<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 Under Rule 14a-12
GLOBESPAN, INC.
-----------------------------------------------------------------------
(Name of Registrant as Specified In Charter)
-----------------------------------------------------------------------
(Name of Person(s) Filing the Proxy Statement,
if other than the Registrant)
</TABLE>
<TABLE>
<S> <C> <C>
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:
----------------------------------------------------------
(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]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of GlobeSpan, Inc., a Delaware
corporation ("GlobeSpan" or the "Company"), will be held at the Oyster Point
Hotel, 146 Bodman Place, Red Bank, New Jersey, on the 13th day of June, 2000, at
10 a.m. (local time), for the following purposes:
1. to elect nine directors;
2. to approve the amendment to the Company's Amended and Restated
Certificate of Incorporation to increase the number of authorized shares
of common stock, par value $.001 per share;
3. to ratify the selection of PricewaterhouseCoopers LLP as independent
accountants of the Company for the year 2000; and
4. to transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
All stockholders of the Company are cordially invited to attend. The board
of directors has fixed the close of business on April 25, 2000 as the record
date for the determination of the stockholders of the Company entitled to notice
and to vote at the Annual Meeting. Each share of the Company's common stock is
entitled to one vote on all matters presented at the Annual Meeting. The Company
will make available an alphabetical list of stockholders entitled to vote at the
Annual Meeting for examination by any stockholder during ordinary business
hours, before the Annual Meeting, at the Company's offices or, on the date of
the Annual Meeting, at the Annual Meeting.
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE READ THE
ACCOMPANYING PROXY STATEMENT AND PROMPTLY COMPLETE, DATE AND SIGN THE ENCLOSED
PROXY CARD AND RETURN IT IN THE ENCLOSED REPLY ENVELOPE. THE PROXY IS REVOCABLE
BY YOU AT ANY TIME PRIOR TO ITS USE AT THE ANNUAL MEETING. IF YOU RECEIVE MORE
THAN ONE PROXY CARD BECAUSE YOUR SHARES ARE REGISTERED IN DIFFERENT NAMES OR
ADDRESSES, EACH PROXY CARD SHOULD BE SIGNED AND RETURNED TO ASSURE THAT ALL YOUR
SHARES WILL BE VOTED AT THE ANNUAL MEETING.
By Order of the Board of Directors
/s/ Richard Gottuso
Richard Gottuso
CORPORATE SECRETARY
May 1, 2000
<PAGE>
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the solicitation by the
board of directors of GlobeSpan, Inc., a Delaware corporation ("GlobeSpan" or
the "Company"), of proxies for use at the 2000 Annual Meeting of Stockholders of
the Company (the "Annual Meeting") to be held at the Oyster Point Hotel, 146
Bodman Place, Red Bank, New Jersey, on Tuesday, June 13, 2000 at 10 a.m. (local
time), and at any adjournment of the Annual Meeting. The Company's mailing
address is 100 Schulz Drive, Red Bank, New Jersey 07701. This Proxy Statement
and the enclosed proxy are first being sent to stockholders on or about May 1,
2000.
Only stockholders of record at the close of business on April 25, 2000 (the
"Record Date") will be entitled to receive notice of and to vote at the Annual
Meeting. Each share of common stock outstanding on the Record Date is entitled
to one vote. All shares of common stock will vote together as one class on all
questions that come before the Annual Meeting. On the Record Date, there were
63,474,032 shares of common stock outstanding.
At the Annual Meeting, stockholders of the Company will:
(1) elect as directors the nominees named below;
(2) vote to approve the amendment to the Company's Amended and Restated
Certificate of Incorporation to increase the number of authorized shares
of common stock;
(3) vote on the ratification of the selection by the board of directors of
PricewaterhouseCoopers LLP as independent accountants for the Company for
the year 2000; and
(4) vote upon such other matters as may properly come before the Annual
Meeting or any adjournment or adjournments thereof.
VOTE REQUIRED
Votes at the Annual Meeting will be tabulated by inspectors of election
appointed by the Company. Shares of common stock represented by a properly
signed and returned proxy are considered present at the Annual Meeting for
purposes of determining a quorum.
Brokers holding shares for beneficial owners must vote those shares
according to the specific instructions they receive from the owners. If specific
instructions are not received, as a general rule, brokers may vote these shares
in their discretion. However, brokers are precluded from exercising their voting
discretion on certain types of proposals and, absent specific instructions from
the beneficial owner in such cases, brokers may not vote on those proposals.
This results in what is known as a "broker non-vote" on such proposals.
Election of directors will be determined by a plurality vote of the shares
of common stock present in person or by proxy and voting at the Annual Meeting.
Accordingly, votes "withheld" from director-nominee(s) will not count against
the election of such nominee(s). Brokers have discretionary authority to vote on
the election of directors.
Approval of the amendment to the Company's Amended and Restated Certificate
of Incorporation requires the favorable vote of the holders of a majority of the
shares of common stock outstanding and entitled to vote at the Annual Meeting.
Brokers do not have discretionary authority to vote on this item and abstentions
and broker non-votes will have the effect of a negative vote.
Passage of the proposal to ratify the selection of PricewaterhouseCoopers
LLP as independent accountants for the Company for the year 2000 requires the
approval of a majority of the votes cast on this proposal. Abstentions as to
this proposal will not count as votes cast for or against this proposal
1
<PAGE>
and will not be included in calculating the number of votes necessary for
approval of this proposal. Brokers have discretionary authority to vote on this
proposal.
All other matters will be determined by the vote of a majority of the shares
of common stock present in person or by proxy at the Annual Meeting and voting
on such matters. Abstentions and broker non-votes as to particular matters will
not count as votes cast for or against such matters and will not be included in
calculating the number of votes necessary for approval of such matters.
Each stockholder of the Company is requested to complete, sign, date and
return the enclosed proxy without delay in order to ensure that shares owned
thereby are voted at the Annual Meeting.
Proxies in the accompanying form will be voted in accordance with the
instructions indicated thereon, and, if no such instructions are indicated, will
be voted FOR the nominees for election as directors named below, FOR the
amendment to the Company's Amended and Restated Certificate of Incorporation,
FOR the selection of PricewaterhouseCoopers LLP as the independent accountants
for the Company, and, in the discretion of the proxy holders, on any other
matters that properly come before the Annual Meeting.
REVOCATION OF PROXIES
Any Stockholder may revoke a proxy at any time before such proxy is voted.
Proxies may be revoked by:
- delivering to the Secretary of the Company a written notice of revocation
bearing a date later than the date of the proxy;
- duly executing a subsequent proxy relating to the same shares of common
stock and delivering it to the Secretary of the Company; or
- attending the Annual Meeting and stating to the Secretary of the Company
an intention to vote in person and so voting.
Attendance at the Annual Meeting will not in and of itself constitute
revocation of a proxy. Any subsequent proxy or written notice of revocation of a
proxy should be delivered to GlobeSpan, Inc., 100 Schulz Drive, Red Bank, New
Jersey 07701, Attention: Richard Gottuso, Secretary.
SOLICITATION PROCEDURES
The Company will bear all costs of soliciting proxies in the accompanying
form. Solicitation will be made by mail, and officers and regular employees of
the Company may also solicit proxies by telephone, facsimile or personal
interview. In addition, the Company expects to request persons who hold shares
in their names for others to forward copies of this proxy soliciting material to
them and to request authority to execute proxies in the accompanying form, and
the Company will reimburse such persons for their out-of-pocket and reasonable
clerical expenses in doing this.
2
<PAGE>
COMMON STOCK OWNERSHIP OF
MANAGEMENT AND OTHER BENEFICIAL OWNERS
The table below sets forth information regarding the beneficial ownership of
GlobeSpan's common stock as of April 25, 2000, by (1) each person or entity who
is known by GlobeSpan to own beneficially more than 5% of GlobeSpan's
outstanding stock; (2) each executive officer of the Company named in the
Summary Compensation Table on page 11; (3) each director and nominee; and
(4) all directors, nominees and executive officers as a group.
Applicable percentage ownership in the following table is based on
63,474,032 shares of common stock outstanding as of April 25, 2000. To the
extent that any shares are issued upon exercise of options, warrants or other
rights to acquire GlobeSpan's capital stock that are presently outstanding or
granted in the future or reserved for future issuance under GlobeSpan's stock
plans, there will be further dilution to new public investors. Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission and generally includes voting or investment power with
respect to securities, subject to community property laws, where applicable.
Shares of the Company's common stock subject to options or conversion rights
that are presently exercisable or exercisable within 60 days of April 25, 2000
are deemed to be outstanding and beneficially owned by the person holding such
options for the purpose of computing the percentage of ownership of such person
but are not treated as outstanding for the purpose of computing the percentage
of any other person.
<TABLE>
<CAPTION>
BENEFICIAL OWNER NUMBER OF SHARES PERCENT OF CLASS
- ---------------- ---------------- ----------------
<S> <C> <C>
Entities Associated with Texas Pacific Group(1)............. 25,204,734 39.7%
PairGain Technologies, Inc.(2).............................. 3,243,591 5.1
Barbara Connor(3)........................................... 30,000 *
James Coulter(4)............................................ 25,204,734 39.7
Dipanjan Deb................................................ -- --
Thomas Epley(5)............................................. 1,293,408 2.0
Federico Faggin(6).......................................... 60,177 *
Keith Geeslin(7)............................................ 635,637 1.0
David Stanton............................................... -- --
John Marren................................................. -- --
Armando Geday(8)............................................ 2,010,228 3.1
Robert McMullan(9).......................................... 566,325 *
Nicholas Aretakis(10)....................................... 545,013 *
Thomas Sennhauser........................................... 381,324 *
All directors, nominees and executive officers as a group
(12 persons)(11).......................................... 30,726,846 47.7
</TABLE>
- ------------------------
* Indicates less than 1%.
(1) Consists of 342,585 shares held by Communication GenPar, Inc., 22,696,326
shares held by TPG Partners, L.P., 90,000 stock options issued under the
1999 Director Stock Option Plan granted to TPG affiliated directors, and
2,075,823 shares held by TPG Parallel I, L.P. TPG Partners, L.P. and TPG
Parallel I, L.P., affiliates of Texas Pacific Group, are shareholders in
Communication GenPar, Inc. James Coulter, one of the Company's directors,
are partners of the general partner of the Texas Pacific Group entities. The
address of Texas Pacific Group is 201 Main Street, Suite 2420, Fort Worth,
Texas 76102.
(2) The address of PairGain Technologies, Inc. is 14402 Franklin Avenue, Tustin,
California 92780.
(3) Includes 30,000 shares subject to options which are exercisable within
60 days of April 25, 2000.
3
<PAGE>
(4) Includes 25,204,734 shares held by entities associated with the Texas
Pacific Group. Mr. Coulter is a partner of the general partner of the Texas
Pacific Group entities, and, as such, he may be deemed to have voting and
dispositive power over the Texas Pacific Group shares. However, Mr. Coulter
disclaims beneficial ownership of the Texas Pacific Group shares except to
the extent of his pecuniary interest therein.
(5) Includes 555,192 shares held by Thomas E. Epley Trust, 236,541 shares held
by Anderson Epley Family Trust, 20,460 shares held by Jacqueline Epley
Trust, 20,460 shares held by Thomas Epley, Jr. Trust and 430,755 shares held
and 30,000 shares subject to options exercisable within 60 days by
Mr. Epley individually.
(6) Includes 30,000 shares subject to options which are exercisable within
60 days of April 25, 2000.
(7) Includes 86,136 shares held by DLJ Capital Corporation, 12,039 shares held
by The Sprout CEO Fund, L.P., 430,722 shares held by DLJ First ESC, L.L.C.
and 76,740 shares held and 30,000 shares subject to options exercisable
within 60 days by Mr. Geeslin. Mr. Geeslin is a Divisional Senior Vice
President of DLJ Capital Corporation, the managing general partner of The
Sprout CEO Fund, L.P. DLJ First ESC L.L.C. is an affiliate of DLJ Capital
Corporation. As such, he may be deemed to have voting and dispositive power
over the shares held by entities associated with these entities. However,
Mr. Geeslin disclaims beneficial ownership of these shares except to the
extent of his pecuniary interest therein.
(8) Includes 480,048 shares subject to options which are exercisable within 60
days of April 25, 2000.
(9) Includes 150,000 shares subject to options which are exercisable within 60
days of April 25, 2000.
(10) Includes 150,000 shares subject to options which are exercisable within 60
days of April 25, 2000.
(11) Includes 990,048 shares subject to options which are exercisable within
60 days of April 25, 2000.
4
<PAGE>
ITEM 1. ELECTION OF DIRECTORS
Eight persons have been nominated for election as directors to serve until
the 2001 Annual Meeting of Stockholders and until their successors are elected
and qualified, and it is anticipated that each nominee will be candidates when
the election is held. However, if for any reason a nominee is not a candidate at
that time, proxies will be voted for a substitute nominee designated by the
Company (except proxies marked to the contrary).
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE ELECTION
OR THE NOMINEES FOR THE BOARD OF DIRECTORS NAMED BELOW. UNLESS A CONTRARY CHOICE
IS SPECIFIED, PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED "FOR"
THE NOMINEES NAMED BELOW.
NOMINEES AND EXECUTIVE OFFICERS
Set forth below are the names of each nominee for the office of director and
each other executive officer of the Company, such person's age, the year such
person was elected a director of the Company, if any, and such person's
principal occupation, other business experience during the last five years, and
other directorships in publicly-held corporations:
NOMINEES
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- -------- ------------------------------------------
<S> <C> <C>
President, Chief Executive Officer and
Armando Geday(1).......................... 38 Director
Barbara Connor(2)......................... 48 Director
James Coulter(1)(3)....................... 39 Director
Dipanjan Deb(1)(2)........................ 29 Director
Thomas Epley(1)(3)........................ 58 Director
Federico Faggin(3)........................ 57 Director
Keith Geeslin(2).......................... 46 Director
David Stanton(3).......................... 36 Director
John Marren............................... 37 Director Nominee
</TABLE>
- ------------------------
(1) Member of Executive Committee
(2) Member of Audit Committee
(3) Member of Compensation Committee
ARMANDO GEDAY has served as President and Chief Executive Officer of
GlobeSpan since April 1997 and as a director of GlobeSpan since April 1997. From
June 1986 to March 1997, Mr. Geday was Vice President and General Manager of the
Multimedia Communications Division of Rockwell Semiconductor Systems, a
developer and manufacturer of semiconductor systems. Prior to June 1986,
Mr. Geday held several other marketing and general management positions at
Rockwell. Prior to Rockwell, Mr. Geday was product marketing manager at Harris
Semiconductor. Mr. Geday received a B.S. in Electrical Engineering from the
Florida Institute of Technology.
BARBARA CONNOR has served as a director of GlobeSpan since May 1999. Since
1973, Ms. Connor has held various positions in Bell Atlantic Corporation, a
telecommunications company, including Treasurer and Controller. Since 1995,
Ms. Connor has served as President of Bell Atlantic Federal Systems, where she
oversees Bell Atlantic's sales and servicing activities to the Federal
Government in the continental United States, Puerto Rico and Europe. Ms. Connor
received a B.A. in economics from Immaculata College, an M.A. in economics and
statistics from the University of Notre Dame and an M.B.A. in finance from Rider
University.
5
<PAGE>
JAMES COULTER has served as a director of GlobeSpan since May 1998.
Mr. Coulter has served as a managing partner of Texas Pacific Group, an
investment firm, since 1992. Mr. Coulter currently serves as a director of
America West Holdings Corp., Beringer Wine Estates Holdings, Inc., Northwest
Airlines, Inc., Oxford Health Plans Inc. and several privately held companies.
Mr. Coulter received a B.A. in Business from Dartmouth College and an M.B.A.
from the Stanford Graduate School of Business.
DIPANJAN DEB has served as a director of GlobeSpan since March 1999.
Mr. Deb has been a partner of Francisco Partners since August 1999. From
November 1998 until August 1999, Mr. Deb was employed by Texas Pacific Group, an
investment firm, where he was responsible for technology-related investments.
From August 1991 to June 1994, Mr. Deb was employed at BancBoston Robertson
Stephens, an investment bank. Mr. Deb rejoined BancBoston Robertson Stephens in
June 1996 and served as their Director of Semiconductor Banking until
October 1998. Prior to rejoining BancBoston Robertson Stephens in 1996, Mr. Deb
worked as a management consultant at McKinsey & Company, a consulting firm.
Mr. Deb received a B.S. in Electrical Engineering from the University of
California at Berkeley and an M.B.A. from the Stanford Graduate School of
Business.
THOMAS EPLEY has served as a director of GlobeSpan since August 1996 and as
Chairman of the Board from August 1996 to March 1999. Mr. Epley has also served
as President of Paradyne Credit Corporation, a related party of GlobeSpan, since
August 1996. Mr. Epley was the CEO and President of GlobeSpan from August 1996
to April 1997 and the President and CEO of Paradyne Networks, Inc., a developer
and manufacturer of telecommunications products and a related party of
GlobeSpan, from August 1996 to April 1997. From May 1991 to April 1996,
Mr. Epley was the CEO of Technicolor, an entertainment media company. Mr. Epley
currently serves as Chairman of Paradyne Networks, Inc., as Chairman of
Solus Inc., a microelectrical and mechanical systems company, and as Chairman
and CEO of IAM.com. Mr. Epley received a B.S. in Mechanical Engineering from the
University of Cincinnati and an M.B.A. from Northwestern University.
FEDERICO FAGGIN has served as a director of GlobeSpan since May 1999.
Mr. Faggin is the Chairman of the board of directors and a director of
Synaptics, Inc., a computer peripheral and software company he co-founded in
1986. Mr. Faggin currently serves as a director of Integrated Device
Technologies, Inc., a semiconductor company, and several privately held
companies. Mr. Faggin received a Doctorate in Physics from the University of
Padua, Italy, and holds an honorary doctor degree in Computer Science from the
University of Milan, Italy.
KEITH GEESLIN has served as a director of GlobeSpan since August 1996.
Mr. Geeslin is a General Partner of The Sprout Group, a venture capital firm,
where he has been employed since July 1984. In addition, he is a general or
limited partner of a series of investment funds associated with The Sprout
Group, a division of DLJ Capital Corporation, which is a subsidiary of
Donaldson, Lufkin & Jenrette. Mr. Geeslin is a director of Paradyne
Networks, Inc., a related party of GlobeSpan, SDL, Inc., Rhythms
NetConnections Inc. and several privately held companies. Mr. Geeslin received a
B.S.E.E. degree from Stanford University, an M.A. degree in Philosophy, Politics
and Economics from Oxford and an M.S. degree in Engineering and Economic Systems
from Stanford University.
DAVID STANTON has served as a director of GlobeSpan since June 1996.
Mr. Stanton has been a partner of Francisco Partners since August 1999. From
1994 until August 1999, Mr. Stanton was a partner of Texas Pacific Group, an
investment firm. Prior to joining Texas Pacific Group, Mr. Stanton was a venture
capitalist with Trinity Ventures, where he specialized in information
technology, software and telecommunications investing. Mr. Stanton currently
serves as a director of Denbury Resources, Inc., Paradyne Networks, Inc., a
related party of GlobeSpan, and several private companies. Mr. Stanton received
a B.S. in Chemical Engineering from Stanford University and an M.B.A. from the
Stanford Graduate School of Business.
6
<PAGE>
JOHN MARREN has been nominated to serve as a director of GlobeSpan. Since
April 2000, Mr. Marren has served as a partner of Texas Pacific Group, an
investment firm. From 1996 until 2000, Mr. Marren served as a managing director
and the co-head of Technology Investment Banking for Morgan Stanley Dean Witter.
From 1992 until 1996, Mr. Marren was a managing director and semiconductor
research analyst for Alex. Brown & Sons. Mr. Marren received a B.S. in
Electrical Engineering from the University of California at Santa Barbara.
OTHER EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- -------- ------------------------------------------
<S> <C> <C>
Robert McMullan........................... 45 Chief Financial Officer, Vice President
and Treasurer
Thomas Sennhauser......................... 45 Chief Operating Officer
Nicholas Aretakis......................... 38 Vice President, Worldwide Sales
</TABLE>
ROBERT MCMULLAN has served as Chief Financial Officer of GlobeSpan since
July 1998. From November 1990 to March 1998, Mr. McMullan was employed by The
BISYS Group, Inc., an outsourcer to the financial services industry, where he
served as Executive Vice President and Chief Financial Officer. Mr. McMullan
received a B.A. in Business Administration from St. Michael's College.
THOMAS SENNHAUSER has served as Chief Operating Officer of GlobeSpan since
June 1998. From November 1993 to May 1998, Mr. Sennhauser was at Siemens
Microelectronics, Inc., a semiconductor company, where he was Vice President of
Signal Processing Integrated Circuits. From 1990 to 1992, Mr. Sennhauser was
Managing Director of the largest foreign subsidiary of Societe Suisse de
Microelectronique et Horlogerie, and from 1980 to 1989, worked at Intel
Corporation, a developer and manufacturer of semiconductor systems, in various
marketing and manufacturing positions. Mr. Sennhauser received Masters degrees
in International Management from the American Graduate School of International
Management and in Electrical Engineering from the Swiss Federal Institute of
Technology, Zurich, Switzerland.
NICHOLAS ARETAKIS has served as Vice President, Worldwide Sales of GlobeSpan
since May 1998. From July 1994 to April 1998, Mr. Aretakis served as Vice
President of Marketing and Sales at ESS Technology, Inc., a developer of audio,
digital video and modem/fax communication semiconductors and software products
for the personal computing industry. Prior to joining ESS Technology Inc.,
Mr. Aretakis held senior sales and marketing positions at SEEQ
Technology, Inc., a developer of LAN and memory semiconductors and software, and
Microchip Technology, a manufacturer of RISC-based microcontrollers and
specialized memory products. Mr. Aretakis received a B.A. in Mathematics from
Hobart College and a B.S. in Electrical Engineering from Columbia University.
COMMITTEES OF THE BOARD OF DIRECTORS
During the 1999 fiscal year, the board of directors of the Company held
seven meetings. The only standing committees of the board of directors are the
Executive Committee, the Audit Committee and the Compensation Committee.
EXECUTIVE COMMITTEE. The board of directors has created an Executive
Committee consisting of Messrs. Coulter, Deb, Epley and Geday. The Executive
Committee is authorized to act with respect to all matters arising before the
board, except for matters which require stockholder approval or where prohibited
by Delaware law, including a sale of the Company. The Executive Committee held
six meetings in 1999.
7
<PAGE>
COMPENSATION COMMITTEE. The Compensation Committee of the board of
directors reviews and makes recommendations to the board regarding all forms of
compensation provided to the executive officers and directors of GlobeSpan and
its subsidiaries, including stock compensation and loans. In addition, the
Compensation Committee reviews and makes recommendations on stock compensation
arrangements for all employees of GlobeSpan. As part of the foregoing, the
Compensation Committee also administers the 1999 Equity Incentive Plan, the 1999
Supplemental Stock Option Plan and Employee Stock Purchase Plan. The current
members of the Compensation Committee are Messrs. Coulter, Epley, Faggin and
Stanton. The Compensation Committee held nine meetings in 1999.
AUDIT COMMITTEE. The Audit Committee of the board of directors reviews and
monitors the corporate financial reporting and the internal and external audits
of GlobeSpan, including, among other things, the Company's internal audit and
control functions, the results and scope of the annual audit and other services
provided by the Company's independent auditors and the Company's compliance with
legal matters that have a significant impact on the Company's financial reports.
The Audit Committee also consults with the Company's management and independent
auditors prior to the presentation of financial statements to stockholders and,
as appropriate, initiates inquiries into aspects of the Company's financial
affairs. In addition, the Audit Committee has the responsibility to consider and
recommend the appointment of, and to review fee arrangements with the Company's
independent auditors. The current members of the Audit Committee are Ms. Connor
and Messrs. Deb and Geeslin. The Audit Committee held four meetings in 1999.
COMPENSATION OF DIRECTORS
Directors of GlobeSpan who are not employees receive $1,500 for
participation in meetings of the board of directors. Non-employee directors of
GlobeSpan who also serve on either the Compensation or the Audit Committees
receive $750 for participation in the committee meetings. We also reimburse our
directors for out-of-pocket expenses incurred by them in their capacity as a
director.
In addition, the 1999 Director Stock Plan grants to each non-employee
director an option to purchase 30,000 shares of common stock on the date on
which he or she is initially elected or appointed to the board; and another
option to purchase 15,000 shares of common stock at each of the first two annual
stockholders' meetings in the calendar years following the year in which he or
she initially became a board member. However, a new director will not receive an
option to purchase 15,000 shares of common stock if he or she resigns at that
annual stockholders' meeting. At each annual stockholders' meeting following the
annual meeting during which each non-employee director received the second
option to purchase 15,000 shares of common stock, the 1999 Director Stock Plan
grants to each continuing director an option to purchase 7,500 shares of common
stock. Each initial option becomes exercisable and vested as to 50% of the
shares immediately and as to 50% upon the director's completion of 12 months of
service during which he or she attended at least 75% of the board meetings. Each
subsequent option will be fully vested at grant. If elected, Ms. Connor and
Messrs. Coulter, Deb, Faggin, Geeslin and Stanton will be non-employee
directors.
CERTAIN TRANSACTIONS
Current members of our board of directors and the executive committee,
Messrs. Epley, Geeslin and Stanton, are directors of both GlobeSpan and Paradyne
Corporation.
During the years ended December 31, 1999, 1998, and 1997, the Company
recorded product sales of approximately $3,224,000, $962,000 and $373,000,
respectively, related to goods sold to Paradyne Corporation. Receivables related
to such product sales as of December 31, 1999 and 1998 amounted to approximately
$146,000 and $73,000, respectively. Sales reflect, through June 30, 1998, a
discount, equal to cost plus 15%, provided to Paradyne pursuant to a Cooperative
Development Agreement. In July 1998, the Company revised its discounted pricing
arrangement with Paradyne which had existed
8
<PAGE>
under the Cooperative Development Agreement. Paradyne agreed to modify the
pricing terms such that Paradyne purchased products from the Company at
preferential prices. In exchange, the Company agreed to pay a 1.25% fee based on
net revenues up to an aggregate amount of $1,500,000. In March 1999, the Company
and Paradyne agreed to terminate the Cooperative Development Agreement. In
connection with such termination agreement, the Company agreed to pay Paradyne
an aggregate of $1,500,000, less the amounts previously paid of approximately
$300,000 (or approximately $1,200,000) to terminate the July discount pricing
arrangement with Paradyne Corporation. Such payment was made in 1999 and has
been charged to cost of sales.
In addition, GlobeSpan and Paradyne Corporation as part of the Termination
Agreement affirmed that the earlier technology license provisions of the
Cooperative Development Agreement were never implemented. In conjunction with
the signing of the Termination Agreement, GlobeSpan and Paradyne Corporation
also entered into a four-year Supply Agreement which gave Paradyne Corporation
preferential pricing and other terms in connection with the sale by GlobeSpan of
products to Paradyne Corporation. Under the terms of the Supply Agreement,
GlobeSpan is required to honor Paradyne Corporation's orders for GlobeSpan's
products in quantities at least consistent with Paradyne Corporation's past
ordering practices and must afford Paradyne Corporation at least the same
priority for Paradyne Corporation's orders as GlobeSpan affords its other
similarly situated customers. GlobeSpan also granted Paradyne Corporation a
standard customer indemnity under GlobeSpan's intellectual property rights with
respect to any of Paradyne Corporation's products which incorporate GlobeSpan's
products.
In 1998 and 1997, Paradyne provided operating, management and other
administrative services for the Company pursuant to an Intercompany Services
Agreement. Paradyne charged the Company for the cost of such services, without
markup, in accordance with the Intercompany Services Agreement, which amounted
to approximately $231,000 and $155,000 for the years ended December 31, 1998 and
1997, respectively. In the opinion of management, the method of allocation was
reasonable.
In fiscal 1997, the Company purchased fixed assets from Paradyne
approximating $350,000. In February and December 1998, the Company purchased
fixed assets from Paradyne for an aggregate cost of $1,442,000. These assets
were sold at their net book value since the transaction involved entities under
common control.
In 1997, the Company paid Paradyne approximately $194,000 as a reimbursement
for Paradyne's purchases of chip sets on GlobeSpan's behalf. These payments were
equal to the amount paid by Paradyne for the initial purchase of the inventory.
In December 1997 and September 1998, the Company purchased from Paradyne
certain GlobeSpan chip sets which it held in its inventory in the amounts of
approximately $98,000 and $29,000, respectively. GlobeSpan purchased these chip
sets for resale to other customers.
In December 1998, the Company subleased additional office space from
Paradyne. In that connection, the Company reimbursed approximately $392,000 of
Paradyne's moving expenses, the cost of which is included in operating expenses
for the year ended December 31, 1998.
Prior to 1999, we participated in a 401(i) plan covering substantially all
employees which is maintained by Paradyne Corporation. In 1999, we adopted our
own 401(i) plan for our employees. Contributions paid by Paradyne Corporation on
our behalf amounted to approximately $242,000 for the year ended December 31,
1999. All payments made by Paradyne Corporation on our behalf have been
reimbursed to Paradyne Corporation. Contributions to our 401(k) plan amounted to
approximately $540,000 for the year ended December 31, 1999.
9
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
To the Company's knowledge, all statements of beneficial ownership required
to be filed with the Securities and Exchange Commission in the fiscal year ended
December 31, 1999 were timely filed.
EXECUTIVE COMPENSATION
The following table sets forth compensation information for the fiscal years
ended December 31, 1998 and 1999 paid by the Company for services by GlobeSpan's
Chief Executive Officer and GlobeSpan's other executive officers whose total
salary and bonus for such fiscal year exceeded $100,000, collectively referred
to below as the Named Executive Officers:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES
------------------------------ UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION
- ---------------------------------------- -------- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Armando Geday........................... 1999 $225,173 $475,000 480,048 $ 405
President and Chief Executive Officer 1998 215,004 330,000 -- --
Thomas Sennhauser(a).................... 1999 153,436 110,000 69,999 253
Chief Operating Officer 1998 80,780 110,000 233,325 37,996(b)
Robert McMullan(c)...................... 1999 153,436 225,000 240,000 5,198
Chief Financial Officer, Vice President 1998 80,780 100,000 233,325 --
and Treasurer
Nicholas Aretakis(d).................... 1999 153,436 130,000 219,999 3,094
Vice President, Worldwide Sales 1998 80,000 100,000 77,775 --
</TABLE>
- ------------------------
(a) Mr. Sennhauser started employment with the Company in June 1998.
(b) Represents reimbursed relocation expenses.
(c) Mr. McMullan started employment with the Company in July 1998.
(d) Mr. Aretakis started employment with the Company in May 1998.
10
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth each grant of stock options during the fiscal
year ended December 31, 1999 to each of the Named Executive Officers. No stock
appreciation rights were granted to these individuals during such year.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
----------------------------------------------- AT ASSUMED ANNUAL RATES
NUMBER OF % OF TOTAL OF STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR OPTION
UNDERLYING GRANTED TO TERM(D)
OPTIONS EMPLOYEES EXERCISE EXPIRATION ---------------------------
NAME GRANTED(A) IN 1999(B) PRICE(C) DATE 5% 10%
- --------------------------------- ---------- ---------- -------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Armando Geday.................... 48 0.0% $ 3.33 11/03/09 $ 101 $ 255
180,000 3.1 3.33 06/06/09 376,956 955,289
300,000 5.2 17.69 10/13/09 3,337,560 8,457,990
Thomas Sennhauser................ 69,999 1.2 3.33 05/17/09 146,592 371,496
Nicholas Aretakis................ 69,999 1.2 3.33 05/17/09 146,592 371,496
150,000 2.6 17.69 10/13/09 1,668,780 4,228,995
Robert McMullan.................. 90,000 1.6 3.33 05/17/09 188,478 477,644
150,000 2.6 17.69 10/13/09 1,668,780 4,228,995
</TABLE>
- ------------------------
(a) Each of the options listed in the table is immediately exercisable. The
shares purchasable under the options may be repurchased by the Company at
the original exercise price paid per share if the optionee ceases service
before vesting in such shares. The repurchase right lapses for
Mr. Sennhauser's option and Mr. McMullan's option, and each officer vests as
to 25% of the option shares upon completion of 12 months of service from the
vesting start date; and each officer vests as to 6.25% of the option shares
upon the completion of every three-month period of service over the next
three years thereafter. The repurchase right lapses for Mr. Aretakis' option
and he vests as to 33 1/3% of the option shares upon completion of
12 months of service from the vesting start date; he vests as to 8.33% of
the option shares upon the completion of every three-month period of service
over the next two years thereafter. Each of the options has a ten-year term,
but the term may end earlier if the optionee ceases service with us.
(b) Based on a total of 5,806,191 option shares granted to the Company's
employees under the 1996 Equity Incentive Plan, the 1999 Equity Incentive
Plan, the 1999 Supplemental Stock Option Plan and the 1999 Director Stock
Option Plan during 1999.
(c) The exercise price was equal to the fair market value of the Company's
common stock as valued by the board of directors on the date of grant. The
exercise price may be paid in cash or through a cashless exercise procedure
involving a same-day sale of the purchased shares. The exercise price may
also be paid with a full recourse promissory note.
(d) The potential realizable value is calculated based on the ten-year term of
the option at the time of grant. Stock price appreciation of 5% and 10% is
assumed pursuant to rules promulgated by the Securities and Exchange
Commission and does not represent the Company's prediction of its stock
price performance. The potential realizable value at 5% and 10% appreciation
is calculated by assuming that the exercise price on the date of grant
appreciates at the indicated rate for the entire term of the option and that
the option is exercised at the exercise price and sold on the last day of
its term at the appreciated price.
11
<PAGE>
AGGREGATED OPTION EXERCISES IN
LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information concerning the number of shares
acquired and the value realized upon the exercise of stock options during the
year ended December 31, 1999 and the number and value of unexercised options for
each of the Named Executive Officers.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING
NUMBER OF UNEXERCISED OPTIONS VALUE OF UNEXERCISED
SHARES HELD AT DECEMBER 31, IN-THE-MONEY OPTIONS
ACQUIRED VALUE 1999 VESTED(B)/ HELD AT DECEMBER 31,
NAME ON EXERCISE REALIZED UNVESTED(A) 1999 VESTED/UNVESTED(B)
---- ----------- ---------- --------------------- -----------------------
<S> <C> <C> <C> <C>
Armando Geday.................. 1,467,180 $4,187,700 60,033/348,738 $1,103,407/$2,221,804
Thomas Sennhauser.............. 303,324 -- 0/0 0/0
Nicholas Aretakis.............. 303,324 -- 0/150,000 0/603,000
Robert McMullan................ 323,325 -- 0/150,000 0/603,000
</TABLE>
- ------------------------
(a) The options are immediately exercisable for all of the option shares, but
any shares purchased under those options may be repurchased by the Company
at the original exercise price paid per share, if the optionee ceases
service with the Company before vesting in such shares. The heading "Vested"
refers to shares that are no longer subject to repurchase; the heading
"Unvested" refers to shares subject to repurchase as of December 31, 1999.
(b) Based on the closing price of the Company's common stock on the Nasdaq NMS
on December 31, 1999 ($21.71), less the exercise price payable for such
shares.
EMPLOYEE BENEFIT PLANS
1999 EQUITY INCENTIVE PLAN. The board of directors adopted GlobeSpan's 1999
Equity Incentive Plan in March 1999, and the Company's stockholders approved the
adoption of the plan in May 1999. The Company has reserved 3,000,000 shares of
common stock for issuance under the 1999 Equity Incentive Plan. On May 1 in
2000, 2001 and 2002, the number of shares reserved for issuance under the 1999
Equity Incentive Plan will be increased automatically by 5.0% of the total
number of shares of common stock then outstanding or, if less, by 3,000,000
shares. Under the 1999 Equity Incentive Plan, the eligible individuals are:
employees, non-employee members of the board of directors and consultants. The
types of awards that may be made under the 1999 Equity Incentive Plan are
options to purchase shares of common stock, stock appreciation rights,
restricted shares and stock units. Options may be incentive stock options that
qualify for favorable tax treatment for the optionee under Section 422 of the
Internal Revenue Code of 1986 or nonstatutory stock options not designed to
qualify for such favorable tax treatment. With limited restrictions, if shares
awarded under the 1999 Equity Incentive Plan or the 1996 Equity Incentive Plan
are forfeited, then those shares will again become available for new awards
under the 1999 Equity Incentive Plan.
The Compensation Committee of the board of directors administers the 1999
Equity Incentive Plan. The Compensation Committee has complete discretion to
make all decisions relating to the interpretation and operation of the 1999
Equity Incentive Plan, including the discretion to determine which eligible
individuals are to receive any award, and to determine the type, number, vesting
requirements and other features and conditions of each award.
The exercise price for incentive stock options granted under the 1999 Equity
Incentive Plan may not be less than 100% of the fair market value of the common
stock on the option grant date. The exercise price for non-qualified options
granted under the 1999 Equity Incentive Plan may not be less
12
<PAGE>
than 85% of the fair market value of the common stock on the option grant date.
The exercise price may be paid in cash or in outstanding shares of common stock.
The exercise price may also be paid by using a cashless exercise method, a
pledge of shares to a broker or promissory note. The purchase price for newly
issued restricted shares awarded under the 1999 Equity Incentive Plan may be
paid in cash, by promissory note or by the rendering of past or future services.
The Compensation Committee may reprice options and may modify, extend or
assume outstanding options and stock appreciation rights. The Compensation
Committee may accept the cancellation of outstanding options or stock
appreciation rights in return for the grant of new options or stock appreciation
rights. The new option or right may have the same or a different number of
shares and the same or a different exercise price.
Upon certain defined events causing a change in control of GlobeSpan, an
option or other award under the 1999 Equity Incentive Plan will become fully
exercisable and fully vested if the option or award is not assumed by the
surviving corporation or its parent or if the surviving corporation or its
parent does not substitute another option or award on substantially the same
terms. If an optionee or other participant under this Plan is involuntarily
terminated within 12 months after a change in control in which the option or
award was assumed or substituted, then the option or award becomes fully
exercisable and vested. A change in control includes:
- A merger or consolidation of GlobeSpan after which the Company's
then-current stockholders own less than 50.0% of the surviving
corporation;
- Sale of all or substantially all of the assets of GlobeSpan;
- A proxy contest that results in replacement of more than one-third of the
directors over a 24-month period; or
- An acquisition of 50.0% or more of GlobeSpan's outstanding stock by a
person other than by a person related to GlobeSpan, such as a corporation
owned by the stockholders of GlobeSpan.
If a merger or other reorganization occurs, the agreement of merger or
reorganization may provide that outstanding options and other awards under the
1999 Equity Incentive Plan shall be assumed by the surviving corporation or its
parent, shall be continued by the Company if the Company were a surviving
corporation, shall have accelerated vesting and then expire early, or shall be
cancelled for a cash payment.
The board of directors may amend or terminate the Company's 1999 Equity
Incentive Plan at any time. If the board amends the Plan, stockholder approval
of the amendment will be sought only if required by an applicable law. The 1999
Equity Incentive Plan will continue in effect indefinitely unless the board
decides to terminate the Plan earlier.
1999 SUPPLEMENTAL STOCK OPTION PLAN. Our board of directors adopted our
1999 Supplemental Stock Option Plan in December 1999. We have reserved 6,000,000
shares of common stock for issuance under the 1999 Supplemental Stock Option
Plan. Under the 1999 Supplemental Stock Option Plan, the eligible individuals
are: employees and consultants, officers of GlobeSpan are not eligible for
grants. Only non-qualified stock options can be granted under the 1999
Supplemental Stock Option Plan. If shares awarded under the 1999 Supplemental
Stock Option Plan are forfeited, then those shares will again become available
for new awards under the 1999 Supplemental Stock Option Plan.
The Compensation Committee of our board of directors administers the 1999
Supplemental Stock Option Plan. The Compensation Committee has complete
discretion to make all decisions relating to the interpretation and operation of
the 1999 Supplemental Stock Option Plan, including the discretion to determine
which eligible individuals are to receive any award, and to determine the type,
number, vesting requirements and other features and conditions of each award.
13
<PAGE>
The exercise price for options granted under the 1999 Supplemental Stock
Option Plan may not be less than 25% of the fair market value of the common
stock on the option grant date. The exercise price may be paid in cash or in
outstanding shares of common stock. The exercise price may also be paid by using
a cashless exercise method, a pledge of shares to a broker or promissory note.
The Compensation Committee may reprice options and may modify, extend or
assume outstanding options and stock appreciation rights. The Compensation
Committee may accept the cancellation of outstanding options or stock
appreciation rights in return for the grant of new options or stock appreciation
rights. The new option or right may have the same or a different number of
shares and the same or a different exercise price.
Upon certain defined events causing a change in control of GlobeSpan, an
option or other award under the 1999 Supplemental Stock Option Plan will become
fully exercisable and fully vested if the option or award is not assumed by the
surviving corporation or its parent or if the surviving corporation or its
parent does not substitute another option or award on substantially the same
terms. If an optionee or other participant under this plan is involuntarily
terminated within 12 months after a change in control in which the option or
award was assumed or substituted, then the option or award becomes fully
exercisable and vested. A change in control includes:
- Our merger or consolidation after which our then-current stockholders own
less than 50.0% of the surviving corporation;
- Sale of all or substantially all of our the assets;
- A proxy contest that results in replacement of more than one-third of our
directors over a 24-month period; or
- An acquisition of 50.0% or more of our outstanding stock by a person other
than by a person related to us, such as a corporation owned by our
stockholders.
If a merger or other reorganization occurs, the agreement of merger or
reorganization may provide that outstanding options and other awards under the
1999 Supplemental Stock Option Plan shall be assumed by the surviving
corporation or its parent, shall be continued by us if we were a surviving
corporation, shall have accelerated vesting and then expire early, or shall be
cancelled for a cash payment.
Our board of directors may amend or terminate our 1999 Supplemental Stock
Option Plan at any time. If our board amends the plan, stockholder approval of
the amendment will be sought only if required by an applicable law. The 1999
Supplemental Stock Option Plan will continue in effect indefinitely unless our
board decides to terminate the plan earlier.
EMPLOYEE STOCK PURCHASE PLAN. The board of directors adopted the Company's
Employee Stock Purchase Plan in March 1999, and the Company's stockholders
approved the adoption of the plan in May 1999. We have reserved 1,200,000 shares
of common stock for issuance under the Employee Stock Purchase Plan. As of
February 1, 2000, 2001 and 2002, the number of shares reserved for issuance
under the Employee Stock Purchase Plan will be increased automatically by 2.0%
of the total number of shares of common stock outstanding or, if less, 1,200,000
shares. The Employee Stock Purchase Plan is intended to qualify under
Section 423 of the Internal Revenue Code. Two overlapping offering periods each
with a duration of 24 months will commence on February 1 and August 1 each
calendar year. However, the first offering period commenced on the effective
date of our initial public offering and will end on July 31, 2001. Purchases of
common stock will occur on January 31 and July 31 each calendar year during an
offering period. The Compensation Committee of the board of directors
administers the Company's Employee Stock Purchase Plan. Each employee of
GlobeSpan is eligible to participate if he or she is employed by the Company for
more than 20 hours per week and for more than five months per year.
14
<PAGE>
The Employee Stock Purchase Plan permits each eligible employee to purchase
common stock through payroll deductions. Each employee's payroll deductions may
not exceed 15.0% of the employee's cash compensation. The price of each share of
common stock purchased under the Employee Stock Purchase Plan will be 85.0% of
the lower of (A) the fair market value per share of common stock on the date
immediately before the first date of the applicable offering period or (B) the
fair market value per share of common stock on the purchase date. Employees may
end their participation in the Employee Stock Purchase Plan at any time.
Participation ends automatically upon termination of employment with us.
If a change in control of GlobeSpan occurs, the Employee Stock Purchase Plan
will end and shares will be purchased with the payroll deductions accumulated to
date by participating employees, unless this Plan is assumed by the surviving
corporation or its parent. The board of directors may amend or terminate the
Employee Stock Purchase Plan at any time. If the board of directors increases
the number of shares of common stock reserved for issuance under the Employee
Stock Purchase Plan, it must seek the approval of GlobeSpan's stockholders.
1999 DIRECTOR STOCK PLAN. The board of directors adopted the Company's 1999
Director Stock Plan in March 1999, and the Company's stockholders approved the
adoption of the plan in May 1999. Under the 1999 Director Stock Plan,
non-employee members of the Company's board of directors will be eligible for
option grants and other awards.
A maximum of 750,000 shares of common stock has been authorized for issuance
under the 1999 Director Stock Plan. The Company may grant options to purchase
shares of common stock under the 1999 Director Stock Plan. Options may only be
nonstatutory stock options not designed to qualify for favorable tax treatment.
With limited restrictions, if shares awarded under the 1999 Director Stock Plan
are forfeited, then those shares will again become available for new awards
under the 1999 Director Stock Plan.
The exercise price for options granted under the 1999 Director Stock Plan
may not be less than 100% of the fair market value of the common stock on the
option grant date. Optionees may pay the exercise price in cash or in
outstanding shares of common stock. Optionees may also pay the exercise price by
using a cashless exercise method or a pledge of shares to a broker. Each option
will have a maximum term of ten years, but will terminate earlier if the
optionee ceases to be a member of the board of directors.
The Compensation Committee may reprice options and may modify, extend or
assume outstanding options. The Compensation Committee may accept the
cancellation of outstanding options in return for the grant of new options. The
new option may have the same or a different number of shares and the same or a
different exercise price.
Upon certain defined events causing a change in control of GlobeSpan, an
option or other award granted under the 1999 Director Stock Plan will become
fully exercisable and fully vested and will terminate unless the option or award
is not assumed by the surviving corporation or its parent. Change in control has
the same definition as under the 1999 Equity Incentive Plan.
The 1999 Director Stock Plan grants options to non-employee directors
pursuant to an automatic grant provision at defined intervals beginning on the
effective date of this Plan. The 1999 Director Stock Plan grants to each person
who becomes a non-employee director following the effective date of this Plan an
option to purchase 30,000 shares of common stock on the date on which he or she
is initially elected or appointed to the board; and each such new director will
be granted another option to purchase 15,000 shares of common stock at each of
the first two annual stockholders' meeting in the calendar years following the
year in which he or she initially became a board member. However, a new director
will not receive an option to purchase 15,000 shares of common stock if he or
she resigns at that annual stockholders' meeting. At each annual stockholders'
meeting following the annual meeting
15
<PAGE>
during which each non-employee director received the second option to purchase
15,000 shares of common stock, the 1999 Director Stock Plan grants to each
continuing director an option to purchase 7,500 shares of common stock. Each
initial option becomes exercisable and vested as to 50% of the shares
immediately and as to 50% upon the director's completion of 12 months of service
during which he or she attended at least 75% of the board meetings. Each
subsequent option will be fully vested at grant.
The board of directors may amend or modify the 1999 Director Stock Plan at
any time. The 1999 Director Stock Plan will terminate in March 2009, unless the
board of directors decides to terminate the plan sooner.
CHANGE OF CONTROL ARRANGEMENTS AND EMPLOYMENT AGREEMENTS
Upon certain defined events causing a change in control of GlobeSpan, an
option or other award under the 1999 Equity Incentive Plan will become fully
exercisable and fully vested if the option or award is not assumed by the
surviving corporation or its parent or if the surviving corporation or its
parent does not substitute another award on substantially the same terms. If an
optionee or other participant under the 1999 Equity Incentive Plan is
involuntarily terminated within 12 months after a change in control in which the
option or award was assumed or substituted, then the option or award becomes
fully exercisable and vested.
Except for Mr. Geday, the Company's President and Chief Executive Officer,
none of GlobeSpan's executive officers have an employment agreement with
GlobeSpan, and they may resign at any time and GlobeSpan may terminate their
employment at any time. GlobeSpan entered into an employment agreement with
Mr. Geday, dated April 1, 1997.
Pursuant to the employment agreement with Mr. Geday, he received an annual
base salary of $225,173 in 1999. Mr. Geday is eligible to earn quarterly and
two-level revenue bonuses based upon goals and revenue targets as determined by
the board of directors and Mr. Geday. Under the employment agreement, we granted
to Mr. Geday an option for 1,395,900 shares of the Company's common stock. If a
corporate transaction occurs in which more than 50.0% of the Company's stock is
transferred, then 50.0% of Mr. Geday's unvested options will become vested. If
the Company is valued at more than $100.0 million in such corporate transaction,
then 100% of Mr. Geday's unvested options will become vested. If the Company
terminates Mr. Geday's employment without cause or he resigns for good reason,
then he will be paid as severance any bonuses that have been earned by him and
will continue to receive his base salary until the earlier of the date that is
12 months from his termination date or the date on which he starts comparable
employment. The aggregate severance payment will not be less than $500,000
prorated for the number of months that Mr. Geday is entitled to receive his base
salary as a severance benefit. In addition, if we terminate Mr. Geday without
cause or he resigns for good reason, his options will become vested, as if he
provided another 18 months of service following his termination date, and his
vested option will have a 10-year term from the date of his employment
agreement.
Mr. McMullan, the Company's Chief Financial Officer, Vice President and
Treasurer, received an offer letter from the Company in which the Company
promised that if a change in control occurs within 18 months after his
employment start date of July 1, 1998 and Mr. McMullan is not offered a
comparable position with comparable responsibilities with the acquiring entity,
then any portion of his options that are not yet exercisable or vested will
become fully exercisable or vested. If the change in control occurs outside of
the 18-month period following his employment start date and Mr. McMullan is not
offered a comparable position with comparable responsibilities with the
acquiring entity, then his options vest for 50.0% of his unvested shares.
16
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Epley is a current director of GlobeSpan, was Chairman of the board of
directors from August 1996 to March 1999 and was CEO and President of GlobeSpan
from August 1996 to April 1997. Mr. Epley is also a director of Paradyne
Corporation, is Chairman of its board of directors, is a member of its
compensation committee and was its CEO and President from August 1996 to
April 1997.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The compensation committee makes recommendations to the board of directors
concerning the salary and cash bonus compensation for the Company's chief
executive officer and determines the salary and cash bonus compensation for the
Company's other executive officers and senior management. The compensation
committee is mindful of the Company's commitment to being a manufacturer of
telecommunications equipment and/or chips in the areas in which it operates. To
realize these objectives, the Company's compensation levels must be such as to
motivate and retain these individuals.
The compensation to these executives consists of base salary and cash bonus
compensation. Effective April 1, 1997 the Company entered into an employment
agreement with Mr. Geday. See "Change of Control Arrangements and Employment
Agreements."
In setting the compensation level of the Company's executive officers and
senior management other than Mr. Geday, the compensation committee relies upon
the recommendation of Mr. Geday, the President and Chief Executive of the
Company, as the person in the best position to judge the respective performances
of said individuals. In this regard the compensation committee takes into
consideration Mr. Geday's evaluation of the potential contributions of said
individuals toward (i) increasing revenues, (ii) increasing the number of
customers, (iii) the development of the Company's businesses and (iv) the
successful completion of certain financial, business or strategic objectives.
The compensation committee administers and the board of directors makes
grants under the 1999 Equity Incentive Plan, the 1999 Supplemental Stock Option
Plan and the Employee Stock Purchase Plan.
The compensation committee's recommendations for compensation for fiscal
1999 were accepted by the board of directors.
<TABLE>
<S> <C>
BY ORDER OF THE COMPENSATION COMMITTEE
James Coulter
Federico Faggin
Thomas Epley
David Stanton
</TABLE>
STOCK PERFORMANCE GRAPHS
The following graph compares the cumulative total stockholder returns, over
the periods presented, on the Company's common stock, the Nasdaq Stock
Market--U.S. Index and the Hambrecht & Quist Communications Components Index.
The fiscal year-end values of each investment are based on share price
appreciation plus reinvested dividends, and assume an initial investment of
$100.
As indicated in the charts, the market price of the Company's common stock
(adjusted for stock splits) has increased from $7.50 at the time of the
Company's initial public offering of common stock, to $21.71 on December 31,
1999. As of April 25, 2000, the closing price of the common stock was $84.75.
17
<PAGE>
CUMULATIVE TOTAL RETURNS SINCE THE COMPANY'S INITIAL PUBLIC OFFERING
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
23-JUN-99 31-DEC-99
<S> <C> <C>
GlobeSpan 100 153.91
Nasdaq Stock Market
(U.S.) 100 192.55
H&O Communications Index 100 156.63
</TABLE>
<TABLE>
<CAPTION>
JUNE 23, DECEMBER 31,
1999 1999
-------- ------------
<S> <C> <C>
GlobeSpan.............................................. $100.00 $153.91
Nasdaq Stock Market (U.S.)............................. $100.00 $192.55
H&Q Communications Index............................... $100.00 $156.63
</TABLE>
The above report of the Compensation Committee and the stock performance
graph will not be deemed to be soliciting material or to be filed with or
incorporated by reference into any filing by the Company under the Securities
Act of 1933 or the Securities Exchange Act of 1934, as amended, except to the
extent that the Company specifically incorporates such report or graph by
reference.
ITEM 2. APPROVAL OF AMENDMENT TO THE COMPANY'S AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED
SHARES OF COMMON STOCK
The Company's Amended and Restated Certificate of Incorporation currently
authorizes the issuance of one hundred million (100,000,000) shares of common
stock, $.001 par value, and ten million (10,000,000) shares of preferred stock,
$.001 par value. On April 19, 2000, the board of directors adopted a resolution
proposing that the Amended and Restated Certificate of Incorporation of the
Company be amended to increase the authorized number of shares of common stock
to four hundred million (400,000,000), subject to stockholder approval of the
amendment.
As of April 25, 2000, the Company had approximately 63,474,032 shares of
common stock outstanding and approximately 13,076,672 shares reserved for future
issuance under the Company's employee stock plans, of which, currently,
approximately 11,642,407 are covered by outstanding options and approximately
1,434,265 are available for grant or purchase. Based upon the foregoing number
of
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<PAGE>
outstanding and reserved shares of common stock, the Company currently has
approximately 23,449,296 shares remaining available for other purposes.
The board of directors has adopted a resolution proposing, approving and
declaring the advisability of and amendment to Article IV of the Amended and
Restated Certificate of Incorporation. The following is the text of Article IV
of the Amended and Restated Certificate of Incorporation of the Company, as
proposed to be amended:
A. Classes of Stock. This corporation is authorized to issue two classes
of stock to be designated, respectively, "Common Stock" and "Preferred
Stock." The total number of shares that this corporation is authorized to
issue is four hundred ten million (410,000,000) shares. Four hundred million
(400,000,000) shares shall be Common Stock and ten million (10,000,000)
shares shall be Preferred Stock, each with a par value of $0.001 per share.
B. Rights, Preferences and Restrictions of Preferred Stock. The
Preferred Stock authorized by this Amended and Restated Certificate of
Incorporation may be issued from time to time in one or more series. The
Board of Directors is hereby authorized to fix or alter the rights,
preferences, privileges and restrictions granted to or imposed upon series
of Preferred Stock, and the number of shares constituting any such series
and the designation thereof, or of any of them. Subject to compliance with
applicable protective voting rights that have been or may be granted to the
Preferred Stock or series thereof in Certificates of Designation or this
corporation's Certificate of Incorporation ("Protective Provisions"), but
notwithstanding any other rights of the Preferred Stock or any series
thereof, the rights, privileges, preferences and restrictions of any such
series may be subordinated to, pari passu with (including, without
limitation, inclusion in provisions with respect to liquidation and
acquisition preferences, redemption and/or approval of matters by vote or
written consent), or senior to any of those of any present or future class
or series of Preferred Stock or Common Stock. Subject to compliance with
applicable Protective Provisions, the Board of Directors is also authorized
to increase or decrease the number of shares of any series, prior or
subsequent to the issue of that series, but not below the number of shares
of such series then outstanding. In case the number of shares of any series
shall be so decreased, the shares constituting such decrease shall resume
the status that they had prior to the adoption of the resolution originally
fixing the number of shares of such series."
The board of directors believes that it is in the Company's best interests
to increase the number of shares of common stock that GlobeSpan is authorized to
issue because the availability of additional authorized but unissued shares will
provide the Company with the flexibility to issue common stock for future stock
splits and stock dividends as well as other proper corporate purposes which may
be identified in the future, such as to raise equity capital, to adopt
additional employee benefit plans or reserve additional shares for issuance
under such plans, and to make acquisitions through the use of stock. Other than
with respect to and as permitted or required under the Company's employee
benefit plans and under outstanding options, warrants and other securities
convertible into common stock, the board of directors has no current plans,
understandings or agreements to issue additional common stock for any purposes,
although the Company, at any time, may be in various stages of discussion with
acquisition candidates with regard to transactions that may involve the issuance
of the Company's common stock.
The board of directors believes that the proposed increase in the authorized
common stock will make available sufficient shares for use, should the Company
decide to use its shares for one or more of such previously mentioned purposes
or otherwise. No additional action or authorization by the Company's
stockholders would be necessary prior to the issuance of such additional shares,
unless required by applicable law or the rules of any stock exchange or national
securities association trading system on which the common stock is then listed
or quoted. The Company reserves the right to seek a
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<PAGE>
further increase in authorized shares from time to time in the future as
considered appropriate by the board of directors.
Under the Company's Amended and Restated Certificate of Incorporation, the
Company's stockholders do not have preemptive rights with respect to common
stock. Thus, should the board of directors elect to issue additional shares of
common stock, existing stockholders would not have any preferential rights to
purchase such shares. In addition, if the board of directors elects to issue
additional shares of common stock, such issuance could have a dilutive effect on
the earnings per share and/or voting power of current stockholders.
The proposed amendment to increase the authorized number of shares of common
stock could, under certain circumstances, have the effect of impeding
unsolicited take-over attempts, although this is not the reason for the
proposal. For example, in the event of a hostile attempt to take over control of
the Company, it might be possible for the Company to endeavor to impede the
attempt by assuming shares of the common stock, thereby diluting the voting
power of the other outstanding shares and increasing the potential cost to
acquire control of the Company, The amendment therefore may have the effect of
discouraging unsolicited takeover attempts. The board of directors is not aware
of any attempt to take control of the Company and the board of directors has not
presented this proposal with the intent that it be utilized as a type of
anti-takeover device.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO AMEND THE
COMPANY'S RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK. UNLESS A CONTRARY CHOICE IS SPECIFIED,
PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED "FOR" APPROVAL OF THE
AMENDMENT.
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ITEM 3. APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The board of directors has appointed the firm of PricewaterhouseCoopers,
LLP, independent public accountants, as the auditors of the Company for the
fiscal year ending December 31, 2000, subject to the approval of such
appointment by stockholders at the Annual Meeting. PricewaterhouseCoopers LLP
has audited the Company's financial statements since the Company's formation in
1996.
If the foregoing appointment of PricewaterhouseCoopers LLP is not ratified
by stockholders, the board of directors will appoint other independent
accountants whose appointment for any period subsequent to the 2000 Annual
Meeting of Stockholders will be subject to the approval of stockholders at that
meeting. A representative of PricewaterhouseCoopers LLP is expected to be
present at the Annual Meeting and will have an opportunity to make a statement
should he so desire and to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE TO RATIFY THE
APPOINTMENT OF THE FIRM OF PRICEWATERHOUSECOOPERS LLP. UNLESS A CONTRARY CHOICE
IS SPECIFIED, PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED "FOR"
RATIFYING THE APPOINTMENT OF AUDITORS DESCRIBED ABOVE.
ADDITIONAL INFORMATION
OTHER MATTERS
The board of directors does not know of any matters that are to be presented
at the Annual Meeting other than those stated in the Notice of Annual Meeting
and referred to in this Proxy Statement. If any other matters should properly
come before the Annual Meeting, it is intended that the proxies in the
accompanying form will be voted as the persons named therein may determine in
their discretion.
STOCKHOLDER PROPOSALS
In accordance with the Company's By-laws, for a matter to be properly
brought before an annual meeting by a stockholder, the stockholder must have
given written notice thereof to the Secretary of the Company not less than
60 days nor more than 90 days in advance of the anniversary date of the
immediately preceding annual meeting. Any such notice must contain certain
information specified in the By-laws.
Pursuant to applicable rules under the Securities and Exchange Act, some
stockholder proposals may be eligible for inclusion in the Company's proxy
statement and form of proxy for the 2001 Annual Meeting of Stockholders. In
order to be included, any such proposal must be received at the Company's
offices at 100 Schulz Drive, Red Bank, New Jersey 07701, Attention: Secretary,
not later than February 13, 2001.
By Order of the Board of Directors
Richard Gottuso
CORPORATE SECRETARY
May 1, 2000
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GLOBESPAN, INC.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Annual Meeting of Stockholders, Tuesday, June 13, 2000
The undersigned stockholder of GLOBESPAN, INC., a Delaware corporation,
hereby appoints Robert McMullan and Richard Gottuso, or any of them, voting
singly in the absence of the other, attorneys and proxies, with full power of
substitution and revocation, to vote, as designated below, all shares of common
stock of GlobeSpan, Inc., which the undersigned is entitled to vote at the
Annual Meeting of Stockholders of said corporation to be held at the Oyster
Point Hotel, 146 Bodman Place, Red Bank, New Jersey on June 13, 2000 at 10 a.m.
(local time) or any adjournment thereof, in accordance with the instructions on
the reverse side.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. IF NO DIRECTION IS MADE, THE PROXY WILL
BE VOTED "FOR" ALL NOMINEES IN PROPOSAL NO. 1 AND "FOR" PROPOSAL NOS. 2 AND 3.
The proxies are authorized to vote as they may determine in their discretion
upon such other business as may properly come before the meeting.
TO VOTE BY MAIL, PLEASE MARK, DATE AND SIGN ON THE REVERSE SIDE AND RETURN
PROMPTLY USING THE ENCLOSED ENVELOPE.
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES IN PROPOSAL NO. 1,
AND "FOR" PROPOSAL NOS. 2 AND 3.
1. Election of the following Nominees as Directors:
(1) Armando Geday
(2) Barbara Connor
(3) James Coulter
(4) Dipanjan Deb
(5) Federico Faggin
(6) Thomas Epley
(7) Keith Geeslin
(8) David Stanton
(9) John Marrer
<TABLE>
<S> <C>
FOR ALL NOMINEES ABSTAIN
(except written to the contrary below)
/ / / /
TO WITHHOLD AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE, WRITE THE NOMINEE'S NAME
ON THE SPACE PROVIDED BELOW:
------------------------------------
</TABLE>
2. The proposal to approve the proposed amendment of the Company's Amended and
Restated Certificate of Incorporation to increase the authorized number of
shares of common stock.
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
/ / / / / /
</TABLE>
3. The ratification of appointment of PricewaterhouseCoopers LLP as independent
accountants for the fiscal year ending December 31, 2000.
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
/ / / / / /
</TABLE>
THE PROXIES ARE AUTHORIZED TO VOTE AS THEY MAY DETERMINE IN THEIR DISCRETION
UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
Date: __________________________, 2000
______________________________________
______________________________________
Signature
______________________________________
Signature (if held jointly)
Please sign exactly as name appears
above.
WHEN SHARES ARE HELD IN NAME OF JOINT
HOLDERS, EACH SHOULD SIGN. WHEN
SIGNING AS ATTORNEY, EXECUTOR,
TRUSTEE, GUARDIAN, ETC., PLEASE SO
INDICATE. IF A CORPORATION, PLEASE
SIGN IN FULL CORPORATE NAME BY AN
AUTHORIZED OFFICER. IF A PARTNERSHIP,
PLEASE SIGN IN PARTNERSHIP NAME BY AN
AUTHORIZED PERSON.
- --------------------------------------------------------------------------------
DETACH PROXY CARD HERE IF YOU ARE VOTING BY MAIL AND RETURN IN
ENCLOSED ENVELOPE.
YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING.
