SCHEDULE 14A INFORMATION
(Rule 14a-101)
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
QUALCOMM INCORPORATED
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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[X] No fee required.
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(1) Title of each class of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
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[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
[QUALCOMM LOGO]
5775 MOREHOUSE DR.
SAN DIEGO, CALIFORNIA 92121
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 7, 2000
TO THE STOCKHOLDERS OF QUALCOMM INCORPORATED:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of QUALCOMM
Incorporated, a Delaware corporation (the "Company"), will be held at Copley
Symphony Hall, 750 B Street, San Diego, CA 92101, on Tuesday, March 7, 2000 at
9:30 a.m. local time for the following purposes:
1. To elect four Class III directors to hold office until the 2003 Annual
Meeting of Stockholders.
2. To ratify the selection of PricewaterhouseCoopers LLP as the Company's
independent accountants for the Company's fiscal year ending September
24, 2000.
3. To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on January 12, 2000
as the record date for the determination of stockholders entitled to notice of
and to vote at this Annual Meeting and at any adjournment or postponement
thereof.
By Order of the Board of Directors
/s/ Irwin Mark Jacobs
Irwin Mark Jacobs
Chairman of the Board
San Diego, California and Chief Executive Officer
January 26, 2000
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF
MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE
GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE
NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER
NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU WILL NOT BE PERMITTED TO VOTE
IN PERSON AT THE MEETING UNLESS YOU FIRST OBTAIN A PROXY ISSUED IN YOUR NAME
FROM THE RECORD HOLDER.
QUALCOMM INCORPORATED
5775 MOREHOUSE DR.
SAN DIEGO, CALIFORNIA 92121
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
MARCH 7, 2000
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of
QUALCOMM Incorporated, a Delaware corporation (the "Company"), for use at the
Annual Meeting of Stockholders to be held on Tuesday, March 7, 2000, at 9:30
a.m. local time (the "Annual Meeting"), or at any adjournment or postponement
thereof, for the purposes set forth herein and in the accompanying Notice of
Annual Meeting. The Annual Meeting will be held at Copley Symphony Hall, 750 B
Street, San Diego, CA 92101. The Company intends to mail this proxy statement
and accompanying proxy card on or about January 26, 2000 to all stockholders
entitled to vote at the Annual Meeting.
SOLICITATION
The Company will bear the entire cost of solicitation of proxies including
preparation, assembly, printing and mailing of this proxy statement, the proxy
card and any additional information furnished to stockholders. Copies of
solicitation materials will be furnished to banks, brokerage houses, fiduciaries
and custodians holding in their names shares of Common Stock beneficially owned
by others to forward to such beneficial owners. The Company may reimburse
persons representing beneficial owners of Common Stock for their costs of
forwarding solicitation materials to such beneficial owners. Original
solicitation of proxies by mail may be supplemented by telephone, telegram or
personal solicitation by directors, officers or other regular employees of the
Company or, at the Company's request, D.F. King & Co., Inc., a professional
proxy solicitation firm. No additional compensation will be paid to directors,
officers or other regular employees for such services, but D.F. King & Co., Inc.
will be paid its customary fee, estimated to be about $10,000, if it renders
solicitation services.
VOTING RIGHTS AND OUTSTANDING SHARES
Only holders of record of Common Stock at the close of business on January
12, 2000 (the "Record Date") will be entitled to notice of and to vote at the
Annual Meeting. At the close of business on the Record Date, the Company had
outstanding and entitled to vote 702,838,854 shares of Common Stock.
Each holder of record of Common Stock on such date will be entitled to one
vote for each share held on all matters to be voted upon. With respect to the
election of directors, stockholders may exercise cumulative voting rights. Under
cumulative voting, each holder of Common Stock will be entitled to four votes
for each share held. Each stockholder may give one candidate, who has been
nominated prior to voting, all the votes such stockholder is entitled to cast or
may distribute such votes among as many such candidates as such stockholder
chooses. However, no stockholder will be entitled to cumulate votes unless the
candidate's name has been placed in nomination prior to the voting and at least
one stockholder has given notice at the meeting, prior to the voting, of his or
her intention to cumulate votes. Unless the proxyholders are otherwise
instructed, stockholders, by means of the accompanying proxy, will grant the
proxyholders discretionary authority to cumulate votes.
All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as
negative votes. Broker non-votes are counted towards a quorum but are not
counted for any purpose in determining whether a matter has been approved.
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
secretary of the Company at the Company's principal executive offices, 5775
Morehouse Dr., San Diego, California 92121-1714, a written notice of revocation
or a duly executed proxy bearing a later date, or it may be revoked by attending
the meeting and voting in person. Attendance at the meeting will not, by itself,
revoke a proxy.
STOCKHOLDER PROPOSALS
The deadline for submitting a stockholder proposal for inclusion in the
Company's proxy statement and form of proxy for the Company's 2001 Annual
Meeting of Stockholders pursuant to Rule 14a-8, "Shareholder Proposals," of the
Securities and Exchange Commission (the "SEC") is September 29, 2000. The
deadline for submitting a stockholder proposal or a nomination for director that
is not to be included in such proxy statement and proxy is also September 29,
2000. Stockholders are also advised to review the Company's Bylaws, which
contain additional advance notice requirements, including requirements with
respect to advance notice of stockholder proposals and director nominations.
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Restated Certificate of Incorporation and Bylaws provide that
the Board of Directors shall be divided into three classes, with each class
having a three-year term. Directors are assigned to each class in accordance
with a resolution or resolutions adopted by the Board of Directors, each class
consisting, as nearly as possible, of one-third the total number of directors.
Vacancies on the Board of Directors resulting from death, resignation,
disqualification, removal or other causes may be filled by either the
affirmative vote of the holders of a majority of the then-outstanding shares or
by the affirmative vote of a majority of the remaining directors then in office,
even if less than a quorum of the Board of Directors. Newly created
directorships resulting from any increase in the number of directors may, unless
the Board of Directors determines otherwise, be filled only by the affirmative
vote of the directors then in office, even if less than a quorum of the Board of
Directors. A director elected by the Board of Directors to fill a vacancy
(including a vacancy created by an increase in the number of directors) shall
serve for the remainder of the full term of the class of directors in which the
vacancy occurred and until such director's successor is elected and qualified.
The Company's Restated Certificate of Incorporation provides that the
number of directors which shall constitute the whole Board of Directors shall be
fixed exclusively by one or more resolutions adopted from time to time by the
Board of Directors. The authorized number of directors is currently set at
thirteen. Four seats on the Board of Directors, currently held by Richard C.
Atkinson, Diana Lady Dougan, Peter M. Sacerdote and Marc I. Stern, have been
designated as Class III Board seats, with the term of the directors occupying
such seats expiring as of the Annual Meeting.
Each of the nominees for election to this class, except for Ambassador
Dougan who was appointed by the Board of Directors in December 1998, is
currently a Board member of the Company who was previously elected by the
stockholders. If elected at the Annual Meeting, each of the four nominees would
serve until the 2003 Annual Meeting and until his or her successor is elected
and has qualified, or until such director's earlier death, resignation or
removal.
If no stockholder has exercised cumulative voting rights, the directors
will be elected by a plurality of the votes of the shares present in person or
represented by proxy at the meeting and entitled to vote on the election of
directors. If a stockholder has exercised cumulative voting rights, the four
candidates receiving the highest number of affirmative votes of the shares
entitled to be voted for such directors will be elected directors of the
Company. Shares represented by executed proxies will be voted, if authority to
do so is not withheld, for the
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election of the four nominees named below. In the event that any nominee should
be unavailable for election as a result of an unexpected occurrence, such shares
will be voted for the election of such substitute nominee as the Board of
Directors may propose. Each person nominated for election has agreed to serve if
elected, and the Board of Directors has no reason to believe that any nominee
will be unable to serve.
Set forth below is biographical information for each person nominated and
each person whose term of office as a director will continue after the Annual
Meeting.
NOMINEES FOR ELECTION FOR A THREE-YEAR TERM EXPIRING AT THE 2003 ANNUAL MEETING
RICHARD C. ATKINSON
Richard C. Atkinson, age 70, became a Director of the Company in January
1991. Dr. Atkinson has been serving as the president of the University of
California since October 1995. Prior to that time, he served as chancellor of
the University of California at San Diego since 1980. Dr. Atkinson joined the
board of directors of Cubic Corporation, an electronic products company, in May
1999. Dr. Atkinson is a former director of the National Science Foundation, past
president of the American Association for the Advancement of Science and former
chair of the Association of American Universities. He is one of the founders of
Computer Curriculum Corporation. He is a member of the National Academy of
Sciences, the Institute of Medicine, the National Academy of Education and the
American Philosophical Society. Dr. Atkinson holds a Ph.D. degree from Indiana
University and a Ph.B. degree from the University of Chicago.
DIANA LADY DOUGAN
Diana Lady Dougan, age 57, became a Director of the Company in December
1998. Ambassador Dougan is senior advisor and international communications
studies chair of the Center for Strategic and International Studies and
chairwoman of the Cyber Century Forum. She has served in senior policy and
management positions for more than three decades, including appointments by both
Republican and Democratic presidents in senate-confirmed positions. From 1982 to
1988, as the first statutory U.S. coordinator for International Communications
and Information Policy, Ambassador Dougan spearheaded international negotiations
and policies involving telecom, broadcast, and information technology services
on behalf of 14 federal agencies and served administratively as assistant
secretary of state and holds the permanent rank of ambassador. Early in her
career, Ambassador Dougan was the first CATV marketing director for Time, Inc.
and an award-winning TV producer. In addition to earning undergraduate degrees
in industrial psychology and English from the University of Maryland, Ambassador
Dougan's studies also include economics at the University of Utah and the
Advanced Management Program at Harvard University.
PETER M. SACERDOTE
Peter M. Sacerdote, age 62, became a Director of the Company in October
1989. Mr. Sacerdote has been an advisory director of Goldman, Sachs & Co. since
May 1999 where he also serves as chairman of its Investment Committee. In the
five years prior to that time, he served as a limited partner of Goldman, Sachs
Group, L.P. He also serves as a director of AMF Group, Inc., a bowling center
operator and equipment manufacturer, and Franklin Resources, Inc., a mutual fund
management company. He received his B.E.E. degree from Cornell University and an
M.B.A. degree from the Harvard Graduate School of Business Administration.
MARC I. STERN
Marc I. Stern, age 55, became a Director of the Company in February 1994.
He has been with the TCW Group, Inc., an asset management firm, since March 1990
and has served as its president since May 1992. From December 1988 to March
1990, Mr. Stern served as president and a director of SunAmerica, Inc., a
financial services company. Prior to joining SunAmerica, Mr. Stern was managing
director and chief administrative officer of The Henley Group, Inc., a
diversified manufacturing company, from May 1986 to December 1988. From
September 1985 to May 1986, he was senior vice president of Allied-Signal Inc.,
a diversified manufacturing company. Mr. Stern is the non-executive chairman of
Apex Mortgage Capital, Inc.,
3
a financial services company, and chairman of TCW Galileo Funds, Inc., a
registered investment company. He received a B.A. degree from Dickinson College,
an M.A. degree from the Columbia University Graduate School of Public Law and
Government and a J.D. degree from the Columbia University School of Law.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF EACH NAMED NOMINEE.
DIRECTORS CONTINUING IN OFFICE UNTIL THE 2001 ANNUAL MEETING
IRWIN MARK JACOBS
Irwin Mark Jacobs, age 66, one of the founders of the Company, has served
as chairman of the Board of Directors and chief executive officer of the Company
since it began operations in July 1985. He also held the title of president
prior to May 1992. Before joining the Company, Dr. Jacobs was executive vice
president and a director of M/A-COM, Inc., a telecommunications company. From
October 1968 to April 1985, Dr. Jacobs held various executive positions at
LINKABIT (M/A-COM LINKABIT after August 1980), a company he co-founded. During
most of his period of service with LINKABIT, he was chairman, president and
chief executive officer and was at all times a director. Dr. Jacobs received his
B.E.E. degree from Cornell University and his M.S. and Sc.D. degrees from the
Massachusetts Institute of Technology ("MIT"). He is a member of the National
Academy of Engineering and was awarded the National Medal of Technology in 1994.
ANDREW J. VITERBI
Andrew J. Viterbi, age 64, one of the founders of the Company, has served
as vice-chairman of the Board of Directors since it began operations in July
1985. From July 1985 through July 1996 he also served as the Company's chief
technical officer. From July 1983 to April 1985, Dr. Viterbi was senior vice
president and chief scientist of M/A-COM, Inc., a telecommunications company.
From October 1968 to April 1985, Dr. Viterbi held various executive positions at
LINKABIT (M/A-COM LINKABIT after August 1980), a company he co-founded, and
served as president of the M/A-COM LINKABIT subsidiary of M/A-COM, Inc. During
most of his period of service with LINKABIT, he was vice-chairman and was at all
times a director. Dr. Viterbi received his B.S. and M.S. degrees in electrical
engineering from MIT and his Ph.D. degree from the University of Southern
California. He is a member of the National Academy of Engineering, the National
Academy of Sciences and the President's Information Technology Advisory
Committee.
ADELIA A. COFFMAN
Adelia A. Coffman, age 47, one of the founders of the Company, has served
as a Director of the Company from July 1985 to February 1989 and since January
1992. She also served as chief financial officer of the Company from July 1985
until April 1994 and held the titles of vice president and senior vice president
at the Company during that time. Ms. Coffman currently provides financial
consulting services and is also active in Oregon Diverse Industries, LLC, a real
estate investment and development company of which she is an owner. From July
1970 until July 1985, Ms. Coffman held various positions at LINKABIT and M/A-COM
LINKABIT. Prior to joining the Company, Ms. Coffman was controller of M/A-COM
LINKABIT. Ms. Coffman received her B.S. degree in business from San Diego State
University.
NEIL KADISHA
Neil Kadisha, age 45, became a Director of the Company in August 1988.
Prior to that date, he served as chairman of the board and chief executive
officer of Omninet Corporation. In 1981, Mr. Kadisha founded GNC Industries,
Inc./Stadco, an aerospace and aircraft component manufacturer, where he is
currently serving as chief executive officer. In 1989, Mr. Kadisha founded
Texollini, Inc., a manufacturer of stretch fabric, where he currently serves as
chairman of the board. In 1999, Mr. Kadisha became a director of AirSwitch
Corporation, a company engaged in the development of high-speed Internet access
technology. Mr. Kadisha's academic background is in industrial management and
economics from Manchester, England.
4
DIRECTORS CONTINUING IN OFFICE UNTIL THE 2002 ANNUAL MEETING
ROBERT E. KAHN
Robert E. Kahn, age 61, became a Director of the Company in February 1997.
Dr. Kahn is chairman, chief executive officer and president of the Corporation
for National Research Initiatives, which he founded in 1986. From 1972 to 1985,
he was employed at the U.S. Defense Advanced Research Projects Agency, where his
last position was director of the Information Processing Techniques Office. From
1966 to 1972, Dr. Kahn was a senior scientist with Bolt Beranek and Newman,
where he was responsible for the system design of the Arpanet, the first
packet-switched network. Dr. Kahn, who is a member of the National Academy of
Engineering, has received numerous awards for his pioneering work on the
Internet for which he received the 1997 National Medal of Technology. Dr. Kahn
received a B.E.E. degree from the City College of New York and M.A. and Ph.D.
degrees from Princeton University.
JEROME S. KATZIN
Jerome S. Katzin, age 81, became a Director of the Company in November
1987. From 1953 until his retirement in 1990, Mr. Katzin was engaged in
investment banking with Kuhn Loeb & Co. and successor firms. He is a director of
the Coastal Corporation, an oil and gas business. Mr. Katzin is a graduate of
the University of Chicago and has a J.D. degree from the University of Chicago
Law School. He served on the legal staff of the U.S. Securities and Exchange
Commission from 1941 to 1953 and held the position of director of the Division
of Public Utilities. He is a member of the Board of Overseers of the University
of California at San Diego, is a trustee of the San Diego Foundation, and was
formerly a trustee and President of the U.C. San Diego Foundation.
DUANE A. NELLES
Duane A. Nelles, age 56, a certified public accountant, became a Director
of the Company in August 1988. Mr. Nelles has also served on the board of
directors of WFS Financial Inc., an automotive finance company, since July 1995.
He has been in the personal investment business since 1987. Prior to that time,
Mr. Nelles was a partner in the international public accounting firm of Coopers
& Lybrand, L.L.P., which he joined in 1968 after receiving his M.B.A. degree
from the University of Michigan.
FRANK SAVAGE
Frank Savage, age 61, became a Director of the Company in February 1996. He
has served as chairman of Alliance Capital Management International and a
director of Alliance Capital Management Corporation since July 1993. He also
served as senior vice president of The Equitable Life Assurance Society of the
United States from February 1988 until March 1996. Alliance Capital is an
investment management subsidiary of The Equitable Life Assurance Society. He was
the chairman of Equitable Capital Management Corporation, an Equitable Life
investment management subsidiary, from April 1992 until it merged with Alliance
Capital in July 1993. From December 1970 to July 1985 he held various positions
with Equitable Life including investment officer and vice president. Mr. Savage
is a director of Lockheed Martin Corporation, an aero-technology corporation,
Lyondell Chemical Company, a chemical company, ENRON Corporation, an energy
company, Essence Communications, Inc., a media company and The Johns Hopkins and
Howard Universities. He received a B.A. degree from Howard University, an M.A.
degree from The Johns Hopkins University Nitze School of Advanced International
Studies and an honorary doctorate degree in humane letters from Hofstra
University.
BRENT SCOWCROFT
Brent Scowcroft, age 74, became a Director of the Company in December 1994.
General Scowcroft is the president of The Scowcroft Group, Inc., an
international business consulting firm he founded in June 1994. He is also the
president of the Forum for International Policy, a non-profit organization that
he founded in 1993 that promotes American leadership and foreign policy. He
served as assistant to the president for national security affairs for President
Bush from January 1989 until January 1993; he also held that position for
5
President Ford during his term. A retired U.S. Air Force lieutenant general,
General Scowcroft served in numerous national security posts in the Pentagon and
the White House prior to his appointments as assistant to the president for
national security affairs. Currently, General Scowcroft serves as a director of
Devon Energy, an oil and gas company and Pennzoil-Quaker State, an automotive
consumer car care company. He received his B.S. degree from West Point and M.A.
and Ph.D. degrees from Columbia University.
BOARD COMMITTEES AND MEETINGS
During the fiscal year ended September 26, 1999, the Board of Directors
held thirteen meetings. The Board has an Audit Committee, a Compensation
Committee, a Nominating Committee and a Stock Option Committee.
The Audit Committee meets at least quarterly with the Company's management
and independent accountants to, among other things, review the results of the
annual audit and quarterly reviews and discuss the financial statements,
recommend to the Board the independent accountants to be retained and receive
and consider the accountants' comments as to controls, adequacy of staff and
management performance and procedures in connection with audit and financial
controls. The Audit Committee, which as of the end of fiscal 1999 was composed
of Messrs. Nelles (Committee Chairman), Kadisha and Katzin and Ms. Coffman, met
seven times during such fiscal year.
The Compensation Committee makes recommendations concerning salaries and
incentive compensation, administers and approves stock offerings under the
Company's 1991 Employee Stock Purchase Plan and the 1996 Non-Qualified Employee
Stock Purchase Plan, administers the Company's 1991 Stock Option Plan (the
"Option Plan") and otherwise determines compensation levels and performs such
other functions regarding compensation as the Board may delegate. The
Compensation Committee, which as of the end of fiscal 1999 was composed of
Messrs. Katzin (Committee Chairman), Nelles and Stern and Ambassador Dougan, met
five times during such fiscal year.
The Nominating Committee interviews, evaluates, nominates and recommends
individuals for membership on the Company's Board of Directors and committees
thereof. The Company's Bylaws provide for procedures for consideration of
nominees recommended by stockholders. Effective February 1998, the Nominating
Committee included Ms. Coffman (Committee Chairman) and Messrs. Kadisha and
Sacerdote and, effective February 1999, was reconstituted to consist of Messrs.
Scowcroft (Committee Chairman), Kahn, Katzin, Nelles and Savage. The Nominating
Committee met once during fiscal 1999. The Committee met in late September 1999
to recommend the nomination of the Class III Director nominees to the Board of
Directors, subject to stockholder approval, as further discussed in Proposal 1.
The Stock Option Committee administers and awards stock options to
employees and consultants (other than with respect to directors and executive
officers of the Company) under the Option Plan. The Stock Option Committee,
which as of the end of fiscal 1999 was composed of Messrs. Nelles (Committee
Chairman), Jacobs and Viterbi, met two times during such fiscal year.
During the fiscal year ended September 26, 1999, each Board member attended
at least 75% of the aggregate of the meetings of the Board and of the committees
on which he or she served and held during the period for which he or she was a
Board or Committee member, respectively.
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected PricewaterhouseCoopers LLP as the
Company's independent accountants for the fiscal year ending September 24, 2000
and has further directed that management submit the selection of independent
accountants for ratification by the stockholders at the Annual Meeting.
PricewaterhouseCoopers LLP has audited the Company's financial statements since
the Company commenced operations in 1985. Representatives of
PricewaterhouseCoopers LLP are expected to be present at the
6
Annual Meeting, will have an opportunity to make a statement if they so desire
and will be available to respond to appropriate questions.
Stockholder ratification of the selection of PricewaterhouseCoopers LLP as
the Company's independent accountants is not required by the Company's Bylaws or
otherwise. However, the Board is submitting the selection of
PricewaterhouseCoopers LLP to the stockholders for ratification as a matter of
good corporate practice. If the stockholders fail to ratify the selection, the
Board and the Audit Committee will reconsider whether or not to retain that
firm. Even if the selection is ratified, the Board and the Audit Committee in
their discretion may direct the appointment of a different independent
accounting firm at any time during the year if they determine that such a change
would be in the best interests of the Company and its stockholders.
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote at the meeting will be
required to ratify the selection of PricewaterhouseCoopers LLP. Abstentions will
be counted toward the tabulation of votes cast on this Proposal 2 and will have
the same effect as negative votes. Broker non-votes are counted towards a
quorum, but are not counted for any purpose in determining whether this matter
has been ratified.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership
of the Company's Common Stock as of December 24, 1999 (as adjusted for the
four-for-one split of the Company's Common Stock effected in December 1999 (the
"Stock Split")), by: (i) each director and nominee for director; (ii) each of
the executive officers of the Company named in the Summary Compensation Table
under "Compensation of Executive Officers" (the "Named Executive Officers");
(iii) all executive officers and directors of the Company as a group; and (iv)
all those known by the Company to be beneficial owners of more than five percent
of its Common Stock.
BENEFICIAL OWNERSHIP(1)
------------------------
NUMBER OF PERCENT OF
BENEFICIAL OWNER SHARES TOTAL
- ------------------------------------------------------ ---------- ----------
Irwin Mark Jacobs(2).................................. 24,826,516 3.54%
Steven R. Altman(3)................................... 158,834 *
Richard Sulpizio(4)................................... 721,480 *
Anthony S. Thornley(14)............................... 581,120 *
Andrew J. Viterbi(5)(14).............................. 9,528,984 1.37%
Richard C. Atkinson(6)(14)............................ 1,796,256 *
Adelia A. Coffman(7)(14).............................. 981,300 *
Diana Lady Dougan(14)................................. 48,000 *
Neil Kadisha(8)(14)................................... 9,199,568 1.32%
Robert E. Kahn(14).................................... 128,000 *
Jerome S. Katzin(9)(14)............................... 1,792,672 *
Duane A. Nelles(10)(14)............................... 332,000 *
Peter M. Sacerdote(11)(14)............................ 848,000 *
Frank Savage(14)...................................... 148,000 *
Brent Scowcroft(14)................................... 536,992 *
Marc I. Stern(12)(14)................................. 544,000 *
All Executive Officers and Directors as a Group (21
persons)(13)(14).................................... 60,471,512 8.54%
7
- ---------------
* Less than one percent.
(1) This table is based upon information supplied by officers, directors and
principal stockholders and Schedules 13D and 13G filed with the SEC. Unless
otherwise indicated in the footnotes to this table and subject to community
property laws where applicable, the Company believes that each of the
stockholders named in this table has sole voting and investment power with
respect to the shares indicated as beneficially owned. Applicable
percentages are based on 696,162,088 shares outstanding on December 24,
1999, adjusted as required by rules promulgated by the SEC and adjusted to
give effect to the Stock Split.
(2) Includes 19,606,672 shares held in family trusts and 118,720 shares held in
trust for the benefit of relatives. Also includes 5,101,124 shares issuable
upon exercise of options exercisable within 60 days of December 24, 1999 of
which 62,600 shares are held in trusts for the benefit of Dr. Jacobs and
his spouse.
(3) Includes 18,136 shares held by Mr. Altman's spouse. Also includes 81,968
shares issuable upon exercise of options exercisable within 60 days of
December 24, 1999 of which 1,968 shares are held in trusts for the benefit
of Mr. Altman's children for which Mr. Altman's spouse is the trustee.
(4) Includes 17,080 shares held in family trusts and 8,400 shares held for the
benefit of Mr. Sulpizio's children. Also includes 696,000 shares issuable
upon exercise of options exercisable within 60 days of December 24, 1999 of
which 44,000 shares are held in trusts for the benefit of Mr. Sulpizio's
children for which Mr. Sulpizio's spouse is the trustee.
(5) Includes 9,221,904 shares held in family trusts.
(6) Includes 84,000 shares held in a foundation of which Dr. Atkinson disclaims
beneficial ownership. Also includes 783,616 shares held in family trusts,
408,000 shares held in a pension plan trust for the benefit of employees of
a business operated by Dr. Atkinson and 32,640 shares held in trust for the
benefit of relatives.
(7) Includes 693,300 shares held in family trusts.
(8) Includes 2,400,000 shares held in family trusts and 80,000 shares held in
trusts for which Mr. Kadisha is the trustee and disclaims beneficial
ownership.
(9) Includes 16,000 shares held in a foundation of which Mr. Katzin disclaims
beneficial ownership. Also includes 1,172,128 shares held in family trusts
and 220,544 shares held in trust for the benefit of Mr. Katzin's
grandchildren of which Mr. Katzin's wife is the trustee.
(10) Includes 4,000 shares held by Mr. Nelles' children.
(11) Includes 160,000 shares held in a foundation of which Mr. Sacerdote
disclaims beneficial ownership.
(12) Includes 16,000 shares held in family trusts.
(13) Includes 496 shares held in family trusts, 56,848 shares held for the
benefit of executive officers' children, 104,000 shares held in a
charitable remainder trust and 45,360 shares held in trust for the benefit
of an executive officer. Also includes 19,400 shares issuable upon exercise
of options exercisable within 60 days of December 24, 1999 which are held
in trusts for the benefit of an executive officer.
(14) Includes shares issuable upon exercise of options exercisable within 60
days of December 24, 1999 as follows: Mr. Thornley, 571,000 shares; Dr.
Viterbi, 264,000 shares; Dr. Atkinson, 488,000 shares; Ms. Coffman, 288,000
shares; Ambassador Dougan, 48,000 shares; Mr. Kadisha, 528,000 shares; Dr.
Kahn, 128,000 shares; Mr. Katzin, 384,000 shares; Mr. Nelles, 248,000
shares; Mr. Sacerdote, 528,000 shares; Mr. Savage, 128,000 shares; Mr.
Scowcroft, 496,000 shares; Mr. Stern, 528,000 shares; all directors and
executive officers as a group, 12,291,492 shares.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
(THE "EXCHANGE ACT")
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than ten percent of a registered
class of the Company's equity securities, to file with the SEC initial reports
of ownership and reports of changes in ownership of Common Stock and other
equity securities
8
of the Company. Officers, directors and greater-than-ten-percent stockholders
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 a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended September 26, 1999, all
Section 16(a) filing requirements applicable to its officers, directors and
greater-than-ten-percent beneficial owners were complied with.
EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
Each Non-Employee Director of the Company receives (i) a fee of $1,000 for
each Board or Board Committee meeting attended, (ii) a fee of $500 for each
Board or Board Committee meeting in which such director participates by
telephone, and (iii) except for the Nominating Committee, a fee of $2,500 per
annum for the Chairperson of each Board Committee. In the fiscal year ended
September 26, 1999, the total amount of such compensation paid to Non-Employee
Directors was approximately $158,000. When traveling from out-of-town, the
members of the Board of Directors are also eligible for reimbursement for their
travel expenses incurred in connection with attendance at Board meetings and
Board Committee meetings. Employee directors do not receive any compensation for
their participation in Board or Board Committee meetings.
Non-Employee Directors of the Company are eligible to receive stock option
grants under the Company's 1998 Non-Employee Directors' Stock Option Plan (the
"1998 Directors' Plan"). Employee Directors are not eligible to receive stock
options under the 1998 Directors' Plan.
The 1998 Directors' Plan provides for an initial option grant to purchase
20,000 shares of the Company's Common Stock to persons upon first joining the
Board (an "Initial Option") and an annual option grant to purchase 10,000 shares
of the Company's Common Stock at the time of each annual meeting to Non-
Employee Directors who continue to serve on the Board (an "Annual Option"). The
number of shares subject to Initial Option and Annual Option grants after the
Stock Split will remain the same notwithstanding the Stock Split.
Options granted on or after November 18, 1996 under the Company's
Non-Employee Directors' Stock Option Plan (the "Prior Directors' Plan"), as
amended by the Board of Directors, and options granted under the 1998 Directors'
Plan, have exercise prices equal to the fair market value of the underlying
common stock on the date of grant, and vest over five years according to the
following schedule: so long as the optionee continues to serve as a Non-Employee
Director or employee of, or consultant to, the Company, 20% of the shares
subject to the option will vest on each of the first, second, third, fourth and
fifth anniversaries of the date of grant. Options granted under the Prior
Directors' Plan prior to November 18, 1996 vest over five years according to the
following schedule: so long as the optionee continues to serve as a Non-Employee
Director (or, as such options have been amended by the Board, as an employee of
or consultant to the Company), 20% of the shares subject to the option will vest
on each of the second, third and fourth anniversaries of the date of grant, and
the remaining 40% of such shares will vest on the fifth anniversary of the date
of grant.
The term of all options under the Prior Directors' Plan and the 1998
Directors' Plan is ten years, but such options generally expire 30 days after
the optionee ceases to be a Non-Employee Director, employee or consultant
(including those options granted prior to November 18, 1996, as amended). In the
event that an optionee ceases to be a Non-Employee Director, employee or
consultant due to the optionee's (i) retirement at age seventy (70) or older
after nine (9) years of service on the Board ("Retirement") or (ii) due to
permanent and total disability as defined in Section 22(e)(3) of the Internal
Revenue Code of 1986, as amended (the "Code"), the option will terminate only
upon expiration of the option term. In the event that an optionee ceases to be a
Non-Employee Director, employee or consultant due to the optionee's death or due
to the optionee's termination due to permanent and total disability or
Retirement and such termination due to disability or Retirement is followed by
death, the vesting of all unvested shares will be accelerated to such date
9
and the option may be exercised in full at any time within one year of such
termination. In addition to the foregoing, the vesting of options granted under
both the Prior Directors' Plan and the 1998 Directors' Plan accelerate in
connection with specified change of control transactions.
If any change is made in the stock subject to the Prior Directors' Plan or
the 1998 Directors' Plan, or subject to any option granted thereunder, the Prior
Directors' Plan and the 1998 Directors' Plan and options outstanding thereunder
will be appropriately adjusted as to the type(s) and maximum number of
securities subject to such plans and the type(s), number of securities and price
per share of stock subject to such outstanding options.
During the fiscal year ended September 26, 1999, upon her election to the
Board in December 1998, Ambassador Dougan was granted an Initial Option to
purchase 160,000 shares of Common Stock (as adjusted for the Stock Split)
pursuant to the 1998 Directors' Plan. In addition, during the fiscal year ended
September 26, 1999, Annual Options to purchase an aggregate of 880,000 shares of
the Company's Common Stock (as adjusted for the Stock Split) were granted to
Non-Employee Directors serving on the Board on February 23, 1999 (the annual
meeting date).
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY OF COMPENSATION
The following table shows, for each of the three fiscal years ended
September 26, 1999, compensation awarded or paid to, or earned by the Company's
Chief Executive Officer and its other four most highly compensated executive
officers at September 26, 1999:
LONG-TERM
COMPENSATION
-------------
ANNUAL SECURITIES
COMPENSATION(1) UNDERLYING
------------------- OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (#)(2) COMPENSATION(3)
- ---------------------------------------- ---- -------- -------- ------------- ---------------
Irwin Mark Jacobs....................... 1999 $773,085 $975,000 0 $302,909
Chairman of the Board and 1998 $660,467 $555,000 3,840,000 $100,959
Chief Executive Officer 1997 $538,394 $500,667 0 $ 55,458
Richard Sulpizio........................ 1999 $537,323 $540,000 0 $ 32,133
President and 1998 $413,154 $280,000 1,200,000 $ 50,801
Chief Operating Officer 1997 $340,411 $225,000 800,000 $ 20,981
Anthony S. Thornley..................... 1999 $402,125 $435,000 0 $ 47,432
Executive Vice President 1998 $327,636 $225,000 1,640,000 $ 3,515
and Chief Financial Officer 1997 $284,638 $150,000 0 $ 25,239
Andrew J. Viterbi....................... 1999 $440,583 $275,000 0 $139,483
Vice Chairman of the Board 1998 $399,870 $200,000 600,000 $ 46,308
1997 $348,070 $201,600 0 $ 33,211
Steven R. Altman........................ 1999 $323,862 $340,000 0 $ 27,015
Executive Vice President, General 1998 $267,783 $175,000 880,000 $ 18,602
Counsel and General Manager,
Technology 1997 $223,220 $125,000 0 $ 2,605
Transfer and Strategic Alliances
Division
- ---------------
(1) As permitted by rules established by the SEC, no amounts are shown with
respect to certain "perquisites" where such amounts do not exceed in the
aggregate the lesser of 10% of bonus plus salary or $50,000.
(2) All share numbers give effect to the Stock Split.
10
(3) Includes Company matching 401(k) contributions, executive benefits payments,
executive retirement stock matching, financial planning services and
split-dollar life insurance as follows:
COMPANY EXECUTIVE
MATCHING EXECUTIVE RETIREMENT FINANCIAL SPLIT-DOLLAR
401(K) BENEFITS STOCK PLANNING LIFE TOTAL OTHER
NAME YEAR CONTRIBUTIONS PAYMENTS MATCHING(1) SERVICES INSURANCE(2) COMPENSATION
------------------------ ---- ------------- --------- ----------- --------- ------------ ------------
Irwin Mark Jacobs....... 1999 $3,125 $2,948 $118,812 $31,246 $146,778 $302,909
1998 $2,659 $2,948 $ 76,576 $ 6,545 $ 12,231 $100,959
1997 $2,145 $2,948 $ 50,365 $ 0 $ 0 $ 55,458
Richard Sulpizio........ 1999 $3,125 $1,195 $ 17,589 $10,224 $ 0 $ 32,133
1998 $2,659 $1,195 $ 38,787 $ 8,160 $ 0 $ 50,801
1997 $2,145 $1,195 $ 17,641 $ 0 $ 0 $ 20,981
Anthony S. Thornley..... 1999 $3,125 $1,260 $ 43,047 $ 0 $ 0 $ 47,432
1998 $2,255 $1,260 $ 0 $ 0 $ 0 $ 3,515
1997 $2,145 $1,260 $ 21,834 $ 0 $ 0 $ 25,239
Andrew J. Viterbi....... 1999 $3,125 $2,410 $ 54,465 $21,653 $ 57,830 $139,483
1998 $2,659 $2,410 $ 36,420 $ 0 $ 4,819 $ 46,308
1997 $2,145 $2,410 $ 28,656 $ 0 $ 0 $ 33,211
Steven R. Altman........ 1999 $3,125 $ 460 $ 23,430 $ $ 0 $ 27,015
1998 $2,659 $ 460 $ 14,244 $ 1,239 $ 0 $ 18,602
1997 $2,145 $ 460 $ 0 $ 0 $ 0 $ 2,605
- ---------------
(1) The Company has a voluntary retirement plan that allows eligible
executives to defer up to 100% of their income on a pre-tax basis. The
Company will match in stock, subject to vesting, up to 50% of a
participant's eligible contributions. Eligible contributions refer to:
(a) 15% of salary through December 31, 1998; (b) 15% of bonus paid for
fiscal years through 1997; (c) 20% of bonus paid with respect to fiscal
year 1998; and (d) 20% of income on or after January 1, 1999. The
values stated above are the values of the Company's quarterly
contributions on their respective dates of contribution. A participant
becomes fully vested in Company contributions at age 65, with partial
vesting beginning after the participant reaches age 61 and has at least
three years of employment with the Company, or has participated in the
plan for more than ten years. Employee and Company contributions are
unsecured and subject to the general creditors of the Company. At
September 26, 1999, Dr. Jacobs, Mr. Sulpizio, Mr. Thornley, Dr. Viterbi
and Mr. Altman were 100%, 0%, 0%, 90% and 0% vested, respectively.
(2) Represents the dollar value of the benefit or premiums paid for a
split-dollar life insurance policy (unrelated to term life insurance
coverage) reflecting the present value of the economic benefit of the
premiums paid by the Company during the fiscal year which ended
September 26, 1999.
11
STOCK OPTION GRANTS AND EXERCISES
The Company grants options to its executive officers under the Option Plan.
As of December 24, 1999, options to purchase a total of 118,491,756 shares were
outstanding under the Option Plan, and options to purchase 58,409,308 shares
remained available for grant thereunder, in each case, as adjusted for the Stock
Split. During fiscal 1999, no options were granted to Named Executive Officers.
The following table shows for the fiscal year ended September 26, 1999
certain information regarding options exercised by and held at year end by the
Named Executive Officers. All share numbers in the following table are adjusted
for the Stock Split.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
SHARES NUMBER OF SECURITIES UNDERLYING
ACQUIRED UNEXERCISED OPTIONS HELD AT
ON VALUE SEPTEMBER 26, 1999
EXERCISE REALIZED -----------------------------------
NAME (#) ($) EXERCISABLE (#) UNEXERCISABLE (#)
- --------------------- --------- ----------- --------------- -----------------
Irwin Mark Jacobs.... 0 $ 0 4,560,000 4,000,000
Richard Sulpizio..... 1,100,000 $17,728,000 788,000 1,792,000
Anthony S.
Thornley........... 640,000 $14,844,320 520,000 1,520,000
Andrew J. Viterbi.... 1,544,000 $28,264,480 0 896,000
Steve R. Altman...... 808,000 $13,411,160 68,000 904,000
VALUE OF UNEXERCISED
IN-THE-MONEY OPTIONS AT
SEPTEMBER 26, 1999(1)
-----------------------------------
NAME EXERCISABLE ($) UNEXERCISABLE ($)
- --------------------- --------------- -----------------
Irwin Mark Jacobs.... $194,678,640 $162,330,560
Richard Sulpizio..... $ 32,401,190 $ 73,298,960
Anthony S.
Thornley........... $ 21,176,440 $ 61,419,880
Andrew J. Viterbi.... $ 0 $ 36,679,840
Steve R. Altman...... $ 2,743,970 $ 36,742,140
- ---------------
(1) Represents the closing price per share of the underlying shares on the last
day of the fiscal year less the option exercise price multiplied by the
number of shares. The closing value per share was $189.50, on a pre-Stock
Split basis, on the last trading day of the fiscal year as reported on the
Nasdaq National Market (or, giving effect to the Stock Split as though it
had occurred prior to such time, $47.375 per share).
REPORT OF THE COMPENSATION COMMITTEE OF THE
BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION(1)
OVERVIEW
The Compensation Committee of the Board of Directors (the "Committee")
administers the Company's executive compensation program. The Committee is
composed of four outside directors. The Committee reviews and approves the
compensation philosophy and program design, and individual officer base salary,
annual cash bonus and stock option grants. Among other responsibilities, the
Compensation Committee reviews and approves various officer and general employee
compensation and benefits policies and practices.
EXECUTIVE OFFICER COMPENSATION PHILOSOPHY
The Company's employee compensation philosophy is to offer a total
compensation approach that includes market-sensitive base salary,
performance-based individual bonuses, a unique package of benefits and a
workplace environment that creates advantage for the Company within the
extremely competitive high technology business environment. Long-term incentive
compensation, and broad-based employee ownership of the Company's stock, is
achieved through a stock option program in which most employees are eligible to
participate, and an Employee Stock Purchase Plan. This approach enables the
Company to attract, retain and motivate employees and to align the interests of
employees to the interests of shareholders. The Company's compensation
philosophy for its officers is similar to that of all employees.
- ---------------
(1) The material in this report is not "soliciting material," is not deemed
filed with the SEC and is not to be incorporated by reference in any filing
of the Company under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, whether made before or after
the date hereof and irrespective of any general incorporation language in
any such filing.
12
Annual Base Salary
The Committee establishes the annual base salary for the executive officers
in line with their responsibilities and with external market practices. In
determining base salary, the Committee reviews information from third-party,
nationally recognized surveys of similar high technology companies. Individual
officer salaries are established at appropriate levels comparable to the 75th
percentile of base salary practices among the surveyed high technology
companies.
Annual Incentive Bonus
The Executive Bonus Plan rewards achievement of specified levels of
corporate revenue and earnings, division revenue and earnings where appropriate
and individual performance. Officers are eligible to receive a pre-determined
portion of their base salary as a targeted annual incentive bonus. A
predetermined formula, which takes into account revenue and earnings performance
against the annual plan approved by the Board of Directors, is used to determine
the financially-based component of the bonus award. The individually-based
component of the bonus award is based upon discretionary assessment of each
officer's performance and contribution to the Company during the prior fiscal
year.
Long-Term Equity Compensation
The Company grants stock options throughout the organization to provide
long-term incentives and align employee and stockholder interests. Individual
grants are based on various factors, including performance and contribution,
value of current unexercisable options, estimated value of proposed option grant
and market practices.
Stock options are granted at an option price equal to the fair market value
of the Company's Common Stock on the date of the grant and are subject to
vesting over five years. The option vesting period is designed to encourage
employees to work with a long-term view of the Company's welfare and to
establish their long-term affiliation with the Company. It is also designed to
reduce employee turnover and to retain the trained skills of valued staff.
Section 162(m) of the Code limits the Company to a deduction for federal
income tax purposes of no more than $1 million of compensation paid to certain
Named 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 Compensation Committee has determined that both payments under the
Executive Bonus Plan and stock options granted by the Compensation Committee
under the Company's 1991 Stock Option Plan with an exercise price at least equal
to the fair market value of the Company's Common Stock on the date of grant
shall be treated as "performance-based compensation."
CHAIRMAN AND CHIEF EXECUTIVE OFFICER SALARY
Dr. Irwin Mark Jacobs, a founder of the Company, has led the Company to
another successful year in fiscal 1999. Company performance for fiscal 1999
reflected a 17% increase in revenues and a 73% increase in earnings per share
over fiscal 1998. Additionally, the Company accomplished major strategic
achievements in its respective business lines and overall strategy. In
accordance with the policies noted above, at the end of fiscal 1998 the
Committee set Dr. Jacobs' fiscal 1999 base salary at $773,000, a 17% increase
over fiscal 1998. In consideration of his leadership during fiscal 1999 and the
Company's financial performance, after the end of fiscal 1999 the Committee
awarded Dr. Jacobs a $975,000 bonus and a stock option grant to purchase 400,000
shares of the Common Stock at an exercise price of $83.50 per share (as adjusted
for the Stock Split).
COMPENSATION COMMITTEE
Jerome S. Katzin, Chairman
Diana Lady Dougan
Duane A. Nelles
Marc I. Stern
13
PERFORMANCE MEASUREMENT COMPARISON
The following graph compares total stockholder return on the Company's
Common Stock since September 23, 1994 to four indices: the Standard & Poor's 500
Stock Index (the "S&P 500"), the Nasdaq Total Return Index for the Nasdaq Stock
Market, U.S. companies (the "Nasdaq-US") and the Nasdaq Total Return Index for
Communications Equipment Stocks, SIC 3660-3669 (the "Nasdaq-Industry"). The S&P
500 tracks the aggregate price performance of the equity securities of 500 U.S.
companies selected by Standard & Poor's Index Committee to include leading
companies in leading industries and to reflect the U.S. stock market. The S&P
Index Committee selected the Company's Common Stock for inclusion in the S&P 500
in July 1999, and the Company is therefore required by SEC rules to present a
comparison of total stockholder return on the Company's Common Stock since
September 23, 1994 to the performance of the S&P 500 during the same period. The
Nasdaq-US tracks the aggregate price performance of all equity securities of
U.S. companies traded on the Nasdaq National Market (the "NNM") and the Nasdaq
SmallCap Market (the "SmallCap Market"). The Nasdaq-Industry tracks the
aggregate price performance of equity securities of communications equipment
companies traded on the NNM and the SmallCap Market. The total return for the
Company's stock and for each index assumes the reinvestment of dividends, except
for the shares of Leap Wireless International, Inc. issued to stockholders as a
dividend on September 23, 1998, dividends have never been declared on the
Company's stock, and is based on the returns of the component companies weighted
according to their capitalizations as of the end of each quarterly period. The
Company's Common Stock is traded on the NNM and is a component of each of the
S&P 500, the Nasdaq-US and the Nasdaq-Industry. Over the five year period
indicated below, approximately 31% of the return on investment for the
Nasdaq-Industry Index was due to the increase in the value of the Company's
Common Stock during that period.(1)
COMPARISON OF CUMULATIVE TOTAL RETURN ON INVESTMENT SINCE
SEPTEMBER 23, 1994(2)
PERFORMANCE GRAPH
S&P 500 NASDAQ INDUSTRY
QUALCOMM ------- INDEX (SIC 3660- NASDAQ U.S. BASELINE INDEX ON
INCORPORATED 3669) COMPANIES INDEX 9/23/94
------------ ---------------- --------------- -----------------
9/23/94 100.0000 100.0000 100.0000 100.0000 100.0000
12/23/94 96.8669 99.9843 112.6520 98.4210 100.0000
3/24/95 122.2590 109.7190 137.4200 108.9160 100.0000
6/23/95 126.9620 120.1940 175.4320 125.0780 100.0000
9/22/95 176.8060 129.7450 214.9720 140.7070 100.0000
12/29/95 165.3850 137.5620 214.5720 141.0200 100.0000
3/29/96 159.6150 144.9450 230.5740 147.6230 100.0000
6/28/96 204.3270 151.4500 304.3290 159.6500 100.0000
9/27/96 163.8750 156.1310 314.3990 165.8320 100.0000
12/27/96 152.3540 169.1460 309.5220 173.7200 100.0000
3/27/97 225.2390 173.6800 300.2540 167.8960 100.0000
6/27/97 190.9130 204.0020 380.2490 193.4620 100.0000
9/26/97 210.8980 219.2830 455.3850 226.5680 100.0000
12/26/97 174.2200 225.5780 425.5300 204.6170 100.0000
3/27/98 187.8560 257.0440 515.6650 247.0580 100.0000
6/26/98 203.6090 265.5310 568.5070 252.0840 100.0000
9/25/98 205.2720 239.1180 425.3710 237.3620 100.0000
12/24/98 205.5230 290.0410 547.0810 295.5470 100.0000
3/26/99 449.0320 304.4930 768.4140 322.6960 100.0000
6/25/99 1020.3200 325.9580 1179.1500 348.9910 100.0000
9/24/99 1525.4500 305.6060 1467.3300 373.8900 100.0000
Note: Historical stock price performance is not
necessarily indicative of future price performance.
14
The Company's closing stock price on September 26, 1999, the last trading
day of the Company's 1999 fiscal year, was $189.50 per share (or, giving effect
to the Stock Split as though it had occurred prior to such time, $47.375 per
share).
- ---------------
(1) The material in this report is not "soliciting material," is not deemed
filed with the SEC and is not to be incorporated by reference in any filing
of the Company under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, whether made before or after
the date hereof and irrespective of any general incorporation language in
any such filing.
(2) Shows the cumulative total return on investment assuming an investment of
$100 in each of the Company, the S&P 500, the Nasdaq-US and the
Nasdaq-Industry on September 23, 1994. All returns are reported as of the
Company's fiscal quarter end, which is the last Sunday of the month in which
the quarter ends, whereas the numbers for the S&P 500 are calculated as of
the last day of the month in which the quarter ends.
CERTAIN TRANSACTIONS
The Company's Bylaws provide that the Company will indemnify its directors
and may indemnify its officers, employees, and other agents to the fullest
extent permitted by law. The Company believes that indemnification under its
Bylaws covers at least negligence and gross negligence by indemnified parties,
and may require the Company to advance litigation expenses in the case of
stockholder derivative actions or other actions, against an undertaking by the
indemnified party to repay such advances if it is ultimately determined that the
indemnified party is not entitled to indemnification.
In addition, the Company's Certificate of Incorporation provides that,
pursuant to Delaware law, its directors shall not be liable for monetary damages
for breach of the directors' fiduciary duty of care to the Company and its
stockholders. This provision in the Certificate of Incorporation does not
eliminate the duty of care, and in appropriate circumstances equitable remedies
such as injunctive or other forms of non-monetary relief will remain available
under Delaware law. In addition, each director will continue to be subject to
liability for breach of the director's duty of loyalty to the Company for acts
or omissions not in good faith or involving intentional misconduct, for knowing
violations of law, for actions leading to improper personal benefit to the
director, and for payment of dividends or approval of stock repurchases or
redemptions that are unlawful under Delaware law. The provision also does not
affect a director's responsibilities under any other law, such as the federal
securities laws or state or federal environmental laws.
The Company has entered into separate indemnification agreements with its
directors. These agreements may require the Company, among other things, to
indemnify the directors against certain liabilities that may arise by reason of
their status or service as directors (other than liabilities arising from
willful misconduct of a culpable nature), to advance their expenses incurred as
a result of any proceeding against them as to which they could be indemnified
and to obtain directors' insurance if available on reasonable terms.
The Company maintains insurance policies covering officers and directors
under which the insurers agree to pay, subject to certain exclusions, including
certain violations of securities laws, for any claim made against the directors
and officers of the Company for a wrongful act that they may become legally
obligated to pay or for which the Company is required to indemnify the officers
or directors. The Company believes that its Certificate of Incorporation and
Bylaw provisions, indemnification agreements and such insurance policies are
necessary to attract and retain qualified persons as directors and officers.
At present, there is no pending litigation or proceeding involving a
director, officer, employee or other agent of the Company as to which
indemnification is being sought nor is the Company aware of any threatened
litigation that may result in claims for indemnification by any director,
officer, employee or other agent.
The Company's policy is that it will not make loans to or enter into other
transactions with directors, officers, or affiliates unless such loans or
transactions are approved by a majority of the Company's
15
disinterested directors, may reasonably be expected to benefit the Company and
are determined to be on terms no less favorable to the Company than could be
obtained in arm's length transactions with unaffiliated third parties.
In July 1999, the Company completed a public offering of shares of its
Common Stock in which it raised approximately $1.079 billion in net proceeds.
Goldman, Sachs & Co. acted as one of the managing underwriters in the public
offering. Mr. Sacerdote, a Director of the Company, is an advisory director of
the Goldman Sachs Group, L.P.
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters are properly brought
before the meeting, it is the intention of the persons named in the accompanying
proxy to vote on such matters in accordance with their best judgment.
A copy of the Company's Annual Report on Form 10-K for the fiscal year
ended September 26, 1999, as filed with the SEC, excluding exhibits, may be
obtained by stockholders without charge by written request addressed to Investor
Relations, 5775 Morehouse Dr., San Diego, California 92121-1714 or may be
accessed on the Internet at: http://www.qualcomm.com/IR/virtual/.
By Order of the Board of Directors
/s/ IRWIN MARK JACOBS
Irwin Mark Jacobs
Chairman of the Board
and Chief Executive Officer
January 26, 2000
16
QUALCOMM INCORPORATED
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 7, 2000.
The undersigned hereby appoints Irwin Mark Jacobs, Anthony S. Thornley and
Steven R. Altman, and each of them, as attorneys and proxies of the
undersigned, with full power of substitution, to vote all of the shares of
stock of QUALCOMM Incorporated (the "Company") which the undersigned may be
entitled to vote at the Annual Meeting of Stockholders of the Company to be
held at Copley Symphony Hall, 750 B Street, San Diego, CA 92101, on Tuesday,
March 7, 2000 at 9:30 a.m. local time and at any and all adjournments or
postponements thereof, with all powers that the undersigned would possess if
personally present, upon and in respect of the following matters and in
accordance with the following instructions, with discretionary authority as to
any and all other matters that may properly come before the meeting.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR ALL
NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSALS 2 AS MORE SPECIFICALLY
DESCRIBED IN THE PROXY STATEMENT. IF SPECIFIC INSTRUCTIONS ARE INDICATED, THIS
PROXY WILL BE VOTED IN ACCORDANCE THEREWITH.
YOUR VOTE IS IMPORTANT. IF YOU ARE NOT VOTING BY TELEPHONE, YOUR ARE
URGED TO COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE
ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE.
QUALCOMM INCORPORATED
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR EACH OF THE
NOMINEES FOR DIRECTOR AND VOTE FOR PROPOSALS 2.
1. To elect four Class III directors whether by cumulative voting or
otherwise, to hold office until the 2003 Annual Meeting of Stockholders.
NOMINEES: 01 Richard C. Atkinson 03 Peter M. Sacardote and
02 Diana Lady Dougan 04 Marc I. Stern.
For All Withhold All For All Except Nominee Exceptions
(INSTRUCTION: To withhold authority to vote for any nominee(s) write such
nominee(s)' name(s) above.)
2. To ratify the selection of PricewaterhouseCoopers LLP as the Company's
independent accountants for the Company's fiscal year ending September 24,
2000.
FOR AGAINST ABSTAIN
If not voting by telephone, please vote,
date and promptly return this proxy in the
enclosed return envelope which is postage
prepaid if mailed in the United States.
DATED __________________________, 2000
______________________________________
Signature
______________________________________
Signature
Please sign exactly as your name appears
hereon. If the stock is registered in the
names of two or more persons, each should
sign. Executors, administrators, trustees,
guardians and attorneys-in-fact should add
their titles. If signer is a corporation,
please give full corporate name and have a
duly authorized officer sign, stating title.
If signer is a partnership, please sign in
partnership name by authorized person.
FOLD AND DETACH HERE
CONTROL NUMBER
VOTE BY TELEPHONE
CALL "TOLL FREE" ON A TOUCH TONE TELEPHONE
1-888-776-5661
THERE IS NO CHARGE FOR THIS CALL
Your telephone vote authorizes the voting of your shares in the same manner as
if you marked, signed and returned your proxy card.
You will be asked to enter a Control Number which is located in the box on the
left side of this form. IF YOU ENTER YOUR CONTROL NUMBER, BUT DO NOT MAKE A
CHOICE ON ANY ITEM, YOUR SHARES WILL BE VOTED FOR ITEM 1 AND ITEM 2.
OPTION #1: To vote as the Board of Directors recommends on ALL items: Press 1
WHEN ASKED, PLEASE CONFIRM YOUR VOTE BY PRESSING 1.
OPTION #2: If you choose to vote on each item separately, press 0 and listen to
the instructions:
Item 1: To vote FOR ALL nominees, press 1; to WITHHOLD FOR ALL nominees,
press 9
To WITHHOLD FOR AN INDIVIDUAL nominee, Press 0 and listen to the
instructions
Item 2: To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0
WHEN ASKED, PLEASE CONFIRM YOUR VOTE BY PRESSING 1.
If you vote by telephone, DO NOT mail back your proxy.
THANK YOU FOR VOTING