<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[x] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
SOLECTRON 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):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
LOGO
SOLECTRON CORPORATION
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JANUARY 11, 2000
To the Stockholders of Solectron Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Solectron
Corporation (the "Company"), a Delaware corporation, will be held on Tuesday,
January 11, 2000, at 9:00 a.m., local time, at The Westin Santa Clara, 5101
Great America Parkway, Santa Clara, CA 98054, for the following purposes:
1. To elect ten (10) directors to serve for the ensuing year and until
their successors are duly elected and qualified.
2. To approve an amendment to the Company's Certificate of
Incorporation increasing the number of authorized shares of Common Stock of
the Company from 400,000,000 to 800,000,000 shares.
3. To ratify the appointment of KPMG LLP as independent auditors of
the Company for the fiscal year ending August 25, 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.
Only stockholders of record at the close of business on November 16, 1999
are entitled to notice of and to vote at the meeting and any adjournment
thereof.
All stockholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to mark,
sign and return the enclosed proxy card as promptly as possible in the
postage-paid envelope enclosed for that purpose. Any stockholder attending the
meeting may vote in person even if he or she has already returned a proxy.
By Order of the Board of Directors,
/s/ Susan Wang
Susan Wang
Secretary
Milpitas, California
December 10, 1999
YOUR VOTE IS IMPORTANT
To assure your representation at the Annual Meeting, you are requested either to
complete, sign and date the enclosed proxy as promptly as possible and return it
in the enclosed envelope, which requires no postage if mailed in the United
States or vote by telephone or via the Internet as instructed on the enclosed
card.
<PAGE> 3
SOLECTRON CORPORATION
------------------------
PROXY STATEMENT
------------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of Solectron Corporation (the
"Company"), for use at the Annual Meeting of Stockholders to be held on Tuesday,
January 11, 2000, at 9:00 a.m., local time, or at any adjournment or
postponement thereof, for the purposes set forth herein and in the accompanying
Notice of Annual Meeting of Stockholders. The Annual Meeting will be held at The
Westin Santa Clara, 5101 Great America Parkway, Santa Clara, CA 98054. The
Company's telephone number is (408) 957-8500.
These proxy solicitation materials were mailed on or about December 10,
1999 to all stockholders of record at the close of business on November 16, 1999
(the "Record Date"). A copy of the Company's Annual Report to Stockholders for
the year ended August 27, 1999 ("Fiscal 1999"), including financial statements,
was sent to the stockholders prior to or concurrently with this Proxy Statement.
RECORD DATE; OUTSTANDING SHARES
Stockholders of record at the close of business on the Record Date are
entitled to notice of and to vote at the Annual Meeting and any adjournment
thereof. At the Record Date, 272,217,489 shares of the Company's Common Stock
were issued and outstanding.
REVOCABILITY OF PROXIES
Any proxy given pursuant to the solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by (i) filing a
written notice of revocation bearing a later date than the proxy with the
Secretary of the Company (currently Susan Wang) at or before the taking of the
vote at the Annual Meeting, (ii) duly executing a later dated proxy relating to
the same shares and delivering it to the Secretary of the Company at or before
the taking of the vote at the Annual Meeting or (iii) attending the Annual
Meeting and voting in person (although attendance at the Annual Meeting will not
in and of itself constitute a revocation of a proxy). Any written notice of
revocation or subsequent proxy should be delivered to the Secretary of the
Company, or hand-delivered to the Secretary of the Company at or before the
taking of the vote at the Annual Meeting.
VOTING AND SOLICITATION
On all matters other than the election of directors, each share has one
vote. See "Proposal One -- ELECTION OF DIRECTORS -- Required Vote."
The cost of soliciting proxies will be borne by the Company. In addition,
the Company may reimburse brokerage firms and other persons representing
beneficial owners of shares for expenses incurred in forwarding solicitation
materials to such beneficial owners. Proxies may be solicited by certain of the
Company's directors, officers and regular employees, without additional
compensation, personally or by telephone, telegraph or letter.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
The required quorum for the transaction of business at the Annual Meeting
is a majority of the votes eligible to be cast by holders of shares of Common
Stock issued and outstanding on the Record Date. Shares that are voted "FOR,"
"AGAINST" or "ABSTAIN" are treated as being present at the meeting for purposes
of establishing a quorum and are also treated as shares entitled to vote at the
Annual Meeting (the "Votes Cast") with respect to such matter.
<PAGE> 4
While there is no definitive statutory or case law authority in Delaware as
to the proper treatment of abstentions, the Company believes that abstentions
should be counted for purposes of determining both (i) the presence or absence
of a quorum for the transaction of business and (ii) the total number of Votes
Cast with respect to a proposal (other than the election of directors). In the
absence of a controlling precedent to the contrary, the Company intends to treat
abstentions in this manner. Accordingly, abstentions will have the same effect
as a vote against the proposal.
In a 1988 Delaware case, Berlin v. Emerald Partners, the Delaware Supreme
Court held that, while broker non-votes should be counted for purposes of
determining the presence or absence of a quorum for the transaction of business,
broker non-votes should not be counted for purposes of determining the number of
Votes Cast with respect to the particular proposal on which the broker has
expressly not voted. Accordingly, the Company intends to treat broker non-votes
in this manner. Thus, a broker non-vote will not have any effect on the outcome
of the voting on a proposal.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS FOR ANNUAL MEETING FOR FISCAL YEAR
2000
Proposals of stockholders of the Company which are to be presented by such
stockholders at the Company's Annual Meeting for the year ended August 25, 2000
("Fiscal 2000") must be received by the Company no later than August 12, 2000 in
order that they may be included in the Proxy Statement and form of proxy
relating to that meeting. Such stockholder proposals should be submitted to
Solectron Corporation at 847 Gibraltar Drive, Milpitas, CA 95035, Attention:
Secretary.
PROPOSAL ONE
ELECTION OF DIRECTORS
NOMINEES
The Company's Board of Directors (the "Board") currently consists of ten
persons. All ten positions on the Board are to be elected at this meeting.
Unless otherwise instructed, the proxyholders will vote the proxies received by
them for the Company's nominees named below, all of whom are presently directors
of the Company. In the event that any nominee of the Company is unable or
declines to serve as a director at the time of the Annual Meeting, the proxies
will be voted for any nominee who shall be designated by the present Board to
fill the vacancy. In the event additional persons are nominated for election as
directors, the proxyholders intend to vote all proxies received by them in such
a manner in accordance with cumulative voting as will ensure the election of as
many of the nominees listed below as possible, and in such event, the specific
nominees to be voted for will be determined by the proxyholders. The Company is
not aware of any nominee who will be unable or will decline to serve as a
director. The term of office of each person elected as a director will continue
until the next Annual Meeting of Stockholders or until his successor has been
elected and qualified.
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<PAGE> 5
The names of the nominees, and certain information about them, are set
forth below.
<TABLE>
<CAPTION>
DIRECTOR
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION SINCE
--------------- --- -------------------- --------
<S> <C> <C> <C>
Dr. Koichi Nishimura................. 61 President, Chief Executive Officer 1991
and Chairman of the Board of the
Company
Dr. Winston H. Chen(1)............... 58 Chairman, Paramitas Foundation 1978
Richard A. D'Amore................... 46 General Partner, North Bridge Venture 1985
Partners
Charles A. Dickinson(1),(3),(4)...... 75 Independent Management Consultant 1984
Heinz Fridrich(2),(4)................ 66 Faculty, University of Florida 1996
Dr. Philip V. Gerdine(2)............. 60 Independent Consultant 1998
William A. Hasler(3),(4)............. 57 Co-Chief Executive Officer, Aphton 1998
Corporation
Dr. Kenneth E. Haughton(3)........... 71 Independent Consultant 1985
Dr. Paul R. Low(2)................... 66 President, PRL Associates 1993
Osamu Yamada(1)...................... 70 Independent International Management 1994
Consultant
</TABLE>
- ---------------
(1) Member of the Nominating Committee.
(2) Member of the Audit and Finance Committee.
(3) Member of the Compensation Committee.
(4) Member of Information Technology Committee.
Except as set forth below, each of the nominees has been engaged in his
principal occupation set forth above during the past five (5) years. There is no
family relationship between any director or executive officer of the Company.
Dr. Koichi Nishimura has served as Chairman of the Board since 1996, Chief
Executive Officer since 1992 and President since 1990. He was Co-Chief Executive
Officer from 1991 to 1992 and Chief Operating Officer from 1988 to 1991. He was
also a director of the Board since 1991 before serving as Chairman of the Board.
From 1964 to 1988, Dr. Nishimura was with International Business Machines
Corporation (IBM) in various technology and management positions. Dr. Nishimura
serves as a director on the boards of Merix Corporation, the Center for Quality
Management and the Santa Fe Institute. He also serves on the Baan Company
supervisory board, the advisory board of Santa Clara University's Leavey School
of Business, and the board of the Santa Clara Valley Manufacturing Group. Dr.
Nishimura serves as a member of the Board of Directors in the capacity of Vice
President for the Foundation for the Malcolm Baldrige National Quality Award,
Inc.
Dr. Winston H. Chen is a founder of the Company and has served as a
director of the Company since 1978, Chairman of the Board of Directors from 1990
to March 1994, President from 1979 to 1990, Chief Executive Officer from 1984 to
1991, and as Co-Chief Executive Officer from 1991 to 1992. Dr. Chen is currently
Chairman of Paramitas Foundation, a position he has held since 1990. From 1970
to 1978, Dr. Chen served as Process Technology and Development Manager of IBM.
He also serves as a director of Intel Corporation and Edison International.
Mr. Richard A. D'Amore has served as a director of the Company since 1985.
Mr. D'Amore has been a general partner of North Bridge Venture Partners since
1992. He also serves as a director of Veeco Instruments, Inc., Xionics Document
Technologies, Inc., Silverstream Software and several private companies.
Mr. Charles A. Dickinson has served as a director of the Company since
1984, and served as Chairman of the Board of Directors from 1986 to 1990 and
from 1994 to September 1996. He served as an independent management consultant
to the Company from 1991 to 1993. He served as President, Solectron Europe, from
1993 to February 1996. From 1986 to 1990, Mr. Dickinson was Chairman of the
Board of Directors, President
3
<PAGE> 6
and Chief Executive Officer of Vermont Micro Systems, Inc. He also serves as a
director of Aavid Thermal Technologies, Inc., LeCroy Corporation and a
privately-held corporation.
Mr. Heinz Fridrich has served as a director of the Company since April
1996. He has been a member of the faculty of the University of Florida since
1993. From 1950 to 1993, Mr. Fridrich held a number of manufacturing and
operations management positions in Europe and the United States with IBM. He
also serves as a director of Central Hudson Gas & Electric Company and Veeco
Instruments, Inc.
Dr. Philip V. Gerdine has served as a director of the Company since May
1998. Dr. Gerdine served as Executive Director, Siemens AG and as managing
director of The Plessey Company from September 1989 to September 1998 and
previously was Vice President-Corporate Development of Siemens Corporation. Dr.
Gerdine has held senior management positions with General Electric Co., Price
Waterhouse and The Boston Consulting Group. He currently serves as a director of
Applied Materials, Inc.
Mr. William A. Hasler has served as a director of the Company since May
1998. Mr. Hasler is currently co-chief executive officer of Aphton Corporation,
an international biotechnology firm. Prior to joining Aphton, he was Dean and
Department Chair of the Haas School of Business at the University of California,
Berkeley. He currently serves as a director of Walker Interactive Systems, Inc.,
TCSI Corporation, Tenera, Inc. and DiTech Corporation. In addition, Mr. Hasler
is a member of the Compensation Committee of TCSI Corporation, Tenera, Inc. and
DiTech Corporation.
Dr. Kenneth E. Haughton has served as a director of the Company since 1985.
Since 1991, Dr. Haughton has been an independent consultant. From 1990 to 1991,
he was Vice President of Engineering at Da Vinci Graphics. From 1989 to 1990,
Dr. Haughton was an independent consultant, and from 1982 to 1989, he served as
Dean of Engineering at Santa Clara University. He also serves as a director of
Seagate Technology.
Dr. Paul R. Low has served as a director of the Company since 1993. He is
currently President of PRL Associates, a position he has held since 1992. Dr.
Low worked for IBM from 1957 to 1992. During his tenure at IBM, Dr. Low held
senior management and executive positions with successively increasing
responsibility, including President, General Technology Division and IBM
Corporate Vice President; President of General Products Division; and General
Manager, Technology Products business line, also serving on IBM's corporate
management board. He also serves as a director of Applied Materials, Inc., Veeco
Instruments, Inc., NCD and Xion.
Mr. Osamu Yamada has served as a director of the Company since 1994. Mr.
Yamada has been an independent international business consultant since November
1996. From October 1991 to November 1996, Mr. Yamada served as an advisor to The
Mitsubishi Bank, Limited and the Bank of Tokyo/Mitsubishi. From 1990 to 1991, he
was Chairman and Chief Executive Officer of BankCal Tri-State Corporation, a
wholly owned subsidiary of The Mitsubishi Bank, Limited. From 1987 to 1990, he
was Senior Managing Director of The Mitsubishi Bank, Limited, and in an
overlapping period from 1985 to 1990, he was also Chairman, President and Chief
Executive Officer of Bank of California. Prior to 1985, he held a number of key
management positions with The Mitsubishi Bank, Limited organization. Mr. Yamada
currently serves on a number of boards of major universities and cultural
centers.
BOARD MEETINGS AND COMMITTEES
The Board held a total of 6 regular meetings, 8 special meetings and 5
telephonic meetings during Fiscal 1999.
During Fiscal 1999, each director attended more than 75% of the meetings of
the Board and meetings of committees upon which such director served.
The Audit and Finance Committee of the Board currently consists of Dr. Paul
R. Low, Heinz Fridrich and Dr. Philip V. Gerdine. This committee oversees the
Company's internal financial control systems and procedures, reviews and
approves the Company's financial statements, and coordinates and approves the
activities of the Company's auditors. This committee also oversees the Company's
capital and financing matters. The Audit and Finance Committee held 3 meetings
during Fiscal 1999.
4
<PAGE> 7
The Compensation Committee of the Board is currently composed of Dr.
Kenneth E. Haughton, Charles A. Dickinson and William A. Hasler. This committee
is responsible for establishing compensation guidelines for executives of the
Company, reviewing and approving executive bonus plans and providing guidance
with respect to other compensation issues, such as incentive stock option
grants. The Compensation Committee held a total of 2 meetings during Fiscal
1999.
The Nominating Committee of the Board currently consists of Charles A.
Dickinson, Dr. Winston H. Chen, and Osamu Yamada. This committee is responsible
for the development of general criteria regarding the qualifications and
selection of board members and recommends candidates for election to the Board.
The Nominating Committee held 1 meeting during Fiscal 1999.
The Information Technology Committee of the Board currently consists of
Heinz Fridrich, Charles A. Dickinson and William A. Hasler. This committee is
responsible for addressing the Company's Information Technology needs from the
Board's perspective. The Information Technology Committee held 7 meetings during
Fiscal 1999.
DIRECTOR COMPENSATION
Directors who are not employees of the Company ("Outside Directors")
receive annual retainers of $20,000. In addition, each Outside Director is paid
$3,000 for each meeting of the Board attended, $500 for each telephonic Board
meeting attended and $1,500 for each committee meeting attended in Fiscal 1999.
Outside Directors may also receive consulting fees for projects completed at the
request of management. Employee directors are not compensated for their service
on the Board or on committees of the Board.
Options to purchase shares of the Company's common stock are granted to
Outside Directors under the 1992 Stock Option Plan (the "Option Plan") only in
accordance with an automatic, non-discretionary grant mechanism. The Option Plan
provides, with respect to Outside Directors, for an automatic grant on December
1 of each year of a nonstatutory option to purchase six thousand (6,000) shares
(pro rata for the portion of the first fiscal year of service as an Outside
Director) of the Company's Common Stock at a per share exercise price of 100% of
the fair market value on the date of grant.
REQUIRED VOTE
Each stockholder voting in the election of directors is entitled to
cumulate such stockholder's votes. Each stockholder who elects to cumulate votes
shall be entitled to as many votes as equals the number of directors to be
elected multiplied by the number of shares held by such stockholder, and the
stockholder may cast all such votes for a single director or distribute such
votes among as many candidates as the stockholder may see fit. However, no
stockholder shall be entitled to cumulate votes unless the candidate's name has
been placed in nomination prior to the voting and the stockholder, or any other
stockholder, has given notice at the meeting prior to the voting of the
intention to cumulate the votes. The ten nominees receiving the highest number
of affirmative votes of the shares entitled to be voted for them shall be
elected as directors. Votes withheld from any director are counted for purposes
of determining the presence or absence of a quorum for the transaction of
business, but have no legal effect under Delaware law. Abstentions and shares
held by brokers that are present but not voted, because the brokers were
prohibited from exercising discretionary authority ("Broker Non-Votes"), will be
counted as present for purposes of determining the presence or absence of a
quorum.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE
"FOR" THE NOMINEES LISTED ABOVE.
PROPOSAL TWO
APPROVAL OF AMENDMENT TO CERTIFICATE OF INCORPORATION
As a result of strategic acquisitions and equity incentives to employees,
officers and directors, the Company has issued or reserved for issuance a
significant amount of its authorized Common Stock. Therefore, the Board of
Directors has determined that it is in the best interests of the Company and its
stockholders to
5
<PAGE> 8
amend the first paragraph of Article Four of the Company's Certificate of
Incorporation to increase the number of authorized shares of Common Stock of the
Company from 400,000,000 to 800,000,000 shares. Accordingly, the Board of
Directors has unanimously approved the proposed amendment to the first paragraph
of Article Four of the Certificate of Incorporation (the "Amendment") and hereby
solicits the approval of the Company's stockholders of the Amendment. If the
stockholders approve the Amendment, the Board of Directors currently intends to
file an amendment to the Company's Certificate of Incorporation reflecting the
Amendment with the Secretary of State of the State of Delaware as soon as
practicable following such stockholder approval. If the Amendment is not
approved by the stockholders, Article Four of the existing Certificate of
Incorporation will continue in effect.
The objective of the increase in the authorized number of shares of Common
Stock is to ensure that the Company has sufficient shares available for future
issuances. The Board of Directors believes that it is prudent to increase the
authorized number of shares of Common Stock to the proposed levels in order to
provide a reserve of shares available for issuance to meet business needs as
they arise. Such future activities may include, without limitation, establishing
strategic relationships with corporate partners, providing equity incentives to
employees, officers or directors, funding future financings or acquisitions or
effecting stock splits or dividends.
POSSIBLE EFFECTS OF THE PROPOSED AMENDMENT TO THE CERTIFICATE OF INCORPORATION
If the stockholders approve the proposed Amendment, the Board of Directors
may cause the issuance of additional shares of Common Stock without a further
vote of the stockholders of the Company, except as provided under Delaware
corporate law or under the rules of New York Stock Exchange or any securities
exchange on which shares of Common Stock of the Company are then listed. The
issuance of additional shares of Common Stock would decrease the proportionate
equity interest of the Company's current stockholders and, depending upon the
price paid for such additional shares, could result in dilution to the Company's
current stockholders.
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
The affirmative vote of at least a majority of the outstanding shares of
Common Stock of the Company is required for approval of this proposal.
Abstentions and broker non-votes will each be counted as votes against the
proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE
"FOR" THE AMENDMENT TO THE CERTIFICATE OF INCORPORATION.
PROPOSAL THREE
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected KPMG LLP ("KPMG"), independent
auditors, to audit the financial statements of the Company for Fiscal 2000. KPMG
has audited the Company's financial statements since the Company's 1985 fiscal
year. Representatives of KPMG are expected to be present at the meeting with the
opportunity to make a statement if they desire to do so, and are expected to be
available to respond to appropriate questions. The affirmative vote of the
holders of a majority of the shares present in person or represented by proxy
and entitled to vote at the meeting is required to ratify the appointment of
KPMG.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE
"FOR" RATIFICATION OF THE APPOINTMENT OF KPMG AS INDEPENDENT AUDITORS.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act and regulations of the Securities and
Exchange Commission (the "SEC") thereunder require the Company's executive
officers and directors, and persons who own more than
6
<PAGE> 9
10% of a registered class of the Company's equity securities, to file reports of
initial ownership and changes in ownership with the SEC. Based solely on its
review of copies of such forms received by the Company, or on written
representations from certain reporting persons that no other reports were
required for such persons, the Company believes that, during Fiscal 1999 all of
the Section 16(a) filing requirements applicable to its executive officers,
directors and 10% stockholders were complied with.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has entered into indemnification agreements with its executive
officers, directors and certain significant employees containing provisions,
which are in some respects broader than the specific indemnification provisions
contained in the General Corporation Law of Delaware. These agreements provide,
among other things, for indemnification of the executive officers, directors and
certain significant employees in proceedings brought by third parties and in
stockholder derivative suits. Each agreement also provides for advancement of
expenses to the indemnified party. The agreements have been approved by the
majority vote of the disinterested stockholders of the Company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of November 16, 1999 information relating
to the beneficial ownership of the Company's Common Stock by (i) each person
known by the Company to be the beneficial owner of more than five percent (5%)
of the outstanding shares of Common Stock, (ii) each director, (iii) each of the
executive officers named in the Summary Compensation Table, (iv) and all
directors and executive officers as a group.
<TABLE>
<CAPTION>
APPROXIMATE
NAME AMOUNT OWNED(1) PERCENTAGE OWNED
---- --------------- ----------------
<S> <C> <C>
The Equitable Companies Incorporated........................ 32,100,000 11.79%
787 Seventh Avenue
New York, NY 10019
FMR Corporation............................................. 19,203,220(2) 7.05%
82 Devonshire Street
Boston, MA 02109-3614
Dr. Winston H. Chen......................................... 708,000(3) *
Dr. Koichi Nishimura........................................ 599,808(4) *
Susan Wang.................................................. 565,712(5) *
Walter W. Wilson............................................ 477,090(6) *
Charles A. Dickinson........................................ 278,652(7) *
Ken Tsai.................................................... 216,863(8) *
Dr. Saeed Zohouri........................................... 138,967(9) *
Dr. Kenneth E. Haughton..................................... 110,200(10) *
Dr. Paul R. Low............................................. 102,000(11) *
Richard A. D'Amore.......................................... 66,000(12) *
Heinz Fridrich.............................................. 35,000(13) *
Osamu Yamada................................................ 20,500(14) *
Dr. Philip V. Gerdine....................................... 12,700(15) *
William A. Hasler........................................... 12,000(16) *
All directors and executive officers as a group (17
persons).................................................. 3,465,784(17) 1.26%
</TABLE>
- ---------------
* Less than one percent (1%).
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to the securities. In computing the number of
shares beneficially owned by a person and the percentage ownership of that
person, shares of Solectron Common Stock subject to options held by that
person that will be
7
<PAGE> 10
exercisable on or before January 16, 1999, are deemed outstanding. Such
shares, however, are not deemed outstanding for the purpose of computing
the percentage ownership of any other person.
(2) Includes 61,644 shares issuable upon conversion of the Company's Liquid
Yield Option Notes due 2019 (Zero Coupon-Senior) at a conversion rate of
7.472 shares per note.
(3) Includes 72,000 shares issuable upon the exercise of stock options that are
exercisable on or before January 16, 2000.
(4) Includes 359,372 shares issuable upon the exercise of stock options that
are exercisable on or before January 16, 2000.
(5) Includes 331,249 shares issuable upon the exercise of stock options that
are exercisable on or before January 16, 2000.
(6) Includes 224,749 shares issuable upon the exercise of stock options that
are exercisable on or before January 16, 2000.
(7) Includes 121,980 shares issuable upon the exercise of stock options that
are exercisable on or before January 16, 2000.
(8) Includes 149,300 shares issuable upon the exercise of stock options that
are exercisable on or before January 16, 2000.
(9) Includes 124,945 shares issuable upon the exercise of stock options that
are exercisable on or before January 16, 2000.
(10) Includes 72,000 shares issuable upon the exercise of stock options that are
exercisable on or before January 16, 2000.
(11) Includes 96,000 shares issuable upon the exercise of stock options that are
exercisable on or before January 16, 2000.
(12) Includes 66,000 shares issuable upon the exercise of stock options that are
exercisable on or before January 16, 2000.
(13) Includes 34,000 shares issuable upon the exercise of stock options that are
exercisable on or before January 16, 2000.
(14) Includes 20,500 shares issuable upon the exercise of stock options that are
exercisable on or before January 16, 2000.
(15) Includes 12,000 shares issuable upon the exercise of stock options that are
exercisable on or before January 16, 2000.
(16) Includes 12,000 shares issuable upon the exercise of stock options that are
exercisable on or before January 16, 2000.
(17) Includes 1,817,508 shares issuable upon the exercise of stock options that
are exercisable on or before January 16, 2000.
8
<PAGE> 11
EXECUTIVE OFFICER COMPENSATION
SUMMARY COMPENSATION TABLE
The following table shows, as to the Chief Executive Officer and each of
the four other most highly compensated executive officers, information
concerning compensation for services to the Company in all capacities.
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION(1) COMPENSATION(2) ALL OTHER
-------------------- OPTIONS/SARS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) (#)(2) ($)(3)
--------------------------- ---- --------- -------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Dr. Koichi Nishimura..................... 1999 $660,000 $940,010 100,000 $ 8,805
President, Chief Executive Officer and 1998 485,552 727,887 90,000 7,650
Chairman of the Board of Directors 1997 475,020 626,352 140,000 5,695
Dr. Saeed Zohouri........................ 1999 425,022 882,060 55,800 10,388
Senior Vice President and 1998 352,926 510,596 30,000 4,485
Chief Operating Officer 1997 249,890 433,872 120,000 3,145
Susan Wang............................... 1999 400,010 715,010 44,000 10,089
Senior Vice President, Chief 1998 374,962 391,399 30,000 4,485
Financial Officer and Secretary 1997 249,990 368,111 48,000 2,832
Walter W. Wilson......................... 1999 425,022 678,210 44,000 10,736
Senior Vice President, Business 1998 350,022 419,015 30,000 4,575
Integration and Information Technology 1997 268,268 378,660 40,000 3,110
Ken Tsai................................. 1999 300,000 517,365 44,000 4,593
Senior Vice President and President, 1998 244,490 362,490 30,000 931
Solectron Asia 1997 224,978 324,417 60,000 863
</TABLE>
- ---------------
(1) Perquisites are not included since the aggregate amount is less than the
lesser of $50,000 or 10% of salary and bonus, in accordance with regulations
promulgated by the Securities and Exchange Commission (the "SEC");
therefore, the Other Annual Compensation has not been included in this
table. Bonus compensation reported for fiscal years 1999, 1998 and 1997 was
earned in that fiscal year, but may have been paid in the subsequent fiscal
year.
(2) The Company has not granted any stock appreciation rights or restricted
stock awards and does not have any Long-Term Incentive Plans as that term is
defined in regulations promulgated by the SEC. Amounts reported have been
adjusted to reflect a 2 for 1 stock split of the Company's common stock,
which occurred in February 1999.
(3) Amounts represent the Company's contributions to a 401(k) plan, the taxable
benefit of premium payments under split dollar life insurance policies, and
premiums under an executive group term life insurance policy.
9
<PAGE> 12
STOCK OPTION GRANTS AND EXERCISES
The following tables set forth, for the executive officers named in the
Summary Compensation Table, the stock options granted under the Company's stock
option plans and the options exercised by such executive officers during Fiscal
1999.
STOCK OPTION GRANTS IN FISCAL 1999
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------
PERCENT OF POTENTIAL REALIZABLE VALUE
TOTAL AT ASSUMED ANNUAL RATES
OPTIONS OF STOCK PRICE APPRECIATION
OPTIONS GRANTED TO EXERCISE OR FOR OPTION TERM(2)
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION ---------------------------
NAME (#)(1) FISCAL YEAR ($/SHARE) DATE 5%($) 10%($)
---- ------- ------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Dr. Koichi Nishimura........... 100,000 1.69% $26.5938 9/23/05 $1,082,635 $2,522,999
Dr. Saeed Zohouri.............. 55,800 .94 26.5983 9/23/05 604,110 1,407,834
Susan Wang..................... 44,000 .74 26.5938 9/23/05 476,359 1,110,120
Walter W. Wilson............... 44,000 .74 26.5938 9/23/05 476,359 1,110,120
Ken Tsai....................... 44,000 .74 26.5938 9/23/05 476,359 1,110,120
</TABLE>
- ---------------
(1) These options become exercisable as to one forty-eighth ( 1/48) of the
shares after each month from the date of grant.
(2) Potential realizable value is based on an assumption that the stock price of
the Common Stock appreciates at the annual rate shown (compounded annually)
from the date of grant until the end of the seven (7) year option term.
Potential realizable value is shown net of exercise price. These amounts are
calculated based on the regulations promulgated by the SEC and do not
reflect the Company's estimate of future stock price growth.
AGGREGATED OPTION EXERCISES IN FISCAL 1999 AND YEAR-END VALUES
<TABLE>
<CAPTION>
TOTAL NUMBER OF VALUE OF UNEXERCISED,
UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS HELD AT HELD AT
ACQUIRED FISCAL YEAR END(#) FISCAL YEAR END($)(2)
ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Dr. Koichi Nishimura.... 268,208 $ 8,064,899 324,787 165,213 $19,688,816 $8,622,105
Dr. Saeed Zohouri....... 175,980 2,907,359 98,395 101,009 5,829,678 5,466,185
Susan Wang.............. 80,000 1,086,248 318,206 63,794 20,411,391 3,293,039
Walter W. Wilson........ 180,000 6,175,481 212,372 61,628 13,403,461 3,159,221
Ken Tsai................ 311,384 11,522,494 135,570 67,046 8,270,799 3,493,951
</TABLE>
- ---------------
(1) Fair market value of underlying securities at exercise minus the exercise
price.
(2) Calculated based upon the August 27, 1999 fair market value share price of
$73.75 less the share price to be paid upon exercise. There is no guarantee
that if and when these options are exercised they will have this value.
COMPENSATION COMMITTEE REPORT
INTRODUCTION
The Compensation Committee (the "Committee") of the Board is charged with
the responsibility of reviewing all aspects of the Company's executive
compensation programs and administering the Company's stock option plans. In
Fiscal 1999, the members of the Committee were Messrs. Haughton, Dickinson and
Hasler, all of whom are non-employee directors of the Company. The Committee
meets at the beginning of
10
<PAGE> 13
each fiscal year to establish target base compensation levels for the Company's
executive officers for the following fiscal year and to finalize bonuses for the
previous fiscal year.
COMPENSATION PHILOSOPHY
The Company's executive compensation policies are designed to attract and
retain qualified executives who will contribute to the Company's long-term
success, to reward executives for achieving the Company's financial goals, and
to link executive compensation and stockholder interests through bonuses and
equity-based plans. The Committee believes that strong financial performance, on
a sustained basis, is the most certain avenue through which the Company can
positively affect long-term stockholder return. Furthermore, the Company
believes that, in order to attract and retain the most qualified executives in
the industry, its compensation policies must be competitive with other companies
of comparable size and in similar industries and must reinforce strategic
performance objectives through the use of incentive compensation programs. In
order to provide incentive to executive officers, a large percentage of their
annual compensation is paid as a bonus. The amount of the bonus for each person
is determined on the basis of several indicators of corporate performance as
outlined below.
COMPENSATION PLANS
The following are the key components of the Company's executive officer
compensation:
Base Compensation. The Committee establishes base salaries for executive
officers based on its review of base salaries of executive officers in companies
of comparable size and in similar industries. A majority of the companies used
by the Committee in its review of salaries of other companies are a part of the
H&Q Technology Index used in the "Performance Graph" below.
Bonuses. The Company's executive bonus plan provides for incentive
compensation to the Company's executive officers and other key employees and is
determined cumulatively on a quarterly basis based principally on certain
performance measures. The performance measures include worldwide corporate
performance, regional and site performance and individual performance.
Worldwide, regional and site performance are measured based on targets with
respect to the Company's economic value created, defined as profit before taxes
less cost of capital charge against net assets employed, terms as defined in the
Company's plan. The Committee believes that these factors are indicative of
overall corporate performance and stockholder value. Individual performance is
measured based on goals related to each person's function within the
organization. Employees accrue bonuses each quarter based on performance against
year-to-date profit and asset utilization targets. However, only approximately
26% of such accrued bonuses vest and are payable quarterly. The remaining
accrued bonus balances vest at the fiscal year end and are payable upon final
determination of earned bonuses.
Long-Term Incentive Compensation. The Company's Option Plan provides for
long-term incentive compensation for employees of the Company, including
executive officers. A significant portion of the total compensation package for
the Company's executive officers is in the form of stock option awards. These
awards give employees an equity interest in the Company, thereby aligning the
interests of executive officers and stockholders and providing incentive to
maximize stockholder value.
COMPANY PERFORMANCE AND CHIEF EXECUTIVE OFFICER COMPENSATION
The compensation for the Company's Chief Executive Officer (CEO) for Fiscal
1999 was comprised of a base salary component and a bonus component. The
Committee met at the beginning of Fiscal 1999 and reviewed CEO compensation for
companies of comparable size and similar industries in order to establish a base
salary for the Company's CEO. The Committee established a close tie between
Company performance and CEO compensation by designating a large portion of total
annual compensation as bonus. The Committee established corporate performance
goals of economic value created, defined as profit before taxes less a cost of
capital charge against net assets employed, terms as defined in the Company's
plan. At the beginning of Fiscal 2000, the Committee evaluated the Company's
Fiscal 1999 performance in light of the goal established in the previous year.
The Committee found that the corporate performance target level had been met or
exceeded
11
<PAGE> 14
and that in addition, the Company's CEO had exceeded his personal performance
goals for strategic leadership, growth, increase in stockholder value and
organizational and human resource development thereby entitling him to his full
bonus payment.
MEMBERS OF THE COMPENSATION COMMITTEE
Dr. Kenneth E. Haughton
Charles A. Dickinson
William A. Hasler
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Neither Dr. Kenneth E. Haughton, Charles A. Dickinson or William A. Hasler,
the members of the Compensation Committee, is an executive officer of any entity
for which any executive officer of the Company serves as a director or a member
of the Compensation Committee.
12
<PAGE> 15
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on the
Company's Common Stock with the cumulative total return on the S&P 500 Index and
the H&Q Technology Index for the five fiscal years commencing August 26, 1994
and ending August 27, 1999, assuming an investment of $100 and the reinvestment
of any dividends.
The comparisons in the graph below are based upon historical data and are
not indicative of, nor intended to forecast, future performance of the Company's
Common Stock.
CUMULATIVE TOTAL RETURN
<TABLE>
<CAPTION>
SOLECTRON CORPORATION H&Q TECHNOLOGY INDEX S&P 500 INDEX
--------------------- -------------------- -------------
<S> <C> <C> <C>
8/94 100.00 100.00 100.00
8/95 116.39 170.12 121.45
8/96 122.54 170.95 144.19
8/97 274.59 272.60 202.81
8/98 270.90 230.00 219.22
8/99 1026.23 494.77 306.52
</TABLE>
OTHER MATTERS
The Company 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 form of proxy to vote the shares they represent as
the Company may recommend.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Susan Wang
Susan Wang
Secretary
Dated: December 10, 1999
13
<PAGE> 16
SOLECTRON
www.solectron.com
PROXY SERVICES
P.O. BOX 9079
FARMINGDALE, NY 11735
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions. Have your
proxy/voting instruction card in hand when you call. You will be prompted to
enter your 12-digit Control Number which is located below and then follow the
simple instructions the Vote Voice provides you.
VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions. Have your proxy/voting
instruction card in hand when you access the web site. You will be prompted to
enter your 12-digit Control Number which is located below to vote your proxy.
VOTE BY MAIL
Mark, sign and date your proxy/voting instruction card and return it in the
postage-paid envelope we have provided or return to Solectron Corporation, c/o
ADP, 51 Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
SOLCOR KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
SOLECTRON CORPORATION
1. ELECTION OF DIRECTORS
(EXCEPT AS MARKED TO THE CONTRARY BELOW AUTHORITY
TO VOTE FOR ALL NOMINEES LISTED BELOW) FOR WITHHOLD FOR ALL
ALL ALL EXCEPT:
01) Koichi Nishimura, Ph.D., 02) Winston H. Chen, [ ] [ ] [ ]
Ph.D., 03) Richard A. D'Amore, 04) Charles A.
Dickinson, 05) Heinz Fridrich, 06) Phillip V.
Gerdine, Ph.D., 07) William A. Hasler, 08) Kenneth To withhold authority
E. Haughton, Ph.D., 09) Paul R. Low, Ph.D. and to vote, mark "For All
10) Osamu Yamada. Except" and write the
nominee's number on
the line below.
----------------------
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
2. PROPOSAL TO APPROVE AN AMENDMENT TO THE COMPANY'S [ ] [ ] [ ]
CERTIFICATE OF INCORPORATION INCREASING THE NUMBER
OF AUTHORIZED SHARES OF COMMON STOCK OF THE COMPANY
FROM 400,000,000 TO 800,000,000 SHARES.
3. PROPOSAL TO RATIFY THE APPOINTMENT OF KPMG LLP AS [ ] [ ] [ ]
THE COMPANY'S INDEPENDENT AUDITORS FOR THE FISCAL
YEAR ENDING AUGUST 25, 2000.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO SIGN
AND PROMPTLY MAIL THIS PROXY IN THE RETURN ENVELOPE SO THAT YOUR STOCK MAY BE
REPRESENTED AT THE MEETING.
- --------------------------------------- ------------------------------------
- --------------------------------------- ------------------------------------
Signature (PLEASE SIGN WITHIN BOX) Date Signature (Joint Owners) Date
<PAGE> 17
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF SOLECTRON CORPORATION
FISCAL 1999 ANNUAL MEETING OF SHAREHOLDERS
The undersigned hereby appoints Koichi Nishimura, Ph.D. and Susan Wang, and
each of them, with full power of substitution, to represent the undersigned and
to vote all of the shares of stock in Solectron Corporation (the "Company")
which the undersigned is entitled to vote at the Annual Meeting of the
Stockholders of the Company to be held at The Westin Santa Clara, 5101 Great
America Parkway, Santa Clara, California 98054 on Tuesday, January 11, 2000 at
9:00 a.m. Pacific Time, and at any adjournment thereof (1) as hereinafter
specified upon the proposals set forth below and as more particularly described
in the Proxy Statement of the Company dated December 10, 1999 (the "Proxy
Statement"), receipt of which is hereby acknowledged, and (2) in their
discretion, upon such other matters as may properly come before the meeting.
The undersigned hereby acknowledges receipt of the Company's Annual Report for
the year ended August 27, 1999.
THE SHARES REPRESENTED HEREBY SHALL BE VOTED AS SPECIFIED. IF NO SPECIFICATION
IS MADE, SUCH SHARES SHALL BE VOTED FOR PROPOSALS 1 THROUGH 3.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE.
