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
|_| Definitive Proxy Statement Commission Only (as permitted
|_| Definitive Additional Materials by Rule 14a-6(e)(2))
|_| Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
CONEXANT SYSTEMS, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(3) Per unit price or other underlying value of transaction computed pursuant to
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calculated and state how it was determined):
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PRELIMINARY COPY
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[CONEXANT LOGO]
Conexant Systems, Inc.
4311 Jamboree Road
Newport Beach, CA 92660-3095
949-483-6000
January 3, 2000
Dear Shareowner:
Conexant's 2000 Annual Meeting of Shareowners will be held at 10:00
a.m. on Thursday, February 10, 2000 at the Company's headquarters, located at
4311 Jamboree Road in Newport Beach, California. We look forward to your
attending either in person or by proxy. Details of the business to be conducted
at the Annual Meeting are included in the attached Notice of Annual Meeting and
the Proxy Statement. Shareowners may also access the Notice of Annual Meeting
and the Proxy Statement via the Internet at http://www.conexant.com.
If you plan to attend the meeting, please request an admittance card by
marking the appropriate box on the Proxy Card and returning it in the enclosed
envelope, or by indicating your intention to attend when voting by telephone or
via the Internet, and an admittance card will be forwarded to you promptly.
Sincerely yours,
Dwight W. Decker
Chairman of the Board and Chief Executive Officer
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PRELIMINARY COPY
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RETURN OF PROXY CARD
Please complete, sign, date and return the accompanying Proxy Card
promptly in the enclosed addressed envelope, even if you plan to attend the
Annual Meeting. Postage need not be affixed to the envelope if mailed in the
United States.
The immediate return of your proxy will be of great assistance in
preparing for the Annual Meeting and is therefore urgently requested. If you
attend the Annual Meeting and have made arrangements to vote in person, your
Proxy Card will not be used.
VOTING ELECTRONICALLY OR BY TELEPHONE
Instead of submitting your proxy vote with the paper Proxy Card, you
may be able to vote electronically via the Internet or by telephone in
accordance with the procedures set forth on the Proxy Card.
IF YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON
If you plan to attend the Annual Meeting to be held on Thursday,
February 10, 2000, at Conexant's headquarters, located at 4311 Jamboree Road,
Newport Beach, California, please be sure to request an admittance card by:
o marking the appropriate box on the Proxy Card and mailing the card
using the enclosed envelope;
o indicating your desire to attend the meeting through Conexant's
telephone or Internet voting procedures; or
o returning the enclosed request for an admittance card.
If you plan to attend the Annual Meeting, it will be necessary for you
to obtain an admittance card. Seating at the Annual Meeting will be limited,
therefore, request or receipt of an admittance card does not guarantee
availability of a seat.
If your shares are not registered in your own name and you plan to
attend the Annual Meeting and vote your shares in person, you should contact
your broker or agent in whose name your shares are registered to obtain a
broker's proxy and bring it to the Annual Meeting in order to vote.
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PRELIMINARY COPY
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Conexant Systems, Inc.
4311 Jamboree Road
Newport Beach, CA 92660-3095
Notice of Annual Meeting of Shareowners
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Dear Shareowner:
You are cordially invited to attend the 2000 Annual Meeting of
Shareowners of Conexant Systems, Inc. ("Conexant" or the "Company") which will
be held on Thursday, February 10, 2000, at Conexant's headquarters, 4311
Jamboree Road, Newport Beach, California, at 10:00 a.m., Pacific Standard Time.
The Annual Meeting is being held for the following purposes:
1. To elect two members of the Board of Directors of the Company with terms
expiring at the 2003 Annual Meeting of Shareowners;
2. To approve an amendment to the Company's Restated Certificate of
Incorporation to increase the number of authorized shares of Common Stock
from 500,000,000 to 1,000,000,000 and the number of authorized shares of
Preferred Stock from 25,000,000 to 50,000,000;
3. To approve an amendment to the Conexant Systems, Inc. 1999 Long-Term
Incentives Plan to increase the number of shares of Common Stock of the
Company for which awards may be granted thereunder by 7,500,000 shares;
4. To ratify the appointment by the Board of Directors of the accounting firm
of Deloitte & Touche LLP as independent auditors for the Company for the
current fiscal year; and
5. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
These items are fully discussed in the following pages. Only
shareowners of record at the close of business on December 14, 1999 will be
entitled to notice of, and to vote at, the Annual Meeting. A list of shareowners
entitled to vote will be available for inspection at the offices of Conexant,
4311 Jamboree Road, Newport Beach, California 92660-3095, for ten days prior to
the Annual Meeting.
Shareowners are requested to complete, date, sign and return the Proxy
Card as promptly as possible. A return envelope is enclosed. Submitting your
proxy with the Proxy Card, or via the Internet, or by telephone will not affect
your right to vote in person should you decide to attend the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Dennis E. O'Reilly
Secretary
January 3, 2000
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PRELIMINARY COPY
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Conexant Systems, Inc.
4311 Jamboree Road
Newport Beach, California 92660-3095
Proxy Statement
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The enclosed proxy is solicited by the Board of Directors of Conexant
Systems, Inc. ("Conexant" or the "Company") for use in voting at the 2000 Annual
Meeting of Shareowners (the "Annual Meeting") to be held at Conexant's
headquarters in Newport Beach, California, on Thursday, February 10, 2000, at
10:00 a.m., Pacific Standard Time, and at any adjournment thereof, for the
purposes set forth in the accompanying Notice of 2000 Annual Meeting of
Shareowners. This proxy statement and the proxy are first being mailed to
shareowners and made available on the Internet (www.conexant.com) on or about
January 3, 2000.
This is the Company's first solicitation of proxies for its Annual
Meeting of Shareowners since the Company began operations as an independent,
publicly-held company. The Company, which was incorporated in 1996, became a
publicly-held company through the pro rata distribution by Rockwell
International Corporation ("Rockwell") of all the outstanding shares of Common
Stock, par value $1 per share, of the Company, to Rockwell's shareowners on
December 31, 1998 (the "Distribution").
On September 13, 1999, the Board of Directors of the Company declared a
2-for-1 stock split in the form of a stock dividend payable on October 29, 1999
to holders of record of the Company's Common Stock as of the close of business
on September 24, 1999. In connection with the stock split certain adjustments
were made to the Company's stock-based compensation plans and outstanding awards
thereunder. All information in this Proxy Statement regarding the Company's
Common Stock and awards under the Company's stock-based compensation plans gives
effect to the stock split and the related adjustments. For presentation
purposes, references made to the September 30, 1999 period relate to the actual
fiscal year ended October 1, 1999.
Voting and Revocability of Proxies
When proxies are properly dated, executed and returned, the shares they
represent will be voted at the Annual Meeting in accordance with the
instructions of the shareowner. If no specific instructions are given, the
shares will be voted FOR the election of the nominees for directors set forth
herein, FOR the amendment to the Company's Restated Certificate of Incorporation
to increase the number of authorized shares of Common Stock from 500,000,000 to
1,000,000,000 and the number of authorized shares of Preferred Stock from
25,000,000 to 50,000,000, FOR the amendment of the Conexant Systems, Inc. 1999
Long-Term Incentives Plan (the "1999 LTIP") to increase the number of shares of
Common Stock of the Company for which awards may be granted thereunder, and FOR
ratification of the appointment of the independent auditors. In addition, if
other matters come before the Annual Meeting, the persons named in the
accompanying form of proxy will vote in accordance with their best judgment with
respect to such matters. A shareowner giving a proxy has the power to revoke it
at any time prior to its
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exercise by voting in person at the Annual Meeting, by giving written notice of
revocation to the Secretary prior to the Annual Meeting or by giving a valid,
later dated proxy.
The enclosed proxy also offers shareowners the option to receive
materials for any future shareowner meeting electronically via the Internet. A
shareowner who consents to receiving such materials electronically may revoke
such consent at any time. The Company will continue to distribute printed
materials for future shareowner meetings to Shareowners who do not consent to
receive such materials electronically.
It is the Company's policy to keep confidential proxy cards, ballots
and voting tabulations that identify individual shareowners except as may be
necessary to meet any applicable legal requirements and, in the case of any
contested proxy solicitation, as may be necessary to permit proper parties to
verify the propriety of proxies presented by any person and the results of the
voting. The inspectors of election and any employees associated with processing
proxy cards or ballots and tabulating the vote are required to acknowledge their
responsibility to comply with this policy of confidentiality.
Each share of Common Stock of the Company outstanding on the record
date will be entitled to one vote on all matters. The two candidates for
election as directors at the Annual Meeting who receive the highest number of
affirmative votes, a quorum being present, will be elected. The approval of the
amendment to the Restated Certificate of Incorporation to increase the number of
authorized shares of the Company's Common Stock and Preferred Stock will require
the affirmative vote of the holders of a majority of the outstanding shares
entitled to vote. The approval of the amendment to the 1999 LTIP and the
ratification of the appointment of the independent auditors each will require
the affirmative vote of a majority of the shares of the Company's Common Stock
present or represented by proxy and entitled to vote at the Annual Meeting, a
quorum being present. Because abstentions with respect to any matter are treated
as shares present or represented by proxy and entitled to vote for the purposes
of determining whether that matter has been approved by the shareowners,
abstentions have the same effect as negative votes for each proposal, other than
the election of directors. Broker non-votes are not deemed to be present or
represented by proxy for purposes of determining whether shareowner approval of
that matter has been obtained, but they are counted as present for purposes of
determining the existence of a quorum at the Annual Meeting.
Record Date, Quorum and Share Ownership
Only shareowners of record at the close of business on December 14,
1999 will be entitled to vote at the Annual Meeting. The presence in person or
by proxy of a majority of the shares of Common Stock outstanding on the record
date is required for a quorum. As of December 14, 1999, there were [ ] shares of
the Company's Common Stock issued and outstanding. On December 14, 1999, Wells
Fargo Bank, N.A., Los Angeles, California, as trustee under Rockwell's Savings
Plan for participating employees and former employees of Rockwell or its
predecessor, held [ ] shares of the Company's Common Stock, representing
approximately [ ]% of the total outstanding shares of the Company's Common
Stock. Shares held by the trustee of the Rockwell Savings Plan on account of the
participants in such plan will be voted by the trustee in accordance with
instructions from the participants (either in writing or by means of the
Company's telephone or Internet voting procedures), and where no instructions
are received, as the trustee deems proper.
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ELECTION OF DIRECTORS (Proposal 1)
The Company's Restated Certificate of Incorporation provides that the
Board of Directors shall consist of three classes of directors with overlapping
three-year terms. One class of directors is to be elected each year with terms
extending to the third succeeding Annual Meeting after election. The Restated
Certificate of Incorporation provides that the Board shall maintain the three
classes so as to be as nearly equal in number as the then total number of
directors permits. The two directors in Class I will be elected at the 2000
Annual Meeting to serve for a term expiring at the Company's Annual Meeting in
the year 2003. The two directors in Class II and the one director in Class III
are serving terms expiring at the Company's Annual Meeting of Shareowners in
2001 and 2002, respectively.
Until November 30, 1998, the Company's Board of Directors consisted of
three members, including Messrs. Dwight W. Decker and Donald R. Beall. In
anticipation of the Distribution, effective on November 30, 1998 the Company's
Board of Directors was expanded to five members, an interim director resigned,
three additional directors of the Company were elected and the directors were
divided into three classes, in each case, as provided in the By-laws of the
Company.
Unless marked otherwise, proxies received will be voted FOR the
election of each of the two nominees specified in "Class I - Nominees for
Directors with Terms Expiring in 2003", below, who now serve as directors with
terms extending to the 2000 Annual Meeting and until their successors are
elected and qualified. If either such nominee for the office of director is
unwilling or unable to serve as a nominee for the office of director at the time
of the Annual Meeting, the proxies may be voted either (1) for a substitute
nominee who shall be designated by the proxy holders or by the present Board of
Directors to fill such vacancy or (2) for the other nominee only, leaving a
vacancy. Alternatively, the size of the Board may be reduced so that there is no
vacancy. The Board of Directors has no reason to believe that either of such
nominees will be unwilling or unable to serve if elected as a director. Such
persons have been nominated to serve until the 2003 Annual Meeting of
Shareowners and until their successors are elected and qualified.
The Board of Directors recommends a vote FOR the election of each of
the nominees listed below.
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Information as to Nominees for Directors and Continuing Directors
There is shown below for each nominee for director and each continuing
director, as reported to the Company, the name, age and principal occupation;
the position, if any, with the Company; and other directorships held.
Class I - Nominees for Directors with Terms Expiring in 2003
DWIGHT W. DECKER Mr. Decker has been a Director of
49 years old Conexant since its incorporation in
Chairman of the Board and [PHOTO] 1996. Mr. Decker has been Chairman and
Chief Executive Officer of Chief Executive Officer of the Company
the Company since November 1998 and was President
and Chief Executive Officer of the
Company since its incorporation in 1996
to November 1998. Mr. Decker was Senior
Vice President of Rockwell and
President, Rockwell Semiconductor
Systems from July 1998 until December
1998; Senior Vice President of Rockwell
and President, Rockwell Semiconductor
Systems and Electronic Commerce from
March 1997 to July 1998; President,
Rockwell Semiconductor Systems from
October 1995 to March 1997; President,
Telecommunications of Rockwell from June
1995 to October 1995; and Vice
President/General Manager, Digital
Communications Division of Rockwell's
Telecommunications Division from January
1993 to June 1995.
F. CRAIG FARRILL Mr. Farrill has been a Director of
47 years old Conexant since 1998. He has been Chief
Chief Technical Officer, [PHOTO] Technical Officer of Vodafone AirTouch
Vodafone AirTouch Public Public Limited Company (wireless
Limited Company communications) since June 1998 and was
corporate Vice President, Strategic
Technology of its predecessor, AirTouch
Communications, Inc. (wireless
communications) from June 1996 to June
1998. From June 1991 to June 1996, he
served as Vice President of Technology,
Planning and Development of AirTouch
Communications, Inc. He is also a member
of the Board of Directors and a
corporate officer of the CDMA
Development Group, a digital cellular
technology consortium, which he founded
in 1993.
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Class II - Continuing Directors with Terms Expiring in 2001
DONALD R. BEALL Mr. Beall has been a Director of
61 years old Conexant since 1998. He is the retired
Retired Chairman and Chief [PHOTO] Chairman of the Board and Chief
Executive Officer of Executive Officer of Rockwell
Rockwell International (electronic controls and communications)
Corporation and has been a director of Rockwell
since 1978. He served as Chairman of the
Board of Rockwell from February 1988 to
February 1998 and Chief Executive
Officer of Rockwell from February 1988
to September 1997. Mr. Beall is also
Chairman of the Executive Committee of
the Board of Directors of Rockwell. Mr.
Beall is a director of Meritor
Automotive, Inc., The Procter & Gamble
Company and The Times Mirror Company. He
is a trustee of California Institute of
Technology, a member of the Foundation
Board of Trustees at the University of
California - Irvine and an Overseer of
the Hoover Institution. He is also a
member of The Business Council and
numerous professional, civic and
entrepreneurial organizations.
JERRE L. STEAD Mr. Stead has been a Director of
56 years old Conexant since 1998. He has been
Chairman of the Board and [PHOTO] Chairman of the Board and Chief
Chief Executive Officer of Executive Officer of Ingram Micro Inc.
Ingram Micro Inc. (computer technology products and
services) since August 1996. Mr. Stead
served as Chief Executive Officer and
Chairman of the Board of LEGENT
Corporation (software development) from
January 1995 to August 1995. Prior
thereto, Mr. Stead was Executive Vice
President, American Telephone and
Telegraph Company and Chief Executive
Officer of AT&T Global Information
Solutions (NCR Corporation) from May
1993 to December 1994. He is a director
of Armstrong World Industries, Inc. and
Thomas & Betts Corporation. Mr. Stead is
Chairman of the Board of the Center of
Ethics and Values at Garrett Seminary on
the Northwestern University campus.
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Class III - Continuing Director with Term Expiring in 2002
RICHARD M. BRESSLER Mr. Bressler has been a Director of
69 years old Conexant since 1998. He served as Chief
Retired Chairman of the [PHOTO] Executive Officer of Burlington Northern
Board, El Paso Natural Inc. (rail transportation) from 1980
Gas Company through 1988. Mr. Bressler retired in
October 1990 as Chairman of both
Burlington Northern Inc. and Burlington
Resources Inc. (natural resources
operations), positions he had held since
1982 and 1989, respectively. He served
as Chairman of the Plum Creek Management
Company (timber operations) from April
1989 to January 1993. He was Chairman of
the El Paso Natural Gas Company (natural
gas operations) from October 1990
through December 1993. Mr. Bressler is
active in a number of business and civic
organizations.
BOARD COMMITTEES AND MEETINGS
The standing committees of the Board of Directors of the Company are an
Audit Committee, a Board Composition Committee, a Compensation and Management
Development Committee and a Technology, Environmental and Social Responsibility
Committee, each of which is comprised of non-employee directors. The functions
of each of these four committees are described below. The members of the
standing committees are identified in the following table.
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Technology,
Board Compensation & Environmental &
Director Audit Composition Management Development Social Responsibility
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D. R. Beall x x x
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D. M. Bressler x x
- ---------------- ----- ----------- ---------------------- ---------------------
F. C. Farrill x x
- ---------------- ----- ----------- ---------------------- ---------------------
J. L. Stead x x x
- ---------------- ----- ----------- ---------------------- ---------------------
The Audit Committee reviews the scope and effectiveness of audits of
the Company by the Company's independent public accountants and internal
auditors; selects and recommends to the Board of Directors the employment of
independent public accountants for the Company, subject to approval of the
shareowners; reviews the audit plans of the Company's independent public
accountants and internal auditors; reviews and approves the fees charged by the
independent public accountants; reviews the Company's annual financial
statements before their release; reviews the adequacy of the Company's system of
internal controls and recommendations of the independent public accountants with
respect thereto; reviews and acts on comments and suggestions by the independent
public accountants and by the internal auditors with respect to their audit
activities; and monitors compliance by the employees of the Company with the
Company's standards of business conduct policies. The Committee met once during
the 1999 fiscal year.
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The principal functions of the Board Composition Committee are to
consider and recommend to the Board of Directors qualified candidates for
election as directors of the Company and periodically to prepare and submit to
the Board of Directors for adoption the Committee's selection criteria for
director nominees. The Committee also periodically assesses the performance of
the Board of Directors and reports thereon to the Board. Shareowners of the
Company may recommend candidates for consideration by the Committee by writing
to the Secretary of the Company within certain time periods specified in the
Company's By-laws, giving the candidate's name, biographical data and
qualifications. Any such recommendation should be accompanied by a written
statement from the individual of his or her consent to be named as a candidate
and, if nominated and elected, to serve as a director. The Committee did not
meet during the 1999 fiscal year.
The principal functions of the Compensation and Management Development
Committee (the "Compensation Committee") are to evaluate the performance of the
Company's senior executives and plans for management succession and development,
to consider the design and competitiveness of the Company's compensation plans,
to review and approve senior executive compensation and to administer the
Company's incentive, deferred compensation, stock option and long-term
incentives plans pursuant to the terms of the respective plans. The members of
the Compensation Committee are ineligible to participate in any of the plans or
programs which are administered by the Committee except the Company's Directors
Stock Plan (the "Directors Plan"). The Compensation Committee met four times
during the 1999 fiscal year.
The Technology, Environmental and Social Responsibility Committee
reviews and monitors science and technological activities of the Company and
reviews and assesses the Company's policies and practices in the following
areas: employee relations, with an emphasis on equal employment opportunity and
advancement; the protection and enhancement of the environment and energy
resources; product integrity and safety; employee health and safety; and
community and civic relations including programs for and contributions to
health, educational, cultural and other social institutions. The Committee met
once during the 1999 fiscal year.
The Board of Directors held ten meetings during the 1999 fiscal year.
Each director is expected to attend each meeting of the Board and those
committees on which he serves. No director attended less than 75% of all the
meetings of the Board and those committees on which he served in 1999.
DIRECTORS' COMPENSATION
Non-employee directors of the Company receive a retainer at the rate of
$30,000 per year for Board service. Pursuant to the Directors Plan, each
non-employee director was granted an option to purchase 80,000 shares of the
Company's Common Stock in January 1999 at an exercise price of $9.4063 per share
and each non-employee director subsequently elected to the Board of Directors
will receive an option to purchase 80,000 shares of the Company's Common Stock
upon his or her initial election as a director at an exercise price equal to the
fair market value of the Company's Common Stock on the date of grant. Such stock
options will become exercisable in four equal installments on each of the first,
second, third and fourth anniversaries of the date the options were granted.
Following completion of one year of service on the Board, each non-employee
director will thereafter be granted an option for 30,000 shares of the Company's
Common Stock immediately after each Annual Meeting of Shareowners of the
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Company. Under the terms of the Company's directors' deferred compensation plan,
a director may elect to defer all or part of the cash payment of retainer fees
until such time as shall be specified with interest on deferred amounts accruing
quarterly at 120% of the Federal long-term rate set each month by the Secretary
of the Treasury. Each director also has the option each year to determine
whether to defer all or any portion of the cash retainer by electing to receive
restricted shares valued at the closing price of the Company's Common Stock on
the Nasdaq Stock Market on the date each retainer payment would otherwise be
made in cash.
REPORT OF THE COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE ON EXECUTIVE
COMPENSATION
The Compensation Committee, which consists entirely of non-employee
directors (see "Board Committees and Meetings" above), has furnished the
following report on executive compensation:
Compensation for Fiscal Year 1999
The Compensation Committee was constituted in November 1998 shortly
prior to the December 31, 1998 spin-off of the Company from Rockwell.
Accordingly, substantially all the decisions affecting compensation of the
Company's chief executive officer and its other senior executives prior to the
spin-off, as well as the various compensation plans applicable to them and other
employees of the Company, were made under plans, arrangements and commitments
approved by Rockwell shareowners or the Compensation and Management Development
Committee of Rockwell's Board of Directors (the "Rockwell Committee").
The Rockwell Committee set base salaries generally somewhat below
competitive levels of other major U.S. industrial companies and provided
opportunity for above-market annual incentives based on financial performance
criteria of Rockwell's semiconductor systems business ("Semiconductor Systems").
In addition, long-term incentives granted to key executives of Semiconductor
Systems under Rockwell's 1995 Long-Term Incentives Plan were provided in the
form of business unit performance plans based on the performance of
Semiconductor Systems over a three-year performance period, the last of which
covered the period from October 1, 1997 through September 30, 2000. Mr. Decker,
as President of Semiconductor Systems, received his long-term incentive
opportunities one-half through stock option grants and one-half through grants
under the business unit performance plan applicable to Semiconductor Systems. No
payments were made in respect of grants made for the three-year performance
period ended September 30, 1998 based on the performance of Semiconductor
Systems in fiscal 1996, 1997 and 1998. In connection with the spin-off of
Semiconductor Systems as the Company, grants made in respect of the three-year
performance periods ending September 30, 1999 and 2000 were terminated without
payment.
Following its appointment in November 1998, the Compensation Committee
developed and implemented compensation policies, plans and programs for the
remainder of fiscal 1999 intended to transition the Company's compensation
philosophy to one appropriate for the semiconductor industry and other high
technology companies with whom the Company
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competes for talent. In addition, the Company's fiscal 1999 compensation plans
were influenced by the critical importance of retaining key executives during
the transition of the Company and during a turbulent period in the semiconductor
industry in general, the need to control expenses in order to generate earnings
in an effort to return the Company to profitability and the expectation that the
Company's stock price would be initially low, making the face value of
stock-based compensation lower than that of many of the Company's peers.
In November 1998, the Compensation Committee determined that while the
Company was not profitable the base salary of executives should be carefully
controlled, provided that base salaries would become competitive once
profitability returned. As a result, effective January 1, 1999, the annual base
salary of the Company's Chief Executive Officer, Dwight W. Decker was reduced by
approximately 20 percent from his 1998 annual salary and the annual base
salaries of other senior executives were reduced by approximately 10 percent
from their 1998 annual salaries. These salary reductions were to remain in
effect until the Company earned a profit in two consecutive quarters, at which
time the salary reductions would be rescinded and annual salaries for Mr. Decker
and the other senior executives would be increased to levels which would be
competitive with the base salaries of the Company's peers.
In May 1999, in view of the Company's return to profitability for the
second quarter of fiscal 1999 and the expectation of profitability for the third
quarter of fiscal 1999, the Compensation Committee determined that the annual
salaries of the senior executives of the Company should be increased effective
July 3, 1999, subject to achieving profitability for the third quarter of fiscal
1999. The salary increases for the executives were based on competitive market
data, including an analysis of information from proxy statements of particular
companies that are considered generally comparable to the Company and data
published in salary surveys of high technology companies. The comparative peer
group was expanded to include other high technology companies, in addition to
pure semiconductor companies, similar in revenue size to the Company. The salary
increases also reflected the Company's then current performance results and a
blend of market data and salary grade levels.
In addition, the Compensation Committee set annual incentive percentage
payout targets for the Company's executives to levels more in line with those of
semiconductor and other high technology companies. For fiscal 1999 only, the
Company's executives received grants of restricted shares of the Company's
Common Stock in lieu of payments from the Company's cash incentive plans. Each
grant of restricted stock was at a level that was 50 percent of the target cash
incentive it replaced. One-half of the restricted stock was to vest upon a 50
percent increase in the price of the Company's Common Stock over the price on
the date of grant and the remainder was to vest upon a 100 percent increase in
the price of the Company's Common Stock over the price on the date of grant,
provided that no restricted stock was to vest prior to one year after the date
of grant. In September 1999, in view of the Company's return to profitability
earlier than anticipated and the price of the Company's Common Stock increasing
by more than 100 percent from the price on the date of grant, the Board of
Directors accelerated the vesting of these shares of restricted stock effective
October 1, 1999, subject to the Company's satisfaction of certain performance
criteria during the fourth quarter of fiscal 1999. All of these shares of
restricted stock, as well as certain shares of restricted stock held by other
employees, were vested on October 1, 1999.
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The Compensation Committee also provided for initial grants of stock
options to executives and other employees under the 1999 LTIP in January 1999.
The Compensation Committee considered these stock option grants to executives to
be an important component of executive compensation in order for the Company to
remain competitive with its peers and to give the executives the opportunity to
share in the future success of the Company. In addition, the Compensation
Committee noted that in connection with a spin-off, executives of the new
spin-off company were often granted significant amounts of stock options in the
spin-off company as a long-term incentive. Finally, the Compensation Committee
determined that the stock option grants would serve as an important retention
tool, particularly for those executives who had not received and would not
receive any payouts under the Rockwell long-term incentive plans for the
three-year period ended September 30, 1998 and the three-year periods ending
September 30, 1999 and 2000.
Compensation Philosophy and Objectives for the Company
The Compensation Committee has adopted for the Company a general
compensation philosophy of "pay for performance" in which total cash
compensation should vary with Company performance. The Compensation Committee
believes this philosophy is appropriate for the Company as a high technology,
semiconductor company. The Compensation Committee's goal is to provide base
salary and opportunity for annual incentives sufficient to provide total cash
compensation at market competitive levels for major U.S. high technology
companies and to provide long-term incentives in the form of stock option grants
to its executives at slightly above market competitive levels for major U.S.
high technology companies.
Total cash compensation for the majority of the Company's employees,
including its executive officers, consists of the following:
o Base salary; and
o A cash bonus through the Company's incentive compensation program that
is related to growth in certain financial performance measures of the
Company and is based on an individual bonus target for the performance
period.
Long-term incentive compensation is realized through the granting of
stock options and, in some cases, shares of restricted stock, to most employees,
including eligible executive officers, under the 1999 LTIP and the Company's
2000 Non-Qualified Stock Plan.
In addition to encouraging stock ownership by granting stock options
and restricted stock, the Company further encourages its employees to own the
Company's Common Stock through the Company's 1999 Employee Stock Purchase Plan
and 1999 Non-Qualified Employee Stock Purchase Plan, employee stock purchase
plans which are generally available to all employees (the "ESPPs"). The ESPPs
allow participants to buy the Company's Common Stock at a discount to the market
price with up to 10% of their salary and bonuses (subject to certain limits),
thereby allowing employees to profit when the value of the Company's Common
Stock increases over time.
10
<PAGE>
Setting Executive Compensation
In setting the base salary and individual bonus target amount for
executive officers, the Compensation Committee reviews information relating to
executive compensation of U.S.-based semiconductor and other high technology
companies that are considered generally comparable to the Company. While there
is no specific formula that is used to establish executive compensation in
relation to this market data, executive officer base salary is generally set to
be around the average salaries for comparable jobs in the marketplace. However,
if the Company's business groups meet or exceed certain predetermined financial
and non-financial goals, amounts paid under the Company's performance-based
compensation programs may lead to total cash compensation levels that are higher
than the average salaries for comparable jobs. The Compensation Committee
considers the total compensation (earned or potentially available) of the senior
executives in establishing each component of compensation. In its review, the
Compensation Committee considers the following: (1) industry, peer group and
national surveys of other U.S. semiconductor and high technology companies; (2)
reports of the independent compensation consultants who advise the Compensation
Committee on the Company's compensation programs in comparison with those of
other companies which the consultants believe compete with the Company for
executive talent; and (3) performance judgments as to the past and expected
future contributions of individual senior executives.
As a result of this process, and in accordance with the Company's
compensation philosophy that total cash compensation should vary with Company
performance, the Compensation Committee establishes base salaries of the
Company's executive officers at levels which the Compensation Committee believes
are at the average base salaries of executives of companies considered by the
Compensation Committee to be comparable to the Company. In addition, as set
forth below, a significant part of each executive officer's potential total cash
compensation is dependent on the performance of the Company as measured through
its performance-based compensation program.
Performance-Based Compensation
The Company's executive annual incentive compensation plan is based on
the overall financial performance of the Company, the performance of the product
platform for which the executive has responsibility or other functional
performance criteria and the attainment of strategic development goals. In
addition, the executive incentive compensation awards may be adjusted by an
individual performance multiplier. The Chief Executive Officer's annual
incentive plan has the same components as the executive plan, other than the
platform and functional performance criteria. This award may also be adjusted by
the Board of Directors based on individual performance. For all executives, the
annual incentive award value is targeted at competitive market levels for
semiconductor and other high-technology companies.
11
<PAGE>
Stock Options and Restricted Stock
The Company grants stock options to aid in the retention of employees
and to align the interests of employees with those of its shareowners. Stock
options have value for an employee only if the price of the Company's stock
increases above the fair market value on the grant date and the employee remains
employed by the Company for the period required for the stock option to be
exercisable, thus providing an incentive to remain in the Company's employ. In
addition, stock options directly link a portion of an employee's compensation to
the interests of shareowners by providing an incentive to maximize shareowner
value.
The Company's 1999 LTIP, as amended, is generally used for making
grants of incentive stock options, non-qualified stock options and restricted
stock to officers and other employees as a part of the Company's executive
performance review process. In addition, the Company has adopted the 2000
Non-Qualified Stock Plan which authorizes the grant of non-qualified stock
option and restricted stock awards to officers and other employees. Annual stock
option grants for executives are a key element of market-competitive total
compensation. In 1999, stock options for the executive officers were granted
upon recommendation of management and approval of the Compensation Committee.
Individual grant amounts were based on internal factors such as relative job
scope and contributions made during the past year, as well as a review of
publicly available data on senior management compensation at other companies. In
general, initial grants are exercisable in 25 percent increments over a
four-year period, first exercisable one year after the date of grant (e.g., 25
percent of options granted in 1999 become exercisable in 2000).
Compliance with Section 162(m)
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), places a limit of $1,000,000 on the amount of compensation that may be
deducted by the Company in any year with respect to each of the Company's five
most highly paid executive officers. Certain performance-based compensation that
has been approved by shareowners is not subject to the deduction limit. The 1999
LTIP is qualified so that awards under the plan constitute performance-based
compensation not subject to the deduction limit under Section 162(m). It is the
Committee's objective that, so long as it is consistent with its overall
business, compensation and retention objectives, the Company will, to the extent
reasonable, endeavor to keep executive compensation deductible by the Company
for federal income tax purposes.
Company Performance and CEO Compensation
The Company's compensation program is designed to support the
achievement of corporate and business objectives. This pay-for-performance
program is most clearly exemplified in the compensation of the Company's
Chairman and Chief Executive Officer, Dwight W. Decker.
Mr. Decker's base salary and incentive target is determined in the same
manner as described above for all executive officers. In setting compensation
levels for the Chief Executive
12
<PAGE>
Officer, the Compensation Committee considers data reflecting comparative
compensation information from other companies for the prior year. As discussed
above under "Compensation for Fiscal Year 1999", however, effective January 1,
1999, Mr. Decker's fiscal 1999 salary was set at $308,000, a 20 percent
reduction from his fiscal 1998 salary and significantly below average base
salary levels of the chief executive officers of the Company's peers, and he
received restricted stock grants with a fair market value that was equal to 50
percent of his annual incentive target in lieu of a cash incentive bonus for
fiscal 1999. Effective July 3, 1999, Mr. Decker's salary reduction was rescinded
based on the achievement of two consecutive quarters of profitable operation and
his new base salary was set at $600,000, which was considered to be slightly
less than competitive base salary levels. In addition, Mr. Decker's target
annual incentive for fiscal 2000 was increased to 125 percent of his base
salary, in view of his below-market base salary. In approving these increases,
the Compensation Committee considered an analysis of information gathered
through May 1999 from proxy statements of several comparable companies, in
addition to comparative compensation data published in salary surveys of a
number of semiconductor and high technology, as well as general industrial,
companies.
Compensation and Management
Development Committee
Jerre L. Stead, Chairman
Donald R. Beall
13
<PAGE>
SHAREOWNER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total
shareowner return on the Company's Common Stock against the cumulative total
return of the Nasdaq Stock Market (U.S.) Index and the Nasdaq Electronic
Components Index. The graph assumes that $100 was invested on January 4, 1999,
the first trading day of the Company's Common Stock, in each of the Company's
Common Stock, the Nasdaq Stock Market (U.S.) Index and the Nasdaq Electronic
Components Index and that all dividends were reinvested. No cash dividends have
been paid or declared on the Company's Common Stock.
COMPARISON OF 9 MONTH CUMULATIVE TOTAL RETURN*
AMONG CONEXANT SYSTEMS, INC.,
THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE NASDAQ ELECTRONIC COMPONENTS INDEX
[SHAREOWNER RETURN PERFORMANCE GRAPH]
* $100 INVESTED ON 1/4/99 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING SEPTEMBER 30.
Cumulative Total Return
---------------------------------------------
01/04/1999 03/31/1999 6/30/1999 09/30/1999
CONEXANT SYSTEMS, INC. 100 147 309 386
NASDAQ STOCK MARKET (U.S.) 100 111 122 124
NASDAQ ELECTRONIC COMPONENTS 100 103 116 140
14
<PAGE>
EXECUTIVE COMPENSATION
The Company began operations independent of Rockwell on January 4,
1999, and did not pay any compensation to its executive officers for services
rendered in all capacities to the Company and its subsidiaries prior to that
date. The information shown below reflects the annual and long-term
compensation, from all sources, of the Chief Executive Officer of the Company
for the fiscal years ended September 30, 1997, 1998 and 1999 and the other four
most highly compensated executive officers of the Corporation at September 30,
1999 (the "Named Executive Officers"), for services rendered in all capacities
to the Company or to Rockwell and its subsidiaries for the fiscal years ended
September 30, 1998 and 1999. In many cases, the individuals listed below served
Rockwell and its subsidiaries in different capacities than those in which they
serve the Company.
<TABLE>
Summary Compensation Table (1)
All Other
Long-Term Compensa-
Annual Compensation Compensation tion (4)
---------------------------------------- ---------------------------------- ----------
Awards Payouts
---------------------- ----------
Other Restricted
Name and Principal Annual Stock Stock Long-term
Position With Compen- Awards Options Incentive
the Company (2) Year Salary Bonus (3) sation (3) (Shares) Payouts
- ----------------------------- ---- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Dwight W. Decker............. 1999 $ $ $ $ $ $
Chairman of the Board 1998
and Chief Executive Officer 1997
Moiz M. Beguwala............. 1999
Senior Vice President and 1998
General Manager -- Wireless
Communications
Lewis C. Brewster............ 1999
Senior Vice President, 1998
Worldwide Sales
Raouf Y. Halim............... 1999
Senior Vice President and 1998
General Manager -- Network
Access
Balakrishnan S. Iyer......... 1999
Senior Vice President and
Chief Financial Officer
- -----------------------------------------------
<FN>
(1) In accordance with the executive compensation disclosure rules adopted by
the Commission, the compensation of the Named Executive Officers, other
than Mr. Decker, is not shown for fiscal 1997 because the Company was not
a reporting company under the Exchange Act for such year and such
compensation information has not been provided in a prior filing with the
Commission. Mr. Iyer joined the Company in October 1998, and therefore,
compensation information is provided only for fiscal 1999.
(2) The table reflects the positions held with the Company at September 30,
1999. The Named Executive Officers served Rockwell and its subsidiaries
in the following capacities during fiscal years 1997, 1998 and 1999 and
the compensation reflected in the table for these years was paid by
Rockwell to the Named Executive Officers in such capacities: Mr. Decker -
Senior Vice President, Rockwell and President, Rockwell Semiconductor
Systems (July 1998-December 1998), Senior Vice President, Rockwell and
President, Rockwell Semiconductor Systems and Electronic Commerce (March
1997-July 1998) and President,
15
<PAGE>
Rockwell Semiconductor Systems, Inc. (October 1995-March 1997); Mr.
Beguwala - Vice President and General Manager -- Wireless Communications
Division (October 1998-December 1998), Vice President and General
Manager -- Personal Computing Division (January 1998-October 1998) and
Vice President, Worldwide Sales (October 1995-January 1998), Rockwell
Semiconductor Systems, Inc.; Mr. Brewster - Vice President, Worldwide
Sales (January 1998-December 1998), Executive Director, America Sales
(June 1997-January 1998) and Director, America Sales (June 1996-June
1997), Rockwell Semiconductor Systems, Inc.; Mr. Halim - Vice President
and General Manager -- Network Access Division, Rockwell Semiconductor
Systems, Inc. (February 1997-December 1998); and Mr. Iyer - Senior Vice
President and Chief Financial Officer, Rockwell Semiconductor Systems,
Inc. (October 1998-December 1998).
(3) On January 4, 1999, each Named Executive Officer received shares of
Restricted Stock valued at $[ ] per share. The total value of each Named
Executive Officer's shares is included in his bonus for fiscal 1999. Mr.
Decker received 35,776 shares ($[ ]) and each of Messrs. Beguwala,
Brewster, Halim and Iyer received 9,760 shares ($[ ]).
(4) Amounts contributed or accrued for the Named Executive Officers under
the Rockwell Savings Plan and the related supplemental savings plan.
</FN>
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with the Distribution, Rockwell and the Company entered
into several agreements, including agreements relating to services to be
provided by Rockwell to the Company following the spin-off, the allocation of
liabilities and obligations with respect to taxes, employee benefit plans and
compensation arrangements, and other matters. At the time these agreements were
negotiated and executed, certain of the Company's directors and executive
officers also served as a director and executive officers of Rockwell. The
Company believes the terms of these agreements to be fair.
The Company has entered into change of control employment agreements
("Employment Agreements") with certain key executives, including Mr. Decker.
Each such Employment Agreement becomes effective upon a "change of control" of
the Company (as defined in the Employment Agreement). Each Employment Agreement
provides for the continuing employment of the executive after the change of
control on terms and conditions no less favorable than those in effect before
the change of control. If the executive's employment is terminated by the
Company without "cause" or if the executive terminates his or her own employment
for "good reason" (each as defined in the Employment Agreement), the executive
is entitled to severance benefits equal to a multiple of his or her annual
compensation (including bonus) and continuation of certain benefits for a number
of years equal to the multiple. The multiple is three for Mr. Decker and two for
the other executives (or, in either case, the shorter number of years until the
executive's normal retirement date). The executives are entitled to an
additional payment, if necessary, to make them whole as a result of any excise
tax imposed by the Code on certain change of control payments (unless the safe
harbor amount above which the excise tax is imposed is not exceeded by more than
10%, in which event the payments will be reduced to avoid the excise tax).
In October 1999, the Company made loans to certain officers and other
employees (including the Named Executive Officers), the proceeds of which were
used to pay federal withholding tax due in connection with the accelerated
vesting on October 1, 1999 of certain shares of Restricted Stock previously
granted to such executive officers and other employees.
16
<PAGE>
Because the tax payments were due at a time shortly prior to the announcement of
the Company's year-end results when such executive officers and other employees
were not permitted to trade in Conexant Common Stock, the Company made the loans
available to these individuals to allow them to pay the taxes without selling
their shares of Restricted Stock. The loans bear interest at a rate of 5.54% and
are due on December 1, 2000. The loan to Mr. Decker was in the amount of
$232,052 and the loan to each of Messrs. Beguwala, Brewster, Halim and Iyer was
in the amount of $126,612.
OPTION GRANTS IN LAST FISCAL YEAR
Shown below is further information on grants to the Named Executive
Officers of stock options pursuant to the Company's 1999 Long-Term Incentives
Plan during the fiscal year ended September 30, 1999, which are reflected in the
Summary Compensation Table on page [ ].
<TABLE>
Option Grants
-------------------------------------------------------------
Percentage of Total Potential Realizable Value
Number of Options Granted at Assumed Annual Rates of
Securities to Conexant Stock Price Appreciation for
Underlying Employees Exercise or Option Term
Options Granted in Fiscal Base Price Expiration ----------------------------
Name (Shares) (l) 1999 (Per Share) Date 5% 10%
- ---------------------- --------------- ------------------- ----------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Dwight W. Decker...... 1,000,000 5.32% $9.4063 1/4/2009 $5,915,571 $14,991,220
Moiz M. Beguwala...... 470,000 2.50 9.4063 1/4/2009 2,780,319 7,045,873
Lewis C. Brewster..... 400,000 2.12 9.4063 1/4/2009 2,365,229 5,996,488
Raouf Y. Halim........ 520,000 2.76 9.4063 1/4/2009 3,076,097 7,795,424
Balakrishnan S. Iyer.. 700,000 3.72 9.4063 1/4/2009 4,140,900 10,493,854
- -----------------------------------------------
<FN>
(1) All the Named Executive Officers were granted options on January 4, 1999
that become exercisable in four substantially equal annual installments
beginning January 4, 2000.
</FN>
</TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
Shown below is information with respect to (i) exercises by the Named
Executive Officers during fiscal 1999 of options to purchase the Company's
Common Stock granted under the Company's 1998 Stock Option Plan or the 1999
Long-Term Incentives Plan and (ii) the unexercised options to purchase the
Company's Common Stock granted to the Named Executive Officers in fiscal 1999
and prior years and held by them at September 30, 1999.
<TABLE>
Number of Unexercised Value of Unexercised
Options Held At In-the-Money Options At
Shares September 30, 1999 (1) September 30, 1999 (1)(2)
Acquired Value -------------------------- --------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- -------------------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Dwight W. Decker..... -- -- 265,432 2,254,118 $7,573,209 $62,976,092
Moiz M. Beguwala..... -- -- 15,904 733,682 516,293 20,113,620
Lewis C. Brewster.... -- -- -- 400,000 -- 10,875,000
Raouf Y. Halim....... -- -- 9,378 800,454 307,654 22,051,786
Balakrishnan S. Iyer. -- -- -- 700,000 -- 19,031,250
17
<PAGE>
- -----------------------------------------------
<FN>
(1) Includes options that were granted by Rockwell prior to the Distribution
and were converted into options to purchase the Company's Common Stock,
on the same terms and vesting schedule as the Rockwell options but with
adjustments to the exercise price and the number of shares for which such
options are exercisable to preserve the aggregate intrinsic value of the
options.
(2) Based on the closing price of the Company's Common Stock on The Nasdaq
Stock Market, Inc. National Market System on September 30, 1999
($36.5938).
</FN>
</TABLE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
To the Company's knowledge, the following sets forth information
regarding ownership of the Company's outstanding Common Stock on November 30,
1999 by each director and Named Executive Officer and all directors and
executive officers as a group. Except as otherwise indicated below and subject
to applicable community property laws, each owner has sole voting and sole
investment power with respect to the stock listed.
Beneficial Ownership as of November 30, 1999
--------------------------------------------
Common Stock
Name Shares (1) Percent of Class (2)
- --------------------------------------- ---------------- --------------------
Donald R. Beall........................ 1,864,663 (3,4,5) --*
Richard M. Bressler.................... 98,752 (5,6) --*
Dwight W. Decker....................... 845,223 (3,5,8) --*
F. Craig Farrill....................... 23,190 (5,7) --*
Jerre L. Stead......................... 23,190 (5,7) --*
Moiz M. Beguwala....................... 153,074 (3,5) --*
Lewis C. Brewster...................... 101,483 (3,5) --*
Raouf Y. Halim......................... 153,005 (3,5) --*
Balakrishnan S. Iyer................... 186,220 (3,5) --*
All of the above and other executive
officers as a group (20 persons)... 4,735,684 (3,5) 2.4%
- ------------------------------------------------------------------------------
* Less than 1%
(1) Each person has sole voting and investment power with respect to the
shares listed unless otherwise indicated. Each person's address is the
address of the Company.
(2) For purposes of computing the percentage of outstanding shares
beneficially owned by each person, shares of which such person has a
right to acquire beneficial ownership within 60 days have been included
in both the number of shares owned by that person and the number of
shares outstanding, in accordance with Rule 13d-3(d)(1) under the
Exchange Act.
(3) Includes shares held under the savings plans of the Company and Rockwell
as of November 30, 1999. Does not include the following: 3,682; 579; 114;
655; 113; and 5,920 share equivalents for Messrs. Decker, Beguwala,
Brewster, Halim, Iyer and the group, respectively, held under the
Company's and Rockwell's supplemental savings plans as of November 30,
1999.
(4) Includes shares, as to which beneficial ownership is disclaimed, as
follows: 251,008 shares (including 230,856 shares underlying stock
options) held for the benefit of family members
18
<PAGE>
and 61,800 shares owned by the Beall Family Foundation, of which Mr.
Beall is President and a director. Does not include 288,208 shares of
Common Stock that may be acquired upon exercise of stock options assigned
to family members who are the beneficial owners thereof.
(5) Includes shares that may be acquired upon the exercise of outstanding
stock options within 60 days as follows: 1,518,468; 91,578; 791,910;
20,000; 20,000; 133,404; 100,000; 139,378; 175,000 and 4,048,332 for
Messrs. Beall, Bressler, Decker, Farrill, Stead, Beguwala, Brewster,
Halim, Iyer and the group, respectively.
(6) Includes 1,784 shares of Conexant Common Stock issued in the Distribution
in respect of restricted shares of Rockwell common stock granted to Mr.
Bressler under the Rockwell Directors Plan.
(7) Includes 3,190 shares of Conexant Common Stock granted to each of Messrs.
Farrill and Stead as restricted stock under the Conexant Directors Plan.
(8) Includes 8,204 shares in respect of shares of Rockwell common stock
granted to Mr. Decker as restricted stock in partial payment of long-term
incentive payments earned for three-year performance periods ended
September 30, 1997.
With the exception of Wells Fargo Bank, N.A., as trustee under the
Rockwell Savings Plan, which held approximately [ ]% (of which approximately [
]% was for active Rockwell employees and the remainder for former Rockwell
employees) of the outstanding shares of the Company's Common Stock as of
November 30, 1999, there are no persons known to Conexant to be "beneficial
owners" (as that term is defined in the rules of the Commission) of more than 5%
of any class of the Company's voting securities outstanding as of November 30,
1999.
RETIREMENT BENEFITS
The Company does not sponsor a defined benefit pension plan for
salaried employees. However, all of the Named Executive Officers, other than Mr.
Iyer, participate in Rockwell's defined benefit pension plan which qualifies
under Section 401(a) of the Code. Pursuant to an agreement entered into between
Conexant and Rockwell at the time of the Distribution and providing for certain
matters relating to employees, employee benefit plans and compensation
arrangements for current and former employees of Conexant and their
beneficiaries (the "Company Participants"), the Named Executive Officers have a
fully non-forfeitable right in their benefits under the Rockwell pension plan
accrued as of the time of the Distribution.
The following table shows the estimated aggregate annual retirement
benefits payable on a straight life annuity basis to participating employees, in
the earnings and years of service classifications indicated, under the Rockwell
retirement plan which, at the time of the Distribution, covered most officers
and other salaried employees of the Company on a noncontributory basis. Such
benefits reflect termination of benefit accrual on December 31, 1998 and a
reduction to recognize in part the cost of Social Security benefits related to
service for Rockwell. The plans also provide for the payment of benefits to an
employee's surviving spouse or other beneficiary.
19
<PAGE>
Average
Annual Estimated Annual Retirement Benefits for
Earnings Years of Service Indicated
- -------- ----------------------------------------
5 Years 10 Years 25 Years
------- -------- --------
$100,000.............................. $ 12,620 $ 25,254 $ 42,096
300,000............................. 39,280 78,594 132,096
500,000............................. 65,940 131,934 222,096
700,000............................. 92,600 185,274 312,096
Covered compensation includes salary and annual bonus. The calculation
of retirement benefits under the plans generally is based upon average earnings
for the highest five consecutive years of the ten years preceding retirement.
The credited years of service of Messrs. Decker, Beguwala, Brewster and
Halim are 10, 25, [ ] and 7 years, respectively.
Sections 401(a)(17) and 415 of the Code limit the annual benefits which
may be paid from a tax-qualified retirement plan. As permitted by the Employee
Retirement Income Security Act of 1974, Rockwell has established supplemental
plans which authorize the payment out of its respective general funds of any
benefits calculated under provisions of the applicable retirement plan which may
be above the limits under these sections. Pursuant to the Employee Matters
Agreement, Rockwell retained all liabilities accrued as of the close of business
on December 31, 1998 with respect to Company participants under such
supplemental plans of Rockwell.
APPROVAL OF AMENDMENT TO THE COMPANY'S RESTATED CERTIFICATE OF INCORPORATION
(Proposal 2)
The Board of Directors believes that it is in the Company's best
interest to approve a proposal to amend the Company's Restated Certificate of
Incorporation to increase the number of authorized shares of Common Stock from
500,000,000 to 1,000,000,000 and the number of authorized shares of Preferred
Stock from 25,000,000 to 50,000,000. The terms of the additional shares of
Common Stock and Preferred Stock would be the same as the terms of the shares of
Common Stock and Preferred Stock now authorized.
As of November 30, 1999, 196,917,116 of Conexant's 500,000,000
currently authorized shares of Common Stock were issued and outstanding. Of the
remaining authorized shares of Common Stock, approximately 48,650,000 shares
were reserved for issuance in connection with the Company's stock-based
compensation plans and approximately [ ] shares were reserved for issuance upon
conversion of the Company's outstanding 4 1/2% Convertible Subordinated Notes
due May 1, 2006. As of November 30, 1999, none of Conexant's 25,000,000
currently authorized shares of Preferred Stock were issued and outstanding.
On October 29, 1999, Conexant effected a 2-for-1 split of the Company's
Common Stock in the form of a stock dividend following significant increases in
the market price for the Company's Common Stock. The current number of
authorized shares of Common Stock that are neither outstanding nor reserved for
issuance would not be sufficient to enable the Company to effect another 2-for-1
stock split in the form of a stock dividend in the event the Board
20
<PAGE>
determined that it would be appropriate to do so. Although the Company cannot
assure that Conexant's stock price will continue to rise or that the Board would
decide to declare a stock split at any specific price or at all, the Board
believes that the increase in the number of authorized shares will provide
Conexant with the flexibility necessary to maintain a reasonable stock price
through future stock splits (effected in the form of a stock dividend) without
the expense of a special shareowner meeting or delaying approval until the next
Annual Meeting.
In addition, in the future, Conexant may acquire companies as part of
its strategy to broaden its portfolio of product offerings, to augment its
technological capabilities and to expand its geographic markets and distribution
channels. The Company may pay for acquisitions with Conexant stock. The Board
believes that the proposed increase in the number of authorized shares is
desirable to maintain the Company's flexibility in choosing how to pay for
acquisitions and in other corporate actions such as equity offerings to raise
capital and adoption of additional stock-based benefit plans. The Board will
determine the terms of any such issuance of additional shares.
The Company's Restated Certificate of Incorporation authorizes the
Board to establish one or more series of Preferred Stock (of up to an aggregate
of 25,000,000 shares) and to determine, with respect to any series of Preferred
Stock, the terms and rights of such series, including (i) the designation of the
series, (ii) the number of shares of the series, which number the Board may
thereafter (except where otherwise provided in the applicable certificate of
designation) increase or decrease (but not below the number of shares thereof
then outstanding), (iii) whether dividends, if any, will be cumulative or
noncumulative, and, in the case of shares of any series having cumulative
dividend rights, the date or dates or method of determining the date or dates
from which dividends on the shares of such series shall be cumulative, (iv) the
rate of any dividends (or method of determining such dividends) payable to the
holders of the shares of such series, any conditions upon which such dividends
will be paid and the date or dates or the method for determining the date or
dates upon which such dividends will be payable, (v) the redemption rights and
price or prices, if any, for shares of the series, (vi) the terms and amounts of
any sinking fund provided for the purchase or redemption of shares of the
series, (vii) the amounts payable on and the preferences, if any, of shares of
the series in the event of any voluntary or involuntary liquidation, dissolution
or winding up of the affairs of Conexant, (viii) whether the shares of the
series will be convertible or exchangeable into shares of any other class or
series, or any other security, of Conexant or any other corporation, and, if so,
the specification of such other class or series or such other security, the
conversion or exchange price or prices or rate or rates, any adjustments
thereof, the date or dates as of which such shares will be convertible or
exchangeable and all other terms and conditions upon which such conversion or
exchange may be made, (ix) restrictions on the issuance of shares of the same
series or of any other class or series, (x) the voting rights, if any, of the
holders of the shares of the series and (xi) any other relative rights,
preferences and limitations of such series.
The Board believes that its ability to issue one or more series of
Preferred Stock provides Conexant with flexibility in structuring possible
future financings and acquisitions, and in meeting other corporate needs which
might arise. The authorized shares of Preferred Stock, as well as Common Stock,
will be available for issuance without further action by Conexant shareholders,
unless such action is required by applicable law or the rules of any stock
exchange or automated quotation system on which Conexant's securities may be
listed or traded. If the
21
<PAGE>
approval of Conexant's shareholders is not so required, the Board may determine
not to seek shareholder approval.
All or any of the authorized shares of Common Stock and Preferred Stock
may be issued without first offering those shares to the shareowners for
subscription. The issuance of shares otherwise than on a pro rata basis to all
shareowners would reduce the proportionate interest in the Company of each
shareowner.
The Company has not proposed the increase in the authorized number of
shares with the intention of using the additional shares for anti-takeover
purposes, although the Company could theoretically use the additional shares to
make more difficult or to discourage an attempt to acquire control of the
Company.
If this proposal is approved, the first paragraph of Article FOURTH of
the Restated Certificate of Incorporation will be amended to read as follows:
"FOURTH: The total number of shares of all classes of stock
which the Company shall have the authority to issue is
1,050,000,000, of which 50,000,000 shares without par value
are to be of a class designated Preferred Stock and
1,000,000,000 shares of the par value of $1 each are to be of
a class designated Common Stock."
The Company does not have any current plans, agreements or
understandings for stock issuances which in the aggregate would involve the use
of a number of shares that exceeds the amount currently authorized but unissued.
The Board has unanimously adopted resolutions setting forth the
proposed amendment to the Restated Certificate of Incorporation, declaring its
advisability and directing that the proposed amendment be submitted to the
shareowners for their approval at the Annual Meeting. If adopted by the
shareowners, the amendment will become effective upon filing of an appropriate
amendment to the Company's Restated Certificate of Incorporation with the
Secretary of State of the State of Delaware.
The Board of Directors recommends a vote FOR approval of the amendment
to the Company's Restated Certificate of Incorporation. Unless a contrary choice
is specified, proxies solicited by the Board of Directors will be voted FOR
approval of the amendment.
APPROVAL OF AMENDMENT TO THE COMPANY'S 1999 LONG-TERM INCENTIVES PLAN TO
INCREASE AUTHORIZED SHARES (Proposal 3)
The Company's shareowners are being asked to act upon a proposal to
approve the action taken by the Board of Directors on December 9, 1999 amending
the Company's 1999 LTIP to increase the number of shares authorized for issuance
under the 1999 LTIP by 7,500,000 shares, from 20,370,000 shares to an aggregate
of 27,870,000 shares, provided that not more than 8,200,000 shares will be
available for grants of Restricted Stock.
The Board of Directors believes that the attraction and retention of
high quality personnel are essential to the Company's continued growth and
success and that an incentive plan such as
22
<PAGE>
the 1999 LTIP is necessary for the Company to remain competitive in its
compensation practices. A significant number of shares available for issuance
under the 1999 LTIP were used during fiscal 1999 for grants of awards of stock
options and restricted stock to existing and newly hired employees. As of
November 26, 1999, there were approximately 366,500 shares available for
additional grants under the 1999 LTIP. In the absence of an increase in the
authorized shares, after the grant of awards for the remaining authorized
shares, no additional shares will be available for future awards under the 1999
LTIP, except to the extent that shares become available upon termination or
cancellation of outstanding awards. For these reasons, the Board of Directors
has approved an amendment to the 1999 LTIP to increase the number of shares of
Common Stock of the Company available for issuance thereunder by 7,500,000
shares, from 20,370,000 shares to an aggregate of 27,870,000 shares, provided
that no more than 8,200,000 of the aggregate number of shares authorized under
the 1999 LTIP are available for awards of Restricted Stock. On December [ ],
1999, the closing price of the Common Stock on the Nasdaq National Market was $[
].
If this proposal is approved, Section 5(a) of the 1999 LTIP will be
amended to read as follows:
"Subject to the adjustment provisions of Section 9,
the number of shares of Stock with respect to which Awards may
be granted under the Plan shall not exceed 27,870,000 shares
of Stock; provided that no more than 8,200,000 of the shares
of Stock available for Awards shall be available for Awards in
the form of Restricted Stock. No single Participant shall
receive, in any one calendar year, Awards which, over any
three-year period exceed a per-year average of (i) 1,000,000
stock options, whether Non-qualified Stock Options or (in the
case of Employees only) Incentive Stock options and (ii)
200,000 shares (in the case of Employees only) Restricted
Stock."
The following is a summary of the principal terms of the 1999 LTIP.
Although the Company believes that the following description provides a fair
summary of the material terms of the 1999 LTIP, the description is qualified in
its entirety by the specific terms of the 1999 LTIP, a copy of which is
available to any shareowner upon request to the Secretary of the Company.
The purpose of the 1999 LTIP is to provide incentive compensation to
officers, executives and other employees, and prospective employees, contractors
and consultants of the Company and its subsidiaries who become employees,
contractors and consultants and others who perform substantial services to the
Company; to attract and retain individuals of outstanding ability; and to align
the interests of such officers, executives and other employees, and prospective
employees, contractors and consultants with the interests of the Company's
shareowners.
The 1999 LTIP was originally adopted by the Company's Board of
Directors and approved by Rockwell, as the Company's sole shareowner, in October
1998. The 1999 LTIP permits grants to be made from time to time as nonqualified
stock options, incentive stock options and restricted stock.
23
<PAGE>
Administration. The 1999 LTIP is administered by the Compensation
Committee, consisting of two or more members of the Company's Board of Directors
who are not eligible to participate in the 1999 LTIP. In order to meet the
requirements of Section 162(m) of the Code and rules under Section 16 of the
Exchange Act, all grants under the 1999 LTIP are made by those members of the
Compensation Committee who are both "outside directors" as defined for purposes
of Section 162(m) of the Code and regulations thereunder and "non-employee
directors" as defined for purposes of Section 16 of the Exchange Act.
Participation. The persons to whom grants are made under the 1999 LTIP
("1999 LTIP Participants") are selected from time to time by the Compensation
Committee in its sole discretion from among (1) employees of the Company and its
subsidiaries, (2) individuals who have been extended an offer of employment with
the Company or one of its subsidiaries but who have not yet accepted such offer
of employment or (3) individuals who perform, or who have been extended an offer
to perform, consulting, contracting or other services for the Company or one of
its subsidiaries (other than as an employee) who hold or are proposed to hold
positions of significant responsibility with the Company or a subsidiary of the
Company or whose performance or potential contribution, in the judgment of the
Compensation Committee, will benefit the future success of the Company and its
subsidiaries. Any grants to an individual who has been extended an offer of
employment or to perform consulting, contracting or other services is contingent
upon acceptance of the offer.
Shares Subject to 1999 LTIP. The 1999 LTIP currently authorizes the
issuance or transfer of an aggregate of 20,370,000 shares of the Company's
Common Stock, of which not more than 6,000,000 shares are available for grants
of restricted stock. Shares of the Company's Common Stock subject to the
unexercised or undistributed portion of any terminated of forfeited grant under
the 1999 LTIP will be available for further awards.
Stock Options and Restricted Stock. The 1999 LTIP authorizes grants to
1999 LTIP Participants of stock options, which may be either incentive stock
options eligible for special tax treatment under the Code, or nonqualified stock
options, and restricted stock. Incentive stock options and restricted stock may
be granted only to employees (including officers and directors who are
employees) of the Company and its subsidiaries. Nonqualified stock options may
be granted to employees, officers, directors, prospective employees, contractors
and consultants of the Company and its subsidiaries. Under the 1999 LTIP, no
single 1999 LTIP Participant will receive, in any one calendar year, grants
which over any three-year period exceed an annual average of (1) 1,000,000 stock
options, whether nonqualified stock options or incentive stock options, and (2)
200,000 shares of restricted stock.
Under the provisions of the 1999 LTIP authorizing the grant of stock
options, (a) the option price may not be less than the fair market value of the
shares of the Company's Common Stock at the date of grant, (b) the aggregate
fair market value (determined as of the date the option is granted) of the
shares of the Company's Common Stock for which any employee may be granted
incentive stock options which are exercisable for the first time in any calendar
year may not exceed $100,000, (c) stock options generally may not be exercised
prior to one year nor after ten years from the date of grant and (d) at the time
of exercise of a stock option the option price must be paid in full in cash or
in shares of the Company's Common Stock or in a combination of cash and shares
of the Company's Common Stock.
24
<PAGE>
Under the 1999 LTIP, the Compensation Committee may also grant to 1999
LTIP Participants who are employees of the Company or its subsidiaries shares of
the Company's Common Stock subject to restrictions on transfer and such other
restrictions on incidents of ownership as the Compensation Committee may
determine ("Restricted Stock"). During the restricted period, shares of
Restricted Stock have all the attributes of outstanding shares of the Company's
Common Stock, except that the Compensation Committee may provide at the time of
the grant that any dividends or other distributions paid on such restricted
stock while subject to such restrictions will be accumulated or reinvested in
the Company's Common Stock and held subject to the same restrictions as the
Restricted Stock and such other terms and conditions as the Compensation
Committee may determine.
All grants made under the 1999 LTIP are evidenced by an agreement
between the Company and the 1999 LTIP Participant (the "Award Agreement")
setting forth the terms and conditions applicable to the grants, as determined
by the Compensation Committee consistent with the terms of the 1999 LTIP. Award
Agreements include, among other things, a provision describing the treatment of
grants in the event of the retirement, disability, death or other termination of
a 1999 LTIP Participant's employment with the Company or any of the Company's
subsidiaries, failure of a prospective employee to become an employee of the
Company or one of its subsidiaries, or the termination of the provision of
contracting, consulting or other services by a 1999 LTIP Participant, including
terms relating to the vesting, time for exercise, forfeiture or cancellation of
a grant under such circumstances. Award Agreements for employees also include a
provision stating that in the event the 1999 LTIP Participant's employment is
terminated for cause, all grants made to such participant will immediately
terminate and be forfeited.
The Compensation Committee may condition, or provide for the
acceleration of, the exercisability or vesting of any grant made under the 1999
LTIP upon such prerequisites as the Compensation Committee, in its sole
discretion, deems appropriate, including achievement of specific performance
objectives, with respect to one or more measures of the performance of the
Company or its subsidiaries, including earnings per share, revenue, net income,
stock price and total shareowner return.
Under the 1999 LTIP, stock options and restricted stock may not be
granted after December 31, 2008.
Award Grants. As of November 30, 1999, options to purchase
approximately 17,800,000 shares of the Company's Common Stock (including
options for approximately 3,000,000 shares granted to the Named Executive
Officers) and 2,200,000 shares of Restricted Stock were outstanding under the
1999 LTIP.
In January 1999, the Company made one-time grants of 490,000 shares of
Restricted Stock to certain of the Company's technical and non-executive
managerial staff as a retention bonus. In addition, the Company made grants of
1,610,000 shares of Restricted Stock in lieu of payments from the Company's cash
incentive plans in fiscal 1999.
The restrictions on outstanding shares of Restricted Stock generally
expire, and the awards become fully vested, within four years from the date of
grant. As of October 1, 1999, vesting of most of the Restricted Stock grants
made in fiscal 1999, including the shares issued to
25
<PAGE>
the Named Executive Officers, was accelerated based upon achievement of certain
performance factors determined by the Board of Directors and measured for the
third and fourth quarters of fiscal 1999.
Tax Matters. The following is a brief summary of the material Federal
income tax consequences of benefits under the 1999 LTIP under present law and
regulations:
(a) Incentive Stock Options. The grant of an incentive stock
option will not result in any immediate tax consequences to the Company
or the optionee. An optionee will not realize taxable income, and the
Company will not be entitled to any deduction, upon the timely exercise
of an incentive stock option, but the excess of the fair market value
of the shares of the Company's Common Stock acquired over the option
exercise price will be includable in the optionee's "alternative
minimum taxable income" for purposes of the alternative minimum tax. If
the optionee does not dispose of the shares of the Company's Common
Stock acquired within one year after their receipt (and within two
years after the option was granted), gain or loss realized on the
subsequent disposition of the shares of the Company's Common Stock will
be treated as long-term capital gain or loss. Capital losses of
individuals are deductible only against capital gains and a limited
amount of ordinary income. In the event of an earlier disposition, the
optionee will realize ordinary income in an amount equal to the lesser
of (1) the excess of the fair market value of the shares of the
Company's Common Stock on the date of exercise over the option exercise
price or (2) if the disposition is a taxable sale or exchange, the
amount of any gain realized. Upon such a disqualifying disposition, the
Company will be entitled to a deduction in the same amount and at the
same time as the optionee realizes such ordinary income.
(b) Nonqualified Stock Options. The grant of a nonqualified
stock option will not result in any immediate tax consequences to the
Company or the optionee. Upon the exercise of a nonqualified stock
option, the optionee will realize ordinary income, and the Company will
be entitled to a deduction, equal to the difference between the option
exercise price and the fair market value of the shares of the Company's
Common Stock acquired at the time of exercise.
(c) Restricted Stock. An employee normally will not realize
taxable income in connection with an award of Restricted Stock, and the
Company will not be entitled to a deduction, until the termination of
the restrictions. Upon such termination, the employee will realize
ordinary income in an amount equal to the fair market value of the
shares of the Company's Common Stock at that time, plus the amount of
the dividends and interest thereon to which the employee then becomes
entitled. However, an employee may elect to realize taxable ordinary
income in the year the restricted stock is awarded in an amount equal
to its fair market value at that time, determined without regard to the
restrictions. The Company will be entitled to a deduction in the same
amount and at the same time as the employee realizes income.
Change of Control Benefits. In order to maintain the rights of 1999
LTIP Participants in the event of a "change of control" of the Company (as
defined in the Company's By-Laws), the 1999 LTIP, as originally adopted,
provided that upon the occurrence of such a change, all outstanding stock
options would become fully exercisable whether or not otherwise then
26
<PAGE>
exercisable, and the restrictions on all shares of the Company's Common Stock
granted as restricted stock would lapse. On December 9, 1999, when it approved
the amendment to increase the authorized shares under the 1999 LTIP to be voted
upon at the Annual Meeting, the Board also approved an amendment to the 1999
LTIP to make the change of control provision therein inapplicable to future
awards granted under the 1999 LTIP.
Amendment, Suspension or Termination of the 1999 LTIP. The Board of
Directors of the Company may at any time amend, suspend or discontinue the 1999
LTIP and the Compensation Committee may at any time alter or amend Award
Agreements made thereunder to the extent permitted by law, provided that no such
alteration or amendment will impair the rights of any recipient of grants
without such recipient's consent. In the event of any change in the outstanding
shares of the Company's Common Stock by reason of a stock dividend, stock split,
recapitalization, merger, consolidation, reorganization or similar corporate
change or an extraordinary dividend, the number of shares of the Company's
Common Stock then remaining subject to the 1999 LTIP and the maximum number of
shares that may be issued to a 1999 LTIP Participant, including those that are
covered by outstanding grants, will (i) in the event of an increase in the
number of outstanding shares of the Company's Common Stock, be proportionately
increased and the price for each share then covered by an outstanding grant will
be proportionately reduced, and (ii) in the event of a reduction in the number
of outstanding shares of the Company's Common Stock, be proportionately reduced
and the price for each share then covered by an outstanding grant will be
proportionately increased. The Compensation Committee may make any further
adjustments as it deems necessary to ensure equitable treatment of any holder of
a grant under the 1999 LTIP as the result of any transaction affecting the
securities subject to the 1999 LTIP.
Grants under the 1999 LTIP to eligible officers (including the Named
Executive Officers), other employees, contractors and consultants, are subject
to the discretion of the Compensation Committee. As of the date of this Proxy
Statement, there has been no determination by the Compensation Committee with
respect to future awards under the 1999 LTIP. Accordingly, future awards are not
determinable. The following table sets forth information with respect to options
granted under the 1999 LTIP during the last fiscal year to (i) the Named
Executive Officers, (ii) all executive officers (including the Named Executive
Officers) as a group and (iii) all employees (other than executive officers) as
a group. As of the date of this Proxy Statement, there are approximately [ ]
participants in the 1999 LTIP.
<TABLE>
Number of
Shares Underlying Options
Name and Position With the Company Granted (1) Dollar Value
- ----------------------------------------------------------- ------------------------- ------------
<S> <C> <C>
Dwight W. Decker...........................................
Chairman of the Board and Chief Executive Officer
Moiz M. Beguwala...........................................
Senior Vice President and General Manager --
Wireless Communications
Lewis C. Brewster..........................................
Senior Vice President, Worldwide Sales
Raouf Y. Halim.............................................
Senior Vice President and General Manager --
Network Access
Balakrishnan S. Iyer.......................................
Senior Vice President and Chief Financial Officer
Executive Officers as a Group..............................
Non-Executive Directors as a Group (2).....................
All Employees (other than Executive Officers) as a Group...
27
<PAGE>
- -----------------------------------------------
<FN>
(1) All options granted at fair market value as of date of grant.
(2) Directors who are not also employees of the Company are not eligible for
awards under the 1999 LTIP, but participate in the Directors Plan.
</FN>
</TABLE>
In addition to the 1999 LTIP, the Company has three other stock-based
compensation plans: the Conexant Systems, Inc. 1998 Stock Option Plan (the "1998
Plan"); the Directors Plan; and the Conexant Systems, Inc. 2000 Non-Qualified
Stock Plan (the "2000 Plan"). As of November 30, 1999, options to purchase an
aggregate of approximately 14,831,171 shares of the Company's Common Stock were
reserved for issuance under the 1998 Plan. No further options may be granted
under the 1998 Plan.
An aggregate of 630,000 shares of the Company's Common Stock have been
authorized for issuance under the Directors Plan. As of November 30, 1999,
options for an aggregate of 320,000 shares of the Company's Common Stock were
outstanding under the Directors Plan and 12,760 shares of Company Common Stock
were issued under the Directors Plan, including 6,380 shares issued as
restricted stock and 6,380 shares issued as non-forfeitable stock.
On November 5, 1999, the Board approved the establishment of the 2000
Plan under which the Company may grant to its officers and other employees
awards covering a maximum of 15,000,000 shares of Conexant Common Stock which
may be (1) non-qualified options to purchase shares of Conexant Common Stock or
(2) shares of Restricted Stock for a maximum of 3,000,000 shares. The 2000 Plan
is intended to be "broadly based" under applicable NASD Rules. The 2000 Plan is
substantially similar to the 1999 Plan, except that it does not provide for
grants of incentive stocks options and does not include a change of control
provision. As of November 30, 1999, 461,283 shares of Company Common Stock were
issued under the 2000 Plan.
The Board of Directors recommends a vote FOR approval of this amendment
to the Company's 1999 LTIP. Unless a contrary choice is specified, proxies
solicited by the Board of Directors will be voted FOR approval of the amendment.
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS (Proposal 4)
Deloitte & Touche LLP have been the Company's independent auditors
since 1998 and, at the recommendation of the Audit Committee of the Board, have
been selected by the Board of Directors as the Company's independent auditors
for the fiscal year ending September 30, 2000.
Before the Audit Committee recommended to the full Board the
appointment of Deloitte & Touche LLP, it carefully considered the qualifications
of that firm, including its performance for Conexant and Rockwell in prior years
and its reputation for integrity and for competence in the fields of accounting
and auditing.
28
<PAGE>
A representative of Deloitte & Touche LLP is expected to be present at
the Annual Meeting and will have an opportunity to make a statement if he or she
so desires. The representative will also be available to respond to appropriate
questions from shareowners.
The Board of Directors recommends a vote FOR ratification of the
appointment of Deloitte & Touche LLP as independent auditors for the Company for
the current year. Unless a contrary choice is specified, proxies solicited by
the Board of Directors will be voted FOR ratification of the appointment.
29
<PAGE>
OTHER MATTERS
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than 10% of
a registered class of the Company's equity securities, to file reports of
ownership of, and transactions in, the Company's securities with the Securities
and Exchange Commission and the NASDAQ Stock Market. Such directors, executive
officers and 10% shareowners are also required to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely on a review of the copies of such forms received by it,
and on written representations from certain reporting persons, the Company
believes that during fiscal 1999, all Section 16(a) filing requirements
applicable to its directors, officers and 10% shareowners were complied with.
2001 Shareowner Proposals or Nominations
Shareowners of the Company may submit proposals that they believe
should be voted upon at the Company's Annual Meetings of Shareowners or nominate
persons for election to the Board of Directors. Pursuant to Rule 14a-8 under the
Exchange Act, some shareowner proposals may be eligible for inclusion in the
Company's Proxy Statement for the Company's 2001 Annual Meeting of Shareowners.
Any such shareowner proposals must be submitted in writing to the Secretary of
the Company no later than September 5, 2000. The submission of a shareowner
proposal does not guarantee that it will be included in the Company's Proxy
Statement.
In addition, under the Company's By-laws, a shareowner proposal or
nomination must be submitted in writing to the Secretary of the Company for the
2001 Annual Meeting of Shareowners not less than 90 days nor more than 120 days
prior to the anniversary of the 2000 Annual Meeting, unless the date of the 2001
Annual Meeting of Shareowners is advanced by more than 30 days or delayed (other
than as a result of adjournment) by more than 60 days from the anniversary of
the 2000 Annual Meeting. For the Company's 2001 Annual Meeting, this means that
any such proposal or nomination must be submitted no earlier than October 14,
2000 and no later than November 13, 2000. If the date of the 2001 Annual Meeting
is advanced by more than 30 days or delayed (other than as a result of
adjournment) by more than 60 days from the anniversary of the 2000 Annual
Meeting, the shareowner must submit any such proposal or nomination no earlier
than the close of business on the 120th day prior to the 2001 Annual Meeting and
no later than the close of business on the later of the 90th day prior to the
2001 Annual Meeting or the 10th day following the day on which public
announcement of the date of such meeting is first made. The shareowner's
submission must include certain specified information concerning the proposal or
nominee, as the case may be, and information as to the shareowner's ownership of
Common Stock of the Company. Proposals or nominations not meeting these
requirements will not be entertained at the 2001 Annual Meeting. If the
shareowner does not also comply with the requirements of Rule 14a-4 under the
Exchange Act, the Company may exercise discretionary voting authority under
proxies it solicits to vote in
30
<PAGE>
accordance with its best judgment on any such proposal or nomination submitted
by a shareowner. Shareowners should contact the Secretary of the Company in
writing at 4311 Jamboree Road, Newport Beach, California 92660-3095 to make any
submission or to obtain additional information as to the proper form and content
of submissions.
Annual Report to Shareowners and Financial Statements
Copies of the Company's Annual Report on Form 10-K for the fiscal year
ended September 30, 1999, including financial statements (the "Form 10-K")
(without exhibits), and the Company's 1999 Annual Report to Shareowners are
being mailed to the Company's shareowners together with this Proxy Statement.
Additional copies of the Form 10-K will be furnished to interested shareowners,
without charge, upon written request. Exhibits to the Form 10-K will be
furnished upon written request and payment of a fee of ten cents per page
covering the Company's costs. Written requests should be directed to the Company
at 4311 Jamboree Road, Newport Beach, California 92660-3095, Attention: Investor
Relations. The Company's 1999 Annual Report to Shareowners, the Form 10-K and
this Proxy Statement are also available on Conexant's Investor Relations Web
site.
Other Matters
At the date hereof, there are no other matters that the Board of
Directors intends to present, or has reason to believe others will present, at
the Annual Meeting. If other matters come before the Annual Meeting, the persons
named in the accompanying form of proxy will vote in accordance with their best
judgment with respect to such matters.
Expenses of Solicitation
The cost of the solicitation of proxies will be borne by the Company.
In addition to the use of the mails, proxies may be solicited personally, or by
telephone or by telegraph, by a few regular employees of the Company without
additional compensation. The Company has engaged ChaseMellon Consulting
Services, L.L.C. to assist in the solicitation of proxies for a base fee of
$10,000, plus all reasonable out-of-pocket expenses. The Company will also
reimburse brokers and other persons holding stock in their names, or in the
names of nominees, for their expenses for sending proxy materials to principals
and obtaining their proxies.
Dated: January 3, 2000
31
<PAGE>
Appendix 1
----------
CONEXANT SYSTEMS, INC.
1999 LONG-TERM INCENTIVES
PLAN
(As amended through April 20, 1999)
-----------------------------------
Section 1: Purpose
- -------------------
The purpose of the Plan is to provide incentive compensation
to officers, executives and other employees, and prospective employees,
contractors and consultants of the Corporation and its Subsidiaries; to attract
and retain individuals of outstanding ability; and to align the interests of
such officers, executives and other employees, and prospective employees,
contractors and consultants with the interests of the Corporation's shareowners.
Section 2: Definitions
- -----------------------
The following terms, as used herein, shall have the meaning
specified:
"Award" means an award granted pursuant to Section 4.
"Award Agreement" means an agreement described in Section 6
entered into between the Corporation and a Participant, setting forth the terms
and conditions applicable to the Award granted to the Participant.
"Board of Directors" means the Board of Directors of the
Corporation as it may be comprised from time to time.
"Cause" means (i) a felony conviction of a Participant; (ii)
the commission by a Participant of an act of fraud or embezzlement against the
Corporation and/or a Subsidiary; (iii) willful misconduct or gross negligence
materially detrimental to the Corporation and/or a Subsidiary; (iv) the
Participant's continued failure to implement reasonable requests or directions
received in the course of his employment; (v) the Participant's wrongful
dissemination or use of confidential or proprietary information; or (vi) the
intentional and habitual neglect by the Participant of his duties to the
Corporation and/or a Subsidiary.
<PAGE>
"Change of Control" means Change of Control as defined in
Section 10.
"Code" means the Internal Revenue Code of 1986, and any
successor statute, as it or they may be amended from time to
time.
"Committee" means the Compensation and Management Development
Committee of the Board of Directors as it may be comprised from time to time or
such other Committee of the Board of Directors designated by the Board of
Directors to administer the Plan.
"Corporation" means Conexant Systems, Inc., a Delaware
corporation, and any successor corporation.
"Disability" means permanent and total disability within the
meaning of the Corporation's long-term disability plan, as it may be amended
from time to time, or, if there is no such plan, as determined by the Committee.
"Employee" means officers, executives and other employees of
the Corporation or a Subsidiary, but excludes directors who are not also
officers or employees of the Corporation.
"Exchange Act" means the Securities Exchange Act of 1934, and
any successor statute, as it may be amended from time to time.
"Fair Market Value" means the closing price of the Stock as
reported in the NASDAQ reporting system on the relevant date, or if no sale of
the Stock is reported for such date, the next preceding day for which there is a
reported sale.
"Incentive Stock Option" means an option to purchase Stock
that is granted pursuant to Section 4(b) or pursuant to any other Plan of the
Corporation or its Subsidiaries that complies with Code section 422.
"Non-Employee" means an individual who (1) has been extended
an offer of employment with the Corporation or a Subsidiary but who has not yet
accepted said offer and become an Employee or (2) performs consulting,
contracting or other services for the Corporation or a Subsidiary other than in
a capacity as an Employee or who has been extended
2
<PAGE>
an offer to perform consulting, contracting or other services for the
Corporation or a Subsidiary.
"Participant" means any Employee or Non-Employee who has been
granted an Award pursuant to this Plan.
"Retirement" means retirement at or after age 62 or, with the
advance consent of the Committee, before age 62 but at or after age 55.
"Stock" means shares of common stock of the Corporation, or
any security of the Corporation issued in substitution, exchange or lieu
thereof.
"Subsidiary" means any corporation in which the Corporation,
directly or indirectly, controls 50% or more of the total combined voting power
of all classes of such corporation's stock.
"Ten-percent Shareowner" means any person who owns, directly
or indirectly, on the relevant date securities having ten percent (10%) or more
of the combined voting power of all classes of the Corporation's securities or
of its parent or subsidiaries. For purposes of applying the foregoing ten
percent (10%) limitation, the rules of Code section 425(d) shall apply.
Section 3: Eligibility
- -----------------------
Persons eligible for Awards shall consist of Employees and
Non-Employees who hold or are proposed to hold positions of significant
responsibility with the Corporation and/or a Subsidiary or whose performance or
potential contribution, in the judgment of the Committee, will benefit the
future success of the Corporation and/or a Subsidiary. Notwithstanding the
foregoing, only Employees will be eligible for Awards of Incentive Stock Options
and/or Restricted Stock under this Plan.
Section 4: Awards
- ------------------
The Committee may grant any of the following types of Awards,
either singly, in tandem or in combination with other types of Awards, as the
Committee may in its sole discretion determine:
a. Non-qualified Stock Options. A Non-qualified Stock Option is
an Award to an Employee or Non-Employee
3
<PAGE>
in the form of an option to purchase a specific number of
shares of Stock exercisable at such time or times, and during
such specified time not to exceed ten (10) years, as the
Committee may determine, at a price not less than 100% of the
Fair Market Value of the Stock on the date the option is
granted.
(i) The purchase price of the Stock subject to the option may
be paid in cash. At the discretion of the Committee, the
purchase price may also be paid by the tender of Stock
(the value of such Stock shall be its Fair Market Value on
the date of exercise), or through a combination of Stock
and cash, or through such other means as the Committee
determines are consistent with the Plan's purpose and
applicable law. No fractional shares of Stock will be
issued or accepted.
(ii) Without limiting the foregoing, the Committee may permit
Participants, either on a selective or aggregate basis, to
simultaneously exercise options and sell the shares of
Stock thereby acquired, pursuant to a brokerage or similar
arrangement approved in advance by the Committee, and use
the proceeds from such sale as payment of the purchase
price of such Stock and any applicable withholding taxes.
b. Incentive Stock Options. An Incentive Stock Option is an Award
to an Employee in the form of an option to purchase a
specified number of shares of Stock that complies with the
requirements of Code Section 422, which option shall, subject
to the following provisions, be exercisable at such time or
times, and during such specified time, as the Committee may
determine.
(i) The aggregate Fair Market Value (determined at the time of
the grant of the Award) of the shares of Stock subject to
Incentive Stock Options which are exercisable by one
person for the first time during a particular calendar
year shall not exceed $100,000.
(ii) No Incentive Stock Option may be granted under this Plan
on or after the tenth anniversary of
4
<PAGE>
the date this Plan is adopted, or the date this Plan is
approved by shareowners, whichever is earlier.
(iii) No Incentive Stock Option may be exercisable more than:
(a) in the case of an Employee who is not a
Ten-Percent Shareowner on the date that the
option is granted, ten (10) years after the date
the option is granted, and
(b) in the case of an Employee who is a Ten-Percent
Shareowner on the date the option is granted,
five (5) years after the date the option is
granted.
(iv) The exercise price of any Incentive Stock Option shall not
be less than:
(a) in the case of an Employee who is not a
Ten-Percent Shareowner on the date that the
option is granted, the Fair Market Value of the
Stock subject to the option on such date; and
(b) in the case of an Employee who is a Ten-Percent
Shareowner on the date that the option is
granted, 110% of the Fair Market Value of the
Stock subject to the option on such date.
(v) The Committee may provide that the exercise price of an
Incentive Stock Option may be paid by one or more of the
methods available for paying the exercise price of a
Non-qualified Stock Option.
c. Restricted Stock. Restricted Stock is an Award of Stock that
is issued to an Employee subject to restrictions on transfer
and such other restrictions on incidents of ownership as the
Committee may determine. Subject to such restrictions, the
Participant as owner of such shares of Restricted Stock shall
have the rights of the holder thereof, except that the
Committee may provide at the time of the Award that any
dividends or other distributions paid on such Stock while
5
<PAGE>
subject to such restrictions shall be accumulated or
reinvested in Stock and held subject to the same restrictions
as the Restricted Stock and such other terms and conditions as
the Committee shall determine. A certificate for the shares of
Restricted Stock, which certificate shall be registered in the
name of the Participant, shall bear an appropriate restrictive
legend and shall be subject to appropriate stop-transfer
orders; provided, however, that the certificates representing
shares of Restricted Stock shall be held in custody by the
Corporation until the restrictions relating thereto otherwise
lapse, and the Participant shall deliver to the Corporation a
stock power endorsed in blank relating to the Restricted
Stock.
Section 5: Shares of Stock Available Under Plan
- ------------------------------------------------
a. Subject to the adjustment provisions of Section 9, the number
of shares of Stock with respect to which Awards may be granted
under the Plan shall not exceed 10,185,000 shares of Stock;
provided that no more than 3,000,000 of the shares of Stock
available for Awards shall be available for Awards in the form
of Restricted Stock. No single Participant shall receive, in
any one calendar year, Awards which, over any three-year
period exceed a per-year average of (i) 500,000 stock options,
whether Non-qualified Stock Options or (in the case of
Employees only) Incentive Stock Options and (ii) 100,000
shares of (in the case of Employees only) Restricted Stock.
b. Shares of Stock with respect to the unexercised or
undistributed portion of any terminated or forfeited Award
shall be available for further Awards in addition to those
shares of Stock available under Section 5(a). Additional rules
for determining the number of shares of Stock granted under
the Plan may be adopted by the Committee, as it deems
necessary and appropriate.
c. The Stock that may be issued pursuant to an Award under the
Plan may be treasury or authorized but unissued Stock, or
Stock may be acquired, subsequently or in anticipation of the
transaction,
6
<PAGE>
in the open market to satisfy the requirements of the Plan.
Section 6: Award Agreements
- ----------------------------
Each Award under the Plan shall be evidenced by an Award
Agreement. Each Award Agreement shall set forth the number of shares of Stock
subject to the Award and shall include the terms set forth below and such other
terms and conditions applicable to the Award, as determined by the Committee,
not inconsistent with the terms of the Plan. Notwithstanding the foregoing, the
provisions of subsection (b) below may be modified to the extent deemed
advisable by the Committee in Award Agreements pertaining to Non-Employees
providing consulting, contracting or other services to the Corporation or a
Subsidiary. In the event of any conflict between an Award Agreement and this
Plan, the terms of the Plan shall govern.
a. Assignability. A provision setting forth the conditions
pursuant to which an Award may be assigned or transferred.
b. Termination of Employment.
(i) A provision describing the treatment of an Award in the
event of the Retirement, Disability, death or other
termination of a Participant's employment with the
Corporation or a Subsidiary, including but not limited to
terms relating to the vesting, time for exercise,
forfeiture or cancellation of an Award in such
circumstances. Participants who terminate employment due
to Retirement, Disability, or death prior to the
satisfaction of applicable conditions and restrictions
associated with their Award(s) may be entitled to a
prorated Award(s) as and to the extent determined by the
Committee.
(ii) A provision that for purposes of the Plan, (i) a transfer
of an Employee from the Corporation to a Subsidiary or
affiliate of the Corporation, whether or not incorporated,
or visa versa, or from one Subsidiary or affiliate of the
Corporation to another, and (ii) a leave of absence, duly
authorized in writing by the
7
<PAGE>
Corporation, shall not be deemed a termination of
employment.
(iii) A provision stating that in the event the Participant's
employment is terminated for Cause, anything else in the
Plan or the Award Agreement to the contrary
notwithstanding, all Awards granted to such Participant
shall immediately terminate and be forfeited.
c. Rights as a Shareowner. A provision stating that a Participant
shall have no rights as a shareowner with respect to any Stock
covered by an Award until the date the Participant becomes the
holder of record thereof. Except as provided in Section 9, no
adjustment shall be made for dividends or other rights, unless
the Award Agreement specifically requires such adjustment.
d. Withholding. A provision requiring the withholding of
applicable taxes required by law from all amounts paid in
satisfaction of an Award. A Participant may satisfy the
withholding obligation by paying the amount of any taxes in
cash or, with the approval of the Committee, shares of Stock
may be deducted from the payment or, in accordance with
Section 4(a)(ii), sold to satisfy the obligation in full or in
part.
e. Treatment of Options. Each Award of an option shall state
whether it will or will not be treated as an Incentive Stock
Option.
f. Performance Conditions. The Committee may condition, or
provide for the acceleration of, the exercisability or vesting
of any Award upon such prerequisites as it, in its sole
discretion, deems appropriate, including, but not limited to,
achievement of specific objectives, whether absolute or
relative to a peer group or index designated by the Committee,
with respect to one or more measures of the performance of the
Corporation and/or one or more Subsidiaries, including
earnings per share, revenue, net income (whether before or
after extraordinary items), net operating income, earnings
before interest, taxes, depreciation and amortization
(EBIDTA), stock price and total shareholder return. Such
performance objectives
8
<PAGE>
shall be determined in accordance with the Corporation's
audited financial statements, to the extent applicable, and so
that a third party having knowledge of the relevant facts
could determine whether such performance objective is met.
Section 7: Amendment and Termination
- -------------------------------------
The Board of Directors may at any time amend, suspend or
discontinue the Plan, in whole or in part, and the Committee may at any time
alter or amend any or all Award Agreements under the Plan to the extent
permitted by law, but no such alteration or amendment shall impair the rights of
any holder of an Award without the holder's consent. Notwithstanding the
foregoing, no such action may, without approval of the shareowners of the
Corporation, increase the number of shares of Stock with respect to which Awards
may be granted or reduce the exercise price of any Option below Fair Market
Value on the date of grant.
Section 8: Administration
- --------------------------
a. The Committee shall have full and complete authority, in its
sole and absolute discretion, (i) to exercise all of the
powers granted to it under the Plan, (ii) to construe,
interpret and implement the Plan and any related document,
(iii) to prescribe, amend and rescind rules relating to the
Plan, (iv) to make all determinations necessary or advisable
in administering the Plan, and (v) to correct any defect,
supply any omission and reconcile any inconsistency in the
Plan. The actions and determinations of the Committee on all
matters relating to the Plan and any Awards will be final and
conclusive. The Committee's determinations under the Plan need
not be uniform and may be made by it selectively among
Employees and Non-Employees who receive, or who are eligible
to receive, Awards under the Plan, whether or not such persons
are similarly situated.
b. The Committee and others to whom the Committee has delegated
such duties shall keep a record of all their proceedings and
actions and shall maintain all such books of account, records
and other data as shall be necessary for the proper
administration of the Plan.
9
<PAGE>
c. The Corporation shall pay all reasonable expenses of
administering the Plan, including, but not limited to, the
payment of professional fees.
d. The Committee may appoint such accountants, counsel, and other
experts as it deems necessary or desirable in connection with
the administration of the Plan. The Committee may delegate to
the officers or employees of the Corporation and its
Subsidiaries the authority to execute and deliver such
instruments and documents, to do all such acts and things, and
to take all such other steps deemed necessary, advisable or
convenient for the effective administration of the Plan in
accordance with its terms and purpose, except that the
Committee may not delegate any discretionary authority with
respect to substantive decisions or functions regarding the
Plan or Awards thereunder as these relate to executive
officers (within the meaning of Rule 3b-7 under the Exchange
Act, or any successor provision) of the Corporation.
Section 9: Adjustment Provisions
- ---------------------------------
a. In the event of any change in the outstanding shares of Stock
by reason of a stock dividend or split, recapitalization,
merger or consolidation (whether or not the Corporation is a
surviving corporation), reorganization, combination or
exchange of shares or other similar corporate changes or an
extraordinary dividend payback in cash or property, the number
of shares of Stock (or other securities) then remaining
subject to this Plan, and the maximum number of shares that
may be issued to any single Participant pursuant to this Plan,
including those that are then covered by outstanding Awards,
shall (i) in the event of an increase in the number of
outstanding shares, be proportionately increased and the price
for each share then covered by an outstanding Award shall be
proportionately reduced, and (ii) in the event of a reduction
in the number of outstanding shares, be proportionately
reduced and the price for each share then covered by an
outstanding Award shall be proportionately increased.
b. The Committee shall make any further adjustments as it deems
necessary to ensure equitable treatment of
10
<PAGE>
any holder of an Award as the result of any transaction
affecting the securities subject to the Plan not described in
(a), or as is required or authorized under the terms of any
applicable Award Agreement.
c. The existence of the Plan and the Awards granted hereunder
shall not affect or restrict in any way the right or power of
the Board of Directors or the shareholders of the Corporation
to make or authorize any adjustment, recapitalization,
reorganization or other capital structure of its business, any
merger or consolidation of the Corporation, any issue of
bonds, debentures, preferred or prior preference stock ahead
of or affecting the Stock or the rights thereof, the
dissolution or liquidation of the Corporation or any sale or
transfer of all or any part of its assets or business, or any
other corporate act or proceeding.
Section 10: Change of Control
- ------------------------------
a. In the event of a Change of Control shall occur, then, (i) all
Awards granted as Non-qualified Stock Options or Incentive
Stock Options then outstanding pursuant to the Plan shall
forthwith become fully exercisable whether or not otherwise
then exercisable and (ii) the restrictions on all Stock
granted as Restricted Stock under the Plan shall forthwith
lapse.
b. Change of Control means:
(i) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act) (a Person) of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange
Act) of 20% or more of either (A) the then outstanding
shares of Common Stock of Conexant (the Outstanding
Conexant Common Stock) or (B) the combined voting power of
the then outstanding voting securities of Conexant
entitled to vote generally in the election of directors
(the Outstanding Conexant Voting Securities); provided,
however, that for purposes of this subparagraph (i), the
11
<PAGE>
following acquisitions shall not constitute a Change of
Control: (w) any acquisition directly from Conexant, (x)
any acquisition by Conexant, (y) any acquisition by any
employee benefit plan (or related trust) sponsored or
maintained by Conexant, Rockwell International Corporation
(Rockwell) or any corporation controlled by Conexant or
Rockwell or (z) any acquisition pursuant to a transaction
which complies with clauses (A), (B) and (C) of subsection
(iii) of this Section 10.b.; or
(ii) Individuals who, as of the date of the pro rata
distribution of all the outstanding Stock by Rockwell to
its shareowners (Conexant Distribution Date), constitute
the Board of Directors (the Incumbent Board) cease for any
reason to constitute at least a majority of the Board of
Directors; provided, however, that any individual becoming
a director subsequent to that date whose election, or
nomination for election by Conexant's shareowners, was
approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with
respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board of
Directors; or
(iii) Consummation of a reorganization, merger or consolidation
or sale or other disposition of all or substantially all
of the assets of Conexant or the acquisition of assets of
another entity (a Corporate Transaction), in each case,
unless, following such Corporate Transaction, (A) all or
substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding
Conexant Common Stock and Outstanding Conexant Voting
Securities immediately prior to such Corporate Transaction
beneficially own, directly or indirectly, more
12
<PAGE>
than 60% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally
in the election of directors, as the case may be, of the
corporation resulting from such Corporate Transaction
(including, without limitation, a corporation which as a
result of such transaction owns the Corporation or all or
substantially all of the Corporation's assets either
directly or through one or more subsidiaries) in
substantially the same proportions as their ownership,
immediately prior to such Corporate Transaction of the
Outstanding Conexant Common Stock and Outstanding Conexant
Voting Securities, as the case may be, (B) no Person
(excluding any employee benefit plan (or related trust) of
the Corporation or such corporation resulting from such
Corporate Transaction) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then
outstanding shares of common stock of the corporation
resulting from such Corporate Transaction or the combined
voting power of the then outstanding voting securities of
such corporation except to the extent that such ownership
existed prior to the Corporate Transaction and (C) at
least a majority of the members of the board of directors
of the corporation resulting from such Corporate
Transaction were members of the Incumbent Board at the
time of the execution of the initial agreement, or of the
action of the Board of Directors, providing for such
Corporate Transaction; or
(iv) Approval by Conexant's shareowners of a complete
liquidation or dissolution of Conexant.
Section 11: Miscellaneous
- --------------------------
a. Other Payments or Awards. Nothing contained in the Plan shall
be deemed in any way to limit or restrict the Corporation or a
Subsidiary from making any award or payment to any person
under any other plan, arrangement or understanding, whether
now existing or hereafter in effect.
13
<PAGE>
b. Payments to Other Persons. If payments are legally required to
be made to any person other than the person to whom any amount
is made available under the Plan, payments shall be made
accordingly. Any such payment shall be a complete discharge of
the liability hereunder.
c. Unfunded Plan. The Plan shall be unfunded. No provision of
the Plan or any Award Agreement shall require the Corporation
or a Subsidiary, for the purpose of satisfying any obligations
under the Plan, to purchase assets or place any assets in a
trust or other entity to which contributions are made or
otherwise to segregate any assets, nor shall the Corporation
or a Subsidiary maintain separate bank accounts, books,
records or other evidence of the existence of a segregated or
separately maintained or administered fund for such purposes.
Participants shall have no rights under the Plan other than as
unsecured general creditors of the Corporation or a
Subsidiary, except that insofar as they may have become
entitled to payment of additional compensation by performance
of services, they shall have the same rights as other
employees under generally applicable law.
d. Limits of Liability. Any liability of the Corporation or a
Subsidiary to any Participant with respect to an Award shall
be based solely upon contractual obligations created by the
Plan and the Award Agreement. Neither the Corporation or its
Subsidiaries, nor any member of the Board of Directors or of
the Committee, nor any other person participating in any
determination of any question under the Plan, or in the
interpretation, administration or application of the Plan,
shall have any liability to any party for any action taken, or
not taken, in good faith under the Plan.
e. Rights of Employees and Non-Employees. Status as an eligible
Employee or Non-Employee shall not be construed as a
commitment that any Award shall be made under this Plan to
such eligible Employee or Non-Employee or to eligible
Employees or Non-Employees generally. Nothing contained in
this Plan or in any Award Agreement shall confer upon any
Employee or Non-Employee any right to continue in the employ
or other service of or, in the case
14
<PAGE>
of prospective employees, become employed by the Corporation
or a Subsidiary or constitute any contract or limit in any way
the right of the Corporation or a Subsidiary to change such
person's compensation or other benefits or, in the case of
prospective employees, prospective compensation or benefits or
to terminate the employment or other service or, in the case
of prospective employees, withdraw an offer of employment of
such person with or without Cause.
f. Section Headings. The section headings contained herein are
for the purpose of convenience only, and in the event of any
conflict, the text of the Plan, rather than the section
headings, shall control.
g. Gender, Etc. In interpreting the Plan, the masculine gender
shall include the feminine, the neuter gender shall include
the masculine or feminine, and the singular shall include the
plural unless the context clearly indicates otherwise.
h. Invalidity. If any term or provision contained herein or in
any Award Agreement shall to any extent be invalid or
unenforceable, such term or provision will be reformed so that
it is valid, and such invalidity or unenforceability shall not
affect any other provision or part thereof.
i. Applicable Law. The Plan, the Award Agreements and all actions
taken hereunder or thereunder shall be governed by, and
construed in accordance with, the laws of the State of
California without regard to the conflict of law principles
thereof.
j. Compliance with Laws. Notwithstanding anything contained
herein or in any Award Agreement to the contrary, the
Corporation shall not be required to sell or issue shares of
Stock hereunder or thereunder if the issuance thereof would
constitute a violation by the Participant or the Corporation
of any provisions of any law or regulation of any governmental
authority or any national securities exchange; and as a
condition of any sale or issuance the Corporation may require
such agreements or undertakings, if any, as the Corporation
may deem necessary or advisable to assure compliance with any
such law or regulation.
15
<PAGE>
k. Non-Assignability. Except as otherwise determined by the
Committee in an Award Agreement, no Award shall be assignable
or transferable except by will or by the laws of descent and
distribution, and, during the lifetime of a Participant, an
Award shall be exercised only by such Participant or by his or
her guardian or legal representative.
l. Effective Date and Term. The Plan was adopted by the Board of
Directors and shall be submitted to the sole shareowner of the
Corporation, and if approved, shall be effective as of
Conexant Distribution Date. The Committee may grant Awards
prior to shareowner approval, provided, however, that Awards
granted prior to such shareowner approval are automatically
canceled if shareowner approval is not obtained at or prior to
the period ending twelve months after the date the Plan is
effective and provided further that no Award may be
exercisable prior to the date shareowner approval is obtained.
The Plan shall remain in effect until all Awards under the
Plan have been exercised or terminated under the terms of the
Plan and applicable Award Agreements, provided that Awards
under the Plan may only be granted within ten (10) years from
the effective date of the Plan.
16
<PAGE>
Appendix 2
----------
PRELIMINARY COPY
----------------
PROXY
CONEXANT SYSTEMS, INC.
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Dwight W. Decker and Dennis E.
O'Reilly, and each of them, with power to act without the other and with full
power of substitution, as proxies and attorneys-in-fact and hereby authorizes
them to represent and vote, as provided on the other side, all the shares of
Conexant Systems, Inc. Common Stock which the undersigned is entitled to vote,
and, in their discretion, to vote upon such other business as may properly come
before the Annual Meeting of Shareowners of the Company to be held on February
10, 2000, or any adjournment thereof, with all powers which the undersigned
would possess if present at the Meeting.
To vote in accordance with the Board of Directors' recommendations just
sign and date the other side; no boxes need to be checked.
Comments: ___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
(If you have written in the above space, please mark the "Comments"
box on the other side.)
(Continued, and to be marked, dated and signed, on the other side)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
<TABLE>
<S> <C>
Where a vote is not specified, the proxies will vote the shares represented by the proxy FOR the election Please mark your
of directors and FOR proposals 2, 3 and 4 and will vote in accordance with their discretion on such other your votes as
matters as may properly come before the meeting. indicated in [X]
this example.
1. ELECTION OF TWO DIRECTORS - Nominees:
FOR WITHHELD 3. APPROVAL OF AMENDMENTS TO 1999 FOR AGAINST ABSTAIN
01) D.W. Decker 02) F.C. Farrill FOR ALL LONG-TERM INCENTIVES PLAN [ ] [ ] [ ]
(Instruction: To withhold authority to vote for any [ ] [ ]
individual nominee, write that nominee's name in the 4. RATIFICATION OF APPOINTMENT OF FOR AGAINST ABSTAIN
space provided below.) AUDITORS [ ] [ ] [ ]
____________________________________________________
I consent to future access of the Annual Reports I/we plan to attend the
2. APPROVAL OF AMENDMENT TO THE COMPANY'S and Proxy Materials electronically via the Internet. [ ] meeting. Please send an [ ]
RESTATED CERTIFICATE OF INCORPORATION I understand that the Company may no longer Admittance Card.
distribute printed materials to me for any future
FOR AGAINST ABSTAIN shareowner meeting until such consent is revoked. Comments on [ ]
[ ] [ ] [ ] I understand that I may revoke my consent at any time. other side
Signature ________________________________________Signature if held jointly _______________________________ Date: ____________, 2000
In signing as attorney, executor, administrator, trustee or guardian, please give full title as such, and, if signing for a
corporation, please give your title. When shares are in the name of more than one person each should sign the proxy. Please sign,
date, and return the Proxy Card promptly using the enclosed envelope.
- ------------------------------------------------------------------------------------------------------------------------------------
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT!
YOU CAN VOTE IN ONE OF THREE WAYS:
====================================================================================================================================
| VOTE BY INTERNET: 24 hours a day, 7 days a week. |
| Follow the instructions at our Website Address: http://www.eproxy.com/cnxt |
| If you indicate that you will be attending the meeting, you will automatically be mailed an Admittance Card. |
====================================================================================================================================
or
====================================================================================================================================
| VOTE BY PHONE: For U.S. shareowners only, call toll-free 1-800-840-1208 on a touch tone telephone 24 hours a day, 7 days a week. |
| There is NO CHARGE to you for this call. Have your proxy card in hand. |
| You will be asked to enter a Control Number, which is located in the box in the lower right hand corner of this form. |
|OPTION 1: To vote as the Board of Directors recommends on ALL proposals, press 1. |
| When asked, please confirm by Pressing 1 |
|OPTION 2: If you choose to vote on each proposal separately, Press 0. You will hear these instructions: |
|Proposal 1, Director Election Proposal: To vote FOR ALL nominees, press 1, to WITHHOLD FOR ALL nominees, press 9. |
| To WITHHOLD FOR AN INDIVIDUAL nominee, Press 0 and listen to the instructions. |
|Proposal 2 and All Other Proposals: To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0 |
|The instructions are the same for all other proposals. |
| When asked, please confirm by Pressing 1 |
|Press 1 to discontinue receiving the Annual Report and Proxy Statement for this account. |
| When asked, please confirm by Pressing 1 |
====================================================================================================================================
or
====================================================================================================================================
| VOTE BY PROXY CARD: Mark, sign and date your proxy card and return it promptly in the enclosed envelope. |
| NOTE: If you voted by Internet or telephone, THERE IS NO NEED TO MAIL BACK your proxy card. |
====================================================================================================================================
THANK YOU FOR VOTING.
- --------------------------------------------------------------------------------
| TO VIEW OUR ANNUAL REPORT AND PROXY STATEMENT ONLINE GO TO: |
| http://www.conexant.com |
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
|NOTE: Seating at the Annual Shareowners Meeting will be limited, therefore, |
|request or receipt of an Admittance Card does not guarantee the availability |
|of a seat. |
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
Appendix 3
----------
PRELIMINARY COPY
----------------
DIRECTION CARD
ROCKWELL SALARIED RETIREMENT SAVINGS PLAN
TO: WELLS FARGO BANK, N.A., TRUSTEE
You are hereby directed to vote, with respect to the proposals listed
on the other side of this Direction Card, the number of shares of Conexant
capital stock held for my account in the Rockwell Salaried Retirement Savings
Plan at the Annual Meeting of Shareowners of Conexant Systems, Inc. to be held
on February 10, 2000, or any adjournment thereof, as follows:
To vote in accordance with the Board of Directors' recommendations
check the boxes FOR each proposal listed on the other side, then sign, date and
return card.
(Continued, and to be marked, dated and signed, on the other side)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
<TABLE>
<S> <C>
Where a vote is not specified, the proxies will vote the shares represented by the proxy FOR the election Please mark your
of directors and FOR proposals 2, 3 and 4 and will vote in accordance with their discretion on such other your votes as
matters as may properly come before the meeting. indicated in [X]
this example.
1. ELECTION OF TWO DIRECTORS - Nominees:
FOR WITHHELD 3. APPROVAL OF AMENDMENTS TO 1999 FOR AGAINST ABSTAIN
01) D.W. Decker 02) F.C. Farrill FOR ALL LONG-TERM INCENTIVES PLAN [ ] [ ] [ ]
(Instruction: To withhold authority to vote for any [ ] [ ]
individual nominee, write that nominee's name in the 4. RATIFICATION OF APPOINTMENT OF FOR AGAINST ABSTAIN
space provided below.) AUDITORS [ ] [ ] [ ]
____________________________________________________
I consent to future access of the Annual Reports I/we plan to attend the
2. APPROVAL OF AMENDMENT TO THE COMPANY'S and Proxy Materials electronically via the Internet. [ ] meeting. Please send an [ ]
RESTATED CERTIFICATE OF INCORPORATION I understand that the Company may no longer Admittance Card.
distribute printed materials to me for any future
FOR AGAINST ABSTAIN shareowner meeting until such consent is revoked.
[ ] [ ] [ ] I understand that I may revoke my consent at any time.
Signature ________________________________________Signature if held jointly _______________________________ Date: ____________, 2000
In signing as attorney, executor, administrator, trustee or guardian, please give full title as such, and, if signing for a
corporation, please give your title. When shares are in the name of more than one person each should sign the proxy. Please sign,
date, and return the Direction Card promptly using the enclosed envelope.
- ------------------------------------------------------------------------------------------------------------------------------------
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT!
YOU CAN VOTE IN ONE OF THREE WAYS:
====================================================================================================================================
| VOTE BY INTERNET: 24 hours a day, 7 days a week. |
| Follow the instructions at our Website Address: http://www.eproxy.com/cnxt |
| If you indicate that you will be attending the meeting, you will automatically be mailed an Admittance Card. |
====================================================================================================================================
or
====================================================================================================================================
| VOTE BY PHONE: For U.S. shareowners only, call toll-free 1-800-840-1208 on a touch tone telephone 24 hours a day, 7 days a week. |
| There is NO CHARGE to you for this call. Have your proxy card in hand. |
| You will be asked to enter a Control Number, which is located in the box in the lower right hand corner of this form. |
|OPTION 1: To vote as the Board of Directors recommends on ALL proposals, press 1. |
| When asked, please confirm by Pressing 1 |
|OPTION 2: If you choose to vote on each proposal separately, Press 0. You will hear these instructions: |
|Proposal 1, Director Election Proposal: To vote FOR ALL nominees, press 1, to WITHHOLD FOR ALL nominees, press 9. |
| To WITHHOLD FOR AN INDIVIDUAL nominee, Press 0 and listen to the instructions. |
|Proposal 2 and All Other Proposals: To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0 |
|The instructions are the same for all other proposals. |
| When asked, please confirm by Pressing 1 |
|Press 1 to discontinue receiving the Annual Report and Proxy Statement for this account. |
| When asked, please confirm by Pressing 1 |
====================================================================================================================================
or
====================================================================================================================================
| VOTE BY PROXY CARD: Mark, sign and date your proxy card and return it promptly in the enclosed envelope. |
| NOTE: If you voted by Internet or telephone, THERE IS NO NEED TO MAIL BACK your proxy card. |
====================================================================================================================================
THANK YOU FOR VOTING.
- --------------------------------------------------------------------------------
| TO VIEW OUR ANNUAL REPORT AND PROXY STATEMENT ONLINE GO TO: |
| http://www.conexant.com |
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
|NOTE: Seating at the Annual Shareowners Meeting will be limited, therefore, |
|request or receipt of an Admittance Card does not guarantee the availability |
|of a seat. |
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
Appendix 4
----------
PRELIMINARY COPY
----------------
DIRECTION CARD
ROCKWELL NON-REPRESENTED HOURLY RETIREMENT SAVINGS PLAN
TO: WELLS FARGO BANK, N.A., TRUSTEE
You are hereby directed to vote, with respect to the proposals listed
on the other side of this Direction Card, the number of shares of Conexant
capital stock held for my account in the Rockwell Non-Represented Hourly
Retirement Savings Plan at the Annual Meeting of Shareowners of Conexant
Systems, Inc. to be held on February 10, 2000, or any adjournment thereof, as
follows:
To vote in accordance with the Board of Directors' recommendations
check the boxes FOR each proposal listed on the other side, then sign, date and
return card.
(Continued, and to be marked, dated and signed, on the other side)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
<TABLE>
<S> <C>
Where a vote is not specified, the proxies will vote the shares represented by the proxy FOR the election Please mark your
of directors and FOR proposals 2, 3 and 4 and will vote in accordance with their discretion on such other your votes as
matters as may properly come before the meeting. indicated in [X]
this example.
1. ELECTION OF TWO DIRECTORS - Nominees:
FOR WITHHELD 3. APPROVAL OF AMENDMENTS TO 1999 FOR AGAINST ABSTAIN
01) D.W. Decker 02) F.C. Farrill FOR ALL LONG-TERM INCENTIVES PLAN [ ] [ ] [ ]
(Instruction: To withhold authority to vote for any [ ] [ ]
individual nominee, write that nominee's name in the 4. RATIFICATION OF APPOINTMENT OF FOR AGAINST ABSTAIN
space provided below.) AUDITORS [ ] [ ] [ ]
____________________________________________________
I consent to future access of the Annual Reports I/we plan to attend the
2. APPROVAL OF AMENDMENT TO THE COMPANY'S and Proxy Materials electronically via the Internet. [ ] meeting. Please send an [ ]
RESTATED CERTIFICATE OF INCORPORATION I understand that the Company may no longer Admittance Card.
distribute printed materials to me for any future
FOR AGAINST ABSTAIN shareowner meeting until such consent is revoked.
[ ] [ ] [ ] I understand that I may revoke my consent at any time.
Signature ________________________________________Signature if held jointly _______________________________ Date: ____________, 2000
In signing as attorney, executor, administrator, trustee or guardian, please give full title as such, and, if signing for a
corporation, please give your title. When shares are in the name of more than one person each should sign the proxy. Please sign,
date, and return the Direction Card promptly using the enclosed envelope.
- ------------------------------------------------------------------------------------------------------------------------------------
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT!
YOU CAN VOTE IN ONE OF THREE WAYS:
====================================================================================================================================
| VOTE BY INTERNET: 24 hours a day, 7 days a week. |
| Follow the instructions at our Website Address: http://www.eproxy.com/cnxt |
| If you indicate that you will be attending the meeting, you will automatically be mailed an Admittance Card. |
====================================================================================================================================
or
====================================================================================================================================
| VOTE BY PHONE: For U.S. shareowners only, call toll-free 1-800-840-1208 on a touch tone telephone 24 hours a day, 7 days a week. |
| There is NO CHARGE to you for this call. Have your proxy card in hand. |
| You will be asked to enter a Control Number, which is located in the box in the lower right hand corner of this form. |
|OPTION 1: To vote as the Board of Directors recommends on ALL proposals, press 1. |
| When asked, please confirm by Pressing 1 |
|OPTION 2: If you choose to vote on each proposal separately, Press 0. You will hear these instructions: |
|Proposal 1, Director Election Proposal: To vote FOR ALL nominees, press 1, to WITHHOLD FOR ALL nominees, press 9. |
| To WITHHOLD FOR AN INDIVIDUAL nominee, Press 0 and listen to the instructions. |
|Proposal 2 and All Other Proposals: To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0 |
|The instructions are the same for all other proposals. |
| When asked, please confirm by Pressing 1 |
|Press 1 to discontinue receiving the Annual Report and Proxy Statement for this account. |
| When asked, please confirm by Pressing 1 |
====================================================================================================================================
or
====================================================================================================================================
| VOTE BY PROXY CARD: Mark, sign and date your proxy card and return it promptly in the enclosed envelope. |
| NOTE: If you voted by Internet or telephone, THERE IS NO NEED TO MAIL BACK your proxy card. |
====================================================================================================================================
THANK YOU FOR VOTING.
- --------------------------------------------------------------------------------
| TO VIEW OUR ANNUAL REPORT AND PROXY STATEMENT ONLINE GO TO: |
| http://www.conexant.com |
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
|NOTE: Seating at the Annual Shareowners Meeting will be limited, therefore, |
|request or receipt of an Admittance Card does not guarantee the availability |
|of a seat. |
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
Appendix 5
----------
PRELIMINARY COPY
----------------
DIRECTION CARD
ROCKWELL EMPLOYEE SAVINGS AND INVESTMENT PLAN FOR
REPRESENTED HOURLY EMPLOYEES
TO: WELLS FARGO BANK, N.A., TRUSTEE
You are hereby directed to vote, with respect to the proposals listed
on the other side of this Direction Card, the number of shares of Conexant
capital stock held for my account in the Rockwell Employee Savings and
Investment Plan for Represented Hourly Employees at the Annual Meeting of
Shareowners of Conexant Systems, Inc. to be held on February 10, 2000, or any
adjournment thereof, as follows:
To vote in accordance with the Board of Directors' recommendations
check the boxes FOR each proposal listed on the other side, then sign, date and
return card.
(Continued, and to be marked, dated and signed, on the other side)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
<TABLE>
<S> <C>
Where a vote is not specified, the proxies will vote the shares represented by the proxy FOR the election Please mark your
of directors and FOR proposals 2, 3 and 4 and will vote in accordance with their discretion on such other your votes as
matters as may properly come before the meeting. indicated in [X]
this example.
1. ELECTION OF TWO DIRECTORS - Nominees:
FOR WITHHELD 3. APPROVAL OF AMENDMENTS TO 1999 FOR AGAINST ABSTAIN
01) D.W. Decker 02) F.C. Farrill FOR ALL LONG-TERM INCENTIVES PLAN [ ] [ ] [ ]
(Instruction: To withhold authority to vote for any [ ] [ ]
individual nominee, write that nominee's name in the 4. RATIFICATION OF APPOINTMENT OF FOR AGAINST ABSTAIN
space provided below.) AUDITORS [ ] [ ] [ ]
____________________________________________________
I consent to future access of the Annual Reports I/we plan to attend the
2. APPROVAL OF AMENDMENT TO THE COMPANY'S and Proxy Materials electronically via the Internet. [ ] meeting. Please send an [ ]
RESTATED CERTIFICATE OF INCORPORATION I understand that the Company may no longer Admittance Card.
distribute printed materials to me for any future
FOR AGAINST ABSTAIN shareowner meeting until such consent is revoked.
[ ] [ ] [ ] I understand that I may revoke my consent at any time.
Signature ________________________________________Signature if held jointly _______________________________ Date: ____________, 2000
In signing as attorney, executor, administrator, trustee or guardian, please give full title as such, and, if signing for a
corporation, please give your title. When shares are in the name of more than one person each should sign the proxy. Please sign,
date, and return the Direction Card promptly using the enclosed envelope.
- ------------------------------------------------------------------------------------------------------------------------------------
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT!
YOU CAN VOTE IN ONE OF THREE WAYS:
====================================================================================================================================
| VOTE BY INTERNET: 24 hours a day, 7 days a week. |
| Follow the instructions at our Website Address: http://www.eproxy.com/cnxt |
| If you indicate that you will be attending the meeting, you will automatically be mailed an Admittance Card. |
====================================================================================================================================
or
====================================================================================================================================
| VOTE BY PHONE: For U.S. shareowners only, call toll-free 1-800-840-1208 on a touch tone telephone 24 hours a day, 7 days a week. |
| There is NO CHARGE to you for this call. Have your proxy card in hand. |
| You will be asked to enter a Control Number, which is located in the box in the lower right hand corner of this form. |
|OPTION 1: To vote as the Board of Directors recommends on ALL proposals, press 1. |
| When asked, please confirm by Pressing 1 |
|OPTION 2: If you choose to vote on each proposal separately, Press 0. You will hear these instructions: |
|Proposal 1, Director Election Proposal: To vote FOR ALL nominees, press 1, to WITHHOLD FOR ALL nominees, press 9. |
| To WITHHOLD FOR AN INDIVIDUAL nominee, Press 0 and listen to the instructions. |
|Proposal 2 and All Other Proposals: To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0 |
|The instructions are the same for all other proposals. |
| When asked, please confirm by Pressing 1 |
|Press 1 to discontinue receiving the Annual Report and Proxy Statement for this account. |
| When asked, please confirm by Pressing 1 |
====================================================================================================================================
or
====================================================================================================================================
| VOTE BY PROXY CARD: Mark, sign and date your proxy card and return it promptly in the enclosed envelope. |
| NOTE: If you voted by Internet or telephone, THERE IS NO NEED TO MAIL BACK your proxy card. |
====================================================================================================================================
THANK YOU FOR VOTING.
- --------------------------------------------------------------------------------
| TO VIEW OUR ANNUAL REPORT AND PROXY STATEMENT ONLINE GO TO: |
| http://www.conexant.com |
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
|NOTE: Seating at the Annual Shareowners Meeting will be limited, therefore, |
|request or receipt of an Admittance Card does not guarantee the availability |
|of a seat. |
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
Appendix 6
----------
PRELIMINARY COPY
----------------
DIRECTION CARD
ROCKWELL RETIREMENT SAVINGS PLAN FOR CERTAIN EMPLOYEES
TO: WELLS FARGO BANK, N.A., TRUSTEE
You are hereby directed to vote, with respect to the proposals listed
on the other side of this Direction Card, the number of shares of Conexant
capital stock held for my account in the Rockwell Retirement Savings Plan for
Certain Employees at the Annual Meeting of Shareowners of Conexant Systems, Inc.
to be held on February 10, 2000, or any adjournment thereof, as follows:
To vote in accordance with the Board of Directors' recommendations
check the boxes FOR each proposal listed on the other side, then sign, date and
return card.
(Continued, and to be marked, dated and signed, on the other side)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
<TABLE>
<S> <C>
Where a vote is not specified, the proxies will vote the shares represented by the proxy FOR the election Please mark your
of directors and FOR proposals 2, 3 and 4 and will vote in accordance with their discretion on such other your votes as
matters as may properly come before the meeting. indicated in [X]
this example.
1. ELECTION OF TWO DIRECTORS - Nominees:
FOR WITHHELD 3. APPROVAL OF AMENDMENTS TO 1999 FOR AGAINST ABSTAIN
01) D.W. Decker 02) F.C. Farrill FOR ALL LONG-TERM INCENTIVES PLAN [ ] [ ] [ ]
(Instruction: To withhold authority to vote for any [ ] [ ]
individual nominee, write that nominee's name in the 4. RATIFICATION OF APPOINTMENT OF FOR AGAINST ABSTAIN
space provided below.) AUDITORS [ ] [ ] [ ]
____________________________________________________
I consent to future access of the Annual Reports I/we plan to attend the
2. APPROVAL OF AMENDMENT TO THE COMPANY'S and Proxy Materials electronically via the Internet. [ ] meeting. Please send an [ ]
RESTATED CERTIFICATE OF INCORPORATION I understand that the Company may no longer Admittance Card.
distribute printed materials to me for any future
FOR AGAINST ABSTAIN shareowner meeting until such consent is revoked.
[ ] [ ] [ ] I understand that I may revoke my consent at any time.
Signature ________________________________________Signature if held jointly _______________________________ Date: ____________, 2000
In signing as attorney, executor, administrator, trustee or guardian, please give full title as such, and, if signing for a
corporation, please give your title. When shares are in the name of more than one person each should sign the proxy. Please sign,
date, and return the Direction Card promptly using the enclosed envelope.
- ------------------------------------------------------------------------------------------------------------------------------------
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT!
YOU CAN VOTE IN ONE OF THREE WAYS:
====================================================================================================================================
| VOTE BY INTERNET: 24 hours a day, 7 days a week. |
| Follow the instructions at our Website Address: http://www.eproxy.com/cnxt |
| If you indicate that you will be attending the meeting, you will automatically be mailed an Admittance Card. |
====================================================================================================================================
or
====================================================================================================================================
| VOTE BY PHONE: For U.S. shareowners only, call toll-free 1-800-840-1208 on a touch tone telephone 24 hours a day, 7 days a week. |
| There is NO CHARGE to you for this call. Have your proxy card in hand. |
| You will be asked to enter a Control Number, which is located in the box in the lower right hand corner of this form. |
|OPTION 1: To vote as the Board of Directors recommends on ALL proposals, press 1. |
| When asked, please confirm by Pressing 1 |
|OPTION 2: If you choose to vote on each proposal separately, Press 0. You will hear these instructions: |
|Proposal 1, Director Election Proposal: To vote FOR ALL nominees, press 1, to WITHHOLD FOR ALL nominees, press 9. |
| To WITHHOLD FOR AN INDIVIDUAL nominee, Press 0 and listen to the instructions. |
|Proposal 2 and All Other Proposals: To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0 |
|The instructions are the same for all other proposals. |
| When asked, please confirm by Pressing 1 |
|Press 1 to discontinue receiving the Annual Report and Proxy Statement for this account. |
| When asked, please confirm by Pressing 1 |
====================================================================================================================================
or
====================================================================================================================================
| VOTE BY PROXY CARD: Mark, sign and date your proxy card and return it promptly in the enclosed envelope. |
| NOTE: If you voted by Internet or telephone, THERE IS NO NEED TO MAIL BACK your proxy card. |
====================================================================================================================================
THANK YOU FOR VOTING.
- --------------------------------------------------------------------------------
| TO VIEW OUR ANNUAL REPORT AND PROXY STATEMENT ONLINE GO TO: |
| http://www.conexant.com |
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
|NOTE: Seating at the Annual Shareowners Meeting will be limited, therefore, |
|request or receipt of an Admittance Card does not guarantee the availability |
|of a seat. |
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
Appendix 7
----------
PRELIMINARY COPY
----------------
DIRECTION CARD
CONEXANT SALARIED 401K SAVINGS PLAN
TO: FIDELITY MANAGEMENT TRUST CO., TRUSTEE
You are hereby directed to vote, with respect to the proposals listed
on the other side of this Direction Card, the number of shares of Conexant
capital stock held for my account in the Conexant Salaried 401K Savings Plan at
the Annual Meeting of Shareowners of Conexant Systems, Inc. to be held on
February 10, 2000, or any adjournment thereof, as follows:
To vote in accordance with the Board of Directors' recommendations
check the boxes FOR each proposal listed on the other side, then sign, date and
return card.
(Continued, and to be marked, dated and signed, on the other side)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
<TABLE>
<S> <C>
Where a vote is not specified, the proxies will vote the shares represented by the proxy FOR the election Please mark your
of directors and FOR proposals 2, 3 and 4 and will vote in accordance with their discretion on such other your votes as
matters as may properly come before the meeting. indicated in [X]
this example.
1. ELECTION OF TWO DIRECTORS - Nominees:
FOR WITHHELD 3. APPROVAL OF AMENDMENTS TO 1999 FOR AGAINST ABSTAIN
01) D.W. Decker 02) F.C. Farrill FOR ALL LONG-TERM INCENTIVES PLAN [ ] [ ] [ ]
(Instruction: To withhold authority to vote for any [ ] [ ]
individual nominee, write that nominee's name in the 4. RATIFICATION OF APPOINTMENT OF FOR AGAINST ABSTAIN
space provided below.) AUDITORS [ ] [ ] [ ]
____________________________________________________
I consent to future access of the Annual Reports I/we plan to attend the
2. APPROVAL OF AMENDMENT TO THE COMPANY'S and Proxy Materials electronically via the Internet. [ ] meeting. Please send an [ ]
RESTATED CERTIFICATE OF INCORPORATION I understand that the Company may no longer Admittance Card.
distribute printed materials to me for any future
FOR AGAINST ABSTAIN shareowner meeting until such consent is revoked.
[ ] [ ] [ ] I understand that I may revoke my consent at any time.
Signature ________________________________________Signature if held jointly _______________________________ Date: ____________, 2000
In signing as attorney, executor, administrator, trustee or guardian, please give full title as such, and, if signing for a
corporation, please give your title. When shares are in the name of more than one person each should sign the proxy. Please sign,
date, and return the Direction Card promptly using the enclosed envelope.
- ------------------------------------------------------------------------------------------------------------------------------------
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT!
YOU CAN VOTE IN ONE OF THREE WAYS:
====================================================================================================================================
| VOTE BY INTERNET: 24 hours a day, 7 days a week. |
| Follow the instructions at our Website Address: http://www.eproxy.com/cnxt |
| If you indicate that you will be attending the meeting, you will automatically be mailed an Admittance Card. |
====================================================================================================================================
or
====================================================================================================================================
| VOTE BY PHONE: For U.S. shareowners only, call toll-free 1-800-840-1208 on a touch tone telephone 24 hours a day, 7 days a week. |
| There is NO CHARGE to you for this call. Have your proxy card in hand. |
| You will be asked to enter a Control Number, which is located in the box in the lower right hand corner of this form. |
|OPTION 1: To vote as the Board of Directors recommends on ALL proposals, press 1. |
| When asked, please confirm by Pressing 1 |
|OPTION 2: If you choose to vote on each proposal separately, Press 0. You will hear these instructions: |
|Proposal 1, Director Election Proposal: To vote FOR ALL nominees, press 1, to WITHHOLD FOR ALL nominees, press 9. |
| To WITHHOLD FOR AN INDIVIDUAL nominee, Press 0 and listen to the instructions. |
|Proposal 2 and All Other Proposals: To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0 |
|The instructions are the same for all other proposals. |
| When asked, please confirm by Pressing 1 |
|Press 1 to discontinue receiving the Annual Report and Proxy Statement for this account. |
| When asked, please confirm by Pressing 1 |
====================================================================================================================================
or
====================================================================================================================================
| VOTE BY PROXY CARD: Mark, sign and date your proxy card and return it promptly in the enclosed envelope. |
| NOTE: If you voted by Internet or telephone, THERE IS NO NEED TO MAIL BACK your proxy card. |
====================================================================================================================================
THANK YOU FOR VOTING.
- --------------------------------------------------------------------------------
| TO VIEW OUR ANNUAL REPORT AND PROXY STATEMENT ONLINE GO TO: |
| http://www.conexant.com |
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
|NOTE: Seating at the Annual Shareowners Meeting will be limited, therefore, |
|request or receipt of an Admittance Card does not guarantee the availability |
|of a seat. |
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
Appendix 8
----------
PRELIMINARY COPY
----------------
DIRECTION CARD
CONEXANT HOURLY 401K SAVINGS PLAN
TO: FIDELITY MANAGEMENT TRUST CO., TRUSTEE
You are hereby directed to vote, with respect to the proposals listed
on the other side of this Direction Card, the number of shares of Conexant
capital stock held for my account in the Conexant Hourly 401K Savings Plan at
the Annual Meeting of Shareowners of Conexant Systems, Inc. to be held on
February 10, 2000, or any adjournment thereof, as follows:
To vote in accordance with the Board of Directors' recommendations
check the boxes FOR each proposal listed on the other side, then sign, date and
return card.
(Continued, and to be marked, dated and signed, on the other side)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
<TABLE>
<S> <C>
Where a vote is not specified, the proxies will vote the shares represented by the proxy FOR the election Please mark your
of directors and FOR proposals 2, 3 and 4 and will vote in accordance with their discretion on such other your votes as
matters as may properly come before the meeting. indicated in [X]
this example.
1. ELECTION OF TWO DIRECTORS - Nominees:
FOR WITHHELD 3. APPROVAL OF AMENDMENTS TO 1999 FOR AGAINST ABSTAIN
01) D.W. Decker 02) F.C. Farrill FOR ALL LONG-TERM INCENTIVES PLAN [ ] [ ] [ ]
(Instruction: To withhold authority to vote for any [ ] [ ]
individual nominee, write that nominee's name in the 4. RATIFICATION OF APPOINTMENT OF FOR AGAINST ABSTAIN
space provided below.) AUDITORS [ ] [ ] [ ]
____________________________________________________
I consent to future access of the Annual Reports I/we plan to attend the
2. APPROVAL OF AMENDMENT TO THE COMPANY'S and Proxy Materials electronically via the Internet. [ ] meeting. Please send an [ ]
RESTATED CERTIFICATE OF INCORPORATION I understand that the Company may no longer Admittance Card.
distribute printed materials to me for any future
FOR AGAINST ABSTAIN shareowner meeting until such consent is revoked.
[ ] [ ] [ ] I understand that I may revoke my consent at any time.
Signature ________________________________________Signature if held jointly _______________________________ Date: ____________, 2000
In signing as attorney, executor, administrator, trustee or guardian, please give full title as such, and, if signing for a
corporation, please give your title. When shares are in the name of more than one person each should sign the proxy. Please sign,
date, and return the Direction Card promptly using the enclosed envelope.
- ------------------------------------------------------------------------------------------------------------------------------------
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT!
YOU CAN VOTE IN ONE OF THREE WAYS:
====================================================================================================================================
| VOTE BY INTERNET: 24 hours a day, 7 days a week. |
| Follow the instructions at our Website Address: http://www.eproxy.com/cnxt |
| If you indicate that you will be attending the meeting, you will automatically be mailed an Admittance Card. |
====================================================================================================================================
or
====================================================================================================================================
| VOTE BY PHONE: For U.S. shareowners only, call toll-free 1-800-840-1208 on a touch tone telephone 24 hours a day, 7 days a week. |
| There is NO CHARGE to you for this call. Have your proxy card in hand. |
| You will be asked to enter a Control Number, which is located in the box in the lower right hand corner of this form. |
|OPTION 1: To vote as the Board of Directors recommends on ALL proposals, press 1. |
| When asked, please confirm by Pressing 1 |
|OPTION 2: If you choose to vote on each proposal separately, Press 0. You will hear these instructions: |
|Proposal 1, Director Election Proposal: To vote FOR ALL nominees, press 1, to WITHHOLD FOR ALL nominees, press 9. |
| To WITHHOLD FOR AN INDIVIDUAL nominee, Press 0 and listen to the instructions. |
|Proposal 2 and All Other Proposals: To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0 |
|The instructions are the same for all other proposals. |
| When asked, please confirm by Pressing 1 |
|Press 1 to discontinue receiving the Annual Report and Proxy Statement for this account. |
| When asked, please confirm by Pressing 1 |
====================================================================================================================================
or
====================================================================================================================================
| VOTE BY PROXY CARD: Mark, sign and date your proxy card and return it promptly in the enclosed envelope. |
| NOTE: If you voted by Internet or telephone, THERE IS NO NEED TO MAIL BACK your proxy card. |
====================================================================================================================================
THANK YOU FOR VOTING.
- --------------------------------------------------------------------------------
| TO VIEW OUR ANNUAL REPORT AND PROXY STATEMENT ONLINE GO TO: |
| http://www.conexant.com |
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
|NOTE: Seating at the Annual Shareowners Meeting will be limited, therefore, |
|request or receipt of an Admittance Card does not guarantee the availability |
|of a seat. |
- --------------------------------------------------------------------------------
</TABLE>
