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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
CLARUS CORPORATION
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
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(1) Title of each class of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
[Clarus Logo]
3970 Johns Creek Court
Suwanee, Georgia 30024
Dear Stockholder:
You are cordially invited to attend the Annual Stockholders' Meeting of
Clarus Corporation, to be held at Hilton Gardens Inn, 4025 Windward Plaza,
Alpharetta, Georgia 30005, on Tuesday, May 21, 2002 at 9:00 a.m., local time,
notice of which is enclosed.
The following proposals are to be presented at the meeting:
. to elect three Class I Directors to serve until the 2005 Annual
Stockholders' Meeting; and
. to ratify the appointment of KPMG LLP as our independent auditors for
the fiscal year ending December 31, 2002.
The proposals listed above have been approved unanimously by your Board of
Directors and are recommended by the Board to you for approval. Each member of
the Board of Directors has agreed to vote all shares of our common stock owned
by such Director in favor of the proposals.
A group of dissidents, Warren B. Kanders, Burtt R. Ehrlich and Nicholas
Sokolow (the "Kanders Group"), have proposed themselves as nominees for
election to your Board of Directors in opposition to our nominees. We believe
that your Board of Directors acts in the best interests of ALL stockholders
and that this action is unnecessary, disruptive and may impede our efforts to
enhance the value of the investment of all of our stockholders. Accordingly,
we urge you to vote "FOR" our nominees for Directors on the WHITE proxy card
provided herein.
The affirmative vote of a plurality of our common stock present in person
or represented by proxy and entitled to vote at the meeting will be required
to elect three Directors to serve as Class I Directors until the 2005 Annual
Stockholders' Meeting. The affirmative vote of a majority of our common stock
present in person or represented by proxy and entitled to vote will be
required to ratify the appointment of KPMG LLP.
Whether you own a few or many shares of stock and whether or not you plan
to attend the meeting in person, it is important that your shares be voted on
matters that come before the meeting. To make sure that your shares are
represented, we urge you to complete and mail the enclosed WHITE proxy card
promptly.
During the meeting we will report on our operations, and our Directors,
Officers and representatives of KPMG LLP will be present to respond to
questions stockholders may have.
Your vote is very important. We appreciate your cooperation in considering
and acting on the matters presented.
Sincerely,
/s/ Stephen P. Jeffery
Stephen P. Jeffery, Chairman of the
Board,
President and Chief Executive
Officer
Atlanta, Georgia
April 30, 2002 ----------------
If you have any questions or need further assistance in voting your shares,
please contact:
Georgeson Shareholder Communications, Inc.
17 State Street, 10th Floor
New York, New York 10004
Banks and Brokers Call Collect (212) 440-9800
Stockholders Call Toll Free (866) 219-9662
[Clarus LOGO]
3970 Johns Creek Court
Suwanee, Georgia 30024
(770) 291-3900
NOTICE OF ANNUAL STOCKHOLDERS' MEETING
TO BE HELD MAY 21, 2002
Notice is hereby given that the Annual Stockholders' Meeting of Clarus
Corporation will be held at Hilton Gardens Inn, 4025 Windward Plaza,
Alpharetta, Georgia 30005, on Tuesday, May 21, 2002 at 9:00 a.m., local time,
for the following purposes:
1. Election of Directors. The election of three nominees for Class I
Directors of Clarus to serve until the 2005 Annual Stockholders' Meeting;
2. Ratification of Auditors. The ratification of the appointment of KPMG
LLP as our independent auditors for the fiscal year ending December 31, 2002;
and
3. Other Business. The transaction of such other business as may properly
come before the meeting, including adjourning the meeting to permit, if
necessary, further solicitation of proxies.
The affirmative vote of a plurality of our common stock present in person
or represented by proxy and entitled to vote at the meeting will be required
to elect the Class I Directors. The affirmative vote of a majority of the
shares of our common stock present in person or represented by proxy and
entitled to vote at the meeting will be required to ratify the appointment of
KPMG LLP. Only stockholders of record at the close of business on April 19,
2002 are entitled to receive notice of and to vote at the meeting or any
adjournment or postponement thereof.
A copy of our annual report for the year ended December 31, 2001 is
enclosed.
YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
YOU ARE ENCOURAGED TO VOTE BY PROXY SO THAT YOUR SHARES WILL BE REPRESENTED
AND VOTED AT THE MEETING EVEN IF YOU CANNOT ATTEND. ALL STOCKHOLDERS OF RECORD
CAN VOTE BY USING THE WHITE PROXY CARD.
THIS SOLICITATION INVOLVES A CONTESTED ELECTION OF DIRECTORS. YOUR BOARD OF
DIRECTORS URGES YOU NOT TO SIGN THE GREEN PROXY CARD THAT MAY BE SENT TO YOU
FROM THE DISSIDENTS.
By Order of the Board of Directors
/s/ Stephen P. Jeffery
Stephen P. Jeffery, Chairman
Atlanta, Georgia
April 30, 2002
[Clarus Logo]
Proxy Statement For
2002 Annual Stockholders' Meeting
TABLE OF CONTENTS
Page
Voting Information.......................................................... 1
Proposal 1--Election of Directors........................................... 4
Executive Officers.......................................................... 8
Executive Compensation...................................................... 9
Stock Performance Graph..................................................... 13
Compensation Committee Report............................................... 14
Audit Committee Report...................................................... 16
Proposal 2--Ratification of Appointment of Independent Auditors............. 17
Security Ownership of Principal Stockholders and Management................. 18
Section 16(a) Beneficial Ownership Reporting Compliance..................... 19
General Information......................................................... 19
Participants in the Solicitation............................................ 20
Other Matters............................................................... 21
[CLARUS LOGO]
PROXY STATEMENT FOR
2002 ANNUAL STOCKHOLDERS' MEETING
VOTING INFORMATION
General
This Proxy Statement and WHITE proxy card are being furnished to you in
connection with the solicitation by and on behalf of our Board of Directors of
proxies for use at our 2002 Annual Stockholders' Meeting, at which you will be
asked to vote upon proposals to:
. elect three Directors to serve as Class I Directors until our 2005
Annual Stockholders' Meeting (see Proposal 1); and
. ratify the appointment of KPMG LLP as our independent auditors for
the fiscal year ending December 31, 2002 (see Proposal 2).
The meeting will be held at 9:00 a.m., local time, on Tuesday, May 21,
2002, at Hilton Gardens Inn, 4025 Windward Plaza, Alpharetta, Georgia 30005.
This Proxy Statement and the enclosed WHITE proxy card are first being mailed
to stockholders on or about April 30, 2002.
Our Board of Directors has established the close of business on April 19,
2002, as the record date for determining our stockholders entitled to notice
of and to vote at the meeting. Only our stockholders of record as of the
record date will be entitled to notice of and to vote at the meeting. Most of
our stockholders hold their shares through a broker, bank or other nominee
rather than directly in their own name. There are some distinctions between
shares held of record and those owned beneficially. If your shares are
registered directly in your name with our transfer agent, American Stock
Transfer & Trust Company, you are considered, with respect to those shares,
the stockholder of record. As the stockholder of record, you have the right to
grant your voting proxy directly to us or to vote in person at the meeting. We
have enclosed a WHITE proxy card for you to use. If your shares are held in a
stock brokerage account or by a bank or other nominee, you are considered the
beneficial owner of such shares, and these proxy materials are being forwarded
to you by your broker or nominee, which is considered, with respect to those
shares, the stockholder of record. As the beneficial owner, you have the right
to direct your broker how to vote and are also invited to attend the meeting.
However, because you are not the stockholder of record, you may not vote these
shares in person at the meeting. Your broker or nominee has enclosed a voting
instruction card for you to use in directing the broker or nominee how to vote
your shares. Only shares held directly in your name as the stockholder of
record may be voted in person at the meeting. If you choose to do so, please
bring the enclosed WHITE proxy card and proof of identification.
Warren B. Kanders, Burtt R. Ehrlich and Nicholas Sokolow (collectively, the
"Kanders Group"), have proposed themselves as nominees for election to the
Board of Directors in opposition to the Company's nominees. The Board of
Directors is soliciting votes FOR the Company's nominees for election to the
Board of Directors. Unless contrary instructions are indicated on the WHITE
proxy card, all shares represented by valid proxies received pursuant to this
solicitation (and not revoked) will be voted FOR the election of all of the
Company's nominees for Directors named in this Proxy Statement. If you specify
a different choice on the WHITE proxy card, your shares will be voted as
specified.
Your vote at this year's annual meeting is especially important. Please
sign and date the enclosed WHITE proxy card and return it in the enclosed
envelope promptly. Using the green proxy card for any reason is a vote against
the nominees of your Board of Directors.
How You Can Vote
YOUR VOTE IS IMPORTANT, NO MATTER HOW MANY OR HOW FEW SHARES YOU OWN.
1. If you are the stockholder of record, please sign, date and mail the
enclosed WHITE proxy card to Georgeson Shareholder Communications,
Inc. in the postage paid envelope provided.
1
2. If your shares are held in the name of a brokerage firm, bank
nominee or other institution, only it can sign a WHITE proxy card
with respect to your shares and only after receiving your specific
instructions. To ensure that your shares are voted, you should
contact the person responsible for your account and give
instructions for a WHITE proxy card to be voted representing your
shares.
3. After signing the enclosed WHITE proxy card, do not sign or return
any green proxy card. Remember--only your latest dated proxy will
determine how your shares are to be voted at the meeting.
4. If you have any questions or need further assistance in voting your
shares, please contact our proxy solicitor at the special telephone
number reserved for Clarus stockholders provided below.
Georgeson Shareholder Communications, Inc.
17 State Street, 10th Floor
New York, New York 10004
Banks and Brokers Call Collect (212) 440-9800
Stockholders Call Toll Free (866) 219-9662
----------------
YOUR BOARD HAS BEEN AND WILL CONTINUE TO ENHANCE
STOCKHOLDER VALUE
----------------
Your Board and management, including all of our nominees, have been
pursuing a business plan designed to enhance value for ALL stockholders. Since
October 2001, your Board has been working closely with The Chasm Group, LLC, a
leading technology-oriented consulting firm specializing in the technology
industry, to evaluate the strategic direction of the Company and its products,
to assist us in developing our business plan and to enhance our strategic
focus. The main aspects of the plan include:
. Continued Exploration of Strategic Alternatives. We are in the process
of retaining a financial advisor to assist us in exploring and
evaluating strategic alternatives. These alternatives include, among
others, evaluating strategic partners that would enable us to more
rapidly achieve our growth and scale objectives and to become a part of
a larger organization with more critical mass and a more expansive
platform.
. Aggressive Reduction of Operating Expenses. We have reduced head count
by 57% since March 2002 to preserve our strong cash position and improve
our operational and financial flexibility. As a result of our decisive
actions, we have substantially reduced operating expenses.
. Significant Progress Toward Profitability. We have already begun to
realize the benefits of our cost-cutting initiatives and, together with
our investments in product development and improved sales and marketing,
we believe we are positioned to achieve breakeven on a pro forma basis
by the end of 2002.
. Continued Focus on Clarus Sourcing, Procurement and Settlement(TM)
Products. We intend to continue our focus on driving sales of our
sourcing, procurement and settlement products, directly and through
selected channel partners. Clarus sourcing, procurement and settlement
products are components of the emerging Supplier Relationship Management
market and going forward we will continue to develop these products with
the requirements of that market in mind.
. Management and Board Additions. During the last 18 months we have
strengthened our management team and Board of Directors with the
addition of Sean Feeney as Chief Operating Officer, Jim McDevitt as
Chief Financial Officer, Tom Underhill as Vice President of Sales EMEA
and most recently, Craig Potts as Vice President of Sales Americas. In
January 2002, we added Todd Hewlin of The Chasm Group, LLC to the Board.
See "Proposal 1--Election of Directors--Biographical Information for
Directors" and "Executive Officers--Biographical Information for Executive
Officers."
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How to Revoke Your Proxy
Any stockholder who has delivered a proxy may revoke it at any time before
it is voted by giving notice of revocation in writing or submitting to us a
signed proxy bearing a later date, provided that we actually receive such
notice or proxy prior to the taking of the stockholder vote. Any notice of
revocation should be sent to: Clarus Corporation, 3970 Johns Creek Court,
Suwanee, Georgia 30024, Attention: James J. McDevitt, Corporate Secretary. If
you are a stockholder of record, you may also revoke your proxy by attending
the annual meeting and voting in person in accordance with the rules for
voting at the annual meeting. However, if you instructed a broker to vote your
shares, you must follow your broker's directions for changing your
instructions. The shares of our common stock represented by properly executed
proxies received at or prior to the meeting and not subsequently revoked will
be voted as directed in such proxies. If instructions are not given, shares
represented by proxies received will be voted "FOR" election of the nominees
for Class I Director and "FOR" ratification of KPMG LLP as our independent
auditor. As of the date of this Proxy Statement, we are unaware of any other
matter to be presented at the meeting.
How Votes Are Counted
The affirmative vote of a plurality of our common stock present in person
or represented by proxy and entitled to vote at the meeting will be required
to elect three Directors to serve as Class I Directors until the 2005 Annual
Stockholders' Meeting. This means that the three nominees receiving the
highest number of votes will be elected. Accordingly, the withholding of
authority by a stockholder (including broker non-votes) will not be counted in
computing a plurality and thus will have no effect on the results of the
election of such nominees. In the election of Directors, you may vote "FOR"
all of the nominees or your vote may be withheld with respect to one or more
of the nominees. For the other proposal, you may vote "FOR," "AGAINST" or
"ABSTAIN." If you "ABSTAIN," it has the same effect as a vote against the
proposal.
The affirmative vote of a majority of our outstanding common stock present
in person or represented by proxy and entitled to vote at the meeting will be
required to ratify the appointment of KPMG LLP as our independent auditors for
the fiscal year ending December 31, 2002 and to approve any other proposals
considered at the meeting. Under certain circumstances, brokers are prohibited
from exercising discretionary authority for beneficial owners who have not
returned proxies to the brokers (so-called "broker non-votes"). In such cases,
those shares will be counted for the purpose of determining if a quorum is
present but will not be included in the vote totals with respect to those
matters for which the broker cannot vote. If a stockholder abstains from
voting on a matter, those shares will be counted for the purpose of
determining if a quorum is present and will be counted as a vote against such
proposal.
As of the record date, there were 15,579,642 shares of our common stock
outstanding and 166 holders of record of shares of our common stock entitled
to vote at the meeting, with each share entitled to one vote.
The presence, in person or by proxy, of a majority of the outstanding
shares of our common stock entitled to vote at the meeting is necessary to
constitute a quorum of the stockholders in order to take action at the
meeting. Shares that are voted "FOR," "AGAINST," "WITHHELD" or "ABSTAIN " are
treated as being present at the meeting for purposes of establishing a quorum
and are also treated as shares entitled to vote at the annual meeting with
respect to such matter. The inspector of election will also treat broker non-
votes as shares that are present and entitled to vote for purposes of
determining a quorum. Broker non-votes, however, are not counted as shares
present and entitled to be voted with respect to the matter on which the
broker has expressly not voted. Thus, broker non-votes will not affect the
outcome of any of the matters being voted upon at the meeting.
Voting Results
We plan to announce preliminary voting results at the annual meeting and
publish final results in our quarterly report on Form 10-Q for the second
quarter of fiscal year 2002.
3
PROPOSAL 1 -- ELECTION OF DIRECTORS
Number and Classification
Our Board of Directors currently consists of seven Directors. Our Bylaws
provide that our Board of Directors will consist of not less than two, nor
more than seven members, the precise number to be determined from time to time
by the Board of Directors. Our Board of Directors has set the number of
Directors at seven. The seven members who comprise our Board of Directors are
divided into three classes: Class I Directors, Class II Directors and Class
III Directors, with each such class of Directors serving staggered three-year
terms.
Messrs. Mark A. Johnson, Brady L. Rackley, III and Todd Hewlin serve in the
class having a term that expires in 2002; Messrs. Tench Coxe and Donald L.
House serve in the class having a term that expires in 2003; and Messrs.
Stephen P. Jeffery and Said Mohammadioun serve in the class having a term that
expires in 2004. Upon the expiration of the term of each class of Directors,
Directors comprising such class of Directors, if nominated, will be eligible
to be elected for a three-year term at the next succeeding annual meeting of
stockholders. In June 2000, Mr. William S. Kaiser resigned from the Board of
Directors and in September 2000, Mr. Norman N. Behar resigned from the Board
of Directors. Mr. Rackley was appointed to the Board of Directors in August
2000 to fill the vacancy in Class I created by Mr. Kaiser's resignation. Mr.
Hewlin was appointed to the Board of Directors in January 2002 to fill the
vacancy in Class I created by Mr. Behar's resignation.
Nominees
We have selected three nominees for election to our Board of Directors as
Class I Directors. Class I Directors will serve a three-year term that will
expire at our 2005 Annual Stockholders' Meeting. The three nominees are: Mark
A. Johnson, Brady L. Rackley, III and Todd Hewlin, all of whom currently serve
as Class I Directors. Proxies cannot be voted at the meeting for a greater
number of persons than the number of nominees named.
Each of the nominees has consented to being named in this Proxy Statement
and to serve as a Director if elected. In the event that any nominee withdraws
or for any reason is not able to serve as a Director, the proxy will be voted
for such other person as may be designated by the Board of Directors (or to
reduce the number of persons to be elected by the number of persons unable to
serve), but in no event will the proxy be voted for more than three nominees.
The Board of Directors unanimously recommends that you vote "FOR" the
Board's nominees for Class I Director as presented on the enclosed WHITE proxy
card.
Board of Directors
The following table sets forth the name and age of each of the three
nominees for election as Class I Directors and the remaining Directors who
will continue to serve on our Board of Directors, as well as his Director
classification and length of service on our Board.
Director Year First
Name Age Classification Elected
---- --- -------------- ----------
Board Nominees
Mark A. Johnson................................... 49 I 1998
Brady L. Rackley, III............................. 31 I 2000
Todd Hewlin....................................... 35 I 2002
Directors Continuing in Office
Tench Coxe........................................ 44 II 1993
Donald L. House................................... 60 II 1993
Stephen P. Jeffery................................ 46 III 1997
Said Mohammadioun................................. 54 III 1998
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Biographical Information for Directors
The principal occupation for the past five years of each Director nominee
and each continuing Director is set forth below.
Nominees for Director
We strongly believe that our three independent Director nominees for
election at the annual meeting are best positioned to execute our strategy and
business plan and lead us through the current environment for companies in our
industry. Each nominee currently serves on our Board, has extensive experience
in the technology industry, is dedicated to enhancing stockholder value, and
is committed to actively assisting management to help ensure our success. We
believe that direct operational experience in the software industry and a
thorough understanding of our market, products and strategic values are
critical to recognizing and maximizing our opportunities, executing our
business strategy and creating long-term stockholder value. Each of the
following nominees has extensive industry-specific experience, including
experience advising technology companies through evolving strategies,
acquisitions and divestitures.
Todd Hewlin has served as a member of our Board of Directors since January
2002. Mr. Hewlin has served as a managing director with The Chasm Group, LLC,
a technology-oriented consulting firm, since May 2001. The Chasm Group, LLC is
located at 411 Borel Avenue, Suite 550, San Mateo, California 94402. Prior to
joining The Chasm Group, Mr. Hewlin was a senior executive with Internet
Capital Group ("ICG") from July 1999 to May 2001 where he also served as a
Board Member and as Advisor of ICG companies. Prior to joining ICG, Mr. Hewlin
was a partner with McKinsey & Co.
Mark A. Johnson has served as a member of our Board of Directors since July
1998. Mr. Johnson has served since October 2000 as President and Chief
Executive Officer of e-RM Partners LLC, a venture capital company that invests
in technology and electronic payment companies. e-RM Partners LLC is located
at 1145 Powers Place, Alpharetta, Georgia 30004. Mr. Johnson has served as the
Vice Chairman of CheckFree Corporation, a supplier of financial e-commerce
services, software and related products, since 1997. He retired from CheckFree
in July 2000. From 1982 to 1997 Mr. Johnson served in various capacities with
CheckFree. From 1996 until 1997, he served as President of CheckFree Software
Division. From 1990 to 1996 Mr. Johnson was Executive Vice President of
Corporate Development for CheckFree. He has been a member of the Board of
Directors of CheckFree for the past 17 years. Mr. Johnson also serves on the
board of directors of several privately-held technology companies.
Brady L. ("Tripp") Rackley, III has served as a member of our Board of
Directors since August 2000. Mr. Rackley founded nFront, Inc. and served as
Chairman of the Board and Chief Executive Officer of nFront since its
inception in 1996 until February 2000, when nFront was acquired in a merger by
Digital Insight Corporation. Prior to forming nFront, Mr. Rackley served as
Chief Operating Officer of LeapFrog Technologies, Inc, a software development
company, from October 1995 until February 1996, and as Vice President--
Development of Systeme Corp., a software development company, from December
1992 until September 1995. Mr. Rackley currently serves as entrepreneur in
residence at Noro-Moseley Partners, a venture capital firm located at 9 North
Parkway Square, 4200 Northside Parkway, NW, Atlanta, Georgia 30327.
Continuing Directors
Tench Coxe has served as a member of our Board of Directors since September
1993. Mr. Coxe is a managing director of the general partner of Sutter Hill
Ventures, A California Limited Partnership, a venture capital company located
at 755 Page Mill Road, Suite A-200, Palo Alto, California 94304, since 1989.
Mr. Coxe also serves on the boards of directors of eLoyalty Corporation,
Copper Mountain Networks, Inc. and NVIDIA Corporation and on the boards of
directors of several privately-held companies.
Donald L. House has served as a member of our Board of Directors since
January 1993. Mr. House served as Chairman of our Board of Directors from
January 1994 until December 1997 and as our President from
5
January 1993 until December 1993. Mr. House also serves on the board of
directors of Carreker Corporation, where he is chairman of its audit
committee. Mr. House is Chairman of the Board of Ockham Technologies, Inc. and
he also serves on the board of directors of several other privately-held
companies.
Stephen P. Jeffery joined us in November 1994 as Vice President of
Marketing and was elected Vice President of Sales and Marketing in June 1995.
He was elected President in October 1995, a Director in October 1997, Chairman
of the Board in December 1997 and Chief Executive Officer in February 1998.
Prior to joining us, Mr. Jeffery was employed by Hewlett-Packard Company,
where he served as the manager of Hewlett-Packard's client/server solutions
and partner programs, as well as in a variety of sales and marketing
management positions in the United States and Europe for 15 years. Mr. Jeffery
also served in sales with International Business Machines prior to joining
Hewlett-Packard.
Said Mohammadioun has served as a member of our Board of Directors since
March 1998. Mr. Mohammadioun has served as chairman and chief executive
officer of Synchrologic, a provider of software infrastructure solutions
located at 200 North Point Center East, Suite 600, Alpharetta, Georgia 30022,
since October 1996. From March 1995 to September 1996, he was a private
investor in small technology companies. Mr. Mohammadioun was vice president of
Lotus Development Corp. from December 1990 to February 1995.
Advance Notice of Stockholder Nominees
By letter dated March 20, 2002, Kanders & Company, Inc., submitted a notice
to us requesting that we nominate Warren B. Kanders, Burtt Ehrlich and
Nicholas Sokolow for election to our Board of Directors. The notice stated
that Kanders & Company, Inc. beneficially owned an aggregate of 724,00 shares
of our common stock, or 4.65% of our issued and outstanding shares of common
stock. In addition, by letter dated March 21, 2002, NightWatch Capital
Partners, LLC ("NightWatch"), submitted a notice to us stating that it
intended to nominate David R. Bradford, John F. Nemelka and Jeffrey H. Singer
for election to our Board of Directors. The notice stated that NightWatch
beneficially owned an aggregate of 147,541 shares of our common stock, or 0.9%
of our issued and outstanding shares of common stock.
On April 12, 2002, Messrs. Kanders, Ehrlich and Sokolow and an investment
fund affiliated with Mr. Sokolow, filed a Schedule 13D with the Securities and
Exchange Commission reporting their aggregate holdings of 853,600 shares of
our common stock, or 5.5% of our outstanding common stock, and stating that
they intended to propose changes in our present Board of Directors and
management and other changes that may include a liquidation of Clarus. On
April 24, 2002 the Kanders Group filed a preliminary proxy statement with the
Securities and Exchange Commission for the purpose of soliciting proxies in
favor of its nominees to the Board of Directors.
Several weeks ago, we invited the Kanders Group to meet with us to discuss
any strategic initiatives that they recommend we consider. To date, they have
not accepted our invitation.
You may receive a proxy statement and a green proxy card from the Kanders
Group with respect to their own nominees for directors. The Kanders Group's
nominees have NOT been endorsed by and are NOT supported by our Board of
Directors. We urge stockholders not to return any proxy card received from the
Kanders Group. Accordingly, please sign, date and return the WHITE proxy card
to us in the enclosed envelope. Even if you have already voted the Kanders
Group's green proxy card, you may cancel that proxy and change your vote by
mailing the enclosed WHITE proxy card.
The Board of Directors unanimously recommends that you vote "FOR" the
Board's nominees for Class I Directors as presented on the enclosed WHITE
proxy card.
Meetings and Committees of the Board
Our Board of Directors held 14 meetings during 2001. Each Director attended
75% or more of the aggregate number of meetings held by the Board of Directors
and the committees on which he served. Our Board of Directors has three
standing committees: the Audit Committee, the Compensation Committee and the
6
Nominating Committee. During 2001, the Board of Directors did not have a
standing nominating committee, although the functions of such committee were
performed by the full Board of Directors.
The Audit Committee presently consists of Messrs. Coxe, House and Johnson.
All of the members of the Audit Committee are independent directors, as that
term is defined in Rule 4200(a)(14) of the National Association of Securities
Dealers' listing standards. The Audit Committee has been assigned the
principal functions of:
. appointing and meeting with our independent auditors;
. reviewing and approving the annual report of our independent
auditors;
. meeting with management regarding audit matters;
. approving the annual financial statements; and
. reviewing and approving summary reports of our independent auditor's
findings and recommendations.
The Audit Committee held six meetings during 2001.
The Compensation Committee presently consists of Messrs. Rackley and
Mohammadioun. The Compensation Committee has been assigned the functions of
approving and monitoring the remuneration arrangements for senior management
and equity compensation awards under our stock-based plans. The Compensation
Committee held three meetings during 2001.
The Nominating Committee consists of Messrs. Hewlin, House and
Mohammadioun. The Nominating Committee presents its recommendation of nominees
for Directors to the full Board of Directors. The Nominating Committee will
consider nominations made by our stockholders, if such nominations are made in
writing to the Secretary and received by us not more than 90 days nor less
than 60 days prior to the anniversary date of our immediately preceding annual
meeting. See "General Information--Stockholder Proposals for 2003 Annual
Meeting." The Nominating Committee did not meet in 2001.
Director Compensation
Directors who are not our employees ("Outside Directors") currently include
Messrs. Coxe, Hewlin, House, Johnson, Mohammadioun and Rackley. In the second
half of 2001, we began providing our Outside Directors with a per meeting fee
in addition to stock option grants. Our Outside Directors now receive a $2,000
fee for each regular and special meeting of the Board attended by such
Director. Each Outside Director was paid $2,000 (or $10,000 for all Outside
Directors as a group) in meeting fees in 2001. Outside Directors are not
compensated for attendance at committee meetings or for strictly telephonic
Board meetings. Outside Directors also participate in our Stock Incentive
Plan. On May 22, 2001, we made our annual option grant of 10,000 shares of our
common stock to each of Messrs. Coxe, House, Johnson, Mohammadioun and
Rackley. On August 28, 2001, we granted an option to purchase 11,250 shares of
our common stock to Mr. Rackley. All options were granted to our Outside
Directors with an exercise price equal to fair market value on the date of
grant. The options granted to our Outside Directors in May 2001 vest in equal
quarterly installments over a one year period from the date of grant. The
option granted to Mr. Rackley vested on the day immediately following the date
of grant.
7
EXECUTIVE OFFICERS
The following table sets forth the name, age and position of each executive
Officer.
Name Age Positions
---- --- ---------
Stephen P. Jeffery...... 46 Chairman, President and Chief Executive Officer
Sean E. Feeney.......... 44 Chief Operating Officer
James J. McDevitt....... 42 Chief Financial Officer and Secretary
Our executive Officers are appointed by the Board of Directors and serve
until their successors are duly elected and qualified. There are no family
relationships among any of our executive Officers or Directors.
Biographical Information for Executive Officers
Stephen P. Jeffery joined us in November 1994 as Vice President of Marketing
and was elected Vice President of Sales and Marketing in June 1995. He was
elected President in October 1995, a Director in October 1997, Chairman of the
Board in December 1997 and Chief Executive Officer in February 1998. Prior to
joining us, Mr. Jeffery was employed by Hewlett-Packard Company, where he
served as the manager of Hewlett-Packard's client/server solutions and partner
programs, as well as in a variety of sales and marketing management positions
in the United States and Europe for 15 years. Mr. Jeffery also served in sales
with International Business Machines prior to joining Hewlett-Packard.
Sean E. Feeney joined us in August 2001 as our Chief Operating Officer.
Prior to joining us, Mr. Feeney served as Chief Executive Officer of One Source
Relocation (formerly Clickandmove.com), from March 2000 to September 2000. From
February 1997 to March 2000 Mr. Feeney served as President of the Software
Division and Executive Vice President, Electronic Commerce Field Operations of
CheckFree Corporation.
James J. McDevitt joined us in August 2000 as Vice President of Finance and
was promoted to Chief Financial Officer in January 2001. Mr. McDevitt was
elected as Secretary in October 2001. Prior to joining us, Mr. McDevitt served
in senior finance positions, including most recently as Senior Vice President
and Chief Financial Officer of Geac Computer Systems, Inc. from 1997 to 2000.
Prior to joining Geac, Mr. McDevitt served from 1996 to 1997 in the Corporate
Finance department of the Georgia Pacific Corporation.
8
EXECUTIVE COMPENSATION
The following table provides certain summary information for 2001, 2000 and
1999 concerning compensation paid or accrued by us to or on behalf of our
Chief Executive Officer and our other four most highly compensated executive
Officers during 2001 (our "Named Executive Officers").
Summary Compensation Table
Long-Term
Annual Compensation(1) Compensation Awards(2)
----------------------- ---------------------
Securities Underlying
Name and Principal Position Year Salary($) Bonus($) Options Granted(#)
- --------------------------- ---- --------- -------- ---------------------
Stephen P. Jeffery.............................. 2001 $250,000 $ 82,994 150,000
Chairman Chief Executive Officer 2000 250,000 146,875 175,000(3)
and President 1999 225,666 93,257 110,000
Joseph E. Bibler................................ 2001 $200,000 $ 89,617 25,000
Vice President, Customer Services 2000 227,754 105,950 --
1999 209,027 158,376 20,000
Steven M. Hornyak............................... 2001 $200,000 $ 86,974 100,000
Executive Vice President, Americas 2000 191,667 263,158 5,000
and Chief Strategy Officer (4) 1999 175,666 94,558 100,000
Alan MacLamroc.................................. 2001 $191,667 $ 49,595 105,000
Chief Technology Officer (5) 2000 35,538 35,000 75,000
1999 -- -- --
James J. McDevitt............................... 2001 $201,365 $ 36,480 50,000
Chief Financial Officer and Secretary 2000 64,308 10,560 20,000
1999 -- -- --
- --------
(1) In accordance with the rules of the Securities and Exchange Commission,
the compensation set forth in the table does not include medical
insurance, group life insurance or other benefits, securities or property
that do not exceed the lesser of $50,000 or 10% of the person's salary and
bonus shown in the table.
(2) We did not make any restricted stock awards, grant any stock appreciation
rights or make any long-term incentive payments to our Named Executive
Officers during 2001, 2000 or 1999. Options granted to our Named Executive
Officers were granted at fair market value on the date of grant as
determined by our Compensation Committee.
(3) Effective February 1, 2002, Mr. Jeffery voluntarily relinquished the
option for these shares.
(4) Mr. Hornyak ceased serving as an executive Officer in March 2002.
(5) Mr. MacLamroc's employment with Clarus ceased effective April 24, 2002.
9
Option Grants in 2001
The following table provides certain information concerning individual
grants of stock options made during 2001 to our Named Executive Officers.
Individual Grants
-----------------------------------------------
Potential
Realizable Value
Percent of at Assumed Annual
Total Rates of Stock
Number of Options Price
Securities Granted to Appreciation for
Underlying Employees Exercise Option Term(2)
Options In Fiscal Price Per Expiration -----------------
Name Granted(#)(1) Year Share($/sh) Date 5% 10%
---- ------------- ---------- ----------- ---------- -------- --------
Stephen P. Jeffery...... 150,000 7.8% $ 7.00 7/30/08 $427,455 $996,153
Joseph E. Bibler........ 25,000 1.3% 5.625 1/8/08 57,249 133,413
Steven M. Hornyak....... 100,000 5.2% 5.625 1/8/08 228,994 533,653
Alan MacLamroc.......... 105,000 5.5% 3.49 11/9/08 149,182 347,657
James J. McDevitt....... 50,000 2.6% 5.625 1/8/08 114,497 266,827
- --------
(1) All options were granted pursuant to our Stock Incentive Plan (formerly,
the 1998 Stock Incentive Plan) at an exercise price not less than fair
market value on the date of grant based on the closing sales price of our
common stock as reported on the Nasdaq National Market. All options granted
to our Named Executive Officers in 2001 vest over 48 monthly installments,
except that the option granted to Mr. MacLamroc vests over 36 monthly
installments. The options granted to our Named Executive Officers expire
seven years after the date of grant.
(2) Amounts reported in this column represent hypothetical values that may be
realized upon exercise of the options immediately prior to the expiration
of their term, assuming that the stock price on the date of grant
appreciates at the specified annual rates of appreciation, compounded
annually over the term of the option. These numbers are calculated based on
rules of the Securities and Exchange Commission.
Aggregated Option Exercises in 2001
and Year-End Option Values
The following table provides certain information concerning the options
exercised in 2001 by our Named Executive Officers and the number and value of
exercised and unexercised options held by our Named Executive Officers as of
December 31, 2001.
Number of Securities
Underlying Unexercised Value of Unexercised
Options at In-the-Money Options
Fiscal Year End(#) at Fiscal Year End ($)(2)
-------------------------- -------------------------
Number of Dollar
Shares Value
Acquired On Realized
Name Exercise(#) ($)(1) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
Stephen P. Jeffery...... -- -- 297,181(3) 333,208(3) $469,197 $172,680
Joseph E. Bibler........ -- -- 43,269 31,270 38,219 11,851
Steven M. Hornyak....... 2,790 $11,422 89,268 147,415 59,964 86,346
4,500 21,645
Alan MacLamroc.......... -- -- 2,916 102,084 8,019 280,731
James J. McDevitt....... -- -- 23,334 46,666 10,250 20,500
- --------
(1) Dollar values were calculated based on the difference between the fair
market value of the underlying common stock on the date prior to exercise
date and the exercise price per share.
(2) Dollar values were calculated based on the difference between the fair
market value of the underlying securities at December 31, 2001 ($6.24 per
share), and the exercise price of the options.
(3) Effective February 1, 2002, Mr. Jeffery voluntarily relinquished an option
to purchase 175,000 shares of common stock granted in 2000.
10
Ten-Year Options Repricing
Length of
original
option
Securities term
underlying Exercise remaining
number of Market price price at New at date
options at time of time of Exercise of
Name Date repriced(#) repricing($) repricing($) Price($) repricing
---- -------- ----------- ------------ ------------ -------- ---------
Alan MacLamroc,
Chief Technology Officer.. 11/09/01 75,000 $3.49 $21.00 $3.49 6 years
30,000 3.49 6.94 3.49 5 years
Compensation Committee Interlocks and Insider Participation
Messrs. Rackley and Mohammadioun serve on our Compensation Committee.
Neither member of the Compensation Committee serves as a member of the Board
of Directors or Compensation Committee of any entity that has one or more
executive Officers serving as a member of our Board of Directors or
Compensation Committee.
Employment Agreements and Change in Control Arrangements and Separation
Agreements
Effective January 1, 2000, we entered into a one-year employment, non-
disclosure, non-solicitation and non-competition agreement with Stephen P.
Jeffery, our President, Chief Executive Officer and Chairman of the Board. The
agreement automatically renews for successive additional one year terms. Under
his employment agreement, Mr. Jeffery receives an annual base salary of
$250,000 and an incentive bonus if certain revenue and earnings targets are
met. If we terminate Mr. Jeffery's employment agreement without cause, then
Mr. Jeffery will be entitled to receive severance pay in the form of
continuation of his annualized base salary for one year from the date of
termination and a pro rata portion of his incentive bonus, if any, for the
quarter in which his employment terminated. Mr. Jeffery may terminate his
employment agreement at any time three months after a change in control has
occurred and we are required to pay to Mr. Jeffery his base salary as of the
date of the change in control for a period of 12 months from the date of
termination and the pro rata portion of his incentive bonus for the quarter in
which his employment terminated.
Effective April 1, 2001, we entered into a one-year employment, non-
disclosure, non-solicitation and non-competition agreement with Steven M.
Hornyak, our Executive Vice President, Americas and Chief Strategy Officer.
The agreement with Mr. Hornyak automatically renews for an additional one-year
term unless either party notifies the other of its intention not to renew the
Agreement at least 30 days prior to the end of the term. Under his employment
agreement, Mr. Hornyak receives an annual base salary of $200,000 and
incentive bonuses if certain revenue, expense and profitability targets are
met. We amended Mr. Hornyak's agreement in February 2002 to provide that if we
terminate Mr. Hornyak's employment prior to March 7, 2003, then Mr. Hornyak
will be entitled to receive severance pay in the form of continuation of his
annualized base salary until July 7, 2002 and thereafter until the earlier of
March 7, 2003 or the date on which he commences new employment. Mr. Hornyak
ceased serving as an executive Officer in February 2002, but he remains an
employee of the Company.
Effective August 15, 2001, we entered into a one-year employment, non-
disclosure, non-solicitation and non-competition agreement with Sean E.
Feeney, our Chief Operating Officer. The agreement with Mr. Feeney
automatically renews for an additional one-year term unless either party
notifies the other of its intention not to renew the Agreement at least 30
days prior to the end of the term. Under his employment agreement, Mr. Feeney
receives an annual base salary of $200,000. Mr. Feeney is also eligible to
receive additional annualized compensation of up to $100,000 per year if we
meet certain revenue, expense and profitability targets and Mr. Feeney attains
specified management business objectives as determined by our Chief Executive
Officer. If we terminate Mr. Feeney's employment without cause, then Mr.
Feeney will be entitled to receive severance pay in the form of continuation
of his annualized base salary until the earlier of six months from the date of
termination,
11
the expiration of the remainder of the one year term in effect, or
Mr. Feeney's commencement of employment with any other entity. Mr. Feeney will
also receive a pro rata portion of his incentive bonus, if any, for the
quarter in which his employment terminated. Mr. Feeney may terminate his
employment agreement at any time three months after a change in control has
occurred and we are required to pay to Mr. Feeney his base salary as of the
date of the change in control for a period of six months from the date of
termination or such earlier date on which Feeney commences new employment and
the pro rata portion of his incentive bonus for the quarter in which his
employment terminated.
Certain Relationships and Related Transactions
On January 24, 2002, Todd Hewlin joined our Board of Directors. Mr. Hewlin
is a managing director of The Chasm Group, LLC, a technology-oriented
consulting firm. During 2001, we engaged The Chasm Group to assist us with
various strategic issues. The period of the engagement was November 15, 2001,
through February 15, 2002, for a total fee of $225,000 plus out-of-pocket
expenses. We expensed a total of $131,000 during 2001 as shown in our general
and administrative expenses in the accompanying consolidated statement of
operations and had a balance due to The Chasm Group of $94,000 at December 31,
2001, as shown in our accounts payable and accrued liabilities in the
accompanying consolidated balance sheet. The balance of the agreement with The
Chasm Group, LLC will be expensed and paid in 2002.
Limitation of Liability and Indemnification of Officers and Directors
Our Amended and Restated Certificate of Incorporation provides that the
liability of our Directors for monetary damages shall be limited to the
fullest extent permissible under Delaware law and that we may indemnify our
Officers, employees and agents to the fullest extent permitted under Delaware
law.
Our Bylaws provide that we must indemnify our Directors against all
liabilities to the fullest extent permitted under Delaware law and that we
must advance all reasonable expenses incurred in a proceeding where the
Director was either a party or a witness because he or she was a Director.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to our Directors pursuant to the provisions of our
charter documents, Delaware law or the agreements described above, we have
been advised that in the opinion of the Securities and Exchange Commission,
this indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable.
12
STOCK PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total stockholder return on our common stock to the cumulative
total return of the Russell 2000 Index and the JP Morgan H&Q Internet 100 for
the period commencing on May 27, 1998, and ending December 31, 2001 (the
"Measuring Period"). The graph assumes that the value of the investment in our
common stock and each index was $100 on May 27, 1998. The yearly change in
cumulative total return is measured by dividing (1) the sum of (i) the
cumulative amount of dividends for the Measuring Period, assuming dividend
reinvestment, and (ii) the change in share price between the beginning and end
of the Measuring Period, by (2) the share price at the beginning of the
Measuring Period.
COMPARISON OF CUMULATIVE TOTAL RETURN*
AMONG CLARUS, THE RUSSELL 2000 INDEX
AND THE JP MORGAN H & Q INTERNET 100 INDEX
[PERFORMANCE GRAPH]
5/27/98 6/98 9/98 12/98 3/99 6/99
------- ------ ------ ------- ------ ------
CLARUS CORPORATION $100.00 $107.35 $ 41.54 $ 70.59 $ 64.71 $ 58.82
RUSSELL 2000 $100.00 $101.62 $ 81.15 $ 94.38 $ 89.26 $103.14
JP MORGAN H & Q
INTERNET 100 $100.00 $128.32 $103.10 $178.08 $301.28 $310.30
9/99 12/99 3/00 6/00 9/00 12/00
------ ------- ------- ------ ------ -------
CLARUS CORPORATION $111.03 $776.47 $830.88 $457.35 $268.39 $ 82.35
RUSSELL 2000 $ 96.62 $114.44 $122.55 $117.92 $119.22 $110.99
JP MORGAN H & Q
INTERNET 100 $318.96 $617.44 $644.92 $478.43 $460.25 $237.57
3/01 6/01 9/01 12/01
------ ------- ------ -------
CLARUS CORPORATION $ 75.00 $ 72.35 $ 46.12 $ 73.41
RUSSELL 2000 $103.77 $118.59 $ 93.94 $113.75
JP MORGAN H & Q
INTERNET 100 $146.88 $185.01 $107.46 $152.86
* $100 INVESTED ON 5/27/98 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
13
COMPENSATION COMMITTEE REPORT
During 2001, the Compensation Committee of the Board of Directors was
comprised of two non-employee members of the Board, Messrs. Brady L. Rackley,
III and Said Mohammadioun. The Compensation Committee is responsible for:
. setting the Company's compensation philosophy and policies;
. establishing the compensation of the Chief Executive Officer and
approving the compensation of the other executive Officers; and
. administering and awarding options and other awards under the
Company's stock incentive plans.
The Company's compensation policies are designed to align the financial
interests of the Company's management with those of its stockholders, and to
take into account the operating environment and expectations for continued
growth and enhanced profitability. Compensation for each of the executive
Officers consists of a base salary, and the opportunity to receive stock
options and a quarterly bonus. The Company does not currently provide executive
Officers with other long-term incentive compensation.
The Compensation Committee's current philosophy is that the predominate
portion of an executive's compensation should be based directly upon the value
of incentive compensation in the form of cash bonuses and stock option awards.
The Compensation Committee believes that providing executives with the
opportunity to acquire interests in the Company through grants of stock
options, while maintaining base salaries at competitive levels, will enable the
Company to attract and retain executives with the outstanding management
abilities and entrepreneurial spirit who are essential to the Company's
success. Furthermore, the Compensation Committee believes that this approach to
compensation, as well as the opportunity to receive cash bonuses based on
performance, motivates executives to perform to their fullest potential.
Base Salary. At least annually, the Compensation Committee reviews salary
recommendations for executives and then approves such recommendations, with any
modifications it considers appropriate. The annual salary recommendations for
such persons are made under the ultimate direction of the Chief Executive
Officer, based on total compensation packages for comparable companies in the
Company's industry, as well as evaluations of the individual executive's past
and expected future performance. Similarly, the Compensation Committee fixes
the base salary of the Chief Executive Officer based on its review of
competitive compensation data from companies in the Company's industry, the
Chief Executive Officer's overall compensation package, and the Compensation
Committee's assessment of his past performance and its expectation as to his
future performance in leading the Company.
Annual Bonuses. The Compensation Committee determined the bonus in 2001 to
be paid to the Chief Executive Officer based upon the Company's 2001 bonus plan
which outlines certain revenue, profitability and other financial-related
goals, as well as other criteria designed to assess his contribution to the
Company's performance. Quarterly bonus recommendations for Named Executive
Officers, other than the Chief Executive Officer, were made under the direction
of the Chief Executive Officer and were reviewed and approved by the
Compensation Committee.
Stock Awards. Stock options represent a substantial portion of compensation
for the executive Officers, including the Chief Executive Officer. Stock
options typically are granted at the fair market value on the date of grant,
and will only have value if the Company's stock price increases. Stock option
grants are generally structured to vest 25% on the first anniversary of
employment and in 36 monthly installments thereafter. In special circumstances,
however, the Compensation Committee has authority to accelerate vesting or
modify other restrictions on exercise. Grants of stock options generally are
based upon the level of the executive's position and an evaluation of the
executive's past and expected future performance. The Compensation Committee
believes that dependence on stock options for a significant portion of an
executive's compensation more closely
14
aligns such executive's interests with those of the Company's stockholders,
since the ultimate value of such compensation is linked directly to stock
price.
Repricing Report. In April 2001, the Company offered its employees the
opportunity to exchange certain stock options granted under the Company's stock
incentive plans that were granted on or after November 1, 1999 for new options
to be granted under the Company's stock incentive plan. The Company offered its
employees a second opportunity to exchange outstanding stock options granted
under the stock incentive plans that were granted on or after November 1, 1999.
The first offering period began on April 9, 2001 and ended on May 7, 2001 and
the second offering period began on July 9, 2001 and ended on August 6, 2001.
The term of both offerings was generally the same. In connection with the first
offer, new options were granted on November 9, 2001 to purchase 366,174 shares
with an exercise price equal to the fair market value on that date or $3.49 per
share. On February 11, 2002, in connection with the second offer, new options
to purchase 198,052 shares were granted with an exercise price equal to the
fair market value on that date or $4.10 per share. The new options granted in
connection with both exchange offers were granted six months and one day
following the date the Company cancelled the options accepted for exchange. All
new options granted vest in 36 equal monthly installments until fully vested.
In connection with the first exchange offer one Named Executive Officer, Alan
MacLamroc, exchanged 105,000 options for 105,000 new options with an exercise
price of $3.49 per share. No other Named Executive Officer was eligible to
participate in either exchange offer.
Compensation of Chief Executive Officer. The base salary paid to Mr. Jeffery
is reviewed annually by the Compensation Committee and may be adjusted based on
competitive compensation information available to the Compensation Committee,
his overall compensation package and the Compensation Committee's assessment of
his past experience and its expectation as to his future contributions in
leading the Company and its businesses. In June 2000 the Compensation Committee
reviewed the compensation of our Chief Executive Officer and entered into an
employment agreement with Mr. Jeffery effective January 1, 2000. The agreement
provided for an annual base salary of $250,000 and incentive bonus if certain
revenue and earnings targets were met. Mr. Jeffery received a base salary of
$250,000 and bonuses in the aggregate amount of $86,994 in 2001. On July 30,
2001, Mr. Jeffery was granted a stock option to purchase 150,000 shares of the
Company's common stock at a price of $7.00 per share.
The Compensation Committee evaluates the Company's compensation policies and
procedures with respect to executives on an ongoing basis. Although the
Compensation Committee believes that current compensation policies have been
successful in aligning the financial interests of executive Officers with those
of the Company's stockholders and with the Company's performance, we continue
to examine what modifications, if any, should be implemented to further link
executive compensation with both individual and Company performance.
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), generally limits amounts that can be deducted for compensation paid to
certain executives to $1,000,000 unless certain requirements are met. No
executive Officer receives compensation in excess of $1,000,000 and therefore
there are no compensation amounts that are nondeductible at present. The
Compensation Committee will continue to monitor the applicability of Section
162(m) to the Company's compensation program.
Submitted by the Compensation Committee of the Board of Directors
Brady L. Rackley, III
Said Mohammadioun
15
AUDIT COMMITTEE REPORT
In accordance with its written charter adopted by the Board of Directors,
the Audit Committee assists the Board in fulfilling its responsibility for
oversight of the quality and integrity of our accounting, auditing and
financial reporting practices. The Audit Committee recommends to the Board of
Directors, subject to stockholder approval, the selection of our independent
accountants.
Management is responsible for the Company's financial reporting process
including its system of internal control, and for the preparation of
consolidated financial statements in accordance with generally accepted
accounting principles. The Company's independent auditors are responsible for
auditing those financial statements. Our responsibility is to monitor and
review these processes. It is not our duty or our responsibility to conduct
auditing or accounting reviews or procedures. We are not employees of the
Company and we may not be, and we may not represent ourselves to be or to serve
as, accountants or auditors by profession or experts in the fields of
accounting or auditing. Therefore, we have relied, without independent
verification, on management's representation that the financial statements have
been prepared with integrity and objectivity and in conformity with accounting
principles generally accepted in the United States of America and on the
representations of the independent auditors included in their report on the
Company's financial statements. Our oversight does not provide us with an
independent basis to determine that management has maintained appropriate
accounting and financial reporting principles or policies, or appropriate
internal controls and procedures designed to assure compliance with accounting
standards and applicable laws and regulations. Furthermore, our considerations
and discussions with management and the independent auditors do not assure that
the Company's financial statements are presented in accordance with generally
accepted accounting principles, that the audit of the Company's financial
statements has been carried out in accordance with generally accepted auditing
standards or that the Company's independent accountants are in fact
"independent." The Audit Committee has general oversight responsibility with
respect to our financial reporting, and reviews the results and scope of the
audit and other services provided by our independent auditors.
In this context, the Audit Committee has met and held discussions with
management and our independent auditors. Management represented to the Audit
Committee that our consolidated financial statements were prepared in
accordance with accounting principles generally accepted in the United States
of America, and the Audit Committee has reviewed and discussed the consolidated
financial statements with management and our independent auditors. The Audit
Committee discussed with our independent auditors matters required to be
discussed by Statement on Auditing Standards No. 61 (Communication with Audit
Committees).
Our independent auditors also provided to the Audit Committee the written
disclosures and the letter required by Independence Standards Board Standard
No. 1 (Independence Discussions with Audit Committees), and the Audit Committee
discussed with the independent auditors their independence.
Based upon the Audit Committee's discussion with management and our
independent auditors and the Audit Committee's review of the representations of
management and the report of our independent auditors to the Audit Committee,
the Audit Committee recommended that the Board of Directors include our audited
consolidated financial statements in our Annual Report on Form 10-K for the
year ended December 31, 2001 filed with the Securities and Exchange Commission.
Submitted by the Audit Committee of the Board of Directors:
Tench Coxe
Donald L. House
Mark A. Johnson
Notwithstanding anything to the contrary set forth in any of our previous
filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate future filings,
including this Proxy Statement, in whole or in part, the foregoing Compensation
Committee Report on Executive Compensation, the Audit Committee Report and the
Stockholder Return Performance Graph shall not be incorporated by reference
into any such filings.
16
PROPOSAL 2 -- RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed KPMG LLP, independent auditors, to
audit our financial statements for the fiscal year ending December 31, 2002 and
seeks ratification of such appointment. In the event of a negative vote on such
ratification, the Board will reconsider its appointment. KPMG LLP has served as
our independent auditor since June 2000.
We expect that one or more representatives of KPMG LLP will be present at
the annual meeting and will have the opportunity to make a statement if they so
desire to do so and will be available to respond to appropriate questions.
Fees Billed by Independent Public Accountant
The following table sets forth the amount of audit fees, financial
information systems design and implementation fees, and all other fees billed
or expected to be billed for services rendered by KPMG LLP, our principal
accountant, for the fiscal year ended December 31, 2001:
Amount
--------
Audit fees, excluding audit related fees(1).................. $272,500
Financial information systems design and implementation
fees(2)..................................................... --
All other fees:
Audit related fees(3)...................................... $17,000
Other non-audit services(4)................................ 124,000
-------
Total all other fees......................................... 141,000
--------
Total fees................................................... $413,500
========
- --------
(1) Audit fees, excluding audit related fees, includes annual financial
statement audit and limited quarterly review services.
(2) KPMG LLP provided no such services during the most recent fiscal year.
(3) Audit related fees consist of services for the review of registration
statements and issuance of consents.
(4) Other non-audit services consist of tax compliance and other tax services
other than those directly related to the audit.
Our Audit Committee of the Board of Directors has considered whether the
provision of other non-audit services is compatible with maintaining KPMG LLP's
independence.
Arthur Andersen LLP was our independent auditor for the fiscal years prior
to 2000. On June 6, 2000, we terminated Arthur Andersen LLP's appointment as
our independent auditor and KPMG LLP was appointed as our independent auditor.
The decision to change auditors was approved by the Audit Committee and our
full Board of Directors.
During the fiscal year ended December 31, 1999, and the subsequent interim
period from January 1, 2000 through June 6, 2000, there were no disagreements
between us and Arthur Andersen LLP on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedures,
which disagreements if not resolved to their satisfaction would have caused
them to make reference in connection with their opinion to the subject matter
of the disagreement. None of the "reportable events" described under
Item 304(a)(1)(v) of Regulation S-K occurred within 1999 and the subsequent
interim period through June 6, 2000. The audit report of Arthur Andersen LLP on
our financial statements as of and for the fiscal year ended December 31, 1999,
did not contain any adverse opinion or disclaimer of opinion, nor was it
qualified or modified as to uncertainty, audit scope, or accounting principles.
During our fiscal year ended December 31, 1999 and the subsequent interim
period through June 6, 2000, we did not consult with KPMG LLP regarding any of
the matters or events set forth in Item 304 (a)(2)(i) and (ii) of Regulation S-
K.
The Board of Directors unanimously recommends that you vote "FOR" the
ratification of KPMG LLP as our independent auditors for the fiscal year ending
December 31, 2002, on the enclosed WHITE proxy card. The affirmative vote of
the holders of a majority of the votes cast is required to ratify the
appointment of KPMG LLP as our independent auditors for the fiscal year ending
December 31, 2002.
17
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table provides information concerning beneficial ownership of
our common stock as of April 19, 2002, by:
. each stockholder that we know owns more than 5% of our outstanding
common stock;
. each of our Named Executive Officers;
. each of our Directors; and
. all of our Directors and Named Executive Officers as a group.
The following table lists the applicable percentage of beneficial ownership
based on 15,579,642 shares of common stock outstanding as of April 19, 2002.
Except where noted, the persons or entities named have sole voting and
investment power with respect to all shares shown as beneficially owned by
them.
The second column shows separately shares that may be acquired by exercise
of stock options or warrants within 60 days after April 19, 2002, by the
Directors and our Named Executive Officers individually and as a group. Shares
of common stock that may be acquired by exercise of stock options are deemed
outstanding for purposes of computing the percentage beneficially owned by the
persons holding these options but are not deemed outstanding for purposes of
computing the percentage beneficially owned by any other person.
Number of
Number of Shares Percentage
Shares of Subject to of Common
Name Common Stock Options Stock
---- ------------ ---------- ----------
Merrill Lynch & Co., Inc.(1)
World Financial Center, North Tower
250 Verey Street
New York, New York 10381................ 1,979,100 -- 12.70%
Ashford Capital Management, Inc.(2)
P.O. Box 4172
Wilmington, Delaware 19807.............. 1,199,400 -- 7.70%
Taunus Corporation(3)
31 West 52nd Street
New York, New York 10019................ 918,280 -- 5.89%
Warren B. Kanders(4)
Burtt Ehrlich
S.T. Investors Fund, LLC
Nicholas Sokolow
c/o Robert L. Lawrence, Esq.
Kane Kessler, P.C.
1350 Avenue of the Americas, 26th Floor
New York, New York 10019................ 853,600 -- 5.48%
Stephen P. Jeffery....................... 110,910 300,514 2.59%
Joseph E. Bibler......................... 39,000 45,869 *
Steven M. Hornyak........................ 47,816 120,414 1.07%
Alan MacLamroc........................... -- 18,750 *
James J. McDevitt........................ 1,375 34,793 *
Tench Coxe............................... 95,174(5) 25,000 *
Todd Hewlin.............................. 10,000 2,500 *
Donald L. House.......................... 101,249 25,000 *
Mark A. Johnson.......................... 33,075 36,250 *
Said Mohammadioun........................ 47,375 17,500 *
Brady L. Rackley, III.................... -- 21,250 *
Directors and Named Officers as a group
(11 persons)............................ 485,974 647,840 6.99%
18
- --------
* Less than one percent.
(1) Based on a Schedule 13G/A filed by Merrill Lynch & Co., Inc. ("Merrill
Lynch") on February 5, 2002. The shares of common stock reported above by
Merrill Lynch are beneficially owned by Master Small Cap Value Trust and
Merrill Lynch Investment Managers, L.P., both indirectly owned asset
management subsidiaries of Merrill Lynch.
(2) Based on a Schedule 13G filed by Ashford Capital Management, Inc. on
February 14, 2002.
(3) Based on a Schedule 13G filed by Taunus Corporation on February 12, 2002.
The shares reported by Taunus Corporation include securities owned by
Bankers' Trust Company. Taunus Corporation is a parent holding company for
Bankers' Trust Company.
(4) Information as to Warren B. Kanders, Burtt Ehrlich, S.T. Investors Fund,
LLC and Nicholas Sokolow (the "Reporting Persons") is derived from a
Schedule 13D filed on April 12, 2002, by the Reporting Persons, which
states that as of April 11, 2002, Warren B. Kanders has sole voting and
dispositive power with respect to 812,250 shares of our common stock,
Burtt Ehrlich has sole voting and dispositive power with respect to 10,000
shares of our common stock, S.T. Investors Fund, LLC has sole voting and
dispositive power with respect to 31,350 shares of our common stock, and
Nicholas Sokolow has shared voting and dispositive power with respect to
31,350 shares of our common stock.
(5) Includes 28,478 shares held individually by Mr. Coxe, 46,929 shares held
by Sutter Hill Ventures, A California Limited Partnership, 5,596 shares
held by Sutter Hill Entrepreneurs Fund, (AI), L.P., and 14,171 shares held
by Sutter Hill Entrepreneurs Fund (QP), L.P. Mr. Coxe is one of seven
managing directors of the general partner of each of Sutter Hill Ventures,
A California Limited Partnership, Sutter Hill Entrepreneurs Fund (AI),
L.P. and Sutter Hill Entrepreneurs Fund (QP), L.P. The seven managing
directors of the general partners of each of the above limited
partnerships share voting and investment powers of the shares. Mr. Coxe
disclaims beneficial interest in these shares except to the extent of his
pecuniary interest in each limited partnership.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our
Directors, executive Officers and persons who own more than 10% of our
outstanding common stock to file with the Securities and Exchange Commission
reports of their ownership and changes in ownership of our common stock held
by such persons. Officers, Directors and stockholders owning more than 10% of
our common stock are also required to furnish us with copies of all forms they
file under this provision. To our knowledge, based solely on a review of the
copies of such reports furnished to us and representations that no other
reports were required during 2001, other than one late Form 4 filing by Mr.
Rackley in October 2001 reporting one option grant, all Section 16(a) filing
requirements applicable to our Officers and Directors were met.
GENERAL INFORMATION
Stockholder Proposals for 2003 Annual Meeting
In order to be considered for inclusion in the Proxy Statement and Proxy to
be used in connection with our 2003 annual meeting of stockholders,
stockholder proposals must be received by our Secretary no later than December
31, 2002.
Our Bylaws contain procedures that stockholders must follow in order to
present business at an annual or special meeting of stockholders. A
stockholder may obtain a copy of these procedures from our Secretary. In
addition to other applicable requirements, for business to be properly brought
before the 2003 annual meeting, a stockholder must give timely written notice
of the matter to be presented at the meeting to our Secretary. To be timely,
the Secretary must receive the notice at our principal offices not less than
60 nor more than 90 days prior
19
to the anniversary date of the immediately preceding annual stockholders'
meeting. In the case where an annual meeting is called for a date that is not
within 30 days before or after the anniversary date of the immediately
preceding annual meeting of stockholders, or in the case of a special meeting
of stockholders, the Secretary must receive notice not later than the close of
business on the tenth day following the day on which the notice of the meeting
was mailed or public disclosure of the date of the meeting was made, whichever
first occurs. Only stockholder proposals that are timely presented in
accordance with established procedures will be eligible for consideration at a
meeting.
Financial Information
Detailed financial information regarding Clarus is included in our 2001
Annual Report that is being mailed to our stockholders together with this
Proxy Statement.
Form 10-K
Our Annual Report on Form 10-K for the fiscal year ended December 31, 2001,
which was filed with the Securities and Exchange Commission, is available
without charge to stockholders who make written request therefor to us at 3970
Johns Creek Court, Suwanee, Georgia 30024, Attention: Investor Relations.
PARTICIPANTS IN THE SOLICITATION
General
Under the proxy rules of the Securities Exchange Act of 1934, each of our
Directors and James McDevitt, our Chief Financial Officer, and Sean Feeney,
our Chief Operating Officer, may be deemed to be a "participant" in our
solicitation of proxies. The names and principal occupations of our Directors
are set forth herein under the caption "Proposal 1--Election of Directors--
Biographical Information for Directors." Information about the ownership of
our common stock by each participant, including the right to acquire shares of
our common stock, is set forth in the table herein under the caption "Security
Ownership of Principal Stockholders and Management." Information about
transactions between us and our Directors is set forth herein under the
caption "Certain Relationships and Related Transactions." Except as set forth
in "Certain Relationships and Related Transactions," no participant or
affiliate of a participant is either a party to any transaction or series of
transactions since January 1, 2001, or has knowledge of any currently proposed
transaction or series of transactions, (i) to which we or any of our
subsidiaries was or is to be a party, (ii) in which the amount involved
exceeds $60,000, and (iii) in which any participant or affiliate of a
participant had or will have, a direct or indirect material interest. For the
purpose of this Proxy Statement, the business address of each participant is
3970 Johns Creek Court, Suwanee, Georgia 30024. Except as set forth herein, no
participant is now, or within the past year has been, a party to any contract,
arrangement or understanding with any person with respect to any of our
securities (including, but not limited to, joint ventures, loan or option
arrangements, puts or calls, guarantees against loss or guarantees of profit,
division of losses or profits, or the giving or withholding of proxies).
There are no material proceedings to which any participant or any associate
of any participant is a party adverse to us or any of our subsidiaries or has
a material interest adverse to us or any of our subsidiaries. Except as
described herein, no participant and no associate of any participant has any
interest in the matters to be voted upon at the meeting, other than an
interest, if any, as our stockholder or as our Officer or Director.
Except for the employment agreements described herein, no participant or
any associate of a participant has any arrangement or understanding with any
person with respect to any future employment by us or our affiliates or with
respect to any future transaction to which we or any of our subsidiaries will
or may be a party.
20
Transactions in the Company's Securities in the Last Two Years
Listed below are the purchases and sales of our common stock by each
participant for the last two years. Messrs. Feeney, House, Mohammadioun and
Rackley did not purchase or sell any shares of our common stock during the
past two years.
Date of Number of Shares Purchased
Name Transaction (P) or Sold (S)
- ---- ----------- --------------------------
Stephen P. Jeffery....................... 10/27/00 33,360 (P)
08/07/00 29,500 (S)
08/23/00 20,000 (S)
James McDevitt........................... 06/29/01 1,375 (P)
Mark A. Johnson.......................... 05/29/01 10,000 (P)
Todd Hewlin.............................. 02/18/02 10,000 (P)
Tench Coxe............................... 08/09/00 2,600 (S)*
05/17/00 30,000 (S)
- --------
* Mr. Coxe gifted these shares to a charitable organization.
Cost of Proxy Solicitation
The cost of soliciting proxies will be paid by us. This solicitation is
being made by mail, but may also be made by telephone, telegram, telecopier,
electronic mail, the Internet and other electronic means or in person by our
Officers, Directors and employees. We will reimburse brokerage firms,
nominees, custodians and fiduciaries for their reasonable out-of-pocket
expenses for forwarding proxy materials to beneficial owners. We have also
hired Georgeson Shareholder Communications, Inc. ("GSC") to assist us in the
distribution of proxy materials and the solicitation of votes. We have agreed
to indemnify GSC against certain liabilities and expenses related to their
solicitation. GSC will use approximately 53 persons in its solicitation
efforts. We will pay GSC a fee of $45,000 plus reasonable out of pocket
expenses for these services. In addition, we expect to incur approximately
$75,000 in expenses in connection with the solicitation of our stockholders,
excluding costs normally expended for a solicitation for an election of
Directors in the absence of a contest, and costs represented by salaries and
wages of regular employees and Officers. To date, we have incurred
approximately $10,000 in expenses.
OTHER MATTERS
The Board of Directors knows of no other matters to be presented for
stockholder action at the annual meeting. However, if other matters do
properly come before the annual meeting or any adjournments or postponements
thereof, the Board of Directors intends that the persons named in the WHITE
proxy card will vote upon such matters in accordance with their best judgment.
By Order Of The Board Of Directors
/s/ James T. McDevitt
James J. McDevitt, Secretary
April 29, 2002
Whether or not you plan to attend the annual meeting, please complete, sign,
date and promptly return the accompanying WHITE proxy card in the enclosed
postage-paid envelope. You may revoke your proxy at any time prior to the
annual meeting. If you are a stockholder of record and you decide to attend
the annual meeting and wish to change your proxy vote, you may do so
automatically by voting in person at the meeting.
Thank you for your attention to this matter. Your prompt response will greatly
facilitate arrangements for the annual meeting.
21
FORM OF PROXY
Clarus Corporation
Annual Meeting of Stockholders
May 21, 2002
PROXY
This proxy is solicited on behalf of our Board of Directors. The undersigned
hereby constitutes and appoints Stephen P. Jeffery and James J. McDevitt and
each of them, the true and lawful attorneys and proxies for the undersigned, to
act and vote all of the undersigned's capital stock of Clarus Corporation, a
Delaware corporation, at the Annual Meeting of Stockholders to be held at
Hilton Gardens Inn, 4025 Windward Plaza, Alpharetta, Georgia 30005, at 9:00
a.m. on Tuesday, May 21, 2002, and at any and all adjournments thereof, for the
purposes of considering and acting upon the matters proposed by Clarus
Corporation that are identified below. This proxy when properly executed will
be voted in accordance with the specifications made herein by the undersigned
stockholder. If no direction is made, this proxy will be voted FOR the election
of the nominees for director listed below and the other proposal.
FOLD AND DETACH HERE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------
[X] Please mark your
votes as in this
example using
dark ink only.
FOR WITHHOLD Nominees: Mark A. Johnson
all nominees listed AUTHORITY Brady L. Rackley, III
to the right (except as to vote for Todd Hewlin
marked to the contrary) all nominees
FOR AGAINST ABSTAIN
1. ELECTION OF [ ] [ ] 2. Ratification of the appointment of [ ] [ ] [ ]
CLASS I KPMG LLP as Clarus Corporation's
DIRECTORS independent auditors for the fiscal
year ending December 31, 2002
(INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through the nominee's name)
The Board of Directors recommends a vote "FOR" all of the above listed propositions.
In their discretion, the proxies are authorized to vote on such other business as may
properly come before the meeting or adjournment(s), including adjourning the Annual
Meeting to permit, if necessary, further solicitation of proxies.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elects to vote at the Annual Meeting, or at any
adjournments thereof, and after notification to the Secretary of the Company at the
Annual Meeting of the stockholder's decision to terminate this proxy, the power of said
attorneys and proxies shall be deemed terminated and of no further force and effect. The
undersigned may also revoke this proxy by filing a subsequently dated proxy or by
notifying the Secretary of the Company of his or her decision to terminate this proxy.
The undersigned acknowledges receipt from the Company prior to the execution of this
proxy of an Annual Report to Stockholders, a Notice of the Meeting and a Proxy Statement
dated April 30, 2002.
Signature of Stockholder ________________________________________ DATED: , 2002
Print Name of Stockholder _______________________________________ DATED: , 2002
NOTE: Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title
as such. If the signatory is a corporation, sign the full corporate name by a duly authorized officer.