<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. ______)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] 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 Materials Pursuant to Rule 14a-12.
ALTERA 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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to the Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
<PAGE> 2
[ ] 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:
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(4) Date Filed:
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[LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 10, 2000
10:00 A.M.
The Annual Meeting of Stockholders of Altera Corporation, a Delaware
corporation, will be held on Wednesday, May 10, 2000, at 10:00 a.m. local time,
at Altera's offices at 101 Innovation Drive, San Jose, California, for the
following purposes:
1. To elect directors to serve until the next annual meeting of
stockholders or until their successors are elected.
2. To approve an amendment to the 1996 Stock Option Plan to increase by
4,000,000 the number of shares of Common Stock reserved for issuance
under the plan.
3. To approve an amendment to the 1987 Employee Stock Purchase Plan to
increase by 250,000 the number of shares of Common Stock reserved for
issuance under the plan.
4. To approve an amendment to Altera's Certificate of Incorporation to
increase from 400 million to 700 million the number of shares of
Altera's authorized Common Stock.
5. To ratify the appointment of PricewaterhouseCoopers LLP as independent
accountants for Altera for the fiscal year ending December 31, 2000.
6. To transact such other business as may properly come before the meeting
or any adjournment of the meeting.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. Stockholders who owned shares of our stock
at the close of business on March 22, 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,
sign, date and return the enclosed Proxy as promptly as possible in the enclosed
postage prepaid envelope. If you attend the meeting in person, you may vote even
if you have returned a proxy card.
For the Board of Directors
ALTERA CORPORATION
C. Wendell Bergere
Secretary
San Jose, California
March 31, 2000
YOUR VOTE IS IMPORTANT.
PLEASE SIGN AND DATE THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE
AND RETURN IT IN THE ENCLOSED ENVELOPE.
<PAGE> 4
ALTERA CORPORATION
----------------
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
MAY 10, 2000
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of Altera
Corporation, a Delaware corporation, for use at Altera's Annual Meeting of
Stockholders to be held on May 10, 2000, or at any adjournment(s) or
postponement(s) of the meeting.
A number of abbreviations are used in this Proxy Statement. We refer to
Altera Corporation as "Altera." The term "proxy solicitation materials" includes
this Proxy Statement, as well as the enclosed proxy card and the 1999 Annual
Report, which is incorporated by reference. References to "fiscal 1999" mean
Altera's 1999 fiscal year which began on January 1, 1999 and ended on December
31, 1999. Altera's 2000 Annual Meeting of Stockholders is simply referred to as
"the annual meeting."
Altera's principal executive offices are located at 101 Innovation Drive, San
Jose, California 95134. Our telephone number is (408) 544-7000.
These proxy solicitation materials were mailed on or about March 31, 2000 to
all stockholders entitled to vote at the annual meeting.
RECORD DATE AND SHARES OUTSTANDING
Stockholders who owned shares of our stock at the close of business on March
22, 2000 (the "Record Date") are entitled to notice of, and to vote at, the
annual meeting. At the Record Date, Altera had 199,737,435 shares of Common
Stock issued and outstanding.
REVOCABILITY OF PROXIES
You may revoke your proxy at any time before its use by delivering a written
notice of revocation to Altera, by delivering an executed proxy bearing a later
date to Altera or by attending the meeting and voting in person.
VOTING
Each share of Common Stock outstanding on the Record Date is entitled to one
vote. Cumulative voting is not permitted. Altera's transfer agent tabulates the
votes. A quorum, which is a majority of the outstanding shares as of the Record
Date, must be present in order to hold the meeting and to conduct business. Your
shares will be counted as being present at the meeting if you appear in person
at the meeting, if you vote your shares by telephone, or if you submit a
properly executed proxy card. Votes against a particular proposal will be
counted both to determine the presence or absence of a quorum and to determine
whether the requisite majority of voting shares has been obtained.
While there is no definitive statutory or case law authority in Delaware as
to the proper treatment of abstentions and broker non-votes, Altera believes
that both abstentions and broker non-votes should be counted for purposes of
determining whether a quorum is present at the annual meeting, but not to
determine whether the requisite majority of the shares has been obtained on the
various proposals. In the absence of controlling precedent to the contrary,
Altera intends to treat abstentions and broker non-votes in this manner.
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SOLICITATION OF PROXIES
Altera will pay for the cost of this solicitation. Altera has retained the
services of D.F. King & Co., Inc. to help solicit proxies from brokers, bank
nominees, and other institutional owners. Altera estimates that it will pay D.F.
King & Co., Inc. a fee of $5,000.00 for its services and will reimburse it for
certain out-of-pocket expenses. We may reimburse brokerage firms and other
persons representing beneficial owners of shares for their expenses in
forwarding soliciting materials to such beneficial owners. Proxies may also be
solicited by certain of our directors, officers, and regular employees, without
additional compensation, personally or by telephone, telegram or facsimile.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
If you intend to present a stockholder proposal at Altera's 2001 Annual
Meeting of Stockholders, we must receive your proposal no later than December 1,
2000 in order to include it in the proxy statement and form of proxy related to
that meeting.
PROPOSAL ONE -- ELECTION OF DIRECTORS
NOMINEES
Our Board of Directors is comprised of seven members, all of whom are to be
elected at the annual meeting. The Nominating Committee of the Board of
Directors has nominated the persons named below for election as directors at the
annual meeting. Unless otherwise directed, the proxy holders will vote the
proxies received by them for the seven nominees named below. If any of the seven
nominees is unable or declines to serve as a director at the time of the annual
meeting, the proxies will be voted for any nominee who is designated by the
present Board of Directors to fill the vacancy. It is not expected that any
nominee will be unable or will decline to serve as a director. The directors
elected will hold office until the next annual meeting of stockholders and until
their successors are elected and qualified.
The names of the nominees and certain information about them are set forth
below.
<TABLE>
<CAPTION>
DIRECTOR
NAME OF NOMINEE AGE POSITION(S) WITH ALTERA SINCE
- --------------- --- ----------------------- --------
<S> <C> <C> <C>
Rodney Smith 59 Chairman of the Board of Directors, 1983
President and Chief Executive Officer
Charles M. Clough 71 Director 1997
Michael A. Ellison 54 Director 1984
Paul Newhagen 50 Director 1987
Robert W. Reed 53 Director 1994
Deborah D. Rieman 50 Director 1996
William E. Terry 66 Director 1994
</TABLE>
There is no family relationship between any of the directors or executive
officers of Altera.
RODNEY SMITH has served as Chairman of the Board of Directors, President and
Chief Executive Officer since joining Altera in November 1983. Prior to that
time, he held various management positions with Fairchild Semiconductor
Corporation, a semiconductor manufacturer.
CHARLES M. CLOUGH has served as a director of Altera since August 1997. In
August 1997, Mr. Clough retired from his position as Chairman of the Board of
Directors of Wyle Electronics, a distributor of semiconductor products and
computer systems. From 1982 to 1997, Mr. Clough held various management
positions at Wyle Electronics, including President, Chief Executive Officer and
Chairman. Wyle Electronics is one of Altera's authorized distributors in the
United States. Prior to joining Wyle Electronics, he had spent 27 years with
Texas Instruments holding a number of management and executive positions
relating to semiconductor operations, including the head of Bipolar operations,
European Semiconductor group and worldwide marketing.
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MICHAEL A. ELLISON has served as a director of Altera since April 1984. Since
October 1994, Mr. Ellison has been the Chief Executive Officer of Steller, Inc.,
a distributor of electronics parts. From January 1982 to December 1992, he was a
General Partner of Cable & Howse Ventures, a venture capital investment firm.
Following that, he was a private venture capital investor.
PAUL NEWHAGEN, a co-founder of Altera, has served as a director of Altera
since July 1987. In March 1998, Mr. Newhagen retired from his position as Vice
President -- Administration of Altera, a position he had held since December
1994. From June 1993 to November 1994, he served as a consultant to Altera. From
1983 to 1993, Mr. Newhagen held various management positions at Altera,
including Vice President of Finance and Administration, Chief Financial Officer
and Secretary.
ROBERT W. REED has served as a director of Altera since October 1994. In
1996, Mr. Reed retired from his position as Senior Vice President of Intel
Corporation, a semiconductor manufacturer. From 1983 to 1991, Mr. Reed was
Intel's Chief Financial Officer.
DEBORAH D. RIEMAN, PH.D., has served as a director of Altera since May 1996.
Dr. Rieman currently manages a private investment fund and consults to Internet
start-up companies. Until May 1999, Dr. Rieman was the President and Chief
Executive Officer of CheckPoint Software Technologies, Inc. ("CheckPoint"), an
Internet security software company. Prior to joining CheckPoint, Dr. Rieman held
various executive and marketing positions with Adobe Systems Inc., a computer
software company, Sun Microsystems Inc., a computer networking company, and
Xerox Corp., a diversified electronics manufacturer. Dr. Rieman also serves as a
director of Corning Inc., Alchemedia Corp., and Enonymous Corp.
WILLIAM E. TERRY has served as a director of Altera since August 1994. Mr.
Terry is a former director and Executive Vice President of the Hewlett-Packard
Company, a diversified electronics manufacturing company. In 36 years at
Hewlett-Packard, he held a number of senior management positions, including
general manager of Hewlett-Packard's Data Products and Instrument Groups, and
subsequently had overall responsibility for the Measurement Systems Sector. He
retired from Hewlett-Packard in November 1993. Mr. Terry also serves as a
director of Key Tronic Corporation and Phase Metrics, Inc.
VOTE REQUIRED
The seven nominees receiving the highest number of affirmative votes of the
shares entitled to be voted shall be elected as directors of Altera. 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 AND COMMITTEE MEETINGS
The Board of Directors held seven meetings during fiscal 1999. The Board of
Directors has standing audit, compensation and nominating committees.
The members of the Audit Committee are Michael A. Ellison and Robert W. Reed.
Messrs. Ellison and Reed are "independent" directors as defined in Rule
4200(a)(15) of the National Association of Securities Dealers listing standards.
The Audit Committee held four meetings during fiscal 1999. The purposes of the
Audit Committee are to review with Altera's management and independent
accountants such matters as internal accounting controls and procedures, the
plan and results of the annual audit, and suggestions of the accountants for
improvements in accounting procedures; to nominate independent accountants; and
to provide such additional information as the committee may deem necessary to
make the Board of Directors aware of significant financial matters which require
the Board's attention.
The members of the Compensation Committee are William E. Terry and Michael A.
Ellison. The Compensation Committee held three meetings during fiscal 1999. The
purposes of the Compensation Committee are to review and
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approve the compensation to be paid or provided to Altera's executive officers,
the aggregate compensation of all employees of Altera and the terms of
compensation plans of all types.
The members of the Nominating Committee are Charles M. Clough, Paul Newhagen
and William E. Terry. The Nominating Committee held two meetings in fiscal 1999.
The purpose of the Nominating Committee is to seek qualified candidates for
nomination and appointment to the Board of Directors. The Nominating Committee
selects such candidates by evaluating potential candidates' decision-making
ability, business experience, technological background, personal integrity,
reputation, and other factors. In addition, as reflected in the Nominating
Committee's charter, the Nominating Committee recognizes the benefits of a Board
of Directors that reflects the diversity of Altera's stockholders, employees,
and customers, and the community in which it operates. Accordingly, the
Nominating Committee actively seeks qualified candidates for nomination and
election to the Board of Directors in order to reflect such diversity. The
Nominating Committee conducts its evaluation of potential candidates
independently and confidentially; therefore, it does not accept stockholder
recommendations of candidates. In January 2000, the Nominating Committee
nominated the candidates identified in this proxy for election to Altera's Board
of Directors.
During fiscal 1999, only one director attended fewer than 75% of the
aggregate number of meetings of the Board of Directors and meetings of its
committees on which they serve. Dr. Rieman was not able to attend a Special
Board meeting that was scheduled during a period when Dr. Rieman was not
available. Also, a pre-existing conflict with the meeting schedule prevented Dr.
Rieman from attending a second Board of Directors meeting.
CERTAIN BUSINESS RELATIONSHIPS
In January 2000, the Board of Directors approved a grant of 25,000 shares of
Altera's restricted Common Stock to Michael B. Jacobs, Altera's newly hired
Senior Vice President, Worldwide Sales. In March 2000, Mr. Jacobs purchased the
25,000 shares at the par value per share. Subject to Mr. Jacobs' continued
employment with Altera, the restrictions on twenty-five percent of the shares
will lapse annually over four years. The restricted stock grant to Mr. Jacobs
was made to compensate him for stock options that were forfeited upon
termination of his prior employment and were scheduled to vest in a short term.
In August 1997, Charles M. Clough retired from his position as Chairman of
the Board of Directors of Wyle Electronics. Immediately thereafter, Altera named
Mr. Clough to its Board of Directors. Mr. Clough is currently a director of
Altera and is a nominee for director. See "-- Nominees." Wyle Electronics is one
of Altera's authorized distributors in the United States. During fiscal 1999,
Altera's sales to end customers in which Wyle Electronics acted as Altera's
distributor exceeded 5% of Altera's 1999 fiscal year consolidated gross revenues
of $836.6 million.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee are Michael A. Ellison and William
E. Terry. Neither Mr. Ellison nor Mr. Terry was at any time during Altera's 1999
fiscal year or at any other time an officer or employee of Altera. No executive
officer of Altera serves as a member of the board of directors or compensation
committee of any entity which has one or more executive officers serving as a
member of Altera's Board of Directors or Compensation Committee.
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COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors (the "Committee")
establishes the general compensation policies of Altera and the compensation
plans and specific compensation levels for senior executives including Altera's
Chief Executive Officer.
General Compensation Philosophy
The primary objectives of Altera's executive compensation policies include:
- Attracting, motivating, and retaining quality employees,
- Rewarding executives based upon Altera's financial performance at
levels competitive with comparable high-growth companies, and
- Providing incentives designed to increase shareholder value.
Because Altera competes against aggressive companies in a dynamic,
high-growth industry, Altera believes that finding, motivating, and retaining
quality employees, particularly senior managers and technical contributors, is a
key factor to Altera's future success. Accordingly, the Committee's compensation
philosophy seeks to align management and shareholder interests by tying cash
compensation and long-term equity incentive programs to Altera's financial
performance, including increased returns to shareholders. The Committee also
seeks to maintain executives' aggregate compensation, including salary, bonus,
and long-term equity incentives, at a level competitive with comparable
high-growth companies.
Cash Compensation
Cash compensation for Altera's senior executives consists of a fixed base
salary and an annual bonus based on Altera's financial performance. Comparable
peer company and other market data are studied in determining total cash
compensation. In order to implement its philosophy that executives be rewarded
for achieving positive financial results, the Committee structures the variable
incentive bonus component to significantly affect their level of total
compensation as compared to total compensation of executives of peer companies.
Thus, while executive base salaries are targeted to be in the third quartile for
salaries paid by peer companies, bonuses are targeted to raise or lower the
level of total compensation in comparison with peer companies depending upon
Altera's performance in meeting annual goals established by the Committee.
In setting annual goals for the executive bonus plan, the Committee considers
various factors, including the anticipated introduction of new products, general
economic conditions, and Altera's position relative to its competitors. The
Committee intends that the goals be aggressive, emphasizing strong revenue
growth and consistent net income. In order to achieve the purpose of the plan,
the financial goals set by the Committee and the corresponding bonus targets are
communicated to participants prior to the beginning of the fiscal year.
Long-Term Equity Compensation
Long-term equity incentives, including stock options and stock purchase
rights granted pursuant to Altera's stock option and stock purchase plans,
directly align the economic interests of Altera's management and employees with
those of its stockholders. Stock options are a particularly strong incentive
because they are valuable to employees only if the fair market value of Altera's
Common Stock increases above the exercise price, which is set at the fair market
value of Altera's Common Stock on the date the option is granted. In addition,
employees must remain employed with Altera for a fixed period of time in order
for the options to vest fully. Options are granted to employees and executives
following a yearly review of individual performance and consideration of the
individual's long-term value to Altera.
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CEO Compensation
In setting the CEO's compensation, the Committee considers comparative
financial and pay data of selected peer companies in the semiconductor industry
which approximate the size of Altera in terms of employees, revenue, and
capitalization. The Committee also considers studies from independent
consultants of compensation structures. The Committee has maintained Mr. Smith's
base annual salary for 2000 at $800,000 based upon the median base salary level
of peer company CEOs and the financial performance of Altera in fiscal 1999,
both in absolute terms and relative to the performance of the peer companies.
The amount of the CEO's 1999 bonus was based on Altera's fiscal 1999 growth
of sales revenue over prior year results as compared to such growth of peer
companies and the level of net income, subject to a cap at 150% of the CEO's
base salary. During 1999, Altera's revenues grew 28%. Net income as a percentage
of revenue was 26.8%, an increase of 3.2 percentage points over the prior year.
Based on Altera's results, the Committee awarded the CEO a bonus for fiscal 1999
of $680,192.
Altera grants stock options to the CEO based primarily on the Committee's
evaluation of his ability to influence Altera's long-term growth and
profitability. The Committee's determination of the size of the option grant is
made in its discretion based principally on the Committee's estimation of the
equity incentive value of the CEO's unvested option position. In 1999, Altera
granted Mr. Smith an option to purchase 200,000 shares of Altera's Common Stock.
Other Executive Compensation
The Committee has adopted compensation policies for its senior executives
similar to those established for the CEO. Using salary data supplied by outside
consultants and other publicly available data, such as proxy data from peer
companies, the CEO recommends to the Committee base salaries for executive
officers that are within the range of salaries for persons holding similar
positions at peer companies. In setting executive officer salaries, the CEO and
the Committee also consider factors such as Altera's performance relative to the
peer companies and the individual officer's past performance and future
potential. In accordance with Altera's compensation goals, the executive
officers' base salaries for fiscal 1999 were generally at the median of the
range of peer company base salary data obtained by the Committee.
Cash bonuses for all executive officers for fiscal 1999 were based on
Altera's growth of revenues over prior year results compared to such growth of
peer companies and the level of net income. As in the case of the CEO, executive
officer bonuses for fiscal 2000 will continue to be awarded based on Altera's
growth of sales revenue over prior year results and the level of net income.
As with the CEO, the size of the stock option grant to each executive officer
is determined by the Committee's evaluation of that officer's ability to
influence Altera's long-term growth and profitability. In addition, the
Committee considers the incentive effect of additional option grants given the
stock options then held by such executive officers and the amount of those
options that are not yet vested.
In the hiring of a new executive officer, the Committee, in addition to
approving the base salary, bonus program participation and stock option grant,
also granted restricted stock in order to compensate him for stock options that
were forfeited upon termination of his prior employment and were scheduled to
vest in a short term.
Other Compensation Considerations
The Committee has studied Section 162(m) of the Internal Revenue Code and
related regulations of the Internal Revenue Service, which restrict the
deductibility of executive compensation paid to any of Altera's five most
highly-paid executive officers at the end of any fiscal year to the extent that
such compensation exceeds $1 million in any year and does not qualify for an
exemption under the statute or related regulations. Altera has qualified its
1987 Stock Option Plan and its 1996 Stock Option Plan as performance-based plans
and therefore compensation realized in connection with exercises of options
granted under the Plan is exempt under the statute. The Committee
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<PAGE> 10
does not believe that the other components of Altera's compensation will be
likely in the aggregate to materially exceed $1 million for executive officers
in 2000 and therefore has concluded that no further action with respect to
qualifying such compensation for deductibility is necessary at this time. The
Committee will continue to evaluate the advisability of qualifying the
deductibility of such compensation in the future.
William E. Terry, Chairman Michael A. Ellison, Member
Compensation Committee Compensation Committee
DIRECTOR COMPENSATION
Currently, Altera's non-employee directors (the "Outside Directors") receive
$2,000 for each meeting of the Board of Directors or a committee of the Board of
Directors (unless held in conjunction with a meeting of the Board as a whole)
attended in person, and $1,000 for each meeting attended by telephone. Altera
reimburses each non-employee member of the Board of Directors and its committees
for expenses incurred by such member in connection with the attendance of such
meetings. Altera's Outside Directors are also paid an annual retainer in the
amount of $12,000, paid in advance on the date of the annual meeting of
stockholders in each year but prorated for any partial year.
Each Outside Director is eligible to include the annual retainer and meeting
fees, but not expense reimbursements, in Altera's Deferred Compensation Plan.
Altera incurs incidental expenses for administration of the Deferred
Compensation Plan, and Altera's tax benefit for payments to such directors is
delayed until funds (including earnings on the amounts invested pursuant to such
Plan) are eventually distributed from such Plan. Altera does not pay any
additional compensation to its non-employee directors as a result of the
Deferred Compensation Plan.
The Outside Directors also receive options under Altera's 1998 Director Stock
Option Plan (the "1998 Director Plan"). The 1998 Director Plan provides for the
grant of nonstatutory stock options to each of Altera's Outside Directors
("Director Options"). Such grants occur automatically upon commencement of
service as an Outside Director (the "First Option Grant") and upon reelection as
an Outside Director (the "Subsequent Option Grant"), and are made from a reserve
of 340,000 shares of Altera's Common Stock. In 1999, the First Option Grants to
Outside Directors were 20,000 shares of Common Stock and Subsequent Option
Grants were 5,000 shares. The exercise price for both First Option Grants and
Subsequent Option Grants is equal to the closing price of Altera's Common Stock
on the date of the grant. Both First Option Grants and Subsequent Option Grants
vest over a period of years according to the 1998 Director Plan.
Each Outside Director is also eligible to receive medical, dental and vision
insurance benefits at the same level available to Altera's employees in general.
Altera's directors who are also officers of Altera do not receive any
additional compensation for their services as members of the Board of Directors.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the shares of Common Stock beneficially owned
by (i) persons known by Altera to beneficially own greater than 5% of Altera's
outstanding stock, (ii) each director of Altera, (iii) the Chief Executive
Officer and the four other most highly paid officers of Altera and (iv) all
directors and executive officers of Altera as a group. Except as otherwise
indicated in the accompanying footnotes, beneficial ownership is shown as of the
Record Date. All percentage figures in the following table are calculated based
on the number of shares of Common Stock outstanding as of the Record Date.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
----------------------
NAME AND ADDRESS OF BENEFICIAL OWNER (1) NUMBER PERCENT(2)
- ---------------------------------------- ---------- ----------
<S> <C> <C>
FIVE-PERCENT STOCKHOLDERS:
FMR Corp.(3) ...................................................... 12,438,324 6.2%
T. Rowe Price Associates, Inc.(4) ................................. 10,583,900 5.3%
DIRECTORS AND EXECUTIVE OFFICERS:
Rodney Smith(5) ................................................... 3,575,386 1.8%
Charles M. Clough(6) .............................................. 18,687 *
Michael A. Ellison(7) ............................................. 78,468 *
Paul Newhagen(8) .................................................. 1,453,888 *
Robert W. Reed(9) ................................................. 23,333 *
Deborah D. Rieman(10) ............................................. 160,000 *
William E. Terry(11) .............................................. 204,667 *
Denis Berlan(12) .................................................. 572,435 *
Nathan Sarkisian(13) .............................................. 172,483 *
Erik Cleage(14) ................................................... 190,846 *
FORMER EXECUTIVE OFFICER
Peter Smyth(15) ................................................... 0 *
All directors and executive officers as a group (14 persons)(16) .. 6,654,729 3.3%
</TABLE>
- ------------
* Less than 1%.
(1) The persons named in the table above have sole voting and investment power
with respect to all shares of Common Stock shown as beneficially owned by
them, subject to community property laws where applicable and to the
information contained in the footnotes to this table. Unless otherwise
indicated in a corresponding footnote, the business address of each of the
beneficial owners listed in this table is 101 Innovation Drive, San Jose,
California 95134.
(2) Applicable percentage of ownership is based on 199,737,435 shares of
Common Stock outstanding as of the Record Date together with applicable
options for such stockholder. Beneficial ownership is determined in
accordance with the rules of the Securities and Exchange Commission, and
includes voting and investment power with respect to shares. Shares of
Common Stock subject to options currently exercisable or exercisable
within 60 days after the Record Date are deemed outstanding for computing
the percentage ownership of the person holding such options, but are not
deemed outstanding for computing the percentage of any other person.
(3) Based on a filing with the Securities and Exchange Commission on February
14, 2000, indicating beneficial ownership as of December 31, 1999. This
filing was made with respect to 12,438,324 shares of Altera's Common Stock
by FMR Corp., which indirectly holds shares on behalf of its direct and
indirect subsidiaries. According to such filing, FMR Corp. has sole voting
power with respect to 1,297,414 such shares and sole dispositive power
with respect to all 12,438,324 such shares. The business address for each
such reporting person is 82 Devonshire Street, Boston, Massachusetts
02109.
(4) Based on a filing with the Securities and Exchange Commission on February
14, 2000, indicating beneficial ownership as of December 31, 1999. These
securities are owned by various individuals and institutional investors
which T. Rowe Price Associates, Inc. ("Price Associates") serves as
investment adviser with power to direct investments and/or sole power to
vote the securities. For purposes of the reporting requirements of the
Securities Exchange Act of 1934, Price Associates is deemed to be a
beneficial owner of such securities; however, Price Associates expressly
disclaims that it is, in fact, the
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<PAGE> 12
beneficial owner of such securities. The business address for each such
reporting person is 100 E. Pratt Street, Baltimore, Maryland 21202.
(5) Includes 530,000 shares which Mr. Smith has the right to acquire within 60
days of the Record Date through exercise of options.
(6) Includes 16,667 shares which Mr. Clough has the right to acquire within 60
days of the Record Date through exercise of options.
(7) Includes 5,865 shares which Mr. Ellison has the right to acquire within 60
days of the Record Date through exercise of options.
(8) Includes 208,500 shares which Mr. Newhagen has the right to acquire within
60 days of the Record Date through exercise of options.
(9) Includes 23,333 shares which Mr. Reed has the right to acquire within 60
days of the Record Date through exercise of options.
(10) Includes 160,000 shares which Dr. Rieman has the right to acquire within
60 days of the Record Date through exercise of options.
(11) Includes 196,667 shares which Mr. Terry has the right to acquire within 60
days of the Record Date through exercise of options.
(12) Includes 469,006 shares which Mr. Berlan has the right to acquire within
60 days of the Record Date through exercise of option.
(13) Includes 167,334 shares which Mr. Sarkisian has the right to acquire
within 60 days of the Record Date through exercise of options.
(14) Includes 185,666 shares which Mr. Cleage has the right to acquire within
60 days of the Record Date through exercise of options.
(15) In February 2000, Mr. Smyth retired from his position as Vice President,
Sales.
(16) Includes 2,130,370 shares in the aggregate which executive officers and
directors have the right to acquire within 60 days of the Record Date
through exercise of options.
10
<PAGE> 13
EXECUTIVE COMPENSATION
Summary of Officer Compensation
The following table summarizes the total compensation of the Chief Executive
Officer and the four other most highly compensated executive officers of Altera
in fiscal 1999 as well as the total compensation earned by each such individual
for Altera's two previous fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES ALL OTHER
--------------------- UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#) ($)
--------------------------- ---- -------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Rodney Smith...................... 1999 800,031 680,192 200,000 17,980(1)
President and Chief Executive 1998 550,022 110,000 200,000 17,736(1)
Officer 1997 496,172 313,250 300,000 17,840(1)
Denis M. Berlan................... 1999 500,020 425,120 100,000 7,369(2)
Executive Vice President and 1998 350,013 70,000 100,000 7,884(2)
Chief Operating Officer 1997 258,010 162,890 200,000 8,505(2)
Nathan Sarkisian.................. 1999 398,477 425,120 100,000 4,452(3)
Senior Vice President and 1998 270,011 54,000 100,000 5,016(3)
Chief Financial Officer 1997 223,278 140,963 100,000 5,269(3)
Erik Cleage....................... 1999 400,015 340,096 100,000 4,863(4)
Senior Vice President -- 1998 265,011 53,000 200,000 5,906(4)
Marketing 1997 240,009 112,770 80,000 6,045(4)
Peter Smyth....................... 1999 300,012 232,440 -- 14,826(5)
Vice President -- Sales 1998 265,011 53,000 -- 14,984(5)
1997 215,008 101,023 60,000 12,325(5)
</TABLE>
- ----------
(1) Represents $16,480, $16,236 and $16,340 of disability insurance premiums,
life insurance premiums and medical examination costs paid by Altera in
fiscal 1999, fiscal 1998 and fiscal 1997, respectively, and a $1,500
contribution by Altera under its 401(k) plan in each such year.
(2) Represents $5,869, $6,384 and $7,005 of disability insurance premiums, life
insurance premiums and medical examination costs paid by Altera in fiscal
1999, fiscal 1998 and fiscal 1997, respectively, and a $1,500 contribution
by Altera under its 401(k) plan in each such year.
(3) Represents $2,952, $3,516 and $3,769 of disability insurance premiums and
life insurance premiums paid by Altera in fiscal 1999, fiscal 1998 and
fiscal 1997, respectively, and a $1,500 contribution by Altera under its
401(k) plan in each such year.
(4) Represents $3,363, $4,406 and $4,545 of disability insurance premiums, life
insurance premiums and medical examination costs paid by Altera in fiscal
1999, fiscal 1998 and fiscal 1997, respectively, and a $1,500 contribution
paid by Altera under its 401(k) plan in each such year.
(5) Represents $13,326, $13,484 and $10,825 of disability insurance premiums,
life insurance premiums and medical examination costs paid by Altera in
fiscal 1999, fiscal 1998 and fiscal 1997, respectively, and a $1,500
contribution paid by Altera under its 401(k) plan in each such year. In
February 2000, Mr. Smyth retired from his position as Vice President,
Sales.
11
<PAGE> 14
Options Granted During Fiscal 1999
The following table summarizes the grants of options to purchase Altera's
Common Stock made to the persons named in the Summary Compensation Table.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
------------------------------------------------------------ ANNUAL RATES OF STOCK
NUMBER OF % OF TOTAL OPTIONS PRICE APPRECIATION FOR
SECURITIES GRANTED TO EXERCISE OPTION TERM(2)
UNDERLYING OPTION EMPLOYEES IN FISCAL PRICE EXPIRATION -----------------------
NAME GRANTED(#)(1) YEAR ($/SHARE) DATE 5%($) 10%($)
---- ----------------- ------------------- --------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Rodney Smith....... 200,000(3) 4.4% 45.3750 12/14/09 5,707,219 14,463,213
Denis M. Berlan.... 100,000(4) 2.2% 45.3750 12/14/09 2,853,609 7,231,606
Nathan Sarkisian... 100,000(5) 2.2% 45.3750 12/14/09 2,853,609 7,231,606
Erik Cleage........ 100,000(6) 2.2% 45.3750 12/14/09 2,853,609 7,231,606
Peter Smyth........ -- -- -- -- -- --
</TABLE>
(1) The options shown in the table are nonstatutory stock options that were
granted at fair market value under Altera's 1996 Stock Option Plan, as
amended (the "1996 Plan").
(2) The 5% and 10% assumed compound rates of annual stock price appreciation
are mandated by the rules of the Securities and Exchange Commission and do
not represent Altera's estimate or projection of future Common Stock
prices.
(3) 50,000 shares vest annually from January 1, 2001 through January 1, 2004.
(4) 8,333 shares vest monthly from January 1, 2003 through December 31, 2003.
(5) 8,333 shares vest monthly from January 1, 2003 through December 31, 2003.
(6) 8,333 shares vest monthly from January 1, 2003 through December 31, 2003.
Option Exercises and Fiscal 1999 Year-End Values
The following table provides the specified information concerning exercises
of options to purchase Altera's Common Stock and the fiscal year-end value of
unexercised options held by each of the persons named in the Summary
Compensation Table.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL YEAR-END IN-THE-MONEY OPTIONS
SHARES (#) AT FISCAL YEAR-END($)(1)
ACQUIRED ON VALUE --------------------------- -------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Rodney Smith.......... 760,000 27,016,485 436,667 1,103,333 21,642,308 54,683,942
Denis M. Berlan....... 115,000 4,112,499 477,340 685,000 23,658,164 33,950,313
Nathan Sarkisian...... 65,500 2,070,764 188,500 548,100 9,342,531 27,165,206
Erik Cleage........... 85,000 4,451,576 177,667 551,333 8,805,621 27,325,442
Peter Smyth........... 372,666 11,132,825 3,334 200,000 165,241 9,912,500
</TABLE>
- ------------
(1) Amounts reflecting gains on outstanding stock options are based on the
closing price of Altera's Common Stock on December 31, 1999 of $49.5625.
12
<PAGE> 15
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
Altera's officers and directors and persons who own more than 10% of a
registered class of Altera's equity securities to file reports of ownership on
Form 3 and changes in ownership on Form 4 or 5 with the Securities and Exchange
Commission (the "SEC"). Such officers, directors, and 10% stockholders are also
required by SEC rules to furnish Altera with copies of all Section 16(a) reports
they file.
Based solely on its review of the copies of such forms received by it or
written representations from certain reporting persons that no Forms 5 were
required for such persons, Altera believes that, during the fiscal year ended
December 31, 1999, all Section 16(a) filing requirements applicable to its
officers, directors, and 10% stockholders were complied with, except that all
executive officers inadvertently failed to file a Form 5 for stock option grants
made to each executive officer in 1997 and 1998. In 1999, the executive officers
filed reports on Form 5 to report those transactions. In making these
statements, Altera has relied upon the written representations of its officers
and directors.
COMPANY PERFORMANCE
The following graph shows a comparison, since January 1, 1995, of cumulative
total return for Altera, the Standard & Poor's 500 Index and the Standard &
Poor's Semiconductor Index.
COMPARISON OF CUMULATIVE TOTAL RETURN*
[GRAPH COMPARING PERFORMANCE OF
ALTERA CORPORATION, S&P INDEX AND
S&P SEMICONDUCTOR INDEX OVER A FIVE YEAR PERIOD
FROM JANUARY 1, 1995 TO DECEMBER 31, 1999 USING THE FOLLOWING DATA]
<TABLE>
<CAPTION>
MEASUREMENT PERIOD ALTERA S&P
(FISCAL YEAR COVERED) CORPORATION S&P 500 INDEX SEMICONDUCTOR INDEX
- --------------------- ----------- ------------- -------------------
<S> <C> <C> <C>
1/1/95 100.00 100.00 100.00
1/1/96 237.61 134.11 135.21
1/1/97 347.16 161.29 212.17
1/1/98 316.42 211.30 222.48
1/1/99 581.49 267.65 346.65
12/31/99 946.87 319.91 635.74
</TABLE>
Assumes $100 invested on December 31, 1994 in Altera Common Stock, Standard &
Poor's 500 Index and Standard & Poor's Semiconductor Index. Total return is
based on historical results and is not intended to indicate future performance.
- ------------
* Total return assumes reinvestment of dividends for the Standard & Poor's 500
Index and Standard & Poor's Semiconductor Index. Altera has never paid
dividends on its common stock and has no present plans to do so.
13
<PAGE> 16
PROPOSAL TWO -- APPROVAL OF AMENDMENT TO 1996 STOCK OPTION PLAN
STOCKHOLDER PROPOSAL
At the annual meeting, the stockholders are being requested to approve the
proposed amendment to the 1996 Plan to increase by 4,000,000 the number of
shares reserved for issuance.
SUMMARY
The 1996 Stock Option Plan (the "1996 Plan") was adopted by the Board of
Directors in March 1996 and approved by the stockholders in May 1996. The 1996
Plan as adopted had 2,000,000 shares of Common Stock reserved for issuance,
which increased to 4,000,000 with Altera's two-for-one stock split in December
1996. At the annual meetings held in 1997, 1998, and 1999, the stockholders
approved amendments to the 1996 Plan that increased the number of shares
reserved for issuance by an aggregate of 5,000,000 to 9,000,000. As a result of
Altera's two-for-one stock split in May 1999, the number of shares reserved for
issuance increased to 18,000,000.
As of the Record Date, options to purchase an aggregate of 15,367,617 shares
were outstanding and options to purchase 1,922,164 shares were available for
future grant. In addition, 16,077,836 shares had been issued pursuant to the
exercise of stock options granted under the 1996 Plan. The 1996 Plan authorizes
the Board of Directors to grant stock options to eligible employees and
consultants of Altera. The 1996 Plan is structured to allow the Board of
Directors broad discretion in creating equity incentives in order to assist
Altera in attracting, retaining and motivating the best available personnel for
the successful conduct of Altera's business. The Board of Directors believes
that the remaining shares available for grant under the 1996 Plan are
insufficient to accomplish these purposes.
In January 2000, the Board of Directors approved an amendment to the 1996
Plan, subject to stockholder approval, to increase the number of shares reserved
for issuance by 4,000,000, thereby increasing the total number of shares
issuable under the 1996 Plan from 18,000,000 to 22,000,000.
Under Altera's stock repurchase program, the Board of Directors has
authorized management to purchase up to 12,000,000 shares of Common Stock in the
open market from time to time. Altera's goal is to use its stock repurchases
under this program to offset the potential share dilution from stock options
granted under the 1996 Plan and from shares purchased under the 1987 Employee
Stock Purchase Plan. In 1996, 1998 and 1999, Altera repurchased 600,000 shares,
3,620,000 shares, and 2,165,000 shares, respectively, substantially offsetting
the potential share dilution from 1996, 1998, and 1999 activity relating to the
1996 Plan and 1987 Employee Stock Purchase Plan. Also, as of the Record Date,
Altera has outstanding puts that may require Altera to purchase 250,000 shares.
Consequently, Altera may repurchase a total of 5,365,000 shares in the future
under Altera's stock repurchase program.
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
The affirmative vote of the holders of a majority of the shares of Altera's
Common Stock present or represented and voting at the annual meeting will be
required to approve the amendment to the 1996 Plan. IN ORDER TO PROVIDE
INCENTIVES TO ELIGIBLE EMPLOYEES AND TO ALIGN THEIR INTERESTS DIRECTLY WITH
THOSE OF THE STOCKHOLDERS, ALTERA'S BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED
THE PROPOSED AMENDMENT AND RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" SUCH
AMENDMENT.
The essential features of the 1996 Plan are outlined below.
GENERAL
The 1996 Plan permits stock option grants to employees and consultants of
Altera, or any parent or subsidiary of Altera. Altera's Board of Directors has
the discretion to grant incentive stock options ("Incentive Stock Options")
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), or nonstatutory
14
<PAGE> 17
stock options ("Nonstatutory Options"). Altera does not currently have plans to
grant Incentive Stock Options under the 1996 Plan.
The 1996 Plan is not a qualified deferred compensation plan under Section
401(a) of the Code and is not subject to the provisions of ERISA.
PURPOSES
The purposes of the 1996 Plan are to attract and retain the best available
personnel for positions of substantial responsibility, to provide additional
incentive to employees and consultants of Altera, to promote the success of
Altera's business, and to clearly align the interests of eligible employees
directly with those of the stockholders.
ADMINISTRATION
The 1996 Plan may be administered by the Board of Directors of Altera or by a
committee designated by the Board. Once appointed, the committee members shall
continue to serve until otherwise directed by the Board. The administration,
interpretation, or application of the 1996 Plan by the Board of Directors or its
committee shall be final, conclusive, and binding upon all participants. The
Board of Directors will administer the 1996 Plan, subject to the authority
delegated to the Stock Option Plan Committee to grant stock options to employees
other than officers and directors, and to the authority delegated to its
Compensation Committee to administer the 1996 Plan in connection with grants and
other matters regarding officers, directors, and 10% stockholders of Altera, as
each such term is defined under Section 16 of the Exchange Act. Currently, the
Stock Option Plan Committee consists of Rodney Smith, and the Compensation
Committee consists of William E. Terry and Michael A. Ellison. Members of the
Board and the committees will receive no additional compensation for their
services in connection with the administration of the 1996 Plan. Copies of the
1996 Plan are available upon request at Altera's principal executive offices.
ELIGIBILITY
The 1996 Plan provides for the grant of stock options to employees (including
employees who are both officers and directors of Altera) and consultants of
Altera or any parent or subsidiary of Altera whom the Board of Directors or the
committees determine are eligible to be granted stock options under the 1996
Plan ("Optionees"). Incentive Stock Options may only be granted to employees.
The Board of Directors or the committees determine the number of shares to be
subject to each stock option. As of the Record Date, approximately 1,250
employees (including officers) were eligible to participate in the 1996 Plan.
The 1996 Plan imposes a limitation on grants to any Optionee in any fiscal
year so that the aggregate grants in any one year to any Optionee may not exceed
500,000 shares per fiscal year; provided, however, that new hires may receive
additional stock option grants for no more than 500,000 shares in the year they
are hired. In addition, there is a limit of $100,000 on the aggregate fair
market value of shares subject to all Incentive Stock Options that are
exercisable for the first time in any calendar year by an employee.
TERMS OF OPTIONS
Each stock option granted pursuant to the 1996 Plan is evidenced by a written
stock option agreement between Altera and the Optionee and is subject to the
following terms and conditions:
(a) Exercise of the Option. The Board of Directors or the committees
determine on the date of grant when stock options may be exercisable under the
1996 Plan.
Effective October 1, 1997, the form of stock option agreement used under the
1996 Plan for all new employees provides that a stock option will be exercisable
cumulatively as to 25% of the stock option shares at the end of the first year
and then monthly in equal amounts until 100% of the stock option shares have
vested at the end of four
15
<PAGE> 18
years, so long as employment continues. Additional stock options granted to
existing employees will typically vest monthly over a one-year period ending
four years from the date of grant.
A stock option is exercised by delivering to Altera a written notice of
exercise that specifies the number of full shares of Common Stock to be
purchased and by tendering payment of the purchase price to Altera. A stock
option may not be exercised for a fraction of a share.
Payment for shares issued upon exercise of a stock option may consist of
cash, check, promissory note, an exchange of shares of Altera's Common Stock,
any combination of such methods of payment or such other consideration as
determined by the Board of Directors or the committees and as permitted under
the Delaware General Corporation Law.
(b) Exercise Price. The exercise price of stock options granted under the
1996 Plan is determined by the Board of Directors or the committees but may not
be less than 100% of the fair market value of the Common Stock on the date the
stock option is granted. The 1996 Plan provides that, because Altera's Common
Stock is currently traded on the Nasdaq National Market, the fair market value
per share shall be the closing price on the Nasdaq National Market, on the date
of grant of the stock option, as reported in The Wall Street Journal.
(c) Termination of Employment. If the Optionee's employment with Altera is
terminated for any reason (other than death, total and permanent disability, or
in certain cases, retirement), a vested stock option may be exercised within 30
days (or such other period of time (not exceeding three months in the case of
Incentive Stock Options) as is determined by the Board or the committee
administering the 1996 Plan at the time of grant of such stock option), after
such termination (but in no event later than the date of expiration of the term
of such stock option) as to all or part of the shares as to which the Optionee
was entitled to exercise at the date of such termination. An Optionee may be
exempt from this rule if the Optionee is on an approved leave of absence, or if
transferred to a subsidiary or parent of Altera.
(d) Retirement. If an Optionee satisfies certain requirements relating to
his or her age and tenure with Altera, the Board or the committee administering
the 1996 Plan may grant the Optionee stock options that continue to vest
following his or her retirement from Altera. The Board or the committee may
determine the extended period of exercisability and vesting, but such period may
not extend beyond the date the stock option would otherwise terminate in
accordance with its terms pursuant to the Option Agreement between Altera and
the Optionee.
Effective October 6, 1999, an Optionee is eligible for extended
exercisability of stock options upon retirement under the 1996 Plan only if he
or she: (i) has terminated his or her employment or consultancy with Altera
after attaining the age of 55 and has completed at least ten years of service as
an employee of Altera, or (ii) has terminated his or her employment or
consultancy with Altera as a result of disability (regardless of Optionee's
age), has completed ten years of service as an employee of Altera, and is
eligible for Social Security benefits. In addition, to be eligible for extended
exercisability of stock options upon retirement under the 1996 Plan, an Optionee
must not have committed certain acts of misconduct, including conduct related to
employment for which either criminal or civil penalties may be sought, willful
violation of Altera's written policies, engaging in any activity which is in
competition with Altera or any parent or subsidiary of Altera, or unauthorized
disclosure of confidential information or trade secrets of Altera or any parent
or subsidiary of Altera (collectively "Acts of Misconduct").
(e) Death or Disability. If an Optionee is unable to continue his or her
employment with Altera as a result of death, his or her stock options may be
exercised at any time within six months from the date of death (but in no event
later than the date of expiration of the term of such stock option) to the
extent such stock options would have been exercisable on the date six months
after the date of the Optionee's death. If an Optionee should die after a
termination of employment, but before his or her stock options have expired or
been exercised, such stock options may be exercised at any time within six
months after death (but in no event later than the date of expiration of the
term of such stock option) but only to the extent the stock options were
exercisable on the date of termination. The Board or its Committee may in its
discretion extend the exercisability (but not the vesting) of such stock options
for up to twelve months from the date of death.
16
<PAGE> 19
If an Optionee is unable to continue his or her employment with Altera as
a result of total and permanent disability, and except as otherwise provided
above under "Retirement," his or her stock options may be exercised at any time
within three months after termination (or such other period not exceeding twelve
months as determined by the Board or committee but in no event later than the
date of expiration of the term of such stock option) to the extent the stock
option was exercisable on the date of termination.
(f) Term and Termination of Options. Stock options granted under the 1996
Plan expire ten years from the date of grant, unless a shorter period is
provided in the stock option agreement. The current form of Option agreement
provides for a ten-year term. No stock option may be exercised by any person
after the expiration of its term.
(g) Nontransferability of Options. A stock option is not transferable by
the Optionee, other than by will or the laws of descent and distribution. If the
Optionee dies, stock options may be exercised by a person who acquires the right
to exercise the stock option by bequest or inheritance.
(h) Other Provisions. The stock option agreement may contain such other
terms, provisions, and conditions not inconsistent with the 1996 Plan as may be
determined by the Board of Directors or the committees.
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER
In the event any change, such as a stock split or payment of a stock
dividend, is made in Altera's capitalization which results in an increase or
decrease in the number of outstanding shares of Common Stock without receipt of
additional consideration by Altera, an appropriate adjustment shall be made by
the Board of Directors in the stock option exercise price and in the number of
shares subject to each stock option.
In the event of a proposed dissolution or liquidation of Altera, Altera is
required to notify each Optionee as soon as practicable prior to the effective
date of the proposed transaction. The Board may, in its discretion, provide for
an Optionee to have the right to exercise his or her stock options prior to the
transaction and may, in addition, accelerate the exercisability of stock options
so as to permit Optionees to exercise their stock options to purchase shares of
Common Stock for which the stock options would not otherwise be exercisable. To
the extent a stock option has not been previously exercised, it will terminate
immediately prior to the proposed liquidation or dissolution.
In the event of a proposed sale of the assets of Altera or the merger of
Altera with or into another corporation, all stock options will be assumed or an
equivalent option will be substituted by the successor corporation. If the
successor corporation refuses to fully assume all stock options, the Optionees
shall have the right to exercise stock options prior to such transaction for all
shares of Common Stock subject to such stock options, including shares for which
such stock options would not otherwise be exercisable. Stock options will be
considered assumed if, following the merger or sale of assets, the option or
right granted to the Optionee by the purchaser or acquiror confers the right to
receive for each share of Common Stock subject to such stock options the
consideration received in the merger or sale of assets in exchange for
outstanding shares of the Common Stock on the date of the transaction; provided,
however, that if the consideration received in the merger or sale of assets was
not solely common stock of the successor corporation or its parent, the Board
may, with the consent of the successor corporation, provide for the
consideration to be received upon exercise of the stock option to be solely
common stock of the successor corporation or its parent equal in fair market
value to the per share consideration received by holders of Altera's Common
Stock in the merger or sale of assets.
AMENDMENT AND TERMINATION
The Board may amend, alter, suspend, or terminate the 1996 Plan, or any part
of the 1996 Plan, at any time and for any reason. However, Altera shall obtain
stockholder approval for any amendment to the 1996 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
17
<PAGE> 20
granted under the 1996 Plan without the written consent of the optionee. Unless
terminated earlier, the 1996 Plan shall terminate ten years from the date of its
approval by the stockholders of Altera.
TAX INFORMATION
Incentive Stock Options
The Code provides to Optionees favorable federal income tax treatment of
stock options which qualify as Incentive Stock Options. If a stock option
granted under the 1996 Plan is treated as an Incentive Stock Option, the
Optionee will recognize no income upon grant of the stock option, and will
recognize no income upon exercise of the stock option unless the alternative
minimum tax rules apply. Altera will not be allowed a deduction for federal tax
purposes in connection with the exercise of an Incentive Stock Option.
Upon the sale of the shares issued upon exercise of an Incentive Stock Option
at least two years after the grant of the stock option and one year after
exercise of the stock option (the "statutory holding periods"), any gain will be
taxed to the Optionee as long-term capital gain. If the statutory holding
periods are not satisfied (i.e., the Optionee makes a "disqualifying
disposition"), the Optionee will recognize compensation income equal to the
excess, if any, of the lower of (i) the fair market value of the stock at the
date of the stock option exercise, or (ii) the sale price of the stock, over the
option price. Altera is generally entitled to a tax deduction in an amount equal
to the ordinary income recognized by the participant in connection with such
sale or disposition. The employee's basis of the option stock will be increased
by the amount of the compensation income recognized. Any further gain or loss
recognized on a disqualifying disposition of the shares will be characterized as
capital gain or loss.
Different rules may apply if shares are purchased by an Optionee who is
subject to Section 16(b) of the Exchange Act, and the Optionee subsequently
disposes of such shares prior to the expiration of the statutory holding
periods.
Nonstatutory Options
Nonstatutory Options granted under the 1996 Plan will not qualify for any
special tax benefits to the Optionee.
An Optionee will not recognize any taxable income at the time he or she is
granted a Nonstatutory Option. Upon exercise of the stock option, the Optionee
will generally recognize compensation income for federal tax purposes measured
by the excess, if any, of the then fair market value of the shares at the time
of exercise over the exercise price. Altera is generally entitled to a tax
deduction in an amount equal to the ordinary income recognized by the
participant in connection with such exercise. The employee's basis of the option
stock will be increased by the amount of the compensation income recognized.
Upon the sale of the shares issued upon exercise of a Nonstatutory Option,
any further gain or loss recognized will be treated as capital gain or loss and
will be treated as short-term capital gain or loss if the shares have been held
less than one year.
During 1999, Altera received a tax benefit resulting from tax deductions of
approximately $49.9 million and $3.1 million with respect to options exercised
by employees under the 1987 Plan and the 1996 Plan, respectively. During 1999,
Altera also received a tax benefit resulting from research and development
credits of approximately $3.8 million and $172,900 with respect to options
exercised by employees under the 1987 Plan and the 1996 Plan, respectively.
These amounts are in addition to approximately $15.0 million and $5.8 million
received by Altera as payment of the exercise price of such options under each
plan, respectively.
Tax Summary
The foregoing summary of the effect of federal income taxation upon the
Optionee and Altera with respect to the grant of stock options and purchase of
shares under the 1996 Plan does not purport to be complete. Reference should be
made to the applicable provisions of the Code. In addition, this summary does
not discuss the tax
18
<PAGE> 21
implications of an Optionee's death or the provisions of the income tax laws of
any municipality, state, or foreign country in which the Optionee may reside.
PARTICIPATION IN THE 1996 PLAN
The grant of stock options under the 1996 Plan to executive officers,
including the executive officers named in the Summary Compensation Table herein
(the "Named Officers"), is subject to the discretion of the Board of Directors.
Since the 1996 Plan's inception, Messrs. Smith, Berlan, Sarkisian, Cleage and
Smyth were granted options to purchase 1,100,000, 700,000, 500,000, 580,000 and
160,000 shares, respectively. See "Proposal One--Election of
Directors--Executive Compensation--Options Granted During Fiscal 1999" for
information with respect to the grant of options to the Named Officers during
fiscal 1999. Since the 1996 Plan's inception, all current executive officers as
a group (including the Named Officers) and all other employees as a group were
granted as of December 31, 1999 options to purchase 3,328,000 and 17,469,525
shares, respectively. During this period, options to purchase an aggregate of
5,138,882 were cancelled. During fiscal 1999, all current executive officers as
a group (including the Named Officers) and all other employees as a group were
granted options to purchase 580,000 and 3,922,125 shares, respectively, pursuant
to the 1996 Plan. As of the date hereof, there has been no determination as to
future awards under the 1996 Plan. Accordingly, future benefits or amounts
received are not determinable.
PROPOSAL THREE -- APPROVAL OF AMENDMENT TO
1987 EMPLOYEE STOCK PURCHASE PLAN
STOCKHOLDER PROPOSAL
At the annual meeting, the stockholders are being requested to approve the
proposed amendment of the 1987 Purchase Plan to increase by 250,000 the number
of shares reserved for issuance.
GENERAL
The 1987 Employee Stock Purchase Plan (the "1987 Purchase Plan") was adopted
by the Board of Directors in August 1987 and approved by the stockholders in
September 1987. Since the Plan's adoption, the Board of Directors has
authorized, and stockholders have approved, amendments to the 1987 Purchase Plan
to increase the shares reserved for issuance from 200,000 to 700,000. The number
of shares reserved for issuance increased to 2,800,000 as a result of Altera's
two-for-one stock splits in each of May 1995 and December 1996. At the annual
meetings held in 1998 and 1999, the stockholders approved an amendment to the
1987 Purchase Plan that increased the number of shares reserved for issuance
under the 1987 Purchase Plan by an additional 500,000 to 3,300,000. The number
of shares reserved for issuance increased to 6,600,000 as a result of Altera's
two-for-one stock split in May 1999. In January 2000, the Board of Directors
approved an amendment to the 1987 Purchase Plan, subject to stockholder
approval, to increase the number of shares reserved for issuance by 250,000,
thereby increasing the total number of shares issuable under the 1987 Purchase
Plan from 6,600,000 to 6,850,000.
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
The affirmative vote of the holders of a majority of the shares of Altera's
Common Stock present or represented and voting at the annual meeting will be
required to approve the amendment to the 1987 Purchase Plan. ALTERA'S BOARD OF
DIRECTORS HAS UNANIMOUSLY APPROVED THE PROPOSED AMENDMENT AND RECOMMENDS THAT
THE STOCKHOLDERS VOTE "FOR" SUCH AMENDMENT.
The essential features of the 1987 Purchase Plan are outlined below.
GENERAL
The 1987 Purchase Plan, and the right of participants to make purchases under
the 1987 Purchase Plan, is intended to qualify as an "Employee Stock Purchase
Plan" under the provisions of Sections 421 and 423 of the
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Code. The provisions of the 1987 Purchase Plan shall, accordingly, be construed
so as to extend and limit participation in a manner consistent with the
requirements of those sections of the Code.
The 1987 Purchase Plan is not a qualified deferred compensation plan under
Section 401(a) of the Code, and is not subject to the provisions of ERISA.
PURPOSE
The purpose of the 1987 Purchase Plan is to provide employees of Altera (and
any of its subsidiaries which is designated by the Board of Directors) with an
opportunity to purchase Common Stock of Altera through accumulated payroll
deductions.
ADMINISTRATION
The 1987 Purchase Plan may be administered by the Board of Altera or a
committee of members of the Board appointed by the Board. Once appointed, the
members of the committee shall continue to serve until otherwise directed by the
Board. The administration, interpretation or application of the 1987 Purchase
Plan by the Board of Directors or its committee shall be final, conclusive and
binding upon all participants. Members of the Board who are eligible employees
are permitted to participate in the 1987 Purchase Plan, provided that such
members may not vote on any matter affecting the administration of the 1987
Purchase Plan or the grant of any stock option pursuant to the 1987 Purchase
Plan, and, if a committee is established to administer the 1987 Purchase Plan,
no member of the Board who is eligible to participate in the 1987 Purchase Plan
may be a member of the committee. No charges for administrative or other costs
may be made against the payroll deductions of a participant in the 1987 Purchase
Plan. Members of the Board receive no additional compensation for their services
in connection with the administration of the 1987 Purchase Plan.
ELIGIBILITY
Any person, including an officer, who is customarily employed for at least 20
hours per week and more than five months in a calendar year by Altera (or any of
its subsidiaries which is designated from time to time by the Board) as of the
first day of a given offering period shall be eligible to participate in the
1987 Purchase Plan. Notwithstanding the foregoing, no participant shall be
granted a stock option under the 1987 Purchase Plan which would permit the
participant's rights to purchase stock under all employee stock purchase plans
of Altera and its subsidiaries to accrue at a rate which exceeds $25,000 of fair
market value of such stock (determined at the time such stock option is granted)
for each calendar year in which such stock option is outstanding at any time.
Furthermore, if the number of shares which would otherwise be subject to stock
options under the 1987 Purchase Plan at the beginning of an offering period
exceeds the number of shares then available for grant, a pro rata allocation of
the available shares shall be made in as uniform a manner as is practicable and
as Altera shall determine to be equitable. As of the Record Date, 1,494
employees were eligible to participate in the 1987 Purchase Plan.
OFFERING PERIODS
Typically, the 1987 Purchase Plan is implemented by one offering during each
six-month period of the plan. Currently, the offering periods commence on or
about April 16 and October 16 of each year. In the future, the Board of
Directors may alter the duration of the offering periods with respect to future
offerings without stockholder approval if such change is announced at least 15
days prior to the scheduled beginning of the first offering period to be
affected.
ENROLLMENT IN THE PLAN
Eligible employees become participants in the 1987 Purchase Plan by
completing a subscription agreement authorizing payroll deductions prior to the
applicable offering date, unless a later time for filing the subscription
agreement has been set by the Board for all eligible employees with respect to a
given offering. A person who
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becomes employed after the commencement of an offering may not participate in
the 1987 Purchase Plan until the commencement of the next offering.
PURCHASE PRICE
The purchase price at which shares are sold under the 1987 Purchase Plan is
the lower of: (i) 85% of the fair market value of a share of the Common Stock of
Altera on the first day of the offering period; or (ii) 85% of the fair market
value of a share of the Common Stock of Altera on the last day of the offering
period. The 1987 Purchase Plan provides that, because Altera's Common Stock is
currently traded on the Nasdaq National Market, the fair market value of a share
of the Common Stock on a given date shall be the closing price on the Nasdaq
National Market, on such date, as reported in The Wall Street Journal. If the
first or last day of the offering period falls on a weekend or holiday, the fair
market value of a share of Altera's Common Stock for the first day of the
offering period will be the closing price on the next business day, and the fair
market value of a share of Altera's Common Stock for the last day of the
offering period will be the closing price on the prior business day.
PAYMENT OF THE PURCHASE PRICE; PAYROLL DEDUCTIONS
The payroll deductions accumulated during the offering period are applied to
the purchase of the shares. The deductions may not exceed 10% of a participant's
eligible compensation received on each payday. The aggregate of such payroll
deductions during the offering period cannot exceed the lesser of 10% of his or
her aggregate compensation during such offering period or $12,500. Partial share
dollar amounts carried over into the following offering period will reduce the
withholding if it would exceed 10% of a participant's eligible compensation.
Compensation is defined as all regular straight time gross earnings, plus sales
commissions and sales incentives earned during the entire offering period, but
exclusive of payments for overtime, shift premium, other incentive compensation,
other incentive payments, bonuses, or other compensation. Payroll deductions
shall commence on the first payday following the first day of the offering
period and shall continue at the same percentage rate until the end of the
offering period unless sooner terminated. No interest shall accrue on the
payroll deductions of a participant in the 1987 Purchase Plan. At any time
during the offering period, a participant may discontinue payroll deductions
under the 1987 Purchase Plan without withdrawing amounts contributed through
prior payroll deductions. All payroll deductions received or held by Altera
under the 1987 Purchase Plan may be used by Altera for any corporate purpose,
and Altera is not obligated to segregate such payroll deductions.
PURCHASE OF STOCK; GRANT OF OPTIONS
On the first day of each offering period, each eligible employee
participating in the 1987 Purchase Plan shall be granted an option to purchase
(at the per-share option price) up to a number of shares determined by dividing
such employee's accumulated payroll deductions by the option purchase price
determined as described under "Purchase Price" above, subject to the limitations
set forth in the 1987 Purchase Plan.
EXERCISE OF OPTIONS
Unless the participant's participation is discontinued, each participant's
option for the purchase of the maximum number of full shares will be exercised
automatically at the end of the offering period at the applicable price.
WITHDRAWAL
A participant may withdraw all, but no less than all, the payroll deductions
credited to his or her account under the 1987 Purchase Plan at any time prior to
the last day of the offering period by giving written notice to Altera. All of
the participant's payroll deductions credited to his or her account will be paid
to him or her promptly after receipt of his or her notice of withdrawal, and his
or her option for the current period will be automatically terminated, and no
further payroll deductions for the purchase of shares will be made during the
offering period.
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A participant's withdrawal from an offering does not have any effect upon
such participant's eligibility to participate in subsequent offerings under the
1987 Purchase Plan or in any similar plan which may be adopted by Altera.
TERMINATION OR INTERRUPTION OF EMPLOYMENT
Upon termination or interruption of a participant's employment for any
reason, including retirement or death, prior to the last day of the offering
period, the payroll deductions credited to the participant's account will be
returned to such participant, or, in the case of the participant's death, to the
person or persons entitled thereto as specified in the participant's
subscription agreement, and his or her option will be automatically terminated.
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER
In the event any change, such as a stock split or payment of a stock
dividend, is made in Altera's capitalization which results in an increase or
decrease in the number of outstanding shares of Common Stock without receipt of
additional consideration by Altera, an appropriate adjustment will be made in
the shares subject to purchase and in the purchase price per share, subject to
any required action by the stockholders. In the event of the proposed
dissolution or liquidation of Altera, the offering period will terminate
immediately prior to the consummation of such proposed action, unless otherwise
provided by the Board. In the event of a proposed sale of all or substantially
all of the assets of Altera, or the merger of Altera with or into another
corporation, each option shall be assumed or an equivalent option shall be
substituted by such successor corporation or a parent or subsidiary of such
successor corporation, unless the participant shall have the right to exercise
the option as to all of the optioned stock, including shares as to which the
option would not otherwise be exercisable. If the Board makes an option fully
exercisable in lieu of assumption or substitution in the event of a merger or
sale of assets, the Board shall notify the participant that the option shall be
fully exercisable for a period of 15 days from the date of such notice, and the
option will terminate upon the expiration of such period.
The Board may, if it so determines in the exercise of its sole discretion,
also make provision for adjusting the number of shares available for grant, as
well as the price per share of Common Stock covered by each outstanding option,
in the event that Altera effects one or more reorganizations, recapitalizations,
rights offerings or other increases or reductions of shares of its outstanding
Common Stock, and in the event of Altera being consolidated with or merged into
any other corporation.
NONASSIGNABILITY
Neither payroll deductions credited to a participant's account nor any rights
with regard to the exercise of an option or to receive shares under the 1987
Purchase Plan may be assigned, transferred, pledged or otherwise disposed of in
any way (other than by will, the laws of descent, and distribution or as
provided in the 1987 Purchase Plan) by the participant. Any such attempt at
assignment, transfer, pledge or other disposition shall be without effect,
except that Altera may treat such act as an election to withdraw from the 1987
Purchase Plan.
AMENDMENT AND TERMINATION OF THE PLAN
The Board of Directors may at any time or from time to time amend or
terminate the 1987 Purchase Plan, except that such termination shall not affect
options previously granted nor may any amendment make any change in an option
granted prior thereto which adversely affects the rights of any participant. No
amendment may be made to the 1987 Purchase Plan without prior approval of the
stockholders of Altera if such amendment would increase the number of shares
reserved for issuance under the 1987 Purchase Plan, permit payroll deductions at
a rate in excess of 10% of the participant's compensation as defined in the 1987
Purchase Plan, modify the designation of the employees (or class of employees)
eligible to participate in the plan, or materially increase the benefits which
may accrue to participants under the 1987 Purchase Plan. The 1987 Purchase Plan
shall continue in effect until August 2007, unless sooner terminated as
described above.
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TAX INFORMATION
The 1987 Purchase Plan and the right of participants to make purchases under
the 1987 Purchase Plan is intended to qualify under the provisions of Sections
421 and 423 of the Code. Under these provisions, no income will be taxable to a
participant at the time of grant of the option or the purchase of shares. A
participant may become liable for tax upon disposition of the shares acquired,
as follows.
If the shares are sold or disposed of (including by way of gift) at least two
years after the offering date (the first day of the offering period during which
shares were purchased) and more than one year after the date on which shares
were transferred to the employee, then the lesser of (a) the excess of the fair
market value of the shares at the time of such disposition over the purchase
price of the shares subject to the option (the "Option Price") or (b) 15% of the
fair market value of the shares on the offering date, will be treated as
ordinary income to the participant. The employee's basis of the option stock
will be increased by the amount of the compensation income recognized. Any
further gain or loss upon such disposition will be treated as long-term capital
gain or loss. If the shares are sold and the sales price is less than the Option
Price, there is no ordinary income and the participant has a capital loss for
the difference.
If the shares are sold or disposed of (including by way of gift or by
exchange in connection with the exercise of an incentive stock option) before
the expiration of the holding periods described above, then the excess of the
fair market value of the shares on the date of option exercise over the Option
Price will be treated as ordinary income to the participant. This excess will
constitute ordinary income in the year of sale or other disposition even if no
gain is realized on the sale or a gratuitous transfer of the shares is made. The
basis of the option stock will be increased by the amount of the compensation
income recognized. Any further gain or loss recognized in connection with any
such sale or exchange will be treated as capital gain or loss and will be
treated as short-term capital gain or loss if the shares have been held less
than one year.
If shares are sold or disposed of before the expiration of the statutory
holding periods, Altera is generally entitled to a tax deduction in an amount
equal to the ordinary income recognized by the participant in connection with
such sale or disposition.
The foregoing summary of the effect of federal income taxation upon the
participant and Altera with respect to the shares purchased under the 1987
Purchase Plan does not purport to be complete. Reference should be made to the
applicable provisions of the Code. In addition, the summary does not discuss the
tax implications of a participant's death or the provisions of the income tax
laws of any municipality, state or foreign country in which the participant may
reside.
PARTICIPATION IN THE 1987 PURCHASE PLAN
Eligible employees participate in the 1987 Purchase Plan voluntarily and each
such employee determines his or her level of payroll deductions within the
guidelines fixed by the 1987 Purchase Plan. Accordingly, future purchases under
the 1987 Purchase Plan are not determinable at this time.
PROPOSAL FOUR -- APPROVAL OF AMENDMENT TO CERTIFICATE OF INCORPORATION
STOCKHOLDER PROPOSAL
At the annual meeting, the stockholders are being requested to approve an
amendment to Altera's Certificate of Incorporation to increase from 400 million
to 700 million the number of shares of Altera's authorized Common Stock.
SUMMARY
Altera's Certificate of Incorporation authorizes Altera to issue up to 400
million shares of Common Stock, $0.001 par value per share. In March 2000, the
Board of Directors approved an increase in the authorized number
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of Altera's Common Stock from 400 million to 700 million shares. Since, as of
the Record Date, there were over 199.7 million issued and outstanding shares of
Altera's Common Stock and approximately an additional 25.4 million reserved for
future issuance under Altera's stock option plans and employee stock purchase
plan, the number of shares of Common Stock currently authorized in the
Certificate of Incorporation would be insufficient to permit the Board of
Directors to approve a 2-for-1 stock split in the form of a 100% stock dividend.
Under Delaware law, the Board of Directors cannot amend the Certificate of
Incorporation without shareholder approval and cannot approve a stock dividend
unless sufficient authorized shares are available. Under the proposed amendment
to the Certificate of Incorporation, the additional shares of Common Stock would
be available for issuance without further stockholder action, unless stockholder
action is otherwise required by Delaware law or the rules of any stock exchange
or automated quotation system on which the Common Stock may then be listed or
quoted. Although Altera is not currently contemplating any additional stock
split or stock dividend and there can be no assurance that any additional stock
split or stock dividend will happen at any particular time in the future or at
all, the additional authorized shares will effectively provide the Board with
the necessary flexibility to split the shares and undertake certain other types
of transactions, if the need arises.
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
The affirmative vote of the holders of a majority of the shares of Altera's
Common Stock present or represented and voting at the annual meeting will be
required to approve the amendment to Altera's Certificate of Incorporation. IN
ORDER TO GIVE ALTERA THE FLEXIBILITY TO UNDERTAKE VARIOUS TYPES OF CORPORATE
TRANSACTIONS, THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THIS PROPOSAL AND
RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE PROPOSAL TO AMEND THE CERTIFICATE OF
INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK FROM
400 MILLION TO 700 MILLION.
PROPOSAL FIVE -- RATIFICATION OF APPOINTMENT OF
INDEPENDENT ACCOUNTANTS
STOCKHOLDER PROPOSAL
At the annual meeting, the stockholders are being requested to ratify the
Board of Directors' selection of PricewaterhouseCoopers LLP as Altera's outside
auditors for fiscal year ending December 31, 2000.
SUMMARY
The Board of Directors has selected PricewaterhouseCoopers LLP, independent
accountants, to audit the financial statements of Altera Corporation for the
current fiscal year ending December 31, 2000. Altera expects that a
representative of PricewaterhouseCoopers LLP will be present at the annual
meeting, will have the opportunity to make a statement if he or she desires to
do so, and will be available to answer any appropriate questions.
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
The affirmative vote of the holders of a majority of the shares of Altera's
Common Stock present or represented and voting at the annual meeting will be
required to approve this proposal. ALTERA'S BOARD OF DIRECTORS HAS UNANIMOUSLY
APPROVED THIS PROPOSAL AND RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE SELECTION OF PRICEWATERHOUSECOOPERS LLP.
OTHER MATTERS
Altera knows of no other matters to be submitted at the meeting. If any other
matters properly come before the meeting, it is the intention of the persons
named in the enclosed proxy card to vote the shares they represent as the Board
of Directors may recommend.
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It is important that your shares be represented at the meeting, regardless of
the number of shares that you hold. You are, therefore, urged to mark, sign,
date and return the accompanying proxy card as promptly as possible in the
enclosed postage-prepaid envelope.
For the Board of Directors
ALTERA CORPORATION
C. Wendell Bergere,
Secretary
Dated: March 31, 2000
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