SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2)
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to `240.14a-11(c) or `240.14a-12
PMC-Sierra, 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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: (Set forth the amount on which the
filing fee is calculated and state how it was determined:
________________________________________________________________________
(4) Proposed maximum aggregate value of transaction: _______________________
(5) Total fee paid: ________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ________________________________________________
(2) Form, Schedule or Registration Statement No.: __________________________
(3) Filing Party: __________________________________________________________
(4) Date Filed: ____________________________________________________________
<PAGE>
PMC-SIERRA, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held on June 15, 2000
The 2000 Annual Meeting of Stockholders of PMC-Sierra, Inc. (the
"Company") will be held on Thursday, June 15, 2000 at 12:00 Noon, local time, at
the Embassy Suites Hotel located at 9000 SW Washington Square Road, Tigard,
Oregon, to act on the following matters:
1. To elect directors of the Company to serve for the ensuing year
and until the next Annual Meeting or the election of their
successors.
2. To approve an amendment to the Company's Certificate of
Incorporation to increase the authorized number of shares of
Common Stock by 700,000,000 shares to a total of 900,000,000
shares.
3. To change the automatic annual increase in shares reserved under
the 1994 Incentive Stock Plan and to restrict the Administrator of
the 1994 Incentive Stock Plan from reducing the exercise prices of
options and stock purchase rights granted to executive officers
and directors.
4. To change the automatic option grants under the 1994 Incentive
Stock Plan to non-employee directors from 20,000 shares of Common
Stock to 40,000 shares upon appointment and from 5,000 shares to
10,000 shares annually thereafter, provided such non-employee
directors are re-elected to the Board of Directors.
5. To ratify the appointment of Deloitte & Touche LLP as the
Company's independent auditors for the 2000 fiscal year.
6. To transact such other business as may properly come before the
meeting or any adjournment thereof.
These matters are more fully described in the Proxy Statement
accompanying this Notice.
Only stockholders of record at the close of business on April 18, 2000
are entitled to notice of and to vote at the Annual Meeting and any adjournments
thereof.
All stockholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to mark,
sign, date 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 the stockholder has previously returned a
proxy.
Robert L. Bailey,
Chairman and Chief Executive Officer
April 28, 2000
IMPORTANT
To ensure your representation at the meeting, please mark, sign, date
and return the enclosed proxy card as soon as possible in the enclosed
postage-paid envelope. If you attend the meeting, you may vote in person
even if you returned a proxy.
<PAGE>
PMC-SIERRA, INC.
---------------------------
PROXY STATEMENT
2000 ANNUAL MEETING OF STOCKHOLDERS
---------------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed proxy is solicited on behalf of the Board of Directors of
PMC-Sierra, Inc. (the "Company") for use at the Annual Meeting of Stockholders
(the "Annual Meeting") of the Company to be held on Thursday, June 15, 2000 at
12:00 Noon, local time, or at any adjournments thereof. The Annual Meeting will
be held at the Embassy Suites Hotel located at 9000 SW Washington Square Road,
Tigard, Oregon. The Company's principal office is located at 105-8555 Baxter
Place, Burnaby, British Columbia, V5A 4V7, Canada. Its telephone number at that
location is (604) 415-6000. The Company's principal subsidiary is a Canadian
corporation named PMC-Sierra, Ltd. References in this proxy statement to "PMC"
or the "Company" mean the parent company, PMC-Sierra, Inc. References to "LTD"
mean PMC's principal subsidiary.
This proxy statement is being mailed on or about May 2, 2000 to all
stockholders entitled to vote at the Annual Meeting.
All information in this document reflects the stock splits effected in
May 1999 and February 2000.
Record Date and Share Ownership
Only holders of Common Stock of record at the close of business on
April 18, 2000 (the "Record Date") are entitled to notice of and vote at the
Annual Meeting. At the Record Date, 140,609,127 shares of the Company's Common
Stock were issued and outstanding. See "Security Ownership of Certain Beneficial
Owners and Management" below for information regarding beneficial owners of more
than five percent of the Company's Common Stock.
Stockholders' Proposals for 2001 Annual Meeting
Proposals to be presented by stockholders of the Company at the 2001
Annual Meeting must be received by the Company no later than January 1, 2001 for
inclusion in the proxy statement and form of proxy relating to that meeting.
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 (i) delivering to the Company's
Secretary at 650 Page Mill Road, Palo Alto, CA 94304-1050, a written notice of
revocation or a duly executed proxy bearing a later date, or (ii) attending the
meeting and voting in person.
<PAGE>
Voting and Solicitation
Each holder of Common Stock outstanding on the Record Date is entitled
to one vote for each share held. In addition, since cumulative voting applies to
the Company's Common Stock in the election of directors, if any stockholder at
the meeting and prior to the voting gives notice of the stockholder's intention
to cumulate votes for the election of directors, then every stockholder, or the
stockholder's proxy, who is entitled to vote upon 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 multiplied by the number of shares held
by such stockholder, or distribute the stockholder's votes on the same principle
among as many candidates as the stockholder may select, provided that votes
cannot be cast for more than five nominees.
The five nominees receiving the highest number of affirmative votes of
the shares present or represented and entitled to vote shall be elected as
directors. Proposals Two, Three and Four require the affirmative vote of a
majority of the shares outstanding on the Record Date. Approval of each other
matter requires the affirmative vote of a majority of the required quorum.
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 "ABSTAIN" a matter are treated as being present at the
meeting for purposes of establishing a quorum and are also treated as shares
entitled to vote at the Annual Meeting (the "Votes Cast") with respect to such
matter. While there is no definitive statutory or case law authority in Delaware
as to the proper treatment of abstentions in the counting of votes with respect
to a proposal, the Company believes that abstentions should be counted for
purposes of determining both (i) the presence or absence of a quorum and (ii)
the total number of Votes Cast with respect to the proposal (other than the
election of directors). In the absence of controlling precedent to the contrary,
the Company intends to treat abstentions in this manner. Accordingly,
abstentions will have the same effect as a vote against the proposal. Broker
non-votes will be counted for purposes of determining the presence or absence of
a quorum for the transaction of business, but will not be counted for purposes
of determining the number of Votes Cast with respect to the particular proposal
on which the 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.
Votes Cast by proxy or in person at the Annual Meeting will be
tabulated by the Inspector of Elections (the "Inspector") with the assistance of
the Company's proxy solicitor. The Inspector will also determine whether a
quorum is present.
The cost of soliciting proxies will be borne by the Company. The
Company has retained the services of Georgeson & Company Inc. to solicit
proxies, for which the Company estimates that it would pay fees of approximately
$20,000 plus out-of-pocket expenses. The Company may reimburse brokerage firms
and other persons representing beneficial owners of shares for their expenses in
forwarding solicitation materials to such beneficial owners. Proxies may also be
solicited by certain of the Company's directors, officers and regular employees,
without additional compensation, in person or by telephone or facsimile.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information known to the Company
regarding beneficial ownership of Common Stock of the Company as of March 31,
2000 by (i) all persons known to the Company to be the beneficial owners of more
than 5% of the Company's Common Stock, (ii) each executive officer named in the
Summary Compensation Table below, (iii) each of the Company's directors, and
(iv) all current directors and executive officers as a group.
<PAGE>
<TABLE>
<CAPTION>
Approximate
Percentage
Name (1) Number of Shares Ownership
<S> <C> <C> <C>
AMVESCAP PLC (2)(5)............................................................. 9,743,060 7.0%
Capital Research and Management Company(2)(3)................................... 7,973,200 5.7%
Putnam Investments, Inc. (2)(4)................................................. 7,291,536 5.2%
FMR Corp.(2)(6)................................................................. 7,303,158 5.2%
James V. Diller(7).............................................................. 3,205,887 2.3%
Robert L. Bailey(8)............................................................. 2,848,420 2.0%
Gregory D. Aasen(9)............................................................. 1,474,974 1.1%
John W. Sullivan(10)............................................................ 272,449 *
Alexandre Balkanski(11)......................................................... 155,012 *
Colin Beaumont(12).............................................................. 61,498 *
Frank Marshall(13).............................................................. 258,278 *
All current directors and executive officers as a group(7 persons)(14).......... 8,276,518 5.8%
____________________
* Less than 1%.
<FN>
(1) The beneficial owners named in the table have sole voting and investment
power with respect to the shares, except as indicated.
(2) Based on statements filed with the Securities and Exchange Commission
pursuant to Sections 13(d) or 13(g) of the Securities Exchange Act of
1934, as amended. The Company has not independently verified these
statements or more current holdings of such stockholders.
(3) Capital Research and Management Group advises Smallcap World Fund, Inc.
Smallcap World Fund, Inc. is the beneficial owner of 3,990,000 shares of
the Company's Common Stock. The address of Capital Research and Management
Company and Smallcap World Fund, Inc. is 333 South Hope Street, Los
Angeles, California 90071.
(4) Putnam Investments, Inc. ("PI") beneficially own 7,291,536 shares. PI's
wholly-owned investment advisers Putnam Investment Management, Inc.
("PIM") has shared dispositive power with respect to 6,489,880 of those
shares, and Putnam Advisory Company, Inc. ("PAC") has shared dispositive
power with respect to 801,656 of those shares. PAC also holds shared
voting power with PI with respect to 173,300 of those shares. PI's, PIM's
and PAC's address is One Post Office Square, Boston, Massachusetts 02109.
(5) AMVESCAP PLC has shared voting and dispositive power with respect to all
9,743,060 shares with AVZ, Inc., AIM Management Group, Inc. AMVESCAP Group
Services, Inc., INVESCO, Inc., INVESCO (NY) Asset Management, Inc.,
INVESCO North American Holdings, Inc., INVESCO Capital Management, Inc.,
INVESCO Funds Group, Inc. and INVESCO Realty Advisors, Inc., all of which
are holding companies, and with INVESCO Capital Management, Inc., INVESCO
Funds Group, Inc., INVESCO Management & Research, Inc., and INVESCO Realty
Advisers, Inc., its investment advisers. The addresses for AMVESCAP PLC
and its other holding companies and investment advisers is 11 Devonshire
Square, London EC2M 4YR, England or 1315 Peachtree Street, N.E., Atlanta,
Georgia 30309.
(6) Fidelity Management & Research Company ("Fidelity"), a wholly-owned
subsidiary of FMR Corp. ("FMR"), is an investment adviser to FMR and the
beneficial owner of 6,705,100 shares. Edward C. Johnson, III, Chairman of
FMR, and FMR through its control of Fidelity, has sole dispositive power
over 6,705,100 shares. FMR through its control of Fidelity, has sole
voting power over 6,705,100 shares. FMR Corp.'s address is 82 Devonshire
Street, Boston, Massachusetts 02109.
(7) Includes 1,215,401 shares subject to options exercisable within 60 days
after March 31, 2000. Mr. Diller's address is c/o PMC-Sierra, Inc.,
105-8555 Baxter Place, Burnaby, British Columbia, V5A 4V7, Canada.
(8) Includes 1,310,000 shares subject to options exercisable within 60 days
after March 31, 2000. Also includes 1,251,804 shares issuable upon
redemption of LTD Special Shares, and 73,328 shares issuable upon
redemption of LTD Special Shares subject to options exercisable within 60
days after March 31, 2000.
(9) Includes 939,999 shares subject to options exercisable within 60 days
after March 31, 2000 and 23,600 shares held by Mr. Aasen's two sons. Also
includes 331,923 shares issuable upon redemption of LTD Special Shares,
101,534 shares issuable upon redemption of LTD Special Shares held by Mr.
Aasen's wife and 63,012 shares issuable upon redemption of LTD Special
Shares held by Mr. Aasen's two sons.
(10) Includes 210,847 shares subject to options exercisable within 60 days of
March 31, 2000, 4,802 shares held by Mr. Sullivan's wife and 10,000 shares
held in an investment retirement account.
(11) Includes 154,166 shares subject to options exercisable within 60 days
after March 31, 2000. Dr. Balkanski's address is c/o C-Cube Microsystems,
1778 McCarthy Boulevard, Milpitas, California 94062.
(12) Includes 57,498 shares subject to option exercisable within 60 days after
March 31, 2000. Mr. Beaumont's address is 200 Elgin Street, Suite 602,
Ottawa, Ontario, Canada K2P1L5.
(13) Includes 111,248 shares subject to options exercisable within 60 days of
March 31, 2000. Also includes 108,066 shares held by Timark, L.P. Mr.
Marshall is a General Partner of Timark, L.P. and disclaims beneficial
ownership except to the extent of his pecuniary interest therein. Mr.
Marshall's address is 14585 Big Basin Way, Saratoga, California 95070.
(14) Includes 3,999,159 shares subject to options exercisable within 60 days
after March 31, 2000 held by the current executive officers and directors
listed above. Also includes 73,328 shares issuable upon redemption of LTD
Special Shares subject to options exercisable within 60 days after March
31, 2000 held by one executive officer listed above and 1,748,273 shares
issuable upon redemption of LTD Special Shares held by two executive
officers listed above. See notes (7) through (13) above.
</FN>
</TABLE>
<PAGE>
PROPOSAL NO. 1:
ELECTION OF DIRECTORS
The Company's Bylaws provide for a board of five directors at the
time of the Annual Meeting. It is planned that a board of five directors will be
elected at the Annual Meeting. Unless otherwise instructed, the proxy holders
will vote the proxies received by them for the five nominees of the Board of
Directors named below, all of whom are presently directors of the Company. If
any nominee is unable or declines to serve as a director at the time of the
Annual Meeting, the proxies will be voted for any nominee designated by the
proxy holders to fill the vacancy. It is not expected that any nominee will be
unable or will decline to serve as a director. In the event that additional
persons are nominated for election as directors, the proxy holders intend to
vote all proxies received by them in such a manner as will assure the election
of as many of the nominees listed below as possible, and in such event, the
specific nominees to be voted for will be determined by the proxy holders. The
term of office of each person elected as a director will continue until the next
Annual Meeting of Stockholders or until the director's successor has been
elected. The following table sets forth information regarding our directors as
of April 16, 2000.
Recommendation
The Board of Directors unanimously recommends a vote FOR the nominees
listed below:
<TABLE>
<CAPTION>
Director
Name of Nominee Age Principal Occupation Since
--------------- --- -------------------- -----
<S> <C> <C> <C>
Robert L. Bailey 42 President, Chief Executive Officer and Chairman of the 1996
Board of Directors, PMC
James V. Diller 64 Vice Chairman, PMC; President, Chief Executive Officer 1983
and Chairman of the Board of Directors, Elantec
Semiconductor, Inc.
Alexandre Balkanski 39 President and Chief Executive Officer, C-Cube 1993
Microsystems, Inc.
Colin Beaumont 59 Management Consultant 1997
Frank J. Marshall 53 Private Investor and Management Consultant 1996
</TABLE>
Mr. Bailey has been a director of the Company since October 1996. Mr.
Bailey has served as the Company's President and Chief Executive Officer since
July 1997 and was appointed as Chairman of the Board in February 2000. Prior to
his present position, Mr. Bailey has served as President, Chief Executive
Officer and director of LTD since December 1993. Prior to joining LTD, Mr.
Bailey was employed by AT&T-Microelectronics from August 1989 to November 1993
where he served as Vice President of Integrated Microperipheral Products and at
Texas Instruments in various management assignments from June 1979 to August
1989. He also serves as a member of the Board of Directors of Copper Mountain
Networks.
Mr. Diller, a founder of the Company, served as the Company's Chief
Executive Officer from 1983 to July 1997 and as President from 1983 to July
1993. Mr. Diller has served as a director of the Company since the Company's
formation in 1983. Mr. Diller served as the Chairman of the Company's Board of
Directors from July 1993 until February 2000, at which time he became Vice
Chairman of the Board. Mr. Diller served as Chief Financial Officer of the
Company from its formation until July 1987. He has served on the Board of LTD
since its formation. He also serves as the President and Chief Executive Officer
and Chairman of the Board of Elantec Semiconductor, Inc. and is Chairman of the
Board of Directors of Summit Microelectronics, a privately held company.
Dr. Balkanski has been a director of the Company since August 1993. In
July 1988, Dr. Balkanski co-founded C-Cube Microsystems, Inc., a developer of
integrated circuits and software. Dr. Balkanski has held a variety of senior
management positions with C-Cube, and is currently its President, Chief
Executive Officer and a director.
<PAGE>
Mr. Beaumont has been a director of the Company since April 1997. Mr.
Beaumont served as Chief Executive Officer of Plaintree Systems, Inc. from June
1998 until February 1999 and as Chief Technology Officer from February 1999
until July, 1999. Mr. Beaumont is currently a management consultant. Mr.
Beaumont served as a board member of Plaintree Systems, Incorporated until
August 1999 and as a board member of Bell Emergis from August 1998 until March
1999. In 1995 Mr. Beaumont retired from Nortel where he was the Chief Engineer
of BNR, the largest commercial research and development facility in Canada. Mr.
Beaumont has served as a director of LTD since 1992.
Mr. Marshall has been a director of the Company since April 1996. Mr.
Marshall is currently a private investor and management consultant. Previously,
Mr. Marshall was Vice President, General Manager of Cisco Systems Inc.'s Core
Products Business Unit. Mr. Marshall has also served as Vice President of
Engineering for Cisco Systems Inc. from April 1992 to July 1995. He also serves
on the Board of Directors of Covad Communications Inc. and several private
companies. Mr. Marshall also serves on the technical advisory board of several
high technology companies, is a member of the technical advisory Board of
Interwest Partners and is a Venture Partner at Sequoia Capital.
Vote Required
The five nominees for director receiving the highest number of affirmative
votes of shares entitled to be voted for them shall be elected as directors.
Votes withheld from any director are counted for purposes of determining the
presence or absence of a quorum, but have no other legal effect under Delaware
law.
Board Meetings and Committees
The Board of Directors of the Company held seven meetings during the 1999
fiscal year. All nominees who were Board members in 1999 attended 85% or more of
the meetings of the Board of Directors and of the committees of the Board on
which the director served held during their membership period. The Board of
Directors has an Audit Committee, Benefit Plans Committee, Compensation
Committee, Stock Option Committee, Plan Committee, and Capital Expenditures
Committee. The Board does not have a Nominating Committee.
The Audit Committee, which consists of Mr. Beaumont and Mr. Marshall,
generally meets on the same date as the Board of Directors, and in addition,
held one meeting in 1999. The Audit Committee recommends engagement of the
Company's independent auditors, approves the services performed by the Company's
independent auditors and reviews the Company's accounting principles and its
system of internal accounting controls.
The Compensation Committee, which consists of Mr. Diller and Dr.
Balkanski, generally meets on the same date as the Board of Directors, and in
addition, held one meeting and took action by written consent on two occasions
in 1999. The Compensation Committee reviews and makes recommendations to the
Board concerning the Company's executive compensation policy, bonus plans and
equity incentive plans.
The Stock Option Committee, which consists of Mr. Bailey and any other one
director, took action by written consent on several occasions in 1999. The Stock
Option Committee has authority to grant stock options to purchase up to 25,000
shares of the Company's Common Stock to individuals not subject to Section 16 of
the Securities Exchange Act of 1934, as amended (the "Exchange Act").
The Plan Committee, which consists of Dr. Balkanski and Mr. Marshall did
not hold any meetings in 1999. The Plan Committee has authority to grant options
to individuals subject to Section 16 of the Exchange Act.
<PAGE>
The Benefit Plans Committee, which consists of Mr. Bailey and any other
one director, was established in July 1999 and did not hold any meetings in
1999. The Benefit Plans Committee has authority to administer and amend any
benefit plan of the Company or any Company subsidiary.
The Capital Expenditures Committee, which consists of three directors, two
of whom must be non-employee directors, was established in October 1998 and did
not hold any meetings in 1999. The Capital Expenditures Committee has authority
to approve capital expenditures.
Board Compensation
Non-employee directors receive an annual retainer of $12,000 per year plus
$1,000 per board meeting attended for their services as members of the Board of
Directors. Presently, under the Company's 1994 Stock Incentive Plan,
non-employee directors are automatically granted options to purchase 20,000
shares of the Company's Common Stock upon appointment and thereafter 5,000
shares per year, provided they are re-elected to the Board of Directors. In
1999, without taking into account the stock splits effected in May 1999 and
February 2000, Mr. Marshall, Mr. Beaumont and Dr. Balkanski each received an
automatic annual option grant to purchase 5,000 shares of the Company's Common
Stock. As adjusted for the stock splits effected in May 1999 and February 2000,
in April 1999, Mr. Marshall and Mr. Beaumont received automatic annual option
grants to purchase 20,000 shares of the Company's Common Stock at exercise
prices of $20.6407 per share and $23.8750 per share, respectively. As adjusted
for the February 2000 stock split, in June 1999, Dr. Balkanski received an
automatic annual option grant to purchase 10,000 shares of the Company's Common
Stock at an exercise price of $23.0625 per share. These options become
exercisable as to 1/4th of the shares subject to the option after one year;
thereafter, 1/48th of the shares subject to the option become exercisable at the
end of each calendar month.
In 2000, prior to the Annual Meeting, non-employee directors received or
will receive the following option grants: In April 2000, Mr. Marshall and Mr.
Beaumont each received an option grant to purchase 5,000 shares of the Company's
Common Stock. On June 1, 2000, Dr. Balkanski will receive an option grant to
purchase 5,000 shares of the Company's Common Stock. Each of these options
becomes exercisable as to 1/4th of the shares subject to the options after one
year; thereafter, 1/48th of the shares subject to the options become exercisable
at the end of each calendar month.
If Proposal No. 4 is approved by the stockholders, each newly elected or
appointed non-employee Board member will receive an automatic option grant for
40,000 shares of the Company's Common Stock upon his or her initial election or
appointment to the Board. The initial option to purchase 40,000 shares of the
Company's Common Stock would become exercisable as to 1/4th of the shares
subject to the option after one year; thereafter 1/48th of the shares subject to
the option become exercisable at the end of each calendar month. Each continuing
incumbent non-employee Board member will receive an automatic option grant to
purchase 10,000 shares of the Company's Common Stock at each Annual Shareholders
Meeting at which he or she is re-elected to the Board. The 10,000 share annual
automatic option grant would vest 1/48th per month from the date of grant.
Following the Annual Meeting, if Proposal No. 4 is approved by the
stockholders, a non-employee director that had not received an option grant
prior to the Annual Meeting, will receive an option grant pursuant to Proposal
No. 4. If Mr. Diller is elected to the Board of Directors at the Annual Meeting,
Mr. Diller will be granted an option to purchase 40,000 shares of the Company's
Common Stock. If the other non-employee directors are elected to the Board of
Directors, they will not receive additional option grants in 2000 other than the
option grants they received prior to the Annual Meeting.
<PAGE>
The Company has agreed to indemnify each director and officer against
certain claims and expenses for which the director might be held liable in
connection with past or future services to the Company and its subsidiaries. In
addition, the Company maintains an insurance policy insuring its officers and
directors against such liabilities.
Certain Relationships and Related Transactions
Dr. Balkanski and Mr. Diller each received 846 shares of the Company's
Common Stock issued in connection with a distribution of shares from Sequoia
Technology Partners VIII (Q). Sequoia Technology Partners VIII (Q) received
shares of the Company's Common Stock through the acquisition by the Company of
Abrizio, Inc.
Mr. Marshall received an aggregate of 127,030 shares of the Company's
Common Stock as a result of the acquisition by the Company of Abrizio, Inc. Of
the shares of the Company's Common Stock received by Mr. Marshall, he received
2,110 shares in connection with a distribution of shares from Sequoia Technology
VIII (Q), which shares are held by Timark L.P. ("Timark") of which Mr. Marshall
is a general partner. Mr. Marshall received the remaining 124,920 shares of the
Company's Common Stock upon exchange of shares of Abrizio, Inc., which amount
includes 105,956 shares held by Timark and 18,964 shares beneficially held by
Mr. Marshall.
During the year ended December 26, 1999, members of the Board of Directors
of the Company and executive officers of the Company received grants of options
and shares of the Company's Common Stock as set forth under "Proposal No. 1 --
Board Compensation" and "Executive Compensation."
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than 10% of the Company's Common Stock, to
file certain reports regarding ownership of, and transactions in, the Company's
securities with the Securities and Exchange Commission (the "SEC"). Such
officers, directors and 10% stockholders are also required by SEC rules to
furnish the Company with copies of all Section 16(a) forms that they file.
Based solely on its review of the copies of such forms received by the
Company, or written representations from certain reporting persons, the Company
believes that during fiscal 1999 all the reporting persons complied with Section
16(a) filing requirements except that in January 2000, Mr. Diller reported on an
amended Form 4 for November 1999 a gift of 40,000 shares of the Company's Common
Stock.
<PAGE>
PROPOSAL NO. 2:
AMENDMENT OF CERTIFICATE OF INCORPORATION TO INCREASE
AUTHORIZED COMMON STOCK
In February 2000 the Board of Directors approved an amendment to the
Company's Certificate of Incorporation to increase the number of authorized
shares of Common Stock of the Company, $0.001 par value per share, from
200,000,000 to 900,000,000 (the "Amendment").
The additional Common Stock to be authorized by adoption of the
Amendment would have rights identical to the currently outstanding Common Stock
of the Company. Adoption of the proposed Amendment would not affect the rights
of the holders of currently outstanding Common Stock of the Company, except to
the extent additional shares are actually issued. If the Amendment is adopted,
it will become effective upon filing of a Certificate of Amendment of the
Company's Certificate of Incorporation with the Secretary of State of the State
of Delaware.
On April 15, 1999 and January 20, 2000, the Company announced
two-for-one stock splits in the form of stock dividends for stockholders of
record on April 30, 1999 and January 31, 2000, respectively. At March 31, 2000,
approximately 143,610,000 shares of Common Stock were outstanding (inclusive of
stock reserved for the acquisitions of Toucan Technology Ltd. and AANetcom,
Inc., which were closed in the first quarter of 2000), and approximately
36,718,000 shares of Common Stock were reserved for options, warrants, employee
equity plans and other convertible securities including those related to the
announced acquisition of Extreme Packet Devices, Inc. This leaves the Company
with approximately 19,672,000 shares available for other corporate purposes.
Purpose and Effect of the Amendment
The principal purpose of the Amendment is to provide the Company with
the flexibility to issue Common Stock for proper corporate purposes, which may
be identified in the future, such as to effect stock splits in the form of stock
dividends, make acquisitions through the use of stock, adopt additional equity
incentive plans or reserve additional shares for issuance under such additional
plans or current plans, and raise equity capital. The Board of Directors has not
authorized or taken any action with respect to the issuance of, and has no
present agreement, arrangement or intention to issue any of the additional
shares for which approval is sought.
Under Delaware law, the Board of Directors may only split the Company's
stock by means of a stock dividend without stockholder approval if there are a
sufficient number of authorized shares available. If this proposal is not
approved, the Board would be unable to declare any significant stock dividends.
The Board has approved two 100% stock dividends since the last annual
stockholders meeting and may distribute stock dividends in the future. The Board
but has no present intention of approving a stock dividend and its decision to
do so, if ever, will be based upon market and other factors deemed relevant by
the Board.
The increased reserve of shares available for issuance may also be used
in connection with potential acquisitions. The Company has acquired other
businesses using its stock as consideration, such as the acquisitions of LTD,
the assets of Bipolar Integrated Technology, Inc., Integrated Telecom Technology
Inc., Abrizio, Inc., Toucan Technology Ltd., AANetcom, Inc. and Extreme Packet
Devices, Inc. The ability to use its stock as consideration provides the Company
with negotiation benefits and increases its ability to execute its contemplated
growth strategy which includes the acquisition of other companies or assets.
In addition, the increased reserve of shares available for issuance may
be used for new equity incentive plans. The Company may adopt new equity
incentive plans for grants to its employees, consultants and directors. Such
equity incentive plans may be used in connection with potential acquisitions as
the Company grants options to the employees of the acquired companies. The
increase may also be used to reserve additional shares under the Company's
existing equity incentive plans.
<PAGE>
The flexibility of the Board of Directors to issue additional shares of
stock could enhance the Board's ability to negotiate on behalf of the
stockholders in a takeover situation. Although it is not the purpose of the
Amendment, the authorized but unissued shares of Common Stock (as well as the
authorized but unissued shares of Preferred Stock) also could be used by the
Board of Directors to discourage, delay or make more difficult a change in the
control of the Company. For example, such shares could be privately placed with
purchasers who might align themselves with the Board of Directors in opposing a
hostile takeover bid. The issuance of additional shares could serve to dilute
the stock ownership of persons seeking to obtain control and thereby increase
the cost of acquiring a given percentage of the outstanding stock. The Company
has previously adopted certain measures that may have the effect of delaying or
preventing an unsolicited takeover attempt, including provisions of the
Certificate authorizing the Board to issue up to 5,000,000 shares of Preferred
Stock with terms, provisions and rights fixed by the Board. The Board of
Directors is not aware of any pending or proposed effort to acquire control of
the Company.
The availability of additional shares of Common Stock is particularly
important in the event that the Board of Directors needs to undertake any of the
foregoing actions on an expedited basis and therefore needs to avoid the time
(and expense) of seeking stockholder approval in connection with the
contemplated action. If the Amendment is approved by the stockholders, the Board
of Directors does not intend to solicit further stockholder approval prior to
the issuance of any additional shares of Common Stock, except as may be required
by applicable law or rules. For example, under Nasdaq rules, stockholder
approval is required for any issuance of 20% or more of the Company's
outstanding shares in connection with acquisitions.
Vote Required
The affirmative vote of the holders of a majority of the outstanding
shares of the Common Stock is required to approve this Amendment to the
Company's Certificate of Incorporation. As a result, abstentions and broker
non-votes will have the same effect as negative votes.
Recommendation
The Board of Directors unanimously recommends a vote FOR Proposal No. 2.
<PAGE>
PROPOSAL NO. 3:
AMENDMENT OF COMPANY'S 1994 INCENTIVE STOCK PLAN
TO INCREASE SHARES RESERVED FOR ISSUANCE
ON AN ANNUAL BASIS AND RESTRICT THE ADMINISTRATOR OF
THE 1994 INCENTIVE STOCK PLAN FROM REDUCING THE EXERCISE PRICES OF
OPTIONS AND STOCK PURCHASE RIGHTS GRANTED TO THE EXECUTIVE OFFICERS
The Company's 1994 Incentive Stock Plan (the "1994 Plan") was adopted
by the Board of Directors in January 1994 and approved by the stockholders in
May 1994. In February 2000, the Board of Directors approved amendments to the
1994 Plan to increase the number of shares of Common Stock reserved for issuance
on January 1 of each year (beginning on January 1, 2001) by the lesser of (i) 5%
of the outstanding shares on such date (ii) 45,000,000 shares, or (iii) a lesser
amount determined by the Board of Directors and to restrict the Board of
Directors and the Administrator of the 1994 Plan from reducing the exercise
prices of any options or stock purchase rights that have been granted to the
executive officers or directors of the Company.
At the Annual Meeting, the stockholders are being requested to consider
and approve the proposed amendments.
Purpose and Effect of the Amendment
The Company proposes to increase the percentage and raise the limit by
which the Company reserves shares of Common Stock for issuance under the 1994
Plan in order to provide for stock option grants to new employees and
consultants, stock option grants in connection with the continued service of key
employees, and option grants to employees and consultants that may join the
Company through future acquisitions. The Board believes that this proposal and
the method by which the options will be granted are consistent with the
Company's historic use of stock options and actions taken by other technology
companies.
The Board believes that the current 4% rate of share reservation may
not be sufficient for the Company to meet the needs of its contemplated growth
strategy, which partially consists of the aggressive attraction of key
employees. To date, the Company has been relatively successful in attracting
highly talented technical employees by offering attractive salary and stock
option packages. The Company's strategy contemplates doubling the number of its
employees in the year 2000. The Board believes that a rate increase from 4% to
5% will support this rapid hiring model.
In addition, the Company is facing strong employment competition from
smaller startup companies which can on occasion offer a greater equity
participation rate and higher potential returns. The Board believes that the
Company may be required to increase the typical number of options granted to
retain key employees in order to compete with these smaller companies. The Board
believes that retaining key employees is critical to the Company's success.
The Company also faces strong competition from equivalently sized peer
companies who allocate a greater percentage of their outstanding shares to their
stock option plans. The Board believes that, over time, unless the percentage of
shares allocated to stock option plans is increased, other peer companies could
be in a position to offer greater reward to potential or current PMC employees.
The Board believes that allocating a greater percentage of outstanding shares to
the 1994 Plan would provide further ammunition in the Company's efforts to
maintain the high employee attraction and retention rates required to support
the employee growth rate contemplated in the Company's strategy.
The Company completed acquisitions of four companies since the 1999
Annual Meeting of Stockholders. The Company's strategy contemplates more
acquisitions in the future in order to gain access to key technologies and
valuable technical employees. The Company may issue options to buy Common Stock
as an incentive to retain these key employees. The Board believes that the
Company should increase the Option Plan reservation percentage in order to
support the Company's growth as driven by its contemplated strategy to acquire
more companies and employees.
The limited percentage of shares allocated to the 1994 Plan has also
introduced an element of uncertainty into the Company's ability to plan its
equity incentive budgets. For example, at times, growth in the number of
employees, or in the number of shares required to attract and maintain
employees, has demonstrated that the Company's incentive plans could be depleted
before the next annual increase. In addition, in the past, the Company's
management has had difficulty setting employee's expectations about future
equity incentive grants. The Board believes that in order to achieve its goals
for growth, a greater percentage of shares should be reserved for issuance under
the 1994 Plan.
The Company believes that allowing the Administrator of the 1994 Plan
to reduce the exercise prices of options and stock purchase rights to executive
officers and directors should the publicly trading price of the Company's Common
Stock fall below the exercise prices would not provide sufficient incentive to
encourage the achievement of superior performance results over time and would
not align the stockholders' and the executive officers' and directors'
interests. Prohibiting the reduction of the exercise prices of options and stock
purchase rights would provide further incentive for executive officers and
directors to direct and manage the Company. Furthermore, the Company believes
that the executive officers and directors would strive to create sustainable
long-term value for the Company because the options granted to them vest over
time. In this manner, the executive officers' and directors' interests would be
aligned closely with the stockholders' interests.
Required Vote
At the Annual Meeting, the stockholders are being asked to approve this
amendment to the 1994 Plan. The affirmative vote of the holders of a majority of
the outstanding shares of the Common Stock is required to approve this Proposal.
As a result, abstentions and broker non-votes will have the same effect as
negative votes.
Recommendation
The Board of Directors unanimously recommends a vote FOR Proposal No. 3.
Summary of the 1994 Plan
General. The purpose of the 1994 Plan is to attract and retain the best
available personnel for positions of substantial responsibility with the
Company, to provide additional incentive to the employees, directors,
consultants, sales representatives and distributors of the Company and to
promote the success of the Company's business. Options and stock purchase rights
may be granted under the 1994 Plan. "Incentive Stock Options," as defined in
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), may
be granted only to employees. As of March 31, 2000, options to purchase
19,656,080 shares of Common Stock had been granted and were outstanding under
the 1994 Plan, 5,619,746 shares were available for future grant, options to
purchase 5,942,246 shares had been exercised and 80,000 shares had been issued
as a stock bonus. The closing price of the Company's Common Stock as last
reported on March 31, 2000 on the Nasdaq National Market was $203.6875.
<PAGE>
Administration. The 1994 Plan may generally be administered by the
Board or a Committee appointed by the Board (as applicable, the
"Administrator"). The Board has several Committees with the authority to grant
stock options. The Administrator determines the terms of options granted,
including the exercise price, number of shares subject to the option and the
exercisability thereof, and the terms of stock purchase rights.
Eligibility; Limitations. Nonstatutory stock options and stock purchase
rights may be granted under the 1994 Plan to employees, directors and
consultants, sales representatives and distributors of the Company and any
parent or subsidiary of the Company. Incentive stock options may be granted only
to employees. The Administrator, in its discretion, selects the employees,
directors and consultants to whom options and stock purchase rights may be
granted, the time or times at which such options and stock purchase rights shall
be granted, and the number of shares subject to each such grant.
Section 162(m) of the Code places limits on the deductibility for
federal income tax purposes of compensation paid to certain executive officers
of the Company. In order to preserve the Company's ability to deduct the
compensation income associated with options and stock purchase rights granted to
such persons, the 1994 Plan provides that no employee may be granted, in any
fiscal year of the Company, options and stock purchase rights to purchase more
than 800,000 shares of Common Stock.
Nontransferability. Options and stock purchase rights granted under the
1994 Plan are not transferable other than by will or the laws of descent and
distribution, and may be exercised during the optionee's lifetime only by the
optionee.
Terms and Conditions of Options. Each option is evidenced by a stock
option agreement between the Company and the optionee, and is subject to the
following additional terms and conditions:
(a) Exercise Price. The Administrator determines the exercise price of
the option at the time the option is granted. The exercise price of an incentive
stock option may not be less than 100% of the fair market value of the Common
Stock on the date such option is granted; provided, however, that the exercise
price of an incentive stock option granted to a 10% stockholder may not be less
than 110% of the fair market value of the Common Stock on the date such option
is granted. The fair market value of the Common Stock is generally determined
with reference to the closing sale price for the Common Stock (or the closing
bid if no sales were reported) on the last market trading day prior to the date
the option is granted.
(b) Exercise Period. The Administrator determines when an option
granted thereunder will become exercisable. Options granted generally become
exercisable as to 1/4th of the shares subject to the option after one year;
thereafter, 1/48th of the shares subject to the option become exercisable at the
end of each calendar month. The Administrator determines when options may, in
its discretion, accelerate the vesting of any outstanding option.
(c) Form of Consideration. The means of payment for shares issued upon
exercise of an option are specified in each option agreement. The 1994 Plan
permits payment to be made by cash, check, promissory note, other shares of
Common Stock of the Company (with some restrictions), cashless exercises, a
reduction in the amount of any Company liability to the optionee, any other form
of consideration permitted by applicable law, or any combination thereof.
(d) Term of Option. The term of an incentive stock option may be no
more than ten (10) years from the date of grant; provided that in the case of an
incentive stock option granted to a 10% stockholder, the term of the option may
be no more than five (5) years from the date of grant. No option may be
exercised after the expiration of its term.
<PAGE>
(e) Termination of Employment. If an optionee's employment or
consulting relationship terminates for any reason (other than death or
disability), then all options held by the optionee under the 1994 Plan expire on
the earlier of (i) the date set forth in his or her notice of grant or if no
date is set forth in his or her notice of grant, the date 90 days following such
employee's termination of employment with the Company, or (ii) the expiration
date of such option. To the extent the option is exercisable at the time of such
termination, the optionee may exercise all or part of his or her option at any
time before termination.
(f) Death or Disability. If an optionee's employment or consulting
relationship with the Company terminates as a result of death or disability,
then all options held by such optionee under the 1994 Plan expire on the earlier
of (i) 12 months from the date of such termination, or (ii) the expiration date
of such option. The optionee (or the optionee's estate or the person who
acquires the right to exercise the option by bequest or inheritance) may
exercise all or part of the option at any time before such expiration to the
extent that the option was exercisable at the time of such termination.
(g) Other Provisions. The stock option agreement may contain other
terms, provisions and conditions not inconsistent with the Plan as may be
determined by the Administrator.
Terms of Options to Non-Employee Directors. Please see Proposal No. 4
for a proposal to amend the terms of option grants to non-employee directors and
a description of the current terms of such options grants.
Terms of Stock Purchase Rights. Shares issued pursuant to stock
purchase rights can be subject to repurchase by the Company at the original
purchase price of the shares in the event that the person acquiring the shares
ceases to be employed by the Company or ceases to be a distributor for or
representative of the Company. The repurchase option lapses at a rate determined
by the Administrator.
Adjustments Upon Changes in Capitalization. In the event that the stock
of the Company changes by reason of any stock split, reverse stock split, stock
dividend, combination, reclassification or other similar change in the capital
structure of the Company effected without the receipt of consideration,
appropriate adjustments shall be made in the number and class of shares of stock
subject to the 1994 Plan, the number and class of shares of stock subject to any
option or stock purchase right outstanding under the 1994 Plan, and the exercise
price of any such outstanding option or stock purchase right.
In the event of a liquidation or dissolution of the Company, any
unexercised option or stock purchase right will terminate. The Administrator
may, in its discretion provide that each optionee shall have the right to
exercise all of the optionee's options and stock purchase rights, including
those not otherwise exercisable at a date fixed by the Administrator prior to
the consummation of the liquidation or dissolution.
In connection with any merger, consolidation, acquisition of assets or
like occurrence involving the Company, each outstanding option or stock purchase
right will be assumed or an equivalent option or right substituted by the
successor corporation. The Administrator may, in lieu of such assumption or
substitution, give the optionee the right to exercise the option or stock
purchase right as to all the optioned stock, including shares not otherwise
exercisable. In such event, the Administrator shall notify the optionee that the
option or stock purchase right is fully exercisable for fifteen days from the
date of such notice and that the option or stock purchase right terminates upon
expiration of such period.
Amendment and Termination of the 1994 Plan. The Board may amend, alter,
suspend or terminate the 1994 Plan, or any part thereof, at any time and for any
reason. However, the Company will obtain stockholder approval for any amendment
to the 1994 Plan to the extent necessary to comply with Section 162(m) and
Section 422 of the Code, or any similar rule or statute. No such action by the
Board or stockholders may alter or impair any option or stock purchase right
previously granted under the 1994 Plan without the written consent of the
optionee. Unless terminated earlier, the 1994 Plan shall terminate ten years
from the date of its approval by the stockholders or the Board of the Company,
whichever is earlier.
<PAGE>
Federal Income Tax Consequences
The summary below applies only with respect to optionees who are
required to file U.S. tax returns and to the Company only as affected by U.S.
tax laws.
Incentive Stock Options. An optionee who is granted an incentive stock
option does not recognize taxable income at the time the option is granted or
upon its exercise, although the exercise is an adjustment item for alternative
minimum tax purposes and may subject the optionee to the alternative minimum
tax. Upon a disposition of the shares more than two years after grant of the
option and one year after exercise of the option, any gain or loss is treated as
long-term capital gain or loss. Net capital gains on shares held more than 12
months may be taxed at a maximum federal rate of 20%. Capital losses are allowed
in full against capital gains and up to $3,000 against other income. If these
holding periods are not satisfied, the optionee recognizes ordinary income at
the time of disposition equal to the difference between the exercise price and
the lower of (i) the fair market value of the shares at the date of the option
exercise or (ii) the sale price of the shares. Any gain or loss recognized on
such a premature disposition of the shares in excess of the amount treated as
ordinary income is treated as long-term or short-term capital gain or loss,
depending on the holding period. A different rule for measuring ordinary income
upon such a premature disposition may apply if the optionee is also an officer,
director, or 10% stockholder of the Company. Unless limited by Section 162(m) of
the Code, the Company is entitled to a deduction in the same amount as the
ordinary income recognized by the optionee.
Nonstatutory Stock Options. An optionee does not recognize any taxable
income at the time he or she is granted a nonstatutory stock option. Upon
exercise, the optionee recognizes taxable income generally measured by the
excess of the then fair market value of the shares over the exercise price. Any
taxable income recognized in connection with an option exercise by an employee
of the Company is subject to tax withholding by the Company. Unless limited by
Section 162(m) of the Code, the Company is entitled to a deduction in the same
amount as the ordinary income recognized by the optionee. Upon a disposition of
such shares by the optionee, any difference between the sale price and the
optionee's exercise price, to the extent not recognized as taxable income as
provided above, is treated as long-term or short-term capital gain or loss,
depending on the holding period. Net capital gains on shares held more than 12
months may be taxed at a maximum federal rate of 20%. Capital losses are allowed
in full against capital gains and up to $3,000 against other income.
Stock Purchase Rights. Stock purchase rights will generally be taxed in
the same manner as nonstatutory stock options. However, restricted stock is
generally purchased upon the exercise of a stock purchase right. At the time of
purchase, restricted stock is subject to a "substantial risk of forfeiture"
within the meaning of Section 83 of the Code because the Company may repurchase
the stock when the purchaser ceases to provide services to the Company. As a
result of this substantial risk of forfeiture, the purchaser will not recognize
ordinary income at the time of purchase. Instead, the purchaser will recognize
ordinary income on the dates when the stock is no longer subject to a
substantial risk of forfeiture. The stock will generally cease to be subject to
a substantial risk of forfeiture when it is no longer subject to the Company's
right to repurchase the stock upon the purchaser's termination of employment
with the Company. At such times, the purchaser will recognize ordinary income
measured as the difference between the purchase price and the fair market value
of the stock on the date the stock is no longer subject to a substantial risk of
forfeiture.
The purchaser may accelerate to the date of purchase his or her
recognition of ordinary income, if any, and begin his or her capital gains
holding period by timely filing (i.e., within 30 days of purchase),an election
pursuant to Section 83(b) of the Code. In such event, the ordinary income
recognized, if any, is measured as the difference between the purchase price and
the fair market value of the stock on the date of purchase, and the capital gain
holding period commences on such date. The ordinary income recognized by a
purchaser who is an employee will be subject to tax withholding by the Company.
Different rules may apply if the purchaser is also an officer, director, or 10%
stockholder of the Company.
<PAGE>
The foregoing is only a summary of the effect of federal income
taxation upon optionees, holders of stock purchase rights and the Company with
respect to the grant and exercise of options and stock purchase rights under the
1994 Plan. It does not purport to be complete, and does not discuss the tax
consequences of the employee's or consultant's death or the provisions of the
income tax laws of any municipality, state or foreign country in which the
employee or consultant may reside.
Participation in the Option Plan. The grant of options and stock
purchase rights under the 1994 Plan to executive officers is subject to the
discretion of the Board or the Administration. Options to purchase a total of
2,080,000 split-adjusted shares were granted during fiscal 1999 to executive
officers under the 1994 Plan. There has been no determination by the Board or
the Administration with respect to future awards under the 1994 Plan.
The grant of options under the 1994 Plan to non-employee directors is
described under "Proposal No. 4-- Terms of Options to Non-Employee Directors."
Please see "Proposal No. 1-- Board Compensation" for option grants to
non-employee directors in 1999 and 2000.
The following table sets forth information regarding grants made under
the 1994 Plan for the last fiscal year to (i) each executive officer named in
the Summary Compensation Table, (ii) all current executive officers as a group,
(iii) all non-employee directors as a group, and (iv) all employees as a group.
Future option grants to the individuals listed below are not presently
determinable, except for the automatic option grants to non-employee directors
described above.
<TABLE>
<CAPTION>
Weighted Average
Options Exercise Price
Identity of Person or Group Granted (#) Per Share
--------------------------- ----------- ---------
<S> <C> <C>
James V. Diller........................................... 0 $ 0.00
Robert L. Bailey.......................................... 1,260,000 $ 29.85
Colin Beaumont............................................ 20,000 $ 23.88
John W. Sullivan.......................................... 240,000 $ 31.15
Gregory Aasen............................................. 820,000 $ 29.30
Alexandre Balkanski....................................... 10,000 $ 23.06
Frank Marshall............................................ 20,000 $ 20.64
All current executive officers as a group(1).............. 2,320,000 $ 29.79
All non-employee directors as a group..................... 50,000 $ 22.42
All employees as a group(2)............................... 7,357,486 $ 31.55
______________________________
(1) Includes Robert L. Bailey, Gregory D. Aasen and John W. Sullivan.
(2) Excludes executive officers named above.
</TABLE>
<PAGE>
PROPOSAL NO. 4
TO CHANGE AUTOMATIC OPTION GRANTS TO NON-EMPLOYEE
DIRECTORS FROM 20,000 SHARES TO 40,000 SHARES ON
APPOINTMENT AND FROM 5,000 SHARES TO 10,000 SHARES ANNUALLY
In February 2000, the Board of Directors also approved an amendment to
the 1994 Plan to increase the annual option grants to non-employee directors.
The Company's stockholders are being asked to approve the amendment to the terms
of options to non-employee directors under the Company's 1994 Plan with no
increase in the number of share options to be granted due to future stock
splits. The proposed amendment would effect the following changes to the terms
of options to non-employee directors.
(i) Each newly elected or appointed non-employee Board member will
receive an automatic option grant to purchase 40,000 shares of the
Company's Common Stock upon his or her initial election or
appointment to the Board. Previously, such a newly elected or
appointed non-employee Board member would have received an initial
option grant to purchase 20,000 shares. The initial option grant
to purchase 40,000 shares would become exercisable as to 1/4th of
the shares subject to the option after one year; thereafter 1/48th
of the shares subject to the option become exercisable at the end
of each calendar month.
(ii) Each continuing non-employee Board member will receive an
automatic option grant to purchase 10,000 shares of Common Stock
on the date of the Annual Meeting of Stockholders at which he or
she is re-elected to the Board. Previously, such a continuing
non-employee Board member would have received an annual option
grant to purchase 5,000 shares. The annual automatic option grant
to purchase 10,000 shares would vest as to 1/48th of the shares
under such option per month from the date of grant.
The proposed amendment is intended to assure that the terms of options
to non-employee directors are competitive and will provide sufficient equity
incentives to attract and retain the services of highly-qualified and
experienced non-employee Board members.
Summary of 1994 Plan
The principal features of the 1994 Plan, as most recently amended are
described in Proposal No. 3. The proposed and current terms of options granted
to non-employee directors are described below:
Terms of Options to Non-Employee Directors. Option grants to members of
the Board of Directors who are not employees or consultants of the Company
("non-employee directors") are automatic and non-discretionary. Based on the
proposed amendment, non-employee directors appointed after June 15, 2000 will
receive an option to purchase 40,000 shares of the Company's Common Stock upon
joining the Board of Directors. The initial option to purchase 40,000 shares of
the Company's Common Stock will vest 1/4th of the total shares subject to the
option after one year and 1/48th of the shares subject to the option vest at the
end of each calendar month thereafter. After June 15, 2000, all incumbent
non-employee directors shall receive an automatic annual grant to purchase
10,000 shares of the Company's Common Stock immediately following their
re-election to the Board of Directors at the next Annual Meeting. The shares
under the annual option grant shall become exercisable as to 1/48th of the
shares subject to the option at the end of each calendar month.
Currently, upon initial election, each non-employee director of the
Company automatically is granted an option to purchase 20,000 shares of the
Company's Common Stock. On June 1 in each calendar year, each continuing
non-employee director of the Company who first served as a non-employee director
prior to September 1, 1995 automatically is granted an option to purchase 5,000
shares of the Company's Common Stock, provided that such person has served in
such capacity on each such date. Each non-employee director of the Company who
first served as a non-employee director after September 1, 1995 automatically
receives an option to purchase 5,000 shares of the Company's Common Stock on
each anniversary date of such person's election to the Board, provided such
person continues to serve as a non-employee director on each such anniversary
date. Additionally, in September 1996, the Board granted an option to purchase
5,000 shares of the Company's Common Stock to each non-employee director who
first served as an non-employee director prior to September 1, 1995. Options
granted before March 1, 1996 become exercisable at the rate of 1/48th of the
shares subject to the option at the end of each calendar month. Options granted
after March 1, 1996, become exercisable at the rate of 1/4th of the total shares
subject to the option after one year; thereafter, 1/48th of the shares subject
to the option vest at the end of each calendar month.
Participation in the Option Plan. If this Proposal No. 4 is approved by
the stockholders, a non-employee director who did not receive an option grant
prior to the Annual Meeting, would be entitled to receive an option grant. See
"Proposal No. 1-- Board Compensation" for option grants to non-employee
directors in 1999 and 2000.
Required Vote
At the Annual Meeting, the stockholders are being asked to approve this
amendment to the 1994 Plan. The affirmative vote of the holders of a majority of
the outstanding shares of the Common Stock is required to approve this Proposal.
As a result, abstentions and broker non-votes will have the same effect as
negative votes.
Recommendation
The Board of Directors unanimously recommends a vote FOR Proposal No. 4.
<PAGE>
PROPOSAL NO. 5:
CONFIRMATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Company's Board of Directors has selected Deloitte & Touche LLP,
Independent Auditors, to audit the financial statements of the Company for the
2000 fiscal year and recommends that the stockholders ratify such selection. In
the event of a negative vote, the Board of Directors will reconsider its
selection.
Vote Required
The affirmative vote of a majority of the Votes Cast, together with the
affirmative vote of a majority of the required quorum, is required to confirm
the appointment of Deloitte & Touche LLP as independent auditors of the Company
for the 2000 fiscal year.
Recommendation
The Board of Director unanimously recommends a vote FOR Proposal No. 5.
<PAGE>
EXECUTIVE COMPENSATION
Compensation Tables
Summary Compensation Table. The following table sets forth the
compensation paid by any person for all services rendered in all capacities to
the Company, for each of the three fiscal years ending in fiscal 1999, to the
Chief Executive Officer and each of the other executive officers of the Company
in fiscal 1999:
<TABLE>
<CAPTION>
Long-Term
Compensation(1)
Securities All Other
Annual Compensation Underlying Compensation
Name and principal Position Year Salary ($) Bonus ($) Options (#) ($)(2)
<S> <C> <C> <C> <C> <C>
Robert L. Bailey............................... 1999 254,279 469,735 1,260,000 7,248(3)
President, Chief Executive Officer and 1998 230,185 456,019 600,000 9,765(4)
Chairmand of the Board of Directors 1997 211,415 459,837 600,000 7,751(5)
Gregory Aasen.................................. 1999 198,634 231,314 820,000 362
Chief Operating Officer 1998 168,968 238,060 400,000 364
1997 147,810 186,102 400,000 198
John W. Sullivan (6)........................... 1999 164,919 140,420 240,000 1,150
Vice President Finance 1998 140,165 141,376 100,000 483
and Chief Financial Officer 1997 87,916 84,552 300,000 27,003(7)
_________________________________
<FN>
(1) The Company made no restricted stock awards during the periods presented.
(2) Life insurance premiums, except as indicated in Notes (3), (4) , (5) and (7).
(3) Includes $486 for life insurance premium and $6,762 for tax preparation.
(4) Includes $798 for life insurance premium and $8,967 for tax preparation.
(5) Includes $107 for life insurance premium and $7,644 for tax preparation.
(6) Mr. Sullivan joined the Company in April 1997 and was elected as Vice
President Finance and Chief Financial Officer in July 1997.
(7) Includes $110 for life insurance premium and $26,893 for relocation expenses.
</FN>
</TABLE>
Option Grants in Last Fiscal Year. The following table sets forth each
stock option grant made during fiscal 1999 to each of the executive officers
named in the Summary Compensation Table above:
<TABLE>
<CAPTION>
Individual Grants
Potential Realizable Value
Number of % of Total at Assumed Annual Rates of
Securities Options Granted Exercise Stock Price Appreciation for
Underlying to or Base Option Term(5)
Options Employees in Price Expiration
Name Granted(1)(2) Fiscal Year(3) ($/Sh)(4) Date 5%($) 10%($)
<S> <C> <C> <C> <C> <C> <C> <C>
Robert L. Bailey......... 780,000 8.0% 15.9844 01/04/2009 $ 7,840,953 $ 19,870,513
480,000 4.9% 52.3750 12/15/2009 $ 15,810,411 $ 40,066,685
Gregory Aasen............ 520,000 5.4% 15.9844 01/04/2009 $ 5,227,302 $ 13,247,009
300,000 3.1% 52.3750 12/15/2009 $ 9,881,507 $ 25,041,678
John W. Sullivan......... 140,000 1.4% 15.9844 01/04/2009 $ 1,407,350 $ 3,566,502
100,000 1.0% 52.3750 12/15/2009 $ 3,293,836 $ 8,347,226
____________________________
<FN>
(1) The listed options become exercisable as to 1/4th of the shares subject to
the option one year after the date of grant and thereafter monthly as to
1/48th of the shares subject to the option with full vesting occurring on
the fourth anniversary of the date of grant.
(2) Under the terms of the Company's 1994 Incentive Stock Plan, the Board of
Directors retains discretion, subject to plan limits, to modify the terms
of outstanding options and to reprice the options.
(3) The Company granted options to purchase 9,677,486 shares of Common Stock to
employees in fiscal 1999.
(4) The exercise price and tax withholding obligations related to exercise may
in some cases be paid by delivery to the Company of other shares or by offset
of the shares subject to the option.
(5) The 5% and 10% assumed annualized rates of compound stock price
appreciation are mandated by rules of the Securities and Exchange
Commission and do not represent the Company's estimate or a projection by
the Company of future Common Stock prices.
</FN>
</TABLE>
<PAGE>
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End
Values. The following table sets forth, for each of the executive officers named
in the Summary Compensation Table above, stock options exercised during fiscal
1999 and the fiscal year-end value of unexercised options:
<TABLE>
<CAPTION>
Number of Securities Value(1) of Unexercised In
Shares Value Underlying Unexercised the Money Options at Fiscal
Acquired on Realized(1)(2) Options at Fiscal Year-End: Year-End:
Name Exercise(1) ($) Exercisable/Unexercisable(3) Exercisable/Unexercisable($)
<S> <C> <C> <C> <C> <C> <C> <C>
Robert L. Bailey......... 1,093 $28,279 957,497/1,739,167 (4) 65,143,972/85,915,219
Gregory Aasen............ 922 $24,856 683,332/1,136,668 46,452,355/56,681,957
John W. Sullivan......... 126,533 $2,768,423 122,514/392,086 8,246,701/20,212,636
_________________________________
<FN>
(1) Shares acquired includes shares purchased pursuant to the Company's
Employee Stock Purchase Plan. Value realized includes the difference
between the closing market price of the Common Stock on the purchase date
and the purchase price of the shares purchased.
(2) Market value of underlying securities at exercise date (for value
realized) or year-end (for value at year-end), minus the exercise price.
At December 26, 1999 the closing market price for the Company's stock was
$72.625.
(3) Does not include outstanding LTD Special Shares redeemable for shares of
Common Stock of the Company.
(4) Includes 36,664 shares issuable upon redemption of LTD Special Shares
subject to options.
</FN>
</TABLE>
Employment Agreements. Robert L. Bailey, Gregory Aasen and John W.
Sullivan each have entered into employment agreements with the Company. Under
the terms of the employment agreements, upon a termination without cause as
defined in the employment agreements and no change of control as defined in the
employment agreements is reasonably expected within the next 60 days or has
occurred in the past two years, the executive officers are entitled to receive
their base salary and accrued vacation through the date of termination. If the
officers are terminated without cause or constructively terminated as defined in
the employment agreements and a change of control is reasonably expected to
occur within 60 days of the termination or has occurred within the past two
years, the officers are entitled to the following benefits: (1) their base
salary through the date of termination; (2) a lump-sum payment equal to four
percent of their current base salary for each full month they were employed with
the Company, provided that the total payment shall not exceed two times their
current base salary; (3) a lump-sum payment equal to two percent of their prior
year's bonus for each full month they were employed with the Company; and (4)
all accrued vacation through the date of termination. In addition, the executive
officers are entitled to execute consulting agreements with the Company that
would require them to provide service to the Company during each calendar
quarter and maintain the confidentiality of the Company's trade secrets. While
they serve as consultants to the Company, their stock options would continue to
vest and be exercisable until 30 days after the options have vested. Each of Mr.
Bailey and Mr. Sullivan also has the right to terminate employment and become a
consultant to the Company on these terms if on the first anniversary of a change
of control of the Company, he is an employee of the Company.
Under the terms of the employment agreements, "cause" means (i) gross
dereliction of duties which continues after at least two notices, each 30 days
apart, from the Chief Executive Officer (or in the case of the Chief Executive
Officer, from a director designated by a majority of the board of directors),
specifying in reasonable detail the tasks which must be accomplished and a
timeline for their accomplishment to avoid termination for Cause; (ii) willful
and gross misconduct which injures the Company; (iii) willful and material
violation of laws applicable to the Company; or (iv) embezzlement or theft of
Company property. "Change of control" under the employment agreements means the
occurrence of any of the following events:
<PAGE>
(i) any "person" or "group" as such terms are defined under Sections 13
and 14 of the Securities Exchange Act of 1934 ("Exchange Act")
(other than the Company, a subsidiary of the Company, or a Company
employee benefit plan) is or becomes the "beneficial owner" (as
defined in Exchange Act Rule 13d-3), directly or indirectly, of
Company securities representing 50% or more of the combined voting
power of the Company's then outstanding securities;
(ii) the closing of (a) the sale of all or substantially all of the
assets of the Company if the holders of Company securities
representing all voting power for the election of directors before
the transaction hold less than a majority of the total voting power
for the election of directors of all entities which acquire such
assets, or (b) the merger of the Company with or into another
corporation if the holders of Company securities representing all
voting power for the election of directors before the transaction
hold less than a majority of the total voting power for the election
of directors of the surviving entity;
(iii) the issuance of securities which would give a person or group
beneficial ownership of Company securities representing 50% or more
of all voting power for the election of directors; or
(iv) a change in the board of directors such that the incumbent directors
and nominees of the incumbent directors are no longer a majority of
the total number of directors.
"Constructive termination" under the employment agreements means (i) a material
reduction in Executive's Base Salary, target bonus or benefits; (ii) a material
reduction in title, authority, status, obligations or responsibilities; or (iii)
the requirement that Executive relocate more than 100 miles from the current
Company headquarters.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee consists of Mr. Diller and Dr. Balkanski.
The Stock Option Committee consists of Mr. Bailey and any other director. The
Benefit Plans Committee consists of Mr. Bailey and any other director. See
"Proposal No. 1 - Certain Relationships and Related Transactions."
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following report is provided to stockholders by the members of the
Compensation Committee of the Board of Directors.
Compensation Philosophy. Under the supervision of the Compensation
Committee of the Board of Directors, the Company has developed and implemented
compensation policies, plans and programs which seek to enhance the
profitability of the Company, and thus stockholder value, by aligning closely
the financial interests of the Company's senior managers with those of its
stockholders. In furtherance of these goals, annual base salaries are generally
set below competitive levels to emphasize quarterly and longer-term incentive
compensation. This is meant to attract, motivate and retain corporate officers
and other key employees to perform to the full extent of their abilities. Both
types of incentive compensation are variable and closely tied to corporate
performance in a manner that encourages continuing focus on profitability and
stockholder value.
Compensation for the Company's executive officers consists of an annual
base salary and quarterly and longer-term incentive compensation. The Committee
considers the total compensation (earned or potentially available) of each
executive officer in establishing each element of compensation.
Cash Compensation. Each fiscal year the Committee reviews with the
Chief Executive Officer and approves, with appropriate modifications, an annual
salary plan for the Company's senior executives (other than the Chief Executive
Officer). This annual salary plan is composed of two elements: a base salary
plan and a quarterly bonus plan. The base salary plan is based on industry, peer
group, and national surveys and performance judgements as to the past and
expected future contributions of the individual senior executives. The base
salaries are fixed at a level below the competitive amounts paid to senior
managers with comparable qualifications, experience and responsibilities at
other similarly sized high-technology companies. In addition to the base
salaries, each executive officer, including the Chief Executive Officer, is
eligible to receive a quarterly cash bonus equal to a percentage of the
Company's operating group's pre-tax profits for the quarter. The percentages of
profits for each participant are determined annually by the Compensation
Committee based upon performance judgments as to the past and expected future
contributions of the individual senior executives.
Increases to executive officer base salaries in fiscal 2000 were
determined by the Committee after general consideration of total fiscal year
1999 compensation, industry and peer group surveys, individual position and
responsibilities and the individual's total compensation package (including
annual incentive and long-term incentive compensation) in fiscal 1999 versus the
proposed plan for fiscal 2000. Together, the base salary plan and the quarterly
bonus plan provide a cash compensation package that is competitive with the
industry and peer groups.
In fiscal 1999, the Company generally attained its performance goals
for pre-tax operating profit (excluding non-recurring charges), and bonuses
ranged in amount from approximately 46% to approximately 54% of total cash-based
compensation for the executive officers named in the Summary Compensation Table
(other than the Chief Executive Officer).
The industry and peer group used by the Compensation Committee for
purposes of determining executive officer compensation is not the same peer
group used in connection with cumulative total stockholder return because the
Compensation Committee believes that the Company's most direct competitors for
executive talent are not necessarily all of the companies included in that peer
group. To construct the industry and peer group for executive officer
compensation, the Company chose companies in the semiconductor industry that (i)
have revenues comparable to the Company's revenues, or (ii) compete with the
Company for executive talent irrespective of revenue. Companies are included in
the latter group if their executives have skills and expertise similar to the
skills and expertise the Company requires of its executive officers.
<PAGE>
Stock Options. During each fiscal year, the Stock Option Committee
considers the desirability of granting to executive officers awards under the
Company's 1994 Incentive Stock Plan, which allows for the grant of long-term
incentives in the form of stock options and stock purchase rights. The Stock
Option Committee believes stock option grants encourage the achievement of
superior results over time and align employee and stockholder interests. In
fixing the grants of stock options to executive officers (other than the Chief
Executive Officer) in the last fiscal year, the Stock Option Committee reviewed
with the Chief Executive Officer the recommended individual award, taking into
account scope of accountability, strategic and operational goals, and
anticipated performance requirements and contributions of the senior management
group. In addition, when hiring new executive officers, the Committee may
recommended a grant of options upon acceptance of employment. These grants are
made in order to retain qualified personnel and take into account the
compensation policies of the Company's competitors and the unique qualifications
of the new executives.
Chief Executive Officer Compensation. The Compensation Committee
reviews and fixes the total cash compensation of the Chief Executive Officer
based on similar competitive compensation data as for all executive officers and
the Compensation Committee's assessment of his past performance and its
expectation as to his future contributions in leading the Company and
positioning the Company for future growth. For fiscal 1999 the cash bonuses paid
to the Company's Chief Executive Officers was approximately 65% of the total
cash-based compensation, based on the pre-tax operating profit (excluding the
non-recurring expenses) of the Company. For fiscal 1999 the Company granted
stock options to the Chief Executive Officer to purchase 780,000 shares of
common stock exercisable at $15.9844 per share and 480,000 shares of common
stock exercisable at $52.375 per share. The award to the Chief Executive Officer
was based, among other things, on a review of competitive compensation data from
several surveys, data from selected peer companies (based on company size,
revenue rate and relative number of outstanding shares) and information
regarding long-term compensation awards, as well as the Committee's perception
of past and expected future contributions to the Company's achievement of its
long-term performance goals.
Respectfully submitted by:
Alexandre Balkanski
James V. Diller
<PAGE>
PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total stockholder
returns for the Company, the Nasdaq National Market, and the line-of-business
index for semiconductors and related devices (SIC code 3674) published by Media
General Financial Services. The graph assumes the investment of $100 on January
1, 1995. The performance shown is not necessarily indicative of future
performance.
Comparison of 5-Year Cumulative Total Return*
Among PMC-Sierra, Inc.,
Nasdaq National Market Index and SIC Code Index 3674
(Graph omitted)
ASSUMES $100 INVESTED ON JAN. 1, 1995
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DEC. 26, 1999
* The total return on each of these investments assumes the
reinvestment of dividends, although cash dividends have never been paid on the
Company's Common Stock.
<PAGE>
OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting.
If any other matters properly come before the meeting, the persons named in the
accompanying form of proxy will vote the shares represented by proxy as the
Board of Directors may recommend or as the proxy holders, acting in their sole
discretion, may determine.
THE COMPANY WILL MAIL WITHOUT CHARGE TO ANY STOCKHOLDER, UPON WRITTEN
REQUEST, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 26, 1999, INCLUDING, IF SO REQUESTED, THE FINANCIAL STATEMENTS,
SCHEDULES AND A LIST OF EXHIBITS. REQUESTS SHOULD BE SENT TO: INVESTOR
RELATIONS, PMC-SIERRA, INC., 105-8555 BAXTER PLACE, BURNABY, BRITISH COLUMBIA,
V5A 4V7, CANADA.
FOR THE BOARD OF DIRECTORS
Dated: April 28, 2000
<PAGE>
APPENDIX 1: FORM OF PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PMC-SIERRA, INC
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 15, 2000
The undersigned stockholder of PMC-SIERRA, INC. (the "Company")
acknowledges receipt of the Notice of Annual Meeting of Stockholders and the
Proxy Statement each dated May 2, 2000, and the undersigned revokes all prior
proxies and appoints Robert L. Bailey and John W. Sullivan and each 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 and to
vote all shares of Common Stock of the Company which the undersigned would be
entitled to vote at the Annual Meeting of Stockholders to be held at the Embassy
Suites Hotel located at 9000 SW Washington Square Road, Tigard, Oregon, on June
15, 2000, at 12:00 Noon local time, and at any adjournment thereof, and
instructs said proxies to vote as follows:
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR THE PROPOSALS.
1. TO ELECT DIRECTORS OF THE COMPANY TO SERVE FOR THE ENSUING YEAR
AND UNTIL THE NEXT ANNUAL MEETING OR THE ELECTION OF THEIR
SUCCESSORS.
|_| FOR all nominees listed below (except as indicated)
|_| WITHHOLD
James V. Diller Frank Marshall Colin Beaumont
Robert L. Bailey Alexandre Balkanski
|_| _____________________________________________________________
If you wish to withhold authority to vote for any individual
nominee, write the name of the nominee on the line above
2. TO APPROVE AN AMENDMENT TO THE COMPANY'S CERTIFICATE OF
INCORPORATION TO INCREASE THE AUTHORIZED NUMBER OF SHARES OF
COMMON STOCK BY 700,000,000 SHARES TO A TOTAL OF 900,000,000
SHARES.
|_| FOR |_| AGAINST |_| ABSTAIN
3. TO CHANGE THE AUTOMATIC ANNUAL INCREASE IN SHARES RESERVED UNDER
THE 1994 INCENTIVE STOCK PLAN AND RESTRICT THE ADMINISTRATOR OF
THE 1994 PLAN FROM REDUCING THE EXERCISE PRICES OF OPTIONS AND
STOCK PURCHASE RIGHTS GRANTED TO EXECUTIVE OFFICERS AND DIRECTORS.
|_| FOR |_| AGAINST |_| ABSTAIN
4. TO CHANGE THE AUTOMATIC OPTION GRANTS UNDER THE 1994 INCENTIVE
STOCK PLAN TO NON-EMPLOYEE DIRECTORS FROM 20,000 SHARES OF COMMON
STOCK TO 40,000 SHARES UPON APPOINTMENT AND FROM 5,000 SHARES TO
10,000 SHARES ANNUALLY THEREAFTER, PROVIDED SUCH NON-EMPLOYEE
DIRECTORS ARE RE-ELECTED TO THE BOARD OF DIRECTORS.
|_| FOR |_| AGAINST |_| ABSTAIN
<PAGE>
5. TO RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE
COMPANY'S INDEPENDENT AUDITORS FOR THE 2000 FISCAL YEAR.
|_| FOR |_| AGAINST |_| ABSTAIN
BY EXECUTING THIS PROXY, THE UNDERSIGNED STOCKHOLDER GRANTS THE PROXIES, IN
THEIR DISCRETION, THE ABILITY TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY
COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
Dated: , 2000
-----------------
_______________________________
Signature
_______________________________
Signature
(Note: This Proxy should be
marked, dated and signed by the
stockholder exactly as his/her
name is printed at the left and
returned promptly in the
enclosed envelope. A person
signing as an executor,
administrator, trustee or
guardian should so indicate and
specify his/her title. If a
corporation, please sign in
full corporate name by
President or other authorized
officer. If a partnership,
please sign in partnership name
by authorized person. If shares
are held by joint tenants or a
community property, all joint
owners should sign)
