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Dell Inc – ‘PRE 14A’ for 7/18/97

As of: Thursday, 5/22/97 · For: 7/18/97 · Accession #: 950134-97-4205 · File #: 0-17017

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 5/22/97  Dell Inc                          PRE 14A     7/18/97    1:113K                                   RR Donnelley

Preliminary Proxy Solicitation Material — Schedule 14A
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: PRE 14A     Preliminary Proxy Statement                           33    172K

Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Additional Information Company Performance Compensation of Executive Officers Current Nominees Dell Computer Corporation Incentive Plan Awards Management Compensation Option Grants in Last Fiscal Year Proposal 1 -- Election of Directors Proposed Stock Split Stockholder Proposals
1	1st Page - Filing Submission
"	Dell Computer Corporation
6	Proposal 1 -- Election of Directors
"	Current Nominees
10	Proposed Stock Split
12	Management Compensation
15	Compensation of Executive Officers
16	Incentive Plan Awards
17	Option Grants in Last Fiscal Year
24	Company Performance
26	Additional Information
"	Stockholder Proposals

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SCHEDULE 14A
(RULE 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934

Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12

DELL COMPUTER CORPORATION
--------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)

N/A
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) and
0-11.

(1) Title of each class of securities to which transaction applies:

N/A
--------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:

N/A
--------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):

N/A
--------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:

N/A
------------------------------------------------------------------------------
(5) Total fee paid:

N/A
--------------------------------------------------------------------------------

[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

N/A
--------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:

N/A
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(3) Filing Party:

N/A
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(4) Date Filed:

N/A
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1 9 9 7
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[DELL LOGO]

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

AND

PROXY STATEMENT

DELL COMPUTER CORPORATION
ONE DELL WAY
ROUND ROCK, TEXAS 78682

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DELL COMPUTER CORPORATION
ONE DELL WAY
ROUND ROCK, TEXAS 78682

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To our Stockholders:

The Annual Meeting of Stockholders of Dell Computer Corporation (the
"Company") will be held at the Four Seasons Hotel, 98 San Jacinto Boulevard,
Austin, Texas, on Friday, July 18, 1997 at 9:00 a.m., local time. At the
meeting, stockholders will be asked to vote on the following proposals:

Proposal 1 -- Elect two directors, each with a term of three years.

Proposal 2 -- Approve an amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of
Common Stock from 300 million to one billion.

Proposal 3 -- Approve an amendment to the Company's Incentive Plan to (a)
provide for automatic periodic increases in the number of
shares of Common Stock that may be awarded thereunder and (b)
reduce the number of authorized shares that may be awarded in
the form of "Stock Awards" (as defined in the Incentive Plan)
from 25% to 20%.

Stockholders will also transact any other business that may properly come before
the meeting.

The Board of Directors has established May 30, 1997 as the record date for
the meeting, and only stockholders of record at the close of business on that
date are entitled to vote at the meeting.

YOUR VOTE IS IMPORTANT!

Please date, sign and return the enclosed proxy card promptly so that we
can be assured of having a quorum at the meeting and so that your shares may be
voted in accordance with your wishes. Doing so will assist the Company in
reducing the expenses of additional proxy solicitation.

Signing and returning the proxy card does not affect your right to vote in
person if you attend the meeting, and you are cordially invited to attend.

By Order of the Board of Directors

/s/ THOMAS B. GREEN

Thomas B. Green
Secretary

Round Rock, Texas
June 6, 1997

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[DELL LOGO]

DELL COMPUTER CORPORATION
ONE DELL WAY
ROUND ROCK, TEXAS 78682

PROXY STATEMENT

ANNUAL MEETING OF STOCKHOLDERS

FRIDAY, JULY 18, 1997
9:00 A.M.

FOUR SEASONS HOTEL
98 SAN JACINTO BOULEVARD
AUSTIN, TEXAS

The enclosed proxy is being solicited on behalf of the Company's Board of
Directors for use at the Company's Annual Meeting of Stockholders, the time and
place of which are noted above. At the meeting, stockholders will be asked to
vote on three proposals, which are listed in the accompanying Notice of Annual
Meeting of Stockholders and described in more detail below. Stockholders will
also consider any other proposals or business that may properly come before the
meeting, although the Board of Directors knows of no other proposals or business
to be presented.

By executing and returning the proxy, you authorize the persons named in
the proxy to represent you and vote your shares at the meeting in accordance
with your instructions. Those persons may also vote your shares to adjourn the
meeting from time to time and will be authorized to vote your shares at any
adjournments or postponements of the meeting.

If you attend the meeting, you may vote in person, regardless of whether
you have executed and returned the proxy. In addition, you may revoke your proxy
at any time before its exercise at the meeting by delivering a written notice of
revocation to the Company's Secretary or by executing and delivering a
later-dated proxy.

IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WHETHER OR NOT YOU
EXPECT TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO COMPLETE, SIGN AND
RETURN THE PROXY IN THE ENCLOSED POSTAGE-PAID, ADDRESSED ENVELOPE.

This Proxy Statement and the accompanying materials are being mailed to
stockholders on or about June 6, 1997.

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QUORUM AND VOTING

RECORD DATE. The record date for the meeting is May 30, 1997. Only
stockholders of record at the close of business on that date are entitled to
notice of and to vote at the meeting.

VOTING STOCK. The only class of stock entitled to be voted at the meeting
is the Company's Common Stock, par value $.01 per share. At the close of
business on the record date, there were shares of Common Stock
outstanding and entitled to be voted at the meeting, and each holder of those
shares will be entitled to one vote per share.

QUORUM. In order for any business to be conducted, holders of more than 50%
of the shares entitled to vote must be represented at the meeting, either in
person or by proxy.

ADJOURNED MEETING. If a quorum is not present at the scheduled time of the
meeting, the stockholders who are represented may adjourn the meeting until a
quorum is present. The time and place of the adjourned meeting will be announced
at the time the adjournment is taken, and no other notice will be given. An
adjournment will have no effect on the business that may be conducted at the
meeting.

TABULATION OF VOTES. The votes will be tabulated by an automated system
administered by the Company's transfer agent.

VOTING BY STREET NAME HOLDERS. If you are the beneficial owner of shares
held in "street name" by a broker, the broker, as the record holder of the
shares, is required to vote those shares in accordance with your instructions.
If you do not give instructions to the broker, the broker will nevertheless be
entitled to vote the shares with respect to "discretionary" items but will not
be permitted to vote the shares with respect to "non-discretionary" items (in
which case, the shares will be treated as "broker non-votes").

ABSTENTIONS AND BROKER NON-VOTES. If you ABSTAIN from voting on one or more
proposals, your shares will nevertheless be included in the number of shares
represented for purposes of determining whether a quorum is present. If you
ABSTAIN from voting on Proposal 2 (Amendment to Certificate of Incorporation) or
Proposal 3 (Amendment to Incentive Plan), your shares will also be included in
the number of shares voting on the proposal, and consequently, your abstention
will have the same practical effect as a vote AGAINST the proposal. Because
directors are elected by a plurality of the votes (see "Proposal 1 -- Election
of Directors" below), an abstention would have no effect on the outcome of the
vote on Proposal 1 and, thus, is not offered as a voting option for that
proposal.

If your shares are treated as broker non-votes on one or more proposals,
they will nevertheless be included in the number of shares represented for
purposes of determining whether a quorum is present. Otherwise, however, those
shares will be treated as shares not entitled to be voted on the proposal.
Consequently, a broker non-vote with respect to Proposal 1 (Election of
Directors) or Proposal 3 (Amendment to Incentive Plan) will have no effect on
the outcome of the vote on that proposal. Because the approval of an amendment
to the Company's Certificate of Incorporation requires the affirmative vote of a
majority of the shares outstanding (see "Proposal 2 -- Amendment of Certificate
of Incorporation" below), a broker non-vote with respect to Proposal 2 will have
the same practical effect as a vote AGAINST that proposal.

DEFAULT VOTING. If you properly execute and return the enclosed proxy but
do not indicate any voting instructions, your shares will be voted as follows:

- Proposal 1 (Election of Directors) -- FOR both nominees

- Proposal 2 (Amendment of Certificate of Incorporation) -- FOR

- Proposal 3 (Amendment of Incentive Plan) -- FOR

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If any other business properly comes before the stockholders for a vote at the
meeting, the shares will be voted in accordance with the discretion of the
holders of the proxy.

PROPOSAL 1 -- ELECTION OF DIRECTORS

CURRENT NOMINEES. The three-year terms of the Class III directors will
expire at the upcoming annual meeting. The Board of Directors has nominated
Claudine B. Malone and Michael A. Miles for reelection as Class III directors.
Both Ms. Malone and Mr. Miles are currently serving as Class III directors. If
they are reelected, they will continue to serve as Class III directors with
terms to expire at the annual meeting of stockholders to be held in 2000. THE
BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF THESE TWO
NOMINEES. The following is biographical information about each of the nominees.

Claudine B. Malone......... Ms. Malone has been a director of the Company since
February 1993. Ms. Malone is President of Financial
& Management Consulting, Inc., a firm she founded
in 1982. She has taught at the business schools of
the University of Virginia, Harvard University and
Georgetown University. Ms. Malone is a trustee of
the Massachusetts Institute of Technology and the
Chairman of the Federal Reserve Bank of Richmond.
She is also a member of the boards of directors of
Hannaford Brothers Co., Hasbro, Inc., Houghton
Mifflin Corp., Lafarge Corp., The Limited, Inc.,
Lowe's Companies, Mallinckrodt Group Inc., SAIC and
Union Pacific Corporation.

Michael A. Miles........... Mr. Miles has been a director of the Company since
February 1995. He is the former Chairman of the
Board and Chief Executive Officer of Philip Morris
Companies Inc., having served in that position from
September 1991 to July 1994. Prior to assuming that
position, Mr. Miles was Vice Chairman and a member
of the Board of Directors of Philip Morris
Companies Inc. and Chairman and Chief Executive
Officer of Kraft General Foods, Inc., positions he
held from December 1989. Mr. Miles is also a
Special Limited Partner in the investment firm of
Forstmann Little and Co. He is a member of Chase
Manhattan's International Advisory Committee and is
a trustee of Northwestern University. Mr. Miles is
also a member of the boards of directors of Dean
Witter Discover & Co., Sears, Roebuck and Co., Time
Warner Inc. and Allstate, Inc.

Should either of these nominees become unable or unwilling to accept
nomination or election, the Board of Directors will either select a substitute
nominee or will reduce the size of the Board. If you have properly executed and
returned the enclosed proxy and a substitute nominee is selected, the holders of
the proxy will vote your shares FOR the election of the substitute nominee. The
Board of Directors has no reason to believe that either of the nominees will be
unable or unwilling to serve if elected.

In accordance with the Company's Bylaws, directors are elected by a
plurality of the votes of shares represented and entitled to vote at the
meeting. That means the two nominees will be elected if they receive more
affirmative votes than any other nominees.

George Kozmetsky, who has served as a director of the Company since March
1987, is retiring from active service on the Board of Directors and has chosen
not to stand for reelection to an additional three-year term. The Board of
Directors has yet to select a person to fill the vacancy created by Dr.
Kozmetsky's retirement and does not expect to select that person by the time of
the

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annual meeting. Accordingly, the Board has passed a resolution reducing the size
of the Board of Directors from nine to eight, effective upon Dr. Kozmetsky's
retirement from the Board of Directors at the annual meeting. When an additional
person is chosen to serve as a director, the size of the Board of Directors will
again be increased to nine and that person will be appointed as a Class III
director to serve until the next annual meeting of the Company's stockholders,
at which time they will be presented to the stockholders for election to fill
the remainder of the Class III term.

CONTINUING DIRECTORS. The Board of Directors is separated into three
classes, and the directors in each class are elected to serve for three-year
terms. The terms of the Class I directors expire next year, the terms of the
Class II directors expire in 1999 and (except as noted above with respect to any
new director) the terms of the Class III directors expire in 2000. The following
is a list of the persons who will constitute the Company's Board of Directors
following the meeting, assuming reelection of the nominees named above, and
their ages, director class designation and current committee assignments.

[Enlarge/Download Table]

DIRECTOR
NAME AGE CLASS COMMITTEES
------------------------------------------------------------- --- -------- ---------------------------------------------

Michael S. Dell.............................................. 32 II --
Donald J. Carty.............................................. 50 I Audit, Finance (Chairman), Nominating
Paul O. Hirschbiel, Jr. ..................................... 44 I Compensation, Finance
Michael H. Jordan............................................ 60 II Compensation, Nominating (Chairman)
Thomas W. Luce III........................................... 56 I Finance
Klaus S. Luft................................................ 55 II Audit, Finance
Claudine B. Malone........................................... 61 III Audit (Chairman)
Michael A Miles.............................................. 57 III Compensation (Chairman), Nominating

Set forth below is biographical information about each of the Company's
directors, except for Ms. Malone and Mr. Miles, whose biographical information
is included under "Current Nominees" above.

Michael S. Dell............ Mr. Dell has been Chairman of the Board, Chief
Executive Officer and a director of the Company
since May 1984. Mr. Dell founded the Company in
1984 while attending the University of Texas at
Austin. He is a member of the Board of Directors of
the United States Chamber of Commerce and the
Computerworld/Smithsonian Awards.

Donald J. Carty............ Mr. Carty has been a director of the Company since
December 1992. Mr. Carty is President of American
Airlines, Inc., a subsidiary of AMR Corporation,
and President of AMR Airline Group, positions he
has held since March 1995. He is also Executive
Vice President of AMR Corporation. From October
1989 to March 1995, Mr. Carty held the positions of
Chief Financial Officer of AMR Corporation and
Executive Vice President, Finance & Planning for
AMR Corporation and American Airlines, Inc. He has
held senior vice presidential positions with
American Airlines, Inc. since 1988. Mr. Carty
serves on the Board of Trustees of Queen's
University in Kingston, Ontario.

Paul O. Hirschbiel, Jr..... Mr. Hirschbiel has been a director of the Company
since October 1987. Mr. Hirschbiel is Managing
Director of Cornerstone Equity Investors, L.L.C., a
position he has held since 1996. Before then, Mr.
Hirschbiel was a Vice President of Prudential
Equity Investors, Inc. and had held the position of
Vice President or Director with that firm since
September 1983. Mr. Hirschbiel

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originally became a director of the Company
pursuant to the terms of a stock purchase agreement
entered into in connection with the issuance by the
Company of a series of convertible preferred stock
in October 1987. Mr. Hirschbiel received a Bachelor
of Arts degree and a Masters of Business
Administration degree from the University of North
Carolina at Chapel Hill.

Michael H. Jordan.......... Mr. Jordan has been a director of the Company since
December 1992. Mr. Jordan is Chairman and Chief
Executive Officer of Westinghouse Electric
Corporation, positions he has held since July 1993.
Prior to joining Westinghouse, he was a principal
with the investment firm of Clayton, Dubilier and
Rice from September 1992 through June 1993,
Chairman of PepsiCo International from December
1990 through July 1992 and Chairman of PepsiCo
World-Wide Foods from December 1986 to December
1990. Mr. Jordan is also a member of the board of
directors of Aetna Inc.

Thomas W. Luce III......... Mr. Luce has been a director of the Company since
November 1991. Mr. Luce is of counsel with the law
firm Hughes & Luce, L.L.P., Dallas, Texas, having
co-founded the firm in 1973. From October 1991
through April 1992, Mr. Luce was Chairman of the
Board and Chief Executive Officer of First
Southwest Company, a Dallas-based investment firm
that is a member of the National Association of
Securities Dealers, Inc. He is also a member of the
boards of directors of Enserch Corporation and
Amtech Corporation.

Klaus S. Luft.............. Mr. Luft has been a director of the Company since
March 1995. Mr. Luft is the founder, owner and
President of MATCH -- Market Access for Technology
Services GmbH, a private company established in
1994 and headquartered in Munich, Germany. MATCH
provides sales and marketing services to high
technology companies. Since August 1990, Mr. Luft
has served and continues to serve as International
Advisor to Goldman Sachs Europe Limited. From March
1986 to November 1989, Mr. Luft was Chief Executive
Officer of Nixdorf Computer AG, a manufacturer of
computer systems in Paderborn, Germany, where he
also held various other executive positions for
more than 17 years in marketing, manufacturing and
finance.

RETIRING DIRECTOR. As noted above, George Kozmetsky is retiring from the
Board of Directors after ten years of service as a director of the Company. Upon
his retirement, Dr. Kozmetsky will hold the position of Director Emeritus. As
Director Emeritus, Dr. Kozmetsky will be an honorary advisor to the Board of
Directors but will not have voting rights on any Board matters. The following is
biographical information about Dr. Kozmetsky.

George Kozmetsky........... Dr. Kozmetsky has been a director of the Company
since March 1987. His retirement from the Board of
Directors will be effective as of the stockholders'
meeting. Dr. Kozmetsky serves as Executive
Associate for Economic Affairs of The University of
Texas System, a position he has held since 1966. He
is also Chairman of the Advisory Board and a Senior
Research Fellow of IC(2) Institute of The
University of Texas at Austin and was a director of
IC(2) Institute from 1977 to 1995. Dr. Kozmetsky is
a co-

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founder and former Executive Vice President of
Teledyne, Inc. Dr. Kozmetsky received a Doctor of
Philosophy degree in Commercial Science and a
Masters of Business Administration degree from
Harvard University and a Bachelor of Arts degree
from the University of Washington.

COMMITTEES AND MEETINGS. The Board of Directors maintains the following
four standing committees. The members of the various committees are identified
in the preceding table of continuing directors.

- Audit Committee. The Audit Committee recommends the appointment of the
Company's independent accountants and determines the appropriateness of
their fees; reviews the scope and results of the audit plans of the
independent accountants and the Company's internal auditors; oversees the
scope and adequacy of the Company's internal accounting control and
record-keeping systems; reviews the objectivity, effectiveness and
resources of the internal audit function; confers independently with the
independent accountants; and determines the appropriateness of fees for
audit services performed by the independent accountants.

- Compensation Committee. The Compensation Committee is responsible for
determining the compensation for the Company's senior management and
establishing compensation policies for Company employees generally. The
Compensation Committee also administers the Company's stock-based
compensation plans and employee stock purchase plan.

- Finance Committee. The Finance Committee is responsible for considering
and recommending to the Board of Directors proposed strategies, policies
and actions related to finance and economics.

- Nominating Committee. The Nominating Committee is responsible for
recruiting and recommending candidates for membership to the Board of
Directors and for recommending to the Chairman of the Board the structure
and membership of the committees of the Board of Directors. For
information about suggesting candidates for consideration as nominees for
election to the Board of Directors, see "Additional
Information -- Stockholder Proposals" below.

During fiscal 1997, the Board of Directors and the various committees held
the following number of meetings: Board of Directors, five; Audit Committee,
four; Compensation Committee, eight; Finance Committee, five; and Nominating
Committee, two. Other than Mr. Jordan, no director attended fewer than 75% of
the aggregate of the total number of meetings of the Board of Directors and the
total number of meetings held by all committees on which that director served.
Mr. Jordan was unable to attend two of the five Board of Directors meetings and
three of the eight Compensation Committee meetings.

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PROPOSAL 2 -- AMENDMENT TO CERTIFICATE OF INCORPORATION

GENERAL. The Company's Certificate of Incorporation currently authorizes
the issuance of up to 300 million shares of Common Stock. As of the record date,
authorized shares were used or reserved as follows:

[Download Table]

Issued and outstanding......................................
Reserved for issuance under stock-based compensation plans:
Covered by currently outstanding awards...................
Available for future awards...............................
Reserved for issuance under employee stock purchase plan....
-----------
Total.............................................
===========

This leaves approximately million shares of Common Stock currently
available for other purposes.

The Board of Directors is proposing an amendment to the Certificate of
Incorporation to increase the number of authorized shares of Common Stock from
300 million to one billion. If the stockholders approve this proposal, the first
paragraph of Article Fourth of the Company's Certificate of Incorporation will
be amended to read in its entirety as follows:

"FOURTH: The total number of shares of capital stock of the
Corporation shall be one billion and five million
(1,005,000,000), which shall consist of five million (5,000,000)
shares of Preferred Stock, of the par value of $0.01 per share,
and one billion (1,000,000,000) shares of Common Stock, of the
par value of $0.01 per share."

PROPOSED STOCK SPLIT. On May 20, 1997, the Board of Directors declared a
two-for-one split of the Common Stock, to be effected as a dividend of one
additional share of Common Stock for each share of Common Stock outstanding on
the specified record date, subject to approval by the stockholders of an
increase in the number of authorized shares of Common Stock (the "Proposed Stock
Split"). Because the Company currently does not have sufficient authorized but
unissued shares to double the number of issued and outstanding shares of Common
Stock, the Proposed Stock Split will not occur unless Proposal 2 is approved. If
Proposal 2 is approved at the meeting, the record date for the Proposed Stock
Split will be July 18, 1997 and the dividend shares will be distributed on July
25, 1997. None of the share-related data in this Proxy Statement is adjusted to
take into account the Proposed Stock Split.

PURPOSE AND EFFECT OF THE PROPOSED AMENDMENT. If Proposal 2 is approved,
approximately 170 million of the authorized but unissued shares will be used to
effect the Proposed Stock Split (depending on the number of shares outstanding
on the record date for the Proposed Stock Split). The remaining authorized but
unissued and unreserved shares will be available for issuance from time to time
for any proper purpose approved by the Board of Directors (including issuances
in connection with future stock splits or dividends and issuances to raise
capital or effect acquisitions). There are currently no arrangements, agreements
or understandings for the issuance or use of the additional shares of authorized
Common Stock (other than the Proposed Stock Split or issuances permitted or
required under the Company's stock-based employee benefit plans or awards made
pursuant to those plans). The Board of Directors does not presently intend to
seek further stockholder approval of any particular issuance of shares unless
such approval is required by law or the rules of The Nasdaq Stock Market.

Stockholders do not have any preemptive or similar rights to subscribe for
or purchase any additional shares of Common Stock that may be issued in the
future, and therefore, future issuances of Common Stock may, depending on the
circumstances, have a dilutive effect on the earnings per share, voting power
and other interests of the existing stockholders.

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The proposal could have an anti-takeover effect, although that is not its
intention. For example, if the Company were the subject of a hostile takeover
attempt, it could try to impede the takeover by issuing shares of Common Stock,
thereby diluting the voting power of the other outstanding shares and increasing
the potential cost of the takeover. The availability of this defensive strategy
to the Company could discourage unsolicited takeover attempts, thereby limiting
the opportunity for the Company's stockholders to realize a higher price for
their shares than is generally available in the public markets. The Board of
Directors is not aware of any attempt, or contemplated attempt, to acquire
control of the Company, and this proposal is not being presented with the intent
that it be utilized as a type of anti-takeover device.

VOTE NECESSARY TO APPROVE PROPOSAL. The affirmative vote of the holders of
a majority of the outstanding shares of Common Stock entitled to vote at the
meeting is necessary for approval of Proposal 2. Therefore, abstentions and
broker non-votes effectively count as votes against the proposal.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE PROPOSED AMENDMENT
TO THE COMPANY'S CERTIFICATE OF INCORPORATION.

PROPOSAL 3 -- AMENDMENT TO INCENTIVE PLAN

GENERAL. At the annual stockholders' meeting in 1994, the Company's
stockholders approved the Dell Computer Corporation Incentive Plan, a
stock-based incentive compensation plan for key employees, directors and select
consultants. A summary description of the Incentive Plan is set forth in
Appendix A. Currently, the maximum number of shares of Common Stock that may be
issued pursuant to awards under the Incentive Plan (the "Plan Shares") is set at
31,761,880. Of that number, approximately 24.5 million shares have already been
awarded or are the subject of currently outstanding awards (such as stock
options or restricted stock awards), leaving approximately 7.2 million shares
available for future awards.

The Board of Directors has determined that, in order to give the Company
the ability to continue to attract and retain the executive and key employee
talent necessary for the Company's continued growth and success, the number of
Plan Shares should be increased and is proposing an amendment to the Incentive
Plan to do that. Rather than request a specific number of additional Plan
Shares, the Board of Directors is proposing that a number of additional Plan
Shares (based on a specified formula) be authorized at the beginning of each of
the next five fiscal years (commencing with fiscal 1999, which begins on
February 2, 1998). No additional Plan Shares would be added after that five-year
period unless the stockholders approve the increase.

DESCRIPTION OF PROPOSED AMENDMENT. If the proposed amendment is approved,
additional Plan Shares will be authorized and available for awards at the
beginning of each fiscal year, beginning with fiscal 1999 and ending with fiscal
2003. The number of Plan Shares that will be added at the beginning of any such
fiscal year will be equal to 4% of the total number of issued and outstanding
shares of Common Stock as of the end of the immediately preceding fiscal year,
plus 4% of the total number of shares of Common Stock repurchased by the Company
during the immediately preceding fiscal year under the Company's stock
repurchase program. In each case, that percentage will be increased to 5% if the
total shareholder return (consisting of increase in stock price plus dividends
paid) achieved by the Company during the immediately preceding fiscal year
exceeds the average total shareholder return achieved by the companies included
in the S&P Computer Systems Index during the immediately preceding fiscal year.
The S&P Computer Systems Index is one of the indices used by the Company in its
comparative analysis of performance contained under "Company Performance" below,
and the companies currently included in that index are described in that
section.

As a part of the proposed amendment, the Board of Directors is also
proposing that the number of Plan Shares that may be awarded in the form of
restricted stock awards or stock bonus awards

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be reduced from 25% of the Plan Shares to 20% of the Plan Shares. Because stock
options issued under the Incentive Plan must have an exercise price of at least
75% of the Common Stock's fair market value on the date of grant, the dilutive
effect of options is less than that of outright share awards. Consequently, the
Board of Directors believes that stock options should be favored over outright
share grants and is proposing that the proportion of Plan Shares available for
outright share grants be reduced.

REASONS FOR THE PROPOSED AMENDMENT. While the Board of Directors is
cognizant of the potential dilutive effect of compensatory stock awards, it also
recognizes the significant motivational and performance benefits that are
achieved from making such awards. In determining the number of additional Plan
Shares that should be authorized, the Board of Directors examined the potential
dilutive effect of the additional Plan Shares over the next five fiscal years
and the potential dilutive effect of management incentive compensation plans at
other companies. The Board of Directors decided to recommend a periodic addition
approach rather than a specified number of additional Plan Shares because this
approach establishes an annual "budget" for each of the next five fiscal years
that management can use to better manage Incentive Plan awards and the resulting
stockholder dilution, if any. In addition, this approach establishes an explicit
"contract" between management and the stockholders for maximum long-term
dilution from the Incentive Plan.

The Board of Directors selected the baseline addition rate of 4% and the
additional 1% performance rate taking into consideration the potential dilutive
effect of that number compared with the potential dilutive effect of management
incentive compensation plans at comparable companies. In addition, the Board of
Directors took into consideration the Company's philosophy of granting Incentive
Plan awards deeper into the organization than many other companies. While
recognizing that this can result in greater dilution to the stockholders, the
Board of Directors believes that philosophy has been significantly instrumental
in fueling the extraordinary shareholder returns achieved by the Company over
the past several years. In short, the Incentive Plan is not just a program to
benefit the Company's executives; rather, the Company utilizes the Incentive
Plan as a means to distribute incentive compensation to key non-executive
employees as well. In fact, in the past, approximately 50% of incentive
compensation awards have gone to non-executive employees. The Board of Directors
also noted that the proposed amendment only effects a five-year program; at the
end of that period, the Board of Directors and the stockholders will be able to
reconsider the program.

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE APPROVAL
OF THE AMENDMENT TO THE INCENTIVE PLAN AND THE APPROVAL OF THE INCENTIVE PLAN AS
AMENDED.

MANAGEMENT COMPENSATION

All Common Stock information has been adjusted to take into account the
two-for-one split of the Common Stock in December 1996, but has not been
adjusted to take into account the Proposed Stock Split discussed above.

COMPENSATION OF DIRECTORS

The following is a description of the compensation arrangements for the
Company's non-employee directors. Mr. Dell, who is the only director who is also
an employee of the Company, does not receive any additional compensation for
serving on the Board of Directors.

ANNUAL CASH PAYMENTS. During each fiscal year, each non-employee director
receives an annual retainer fee and an additional $1,000 for each Board of
Directors meeting attended in person during the fiscal year. The amount of the
annual retainer fee was $30,000 for fiscal 1997. The annual retainer fee is paid
at the first meeting of the Board of Directors following the annual meeting of
stockholders.

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The Company maintains a deferred compensation plan for the non-employee
directors, pursuant to which the directors may elect to defer all or a portion
of their annual retainer fees. A director's deferred amounts are allocated by
the director to various investment funds and, along with any earnings, are
payable to the director upon termination of service as a member of the Board of
Directors or to the director's named beneficiary in the event of death.
Distribution of the deferred amounts and any earnings may be made, at the
election of the participating director, in a lump sum or in annual, quarterly or
monthly installments over a period of up to ten years.

A non-employee director may elect to receive an option to purchase Common
Stock in lieu of all or a portion of the annual retainer fee. The option is
granted on the date the annual retainer fee would otherwise have been paid. The
number of shares subject to the option is determined by dividing the amount of
the annual retainer fee subject to the election by the value of an option for
one share of Common Stock (calculated pursuant to the Black-Scholes model). The
exercise price of the option is the average of the high and low reported sales
price of the Common Stock on the date of grant. The option vests and becomes
exercisable with respect to 20% of the shares on each of the first five
anniversaries of the date of grant and terminates on the tenth anniversary of
the date of grant.

OPTION AWARDS. Each newly appointed or elected non-employee director is
entitled to receive an option to purchase 60,000 shares of Common Stock. This
option award is granted on the date after the first meeting of the Board of
Directors that the director attends. In addition, during each fiscal year, each
non-employee director who is serving as a member of the Board of Directors both
immediately before and immediately after the annual meeting of stockholders held
during that fiscal year receives an option to purchase 24,000 shares of Common
Stock. This option award is granted on the date of the first meeting of the
Board of Directors following the annual meeting of stockholders.

In each case, the exercise price of the option is equal to the average of
the high and low reported sales price of the Common Stock on the date of grant.
The option vests and becomes exercisable with respect to 20% of the shares on
each of the first five anniversaries of the date of grant, so long as the
director remains a member of the Board of Directors through those dates. The
option terminates when the director ceases to be a member of the Board of
Directors (if the Board of Directors demands or requests the director's
resignation), 90 days after the director ceases to be a member of the Board of
Directors (if the director resigns for any other reason) or one year after the
director ceases to be a member of the Board of Directors because of death or
permanent disability. In any event, the option terminates on the tenth
anniversary of the date of grant.

OTHER BENEFITS. The Company reimburses non-employee directors for their
reasonable expenses associated with attending Board of Directors meetings and
provides the directors with liability insurance coverage with respect to their
activities as directors of the Company.

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COMPENSATION DURING FISCAL 1997. The following table describes the fiscal
1997 fees and stock option grants for each of the Company's non-employee
directors.

[Download Table]

CASH OPTIONS
NAME PAYMENTS GRANTED(A)
------------------------------------------------------ -------- -------------

Mr. Carty............................................. $35,000(b) 24,000 shares
Mr. Hirschbiel........................................ $35,000 24,000 shares
Mr. Jordan............................................ $34,000(b) 24,000 shares
Dr. Kozmetsky......................................... $35,000 24,000 shares
Mr. Luce(c)........................................... $ 5,000 25,400 shares
Mr. Luft.............................................. $35,000 24,000 shares
Ms. Malone............................................ $35,000 24,000 shares
Mr. Miles(c).......................................... $ 5,000 25,400 shares

---------------

(a) On August 29, 1996 (the date of the first Board of Directors meeting
following last year's annual meeting of stockholders), each non-employee
director received an option to purchase 24,000 shares with an exercise price
of $33.155 per share.

(b) Elected to defer $30,000 of this amount pursuant to the deferred
compensation plan described above.

(c) Mr. Luce and Mr. Miles elected to receive options in lieu of the $30,000
annual retainer fee. Accordingly, in addition to the options referred to in
note (a) above, on August 29, 1996 (the date of the first Board of Directors
meeting following last year's annual meeting of stockholders), each of Mr.
Luce and Mr. Miles received an option to purchase 1,400 shares with an
exercise price of $33.155 per share.

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COMPENSATION OF EXECUTIVE OFFICERS

GENERAL. The compensation paid to the Company's executive officers is
administered by the Compensation Committee of the Board of Directors and
consists of base salaries, annual bonuses, awards made pursuant to the Incentive
Plan, contributions to the Company-sponsored 401(k) retirement plan and deferred
compensation plan and miscellaneous benefits. The following table summarizes the
total compensation for each of the last three fiscal years awarded to, earned by
or paid to the Company's Chief Executive Officer and the four most highly
compensated executive officers of the Company (other than the Chief Executive
Officer) who were serving as executive officers at the end of fiscal 1997 (the
"Named Executive Officers").

SUMMARY COMPENSATION TABLE

[Enlarge/Download Table]

LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
----------------------------------- -----------------------
OTHER SHARES
ANNUAL RESTRICTED UNDER- ALL OTHER
NAME AND FISCAL COMPEN- STOCK LYING COMPEN-
PRINCIPAL POSITION YEAR SALARY BONUS SATION(A) AWARDS(B) OPTIONS(C) SATION(D)
---------------------------- ------ -------- ---------- --------- ---------- ---------- ----------

MICHAEL S. DELL............. 1997 $688,461 $1,304,910 $ 17,440 $ 0 800,000 $36,266
Chairman of the Board, 1996 568,629 731,421 92,541 0 120,000 22,044
Chief Executive Officer 1995 374,850 443,182 92,789 0 0 10,308

MORTON L. TOPFER............ 1997 544,276 1,031,622(e) 17,567 0 90,000 36,636
Vice Chairman 1996 490,892 631,429 116,515 640,000 550,000 27,652
1995 300,000 266,015 82,039 0 830,000 4,400

KEVIN B. ROLLINS............ 1997 341,540 486,610 125,099 0 670,000 3,000
Senior Vice President, 1996 -- -- -- -- -- --
General Manager - 1995 -- -- -- -- -- --
Americas

MARTYN R. RATCLIFFE(F)...... 1997 359,874 631,034 62,982 0 260,000 14,395
Senior Vice President, 1996 261,510 273,190 73,977 1,405,000 150,000 13,673
General Manager - Europe 1995 198,866 101,779 47,143 0 106,580 10,104

THOMAS J. MEREDITH.......... 1997 383,547 545,232(e) 14,314 0 60,000 19,037
Senior Vice President, 1996 327,635 316,075 41,534 320,000 56,000 16,621
Chief Financial Officer 1995 277,894 246,414 71,048 0 64,304 9,785

---------------

(a) The amounts show in this column include amounts paid by the Company for
personal financial counseling and tax planning services and (prior to fiscal
1997) reimbursement for the related tax liability (Mr. Dell, $17,440 in
fiscal 1997, $92,541 in fiscal 1996 and $92,789 in fiscal 1995; Mr. Topfer,
$17,567 in fiscal 1997, $34,031 in fiscal 1996 and $7,496 in fiscal 1995;
Mr. Rollins, $643 in fiscal 1997; Mr. Ratcliffe, $13,972 in fiscal 1997,
$4,989 in fiscal 1996 and $0 in fiscal 1995; and Mr. Meredith, $14,314 in
fiscal 1997, $39,485 in fiscal 1996 and $68,779 in fiscal 1995) and
relocation expenses paid by the Company and reimbursement for the related
tax liability (Mr. Topfer, $82,484 in fiscal 1996 and $74,543 in fiscal
1995; Mr. Rollins, $34,456 in fiscal 1997; and Mr. Ratcliffe, $20,611 in
fiscal 1995). For Mr. Rollins, the amount shown also includes the amount of
bonus paid on commencement of employment ($90,000). For Mr. Ratcliffe (who
is a citizen and resident of the United Kingdom), the amounts shown also
include the following: for fiscal 1997, $26,830 for housing allowance,
$21,194 for automobile allowance and $986 for miscellaneous tax
reimbursements; for fiscal 1996, $47,360 for housing allowance, $21,312 for
automobile allowance and $316 for miscellaneous tax reimbursements; and for
fiscal 1995, $7,854 for housing allowance and $18,678 for automobile
allowance. For Mr. Meredith, the amounts shown also include imputed interest
on below-market loans that have since been repaid (for fiscal year 1996,
$2,049; and for fiscal 1995, $2,269).

(b) For Mr. Topfer, the amount shown represents the value of 40,000 shares of
Common Stock awarded on July 24, 1995 (calculated using the closing sales
price of the Common Stock on the date of grant, which was $16.00). At the
time of grant, the shares were subject to vesting and transfer restrictions
that lapse with respect to all of the shares on the fourth anniversary of
the date of grant. In addition, the shares are subject to forfeiture (and
any gain realized on the sale of the shares is subject to repayment to the
Company) if Mr. Topfer competes with the Company within two years after his
employment with the Company is terminated.

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For Mr. Ratcliffe, the amount shown represents the aggregate value of 40,000
shares of Common Stock awarded on April 12, 1995 and 60,000 shares of Common
Stock awarded on July 24, 1995 (calculated using the closing sales price of
the Common Stock on the dates of grant, which were $11.125 and $16.00,
respectively). At the time of grant, all such shares were subject to vesting
and transfer restrictions that lapse with respect to one-seventh of the
shares on each of the first six anniversaries of the date of grant and the
remaining one-seventh of the shares one week prior to the seventh
anniversary of the date of grant (with the lapse of the vesting and transfer
restrictions on 20,000 of the shares awarded on July 24, 1995 being subject
to acceleration under certain circumstances). In addition, the shares are
subject to forfeiture (and any gain realized on the sale of the shares is
subject to repayment to the Company) if Mr. Ratcliffe competes with the
Company within two years after his employment with the Company is
terminated.

For Mr. Meredith, the amount shown represents the value of 20,000 shares of
Common Stock awarded on July 24, 1995. That value was calculated using the
closing sales price of the Common Stock on the date of grant, which was
$16.00. At the time of grant, the shares were subject to vesting and
transfer restrictions that lapse with respect to one-seventh of the shares
on each of the first seven anniversaries of the date of grant. In addition,
the shares are subject to forfeiture (and any gain realized on the sale of
the shares is subject to repayment to the Company) if Mr. Meredith competes
with the Company within two years after his employment with the Company is
terminated.

The total number and value of the shares of restricted stock held by the
Named Executive Officers as of the end of fiscal 1997 are as follows, with
the values based on the closing sales price of the Common Stock on the last
trading day of fiscal 1997 ($66.125):

[Download Table]

NUMBER
OF
SHARES VALUE
--------- ----------

Mr. Dell................................ 0 $ 0
Mr. Topfer.............................. 40,000 2,645,000
Mr. Rollins............................. 0 0
Mr. Ratcliffe........................... 77,140 5,100,882
Mr. Meredith............................ 17,140 1,133,382

When and if the Board of Directors declares and pays dividends on the Common
Stock, such dividends will be paid on the outstanding shares of restricted
stock described in this note at the same rate as they are paid to all
stockholders.

(c) For information regarding the stock option grants made during fiscal 1997,
see the table titled "Option Grants in Last Fiscal Year" under "Management
Compensation -- Compensation of Executive Officers -- Incentive Plan Awards"
below.

(d) Includes the value of the Company's contributions to the Company-sponsored
401(k) retirement savings plan that is available to all Company employees
(or, for Mr. Ratcliffe, a comparable defined contribution retirement plan
substantially similar to that made available to all of the Company's U.K.
employees) and the amount of the Company's contributions to the deferred
compensation plan that is available to certain members of the Company's
management.

(e) In accordance with the terms of the Executive Stock Ownership Incentive Plan
described below, Mr. Topfer and Mr. Meredith each elected to receive
discounted stock options in lieu of annual bonus. The amount shown
represents the amount of the annual bonus foregone. In lieu of that amount,
Mr. Topfer received options to purchase 77,347 shares of Common Stock and
Mr. Meredith received options to purchase 40,879 shares of Common Stock. The
options were granted on March 21, 1997 and have an exercise price of $53.35
(which was 80% of the market value of the Common Stock on that date). These
options are fully vested but are not exercisable until the first anniversary
of the date of grant.

(f) Mr. Ratcliffe's compensation is paid in British pounds. Dollar amounts shown
for Mr. Ratcliffe were generally calculated on the basis of the actual
amount of each payment in pounds converted into U.S. dollars at the exchange
rate applicable at the time of such payment.

INCENTIVE PLAN AWARDS. The Company's Incentive Plan provides for the
granting of incentive awards in the form of stock options, stock appreciation
rights, stock and cash to directors, executive officers and key employees of the
Company and its subsidiaries and certain other persons who provide consulting or
advisory services to the Company. An aggregate of 31,761,880 shares of Common
Stock may be issued pursuant to awards under the Incentive Plan (which number
may be periodically increased over the next five fiscal years if Proposal 3 is
approved). As of May 1, 1997, approximately 7.2 million shares of Common Stock
remained available for issuance under Incentive Plan awards.

No restricted stock was awarded to any of the Named Executive Officers
during fiscal 1997. The following table sets forth information about stock
option grants made to the Named Executive Officers during fiscal 1997. The
Company has not made any awards of stock appreciation rights to any of the Named
Executive Officers.

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OPTION GRANTS IN LAST FISCAL YEAR

[Enlarge/Download Table]

INDIVIDUAL GRANTS
-----------------------------------------------------------------
NUMBER PERCENTAGE OF
OF SHARES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS EMPLOYEES IN PRICE GRANT EXPIRATION PRESENT
NAME GRANTED FISCAL YEAR PER SHARE DATE DATE VALUE(A)
-------------------------------- ---------- ------------- --------- ------- ---------- ----------

Mr. Dell........................ 200,000(b) 1.87% $23.125 7-11-96 7-11-06 $1,951,725
600,000(b) 5.62 28.940 8-9-96 8-9-06 7,236,405
Mr. Topfer...................... 90,000(b) 0.84 23.125 7-11-96 7-11-06 878,276
Mr.Rollins...................... 160,000(b) 1.50 14.095 3-8-96 3-8-06 930,363
440,000(b) 4.12 10.570 3-8-96 3-8-06 2,896,773
70,000(b) 0.66 23.125 7-11-96 7-11-06 683,104
Mr. Ratcliffe................... 200,000(c) 1.87 14.095 3-8-96 3-8-06 1,163,295
60,000(b) 0.56 23.125 7-11-96 7-11-06 585,517
Mr. Meredith.................... 60,000(b) 0.56 23.125 7-11-96 7-11-06 585,517

---------------

(a) Calculated using the Black-Scholes model. The material assumptions and
adjustments incorporated into the Black-Scholes model in making such
calculations include the following: (1) an interest rate representing the
interest rate on U.S. Treasury securities with a maturity date corresponding
to the expected option term (five years); (2) volatility determined using
daily prices for the Common Stock during the five-year period immediately
preceding date of grant; (3) a dividend rate of $0; and (4) in each case, a
reduction of 25% to reflect the probability of forfeiture due to termination
of employment prior to vesting and the probability of a shortened option
term due to termination of employment prior to the option expiration date.
The ultimate values of the options will depend on the future market prices
of the Common Stock, which cannot be forecast with reasonable accuracy. The
actual value, if any, that an optionee will recognize upon exercise of an
option will depend on the difference between the market value of the Common
Stock on the date the option is exercised and the applicable exercise price.

(b) These options will vest and become exercisable with respect to one-fifth of
the underlying shares on each of the first five anniversaries of the date of
grant.

(c) At the time of grant, these options were to vest and become exercisable with
respect to 40,000 shares on each of the first three anniversaries of the
date of grant and with respect to the remaining 80,000 shares on June 15,
1999. Subsequently, the vesting provisions were modified to provide for
vesting on July 1, 1998 of two-thirds of the remaining options then
unvested.

The following table sets forth, for each Named Executive Officer,
information concerning the exercise of stock options during fiscal 1997 and the
value of unexercised stock options at the end of fiscal 1997.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES

[Enlarge/Download Table]

NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END(B)
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED(A) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------------------- ----------- ----------- ----------- ------------- ----------- -------------

Mr. Dell................. 0 $ 0 24,000 896,000 $ 1,210,140 $35,751,560
Mr. Topfer............... 180,000 4,821,825 71,500 1,048,500 4,069,556 57,018,381
Mr. Rollins.............. 0 0 0 670,000 0 35,779,000
Mr. Ratcliffe............ 87,224 2,495,129 0 409,868 0 20,293,780
Mr. Meredith............. 70,000 2,567,420 181,560 314,476 10,489,526 18,099,966

---------------

(a) Calculated using the difference between (1) the actual sales price of the
underlying shares (if the underlying shares were sold immediately upon
exercise) or the closing sales price of the Common Stock on the date of
exercise (if the underlying shares were not sold immediately upon exercise)
and (2) the exercise price.

(b) Amounts were calculated by multiplying the number of unexercised options by
the closing sales price of the Common Stock on the last trading day of
fiscal 1997 ($66.125) and subtracting the exercise price.

Under the Executive Stock Ownership Incentive Program, which is a program
implemented under the Incentive Plan, certain members of the Company's
management (including the executive officers) may elect, on an annual basis, to
receive stock options in lieu of all or a portion of the

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annual bonus that they would otherwise receive. The exercise price of the
options is 80% of the fair market value of the Common Stock on the date of
issuance. The number of shares subject to the options is dependent on the amount
of bonus a participant designates for the program and is calculated by dividing
the designated bonus amount by 20% of the fair market value of the Common Stock
on the date of issuance. The options are fully vested at the time of issuance
but are not exercisable for a period of one year. All decisions regarding
participation in the program and the amount of bonus to designate must be made
several months in advance of the anticipated bonus payment date. With respect to
fiscal 1997, 104 persons (including two of the Named Executive Officers) elected
to participate in the program with respect to their bonuses for such year.

401(K) RETIREMENT PLAN. The Company maintains a defined contribution
retirement plan that complies with the provisions of Section 401(k) of the
Internal Revenue Code. Substantially all U.S. employees are eligible to
participate in the plan, and eligibility for participation commences upon
hiring. Under the terms of the plan, the Company currently matches 100% of each
employee participant's voluntary contributions, subject to a maximum Company
contribution of 3% of the employee's compensation. The Company's matching
contributions are used to purchase Common Stock and vest at the rate of 20% on
each of the first five anniversaries of the date of hire. A participant may
elect to transfer the matching contributions from Common Stock to another
available investment fund after those contributions have vested. During fiscal
1997, the Company made a discretionary contribution for every eligible employee,
regardless of whether the employee was a plan participant, equal to 2% of the
employee's actual earnings during calendar 1996.

DEFERRED COMPENSATION PLAN. The Company maintains a deferred compensation
plan, pursuant to which certain members of management (including the executive
officers) may elect to defer a portion of annual compensation. The Company
matches 100% of the employee's voluntary contributions not in excess of 3% of
annual compensation. Participants are given various options for the investment
of their funds (including voluntary contributions and matching contributions).
Upon the death or retirement of a participant, the funds attributable to the
participant (including any earnings on contributions) are distributed to the
participant or the participant's beneficiary in a lump sum or in annual,
quarterly or monthly installments over a period of up to ten years. A
participant whose employment with the Company is terminated prior to death or
retirement is entitled to receive their contributions to the plan (and any
earnings thereon) but is entitled to receive the Company's matching
contributions only if they have completed five years of service with the
Company.

EMPLOYEE STOCK PURCHASE PLAN. The Company maintains an employee stock
purchase plan that qualifies under Section 423 of the Internal Revenue Code and
permits substantially all employees to purchase shares of Common Stock.
Participating employees may purchase Common Stock at the end of each
participation period at a purchase price equal to 85% of the lower of the fair
market value of the Common Stock at the beginning or the end of the
participation period. Participation periods are semi-annual and begin on January
1 and July 1 of each year. Employees may designate up to 15% of their base
compensation for the purchase of Common Stock under the plan.

EMPLOYMENT AGREEMENTS AND CHANGE-IN-CONTROL ARRANGEMENTS. Each of the Named
Executive Officers has entered into an employment agreement with the Company.
The employment agreements for Mr. Topfer, Mr. Rollins and Mr. Meredith do not
contain any provisions regarding compensation or continued employment and are
identical in all material respects to those contained in the employment
agreement entered into by all the Company's employees upon the commencement of
their employment with the Company. Mr. Dell's employment agreement provides for
continued employment for successive one-year terms, subject to termination at
any time at the option of Mr. Dell upon 30 days' written notice.

In accordance with normal corporate practices in the U.K., the Company and
Mr. Ratcliffe have entered into a contract governing the terms of Mr.
Ratcliffe's employment with the Company. The contract establishes Mr.
Ratcliffe's base salary at $389,284 and sets his target bonus payout at 75% of
his annual salary. In addition, the contract also provides for the payment to
Mr. Ratcliffe of an

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annual automobile allowance and certain reimbursements for taxes and addresses
such matters as holidays, payments during sickness or injury, employee benefits
and disciplinary procedures. Mr. Ratcliffe's employment contract provides for
accelerated vesting on options covering approximately 147,000 shares of Common
Stock if his employment with the Company continues through July 1, 1998 and
provides for accelerated vesting on options covering approximately 73,000
additional shares of Common Stock if his employment with the Company continues
through July 1, 1999.

Under the terms of the Incentive Plan and the Company's prior stock option
plans, the Compensation Committee, if it so chooses, may issue awards with
provisions that accelerate vesting and exercisability in the event of a
change-in-control of the Company and may amend existing awards to provide for
such acceleration. To date, the Compensation Committee has not elected to
include such acceleration provisions in any awards.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Ms. Malone, Mr. Jordan and Mr. Miles served as members of the Compensation
Committee of the Company's Board of Directors during fiscal 1997. None of such
persons is an officer or employee, or former officer or employee, of the Company
or any of its subsidiaries. No interlocking relationship exists between the
members of the Company's Board of Directors or Compensation Committee and the
board of directors or compensation committee of any other company, nor has any
such interlocking relationship existed in the past.

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COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The Company's mission is to become the leader in the personal computer
industry by providing products and services of the highest value to its
customers. To accomplish this objective, the Company has developed a
comprehensive business strategy that emphasizes maximizing long-term stockholder
value through return on invested capital, revenue and earnings growth, quality
and customer and employee satisfaction.

COMPENSATION PHILOSOPHY

The Compensation Committee (the "Committee") is committed to implementing a
compensation program that furthers the Company's mission. The Committee
therefore adheres to the following compensation policies, which are intended to
facilitate the achievement of the Company's business strategies:

- Executives' total compensation programs should strengthen the relationship
between pay and performance by emphasizing variable, at-risk compensation that
is dependent upon the level of success in meeting specified corporate,
business unit and individual performance goals.

- A significant amount of pay for senior executives should be comprised of
long-term, at-risk pay to focus management on the long-term interests of
stockholders.

- The at-risk components of pay offered should be comprised primarily of
equity-based pay opportunities. Encouraging a personal proprietary interest
provides executives with a close identification with the Company and aligns
executives' interests with those of the stockholders. This promotes a
continuing focus on building profitability and stockholder value.

- Compensation opportunities should enhance the Company's ability to attract,
retain and encourage the development of exceptionally knowledgeable and
experienced executives upon whom, in large part, the successful operation and
management of the Company depends.

- Base compensation should target compensation opportunities at the median of
compensation paid to executives of similar high-tech companies. However, if
the Company's performance exceeds that of its peers, total compensation should
be above the median. Likewise, if the Company's performance falls below the
performance of its peers, total compensation paid to the senior executives
should be below the median compensation paid by the peer group.

The Committee compares total compensation levels for the Company's senior
executives to the compensation paid to executives of a peer group of similar
high-tech companies. Each year, management develops the peer group based on
similar sales volumes, market capitalization, employment levels and lines of
business. The Committee reviews and approves the selection of companies used in
the peer group for compensation comparison purposes. For fiscal 1997, the peer
group consisted of approximately 20 high-tech companies, and is basically
unchanged from the comparison group used for fiscal 1996. As in the past, this
group is not the same group used for the industry comparison in the performance
graph found in "Company Performance" since this group includes additional
companies that the Company competes with for people talent, in addition to
industry-product competitors.

COMPONENTS OF COMPENSATION

The key elements of the Company's executive compensation program are base
salary, short-term (annual) incentive and long-term incentive compensation.
These elements are addressed separately.

The Committee does not exclusively use quantitative methods or mathematical
formulas in setting any element of compensation. In determining each component
of compensation, the

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Committee considers all elements of an executive's total compensation package,
including insurance and other benefits.

BASE SALARIES. Base salaries are targeted at median levels for the peer
group of companies and are adjusted by the Committee to recognize varying levels
of responsibility, individual performance, business unit performance and
internal equity issues, as well as external pay practices. The Committee reviews
each executive's base salary annually.

Overall, executive salaries were increased in fiscal 1997 at rates
comparable to the increases provided in the peer group of high-tech companies,
and the salaries are near median levels for that peer group.

SHORT-TERM INCENTIVES. The Incentive Bonus Plan promotes the Company's
pay-for-performance philosophy by providing executives with direct financial
incentives in the form of annual cash bonuses to achieve corporate, business
unit and individual performance goals.

Each year, the Committee establishes these corporate and business unit
specific goals relating to each executive's bonus opportunity. For fiscal 1997,
the Company's performance and business unit performance were based on financial
measures, including return on invested capital ("ROIC") and revenue growth, and
on non-financial measures, such as quality, systems infrastructure and process
enhancements. For fiscal 1997, a subjective evaluation of individual performance
could not result in an upward adjustment of the award for those corporate vice
presidents who participate in the Executive Incentive Bonus Plan ("EIBP") and
who are executive officers. The EIBP was approved by the stockholders at the
1995 annual meeting in order to comply with the performance-based compensation
exemption under Section 162(m) of the Internal Revenue Code.

Fiscal 1997 target bonus awards for each of the executives were set
slightly above market levels, but required above-average performance from each
of the executives to be achievable. For the Company's executive officers, the
targets ranged from 75% to 100% of base salaries. The actual percentage to be
paid was subject to adjustment above or below the target based on the Company's
performance. The Company's performance in fiscal 1997 significantly exceeded the
performance levels as specified in the plan, and bonuses were paid to the Named
Executive Officers as shown in the Summary Compensation Table. The payouts
ranged from 190% to 210% of the target bonus percentages for each of the Named
Executive Officers.

For fiscal 1998, the Company's annual incentive plan will be again focused
primarily on ROIC and revenue growth measures. Under the plan, corporate ROIC
must exceed the Company's risk-adjusted weighted average cost of capital before
the EIBP bonus pool is funded. This represents an aggressive program design that
only pays for performance which truly works to enhance stockholder value.
Similarly, the Company's revenue growth thresholds are set near 150% of the
computer industry growth rate before the bonus pool will be funded.

LONG-TERM INCENTIVES. In keeping with the Company's philosophy of providing
a total compensation package that favors at-risk components of pay, long-term
incentives comprise an important component of an executive's total compensation
package. These incentives are designed to motivate and reward executives for
maximizing stockholder value and encourage the long-term employment of key
employees. Long-term incentives are still outstanding pursuant to the Company's
1989 and 1993 Stock Option Plans and are currently provided pursuant to the
Incentive Plan approved by the stockholders at the 1994 annual meeting.

When awarding long-term incentives, the Committee considers executives'
levels of responsibility, prior experience, individual performance criteria,
previous stock option grants and compensation practices at the peer group of
companies used to evaluate total compensation. The Committee's objective is to
provide executives with long-term incentive award opportunities that approximate
the market median but provide for above-market payout opportunities when the
Company's stockholder returns exceed industry norms.

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The size of stock option grants is based primarily on the dollar value of
the award granted. As a result, the number of shares underlying stock option
awards varies and is dependent on the price of the Common Stock on the date of
grant. The size of the award can also be adjusted based on individual factors.

In July 1996, stock options with an exercise price set at fair market value
were granted for fiscal 1997 as part of the Company's regular annual grant of
stock options. The size of each award was determined based on the criteria for
awarding long-term incentives stated in the preceding two paragraphs. These
nonqualified options vest ratably on the first five anniversaries of the grant
date (20% of the grant each year).

Because all of the above grants were made at option prices equal to the
fair market value of the Common Stock on the dates of grant, the stock options
have value only if the stock price appreciates from the value on the date the
options were granted. This design is intended to focus executives on the
enhancement of stockholder value over the long-term and to encourage equity
ownership in the Company.

Also, on March 21, 1997, discounted stock options with an exercise price
set at 80% of fair market value were granted to 104 of 160 potential
participants in the Company's "Executive Stock Ownership Incentive Program."
Under this program, executives could elect to forgo a portion of their pre-tax
Incentive Bonus Plan or EIBP payouts for fiscal 1997 and receive options granted
at 80% of fair market value on the scheduled bonus payment date. Because of the
inherent risk in forgoing a cash payment to receive an option grant, the number
of shares granted is calculated by dividing the forgone bonus payment amount by
20% of the fair market value of the Common Stock on the bonus payment date.
Although the foregone cash payments would have been unrestricted, these
discounted options are subject to a one-year holding period requirement, in
exchange for the favorable share calculation formula.

The Committee also approved grants of restricted stock to key employees who
joined the Company during fiscal 1997. The restricted stock was required to
attract these individuals to the Company and was intended to replace the
long-term incentives they forfeited when they left their previous employers.

COMPENSATION OF THE CHIEF EXECUTIVE OFFICER

In fiscal 1997, Mr. Dell's annualized base salary was increased to $700,000
to reflect the Company's outstanding performance, resulting in base pay closer
to median base salary earnings for chief executive officers of the peer group of
companies.

Mr. Dell also received a payment under the EIBP because the Company's
performance in fiscal 1997 exceeded the target performance levels specified in
the plan, resulting in a payout of 190% of Mr. Dell's base salary, versus a
target bonus percentage of 100% of base salary earnings for fiscal 1997.

In fiscal 1997, Mr. Dell also received stock option grants covering 400,000
shares (800,000 shares, adjusted for the two-for-one split in December 1996)
with an exercise price set at the fair market value of the Common Stock on the
date of grant. The awards were based on comparative long-term incentive awards
made to other chief executive officers in the peer group of high-tech companies.

POLICY WITH RESPECT TO THE $1 MILLION DEDUCTION LIMIT

Section 162(m) of the Internal Revenue Code generally limits the U.S.
corporate income tax deduction for compensation paid to executive officers named
in the summary compensation table in the proxy statement of a public company to
$1 million, unless the compensation is "performance based compensation" or
qualifies under certain other exceptions. When structuring awards to the
executive officers, the Committee considers the potential loss of deduction
under Section 162(m),

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as well as the financial statement effect of a particular award. In some cases,
an award that qualifies as "performance based compensation" under Section 162(m)
may give rise to an accounting treatment that results in an adverse financial
statement effect. Consequently, the Committee attempts to strike a reasonable
balance between the Section 162(m) considerations and the financial accounting
or other considerations. The Committee may authorize an award that will give
rise to a loss of deduction under Section 162(m), but only after determining
that the potential adverse financial statement effect of alternative award
structures, or other considerations, outweighs the monetary value of the lost
deduction. As a result of the Section 162(m) limitation, approximately $2.2
million of the compensation earned by Mr. Topfer during fiscal 1997 will be
nondeductible (resulting in a cash cost to the Company of approximately
$760,000).

CONCLUSION

The Committee believes these executive compensation policies and programs
serve the interests of stockholders and the Company effectively. The various pay
vehicles offered are appropriately balanced to provide increased motivation for
executives to contribute to the Company's overall future success, thereby
enhancing the value of the Company for the stockholders' benefit.

THE COMPENSATION COMMITTEE

CLAUDINE B. MALONE, Chairman
MICHAEL H. JORDAN
MICHAEL A. MILES

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COMPANY PERFORMANCE

The following graph compares the cumulative total return on the Company's
Common Stock during the last five fiscal years with the S&P 500 Index and the
S&P Computer Systems Index during the same period. The graph shows the value, at
the end of each of the last five fiscal years, of $100 invested in the Company's
Common Stock or the indices on February 2, 1992 and assumes the reinvestment of
all dividends. The graph depicts the change in the value of the Company's Common
Stock relative to the noted indices as of the end of each fiscal year and not
for any interim period. Historical stock price performance is not necessarily
indicative of future stock price performance.

COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN

[GRAPH]

[Enlarge/Download Table]

END OF FISCAL YEAR
-----------------------------------------
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ------

Dell Computer Corporation...................... $100 $218 $102 $197 $259 $1,245
S&P 500........................................ 100 72 72 87 124 168
S&P Computer Systems Index..................... 100 107 117 115 152 192

---------------

(a) The S&P Computer Systems Index currently consists of Amdahl Corporation,
Apple Computer, Inc., Compaq Computer Corporation, Data General Corporation,
Dell Computer Corporation, Digital Equipment Corporation, Hewlett-Packard
Company, Intergraph Corporation, International Business Machines
Corporation, Silicon Graphics, Inc., Sun Microsystems, Inc. and Tandem
Computers Inc.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table provides information about the beneficial ownership of
Common Stock (the only class of voting securities of the Company outstanding) by
the persons known to the Company to be the beneficial owners of more than 5% of
the outstanding Common Stock, by each of the Company's directors, by each Named
Executive Officer and by all of the Company's directors and executive officers
as a group. To the best of the Company's knowledge, each such person holds sole
investment and voting power over the shares shown, except as otherwise
indicated.

[Enlarge/Download Table]

AMOUNT AND NATURE
OF BENEFICIAL PERCENTAGE
BENEFICIAL OWNER OWNERSHIP (A) OF CLASS (B)
--------------------------------------------------------- ----------------- ------------

Michael S. Dell.......................................... 26,894,200(c)(d) 16.0%
One Dell Way
Round Rock, Texas 78682
FMR Corp................................................. 9,087,000(e) 5.4%
82 Devonshire Street
Boston, Massachusetts 02109
Donald J. Carty.......................................... 66,400(c) *
Paul O. Hirschbiel, Jr................................... 28,056(c)(f) *
Michael H. Jordan........................................ 82,400(c) *
George Kozmetsky......................................... 648,634(g) *
Thomas W. Luce III....................................... 13,440(h) *
Klaus S. Luft............................................ 28,800(c) *
Claudine B. Malone....................................... 26,800(c) *
Michael A. Miles......................................... 77,800(c)(i) *
Morton L. Topfer......................................... 375,402(c)(j) *
Kevin B. Rollins......................................... 120,052(c) *
Martyn R. Ratcliffe...................................... 87,096(c) *
Thomas J. Meredith....................................... 375,913(c)(k) *
Directors and executive officers as a group
(24 persons)........................................... 30,141,596(c) 18.0%

---------------

* Less than 1%.

(a) As of April 30, 1997 (the last trading day of the first quarter of fiscal
1998), unless otherwise indicated.

(b) Based on the number of shares outstanding (167,727,302) at the close of
business on April 30, 1997 (the last trading day of the first quarter of
fiscal 1998).

(c) Includes the following number of shares subject to options that were
exercisable at or within 60 days after April 30, 1997: Mr. Dell, 24,000; Mr.
Carty, 62,400; Mr. Hirschbiel, 4,800; Mr. Jordan, 62,400; Mr. Luft, 28,800;
Ms. Malone, 16,800; Mr. Miles, 28,800; Mr. Topfer, 222,250; Mr. Rollins,
120,000; Mr. Ratcliffe, 9,956; Mr. Meredith, 184,421; and all directors and
executive officers as a group, 966,726. Also includes the following number
of shares held for the person's account in the Company-sponsored 401(k)
retirement savings plan: Mr. Dell, 6,260; Mr. Topfer, 1,018; Mr. Rollins,
52; Mr. Meredith, 2,361; and all directors and executive officers as a
group, 9,349.

(d) Does not include 420,000 shares held in a trust of which Mr. Dell is the
grantor, 390,000 shares held in a trust of which Mr. Dell's spouse is the
grantor or 2,682,032 shares held by Mr. Dell's spouse.

(e) Based on a Schedule 13G filed with the Securities and Exchange Commission on
February 11, 1997 and reflecting ownership of Common Stock as of December
31, 1996. The following information is taken from that filing. Of the
reported number of shares, 8,012,800 shares (4.45%) are beneficially owned
by Fidelity Management & Research Company, a wholly-owned subsidiary of FMR
Corp., as a result of acting as investment adviser to various registered
investment companies, and 582,600 shares (0.32%) are beneficially owned by
Fidelity Management Trust Company, a wholly-owned subsidiary of FMR Corp.,
as a result of its serving as investment manager of various institutional
accounts. In addition, Edward C. Johnson 3d, Chairman of FMR Corp., has sole
voting and dispositive power over 22,500 shares and shares voting and
dispositive power over 9,100 shares. The reported number also includes
460,000 shares (0.26%) beneficially owned by Fidelity International Limited
("FIL"), an investment adviser to various investment companies and certain
institutional investors. FIL currently operates as an entity independent of
FMR Corp. FMR Corp. and FIL are of the view that the shares held by the
other corporation need not be aggregated for purposes of Section 13(d);
however, FMR Corp. made the filing on a voluntary basis as if all of the
shares are beneficially owned by FMR Corp. and FIL on a joint basis.

(f) Includes 1,440 shares held in family trusts of which Mr. Hirschbiel is the
trustee.

(g) Includes 43,150 shares held by Kozfund, Ltd., an affiliate of Dr. Kozmetsky.

(h) Includes 13,440 shares owned by the Hughes & Luce Retirement Plan for the
benefit of Mr. Luce.

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(i) Includes 10,000 shares held by Mr. Miles' spouse.

(j) Includes 3,216 shares held by Mr. Topfer's spouse and 8,092 shares held by a
family limited partnership of which Mr. Topfer is the general partner.

(k) Includes 123,991 shares held by a grantor trust of which Mr. Meredith and
his spouse are the trustees and Mr. Meredith and members of his family are
the beneficiaries.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Thomas W. Luce III, a director of the Company, is affiliated with the law
firm of Hughes & Luce, L.L.P., Dallas, Texas, which provided certain legal
services to the Company during fiscal 1997. The dollar amount of fees that the
Company paid to that firm during fiscal 1997 did not exceed 5% of that firm's
gross revenues for its last full fiscal year.

ADDITIONAL INFORMATION

INDEPENDENT ACCOUNTANTS. The Board of Directors has selected Price
Waterhouse LLP as the Company's independent accountants for fiscal 1998. Price
Waterhouse LLP has been the Company's independent accountants for each of the
past eleven fiscal years. The Company expects that representatives of Price
Waterhouse LLP will be present at the meeting to respond to appropriate
questions and will have an opportunity to make a statement if they desire to do
so.

PROXY SOLICITATION. The Company will bear all costs of this proxy
solicitation. Proxies may be solicited by mail, in person or by telephone or
facsimile transmission by officers, directors and regular employees of the
Company. In addition, the Company expects to utilize the services of an
independent proxy solicitation firm and expects to pay approximately $ as
compensation for those services. The Company may also reimburse brokerage firms,
custodians, nominees and fiduciaries for their expenses to forward proxy
materials to beneficial owners.

STOCKHOLDER PROPOSALS. Any stockholder of the Company who desires to
present a proposal for consideration at next year's annual meeting of
stockholders must deliver the proposal to the Company's principal executive
offices no later than February 6, 1998, unless the Company notifies the
stockholders otherwise. Only those proposals that are proper for stockholder
action may be included in the Company's proxy statement. Written requests for
inclusion should be addressed to Corporate Secretary, Dell Computer Corporation,
One Dell Way, Round Rock, Texas 78682-2244.

In recommending candidates to the Board of Directors, the Nominating
Committee seeks persons of proven judgment and experience. Stockholders who wish
to suggest qualified candidates may write to the Corporate Secretary, Dell
Computer Corporation, One Dell Way, Round Rock, Texas 78682-2244, stating in
detail the qualifications of the persons they recommend.

STOCKHOLDER LIST. The Company will maintain at its corporate offices at One
Dell Way, Round Rock, Texas, a list of the stockholders entitled to vote at the
annual meeting, and the list will be open for examination by any stockholder,
for purposes germane to the meeting, during ordinary business hours for a period
of 10 days prior the meeting. The list will also be available for examination at
the meeting itself.

ANNUAL REPORT. The Company's Annual Report to Stockholders for the fiscal
year ended February 2, 1997 is being mailed to stockholders concurrently with
this Proxy Statement and does not form any part of the proxy solicitation
material. A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K (WITHOUT EXHIBITS)
FOR THE FISCAL YEAR ENDED FEBRUARY 2, 1997, AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION, WILL BE SENT TO ANY STOCKHOLDER WITHOUT CHARGE UPON WRITTEN
REQUEST ADDRESSED TO DONALD D. COLLIS, INVESTOR RELATIONS, DELL COMPUTER
CORPORATION, ONE DELL WAY, ROUND ROCK, TEXAS 78682.

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APPENDIX A

SUMMARY DESCRIPTION OF THE INCENTIVE PLAN

GENERAL

The Incentive Plan provides for the granting of incentive awards in the
form of stock options, SARS, stock and cash to executive officers and employees
of the Company and its subsidiaries and certain other persons who are not
employees but who from time to time provide substantial advice or other
assistance or services to the Company. The Incentive Plan also provides for the
automatic grant of options to non-employee directors. As of the end of fiscal
1997, the Company and its subsidiaries had approximately 10,350 full-time
employees and eight non-employee directors. Except when a participant's
employment terminates as a result of death, disability or normal retirement, an
award generally may be exercised (or the restrictions thereon may lapse) only if
the participant is an officer, employee or director of the Company or a
subsidiary at that time. The Compensation Committee, however, has discretion to
permit awards that may be exercised after the participant ceases to be an
officer or employee of the Company or a subsidiary. The Incentive Plan permits
awards to be transferred to a trust established for the benefit of one or more
of the children, grandchildren or spouse of the participant, but only if the
Compensation Committee approves.

SHARES SUBJECT TO AWARDS. The maximum number of shares of Common Stock that
may be issued pursuant to awards granted under the Incentive Plan is 34,003,692
currently. If the proposed amendment to the Incentive Plan is approved, that
number will be periodically increased. The shares issued pursuant to awards
under the Incentive Plan may be newly issued or from treasury.

The number of shares authorized for issuance under the Incentive Plan and
the number of shares subject to outstanding awards are subject to adjustment in
the event of stock splits, stock dividends, recapitalizations and other changes
in the Company's capitalization or in the event of mergers or other similar
transactions involving the Company. The Incentive Plan includes provisions
governing the effects on awards of a dissolution, liquidation, merger,
consolidation or other reorganization of the Company, including a provision that
permits the Company to allow for the preservation of the rights of the holders
of awards in the event of such reorganization or providing for the acceleration
of vesting and exercisability of awards. No awards for more than 800,000 shares
may be granted to any one employee in a calendar year. In addition, the
aggregate fair market value (determined at the date of grant) of Common Stock
that a participant becomes eligible to purchase by exercising incentive stock
options may not exceed $100,000 in any calendar year.

ADMINISTRATION. The Incentive Plan is administered by the Compensation
Committee, which is composed entirely of directors who are both non-employee
directors as defined in applicable SEC regulations and outside directors as
defined in Section 162(m) of the Internal Revenue Code. Except for certain
automatic awards to non-employee directors, the Compensation Committee has broad
discretion to administer the Incentive Plan, interpret its provisions and adopt
policies to implement it. This discretion includes the power to select the
employees to receive awards, to determine the type and size of awards, to
determine when awards will be granted, to grant any kind of award in combination
with other kinds of awards and to prescribe and amend the terms of the
agreements governing the awards.

STOCK OPTIONS. Options awarded under the Incentive Plan may be Incentive
Options (as defined in the Incentive Plan) meeting the requirements of Section
422 of the Internal Revenue Code or Nonstatutory Options (as defined in the
Incentive Plan). Options are rights to purchase a specified number of shares of
Common Stock at a price fixed when the option is granted. Incentive Options must
have an exercise price at least equal to the fair market value of the Common
Stock on the date of grant, while Nonstatutory Options may have any exercise
price that is equal to or greater than 75% of the fair market value of the
Common Stock on the date of grant. Options are exercisable when and on the terms
set by the Compensation Committee, but no Incentive Option may be

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exercised more than ten years after the date of its grant. Payment of the
exercise price may be made in cash, with other shares of Common Stock or a
combination of both. Pyramiding of stock option exercises may be permitted,
which could allow a participant to exercise the options without paying any
significant amount of cash.

STOCK APPRECIATION RIGHTS. SARs are rights to receive a payment, in cash or
shares of Common Stock or both, based on the value of Common Stock. SARs not
granted in connection with another award under the Incentive Plan must have an
exercise price that is at least 75% of the fair market value of the Common Stock
on the date of grant. SARs granted in connection with another award generally
will have the same exercise price and other terms as the related award; exercise
of the tandem SAR will terminate the related award, and exercise of the related
award will similarly terminate the tandem SAR.

OTHER AWARDS. The Incentive Plan also permits stock awards and cash awards.
A stock award is an award of shares of Common Stock. The award may be subject to
restrictions against transfer, satisfaction of specified conditions, repurchase
options exercisable by the Company or other limitations or may be made without
any restrictions or limitations. The participant may be given the right to vote
the shares and receive dividends on the shares subject to the award, whether
before or after such shares have been earned. No more than 25% (20% if the
proposed amendment to the Incentive Plan is approved) of the total shares
reserved for issuance under the Incentive Plan may be issued pursuant to
restricted stock, stock bonus or similar stock awards (although this limitation
does not apply to stock issued upon exercise or settlement of an option, SAR or
performance unit). Cash awards are generally based on the extent to which
pre-established performance goals are achieved over a pre-established period,
but may also include individual bonuses paid for previous performance.

The Compensation Committee may select any performance measure or
combination of measures as conditions for awards under the Incentive Plan,
except that the performance measures for executive officers must be chosen from
among the following choices: (a) total stockholder return (stock price
appreciation plus dividends); (b) net income; (c) earnings per share; (d) return
on sales; (e) return on equity; (f) return on assets; (g) increase in the market
price of Common Stock or other securities; (h) the Company's performance in any
of the categories listed in clauses (a) through (g) compared to the average
performance of the companies included in the S&P Computer Systems Index; and (i)
the Company's performance in any of the categories listed in clauses (a) through
(g) compared to the average performance of the companies used in a peer group
established by the Compensation Committee before the beginning of the
performance period. Nevertheless, the Compensation Committee may choose
different performance measures for executive officers if the stockholders
otherwise approve, if tax laws or regulations change so as not to require
stockholder approval of different measures in order to deduct the related cash
or stock payment for federal income tax purposes or if the Compensation
Committee determines that it is in the Company's best interest to grant awards
not satisfying the requirements of Section 162(m) or any successor law.

AUTOMATIC GRANTS OF OPTIONS TO NON-EMPLOYEE DIRECTORS. The Incentive Plan
provides that each non-employee director of the Company will be automatically
granted stock options for 60,000 shares of Common Stock on the day after the
first meeting of the Board of Directors that the non-employee director attends
following the director's initial election or appointment to the Board of
Directors. The exercise price of the options will be the fair market value of
the Common Stock on the date of grant, and the options will vest in annual
amounts of 12,000 shares on each of the first five anniversaries of the date of
grant so long as the non-employee director is a director of the Company at all
times after the date of grant and including the vesting date. In addition, each
non-employee director who is a member of the Board of Directors both before and
after the annual meeting of stockholders of the Company each year will
automatically be granted stock options for 24,000 shares of Common Stock on the
date of the first meeting of the Board of Directors following that annual
meeting of stockholders. The exercise price of the options will be the fair
market value of the

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Common Stock on the date of grant, and the options will vest in annual amounts
of 4,800 shares on each of the first five anniversaries of the date of grant so
long as the non-employee director is a director of the Company at all times
after the date of grant and including the vesting date. Both the initial options
and the annual options terminate on the earlier of (a) ten years from the date
of grant, (b) immediately when the holder ceases to be a director if the Board
of Directors demanded the holder's resignation, (c) 90 days after the holder
ceases to be a director because of other resignation or failure to stand for
re-election or (d) one year after death or permanent disability.

DEFERRAL AND SUBSTITUTION OF AWARD. The Compensation Committee may permit a
participant to defer receipt of the payment of cash or the delivery of shares
that the participant would otherwise be due under any award pursuant to the
Incentive Plan. Non-employee directors may elect to receive stock options in
lieu of all or a portion of their annual fee. The exercise price of the options
will be the fair market value on the date of grant (which will be the date the
fee otherwise would have been paid), the options will vest in annual amounts of
20% on each of the first five anniversaries of the date of grant and the options
will expire on the tenth anniversary of the date of grant. The number of options
issued will be calculated by dividing the amount of the annual fee foregone by
the value of an option for one share of Common Stock on the date of grant
(calculated using the Black-Scholes Model based on the applicable assumptions
used in calculating option values in the Company's most recent annual meeting
proxy statement).

TAX WITHHOLDING. The Incentive Plan allows for the satisfaction of a
participant's tax withholding with respect to an award by the withholding of
shares of Common Stock issuable pursuant to the award or the delivery of
previously owned shares of Common Stock, in either case based upon the fair
market value of the applicable shares and subject to any limitations or
conditions the Compensation Committee adopts.

CHANGE IN CONTROL. Any awards granted under the Incentive Plan may provide
that, on the occurrence of a change in control of Dell, (a) the options and SARs
represented by the award will become immediately exercisable; (b) all
restriction periods and restrictions imposed on restricted stock subject to the
award will lapse and (c) the target payout opportunity attainable under the
award will be deemed to have been fully earned for all performance periods as of
the effective date of the change in control, the vesting of the awards
denominated in shares will be accelerated as of the effective date of the change
in control and the holder of the award will be paid in cash within 30 days
following the change in control a pro rata portion of all targeted cash payout
opportunities associated with outstanding cash-based awards (based on the number
of complete and partial calendar months within the performance period that had
elapsed as of the change in control). The award may also provide that the award
will remain exercisable for its original term whether or not employment is
terminated following a change in control. The provisions of the preceding clause
(c) will not apply to awards that were granted fewer than six months before the
change in control. In addition, the Compensation Committee may make any
modifications to the awards other than those for which a stockholder vote is
required or that would cancel the awards. In general, the Incentive Plan defines
a change in control as any of the following:

(a) The acquisition by any person of beneficial ownership of 20% or
more of the outstanding Common Stock or the outstanding voting securities
of the Company, other than (1) an acquisition from the Company; (2) an
acquisition by the Company, a company controlled by the Company or an
employee benefit plan sponsored by the Company; (3) an acquisition by
Michael S. Dell, his affiliates or associates, his heirs or any trust or
foundation to which he transfers stock (collectively, "Michael Dell"); or
(4) an acquisition that complies with the three requirements of paragraph
(c) below.

(b) Individuals who constitute the Incumbent Board (as defined in the
Incentive Plan) cease for any reason to constitute at least a majority of
the Company's Board of Directors. The Incumbent Board means those
individuals who were serving as directors on June 22, 1994 and any
individual who becomes a director after that time whose election or
nomination was

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approved by a vote of a majority of the directors then comprising the
Incumbent Board (unless such person became a director as a result of an
actual or threatened election contest or solicitation of proxies or
consents by or on behalf of a person other than the Board of Directors).

(c) Approval by the Company's stockholders of a reorganization
transaction (such as a merger, consolidation or asset sale), unless,
following such transaction, (1) the beneficial owners of the outstanding
Common Stock and outstanding voting securities immediately prior to the
transaction beneficially own more than 60% of the outstanding shares of
common stock and combined voting power of the voting securities of the
corporation resulting from the transaction (including a corporation that
owns the Company) in substantially the same proportions as their ownership
of the outstanding Common Stock and voting securities of the Company
immediately prior to the transaction, (2) no person (other than an employee
benefit plan sponsored by the Company, the corporation resulting from the
transaction or Michael Dell) beneficially owns 20% or more of the
outstanding common stock or voting securities of the corporation resulting
from the transaction, except to the extent such ownership existed prior to
the transaction, and (3) at least a majority of the members of the board of
directors of the corporation resulting from the transaction were members of
the Incumbent Board at the time of the execution of the initial agreement,
or the action of the Board of Directors, providing for such transaction.

(d) Approval by the Company's stockholders of a complete liquidation
or dissolution of the Company.

AMENDMENT, MODIFICATION AND TERMINATION. The Board of Directors may at any
time and from time to time, alter, amend, suspend or terminate the Incentive
Plan in whole or in part; except that no amendment that materially increases the
number of shares of Common Stock subject to the Incentive Plan, materially
increases the benefits to participants in the Incentive Plan or materially
modifies the requirements for eligibility to participate in the Incentive Plan
may be made without stockholder approval. No awards may be granted under the
Incentive Plan after June 22, 2004. No stockholder approval will be sought for
amendments to the Incentive Plan except as required by law or the rules of any
national securities exchange or inter-dealer quotation system on which the
Common Stock is then listed or quoted.

FEDERAL INCOME TAX CONSEQUENCES

NONSTATUTORY OPTIONS. The grant of a Nonstatutory Option should neither
result in recognition of taxable income by the optionee nor give rise to a
deduction by the Company. However, an optionee who exercises a Nonstatutory
Option must generally, as of the exercise date, recognize compensation income
equal to the excess (if any) of the then fair market value of the Common Stock
received over the exercise price of the option. If the Common Stock received
upon exercise of a Nonstatutory Option is subject to a substantial risk of
forfeiture within the meaning of Section 83(c) of the Internal Revenue Code,
then, unless the optionee makes an election pursuant to Section 83(b) of the
Internal Revenue Code to be taxed currently on the excess of the fair market
value of the shares over the option price, the excess would not be includible as
compensation income unless and until the substantial risk of forfeiture has
lapsed. Any gain or loss on the subsequent sale or exchange of Common Stock
received on exercise of a Nonstatutory Option will be treated as capital gain or
loss, provided the stock is held as a capital asset. If an optionee pays the
exercise price of a Nonstatutory Option solely with cash, the tax basis of the
Common Stock received will equal the sum of the cash paid plus the amount of
compensation income includible by the optionee resulting from the exercise. An
optionee who pays all or a portion of the exercise price of a Nonstatutory
Option with shares of Common Stock is subject to detailed rules as provided in
regulations concerning recognition of income or gain and the determination of
basis in the shares received. The amount of compensation income includible in
gross income by an optionee is

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deductible by the Company during the taxable year in which the income is
includible by the optionee (provided the optionee's total compensation for that
year is otherwise deductible and the applicable withholding requirements are
satisfied).

RESTRICTED STOCK. A participant who receives a restricted stock award will
recognize ordinary income equal to the fair market value of the restricted stock
received at the time the restrictions lapse, unless the participant makes an
election under Section 83(b) of the Internal Revenue Code to report the fair
market value of the restricted stock as ordinary income at the time of receipt.
At the time the participant is required to include such ordinary income in gross
income, the Company may deduct a corresponding amount, provided the
participant's compensation is reasonable and the Company withholds the
applicable federal income taxes (if required to do so). During the period in
which a participant holds restricted stock, before the lapse of the
restrictions, if dividends are declared but not distributed to the participant
until the restrictions lapse, the dividends will be treated for tax purposes by
the participant and the Company in the following manner: (a) if the participant
makes an election under Section 83(b) of the Internal Revenue Code to recognize
income at the time of receipt of the restricted stock, the dividends will be
taxed as dividend income to the participant when the restrictions lapse and the
Company will not be entitled to a deduction and will not be required to withhold
income tax, and (2) if no election is made under Section 83(b) by the
participant, the dividends will be taxed as compensation to the participant at
the time the restrictions lapse and will be deductible by the Company and
subject to any required income tax withholding at that time.

SARS OR PERFORMANCE UNITS. A participant generally will not recognize
taxable income upon the grant under the Incentive Plan of either a SAR or other
performance-based award. Upon the exercise of a SAR or the payment of other
performance-based awards, the participant will recognize ordinary income in an
amount equal to the cash and fair market value of other property received,
including Common Stock. The value of the shares will be determined (a) on the
date received, if the shares are substantially vested as of that date or (b) the
first date on which the shares become substantially vested. Delivery of shares
of Common Stock previously owned by the participant to the Company to satisfy
any tax withholding obligations of the Company will be a taxable event to the
participant with respect to the surrendered shares. The Company will be entitled
to a deduction in the amount and at the time that the participant recognizes
ordinary income in connection with the exercise of a SAR or the payment of a
performance unit, provided that the participant's compensation is otherwise
deductible and the Company withholds the applicable federal income taxes (if
required to do so). If the SAR or other performance-based award is paid, in
whole or in part, in shares of Common Stock, the amount recognized by the
participant as ordinary income with respect to such shares becomes the
participant's basis in the shares of Common Stock for purposes of determining
any gain or loss on the subsequent sale of those shares.

INCENTIVE OPTIONS. An employee who receives an Incentive Option will not
recognize income for federal income tax purposes as a result of the receipt or
exercise of the Incentive Option. The exercise of the Incentive Option, however,
will increase the optionee's alternative minimum taxable income for purposes of
the alternative minimum tax in an amount equal to the excess of the fair market
value of the Common Stock received over the exercise price. The Company and its
participating subsidiaries will not be entitled to a deduction with respect to
the grant or exercise of an Incentive Option.

Provided the shares are held as a capital asset, gain recognized on the
disposition of Common Stock acquired by exercise of an Incentive Option
("incentive stock") will be treated as long-term capital gain if (a) no
disposition of the shares is made by the employee within two years from the date
the Incentive Option was granted nor within one year after the transfer of the
shares to the employee upon exercise of the Incentive Option (the "Statutory
Holding Period") and (b) certain other requirements of the Internal Revenue Code
are satisfied by the holder of the incentive stock. Gain recognized on
disposition of Incentive stock held by the optionee for less than the Statutory
Holding Period (a "disqualifying disposition") generally will be compensation
income to the

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optionee to the extent of the excess of the fair market value of the incentive
stock when received (or, if less, the amount realized on disposition of the
incentive stock) over the applicable exercise price. However, if upon receipt
the incentive stock is subject to a substantial risk of forfeiture within the
meaning of Section 83(c) of the Internal Revenue Code, then special rules apply
concerning the date when the fair market value of the incentive stock is
determined. Any gain recognized in excess of the amount taxed as compensation
generally will be characterized as capital gain. If an optionee pays the
exercise price of an Incentive Option solely with cash, the optionee's initial
tax basis of the incentive stock received is equal to the amount of cash paid.
An optionee who pays all or a portion of the exercise price of an Incentive
Option with shares of Common Stock will be subject to detailed rules as provided
in regulations concerning recognition of income or gain and the determination of
basis in the shares received. In the event of a disqualifying disposition, the
Company will be entitled to a corresponding deduction for federal income tax
purposes equal to the amount of compensation income includible by the optionee
(provided the optionee's compensation for that year is otherwise deductible).

GENERAL RESTRICTIONS OF DEDUCTIONS. In any case, the Company's ability to
deduct amounts with respect to any awards for U.S. federal income tax purposes
will be subject to compliance with the conditions or limitations of Section
162(m) of the Internal Revenue Code.

PLAN BENEFITS TABLE

The awards, if any, that will be made to eligible participants (other than
the non-employee directors) in the Incentive Plan during fiscal 1998 are subject
to the discretion of the Compensation Committee and, therefore, are not
determinable at this time. As noted above, each of the non-employee directors
will receive a grant of stock options for 24,000 shares during fiscal 1998.

The following table sets forth, for certain executive officers and groups,
the awards that were received under the Incentive Plan during fiscal 1997. None
of these awards would have been affected had the proposed amendment to the
Incentive Plan been effective during fiscal 1997.

PLAN BENEFITS TABLE

[Download Table]

NUMBER OF SECURITIES
NAME AND PRINCIPLE POSITION UNDERLYING AWARDS(A)
--------------------------- --------------------

Michael S. Dell......................... 800,000
Chairman of the Board and Chief
Executive Officer
Morton L. Topfer........................ 90,000
Vice Chairman
Kevin B. Rollins........................ 670,000
Senior Vice President and General
Manager -- Americas
Martyn R. Ratcliffe..................... 260,000
Senior Vice President and General
Manager -- Europe
Thomas J. Meredith...................... 60,000
Senior Vice President and Chief
Financial Officer
Executive Officer Group(b).............. 3,193,746
Non-Executive Director Group(c)......... 194,800
Non-Executive Officer Group(d).......... 7,290,655

---------------

(a) For additional information regarding certain of these awards (including the
exercise price and the grant date present value), see the table under
"Management Compensation -- Compensation of Executive Officers -- Option
Grants in Last Fiscal Year."

(b) Consists of all executive officers of the Company (16 persons)

(d) Consists of all employees of the Company (other than the executive officers)
who received awards under the Incentive Plan during fiscal 1997.

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DELL COMPUTER CORPORATION

PROXY

FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JULY 18, 1997
AND ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF DELL COMPUTER CORPORATION

The undersigned hereby (a) acknowledges receipt of the Notice of Annual Meeting
of Stockholders of Dell Computer Corporation (the "Company") to be held on July
18, 1997 and the related Proxy Statement; (b) appoints Michael S. Dell and
Thomas B. Green, or either of them, as Proxies, each with the power to appoint
a substitute; (c) authorizes the Proxies to represent and vote, as designated
below, all the shares of the Company's common stock, par value $.01 per share
(the "Common Stock"), held of record by the undersigned on May 30, 1997 at such
Annual Meeting and any adjournments or postponements thereof; and (d) revokes
any proxies previously given.

1. Election of two Class III directors (Nominees: Claudine B. Malone and
Michael A. Miles).

[ ] FOR ALL NOMINEES [ ] AGAINST ALL NOMINEES

To vote for fewer than all nominees, print the names of the nominees
you wish to vote FOR in the following space:

-----------------------------------------------------------------------

2. Approval of an amendment to the Company's Certificate of Incorporation
to increase the number of authorized shares of Common Stock from 300
million to one billion.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

3. Approval of an amendment to the Company's Incentive Plan to (a) provide
for automatic periodic increases in the number of shares of Common Stock
that may be awarded thereunder and (b) reduce the number of authorized
shares that may be awarded in the form of "Stock Awards" (as defined in
the Incentive Plan) from 25% to 20%.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

4. In their discretion, the Proxies are authorized to vote on such other
business as may properly come before the meeting or any adjournment(s)
thereof.

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF ALL NOMINEES FOR DIRECTORS, FOR APPROVAL OF THE
AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION AND FOR APPROVAL OF THE
AMENDMENT TO THE COMPANY'S INCENTIVE PLAN. THE PROXIES WILL USE THEIR
DISCRETION WITH REGARD TO ANY MATTER REFERRED TO IN ITEM 4 ABOVE.

Please sign, date and return this proxy as promptly as possible in the envelope
provided.

Dated: , 1997
------------------- ---------------------------------------

---------------------------------------
Signature(s) of Stockholder(s)

EACH JOINT OWNER SHOULD SIGN. SIGNATURES
SHOULD CORRESPOND WITH THE NAMES PRINTED
ON THIS PROXY. ATTORNEYS, EXECUTORS,
ADMINISTRATORS, GUARDIANS, TRUSTEES,
CORPORATE OFFICERS OR OTHER SIGNING IN A
REPRESENTATIVE CAPACITY SHOULD GIVE FULL
TITLE.

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘PRE 14A’ Filing	Date	First	Last	Other Filings

	6/22/04	30		4
	7/1/99	19
	6/15/99	17
	7/1/98	17	19
	2/6/98	26
	2/2/98	11
	7/25/97	10
For Period End:	7/18/97	3	33	DEF 14A
	6/6/97	3	4
	5/30/97	3	33
Filed on:	5/22/97
	5/20/97	10
	5/1/97	16
	4/30/97	25
	3/21/97	16	22
	2/11/97	25		SC 13G
	2/2/97	26		10-K405
	12/31/96	25
	8/29/96	14
	7/24/95	15	16
	4/12/95	16
	6/22/94	29		DEF 14A
	2/2/92	24
				List all Filings

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Filing Submission 0000950134-97-004205 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Dell Inc – ‘PRE 14A’ for 7/18/97

As of: Thursday, 5/22/97 · For: 7/18/97 · Accession #: 950134-97-4205 · File #: 0-17017

Previous ‘PRE 14A’: ‘PRE 14A’ on 5/11/95 for 7/21/95 · Next: ‘PRE 14A’ on 5/8/98 for 7/17/98 · Latest: ‘PRE 14A’ on 4/30/10 for 7/16/10

Preliminary Proxy Solicitation Material — Schedule 14AFiling Table of Contents

Document Table of Contents

Dates Referenced Herein and Documents Incorporated by Reference

Preliminary Proxy Solicitation Material — Schedule 14A
Filing Table of Contents