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United States
Securities and Exchange Commission
Washington, D.C. 20549
Form 6-K
Report of Foreign Private Issuer Pursuant to Rule 13a-16
or 15d-16 of the Securities Exchange Act of 1934
For the month of April 2000
Commission File Number 000-27811
CHARTERED SEMICONDUCTOR MANUFACTURING LTD
(Exact name of registrant as specified in its charter)
Not Applicable
(Translation of registrant's name into English)
Republic of Singapore
(Jurisdiction of incorporation or organization)
60 Woodlands Industrial Park D
Street 2, Singapore 738406
(65) 352-2838
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.
Form 20-F [X] Form 40-F [ ]
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes [ ] No [X]
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b). Not applicable.
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TABLE OF CONTENTS:
1. Other Events
On April 13, 2000 (Singapore), the Company began distribution of the
Company's proxy statement for the annual shareholders' meeting to be held on May
25, 2000. A copy of the Company's proxy statement for the annual shareholders'
meeting is attached hereto as Exhibit 99.1 and is incorporated herein by
reference.
2. Exhibits
99.1 Company proxy statement for annual shareholders' meeting to be held
on May 25, 2000.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunder duly organized.
Date: April 14, 2000
CHARTERED SEMICONDUCTOR
MANUFACTURING LTD
By: /s/ CHIA SONG HWEE
-------------------------------
Name: Chia Song Hwee
Title: Senior Vice President and
Chief Financial Officer
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EXHIBIT INDEX
99.1 Company proxy statement for annual shareholders' meeting to be held on
May 25, 2000.
<PAGE> 1
EXHIBIT 99.1
[CHARTERED LOGO]
NOTICE OF TWELFTH ANNUAL GENERAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 25, 2000
To Our Shareholders:
You are cordially invited to attend and NOTICE IS HEREBY GIVEN of the
twelfth Annual General Meeting of Chartered Semiconductor Manufacturing Ltd (the
"Company") to be held in Singapore on Thursday, May 25, 2000 at the principal
offices of the Company located at 60 Woodlands Industrial Park D, Street 2,
Singapore 738406 at 10:00 a.m. (Singapore time) for the following purposes:
ROUTINE BUSINESS
(1) To adopt the Audited Accounts of the Company for the year ended
December 31, 1999, including the reports of the Directors and the Auditors.
(2) To re-elect the following Directors retiring pursuant to:
(a) Article 94 of the Company's Articles of Association and who, being
eligible, offer themselves for re-election:
Ms. Ho Ching
Mr. Lim Ming Seong
Mr. Sum Soon Lim
(b) Article 99 of the Company's Articles of Association and who, being
eligible, offers himself for re-election:
Dr. Tsugio Makimoto
(3) To re-appoint the following Directors pursuant to Section 153(6) of the
Companies Act, Chapter 50:
Mr. Aubrey C. Tobey
Dr. James H. Van Tassel
Mr. Charles E. Thompson
(4) To re-appoint KPMG as the Company's Auditors and to authorize the
Directors to fix their remuneration.
(5) To approve Directors' fees up to $750,000 for the year ended December
31, 1999 ($340,000 for the year ended December 31, 1998).
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SPECIAL BUSINESS
(6) To authorize the Directors to:
(a) issue shares in the capital of the Company pursuant to Section 161
of the Companies Act, Chapter 50;
(b) create and issue securities and to issue shares in connection
therewith in the capital of the Company pursuant to Section 161 of the
Companies Act, Chapter 50; and
(c) offer and grant options and to issue additional shares in the
capital of the Company pursuant to the Chartered Semiconductor
Manufacturing Ltd Share Option Plan 1999.
(7) To transact any other business as may be properly transacted at an
annual general meeting.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on March 31, 2000 as
the date for determining those holders of ordinary shares, S$0.26 par value per
share ("Shareholders") who will be entitled to receive copies of this Notice and
the accompanying Proxy Statement and the Company's 1999 Annual Report to
Shareholders (the "Annual Report"). A Shareholder who is registered with The
Central Depository (Pte) Limited or the Company at least 48 hours before the
time set for the Annual General Meeting on May 25, 2000 shall be entitled to
vote in person or by proxy at the Annual General Meeting.
NOTE:
(1) A Shareholder is a person whose name appears on the Depository Register
of The Central Depository (Pte) Limited in Singapore or a person registered in
the Company's Register of Shareholders (Members).
(2) A Shareholder entitled to attend and vote at the Annual General Meeting
is entitled to appoint a proxy to attend and vote on his behalf. A proxy need
not be a Shareholder of the Company. The instrument appointing a proxy must be
deposited at the registered office of the Company at 60 Woodlands Industrial
Park D, Street 2, Singapore 738406 not less than 48 hours before the time
appointed for holding the Annual General Meeting or any adjournment thereof. A
proxy may be revoked at any time prior to the time it is voted.
(3) The Company and its subsidiaries are subject to the continuing Nasdaq
listing rules and applicable U.S. federal securities laws and will not be
subject to the continuing listing rules of the Singapore Exchange Securities
Trading Limited.
BY ORDER OF THE BOARD
ANGELA HON KAH SIM/NANCY TAN SEE SIN
JOINT COMPANY SECRETARIES
Singapore
April 13, 2000
ii
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PROXY STATEMENT FOR
TWELFTH ANNUAL GENERAL MEETING OF SHAREHOLDERS OF
CHARTERED SEMICONDUCTOR MANUFACTURING LTD
TO BE HELD ON MAY 25, 2000
GENERAL
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Chartered Semiconductor Manufacturing Ltd (the
"Company"), a company incorporated in Singapore under the Companies Act, Chapter
50 of Singapore (the "Companies Act"), of proxies to be voted at the Company's
Annual General Meeting of Shareholders (the "Annual General Meeting") to be held
in Singapore on Thursday, May 25, 2000 at the principal offices of the Company
located at 60 Woodlands Industrial Park D, Street 2, Singapore 738406 at 10:00
a.m. (Singapore time), or any adjournments or postponements thereof, for the
purposes set out in the accompanying Notice of Annual General Meeting.
Shareholders should read the entire proxy statement carefully prior to returning
their proxies.
This Proxy Statement, the accompanying form of proxy, the Notice of Annual
General Meeting and the Annual Report were mailed to Shareholders on or about
April 13, 2000.
In the Proxy Statement and the Notice of Annual General Meeting, references
to "S$" shall mean Singapore dollars, the legal currency of Singapore and
references to "$" shall mean United States dollars, the legal currency of the
United States. The Proxy Statement contains translations of certain Singapore
dollar amounts into U.S. dollars as of December 31, 1999, which was
S$1.67 = $1.00. No representation is made that the Singapore dollar of U.S.
dollar amounts shown in the Proxy Statement could have been or could be
converted at such rate or at any other rate.
IMPORTANT DATE; SHARES OUTSTANDING
The Board of Directors has fixed the close of business on March 31, 2000 as
the date for determining those holders of ordinary shares, S$0.26 par value per
share ("Shareholders") who will be entitled to receive copies of this Notice and
the accompanying Proxy Statement and the Company's 1999 Annual Report to
Shareholders (the "Annual Report"). A Shareholder who is registered with The
Central Depository (Pte) Limited or the Company at least 48 hours before the
time set for the Annual General Meeting on May 25, 2000 shall be entitled to
vote in person or by proxy at the Annual General Meeting.
As of March 15, 2000, the Company had 1,280,512,723 ordinary shares, S$0.26
par value per share (the "Ordinary Shares"), issued and outstanding.
REVOCABILITY OF PROXIES
A proxy given pursuant to this solicitation may be revoked by the
Shareholder giving it at any time prior to the Annual General Meeting or at the
Annual General Meeting prior to the vote of the matter by the Shareholder
submitting a subsequently dated instrument of proxy or by attending the Annual
General Meeting and voting in person.
To be effective, the instrument appointing a proxy must be deposited at the
registered office of the Company at 60 Woodlands Industrial Park D, Street 2,
Singapore 738406 not less than 48 hours before the time appointed for holding
the Annual General Meeting, or any adjournment thereof. A proxy need not be a
Shareholder and Shareholders may appoint any member of the Board, a Joint
Secretary or any other person as their proxy.
VOTING AND SOLICITATION
A Shareholder is a person whose name appears on the Depository Register of
The Central Depository (Pte) Limited in Singapore or a person registered in the
Company's Register of Shareholders (Members). A Shareholder who is registered
with The Central Depository (Pte) Limited or the Company at least 48 hours
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before the time set for the Annual General Meeting on May 25, 2000 shall be
entitled to vote in person or by proxy at the Annual General Meeting. On a show
of hands, every Shareholder present in person or by proxy shall have one vote
and on a poll, every Shareholder present in person or by proxy shall have one
vote for each Ordinary Share held. A resolution put to the vote of Shareholders
at the Annual General Meeting will be decided on a show of hands unless a poll
is demanded by the chairman of the meeting or a Shareholder present in person or
by proxy and entitled to vote at the Annual General Meeting.
Ordinary Shares represented by a duly executed instrument appointing a
proxy that is deposited with the Company will be voted at the Annual General
Meeting in accordance with Shareholders' instructions contained in the
instrument. In the absence of specific instructions in the instrument, the proxy
of a Shareholder may vote or abstain as he may think fit. On a show of hands,
each of the resolutions to be proposed under proposals 1, 2, 4, 5 and 6 will be
duly passed by the affirmative vote of a simple majority of Shareholders present
and voting at the Annual General Meeting. On a poll, each of the resolutions to
be proposed under proposals 1, 2, 4, 5 and 6 will be duly passed by the
affirmative vote of a simple majority of votes cast at the Annual General
Meeting for each Ordinary Share held. On a show of hands, each of the
resolutions to be proposed under proposal 3 will be duly passed by the
affirmative vote of not less than 3/4 of Shareholders present and voting at the
Annual General Meeting. On a poll, each of the resolutions to be proposed under
proposal 3 will be duly passed by the affirmative vote of not less than 3/4 of
votes cast at the Annual General Meeting for each Ordinary Share held.
The entire cost of soliciting proxies will be borne by the Company.
QUORUM
The required quorum for transaction of business at the Annual General
Meeting is two or more Shareholders holding not less than 33 1/3% of the total
issued and fully paid shares in the capital of the Company.
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SECURITY OWNERSHIP
The following table sets forth certain information with respect to the
beneficial ownership of the Ordinary Shares as of March 15, 2000, based on an
aggregate of 1,280,512,723 Ordinary Shares outstanding as of such date, by:
- each person or group of affiliated persons who is known by the Company to
beneficially own 10% or more of its Ordinary Shares;
- each of the Directors and the President and Chief Executive Officer; and
- all of the Directors and executive officers as a group.
<TABLE>
<CAPTION>
ORDINARY SHARES
BENEFICIALLY OWNED(1)
10% SHAREHOLDERS, DIRECTORS AND ----------------------
EXECUTIVE OFFICERS AS A GROUP(2) NUMBER PERCENT
-------------------------------- ----------- -------
<S> <C> <C>
Singapore Technologies Pte Ltd(3).......................... 499,116,152 39.0%
Singapore Technologies Semiconductors Pte Ltd(3)........... 398,518,228 31.1%
Ho Ching................................................... 40,000 *
Lim Ming Seong............................................. 0 *
Barry Waite................................................ 4,176,000 *
Sum Soon Lim............................................... 247,001 *
James H. Van Tassel........................................ 131,929 *
Aubrey C. Tobey............................................ 46,968 *
Robert E. La Blanc......................................... 45,168 *
Andre Borrel............................................... 40,168 *
Charles E. Thompson........................................ 60,168 *
Koh Beng Seng.............................................. 41,600 *
Tsugio Makimoto............................................ 4,000 *
Premod Paul Thomas......................................... 18,000 *
Liow Voon Kheong........................................... 4,000 *
All directors and executive officers as a group (22
persons)................................................. 7,118,709 *
</TABLE>
- ---------------
* Less than 1% of total.
(1) Gives effect to the Ordinary Shares issuable within 60 days of March 15,
2000 upon the exercise of all options and other rights beneficially owned by
the indicated shareholders on that date. Beneficial ownership is determined
in accordance with the rules of the U.S. Securities and Exchange Commission
and includes voting and investment power with respect to Ordinary Shares.
Unless otherwise indicated, the persons named in the table have sole voting
and sole investment control with respect to all Ordinary Shares beneficially
owned.
(2) The number of Ordinary Shares listed in this table includes Ordinary Shares
held directly or in the form of American Depositary Shares ("ADSs").
(3) As of December 31, 1999, Temasek Holdings (Private) Limited, the principal
holding company of the Government of Singapore, owned 78.3% of Singapore
Technologies Pte Ltd, or ST, and 100% of Singapore Technologies Holdings Pte
Ltd, or ST Holdings. ST Holdings owned 21.7% of ST which, in turn, owns 100%
of Singapore Technologies Semiconductors Pte Ltd, or ST Semiconductors.
Temasek may be deemed to beneficially own the shares directly owned by ST
and ST Semiconductors because it is the parent of ST and ST Holdings.
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SUMMARY OF PROPOSALS
Shareholders will be requested to vote on the following proposals at the
Annual General Meeting:
(1) Adoption of the Audited Accounts of the Company for the year ended
December 31, 1999, including the reports of the Directors and the Auditors;
(2) Re-election of Directors retiring by rotation and a Director
nominated by the Board to fill a vacancy;
(3) Re-appointment of Directors pursuant to Section 153(6) of the
Companies Act, Chapter 50;
(4) Re-appointment of independent Auditors and authorization of the
Board to fix their remuneration;
(5) Approval of Directors' fees for services rendered during the year
ended December 31, 1999; and
(6) Authorization of the Board to issue shares and securities.
PROPOSAL NO. 1:
ADOPTION OF THE AUDITED ACCOUNTS OF THE COMPANY,
INCLUDING THE REPORTS OF THE DIRECTORS AND AUDITORS
The Company's Annual Report for the fiscal year ended December 31, 1999
accompanies this Proxy Statement. The Annual Report includes the Company's
United States dollar financial statements prepared in conformity with United
States generally accepted accounting principles ("US GAAP") and a summary of the
Supplementary Financial Statements described hereafter. For the purposes of
complying with the Companies Act, the Company has prepared for distribution to
Shareholders, supplementary financial statements (the "Supplementary Financial
Statements") containing financial information required to be presented under the
Companies Act but not included in US GAAP financial statements. The financial
statements are accompanied by the Auditor's Reports of KPMG, the Company's
independent auditors.
THE BOARD RECOMMENDS A VOTE "FOR" THE ADOPTION OF THE COMPANY'S AUDITED ACCOUNTS
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999, INCLUDING THE DIRECTORS' REPORTS
AND AUDITOR'S REPORTS.
PROPOSAL NO. 2(a):
RE-ELECTION OF DIRECTORS RETIRING BY ROTATION
In accordance with Article 94 of the Articles of Association of the
Company, a portion of the Directors is elected at every annual general meeting
of the Shareholders. The number of Directors retiring and eligible to stand for
reelection each year varies, but generally it is equal to one-third of the
Board, with the Directors who have been in office longest since their
re-election or appointment standing for re-election. Ms. Ho Ching and Messrs.
Lim Ming Seong and Sum Soon Lim are retiring by rotation at the Annual General
Meeting. They are eligible to stand for re-election and have been nominated by
the Board to do so.
The biographies of Ms. Ho and Messrs. Lim and Sum follow. For a complete
listing of our Board of Directors, please see "Directors and Executive Officers"
below. Also see "Board and Committee Meetings" and "Compensation of Directors
and Executive Officers" for a discussion of our Board and Committee meetings and
the compensation of our Board members.
<TABLE>
<CAPTION>
POSITIONS CURRENTLY HELD
NOMINEES FOR DIRECTOR AGE DIRECTOR SINCE WITH THE COMPANY
--------------------- --- -------------- ------------------------
<S> <C> <C> <C>
Ho Ching............................... 46 November 1987 Chairman of the Board
Lim Ming Seong......................... 52 November 1987 Deputy Chairman of the Board
Sum Soon Lim........................... 56 February 1994 Director
</TABLE>
4
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HO CHING has served on our Board of Directors since November 1987 and as
the Chairman of the Board since August 1995. Ms. Ho is the President and Chief
Executive Officer of Singapore Technologies Pte Ltd, the Company's controlling
shareholder, Chairman of Singapore Technologies Engineering Ltd and Vice
Chairman of SembCorp Industries Ltd. Ms. Ho also serves on the boards of
directors of various companies in the Singapore Technologies group. Before
joining Singapore Technologies in 1987, Ms. Ho was with the Ministry of Defence
of Singapore where she held various senior positions. Ms. Ho received a Master
of Science (Electrical Engineering) Degree from Stanford University. For her
public service, she was awarded the Public Service Star in 1996.
LIM MING SEONG has served on our Board of Directors since November 1987 and
as the Deputy Chairman of the Board since August 1995. Mr. Lim is the Group
Director of Singapore Technologies Pte Ltd, Deputy Chairman of ST Assembly Test
Services Ltd and Chairman of CSE Systems & Engineering Ltd. After joining
Singapore Technologies in December 1986, Mr. Lim has held various senior
positions in the Singapore Technologies group. Prior to joining Singapore
Technologies, Mr. Lim was with the Ministry of Defence of Singapore. Mr. Lim
received his Bachelor of Science (Honors) in Mechanical Engineering from the
University of Toronto and his Diploma in Business Administration from the
University of Singapore. Mr. Lim also participated in the Advanced Management
Programs at INSEAD and Harvard University.
SUM SOON LIM has served on our Board of Directors since February 1994 and
is currently a part time corporate advisor to Singapore Technologies Pte Ltd.
Prior to accepting his position with Singapore Technologies, Mr. Sum had worked
with the Singapore Economic Development Board, DBS Bank, J.P. Morgan Inc.,
Overseas Union Bank and Nuri Holdings (S) Pte Ltd, a private investment holding
company. Mr. Sum is also a member of the Securities Industry Council. Mr. Sum
received his B.Sc (Honors) in Production Engineering from the University of
Nottingham, England.
THE BOARD RECOMMENDS A VOTE "FOR" THE RE-ELECTION OF EACH OF MS. HO CHING AND
MESSRS. LIM MING SEONG AND SUM SOON LIM TO THE BOARD OF DIRECTORS.
PROPOSAL NO. 2(b):
RE-ELECTION OF DIRECTOR ELECTED BY THE BOARD TO FILL A VACANCY
Effective September 15, 1999, the Board appointed Dr. Tsugio Makimoto as a
member of our Board to fill a vacancy. In accordance with Article 99 of the
Articles of Association of the Company, Dr. Makimoto's appointment to our Board
will expire at the Annual General Meeting. Dr. Makimoto is eligible to stand for
re-election and has been nominated by the Board to do so.
The biography of Dr. Makimoto follows. For a complete listing of our Board
of Directors, please see "Directors and Executive Officers" below. Also see
"Board and Committee Meetings" and "Compensation of Directors and Executive
Officers" for a discussion of our Board and Committee meetings and the
compensation of our Board members.
<TABLE>
<CAPTION>
POSITIONS CURRENTLY HELD
NOMINEES FOR DIRECTOR AGE DIRECTOR SINCE WITH THE COMPANY
--------------------- --- -------------- ------------------------
<S> <C> <C> <C>
Tsugio Makimoto.............................. 62 September 1999 Director
</TABLE>
TSUGIO MAKIMOTO has served on our Board of Directors since September 1999
and has 40 years of working experience in the semiconductor industry. Dr.
Makimoto has worked for Hitachi Ltd since 1959 where he has held various senior
positions, including Executive Managing Director in 1993 and Senior Executive
Managing Director in 1997. Dr. Makimoto is currently Hitachi's Corporate Chief
Technologist. Dr. Makimoto is a member of the Advisory Committee of the NAIST
(Nara Institute of Science and Technology) and the International Advisory Panel
of the NSTB (National Science and Technology Board) of Singapore. Dr. Makimoto
is also a visiting professor at Toyo University.
THE BOARD RECOMMENDS A VOTE "FOR" THE RE-ELECTION OF DR. TSUGIO MAKIMOTO
TO THE BOARD OF DIRECTORS.
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PROPOSAL NO. 3:
RE-APPOINTMENT OF DIRECTORS PURSUANT TO SECTION 153(6)
OF THE COMPANIES ACT
Section 153(1) of the Companies Act provides that, subject to sub-section
(6) of Section 153, no person of or over the age of 70 years shall be appointed
to act as a director of a public company or of a subsidiary of a public company.
Section 153(6) allows the appointment of such a person by the passing of a
resolution (of which no shorter notice than that required to be given to the
shareholders of the company of an annual general meeting has been duly given) by
a majority of not less than 3/4 of such registered shareholders of the company
voting in person or by proxy at a general meeting of the company. A director
appointed pursuant to Section 153(6) of the Companies Act would hold office
until the next annual general meeting of the Company.
In accordance with Section 153 of the Companies Act, Messrs. Aubrey C.
Tobey, James H. Van Tassel and Charles E. Thompson are offering themselves up
for re-appointment to the Board.
The biographies of Messrs. Tobey, Van Tassel and Thompson follow. For a
complete listing of our Board of Directors, please see "Directors and Executive
Officers" below. Also see "Board and Committee Meetings" and "Compensation of
Directors and Executive Officers" for a discussion of our Board and Committee
meetings and the compensation of our Board members.
<TABLE>
<CAPTION>
POSITIONS CURRENTLY HELD
NOMINEES FOR DIRECTOR AGE DIRECTOR SINCE WITH THE COMPANY
--------------------- --- -------------- ------------------------
<S> <C> <C> <C>
Aubrey C. Tobey.............................. 74 March 1998 Director
James H. Van Tassel.......................... 70 June 1993 Director
Charles E. Thompson.......................... 70 September 1998 Director
</TABLE>
AUBREY C. TOBEY has served on our Board of Directors since March 1998 and
is currently the President of ACT International providing consultancy in the
management and marketing of high technology. From 1983 to 1987, Mr. Tobey was
Vice President of Micronix Corporation and from 1965 to 1983 was Corporate Vice
President at GCA Corporation. Mr. Tobey was with Arthur D. Little, Inc., a
management, science and technology consulting firm from 1959 to 1965. Mr. Tobey
received his Bachelor of Science degree in Mechanical Engineering from Tufts
University and his Master of Science degree in Mechanical Engineering from the
University of Connecticut.
JAMES H. VAN TASSEL has served on our Board of Directors since June 1993.
He is a consultant in the semiconductor industry and has been involved in the
electronics and microelectronics industry since 1960. From 1980 to 1991, Dr. Van
Tassel was Vice President (Microelectronics) with NCR Corporation. Dr. Van
Tassel received his Bachelor of Science degree from the University of Wisconsin
at La Crosse, and his Master of Science Degree (Inorganic Chemistry) and Doctor
of Philosophy from Texas Technological University.
CHARLES E. THOMPSON has served on our Board of Directors since September
1998 and is currently working as a consultant in the information
technology/semiconductor technology industry. From 1973 to 1996, Mr. Thompson
was World Marketing Senior Vice President at Motorola Inc. Prior thereto, Mr.
Thompson was Computer Department Sales Director at General Electric. Mr.
Thompson received his Bachelor of Science in Mathematics from the University of
Washington.
THE BOARD RECOMMENDS A VOTE "FOR" THE RE-APPOINTMENT OF EACH OF MESSRS. AUBREY
C. TOBEY, JAMES H. VAN TASSEL AND CHARLES E. THOMPSON TO THE BOARD OF DIRECTORS
AND TO HOLD SUCH OFFICE UNTIL THE NEXT ANNUAL GENERAL MEETING OF THE COMPANY.
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PROPOSAL NO. 4:
RE-APPOINTMENT OF INDEPENDENT AUDITORS AND AUTHORIZATION
OF THE BOARD TO FIX THEIR REMUNERATION
The firm of KPMG has served as independent auditors for the Company from
the incorporation of the Company in 1987 to the fiscal year ended December 31,
1999. The Board of Directors intends to re-appoint KPMG as independent auditors
to audit the accounts and records of the Company for the fiscal year ended
December 31, 2000 and to perform other appropriate services. The Company expects
that a representative from KPMG will be present at the Annual General Meeting.
Such representative will have the opportunity to make a statement if he so
desires and is expected to be available to respond to appropriate questions.
THE BOARD RECOMMENDS A VOTE "FOR" THE RE-APPOINTMENT OF KPMG AS THE COMPANY'S
INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000 AND
AUTHORIZATION FOR THE BOARD TO FIX THEIR REMUNERATION.
PROPOSAL NO. 5:
APPROVAL OF DIRECTORS' FEES
In accordance with Article 81 of the Articles of Association, Shareholders
are requested to approve the payment of Directors' fees up to $750,000 for
services rendered during the fiscal year ended December 31, 1999. The Directors'
fees for the fiscal year ended December 31, 1999 represent an increase of
$410,000 over the Directors' fees of $340,000 for the fiscal year ended December
31, 1998. The reasons for the increase in Directors' fees in 1999 included the
need for Directors to attend four additional Board meetings, the establishment
of the Executive Resource and Compensation Committee and the Budget Committee of
the Board in 1999, the addition of a new member to the Audit Committee and the
payment of a one-time bonus totaling in the aggregate approximately $250,000 to
eligible members of the Board in recognition of their contributions to the
successful initial public offering of the Company's Ordinary Shares and ADSs on
October 29, 1999.
Please see "Compensation of Directors and Executive Officers" for a general
discussion of the compensation of our Board members.
THE BOARD RECOMMENDS A VOTE "FOR" THE APPROVAL OF DIRECTORS' FEES
TOTALING $750,000 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999.
PROPOSAL NO. 6:
AUTHORIZATION OF THE BOARD TO ISSUE SHARES AND SECURITIES
The Company is incorporated in the Republic of Singapore. Pursuant to the
Companies Act, Directors may exercise any power of the Company to issue new
Ordinary Shares only with the prior approval of the Shareholders of the Company
at a general meeting. Such approval, if granted, is effective from the date of
the meeting at which it was given to the conclusion of the next annual general
meeting of shareholders of the company or the expiration of the period within
which the next annual general meeting is required by law to be held, whichever
is earlier.
Shareholders' approval is sought for the issue of new Ordinary Shares
during the period from the Annual General Meeting to the next annual general
meeting. This approval, if granted, will lapse at the conclusion of the annual
general meeting of the Company to be held in 2001.
The requirement for Shareholders' approval under the Companies Act extends
to the issue of new Ordinary Shares arising from the conversion, exchange or
exercise of other securities, including warrants or options to subscribe for new
Ordinary Shares of the Company or to purchase from the Company other securities
issued or to be issued by the Company, debt securities and securities which are
convertible into, exchangeable for, or exercisable for new Ordinary Shares, new
Ordinary Shares pursuant to any offers,
7
<PAGE> 10
agreements, options, undertakings, guarantees and/or indemnities to be made,
entered into or issued by the Company, as well as new Ordinary Shares to be
issued pursuant to the exercise of options under the Company's Share Option Plan
1999 (the "1999 Plan").
Shareholders' approval is sought for the creation and issuance of new
securities, including but not limited to warrants, options or other securities
convertible into, exchangeable for, or exercisable for, Ordinary Shares, the
making, entry into and/or issue of offers, agreements, options, undertakings,
guarantees and/or indemnities by the Company which would or might require the
issue of Ordinary Shares, and the issuance of Ordinary Shares required or
permitted to be allotted and issued on the conversion, exchange or exercise of
such securities, pursuant to such offers, agreements, options, undertakings,
guarantees and/or indemnities, or upon the exercise of any options under the
1999 Plan.
The Board believes that it is advisable and in the best interests of the
Company and its Shareholders to have a sufficient number of new Ordinary Shares
for issuance in future financing transactions, acquisitions and other proper
corporate opportunities and purposes. Having additional Ordinary Shares
available for issuance in the future would give the Company greater flexibility
to pursue corporate opportunities and, subject to the listing requirements of
the Nasdaq National Market, enable it to issue Ordinary Shares without the
expense and delay of having to convene an extraordinary general meeting of
Shareholders.
In summary, under proposal 6, Shareholders are requested to authorize the
Board to:
(a) issue shares in the capital of the Company pursuant to Section 161
of the Companies Act;
(b) create and issue securities and to issue shares in connection
therewith in the capital of the Company pursuant to Section 161 of
the Companies Act; and
(c) offer and grant options and to issue additional shares in the
capital of the Company pursuant to the 1999 Plan.
THE BOARD RECOMMENDS A VOTE "FOR" EACH OF THE RESOLUTIONS SET OUT UNDER PROPOSAL
NO. 6 AS DESCRIBED ABOVE AND IN THE NOTICE OF ANNUAL GENERAL MEETING.
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth, as of December 31, 1999, the name, age and
position of each director and executive officer of the Company.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
BOARD OF DIRECTORS
Ho Ching(1)................................ 46 Chairman of the Board
Lim Ming Seong(1)(3)....................... 52 Deputy Chairman of the Board
Barry Waite................................ 51 Director
Sum Soon Lim(1)(2)(3)...................... 56 Director
James H. Van Tassel(3)..................... 70 Director
Aubrey C. Tobey(1)(2)...................... 74 Director
Robert Edmund La Blanc(2).................. 65 Director
Andre Borrel(1)(3)......................... 63 Director
Charles E. Thompson(1)..................... 70 Director
Koh Beng Seng(2)........................... 49 Director
Tsugio Makimoto............................ 62 Director
Premod Paul Thomas(4)...................... 42 Alternate Director to Sum Soon Lim
Liow Voon Kheong(4)(5)..................... 48 Alternate Director to Lim Ming Seong
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
EXECUTIVE OFFICERS
Barry Waite................................ 51 President and Chief Executive Officer
Chia Song Hwee............................. 37 Senior Vice President and Chief Financial
Officer
Robert Baxter.............................. 44 Senior Vice President, Business Operations
John Docherty.............................. 47 Senior Vice President, Manufacturing
Operations
Brian Klene................................ 42 Vice President, Strategic Development
John Martin................................ 57 Vice President, Technology Development
Lau Chi Kwan............................... 49 Vice President, Quality, Reliability and
Assurance
Justin Lim................................. 42 Vice President, Information Technology
Tan Seng Chai.............................. 37 Vice President, Human Resources
Michael J. Rekuc........................... 50 President, North America
</TABLE>
- ---------------
(1) Member of the Executive Resource and Compensation Committee.
(2) Member of the Audit Committee.
(3) Member of the Budget Committee.
(4) Under the Company's Articles of Association, a Director is entitled to
designate an Alternate Director to take his place when he is absent from a
meeting. An Alternate Director, when serving in place of an absent Director,
may exercise all of the powers and authority of the absent Director, except
the power to appoint an Alternate Director. When not acting in place of an
absent director for whom he has been appointed Alternate Director, an
alternate director is not entitled to attend, participate or vote in any
Board meetings.
(5) Liow Voon Kheong was nominated as an Alternate Director by EDB Investments
Pte Ltd. EDB Investments has the right to nominate an Alternate Director for
so long as EDB Investments owns any Ordinary Shares.
BIOGRAPHICAL INFORMATION
The biographical information relating to Ms. Ho and Messrs. Lim, Sum, Van
Tassel, Tobey, Thompson and Makimoto has been set out under proposals 2(a), 2(b)
and 3, above.
BARRY WAITE
Barry Waite has served on the Board of Directors and as the President and
Chief Executive Officer since May 1998. Mr. Waite has more than 29 years of
experience in the semiconductor industry. Prior to joining the company, Mr.
Waite held various positions at Motorola Inc. Semiconductor Products Sector,
including Senior Vice President and General Manager of its microprocessor and
memory technology group and Senior Vice President and General Manager of the
European, Middle East and Africa region. Mr. Waite was with Texas Instruments
from 1970 to 1982. Mr. Waite has been Chairman of Silicon Manufacturing Partners
Pte Ltd and Chartered Silicon Partners Pte Ltd since May 1998. Mr. Waite
received his BA (Economics) (Honours) Degree from the University of Sheffield,
England and is an Officer of the Order of the British Empire.
ROBERT EDMUND LA BLANC
Robert Edmund La Blanc has served on the Board of Directors since May 1998
and is the President of Robert E. La Blanc Associates, Inc., an information
technologies consulting and investment banking firm. From 1979 to 1981, Mr. La
Blanc was Vice Chairman of Continental Telecom, Inc. and from 1969 to 1979, a
General Partner of Salomon Brothers Inc. Mr. La Blanc has also held various
senior positions within companies in the telecommunications industry including
AT&T, Bell Telephone Laboratories and New York Telephone Company. Mr. La Blanc
received his B.E.E. from Manhattan College and his MBA from New York University.
Mr. La Blanc also is a graduate of the Operating Engineers Program at Bell
Telephone Laboratories and the USAF Communications Officers School.
9
<PAGE> 12
ANDRE BORREL
Andre Borrel has served on the Board of Directors since July 1998 and is
currently working as a consultant in the semiconductor industry. Prior to
joining the Company, Mr. Borrel was Senior Vice President and General Manager of
Communications, Power and Signal Technology Group at Motorola Inc. Mr. Borrel is
also an Officer of the French National Order of Merit and holds a Master Degree
in Electronics from "Ecole Nationale Superieure des Telecommunications" in
Paris, France.
KOH BENG SENG
Koh Beng Seng has served on the Board of Directors since February 1999. He
is currently Senior Advisor to Asia Pulp & Paper Co. Ltd and an advisor to the
International Monetary Fund. Mr. Koh is active in the financial services sector
and was with the Monetary Authority of Singapore from 1973 to 1998, where he
served as Deputy Managing Director from 1988 to 1998. Mr. Koh received his
Bachelor of Commerce (First Class Honors) from Nanyang University and his MBA
from Columbia University. Mr. Koh was awarded an Overseas Postgraduate
Scholarship by the Monetary Authority of Singapore in 1978. In 1987, the
President of the Republic of Singapore awarded him a Meritorious Service Medal.
PREMOD PAUL THOMAS
Premod Paul Thomas was appointed to the Board of Directors as the Alternate
Director to Sum Soon Lim in July 1999. Mr. Thomas is Director (Finance) of
Singapore Technologies Pte Ltd. Before joining Singapore Technologies Pte Ltd.
he was with Tirtamas Group, Jakarta, as Group Executive Advisor from 1995 to
1998 and with Bank of America from 1983 to 1995. Mr. Thomas received his B.Com.
(First Class Honors) from Loyola College, India in 1977. He is a Certified
Associate of the Indian Institute of Bankers, Bombay, and has an MBA from the
Indian Institute of Management, Ahmedabad.
LIOW VOON KHEONG
Liow Voon Kheong was appointed to the Board of Directors as the Alternate
Director to Lim Ming Seong in July 1998. Mr. Liow was previously an Alternate
Director from May 1995 to July 1998. Mr. Liow is presently Assistant Managing
Director (Operations) of the Singapore Economic Development Board, General
Manager of EDB Investments Pte Ltd, Director/General Manager of EDB Ventures Pte
Ltd and EDB Ventures 2 Pte Ltd and General Manager of PLE Investments Pte Ltd.
Mr. Liow started his career with the Singapore Economic Development Board in
1976. He received his B.E. (Electrical & Electronics) and his Diploma in
Business Administration from the University of Singapore.
CHIA SONG HWEE
Chia Song Hwee has served as our Senior Vice President since February 2000
and as our Chief Financial Officer since December 1997. Mr Chia was our Director
of Finance from April 1996 to December 1997. Mr. Chia has more than 13 years of
experience in financial accounting and has overall responsibility for our
company's finance and legal matters. From May 1992 through December 1994, Mr.
Chia was Regional Financial Controller (Asia and Middle East) for Anadrill
Technical Services, Inc. From January 1995 to April 1996, Mr. Chia was Regional
Controller (Asia, Australia and Middle East) for Sedco Forex Technical Services,
Inc. Mr. Chia has been an Alternate Director on the Board of Directors of
Chartered Silicon Partners Pte Ltd since July 1998 and was appointed to its
Board of Directors in April 1999. He has also been an Alternate Director on the
Board of Directors of Silicon Manufacturing Partners Pte Ltd since October 1998.
Mr. Chia received his Bachelor of Business (Accountancy), with distinction, from
Edith Cowan University, Australia and is a Certified Practicing Accountant by
the Australian Society of CPAs.
MICHAEL J. REKUC
Michael J. Rekuc has served as President of our North American operations
since March 1999. From 1976 until March 1999, Mr. Rekuc held sales, management
and director positions in the semiconductor product sector of Motorola Inc. His
most recent positions at Motorola Inc. included worldwide responsibilities
10
<PAGE> 13
as global sales director for wireless subscriber systems and a two year role as
vice president and sales director for PC, computing and peripherals. Mr. Rekuc
holds a BSc in Electrical Engineering from Lawrence University of Michigan.
ROBERT BAXTER
Robert Baxter has served as our Senior Vice President, Business Operations
since July 1998 with overall responsibility for regional sales, worldwide
marketing, customer engineering and EDA teams in planning and executing business
strategies. Mr. Baxter has more than 23 years of working experience in the
semiconductor industry. He started his career with Texas Instruments in 1976 and
later joined Motorola Corporation in 1982. Prior to joining Chartered, Mr.
Baxter was Vice President and General Manager of Motorola's Advanced Digital
Consumer Division based in Tokyo. He also ran Microcontroller Business Divisions
based in Europe and in Austin, Texas for Motorola Inc. He has served on the
Board of Directors of Chartered Silicon Partners Pte Ltd since October 1998. Mr.
Baxter holds a BSc (Hons) in Applied Physics and Electronics from Durham
University, United Kingdom.
JOHN DOCHERTY
John Docherty has served as our Senior Vice President, Manufacturing
Operations since September 1998 and has overall responsibility for wafer fab
manufacturing operations, and leading our fab operations, turnkey services and
supply management activities. Mr. Docherty has more than 24 years experience in
the semiconductor industry. Prior to joining Chartered, Mr. Docherty was the
Vice President and Director of European Manufacturing for Motorola Inc.'s wafer
fabrication facilities in Scotland and France. Mr. Docherty has served on the
Boards of Directors of Chartered Silicon Partners Pte Ltd and Silicon
Manufacturing Partners Pte Ltd since October 1998. Mr. Docherty graduated from
Napier University, Edinburgh, United Kingdom and holds a Business Diploma from
Strathclyde University, Glasgow.
BRIAN KLENE
Brian Klene has served as our Vice President, Strategic Development since
October 1998 and has overall responsibility for strategic business development
and planning activities and intellectual property management. Mr. Klene has also
served as Vice President, Worldwide Marketing. Mr. Klene has more than 20 years
of working experience in the semiconductor and communications industry. Prior to
joining Chartered, Mr. Klene was Executive Vice President of Sales and Marketing
at Micron Technology and was with IBM from 1979 to 1989. Mr. Klene received an
MBA from the University of Southern California and his BA from The Citadel.
JOHN MARTIN
John Martin has served as our Vice President, Technology Development since
January 1998 and has overall responsibility for our internal and external
technology development activities. Dr. Martin has more than 25 years of
experience in the semiconductor industry. He began his semiconductor career with
Rockwell International Microelectronics in 1973. From 1981 to 1997, Dr. Martin
held various positions in Motorola Inc.'s Semiconductor Products Sector. Dr.
Martin holds a Ph.D. in Inorganic Chemistry from the University of Arkansas and
a BA (Chemistry) from DePauw University.
LAU CHI KWAN
Lau Chi Kwan has served as our Vice President, Quality, Reliability and
Assurance since January 1998 and has overall responsibility for our quality
operations, total quality management and quality engineering support, which
includes failure analysis and reliability engineering. From 1994 to 1997, Dr.
Lau was our Yield Engineering Manager and subsequently our Research and
Development Director. Dr. Lau has 23 years of experience in the semiconductor
industry, largely in research and development. Prior to joining Chartered, Dr.
Lau was a project manager for Hewlett-Packard's Circuit Technology Business
Division. He began his career in 1976 with Microwave Acoustics Lab of the
University of Southern California and subsequently continued his research and
engineering work at Texas Instruments for three years and Hewlett-Packard for
11
<PAGE> 14
11 years. Dr. Lau received a BSc from the University of Hawaii and MSc from the
University of Wisconsin. Dr. Lau received his Ph.D. from the University of
Southern California.
JUSTIN LIM
Justin Lim has served as our Vice President, Information Technology since
February 1998 and has overall responsibility for the development and application
of information technology for our business, operational and strategic needs. Dr.
Lim has 16 years of experience in the semiconductor industry, largely in
information technology support and development work. He began his career in 1983
with Fairchild Semiconductor which was later acquired by National Semiconductor
Pte Ltd in 1988. Dr. Lim was with National Semiconductor from 1988 to 1995. From
1995 to 1998, Dr. Lim was the Director of Services for FASTech Integration Asia
for three years. Dr. Lim received his Ph.D. in Electrical Engineering from the
University of Swansea, UK in 1983 after obtaining his BSC (Electro-Mechanical
Eng) (1st Class Hons) there in 1980. He also holds a MBA from the National
University of Singapore.
TAN SENG CHAI
Tan Seng Chai has served as our Vice President, Human Resources since July
1999 and has overall responsibility for the development and implementation of
policies and processes in our human resource management system. From October
1997 to June 1999, Mr. Tan was our Human Resource Director. Mr. Tan joined our
company as human resource manager in April 1996. He has more than 12 years of
experience in the semiconductor industry. He began his career at National
Semiconductor in 1987 where he held various positions in engineering, production
and human resource management. Mr. Tan later joined Creative Technology Ltd in
1994 and prior to joining Chartered, he was Creative's Senior Manager, Human
Resource. Mr. Tan holds a Bachelor of Engineering (Hons) from the National
University of Singapore in 1987 and a MSc (Industrial and System Eng) from the
National University of Singapore in 1991.
BOARD AND COMMITTEE MEETINGS
The Board of Directors held eight meetings during the fiscal year ended
December 31, 1999, including four regularly scheduled meetings and four special
meetings. Overall attendance at Board and Committee meetings was approximately
80% in 1999.
The Executive Resource and Compensation Committee, or ERCC, of our Board of
Directors oversees executive compensation and development in the Company with
the goal of building capable and committed management teams through competitive
compensation, focused management and progressive policies which can attract,
motivate and retain a pool of talented executives to meet the Company's current
and future growth plans. Specifically, the ERCC:
- establishes compensation policies for executive officers;
- approves salary reviews, bonuses and incentives for executive officers;
- approves share incentives, including share options and share ownership
for executives;
- approves key appointments and reviews succession plans for key positions;
and
- oversees the development of executive officers and younger executives.
The members of the ERCC are Ms. Ho (Chairman) and Messrs. Borrel, Lim,
Thompson, Sum and Tobey. The ERCC held 1 meeting during the fiscal year ended
December 31, 1999.
The Audit Committee of our Board of Directors consists of four members, of
which a majority may not be officers or employees of the Company. The Audit
Committee reviews, acts on and reports to the Board of Directors regarding
various auditing and accounting matters, including the scope and results of
annual audits and the recommendation of our independent auditors. The Audit
Committee also reviews all material transactions between the Company and the
Singapore Technologies group. The members of the Audit Committee are Messrs. Sum
(Chairman), Koh, La Blanc and Tobey. The Audit Committee held a total of
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<PAGE> 15
4 meetings during the fiscal year ended December 31, 1999. The Company is in the
process of reviewing its Audit Committee charter, structure and membership
requirements and will amend them as necessary in line with Nasdaq's new rules
relating to audit committees.
The Budget Committee of our Board of Directors is responsible for reviewing
our annual budget and our quarterly financial performance in relation to our
budget. The members of the Budget Committee are Messrs. Borrel (Chairman), Lim,
Van Tassel and Sum. The Budget Committee held a total of 4 meetings during the
fiscal year ended December 31, 1999.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The aggregate compensation paid to or accrued for all of the Directors and
executive officers for services rendered to the Company and its subsidiaries
during the fiscal year ended December 31, 1999 was approximately $5.0 million.
The 1999 compensation to the Directors included a one-time bonus payment
totaling in the aggregate approximately $250,000 to the Directors in recognition
of their contributions to the successful initial public offering of the
Company's Ordinary Shares and ADSs on October 29, 1999.
The Company did not set aside any provision for pension, retirement or
similar benefits for any Director or executive officer during the fiscal year
ended December 31, 1999.
All of the Company's officers and employees are eligible to participate in
the employee bonus plans. The plans provide for bonus payments based upon the
achievement of certain operational, financial and customer satisfaction targets.
Upon achievement of these targets, the participants in the plans are awarded
bonuses based on a percentage of their annual salary. Our President and Chief
Executive Officer is entitled to a guaranteed minimum annual bonus pursuant to
his employment agreement.
Please see "Report of the Executive Resource and Compensation Committee on
Executive Compensation" below for a discussion of our employee bonus plans.
ISSUANCE OF SHARE OPTIONS
As of March 15, 1999, options to purchase 32,242,131 Ordinary Shares were
issued and outstanding, of which 15,737,296 were held by the Directors and
executive officers. The outstanding options were granted under our 1999 Plan.
The exercise prices of these options range from S$0.93 to S$3.344. The
expiration dates of the options range from April 2004 to October 2009. In April
2000, the Company expects to grant to its officers, directors and employees
options under the 1999 Share Option Plan to purchase approximately 18,000,000
Ordinary Shares. The exercise price of such options will be the fair market
value of Ordinary Shares at the time of the grant.
REPORT OF THE EXECUTIVE RESOURCE AND COMPENSATION
COMMITTEE ON EXECUTIVE COMPENSATION
COMPENSATION PHILOSOPHY
The Executive Resource and Compensation Committee, or ERCC of the Board of
Directors oversees executive compensation and development in the Company. In
carrying out this role, it establishes the overall executive compensation
strategies to attract, retain and reward executive officers to grow and position
the Company as a top-tier and world-class semiconductor foundry. The ERCC
periodically reviews its approach to executive compensation.
The compensation strategies are built around a multi-faceted approach that
includes cash-based and long-term equity-based compensation. The combination of
these components in the compensation packages
13
<PAGE> 16
for executive officers is designed to reward each executive officer according to
the Company's financial and operational performance, as well as the individual's
performance. The Company also has a policy on healthcare, welfare and retirement
benefits for executive officers that is consistent with what is generally
available to executives from the semiconductor industry. The policy is
periodically reviewed to maintain its competitiveness.
The compensation philosophy of the Company is to provide a comprehensive,
competitive and attractive remuneration package for each executive officer that
will motivate him to plan, drive and execute the business and operational
strategies of the Company to maximize financial returns and shareholder values.
EXECUTIVE COMPENSATION
The total cash-based compensation for each executive officer is comprised
of a base salary and discretionary bonuses in accordance with the Company's
quarterly performance bonus plan, annual economic value-added (EVA) bonus plan
and executive business plan bonus.
The ERCC establishes the base salary for each executive based on the
Company's expectation of his or her performance and potential and industry
benchmarks.
The quarterly performance bonus plan is open to all employees including
executive officers and is paid at the start of every quarter for the previous
quarter's performance. The plan is based on objective performance criteria that
reflect company-wide performance as well as performance in the areas of sales,
manufacturing and technology development when measured against established
targets. Under the plan, a maximum of 2 months of an individual's base salary
may be paid every year, subject to any revision of the limit by the ERCC. The
plan also empowers our President and Chief Executive Officer to set aside a
bonus pool (subject to an annual limit approved by the ERCC) to reward
extraordinary individual performances during the year.
Implemented in 1999, the EVA bonus is paid annually to all eligible
employees for the Company's performance during the previous fiscal year when
measured against the absolute EVA results for that year and the EVA change from
the previous year. The EVA plan uses these indicators to create the bonus pool
for distribution to employees (including executive officers). For the fiscal
year ended December 31, 1999, eligible employees received 3 months of their base
salary under the EVA bonus plan.
The executive bonus plan is an incentive plan established to motivate
executive officers to strive to meet and exceed the targets set in the Company's
annual business plan. Implemented in 1999, the incentive plan rewards executive
officers according to the Company's performance and the individual's performance
and contributions. The executive bonus is paid once a year after the close of
the last fiscal year.
The long-term equity compensation plan is administered through the Share
Option Plan 1999. The 1999 Plan was adopted by Shareholders on March 30, 1999 to
offer employees of the Company and its affiliates (who satisfy certain
eligibility criteria) an opportunity to acquire a proprietary interest in the
success of the Company, or to increase such an interest, by exercising options
to purchase the Company's shares. Options granted to executive officers may be
exercised over a specified period of time (up to ten years), thereby creating a
long-term incentive to the executive officers to manage the Company from the
perspective of an owner with an equity stake in the business.
The ERCC maintains a set of guidelines for the determination of the grant
of share options to executive officers. The guidelines take into account the
individual's performance, his current position and promotion during the
performance review period. The relative weight given to each of these factors is
left to the discretion of the ERCC and the size of a grant is generally set at a
level that is intended to create a meaningful opportunity for share ownership in
the Company. The ERCC may grant share options more than once a year.
To ensure that the executive compensation packages are competitive enough
to attract, retain and reward talent, the ERCC keeps itself up to date by
referring to data and advice from external compensation consultants, as and when
it deems necessary.
The aggregate compensation paid to executive officers for services rendered
to the Company and its subsidiaries for the fiscal year ended December 31, 1999
was approximately $4.2 million.
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<PAGE> 17
The Company also provided its executive officers with customary healthcare,
welfare and retirement benefits during the year.
EXECUTIVE RESOURCE AND COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
The members of the ERCC in 1999 were Ms. Ho (Chairman) and Messrs. Lim,
Borrel, Sum, Thompson and Tobey. No officers of the Company served on the ERCC.
No interlocking relationships exist between the Company's Board of Directors or
ERCC and the board of directors or compensation committee of any other company.
No member of the ERCC engaged in any insider transactions with the Company that
is required to be disclosed pursuant to the U.S. Securities Exchange Act of
1934.
By the Executive Resource and
Compensation Committee
Ho Ching
Lim Ming Seong
Andre Borrel
Sum Soon Lim
Charles E. Thompson
Aubrey C. Tobey
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<PAGE> 18
STOCK PERFORMANCE GRAPH
The Stock Performance Graph below shall not be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under the U.S. Securities Act of 1933 or under the
U.S. Securities Exchange Act of 1934, except to the extent the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
This graph compares the total shareholder return of the Company's ADSs with
the S&P 500 Index and the S&P Electronics (Semiconductor) Index over a period
from October 29, 1999 to December 31, 1999. October 29, 1999 was the first day
of trading in the Company's ADSs. The total shareholder return assumes $100
invested at the beginning of the period in the Company's ADSs, the S&P 500 Index
and the S&P Electronics (Semiconductor) Index. It also assumes reinvestment of
all dividends.
Pursuant to the rules and interpretations of the U.S. Securities and
Exchange Commission, the graph is calculated using, as the beginning measurement
point, the closing price of the Company's ADS on October 29, 1999, which was
$33.19. The initial public offering price of the Company's ADS was $20.00 per
share.
The comparisons in the graph are based on historical data and are not
intended to forecast the possible future performance of the Company's ADSs or
Ordinary Shares. The graph lines merely connect the prices on the dates
indicated and do not reflect fluctuations between those dates.
<TABLE>
<CAPTION>
CHARTERED SEMICONDUCTOR S&P ELECTRONICS
MANUFACTURING LTD ADS S&P 500 (SEMICONDUCTORS)
----------------------- ------- ----------------
<S> <C> <C> <C>
10/29/1999 100.00 100.00 100.00
11/30/1999 160.00 102.00 102.00
12/31/1999 220.00 108.00 110.00
</TABLE>
CERTAIN TRANSACTIONS
WHAT IS THE SINGAPORE TECHNOLOGIES GROUP
Singapore Technologies Pte Ltd, or ST, is a holding company for a group of
high-technology companies. As of December 31, 1999, ST was 21.7% owned by
Singapore Technologies Holdings Pte Ltd, or ST Holdings. ST and ST Holdings were
78.3% and 100% owned, respectively, by Temasek Holdings (Private) Limited
through which the corporate investments of the Government of Singapore are held.
Temasek is owned by the Minister for Finance (Incorporated) of Singapore. ST
owns 100% of Singapore Technologies Semiconductors Pte Ltd, or ST
Semiconductors. As of March 15, 2000, ST and ST Semiconductors hold
approximately a 39.0% and 31.1% interest in our Company, respectively. ST
Semiconductors holds interests in our sister
16
<PAGE> 19
companies, STATS and Tritech Microelectronics Ltd (for which provisional
liquidators were appointed effective September 1, 1999), or Tritech. In 1999,
our revenues represented approximately 21% of ST's revenues and our assets
represented approximately 19% of ST's assets (in each case, based on unaudited
numbers).
ST has five principal business groups: engineering, technology,
infrastructure, property and financial services. ST has three operating
subsidiaries that are engaged in the semiconductor business, namely:
- Chartered Semiconductor Manufacturing Ltd;
- STATS; and
- Tritech (in liquidation).
STATS specializes in assembly and testing of semiconductors. STATS
consummated its initial public offering on February 8, 2000. Tritech, which is
in liquidation, was in the business of designing, developing and marketing
application specific standard products as well as customer specific
semiconductors. ST may in the future establish other subsidiaries, or form
strategic alliances with companies, which are engaged in the semiconductor
business.
As of March 15, 2000, ST and its affiliates own approximately 70.1% of our
outstanding Ordinary Shares and, as a result, are able to control actions over
many matters requiring approval by our shareholders, including the election of
Directors and approval of significant corporate transactions. In addition, Ms.
Ho and Messrs. Lim, Sum, Koh, Thomas and Liow, each a member of our Board of
Directors (other than Messrs. Thomas and Liow who serve as alternate members),
serve as directors of companies in the Singapore Technologies group. Ms. Ho and
Messrs. Lim and Thomas, each a member (or alternate member) of our Board of
Directors, are employed by companies in the Singapore Technologies group.
In 1996, our Board of Directors established an Audit Committee that, among
other things, reviews all material transactions between us and the Singapore
Technologies group. Please see "Board and Committee Meetings" above for a
summary of the function and composition of the Audit Committee. Mr. Sum, the
Chairman of the Audit Committee, also serves as a consultant to ST and serves as
a director for other ST affiliates.
We also have contractual and other business relationships with ST and its
affiliates and we engage in material transactions with ST from time to time.
Although our Audit Committee reviews all material transactions between our
Company and the Singapore Technologies group, conflicts of interest may arise
between us in certain circumstances. We are not obligated to conduct any
business with members of the ST group if the costs of doing so are greater than
for unaffiliated third parties.
FINANCIAL SUPPORT PROVIDED TO US BY SINGAPORE TECHNOLOGIES GROUP
Through its subsidiary, ST Treasury Services Ltd, ST currently provides us
with short-term financing and guarantees some of our debt. Certain of our loan
agreements require ST to own at least a majority of our outstanding Ordinary
Shares. ST Treasury Services Ltd has also in the past provided loans to us and
has entered into forward foreign exchange contracts with us to provide a hedge
for certain of our equipment purchase commitments with foreign vendors. As of
December 31, 1999, approximately $202.2 million of our debt was guaranteed by ST
at no cost. In addition, $153.7 million of our debt was guaranteed by commercial
banks at the request of ST, at a weighted average cost to us of 0.29%.
In addition, from time to time we advance funds to, or borrow funds from,
ST Treasury Services Ltd (and from ST prior to the second half of 1998). In
general, advances to and borrowings from ST and ST Treasury bear interest at
rates comparable to the rates offered by commercial banks in Singapore, are
unsecured and are repayable within three to six months on a renewable basis. The
amount of interest income received from ST in 1997 and 1998 was $0.2 million and
$0.8 million respectively. The amount of interest income received from ST
Treasury in 1998 and 1999 was $0.9 million and $2.8 million, respectively. The
amount of interest expense paid to ST was $12.7 million and $6.6 million in 1997
and 1998 respectively. The amount of interest expense paid to ST Treasury in
1998 and 1999 was $2.3 million and $0.1 million, respectively. The average rate
of
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interest payable in 1997, 1998 and 1999 to ST and ST Treasury for our Singapore
dollar denominated borrowings was 4.89%, 7.13% and 2.74% respectively, and
6.06%, 6.33% and 6.13% respectively, for our U.S. dollar denominated borrowings.
We have also entered into an oral multi-currency credit facility with ST
Treasury in connection with our borrowing arrangements with it. Under this
facility, ST Treasury has agreed to make available to us funds of up to $100
million. We may, upon notice to ST Treasury, draw down at any time any amount
available under the facility. We are not restricted in our utilization of drawn
funds. Funds drawn under the facility are required to be repaid within one year
of the date on which they are drawn. Payment schedules and directions will be as
agreed to by us and ST Treasury at the time of the draw down. Unless otherwise
agreed to, amounts drawn under the facility are unsecured and neither we nor ST
Treasury are subject to conditions or events of default. Interest on drawn funds
accrues at a rate based on the monthly average interest rate of three banks, as
chosen by ST Treasury. As of December 31, 1999, there were no unsecured
borrowings outstanding under this facility. While ST has historically provided
credit and other support to us, ST has no obligation to continue doing so and
the availability and amount of such support will depend on various factors,
including our ability to raise funds without such support and the expenses
relating to such fundraising.
CORPORATE SERVICES PROVIDED TO US BY SINGAPORE TECHNOLOGIES
We have a service agreement with ST pursuant to which it provides us with
services and support which are tangible as well as intangible in nature. The
services provided by ST include management and corporate support services, such
as treasury, cash management, internal audit, training and executive resources.
In addition, ST is able to offer us the benefits of a global network and the
"Singapore Technologies" name and ST's wide spectrum of industries provide us
with operational and financial leverages in our dealings with external third
parties. In return for those services, support and benefits, we currently pay ST
an annual management fee based on a service based fee arrangement. In addition,
we reimburse ST for the third-party costs and expenses it incurs on our behalf.
In 1997, 1998 and 1999, we paid management fees to ST of $5.7 million, $4.9
million and $3.8 million, respectively. In addition, we reimbursed ST for costs
and expenses incurred on our behalf, principally certain of our payroll expenses
paid through ST. Those reimbursements totaled $5.6 million, $5.7 million and
$6.5 million in 1997, 1998 and 1999, respectively.
The service agreement expires in the event we cease to be a subsidiary of
ST. It can be terminated by ST upon our prolonged failure to pay the management
fees due to ST. The management fees we pay ST under the service agreement are
itemized to allow us to compare them with similar services provided by unrelated
third parties. We also believe that we derive economic benefits from the
corporate services and support ST provides us. For example, ST guarantees a
portion of our debt without fees or covenants and provides standby credit
facilities without charge. In addition, we have used ST's leverage to secure
loans and terms (including interest rates and covenants) that we would not
otherwise have obtained.
In the event that the service agreement is terminated, however, we will be
required to provide the corporate services previously provided by ST either
internally or obtain them from third parties and the cost to us could be greater
than that charged by ST.
OTHER TRANSACTIONS WITH THE SINGAPORE TECHNOLOGIES GROUP
We transact business with ST and its affiliates in the normal course of our
respective businesses. We recorded sales to Tritech of $20.8 million, $6.2
million and $1.3 million in 1997, 1998 and 1999, respectively. These sales
represented 5.5%, 1.5% and 0.2% of our net sales for the respective periods.
Tritech was placed under judicial management on July 2, 1999 and commenced
winding-up proceedings on October 15, 1999.
We paid STATS $13.3 million, $22.7 million and $33.9 million in 1997, 1998
and 1999, respectively, for services rendered in those years. We also paid
affiliates of ST $3.0 million, $1.4 million and $7.6 million in 1997, 1998 and
1999, respectively, for services rendered in those years. We purchased $1.0
million, $0.9 million and $0.6 million in assets from affiliates of ST in 1997,
1998 and 1999, respectively. We also paid
18
<PAGE> 21
ST Construction and ST Architects $2.6 million, $1.1 million and $0.1 million in
1997, 1998 and 1999, respectively, for construction costs rendered in those
years.
Fabs 2 and 3 and our corporate offices are located on land leased to ST by
Jurong Town Corporation, or JTC, a statutory board established by the Government
of Singapore to develop and manage industrial estates in Singapore. These leases
run until 2024 with conditional options to extend for another 30 years. We have
entered into sub-leases with ST for the entire term of the leases for Fabs 2 and
3. The sub-leases for Fab 2 and Fab 3 require us to make rental payments to ST
at rates equal to the rent paid by ST to JTC for the subject land through 2006
for Fab 2 and 2024 for Fab 3. The rental rates may be re-negotiated thereafter.
In total, we paid ST $2.1 million, $1.6 million and $2.5 million, respectively,
in lease payments for 1997, 1998 and 1999.
CSP leases the land on which Fab 6 is located from ST, which in turn leases
it from JTC. The agreement provides for the land to be leased to ST until 2027,
with a conditional option to extend for an additional 30 years. CSP makes rental
payments to ST at rates equal to the rent paid by ST to JTC for the subject land
through 2027. CSP paid ST $0.5 million, $0.9 million and $1.1 million in lease
payments for 1997, 1998 and 1999, respectively. We expect ST to lease the land
on which our new fabrication facility, Fab 7, is being built from JTC and to
sublease that land to us on terms similar to those of our other leases with ST.
Some of our insurance coverage is held under various insurance policies which
are negotiated and maintained by ST but billed directly to us. This enables us
to benefit from the group rates negotiated by ST.
BY ORDER OF THE BOARD
ANGELA HON KAH SIM/NANCY TAN SEE SIN
JOINT COMPANY SECRETARIES
Singapore
April 13, 2000
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<TABLE>
<S> <C>
-------------------------------------------------------------
IMPORTANT
1. For Investors who have used their CPF moneys to buy
shares of Chartered Semiconductor Manufacturing Ltd, the
Annual Report 1999 is forwarded to them at the request
of their CPF Approved Nominees and is sent solely FOR
INFORMATION ONLY.
2. This Proxy Form is not valid for use by CPF Investors
and shall be ineffective for all intents and purposes if
used or purported to be used by them.
3. CPF Investors who wish to vote should contact their CPF
Approved Nominees.
-------------------------------------------------------------
</TABLE>
PROXY FORM -- TWELFTH ANNUAL GENERAL MEETING
I/We, ___________________________ (Name), of ____________________________
________________________________ (Address) being a member(s) of CHARTERED
SEMICONDUCTOR MANUFACTURING LTD (the "Company") hereby appoint
<TABLE>
<CAPTION>
- ------------------------------------- NRIC/Passport Proportion of
Name Address Number Shareholding(%)
<S> <C> <C> <C>
- -------------------------------------
- -------------------------------------
*and/or
- -------------------------------------
- -------------------------------------
</TABLE>
as my/our proxy, to attend and to vote for me/us on my/our behalf and, if
necessary, to demand a poll, at the Twelfth Annual General Meeting ("Twelfth
AGM") of the Company to be held at 60 Woodlands Industrial Park D Street 2,
Singapore 738406 on May 25, 2000 at 10:00 a.m., and at any adjournment thereof.
(Please indicate with an "X" in the spaces provided whether you wish your
vote(s) to be cast for or against the Resolutions as set out in the Notice of
the Twelfth AGM and summarised below. In the absence of any specific directions,
the proxy/proxies will vote or abstain as he/they may think fit, as he/they will
on any other matter arising at the Twelfth AGM).
<TABLE>
<CAPTION>
NO. ROUTINE BUSINESS -- ORDINARY RESOLUTIONS FOR AGAINST
<S> <C> <C> <C>
1) To adopt the Audited Accounts of the Company for the year [ ] [ ]
ended December 31, 1999, including the reports of the
Directors and the Auditors
2(a) (i) To re-elect Ms. Ho Ching as a Director of the Company [ ] [ ]
pursuant to Article 94 of the Company's Articles of
Association.
(ii) To re-elect Mr. Lim Ming Seong as a Director of the [ ] [ ]
Company pursuant to Article 94 of the Company's Articles of
Association.
(iii) To re-elect Mr. Sum Soon Lim as a Director of the [ ] [ ]
Company pursuant to Article 94 of the Company's Articles of
Association.
2(b) To re-elect Dr. Tsugio Makimoto as a Director of the Company [ ] [ ]
pursuant to Article 99 of the Company's Articles of
Association.
3) (i) To re-appoint Mr. Aubrey C. Tobey as a Director of the [ ] [ ]
Company to hold office until the next Annual General Meeting
pursuant to Section 153(6) of the Companies Act, Chapter
50.
(ii) To re-appoint Dr. James H. Van Tassel as a Director of [ ] [ ]
the Company to hold office until the next Annual General
Meeting pursuant to Section 153(6) of the Companies
Act, Chapter 50.
(iii) To re-appoint Mr. Charles E. Thompson as a Director of [ ] [ ]
the Company to hold office until the next Annual General
Meeting pursuant to Section 153(6) of the Companies
Act, Chapter 50.
4) To re-appoint KPMG as the Company's Auditors and to [ ] [ ]
authorise the Directors to fix their remuneration.
5) To approve Directors' fees up to US$750,000 for the year [ ] [ ]
ended December 31, 1999.
6(a) To authorize the Directors to issue shares in the capital of [ ] [ ]
the Company pursuant to Section 161 of the Companies Act,
Chapter 50.
6(b) To authorize the Directors to create and issue securities [ ] [ ]
and to issue shares in connection therewith in the capital
of the Company pursuant to Section 161 of the Companies Act,
Chapter 50.
6(c) To authorize the Directors to offer and grant options and to [ ] [ ]
issue additional shares in the capital of the Company
pursuant to the Chartered Semiconductor Manufacturing Ltd
Share Option Plan 1999.
</TABLE>
Dated this ____ day of ____________________________________ 2000.
--------------------------------------
Total Number of Shares Held
--------------------------------------
--------------------------------------
- ---------------------------------------------------------------
Signature(s) of Shareholder(s)/Common Seal
Please read Notes on the reverse.
- ---------------
* Please delete accordingly
<PAGE> 23
NOTES
1. Please insert the total number of Shares held by you. If you have Shares
entered against your name in the Depository Register (as defined in Section
130A of the Companies Act, Chapter 50), you should insert that number of
Shares. If you have Shares registered in your name in the Register of
Shareholders (Members), you should insert that number of Shares. If you have
Shares entered against your name in the Depository Register and Shares
registered in your name in the Register of Shareholders, you should insert
the aggregate number of Shares entered against your name in the Depository
Register and registered in your name in the Register of Shareholders. If no
number is inserted, the instrument appointing a proxy or proxies shall be
deemed to relate to all the Shares held by you.
2. A shareholder of the Company entitled to attend and vote at a meeting of the
Company is entitled to appoint one or two proxies to attend and vote instead
of him. A proxy need not be a member of the Company.
3. Where a shareholder appoints two proxies, the appointments shall be invalid
unless he specifies the proportion of his shareholding (expressed as a
percentage of the whole) to be represented by each proxy.
4. The instrument appointing a proxy or proxies must be deposited at 60
Woodlands Industrial Park D Street 2, Singapore 738406 not less than 48 hours
before the time appointed for the Twelfth Annual General Meeting.
5. The instrument appointing a proxy or proxies must be under the hand of the
appointor or of his attorney duly authorised in writing. Where the instrument
appointing a proxy or proxies is executed by a corporation, it must be
executed either under its seal or under the hand of an officer or attorney
duly authorised.
6. A corporation which is a shareholder may authorise by resolution of its
directors or other governing body such person as it thinks fit to act as its
representative at the Twelfth Annual General Meeting, in accordance with
Section 179 of the Companies Act, Chapter 50.
GENERAL
The Company shall be entitled to reject the instrument appointing a proxy or
proxies if it is incomplete, improperly completed or illegible or where the true
intentions of the appointor are not ascertainable from the instructions of the
appointor specified in the instrument appointing a proxy or proxies. In
addition, in the case of Shares entered in the Depository Register, the Company
may reject any instrument appointing a proxy or proxies lodged if the
shareholder, being the appointor, is not shown to have Shares entered against
his name in the Depository Register as at 48 hours before the time appointed for
holding the Twelfth Annual General Meeting, as certified by The Central
Depository (Pte) Limited to the Company.
