
shares, long-term performance awards covering in the aggregate
more than 1,000,000 shares of our Class A Common Stock
during any fiscal year; provided, that a share subject to a
tandem stock appreciation right will not count against the
limitation listed above. |
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(8) |
The addition of a second requirement in order for awards to
receive full vesting in connection with a change in control. The
Plan currently provides that all outstanding awards generally
vest (or are deemed earned or are settled, as applicable)
immediately upon our change in control. For awards granted after
stockholder approval of the amendment and restatement of the
Plan, the Plan generally only will provide for the immediate
vesting (or deemed earning or settlement, as applicable) of a |
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participants awards in connection with a change in control
if the participant is terminated without cause within
12 months following the change in control. |
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(9) |
The removal of the authority to offer at any time to buy back an
option previously granted to a participant under the Plan. |
If the stockholders approve the amended and restated Plan, it
will replace the current version of the Plan. Otherwise, the
current version of the Plan will remain in effect. Our named
executive officers and directors have an interest in this
proposal.
The following is a brief summary of the material features of the
Plan. The full text of the amended and restated Plan document is
attached as Appendix C. You should read Appendix C in
its entirety.
PURPOSE OF THE PLAN
The purpose of the Plan is to enable us to provide incentives to
eligible employees, consultants and directors whose present and
potential contributions are important to our continued success,
to afford these individuals the opportunity to acquire a
proprietary interest in us and to enable us to enlist and retain
qualified personnel.
We intend to continue to consider the dilutive effect that the
issuance of awards under our equity compensation program will
have on our stockholders in making awards to eligible
participants.
ADMINISTRATION AND OPERATION
A committee of independent directors designated by our Board
(the Committee) will administer the Plan, currently
the Compensation Committee of our Board. In the case of awards
intended to qualify as performance based
compensation within the meaning of Section 162(m) of
the Code or granted to an officer subject to Section 16 of
the Securities Exchange Act of 1934, as amended (the
Exchange Act), the Committee will consist of two or
more outside directors within the meaning of
Section 162(m) of the Code (to enable us to receive a
federal tax deduction for certain compensation paid under the
Plan) and who are non-employee directors for
purposes of Rule 16b-3 of the Exchange Act (dealing with
short-swing profit rules). Under the amended Plan, the Committee
has the discretion to delegate its authority under the Plan to
one or more directors or officers, except with respect to grants
to officers subject to Section 16 of the Exchange Act and
awards intended to qualify as performance based
compensation within the meaning of Section 162(m).
Subject to certain restrictions, the Committee will have the
authority to interpret the Plan and will oversee all decisions
regarding its administration, including the selection of award
recipients, the determination of the types of awards they
receive, the establishment of the terms, conditions and other
provisions of such awards and any modification or amendment of
such awards. This includes the authority to determine the
exercise price, the number of shares subject to each award
(subject to the limits under the plan), the exercisability of
the awards and the form of consideration payable upon exercise,
and to make all other determinations necessary or advisable for
administering the Plan. Without the approval of our
stockholders, the exercise price of options may not be reduced
after the date of grant nor may options be exchanged for new
options with a lower exercise price.
GENERAL TERMS AND ELIGIBILITY
The Plan provides for the grant of incentive stock options,
within the meaning of Section 422 of the Code, to our
employees and nonstatutory stock options, stock appreciation
rights, restricted stock, restricted stock units, long-term
performance awards and common stock equivalent awards (each, an
award) to our employees, directors, and consultants.
All of our employees and consultants (and the employees or
consultants of any parent or subsidiary corporation of ours) and
our outside directors are eligible to receive awards under the
Plan; however, only eligible employees of us or our parent or
subsidiary may receive an incentive stock
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option. Seven outside directors and approximately 1,370
employees and consultants participate in the Plan. On
May 12, 2005, the closing price of our Class A Common
Stock was $9.32 per share.
SHARES AVAILABLE FOR ISSUANCE
Stockholder approval of this proposal will result in an increase
to the number of shares available under the Plan by an
additional 11,000,000 shares of Class A Common Stock.
Assuming stockholder approval of this proposal, a total of
20,928,000 shares of our Class A Common Stock will
have been reserved for issuance under the Plan. On
December 31, 2004, a total of 3,436,249 shares of our
Class A Common Stock remained available for future issuance
under the Plan.
If any shares of stock that are subject to an award under the
Plan are not issued or cease to be issuable for any reason,
(including, for example, because the award is settled in cash,
terminated, forfeited or cancelled, or the shares subject to the
award or other shares owned by the participant are used to
satisfy the exercise price or tax withholding obligations
related to the award), those shares will become available for
additional awards.
The number of shares available for issuance under the Plan, the
number of shares covered by an outstanding award, the number of
shares and other awards provided to outside directors, the award
limits under the Plan and the price per share covered by each
outstanding award are subject to proportionate adjustment in the
event of a stock split, reverse stock split, stock dividend,
spin-off or split-up, or combination or reclassification of the
Class A Common Stock or similar action.
TYPES AND GENERAL TERMS OF AWARDS
Awards under the Plan may take the form of incentive or
nonstatutory stock options, stock appreciation rights,
restricted stock, restricted stock units, long-term performance
awards or common stock equivalents. Subject to certain
restrictions set forth in the Plan, the Committee will set the
terms, conditions and other provisions of each award, including
the size of the award, the exercise or base price, the vesting
and exercisability schedule and termination, cancellation and
forfeiture provisions.
All awards are subject to the following specific restrictions:
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Section 162(m) of the Code places limits on the
deductibility for federal income tax purposes of compensation
paid to certain of our executive officers. In order to preserve
our ability to deduct the compensation income associated with
certain awards granted to such persons, the Plan provides that
no participant may receive options or stock appreciation rights,
excluding shares subject to tandem stock appreciation rights,
covering in the aggregate more than 2,000,000 shares of our
Class A Common Stock during any fiscal year, and no
participant may receive restricted stock units, restricted stock
awards or, to the extent payable in or measured by the value of
shares, long-term performance awards covering in the aggregate
more than 1,000,000 shares of our Class A Common Stock
during any fiscal year (together, referred to as the Per
Person Limits). |
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No participant may receive long-term performance awards payable
in cash and not measured by the value of shares of our
Class A Common Stock during any fiscal year covering an
amount in excess of $2,500,000. |
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Except for adjustments made to address stock splits and similar
transactions, the exercise price for outstanding options granted
under the Plan may not be reduced after the date of grant and
any outstanding option granted under the Plan may not be
surrendered to us as consideration for the grant of a new option
with a lower exercise price without approval of our stockholders. |
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Unless otherwise determined by the Committee, an award may not
be sold, pledged, assigned, transferred or disposed of in any
manner other than by will or by the laws of descent or
distribution, and during the lifetime of a participant, may be
exercised or purchased only by the participant. The Committee
may permit the transfer of an award to members of a
participants immediate family. |
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The Committee determines the permissible methods of exercise or
purchase of an award, which may include cash or check, certain
other shares of our stock owned by the participant having a fair
market value equal to the price payable by the participant for
the award, net exercise and any other legal consideration that
the Committee deems appropriate or any combination of the
foregoing. However, we may not make loans to participants for
the purposes of paying the exercise, purchase price or taxes
related to any award. |
The Committee may designate any award as performance-based
compensation for purposes of Section 162(m) of the
Code. Pursuant to Section 162(m) of the Code, we generally
may not deduct for federal income tax purposes compensation paid
to the Chief Executive Officer or the four other highest paid
employees to the extent that any of these persons receive more
than $1 million in compensation in any single year.
However, if the compensation qualifies as
performance-based for Section 162(m) purposes,
we may deduct for federal income tax purposes the compensation
paid even if such compensation exceeds $1 million in a
single year. For certain awards granted under the Plan to
qualify as performance-based compensation under
Section 162(m), among other things, the stockholders must
approve the material terms of the Plan, including the
performance goals that may be permitted to apply to certain
awards granted under the Plan, and the per person annual award
limits of the Plan. Certain awards intended to qualify as
performance-based compensation, such as restricted
stock, restricted stock units and long-term performance awards,
must be conditioned on the achievement of one or more of the
following Performance Objectives: specified levels
of, or increases in, our (or our parent or subsidiarys)
return on equity, earnings per share, total earnings, earnings
growth, return on capital, return on assets, economic value
added, earnings before interest and taxes, earnings before
interest, taxes and amortization, core research contract value,
total sales bookings, sales growth, gross margin, return on
investment, increase in the fair market value of our
Class A Common Stock, share price (including, but not
limited to, growth measures and total stockholder return), net
operating profit, cash flow (including, but not limited to,
operating cash flow and free cash flow), cash flow return on
investment (which equals net cash flow divided by total
capital), internal rate of return, increase in net present value
or expense targets.
Any Performance Objectives used may be measured, as applicable,
in absolute terms or in relative terms (including against
another company or companies), on a per-share basis, against our
performance as a whole or of any parent, subsidiary or business
unit of ours, and on a pre-tax or after-tax basis. The amended
and restated Plan also allows the Committee to adjust any of the
Performance Objectives applicable to an award to reflect
extraordinary expenses or changes in accounting rules. In
addition, for those awards not intended to qualify as
performance-based compensation for purposes of
Section 162(m), the Committee may modify the Performance
Objectives used to reflect a change in our business, operations,
corporate structure or capital structure or of a parent,
subsidiary or business unit of ours, or in other circumstances
rendering the Performance Objectives unsuitable.
OPTIONS
A stock option is the right to purchase shares of our
Class A Common Stock at a fixed exercise price for a fixed
period of time. Options granted under the Plan may be incentive
stock options, within the meaning of Section 422 of the
Code, granted to our employees, or may be nonstatutory stock
options. Each option is evidenced by an award agreement between
us and the optionee, and is subject to the following terms and
conditions:
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The Committee determines the number of shares granted to a
participant pursuant to a stock option, subject to the Per
Person Limits described above. |
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The Committee will determine the exercise price of options
granted under the Plan, but no options will have an exercise
price less than the fair market value of our Class A Common
Stock on the date of grant. The exercise price of an incentive
stock option granted to a 10% stockholder may not be less than
110% of the fair market value on the date such option is granted. |
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The terms of options are determined by the Committee, provided
that no option will be exercisable more than ten years after the
date of grant. However, with respect to any participant who owns
10% of the voting power of all classes of our outstanding
capital stock, the term of an incentive stock option must not
exceed five years. |
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After termination of one of our employees, directors or
consultants, he or she may exercise his or her option for the
period of time determined by the Committee and stated in the
award agreement. |
STOCK APPRECIATION RIGHTS
A stock appreciation right is the right to receive the
appreciation in the fair market value of our Class A Common
Stock between the exercise date and the date of grant, for that
number of shares of our Class A Common Stock with respect
to which the stock appreciation right is exercised. We may grant
stock appreciation rights in connection with or separate from
grants of stock options. Each award of stock appreciation rights
is evidenced by an award agreement specifying the terms and
conditions of the award. The Committee determines the exercise
price of stock appreciation rights, except that no stock
appreciation right may have an exercise price less than the fair
market value of the shares on the date the award is granted. The
Committee also determines the vesting schedule and other terms
and conditions of stock appreciation rights. The Committee also
will determine the number of shares granted to a participant
pursuant to a stock appreciation right, subject to the Per
Person Limits as discussed above. After termination of service
with us, a participant will be able to exercise the vested
portion of his or her stock appreciation right for the period of
time stated in the award agreement. In no event will a stock
appreciation right be exercised later than the expiration of its
term. The Committee may, in its sole discretion, pay amounts
owed pursuant to a stock appreciation right in cash, shares of
our Class A Common Stock or in a combination thereof.
RESTRICTED STOCK
Restricted stock awards are awards of shares of our Class A
Common Stock that vest in accordance with terms and conditions
established by the Committee. The Committee may impose whatever
conditions to vesting it determines to be appropriate including,
if the Committee has determined it is desirable for the award to
qualify as performance-based compensation for
purposes of Section 162(m) of the Code, the restricted
stock will vest based on the achievement of Performance
Objectives. Each award of restricted stock is evidenced by an
award agreement specifying the terms and conditions of the
award. The Committee determines the purchase price of any grants
of restricted stock and, unless the Committee determines
otherwise, shares that do not vest typically will be subject our
right of repurchase, which we may exercise upon the voluntary or
involuntary termination of the participants service with
us for any reason including death or disability.
The Committee will determine the number of shares of restricted
stock granted to any participant, subject to the Per Person
Limits discussed above.
RESTRICTED STOCK UNITS
Restricted stock units are awards of a right to receive
Class A Common Stock, which may be paid out upon vesting or
such other time or times determined by the Committee. Each
restricted stock unit has an initial value equal to the fair
market value of a share on the date of grant. The Committee
determines the terms and conditions of restricted stock units.
Each restricted stock unit award will be evidenced by an award
agreement that will specify terms and conditions as the
Committee may determine in its sole discretion, including,
without limitation whatever conditions to vesting it determines
to be appropriate. If the Committee has determined it is
desirable for the award to qualify as performance-based
compensation for purposes of Section 162(m) of the
Code, the restricted stock unit will vest based on the
achievement of Performance Objectives. The Committee will
determine the number of shares granted pursuant to a restricted
stock unit award, subject to the Per Person Limits as discussed
above.
25
LONG-TERM PERFORMANCE AWARDS
Long-term performance awards are awards that permit the
recipient to receive a cash or stock bonus upon satisfaction of
the Performance Objectives determined by the Committee during
the performance period the Committee has specified. Each
long-term performance award will be evidenced by an award
agreement that will specify terms and conditions as the
Committee may determine in its sole discretion, including,
without limitation whatever conditions to vesting it determines
to be appropriate.
AWARDS TO OUTSIDE DIRECTORS
Common Stock Equivalents. On a quarterly basis, each of
our outside directors will receive common stock equivalent
awards for at least 50%, and at the outside directors
election up to 100%, of his or her total cash compensation. A
director must elect to receive common stock equivalents in lieu
of his or her compensation for the following year by no later
than December 31st of each year. The common stock
equivalents will be equal in value to that portion of the
outside directors quarterly compensation that he or she
has elected to receive in common stock equivalents divided by
the fair market value of our Class A Common Stock on the
first business day of each of fiscal quarter. The common stock
equivalents will be credited to a book-entry account. Additional
common stock equivalents will be credited to such account to the
extent we distribute a cash dividend on our outstanding
Class A Common Stock. Our obligation with respect to common
stock equivalents will not be funded or secured.
Other grants of equity made to outside directors will be made
under this Plan. At the discretion of the Committee, outsider
directors also may receive discretionary awards under the Plan.
OTHER PROVISIONS
Liquidation or Dissolution. In the event of our proposed
dissolution or liquidation, any unexercised awards will
terminate immediately prior to the consummation of the proposed
action.
Merger or Asset Sale. In the event of a merger with or
into another corporation or our sale of all or substantially all
of our assets, the Plan provides that the successor corporation
will assume or substitute an equivalent award for each
outstanding award. Unless determined otherwise by the Committee,
awards not assumed or substituted for will be fully vested and
exercisable, including as to shares that would not otherwise
have been vested and exercisable, for a period of at least
15 days from the date of notice to the award recipient. The
option or stock appreciation right will terminate at the end of
such period and the restricted stock, restricted stock units and
other awards will be fully vested as to all of the shares
subject to the award, including shares which would not otherwise
be vested.
Change in Control. Unless the Committee determines
otherwise, if we are subject to a change in control (as defined
in the Plan), all outstanding awards granted before stockholder
approval of this amendment and restatement of the Plan that are
subject to a vesting schedule, substantial risk of forfeiture or
performance conditions will vest immediately, the risk of
forfeiture will lapse immediately, the performance conditions
will be deemed to be satisfied at target and any award requiring
exercise by the participant will remain exercisable for at least
90 days following the date of the change in control. In
addition, all common stock equivalents will be settled
immediately in shares of Class A Common Stock. For awards
granted on or after stockholder approval of this amendment and
restatement of the Plan, unless the Committee determines
otherwise, if we are subject to a change in control (as defined
in the Plan) all outstanding awards granted to a participant who
is terminated without cause within 12 months following the
change in control and that are subject to a vesting schedule,
substantial risk of forfeiture or performance conditions will
vest immediately upon the participants termination, the
risk of forfeiture will lapse immediately, the performance
conditions will be deemed to be satisfied at target and any
award requiring exercise by the participant will remain
exercisable for at least 90 days following the date of the
termination. In addition, all common stock equivalents of a
participant who is terminated without cause within
12 months following the change in control will be settled
immediately in shares of Class A Common Stock.
26
Amendments and Termination. Our Board may amend, suspend
or terminate the Plan, provided that action does not impair
materially any award then outstanding. Our Board may not amend
the Plan to increase the number of shares available for issuance
or increase any of the limitations on the number of awards that
may be made to individual participants without the approval of
our stockholders. No award may be granted under the Plan after
April 19, 2015. As noted above, without the approval of our
stockholders, the exercise price of options may not be reduced
after the date of grant nor may options be exchanged for new
options with a lower exercise price.
Foreign Jurisdictions. To facilitate awards to foreign
nationals or to employees employed by us (or certain affiliates)
outside the United States, the Committee may approve supplements
to, or amendments, restatements or alternative versions of, the
Plan without affecting the terms of the Plan for any other
purpose; provided that no such supplements, amendments,
restatements or alternative versions include any provisions that
are inconsistent with the terms of the Plan, as then in effect,
unless the Plan could have been amended to eliminate such
inconsistency without further approval by our stockholders.
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief description of the material
U.S. federal income tax consequences associated with awards
under the Plan. It is based on existing U.S. laws and
regulations, and there can be no assurance that those laws and
regulations will not change in the future. It does not purport
to be complete, and does not discuss the tax consequences of a
recipients death or the provisions of the income tax laws
of any municipality, state or foreign country in which the
recipient may reside.
Incentive Stock Options. An optionee who is granted an
incentive stock option does not recognize taxable income at the
time the option is granted or upon its exercise, although the
exercise is an adjustment item for alternative minimum tax
purposes and may subject the optionee to the alternative minimum
tax. Upon a disposition of the shares more than two years after
grant of the option and one year after exercise of the option,
any gain or loss is treated as long-term capital gain or loss.
If these holding periods are not satisfied, the optionee
recognizes ordinary income at the time of disposition equal to
the difference between the exercise price and the lower of
(i) the fair market value of the shares at the date of the
option exercise or (ii) the sale price of the shares. Any
gain or loss recognized on such a premature disposition of the
shares in excess of the amount treated as ordinary income is
treated as long-term or short-term capital gain or loss,
depending on the holding period. Unless limited by
Section 162(m) of the Code, we generally are entitled to a
deduction in the same amount as the ordinary income recognized
by the optionee.
Nonstatutory Stock Options. An optionee does not
recognize any taxable income at the time he or she is granted a
nonstatutory stock option. Upon exercise, the optionee
recognizes taxable income generally measured by the excess of
the then fair market value of the shares over the exercise
price. Any taxable income recognized in connection with an
option exercise by one of our employees is subject to tax
withholding by us. Unless limited by Section 162(m) of the
Code, we generally are entitled to a deduction in the same
amount as the ordinary income recognized by the optionee. Upon a
disposition of such shares by the optionee, any difference
between the sale price and the optionees exercise price,
to the extent not recognized as taxable income as provided
above, is treated as long-term or short-term capital gain or
loss, depending on the holding period.
Restricted Stock and Restricted Stock Units. A
participant generally will not have taxable income at the time
an award of restricted stock or restricted stock units is
granted. Instead, he or she will recognize ordinary income in
the first taxable year in which his or her interest in the
shares underlying the award becomes either (i) freely
transferable or (ii) no longer subject to substantial risk
of forfeiture (i.e., vested). However, a holder of a restricted
stock award may elect to recognize income at the time he or she
receives the award in an amount equal to the fair market value
of the shares underlying the award (less any amount paid for the
shares) on the date the award is granted.
Stock Appreciation Rights. No taxable income is
reportable when a stock appreciation right is granted to a
participant. Upon exercise, the participant will recognize
ordinary income in an amount equal to the
27
amount of cash received and the fair market value of any shares
received. Any additional gain or loss recognized upon any later
disposition of the shares would be capital gain or loss.
Other Awards. For other awards, the participant will
generally recognize ordinary income in an amount equal to any
cash received and the fair market value of any shares received
on the date of payment or the date of delivery of the shares and
we will generally be entitled to a corresponding tax deduction.
Tax Effect for Gartner. We generally will be entitled to
a tax deduction in connection with an award under the Plan in an
amount equal to the ordinary income realized by a participant
and at the time the participant recognizes such income (for
example, the exercise of a nonstatutory stock option). Special
rules limit the deductibility of compensation paid to our Chief
Executive Officer and to each of its other four most highly
compensated executive officers. Under Section 162(m) of the
Code, the annual compensation paid to any of these specified
executives will be deductible only to the extent that it does
not exceed $1,000,000. However, we can preserve the
deductibility of certain compensation in excess of $1,000,000 if
the conditions of Section 162(m) are met. These conditions
include stockholder approval of the Plan and setting limits on
the number of awards that any individual may receive per year.
The Plan has been designed to permit the Committee to grant
awards that qualify as performance-based for purposes of
satisfying the conditions of Section 162(m) of the Code,
thereby permitting us to receive a federal income tax deduction
in connection with such awards.
PLAN BENEFITS
Except for the common stock equivalent awards granted
automatically to our outside directors, the awards granted under
the Plan are subject to the discretion of the Committee and are
not determinable at this time. Our executive officers and
directors have an interest in this proposal because they are
eligible to receive awards under the Plan. The following table
sets forth with respect to the Plan (a) the total number of
shares of our Class A Common Stock subject to options
granted during the last fiscal year, (b) the average per
share exercise price of such options (c) the total number
of shares of restricted stock granted during the last fiscal
year, (d) the U.S. dollar value of such shares of
restricted stock, based on $12.46 per share, the last
reported trade price for shares on December 31, 2004,
(e) the total number of common stock equivalents granted
during the last fiscal year, and (f) the U.S. dollar
value of such common stock equivalents. No other types of awards
were granted under the Plan during the last fiscal year.
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Number of | |
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Dollar Value | |
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Dollar Value | |
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Average | |
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Shares of | |
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of Shares of | |
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Number of | |
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of Common | |
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Number of | |
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Per Share | |
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Restricted | |
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Restricted | |
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Common | |
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Stock | |
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Options | |
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Exercise | |
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Stock | |
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Stock | |
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Stock | |
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Equivalents | |
Name of Individual or Group |
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Granted | |
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Price($) | |
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Granted | |
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Granted($) | |
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Equivalents | |
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Granted($) | |
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Eugene A. Hall, Chief Executive Officer
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800,000 |
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$ |
12.11 |
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Michael D. Fleisher, Chief Executive Officer
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Alister Christopher, Senior Vice President, Worldwide Events
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12,000 |
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$ |
12.45 |
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Michael McCarty, Senior Vice President, Global Sales
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125,000 |
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$ |
12.17 |
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Robert C. Patton, President, Gartner Consulting
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210,000 |
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$ |
12.11 |
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33,000 |
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$ |
411,180 |
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Clive Taylor, Senior Vice President, International Operations
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Maureen OConnell, President and Chief Operating Officer
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55,000 |
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$ |
12.49 |
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Number of | |
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Dollar Value | |
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Dollar Value | |
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Average | |
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Shares of | |
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of Shares of | |
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Number of | |
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of Common | |
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Number of | |
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Per Share | |
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Restricted | |
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Restricted | |
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Common | |
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Stock | |
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Options | |
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Exercise | |
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Stock | |
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Stock | |
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Stock | |
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Equivalents | |
Name of Individual or Group |
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Granted | |
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Price($) | |
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Granted | |
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Granted($) | |
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Equivalents | |
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Granted($) | |
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Willard Pardue, Jr., President, Gartner Intelligence
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660,000 |
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$ |
11.27 |
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175,000 |
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$ |
2,180,500 |
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All executive officers, as a group
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2,328,500 |
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$ |
11.94 |
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241,000 |
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$ |
3,002,860 |
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All directors who are not executive officers, as a group
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64,000 |
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$ |
11.86 |
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24,824 |
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$ |
301,546 |
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All employees who are not executive officers, as a group
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2,751,899 |
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$ |
12.45 |
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RECOMMENDATION OF OUR BOARD
We believe strongly that the approval of the amended and
restated Plan is essential to our continued success. Our
employees are our most valuable assets. Stock options and other
awards such as those provided under the amended and restated
Plan are vital to our ability to attract and retain outstanding
and highly skilled individuals. Such awards also are crucial to
our ability to motivate employees to achieve our goals. While we
do not have any specific plans or commitments to issue stock
options or awards under the amended and restated Plan at this
time, other than with respect to common stock equivalent awards
automatically granted to outside directors, for the reasons
stated above and to ensure we can continue to grant equity-based
awards to our service providers at levels determined appropriate
by the Board and the Committee of the Board, the stockholders
are being asked to approve the amended and restated Plan.
OUR BOARD RECOMMENDS THAT YOU VOTE FOR APPROVAL
OF THE AMENDED AND RESTATED 2003 LONG-TERM INCENTIVE PLAN.
29
PROPOSAL FIVE
APPROVAL OF AN OFFER BY GARTNER TO BUY BACK CERTAIN
OUTSTANDING OPTIONS FOR CASH AND APPROVAL OF AMENDMENTS TO
CERTAIN STOCK OPTION PLANS TO PERMIT THE OFFER
We currently are considering making an offer to all current and
former employees, except our current executive officers and
directors, to buy back certain outstanding stock options
previously granted under our 1991 Stock Option Plan, 1994 Long
Term Stock Option Plan, 1996 Long Term Stock Option Plan, 1998
Long Term Stock Option Plan and 1999 Stock Option Plan (the
Stock Plans). We are asking our stockholders to
approve the proposed program. The offer to redeem certain
outstanding options under the Stock Plans in exchange for cash
(the offer) would be a one-time offer and
participation would be voluntary. We also are asking our
stockholders to approve an amendment to each Stock Plan, other
than the 1991 Stock Option Plan and the 1999 Stock Option Plan,
to generally permit us to offer to repurchase outstanding
options.
A primary reason for this repurchase offer is that the number of
options outstanding as a percent of the total number of common
shares outstanding (called the overhang) has grown
to an undesirable level, in large part because of the decrease
in our stock price over the last few years. We believe that
continuing with the present level of overhang could result in
the dilution of our stockholders, and could potentially have a
negative impact on our outstanding shares and earnings per
share. We expect that this offer will help us to significantly
reduce the overhang and, as a result, will be beneficial to us
and our stockholders.
In addition, a critical factor in our success has been the
motivation of our employees through appropriate levels of cash
and equity compensation. We consider stock options to be an
important component of such employee compensation. We issued the
currently outstanding stock options that will be the subject of
the offer to provide incentive to our employees to promote
increased stockholder value, to help us attract and retain
personnel responsible for the continued success of our business,
and to reward employees for their contributions to our success.
However, many outstanding options now have exercise prices that
are significantly higher than the current market price for our
stock. These options are commonly referred to as being
underwater. This substantial difference between the
exercise price and the current market price has rendered these
options without value in the current economic environment. By
making this offer to exchange certain underwater options for
cash, we believe we will be able to improve employee morale by
realigning our compensation programs to more closely reflect the
current market and economic conditions.
TEXT OF PROPOSED AMENDMENT
None of the Stock Plans, other than the 1991 Stock Option Plan
and the 1999 Stock Option Plan currently permit us to offer to
repurchase outstanding options granted thereunder. For the
reasons stated above, the Board believes it to be in the best
interests of Gartner and its stockholders to amend each Stock
Plan (other than the 1991 Stock Option Plan and the 1999 Stock
Option Plan) to permit us to offer to repurchase outstanding
options granted under the applicable Stock Plan. The text of the
proposed amendment, the language of which would be added to each
amended Stock Plan, effective upon stockholder approval, is
substantially as follows:
Buyout Provisions. The Committee may at any
time offer to buy from a Participant an Option previously
granted, on such terms and conditions as the Committee shall
establish and communicate to the Participant at the time that
such offer is made.
The precise language of the amendment may be modified on a Stock
Plan-by-Stock Plan basis as necessary to conform to the defined
terms in use under the applicable Stock Plan.
TERMS OF PROPOSED OFFER
For the reasons discussed above, our Board is considering
offering, subject to the approval of our stockholders, a
one-time offer to buy back certain vested and outstanding stock
options for cash, generally structured within the parameters
described below. The approval of the stockholders would permit
us to
30
commence the offer as soon as the Board determines is advisable.
The offer would be made to holders of certain vested and
outstanding options on the terms listed below. We believe that
we will pay out cash for redeemed stock options in an amount
ranging between $6,000,000 and $8,000,000, assuming 100%
participation.
Although the Board intends the offer to be made substantially on
the following terms, the Board reserves the right to change or
add to the terms of the proposed offer. The currently proposed
terms are:
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All current and former employees, except our current executive
officers and directors, will be eligible to participate in this
offer. Participation in the offer will be voluntary. |
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Options eligible to be redeemed in the offer will be those that: |
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(1) |
were granted under the Stock Plans (options granted under the
2003 Long-Term Incentive Plan are not eligible for this offer); |
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(2) |
have an exercise price per share that is at least twenty percent
(20%) above the average closing price of our common stock during
the fourteen (14) trading days prior to the commencement of
the offer; |
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(3) |
are fully vested and outstanding as of the last date on which
the offer remains open for acceptance; and |
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(4) |
are held by eligible current and former employees. |
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Optionholders will be offered the opportunity to elect to cancel
eligible options in exchange for a payment equal to the value of
the outstanding options, as calculated based on the
Black-Scholes valuation technique. |
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The redemption price would be paid in cash to the participants
as soon as practicable after the cancellation of the options. |
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In order to participate, a participant must elect to have all of
his or her eligible options redeemed in the offer. A participant
will not be permitted to have only some of his or her eligible
options purchased by us. |
All eligible options will be vested at the time of the offer;
therefore, the cash amount granted in exchange for the
cancellation of options also will be fully vested.
REASONS FOR THE OFFER
The Board believes that the offer is in the best interests of
Gartner and its stockholders, in that the repurchase of options
held by current and former employees (1) will reduce the
option overhang, (2) will improve employee morale, and
(3) will enable us to realign our equity compensation
programs to more closely reflect the current market and economic
conditions. Additionally, under the terms of the proposed offer,
our current executive officers and directors will not be
eligible to participate in the offer.
MATERIAL TERMS OF STOCK PLANS BEING AMENDED
The material terms of the 1994 Long Term Stock Option Plan (the
1994 Plan), 1996 Long Term Stock Option Plan (the
1996 Plan) and the 1998 Long Term Stock Option Plan
(the 1998 Plan), each as amended by this proposal,
are summarized below. This summary is qualified in its entirety
by reference to each applicable Stock Plan.
General. Each of the Stock Plans being amended was
adopted by our Board and approved by our stockholders. The 1994
Plan, the 1996 Plan and the 1998 Plan each provide for the
issuance of incentive stock options or nonstatutory stock
options to purchase up to 6,560,000 shares,
1,800,000 shares and 2,500,000 shares, respectively.
The 1994 Plan terminated in 2004. Unless sooner terminated by
our Board, the
31
1996 Plan will terminate in 2006 and the 1998 Plan will
terminate in 2008. No options will be granted in the future
under the 1996 Plan or the 1998 Plan.
Purpose. The purpose of the Stock Plans being amended
generally is to attract and retain quality personnel for
positions of substantial responsibility. In addition, the 1994
Plan, the 1996 Plan and the 1998 Plan are intended to create
additional incentive for our senior personnel by offering long
term equity participation in Gartner, and to promote the success
of our business.
Administration. The 1994 Plan, the 1996 Plan and the 1998
Plan may be administered by the Board or a committee appointed
by the Board. With respect to directors and officers who are
subject to Section 16 of the Securities Exchange Act of
1934, as amended (the Exchange Act), these plans
will be administered in a manner designated to comply with
Rule 16b-3 of the Exchange Act, which generally means that
the administering committee will consist of two or more
directors who qualify as non-employee directors
under Rule 16b-3. In the case of awards intended to qualify
as performance based compensation within the meaning
of Section 162(m) of the Code, the committee administering
the 1996 Plan and the 1998 Plan will consist of two or more
outside directors within the meaning of
Section 162(m) of the Code (to enable us to receive a
federal tax deduction for certain compensation paid under the
plans). The Board, the compensation committee or other committee
administering the Stock Plans to be amended is referred to
herein as the Administrator. Under the 1994 Plan,
the 1996 Plan and the 1998 Plan, the Administrator has the power
to determine the terms of the awards, including the authority to
reduce the exercise price of an option or institute an option
exchange program in which options are exchanged for options with
a lower exercise price. The Administrator interprets and
construes the terms of the Stock Plans, and the
Administrators decision is final and binding. The
Administrator may amend the Stock Plans at any time, although
certain amendments require the approval of the stockholders.
Eligibility. Under the 1994 Plan, the 1996 Plan and the
1998 Plan, options may be granted to our senior personnel.
Options. Each option granted under the 1994 Plan, the
1996 Plan and the 1998 Plan is evidenced by a written stock
option agreement between us and the optionee. The terms of and
conditions of such grants are as described below.
Exercise Price. The Administrator determines the exercise
price of options granted under the plans at the time the options
are granted, but with respect to incentive stock options and,
under the 1996 Plan and the 1998 Plan nonstatutory stock options
intended to qualify as performance-based
compensation within the meaning of Section 162(m) of
the Code, the exercise price generally must be at least equal to
the fair market value of our Class A Common Stock on the
date of grant. The exercise price of an incentive stock option
granted to a 10% stockholder may not be less than 110% of the
fair market value on the date such option is granted.
Limitations. Under both the 1994 Plan and the 1996 Plan,
no employee may be granted options under the applicable plan to
purchase more than 500,000 shares in any fiscal year of
ours, except that he or she may be granted options to purchase
up to an additional 500,000 shares in connection with his
or her initial employment. Under the 1998 Plan, no employee may
be granted options to purchase more than 150,000 shares in
any fiscal year of ours, except that he or she may be granted
options to purchase up to an additional 150,000 shares in
connection with his or her initial employment.
Vesting; Option Term. Options vest in accordance with a
schedule determined by the Administrator and indicated in the
option agreement. The term of an option is determined by the
Administrator, provided that no option will be exercisable more
than ten years after the date of grant. However, with respect to
any participant who owns 10% of the voting power of all classes
of our outstanding capital stock, the term must not exceed five
years.
Termination of Employment. After termination of one of
our employees for any reason other than death or disability, he
or she may exercise his or her vested option for the period of
time determined by the Administrator and stated in the option
agreement; however, in no event may an incentive stock option be
exercised more than 3 months after termination. If an
employees employment terminates as a result of death
32
or disability, he or she (or, if the employee has died, the
employees estate or the person who acquires the right to
exercise the option by bequest or inheritance) may exercise the
option, to the extent the option was vested on the date of
termination, within 12 months from the date of such
termination. However, in no event shall any option be
exercisable after the expiration of the term of such option as
set forth in the option agreement.
Merger. In the event of our merger or the sale of
substantially all our assets, each option granted under the 1994
Plan, the 1996 Plan and the 1998 Plan may be assumed or
substituted. Any outstanding options or stock appreciation
rights not assumed or substituted for will be fully vested and
exercisable, including as to shares that would not otherwise
have been vested and exercisable, for a period of up to
15 days from the date of notice to the optionee, and will
thereafter terminate.
Nontransferability of Options. Options granted under the
Stock Plans that are to be amended generally are not
transferable other than by will or the laws of descent and
distribution, and may be exercised during the optionees
lifetime only by the optionee. However, the 1998 Plan allows the
Administrator to provide for the transfer of nonstatutory stock
options to the optionees immediate family.
AMENDED PLAN BENEFITS
No future options will be granted under the Stock Plans being
amended by this proposal. The amount and timing of cash to be
paid in repurchase of eligible outstanding options under the
proposed offer cannot be determined in advance. None of our
current executive officers or directors will be eligible to
participate in the offer, and therefore they do not have an
interest in the proposal to approve the offer.
FEDERAL INCOME TAX CONSEQUENCES OF THE OFFER
For purposes of U.S. federal income tax law, participants
in the offer generally will be subject to ordinary income tax on
the amount of any cash received in exchange for the cancellation
of stock options. The cash payment will be treated as wages and
will be subject to applicable withholding taxes. We generally
will be entitled to a deduction in the same amount as the
ordinary income recognized by the participant.
The above summary is based on existing U.S. laws and
regulations as of the date of this description, and there can be
no assurance that those laws and regulations will not change in
the future. It does not purport to be complete, and does not
discuss the tax consequences of a recipients death or the
provisions of the income tax laws of any municipality, state or
foreign country in which the recipient may reside.
ACCOUNTING TREATMENT OF THE OFFER
If the stockholders approve this proposal, we are currently
considering launching the proposed offer in July 2005. The offer
will be governed by Accounting Principles Board Opinion
No. 25 Accounting for Stock Issued to Employees
(APB 25). Under APB 25, the cash
consideration paid for redeemed stock options is treated as
compensation expense which is a charge to earnings. Assuming
100% participation, this charge would be between $6 and
$8 million, pretax. Additionally, those outstanding options
which we offered to redeem and which were not tendered would be
subject to variable accounting treatment from the day of the
offer onwards, requiring us to take a potential charge each
quarter to the extent the in the money value of those options
increased as measured on the last day of the quarter.
Additionally, to the extent we issue new option grants to those
employees whose options we redeemed within 6 months from
the closing of the offer, those option grants would also be
subject to variable accounting. Any variable accounting
treatment triggered by the proposed offer would cease upon our
adoption of Financial Accounting Standard Boards Statement
of Financial Accounting Standards No. 123 (revised 2004)
Share-Based Payment which is currently required by the
Securities and Exchange Commission to occur on January 1,
2006.
RECOMMENDATION OF OUR BOARD
We believe that the offer will enable us to significantly reduce
our overhang, which currently is at an undesirable level. In
addition, because our employees are our most valuable assets, we
believe strongly that the
33
approval of the offer is an important step in improving employee
morale and enabling us to realign our compensation programs to
more closely reflect the current market and economic conditions.
OUR BOARD RECOMMENDS THAT YOU VOTE FOR APPROVAL
OF THE OFFER TO BUY BACK CERTAIN OUTSTANDING STOCK OPTIONS FOR
CASH AND APPROVAL OF THE AMENDMENTS TO THE 1994 LONG TERM STOCK
OPTION PLAN, 1996 LONG TERM STOCK OPTION PLAN AND 1998 LONG TERM
STOCK OPTION PLAN TO PERMIT OPTION BUYBACKS UNDER EACH SUCH
PLAN.
34
EXECUTIVE OFFICERS
The following individuals were serving as our executive officers
on March 31, 2005:
|
|
|
|
|
|
|
Name |
|
Age | |
|
Position |
|
|
| |
|
|
Eugene A. Hall
|
|
|
48 |
|
|
Chief Executive Officer and Director |
Alister Christopher
|
|
|
44 |
|
|
Senior Vice President, Worldwide Events |
Scott Fertig
|
|
|
46 |
|
|
Senior Vice President & Chief Information Officer |
Robin B. Kranich
|
|
|
34 |
|
|
Senior Vice President, Research Operations and Business
Development |
Christopher Lafond
|
|
|
39 |
|
|
Executive Vice President and Chief Financial Officer |
Michael McCarty
|
|
|
56 |
|
|
Senior Vice President, Global Sales |
Robert C. Patton
|
|
|
44 |
|
|
President, Gartner Consulting |
Lewis G. Schwartz
|
|
|
54 |
|
|
Senior Vice President, General Counsel & Corporate
Secretary |
Peter Sondergaard
|
|
|
41 |
|
|
Senior Vice President, Research Content |
Clive Taylor
|
|
|
50 |
|
|
Senior Vice President, International Operations |
Joseph T. Waters
|
|
|
46 |
|
|
Senior Vice President, Executive Programs |
Gene Hall has been our Chief Executive Officer and
a director since August 2004. Prior to joining us, Mr. Hall
was a senior executive at Automatic Data Processing, serving
most recently as President, Employers Services Major
Accounts Division, a $2 billion human resources and
payroll services business with 8,000 associates. Prior to
joining ADP in 1998, Mr. Hall spent 16 years at
McKinsey & Company, rising to the level of Director
(senior partner). Mr. Hall holds a B.S. in Mechanical
Engineering from the Massachusetts Institute of Technology
(M.I.T.) and received an M.B.A. degree from Harvard Business
School.
Alister Christopher has been our Senior Vice
President, Worldwide Events since June 2003. During his
12 years at Gartner, Mr. Christopher has served in a
variety of roles, including Sales Executive, Director, Sales
Operations in EMEA, VP of EMEA Inside Sales, GVP, North American
Inside Sales and GVP EMEA Sales. Prior to joining us in August
1996, Mr. Christopher spent 10 years in the IT
industry, with, among others, ICL Corporation.
Mr. Christopher studied Business Management at Swansea
College, United Kingdom.
Scott Fertig has been our Chief Information
Officer since August 2002 and is responsible for all internal
and client-facing IT applications worldwide. Prior to joining
Gartner, Mr. Fertig was a principal at Narrowcast Partners,
a strategic business and IT consultancy serving media companies.
Prior to joining Narrowcast Partners in July 2001,
Mr. Fertig served as Chief Information Officer and Chief
Technology Officer of TechRepublic. From April 2000 to August
2000, he consulted for a number of companies, including Gartner.
From December 1996 to April 2000, Mr. Fertig founded and
served as Chief Executive Officer of Mirror World Technologies,
a knowledge management software company. Prior to that,
Mr. Fertig headed up server and internet development for
Software AGs Business Intelligence division.
Mr. Fertig has a B.A. degree from Hampshire College, and a
Master of Science and Master of Philosophy in Computer Science
from Yale University.
Robin Kranich has been our Senior Vice President
Research Operations and Business Development since November
2004. During her more than 10 years at Gartner,
Ms. Kranich has held various roles, including Senior Vice
President and General Manager of Gartner EXP, Vice President and
Chief of Staff to Gartners president and various sales and
sales management roles. Prior to joining us in September 1994,
Ms. Kranich was part of the Technology Advancement Group at
Marriott International. Ms. Kranich holds a degree in
business administration from American University in
Washington, D.C.
Chris Lafond has been our Executive Vice
President, Chief Financial Officer since October 2003. From
January 2002 to October 2003, Mr. Lafond served as Chief
Financial Officer for North America and Latin America. From July
2000 to December 2001, Mr. Lafond was Group Vice President
and North American
35
Controller. Mr. Lafond joined us in March 1995 and has held
several finance positions, including Director of Finance, Vice
President of Finance and Assistant Controller. Prior to joining
us, Mr. Lafond was Senior Financial Planner at
International Business Machines Corporation and an Analyst in
fixed-income asset management at J.P. Morgan Investment
Management. Mr. Lafond holds a bachelors degree from
the University of Connecticut and a masters degree from
the Columbia University Graduate School of Business.
Mike McCarty has been our Senior Vice President of
Global Sales since April 2004. Prior to joining us,
Mr. McCarty spent 13 years with IBM in a variety of
sales and sales management positions. He was also the Executive
Vice President of Sales and Customer Service for HBO &
Company (now part of McKesson Information Solutions) and Liebert
Corporation. He served as president and CEO for Carecentric
Solutions, Multum Information Services and Just Medicine, Inc.
Mr. McCarty holds a Bachelor of Science degree and an M.B.A
degree in Finance from Bowling Green State University.
Bob Patton has been our President, Gartner
Consulting since April 2004. Prior to joining us,
Mr. Patton worked for 13 years at Cap Gemini
Ernst & Young in numerous senior management roles, most
recently as CEO, Government Solutions. Previously, he was
managing director CGE&Y Americas sector. Mr. Patton
holds a B.B.A. in Accounting with honors from the University of
Georgia and is a Certified Public Accountant. He is also a
graduate of the executive leadership program at the J.L. Kellogg
School of Management at Northwestern University.
Lew Schwartz has been our Senior Vice President,
General Counsel and Corporate Secretary since January 2001.
Prior to joining Gartner, Mr. Schwartz was a partner with
the law firm of Shipman & Goodwin LLP, serving on the
firms management committee. Before joining
Shipman & Goodwin, Mr. Schwartz was a partner with
Schatz & Schatz, Ribicoff & Kotkin, an
associate in New York City at Skadden, Arps, Slate,
Meagher & Flom, and an assistant district attorney in
New York County (Manhattan). Mr. Schwartz holds a B.A.
degree from Yale University and a J.D. degree from Cornell Law
School.
Peter Sondergaard has been our Senior Vice
President, Research Content since August 2004. During his
16 years at Gartner, Mr. Sondergaard has held various
roles, including Head of Research for the Technology &
Services Sector, Hardware & Systems Sector Vice
President and General Manager for Gartner Research EMEA.
Mr. Sondergaard started at Gartner as a program director
for Gartners personal computing research area,
specializing in the overall desktop computing issues of European
users. Prior to joining Gartner in November, 1998,
Mr. Sondergaard was research director at International Data
Corporation in Europe. Mr. Sondergaard holds a
Masters degree in economics from the University of
Copenhagen.
Clive Taylor has been our Senior Vice President,
International Operations since February 2004. Mr. Taylor
joined Gartner in January 1995 as Senior Vice President of our
Measurement business. Prior to joining Gartner, Mr. Taylor
spent 16 years in packaged software design and business
consulting at a senior level with companies in Europe and the
United States, including Nynex and Fujitsu. Mr. Taylor
holds a bachelor of science honors degree in production
engineering from the University of Aston in Birmingham, England.
Terry Waters has run our worldwide Executive
Programs business as Senior Vice President, Executive Programs
since January 2005. Prior to rejoining Gartner in August 2002,
Mr. Waters was the chief operating officer for
ScreamingMedia, an Internet content syndication solutions
provider based in New York City. From 1985 to 1999,
Mr. Waters spent 14 years with Gartner in a variety of
senior sales, marketing and product leadership roles, including
head of Eastern Region sales for North America and head of
worldwide marketing. Mr. Waters started his career with
Xerox Corporation, where he spent four years in sales and
product-marketing support. Mr. Waters holds a
bachelors degree in history from the College of the Holy
Cross.
36
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following report by our compensation committee shall not be
deemed to be (i) soliciting material,
(ii) filed with the SEC, (iii) subject to
Regulations 14A or 14C of the Securities Exchange Act of 1934,
or (iv) subject to the liabilities of Section 18 of
the Securities Exchange Act of 1934. The report shall not be
deemed incorporated by reference into any of our other filings
under the Securities Exchange Act of 1934 or the Securities Act
of 1933, except to the extent we specifically incorporate it by
reference into such filing.
Our role is to set overall compensation principles and review
Gartners entire compensation program annually. We also
review and establish the individual compensation levels for our
executive officers and consider the advice of independent,
outside consultants in determining whether the amounts and types
of compensation we pay our executive officers are appropriate.
We also administer our employee stock purchase plan and
long-term equity incentive plans. In discharging these
responsibilities, we consult with outside compensation
consultants, attorneys and other specialists.
The goal of our compensation program is to attract, motivate and
retain highly talented individuals. Our guiding philosophy is
that compensation should be linked to performance. We believe
that the better an individual performs, the higher the
individuals compensation should be. Our compensation
program is designed to balance short and long term financial
objectives, build stockholder value and reward individual, group
and corporate performance. We believe that individual
compensation should be tied to our financial performance so that
when our performance is better than established objectives,
individuals should be paid more and when our financial
performance does not meet our established objectives, incentive
award payments should be reduced. The proportion of an
individuals total compensation that varies with individual
and corporate performance objectives should increase as the
individuals business responsibilities increase. In
addition, we believe that the total compensation package must be
competitive with other companies in our industry to ensure that
we continue to attract, motivate and retain the people who are
critical to our long-term success.
Compensation for our executive officers consists of three
principal components: base salary, short-term incentives and
long-term incentives.
Base Salary. We set base salaries by evaluating the
responsibilities of the position and the experience of the
individual. We reference the competitive marketplace for
executive talent and conduct surveys periodically for comparable
positions at companies with whom we compare for compensation
purposes.
Short-Term Incentives (Cash Bonuses). We designed the
annual bonus component of incentive compensation to align pay
with our short-term (annual) performance. Individual target
bonuses are set based on the competitive marketplace for each
position. For 2004, the percentage of target bonus paid was
based entirely on corporate performance. For 2005, the
percentage of target bonus is based on a sliding scale weighting
of corporate versus individual performance goals based on the
employees position in Gartner, with the bonus for more
senior employees being more heavily weighted towards corporate
performance. For executive officers, bonus payments are based
solely on achievement of company-wide financial performance
objectives
Long-Term Incentives (Stock Plans). The principal equity
components of executive compensation are options and restricted
stock granted under our long-term equity incentive plans. Awards
are often granted at the commencement of employment, with
additional annual grants for promotions or performance. We
believe that ownership of our stock is a key element of our
compensation program and that stock options and restricted stock
provide a retention incentive for our executive officers and
align their personal objectives with long-term stock price
appreciation.
CEO Compensation. Mr. Hall joined Gartner as CEO in
August of 2004 with an annual base salary and target bonus of
$650,000 each. In order to induce Mr. Hall to join Gartner,
we guaranteed the first 12 months of his bonus.
Additionally, we granted Mr. Hall options to
purchase 800,000 shares of our common stock, vesting
over 4 years and 500,000 shares of restricted stock.
The shares of restricted stock lapse only upon Gartners
stock meeting certain price targets between $20 and $30 a share.
We feel that these measures, particularly the restricted stock
grant, tie Mr. Halls compensation to the long term
performance of Gartner and its stock. In 2005, Mr. Hall
will be eligible for additional annual grants.
37
Other Compensation. Other elements of executive
compensation include life insurance and long-term disability
insurance programs and participation in our U.S. profit
sharing plan under which a specified percentage of operating
profit is distributed pro-rata among all employees based on
salary. Executive officers are eligible for company-wide medical
benefits, a supplemental life insurance program, a supplemental
long term disability program, a 401(k) plan under which we
provide matching contributions to all participants and a payroll
deduction employee stock purchase plan under which participants
may purchase our Class A Common Stock at a discounted
price. In 2004, this discounted price was 85% of the lower of
the fair market value of our Class A Common Stock at the
beginning or end of each six-month offering period (up to a
maximum stock value of the lesser of $25,000 per calendar
year or 10 percent of salary). In 2005, we amended our plan
to reduce the discounted price to 95% of the fair market value
of our Class A Common Stock at the end of each six-month
offering period for all offering periods beginning on
June 1, 2005.
The Compensation Committee has considered the potential impact
of Section 162(m) of the Internal Revenue Code adopted
under the Federal Revenue Reconciliation Act of 1993. This
section precludes a public corporation from taking a tax
deduction for individual compensation in excess of
$1 million for its chief executive officer or any of its
four other highest-paid officers. This section also provides for
certain exemptions to this limitation, specifically compensation
that is performance based within the meaning of
Section 162(m). The Compensation Committee has approved
awards to executives that are performance based and deductible
under Section 162(m). However, the Compensation Committee
may from time to time approve compensation that is not
deductible under this Section.
|
|
|
COMPENSATION COMMITTEE OF THE |
|
BOARD OF DIRECTORS |
|
|
Maynard G. Webb, Jr. (Chairman) |
|
Michael J. Bingle |
|
Jeffrey W. Ubben |
38
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table provides information about compensation paid
by us to (i) those individuals serving as our Chief
Executive Officer during 2004, (ii) the other four most
highly compensated executive officers who served as executive
officers as of December 31, 2004, and (iii) two
additional individuals who would have been among our four most
highly compensated Executive Officers had they continued to
serve as executive officers on December 31, 2004
(collectively, the Named Executive Officers).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term | |
|
|
|
|
|
|
|
|
Compensation Awards | |
|
|
|
|
|
|
Annual | |
|
| |
|
|
|
|
|
|
Compensation(1) | |
|
|
|
|
|
|
|
|
| |
|
Restricted Stock | |
|
Securities | |
|
All Other | |
Name and Principal Position |
|
Year | |
|
Salary($) | |
|
Bonus($)(2) | |
|
Award($)(3) | |
|
Underlying | |
|
Compensation($)(4) | |
|
|
| |
|
| |
|
| |
|
| |
|
Options(#)- | |
|
| |
Eugene A.
Hall(5)
|
|
|
2004 |
|
|
$ |
263,749 |
|
|
$ |
270,833 |
|
|
$ |
6,025,000 |
|
|
|
800,000 |
|
|
$ |
28,766 |
|
|
Chief Executive Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael D.
Fleisher(6)
|
|
|
2004 |
|
|
$ |
442,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
3,542,835 |
|
|
Chief Executive Officer |
|
|
2003 |
|
|
|
650,000 |
|
|
|
442,000 |
|
|
|
|
|
|
|
250,000 |
|
|
|
16,544 |
|
|
|
|
|
2002 |
|
|
|
500,000 |
|
|
|
450,000 |
|
|
|
|
|
|
|
250,000 |
|
|
|
16,451 |
|
Alister
Christopher(7)
|
|
|
2004 |
|
|
$ |
342,850 |
|
|
$ |
155,479 |
|
|
|
|
|
|
|
12,000 |
|
|
$ |
49,753 |
|
|
Senior Vice President, Worldwide Events |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael
McCarty(8)
|
|
|
2004 |
|
|
$ |
235,208 |
|
|
$ |
196,706 |
|
|
|
|
|
|
|
125,000 |
|
|
$ |
33,020 |
|
|
Senior Vice President, Global Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert C.
Patton(9)
|
|
|
2004 |
|
|
$ |
337,500 |
|
|
$ |
785,000 |
|
|
$ |
394,680 |
|
|
|
210,000 |
|
|
$ |
12,790 |
|
|
President, Gartner Consulting |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Clive
Taylor(10)
|
|
|
2004 |
|
|
$ |
340,040 |
|
|
$ |
105,572 |
|
|
|
|
|
|
|
|
|
|
$ |
40,622 |
|
|
Senior Vice President, International Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maureen
OConnell(11)
|
|
|
2004 |
|
|
$ |
464,054 |
|
|
$ |
575,000 |
|
|
|
|
|
|
|
55,000 |
|
|
$ |
3,194,805 |
|
|
President and |
|
|
2003 |
|
|
|
518,740 |
|
|
|
416,000 |
|
|
|
|
|
|
|
250,000 |
|
|
|
12,758 |
|
|
Chief Operating Officer |
|
|
2002 |
|
|
|
136,538 |
|
|
|
400,000 |
|
|
|
|
|
|
|
650,000 |
|
|
|
1,550 |
|
Willard
Pardue, Jr.(12)
|
|
|
2004 |
|
|
$ |
379,166 |
|
|
$ |
264,654 |
|
|
$ |
1,951,250 |
|
|
|
660,000 |
|
|
$ |
1,625,450 |
|
|
President, Gartner Intelligence |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
The amounts shown exclude certain perquisites and other personal
benefits, such as car allowances. These amounts, in the
aggregate, did not equal or exceed the lesser of $50,000 or
10 percent of the total annual salary and bonus for each
executive officer. |
|
(2) |
The amounts shown include bonuses earned in the year noted
although such amounts are payable in the subsequent year. The
amounts shown exclude bonuses paid in the year noted but earned
in prior years. |
|
(3) |
The following restricted stock grants were made to Named
Executive Officers during 2004
(i) Mr. Hall 500,000 shares; The
terms under which the restrictions on these shares lapse is
described in the description of Mr. Halls employment
agreement below. The market value of these shares at
December 31, 2004 was $6,225,000;
(ii) Mr. Patton 33,000 shares. The
market value of these shares at December 31, 2004 was
$411,180; and (iii) Mr. Pardue
175,000 shares. Mr. Pardue forfeited his entire
restricted stock reward upon his resignation in October 2004. |
|
(4) |
For 2004, the amounts shown represents: (i) premiums paid
for life insurance: Mr. Hall $11,850,
Mr. Fleisher $4,370;
Mr. McCarty $7,170; Mr. Patton
$2,090; Ms. OConnell $1,760;
Mr. Pardue $4,830; (ii) premiums paid for
long term disability insurance: Mr. Fleisher
$3,654; Mr. Patton $4,421;
Ms. OConnell $4,288;
Mr. Pardue $1,621; (iii) matching and
profit sharing contributions under our defined benefit plans:
Mr. McCarty $7,250; Mr. Patton
$6,279; |
39
|
|
|
Mr. Christopher $34,338;
Mr. Taylor $40,622;
Ms. OConnell $5,200;
Mr. Pardue $5,200; (iv) relocation
expenses: Mr. Hall $16,916;
Mr. McCarty $18,600;
Mr. Pardue $69,570; (v) severance
payments: Mr. Fleisher $3,534,811;
Ms. OConnell $3,173,557;
Mr. Pardue $1,544,229; (vi) living away
from home allowance: Mr. Christopher $15,365;
and (vii) legal fees: Ms. OConnell
$10,000. |
|
(5) |
Mr. Hall was elected Chief Executive Officer in August 2004. |
|
(6) |
Mr. Fleisher resigned as Chief Executive Officer in August
2004. Mr. Fleishers last day of employment was
October 30, 2004. |
|
(7) |
The position of Senior Vice President, Worldwide Events was
elevated to the executive officer level in November 2004. |
|
(8) |
Represents compensation received from April 2004, the start date
of Mr. McCartys employment. Mr. McCartys
bonus includes a $40,625 sign on bonus and a $81,250 retention
bonus. |
|
(9) |
Represents compensation received from April 2004, the start date
of Mr. Pattons employment. Mr. Pattons
bonus includes a $200,000 sign on bonus and a $225,000 retention
bonus. |
|
|
(10) |
Mr. Taylor was appointed Senior Vice President,
International Operations in February 2004. |
|
(11) |
Ms. OConnell resigned as of October 21, 2004.
Ms. OConnells bonus consisted of a $575,000
retention bonus. |
|
(12) |
Represents compensation received from January 2004, the start
date of Mr. Pardues employment. Mr. Pardue
resigned as of November 5, 2004. Mr. Pardues
bonus includes a $14,654 sign on bonus and a $250,000 retention
bonus. |
OPTIONS GRANTED IN 2004 TO THE NAMED EXECUTIVE OFFICERS
The following table provides information regarding stock options
to purchase our Class A Common Stock granted to the Named
Executive Officers during 2004:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potential Realizable | |
|
|
Individual Grant(1) | |
|
|
|
Value at Assumed Annual | |
|
|
| |
|
|
|
Stock Price Rates of | |
|
|
Number of | |
|
% of Total Options | |
|
|
|
|
|
Appreciation for | |
|
|
Securities | |
|
Granted to | |
|
Exercise | |
|
|
|
Option Term(2) | |
|
|
Underlying | |
|
Employees | |
|
Price Per | |
|
Expiration | |
|
| |
Name |
|
Options | |
|
in Fiscal Year | |
|
Share | |
|
Date | |
|
5% | |
|
10% | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Eugene A. Hall
|
|
|
800,000 |
|
|
|
15.68 |
% |
|
$ |
12.11 |
|
|
|
8/16/14 |
|
|
$ |
6,092,731 |
|
|
$ |
15,440,177 |
|
Alister Christopher
|
|
|
12,000 |
|
|
|
0.24 |
|
|
|
12.45 |
|
|
|
6/01/14 |
|
|
|
93,957 |
|
|
|
238,105 |
|
Michael McCarty
|
|
|
75,000 |
|
|
|
1.47 |
|
|
|
11.96 |
|
|
|
5/17/14 |
|
|
|
564,118 |
|
|
|
1,429,587 |
|
|
|
|
50,000 |
|
|
|
0.98 |
|
|
|
12.49 |
|
|
|
6/07/14 |
|
|
|
392,745 |
|
|
|
995,292 |
|
Robert C. Patton
|
|
|
150,000 |
|
|
|
2.94 |
|
|
|
11.96 |
|
|
|
5/17/14 |
|
|
|
1,128,237 |
|
|
|
2,859,174 |
|
|
|
|
60,000 |
|
|
|
1.18 |
|
|
|
12.49 |
|
|
|
6/07/14 |
|
|
|
471,294 |
|
|
|
1,194,351 |
|
Maureen OConnell
|
|
|
55,000 |
|
|
|
1.08 |
|
|
|
12.49 |
|
|
|
6/07/14 |
|
|
|
432,019 |
|
|
|
1,094,821 |
|
Willard Pardue, Jr.
|
|
|
600,000 |
|
|
|
11.76 |
|
|
|
11.15 |
|
|
|
2/04/14 |
|
|
|
4,207,305 |
|
|
|
10,662,137 |
|
|
|
|
60,000 |
|
|
|
1.18 |
|
|
|
12.49 |
|
|
|
6/07/14 |
|
|
|
471,294 |
|
|
|
1,194,351 |
|
|
|
(1) |
These options were granted under our 2003 Long Term Incentive
Plan and are subject to its terms. These options vest in equal
annual installments on the anniversary of the date of grant.
Mr. Halls option vests over a four-year period, and
all of the other options vest over a three-year period. |
|
(2) |
Shown are the hypothetical gains or option spreads that would
exist for the respective options. These gains are based on
assumed rates of annual compounded stock price appreciation on
our Class A Common Stock of 5% and 10% from the date the
option was granted over the option term of ten years. The 5% and
10% assumed rates of appreciation are mandated by SEC rules and
do not represent our projection of future increases in the price
of our Class A Common Stock. |
40
OPTIONS EXERCISED IN 2004 BY THE NAMED EXECUTIVE OFFICERS AND
2004 YEAR-END OPTION VALUES
The following table provides information regarding options
exercised by each Named Executive Officer during fiscal 2004,
the number of unexercised options at fiscal year-end and the
value of unexercised in-the-money options at fiscal
year-end:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities | |
|
Value of Unexercised | |
|
|
Number of | |
|
|
|
Underlying Unexercised | |
|
In-the-Money Options at | |
|
|
Shares | |
|
|
|
Options at Year-End | |
|
Year-End($)(1) | |
|
|
Acquired | |
|
Value | |
|
| |
|
| |
Name |
|
on Exercise | |
|
Realized($) | |
|
Exercisable | |
|
Unexercisable | |
|
Exercisable | |
|
Unexercisable | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Eugene A. Hall
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
800,000 |
|
|
$ |
|
|
|
$ |
280,000 |
|
Michael D. Fleisher
|
|
|
1,165,417 |
|
|
$ |
3,456,648 |
|
|
|
412,417 |
|
|
|
229,166 |
|
|
|
64,894 |
|
|
|
768,851 |
|
Alister Christopher
|
|
|
|
|
|
|
|
|
|
|
97,662 |
|
|
|
31,665 |
|
|
|
219,926 |
|
|
|
73,223 |
|
Michael McCarty
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
125,000 |
|
|
|
|
|
|
|
37,500 |
|
Robert C. Patton
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
210,000 |
|
|
|
|
|
|
|
75,000 |
|
Clive Taylor
|
|
|
|
|
|
|
|
|
|
|
136,435 |
|
|
|
7,665 |
|
|
|
351,163 |
|
|
|
15,170 |
|
Maureen OConnell
|
|
|
352,084 |
|
|
|
1,703,977 |
|
|
|
72,917 |
|
|
|
449,166 |
|
|
|
0 |
|
|
|
1,733,871 |
|
Willard Pardue, Jr.
|
|
|
|
|
|
|
|
|
|
|
140,000 |
|
|
|
|
|
|
|
157,200 |
|
|
|
|
|
|
|
(1) |
The values for in-the-money options represent the
difference between the exercise price of the options and the
closing price of our Class A Common Stock on
December 31, 2004, which was $12.46 per share. |
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
Our Compensation Committee currently consists of
Messrs. Bingle, Smith and Webb. No member of our
Compensation Committee is a current or former officer or
employee of Gartner or any of our subsidiaries. None of our
executive officers has served on the board of directors or on
the compensation committee of any other entity that had an
executive officer serving on our Board or our Compensation
Committee.
EMPLOYMENT AGREEMENTS WITH EXECUTIVE OFFICERS
Gene
Hall. Mr. Hall entered
into an Employment Agreement effective August 4, 2004 (the
Hall Agreement). Under the agreement, Mr. Hall
serves as our Chief Executive Officer through July 31,
2007, and thereafter for subsequent one-year periods unless
either party provides ninety days written notice not to renew.
During the term of the agreement, we agree to include
Mr. Hall on our slate of nominees to be elected to our
Board.
Mr. Halls initial base salary is $650,000, subject to
annual adjustments by our Board or Compensation Committee.
Mr. Halls annual target bonus is equal to 100% of his
base salary and is based on the achievement of specified company
and individual objectives. Mr. Halls bonus may be
higher or lower than the target bonus amount based on over- or
under- achievement of the objectives, but in no event shall the
bonus exceed 200% of his base salary. Mr. Halls bonus
for the first twelve months of his employment is guaranteed
at 100% of his target bonus. Additionally, we agreed to provide
Mr. Hall with an automobile and a driver during his
employment term.
Pursuant to the agreement, Mr. Hall received a grant on
August 16, 2004 of options to purchase 800,000 of our
Class A Common Stock at a price of $12.11 per share.
These stock options vest in four equal annual installments on
the anniversary of the date of grant. Mr. Hall also
received a grant of 500,000 shares of restricted stock on
October 15, 2004. The restrictions on these shares will
lapse upon the earlier of (a) our 60-day average stock
price meeting certain targets, or (b) a change in control.
The price targets are $20 for the first 300,000 shares, $25
for the next 100,000 shares and $30 for the remaining
100,000 shares.
Mr. Halls employment is at will and may be terminated
by him or us upon sixty days notice. If we terminate
Mr. Halls employment involuntarily without Business
Reasons (as defined in the agreement) or a Constructive
Termination (as defined in the agreement) occurs, or if we do
not renew the agreement upon its
41
expiration and Mr. Hall terminates his employment within
ninety days following the expiration of the agreement,
Mr. Hall will be entitled to receive: (a) his base
salary for twenty-four months, payable in accordance with our
regular payroll schedule; (b) 200% of his target bonus for
the year in which the termination occurs, and any earned but
unpaid bonus from the prior year; and (c) continued vesting
for twenty-four months other than any award that vests pursuant
to performance-based criteria.
If a Change in Control (as defined in the agreement) occurs,
Mr. Hall will be entitled to receive: (a) three times
his base salary then in effect; (b) three times his minimum
target bonus for the fiscal year in which the Change in Control
occurs (plus any unpaid bonus from the prior fiscal year);
(c) acceleration in full of his option grant and the
lapsing of all restrictions on his restricted stock grant;
(d) at our cost, group health benefits pursuant to our
standard programs for himself, his spouse and any children for
three years after the Change in Control; and (e) any
Gross-Up Payments (as defined in the agreement) for
Mr. Halls excise tax liabilities.
Alister Christopher. Mr. Christopher entered
into a service agreement on August 18, 2003 with our UK
subsidiary, Gartner Group UK Limited. Under the agreement,
Mr. Christopher serves as our Senior Vice President,
Worldwide Events until the earlier of his 60th birthday or the
date that the agreement is terminated by either party, provided,
however, that Gartner must give Mr. Christopher
12 months notice, or provide payment of the amount of his
target earnings in lieu of notice.
Mr. Christophers base salary is
£180,000 per annum and his discretionary bonus is
£85,000, subject to Gartner meeting its performance targets
and his meeting his defined personal objectives. We agreed to
contribute an amount equal to 6% of Mr. Christophers
base salary to our UK defined contribution pension scheme. This
amount increases to 8% after two years of service. Additionally,
we agreed to provide Mr. Christopher with either a car with
a lease value of £850 per month, or a car allowance of
£1,000 per month. On April 14, 2005, our
Compensation Committee approved a change in
Mr. Christophers discretionary bonus target to
£108,000.
Clive Taylor. Mr. Taylor entered into a
service agreement on December 21, 2004 with our UK
subsidiary, Gartner Group UK Limited. Under the agreement,
Mr. Taylor serves as our Senior Vice President,
International Operations until the earlier of his 60th birthday
or the date that the agreement is terminated by either party,
provided, however, that Gartner must give Mr. Taylor
12 months notice, or provide payment of the amount of his
target earnings in lieu of notice.
Mr. Taylors base salary is £188,000 per
annum and his discretionary bonus is £94,000 subject to
Gartner meeting its performance targets and his meeting his
defined personal objectives. We agreed to contribute an amount
equal to 6% of Mr. Taylors base salary to our UK
defined contribution pension scheme. The amount rises to 8%
after two years of service. Additionally, we agreed to provide
Mr. Taylor with a car or car allowance.
Executive Officers. Other than
Messrs. Christopher, Sondergaard and Taylor, who are
employed by our UK subsidiary, and our CEO, we do not have
long-term employment agreements with any of our executive
officers. Each of our executive officers is covered by
Gartners Executive Benefits Program which provides that
upon termination without cause, each of our executive officers
will be entitled to receive: (a) 12 months base salary
then in effect; (b) at our cost, group health benefits
pursuant to our standard programs for the executive, the
executives spouse and any children for one year after the
termination date; and (c) 90 days following the
termination to exercise all options vested as of the termination
date. In the event that there is a change of control and the
executive is terminated without cause within 12 months
after the change in control, all of the executives
outstanding equity awards issued subsequent to the adoption of
the program will immediately vest and the executive will have
12 months to exercise his or her awards. Additionally, the
program provides for an annual physical examination and an
annual lump sum payment of $15,000 per year in lieu of any
other perquisites to be provided by Gartner. The lump sum
payment and other benefits are grossed up so as to be tax
neutral to the executive.
42
AUDIT COMMITTEE REPORT
Our Board has appointed an Audit Committee consisting of three
independent directors, as defined under current New
York Stock Exchange listing standards and the Sarbanes-Oxley Act
of 2002 (the Act).
We operate under a written charter adopted by our Board. We
review the charter at least annually and we last modified the
charter in January 2004. We hold regularly scheduled meetings at
least four times each fiscal year and we meet more frequently as
appropriate. We have the power and funding to retain independent
counsel and other advisers as we deem necessary to carry out our
duties as required by Section 301 of the Act.
We are directly responsible for the appointment, compensation
and oversight of the independent auditors, including
establishing the independence of the auditors, approving the
engagement letter describing the scope of the audit and
resolving disagreements between management and the auditors
regarding financial reporting, for the purpose of issuing an
audit report in connection with our financial statements. The
auditors report directly to us. By meeting regularly with
independent auditors and internal auditing, operating and
financial management personnel, we oversee matters relating to
accounting standards, policies and practices, changes to these
standards, polices and practices and the effects of any changes
on our financial statements, financial reporting practices and
the quality and adequacy of internal controls. Additionally our
internal audit function reports directly to the Audit Committee.
KPMG LLP, an independent registered public accounting firm, has
audited our financial statements since September 1996. During
2004, KPMG performed recurring audit services, including the
examination of our annual financial statements, limited reviews
of quarterly financial information and certain statutory audits.
KPMG also performed services for us in other business areas. The
following table sets forth the fees billed for these
professional services during 2003 and 2004.
|
|
|
|
|
|
|
|
|
|
|
2004 | |
|
2003 | |
|
|
| |
|
| |
Audit
Fees(1):
|
|
$ |
1,823,584 |
|
|
$ |
806,145 |
|
Audit Related
Fees(2):
|
|
|
45,045 |
|
|
|
48,000 |
|
Tax
Fees(3):
|
|
|
700,044 |
|
|
|
533,828 |
|
All Other Fees:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
$ |
2,568,673 |
|
|
$ |
1,387,973 |
|
|
|
|
|
|
|
|
|
|
(1) |
Audit fees consisted of audit work performed on consolidated
financial statements, as well as work normally performed by KPMG
in connection with statutory and regulatory filings. |
|
(2) |
Audit related fees consisted primarily of audits of our employee
benefit plan, as well as an audit of a foreign subsidiary not
required by statute or regulation. |
|
(3) |
Tax fees are fees associated with tax compliance in foreign
locations, tax advice, and tax planning. |
The Audit Committees policy is to pre-approve all audit
and permissible non-audit services provided by KPMG. These
services may include audit services, audit-related services, tax
services and other services. Pre-approval is generally provided
for up to one year and any pre-approval is detailed as to the
particular service or category of services and is generally
subject to a specific budget. KPMG and management are required
to periodically report to the Audit Committee regarding the
extent of services provided by KPMG in accordance with this
pre-approval, and the fees for the services performed to date.
The Audit Committee may also pre-approve particular services on
a case-by-case basis. All of the services relating to the fees
set forth on the above table were pre-approved by the Audit
Committee.
We reviewed and discussed our audited financial statements for
2004 with management and KPMG. We also discussed with KPMG the
matters required by Statement on Auditing Standards No. 61
(Communications with Audit Committees), as amended. This
included a discussion of our auditors judgments as to the
quality, not just the acceptability, of our accounting
principles, and other matters that generally accepted auditing
standards require to be discussed with an audit committee. We
also received the written disclosures and the letter from KPMG
required by Independence Standards Board Standard No. 1
(Independence
43
Discussion with Audit Committees) and discussed with KPMG their
independence. We have determined that the provision of all
non-audit services by KPMG is compatible with the auditors
independence.
Based on our review and discussions noted above, we recommended
to our Board, and our Board approved, that the audited financial
statements be included in our Annual Report on Form 10-K
for the fiscal year ended December 31, 2004.
We have reappointed KPMG as our independent registered public
accounting firm for 2005. We are not asking stockholders to
ratify this appointment since the Act requires that the audit
committee have the sole responsibility for appointing the
independent auditors. A representative of KPMG will be at the
Annual Meeting, will have the opportunity to make a statement
and will answer appropriate questions.
|
|
|
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS |
|
|
Stephen G. Pagliuca (Chairman) |
|
Max D. Hopper |
|
James C. Smith |
44
COMPARISON OF TOTAL CUMULATIVE STOCKHOLDER RETURN
The following graph compares our Class A Common Stock
performance to the performance of Standard &
Poors Stock 400 Index and a Peer Group Index.
Our Peer Group Index consists of The Corporate Executive Board
Company, Forrester Research, Inc., and META Group, Inc. These
companies represent the most significant publicly traded
companies that we believe compete with us in our most important
line of business: independent research and analysis on
information technology, computer hardware, software,
communications and related technology industries. There are no
publicly traded information technology research companies that
also compete with us in our consulting and events businesses.
The comparison assumes $100.00 was invested on
September 30, 1999 in our Class A Common Stock and in
each of the indices, and assumes the reinvestment of dividends,
if any.
The comparisons in the graph below are provided in response to
SEC disclosure requirements and are not intended to forecast or
be indicative of future performance of our Class A Common
Stock.
45
OTHER INFORMATION
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Based on our review of information on file with the Securities
and Exchange Commission and our stock records, the following
table provides certain information about beneficial ownership of
our Class A and Class B Common Stock as of
May 12, 2005 by: (i) each person (or group of
affiliated persons) which is known by us to own beneficially
more than five percent of our Class A or Class B
Common Stock, (ii) each of our directors, (iii) each
Named Executive Officer, and (iv) all directors and current
executive officers as a group. Unless otherwise indicated, the
address for those listed below is c/o Gartner, Inc., 56 Top
Gallant Road, Stamford, CT 06904. Except as indicated by
footnote, and subject to applicable community property laws, the
persons named in the table have sole voting and investment power
with respect to all shares of Common Stock shown as beneficially
owned by them.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of | |
|
|
|
Number of | |
|
|
Name of Beneficial Owner |
|
Class A Shares | |
|
Percent of | |
|
Class B Shares | |
|
Percent of | |
|
|
| |
|
Class A | |
|
| |
|
Class B | |
|
|
|
|
| |
|
|
|
| |
Michael J.
Bingle(1)
|
|
|
37,740,128 |
|
|
|
42.10 |
% |
|
|
|
|
|
|
|
|
Anne Sutherland
Fuchs(2)
|
|
|
26,001 |
|
|
|
|
* |
|
|
|
|
|
|
|
|
William O.
Grabe(2)
|
|
|
95,001 |
|
|
|
|
* |
|
|
|
|
|
|
|
|
Max D.
Hopper(2)
|
|
|
42,001 |
|
|
|
|
* |
|
|
|
|
|
|
|
|
Glenn H.
Hutchins(3)
|
|
|
37,740,128 |
|
|
|
42.10 |
% |
|
|
|
|
|
|
|
|
Stephen G.
Pagliuca(4)
|
|
|
60,001 |
|
|
|
|
* |
|
|
|
|
|
|
|
|
James C.
Smith(5)
|
|
|
112,334 |
|
|
|
|
* |
|
|
|
|
|
|
|
|
Maynard G.
Webb, Jr.(6)
|
|
|
42,001 |
|
|
|
|
* |
|
|
|
|
|
|
|
|
Jeffrey W.
Ubben(7)
|
|
|
11,918,200 |
|
|
|
13.30 |
% |
|
|
5,122,546 |
|
|
|
22.65% |
|
Eugene A.
Hall(8)
|
|
|
501,298 |
|
|
|
|
* |
|
|
|
|
|
|
|
|
Alister
Christopher(9)
|
|
|
113,495 |
|
|
|
|
* |
|
|
|
|
|
|
|
|
Michael
McCarty(10)
|
|
|
41,667 |
|
|
|
|
* |
|
|
|
|
|
|
|
|
Robert C.
Patton(11)
|
|
|
103,000 |
|
|
|
|
* |
|
|
|
|
|
|
|
|
Clive
Taylor(12)
|
|
|
140,601 |
|
|
|
|
* |
|
|
|
|
|
|
|
|
All current directors, director nominees and current executive
officers as a group
(20 persons)(13)
|
|
|
51,509,510 |
|
|
|
56.81 |
% |
|
|
5,122,546 |
|
|
|
22.65% |
|
Wellington Management Company,
LLP.(14)
|
|
|
6,646,660 |
|
|
|
7.42 |
% |
|
|
|
|
|
|
|
|
|
75 State Street, Boston, MA 02109
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Entities Affiliated with Silver Lake Partners,
L.P.(15)
|
|
|
37,740,128 |
|
|
|
42.10 |
% |
|
|
|
|
|
|
|
|
|
2725 Sand Hill Road, Suite 150, Menlo Park, CA 94025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VA Partners,
L.L.C.(16)
|
|
|
11,913,200 |
|
|
|
13.29 |
% |
|
|
5,122,546 |
|
|
|
22.65% |
|
|
One Maritime Plaza, Suite 1400, San Francisco,
CA 94111 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Less than 1%
|
|
|
|
(1) |
Silver Lake Partners, L.P., Silver Lake Investors, L.P. and
Silver Lake Technology Investors, L.L.C. own
37,740,128 shares of Class A Common Stock. Silver Lake
Technology Associates, L.L.C. is the General Partner of each of
Silver Lake Partners, L.P. and Silver Lake Investors, L.P.
Silver Lake Technology Management, L.L.C. is the manager of
Silver Lake Technology Investors, L.L.C. Mr. Bingle is a
Managing Director of each of Silver Lake Technology Associates,
L.L.C. and of Silver Lake Technology Management, L.L.C. As such,
Mr. Bingle could be deemed to have shared voting or
dispositive power over these shares. Mr. Bingle, however,
disclaims beneficial ownership in these shares, except to the
extent of his pecuniary interest therein. |
46
|
|
|
|
|
(2) |
Includes 21,001 shares of Class A Common Stock
issuable upon the exercise of stock options that are exercisable
within 60 days of May 12, 2005. |
|
|
|
(3) |
Silver Lake Partners, L.P., Silver Lake Investors, L.P. and
Silver Lake Technology Investors, L.L.C. own
37,740,128 shares of Class A Common Stock. Silver Lake
Technology Associates, L.L.C. is the General Partner of each of
Silver Lake Partners, L.P. and Silver Lake Investors, L.P.
Silver Lake Technology Management, L.L.C. is the manager of
Silver Lake Technology Investors, L.L.C. Mr. Hutchins is a
Managing Member of each of Silver Lake Technology Associates,
L.L.C. and of Silver Lake Technology Management, L.L.C. As such,
Mr. Hutchins could be deemed to have shared voting or
dispositive power over these shares. Mr. Hutchins, however,
disclaims beneficial ownership in these shares, except to the
extent of his pecuniary interest therein. |
|
|
|
(4) |
Includes 21,001 shares of Class A Common Stock
issuable upon the exercise of stock options that are exercisable
within 60 days of May 12, 2005, and includes
10,000 shares of Class A Common Stock that are owned
by Mr. Pagliuca indirectly. |
|
|
|
|
(5) |
Includes 12,334 shares of Class A Common Stock
issuable upon the exercise of stock options that are exercisable
within 60 days of May 12, 2005. |
|
|
|
|
(6) |
Includes 22,001 shares of Class A Common Stock
issuable upon the exercise of stock options that are exercisable
within 60 days of May 12, 2005. |
|
|
|
|
(7) |
ValueAct Capital Master Fund, L.P. and ValueAct Capital Partners
Co-Investment, L.P. own 11,913,200 shares of our
Class A Common Stock and 5,122,546 shares of our
Class B Common Stock. VA Partners, L.L.C. is the General
Partner of each of these entities. Mr. Ubben is a Managing
Member of VA Partners, L.L.C. As such, Mr. Ubben could be
deemed to have shared voting or dispositive power over these
shares. Mr. Ubben, however, disclaims beneficial ownership
in these shares, except to the extent of his pecuniary interest
therein. Also includes 5,000 shares of Class A Common Stock
issuable upon the exercise of stock options that are exercisable
within 60 days of May 12, 2005. |
|
|
|
(8) |
Includes 500,000 shares of restricted stock. |
|
|
|
(9) |
Includes 113,495 shares of Class A Common Stock
issuable upon the exercise of stock options that are exercisable
within 60 days of May 12, 2005. |
|
|
|
|
(10) |
Includes 41,667 shares of Class A Common Stock
issuable upon the exercise of stock options that are exercisable
within 60 days of May 12, 2005. |
|
|
|
(11) |
Includes 70,000 shares of Class A Common Stock
issuable upon the exercise of stock options that are exercisable
within 60 days of May 12, 2005, and 33,000 shares
of restricted stock. |
|
|
|
(12) |
Includes 134,001 shares of Class A Common Stock
issuable upon the exercise of stock options that are exercisable
within 60 days of May 12. |
|
|
|
(13) |
Includes 1,037,477 shares of Class A Common Stock
issuable upon the exercise of stock options that are exercisable
within 60 days of May 12, 2005 and 533,084 shares
of restricted stock. |
|
|
(14) |
The shares shown as beneficially owned by Wellington Management
Company, LLP were reported in its Schedule 13G filed with
the SEC on February 14, 2005. |
|
(15) |
Represents shares owned by a group of investment funds
affiliated with Silver Lake Partners, L.P., the General Partner
of which is Silver Lake Technology Associates, including
(i) 34,755,105 shares owned by Silver Lake Partners,
L.P.; (ii) 998,701 shares owned by Silver Lake
Investors, L.P.; and (iii) 1,986,322 shares owned by
Silver Lake Technology Investors, L.L.C. |
|
|
(16) |
Represents shares owned by a group of investments whose General
Partner is VA Partners, L.L.C., including:
11,913,200 shares of Class A Common Stock and
5,122,546 shares of Class B Common Stock owned by
ValueAct Capital Master Fund, L.P. and by ValueAct Capital
Partners Co-Investors, L.P. |
|
47
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of March 31,
2005, regarding the number of shares of our Class A Common
Stock that may be issued under our equity compensation plans.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Column C | |
|
|
|
|
|
|
Number of Securities | |
|
|
Column A | |
|
Column B | |
|
Remaining Available | |
|
|
Number of Securities | |
|
Weighted-Average | |
|
for Future Issuance | |
|
|
to be Issued Upon | |
|
Exercise Price of | |
|
Under Equity | |
|
|
Exercise of | |
|
Outstanding | |
|
Compensation Plans | |
|
|
Outstanding Options, | |
|
Options, Warrants | |
|
(Excluding Securities | |
|
|
Warrants and Rights | |
|
and Rights | |
|
in Column A) | |
|
|
| |
|
| |
|
| |
Equity Compensation Plans Approved by Stockholders Stock option
plans
|
|
|
13,943,496 |
(1) |
|
$ |
14.91 |
|
|
|
3,738,108 |
(2) |
|
2002 Employee Stock Purchase Plan
|
|
|
|
|
|
|
N/A |
|
|
|
2,460,327 |
|
Equity Compensation Plans Not Approved by Stockholders
|
|
|
10,476,757 |
(3) |
|
|
10.96 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
24,420,253 |
(4) |
|
$ |
12.95 |
|
|
|
6,198,435 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Consists of the 1991 Stock Option Plan, the 1993 Directors
Stock Option Plan, the 1994 Long-Term Option Plan, the 1996
Long-Term Option Plan, the 1998 Long Term Stock Option Plan and
the 2003 Long Term Incentive Plan. |
|
(2) |
Consists of the 2003 Long-Term Incentive Plan. |
|
(3) |
Consists of the 1999 Stock Option Plan. In November 1999, we
adopted the 1999 Stock Option Plan. Under the terms of the plan,
our Board of Directors could grant non-qualified and incentive
stock options and other awards to eligible employees and
consultants. Gartners directors and most highly
compensated executive officers were not eligible for awards
under the plan. Substantially all of the options currently
granted under the plan vest and become fully exercisable each
year for three years in equal installments following the date of
grant, based on continued employment, and have a term of ten
years from the date of grant assuming continued employment. |
|
(4) |
These options have a remaining average life of 5.87 years. |
CERTAIN RELATIONSHIPS AND TRANSACTIONS
RELATIONSHIP WITH SILVER LAKE PARTNERS, L.P.
On April 17, 2000, we issued and sold an aggregate of
$300 million principal amount of our unsecured
6% Convertible Junior Subordinated Promissory Notes due
April 17, 2005 to Silver Lake Partners, L.P.
(Silver Lake) and certain of Silver Lakes
affiliates and to Integral Capital Partners IV, L.P. and
one of its affiliates. In October 2003, these notes were
converted into 49,441,122 shares of our Class A Common
Stock. The determination of the number of shares issued upon the
conversion was based upon a $7.45 conversion price and a
convertible note of $368.3 million, consisting of the
original face amount of $300 million plus accrued interest
of $68.3 million. In connection with the issuance of the
notes, we agreed, among other things, that Silver Lake would
recommend two nominees for director and we would include two
Silver Lake nominees on our slate of nominees to be elected to
our Board. This obligation exists while Silver Lake owns
Class A Common Stock representing at least 20 percent
of the amount of Class A Common Stock into which the notes
were converted.
Silver Lake purchased $112,200 in research and consulting
services from us during 2004 and has contracted to purchase
subscription research services from us in 2005 in the amount of
$113,700.
48
RELATIONSHIPS WITH OTHER THIRD PARTIES
Several of our other directors are employed by companies that
purchase our research and consulting services in the ordinary
course of their business. The following table shows the amount
of research and consulting services purchased by each company
during 2004 and the amount for which each company has signed
commitments to date for 2005:
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Company |
|
2004 | |
|
2005 | |
|
Affiliated Director | |
|
|
| |
|
| |
|
| |
Bain Capital, Inc.
|
|
$ |
107,635 |
|
|
$ |
91,550 |
|
|
|
Pagliuca |
|
Ebay, Inc.
|
|
$ |
164,000 |
|
|
$ |
37,250 |
|
|
|
Webb |
|
General Atlantic Partners, L.P.
|
|
$ |
407,500 |
|
|
$ |
205,000 |
|
|
|
Grabe |
|
Value Act Capital
|
|
$ |
113,265 |
|
|
$ |
16,734 |
|
|
|
Ubben |
|
MISCELLANEOUS
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934
requires our executive officers, directors and persons who
beneficially own more than 10% of either class of our Common
Stock to file reports of ownership and changes of ownership with
the SEC and to furnish us with copies of the reports they file.
Based solely on our review of the reports received by us, or
written representations from certain reporting persons, we
believe that all reports were timely filed, except for:
(a) one late Form 4 filed jointly by ValueAct Capital
and its affiliates and Jeffrey Ubben on July 6, 2004 to
show purchases of our Class A Common Stock made between
December 31, 2003 and May 12, 2004; (b) the grant
of an option to Lew Schwartz made on December 13, 2002
which was not reported on a timely-filed Form 4, but was
subsequently reported on a Form 5 filed on
February 11, 2005, and one late Form 4 filed by
Mr. Schwartz on May 14, 2004 to show a sale of stock
made by him on May 11, 2004; and (c) an amended
Form 3 was filed by Peter Sondergaard on November 15,
2004 to add certain holdings that were omitted from his original
Form 3 filed on November 10, 2004.
SOLICITATION OF PROXIES
We will bear the entire cost of this solicitation of proxies,
including the preparation, assembly, printing, and mailing of
this Proxy Statement, the proxy, and any additional solicitation
material that we may provide to stockholders. Copies of
solicitation material will be provided to brokerage firms,
fiduciaries and custodians holding shares in their names that
are beneficially owned by others so that they may forward the
solicitation material to such beneficial owners. In addition, we
have retained Georgeson Shareholder Communications, Inc. to act
as a proxy solicitor in conjunction with the meeting. We have
agreed to pay that firm $15,000, plus reasonable out of pocket
expenses, for proxy solicitation services. The original
solicitation of proxies by mail may be supplemented by
solicitation by telephone, telegram and other means by our
directors, officers and employees. No additional compensation
will be paid to these individuals for any such services.
INCORPORATION BY REFERENCE
The information set forth in Part II, Item 6;
Part II, Items 7 and 7A; and Part II, Item 8
of our Annual Report on Form 10-K for the fiscal year ended
December 31, 2004 has been incorporated herein by reference.
49
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS FOR OUR 2005
ANNUAL MEETING
If you want to make a proposal for consideration at next
years Annual Meeting and have it included in our proxy
materials, we must receive your proposal by December 31,
2005, and the proposal must comply with the rules of the
Securities and Exchange Commission.
If you want to make a proposal for consideration at next
years Annual Meeting without having the proposal included
in our proxy materials, we must receive your proposal at least
90 days prior to the 2006 Annual Meeting. If we give less
than 100 days notice of the 2006 Annual Meeting, we
must receive your proposal within ten days after we give the
notice.
If we do not receive your proposal by the appropriate deadline,
then it may not be brought before the 2006 Annual Meeting.
Proposals should be addressed to the Corporate Secretary,
Gartner, Inc., 56 Top Gallant Road,
P.O. Box 10212, Stamford, Connecticut 06904-2212.
|
|
|
THE BOARD OF DIRECTORS GARTNER, INC. |
|
|
|
|
Lewis G. Schwartz |
|
Corporate Secretary |
Stamford, Connecticut
May 24, 2005
50
APPENDIX A-1
RESTATED
CERTIFICATE OF INCORPORATION
OF GARTNER, INC.
a Delaware corporation
(originally incorporated on June 1, 1990 under the name
GGI Holding Corporation)
This Restated Certificate of Incorporation has been duly
adopted by the Corporations Board of Directors and
Stockholders in accordance with the applicable provisions of
Section 242 and 245 of the General Corporation Law of the
State of Delaware.
ARTICLE I
The name of the corporation is Gartner, Inc. (the
Corporation).
ARTICLE II
The address of the Corporations registered office in the
State of Delaware is 2711 Centerville Road, Suite 400, City
of Wilmington 19808, County of New Castle. The name of its
registered agent at such address is The Corporation Service
Company.
ARTICLE III
The nature of the business or purposes to be conducted or
promoted is to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law
of Delaware.
ARTICLE IV
1. Authorized Stock. This corporation is authorized
to issue two classes of stock to be designated, respectively,
common stock and preferred stock. The
total number of shares which this corporation is authorized to
issue is two hundred fifty-five million (255,000,000) shares.
Two hundred fifty million (250,000,000) shares shall be
designated common stock (the Common
Stock), of which one hundred sixty-six million
(166,000,000) shares shall be designated Common Stock,
Class A (the Class A Common Stock)
and eighty-four million (84,000,000) shares shall be designated
Common Stock, Class B (the Class B Common
Stock). Five million (5,000,000 shares)
shall be designated preferred stock (the Preferred
Stock), all of which are presently undesignated as to
series.
Each share of Preferred Stock shall have a par value of $0.01
and each share of Common Stock shall have a par value of $0.0005.
2. Common Stock. The Class A Common
Stock and the Class B Common Stock shall be identical in
all respects, except as otherwise expressly provided herein, and
the relative powers, preferences, rights, qualifications,
limitations and restrictions of the shares of Class A
Common Stock and Class B Common Stock shall be as
follows:
(a) Cash or Property Dividends. Subject to
the rights and preferences of the Preferred Stock as set forth
in any resolution or resolutions of the Board of Directors
providing for the issuance of such stock pursuant to this
Article IV, and except as otherwise provided for herein,
the holders of Class A Common Stock and Class B Common
Stock are entitled to receive dividends out of assets legally
available therefor at such times and in such per share amounts
as the Board of Directors may from time to time determine;
provided that whenever a cash dividend is paid, the same amount
shall be paid in respect of each outstanding share of
Class A Common Stock and Class B Common Stock.
(b) Stock Dividends. If at any time a
dividend is to be paid in shares of Class A Common Stock or
shares of Class B Common Stock (a stock
dividend), such stock dividend may be declared and paid
only as
A1-1
follows: only Class A Common Stock may be paid to
holders of Class A Common Stock and only Class B Common
Stock may be paid to holders of Class B Common Stock, and
whenever a stock dividend is paid, the same rate or ratio of
shares shall be paid in respect of each outstanding share of
Class A Common Stock and Class B Common Stock.
(c) Stock Subdivisions and Combinations. The
Corporation shall not subdivide, reclassify or combine stock of
either class of Common Stock without at the same time making a
proportionate subdivision or combination of the other
class.
(d) Voting. Voting power shall be divided
between the classes and series of stock as follows:
(i) With respect to the election of directors,
holders of Class A Common Stock and holders of Voting
Preferred Stock (as defined below), voting together, shall be
entitled to elect that number of directors which constitutes 20%
of the authorized number of members of the Board of Directors
(or, if such 20% is not a whole number, then the nearest lower
whole number of directors that is closest to 20% of such
membership) (the Class A Directors).
Each share of Class A Common Stock shall have one vote in
the election of the Class A Directors and each share of
Voting Preferred Stock shall have a number of votes in the
election of the Class A Directors as specified in the
resolution of the Board of Directors authorizing such Voting
Preferred Stock. Holders of Class B Common Stock shall be
entitled to elect the remaining directors (the
Class B Directors). Each share of
Class B Common Stock shall have one vote in the election of
such directors. For purposes of this Section (2)(d) and
Section (2)(e) of this Article IV, references to the
authorized number of members of the Board of Directors (or the
remaining directors) shall not include any directors which the
holders of any shares of Preferred Stock may have the right to
elect upon the failure of the Corporation to pay regular
dividends on such Preferred Stock as and when due for a
specified period of time. For purposes of this
Section (2)(d), Special Voting Rights
means the different voting rights of the holders of
Class A Common Stock, holders of Class B Common Stock
and holders of Voting Preferred Stock with respect to the
election of the applicable percentage of the authorized number
of members of the Board of Directors as described in this
Section (2)(d)(i). Voting Preferred
Stockmeans shares of each series of Preferred Stock
upon which the right to vote for directors has been conferred in
accordance with Section (3) of this Article IV,
except for any right to elect directors which may be provided
upon the failure of the Corporation to pay regular dividends on
such Preferred Stock as and when due for a specified period of
time.
(ii) Subject to the last sentence of this
Section (2)(d)(ii), notwithstanding anything to the
contrary contained in Section 2(d)(i) of this
Article IV, for so long as any person or entity or group of
persons or entities acting in concert beneficially own 15% or
more of the outstanding shares of Class B Common Stock,
then in any election of directors or other exercise of voting
rights with respect to the election or removal of directors,
such person, entity or group shall only be entitled to vote (or
otherwise exercise voting rights with respect to) a number of
shares of Class B Common Stock that constitutes a
percentage of the total number of shares of Class B Common
Stock then outstanding which is less than or equal to such
person, entity or groups Entitled Voting Percentage. For
the purposes hereof, a person, entity or groups
Entitled Voting Percentage at any time shall mean
the percentage at such time of the then outstanding shares of
Class A Common Stock beneficially owned by such person,
entity or group. For purposes of this Section (2)(d)(ii), a
beneficial owner of Common Stock includes any person
or entity or group of persons or entities who, directly or
indirectly, including through any contract, arrangement,
understanding, relationship or otherwise, written or oral,
formal or informal, control the voting power (which includes the
power to vote or to direct the voting) of such Common Stock. The
provisions of this Section (2)(d)(ii) shall be effective
only following (A) the distribution by IMS Health
Incorporated (IMS HEALTH) to its stockholders of all
of the Class B Common Stock owned by it, (B) the
receipt of a private letter ruling from the Internal Revenue
Service (the IRS) to the effect that the terms of
this Section (2)(d)(ii) will not have any adverse effect on
the private letter ruling issued by the IRS to IMS Health on
April 14, 1999 and any other private letter ruling issued
by the IRS to IMS Health or any predecessor or former parent of
IMS Health and (C) the approval of the terms of this
Section (2)(d)(ii) by the New York Stock Exchange, Inc. or
any other national securities exchange or automated quotation
service on which the Common Stock is then listed or admitted for
trading.
A1-2
(iii) Any Class A Director may be removed only
for cause, by a vote of a majority of the votes held by the
holders of Class A Common Stock and holders of Voting
Preferred Stock, voting together as a class. Any Class B
Director may be removed only for cause, by a vote of a majority
of the votes held by the holders of Class B Common Stock,
voting separately as a class.
(iv) Except as otherwise specified herein, the
holders of Class A Common Stock and holders of Class B
Common Stock (A) shall in all matters not otherwise
specified in this Section (2)(d) of this Article IV
vote together (including, without limitation, with respect to
increases or decreases in the authorized number of shares of any
class of Common Stock), with each share of Class A Common
Stock and Class B Common Stock having one vote, and
(B) shall be entitled to vote as separate classes only when
required by law to do so under mandatory statutory provisions
that may not be excluded or overridden by a provision in the
Certificate of Incorporation or as provided herein.
(v) Except as set forth in this Section (2)(d)
of this Article IV, the holders of Class A Common
Stock shall have exclusive voting power (except for any voting
powers of any Preferred Stock) on all matters at any time when
no Class B Common Stock is issued and outstanding, and the
holders of Class B Common Stock shall have exclusive voting
power (except for any voting powers of any Preferred Stock) on
all matters at any time when no Class A Common Stock is
issued and outstanding.
(e) Vacancies; Increase or Decreases in Size of
the Board of Directors. Any vacancy in the office of a
director created by the death, resignation or removal of a
director elected by (or appointed on behalf of) the holders of
the Class B Common Stock or the holders of the Class A
Common Stock and Voting Preferred Stock voting together as a
class, as the case may be, may be filled by the vote of the
majority of the directors (or the sole remaining director)
elected by (or appointed on behalf of) such holders of
Class B Common Stock or Class A Common Stock and
Voting Preferred Stock (or on behalf of whom that director was
appointed), as the case may be, whose death, resignation or
removal created the vacancy, unless there are no such directors,
in which case such vacancy may be filled by the vote of the
majority of the directors or by the sole remaining director,
regardless, in each instance, of any quorum requirements set out
in the By-laws. Any director elected by some or all of the
directors to fill a vacancy shall hold office for the remainder
of the full term of the director whose vacancy is being filled
and until such directors successor shall have been elected
and qualified unless removed and replaced pursuant to
Section (2)(d)(iii) of this Article IV and this
Section (2)(e). All newly-created directorships resulting
from an increase in the authorized number of directors shall be
allocated between Class A Directors and Class B
Directors such that at all times the number of directorships
reserved for Class A Directors shall be 20% of the
authorized number of members of the Board of Directors (or, if
such 20% is not a whole number, then the nearest lower whole
number of directors that is closest to 20% of such membership)
and the remaining directorships are reserved for Class B
Directors. No decrease in the number of directors constituting
the Board of Directors shall shorten the term of any incumbent
director. If the number of directors is changed, any increase or
decrease shall be apportioned among the classes of directors
established pursuant to Article V so as to maintain the
number of directors in each class as nearly equal as
possible.
(f) Merger or Consolidation. In case of any
consolidation of the Corporation with one or more other
corporations or a merger of the Corporation with another
corporation, each holder of a share of Class A Common Stock
shall be entitled to receive with respect to such share the same
kind and amount of shares of stock and other securities and
property (including cash) receivable upon such consolidation or
merger by a holder of a share of Class B Common Stock, and
each holder of a share of Class B Common Stock shall be
entitled to receive with respect to such share the same kind and
amount of shares of stock and other securities and property
(including cash) receivable upon such consolidation or merger by
a holder of a share of Class A Common Stock; provided that,
in any such transaction, the holders of shares of Class A
Common Stock and the holders of shares of Class B Common
Stock may receive different kinds of shares of stock if the only
difference in such shares is the inclusion of voting rights
which continue the Special Voting Rights.
(g) Liquidation. In the event of any
liquidation, dissolution or winding up of the Corporation, the
holders of the Class A Common Stock and Class B Common
Stock shall participate equally per share in any distribution to
stockholders, without distinction between classes.
A1-3
Immediately upon the filing of this Restated Certificate of
Incorporation, each outstanding share of this corporations
Common Stock, Class A, and each outstanding share of this
corporations Common Stock, Class B, will be
reclassified and exchanged, automatically and without further
action on the part of any holder thereof or otherwise, for one
share of Common Stock.
3.2. Preferred
Stock. Any Preferred Stock not previously designated as to
series may be issued from time to time in one or more series
pursuant to a resolution or resolutions providing for such issue
duly adopted by the Board of Directors (authority to do so being
hereby expressly vested in the Board), and such resolution or
resolutions shall also set forth the voting powers, full or
limited or none, of each such series of Preferred Stock and
shall fix the designations, preferences and relative,
participating, optional or other special rights and
qualifications, limitations or restrictions of each such series
of Preferred Stock. The Board of Directors is authorized to
alter the designation, rights, preferences, privileges and
restrictions granted to or imposed upon any wholly unissued
series of Preferred Stock and, within the limits and
restrictions stated in any resolution or resolutions of the
Board of Directors originally fixing the number of shares
constituting any series of Preferred Stock, to increase or
decrease (but not below the number of shares of any such series
then outstanding) the number of shares of any such series
subsequent to the issue of shares of that series.
Each share of Preferred Stock issued by the Corporation, if
reacquired by the Corporation (whether by redemption,
repurchase, conversion to Common Stock or other means), shall
upon such reacquisition resume the status of authorized and
unissued shares of Preferred Stock, undesignated as to series
and available for designation and issuance by the Corporation in
accordance with the immediately preceding paragraph.
ARTICLE V
The directors, other than those who may be elected solely by the
holders of any class or series of Preferred Stock, if any, shall
be classified, with respect to the time for which they severally
hold office, into three classes, as nearly equal in number as
possible, as determined by the Board of Directors, one class
(Class I) To hold office initially for a
term expiring at the first annual meeting of stockholders to be
held after the date this Article V becomes effective (the
Classified Board Effective Date), another
class (Class II)to hold office initially
for a term expiring at the second annual meeting of stockholders
to be held after the Classified Board Effective Date, and
another class (Class III) to hold office
initially for a term expiring at the third annual meeting of
stockholders to be held after the Classified Board Effective
Date, with the members of each class to hold office until their
successors are elected and qualified. Directors elected by a
class or series of stock, or if applicable, classes or series of
stock voting together, shall be divided as evenly as possible,
and shall be allocated by the Board of Directors, among
Class I, Class II and Class III. At each annual
meeting of stockholders, the successors of the class of
directors whose term expires at that meeting shall be elected to
hold office for a term expiring at the annual meeting of
stockholders held in the third year following the year of their
election.
ARTICLE VI
In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the by-laws of the
Corporation.
ARTICLE VII
Meetings of stockholders may be held within or without the State
of Delaware, as the by-laws of the Corporation may provide. The
books of the Corporation may be kept outside the State of
Delaware at such place or places as may be designated from time
to time by the Board of Directors or in the by-laws of the
Corporation. Election of directors need not be by written ballot
unless the by-laws of the Corporation so provide.
A1-4
ARTICLE VIII
To the fullest extent permitted by the General Corporation Law
of the State of Delaware as the same exists or may hereafter be
amended, a director of the Corporation shall not be liable to
the Corporation or its stockholders for monetary damages for a
breach of fiduciary duty as a director. Any repeal or
modification of this Article VIII shall not adversely
affect any right or protection of a director of the Corporation
existing at the time of such repeal or modification.
ARTICLE IX
The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Restated Certificate in
the manner now or hereafter prescribed herein and by the laws of
the State of Delaware, and all rights conferred upon
stockholders herein are granted subject to this reservation.
IN WITNESS WHEREOF, the undersigned has executed this
certificate on July 16,
1999.[ ].
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Michael D. Fleisher |
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Executive Vice President and |
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Chief Financial Officer |
A1-5
APPENDIX A-2
RESTATED
CERTIFICATE OF INCORPORATION
OF GARTNER, INC.
a Delaware corporation
(originally incorporated on June 1, 1990 under the name
GGI Holding Corporation)
This Restated Certificate of Incorporation has been duly
adopted by the Corporations Board of Directors and
Stockholders in accordance with the applicable provisions of
Section 242 and 245 of the General Corporation Law of the
State of Delaware.
ARTICLE I
The name of the corporation is Gartner, Inc. (the
Corporation).
ARTICLE II
The address of the Corporations registered office in the
State of Delaware is 2711 Centerville Road, Suite 400, City
of Wilmington 19808, County of New Castle. The name of its
registered agent at such address is Corporation Service Company.
ARTICLE III
The nature of the business or purposes to be conducted or
promoted is to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law
of Delaware.
ARTICLE IV
1. Authorized Stock. This corporation is authorized
to issue two classes of stock to be designated, respectively,
common stock and preferred stock. The
total number of shares which this corporation is authorized to
issue is two hundred fifty-five million (255,000,000) shares.
Two hundred fifty million (250,000,000) shares shall be
designated common stock (the Common
Stock), of which one hundred sixty-six million
(166,000,000) shares shall be designated Common Stock,
Class A (the Class A Common Stock)
and eighty-four million (84,000,000) shares shall be designated
Common Stock, Class B (the Class B Common
Stock). Five million (5,000,000 shares) shall be
designated preferred stock (the Preferred
Stock), all of which are presently undesignated as to
series.
Each share of Preferred Stock shall have a par value of $0.01
and each share of Common Stock shall have a par value of $0.0005.
2. Common Stock. The Class A Common Stock and
the Class B Common Stock shall be identical in all
respects, except as otherwise expressly provided herein, and the
relative powers, preferences, rights, qualifications,
limitations and restrictions of the shares of Class A
Common Stock and Class B Common Stock shall be as follows:
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(a) Cash or Property Dividends. Subject to the
rights and preferences of the Preferred Stock as set forth in
any resolution or resolutions of the Board of Directors
providing for the issuance of such stock pursuant to this
Article IV, and except as otherwise provided for herein,
the holders of Class A Common Stock and Class B Common
Stock are entitled to receive dividends out of assets legally
available therefor at such times and in such per share amounts
as the Board of Directors may from time to time determine;
provided that whenever a cash dividend is paid, the same amount
shall be paid in respect of each outstanding share of
Class A Common Stock and Class B Common Stock. |
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(b) Stock Dividends. If at any time a dividend is to
be paid in shares of Class A Common Stock or shares of
Class B Common Stock (a stock dividend), such
stock dividend may be declared and paid |
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only as follows: only Class A Common Stock may be paid to
holders of Class A Common Stock and only Class B Common
Stock may be paid to holders of Class B Common Stock, and
whenever a stock dividend is paid, the same rate or ratio of
shares shall be paid in respect of each outstanding share of
Class A Common Stock and Class B Common Stock. |
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(c) Stock Subdivisions and Combinations. The
Corporation shall not subdivide, reclassify or combine stock of
either class of Common Stock without at the same time making a
proportionate subdivision or combination of the other class. |
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(d) Voting. Voting power shall be divided between
the classes and series of stock as follows: |
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(i) With respect to the election of directors, holders of
Class A Common Stock and holders of Voting Preferred Stock
(as defined below), voting together, shall be entitled to elect
that number of directors which constitutes 20% of the authorized
number of members of the Board of Directors (or, if such 20% is
not a whole number, then the nearest lower whole number of
directors that is closest to 20% of such membership) (the
Class A Directors). Each share of
Class A Common Stock shall have one vote in the election of
the Class A Directors and each share of Voting Preferred
Stock shall have a number of votes in the election of the
Class A Directors as specified in the resolution of the
Board of Directors authorizing such Voting Preferred Stock.
Holders of Class B Common Stock shall be entitled to elect
the remaining directors (the Class B
Directors). Each share of Class B Common Stock
shall have one vote in the election of such directors. For
purposes of this Section (2)(d) and Section (2)(e) of
this Article IV, references to the authorized number of
members of the Board of Directors (or the remaining directors)
shall not include any directors which the holders of any shares
of Preferred Stock may have the right to elect upon the failure
of the Corporation to pay regular dividends on such Preferred
Stock as and when due for a specified period of time. For
purposes of this Section (2)(d), Special Voting
Rights means the different voting rights of the
holders of Class A Common Stock, holders of Class B
Common Stock and holders of Voting Preferred Stock with respect
to the election of the applicable percentage of the authorized
number of members of the Board of Directors as described in this
Section (2)(d)(i). Voting Preferred
Stockmeans shares of each series of Preferred Stock
upon which the right to vote for directors has been conferred in
accordance with Section (3) of this Article IV,
except for any right to elect directors which may be provided
upon the failure of the Corporation to pay regular dividends on
such Preferred Stock as and when due for a specified period of
time. |
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(ii) Subject to the last sentence of this
Section (2)(d)(ii), notwithstanding anything to the
contrary contained in Section 2(d)(i) of this
Article IV, for so long as any person or entity or group of
persons or entities acting in concert beneficially own 15% or
more of the outstanding shares of Class B Common Stock,
then in any election of directors or other exercise of voting
rights with respect to the election or removal of directors,
such person, entity or group shall only be entitled to vote (or
otherwise exercise voting rights with respect to) a number of
shares of Class B Common Stock that constitutes a
percentage of the total number of shares of Class B Common
Stock then outstanding which is less than or equal to such
person, entity or groups Entitled Voting Percentage. For
the purposes hereof, a person, entity or groups
Entitled Voting Percentage at any time shall mean
the percentage at such time of the then outstanding shares of
Class A Common Stock beneficially owned by such person,
entity or group. For purposes of this Section (2)(d)(ii), a
beneficial owner of Common Stock includes any person
or entity or group of persons or entities who, directly or
indirectly, including through any contract, arrangement,
understanding, relationship or otherwise, written or oral,
formal or informal, control the voting power (which includes the
power to vote or to direct the voting) of such Common Stock. The
provisions of this Section (2)(d)(ii) shall be effective
only following (A) the distribution by IMS Health
Incorporated (IMS HEALTH) to its stockholders of all
of the Class B Common Stock owned by it, (B) the
receipt of a private letter ruling from the Internal Revenue
Service (the IRS) to the effect that the terms of
this Section (2)(d)(ii) will not have any adverse effect on
the private letter ruling issued by the IRS to IMS Health on
April 14, 1999 and any other private letter ruling issued
by the IRS to IMS Health or any predecessor or former parent of
IMS Health and (C) the approval of the terms of this |
A2-2
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Section (2)(d)(ii) by the New York Stock Exchange, Inc. or
any other national securities exchange or automated quotation
service on which the Common Stock is then listed or admitted for
trading. |
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(iii) Any Class A Director may be removed only for
cause, by a vote of a majority of the votes held by the holders
of Class A Common Stock and holders of Voting Preferred
Stock, voting together as a class. Any Class B Director may
be removed only for cause, by a vote of a majority of the votes
held by the holders of Class B Common Stock, voting
separately as a class. |
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(iv) Except as otherwise specified herein, the holders of
Class A Common Stock and holders of Class B Common
Stock (A) shall in all matters not otherwise specified in
this Section (2)(d) of this Article IV vote together
(including, without limitation, with respect to increases or
decreases in the authorized number of shares of any class of
Common Stock), with each share of Class A Common Stock and
Class B Common Stock having one vote, and (B) shall be
entitled to vote as separate classes only when required by law
to do so under mandatory statutory provisions that may not be
excluded or overridden by a provision in the Certificate of
Incorporation or as provided herein. |
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(v) Except as set forth in this Section (2)(d) of this
Article IV, the holders of Class A Common Stock shall
have exclusive voting power (except for any voting powers of any
Preferred Stock) on all matters at any time when no Class B
Common Stock is issued and outstanding, and the holders of
Class B Common Stock shall have exclusive voting power
(except for any voting powers of any Preferred Stock) on all
matters at any time when no Class A Common Stock is issued
and outstanding. |
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(e) Vacancies; Increase or Decreases in Size of the
Board of Directors. Any vacancy in the office of a director
created by the death, resignation or removal of a director
elected by (or appointed on behalf of) the holders of the
Class B Common Stock or the holders of the Class A
Common Stock and Voting Preferred Stock voting together as a
class, as the case may be, may be filled by the vote of the
majority of the directors (or the sole remaining director)
elected by (or appointed on behalf of) such holders of
Class B Common Stock or Class A Common Stock and
Voting Preferred Stock (or on behalf of whom that director was
appointed), as the case may be, whose death, resignation or
removal created the vacancy, unless there are no such directors,
in which case such vacancy may be filled by the vote of the
majority of the directors or by the sole remaining director,
regardless, in each instance, of any quorum requirements set out
in the By-laws. Any director elected by some or all of the
directors to fill a vacancy shall hold office for the remainder
of the full term of the director whose vacancy is being filled
and until such directors successor shall have been elected
and qualified unless removed and replaced pursuant to
Section (2)(d)(iii) of this Article IV and this
Section (2)(e). All newly-created directorships resulting
from an increase in the authorized number of directors shall be
allocated between Class A Directors and Class B
Directors such that at all times the number of directorships
reserved for Class A Directors shall be 20% of the
authorized number of members of the Board of Directors (or, if
such 20% is not a whole number, then the nearest lower whole
number of directors that is closest to 20% of such membership)
and the remaining directorships are reserved for Class B
Directors. No decrease in the number of directors constituting
the Board of Directors shall shorten the term of any incumbent
director. If the number of directors is changed, any
increase or decrease shall be apportioned among the classes of
directors established pursuant to Article V so as to
maintain the number of directors in each class as nearly equal
as possible. |
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(f) Merger or Consolidation. In case of any
consolidation of the Corporation with one or more other
corporations or a merger of the Corporation with another
corporation, each holder of a share of Class A Common Stock
shall be entitled to receive with respect to such share the same
kind and amount of shares of stock and other securities and
property (including cash) receivable upon such consolidation or
merger by a holder of a share of Class B Common Stock, and
each holder of a share of Class B Common Stock shall be
entitled to receive with respect to such share the same kind and
amount of shares of stock and other securities and property
(including cash) receivable upon such consolidation or merger by
a holder of a share of Class A Common Stock; provided that,
in any such transaction, the holders of shares of Class A
Common Stock and the holders of shares of Class B Common
Stock may receive |
A2-3
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different kinds of shares of stock if the only difference in
such shares is the inclusion of voting rights which continue the
Special Voting Rights. |
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(g) Liquidation. In the event of any liquidation,
dissolution or winding up of the Corporation, the holders of the
Class A Common Stock and Class B Common Stock shall
participate equally per share in any distribution to
stockholders, without distinction between classes. |
3. Preferred Stock. Any Preferred Stock not
previously designated as to series may be issued from time to
time in one or more series pursuant to a resolution or
resolutions providing for such issue duly adopted by the Board
of Directors (authority to do so being hereby expressly vested
in the Board), and such resolution or resolutions shall also set
forth the voting powers, full or limited or none, of each such
series of Preferred Stock and shall fix the designations,
preferences and relative, participating, optional or other
special rights and qualifications, limitations or restrictions
of each such series of Preferred Stock. The Board of Directors
is authorized to alter the designation, rights, preferences,
privileges and restrictions granted to or imposed upon any
wholly unissued series of Preferred Stock and, within the limits
and restrictions stated in any resolution or resolutions of the
Board of Directors originally fixing the number of shares
constituting any series of Preferred Stock, to increase or
decrease (but not below the number of shares of any such series
then outstanding) the number of shares of any such series
subsequent to the issue of shares of that series.
Each share of Preferred Stock issued by the Corporation, if
reacquired by the Corporation (whether by redemption,
repurchase, conversion to Common Stock or other means), shall
upon such reacquisition resume the status of authorized and
unissued shares of Preferred Stock, undesignated as to series
and available for designation and issuance by the Corporation in
accordance with the immediately preceding paragraph.
ARTICLE V
The directors, other than those who may be elected
solely by the holders of any class or series of Preferred Stock,
if any, shall be classified, with respect to the time for which
they severally hold office, into three classes, as nearly equal
in number as possible, as determined by the Board of Directors,
one class (Class I) To hold office
initially for a term expiring at the first annual meeting of
stockholders to be held after the date this Article V
becomes effective (the Classified Board Effective
Date), another class
(Class II)to hold office initially for a
term expiring at the second annual meeting of stockholders to be
held after the Classified Board Effective Date, and another
class (Class III) to hold office
initially for a term expiring at the third annual meeting of
stockholders to be held after the Classified Board Effective
Date, with the members of each class to hold office until their
successors are elected and qualified. Directors elected by a
class or series of stock, or if applicable, classes or series of
stock voting together, shall be divided as evenly as possible,
and shall be allocated by the Board of Directors, among
Class I, Class II and Class III. At each annual
meeting of stockholders, the successors of the class of
directors whose term expires at that meeting shall be elected to
hold office for a term expiring at the annual meeting of
stockholders held in the third year following the year of their
election.
ARTICLE VI In furtherance and not in
limitation of the powers conferred by statute, the Board of
Directors of the Corporation is expressly authorized to make,
alter or repeal the by-laws of the Corporation.
ARTICLE VIIVI
Meetings of stockholders may be held within or without the State
of Delaware, as the by-laws of the Corporation may provide. The
books of the Corporation may be kept outside the State of
Delaware at such place or places as may be designated from time
to time by the Board of Directors or in the by-laws of the
Corporation. Election of directors need not be by written ballot
unless the by-laws of the Corporation so provide.
A2-4
ARTICLE VIIIVII
To the fullest extent permitted by the General Corporation Law
of the State of Delaware as the same exists or may hereafter be
amended, a director of the Corporation shall not be liable to
the Corporation or its stockholders for monetary damages for a
breach of fiduciary duty as a director. Any repeal or
modification of this Article VIIIVII shall
not adversely affect any right or protection of a director of
the Corporation existing at the time of such repeal or
modification.
ARTICLE IXVIII
The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Restated Certificate in
the manner now or hereafter prescribed herein and by the laws of
the State of Delaware, and all rights conferred upon
stockholders herein are granted subject to this reservation.
IN WITNESS WHEREOF, the undersigned has executed this
certificate on July 16,
1999.[ ].
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Michael D. Fleisher |
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Executive Vice President and |
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Chief Financial Officer |
A2-5
APPENDIX B-1
[Perseus Advisors, LLC Letterhead]
April 19, 2005
The Board of Directors
Gartner, Inc.
56 Top Gallant Road
Stamford, CT 06904
Members of the Board of Directors:
You have requested our opinion as to the fairness, from a
financial point of view, to the holders of Class A Common
Stock, par value $0.0005 per share (the Class A
Stock), of Gartner, Inc. (Gartner or the
Company) of the Exchange Ratio (as defined below) in
a proposed reclassification (the Reclassification)
in which the Company would reclassify each outstanding share of
Class A Stock and each outstanding share of Class B
Common Stock, par value $0.0005 per share (the
Class B Stock), of Gartner into one share (the
Exchange Ratio) of a single class of Common Stock,
par value $0.0005 per share.
For purposes of the opinion set forth herein, we have:
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(i) |
reviewed certain publicly available business and historical
financial information relating to the Company; |
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(ii) |
reviewed the Companys current restated certificate of
incorporation and bylaws as they relate to the rights and
privileges of both the Class A Stock and Class B Stock
and held discussions with the Companys outside counsel
regarding such rights and privileges; |
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(iii) |
reviewed the historical trading performance and trading
liquidity of the Class A Stock and Class B Stock; |
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(iv) |
reviewed the historical trading performance and trading
liquidity for other dual-class companies; |
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(v) |
compared the financial terms of the Reclassification and the
Exchange Ratio with the publicly available financial terms of
selected recent reclassification transactions that we deemed
relevant and the exchange ratios used in such transactions; |
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(vi) |
reviewed the historical trading performance, trading liquidity
and post-announcement stock price performance for securities in
such relevant reclassification transactions; |
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(vii) |
held discussions with certain members of the management of the
Company with respect to certain aspects of the Reclassification
and the strategic and other reasons behind the decision of the
Company to engage in the Reclassification; |
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(viii) |
reviewed the proposed amendment to the Companys restated
certificate of incorporation to effect the Reclassification; |
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(ix) |
reviewed a draft of the Companys proxy statement provided
to Perseus; |
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(x) |
reviewed and analyzed the current and pro forma ownership of the
Company; and |
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(xi) |
performed such other analyses and considered such other factors
as we deemed appropriate. |
We have assumed and relied upon, without independent
verification, the accuracy and completeness of the information
reviewed by us for the purposes of this opinion. We have not
made any independent valuation or appraisal of the assets,
liabilities or technology of the Company, nor have we been
furnished with any such appraisals. We have also assumed that
the Reclassification will qualify as a tax-free exchange and
recapitalization for United States federal income tax purposes.
We note that we are not legal or tax experts and have relied
upon, without assuming any responsibility for independent
verification or liability therefor, the
B1-1
assessment of the Companys legal and tax advisors with
respect to the legal and tax matters related to the
Reclassification.
Our opinion is necessarily based on economic, market and other
conditions as in effect on; and the information made available
to us as of, the date hereof. It should be understood that
subsequent developments may affect this opinion and that we do
not have any obligation to update, revise, or reaffirm this
opinion. Our opinion is limited to the fairness, from a
financial point of view, to the holders of the Class A
Stock of the Exchange Ratio in the Reclassification and we
express no opinion as to the underlying decision by the Company
to engage in the Reclassification. We are expressing no opinion
herein as to the price at which the Class A Stock or the
Class B Stock will trade at any future time.
Perseus was not requested to, and did not, provide any services
with respect to the Reclassification other than the delivery of
this opinion; specifically, Perseus was not requested to, and
did not, provide any advice concerning the structure, the
specific Exchange Ratio, or any other aspect of the
Reclassification. We will receive a fee from the Company for the
delivery of this opinion. In the past, Perseus has provided
advisory and other investment banking services to the Company
and may provide such services in the future. Gartner has
indemnified Perseus, and their respective partners, directors,
officers, agents, consultants, employees, and controlling
persons against particular liabilities, including liabilities
under the federal securities laws.
This letter is provided for the Special Committee of the Board
of Directors of the Company in connection with and for the
purposes of its evaluation of the Reclassification. This opinion
does not constitute a recommendation to any holder of
Class A Stock or Class B Stock as to how such holder
should vote with respect to the Reclassification or any other
matter. This opinion may not be disclosed, referred to, or
communicated (in whole or in part) publicly or to any third
party for any purpose whatsoever except with our prior written
approval; provided, however that this opinion may be reproduced
in full in any proxy or information statement mailed to
shareholders of the Company but may not otherwise be disclosed
publicly in any manner without our prior written approval.
Based upon and subject to the foregoing, we are of the opinion
on the date hereof that the Exchange Ratio in the
Reclassification is fair, from a financial point of view, to the
holders of Class A Stock.
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Very truly yours, |
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/s/ Mark Waissar |
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Mark Waissar |
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Managing Director |
B1-2
APPENDIX B-2
[Banc of America Securities Letterhead]
April 19, 2005
The Board of Directors
Gartner, Inc.
56 Top Gallant Road
Stamford, CT 06904
Members of the Board of Directors:
You have requested our opinion as to the fairness from a
financial point of view to the holders of Class B Common
Stock of Gartner, Inc. (the Company) of the Exchange
Ratio (as defined below) in the Proposed Reclassification (as
defined below). It is our understanding that the Company has
proposed to effect a reclassification (the Proposed
Reclassification) pursuant to which the Companys
Class A Common Stock, par value $0.0005 per share
(Class A Common Stock), and Class B Common
Stock, par value $0.0005 per share (Class B
Common Stock), will be reclassified as a single class of
common stock, par value $0.0005 per share of the Company
(the New Company Common Stock), and each outstanding
share of Class A Common Stock and Class B Common Stock
will automatically be converted into one share (the
Exchange Ratio) of New Company Common Stock. It is
our further understanding that in order to effect the Proposed
Reclassification, the Company will be proposing an amendment to
the Companys Restated Certificate of Incorporation.
For purposes of the opinion set forth herein, we have:
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(i) |
reviewed certain publicly available business and financial
information of the Company; |
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(ii) |
reviewed the Companys Restated Certificate of
Incorporation, as well as a draft, dated April 8, 2005, of
the Companys Amended and Restated Certificate of
Incorporation; |
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(iii) |
reviewed the reported prices and trading activity for the
Class A Common Stock and Class B Common Stock from
April 18, 2000 to April 18, 2005; |
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(iv) |
reviewed the reported prices and trading activity for the common
stock of other companies with two classes of publicly traded
stock from April 18, 2000 to April 18, 2005; |
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(v) |
reviewed the financial terms of selected recent reclassification
transactions that we deemed relevant; |
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(vi) |
reviewed the historical trading performance, trading activity,
and post-announcement stock price performance for securities in
the selected recent reclassification transactions; |
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(vii) |
reviewed the current ownership structure of the Company, as well
as the ownership structure of the Company following consummation
of the Proposed Reclassification; |
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(viii) |
reviewed a draft, dated April 8, 2005, of the preliminary
proxy statement relating to the Proposed Reclassification
provided to us; |
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(ix) |
discussed with management of the Company the rationale for the
Proposed Reclassification and for the original creation of the
dual class structure; and |
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(x) |
performed such other analyses and considered such other factors
as we have deemed appropriate. |
We have assumed and relied upon, without independent
verification, the accuracy and completeness of the financial and
other information reviewed by us for the purposes of this
opinion. We have not made any independent valuation or appraisal
of the assets or liabilities of the Company, nor have we been
furnished with any such appraisals. We have assumed that the
Proposed Reclassification will qualify as a tax-free exchange
and reclassification for United States Federal income tax
purposes. We also have assumed that the final
B2-1
Amended and Restated Certificate of Incorporation will not
differ in any material respect from the draft, dated
April 8, 2005, provided to us, and that the Proposed
Reclassification will be consummated as provided in the draft
preliminary proxy statement, dated April 8, 2005, provided
to us. We note that we are not legal or tax experts and have
relied upon, without assuming any responsibility for independent
verification or liability thereof, the assessment of the
Companys legal and tax advisors with respect to the legal
and tax matters related to the Proposed Reclassification.
We were not requested to and did not provide advice concerning
the structure or any other aspect of the Reclassification,
including the Exchange Ratio, or to provide services other than
the delivery of this opinion. In addition, we have not been
requested to opine as to, and our opinion does not in any manner
address, the Companys underlying business decision to
proceed with or effect the Proposed Reclassification.
We have acted as financial advisor to the Board of Directors of
the Company in connection with the Proposed Reclassification
solely to render this opinion and will receive a fee for our
services, which is contingent upon the rendering of this
opinion. We have provided and in the future may provide
financial advisory and financing services to the Company and
have received or in the future may receive fees for the
rendering of these services. An affiliate of ours serves as
agent bank and is a lender under the Companys senior
credit facility and has received fees for the rendering of such
services. In the ordinary course of our businesses, we and our
affiliates may actively trade the debt and equity securities or
loans of the Company for our own account or for the accounts of
customers, and accordingly, we or our affiliates may at any time
hold long or short positions in such securities or loans.
It is understood that this letter is for the benefit and use of
the Board of Directors of the Company in connection with and for
the purposes of its evaluation of the Proposed Reclassification.
This opinion may not be disclosed, referred to, or communicated
(in whole or in part) to any third party for any purpose
whatsoever except with our prior written consent in each
instance. Our opinion is necessarily based on economic, market
and other conditions as in effect on, and the information made
available to us as of, the date hereof. It should be understood
that subsequent developments may affect this opinion and we do
not have any obligation to update, revise or reaffirm this
opinion. This opinion does not in any manner address the prices
at which the New Company Common Stock will trade following
consummation of the Proposed Reclassification. In addition, we
express no opinion or recommendation as to how the stockholders
of the Company, including holders of Class B Common Stock,
should vote at the stockholders meeting held in connection
with the Proposed Reclassification.
Based upon and subject to the foregoing, including the various
assumptions and limitations set forth herein, we are of the
opinion on the date hereof that the Exchange Ratio in the
Proposed Reclassification is fair from a financial point of view
to the holders of Class B Common Stock.
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Very truly yours, |
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/s/ BANC OF AMERICA SECURITIES LLC |
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BANC OF AMERICA SECURITIES LLC |
B2-2
APPENDIX C
GARTNER, INC.
2003 LONG-TERM INCENTIVE PLAN
1. Purpose of the Plan. The purpose of this
2003 Long-Term Incentive Plan is to enable the Company to
provide incentives to eligible employees, officers, consultants
and directors whose present and potential contributions are
important to the continued success of the Company, to afford
these individuals the opportunity to acquire a proprietary
interest in the Company, and to enable the Company to enlist and
retain qualified personnel. This purpose will be effected
through the granting of (a) stock options, (b) stock
appreciation rights, (c) restricted stock awards,
(d) restricted stock units, (e) long-term performance
awards, and (f) director common stock equivalents.
2. Definitions.
(a) Award means an Option, SAR,
Restricted Stock Award, Restricted Stock Unit, Long-Term
Performance Award or Common Stock Equivalent awarded under the
Plan.
(b) Award Agreement means a
written agreement between the Company and a Participant
evidencing the terms and conditions of an individual Award.
(c) Board means the Board of
Directors of the Company.
(d) Cause means
(i) Participants failure to perform his or her
assigned duties or responsibilities (other than a failure
resulting from disability) in such a manner as to cause material
loss, damage or injury to the Company; (ii) gross
negligence or serious misconduct by Participant in connection
with the discharge of the duties of his or her position in such
a manner as to cause material loss, damage or injury to the
Company; (iii) Participants use of drugs or alcohol
in such a manner as to materially interfere with the performance
of his or her assigned duties; or (iv) Participants
being convicted of, or entering a plea of nolo contendere
to, a felony. In each instance, the foregoing acts and
omissions shall not constitute Cause unless and until the
Participant has been provided with written notice from the
Company describing Participants act or omission that
otherwise would constitute Cause and Participants failure
to remedy such act or omission within 30 days of receiving
written notice.
(e) Change in Control means the
happening of any of the following:
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(i) when any person, as such term is used in
Sections 13(d) and 14(d) of the Exchange Act (other than
the Company, a Subsidiary or a Company employee benefit plan,
including any trustee of such plan acting as trustee) is or
becomes the beneficial owner (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Company representing more than fifty (50%)
of the combined voting power of the Companys then
outstanding securities entitled to vote generally in the
election of directors (other than as a result of a repurchase of
securities by the Company or in connection with a transaction
described in clause (ii) below); or |
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(ii) a merger or consolidation of the Company with any
other entity, other than a merger or consolidation that would
result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving entity) at least fifty percent (50%)
of the total voting power represented by the voting securities
of the Company or such surviving entity outstanding immediately
after such merger or consolidation; or |
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(iii) the stockholders of the Company approve an agreement
for the sale or disposition by the Company of all or
substantially all the Companys assets; or |
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(iv) a change in the composition of the Board occurring
after approval of the Plan by the Companys stockholders,
as a result of which fewer than a majority of the Directors
holding voting rights on the Board are Incumbent Directors. |
(f) Code means the Internal
Revenue Code of 1986, as amended.
C-1
(g) Committee means a Committee
appointed by the Board in accordance with Section 11 to
administer the Plan or, if no Committee is appointed, the entire
Board.
(h) Common Stock means the
Class A Common Stock of the Company.
(i) Common Stock Equivalent means
a right to receive Shares in the future that may be granted to
an Outside Director pursuant to Section 10.
(j) Company means Gartner, Inc.,
a Delaware corporation.
(k) Consultant means any person,
including an advisor, engaged by the Company or a Parent or
Subsidiary to render services and who is compensated for such
services, provided that the term Consultant shall
not include Directors who are paid only a directors fee by
the Company or who are not compensated by the Company for their
services as Directors.
(l) Director means a member of
the Board and, except for the purposes of determining the
eligibility for grants of Options under Section 10, also
means any Director Emeritus appointed in accordance with the
Companys Bylaws.
(m) Employee means any person,
including any officer or Director, employed by the Company or
any Parent or Subsidiary of the Company. A Director whose
services to the Company are limited to services as a Director
will not be considered employed by the Company.
(n) Exchange Act means the
Securities Exchange Act of 1934, as amended.
(o) Existing Plans means the
Companys 1993 Director Stock Option Plan, 1994 Long
Term Option Plan, 1996 Long Term Stock Option Plan, 1998 Long
Term Stock Option Plan and 1999 Stock Option Plan.
(p) Fair Market Value means, as
of any date, the fair market value of the Common Stock as
determined in good faith by the Committee. Absent a specific
determination by the Committee to the contrary, the fair market
value of the Common Stock will be the closing price of the
Common Stock reported on a consolidated basis on the New York
Stock Exchange on the relevant date or, if there were no sales
on such date, the closing price on the nearest preceding date on
which sales occurred.
(q) Freestanding SARs means a SAR
granted under Section 6 without a related Option.
(r) Incentive Stock Option means
an Option that is intended to qualify as an incentive
stock option under Section 422 of the Code or any
successor provision.
(s) Incumbent Directors means
Directors who either are (A) directors of the Company as of
the date the Plan is approved by the Companys
stockholders, or (B) elected, or nominated for election, to
the Board with the affirmative votes of at least a majority of
the Incumbent Directors (or majority of the Incumbent Directors
serving as members of any nominating or similar committee of the
Board) at the time of such election or nomination (but shall not
include an individual whose election or nomination is in
connection with an actual or threatened proxy contest relating
to the election of Directors).
(t) Long-Term Performance Award
means an award under Section 9. A Long-Term Performance
Award will permit the recipient to receive a cash or stock bonus
upon satisfaction of such Performance Objectives as the
Committee may determine.
(u) Nonstatutory Stock Option
means an Option that is not intended to qualify as an Incentive
Stock Option.
(v) Option means an option to
purchase Shares of Common Stock granted under Section 5.
(w) Outside Director means a
Director who is not an Employee.
(x) Parent means a parent
corporation, whether now or hereafter existing, as defined
in Section 424(e) of the Code.
(y) Participant means any person
who receives an Award under the Plan.
C-2
(z) Performance Objectives means
the performance objectives established under this Plan for
Participants who receive grants of Long-Term Performance Awards
or, if determined by the Committee, Restricted Stock Awards,
Restricted Stock Units or other Awards. Any Performance
Objectives that are intended to qualify as
performance-based compensation under
Section 162(m) of the Code shall be limited to specified
levels of, or increases in, the Companys, Parents or
Subsidiarys return on equity, earnings per share, total
earnings, earnings growth, return on capital, return on assets,
economic value added, earnings before interest and taxes,
earnings before interest, taxes and amortization, core research
contract value, total sales bookings, sales growth, gross margin
return on investment, increase in the Fair Market Value of the
Shares, share price (including, but not limited to, growth
measures and total stockholder return), net operating profit,
cash flow (including, but not limited to, operating cash flow
and free cash flow), cash flow return on investment (which
equals net cash flow divided by total capital), internal rate of
return, increase in net present value or expense targets. Any
Performance Objective used may be measured, as applicable,
(i) in absolute terms, (ii) in relative terms
(including, but not limited to, passage of time and/or against
another company or companies), (iii) on a per-share basis,
(iv) against the performance of the Company as a whole or
of a Parent, Subsidiary or business unit of the Company, and/or
(v) to the extent not otherwise specified by the definition
of the Performance Objective, on a pre-tax or after-tax basis.
The Committee shall appropriately adjust any evaluation of
performance under a Performance Objective to exclude
(i) any extraordinary non-recurring items as described in
Accounting Principles Board Opinion No. 30 and/or in
managements discussion and analysis of financial
conditions and results of operations appearing in the
Companys annual report to stockholders for the applicable
year, or (ii) the effect of any changes in accounting
principles affecting the Companys, a Parents,
Subsidiarys or business units reported results.
Except in the case of an Award intended to qualify under
Section 162(m) of the Code, if the Committee determines
that a change in the business, operations, corporate structure
or capital structure of the Company or a Parent, Subsidiary or
business unit of the Company, or other circumstances render the
Performance Objectives unsuitable, the Committee may modify such
Performance Objectives or the related minimum acceptable level
of achievement, in whole or in part, as the Committee deems
appropriate and equitable.
(aa) Plan means this 2003
Long-Term Incentive Plan.
(bb) Quarterly Compensation means
the retainer fee and committee fees, as applicable, that an
Outside Director receives from the Company for each of the
Companys fiscal quarters.
(cc) Restricted Stock means
shares of Common Stock that are subject to a risk of forfeiture
or other restrictions that will lapse upon the satisfaction of
specified conditions or the achievement of specified Performance
Objectives.
(dd) Restricted Stock Award means
a grant under Section 7 of Restricted Stock or the right to
purchase Restricted Stock.
(ee) Restricted Stock Unit means
an Award granted pursuant to Section 8.
(ff) Rule 16b-3 means
Rule 16b-3 under the Exchange Act or any successor rule, as
in effect when discretion is being exercised with respect to the
Plan.
(gg) SAR means a stock
appreciation right granted under Section 6.
(hh) Section 16 Person means
a person who, with respect to the Shares, is subject to
Section 16 of the Exchange Act.
(ii) Share means a share of
Common Stock, as adjusted in accordance with Section 12.
(jj) Subsidiary means a
subsidiary corporation, whether now or hereafter
existing, as defined in Section 424(f) of the Code.
(kk) Tandem SAR means a SAR
granted under Section 6 in connection with a related Option.
3. Shares Available Under the Plan.
C-3
(a) Subject to adjustment under Section 12, 20,928,000
Shares are reserved and available for distribution to
Participants and their beneficiaries under the Plan.
(b) The following Shares will continue to be available for
distribution under this Plan through the grant of additional
Awards:
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Shares subject to any Award that is canceled, expires or lapses
for any reason; |
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Shares used to pay the exercise or purchase price under any
Award, or to satisfy any tax withholding obligation attributable
to any Award, whether such Shares are withheld by the Company
upon exercise of the Award or are tendered by the Participant
from previously owned Shares; and |
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Shares available under any Award to the extent the Award is
settled in cash rather than Shares. |
(d) The payment of stock dividends on outstanding Awards
will not reduce the number of Shares available for distribution
under the Plan.
4. Eligibility, Award Limits and Other General
Matters.
(a) All Employees, Directors and Consultants selected by
the Committee for their potential to contribute to the success
of the Company are eligible to participate in this Plan. Only
Employees are eligible to receive Incentive Stock Options.
(b) The following limits will apply to Awards under the
Plan:
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No Participant may receive Options or Freestanding SARs or
Tandem SARs during any one (1) fiscal year of the Company
covering in the aggregate more than 2,000,000 Shares;
provided, that a Share subject to a Tandem SAR and a related
Option shall only count as one Share against this limitation. |
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No Participant may receive Restricted Stock Units, Restricted
Stock Awards or, to the extent payable in or measured by the
value of Shares, Long-Term Performance Awards during any one
(1) fiscal year of the Company covering in the aggregate
more than 1,000,000 Shares. |
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No Participant may receive Long-Term Performance Awards payable
in cash and not measured by the value of Shares during any one
(1) fiscal year of the Company covering an amount in excess
of $2,500,000. |
(c) The Committee, in its discretion, may grant Awards on
terms and conditions that vary from Participant to Participant.
(d) Each Award under this Plan, other than an award of
Common Stock Equivalents, will be evidenced by a written Award
Agreement between the Company and the Participant in such form
and containing such provisions, not inconsistent with this Plan,
as the Committee, in its discretion, determines from time to
time. Common Stock Equivalents will be evidenced by the Company
on a book-entry basis and administered in accordance with this
Plan.
(e) The Company may, but will not be required to, issue any
fractional Share under the Plan. The Committee may provide for
the elimination of fractions or for the settlement of fractions
in cash.
(f) This Plan does not constitute a contract of employment,
and adoption of the Plan or the grant of any Award will not
confer upon any Employee any right to continued employment or
interfere in any way with the right of the Company (or its
Parent or any Subsidiary) to terminate the employment of any
Employee at any time. This Plan or the grant of any Award does
not confer upon any Director any right to continuation of
service as a director or any right to nomination as a
Director, or interfere in any way with any rights that a
Director or the Company may have to terminate his or her
directorship at any time.
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This reflects 9,928,000 shares reserved for issuance under
the Plan upon its adoption in 2003, and an increase of
11,000,000 shares (subject to the approval of the
Companys stockholders) in April 2005, for a total of
20,928,000 shares reserved for issuance under the Plan. |
C-4
(g) Unless otherwise determined by the Committee, Awards
may not be sold, pledged, assigned, transferred or disposed of
in any manner other than by will or by the laws of descent or
distribution, and during the lifetime of a Participant may be
exercised only by a Participant. The Committee may, in its
discretion, provide for the transfer of an Award by a
Participant to any member of the Participants immediate
family. In such case, the Award will be exercisable only by such
transferee. Following transfer, any such Award will continue to
be subject to the same terms and conditions as were applicable
immediately prior to the transfer. For purposes of this
Section 4(g), a Participants immediate
family shall mean any of the following who have acquired
the Award from the Participant through a gift or domestic
relations order: a child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, sibling, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships, trusts for the
exclusive benefit of these persons and any other entity owned
solely by these persons, and such other persons and entities as
shall be eligible to be included as transferees in the
Form S-8 Registration Statement under the Securities Act of
1933, as amended, filed or to be filed by the Company to
register shares of Common Stock to be issued upon the exercise
of Awards granted under the Plan.
(h) Unless otherwise determined by the Committee, the date
of grant of an Award will be the date on which the Committee
makes the determination to grant such Award.
(i) The Committee may determine the manner in which the
exercise price or purchase price is payable with respect to any
Award, which may include: (i) cash in the form of currency
or check or other cash equivalent acceptable to the Company;
(ii) nonforfeitable, unrestricted Shares owned by the
Participant which have a Fair Market Value at the time of
exercise that is equal to the price payable by the Participant;
(iii) net exercise, (iv) any other legal consideration
that the Committee may deem appropriate, including restricted
Shares or other Shares that are subject to risk or forfeiture or
restrictions on transfer, on such basis as the Committee may
determine; or (v) any combination of the foregoing. Unless
otherwise determined by the Committee, whenever any exercise
price or purchase price is paid in whole or in part by
forfeitable or restricted Shares, the Shares received by the
Participant upon the exercise or receipt of the Award shall be
subject to the same risks of forfeiture or restrictions on
transfer as those that applied to the Shares surrendered by the
Participant, provided that such risks of forfeiture and
restrictions on transfer shall apply only to the same number of
Shares received by the Participant as applied to the forfeitable
or restricted Shares surrendered by the Participant. Any Award
may provide for deferred payment of the exercise price from the
proceeds of the sale of such Shares through a bank or broker.
(j) The Company may not make loans to Participants for the
purpose of paying the exercise price, purchase price or taxes
related to any Award. Any of the methods of payment specified in
clause (i) above shall not be deemed to be a loan by the
Company.
(k) Unless otherwise determined by the Committee upon the
grant of an Award, in the event of a Change in Control of the
Company the following provisions shall apply to Awards granted
before the date the amended and restated Plan (as presented to
stockholders in the Companys 2005 proxy) is approved by
the stockholders:
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any Award outstanding on the date of such Change in Control that
is not yet exercisable and vested on such date shall become
fully exercisable and vested, and will remain exercisable by the
Participant for a period of at least ninety (90) days from
the date the Participant receives written notice of the Change
in Control and the Participants exercise rights; |
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all restrictions imposed on Restricted Stock will immediately
lapse; |
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all Performance Objectives applicable to Awards will be deemed
fully met at target amounts; |
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each outstanding Common Stock Equivalent shall convert into
Shares (as provided in Section 10(d)) immediately prior to
the Change in Control; and |
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each outstanding Award shall be assumed by the successor entity
(if any) or by a Parent or Subsidiary of the successor entity
(if any). |
C-5
(l) Unless otherwise determined by the Committee upon the
grant of an Award, with respect to Awards granted on or after
the date the amended and restated Plan (as presented to
stockholders in the Companys 2005 proxy) is approved by
the stockholders, the following provisions shall apply in the
event of a participants termination of employment without
Cause within twelve (12) months following a Change in
Control of the Company:
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each outstanding Award assumed or substituted for by the
successor entity (if any) or by a Parent or Subsidiary of the
successor entity (if any) shall become fully exercisable and
vested, and will remain exercisable by the Participant for a
period of at least ninety (90) days from the date of the
Participants termination of employment without Cause; |
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all restrictions imposed on Restricted Stock will immediately
lapse; |
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all Performance Objectives applicable to Awards will be deemed
fully met at target amounts; and |
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each outstanding Common Stock Equivalent shall convert into
Shares (as provided in Section 10(d)) immediately prior to
the Change in Control. |
5. Options.
(a) Grant of Options. The Committee, in its
discretion, may grant Options to eligible Employees, Directors
and Consultants, subject to the following:
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each grant will specify the number of Shares issuable upon
exercise of the Option; |
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each grant will specify whether it is intended to be an
Incentive Stock Option or a Nonstatutory Stock Option; |
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each grant will specify the term during which the Option is
exercisable, but no Option will be exercisable more than
10 years after its date of grant; |
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each grant will specify the exercise price for the Shares
issuable upon exercise of an Option, which price shall not be
less than the Fair Market Value of the Shares on the date of
grant; |
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each grant will specify the form of consideration to be paid in
satisfaction of the exercise price and the manner of payment of
such consideration; and |
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each grant will specify the other terms and conditions under
which the Shares underlying the Option may be purchased,
including any vesting requirements and the treatment of the
Option upon termination of the Participants employment or
directorship (including by reason of death or disability). |
(b) Repricing Prohibited. Except for
adjustments made under Section 12, the exercise price for
any outstanding Option may not be declared or reduced after the
date of grant and any outstanding Option may not be surrendered
to the Company as consideration for the grant of a new Option
with a lower exercise price without approval of the
Companys stockholders.
(c) Additional Rules for Incentive Stock
Options. The following additional rules shall apply to
each Option intended to be granted as an Incentive Stock Option:
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the aggregate Fair Market Value (determined on the grant
date(s)) of the Shares with respect to which Incentive Stock
Options are exercisable for the first time by any Employee
during any calendar year (under all plans of the Company and its
Subsidiaries and any Parent of the Company) shall not exceed
$100,000; |
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the exercise price of an Incentive Stock Option shall be not
less than one hundred and ten percent (110%) of the Fair Market
Value of a Share on the grant date that if on the grant date,
the Employee (together with persons whose stock ownership is
attributed to the Employee pursuant to Section 424(d) of
the Code) owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or
any of its Subsidiaries or any Parent of the Company; and |
C-6
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no Incentive Stock Option will be exercisable more than
5 years after its date of grant if it is granted to an
Employee who, together with persons whose stock ownership is
attributed to the Employee pursuant to Section 424(d) of
the Code, owns stock possessing more than 10% of the total
combined voting power of all classes of the stock of the Company
or any of its Subsidiaries or any Parent of the Company. |
6. SARs.
(a) Tandem SARs. The Committee may grant
Tandem SARs to eligible Employees in connection with all or part
of an Option, either concurrently with the grant of the Option
or at any time thereafter during the term of the Option, subject
to the following:
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the Tandem SAR will entitle the Participant to exercise it by
surrendering to the Company the unexercised Option in connection
with which the Tandem SAR was granted. The Participant will
receive in exchange from the Company an amount equal to the
excess of (i) the Fair Market Value on the date of exercise
of the Tandem SAR of the Shares covered by the surrendered
Option, over (ii) the exercise price of the Shares covered
by the surrendered Option, provided that the Committee may place
limits on the amount that may be paid upon exercise of a Tandem
SAR, which limits will not restrict the exercisability of the
related Option; |
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amounts payable pursuant to a Tandem SAR may be paid, in the
sole discretion of the Committee, in cash, Shares, or a
combination thereof. |
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when a Tandem SAR is exercised, the related Option will cease to
be exercisable; |
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a Tandem SAR will be exercisable only when and to the extent
that the related Option is exercisable and shall expire no later
than the date on which the related Option expires; and |
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each grant will specify the other terms and conditions under
which the Tandem SAR is exercisable, including any vesting
requirements and the treatment of the Tandem SAR upon
termination of the Participants employment (including by
reason of death or disability). |
(b) Freestanding SARs. The Committee may
grant Freestanding SARs to eligible Employees without related
Options, subject to the following:
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the Freestanding SAR will entitle the Participant, by exercising
the Freestanding SAR, to receive from the Company an amount
equal to the excess of (i) the Fair Market Value of the
Shares covered by the exercised portion of the Freestanding SAR,
as of the date of such exercise, over (ii) the Fair Market
Value of the Shares covered by the exercised portion of the
Freestanding SAR on the date of grant, provided that the
Committee may place limits on the aggregate amount that may be
paid upon exercise of a Freestanding SAR; |
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amounts payable pursuant to a Freestanding SAR may be paid, in
the sole discretion of the Committee, in cash, Shares, or a
combination thereof. |
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each grant will specify the number of Shares covered by the
Freestanding SAR; |
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each grant will specify the term during which the Freestanding
SAR is exercisable, but no Freestanding SAR will be exercisable
more than 10 years after its date of grant; and |
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each grant will specify the other terms and conditions under
which the Freestanding SAR is exercisable, including any vesting
requirements and the treatment of the Freestanding SAR upon
termination of the Participants employment (including by
reason of death or disability). |
C-7
7. Restricted Stock Awards.
(a) Grant of Restricted Stock. The Committee
may grant Restricted Stock to eligible Employees on such terms
and conditions as the Committee may determine, subject to the
following:
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each grant of Restricted Stock will provide that the Restricted
Stock will be subject to a substantial risk of
forfeiture within the meaning of Section 83 of the
Code, on such terms and for such period as may be determined by
the Committee; |
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each grant will constitute an immediate transfer of the
ownership of the Restricted Stock to the Participant in
consideration for the performance of services. Unless otherwise
determined by the Committee, a Restricted Stock Award will
entitle the Participant to dividend, voting and other ownership
rights during the period in which the Restricted Stock is
subject to substantial risk of forfeiture; |
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each grant may be made without additional consideration from the
Participant or in consideration of a payment by the Participant
that is less than the Fair Market Value of the Restricted Stock
on the date of grant; |
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each grant will provide that during the period in which the
Stock is subject to substantial risk of forfeiture, the
transferability of the Restricted Stock will be prohibited or
restricted in the manner and to the extent determined by the
Committee. Such restrictions may include rights of repurchase or
first refusal in favor of the Company or provisions subjecting
the Restricted Stock to a continuing substantial risk of
forfeiture in the hands of any transferee; |
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any grant or the vesting of any Restricted Stock may be further
conditioned upon the attainment of Performance Objectives
established by the Committee in accordance with the applicable
provisions of Section 9 of this Plan regarding Long-Term
Performance Awards; and |
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any grant may require that any or all dividends or other
distributions paid on the Restricted Stock during the period
that it is subject to a substantial risk of forfeiture be
automatically set aside and reinvested on an immediate or
deferred basis in additional Shares, which may be subject to the
same restrictions as the underlying Restricted Stock or such
other restrictions as the Committee may determine. |
(b) Repurchase Option. Unless the Committee
determines otherwise, the Award Agreement for each Restricted
Stock Award will grant the Company a repurchase option
exercisable upon the voluntary or involuntary termination of the
Participants employment with the Company for any reason
(including death or disability), on such terms and conditions as
the Committee shall determine.
(c) Certificates. Shares of Restricted Stock
shall be evidenced in such manner as the Committee may deem
appropriate, including book-entry registration or by the
issuance of one or more certificates. Any certificates
representing Restricted Stock shall bear a legend as the
Committee shall deem appropriate referring to the applicable
terms, conditions and restrictions. The Committee may require
that each Certificate representing Restricted Stock be held in
custody by the Company, together with a stock power endorsed in
blank by the Participant, until such Restricted Stock is no
longer subject to a substantial risk of forfeiture.
8. Restricted Stock Units.
(a) Grant. Restricted Stock Units may be
granted at any time and from time to time as determined by the
Committee. Each Restricted Stock Unit grant shall be evidenced
by an Award Agreement that shall specify such other terms and
conditions as the Committee, in its sole discretion, shall
determine, including all terms, conditions, and restrictions
related to the grant, the number of Restricted Stock Units and
the form of payout.
(b) Value of Restricted Stock Unit. Each
Restricted Sock Unit shall have an initial value equal to the
Fair Market Value of a Share on the date of grant.
C-8
(c) Vesting Criteria and Other Terms. The
Committee shall set vesting criteria in its discretion, which,
depending on the extent to which the criteria are met, will
determine the number of Restricted Stock Units that will be paid
out to the Participant. The Committee may set vesting criteria
based upon the achievement of Company-wide, business unit, or
individual goals (including, but not limited to, continued
employment or service), or any other basis determined by the
Committee in its discretion. Any grant or the vesting of any
Restricted Stock Unit may be further conditioned upon the
attainment of Performance Objectives established by the
Committee in accordance with the applicable provisions of
Section 9 of this Plan regarding Long-Term Performance
Awards.
(d) Earning Restricted Stock Units. Upon
meeting the applicable vesting criteria, the Participant shall
be entitled to receive a payout as specified in the Restricted
Stock Unit Award Agreement. Notwithstanding the foregoing, at
any time after the grant of Restricted Stock Units, the
Committee, in its sole discretion, may reduce or waive any
vesting criteria that must be met to receive a payout.
(e) Form and Timing of Payment. Payment of
earned Restricted Stock Units shall be made as soon as
practicable after the date(s) set forth in the Restricted Stock
Unit Award Agreement. The Committee, in its sole discretion, may
permit a Participant to defer receipt of the payment of earned
Restricted Stock Units, and any such deferral elections shall be
subject to such rules and procedures as shall be determined by
the Committee in its sole discretion. The Committee, in its sole
discretion, may pay earned Restricted Stock Units in cash,
Shares, or a combination thereof. Shares represented by
Restricted Stock Units that are fully paid in cash again shall
be available for grant under the Plan.
(f) Cancellation. On the date set forth in
the Restricted Stock Unit Award Agreement, all unearned
Restricted Stock Units shall be forfeited to the Company.
(g) Dividend Equivalents. Participants
holding unvested Restricted Stock Units shall be entitled to be
credited with all dividends and other distributions paid with
respect to the underlying Shares, unless otherwise provided in
the Award Agreement. Unless otherwise determined by the
Committee, such dividends and distributions shall be deemed
reinvested in Restricted Stock Units, which shall be subject to
the same terms and conditions as the underlying Award.
9. Long-Term Performance Awards. The
Committee may grant Long-Term Performance Awards to eligible
Employees on such terms and conditions as the Committee may
determine, subject to the following:
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each grant will specify the payment for which the Participant is
eligible, which may be a fixed or variable number of Shares
(subject to adjustment in accordance with Section 12), or a
fixed or variable cash bonus. The Committee may provide any
Participant with a choice to elect between Shares, cash and a
combination of Shares and cash; |
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each grant will specify the nature, length and starting date of
the performance period during which the payment under the
Long-Term Performance Award may be earned; |
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each grant will specify the Performance Objectives that are to
be achieved by the Participant and, to the extent that any
payments under the Long-Term Performance Award are variable, the
formula under which such payments are to be computed; |
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each grant will specify the terms and manner of payment of any
Shares or amounts earned under the Long-Term Performance Award; |
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a grant may provide, in the Committees discretion, for the
payment of dividend equivalents in cash or additional Shares on
a current, deferred or contingent basis; and |
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no payment will be made with respect to a Long-Term Performance
Award until the Committee has determined that the relevant
Performance Objectives have been achieved. |
10. Awards to Outside Directors.
(a) Award of Common Stock Equivalents. On an
annual basis, each Outside Director may elect to receive up to
50% of his or her compensation in cash and the balance in Common
Stock Equivalents. Such
C-9
election shall be made no later than December 31st of each
calendar year for the following calendar year, provided that
during the first fiscal year during which the Plan is in effect,
the elections made by the Outside Directors with respect to the
common stock equivalents provided for in the Companys
1993 Director Stock Option Plan shall be deemed to be their
elections under this Plan. Beginning on April 1, 2003, and
on the first business day of each of the Companys fiscal
quarters during the term of this Plan, the Company shall grant
to each Outside Director that number of Common Stock Equivalents
equal in value to that portion of the Outside Directors
Quarterly Compensation for the immediately preceding quarter
that he or she has elected to receive in Common Stock
Equivalents divided by the Fair Market Value of the Common Stock
on such day.
(b) Book-Entry Account; Nontransferability.
The number of Common Stock Equivalents awarded to each Outside
Director shall be credited to a book-entry account established
in the name of the Outside Director. The Companys
obligation with respect to such Common Stock Equivalents will
not be funded or secured in any manner. No Common Stock
Equivalent may be sold, pledged, assigned, transferred or
disposed of in any manner, other than by will, the laws of
descent or distribution or pursuant to a qualified domestic
relations order, and may be exercised during the life of the
Outside Director only by the Outside Director or a permitted
transferee.
(c) Dividends. If the Company pays a cash
dividend with respect to the Shares at any time while Common
Stock Equivalents are credited to an Outside Directors
account, additional Common Stock Equivalents shall be credited
to the Outside Directors account equal to (i) the
dollar amount of the cash dividend the Outside Director would
have received had he or she been the actual owner of the Shares
to which the Common Stock Equivalents then credited to the
Outside Directors account relate, divided by (ii) the
Fair Market Value of one Share on the dividend payment date.
(d) Conversion. As soon as practicable
following the date on which an Outside Director ceases to be a
member of the Board for any reason, or as otherwise provided by
this Plan, the Company shall deliver to the Outside Director (or
his or her designated beneficiary or estate) a number of Shares
equal to the whole number of Common Stock Equivalents then
credited to the Outside Directors account, or at the
Outside Directors option, shall have the Shares credited
to an account for the Director with a brokerage firm of the
Outside Directors choosing.
(e) Stockholder Rights. An Outside Director
(or his or her designated beneficiary or estate) shall not be
entitled to any voting or other stockholder rights as a result
of the credit of Common Stock Equivalents to the Outside
Directors account, until certificates representing Shares
are delivered to the Outside Director (or his or her designated
beneficiary or estate) upon conversion of the Outside
Directors Common Stock Equivalents to Shares pursuant to
Section 10(d).
(f) Discretionary Awards. Outside Directors
may, in the sole discretion of the Committee, receive additional
Awards under this Plan, subject to such terms and conditions as
determined by the Committee in accordance with the terms of the
Plan.
11. Administration.
(a) The Committee. This Plan shall be
administered by one or more committees appointed by the Board.
If the Board does not appoint a specific committee, the
Compensation Committee of the Board, or a subcommittee appointed
by the Compensation Committee, shall administer the Plan. Each
member of the Committee shall meet such standards of
independence as the Board shall determine from time to time.
With respect to Awards granted to Section 16 Persons or
intended to qualify as performance-based
compensation under Section 162(m) of the Code, the
Committee shall consist solely of not less than two
(2) Directors who both are (a) non-employee
directors under Rule 16b-3, and
(b) outside directors under Section 162(m)
of the Code. The interpretation and construction by the
Committee of any provision of this Plan or of any Award
Agreement or other document evidencing the grant of any Award
and any determination by the Committee pursuant to any provision
of this Plan or any such Award Agreement or other document,
shall be final and conclusive. No member of the Committee shall
be liable to any person for any such action taken or
determination made in good faith.
C-10
(b) Delegation of Authority. The Committee,
in its sole discretion and on such terms and conditions as it
may provide, may delegate all or any part of its authority and
powers under the Plan to one or more Directors or officers of
the Company; provided, however, that the Committee may not
delegate its authority and powers (a) with respect to
Section 16 Persons, or (b) in any way which would
jeopardize the Plans qualification under
Section 162(m) of the Code or Rule 16b-3.
(c) Powers of the Committee. Subject to the
provisions of the Plan, and in the case of the Committee,
subject to the specific duties delegated by the Board to the
Committee, the Committee shall have the authority, in its
discretion:
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to determine the Fair Market Value of the Common Stock; |
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to select the Employees and Consultants to whom Awards are
granted; |
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except as provided in Section 10, to determine whether and
to what extent Awards are granted; |
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except as provided in Section 10, to determine the number
of Shares to be covered by each Award; |
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to approve forms of agreement for use under the Plan; |
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to determine the terms and conditions, not inconsistent with the
terms of the Plan, of each Award; |
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to construe and interpret the provisions of the Plan; |
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to prescribe, amend and rescind rules and regulations relating
to the Plan; |
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to determine whether and under what circumstances an Award may
be settled in cash instead of Common Stock or Common Stock
instead of cash; |
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to modify or amend any Award (subject to the restrictions
contained in this Plan, including Sections 5(b)
(repricing), 9 (Outside Directors) and 15(b) (rights of
Participants)); |
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to authorize any person to execute on behalf of the Company any
instrument required to effect the grant of an Award approved by
the Committee or provided for in this Plan; and |
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to make all other determinations deemed necessary or advisable
for administering the Plan. |
12. Adjustments Upon Changes in Capitalization,
Dissolution, Merger or Asset Sale.
(a) Changes in Capitalization. Subject to any
required action by the stockholders of the Company, the number
of shares of Common Stock covered by each outstanding Award, the
number of Shares and other Awards provided for in
Section 10 (Outside Directors), the number of shares of
Common Stock which have been authorized for issuance under the
Plan but as to which no Awards have yet been granted or which
have been returned to the Plan upon cancellation or expiration
of an Award, and the limitations set forth in Section 4(b),
as well as the price per share of Common Stock covered by each
such outstanding Award, shall be proportionately adjusted for
any increase or decrease in the number of issued shares of
Common Stock resulting from a stock split, reverse stock split,
stock dividend, spin-off or split-up or combination or
reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected
without receipt of consideration by the Company;
provided, however, that conversion of any convertible
securities of the Company shall not be deemed to have been
effected without receipt of consideration. Such
adjustment shall be made by the Board, whose determination in
that respect shall be final, binding and conclusive. Except as
expressly provided herein, no issuance by the Company of shares
of stock of any class, or securities convertible into shares of
stock of any class, shall affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of
shares of Common Stock subject to an Award.
(b) Dissolution or Liquidation. Subject to
Sections 4(k) and 4(l) (Change in Control), in the event of
the proposed dissolution or liquidation of the Company, to the
extent that an Award has not been previously exercised, it will
terminate immediately prior to the consummation of such proposed
action.
C-11
(c) Merger or Asset Sale. Subject to
Sections 4(k) and 4(l) (Change in Control), if the Company
is merged with or into another corporation, or substantially all
of its assets are sold, each outstanding Award shall be assumed
or an equivalent Award substituted by the successor corporation
or a Parent or Subsidiary of the successor corporation. If the
successor corporation does not agree to assume an Award or to
substitute an equivalent Award, the Committee shall provide for
the Participant to have the right to exercise the Award, in
whole or in part, including Awards that would not otherwise be
exercisable. If the Committee makes an Award exercisable in lieu
of assumption or substitution in the event of a merger or sale
of assets, the Committee shall notify the Participant that the
Award shall be exercisable for at least fifteen (15) days
from the date of such notice, and the Award will terminate upon
the expiration of the notice period. For the purposes of this
Section, an Award shall be considered assumed if, immediately
following the merger or sale of assets, the Award confers the
right to purchase, for each underlying Share subject to the
Award immediately prior to the merger or sale of assets, the
consideration (whether stock, cash or other securities or
property) received in the merger or sale of assets by holders of
Common Stock for each Share held on the effective date of the
transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders
of a majority of the outstanding Shares); provided, that if the
consideration received in the merger or sale of assets was not
solely common stock of the successor corporation or its Parent,
the Committee may, with the consent of the successor corporation
and the Participant, provide for the consideration to be
received upon the exercise of the Award, for each underlying
Share, to be solely common stock of the successor corporation or
its Parent equal in Fair Market Value to the per Share
consideration received by holders of the Common Stock in the
merger or sale of assets.
13. Conditions Upon Issuance of Shares.
(a) Legal Compliance. Shares shall not be
issued pursuant to the exercise of an Award unless the exercise
of such Award and the issuance and delivery of such Shares shall
comply with all relevant provisions of law, including, without
limitation, the Securities Act of 1933, as amended, the Exchange
Act, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange or quotation system upon
which the Shares may then be listed or quoted, and shall be
further subject to the approval of counsel for the Company with
respect to such compliance.
(b) Investment Representations. As a
condition to the exercise of an Award, the Company may require
the person exercising such Award to represent and warrant at the
time of any such exercise that the Shares issuable upon exercise
of the Award are being purchased only for investment and without
any present intention to sell or distribute such Shares if, in
the opinion of counsel for the Company, such a representation is
necessary or desirable.
14. Liability of Company. The inability of
the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Companys
counsel to be necessary to the lawful issuance and sale of any
Shares hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.
15. Reservation of Shares. During the term of
this Plan, the Company will at all times reserve and keep
available such number of Shares as shall be sufficient to
satisfy the requirements of the Plan.
16. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may
at any time amend, alter, suspend or terminate the Plan, but no
amendment shall increase the number of Shares available for
issuance under the Plan (except as contemplated by
Section 12) or increase any of the limitations provided for
in Section 4(b) without the further approval of the
stockholders of the Company.
(b) Effect of Amendment or Termination. No
amendment, alteration, suspension or termination of the Plan
shall impair the rights of any Participant, unless mutually
agreed between the Participant and the Committee, which
agreement must be in writing and signed by the Participant and
the Company.
C-12
17. Term of the Plan. The Plan shall become
effective upon its approval by the stockholders of the Company
as described in Section 23. It shall continue in effect for
new Awards until April 19, 2015, unless sooner terminated
under Section 16.
18. Tax and Social Security Indemnity. Each
Participant shall indemnify the Company against any tax arising
in respect of the grant or exercise of an Award which is a
liability of the Participant but for which the Company is
required to account under the laws of any relevant jurisdiction.
The Company may recover the tax from the Participant in such
manner as the Committee deems appropriate, including:
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(a) withholding Shares or payment upon the exercise of an
Award; |
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(b) deducting the necessary amount from the
Participants compensation; or |
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(c) requiring the Participant to make a cash payment to the
Company. |
19. Options Granted to Employees of French
Subsidiaries.
(a) Purpose. Options granted under the Plan
to employees of French subsidiaries are intended to qualify
under the French regulations as provided in articles 208-1
to 208-8-2 of the French Company Act (Code des Societes). The
purpose of this Section is to specify the applicable rules for
Options granted to French Employees and shall not be applicable
to any other Employee of the Company.
(b) General. Options granted to French
Employees under the Plan are subject to the provisions of the
Plan and any related Award Agreement unless otherwise provided
in this Section.
(c) Eligible Participants. Only Employees of
French Subsidiaries are eligible to receive Options granted
pursuant to this Section. Payment of Director fees by the
Company shall not be sufficient to constitute employment for
this purpose. Employees of French subsidiaries may not be
granted Options if, at the date of grant, they hold more than
ten percent (10%) of the Common Stock of the Company.
(d) Options. Eligible Employees may be
granted Options as provided in Section 5 of the Plan. This
Section shall not apply to the grant of SARs, Restricted Stock
or Long-Term Performance Awards.
(e) Option Price. The exercise price of each
Option granted pursuant to this Section shall be determined as
set forth in the Plan but it shall not be less than 80% of the
average Fair Market Value of the Common Stock during the twenty
(20) market trading days prior to the date of the grant.
The exercise price shall remain unchanged once the Option is
granted. Any authority of the Committee to reduce the Option
exercise price shall, with respect to Options granted to
Employees of French Subsidiaries, be limited to the extent that
such reduction may not be to a price less than 80% of the
average Fair Market Value of the Common Stock during the twenty
(20) market trading days prior to the date of such
reduction.
(f) Exercise of the Option. Upon exercise of
an Option granted pursuant to this Section, Employees of French
Subsidiaries will receive Shares of Common Stock and may not
settle any Option in cash.
(g) Qualification of Plan. In order to have
the Plan qualify in France, any other provision of the Plan that
would be inconsistent with French company law or tax law
requirements shall not apply to Employees of French Subsidiaries.
20. Options Granted to Employees of Italian
Subsidiaries.
(a) Purpose. Options granted under the Plan
to Employees of Italian Subsidiaries are intended to qualify
under Italian law. The purpose of this Section is to specify the
applicable rules for Options granted to Italian Employees and
shall not be applicable to any other Employee of the Company.
(b) General. Options granted to Italian
Employees under the Plan are subject to the provisions of the
Plan and any related Award Agreement unless otherwise provided
in this Section.
(c) Eligible Participants. Only Employees of
Italian Subsidiaries may be granted Options granted pursuant to
this Section. The amount of Shares (or related option rights)
assigned to each Italian Employee shall not exceed 10% of the
voting rights in the ordinary shareholders meeting or 10%
of the capital or equity
C-13
of the offering Company. This Section shall not apply to the
grant of SARs, Restricted Stock or Long-Term Performance Awards
granted.
(d) Option Price. The exercise price of
Options granted to Italian Employees shall be the higher of
(i) the Fair Market Value determined as set forth in the
Plans, and (ii) the average closing price of the Common
Stock during the month preceding the grant date. The exercise
price shall remain unchanged once the Options are granted. Any
authority of the Committee to reduce the Option exercise price
shall, with respect to Options granted to Employees of Italian
Subsidiaries, be limited to the extent that such reduction may
not be to a price less than the price calculated under
(ii) above on the grant date.
(e) Qualification of Plan. In order to have
the Plan qualify in Italy, any other provision of the Plan that
would be inconsistent with Italian law shall not apply to
Employees of Italian subsidiaries.
21. Options Granted to Employees of Indian and Dutch
Subsidiaries.
(a) Purpose. The purpose of this Section is
to specify the applicable rules for Options granted to Indian
and Dutch Employees and shall not be applicable to any other
Employee of the Company.
(b) General. Options granted to Indian and
Dutch Employees under the Plan are subject to the provisions of
the Plan and any related Award Agreement unless otherwise
provided in this Section.
(c) Exercise of Options. The consideration to
be paid for Options exercised by Indian and Dutch Employees
under the Plan shall be limited to a cashless
exercise, which is delivery of a properly executed
exercise notice together with such other documentation as the
Committee and any broker approved by the Company, if applicable,
shall require to effect an exercise of the Option and delivery
to the Company of the sale or loan proceeds required to pay the
exercise price.
22. Foreign Jurisdictions. In order to
facilitate the making of any Award under this Plan, the
Committee may provide for special terms for Awards to
Participants who are foreign nationals or who are employed by
the Company (or its Parent or any Subsidiary) outside of the
United States, as the Committee may consider necessary or
appropriate to accommodate differences in local law, tax policy
or custom. In addition, the Committee may approve such
supplements to, or amendments, restatements or alternative
versions of, this Plan as it may consider necessary or
appropriate for such purposes without affecting the terms of
this Plan as in effect for any other purpose, provided that no
such supplements, amendments, restatements or alternative
versions shall include any provisions that are inconsistent with
the terms of this Plan, as then in effect, unless the Plan could
have been amended to eliminate such inconsistency without
further approval by the stockholders of the Company.
23. Stockholder Approval. This Plan shall be
subject to approval by the stockholders of the Company at the
first annual meeting of stockholders held subsequent to the
Board of Directors approval of the Plan. Such stockholder
approval shall be obtained as required under applicable state
and federal law. As of the date of stockholder approval, no new
awards may be made under the Existing Plans. Any awards
outstanding under such plans as of the date of stockholder
approval of this Plan shall remain outstanding and shall
otherwise continue to be subject to the terms and conditions of
such plans.
C-14
TO VOTE BY MAIL, PLEASE DETACH PROXY CARD HERE
GARTNER, INC.
Proxy for the Annual Meeting of Stockholders
To Be Held on June 29, 2005
Class A Common Stock
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
I acknowledge receipt of the Notice of the Annual Meeting of Stockholders and Proxy Statement
of Gartner, Inc., each dated May 24, 2005. I appoint Eugene A. Hall,
Christopher Laford and Lewis G. Schwartz, and each of them, Proxies and attorneys-in-fact, with
full power to each of substitution, to represent me at Gartners Annual Meeting, to be held on June
29, 2005, at 10:00 a.m. local time, and at any adjournments, and to vote all shares of my Class A
Common Stock as I specify on the reverse side of this card.
THE PROXYHOLDERS WILL VOTE THE SHARES REPRESENTED BY THIS PROXY AS SPECIFIED. IF NO SPECIFICATION
IS INDICATED, THE PROXYHOLDERS WILL VOTE THE SHARES REPRESENTED BY THIS PROXY FOR THE PROPOSALS
AND FOR SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING AS THE PROXYHOLDERS DEEM
ADVISABLE.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
SEE REVERSE SIDE
THERE ARE THREE WAYS TO VOTE YOUR PROXY
TELEPHONE VOTING
This method of voting is available for residents of the U.S. and Canada. On a touch tone telephone,
call TOLL FREE 1-877-816-0837, 24 hours a day, 7 days a week. Have this proxy card
ready, then follow the prerecorded instructions. Your vote will be confirmed and cast as you have
directed. Available until 5:00 p.m., Eastern Daylight Time, on June 28, 2005.
INTERNET VOTING
Visit the Internet voting Web site at http://proxy.georgeson.com. Have this proxy card ready and
follow the instructions on your screen. You will incur only your usual internet charges. Available
until 5:00 p.m., Eastern Daylight Time, on June 28, 2005.
VOTING BY MAIL
Simply sign and date your proxy card and return it in the postage-paid envelope to Georgeson
Shareholder Communications, Wall Street Station, P.O. Box 1102, New York, NY 10269-0646. If you are
voting by telephone or the Internet, please do not mail your proxy card.
TO VOTE BY MAIL, PLEASE DETACH PROXY CARD HERE
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Please mark your votes as indicated
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THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR PROPOSALS 1 THRU 5.
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the nominee listed
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AUTHORITY |
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at left (except as
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marked to the
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contrary)
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1.
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Election of Director |
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(01) William O. Grabe as a director to hold office for
a term of three years.
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(Instruction: to withhold authority to vote for any
individual nominee, write that nominees name on the
space provided below.) |
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2.
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Proposal to amend and restate our restated
certificate of incorporation to reclassify our Class A
Common Stock and Class B Common Stock into a
single class of common stock.
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FOR
o
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AGAINST
o
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ABSTAIN
o |
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3.
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Proposal to amend and
restate our restated
certificate of incorporation to
eliminate our classified board
structure.
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FOR
o
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AGAINST
o
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ABSTAIN
o |
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4.
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Proposal to amend and
restate our 2003 Long Term
Incentive Plan.
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o
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o
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o |
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5.
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Proposal for us to buy
back certain of our outstanding
stock options that are out of
the money and amend our option
plans to allow this.
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o
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o
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o |
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6. |
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Transact any other business that is brought properly before the
Annual Meeting.
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Mark here for address change and note at left. o |
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Date , 2005 |
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Signature |
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Signature |
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Note: Please sign exactly as your name appears on your stock
certificate. If shares are held jointly, each holder should sign.
Executors, administrators, trustees, guardians, attorneys and agents
should sign using their full title. Corporations should sign using
the full corporate name by the authorized officer. |
TO VOTE BY MAIL, PLEASE DETACH PROXY CARD HERE
GARTNER, INC.
Proxy for the Annual Meeting of Stockholders
To Be Held on June 29, 2005
Class B Common Stock
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
I acknowledge receipt of the Notice of the Annual Meeting of Stockholders and Proxy Statement
of Gartner, Inc., each dated May 24, 2005. I appoint Eugene A. Hall,
Christopher Laford and Lewis G. Schwartz, and each of them, Proxies and attorneys-in-fact, with
full power to each of substitution, to represent me at Gartners Annual Meeting, to be held on June
29, 2005, at 10:00 a.m. local time, and at any adjournments, and to vote all shares of my Class B
Common Stock as I specify on the reverse side of this card.
THE PROXYHOLDERS WILL VOTE THE SHARES REPRESENTED BY THIS PROXY AS SPECIFIED. IF NO SPECIFICATION
IS INDICATED, THE PROXYHOLDERS WILL VOTE THE SHARES REPRESENTED BY THIS PROXY FOR THE PROPOSALS
AND FOR SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING AS THE PROXYHOLDERS DEEM
ADVISABLE.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
SEE REVERSE SIDE
THERE ARE THREE WAYS TO VOTE YOUR PROXY
TELEPHONE VOTING
This method of voting is available for residents of the U.S. and Canada. On a touch tone telephone,
call TOLL FREE 1-877-816-0837, 24 hours a day, 7 days a week. Have this proxy card
ready, then follow the prerecorded instructions. Your vote will be confirmed and cast as you have
directed. Available until 5:00 p.m., Eastern Daylight Time, on June 28, 2005.
INTERNET VOTING
Visit the Internet voting Web site at http://proxy.georgeson.com. Have this proxy card ready and
follow the instructions on your screen. You will incur only your usual internet charges. Available
until 5:00 p.m., Eastern Daylight Time, on June 28, 2005.
VOTING BY MAIL
Simply sign and date your proxy card and return it in the postage-paid envelope to Georgeson
Shareholder Communications, Wall Street Station, P.O. Box 1102, New York, NY 10269-0646. If you are
voting by telephone or the Internet, please do not mail your proxy card.
TO VOTE BY MAIL, PLEASE DETACH PROXY CARD HERE
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x
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Please mark your votes as indicated
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in this example |
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR PROPOSALS 1 THRU 5.
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FOR
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WITHHOLD |
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the nominees listed
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AUTHORITY |
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at left (except as
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to vote for the |
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marked to the
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nominees listed at |
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contrary)
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left |
1.
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Election of Director |
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(01) Eugene A.
Hall (02) Max D. Hopper (03) James
C. Smith
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o
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o |
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(Instruction: to withhold authority to vote for any
individual nominee, write that nominees name on the
space provided below.) |
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2.
|
|
Proposal to amend and restate our restated
certificate of incorporation to reclassify our Class A
Common Stock and Class B Common Stock into a
single class of common stock.
|
|
FOR
o
|
|
AGAINST
o
|
|
ABSTAIN
o |
|
|
|
|
|
|
|
|
|
3.
|
|
Proposal to amend and
restate our restated
certificate of incorporation to
eliminate our classified board
structure.
|
|
FOR
o
|
|
AGAINST
o
|
|
ABSTAIN
o |
|
|
|
|
|
|
|
|
|
4.
|
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Amend and
restate our 2003 Long Term
Incentive Plan.
|
|
o
|
|
o
|
|
o |
|
|
|
|
|
|
|
|
|
5.
|
|
Proposal for us to buy
back certain of our outstanding
stock options that are out of
the money and amend our option
plans to allow this.
|
|
o
|
|
o
|
|
o |
|
|
|
|
|
|
|
|
|
6. |
|
Transact any other business that is brought properly before the
Annual Meeting.
|
|
Mark here for address change and note at left. o |
|
Date , 2005 |
|
|
Signature |
|
|
Signature |
|
Note: Please sign exactly as your name appears on your stock
certificate. If shares are held jointly, each holder should sign.
Executors, administrators, trustees, guardians, attorneys and agents
should sign using their full title. Corporations should sign using
the full corporate name by the authorized officer. |