SCHEDULE 14A(Rule 14a-101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATIONProxy Statement Pursuant to Section 14(a) of the Filed by the Registrant [X] Check the appropriate box: |
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[_] Definitive Additional Materials |
Cypress Semiconductor Corporation Payment of Filing Fee (Check the appropriate box): |
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[_] | Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. |
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April 2, 2001 Dear Stockholder: You are cordially invited to attend the Cypress Semiconductor Corporation Annual Meeting of Stockholders to be held on Thursday, May 3, 2001 at 10:00 a.m., Pacific Daylight Time, at our offices located at 3939 North First Street, San Jose, California 95134. Details regarding the meeting and the business to be conducted are more fully described in the accompanying Notice of Annual Meeting and Proxy Statement. We hope you will be able to attend the Annual Meeting to listen to our report on the status of our business and performance during 2000 and near-term plans, and to ask any questions you may have. Your vote is very important. Whether or not you plan to attend the Annual Meeting, please vote as soon as possible. In order to facilitate your voting, this year you may vote in person at the meeting, by sending in your written proxy, by telephone, or by using the Internet. Your vote by telephone, over the Internet or by written proxy will ensure your representation at the Annual Meeting if you cannot attend in person. Please review the instructions on the proxy card regarding each of these voting options. Thank you for your on-going support and continued interest in Cypress Semiconductor Corporation. |
Very truly yours, /s/ T.J. Rodgers T.J. Rodgers President and Chief Executive Officer |
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1. | To elect six directors to serve for the next year and until their successors are elected. |
2. | To ratify the appointment of PricewaterhouseCoopers LLP as our independent accountants for the fiscal year ending December 30, 2001. |
3. | To ratify and approve the adoption of the Companys 2001 Employee Stock Purchase Assistance Plan. |
4. | 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 stockholders of record at the close of business on March 5, 2001 are entitled to receive notice of, to attend and to vote at the meeting and any adjournment of the meeting. All stockholders are cordially invited to attend the meeting in person. Any stockholder attending the meeting may vote in person even if such stockholder returned a proxy. |
FOR THE BOARD OF DIRECTORS /s/ Emmanuel Hernandez Emmanuel Hernandez Secretary |
San Jose, California |
IMPORTANT: WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE OR YOU MAY VOTE BY TELEPHONE OR OVER THE INTERNET FOLLOWING THE DIRECTIONS ON THE PROXY CARD; EITHER METHOD WILL ENSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF MAILED IN THE UNITED STATES. |
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| reviews and approves the scope of the annual audit and the independent auditorsfees; |
| meets independently with our independent auditors and our senior management; and |
| reviews the general scope of our accounting, financial reporting, annual audit and internal audit program and matters relating to internal control systems, as well as the results of the annual audit and review of interim financial statements, auditor independence issues, and the adequacy of the Audit Committee charter. |
The Audit Committee operates under a written charter adopted by our Board of Directors, a copy of which is attached as Appendix A to this proxy statement. Our compensation committee met 3 times during our 2000 fiscal year and is comprised of Messrs. Lewis and Benhamou. The compensation committee: |
| reviews compensation and benefits for our senior executives; |
| has authority to grant stock options under our 1994 Stock Option Plan, as amended, to employees and consultants (including officers and directors who are also our employees or consultants); and |
| has authority to grant stock options under the 1999 Non-Qualified Stock Option Plan, as amended, including grants for new employees who join us through our acquisitions of other entities. |
Name of Nominee |
Age |
Principal Occupation |
Director Since |
||||
---|---|---|---|---|---|---|---|
T.J. Rodgers | 53 | Our President and Chief Executive Officer | 1982 | ||||
Fred B. Bialek | 67 | Business Consultant | 1991 | ||||
Eric A. Benhamou | 45 | Our Chairman of the Board, and Chairman of the Board of 3Com Corporation | 1993 | ||||
John C. Lewis | 65 | Former Chairman of the Board of Amdahl Corporation | 1993 | ||||
Alan F. Shugart | 70 | Chairman, President and CEO of Al Shugart International | 1998 | ||||
James R. Long | 58 | Former Executive Vice President of Nortel Networks | 2000 |
Except as set forth below, each of the nominees has been engaged in his principal occupation described above during the past five years. There are no family relationships among our directors or executive officers. T.J. Rodgers is a co-founder of Cypress and has been our President and Chief Executive Officer since 1982. Mr. Rodgers also serves as a director of C-Cube Microsystems Inc. and is the current Chairman of the Board of the Semiconductor Industry Association, referred to as SIA. Fred B. Bialek has been an independent business consultant since November 1986, during which time he has been active in the negotiation and execution of merger and acquisition transactions for semiconductor and other technology companies. Mr. Bialek has acted as a consultant to us in some of our acquisitions. Mr. Bialek, who was a founder of National Semiconductor Corporation, has over 30 years operating experience in semiconductor and related technology industries. Eric A. Benhamou serves as Chairman of the Board of Directors of 3Com Corporation. He served as Chief Executive Officer of 3Com Corporation from September 1990 through December 2000. He served as President from April 1990 through August 1998. Mr. Benhamou became Chairman of the Board of Directors of 3Com in July 1994. Mr. Benhamou served as 3Coms Chief Operating Officer from April 1990 through September 1990. From October 1987 through April 1990, Mr. Benhamou held various general management positions within 3Com. Mr. Benhamou currently serves as Chairman of our Board of Directors and Chairman of the Board of Directors of Palm, Inc. He serves on the Board of Directors for Legato Systems, Inc., Atrica Inc. and the New America Foundation as well as the Stanford University School of Engineering Board of Advisors. He also serves as Chairman of Western Governors Universitys National Advisory Board. Mr. Benhamou is also a member of the U.S. Presidents Information Technology Advisory Committee. John C. Lewis was Chairman of the Board of Amdahl Corporation, a supplier of solutions-oriented information processing systems, software and services for all types of computing environments, from 1987 to July 2000. He was President of Amdahl from 1977 until 1987 and Chief Executive Officer of Amdahl from 1983 until 1992 and from 1996 through 1997. Mr. Lewis also serves as a director of Vitesse Semiconductor Corporation and Pinnacle Systems, Inc. 4 |
1. | The Audit Committee has reviewed and discussed the audited financial statements with Cypress management. |
2. | The Audit Committee has discussed with the independent auditors the matters required to be discussed by SAS 61 (Codification of Statements on Auditing Standard, AU 380). |
3. | The Audit Committee has received the written disclosures and the letter from the independent auditors required by Independence Standards Board Standard No. 1 (Independence Standards Board Standards No. 1, Independence Discussions with Audit Committees) and has discussed with the independent auditors the independent auditorsindependence, including whether the independent auditorsprovision of non-audit services to Cypress is compatible with the independent auditorsindependence. |
Based on the review and discussion referred to in paragraphs (1) through (3) above, the Audit Committee recommended to Cypress Board of Directors and the Board approved, that the audited financial statements be included in Cypress Annual Report on Form 10-K for the fiscal year ended December 31, 2000, for filing with the Securities and Exchange Commission. Each of the members of the Audit Committee is independent as defined under the listing standards of the New York Stock Exchange. |
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS /s/ Eric A. Benhamou Eric A. Benhamou /s/ John C. Lewis John C. Lewis /s/ James R. Long James R. Long |
6 |
| Audit Fees: Audit fees billed to us by PricewaterhouseCoopers LLP during the fiscal year ended December 31, 2000, for review of our annual financial statements and those financial statements included in our quarterly reports on Form 10-Q totaled $477,000. |
| Financial Information Systems Design and Implementation Fees: We did not engage PricewaterhouseCoopers LLP to provide advice regarding financial information systems design and implementation during the fiscal year ended December 31, 2000. |
| All Other Fees: Aggregate fees billed for all other services rendered by PricewaterhouseCoopers LLP were $2,168,000 for the fiscal year ending December 31, 2000. These services primarily included assistance with 1933 Securities Act filings, accounting technical advice, income and other tax consulting and acquisitions due diligence. |
| each of our directors; |
| our Chief Executive Officer and each of the four other most highly compensated individuals who served as our executive officers at fiscal year end (the Named Officers); |
| all individuals who served as directors or executive officers at fiscal year end as a group; and |
| each person who is known by us to own beneficially more than 5% of our common stock. |
Shares Beneficially Owned |
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---|---|---|---|---|---|---|
Directors, Officers and 5% Stockholders |
Number |
Percent |
||||
Directors | ||||||
T.J. Rodgers (1) | 1,823,238 | 1.4% | ||||
Fred B. Bialek (2) | 57,698 | * | ||||
Eric A. Benhamou (3) | 125,000 | * | ||||
John C. Lewis (4) | 110,000 | * | ||||
Alan F. Shugart (5) | 36,000 | * | ||||
James Long (6) | 4,300 | * | ||||
Named Officers | ||||||
Ralph Schmitt (7) | 49,475 | * | ||||
Antonio R. Alvarez (8) | 178,894 | * | ||||
Emmanuel T. Hernandez (9) | 159,030 | * | ||||
J. Daniel McCranie (Retired) | 0 | * | ||||
All directors and executive officers at fiscal year end as a group (9 persons) (10) |
2,543,635 | 2.0% | ||||
5% Owners of Our Common Stock | ||||||
T. Rowe Price Associates, Inc. (11) | 8,665,000 | 6.9% |
|
* | Less than 1%. |
(1) | Mr. Rodgers is also our President and Chief Executive Officer. Includes 293,139 shares held directly and options to purchase 1,530,099 shares of common stock exercisable within 60 days of the Record Date. |
(2) | Includes 3,541 shares held directly. Mr. Bialek has transferred 14,402 shares to family members for which shares Mr. Bialek disclaims any beneficial ownership. Also includes options held by Mr. Bialek to purchase 39,755 shares of common stock exercisable within 60 days of the Record Date. |
(3) | Includes 100,000 shares directly held . Also includes options held by Mr. Benhamou to purchase 25,000 shares of common stock exercisable within 60 days of the Record Date. |
(4) | Includes 30,000 shares held directly. Also includes options held by Mr. Lewis to purchase 80,000 shares of common stock exercisable within 60 days of the Record Date. |
(5) | Includes 16,000 shares held directly. Also includes options held by Mr. Shugart to purchase 20,000 shares of common stock exercisable within 60 days of the Record Date. |
(6) | Includes 4,300 shares held directly. |
(7) | Includes 3,610 shares held directly. Also includes options held by Mr. Schmitt to purchase 45,865 shares of common stock exercisable within 60 days of the Record Date. |
(8) | Includes options held by Mr. Alvarez to purchase 178,894 shares of common stock exercisable within 60 days of the Record Date. |
9 |
(9) | Includes 6,250 shares directly held and 12,932 shares transferred to family members. Also includes options held by Mr. Hernandez to purchase 139,848 shares of common stock exercisable within 60 days of the Record Date. |
(10) | Includes 484,174 shares held directly by our executive officers and directors. Also includes options to purchase an aggregate of 2,059,461 shares of common stock exercisable within 60 days of the Record Date. |
(11) | This information is provided based on the Schedule 13G filed by the named entity. The named entity provided the following address as the principal business office: 100 E. Pratt Street, Baltimore, Maryland 21202. |
Annual Compensation |
Long-Term Compensation Awards |
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Name and Principal Position |
Year |
Salary(1) ($) |
Bonus(2) ($) |
Other ($) |
Securities Underlying Options (#) |
All Other Compensation ($) | |||||||
T.J. Rodgers | 2000 | $371,060 | $712,528 | $ 1,000 | (3) | 400,000 | | ||||||
President, Chief Executive | 1999 | $337,706 | $405,316 | $ 1,000 | (3) | 300,000 | | ||||||
Officer and Director | 1998 | $344,453 | $ 57,236 | $ 1,000 | (3) | 200,000 | | ||||||
J. Daniel McCranie (4) | 2000 | $342,990 | $ 97,994 | | 0 | | |||||||
Vice President, Business | 1999 | $332,556 | $291,173 | | 70,000 | $ 335,075 | (6) | ||||||
Development (Retired) | 1998 | $321,054 | $ 57,936 | | 192,000 | $ 229,165 | (5) | ||||||
Ralph Schmitt | 2000 | $213,074 | $297,115 | $86,441 | (7) | 110,000 | $ 8,473 | (10) | |||||
Vice President, Marketing and | 1999 | $179,622 | $ 11,632 | $89,919 | (7) | 40,000 | $ 285,787 | (9) | |||||
Sales | 1998 | $162,901 | $ 1,598 | $19,530 | (7) | 20,000 | $ 18,702 | (8) | |||||
Antonio R. Alvarez | 2000 | $335,260 | $426,484 | | 70,000 | $ 600 | (12) | ||||||
Vice President, Memory | 1999 | $316,425 | $257,815 | | 70,000 | $ 322,108 | (11) | ||||||
Products Division and Research | 1998 | $281,538 | $ 39,680 | | 135,000 | | |||||||
and Development | |||||||||||||
Emmanuel T. Hernandez | 2000 | $307,607 | $410,852 | | 40,000 | $ 600 | (12) | ||||||
Vice President, Finance and | 1999 | $273,130 | $261,437 | | 80,000 | $2,900,255 | (13) | ||||||
Administration, and Chief | 1998 | $246,192 | $ 56,485 | | 233,000 | | |||||||
Financial Officer |
|
(1) | Compensation is included in the year paid. |
(2) | Includes bonus earned under our New Product Bonus Plan and Key Employee Bonus Plan. Bonuses given out under our Key Employee Bonus Plan are by virtue of the success in accomplishing certain group- and individual-specific goals. |
(3) | Represents cash bonus of $1,000 earned and paid to Mr. Rodgers under our Patent Award Program in each of fiscal years 1998, 1999 and 2000. |
(4) | Mr. McCranie retired on January 5, 2001. |
(5) | Represents forgiveness of a promissory note payable by Mr. McCranie to us pursuant to the terms of a promissory note. |
(6) | Represents a one-time retention bonus earned in 1999 and paid in early 2000. |
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(7) | Represents sales related commission and bonus earned and paid to Mr. Schmitt. |
(8) | Represents relocation reimbursement of $10,029 and auto reimbursement of $8,673. |
(9) | Represents a one-time retention earned in 1999 and paid in early 2000 to Mr. Schmitt in the amount of $188,920 plus relocation reimbursement of $89,530 and auto reimbursement of $7,337. |
(10) | Represents auto reimbursement of $7,698 and a published article bonus of $775. |
(11) | Represents a one-time retention bonus earned in 1999 and paid in early 2000 to Mr. Alvarez in the amount of $321,900 plus the contribution of $208 towards the purchase of a computer made pursuant to our Computer Purchase Program. |
(12) | Represents that portion of our contribution toward the purchase of computers made pursuant to our Computer Purchase Program, which is available to all employees. |
(13) | Represents a one-time retention bonus earned and paid in 1999 to Mr. Hernandez in the amount of $2,899,701 plus the contribution of $554 towards the purchase of a computer made pursuant to our Computer Purchase Program. |
Individual Grants |
|||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Number of Securities Underlying Options |
% of Total Options Granted to Employees in Fiscal |
Exercise | Expiration | Potential Realizable Value at Assumed Annual Rate of Stock Price Appreciation for Option Term |
|||||||||||||||||
Name |
Granted(1) |
Year(2) |
Price(3) |
Date(4) |
5%(5) |
10%(5) |
|||||||||||||||
T.J. Rodgers | 400,000 | 4 | .79% | $23.19 | 12/14/2010 | $ | 5,832,998 | $ | 14,781,961 | ||||||||||||
Ralph Schmitt (6) | 40,000 | 0 | .48% | $39.63 | 08/11/2010 | $ | 996,798 | $ | 2,526,082 | ||||||||||||
70,000 | 0 | .84% | $23.19 | 12/14/2010 | $ | 1,020,775 | $ | 2,586,843 | |||||||||||||
Antonio R. Alvarez | 70,000 | 0 | .84% | $23.19 | 12/14/2010 | $ | 1,020,775 | $ | 2,586,843 | ||||||||||||
Emmanuel T. Hernandez | 40,000 | 0 | .48% | $23.19 | 12/14/2010 | $ | 583,300 | $ | 1,478,196 | ||||||||||||
J. Daniel McCranie (retired) | 0 | 0% | | | | |
|
(1) | Options granted under our 1994 Stock Option Plan typically have a ten-year term, vest over a five-year period of employment and have an exercise price equal to market value on the date of grant. All of the options granted and described in this table have these terms. |
(2) | During the fiscal year ended December 31, 2000, Options to purchase an aggregate of 8,352,101 shares of our common stock were granted to employees, including options granted to employees of acquired companies. |
(3) | The exercise price may be paid by check, cash or delivery of shares that are already owned. |
(4) | Options may terminate before their expiration dates if the optionees status as an employee or consultant is terminated, upon the optionees death or if a third party acquires us. |
(5) | Potential realizable value is based on an assumption that the market price of the stock appreciates at the stated rate, compounded annually, from the date of grant until the end of the ten-year option term. These values are calculated based on requirements promulgated by the Securities and Exchange Commission and do not reflect our estimate of future stock price appreciation. Annual compounding results in total appreciation of 63% (at 5% per year) and 159% (at 10% per year). If the price of our common stock were to increase at such rates from the price at 2000 fiscal year end ($19.6875 per share) over the next ten years, the resulting stock prices at 5% and 10% appreciation would be $32.07 and $51.06, respectively. |
(6) | Mr. Schmitt was granted 40,000 shares of option for his promotion to Vice President of Sales and Marketing. As part of our Stock Option program, Mr. Schmitt was granted 70,000 shares of options in October. |
11 |
Shares Acquired on |
Value | Number of Securities Underlying Unexercised Options at Fiscal Year End |
Value of Unexercised In-the-Money Options at Fiscal Year End ($)(1) |
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---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name |
Exercise (#) |
Realized ($) |
Exercisable |
Unexercisable |
Exercisable |
Unexercisable |
|||||||
T.J. Rodgers | 270,000 | $7,773,471 | 1,435,099 | 895,001 | $13,868,809 | $2,703,966 | |||||||
J. Daniel McCranie (retired) | 118,396 | $3,479,381 | 14,648 | 134,790 | $ 107,260 | $ 742,640 | |||||||
Ralph Schmitt | 10,000 | $ 429,375 | 30,742 | 153,694 | $ 160,061 | $ 219,687 | |||||||
Antonio R. Alvarez | 130,000 | $4,962,500 | 149,270 | 257,418 | $ 1,205,159 | $1,353,058 | |||||||
Emmanuel T. Hernandez | 115,250 | $5,001,017 | 124,057 | 151,117 | $ 1,166,328 | $ 563,184 |
|
(1) | Calculated by determining the difference between the fair market value of the securities underlying the options at December 29, 2000 ($19.6875) and the exercise price of the options. |
| Competitive Levels of Compensation. Cypress is committed to providing a compensation program that helps Cypress attract and retain the best people in the industry. To ensure that pay is competitive, we periodically review the compensation practices of other leading companies in the semiconductor industry. We believe that Cypress compensation levels fall within the median of industry compensation levels. |
| Performance-Driven Rewards. Executive officers are rewarded based upon corporate performance, business unit performance and individual performance. Corporate performance and business unit performance are evaluated by reviewing the extent to which strategic and business plan goals are met, including such factors as operating profit, performance relative to competitors and timely new product introductions. Individual performance is evaluated by measuring organization progress against set objectives. |
| Performance and Compensation Feedback. At the beginning of the performance cycle, key quarterly and annual objectives are set for each officer. The Chief Executive Officer gives ongoing feedback on performance to each officer. At the end of the performance cycle, we evaluate the extent to which the key objectives have been accomplished, which evaluation affects decisions on merit increases and stock option grants. |
12 |
Cash-Based Compensation: |
The compensation committee sets base salary for officers on the basis of level of responsibility, prior performance and other factors after reviewing the compensation levels for competitive positions in the market. |
Cypress has a New Product Bonus Plan under which Cypress distributes to all employees, including executive officers, payments based on Cypress achieving certain levels of new product revenue, plus attaining certain levels of profitability. Cypress believes that all employees share the responsibility of achieving revenue and profit levels. Under the New Product Bonus Plan, Cypress specific performance criteria must be met in each fiscal quarter for employees to be eligible for bonuses. For fiscal year 1998, Cypress met these criteria only for the third quarter of that fiscal year. For fiscal years 1999 and 2000, Cypress met these criteria in all quarters. |
Cypress has a Key Employee Bonus Plan in which the Chief Executive Officer, Vice Presidents and certain other key employees participated. Plan participants were eligible to receive bonuses (in each case a percentage of the participants base salary) based on Cypress achievement of a targeted level of sales, earnings per share and relative growth compared to industry average, as well as success in accomplishing certain group- and individual-specific goals. In 1998, bonuses were earned pursuant to the quarterly goal accomplishments for the last three quarters of the year. In 1999 and 2000, bonuses were paid pursuant to the quarterly goal accomplishments, sales, earnings, and growth portions of the plan. |
Equity-Based Compensation: |
Stock options provide additional incentives to officers and employees to work to maximize stockholder value. The options become exercisable over a defined period of employment with Cypress to encourage employees to remain with Cypress. In line with Cypress compensation philosophy, we grant stock options to all employees, commensurate with their potential contributions to Cypress. Stock options are included as part of the initial employment compensation package, and are also awarded for promotions and pursuant to the annual Evergreen Stock Program, which provides long-term incentives to virtually all employees based on performance and potential contributions. |
A second way that we establish the link between Cypress performance and level of compensation is by Cypress bonus plan, which awards variable compensation based to a substantial degree on an objective measure of Cypress profitability and long-term growth. It is the philosophy of Cypress and this committee to bias compensation toward this kind of variable compensation as well as equity awards. This means that when we perform well, as principally indicated by profitability, employees, and in particular the Chief Executive Officer, will be well compensated, to a level which may exceed the median of industry compensation levels. When our performance is below target levels, however, variable compensation will be limited or non-existent and equity compensation will not attain the same value, meaning that the Chief Executive Officers overall compensation package may well be below industry median levels. Consistent with our compensation objectives, Mr. Rodgers was awarded a bonus for accomplishments under the quarterly goals portion of the bonus plan and for achieving Cypress targeted levels of sales and earnings per share as set forth in the 2000 Key Employee Bonus Plan. |
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS /s/ Eric A. Benhamou Eric A. Benhamou /s/ John C. Lewis John C. Lewis |
FOR THE BOARD OF DIRECTORS /s/ Emmanuel Hernandez Emmanuel Hernandez Secretary |
Dated: April 2, 2001 16 |
| to provide oversight and monitoring of Company management and the independent auditors and their activities with respect to the Companys financial reporting process; |
| to provide the Companys Board of Directors with the results of its monitoring and recommendations derived therefrom; |
| to outline to the Board improvements made, or to be made, in internal accounting controls; |
| to nominate to the Board of Directors independent auditors to audit the Companys financial statements and oversee the activities and independence of the auditors; and |
| to provide to the Board of Directors such additional information and materials as it may deem necessary to make the Board of Directors aware of significant financial matters that require the attention of the Board of Directors. |
The Audit Committee will undertake those specific duties and responsibilities listed below and such other duties as the Board of Directors may from time to time prescribe. MEMBERSHIP:The Audit Committee members will be appointed by, and will serve at the discretion of, the Board of Directors and, on or before June 14, 2001 and thereafter, will consist of at least three members of the Board of Directors. On or before June 14, 2001, the members will meet the following criteria: |
1. | Each member will be an independent director, in accordance with the New York Stock Exchange Audit Committee requirements; |
2. | Each member will financially literate or will become so in a reasonable amount of time (as determined by the Board of Directors) after becoming a member of the Audit Committee; and |
3. | At least one member will have past employment experience in finance or accounting, requisite professional certification in accounting, or other comparable experience or background, including a current or past position as a chief executive or financial officer or other senior officer with financial oversight responsibilities. |
RESPONSIBILITIES:The responsibilities of the Audit Committee shall include: |
| Providing oversight and monitoring of Company management and the independent auditors and their activities with respect to the Companys financial reporting process; |
| Recommending the selection and, where appropriate, replacement of the independent auditors to the Board of Directors; |
| Reviewing fee arrangements with the independent auditors; |
| Reviewing the independent auditors proposed audit scope, approach and independence; |
A-1 |
| Reviewing the performance of the independent auditors, who shall be accountable to the Board of Directors and the Audit Committee; |
| Requesting from the independent auditors a formal written statement delineating all relationships between the auditor and the Company, consistent with Independence Standards Board Standard No. 1, and engaging in a dialogue with the auditors with respect to any disclosed relationships or services that may impact the objectivity and independence of the auditors; |
| Directing the Companys independent auditors to review before filing with the SEC the Companys interim financial statements included in Quarterly Reports on Form 10-Q, using professional standards and procedures for conducting such reviews; |
| Discussing with the Companys independent auditors the matters required to be discussed by Statement on Auditing Standards No. 61, as it may be modified or supplemented; |
| Reviewing with management, before release, the audited financial statements and Managements Discussion and Analysis in the Companys Annual Report on Form 10-K; |
| Providing a report in the Companys proxy statement in accordance with the requirements of Item 306 of Regulation S-K and Item 7(e) (3) of Schedule 14A; |
| Reviewing the Audit Committees own structure, processes and membership requirements; |
| Reviewing on a continuing basis the adequacy of the Companys system of internal controls; |
| Conducting a post-audit review of the financial statements and audit findings, including any significant suggestions for improvements provided to management by the independent auditors; |
| Reviewing managements monitoring of compliance with the Companys Standards of Business Conduct and with the Foreign Corrupt Practices Act; |
| Reviewing, in conjunction with counsel, when necessary, any legal matters that could have a significant impact on the Companys financial statements; |
| Providing oversight and review of the Companys investment policies; |
| If necessary, instituting special investigations and, if appropriate, hiring special counsel or experts to assist; and |
| Performing such other duties as may be requested by the Board of Directors. |
(b) If a Participant desires to sell any shares purchased under the Plan, he or she shall notify the Board of Directors or, if the Board of Directors has delegated responsibility for administration of the Plan, the Participant shall notify the officer of the Company to whom such responsibility has been delegated. The proceeds from the sale shall be applied to the principal of and accrued interest on the promissory note executed by the Participant. After repayment of the promissory note in full, the proceeds will be distributed to the Participant by check mailed to the address of the Participant on the Companys records. 6. No Continued Employment. Nothing in this Plan or any of the documents entered into by a Participant in connection with this Plan shall confer upon any Participant any right to continued employment by the Company or any of its subsidiaries for any specified period of time or interfere with any right of the Company to terminate such employment at any time. 7. Administration. (a) The Plan shall be administered by the Board of Directors of the Company. The Board of Directors may delegate responsibility for the administration of all or part of the Plan to officers of the Company. Notwithstanding any such delegation by the Board of Directors, the officers administering the Plan will not have the power or authority to make Loans under the Plan except in accordance with guidelines established by the Board of Directors, to amend, modify or waive any provision of the Plan, or to forgive any Loans without the approval of the Board of Directors. (b) Any purchases of Common Stock of the Company under the Plan must be made in compliance with the Companys policies, including insider trading policies, regarding trading in stock of the Company. 8. Amendment. The Companys Board of Directors shall make, in its sole and conclusive discretion, all determinations and interpretations required in connection with this Plan, and may amend this Plan in any regard at any time (subject to any contractual rights of loan recipients at the time and any requirement for stockholder approval of such amendments under Delaware law). 9. Governing Law. The Plan shall be governed by and construed and interpreted in accordance with laws of the State of Delaware. B-2 |