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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
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<S> <C>
[ ] 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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
PLANTRONICS
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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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
PROXY STATEMENT
LOGO
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PRINCIPAL EXECUTIVE OFFICES PLACE OF MEETING
345 Encinal Street The Museum of Art & History
Santa Cruz, CA 95060 McPherson Center
705 Front Street
Santa Cruz, CA 95060
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 29, 2000
To the Stockholders:
Our 2000 Annual Meeting of Stockholders will be held at on Thursday, June
29, 2000 at 12:00 noon, local time, at The Museum of Art and History at the
McPherson Center, 705 Front Street, Santa Cruz, California. Our Board of
Directors is soliciting proxies for the Annual Meeting. This Proxy Statement
contains important information for you to consider when deciding how to vote on
the matters brought before the meeting. We ask that you please read it
carefully.
The purpose of the Annual Meeting is to:
1. To elect seven directors to serve until the next Annual Meeting.
2. To ratify and approve an increase of 850,000 shares in the common stock
issuable under the 1993 Stock Plan.
3. To ratify and approve an increase of 40,000 shares in the common stock
issuable under the 1993 Director Stock Option Plan.
4. To ratify the appointment of PricewaterhouseCoopers LLP as independent
public accountants of the Company for the fiscal year ending March 31,
2001.
5. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only Plantronics stockholders of record at the close of business on May 19,
2000 are entitled to vote at the meeting. To assure your representation at the
meeting, you are urged to mark, sign, date and return the enclosed proxy card as
promptly as possible. We enclose a postage-prepaid envelope for that purpose.
Any stockholder attending the meeting may vote in person, even if she or he has
returned a proxy.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ KEVIN A. GOODWIN
Kevin Goodwin
Secretary
Santa Cruz, California
May 24, 2000
YOUR VOTE IS IMPORTANT
TO ASSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, YOU ARE REQUESTED TO
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE AND
RETURN IT IN THE ENCLOSED ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED
IN THE UNITED STATES.
<PAGE> 3
LOGO
KEN KANNAPPAN
PRESIDENT AND CHIEF EXECUTIVE OFFICER
May 24, 2000
Dear Fellow Stockholders:
It has been an exciting year of growth for Plantronics and I thank you for
your support of our efforts. We have worked very hard to advance the adoption of
headsets and have made significant progress in doing so. We know that much
remains to be done.
We are asking our stockholders to consider not only the re-election of our
current board of directors and the ratification of PricewaterhouseCoopers as our
auditors, but also to support two important proposals at our 2000 Annual
Meeting. We ask that you approve an increase in the number of shares authorized
for issuance under our employee stock option plan and also under our Director
stock option plan.
Attracting and retaining the best employees is a critical need if we are to
continue our growth and retain our leadership position in communications
headsets. We are in a period of tremendous opportunity and there is what can
only be called a "war for talent" being waged in the telecommunications and
technology industries. Equity-based compensation is a proven key component of
our compensation strategy and we need to replenish the fund of shares available
for grant to our valued present and needed future employees. A failure to seize
the opportunities available to us due to the inability to retain and attract the
best and brightest associates would potentially put at risk all that we have
created. The same applies to our Board of Directors -- we need to attract and
retain the best board members to oversee and guide the future of Plantronics.
Each of these proposals is discussed in greater detail in the following
Proxy Statement. We appreciate your support of these proposals and your
continued support of Plantronics.
Very truly yours,
Ken Kannappan
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PLANTRONICS, INC.
------------------------
PROXY STATEMENT
FOR 2000 ANNUAL MEETING OF STOCKHOLDERS
VOTING PROCEDURES
Your vote is very important. The Board of Directors of Plantronics, Inc., a
Delaware corporation (the "Company"), is soliciting proxies to be used at the
June 29, 2000 Annual Meeting of Stockholders. This proxy statement, the form of
proxy and the 2000 Annual Report to Stockholders will be mailed to stockholders
on or about June 1, 2000. The Annual Report is not a part of this proxy
statement. The Annual Meeting will be held at The Museum of Art and History at
the McPherson Center, 705 Front Street, Santa Cruz, California. The Company's
principal executive offices are located at 345 Encinal Street, Santa Cruz,
California 95060 and the telephone number at that location is (831) 426-5858.
WHO CAN VOTE
Only stockholders of record at the close of business on May 19, 2000 (the
"record date") will be entitled to notice of and to vote at the Annual Meeting
or any adjournments thereof. There is only one class of voting securities of the
Company, the Company's common stock, $0.01 par value per share ("Common Stock").
On the record date there were 16,365,757 shares of Common Stock outstanding.
HOW YOU CAN VOTE
You can vote by marking, signing and mailing in the accompanying Proxy
Card. We have provided an addressed and postage-paid envelope for your
convenience. You may also vote in person at the Annual Meeting.
If you are the beneficial owner of shares held in "street name" by a
broker, the broker as the record holder of the shares is required to vote those
shares in accordance with your instructions. If you do not give instructions to
the broker, the broker will be entitled to vote the shares with respect to
"discretionary" items but will not be permitted to vote the shares with respect
to "non-discretionary" items (those shares are treated as "broker non-votes").
All shares that have been properly voted will be voted at the Annual
Meeting in accordance with your instructions. If you sign your proxy card but do
not give voting instructions, the shares represented by that proxy will be voted
as recommended by the Board of Directors.
If any other matters are properly presented at the Annual Meeting for
consideration, the persons named in the enclosed proxy card will have the
discretion to vote on those matters for you. At the date we began printing this
proxy statement, the Board of Directors did not know of any other matter to be
raised at the annual meeting.
HOW YOU MAY REVOKE OR CHANGE YOUR VOTE
You can revoke your proxy at any time before it is voted at the meeting by:
- Sending written notice of revocation to the Secretary.
- Sending to the Secretary another duly executed proxy bearing a later
date.
- Attending the Annual Meeting and voting in person. If your shares are
held in the name of a bank, broker or other holder of record, you must
obtain a proxy, executed in your favor, from the holder of record to be
able to vote at the meeting.
<PAGE> 5
GENERAL INFORMATION ON VOTING
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.
In order for business to be conducted, a quorum must be represented at the
Annual Meeting. A quorum is a majority of the shares entitled to vote at the
Annual Meeting. Shares represented by a proxy in which authority to vote for any
matter considered is "withheld", a proxy marked "abstain" or a proxy as to which
there is a "broker non-vote" will be considered present at the meeting for
purposes of determining a quorum.
There are differing vote requirements for the various proposals. Directors
will be elected by a plurality of the votes cast at the Annual Meeting, meaning
the seven nominees receiving the most votes will be elected. Only votes cast for
a nominee will be counted. Unless indicated otherwise by your proxy, the shares
will be voted for the seven management nominees. Instructions on the
accompanying proxy to withhold authority to vote for one or more of the nominees
will result in those nominees receiving fewer votes but will not count as a vote
against the nominees.
The amendment to the Company's 1993 Stock Plan and the 1993 Director's
Stock Option Plan each require an affirmative vote of a majority of the shares
present in person or by proxy and entitled to vote at the Annual Meeting. For
those proposals, an abstention will have the same effect as a vote against the
proposal. Broker non-votes will not be voted for or against the proposals and
will have no effect on the proposals.
VOTING BY PARTICIPANTS IN THE COMPANY'S 401K PLAN
If a stockholder is a participant in the Plantronics 401K Plan the proxy
card will serve as a voting instruction for the trustees of that plan. If shares
of Common Stock in the 401K Plan are not voted by returning the proxy card
representing such shares, those shares will be voted by the trustees in the same
proportion as the shares properly voted.
PROXY SOLICITATION
This solicitation of proxies is made by the Company, and all related costs
will be borne by us. We have retained the services of Skinner & Co., Inc. to aid
in the solicitation of proxies from brokers, bank nominees and other
institutional owners. We will pay Skinner & Co. a fee not to exceed $4,000 for
its services, inclusive of the expenses that Skinner will incur. In addition, we
will reimburse brokerage firms and other persons representing beneficial owners
of shares for their expenses in forwarding solicitation material to such
beneficial owners. Proxies may also be solicited by certain of our directors,
officers and regular employees, without additional compensation, personally or
by telephone or facsimile.
These proxy solicitation materials and the Annual Report to Stockholders
for the fiscal year 2000, including financial statements, were first mailed on
or about June 1, 2000 to all stockholders entitled to vote at the meeting.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
A stockholder wishing to make a proposal at the 2001 Annual Stockholder
Meeting must submit a proposal to the Company prior to April 17, 2001. In order
to have any stockholder-submitted proposal considered for inclusion in the proxy
statement and form of proxy relating to the 2001 Annual Meeting of Stockholders,
the proposal must be received not later than February 16, 2001.
DATE OF OUR FISCAL YEAR END
This section of the proxy statement provides information about the matters
to be voted on at the Annual Meeting and also additional information about
Plantronics, its officers and directors. Some of the information is stated as of
the end of fiscal 2000 and some information is provided as of the more current
date of May 1, 2000. Each of our fiscal years ends on the Saturday closest to
the last day of March. Our fiscal year 2000 ended on April 1, 2000. For purposes
of consistent presentation, we have indicated in this proxy statement that
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each fiscal year ended "March 31" of the given year, even though the actual
fiscal year end may have been on a different date.
PROPOSAL ONE
ELECTION OF DIRECTORS
NOMINEES
A board of seven directors is to be elected at the Annual Meeting of
Stockholders. Unless otherwise instructed, the proxy holders will vote the
proxies received by them for the Company's seven nominees named below, all of
whom are presently directors of the Company. In the event that any nominee of
the Company is unable or declines to serve as a director at the time of the
Annual Meeting of Stockholders, the proxies will be voted for any nominee who
shall be designated by the present Board of Directors to fill the vacancy. 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 Stockholders or until a successor has
been elected and qualified.
Pursuant to the terms of a Board Designation Agreement between the Company
and Citicorp Venture Capital, Ltd. ("CVC"), the Company's largest stockholder,
the Company will nominate and support for election to the Board of Directors
three designees of CVC. Directors Logan, Muqaddam and O'Mara are the nominees
designated by CVC. See "Board Designation Agreement" below for a description of
the Board Designation Agreement. See also "Additional Information -- Security
Ownership of Principal Stockholders and Management."
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE NOMINEES LISTED BELOW.
The names of the nominees and certain information about them as of June 1,
2000 are set forth below:
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DIRECTOR
NAME OF NOMINEE AGE POSITIONS WITH THE COMPANY SINCE
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Marvin Tseu.......................... 52 Director and Chairman of the Board 1999
S. Kenneth Kannappan................. 40 Director, President and Chief Executive Officer 1999
Robert F.B. Logan(1)(2).............. 67 Director 1997
M. Saleem Muqaddam................... 53 Director 1994
John Mowbray O'Mara(2)............... 72 Director 1994
Trude C. Taylor(1)(2)................ 79 Director 1989
David A. Wegmann(1).................. 53 Director 1988
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(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
Mr. Tseu was elected to the Board of Directors in 1999 and serves as
Chairman of the Board. Mr. Tseu is the President and Chief Executive Officer of
SiteSmith, Inc., a leading provider of outsourced Internet site operations,
co-founded by Mr. Tseu in 1999. From 1998 to 1999, Mr. Tseu served as President
of Structured Internetworks, Inc., a company engaged in the design and marketing
of bandwidth allocation products. From 1996 to 1998 Mr. Tseu served as Executive
Vice President, Sales and Marketing, for CIDCO, Inc., a designer and
manufacturer of advanced telephone products. Mr. Tseu was previously employed
with Plantronics from 1984 to 1996. He was Director of Sales and Marketing from
1984 to 1987. From 1988 to 1992, Mr. Tseu served as President and General
Manager of Walker Equipment Company, now a division of Plantronics and then a
wholly owned subsidiary of the Company. In 1992 he was promoted to Corporate
Vice President, Sales and Marketing, and served at that position until 1996. Mr.
Tseu is also a director of CIDCO, Inc.
Mr. Kannappan serves as President and Chief Executive Officer of
Plantronics and has been a member of the Board since 1999. He joined the Company
in February 1995 as Vice President -- Sales, responsible for
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OEM Sales and the Asia Pacific/Latin America markets for Plantronics, Inc. He
was promoted to Vice President -- Sales, responsible for the United States,
Asian and Latin American markets in September 1995. He was promoted to Managing
Director of our Plantronics Limited subsidiary in England in March 1996. In
March 1997, Mr. Kannappan returned from England and was promoted to Senior Vice
President responsible for Plantronics' Worldwide Operations, the Company's
Mobile and Walker Equipment Divisions and Plantronics Limited. In March 1998,
Mr. Kannappan was promoted to President and Chief Operating Officer. In January
1999, he was promoted to Chief Executive Officer and appointed to the Board of
Directors. Prior to joining Plantronics, Mr. Kannappan was Senior Vice President
of Investment Banking for Kidder, Peabody & Co. Incorporated, where he was
employed from August 1985 through January 1995. Mr. Kannappan has a Bachelor of
Arts degree in Economics from Yale University and a Masters of Business
Administration from Stanford University. Mr. Kannappan is also a Director of
Mattson Technology, Inc., a supplier of advanced process equipment for the
semiconductor industry.
Mr. Logan has more than 30 years of diverse senior executive experience.
Most recently, he was chairman and CEO of Banc One Arizona and Bank One Arizona
from April 1995 to March 1996. From May 1993 to March 1995 he served as director
of Banc One Arizona and from January 1990 to April 1993 he was President and
Chief Operating Officer of Valley National, the predecessor of Bank One Arizona.
Prior to 1990 Mr. Logan was President and Chief Executive Officer of Alexander
Hamilton Life Insurance Company, Chief Financial Officer for Continental Grain
Company of New York, and Executive Vice President of the Merchant Banking Group
at Citicorp. Mr. Logan currently is a member of the boards of directors of EABC,
a broadcasting company, York International Corporation, an air conditioning and
refrigeration products manufacturer, and Banc One Capital Partners, an
investment partnership.
Mr. Muqaddam has served as a Vice President of CVC and its affiliated
investment companies since 1989. Previously he spent 15 years with Citibank,
N.A. and its affiliates in senior management positions. Mr. Muqaddam is a
director of Chromcraft Revington Inc., which designs, manufactures and sells
residential and commercial furniture.
Mr. O'Mara has been a management consultant since May 1993. From May 1990
to May 1993, he served as Chairman of the Executive Committee of Quality Care
Systems, Inc., a provider of computer-based "expert" medical cost containment
systems. From August 1988 through December 1989, Mr. O'Mara served as Chairman
of the Board and Chief Executive Officer of Global Natural Resources, Inc. Prior
to 1988, Mr. O'Mara spent 22 years as an investment banker, serving most
recently as Managing Director for Chase Investment Bank, a subsidiary of Chase
Manhattan Bank, N.A. Mr. O'Mara is a director of Baldwin & Lyons, Inc., which
specializes in marketing and underwriting property and casualty insurance, and
The Midland Company, a provider of specialty insurance products and services.
Mr. Taylor has been a private investor since 1987 and a principal in TC
Associates, a management consulting firm, since 1984. He served as a director of
the Company's former operating subsidiary, Plantronics, Inc., from 1969 until
its merger into the Company in January 1994 as part of Plantronics going public.
He was Chairman of the Board of Directors and a Director of Zehntel, Inc.
("Zehntel"), a manufacturer of automated test equipment and a former subsidiary
of Plantronics, Inc., from 1984 to 1987, Chief Executive Officer of Zehntel from
1984 to 1985 and Chairman of the Board of Directors, President and Chief
Executive Officer of Electronic Memories and Magnetics Corporation, a
manufacturer of computer peripherals, from 1969 until 1984. He is also currently
a director of Dense-Pac Microsystems, Inc., a designer and manufacturer of
ultra-high density memory products and other electronic devices.
Mr. Wegmann has been a private investor since August 1988. Prior to that,
he was a Vice President of CVC. Mr. Wegmann was the President and sole director
of PI Parent Corporation, the privately held holding company for Plantronics
from that company's inception in August 1988 until March 1989. He also served as
a director of Plantronics, Inc., the operating subsidiary, of PI Parent
Corporation, from March 1989 until its merger with the Company as part of the
initial public offering in January 1994.
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BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of five meetings during
the fiscal year ended March 31, 2000. The Board of Directors has an Audit
Committee and a Compensation Committee. The Board of Directors has no nominating
committee or any committee performing such functions.
The Compensation Committee, which consists of directors Logan, O'Mara and
Taylor, met two times, and acted by unanimous written consent four times, during
the fiscal year. This Committee is responsible for determining salaries,
incentives and other forms of compensation for directors, officers and other
highly compensated employees of the Company and administers various incentive
compensation and benefit plans. Mr. O'Mara was appointed to the Compensation
Committee as the designee of CVC pursuant to the terms of the Company's 1993
Stock Plan.
The Audit Committee, which consists of directors Logan, Taylor, and Wegmann
(Chairman), met four times during the fiscal year. This Committee is responsible
for overseeing actions taken by the Company's independent auditors and reviews
the Company's internal financial controls.
No director attended fewer than 75% of the sum of the total number of
meetings of the Board of Directors and committees upon which that director
served.
At their March 2000 board meeting, the Board of Directors unanimously
agreed to consider increasing the size of the board to nine members, subject to
identification of suitable additions to the board. If the size of the board is
expanded, any new members would be subject to re-election at the 2001 Annual
Meeting of Stockholders.
COMPENSATION OF DIRECTORS
The directors of the Company, other than directors who are also executive
officers, receive a retainer fee of $5,000 per quarter, plus a fee of $1,000 for
attendance at each meeting of the Board of Directors and the Audit and
Compensation Committees. Directors also are entitled to reimbursement of
expenses incurred in connection with attendance at meetings.
Each non-employee director of the Company is entitled to participate in the
Company's 1993 Director Stock Option Plan (the "Director Plan"). Pursuant to the
Director Plan, newly elected director Tseu received an option on July 20, 1999
to purchase 4,000 shares of our Common Stock at an exercise price of $69.875,
directors Logan, Muqaddam, O'Mara, Taylor, and Wegmann each received on January
14, 2000 an option to purchase 1,000 shares of Common Stock at an exercise price
of $74.50 per share.
BOARD DESIGNATION AGREEMENT
The Company and CVC are parties to a Board Designation Agreement under
which the Company will nominate for election to the Board of Directors of the
Company up to three designees of CVC and will solicit proxies in favor of the
election of such nominees. The Agreement expires on the earlier to occur of (i)
January 19, 2004 (the tenth anniversary of the Company's initial public
offering) or (ii) the date on which CVC no longer has the right under the
Agreement to designate a director for nomination to the Company's Board of
Directors. During the term of such Agreement, for so long as CVC owns at least
66 2/3% of the initial percentage of fully-diluted Common Stock held by it
immediately following the Company's 1994 initial public offering, the Company
has agreed to nominate and support the election of three CVC designees to the
Board of Directors. During any period that CVC owns more than 15% of the
outstanding Common Stock of the Company (on a fully diluted basis assuming
exercise of all outstanding options or warrants to purchase Common Stock and the
conversion of all securities convertible into Common Stock) but less than
66 2/3% of CVC's initial percentage ownership of the Company's Common Stock held
by it immediately following the Company's initial public offering, the Company
will nominate and support for election two CVC designees. For so long as CVC
owns at least 10% of the outstanding Common Stock of the Company on a fully
diluted basis, the Company will nominate and support for election at least one
CVC designee. Additionally, any interim term vacancy of any directorship held by
a CVC designee immediately prior to such vacancy shall be filled by a nominee
selected by a majority of the remaining CVC designee(s). Interim vacancies of
any
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directorships held by non-CVC designees shall be filled by a nominee selected by
a majority of the remaining Board members that are neither CVC designees nor the
Company's Chief Executive Officer.
VOTE REQUIRED
If a quorum is present and voting at the Annual Meeting of Stockholders,
the seven nominees receiving the highest number of votes will be elected to the
Board of Directors. Votes withheld from any nominee will be counted for purposes
of determining the presence or absence of a quorum for transaction of business
at the meeting, but will have no other legal effect upon the election of
directors under Delaware law.
PROPOSAL TWO
APPROVAL OF AN 850,000 SHARE INCREASE IN SHARES
ISSUABLE UNDER THE 1993 STOCK PLAN
The Company is seeking stockholder approval for an amendment of the 1993
Stock Plan (the "Employee Plan") to increase the number of shares issuable under
the Employee Plan. The Employee Plan was adopted by the Board of Directors and
approved by the Company's stockholders in September 1993. In 1996 and again in
1998, the Company's stockholders approved increases in the shares issuable under
the Employee Plan. In March 2000, the Board of Directors approved an increase of
850,000 shares issuable under the Employee Plan which, if approved by the
stockholders, would increase the total shares reserved for issuance under the
Employee Plan since its inception to 6,309,242 shares.
The Board of Directors believes that it is in the best interests of the
Company and its stockholders for the stockholders to approve the proposed
increase in shares available for grant under the 1993 Stock Plan. The Board
believes that stock options assist in retaining, motivating and rewarding
employees, executives and consultants by giving them an opportunity to obtain
long-term equity participation in the Company. In addition, stock options are an
important contributor to aligning the incentives of the Company's employees with
the interests of the Company's stockholders. The Board also believes stock
options are essential to attracting new employees. Competition for qualified
employees in the technology market is extremely intense, and, due to the rapid
growth of many successful companies in this sector, such competition is
increasing. The Board of Directors believes that in order to remain competitive
with other technology companies with regard to its long-term incentive plans,
the Company must continue to provide employees with the opportunity to obtain
equity in the Company and that an inability to offer equity incentives to new
and current employees would put the Company at a severe competitive disadvantage
with respect to attracting and retaining qualified personnel.
As of May 1, 2000, a total of 5,459,242 shares were reserved for issuance
under the Employee Plan since its inception. As of May 1, 2000, options to
purchase 6,214,963 shares of Common Stock had been granted under the Employee
Plan and, with cancellation of options representing 811,035 shares, there
remained 55,314 shares available for future option grants. Subject to
stockholder approval of the increase of 850,000 shares, there would then be
905,314 shares available for future grants.
Options to purchase a total of 2,806,226 shares under the Employee Plan had
been exercised as of May 1, 2000, leaving a total of 2,653,016 option shares
unexercised under the Employee Plan. This total of unexercised shares includes
2,597,702 shares granted but not exercised plus the 55,314 shares available for
future grant. The aggregate market value on May 1, 2000 of the unexercised
options for shares of Common Stock under the Employee Plan was $240,927,016,
based on a closing price of $90.8125 on the New York Stock Exchange on that
date.
For a description of the principal features of the Plan, see "Appendix
A -- Description of the Plantronics, Inc. 1993 Stock Plan."
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VOTE REQUIRED
The affirmative vote of a majority of the shares present in person or by
proxy and entitled to vote at the Annual Meeting will be required to approve the
amendment to the 1993 Stock Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE AMENDMENT TO THE 1993 STOCK PLAN.
PROPOSAL THREE
APPROVAL OF A 40,000 SHARE INCREASE IN SHARES
ISSUABLE UNDER THE 1993 DIRECTOR STOCK OPTION PLAN
The Company is seeking stockholder approval for an amendment of the 1993
Director Stock Option Plan (the "Director Plan") to increase by 40,000 the
number of shares reserved for issuance thereunder. The Director Plan was adopted
by the Board of Directors in September 1993 and approved by the Company's
stockholders in December 1993. In April 1996, the Board of Directors approved an
increase in the number of shares issuable under the Director Plan and the
stockholders approved that increase in August 1996. On March 21, 2000, the Board
of Directors approved an increase of 40,000 shares issuable under the Director
Plan, which, if approved by the stockholders, would increase the total shares
reserved for issuance under the Director Plan since its inception to 100,000
shares.
Options are granted under the Director Plan to non-employee directors to
provide them with an incentive through their proprietary interest in the Company
and to encourage them to continue to serve as directors of the Company. The
purposes of the Plan generally are to promote the interests Plantronics and its
stockholders by enabling it to attract and retain experienced and knowledgeable
directors and by aligning the directors' economic interests more closely with
those of the Company's stockholders. The Plan is consistent with the directors'
compensation practices recommended by the National Association of Corporate
Directors' Blue Ribbon Commission (the "Blue Ribbon Commission"). The Blue
Ribbon Commission urged companies to establish or increase the equity component
of director pay practices as a meaningful manner of aligning directors' economic
interests with the stockholders (Source: Report of NACD Blue Ribbon Commission
on Director Compensation, June 19, 1995). The Board of Directors believes that
approval of the increase in shares available under the 1993 Director Stock
Option Plan is in the best interests of the Company and its stockholders.
From its inception in 1993 through May 1, 2000, a total of 60,000 shares
were reserved for issuance under the Director Plan. As of May 1, 2000, options
to purchase 67,000 shares of Common Stock had been granted under the Director
Plan and with cancellation of options representing 9,500 shares, there remained
2,500 available for future grant. Subject to stockholder approval of the
increase of 40,000 shares, there would be 42,500 shares available for future
grant.
Options to purchase a total of 6,500 shares under the Directors Plan had
been exercised as of May 1, 2000, leaving a total of 53,500 option shares
unexercised under the Directors Plan. This total of unexercised shares includes
51,000 shares granted but not exercised plus the 2,500 shares available for
future grant. The aggregate market value on May 1, 2000 of the unexercised
options for shares of Common Stock under the Directors Plan was $4,858,469,
based on a closing price of $90.8125 on the New York Stock Exchange on such
date.
7
<PAGE> 11
The following table sets forth certain information regarding options
granted under the Director Plan in the fiscal year ended March 31, 2000:
<TABLE>
<CAPTION>
1993 DIRECTORS' STOCK OPTION PLAN
---------------------------------
DOLLAR NUMBER OF SHARES
NAME OF DIRECTOR VALUE($)(1) SUBJECT TO OPTIONS
---------------- ----------- ------------------
<S> <C> <C>
Robert F.B. Logan............................... $18,687.50 1,000
M. Saleem Muqaddam.............................. $18,687.50 1,000
John Mowbray O'Mara............................. $18,687.50 1,000
Trude C. Taylor................................. $18,687.50 1,000
Marvin Tseu..................................... $74,750.00 4,000(2)
David A. Wegmann................................ $18,687.50 1,000
</TABLE>
- ---------------
(1) Based on the difference between the exercise price of $74.50 for such
options and $93.1875, the closing price of the Company's Common Stock on
March 31, 2000, the last trading day in fiscal 2000.
(2) Initial grant made upon election to the Board in July 1999.
In fiscal year 2001 each current non-employee director re-elected to serve
on the Board of Directors in the fiscal year will on January 15, 2001 receive a
Subsequent Option to purchase 1,000 shares of Common Stock. The exercise prices
of such options are not presently determinable. No persons other than non-
employee directors are eligible to participate in the Director Plan.
For a description of the principal features of the Director Plan, see
"Appendix B -- Description of the Plantronics, Inc. 1993 Director Stock Option
Plan."
VOTE REQUIRED
The affirmative vote of a majority of the shares present in person or by
proxy and entitled to vote at the Annual Meeting will be required to approve the
amendment to the Director Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE AMENDMENT TO THE DIRECTOR STOCK OPTION PLAN.
PROPOSAL FOUR
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected PricewaterhouseCoopers LLP, independent
public accountants, to audit the consolidated financial statements of the
Company for the fiscal year ending March 31, 2001, and recommends that
stockholders vote for ratification of such appointment. In the event of a
negative vote on ratification, the Board of Directors will reconsider its
selection.
PricewaterhouseCoopers LLP has audited the Company's financial statements
annually since 1988. Representatives of PricewaterhouseCoopers LLP will be
available at the meeting to respond to any appropriate questions. The
PricewaterhouseCoopers representatives will have an opportunity to make a
statement at the meeting if they desire to do so.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT PUBLIC ACCOUNTANTS.
8
<PAGE> 12
ADDITIONAL INFORMATION
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth certain information with respect to
beneficial ownership of Common Stock of the Company as of May 1, 2000 as to (i)
each person who is known by the Company to own beneficially more than 5% of the
outstanding shares of Common Stock, (ii) each director and each nominee for
director of the Company, (iii) each of the executive officers named in the
Summary Compensation Table below, and (iv) all directors and executive officers
as a group. Except as otherwise indicated, the Company believes that the
beneficial owners of the Common Stock listed below have sole investment and
voting power with respect to such shares, subject to community property laws.
<TABLE>
<CAPTION>
COMMON STOCK APPROXIMATE
BENEFICIALLY PERCENTAGE
FIVE PERCENT STOCKHOLDERS, DIRECTORS AND CERTAIN EXECUTIVE OFFICERS OWNED(1) OWNED(2)
- ------------------------------------------------------------------- ------------ -----------
<S> <C> <C>
Citigroup Inc.(3)........................................... 4,673,221 28.6%
153 East 53rd Street
New York, NY 10043
Lord, Abbett & Co.(4)....................................... 1,699,935 10.4
767 Fifth Avenue
New York, NY 10153-0203
PRIMECAP Management Company(5).............................. 1,608,000 9.9
225 South Lake Ave., Suite 400
Pasadena, CA 91101-3005
S. Kenneth Kannappan........................................ 195,581 1.2
Robert F.B. Logan........................................... 8,813 *
M. Saleem Muqaddam.......................................... 9,500 *
John Mowbray O'Mara......................................... 18,563 *
Trude C. Taylor............................................. 99,143 *
Marvin Tseu................................................. 2,000 *
David A. Wegmann............................................ 267,455 1.6
Donald S. Houston........................................... 76,249 *
Jean-Claude Malraison....................................... 10,000 *
H. Craig May................................................ 52,780 *
Barbara V. Scherer.......................................... 63,863 *
All directors and executive officers as a group (14 persons).. 864,245 5.3%
</TABLE>
- ---------------
* Less than 1%.
(1) Includes stock subject to stock options held by directors and executive
officers that are exercisable within 60 days of May 1, 2000, as follows: Mr.
Kannappan, 186,825 shares; Mr. Logan, 3,813 shares; Mr. Muqaddam, 7,500
shares; Mr. O'Mara, 7,563 shares; Mr. Taylor, 7,563 shares; Mr. Wegmann,
7,563 shares; Mr. Houston, 70,625 shares; Ms. Scherer, 61,458 shares, and
all directors and executive officers as a group (14 persons), 462,473
shares.
(2) Based on 16,311,793 shares of Common Stock outstanding on May 1, 2000.
(3) Citibank, N.A. is the sole stockholder of Citicorp Venture Capital Ltd.
Citicorp is the sole stockholder of CitiBank, N.A. Citigroup Inc. is the
sole stockholder of Citicorp. Information provided herein is based on the
group filing of Schedule 13G/A on February 9, 2000 by Citicorp Venture
Capital Ltd., Citibank, N.A., Citicorp, Citigroup Holdings Company and
Citigroup Inc. In the joint filing, Citigroup, Inc. claims shared voting
power and ownership by shared dispositive power of 4,673,221 shares of
Common Stock and each of Citicorp Venture Capital Ltd., Citicorp, Citigroup
Holdings Company, and Citibank, N.A. claim shared voting power and shared
dispositive power as to 4,509,168 shares.
9
<PAGE> 13
(4) Lord, Abbett & Co. claims sole voting power and sole dispositive power as to
the 1,699,935 shares. Information provided herein is based solely on Lord,
Abbett & Co.'s Schedule 13G dated February 8, 2000.
(5) Vanguard/PRIMECAP Fund, Inc. claims shared dispositive and sole voting power
as to the 1,608,000 shares. Information provided herein is based solely upon
Vanguard/PRIMECAP Fund, Inc.'s Schedule 13G/A dated February 4, 2000.
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid by the Company during
fiscal years 1998, 1999 and 2000 to the Chief Executive Officer and each of the
four other most highly compensated executive officers of the Company (the CEO
and such other officers collectively the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ------------
--------------------------------------------- AWARDS
OTHER ANNUAL ------------ ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS COMPENSATION(2) OPTIONS(#) COMPENSATION(3)
--------------------------- ---- --------- -------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Ken Kannappan.................... 2000 $371,046 $371,046 $ -- 40,000 $172,568
Director, President and 1999 267,304 259,492 2,986(4) 50,000 127,797
Chief Executive Officer 1998 208,333 179,576 18,387(4) 80,000 91,164
Don Houston...................... 2000 204,615 189,910 -- 10,000 96,211
Senior Vice President -- Sales 1999 200,000 136,831 -- 10,000 96,763
1998 200,000 122,212 59,549(5) 10,000 82,154
Jean-Claude Malraison............ 2000 114,542 308,161(6) -- 90,000 42,836
Managing Director -- Europe, 1999 -- -- -- -- --
Middle East & Africa 1998 -- -- -- -- --
Craig May........................ 2000 198,264 193,790 -- 10,000 93,407
Senior Vice President -- 1999 157,907 156,942 71,960(7) 100,000 57,924
Marketing 1998 -- -- -- -- --
Barbara Scherer.................. 2000 185,847 180,332 -- 10,000 87,660
Senior Vice President -- 1999 167,339 160,046 -- 10,000 80,835
Finance and Administration 1998 140,667 120,025 88,373(8) 110,000 56,993
and Chief Financial Officer
</TABLE>
- ---------------
(1) Includes salary deferred at the election of the executive officer.
(2) Includes perquisites only where the aggregate amount thereof equals or
exceeds the lesser of $50,000 or 10% of the salary plus bonus for the
executive officer.
(3) Amounts shown include (i) the following life and disability payments by the
Company for each executive in fiscal years 1998, 1999 and 2000,
respectively: Mr. Kannappan ($830, $297 and $947), Mr. Houston ($830, $486
and $947), Mr. Malraison (none, none and $2,403), Mr. May (none, $233 and
$947) and Ms. Scherer ($830, $408 and $947); (ii) the following
contributions by the Company under the quarterly profit sharing plan in
fiscal years 1998, 1999 and 2000, respectively: Mr. Kannappan ($47,139,
$63,734 and $84,516), Mr. Houston ($39,113, $48,046 and $46,896), Mr.
Malraison (none, none and $14,661), Mr. May (none, $21,462 and $45,528) and
Ms. Scherer ($27,356, $40,143 and $42,693); and (iii) the following
contributions by the Company under the Annual Profit Sharing/Individual
Savings Plan for fiscal years 1998, 1999 and 2000, respectively: Mr.
Kannappan ($43,195, $63,766 and $87,105), Mr. Houston ($42,211, $48,231 and
$48,368), Mr. Malraison (none, none and $25,772), Mr. May (none, $36,229 and
$46,932) and Ms. Scherer ($28,807, $40,283 and $44,020).
(4) Reflects the dollar value of the difference between the price paid for
shares of the Company's stock purchased pursuant to the Company's Senior
Executive Stock Purchase Plan and the fair market value of such stock at the
date of purchase.
(5) Reflects the dollar value of the difference between the price paid by Mr.
Houston for shares of the Company's stock purchased pursuant to the
Company's Senior Executive Stock Purchase Plan and the
10
<PAGE> 14
fair market value of such stock at the date of purchase, which was $26,635.
Amounts shown also reflect other personal benefits, including a relocation
payment of $16,932 to Mr. Houston.
(6) Amount includes a one-time signing bonus of $249,516, quarterly incentive
bonuses totaling $14,661 and an annual incentive bonus of $43,984. All
amounts have been converted from the British Pound and Dutch Guilder
currencies in which the amounts were paid based upon the interbank exchange
rate to the U.S. Dollar as of March 31, 2000.
(7) Amount shown reflects other personal benefits, including a relocation
payment of $56,465 to Mr. May.
(8) Reflects the dollar value of the difference between the price paid for
shares of the Company's stock purchased pursuant to the Company's Senior
Executive Stock Purchase Plan and the fair market value of such stock at the
date of purchase. Such amount was $9,893 for Ms. Scherer. Amount shown also
reflects other personal benefits, including a relocation payment of $64,846.
OPTION GRANTS
The following table shows, as to the individuals named in the Summary
Compensation Table above, information concerning stock options granted during
the fiscal year ended March 31, 2000.
OPTION GRANTS IN FISCAL YEAR 2000
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
------------------------------------------------- POTENTIAL REALIZABLE VALUE OF
NUMBER OF % OF TOTAL ASSUMED ANNUAL RATES OF
SECURITIES OPTIONS EXERCISE STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO OR BASE FOR OPTION TERM(2)
OPTIONS EMPLOYEES IN PRICE EXPIRATION ------------------------------
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE(S) 5% 10%
---- ---------- ------------ -------- ---------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Ken Kannappan.......... 40,000 4.6% $63.0000 06/24/09 $1,584,814 $ 4,016,231
Donald Houston......... 10,000 1.2% 73.3750 02/04/10 461,451 1,169,409
Jean-Claude
Malraison............ 90,000 10.4% 69.8750 07/19/09 3,954,961 10,022,648
Craig May.............. 10,000 1.2% 63.0000 06/24/09 396,204 1,004,058
Barbara Scherer........ 10,000 1.2% 73.3750 02/04/10 461,451 1,169,409
</TABLE>
- ---------------
(1) These options were granted pursuant to the Company's 1993 Stock Plan. The
option exercise prices were at the fair market value of the Company's Common
Stock on the date of grant. 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
20% of the total grant 12 months after the date of grant and 1.6667% of the
total grant each month thereafter. The options are fully vested at five
years from the date of grant, if the executive is employed with the Company
as of that date.
(2) Potential realizable values 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,
applied for the entire ten (10) year term of the options. Actual gains, if
any, on stock option exercises are dependent on the future performance of
the Common Stock, overall market conditions the option holders' continued
employment through the vesting period and the date of exercise and sale of
the option shares. The amounts reflected in this table may not necessarily
be achieved and do not reflect the Company's estimate of future stock price
growth.
11
<PAGE> 15
OPTION EXERCISES AND VALUES
The following table sets forth certain information regarding option
exercises in fiscal year 2000 and the value of options held by the Named
Executive Officers.
OPTION EXERCISES AND VALUES IN FISCAL YEAR 2000
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS OPTIONS AT
SHARES AT MARCH 31, 2000 MARCH 31, 2000($)(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ken Kannappan............ -- -- 152,158 126,042 $10,931,335 $5,060,885
Don Houston.............. -- -- 63,750 41,250 4,649,193 1,967,682
Jean-Claude Malraison.... -- -- -- 90,000 -- 2,098,125
Craig May................ -- -- 43,750 66,250 1,792,318 2,565,807
Barbara Scherer.......... 20,000 $1,001,219 54,583 55,417 3,633,516 2,774,609
</TABLE>
- ---------------
(1) Based on market value of the Company's Common Stock at March 31, 2000 of
$93.1875, minus the exercise price.
EMPLOYMENT AGREEMENTS AND CHANGE-IN-CONTROL ARRANGEMENTS
In July 1999, the Company entered into a three-year employment agreement
with Ken Kannappan, Chief Executive Officer. This employment agreement
superceded the employment agreement entered into between the Company and Mr.
Kannappan in March 1996 when he joined Plantronics, which was similar to the
agreement with Mr. Houston discussed below. The term of the current agreement
automatically extends for additional one-year periods unless either the Company
or Mr. Kannappan gives advance notice of termination. The agreement provided for
an initial annual base salary of $375,000, payable in installments on the
Company's regular payroll schedule. The Agreement provides also for receipt by
Mr. Kannappan of profit sharing payments under the Company's profit sharing
plans and provides for adjustment in the base salary amount if the profit
sharing plan changes so that the total of salary plus profit sharing remains
substantially the same. The agreement also provides for an annual performance
bonus of up to 100% of base salary if the Company exceeds certain performance
targets established by its Board of Directors.
In the event that (i) the Company terminates Mr. Kannappan's employment
(other than for cause), including voluntary resignation by Mr. Kannappan due to
a constructive discharge or (ii) Mr. Kannappan terminates his employment
voluntarily on or after July 4, 2002 or (iii) Mr. Kannappan's employment
terminates because of death or disability, he (or his beneficiaries in the case
of death) will receive for a period of two (2) years from the date of
termination of employment (a) continued cash compensation payments equal to
seventy-five percent (75%) of the average of the cash compensation earned in the
four (4) full fiscal quarters immediately preceding the date of termination of
employment and (b) continuation of certain fringe benefits. "Cash compensation"
as used above means base salary, profit sharing, and incentive bonuses earned in
the applicable four fiscal quarters, even if the amounts are paid in subsequent
periods. In the event his employment terminates due to death or disability, his
benefits will be offset to the extent of any disability or death benefits
payable under any Company benefit plan. For a period of 36 months following Mr.
Kannappan's termination of employment with the Company, Mr. Kannappan may not
perform services for any direct competitor of the Company and may not solicit
any of the Company's employees to become employed by any other business
enterprise. Covenants not to compete are generally not enforceable under
California law.
Under the employment agreement, the Company has agreed to indemnify Mr.
Kannappan to the fullest extent permitted by law so long as Mr. Kannappan acts
in good faith. Failure by the Company to provide such indemnification is deemed
to be a breach of the employment agreement and may be deemed a termination of
Mr. Kannappan's employment other than for cause.
Mr. Houston joined the Company in November, 1996 as
Vice-President -- Sales, and entered into an employment agreement with the
Company at that time. The agreement provides that if, within two years of a
12
<PAGE> 16
change of control of the Company, the Company terminates Mr. Houston's
employment other than for cause, or he is constructively discharged, or his
employment terminates due to death or disability, he, or his beneficiaries, will
receive continuation of base salary and fringe benefits for six months or up to
12 months if the executive is unable to obtain subsequent employment. For
purposes of the agreement, fringe benefits exclude bonus, profit sharing,
deferred compensation or incentive compensation plans. In the event Mr.
Houston's employment is terminated by the Company for cause, he will receive no
benefits except as may be provided by the Company's employee benefit plans
generally. Under the agreement, a termination is "for cause" only if such
termination results from gross misconduct of the executive that is materially
injurious to the Company. The agreement also contains a two-year non-compete
covenant which takes effect upon termination of Mr. Houston's employment.
However, such covenants are generally not enforceable under California law.
The Company entered into employment agreements with Mr. May and Ms. Scherer
in May 1998 and April 1997, respectively. Such agreements are similar to the
agreement with Mr. Houston.
Mr. Malraison joined the Company in July 1999 as the Managing
Director -- Europe, Middle East & Africa. Mr. Malraison entered into an
employment agreement, titled "Service Agreement," dated effective July 20, 1999
with Plantronics Limited, a wholly owned subsidiary of Plantronics, Inc. Under
the Service Agreement, Mr. Malraison is obligated to repay a decreasing
percentage of his signing bonus if he leaves employment or is terminated for
cause in the first two years after July 1999. The agreement requires not less
than six (6) months notice of termination of employment for other than cause and
Plantronics Ltd. may make payment of six months salary in lieu of such notice.
No other severance benefits are payable to Mr. Malraison in the event of
termination of his employment. The Service Agreement also contains provisions
which prohibit the employment of Mr. Malraison by a competitor in the twelve
(12) month period after termination of employment and further prohibits his
solicitation in that same twelve month period of any Plantronics employees to
work at any other company.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee (the "Committee") of the Board of Directors is
responsible for reviewing and approving the Company's executive compensation
policies and the compensation paid to the executive officers. The Committee also
advises the Company's management on the compensation policies in place for all
non-executive personnel. The Committee is comprised of the members named below,
all of whom are non-employee directors.
Following is the report of the Committee describing compensation policies
and rationale applicable to the Company's executive officers with respect to the
compensation paid to such executive officers for the fiscal year ended March 31,
2000. The information contained in such report shall not be deemed to be
"soliciting material" or to be "filed" with the Securities and Exchange
Commission, nor shall such information be incorporated by reference into any
future filing under the Securities Act of 1933 or the Securities Exchange Act of
1934, except to the extent that the Company specifically incorporates it by
reference into such filing.
COMPENSATION POLICIES. The Company's basic compensation philosophy is
founded on the idea that compensation should be tied to performance. This
philosophy is reflected in the structure of the Company's compensation program,
which is designed to link executive compensation to the performance of the
Company as well as to the individual contribution of each executive and to make
a certain portion of each executive's compensation variable as opposed to fixed.
The Company's performance-based compensation program is a total system
consisting of base salary and "at risk" incentives that reward executives for
the achievement of performance levels designed to increase the stockholder value
of the Company. A significant portion of each executive's compensation is
dependent upon meeting certain financial goals of the Company and individual
performance objectives.
The guiding principles which form the basis for the Company's executive
compensation program are to (i) provide a total compensation package that will
attract highly qualified executives to the Company, motivate such individuals to
perform at their highest levels, reward outstanding performance, and retain
executives whose skills are essential for building the Company's business and
long-term stockholder value;
13
<PAGE> 17
(ii) establish annual incentives for senior executives that are directly tied to
the overall financial performance of the Company as well as to individual
performance goals; and (iii) implement long-term incentives to focus executives
on managing the Company from the perspective of an owner with an equity stake in
the business and align executive compensation with benefits realized by the
Company's stockholders.
There are five basic components of the Company's compensation program: (i)
annual cash compensation in the form of base salary; (ii) annual incentive
bonuses which reward executives for achievement against pre-established goals;
(iii) long-term incentive stock options, which are designed to align
compensation incentives with the interests of the Company's stockholders; (iv)
compensation and employee benefits generally available to employees of the
Company, such as the Company's nonqualified cash quarterly profit sharing plan
and qualified defined contribution savings plan, including an annual profit
sharing component and a qualified salary deferral program under Section 401 (k)
of the Internal Revenue Code; and (v) discounted sales of Company Common Stock
to senior executive officers pursuant to the Senior Executive Stock Purchase
Plan in order to increase investment by such executive officers in the Company
and align their interests with other stockholders.
BASE SALARIES. Base salaries for the Company's executive officers are
determined by evaluating each executive's scope of responsibility, prior
experience and salary history with a focus on such executive's past performance
with the Company and/or expected contribution to the Company's future success.
For reference, the Company participates in various executive compensation
surveys covering similar industries and publicly-held companies in the San
Francisco Bay Area and uses this data to assist it in analyzing competitive
salary information in connection with determining appropriate salary levels for
the Company's executive officers. After analyzing the surveys, the Chief
Executive Officer recommends an annual salary increase budget for approval by
the Compensation Committee and further recommends salary increases within such
budget for the individual executives on the basis of individual performance
during the preceding 12 months as measured against pre-established objectives
related to each individual's respective area of responsibility. Performance
objectives are proposed by the individual executive, and, thereafter, negotiated
and agreed to between the executive and the Chief Executive Officer. For fiscal
year 2000, individual adjustments in annualized base salary ranged from 0% to
11% and averaged 5.7% for the Named Executive Officers (other than the Chief
Executive Officer and also excluding Mr. Malraison because he was not employed
with Plantronics prior to the beginning of fiscal year 2000).
INCENTIVE BONUS AWARDS. Under the Company's Executive Bonus Plan for fiscal
2000, incentive cash payments (regular and supplemental bonuses) were based on
the achievement of certain Company operating profit targets as well as
individual objectives. A portion of the bonus awards earned under the plans
described below were paid on a quarterly basis during fiscal 2000 and fourth
quarter and supplemental bonus awards were paid in April and May 2000 after the
close of the fiscal year. The plan is composed of two programs consisting of a
regular bonus plan and a supplemental bonus plan. Each plan is designed to
reward the performance of officers and certain key employees designated by the
Chief Executive Officer, subject to the approval of the Compensation Committee.
Under either plan, no bonuses are earned unless the Company meets the
profitability targets set by the Board of Directors, regardless of the
achievement of individual performance goals by the participants.
Under the regular bonus plan, a participant becomes eligible to earn up to
a certain percentage of base salary if the Company achieves certain operating
profit targets defined by the Board of Directors, provided such executive
achieves certain individual performance objectives. Such percentage varies among
executives depending upon position, but in no case exceeds 40%. Individual
performance objectives are proposed by the individual executive and, thereafter,
negotiated and agreed to between the executive and the Chief Executive Officer.
A portion of such bonus is paid on a quarterly basis to the eligible
participants who must be employed by the Company on the day the bonus is paid.
Such bonuses are paid only after the Company achieves the established targets as
follows: when the year-to-date operating profit achieved equals at least 75% of
the year-to-date operating profit target set by the Board of Directors, eligible
participants may receive up to 50% of eligible bonus awards, or some smaller
percentage of such bonus depending upon achievement of individual performance
objectives. The percentage payout of bonus may be increased to 75% of eligible
bonus if the year-to-date operating profit achieved equals at least 90% of the
year-to-date operating profit target and up to 100%
14
<PAGE> 18
of eligible bonus if the year-to-date operating profit achieved equals at least
100% of the year-to-date operating profit target. In all cases, the actual bonus
percentage paid to an individual executive depends on the percentage achievement
of such executive's individual performance objectives. For example, if the Chief
Executive Officer determines that an executive has achieved 80% of his or her
predetermined performance objectives, the executive will receive 80% of the
bonus award for which he or she is eligible.
In addition to the regular bonus plan, the Company maintains a supplemental
bonus plan pursuant to which participants may earn up to 100% of base salary
(including amounts earned under the regular bonus plan described above) if the
Company significantly exceeds operating profit targets established by the Board
of Directors. The supplemental bonus amounts are payable from a pool comprised
of 25% of the operating profits, if any, which the Company earns beyond the
operating profit targets established under the regular bonus plan. Participants
are eligible to share in the supplemental bonus pool pro-rata based on the ratio
of such participant's annual base salary to the aggregate base salaries received
by all eligible participants. Total bonuses paid under both the regular and
supplemental bonus plans cannot exceed 100% of a participant's annual base
salary earned in a given fiscal year. The percentage of bonus earned by each
participant under the supplemental bonus plan, as is the case under the regular
bonus plan, is based on such participant's percentage achievement measured
against pre-established individual performance objectives as determined by the
Chief Executive Officer. Supplemental bonus amounts are payable within 90 days
after completion of the Company's audited financial statements at fiscal year
end to participants who must be employed by the Company on the payment date. In
the event of death of a participant during the second half of the fiscal year,
in which case such participant will be treated as having been employed on the
payment date and any supplemental bonus earned will be paid to such
participant's estate. Additionally, the plan provides for the payment prior to
the end of a calendar year (at the option of the Compensation Committee) of 75%
of estimated bonus awards under both the regular and the supplemental bonus
plans based on a forecast by the Chief Executive Officer of operating profits
for the fiscal year and an estimate of bonus attainments. If such early payment
is made, participants who elect to receive the early payout of bonus awards
under this feature of the plan are required to sign a written agreement
promising to repay any amount paid that exceeds the amount ultimately determined
that the participant is entitled to receive under the plans based on final
audited operating profits. No such early payments were approved or made during
fiscal 2000.
The Company's operating profits improved substantially in fiscal year 2000.
However, the Company did not exceed all the targets as defined by the Board of
Directors for purposes of the regular and supplemental bonus plans. The Board of
Directors decided that the real progress of the business exceeded the reported
financial results as a result of one-time effects due to inventory reductions at
customers, who sold more product to end users than they purchased, and the
impact of the Year 2000 on the call center market. As a result, the Board made a
discretionary funding of the regular and supplemental bonus plans and bonuses
were paid to participants up to 100% of eligible bonus amounts under both bonus
plans.
STOCK OPTIONS. The Company provides long-term incentives to executive
officers through its 1993 Stock Plan, adopted by the Board of Directors in
September 1993. In order to attract and retain highly qualified executives and
to ensure that the interests of the executive officers will coincide with the
interests of the Company's stockholders, stock options constitute a significant
portion of the Company's incentive compensation program for executives. Options
granted under the 1993 Stock Plan incorporate vesting schedules to encourage
employees to remain with the Company. Generally, in granting options to
executives, the Compensation Committee takes into consideration the individual's
position with the Company, responsibilities, past performance and future
potential to influence the long-term growth and profitability of the Company, as
well as the individual's existing equity interest in the Company, giving primary
weight to position, responsibilities and performance.
SENIOR EXECUTIVE STOCK PURCHASE PLAN. On November 4, 1996 the Board of
Directors adopted the Company's Senior Executive Stock Purchase Plan (the "SEP")
effective as of January 1, 1997 to facilitate purchases of Company stock by
senior executives and thus create long-term incentives to focus executives on
managing the Company and align executive compensation with benefits realized by
the Company's stockholders. The SEP is a voluntary plan and its goal is to
encourage the Chief Executive Officer and all senior executives who participate
in the Company's Supplemental Bonus Plan to acquire, over a five year period,
15
<PAGE> 19
Company stock with a value, in the case of the CEO, of twice annual base salary,
and in the case of the other participants, equal to annual base salary. For
purposes of evaluating whether the target ownership levels are met, stock
purchases, exercise of options, and stock held in the Company's Basic Deferred
Compensation Plan, the Company's Annual Profit Sharing/Individual Savings Plan
(401k Plan) and the executive's Individual Retirement Account are aggregated. To
encourage such purchases, the Company offers treasury shares to the
participating senior executives at a discount. Shares are sold under the SEP at
a price equal to the greater of (i) 95% of the price set by the Board of
Directors on an annual basis or (ii) 85% of the fair market value of the stock
on the date of the transaction. However, if the fair market value falls below
the Board's annual set price, then a 5% discount off the fair market value on
the date of the transaction applies. The Board of Directors set an annual price
for the calendar year 1999 of $45.75 per share and for calendar year 2000 a
price of $59.9375. To facilitate purchases necessary to achieve the target
levels of stock ownership, the Company also offers a loan program, with the
amounts borrowed to be repaid on a periodic basis within five years or less, to
be evidenced by a promissory note, and secured by the stock purchased and by a
personal guarantee. To date no such loans have been made.
COMPENSATION OF CHIEF EXECUTIVE OFFICER. The compensation of the Chief
Executive Officer in fiscal 2000 was approved by the Compensation Committee
pursuant to an employment agreement (the "Employment Agreement") between the
Company and the Chief Executive Officer (described in this Proxy Statement under
the caption "Additional Information -- Employment Agreements and
Change-in-Control Arrangements"). In making compensation decisions with respect
to the Chief Executive Officer, the Compensation Committee refers to Mr.
Kannappan's Employment Agreement, and also generally applies the compensation
philosophy described above. Mr. Kannappan received 100% of the bonus amount for
fiscal 2000 for which he was eligible under the Company's regular and
supplemental bonus plans. Mr. Kannappan's fiscal 2000 bonus was determined
(pursuant to his Employment Agreement) in accordance with the Company's
Executive Bonus Plan approved by the Board of Directors. On June 24, 1999, the
Company issued Mr. Kannappan an option to purchase 40,000 shares of the
Company's stock at an option price of $63.00 per share.
TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION. Beginning in 1994, Section 162
of the Internal Revenue Code of 1986, as amended (the "Code"), limits the
federal income tax deductibility of compensation, other than performance-based
compensation within the meaning of Section 162(m), paid to the Company's Chief
Executive Officer and to each of the other four most highly compensated
executive officers. The Company may deduct such compensation only to the extent
that during any fiscal year the compensation paid to any such individual does
not exceed $1 million. Based on the Company's current compensation plans and
policies, the Company and the Committee believe that, for the near future, there
is little risk that the Company will lose any material tax deduction for
executive compensation.
Members of the Compensation Committee:
Robert F.B. Logan
John Mowbray O'Mara
Trude C. Taylor
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Board of Directors of the Company appointed directors Logan, Taylor and
O'Mara to the Compensation Committee in July 1999, September 1993 and March
1994, respectively. Mr. Taylor is a former officer and director of Zehntel, a
former subsidiary of the Company's former operating subsidiary, Plantronics,
Inc. He served as Chairman of the Board of Zehntel from 1984 to 1987 and as
Chief Executive Officer of Zehntel from 1984 to 1985.
16
<PAGE> 20
COMPANY'S STOCK PERFORMANCE
Set forth below is a line graph comparing the annual percentage change in
the cumulative return to the stockholders of the Company's Common Stock with the
cumulative return of the NYSE Stock Market index and a peer group index for the
period commencing on the morning of April 1, 1995 and ending on March 31, 2000.
The information contained in the performance graph shall not be deemed to be
"soliciting material" or to be "filed" with the Securities and Exchange
Commission, nor shall such information be incorporated by reference into any
future filing under the Securities Act of 1933 or the Securities Exchange Act of
1934, except to the extent that the Company specifically incorporates it by
reference into such filing.
The graph assumes that $100 was invested on the morning of April 1, 1995 in
the Company's Common Stock and in each index (based on prices from the close of
trading on March 31, 1995), and that all dividends were reinvested. No cash
dividends have been declared or paid on the Company's Common Stock. Under the
assumptions stated above, over the period from April 1, 1995 to March 31, 2000
the total return on an investment in the Company would have been 674.7%, as
compared to 319.0% for the NYSE/AMEX/Nasdaq Stock Market index (U.S. Companies
only) and 617.1% for the NYSE/Amex/Nasdaq Communications Equipment Stocks index
shown below. Stockholder returns over the indicated period should not be
considered indicative of future stockholder returns.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH FOR
PLANTRONICS, INC.
Prepared by the Center for Research in Security Prices
Produced on 05/09/2000 including data to 03/31/2000
<TABLE>
<CAPTION>
NYSE/AMEX/NASDAQ NYSE/AMEX/NASDAQ
PLANTRONICS, INC. (US COMPANIES) (SIC/EQUIPMENT)
----------------- ---------------- ----------------
<S> <C> <C> <C>
03/31/1995 100.0 100.0 100.0
03/29/1996 136.7 132.0 136.6
03/27/1997 155.7 155.9 142.4
03/31/1998 296.4 224.9 170.0
03/31/1999 452.9 254.4 197.3
03/31/2000 674.7 319.0 617.1
</TABLE>
17
<PAGE> 21
CERTAIN TRANSACTIONS
The Company has entered into indemnification agreements with each of its
directors and executive officers. Such agreements require the Company to
indemnify such individuals to the fullest extent permitted by Delaware law.
In connection with the commencement of her employment, the Company made an
interest-free term loan due in June 1999 to Barbara V. Scherer, a Senior Vice
President and Chief Financial Officer of the Company, of $200,000 for use in the
purchase of and improvements to her primary residence. The loan was secured by a
deed of trust on Ms. Scherer's residence. In June 1999, the Company extended the
term of the loan to December 31, 1999. The largest amount of such loan
outstanding at any time during fiscal 2000 was $100,000. Ms. Scherer paid the
entire balance of the loan in December 1999 and there was no balance outstanding
as of the fiscal year end.
In connection with the commencement of his employment, the Company made an
interest free term loan to H. Craig May, a Senior Vice President of the Company,
of $200,000 for use in the purchase of his primary residence. The loan is due
and payable on July 2, 2001. The total amount of such loan outstanding as of May
1, 2000 was $200,000.
On October 1, 1999, the Company made a $60,000 term loan to Don Houston, a
Senior Vice-President of the Company, secured by the principal residence of Mr.
Houston. The interest rate on the loan was 6.5% per annum and was due and
payable on October 2, 2000. The largest amount of the loan outstanding at any
time in fiscal year 2000 was $60,000 in principal and $1,720 in interest. Mr.
Houston paid the loan in full on May 11, 2000.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's executive officers and directors, and persons who own
more than ten percent of a registered class of the Company's equity securities
to file reports of ownership and changes in ownership with the Securities and
Exchange Commission ("SEC") and the New York Stock Exchange. Executive officers,
directors and greater than ten percent stockholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file. Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons, the Company believes
that, during fiscal year 2000, all filing requirements applicable to its
executive officers and directors were complied with.
OTHER MATTERS
The Company knows of no other matters to be submitted at the meeting. If
any other matters properly come before the meeting, it is the intention of the
persons named in the enclosed form of Proxy to vote the shares they represent as
the Board of Directors may recommend.
For the Board of Directors
/s/ KEVIN A. GOODWIN
Kevin A. Goodwin
Secretary
Dated: June 1, 2000
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<PAGE> 22
APPENDIX A
DESCRIPTION OF THE PLANTRONICS, INC. 1993 STOCK PLAN
SUMMARY OF 1993 STOCK PLAN
PURPOSES. The purposes of the Employee Plan are to attract and retain the
best available personnel for positions of substantial responsibility, to provide
additional incentive for employees and consultants of the Company and to promote
the success of the Company's business.
ADMINISTRATION. For so long as Citicorp Venture Capital, Ltd. ("CVC") owns
at least 10% of the Common Stock of the Company, the Employee Plan shall be
administered by the Compensation Committee of the Board of Directors (the
"Committee"), which Committee shall be composed solely of two or three (but no
more than three) directors who are neither employees nor consultants of the
Company, at least one of whom shall be a designee of CVC; provided, however,
that the Committee shall have discretionary authority to take actions with
respect to outstanding options only with at least two-thirds vote of the
Committee or, in the alternative, upon a majority vote of the Committee ratified
by approval of at least two-thirds vote of the Board of Directors. After the
date upon which CVC ceases to own at least 10% of the Company's Common Stock,
the Employee Plan shall also be administered by the Committee, which Committee
shall be composed of two or more directors who are neither employees nor
consultants of the Company, and which Committee shall have the full
discretionary authority to take all actions with respect to the Employee Plan
upon a majority vote.
The Committee has full power to select, from among the employees and
consultants of the Company eligible for awards, the individuals to whom awards
will be granted, to make any combination of awards to any participant and to
determine the specific terms of each grant, subject to the provisions of the
Employee Plan. The interpretation and construction of any provision of the
Employee Plan by the Committee shall be final and conclusive.
ELIGIBILITY. The Employee Plan provides that options may be granted to
employees (including officers and directors who are also employees) and
consultants to the Company or its parent or subsidiary. Incentive stock options
may only be granted to employees. At its meeting on July 20, 1999, the Board of
Directors directed that options under the Employee Plan be granted to all
employees of the Company worldwide, other than direct production labor in the
Company's Plamex S.A. de C.V. manufacturing subsidiary. The Board delegated to a
management committee the administration of the broad based option program,
subject to certain guidelines and restrictions. The Board provided that the
Compensation Committee was not to delegate and would retain the right, subject
to oversight by the full Board, the determination of stock option grants, if
any, given to the Company's President and Vice-Presidents. The management
committee is obligated by the Board resolution establishing the guidelines, to
report quarterly to the Compensation Committee the level of grants made in the
prior period and, not less frequently than annually, report to the Compensation
Committee its assessment of the option grant guidelines then in effect, the
average grant size within each of the guideline levels established by the
Compensation Committee and such other matters as may be requested by the
Committee.
STOCK OPTIONS. Each option granted under the Employee Plan is to be
evidenced by a written stock option agreement between the Company and the
optionee and is subject to the following additional terms and conditions:
(a) Exercise of the Option. The committee determines on the date of
grant when options become exercisable. An option is exercised by giving
written notice of exercise to the Company, specifying the number of full
shares of Common Stock to be purchased and tendering payment of the
purchase price to the Company. The acceptable methods of payment for shares
issued upon exercise of an option are set forth in the option agreement and
may consist of (1) cash, (2) check, (3) shares of Common Stock, (4) the
delivery of a properly executed exercise notice together with such other
documentation as the Board and the broker, if applicable, shall require to
effect a cash-less exercise of the option and delivery to the Company of
the amount of sale or loan proceeds required to pay the exercise price, (5)
any
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<PAGE> 23
combination of the foregoing methods or (6) such other consideration and
method of payment permitted under applicable law.
(b) Exercise Price. The exercise price of options granted under the
Employee Plan is determined on the date of grant. In the event of the grant
of a nonstatutory option below the fair market value, the difference
between fair market value on the date of grant and the exercise price would
be treated as a compensation expense for accounting purposes and would
therefore affect the Company's earnings. In the case of incentive stock
options granted to an employee who at the time of grant owns more than 10%
of the voting power of all classes of stock of the Company or any parent or
subsidiary, the exercise price must be at least 110% of the fair market
value per share of the Common Stock at the time of grant. The exercise
price of incentive stock options must be at least 100% of the fair market
value per share at the time of grant. The fair market value of a share of
Common Stock shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on The New York Stock
Exchange on the date of grant.
(c) Termination. Subject to the terms of employment agreements between
the Company and individual optionees, if the optionee's employment or
consulting relationship with the Company is terminated for any reason,
including death or total and permanent disability, options may be exercised
after such termination as to all or part of the shares as to which the
optionee was entitled to exercise at the date of such termination, provided
that the option is exercised no later than its expiration date. Under a
recent amendment to the Employee Plan, the expiration date for all new
option grants issued subsequent to the amendment will be ninety (90) days
from the termination date.
(d) Term and Termination of Options. At the time an option is granted,
the Board or the Committee determines the period within which the option
may be exercised. In no event may the term of an incentive stock option be
longer than 10 years. No option may be exercised by any person after the
expiration of its term. An option granted to an optionee who, at the time
such option is granted, owns more than 10% of the voting power of all
classes of stock of the Company, may not have a term of more than five
years.
(e) Nontransferability of Options. An option is not transferable by
the optionee, other than by will or the laws of descent and distribution,
and is exercisable during the optionee's lifetime only by the optionee.
(f) Other Provisions. The option agreement may contain such other
terms, provisions and conditions not inconsistent with the Employee Plan as
may be determined by the Board or the Committee.
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, LIQUIDATION,
MERGER, SALE OF ASSETS OR CHANGE OF CONTROL. Subject to any required action by
the stockholders of the Company, in the event of a stock split, reverse stock
split, stock dividend, recapitalization, combination or reclassification of the
Company's Common Stock, or any other increase or decrease in the number of
issued shares of Common Stock or in the number or amount of convertible
securities (as defined in the Employee Plan) effected without receipt of
consideration by the Company, the number of shares of Common Stock covered by
each outstanding option and the number of shares of Common Stock which have been
authorized for issuance under the Employee Plan but as to which no options have
yet been granted or which have been returned to the Employee Plan upon
cancellation or expiration of an option, as well as the price per share of
Common Stock covered by each such outstanding option, shall be proportionately
adjusted so that such options' claim on assets, earnings and voting power
remains the same before and after any increase or decrease in the number of
issued shares of Common Stock resulting from such event. Such adjustment shall
be made by the Board, whose determination in that respect shall be final,
binding and conclusive. In the event that the Company undertakes any corporate
separation or division, including, without limitation, a split-up, split-off or
spin-off, the Committee shall provide that the holder of each option shall
receive, upon a subsequent exercise of his or her option, the same per share
consideration for each share exercised that stockholders of the Company received
for each share of their holdings pursuant to the corporate separation or
division. In the event that the Company offers for sale any Common Stock or any
convertible securities for an initial consideration price per
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<PAGE> 24
share of Common Stock less than the fair market value of such securities, and in
the further event that sales pursuant to such offerings result in the fair
market value of the Common Stock declining, the per share exercise price of each
outstanding option shall be adjusted so that the ratio of the exercise price to
the fair market value of the Common Stock before and after the closing of such
sales remains constant. Such adjustment shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive.
In the event of a proposed dissolution or liquidation of the Company, after
proper notice thereof and sufficient time to exercise all vested options, all
outstanding unexercised options will immediately terminate prior to the
consummation of such proposed action.
In the event of a "Change of Control" (as defined below), the Committee
shall provide for optionees to have the right to exercise their options as to
all of the shares subject to such options, including shares that would not
otherwise be exercisable. In such event, the Committee shall notify each
optionee that the options shall be exercisable for a period of not less than
thirty (30) days from the date of such notice. For these purposes, a "Change of
Control" shall mean the occurrence of any of the following events:
(a) Any "person" (as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended) becomes the "beneficial
owner" (as defined in Rule 13d-3 under said Act), directly or indirectly,
of securities of the Company representing forty percent (40%) or more of
the total voting power represented by the Company's then outstanding voting
securities; or
(b) A change in the composition of the Board of Directors occurring
within a two-year period, as a result of which fewer than a majority of the
directors are Incumbent Directors. "Incumbent Directors" shall mean
directors who (i) were directors of the Company as of the date the Employee
Plan was adopted, (ii) are elected, or nominated for election, to the Board
of Directors with the affirmative votes of at least a majority of the
Incumbent Directors at the time of such election or nomination (but shall
not include an individual whose election or nomination is in connection
with an actual or threatened proxy contest relating to the election of
directors to the Company) or (iii) are elected in accordance with the terms
of the Board Designation Agreement between the Company and CVC; or
(c) A merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least seventy
percent (70%) of the total voting power represented by the voting
securities of the Company or such surviving entity outstanding immediately
after such merger or consolidation, or the stockholders of the Company
approve a plan of complete liquidation of the Company or an agreement for
the sale or disposition by the Company of all or substantially all of the
Company's assets.
AMENDMENT AND TERMINATION OF THE EMPLOYEE PLAN.
The Board may amend the Employee Plan at any time or from time to time or
may terminate the Employee Plan without approval of the stockholders; provided,
however, that stockholder approval is required for any amendment to the Employee
Plan for which stockholder approval would be required under applicable law or
regulation (including the requirements of The New York Stock Exchange), as in
effect at the time. However, no action by the Board of Directors or stockholders
may alter or impair any option previously granted under the Employee Plan. The
Committee may accelerate any option or waive any condition or restriction
pertaining to such option at any time. The Committee may also reduce the
exercise price of any option to the then current fair market value, if the fair
market value of the Common Stock covered by such option shall have declined
since the date the option was granted. In any event, the Employee Plan shall
terminate in September 2003. Any options outstanding under the Employee Plan at
the time of its termination shall remain outstanding until they expire by their
terms.
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<PAGE> 25
CERTAIN FEDERAL INCOME TAX INFORMATION.
An optionee who is granted an incentive stock option will not recognize
taxable income either at the time of grant or exercise, although the exercise
may subject the optionee to the alternative minimum tax. Upon the sale or
exchange of the shares more than two years after grant of the option and one
year after exercise, any gain or loss will be treated as long-term capital gain
or loss. If these holding periods are not satisfied, the optionee will recognize
ordinary income at the time of sale or exchange 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. A
different rule for measuring ordinary income upon such a premature disposition
may apply if the optionee is subject to Section 16 of the Securities Exchange
Act of 1934. Any gain or loss recognized on such a premature disposition of the
shares in excess of the amount treated as ordinary income will be characterized
as long-term or short-term capital gain or loss, depending on the holding
period.
An optionee will not recognize any taxable income at the time he or she is
granted a nonstatutory option. However, upon its exercise, the optionee will
recognize taxable income generally measured as the excess of the then fair
market value of the shares purchased over the purchase price. Any taxable income
recognized in connection with an option exercised by an optionee who is also an
employee of the Company will be subject to tax withholding by the Company. Upon
resale of such shares by the optionee, any difference between the sales price
and the optionee's purchase price, to the extent not recognized as taxable
income as described above, will be treated as long-term or short-term capital
gain or loss, depending on the holding period.
The Company will be entitled to a tax deduction in the same amount as the
ordinary income recognized by an optionee with respect to shares acquired upon
exercise of an option.
The foregoing summary of the federal income tax consequences of Employee
Plan transactions is based upon federal income tax laws in effect on the date of
this Proxy Statement. This summary does not purport to be complete, and does not
discuss foreign, state or local tax consequences.
A-4
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APPENDIX B
DESCRIPTION OF THE PLANTRONICS, INC. 1993 DIRECTOR STOCK OPTION PLAN
SUMMARY OF THE DIRECTOR PLAN
PURPOSES. The purposes of the Director Plan are to attract and retain the
best available personnel for service as outside directors of the Company, to
provide additional incentive to such non-employee directors and to encourage
their continued service on the Board.
ADMINISTRATION. The Director Plan is designed to be effective automatically
without requiring administration. However, to the extent administration is
necessary, it will be provided by the Board. The interpretation and construction
of any provision of the Director Plan by the Board shall be final and
conclusive. Members of the Board receive no additional compensation for their
services in connection with the administration of the Director Plan.
TERMS OF OPTIONS. The Director Plan provides for the grant of nonstatutory
stock options to non-employee directors of the Company. Each eligible director
shall be granted an initial option (the "Initial Option") to purchase 4,000
shares of Common Stock (adjusted for the 1997 2-for-1 stock split) on the later
of the effective date of the Company's initial public offering or the date on
which such person first becomes such a director. Thereafter, each eligible
director shall be granted an option (the "Subsequent Option") to purchase 1,000
additional shares of Common Stock (adjusted for the 1997 2-for-1 stock split) on
January 15 of each year if, on such date, the eligible director shall have
served on the Company's Board of Directors for at least six months. Options
granted under the Director Plan expire 10 years after the date of grant. Each
option is evidenced by a stock option agreement between the Company and the
director to whom such option is granted. The terms of the Director Plan
described above may not be amended more than once every six months, except for
amendments to comply with changes in applicable law.
RULE 16b-3. The Director Plan requires that options granted thereunder must
comply with the applicable provisions of Rule 16b-3 promulgated under the
Exchange Act or any successor thereto and shall contain such additional
conditions or restrictions as may be required thereunder from time to time to
qualify for the maximum exemption from Section 16 of the Exchange Act with
respect to the Director Plan transactions.
EXERCISE OF THE OPTIONS. The Initial Option shall become exercisable as to
25% of the shares subject to the Initial Option on the first anniversary of the
date of grant of the Initial Option, and shall become exercisable as to an
additional 6.25% of the shares subject to the Initial Option at the end of each
three-month period thereafter, so long as the optionee remains a director. Each
Subsequent Option shall become exercisable in full on the fourth anniversary of
the date of its grant, so long as the optionee remains a director. An option is
exercised by giving written notice of exercise to the Company, specifying the
number of full shares of Common Stock to be purchased and tendering payment of
the purchase price to the Company. The consideration to be paid for shares
issued upon exercise of options granted under the Director Plan may consist of
(1) cash, (2) check, (3) shares of Common Stock, (4) the delivery of a properly
executed exercise notice together with such other documentation as the Board and
the broker, if applicable, shall require to effect a cash-less exercise of the
option and delivery to the Company of the amount of sale or loan proceeds
required to pay the exercise price, or (5) any combination of the foregoing
methods of payment.
OPTION PRICE. The option price under the Director Plan is the fair market
value of the Company's Common Stock on the date of grant. The fair market value
of a share of Common Stock shall be the closing sales price for such stock (or
the closing bid, if no sales were reported) as quoted on the New York Stock
Exchange. For purposes of Initial Options granted on the effective date of the
initial public offering, the fair market value per share was the initial public
offering price as set forth in the final prospectus filed with the Securities
and Exchange Commission pursuant to Rule 424 under the Securities Act.
TERMINATION OF STATUS AS A DIRECTOR. The Director Plan provides that if the
optionee ceases to serve as a director of the Company for any reason other than
death or disability, the optionee may, but only within 90 days after the date he
or she ceases to be a director, exercise his or her option to the extent that
the
B-1
<PAGE> 27
optionee was entitled to exercise it at the date of such termination, provided
that the option is exercised no later than its expiration date.
DISABILITY. If an optionee is unable to continue service as a director of
the Company as a result of his or her total and permanent disability, the
optionee may, but only within 12 months after the date of the optionee's
termination, exercise his or her option to the extent that the optionee was
entitled to exercise it at the date of such termination, provided that the
option is exercised no later than its expiration date.
DEATH. In the event of the death of an optionee, the option may be
exercised at any time within 12 months after death, but only to the extent that
the optionee was entitled to exercise it at the date of death, provided that the
option is exercised no later than its expiration date.
NONTRANSFERABILITY OF OPTIONS. An option is nontransferable by the
optionee, other than by will or the laws of descent and distribution, and is
exercisable during the optionee's lifetime only by the optionee.
ADJUSTMENTS, DISSOLUTION, MERGERS AND ASSET SALES. In the event any change,
such as a stock split or dividend, is made in the Company's capitalization which
results in an increase or decrease in the number of outstanding shares of Common
Stock without receipt of consideration by the Company, an appropriate adjustment
shall be made in the number of shares under the Director Plan, the number of
shares subject to Initial Options and Subsequent Options granted thereafter, and
the number of shares and price per share covered by each outstanding option. In
the event of the proposed dissolution or liquidation of the Company, all
outstanding options will terminate immediately prior to the consummation of such
proposed action. In the event of the merger of the Company with or into another
corporation or a proposed sale of all or substantially all of the assets of the
Company, each outstanding option shall be assumed or substituted by such
successor corporation. If the successor corporation chooses not to assume the
options or to substitute equivalent options, then the options will be made fully
exercisable for a period of 30 days and thereafter all unexercised options shall
terminate.
AMENDMENT AND TERMINATION. The Board may amend, alter, suspend or
discontinue the Director Plan at any time, but any such action shall not
adversely affect any stock option then outstanding under the Director Plan
without the consent of the holder thereof. To the extent necessary and desirable
to comply with Rule 16b-3 (or any other applicable law or regulation), the
Company shall obtain stockholder approval of any amendment to the Director Plan
in such a manner and to such a degree as required. The Director Plan shall
terminate in September 2003. Any options outstanding under the Director Plan at
the time of its termination shall remain outstanding until they expire by their
terms.
CERTAIN FEDERAL INCOME TAX INFORMATION. Options granted under the Director
Plan are nonstatutory options. An optionee will not recognize any taxable income
at the time of grant of a nonstatutory option. However, upon its exercise, the
optionee will recognize ordinary income for tax purposes measured by the excess
of the then fair market value of the shares over the exercise price. Because the
optionee is a director of the Company and therefore subject to Section 16 of the
Securities Exchange Act of 1934, the date of taxation (and the date of
measurement of taxable ordinary income) may be deferred unless the optionee
files an election under Section 83(b) of the Code. Upon resale of such shares by
the optionee, any difference between the sales price and the exercise price, to
the extent not recognized as ordinary income as provided above, will be treated
as capital gain or loss. The Company will be entitled to a tax deduction in the
amount and at the time that the optionee recognizes ordinary income with respect
to shares acquired upon exercise of an option.
The foregoing summary of the federal income tax consequences of Director
Plan transactions is based on federal income tax laws in effect on the date of
this Proxy Statement. This summary is not intended to be complete, and does not
describe foreign, state or local tax consequences.
B-2
