<PAGE> 1
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-12
AGILENT TECHNOLOGIES, INC.
(Name of Registrant as Specified In Its Charter)
------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[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:
<PAGE> 2
<TABLE>
<S> <C>
Agilent Technologies, Inc.
395 Page Mill Road
Palo Alto, California 94306
[Agilent Logo]
Edward W. Barnholt
President and
Chief Executive Officer
</TABLE>
To our Stockholders:
I am pleased to invite you to attend the annual meeting of stockholders of
Agilent Technologies, Inc. ("Agilent") to be held on Friday, February 23, 2001,
at 2 p.m. at the Hotel Sofitel located at 223 Twin Dolphin Drive, Redwood City,
California (U.S.A.). Details regarding admission to the annual meeting and the
business to be conducted are more fully described in the accompanying Notice of
Annual Meeting and Proxy Statement.
Also enclosed in this mailing are four other documents: our 2000 Annual
Report, which contains information about Agilent's businesses, our 2000
Financial Report, which contains financial information about Agilent including
our 2000 audited financial statements, a proxy card for you to record your vote
and a return envelope for your proxy card.
If you are unable to attend the annual meeting in person, you may listen to
audio highlights, which will be posted a few days after the annual meeting on
our Web site located at http://www.investor.agilent.com. You cannot record your
vote on this website.
Your vote is important. Whether or not you plan to attend the annual
meeting, I hope that you will vote as soon as possible. You may vote on the
Internet, by telephone or by completing and mailing the enclosed proxy card.
Voting over the Internet, by phone or by written proxy will ensure your
representation at the annual meeting, if you do not attend in person. Please
review the instructions on the proxy card regarding each of these voting
options.
Thank you for your ongoing support of, and continued interest in, Agilent.
Sincerely,
/s/ NED BARNHOLT
<PAGE> 3
2001 ANNUAL MEETING OF STOCKHOLDERS
NOTICE OF ANNUAL MEETING AND PROXY STATEMENT
TABLE OF CONTENTS
<TABLE>
<S> <C>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS.................... 1
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND THE
ANNUAL MEETING............................................ 2
Why am I receiving these materials?....................... 2
What information is contained in these materials?......... 2
What proposals will be voted on at the annual meeting?.... 2
What is Agilent's voting recommendation?.................. 2
What shares owned by me can be voted?..................... 2
What is the difference between holding shares as a
stockholder of record and as a beneficial owner?....... 2
How can I vote my shares in person at the annual
meeting?............................................... 2
How can I vote my shares without attending the annual
meeting?............................................... 3
Can I change my vote?..................................... 3
How are votes counted?.................................... 3
What is the voting requirement to approve each of the
proposals?............................................. 3
What does it mean if I receive more than one proxy or
voting instruction card?............................... 3
How can I obtain an admission ticket for the annual
meeting?............................................... 3
Where can I find the voting results of the annual
meeting?............................................... 3
BOARD STRUCTURE AND COMPENSATION............................ 4
DIRECTOR COMPENSATION ARRANGEMENTS AND STOCK OWNERSHIP
GUIDELINES................................................ 5
PROPOSALS TO BE VOTED ON.................................... 6
PROPOSAL NO. 1--Election of Class I Directors............. 6
PROPOSAL NO. 2--Ratification of Independent Accountants... 8
PROPOSAL NO. 3--Approval of the Agilent Technologies, Inc.
1999 Stock Plan and the Increase in the Share Reserve
of 45,000,000 Shares Thereunder........................ 8
NEW PLAN BENEFITS TABLE................................... 13
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT................................................ 14
Beneficial Ownership Table................................ 14
Section 16(a) Beneficial Ownership Reporting Compliance... 16
EXECUTIVE COMPENSATION...................................... 17
Summary Compensation Table................................ 17
Option Grants in Last Fiscal Year Table................... 18
Aggregated Option Exercises in Last Fiscal Year and Fiscal
Year-End Option Values................................. 19
Pension Plans............................................. 19
Estimated Annual Retirement Benefits...................... 19
Report of the Compensation Committee of the Board on
Executive Compensation................................. 20
Compensation Committee Interlocks and Insider
Participation.......................................... 22
Audit and Finance Committee Report........................ 23
Stock Price Performance Graph............................. 24
ADDITIONAL QUESTIONS AND INFORMATION REGARDING THE ANNUAL
MEETING AND STOCKHOLDER PROPOSALS......................... 25
What happens if additional proposals are presented at the
annual meeting?........................................ 25
What class of shares is entitled to be voted?............. 25
What is the quorum requirement for the annual meeting?.... 25
Who will count the vote?.................................. 25
Is my vote confidential?.................................. 25
Who will bear the cost of soliciting votes for the annual
meeting?............................................... 25
May I propose actions for consideration at next year's
annual meeting of stockholders or nominate individuals
to serve as directors?................................. 26
APPENDIX A--AGILENT TECHNOLOGIES, INC. 1999 STOCK PLAN...... A-1
APPENDIX B--AUDIT AND FINANCE COMMITTEE CHARTER............. B-1
</TABLE>
<PAGE> 4
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
AGILENT TECHNOLOGIES, INC.
395 PAGE MILL ROAD
PALO ALTO, CALIFORNIA 94306
(650) 752-5000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
<TABLE>
<S> <C>
TIME 2:00 p.m. on Friday, February 23, 2001
PLACE Hotel Sofitel
223 Twin Dolphin Drive
Redwood City, California (U.S.A.)
ITEMS OF BUSINESS (1) To elect Class I directors to a 3 year term.
(2) To ratify the appointment of
PricewaterhouseCoopers LLP as Agilent's
independent accountants.
(3) To approve the Agilent Technologies, Inc.
1999 Stock Plan and the increase in the share
reserve of 45,000,000 shares thereunder.
(4) To consider such other business as may
properly come before the annual meeting.
RECORD DATE You are entitled to vote if you were a
stockholder at the close of business on Tuesday,
December 26, 2000.
ANNUAL MEETING ADMISSION Two cut-out admission tickets are included on the
back cover of this proxy statement. Please
contact Agilent's Corporate Secretary at
Agilent's corporate headquarters if you need
additional tickets. The annual meeting will begin
promptly at 2 p.m.
VOTING BY PROXY Please submit a proxy as soon as possible so that
your shares can be voted at the annual meeting in
accordance with your instructions. For specific
instructions on voting, please refer to the
instructions on the proxy card.
</TABLE>
By Order of the Board
/s/ D. Craig Nordlund
D. CRAIG NORDLUND
Senior Vice President, General Counsel
and Secretary
This proxy statement and accompanying proxy card are being distributed on or
about January 19, 2001.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1
<PAGE> 5
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS
AND THE ANNUAL MEETING
Q: WHY AM I RECEIVING THESE MATERIALS?
A: Agilent's Board of Directors (the "Board") is providing these proxy materials
for you in connection with Agilent's annual meeting of stockholders, which
will take place on February 23, 2001. Stockholders are invited to attend the
annual meeting and are requested to vote on the proposals described in this
proxy statement.
Q: WHAT INFORMATION IS CONTAINED IN THESE MATERIALS?
A: The information included in this proxy statement relates to the proposals to
be voted on at the annual meeting, the voting process, the compensation of
directors and our most highly paid officers, and certain other required
information. Agilent's 2000 Annual Report, 2000 Financial Report, Proxy Card
and return envelope are also enclosed.
Q: WHAT PROPOSALS WILL BE VOTED ON AT THE ANNUAL MEETING?
A: There are three proposals scheduled to be voted on at the annual meeting:
- the election of Class I directors for a 3 year term;
- the ratification of PricewaterhouseCoopers LLP as Agilent's independent
accountants; and
- the approval of Agilent Technologies, Inc. 1999 Stock Plan and the
increase in the share reserve of 45,000,000 shares thereunder.
Q: WHAT IS AGILENT'S VOTING RECOMMENDATION?
A: Agilent's Board recommends that you vote your shares "FOR" each of the
nominees to the Board and "FOR" each of the other proposals.
Q: WHAT SHARES OWNED BY ME CAN BE VOTED?
A: All shares owned by you as of the close of business on December 26, 2000 (the
"Record Date") may be voted by you. These shares include shares that are: (1)
held directly in your name as the stockholder of record, including shares
purchased through Agilent Technologies, Inc. 1999 Stock Plan, and (2) held
for you as the beneficial owner through a stockbroker, bank or other nominee
or shares purchased through Agilent Technologies, Inc. 401(k) plan, which is
called the Agilent Technologies, Inc. Savings Accumulation Plan.
Q: WHAT IS THE DIFFERENCE BETWEEN HOLDING SHARES AS A STOCKHOLDER OF RECORD AND
AS A BENEFICIAL OWNER?
A: Most stockholders of Agilent hold their shares through a stockbroker, bank or
other nominee rather than directly in their own name. As summarized below,
there are some distinctions between shares held of record and those owned
beneficially.
STOCKHOLDER OF RECORD
If your shares are registered directly in your name with Agilent's transfer
agent, Computershare Investor Services, you are considered, with respect to
those shares, the stockholder of record, and these proxy materials are being
sent directly to you by Agilent. As the stockholder of record, you have the
right to grant your voting proxy directly to Agilent or to vote in person at
the annual meeting. Agilent has enclosed a proxy card for you to use.
BENEFICIAL OWNER
If your shares are held in a stock brokerage account or by a bank or other
nominee, you are considered the beneficial owner of shares held in street
name, and these proxy materials are being forwarded to you by your broker or
nominee who is considered, with respect to those shares, the stockholder of
record. As the beneficial owner, you have the right to direct your broker on
how to vote and are also invited to attend the annual meeting. However, since
you are not the stockholder of record, you may not vote these shares in
person at the annual meeting. Your broker or nominee has enclosed a voting
instruction card for you to use in directing the broker or nominee regarding
how to vote your shares.
Q: HOW CAN I VOTE MY SHARES IN PERSON AT THE ANNUAL MEETING?
A: Shares held directly in your name as the stockholder of record may be voted
in person at the annual meeting. If you choose to do so, please
2
<PAGE> 6
bring the enclosed proxy card or proof of identification.
Even if you plan to attend the annual meeting, Agilent recommends that you
also submit your proxy as described below so that your vote will be counted
if you later decide not to attend the annual meeting. Shares held in street
name may be voted in person by you only if you obtain a signed proxy from
the record holder giving you the right to vote the shares.
Q: HOW CAN I VOTE MY SHARES WITHOUT ATTENDING THE ANNUAL MEETING?
A: Whether you hold shares directly as the stockholder of record or
beneficially in street name, you may direct your vote without attending the
annual meeting. You may vote by granting a proxy or, for shares held in
street name, by submitting voting instructions to your broker or nominee.
Q: CAN I CHANGE MY VOTE?
A: You may change your proxy instructions at any time prior to the vote at the
annual meeting. For shares held directly in your name, you may accomplish
this by granting a new proxy bearing a later date (which automatically
revokes the earlier proxy) or by attending the annual meeting and voting in
person. Attendance at the annual meeting will not cause your previously
granted proxy to be revoked unless you specifically so request. For shares
held beneficially by you, you may accomplish this by submitting new voting
instructions to your broker or nominee.
Q: HOW ARE VOTES COUNTED?
A: In the election of directors, you may vote "FOR" all of the nominees or your
vote may be "WITHHELD" with respect to one or more of the nominees. For the
other proposals, you may vote "FOR", "AGAINST" or "ABSTAIN". If you
"ABSTAIN", it has the same effect as a vote "AGAINST". If you sign your
proxy card or broker voting instruction card with no further instructions,
your shares will be voted in accordance with the recommendations of the
Board.
Q: WHAT IS THE VOTING REQUIREMENT TO APPROVE EACH OF THE PROPOSALS?
A: In the election for Class I directors, the 3 persons receiving the highest
number of "FOR" votes will be elected. All other proposals require the
affirmative "FOR" vote of a majority of those shares present and entitled to
vote. If you are a beneficial owner and do not provide the stockholder of
record with voting instructions, your shares may constitute broker non-
votes, as described in "What is the quorum requirement for the annual
meeting?" in the section entitled "Additional Questions and Information
Regarding the Annual Meeting and Stockholder Proposals" herein. In
tabulating the voting result for any particular proposal, shares which
constitute broker non-votes are not considered entitled to vote.
Q: WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE PROXY OR VOTING INSTRUCTION
CARD?
A: It means your shares are registered differently or are in more than one
account. Please provide voting instructions for all proxy and voting
instruction cards you receive.
Q: HOW CAN I OBTAIN AN ADMISSION TICKET FOR THE ANNUAL MEETING?
A: Two cut-out admission tickets are included on the back of this proxy
statement. A limited number of tickets are available for additional joint
owners. To request additional tickets, please contact Agilent's Corporate
Secretary at Agilent's corporate headquarters. If you forget to bring an
admission ticket, you will be admitted to the annual meeting only if you are
listed as a stockholder of record as of December 26, 2000, and bring proof
of identification. If you hold your shares through a stock broker or other
nominee and fail to bring an admission ticket, you will need to provide
proof of ownership by bringing either a copy of the voting instruction card
provided by your broker or a copy of a brokerage statement showing your
share ownership as of December 26, 2000.
Q: WHERE CAN I FIND THE VOTING RESULTS OF THE ANNUAL MEETING?
A: Agilent will announce preliminary voting results at the annual meeting and
publish final results in Agilent's quarterly report on Form 10-Q for the
second quarter of fiscal 2001.
3
<PAGE> 7
BOARD STRUCTURE AND COMPENSATION
The Board is divided into three classes serving staggered three-year terms.
The Board has 10 directors and the following 4 committees: (1) Audit and
Finance, (2) Compensation, (3) Nominating and (4) Executive. The membership
during the 2000 fiscal year and the function of each committee are described
below. During the 2000 fiscal year, the Board held 8 meetings. The Audit and
Finance, Nominating, Compensation and Executive Committees held 4, 0, 6 and 5
meetings, respectively, during the 2000 fiscal year. Each director attended at
least 75% of all Board and applicable committee meetings.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
NAME OF DIRECTOR AUDIT AND FINANCE COMPENSATION NOMINATING EXECUTIVE
<S> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------------------------------
NON-EMPLOYEE DIRECTORS:
-----------------------------------------------------------------------------------------------------------------------
Gerald Grinstein(1) X X* X*
-----------------------------------------------------------------------------------------------------------------------
James G. Cullen(2) X
-----------------------------------------------------------------------------------------------------------------------
Thomas E. Everhart(3) X X
-----------------------------------------------------------------------------------------------------------------------
Robert J. Herbold(4) X
-----------------------------------------------------------------------------------------------------------------------
Walter B. Hewlett(3) X X
-----------------------------------------------------------------------------------------------------------------------
Heidi Kunz(5) X*
-----------------------------------------------------------------------------------------------------------------------
David M. Lawrence, M.D.(3) X* X
-----------------------------------------------------------------------------------------------------------------------
A. Barry Rand(6)
-----------------------------------------------------------------------------------------------------------------------
Randall L. Tobias(7) X X
-----------------------------------------------------------------------------------------------------------------------
EMPLOYEE DIRECTORS:
-----------------------------------------------------------------------------------------------------------------------
Edward W. Barnholt(8) X X
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
X = Committee member; * = Chairperson
(1) Mr. Grinstein has served as a director and Chairman of the Board since
August 1999.
(2) Mr. Cullen has served as a director since April 2000.
(3) Dr. Everhart, Mr. Hewlett and Dr. Lawrence have served as directors since
July 1999.
(4) Mr. Herbold has served as a director since June 2000.
(5) Ms. Kunz has served as a director since February 2000.
(6) Mr. Rand has served as a director since November 2000.
(7) Mr. Tobias has served as a director since October 1999.
(8) Mr. Barnholt has served as a director since May 1999.
AUDIT AND FINANCE COMMITTEE
The Audit and Finance Committee is responsible for review of Agilent's auditing,
accounting, financial reporting and internal control functions and for the
selection of independent accountants. In addition, the committee is expected to
monitor the quality of Agilent's accounting principles and financial reporting,
Agilent's compliance with foreign trade regulations, as well as the independence
of, and the non-audit services provided by, Agilent's independent accountants.
In discharging its duties, the Audit and Finance Committee is expected to:
- review and approve the scope of the annual audit and the independent
accountants' fees;
- meet independently with Agilent's internal auditing staff, independent
accountants and senior management;
- review the general scope of Agilent's accounting, financial reporting,
annual audit and internal audit programs, matters relating to internal
control systems and results of the annual audit;
- review funding and investment policies, implementation of funding
policies and investment performance of Agilent's benefit plans; and
- review disclosures from Agilent's independent accountants regarding
Independence Standards Board Standard No. 1.
4
<PAGE> 8
COMPENSATION COMMITTEE
The Compensation Committee determines, approves and reports to the Board on all
elements of compensation for Agilent's elected officers including total cash
compensation and long-term equity based incentives.
NOMINATING COMMITTEE
The charter of the Nominating Committee is to propose a slate of directors for
appointment by Agilent's stockholders at each annual meeting and candidates to
fill any vacancies on the Board. It is also responsible for approving management
succession plans and addressing the Board's organizational and governance
issues. During fiscal year 2000, the full Board has fulfilled these roles and
has indicated that it intends to continue this practice. Accordingly, effective
this year, Agilent will no longer have a separate Nominating Committee.
EXECUTIVE COMMITTEE
The Executive Committee meets or takes written action when the Board is not
otherwise meeting. The Committee has full authority to act on behalf of the
Board, except that it cannot amend Agilent's Bylaws, recommend any action that
requires the approval of the stockholders or take any other action not permitted
under Delaware law to be delegated to a committee.
DIRECTOR COMPENSATION ARRANGEMENTS AND STOCK OWNERSHIP GUIDELINES
The following table provides information on Agilent's compensation and
reimbursement practices during the 2000 fiscal year for non-employee directors.
Directors who are employed by Agilent do not receive any compensation for their
Board activities.
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------
COMPENSATION TABLE
FOR THE 2000 FISCAL YEAR
<S> <C>
---------------------------------------------------------------------------------
Annual Director Retainer(1) $100,000
---------------------------------------------------------------------------------
Annual Retainer for Board Chairman $400,000
---------------------------------------------------------------------------------
Minimum Percentage of Annual Retainer to be Paid in
Agilent's Stock Options(2) 75%
---------------------------------------------------------------------------------
One Time Initial Grant to be Paid in Agilent's Stock
Options $250,000
---------------------------------------------------------------------------------
One Time Initial Grant to be Paid in Agilent's Stock
Options for Board Chairman $500,000
---------------------------------------------------------------------------------
Additional Retainer for Committee Chair $5,000
---------------------------------------------------------------------------------
</TABLE>
(1) All directors served the entire 2000 fiscal year, except for Heidi Kunz,
James G. Cullen, Robert J. Herbold and A. Barry Rand, who joined Agilent's
Board on February 16, 2000, April 13, 2000, June 19, 2000, and November 27,
2000, respectively.
(2) Stock options will be valued using a Black-Scholes model. The initial grants
will be made at the time of election and will cover the period extending
through February 28, 2001. Future grants will then be made on an annual
cycle on March 1st of each year following Agilent's annual stockholders
meeting.
5
<PAGE> 9
PROPOSALS TO BE VOTED ON
PROPOSAL NO. 1
ELECTION OF CLASS I DIRECTORS
Agilent's Board is divided into three classes serving staggered three-year
terms. Directors for each class are elected at the annual meeting of
stockholders held in the year in which the term for their class expires.
The term for three directors will expire at this 2001 annual meeting.
Directors elected at the 2001 annual meeting will hold office for a three-year
term expiring at the annual meeting in 2004 (or until their respective
successors are elected and qualified, or until their earlier death, resignation
or removal). All of the nominees are currently directors of Agilent. There are
no family relationships among Agilent's executive officers and directors.
NOMINEES FOR A THREE-YEAR TERM THAT WILL EXPIRE IN 2004
JAMES G. CULLEN
Age 58 Mr. Cullen has served as a director since April
2000. Mr. Cullen was President and Chief Operations
Officer of Bell Atlantic from 1997 to June 2000 and
a member of the office of chairman since 1993.
Prior to this appointment, Mr. Cullen was a
President and Chief Executive Officer of the
Telecom Group of Bell Atlantic from 1995 to 1997.
Prior to joining Bell Atlantic, Mr. Cullen held
management positions with New Jersey Bell from 1966
to 1981, AT&T from 1981 to 1983 and Bell Atlantic
Enterprises. Mr. Cullen is a member of the board of
directors of Johnson & Johnson, Prudential
Insurance Company and Quantum Bridge
Communications.
WALTER B. HEWLETT
Age 56 Mr. Hewlett has served as a director since July
1999. Mr. Hewlett is an independent software
developer involved with computer applications in
the humanities. He participated in the formation of
Vermont Telephone Company of Springfield, Vermont
in 1994 and currently serves as its Chairman. Mr.
Hewlett founded the Center for Computer Assisted
Research in the Humanities in 1984, for which he
serves as a director. He has been a trustee of The
William and Flora Hewlett Foundation since its
founding in 1966 and currently serves as its
Chairman. In 1997, Mr. Hewlett was elected to the
Board of Overseers of Harvard University and has
served as a director of Hewlett-Packard Company
since 1987. He is the son of Hewlett-Packard
Company co-founder, William R. Hewlett.
RANDALL L. TOBIAS
Age 58 Mr. Tobias has served as a director since October
1999. From 1993 to 1999, Mr. Tobias served as
Chairman of the Board of Directors and Chief
Executive Officer of Eli Lilly and Company and was
named as Chairman Emeritus of the company in
January 1999. Prior to joining Eli Lilly, Mr.
Tobias served as Vice Chairman of the Board of AT&T
from 1986 until 1993, and had been employed by AT&T
since 1964. Mr. Tobias is a director of Phillips
Petroleum Company, Kimberly-Clark Corporation and
Knight-Ridder, Inc.
AGILENT'S BOARD RECOMMENDS A VOTE FOR THE ELECTION TO THE BOARD OF EACH OF THE
FOREGOING NOMINEES.
6
<PAGE> 10
Agilent's directors listed below are not up for election this year and will
continue in office for the remainder of their terms or earlier in accordance
with Agilent's Bylaws. Information regarding the business experience of each of
such directors is provided below.
DIRECTORS WHOSE TERMS WILL EXPIRE IN 2002
THOMAS E. EVERHART
Age 68 Dr. Everhart has served as a director since July
1999. From February to July 1998, Dr. Everhart
acted as the Pro-Vice Chancellor of the University
of Cambridge. Prior to assuming that position, Dr.
Everhart served as President of the California
Institute of Technology from September 1987 until
his retirement in October 1997, when he became
President Emeritus. Since December 1997, Dr.
Everhart has acted as the Senior Scientific Advisor
to the W. M. Keck Foundation. He is a director of
General Motors Corporation, Raytheon Company,
Hughes Electronics Corporation, Reveo, Inc. and
Saint-Gobain Company. He is also a director of the
Corporation for National Research Initiatives, the
Electric Power Research Institute and a member of
the Board of Trustees of the California Institute
of Technology and of the Board of Overseers of
Harvard University.
HEIDI KUNZ
Age 46 Ms. Kunz has been a director of Agilent since
February 2000. Ms. Kunz has served as an Executive
Vice President and the Chief Financial Officer of
Gap, Inc. since 1999. Prior to assuming her current
position, Ms. Kunz served as the Chief Financial
Officer of ITT Industries, Inc. from 1995 to 1999.
From 1979 to 1995, Ms. Kunz held senior financial-
management positions at General Motors Corporation,
including Vice President and Treasurer.
DAVID M. LAWRENCE, M.D.
Age 60 Dr. Lawrence has been a director of Agilent since
July 1999. He has served as Chairman of the Board
since 1992 and Chief Executive Officer since 1991
of Kaiser Foundation Health Plan, Inc. and Kaiser
Foundation Hospitals. He held a number of
management positions with those organizations prior
to assuming his current positions, including Vice
Chairman of the Board and Chief Operating Officer.
Dr. Lawrence is a director of Pacific Gas and
Electric Company and Raffles Medical Group, Inc.
A. BARRY RAND
Age 56 Mr. Rand has been a director of Agilent since
November 2000. He has served as the Chairman and
Chief Executive Officer of Avis Group Holdings,
Inc. since November 1999. Prior to joining Avis
Group, Mr. Rand was Executive Vice President for
Worldwide Operations at Xerox Corporation from 1995
to 1999. Mr. Rand is a director of Abbott
Laboratories.
DIRECTORS WHOSE TERMS WILL EXPIRE IN 2003
EDWARD W. BARNHOLT
Age 57 Mr. Barnholt has served as Agilent's President and
Chief Executive Officer and as a director since May
1999. Before being named Agilent's Chief Executive
Officer, Mr. Barnholt served as Executive Vice
President and General Manager of Hewlett-Packard
Company's Measurement Organization from 1998 to
1999, which included the business organizations
that have become Agilent. From 1990 to 1998, he
served as General Manager of Hewlett-Packard
Company's Test and Measurement Organization. He was
elected a Senior Vice President of Hewlett-
7
<PAGE> 11
Packard Company in 1993 and an Executive Vice
President in 1996. He is a director of KLA-Tencor
Corporation.
GERALD GRINSTEIN
Age 68 Mr. Grinstein has served as Chairman of the Board
since August 1999. From 1985 to 1995, he held a
number of positions at Burlington Northern, Inc. He
was named its Chairman and Chief Executive Officer
in July 1991 and retired from his position as
chairman of Burlington Northern Santa Fe
Corporation (the successor to Burlington Northern,
Inc.) in September 1995. Mr. Grinstein served as
Chairman of the Board of Delta Air Lines, Inc. from
August 1997 to October 1999 and has served as a
principal of Madrona Investment Group, L.L.C., a
Seattle based investment company, since October
1996. He is a director of Delta Air Lines, Inc.,
PACCAR Inc., Vans, Inc., the Pittston Company,
Expedia.com and Imperial Sugar Corporation. Mr.
Grinstein is also a director of the following
privately held corporations: Space Needle
Corporation, Grove Worldwide and Stellar One
Corporation.
ROBERT J. HERBOLD
Age 58 Mr. Herbold has been a director of Agilent since
June 2000. He has served as an Executive Vice
President and Chief Operating Officer of Microsoft
Corporation since 1994. Prior to joining Microsoft,
Mr. Herbold was a Senior Vice President at The
Procter & Gamble Company from 1990 to 1994. Mr.
Herbold is a director of Weyerhaeuser Corp.
PROPOSAL NO. 2
RATIFICATION OF INDEPENDENT ACCOUNTANTS
The Audit and Finance Committee of the Board has appointed
PricewaterhouseCoopers LLP as Agilent's independent accountants to audit its
consolidated financial statements for the 2001 fiscal year. During the 2000
fiscal year, PricewaterhouseCoopers LLP served as Agilent's independent
accountants and also provided certain tax and other consulting services.
Although Agilent is not required to seek stockholder approval of this
appointment, the Board believes it to be sound corporate practice to do so. If
the appointment is not ratified, the Audit and Finance Committee will
investigate the reasons for stockholder rejection and the Board will reconsider
the appointment.
Representatives of PricewaterhouseCoopers LLP are expected to attend the
annual meeting where they will be available to respond to questions and, if they
desire, to make a statement.
AGILENT'S BOARD RECOMMENDS A VOTE FOR THE RATIFICATION OF THE APPOINTMENT
OF PRICEWATERHOUSECOOPERS LLP AS AGILENT'S INDEPENDENT ACCOUNTANTS.
PROPOSAL NO. 3
APPROVAL OF THE AGILENT TECHNOLOGIES, INC. 1999 STOCK PLAN AND THE INCREASE IN
THE SHARE RESERVE OF 45,000,000 SHARES THEREUNDER
On September 17, 1999, the Board adopted the Agilent Technologies, Inc.
1999 Stock Plan (the "Stock Plan") and authorized 75,000,000 shares of common
stock for issuance thereunder, subject to stockholder approval. On September 16,
1999, Hewlett-Packard Company, acting in its capacity as sole stockholder of
Agilent, approved the adoption of the Stock Plan. Pursuant to the adjustment in
the initial capitalization of Agilent, 67,800,000 shares were reserved for
issuance under the Stock Plan. As of December 26, 2000, options to purchase
40,220,329 shares of Agilent common stock have been granted pursuant to the
Stock Plan. On
8
<PAGE> 12
December 14, 2000, the Compensation Committee of the Board authorized the
addition of 45,000,000 shares to the share reserve subject to stockholder
approval. Such increase is expected to cover all stock option grants through
fiscal year 2003. On December 14, 2000, as more fully described in the paragraph
entitled "Limitations" below, the Compensation Committee of the Board also
adopted an amendment and restatement of the Stock Plan.
Agilent has a policy of emphasizing equity grants for key employees. By
making a significant portion of key employees' compensation contingent upon
long-term positive share price performance, the interests of key employees are
aligned with those of stockholders. The Compensation Committee believes the
addition of 45 million shares to the reserve under the Stock Plan is necessary
for Agilent to continue its policy of emphasizing equity compensation and to
remain competitive with industry equity grant practice. At the same time, the
Compensation Committee has amended and restated the Stock Plan to provide
limitations on the Compensation Committee's ability to grant stock appreciation
rights, restricted stock and discounted options and to prohibit the repricing of
options and grants of discounted options to executive officers. The amended and
restated Stock Plan also provides Code section 162(m) individual annual stock
option and SAR grant limitations and optional performance-based conditions for
limited grants of restricted stock. These limitations and conditions are
designed to help Agilent preserve the tax deductibility of awards granted under
the Stock Plan.
AGILENT'S BOARD RECOMMENDS A VOTE FOR THE APPROVAL OF THE STOCK PLAN AND
THE RESERVATION OF SHARES FOR ISSUANCE THEREUNDER.
VOTE REQUIRED
Approval of the Stock Plan requires the affirmative vote of a majority of the
shares of common stock present or represented by proxy and entitled to vote at
the meeting.
SUMMARY OF THE STOCK PLAN
General. The purpose of the Stock Plan is to encourage ownership in Agilent by
key personnel whose long-term employment is essential to Agilent's continued
progress. Stock options, stock appreciation rights, stock awards and cash awards
may be granted under the Stock Plan. Options granted under the Stock Plan may be
either "incentive stock options," as defined in Section 422 of the Code, or
non-statutory stock options.
Administration. The Stock Plan may generally be administered by the Board or a
Committee appointed by the Board including the Executive Committee (as
applicable, the "Administrator").
Eligibility. Non-statutory stock options, stock appreciation rights, stock
awards and cash awards may be granted under the Stock Plan to employees,
directors and consultants of Agilent, its affiliates and subsidiaries. Incentive
stock options may be granted only to employees of Agilent or its subsidiaries.
The Administrator, in its discretion, approves options, stock awards and cash
awards to be granted under the Stock Plan. Agilent intends the Stock Plan to be
a broad-based employee plan, and as part of its first year incentive program, on
May 17, 2000, an option to purchase 100 shares was granted to every employee of
Agilent where permitted by local law.
Limitations. Section 162(m) of the Code places limits on the deductibility for
federal income tax purposes of compensation paid to certain executive officers
of Agilent. In order to preserve Agilent's ability to deduct the compensation
income associated with options granted to such persons, the Stock Plan provides
that no employee, director or consultant may be granted, in any fiscal year of
Agilent, SARs or options to purchase more than 1,000,000 shares of common stock.
Notwithstanding this limit, however, an individual may be granted SARs or
options to purchase up to an additional 1,000,000 shares of common stock in
connection with his or her initial employment with Agilent. In addition, the
aggregate number of shares underlying stock awards granted in any fiscal year to
an individual under the Stock Plan may not exceed 2,000,000. Pursuant to
amendments to the Stock Plan adopted on December 14, 2000, awards granted under
the Stock Plan on or after December 14, 2000, are subject to the following new
limitations: (1) the aggregate number of shares underlying discounted
non-statutory stock options that may be granted under this Stock Plan generally
shall not exceed 20% of the share reserve; (2) discounted stock options shall
not be granted to executive officers; (3) the aggregate number of shares of
restricted stock that may be granted under the Stock Plan generally shall not
exceed 10% of the share reserve; and (4) stock appreciation rights that may be
9
<PAGE> 13
granted under the Stock Plan generally shall not exceed 5% of the share reserve
and will only be granted in countries where it is not legal, feasible or
practical (as determined by the Compensation Committee) to grant stock options.
Terms and Conditions of Options. Each option is evidenced by a stock option
agreement between Agilent and the optionee and is subject to the following
additional terms and conditions:
Exercise Price. The Administrator determines the exercise price of options at
the time the options are granted. The exercise price of an incentive stock
option may not be less than 100% of the fair market value of the common stock on
the date such option is granted. The exercise price of a non-statutory stock
option may not be less than 75% of the fair market value of the common stock on
the date such option is granted. Certain replacement options with lower exercise
prices may be granted to employees of entities acquired by Agilent to replace
that employee's existing options. The fair market value of the common stock is
generally the average of the highest and lowest quoted sales prices for the
common stock on the date the option is granted (or if no sales were reported
that day, the last preceding day a sale occurred). On December 26, 2000, the
average of the highest and lowest quoted sales prices of Agilent common stock on
the New York Stock Exchange was $54.09 per share. In addition, no option may be
repriced, replaced or regranted through cancellation or modification without
stockholder approval if the effect would be to reduce the exercise price of such
option (except in connection with a change in Agilent's capitalization or an
acquisition).
Exercise of Option; Form of Consideration. The Administrator determines when
options become exercisable and in its discretion may accelerate the vesting of
any outstanding option. The means of payment for shares issued on exercise of an
option are specified in each option agreement. The Stock Plan permits payment to
be made by cash, check, wire transfer, other shares of common stock of Agilent
(with some restrictions), broker assisted same day sales, any other form of
consideration permitted by applicable law, or any combination thereof, as
provided in the individual stock option agreement.
Term of Option. The term of an option may be no more than ten years from the
date of grant, or 10 1/2 years in certain jurisdictions outside of the United
States. No option may be exercised after the expiration of its term.
Termination of Employment. Generally, if an optionee's employment terminates for
any reason (other than as described below), vested and unvested options held by
the optionee under the Stock Plan will be forfeited on the optionee's
termination. Notwithstanding the above, for vested options granted between
January 1, 2000, and July 31, 2000, and all options granted on or after December
14, 2000, optionees whose employment terminates for any reason (other than those
reasons described below) shall have 3 months from the date of termination to
exercise vested options, or if earlier, the term of the option, and all unvested
options shall be forfeited on termination.
Death, Disability or Retirement Due to Age. If an optionee's employment
terminates as a result of the optionee's death, then all unvested options will
immediately vest and all options may be exercised for one year following the
optionee's death. If an optionee's employment terminates as a result of the
optionee's disability or retirement due to age in accordance with the retirement
policies of Agilent or its subsidiaries, then all unvested options will
immediately vest and the optionee may exercise the option within three years of
the date of such disability or retirement for a non-statutory stock option, and
within three months of the date of such disability or retirement for an
incentive stock option, provided that no option may be exercised after the
expiration of its term.
Voluntary Severance Incentive Program or Divestiture. If an optionee ceases to
be an employee as a result of participation in a voluntary severance incentive
program of Agilent or a subsidiary, all unvested options will immediately vest
and all outstanding options will be exercisable for three months following the
optionee's termination. If an employee ceases to be a participant because of a
divestiture by Agilent, as determined by the Administrator, the Administrator
will have the sole discretion to accelerate the vesting of outstanding options
and determine the time period for exercise.
10
<PAGE> 14
Nontransferability of Options. Unless otherwise determined by the Administrator,
options granted under the Stock Plan are not transferable other than by will or
the laws of descent and distribution and may be exercised during the optionee's
lifetime only by the optionee.
Other Provisions. The stock option agreement may contain other terms, provisions
and conditions not inconsistent with the Stock Plan, as may be determined by the
Administrator.
Stock Awards. The Administrator may grant stock awards in its discretion. The
terms and conditions of a stock award will be found in a restricted stock
agreement. The grant or vesting of a stock award may be made contingent on
achievement of performance conditions, including net order dollars, net profit
dollars, net profit growth, net revenue dollars, revenue growth, individual
performance, earnings per share, return on assets, return on equity, and other
financial objectives, customer satisfaction indicators and guaranteed efficiency
measures, each with respect to Agilent and/or an individual business unit. In
the case of stock awards, unless the Administrator determines otherwise, the
restricted stock agreement will provide that the unvested stock reverts to
Agilent on the awardee's termination of employment for any reason (except death,
disability, retirement, or participation in a voluntary severance incentive
program). On disability or retirement due to age in accordance with the
retirement policies of Agilent or its subsidiaries, the time-based forfeiture
provisions of the restricted stock continue to lapse as long as the awardee does
not compete or disclose any confidential information and, if retiring due to
age, the awardee performs reasonably requested consulting services. The time-
based forfeiture provisions for the restricted stock will generally lapse at a
rate determined by the Administrator. On the death of an awardee, or if an
awardee's employment is terminated due to a voluntary severance incentive
program of Agilent or a subsidiary, then the stock award shall immediately vest
and all time-based forfeiture provisions and repurchase rights shall lapse as to
a prorated number of shares determined by dividing the number of whole years
since the grant date by the number of whole years between the grant date and the
date that the stock award would have fully vested.
Cash Awards. The Administrator may grant cash awards, which entitle the
recipient to a cash payment. The Administrator determines the terms, conditions
and restrictions related to cash awards.
Adjustments on Changes in Capitalization, Merger or Sale of Assets. In the event
that Agilent's stock changes by reason of any stock split, dividend,
combination, reclassification or other similar change in Agilent's capital
structure effected without the receipt of consideration, appropriate adjustments
shall be made in the number and class of shares of stock subject to the Stock
Plan, the number and class of shares of stock subject to any option or stock
award outstanding under the Stock Plan, and the exercise price of any such
outstanding option or stock award.
In the event of a liquidation or dissolution of Agilent, any unexercised options
or stock awards will terminate. The Administrator, in its discretion, may
provide that each optionee shall have the right to exercise all of the
optionee's options, including those not otherwise exercisable, and be fully
vested in any stock awards until the date ten days prior to the consummation of
the liquidation or dissolution.
In the event of a change of control of Agilent, the Board, in its discretion,
may provide for the assumption, substitution or adjustment of each outstanding
award, accelerate the vesting of options and terminate any restrictions on stock
awards or cash awards, or cancel awards for a cash payment to the awardee.
Amendment and Termination of the Plan. The Board may amend, alter, suspend or
terminate the Stock Plan, or any part thereof, at any time and for any reason.
However, Agilent shall obtain stockholder approval for any amendment to the
Stock Plan to the extent necessary and desirable to comply with applicable laws.
No such action by the Board or stockholders may alter or impair any option or
award previously granted under the Stock Plan without the written consent of the
awardees. Unless terminated earlier, the Stock Plan shall terminate ten years
from the date of its adoption by the Board.
New Plan Benefits. Because benefits under the Stock Plan will depend on the
Administrator's actions and the fair market value of common stock at various
future dates, it is not possible to determine the benefits that will be received
by directors, executive officers and other employees if the Stock Plan is
approved by the stockholders. Notwithstanding the above, discounted stock
options shall not be granted to executive officers.
11
<PAGE> 15
FEDERAL INCOME TAX CONSEQUENCES
Incentive Stock Options. An optionee who is granted an incentive stock option
does not recognize taxable income at the time the option is granted or on its
exercise, although the difference between the exercise price and the market
value on exercise is an adjustment item for alternative minimum tax purposes and
may subject the optionee to the alternative minimum tax. On a disposition of the
shares more than two years after grant of the option and one year after exercise
of the option, any gain or loss is treated as long-term capital gain or loss.
Net capital gains on shares held more than 12 months are generally taxed at a
maximum federal rate of 20%. Capital losses are generally allowed in full
against capital gains and up to $3,000 against other income. If the above
holding periods are not satisfied, the optionee recognizes ordinary income at
the time of disposition equal to the difference between the exercise price and
the lower of (i) the fair market value of the shares at the date of the option
exercise or (ii) the sale price of the shares. Any gain or loss recognized on
such a premature disposition of the shares in excess of the amount treated as
ordinary income is treated as long-term or short-term capital gain or loss,
depending on the holding period. Unless limited by Section 162(m) of the Code,
Agilent is entitled to a deduction in the same amount as and at the time the
optionee recognizes ordinary income.
Non-statutory Stock Options. An optionee does not recognize any taxable income
at the time he or she is granted a non-statutory stock option. On exercise, the
optionee recognizes taxable income generally measured by the excess of the then
fair market value of the shares over the exercise price. Any taxable income
recognized in connection with an option exercise by an employee of Agilent is
subject to tax withholding by Agilent. On a disposition of such shares by the
optionee, any difference between the sale price and the optionee's exercise
price, to the extent not recognized as taxable income as provided above, is
treated as long-term or short-term capital gain or loss, depending on the
holding period. Net capital gains on shares held more than 12 months may be
taxed at a maximum federal rate of 20% (lower rates may apply depending on when
the stock is acquired and the applicable income tax bracket of the taxpayer).
Capital losses are generally allowed in full against capital gains and up to
$3,000 against other income. Unless limited by Section 162(m) of the Code,
Agilent is entitled to a deduction in the same amount as and at the time the
optionee recognizes ordinary income.
Stock Awards. Stock awards will generally be taxed in the same manner as
non-statutory stock options. However, a stock award is subject to a "substantial
risk of forfeiture" within the meaning of Section 83 of the Code to the extent
the award will be forfeited in the event that the service provider ceases to
provide services to Agilent. As a result of this substantial risk of forfeiture,
the service provider will not recognize ordinary income at the time of award.
Instead, the service provider will recognize ordinary income on the dates when
the stock is no longer subject to a substantial risk of forfeiture, or when the
stock becomes transferable, if earlier. The service provider's ordinary income
is measured as the difference between the amount paid for the stock, if any, and
the fair market value of the stock on the date the stock is no longer subject to
forfeiture.
The service provider may accelerate to the date of award his or her recognition
of ordinary income, if any, and begin his or her capital gains holding period by
timely filing (i.e., within thirty days of the award) an election pursuant to
Section 83(b) of the Code. In such event, the ordinary income recognized, if
any, is measured as the difference between the amount paid for the stock, if
any, and the fair market value of the stock on the date of award, and the
capital gain holding period commences on such date. The ordinary income
recognized by a service provider who is an employee will be subject to tax
withholding by Agilent. Unless limited by Section 162(m) of the Code, Agilent is
entitled to a deduction in the same amount as and at the time the service
provider recognizes ordinary income.
Cash Awards. On receipt of cash, the recipient will have taxable ordinary
income, in the year of receipt, equal to the cash received. In the case of a
recipient who is also an employee, any cash received will be subject to tax
withholding by Agilent. Unless limited by section 162(m) of the Code, Agilent
will be entitled to a tax deduction in the amount and at the time the recipient
recognizes compensation income.
The foregoing is only a summary of the effect of federal income taxation on
optionees and Agilent with respect to the grant and/or exercise of options and
awards under the Stock Plan. It does not purport to be complete and does not
discuss the tax consequences arising in the context of the employee's or
consultant's death or the income tax
12
<PAGE> 16
laws of any municipality, state or foreign country in which the employee's or
consultant's income or gain may be taxable.
INCORPORATION BY REFERENCE
The foregoing is only a summary of the Stock Plan and is qualified in its
entirety by reference to its full text, a copy of which is attached hereto as
Appendix A.
AWARDS UNDER STOCK PLAN FOR FISCAL YEAR 2001
Awards under the Stock Plan will be made at the discretion of the
Administrator. The following table sets forth information concerning awards made
in November and December 2000, for fiscal year 2001 under the Stock Plan to
individuals listed in the New Plan Benefits Table. This information may not be
indicative of the total awards that will be made under the Stock Plan in fiscal
year 2001, because the Administrator may make decisions on additional awards
over the course of fiscal year 2001.
NEW PLAN BENEFITS TABLE
<TABLE>
<CAPTION>
DOLLAR VALUE OF NUMBER OF SHARES NUMBER OF
NAME AND PRINCIPAL POSITION RESTRICTED STOCK SUBJECT TO OPTIONS(1, 2) SARS
--------------------------- ---------------- ------------------------ ---------
<S> <C> <C> <C>
Edward W. Barnholt.................................. $0 500,000 0
President and Chief Executive Officer
John E. Scruggs..................................... $0 85,000 0
Senior Vice President, Automated Test
Byron Anderson...................................... $0 75,000 0
Senior Vice President, Electronic Products and
Solutions
William P. Sullivan................................. $0 200,000 0
Senior Vice President, Semiconductor Products
Robert R. Walker.................................... $0 150,000 0
Executive Vice President, Chief Financial Officer
All Executive Officers as a Group................... $0 1,585,000 0
All Directors as a Group, Excluding Executive
Officers.......................................... N/A(2) N/A(2) N/A(2)
All Employees as a Group, Excluding Executive
Officers and Directors............................ $0 14,150,120 8,175
</TABLE>
-------------------------
(1) Options were granted at an exercise price of 100% of the market price of the
underlying shares of Agilent's common stock on the date of grant. Options
generally become exercisable over four years at the rate of twenty-five
percent each year and expire no later than ten years from the date of grant.
On December 14, 2000, the grant date of the options listed in the table
above, the average of the highest and lowest quoted sales prices of Agilent
common stock on the New York Stock Exchange was $58.85 per share.
(2) Non-employee directors do not participate in the Stock Plan.
AMENDMENT AND TERMINATION OF THE STOCK PLAN
The Board may amend, alter, suspend or terminate the Stock Plan at any time
and for any reason.
13
<PAGE> 17
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, as of December 26, 2000,
concerning:
- beneficial ownership of Agilent's common stock by the William R. Hewlett
Trust; FMR Corp., Edward C. Johnson 3d and Abigail P. Johnson, as a
group; and The David and Lucile Packard Foundation, the only beneficial
owners of 5% or more of Agilent's common stock;
- beneficial ownership of Agilent's common stock by all directors and
executive officers named in the Summary Compensation Table herein; and
- beneficial ownership of Agilent's common stock by all directors and
executive officers as a group.
The number of shares beneficially owned by each entity, person, director or
executive officer is determined under the rules of the U.S. Securities and
Exchange Commission, and the information is not necessarily indicative of
beneficial ownership for any other purpose. Under such rules, beneficial
ownership includes any shares as to which the individual has the sole or shared
voting power or investment power and also any shares which the individual has
the right to acquire as of February 24, 2001, 60 days after the record date of
December 26, 2000, through the exercise of any stock option or other right.
Unless otherwise indicated, each person has sole investment and voting power, or
shares such powers with his or her spouse, with respect to the shares set forth
in the following table.
BENEFICIAL OWNERSHIP TABLE
<TABLE>
<CAPTION>
SHARES OF AGILENT
BENEFICIALLY OWNED
---------------------------------------------
NAME OF BENEFICIAL OWNER NUMBER NATURE(1) PERCENTAGE
------------------------ ---------- ----------------- ----------
<S> <C> <C> <C>
Byron Anderson.............................................. 10,879 Direct
105,652 Vested Options
472 Indirect(2)
----------
117,003 *
Edward W. Barnholt.......................................... 50,797 Direct
705,814 Vested Options
1,979 Indirect(3)
----------
758,590 *
James G. Cullen............................................. 0 Direct
0 Vested Options
----------
0 *
The David and Lucile Packard Foundation(4).................. 38,927,525 8.6%
300 Second Street, Suite 200
Los Altos, CA 94022
Thomas E. Everhart.......................................... 4,365 Direct
33,297 Vested Options
----------
37,662 *
FMR Corp., Edward C. Johnson 3d, Abigail P. Johnson, as a
group(5).................................................... 45,584,152 10.1%
82 Devonshire Street
Boston, MA 02109
Gerald Grinstein............................................ 2,097 Direct
70,175 Vested Options
----------
72,272 *
Robert J. Herbold........................................... 0 Direct
0 Vested Options
----------
0 *
</TABLE>
14
<PAGE> 18
<TABLE>
<CAPTION>
SHARES OF AGILENT
BENEFICIALLY OWNED
---------------------------------------------
NAME OF BENEFICIAL OWNER NUMBER NATURE(1) PERCENTAGE
------------------------ ---------- ----------------- ----------
<S> <C> <C> <C>
Hewlett Direct and Indirect Accounts
Walter B. Hewlett......................................... 39,139 Direct
30,702 Vested Options
12,857 Indirect(6)
----------
82,698 *
William R. Hewlett Revocable Trust........................ 22,900,284(7) 5.0%
1505 Page Mill Road
Palo Alto, CA 94304
The William and Flora Hewlett Foundation.................. 511,477(7) *
Packard Humanities Institute.............................. 4,910,828(7) *
Flora L. Hewlett Trust.................................... 413,056(7) *
William R. Hewlett and Rosemary Hewlett Community
Property................................................ 669,964(7) *
Flora Family Foundation................................... 491,128(7) *
Heidi Kunz.................................................. 0 Direct
8,160 Vested Options
----------
8,160 *
David M. Lawrence, M.D. .................................... 1,577 Direct
45,497 Vested Options
----------
47,074 *
A. Barry Rand............................................... 350 Direct
John E. Scruggs............................................. 21,392 Direct
99,174 Vested Options
----------
120,566 *
William P. Sullivan......................................... 379 Direct
68,228 Vested Options
----------
68,607 *
Randall L. Tobias........................................... 2,381 Direct
30,702 Vested Options
666(8) Indirect
----------
33,749 *
Robert R. Walker............................................ 9,544 Direct
170,706 Vested Options
----------
180,250 *
All directors and executive officers as a group............. 2,213,216 *
</TABLE>
------------------------------
* Represents holdings of less than one percent.
(1) "Vested Options" are options which may be exercised as of February 24, 2001.
"Direct Shares" include among other things, shares of stock owned by the
stockholder that are subject to vesting schedule, forfeiture risk and other
restrictions.
(2) Includes 236 shares held for the benefit of Mr. Anderson's daughter and 236
shares held in trust for Mr. Anderson's son, for which trust Mr. Anderson is
a trustee.
(3) Includes 1,979 shares held by Mr. Barnholt as a custodian for his children.
(4) The number of shares of Agilent common stock beneficially owned by The David
and Lucile Packard Foundation is based on the Schedule 13G filed by the
Foundation with the U.S. Securities and Exchange Commission on June 9, 2000.
15
<PAGE> 19
(5) The number of shares of Agilent common stock beneficially owned by FMR
Corp., Edward C. Johnson 3d, and Abigail P. Johnson is based on the Schedule
13G filed by this group with the U.S. Securities and Exchange Commission on
September 11, 2000.
(6) Includes 12,369 shares held by Mr. Hewlett for the benefit of his children
and 488 shares held by Mr. Hewlett's spouse.
(7) Mr. Hewlett shares voting and investment power over the shares held by the
William R. Hewlett Revocable Trust, The William and Flora Hewlett
Foundation, the William R. Hewlett and Rosemary Hewlett Community Property,
the Packard Humanities Institute, and the Flora L. Hewlett Trust. Mr.
Hewlett shares investment power in the Flora Family Foundation. Mr. Hewlett
disclaims any beneficial interest in these shares, because he has no
pecuniary interest in the shares.
(8) Includes 381 shares of Agilent common stock held by the Marianne W. Tobias
Revocable Trust, a trust in the name of Mr. Tobias' spouse; 152 shares of
Agilent common stock held by the Trust for the Benefit of James R. Ullyot, a
trust in which Mr. Tobias' spouse has voting and investment power; and 133
shares of Agilent common stock held by the Marianne W. Tobias Individual
Retirement Account.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires Agilent's
directors, executive officers and holders of more than 10% of Agilent common
stock to file with the U.S. Securities and Exchange Commission reports regarding
their ownership and changes in ownership of Agilent stock. Agilent believes that
during the 2000 fiscal year, its officers, directors and 10% stockholders
complied with all Section 16(a) filing requirements, except for Dr. Thomas E.
Everhart who exercised an option to purchase 1,811 shares of Agilent common
stock on August 14, 2000, and due to employee transitions at Agilent, Agilent
did not file the Form 4 reporting the transaction on Dr. Everhart's behalf until
October 10, 2000, one month after the deadline. In making this statement,
Agilent has relied on the written representations of its directors and officers.
16
<PAGE> 20
EXECUTIVE COMPENSATION
The following table sets forth certain compensation information for the
chief executive officer and the four other executive officers of Agilent who,
based on their salary and bonus compensation, were the most highly compensated
for the fiscal year ended October 31, 2000 (the "Named Executive Officers"). All
information set forth in this table reflects compensation earned by these
individuals for services with Agilent for the fiscal year ended October 31,
2000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
-------------------------------
ANNUAL COMPENSATION RESTRICTED SECURITIES ALL OTHER
---------------------- STOCK AWARD(S) UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) ($)(1) OPTIONS (#)(2) ($)(3)
--------------------------- ---- ---------- --------- -------------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Edward W. Barnholt.......... 2000 $1,000,000 $660,000 $ 46,908 750,000 $ 6,800
President and Chief 1999 920,635 474,684 409,141 121,458 313,892
Executive Officer
John E. Scruggs............. 2000 470,000 243,930 19,778 100,000 6,800
Senior Vice President, 1999 415,167 193,350 21,166 38,172 80,110
Automated Test
Byron Anderson.............. 2000 500,000 173,684 21,311 100,000 6,800
Senior Vice President, 1999 425,000 135,690 22,932 34,702 109,474
Electronic Products and
Solutions
William P. Sullivan......... 2000 440,000 205,260 0 150,000 7,300
Senior Vice President, 1999 408,438 174,331 177,570 26,026 30,678
Semiconductor Products
Robert R. Walker............ 2000 450,000 148,500 17,823 200,000 6,800
Executive Vice President, 1999 439,583 37,910 19,572 32,099 62,392
Chief Financial Officer
</TABLE>
------------------------------
(1) For fiscal year 2000, the amounts disclosed reflect the dollar values of
Hewlett-Packard Company's and Agilent's common stock, which were contributed
under the Hewlett-Packard Company Employee Stock Purchase Plan and the
Agilent Technologies, Inc. Employee Stock Purchase Plan, respectively. Under
such plans, eligible employees (including Executive Officers) receive one
share as a match ("Matching Shares") for every two shares purchased. In
February 2000, eligible Agilent employees stopped participating in the
Hewlett-Packard Company Employee Stock Purchase Plan and commenced
participating in a similar Agilent Technologies, Inc. Employee Stock
Purchase Plan. As of June 2, 2000, Hewlett-Packard Company Matching Shares
held by Agilent employees were forfeited and replaced with Agilent Matching
Shares. The Matching Shares vest two years after the date of purchase.
Vesting occurs on a rolling fiscal quarter basis, and is subject to
forfeiture during the two-year period in the event of termination or certain
other events.
For fiscal year 1999, the amounts disclosed in this column reflect both the
Hewlett-Packard Company Employee Stock Purchase Plan Matching Shares and
Hewlett-Packard Company compensatory restricted stock awards. The amounts
shown for 1999 restricted stock awards represent the dollar value of the
awards on the dates originally granted.
In fiscal year 1999, Hewlett-Packard Company granted 6,000 shares of
performance-based restricted stock to Mr. Barnholt valued at $355,140 based
on the grant date closing price of $59.19 per share. The value of this
award as of the original grant date is reflected in the table. This award
was replaced on November 18, 1999 with an Agilent stock option exercisable
for 40,756 shares of Agilent common stock, which replacement was intended
to preserve the fair value of the award at the time of distribution. This
replacement grant contained no further performance criteria.
17
<PAGE> 21
In fiscal year 1999, Hewlett-Packard Company granted 3,000 shares of
time-based restricted stock valued at $177, 570 to Mr. Sullivan. This award
was replaced on November 18, 1999 with an award of an Agilent stock option
exercisable for 20,278 shares of Agilent common stock, which replacement
was intended to preserve the fair value of the award at the time of
distribution.
No new compensatory restricted stock awards were granted to Agilent
executives in fiscal year 2000. On October 31, 2000, each of the Named
Executive Officers held the following number of shares of restricted stock
with a value based on the October 31, 2000, closing price of $46.31 per
share: Mr. Barnholt held 2,146 shares of restricted stock valued at
$99,381; Mr. Scruggs held 13,857 shares of restricted stock valued at
$641,718; Mr. Anderson held 892 shares of restricted stock valued at
$41,309; Mr. Sullivan held no shares of restricted stock; and Mr. Walker
held 759 shares of restricted stock valued at $35,149.
(2) Awards granted prior to fiscal year 2000 were granted with respect to
Hewlett-Packard Company common stock. The amounts shown for 1999 stock
options represent the equivalent number of shares of Agilent common stock
resulting from the conversion of Hewlett-Packard Company awards to Agilent
awards. This conversion maintained the intrinsic value of the options held
by Agilent employees as of June 2, 2000, the date of the distribution of the
Agilent stock dividend to Hewlett-Packard Company stockholders. The number
of shares of common stock covered by the conversion option was calculated by
multiplying the number of shares of Hewlett-Packard Company common stock
under the original award by a factor of 1.73511, and the exercise price of
the options was decreased by dividing the original exercise price by the
same factor.
(3) The amounts disclosed in this column include payment of Agilent's
contributions under the Agilent Technologies, Inc. 401(k) plan, which is
also referred to as the Agilent Technologies, Inc. Savings Accumulation
Plan, in fiscal year 2000 of $6,800 on behalf of each of Messrs. Barnholt,
Scruggs, Anderson, and Walker and of $7,300 on behalf of Mr. Sullivan.
OPTION GRANTS IN LAST FISCAL YEAR
The following table shows all grants of options to acquire shares of
Agilent common stock granted to the Named Executive Officers listed in the
Summary Compensation Table for the fiscal year ended October 31, 2000.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
NUMBER OF % OF TOTAL ASSUMED ANNUAL RATES OF
SECURITIES OPTIONS GRANTED STOCK PRICE APPRECIATION FOR
UNDERLYING TO AGILENT EXERCISE OR OPTION TERM
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION -----------------------------
NAME YEAR GRANTED(#)(1) FISCAL YEAR ($/SHARE)(2) DATE 5% 10%
---- ---- ------------- --------------- ------------ ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Edward W. Barnholt.... 2000 750,000 2.5% $30.00 Nov. 2009 $14,150,129 $35,859,205
John E. Scruggs....... 2000 100,000 0.3% $30.00 Nov. 2009 1,886,684 4,781,227
Byron Anderson........ 2000 100,000 0.3% $30.00 Nov. 2009 1,886,684 4,781,227
William P. Sullivan... 2000 150,000 0.5% $30.00 Nov. 2009 2,830,026 7,171,841
Robert R. Walker...... 2000 200,000 0.7% $30.00 Nov. 2009 3,773,368 9,562,455
</TABLE>
------------------------------
(1) The options granted are exercisable 25% after the first year, 50% after the
second year, 75% after the third year, and 100% after the fourth year.
(2) The exercise price equals the initial public offering price of Agilent's
common stock. The exercise price may be paid by delivery of cash in an
amount equal to the exercise price or delivery of already-owned shares, and
tax-withholding obligations related to exercise may be paid by offset of the
underlying shares, subject to certain conditions.
18
<PAGE> 22
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
The following table shows aggregate exercises of options to purchase
Agilent's common stock in the fiscal year ended October 31, 2000, by the Named
Executive Officers.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-
OPTIONS AS FISCAL YEAR-END MONEY OPTIONS AT FISCAL
SHARES (#) YEAR-END ($)(1)
ACQUIRED ON VALUE --------------------------- -----------------------------
NAME YEAR EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ---- ----------- -------- ----------- ------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Edward W. Barnholt..... 2000 0 $0 347,020 1,048,807 $8,581,675 $16,772,904
John E Scruggs......... 2000 0 $0 53,787 145,980 $ 853,459 $ 2,236,112
Byron Anderson......... 2000 0 $0 0 204,510 $ 0 $ 3,220,164
William P. Sullivan.... 2000 0 $0 0 217,156 $ 0 $ 3,496,571
Robert R. Walker....... 2000 0 $0 47,930 294,033 $ 758,476 $ 4,731,270
</TABLE>
------------------------------
(1) The value of unexercised Agilent options is based on the difference between
the exercise price and the average of the high and low market prices of
Agilent common stock on October 31, 2000 of $46.63.
PENSION PLANS
The following table shows the estimated annual benefits payable on
retirement to Agilent's eligible employees in the United States under Agilent's
Deferred Profit Sharing Plan (the "Deferred Plan"), Agilent's Retirement Plan
(the "Retirement Plan") and Agilent's Excess Benefit Retirement Plan (the
"Excess Benefit Plan"). To calculate the number of years of an eligible
employee's service, the pension plans will bridge each eligible employee's
service with Hewlett-Packard Company to that eligible employee's service with
Agilent.
ESTIMATED ANNUAL RETIREMENT BENEFITS
<TABLE>
<CAPTION>
HIGHEST FIVE-YEAR 15 YEARS 20 YEARS 25 YEARS 30 YEARS
AVERAGE COMPENSATION OF SERVICE OF SERVICE OF SERVICE OF SERVICE
-------------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
400,0$00........ $ 86,851 $115,801 $144,751 $173,701
600,000........ 131,851 175,801 219,751 263,701
800,000........ 176,851 235,801 294,751 353,701
1,000,000...... 221,851 295,801 369,751 443,701
1,200,000...... 266,851 355,801 444,751 533,701
1,400,000...... 311,851 415,801 519,751 623,701
1,600,000...... 356,851 475,801 594,751 713,701
1,800,000...... 401,851 535,801 669,751 803,701
</TABLE>
For fiscal year 2000, benefits exceeding $135,000 will be paid pursuant to
the Excess Benefit Plan. No more than $170,000 (as adjusted from time to time by
the U.S. Internal Revenue Service) of eligible compensation may be taken into
account in calculating benefits payable under the Retirement Plan or the
Deferred Plan. Benefits attributable to annual earnings over $170,000 are
payable under the Excess Benefit Plan. Benefits payable under the Excess Benefit
Plan are available in a lump sum or up to 15 annual installments.
The compensation used to determine the benefits summarized in the table
above equals base pay. The covered compensation for each of the Named Executive
Officers is the highest five-year average of such base pay for such Executive
Officer.
Agilent's employees received credit under Hewlett-Packard Company's plans
for their years of service with Hewlett-Packard Company. Named Executive
Officers have been credited with the following years of service as of December
26, 2000: Mr. Barnholt, 30 years; Mr. Scruggs, 27.8 years; Mr. Anderson, 30
years; Mr. Sullivan, 23.8 years; and Mr. Walker, 25 years. Retirement benefits
shown are expressed as a single life annuity at age 65 and reflect the maximum
offset currently in effect under Section 401(l) of the Code, to
19
<PAGE> 23
compute the offset for such benefits under the pension plan. For purposes of
calculating the benefit, an employee cannot be credited with more than 30 years
of service. Benefits under the Retirement Plan are payable in the form of a
single life annuity, a qualified joint and survivor annuity or a lump sum.
Prior to November 1, 1999, Hewlett-Packard Company maintained the
Hewlett-Packard Company Officers Early Retirement Plan (the "Officers Plan").
The Officers Plan provided early retirement benefits to certain elected officers
of Hewlett-Packard Company. Effective October 31, 1999, the Officers Plan was
terminated, and officers covered by the Officers Plan received a present value
single lump-sum settlement of benefits accrued under the Officers Plan. Such
amounts were credited directly to such officers' deferral accounts under the
Agilent Technologies, Inc. Executive Deferred Compensation Plan as follows: Mr.
Barnholt, $1,976,051; Mr. Scruggs, $742,074; Mr. Anderson, $757,534; and Mr.
Walker, $384,061. Any amounts credited to an officer's deferral account as
described above will be subject to forfeiture if the officer terminates his
employment with Agilent prior to April 1, 2001, unless he is a retiree who had
attained age 58 prior to April 1, 1999.
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD ON EXECUTIVE COMPENSATION
Agilent's executive compensation program is administered by the Compensation
Committee of the Board (the "Compensation Committee"). The Compensation
Committee, which is composed of non-employee directors, is responsible for
approving and reporting to the Board on all elements of compensation for the
elected corporate officers. The Compensation Committee has furnished the
following report on executive compensation for fiscal year 2000.
COMPENSATION PHILOSOPHY
The goal of the executive compensation program is to provide a total
compensation package composed of pay, stock and benefits. The total package is
designed to inspire and reward superior performance by executives, business
organizations and Agilent, and to include executives in the success of Agilent.
EXECUTIVE COMPENSATION PRACTICES
Each year the Compensation Committee surveys the executive compensation
practices of S&P 500 High Technology companies. The Compensation Committee's
practice is to target direct compensation levels for Agilent's executives at the
50th percentile of total direct compensation of surveyed companies. Total direct
compensation includes base pay, short-term bonus at target and long-term
incentives. Overall, individual performance is measured against the following
factors; these factors may vary as required by business conditions:
- long-term strategic goals;
- short-term business goals;
- revenue and profit goals;
- customer satisfaction;
- new business creation;
- total stockholder return;
- the development of employees; and
- the fostering of teamwork and other Agilent values.
In setting the goals and measuring an executive's performance against those
goals, Agilent considers the performance of its competitors and general economic
and market conditions. None of the factors included in Agilent's strategic and
business goals are assigned a specific weight. Instead, the Compensation
Committee recognizes that the relative importance of these factors may change in
order to adapt Agilent's operations to specific business challenges and to
reflect changing economic and marketplace conditions.
In fiscal year 2000, Agilent introduced a new short-term bonus program, the
Agilent Technologies, Inc. Pay-For-Results Plan (the "Pay for Results Plan").
The Pay for Results Plan included 756 of Agilent's top business, sales and
corporate managers. This performance-based compensation is designed to provide
executives with rewards based on individual performance and obtaining short-term
business goals. The Pay for Results Plan will continue in fiscal year 2001.
20
<PAGE> 24
COMPONENTS OF EXECUTIVE COMPENSATION
The compensation program for executive officers consists of the following four
components:
- base pay;
- short-term bonus;
- long-term incentives; and
- benefits.
BASE PAY
Base pay is baseline cash compensation and is determined by the competitive
market and individual performance. Base pay for each executive officer is
established each year based on a salary range, which corresponds to the
executive officer's job responsibilities and the executive officer's overall
individual job performance.
SHORT-TERM BONUS
Short-term bonus is cash compensation that is paid semi-annually when
performance targets are achieved. During fiscal year 2000, the executive
officers participated in the Pay for Results Plan. Actual bonuses paid to
executive officers are based on achievement of profit and revenue goals
established in advance of each performance period.
LONG-TERM INCENTIVES
The long-term incentive program is designed to encourage creation of long-term
value for our stockholders and equity ownership by our executives. During fiscal
year 2000, Agilent made stock option grants to each of Agilent's executive
officers under the Stock Plan. Each grant allows the officer to acquire shares
of Agilent's common stock, subject to the completion of a four-year vesting
period, and continued employment with Agilent. These shares may be acquired at a
fixed price per share (the market price on the grant date) over a ten-year
period. Individual and business unit performance determine an executive's grant
amount.
BENEFITS
The global benefits philosophy provides employees protection from catastrophic
events and offers health and welfare benefits typical in the given country in
which Agilent operates. In addition, through the benefits survey process,
benefits offered by competitors, as well as benefits that set Agilent apart as
an employer, may be incorporated into the benefits package. Where applicable,
employees are responsible for managing benefit choices, balancing their own
level of risk and return.
POLICY REGARDING COMPENSATION IN EXCESS OF $1 MILLION A YEAR
Section 162(m) of the Code generally disallows a tax deduction to public
companies for compensation in excess of $1 million paid to Agilent's Chief
Executive Officer or any of the four other most highly compensated executive
officers. Certain compensation is specifically exempt from the deduction limit
to the extent that it does not exceed $1 million during any fiscal year or is
"performance based" as defined in Section 162(m) of the Code. The Compensation
Committee considers the net cost to Agilent. Accordingly, the Stock Plan and the
Pay For Results Plan (the annual bonus plan) have been designed to qualify under
Section 162(m) of the Code.
STOCK OWNERSHIP GUIDELINES
Agilent's stock ownership guidelines are designed to increase an executive's
equity stake in Agilent and more closely align his or her interests with those
of our stockholders. The guidelines provide that the President and CEO should
attain an investment position in Agilent's stock equal to five times his or her
annual targeted total cash compensation under the Pay for Results Plan, and all
other executive officers should attain an investment position equal to three
times their targeted total cash compensation under the Pay for Results Plan, in
each case within five years of election to their positions.
COMPENSATION FOR THE CHIEF EXECUTIVE OFFICER
Edward W. Barnholt has served as President and Chief Executive Officer since May
4, 1999. The Compensation Committee used the executive compensation practices
described above to determine Mr. Barnholt's fiscal year 2000 compensation. In
setting both the cash-based and equity-based elements of Mr. Barnholt's
compensation, the Compensation Committee made an overall assessment of Mr.
Barnholt's leadership in establishing Agilent's long-term and short-term
strategic, operational and business goals in Agilent's first year as a separate
company from Hewlett-Packard Company. Mr. Barnholt's total compensation reflects
a consideration of both competitive forces and Agilent's performance.
21
<PAGE> 25
The Compensation Committee surveyed the total direct compensation for chief
executive officers of selected high technology companies. Based on this
information, the Compensation Committee determined a median around which the
Compensation Committee built a competitive range for cash-based and equity-based
elements of the compensation package. As a result of this review, the
Compensation Committee determined a mix of base salary and bonus opportunity,
along with an equity position to align Mr. Barnholt's compensation with the
growth of Agilent. The resulting total compensation package was competitive for
CEO's running companies comparable in size and complexity to Agilent.
Additionally, as part of the review process, the Compensation Committee assessed
Agilent's financial and business results compared to other companies within the
high-technology industry; Agilent's financial performance relative to its
financial performance in prior periods; Agilent's market competitiveness as
measured by customer feedback, new business creation and product generation; and
the health of the Agilent organization as measured by employee surveys and the
ability to attract and retain key talent. The fact that Mr. Barnholt was leading
Agilent's separation from Hewlett-Packard Company and establishing confidence in
the new company with investors and customers was also taken into consideration
in determining his compensation package.
The specific recommendation for Mr. Barnholt positioned his target total cash
compensation at $1,600,000: $1,000,000 in base salary, with a $600,000 bonus
opportunity under the Pay for Results Plan. The bonus opportunity could have
increased to $1,200,000 if maximum performance objectives were achieved.
Consistent with the Pay for Results Plan, the performance objectives were based
on Agilent's net profit and revenue growth. In fiscal year 2000, Mr. Barnholt
received $660,000 under the Pay for Results Plan.
In determining the stock option grant for Mr. Barnholt, the Compensation
Committee evaluated his total direct compensation compared to CEO's of
comparable companies and determined that an award of a non-qualified stock
option to purchase 750,000 shares of Agilent common stock was appropriate.
Submitted by:
Compensation Committee
David M. Lawrence, M.D., Chairperson
James G. Cullen
Thomas E. Everhart
Gerald Grinstein
Randall L. Tobias
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee are set forth in the preceding
section. There are no members of the Compensation Committee who were officers or
employees of Agilent or any of its subsidiaries during the fiscal year, formerly
officers of Agilent, or had any relationship otherwise requiring disclosure
hereunder.
22
<PAGE> 26
AUDIT AND FINANCE COMMITTEE REPORT
The Audit and Finance Committee of the Board reviews the financial reporting
process, the system of internal controls, the audit process and the process for
monitoring compliance with laws and regulations. Each of the Audit and Finance
Committee members satisfies the definition of independent director as
established in the New York Stock Exchange Listing Standards. The Board adopted
a written charter for the Audit and Finance Committee on May 17, 2000, which is
attached to this proxy statement as APPENDIX B. Agilent operates with a November
1 to October 31 fiscal year. The Audit and Finance Committee met four times
during the 2000 fiscal year.
The Audit and Finance Committee has reviewed Agilent's audited consolidated
financial statements and discussed such statements with management. The Audit
and Finance Committee has discussed with PricewaterhouseCoopers LLP, Agilent's
independent accountants during the 2000 fiscal year, the matters required to be
discussed by Statement of Auditing Standards No. 61 (Communication with Audit
and Finance Committees, as amended).
The Audit and Finance Committee received from PricewaterhouseCoopers LLP the
written disclosures required by Independence Standards Board Standard No. 1 and
discussed with them their independence. Based on the review and discussions
noted above, the Audit and Finance Committee recommended to the Board that
Agilent's audited consolidated financial statements be included in Agilent's
Annual Report on Form 10-K for the fiscal year ended October 31, 2000, and be
filed with the U.S. Securities and Exchange Commission.
This report of the Audit and Finance Committee shall not be deemed incorporated
by reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, except to the extent that Agilent
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
Submitted by:
Audit and Finance Committee
Heidi Kunz, Chairperson
Thomas E. Everhart
Robert J. Herbold
Walter B. Hewlett
Randall L. Tobias
23
<PAGE> 27
STOCK PRICE PERFORMANCE GRAPH
The graph below shows the one-year cumulative total stockholder return
assuming the investment of $100 (and the reinvestment of any dividends
thereafter) on November 18, 1999, the first trading day of Agilent's common
stock, in each of Agilent's common stock, the S&P 500 Index, and a peer
group.(1) Agilent's stock price performance shown in the following graph is not
indicative of future stock price performance.
COMPARISON OF 1 YEAR (11/18/99 TO 11/18/00) CUMULATIVE TOTAL RETURN*
AMONG AGILENT TECHNOLOGIES, THE S&P 500 INDEX, AND THE PEER GROUP COMPOSITE
[PERFORMANCE GRAPH]<QC>
* $100 Invested on 11/18/99 in stock or index including reinvestment of any
dividends granted
<TABLE>
<CAPTION>
DOLLAR VALUE INVESTMENTS ON
----------------------------------------------------------------------------------------------------
11/18/99 11/30/99 12/31/99 1/31/00 2/29/00 3/31/00 4/30/00 5/31/00 6/30/00 7/31/00
-------- -------- -------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AGILENT 100 96 176 150 236 236 201 167 168 93
S&P 500 100 98 103 98 96 106 102 100 103 101
PEER GROUP 100 97 115 116 142 153 142 127 141 136
<CAPTION>
DOLLAR VALUE INVESTMENTS ON
---------------------------------------
8/31/00 9/30/00 10/31/00 11/18/00
------- ------- -------- --------
<S> <C> <C> <C> <C>
AGILENT 139 111 105 108
S&P 500 107 102 101 97
PEER GROUP 149 112 103 93
</TABLE>
------------------------------
(1) The peer group is composed of companies that are members of the S&P High
Technology Index, which are in sectors related to Agilent's businesses. They
are: Communications Equipment, Computers (Networking), Electronics
(Instrumentation), Electronics (Semiconductors), and Equipment
(Semiconductor). These sectors were selected by Agilent with the underlying
companies chosen and maintained by S&P:
<TABLE>
<CAPTION>
ELECTRONICS
COMMUNICATIONS COMPUTERS (INSTRUMENTATION), ELECTRONICS EQUIPMENT
EQUIPMENT (NETWORKING) EXCLUDING AGILENT (SEMICONDUCTORS) (SEMICONDUCTOR)
---------------------- ------------------ ------------------ ------------------------- ---------------------------
<S> <C> <C> <C> <C>
ADC Telecommunications Avaya Inc. PerkinElmer Inc. Adaptec Inc. Applied Materials
Andrew Corp. Cabletron Systems Tektronix Inc. Advanced Micro Devices Broadcom Corporation
Comverse Technology Cisco Systems Altera Corp. KLA-Tencor Corp.
Corning Inc. Network Appliances Analog Devices Novellus Systems
JDS Uniphase Corp. Conexant Systems Teradyne Inc.
Lucent Technologies Intel Corp.
Motorola Inc. Linear Technology
Nortel Networks Corp. LSI Logic
Qualcomm Inc. Maxim Integrated Products
Scientific-Atlanta Micron Technology
Tellabs Inc. National Semiconductor
Texas Instruments
Xilinx Inc.
</TABLE>
24
<PAGE> 28
ADDITIONAL QUESTIONS AND INFORMATION REGARDING
THE ANNUAL MEETING AND STOCKHOLDER PROPOSALS
Q: WHAT HAPPENS IF ADDITIONAL PROPOSALS ARE PRESENTED AT THE ANNUAL MEETING?
A: Other than the 3 proposals described in this proxy statement, Agilent does
not expect any matters to be presented for a vote at the annual meeting. If
you grant a proxy, the persons named as proxy holders, Edward W. Barnholt,
Agilent's President and Chief Executive Officer, and D. Craig Nordlund,
Agilent's Senior Vice President, General Counsel and Secretary, will have the
discretion to vote your shares on any additional matters properly presented
for a vote at the annual meeting. If for any unforeseen reason any of
Agilent's nominees is not available as a candidate for director, the persons
named as proxy holders will vote your proxy for such other candidate or
candidates as may be nominated by the Board.
Q: WHAT CLASS OF SHARES IS ENTITLED TO BE VOTED?
A: Each share of Agilent's common stock outstanding as of the close of business
on December 26, 2000, the Record Date, is entitled to one vote at the annual
meeting. On the Record Date, Agilent had approximately 456,366,381 shares of
common stock issued and outstanding.
Q: WHAT IS THE QUORUM REQUIREMENT FOR THE ANNUAL MEETING?
A: The quorum requirement for holding the annual meeting and transacting
business is a majority of the outstanding shares entitled to be voted. The
shares may be present in person or represented by proxy at the annual
meeting. Both abstentions and broker non-votes are counted as present for the
purpose of determining the presence of a quorum. Broker non-votes, however,
are not counted as shares present and entitled to be voted with respect to
the matter on which the broker has expressly not voted. Thus, broker
non-votes will not affect the outcome of any of the matters being voted on at
the annual meeting. Generally, broker non-votes occur when shares held by a
broker for a beneficial owner are not voted with respect to a particular
proposal because (1) the broker has not received voting instructions from the
beneficial owner and (2) the broker lacks discretionary voting power to vote
such shares.
Q: WHO WILL COUNT THE VOTE?
A: A representative of Computershare Investor Services, Agilent's transfer
agent, will tabulate the votes and act as the inspector of election.
Q: IS MY VOTE CONFIDENTIAL?
A: Proxy instructions, ballots and voting tabulations that identify individual
stockholders are handled in a manner that protects your voting privacy. Your
vote will not be disclosed either within Agilent or to third parties except
(1) as necessary to meet applicable legal requirements, (2) to allow for the
tabulation of votes and certification of the vote, or (3) to facilitate a
successful proxy solicitation by the Board. Occasionally, stockholders
provide written comments on their proxy card which are then forwarded to
Agilent's management.
Q: WHO WILL BEAR THE COST OF SOLICITING VOTES FOR THE ANNUAL MEETING?
A: Agilent will pay the entire cost of preparing, assembling, printing, mailing
and distributing these proxy materials. In addition to the mailing of these
proxy materials, the solicitation of proxies or votes may be made in person,
by telephone or by electronic communication by Agilent's directors, officers,
and employees, who will not receive any additional compensation for such
solicitation activities. Agilent has retained the services of Corporate
Investor Communications, Inc. ("CIC") to aid in the solicitation of proxies
from banks, brokers, nominees and intermediaries. Agilent estimates that it
will pay CIC a fee of $16,000 for its services. In addition, Agilent may
reimburse brokerage firms and other persons representing beneficial owners of
shares for their expenses in forwarding solicitation material to such
beneficial owners.
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<PAGE> 29
Q: MAY I PROPOSE ACTIONS FOR CONSIDERATION AT NEXT YEAR'S ANNUAL MEETING OF
STOCKHOLDERS OR NOMINATE INDIVIDUALS TO SERVE AS DIRECTORS?
A: You may submit proposals for consideration at future annual stockholder
meetings, including director nominations.
STOCKHOLDER PROPOSALS: In order for a stockholder proposal to be considered
for inclusion in Agilent's proxy statement for next year's annual meeting,
the written proposal must be received by Agilent no later than September 7,
2001. Such proposals will need to comply with the U.S. Securities and
Exchange Commission's regulations regarding the inclusion of stockholder
proposals in Agilent-sponsored proxy materials. In order for a stockholder
proposal to be raised from the floor during next year's annual meeting,
written notice must be received by Agilent no later than October 26, 2001 and
should contain such information as required under Agilent's Bylaws.
NOMINATION OF DIRECTOR CANDIDATES: Agilent's Bylaws permit stockholders to
nominate directors at a stockholder meeting. In order to make a director
nomination at an annual stockholder meeting, it is necessary that you notify
Agilent not fewer than 120 days in advance of the date of the prior year's
annual meeting of stockholders. Thus, since this year's annual meeting is
February 23, in order for any such nomination notice to be timely for next
year's annual meeting, it must be received by Agilent not later than October
26, 2001 (i.e., 120 days prior to February 23). In addition, the notice must
meet all other requirements contained in Agilent's Bylaws and include any
other information required pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended.
COPY OF BYLAW PROVISIONS: You may contact the Agilent Corporate Secretary at
Agilent's corporate headquarters for a copy of the relevant Bylaw provisions
regarding the requirements for making stockholder proposals and nominating
director candidates.
AGILENT'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED OCTOBER 31,
2000, IS AVAILABLE WITHOUT CHARGE TO EACH STOCKHOLDER, ON SUCH STOCKHOLDER'S
WRITTEN REQUEST TO THE UNDERSIGNED AT AGILENT'S ADDRESS INDICATED ON THE
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS ON THE FIRST PAGE OF THIS PROXY
STATEMENT.
By Order of the Board
/s/ D. Craig Nordlund
D. CRAIG NORDLUND
Senior Vice President, General Counsel and
Secretary
Dated: January 16, 2001
26
<PAGE> 30
APPENDIX A
AGILENT TECHNOLOGIES, INC.
1999 STOCK PLAN
(Amendment and Restatement, effective December 14, 2000)
1. PURPOSES OF THE PLAN. The purpose of this 1999 Stock Plan is to
encourage ownership in the Company by key personnel whose long-term employment
is considered essential to the Company's continued progress and, thereby,
encourage recipients to act in the stockholder's interest and share in the
Company's success.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "ADMINISTRATOR" means the Board or any of its Committees as shall be
administering the Plan, in accordance with Section 4 of the Plan.
(b) "AFFILIATE" means any entity that is directly or indirectly
controlled by the Company or any entity in which the Company has a
significant ownership interest as determined by the Administrator.
(c) "APPLICABLE LAWS" means the requirements relating to the
administration of stock option plans under U.S. federal and state
laws, any stock exchange or quotation system on which the Common
Stock is listed or quoted and the applicable laws of any foreign
jurisdiction where Awards are, or will be, granted under the Plan.
(d) "AWARD" means a Cash Award, Stock Award, SAR, or Option granted in
accordance with the terms of the Plan.
(e) "AWARDEE" means the holder of an outstanding Award.
(f) "AWARD AGREEMENT" means a written or electronic agreement between
the Company and an Awardee evidencing the terms and conditions of an
individual Award. The Award Agreement is subject to the terms and
conditions of the Plan.
(g) "BOARD" means the Board of Directors of the Company.
(h) "CASH AWARDS" means cash awards granted pursuant to Section 13 of
the Plan.
(i) "CODE" means the United States Internal Revenue Code of 1986, as
amended.
(j) "COMMITTEE" means a committee of Directors appointed by the Board in
accordance with Section 4 of the Plan.
(k) "COMMON STOCK" means the common stock of the Company.
(l) "COMPANY" means Agilent Technologies, Inc., a Delaware corporation.
(m) "CONSULTANT" means any person, including an advisor, engaged by the
Company or a Subsidiary to render services to such entity or any
person who is an employee, advisor, director or consultant of an
Affiliate.
(n) "DIRECTOR" means a member of the Board.
(o) "EMPLOYEE" means a regular employee of the Company or any
Subsidiary, including Officers and Directors, who is treated as an
employee in the personnel records of the Company or its Subsidiary
for the relevant period, but shall exclude individuals who are
classified by the Company or its Subsidiary as (A) leased from or
otherwise employed by a third party, (B) independent contractors, or
(C) intermittent or temporary, even if any such classification is
changed retroactively as a result of an audit, litigation or
otherwise. An Awardee shall not cease to be an Employee in the case
of (i) any leave of absence approved by the Company or its
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Subsidiary or (ii) transfers between locations of the Company or
between the Company, any Subsidiary, or any successor. Neither
service as a Director nor payment of a director's fee by the Company
shall be sufficient to constitute "employment" by the Company.
(p) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(q) "FAIR MARKET VALUE" means, as of any date, the average of the
highest and lowest quoted sales prices for such Common Stock as of
such date (or if no sales were reported on such date, the average on
the last preceding day a sale was made) as quoted on the stock
exchange or a national market system, with the highest trading
volume, as reported in such source as the Administrator shall
determine.
(r) "GRANT DATE" means the date selected by the Administrator, from time
to time, upon which Awards are granted to Participants pursuant to
this Plan.
(s) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code
and the regulations promulgated thereunder.
(t) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify
as an Incentive Stock Option.
(u) "OFFICER" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(v) "OPTION" means a stock option granted pursuant to the Plan. Options
granted under the Plan may be Incentive Stock Options or Nonstatutory
Stock Options.
(w) "PARTICIPANT" means an Employee, Director or Consultant.
(x) "PLAN" means this 1999 Stock Plan, as amended and restated effective
December 14, 2000.
(y) "RESTRICTED STOCK" means shares of Common Stock acquired pursuant to
a grant of a Stock Award under Section 12 of the Plan.
(z) "SHARE" means a share of the Common Stock, as adjusted in accordance
with Section 15 of the Plan.
(aa) "SAR" means a stock appreciation right granted pursuant to Section
11 of the Plan.
(bb) "STOCK AWARDS" means right to purchase or receive Common Stock
pursuant to Section 12 of the Plan.
(cc) "SUBSIDIARY" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 15 of
the Plan, the maximum aggregate number of Shares that may be issued under the
Plan is 112,800,000 Shares. The Shares may be authorized, but unissued, or
reacquired Common Stock. Preferred stock may be issued in lieu of Common Stock
for Awards.
If an Award expires or becomes unexercisable without having been exercised
in full, the unpurchased Shares which were subject thereto, if any, shall become
available for future grant or sale under the Plan (unless the Plan has
terminated); provided, however, that Shares that have actually been issued under
the Plan, whether upon exercise of an Award, shall not be returned to the Plan
and shall not become available for future distribution under the Plan, except
that if Shares of Restricted Stock are repurchased by the Company at their
original purchase price, such Shares shall become available for future grant
under the Plan.
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4. ADMINISTRATION OF THE PLAN.
(a) Procedure.
(i) Multiple Administrative Bodies. The Plan may be administered by
different Committees with respect to different groups of
Participants.
(ii) Section 162(m). To the extent that the Administrator determines
it to be desirable to qualify Awards granted hereunder as
"performance-based compensation" within the meaning of Section
162(m) of the Code, the Plan shall be administered by a
Committee of two or more "outside directors" within the meaning
of Section 162(m) of the Code.
(iii)Rule 16b-3. To the extent desirable to qualify transactions
hereunder as exempt under Rule 16b-3 promulgated under the
Exchange Act ("Rule 16b-3"), the transactions contemplated
hereunder shall be structured to satisfy the requirements for
exemption under Rule 16b-3.
(iv) Other Administration. The Board may delegate to the Executive
Committee of the Board (the "Executive Committee") the power to
approve Awards to Participants who are not (A) subject to
Section 16 of the Exchange Act or (B) at the time of such
approval, "covered employees" under Section 162(m) of the Code.
(b) Powers of the Administrator. Subject to the provisions of the Plan,
and in the case of a Committee, subject to the specific duties
delegated by the Board to such Committee, the Administrator shall
have the authority, in its discretion:
(i) to select the Participants to whom Awards may be granted
hereunder;
(ii) to determine the number of shares of Common Stock to be covered
by each Award granted hereunder;
(iii) to approve forms of agreement for use under the Plan;
(iv) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any Award granted hereunder. Such
terms and conditions include, but are not limited to, the
exercise price, the time or times when an Award may be
exercised (which may or may not be based on performance
criteria), any vesting acceleration or waiver of forfeiture
restrictions, and any restriction or limitation regarding any
Award or the Shares relating thereto, based in each case on
such factors as the Administrator, in its sole discretion,
shall determine;
(v) to construe and interpret the terms of the Plan and Awards
granted pursuant to the Plan;
(vi) to adopt rules and procedures relating to the operation and
administration of the Plan to accommodate the specific
requirements of local laws and procedures. Without limiting the
generality of the foregoing, the Administrator is specifically
authorized (A) to adopt the rules and procedures regarding the
conversion of local currency, withholding procedures and
handling of stock certificates which vary with local
requirements, (B) to adopt sub-plans and Plan addenda as the
Administrator deems desirable, to accommodate foreign tax laws,
regulations and practice;
(vii) to prescribe, amend and rescind rules and regulations relating
to the Plan, including rules and regulations relating to
sub-plans and Plan addenda;
(viii) to modify or amend each Award, including the discretionary
authority to extend the post-termination exercisability period
of Options longer than is otherwise provided for in the Plan,
provided, however, that any such amendment is subject to
Section 16(C) of the Plan and may not impair any outstanding
Award unless agreed to in writing by the Awardee;
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(ix) to allow Awardees to satisfy withholding tax obligations by
electing to have the Company withhold from the Shares to be
issued upon exercise of an Award that number of Shares having a
Fair Market Value equal to the amount required to be withheld.
The Fair Market Value of the Shares to be withheld shall be
determined on the date that the amount of tax to be withheld is
to be determined. All elections by an Awardee to have Shares
withheld for this purpose shall be made in such form and under
such conditions as the Administrator may deem necessary or
advisable;
(x) to authorize conversion or substitution under the Plan of any or
all outstanding stock options held by optionees of an entity
acquired by the Company (the "Conversion Options"). Any
conversion or substitution shall be effective as of the close of
the merger or acquisition. The Conversion Options may be
Nonstatutory Stock Options or Incentive Stock Options, as
determined by the Administrator. Unless otherwise determined by
the Administrator at the time of conversion or substitution, all
Conversion Options shall have the same terms and conditions as
Options generally granted by the Company under the Plan;
(xi) to authorize any person to execute on behalf of the Company any
instrument required to effect the grant of an Award previously
granted by the Administrator;
(xii) to make all other determinations deemed necessary or advisable
for administering the Plan and any Award granted hereunder.
(c) Effect of Administrator's Decision. The Administrator's decisions,
determinations and interpretations shall be final and binding on all
Awardees.
5. ELIGIBILITY. Awards may be granted to Participants, provided, however,
that Incentive Stock Options may be granted only to Employees.
6. LIMITATIONS.
(a) Each Option shall be designated in the Award Agreement as either an
Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate
Fair Market Value of the Shares with respect to which Incentive Stock
Options are exercisable for the first time by the Awardee during any
calendar year (under all plans of the Company and any Subsidiary)
exceeds $100,000, such Options shall be treated as Nonstatutory Stock
Options. For purposes of this Section 6(a), Incentive Stock Options
shall be taken into account in the order in which they were granted.
The Fair Market Value of the Shares shall be determined as of the
time the Option with respect to such Shares is granted.
(b) For purposes of Incentive Stock Options, no leave of absence may
exceed ninety (90) days, unless reemployment upon expiration of such
leave is guaranteed by statute or contract. If reemployment upon
expiration of a leave of absence approved by the Company is not so
guaranteed, on the 91st day of such leave an Awardee's employment
with the Company shall be deemed terminated for Incentive Stock
Option purposes and any Incentive Stock Option held by the Awardee
shall cease to be treated as an Incentive Stock Option and shall be
treated for tax purposes as a Nonstatutory Stock Option three (3)
months thereafter.
(c) No Participant shall have any claim or right to be granted an Award
and the grant of any Award shall not be construed as giving a
Participant the right to continue in the employ of the Company, its
Subsidiaries or Affiliates.
Further, the Company, its Subsidiaries and Affiliates expressly reserve the
right, at any time, to dismiss a Participant at any time without liability or
any claim under the Plan, except as provided herein or in any Award Agreement
entered into hereunder.
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(d) The following limitations shall apply to grants of Options and SARs:
(i) No Participant shall be granted, in any fiscal year of the
Company, Options to purchase or SARs for more than 1,000,000
Shares.
(ii) In connection with his or her initial service, a Participant
may be granted Options to purchase or SARs for up to an
additional 1,000,000 Shares which shall not count against the
limit set forth in subsection (i) above.
(iii) The foregoing limitations shall be adjusted proportionately in
connection with any change in the Company's capitalization as
described in Section 15.
(iv) If an Option or SAR is cancelled in the same fiscal year of the
Company in which it was granted (other than in connection with
a transaction described in Section 15), the cancelled Option or
SAR will be counted against the limits set forth in subsections
(i) and (ii) above.
(v) SARs to be granted under this Plan shall not exceed 5% of the
total shares reserved for issuance under the Plan;
(vi) No more than 10% of the total shares reserved for issuance
under the Plan will constitute Stock Awards granted under this
Plan;
(vii) No more than 20% of the total shares reserved for issuance
under the Plan will constitute Nonstatutory Stock Options,
with an exercise price less than Fair Market Value on the
Grant Date, granted under this Plan; and
(viii) Nonstatutory Stock Option with an exercise price less than
Fair Market Value on the Grant Date shall not be granted to
any Officer.
7. TERM OF PLAN. Subject to Section 21 of the Plan, the Plan shall become
effective upon its adoption by the Board. It shall continue in effect for a term
of ten (10) years unless terminated earlier under Section 16 of the Plan.
8. TERM OF AWARD. The term of each Award shall be determined by the
Administrator and stated in the Award Agreement. In the case of an Incentive
Stock Option, the term shall be ten (10) years from the Grant Date or such
shorter term as may be provided in the Award Agreement.
9. OPTION EXERCISE PRICE AND CONSIDERATION.
(a) Exercise Price. The per share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:
(i) In the case of an Incentive Stock Option the per Share exercise
price shall be no less than 100% of the Fair Market Value per
Share on the Grant Date.
(ii) In the case of a Nonstatutory Stock Option, the per Share
exercise price shall be no less than seventy-five per cent
(75%) of the Fair Market Value per Share on the Grant Date. In
the case of a Nonstatutory Stock Option intended to qualify as
"performance-based compensation" within the meaning of Section
162(m) of the Code, the per Share exercise price shall be no
less than 100% of the Fair Market Value per Share on the Grant
Date.
(iii) Notwithstanding the foregoing, at the Administrator's
discretion, Conversion Options (as defined in Section 4(b)(x))
may be granted with a per Share exercise price of less than 75%
of the Fair Market Value per Share on the Grant Date.
(iv) Other than in connection with a change in the Company's
capitalization (as described in Section 15(a), Options may not
be repriced, replaced, regranted through cancellation or
modified without shareholder approval if the effect of such
repricing, replacement, regrant or modification would be to
reduce the exercise price of such Incentive Stock Options or
Nonstatutory Stock Options.
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(b) Vesting Period and Exercise Dates. At the time an Option is granted,
the Administrator shall fix the period within which the Option may be
exercised and shall determine any conditions that must be satisfied
before the Option may be exercised.
(c) Form of Consideration. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including
the method of payment. In the case of an Incentive Stock Option, the
Administrator shall determine the acceptable form of consideration at
the Grant Date. Acceptable forms of consideration may include:
(i) cash;
(ii) check or wire transfer (denominated in U.S. Dollars);
(iii) other Shares which (A) in the case of Shares acquired upon
exercise of an Option, have been owned by the Awardee for more
than six months on the date of surrender, and (B) have a Fair
Market Value on the date of surrender equal to the aggregate
exercise price of the Shares as to which said Option shall be
exercised;
(iv) consideration received by the Company under a cashless exercise
program implemented by the Company in connection with the Plan;
(v) any combination of the foregoing methods of payment; or
(vi) such other consideration and method of payment for the issuance
of Shares to the extent permitted by Applicable Laws.
10. EXERCISE OF OPTION.
(a) Procedure for Exercise; Rights as a Shareholder. Any Option granted
hereunder shall be exercisable according to the terms of the Plan and
at such times and under such conditions as determined by the
Administrator and set forth in the respective Award Agreement. No
Option may be exercised during any leave of absence other than an
approved personal or medical leave with an employment guarantee upon
return. An Option shall continue to vest during any authorized leave
of absence and such Option may be exercised to the extent vested upon
the Awardee's return to active employment status. An Option may not
be exercised for a fraction of a Share.
An Option shall be deemed exercised when the Company receives:
(i) written or electronic notice of exercise (in accordance with the
Award Agreement) from the person entitled to exercise the Option,
(ii) full payment for the Shares with respect to which the related
Option is exercised, and (iii) with respect to Nonstatutory Stock
Options, payment of all applicable withholding taxes due upon such
exercise.
Shares issued upon exercise of an Option shall be issued in the
name of the Awardee or, if requested by the Awardee, in the name of
the Awardee and his or her spouse. Until the Shares are issued (as
evidenced by the appropriate entry on the books of the Company or of
a duly authorized transfer agent of the Company), no right to vote or
receive dividends or any other rights as a shareholder shall exist
with respect to the Shares subject to an Option, notwithstanding the
exercise of the Option. The Company shall issue (or cause to be
issued) such Shares promptly after the Option is exercised. No
adjustment will be made for a dividend or other right for which the
record date is prior to the date the Shares are issued, except as
provided in Section 15 of the Plan.
Exercising an Option in any manner shall decrease the number of
Shares thereafter available, both for purposes of the Plan and for
sale under the Option, by the number of Shares as to which the Option
is exercised.
(b) Termination of Employment. Unless otherwise provided for by the
Administrator in the Award Agreement, if an Awardee ceases to be an
Employee, other than as a result of
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circumstances described in Sections 10(c), (d), (e) and (f) below,
the Awardee's unvested Option, shall terminate immediately upon the
Awardee's termination. On the date of the Awardee's termination of
employment, the Shares covered by the unvested portion of his or her
Option shall revert to the Plan.
Unless otherwise provided for by the Administrator in the Award
Agreement, if an Awardee ceases to be an Employee, other than as a
result of circumstances described in Sections 10(c), (d), (e) and (f)
below, the Awardee's vested Option, granted on or after December 14,
2000, shall be exercisable for 3 months after the Awardee's
termination, or if earlier, the expiration of the term of such
Option. The Awardee's vested Option granted between January 1, 2000
and July 31, 2000, shall be exercisable for 3 months after the
Awardee's termination, or if earlier, the expiration of the term of
such Option. All of the Awardee's other vested Options, shall
terminate immediately upon the Awardee's termination. If, the Awardee
does not exercise his or her vested Option within the appropriate
exercise period set forth above, the Option shall automatically
terminate, and the Shares covered by such Option shall revert to the
Plan.
(c) Disability or Retirement of Awardee. Unless otherwise provided for
by the Administrator in the Award Agreement, if an Awardee ceases to
be an Employee as a result of the Awardee's total and permanent
disability or retirement due to age, in accordance with the Company's
or its Subsidiaries' retirement policy, all unvested Options shall
immediately vest and the Awardee may exercise his or her Option
within three (3) years of the date of such disability or retirement
for a Nonstatutory Stock Option, within three (3) months of the date
of such disability or retirement for an Incentive Stock Option, or if
earlier, the expiration of the term of such Option. If the Awardee
does not exercise his or her Option within the time specified herein,
the Option shall automatically terminate, and the Shares covered by
such Option shall revert to the Plan.
(d) Death of Awardee. Unless otherwise provided for by the Administrator
in the Award Agreement, if an Awardee dies while an Employee, all
unvested Options shall immediately vest and all Options may be
exercised for one (1) year following the Awardee's death, or if
earlier, the expiration of the term of such Option. The Option may be
exercised by the beneficiary designated by the Awardee (as provided
in Section 17), the executor or administrator of the Awardee's estate
or, if none, by the person(s) entitled to exercise the Option under
the Awardee's will or the laws of descent or distribution. If the
Option is not so exercised within the time specified herein, the
Option shall automatically terminate, and the Shares covered by such
Option shall revert to the Plan.
(e) Voluntary Severance Incentive Program. If an Awardee ceases to be an
Employee as a result of participation in the Company's or its
Subsidiaries' voluntary severance incentive program approved by the
Board or Executive Committee, all unvested Options shall immediately
vest and all outstanding Options shall be exercisable for three (3)
months following the Awardee's termination (or such other period of
time as provided for by the Administrator) or if earlier, the
expiration of the term of such Option. If, after termination, of
Awardee's employment the Awardee does not exercise his or her Option
within the time specified herein, the Option shall automatically
terminate, and the Shares covered by such Option shall revert to the
Plan.
(f) Divestiture. If an Employee ceases to be a Participant because of a
divestiture of the Company, the Administrator may, in its sole
discretion, make such Employee's outstanding Options fully vested and
exercisable and provide that such Options remain exercisable for a
period of time to be determined by the Administrator. The
determination of whether a divestiture will occur shall be made by
the Administrator in its sole discretion. If, after the close of the
divestiture, the Awardee does not exercise his or her Option within
the time specified herein, the Option shall automatically terminate
and the shares covered by such Option shall revert to the Plan.
(g) Buyout Provisions. At any time, the Administrator may, but shall not
be required to, offer to buy out for a payment in cash or Shares an
Option previously granted based on such terms and
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conditions as the Administrator shall establish and communicate to
the Awardee at the time that such offer is made.
11. SARS.
(a) General. The Administrator may grant SARs to Participants subject to
the terms and conditions not inconsistent with the Plan and
determined by the Administrator. The terms and conditions shall be
provided for in the Award Agreement which may be delivered in writing
or electronically. SARs shall be exercisable, in whole or in part, at
such times as the Administrator shall specify in the Award Agreement.
(b) Exercise. Upon the exercise of a SAR, in whole or in part, an
Awardee shall be entitled to a cash payment in an amount equal to the
difference between the Fair Market Value of a fixed number of shares
of Common Stock covered by the exercised portion of the SAR on the
date of such exercise, over the Fair Market Value of the Common Stock
covered by the exercised portion of the SAR on the Grant Date;
provided, however, that the Administrator may place limits on the
aggregate amount that may be paid upon the exercise of a SAR. The
Company's obligation arising upon the exercise of a SAR will be paid
in cash.
(c) Method of Exercise. A SAR shall be deemed to be exercised when
written or electronic notice of such exercise has been given to the
Company in accordance with the terms of the SAR by the person
entitled to exercise the SAR. The SAR shall cease to be exercisable
to the extent it has been exercised.
(d) Termination of Employment. Unless otherwise provided for by the
Administrator in the Award Agreement, if an Awardee ceases to be an
Employee, other than as a result of circumstances described in
Sections 11(e) and (f) below, the Awardee's unvested SAR, shall
terminate immediately upon the Awardee's termination.
Unless otherwise provided for by the Administrator in the Award
Agreement, if an Awardee ceases to be an Employee, other than as a
result of circumstances described in Sections 11(e) and (f) below,
the Awardee's vested SAR, granted on or after December 14, 2000,
shall be exercisable for 3 months after the Awardee's termination, or
if earlier, the expiration of the term of such SAR. The Awardee's
vested SAR granted between January 1, 2000 and July 31, 2000, shall
be exercisable for 3 months after the Awardee's termination, or if
earlier, the expiration of the term of such SAR. All of the Awardee's
other vested SARs, shall terminate immediately upon the Awardee's
termination.
(e) Disability or Retirement of Awardee. Unless otherwise provided for
by the Administrator in the Award Agreement, if an Awardee ceases to
be an Employee as a result of the Awardee's total and permanent
disability or retirement due to age, in accordance with the Company's
or its Subsidiaries' retirement policy, the Award shall immediately
vest. The Awardee may exercise his or her SAR within three (3) three
years following the Awardee's total and permanent disability or
retirement or, if earlier, the expiration of the term of such SAR. If
the Awardee fails to exercise his or her SAR within the specified
time period, the SAR shall terminate.
(f) Death of Awardee. Unless otherwise provided for by the Administrator
in the Award Agreement, if an Awardee dies while an Employee, the SAR
shall immediately vest and be exercisable for (1) one year following
the Awardee's death or, if earlier, the expiration of the term of
such SAR. The SAR may be exercised by the beneficiary designated by
the Awardee (as provided in Section 17), the executor or
administrator of the Awardee's estate or, if none, by the person(s)
entitled to exercise the SAR under the Awardee's will or the laws of
descent or distribution. If the SAR is not so exercised within the
specified time period, the SAR shall terminate.
(g) Buyout Provisions. At any time, the Administrator may, but shall not
be required to, offer to buy out for a payment in cash or Shares, SAR
previously granted based on such terms and
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conditions as the Administrator shall establish and communicate to
the Awardee at the time that such offer is made.
12. STOCK AWARDS.
(a) General. Stock Awards may be issued either alone, in addition to, or
in tandem with other Awards granted under the Plan. After the
Administrator determines that it will offer a Stock Award under the
Plan, it shall advise the Awardee in writing or electronically, by
means of an Award Agreement, of the terms, conditions and
restrictions related to the offer, including the number of Shares
that the Awardee shall be entitled to receive or purchase, the price
to be paid, if any, and, if applicable, the time within which the
Awardee must accept such offer. The offer shall be accepted by
execution of an Award Agreement in the form determined by the
Administrator. The Administrator will require that all shares subject
to a right of repurchase or forfeiture be held in escrow until such
repurchase right or risk of forfeiture lapses. The grant or vesting
of a stock award may be made contingent on achievement of performance
conditions, including net order dollars, net profit dollars, net
profit growth, net revenue dollars, revenue growth, individual
performance, earnings per share, return on assets, return on equity,
and other financial objectives, customer satisfaction indicators and
guaranteed efficiency measures, each with respect to Agilent and/or
an individual business unit.
(b) Forfeiture. Unless the Administrator determines otherwise, the Award
Agreement shall provide for the forfeiture of the unvested Restricted
Stock upon the Awardee ceasing to be an Employee except as provided
below in Sections 12(c), (d) and (e). To the extent that the Awardee
purchased the Restricted Stock, the Company shall have a right to
repurchase the unvested Restricted Stock at the original price paid
by the Awardee upon Awardee ceasing to be a Participant for any
reason, except as provided below in Sections 12(c), (d) and (e).
(c) Disability or Retirement of Awardee. Unless otherwise provided for
by the Administrator in the Award Agreement, if an Awardee ceases to
be an Employee as a result of the Awardee's total and permanent
disability or retirement due to age, in accordance with the Company's
or its Subsidiaries' retirement policy, the Award shall continue to
vest, provided the following conditions are met:
(i) The Awardee shall not render services for any organization or
engage directly or indirectly in any business which, in the
opinion of the Administrator, competes with, or is in conflict
with the interest of, the Company. The Awardee shall be free,
however, to purchase as an investment or otherwise stock or
other securities of such organizations as long as they are
listed upon a recognized securities exchange or traded
over-the-counter, or as long as such investment does not
represent a substantial investment to the Awardee or a
significant (greater than 10%) interest in the particular
organization. For the purposes of this subsection, a company
(other than a Subsidiary) which is engaged in the business of
producing, leasing or selling products or providing services of
the type now or at any time hereafter made or provided by the
Company shall be deemed to compete with the Company;
(ii) The Awardee shall not, without prior written authorization from
the Company, use in other than the Company's business, any
confidential information or material relating to the business
of the Company, either during or after employment with the
Company;
(iii) The Awardee shall disclose promptly and assign to the Company
all right, title and interest in any invention or idea,
patentable or not, made or conceived by the Awardee during
employment by the Company, relating in any manner to the actual
or anticipated business, research or development work of the
Company and shall do anything reasonably necessary to enable
the Company to secure a patent where appropriate in the United
States and in foreign countries; and
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(iv) An Awardee retiring due to age shall render, as a Consultant
and not as an Employee, such advisory or consultative services
to the Company as shall be reasonably requested by the Board or
the Executive Committee in writing from time to time,
consistent with the state of the retired Awardee's health and
any employment or other activities in which such Awardee may be
engaged. For purposes of this Plan, the Awardee shall not be
required to devote a major portion of time to such services and
shall be entitled to reimbursement for any reasonable
out-of-pocket expenses incurred in connection with the
performance of such services.
(d) Death of Awardee. Unless otherwise provided for by the Administrator
in the Award Agreement, if an Awardee dies while an Employee, the
Stock Award shall immediately vest and all forfeiture provisions and
repurchase rights shall lapse as to a prorated number of shares
determined by dividing the number of whole years since the Grant Date
by the number of whole years between the Grant Date and the date that
the Stock Award would have fully vested (as provided for in the Award
Agreement). The vested portion of the Stock Award shall be delivered
to the beneficiary designated by the Awardee (as provided in Section
17), the executor or administrator of the Awardee's estate or, if
none, by the person(s) entitled to receive the vested Stock Award
under the Awardee's will or the laws of descent or distribution.
(e) Voluntary Severance Incentive Program. If an Awardee ceases to be an
Employee as a result of participation in the Company's or its
Subsidiaries' voluntary severance incentive program approved by the
Board or Executive Committee, the Stock Award shall immediately vest
and all forfeiture provisions and repurchase rights shall lapse as to
a prorated number of shares determined by dividing the number of
whole years since the Grant Date by the number of whole years between
the Grant Date and the date that the Stock Award would have fully
vested (as provided for in the Award Agreement).
(f) Rights as a Shareholder. Unless otherwise provided for by the
Administrator, once the Stock Award is accepted, the Awardee shall
have the rights equivalent to those of a shareholder, and shall be a
shareholder when his or her acceptance of the Stock Award is entered
upon the records of the duly authorized transfer agent of the
Company.
13. CASH AWARDS. Cash Awards may be granted either alone, in addition to,
or in tandem with other Awards granted under the Plan. After the Administrator
determines that it will offer a Cash Award, it shall advise the Awardee in
writing or electronically, by means of an Award Agreement, of the terms,
conditions and restrictions related to the Cash Award.
14. NON-TRANSFERABILITY OF AWARDS. Unless determined otherwise by the
Administrator, an Award may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by the beneficiary
designation, will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Awardee, only by the Awardee. If the
Administrator makes an Award transferable, such Award shall contain such
additional terms and conditions as the Administrator deems appropriate.
15. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER OR
ASSET SALE.
(a) Changes in Capitalization. Subject to any required action by the
shareholders of the Company, the number and kind of shares of Common
Stock covered by each outstanding Award, and the number and kind of
shares of Common Stock which have been authorized for issuance under
the Plan but as to which no Awards have yet been granted or which
have been returned to the Plan upon cancellation or expiration of an
Award, as well as the price per share of Common Stock covered by each
such outstanding Award, shall be proportionately adjusted for any
increase or decrease in the number or kind of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock, or any
other increase or decrease in the number of issued shares of Common
Stock effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of
the Company shall not be deemed to have been "effected without
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<PAGE> 40
receipt of consideration." Such adjustment shall be made by the
Board, whose determination in that respect shall be final, binding
and conclusive. Except as expressly provided herein, no issuance by
the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the
number or price of shares of Common Stock subject to an Award.
(b) Dissolution or Liquidation. In the event of the proposed dissolution
or liquidation of the Company, the Administrator shall notify each
Awardee as soon as practicable prior to the effective date of such
proposed transaction. The Administrator in its discretion may provide
for an Option or SAR to be fully vested and exercisable until ten
(10) days prior to such transaction. In addition, the Administrator
may provide that any restrictions on any Award shall lapse prior to
the transaction, provided the proposed dissolution or liquidation
takes place at the time and in the manner contemplated. To the extent
it has not been previously exercised, an Award will terminate
immediately prior to the consummation of such proposed transaction.
(c) Merger or Asset Sale. In the event there is a change of control of
the Company, as determined by the Board, the Board may, in its
discretion, (A) provide for the assumption or substitution of, or
adjustment to, each outstanding Award (B) accelerate the vesting of
Options and SARs and terminate any restrictions on Cash Awards or
Stock Awards and (C) provide for the cancellation of Awards for a
cash payment to the Awardee.
16. AMENDMENT AND TERMINATION OF THE PLAN.
(a) Amendment and Termination. The Board may at any time amend, alter,
suspend or terminate the Plan.
(b) Shareholder Approval. The Company shall obtain shareholder approval
of any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws.
(c) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any
Award, unless mutually agreed otherwise between the Awardee and the
Administrator, which agreement must be in writing and signed by the
Awardee and the Company. Termination of the Plan shall not affect the
Administrator's ability to exercise the powers granted to it
hereunder with respect to Awards granted under the Plan prior to the
date of such termination.
17. DESIGNATION OF BENEFICIARY.
(a) An Awardee may file a written designation of a beneficiary who is to
receive the Awardee's rights pursuant to Awardee's Award or the
Awardee may include his or her Awards in an omnibus beneficiary
designation for all benefits under the Plan. To the extent that
Awardee has completed a designation of beneficiary while employed
with Hewlett-Packard Company, such beneficiary designation shall
remain in effect with respect to any Award hereunder until changed by
the Awardee.
(b) Such designation of beneficiary may be changed by the Awardee at any
time by written notice. In the event of the death of an Awardee and
in the absence of a beneficiary validly designated under the Plan who
is living at the time of such Awardee's death, the Company shall
allow the executor or administrator of the estate of the Awardee to
exercise the Award, or if no such executor or administrator has been
appointed (to the knowledge of the Company), the Company, in its
discretion, may allow the spouse or one or more dependents or
relatives of the Awardee to exercise the Award.
18. LEGAL COMPLIANCE. Shares shall not be issued pursuant to the exercise
of an Option or Stock Award unless the exercise of such Option or Stock Award
and the issuance and delivery of such Shares shall comply with Applicable Laws
and shall be further subject to the approval of counsel for the Company with
respect to such compliance.
A-11
<PAGE> 41
19. INABILITY TO OBTAIN AUTHORITY. To the extent the Company is unable to
or the Administrator deems it infeasible to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company's counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, the
Company shall be relieved of any liability with respect to the failure to issue
or sell such Shares as to which such requisite authority shall not have been
obtained.
20. RESERVATION OF SHARES. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
21. SHAREHOLDER APPROVAL. The Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months of the date the Plan is
adopted. Such shareholder approval shall be obtained in the manner and to the
degree required under Applicable Laws.
22. NOTICE. Any written notice to the Company required by any provisions of
this Plan shall be addressed to the Secretary of the Company and shall be
effective when received.
23. GOVERNING LAW. This Plan and all determinations made and actions taken
pursuant hereto shall be governed by the substantive laws, but not the choice of
law rules, of the state of Delaware.
24. UNFUNDED PLAN. Insofar as it provides for Awards, the Plan shall be
unfunded. Although bookkeeping accounts may be established with respect to
Participants who are granted Awards of Shares under this Plan, any such accounts
will be used merely as a bookkeeping convenience. Except for the holding of
Restricted Stock in escrow pursuant to Section 12, the Company shall not be
required to segregate any assets which may at any time be represented by Awards,
nor shall this Plan be construed as providing for such segregation, nor shall
the Company nor the Administrator be deemed to be a trustee of stock or cash to
be awarded under the Plan. Any liability of the Company to any Awardee with
respect to an Award shall be based solely upon any contractual obligations which
may be created by the Plan; no such obligation of the Company shall be deemed to
be secured by any pledge or other encumbrance on any property of the Company.
Neither the Company nor the Administrator shall be required to give any security
or bond for the performance of any obligation which may be created by this Plan.
A-12
<PAGE> 42
ADDENDUM TO THE AGILENT TECHNOLOGIES, INC. 1999 STOCK PLAN
Pursuant to Section 4(b)(vi) of the Plan the following modifications to the
Plan will apply in the countries as set forth below:
AUSTRALIA
Pursuant to Section 4(b)(vi) of the Plan the following modifications to the
Plan will apply in Australia:
A. Purpose. This Addendum (the "Australian Addendum") to the 1999 Stock
Plan is hereby adopted to set out certain rules which, together with the
provisions of the Plan which are not modified hereby, will govern the
operation of the Plan with respect to Australian-resident employees of
the Company.
B. Definitions. Except as set forth below, capitalized terms used herein
shall have the meaning ascribed to them in the Plan. In the event of any
conflict between these provisions and the Plan, these provisions shall
prevail.
For the purposes of this Australian Addendum:
"Agilent" means Agilent Technologies, Inc. or its duly authorized
subsidiary;
"Australian Participants" means all persons to whom an offer or
invitation of options over shares of common stock in Agilent is made in
Australia under the Plan;
"Plan" means collectively the 1999 Stock Plan and the Australian
Addendum; and
C. Form of Awards. Non-statutory Stock Options to acquire common stock in
Agilent are the only Awards that will be granted to Australian
Participants.
AUSTRIA
Notwithstanding Section 3 herein, only newly issued shares will be issued
to employees in Austria pursuant to the Plan.
BRAZIL
All stock options granted in Brazil will only be exercisable using the
cashless exercise method. Both full cashless exercise (proceeds remitted in
cash) and partial cashless exercise (proceeds remitted in stock) may be
permitted. Cash exercises are prohibited.
CHINA
All stock options granted in China will only be exercisable using the
cashless exercise method. Only full cashless exercise (proceeds remitted in
cash) will be permitted. Cash exercises are prohibited.
FRANCE
All options granted in France shall be subject to the additional terms and
conditions of the Agilent Technologies, Inc. Sub-Plan for French Employees.
INDIA
All options granted in India shall be subject to the additional terms and
conditions of the Agilent Technologies, Inc. India Cashless Stock Option
Sub-Plan.
ITALY
Notwithstanding Section 3 herein, only newly issued shares will be issued
to employees in Italy pursuant to the Plan.
SWITZERLAND
Notwithstanding Section 8 herein, options granted in Switzerland shall have
a term of ten (10) years and six (6) months.
A-13
<PAGE> 43
APPENDIX B
AUDIT AND FINANCE COMMITTEE CHARTER
I. MEMBERSHIP
The Audit and Finance Committee (the "Committee") of the Board of Directors
(the "Board") shall consist of at least three directors whose qualifications
include financial literacy, independence, and accounting or related financial
management expertise.
II. PURPOSE
The Committee serves as the representative of the Board for the general
oversight of Company affairs in the area of financial accounting and reporting
and the underlying internal control environment. Through its activities, the
Committee facilitates open communication among directors, outside auditors, the
internal auditor and management by meeting in private session regularly with
these parties.
The Committee also provides oversight regarding significant financial
matters, including borrowings, currency exposures, dividends, share issuance and
repurchases, and the financial aspects of the Company's benefit plans.
III. MEETINGS AND PROCEDURES
The Committee shall convene at least four times each year. It shall
endeavor to determine that auditing procedures and controls are adequate to
safeguard Company assets and to assess compliance with Company policies and
legal requirements. The Committee shall be given full access to the Company's
internal auditors, Board Chairman, Company executives and outside auditors.
IV. RESPONSIBILITIES
The Committee shall:
1. Review and reassess at least annually the adequacy of this charter and
submit the charter for approval of the full board.
2. Select, evaluate and, where appropriate, replace the outside auditor,
who is ultimately accountable to the Committee and the Board.
3. Annually review and approve the proposed scope of each fiscal year's
internal and outside audit and the proposed audit fee of the outside
auditor at the beginning of each new fiscal year.
4. Review non-audit services and fees for such services provided by the
Company's outside auditor.
5. At, or shortly after the end of each fiscal year, review with the
outside auditors, the internal auditor and Company management, the
audited financial statements and related opinion and costs of the audit
of that year. In conferring with the outside auditor, the internal
auditors and Company management, the Committee shall consider the
following:
a. Periodic written statements from the outside auditors delineating all
services between the auditors and the Company or any other
relationships that may adversely affect the independence and
objectivity of the auditors, as well as recommending appropriate
action to satisfy the Committee of the outside auditors'
independence.
b. The effectiveness of the audit and assurances that no restrictions
were placed on the scope or performance of the examination.
c. The effectiveness and adequacy of the Company's internal auditing
plan and procedures, and quality of the control environment.
B-1
<PAGE> 44
d. Conducting open and frank discussions regarding the quality of
accounting principles and the consistency of their application to the
Company's financial statements.
6. Review funding and investment policies, implementation of funding
policies and investment performance of the Company's benefit plans.
7. Provide any recommendations, certifications and reports that may be
required by the NYSE or the SEC.
8. Review and discuss, as needed, interim financial reports with management
and the Company's outside auditors.
B-2
<PAGE> 45
-----------------------------------------
--------------------------------------------------------------------------------
DIRECTIONS TO
THE SOFITEL
FROM SOUTH
Take 101 North.
Exit Holly Street, follow sign for
Redwood Shores Parkway.
At second traffic signal turn left
on Twin Dolphin Drive.
Hotel is 1/2 mile on right side.
FROM NORTH
Take 101 South.
Exit Ralston/Belmont, follow sign
for Marine World Parkway.
At second traffic signal turn right
on Twin Dolphin Drive.
Hotel is 1/2 mile on left side.
FROM EAST BAY VIA HIGHWAY 92
Take Highway 92 West to 101 South.
Exit Ralston Belmont, follow sign for Marine World Parkway.
At second traffic signal, turn right on Twin Dolphin Drive.
Hotel is 1/2 mile on left side.
--------------------------------------------------------------------------------
[Agilent Logo]
ANNUAL MEETING OF STOCKHOLDERS
Hotel Sofitel
223 Twin Dolphin Drive
Redwood City, CA 94054
February 23, 2001 at 2 p.m.
ADMIT ONE
[AGILENT LOGO]
ANNUAL MEETING OF STOCKHOLDERS
Hotel Sofitel
223 Twin Dolphin Drive
Redwood City, CA 94054
February 23, 2001 at 2 p.m.
ADMIT ONE
[5988-1685 ENUS]
LOGO
<PAGE> 46
FORM OF PROXY CARD
AGILENT TECHNOLOGIES, INC.
PLEASE MARK VOTE IN BRACKETS IN THE FOLLOWING MANNER USING DARK INK ONLY.[X]
THE BOARD RECOMMENDS A VOTE FOR 1-3.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
1. ELECTION OF DIRECTORS -- 01-James G. Cullen, Withhold For All 3. Proposal to approve Agilent For Against Abstain
02-Walter B. Hewlett, 03-Randall L. Tobias For All Except Technologies, Inc. 1999 Stock [ ] [ ] [ ]
[ ] [ ] [ ] Plan and the increase in the
share reserve of 45,000,000
------------------------------------------ shares thereunder
(Except nominee(s) written above)
2. Proposal to ratify PricewaterhouseCoopers For Against Abstain
LLP as Agilent's independent accountants [ ] [ ] [ ]
</TABLE>
In their discretion the Proxies are authorized
to vote on such other business as may properly
come before the annual meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED
IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED
STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR ITEMS 1 THROUGH 3.
--------------------- -------------------------
Signature Signature Dated: ,2001
-----------
Please sign exactly as your name or names appear above. For joint accounts, each
owner should sign. When signing as executor, administrator, attorney, trustee or
guardian, etc., please give your full title.
--------------------------------------------------------------------------------
- DETACH PROXY CARD HERE -
[AGILENT TECHNOLOGIES LOGO]
PROXY
AGILENT TECHNOLOGIES, INC.
ANNUAL MEETING OF STOCKHOLDERS - FEBRUARY 23, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
The undersigned hereby appoints Edward W. Barnholt and D. Craig Nordlund
and each of them as proxies for the undersigned, with full power of
substitution, to act and to vote all the shares of Common Stock of
Agilent Technologies, Inc. held of record by the undersigned on December
26, 2000, at the annual meeting of stockholders to be held on Friday,
February 23, 2001, or any adjournment thereof.
IMPORTANT - THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE.
