<PAGE> 1
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
LSI LOGIC CORPORATION
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on
which the filing fee is calculated and state how it was
determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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LSI LOGIC CORPORATION
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 4, 2000
To the Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of LSI Logic
Corporation (the "Company"), a Delaware corporation, will be held on May 4, 2000
at 1:00 p.m., local time, at the Company's offices located at 4420 Arrowswest
Drive, Colorado Springs, Colorado 80907, for the following purposes:
1. To elect six directors to serve for the ensuing year and until
their successors are elected.
2. To approve an amendment to the Company's Restated Certificate of
Incorporation to increase the number of authorized shares of common stock
from 450,000,000 shares to 1,300,000,000 shares.
3. To approve an amendment to the Amended and Restated Employee Stock
Purchase Plan to increase the number of shares of common stock reserved for
issuance thereunder by 1,500,000.
4. To approve an amendment to the Company's 1991 Equity Incentive Plan
to increase the number of shares of common stock reserved for issuance
thereunder by 10,000,000.
5. To ratify the appointment of PricewaterhouseCoopers LLP as
independent accountants of the Company for its 2000 fiscal year.
6. To transact such other business as may properly come before the
meeting and any adjournments thereof.
These items of business are more fully described in the Proxy Statement
accompanying this Notice.
Only stockholders of record at the close of business on March 17, 2000 are
entitled to notice of and to vote at the meeting.
All stockholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to mark,
date, sign and return the enclosed proxy card as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Any stockholder attending
the meeting may vote in person even if he or she returned a proxy.
Sincerely,
David E. Sanders
Secretary
Milpitas, California
March (xx), 2000
YOUR VOTE IS IMPORTANT
IN ORDER TO ASSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE REQUESTED TO
MARK, SIGN AND DATE THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE AND RETURN
IT IN THE ENCLOSED ENVELOPE (TO WHICH NO POSTAGE NEED BE AFFIXED IF MAILED IN
THE UNITED STATES).
<PAGE> 3
LSI LOGIC CORPORATION
------------------------
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of LSI Logic Corporation
(referred to as "LSI Logic" or the "Company") for use at the Annual Meeting of
Stockholders to be held on May 4, 2000 at 1:00 p.m., local time, or at any
adjournment(s) thereof, for the purposes set forth in this proxy statement and
in the accompanying Notice of Annual Meeting of Stockholders. The annual meeting
will be held at the LSI Logic offices located at 4420 Arrowswest Drive, Colorado
Springs, Colorado 80907. The address of the Company's principal executive
offices is 1551 McCarthy Boulevard, Milpitas, California 95035, and the
Company's telephone number is (408) 433-8000.
On March 23, 2000 the definitive proxy solicitation materials are intended
to be filed with the Commission and mailed to all stockholders entitled to vote
at the meeting.
RECORD DATE; SHARES OUTSTANDING
Stockholders of record at the close of business on the record date of March
17, 2000 (the "Record Date") are entitled to notice of and to vote at the
meeting. As of the Record Date, (xxx) shares of the Company's common stock,
$0.01 par value, were issued and outstanding. On the Record Date, the closing
price of the Company's common stock on the New York Stock Exchange was $(xx.xx)
per share.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering a written notice of
revocation or a duly executed proxy bearing a later date to the Company or by
attending the meeting and voting in person.
VOTING AND SOLICITATION
On all matters other than the election of directors, each share has one
vote. See "ELECTION OF DIRECTORS -- REQUIRED VOTE." The cost of soliciting
proxies will be borne by the Company. The Company has retained the services of
Georgeson & Company, Inc. to aid in the solicitation of proxies from brokers,
bank nominees and other institutional owners. The Company estimates that it will
pay Georgeson & Company, Inc. a fee not to exceed $14,000 for its services and
will reimburse it for certain out of pocket expenses estimated to be $12,000. In
addition, the Company may reimburse brokerage firms and other persons
representing beneficial owners of shares for their expenses in forwarding
solicitation material to such beneficial owners. Proxies may be solicited by
some of the Company's directors, officers and regular employees, without
additional compensation, personally or by telephone.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
The required quorum for the transaction of business at the annual meeting
is a majority of the votes eligible to be cast by holders of shares of common
stock issued and outstanding on the Record Date. Shares that are voted "FOR,"
"AGAINST," or "WITHHELD FROM" a matter are treated as being present at the
meeting for purposes of establishing a quorum and are also treated as votes cast
at the annual meeting with respect to a matter (the "Votes Cast").
The Company intends to count abstentions for purposes of determining both
the presence or absence of a quorum and the total number of votes cast with
respect to any matter (other than the election of directors). Broker non-votes
will not be considered to be Votes Cast with respect to the particular proposal
on which the
<PAGE> 4
broker has expressly not voted. Accordingly, broker non-votes will not affect
the outcome of the voting on a proposal that requires a majority of the Votes
Cast (such as the approval of a plan amendment). However, with respect to a
proposal that requires a majority of the outstanding shares (such as an
amendment to the certificate of incorporation), a broker non-vote has the same
effect as a vote against the proposal.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Proposals of stockholders of the Company that are intended to be presented
by such stockholders at the Company's 2001 annual meeting and that stockholders
desire to have included in the Company's proxy materials relating to such
meeting must be received by the Company no later than November 24, 2000, which
is 120 calendar days prior to the anniversary of this year's mail date, and must
be in compliance with applicable laws and regulations in order to be considered
for possible inclusion in the proxy statement and form of proxy for that
meeting.
If a stockholder wishes to present a proposal at the Company's annual
meeting in the year 2001 and the proposal is not intended to be included in the
Company's proxy statement relating to that meeting, the stockholder must give
advance notice to the Company prior to the deadline for such meeting determined
in accordance with the Bylaws (the "Bylaw Deadline"), as described below in the
section entitled "Other Matters". If a stockholder gives notice of such a
proposal after the Bylaw Deadline, the stockholder will not be permitted to
present the proposal to the stockholders for a vote at the meeting.
SEC rules also establish a different deadline for submission of stockholder
proposals that are not intended to be included in the Company's proxy statement
with respect to discretionary voting (the "Discretionary Vote Deadline"). The
Discretionary Vote Deadline for the year 2001 annual meeting is February 7, 2001
(45 calendar days prior to the anniversary of the mailing date of this proxy
statement). If a stockholder gives notice of such a proposal after the
Discretionary Vote Deadline, the Company's proxy holders will be allowed to use
their discretionary voting authority to vote against the stockholder proposal
when and if the proposal is raised at the Company's year 2001 annual meeting.
Because the Bylaw Deadline is not capable of being determined until the Company
publicly announces the date for its next annual meeting, it is possible that the
Bylaw Deadline may occur after the Discretionary Vote Deadline. In such a case,
a proposal received after the Discretionary Vote Deadline but before the Bylaw
Deadline would be eligible to be presented at next year's annual meeting and the
Company believes that its proxy holders would be allowed to use the
discretionary authority granted by the proxy card to vote against the proposal
at the meeting without including any disclosure of the proposal in the proxy
statement relating to such meeting.
The Company has not been notified by any stockholder of his or her intent
to present a stockholder proposal from the floor at this year's Annual Meeting.
The enclosed proxy card grants the proxy holders discretionary authority to vote
on any matter properly brought before the Annual Meeting, including any
stockholder proposals received between the date of this proxy statement and the
Bylaw Deadline for this year's Annual Meeting, which is March 30, 2000 (the
seventh day after this proxy statement is mailed).
EFFECT OF STOCK SPLIT
On January 25, 2000, the Company announced a two-for-one common stock
split, effective February 4, 2000, to be distributed on February 16, 2000.
Except for the number of authorized shares discussed in Proposal Two or as
otherwise noted, all references to number of shares, stock option data and
market prices of the Company's common stock in this Proxy have been restated to
reflect the stock split.
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SECURITY OWNERSHIP
SECURITY OWNERSHIP
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of the Record Date, by all
persons known to the Company to be beneficial owners of five percent or more of
the Company's Common Stock, by all directors and executive officers named in the
Summary Compensation Table on page 17 of this proxy statement and by all current
directors and executive officers as a group. All figures below are adjusted for
the two-for-one common stock split effective February 4, 2000.
<TABLE>
<CAPTION>
NUMBER
OF SHARES APPROXIMATE
BENEFICIALLY PERCENTAGE
NAME OWNED OWNED
---- ------------ -----------
<S> <C> <C>
Massachusetts Financial Services Company(1)................. 17,408,250 5.90%
FMR Corp(2)................................................. 15,877,238 5.34%
Wilfred J. Corrigan(3)...................................... 13,229,904 4.38%
T.Z. Chu(4)................................................. 151,400 *
Malcolm R. Currie(5)........................................ 279,000 *
James H. Keyes(6)........................................... 132,500 *
R. Douglas Norby(7)......................................... 304,170 *
Matthew J. O'Rourke(8)...................................... 7,500 *
Joseph M. Zelayeta(9)....................................... 486,500 *
John P. Daane(10)........................................... 397,180 *
John D'Errico(11)........................................... 110,434 *
*
All current directors and executive officers as a group 14
persons(12)............................................... 15,928,036 5.27%
</TABLE>
- ---------------
* Less than 1%
(1) As reported in a Schedule 13G dated February 11, 2000, filed with the
Commission, by the Massachusetts Financial Services Company ("MFS"). As of
December 31, 1999, MFS had sole voting power and sole dispositive power
over all of these shares. The address for MFS is 500 Boylston Street,
Boston, Massachusetts 02116.
(2) As reported in a Schedule 13G dated February 14, 2000, filed with the
Commission, by the Fidelity and Management Reserach Corporation ("FMR"). As
of December 31, 1999, FMR had sole voting power and sole dispositive power
over all of these shares. The address for FMR is 82 Devonshire Street,
Boston, Massachusetts 02109.
(3) Includes options to purchase 2,650,000 shares, which are presently
exercisable or will become exercisable within 60 days of the Record Date.
(4) Includes options to purchase 57,500 shares, which are presently exercisable
or will become exercisable within 60 days of the Record Date.
(5) Includes options to purchase 37,500 shares, which are presently exercisable
or will become exercisable within 60 days of the Record Date.
(6) Includes options to purchase 37,500 shares, which are presently exercisable
or will become exercisable within 60 days of the Record Date.
(7) Includes options to purchase 232,500 shares, which are presently
exercisable or will become exercisable within 60 days of the Record Date.
(8) Includes options to purchase 7,500 shares, which are presently exercisable
or will become exercisable within 60 days of the Record Date.
(9) Includes options to purchase 455,500 shares, which are presently
exercisable or will become exercisable within 60 days of the Record Date.
3
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(10) Includes options to purchase 369,000 shares, which are presently
exercisable or will become exercisable within 60 days of the Record Date.
(11) Includes options to purchase 97,500 shares, which are presently exercisable
or will become exercisable within 60 days of the Record Date.
(12) Includes options to purchase 4,719,500 shares, which are presently
exercisable or will become exercisable within 60 days of the Record Date.
PROPOSAL ONE
ELECTION OF DIRECTORS
NOMINEES
A board of six directors is to be elected at the meeting. Unless otherwise
instructed, the proxy holders will vote the proxies received by them for the
Company's six nominees named below. All nominees are currently directors of the
Company. If any nominee of the Company is unable or declines to serve as a
director at the time of the annual meeting, the proxies will be voted for a
nominee designated by the current Board of Directors to fill the vacancy. If
additional persons are nominated for election as directors, the proxy holders
intend to vote all proxies received by them in accordance with cumulative voting
so as to elect as many of the nominees listed below as possible. In such event,
the proxy holders will determine the specific nominees for whom to vote. The
term of office of each person elected as a director will continue until the next
annual meeting or until his successor has been elected and qualified.
The names of the nominees for election to the Board of Directors, and
certain information about them, are set forth below.
<TABLE>
<CAPTION>
DIRECTOR
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION SINCE
--------------- --- -------------------- --------
<S> <C> <C> <C>
Wilfred J. Corrigan... 62 Chairman of the Board of Directors and Chief 1981
Executive Officer of the Company
T.Z. Chu.............. 65 Retired President of Hoefer Pharmacia Biotech, Inc. 1992
Malcolm R. Currie..... 73 Chief Executive Officer, Currie Technologies, Inc. 1992
James H. Keyes........ 59 Chairman and Chief Executive Officer of Johnson 1983
Controls, Inc.
R. Douglas Norby...... 64 Executive Vice President and Chief Financial Officer 1993
of the Company
Matthew J. O'Rourke... 61 Consultant; Retired Partner, Price Waterhouse LLP 1999
</TABLE>
There are no family relationships between or among any directors or
executive officers of the Company.
Mr. Corrigan, a founder of the Company, has served as Chief Executive
Officer and a director of the Company since our organization in January 1981.
Mr. Corrigan also serves on the boards of directors of several privately held
corporations.
Mr. Chu served as President of Hoefer Pharmacia Biotech, Inc., a
biotechnology company, from March 1995 until his retirement in February 1997.
From August 1993 until March 1995, Mr. Chu served as President and Chief
Executive Officer of Hoefer Scientific Instruments, a manufacturer of scientific
instruments.
Dr. Currie has served as Chief Executive Officer of Currie Technologies,
Inc., a manufacturer of electric propulsion systems for bicycles and other light
vehicles, since February 1997. Dr. Currie served as Chairman and Chief Executive
Officer of Hughes Aircraft Company from March 1988 until his retirement in July
1992. He presently serves on the Board of Directors for Investment Company of
America, ENOVA Systems, Inc. and Regal One Corp., and as Chairman of the Board
of Trustees of the University of Southern California.
4
<PAGE> 7
Mr. Keyes has served as Chairman and Chief Executive Officer of Johnson
Controls, Inc., an automotive systems and facility management and control
company, since January 1993. Mr. Keyes also serves on the boards of directors of
Pitney Bowes Inc. and the Chicago Federal Reserve Board.
Mr. Norby has served as Executive Vice President and Chief Financial
Officer of the Company since November 1996. From September 1993 until November
1996, Mr. Norby served as Senior Vice President and Chief Financial Officer of
Mentor Graphics Corporation, an electronic design automation company. Mr. Norby
is also on the Board of Directors of Alexion Pharmaceuticals, Inc.
Mr. O'Rourke was a partner with the accounting firm Price Waterhouse LLP
from 1972 until his retirement in June 1996. Prior to his retirement, he served
as Managing Partner at Price Waterhouse's New York National Office from 1994 to
1996 and as Managing Partner for Northern California from 1988 to 1994. Since
his retirement, Mr. O'Rourke has been engaged as an independent business
consultant. Mr. O'Rourke is also member of the Board of Directors of Read-Rite
Corporation.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of nine meetings during
the fiscal year ended December 31, 1999. The Board of Directors has an Audit
Committee and a Compensation Committee, both of which consist solely of
non-employee directors. The Board of Directors does not have a nominating
committee or a committee performing the functions of a nominating committee.
The Audit Committee, which consists of Dr. Currie (who serves as its
chairman), Mr. Chu, Mr. Keyes and Mr. O'Rourke, held three meetings during the
last fiscal year. The Audit Committee recommends engagement of the Company's
independent accountants, and is primarily responsible for approving the services
performed by the Company's independent accountants and for reviewing and
evaluating the Company's accounting principles and its system of internal
accounting controls.
The Compensation Committee, which consists of Mr. Keyes (who serves as its
chairman), Mr. Chu, Dr. Currie and Mr. O'Rourke, held three meetings during the
last fiscal year. The Compensation Committee reviews and approves the Company's
executive compensation policy and makes recommendations concerning the Company's
employee benefit plans.
During the fiscal year ended December 31, 1999, all incumbent directors
attended at least 75% of the aggregate number of meetings of the Board of
Directors and meetings of the committees of the Board on which they served.
COMPENSATION OF DIRECTORS
Members of the Board of Directors who are not employees of the Company
receive an annual fee of $25,000 paid on a prorated basis and $1,500 for each
meeting they attend, plus reimbursement of expenses for attendance at Board and
committee meetings. The Company's 1995 Director Stock Option Plan, as adopted by
the Board of Directors and approved by the stockholders, provides for a grant of
non-statutory stock options to non-employee directors of the Company. Each
non-employee director is granted an initial option to purchase 15,000 shares of
common stock on the date on which he or she first becomes a director. In
addition, on April 1 of each year, each non-employee director is automatically
granted a subsequent option to purchase 12,500 shares of common stock of the
Company, if on the date of grant he or she has served on the Board of Directors
for at least six months. The vesting schedule for initial options granted under
the 1995 Director Stock Option Plan is set at 25% on each of the first four
anniversaries of the grant. Subsequent option grants become exercisable in full
six months after the date of grant. Options may be exercised only while the
optionee is a director of the Company, within 12 months after death or within
three months after the optionee ceases to serve as a director of the Company,
but in no event after the ten-year term of the option has expired. As of the
Record Date, a total of 1,000,000 shares have been reserved for issuance under
the 1995 Director Stock Option Plan, of which 225,000 shares are subject to
outstanding options, no shares have been issued upon exercise of options, and
775,000 shares remain available for grant. During fiscal 1999, giving effect to
the two-for-one stock split effective February 4, 2000, an option to purchase
25,000 shares was granted to each of
5
<PAGE> 8
Directors Currie, Keyes and Chu having an exercise price of $16.125 per share;
and an option to purchase 30,000 shares was granted to Director O'Rourke, having
an exercise price of $18.50 per share.
REQUIRED VOTE
Directors shall be elected by a plurality. The six nominees for director
receiving the highest number of affirmative votes of the shares entitled to be
voted for them shall be elected as directors. Votes against, votes withheld and
broker non-votes have no legal effect on the election of directors due to the
fact that such elections are by a plurality.
Every stockholder voting in the election of directors may cumulate such
stockholder's votes and give one candidate a number of votes equal to the number
of directors to be elected (six) multiplied by the number of votes to which the
stockholder's shares are entitled, or may distribute the stockholder's votes on
the same principle among as many candidates as the stockholder thinks fit,
provided that votes cannot be cast for more than six candidates. However, no
stockholder shall be entitled to cumulate votes for a candidate unless the
candidate's name has been properly placed in nomination in accordance with the
Company's by-laws prior to the meeting, and the stockholder, or any other
stockholder, has given notice at the meeting prior to the voting of the
stockholders' intention to cumulate votes. The proxy holders will exercise
discretionary authority to cumulate votes in the event that additional persons
are nominated for election of directors.
MANAGEMENT RECOMMENDS A VOTE FOR EACH OF THE NOMINEES LISTED ABOVE.
PROPOSAL TWO
AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO INCREASE
THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
The Restated Certificate of Incorporation of the Company, as currently in
effect, provides that the authorized capital stock of the Company shall consist
of 450,000,000 shares of Common Stock, $0.01 par value, and 2,000,000 shares of
Preferred Stock. The proposed amendment would increase the number of shares of
Common Stock authorized for issuance by 850,000,000 to a total of 1,300,000,000
shares. The proposed amendment is intended to provide the Company flexibility to
meet its future needs for unreserved Common Stock.
The Company's number of authorized shares of Common Stock, currently at
450,000,000, was increased to that number in 1997 from 250,000,000 by approval
of the Company's stockholders. Since the increase in the Company's authorized
capital stock in 1997, the Company has issued a total of (xxx) additional
shares, adjusted for the two-for-one stock split effective as of February 4, and
the issuance of new shares pursuant to various capital transactions, including
corporate mergers and employee benefit plan transactions. On the Record Date,
the Company's market capitalization was approximately $(xxx).
As of the Record Date, (xxx) shares of the Common Stock were issued and
outstanding; (xxx) shares were reserved for issuance upon conversion of certain
convertible notes; and (xxx) shares were reserved under the Company's employee
stock benefit plans, leaving only (xxx) shares of Common Stock available for
future issuance. The number of shares remaining available is not considered
adequate for the Company's future possible requirements.
Although the Company has no firm plans to use the additional authorized
shares of Common Stock, the Company's Board of Directors believes that it is
prudent to increase the number of authorized shares available for issuance in
connection with possible future actions. Such actions may include, but are not
limited to stock dividends -- if the Board of Directors, for example, were to
determine that it would be desirable to facilitate a broader base of
shareholders -- financing, corporate mergers, acquisitions of property, employee
benefit plans and for other general corporate purposes. For example, in 1999 and
2000, the Company raised approximately $345,000,000 and $500,000,000,
respectively, through the issuance of notes convertible into the Company's
Common Stock (collectively "Notes"). Based on the current market price of the
Company's Common Stock, the Company anticipates that the Notes will be fully
converted into the Company's Common Stock in
6
<PAGE> 9
accordance with their terms. Further, the semiconductor industry is
characterized by constant technological change, rapid product obsolescence, and
evolving industry standards. To remain competitive, the Company must continue to
acquire new technology through acquisitions and to make significant investments
in new facilities and capital equipment, for which the remaining number of
unreserved shares would likely be inadequate. Having such additional authorized
Common Stock available for issuance in the future would allow the Board of
Directors to issue shares of Common Stock without the delay and expense
associated with seeking stockholder approval. Elimination of such delays and
expense occasioned by the necessity of obtaining stockholder approval will
better enable the Company, among other things, to engage in financing
transactions and acquisitions as well as to take advantage of changing market
and financial conditions on a more competitive basis as determined by the Board
of Directors.
POSSIBLE EFFECTS OF THE AMENDMENT
If the proposed amendment is approved, the Board of Directors may cause the
issuance of additional shares of Common Stock without further vote of
stockholders of the Company, except as provided under Delaware corporate law or
under the rules of any national securities exchange on which shares of Common
Stock of the Company are then listed. Current holders of Common Stock have no
preemptive or like rights, which means that current stockholders do not have a
right to purchase any new issue of capital stock of the Company in order to
maintain their proportionate ownership thereof. Therefore, to the extent that
the additional authorized shares are issued in the future, they will decrease
the existing stockholders' percentage of equity ownership and, depending on the
price at which these are issued, could be dilutive to the existing stockholders.
An effect of the increase in the number of authorized shares of Common
Stock may be to deter or prevent a change in control of the Company without
further action by stockholders. In November 1988, the Board of Directors
established a Shareholder Rights Plan ("Rights Plan") and issued under the
Rights Plan as a dividend to the holders of Common Stock, rights to purchase
Series A Participating Preferred Stock. In the event the rights become
exercisable, the Company might have to issue a substantial number of new shares
of Common Stock in order to effectuate the Rights Plan. Although under the
Rights Plan the Company is not now obligated to reserve shares of Common Stock
for issuance thereunder, a failure to have sufficient authorized shares
available could result in a delay or failure of implementation of all aspects of
the Rights Plan. The Agreement was amended and restated in November 1998 to
extend its term until December 15, 2008. A copy of the Amended and Restated
Rights Agreement was filed with the Securities and Exchange Commission on
December 8, 1998 as an exhibit to the Registration Statement on Form 8-A
pursuant to Section 12(a) of the Securities Exchange Act of 1934. The foregoing
brief description of the Rights Plan is qualified in its entirety by reference
to the text of the Rights Agreement.
The Board of Directors is not currently aware of any attempt to take over
or acquire the Company. While it may be deemed to have potential anti-takeover
effects, the proposed amendment to increase the authorized Common Stock is not
prompted by any specific effort or takeover threat currently perceived by
management. Moreover, management does not intend to propose additional
anti-takeover measures in the foreseeable future.
REQUIRED VOTE
The affirmative vote of a majority of the shares of Common Stock
outstanding on the Record Date will be required to approve PROPOSAL TWO. If the
proposed amendment to the Restated Certificate of Incorporation is approved by
the stockholders, such amendment will become effective upon filing an amendment
to the Restated Certificate of Incorporation with the Delaware Secretary of
State. If the amendment is authorized and the Certificate of Amendment to the
Restated Certificate of Incorporation is filed, the text of the first paragraph
of Article 4 of the Company's Restated Certificate of Incorporation will be
amended to read as follows:
"This corporation is authorized to issue two classes of shares designated,
respectively, "Common Stock" and "Preferred Stock." The total number of shares
that this corporation shall have authority to issue is one
7
<PAGE> 10
billion three hundred and two million (1,302,000,000), of which one billion
three hundred million (1,300,000,000) shall be Common Stock with a par value of
$0.01 per share and two million (2,000,000) shall be Preferred Stock with a par
value of $0.01 per share."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO
THE COMPANY'S RESTATED CERTIFICATE OF INCORPORATION.
PROPOSAL THREE
AMENDMENT TO THE EMPLOYEE STOCK PURCHASE PLAN TO INCREASE THE
NUMBER OF SHARES RESERVED FOR ISSUANCE THEREUNDER
GENERAL
The Amended and Restated Employee Stock Purchase Plan ("ESPP") was adopted
by the Board of Directors and approved by the stockholders in April 1983. A
total of 225,000 shares of common stock were initially reserved for issuance
thereunder. From time to time since April 1983, the Board of Directors and
stockholders have approved amendments to the ESPP to increase the number of
shares reserved for issuance thereunder, and to change certain other provisions.
Giving effect to the two-for-one stock split effective February 4, 2000, as of
the Record Date, of the 36,437,740 shares reserved for issuance under the ESPP
(without giving effect to this amendment), 32,992,672 shares had been issued.
The Company estimates that it will have utilized a substantial portion of the
3,445,068 remaining available shares by the end of the exercise period ending
May 14, 2000, leaving an inadequate number of shares available for issuance
thereafter.
The Board of Directors believes that it is in the best interest of the
Company to provide employees with an opportunity to purchase Common Stock
through payroll deductions. Employees have rated the ESPP as their most valuable
benefit. As of the Record Date, over 69% of the eligible employees are
participating in the ESPP.
PROPOSED AMENDMENT TO THE ESPP
On February 17, 2000, the Board of Directors approved an amendment to the
ESPP to increase the number of shares reserved under the ESPP by 1,500,000 to a
total of 37,937,740 shares.
Giving effect to the two-for-one stock split effective February 4, 2000,
the total number of shares of common stock reserved for issuance under the ESPP
is 36,437,740, of which 3,445,068 are currently available for issuance. These
are not enough shares to meet anticipated demand because participation in the
ESPP has increased. Therefore, stockholder approval is sought to increase the
number of shares of common stock reserved for issuance under the ESPP by
1,500,000. If the proposed amendment is approved, the total number of shares of
common stock reserved for issuance under the ESPP will be 37,937,740 on a
split-adjusted basis. This amount includes the 2,614,948 shares, adjusted for
the two-for-one stock split effective February 4, 2000, automatically added to
the ESPP on January 1, 2000 ("Annual Replenishment"), which was previously
approved by the stockholders. The Annual Replenishment consists of 1.15% of the
Company's Common Stock issued and outstanding at fiscal year end less the number
of shares available for future option grants under the ESPP at fiscal year end.
The number of shares of common stock reserved for issuance under the ESPP, as
amended by this proposal, together with the Annual Replenishment, is anticipated
to be sufficient to meet the Company's requirements for the next 12 months if
the Company continues to issue shares under the ESPP at rates approximating
historical levels.
REQUIRED VOTE
The affirmative vote of a majority of the Votes Cast at the annual meeting
will be required to approve PROPOSAL THREE.
8
<PAGE> 11
SUMMARY OF THE ESPP
The essential features of the ESPP are outlined below.
Purpose
The purpose of the ESPP is to provide employees of the Company and of its
majority-owned subsidiaries designated by the Board of Directors who participate
in the ESPP with an opportunity to purchase common stock of the Company through
payroll deductions.
Administration
The ESPP is currently being administered by the Board of Directors,
although that body may appoint a committee to perform that function. All
questions of interpretation or application of the ESPP are determined in the
sole discretion of the Board of Directors or its committee, and its decisions
are final and binding upon all participants. Members of the Board of Directors
who are eligible employees are permitted to participate in the ESPP but may not
vote on any matter affecting the administration of the ESPP or the grant of any
option pursuant to the ESPP. No member of the Board of Directors who is eligible
to participate in the ESPP may be a member of the committee appointed to
administer the ESPP. No charges for administrative or other costs may be made
against the payroll deductions of a participant in the ESPP. Members of the
Board of Directors receive no additional compensation for their services in
connection with the administration of the ESPP.
Eligibility
Any person who is employed by the Company (or by any of its majority-owned
subsidiaries designated by the Board) for at least 20 hours per week and more
than five months in a calendar year is eligible to participate in the ESPP. As
of the Record Date, approximately 6,300 employees were eligible to participate
in the ESPP and approximately 4,400 of those were participating.
Offering Dates
The ESPP is currently implemented by consecutive overlapping 12-month
offering periods. The offering periods begin May 15 and November 15 of each
year. Each offering period is composed of two six-month purchase periods.
However, the offering period that began on October 1, 1998 is a 24-month period
that will end on September 29, 2000 and consists of four six-month purchase
periods, since it commenced prior to the amendments to the ESPP that were
approved by the stockholders in 1999. The Board of Directors has the power to
alter the duration of the offering periods without stockholder approval if such
change is announced prior to the scheduled beginning of the first offering
period to be affected.
Eligible employees become participants in the ESPP by delivering a
subscription agreement to the Company authorizing payroll deductions. An
employee who becomes eligible to participate in the ESPP after the commencement
of an offering period may not participate in the ESPP until the commencement of
the next offering period.
Purchase Price
The purchase price per share at which shares are purchased under the ESPP
is the lower of (a) 85% of the fair market value of a share of Company common
stock on the enrollment date for an offering period or (b) 85% of the fair
market value of a share of common stock on the applicable purchase date within
that offering period. If shares are to be added to the ESPP at a time when the
fair market value of a share of common stock is higher than it was on the
enrollment date, then the Board of Directors may at its discretion set the
purchase price for the added shares at the lesser of 85% of the fair market
value of a share of common stock on the date such shares are authorized or 85%
of the fair market value of shares on the applicable purchase date within the
offering period. The fair market value of the common stock on a given date is
determined by the Board of Directors based upon the closing sales price as
reported by the New York Stock Exchange on such date.
9
<PAGE> 12
Payment of Purchase Price; Payroll Deductions
ESPP shares are purchased with funds that are accumulated through payroll
deductions during the offering period. The deductions may not exceed 10% of a
participant's eligible compensation, which is defined in the ESPP to include the
regular straight time salary as of each payday during the offering period,
exclusive of any payments for overtime, bonuses, commissions or incentive
compensation. A participant may decrease the rate of payroll deductions at any
time in whole percentage point increments, and such decreases are immediately
effective. Increases in the rate of payroll deductions may be made only at the
start of a purchase period.
All payroll deductions are credited to the participant's account under the
ESPP; no interest accrues on the payroll deductions. All payroll deductions
received or held by the Company may be used by the Company for any corporate
purpose and such payroll deductions need not be segregated.
Purchase of Stock; Exercise of Option
At the beginning of each offering period, each participating employee is in
effect granted an option to purchase shares of common stock. The maximum number
of shares placed under option to a participant in an offering period is
determined by dividing the participant's accumulated payroll deductions during
the purchase period by 85% of the fair market value of the common stock at the
beginning of the offering period or on the applicable purchase date, whichever
is lower. However, the number of shares placed under option may not exceed 200%
of the number of shares determined by dividing 10% of the employee's
compensation to be accumulated over the offering period (determined as of the
enrollment date) by 85% of the fair market value of a share of the Company's
common stock on the enrollment date. Under no circumstances may an employee make
aggregate purchases of stock of the Company and its majority-owned subsidiaries
under the ESPP and any other employee stock purchase plans qualified as such
under Section 423(b) of the Internal Revenue Code in excess of $25,000
(determined using the fair market value of the shares at the time the option is
granted) during any calendar year.
Withdrawal
A participant may terminate his or her participation in the ESPP at any
time by signing and delivering to the Company a notice of withdrawal from the
ESPP. All of the participant's accumulated payroll deductions will be paid to
the participant promptly after receipt of his or her notice of withdrawal and
his or her participation in the current offering period will be automatically
terminated. No resumption of payroll deductions will occur on behalf of such
participant unless such participant re-enrolls in the ESPP by delivering a new
subscription agreement to the Company during the applicable open enrollment
period preceding the commencement of a subsequent offering period. A
participant's withdrawal from the ESPP during an offering period does not have
any effect upon such participant's eligibility to participate in subsequent
offering periods under the ESPP.
Termination of Employment
Termination of a participant's employment for any reason, including
retirement or death, cancels his or her participation in the ESPP immediately.
In such event, the payroll deductions credited to the participant's account will
be returned to such participant or, in the case of death, to the person or
persons designated in the subscription agreement. In the case of death of the
participant, the beneficiary may elect to have funds remain in the participant's
account until the next purchase date and the shares purchased with the funds
will be forwarded to the beneficiary. A participant who receives payment in lieu
of notice of termination of employment shall be treated as continuing to be an
employee during the period in which the participant is subject to such payment
in lieu of notice.
Capital Changes
If any change is made in the capitalization of the Company, such as stock
splits or stock dividends, which results in an increase or decrease in the
number of shares of common stock outstanding without receipt of
10
<PAGE> 13
consideration by the Company, appropriate adjustments will be made by the
Company in the number of shares subject to purchase and in the purchase price
per share, subject to any required action by the stockholders of the Company. In
the event of the proposed dissolution or liquidation of the Company, the
offering period then in progress will terminate immediately, unless otherwise
provided by the Board. In the event of the proposed sale of all or substantially
all of the assets of the Company or the merger of the Company with or into
another corporation, each outstanding option shall be assumed or an equivalent
option shall be substituted by the successor corporation, unless the Board
determines, in its discretion, to accelerate the exercisability of all
outstanding options under the ESPP. The Board may also make provisions for
adjusting the number of shares subject to the ESPP and the purchase price per
share if the Company effects one or more reorganizations, recapitalizations,
rights offerings or other increases or reductions of shares of the Company's
outstanding common stock.
Amendment and Termination of the ESPP
The Board of Directors may at any time amend or terminate the ESPP. An
offering period may be terminated by the Board of Directors on any purchase date
if it determines that the termination of the offering period or the ESPP is in
the best interests of the Company and its stockholders. No amendment may be made
to the ESPP without prior approval of the stockholders of the Company where such
approval is necessary to comply with Section 423 of the Internal Revenue Code
(i.e., if such amendment would increase the number of shares reserved under the
ESPP or modify the eligibility requirements).
Without stockholder consent and without regard to whether any participant
rights may be considered to have been "adversely affected," the Board of
Directors shall be entitled to change the offering periods, limit the frequency
and/or number of changes in the amount withheld during an offering period,
establish the exchange ratio applicable to amounts withheld in a currency other
than U.S. dollars, permit payroll withholding in excess of the amount designated
by a participant in order to adjust for delays or mistakes in the Company's
processing of properly completed withholding elections, establish reasonable
waiting and adjustment periods and/or accounting and crediting procedures to
ensure that amounts applied toward the purchase of common stock for each
participant properly correspond with amounts withheld from the participant's
compensation and establish such other limitations or procedures consistent with
the ESPP as the Board of Directors determines in its sole discretion to be
advisable.
In the event the Board of Directors determines that the ongoing operation
of the ESPP may result in unfavorable financial accounting consequences, the
Board of Directors may, in its discretion, modify or amend the ESPP to reduce or
eliminate such accounting consequences, including, but not limited to, altering
the purchase price for any offering period, including an offering period
underway at the time of the change; shortening any offering period so that
offering period ends on a new purchase date, including an offering period
underway at the time; and allocating shares.
Certain United States Federal Income Tax Information
The ESPP, and the right of participants to make purchases thereunder, is
intended to qualify under the provisions of Sections 421 and 423 of the Internal
Revenue Code. Under these provisions, no income will be taxable to a participant
at the time of grant of the option or purchase of shares. Upon disposition of
the shares, the participant will generally be subject to tax and the amount of
the tax will depend upon the holding period. If the shares have been held by the
participant for more than two years after the offering date and more than one
year after the purchase date, the lesser of: (a) the excess of the fair market
value of the shares at the time of such disposition over the purchase price, or
(b) the excess of the fair market value of the shares at the time the option was
granted over the purchase price (which purchase price will be computed as of the
grant date) will be treated as ordinary income, and any further gain will be
treated as long-term capital gain. If the shares are disposed of before the
expiration of these holding periods, the excess of the fair market value of the
shares on the purchase date over the purchase price will be treated as ordinary
income, and any further gain or any loss on such disposition will be long-term
or short-term capital gain or loss, depending on the holding period. Different
rules may apply with respect to participants subject to Section 16(b) of the
Securities Exchange Act of 1934, as amended. The Company is not entitled to a
deduction for amounts taxed as ordinary income or
11
<PAGE> 14
capital gain to a participant, except to the extent of ordinary income reported
by participants upon disposition of shares prior to the expiration of the two
holding periods described above.
The foregoing is only a summary of the effect of federal income taxation
upon the participant and the Company with respect to the purchase of shares
under the ESPP, is not intended to be complete, and does not discuss the income
tax laws of any municipality, state or foreign country.
PARTICIPATION IN THE ESPP
Participation in the ESPP is voluntary and dependent on each eligible
employee's election to participate and his or her determination as to the level
of payroll deductions. Accordingly, future purchases under the ESPP are not
determinable. Non-employee directors are not eligible to participate in the
ESPP. No purchases have been made under the ESPP since its amendment by the
Board. However, purchases were made under the ESPP prior to such amendment. The
following table sets forth certain information regarding shares purchased under
the ESPP during the last fiscal year and the payroll deductions accumulated at
the end of the last fiscal year in accounts under the ESPP for each of the Named
Executive Officers, for all current executive officers as a group and for all
other employees who participated in the ESPP as a group:
AMENDED PLAN BENEFITS
EMPLOYEE STOCK PURCHASE PLAN
<TABLE>
<CAPTION>
PAYROLL DEDUCTIONS
NAME OF INDIVIDUAL AND POSITION NUMBER OF SHARES AS OF
OR IDENTITY OF GROUP PURCHASED(#) DOLLAR VALUE($)(1) FISCAL YEAR END
------------------------------- ---------------- ------------------ ------------------
<S> <C> <C> <C>
Wilfred J. Corrigan....................... 0 N/A N/A
Chairman and Chief Executive Officer
Joseph M. Zelayeta........................ 0 N/A N/A
Executive Vice President, Worldwide
Operations
John P. Daane............................. 6,024 121,575.92 21,250.00
Executive Vice President, Communications
Products Group
R. Douglas Norby.......................... 6,024 121,575.92 21,250.00
Executive Vice President and Chief
Financial Officer
John D'Errico............................. 5,810 120,132.77 21,250.00
Executive Vice President, Storage
Components and Colorado Operations
All current executive officers as a
group................................... 37,498 772,235.22 (xxx)
All other employees as a group............ 3,885,016 (xxx) (xxx)
</TABLE>
- ---------------
(1) Market value of shares on date of purchase, minus the purchase price under
the ESPP.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE AMENDED
AND RESTATED EMPLOYEE STOCK PURCHASE PLAN. THE EFFECT OF AN ABSTENTION IS THE
SAME AS THAT OF A VOTE AGAINST THE AMENDED AND RESTATED EMPLOYEE STOCK PURCHASE
PLAN.
PROPOSAL FOUR
AMENDMENT TO THE 1991 EQUITY INCENTIVE PLAN TO INCREASE
THE NUMBER OF SHARES RESERVED FOR ISSUANCE THEREUNDER
GENERAL
The 1991 Equity Incentive Plan ("EIP"), was adopted by the Board of
Directors and approved by the stockholders in May 1991, and a total of 2,000,000
shares of common stock were initially reserved for issuance
12
<PAGE> 15
thereunder. From time to time since May 1991, the Board of Directors and
stockholders have approved amendments to the 1991 EIP to increase the number of
shares reserved for issuance thereunder to an aggregate of 62,500,000 shares
(split adjusted) and to make certain additional amendments.
Giving effect to the two-for-one stock split effective February 4, 2000 but
not to the proposed amendment, as of the Record Date, (xxx) shares had been
issued pursuant to the exercise of options granted under the 1991 EIP and
options to purchase (xxx) shares were outstanding, leaving only (xxx) shares
available for future grants under the 1991 EIP.
PROPOSED AMENDMENT TO INCREASE SHARES RESERVED
Stockholder approval is hereby sought for an amendment approved by the
Board of Directors on February 17, 2000, increasing the number of shares of
common stock reserved for issuance under the 1991 EIP by 10,000,000 shares. If
the proposed amendment is approved, the total number of shares of common stock
reserved for issuance under the 1991 EIP will be 72,500,000, on a split-adjusted
basis.
REQUIRED VOTE
The affirmative vote of a majority of the Votes Cast at the annual meeting
will be required to approve PROPOSAL FOUR.
SUMMARY OF THE 1991 EQUITY INCENTIVE PLAN
The essential features of the 1991 EIP are outlined below.
Purpose
The purpose of the 1991 EIP is to enable the Company to provide an
incentive to eligible employees and consultants whose present and potential
contributions are important to the continued success of the Company, to afford
them an opportunity to acquire a proprietary interest in the Company and to
enable the Company to hire and retain the best available talent for the
successful conduct of its business.
The Board of Directors believes that the continued growth of the Company
will depend upon its ability to attract, hire and retain qualified employees.
The 1991 EIP is an important factor in attracting and retaining the high caliber
employees and consultants essential to the success of the Company and in
aligning their long-term interests with those of the stockholders. Competition
for highly qualified individuals in the expanding high technology industry is
intense, particularly in the current environment of very low unemployment among
the limited pool of candidates possessing the specialized skills required in
areas in which the Company competes. Employers with which the Company competes
for such highly qualified individuals, including those companies that anticipate
an initial public offering, frequently offer grants of substantial numbers of
stock options as part of a comprehensive compensation package. Accordingly,
management believes that to successfully attract the best candidates and retain
key employees, the Company must be in a position to offer a competitive stock
option incentive program as an essential component of its compensation packages.
The Board of Directors further believes that stock options serve an
important role in motivating recipients to contribute to the Company's continued
growth and profitability. The proposed amendment to the 1991 EIP is intended to
ensure that there will be a reasonable number of shares available to meet these
needs for the coming year.
Stock Options
The 1991 EIP permits the granting both of stock options that either are
intended to qualify as Incentive Stock Options, or ISOs, and of stock options
that are not intended to so qualify, known as Nonstatutory Stock Options or
NSOs.
The exercise price for each option may not be less than 100% of the fair
market value of a share of common stock on the date such option is granted (or
not less than 110% of such fair market value in the case
13
<PAGE> 16
of grants of ISOs to 10% stockholders). The exercise price of granted options
may not be reduced without stockholder approval. No employee may be granted, in
any fiscal year, options to purchase more than 750,000 shares.
The Board of Directors fixes the term of each option at the time of the
grant, generally at ten years from the date of grant. (In the case of ISOs, the
term may not exceed five years in the case of grants to a 10% stockholder and
ten years for others.) The Board of Directors also determines the vesting
schedule for each option grant, which is generally 25% on each of the first four
anniversaries of the date of grant.
The exercise price of options granted under the 1991 EIP, including
applicable tax withholding, if any, must be paid in full at the time of
exercise. The method of payment is determined by the Board of Directors or its
designated committee administering the 1991 EIP and may consist of cash, check,
promissory note, other shares of common stock, delivery of a properly executed
exercise notice with irrevocable instructions to the optionee's broker to
deliver to the Company the amount of sale proceeds required to pay the exercise
price, any combination of the foregoing methods of payment or such other
consideration and method of payment permitted under the Delaware General
Corporation Law.
If an optionee's employment terminates for any reason, including
retirement, his or her exercisable options may be exercised within the time
period set forth in the option agreement, which is generally 90 days from the
date of termination. If the Board of Directors or its designated committee
determines that an employee was discharged for misconduct (as defined in the
1991 EIP), the employee has no further rights under the options granted to him
or her or under the plan. If an optionee's employment is terminated by reason of
the optionee's death or permanent total disability, the option will be
exercisable for 12 months following the date of death or disability, subject to
the stated term of the option. Options granted to consultants have such terms
and conditions with respect to the effect of termination of the consulting
relationship (including upon the death of the consultant) as the Board of
Directors or its designated committee may determine in each case.
Eligibility
Any employee (including any officer) or consultant of the Company or of its
majority-owned subsidiaries whom the Board of Directors deems to have the
potential to contribute to the future success of the Company is eligible to
receive NSO option grants under the 1991 EIP. Only employees of the Company or
of its subsidiaries are eligible to ISO grants. As of December 31, 1999, the
Company had approximately 6,300 employees and 262 consultants.
Adjustments for Recapitalizations and Reorganizations
In the event of a stock dividend, stock split, combination or similar
event, the number of shares of common stock available for issuance under the
1991 EIP shall be increased or decreased proportionately, and the number of
shares of common stock deliverable upon exercise, and, where applicable, the
exercise price of each option, shall be proportionately adjusted. In the event
of a merger, reorganization, liquidation or similar event, the Board of
Directors may either provide for the assumption or substitution of outstanding
options or provide that the options must be exercised within 30 days. In either
case, the Board of Directors may provide for accelerated vesting of such
options.
Administration
The 1991 EIP is administered by the Board of Directors or by a committee
appointed by the Board of Directors in compliance with Rule 16b-3 promulgated
under the Securities Exchange Act of 1934. If permitted by Rule 16b-3, the 1991
EIP may be administered by different bodies with respect to employees who are
directors, non-director officers, employees who are neither directors nor
officers, and consultants. A member of the Board of Directors who is an eligible
employee is permitted to participate in the 1991 EIP but may not be a member of
a committee appointed to administer it. Members of the Board of Directors
receive no additional compensation for their services in connection with the
administration of the 1991 EIP.
14
<PAGE> 17
Amendment and Termination
The Board of Directors may amend, alter, suspend or discontinue the 1991
EIP at any time, but such amendment, alteration, suspension or discontinuation
may not impair the rights of any participant in the 1991 EIP without the
participant's consent. In addition, no ISO may be granted under the 1991 EIP
after March 8, 2001.
In addition, to the extent necessary and desirable to comply with Section
422A of the Internal Revenue Code of 1986, as amended (or any other applicable
law or regulation), the Company shall obtain stockholder approval of any 1991
EIP amendment, in such a manner and to such a degree as required to comply with
such laws or regulations.
Certain United States Federal Income Tax Information
The following is only a brief summary of the effect of federal income
taxation upon the participant and the Company under the 1991 EIP based upon the
Internal Revenue Code. This summary is not intended to be complete and does not
discuss the income tax laws of any municipality, state or country outside of the
United States. It is advisable that a participant contact his or her own tax
adviser concerning the application of tax laws.
If an option granted under the 1991 EIP is an ISO, the optionee will
recognize no taxable income upon grant or exercise of the ISO unless the
alternative minimum tax rules apply. Upon the resale or exchange of the shares
at least two years after grant of the ISO and one year after exercise by the
optionee, any gain (or loss) will be taxed to the optionee as ordinary income
(or loss) or capital gain (or loss), depending on how long the optionee has held
the stock.
All options that do not qualify as ISOs are taxed as NSOs. An optionee will
not recognize any taxable income at the time he or she is granted an NSO.
However, upon the exercise of an NSO, the optionee will generally recognize
ordinary income for federal income tax purposes measured by the excess, if any,
of the then fair market value of the shares over the exercise price. The
ordinary income recognized upon exercise of an NSO by an optionee who is also an
employee of the Company will be treated as wages for tax purposes and will be
subject to tax withholding out of the current compensation, if any, paid to the
optionee. Upon resale of such shares by the optionee, any difference between the
sale price and fair market value on the date of exercise will be treated as
capital gain (or loss).
The Company will be entitled to a tax deduction in the same amount as the
ordinary income, if any, recognized by the optionee (i) upon exercise of an NSO
and (ii) upon the sale of shares acquired by exercise of an ISO in a
disqualifying disposition. The Company will not be allowed a deduction for
federal income tax purposes as a result of the exercise of an ISO, regardless of
the applicability of the alternative minimum tax.
PARTICIPATION IN THE 1991 EQUITY INCENTIVE PLAN
The grant of options under the 1991 Equity Incentive Plan to employees,
including the Named Executive Officers, is subject to the discretion of the
plan's administrator. As of the date of this proxy statement, there has been no
determination by the administrator with respect to future awards under the 1991
Equity Incentive Plan. Accordingly, future awards are not determinable.
Non-employee directors are not eligible to participate in the 1991 Equity
Incentive Plan. The following table sets forth information with respect to the
grant of options to the Named Executive Officers adjusted for the two-for-one
stock split effective February 4, 2000, to all current executive officers as a
group and to all other employees as a group during the last fiscal year:
15
<PAGE> 18
AMENDED PLAN BENEFITS
1991 EQUITY INCENTIVE PLAN
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
SHARES UNDERLYING EXERCISE PRICE PER
NAME OF INDIVIDUAL OR IDENTITY OF GROUP AND POSITION OPTIONS GRANTED(#) SHARE($/SH.)
---------------------------------------------------- ------------------ ------------------
<S> <C> <C>
Wilfred J. Corrigan........................................ 1,000,000 32.53
Chairman and Chief Executive
Officer
Joseph M. Zelayeta......................................... 300,000 29.44
Executive Vice President,
Worldwide Operations
John P. Daane.............................................. 400,000 29.44
Executive Vice President,
Communications Products Group
R. Douglas Norby........................................... 200,000 29.44
Executive Vice President and
Chief Financial Officer
John D'Errico.............................................. 250,000 29.44
Executive Vice President,
Storage Components and
Colorado Operations
All current executive officers as a group.................. 2,935,000 (xx)
All other employees as a group............................. 8,301,840 (xx)
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT OF THE 1991
EQUITY INCENTIVE PLAN TO INCREASE THE NUMBER OF SHARES RESERVED FOR ISSUANCE
THEREUNDER.
PROPOSAL FIVE
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board has selected PricewaterhouseCoopers LLP, independent accountants,
to audit the consolidated financial statements of the Company for its 2000
fiscal year and recommends that the stockholders vote for ratification of such
appointment. If there is a negative vote on such ratification, the Board will
reconsider its selection. PricewaterhouseCoopers LLP (or its predecessor) has
audited the Company's consolidated financial statements since the fiscal year
ended December 31, 1981. Representatives of PricewaterhouseCoopers LLP are
expected to be present at the annual meeting with the opportunity to make a
statement if they desire to do so, and are expected to be available to respond
to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE INDEPENDENT ACCOUNTANTS FOR THE
2000 FISCAL YEAR.
16
<PAGE> 19
EXECUTIVE COMPENSATION
SUMMARY OF COMPENSATION
The following table shows, as to (i) the Chief Executive Officer, and (ii)
each of the four other most highly compensated executive officers whose salary
plus bonus exceeded $100,000 in 1999 (the "Named Executive Officers"),
information concerning all reportable compensation awarded to, earned by or paid
to each for services to us in all capacities during the fiscal year ended
December 31, 1999, as well as such compensation for each such individual for our
previous two fiscal years (if such person was an executive officer during any
part of such previous fiscal year). The number of option shares has been
adjusted for the two-for-one stock split effective February 4, 2000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
AWARDS
ANNUAL ------------
COMPENSATION SECURITIES ALL OTHER
---------------- UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS ($)(2)
--------------------------- ---- --------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Wilfred J. Corrigan....................... 1999 $787,897 $1,400,000 1,000,000 $ 7,686
Chairman and Chief Executive 1998 $744,238 $ 375,000 1,000,000 $ 9,450
Officer 1997 $704,231 $ 375,000 600,000 $ 19,911
Joseph M. Zelayeta........................ 1999 $381,086 $ 500,000 300,000 $ 2,982
Executive Vice President, 1998 $360,968 $ 130,000 70,000 $ 3,722
Worldwide Operations 1997 $304,423 $ 170,000 140,000 $ 19,785
John P. Daane............................. 1999 $365,584 $ 500,000 400,000 $ 840
Executive Vice President, 1998 $329,238 $ 150,000 400,000 $ 727
Communications Products Group 1997 $230,000 $ 200,000 200,000 $ 4,884
R. Douglas Norby.......................... 1999 $354,625 $ 400,000 200,000 $ 7,686
Executive Vice President and 1998 $334,623 $ 110,000 150,000 $ 9,450
Chief Financial Officer 1997 $314,615 $ 150,000 60,000 $187,530
John D'Errico(3).......................... 1999 $313,167 $ 400,000 250,000 $ 4,956
Executive Vice President, 1998 $267,507 $ 90,000 120,000 $ 5,255
Storage Components and
Colorado Operations
</TABLE>
- ---------------
(1) The Company has not granted any stock appreciation rights.
(2) "All Other Compensation" for 1999 consists solely of group life insurance.
(3) Mr. D'Errico was named an executive officer of the Company in August 1998.
CHANGE-IN-CONTROL AGREEMENTS
The Company is a party to agreements with Mr. Wilfred J. Corrigan and each
of the other Named Executive Officers to ensure the continued services of
management to the Company in the event of a change in control. In November 1998,
the Company entered into a change of control agreement with Wilfred J. Corrigan,
the Company's Chairman of the Board and Chief Executive Officer. Under the
agreement, benefits are payable only upon a change in control of the Company,
which is deemed to have occurred in the event of (1) the consummation by the
Company of a merger or consolidation of the Company with any other corporation,
other than merger or consolidation that would result in the voting securities of
the Company outstanding immediately prior thereto continuing to represent more
than 50% of the total voting power represented by the voting securities of the
Company or such surviving entity outstanding immediately after such merger or
consolidation; (2) the approval by the shareholders of the Company of a plan of
complete liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets; or (3) any
person becoming the beneficial owner, directly or indirectly, of securities of
the Company representing 50% or more of the total voting power represented by
the Company's
17
<PAGE> 20
then outstanding voting securities. Upon a change of control, Mr. Corrigan will
receive a lump sum payment equal to three years' base salary plus 300% of his
target bonus for the year in which the change of control occurs. In addition,
the vesting and exercisability of all unvested options that were granted at
least six months prior to the change of control shall be accelerated
automatically and shall be fully vested and exercisable as of the date of the
change of control. The Company shall also provide Mr. Corrigan with health-care
benefits for a period not to exceed two years following the termination of
employment. This agreement shall terminate five years following the effective
date unless a change of control occurs, in which case the agreement shall
terminate upon the date that all obligations of the parties have been satisfied.
Under the agreements, if the executive officer's employment is terminated
involuntarily at any time within 12 months after a change of control, the
executive officer will receive a lump sum payment equal to the sum of two years'
base salary plus 200% of the executive officer's target bonus for the year in
which the change of control occurs and continued health-care benefits during the
two years following the termination. In addition, the vesting and exercisability
of all options that were granted at least six months prior to the change of
control shall be automatically accelerated and fully vested and exercisable at
the date of the involuntary termination.
STOCK OPTION GRANTS AND EXERCISES
The following tables set forth information with respect to the stock
options granted to the Named Executive Officers under our stock option plans,
the options exercised by such Named Executive Officers during the fiscal year
ended December 31, 1999 and the options held by the Named Executive Officers at
December 31, 1999.
The Option Grants Table sets forth hypothetical gains or "option spreads"
for the options at the end of their respective ten-year terms, as calculated in
accordance with the rules of the Securities and Exchange Commission. Each gain
is based on an arbitrarily assumed annualized rate of compound appreciation of
the market price of 5% and 10% from the date the option was granted to the end
of the option term and does not represent our projection of future stock price
performance. Actual gains, if any, on option exercises are dependent on the
future performance of our common stock and overall market conditions. The number
of option shares and exercise prices have been adjusted for the February 2000
stock split.
OPTION(1) GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------------------- POTENTIAL REALIZABLE VALUE
PERCENT OF AT ASSUMED ANNUAL RATES
NUMBER OF SECURITIES TOTAL OPTIONS OF STOCK PRICE APPRECIATION
UNDERLYING OPTIONS GRANTED TO EXERCISE FOR OPTION TERM
GRANTED IN EMPLOYEES IN PRICE EXPIRATION ---------------------------
NAME FISCAL YEAR(#)(2) FISCAL YEAR(3) ($/SHARE) DATE 5%($) 10%($)
---- -------------------- -------------- ------------ ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Wilfred J. Corrigan......... 1,000,000 5.33 $32.531 11/11/2009 $20,458,728 $51,846,434
Joseph M. Zelayeta.......... 300,000 1.60 $29.438 8/13/2009 $ 5,553,926 $14,074,738
John P. Daane............... 400,000 2.13 $29.438 8/13/2009 $ 7,405,234 $18,766,317
R. Douglas Norby............ 200,000 1.07 $29.438 8/13/2009 $ 3,702,617 $ 9,383,159
John D'Errico............... 250,000 1.33 $29.438 8/13/2009 $ 4,628,271 $11,728,948
</TABLE>
- ---------------
(1) The Company has not granted any stock appreciation rights.
(2) All options shown in the table were granted under the 1991 Equity Incentive
Plan. The material terms of the options are: (a) The exercise price of the
options is the fair market value of the common stock as of the date of
grant, split adjusted; (b) The options vest cumulatively in equal 25%
increments on each of the first four anniversaries of the date of grant; (c)
To the extent unexercised, the options lapse after ten years; (d) The
options are non-transferable and are only exercisable during the period of
employment of the optionee (or within three months following termination of
employment), subject to limited exceptions in the cases of certain
terminations, death or permanent disability of the optionee. These options
are subject to acceleration of exercisability in certain events. See
"Change-in-Control Agreements" above.
(3) Based on options granted to all employees in 1999 to purchase an aggregate
of 18,847,09 shares.
18
<PAGE> 21
AGGREGATED OPTION(1) EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE(1) OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
FISCAL YEAR END(#) FISCAL YEAR END($)
SHARES ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Wilfred J. Corrigan.............. -0- $ -0- 3,600,000 2,050,000 $78,254,688 $25,270,313
Joseph M. Zelayeta............... 80,000 $1,957,000 455,500 462,500 $11,220,672 $ 4,844,766
John P. Daane.................... 100,000 $1,615,125 384,000 860,000 $ 8,405,781 $12,221,719
R. Douglas Norby................. 240,000 $3,618,750 328,750 496,250 $ 6,431,562 $ 7,112,812
John D'Errico.................... 110,000 $2,481,806 975,000 377,500 $ 2,030,156 $ 4,027,969
</TABLE>
- ---------------
(1) Value of unexercised options is based on the difference between the fair
market value of Company's common stock of $33.75 per share as of December
31, 1999 (the last day of the last completed fiscal year) and the exercise
price of the unexercised in-the-money options, split adjusted.
OTHER TRANSACTIONS
In 1998, the Company loaned $400,000 to Elias J. Antoun, then an executive
officer, to assist in the purchase of his home on relocation from an assignment
abroad. The term of the loan was five years and it bore interest at an annual
rate of six percent. The note was secured by a deed of trust. The largest
principal amount outstanding under the note in 1999 was $400,000 and there was
no amount outstanding at December 31, 1999, as the outstanding balance on the
loan plus accrued interest was paid in full prior to his resignation in January
2000.
BOARD COMPENSATION COMMITTEE REPORT ON CEO AND OTHER
EXECUTIVE OFFICER COMPENSATION FOR LSI LOGIC CORPORATION
OVERVIEW AND PHILOSOPHY
The Compensation Committee (the "Committee") of the Board of Directors
establishes the overall executive compensation strategies of the Company and
approves compensation elements for the chief executive officer and other
executive officers. The Committee periodically reviews its approach to executive
compensation.
The Committee is comprised of all outside, non-employee members of the
Board of Directors (four), none of whom has any interlocking relationships as
defined by the Securities and Exchange Commission. The Committee has available
to it such external compensation advice and data as the Committee deems
appropriate to obtain.
The compensation philosophy of the Committee is to provide a comprehensive
compensation package for each executive officer that is well suited to support
accomplishment of the Company's business strategies, objectives and initiatives.
For incentive-based compensation, the Committee considers the desirability of
structuring such compensation arrangements so as to qualify for deductibility by
the Company under Section 162(m) of the Internal Revenue Code, as amended. As
the Committee applies this compensation philosophy in determining appropriate
executive compensation levels and other compensation factors, the Committee
reaches its decisions with a view towards the Company's overall financial
performance.
EXECUTIVE OFFICER COMPENSATION
The Committee's approach is based upon a belief that a substantial portion
of aggregate annual compensation for executive officers should be contingent
upon the Company's performance and an individual's contribution to the Company's
success. In addition, the Committee strives to align the interests of the
Company's executive officers with the long-term interests of shareholders
through stock option grants that can result in ownership of the Company's Common
Stock. The Committee endeavors to structure each executive
19
<PAGE> 22
officer's overall compensation package to be consistent with this approach and
to enable the Company to attract, retain and reward individuals who contribute
to the success of the Company.
The Company's compensation program for executive officers is based on the
following guidelines:
- Establishment of base salary levels and participation in generally
available employee benefit programs based on competitive compensation
package practices.
- Utilization of a performance-based, cash incentive plan.
- Inclusion of equity opportunities that create long-term incentives based
upon increases in shareholder return.
The Company had a cash incentive plan during 1999 that provided for bonus
awards to be made to the executive officers (other than the CEO) and other
members of senior management subject to an aggregate budget for all awards under
the plan. The plan established a minimum level of operating income to be
achieved by the Company for the year 1999 before any payments would be made
under the plan. The plan also allowed upward adjustments in awards to be made if
the minimum operating income target was exceeded. In addition, the plan provides
for the CEO to determine individual bonus award amounts pursuant to his judgment
of each participant's personal contributions to the Company's performance for
the year, subject to the approval of the Committee of awards to executive
officers. The Company's operating income for 1999 exceeded the threshold target
established under the plan. Accordingly, awards were made to individual
executive officers consistent with the plan's provisions regarding the Company's
performance and the personal contributions of each executive officer. The total
of all payments under the plan was within the budget approved previously by the
Committee.
During 1999, the Committee approved a budget for increases in the base
salary levels of executive officers, which reflected the compensation guidelines
described previously in this report. Increases in base salary amounts for
individual executive officers were then made pursuant to the chief executive
officer's judgment and discretion in satisfying the Company's compensation
philosophy set forth above. The aggregate of such adjustments was within the
budget that had been approved by the Committee. The general level of
compensation of the Company's executive officers is in the median of ranges of
compensation information sources against which the Company makes competitive
comparisons.
The Company maintains a set of guidelines for use in making recommendations
to the Committee on individual grants to executive officers of options to
purchase Common Stock of the Company. Stock option grants were made to executive
officers during 1999 by reference to the guidelines. These guidelines are
developed by reference to external published surveys and other information that
are believed to fairly reflect the competitive environment in which the Company
operates and that are consistent with the compensation principles set forth
above.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Corrigan has been CEO of the Company since its founding in 1981. His
annual base salary prior to the beginning of fiscal 1999 was $755,000. During
1999, the Committee considered information regarding competitive compensation
practices and levels for chief executive officers, the above described approach
to compensation for executive officers and the Committee's assessment of Mr.
Corrigan's contribution to the Company's performance. Based upon such factors,
the Committee increased Mr. Corrigan's annual base salary to $800,000. The base
salary established by the Committee for Mr. Corrigan falls in the median of the
range of such information used for competitive comparisons.
The Committee awarded Mr. Corrigan a cash bonus in the amount of
$1,400,000, in respect to the Company's performance during 1999 and Mr.
Corrigan's contributions as chief executive officer. The foregoing is a
performance-based bonus within the meaning of Section 162(m) of the Internal
Revenue Code and is therefore deductible by the Company. The Committee based its
evaluation of Mr. Corrigan's performance for purposes of determining the amount
of this award pursuant to the operating income objectives
20
<PAGE> 23
that were established in accordance with terms of the performance-based bonus
compensation plan for the Company's Chief Executive Officer.
Mr. Corrigan was granted an option to purchase 1,000,000 shares of the
Company's Common Stock during 1999. The Committee determined this portion of Mr.
Corrigan's total compensation after consideration of the compensation principles
set forth above. Also, the Committee considered external published survey data
and other information sources that it believes fairly reflect competitive equity
incentive practices for chief executive officers of public traded companies
against which the Company's practices for the CEO should be compared.
The Committee believes Mr. Corrigan has managed the Company well, and has
achieved distinguished results, which is reflected by the Company's key
financial metrics such as revenue, gross margin and operating income and net
income as well as through successful execution of strategic initiatives.
MEMBERS OF THE COMPENSATION COMMITTEE
James H. Keyes
T.Z. Chu
Malcolm R. Currie
Matthew O'Rourke (since May 1999)
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee are set forth in the preceding
section as well as in Proposal One. There are no members of the Compensation
Committee who were officers or employees of the Company or any of its
subsidiaries during the fiscal year, were formerly officers of the Company, or
had any relationship otherwise requiring disclosure hereunder.
21
<PAGE> 24
PERFORMANCE GRAPH
The stock price performance shown on the graph following is not necessarily
indicative of future price performance.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG LSI LOGIC CORPORATION*, S&P 500 INDEX
AND THE PHILADELPHIA SEMICONDUCTOR INDEX
<TABLE>
<CAPTION>
PHILADELPHIA SEMICONDUCTOR
LSI LOGIC CORPORATION S & P 500 INDEX INDEX
--------------------- --------------- --------------------------
<S> <C> <C> <C>
1994 100.00 100.00 100.00
1995 162.23 134.11 143.24
1996 132.51 161.29 171.53
1997 97.21 216.54 188.19
1998 79.88 267.64 250.24
1999 334.37 319.92 502.93
</TABLE>
* During 1997, the Company changed its fiscal year to a straight calendar year
from a 52/53 week fiscal year that ended on the Sunday closest to December 31.
Prior to the change, the Company's last trading day of its fiscal year may
have varied. For consistent presentation and comparison to the industry
indices shown herein, the Company has calculated its stock performance graph
assuming a December 31 year-end.
22
<PAGE> 25
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our officers,
directors and persons who own more than ten percent of a registered class of our
equity securities to file reports of security ownership and changes in such
ownership with the Securities and Exchange Commission (the "SEC") and the New
York Stock Exchange. Executive officers, directors and greater than ten percent
stockholders are required by SEC regulations to furnish us with copies of all
Section 16(a) forms they file.
Based solely on our review of the copies of such forms received by us and
written representations received from those reporting persons known by us to be
subject to filing requirements, we believe that all required Section 16(a)
reports were timely filed during 1999.
OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting. If
any other matters properly come before the meeting, it is the intention of the
persons named in the enclosed form of Proxy to vote the shares they represent as
the Board of Directors may recommend. Under the Company's bylaws, in order to be
deemed properly presented, notice must be delivered to the Secretary of the
Company at the principal executive offices of the Company no less than 60 days
nor more than 90 days prior to the Annual Meeting, provided, however, if less
than 65 days' notice of the date of the Annual Meeting has been given to
stockholders, notice by the stockholder to be timely must be delivered to the
Company not later than the close of business on the seventh day following the
day on which such notice of the Annual Meeting was mailed. The stockholder's
notice must set forth, as to each proposed matter: (a) a reasonably detailed
description of the business and reason for conducting such business at the
meeting; (b) the name and address as they appear on the Company's books of the
stockholder proposing such business, or the name of the beneficial holder or
other party on whose behalf the proposal is made; (c) the class and number of
shares of the Company owned by the stockholder or beneficial holder or other
party on whose behalf the proposal is made; and (d) any material interest of the
stockholder or beneficial holder or other party on whose behalf the proposal is
made in such business.
THE BOARD OF DIRECTORS
March (xx), 2000
23
<PAGE> 26
[x] Please mark votes as in this example.
THIS PROXY WILL BE VOTED AS DIRECTED OR IF NO CONTRARY DIRECTION IS INDICATED,
WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND FOR PROPOSALS 2, 3, 4, AND 5 AS
SAID PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE
THE MEETING.
1. Election of Directors
NOMINEES: Wilfred J. Corrigan; James H. Keyes, Malcom R. Currie;
T.Z. Chu; R. Douglas Norby, Matthew J. O'Rourke
FOR WITHHELD
[ ] [ ]
[ ]
-------------------------------------------------------
For all nominees except those listed on the line above
MARK HERE FOR
ADDRESS CHANGE
AND NOTE BELOW [ ]
Signature: _______________________________________ Date: _____________
FOR AGAINST ABSTAIN
2. Approval of amendment to the [ ] [ ] [ ]
Restated Certificate of
Incorporation to increase the
number of authorized shares of
common stock to 1,300,000,000
shares.
3. Approval of amendment to the [ ] [ ] [ ]
Restated Employee Stock Purchase
Plan to increase the number of
shares of common stock reserved
for issuance thereunder by
1,500,000.
4. Approval of amendment to the [ ] [ ] [ ]
1991 Equity Incentive Plan to
increase the number of shares of
Common stock reserved for
issuance thereunder by
10,000,000.
5. To ratify the appointment of [ ] [ ] [ ]
PricewaterhouseCoopers LLP as
independent accountants for its
2000 fiscal year.
(This Proxy should be marked, dated and signed by the stockholder(s) exactly as
his or her name appears hereon, and returned promptly in the enclosed envelope.
Persons signing in a fiduciary capacity should so indicate. If shares are held
by joint tenants or as community property, both should sign.)
Signature: _______________________________________ Date: _____________
<PAGE> 27
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS
LSI LOGIC CORPORATION
2000 ANNUAL MEETING OF SHAREHOLDERS
PROXY
The undersigned stockholder of LSI Logic Corporation, a Delaware
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement, each dated ____________________, and
hereby appoints Wilfred J. Corrigan and David E. Sanders, or either of
them, proxies and attorneys-in-fact, with full power to each of
substitution, on behalf and in the name of the undersigned, to represent
the undersigned at the 2000 Annual Meeting of Stockholders of LSI Logic
Corporation to be held on May 4, 2000, at 1:00 p.m., local time, at the
Company's facility located at 4420 Arrowswest Drive, Colorado Spings,
Colorado 80907, and at any adjournment(s) thereof, and to vote all shares
of Common Stock that the undersigned would be entitled to vote if then and
there personally present, on the matters set forth on the reverse side.
SEE REVERSE
SIDE
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
