<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
MATTSON TECHNOLOGY, INC.
(Name of Registrant as Specified In Its Charter)
MATTSON TECHNOLOGY, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction
applies:
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2) Aggregate number of securities to which transaction
applies:
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3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth
the amount on which the filing fee is calculated and
state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
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<PAGE> 2
[MATTISON LOGO]
2800 BAYVIEW DRIVE
FREMONT, CALIFORNIA 94538
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 17, 2000
------------------------
The Annual Meeting of Stockholders of Mattson Technology, Inc. (the
"Company") will be held at the Newark Hilton, 39900 Balentine Drive, Newark,
California 94560 on May 17, 2000, at 9:30 a.m. local time for the following
purposes:
1. To elect one (1) Class III director of the Company to hold office for a
three-year term and until his successor is elected and qualified.
2. To approve an amendment to the Company's Amended and Restated 1989 Stock
Option Plan to increase the number of shares reserved for issuance
thereunder by 900,000 shares.
3. To ratify the appointment of Arthur Andersen LLP as the Company's
independent public accountants for the year ending December 31, 2000.
4. To transact such other business as may properly come before the meeting
or any adjournment or postponement of the meeting.
Only stockholders of record at the close of business on March 31, 2000 will
be entitled to vote at the meeting. Each of these stockholders is cordially
invited to be present and vote at the meeting in person.
By Order of the Board of Directors,
/s/ Brian McDonald
Brian McDonald, Secretary
Fremont, California
April 17, 2000
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. HOWEVER, WHETHER OR NOT
YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE COMPLETE, DATE AND SIGN THE
ACCOMPANYING PROXY AND MAIL IT PROMPTLY IN THE RETURN ENVELOPE TO ASSURE THAT
YOUR SHARES ARE REPRESENTED AT THE MEETING. IF YOU LATER DESIRE TO REVOKE YOUR
PROXY, YOU MAY DO SO AT ANY TIME BEFORE IT IS EXERCISED.
<PAGE> 3
MATTSON TECHNOLOGY, INC.
2800 BAYVIEW DRIVE
FREMONT, CALIFORNIA 94538
------------------------
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 17, 2000
------------------------
GENERAL INFORMATION
Your proxy in the enclosed form is solicited by the directors of Mattson
Technology, Inc., a Delaware corporation (the "Company"), for use at the Annual
Meeting of Stockholders to be held on May 17, 2000 (the "Meeting") for the
purposes set forth in the accompanying notice and at any adjournment or
postponement of that meeting. The date of this Proxy Statement is April 17,
2000, the approximate date on which this Proxy Statement and accompanying form
of proxy were first sent or given to stockholders.
The shares represented by any proxy in the enclosed form will be voted in
accordance with the instructions given on the proxy if the proxy is properly
executed and is received by the Company prior to the close of voting at the
Meeting or any adjournment or postponement thereof. Proxies received by the
Company on which no contrary instruction has been given will be voted in
accordance with the recommendations of the Board of Directors for each proposal.
A stockholder giving a proxy has the power to revoke it at any time before it is
exercised. A proxy may be revoked by filing with the Secretary of the Company an
instrument revoking it or a duly executed proxy bearing a later date. The powers
of the proxy holders will be suspended if the person executing the proxy is
present at the meeting and votes in person.
Copies of solicitation material will be furnished to brokerage houses,
fiduciaries, and custodians holding shares in their names which are beneficially
owned by others (the "Record Holders") to forward to such beneficial owners. In
addition, the Company may reimburse such persons for their cost of forwarding
the solicitation material to such beneficial owners. Original solicitation of
proxies by mail may be supplemented, if deemed desirable or necessary, by one or
more of telephone, telegram, facsimile, or personal solicitation by directors,
officers, or employees of the Company. No additional compensation will be paid
for any such services. The Company reserves the right, if deemed desirable or
necessary, to retain a proxy solicitation firm to deliver soliciting materials
to Record Holders for distribution by them to their principals and to assist the
Company in collecting proxies from such holders. The costs of these services,
exclusive of out-of-pocket costs, is not expected to exceed $7,000. Except as
described above, the Company does not intend to solicit proxies other than by
mail.
<PAGE> 4
SHARES OUTSTANDING AND VOTING RIGHTS
Only holders of shares of Common Stock of record as of the close of
business on March 31, 2000 are entitled to vote at the meeting. On this record
date there were issued and outstanding 19,603,457 shares of Common Stock. Each
share of Common Stock is entitled to one vote on all matters to be voted upon.
The presence, in person or by proxy duly authorized, of the holders of a
majority of the voting shares of Common Stock will constitute a quorum for the
transaction of business at the Meeting and any continuation or adjournment
thereof. Votes for and against, abstentions and broker non-votes (i.e. shares
held by broker or nominee which are represented at the Meeting, but with respect
to which such broker or nominee is not empowered to vote on a particular
purpose) will be counted as present in determining whether a quorum is present
at the Meeting.
Your execution of the enclosed proxy will not affect your right as a
stockholder to attend the Meeting and to vote in person. Any stockholder giving
a proxy has a right to revoke it at any time by either (i) a later-dated proxy,
(ii) a written revocation sent to and received by the Secretary of the Company
prior to the Meeting, or (iii) attendance at the Meeting and voting in person.
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of March 24, 2000 by (i) each
director, director-nominee, and executive officer of the Company named in the
Summary Compensation Table; (ii) all current executive officers and directors of
the Company as a group; and (iii) all persons known by the Company to own
beneficially 5% or more of the outstanding shares or voting power of the
Company's voting securities. The table is based upon information supplied by
directors, officers and principal stockholders. Unless otherwise indicated, each
of the listed persons has sole voting and sole investment power with respect to
the shares beneficially owned, subject to community property laws where
applicable.
<TABLE>
<CAPTION>
SHARES
BENEFICIAL OWNER(1) BENEFICIALLY OWNED PERCENTAGE
------------------- ------------------ ----------
<S> <C> <C>
Brad Mattson................................................ 3,701,192(2) 17.7%
Dimensional Fund Advisors Inc. ............................. 830,400(3) 5.4%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
John C. Savage.............................................. 35,500(4) *
Shigeru Nakayama............................................ 24,792(5) *
Kenneth G. Smith............................................ 43,125(6) *
Kenneth S. Kannappan........................................ 7,250(7) *
Yasuhiko Morita............................................. 58,895(8) *
David Dutton................................................ 50,045(9) *
Brian McDonald.............................................. 22,293(10) *
Walter Kasianchuk(11)....................................... -- *
All directors and executive officers as a group (9
persons).................................................. 3,943,092(12) 18.9%
</TABLE>
- ---------------
* Less than 1%
(1) Except as set forth herein the address of the directors and executive
officers set forth in the table is 2800 Bayview Drive, Fremont, California
94538.
(2) Includes 165,676 shares subject to options exercisable within 60 days of
March 24, 2000.
(3) According to a Schedule 13G filed February 3, 2000 by Dimensional Fund
Advisers Inc. ("Dimensional") with the Securities and Exchange Commission,
Dimensional may be deemed to beneficially own an aggregate of 830,400
shares of the Company's Common Stock, has sole voting power with respect to
830,400 shares of the Company's Common Stock and has sole dispositive power
over 830,400 shares of the Company's Common Stock.
2
<PAGE> 5
(4) Includes 35,500 shares subject to options exercisable within 60 days of
March 24, 2000.
(5) Includes 24,792 shares subject to options exercisable within 60 days of
March 24, 2000.
(6) Includes 43,125 shares subject to options exercisable within 60 days of
March 24, 2000.
(7) Includes 6,250 shares subject to options exercisable within 60 days of
March 24, 2000.
(8) Includes 58,541 shares subject to options exercisable within 60 days of
March 24, 2000.
(9) Includes 42,819 shares subject to options exercisable within 60 days of
March 24, 2000.
(10) Includes 20,312 shares subject to options exercisable within 60 days of
March 24, 2000.
(11) This individual is not an executive officer or director but is deemed to be
a significant employee who makes or is expected to make a significant
contribution to our business.
(12) Includes 397,015 shares subject to options exercisable within 60 days of
March 24, 2000.
3
<PAGE> 6
PROPOSAL ONE
ELECTION OF DIRECTORS
The Company has a classified Board of Directors consisting of two Class I
directors (Brad Mattson and Kenneth Kannappan), two Class II directors (John C.
Savage and Kenneth G. Smith) and one Class III director (Shigeru Nakayama).
Class III, I and II directors will serve until the Annual Meetings of
Stockholders to be held in 2000, 2001, and 2002 respectively, and until their
respective successors are duly elected and qualified. At each Annual Meeting of
Stockholders, directors are elected for a full term of three (3) years to
succeed those directors whose terms expire on the Annual Meeting dates.
Unless otherwise directed by stockholders, the proxyholders will vote all
shares represented by proxies held by them for the election of the nominee,
Shigeru Nakayama. The Company is advised that Mr. Nakayama has indicated his
availability and willingness to serve if elected. In the event that Mr. Nakayama
becomes unavailable or unable to serve as a director of the Company prior to the
voting, the proxyholders will refrain from voting for the unavailable nominee
and will vote for a substitute nominee in the exercise of their best judgment.
If a quorum is present and voting, the nominee for directors receiving the
highest number of votes will be elected as a director. Absentees and shares held
by brokers that are present, but not voted because the brokers were prohibited
from exercising discretionary authority, i.e., "broker non-votes," will be
counted as present for purposes of determining if a quorum is present.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE POSITION WITH THE COMPANY SINCE
---- --- ------------------------------------------------- --------
<S> <C> <C> <C>
CLASS III DIRECTOR WHOSE TERM EXPIRES AT THE 2000 ANNUAL MEETING OF STOCKHOLDERS:
Shigeru Nakayama 65 Director 1996
CLASS I DIRECTORS WHOSE TERMS EXPIRE AT THE 2001 ANNUAL MEETING OF STOCKHOLDERS:
Brad Mattson 45 Chairman and Chief Executive Officer 1988
Kenneth Kannappan 40 Director 1998
CLASS II DIRECTORS WHOSE TERMS EXPIRE AT THE 2002 ANNUAL MEETING OF STOCKHOLDERS:
John C. Savage 52 Director 1992
Kenneth G. Smith 50 Director 1994
</TABLE>
Brad Mattson, age 45, founded Mattson in November 1988 and has served as
Chief Executive Officer and Chairman since its inception, and until January 1997
had served as President. Mr. Mattson was the founder of Novellus Systems, Inc.
("Novellus"), a semiconductor equipment company, and formerly served as its
President, Chief Executive Officer and Chairman. He has held previous executive
positions at Applied Materials, Inc. and LFE Corporation, semiconductor
equipment companies. Mr. Mattson is a director of CFM Technologies, Inc., a
semiconductor equipment company.
John C. Savage, age 52, joined Mattson as a member of its Board of
Directors in October 1992. Since July 1998, Mr. Savage has been a Partner at
Alliant Partners, a technology merger and acquisition advisory firm. From 1990
to July 1998, Mr. Savage was managing partner of Glenwood Capital Partners, a
venture buyout firm, and from 1996 to 1999 was managing director of Redwood
Partners LLC, an affiliated venture buyout and investment banking firm. Mr.
Savage is a director of FileNet Corporation, a web content management company.
Mr. Savage is currently a member of the Audit Committee of the Board of
Directors.
Kenneth G. Smith, age 50, joined Mattson as a member of its Board of
Directors in August 1994. Since May 1996, Mr. Smith has been President, Chief
Operating Officer and a Director of WaferTech, a semiconductor manufacturer.
From 1991 to 1995, Mr. Smith was Vice President of Operations at Micron
Semiconductor, Inc., a semiconductor manufacturer, and from 1989 to 1991, Mr.
Smith was a Fabrication Manager at Micron Semiconductor. Mr. Smith is a member
of the Audit Committee and the Compensation Committee of the Board of Directors.
Shigeru Nakayama, age 65, joined Mattson as a member of its Board of
Directors in May 1996. Since 1996, Mr. Nakayama has been a business consultant
to Semiconductor Equipment and Materials International, an international
association of semiconductor equipment manufacturers and materials suppliers.
From
4
<PAGE> 7
1984 to 1994, Mr. Nakayama was the President of SEMI Japan, a member of
Semiconductor Equipment and Materials International.
Kenneth Kannappan, age 40, joined Mattson as a member of its Board of
Directors in July 1998. In March 1998, Mr. Kannappan was appointed the President
and Chief Executive Officer of Plantronics, Inc., a telecommunications equipment
manufacturer. From February 1995 to 1998, Mr. Kannappan held various positions
at Plantronics, Inc. From 1991 to 1995 Mr. Kannappan was Senior Vice President
of Kidder, Peabody & Co. Incorporated, an investment banking company. Mr.
Kannappan is a member of the Compensation Committee and the Audit Committee of
the Board of Directors.
BOARD MEETINGS AND COMMITTEES
During the fiscal year ended December 31, 1999, the Board of Directors held
six meetings. Each director attended at least 75% of the meetings of the Board
and of the Committees on which he served during fiscal 1999 which occurred on or
after the initiation of his term as a director.
During fiscal year 1999, the Board of Directors of the Company had an Audit
Committee and a Compensation Committee. The Company does not have a Nominating
Committee or a committee that performs equivalent functions of a Nominating
Committee.
The Audit Committee oversees the Company's accounting and financial
reporting policies and internal controls, reviews annual audit reports and
management letters and makes recommendations to the Board of Directors regarding
appointment of independent public accountants. During fiscal 1999, the Audit
Committee consisted of Messrs. Smith, Savage and Kannappan. The Audit Committee
held four meetings during fiscal 1999.
The principal functions of the Compensation Committee are to recommend to
the Board the compensation of directors and officers of the Company, to oversee
the administration of the Company's stock option plans and to perform such other
duties regarding compensation for employees and consultants as the Board may
delegate from time to time. See also "REPORT OF THE COMPENSATION COMMITTEE ON
EXECUTIVE COMPENSATION." During fiscal 1999, the Compensation Committee
consisted of Messrs. Smith, Savage and Kannappan. The Compensation Committee
held three meetings during fiscal 1999.
COMPENSATION OF DIRECTORS
The Company reimburses each of its outside directors for out-of-pocket
expenses associated with attending meetings of the Board of Directors of the
Company, but otherwise does not provide any cash compensation to outside
directors for their services as such. On December 16, 1999, the Board of
Directors approved a proposal under which nonemployee directors are to be
reimbursed $5,000 per Board of Directors meeting attended, up to a maximum of
four meetings per year.
The Company's Amended and Restated 1989 Stock Option Plan (the "Option
Plan") provides for the automatic grant of options to the Company's nonemployee
directors. Nonemployee directors elected or appointed after July 24, 1997 (the
"Effective Date") are each granted an option to purchase 12,500 shares on the
date of appointment or election. In addition, each nonemployee director is
thereafter granted an option to purchase 5,000 shares on the date immediately
after each annual meeting of stockholders occurring after the Effective Date
following which he remains a nonemployee director of the Company, as long as
such director has continuously served on the Board for six months as of the date
of such annual meeting. On December 16, 1999, the Board of Directors approved an
increase in the number of options to be granted to nonemployee directors from
5,000 shares per year to 10,000 shares per year. In addition, the Board of
Directors approved that the nonemployee directors be granted options to purchase
17,500 shares for fiscal year 2000. These options were granted to the
nonemployee directors on January 3, 2000. Thereafter, nonemployee directors will
be granted options to purchase 10,000 shares per year. See Proposal Two,
"APPROVAL OF INCREASE IN SHARES RESERVED FOR ISSUANCE UNDER THE AMENDED AND
RESTATED 1989 STOCK OPTION PLAN."
5
<PAGE> 8
VOTE REQUIRED AND RECOMMENDATION OF THE BOARD OF DIRECTORS
The affirmative vote of a majority of the votes present or represented by
proxy and entitled to a vote at the Annual Meeting of Stockholders, at which a
quorum representing a majority of all outstanding shares of Common Stock of the
Company is present and voting, is required for approval of this proposal.
Abstentions and broker nonvotes will each be counted present for purposes of
determining the presence of a quorum, but will not be counted as having been
voted on this proposal.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE NOMINEE LISTED HEREIN.
ADDITIONAL INFORMATION
EXECUTIVE OFFICERS
The following table sets forth certain information concerning the Company's
executive officers who are not directors of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
David Dutton 39 Executive Vice President, Chief Operating Officer
Brian McDonald 43 Vice President, Finance, Chief Financial Officer &
Secretary
Yasuhiko Morita 58 Executive Vice President, Global Sales
Walter Kasianchuk 50 General Manager and Vice President, Epitaxial Product
Division
</TABLE>
David Dutton, age 39, joined Mattson as General Manager in the Strip/Plasma
Etch division in 1994. In March 1998, Mr. Dutton became Executive Vice President
and Chief Operating Officer of Mattson. From 1984 to 1993, Mr. Dutton served an
engineer and then manager in plasma etch processing and yield enhancement at
Intel Corp. From 1993 to 1994, Mr. Dutton was Engineering Manager for Thin Films
Processing at Maxim Integrated Products.
Brian McDonald, age 43, joined Mattson as Vice President, Finance, Chief
Financial Officer and Secretary in April 1999. From 1993 to July 1998, Mr.
McDonald was Vice President of Finance for the Central Technology and
Manufacturing division of National Semiconductor Corporation. Mr. McDonald
previously held senior finance positions at National Semiconductor, Read-Rite
Corporation and Micro Linear Corporation.
Yasuhiko Morita, age 58, has served as Mattson's Executive Vice President,
Global Sales since January 1999. From January 1996 to January 1999, Mr. Morita
was President of Mattson's majority-owned Japanese subsidiary, Mattson
Technology Center, K.K. Mr. Morita served on Mattson's Board of Directors from
April 1994 through February 1996. Mr. Morita was a staff member of Marubeni
Corporation from 1966 to December 1995 and served as Executive Vice President of
Marubeni Hytech Corporation from 1988 through 1995.
Walter Kasianchuk, age 50, joined Mattson as General Manager and Vice
President, Epitaxial Product Division in September 1999. From 1995 to 1999, Mr.
Kasianchuk was Executive Vice President of Engineering and Technology at
Mitsubishi Silicon America. From 1983 to 1995, Mr. Kasianchuk held senior
management positions with Siltec Corp., and from 1977 to 1982, Mr. Kasianchuk
held management positions with Monsanto.
6
<PAGE> 9
EXECUTIVE COMPENSATION AND OTHER MATTERS
EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation of
the Company's Chief Executive Officer and the four highest compensated executive
officers of the Company whose total salary and bonus for the fiscal years ended
December 31, specified below, exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------- ------------------
NAME AND PRINCIPAL FUNCTION YEAR SALARY($) BONUS($)(4) OPTIONS GRANTED(#)
--------------------------- ---- --------- ------------ ------------------
<S> <C> <C> <C> <C>
Brad Mattson............................... 1999 313,272 201,000(5) 100,000
Chief Executive Officer 1998 273,134 87,000 --
1997 299,134 79,000 116,500
Brian McDonald(2).......................... 1999 136,924 70,750(5) 83,750
Vice President, Finance, Chief
Financial Officer and Secretary
David Dutton............................... 1999 194,692 119,000 37,500
Executive Vice President, 1998 167,722 34,000 --
Chief Operating Officer 1997 155,999 32,000 45,500
Yasuhiko Morita(1)......................... 1999 200,936 81,000(5) 20,000
Executive Vice President, Global Sales 1998 114,141 44,000 --
1997 172,985 39,000 37,000
Walter Kasianchuk(3)....................... 1999 53,570 20,000(5) 30,000
General Manager and Vice President,
Epitaxial Product Division
</TABLE>
- ---------------
(1) Mr. Morita's salary was denominated in Japanese yen and converted to US
dollars.
(2) Mr. McDonald joined the Company in April 1999.
(3) Mr. Kasianchuk joined the Company in September 1999.
(4) 1997 bonus figures represent bonuses accrued at the end of the 1997 fiscal
year but paid in the succeeding fiscal year.
(5) 1999 bonus figures represent bonuses accrued at the end of the 1999 fiscal
year but paid in the 2000 fiscal year.
7
<PAGE> 10
STOCK OPTIONS GRANTED DURING FISCAL 1999
The following table provides the specified information concerning grants of
options to purchase the Company's Common Stock made during the fiscal year ended
December 31, 1999, to the persons named in the Summary Compensation Table.
STOCK OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS IN FISCAL 1999 VALUE AT ASSUMED
----------------------------------------------------- ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM(2)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ---------------------
NAME GRANTED(1) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
---- ----------- ------------ ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Brad Mattson 14,269 1.56% $ 7.77 05/20/04 $ 18,000 $ 51,000
35,731 3.90% $ 7.77 05/20/04 $ 44,000 $129,000
768 0.08% $16.78 12/16/04 $ 2,000 $ 6,000
49,232 5.38% $16.78 12/16/04 $132,000 $383,000
Brian McDonald 49,105 5.36% $ 7.00 04/21/09 $216,000 $548,000
25,895 2.83% $ 7.00 04/21/09 $114,000 $289,000
3,688 0.40% $15.25 12/16/09 $ 35,000 $ 90,000
5,062 0.55% $15.25 12/16/09 $ 49,000 $123,000
David Dutton 6,108 0.67% $ 7.06 05/20/09 $ 27,000 $ 69,000
16,392 1.79% $ 7.06 05/20/09 $ 73,000 $185,000
6,557 0.72% $15.25 12/16/09 $ 63,000 $159,000
8,443 0.92% $15.25 12/16/09 $ 81,000 $205,000
Yasuhiko Morita 14,192 1.55% $ 7.06 05/20/09 $ 63,000 $160,000
808 0.09% $ 7.06 05/20/09 $ 4,000 $ 9,000
2,091 0.23% $ 7.06 05/20/09 $ 9,000 $ 24,000
2,909 0.32% $ 7.06 05/20/09 $ 13,000 $ 33,000
Walter Kasianchuk 28,468 3.11% $12.75 09/09/09 $228,000 $578,000
1,532 0.17% $12.75 09/09/09 $ 12,000 $ 31,000
</TABLE>
- ---------------
(1) Options granted in fiscal 1999 under the Company's Option Plan generally
vest one-quarter of the number of shares granted one year after commencement
of employment or grant and continue to vest thereafter monthly over a period
of three years, conditioned upon continued employment with the Company.
Under the Option Plan, the Board retains discretion to modify the terms,
including the price, of outstanding options.
(2) Potential gains are net of exercise price, but before taxes associated with
exercise. These amounts represent certain assumed rates of appreciation
only, in accordance with the Securities and Exchange Commission's rules.
Actual gains, if any, on stock option exercises are dependent on the future
performance of the Company's Common Stock, overall market conditions and the
optionholders' continued employment through the vesting period. The amounts
reflected in this table may not necessarily be achieved. One share of stock
purchased at $7.00 in fiscal 1999 would yield profits of approximately $4.40
per share at 5% appreciation over ten years, or approximately $11.16 per
share at 10% appreciation over the same period. One share of stock purchased
at $7.06 in fiscal 1999 would yield profits of approximately $4.44 per share
at 5% appreciation over ten years, or approximately $11.25 per share at 10%
appreciation over the same period. One share of stock purchased at $7.77 in
fiscal 1999 would yield profits of approximately $4.89 per share at 5%
appreciation over ten years, or approximately $12.38 per share at 10%
appreciation over the same period. One share of stock purchased at $12.75 in
fiscal 1999 would yield profits of approximately $8.02 per share at 5%
appreciation over ten years, or approximately $20.32 per share at 10%
appreciation over the same period. One share of stock purchased at $15.25 in
fiscal 1999 would yield profits of approximately $9.59 per share at 5%
appreciation over ten years, or approximately $24.30 per share at 10%
appreciation over the same period. One share of stock purchased at $16.78 in
fiscal 1999 would yield profits of approximately $10.55 per share at 5%
appreciation over ten years, or approximately $26.74 per share at 10%
appreciation over the same period.
8
<PAGE> 11
OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information concerning the option exercises
during the fiscal year ended December 31, 1999 by the persons named in the
Summary Compensation Table and the fiscal 1999 year-end option values.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FY-END(#) AT FY-END($)(1)
SHARES ACQUIRED VALUE ------------------------------------ ---------------------------------
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE(1)(2) UNEXERCISABLE(3) EXERCISABLE(2) UNEXERCISABLE(4)
---- --------------- ----------- ----------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Brad Mattson 124,000 705,720 141,499 175,001 889,107 1,077,941
Brian McDonald -- -- -- 83,750 -- 775,781
David Dutton -- -- 36,900 68,000 350,369 544,625
Yasuhiko Morita -- -- 51,998 42,502 477,128 401,185
Walter Kasianchuk -- -- -- 30,000 -- 131,250
</TABLE>
- ---------------
(1) Options granted in fiscal 1999 under the Company's Option Plan generally
vest and become exercisable as follows: one-quarter of the shares vest after
one year and thereafter the remaining shares vest monthly over a period of
three years, with vesting conditioned upon continued employment with the
Company. Under the Option Plan, the Board retains discretion to modify the
terms including the price of outstanding options.
(2) Represents shares which are immediately exercisable and/or vested. Based on
the closing price of $17.13, as reported on the Nasdaq National Market on
December 31, 1999, less the exercise price.
(3) Represents shares which are unvested and not immediately exercisable.
(4) Based on the closing price of $17.13, as reported on the Nasdaq National
Market on December 31, 1999, less the exercise price.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1999, the Company sold approximately $3.4 million in systems to
WaferTech. Kenneth Smith is the President, Chief Operating Officer and a
Director of WaferTech. Mr. Smith is a member of Mattson's Board of Directors and
serves on both the Audit Committee and the Compensation Committee of Mattson's
Board of Directors. Each transaction was determined based on arm's length
negotiations and the Company believes the terms of these transactions were no
more favorable to WaferTech than would have been offered to third party
customers.
During 1999, the Company paid Alliant Partners for investment banking
services. John Savage is a Partner of Alliant Partners. Mr. Savage is a member
of the Audit Committee of Mattson's Board of Directors and served on the
Compensation Committee of Mattson's Board of Directors during part of 1999. The
agreement for services with Alliant Partners was determined based on arm's
length negotiation and the Company believes the terms of the agreement were no
less favorable than could have been obtained from third party consultants and
investment bankers. The Company has engaged Alliant Partners to provide
financial advisory services in connection with acquisition transactions.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1999, the Company purchased certain inventory parts from R.F.
Services, Inc. in the amount of $680,000. Brad Mattson owns a majority of the
outstanding shares of R.F. Services, Inc. and serves as a director of that
corporation. Each purchase was determined based on arm's length negotiations and
the Company believes the terms of these purchases were no less favorable than
could have been obtained from third party suppliers. Mattson has an agreement in
principal to acquire R.F. Services, Inc. for a price anticipated to be equal to
the net book value of its assets of approximately $500,000.
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<PAGE> 12
During the third quarter of 1998 the Company extended a one-year loan to
Brad Mattson, the Chief Executive Officer of the Company, in the amount of $3.1
million. The loan was collateralized by 2.2 million shares of the Company's
Common Stock and was a full recourse note bearing interest at the market rate of
8%. During 1999, the Company agreed to extend the loan for an additional six
months and increased the note to $3.7 million, which included accrued interest
of approximately $300,000 and an additional $300,000 loaned to Brad Mattson. The
note, including all accrued interest, was repaid in full during the quarter
ended December 31, 1999.
During the fourth quarter of 1998 the Company extended a two-year loan to
David Dutton, the Executive Vice President and Chief Operating Officer of the
Company, in the amount of $100,000. The loan is collateralized by approximately
32,000 shares of the Company's Common Stock and vested options and is a full
recourse note bearing interest at the market rate. Interest is payable at the
end of the two year loan.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
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.
Officers, directors and greater than ten-percent shareholders are required by
SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representation from certain
reporting persons that no other reports were required, the Company believes that
all Section 16(a) filing requirements applicable to the Company's executive
officers, directors and greater than ten percent shareholders were complied
with.
CHANGES TO BENEFIT PLANS
Option Plan. The Company has proposed the amendment of the Company's Option
Plan to increase the maximum aggregate number of shares of the Company's Common
Stock issuable under the Option Plan by 900,000 shares from 5,675,000 shares to
6,575,000 shares. As of March 24, 2000, no grant of options conditioned on
stockholder approval of an increase in the share reserve under the Option Plan
had been made to any employee. Grants under the Option Plan are made at the
discretion of the Compensation Committee or the Board of Directors. Accordingly,
future grants under the Option Plan are not yet determinable. See Proposal Two,
"APPROVAL OF INCREASE IN SHARES RESERVED FOR ISSUANCE UNDER THE AMENDED AND
RESTATED 1989 STOCK OPTION PLAN."
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<PAGE> 13
COMPARISON OF STOCKHOLDER RETURN(1)
Set forth below is a line graph comparing the annual percentage change in
the cumulative total return of the Company's Common Stock with the cumulative
total return of the Nasdaq Stock Market Index -- US and the Nasdaq Electronic
Components Index for the period commencing December 31, 1994 and ending December
31, 1999.
<TABLE>
<CAPTION>
MATTSON NASDAQ STOCK NASDAQ ELECTRONIC
TECHNOLOGY, INC. MARKET (U.S.) COMPONENTS
---------------- ------------- -----------------
<S> <C> <C> <C>
12/31/94 100.00 100.00 100.00
12/31/95 156.00 141.00 166.00
12/31/96 99.00 174.00 286.00
12/31/97 73.00 213.00 300.00
12/31/98 60.00 300.00 464.00
12/31/99 178.00 542.00 910.00
</TABLE>
(1) ASSUMES THAT $100.00 WAS INVESTED IN THE COMPANY'S COMMON STOCK AND IN EACH
INDEX AT MARKET CLOSING PRICES ON DECEMBER 31, 1994, AND THAT ALL DIVIDENDS
WERE REINVESTED. STOCKHOLDER RETURNS OVER THE INDICATED PERIOD SHOULD NOT BE
CONSIDERED INDICATIVE OF FUTURE STOCKHOLDER RETURNS.
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<PAGE> 14
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") recommends to the Company's
Board of Directors compensation of Company directors and officers and oversees
the administration of the Company's Option Plan.
COMPENSATION PHILOSOPHY
In structuring the Company's compensation programs, the Committee's goals
are to align compensation with the Company's business objectives and performance
and to enable it to attract, retain and reward executive officers and other key
employees who contribute to the long-term success of the Company. The Committee
also seeks to link executive compensation with the creation of long-term
stockholder value. Consistent with these goals, the Company's compensation
programs include a mix of salary, bonus and stock options. In particular, stock
options are used to link executive incentives and the creation of stockholder
value.
In addressing compensation issues, the Committee is influenced by several
factors which arise from the Company's current position and industry. The
Company competes against many companies that are substantially larger than the
Company and sells primarily to very large customers. The Company must be in a
position to attract and maintain a management team with sufficient experience
and credibility with customers to compete. Moreover, as the Company's goal is to
return to the aggressive growth which it experienced prior to the most recent
industry slowdown, the Company must have a management team which has the ability
to address such growth and successfully manage a much larger business. The
Company also is involved in a highly cyclical industry that can experience
significant slowdowns and declines in financial performance and stock price
which are not related to the performance of management.
Base Salary. The Committee reviews annually each executive officer's base
salary. When reviewing base salaries, the Committee considers individual and
corporate performance, levels of responsibility, prior experience, breadth of
knowledge and competitive pay practices. Consistent with the competitive factors
relative to competing against much larger companies described above, the
Committee believes current executive salaries are in the appropriate range as
compared to the salaries offered by competitive companies.
Bonus. The Company's bonus plan provides for bonuses to be awarded to key
employees based on specific goals achieved by the Company and the level of
contribution to achievement of the goals by the key employees. The bonus plan is
designed such that bonuses when combined with salaries create total compensation
which is competitive with other companies against which the Company competes in
hiring and retaining key employees. Bonus awards depend on the extent to which
Company and individual performance objectives are achieved. The Company's
performance objectives include operating, strategic and financial goals
considered critical to the Company's short and long term goals. In particular,
the plan focuses on performance relative to plan in revenues, operating profit
and market share.
Options. The purpose of the Company's Option Plan is to provide employees
of the Company with an opportunity to share, along with stockholders of the
Company, in the long-term performance of the Company. The Committee makes
periodic grants of stock options to eligible employees, generally upon
commencement of employment or following a significant change in job
responsibilities. Stock options generally vest over a four-year period and
expire ten years from the date of grant. The exercise price of options is
generally 100% of fair market value of the underlying stock on the date of
grant. In awarding stock options, the Committee considers individual
performance, overall contribution to the Company, retention, the number of
unvested stock options and the total number of stock options to be awarded.
Section 162(m) of the Internal Revenue Code (the "Code") imposes
limitations on the deductibility for federal income tax purposes of compensation
over $1 million paid to certain executive officers in a taxable year.
Compensation above $1 million may be deducted if it is "performance-based
compensation" within the meaning of the Code. The Committee believes that at the
present time it is unlikely that the compensation paid to any executive officer
in a taxable year which is subject to the deduction limit will exceed $1
million. In addition, no employee may receive in any fiscal year options to
purchase in excess of 500,000 shares. However, the Compensation Committee has
not yet established a policy for determining which forms of incentive
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<PAGE> 15
compensation awarded to its executive officers shall be designed to qualify as
"performance-based compensation." The Compensation Committee intends to continue
to evaluate the effects of the statute and any fiscal Treasury regulations and
to comply with Code Section 162(m) in the future to the extent consistent with
the best interests of the Company.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Committee uses the same procedures described above in setting the
annual salary, bonus and stock option awards for the Chief Executive Officer.
The Chief Executive Officer's salary is determined based on comparisons with
competitive companies as described above. In awarding stock options, the
Committee considers the Chief Executive Officer's performance, overall
contribution to the Company, retention, the number of unvested options and the
total number of options to be granted. The Committee believes that the Chief
Executive Officer's salary, bonus and options are in the appropriate range as
compared to the compensation arrangements offered to chief executive officers of
competitive companies.
CONCLUSION
As a significant portion of the Company's compensation program is linked to
Company performance, the Committee believes that compensation is closely tied to
increases in long-term stockholder value.
COMPENSATION COMMITTEE
Kenneth Kannappan
Kenneth G. Smith
April 17, 2000
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<PAGE> 16
PROPOSAL TWO
APPROVAL OF INCREASE IN SHARES RESERVED FOR
ISSUANCE UNDER THE AMENDED AND RESTATED 1989 STOCK OPTION PLAN
GENERAL
The Company's 1989 Stock Option Plan (the "1989 Plan") became effective on
September 29, 1989 and was restated in August 1994. The Company obtained
stockholder approval of the restated 1989 Plan in August 1994. A reserve of
1,200,000 shares of the Company's Common Stock was originally established for
issuance under the restated 1989 Plan. In March 1995, the number of shares
reserved for issuance under the 1989 Plan was increased to 1,500,000 by the
Board of Directors and approved by the Company's stockholders in May 1995. In
March 1996, the number of shares reserved for issuance under the 1989 Plan was
increased by 1,000,000 to 4,000,000 (post stock split effective September 1995)
by the Board of Directors and approved by the Company's stockholders in May
1996. In April 1997, the Board of Directors amended and restated the 1989 Plan
to make certain technical changes and increase the number of shares reserved for
issuance thereunder by 300,000 to 4,300,000 and such changes were approved by
the Company's Stockholders in July 1997 as the Company's 1989 Amended and
Restated Stock Option Plan (the "Option Plan"). In March 1998, the number of
shares reserved for issuance under the 1989 Plan was increased to 4,550,000 by
the Board of Directors and approved by the Company's stockholders in May 1998.
In April 1999, the number of shares reserved for issuance under the 1989 Plan
was increased to 5,675,000 by the Board of Directors and approved by the
Company's stockholders in May 1999. In April 2000, subject to stockholder
approval, the Board amended the Option Plan to increase the number of shares
reserved for issuance to 6,575,000.
AT THE ANNUAL MEETING, THE STOCKHOLDERS ARE BEING REQUESTED TO APPROVE THE
INCREASE IN THE NUMBER OF SHARES AUTHORIZED UNDER THE OPTION PLAN. THE
AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE SHARES OF THE COMPANY'S
COMMON STOCK PRESENT, OR REPRESENTED BY PROXY AND ENTITLED TO VOTE AT THE
MEETING, WILL BE REQUIRED TO RATIFY THE SHARE RESERVE INCREASE. THE BOARD OF
DIRECTORS BELIEVES THAT THE INCREASE UNDER THE OPTION PLAN IS NECESSARY TO
ENABLE THE COMPANY TO PROVIDE MEANINGFUL EQUITY INCENTIVES TO ATTRACT, MOTIVATE
AND RETAIN EMPLOYEES AND RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR APPROVAL OF
THIS INCREASE.
DESCRIPTION OF PLAN
The following summary of the Option Plan is qualified in its entirety by
the specific language of the Option Plan, a copy of which is available to any
stockholders upon request.
General. The Option Plan provides for the discretionary grant of incentive
stock options within the meaning of section 422 of the Internal Revenue Code of
1986, as amended (the "Code") and nonstatutory stock options. In addition, the
Option Plan also provides for the automatic grant of nonstatutory stock options
to nonemployee directors of the Company ("Nonemployee Director Options").
Shares Subject to Plan. The stockholders have previously authorized the
reservation of an aggregate of 5,675,000 shares of the Company's Common Stock
for issuance upon the exercise of options granted under the Option Plan. As of
March 24, 2000, a total of 2,974,088 shares were subject to outstanding options
granted under the Option Plan, 674,951 shares were available for future grant
under the Option Plan (without taking the proposed amendment into account) and
options to purchase 2,025,961 shares of Common Stock granted under the Option
Plan had been exercised. The maximum number of authorized but unissued or
reacquired shares of the Company's Common Stock available for issuance under the
Option Plan has been increased, subject to stockholder approval, to 6,575,000.
The Option Plan imposes a grant limit under which no employee may receive in any
fiscal year options to purchase in excess of 500,000 shares (the "Grant Limit").
Appropriate adjustments will be made to the shares subject to the Option Plan,
to the Grant Limit, to the automatic Nonemployee Director Option grant
provisions (discussed below) and to outstanding options upon any stock dividend,
stock split, reverse stock split, recapitalization, combination,
reclassification, or similar
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<PAGE> 17
change in the capital structure of the Company. To the extent that any
outstanding option under the Option Plan expires or terminates prior to exercise
in full, the shares of Common Stock for which such option is not exercised are
returned to the Option Plan and become available for future grant. The Option
Plan also provides that if shares issued upon exercise of an option are
repurchased by the Company, the repurchased shares are returned to the Option
Plan and become available for future grant.
Administration. The Option Plan is administered by the Board of Directors
or a duly appointed committee of the Board (hereinafter referred to as the
"Board"). With respect to the participation of individuals whose transactions in
the Company's equity securities are subject to Section 16 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), the Option Plan must be
administered in compliance with the requirements of Rule 16b-3 under the
Exchange Act, if any. Subject to the provisions of the Option Plan, the Board
determines the persons to whom options are to be granted, the number of shares
to be covered by each option, whether an option is to be an incentive stock
option or a nonstatutory stock option, the timing and terms of exercisability of
each option or the vesting of shares acquired upon the exercise of an option,
including the effect thereon of an optionee's termination of service, the
exercise price of and the type of consideration to be paid to the Company upon
the exercise of each option, the duration of each option, and all other terms
and conditions of the options. The Option Plan also authorizes the Board to
delegate to an officer of the Company the power to grant options for up to
25,000 shares per fiscal year to any eligible person other than an officer or
director of the Company.
The Option Plan authorizes the Board to amend, reprice, modify, extend,
renew, or grant a new option in substitution for, any option, to waive any
restrictions or conditions applicable to any option or any shares acquired upon
the exercise thereof, and to accelerate, continue, extend or defer the
exercisability of any option or the vesting of any shares acquired upon the
exercise of an option, including with respect to the period following an
optionee's termination of service with the Company. The Option Plan also
provides, subject to certain limitations, for indemnification by the Company of
any director, officer or employee against all reasonable expenses, including
attorneys' fees, incurred in connection with any legal action arising from such
person's action or failure to act in administering the Option Plan. The Board
will interpret the Option Plan and options granted thereunder, and all
determinations of the Board will be final and binding on all persons having an
interest in the Option Plan or any option.
Eligibility. The Option Plan permitted the grant of options to employees,
consultants and directors of the Company or of any present or future parent or
subsidiary corporations of the Company. Options may also be granted to
prospective employees, consultants and directors in connection with written
offers of employment or engagement, provided that such options may not become
exercisable prior to the individual's commencement of service. As of March 24,
2000, the Company had approximately 481 employees, including 4 executive
officers, and 5 directors. While any person eligible under the Option Plan may
be granted a nonstatutory option, only employees may be granted incentive stock
options. In addition, only nonemployee directors of the Company are eligible to
receive Nonemployee Director Options.
Terms and Conditions of Options. Each option granted under the Option Plan
is evidenced by a written agreement between the Company and the optionee
specifying the number of shares subject to the option and the other terms and
conditions of the option, consistent with the requirements of the plan. The
exercise price per share of each incentive stock option granted under the Option
Plan must equal at least the fair market value of a share of the Company's
Common Stock on the date of grant and the exercise price per share of each
nonstatutory stock option granted under the Option Plan must equal at least 85%
of the fair market value of a share of the Company's Common Stock on the date of
grant. In addition, any incentive stock option granted to a person who at the
time of grant owns stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company or any parent or subsidiary
corporation of the Company (a "Ten Percent Stockholder") must have an exercise
price equal to at least 110% of the fair market value of a share of Common Stock
on the date of grant. As of March 24, 2000 the closing price of a share of the
Company's Common Stock as reported on the Nasdaq National Market was $33.00.
The option exercise price may be paid in cash, by check, or in cash
equivalent, by the assignment of the proceeds of a sale or loan with respect to
some or all of the shares of Common Stock being acquired upon the
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<PAGE> 18
exercise of the option, by means of a promissory note, by any other lawful
consideration approved by the Board, or by any combination thereof. The Board
may nevertheless restrict the forms of payment permitted in connection with any
option grant. The Option Plan also authorizes (i) the Company to withhold from
shares otherwise issuable upon the exercise of an option or (ii) to accept the
tender of shares of the Company's Common Stock in full or partial payment of any
tax withholding obligations.
Options granted under the Option Plan become exercisable and vested at such
times and subject to such conditions as specified by the Board. Generally,
options granted under the Option Plan become exercisable in installments over a
period of time specified by the Board at the time of grant, subject to the
optionee's continued service with the Company. The Option Plan provides that the
maximum term of an incentive stock option is ten years unless granted to a Ten
Percent Stockholder, in which case the maximum term is five years. Consistent
with the Code, the Option Plan does not limit the term of a nonstatutory stock
option. Options are generally nontransferable by the optionee other than by will
or by the laws of descent and distribution, and are exercisable during the
optionee's lifetime only by the optionee. However, the Option Plan provides that
a nonstatutory stock option may be assignable or transferable to the extent
permitted by the Board and set forth in the option agreement.
Terms and Conditions of Nonemployee Director Options. The Option Plan
provides for the automatic grant of options to nonemployee directors of the
Company. The Option Plan further provides that each nonemployee director first
elected or appointed to the Board after July 24, 1997 (the "Effective Date")
will be granted automatically, on the date of such initial election or
appointment, an option to purchase 12,500 shares of Common Stock. A Nonemployee
Director Option granted on the Effective Date or on the date of initial
appointment or election as a nonemployee director is referred to herein as an
"Initial Option". The Option Plan also provides for the automatic annual grant,
on the day following each annual meeting of the stockholders of the Company
which occurs after the Effective Date, of an additional option to purchase 5,000
shares of Common Stock (an "Annual Option") to each nonemployee director who
continues to serve in such capacity. However, a nonemployee director who has not
continuously served on the Board for at least 6 months as of the date of such
annual meeting will not receive an Annual Option on such date. On December 16,
1999, the Board of Directors approved for an increase in the initial grant of
options to non-employee directors from 12,500 shares to 30,000 shares. In
addition, the annual options granted to non-employee directors were increased
from 5,000 shares per year to 10,000 shares per year. Lastly, the Board of
Directors approved a grant of 17,500 shares of options to each nonemployee
director during 2000. For 2000, the nonemployee directors were each granted
17,500 shares on January 3, 2000 in lieu of the options which were originally to
be granted on May 17, 2000. The exercise price per share of each Nonemployee
Director Option will be equal to the fair market value of a share of the
Company's Common Stock on the date of grant and each Nonemployee Director Option
will have a term of 10 years.
Nonemployee Director Options are exercisable only to the extent that the
shares subject to the option are vested. In general, Initial Options granted
after the Effective Date will vest as follows: 5,000 shares will vest 1 year
after the date of grant, 3,750 shares will vest 2 years after the date of grant,
2,500 shares will vest 3 years after the date of grant and 1,250 shares will
vest 4 years after the date of grant. Effective December 16, 1999 based on the
approved initial grant of 30,000 shares, 12,000 shares will vest 1 year after
the date of grant, 9,000 shares will vest 2 years after the date of grant, 6,000
shares will vest 3 years after the date of grant and 3,000 shares will vest 4
years after the date of grant. Annual Options become vested cumulatively for 25%
of the shares initially subject to the option on each of the first 4
anniversaries of the date of grant. Vesting of shares subject to a Nonemployee
Director Option is subject to the optionee's continued service through the
relevant date.
Transfer of Control. As restated, the Option Plan provides that, in the
event of (i) a sale or exchange by the stockholders in a single or series of
related transactions of more than 50% of the Company's voting stock, (ii) a
merger or consolidation in which the Company is a party, (iii) the sale,
exchange or transfer of all or substantially all of the assets of the Company,
or (iv) a liquidation or dissolution of the Company wherein, upon any such
event, the stockholders of the Company immediately before such event do not
retain, in substantially the same proportions as their ownership of shares
immediately before the transaction, direct or indirect beneficial ownership of
more than 50% of the total combined voting power of the voting stock of the
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<PAGE> 19
Company, its successor, or the corporation to which the assets of the Company
were transferred (a "Transfer of Control"), any unexercisable or unvested
portion of the outstanding options will become immediately exercisable and
vested in full prior to the Transfer of Control unless the acquiring or
successor corporation assumes the Company's rights and obligations under the
outstanding options or substitutes substantially equivalent options for such
corporation's stock. To the extent that the options outstanding under the Option
Plan are not assumed, substituted for, or exercised prior to the Transfer of
Control, they will terminate.
Termination or Amendment. The Option Plan will continue in effect until the
earlier of its termination by the Board or the date on which all shares
available for issuance under the Option Plan have been issued and all
restrictions on such shares under the terms of the Option Plan and the option
agreements have lapsed, provided that all incentive stock options must be
granted within ten years of April 24, 1997. The Board may terminate or amend the
Option Plan at any time. However, subject to changes in the law that would
permit otherwise, without stockholder approval, the Board may not adopt an
amendment to the Option Plan which would increase the total number of shares of
Common Stock issuable thereunder, change the class of persons eligible to
receive incentive stock options, or otherwise require approval of the Company's
stockholders under any applicable law, regulation or rule. No amendment may
adversely affect an outstanding option without the consent of the optionee,
unless the amendment is required to preserve the option's status as an incentive
stock option or is necessary to comply with any applicable law.
SUMMARY OF UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following summary is intended only as a general guide as to the United
States federal income tax consequences under current law of participation in the
Option Plan and does not attempt to describe all possible federal or other tax
consequences of such participation or tax consequences based on particular
circumstances.
Incentive Stock Options. An optionee recognizes no taxable income for
regular income tax purposes as the result of the grant or exercise of an
incentive stock option qualifying under section 422 of the Code. Optionees who
do not dispose of their shares for two years following the date the option was
granted nor within one year following the exercise of the option will normally
recognize a long-term capital gain or loss equal to the difference, if any,
between the sale price and the purchase price of the shares. If an optionee
satisfies such holding periods upon a sale of the shares, the Company will not
be entitled to any deduction for federal income tax purposes. If an optionee
disposes of shares within two years after the date of grant or within one year
from the date of exercise (a "disqualifying disposition"), the difference
between the fair market value of the shares on the exercise date and the option
exercise price (not to exceed the gain realized on the sale if the disposition
is a transaction with respect to which a loss, if sustained, would be
recognized) will be taxed as ordinary income at the time of disposition. Any
gain in excess of that amount will be a capital gain. If a loss is recognized,
there will be no ordinary income, and such loss will be a capital loss. A
capital gain or loss will be long-term if the optionee's holding period is more
than 12 months and short-term if the optionee's holding period is 12 months or
less. Long-term capital gains are currently subject to a maximum tax rate of 20%
and short-term capital gains are subject to taxation at ordinary rates. Any
ordinary income recognized by the optionee upon the disqualifying disposition of
the shares generally should be deductible by the Company for federal income tax
purposes, except to the extent such deduction is limited by applicable
provisions of the Code or the regulations thereunder.
The difference between the option exercise price and the fair market value
of the shares on the exercise date of an incentive stock option is an adjustment
in computing the optionee's alternative minimum taxable income and may be
subject to an alternative minimum tax which is paid if such tax exceeds the
regular tax for the year. Special rules may apply with respect to certain
subsequent sales of the shares in a disqualifying disposition, certain basis
adjustments for purposes of computing the alternative minimum taxable income on
a subsequent sale of the shares and certain tax credits which may arise with
respect to optionees subject to the alternative minimum tax.
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<PAGE> 20
Nonstatutory Stock Options. Options not designated or qualifying as
incentive stock options will be nonstatutory stock options. Nonstatutory stock
options have no special tax status. An optionee generally recognizes no taxable
income as the result of the grant of such an option. Upon exercise of a
nonstatutory stock option, the optionee normally recognizes ordinary income in
the amount of the difference between the option exercise price and the fair
market value of the shares on the exercise date. If the optionee is an employee,
such ordinary income generally is subject to withholding of income and
employment taxes. Upon the sale of stock acquired by the exercise of a
nonstatutory stock option, any gain or loss, based on the difference between the
sale price and the fair market value on the exercise date, will be taxed as
capital gain or loss. A capital gain or loss will be long-term if the optionee's
holding period is more than 12 months and short-term if the optionee's holding
period is 12 months or less. Long-term capital gains are currently subject to a
maximum tax rate of 20% and short-term capital gains are subject to taxation at
ordinary rates. No tax deduction is available to the Company with respect to the
grant of a nonstatutory stock option or the sale of the stock acquired pursuant
to such grant. The Company generally should be entitled to a deduction equal to
the amount of ordinary income recognized by the optionee as a result of the
exercise of a nonstatutory stock option, except to the extent such deduction is
limited by applicable provisions of the Code or the regulations thereunder.
VOTE REQUIRED AND RECOMMENDATION OF THE BOARD OF DIRECTORS
The affirmative vote of a majority of the shares present or represented by
proxy and entitled to a vote at the Annual Meeting of Stockholders, at which a
quorum representing a majority of all outstanding shares of Common Stock of the
Company is present and voting, is required for approval of this proposal.
Abstentions and broker nonvotes will each be counted present for purposes of
determining the presence of a quorum. Abstentions will have the same effect as a
negative vote on this proposal. Broker non-votes will have no effect on the
outcome of this vote.
The Board of Directors believes that the proposed 900,000 share increase in
the number of shares reserved for issuance under the Company's Option Plan is
important if the Company is to be able to attract and retain qualified
directors, officers and employees to the Company.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT OF
THE OPTION PLAN TO INCREASE THE NUMBER OF SHARES RESERVED FOR ISSUANCE BY
900,000 SHARES FOR THE REASONS STATED ABOVE.
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PROPOSAL THREE
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Arthur Andersen LLP as the Company's
independent public accountants for the year ending December 31, 2000, and
further directed that management submit the selection of independent public
accountants for ratification by the stockholders at the Meeting. Its
representatives are expected to be present at the Meeting, will have the
opportunity to make a statement if they desire to do so and will be available to
respond to appropriate questions.
Stockholder ratification of the selection of Arthur Andersen LLP as the
Company's independent public accountants is not required by the Company's Bylaws
or otherwise. The Board of Directors is submitting the selection of Arthur
Andersen LLP to the stockholders for ratification as a matter of good corporate
practice. In the event the stockholders fail to ratify the selection, the Board
of Directors will reconsider whether or not to retain that firm. Even if the
selection is ratified, the Board of Directors in its discretion may direct the
appointment of a different independent accounting firm at any time during the
year if the Board of Directors determines that such a change could be in the
best interests of the Company and its stockholders.
VOTE REQUIRED AND RECOMMENDATION OF THE BOARD OF DIRECTORS
The affirmative vote of a majority of the votes present or represented by
proxy and entitled to a vote at the Annual Meeting of Stockholders, at which a
quorum representing a majority of all outstanding shares of Common Stock of the
Company is present and voting, is required for approval of this proposal.
Abstentions and broker nonvotes will each be counted present for purposes of
determining the presence of a quorum, but will not be counted as having been
voted on this proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP TO SERVE AS THE COMPANY'S
INDEPENDENT PUBLIC ACCOUNTANTS FOR THE YEAR ENDING DECEMBER 31, 2000.
19
<PAGE> 22
STOCKHOLDER PROPOSALS TO BE PRESENTED
AT NEXT ANNUAL MEETING
The Company has an advance notice provision under its bylaws for
stockholder business to be presented at meetings of stockholders. Such provision
states that in order for stockholder business to be properly brought before a
meeting by a stockholder, such stockholder must have given timely notice thereof
in writing to the Secretary of the Company. A stockholder proposal, to be
timely, must be received at the Company's principal executive offices not less
than 120 calendar days in advance of the one year anniversary of the date the
Company's proxy statement was released to stockholders in connection with the
previous year's annual meeting of stockholders; except that (i) if no annual
meeting was held in the previous year, (ii) if the date of the annual meeting
has been changed by more than thirty calendar days from the date contemplated at
the time of the previous year's proxy statement, or (iii) in the event of a
special meeting, then notice must be received not later than the close of
business on the tenth day following the day on which notice of the date of the
meeting was mailed or public disclosure of the meeting date was made.
Proposals of stockholders intended to be presented at the next annual
meeting of stockholders of the Company (i) must be received by the Company at
its offices no later than December 18, 2000, and (ii) must satisfy the
conditions established by the Securities and Exchange Commission for stockholder
proposals to be included in the Company's Proxy Statement for that meeting.
TRANSACTION OF OTHER BUSINESS
At the date of this Proxy Statement, the Board of Directors knows of no
other business that will be conducted at the 2000 Annual Meeting of Stockholders
other than as described in this Proxy Statement. If any other matter or matters
are properly brought before the meeting or any adjournment thereof, it is the
intention of the persons named in the accompanying form of Proxy to vote the
Proxy on such matters in accordance with their best judgment.
By Order of the Board of Directors,
/s/ Brian McDonald
Brian McDonald, Secretary
April 17, 2000
20
<PAGE> 23
PROXY
MATTSON TECHNOLOGY, INC.
2800 BAYVIEW DRIVE, FREMONT, CALIFORNIA 94538
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Brad Mattson and Brian McDonald (the
"Proxies"), and each of them, each with the power to appoint his substitute, and
hereby authorizes each of them to represent and vote as designated below, all
the shares of Common Stock of Mattson Technology, Inc. (the "Company") held of
record by the undersigned on March 31, 2000 at the Annual Meeting of
Stockholders to be held on May 17, 2000 or any adjournment thereof.
<TABLE>
<S> <C> <C>
1. To elect the following director as Class III director of the
Company to hold office for a three-year term and until his
successor is elected and qualified.
[ ] FOR the nominee listed below [ ] WITHHOLD AUTHORITY
except as marked to the contrary below to vote for the nominee listed below
Shigeru Nakayama
2. To approve an amendment to the Company's Amended and Restated
1989 Stock Option Plan to increase the number of shares
reserved for issuance thereunder by 900,000 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To ratify the appointment of Arthur Andersen LLP as the
independent public accountants of the Company for the year
ending December 31, 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
</TABLE>
4. To transact such other business as may properly come before the
meeting.
This Proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, the Proxy will
be voted FOR Proposals 1, 2, and 3.
Please sign exactly as your name appears on your stock certificates.
When shares are held by joint tenants, both should sign. When signing as an
attorney, as executor, administrator, trustee or guardian, please give your full
title. If a corporation, please sign in full corporate name, by President or
other authorized officer. If a partnership, please sign in partnership name by
authorized person.
Dated: 2000
_____________________________________________
Signature
_____________________________________________
Signature if held jointly
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, YOU ARE URGED
TO DATE, SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED TO
ASSURE THAT YOUR SHARES ARE REPRESENTED AT THE MEETING. IF YOU ATTEND THE
MEETING, YOU MAY VOTE IN PERSON IF YOU WISH TO DO SO EVEN THOUGH YOU HAVE SENT
IN YOUR PROXY.
