<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / 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
Cymer, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
CYMER, INC.
-----------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 20, 1999
TO THE STOCKHOLDERS OF CYMER, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Annual
Meeting") of CYMER, INC., a Nevada corporation (the "Company"), will be held at
10:00 a.m., local time, on May 20, 1999, at the Company's corporate offices,
16750 Via Del Campo Court, San Diego, California 92127, for the following
purposes:
1. To elect six (6) directors to serve for the ensuing year and until
their successors are elected.
2. To approve an amendment to the Company's 1996 Stock Option Plan to
increase the shares reserved for issuance thereunder by 1,250,000 shares.
3. To ratify the appointment of Deloitte & Touche LLP as independent
auditors of the Company for the year ending December 31, 1999.
4. To transact such other business as may properly come before the Annual
Meeting or any postponements or adjournments thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on March 22, 1999 are
entitled to notice of and to vote at the Annual Meeting.
All stockholders are cordially invited to attend the Annual Meeting in
person; however, to ensure your representation at the Annual Meeting you are
urged to mark, sign, date and return the enclosed proxy card as promptly as
possible in the postage prepaid envelope enclosed for that purpose. YOU MAY
REVOKE YOUR PROXY IN THE MANNER DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT AT
ANY TIME BEFORE IT HAS BEEN VOTED AT THE ANNUAL MEETING. ANY STOCKHOLDER
ATTENDING THE ANNUAL MEETING MAY VOTE IN PERSON EVEN IF HE OR SHE HAS RETURNED A
PROXY.
BY ORDER OF THE BOARD OF DIRECTORS
William A. Angus, III, Secretary
San Diego, California
April 15, 1999
<PAGE>
CYMER, INC.
PROXY STATEMENT FOR THE
1999 ANNUAL MEETING OF STOCKHOLDERS
________________
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of CYMER, INC., a Nevada
corporation (the "Company") for use at the Annual Meeting of Stockholders (the
"Annual Meeting") to be held on Thursday, May 20, 1999, at 10:00 a.m., local
time, or at any adjournment or postponement thereof, for the purposes set forth
herein and in the accompanying Notice of Annual Meeting of Stockholders. The
Annual Meeting will be held at the Company's corporate offices, 16750 Via Del
Campo Court, San Diego, California 92127. The telephone number at that
location is (619) 451-7300. When proxies are properly dated, executed and
returned, the shares they represent will be voted at the Annual Meeting in
accordance with the instructions of the stockholder. If no specific
instructions are given, the shares will be voted for the election of the
nominees for directors set forth herein, for the ratification of the appointment
of Deloitte & Touche LLP as independent auditors as set forth herein and, at the
discretion of the proxy holders, upon such other business as may properly come
before the Annual Meeting or any adjournment or postponement thereof.
These proxy solicitation materials and the Annual Report to Stockholders
for the year ended December 31, 1998, including financial statements, were first
mailed on or about April 15, 1999, to all stockholders entitled to vote at the
Annual Meeting.
RECORD DATE AND SHARES OUTSTANDING
Stockholders of record at the close of business on March 22, 1999 (the
"Record Date") are entitled to notice of and to vote at the Annual Meeting. At
the record date, 27,507,368 shares of the Company's Common Stock, $0.001 par
value (the "Common Stock"), were issued and outstanding. No shares of the
Company's Preferred Stock were outstanding.
REVOCABILITY OF PROXIES
Any proxy given pursuant to the solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by (i) filing
with the Secretary of the Company at or before the taking of the vote at the
Annual Meeting a written notice of revocation bearing a later date than the
proxy, (ii) duly executing a later dated proxy relating to the same shares and
delivering it to the Secretary of the Company at or before the taking of the
vote at the Annual Meeting or (iii) attending the Annual Meeting and voting in
person (although attendance at the Annual Meeting will not in and of itself
constitute a revocation of a proxy). Any written notice of revocation or
subsequent proxy should be delivered to Cymer, Inc. at 16750 Via Del Campo
Court, San Diego, California 92127, Attention: Secretary, or hand-delivered to
the Secretary of the Company at or before the taking of the vote at the Annual
Meeting.
<PAGE>
VOTING AND SOLICITATION
Each stockholder is entitled to one vote for each share of Common Stock on
all matters presented at the Annual Meeting. Stockholders do not have the right
to cumulate their votes in the election of directors.
The costs of soliciting proxies will be borne by the Company. Such costs
are anticipated to include an approximately $5,000 fee of ChaseMellon
Shareholder Services, a proxy soliciting firm engaged by the Company to solicit
proxies for the proposals set forth herein. In addition, the Company may
reimburse brokerage firms and other persons representing beneficial owners of
shares for their expenses in forwarding solicitation material to such beneficial
owners. Proxies may be solicited by directors, officers and employees of the
Company in person or by telephone, telegram or other means of communication. No
additional compensation will be paid for such services.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
The required quorum for the transaction of business at the Annual Meeting
is a majority of the shares of Common Stock issued and outstanding on the Record
Date. Shares that are voted "FOR", "AGAINST" or "ABSTAIN" on a matter are
treated as being present at the Annual Meeting for purposes of establishing a
quorum and are also treated as shares "represented and voting" at the Annual
Meeting (the "Votes Cast") with respect to such matter.
While there is no definitive statutory authority in Nevada as to the proper
treatment of abstentions and broker non-votes, the Company believes that
abstentions should be counted for purposes of determining both (i) the presence
or absence of a quorum for the transaction of business and (ii) the total number
of Votes Cast with respect to a proposal (other than the election of directors).
In the absence of controlling precedent to the contrary, the Company intends to
treat abstentions in this manner. Accordingly, abstentions will have the same
effect as a vote against the proposal.
Broker non-votes will be counted for purposes of determining the presence
or absence of a quorum for the transaction of business, but will not be counted
for purposes of determining the number of Votes Cast with respect to the
proposal on which the broker has expressly not voted. Thus, a broker non-vote
will not affect the outcome of the voting on a proposal.
STOCKHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
The Company currently intends to hold its 2000 Annual Meeting of
Stockholders in May 2000 and to mail Proxy Statements relating to such meeting
in April 2000. The date by which stockholder proposals must be received by the
Company for inclusion in the Proxy Statement and form of proxy for its 2000
Annual Meeting of Stockholders, is December 11, 1999. In addition, under the
Company's Bylaws, a stockholder wishing to make a proposal at the 2000 Annual
Meeting of Stockholders must submit such proposal to the Company on or prior to
February 24, 2000. All stockholder proposals should be submitted to Cymer, Inc.
at 16750 Via Del Campo Court, San Diego, California 92127, Attention: Secretary.
-2-
<PAGE>
PROPOSAL NO. 1--ELECTION OF DIRECTORS
NOMINEES
A board of six (6) directors is to be elected at the Annual Meeting.
Unless otherwise instructed, the proxy holders will vote the proxies received by
them for the six (6) nominees named below, all of whom, except Jon D. Tompkins,
are presently directors of the Company. In the event that any nominee is unable
or declines to serve as a director at the time of the Annual Meeting, the
proxies will be voted for a nominee who shall be designated by the present Board
of Directors to fill the vacancy. In the event that additional persons are
nominated for election as directors, the proxy holders intend to vote all
proxies received by them in such a manner as will assure the election of as many
of the nominees listed below as possible, and, in such event, the specific
nominees to be voted for will be determined by the proxy holders. The Company
is not aware of any nominee who will be unable or will decline to serve as a
director. The term of office for each person elected as a director will
continue until the next annual meeting of the stockholders and until such
director's successor has been duly elected and qualified.
VOTE REQUIRED
The six (6) nominees receiving the highest number of affirmative votes of
the shares entitled to be voted shall be elected to the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE NOMINEES
LISTED BELOW.
The names of the nominees and certain information about them as of
March 22, 1999 are set forth below:
<TABLE>
<CAPTION>
DIRECTOR
NAME OF NOMINEE AGE POSITION(S) WITH THE COMPANY SINCE
- --------------------- ----- ----------------------------------- ------
<S> <C> <C> <C>
Robert P. Akins 47 Chairman of the Board of Directors, 1986
Chief Executive Officer and
President
Richard P. Abraham(1) 69 Director 1987
Kenneth M. Deemer(1) 47 Director 1988
Peter J. Simone(2) 51 Director 1993
Gerald F. Taylor 58 Director 1998
Jon D. Tompkins(3) 59 -- --
</TABLE>
- ----------------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
(3) Mr. Tompkins has been nominated by the Board of Directors to succeed
Mr. Townsen.
ROBERT P. AKINS, a co-founder of the Company, has served as its President,
Chief Executive Officer and Chairman of the Board since its inception in January
1986. From 1980 to 1985, Mr. Akins was a Senior Program Manager for HLX, Inc.,
a manufacturer of laser and defense systems, where he was responsible for
managing the development of a compact excimer laser for military communications
applications and an excimer laser trigger for the particle beam fusion
accelerator at Sandia National Laboratories. Mr. Akins received a B.S. in
Physics and a B.A. in Literature in 1974, and a Ph.D. in Applied Physics in
1983, from the University of California, San Diego.
-3-
<PAGE>
RICHARD P. ABRAHAM has served as a Director of the Company since October
1987. From October 1994 to the present, Mr. Abraham has served as Chairman and
President of BTR, Inc., which licenses various technologies to the semiconductor
industry. From October 1993 to the present, he has served as Chairman and
President of Advantage Logic, Inc., which also licenses various technologies to
the semiconductor industry. From 1988 to 1996, Mr. Abraham served as a general
partner of Weeden Capital Partners. From 1983 to 1988, Mr. Abraham served as
President of Pacific Associates, a consulting firm for the semiconductor
industry. From 1988 to the present, Mr. Abraham has served as a director of
Rainbow Technologies, Inc., a maker of software protection devices for the
computer industry and encryption chips for the satellite communications
industry. Mr. Abraham received a B.S. in Electrical Engineering in 1951, and an
M.S. in Electrical Engineering in 1954, from Stanford University.
KENNETH M. DEEMER has served as a Director of the Company since June 1988.
Since 1985, Mr. Deemer has been a Vice President of InterVen Partners, Inc., a
venture capital firm and an affiliate of InterVen II, L.P., and InterVen
Ventures 1987. From January 1982 to June 1985, Mr. Deemer served as a Vice
President at First Interstate Capital, a venture capital firm. Mr. Deemer
received a B.S. in Physics and a B.S. in Electrical Engineering in 1975 from
Massachusetts Institute of Technology and an M.B.A. from Carnegie Mellon
University in 1979.
PETER J. SIMONE has served as a Director of the Company since July 1993.
From April 1997 to the present, Mr. Simone has served as President and Chief
Executive Officer and director of Xionics Document Technologies, Inc., a
provider of embedded software solutions for printer and copier OEMs. From
December 1992 to November 1996, he served as Group Vice President of the
Time/Data Systems Division of Simplex Time Recorder Company, Inc., a
manufacturer of time, attendance, building life safety and security systems.
From May 1987 to December 1992, he was President and a director of GCA
Corporation, a manufacturer of wafer stepper photolithography equipment.
Mr. Simone received a B.S. in Accounting from Bentley College in 1970 and an
M.B.A. from Babson College in 1974.
GERALD F. TAYLOR has served as a Director of the Company since July 1998.
From 1984 to January 1998, Mr. Taylor served as Senior Vice President and Chief
Financial Officer of Applied Materials, Inc., a manufacturer of semiconductor
manufacturing equipment. Mr. Taylor is currently acting as senior advisor to
the executive staff at Applied Materials, Inc. Mr. Taylor also serves as a
director of Electro Scientific Industries, Inc. and Integrated Sensor Solutions,
Inc.
JON D. TOMPKINS served as Chief Executive Officer of KLA-Tencor Corporation
("KLA-Tencor") from April 1997 until June 1998 and has served as Chairman of the
Board of KLA-Tencor Corporation from July 1998 to the present. He served as
President and Chief Executive Officer of Tencor Instruments ("Tencor") from
April 1991 until Tencor's merger with KLA Instruments in April 1997 (the
"Merger") and Chairman of the Board from November 1993 until the Merger. He has
also previously served as President and Chief Executive Officer of
Spectra-Physics, a leader in the commercial laser market. Mr. Tompkins
currently serves on the Board of Directors of Electro Scientific Industries and
is Chairman of the Board of SEMI/SEMATECH, the trade association of United
States Manufacturers of Semiconducting Manufacturing Equipment and Materials.
Mr. Tompkins received a B.S.E.E. from the University of Washington and an M.B.A.
from Stanford University.
There are no family relationships among directors and executive officers of
the Company.
-4-
<PAGE>
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of seven meetings during
1998. Other than Mr. Taylor, no director attended fewer than 75% of the total
number of meetings of the Board of Directors or committees of the Board of
Directors held in 1998 during the period in which such directors were members of
the Board of Directors. The Board of Directors has a Compensation Committee and
an Audit Committee.
The Audit Committee currently consists of Mr. Simone and F. Duwaine Townsen
and met three times during 1998. This committee is primarily responsible for
approving the services performed by the Company's independent auditors and for
reviewing and evaluating the Company's accounting principles and its system of
internal accounting controls.
The Compensation Committee currently consists of Messrs. Abraham and Deemer
and met two times during 1998. This committee reviews and approves the
Company's executive compensation policy and options plans.
DIRECTOR COMPENSATION
Directors receive $2,000 per meeting for their services as members of the
Board of Directors, $1,000 per committee meeting attended, and are reimbursed
for their expenses in attending out-of-town meetings. In connection with his
joining the Board of Directors in 1998, Mr. Taylor was granted an option
expiring on October 21, 2008 to purchase 20,000 shares of the Company's Common
Stock at a per share exercise price of $11.25. The option will vest as to 25%
of such shares on July 22, 1999, and as to 1/48 of such shares each month
thereafter. In January 1999, each non-employee director was granted an option
expiring on January 13, 2009 to purchase 5,000 shares of the Company's Common
Stock at a per share exercise price of $20.50. These options were fully vested
at the time they were granted.
-5-
<PAGE>
PROPOSAL NO. 2--APPROVAL OF A 1,250,000 SHARE INCREASE
IN SHARES ISSUABLE UNDER THE 1996 STOCK OPTION PLAN
The Company is seeking stockholder approval of an amendment to the
Company's 1996 Stock Option Plan (the "Stock Option Plan") which would increase
the number of shares issuable under the Stock Option Plan by 1,250,000 shares.
A summary of the Stock Option Plan (which assumes the adoption of the proposed
amendment) is included as APPENDIX A.
The Stock Option Plan was approved by the Board of Directors and by the
stockholders in July 1996. A total of 3,000,000 shares of Common Stock (which
reflects the Company's 2-for-1 stock split effective August 21, 1997) were
initially reserved for issuance under the Stock Option Plan. The Plan was
amended in 1998 to reserve an additional 1,250,000 shares for issuance under the
Plan, bringing the total reserved for issuance to 4,250,000 shares. In
February 1999, the Board of Directors approved a further increase of 1,250,000
shares issuable under the Stock Option Plan which, if approved by stockholders,
would increase the total shares under the Stock Option Plan since its inception
to 5,500,000 shares. The stockholders are being requested to approve this
amendment.
As of March 22, 1999, before giving effect to the proposed amendment,
options to purchase 3,541,858 shares of Common Stock were outstanding under the
Stock Option Plan, 207,754 shares had been issued by the Company upon exercise
of options under the Stock Option Plan and 500,388 shares remained available for
future option grants under the Stock Option Plan.
The Board believes that the proposed increase is in the best interests of
the Company for several reasons. First, the increase will provide an adequate
reserve of shares for issuance under the Stock Option Plan, which is an integral
part of the Company's overall compensation program. Second, the Board of
Directors believes the proposed increase is essential for the Company to compete
successfully against other companies in attracting and retaining key employees,
thereby facilitating the future potential growth of the Company. Third, the
Board of Directors believes the Stock Option Plan is an important contributor to
the alignment of employee and stockholder interests.
Grants were made to the Named Executive Officers (as defined in the
Summary Compensation Table below) and to Mr. Taylor under the Stock Option Plan
during the fiscal year ended December 31, 1998. Options to purchase a total of
1,351,085 shares of Common Stock were issued to non-executive-officer employees
as a group under the Stock Option Plan during fiscal 1998. All stock options
granted under the Stock Option Plan during 1998 were issued at exercise prices
ranging from $9.125 to $26.875 per share (which exercise prices represented the
closing prices of the Company's Common Stock on The Nasdaq National Market on
the dates immediately prior to the dates of grant).
REQUIRED VOTE
The amendment of the Stock Option Plan to increase the number of shares
issuable thereunder by 1,250,000 shares requires the affirmative vote of the
holders of a majority of the shares of the Company's Common Stock represented in
person or by proxy and entitled to vote on the proposal, which shares voting
affirmatively must also constitute a majority of the required quorum. See
"Voting and Solicitation" above.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO
THE 1996 STOCK OPTION PLAN.
-6-
<PAGE>
PROPOSAL NO. 3 -- RATIFICATION OF
APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected Deloitte & Touche LLP, independent
auditors, to audit the consolidated financial statements of the Company for the
fiscal year ending December 31, 1999 and recommends that stockholders vote for
ratification of such appointment. In the event of a negative vote on such
ratification, the Board of Directors will reconsider its selection.
Deloitte & Touche LLP has audited the Company's financial statements since
1986. Its representatives are expected to be present at the Annual Meeting with
the opportunity to make a statement if they desire to do so and are expected to
be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR RATIFICATION
OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY'S INDEPENDENT
AUDITORS.
-7-
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation earned in each of the last
three fiscal years by the Chief Executive Officer and each of the four other
most highly compensated executive officers of the Company (the "Named Executive
Officers"):
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-------------------------------------- ---------------------------------
SECURITIES
UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($)(1) BONUS($)(2) OPTIONS(#) COMPENSATION($)(3)
- ------------------------------------------- ------ ------------- ------------ ------------ ------------------
<S> <C> <C> <C> <C> <C>
Robert P. Akins . . . . . . . . . . . . . . 1998 $349,588 $ -- 46,000 $ 4,336
Chairman of the Board of Directors, 1997 $248,654 $ 150,000 -- $ 3,685
Chief Executive Officer and President 1996 $175,497 $ 87,748 100,000 $ 1,845
William A. Angus, III . . . . . . . . . . . 1998 $223,307 $ -- 22,000 $ 5,898
Chief Financial Officer, Senior 1997 $198,654 $ 95,000 -- $ 4,254
Vice President and Secretary 1996 $128,942 $ 38,683 50,000 $ 3,184
Pascal Didier . . . . . . . . . . . . . . . 1998 $271,548 $ -- 200,000 $ 5,398
Senior Vice President, Worldwide 1997 $160,846 $ -- -- $ 1,773
Customer Operations
Edward P. Holtaway . . . . . . . . . . . . 1998 $104,625 $ -- 80,000 $ 4,169
Senior Vice President of Process
Quality
G. Scott Scholler . . . . . . . . . . . . . 1998 $228,786 $ -- 22,000 $ 6,006
Senior Vice President of Operations 1997 $198,654 $ 95,000 -- $ 5,525
1996 $121,154 $ 36,346 240,000 $ 3,949
</TABLE>
- -----------------------
(1) 1998 salaries include one-time payments with respect to accrued but unused
vacation through December 31, 1997. The Company ceased to accrue vacation
pay for officers beginning in 1998.
(2) Due to the Company's financial performance, there were no bonuses earned in
fiscal 1998.
(3) For fiscal 1998, the amounts shown include the following: (i) health
insurance premiums paid by the Company: Mr. Akins ($2,319), Mr. Angus
($4,241), Mr. Didier ($4,241), Mr. Holtaway ($2,827), and Mr. Scholler
($4,241); (ii) life insurance premiums paid by the Company: Mr. Akins
($1,517), Mr. Angus ($1,157), Mr. Didier ($1,157), Mr. Holtaway ($842), and
Mr. Scholler ($1,265); and (iii) Company contributions to 401(k) plan: Mr.
Akins ($500), Mr. Angus ($500), Mr. Didier ($0), Mr. Holtaway ($500), and
Mr. Scholler ($500).
-8-
<PAGE>
OPTION GRANTS
The following table shows, as to the Named Executive Officers, information
concerning stock options granted during the fiscal year ended December 31, 1998:
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS(1)
----------------------------------------------------------------
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION FOR
NUMBER OF OPTION TERM(2)
SECURITIES % OF TOTAL --------------------------------
UNDERLYING OPTIONS GRANTED EXERCISE OR
OPTIONS TO EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
- ----------------------------- ------------- --------------- -------------- ------------ --------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Robert P. Akins.............. 46,000 2.7% $ 19.34 3/6/08 $ 667,485 $ 1,589,822
William A. Angus, III........ 22,000 1.3% $ 19.34 3/6/08 $ 319,232 $ 760,349
Pascal Didier................ 200,000 11.6% $ 22.56 3/2/08 $ 2,207,190 $ 6,187,188
Edward P. Holtaway........... 80,000 4.6% $ 16.63 5/28/08 $ 941,908 $ 2,287,871
G. Scott Scholler............ 22,000 1.3% $ 19.34 3/6/08 $ 319,232 $ 760,349
</TABLE>
- -----------------------
(1) These options were granted pursuant to the Company's 1996 Stock Option
Plan. All options expire 10 years from the date of grant, are not
transferable by the optionee (other than by will or the laws of descent and
distribution), and are exercisable during the optionee's lifetime only by
the optionee. The options become exercisable at the rate of 25% of the
total grant 12 month after the date of grant and 1/48 of the total grant
each month thereafter. The options are fully vested at five years from the
date of grant. To the extent exercisable at the time of employment
termination, options may be exercised for an additional three months.
(2) Potential gains are net of exercise price, but before taxes associated with
exercise. The amounts represent certain assumed rates of appreciation
only, based on Securities and Exchange Commission rules. Actual gains, if
any, on stock option exercises are dependent on the future performance of
the Common Stock, overall market conditions and option holders' continued
employment through the vesting period. The amounts reflected in this table
may not necessarily be achieved and do not reflect the Company's estimate
of future stock price growth.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES
The following table provides certain information concerning the exercises
of options during the fiscal year ended December 31, 1998, and the unexercised
options held as of December 31, 1998 by each of the Named Executive Officers:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
NO. OF SHARES OPTIONS AT FY-END(#): OPTIONS AT FY-END($)(2):
ACQUIRED ON VALUE ------------------------------ -----------------------------
NAME EXERCISE(#) REALIZED($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------- ------------- --------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert P. Akins............ -- $ -- 326,525 $ 114,075 $ 4,404,328 $ 908,266
William A. Angus, III...... 45,000 $ 750,000 80,625 $ 56,375 $ 1,081,641 $ 458,985
Pascal Didier.............. -- $ -- -- $ 200,000 $ -- $ --
Edward P. Holtaway......... -- $ -- -- $ 80,000 $ -- $ --
G. Scott Scholler.......... 16,500 $ 272,766 11,998 $ 97,002 $ 1,357,976 $ 909,399
</TABLE>
- ------------------------
(1) Market value of underlying securities on date of exercise, minus the
exercise price multiplied by the number of shares.
(2) Market value of underlying securities at fiscal year end, minus the
exercise price multiplied by the number of shares.
-9-
<PAGE>
OPTION REPRICING
In February 1998, the Company offered all employees (but not directors) the
opportunity to amend the exercise prices of their employee stock options to the
closing sales price of the Company's Common Stock on March 2, 1998 if such
closing sales price was less than the employees' respective option exercise
prices. The closing sales price of the Common Stock on March 2, 1998 was
$22.5625. In exchange for this opportunity, participating option holders had to
agree to completely restart the vesting period of any repriced option.
The reason for the repricing was that subsequent to the grant of a number
of options, the price of the Company's Common Stock had declined. As a result,
such options had per share exercise prices in excess of the market price per
share. The purpose of stock options issued pursuant to the Company's 1996 Stock
Option Plan is to provide an equity incentive to employees to continue providing
service to the Company and to work diligently in its best interests. The Board
of Directors determined that such purpose would be advanced by offering
employees holding options with exercise prices in excess of the then fair market
value of the Common Stock the opportunity to reprice such options at the then
current fair market value in exchange for the recommencement of vesting on such
options.
The following table shows, as to all persons who served as an executive
officer of the Company at any time during the Company's last ten fiscal years,
information concerning such repricing:
TEN-YEAR OPTION REPRICING TABLE
<TABLE>
<CAPTION>
NUMBER OF MARKET LENGTH OF
SECURITIES PRICE OF EXERCISE ORIGINAL
UNDERLYING STOCK AT PRICE AT NEW OPTION TERM
OPTIONS TIME OF TIME OF EXERCISE REMAINING AT
REPRICED REPRICING REPRICING PRICE DATE OF
NAME DATE (#) ($/SH) ($/SH) ($/SH) REPRICING
- ------------------------------- -------- ------------ ------------ ----------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Pascal Didier ................... 3/2/98 150,000 $22.5625 $33.75 $22.5625 9.4 YEARS
Senior Vice President, 3/2/98 50,000 $22.5625 $27.375 $22.5625 9.5 years
Worldwide Customer
Operations
</TABLE>
- -------------------
The repricing report set forth above is made under the authority of the
Company's Compensation Committee.
Compensation Committee
Richard P. Abraham
Kenneth M. Deemer
-10-
<PAGE>
EMPLOYMENT AGREEMENTS; CHANGE-IN-CONTROL ARRANGEMENTS
The Company has entered into agreements with the Named Executive Officers
and certain other officers and key employees under which such individuals are
entitled to certain benefits in the event their employment with the Company is
involuntarily terminated other than for cause within 18 months after a "change
of control" of the Company. In such event, the Named Executive Officers are
entitled to receive for a specified number of months (i) a continuation of their
monthly base compensation as well as monthly payments equivalent to one-twelfth
of the average of their annual bonus amounts for the prior three years, (ii) a
percentage of the bonus that would otherwise be payable for the year of
termination based on the number of days during the year in which the individual
was employed by the Company, (iii) vesting of all unvested stock options and
(iv) a continuation of medical benefits. Under the agreements, Mr. Akins would
be entitled to benefits for 18 months and the other Named Executive Officers
would be entitled to benefits for 12 months. Mr. Akins and Mr. Angus are also
entitled to similar benefits if they voluntarily resign from the Company within
the 30-day period beginning one year after a change of control. For purposes of
the agreements, involuntary termination includes a significant reduction in
duties or responsibilities, a substantial reduction without good business reason
in facilities and perquisites available to the employee, a material reduction in
compensation, a significant reduction in the employee's benefits package,
relocation without consent, termination other than for death, disability or
cause, and failure of a successor company to assume the agreement. A mechanism
is provided in the agreements to limit payments in the event they would result
in the levy of an excise tax under Section 4999 of the Internal Revenue Code of
1986.
"Change of control" is defined in the agreements as (i) the acquisition by
a person or entity of 50% of the voting power of the Company, (ii) a change in
the composition of the Board of Directors within a two-year period as a result
of which fewer than a majority of the directors are persons who were either
directors of the Company on the date of the respective agreement or who were
elected or nominated by a majority of such persons, or (iii) a merger resulting
in a 50% or greater change in voting power or a sale of all or substantially all
of the Company's assets.
The agreements do not provide for a specified term of employment, which
remains terminable at will by the Company. The agreements specify minimum base
compensation levels for the executives, namely, $300,000 for Mr. Akins, $175,000
for Mr. Holtaway, and $200,000 for the other Named Executive Officers.
-11-
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
OVERVIEW AND PHILOSOPHY
The Compensation Committee (the "Committee") of the Board of Directors
regularly reviews and approves all executive officer compensation and stock
option grants. Executive compensation includes the following elements: base
salaries, annual incentives, stock options and various benefit plans.
The Committee is composed of two independent, outside directors. It is the
Committee's objective that executive compensation be tied directly to the
achievement of the Company's performance objectives. Specifically, the
Company's executive compensation program is designed to reward exceptional
executive performance that results in enhanced corporate and stockholder values.
The Committee recognizes that the industry sector in which the Company
operates is both highly competitive and undergoing significant globalization,
with the result that there is substantial demand for qualified, experienced
executive personnel. The Committee considers it crucial that the Company be
assured of retaining and rewarding its top caliber executives who are essential
to the attainment of the Company's ambitious long-term, strategic goals.
For these reasons, the Committee believes the Company's executive
compensation arrangements must remain competitive with those offered by other
companies of similar size, scope, performance levels and complexity of
operations, including some, but not all, of the companies comprising the Nasdaq
100 Index and the Nasdaq Computer Industry & DP Index.
ANNUAL CASH COMPENSATION
The Committee believes that the annual cash compensation paid to executives
should be commensurate with both the executive's and the Company's performance.
For this reason, the Company's executive cash compensation consists of base
compensation (salary) and variable incentive compensation (annual bonus).
Base salaries for executive officers are established considering a number
of factors, including the Company's profitability; the executive's individual
performance and measurable contribution to the Company's success; and pay levels
of similar positions with comparable companies in the industry. The Committee
supports the Company's compensation philosophy of moderation for elements such
as base salary and benefits. Base salary decisions are made as part of the
Company's formal annual review process. Generally, base salaries are maintained
at approximately the 50th percentile of salaries paid by similar size, high
technology companies.
Under the Company's executive incentive plan (EIP), an executive's annual
performance award generally depends on two performance factors: the overall
financial performance of the Company and the executive's individual performance.
The performance objectives of the Company were derived from the Company's
Board-approved 1998 business plan, which included specific financial performance
targets relating to revenue and profits. No payments are made unless minimum
operating income targets are met. These targets are reviewed annually to meet
the changing nature of the Company's business. The maximum bonus as a
percentage of base salary is 100% for the Chief Executive Officer and 75% for
the other executive officers. The Committee annually reviews and approves
specific targets and performance criteria for each executive. Due to the
Company's financial performance, no bonus was earned by any executive officer
for 1998.
-12-
<PAGE>
STOCK OPTIONS
During 1998 the Compensation Committee approved all stock option grants
made to executive officers under the Stock Option Plan. The Stock Option Plan
is designed to attract, retain and motivate the Company's officers and other
participants by providing them with a meaningful stake in the Company's
long-term success.
In making its determinations, the Compensation Committee takes into
consideration: (i) grants made to individuals in similar positions in comparable
high technology companies, (ii) participants' contributions to the Company's
performance, both short- and long-term, (iii) prior stock option grants,
especially as they relate to the number of options vested and unvested and (iv)
the impact that total option grants made to all participants have on dilution of
current stockholder ownership and the Company's earnings.
Stock option grants made to the Named Executive Officers are set forth in
the table of option grants during the last fiscal year set forth above. See
"Executive Compensation--Option Grants."
BENEFITS
The Company provides benefits to the named executive officers that are
generally available to all Company employees. The amount of executive level
benefits and perquisites, as determined in accordance with the rules of the
Securities and Exchange Commission relating to executive compensation, did not
exceed 10% of total salary and bonus for fiscal year 1998 for any executive
officer.
CHIEF EXECUTIVE OFFICER'S COMPENSATION
Compensation for the Chief Executive Officer is determined by a process
similar to that discussed above for executive officers. Mr. Akins' base
compensation for fiscal 1998, which was established by the Compensation
Committee in January 1998, was $300,000 and represented an increase of $51,346
over his 1997 base compensation.
The Committee also established Mr. Akins' bonus for fiscal 1998 in
accordance with the EIP described above. Due to the Company's financial
performance, no bonus was earned by Mr. Akins for fiscal 1998.
During 1998 Mr. Akins was granted an option to purchase 46,000 shares of
the Company's Common Stock.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is composed of Richard P. Abraham and Kenneth M.
Deemer who are non-employee directors with no interlocking relationships as
defined by the Securities and Exchange Commission.
Compensation Committee
Richard P. Abraham
Kenneth M. Deemer
-13-
<PAGE>
PERFORMANCE GRAPH FOR CYMER, INC.
The following line graph compares the cumulative total return to
stockholders of the Company's Common Stock since September 18, 1996 (the date
the Company first became subject to the reporting requirements of the Exchange
Act) to the cumulative total return over such period of (i) the Nasdaq Composite
Index and (ii) the Morgan Stanley High Tech 35 Index. The information contained
in the Performance Graph shall not be deemed to be "soliciting material" or to
be "filed" with the Commission, nor shall such information be incorporated by
reference into any future filing under the Securities Act or the Exchange Act,
except to the extent that the Company specifically incorporates it by reference
into such filing.
The graph assumes that $100 was invested on September 18, 1996 in the
Company's Common Stock at the closing price of $4.75 per share at the end of the
first day of trading in the Common Stock following the Company's initial public
offering (as adjusted to reflect the Company's 2-for-1 stock split effective
August 21, 1997) and in each index, and that all dividends were reinvested. No
dividends have been declared or paid on the Company's Common Stock. Stockholder
returns over the period indicated should not be considered indicative of future
stockholder returns.
CYMER, INC.
NASDAQ COMPOSITE INDEX
MORGAN STANLEY HIGH TECH 35 INDEX
<TABLE>
<S> <C> <C> <C>
18-Sep-96 100.0 100.0 100.0
30-Sep-96 186.9 101.8 101.2
31-Dec-96 506.5 107.1 110.0
31-Mar-97 377.7 101.3 101.8
30-Jun-97 513.3 119.6 122.4
30-Sep-97 576.4 139.8 149.5
31-Dec-97 315.8 130.2 128.5
31-Mar-98 425.1 152.2 155.8
30-Jun-98 339.6 157.1 171.1
30-Sep-98 192.2 140.5 164.8
31-Dec-98 308.0 181.9 251.1
</TABLE>
Cymer, Inc.
Nasdaq
Morgan Stanley
High Tech 35 Index
-14-
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of March 22, 1999 (except as noted)
certain information with respect to the beneficial ownership of the Company's
Common Stock by (i) each person known by the Company to own beneficially more
than 5% of the outstanding shares of Common Stock, (ii) each director of the
Company, (iii) each of the Named Executive Officers set forth in the Summary
Compensation Table, and (iv) all directors and executive officers as a group.
Except as indicated in the footnotes to this table, the persons and entities
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>
SHARES OF COMMON STOCK
BENEFICIALLY OWNED(1)
-------------------------------------------
PERCENTAGE
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER OWNERSHIP
- --------------------------------------------------------------------------- ------------- -------------
<S> <C> <C>
Capital Research and Management Company(2)............................... 2,016,800 7.3%
333 South Hope Street, 55th Floor
Los Angeles, CA 90071
Capital Guardian Trust Company(3)........................................ 1,892,500 6.9%
11100 Santa Monica Boulevard
Los Angeles, CA 90025
Robert P. Akins(4)....................................................... 701,257 2.5%
William A. Angus, III(4)................................................. 135,001 *
Pascal Didier(4)......................................................... 59,750 *
Edward P. Holtaway(4).................................................... 20,000 *
G. Scott Scholler(4)..................................................... 148,983 *
Richard P. Abraham(4).................................................... 156,900 *
Kenneth M. Deemer(4)..................................................... 86,032 *
Peter J. Simone(4)....................................................... 11,250 *
Gerald F. Taylor......................................................... 2,000 *
F. Duwaine Townsen(4).................................................... 29,230 *
All directors and executive officers as a group (10) persons............. 1,350,403 4.9%
</TABLE>
- ---------------------
* Less than 1%.
(1) Applicable percentage of ownership is based on shares of Common Stock
outstanding as of March 22, 1999 together with applicable options for such
stockholder. Beneficial ownership is determined in accordance with the
rules of the Securities and Exchange Commission and generally includes
voting or investment power with respect to securities. Shares of Common
Stock subject to options or warrants currently exercisable or exercisable
within 60 days are deemed to be beneficially owned by the person holding
such option or warrant for computing the percentage ownership of such
person, but are not treated as outstanding for computing the percentage of
any other person.
(2) Capital Research and Management Company, a registered investment adviser,
claims sole dispositive power as to the 2,016,800 shares. Capital Research
and Management Company serves as an investment adviser to SMALLCAP World
Fund, Inc., a registered investment company which claims sole voting power
as to 1,682,700 of the 2,016,800 shares. The Capital Research and
Management Company disclaims beneficial ownership of the 2,016,800 shares
pursuant to Rule 13d-4 under the Securities Exchange Act of 1934, as
amended. Information provided in this footnote is based solely on a joint
Schedule 13G for these two entities dated February 11, 1999.
(3) Capital Guardian Trust Company, a bank as defined in Section 3(a)(6) of the
1933 Securities Act, as amended, claims sole voting power as to 1,695,000
shares, sole dispositive power as to 1,892,500 shares and disclaims
beneficial ownership of 1,892,500
-15-
<PAGE>
shares pursuant to Rule 13d-4 under the Securities Exchange Act of 1934, as
amended. Information provided in this footnote is based solely on a
Schedule 13G for this entity dated February 12, 1999.
(4) Includes the following number of shares issuable upon exercise of options
exercisable as of, or that will have become exercisable within 60 days of,
March 22, 1999: Mr Akins, 323,015 shares; Mr. Angus, 88,915 shares; Mr.
Didier, 58,332 shares; Mr. Holtaway, 20,000 shares; Mr. Scholler, 122,498
shares; Mr. Abraham, 49,954 shares; Mr. Deemer, 10,000 shares; Mr. Simone,
11,250 shares; and Mr. Townsen, 10,000 shares.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act of 1934, as amended, and regulations of
the Securities and Exchange Commission (the "SEC") thereunder require the
Company's officers and directors, and persons who own more than 10% of a
registered class of the Company's equity securities, to file reports of initial
ownership and changes in ownership with the SEC. Based solely on its review of
copies of such forms received by the Company, or on written representations from
certain reporting persons that no other reports were required for such persons,
the Company believes that, during or with respect to the period from January 1,
1998 to December 31, 1998, all of the Section 16(a) filing requirements
applicable to its officers, directors and 10% stockholders were complied with,
except that one Form 4 for Richard Sandstrom, Vice President of Advanced
Research and Chief Technical Officer, covering two transactions, was not timely
filed.
OTHER MATTERS
The Company knows of no other matters to be brought before the Annual
Meeting. If any other matters properly come before the Annual Meeting, it is
the intention of the persons named in the accompanying proxy to vote the shares
represented as the Board of Directors may recommend.
THE BOARD OF DIRECTORS
By: William A. Angus, III, Secretary
Dated: April 15, 1999
-16-
<PAGE>
APPENDIX A
SUMMARY OF 1996 STOCK OPTION PLAN
GENERAL. The purpose of the Plan is to attract and retain the best
available personnel for positions of substantial responsibility with the
Company, to provide additional incentive to the employees, directors and
consultants of the Company and to promote the success of the Company's business.
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.
NUMBER OF SHARES ISSUABLE UNDER PLAN. The maximum aggregate number of
shares of the Company's Common Stock which may be optioned and sold under the
Plan is 5,500,000 shares. If an option expires or becomes unexercisable without
having been exercised in full, or is surrendered pursuant to an option
repricing, the unpurchased shares which were subject thereto shall become
available for future grant or sale under the Plan. Shares that have actually
been issued under the Plan shall not be returned to the Plan and shall not
become available for future distribution under the Plan, except for any shares
of restricted stock which are repurchased by the Company at their original
purchase price.
ADMINISTRATION. The Plan may generally be administered by the Board or the
Committee appointed by the Board (as applicable, the "Administrator"). The
Administrator may make any determinations deemed necessary or advisable for the
Plan.
ELIGIBILITY. Nonstatutory stock options may be granted under the Plan to
employees, directors and consultants of the Company and any parent or subsidiary
of the Company. Incentive stock options may be granted only to employees. The
Administrator, in its discretion, selects the employees, directors and
consultants to whom options may be granted, the time or times at which such
options and stock purchase rights shall be granted, and the number of shares
subject to each such grant.
LIMITATIONS. Section 162(m) of the Code places limits on the deductibility
for federal income tax purposes of compensation paid to certain executive
officers of the Company. In order to preserve the Company's ability to deduct
the compensation income associated with options granted to such persons, the
Plan provides that no employee, director or consultant may be granted, in any
fiscal year of the Company, options to purchase more than 500,000 shares of
Common Stock. Notwithstanding this limit, however, in connection with such
individual's initial employment with the Company, he or she may be granted
options 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 the Company and the optionee, and is subject to the
following additional terms and conditions:
(a) 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; provided, however, the exercise price
of an incentive stock option granted to a 10% stockholder may not be less than
110% 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 last market trading day prior to the date the
option is granted.
A-1
<PAGE>
(b) 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 made by cash, check, promissory note, other
shares of Common Stock of the Company (with some restrictions), cashless
exercises, a reduction in the amount of any Company liability to the optionee,
any other form of consideration permitted by applicable law, or any combination
thereof.
(c) TERM OF OPTION. The term of an incentive stock option may be no more
than ten (10) years from the date of grant; provided that in the case of an
incentive stock option granted to a 10% stockholder, the term of the option may
be no more than five (5) years from the date of grant. No option may be
exercised after the expiration of its term.
(d) 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 set forth 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.
(e) NONTRANSFERABILITY OF OPTIONS: Unless otherwise determined by the
Administrator, 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.
(f) 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.
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event that the stock of
the Company changes by reason of any stock split, reverse stock split, stock
dividend, combination, reclassification or other similar change in the capital
structure of the Company effected without the receipt of consideration,
appropriate adjustments shall 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 outstanding under the Plan, and the exercise price of any such
outstanding option.
In the event of a liquidation or dissolution, any unexercised options will
terminate. The Administrator may, in its discretion provide that each optionee
shall have the right to exercise all of the optionee's options, including those
not otherwise exercisable, until the date ten (10) days prior to the
consummation of the liquidation or dissolution.
In connection with any merger, consolidation, acquisition of assets or like
occurrence involving the Company, each outstanding option shall be assumed or an
equivalent option or right substituted by the successor corporation. If the
successor corporation refuses to assume the options or to substitute
substantially equivalent options, the optionee shall have the right to exercise
the option as to all the optioned stock, including shares not otherwise
exercisable. In such event, the Administrator shall notify the optionee that
the option is fully exercisable for fifteen (15) days from the date of such
notice and that the option terminates upon 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, the Company shall obtain stockholder 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 stockholders may alter or impair any option or stock
purchase right previously granted under the Plan
A-3
<PAGE>
without the written consent of the optionee. Unless terminated earlier, the
Plan shall terminate ten years from the date of its approval by the stockholders
or the Board of the Company, 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 between 12 and
18 months may be taxed at a maximum federal rate of 28%, while net capital gains
on shares held for more than 18 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% stockholder of the Company.
Unless limited by Section 162(m) of the Code, the Company 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 the Company is subject to tax withholding by the Company. Unless limited by
Section 162(m) of the Code, the Company 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 between 12
and 18 months may be taxed at a maximum federal rate of 28%, while net capital
gains on shares held for more than 18 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.
THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF FEDERAL INCOME TAXATION
UPON OPTIONEES AND THE COMPANY WITH RESPECT TO THE GRANT AND EXERCISE OF OPTIONS
UNDER THE PLAN. IT DOES NOT PURPORT TO BE COMPLETE, AND DOES NOT DISCUSS THE
TAX CONSEQUENCES OF DEATH OR THE PROVISIONS OF THE INCOME TAX LAWS OF ANY
MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH THE DIRECTOR, EMPLOYEE OR
CONSULTANT MAY RESIDE.
<PAGE>
PROXY
CYMER, INC.
16750 VIA DEL CAMPO COURT,
SAN DIEGO, CALIFORNIA 92127
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Robert P. Akins and William A. Angus,
III as Proxies, each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated below, all the shares
of Common Stock of Cymer, Inc. (the "Company") held of record by the
undersigned on March 22, 1999, at the Annual Meeting of Stockholders to be
held on May 20, 1999 or any adjournment thereof.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
Please mark your votes as indicated in this example /X/
FOR all nominees WITHHOLD AUTHORITY
listed below to vote for all nominees
(EXCEPT AS INDICATED BELOW) listed below
/ / / /
1. ELECTION OF DIRECTORS:
Robert P. Akins Kenneth M. Deemer Gerald F. Taylor
Richard P. Abraham Peter J. Simone Jon D. Tompkins
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW:
- ---------------------------------------
2. Proposal to approve an amendment to the company's 1996 stock option plan
to increase the shares reserved for issuance thereunder by 1,250,000 shares.
FOR AGAINST ABSTAIN
/ / / / / /
3. Proposal to approve the appointment of Deloitte & Touche LLP as the
independent auditors of the company.
/ / / / / /
4. In their discretion the proxies are authorized to vote upon such other
business as may properly come before the annual meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2, AND 3.
PLEASE SIGN BELOW EXACTLY AS NAME APPEARS ON STOCK CERTIFICATE(S). WHEN
SHARES ARE HELD BY JOINT TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY,
AS EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS
SUCH. IF A CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY PRESIDENT OR
OTHER AUTHORIZED OFFICER. IF A PARTNERSHIP PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE
Signature(s) Dated: , 1999
--------------------------------- -----------------
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
