<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 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for the Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
</TABLE>
GENERAL SEMICONDUCTOR, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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
GENERAL SEMICONDUCTOR LOGO
GENERAL SEMICONDUCTOR, INC.
TEN MELVILLE PARK ROAD
MELVILLE, NEW YORK 11747
March 31, 2000
Dear Stockholders:
You are cordially invited to attend the 2000 Annual Meeting of Stockholders
of General Semiconductor, Inc., to be held on Wednesday, May 10, 2000, at 10:00
a.m., local time, at the Melville Marriott Hotel, 1350 Old Walt Whitman Road,
Melville, New York 11747.
At the meeting, we will review General Semiconductor's activities over the
past year, as well as the outlook for 2000. The Secretary's formal notice of the
meeting and the Proxy Statement appear on the following pages and describe the
matters to be acted upon at the meeting.
We hope that you will be able to attend the meeting in person. However,
whether or not you plan to attend, please fill in, sign, date and return your
proxy in the enclosed envelope as soon as possible so that your vote will be
counted. If your shares are held in a participating bank or brokerage account,
you may be eligible to vote over the Internet, or by telephone, as an
alternative to mailing the traditional proxy card. Please see "Voting
Electronically via the Internet or Telephone" in the Proxy Statement for further
details.
Sincerely
/s/ Ronald A. Ostertag
Ronald A. Ostertag
Chairman of the Board
<PAGE> 3
GENERAL SEMICONDUCTOR, INC.
TEN MELVILLE PARK ROAD
MELVILLE, NEW YORK 11747
---------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 10, 2000
---------------------------------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of General
Semiconductor, Inc. (the "Company") will be held at 10:00 a.m., local time, on
May 10, 2000 at the Melville Marriott Hotel, 1350 Old Walt Whitman Road,
Melville, New York 11747 for the following purposes:
1. To elect six directors of the Company to serve until the next annual
meeting of stockholders and until the election and qualification of
their respective successors;
2. To ratify the appointment of Deloitte & Touche LLP, independent
certified public accountants, as the Company's auditor for the fiscal
year ending December 31, 2000; and
3. To transact such other business as may properly come before the meeting
or any adjournments thereof.
Only holders of record of the Company's common stock at the close of
business on March 15, 2000 are entitled to notice of, and to vote at, the
meeting and any adjournments thereof. Such stockholders may vote in person or by
proxy.
Stockholders who find it convenient are cordially invited to attend the
meeting in person. Whether or not you plan to attend the meeting, please fill
in, sign, date and return the accompanying proxy in the enclosed envelope. No
postage is required if mailed in the United States. If your shares are held in a
participating bank or brokerage account and you elected to receive the Proxy
Statement and Annual Report electronically over the Internet you will not
receive a paper proxy and should vote online, unless you cancel your enrollment.
If your shares are held in a participating bank or brokerage account and you did
not elect to receive materials through the Internet, you may be eligible to vote
your proxy over the Internet or by telephone. Please see "Voting Electronically
via the Internet or Telephone" in the Proxy Statement for further details.
By Order of the Board of Directors,
/s/ Stephen B. Paige
Stephen B. Paige
Secretary
Melville, New York
March 31, 2000
<PAGE> 4
GENERAL SEMICONDUCTOR, INC.
TEN MELVILLE PARK ROAD
MELVILLE, NEW YORK 11747
-------------------------------
PROXY STATEMENT
-------------------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of General Semiconductor, Inc., a Delaware
corporation (the "Company" or "General Semiconductor"), to be used at the 2000
Annual Meeting of Stockholders (the "Annual Meeting") to be held at 10:00 a.m.,
local time on Wednesday, May 10, 2000, at the Melville Marriott Hotel, 1350 Old
Walt Whitman Road, Melville, New York 11747 and at any adjournments thereof.
Holders of record of the Company's common stock, par value $0.01 per share
(the "Common Stock"), as of the close of business on March 15, 2000 (the "Record
Date") will be entitled to vote at the Annual Meeting or any adjournments
thereof. As of the Record Date, there were 37,529,618 shares of Common Stock
outstanding and entitled to vote and a majority, or 18,764,810 of these shares,
will constitute a quorum for the transaction of business. Each share of Common
Stock entitles the holder thereof to one vote on all matters to come before the
Annual Meeting, including election of directors. This Proxy Statement and the
accompanying form of proxy are first being mailed and sent electronically on or
about March 31, 2000 to stockholders entitled to vote at the Annual Meeting.
1997 COMPANY RESTRUCTURING
On January 7, 1997 the Board of Directors of General Instrument Corporation
("GI") approved a plan to divide GI into three separate public companies. To
effect the transaction, GI distributed all of the outstanding shares of capital
stock of each of NextLevel Systems, Inc. (subsequently renamed General
Instrument Corporation) and CommScope, Inc. to GI's stockholders on a pro rata
basis as a dividend (the "Distribution") in a transaction that was finalized on
July 28, 1997. GI retained no ownership in either NextLevel Systems, Inc. or
CommScope, Inc. Concurrent with the Distribution, GI changed its name to General
Semiconductor, Inc. and effected a one-for-four reverse stock split (the "Stock
Split"). Unless otherwise specifically indicated to the contrary, all share and
per share information set forth in this Proxy Statement gives effect to the
Stock Split.
VOTING AND REVOCATION OF PROXIES
VOTING
Whether or not you are able to attend the Annual Meeting, you are urged to
vote your proxy, which is solicited by the Company's Board of Directors and
which will be voted as you direct on your proxy when properly completed. If no
directions are specified, such proxies will be voted FOR the election of each
person nominated for election as a director and FOR the ratification of the
appointment by the Board of Directors of Deloitte & Touche LLP as the Company's
auditor for the fiscal year ending December 31, 2000 and in the discretion of
the proxy holders, as to other matters that may properly come before the Annual
Meeting.
The holders of a majority of the shares of Common Stock entitled to vote at
the meeting, present in person or by proxy, constitute a quorum. If a quorum is
present: (i) the affirmative vote of the holders of a plurality of the shares
present, in person or by proxy, and entitled to vote thereon will be required
for election of directors; and (ii) the affirmative vote of the holders of a
majority of the shares present, in person or by proxy, and entitled to vote
thereon will be required to ratify the appointment by the Board of Directors of
Deloitte & Touche LLP as the Company's auditor. An automated system administered
by the Company's transfer agent tabulates the votes. For purposes of determining
the number of votes cast with respect to any voting matter, only those cast
"for" or "against" are included; abstentions and broker non-votes are excluded.
For purposes of determining whether the affirmative vote of a majority of the
shares present at the meeting
<PAGE> 5
and entitled to vote on a proposal has been obtained, abstentions will be
included in, and broker non-votes will be excluded from, the number of shares
present and entitled to vote. Accordingly, abstentions will have the effect of a
vote "against" the matter (other than the election of directors) and broker
non-votes will have the effect of reducing the number of affirmative votes
required to achieve the majority vote.
VOTING ELECTRONICALLY VIA THE INTERNET OR TELEPHONE
Stockholders whose shares are registered in the name of a participating
bank or brokerage firm and who elected to receive the Company's Annual Report
and this Proxy Statement over the Internet will be receiving an email on or
about March 31, 2000 with information on how to access stockholder information
and instructions for voting. If your shares are registered in the name of a
participating bank or brokerage firm and you have not elected to receive the
Company's Annual Report and this Proxy Statement over the Internet, you may be
eligible to vote your shares electronically over the Internet or by telephone. A
number of banks and brokerage firms participate in the ADP Shareholder
Preference Database program. This program provides eligible stockholders who
receive a paper copy of a Company's Annual Report and Proxy Statement with the
opportunity to vote via the Internet or by telephone. If your bank or brokerage
firm is participating in the ADP program, your voting form will provide
instructions. If your voting form does not reference Internet or telephone
information, please complete and return the paper proxy card in the
self-addressed postage paid envelope provided.
REVOCATION
A stockholder giving a proxy may revoke it at any time before it is voted
by delivery to the Company's Secretary of a subsequently executed proxy or a
written notice of revocation. In addition, voting by telephone, Internet or mail
will not prevent you from voting in person at the Annual Meeting should you be
present and wish to do so.
ANNUAL REPORT
The Company's Annual Report to Stockholders for the year ended December 31,
1999 is being mailed with this Proxy Statement and the accompanying form of
proxy to stockholders entitled to vote at the Annual Meeting. Copies of the
Company's Annual Report are also available on the Company's World Wide Web site
at www.gensemi.com. Stockholders are referred to that report for financial and
other information about the activities of the Company. The Annual Report is not
incorporated by reference into this Proxy Statement and is not deemed to be a
part of it.
ELECTION OF DIRECTORS
The following table sets forth names and information as to the nominees for
election as directors of the Company. Unless otherwise directed, proxies will be
voted FOR the nominees listed below. If any one or more of the nominees is
unable to serve for any reason or withdraws from nomination, proxies will be
voted for the substitute nominee or nominees, if any, proposed by the Board of
Directors (the "Board").
All of the nominees are presently serving as directors of the Company and
have served since July 1997, except Mr. Kulicke who has served as a director
since July 1999.
<TABLE>
<CAPTION>
NAME, AGE AND CURRENT
PRINCIPAL OCCUPATION INFORMATION
- --------------------- -----------
<S> <C>
C. Scott Kulicke, 50 C. Scott Kulicke is Chairman, President and Chief
Chairman, President and Chief Executive Officer of Kulicke & Soffa Industries, Inc., a
Executive Officer of Kulicke & supplier of semiconductor assembly equipment. He has been
Soffa Industries, Inc. a director of Kulicke & Soffa Industries, Inc. since 1975
and served as its President and Chief Executive Officer
since 1980. He was Executive Vice President from 1978 to
1980.
</TABLE>
2
<PAGE> 6
<TABLE>
<CAPTION>
NAME, AGE AND CURRENT
PRINCIPAL OCCUPATION INFORMATION
- --------------------- -----------
<S> <C>
Ronald A. Ostertag, 59 Ronald A. Ostertag has been Chairman, President and Chief
Chairman, President, and Chief Executive Officer of General Semiconductor since July 25,
Executive Officer of the Company 1997. Previously, he held the position of Vice President
of GI since February 1989 and President of GI's Power
Semiconductor Division since September 1990.
Ronald Rosenzweig, 62 Ronald Rosenzweig is Chairman of Anadigics, Inc., an
Chairman of Anadigics, Inc. electronics company he co-founded in 1985. He has been a
director of Anadigics, Inc. since 1985 and served as its
President and Chief Executive Officer from 1985 until
October 1998.
Peter A. Schwartz, 56 Peter A. Schwartz is the Chief Financial Officer of
Chief Financial Officer of InterWorld Corporation, a publicly traded provider of
InterWorld Corporation Internet commerce software and services. Prior to joining
InterWorld in 1998, Mr. Schwartz was Senior Vice
President and Chief Financial Officer of Computer
Associates International, Inc., a business software
company, from 1987 until June 1998.
Samuel L. Simmons, 70 Samuel L. Simmons was Senior Vice President and
Retired Director -- Corporate Development of ITT Corporation from
1987 until his retirement in 1994.
Prof. Gerard T. Wrixon, 59 Prof. Gerard T. Wrixon is President of University
President of University College, College, Cork, Ireland. Previously, he founded and was
Cork, Ireland Director of National Mircoelectronics Research Centre
from 1982 until January 1999. Prof. Wrixon has held
teaching and research positions at a number of leading
educational institutions and research facilities,
including Loyola University -- Los Angeles and Bell
Telephone Laboratories. He is a director of DII Group,
Inc. and Farran Technology Ltd.
</TABLE>
THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
The Board of Directors of the Company directs the management of the
business and affairs of the Company and conducts its business through meetings
of the Board and three standing committees: Executive, Audit and Compensation.
In addition, special committees may be established under the direction of the
Board when necessary to address specific issues. The Company does not have a
nominating or similar committee.
BOARD MEETINGS; COMMITTEES OF THE BOARD
In 1999 the Board of Directors of the Company held seven meetings. Each
incumbent director attended 75% or more of the aggregate of (i) meetings of the
Board held during the period for which he served as a director; and (ii)
meetings of all committees held during the period for which he served on those
committees.
The EXECUTIVE COMMITTEE has the authority, between meetings of the Board of
Directors, to exercise all powers and authority of the Board in the management
of the business and affairs of the Company that may be lawfully delegated to it
under Delaware law and the Company's By-Laws. The Executive Committee consists
of: Ronald A. Ostertag, Chairman; C. Scott Kulicke; Ronald Rosenzweig; and Prof.
Gerard T. Wrixon. The Executive Committee held no meetings during 1999.
The AUDIT COMMITTEE's principal functions are to review the scope of the
annual audit of the Company by its independent auditor, review the annual
financial statements of the Company and the related audit report of the Company
as prepared by the independent auditor, recommend the selection of the
independent auditor each year and review audit and any non-audit fees paid to
the Company's independent auditor. The head of the Internal Audit Department
attends Audit Committee meetings and gives reports to and answers inquiries from
the Audit Committee. The Audit Committee is composed of three non-employee
3
<PAGE> 7
directors: Peter A. Schwartz, Chairman; Ronald Rosenzweig; and Prof. Gerard T.
Wrixon. The Audit Committee held three meetings in 1999.
The COMPENSATION COMMITTEE is responsible for executive compensation,
including recommending to the Board of Directors the base salary to be paid to
the Chief Executive Officer and determining the compensation for all other
executive officers, administering and granting awards under the Company's
equity-based incentive plans and bonus plans, making recommendations to the
Board with respect to the Company's overall compensation policies and employee
benefit plans, and performs such duties as the Board may from time to time
request. The Compensation Committee is composed of three non-employee directors:
Samuel L. Simmons, Chairman; C. Scott Kulicke; and Peter A. Schwartz. The
Compensation Committee held four meetings in 1999.
COMPENSATION OF DIRECTORS
Employee directors do not receive additional compensation for serving on
the Company's Board. Non-employee directors receive an annual retainer of
$25,000 and committee chairpersons receive an additional $5,000. The
non-employee directors' remuneration is paid quarterly. In addition, each
non-employee director, upon election to the Board, received 1,000 shares of
Common Stock which vested immediately and was granted an option to purchase
20,000 shares of Common Stock at an exercise price per share equal to the fair
market value on the date of grant, which option becomes exercisable with respect
to one-third of the underlying shares on each of the first three anniversaries
of the grant date. If a non-employee director remains in office, a similar
option is expected to be granted every three years.
4
<PAGE> 8
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is comprised entirely of non-employee directors
none of whom has ever been an officer or employee of the Company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT OF THE COMPANY
The following table sets forth certain information known by the Company
regarding the beneficial ownership of the Common Stock as of March 15, 2000
(except as otherwise specified) by each beneficial owner of more than five
percent of the outstanding Common Stock, by each of the Company's directors, by
each of the executives named in the Summary Compensation Table and by all
current directors and officers of the Company as a group.
<TABLE>
<CAPTION>
NUMBER OF
SHARES BENEFICIALLY PERCENTAGE
NAME OWNED(1) OF CLASS
---- ------------------- ----------
<S> <C> <C>
J. & W. Seligman & Co. Incorporated(2)...................... 4,376,000 11.7
Wellington Management Company, LLP(3)....................... 3,475,600 9.3
Vanguard Windsor Funds -- Windsor Fund(3)................... 3,468,600 9.2
State of Wisconsin Investment Board(4)...................... 3,300,000 8.8
Mellon Financial Corporation(5)............................. 2,484,334 6.6
FMR Corp.(6)................................................ 2,400,000 6.4
Sanford C. Bernstein & Co., Inc.(7)......................... 2,196,780 5.9
Oppenheimer Capital(8)...................................... 1,995,984 5.3
Andrew M. Caggia(9)(14)..................................... 6,883 *
W. John Nelson(10)(14)...................................... 226,390 *
Ronald A. Ostertag(11)(14).................................. 507,793 1.4
Stephen B. Paige(12)(14).................................... 63,964 *
John P. Phillips(13)(14).................................... 120,417 *
C. Scott Kulicke............................................ 2,000 *
Ronald Rosenzweig(15)....................................... 16,458 *
Peter A. Schwartz(15)....................................... 20,333 *
Samuel L. Simmons(15)....................................... 14,358 *
Prof. Gerard T. Wrixon(15).................................. 14,333 *
All current directors and executive officers as a group (12
persons)(16).............................................. 1,270,671 3.4
</TABLE>
- ---------------
* The percentage of shares of Common Stock beneficially owned does not
exceed one percent of the outstanding shares of Common Stock.
(1) For purposes of this table, a person or group of persons is deemed to have
"beneficial ownership" of any shares of Common Stock that it has the right
to acquire within 60 days following March 15, 2000. For purposes of
computing the percentage of outstanding shares of Common Stock held by
each person or group of persons named above, any security which it has the
right to acquire within 60 days following March 15, 2000 is deemed to be
outstanding, but is not deemed to be outstanding for the purpose of
computing the percentage ownership of any other person.
(2) This information is obtained from a Schedule 13G, dated February 10, 2000,
filed with the Securities and Exchange Commission ("SEC") by J. & W.
Seligman & Co. Incorporated and William C. Morris, as the owner of a
majority of the outstanding securities of J. & W. Seligman (collectively,
"Seligman"). Seligman reports beneficial ownership of 4,376,000 shares.
Seligman claims no sole voting power, shared voting power over 3,750,800
shares, no sole dispositive power and shared dispositive power over
4,376,000 shares. Seligman's principal business office is located at 100
Park Avenue, New York, New York 10017.
5
<PAGE> 9
(3) Information regarding the ownership of Common Stock by Wellington
Management Company, LLP ("Wellington") was obtained from a Schedule 13G,
dated February 9, 2000, filed with the SEC by Wellington. Wellington
reports beneficial ownership of 3,475,600 shares of Common Stock. The
shares are owned of record by clients of Wellington including Vanguard
Windsor Fund. Wellington, in its capacity as investment advisor, may be
deemed to beneficially own the shares that are held of record by the
clients of Wellington. With the exception of Vanguard Windsor Fund, no
such client is known to have the right to receive, or the power to direct
the receipt of, dividends from, or the proceeds from the sale of, shares
representing more than 5% of the outstanding common stock. Wellington
reports shared dispositive power as to all 3,475,600 shares and shared
voting power over 7,000 shares. Wellington's principal business office is
located at 75 State Street, Boston, Massachusetts 02109. Information
regarding the ownership of Common Stock by Vanguard Windsor Funds
Inc. -- Windsor Fund was obtained from a Schedule 13G, dated February 4,
2000, filed with the SEC by Vanguard Windsor. Vanguard Windsor reports
beneficial ownership of 3,468,600 shares of Common Stock. Vanguard Windsor
shares dispositive power as to all 3,468,600 shares and has sole voting
power as to all 3,468,600 shares.
(4) This information is obtained from a Schedule 13G, dated February 10, 2000,
filed with the SEC by the State of Wisconsin Investment Board ("Wisconsin
Investment Board"). The Wisconsin Investment Board reports beneficial
ownership of 3,300,000 shares. The Wisconsin Investment Board claims sole
voting power over 3,300,000 shares, no shared voting power, sole
dispositive power over 3,300,000, and no shared dispositive power. The
Wisconsin Investment Board's principal business office is located at P.O.
Box 7842, Madison, Wisconsin 53707.
(5) This information is obtained from a Schedule 13G, dated January 21, 2000,
filed with the SEC by: Mellon Financial Corporation, Boston Group
Holdings, Inc. and The Boston Company, Inc., each a parent holding
company. Mellon Financial Corporation reports beneficial ownership of
2,484,334 shares, sole voting power over 1,854,534 shares, shared voting
power over 193,600 shares, sole dispositive power over 2,082,934 shares
and shared dispositive power over 401,400 shares. Boston Group Holding,
Inc. reports beneficial ownership of 1,994,125 shares, sole voting power
over 1,381,525 shares, shared voting power over 193,600 shares, sole
dispositive power over 1,592,727 shares and shared dispositive power over
401,400 shares. The Boston Company, Inc. reports beneficial ownership of
1,944,125 shares, sole voting power over 1,381,525 shares, shared voting
power over 193,600 shares, sole dispositive power over 1,592,725 shares
and shared dispositive power over 401,400 shares. Mellon Financial
Corporation's principal place of business is One Mellon Center,
Pittsburgh, Pennsylvania 15258.
(6) This information is obtained from a Schedule 13G, dated February 14, 2000,
filed with the SEC by: FMR Corp., a parent holding company; Fidelity
Management & Research Company, a wholly-owned subsidiary of FMR Corp. and
an investment advisor; Fidelity Low-Priced Stock Fund; and Edward C.
Johnson 3rd ("Mr. Johnson") and Abigail Johnson ("Ms. Johnson"). FMR
Corp., Mr. Johnson and Ms. Johnson each report beneficial ownership of
2,400,000 shares. Fidelity Management & Research Company, an investment
advisor, reported beneficial ownership of 2,400,000 shares. Fidelity Low-
Priced Stock Fund reported ownership of 2,300,000 shares. FMR Corp., Mr.
Johnson and Ms. Johnson each report no voting power and sole dispositive
power over 2,400,000 shares. The Schedule 13G states that through their
ownership of voting common stock and the execution of a shareholders'
voting agreement, members of the Johnson family may be deemed, under the
Investment Company Act of 1940, to form a controlling group with respect
to FMR Corp. FMR Corp.'s principal business office is located at 82
Devonshire Street, Boston, Massachusetts 02109.
(7) This information is obtained from a Schedule 13G, dated February 8, 2000,
filed with the SEC by Sanford C. Bernstein & Co., Inc. ("Bernstein").
Bernstein reports beneficial ownership of 2,196,780 shares, sole voting
power over 1,796,450 shares, shared voting power over 45,300 shares, sole
dispositive power over 2,196,780 shares and no shared dispositive power.
Bernstein's principal place of business is at 767 Fifth Avenue, New York,
New York 10153.
6
<PAGE> 10
(8) This information is obtained from a Schedule 13G, dated February 10, 2000,
filed with the SEC by Oppenheimer Capital ("Oppenheimer"). Oppenheimer
reports beneficial ownership of 1,995,984 shares and shared voting power
and shared dispositive power over all such shares. As a result of its role
as an investment advisor, Oppenheimer may be deemed to beneficially own
the shares. Oppenheimer has the sole power to dispose of the shares and to
vote the shares under its written guidelines established by its Management
Board. Oppenheimer's principal business office is 1345 Avenue of the
Americas, New York, New York 10105-4800.
(9) Includes 1,035 shares held by the spouse of Andrew M. Caggia. Effective
January 19, 2000, Andrew M. Caggia resigned his position as Senior Vice
President and Chief Financial Officer.
(10) Includes 212,337 shares of Common Stock that may be acquired on the
exercise of options exercisable within 60 days of March 15, 2000.
(11) Includes (i) 487,874 shares of Common Stock that may be acquired on the
exercise of options exercisable within 60 days of March 15, 2000; and (ii)
225 shares held by the spouse of Ronald A. Ostertag.
(12) Includes 51,214 shares of Common Stock that may be acquired on the
exercise of options exercisable within 60 days of March 15, 2000.
(13) Includes 116,057 shares of Common Stock that may be acquired on the
exercise of options exercisable within 60 days of March 15, 2000.
(14) Includes the number of shares which were held by the trustee of the
Savings Plan and were allocated to the individual's respective account
under the Savings Plan as of February 29, 2000 as follows: Andrew M.
Caggia, 2,813 shares; W. John Nelson, 4,453 shares; Ronald A. Ostertag,
4,567 shares; Stephen B. Paige, 1,750 shares and John P. Phillips, 1,360
shares.
(15) Includes 13,333 shares of Common Stock that may be acquired on the
exercise of options exercisable within 60 days of March 15, 2000.
(16) Includes 1,175,884 shares of Common Stock that may be acquired on the
exercise of options exercisable within 60 days of March 15, 2000. Includes
an aggregate of 34,710 shares that were held by the trustees of the
Savings Plan and were allocated to the current officers' respective
accounts under the Savings Plan as of February 29, 2000.
7
<PAGE> 11
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers and
holders of more than 10% of the outstanding Common Stock to file with the
Securities and Exchange Commission reports of ownership and changes in ownership
of Common Stock and other equity securities of the Company on Forms 3, 4 and 5.
The Company undertakes to make such filings on behalf of its directors and
executive officers. Based on written representations of reporting persons and a
review of those reports, the Company believes that during the year ended
December 31, 1999 its executive officers and directors and holders of more than
10% of the outstanding Common Stock complied with all applicable Section 16(a)
filing requirements.
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table sets forth individual compensation information for all
services rendered in all capacities for the last three fiscal years for the
individual who served as Chief Executive Officer during 1999 and the other four
most highly compensated executive officers of the Company who were serving as
executive officers at December 31, 1999 (the "named executive officers").
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION -------------
----------------------------------------------- SECURITIES
NAME AND BASE OTHER ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($)(A) COMPENSATION(B) OPTIONS(#)(C) COMPENSATION($)
- ------------------ ---- --------- ----------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Ronald A. Ostertag..... 1999 $475,108 $ -- $ -- 150,000 $ 6,900(d)
Chairman, President 1998 450,000 143,000 -- 225,000 167,459(e)
and Chief Executive 1997 375,000 215,000 -- 198,859 5,983
Officer
Stephen B. Paige....... 1999 $266,049 $ -- $ -- 40,000 $ 6,275(d)
Senior Vice
President, 1998 250,000 53,000 -- 60,000 6,672
General Counsel and 1997 153,846(f) 75,000 223,256(g) 36,820 738
Secretary
W. John Nelson(k)...... 1999 $258,139 $ -- $118,449(h) 75,000 $ 5,195(d)
President, Asia/ 1998 235,000 52,000 183,707(i) 60,000 94,628(e)
Pacific Operations 1997 223,200 110,000 133,642(h) 99,431 5,324
John P. Phillips....... 1999 $257,954 $ -- $ 83,853(i) 75,000 $ 6,160(d)
President, Europe 1998 223,000 42,000 121,295(j) 60,000 68,723(e)
and North America 1997 197,492 75,029 18,342(h) 48,435 6,148
Operations
Andrew M. Caggia(l).... 1999 $234,815 $ -- $ -- 40,000 $ 5,956(d)
Senior Vice President 1998 223,000 37,000 -- 60,000 69,154(e)
and Chief Financial 1997 198,608 90,616 -- 47,057 5,609
Officer
</TABLE>
- ---------------
(a) No cash bonus awards were paid pursuant to the Annual Incentive Plan in 2000
with respect to performance in 1999. Amounts reported for 1998 reflect
discretionary cash bonus awards paid in 1999 for performance in 1998. No
awards were paid under the Company's Annual Incentive Plan with respect to
performance in 1998. Amounts reported for 1997 reflect cash bonus awards
paid pursuant to the Company's Annual Incentive Plan in 1998 with respect to
performance in 1997.
(b) Unless otherwise indicated, with respect to any individual named in the
above table, the aggregate amount of perquisites and other personal
benefits, securities or property was less than either $50,000 or 10% of the
total annual salary and bonus reported for the named executive officer.
8
<PAGE> 12
(c) Reflects the number of shares of Common Stock underlying options granted in
1999 under the Company's 1998 Long-Term Incentive Plan.
(d) Reflects (i) payment by the Company in 1999 of premiums for group term life
insurance of $2,100; $1,475; $395; $1,156 and $1,360 on behalf of each of
Messrs. Ostertag, Paige, Nelson, Phillips and Caggia, respectively; and
(ii) the matching contribution for 1999 by the Company under the General
Semiconductor Savings Plan in the amount of $4,800 for each of Messrs.
Ostertag, Paige, Nelson, Phillips and Caggia.
(e) Reflects (i) payment by the Company in 1998 of premiums for group term life
insurance of $3,151; $548; $773; $1,004 and $1,623 on behalf of each of
Messrs. Ostertag, Nelson, Caggia and Phillips, respectively; (ii) the
matching contribution for 1998 by the Company under the General
Semiconductor Savings Plan in the amount of $4,308 for Mr. Ostertag and
$4,800 for each of Messrs. Nelson, Caggia and Phillips; and (iii) Stay
Incentive bonuses of $160,000; $89,280; $63,350 and $62,300 to Messrs.
Ostertag, Nelson, Caggia and Phillips, respectively, pursuant to severance
protection and stay agreements with the Company entered into on July 28,
1997 (see "Severance Protection and Other Agreements").
(f) Reflects seven months employment with the Company.
(g) Reflects relocation costs and tax gross-up payment with respect to
relocation costs.
(h) Reflects foreign service premium, cost of living adjustment, and overseas
housing allowance.
(i) Reflects foreign service premium, cost of living adjustment, overseas
housing allowance, and tax equalization payment.
(j) Reflects relocation costs, foreign service premium, cost of living
adjustment, and overseas housing allowance.
(k) Mr. Nelson was appointed Chief Operating Officer effective March 15, 2000.
(l) Mr. Caggia resigned from his position as Senior Vice President and Chief
Financial Officer effective January 19, 2000.
STOCK OPTIONS
The following table sets forth information for the year ended December 31,
1999 with respect to grants to the named executive officers of stock options to
purchase Common Stock. These grants were made pursuant to the Company's 1998
Long-Term Incentive Plan and are reflected in the Summary Compensation Table.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
----------------------------------------------------- VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS EXERCISE/ PRICE APPRECIATION
UNDERLYING GRANTED TO BASE FOR OPTION TERM(C)
OPTIONS EMPLOYEES PRICE EXPIRATION ---------------------
GRANTED(#) IN FISCAL YEAR ($/SH) DATE 5%($) 10%($)
----------- -------------- --------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Ronald A. Ostertag....... 150,000(a) 11.14% $8.6875 10/19/09 $819,528 $2,076,846
Stephen B. Paige......... 40,000(a) 2.97% 8.6875 10/19/09 218,541 553,826
W. John Nelson........... 35,000(b) 2.60% 7.3750 5/25/09 162,333 411,385
40,000(a) 2.97% 8.6875 10/19/09 218,541 553,826
John P. Phillips......... 35,000(b) 2.60% 7.3750 5/25/09 162,333 411,385
40,000(a) 2.97% 8.6875 10/19/09 218,541 553,826
Andrew M. Caggia......... 40,000(a) 2.97% 8.6875 10/19/09 218,541 553,826
</TABLE>
- ---------------
(a) These options will become exercisable with respect to one-third of the
shares covered thereby on October 19, in each of 2000, 2001 and 2002. In the
event of a change in control of the Company, (as defined in the 1998
Long-Term Incentive Plan), all such options shall become immediately and
fully exercisable.
9
<PAGE> 13
(b) These options will become exercisable with respect to one-third of the
shares covered thereby on May 25, in each of 2000, 2001 and 2002. In the
event of a change in control of the Company, (as defined in the 1998
Long-Term Incentive Plan), all such options shall become immediately and
fully exercisable.
(c) Sets forth potential option gains based on assumed annualized rates of stock
price appreciation from the market price at the date of grant of 5% and 10%
(compounded annually) over the full term of the grant with appreciation
determined as of the expiration date. The 5% and 10% assumed rates of
appreciation are mandated by the rules of the Securities and Exchange
Commission, and do not represent the Company's estimate or projection of
future Common Stock prices.
AGGREGATED OPTION EXERCISES AND YEAR-END VALUE
The following table sets forth as of December 31, 1999, for each of the
named executive officers listed (i) the total number of shares received upon
exercise of options during 1999; (ii) the value realized upon such exercise;
(iii) the total number of unexercised options to purchase Common Stock
(exercisable and unexercisable); and (iv) the value of such options which were
in-the-money at December 31, 1999 (based on the difference between the closing
price of Common Stock at December 31, 1999 and the exercise price of the option
on such date).
10
<PAGE> 14
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY STOCK OPTIONS
SHARES FISCAL YEAR-END(#) AT FISCAL YEAR-END($)(A)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#)(B) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- -------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ronald A. Ostertag...... -- -- 432,028 330,846 $1,299,041 $1,703,460
Stephen B. Paige........ -- -- 44,548 92,272 107,089 434,161
W. John Nelson.......... -- -- 190,904 129,766 543,610 708,664
John P. Phillips........ -- -- 98,629 125,761 299,234 698,883
Andrew M. Caggia........ -- -- 118,910 90,761 381,319 460,445
</TABLE>
- ---------------
(a) Based on the difference between the closing price of $14.1875 per share at
December 31, 1999, as reported on the New York Stock Exchange Composite
Tape, and the exercise price of the outstanding stock options on such date.
(b) No options were exercised in 1999 by any of the named executive officers.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors of General
Semiconductor is providing this report to enable stockholders to understand the
goals, policies and procedures relevant to establishing the compensation of the
Company's Chief Executive Officer and other executive officers.
The Compensation Committee of the Board of Directors of the Company is
comprised entirely of non-employee directors. The Compensation Committee
considers and recommends to the Board of Directors the base salary to be paid to
the Chief Executive Officer, determines the base salary for all other executive
officers and others as appropriate, administers and grants awards under the
Company's equity-based incentive plans, administers the bonus plans of the
Company with respect to executive officers, makes recommendations to the Board
with respect to the Company's overall compensation policies and employee benefit
plans, and performs such duties as the Board may from time to time request.
The Company's compensation philosophy is in keeping with the Company's
mission statement and is based on the premise that the achievements of the
Company result from the efforts of employees working toward common goals and
objectives. The Company's compensation program is designed to reward its
executive officers and other employees through a combination of equity-based and
cash compensation and to attract, retain, and motivate highly qualified
employees. The Compensation Committee generally sets compensation levels for
executives based on a review of available data from comparable companies and
relevant survey data. A substantial portion of the Company's total cash
compensation is intended to vary based on the Company's performance and
reinforce the alignment of employee and stockholder interest. Compensation of
executive officers and other management employees, including the Chief Executive
Officer, is comprised of three principal elements: (i) stock ownership; (ii)
base salary; and (iii) annual bonuses, each of which is described below.
STOCK OWNERSHIP
The Compensation Committee believes that executive officers and other
employees, who are in a position to make a substantial contribution to the
long-term success of the Company and to build stockholder value, should have a
significant stake in the Company's ongoing success. Accordingly, one of the
Company's principal methods of motivating executive officers and other employees
is through a broad-based stock option program.
Management recommends to the Compensation Committee those executive
officers and other employees to whom options should be granted and the number of
options to be granted to them. The recommendations
11
<PAGE> 15
are based on a review of the employee's individual performance, position and
level of responsibility in the Company, long-term potential contribution to the
Company and the number of options previously granted to the employee. Neither
management nor the Compensation Committee assigns specific weights to these
factors, although the executive's position and a subjective evaluation of his or
her performance are considered most important. Generally, the number of options
granted to an executive reflects his or her level of responsibility and position
in the Company.
To encourage employees to remain in the employ of the Company, options
generally vest and become exercisable over a three year period and are not
exercisable until one year after the date of grant.
During 1999, the Compensation Committee granted a total of 473,320 options
under the 1998 Long-Term Incentive Plan (the "1998 LTIP") to a total of seven
officers, including a total of 230,000 options to the named executive officers
(other than the Chief Executive Officer). The options were granted at the
closing market price per share of Common Stock on the date of grant, to become
exercisable in one-third increments on each succeeding anniversary of the grant.
BASE SALARY
Base salary is intended to provide annual cash compensation that is
consistent with the executive officer's position and contributions, and is
competitive with comparable companies. Salaries paid to executive officers
(other than the Chief Executive Officer) are based on the Chief Executive
Officer's recommendations to the Compensation Committee, which is responsible
for reviewing and approving or disapproving those recommendations. All executive
officers received base salary increases in 1999 based on their performance.
ANNUAL INCENTIVE BONUS
The Company has an Annual Incentive Plan which is intended to provide a
means of annually rewarding certain employees, including the named executive
officers, based on the performance of the Company and on the achievement of
personal performance objectives. This approach allows management to focus on key
business objectives in the short-term and to support the long-term performance
orientation of stock ownership.
Under the Annual Incentive Plan, if a financial target is exceeded, the
portion of the bonus based on that target is increased above the target level,
but may not exceed 150% of the target level. The maximum award any executive
officer may receive for any performance period is 150% of the participant's base
salary times his or her target award percentage. Awards are earned if the
Company attains or exceeds 90% of the financial targets referred to above.
Bonuses for executive officers are generally a function of the Company's
achievement of its earnings per share target. No awards were earned under the
Annual Incentive Plan in 1999.
CHIEF EXECUTIVE OFFICER COMPENSATION
Ronald A. Ostertag has been Chairman of the Board, President, and Chief
Executive Officer of the Company since July 1997. His 1999 base salary was
increased from an annual rate of $450,000 to an annual rate of $475,500 in
January 1999 based on his performance, and his 1999 target bonus percentage
under the Annual Incentive Plan was 65%. Mr. Ostertag's target bonus percentage
was not changed in 1999. No award was earned under the Annual Incentive Plan in
1999. During 1999, Mr. Ostertag was granted an option under the 1998 LTIP to
purchase 150,000 shares of Common Stock at an exercise price of $8.6875 per
share, the closing market price per share of Common Stock on the date of the
grant, to become exercisable in one-third increments on each succeeding
anniversary of the grant. The rationale for Mr. Ostertag's option grant is
described under the caption "Stock Ownership" above.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(m)
Section 162(m) of the Internal Revenue Code of 1986 as amended (the
"Code"), which was enacted in 1993, generally disallows a federal income tax
deduction to any publicly held corporation for compensation paid in excess of $1
million in any taxable year to the chief executive officer or any of the four
other most highly compensated executive officers who are employed by the Company
on the last day of the taxable year.
12
<PAGE> 16
Section 162(m), however, allows a federal income tax deduction for qualified
"performance-based compensation," the material terms of which are disclosed to
and approved by stockholders.
The Compensation Committee has considered the tax deductibility of
compensation awarded under the 1993 LTIP, the 1998 LTIP and the Annual Incentive
Plan in light of Section 162(m). The Company has structured and intends to
administer the stock option and stock appreciation right portions of the 1993
LTIP and the stock option, stock appreciation right, performance share and
performance unit portions of the 1998 LTIP with the intention that the
compensation thereunder may qualify as "performance-based compensation" and, if
so qualified, would be deductible. No executive officer's compensation in 1999
exceeded $1 million. It is not expected that any executive officer's
compensation will be non-deductible in 2000 by reason of the application of
Section 162(m).
Respectfully submitted,
Compensation Committee
Samuel L. Simmons, Chairman
C. Scott Kulicke
Peter A. Schwartz
13
<PAGE> 17
PENSION PLAN AND SERP
The following table shows, as of December 31, 1999, estimated aggregate
annual benefits payable upon retirement at age 65 under the General
Semiconductor Pension Plan for Salaried and Hourly Paid Non-Union Employees (the
"Pension Plan") and the General Semiconductor Supplemental Executive Retirement
Plan (the "SERP").
PENSION PLAN TABLE
<TABLE>
<CAPTION>
AVERAGE ANNUAL BASIC ESTIMATED ANNUAL BENEFITS UPON RETIREMENT,
REMUNERATION DURING WITH YEARS OF SERVICE INDICATED
SIXTY CONSECUTIVE CALENDAR --------------------------------------------------------
MONTHS PRIOR TO RETIREMENT 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
-------------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$125,000............................... $25,646 $34,194 $42,743 $ 51,291 $ 51,291
150,000............................... 31,271 41,694 52,118 62,541 62,541
175,000............................... 36,896 49,194 61,493 73,791 73,791
200,000............................... 42,521 56,694 70,868 85,041 85,041
225,000............................... 48,146 64,194 80,243 96,291 96,291
250,000............................... 53,771 71,694 89,618 107,541 107,541
300,000............................... 58,271 77,694 97,118 116,541 116,541
</TABLE>
The compensation covered by the Company's Pension Plan and the Company's
SERP is substantially that described under the "Salary" column of the Summary
Compensation Table. However, pursuant to Section 401(a)(17) of the Code, the
maximum amount of compensation that can be considered in computing benefits
under the Company's Pension Plan for 1999 was $160,000. Under the SERP,
compensation for 1999 in excess of $160,000, but not in excess of $270,000 is
considered in computing benefits. Accordingly, the total compensation covered by
the Company's Pension Plan and the Company's SERP for the calendar year 1999 was
$270,000 for Mr. Ostertag; $266,049 for Mr. Paige; $258,139 for Mr. Nelson;
$297,954 for Mr. Phillips; and $234,815 for Mr. Caggia. Credited years of
service under both the Pension Plan and the SERP as of December 31, 1999 are as
follows: Mr. Ostertag, 21 years; Mr. Paige, 2 years; Mr. Nelson, 9 years; Mr.
Phillips, 10 years; and Mr. Caggia, 13 years. Estimated benefits set forth in
the Pension Plan Table were calculated on the basis of a single life annuity and
Social Security covered compensation as in effect during 1999. Such estimated
benefits are not subject to any deduction for Social Security or other offset
amounts.
Pursuant to the terms of the SERP, in the event of a change in control of
the Company (as defined in the SERP), the present value lump sum actuarial
equivalent of each of the named executive officer's supplemental benefit under
the SERP on the date of the change in control will be paid to the individual
immediately in a single cash payment.
14
<PAGE> 18
PERFORMANCE GRAPH
The following graph compares the cumulative total return to stockholders
(stock price appreciation plus reinvested dividends) for General Semiconductor
Common Stock with the cumulative total return on each of two indices: the
Standard & Poor's SmallCap 600 Index ("S&P 600(R)") and the Standard & Poor's
SmallCap Technology Index ("S&P SCT(R)"). The graph assumes:
- An investment of $100 in the Company's Common Stock and in each of the
indices at the closing price on July 28, 1997 (the date on which the
Company's Common Stock began trading on the New York Stock Exchange);
- All dividends were reinvested; and
- The investment was held through December 31, 1999.
The stock price performance shown on the graph below is not necessarily
indicative of future price performance.
ANNUAL PERFORMANCE COMPARISON
<TABLE>
<CAPTION>
GENERAL
SEMICONDUCTOR S&P 600(R) S&P SCT(R)
------------- ---------- ----------
<S> <C> <C> <C>
Jul 97 100 100 100
Dec 97 78 108 92
Dec 98 56 107 94
Dec 99 96 120 155
</TABLE>
15
<PAGE> 19
SEVERANCE PROTECTION AND OTHER AGREEMENTS
The Company has entered into severance protection agreements (the
"Severance Agreements") with the Company's Chief Executive Officer and other
executive officers which were automatically extended for one year on January 1,
1999 and which are automatically extended for one year each January 1 thereafter
unless notification is given to either the Company or the executive.
The Severance Agreements provide severance pay and other benefits in the
event of a termination of employment within 24 months of a Change in Control (as
defined in the Severance Agreements) if such termination is:
(1) by the Company without Cause, other than by reason of the
executive's Disability or death (as such terms are defined in the Severance
Agreements), or
(2) by the executive, other than the Chief Executive Officer, for Good
Reason (as defined in the Severance Agreements), or in the case of the
Chief Executive Officer, for any reason.
Such severance pay will be in an amount equal to two and one-half times the
sum of the executive's base salary and the executive's bonus amount that would
be payable to the executive in the year of termination in the case of the Chief
Executive Officer and two times such sum in the case of all other executive
officers. In addition, the Company will pay the executive all accrued but unpaid
compensation and a pro rata bonus, calculated up to the executive's termination
date. The executive's benefits will be continued for either 30 months, in the
case of the Chief Executive Officer, or 24 months in the case of all other
executive officers. The executive will also receive limited reimbursement for
outplacement, tax and financial planning assistance and reimbursement for
relocation under certain circumstances. If the executive's employment is
terminated without Cause:
(1) within six months prior to a Change in Control; or
(2) prior to the date of a Change in Control; but
(a) at the request of a third party who effectuates a Change in
Control; or
(b) otherwise in connection with, or in anticipation of, a
threatened Change in Control which actually occurs,
such termination shall be deemed to have occurred after the Change in Control.
If the executive's employment is terminated by the Company for Cause or
Disability, by reason of the executive's death or by the executive other than
the Chief Executive Officer other than for Good Reason, the Company shall pay to
the executive his accrued compensation. In addition, in the case of a
termination by the Company for Disability or due to the executive's death, the
executive will receive a pro rata bonus in addition to accrued compensation.
The Severance Agreements provide for a gross-up payment by the Company in
the event that the total payments due the executive under the agreement or
otherwise exceed by $10,000 or more the maximum amount which could be paid
without being subject to the excise tax under Section 4999 of the Code. In such
an event, the Company will pay an additional amount so that the executive is
made whole on an after-tax basis from the effect of the excise tax. In the event
that such payments exceed the aforementioned amount by less than $10,000, the
payments shall be reduced to the extent necessary so that no excise tax is
payable.
Except for the Severance Agreements described above, the Company's SERP
(see "Pension Plan and SERP"), the 1993 LTIP, the 1998 LTIP, and the Annual
Incentive Plan, there are no compensatory plans or arrangements with respect to
any of the named executive officers which are triggered by, or result from, a
change in control of the Company or a change in such executive's
responsibilities or any other termination of such executive's employment
following a change in control.
The following is a brief description of the change in control provisions of
the Company's employee compensation plans.
16
<PAGE> 20
ANNUAL INCENTIVE PLAN
The Annual Incentive Plan is the Company's annual cash bonus incentive plan
for the Chief Executive Officer and certain other key employees. In the event of
a Change in Control of the Company (as defined in the Annual Incentive Plan),
within 60 days thereafter, the Company will pay to each participant in the plan
immediately prior to a Change in Control (regardless of whether such participant
remains in the Company's employ following the Change in Control) a pro rata
portion of his or her bonus award assuming that all performance percentages are
100%.
1998 LTIP AND 1993 LTIP
The 1998 LTIP provides for the granting of stock options, stock
appreciation rights ("SARs"), dividend equivalent rights, restricted stock,
performance units, performance shares, phantom stock, director shares and share
awards to the Company's employees, officers, consultants, advisors and directors
and those of the Company's subsidiaries.
Pursuant to the terms of the 1998 LTIP and subject to an optionee's or
grantee's rights under his or her option or award agreement, in the event of a
Change in Control, as defined in the 1998 LTIP:
(1) all stock options will become immediately and fully exercisable
and, to the extent set forth in the agreement evidencing the grant, the
optionee may elect to receive a cash payment within 60 days of the Change
in Control with respect to all or a portion of any unexercised options;
(2) all SARs will become immediately and fully exercisable and, to the
extent set forth in the agreement evidencing the grant of a SAR unrelated
to an option, the grantee will be entitled to receive a payment of cash or
stock upon exercise of the SAR;
(3) any restrictions on restricted stock shall lapse, unless the
Compensation Committee determined otherwise at the time of the grant;
(4) all or a portion of any performance units will become fully
vested, as determined by the Compensation Committee at the time of grant,
and will entitle the grantee to a cash payment within 10 days of the Change
in Control in an amount as determined by the Compensation Committee at the
time of the grant; and
(5) any restrictions on performance shares shall lapse unless the
Compensation Committee determined otherwise at the time of the grant. In
addition, in the event that an optionee's or grantee's employment, or
service as a director, terminates following a Change in Control, each
option or SAR exercisable as of the date of such termination shall remain
exercisable for the longer of:
(a) the first anniversary of such termination; or
(b) the stated expiration of the term of the option or SAR.
The 1993 LTIP has been terminated with respect to the granting of any new
awards. Stock options and other awards previously granted pursuant to the 1993
LTIP, however, remain outstanding. Under the terms of the 1993 LTIP and subject
to an optionee's rights under his or her option award agreement, in the event of
a Change of Control, as defined in the 1993 LTIP, all stock options granted
under the 1993 LTIP will become immediately and fully exercisable.
17
<PAGE> 21
CERTAIN RELATED PARTY TRANSACTIONS
There were no related party transactions in 1999.
CERTAIN LEGAL PROCEEDINGS
A securities class action is presently pending in the United States
District Court for the Northern District of Illinois, Eastern Division, In Re
General Instrument Corporation Securities Litigation. This action, which
consolidates numerous class action complaints filed in various courts between
October 10 and October 27, 1995, is brought by plaintiffs, on their own behalf
and as representatives of a class of purchasers of GI Common Stock during the
period March 21, 1995 through October 18, 1995. The complaint alleges that,
prior to the Distribution, GI and certain of its officers and directors, as well
as Forstmann Little & Co. and certain related entities, violated the federal
securities laws, namely, Sections 10(b) and 20(a) of the Exchange Act, by
allegedly making false and misleading statements and failing to disclose
material facts about GI's planned shipments in 1995 of its CFT 2200 and
DigiCipher II products. Also pending in the same court, under the same name, is
a derivative action brought on behalf of GI. The derivative action alleges that,
prior to the Distribution, the members of the GI Board of Directors, several of
its officers and Forstmann Little & Co. and related entities had breached their
fiduciary duties by reason of the matter complained of in the class action and
the defendant's alleged use of material non-public information to sell shares of
GI Common Stock for personal gain. In connection with the Distribution, General
Instrument Corporation (formerly "NextLevel Systems, Inc.") agreed to indemnify
the Company with respect to its obligations, if any, relating to these actions.
On January 5, 2000, General Instrument Corporation was acquired by Motorola,
Inc.
INDEPENDENT PUBLIC ACCOUNTANTS
Based on the recommendation of the Audit Committee, the Board of Directors
appointed Deloitte & Touche LLP, independent certified public accountants, to
audit and report on the consolidated financial statements of the Company for the
year ending December 31, 2000 and to perform such other services as may be
required of them. The Board of Directors is asking the stockholders to ratify
and approve this action. Deloitte & Touche LLP has served as the Company's
independent certified public accountants since September 1990. A representative
of Deloitte & Touche LLP will be present at the Annual Meeting and will be
afforded the opportunity, if so desired, to make a statement or respond to
appropriate questions that may come before the Annual Meeting.
Although such ratification is not required by law, the Board of Directors
believes that stockholders should be given the opportunity to express their
views on the subject. While not binding on the Board of Directors, the failure
of the stockholders to ratify the appointment of Deloitte & Touche LLP as the
Company's independent certified public accountants would be considered by the
Board of Directors in determining whether to continue with the services of
Deloitte & Touche LLP.
STOCKHOLDER PROPOSALS FOR THE COMPANY'S 2001 ANNUAL MEETING
Stockholders who intend to present proposal(s) at the 2001 Annual Meeting,
and who wish to have such proposal(s), included in the proxy statement for such
meeting, must submit such proposal(s) in writing by notice delivered or mailed
by first-class United States mail, postage prepaid, to the Secretary, General
Semiconductor, Inc., 10 Melville Park Road, Melville, New York 11747, which
notice must be received no later than December 1, 2000. Such proposals must meet
the requirements set forth in the rules and regulations of the Securities and
Exchange Commission in order to be eligible for inclusion in the Company's proxy
statement for its 2001 Annual Meeting.
In addition, under the Company's By-laws, stockholders must comply with
specified procedures to nominate directors or introduce an item of business at
an annual meeting. Nominations or an item of business to be introduced at an
annual meeting must be submitted in writing and received by the Company
generally not less than 60 days nor more than 90 days in advance of an annual
meeting. To be in proper written form, a
18
<PAGE> 22
stockholder's notice must contain the specific information required by the
Company's By-laws. A copy of the Company's By-laws which describes the advance
notice procedures can be obtained from the Secretary of the Company.
SOLICITATION OF PROXIES
Proxies will be solicited electronically, by mail, telephone, or other
means of communication. Solicitation of proxies also may be made by directors,
officers and regular employees of the Company. The Company has retained
Georgeson Shareholder Communications, Inc. to assist in the solicitation of
proxies from stockholders. Georgeson Shareholder Communications, Inc. will
receive a fee of $5,000 plus reimbursement of certain out-of-pocket expenses.
The Company will reimburse brokerage firms, custodians, nominees and fiduciaries
in accordance with the rules of the New York Stock Exchange, for reasonable
expenses incurred by them in forwarding materials to the beneficial owners of
shares. The cost of soliciting proxies will be borne by the Company.
OTHER MATTERS
The Company knows of no other matter to be brought before the Annual
Meeting. If any other matter requiring a vote of the stockholders should come
before the Annual Meeting, it is the intention of the persons named in the proxy
to vote with respect to any such matter in accordance with their best judgement.
The Company will furnish, without charge, to each person whose proxy is
being solicited upon written request, a copy of its Annual Report on Form 10-K
for the fiscal year ended December 31, 1999, as filed with the Securities and
Exchange Commission (excluding exhibits). Copies of any exhibits thereto also
will be furnished upon the payment of a reasonable duplicating charge. Requests
in writing for copies of any such materials should be directed to General
Semiconductor, Inc., 10 Melville Park Road, Melville, New York 11747, Attention:
Vice President, Investor Relations.
By Order of the Board of Directors,
/s/ Stephen B. Paige
Stephen B. Paige
Secretary
Dated: March 31, 2000
Melville, New York
19
<PAGE> 23
GENERAL SEMICONDUCTOR, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 10, 2000
The undersigned hereby authorizes and directs State Street Bank and Trust
Company, as Special Fiduciary (the "Special Fiduciary") of the General
Semiconductor, Inc. Savings Plan (the "Plan"), to direct Vanguard Fiduciary
Trust, as Trustee (the "Trustee") of the Plan to vote as Proxy for the
undersigned as herein stated at the Annual Meeting of Stockholders of General
Semiconductor, Inc. (the "Company") to be held at the Melville Marriott Hotel,
1350 Old Walt Whitman Road, Melville, New York 11747 on Wednesday, May 10, 2000
at 10:00 a.m., local time, and at any adjournment thereof, all shares of Common
Stock of General Semiconductor, Inc. allocated to the account of the undersigned
under such Plan, on the proposals set forth on the reverse hereof and in
accordance with the discretion of the Special Fiduciary on any other matters
that may properly come before the meeting or any adjournments thereof. The
undersigned hereby acknowledges receipt of the Notice and Proxy Statement, dated
March 31, 2000.
THE SHARES COVERED BY THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION
IS MADE, THE PROXY WILL BE VOTED BY THE TRUSTEE, AS DIRECTED BY THE SPECIAL
FIDUCIARY, IN ITS SOLE DISCRETION IN THE BEST INTEREST OF THE PLAN PARTICIPANTS
AND BENEFICIARIES.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
(IMPORTANT -- TO BE SIGNED AND DATED ON REVERSE SIDE)
SEE REVERSE
SIDE
<PAGE> 24
The Board of Directors recommends that stockholders vote FOR Proposals One and
Two.
PROPOSAL ONE: To elect six directors of the Company to serve until the next
annual meeting of stockholders and until the election and qualification of their
respective successors.
<TABLE>
<S> <C>
FOR [ ] WITHHOLD AUTHORITY [ ]
all nominees listed below to vote for all nominees listed below
(except as marked to the contrary)
</TABLE>
Nominees: C. Scott Kulicke, Ronald A. Ostertag, Ronald Rosenzweig, Peter A.
Schwartz, Samuel L. Simmons and Prof. Gerard T. Wrixon
INSTRUCTION: TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE
THROUGH THE NOMINEE'S NAME.
PROPOSAL TWO: To ratify the appointment of Deloitte & Touche LLP, independent
certified public accountants, as the Company's Auditor for the fiscal year
ending December 31, 2000.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
PLEASE MARK, SIGN, DATE AND RETURN
THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
Please sign as name appears
hereon. If acting as attorney,
executor, administrator, trustee,
guardian, etc., you should so
indicate when signing.
Signature(s): Date: ______________________________
<PAGE> 25
GENERAL SEMICONDUCTOR, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 10, 2000
The undersigned hereby appoints Stephen B. Paige, Robert J. Gange and Michael C.
Smiley, and each or either of them, their attorneys or agents, with full power
of substitution, to vote as Proxy for the undersigned as herein stated at the
Annual Meeting of Stockholders of General Semiconductor, Inc. (the "Company") to
be held at the Melville Marriott Hotel, 1350 Old Walt Whitman Road, Melville,
New York 11747 on Wednesday, May 10, 2000 at 10:00 a.m., local time, and at any
adjournment thereof, according to the number of votes the undersigned would be
entitled to vote if personally present, on the proposals set forth on the
reverse hereof and in accordance with their discretion on any other matters that
may properly come before the meeting or any adjournments thereof. The
undersigned hereby acknowledges receipt of the Notice and Proxy Statement, dated
March 31, 2000. If this proxy is returned without direction being given, this
proxy will be voted FOR Proposals One and Two.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
(IMPORTANT -- TO BE SIGNED AND DATED ON REVERSE SIDE)
SEE REVERSE
SIDE
<PAGE> 26
The Board of Directors recommends that stockholders vote FOR Proposals One and
Two.
PROPOSAL ONE: To elect six directors of the Company to serve until the next
annual meeting of stockholders and until the election and qualification of their
respective successors.
<TABLE>
<S> <C>
FOR [ ] WITHHOLD AUTHORITY [ ]
all nominees listed below to vote for all nominees listed below
(except as marked to the contrary)
</TABLE>
Nominees: C. Scott Kulicke, Ronald A. Ostertag, Ronald Rosenzweig, Peter A.
Schwartz, Samuel L. Simmons and Prof. Gerard T. Wrixon
INSTRUCTION: TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE
THROUGH THE NOMINEE'S NAME.
PROPOSAL TWO: To ratify the appointment of Deloitte & Touche LLP, independent
certified public accountants, as the Company's Auditor for the fiscal year
ending December 31, 2000.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
PLEASE MARK, SIGN, DATE AND RETURN
THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
Please sign as name appears
hereon. If acting as attorney,
executor, administrator, trustee,
guardian, etc., you should so
indicate when signing. If shares
are held jointly, both parties
must sign and date.
Signature(s): Date: ______________________________
Signature(s): Date: ______________________________
