KOMAG INC /DE/
DEF 14A, 2000-04-10
MAGNETIC & OPTICAL RECORDING MEDIA
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                            SCHEDULE 14A INFORMATION

                  Proxy Statement Pursuant to Section 14(a) of
                      the Securities Exchange Act of 1934
                                (Amendment no. 1)


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
[X]  Definitive Proxy Statement                 Commission Only (as permitted by
[ ]  Definitive Additional Materials            Rule 14a-6(e)(2))
[ ]  Soliciting Material Pursuant to
     Rule 14a-11(c) or Rule 14a-12

                               KOMAG INCORPORATED
            ------------------------------------------------
            (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)(4) and 0-11.


(1)   Title of each class of securities to which transactions applies:

- --------------------------------------------------------------------------------

(2)   Aggregate number of securities to which transactions 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):

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(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:

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(4)   Date filed:

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<PAGE>


[KOMAG LOGO GOES HERE]


                                    NOTICE OF

                               2000 ANNUAL MEETING

                                 OF STOCKHOLDERS

                                       AND

                                 PROXY STATEMENT









                               Beneficial owners of stock held by banks, brokers
                                 or investments plans in "street name" will need
                               proof of ownership to be admitted to the meeting.
                                A recent brokerage statement or letter from your
                                      broker are examples of proof of ownership.



<PAGE>

                               KOMAG, INCORPORATED
                             1710 Automation Parkway
                           San Jose, California 95131

                    NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
                             TO BE HELD MAY 10, 2000

         The annual  meeting of  stockholders  (the  "Annual  Meeting" of Komag,
Incorporated) (the "Company") will be held at Komag, Incorporated,  Building 10,
1710 Automation Parkway, San Jose, California, 95131 on Wednesday, May 10, 2000,
at 10:00 a.m. for the following purposes:

         1)      To elect the Board of Directors for the following year.

         2)      To renew the approval  for the sale and issuance by the Company
                 from  time to time of up to $250  million  of  Common  Stock or
                 securities   convertible   into   Common   Stock   in   private
                 transactions through June 30, 2001 at a price not less than the
                 greater of book value and 90% of the then current  market value
                 of the Common Stock.

         3)      To ratify the  appointment  of Ernst & Young LLP as independent
                 auditors of the Company for the fiscal year ending December 31,
                 2000.

         4)      To transact such other business as may properly come before the
                 meeting or any adjournment thereof.

         The foregoing  items of business are more fully  described in the Proxy
Statement  accompanying  this  Notice.  Stockholders  of  record at the close of
business on March 13, 2000 will be  entitled  to vote at the Annual  Meeting.  A
list of  stockholders  entitled to vote at the Annual  Meeting will be available
for  inspection at the offices of the Company.  If you attend the Annual Meeting
and vote by ballot, your proxy will be revoked  automatically and only your vote
at the Annual  Meeting  will be  counted.  The prompt  return of your proxy will
assist us in preparing for the Annual Meeting.

         All stockholders are cordially invited to attend the Annual Meeting.  A
map to  Komag's  location  is  included  at the end of the Proxy  Statement  for
reference.

           BY ORDER OF THE BOARD OF DIRECTORS

           Thian Hoo Tan,
           President and Chief Executive Officer





           San Jose, California
           April 14, 2000

IMPORTANT:      WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED
                TO VOTE PROMPTLY ON THE ENCLOSED PROXY


<PAGE>

                                TABLE OF CONTENTS

General ...................................................................    1

Principal Stockholders ....................................................    2

Stock Ownership Table .....................................................    3

Item No. 1 - Election of Directors ........................................    4

Director Nominees .........................................................    5

Committees and Meetings of the Board of Directors .........................    6

Director Remuneration .....................................................    7

Item No. 2 - Financing ....................................................    8

Item No. 3 - Ratification of Independent Auditors .........................   10

Executive Compensation and Related Information ............................   10

Stock Performance Graph ...................................................   14

Summary Compensation Table ................................................   15

Options Grant Table .......................................................   17

Option Exercises and Year-End Value Table .................................   19

Compliance with Section 16(a) Beneficial Ownership Reporting ..............   20

Certain Relationships and Related Transactions ............................   20

Other Business ............................................................   20

Stockholder Proposals .....................................................   21

         A copy of the Annual  Report to  Stockholders  of Komag,  Incorporated,
which includes financial statements,  is being mailed with this Proxy Statement.
You may receive an additional  copy of the Annual Report to  Stockholders  at no
charge upon request directed to:

                               Komag, Incorporated
                            Attn: Investor Relations
                             1710 Automation Parkway
                           San Jose, California 95131

  Financial Information may also be accessed on our Web site at: www.komag.com


<PAGE>




                               KOMAG, INCORPORATED
                             1710 Automation Parkway
                           San Jose, California 95131

                                 PROXY STATEMENT
                     FOR THE ANNUAL MEETING OF STOCKHOLDERS
                             TO BE HELD MAY 10, 2000

                                     GENERAL

         The enclosed  proxy is solicited on behalf of the Board of Directors of
Komag,  Incorporated,  a Delaware  corporation (the  "Company"),  for use at the
Annual  Meeting to be held on May 10,  2000.  The Annual  Meeting  will begin at
10:00 a.m. at Komag,  Incorporated,  Building 10, 1710 Automation  Parkway,  San
Jose,  CA 95131.  Stockholders  of record on March 13,  2000 will be entitled to
notice of and to vote at the Annual Meeting.

         This Proxy  Statement and  accompanying  proxy (the "Proxy") were first
mailed to stockholders on or about April 14, 2000.

Voting

         Your vote is  important.  Because many  stockholders  cannot attend the
meeting,  it is  necessary  that a large  number be  represented  by  proxy.  As
described in more detail below,  if you are a stockholder of record you may vote
four ways:  (1) by attending  the  meeting,  (2) by using the  toll-free  number
listed on the proxy card, (3) by voting on the Internet at the address listed on
the proxy card, or (4) by marking,  signing,  dating,  and mailing your proxy in
the envelope provided.

         On March 13, 2000, the record date for  determination  of  stockholders
entitled to vote at the Annual Meeting,  there were 65,874,918  shares of Common
Stock  outstanding.  Each stockholder is entitled to one (1) vote for each share
of  Common  Stock  held by such  stockholder.  Directors  will be  elected  by a
plurality vote. Other matters submitted for stockholder  approval at this Annual
Meeting  will be decided  by the  affirmative  vote of a majority  of the shares
present or  represented  and entitled to vote on each such  matter.  Abstentions
with respect to any matter  other than the election of directors  are treated as
shares present or  represented  and have the same effect as negative  votes.  If
shares are not voted by the broker who is the record holder of the shares, or if
shares  are not  voted  in  other  circumstances  in which  proxy  authority  is
defective  or has been  withheld  with  respect to any matter,  these  non-voted
shares are not deemed to be present or  represented  for purposes of determining
whether stockholder approval of that matter has been obtained.  Each stockholder
voting for the election of directors may cumulate such stockholder's vote. Under
cumulative voting, a stockholder is allowed one (1) vote per share multiplied by
the number of directors to be elected  (seven (7) at this  meeting) and may cast
such cumulative total for one (1) nominee or may distribute such number among as
many nominees as such stockholder chooses.

Revocability of Proxies

         Any person giving a proxy has the power to revoke it at any time before
its exercise. A proxy may be revoked by filing with the Secretary of the Company
at the Company's principal executive office, 1710 Automation Parkway,  San Jose,
California,  95131,  a notice of revocation or another signed proxy with a later
date.  You may also revoke your proxy by attending the Annual Meeting and voting
in person.




                                       1
<PAGE>

Solicitation

         The Company will bear the entire cost of  solicitation,  including  the
preparation,  assembly,  printing  and mailing of this Proxy  Statement  and any
additional   soliciting   materials   furnished  to   stockholders.   Copies  of
solicitation materials will be furnished to brokerage houses,  fiduciaries,  and
custodians  holding shares in their names that are beneficially  owned by others
so that they may forward these solicitation materials to such beneficial owners.
In  addition,  the  Company  may  reimburse  such  persons  for  their  costs of
forwarding the solicitation  materials to such beneficial  owners.  The original
solicitation  of  proxies  by  mail  may  be  supplemented  by  solicitation  by
telephone,  telegram or other means by directors,  officers, employees or agents
of the Company. No additional compensation will be paid to these individuals for
any such  services.  Except as described  above,  the Company does not presently
intend to solicit proxies other than by mail.

Principal Stockholders
<TABLE>
         The following table sets forth certain information known to the Company
regarding the  ownership of the Company's  Common Stock per Schedule 13G filings
prior to March 13, 2000 for all persons who are known to be beneficial owners of
five percent or more of the Company's Common Stock.
<CAPTION>
Name and Address of                                                                                           Percent
  Beneficial Owner                                Amount and Nature of Beneficial Ownership                   of Class
  ----------------                               -----------------------------------------                    --------

<S>                                        <C>                                                                 <C>
Western Digital Corporation                10,783,132                                                          16.4%

8105 Irvine Center                         (sole   voting  power  and   dispositive   power  as  to
                                           10,783,132  shares by Western  Digital  Corporation  per
Irvine, CA 92718                           April, 1999 Schedule 13G filing)


Franklin Advisors, Inc.                    4,540,100                                                            6.9%

777 Mariners Island Boulevard              (sole voting power and dispositive power as to 4,540,100
                                           shares by Franklin  Advisers,  Inc.  per  January,  2000
San Mateo, CA 94404                        Schedule 13G filing)


Dimensional Fund Advisors, Inc.            3,712,200                                                            5.6%

1299 Ocean Avenue                          (sole voting power and dispositive power as to 3,712,200
                                           shares by Dimensional Fund Advisors,  Inc. per February,
11th Floor                                 2000 Schedule 13G filing)

Santa Monica, CA 90401
</TABLE>


                                       2
<PAGE>

Stock Ownership Table

         The table  below  indicates  the number of shares of the  Corporation's
common stock beneficially owned as of March 13, 2000 by directors,  the nominees
recommended by the Nominating  Committee and nominated by the Board of Directors
for election as directors,  by each of the current executive  officers listed in
the Summary Compensation Table below, and by all current directors and executive
officers as a group.  Except as otherwise noted, each person has sole investment
and  voting  powers  with  respect to the shares  shown as  beneficially  owned.
Ownership  information  is based upon  information  furnished by the  respective
individuals.

                DIRECTORS, NOMINEES AND NAMED EXECUTIVE OFFICERS

                                                   Shares Beneficially Owned(12)
                                                   -----------------------------
 Name                                              Number            Percentage
 ----                                              ------            ----------

 Thian Hoo Tan (1).......................         144,745                *

 Chris A. Eyre (2) ......................          54,500                *

 Irwin Federman (3)......................         115,371                *

 George A. Neil (4)......................          40,500                *

 Michael R. Splinter.....................               0                *

 Anthony Sun (2).........................         127,310                *

 Masayoshi Takebayashi (5)(6)............          47,750                *

 Christopher H. Bajorek(7) ..............         326,431                *

 Ray Martin(8)...........................         125,425                *

 William L. Potts, Jr.(9) ...............         264,843                *

 Tsutomu T. Yamashita(10)................         181,677                *


 Current executive officers and directors as
 a group (12 persons) (11) ..............       1,293,695             2.0%


 *   Less than 1%

         (1) Includes  109,303  shares  subject to options  which are  currently
exercisable or which will become  exercisable within sixty (60) days after March
13, 2000.

         (2)  Includes  53,500  shares  subject to options  which are  currently
exercisable or which will become  exercisable within sixty (60) days after March
13, 2000.

                                       3
<PAGE>

         (3)  Includes  24,250  shares  subject to options  which are  currently
exercisable or which will become  exercisable within sixty (60) days after March
13, 2000.

         (4)  Includes  39,500  shares  subject to options  which are  currently
exercisable or which will become  exercisable within sixty (60) days after March
13, 2000.

         (5)  Includes  27,750  shares  subject to options  which are  currently
exercisable or which will become  exercisable within sixty (60) days after March
13, 2000.

         (6)  Excludes  shares  held by Kobe  Steel,  Ltd.  and Kobe  Steel  USA
Holdings  Incorporated.   Mr.  Takebayashi  is  an  Executive  Officer  of  Kobe
Precision,  Incorporated,  a wholly-owned subsidiary of Kobe Steel, Ltd., and on
such  basis  may be  deemed,  under the 1934 Act,  the  beneficial  owner of the
2,000,002 shares  beneficially owned by such corporations with shared voting and
investment  power with respect thereto.  Mr.  Takebayashi  disclaims  beneficial
ownership of these shares.

         (7) Includes  290,644  shares  subject to options  which are  currently
exercisable or which will become  exercisable within sixty (60) days after March
13, 2000.

         (8) Includes  123,030  shares  subject to options  which are  currently
exercisable or which will become  exercisable within sixty (60) days after March
13, 2000.

         (9) Mr.  Potts,  Jr.  resigned  from the  company  in  February,  2000.
Includes  202,616  shares which are currently  exercisable  or which will become
exercisable within sixty (60) days after March 13, 2000.

         (10)  Includes  177,228  shares  subject to options which are currently
exercisable or which will become  exercisable within sixty (60) days after March
13, 2000.

         (11) Includes 1,022,735 shares, of current executive officers,  subject
to options  which are  currently  exercisable  or which will become  exercisable
within sixty (60) days after March 13, 2000.

         (12) Some of the  individuals may share voting power with regard to the
shares listed herein with their spouses.


                                  ITEM NO. 1 --
                              ELECTION OF DIRECTORS

         The Bylaws of the Company  provide that the Board of Directors shall be
comprised of between eight (8) and twelve (12) directors,  with the exact number
to be fixed by the Board.  During the 1999  fiscal year the Board  consisted  of
seven (7) members.  The Company intends to appoint two (2) additional members to
the Board  following  the  Annual  Meeting.  At the  Annual  Meeting,  seven (7)
directors  will be elected to serve until the Company's  next Annual Meeting and
until their  successors  are elected and  qualified.  The Board of Directors has
selected seven (7) nominees,  all seven (7) of whom are current directors of the
Company.

         Each person nominated for election has agreed to serve if elected,  and
management  has no reason to believe  that any nominee  will be  unavailable  to
serve.  Unless  otherwise  instructed,  the proxy  holders will vote the proxies
received  by them  FOR the  nominees  named  below.  The  seven  (7)  candidates
receiving the highest number of affirmative votes of the shares entitled to vote
at the Annual Meeting will be elected directors of the Company.

Recommendation of the Board of Directors

         The Board of Directors  recommends that the  stockholders  vote FOR the
election of each of the following  nominees to serve as directors of the Company
for the  ensuing  year  until  the  next  Annual  Meeting  at which  time  their
successors are elected and qualified.

                                       4
<PAGE>

Director Nominees
<TABLE>
         Set  forth  below  is  information  regarding  the  director  nominees,
including  information furnished by them as to principal  occupations,  business
experience,  certain other directorships held by them, any arrangements pursuant
to which they were selected as directors or nominees.
<CAPTION>

                                                                                                          Year
                                                                                                      First Elected
               Nominees                                                                       Age        Director
               --------                                                                       ---        --------
<S>                                       <C>                                                  <C>        <C>
Thian Hoo Tan.......................      President and Chief Executive Officer of the         51         1999
                                          Company

Chris A. Eyre.......................      Private Investor                                     53         1983

Irwin Federman......................      General Partner, U.S. Venture Partners               64         1983

George A. Neil......................      Consultant to Asahi Glass America, Incorporated      62         1994

Michael R. Splinter.................      Senior Vice President & General Manager,             59         1999
                                          Technology and Manufacturing Group,
                                          Intel Corporation

Anthony Sun.........................      General Partner, Venrock Associates                  47         1983

Masayoshi Takebayashi ..............      President, Chief Executive Officer,                  65         1992
                                          Kobe Precision, Incorporated
</TABLE>

         Mr. Thian Hoo Tan was appointed President,  Chief Executive Officer and
director  in  August  1999.  Mr.  Tan  started  the  Company's  first  San Jose,
California manufacturing facility in 1989 and managed Komag's Penang and Sarawak
operations  from 1992 through  1996.  Mr. Tan returned to the U.S. to assume the
position of Senior Vice  President-Worldwide  Operations  from 1996  through his
appointment by the Board to the present position.  Before joining Komag in 1989,
Mr. Tan was Vice  President of  Operations at HMT  Technology.  Mr. Tan holds an
M.S. degree in Physics from the University of Malaya at Kuala Lumpur.

         Mr. Eyre has served as a director of the Company since  September 1983.
Mr. Eyre is a private investor and from 1980 to 1987 served as a general partner
of Merrill,  Pickard,  Anderson & Eyre, a general  partnership  which  manages a
series of venture capital partnerships.

         Mr.  Federman has served as a director of the Company  since  September
1983.  In April 1990,  Mr.  Federman  joined U.S.  Venture  Partners,  a general
partnership which manages a series of venture capital partnerships, as a general
partner.  From  February  1988 to March 1990,  Mr.  Federman  served as Managing
Director  of  Dillon,  Read  &  Co.  Incorporated,  an  investment  banking  and
securities  firm.  From 1979 until August 1987,  Mr.  Federman was President and
Chief Executive Officer of Monolithic Memories,  Incorporated.  Mr. Federman was
elected  Vice  Chairman of the Board of  Directors  of Advanced  Micro  Devices,
Incorporated  ("AMD") when  Monolithic  Memories  merged with AMD, and served in
that capacity  until January 1988. He is also a director of Checkpoint  Software
Technologies, MMC Networks, Inc., Neomagic, Incorporated, Netro Corporation, and
SanDisk Corporation, Ltd.

         Mr. Neil has served as Consultant  to Asahi Glass Co., Ltd.  since 1990
and Senior Vice  President of Asahi Glass America from 1990 through  1996.  From
August  1986  Mr.  Neil  held  executive  positions  at  two  specialty  ceramic
companies.  From  August  1988 to July  1990  Mr.  Neil  was  consultant  to and
President of  Thunderbird  Technologies.  Mr. Neil served in various  management
positions with Corning, Incorporated including Executive Vice President of Iwaki
Glass and President of Corning Japan.



                                       5
<PAGE>

         Mr.  Splinter  has served as a director  of the  Company  since May 25,
1999. Mr.  Splinter is the Senior Vice President and General  Manager of Intel's
Technology and Manufacturing  Group. Mr. Splinter joined Intel's management team
in 1984,  was elected  vice-president  in 1993 and assumed the role of Assistant
General Manager of the Technology  Manufacturing Group in October 1996. Prior to
joining  Intel,   Mr.   Splinter  held  a  management   position  with  Rockwell
International.  Mr. Splinter is a director of SEMATECH and Ayurcore Corporation.
He holds two patents on semiconductor processing.

         Mr. Sun has served as a director of the Company since  September  1983.
Since 1979, he has been  associated with Venrock  Associates,  a venture capital
partnership, and has been a general partner since 1980. Mr. Sun is a director of
3Dfx Interactive  Corporation,  Cognex Corporation,  Phoenix  Technologies Ltd.,
Ramp Networks,  Worldtalk Communications Corporation, and several privately held
companies.

         Mr. Takebayashi has served as a director of the Company since May 1992.
Since September 1964, he has served in various  positions with Kobe Steel,  Ltd.
and its  subsidiaries,  most recently as President,  Chief Executive  Officer of
Kobe Precision,  Incorporated,  a wholly-owned  subsidiary of Kobe Steel,  Ltd.,
since  January  1988.  From  January 1986 to December  1988,  he was the General
Manager, International Marketing and Sales Overseas Department of the Aluminum &
Copper Division of Kobe Steel, Ltd. He is a member of the board of directors for
Kobe  Precision  Technology  Malaysia,  Sdn.  Bhd., and a member of the Board of
Directors  of Komag  Material  Technology,  Incorporated.  Mr.  Takebayashi  was
selected as a nominee pursuant to the terms of a Common Stock Purchase Agreement
between the Company and Kobe Steel USA Holdings Incorporated.

Committees and Meetings of the Board of Directors

         During the fiscal year ended  January 2, 2000,  the Board of  Directors
held eight (8) meetings. During this period, each of the directors,  attended or
participated in at least  seventy-five  percent (75%) of the aggregate number of
Board of  Directors  meetings  and  committee  meetings of the Board on which he
served.

         The  Company  has  five  standing  committees:  an Audit  Committee,  a
Compensation  Committee,  a Primary  Stock Option Plan  Committee,  a Nominating
Committee, and a Special Stock Option Plan Administration Committee.

         The Audit Committee is primarily responsible for approving the services
performed by the Company's  independent  auditors and  reviewing  reports of the
Company's auditors regarding the Company's  accounting  practices and systems of
internal  accounting  controls.  The Audit Committee formally met four (4) times
during the last fiscal year. This Committee currently consists of Messrs.  Eyre,
Neil and Sun.

         The Compensation  Committee  reviews and approves the Company's general
compensation  policies and sets compensation  levels for the Company's executive
officers.  This Committee currently consists of Messrs.  Federman,  Splinter and
Takebayashi. During fiscal 1999, the Compensation Committee formally met two (2)
times.

         The Primary Stock Option Plan Committee  administers the  discretionary
option grant  program of the  Company's  Restated 1987 Stock Option Plan and the
Company's 1997 Supplemental  Stock Option Plan (the "Option Plans") with respect
to the Company officers who are subject to the short-swing  profit  restrictions
of the federal  securities  laws. The Committee also  administers  the Company's
Employee  Stock  Purchase Plan.  This  Committee  currently  consists of Messrs.
Federman and Splinter. The Primary Stock Option Plan Committee met two (2) times
during the last fiscal year.

         The Nominating  Committee is responsible for recommending  nominees for
members of the Company's Board of Directors.  This Committee  currently consists
of Messrs.  Eyre, Neil and  Takebayashi.  This Committee met one (1) time during
1999.  The  Nominating  Committee  has not  instituted  proceedings  to consider
nominees recommended by security holders, but may do so in the future.



                                       6
<PAGE>

         The Special Stock Option Plan Administration  Committee (the "Secondary
Committee")  has separate but  concurrent  jurisdiction  with the Primary  Stock
Option Plan  Committee to administer the  discretionary  option grant program of
the Option Plans with respect to non-officer  employees.  The option grants made
by the Secondary  Committee will comply with certain  guidelines  established by
the Primary  Stock Option Plan  Committee.  The  Secondary  Committee  currently
consists of Mr. Tan and Edward H. Siegler,  an executive  officer of the company
as of February, 2000, and performs its duties on an ongoing basis.

Director Remuneration

         Non-employee  Board  members  receive  $4,500 per fiscal  quarter and a
$1,000  meeting  fee for each  Board of  Directors  meeting  or Board  Committee
meeting attended, including telephonic meetings. Non-employee Board members also
receive  periodic  option  grants under the  Automatic  Option Grant  Program in
effect for them under the Option  Plans.  Each  individual  who first  becomes a
non-employee  Board member,  whether  through  election by the  stockholders  or
appointment by the Board, will receive,  at the time of such initial election or
appointment,  a stock option grant to purchase 30,000 shares of Common Stock. On
the date of each Annual Stockholders  Meeting, each individual who is re-elected
as a non-employee  Board member will receive an option to purchase 12,000 shares
of Common Stock,  provided such  individual has served on the Board for at least
six  months.  Each option  grant will have an  exercise  price equal to the fair
market value of the option shares on the grant date and will have a maximum term
of ten years,  subject to earlier  termination upon the optionee's  cessation of
Board service.

         Each  non-employee  director  re-elected  at the  1999  Annual  Meeting
(Messrs.  Eyre,  Federman,  Neil, Sun and Takebayashi)  received at that time an
option to purchase 12,000 shares with an exercise price of $4.03 per share. As a
newly elected  Director,  Mr.  Splinter was granted an option to purchase 30,000
shares  with an  exercise  price of $4.03 per share.  Each  option  will  become
exercisable for all the option shares upon the optionee's completion of one year
of non-employee  director  service  measured from the grant date.  However,  the
option will become immediately  exercisable for all of the option shares upon an
acquisition  of the  Company  by  merger,  consolidation  or asset  sale or upon
certain  other  changes  in  control  or  ownership  of the  Company.  Upon  the
successful  completion  of a  hostile  tender  offer  for  more  than 50% of the
Company's  outstanding Common Stock, each of these options will automatically be
canceled,  and each optionee will in return receive a cash distribution from the
Company in an amount per  canceled  option  share equal to the excess of (i) the
highest  reported  price per share of Common Stock paid in the tender offer over
(ii) the option exercise price payable per share.




                                       7
<PAGE>


                                  ITEM NO. 2 --

                                    FINANCING

         The Company is seeking to renew authorization from stockholders to sell
and issue up to $250 million of Common Stock in equity or equity-linked  private
transactions  from time to time until June 30, 2001 at a price not less than the
greater of book value and 90% of the then current market value as defined by the
National  Association  of  Securities  Dealers,  Inc. (the "NASD") of the Common
Stock (the "Financing Proposal").

Background

         The Company  continues to negotiate with its lenders proposed terms for
a Restructuring  Agreement.  Even if the Company restructures its current credit
facilities,  the Company believes that it will require  additional funding prior
to the maturity of its existing bank debt to facilitate  full repayment of these
loans. If the Company is unable to obtain adequate new funding, the Company will
be  required  to further  restructure  its bank  credit  facilities,  and may be
required to further reduce its operations and capital  spending which could have
a material adverse effect on the Company's  results of operations.  No assurance
can be given  that the  company  will be able to  further  restructure  its bank
credit facilities.

         In July 1998,  the Company  solicited and received  authorization  from
stockholders to engage in transactions similar to those that would be authorized
by the  Financing  Proposal  in amounts  of up to $350  million.  The  authority
granted  by the July  1998  stockholder  resolution  was  limited  to one  year.
However, because of unfavorable market conditions and other factors,  management
elected  not  to  engage  in  any  transactions  authorized  by  the  July  1998
stockholder resolution.  In May, 1999 approval was extended to October, 2000 for
the company to enter into  transactions  up to $250  million.  The company seeks
this  authority to allow for a potential new financing  prior to the  expiration
date of its bank credit facilities.

Reasons For the Financing Proposal

         Under  the  Delaware   General   Corporation   Law  and  the  Company's
Certificate  of  Incorporation  and Bylaws,  no action or  authorization  by the
Company's stockholders is necessary for the Financing Proposal. However, because
the Common Stock is quoted on The Nasdaq Stock Market, the Company is subject to
the rules of the NASD. NASD Rule 4460(i) generally requires stockholder approval
for the  issuance  by a company  of shares of its  common  stock (or  securities
convertible  into or  exercisable  for common stock) equal to 20% or more of the
voting  power  of all  shares  of the  company  if  such  shares  are  sold in a
transaction  other than a public offering at a price (or with a conversion price
of) not less than the greater of bank value and 90% of the then  current  market
value of such company's common stock.  Approval of the Financing  Proposal would
not limit the Company from taking any action for which  stockholder  approval is
not otherwise required.

         If the Financing  Proposal is approved at the Annual Meeting and if the
Company  issues  securities  in a  transaction  subject to  approval  under Rule
4460(i),  then the Company will mail to stockholders  certain  information about
the transaction prior to issuing the securities.

         The market price of the Common Stock has been highly volatile in recent
periods.  If the  Financing  Proposal  is approved  at the Annual  Meeting,  the
Company will be authorized to issue up to $250 million of Common Stock in equity
or equity-linked private transactions from time to time until June 30, 2001 at a
price no less than the greater of book value and 90% of the then current  market
value of the Common  Stock.  At March 13, 2000,  the closing price of the Common
Stock on the Nasdaq  Stock  Market was $4.00 and the book value per share of the
Common Stock on January 2, 2000 was $0.79.



                                       8
<PAGE>

         If stockholders  approve the Financing  Proposal at the Annual Meeting,
no further authorization by stockholders for the issuance of securities pursuant
to this  authorization  will be  obtained.  The  terms of the  securities  to be
authorized,  including  dividend or interest rates,  conversion  prices,  voting
rights, redemption prices, maturity dates and similar matters will be determined
by the Board of Directors.

Risk Factors

         IN ADDITION TO THE OTHER INFORMATION SET FORTH IN THIS PROXY STATEMENT,
STOCKHOLDERS  SHOULD CAREFULLY  CONSIDER THE FOLLOWING  FACTORS BEFORE ACTING ON
THE FINANCING PROPOSAL.

Dilution to Existing Stockholders; Impact on Market Value of Common Stock

         The  sale  of a  significant  amount  of  Common  Stock  or  securities
convertible  into Common  Stock could cause  substantial  dilution to the voting
power,  earnings per share and interests of current  stockholders.  In addition,
the sale of a significant number of securities convertible into shares of Common
Stock could cause a decline in the market value of the Common Stock.

Consequences If the Financing Proposal Is Not Approved

         If the Financing Proposal is not approved by the Company's stockholders
at the Annual Meeting,  the consequences could have a material adverse effect on
the Company's  business,  results of operations  and  financial  condition.  The
Company is considering  sources of funding,  including  equity or  equity-linked
financings that are dependent,  in part, on approval of the Financing  Proposal.
As discussed  above, the Company believes that it will require new funding prior
to the maturity of its existing bank debt to facilitate  full repayment of these
loans. If the Company is unable to obtain adequate new funding, the Company will
be required to restructure  its bank credit  facilities,  and may be required to
further reduce its  operations and capital  spending which could have a material
adverse effect on the Company's results of operations.

         THE BOARD OF  DIRECTORS  RECOMMENDS  THAT  STOCKHOLDERS  VOTE "FOR" THE
FINANCING PROPOSAL.  ABSTENTIONS AND BROKER NON-VOTES WILL HAVE NO EFFECT ON THE
OUTCOME OF THE FINANCING  PROPOSAL.


                                       9
<PAGE>

                                  ITEM NO. 3 --

                      RATIFICATION OF INDEPENDENT AUDITORS

         The Company is asking the stockholders to ratify the selection of Ernst
& Young LLP as the  Company's  independent  auditors  for the fiscal year ending
December  31,  2000.  The  affirmative  vote of the holders of a majority of the
shares  represented  and voting at the Annual Meeting will be required to ratify
the selection of Ernst & Young LLP.

         In the event the stockholders fail to ratify the appointment, the Board
of Directors will  reconsider its selection.  Even if the selection is ratified,
the  Board  in  its  discretion  may  direct  the  appointment  of  a  different
independent  accounting firm at any time during the year if the Board feels that
such  a  change  would  be  in  the  best  interests  of  the  Company  and  its
stockholders.  Unless  otherwise  instructed,  the proxy  holders  will vote the
proxies  received by them FOR the ratification of the selection of Ernst & Young
LLP.

         Ernst & Young  LLP have  audited  the  Company's  financial  statements
annually beginning in 1986.  Representatives of the firm, who are expected to be
present at the Annual Meeting,  will have the opportunity to make a statement if
they desire to do so, and will be available to respond to appropriate questions.

Recommendation of the Board of Directors

         The affirmative vote of a majority of the issued and outstanding voting
shares is sought for the ratification of the selection of Ernst & Young LLP. The
Board of Directors recommends that the stockholders vote FOR this proposal.

EXECUTIVE COMPENSATION AND RELATED INFORMATION

         In compliance with the Securities and Exchange Commission's regulations
on disclosure of Executive  Compensation,  this section  presents the Reports of
the Compensation  Committee and of the Primary Stock Option  Committee,  a Stock
Performance  Graph  comparing  Company  stockholder  return  relative to a broad
market  index and a peer group  index,  and Summary and  Companion  Compensation
Tables  presenting  a  detailed   representation  of  the  Company's   executive
compensation practices.

         REPORT OF THE COMPENSATION AND PRIMARY STOCK OPTION COMMITTEES
                            ON EXECUTIVE COMPENSATION

         The Compensation Committee's members, Irwin Federman,  Michael Splinter
and Masayoshi  Takebayashi,  are independent  directors who are not employees of
the Company and who further qualify as outside directors under Section 162(m) of
the Internal  Revenue Code. The  Compensation  Committee is accountable  for the
approval of cash compensation programs that fairly compensate key executives and
employees and that relate the pay levels of officers to the  performance  of the
Company.  The Primary  Stock  Option  Committee's  members,  Irwin  Federman and
Michael  Splinter  qualify as  disinterested  persons for purposes of Rule 16b-3
adopted  under the 1934 Act. The Primary Stock Option  Committee is  responsible
for all stock option grants to executive officers.



                                       10
<PAGE>

Objectives of the Company's Executive Compensation Plan

         The Company's  executive  compensation is based on the premise that the
executive  officers are  responsible  for achievement of the Company's goals and
objectives  and  are  rewarded  when  achievement  of  these  goals  results  in
successful financial performance.  The Committee intends to control fixed salary
costs, to provide a high degree of leverage in officers' pay based on the actual
performance  of the  Company,  to  allow  flexibility  to  respond  to  specific
individual issues such as retention, and to balance cost to stockholders against
providing  appropriate  incentives for value  creation.  To structure the actual
annual  compensation  plans,  the  Compensation  Committee  relies  on  research
performed by an independent  compensation  consulting  firm, and advice from the
Company's human resources department.  For comparison purposes,  the Company has
identified a group of  high-performing  companies ("peer companies") both within
and outside the Company's industry. The Company competes with the peer companies
for the hiring and  retention of key  executives  and  accordingly  compares its
executive compensation practices to these companies. Each peer company shares at
least one attribute, such as high technology, location or size with the Company.
Such comparisons also include the relative financial  performance of the Company
and the peer companies.  Since executive search and retention is not necessarily
industry  specific,  no attempt is made to correlate the list of peer  companies
with the  companies  in  Nasdaq  Computer  Manufacturers  Index,  the  Company's
Industry index in the "Stock Performance Graph."

         The total  compensation  plan developed for each officer  includes base
salary,  incentive bonus and stock options in addition to  participation  in the
Company's  Cash and Deferred  Profit  Sharing and Employee  Stock Purchase plans
subject to the same eligibility criteria applicable to all employees.  Executive
officers  are also  eligible to defer salary  under the  Company's  401(k) Plan.
Average base salary is targeted at or below the 50th percentile of base salaries
for executives with similar positions among the peer companies. The Compensation
Committee considers this level of base salary sufficient,  in the context of the
total  compensation  package,  to attract and retain  executives  of the caliber
required to manage a company that employs  leading edge technology in a fiercely
competitive,  rapidly changing industry,  while controlling this fixed component
of compensation in the event of poor business conditions or company performance.
On an individual  basis, the base salaries of the Company's  executive  officers
range  from  the 30th  percentile  to the 75th  percentile.  Variation  from the
targeted  range  is due to  individual  qualifications,  including  performance,
specific technical knowledge, experience and/or total targeted cash compensation
as judged by the Compensation Committee.

         To complement base salary, the Compensation  Committee  administers the
Management Bonus Plan (the "Bonus Plan"). This Bonus Plan is designed to provide
substantial rewards for exceeding financial performance targets and little or no
payout when the Company performs poorly. Specifically, the Bonus Plan provides a
pool of funds  available for bonus  payments  based on the  Company's  operating
income as  compared  to the Annual  Operating  Plan as  approved by the Board of
Directors in the first quarter of each fiscal year. The maximum pool is equal to
7% of operating  income when actual operating income is greater than or equal to
122% of the Annual  Operating Plan. This percentage  declines  linearly to 2% of
operating  income at a level of 66.67% of the  Annual  Operating  Plan and to 0%
when  there is no  operating  income  or an  operating  loss.  The  Compensation
Committee  allocates  this  pool  to  the  executives,  up to  each  executive's
pre-established  maximum,  and to other  non-executive  employees,  based on its
judgment of each  individual's  contributions  to the  Company's  financial  and
operating performance. Since the Company sustained an operating loss in 1999, no
payments were accrued or paid under the Bonus Plan for the fiscal year.

         The Compensation Committee also administers the Company's Discretionary
Bonus Plan (the  "Discretionary  Plan").  The Discretionary  Plan is designed to
allow  the  Compensation  Committee  the  flexibility  to  grant a  bonus  to an
executive if an executive  has achieved a  substantial  objective  during a time
when the Bonus Plan cannot provide a payout or if there is a specific  retention
issue related to the  executive's  level of income.  No payments were accrued or
made to officers under this plan for the 1999 fiscal year.



                                       11
<PAGE>

         In addition to cash compensation the Company's  executive  compensation
plan  includes  stock  options that are  designed to align the  interests of the
executive  officers with those of  stockholders,  providing  each officer with a
significant incentive to manage the Company from the long-term perspective of an
owner with an equity stake in the  business.  The stock  option plan  encourages
long-term  retention  and  provides  rewards to  executives  and other  eligible
employees  commensurate  with growth in  stockholder  value.  The Primary  Stock
Option  Committee  had the sole  responsibility  for making option grants to the
Company's  executive  officers  during 1999. The Primary Stock Option  Committee
also  approved  the  guidelines  for option  grants made to other key  employees
during that fiscal  year.  Based on a review of  competitive  data,  the Primary
Stock Option  Committee  targeted  total option grants for 1999 to fall within a
range of 2.5% - 4.0% of total shares  outstanding.  Due to  continued  difficult
market conditions,  the inability to pay cash bonuses and the need to retain key
employees,  actual  option  grants,  net of  cancellations,  for the fiscal year
totaled 10.0% of the weighted  average number of shares issued and  outstanding.
All stock  options  were granted at market price on the date of grant and have a
maximum term of ten years.

         The Primary Stock Option  Committee has established  guidelines for the
number  of  options  to  be  granted  to  each  level  of   executive   officer,
non-executive  management  and key individual  contributor  based on analysis of
competitive  data and internal  estimates of the number of options  necessary to
attract and retain these employees.  These guidelines were used to determine the
range of options to be granted to each  employee  through the  Company's  annual
grant  program.  The Primary  Stock  Option  Committee  applied its  judgment of
individual  performance,  with some  consideration  for the  number of  unvested
options held by an  individual,  when making  specific  grants to each executive
officer. These options will vest entirely in the fourth year after grant so that
generally the vesting will not overlap with previously granted options.

         The Primary  Stock Option  Committee  deemed it in the best interest of
the Company to grant new options,  as a retention tool,  since it was clear that
there would be no cash bonuses paid during 1999. Accordingly,  in February, 1999
the Primary Stock Option Committee granted 228,455 shares to 5 current executive
officers. Each of these options becomes exercisable in the thirty-seventh (37th)
month following the date of grant. Each option will thereupon become exercisable
in a series  of twelve  (12)  successive  equal  monthly  installments  over the
optionee's period of continued  employment with the company. In August 1999, the
Primary Stock Option  Committee  granted 420,000 options to 5 current  executive
officers.  Each of these options becomes exercisable in a series of installments
with 25% vesting six months following grant date, and the remainder vesting over
the next nine months.  In December,  1999,  the Primary  Stock Option  Committee
granted 269,420 options to 5 current executive  officers.  Each of these options
becomes  exercisable  in a series  of  installments  with 25%  vesting  one year
following  grant  date,  and the  remainder  vesting  in  successive  25% annual
installments.  Additionally  in December,  1999 397,500 shares were granted to 4
current  executive  officers.  Each of these options  becomes  exercisable  in a
series of installments with 16.67% vesting nine months following grant date, and
the  remainder  vesting  over the next 15 months.  No former  executive  officer
option grants are included in the above numbers.  Additionally,  options granted
to Mr. Tan are detailed in the following discussion.

Compensation of the Chief Executive Officer

         Base  salary  of Thian Hoo Tan for 1999 was at  approximately  the 50th
percentile of salaries  paid to  executives in comparable  positions at the peer
companies,  in accordance with the Compensation  Committee's  target. As no cash
bonuses  were paid for 1999  under the  Company's  plans,  Mr. Tan  received  no
variable  compensation  during the year.  Mr. Tan was granted  stock options for
1,714,595 shares during the year.

Compliance with Internal Revenue Code Section 162(m)

         As a result of Section 162(m) of the Internal  Revenue Code,  which was
enacted into law in 1993,  the Company will not be allowed a Federal  income tax
deduction  for  compensation  paid  to  certain  officers,  to the  extent  that
compensation  exceeds one (1) million  dollars per officer in any one year. This
limitation will be in effect for each fiscal year of the Company beginning after
December  31,  1993  and  will  apply to all  compensation  paid to the  covered
executive   officers  which  is  not   considered  to  be   performance   based.
Compensation,  which does qualify as  performance-based  compensation,  will not
have to be taken into  account  for  purposes  of this  limitation.  At the 1994


                                       12
<PAGE>

Annual Meeting, the Company obtained stockholder approval for certain amendments
to the  Company's  Stock  Option  Plan which were  designed  to assure  that any
compensation  deemed  paid in  connection  with the  exercise  of stock  options
granted  under that plan,  with an exercise  price equal to the market  price of
Common Stock on the grant date, would qualify as performance-based compensation.
The Bonus Plan was restructured in 1996 and approved by stockholders so that the
payments   made  under  that  plan  would  also  qualify  as   performance-based
compensation  under  Section  162(m) and the Company  obtained a ruling from the
Internal  Revenue Service that the payments under the Bonus Plan will qualify as
performance-based compensation.  Stockholders subsequently approved an amendment
to the Bonus Plan in 1997, and future  payments  thereunder  should  continue to
qualify as performance-based  compensation that would not be subject to the Code
Section 162(m) limitation on deductibility.

                   1999 MEMBERS OF THE COMPENSATION COMMITTEE

           Irwin Federman     Michael Splinter    Masayoshi Takebayashi

               1999 MEMBERS OF THE PRIMARY STOCK OPTION COMMITTEE

                     Irwin Federman       Michael Splinter

         The members of the Compensation  Committee and the Primary Stock Option
Committee of the Company's  Board of Directors are as named in the above report.
No member of either committee was at any time during the 1999 fiscal year, or at
any other time an officer or employee of the Company.

         No executive officer of the Company served on the board of directors or
compensation  committee  of any  entity  which has one or more of its  executive
officers  serving  as  a  member  of  the  Company's  Board  of  Directors,  the
Compensation Committee, or the Primary Stock Option Committee.  Mr. Takebayashi,
a member of the Company's  Board of Directors,  is an executive  officer of Kobe
Precision,  Inc. a wholly-owned subsidiary of Kobe Steel, Ltd. ("Kobe") and is a
member  of the  Board of Komag  Materials  Technology,  a joint  venture  of the
Company and Kobe.


                                       13
<PAGE>


Stock Performance Graph

         The following  graph shows a five-year  comparison of cumulative  total
return on common  stock for the Company,  the Nasdaq  Composite  Index,  and the
Nasdaq Computer  Manufacturers Index from December 30, 1994 through December 31,
1999.

                COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURNS
         OF KOMAG, INCORPORATED, THE NASDAQ STOCK MARKET (US COMPANIES)
               INDEX, AND THE NASDAQ COMPUTER MANUFACTURERS INDEX


<TABLE>
         The chart above  assumes $100  invested on December 30, 1994, in Komag,
Incorporated   Common  Stock,   Nasdaq   Composite  Index  and  Nasdaq  Computer
Manufacturers  Index, and the reinvestment of dividends (although dividends have
not been declared on the Company's  Common  Stock).  Historical  returns are not
necessarily  indicative of future  performance.  The graph was plotted using the
following data:
<CAPTION>

- --------------------------------------------------------------------------------------------------------------------
  Prices indexed to an
 initial investment of
          $100                12/30/94      12/29/95      12/27/96      12/26/97       12/31/98      12/31/99
- --------------------------------------------------------------------------------------------------------------------
<S>                           <C>           <C>           <C>            <C>           <C>           <C>
Komag, Incorporated           $100.00       $176.56       $205.74        $109.57       $ 79.43       $   23.92
- --------------------------------------------------------------------------------------------------------------------
Nasdaq Composite              $100.00       $141.33       $174.11        $205.07       $300.25       $  542.43
- --------------------------------------------------------------------------------------------------------------------
Nasdaq Computer Mfg           $100.00       $157.45       $217.56        $242.85       $553.26       $1,163.21
- --------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       14
<PAGE>


Summary of Cash and Certain Other Compensation

<TABLE>
         The following table sets forth the compensation earned by the Company's
Chief  Executive  Officer,  each of the Company's  five most highly  compensated
executive  officers  whose base salary and bonus for the 1999 fiscal year was in
excess of $100,000,  and two additional former executive officers of the Company
who earned in excess of $100,000, for services rendered in all capacities to the
Company  and its  subsidiaries  for the 1999,  1998 and 1997  fiscal  years (the
"Named Executive Officers").

<CAPTION>
                                          SUMMARY COMPENSATION TABLE

- ------------------------------------------------------------------------------------------------------------
                                                                                  Long Term
                                               Annual Compensation               Compensation
                                               -------------------               ------------
              Name and                                                                            All Other
             Principal                                                           Stock Options     Compen-
              Position                 Year        Salary          Bonus           Granted         sation
              --------                 ----        ------          -----           -------         ------
                                                  ($) (1)         ($) (2)       (# of shares)      ($) (3)

<S>                                    <C>        <C>             <C>              <C>             <C>
  Thian H. Tan........................ 1999       $331,399          --             1,714,595       $     625
  President and Chief Executive        1998       $257,216          --                63,067       $     625
  Officer                              1997       $230,000        $ 5,708             77,390       $   5,161


  Christopher H. Bajorek............   1999       $372,922          --               466,460       $     625
  Senior Vice President --             1998       $321,000          --                86,640       $     625
  Chief Technical Officer              1997       $316,654        $ 7,966            160,825       $   6,956


  William  L. Potts, Jr. (5)......    1999       $284,462          --               445,190       $     625
  Senior Vice President, Chief         1998       $245,999          --                49,150       $     625
  Financial Officer & Secretary        1997       $246,000        $ 6,105             29,835       $   5,477


  Ray L. Martin.............           1999       $275,464          --               201,530       $     625
  Senior Vice President - Customer     1998       $252,847          --                90,000       $     625
  Sales and Service                    1997       $ 46,538          --                60,000             --


  Tsotomu T. Yamashita.............    1999       $209,744          --               269,120       $     625
  Vice President - Process             1998       $199,526          --                50,055       $     625
  Development                          1997       $197,999        $ 4,913             77,165       $   4,530


  Tu Chen (4)......................    1999       $287,416          --               150,000       $ 147,551
  Former Chairman of the Board of      1998       $428,000          --               113,500       $     625
  Directors                            1997       $428,000        $10,621            113,810       $   9,067


  Stephen C. Johnson (4)...........    1999       $287,414          --               150,000       $ 109,290
  Former President, Chief              1998       $428,000          --               113,500       $     625
  Executive Officer                    1997       $428,000        $10,621            113,810       $   9,067

- ------------------------------------------------------------------------------------------------------------


                                                    15
<PAGE>

<FN>
(1)  Includes  salary  deferred  under the Komag  Savings  and  Deferred  Profit
     Sharing Plan and the Company's Non-Qualified Deferred Compensation Plan.

(2)  Includes  amounts  earned for the indicated  year under the Company's  Cash
     Profit Sharing Plan, the Management Bonus Plan and the Discretionary  Bonus
     Plan.  Amounts earned under the Cash Profit Sharing Plan are accrued during
     a given year and are paid in July of that year and  January or  February of
     the following  year.  Bonuses  earned under the  Management  Bonus Plan are
     accrued  during  a given  year  and  paid in  January  or  February  of the
     following year.  Bonuses under the Discretionary  Bonus Plan are awarded by
     the Compensation Committee for a particular fiscal year solely on the basis
     of such Committee's competitive compensation analysis for that year and are
     paid in January or  February  of the  following  year.  For the 1999 fiscal
     year, no bonuses were paid.

(3)  Includes  for  the  fiscal  years   indicated   below:   (i)  the  matching
     contributions  ($0.25 match per $1.00 individual  contribution) made by the
     Company on behalf of each Named  Executive  Officer to the  Section  401(k)
     Savings  Program,  up to a maximum  match of $625 and (ii) the  semi-annual
     profit  sharing  contributions  made by the Company on behalf of each Named
     Executive  Officer to the  Savings  and  Deferred  Profit-Sharing  Plan and
     Deferred Compensation Plan, and (iii) payments made to former officers upon
     their termination for accrued but unused vacation.

(4)  Dr. Chen and Mr. Johnson resigned from the company in August, 1999.

(5)  Mr. Potts resigned from the company in February, 2000.
</FN>
</TABLE>
<TABLE>
<CAPTION>

                                              All Other Compensation
       ------------------------------------------------- ---------------- ------------------- -------------------
                                                            Matching        Profit Sharing         Vacation
                                                          Contribution       Contribution          Payouts

<S>                                          <C>              <C>              <C>                   <C>
       Thian H. Tan                          1999             $625                --                  --
                                             1998             $625                --                  --
                                             1997             $625              $4,536                --

       Christopher H. Bajorek                1999             $625                --                  --
                                             1998             $625                --                  --
                                             1997             $625              $6,331                --

       William L. Potts, Jr.                 1999             $625                --                  --
                                             1998             $625                --                  --
                                             1997             $625                --                  --

       Ray L. Martin                         1999             $625                --                  --
                                             1998             $625                --                  --
                                             1997              --                 --                  --

       Tsutomu T. Yamashita                  1999             $625                --                  --
                                             1998             $625                --                  --
                                             1997             $625                --                  --

       Tu Chen                               1999             $625                --               $146,926
                                             1998             $625                --                  --
                                             1997             $625              $8,442                --

       Stephen C. Johnson                    1999             $625                --               $108,655
                                             1998             $625                --                  --
                                             1997             $625              $8,442                --

       -------------------------------- ---------------- ---------------- ------------------- -------------------
</TABLE>

                                                        16
<PAGE>

Stock Options
<TABLE>
         The  following  table  provides  information  with respect to the stock
option  grants made for the 1999 fiscal year under the  Company's  Restated 1987
Stock Option Plan to the Named Executive Officers.  Except for the limited stock
appreciation  right described below,  which formed part of the option grant made
to each of the Named  Executive  Officers,  no stock  appreciation  rights  were
granted to such individuals  during the 1999 fiscal year.  Potential  Realizable
Values noted below reflect hypothetical appreciation based on the stock price at
grant date.
<CAPTION>
                                                 OPTION GRANTS TABLE

                                                                                                  Potential Realizable
                                                                                                        Value at
                                                                                                  Assumed Annual Rates
                                                                                                Stock Price Appreciation
                                     Individual Grants                                              For Option Term
                                     -----------------                                              ---------------
                                                    % of Total
                                        Number of      Options   Exercise or                                 Valuation
                                       Securities     Granted to  Base Price Expira-                          per SFAS
                           Date of     Underlying    Employees in ($/Share)  tion                               123
Name                        Grant    Options Granted Fiscal Year    (1)      Date   5% ($) (2)  10%($) (2)   pro forma(3)
- ----                        ------   --------------- -----------    ---      ----   ----------  ----------   ---------
<S>                        <C>        <C>               <C>       <C>      <C>      <C>         <C>           <C>
Thian H. Tan                2/4/99      109,800          1.1248   $9.6875    2/4/09   $668,947  $1,695,244    $236,520
                            8/4/99    1,000,000         10.2438   $3.9063    8/4/09 $2,456,651  $6,225,636    $868,600
                           11/3/99      500,000          5.1218   $1.6875   11/3/09   $530,630  $1,344,720    $187,600
                          12/23/99      104,795          1.0735   $3.0000  12/23/09   $197,715    $501,049     $69,909

Christopher H. Bajorek      2/4/99       83,230          0.8526   $9.6875    2/4/09   $507,072  $1,285,020    $179,286
                           8/26/99      150,000          1.5365   $3.5625   8/26/09   $336,066    $851,656    $118,830
                           12/7/99      150,000          1.5366   $2.2500   12/7/09   $212,252    $537,888     $75,045
                          12/23/99       83,230          0.8526   $3.0000  12/23/09   $157,029    $397,942     $55,523

William L. Potts, Jr.       2/4/99       61,960          0.6347   $9.6875    2/4/09   $377,486    $956,624    $133,468
                           8/26/99      150,000          1.5366   $3.5625   8/26/09   $336,066    $851,656    $118,830
                           12/7/99      150,000          1.5366   $2.2500   12/7/09   $212,252    $537,888     $75,045
                          12/23/99       83,230          0.8526   $3.0000  12/23/09   $157,029    $397,942     $55,523

Ray L. Martin               2/4/99       49,570          0.5078   $9.6875    2/4/09   $302,001    $765,330    $106,779
                           8/26/99       90,000          0.9219   $3.5625   8/26/09   $201,639    $510,994     $71,298
                          12/23/99       61,960          0.6347   $3.0000  12/23/09   $116,899    $296,245     $41,334

Tsutomu T. Yamashita        2/4/99       39,610          0.4057   $9.6875    2/4/09   $241,321    $611,554     $85,324
                           8/26/99       90,000          0.9219   $3.5625   8/26/09   $201,639    $510,994     $71,298
                           12/7/99       90,000          0.9219   $2.2500   12/7/09   $127,351    $322,733     $45,027
                          12/23/99       49,510          0.5071   $3.0000  12/23/09    $93,410    $236,719     $33,028

Tu Chen                     2/4/99      150,000          1.5366   $9.6875    2/4/09   $913,863  $2,315,907    $323,115

Stephen C. Johnson          2/4/99      150,000          1.5366   $9.6875    2/4/09   $913,863  $2,315,907    $323,115

</TABLE>


                                                           17
<PAGE>

         Each new  option  has a maximum  term of 10 years,  subject  to earlier
termination  upon the optionee's  cessation of service.  Each option will become
immediately  exercisable  for all the option  shares in the event the Company is
acquired by a merger or asset sale  (unless the option is assumed or replaced by
the acquiring  entity) or in the event the optionee's  employment  terminates by
reason of death or permanent  disability.  Each option  includes a limited stock
appreciation  right which would result in the cancellation of that option upon a
take-over of the Company  effected  through a hostile tender offer for more than
50% of the Company's  outstanding  Common Stock. In return, the optionee will be
entitled to a cash distribution from the Company per canceled option share equal
to the  highest  reported  price paid per share of Common  Stock in such  tender
offer less the option exercise price per share.

(1)      The  exercise  price may be paid in cash,  in  shares of the  Company's
         Common  Stock  valued at fair market  value on the  exercise  date,  or
         through a cashless exercise procedure  involving a same-day sale of the
         purchased shares.

(2)      There is no assurance provided to any executive  officer,  or any other
         holder  of the  Company's  securities,  that  the  actual  stock  price
         appreciation  from the grant date and over the 10 year option term will
         be at the  assumed  5% and 10%  levels or at any other  defined  level.
         Unless the market price of the Common Stock appreciates over the option
         term,  no value will be  realized  from the option  grants  made to the
         executive officers.

(3)      For  purposes  of such pro  forma  disclosure,  the fair  value of each
         option grant is estimated on the date of grant using the  Black-Scholes
         option pricing model with the following assumptions: risk-free interest
         rate of 5.75%;  volatility  factor of the expected  market price of the
         Company's Common Stock of 90.4%; and a  weighted-average  expected life
         of such options of 4.3 years.  There was no dividend  yield included in
         the  calculation  since  the  Company  does  not  pay  dividends.   The
         weighted-average  fair value of options granted to all employees during
         1999 was $4.38.  For officer grants during 1999,  the  weighted-average
         fair value of the options was $3.99.

Option Exercises and Holdings

         The table  below sets forth  information  concerning  the  exercise  of
options during the 1999 fiscal year and  unexercised  options held as of the end
of such year by the Named Executive Officers.  No stock appreciation rights were
exercised during such fiscal year, and except for the limited stock appreciation
rights described  immediately  following the Option Grant Table above which form
part of each stock option grant, no stock  appreciation  rights were outstanding
at the end of such fiscal year.



                                       18
<PAGE>

<TABLE>
                    OPTION EXERCISES AND YEAR-END VALUE TABLE

 Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option Value:

<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
                                                                                                 Value of
                                                                       Number of                Unexercised
                                                                 Securities Underlying         In-The-Money
                                  Shares                          Unexercised Options        Options at Fiscal
                                 Acquired           Value        At Fiscal Year-End (#)      Year-End ($) (2)
                               on Exercise       Realized (1)       Exercisable (E)/         Exercisable (E)/
           Name                    (#)               (#)           Unexercisable (U)          Unexercisable(U)
           ----                    ---               ---           -----------------          ----------------
<S>                                <C>                <C>             <C>                     <C>
  Thian H. Tan                      --                --                 78,539 E             $      --    E
                                                                      1,806,629 U             $    731,849 U

  Christopher H. Bajorek            --                --                154,072 E             $      --    E
                                                                        634,528 U             $    141,654 U

  William L. Potts, Jr.             --                --                115,369 E             $      --    E
                                                                        521,541 U             $    141,654 U

  Tsutomu T. Yamashita              --                --                104,212 E             $      --    E
                                                                        353,635 U             $     84,939 U

  Ray L. Martin.                    --                --                 61,244 E             $      --    E
                                                                        290,286 U             $      7,745 U

  Tu Chen                           --                --                294,846 E             $      --    E
                                                                        --      U             $      --    U

  Stephen C. Johnson                --                --                369,306 E             $      --    E
                                                                        --      U             $      --    U
- -------------------------------------------------------------------------------------------------------------------
<FN>

(1)  Value  Realized  equals the market price value of the shares at the time of
     exercise less the exercise price thereof.

(2)  Excess of the closing price per share of the Company's  Common Stock at the
     end of the fiscal year  ($3.125)  over the option  exercise  price.  If the
     closing  price  is  less  than  the  exercise  price,  then  the  value  of
     unexercised options equals zero.
</FN>
</TABLE>

 Officer Loans

         The Company has advanced a total sum of $281,010 to Mr.  Bajorek during
the 1997,  1998,  and 1999 fiscal years as a personal  loan.  The advances  bear
interest at the market  rate  required  under the federal tax laws.  The highest
amount  outstanding  under  these  advances  during  the  1999  fiscal  year was
$281,010, and as of February 27, 2000, the amount outstanding was $283,772.

         The  Company has  advanced a total sum of $233,684 to Mr.  Thian H. Tan
during the 1998 fiscal year as a personal  loan.  The advances  bear interest at
the  market  rate  required  under the  federal  tax laws.  The  highest  amount
outstanding under these advances during the 1999 fiscal year was $63,684, and as
of February 27, 2000, the amount outstanding was $33,933.



                                       19
<PAGE>

Compliance with Section 16(a) Beneficial Ownership Reporting

         Section  16(a) of the  Securities  Exchange  Act of 1934  requires  the
Company's  directors and executive  officers,  and persons who own more than ten
percent of a registered class of the Company's equity  securities,  to file with
the Commission  initial reports of ownership and reports of changes in ownership
of common stock and other equity securities of the Company. Officers,  directors
and greater than ten percent stockholders are required by Commission regulations
to furnish the Company with copies of all Section 16(a) forms they file.

         To the Company's  knowledge,  based solely upon written  review of such
reports  furnished  to the  Company and  written  representations  that no other
reports were required, during the fiscal year ended January 2, 2000, all Section
16(a) filing requirements  applicable to the Company's  officers,  directors and
greater than ten percent stockholders were met in a timely manner.


                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         In April 1999,  the  Company  purchased  the assets of Western  Digital
Corporation's  ("WDC's") media operations  through the issuance of approximately
10.8 million  shares of the  Company's  Common Stock and a note in the principal
amount of $30.1 million. The shares issued in the transaction, which represented
16.7%  of the  Company's  outstanding  shares  on a  post-issuance  basis,  were
originally  unregistered  and  subject to trading  restrictions.  WDC may resell
these shares in specified increments over a three and one-half year period under
registration  rights granted by the Company or under SEC rules after  expiration
of the required  holding  periods.  The Company  registered 30% of the shares in
January 2000 pursuant to the  agreement.  Principal and interest  accrued on the
note are due in three years and the note is subordinated to the Company's senior
credit  facilities.  In the event  WDC  realizes  a return  on its Komag  equity
holdings in excess of a targeted  amount  within three years,  the excess amount
will reduce the balance due under the note. The Company discounted the principal
amount of the subordinated  note payable to $21.2 million based on the Company's
estimated  incremental  borrowing rate at the time of the acquisition of 18% for
this class of financial instrument.

         Additionally,  the Company and WDC signed a volume  purchase  agreement
under which the Company  agreed to supply a  substantial  portion of WDC's media
needs over the next three years.  Under the volume purchase  agreement WDC began
to purchase the majority of its media  requirements  from the Company  after the
closing date. During 1999, revenue from WDC approximated $183,511,000 subsequent
to the asset purchase.

                                 OTHER BUSINESS

         The  Board  of  Directors  knows  of no  other  business  that  will be
presented for consideration at the Annual Meeting. If other matters are properly
brought before the Annual Meeting,  however,  it is the intention of the persons
named in the accompanying proxy to vote the shares  represented  thereby on such
matters in accordance with their best judgment.



                                       20
<PAGE>

                              STOCKHOLDER PROPOSALS

         Stockholders  of the Company  may submit  proposals  that they  believe
should be voted upon at the Annual  Meeting or nominate  persons for election to
the Board of Directors.  In accordance with the Company's  Bylaws and applicable
rules under the Securities  Exchange Act of 1934, as amended,  any such proposal
or  nomination  must be submitted in writing to the  Secretary of the Company no
later  than  December  31,  2000.  As set forth in the  Company's  Bylaws,  this
submission must include certain specified information concerning the proposal or
nominee,  as the  case  may be.  Proposals  or  nominations  not  meeting  these
requirements will not be entertained at the Annual Meeting. The Secretary should
be contacted in writing at the address on the first page of this Proxy Statement
to make any submission or to obtain additional information as to the proper form
and  content  of  submissions.  Stockholders  interested  in  submitting  such a
proposal  are  advised  to contact  knowledgeable  counsel  with  regards to the
detailed requirements of submitting such a proposal.

By Order of the Board of Directors


Thian H. Tan
President and Chief Executive Officer


                                       21
<PAGE>




                               KOMAG, INCORPORATED




         The  annual  meeting  of  Stockholders  will be held at 10:00  a.m.  on
Wednesday, May 10, 2000, at Komag, Incorporated, Building 10, located at:


                             1710 Automation Parkway
                           San Jose, California 95131





                              [MAP GRAPHIC OMITTED]




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