<PAGE>
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]
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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 2000
WHEN: January 19, 2001 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 2001 Director Stock Option
Plan.
3. Ratify the appointment of Ernst & Young LLP as independent
auditors of Xircom for the fiscal year ending September 30,
2001.
4. 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 27, 2000
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/ R. H. Holliday
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Thousand Oaks, California Randall H. Holliday
December 11, 2000 Secretary
<PAGE>
================================================================================
XIRCOM, INC.
2300 Corporate Center Drive
Thousand Oaks, CA 91320
(805) 376-9300
PROXY STATEMENT
================================================================================
The Board of Directors of Xircom, Inc., ("Xircom" or first person
pronouns), seeks your Proxy for use at our Fiscal Year 2000 ("FY00") 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, 2000 to all shareholders
entitled to vote at the Annual Meeting.
. VOTING AND SOLICITATION
-----------------------
Shareholders of record as of the close of business on November 27, 2000
(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 29,717,551 shares of our common stock issued and outstanding as
of the Record Date. The closing sale price on that date was $15.1875. Our common
stock ($.001 par value) is traded on the Nasdaq National Market(R) (symbol
"XIRC").
See the section titled "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT" on page 16 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 materials to beneficial owners.
-2-
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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 a written revocation notice, or a
later Proxy, to our Secretary at the Annual Meeting before we begin voting.
. DEADLINE FOR SHAREHOLDER PROPOSALS FOR THE 2001 ANNUAL MEETING
--------------------------------------------------------------
Any shareholder proposals intended to be included in our 2001 Proxy
Statement and presented at Xircom's fiscal 2001 Annual Meeting must be received
by Xircom no later than August 12, 2001, 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 26, 2001 of a
shareholder proposal for our 2001 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 2001 Annual Meeting.
-3-
<PAGE>
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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- 51
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Vice President of Corporate Finance, Data Networking, Cisco Systems, Inc.
(a manufacturer of network communications systems) 11/99 to date (upon
acquisition of Cerent Corporation); Chief Financial Officer, Cerent
Corporation (a manufacturer of optical transport systems for public
networks) 7/99 to 11/99; Executive Vice President and Chief Financial
Officer, Ascend Communications, Inc. (a manufacturer of enterprise
networking equipment) 11/97 to 6/99; Vice President and Chief Financial
Officer, Pacific Telesis Enterprises/Pacific Bell (a telecommunications
company) 9/95 to 10/97; President and Chief Executive Officer, Network
Systems Corporation (a manufacturer of network communications devices) 3/95
to 8/95.
. KENNETH J. BIBA Director Since 1991 Age- 50
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Managing Director, The Value Group (a technology consulting firm) 6/97 to
date; President, HighGain Technologies, Inc. (a technology consulting firm)
11/95 to 5/97; Executive Vice President and General Manager, Wireless
Products Division of Xircom 9/93 to 10/95; Executive Vice President,
Business Development, Xircom 1/93 to 9/93.
. GARY J. BOWEN Director Since 1995 Age- 53
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Chairman, Quantum Bridge Communications (a manufacturer of optical access
network equipment) 11/98 to date; Industry consultant 10/96 to 11/98;
Executive Vice President, Worldwide Field Operations, Bay Networks, Inc. (a
manufacturer of enterprise networking equipment) 10/94 to 10/96.
. DIRK I. GATES Director Since 1988 Age- 39
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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.
. WILLIAM J. SCHROEDER Director Since 1991 Age- 56
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President and Chief Executive Officer, Cyber IQ Systems, Inc. (a supplier
of cryptographic processing and Internet traffic management systems) 2/00
to date; Chairman, President, Chief Executive Officer, Diamond Multimedia
Systems, Inc. (a supplier of computer multimedia products) 5/94 to 9/99.
Member of the Board of Directors, CNF Inc.
. ROBERT R. STAPLETON Director Since 2000 Age- 42
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Director, President and Chief Operating Officer, VoiceStream Wireless Corp.
(a nationwide cellular carrier) 4/94 to date; President, Western Wireless
Corp. (a cellular carrier and predecessor of VoiceStream) 1992 to 1999;
Chief Operating Officer, General Cellular Corp. (a cellular carrier) 1989
to 1992.
. CARL E. RUSSO Director Since 1999 Age- 44
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Vice President and General Manager, Optical Transport Business Unit, Cisco
Systems, Inc. 11/99 to date; Chief Executive Officer and Director, Cerent
Corp. 6/98 to 10/99; Executive Vice President and Chief Operating Officer,
Xircom 4/95 to 5/98; Senior Vice President and General Manager, Network
Systems Corporation 4/94 to 4/95.
. DELBERT W. YOCAM Director Since 1996 Age- 56
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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; Industry consultant 11/94 to 11/96; President,
Chief Operating Officer and Director, Tektronix, Inc. (a manufacturer of
electronic equipment) 9/92 to 11/94. Member of the Board of Directors,
Adobe Systems, Inc.
-4-
<PAGE>
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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" on page 16 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
-----------------
have been nominated prior to voting. Furthermore, 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
-------------
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 FY00.
Fees paid include a quarterly retainer, plus a set amount per meeting attended.
Fees paid in FY00 were:
. Messrs. Ashby, Yocam and Schroeder: $36,500
. Mr. Bowen: $35,250
. Mr. Biba: $37,750
. Mr. Mathews*: $27,750
. Mr. Russo: $32,750
. Mr. Stapleton: $8,500
* J. Kirk Mathews, director since 1988, resigned effective August 25, 2000.
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. Stapleton received such an
option grant on August 25, 2000 at an exercise price of $32.06 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, Russo, Schroeder and Yocam each received an
annual grant on July 3, 2000, at an exercise price of $48.56 per share.
. FISCAL YEAR 2000 MEETINGS
-------------------------
. Board of Directors: 11 (6 by phone)
. Audit Committee: 5
. Compensation Committee: 2
We do not have a standing nominating committee.
During FY00, all of the directors nominated for election attended at least
75% of the meetings of the Board of Directors. Mr. Stapleton attended all
meetings of the Board of Directors in FY00 following his election to the Board
on August 25, 2000. During FY00, members of the Committees of the Board attended
at least 75% of the committee meetings.
. COMMITTEE MEMBERSHIPS
---------------------
Directors Ashby, Bowen, Schroeder, Stapleton and Yocam serve on the Audit
and the Compensation Committees.
. COMMITTEE RESPONSIBILITIES
--------------------------
Audit Committee
---------------
. Recommends engagement of Xircom's independent auditors.
. 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 2000 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-
<PAGE>
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PROPOSAL 2
APPROVAL OF ADOPTION OF 2001 DIRECTOR STOCK OPTION PLAN
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. PROPOSAL OVERVIEW
-----------------
On October 20, 2000, our Board of Directors adopted the 2001 Director Stock
Option Plan (the "2001 Director Plan") and reserved, therefore, a total of:
. all shares which have been reserved but unissued under the 1992 Director
Stock Option Plan (the "1992 Director Plan") as of the date of shareholder
approval of this Plan;
. any 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;
. no additional shares have been reserved for the 2001 Director Plan beyond
those shares currently reserved under the 1992 Director Plan, as amended.
As of the Record Date, no options or rights to purchase stock have been
granted pursuant to the 2001 Director Plan. We will not issue or award any
options or rights to purchase stock prior to shareholder approval of the Plan.
As explained in Proposal 1, Xircom's 1992 Director Plan provides for the
grant of nonstatutory options to our non-employee directors. The 1992 Director
Plan will expire on December 31, 2002.
The proposed 2001 Director Plan will continue the Company's practice of
issuing stock options to its directors using the same standards as the 1992
Director Plan using only shares previously reserved for issuance under the 1992
Director Plan. No new shares will be reserved. Under the 2001 Director Plan,
non-employee directors will continue to receive an option to purchase a total of
40,000 shares of common stock upon first joining the Board of Directors. 10,000
shares under these options vest cumulatively each year for four years after the
date of grant, based on continued service on the board.
In addition, each year on July 1, each non-employee director who has served
on the board for at least six months as of the date of grant will be
automatically granted under the plan an option to purchase 10,000 shares of
common stock (the "Annual Grant"). Each Annual Grant vests in full four years
after the date of grant. All options are granted at an exercise price equal to
fair market value as of the date of grant.
Related Stock Option Plans
--------------------------
As of September 30, 2000, 1,922,029 shares were reserved under Xircom's
2000 Stock Option Plan, with 488,148 shares subject to outstanding options and
1,433,552 shares available for future grants; 6,249,857 shares were reserved
under Xircom's 1995 Stock Option Plan, with 3,128,885 shares subject to
outstanding options and 2,612,420 shares available for future grants; 250,000
shares were reserved under Xircom's Patent Award Stock Option Plan, with 166,960
shares subject to outstanding options and 71,771 shares available for future
grants; 76,914 shares were reserved under the Entrega Stock Option Plan, with
8,718 shares subject to outstanding options and 13,713 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.
-7-
<PAGE>
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PROPOSAL 2
APPROVAL OF ADOPTION OF 2001 DIRECTOR STOCK OPTION PLAN
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. SUMMARY AND DESCRIPTION OF THE 2001 DIRECTOR STOCK OPTION PLAN
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General - The Company's 2001 Director Plan provides for the grant of
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nonstatutory stock options to non-employee directors of the Company. An
aggregate of 215,000 shares have been authorized for issuance under the 2001
Director Plan. These shares have been previously authorized under the 1992
Director Plan. The Board of Directors will administer the 2001 Director Plan.
Administration - Under the 2001 Director Plan, each new non-employee
--------------
director who joins the Board will automatically be granted a nonstatutory option
to purchase 40,000 shares of Common stock on the date upon which such person
first becomes a director. Each such one-time grant will vest cumulatively as to
10,000 shares each year for four years after the date of grant, based on
continued service as a director. In addition, on July 1 of each year commencing
July 1, 2001, each non-employee director who has served as a non-employee
director for at least six months as of the date of grant will automatically
receive a nonstatutory option to purchase 10,000 shares of the Company's common
stock. Each such annual option will vest in its entirety four years after the
date of grant, based on continued service as a director. The exercise price of
each option granted under the 2001 Director Plan will be equal to the fair
market value of the common stock on the date of grant.
Term Of Options - Options granted under the 2001 Director Plan will
---------------
generally have a term of ten years, unless terminated sooner upon termination of
the optionee's status as a director or otherwise pursuant to the 2001 Director
Plan.
Options Not Transferable - Options will not be transferable by the optionee
------------------------
other than by will or the laws of decent or distribution or pursuant to a
qualified domestic relations order, and each option is exercisable during the
lifetime of the director only by such director or a permitted transferee.
Merger or Consolidation - In the event of a merger of the Company with or
-----------------------
into another corporation or a consolidation, acquisition of assets or like
transaction involving the Company, each option may be assumed or an equivalent
option substituted by the successor corporation. If the successor corporation
chooses not to assume the options under the 2001 Director Plan, or if the Board
of Directors determines that the options should not continue to be outstanding,
then the options become null and void upon consummation of the merger or
transaction; provided that the optionee must be given notice of the transaction
and have 30 days from the date such notice is sent to exercise all unexpired
options, and, if as a result of the transaction the Company is not the surviving
entity, the optionee may exercise all options not otherwise exercisable. The
option exercise price may be paid in cash, promissory note, or shares of the
Company's common stock, or may be paid through a broker-dealer sale and
remittance procedure which will allow the optionee to exercise the option and
sell the purchased shares on the same day, with the sale proceeds used to
satisfy the option price payable for the purchased shares.
Amendment and Termination of the Plan - Unless terminated sooner, the
-------------------------------------
Director Plan will terminate on December 31, 2011. The board has the authority
to amend or terminate the 2001 Director Plan, provided that no such action may
affect any outstanding option without the consent of the holder.
Other Provisions - A particular option agreement may contain other terms,
----------------
provisions and conditions not inconsistent with the 2001 Director Plan as may be
determined by the administrator. There are currently no options outstanding
under the 2001 Director Plan.
-8-
<PAGE>
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PROPOSAL 2
APPROVAL OF ADOPTION OF 2001 DIRECTOR STOCK OPTION PLAN
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Federal Income Tax Consequences - 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 fair market value of the shares over the exercise price at the
time the options are exercised. Unless limited by Section 162(m) of the Internal
Revenue Code, Xircom is entitled to a tax deduction in the same amount as the
ordinary income recognized by the optionee. When the optionee disposes of such
shares, any difference between the sale price and the optionee's exercise price,
to the extent not recognized as taxable income as provided herein, 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 allowed in full against capital gains
and up to $3,000 per year against other income.
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.
. 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 a 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 2001 Director
Plan and recommends that the shareholders vote FOR this proposal.
-9-
<PAGE>
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PROPOSAL 3
RATIFICATION OF APPOINTMENT OF AUDITORS
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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, 2001. This appointment is being presented to the shareholders for
ratification at the meeting. 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.
. 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 in Proposal 2 under the heading "REQUIRED VOTE."
======================================
RECOMMENDATION
======================================
The Board of Directors recommends that shareholders vote FOR ratification of
Ernst & Young LLP as Xircom's independent auditors.
-10-
<PAGE>
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EXECUTIVE OFFICER COMPENSATION
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SUMMARY COMPENSATION TABLE
This table reflects compensation paid for services in all capacities
during fiscal year 2000 ("FY00"), 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
September 30, 2000 and whose salary plus bonus exceeded $100,000.
<TABLE>
<CAPTION>
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Annual Long-Term All Other
Officers Compensation Compensation /(1)/ Compensation /(2)/
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Name, Age and Position Year Salary Bonus Options (Shares)
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<S> <C> <C> <C> <C> <C>
Dirk I. Gates, 39 2000 $480,000 $650,400 150,000 $ 3,449
Chairman, President 1999 $400,000 $591,200 250,000 $ 3,213
and Chief Executive Officer 1998 $350,000 $301,350 87,500 $ 3,914
------------------------------------------------------------------------------------------------------------------------------------
Marc M. Devis, 41 /(3)/ 2000 $332,344 $363,637 50,000 $ 42,055
Sr. VP, Worldwide Sales and Regional 1999 $297,269 $354,334 200,000 $ 44,742
Marketing 1998 $256,521 $199,062 50,000 $ 40,427
------------------------------------------------------------------------------------------------------------------------------------
Robert W. Bass, 54 2000 $225,000 $228,656 50,000 $ 1,588
Sr. VP, Worldwide Operations and 1999 $200,000 $258,650 150,000 $ 1,427
General Manager, Access Products 1998 $187,000 $105,005 50,000 $ 17,506/(4)/
Division
------------------------------------------------------------------------------------------------------------------------------------
Steven F. DeGennaro, 37 2000 $250,000 $254,063 50,000 $ 3,400
Sr. VP and Chief 1999 $200,000 $308,650 150,000 $ 4,367
Financial Officer 1998 $175,000 $129,150 80,000 $ 4,061
------------------------------------------------------------------------------------------------------------------------------------
Randall H. Holliday, 51 2000 $200,000 $176,150 20,000 $ 3,200
Secretary and General Counsel 1999 $150,000 $196,275 75,000 $ 3,794
1998 $140,000 $ 86,100 20,000 $ 3,832
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</TABLE>
(1) Xircom has not granted any SARs to any of the Top 5 Compensated
Officers.
(2) Amounts include Xircom matching contributions to our 401(k) Plan, if
any.
(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 $14,717 imputed income arising from forgiveness of interest
accrued on loan repaid in prior fiscal year.
-11-
<PAGE>
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EXECUTIVE OFFICER COMPENSATION
--------------------------------------------------------------------------------
STOCK OPTION GRANTS AND EXERCISES
FOR TOP 5 COMPENSATED OFFICERS
STOCK OPTION GRANTS IN FISCAL YEAR ENDED SEPTEMBER 30, 2000 (FY00)
------------------------------------------------------------------
This table shows grants made in FY00, and hypothetical gains for the
options at the end of their respective seven (7) year terms. We have arbitrarily
assumed annualized growth rates of the market price of our common stock over the
exercise price of the option of five percent (5%) and ten percent (10%), running
from the date the option was granted to the end of the option term. Actual
gains, if any, on option exercises depend on the future performance of Xircom's
common stock and overall market conditions.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
INDIVIDUAL GRANTS/(1)/
------------------------------------------------------------------------------------------------------------------------------
Percent of Total Exercise or Potential Realizable Value at
Option Shares Options Granted to Base Price Assumed Annual Rates of Stock
Granted(#) Employees in ($/share) Expiration Price Appreciation
Officer Fiscal Year Date for Option Term
5%($) 10%($)
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Dirk I. Gates 100,000 3.81% $ 33.75 04/24/07 $ 1,373,964 $ 3,201,920
50,000 1.90% $ 43.50 10/01/06 $ 885,443 $ 2,063,460
------------------------------------------------------------------------------------------------------------------------------
Marc M. Devis 50,000 1.90% $ 33.75 04/24/07 $ 686,982 $ 1,600,960
------------------------------------------------------------------------------------------------------------------------------
Robert W. Bass 50,000 1.90% $ 33.75 04/24/07 $ 686,982 $ 1,600,960
------------------------------------------------------------------------------------------------------------------------------
Steven F. DeGennaro 50,000 1.90% $ 33.75 04/24/07 $ 686,982 $ 1,600,960
------------------------------------------------------------------------------------------------------------------------------
Randall H. Holliday 20,000 0.76% $ 33.75 04/24/07 $ 274,793 $ 640,384
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Xircom did not grant any SARs in FY00 to any of the Top 5 Compensated
Officers.
AGGREGATE OPTION EXERCISES IN FY00 AND YEAR-END OPTION VALUES
-------------------------------------------------------------
This table shows all stock options exercised by the Top 5 Compensated
Officers for FY00. The "Value Realized" column reflects the difference between
the market value of the underlying securities at the actual exercise date and
the exercise price of the options. The "Value of unexercised in-the-money
options at 2000 year-end" column reflects the difference between the market
value and the exercise price of in-the-money options at the end of FY00.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
Shares Number of unexercised options Value of unexercised in-the-money
acquired on Value at 2000 year-end options at 2000 year-end/(1)/
Officer exercise(#) Realized($) Exercisable/Unexercisable Exercisable/Unexercisable
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Dirk I. Gates -- -- 266,663 345,837 $2,863,022 $1,256,466
--------------------------------------------------------------------------------------------------------------------------------
Marc M. Devis 69,168 $1,767,512 78,125 222,920 $ 391,809 $1,089,543
--------------------------------------------------------------------------------------------------------------------------------
Robert W. Bass 25,000 $ 695,071 105,288 172,712 $ 892,017 $ 712,363
--------------------------------------------------------------------------------------------------------------------------------
Steven F. DeGennaro 13,770 $ 294,771 128,541 174,377 $1,172,678 $ 749,024
--------------------------------------------------------------------------------------------------------------------------------
Randall H. Holliday 10,242 $ 299,029 74,441 78,442 $ 684,245 $ 319,531
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Total value of vested and unvested options based on the market value of
Xircom's common stock on September 29, 2000 ($25.25 per share).
-12-
<PAGE>
--------------------------------------------------------------------------------
EXECUTIVE OFFICER COMPENSATION
--------------------------------------------------------------------------------
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT,
CHANGE-IN-CONTROL ARRANGEMENTS AND CERTAIN TRANSACTIONS
From time to time, we have entered into letter employment agreements with
certain of our 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.
We have entered into indemnification agreements with each of our directors
and officers. Such agreements require us to indemnify such individuals to the
fullest extent permitted by law.
Effective October 1, 2000, we renewed the Change in Control Agreements (the
"CIC Agreement(s)"), 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 the
then existing stock options. In addition, if an executive's employment is
involuntarily terminated within two years following a Change in Control, or the
executive voluntarily 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) an 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 an 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 us 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, 1999 to September 30, 2000, one delayed Form 4 filing was
made by J. Kirk Mathews, involving two transactions on the part of Mr. Mathews.
This untimely transaction was inadvertent and the report has since been filed.
Other than this delayed filing, the Company believes that its executive
officers, directors and ten percent shareholders were in compliance with all
filing requirements.
-13-
<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 our executive officers. The
committee also evaluates the performance of our Chief Executive Officer against
our overall objectives, and administers our 2000 Stock Option Plan and our 1994
Employee Stock Purchase Plan. Our President and Chief Executive Officer, and our
Vice President, Worldwide Human Resources, provide executive officer background
and independent salary survey information from third-party providers for the
committee's use.
Our 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 officer's total
potential annual compensation 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, we may also pay special discretionary project-based bonuses related to
extraordinary efforts or achievements on the part of a particular executive
officer. 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.
. Our financial performance during the past year.
. Each officer's performance is evaluated against objectives related to his
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, our Chief Executive Officer, is a founder of Xircom and as
such, owned 495,802 shares of Common stock as of September 30, 2000. This
substantial equity interest further ensures that increasing shareholder value is
a key element of the total earnings of Mr. Gates.
For FY00, Xircom's Chief Executive Officer was eligible under the bonus
plan for incentive bonuses, at specified targets, of up to 100% of salary based
on achievement of specific quarterly financial goals (100% bonus at target). The
other executive officers also were eligible for bonus incentives at specified
targets ranging up to 65% or 75% 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.
-14-
<PAGE>
--------------------------------------------------------------------------------
EXECUTIVE OFFICER COMPENSATION
--------------------------------------------------------------------------------
Under the plans for FY00, 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, we then gave consideration
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 FY00 bonus plan was to run the company to achieve targeted
operating income, and then 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 FY00, the Chief Executive Officer received bonuses for
FY00 totaling 136% of base salary (for a total bonus of $650,400). The other
executive officers received bonuses ranging from 88% to 109% of base salary
earned during the fiscal year.
For fiscal year 2001 ("FY01"), 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 120% of
base salary based on achievement of targeted goals.
The bonus plan for other executive officers provides for bonuses up to a
range of 70% to 80% 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 FY01 will be based upon the combination
and comparison of quarterly operating income percentages and quarter on quarter
revenue growth rather than sales out unit growth as was used for the FY00 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 FY00, Mr. Gates received option grants on
October 1, 1999 for 50,000 shares and on April 24, 2000 for 100,000 shares.
During FY00, options for 170,000 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, Robert R. Stapleton
============================================================================
and Delbert W. Yocam
====================
-15-
<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, 2000, 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 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 1,868,530 6.3%
2200 Mission College Boulevard
Santa Clara, California 95052
Dirk I. Gates/(2)/ 803,456 2.7%
Steven F. DeGennaro 167,021 *
Robert W. Bass 123,690 *
Marc M. Devis 103,126 *
Randall H. Holliday 89,002 *
Michael F.G. Ashby 35,000 *
Kenneth J. Biba 30,200 *
William J. Schroeder/(3)/ 25,000 *
Carl E. Russo 13,727 *
Gary J. Bowen 7,500 *
Delbert W. Yocam 7,500 *
Robert R. Stapleton 0 *
J. Kirk Mathews 100,052 *
All current directors and executive officers
as a group (13 persons) 1,505,274 4.9%
</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, 2000, as follows: Mr.
Ashby, 30,000; Mr. Bass, 121,227; Mr. Biba, 30,000; Mr. Bowen, 7,500; Mr.
DeGennaro, 144,792; Mr. Devis, 103,126; Mr. Holliday, 82,255; Mr. Mathews,
7,500; Mr. Russo, 10,000; Mr. Schroeder, 5,000; Mr. Yocam, 7,500; and all
executive officers and directors as a group, 855,929.
(2) Includes 496,427 shares held by the Dirk I. Gates Trust dated October 4,
1994 of which Mr. Gates is Trustee and 307,029 shares subject to outstanding
options held by Mr. Gates that were exercisable as of November 1, 2000 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.
-16-
<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, 1995, and ending September 30, 2000.
<TABLE>
<CAPTION>
Sept. 30, Sept. 30, Sept. 30, Sept. 30, Sept. 30, Sept. 30,
--------- --------- --------- --------- --------- ---------
1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Xircom $100 $118 $ 90 $178 $310 $184
S&P 500 $100 $120 $169 $184 $236 $267
Chase H&Q Growth $100 $120 $126 $112 $254 $469
</TABLE>
[GRAPH]
Note: Xircom's return is calculated based on the assumption that $100 was
invested on September 30, 1995 at $13.75 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/ R. Holliday
Thousand Oaks, California Randall H. Holliday
December 11, 2000 Secretary
-17-
<PAGE>
DETACH HERE
PROXY
XIRCOM, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS - JANUARY 19, 2001
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 19, 2001 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, and 3 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>
XIRCOM, INC.
C/O EQUISERVE
P.O. BOX 9398
BOSTON, MA 02205-9398
<TABLE>
<CAPTION>
<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). http://www.eproxyvote.com/xirc
3. Enter your 14-digit Voter Control Number 3. Enter your 14-digit Voter Control Number
located on your Proxy Card above your name. located on your Proxy Card above your name.
4. Follow the recorded instructions. 4. Follow the instructions provided.
--------------------------------------------------- ---------------------------------------------------
Your vote is important! Your vote is important!
Call 1-877-PRX-VOTE anytime! Go to http://www.eproxyvote.com/xirc anytime!
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 FOR AGAINST ABSTAIN
and until their successors are elected and duly 2. To approve the adoption of Xircom's 2001
qualified. Director Stock Option Plan. [_] [_] [_]
Nominees: (01) Michael F.G. Ashby, (02) Kenneth
J. Biba, (03) Gary J. Bowen, (04) Dirk I. Gates,
(05) Carl E. Russo, (06) William J. Schroeder,
(07) Robert R. Stapleton and (08) Delbert W.
Yocam 3. To ratify the appointment of Ernst & Young
LLP as independent auditors of Xircom for
FOR WITHHELD the fiscal year ending September 30, 2001. [_] [_] [_]
[_] [_]
4. To transact any other business which may be presented at the
meeting or any adjournment.
[_] ________________________________________
For all nominees except those indicated on
the line above.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [_]
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [_]
The proxies are authorized to accumulate votes 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: ___________
</TABLE>
