<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
<TABLE>
<S> <C>
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[ ] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
</TABLE>
SANDISK CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
N/A
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(2) Aggregate number of securities to which transaction applies:
N/A
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
N/A
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(4) Proposed maximum aggregate value of transaction:
N/A
-------------------------------------------------------------------------
(5) Total fee paid:
N/A
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
N/A
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(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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SANDISK CORPORATION
<PAGE>
140 Caspian Court
Sunnyvale, California 94089
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders (the
"Annual Meeting") of SanDisk Corporation (the "Company") which will be held on
May 11, 2000 at 9:00 a.m., local time, at the Company's headquarters, 140
Caspian Court, Sunnyvale, California 94089.
At the Annual Meeting, you will be asked to consider and vote upon the
following proposals: (i) to elect six (6) directors of the Company, (ii) to
approve an amendment to the Company's Certificate of Incorporation to increase
the authorized shares of the Company's common stock (the "Common Stock") from
125,000,000 shares to 400,000,000 shares and (iii) to ratify the appointment
of Ernst & Young LLP as independent accountants of the Company for the fiscal
year ending December 31, 2000.
The enclosed Proxy Statement more fully describes the details of the
business to be conducted at the Annual Meeting. After careful consideration,
the Company's Board of Directors has unanimously approved the proposals and
recommends that you vote FOR each such proposal.
After reading the Proxy Statement, please mark, date, sign and return the
enclosed proxy card in the accompanying reply envelope as promptly as possible
but no later than May 11, 2000. If you decide to attend the Annual Meeting and
would prefer to vote in person, please notify the Secretary of the Company
that you wish to vote in person and your proxy will not be voted. YOUR SHARES
CANNOT BE VOTED UNLESS YOU SIGN, DATE AND RETURN THE ENCLOSED PROXY OR ATTEND
THE ANNUAL MEETING IN PERSON.
A copy of the Company's 1999 Annual Report has been mailed concurrently
herewith to all stockholders entitled to notice of and to vote at the Annual
Meeting.
We look forward to seeing you at the Annual Meeting.
Sincerely yours,
/s/ Eli Harari
Eli Harari
President and Chief Executive
Officer
Sunnyvale, California
April 10, 2000
IMPORTANT
PLEASE MARK, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT AT YOUR
EARLIEST CONVENIENCE IN THE ENCLOSED POSTAGE-PREPAID RETURN ENVELOPE SO
THAT IF YOU ARE UNABLE TO ATTEND THE ANNUAL MEETING, YOUR SHARES MAY BE
VOTED.
<PAGE>
SANDISK CORPORATION
140 Caspian Court
Sunnyvale, California 94089
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 11, 2000
TO OUR STOCKHOLDERS:
You are cordially invited to attend the Annual Meeting of Stockholders (the
"Annual Meeting") of SanDisk Corporation, a Delaware corporation (the
"Company"), to be held on May 11, 2000 at 9:00 a.m., local time, at the
Company's headquarters, 140 Caspian Court, Sunnyvale, California 94089, for
the following purposes:
1. To elect directors to serve for the ensuing year or until their
respective successors are duly elected and qualified. The nominees are Dr. Eli
Harari, Irwin Federman, William V. Campbell, Catherine P. Lego, Dr. James D.
Meindl and Alan F. Shugart.
2. To approve an amendment to the Company's Certificate of Incorporation to
increase the authorized shares of the Company's common stock (the "Common
Stock") from 125,000,000 shares to 400,000,000 shares.
3. To ratify the appointment of Ernst & Young LLP as independent accountants
of the Company for the fiscal year ending December 31, 2000.
4. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement that accompanies this Notice.
Only stockholders of record at the close of business on March 15, 2000 are
entitled to notice of and to vote at the Annual Meeting and at any
continuation or adjournment thereof. A list of stockholders entitled to vote
at the Annual Meeting will be available for inspection at the executive
offices of the Company.
All stockholders are cordially invited and encouraged to attend the Annual
Meeting. In any event, to assure your representation at the meeting, please
carefully read the accompanying Proxy Statement which describes the matters to
be voted on at the Annual Meeting and sign, date and return the enclosed proxy
card in the reply envelope provided. Should you receive more than one proxy
because your shares are registered in different names and addresses, each
proxy should be returned to assure that all your shares will be voted. If you
attend the Annual Meeting and vote by ballot, your proxy will be revoked
automatically and only your vote at the Annual Meeting will be counted. The
prompt return of your proxy card will assist us in preparing for the Annual
Meeting.
We look forward to seeing you at the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Eli Harari
Eli Harari
President and Chief Executive
Officer
Sunnyvale, California
April 10, 2000
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN
PERSON. IN ANY EVENT, TO ENSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, YOU
ARE URGED TO VOTE, SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE
IN THE POSTAGE-PREPAID ENVELOPE ENCLOSED FOR THAT PURPOSE.
<PAGE>
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS OF
SANDISK CORPORATION
TO BE HELD MAY 11, 2000
GENERAL
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of SanDisk Corporation, a Delaware corporation (the
"Company" or "SanDisk"), of proxies to be voted at the Annual Meeting of
Stockholders (the "Annual Meeting") to be held on May 11, 2000, or at any
adjournment or postponement thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders. Stockholders of record
on March 15, 2000 will be entitled to vote at the Annual Meeting. The Annual
Meeting will be held at 9:00 a.m., local time, at the Company's headquarters,
140 Caspian Court, Sunnyvale, California 94089.
It is anticipated that this Proxy Statement and the enclosed proxy card will
be first mailed to stockholders on or about April 10, 2000.
All references to shares of Common Stock in this Proxy Statement are
adjusted to account for the Company's 2-for-1 stock split, effected as a 100%
stock dividend, in February 2000.
VOTING RIGHTS
The close of business on March 15, 2000 was the record date for stockholders
entitled to notice of and to vote at the Annual Meeting and any adjournments
thereof. At the record date, the Company had approximately 66,531,812 shares
of its Common Stock outstanding and entitled to vote at the Annual Meeting,
held by approximately 203 stockholders of record. Holders of Common Stock are
entitled to one vote for each share of Common Stock so held. In the election
of Directors, however, cumulative voting is authorized for all stockholders if
any stockholder gives notice at the meeting, prior to voting for the election
of Directors, of his or her intention to cumulate votes. Under cumulative
voting, a stockholder may cumulate votes and give to one nominee a number of
votes equal to the number of Directors to be elected (six at this meeting)
multiplied by the number of votes to which such stockholder is entitled, or
may distribute such number among any or all of the nominees. The six
candidates receiving the highest number of votes will be elected. The Board of
Directors is soliciting discretionary authority to vote proxies cumulatively.
A majority of the shares of Common Stock entitled to vote will constitute a
quorum for the transaction of business at the Annual Meeting.
If any stockholder is unable to attend the Annual Meeting, such stockholder
may vote by proxy. The enclosed proxy is solicited by the Company's Board of
Directors, (the "Board of Directors" or the "Board") and, when the proxy card
is returned properly completed, it will be voted as directed by the
stockholder on the proxy card. Stockholders are urged to specify their choices
on the enclosed proxy card. If a proxy card is signed and returned without
choices specified, in the absence of contrary instructions, the shares of
Common Stock represented by such proxy will be voted FOR Proposals 1, 2, and 3
and will be voted in the proxy holders' discretion as to other matters that
may properly come before the Annual Meeting.
An affirmative vote of a plurality of the shares present or represented at
the meeting and voting is required for the election of directors. An
affirmative vote of a majority of the shares of the Company's outstanding
Common Stock is required to amend the Company's Certificate of Incorporation
to increase the authorized number of shares of Common Stock. An affirmative
vote of a majority of the shares present or represented at the meeting and
entitled to vote is required for ratification of Ernst & Young LLP as
independent accountants of the Company. An automated system administered by
the Company's transfer agent tabulates stockholder votes. Abstentions and
broker non-votes each are included in determining the number of shares present
and voting at the Annual Meeting for purposes of determining the presence or
absence of a quorum, and each is tabulated separately. Abstentions are counted
as negative votes, whereas broker non-votes are not counted for purposes of
determining whether Proposal 3 presented to the stockholders has been
approved, but will have the effect of negative votes for purposes of Proposal
2.
1
<PAGE>
REVOCABILITY OF PROXIES
Any person giving a proxy has the power to revoke it at any time before its
exercise. A proxy may be revoked by filing with the Secretary of the Company
an instrument of revocation or a duly executed proxy bearing a later date, or
by attending the Annual Meeting and voting in person.
SOLICITATION OF PROXIES
The Company will bear the cost of soliciting proxies. Copies of solicitation
material will be furnished to brokerage houses, fiduciaries and custodians
holding shares in their names that are beneficially owned by others to forward
to such beneficial owners. The Company may reimburse such persons for their
costs of forwarding the solicitation material to such beneficial owners. The
original solicitation of proxies by mail may be supplemented by solicitation
by telephone, telegram, or other means by directors, officers, employees or
agents of the Company. No additional compensation will be paid to these
individuals for any such services. In addition, the Company may engage and pay
a proxy solicitation firm to aid in the solicitation of proxies. Except as
described above, the Company does not intend to solicit proxies other than by
mail.
The Annual Report of the Company for the fiscal year ended January 2, 2000,
has been mailed concurrently with the mailing of the Notice of Annual Meeting
and Proxy Statement to all stockholders entitled to notice of and to vote at
the Annual Meeting. The Annual Report is not incorporated into this Proxy
Statement and is not considered proxy soliciting material.
2
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
At the Annual Meeting, six directors (constituting the entire board) are to
be elected to serve until the next Annual Meeting of Stockholders and until a
successor for such director is elected and qualified, or until the death,
resignation, or removal of such director. It is intended that the proxies will
be voted for the six nominees named below for election to the Company's Board
of Directors unless authority to vote for any such nominee is withheld. There
are six nominees, each of whom is currently a director of the Company. All of
the current directors were elected to the Board by the stockholders at the
last annual meeting. Each person nominated for election has agreed to serve if
elected, and the Board of Directors has no reason to believe that any nominee
will be unavailable or will decline to serve. In the event, however, that any
nominee is unable or declines to serve as a director at the time of the Annual
Meeting, the proxies will be voted for any nominee who is designated by the
current Board of Directors to fill the vacancy. Unless otherwise instructed,
the proxyholders will vote the proxies received by them FOR the nominees named
below. The six candidates receiving the highest number of the affirmative
votes of the shares entitled to vote at the Annual Meeting will be elected
directors of the Company. The proxies solicited by this Proxy Statement may
not be voted for more than six nominees.
NOMINEES
Set forth below is information regarding the nominees to the Board of
Directors.
<TABLE>
<CAPTION>
Name Position(s) with the Company Age First Elected Director
---- ---------------------------- --- ----------------------
<S> <C> <C> <C>
Dr. Eli Harari.......... President, Chief Executive Officer 54 1988
and Director
Irwin Federman(1)....... Chairman of the Board 64 1988
William V. Campbell(2).. Director 59 1993
Catherine P. Director 43 1989
Lego(1)(2).............
Dr. James D. Meindl..... Director 66 1989
Alan F. Shugart(2)...... Director 69 1993
</TABLE>
- --------
(1) Member of the Audit Committee
(2) Member of the Compensation Committee
BUSINESS EXPERIENCE OF NOMINEES FOR ELECTION AS DIRECTORS
Dr. Harari, the founder of the Company, has served as the President and
Chief Executive Officer and as a director of the Company since June 1988. Dr.
Harari founded Wafer Scale Integration, a privately held semiconductor
company, in 1983 and was its President and Chief Executive Officer from 1983
to 1986, and Chairman and Chief Technical Officer from 1986 to 1988. From 1973
to 1983, Dr. Harari held various management positions with Honeywell Inc.,
Intel and Hughes Aircraft Microelectronics. Dr. Harari also serves on the
board of Artisan Components. Dr. Harari holds a Ph.D. degree in Solid State
Sciences from Princeton University.
Mr. Federman has served as Chairman of the Board of Directors since
September 1988. Since April 1990, Mr. Federman has been a general partner in
U.S. Venture Partners, a venture capital firm. From 1988 to 1990, he was a
Managing Director of Dillon Read & Co., an investment banking firm, and a
general partner in its venture capital affiliate, Concord Partners. From
August 1987 to December 1987, Mr. Federman was Vice Chairman of Advanced Micro
Devices, which acquired Monolithic Memories; a corporation engaged in the
production of integrated circuits, with which he was affiliated for over 17
years. From 1979 to 1987, Mr. Federman was President of Monolithic Memories.
Mr. Federman served as Chairman of the Semiconductor Industry Association from
1986 to 1988. He is also a director of Komag Incorporated, Check Point
Software Technologies, Inc., MMC Networks, Inc., Quicklogic, Inc., Netro
Corporation and various private corporations. Mr. Federman holds a B.S. degree
in Economics from Brooklyn College.
3
<PAGE>
Mr. Campbell has served as a director of the Company since October 1993. Mr.
Campbell is Chairman of the Board of Directors of Intuit. From 1994 to 1998,
Mr. Campbell served as the President and Chief Executive Officer and a
director of Intuit. From 1991 to 1993, Mr. Campbell was President and Chief
Executive Officer of GO Corporation, a pen-based computing software company.
From 1987 to 1991, Mr. Campbell was President and Chief Executive Officer of
Claris Corporation, a software subsidiary of Apple Computer Inc. Mr. Campbell
also serves as a director for Apple Computer and Great Plains Software. Mr.
Campbell holds both B.A. and M.A. degrees in Economics from Columbia
University.
Ms. Lego has served as a director of the Company since March 1989.
Currently, she is the general partner of The Photonics Fund, a venture capital
firm focused on the fiber optic industry. Ms. Lego had been previously self-
employed with her consulting firm, Lego Ventures, from 1992 to December 1999.
From 1981 to 1992, Ms. Lego held various positions with Oak Investment
Partners, a venture capital firm, and was general partner of several of the
venture capital partnerships affiliated with Oak Investment Partners. Ms. Lego
also serves as a director of various private corporations. Ms. Lego is a
Certified Public Accountant and holds a B.A. degree in Economics and Biology
from Williams College and an M.S. degree in Accounting from the New York
University Graduate School of Business.
Dr. Meindl has served as a director of the Company since March 1989. Dr.
Meindl has been the Joseph M. Pettit Chair Professor of Microelectronics at
the Georgia Institute of Technology in Atlanta, Georgia since 1993. From 1986
to 1993, Dr. Meindl served as Senior Vice President for Academic Affairs and
Provost of Rensselaer Polytechnic Institute. From 1967 to 1986, he was the
John M. Fluke Professor of Electrical Engineering at Stanford University. Dr.
Meindl serves as a director of Zoran, Inc. and Digital Microwave. Dr. Meindl
holds B.S., M.S. and Ph.D. degrees in Electrical Engineering from Carnegie-
Mellon University.
Mr. Shugart has served as a director of the Company since January 1993. Mr.
Shugart founded Seagate Technology, Inc. in 1979, building the company into
the world's largest independent manufacturer of disk drives and related
components. In 1998, he left Seagate to establish Al Shugart International, a
management/consultant company focused on helping entrepreneurs launch new
enterprises. Mr. Shugart also serves as a director of Cypress Semiconductor
Corp., Valence Technology, Inktomi, and Sarnoff Digital Communications. Mr.
Shugart holds a B.S. degree in Engineering/Physics from the University of
Redlands.
BOARD MEETINGS AND COMMITTEES
The Board of Directors held eight meetings during fiscal 1999. Each member
of the Board of Directors during fiscal 1999 attended or participated in
seventy five percent (75%) or more of the aggregate of (i) the total number of
meetings of the Board of Directors held during the fiscal year and (ii) the
total number of meetings held by all committees on which such director served
during the past fiscal year, except Irwin Federman (who attended fifty-eight
percent (58%) of such meetings). There are no family relationships among
executive officers or directors of the Company. The Board of Directors has an
Audit Committee and a Compensation Committee.
The Audit Committee of the Board of Directors held four meetings during
fiscal 1999. The Audit Committee, which is currently comprised of Directors
Federman and Lego, recommends engagement of the Company's independent
accountants, approves services performed by such accountants and reviews and
evaluates the Company's accounting system and its system of internal controls.
The Compensation Committee of the Board of Directors held two meetings
during fiscal 1999 and approved grants of options by written consent on a
monthly basis. The Compensation Committee, which is comprised of Directors
Campbell, Lego and Shugart, has overall responsibility for the Company's
compensation policies and determines the compensation payable to the Company's
executive officers, including their participation in certain of the Company's
employee benefit and stock option plans.
4
<PAGE>
The Special Option Committee of the Board of Directors was established in
October 1999, and delegated the authority to make option grants to eligible
individuals, other than Officers and Board members of the Company, as long as
such grants are less than two times the Company's then-current option
guidelines. The Special Option Committee is comprised of one Board member, Mr.
Harari, and granted options on a weekly basis following its establishment in
October 1999.
DIRECTOR COMPENSATION
Board members receive cash compensation for their services as a director
based on their attendance of board and committee meetings. Board members are
compensated for their service at Board Meetings at the rate of $1,500 for in-
person meetings and $500 for telephonic meetings. Board members are
compensated for their service on Board committees at the rate of $500 for in-
person meetings and $250 for telephonic meetings. The non-employee Board
members are also eligible to receive periodic option grants under the
Company's 1995 Non-Employee Directors Stock Option Plan (the "Directors
Plan").
Each individual who was re-elected as a non-employee Board member at the
1999 Annual Meeting received at that time an option grant under the Directors
Plan to purchase 16,000 shares of Common Stock, provided such individual had
served as a non-employee Board member for at least six months. Accordingly,
each of the following non-employee Board members re-elected to the Board at
the 1999 Annual Meeting received an option grant for 16,000 shares on May 12,
1999, the date of that meeting, at an exercise price of $15.2188 per share:
Messrs. Federman, Campbell, Meindl, and Shugart and Ms. Lego. In addition, Mr.
Thomas F. Mulvaney received an automatic option grant for 16,000 shares on May
12, 1999, but that option terminated upon his resignation as a director in
August 1999.
Each automatic grant has an exercise price per share equal to the fair
market value per share of Common Stock on the grant date and has a maximum
term of 10 years, subject to earlier termination following the optionee's
cessation of Board service. Each automatic option is immediately exercisable
for any or all of the option shares; however, any shares purchased under the
option will be subject to repurchase by the Company, at the option exercise
price paid per share, should the optionee cease service as a Board member
prior to vesting in those shares. The shares subject to each 16,000-share
grant made to each non-employee Board member re-elected at the 1999 Annual
Meeting will vest upon the optionee's completion of one year of Board service
measured from the grant date. However, the shares subject to each outstanding
option will immediately vest upon (i) certain changes in the ownership or
control of the Company or (ii) the death or disability of the optionee while
serving as a Board member. In addition, each automatic option grant may, upon
the successful completion of a hostile tender offer for more than fifty
percent (50%) of the Company's outstanding Common Stock, be surrendered to the
Company for a cash distribution per surrendered option share equal to the
excess of (i) the highest price per share of common stock paid in connection
with such tender offer over (ii) the exercise price payable per share.
The Board of Directors recommends that the stockholders vote FOR the election
of all of the above nominees.
5
<PAGE>
PROPOSAL NO. 2
INCREASE OF NUMBER OF SHARES OF AUTHORIZED COMMON STOCK
The Company is asking the stockholders to approve an amendment to the
Company's Certificate of Incorporation to increase the authorized shares of
the Company's common stock (the "Common Stock") from 125,000,000 shares to
400,000,000 shares. The Board of Directors of the Company believes the
increase in the authorized shares is necessary to provide the Company with the
flexibility to act in the future with respect to financing programs,
acquisitions and other corporate purposes, including effecting potential stock
splits, without the delay and expense of obtaining stockholder approval each
time an opportunity requiring the issuance of shares may arise.
On March 15, 2000, the Company had approximately 66,531,812 shares of Common
Stock issued and outstanding. Also on that date, the Company had 8,252,944
shares of Common Stock subject to outstanding options under the Company's 1995
Stock Option Plan and the Company's 1995 Non-Employee Directors Stock Option
Plan, including options incorporated from the predecessor plans, 6,190,659
shares available for future grant under such plans and 1,359,396 shares
available for issuance under the Company's Employee Stock Purchase Plan. A
substantial majority of the Company's 125 million authorized shares have been
issued or are reserved for issuance and thus few shares are available to the
Company for use in connection with its future financing and other corporate
needs. The lack of authorized Common Stock available for issuance could
unnecessarily limit the Company's ability to pursue opportunities for future
financings, acquisitions, mergers and other transactions. The Company would
also be limited in its ability to effectuate future stock splits or stock
dividends. The Company has considered other plans to issue additional shares
of Common Stock in possible future financings. The Board of Directors believes
that the increase in the authorized shares of Common Stock is necessary to
provide the Company with the flexibility to pursue the types of opportunities
described above without added delay and expense, including the facilitation of
the Company's ability to effect stock splits and thereby provide the
opportunity to broaden the stockholder base.
The availability of authorized but unissued shares of Common Stock might be
deemed to have the effect of preventing or discouraging an attempt by another
person to obtain control of the Company, because the additional shares could
be issued by the Board of Directors, which could dilute the stock ownership of
such person. The Company has no plans for such issuances and this proposal is
not being proposed in response to a known effort to acquire control of the
Company.
In addition, an issuance of additional shares by the Company could have an
effect on the potential realizable value of a stockholder's investment. In the
absence of a proportionate increase in the Company's earnings and book value,
an increase in the aggregate number of outstanding shares of the Company
caused by the issuance of the additional shares would dilute the earnings per
share and book value per share of all outstanding shares of the Company's
capital stock. If such factors were reflected in the price per share of Common
Stock, the potential realizable value of a stockholder's investment could be
adversely affected.
The additional shares of Common Stock to be authorized by adoption of the
amendment to the Certificate of Incorporation would have rights identical to
the currently outstanding shares of Common Stock of the Company. Adoption of
the proposed amendment to the Certificate of Incorporation would not affect
the rights of the holders of currently outstanding shares of Common Stock.
Adoption of the amendment to the Certificate of Incorporation to increase
the Company's authorized Common Stock requires the vote of a majority of the
outstanding shares of the Company's Common Stock. Votes, abstentions and
broker non-votes will be counted as set forth above in "VOTING PROCEDURES." If
the proposal is approved, the Company intends to file an amendment to its
Certificate of Incorporation promptly after the Meeting. The amendment to the
Certificate of Incorporation will be effective immediately upon acceptance of
filing by the Secretary of State of the State of Delaware. Thereafter, the
Board of Directors would generally be free to issue Common Stock without
further action on the part of the stockholders.
The Board of Directors recommends that the stockholders vote FOR the
adoption of the proposed increase in the number of shares of authorized Common
Stock.
6
<PAGE>
PROPOSAL NO. 3
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Company is asking the stockholders to ratify the selection of Ernst &
Young LLP as the Company's independent public accountants for the fiscal year
ending December 31, 2000. The affirmative vote of the holders of a majority of
the shares represented and voting at the Annual Meeting will be required to
ratify the selection of Ernst & Young LLP.
In the event the stockholders fail to ratify the appointment, the Audit
Committee of the Board of Directors will consider it as a direction to select
other auditors for the subsequent year. Even if the selection is ratified, the
Board of Directors in its discretion may direct the appointment of a different
independent accounting firm at any time during the year if the Board of
Directors determines that such a change would be in the best interest of the
Company and its stockholders.
Ernst & Young LLP has audited the Company's financial statements annually
since 1991. Its representatives are expected to be present at the Annual
Meeting, will have the opportunity to make a statement if they desire to do
so, and will be available to respond to appropriate questions.
The Board of Directors recommends that the stockholders vote FOR the
proposal to ratify the selection of Ernst & Young LLP to serve as the
Company's independent public accountants for the fiscal year ending December
31, 2000.
7
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership
of the Company's Common Stock as of March 15, 2000 by (i) all persons known by
the Company to be beneficial owners of five percent (5%) or more of its
outstanding Common Stock, (ii) each director of the Company and each nominee
for director, (iii) the Chief Executive Officer and each of the four most
highly compensated executive officers of the Company (as determined at the
fiscal year ended January 2, 2000), and (iv) all current executive officers
and directors of the Company as a group.
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial
Ownership(1)
------------------
Number of Percent
Name or Group of Beneficial Owners Shares Owned(2)
---------------------------------- --------- --------
<S> <C> <C>
Seagate Technology, Inc.................................... 4,082,748 6.14%
Scotts Valley, CA FMR Corp. (3)............................ 5,092,380 7.66
Boston, MA
Forstmann-Leff Associates, Inc. (3)........................ 4,361,062 6.56
New York, NY
American Century Investment Management, Inc. (3)........... 3,550,000 5.34
Kansas City, MO
William V. Campbell(4)..................................... 99,216 *
Irwin Federman(5).......................................... 63,640 *
Catherine P. Lego(6)....................................... 152,074 *
Dr. Eli Harari(7).......................................... 2,503,218 3.77
Dr. James D. Meindl(8)..................................... 142,930 *
Alan F. Shugart(9)......................................... 40,000 *
Daniel Auclair(10)......................................... 193,459 *
Cindy Burgdorf(11)......................................... 370,811 *
Leon Malmed(12)............................................ 118,477 *
Ralph Hudson(13)........................................... 43,361 *
All directors and executive officers as a group (13
persons)(14).............................................. 3,943,119 5.93%
</TABLE>
- --------
* Less than 1% of the outstanding Common Stock.
(1) Except as indicated in the footnotes to this table and pursuant to
applicable community property laws, the persons named in the table have
sole voting and investment power with respect to all shares of Common
Stock. The number of shares beneficially owned includes Common Stock of
which such individual has the right to acquire beneficial ownership
either currently or within 60 days after March 15, 2000, including, but
not limited to, upon the exercise of an option.
(2) Percentage of beneficial ownership is based upon 66,531,812 shares of
Common Stock, all of which were outstanding on March 15, 2000. For each
individual, this percentage includes Common Stock of which such
individual has the right to acquire beneficial ownership either currently
or within 60 days after March 15, 2000, including, but not limited to,
upon the exercise of an option; however, such Common Stock will not be
deemed outstanding for the purpose of computing the percentage owned by
any other individual. Such calculation is required by General Rule 13d-
3(d)(1)(i) under the Securities Exchange Act of 1934. Based upon a review
of 13G filings made with the Securities and Exchange Commission ("SEC")
during 1999 and 2000, the table above includes all greater than 5%
stockholders.
(3) Based on a Schedule 13G filed with the SEC in February 2000.
8
<PAGE>
(4) Includes 40,000 shares owned by Mr. Campbell in the form of immediately
exercisable options, some of which, if exercised and issued, would be
subject to a repurchase right of the Company that lapses over time.
(5) Includes 24,000 shares owned by Mr. Federman in the form of immediately
exercisable options, some of which, if exercised and issued, would be
subject to a repurchase right of the Company that lapses over time. Also
includes 268 shares owned by BHMS III, of which Mr. Federman is a general
partner and disclaims beneficial ownership in the shares except with
respect to the pecuniary interest arising from his interest in BHMS III.
(6) Includes 40,000 shares owned by Ms. Lego in the form of immediately
exercisable options, some of which, if exercised and issued, would be
subject to a repurchase right of the Company that lapses over time.
(7) Includes 2,058,794 shares held in the name of a trust for the benefit of
Dr. Harari and his wife. Also includes 395,024 shares owned by Dr. Harari
in the form of outstanding options, which were exercisable on March 15,
2000, or within 60 days of that date. Also includes 22,666 shares owned
directly by his son and 22,986 shares held in the name of a trust for the
benefit of his children.
(8) Represents 110,930 shares held as community property in the name of Dr.
Meindl and his wife. Also includes 32,000 shares owned by Mr. Meindl in
the form of immediately exercisable options, some of which, if exercised
and issued, would be subject to a repurchase right of the Company that
lapses over time.
(9) Includes 40,000 shares owned by Mr. Shugart in the form of immediately
exercisable options, some of which, if exercised and issued, would be
subject to a repurchase right of the Company that lapses over time.
(10) Includes 65,161 shares owned by Mr. Auclair in the form of outstanding
options, which were exercisable on March 15, 2000 or within 60 days of
that date. Includes an aggregate of 9,510 shares owned by his children
held in his name as custodian.
(11) Includes 50,653 shares owned by Ms. Burgdorf in the form of outstanding
options, which were exercisable on March 15, 2000 or within 60 days of
that date.
(12) Includes 15,001 shares owned by Mr. Malmed in the form of outstanding
options, which were exercisable on March 15, 2000 or within 60 days of
that date.
(13) Includes 43,361 shares owned by Mr. Hudson in the form of outstanding
options, which were exercisable on March 15, 2000 or within 60 days of
that date.
(14) Includes 894,689 shares subject to options, including those identified in
notes (4), (5), (6), (7), (8), (9), (10), (11), (12) and (13).
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers, and persons who own more than
ten percent (10%) of a registered class of the Company's equity securities, to
file with the Securities and Exchange Commission (the "SEC") initial reports
of ownership and reports of changes in ownership of Common Stock and other
equity securities of the Company. Officers, directors and stockholders holding
more than ten percent (10%) of the outstanding capital stock of the Company
are required by SEC regulations to furnish the Company with copies of all
Section 16(a) forms they file.
Based upon (i) the copies of Section 16(a) reports which the Company
received from such persons for their 1999 fiscal year transactions in the
Common Stock and their Common Stock holdings, and (ii) the written
representations received from one or more of such persons that no annual Form
5 reports were required to be filed by them for the 1999 fiscal year, the
Company believes that all executive officers and Board members complied with
all their reporting requirements under Section 16(a) for such fiscal year.
9
<PAGE>
FORM 10-K
The Company filed an Annual Report on Form 10-K with the Securities and
Exchange Commission on or about March 27, 2000. Stockholders may obtain a copy
of this report, without charge, by writing to Frank Calderoni, Chief Financial
Officer and Senior Vice President, Finance and Administration of the Company,
at the Company's principal executive offices located at 140 Caspian Court,
Sunnyvale, California 94089.
10
<PAGE>
EXECUTIVE COMPENSATION AND RELATED INFORMATION
Summary of Cash and Certain Other Compensation
The following table provides certain summary information concerning the
compensation earned, by (i) the Company's Chief Executive Officer and (ii)
each of the four other most highly compensated executive officers of the
Company whose salary and bonus for the 1999 fiscal year was in excess of
$100,000, for services rendered in all capacities to the Company and its
subsidiaries for each of the last three fiscal years. Such individuals will be
hereafter referred to as the Named Executive Officers. No other executive
officer who would have otherwise been includible in such table on the basis of
salary and bonus earned for the 1999 fiscal year has resigned or terminated
employment during that fiscal year.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
------------------------------ ------------
Securities
Name and Principal Underlying All Other
Position Years Salary($)(1) Bonus($)(2) Options(#) Compensation
- ------------------ ----- ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Dr. Eli Harari...... 1999 $368,473 $329,901 200,000 $ 0
President and Chief 1998 $303,529 $ 0 200,000 $ 0
Executive Officer 1997 $273,384 $208,920 200,000 $ 0
Cindy Burgdorf(3)... 1999 $220,610 $ 98,537 0 $ 0
Chief Financial
Officer, 1998 $196,501 $ 0 100,000 $ 0
Senior Vice
President, 1997 $189,212 $ 69,309 50,000 $ 0
Finance and
Administration
and Secretary
Leon Malmed(5)...... 1999 $228,530 $104,881 0 $ 0
Senior Vice
President 1998 $215,938 $ 0 100,000 $ 0
Marketing and Sales 1997 $210,781 $ 76,047 50,000 $ 0
Daniel Auclair...... 1999 $215,242 $ 96,141 30,000 $ 0
Senior Vice
President 1998 $202,590 $ 0 30,000 $ 0
Business
Development & 1997 $197,760 $ 58,677 0 $ 0
Intellectual
Property
Ralph Hudson........ 1999 $232,926 $103,528 50,000 $ 0
Senior Vice
President 1998 $ 76,933 $105,772(4) 220,000 $ 0
Operations
</TABLE>
- --------
(1) Includes salary deferral contributions to the Company's 401(k) Plan.
(2) Bonus earned for the year indicated but paid in the following year.
(3) Ms. Burgdorf resigned as Secretary and CFO effective January 27, 2000 and
February 28, 2000, respectively, and has announced her intention to retire
in June 2000.
(4) Mr. Hudson joined the Company on August 17, 1998 and was paid a one-time
hiring bonus in 1998.
(5) Mr. Malmed resigned effective March 31, 2000.
11
<PAGE>
Stock Options
The following table contains information concerning the stock option grants
made to each of the Named Executive Officers for fiscal 1999. Except for the
limited stock appreciation rights described in footnote (1) below, no stock
appreciation rights were granted to those individuals during such year.
Individual Grants
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Number of Annual Rates of Stock
Securities % of Total Price Appreciation For
Underlying Options Granted Exercise Option Term(5)
Options to Employees in Price Expiration ----------------------
Name Granted (1)(2) Fiscal Year(3) ($/Sh)(4) Date 5%($) 10%($)
---- -------------- --------------- --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Dr. Eli Harari.......... 200,000 6.89% $35.8125 12/13/09 $4,502,898 $11,410,330
Cindy Burgdorf.......... 0 0%
Leon Malmed............. 0 0%
Daniel Auclair.......... 30,000 1.03% 35.8125 12/13/09 675,435 1,711,549
Ralph Hudson............ 50,000 1.72% 35.8125 12/13/09 1,125,725 2,852,582
</TABLE>
- --------
(1) Each option will become exercisable for 25% of the option shares upon the
optionee's completion of one year of service measured from December 14,
1999, the vesting commencement date, and the option will become
exercisable for the remaining shares in a series of successive equal
quarterly installments upon the optionee's completion of each additional
three (3)-month period of service with the Company over the 36-month
period beginning December 14, 2000 and ending December 13, 2003.
(2) Each option will become immediately exercisable for all the option shares
upon an acquisition of the Company by merger or asset sale, unless the
option is assumed by the acquiring entity. Each option has a maximum term
of ten (10) years, subject to earlier termination in the event of the
optionee's cessation of service with the Company. Each option includes a
limited stock appreciation right that will allow the optionee, upon the
acquisition of 25% or more of the Company's outstanding voting stock
pursuant to a hostile tender offer, to surrender that option to the
Company, to the extent the option is at the time exercisable for vested
shares, in exchange for a cash distribution based on the tender offer
price.
(3) The Company granted options to purchase 2,903,632 shares of Common Stock
to employees during 1999.
(4) The exercise price may be paid in cash or in shares of the Company's
Common Stock valued at fair market value on the exercise date. The Company
may finance the option exercise by loaning the optionee sufficient funds
to pay the exercise price for the purchased shares, together with any
federal and state income and employment withholding taxes to which the
optionee may be subject in connection with such exercise.
(5) Potential gains are net of exercise price, but before taxes associated
with exercise. There is no assurance that the actual stock price
appreciation over the 10-year option term will be at the assumed 5% and
10% levels of assumed annual rates of compounded stock price appreciation
or at any other defined level. Unless the market price of the Common Stock
appreciates over the option term, no value will be realized from the
option grants made to the executive officers.
12
<PAGE>
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The following table sets forth information concerning option exercises and
option holdings for the 1999 fiscal year by each of the Named Executive
Officers. Except for the limited stock appreciation rights described in
footnote (1) to the Stock Options table above, no stock appreciation rights
were exercised during such year or were outstanding at the end of that year.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money
Acquired on Aggregate Options at FY-End (#) Options at FY-End $(1)
Exercise Value ------------------------- -------------------------
Name (#) Realized(2) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Dr. Eli Harari.......... 0 0 529,164 487,500 22,891,024 14,148,438
Cindy Burgdorf.......... 157,034 3,510,507 257,964 115,000 11,988,212 4,728,750
Leon Malmed............. 114,790 2,459,590 41,876 115,000 1,771,913 4,728,750
Daniel Auclair.......... 34,000 1,054,000 171,830 67,500 7,623,204 1,943,438
Ralph Hudson............ 0 0 67,500 202,500 2,963,281 7,302,344
</TABLE>
- --------
(1) Based on the fair market value of the Company's Common Stock at January 2,
2000, $48.125 per share, (the closing selling price of the Company's
Common Stock on that date on the Nasdaq National Market) less the exercise
price payable for such shares.
(2) Based on the closing price of the purchased shares on the exercised date
less the exercise price payable per share.
13
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is responsible for
establishing the base salary and incentive cash bonus programs for the
Company's executive officers and other key employees and administering certain
other compensation programs for such individuals, subject in each instance to
review by the full Board. The Compensation Committee also has the exclusive
responsibility for the administration of the Company's 1995 Stock Option Plan
under which grants may be made to executive officers and other key employees.
The Compensation Committee is comprised of three non-employee Board members,
William V. Campbell, Alan F. Shugart and Catherine P. Lego.
General Compensation Policy. The overall policy of the Compensation
Committee is to provide the Company's executive officers and other key
employees with competitive compensation opportunities based upon their
contribution to the financial success of the Company and their personal
performance. It is the Compensation Committee's objective to have a
substantial portion of each officer's compensation contingent upon the
Company's performance as well as upon the officer's own level of performance.
Accordingly, the compensation package for each executive officer and key
employee is comprised of three elements: (i) base salary which reflects
individual performance and is designed primarily to be competitive with salary
levels in effect at companies within and outside the industry with which the
Company competes for executive talent, (ii) annual variable performance awards
payable in cash and tied to the Company's achievement of financial and
individual performance targets, and (iii) long-term stock-based incentive
awards which strengthen the mutuality of interests between the executive
officers and the Company's stockholders. As an executive officer's level of
responsibility increases, it is the intent of the Compensation Committee to
have a greater portion of the executive officer's total compensation be
dependent upon Company performance and stock price appreciation rather than
base salary.
Factors. The principal factors which the Compensation Committee considered
in establishing the components of each executive officer's compensation
package for the 1999 fiscal year are summarized below. The Compensation
Committee may, however, at its discretion apply entirely different factors,
particularly different measures of financial performance, in setting executive
compensation for future fiscal years.
Base Salary. For comparative compensation purposes for the 1999 fiscal year,
the Compensation Committee selected a peer group of companies within the
industry which are comparable in size and growth pattern with the Company and
which compete with the Company for executive talent. The base salary for each
officer was then determined on the basis of the following factors: the salary
levels in effect for comparable positions at the peer group companies
(determined on the basis of their published 1998 fiscal year data), the
experience and personal performance of the officer and internal comparability
considerations. The weight given to each of these factors differed from
individual to individual, as the Compensation Committee deemed appropriate.
The compensation level for the Company's executive officers for the 1999
fiscal year ranged from the 60th percentile to the 75th percentile of the base
salary levels in effect for executive officers with comparable positions at
the peer group companies, based on the published 1998 fiscal year data for
those companies.
In selecting companies to survey for such compensation purposes, the
Compensation Committee considered many factors not directly associated with
stock price performance, such as geographic location, development stage,
organizational structure and market capitalization. For this reason, there is
not a meaningful correlation between the companies included within the peer
group identified for comparative compensation purposes and the companies
included within the S&P Electronics Semiconductor Index which the Company has
selected as the industry index for purposes of the stock performance graph
appearing later in this Proxy Statement.
Annual Incentive Compensation. Annual bonuses are earned by each executive
officer on the basis of the Company's achievement of certain corporate
financial performance targets established for the fiscal year and the
individual's level of performance. For fiscal year 1999, a minimum of 75% of
the bonus target was measured on the basis of Company performance and the
remainder of the bonus target was tied to individual performance.
14
<PAGE>
Company performance was measured on the basis of pre-tax profit (exclusive of
royalties) and net revenue targets established by the Compensation Committee
at the start of the 1999 fiscal year. The executive officers were awarded
bonuses for fiscal 1999 on this basis as indicated for them in the Summary
Compensation Table which appears earlier in this proxy statement.
Long-Term Incentive Compensation. Long-term incentives are provided through
stock option grants. The grants are designed to align the interests of each
executive officer with those of the stockholders and provide each individual
with a significant incentive to manage the Company from the perspective of an
owner with an equity stake in the business. Each grant allows the individual
to acquire shares of the Company's Common Stock at a fixed price per share
(the market price on the grant date) over a specified period of time (up to 10
years). Each option generally becomes exercisable in installments over the
executive officer's continued employment with the Company. Accordingly, the
option will provide a return to the executive officer only if the executive
officer remains employed by the Company during the applicable vesting period,
and then only if the market price of the underlying shares appreciates over
the option term.
The number of shares subject to each option grant is set at a level intended
to create a meaningful opportunity for stock ownership based on the officer's
current position with the Company, the size of comparable awards made to
individuals in similar positions within the industry, the individual's
potential for increased responsibility and promotion over the option term, and
the individual's personal performance in recent periods. The Compensation
Committee also takes into account the number of unvested options held by the
executive officer in order to maintain an appropriate level of equity
incentive for that individual. However, the Compensation Committee does not
adhere to any specific guidelines as to the relative option holdings of the
Company's executive officers.
CEO Compensation. In setting Dr. Harari's base salary as Chief Executive
Officer for the 1999 fiscal year, the Compensation Committee sought to achieve
two objectives: (i) establish a level of base salary competitive with that
paid to other chief executive officers of the peer group companies and (ii)
make a significant percentage of the total compensation package contingent
upon Company performance. The base salary established for Dr. Harari on the
basis of the foregoing criteria was intended to provide him with a level of
stability and certainty each year. Accordingly, this element of Dr. Harari's
compensation was not affected to any significant degree by Company performance
factors and was at the 50th percentile of the base salary levels in effect for
other chief executive officers at the same peer group of companies surveyed
for comparative compensation purposes for all of the Company's other executive
officers. The remaining components of the compensation earned by Dr. Harari
for the 1999 fiscal year were entirely dependent upon financial performance
and provided no dollar guarantees. Dr. Harari was paid a cash bonus of
$329,901 for the 1999 fiscal year based upon his individual performance and
the same Company performance factors taken into account for incentive
compensation purposes for the Company's other executive officers.
Dr. Harari also received an option grant for 200,000 shares during the 1999
fiscal year with an exercise price equal to the market price of the shares on
the grant date. The grant is designed to provide him with a significant
incentive to remain in the Company's employ and to contribute to the creation
of shareholder value in the form of stock price appreciation, since the grant
will not have any value unless Dr. Harari remains with the Company during the
four-year vesting period and the market price of the Company's common stock
appreciates over the market price in effect at the time the option grant was
made to him.
Compliance with Internal Revenue Code Section 162(m). Section 162(m) of the
Internal Revenue Code, enacted in 1993, generally disallows a tax deduction to
publicly-held companies for compensation paid to certain executive officers,
to the extent that compensation exceeds $1 million per officer in any year.
The compensation paid to the Company's executive officers for the 1999 fiscal
year did not exceed the $1 million limit per officer, and it is not expected
the compensation to be paid to the Company's executive officers for the 2000
fiscal year will exceed that limit. In addition, the Company's 1995 Stock
Option Plan is structured so that any compensation
15
<PAGE>
deemed paid to an executive officer in connection with the exercise of his or
her outstanding options under the 1995 Plan with an exercise price per share
equal to the fair market value per share of the Common Stock on the grant date
will qualify as performance-based compensation which will not be subject to
the $1 million limitation. Because it is very unlikely that the cash
compensation payable to any of the Company's executive officers in the
foreseeable future will approach the $1 million limit, the Compensation
Committee has decided at this time not to take any other action to limit or
restructure the elements of cash compensation payable to the Company's
executive officers. The Compensation Committee will reconsider this decision
should the individual compensation of any executive officer ever approach the
$1 million level.
William V. Campbell, Compensation Committee Member
Alan F. Shugart, Compensation Committee Member
Catherine P. Lego, Compensation Committee Member
16
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Company's Board of Directors was formed in
June 1990 and is comprised of Messrs. William V. Campbell, Alan F. Shugart and
Ms. Catherine Lego. None of these individuals was at any time during fiscal
1999, or at any other time, an officer or employee of the Company. No
executive officer of the Company serves as a member of the board of directors
or compensation committee of any other entity that has one or more executive
officers serving as a member of the Company's Board of Directors or
Compensation Committee.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT
AND CHANGE-IN-CONTROL AGREEMENTS
None of the Company's executive officers, except as reported in Certain
Transactions, have employment agreements with the Company, and their
employment may be terminated at any time at the discretion of the Board of
Directors. Pursuant to the express provisions of the 1995 Stock Option Plan,
the outstanding options under the 1995 Plan held by the Chief Executive
Officer and the Company's other executive officers will immediately accelerate
in full, and all unvested shares of Common Stock at the time held by such
individuals under the 1995 Plan will immediately vest, in the event their
employment were to be terminated (whether involuntarily or through a forced
resignation) within twelve (12) months after any acquisition of the Company by
merger or asset sale in which those options and shares did not otherwise vest.
In addition, the Compensation Committee of the Board of Directors has the
authority as Plan Administrator of the 1995 Stock Option Plan to provide for
the accelerated vesting of the outstanding options under the 1995 Plan held by
the Chief Executive Officer and the Company's other executive officers and the
immediate vesting of all unvested shares of Common Stock at the time held by
such individuals under the 1995 Plan, in the event their employment were to be
terminated (whether involuntarily or through a forced resignation) following a
successful tender offer for more than fifty percent (50%) of the Company's
outstanding Common Stock or a change in the majority of the Board as a result
of one or more contested elections for Board membership.
17
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on the
Common Stock of the Company with that of the Standard & Poors 500 Stock Index,
a broad market index published by S&P, and a selected S&P
Electronics/Semiconductor company stock index compiled by Morgan Stanley &
Company. The comparison for each of the periods assumes that $100 was invested
on November 7, 1995 (the date of the Company's initial public offering) in the
Company's Common Stock, the stocks included in the S&P 500 Stock Index and the
stocks included in the S&P Electronics/Semiconductor company index. These
indices, which reflect formulas for dividend reinvestment and weighing of
individual stocks, do not necessarily reflect returns that could be achieved
by individual investor.
Comparison of Cumulative Total Return From
November 7, 1995 to December 31, 1999
Among SanDisk, S&P 500 Stock Index
and S&P Electronics Semiconductors Company Index
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
AMONG SANDISK, S&P 500 INDEX AND S&P SEMICONDUCTORS INDEX
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
S&P
Measurement Period S&P Semiconductor SanDisk
(Fiscal Year Covered) 500 Index Index Index
- --------------------- --------- ------------- -------
<S> <C> <C> <C>
Measurement Pt-11/07/1995 $100.00 $100.00 $100.00
FYE 12/29/1995 $105.05 $ 83.27 $150.00
FYE 03/29/1996 $110.09 $ 78.42 $130.00
FYE 06/26/1996 $114.38 $ 90.61 $121.25
FYE 09/27/1996 $117.03 $114.66 $160.00
FYE 12/27/1996 $129.07 $154.20 $120.00
FYE 03/27/1997 $131.99 $166.14 $100.00
FYE 06/27/1997 $151.33 $169.89 $145.00
FYE 09/26/1997 $161.21 $219.39 $325.00
FYE 12/26/1997 $159.72 $161.24 $184.38
FYE 03/27/1998 $186.83 $181.80 $241.88
FYE 06/26/1998 $193.27 $175.43 $137.50
FYE 09/25/1998 $178.19 $195.04 $ 78.13
FYE 12/24/1998 $209.15 $280.61 $131.25
FYE 03/26/1999 $218.79 $267.40 $289.38
FYE 06/25/1999 $224.33 $276.34 $398.13
FYE 09/24/1999 $217.86 $375.04 $687.50
FYE 12/31/1999 $250.59 $420.40 $982.50
</TABLE>
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933 or the Exchange Act that
might incorporate future filings, including this Proxy Statement, in whole or
in part, the preceding Compensation Committee Report on Executive Compensation
and the preceding Performance Graph shall not be incorporated by reference
into any such filings; nor shall such Report or graph be incorporated by
reference into any future filings.
18
<PAGE>
CERTAIN TRANSACTIONS
The Company has a strategic relationship with Seagate Technology, Inc.
("Seagate"), which owns 5.4% of the Company's Common Stock as calculated on a
fully diluted basis. In January 1993, Seagate acquired a 25% ownership
interest in the Company. Thomas F. Mulvaney, Seagate's Senior Vice President,
General Counsel and Secretary, served as Seagate's nominee to the Company's
Board of Directors until he resigned in August 1999. The Shareholder Rights
Plan, adopted by the Board of Directors on April 21, 1997, permits Seagate to
continue to hold its ownership interest in the Company without triggering the
provisions of the plan.
On February 28, 2000, the Company hired Frank Calderoni to serve as its
Senior Vice President, Finance and Administration, and Chief Financial
Officer. Mr. Calderoni will receive an annual base salary of $240,000 and will
be eligible to participate in the Company's Executive Bonus Plan. Mr.
Calderoni was paid a one-time bonus of $75,000 and was granted options to
purchase 170,000 shares of the Company's Common Stock pursuant to the
Company's 1995 Stock Option Plan. If his employment is terminated without
cause during the first year, Mr. Calderoni will receive one quarter of his
annual base salary and one quarter of his option shares will vest.
The Company intends that all future transactions, including loans, between
the Company and its officers, directors, principal stockholders and their
affiliates be approved by a majority of the Board of Directors, including a
majority of the independent and disinterested outside directors on the Board
of Directors, and be on terms no less favorable to the Company than could be
obtained from unaffiliated third parties. In addition, the Company has entered
into indemnification agreements with each of its directors and executive
officers.
OTHER BUSINESS
The Board of Directors knows of no other business that will be presented for
consideration at the Annual Meeting. If other matters are properly brought
before the Annual Meeting, however, it is the intention of the persons named
in the accompanying proxy to vote the shares represented thereby on such
matters in accordance with their best judgment.
STOCKHOLDER PROPOSALS
Proposals of stockholders that are intended to be presented at the Company's
Annual Meeting of stockholders to be held in 2001 must be received by February
22, 2001 in order to be included in the proxy statement and proxy relating to
that meeting.
In addition, the proxy solicited by the Board of Directors for the Annual
Meeting to be held in 2001 will confer discretionary authority to vote on any
stockholder proposal presented at that meeting, unless the Company is provided
with notice of such proposal no later than February 22, 2001.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Eli Harari
Eli Harari
President and Chief Executive
Officer
April 10, 2000
19
<PAGE>
- --------------------------------------------------------------------------------
PROXY PROXY
SANDISK CORPORATION
This proxy is Solicited on Behalf of the Board of Directors for the
Annual Meeting of Stockholders to be held on May 11, 2000.
Eli Harari and Frank Calderoni, or either of them, are hereby appointed as
the lawful agents and proxies of the undersigned (with all powers the
undersigned would possess if personally present, including full power of
substitution) to represent and to Vote all shares of capital stock of SanDisk
Corporation (the "Company") which the undersigned is entitled to vote at the
Company's Annual Meeting of Stockholders on May 11, 2000, and at any
adjournments to postponements thereof, as follows:
The Board of Directors recommends a vote FOR the Election of Directors and
FOR Proposals 2, 3 and 4 as stated on the reverse side. This proxy will be
voted as directed, or, if no direction is indicated, will be voted FOR each of
the proposals and, at the discretion of the persons named as proxies, upon such
other matters as may property come before the meeting. This proxy may be
revoked at any time before it is voted.
SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side.)
- --------------------------------------------------------------------------------
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SANDISK CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING PLANNER USING DARK INK ONLY [ ]
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[ ]
1. Election of Directors as described For Withhold For All 2. To amend the Company's For Against Abstain
in the Proxy Statement Nominees: All All Except Certificate of Incorporation [ ] [ ] [ ]
[ ] [ ] [ ] to Increase the number of
authorized shares of Common
Stock
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01 Dr. EH Harari 02 Irwin Paderman
03 William V. Campbell 04 Catherine P. Lego
05 Dr. James D. Meindi 06 Alan F. Shugant 3. To ratify the appointment For Against Abstain
of Ernst & Young LLP as [ ] [ ] [ ]
independent accountants of the
Company for the fiscal year
ending December 31, 2000.
_______________________________________________ 4. To transact any other business For Against Abstain
Write nominee(s) exception above. which may properly come before [ ] [ ] [ ]
the meeting and any adjournment
on postponement thereof.
_________________________________________________________________________________________
THIS SPACE RESERVED FOR ADDRESSING Dated:____________, 2000
(key lines do not print)
Signature(s)________________________
_________________________________________________________________________________________
__________________________________________
Note: Please sign exactly as name appears
hereon. Joint owners should each
sign. When signing as attorney,
executor, administrator, trustee or
guardian, please give full title as
such.
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. FOLD AND DETACH HERE.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE.
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