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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [_]
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 Section 240.14a-11(c) or Section 240.14a-12
XIRCOM, INC.
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(Name of Registrant as Specified In Its Charter)
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(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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
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[LOGO OF XIRCOM APPEARS HERE]
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Notice of Annual Meeting of Shareholders
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To Our Shareholders:
WHAT: Our Annual Meeting of Shareholders for Fiscal Year 1999
WHEN: January 21, 2000 at 10:00 a.m., local time
WHERE: The Hyatt Westlake Plaza Hotel
880 South Westlake Boulevard
Westlake Village, California 91361
WHY: At this meeting, we plan to:
1. Elect directors to serve for the coming year and until their
successors are elected and qualified.
2. Approve the adoption of Xircom's 2000 Stock Option Plan.
3. Approve the amendment of Xircom's Articles of Incorporation to
increase the authorized number of shares of Common Stock Xircom
may issue.
4. Ratify the appointment of Ernst & Young LLP as independent
auditors of Xircom for the fiscal year ending September 30, 2000.
5. Transact any other business which may be presented at the meeting
or any adjournment.
Only shareholders of record at the close of business on November 24, 1999
will receive notice of the Annual Meeting and be eligible to vote at the
meeting.
All shareholders are encouraged to attend the Annual Meeting. However, if
you cannot attend the Annual Meeting in person, please promptly register your
votes for the proposals to ensure you are represented at the Annual Meeting.
Please refer to your Proxy card for various voting methods. Please vote as
soon as possible. We have enclosed a postage-prepaid envelope for your
convenience if you choose to use the enclosed Proxy card. Please note: If you
attend the Annual Meeting, you may still vote in person at the meeting even if
you previously returned or voted a Proxy.
By Order of the Board of Directors
/s/ Randall H. Holliday
Thousand Oaks, California Randall H. Holliday
December 13, 1999 Secretary
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XIRCOM, INC.
2300 Corporate Center Drive
Thousand Oaks, CA 91320
(805) 376-9300
PROXY STATEMENT
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The Board of Directors of Xircom, Inc., ("Xircom" or first person
pronouns), seeks your Proxy for use at our Fiscal Year 1999 ("FY99") Annual
Meeting of Shareholders (the "Annual Meeting"). We will hold the meeting per our
Notice of Annual Meeting, unless we adjourn to a later date and/or time.
This Proxy Statement, and our accompanying Notice of Annual Meeting of
Shareholders, covers the purposes of the Annual Meeting. We have sent these
Proxy solicitation materials on or about December 13, 1999 to all shareholders
entitled to vote at the Annual Meeting.
. VOTING AND SOLICITATION
-----------------------
Shareholders of record as of the close of business on November 24, 1999
(the "Record Date") will receive notice of and may vote at the Annual Meeting.
Eligible shareholders may vote using one of the following methods:
. On-line via the Internet, if available.
. By telephone.
. By marking, signing, and returning the Proxy card.
There were 24,957,857 shares of our Common Stock issued and outstanding as
of the Record Date. The closing sale price on that date was $48.00. Our Common
Stock ($.001 par value) is traded on the Nasdaq Stock Market(SM) (symbol
"XIRC").
On November 12, 1999, we filed a registration statement with the Securities
and Exchange Commission (which was amended on November 19, 1999) for the
underwritten public offering of approximately 3,500,000 shares of our Common
Stock (the "Shares"). The public offering was scheduled to be completed on
December 8 or 9, 1999. Final details of the offering were not available as of
the time these Proxy solicitation materials were printed for mailing to eligible
shareholders. We encourage you to check the Securities and Exchange Commission's
EDGAR database (www.sec.gov), our web site (www.xircom.com), press releases, or
other comparable sources for the most current information regarding the Shares
before you vote on the proposals contained in this solicitation. Assuming the
successful completion of the public offering, the addition of the Shares to our
total shares of Common Stock issued and outstanding may be relevant to your
consideration and vote on proposals included in this solicitation.
(See the section titled "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT" below on page 20 for information about owners of more than 5% of
our outstanding Common Stock).
Each share has one vote on all matters, except as noted in Proposal 1-
"ELECTION OF DIRECTORS" under "Required Vote."
We have hired D.F. King & Co., Inc., for approximately $4,000, plus out-of-
pocket expenses, to help distribute Proxy materials and secure votes. Xircom
will pay for this solicitation. We may also reimburse brokerage firms and other
persons representing beneficial owners of shares for their reasonable expenses
in sending solicitation material to beneficial owners
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XIRCOM, INC.
2300 Corporate Center Drive
Thousand Oaks, CA 91320
(805) 376-9300
PROXY STATEMENT
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. REVOKING YOUR PROXY
-------------------
Any Proxy may be revoked at any time before it is actually voted at the
Annual Meeting. Regardless of the method of voting used, you may revoke your
Proxy by doing one of the following:
. File a written notice of revocation, dated later than the Proxy, before the
vote is taken at the Annual Meeting.
. Execute a later dated Proxy before the vote is taken at the Annual Meeting.
. Vote in person at the Annual Meeting (your attendance at the Meeting, by
itself, does not revoke your earlier Proxy).
Any written notice of revocation, or later Proxy, should be delivered to
Xircom, Inc., 2300 Corporate Center Drive, Thousand Oaks, CA 91320-1420,
Attention: Secretary. Or, you may hand deliver written revocation notice, or a
later Proxy, to our Secretary at the Annual Meeting before we begin voting.
. DEADLINE FOR SHAREHOLDER PROPOSALS FOR THE 2000 ANNUAL MEETING
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Any shareholder proposals intended to be included in our 2000 Proxy
Statement and presented at Xircom's fiscal 2000 Annual Meeting must be received
by Xircom no later than August 14, 2000, to be considered for use in the Proxy
Statement and form of Proxy for that meeting.
If we do not receive written notice before October 28, 2000 of a
shareholder proposal for our 2000 Annual Meeting, the proxy holders for that
meeting may exercise discretionary voting authority if the proposal is raised at
that meeting, even though the proposal was not included in the Proxy Materials
for the 2000 Annual Meeting.
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PROPOSAL 1
ELECTION OF DIRECTORS
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NOMINEES FOR XIRCOM, INC. BOARD OF DIRECTORS
. MICHAEL F.G. ASHBY Director Since 1996 Age- 50
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Chief Financial Officer, Cerent Corporation (a manufacturer of optical
transport systems for public networks) 7/99 to date; Executive Vice
President and Chief Financial Officer, Ascend Communications, Inc. (a
manufacturer of enterprise networking equipment) 11/97 - 6/99; Vice
President and Chief Financial Officer, Pacific Telesis Enterprises/Pacific
Bell (a telecommunications company) 9/95-10/97; President and Chief
Executive Officer, Network Systems Corporation (a manufacturer of network
communications devices) 3/95-8/95; Chief Operating Officer, Network Systems
Corporation 1/93-3/95.
. KENNETH J. BIBA Director Since 1991 Age- 49
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President, HighGain Technologies, Inc. (a technology consulting firm) 11/95
to date; Executive Vice President and General Manager, Wireless Products
Division of Xircom 9/93-10/95; Executive Vice President, Business
Development, Xircom 1/93-9/93.
. GARY J. BOWEN Director Since 1995 Age- 52
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Industry consultant 10/96 to date; Executive Vice President, Worldwide
Field Operations, Bay Networks, Inc. (a manufacturer of enterprise
networking equipment) 10/94-10/96; Senior Vice President, Marketing and
Field Operations, Wellfleet Communications, Incorporated 1/90-10/94.
. DIRK I. GATES Director Since 1988 Age- 38
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Chairman of the Board, Xircom 1/95 to date, Chief Executive Officer, Xircom
10/91 to date, and President, Xircom 11/88 to date.
. J. KIRK MATHEWS Director Since 1988 Age- 57
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Independent industry consultant 1/95 to date; Chairman of the Board, Xircom
11/88-1/95; Chief Executive Officer, Xircom 11/88-10/91.
. CARL E. RUSSO Director Since 1999 Age- 43
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Vice President and General Manager, Optical Transport Business Unit, Cisco
Systems, Inc. 11/99 to date; Chief Executive Officer, and member of the
Board of Directors, Cerent Corp. (a manufacturer of optical transport
systems for public networks) 6/98 - 10/99; Executive Vice President and
Chief Operating Officer, Xircom 4/95-5/98; Senior Vice President and
General Manager, Network Systems Corporation (a manufacturer of network
communications devices) 4/94-4/95.
. WILLIAM J. SCHROEDER Director Since 1991 Age- 55
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Independent industry consultant 9/99 to date; President, Chief Executive
Officer and member of the Board of Directors, Diamond Multimedia Systems,
Inc. (a manufacturer of computer multimedia products) 5/94 to 9/99; Vice
Chairman of the Board, Conner Peripherals, Inc. (a disk drive manufacturer)
1989 to 1994. Member of the Board of Directors, CNF Transportation, Inc. S3
Incorporated, and Sync Research, Inc.
. DELBERT W. YOCAM Director Since 1996 Age- 55
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Independent industry consultant 4/99 to date; Chairman and Chief Executive
Officer, INPRISE Corporation (a provider of software development products
and services) 11/96 to 4/99; independent industry consultant 11/94-11/96;
President, Chief Operating Officer, and member of the Board of Directors,
Tektronix, Inc. (a manufacturer of electronic equipment) 9/92-11/94. Member
of the Board of Directors, Adobe Systems, Inc.
-4-
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PROPOSAL 1
ELECTION OF DIRECTORS
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. NOMINEES
--------
Directors are to be elected at the Annual Meeting of Shareholders. Unless
otherwise instructed by your vote on the Proxy card, the Proxy holders will cast
your vote for our eight nominees.
Our nominees are presented on the preceding page. See "SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" below on page 20 for information on
the stock ownership of each director candidate, plus information on stock
ownership of all current directors and executive officers as a group. There are
no family relationships among any of our directors or executive officers.
Per our Bylaws, our Board may include up to eight directors. We currently
have eight Directors. When elected, they will serve until the next Annual
Meeting of Shareholders, or until a successor has been elected and qualified. If
any nominee is unable or does not want to stand for re-election, proxies will be
voted for any nominee designated by the present Board of Directors to fill the
vacancy. We are not aware of any reason why any of our nominees will be unable
or will decline to continue to serve as a director.
If additional persons are nominated for election as directors, the Proxy
holders plan to vote all proxies according to the cumulative voting rules. We
will use those rules so that the greatest number of allowable votes are cast to
provide for election of as many of our nominees as possible. If cumulative
voting is used, the Proxy holders allocate votes among specific nominees.
. REQUIRED VOTE
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Cumulative Voting- Cumulative voting may only be used for candidates who
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have been nominated prior to voting. And, cumulative voting may only be used if
at least one shareholder at the meeting gives notice of the shareholder's plan
to cumulate votes. Under cumulative voting, you may choose to give a single
candidate a number of votes equal to the number of directors to be elected
multiplied by the number of votes to which your shares are entitled. Or, you may
distribute your votes on the same principle among as many candidates as you
choose. You may not cast votes for more than the total number of directors to be
elected.
Vote Counting- The eight nominees receiving the highest number of Votes
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Cast will be elected as directors for the coming year. Under California law,
"Votes Cast" are the shares of our Common Stock represented and "voting" at the
Annual Meeting. Votes that are withheld from any director will be counted for
purposes of determining the presence or absence of a quorum, but will not be
counted as an actual vote cast. We will count abstentions only for purposes of
determining the presence or absence of a quorum required for the transaction of
business at the Annual Meeting. Broker non-votes will also be counted for
purposes of determining the presence or absence of a quorum for the transaction
of business.
-5-
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PROPOSAL 1
ELECTION OF DIRECTORS
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. DIRECTOR COMPENSATION
---------------------
We paid fees to each non-employee director for his services during FY99.
Fees paid include a quarterly retainer, plus a set amount per meeting attended.
Fees paid in FY 1999 were:
. Messrs. Ashby, Biba and Bowen: $35,250
. Mr. Schroeder: $34,000
. Messrs. Mathews and Yocam: $32,750
. Mr. Russo: $26,750
We also reimbursed our directors for their reasonable out-of-pocket
expenses incurred in connection with attending board and committee meetings.
Under Xircom's 1992 Director Stock Option Plan, when a new non-employee
director joins our Board, the director receives an option to purchase a total of
40,000 shares of Common Stock. These grants have an exercise price equal to the
fair market value as of the date of the grant. These "new director" options vest
cumulatively as to 10,000 shares each year for four years after the date of
grant, based on continued service on the Board. Mr. Russo received such an
option grant on January 22, 1999 at an exercise price of $42.00 per share.
On July 1 of each year, each non-employee director who has served on the
Board for at least six (6) months as of the date of the grant is automatically
granted an option to purchase 10,000 shares of Common Stock. These annual
options vest in full four years after the date of the grant and are granted at
an exercise price equal to the fair market value as of the date of the grant.
Messrs. Ashby, Biba, Bowen, Mathews, Schroeder and Yocam each received an annual
grant on July 1, 1999, at an exercise price of $30.5625 per share.
. FISCAL YEAR 1999 MEETINGS
-------------------------
. Board of Directors: 11 (6 by phone)
. Audit Committee: 4
. Compensation Committee: 3
During FY99, all of our incumbent Directors attended at least 75% of the
meetings of the Board of Directors. Mr. Russo attended all meetings of the Board
of Directors in FY99 following his election to the Board on January 22, 1999. We
had 100% attendance in FY99 of Board members for Committees of the Board on
which the director served.
. COMMITTEE MEMBERSHIPS
---------------------
Directors Ashby, Bowen, Schroeder and Yocam serve on the Audit and the
Compensation Committees.
. COMMITTEE RESPONSIBILITIES
--------------------------
Audit Committee
---------------
. Recommends engagement of Xircom's independent accountants.
. Reviews and oversees the services performed by Xircom's independent
auditors.
. Reviews and evaluates Xircom's accounting principles and its system of
internal accounting controls.
Compensation Committee
----------------------
. Makes recommendations to the Board of Directors regarding Xircom's
executive compensation policies.
. Administers Xircom's 1992 Stock Option Plan.
. Administers Xircom's 1994 Employee Stock Purchase Plan.
. Oversees administration of Xircom's nonstatutory stock option plans by a
committee of Management.
================================
RECOMMENDATION
================================
The Board of Directors recommends a vote FOR our nominees.
-6-
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PROPOSAL 2
APPROVAL OF ADOPTION OF 2000 STOCK OPTION PLAN
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. PROPOSAL OVERVIEW
-----------------
On October 22, 1999, our Board of Directors adopted the 2000 Stock Option
Plan (the "Plan") and reserved a total of:
. 1,200,000 shares; plus
. shares which have been reserved but unissued under Xircom's 1992 Stock
Option Plan (the "1992 Plan") as of the date of shareholder approval of
this Plan; and
. shares returned to the 1992 Plan after the date of shareholder approval of
this Plan as a result of the termination of options under the 1992 Plan.
As of the Record Date, no options or rights to purchase stock have been
granted pursuant to the Plan. We will not issue or award any options or rights
to purchase stock prior to shareholder approval of the Plan.
Related Stock Option Plans
--------------------------
As of the Record Date, 7,500,000 shares were reserved under Xircom's 1992
Stock Option Plan, with 2,213,561 shares subject to outstanding options and
587,366 shares available for future grants. As of the Record Date, 2,249,857
shares were reserved under Xircom's 1995 Stock Option Plan, with 1,737,628
shares subject to outstanding options and 231,724 shares available for future
grants. As of the Record Date, 250,000 shares were reserved under Xircom's
Patent Award Stock Option Plan, with 158,959 shares subject to outstanding
options and 85,000 shares available for future grants. As of the Record Date,
76,914 shares were reserved under the Entrega Stock Option Plan, with 75,456
shares subject to outstanding options and 1,458 shares available for future
grants. The Entrega Stock Option Plan was assumed by Xircom as part of its
merger with Entrega Technologies, Inc., which merger became effective on October
1, 1999. The reserved shares noted above for the Entrega Stock Option Plan are
shares of our Common Stock, converted from shares of Entrega Technologies, Inc.
pursuant to the applicable agreement and plan of merger.
Public Offering
---------------
On November 12, 1999, we filed a registration statement with the Securities
and Exchange Commission (which was amended on November 19, 1999) for the
underwritten public offering of approximately 3,500,000 shares of our Common
Stock (the "Shares"). The public offering was scheduled to be completed on
December 8 or 9, 1999. Final details of the offering were not available as of
the time these Proxy solicitation materials were printed for mailing to eligible
shareholders. We encourage you to check the Securities and Exchange Commission's
EDGAR database (www.sec.gov), our web site (www.xircom.com), press releases, or
other comparable sources for the most current information regarding the Shares
before you make your decision on this Proposal 2. Assuming the successful
completion of the public offering, the addition of the Shares to our total
shares of Common Stock issued and outstanding may be relevant to your
consideration and vote on this Proposal.
At the Annual Meeting, the shareholders are being requested to consider and
approve the Plan and the reservation of shares thereunder.
A description of the principal features of the Plan may be found below in
this Proxy.
. REQUIRED VOTE
-------------
The approval of the Plan requires the affirmative vote of a majority of the
Votes Cast on the proposal at the Annual Meeting. "Votes Cast" will be counted
as per the procedures noted below for Proposal 3 under the heading "REQUIRED
VOTE."
-7-
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PROPOSAL 2
APPROVAL OF ADOPTION OF 2000 STOCK OPTION PLAN
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. SUMMARY AND DESCRIPTION OF THE XIRCOM, INC. 2000 STOCK OPTION PLAN .
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General. We will use the Plan to:
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. attract and retain the best people for positions of substantial
responsibility with Xircom;
. provide additional incentives to our employees and consultants; and
. promote the success of our business.
Options and stock purchase rights may be granted under the Plan. Options
granted under the Plan may be either "incentive stock options," as defined in
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), or
nonstatutory stock options.
Administration. The Plan may generally be administered by the Board or a
--------------
Committee appointed by the Board (as applicable, the "Administrator"). The
Administrator may make any determinations deemed necessary or advisable for the
Plan. However, as required by the Plan, the Company can not reprice any options
granted under the Plan without prior shareholder approval. The Plan also
requires prior shareholder approval of any amendment to the Plan dealing with
the repricing provisions and limitations. In addition, the Company represents
that it will not cancel outstanding options under the Plan with the intention of
replacing them with new options with a lower exercise price.
Eligibility. Nonstatutory stock options and stock purchase rights may be
-----------
granted under the Plan to our employees, directors and consultants or to the
employees, directors or consultants of any parent or subsidiary of Xircom. Only
employees may receive incentive stock options under the Plan. The Administrator,
in its discretion, selects the employees, directors and consultants to whom
options and stock purchase rights may be granted, the time or times at which
such options and stock purchase rights will be granted, and the exercise price
and number of shares subject to each such grant.
Limitations. Under Section 162(m) of the Code certain limits are placed on
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the deductibility for federal income tax purposes of compensation paid to
certain of our executive officers. In order to preserve the deductibility of
compensation income associated with options and stock purchase rights granted to
such persons, the Plan provides that no employee may be granted, in any Xircom
fiscal year, options and stock purchase rights to purchase more than 500,000
shares of Common Stock. Notwithstanding this limit, however, in connection with
such individual's initial employment with Xircom, he or she may be granted
options or stock purchase rights to purchase up to an additional 500,000 shares
of Common Stock.
Terms and Conditions of Options. Each option is evidenced by a stock option
-------------------------------
agreement between Xircom and the optionee, and is subject to the following terms
and conditions:
. Exercise Price- The Administrator determines the exercise price of options
at the time the options are granted. The exercise price of an incentive stock
option may not be less than 100% of the fair market value of the Common Stock on
the date such option is granted. The fair market value of the Common Stock is
generally determined with reference to the closing sale price for the Common
Stock (or the closing bid if no sales were reported) on the date the option is
granted.
. Exercise of Option; Form of Consideration- The Administrator determines
when options become exercisable, and may in its discretion, accelerate the
vesting of any outstanding option. The means of payment for shares issued upon
exercise of an option is specified in each option agreement. The Plan permits
payment to be
-8-
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PROPOSAL 2
APPROVAL OF ADOPTION OF 2000 STOCK OPTION PLAN
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made by cash, check, promissory note, other shares of Common Stock of Xircom
(with some restrictions), cashless exercises (i.e. a broker sale), a reduction
in the amount of any Company liability to the optionee, any other form of
consideration permitted by applicable law, or any combination of these allowable
forms of consideration.
. Term of Option- The term of an incentive stock option may be no more than
ten (10) years from the date of grant. No option may be exercised after the
expiration of its term.
. Termination of Employment- If an optionee's employment or consulting
relationship terminates for any reason (including death or disability), then all
options held by the optionee under the Plan expire on the earlier of (i) the
date noted in his or her notice of grant or (ii) the expiration date of such
option. The Plan and the option agreement may provide for a longer period of
time for the option to be exercised after the optionee's death or disability
than for other terminations. To the extent the option is exercisable at the time
of such termination, the optionee (or the optionee's estate or the person who
acquires the right to exercise the option by bequest or inheritance) may
exercise all or part of his or her option at any time before termination of the
option.
. Nontransferability of Options- Unless the Administrator determines
otherwise, options granted under the Plan are not transferable other than by
will or the laws of descent and distribution, and may be exercised during the
optionee's lifetime only by the optionee.
. Other Provisions- The stock option agreement may contain other terms,
provisions and conditions not inconsistent with the Plan as may be determined by
the Administrator.
Stock Purchase Rights. In the case of stock purchase rights, unless the
---------------------
Administrator determines otherwise, the Restricted Stock Purchase Agreement will
grant Xircom a repurchase option exercisable upon the voluntary or involuntary
termination of the purchaser's employment with Xircom for any reason (including
death or disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock Purchase Agreement will be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to Xircom. The repurchase option will lapse at a rate determined by the
Administrator.
Adjustments Upon Changes in Capitalization. In the event that the stock of
------------------------------------------
Xircom changes by reason of any stock split, reverse stock split, stock
dividend, combination, reclassification or other change in the capital structure
of Xircom effected without the receipt of consideration, appropriate adjustments
will be made in the number and class of shares of stock subject to the Plan, the
number and class of shares of stock subject to any option or stock purchase
right outstanding under the Plan, and the exercise price of any such outstanding
option or stock purchase right.
In the event of a liquidation or dissolution, any unexercised options or
stock purchase rights will terminate. The Administrator may, in its sole
discretion, provide that each optionee will have the right to exercise all of
the optionee's options and stock purchase rights, including those not otherwise
exercisable.
In connection with any merger, consolidation, acquisition of assets or like
occurrence involving Xircom, each outstanding option or stock purchase right
will be assumed or an equivalent option or right substituted by the successor
corporation. If the successor corporation refuses
-9-
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PROPOSAL 2
APPROVAL OF ADOPTION OF 2000 STOCK OPTION PLAN
================================================================================
to assume the options and stock purchase rights or to substitute substantially
equivalent options and stock purchase rights, the optionee will fully vest in
and have the right to exercise the option or stock purchase right, including
shares as to which it would not otherwise be exercisable. In such event, the
Administrator will notify the optionee that the option or right will be
exercisable for a period of fifteen (15) days from the date of such notice and
the option or stock purchase right will terminate upon the expiration of such
period.
Amendment and Termination of the Plan. The Board may amend, alter, suspend
-------------------------------------
or terminate the Plan, or any part thereof, at any time and for any reason.
However, Xircom will obtain shareholder approval for any amendment to the Plan
to the extent necessary and desirable to comply with applicable law. No such
action by the Board or shareholders may alter or impair any option or stock
purchase right previously granted under the Plan without the written consent of
the optionee. Unless terminated earlier, the Plan will terminate ten years from
the date of its approval by the shareholders or the Board of Xircom, whichever
is earlier.
Federal Income Tax Consequences
-------------------------------
. Incentive Stock Options- An optionee who is granted an incentive stock
option does not recognize taxable income at the time the option is granted or
upon its exercise, although the exercise is an adjustment item for alternative
minimum tax purposes and may subject the optionee to the alternative minimum
tax. Upon a disposition of the shares more than two years after grant of the
option and one year after exercise of the option, any gain or loss is treated as
long-term capital gain or loss. Net capital gains on shares held more than 12
months may be taxed at a maximum federal rate of 20%. Capital losses are allowed
in full against capital gains and up to $3,000 against other income. If these
holding periods are not satisfied, the optionee recognizes ordinary income at
the time of disposition equal to the difference between the exercise price and
the lower of (i) the fair market value of the shares at the date of the option
exercise or (ii) the sale price of the shares. Any gain or loss recognized on
such a premature disposition of the shares in excess of the amount treated as
ordinary income is treated as long-term or short-term capital gain or loss,
depending on the holding period. A different rule for measuring ordinary income
upon such a premature disposition may apply if the optionee is also an officer,
director, or 10% shareholder of Xircom. Unless limited by Section 162(m) of the
Code, Xircom is entitled to a deduction in the same amount as the ordinary
income recognized by the optionee.
. Nonstatutory Stock Options- An optionee does not recognize any taxable
income at the time he or she is granted a nonstatutory stock option. Upon
exercise, the optionee recognizes taxable income generally measured by the
excess of the then fair market value of the shares over the exercise price. Any
taxable income recognized in connection with an option exercise by an employee
of Xircom is subject to tax withholding by Xircom. Unless limited by Section
162(m) of the Code, Xircom is entitled to a deduction in the same amount as the
ordinary income recognized by the optionee. Upon a disposition of such shares by
the optionee, any difference between the sale price and the optionee's exercise
price, to the extent not recognized as taxable income as provided above, is
treated as long-term or short-term capital gain or loss, depending on the
holding period. Net capital gains on shares held more than 12 months may be
taxed at a maximum federal rate of 20%. Capital losses are
-10-
<PAGE>
================================================================================
PROPOSAL 2
APPROVAL OF ADOPTION OF 2000 STOCK OPTION PLAN
================================================================================
allowed in full against capital gains and up to $3,000 against other income.
. Stock Purchase Rights- Stock purchase rights will generally be taxed in the
same manner as nonstatutory stock options. However, restricted stock is
generally purchased upon the exercise of a stock purchase right. At the time of
purchase, restricted stock is subject to a "substantial risk of forfeiture"
within the meaning of Section 83 of the Code, because Xircom may repurchase the
stock when the purchaser ceases to provide services to Xircom. As a result of
this substantial risk of forfeiture, the purchaser will not recognize ordinary
income at the time of purchase. Instead, the purchaser will recognize ordinary
income on the dates when the stock is no longer subject to a substantial risk of
forfeiture (i.e., when Xircom's right of repurchase lapses). The purchaser's
ordinary income is measured as the difference between the purchase price and the
fair market value of the stock on the date the stock is no longer subject to
right of repurchase.
The purchaser may accelerate to the date of purchase his or her recognition
of ordinary income, if any, and begin his or her capital gains holding period by
timely filing, (i.e., within thirty days of the purchase), an election pursuant
to Section 83(b) of the Code. In such event, the ordinary income recognized, if
any, is measured as the difference between the purchase price and the fair
market value of the stock on the date of purchase, and the capital gain holding
period commences on such date. The ordinary income recognized by a purchaser who
is an employee will be subject to tax withholding by the Company. Different
rules may apply if the purchaser is also an officer, director, or 10%
shareholder of Xircom.
NOTE: Our discussion of tax information is not a complete summary of the effect
of federal income taxation upon holders of options or upon Xircom. It also does
not reflect provisions of the income tax laws of any municipality, state or
foreign country in which an option holder lives.
=====================================
RECOMMENDATION
=====================================
The Board of Directors has unanimously approved adoption of the Plan and
recommends that the shareholders vote FOR this proposal.
-11-
<PAGE>
================================================================================
PROPOSAL 3
APPROVAL OF AMENDMENT OF ARTICLES OF INCORPORATION
================================================================================
. OVERVIEW OF ARTICLES AND PROPOSED AMENDMENT
Xircom's Amended and Restated Articles of Incorporation, as currently in
effect (the "Articles"), provide that Xircom is authorized to issue 52,000,000
shares of Xircom's capital stock. The authorized capital stock consists of
50,000,000 shares of Common Stock, $0.001 par value and 2,000,000 shares of
Preferred Stock, $0.001 par value. As of the Record Date there were 24,957,857
outstanding shares of Common Stock and no Preferred Stock.
On October 22, 1999, the Board of Directors authorized an amendment to the
Articles (the "Proposed Amendment") to (i) increase the total number of shares
the Board is authorized to issue from 52,000,000 shares to 127,000,000; and (ii)
to increase the authorized number of shares of Common Stock from 50,000,000
shares to 125,000,000 shares.
The principle purpose and effect of the Proposed Amendment will be to
authorize additional shares of Common Stock. This amendment, and the addition of
these shares if approved, will have no immediate impact upon existing
shareholders, but might have a dilutive effect on shareholders at such time in
the future, if any, as any additional shares are issued by the Company. These
shares will be available in the event the Board of Directors determines that it
is necessary and appropriate to effect a stock split, to raise additional
capital through the sale of securities in the public market, to grant options or
stock purchase rights to Xircom's employees or to acquire another company,
business or assets.
. REQUIRED VOTE
Under California law, we need a "FOR" vote by the holders of a majority of
the Votes Cast. For this purpose, "Votes Cast" means the number of shares of
Xircom's Common Stock outstanding and represented and entitled to vote at the
Annual Meeting. The "For" votes must represent a majority of the shares
represented and voting at the Annual Meeting, assuming a quorum is present. The
requisite quorum is a majority of the shares outstanding on the Record Date.
Votes that are cast against the proposal and abstentions will each be counted
for the purposes of determining (i) the presence or absence of quorum and (ii)
the total number of Votes Cast with respect to the proposal. In essence,
abstentions will have the same effect as a vote against the proposal. Broker
non-votes will be counted for the purposes of determining the presence or
absence of quorum, but will not be counted for purposes of determining the
number of Votes Cast.
==============================================
RECOMMENDATION
==============================================
The Board of Directors has unanimously approved adoption of the Proposed
Amendment and recommends that the shareholders vote FOR this proposal.
-12-
<PAGE>
================================================================================
PROPOSAL 4
RATIFICATION OF APPOINTMENT OF AUDITORS
================================================================================
The Board of Directors, following the recommendation of the Audit
Committee, has appointed Ernst & Young LLP, independent auditors, to audit
Xircom's consolidated financial statements for the fiscal year ending September
30, 2000. This appointment is being presented to the shareholders for
ratification at the meeting. The affirmative vote of the holders of a majority
of the shares present in person or represented by Proxy and entitled to vote at
the meeting is required to ratify the Board's appointment. If the appointment is
not ratified, the Board of Directors will reconsider its selection.
Ernst & Young LLP has audited Xircom's consolidated financial statements
since the fiscal period ended September 30, 1989. Representatives of Ernst &
Young LLP are expected to be present at the meeting. They will have the
opportunity to address the audience at the meeting, and will be available to
answer appropriate questions from shareholders.
======================================
RECOMMENDATION
======================================
The Board of Directors recommends that shareholders vote FOR ratification of
Ernst & Young LLP as Xircom's independent auditors.
-13-
<PAGE>
================================================================================
EXECUTIVE OFFICER COMPENSATION
================================================================================
SUMMARY COMPENSATION TABLE
This table reflects compensation paid for services in all capacities during
FY99, as well as the total compensation paid to each individual for Xircom's
previous two fiscal years for the following individuals ("Top 5 Compensated
Officers"):
. Our Chief Executive Officer ("CEO").
. Each of our four other most highly compensated executive officers other
than the CEO who served as executive officers of Xircom as of 9/30/99 and
whose salary plus bonus exceeded $100,000.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
ANNUAL LONG-TERM ALL OTHER
OFFICERS COMPENSATION COMPENSATION/(1)/ COMPENSATION/(2)/
- ------------------------------------------------------------------------------------------------------------------------------------
Name, Age and Position Year Salary Bonus Options (Shares)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Dirk I. Gates, 38 1999 $400,000 $591,200 250,000 $ 3,213
Chairman, President 1998 $350,000 $301,350 87,500 $ 3,914
and Chief Executive Officer 1997 $285,020 $142,144 75,000 $ 1,267
- ------------------------------------------------------------------------------------------------------------------------------------
Marc M. Devis, 40/(3)/ 1999 $297,269 $354,334 200,000 $ 44,742
Sr. VP, Worldwide Sales and 1998 $256,521 $199,062 50,000 $ 40,427
Marketing 1997 $229,203 $212,593 150,000 $ 40,135
- ------------------------------------------------------------------------------------------------------------------------------------
Robert W. Bass, 53 1999 $200,000 $258,650 150,000 $ 1,427
Sr. VP, Worldwide 1998 $187,000 $105,005 50,000 $ 17,506/(4)/
Operations 1997 $172,833 $ 66,525 55,000 $ 2,264
- ------------------------------------------------------------------------------------------------------------------------------------
Steven F. DeGennaro, 36 1999 $200,000 $308,650 150,000 $ 4,367
VP, Finance 1998 $175,000 $129,150 80,000 $ 4,061
and Chief Financial Officer 1997 $153,750 $ 63,705 30,000 $ 2,891
- ------------------------------------------------------------------------------------------------------------------------------------
Randall H. Holliday, 50 1999 $150,000 $196,275 75,000 $ 3,794
Secretary and General 1998 $140,000 $ 86,100 20,000 $ 3,832
Counsel 1997 $132,000 $ 58,890 30,000 $ 3,318
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Xircom has not granted any SARs to any of the Top 5 Compensated Officers.
Certain SARs had been granted to certain employees of Entrega Technologies,
Inc. prior to the merger, effective October 1, 1999, of Xircom with Entrega
Technologies, Inc.
(2) For 1999, 1998 and 1997, amounts include Xircom matching contributions to
our 401(k) Plan.
(3) Mr. Devis, resident in Belgium, is provided the use of a company-paid car.
The value of the personal use of the car is less than $10,000 per year.
Other compensation includes amounts payable as special allowances under
Belgian law.
(4) Includes $14,717 imputed income arising from forgiveness of interest
accrued on loan repaid in prior fiscal year.
-14-
<PAGE>
================================================================================
EXECUTIVE OFFICER COMPENSATION
================================================================================
STOCK OPTION GRANTS AND EXERCISES
FOR TOP 5 COMPENSATED OFFICERS
STOCK OPTION GRANTS IN FISCAL YEAR ENDED SEPTEMBER 30, 1999 (FY99)
-----------------------------------------------------------------
This table shows grants made in FY99, and hypothetical gains for the
options at the end of their respective seven (7) year terms. We have
arbitrarily assumed annualized growth rates of the market price of our Common
Stock over the exercise price of the option of five percent (5%) and ten
percent (10%), running from the date the option was granted to the end of the
option term. Actual gains, if any, on option exercises depend on the future
performance of Xircom's Common Stock and overall market conditions.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS/(1)/
- ------------------------------------------------------------------------------------------------------------------------------------
Percent of Total Potential Realizable Value at
Option Options Granted Exercise or Assumed Annual Rates of
Shares to Employees in Base Price Expiration Stock Price Appreciation
Officer Granted(#) Fiscal Year ($/share) Date for Option Term
5%($) 10%($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Dirk I. Gates 50,000 2.15% $ 32.8125 07/23/06 $ 667,899 $ 1,556,489
100,000 4.30% $ 21.0000 04/23/06 $ 854,911 $ 1,992,306
100,000 4.30% $ 17.5000 10/07/05 $ 712,426 $ 1,660,255
- ------------------------------------------------------------------------------------------------------------------------------------
Marc M. Devis 50,000 2.15% $ 32.8125 07/23/06 $ 667,899 $ 1,556,489
50,000 2.15% $ 21.0000 04/23/06 $ 427,455 $ 996,153
50,000 2.15% $ 21.0000 04/23/06 $ 427,455 $ 996,153
50,000 2.15% $ 17.5000 10/07/05 $ 356,213 $ 830,127
- ------------------------------------------------------------------------------------------------------------------------------------
Robert W. Bass 50,000 2.15% $ 32.8125 07/23/06 $ 667,899 $ 1,556,489
50,000 2.15% $ 21.0000 04/23/06 $ 427,455 $ 996,153
50,000 2.15% $ 17.5000 10/07/05 $ 356,213 $ 830,127
- ------------------------------------------------------------------------------------------------------------------------------------
Steven F. DeGennaro 50,000 2.15% $ 32.8125 07/23/06 $ 667,899 $ 1,556,489
50,000 2.15% $ 21.0000 04/23/06 $ 427,455 $ 996,153
50,000 2.15% $ 17.5000 10/07/05 $ 356,213 $ 830,127
- ------------------------------------------------------------------------------------------------------------------------------------
Randall H. Holliday 20,000 0.86% $ 32.8125 07/23/06 $ 267,160 $ 622,596
35,000 1.51% $ 21.0000 04/23/06 $ 299,219 $ 697,307
20,000 0.86% $ 17.5000 10/07/05 $ 142,485 $ 332,051
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Xircom did not grant any SARs in FY99 to any of the Top 5 Compensated
Officers. Certain SARs had been granted to certain employees of
Entrega Technologies, Inc. prior to the merger, effective October 1,
1999, of Xircom with Entrega Technologies, Inc.
-15-
<PAGE>
================================================================================
EXECUTIVE OFFICER COMPENSATION
================================================================================
AGGREGATE OPTION EXERCISES IN FY99 AND YEAR-END OPTION VALUES
-------------------------------------------------------------
This table shows all stock options exercised by the Top 5 Compensated
Officers for FY99. The "Value Realized" column reflects the difference
between the market value of the underlying securities at the actual
exercise date minus the exercise price of the options. The "Value of
unexercised in-the-money options" column reflects the difference between
the market value at the end of the fiscal year and the exercise price of
in-the-money options.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Shares (#) Number of unexercised options Value of unexercised in-the-money
acquired on Value at 1999 year-end options at 1999 year-end(1)
Officer exercise Realized($) Exercisable/Unexercisable Exercisable/Unexercisable
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Dirk I. Gates -- -- 117,706 344,794 $ 3,692,163 $ 8,114,043
- ------------------------------------------------------------------------------------------------------------------------------------
Marc M. Devis 173,956 $ 3,599,283 12,920 307,293 $ 397,970 $ 7,215,130
- ------------------------------------------------------------------------------------------------------------------------------------
Robert W. Bass 55,000 $ 1,255,399 38,414 214,586 $ 1,160,007 $ 4,808,256
- ------------------------------------------------------------------------------------------------------------------------------------
Steven F. DeGennaro 37,500 $ 797,305 53,770 212,918 $ 1,631,341 $ 4,772,600
- ------------------------------------------------------------------------------------------------------------------------------------
Randall H. Holliday 27,375 $ 521,662 38,329 104,796 $ 1,137,466 $ 2,358,761
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Total value of vested and unvested options based on the market value
of Xircom's Common Stock on September 30, 1999 ($42.69 per share).
-16-
<PAGE>
================================================================================
EXECUTIVE OFFICER COMPENSATION
================================================================================
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT,
CHANGE-IN-CONTROL ARRANGEMENTS AND CERTAIN TRANSACTIONS
From time to time, Xircom has entered into letter employment agreements
with certain of its executive officers. Such agreements set the officer's base
salary and state that options to purchase Xircom's Common Stock will be granted
to the officer. No such agreements are currently in effect.
Xircom has entered into indemnification agreements with each of its
directors and executive officers. Such agreements require Xircom to indemnify
such individuals to the fullest extent permitted by law.
Effective October 1, 1999, we renewed Change in Control Agreements (the
"CIC Agreements"), with each Named Executive Officer other than our Chief
Executive Officer. Each CIC Agreement renews automatically on an annual basis
effective October 1, unless terminated by our written notice. The CIC Agreement
provides that in the event of a "Change in Control," each executive
automatically receives acceleration of twelve (12) months of vesting under then
existing stock options. In addition, if an executive's employment is involuntary
terminated within two years following a Change in Control, or the executive
voluntary terminates employment after a Change in Control, and for "Good
Reason," the executive is entitled to certain severance payments and
entitlements.
A "Change in Control" is generally defined to be (1) acquisition by a
third party of greater than fifty percent (50%) of the voting power of Xircom,
or (2) a merger, sale of assets, or comparable transaction, which results in a
Board of Directors in which the Directors who were members of the Board prior to
the event represent less than a majority of the Board of Directors following the
event. "Good Reason" is generally defined as a substantial alteration or
reduction in duties and responsibilities, a reduction in salary or bonus
eligibility affecting the executive individually (as opposed to across the board
reductions impacting all executives equally), reassignment to a different
geographic location, or refusal of the successor entity to assume the CIC
Agreement.
The severance payments and entitlements made to the executive under the
CIC Agreement include continued payment of base salary, bonuses and benefits,
and acceleration of vesting under then existing stock option grants. Payments
and entitlements run for a period of one (1) year if termination of employment
or resignation for Good Reason occurs within twelve (12) months after the Change
in Control, or for a period of six (6) months if termination of employment or
resignation for Good Reason occurs within the thirteenth to twenty-fourth
(13/th/-24/th/) month after the Change in Control.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires our executive officers and directors to file reports of
holdings and transactions in our shares with the Securities and Exchange
Commission (the "SEC") and the National Association of Securities Dealers, Inc.
Executive Officers, directors and greater-than-ten-percent shareholders are also
required by SEC rules to furnish Xircom with copies of all Section 16(a) forms
they file. Based solely on our review of copies of such forms we received, or
written representations from certain reporting persons, we believe that during
the period from October 1, 1998 to September 30, 1999, all filing requirements
applicable to its officers, directors and ten percent shareholders were complied
with.
-17-
<PAGE>
- --------------------------------------------------------------------------------
EXECUTIVE OFFICER COMPENSATION
- --------------------------------------------------------------------------------
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Our Compensation Committee establishes Xircom's executive compensation
policies at the beginning of each fiscal year. The Committee approves the base
salary levels and target incentive plans for executive officers of Xircom. The
Committee also evaluates the performance of Xircom's Chief Executive Officer
against Xircom's overall objectives, and administers Xircom's Stock Option Plan
and Employee Stock Purchase Plan. Xircom's President and Chief Executive
Officer, and Xircom's Vice President, Human Resources, provide executive officer
background and independent salary survey information from third party providers
for the Committee's use.
Xircom's executive compensation policies support two major objectives:
. Ensure that the total compensation earned by our executive officers is
closely aligned with and dependent upon our continued favorable financial
performance.
. Enable us to attract and retain, through a competitive compensation
structure, those key executives critical to our long-term success.
To ensure that our first objective is met, the Committee's executive
compensation program provides that a significant portion of each officers' total
potential compensation annually comes from incentive bonus compensation. This
bonus compensation may only be earned if we achieve certain targeted financial
objectives set by the Committee at the beginning of the fiscal year. On
occasion, special discretionary project-based bonuses related to extraordinary
efforts or achievements on the part of a particular executive officer may also
be paid. In addition, significant potential remuneration is tied to Xircom's
stock price performance, through the ongoing grant of stock options to key
executive officers.
Our second executive compensation objective is addressed by setting
compensation levels based on several factors:
. The salaries and total compensation of executive officers in similar
positions with comparable companies in our industry.
. Xircom's financial performance during the past year.
. Each officer's performance against objectives related to their areas of
responsibility.
In essence, the Committee ensures that there is a consistent, direct and
reasonable relationship between total executive compensation and the value of
work performed toward maximizing shareholder value.
Mr. Dirk Gates, Xircom's Chief Executive Officer, is a founder of Xircom
and as such, owned 783,802 shares of Common Stock as of September 30, 1999. This
substantial equity interest further ensures that increasing shareholder value is
a key element of the total earnings of Mr. Gates.
For FY99, Xircom's Chief Executive Officer was eligible under the bonus
plan for incentive bonuses, at specified targets, of up to 80% of salary based
on achievement of specific quarterly financial goals (80% bonus at target). The
other executive officers also were eligible for bonus incentives at specified
targets ranging up to 60% or 70% of base salary based on quarterly financial
goals. For those officers with sales responsibilities, specific sales volume
incentives were also established for bonus calculations. Our bonus plans and our
administration of same also provided for higher percentages if targeted goals
were exceeded.
-18-
<PAGE>
- --------------------------------------------------------------------------------
EXECUTIVE OFFICER COMPENSATION
- --------------------------------------------------------------------------------
Under the plans for FY99, bonuses were calculated and paid quarterly based
upon certain quarterly performance measurements. Initial consideration was given
to our actual quarterly operating income percentage. If operating income was at
or below the percentage established by the Committee, the operating income
percentage formed the basis for our calculation of bonus income. If operating
income exceeded the designated threshold percentage, consideration was then
given to the applicable quarter over quarter growth (as a percentage) of unit
sales out. Under those circumstances, the bonus compensation payable would be
the greater of the bonus amount calculated by using (a) the actual operating
income percentage, or (b) the actual sales out unit growth percentage. In
essence, the philosophy behind the FY99 bonus plan was to (a) run the company to
achieve targeted operating income, then (b) seek to increase our market share.
Given the calculation methods adopted by the Committee, the bonus plans did not
have any minimum performance thresholds for bonus eligibility other than
positive numbers for the measurement criteria.
Based on our financial performance as compared to the applicable financial
incentive objectives for FY99, the Chief Executive Officer received bonuses for
FY99 totaling 148% of base salary (for a total bonus of $591,200). The other
executive officers received bonuses ranging from 119% to 154% of base salary
earned during the fiscal year.
For FY00, the Chief Executive Officer bonus plan again provides for a
bonus based on achievement of specific financial objectives. The total bonus
available under the Chief Executive Officer plan is up to 100% of base salary
based on achievement of targeted goals.
The bonus plan for other executive officers provides for bonuses up to a
range of 65% to 85% based on achievement of specified financial and (as
applicable) sales goals. The plans provide for higher percentages if targeted
goals are exceeded. The bonus plans for FY00 will be based upon the same
combination and comparison of quarterly operating income percentages and quarter
on quarter sales out unit growth as was used for the FY99 bonus plans.
The Committee also considers granting stock options to an executive
officer based on a number of factors, including an officer's responsibilities
and relative position in the company, any changes in an officer's responsibility
and position, special projects within the officer's area of responsibility, and
the officer's equity interest in Xircom in the form of stock and options held by
such individual. Options are granted at the current market price of our Common
Stock on the date of the grant. During FY99, Mr. Gates received option grants on
October 7, 1998 for 100,000 shares, on April 23, 1999 for 100,000 shares and on
July 23, 1999 for 50,000 shares. During FY99, options for 575,000 shares were
granted to the remaining Top 5 Compensated Officers as a group.
No Compensation Committee member is a former or current officer, or
employee of Xircom or any of its subsidiaries.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of our Compensation Committee has a relationship that would
constitute an interlocking relationship with executive officers or directors of
another entity.
COMPENSATION COMMITTEE
Michael F.G. Ashby, Gary J. Bowen, William J. Schroeder and Delbert W. Yocam
================================================================================
-19-
<PAGE>
- --------------------------------------------------------------------------------
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- --------------------------------------------------------------------------------
The following table presents certain information about beneficial ownership
of Xircom's Common Stock as of November 1, 1999, by each person (or group of
affiliated persons) who is known by Xircom to own beneficially more than 5% of
Xircom's Common Stock, each director, each executive officer named in the
Executive Officer Compensation table, and all current directors and executive
officers as a group. Except as indicated in the footnotes to this table, the
persons named in the table have sole voting and investment power with respect to
all shares of Common Stock shown as beneficially owned by them, subject to
community property laws where applicable.
<TABLE>
<CAPTION>
Name and Address Number of shares/(1)/ Percent of Total
---------------- --------------------- ----------------
<S> <C> <C>
Intel Corporation 2,516,405 10.1%
2200 Mission College Boulevard
Santa Clara, California 95052
Nicholas Applegate Capital Management 1,309,810 5.3%
600 West Broadway
San Diego, California 92101
Dirk I. Gates /(2)/ 868,957 3.5%
Michael F.G. Ashby 27,500 *
Robert W. Bass 64,339 *
Kenneth J. Biba 22,700 *
Gary J. Bowen 30,000 *
Steven F. DeGennaro 91,836 *
Marc M. Devis 43,128 *
Randall H. Holliday 52,867 *
J. Kirk Mathews 115,352 *
Carl E. Russo 3,727 *
William J. Schroeder /(3)/ 17,500 *
Delbert W. Yocam 7,500 *
All current directors and executive officers as a 1,345,406 5.3%
group (12 persons)
</TABLE>
- --------------------------------------------------------------------------------
* Less than 1%
(1) Includes options to exercise shares of Common Stock held by the following
individuals, and all executive officers and directors as a group, that were
exercisable on, or within 60 days after, November 1, 1999, as follows: Mr.
Ashby, 22,500; Mr. Bass, 62,374; Mr. Biba, 22,500; Mr. Bowen, 30,000; Mr.
DeGennaro, 77,105; Mr. Devis, 43,128; Mr. Holliday, 50,101; Mr. Mathews,
30,000; Mr. Schroeder, 2,500; Mr. Yocam, 7,500; and all executive officers
and directors as a group, 507,863.
(2) Includes 708,802 shares held by the Dirk I. Gates Trust dated October 4,
1994 of which Mr. Gates is Trustee and 160,155 shares subject to
outstanding options held by Mr. Gates that were exercisable as of November
1, 1999 or within 60 days of such date.
(3) Mr. Schroeder's shares are held in the name of William J. Schroeder and
Marilee J. Schroeder Revocable Trust.
-20-
<PAGE>
- --------------------------------------------------------------------------------
STOCK PERFORMANCE GRAPH
- --------------------------------------------------------------------------------
The following graph compares the change in Xircom's cumulative total
shareholder return on its Common Stock with the Standard and Poor's 500 Stock
Index and the Hambrecht & Quist High Growth Index for the five-year period
commencing September 30, 1994, and ending September 30, 1999.
<TABLE>
<CAPTION>
Sept. 30, 1994 Sept. 30, 1995 Sept. 30, 1996 Sept. 30, 1997 Sept. 30, 1998 Sept. 30, 1999
-------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Xircom $100 $ 66 $ 78 $ 60 $118 $203
S&P 500 $100 $130 $156 $219 $239 $306
H&Q Growth $100 $167 $200 $211 $187 $425
</TABLE>
[GRAPH OMITTED]
Note: Xircom's return is calculated based on the assumption that $100 was
invested on September 30, 1994 at $20.75 per share.
OTHER MATTERS
-------------
The Board of Directors knows of no other matters that have been submitted
on a timely basis for voting at this Annual Meeting. If any other matters come
before the shareholders at this Annual Meeting, the persons named on the
enclosed Proxy card intend to vote the shares they represent as the Board of
Directors may recommend.
By Order of the Board of Directors
/s/ Randall H. Holliday
Thousand Oaks, California Randall H. Holliday
December 13, 1999 Secretary
-21-
<PAGE>
1112-PS-99
-22-
<PAGE>
DETACH HERE
PROXY
XIRCOM, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS - JANUARY 21, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of Xircom, Inc. designates and appoints DIRK I.
GATES and STEVEN F. DeGENNARO, and each of them, proxies and attorneys-in-fact
of the undersigned, each with full power of substitution, to vote all the shares
of Common Stock of Xircom, Inc. standing in the name of the undersigned at the
Annual Meeting of Shareholders of Xircom, Inc. to be held at the Hyatt Westlake
Plaza Hotel, located at 880 S. Westlake Boulevard, Westlake Village,
California, on January 21, 2000 at 10:00 a.m., local time, and at any
adjournment(s) or postponement(s) thereof.
Unless a contrary direction is indicated, this Proxy will be voted FOR all
nominees listed in Proposal 1, FOR Proposals 2, 3, 4 and 5 and in accordance
with the judgment of the proxies as to the best interests of the Company upon
such other business as may properly come before the meeting or any
adjournment(s) or postponement(s) thereof. If specific instructions are
indicated, this Proxy will be voted in accordance therewith.
SEE REVERSE SIDE FOR VOTING ALTERNATIVES
- --------------- ---------------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
- --------------- ---------------
<PAGE>
<TABLE>
<S> <C>
- ----------------- ----------------
Vote by Telephone Vote by Internet
- ----------------- ----------------
It's fast, convenient, and immediate!! It's fast, convenient, and your vote is immediately
Call Toll-Free on a Touch-Tone Phone confirmed and posted.
1-877-PRX-VOTE (1-877-779-8683)
- --------------------------------------------------- ---------------------------------------------------
Follow these four easy steps: Follow these four easy steps:
1. Read the accompanying Proxy 1. Read the accompanying Proxy
Statement/Prospectus and Proxy Card. Statement/Prospectus and Proxy Card.
2. Call the toll-free number 2. Go to the Website
1-877-PRX-VOTE (1-877-779-8683). For http://www.eproxyvote.com/xirc
shareholders residing outside the United
States call collect on a touch-tone phone 3. Enter your 14-digit Voter Control Number
1-201-536-8073. located on your Proxy Card above your name.
3. Enter your 14-digit Voter Control Number 4. Follow the instructions provided.
located on your Proxy Card above your name.
4. Follow the recorded instructions.
- --------------------------------------------------- ---------------------------------------------------
Your vote is important! Your vote is important!
Call 1-877-PRX-VOTE anytime! Go to http://www.eproxyvote.com/xirc anytime!
</TABLE>
Do not return your Proxy Card if you are voting by Telephone or Internet
DETACH HERE
Please mark
[X] votes as in
this example.
1. To elect directors to serve for the coming year and until their
successors are elected and duly qualified.
Nominees: (01) Michael F. G. Ashby, (02) Kenneth J. Biba, (03) Gary
J. Bowen, (04) Dirk I. Gates, (05) J. Kirk Mathews, (06) Carl E.
Russo, (07) William J. Schroeder and (08) Delbert W. Yocam
FOR WITHHELD
[ ] [ ]
MARK HERE
FOR ADDRESS [ ]
[ ] CHANGE AND
---------------------------------- NOTE BELOW
For all nominees except those indicated
on the line above.
FOR AGAINST ABSTAIN
2. To approve the adoption of Xircom's 2000
Stock Option Plan. [ ] [ ] [ ]
3. To approve the amendment of Xircom's
Articles of Incorporation to increase the
authorized number of shares of Common [ ] [ ] [ ]
Stock Xircom may issue.
4. To ratify the appointment of Ernst &
Young LLP as independent auditors of
Xircom for the fiscal year ending [ ] [ ] [ ]
September 30, 2000.
5. To transact any other business which may be presented at the meeting or
any adjournment.
The proxies are authorized to accumulate votes and vote on such other
business as is properly brought before the Annual Meeting for action in
accordance with their judgment as to the best interests of the Company.
Please sign exactly as name appears on your stock certificate. If the stock
is registered in the names of two or more persons, each should sign.
Executors, administrators, trustees, guardians, attorneys and corporate
officers should insert their titles.
Signature: Date: Signature: Date:
--------------- -------- ---------------- --------
<PAGE>
XIRCOM, INC. ANNUAL MEETING TO BE HELD ON 01/21/00 AT 10:00 A.M. PST
FOR HOLDERS AS OF 11/24/99 * ISSUER CONFIRMATION COPY - INFO ONLY *
2 1-0601 -------------------------------------------------
CUSIP:
983922105
DIRECTORS CONTROL NO -------------------- ---
--------- |
DIRECTORS RECOMMEND: A VOTE FOR ELECTION OF THE FOLLOWING NOMINEES 0030100 |
1 - 01-MICHAEL F.G. ASHBY,02-KENNETH J. BIBA,03-GARY J. BOWEN, |
04-DIRK I. GATES, 05-J. KIRK MATHEWS,06-CARL E. RUSSO,
07-WILLIAM J. SCHROEDER, 08-DELBERT W. YOCAM
DIRECTORS
PROPOSALS: RECOMMEND
- --------- ---------
2 - TO APPROVE THE ADOPTION OF XIRCOM'S 2000 STOCK ------->>> FOR --->>> 2
OPTION PLAN. 0020701
3 - TO APPROVE THE AMENDMENT OF XIRCOM'S ARTICLES ------->>> FOR --->>> 3
OF INCORPORATION TO INCREASE THE AUTHORIZED 0040101
NUMBER OF SHARES OF COMMON STOCK XIRCOM MAY
ISSUE.
4 - TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP ------->>> FOR --->>> 4
AS INDEPENDENT AUDITORS OF XIRCOM FOR THE 0010210
FISCAL YEAR ENDING SEPTEMBER 30, 2000.
*NOTE* SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING OR ANY ADJOURNMENT THEREOF
TELEPHONE VOTE AT 1-800-454-8683 OR
INTERNET VOTE AT WWW.PROXYVOTE.COM
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
XIRCOM, INC.
01/21/00 AT 10:00 A.M. PST
2 ITEM(S) SHARE(S)
DIRECTORS
MARK 'X' FOR ONLY ONE BOX
[_] FOR ALL NOMINEES
-------
[_] WITHHOLD ALL NOMINEES |
|
[_] WITHHOLD AUTHORITY TO VOTE FOR |
ANY INDIVIDUAL NOMINEE. WRITE
NUMBER(S) OR NOMINEE(S) BELOW.
USE NUMBER ONLY ____________________________
