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SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] 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
CONEXANT SYSTEMS, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials:
[ ] Check box if any 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[CONEXANT LOGO]
January 10, 2001
Dear Shareowner:
Conexant's 2001 Annual Meeting of Shareowners will be held at 9:00 a.m.
Eastern Standard Time on Wednesday, February 28, 2001, at the New York Marriott
Marquis Hotel, located at 1535 Broadway, New York, New York. 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> 3
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 Card 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 accompanying paper Proxy
Card, you may 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 at 9:00 a.m. Eastern
Standard Time on Wednesday, February 28, 2001, at the New York Marriott Marquis
Hotel, located at 1535 Broadway, New York, New York, 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, IN ADDITION TO OBTAINING AN
ADMITTANCE CARD, 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> 4
CONEXANT SYSTEMS, INC.
4311 JAMBOREE ROAD
NEWPORT BEACH, CALIFORNIA 92660-3095
NOTICE OF ANNUAL MEETING OF SHAREOWNERS
Dear Shareowner:
You are cordially invited to attend the 2001 Annual Meeting of Shareowners
of Conexant Systems, Inc. ("Conexant" or the "Company") which will be held on
Wednesday, February 28, 2001, at 9:00 a.m. Eastern Standard Time, at the New
York Marriott Marquis Hotel, located at 1535 Broadway, New York, New York. 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 2004 Annual Meeting of Shareowners;
2. 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
3. To transact such other business as may properly come before the 2001 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 January 2, 2001 will be entitled to notice
of, and to vote at, the 2001 Annual Meeting. A list of shareowners entitled to
notice of, and to vote at, the 2001 Annual Meeting will be available for
inspection by any shareowner at the offices of the Company, 4311 Jamboree Road,
Newport Beach, California 92660-3095, for at least ten days prior to the 2001
Annual Meeting and also at the Meeting.
Shareowners are requested to complete, sign, date 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 10, 2001
<PAGE> 5
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 2001 Annual
Meeting of Shareowners (the "Annual Meeting") to be held at 9:00 a.m. Eastern
Standard Time on Wednesday, February 28, 2001, at the New York Marriott Marquis
Hotel, located at 1535 Broadway, New York, New York, and at any adjournment
thereof, for the purposes set forth in the accompanying Notice of 2001 Annual
Meeting of Shareowners. This proxy statement and the proxy are first being
mailed to shareowners and made available on the Internet
(http://www.conexant.com) on or about January 10, 2001.
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 (the "Stock Split"). 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, and references made to
the September 30, 2000 period relate to the actual fiscal year ended September
29, 2000.
VOTING AND REVOCABILITY OF PROXIES
When proxies are properly executed, dated 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 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 Card 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 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 one share of the Company's
Series B Voting Preferred Stock outstanding on the record date will be entitled
to one vote for every exchangeable share of Philsar Semiconductor Inc., a
subsidiary of the Company ("Philsar"), outstanding on the record date and not
held by the Company. The Company's Common Stock and Series B Voting Preferred
Stock will vote together as one class on all matters to be voted on at the
Annual Meeting. 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 ratification of the appointment of the independent
auditors will require the affirmative vote of a majority of the votes entitled
to
<PAGE> 6
be cast by holders of shares of the Company's Common Stock and Series B Voting
Preferred Stock, voting together as a single class, 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 a 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 January 2, 2001 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 and Series B Voting Preferred Stock
outstanding on the record date is required for a quorum. As of January 2, 2001,
there were 242,425,144 shares of the Company's Common Stock and one share of the
Company's Series B Voting Preferred Stock issued and outstanding. The
outstanding share of Series B Voting Preferred Stock is held by CIBC Mellon
Trust Company, as trustee (the "Trustee"), on behalf of the holders of
exchangeable shares of Philsar. On January 2, 2001, there were 1,728,821
exchangeable shares of Philsar outstanding and not held by the Company. The
Trustee will exercise the voting rights of the Series B Voting Preferred Stock
only to the extent it receives voting instructions from the holders of the
Philsar exchangeable shares.
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 II will be elected at the 2001
Annual Meeting to serve for a term expiring at the Company's Annual Meeting in
the year 2004. The two directors in Class I and the one director in Class III
are serving terms expiring at the Company's Annual Meeting of Shareowners in
2003 and 2002, respectively.
Unless marked otherwise, proxies received will be voted FOR the election of
each of the two nominees specified in "Class II--Nominees for Directors with
Terms Expiring in 2004," below, who now serve as directors with terms extending
to the 2001 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 the nominees will
be unwilling or unable to serve if elected as a director. Such persons have been
nominated to serve until the 2004 Annual Meeting of Shareowners and until their
successors are elected and qualified.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE
NOMINEES LISTED BELOW.
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INFORMATION AS TO NOMINEES FOR DIRECTORS AND CONTINUING DIRECTORS
There is shown below for each nominee for director and each continuing
director, as reported to the Company, the name, age and principal occupation;
the position, if any, with the Company; and other directorships held.
CLASS II--NOMINEES FOR DIRECTORS WITH TERMS EXPIRING IN 2004
<TABLE>
<S> <C> <C>
DONALD R. BEALL PHOTO Mr. Beall has been a Director of Conexant
Age 62 since 1998. He is the retired Chairman of
Retired Chairman and Chief the Board and Chief Executive Officer of
Executive Officer of Rockwell International Corporation
Rockwell International Corporation ("Rockwell") (electronic controls and
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 ArvinMeritor, Inc. and The
Procter & Gamble Company. He is a trustee of
California Institute of Technology, a member
of the Foundation Board of Trustees at the
University of California--Irvine and an
Overseer of the Hoover Institution. He is
also a member of The Business Council and
numerous professional, civic and
entrepreneurial organizations.
JERRE L. STEAD (PHOTO) Mr. Stead has been a Director of Conexant
Age 58 since 1998. In May 2000 he retired as
Retired Chairman and Chief Chairman of the Board and Chief Executive
Executive Officer of Officer of Ingram Micro Inc. (computer
Ingram Micro Inc. technology products and services), positions
he had held 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 of 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., Brightpoint, 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>
3
<PAGE> 8
<TABLE>
<S> <C> <C>
CLASS I--CONTINUING DIRECTORS WITH TERMS EXPIRING IN 2003
DWIGHT W. DECKER (PHOTO) Mr. Decker has been a Director of Conexant
Age 50 since its incorporation in 1996. Mr. Decker
Chairman of the Board and has been Chairman of the Board and Chief
Chief Executive Officer of Executive Officer of the Company since
the Company November 1998. He served as Senior Vice
President of Rockwell (electronic controls
and communications) and President, Rockwell
Semiconductor Systems from July 1998 to
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 prior thereto.
F. CRAIG FARRILL (PHOTO) Mr. Farrill has been a Director of Conexant
Age 48 since 1998. Mr. Farrill has been Managing
Managing Director and Chief Director and Chief Technology Officer of
Technology Officer of inOvate inOvate Communications Group (wireless
Communications Group and Former Chief communications) since September 2000. Prior
Technology Officer of Vodafone thereto, he was Chief Technology Officer of
AirTouch Plc Vodafone AirTouch Plc (wireless
communications) from July 1999 to July 2000
and was Vice President, Strategic Technology
of AirTouch Communications, Inc. (wireless
communications) from June 1996 to July 1999.
From June 1991 to June 1996, Mr. Farrill
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>
4
<PAGE> 9
<TABLE>
<S> <C> <C>
CLASS III--CONTINUING DIRECTOR WITH TERM EXPIRING IN 2002
RICHARD M. BRESSLER (PHOTO) Mr. Bressler has been a Director of Conexant
Age 70 since 1998. He served as Chief Executive
Retired Chairman of the Board of El Officer of Burlington Northern Inc. (rail
Paso Energy Corp. 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 Plum Creek Management Company
(timber operations) from April 1989 to
January 1993 and as Chairman of the El Paso
Natural Gas Company, now known as El Paso
Energy Corp. (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 x*
J. L. Stead.................. x x x*
</TABLE>
------------------------------
* Chairman
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 quarterly and 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.
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<PAGE> 10
At October 1, 1999, the members of the Audit Committee were Messrs.
Bressler and Stead. On August 11, 2000, Mr. Farrill was appointed as an
additional member of the Audit Committee. The Committee acts pursuant to a
written charter which was adopted by the Board of Directors of the Company on
November 30, 1998, amended on August 11, 2000 and amended and restated on
December 20, 2000, a copy of which is attached hereto as Appendix A. In the
opinion of the Board of Directors of the Company, all current members of the
Company's Audit Committee are independent directors within the meaning of Rule
4200(a)(14) of the Rules of the National Association of Securities Dealers, Inc.
The Committee met three times during the 2000 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 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 2000 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 Committee met five times during the 2000 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 2000
fiscal year.
The Board of Directors held 22 meetings during the 2000 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 the 2000 fiscal year.
DIRECTORS' COMPENSATION
Non-employee directors of the Company receive a retainer at the rate of
$30,000 per year for Board service. Prior to February 10, 2000, the Directors
Stock Plan provided that upon initial election to the Board, each non-employee
director was granted an option to purchase 80,000 (40,000 prior to the
adjustment as a result of the Stock Split) shares of the Company's Common Stock
at an exercise price per share equal to the fair market value of the Company's
Common Stock on the date of grant. Such stock options become exercisable in four
equal installments on each of the first, second, third and fourth anniversaries
of the date the options were granted. In addition, following completion of one
year of service on the Board, each non-employee director would thereafter be
granted an option to purchase 30,000 (15,000 prior to the adjustment as a result
of the Stock Split) shares of the Company's Common Stock immediately after each
Annual Meeting of Shareowners of the Company. Pursuant to the Directors Stock
Plan, in January 1999 each non-employee director was granted an option to
purchase 80,000 shares of the Company's Common Stock. Such stock options become
exercisable in four equal installments on each of the first, second, third and
fourth anniversaries of the date the options were granted. On February 10, 2000,
the Directors Stock Plan was amended to reduce the initial grant of options to
purchase shares of the Company's Common Stock to non-
6
<PAGE> 11
employee directors from 80,000 to 40,000 shares and the annual grants of options
to non-employee directors following the initial grant from 30,000 to 20,000
shares. Following the 2000 Annual Meeting, each non-employee director was
granted an option to purchase 20,000 shares of the Company's Common Stock.
Under the terms of the Company's directors' deferred compensation plan, a
director may elect to defer all or part of the cash payment of retainer fees
until such time as shall be specified with interest on deferred amounts accruing
quarterly at 120% of the Federal long-term rate set each month by the Secretary
of the Treasury. Each director also has the alternative 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 AUDIT COMMITTEE
The Audit Committee, which consists entirely of non-employee directors (see
"Board Committees and Meetings" above), has furnished the following report on
Audit Committee matters:
The Audit Committee acts pursuant to a written charter which was adopted by
the Board of Directors of the Company on November 30, 1998, amended on August
11, 2000 and amended and restated on December 20, 2000. The Audit Committee has
reviewed the audited financial statements of the Company for the fiscal year
ended September 30, 2000 with management and it has discussed with Deloitte &
Touche LLP, the Company's independent auditors, the matters required to be
discussed by Statement on Auditing Standards No. 61 (Communication with Audit
Committees) relating to the conduct of the audit. The Audit Committee has also
received written disclosures and a letter from Deloitte & Touche LLP regarding
its independence from the Company as required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees) and has
discussed with Deloitte & Touche LLP the independence of that firm. Based upon
the above materials and discussions, the Audit Committee recommended to the
Board of Directors that the audited financial statements be included in the
Company's Annual Report on Form 10-K for the fiscal year ended September 30,
2000.
Audit Committee
Richard M. Bressler, Chairman
F. Craig Farrill
Jerre L. Stead
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 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.
7
<PAGE> 12
Total cash compensation for the majority of the Company's employees,
including its executive officers, consists of the following:
- Base salary; and
- An annual incentive compensation program that is related to growth in
certain financial performance measures of the Company and/or its stock
price appreciation, and based on an individual bonus target for the
performance period. The annual incentive maximum from year to year may be
delivered in cash, restricted stock or stock options.
Long-term incentive compensation is realized through the grant of stock
options and, in some cases, shares of restricted stock, to executive officers
and most employees under the Company's 1999 Long Term Incentives Plan (the "1999
LTIP") and 2000 Non-Qualified Stock Plan.
In addition to encouraging stock ownership by granting stock options and
restricted stock, the Company further encourages all of 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 (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
incentive 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 of 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 incentive compensation program.
PERFORMANCE-BASED COMPENSATION
The Company's executive annual incentive compensation plan is based on the
overall financial performance of the Company. In any given year, that
performance is measured by either stock price appreciation or 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, 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. This award may
also be
8
<PAGE> 13
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 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's 2000 Non-Qualified Stock Plan 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 fiscal year 2000, 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, options are exercisable in 25%
increments over a four-year period, first exercisable one year after the date of
grant (e.g., 25% of options granted in 2000 become exercisable on the
anniversary of the date of grant in 2001). In view of the fact that the stock
price of the Company's Common Stock had remained below the grant price of the
stock option grants for a number of months, the Compensation Committee
recommended to the Board of Directors to advance the normally scheduled option
grants to executive officers under the 1999 LTIP from February 2001 to July 24,
2000 and option grants to other employees under the 2000 Non-Qualified Stock
Plan from January 2001 to July 24, 2000. The Compensation Committee considered
the advancement of these option grants to be important as a method of retaining
and motivating valuable employees during a period of intense competition among
companies in the semiconductor industry. The Company's Board of Directors
approved the advancement of these option grants.
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.
9
<PAGE> 14
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. Effective January 1, 2000, Mr. Decker's salary was set at
$700,000, a 16.7% increase from his fiscal year 1999 salary and at approximately
the average base salary level of the chief executive officers of the Company's
peers. In approving this salary level, the Compensation Committee considered an
analysis of information gathered through Sibson and Company, and from the 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. Mr. Decker's bonus
for the fiscal year ended September 30, 2000 was $950,000. The bonus amount was
based on a pre-determined bonus formula which included Company financial
performance, progress on Company business strategies, and formal leadership
feedback from the Conexant executive management team.
Compensation and Management Development Committee
Jerre L. Stead, Chairman
Donald R. Beall
10
<PAGE> 15
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 for
the 21-month period beginning January 4, 1999 and ending September 30, 2000. The
graph assumes that $100 was invested on January 4, 1999, the first day of public
trading 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 Twenty-One-Month Cumulative Total Return*
Among Conexant Systems, Inc.,
the Nasdaq Stock Market (U.S.) Index
and the Nasdaq Electronic Components Index
[PERFORMANCE GRAPH]
* $100 Invested on 1/4/1999 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 12/31/1999 03/31/2000 06/30/2000 09/30/2000
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Conexant Systems,
Inc. ............. 100 147 309 386 706 755 517 445
Nasdaq Stock Market
(U.S.)............ 100 111 122 125 185 207 180 166
Nasdaq Electronic
Components........ 100 102 116 138 184 294 287 241
</TABLE>
11
<PAGE> 16
EXECUTIVE COMPENSATION
The Company, which was incorporated in 1996, became a publicly-held company
through the pro rata distribution by 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"). The Company 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 and the other four most highly
compensated executive officers of the Company at September 30, 2000 (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,
1999 and 2000, except as noted below. 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-
COMPENSATION TION(4)
ANNUAL COMPENSATION ---------------------------------- ---------
----------------------------------------- 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............... 2000 $669,231 $950,000 $80,440 -- 1,250,000 -- $26,769
Chairman of the Board 1999 444,385 336,518 46,889 -- 1,000,000 -- 20,873
and Chief Executive Officer 1998 357,405 -- 16,839 -- 178,564 -- --
Raouf Y. Halim................. 2000 334,615 234,437 72,565 -- 885,000 -- 13,385
Senior Vice President and 1999 266,408 126,805(5) 44,440 -- 520,000 -- 12,977
General Manager-- 1998 227,324 -- 13,404 -- -- -- 13,640
Network Access
Moiz M. Beguwala............... 2000 343,846(6) 120,142 19,297 -- 225,000 -- 12,831
Senior Vice President and 1999 245,309 126,805(5) 26,377 -- 470,000 -- 12,328
General Manager-- 1998 216,058 24,998 5,772 -- 119,044 -- 12,963
Wireless Communications
Balakrishnan S. Iyer........... 2000 320,769 227,085 65,962 -- 500,000 -- 12,831
Senior Vice President and 1999 282,693 341,805(7) 55,126(8) -- 700,000 -- 6,400
Chief Financial Officer
F. Matthew Rhodes.............. 2000 292,308 276,558(9) 22,969 -- 300,000 -- 10,850
Senior Vice President and 1999 217,616 211,805(10) 21,119(11) -- 300,000 -- 11,418
General Manager--
Personal Computing
</TABLE>
------------------------------
(1) Mr. Iyer joined the Company in October 1998, and Mr. Rhodes became an
executive officer of the Company in November 1998; therefore, for these two
executive officers, compensation information is provided only for fiscal
years 1999 and 2000.
(2) The table reflects the positions held with the Company at September 30,
2000. The Named Executive Officers served Rockwell and its subsidiaries in
the following capacities during fiscal years 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); Mr. Halim--Vice President and General Manager--Network Access
Division, Rockwell Semiconductor Systems, Inc. (February 1997 - December
1998); 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. Iyer--Senior Vice President and Chief
Financial Officer, Rockwell Semiconductor Systems, Inc. (October
1998 - December 1998); and Mr. Rhodes--Vice President and General
Manager--Personal Computing Division (October 1998 - December 1998) and
Director, Marketing Software Products (January 1997 - October 1998),
Rockwell Semiconductor Systems, Inc.
12
<PAGE> 17
(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 year 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 ($336,520) and each of Messrs. Halim, Beguwala, Iyer and Rhodes
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) Includes a retention bonus of $35,000 paid to Messrs. Halim and Beguwala as
consideration for their remaining with Conexant after the Distribution.
(6) Includes $23,077 paid to Mr. Beguwala in lieu of vacation.
(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.
(9) Includes a retention bonus of $60,000 paid to Mr. Rhodes in connection with
Rockwell's acquisition of Pacific Communication Sciences, Inc.
(10) Includes a retention bonus of $120,000 paid to Mr. Rhodes in connection
with Rockwell's acquisition of Pacific Communication Sciences, Inc.
(11) Includes $3,437 paid in connection with the relocation of Mr. Rhodes'
residence within Southern California.
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,
Halim, Beguwala, Iyer and Rhodes. 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 and state 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
13
<PAGE> 18
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, 2001. The loan to Mr. Decker was in the amount of $232,052 and the
loan to each of Messrs. Halim, Beguwala, Iyer and Rhodes was in the amount of
$126,612. Mr. Iyer repaid his loan in December 1999.
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, 2000, which are reflected in the Summary Compensation Table on
page 12.
<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) IN FISCAL 2000 (PER SHARE) DATE 5% 10%
---- --------------- ------------------- ----------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Dwight W. Decker..... 500,000(1) 1.64% $110.375 2/9/2010 $34,707,121 $87,954,661
500,000(2) 1.64 36.500 7/23/2010 11,477,327 29,085,800
250,000(3) 0.82 36.500 7/23/2010 5,738,663 14,542,900
Raouf Y. Halim....... 225,000(1) 0.74 110.375 2/9/2010 15,618,205 39,579,598
225,000(2) 0.74 36.500 7/23/2010 5,164,797 13,088,610
375,000(4) 1.23 36.500 7/23/2010 8,607,995 21,814,350
Moiz M. Beguwala..... 150,000(1) 0.49 110.375 2/9/2010 10,412,137 26,386,399
75,000(5) 0.25 36.500 7/23/2010 1,721,599 4,362,870
Balakrishnan S.
Iyer............... 175,000(1) 0.58 110.375 2/9/2010 12,147,493 30,784,132
175,000(2) 0.58 36.500 7/23/2010 4,017,064 10,180,030
150,000(3) 0.49 36.500 7/23/2010 3,443,198 8,725,740
F. Matthew Rhodes.... 150,000(1) 0.49 110.375 2/9/2010 10,412,137 26,386,399
150,000(2) 0.49 36.500 7/23/2010 3,443,198 8,725,740
</TABLE>
------------------------------
(1) Options were granted on February 10, 2000 and become exercisable in four
substantially equal annual installments beginning on February 10, 2001.
(2) Options were granted on July 24, 2000 and become exercisable in four
substantially equal annual installments beginning on July 24, 2001.
(3) Options were granted on July 24, 2000 and 50% become exercisable two years
after the date of grant and then 25% become exercisable each twelve months
thereafter.
(4) Options were granted on July 24, 2000 and become exercisable on July 24,
2008, provided that such options may become exercisable earlier upon
satisfaction of individual performance criteria for Mr. Halim established by
the Board of Directors.
(5) Options were granted on July 24, 2000 and 50% become exercisable one year
after the date of grant and 50% become exercisable two years after the date
of grant.
14
<PAGE> 19
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 year 2000 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 year 2000 and prior years and held by
them at September 30, 2000.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS HELD AT IN-THE-MONEY OPTIONS AT
SHARES SEPTEMBER 30, 2000 SEPTEMBER 30, 2000(1)
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Dwight W. Decker...... 370,964 $24,009,426 420,946 2,997,640(2) $14,122,827 $61,172,398(2)
Raouf Y. Halim........ 139,378 9,017,330 -- 1,495,454(2) -- 25,283,213(2)
Moiz M. Beguwala...... 133,404 10,399,212 -- 841,182(2) -- 20,576,394(2)
Balakrishnan S.
Iyer................ 175,000 12,114,885 -- 1,025,000 -- 18,792,942
F. Matthew Rhodes..... 50,000 3,219,220 25,000 525,000 811,717 8,111,707
</TABLE>
------------------------------
(1) Based on the closing price of the Company's Common Stock on the Nasdaq
National Market on September 29, 2000 ($41.875).
(2) 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.
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 participating Named Executive
Officers have a fully non-forfeitable right in their benefits under the Rockwell
pension plan accrued as of the time of the Distribution.
The following table shows the estimated aggregate annual retirement
benefits payable on a straight life annuity basis to participating employees, in
the earnings and years of service classifications indicated, under the Rockwell
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 2 YEARS 5 YEARS 10 YEARS 25 YEARS
----------------------- -------- -------- --------- ---------
<S> <C> <C> <C> <C>
$100,000................................ $ 4,985 $12,620 $ 25,254 $ 42,096
$200,000................................ 10,359 25,906 51,836 86,916
$300,000................................ 15,645 39,280 78,594 132,096
$500,000................................ 26,305 65,940 131,934 222,096
</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.
15
<PAGE> 20
The credited years of service of Messrs. Decker, Halim, Beguwala and Rhodes
are 10, 7, 25 and 2 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 table sets forth information
regarding ownership of the Company's outstanding Common Stock on November 30,
2000 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, 2000
<TABLE>
<CAPTION>
COMMON STOCK
------------------------------------
NAME SHARES(1) PERCENT OF CLASS(2)
---- --------- -------------------
<S> <C> <C>
Donald R. Beall............................................. 1,298,440(3,4,5) --*
Richard M. Bressler......................................... 107,686(5,6) --*
Dwight W. Decker............................................ 1,773,916(3,5,7) --*
F. Craig Farrill............................................ 43,760(5,8) --*
Jerre L. Stead.............................................. 23,760(5,8) --*
Raouf Y. Halim.............................................. 433,762(3,5) --*
Moiz M. Beguwala............................................ 293,146(3,5) --*
Balakrishnan S. Iyer........................................ 186,803(3,5) --*
F. Matthew Rhodes........................................... 111,678(3,5) --*
All of the above and other executive
officers as a group (22 persons).......................... 5,652,744(3,5) 2.3%
</TABLE>
------------------------------
* Less than 1%
(1) Each person has sole voting and investment power with respect to the shares
listed unless otherwise indicated. Each person's address is the address of
the Company.
(2) For purposes of computing the percentage of outstanding shares beneficially
owned by each person, shares of which such person has a right to acquire
beneficial ownership within 60 days have been included in both the number of
shares owned by that person and the number of shares outstanding, in
accordance with Rule 13d-3(d)(1) under the Securities Exchange Act.
(3) Includes shares held under the savings plans of the Company and Rockwell as
of November 30, 2000. Does not include the following: 4,071; 767; 702, 137;
20; and 6,688 share equivalents for Messrs. Decker, Halim, Beguwala, Iyer,
Rhodes and the group, respectively, held under the Company's and Rockwell's
supplemental savings plans as of November 30, 2000.
(4) Includes shares, as to which beneficial ownership is disclaimed, as follows:
20,152 shares held for the benefit of family members and 10,000 shares owned
by the Donald and Joan Beall 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 transferred 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: 1,118,316; 44,254; 1,648,586; 40,000;
20,000; 410,454; 262,138; 175,000; 100,000; and 4,910,294
16
<PAGE> 21
for Messrs. Beall, Bressler, Decker, Farrill, Stead, Halim, Beguwala, Iyer,
Rhodes 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 3,760 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., Los Angeles, California, as
trustee under the Rockwell Savings Plan, which held approximately 9% of the
outstanding shares of the Company's Common Stock as of November 30, 2000, 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,
2000. 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.
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS (PROPOSAL 2)
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, 2001.
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. 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 year 2000 its directors, officers and 10% shareowners timely
filed all forms required to be filed under Section 16(a).
2002 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
17
<PAGE> 22
inclusion in the Company's Proxy Statement for the Company's 2002 Annual Meeting
of Shareowners. To be eligible for inclusion in the Company's 2002 Proxy
Statement, any such shareowner proposals must be submitted in writing to the
Secretary of the Company no later than September 12, 2001. The submission of a
shareowner proposal does not guarantee that it will be included in the Company's
Proxy Statement.
With respect to the Company's 2002 Annual Meeting, under the Company's
By-laws, a shareowner proposal or nomination must be submitted in writing to the
Secretary of the Company not less than 90 days nor more than 120 days prior to
the anniversary of the 2001 Annual Meeting, unless the date of the 2002 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
2001 Annual Meeting. For the Company's 2002 Annual Meeting, this means that any
such proposal or nomination must be submitted no earlier than November 1, 2001
and no later than December 1, 2001. If the date of the 2002 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 2001 Annual Meeting, the
shareowner must submit any such proposal or nomination no earlier than the close
of business on the 120th day prior to the 2002 Annual Meeting and no later than
the close of business on the later of the 90th day prior to the 2002 Annual
Meeting or the 10th day following the day on which public announcement of the
date of such meeting is first made. The shareowner's submission must include
certain specified information concerning the proposal or nominee, as the case
may be, and information as to the shareowner's ownership of Common Stock of the
Company. Proposals or nominations not meeting these requirements will not be
entertained at the 2002 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, 2000, including financial statements (the "Form 10-K")
(without exhibits), and the Company's 2000 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 2000 Annual Report to Shareowners, the Form 10-K and
this Proxy Statement are also available on Conexant's Investor Relations Website
(http://www.conexant.com).
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 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 10, 2001
18
<PAGE> 23
APPENDIX A
CONEXANT SYSTEMS, INC.
AUDIT COMMITTEE CHARTER
AS AMENDED DECEMBER 20, 2000
The Audit Committee has been constituted by the Board of Directors to
assist the Board of Directors in overseeing (1) the integrity of the financial
statements of the Corporation, (2) the compliance by the Corporation with legal
and regulatory requirements and (3) the independence and performance of the
Corporation's internal and external auditors.
The members of the Audit Committee shall meet the independence and
experience requirements of the Nasdaq Stock Market, Inc., shall have the
following powers and duties and shall report thereon to the Board of Directors:
(1) For each fiscal year:
(a) to select and recommend employment of, subject to the approval of
the shareowners, independent public accountants to audit the
books, records, accounts and financial statements of this
Corporation and its subsidiaries, which independent public
accountants are ultimately accountable to the Board of Directors
and the Audit Committee who act as representatives of the
shareowners of this Corporation; and
(b) to take, or to recommend that the Board of Directors of this
Corporation take, appropriate action to oversee the independence
of the independent public accountants;
(2) To review with the independent public accountants:
(a) the scope of their annual audit of this Corporation's financial
statements;
(b) this Corporation's quarterly and annual financial statements
before their release;
(c) the adequacy of this Corporation's system of internal controls
and any recommendations of the independent public accountants
with respect thereto;
(d) any comments they may have on major issues related to their audit
activities, restrictions, if any, imposed on their work and the
cooperation they received during the audit;
(e) the matters required to be discussed by Statement on Auditing
Standards No. 1 (Communication with Audit Committees); and
(f) a formal written statement prepared by the independent public
accountants delineating all relationships between the independent
public accountants and this Corporation consistent with
Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees) and any disclosed
relationships or services that may impact the objectivity and
independence of the independent public accountants;
(3) To review and approve the fees charged, and the scope and extent of
any non-audit services performed, by the independent public
accountants;
(4) To review with this Corporation's Director of Internal Audit
(however titled, the "General Auditor"):
(a) the scope of the annual internal audit plan and the results of
completed internal audits; and
(b) any comments the General Auditor may have on major issues related
to the internal audit activities or restrictions, if any, imposed
thereon;
A-1
<PAGE> 24
(5) To monitor compliance by the employees of this Corporation with this
Corporation's Standards of Business Conduct policies;
(6) To meet with this Corporation's Chief Executive Officer, Chief
Financial Officer, General Counsel and other management personnel to
review any issues related to this Corporation's financial reporting,
internal controls, Standards of Business Conduct policies or other
matters within the scope of the Audit Committee's duties; and
(7) To investigate any matter brought to its attention within the scope
of its duties and to engage consultants or independent counsel in
connection therewith as the Audit Committee deems appropriate.
While the Audit Committee has the responsibilities and powers set forth
in this Charter, it is not the duty of the Audit Committee to plan or
conduct audits or to determine that the Corporation's financial
statements are complete and accurate and are in accordance with
generally accepted accounting principles. Those duties are the
responsibility of management and the independent auditors. Nor is it the
duty of the Audit Committee to conduct investigations, to resolve
disagreements, if any, between management and the independent auditors
or to assure compliance with laws and regulations and the Corporation's
Standards of Business Conduct policies.
A-2
<PAGE> 25
Where a vote is not specified, the proxies will vote the Please mark
shares represented by the proxy FOR the election of your votes as [X]
directors and FOR proposal 2 and will vote in indicated in
accordance with their discretion on such other matters this example
as may properly come before the meeting.
1. ELECTION OF TWO DIRECTORS - Nominees:
(01) D.R. Beall (02) J.L. Stead
WITHHOLD
FOR FOR ALL
[ ] [ ]
(Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
-----------------------------------------------------------------------------
2. RATIFICATION OF APPOINTMENT OF AUDITORS
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
I/We consent to future access of the [ ] I/We plan to attend the [ ]
Annual Reports and Proxy Materials meeting. Please send an
electronically via the Internet. I/We Admittance Card.
understand that the Company may no
longer distribute printed materials Comments on other side [ ]
to me/us for any future shareowner
meeting until such consent is revoked.
I/We understand that I/we may revoke
my/our consent at any time.
SIGNATURE________________SIGNATURE IF HELD JOINTLY______________DATE:_____, 2001
If 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 person should
sign. 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, Election of Directors: 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, Ratification of Auditors: To vote FOR, press 1; AGAINST, press 9;
ABSTAIN, press 0.
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> 26
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
28, 2001, 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> 27
Please mark
your votes as [X]
indicated in
this example
1. ELECTION OF TWO DIRECTORS - Nominees:
(01) D.R. Beall (02) J.L. Stead
WITHHOLD
FOR FOR ALL
[ ] [ ]
2. RATIFICATION OF APPOINTMENT OF AUDITORS
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
(Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
-----------------------------------------------------------------------------
I/We consent to future access of the [ ] I/We plan to attend the [ ]
Annual Reports and Proxy Materials meeting. Please send an
electronically via the Internet. I/We Admittance Card.
understand that the Company may no
longer distribute printed materials
to me/us for any future shareowner
meeting until such consent is revoked.
I/We understand that I/we may revoke
my/our consent at any time.
SIGNATURE________________SIGNATURE IF HELD JOINTLY______________DATE:_____, 2001
If 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 person should
sign. 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, Election of Directors: 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, Ratification of Auditors: To vote FOR, press 1; AGAINST, press 9;
ABSTAIN, press 0.
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> 28
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
(the "Plan") at the Annual Meeting of Shareowners of Conexant Systems, Inc. to
be held on February 28, 2001, 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 THIS CARD.
PLEASE VOTE IN ACCORDANCE WITH THE INSTRUCTIONS ON THE REVERSE SIDE OF
THIS CARD BY FEBRUARY 23, 2001. IF YOU DO NOT PROPERLY VOTE BY THAT DATE,
FIDELITY MANAGEMENT TRUST COMPANY, TRUSTEE FOR THE PLAN, WILL VOTE THE SHARES
ALLOCATED TO YOUR PLAN ACCOUNT IN THE SAME PROPORTION ON EACH ISSUE AS IT VOTES
THE SHARES FOR WHICH IT HAS RECEIVED VOTING DIRECTIONS FROM THE OTHER PLAN
PARTICIPANTS.
(Continued, and to be marked, dated and signed, on the other side)
--------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 29
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
(the "Plan") at the Annual Meeting of Shareowners of Conexant Systems, Inc. to
be held on February 28, 2001, 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 THIS CARD.
PLEASE VOTE IN ACCORDANCE WITH THE INSTRUCTIONS ON THE REVERSE SIDE OF
THIS CARD BY FEBRUARY 23, 2001. IF YOU DO NOT PROPERLY VOTE BY THAT DATE,
FIDELITY MANAGEMENT TRUST COMPANY, TRUSTEE FOR THE PLAN, WILL VOTE THE SHARES
ALLOCATED TO YOUR PLAN ACCOUNT IN THE SAME PROPORTION ON EACH ISSUE AS IT VOTES
THE SHARES FOR WHICH IT HAS RECEIVED VOTING DIRECTIONS FROM THE OTHER PLAN
PARTICIPANTS.
(Continued, and to be marked, dated and signed, on the other side)
--------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 30
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 (the "Plan") at the Annual Meeting of Shareowners of Conexant Systems, Inc.
to be held on February 28, 2001, 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 THIS CARD.
PLEASE VOTE IN ACCORDANCE WITH THE INSTRUCTIONS ON THE REVERSE SIDE OF
THIS CARD BY FEBRUARY 23, 2001. IF YOU DO NOT PROPERLY VOTE BY THAT DATE, WELLS
FARGO BANK, N.A., TRUSTEE FOR THE PLAN, WILL VOTE THE SHARES ALLOCATED TO YOUR
PLAN ACCOUNT AS IT DEEMS PROPER.
(Continued, and to be marked, dated and signed, on the other side)
--------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 31
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 (the "Plan") at the Annual Meeting of Shareowners of Conexant
Systems, Inc. to be held on February 28, 2001, 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 THIS CARD.
PLEASE VOTE IN ACCORDANCE WITH THE INSTRUCTIONS ON THE REVERSE SIDE OF
THIS CARD BY FEBRUARY 23, 2001. IF YOU DO NOT PROPERLY VOTE BY THAT DATE, WELLS
FARGO BANK, N.A., TRUSTEE FOR THE PLAN, WILL VOTE THE SHARES ALLOCATED TO YOUR
PLAN ACCOUNT AS IT DEEMS PROPER.
(Continued, and to be marked, dated and signed, on the other side)
--------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 32
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 (the "Plan") at the Annual
Meeting of Shareowners of Conexant Systems, Inc. to be held on February 28,
2001, 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 THIS CARD.
PLEASE VOTE IN ACCORDANCE WITH THE INSTRUCTIONS ON THE REVERSE SIDE OF
THIS CARD BY FEBRUARY 23, 2001. IF YOU DO NOT PROPERLY VOTE BY THAT DATE, WELLS
FARGO BANK, N.A., TRUSTEE FOR THE PLAN, WILL VOTE THE SHARES ALLOCATED TO YOUR
PLAN ACCOUNT AS IT DEEMS PROPER.
(Continued, and to be marked, dated and signed, on the other side)
--------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 33
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 (the "Plan") at the Annual Meeting of Shareowners of
Conexant Systems, Inc. to be held on February 28, 2001, 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 THIS CARD.
PLEASE VOTE IN ACCORDANCE WITH THE INSTRUCTIONS ON THE REVERSE SIDE OF
THIS CARD BY FEBRUARY 23, 2001. IF YOU DO NOT PROPERLY VOTE BY THAT DATE, WELLS
FARGO BANK, N.A., TRUSTEE FOR THE PLAN, WILL VOTE THE SHARES ALLOCATED TO YOUR
PLAN ACCOUNT AS IT DEEMS PROPER.
(Continued, and to be marked, dated and signed, on the other side)
--------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 34
DIRECTION CARD
ROCKWELL RETIREMENT SAVINGS 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 Retirement Savings Plan for
Represented Hourly Employees (the "Plan") at the Annual Meeting of Shareowners
of Conexant Systems, Inc. to be held on February 28, 2001, 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 THIS CARD.
PLEASE VOTE IN ACCORDANCE WITH THE INSTRUCTIONS ON THE REVERSE SIDE OF
THIS CARD BY FEBRUARY 23, 2001. IF YOU DO NOT PROPERLY VOTE BY THAT DATE, WELLS
FARGO BANK, N.A., TRUSTEE FOR THE PLAN, WILL VOTE THE SHARES ALLOCATED TO YOUR
PLAN ACCOUNT AS IT DEEMS PROPER.
(Continued, and to be marked, dated and signed, on the other side)
--------------------------------------------------------------------------------
FOLD AND DETACH HERE
