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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
SCIENTIFIC-ATLANTA, INC.
--------------------------------------------------------------------------------
(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 transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
Dear Shareholder:
You are cordially invited to attend the annual meeting of shareholders of
Scientific-Atlanta, Inc. to be held on Wednesday, November 8, 2000, at 9:00
a.m., local time, at our offices located at 5030 Sugarloaf Parkway,
Lawrenceville, Georgia 30043. On the ballot at this year's meeting are the
following company proposals, all of which are described in the attached Proxy
Statement:
1. The election of three directors;
2. A proposal to approve and adopt our amended and restated Deferred
Compensation Plan for Non-Employee Directors;
3. A proposal to ratify the selection of Arthur Andersen LLP as our
independent auditors for the 2001 fiscal year; and
4. Such other matters as may properly come before the meeting and at
any adjournments thereof.
I would also like to share some information regarding two new opportunities
we are pleased to be able to offer you this year:
. We are offering you the flexibility of voting your Scientific-
Atlanta shares by telephone or over the Internet, in addition to the
traditional mail-in method. Telephone and Internet voting give you
the convenience of voting 24 hours a day, seven days a week. Simply
follow the instructions on your proxy card and in the information
insert included in your proxy package.
. We are also offering you the opportunity during this year's voting
process to elect to view future annual reports and proxy material on
the Internet, rather than receive paper copies in the mail. This
service will also help Scientific-Atlanta reduce printing and
postage costs.
We look forward to seeing you at the annual meeting.
Sincerely,
/s/ William E. Eason, Jr.
-----------------------------------
William E. Eason, Jr.
Senior Vice President and Secretary
October 2, 2000
Scientific-Atlanta, Inc., 5030 Sugarloaf Parkway, Lawrenceville, Georgia 30043
<PAGE>
2000 ANNUAL MEETING OF SHAREHOLDERS
NOTICE OF ANNUAL MEETING AND PROXY STATEMENT
TABLE OF CONTENTS
<TABLE>
<S> <C>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS................................... 1
PROXY STATEMENT
General Information........................................................ 2
Why am I receiving these annual meeting materials?....................... 2
What is the purpose of the annual meeting?............................... 2
Does the information in this proxy statement reflect the March 2000 stock
split?.................................................................. 2
Who may vote?............................................................ 2
How much does each share count?.......................................... 2
How do I give voting instructions?....................................... 2
How do I vote by Internet?............................................... 3
How do I vote by telephone?.............................................. 3
How do I vote by mail?................................................... 3
Will my shares be voted if I do not provide my proxy?.................... 3
What if I return my proxy card but do not provide voting instructions?... 3
How can I revoke a proxy?................................................ 3
What does it mean if I receive more than one proxy card?................. 3
Who will bear the cost of soliciting votes for the meeting?.............. 4
Who counts the votes?.................................................... 4
What are some of the considerations relating to electronic access of
future annual meeting materials?........................................ 4
Certain Beneficial Ownership............................................... 5
Proposal No. 1 (Election of Directors)..................................... 6
Meetings and Committees of the Board of Directors.......................... 9
Compensation of Officers and Directors..................................... 10
Report of the Human Resources and Compensation Committee................... 16
Performance Graph.......................................................... 19
Proposal No. 2 (Proposal to Approve and Adopt the Deferred Compensation
Plan for Non-Employee Directors).......................................... 19
Proposal No. 3 (Selection of Independent Public Accountants)............... 22
Other Matters.............................................................. 22
Section 16(a) Beneficial Ownership Reporting Compliance.................... 22
Form 10-K Annual Report.................................................... 23
Shareholder Proposals and Nominations for 2001 Annual Meeting.............. 23
</TABLE>
<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Time: 9:00 a.m., Wednesday, November 8, 2000
Place: Scientific-Atlanta, Inc.
5030 Sugarloaf Parkway
Lawrenceville, GA 30043
Items of Business: 1. Elect the following three directors:
.David J. McLaughlin
.James V. Napier
.Sam Nunn
2. Approve and adopt the amended and
restated Deferred Compensation Plan for Non-
Employee Directors to allow non-employee
directors to defer cash compensation into a stock
account and to convert hypothetical shares
currently held in a phantom stock account under
that plan into the right to receive actual shares
of stock.
3. Ratify the selection of Arthur Andersen
LLP as our independent auditors for the current
fiscal year.
4. Transact such other business as may properly
come before the meeting, and any adjournment or
postponement.
Who May Vote: You can vote if you were a shareholder of record
at the close of business on September 20, 2000.
Documents: A proxy solicited by our board of directors, our
2000 Proxy Statement and our 2000 Annual Report
are included in this mailing.
Proxy Voting: Your vote is important. Please vote in one of
these ways:
1. Visit the web site listed on your proxy card;
2. Use the toll-free telephone number shown on
your proxy card; or
3. Mark, sign, date and promptly return the
enclosed proxy card in the postage-paid envelope.
Electronic Delivery: During this year's voting process you may consent
to receive future annual meeting materials by
Internet, instead of using the traditional paper-
based delivery system.
By Order of the Board of Directors, William E. Eason, Jr., Secretary, October
2, 2000
1
<PAGE>
PROXY STATEMENT
GENERAL INFORMATION
Why am I receiving these annual meeting materials?
The board of directors of Scientific-Atlanta is providing these materials
for you in connection with our 2000 annual meeting of shareholders and any
adjournments thereof. As a shareholder, you are invited to attend the meeting
and are entitled to and requested to vote on the proposals described in this
proxy statement. The meeting will be held at 9:00 a.m., local time, on
November 8, 2000 at our offices located at 5030 Sugarloaf Parkway,
Lawrenceville, Georgia 30043. These proxy materials are first being mailed to
shareholders on or about October 2, 2000.
What is the purpose of the annual meeting?
At the annual meeting, you will act upon the matters outlined in the notice
of meeting, including the following:
.To elect three directors;
. To approve and adopt the amended and restated Deferred Compensation Plan
for Non-Employee Directors; and
. To ratify the selection of Arthur Andersen LLP as our independent
auditors for the 2001 fiscal year
Our board of directors recommends that you vote your shares "FOR" each of
the nominees to the board, and "FOR" each of the other proposals.
In addition, on our proxy card you are being asked to consider whether to
consent to view future proxy material on the Internet, rather than receive
paper copies in the mail. By choosing to receive future annual meeting
materials electronically, you will help us reduce printing and postage costs.
Our management will also report on the performance of Scientific-Atlanta
during fiscal 2000 and respond to questions from shareholders.
Does the information in this proxy statement reflect the March 2000 stock
split?
All share data in this proxy statement has been adjusted retroactively to
account for the recent two-for-one stock split effected in the form of a
stock dividend. The stock dividend was payable on
March 27, 2000 to shareholders of record as of the close of business on March
10, 2000.
Who may vote?
All shareholders of record as of the close of business on the record date of
September 20, 2000. As of the record date, we had 161,021,002 shares of common
stock outstanding and entitled to vote.
How much does each share count?
Each share of Scientific-Atlanta common stock, $0.50 par value per share, is
entitled to one vote. The presence at the meeting, in person or by proxy, of a
majority of the shares of common stock outstanding on the record date will
constitute a quorum at the meeting. Abstentions and broker non-votes are
counted to determine a quorum.
How do I give voting instructions?
If your shares are registered directly in your name with Scientific-
Atlanta's transfer agent, The Bank of New York, you are considered the
shareholder of record with respect to those shares, and these proxy materials
are being sent directly to you. If you are the shareholder of record, you may
attend the annual meeting and give instructions in person. You may also give
voting instructions by Internet, telephone or mail as described below. The
proxy committee, named on the enclosed proxy card, will vote all properly
executed proxies that are delivered pursuant to this solicitation and not
subsequently revoked in accordance with the instructions given by you.
If your shares are held in a stock brokerage account or by a bank or other
nominees, you are considered the beneficial owner of such shares held in
"street name," and these proxy materials are being forwarded to you by your
broker or nominee, which is considered the shareholder of record with respect
to those shares. Your broker or nominee has enclosed a voting instruction card
for you to use in directing the broker or nominee how to vote your shares. As
the beneficial owner, you are invited to attend the meeting. However, since
you are not the shareholder of record, you may not vote these shares in person
at the meeting unless you have obtained a signed proxy from the record holder
giving you the right to vote the shares. If you are a beneficial owner,
2
<PAGE>
please check your voting instruction card or contact your broker or nominee to
determine whether you will be able to vote by Internet or telephone.
How do I vote by Internet?
The web site for Internet voting is shown on your proxy card. Internet
voting is available 24 hours a day, seven days a week. You will be given the
opportunity to confirm that your instructions have been properly recorded, and
you can consent to view future proxy statements and annual reports on the
Internet instead of receiving them in the mail. If you vote on the Internet,
you do NOT need to return your proxy card. The deadline for voting by Internet
is 5:00 p.m. on November 7, 2000.
How do I vote by telephone?
You can vote your shares by telephone by calling the toll-free telephone
number shown on your proxy card. Telephone voting is available 24 hours a day,
seven days a week. Easy-to-follow voice prompts allow you to vote your shares
and confirm that your instructions have been properly recorded. Our telephone
voting procedures are designed to authenticate the shareholder by using
individual control numbers. If you vote by telephone, you will also be given
the opportunity to consent to view future proxy statements and annual reports
on the Internet instead of receiving them in the mail. If you vote by
telephone, you do NOT need to return your proxy card. The deadline for voting
by telephone is 5:00 p.m. on November 7, 2000.
How do I vote by mail?
If you are a shareholder of record, you may simply mark the enclosed proxy
card, date and sign it, and return it in the postage-paid envelope provided.
If you wish to view future proxy statements and annual reports on the
Internet, check the box provided on the card.
If you hold your shares in street name, you must sign the voting instruction
card included by your broker or nominee and mail it in the postage-paid
envelope provided. If you wish to view future proxy statements and annual
reports on the Internet, please contact your broker or nominee.
Will my shares be voted if I do not provide my proxy?
Your shares may be voted under certain circumstances if they are held in the
name of a brokerage firm. Brokerage firms have the authority
under the New York Stock Exchange rules to vote customers' unvoted shares,
which are referred to as broker non-votes, on certain routine matters. At the
meeting, shares represented by broker non-votes will be counted as voted by
the brokerage firm in the election of directors and the ratification of
independent auditors, but will not be counted for any other matters to be
voted on because these other matters are not considered routine. If you hold
your shares directly in your name, they will not be voted if you do not
provide a proxy.
What if I return my proxy card but do not provide voting instructions?
If you sign and return your proxy, but do not provide voting instructions,
your shares will be voted:
1. "FOR" the election of the nominee directors named in this proxy
statement,
2. "FOR" the approval and adoption of the Deferred Compensation Plan for
Non-Employee Directors, and
3. "FOR" the ratification of the selection of Arthur Andersen LLP as
independent auditors for the 2001 fiscal year.
We are not aware of any other matters to be presented to the meeting;
however, the holders of the proxies will vote in their discretion on any other
matters properly presented.
How can I revoke a proxy?
You may revoke a proxy by any one of the following three actions:
1. delivering an instrument revoking the proxy to our Secretary,
2. delivering a later dated proxy to our Secretary, or
3. voting in person.
Attendance at the annual meeting, in and of itself, will not constitute a
revocation of a proxy.
What does it mean if I receive more than one proxy card?
You will receive a proxy card for each account you have. Please vote proxies
for all accounts to ensure that all your shares are voted.
3
<PAGE>
Who will bear the cost of soliciting votes for the meeting?
We have engaged Morrow & Co., Inc. to assist in the solicitation of proxies
from brokers, banks and their nominees which are shareholders of record, at a
cost of approximately $8,000, plus reasonable out-of-pocket expenses. We will
pay the costs of this solicitation, including the cost of preparing and mailing
this Proxy Statement. In addition to solicitations by mail, our directors and
regular employees may solicit proxies in person or by telephone or telegraph
without receiving any compensation in addition to their regular compensation as
directors or employees.
Who counts the votes?
Votes cast by proxy or in person at the annual meeting will be counted by the
persons appointed by us to act as the inspectors of election for the meeting.
What are some of the considerations relating to electronic access of future
annual meeting materials?
The following are some things to note about electronic access of future
annual meeting materials:
. Choosing online access of future annual meeting materials is voluntary.
. Accessing your Scientific-Atlanta annual meeting materials online
requires that you have access to the Internet, which may result in
charges to you from your Internet service provider and/or telephone
companies.
. If you do not sign up for this service, you will continue receiving
paper copies of these documents by U.S. mail.
. If you elect to access future annual reports and proxy material on the
Internet, you will still receive a proxy card in the mail to vote your
shares. The proxy card will contain the Internet address for viewing the
annual report and proxy statement, and instructions for electronic
voting.
. Your consent will be effective for accessing all future Scientific-
Atlanta annual reports, notices of annual meeting and proxy statements,
and will continue in effect unless it is revoked by you.
. You may revoke your election if you change your mind after consenting by
calling 1-800-524-4458. Also, even if you elect to view our annual
meeting materials online, you will still be able to request printed
copies of the annual report and proxy statement.
. Whether you register for Internet access or continue to receive paper
copies of the annual report and proxy statement, you will be able to
choose how you want to vote your shares: via telephone, Internet or U.S.
mail.
4
<PAGE>
CERTAIN BENEFICIAL OWNERSHIP
The following table sets forth information, as of September 10, 2000, as to
shares of Scientific-Atlanta common stock held by persons known to us to be
the beneficial owners of more than five percent of Scientific-Atlanta common
stock based upon information publicly filed by such persons:
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial Percent of
Name and Address of Beneficial Owner Ownership Class
-------------------------------------------- ----------------- ----------
<S> <C> <C>
FMR Corp. .................................. 17,047,429 10.704%(/1/)
82 Devonshire Street
Boston, Massachusetts 02109
</TABLE>
(1) Based on a Schedule 13G, dated September 10, 2000, filed by FMR Corp. and
related entities. FMR has sole voting over 1,761,619 shares and sole
dispositive power over all of these shares. The percent of class was
computed by the beneficial owner as of the date immediately preceding the
filing of its Schedule 13G with the SEC.
The following table sets forth, as of June 30, 2000, unless otherwise
indicated, information regarding ownership of Scientific-Atlanta common stock
and common stock equivalents held by each director, by each executive officer
named in the Summary Compensation Table and by all directors and executive
officers as a group:
<TABLE>
<CAPTION>
Beneficially Owned
---------------------------------------------------
(A) (B) (C) (D) (E)
--- --- --- --- ---
No. of Shares
No. of Shares Subject to Options No. of Shares Deferred
Owned Exercisable Prior of Restricted Deferred Common Stock
Name Directly(1) to August 29, 2000 Stock Not Vested Common Stock(2) Equivalents(3)
------------------------ ------------- ------------------ ---------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
Marion H. Antonini...... 24,000 145,000 6,000(/4/) 65,362 26,387
David W. Dorman......... 2,000 22,500 -- 6,000 --
William E. Kassling..... 7,712 145,000 6,000(/4/) 10,500 --
Mylle Bell Mangum....... 17,611 74,000 -- 15,000 --
James F. McDonald....... 154,858 1,712,500 91,547(/5/) -- --
David J. McLaughlin..... 41,320(/6/) 10,000 -- 55,892 --
James V. Napier......... 30,836 205,000 -- 45,014 42,391
Sam Nunn................ 9,032 37,500 -- 11,000 10,731
Conrad J. Wredberg...... 39,804 97,500 31,183(/5/) -- --
Dwight B. Duke.......... 8,099 74,500 26,134(/5/) -- --
H. Allen Ecker.......... 33,041 215,000 25,665(/5/) -- --
Wallace G. Haislip...... 30,204 70,500 22,511(/5/) -- --
All Directors and
Executive
Officers as a Group.... 604,660 3,147,500 359,310(/4/)(/5/) 208,768 79,509
</TABLE>
The total shares beneficially owned by each individual director and
executive officer (columns A, B and C) constituted less than 1% of the
outstanding Scientific-Atlanta common stock at June 30, 2000, except that the
shares beneficially owned by James F. McDonald (columns A, B and C)
constituted approximately 1.2% of the outstanding common stock. The aggregate
shares beneficially owned by all directors and executive officers as a group
(columns A, B and C) represented approximately 2.6% of the outstanding common
stock at June 30, 2000.
(1) Each person has sole voting and dispositive power with respect to the
shares shown in this column. With respect to executive officers, the
number of shares owned directly includes shares held in the Scientific-
Atlanta Voluntary Employee Retirement and Investment Plan (the 401(k)
plan), and shares held in Scientific-Atlanta's Dividend Reinvestment Plan
(DRIP) with respect to which such officers have voting and dispositive
power.
5
<PAGE>
(2) These shares constitute shares received in connection with the
discontinuance of Scientific-Atlanta's Retirement Plan for Non-Employee
Directors as of January 1, 1997, which these directors were obligated to
defer, pursuant to the Deferred Compensation Plan for Non-Employee
Directors, until the respective non-employee director's retirement date or
later. For periods after January 1, 1997, all non-employee directors
receive 1,500 shares, as a retirement award, on the date of each annual
shareholders meeting, which shares must, at each non-employee director's
election, either be (i) deferred under the Deferred Compensation Plan for
Non-Employee Directors for at least two years, or (ii) received as
restricted stock which vests two years after the date of grant. Deferred
lump sum distributions and deferred retirement awards are set forth in
this column. Such deferred lump sum distributions and deferred retirement
awards earn amounts equivalent to the dividends paid on Scientific-Atlanta
common stock. Directors with rights to such deferred shares of common
stock disclaim beneficial ownership of such shares because they do not
have the right to vote the deferred shares.
(3) This column sets forth the number of shares of Scientific-Atlanta common
stock used in determining the value of the phantom stock sub-account for a
particular director under the Deferred Compensation Plan for Non-Employee
Directors. If the amended and restated Deferred Compensation Plan for Non-
Employee Directors is approved and adopted as set forth in Proposal No. 2,
effective as of August 16, 2000, all such hypothetical shares of
Scientific-Atlanta common stock will be converted into the right to
receive the same number of actual shares of such stock.
(4) The specified shares are shares of restricted stock received by the
designated directors as retirement awards. As described in Note (2) above,
each non-employee director receives an annual retirement award of
1,500 shares, which must either be (i) deferred for at least two years, or
(ii) received as restricted stock which vests two years after the date of
grant. The specified shares are shares of restricted stock received by the
designated directors as retirement awards. Directors holding such
restricted stock have the right to vote the shares and the right to
receive dividends on the shares.
(5) This is the number of performance-based and time-based restricted shares
of common stock which were granted during or prior to fiscal year 2000
under the LTIP or under a separate arrangement and which had not vested as
of June 30, 2000. Executive officers entitled to such restricted shares
have the right to vote the shares and the right to receive dividends on
the shares.
(6) This includes 1,412 and 400 shares held indirectly by Mr. McLaughlin's
daughter and spouse, respectively.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Scientific-Atlanta articles of incorporation provide for the division of
the board of directors into three classes, with the directors in each class
serving for a term of three years. At the annual meeting, three nominees for
director are to be elected to serve until the annual meeting of shareholders
in 2003. The nominees for director are: David J. McLaughlin, James V. Napier
and Sam Nunn. All of the nominees for election as directors at this meeting,
and all directors whose term of office will continue after the annual meeting,
are currently directors of Scientific-Atlanta.
Directors are to be elected by a plurality of the votes cast at the annual
meeting in person or by proxy by the holders of shares entitled to vote in the
election. Votes may be cast for or votes may be withheld from each nominee.
Abstentions may not be specified with respect to the election of directors.
The withholding of authority by a shareholder, including broker non-votes,
will not be counted in computing a plurality and thus will have no effect on
the results of the election of such nominees.
The board of directors is informed that all of the nominees are willing to
serve as directors, but if any of them should decline or be unable to act as a
director, the persons designated as proxy holders in the accompanying proxy
card(s) (or their substitutes) will vote for such substitute nominee or
nominee(s) as may be designated by the board of directors unless the board
reduces the number of directors accordingly.
6
<PAGE>
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NOMINEES FOR TERMS EXPIRING IN 2003
-------------------------------------------------------------------------------
[PHOTO OF DAVID J. MCLAUGHLIN APPEARS HERE]
DAVID J. MCLAUGHLIN Director since 1987
Age 64
Mr. McLaughlin has been Vice Chairman of Troy Biosciences
Incorporated, a biotechnology company, since January 1,
2000, and President of Pentacle Press LLC, a research,
consulting and publishing company, since December 1, 1999.
From July 1, 1996 through 1999, he served as President and
Chief Executive Officer of Troy Biosciences Incorporated.
From January 1, 1985 to June 30, 1996, he served as
President of McLaughlin and Company, Inc., a management
consulting firm. He is a director of Smart & Final, Inc. and
Troy Biosciences Incorporated.
-------------------------------------------------------------------------------
[PHOTO OF JAMES V. NAPIER APPEARS HERE]
JAMES V. NAPIER Director since 1978
Age 63
Mr. Napier has been the Chairman of Scientific-Atlanta's
board of directors since November 1992. Mr. Napier served as
our interim Chief Executive Officer from December 1992 until
July 1993. From 1986 to 1992, he was an independent business
consultant. From March 1985 until March 1986, he served as
President of HBO & Company, which provides information
processing materials and services to health care facilities.
Previously, he was Chief Executive Officer of Contel
Corporation, a telecommunications company. Mr. Napier is a
director of Engelhard Corporation, Vulcan Materials Company,
McKesson HBOC, Inc., Intelligent Systems, Inc., Personnel
Group of America, and WABTEC, Inc.
-------------------------------------------------------------------------------
[PHOTO OF SAM NUNN APPEARS HERE]
SAM NUNN Director since 1997
Age 62
Mr. Nunn has been a Partner at the law firm of King &
Spalding since January 3, 1997. King & Spalding represents
us in certain legal matters and is expected to represent us
on a variety of legal matters during the current fiscal
year. Prior to joining King & Spalding, Mr. Nunn served as a
United States Senator from 1972 to 1997. Mr. Nunn serves as
a director for The Coca-Cola Company, Community Health
Systems, Inc., Dell Computer Corporation, General Electric
Company, Internet Security Systems Group, Inc., National
Service Industries, Inc., Texaco Inc., and Total System
Services, Inc.
-------------------------------------------------------------------------------
DIRECTORS WHOSE TERMS WILL EXPIRE IN 2002
-------------------------------------------------------------------------------
[PHOTO OF MARION H. ANTONINI APPEARS HERE]
MARION H. ANTONINI Director since 1990
Age 70
Mr. Antonini has been a Principal in Kohlberg & Company, a
private merchant banking firm, since March 1, 1998. Prior to
joining Kohlberg & Company, Mr. Antonini was Chairman of the
Board of Welbilt Corporation from July 1990 to March 1998
and Chief Executive Officer of that company from September
1990 to March 1998. From 1986 to 1990, Mr. Antonini served
as Chairman of KD Equities, a merchant banking firm. Prior
to that, he served as Group Vice President of Xerox
Corporation's Worldwide Operations from 1982 to 1986 and in
other executive positions with that company. Mr. Antonini is
a director of Vulcan Materials Company, Turbochef
Technologies, Inc., and Engelhard Corporation.
-------------------------------------------------------------------------------
7
<PAGE>
-------------------------------------------------------------------------------
[PHOTO OF WILLIAM E. KASSLING APPEARS HERE]
WILLIAM E. KASSLING Director since 1990
Age 56
Mr. Kassling was a Group Vice President of American
Standard, Inc. for more than five years before becoming
Chairman of the Board and Chief Executive Officer of
Westinghouse Air Brake Company in March 1990. Mr. Kassling
is a director of Aearo Company and Commercial Intertech.
-------------------------------------------------------------------------------
[PHOTO OF MYLLE BELL MANGUM APPEARS HERE]
MYLLE BELL MANGUM Director since 1993
Age 52
Ms. Mangum has been Chief Executive Officer of MMS
Incentives, LLC, a private equity company concentrating on
high-tech marketing solutions, since May 1999. From March
1997 to May 1999, Ms. Mangum served as Senior Vice
President, Expense Management and Strategic Planning of
Carlson Wagonlit Travel, a travel and hospitality company.
From August 1992 to March 1997, Ms. Mangum was Executive
Vice President - Strategic Management of Holiday Inn
Worldwide. She was also a member of the board of directors
and executive committee of Holiday Inn during her tenure
there. From 1985 until August 1992, Ms. Mangum was Director,
Corporate Planning and Development with BellSouth
Corporation. Ms. Mangum is a director of Haverty Furniture
and Payless Shoe Source.
-------------------------------------------------------------------------------
DIRECTORS WHOSE TERMS WILL EXPIRE IN 2001
-------------------------------------------------------------------------------
[PHOTO OF DAVID W. DORMAN APPEARS HERE]
DAVID W. DORMAN Director since 1998
Age 46
Mr. Dorman has held the position of Chief Executive Officer
of Concert, an AT&T/British Telecom Global Venture, since
April 1, 1999. Mr. Dorman served as Chairman, President and
Chief Executive Officer of PointCast, Inc. from November
1997 through March 1999. Prior to joining PointCast, Inc.,
Mr. Dorman served as Chairman, President and Chief Executive
Officer of Pacific Bell from July 1994 to November 1997 and
served as President of Business Services for Sprint
Corporation from 1993 to 1994. Mr. Dorman is a director of
3Com Corporation, Science Applications International
Corporation, E-Tek Dynamics and TBG Holdings, NV.
-------------------------------------------------------------------------------
[PHOTO OF JAMES F. MCDONALD APPEARS HERE]
JAMES F. McDONALD Director since 1993
Age 60
Mr. McDonald was elected President and Chief Executive
Officer of Scientific-Atlanta, effective July 15, 1993. Mr.
McDonald was a general partner of J. H. Whitney & Company, a
private investment firm, from 1991 until his employment by
Scientific-Atlanta. From 1989 to 1991, he was President and
Chief Executive Officer of Prime Computer, Inc., a supplier
of CAD/CAM software and computer systems. Prior to that
time, he was President and Chief Executive Officer of Gould,
Inc., a computer and electronics company (1984 to 1989), and
held a variety of positions with IBM Corporation (1963 to
1984). Mr. McDonald is a director of Burlington Resources,
Inc., Global Crossing Ltd. and National Data Corporation.
-------------------------------------------------------------------------------
8
<PAGE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The board of directors met five times during the 2000 fiscal year to
consider matters related to the business of Scientific-Atlanta. The board of
directors has an Executive Committee, an Audit Committee, a Human Resources
and Compensation Committee, a Governance and Nominations Committee and a
Pension Investment Committee. Each director attended 75% or more of the
aggregate of the total number of meetings of the board of directors and the
committees of which he or she was a member during the portion of the 2000
fiscal year that he or she served as a director or committee member.
The Executive Committee acts for the board of directors between meetings,
subject to certain limitations. The Executive Committee met four times during
the 2000 fiscal year. The members of this committee are directors Antonini,
Kassling, McDonald, Napier and Nunn. Mr. Napier is Chairman.
The Audit Committee makes recommendations as to the selection of independent
auditors, evaluates the audit services and Scientific-Atlanta's financial,
accounting and internal audit policies, functions and systems, and approves
the engagement of independent auditors to provide non-audit services. The
Audit Committee met three times during the 2000 fiscal year. The members of
this committee are directors Antonini, Napier and Nunn. Mr. Antonini is
Chairman.
The Human Resources and Compensation Committee makes determinations as to
the compensation and benefits to be paid to Scientific-Atlanta's officers and
key employees. The Human Resources and Compensation Committee met three times
during the 2000 fiscal year. The members of this committee are directors
Dorman, Kassling, Mangum and McLaughlin. Mr. Kassling is Chairman.
The Governance and Nominations Committee considers nominations for directors
(and will consider nominees by shareholders) and provides oversight of the
governance of the board of directors, including issues concerning size,
committee structure, membership and compensation of the board of directors.
Nominations should be in writing, addressed to Chairman, Governance and
Nominations Committee, c/o the Office of the General Counsel, Scientific-
Atlanta, Inc., 5030 Sugarloaf Parkway, Lawrenceville, Georgia 30043. The
Governance and Nominations Committee met three times during the 2000 fiscal
year. The members of this committee are directors Antonini, Kassling, Napier
and Nunn. Mr. Nunn is Chairman.
The Pension Investment Committee monitors the Scientific-Atlanta qualified
retirement plans to determine whether they are adequately funded and that
funds are properly invested, reviews the performance of firms which provide
investment advice and services to Scientific-Atlanta on pension investment
matters, and reviews material changes to Scientific-Atlanta's retirement
plans. The Pension Investment Committee met once during the 2000 fiscal year.
The members of this committee are directors Dorman, Mangum, and McLaughlin.
Ms. Mangum is Chairman.
9
<PAGE>
COMPENSATION OF OFFICERS AND DIRECTORS
Cash Compensation
The following table sets forth in the prescribed format the compensation
paid to the Chief Executive Officer and the other four most highly compensated
executive officers of Scientific-Atlanta for services rendered in all
capacities during Scientific-Atlanta's last three fiscal years:
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
--------------------------
Annual Compensation Awards(2) Payouts
------------------------------ ---------- ----------
Other Annual Securities LTIP All Other
Name and Fiscal Salary Bonus Compensation Underlying Payouts Compensation
Principal Position Year ($) ($) ($)(1) Options(#) ($)(3) ($)(4)
------------------------ ------ -------- -------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
James F. McDonald....... 2000 $743,850 $983,850 $ -- 1,624,641(/5/) $1,806,120 $89,846
President and Chief
Executive 1999 704,615 695,800 -- 300,000 560,899 90,565
Officer 1998 666,346 564,600 -- 250,000 505,828 90,617
Conrad J. Wredberg, Jr.. 2000 446,154 498,500 -- 353,549(/5/) 551,016 35,833
Senior Vice President
and Chief 1999 377,115 343,800 -- 70,000 146,822 41,042
Operating Officer 1998 345,192 227,500 -- 60,000 104,215 50,587
Dwight B. Duke.......... 2000 308,846 280,100 -- 188,402(/5/) 336,096 17,863
Senior Vice President;
President, 1999 272,692 203,000 -- 50,000 92,504 19,810
Transmission Networks
Systems 1998 240,538 146,500 -- 50,000 83,648 22,228
H. Allen Ecker.......... 2000 326,462 300,700 5,444 210,995(/5/) 520,200 49,827
Senior Vice President;
President, 1999 303,923 207,000 4,569 50,000 160,903 48,645
Subscriber Networks 1998 280,461 170,000 3,822 50,000 147,155 49,865
Wallace G. Haislip...... 2000 297,692 280,100 -- 186,533(/5/) 334,008 23,871
Senior Vice President;
Chief 1999 281,923 192,100 -- 50,000 92,924 23,354
Financial Officer and
Treasurer 1998 243,212 172,700 -- 34,000 72,010 21,822
</TABLE>
(1) The amounts disclosed in this column represent preferential earnings on
deferred compensation under the Scientific-Atlanta 1985 Executive Deferred
Compensation Plan.
(2) Restricted shares granted to executive officers pursuant to Scientific-
Atlanta's LTIP, which shares vest based upon the performance of
Scientific-Atlanta, are not reflected under "Awards," but are included in
the "Long-Term Incentive Plan - Awards in 2000 Fiscal Year" chart below.
(3) The amounts shown for fiscal 1998 represent the fair market value, as of
August 20, 1998, of the performance-based restricted stock awards that
vested as a result of Scientific-Atlanta's performance during fiscal years
1994 - 1998. The amounts shown for fiscal 1999 represent the fair market
value, as of August 18, 1999, of the performance-based restricted stock
awards that vested as a result of Scientific-Atlanta's performance during
fiscal years 1995 - 1999. The amounts shown for fiscal 2000 represent the
fair market value, as of August 16, 2000, of the performance-based
restricted stock awards that vested as a result of Scientific-Atlanta's
performance during fiscal years 1996 - 2000. However, under the executive
deferred compensation plan, officers were permitted to defer all or a
portion of the shares which vested for the fiscal year 2000 based on
either (a) the average closing price for the ten days preceding the
announcement of third quarter results or (b) the average closing price for
the ten days preceding the announcement of fourth quarter results. These
two averages were $64.25 and $81.5719, respectively. Therefore, Messrs.
McDonald, Wredberg, Duke and Haislip, the officers who elected to defer
all or a portion of these shares, actually deferred amounts of $1,611,711,
$624,270, $380,778 and $378,412, respectively. See footnote 1 to the Long-
Term Incentive Plan - Awards in 2000 Fiscal Year Table regarding shares
earned but not paid out.
(4) For the 2000 fiscal year, this column includes $83,183; $32,683; $10,468;
$41,578; and $15,840 of life insurance premiums paid by Scientific-Atlanta
on behalf of Messrs. McDonald, Wredberg, Duke, Ecker and Haislip,
respectively. All other amounts in fiscal year 2000 represent
contributions to Scientific-Atlanta's 401(k) Plan.
10
<PAGE>
(5) In fiscal year 2000, there were three grants of options to Scientific-
Atlanta employees. The first grant was in August 1999, which was then the
historical normal time for granting options. In February 2000, the Human
Resources and Compensation Committee decided to move the regular grant
date for annual option grants to February, and grants were made at that
time. No regular annual grants of options were made in August 2000.
Finally, as explained below, Scientific-Atlanta granted options in May
2000 to certain executive officers who agreed to surrender previous
performance-based restricted stock grants.
Stock Options
The following tables set forth certain information in the prescribed formats
with respect to options granted and exercised under Scientific-Atlanta's
various stock option plans and under stock option agreements during the 2000
fiscal year:
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation
Individual Grants for Option Term(2)
--------------------------------------------- ---------------------
Number of % of Total
Securities Options Exercise
Underlying Granted to or Base
Options Employees Price Expiration
Name Granted(1) FY2000 ($/sh) Date 5%($) 10%($)
------------------------ ---------- ---------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
James F. McDonald....... 350,000(/3/) 3.8% $23.31 8/18/09(/3/) 5,131,387 13,003,942
350,000(/3/) 3.8% 51.78 2/19/10(/3/) 11,397,743 28,884,120
650,000(/4/) 7.1% 51.78 2/19/10(/4/) 21,167,238 53,641,937
274,641(/5/) 3.0% 55.63 5/11/10(/5/) 9,607,564 24,347,453
Conrad J. Wredberg,
Jr. ................... 130,000(/3/) 1.4% 23.31 8/18/09(/3/) 1,905,944 4,830,036
130,000(/3/) 1.4% 51.78 2/19/10(/3/) 4,233,448 10,728,387
93,549(/5/) 1.0% 55.63 5/11/10(/5/) 3,272,556 8,293,299
Dwight B. Duke.......... 64,000(/3/) 0.7% 23.31 8/18/09(/3/) 938,311 2,377,864
70,000(/3/) 0.8% 51.78 2/19/10(/3/) 2,279,549 5,776,824
54,402(/5/) 0.6% 55.63 5/11/10(/5/) 1,903,105 4,822,842
H. Allen Ecker.......... 64,000(/3/) 0.7% 23.31 8/18/09(/3/) 938,311 2,377,864
70,000(/3/) 0.8% 51.78 2/19/10(/3/) 2,279,549 5,776,824
76,995(/5/) 0.8% 55.63 5/11/10(/5/) 2,693,459 6,825,755
Wallace G. Haislip...... 64,000(/3/) 0.7% 23.31 8/18/09(/3/) 938,311 2,377,864
70,000(/3/) 0.8% 51.78 2/19/10(/3/) 2,279,549 5,776,824
52,533(/5/) 0.6% 55.63 5/11/10(/5/) 837,723 4,657,152
</TABLE>
(1) In fiscal year 2000, there were three grants of options to Scientific-
Atlanta employees. The first grant was in August 1999, which was then the
historical normal time for granting options. In February 2000, the Human
Resources and Compensation Committee decided to move the regular grant
date for annual option grants to February, and grants were made at that
time. No regular annual grants of options were made in August 2000.
Finally, as explained below, Scientific-Atlanta granted options in May
2000 to certain executive officers who agreed to surrender previous
performance-based restricted stock grants.
(2) The dollar amounts in these columns were determined using assumed rates of
appreciation set by the Securities and Exchange Commission and are not
intended to forecast future appreciation, if any, in the market value of
Scientific-Atlanta common stock. Such amounts are based on the assumption
that the named persons hold the options for their full ten-year term. The
actual value of the options will vary in accordance with the market price
of Scientific-Atlanta common stock.
(3) All of these stock options were awarded under the LTIP in August 1999 and
February 2000. All of these options become exercisable at the rate of 25%
per year commencing on the date of grant, except that if a change of
control occurs (as defined in the LTIP), all options become exercisable
immediately. Options granted under the LTIP in fiscal year 2000 may be
exercised within a period of two years following a
11
<PAGE>
termination by reason of retirement, within one year following a
termination by reason of death or disability, and within thirty days
following a termination for other reasons, except for cause, in which case
such options expire immediately upon the giving of the notice of such
termination.
(4) This option was granted pursuant to the LTIP and will become 100%
exercisable three years after the date of grant. However, this option
could vest after two years if the Scientific-Atlanta per share stock price
exceeds the following levels for twenty or more consecutive business days:
one-third would vest at $65 per share, another one-third would vest at $80
per share, and the final third would vest at $100 per share. The other
terms of exercisability described in footnote 3 above apply to this
option. The conditions for one third of such option to vest after two
years has been satisfied.
(5) All of these stock options were awarded under the 1996 Stock Option Plan
in May 2000. The options vest after six years but may vest earlier based
on improvement in the average return on equity. Options under the 1996
Stock Option Plan granted prior to August 18, 1999 may be exercised
within a period of two years following a termination by reason of
retirement and options granted on or after August 18, 1999 may be
exercised within a period of three years following a termination by
reason of retirement. All of these options may be exercised within a
period of three years following a termination by reason of death, and
within 30 days by reason of disability or following a termination for
other reasons, except for cause, in which case such options expire
immediately upon the giving of the notice of such termination.
Aggregated Option Exercises in Last Fiscal Year
and FY-End Option Values
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options/SARs at Fiscal In-The-Money Options/SARs
Shares Valued Year-End (#) at Fiscal Year-End ($)(1)
Acquired on Realized ------------------------- -------------------------
Name Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
------------------------ ----------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James F. McDonald....... 775,000 24,137,484 1,487,500 1,662,141 $90,314,434 $52,670,913
Conrad J. Wredberg,
Jr. ................... 157,500 2,482,267 32,500 338,549 738,358 12,105,654
Dwight B. Duke.......... 29,000 494,656 33,500 192,402 1,216,577 7,027,351
H. Allen Ecker.......... -- -- 178,000 214,995 10,413,418 7,458,668
Wallace G. Haislip...... 64,000 1,764,931 68,000 186,533 3,378,921 6,740,823
</TABLE>
(1) The amounts in these columns are calculated using the difference between
the closing market price of Scientific-Atlanta common stock at the end of
Scientific-Atlanta's 2000 fiscal year and the option exercise prices.
Long-Term Incentive Awards
The following table sets forth in the prescribed formats certain information
with respect to restricted stock awards granted under Scientific-Atlanta's
LTIP during fiscal year 2000.
Long-Term Incentive Plan - Awards in 2000 Fiscal Year
<TABLE>
<CAPTION>
Estimated Future Payouts
Performance or under Non-Stock
Other Period Price-Based Plans
Number of until Maturation ---------------------------------------
Name Shares (#)(1) or Payout(2) Threshold (#) Target (#)(3) Maximum (#)
------------------------ ------------- ---------------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
James F. McDonald....... 28,920(/4/) 10 years 2,892 -- 28,920
91,547(/5/) 4-10 years 9,155 -- 91,547
Conrad J. Wredberg,
Jr. ................... 14,460(/4/) 10 years 1,446 -- 14,460
31,183(/5/) 6-10 years 3,118 -- 31,183
Dwight B. Duke.......... 7,860(/4/) 10 years 786 -- 7,860
18,134(/5/) 4-10 years 1,813 -- 18,134
H. Allen Ecker.......... 8,500(/4/) 10 years 850 -- 8,500
25,665(/5/) 4-10 years 2,566 -- 25,665
Wallace G. Haislip...... 7,720(/4/) 10 years 772 -- 7,720
17,511(/5/) 4-10 years 1,751 -- 17,511
</TABLE>
12
<PAGE>
(1) During fiscal years 1994 through 2000, we issued to senior executives, as
the long term incentive portion of their compensation, shares of
restricted stock under the LTIP. These shares vested only if our
performance resulted in certain prescribed levels of improvement in the
five-year average return on equity. As of January 1, 2000, 742,798 of
these shares were outstanding and were not vested. As a result of our
performance for fiscal year 2000, a large percentage of these shares would
have vested in August 2000. Because our stock price is also at
historically high levels, this would have resulted in a substantial charge
to our earnings for fiscal year 2000 and possibly subsequent years. In
April 2000, in view of the potential impact on Scientific-Atlanta from the
vesting of these shares, certain of these holders surrendered these
performance based restricted stock awards.
In May 2000, the Human Resources and Compensation Committee awarded to each
of the executives who had surrendered performance based restricted stock
awards (1) a number of new shares of restricted stock equal to one half the
shares surrendered, and (2) a number of options to purchase Scientific-
Atlanta common stock equal to three times the other one-half of the
restricted shares surrendered. The option price was $55.63, the fair market
value on the date of grant. The other terms of this option grant are
described in footnote 5 to the Option Grants in Last Fiscal Year Table. The
new restricted shares vest on the same terms and conditions as the
restricted shares surrendered, except that there is a cap on the number of
shares of the new restricted stock which can vest for any given fiscal year
equal to that number of shares having a fair market value at the time of
vesting which does not exceed 5% of our profit before tax for that year (4%
for years subsequent to fiscal year 2000). Any shares which are earned but
do not vest for any fiscal year are converted into the right to receive cash
equal to 125% of the fair market value of those shares, and that amount is
deferred if and until it can be paid out under the cap. Deferred amounts
bear interest at the same rate as amounts deferred under the Executive
Deferred Compensation Plan, but any amount of such cash not paid out within
ten years from the date of original deferral is forfeited. For the executive
officers named in the Summary Compensation Table, the amounts of such cash
mandatorily deferred with respect to the performance-based restricted stock
awards that vested as a result of Scientific-Atlanta's performance during
fiscal years 1996 - 2000 were $1,753,200, $534,960, $326,340, $504,990 and
$324,360 for Messrs. McDonald, Wredberg, Duke, Ecker and Haislip,
respectively.
(2) Vesting of these shares is based on achieving specified improvements in
Scientific-Atlanta's weighted five-year average return on equity. Results
are reviewed annually, and shares vest based on the degree of improvement
achieved. Any shares which have not vested at the end of the ten-year term
are forfeited. Dividends are paid by Scientific-Atlanta on restricted
stock held by such executive officers, and the executives have the right
to vote these shares of restricted stock.
(3) Vesting of the right to receive the performance-based restricted stock
awards is based on the degree of improvement in Scientific-Atlanta's
weighted five-year average return on equity. Upon achieving the minimum
level of improvement, one percent of the rights become vested, as shown in
the "Threshold" column. Upon achievement of a specified maximum five-year
average return on equity, all such awards will be vested. No "target," as
such, has been established, but improvements in Scientific-Atlanta's
return on equity between the "threshold" and the "maximum" levels will
result in the vesting of a proportionate number of awards.
(4) These restricted stock awards were granted in August 1999 and surrendered
in April 2000 as described in footnote 1 above.
(5) These restricted stock awards are the awards awarded in May 2000 described
in footnote 1 above.
13
<PAGE>
Retirement Plans and Other Arrangements
Defined Benefit Retirement Plan. Scientific-Atlanta presently has in effect
a non-contributory retirement plan for the benefit of its employees which
provides for the payment of fixed benefits upon normal retirement at age 65 on
the basis of years of service and all cash compensation of each employee.
Examples of annual retirement benefits payable under the retirement plan are
set forth in the table below. These examples are based on the following: (i)
retirement at the normal retirement age of 65, (ii) "average compensation" is
the average compensation in the highest consecutive five of the last ten
calendar years of service that immediately precede retirement, and (iii) the
benefits are straight life annuities. Benefits under the retirement plan are
not reduced by Social Security benefits. The years of service, as of June 30,
2000, credited for retirement benefits for the persons named in the Summary
Compensation Table are James F. McDonald, 6 11/12 years; Conrad J. Wredberg, 5
1/6 years; Dwight B. Duke, 21 5/6 years; H. Allen Ecker, 23 2/3 years; and
Wallace G. Haislip, 11 years.
<TABLE>
<CAPTION>
Years of Service(1)
-----------------------------------------------
Average Annual Compensation 10 15 20 25 30 35
---------------------------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
$125,000.................... $17,250 $23,459 $27,913 $31,477 $34,149 $36,228
150,000.................... 21,024 28,151 33,496 37,772 40,979 43,474
175,000.................... 22,426 30,028 35,729 40,393 43,711 46,372
200,000.................... 22,426 30,028 35,729 42,304 44,066 46,372
225,000.................... 22,426 30,028 35,729 42,304 44,066 46,372
250,000.................... 22,426 30,028 35,729 42,304 44,066 46,372
500,000.................... 22,426 30,028 35,729 42,304 44,066 46,372
</TABLE>
(1) Scientific-Atlanta also maintains a Supplemental Executive Retirement Plan
(SERP) for its executive officers, including Messrs. McDonald, Wredberg,
Duke, Ecker and Haislip. Provisions of the SERP include a ten-year vesting
requirement and a normal retirement age of 65. Benefits are based upon up
to fifty percent of final average pay with offsets for the retirement
plan, Social Security benefits and any retirement benefits payable from
former employers.
The Omnibus Budget Reconciliation Act of 1993 (OBRA) changed the Internal
Revenue Code by placing an annual maximum limit of $150,000 on the
compensation which may be considered in determining a participant's
benefits. Previous to this change in the statute, the Internal Revenue Code
allowed a maximum limit of $235,840 (i.e., $200,000, indexed for a cost of
living adjustment). Effective July 1, 1994, Scientific-Atlanta adopted a
non-qualified Restoration Retirement Plan to replace the benefits to certain
participants that had been eliminated by the changes made to the Internal
Revenue Code by OBRA. Thus, effective July 1, 1994, participants'
compensation, as defined in the Restoration Retirement Plan, in excess of
the newly prescribed limit and up to what the limit would have been had OBRA
not been enacted will be considered under the Restoration Retirement Plan.
Participants under the SERP will continue to have all compensation, as
defined in the SERP, in excess of the maximum limit prescribed by the
Internal Revenue Code considered in determining their pension benefits. The
above table does not include any benefits under the Restoration Retirement
Plan.
Agreements with Certain Persons. Scientific-Atlanta has letter agreements
with Messrs. Wredberg, Duke, Ecker, and Haislip which provide for the
continuation of salary and certain benefits for a twelve-month period in the
event of termination of employment without cause. Scientific-Atlanta also has
agreements with Messrs. McDonald, Wredberg, Duke, Ecker, and Haislip which
provide for the payment of two times the executive's compensation plus the
continuation of the executive's benefits for two years in the event the
executive's employment with Scientific-Atlanta is terminated within two years
from the time of a change of control (as defined in the agreement) of
Scientific-Atlanta, unless such termination is for cause.
Director Compensation
Annual Fees. Each director who is not an employee receives a $25,000 annual
cash retainer, paid quarterly, and $1,250 for each meeting of the board and
each meeting of a committee he or she attends. The
14
<PAGE>
Chairman of the Board and each committee chair receives an additional annual
retainer of $60,000 and $5,000, respectively, paid quarterly. Non-employee
directors may elect to defer all or a portion of their retainer and meeting
fees under the Deferred Compensation Plan for Non-Employee Directors. See
Proposal 2 regarding proposed amendments to such plan.
Non-Employee Director Stock Option Plan. Under this option plan, an initial
option to purchase 40,000 shares of Scientific-Atlanta common stock is granted
to each non-employee director upon joining the Scientific-Atlanta board of
directors. An option to purchase an additional 5,000 shares is granted to each
such director on the date of each annual meeting of shareholders. The exercise
price for each option is the composite closing price of Scientific-Atlanta
common stock on the New York Stock Exchange on the grant date. Each option is
exercisable as to 25% of the shares covered thereby after the expiration of
one year following the date of grant and for an additional 25% of the shares
after the expiration of each succeeding year, except that if a change of
control occurs (as defined in the plan), all options become exercisable
immediately. Options granted under this option plan may be exercised within a
period of one year following the last day of the director's board membership,
and within three years following termination by death or mandatory retirement.
If board membership ceases on account of early retirement, all unexpired
options held by the director on the last day of the director's board
membership, which are then exercisable or would have been exercisable had the
director continued as a member of the board for one additional year, whether
exercisable or not exercisable, shall be immediately exercisable and remain
exercisable for one year following the last day of the director's membership
and shall expire if not exercised within such one year. The options granted
under this option plan are exercisable only by the non-employee director,
except in certain limited circumstances.
Non-Employee Director Stock Plan. This stock plan provides for the grant of
a stock award of 500 shares of Scientific-Atlanta common stock and the grant
of a retirement award of 1,500 shares of Scientific-Atlanta common stock to
each non-employee director on the date of each annual meeting of Scientific-
Atlanta's shareholders. In addition, under this stock plan, each non-employee
director may elect to receive up to 100% of his or her quarterly compensation,
meeting fees and committee meeting fees from Scientific-Atlanta in the form of
shares of Scientific-Atlanta common stock. Receipt of shares awarded as a
stock award, retirement award or as an elective grant may be deferred under
the Deferred Compensation Plan for Non-Employee Directors. Pursuant to the
terms of this stock plan, each year non-employee directors must elect, as to
his or her annual retirement award, either (a) to receive the 1,500 shares as
restricted stock which cannot be sold or otherwise transferred for two years,
or (b) to defer the 1,500 shares for at least two years under the Deferred
Compensation Plan for Non-Employee Directors.
15
<PAGE>
REPORT OF THE
HUMAN RESOURCES AND COMPENSATION COMMITTEE
Role of the Committee and the Board
The Human Resources and Compensation Committee sets compensation policies for
Scientific-Atlanta's senior management within guidelines approved by the Board
of Directors. The committee evaluates individual and corporate performance
from a short-term and long-term perspective, establishes base salaries and
approves annual and long-term incentives for all officers, and administers
option and incentive plans. The committee's recommendations regarding the
compensation of the chief executive officer are subject to the approval of the
full board.
Compensation Philosophy
Scientific-Atlanta's executive compensation program is designed to attract,
motivate and retain highly qualified executives and to encourage the
achievement of superior performance. The program is designed to:
. Foster a performance-oriented environment with a high level of variable
compensation based on the short-term and long-term performance of the
individual, team, business unit and Scientific-Atlanta against demanding
goals and objectives.
. Provide total compensation opportunities which exceed industry medians for
superior financial results and outstanding personal performance.
. Align the interests of our executives and shareholders through the use of
stock-based compensation plans.
Base Salaries
We position executive base salaries to be fully competitive with the range of
compensation levels of comparably-sized, high-technology companies and with
our direct business competitors that have similar market characteristics.
National surveys such as Hewitt Associates' Total Compensation Database and
Radford Associates' Management Total Compensation Report and, periodically,
independent compensation consultants are utilized by the committee when
determining such salaries.
In determining whether the base salaries of executives, including the chief
executive officer, should be increased, the committee takes into account
individual performance, performance of the operations directed by that
executive, and the positioning of compensation within established salary
ranges.
Incentive Compensation
Under our compensation philosophy, the majority of compensation is intended to
be payable from incentive plans. Payments and awards from these incentive
plans are based on the achievement of annual and long-term goals and,
accordingly, are "at risk." Executives of Scientific-Atlanta are eligible to
participate in the following incentive plans, as determined by the committee:
Senior Officer Annual Incentive Plan. This plan has been designed to qualify
as "performance-based" compensation under Section 162(m) of the Internal
Revenue Code. Payments under the plan are based upon the achievement of annual
goals. The award determinations for Messrs. McDonald and Wredberg under the
Senior Officer Annual Incentive Plan were determined based on whether Mr.
McDonald and Mr. Wredberg, respectively, satisfied the quantitative objectives
established by the committee earlier in the fiscal year. Mr. McDonald's award
under this plan and the basis for such award are discussed in the next section
of this report.
Annual Incentive Plan. Under the Annual Incentive Plan (AIP), awards are made
based on company, business unit and/or region results and assessments of
individual performance. Quantitative and qualitative objectives are generally
weighted 60% and 40%, respectively, in setting "target" awards for functional
groups and 75% and 25%, respectively, for business unit participants.
16
<PAGE>
Quantitative objectives, consistent with annual business plans approved by the
board, are used in determining the amount of the award governed by the
company, group and/or business unit performance. Awards under the quantitative
portion of the AIP are not made if the minimum thresholds are not met. The
committee may also take into account non-recurring extraordinary circumstances
unrelated to our financial performance.
The award for Mr. McDonald under the AIP is discussed in the next section of
this report. AIP awards for Messrs. Duke, Ecker and Haislip were based on the
quantitative performance of Scientific-Atlanta, as measured by earnings per
share, gross margin, revenue and working capital, and an assessment of their
individual performance against personal qualitative objectives. Mr. Wredberg's
AIP award was based on the committee's assessment of his individual
performance against personal qualitative objectives.
Senior Officer and AIP awards for the chief executive officer and the four
other most highly compensated executives of Scientific-Atlanta are included in
the "Bonus" column of the Summary Compensation Table.
Long-Term Incentive Plan. This plan permits the committee to use one or more
long-term incentives to motivate excellent long-term performance. In fiscal
year 2000, performance-based restricted stock awards were granted to 19 key
executives, including Messrs. McDonald, Wredberg, Duke, Ecker and Haislip.
These awards will vest over a term of up to ten years, based on improvement in
our weighted average return on equity over the previous five-year period. The
number of shares granted are shown in the Long-Term Incentive Plan -- Awards
in 2000 Fiscal Year Table. These shares were cancelled later in fiscal year
2000, as described in the footnote 1 to the Long-Term Incentive Plan -- Awards
in 2000 Year Table. The dollar value of shares that vested based on our fiscal
year 2000 performance are shown in the Summary Compensation Table.
Stock Option Plan. A larger group of executives, including the executives
named in the Summary Compensation Table, receive grants of stock options under
the provisions of the LTIP and the provisions of the 1996 Employee Stock
Option Plan. The objective of the grants is to align the interests of the
executives with the interests of our shareholders by affording the executives
the opportunity of a potentially significant financial benefit if their
efforts result in stock price appreciation. The committee takes into account
the performance of the individual recipient, the number of options previously
awarded to any individual participant and our grant levels compared to
competitive practices, targeting near a median grant posture. Grants made in
fiscal year 2000 to Mr. McDonald and the other named executives are shown in
the Summary Compensation Table and in the Option Grants in Last Fiscal Year
Table. During fiscal year 2000, options for a total of 9,201,739 shares were
granted to optionees.
Policy Relative to Code Section 162(m)
The Omnibus Budget Reconciliation Act of 1993 (OBRA) limited deductible senior
officer annual compensation to $1,000,000, unless the compensation qualifies
as "performance-based" compensation under Section 162(m) of the Internal
Revenue Code. In general, we will seek to maximize the use of the
"performance-based" exemption provided under Section 162(m). The committee
also believes that inclusion of qualitative (non-quantitative) objectives play
an important role in incentive plans. The committee will continue to base a
portion of incentive payments on such qualitative assessments, even though
they may not meet the Section 162(m) requirements to qualify as "performance-
based" compensation.
Stock Ownership
The committee believes that significant ownership of Scientific-Atlanta common
stock by officers and directors more closely aligns the upside and downside
returns for these individuals with our other shareholders. As a result, our
officers and directors agreed during fiscal year 1994 to increase their
ownership over time to a level of one times the annual salary for officers
(three times in the case of the Chief Executive Officer) and three times the
annual retainer for outside directors. As of the end of fiscal year 2000,
officers' holdings averaged 14.5 times base salaries, and outside director
holdings averaged 74 times annual retainers (based on the closing price of
Scientific-Atlanta common stock at the 2000 fiscal year end). These holdings
include restricted stock, whether performance-based or time-based, which has
not yet vested or been "earned out."
17
<PAGE>
Chief Executive Officer Compensation
At the beginning of fiscal year 2000, Mr. McDonald's base salary was increased
to maintain a fully competitive position among chief executive officers of
similarly-situated high technology companies. This increase of 5.6 percent was
based also on Mr. McDonald's excellent performance during the previous year.
During fiscal year 2000, Mr. McDonald was granted stock options totaling
1,350,000 shares. These grants included a normal annual grant of 350,000
shares (175,000 pre-split) in August 1999. An equal grant, which would have
been made in August 2000, was accelerated to February 2000, as were the annual
grants for all other executives. No such grants were made in August 2000 and
future annual grants will most likely be made in February. Mr. McDonald also
received a special one-time grant of 650,000 shares (325,000 pre-split) in
February 2000 as a special incentive to remain with Scientific-Atlanta for the
next several years. In combination with the grants of performance-based stock,
discussed later in this section, the option grants were designed to be fully
competitive with grants of long-term incentives to chief executive officers by
other comparable high technology companies.
Under the Senior Officer Annual Incentive Plan, Mr. McDonald had an
opportunity to earn a maximum of $630,000 if Scientific-Atlanta achieved its
maximum targeted performance as measured by earnings per share, gross margin
percent, working capital percent and sales (revenue). The results for fiscal
year 2000 approached maximum levels. The committee, therefore, approved a
payment of $563,850 according to the provisions of the plan.
Mr. McDonald also had an opportunity to earn additional incentive pay under
the Annual Incentive Plan, based on his performance against qualitative
objectives. The committee approved payment of $420,000 based on excellent
performance. In reaching its decision, the committee noted record financial
performance, stock price appreciation of nearly 400% during fiscal year 2000,
acceptance of Scientific-Atlanta's digital interactive cable networks, growing
market share, successful consolidation of most operations at a new, state-of-
the-art corporate campus and extraordinary growth of manufacturing capability
at the Juarez facility.
Mr. McDonald received a grant of 28,920 performance-based shares of restricted
stock under the Long-Term Incentive Plan. Based upon our 2000 fiscal year
return on equity performance, Mr. McDonald's right to receive 44,565 shares
under prior awards vested.
Other Compensation Plans
There are also various broad-based employee benefit plans. Executives
participate in these plans on the same terms as eligible, non-executive
employees, subject to any legal limits on the amounts that may be contributed
or paid to executives under the plans. An Employee Stock Purchase Plan is
offered pursuant to the provisions of Section 423 of the Internal Revenue Code
under which employees may purchase Scientific-Atlanta common stock. The
Voluntary Employee Retirement and Investment Plan pursuant to the provisions
of Section 401(k) of the Internal Revenue Code, permits employees to invest in
a variety of funds on a pre-tax basis. Matching contributions under the plan
are made in Scientific-Atlanta common stock.
Employees are also eligible to participate in pension, insurance and other
benefit plans.
Submitted by the Human Resources and Compensation Committee:
William E. Kassling, Chairman
David W. Dorman
David J. McLaughlin
Mylle Bell Mangum
18
<PAGE>
PERFORMANCE GRAPH
The following graph shows a comparison of total return to shareholders for
Scientific-Atlanta, the Standard & Poor's Communications Equipment Index and
the Standard & Poor's 500 for Scientific-Atlanta's last five fiscal years. The
graph assumes that the value of investment in the Scientific-Atlanta common
stock and in each index was $100 on June 30, 1995 and that all dividends were
reinvested. The values in the graph below have been adjusted to take into
account the two for one stock split in March 2000.
1995 1996 1997 1998 1999 2000
--------------------------------------------------------------------------
S&P 500 $100 $126 $168 $216 $267 $281
S&P Communications Equipment $100 $141 $188 $260 $452 $601
Scientific-Atlanta, Inc. $100 $71 $101 $114 $178 $679
PROPOSAL NO. 2
PROPOSAL TO APPROVE AND ADOPT
THE DEFERRED COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS
At the annual meeting, there will also be presented to the shareholders a
proposal to approve an amended and restated Deferred Compensation Plan for Non-
Employee Directors of Scientific-Atlanta. The board of directors unanimously
approved the amended and restated Deferred Compensation Plan for Non-Employee
Directors on August 16, 2000. The board of directors recommends that you
approve this proposal to approve and adopt the amended and restated Deferred
Compensation Plan for Non-Employee Directors.
The purpose of the Deferred Compensation Plan for Non-Employee Directors is
to provide non-employee directors the opportunity to defer to some future
period receipt of cash compensation and compensation in the form of stock
payable to them for their services as directors. The plan currently provides
that directors may defer all or a portion of their cash compensation into a
phantom stock account, which is paid out in cash based upon the value of
Scientific-Atlanta common stock. The proposed amendment to the plan would
change this payout from cash to actual shares of stock. This is intended to
motivate such directors to continue to make contributions to the growth and
profits of Scientific-Atlanta and to increase their ownership of shares of
common stock, and align their interest in the long-term success of Scientific-
Atlanta with that of the other shareholders. The proposed amendment eliminates
adverse financial effects of phantom stock which do not exist if actual stock
is issued.
19
<PAGE>
Administration
The Human Resources and Compensation Committee of the board of directors
will continue to administer the plan. The committee has the authority to
interpret the provisions of the plan and to determine all questions arising in
the administration, interpretation and application of the plan. The committee
may amend the plan without board approval as follows:
. amendments required by law;
. amendments that relate to the administration of the plan and that do not
materially increase the cost of the plan; and
. amendments that are designed to resolve possible ambiguities,
inconsistencies or omissions in the plan and do not materially increase the
cost of the plan.
Eligibility
Directors who are not employees of Scientific-Atlanta and who are actively
serving on the board of directors are eligible to participate in the plan.
Eligible non-employee directors include Marion H. Antonini, William E.
Kassling, Mylle Bell Mangum, David J. McLaughlin, James V. Napier, Sam Nunn
and David W. Dorman.
Authorized Shares
The awards of stock deferred pursuant to the plan will continue to be
granted from the shares reserved for the Scientific-Atlanta Stock Plan for
Non-Employee Directors. Prior to the proposed amendments, no stock was issued
pursuant to the plan. If the proposed amendments are approved, the shares of
stock issued pursuant to cash compensation deferred into the stock sub-account
of the plan will be issued from the 750,000 shares reserved for issuance under
this plan. Shares of common stock available for issuance under this plan may
be authorized and unissued shares or issued shares which have been reacquired
by Scientific-Atlanta.
Plan Features
Under the plan, a non-employee director participant may elect to defer the
receipt of all or a portion of his or her fees, which the participant receives
in the form of cash or shares of common stock, for services as a director.
Shares of common stock deferred pursuant to the plan will be credited to the
award sub-account. Prior to the proposed amendments, a participant could elect
to defer cash compensation into an interest sub-account, a phantom stock sub-
account or a split dollar insurance sub-account. If the proposed amendments
are approved, a participant will be able to elect to defer cash compensation
into an interest sub-account, a stock sub-account or a split dollar insurance
sub-account. If the proposed amendments are approved, all hypothetical shares
of Scientific-Atlanta common stock credited to a participant's phantom stock
sub-account will also be converted into the right to receive the same number
of shares of Scientific-Atlanta common stock under a stock sub-account.
Approval of this proposal constitutes approval of the disposition of the
hypothetical shares to Scientific-Atlanta and approval of the acquisition of
the actual shares from the Scientific-Atlanta by non-employee directors who
have hypothetical shares in their phantom stock subaccount.
If a participant defers a stock into the award sub-account, such participant
will not have any rights as a shareholder while the award is being held in the
award sub-account. However, accrued dividends on such stock will be credited
to the interest sub-account.
Any amounts credited to the interest sub-account accrue interest at an
annual rate of interest equal to the average of Moody's Long Term Industrial
Bond Rate for the ninety-day period ending on the March 1st preceding the
commencement of each plan year, rounded to the next highest one-half
percentage point, plus 1%. As of June 30, 2000, the annual interest rate for
the interest sub-account was 8%.
If a participant defers cash compensation into the stock sub-account, the
amount credited to the stock sub-account will be determined by dividing the
cash compensation being deferred by the average closing price of the
Scientific-Atlanta common stock for the twenty business days immediately
preceding the last day of the month prior to the month in which such
compensation was deferred. The participant will not have any rights as a
shareholder while such stock is credited to the stock sub-account. However,
accrued dividends on such stock will be credited to the interest sub-account.
20
<PAGE>
The amounts credited to the split-dollar insurance sub-account are used to
pay premiums on life insurance insuring the life of the participant. The
participant may also elect to insure the life of his or her spouse on a joint
and survivor basis.
Except with respect to benefits credited to the split-dollar insurance sub-
account, participants may defer benefits under the plan until:
(1) a set date which is no earlier than July 1 of the calendar year
following the end of the plan year in which the election amount is
deferred;
(2) the participant's retirement; or
(3) a date which is either the fifth or tenth anniversary following the
date of the participant's retirement.
In addition, a participant must comply with any applicable minimum deferral
periods required under the terms of the Scientific-Atlanta Stock Plan for Non-
Employee Directors.
The proposed amendments to the plan also include revisions to make it clear
that termination for total disability will be treated the same as service
termination. This change conforms this plan to the similar executive deferred
compensation plan.
Federal Income Tax Consequences
The federal income tax consequences of the Deferred Compensation Plan for
Non-Employee Directors are summarized in the following discussion which deals
with the general tax principles applicable to the plan and is intended for
general information only. Alternative minimum tax and foreign, state and local
income taxes are not discussed and may vary depending on individual
circumstances and from locality to locality.
Under the Internal Revenue Code of 1986, as amended, a participant in the
plan will not recognize taxable income upon the deferral of compensation. A
participant will generally recognize ordinary income and be subject to income
and self-employment tax only when such deferred compensation is received.
Generally, the amount of income subject to tax will be equal to the sum of any
cash and the fair market value on the distribution date of any Scientific-
Atlanta common stock received by the participant. Any appreciation in value of
the Scientific-Atlanta common stock received pursuant to the plan that occurs
from the distribution date to the date the participant disposes of such stock
will be taxed as capital gain (short-term or long-term depending on the length
of time such stock was held).
Scientific-Atlanta will not be entitled to a tax deduction on the
compensation deferred by a participant until such compensation is actually
distributed to the participant. As a general rule, the amount of such
deduction will be equal to the amount of ordinary income recognized by the
participant.
Plan Benefits
The number of shares that will be deferred by the non-executive director
group during fiscal year 2001 pursuant to the plan will be 9,500 shares. The
dollar value of the cash compensation that will be deferred by the non-
executive director group pursuant to the plan are not determinable for fiscal
year 2001 and future fiscal years.
Amendment of the Plan
Unless shareholder approval of amendments to the plan are required under
applicable New York Stock Exchange rules, the board may amend the plan, except
that the board may not amend the plan for the two-year period after a change
of control as defined below.
Change of Control
Upon a change of control (as defined in the plan), Scientific-Atlanta is
obligated to contribute to a trust a lump sum amount equal to the benefits
deferred by the plan participants. All stock issuable under the plan pursuant
to deferred benefit elections by the plan participants automatically converts
into the cash value of such stock. The cash value of such stock is determined
using the closing price of Scientific-Atlanta common stock on the business day
immediately prior to the date of the change of control.
21
<PAGE>
Availability of Plans
Copies of the Deferred Compensation Plan for Non-Employee Directors are
available upon request directed to William E. Eason, Jr., Senior Vice
President and Secretary, Scientific-Atlanta, Inc., 5030 Sugarloaf Parkway,
Lawrenceville, Georgia 30043.
Vote Required
Approval of the plan requires the affirmative vote of a majority of the
shares of common stock present or represented and entitled to vote at the
annual meeting. For purposes of determining whether the requisite approvals
have been obtained, abstentions and "broker non-votes" are included in the
calculation for the purpose of determining whether the matter has been
approved and will be treated as "no" votes.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THIS
PROPOSAL 2. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED FOR THIS
PROPOSAL UNLESS A VOTE AGAINST THE PROPOSAL OR AN ABSTENTION IS SPECIFICALLY
INDICATED.
PROPOSAL NO. 3
SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The board of directors has selected Arthur Andersen LLP to be our
independent auditors for the fiscal year ending June 29, 2001, and proposes
that the shareholders ratify this selection at the annual meeting. Arthur
Andersen LLP also acted as our independent auditors for the 2000 fiscal year.
Representatives of Arthur Andersen LLP are expected to be present at the
annual meeting and will have the opportunity to make a statement if they
desire to do so and will be available to respond to appropriate questions.
Ratification of the selection of Arthur Andersen LLP requires the
affirmative vote of a majority of the shares voting on such proposal (i.e.,
shares voting for or against the proposal). Abstentions and broker non-votes
are not counted for or against this proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THIS
PROPOSAL NO. 3. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED FOR
THIS PROPOSAL UNLESS A VOTE AGAINST THE PROPOSAL OR AN ABSTENTION IS
SPECIFICALLY INDICATED.
OTHER MATTERS
The board of directors of Scientific-Atlanta knows of no other matters which
are to be brought before the meeting. However, if any such other matters
should be presented for consideration and voting, it is the intention of the
persons named in the enclosed form of proxy to vote the proxy in accordance
with their best judgment.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the officers,
directors, and shareholders of Scientific-Atlanta who own more than ten
percent of a registered class of our equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange
Commission. Officers, directors and greater than ten-percent shareholders are
required by SEC regulations to furnish Scientific-Atlanta with copies of all
Section 16(a) forms they file. Based solely on a review of the copies of such
forms furnished to us and written representations submitted by the reporting
persons, we believe that during the last fiscal year all Section 16(a) filing
requirements applicable to its officers, directors and greater than ten-
percent beneficial owners were complied with except for the failure to timely
file Mr. Bradner's Initial Report on Form 3 which has since been filed, Mr.
Enterline's failure to report one transaction on a timely basis, which has
since been reported, and Mr. Napier's failure to report one transaction on a
timely basis, which has since been reported.
22
<PAGE>
FORM 10-K ANNUAL REPORT
A copy of Scientific-Atlanta's Annual Report on Form 10-K, including
financial statements and schedules, filed with the SEC for the fiscal year
ended June 30, 2000, is included in the annual report to Shareholders which
accompanies these proxy materials. Copies of any exhibit(s) to the Form 10-K
will be furnished on request and upon the payment of Scientific-Atlanta's
expenses in furnishing such exhibit(s). Any request for exhibits should be in
writing addressed to William E. Eason, Jr., Senior Vice President and
Secretary, Scientific-Atlanta, Inc., 5030 Sugarloaf Parkway, Lawrenceville,
Georgia 30043.
SHAREHOLDER PROPOSALS AND NOMINATIONS FOR 2001 ANNUAL MEETING
For a shareholder's proposal to be included in our Proxy Statement and form
of proxy for the 2001 annual meeting of shareholders, the proposal must be
submitted in writing to William E. Eason, Jr., Senior Vice President and
Secretary, Scientific-Atlanta, Inc., 5030 Sugarloaf Parkway, Lawrenceville,
Georgia 30043, by no later than June 4, 2001.
In accordance with Scientific-Atlanta's By-Laws, shareholders who do not
submit a proposal for inclusion in the Proxy Statement, as described in the
previous paragraph, but who intend to present a proposal, nomination for
director or other business for consideration at the 2001 annual meeting, are
required to notify the Secretary of Scientific-Atlanta of their proposal,
nomination or other business by no later than sixty (60) days (expected to be
September 9, 2001) and no earlier than ninety (90) days (expected to be August
10, 2001) prior to the 2001 annual meeting. Scientific-Atlanta's By-Laws
contain detailed requirements that the shareholder's notice must satisfy. If a
shareholder does not comply with the notice requirements, including the
deadlines specified above, the persons named as proxies in the form of proxy
for the 2001 annual meeting will use their discretion in voting the proxies on
any such matters raised at the 2001 annual meeting. Any shareholder notice and
any request for a copy of Scientific-Atlanta's By-Laws should be in writing
and addressed to William E. Eason, Jr., Senior Vice President and Secretary,
Scientific-Atlanta, Inc., 5030 Sugarloaf Parkway, Lawrenceville, Georgia
30043.
By Order of the Board of Directors,
/s/ William E. Eason, Jr.
------------------------------------
William E. Eason, Jr.
Senior Vice President and Secretary
October 2, 2000
23
<PAGE>
<TABLE>
<CAPTION>
Two New Ways to Vote Your Proxy
VOTE BY TELEPHONE OR INTERNET
SCIENTIFIC-ATLANTA, INC. 24 Hours a Day - 7 Days a Week
Save your Company money - It's Fast and Convenient
---------------------------------- ---------------------------------------------------------------------------------
TELEPHONE INTERNET MAIL
1-800-530-4762 http://proxy.shareholder.com/sfa
---------------------------------- ------------------------------------- ----------------------------------
<S> <C> <C>
. Use any touch-tone telephone. . Go to the website address listed . Mark, sign and date your proxy
. Have your Proxy Form in hand. above. card.
. Enter your Control Number OR . Have your Proxy Form in hand. OR . Detach card from Proxy Form.
located in the box below. . Enter the Control Number, located . Return the card in the
. Follow the simple recorded in the box below. postage-paid envelope provided.
instructions. . Follow the simple instructions.
---------------------------------- ------------------------------------- ----------------------------------
</TABLE>
<TABLE>
<S> <C>
Your telephone or Internet vote authorizes the named proxies to vote your shares
in the same manner as if you marked, signed and returned your proxy card. If
you have submitted your proxy by telephone or the Internet, there is no need for
you to mail back your proxy.
1-800-530-4762
CALL TOLL-FREE TO VOTE
-------------------------------
CONTROL NUMBER
FOR TELEPHONE / INTERNET VOTING
-------------------------------
</TABLE>
<PAGE>
SCIENTIFIC-ATLANTA, INC.
PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON NOVEMBER 8, 2000
The undersigned hereby appoints James V. Napier, James F. McDonald and William
E. Eason, Jr., and each of them, with full power of substitution, attorneys and
proxies of the undersigned, to represent the undersigned and to vote the Common
Stock as specified below at the Annual Meeting of Shareholders of Scientific-
Atlanta, Inc. to be held on November 8, 2000 at 9:00 a.m., local time, at
Scientific-Atlanta's offices at 5030 Sugarloaf Parkway, Lawrenceville, GA 30043,
and at any postponement or adjournment thereof, upon the following matters and
in accordance with their best judgment with respect to any other matters which
may properly come before the meeting, all as more fully described in the Proxy
Statement for said Annual Meeting (receipt of which is hereby acknowledged).
THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS INDICATED, THIS PROXY
WILL BE VOTED FOR ALL NOMINEES FOR DIRECTOR LISTED IN PROPOSAL 1 AND FOR
PROPOSAL 2 AND 3, AND IN ACCORDANCE WITH THE BEST JUDGMENT OF THE DESIGNATED
INDIVIDUALS WITH RESPECT TO MATTERS INCIDENTAL TO THE CONDUCT OF THE MEETING OR
WHICH MAY OTHERWISE PROPERLY COME BEFORE THE MEETING. IF ANY OF THE NOMINEES FOR
DIRECTOR ARE UNABLE TO SERVE OR FOR GOOD CAUSE WILL NOT SERVE, THE PROXYHOLDER
WILL VOTE FOR SUCH OTHER PERSON OR PERSONS AS THE BOARD OF DIRECTORS MAY
RECOMMEND.
SCIENTIFIC-ATLANTA
P.O. BOX 11135
NEW YORK, N.Y. 10203-0135
(Continued and to be dated and signed on the reverse side.)
<PAGE>
The Board of Directors favors an affirmative vote for the nominees for director
listed below and for proposals 2 and 3.
1. ELECTION OF DIRECTORS
FOR all nominees [ ] WITHHOLD AUTHORITY to vote [ ] *EXCEPTIONS [ ]
listed below for all nominees listed below
Nominees: (1) DAVID J. McLAUGHLIN, (2) JAMES V. NAPIER AND (3) SAM NUNN
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the "Exceptions" box and write that nominee's name in the space provided below.)
*Exceptions:____________________________________________________________________
2. Approval of the amended and restated Deferred Compensation Plan for Non-
Employee Directors.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Ratification of selection of Arthur Andersen LLP as independent auditors of
Scientific-Atlanta.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Change of Address and/or Comments Mark Here
If you agree to access our Annual Report and Proxy Materials electronically
in the future, please mark this box. [ ]
Note: Please date and sign this Proxy exactly as name appears. When signing as
attorney, trustee, administrator, executor or guardian, please give your title
as such. In the case of joint tenants, each joint owner should sign.
Dated ___________________________________, 2000
________________________________________ (SEAL)
Signature
________________________________________ (SEAL)
Signature (if held jointly)
Sign, Date and Return this Proxy Card Promptly Using the Enclosed Envelope.
Votes must be indicated (x) in Black or Blue ink. [X]
<PAGE>
APPENDIX A
[LOGO]
Scientific DEFERRED COMPENSATION PLAN FOR
Atlanta NON-EMPLOYEE DIRECTORS OF SCIENTIFIC-ATLANTA, INC.
--------------------------------------------------
As Amended and Restated, Effective August 16, 2000
ARTICLE I - INTRODUCTION
------------------------
1.1 Name of the Plan
----------------
This Plan shall be known as the Deferred Compensation Plan for Non-Employee
Directors of Scientific-Atlanta, Inc. ("the Company").
1.2 Purpose of Plan
---------------
The purpose of the Plan is to provide non-employee directors of the Company
the opportunity to defer receipt of cash compensation and compensation in the
form of stock payable to them for services to the Company as directors.
1.3 Restatement of Plan
-------------------
This document amends and restates the Plan effective as of August 16, 2000.
All deferral elections made before or after August 16, 2000, shall be governed
by the terms of the Plan as amended and restated herein.
ARTICLE II - DEFINITIONS
------------------------
For purposes of this Plan the following words and phrases shall have the
meanings and applications set forth below:
2.1 Annual Retainer
---------------
The amount paid each year, in quarterly payments, to non-employee members
of the Board of Directors of the Company.
2.2 Award Sub-Account
-----------------
The sub-account described in Section 5.4 of this Plan.
1
<PAGE>
2.3 Awards
------
The right to receive shares of Scientific-Atlanta Common Stock, granted
under a Stock Award, an Elective Grant, a Retirement Award, or a Lump Sum
Distribution made pursuant to the Stock Plan for Non-Employee Directors, as such
terms are defined in that plan.
2.4 Beneficiary
-----------
A person or entity designated in accordance with the terms and conditions
of this Plan to receive benefits upon the death of a Participant.
2.5 Committee Chair Retainer
------------------------
The amount paid each year, in quarterly payments to a non-employee director
who chairs a standing or special committee of the Board of Directors.
2.6 Compensation
------------
The total of a Participant's Annual Retainer, Meeting Fees, and Committee
Chair Retainer payments paid to the Participant, by the Company during a Plan
Year.
2.7 Conversion Date
---------------
August 16, 2000.
2.8 Deferral Election
-----------------
Each election made by a Participant to defer a portion of his or her
Compensation and/or Awards by executing and submitting an Election Form.
2.9 Deferral Period
---------------
The period commencing on the date that an Election Form becomes effective
for a Deferral Election and continuing until the Deferred Benefit Commencement
Date.
2.10 Deferred Benefit Account
------------------------
An account maintained pursuant to and in accordance with the terms and
conditions set forth in Article V hereof by or on behalf of the Company for each
Deferral Election made by a Participant under this Plan.
2
<PAGE>
2.11 Deferred Benefit Commencement Date
----------------------------------
The date designated by a Participant with respect to each Deferral
Election entered on an Election Form as the date on which the payment of the
Deferred Benefits that accumulate as a result of each respective election is to
begin.
2.12 Deferred Benefits
-----------------
The amounts (and number of shares of Scientific-Atlanta Common Stock, if
applicable) payable to a Participant or to his or her Beneficiary or estate
beginning on the Deferred Benefit Commencement Date under this Plan.
2.13 Determination Date
------------------
The last day of each Plan Year.
2.14 Election Amount
---------------
The amount of Compensation (and right to a certain number of shares of
Scientific-Atlanta Common Stock under an Award, if applicable) to be deferred
pursuant to a single Deferral Election.
2.15 Election Form
-------------
The form completed by a Participant in order to make one or more Deferral
Elections for the next Plan Year, as the same may be amended or revised as
herein permitted.
2.16 Interest Sub-Account
--------------------
The sub-account described in Section 5.2 of this Plan.
2.17 Meeting Fees
------------
The amounts paid to a non-employee member of the Board of Directors of the
Company for each meeting of the Board and each meeting of a standing or special
committee he or she attends.
2.18 Participant
-----------
A non-employee member of the Board of Directors of the Company who elects
to participate in this Plan.
2.19 Phantom Stock
-------------
The hypothetical shares of Scientific-Atlanta Common Stock credited to the
Phantom Stock Sub-Account prior to the Conversion Date.
3
<PAGE>
2.20 Phantom Stock Sub-Account
-------------------------
Prior to the Conversion Date, the sub-account into which Compensation
could be deferred and converted into values based upon hypothetical shares of
Scientific-Atlanta Common Stock.
2.21 Plan
----
This Deferred Compensation Plan for Non-Employee Directors of Scientific-
Atlanta, Inc., as amended from time to time.
2.22 Plan Committee
--------------
The Human Resources and Compensation Committee of the Board of Directors
of the Company.
2.23 Plan Interest Rate
------------------
An annual rate of interest equal to the average of Moody's Long Term
Industrial Bond Rate for the ninety (90) day period ending on the March 1st
preceding the commencement of each Plan Year (rounded to the next highest one-
half (1/2) percentage point), plus 1%, which shall be credited to a
Participant's Deferred Benefit Accounts during such Plan Year.
2.24 Plan Year
---------
The period beginning on the first day of July of each calendar year and
ending on and including the last day of June of the next calendar year.
2.25 Retirement
----------
The discontinuation of service on the Board of Directors by a Participant
who is fifty-five years of age or older with at least three years of Board
service.
2.26 Scientific-Atlanta Common Stock
-------------------------------
The $.50 par value per share common stock of the Company.
2.27 Service Termination Date
------------------------
The last day of the month immediately preceding the date of a
Participant's Retirement, termination of service, determination of Total
Disability, or death, whichever is applicable.
2.28 Split-Dollar Insurance Sub-Account
----------------------------------
The sub-account described in Section 5.5 of this Plan.
4
<PAGE>
2.29 Stock Sub-Account
-----------------
The sub-account described in Section 5.3 of this Plan.
2.30 Total Disability
----------------
A physical or mental condition which is expected to be totally and
permanently disabling as determined in accordance with the terms and conditions
of the long-term disability plan currently or most recently maintained by the
Company for the benefit of its employees who are totally disabled.
ARTICLE III - ELIGIBILITY AND PARTICIPATION
-------------------------------------------
3.1 Eligibility
-----------
Directors who are not employees of the Company and who are actively
serving on the Board of Directors of the Company shall be eligible to
participate in this Plan.
3.2 Participation
-------------
The Plan Committee shall notify in writing each director who becomes
eligible to participate in this Plan of his or her eligibility. Eligible
directors may participate in this Plan by completing an Election Form on or
before the end of the quarter immediately preceding the quarter in which he or
she wants to begin deferring Compensation or Awards. If timely received, such
election to participate shall be effective on the first day of the succeeding
quarter.
ARTICLE IV - COMPENSATION DEFERRAL
----------------------------------
4.1 Deferral Election
-----------------
(a) A Participant shall effect a Deferral Election by executing and
submitting to the Plan Committee an Election Form. Subsequently, the
Company shall defer Election Amounts deferred from the Participant's
Compensation and Awards at the time Compensation would have been paid or
at the time the right to receive shares of Scientific-Atlanta Common Stock
was granted, as applicable.
(b) Each Election Amount shall be deferred for the Deferral Period
specified with respect to the particular Deferral Election in the Election
Form, provided, however, that the Participants shall not be entitled to
defer Retirement Awards or Lump Sum Distributions (as such terms are
defined in the Stock Plan for Non-Employee Directors) for Deferral Periods
that are shorter than the minimum Deferral Periods for such Awards that
are set forth in the Stock Plan for Non-Employee Directors.
5
<PAGE>
(c) All Deferral Elections shall apply solely to Compensation and/or
Awards which will be paid (or granted) to a Participant beginning with the
first day of the calendar quarter commencing subsequent to the calendar
quarter in which the Deferral Election is received; provided, however, the
-------- -------
Participant must submit the Election Form at least thirty (30) days prior
to the quarter in which the Participant desires to commence a deferral.
Any Deferral Election will apply only to Compensation and/or Awards paid
(or granted) during the Plan Year in which the election becomes effective.
A Participant may revise or change any election contained in any Election
Form, other than the Election Amount, by submitting to the Plan Committee a
request for such a revision or change and obtaining the Plan Committee's
approval of such revision or change at least ninety (90) days prior to the
effective date of such revision or change.
4.2 Election Amounts
----------------
Each Election Amount specified by a Participant on an Election Form with
respect to any Plan Year shall state in percentages the amount (and, to the
extent applicable, the right to receive a specific number of shares of
Scientific-Atlanta Common Stock), if any, which the Participant wishes to defer.
An election to defer Compensation must equal a minimum of five percent up to a
maximum of one hundred percent, in increments of five percentage points, of the
Compensation which the Participant may be paid during the Plan Year. As to
Awards, the election must be in whole shares, with no right to receive
fractional shares being deferred.
4.3 Investment Election
-------------------
(a) A Participant shall specify in his or her Deferral Election the
percentage of the Election Amount to be credited to an Interest Sub-
Account, a Stock Sub-Account or a Split-Dollar Insurance Sub-Account, and
the number of shares from Awards to be credited to an Award Sub-Account.
(b) Compensation may be credited into an Interest Sub-Account, a Stock
Sub-Account or a Split-Dollar Insurance Sub-Account, but Awards may only be
credited into an Award Sub-Account.
4.4 Deferral Period
---------------
With the exception of any amounts deposited into a Split-Dollar Insurance
Sub-Account, a Participant shall irrevocably specify in his or her Deferral
Election a Deferred Benefit Commencement Date for all of the Election Amount to
be deferred pursuant to such Deferral Election, which date shall be (i) a set
date which is no earlier than July 1 of the calendar year following the end of
the Plan Year in which the Election Amount is deferred; (ii) the Participant's
Retirement; or (iii) a date which is either the fifth or the tenth anniversary
following the date of the Participant's Retirement. In the case of Awards which
have minimum Deferral Periods that are required under the terms of the Stock
Plan for Non-Employee Directors, the above limitations shall apply, and the
Participant shall also be required to elect a Deferral Period that complies with
the minimum Deferral Periods required under the Stock Plan for Non-Employee
Directors.
6
<PAGE>
4.5 Deferred Benefit Commencement Date; Manner of Payment and Issuance
------------------------------------------------------------------
Except as otherwise provided in Article VI hereof, the Election Amounts
that accumulate in a Deferred Benefit Account as a result of a Participant's
making a Deferral Election will be paid (or issued, as applicable) by the
Company to the Participant in the manner and commencing on the Deferred Benefit
Commencement Date designated with respect to the Deferral Election in an
Election Form.
(a) Manner of Cash Payments: Except as otherwise provided in Article VI
-----------------------
hereof, the Participant may elect to receive payment of the Deferred
Benefits held in the form of cash, which Deferred Benefits are held in an
Interest Sub-Account, pursuant to one of the following methods:
(1) Annual, semi-annual or quarterly installments payable over a
five, ten or fifteen year period, and commencing on the respective
Deferred Benefit Commencement Date; or
(2) A single lump sum payment of the entire balance of the respective
Deferred Benefit Account, determined as of and payable on the Deferred
Benefit Commencement Date.
(b) Manner of Issuance of Shares: Except as otherwise provided in Article
----------------------------
VI hereof, the Participant may elect to receive issuance of the Deferred
Benefits held in the form of shares of Scientific-Atlanta Common Stock held
in a Stock Sub-Account or an Award Sub-Account, pursuant to one of the
following methods:
(1) Annual, semi-annual or quarterly issuance of shares of
Scientific-Atlanta Common Stock from an Award Sub-Account or a Stock
Sub-Account over a five, ten or fifteen year period, and commencing on
the respective Deferred Benefit Commencement Date; provided, however,
-------- -------
that no fractional shares of Scientific-Atlanta Common Stock will be
issued; or
(2) A single issuance of all shares subject to the specific Award
Sub-Account or Stock Sub-Account, determined as of and payable on the
Deferred Benefit Commencement Date.
(c) Stock. The shares of Scientific-Atlanta Common Stock issued under the
-----
Stock Sub-Account of this Plan may be authorized, but previously unissued,
shares or previously issued shares reacquired by the Company. The
aggregate number of shares which may be issued under the Stock Sub-Account
of this Plan shall not exceed 750,000 shares.
(d) Change in Payment or Issuance Method. A Participant may change the
------------------------------------
method of payment (or method of issuance of shares) selected, which method
was selected pursuant
7
<PAGE>
to the terms of subsection (a) or subsection (b) above, as applicable, with
respect to a Deferral Election by submitting a request in writing to the
Plan Committee. Prior to a change in the method of payment or a change in
the method of issuance of shares becoming effective, the Plan Committee
must approve such change. Participants may not move Deferred Benefits from
one sub-account to another sub-account, except that Participants may move
Deferred Benefits from an Interest Sub-Account to a Split-Dollar Insurance
Sub-Account by notifying the Plan Committee in writing and designating in
such notification the date upon which such Deferred Benefits are to be
moved.
4.6 Designation of Beneficiaries
----------------------------
A Participant shall designate a Beneficiary with respect to each Deferral
Election and may change the Beneficiary designation with respect to any Deferral
Election at any time by submitting to the Plan Committee a revised Beneficiary
designation in writing reflecting the change.
ARTICLE V - DEFERRED BENEFIT ACCOUNTS
-------------------------------------
5.1 Deferred Benefit Accounts
-------------------------
The Company shall cause to be established and maintained for each
Participant a separate Deferred Benefit Account, and within each such Deferred
Benefit Account an Interest Sub-Account, a Stock Sub-Account, an Award Sub-
Account and Split-Dollar Insurance Sub-Account with respect to each Deferral
Election. The Company shall credit the Election Amount deferred pursuant to
each such election to the Participant's appropriate Deferred Benefit Account,
and to the Interest Sub-Account, the Stock Sub-Account, the Award Sub-Account
and the Split-Dollar Insurance Sub-Account as specified in the Election, as of
the date deferred from Participant's Compensation as provided in Section 4.1
hereof.
5.2 Interest Sub-Account
--------------------
Except as otherwise provided by Section 6.2(a) hereof, interest shall
accrue at the Plan Interest Rate on any amounts credited to an Interest Sub-
Account from the date on which the amount is credited until it is paid to the
Participant, and shall be credited and compounded weekly.
5.3 Stock Sub-Account
-----------------
If a Participant elects all or a portion of the Election Amount to be
credited to the Stock Sub-Account, the amount so credited shall be deemed to be
the right to receive a number of shares of Scientific-Atlanta Common Stock
determined as follows:
(a) Conversion into Scientific-Atlanta Common Stock: The amount credited
-----------------------------------------------
to the Stock Sub-Account shall be converted on the date of such credit into
the right to receive a number of shares of Scientific-Atlanta Common Stock
determined by dividing the amount credited by the average closing price of
Scientific-Atlanta Common Stock, as
8
<PAGE>
reported on the composite tape of the New York Stock Exchange, for the 20
business days immediately preceding the last day of the month prior to the
month in which such amount is credited (the "Conversion Price").
(b) Conversion of Phantom Stock: Effective as of the Conversion Date, all
---------------------------
hypothetical shares of Scientific-Atlanta Common Stock credited to a
Participant's Phantom Stock Sub-Account shall be converted into the right
to receive the same number of the shares of Scientific-Atlanta Common Stock
under the Stock Sub-Account.
(c) Fractional Shares: No fractional shares will be credited to a Stock
-----------------
Sub-Account. In lieu of fractional shares, an amount equal to the
fractional share multiplied by the Conversion Price shall be credited to
the Interest Sub-Account.
(d) Dividends: No interest will accrue on the amounts held in a Stock Sub-
---------
Account, but amounts equivalent to the cash dividends that would have been
paid if the underlying shares had been issued will be placed in an Interest
Sub-Account.
(e) No Rights as Shareholder: A Participant shall not have any rights as a
------------------------
shareholder of the Company with respect to any amounts credited to the
Stock Sub-Account or the right to receive shares of Scientific-Atlanta
Common Stock represented by such amounts until such shares are actually
issued as hereinafter provided.
5.4 Award Sub-Account
-----------------
If a Participant elects that an Award be deferred and credited to an Award
Sub-Account, such Award will remain in such Award Sub-Account until the Deferred
Benefit Commencement Date related to such Award Sub-Account occurs. No interest
will accrue on the Award in such Award Sub-Account, but Accrued Dividends will
accrue and will be placed in an Interest Sub-Account. A Participant shall not
have any rights as a shareholder of the Company while an Award is held in an
Award Sub-Account.
5.5 Split-Dollar Insurance Sub-Account
----------------------------------
Amounts credited to a Split-Dollar Insurance Sub-Account shall be used to
pay premiums on life insurance insuring the life of the Participant, or, at the
Participant's election, the lives of the Participant and his or her spouse on a
joint and survivor basis, pursuant to such policies of insurance, and with such
insurers, as the Plan Committee may determine from time to time. The Company
shall be the owner of such insurance policy or policies, and the proceeds
thereof shall be payable as provided in an Endorsement Split-Dollar Agreement to
be entered into between the Participant and the Company.
5.6 Statement of Accounts
---------------------
Within ninety (90) days after each Determination Date, the Plan Committee
shall submit to each Participant a statement in such form as the Plan Committee
shall deem desirable, setting
9
<PAGE>
forth a summary of the Deferral Elections made and the current balances of the
Deferred Benefit Accounts and related sub-accounts maintained for the
Participant as of the Determination Date.
ARTICLE VI - PAYMENT (AND ISSUANCE) OF DEFERRED BENEFITS
--------------------------------------------------------
6.1 General
-------
Except as otherwise provided herein, Deferred Benefits credited to the
Interest Sub-Account, the Stock Sub-Account or the Award Sub-Account shall be
payable (and issued, if applicable) to a Participant upon the Deferred Benefit
Commencement Date and pursuant to the manner of payment (or issuance, if
applicable) selected by the Participant on the applicable Deferral Election or
any permitted modification thereof, pursuant to Section 4.5(d) hereof. If the
Participant has elected to receive such Deferred Benefits in installments, the
amount payable in the first year of such installments shall be an amount that
will fully amortize the balance in the Participant's Deferred Benefit Account
determined as of the Deferred Benefit Commencement Date over the five, ten or
fifteen year period, based on assumed interest earnings at the Plan Interest
Rate (to the extent applicable) in effect for such first year. Thereafter, the
amount payable (or to be issued) in each succeeding year shall be adjusted to an
amount that will fully amortize the remaining balance in such Deferred Benefit
Account over the remaining years in the aforesaid five, ten, or fifteen year
installment period based on the Plan Interest Rate (to the extent applicable)
for such succeeding year. Proceeds of life insurance purchased with amounts
credited to the Split-Dollar Insurance Sub-Account shall be payable as provided
in the respective policy or policies and the applicable Endorsement Split-Dollar
Agreement.
6.2 Service Termination
-------------------
Deferred Benefits shall be paid (or issued, as appropriate) to a
Participant after his or her termination, as follows:
(a) Upon termination of service as a director prior to the Participant's
Retirement:
(1) the amounts in each of the Participant's Deferred Benefit
Accounts shall cease to earn interest (to the extent applicable) and
the balance of each Deferred Benefit Account shall be determined in
accordance with Article V hereof, and
(2) the Company shall pay (or issue, as appropriate) to the
Participant the balance of each of the Participant's Deferred Benefit
Accounts not according to the Participant's elections as specified in
his or her Election Forms but in a lump sum, to be paid within sixty
days of the termination.
(b) Upon termination of service as a director on the date of the
Participant's Retirement, the Company will pay (or issue) to such a
Participant all amounts in his or her Deferred Benefit Accounts in
accordance with Section 6.1 hereof.
10
<PAGE>
6.3 Total Disability
----------------
Deferred Benefits shall be paid (or issued, as appropriate) to a
Participant after his or her becoming Totally Disabled, as follows:
(a) Upon the determination that a Participant is Totally Disabled, no
further deferrals will be made from his or her Compensation, and the
Company shall pay (or issue, as appropriate) to the Participant all amounts
in his or her Deferred Benefit Accounts in accordance with Section 6.2
hereof unless the Participant has specified in his or her Election Form a
different manner of payment.
(b) For purposes of this Plan, once a Participant is determined to be
Totally Disabled, he or she will continue to be deemed Totally Disabled
irrespective of the Participant's ceasing to be considered Totally Disabled
for purposes of any other plan maintained by the Company.
(c) In the event that a Totally Disabled Participant recovers and resumes
service with the Board, such Totally Disabled Participant may resume
participation in this Plan at the discretion of the Plan Committee;
provided, however, that in any event the Totally Disabled Participant shall
-------- -------
continue to receive payments of Deferred Benefits that are then being paid
pursuant to the terms of this Plan.
6.4 Death
-----
Deferred Benefits shall be paid (or issued, as appropriate) after the death
of a Participant, as follows:
(a) After the death of a Participant, the Company shall pay the amounts
(or issue shares of Scientific-Atlanta Common Stock, if applicable) in each
of the Participant's Deferred Benefit Accounts to the Beneficiary
designated by the Participant with respect to each Deferral Election in
each of his or her respective Election Forms, or, if the Participant fails
to so designate a Beneficiary, to his or her estate.
(b) If the Participant dies prior to Retirement, the Company shall pay to
each respective Beneficiary or to the Participant's estate, as the case may
be, the amounts in each of the Participant's respective Deferred Benefit
Accounts (or issue the shares held in the Stock Sub-Account or the Award
Sub-Account), in the same manner as set forth in Section 6.2(a).
(c) If the Participant dies following Retirement or being determined to be
Totally Disabled but prior to his or her receiving the full payment of all
Deferred Benefits payable to him or her, the Company shall pay (or issue,
if appropriate) to the respective Beneficiaries or to the Participant's
estate, as the case may be, the same Deferred Benefits in the same manner
as it otherwise would have paid (or issued) to the Participant as if the
11
<PAGE>
Participant had not died, unless the Participant has specified in his or
her Election Form a different manner of payment to a Beneficiary.
(d) Notwithstanding the other provisions of Section 6.4, a Beneficiary may
request a different payment schedule than what has been elected by the
Participant, if such change does not further defer the scheduled payout, by
submitting a request in writing to the Plan Committee. The granting of any
such request shall be within the discretion of the Plan Committee.
(e) If a Beneficiary who is receiving Deferred Benefits pursuant to this
Plan dies, the remainder of the Deferred Benefits to which such Beneficiary
was entitled at the time of his or her death shall continue to be payable
to the Beneficiary or to beneficiaries designated by such Beneficiary in
writing to the Plan Committee (or to the Beneficiary's estate or heirs if
he or she fails to designate a beneficiary or beneficiaries).
ARTICLE VII - PLAN ADMINISTRATION
---------------------------------
7.1 Plan Committee
--------------
This Plan and all matters related to it shall be administered by the Plan
Committee. The Plan Committee shall have the authority to interpret the
provisions of this Plan and to determine all questions arising in the
administration, interpretation and application of this Plan.
ARTICLE VIII - PARTICIPANT'S RIGHTS
-----------------------------------
8.1 Ineligibility to Participate in Plan
------------------------------------
In the event that the Plan Committee determines that a Participant has
become ineligible to continue to participate in this Plan, the Plan Committee
may terminate Participant's participation in this Plan upon ten (10) days' prior
written notice to the Participant. In such event, the Participant will not be
entitled to make further Deferral Elections, but all current Deferral Elections
shall continue in effect. All Deferred Benefit Accounts shall be payable as
otherwise provided in Article VI hereof.
8.2 Termination of Plan
-------------------
The Board of Directors of the Company may terminate this Plan at any time,
and termination of this Plan shall be effective upon ten (10) days' written
notice to all Participants in the Plan. Upon such termination of this Plan, the
Company shall pay all Participants their Deferred Benefits as provided in
Section 6.1 and in the Participant's Election Form; provided, however, if this
-------- -------
Plan is terminated within two (2) years after a Change in Control (as defined in
Section 9.4 hereof), each Participant's Deferred Benefits shall be paid in
accordance with either (a) each Participant's "Change in Control Election Form"
(as defined in Section 9.3 hereof), provided such Participant has completed and
submitted such Change in Control Election Form, as required by Section 9.3
hereof, or (b) Participant's original Election Form and in accordance
12
<PAGE>
with Section 6.1 hereof, but only if a Participant has not validly completed and
submitted a Change in Control Election Form. Upon termination of the Plan,
amounts credited to the Deferred Benefit Accounts of each Participant shall
continue to earn interest at the Plan Interest Rate until such amounts are paid
to the Participant.
8.3 Participant's Rights
--------------------
The right of a Participant or his or her Beneficiary or estate to receive
any benefits under this Plan shall be solely that of an unsecured creditor of
the Company. Any asset acquired or held by the Company or funds allocated by
the Company in connection with the liabilities assumed by the Company pursuant
to this Plan shall not be deemed to be held under any trust for the benefit of
any Participant or of any of Participant's Beneficiaries or to be security for
the performance of the Company's obligations hereunder but shall be and remain a
general asset of the Company.
8.4 Spendthrift Provision
---------------------
Neither a Participant nor any person claiming through a Participant shall
have the right to commute, sell, assign, transfer, pledge, mortgage or otherwise
encumber, transfer, hypothecate or convey any Deferred Benefit payable hereunder
or any part thereof in advance of its actually having been received by a
Participant or other appropriate recipient under this Plan, and the right to
receive all such Deferred Benefits is expressly declared to be non-assignable
and non-transferable. Prior to the actual payment (or issuance, if appropriate)
thereof, no part of the Deferred Benefits payable hereunder shall be subject to
seizure or sequestration for the payment of any debts, judgments, alimony or
separate maintenance owed by a Participant or any person claiming through a
Participant or be transferable by operation of law in the event of a
Participant's or any such other person's bankruptcy or insolvency.
8.5 Cooperation
-----------
Each Participant will cooperate with the Company by furnishing any and all
information reasonably requested by the Company in order to facilitate the
payment of Deferred Benefits hereunder and by taking any such other actions as
the Company or the Plan Committee may reasonably request.
ARTICLE IX - CHANGE IN CONTROL
------------------------------
9.1 Applicability
-------------
Notwithstanding any provision in this Plan to the contrary, the terms of
this Article IX shall apply to any Participant, whether active or inactive.
13
<PAGE>
9.2 Effect of Change in Control
---------------------------
Upon a Change in Control the following shall immediately occur:
(a) The Company shall contribute to the trust maintained pursuant to the
Scientific-Atlanta, Inc. Benefits Protection Trust Agreement a lump sum
amount equal to each Participant's Deferred Benefit Accounts. The Company
shall assign to such trust (i) any split-dollar life insurance policies
held by the Company, pursuant to Section 5.5 hereof, for the benefit of a
Participant's beneficiaries; and (ii) any Endorsement Split-Dollar
Agreements between the Company and a Participant.
(b) All Participants shall be deemed to have satisfied the age and service
requirements in the definition of Retirement in this Plan.
(c) For any Participant who is a member of the Board on the date that a
Change in Control occurs and who ceases, within twenty-four (24) months
after a Change in Control, to be a member of the Board for any reason, the
Company shall pay such Participant his or her Deferred Benefits in
accordance with such Participant's Change in Control Election Form, if
completed and returned pursuant to Section 9.3. If a Participant has not
completed and returned such Change in Control Election Form, such
Participant's Deferred Benefits shall be paid in accordance with his
original Election Form and Article VI hereof.
(d) All amounts held in an Interest Sub-Account shall remain in such
Interest Sub-Account and shall earn interest at the Plan Interest Rate
until all amounts in such Interest Sub-Account are fully paid.
(e) The rights to receive shares under all Stock Sub-Accounts and all
Awards held in an Award Sub-Account shall be automatically converted into
the cash value of such shares on the date of the Change in Control and such
cash value shall be automatically transferred to the Interest Sub-Account
(and earn interest in accordance with Section 9.2(d)). The cash value of
such shares on the date of the Change in Control shall be determined by
multiplying the closing price of one (1) share of Scientific-Atlanta Common
Stock on the business day immediately prior to the date of the Change in
Control times the number of shares of Scientific-Atlanta Common Stock that
-----
the Participant has a deferred right to receive under his Stock Sub-Account
or his Award Stock-Sub-Account.
(f) All amounts, if any, held in a Participant's Split-Dollar Insurance
Sub-Account shall be automatically transferred to an Interest Sub-Account
for such Participant (and shall earn interest in accordance with Section
9.2(d)). The trust described in Section 9.2(a) shall withdraw from a
Participant's Interest Sub-Account the amounts required to pay the premiums
for the split-dollar life insurance held by the trust (pursuant to Section
9.2(a)) for the benefit of such Participant's beneficiaries.
14
<PAGE>
9.3 Change in Control Election Form
-------------------------------
At any time at least ninety (90) days prior to a Change in Control, each
Participant may elect to have his Deferred Benefits paid out after a Change in
Control in a manner different from the manner he previously elected in his
original Election Form. Each Participant may complete and submit a Change in
Control Election Form and thereby elect to have his or her Deferred Benefits
paid as follows if the Plan is terminated or a Participant's service on the
Board is terminated, within twenty-four (24) months after a Change in Control:
(a) have his Deferred Benefits paid as a lump sum payment, payable within five
(5) days after the date of termination of the Plan or the date of Participant's
termination of service on the Board (whichever occurs first); or (b) have his
Deferred Benefits paid as though his Deferred Benefit Commencement Date were the
date of termination of the plan or the date of Participant's termination of
service on the Board (whichever occurs first); or (c) have his Deferred Benefits
paid as of a specified date (the "Change in Control Election Form"). As with the
original Election Form, Participant may elect, in his Change in Control Election
Form, to have his Deferred Benefits paid in a lump sum, or in installments over
a 5-year period, a 10-year period, or a 15-year period. For a Change in Control
Election Form to be validly submitted by a Participant, it must be received by
the Corporate Secretary of the Company prior to the deadline specified in the
first sentence of this Section 9.3.
9.4 Definition of Change in Control
-------------------------------
For purposes of this Plan, a Change in Control shall mean any of the
following events:
(a) The acquisition in one or more transactions by any "Person" (as the
term person is used for purposes of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended (the "1934 Act")) of
"Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated under
the 1934 Act) of twenty percent (20%) or more of the combined voting power
of the Company's then outstanding voting securities (the "Voting
Securities"); provided, however, that for purposes of this Section 9.4, the
-------- -------
Voting Securities acquired directly from the Company by any Person shall be
excluded from the determination of such Person's Beneficial Ownership of
Voting Securities (but such Voting Securities shall be included in the
calculation of the total number of Voting Securities then outstanding); or
(b) The individuals who are members of the Incumbent Board (as defined
below) cease for any reason to constitute at least two-thirds (2/3) of the
Board. The "Incumbent Board" shall include the individuals who as of
August 20, 1990, are members of the Board and any individual becoming a
director subsequent to August 20, 1990, whose election, or nomination for
election, by the Company stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then comprising the Incumbent Board;
provided, however, that any individual who is not a member of the Incumbent
-------- -------
Board at the time he or she becomes a member of the Board shall become a
member of the Incumbent Board upon the completion of two (2) full years as
a member of the Board; provided, further, however, that notwithstanding the
-------- -------- -------
foregoing, no individual shall be
15
<PAGE>
considered a member of the Incumbent Board if such individual initially
assumed office (i) as a result of either an actual or threatened "election
contest" (within the meaning of Rule 14a-11 promulgated under the 1934 Act)
or other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board (a "Proxy Contest") or (ii) with
the approval of the other Board members, but by reason of any agreement
intended to avoid or settle a Proxy Contest; or
(c) Approval by stockholders of the Company of (i) a merger or
consolidation involving the Company if the stockholders of the Company,
immediately before such merger or consolidation, do not own, directly or
indirectly, immediately following such merger or consolidation, more than
eight percent (80%) of the combined voting power of the outstanding voting
securities of the corporation resulting from such merger or consolidation
in substantially the same proportion as their ownership of the Voting
Securities immediately before such merger or consolidation or (ii) a
complete liquidation or dissolution of the Company or an agreement for the
sale or other disposition of all or substantially all of the assets of the
Company.
Notwithstanding the foregoing, a Change in Control shall not be deemed to
occur solely because twenty percent (20%) or more of the then outstanding Voting
Securities is acquired by (i) a trustee or other fiduciary holding securities
under one or more employee benefit plans maintained by the Company or any of its
subsidiaries or (ii) any corporation which, immediately prior to such
acquisition, is owned directly or indirectly by the stockholders of the Company
in the same proportion as their ownership of stock in the Company immediately
prior to such acquisition.
Moreover, notwithstanding the foregoing, a Change in Control shall not be
deemed to occur solely because any Person (the "Subject Person") acquired
Beneficial Ownership of more than the permitted amount of the outstanding Voting
Securities as a result of the acquisition of Voting Securities by the Company,
which acquisition, by reducing the number of Voting Securities outstanding,
increases the proportional number of shares Beneficially Owned by the Subject
Person, provided that if a Change in Control would occur (but for the operation
--------
of this sentence) as a result of such acquisition of Voting Securities by the
Company, and after such share acquisition of Voting Securities by the Company,
the Subject Person becomes the Beneficial Owner of any additional Voting
Securities, which increases the percentage of the then outstanding Voting
Securities Beneficially Owned by the Subject Person, then a Change in Control
shall be deemed to have occurred.
ARTICLE X - MISCELLANEOUS
-------------------------
10.1 Amendments and Modifications
----------------------------
The Board of Directors of the Company may amend this Plan in any respect at
any time, except that the Board of Directors may not amend this Plan for the two
(2) year period commencing on the date of a Change in Control; provided however,
that shareholder approval is required for Plan amendments that require
shareholder approval under applicable rules of the
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New York Stock Exchange. In addition, the Plan Committee may authorize the
following types of amendments to the Plan without Board approval: (a) amendments
required by law; (b) amendments that relate to the administration of the Plan
and that do not materially increase the cost of the Plan; and (c) amendments
that are designed to resolve possible ambiguities, inconsistencies or omissions
in the Plan and that do not materially increase the cost of the Plan. All
authorized amendments shall be effective upon ten (10) days' written notice to
the Participants. If any such amendment affects a Participant's Deferred
Benefits, such affected Participant may, within ninety (90) days after the
effective date of such amendment, elect to terminate his or her participation in
the Plan pursuant to this Section 10.1, in which event the date of such election
shall be deemed to be such Participant's Deferred Benefit Commencement Date.
10.2 Inurement
---------
This Plan shall be binding upon and shall inure to the benefit of the
Company and each Participant hereto, and their respective beneficiaries, heirs,
executors, administrators, successors and assigns.
10.3 Governing Law
-------------
This Plan is made in accordance with and shall be governed in all respects
by the laws of the state of Georgia.
10.4 Tax Withholding
---------------
All payments (and issuances of shares) made pursuant to this Plan shall be
subject to the withholding of state and federal income taxes, FICA tax or other
taxes to the extent required by applicable law. The Plan Committee shall,
before delivery of a cash payment or a stock certificate, require the
Participant to make arrangements satisfactory to the Plan Committee to satisfy
such withholding requirements. A Participant receiving shares of Scientific-
Atlanta Common Stock may elect to satisfy such withholding requirements by
having the Plan Committee withhold shares otherwise issuable to the Participant,
with the Participant's election being made by delivering to the Plan Committee a
written election stating his or her desire to so satisfy such withholding
requirements.
10.5 Fractional Shares
-----------------
No fractional shares will be issued under this Plan. Except to the extent
that the provision for fractional shares is expressly set forth in this Plan,
the Plan Committee shall determine the manner for treating fractional shares.
10.6 Antidilution
------------
If a reorganization, recapitalization, stock split, stock dividend,
combination of shares, merger, consolidation, rights offering, or any other
change in the corporate structure of the
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Company or the shares of Scientific-Atlanta Common Stock occurs, then the
aggregate number of shares reserved under this Plan and all other share (or
share equivalent) numbers set forth in or calculated under this Plan shall be
equitably adjusted by the Plan Committee.
10.7 Delivery of Shares
------------------
The obligation of the Company to issue shares under this Plan shall be
subject to all applicable laws, rules and regulations, including all applicable
federal and state securities laws, and the obtaining of all such approvals by
governmental agencies as may be deemed necessary or appropriate by the Plan
Committee.
10.8 Securities Act Requirements
---------------------------
No certificates for shares shall be delivered pursuant to this Plan if the
delivery would, in the opinion of counsel for the Company, violate the
Securities Act of 1933, as amended (the "Securities Act") or any other Federal
or state statutes having similar requirements as may be in effect at that time.
As a condition of the issuance of any shares under this Plan, the Plan Committee
may require the recipient to furnish a written representation that he or she is
acquiring the shares for investment and not with a view to distribution to the
public. In the event that the disposition of shares acquired pursuant to the
Plan is not covered by a then current registration statement under the
Securities Act and is not otherwise exempt from such registration, such shares
shall be restricted against transfer to the extent required by the Securities
Act and Rule 144 of the Securities Act or the regulations hereunder.
10.9 Listing and Regulatory Requirements
-----------------------------------
If at any time the Plan Committee shall determine, in its discretion, that
the listing, registration or qualification of the shares to be delivered
pursuant to this Plan is required by any securities exchange or under any
applicable law or the rule of any regulatory body, or is necessary or desirable
as a condition of, or in connection with, the issuance of shares thereunder,
such shares may not be issued unless and until such listing, qualification,
consent or approval shall have been effected or obtained free of any conditions
not acceptable to the Plan Committee.
10.10 Section 16
----------
The transactions under this Plan are intended to comply with all
applicable conditions of Rule 16b-3 or its successors under the Securities
Exchange Act of 1934, as amended. To the extent any provision under the Plan or
action by the Plan Committee fails to so comply, it shall be deemed null and
void to the extent permitted by law and deemed advisable by the Plan Committee.
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To record the adoption of the Plan (as amended and restated) by the Board
on August 16, 2000, the Company has caused its authorized officers to execute
this Plan.
SCIENTIFIC-ATLANTA, INC.
By: /s/ Brian C. Koenig
-------------------------------------
Name: Brian C. Koenig
Title: Senior Vice President - Human
Resources
By: /s/ William E. Eason, Jr.
-------------------------------------
Name: William E. Eason, Jr.
Title: Senior Vice President, General
Counsel and Corporate Secretary
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