<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
<TABLE>
<S> <C>
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule
14a-12
</TABLE>
CONEXANT SYSTEMS, INC.
- - - - - - - - - - - - - - - - - --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- - - - - - - - - - - - - - - - - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<S> <C> <C>
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------
/ / Fee paid previously with preliminary materials:
-----------------------------------------------------------------
Check box if any part of the fee is offset as provided by
/ / Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------
</TABLE>
<PAGE>
[LOGO]
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 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,
/s/ Dwight W. Decker
Dwight W. Decker
CHAIRMAN OF THE BOARD AND CHIEF
EXECUTIVE OFFICER
<PAGE>
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:
- marking the appropriate box on the Proxy Card and mailing the card using
the enclosed envelope; or
- indicating your desire to attend the meeting through Conexant's telephone
or Internet voting procedures.
IF YOU PLAN TO ATTEND THE ANNUAL MEETING, IT WILL BE NECESSARY FOR YOU TO
OBTAIN AN ADMITTANCE CARD.
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.
<PAGE>
CONEXANT SYSTEMS, INC.
4311 JAMBOREE ROAD
NEWPORT BEACH, CA 92660-3095
NOTICE OF ANNUAL MEETING OF SHAREOWNERS
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 Preferred Stock
from 25,000,000 to 50,000,000;
3. 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;
4. 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;
5. 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
6. 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
/s/ Dennis E. O'Reilly
Dennis E. O'Reilly
SECRETARY
January 3, 2000
<PAGE>
CONEXANT SYSTEMS, INC.
4311 JAMBOREE ROAD
NEWPORT BEACH, CALIFORNIA 92660-3095
PROXY STATEMENT
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 Preferred Stock from 25,000,000
to 50,000,000, 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, 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 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 access materials
for any future shareowner meeting electronically via the Internet. A shareowner
who consents to accessing 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 access 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
<PAGE>
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 amendments
to the Company's Restated Certificate of Incorporation to increase the number of
authorized shares of Preferred Stock and Common Stock each 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 198,036,072 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 27,989,753 shares of the Company's Common Stock, representing
approximately 14% 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.
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 a term
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
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<PAGE>
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.
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
<TABLE>
<S> <C> <C>
DWIGHT W. DECKER Mr. Decker has been a Director of Conexant
Age 49 [PHOTO] since its incorporation in 1996. Mr. Decker
Chairman of the Board and Chief has been Chairman and Chief Executive
Executive Officer of the Company Officer of the Company since November 1998
and was President 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.
</TABLE>
3
<PAGE>
<TABLE>
<S> <C> <C>
F. CRAIG FARRILL Mr. Farrill has been a Director of Conexant
Age 47 [PHOTO] since 1998. He has been Chief Technology
Chief Technology Officer, Vodafone Officer of Vodafone AirTouch Public Limited
AirTouch Public Limited Company Company (wireless communications) since June
1998 and was corporate Vice President,
Strategic Technology of 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.
</TABLE>
CLASS II--CONTINUING DIRECTORS WITH TERMS EXPIRING IN 2001
<TABLE>
<S> <C> <C>
DONALD R. BEALL Mr. Beall has been a Director of Conexant
Age 61 [PHOTO] since 1998. He is the retired Chairman of
Retired Chairman and Chief Executive the Board and Chief Executive Officer of
Officer of Rockwell (electronic controls and
Rockwell International Corporation communications) 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.
</TABLE>
4
<PAGE>
<TABLE>
<S> <C> <C>
JERRE L. STEAD Mr. Stead has been a Director of Conexant
Age 56 [PHOTO] since 1998. He has been Chairman of the
Chairman of the Board and Chief Board and Chief Executive Officer of Ingram
Executive Officer of Ingram Micro Micro Inc. (computer technology products and
Inc. 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.
</TABLE>
CLASS III--CONTINUING DIRECTOR WITH TERM EXPIRING IN 2002
<TABLE>
<S> <C> <C>
RICHARD M. BRESSLER Mr. Bressler has been a Director of Conexant
Age 69 [PHOTO] since 1998. He served as Chief Executive
Retired Chairman of the Board, El Officer of Burlington Northern Inc. (rail
Paso Natural Gas Company transportation) from 1980 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.
</TABLE>
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.
<TABLE>
<CAPTION>
COMPENSATION & TECHNOLOGY,
BOARD MANAGEMENT ENVIRONMENTAL &
DIRECTOR AUDIT COMPOSITION DEVELOPMENT SOCIAL RESPONSIBILITY
- - - - - - - - - - - - - - - - - -------- -------- ----------- -------------- ---------------------
<S> <C> <C> <C> <C>
D. R. Beall................ x x x
R. M. Bressler............. x x
F. C. Farrill.............. x x
J. L. Stead................ x x x
</TABLE>
5
<PAGE>
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.
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. 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 Company. Under the terms of the Company's directors' deferred
compensation plan, a director may elect to defer all
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<PAGE>
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 National 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 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
7
<PAGE>
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.
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 OF 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.
8
<PAGE>
TOTAL CASH COMPENSATION for the majority of the Company's employees,
including its executive officers, consists of the following:
- Base salary; and
- 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 adopted by the Board of Directors in November
1999.
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.
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.
9
<PAGE>
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.
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 the 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, nonqualified 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 nonqualified 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.
10
<PAGE>
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 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 somewhat 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
11
<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 Nine-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.
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
-------------------------------------------------
01/04/1999 03/31/1999 06/30/1999 09/30/1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Conexant Systems, Inc................ 100 147 309 386
Nasdaq Stock Market (U.S.)........... 100 111 122 124
Nasdaq Electronic Components......... 100 103 116 140
</TABLE>
12
<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 Company 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.
SUMMARY COMPENSATION TABLE(1)
<TABLE>
<CAPTION>
ALL OTHER
LONG-TERM COMPENSA-
ANNUAL COMPENSATION COMPENSATION TION(4)
-------------------------------------------- ------------------------------------ ----------
AWARDS PAYOUTS
OTHER ----------------------- ----------
ANNUAL RESTRICTED STOCK LONG-TERM
NAME AND PRINCIPAL POSITION COMPENSA- STOCK OPTIONS INCENTIVE
WITH THE COMPANY(2) YEAR SALARY BONUS(3) TION AWARDS(3) (SHARES) PAYOUTS
- - - - - - - - - - - - - - - - - ------------------------------- -------- -------- --------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Dwight W. Decker............... 1999 $444,385 $336,518 $46,889 $ -- 1,000,000 $ -- $20,873
Chairman of the Board 1998 357,405 -- 16,839 -- 178,564 -- --
and Chief Executive Officer 1997 305,039 300,000 17,278 -- 509,314 1,041,013(5) 39,558
Moiz M. Beguwala............... 1999 245,309 126,805(6) 26,377 -- 470,000 -- 12,328
Senior Vice President and 1998 216,058 24,998 5,772 -- 119,044 -- 12,963
General Manager--
Wireless Communications
Lewis C. Brewster.............. 1999 204,447 137,474 18,625 -- 400,000 -- 10,506
Senior Vice President, 1998 180,878 66,667 16,016 -- -- -- --
Worldwide Sales
Raouf Y. Halim................. 1999 266,408 126,805(6) 44,440 -- 520,000 -- 12,977
Senior Vice President and 1998 227,324 -- 13,404 -- -- -- 13,640
General Manager--
Network Access
Balakrishnan S. Iyer........... 1999 282,693 341,805(7) 55,126(8) -- 700,000 -- 6,400
Senior Vice President and
Chief Financial Officer
</TABLE>
- - - - - - - - - - - - - - - - - ------------------------------
(1) In accordance with the executive compensation disclosure rules adopted by
the Securities and Exchange 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 Securities
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, 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 -
13
<PAGE>
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 $9.4063 per share, the closing price of the
Company's Common Stock on The Nasdaq National Market on that day. The total
value of each Named Executive Officer's shares is included in his bonus for
fiscal 1999, as such shares were granted in lieu of payments from the
Company's cash incentive plans in fiscal 1999. Mr. Decker received 35,776
shares ($336,518) and each of Messrs. Beguwala, Brewster, Halim and Iyer
received 9,760 shares ($91,805).
(4) Amounts contributed or accrued for the Named Executive Officers under the
Rockwell and Conexant savings plans and the related supplemental savings
plans.
(5) Long-term incentive payments to Mr. Decker for the three-year performance
period ended September 30, 1997 were paid in part by delivery of 8,204
shares of restricted Rockwell common stock, valued at the closing price on
the New York Stock Exchange--Composite Transactions on November 28, 1997,
the date specified for that purpose in the Rockwell 1995 Long-Term
Incentives Plan ($48.75).
(6) Includes a retention bonus of $35,000 paid to each of Messrs. Beguwala and
Halim as consideration for their remaining with Conexant after the
Distribution.
(7) Includes a hire-on bonus of $250,000 paid to Mr. Iyer upon his joining the
Company in October 1998.
(8) Includes $26,757 paid in connection with the relocation of Mr. Iyer's
residence in Southern California upon his joining the Company.
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
Messrs. Decker, Beguwala, Brewster, Halim and Iyer. 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 officers and other employees. Because the tax payments were due
at a time shortly prior to the announcement of the Company's year-end results
when such 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.
14
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
Shown below is further information on grants to the Named Executive Officers
of stock options pursuant to the 1999 LTIP during the fiscal year ended
September 30, 1999, which are reflected in the Summary Compensation Table on
page 13.
<TABLE>
<CAPTION>
OPTION GRANTS
----------------------------------------------------------------- POTENTIAL REALIZABLE VALUE
NUMBER OF PERCENTAGE OF TOTAL AT ASSUMED ANNUAL RATES OF
SECURITIES OPTIONS GRANTED STOCK PRICE APPRECIATION FOR
UNDERLYING TO CONEXANT EXERCISE OR OPTION TERM
OPTIONS GRANTED EMPLOYEES BASE PRICE EXPIRATION ----------------------------
NAME (SHARES)(1) IN FISCAL 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 2,366,229 5,996,488
Raouf Y. Halim........... 520,000 2.76 9.4063 1/4/2009 3,076,097 7,795,434
Balakrishnan S. Iyer..... 700,000 3.72 9.4063 1/4/2009 4,140,900 10,493,854
</TABLE>
- - - - - - - - - - - - - - - - - ------------------------
(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.
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 LTIP
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>
<CAPTION>
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................. -- -- 425,796 2,093,754 $12,479,959 $58,069,342
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
</TABLE>
- - - - - - - - - - - - - - - - - ------------------------
(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
National Market on September 30, 1999 ($36.5938).
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.
15
<PAGE>
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
pension 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.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL RETIREMENT BENEFITS
FOR YEARS OF SERVICE INDICATED
------------------------------------
AVERAGE ANNUAL EARNINGS 5 YEARS 10 YEARS 25 YEARS
- - - - - - - - - - - - - - - - - ----------------------- -------- -------- --------
<S> <C> <C> <C>
$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
</TABLE>
Covered compensation includes salary and annual bonus. The calculation of
retirement benefits under the plan 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, 13 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 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 agreement entered into between
the Company and Rockwell, 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.
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
<TABLE>
<CAPTION>
COMMON STOCK
-------------------------------------
NAME SHARES(1) PERCENT OF CLASS(2)
- - - - - - - - - - - - - - - - - ---- --------- -------------------
<S> <C> <C>
Donald R. Beall............................................. 1,864,663(3,4,5) --*
Richard M. Bressler......................................... 98,752(5,6) --*
Dwight W. Decker............................................ 845,223(3,5,7) --*
F. Craig Farrill............................................ 23,190(5,8) --*
Jerre L. Stead.............................................. 23,190(5,8) --*
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%
</TABLE>
- - - - - - - - - - - - - - - - - --------------------------
* Less than 1%
16
<PAGE>
(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 Securities 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 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 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 the three-year performance period ended September 30,
1997.
(8) Includes 3,190 shares of Conexant Common Stock granted to each of
Messrs. Farrill and Stead as restricted stock under the Directors Plan.
With the exception of Wells Fargo Bank, N.A., as trustee under the Rockwell
Savings Plan, which held approximately 14% 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
Securities and Exchange Commission) of more than 5% of any class of the
Company's voting securities outstanding as of November 30, 1999.
APPROVAL OF AMENDMENTS TO THE COMPANY'S RESTATED CERTIFICATE OF INCORPORATION
(PROPOSALS 2 AND 3)
The Board of Directors believes that it is in the Company's best interest to
approve proposals to amend the Company's Restated Certificate of Incorporation
(i) to increase the number of authorized shares of Preferred Stock from
25,000,000 to 50,000,000 and (ii) to increase the number of authorized shares of
Common Stock from 500,000,000 to 1,000,000,000. The terms of the additional
shares of Preferred Stock and Common Stock would be the same as the terms of the
shares of Preferred Stock and Common 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 15,153,000 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 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
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<PAGE>
declare a stock split at any specific price or at all, the Board believes that
the increases 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. For example,
on December 20, 1999, the Company announced that it had entered into an
agreement to acquire Maker Communications, Inc. (subject to customary regulatory
approvals and the approval of Maker's shareholders) in an all-stock transaction
pursuant to which Maker shareholders will receive 0.66 of a share of Conexant
Common Stock for each share of Maker common stock, or an aggregate of
approximately 13,860,000 shares of Conexant Common Stock. The Board believes
that the proposed increases in the number of authorized shares are 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 (currently 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 shareowners, 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 approval of Conexant's shareowners is not so required, the Board
may determine not to seek shareowner 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.
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The Company has not proposed the increases 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 these proposals are 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
Corporation 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."
If only one of the proposals is approved, the Restated Certificate of
Incorporation will be amended to that extent only.
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
amendments to the Restated Certificate of Incorporation, declaring their
advisability and directing that the proposed amendments be submitted to the
shareowners for their approval at the Annual Meeting. If adopted by the
shareowners, the amendments 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 EACH OF THE
PROPOSED AMENDMENTS TO THE COMPANY'S RESTATED CERTIFICATE OF INCORPORATION.
UNLESS CONTRARY CHOICES ARE SPECIFIED, PROXIES SOLICITED BY THE BOARD OF
DIRECTORS WILL BE VOTED FOR APPROVAL OF EACH OF THE PROPOSED AMENDMENTS.
APPROVAL OF AMENDMENT TO THE COMPANY'S 1999 LONG-TERM INCENTIVES PLAN TO
INCREASE AUTHORIZED SHARES (PROPOSAL 4)
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 the 1999 LTIP is necessary for the Company to
remain competitive in its compensation practices. Essentially all the 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 22, 1999, the closing price of the Common Stock on The Nasdaq National
Market was $70.
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
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<PAGE>
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 Nonqualified Stock
Options or (in the case of Employees only) Incentive Stock Options and
(ii) 200,000 shares (in the case of Employees only) of 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; 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.
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
Securities 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
Securities 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 grant 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 or 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. 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,
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<PAGE>
(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.
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, 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) were
outstanding and 2,200,000 shares of Restricted Stock had been issued 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 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.
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<PAGE>
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 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
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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, is 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 as of November 30, 1999 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 3,855
participants in the 1999 LTIP.
<TABLE>
<CAPTION>
NUMBER OF SHARES UNDERLYING
NAME AND POSITION WITH THE COMPANY OPTIONS GRANTED(1)
- - - - - - - - - - - - - - - - - ---------------------------------- ---------------------------
<S> <C>
Dwight W. Decker ........................................... 1,000,000
Chairman of the Board and Chief Executive Officer
Moiz M. Beguwala ........................................... 470,000
Senior Vice President and General Manager--Wireless
Communications
Lewis C. Brewster .......................................... 400,000
Senior Vice President, Worldwide Sales
Raouf Y. Halim ............................................. 520,000
Senior Vice President and General Manager--Network Access
Balakrishnan S. Iyer ....................................... 700,000
Senior Vice President and Chief Financial Officer
Executive Officers as a Group............................... 5,420,000
Non-Executive Directors as a Group(2)....................... --
All Employees (other than Executive Officers) as a Group.... 13,188,918
</TABLE>
- - - - - - - - - - - - - - - - - ------------------------
(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.
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 14,831,000 shares of the Company's Common Stock were
outstanding 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
had been 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) nonqualified options to purchase shares of Conexant
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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 and it is currently anticipated that grants thereunder will be made
primarily to persons who are not executive officers of Conexant. It is further
anticipated that future grants under the 1999 LTIP will be made primarily to
executive officers of Conexant and that the increase in authorized shares in the
1999 LTIP will be sufficient to cover such grants for approximately a three-year
period. The 2000 Plan is substantially similar to the 1999 Plan, except that it
does not provide for grants of incentive stock options and does not include a
change of control provision. As of November 30, 1999, options to purchase
429,846 shares of the Company's Common Stock and 31,437 shares of Restricted
Stock had been granted under the 2000 Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE 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 5)
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.
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.
OTHER MATTERS
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act requires the Company's
directors and 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, 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 its directors, officers and 10% shareowners timely filed
all forms required to be filed under Section 16(a), except that Steven M.
Thomson, Vice President and Controller of the Company, inadvertently reported
late the issuance to his wife of 266 shares of Restricted Stock and options
covering 800 shares of the Company's Common Stock under the 1999 LTIP.
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
Securities 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
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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 120(th) day prior to the 2001 Annual Meeting
and no later than the close of business on the later of the 90(th) day prior to
the 2001 Annual Meeting or the 10(th) 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
Securities Exchange Act, the Company may exercise discretionary voting authority
under proxies it solicits to vote in 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.
January 3, 2000
25
<PAGE>
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>
<CAPTION>
<S><C>
Where a vote is not specified, the proxies will vote the shares represented by Please mark your
the proxy FOR the election of directors and FOR proposals 2, 3, 4 and 5 and will votes as indicated /X/
vote in accordance with their discretion on such other matters as may properly in this example.
come before the meeting.
WITHHOLD
FOR
FOR ALL
1. ELECTION OF TWO DIRECTORS-Nominees: / / / / FOR AGAINST ABSTAIN
01) D. W. Decker 02) F. C. Farrill 4. APPROVAL OF AMENDMENT TO / / / / / /
1999 LONG-TERM INCENTIVES
PLAN
(Instruction: To withhold authority to vote for any individual
nominee, write that nominee's name in the space provided below.)
- - - - - - - - - - - - - - - - - ----------------------------------------------------------------
FOR AGAINST ABSTAIN
5. RATIFICATION OF APPOINTMENT / / / / / /
OF AUDITORS
I consent to future access of the
Annual Reports and Proxy Materials
2. APPROVAL OF AMENDMENT TO RESTATED electronically via the Internet. I / / I/we plan to attend the / /
CERTIFICATE OF INCORPORATION TO understand that the Company may no meeting. Please send an
INCREASE AUTHORIZED PREFERRED STOCK longer distribute printed materials Admittance Card.
to me for any future shareowner meeting
FOR AGAINST ABSTAIN until such consent is revoked. I
/ / / / / / understand that I may revoke my consent
at any time.
3. APPROVAL OF AMENDMENT TO RESTATED
CERTIFICATE OF INCORPORATION TO INCREASE
AUTHORIZED COMMON STOCK
FOR AGAINST ABSTAIN
/ / / / / /
Comments on other side / /
</TABLE>
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 AND READ THE REVERSE SIDE
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 consent to view future Annual Reports and Proxy Materials for this
account via the Internet.
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 MATERIALS ONLINE GO TO:
http://www.conexant.com
- - - - - - - - - - - - - - - - - ------------------------------------------------------------
<PAGE>
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.
Please vote in accordance with the instructions on the reverse side
of this card by February 9, 2000. IF YOU DO NOT PROPERLY VOTE by that date,
Wells Fargo Bank, N.A., Trustee for the Rockwell Plans, will vote the shares
allocated to your Rockwell Plan accounts as it deems proper.
(Continued, and to be marked, dated and signed, on the other side)
FOLD AND DETACH HERE
<PAGE>
<TABLE>
<CAPTION>
<S><C>
Please mark your
votes as indicated /X/
in this example.
WITHHOLD
FOR
FOR ALL
1. ELECTION OF TWO DIRECTORS-Nominees: / / / / FOR AGAINST ABSTAIN
01) D. W. Decker 02) F. C. Farrill 4. APPROVAL OF AMENDMENT TO / / / / / /
1999 LONG-TERM INCENTIVES
PLAN
(Instruction: To withhold authority to vote for any individual
nominee, write that nominee's name in the space provided below.)
- - - - - - - - - - - - - - - - - ----------------------------------------------------------------
FOR AGAINST ABSTAIN
5. RATIFICATION OF APPOINTMENT / / / / / /
OF AUDITORS
I consent to future access of the
Annual Reports and Proxy Materials
2. APPROVAL OF AMENDMENT TO RESTATED electronically via the Internet. I / / I/we plan to attend the / /
CERTIFICATE OF INCORPORATION TO understand that the Company may no meeting. Please send an
INCREASE AUTHORIZED PREFERRED STOCK longer distribute printed materials Admittance Card.
to me for any future shareowner meeting
FOR AGAINST ABSTAIN until such consent is revoked. I
/ / / / / / understand that I may revoke my consent
at any time.
3. APPROVAL OF AMENDMENT TO RESTATED
CERTIFICATE OF INCORPORATION TO
INCREASE AUTHORIZED COMMON STOCK
FOR AGAINST ABSTAIN
/ / / / / /
</TABLE>
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
Direction Card. PLEASE SIGN, DATE, AND RETURN THE DIRECTION CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.
FOLD AND DETACH HERE AND READ THE REVERSE SIDE
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 direction 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 consent to view future Annual Reports and Proxy Materials for this
account via the Internet.
WHEN ASKED, PLEASE CONFIRM BY PRESSING 1
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------
OR
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------
VOTE BY DIRECTION CARD: Mark, sign and date your direction 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
direction card.
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------
THANK YOU FOR VOTING.
- - - - - - - - - - - - - - - - - ------------------------------------------------------------
TO VIEW OUR ANNUAL REPORT AND PROXY MATERIALS ONLINE GO TO:
http://www.conexant.com
- - - - - - - - - - - - - - - - - ------------------------------------------------------------
<PAGE>
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.
Please vote in accordance with the instructions on the reverse side
of this card by February 9, 2000. IF YOU DO NOT PROPERLY VOTE by that date,
Wells Fargo Bank, N.A., Trustee for the Rockwell Plans, will vote the shares
allocated to your Rockwell Plan accounts as it deems proper.
(Continued, and to be marked, dated and signed, on the other side)
FOLD AND DETACH HERE
<PAGE>
<TABLE>
<CAPTION>
<S><C>
Please mark your
votes as indicated /X/
in this example.
WITHHOLD
FOR
FOR ALL
1. ELECTION OF TWO DIRECTORS-Nominees: / / / / FOR AGAINST ABSTAIN
01) D. W. Decker 02) F. C. Farrill 4. APPROVAL OF AMENDMENT TO / / / / / /
1999 LONG-TERM INCENTIVES
PLAN
(Instruction: To withhold authority to vote for any individual
nominee, write that nominee's name in the space provided below.)
- - - - - - - - - - - - - - - - - ----------------------------------------------------------------
FOR AGAINST ABSTAIN
5. RATIFICATION OF APPOINTMENT / / / / / /
OF AUDITORS
I consent to future access of the
Annual Reports and Proxy Materials
2. APPROVAL OF AMENDMENT TO RESTATED electronically via the Internet. I / / I/we plan to attend the / /
CERTIFICATE OF INCORPORATION TO understand that the Company may no meeting. Please send an
INCREASE AUTHORIZED PREFERRED STOCK longer distribute printed materials Admittance Card.
to me for any future shareowner meeting
FOR AGAINST ABSTAIN until such consent is revoked. I
/ / / / / / understand that I may revoke my consent
at any time.
3. APPROVAL OF AMENDMENT TO RESTATED
CERTIFICATE OF INCORPORATION TO
INCREASE AUTHORIZED COMMON STOCK
FOR AGAINST ABSTAIN
/ / / / / /
</TABLE>
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
Direction Card. PLEASE SIGN, DATE, AND RETURN THE DIRECTION CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.
FOLD AND DETACH HERE AND READ THE REVERSE SIDE
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 direction 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 consent to view future Annual Reports and Proxy Materials for this
account via the Internet.
WHEN ASKED, PLEASE CONFIRM BY PRESSING 1
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------
OR
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------
VOTE BY DIRECTION CARD: Mark, sign and date your direction 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
direction card.
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------
THANK YOU FOR VOTING.
- - - - - - - - - - - - - - - - - ------------------------------------------------------------
TO VIEW OUR ANNUAL REPORT AND PROXY MATERIALS ONLINE GO TO:
http://www.conexant.com
- - - - - - - - - - - - - - - - - ------------------------------------------------------------
<PAGE>
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.
Please vote in accordance with the instructions on the reverse side
of this card by February 9, 2000. IF YOU DO NOT PROPERLY VOTE by that date,
Wells Fargo Bank, N.A., Trustee for the Rockwell Plans, will vote the shares
allocated to your Rockwell Plan accounts as it deems proper.
(Continued, and to be marked, dated and signed, on the other side)
FOLD AND DETACH HERE
<PAGE>
<TABLE>
<CAPTION>
<S><C>
Please mark your
votes as indicated /X/
in this example.
WITHHOLD
FOR
FOR ALL
1. ELECTION OF TWO DIRECTORS-Nominees: / / / / FOR AGAINST ABSTAIN
01) D. W. Decker 02) F. C. Farrill 4. APPROVAL OF AMENDMENT TO / / / / / /
1999 LONG-TERM INCENTIVES
PLAN
(Instruction: To withhold authority to vote for any individual
nominee, write that nominee's name in the space provided below.)
- - - - - - - - - - - - - - - - - ----------------------------------------------------------------
FOR AGAINST ABSTAIN
5. RATIFICATION OF APPOINTMENT / / / / / /
OF AUDITORS
I consent to future access of the
Annual Reports and Proxy Materials
2. APPROVAL OF AMENDMENT TO RESTATED electronically via the Internet. I / / I/we plan to attend the / /
CERTIFICATE OF INCORPORATION TO understand that the Company may no meeting. Please send an
INCREASE AUTHORIZED PREFERRED STOCK longer distribute printed materials Admittance Card.
to me for any future shareowner meeting
FOR AGAINST ABSTAIN until such consent is revoked. I
/ / / / / / understand that I may revoke my consent
at any time.
3. APPROVAL OF AMENDMENT TO RESTATED
CERTIFICATE OF INCORPORATION TO INCREASE
AUTHORIZED COMMON STOCK
FOR AGAINST ABSTAIN
/ / / / / /
</TABLE>
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
Direction Card. PLEASE SIGN, DATE, AND RETURN THE DIRECTION CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.
FOLD AND DETACH HERE AND READ THE REVERSE SIDE
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 direction 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 consent to view future Annual Reports and Proxy Materials for this
account via the Internet.
WHEN ASKED, PLEASE CONFIRM BY PRESSING 1
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------
OR
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------
VOTE BY DIRECTION CARD: Mark, sign and date your direction 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
direction card.
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------
THANK YOU FOR VOTING.
- - - - - - - - - - - - - - - - - ------------------------------------------------------------
TO VIEW OUR ANNUAL REPORT AND PROXY MATERIALS ONLINE GO TO:
http://www.conexant.com
- - - - - - - - - - - - - - - - - ------------------------------------------------------------
<PAGE>
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.
Please vote in accordance with the instructions on the reverse side
of this card by February 9, 2000. IF YOU DO NOT PROPERLY VOTE by that date,
Wells Fargo Bank, N.A., Trustee for the Rockwell Plans, will vote the shares
allocated to your Rockwell Plan accounts as it deems proper.
(Continued, and to be marked, dated and signed, on the other side)
FOLD AND DETACH HERE
<PAGE>
<TABLE>
<CAPTION>
<S><C>
Please mark your
votes as indicated /X/
in this example.
WITHHOLD
FOR
FOR ALL
1. ELECTION OF TWO DIRECTORS-Nominees: / / / / FOR AGAINST ABSTAIN
01) D. W. Decker 02) F. C. Farrill 4. APPROVAL OF AMENDMENT TO / / / / / /
1999 LONG-TERM INCENTIVES
PLAN
(Instruction: To withhold authority to vote for any individual
nominee, write that nominee's name in the space provided below.)
- - - - - - - - - - - - - - - - - ----------------------------------------------------------------
FOR AGAINST ABSTAIN
5. RATIFICATION OF APPOINTMENT / / / / / /
OF AUDITORS
I consent to future access of the
Annual Reports and Proxy Materials
2. APPROVAL OF AMENDMENT TO RESTATED electronically via the Internet. I / / I/we plan to attend the / /
CERTIFICATE OF INCORPORATION TO understand that the Company may no meeting. Please send an
INCREASE AUTHORIZED PREFERRED STOCK longer distribute printed materials Admittance Card.
to me for any future shareowner meeting
FOR AGAINST ABSTAIN until such consent is revoked. I
/ / / / / / understand that I may revoke my consent
at any time.
3. APPROVAL OF AMENDMENT TO RESTATED
CERTIFICATE OF INCORPORATION TO
INCREASE AUTHORIZED COMMON STOCK
FOR AGAINST ABSTAIN
/ / / / / /
</TABLE>
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
Direction Card. PLEASE SIGN, DATE, AND RETURN THE DIRECTION CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.
FOLD AND DETACH HERE AND READ THE REVERSE SIDE
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 direction 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 consent to view future Annual Reports and Proxy Materials for this
account via the Internet.
WHEN ASKED, PLEASE CONFIRM BY PRESSING 1
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------
OR
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------
VOTE BY DIRECTION CARD: Mark, sign and date your direction 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
direction card.
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------
THANK YOU FOR VOTING.
- - - - - - - - - - - - - - - - - ------------------------------------------------------------
TO VIEW OUR ANNUAL REPORT AND PROXY MATERIALS ONLINE GO TO:
http://www.conexant.com
- - - - - - - - - - - - - - - - - ------------------------------------------------------------
<PAGE>
DIRECTION CARD
CONEXANT SALARIED 401K SAVINGS PLAN
TO: FIDELITY MANAGEMENT TRUST COMPANY, 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.
Please vote in accordance with the instructions on the reverse side
of this card by February 9, 2000. IF YOU DO NOT PROPERLY VOTE by that date,
Fidelity Management Trust Company, Trustee for the Conexant Plans, will NOT
vote the shares allocated to your Conexant Plan accounts.
(Continued, and to be marked, dated and signed, on the other side)
FOLD AND DETACH HERE
<PAGE>
<TABLE>
<CAPTION>
<S><C>
Please mark your
votes as indicated /X/
in this example.
WITHHOLD
FOR
FOR ALL
1. ELECTION OF TWO DIRECTORS-Nominees: / / / / FOR AGAINST ABSTAIN
01) D. W. Decker 02) F. C. Farrill 4. APPROVAL OF AMENDMENT TO / / / / / /
1999 LONG-TERM INCENTIVES
PLAN
(Instruction: To withhold authority to vote for any individual
nominee, write that nominee's name in the space provided below.)
- - - - - - - - - - - - - - - - - ----------------------------------------------------------------
FOR AGAINST ABSTAIN
5. RATIFICATION OF APPOINTMENT / / / / / /
OF AUDITORS
I consent to future access of the
Annual Reports and Proxy Materials
2. APPROVAL OF AMENDMENT TO RESTATED electronically via the Internet. I / / I/we plan to attend the / /
CERTIFICATE OF INCORPORATION TO understand that the Company may no meeting. Please send an
INCREASE AUTHORIZED PREFERRED STOCK longer distribute printed materials Admittance Card.
to me for any future shareowner meeting
FOR AGAINST ABSTAIN until such consent is revoked. I
/ / / / / / understand that I may revoke my consent
at any time.
3. APPROVAL OF AMENDMENT TO RESTATED
CERTIFICATE OF INCORPORATION TO
INCREASE AUTHORIZED COMMON STOCK
FOR AGAINST ABSTAIN
/ / / / / /
</TABLE>
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
Direction Card. PLEASE SIGN, DATE, AND RETURN THE DIRECTION CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.
FOLD AND DETACH HERE AND READ THE REVERSE SIDE
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 direction 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 consent to view future Annual Reports and Proxy Materials for this
account via the Internet.
WHEN ASKED, PLEASE CONFIRM BY PRESSING 1
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------
OR
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------
VOTE BY DIRECTION CARD: Mark, sign and date your direction 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
direction card.
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------
THANK YOU FOR VOTING.
- - - - - - - - - - - - - - - - - ------------------------------------------------------------
TO VIEW OUR ANNUAL REPORT AND PROXY MATERIALS ONLINE GO TO:
http://www.conexant.com
- - - - - - - - - - - - - - - - - ------------------------------------------------------------
<PAGE>
DIRECTION CARD
CONEXANT HOURLY 401K SAVINGS PLAN
TO: FIDELITY MANAGEMENT TRUST COMPANY, 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.
Please vote in accordance with the instructions on the reverse side
of this card by February 9, 2000. IF YOU DO NOT PROPERLY VOTE by that date,
Fidelity Management Trust Company, Trustee for the Conexant Plans, will NOT
vote the shares allocated to your Conexant Plan accounts.
(Continued, and to be marked, dated and signed, on the other side)
FOLD AND DETACH HERE
<PAGE>
<TABLE>
<CAPTION>
<S><C>
Please mark your
votes as indicated /X/
in this example.
WITHHOLD
FOR
FOR ALL
1. ELECTION OF TWO DIRECTORS-Nominees: / / / / FOR AGAINST ABSTAIN
01) D. W. Decker 02) F. C. Farrill 4. APPROVAL OF AMENDMENT TO / / / / / /
1999 LONG-TERM INCENTIVES
PLAN
(Instruction: To withhold authority to vote for any individual
nominee, write that nominee's name in the space provided below.)
- - - - - - - - - - - - - - - - - ----------------------------------------------------------------
FOR AGAINST ABSTAIN
5. RATIFICATION OF APPOINTMENT / / / / / /
OF AUDITORS
I consent to future access of the
Annual Reports and Proxy Materials
2. APPROVAL OF AMENDMENT TO RESTATED electronically via the Internet. I / / I/we plan to attend the / /
CERTIFICATE OF INCORPORATION TO understand that the Company may no meeting. Please send an
INCREASE AUTHORIZED PREFERRED STOCK longer distribute printed materials Admittance Card.
to me for any future shareowner meeting
FOR AGAINST ABSTAIN until such consent is revoked. I
/ / / / / / understand that I may revoke my consent
at any time.
3. APPROVAL OF AMENDMENT TO RESTATED
CERTIFICATE OF INCORPORATION TO
INCREASE AUTHORIZED COMMON STOCK
FOR AGAINST ABSTAIN
/ / / / / /
</TABLE>
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
Direction Card. PLEASE SIGN, DATE, AND RETURN THE DIRECTION CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.
FOLD AND DETACH HERE AND READ THE REVERSE SIDE
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 direction 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 consent to view future Annual Reports and Proxy Materials for this
account via the Internet.
WHEN ASKED, PLEASE CONFIRM BY PRESSING 1
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------
OR
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------
VOTE BY DIRECTION CARD: Mark, sign and date your direction 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
direction card.
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------
THANK YOU FOR VOTING.
- - - - - - - - - - - - - - - - - ------------------------------------------------------------
TO VIEW OUR ANNUAL REPORT AND PROXY MATERIALS ONLINE GO TO:
http://www.conexant.com
- - - - - - - - - - - - - - - - - ------------------------------------------------------------
