def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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Soliciting Material Pursuant to Rule 14a-12 |
Conexant Systems, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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January 6, 2009
Dear Shareowner:
Conexants 2009 Annual Meeting of Shareowners will be held
at 8:30 a.m. Eastern Standard Time on Wednesday,
February 18, 2009 at The Westin Waltham Boston, located at
70 Third Avenue, Waltham, Massachusetts 02451. We look forward
to your attending either in person or by proxy. Details of the
business to be conducted at the Annual Meeting are included in
the attached Notice of Annual Meeting and Proxy Statement.
Shareowners may also access the Notice of Annual Meeting and the
Proxy Statement via the Internet at www.conexant.com.
Sincerely yours,
D. Scott Mercer
Chairman of the Board and
Chief Executive Officer
TABLE OF CONTENTS
NOTICE OF
INTERNET AVAILABILITY OF PROXY MATERIALS
In accordance with rules adopted by the Securities and Exchange
Commission, we are permitted to furnish proxy materials,
including this proxy statement and our 2008 Annual Report on
Form 10-K,
by providing access to these documents over the Internet instead
of mailing a printed copy of our proxy materials to our
shareowners. Accordingly our shareowners have already received a
Notice of Internet Availability of Proxy Materials (Notice),
which provides instructions for accessing our proxy materials on
a website referred to in the Notice or to request to receive
printed copies of the proxy materials by mail or electronically
by email. We believe the delivery options that we have chosen
this year will allow us to provide our shareowners with the
proxy materials they need, while lowering the cost of the
delivery of the materials and reducing the environmental impact
of printing and mailing printed copies.
VOTING
ELECTRONICALLY OR BY TELEPHONE
You may submit your proxy for voting at the Annual Meeting
electronically via the Internet by following the procedures
provided in the Notice or on the separate Proxy Card if you
received a printed set of the proxy materials. You may also
submit your proxy by telephone by following the procedures set
forth on the separate Proxy Card if you received a printed set
of the proxy materials.
RETURN OF PROXY
CARD
If you received a printed set of proxy materials, you can submit
your proxy by completing, signing, dating, and returning the
Proxy Card that accompanies these materials in the enclosed
addressed envelope. Postage need not be affixed to the envelope
if mailed in the United States.
Whether or not you plan to attend the Annual Meeting, please
submit your proxy as soon as possible. The prompt submission of
your proxy electronically via the Internet, by telephone or by
returning a Proxy Card will be of great assistance in preparing
for the Annual Meeting and is, therefore, urgently requested. If
you attend the Annual Meeting and have made arrangements to vote
in person, any previously submitted proxy will not be used.
IF YOU PLAN TO
ATTEND THE ANNUAL MEETING IN PERSON
If you plan to attend the Annual Meeting to be held at
8:30 a.m. Eastern Standard Time on Wednesday,
February 18, 2009 at The Westin Waltham Boston, located at
70 Third Avenue, Waltham, Massachusetts 02451, please be sure to
check the box on your Proxy Card indicating your desire to
attend. If you are submitting your proxy electronically via the
Internet or by telephone you will also be asked to indicate if
you plan to attend the Annual Meeting.
If you plan to attend the Annual Meeting you may be asked to
present a valid picture identification such as a drivers
license or passport.
If your shares are not registered in your own name and you
plan to attend the Annual Meeting and vote your shares in
person, you should contact your broker or agent in whose name
your shares are registered to obtain a legal proxy and bring it
to the Annual Meeting in order to vote the shares in person at
the meeting.
CONEXANT SYSTEMS,
INC.
4000 MacArthur Boulevard
Newport Beach, California 92660
NOTICE OF ANNUAL MEETING OF SHAREOWNERS
Dear Shareowner:
You are cordially invited to attend the 2009 Annual Meeting of
Shareowners of Conexant Systems, Inc. (Conexant or
the Company) which will be held at
8:30 a.m. Eastern Standard Time on Wednesday,
February 18, 2009 at The Westin Waltham Boston, located at
70 Third Avenue, Waltham, Massachusetts 02451. The 2009 Annual
Meeting is being held for the following purposes:
1. To elect four members of the Board of Directors of the
Company with terms expiring at the Annual Meeting of Shareowners
as follows: two members whose term expires in 2012, one member
whose term expires in 2011 and one member whose term expires in
2010;
2. To ratify the appointment by the Audit Committee of the
Board of Directors of the accounting firm of
Deloitte & Touche LLP as independent auditors for the
Company for the current fiscal year; and
3. To transact such other business as may properly come
before the 2009 Annual Meeting or any postponement or
adjournment thereof.
These items are fully discussed in the following pages. Only
shareowners of record at the close of business on
December 23, 2008 will be entitled to notice of, and to
vote at, the 2009 Annual Meeting. A list of such shareowners
will be available for inspection by any shareowner at the
offices of the Company at 4000 MacArthur Boulevard, Newport
Beach, California
92660-3095,
for at least ten (10) days prior to the 2009 Annual Meeting
and also at the meeting.
Shareowners are requested to submit a proxy for voting at the
Annual Meeting over the Internet, by telephone or by completing,
signing, dating and returning a Proxy Card as promptly as
possible. A separate Proxy Card and a return envelope for
submitting the Proxy Card has been provided to shareowners who
have received a printed copy of the proxy materials. Submitting
your vote with the Proxy Card, via the Internet or by telephone
will not affect your right to vote in person should you decide
to attend the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Mark Peterson
Senior Vice President, Chief Legal
Officer and Secretary
January 6, 2009
Conexant Systems,
Inc.
4000 MacArthur Boulevard
Newport Beach, California 92660
Proxy
Statement
The enclosed proxy is solicited by the Board of Directors of
Conexant Systems, Inc. (Conexant or the
Company) for use in voting at the 2009 Annual
Meeting of Shareowners (the Annual Meeting) to be
held 8:30 a.m. Eastern Standard Time on Wednesday,
February 18, 2009 at The Westin Waltham Boston, located at
70 Third Avenue, Waltham, Massachusetts 02451 and at any
postponement or adjournment thereof, for the purposes set forth
in the accompanying Notice of Annual Meeting of Shareowners.
This proxy statement and the proxy are first being mailed to
shareowners and made available on the Internet
(www.conexant.com) on or about January 6, 2009.
Important notice regarding the availability of proxy
materials: The Companys 2008 Annual Report to
Shareowners and this proxy statement are available on the
Internet at www.ProxyVote.com
Voting and
Revocability of Proxies
When proxies are properly submitted, the shares they represent
will be voted at the Annual Meeting in accordance with the
instructions of the shareowners. If no specific instructions are
given, the shares will be voted FOR the election of the
nominees for directors set forth herein, and FOR
ratification of the appointment of the independent auditors. In
addition, if other matters come before the Annual Meeting, the
proxyholders will vote in accordance with their best judgment
with respect to such matters. A shareowner of record giving a
proxy has the power to revoke it at any time prior to its
exercise by giving written notice of revocation to the Secretary
prior to the Annual Meeting, by giving a valid, later dated
proxy, or by voting in person at the Annual Meeting.
For shares you hold beneficially in street name, if you do not
submit voting instructions, your shares may constitute
broker non-votes. Generally, broker non-votes occur
on a matter when a broker is not permitted to vote on that
matter without instructions from the beneficial owner and
instructions are not given. In tabulating the voting result for
any particular proposal, shares that constitute broker non-votes
are not considered entitled to vote on that proposal. We believe
that the proposals discussed in this proxy statement are all
considered routine and therefore may be voted upon in the
discretion of your broker if you do not give specific
instructions to your broker.
It is the Companys policy to maintain the confidentiality
of all proxies, voting instructions, ballots and voting
tabulations that identify individual shareowners except as may
be necessary to meet any applicable legal requirements and, in
the case of any contested proxy solicitation, as may be
necessary to permit proper parties to verify the propriety of
proxies presented by any person and the results of the voting.
The inspectors of election and any employees associated with
processing proxies, voting instructions or ballots and
tabulating the vote are required to acknowledge their
responsibility to comply with this policy of confidentiality.
Each share of common stock of the Company outstanding on the
record date will be entitled to one vote on all matters. With
respect to Proposal No. 1, assuming a quorum is
present, the two Class I director nominees who receive the
highest number of affirmative votes will be elected, the
Class II director nominee who receives the highest number
of affirmative votes will be elected, and the Class III
director who receives the highest number of affirmative votes
will be elected. Proposal No. 2, the ratification of
the appointment of the independent auditors, will require the
affirmative vote of a majority of the votes entitled to be cast
by holders of shares of the Companys common stock present
or represented by proxy and entitled to vote at the Annual
Meeting, a quorum being present. However, such ratification is
not binding on the appointment of independent auditors by the
Audit Committee of the Board. Because abstentions with respect
to any matter are treated as shares present or represented by
proxy and entitled to vote for the purposes of determining
whether that matter has been approved by the shareowners,
abstentions have the same effect as negative votes for each
proposal, other than the election of directors. Broker non-votes
are not deemed
to be entitled to vote for purposes of determining whether
shareowner approval of a matter has been obtained, but they are
counted as present for purposes of determining the existence of
a quorum at the Annual Meeting.
Record Date,
Quorum and Share Ownership
Only shareowners of record at the close of business on
December 23, 2008 will be entitled to vote at the Annual
Meeting. The presence in person or by proxy of a majority of the
shares of the Companys common stock outstanding on the
record date is required for a quorum. As of December 23,
2008, there were 49,665,265 outstanding shares of the
Companys common stock. All share figures herein have been
adjusted for the
1-for-10
reverse stock split that was effective June 27, 2008.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Companys Restated Certificate of Incorporation
provides that the Board of Directors shall consist of three
classes of directors with overlapping three-year terms. One
class of directors is to be elected each year with a term
extending to the third succeeding Annual Meeting after election.
The Restated Certificate of Incorporation provides that the
Board shall maintain the three classes so as to be as nearly
equal in number as the then total number of directors permits.
At the end of fiscal year 2008, the Company had
8 directors. In February 2008 John W. Marren resigned from
the Board of Directors and Daniel A. Artusi resigned in April
2008. William E. Bendush and Matthew E. Massengill were
appointed to the Board in June 2008, to Class II and
Class III, respectively. The two directors in Class I,
the three directors in Class II and the three directors in
Class III are serving terms expiring at the Companys
Annual Meeting of Shareowners in 2009, 2010 and 2011,
respectively.
In October 2008, our Board of Directors approved an amendment to
our Bylaws to adopt a director resignation policy that requires
each of the director nominees to tender an irrevocable
resignation that will be effective if (a) the director
fails to receive a greater number of votes for his
or her election than votes withheld from his or her
election at the Annual Meeting and (b) the Board of
Directors accepts the resignation, taking into account the
recommendation of the Governance and Board Composition Committee
as to whether to accept or reject the resignation of such
director or whether other action should be taken. The Company
will publicly disclose the Board of Directors decision
regarding any resignation that is effective under this policy
and, if such resignation is rejected, the rationale behind the
decision within 90 days following certification of the
election results. Each of the director nominees listed below has
tendered an irrevocable resignation to the Board of Directors
with respect to the Annual Meeting as required by our Bylaws.
Unless marked otherwise, proxies received will be voted FOR
the election of each of the two nominees specified in
Class I Nominees for Directors with Terms
Expiring in 2012, the one nominiee specified in
Class II Nominee for Director with Term
Expiring 2010 and the one nominee specified in
Class III Nominee for Director with Term
Expiring 2011, below, until their successors are elected
and qualified. If any of such nominees for the office of
director is unwilling or unable to serve as a nominee for the
office of director at the time of the Annual Meeting, the
proxies may be voted either (1) for a substitute nominee,
who shall be designated by the proxy holders or by the present
Board of Directors to fill such vacancy, or (2) for the
other nominee only, leaving a vacancy. Alternatively, the size
of the Board may be reduced so that there is no vacancy. The
Board of Directors has no reason to believe that any of the
nominees will be unwilling or unable to serve if elected as a
director.
The Board of Directors recommends a vote FOR the election of
each of the nominees listed below.
Information as
to Nominees for Directors and Continuing Directors
Listed below for each director, as reported to Conexant, is the
directors name, age and principal occupation for the past
five years, his position, if any, with Conexant, and other
directorships held.
2
Class I
Nominees for Director with Terms Expiring in 2012
Dwight W. Decker, age 58 Mr. Decker
been a director of Conexant since 1996 and has served as its
chairman of the board from December 1998 to August 2008,
including as non-executive chairman from the end of February
2004 to November 2004 and from July 2007 to August 2008. He was
chief executive officer of the Company from January 1999 to
February 2004 and again from November 2004 to July 2007.
Mr. Decker is non-executive chairman of the board and a
director of Mindspeed Technologies, Inc. and a director of
Pacific Mutual Holding Company.
F. Craig Farrill, age 55
Mr. Farrill has been a director of Conexant since 1998.
Mr. Farrill was director, president and chief executive
officer of Kodiak Networks, Inc. (wireless communications) from
April 2003 to August 2007 and continues to be a director. He is
a director and a corporate officer of the CDMA Development
Group, a digital cellular technology consortium, which he
founded in 1993.
Class II
Nominee for Director with Term Expiring in 2010
William E. Bendush, age 59
Mr. Bendush has been a director of Conexant since June
2008. A retired executive and private investor, he served as
senior vice president and chief financial officer of Applied
Micro Circuits Corporation (semiconductors) from April 1999 to
March 2003. He is currently a director of Microsemi Corporation.
Continuing
Directors with Terms Expiring in 2010
Balakrishnan S. Iyer, age 52
Mr. Iyer has been a director of Conexant since 2002. He
served as senior vice president and chief financial officer of
the Company from January 1999 to June 2003. He served as a
consultant to Mindspeed Technologies, Inc. (networking
infrastructure semiconductors) from June 2003 through December
2004. Mr. Iyer is currently a director of IHS, Inc.,
Invitrogen Corporation, Power Integrations, QLogic Corporation
and Skyworks Solutions, Inc.
Jerre L. Stead, age 64 Mr. Stead
has been a director of Conexant since 1998. Mr. Stead has
been executive chairman and chief executive officer of IHS, Inc.
(software) since September 2006 and was chairman of the board of
IHS, Inc. from December 2000 to September 2006. He is a director
of Brightpoint, Inc. and Mindspeed Technologies, Inc.
Class III
Nominee for Directors with Term Expiring in 2011
Matthew E. Massengill, age 47
Mr. Massengill has been a director of Conexant since June
2008. He served as chairman of the board of Western Digital
Corporation (computer storage devices) from November 2001 to
March 2007. He was its chief executive officer from January 2000
to October 2005. He currently serves as a director of Western
Digital Corporation, MicroSemi Corporation and GT Solar
International, Inc.
Continuing
Directors with Terms Expiring 2011
Steven J. Bilodeau, age 50
Mr. Bilodeau has been a director of Conexant since February
2004. Prior to that, he was a director of GlobespanVirata, Inc.
since September 2003. He has been the chairman of the board,
chief executive officer, and president of SMSC (also known as
Standard Microsystems Corporation) (semiconductors) from
February 2000 to October 2008. He is currently the non-executive
chairman of SMSC and from May to October 2008 was its acting
chief financial officer. Mr. Bilodeau is currently a director of
Gennum Corporation.
3
D. Scott Mercer, age 57
Mr. Mercer has been a director of Conexant since 2003. In
April 2008 he was appointed as Chief Executive Officer and
became Chairman of the Board in August 2008. Mr. Mercer is
a private investor, who served as interim chief executive
officer of Adaptec, Inc. (computer technology services) from May
2005 to November 2005, and as senior vice president and adviser
to the chief executive officer of Western Digital Corporation
(computer storage devices) from February 2004 through December
2004. Prior to that, he was senior vice president and chief
financial officer of Western Digital Corporation from October
2001 to February 2004. Mr. Mercer is a director of Palm,
Inc., Polycom, Inc. and Smart Modular Technologies (WWH), Inc.
BOARD COMMITTEES
AND MEETINGS
The standing committees of the Board of Directors of Conexant
during fiscal 2008 were an Audit Committee, a Governance and
Board Composition Committee, and a Compensation and Management
Development Committee, each of which is comprised of
non-employee directors who are independent directors within the
meaning of the rules of The Nasdaq Stock Market and the
Securities and Exchange Commission (SEC). The functions of each
of these three committees are described below; committee
charters are posted on Conexants website at
www.conexant.com. The current members of each of the Board
committees are identified in the following table, each committee
chairman being denoted with an asterisk. Conexants
independent directors also hold regular meetings without members
of management present.
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Governance
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Compensation
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Board
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Management
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Director
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Audit
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Composition
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Development
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W. E. Bendush
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S. J. Bilodeau
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F. C. Farrill
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B. S. Iyer
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M. E. Massengill
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J. L. Stead
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The Audit Committee, among other things, reviews the
scope and effectiveness of audits of Conexant by its independent
public accountants and internal auditors; appoints and oversees
the independent public accountants for Conexant; reviews the
audit plans of Conexants independent public accountants
and internal auditors; reviews and approves, in advance, the
fees charged and the scope and extent of any non-audit services
performed by the independent public accountants; establishes
procedures for the receipt, retention and treatment of anonymous
and other complaints regarding Conexants accounting or
auditing matters; reviews Conexants quarterly and annual
financial statements before their release; reviews and approves
the appointment or change of Conexants executive director
of internal audit; reviews the adequacy of Conexants
system of internal controls and recommendations of the
independent public accountants and of the internal auditors with
respect thereto; reviews and acts on comments and suggestions by
the independent public accountants and by the internal auditors
with respect to their audit activities; monitors compliance by
Conexants employees with its standard of business conduct
policies; meets with Conexants management to review any
issues related to matters within the scope of the Audit
Committees duties; and investigates any matter brought to
its attention within the scope of its duties. The Audit
Committee acts pursuant to a written charter. In the opinion of
the Conexant Board of Directors, all current members of the
Audit Committee are independent directors and its chairman is a
financial expert as defined by the SEC. The Audit
Committee met eleven (11) times during the 2008 fiscal year.
The principal functions of the Governance and Board
Composition Committee are to develop and review at least
annually Conexants governance guidelines; to develop an
annual self-evaluation process
4
for the Board and its committees and oversee the annual
self-evaluations; to review the Boards committee structure
and recommend to the Board for its approval the directors to
serve as members of each committee; to consider and recommend to
the Board of Directors qualified candidates for election as
directors of Conexant; to lead the search for qualified
candidates who may be submitted by directors, officers,
employees, shareowners and others; and periodically to prepare
and submit to the Board of Directors for adoption the
committees selection criteria for director nominees. The
Governance and Board Composition Committee acts pursuant to a
written charter.
Under the Governance and Board Composition Committees
current Board selection criteria (included in the Companys
Guidelines on Corporate Governance and posted on Conexants
website at www.conexant.com), director candidates are selected
with a view to bringing to the Board a variety of experience and
backgrounds. Directors should have high level managerial
experience in a relatively complex organization or be accustomed
to dealing with complex problems. The committee seeks candidates
of the highest character and integrity, and who have experience
at or demonstrated understanding of strategy/policy setting and
a reputation for working constructively with others. In
addition, candidates should have sufficient time available to
devote to Conexant in order to carry out their duties as
directors. In fulfilling its responsibility to lead the search
for qualified director candidates, the committee consults with
other directors, as well as the chief executive officer and
other senior executives of Conexant. The committee may also from
time to time retain third party search firms to assist in
identifying candidates. In 2008, the committee retained the firm
of Spencer Stuart in connection with recruiting William E.
Bendush to the Board. The committee will consider director
candidates recommended by Conexant shareowners pursuant to the
procedures described in Other Matters
2009 Shareowner Proposals or Nominations. In the
opinion of the Conexant Board of Directors, all current members
of the Governance and Board Composition Committee are
independent directors. The Governance and Board Composition
Committee met six (6) times during the 2008 fiscal year.
The principal functions of the Compensation and Management
Development Committee, or the Compensation Committee, are to
recommend compensation and benefits for non-employee directors;
to review and approve on an annual basis the corporate goals and
objectives with respect to compensation for the chief executive
officer; to determine the salaries of all executive officers and
review annually the salary plan for other executives in general
management positions; to review Conexants base pay,
incentive compensation, deferred compensation and all
stock-based plans; to review the performance of Conexants
chief executive officer and oversee the development of executive
succession plans; to review and discuss with management the
Compensation Discussion and Analysis section
included in this proxy statement and prepare and publish the
Report of the Compensation Committee included in this proxy
statement. The members of the Compensation Committee are
ineligible to participate in any of the plans or programs
administered by the Compensation Committee, except the Conexant
Directors Stock Plan. In the opinion of the Conexant Board of
Directors, all current members of the Compensation Committee are
independent directors. The Compensation Committee met eight
(8) times during the 2008 fiscal year and acted by
unanimous written consent one (1) time.
The Conexant Board of Directors held thirteen (13) meetings
and acted by unanimous written consent three (3) times
during the 2008 fiscal year. Each director is expected to attend
each meeting of the Board and those committees on which he
serves. No sitting director attended less than 75% of all the
meetings of the Board and those committees on which he served in
the 2008 fiscal year. In addition, Conexants independent
directors held four (4) meetings during the 2008 fiscal
year. Directors are expected to attend Conexants annual
meetings of shareowners. All currently serving directors who
were members of the Board of Directors as of the time of the
2008 Annual Meeting of Shareowners attended that meeting held on
February 20, 2008, except for D. Scott Mercer. The Board of
Directors has implemented a process for shareowners of Conexant
to send communications to the Board. Any shareowner desiring to
communicate with the Board, or with specific individual
directors, may do so by writing to the Secretary of Conexant,
who has been instructed by the Board to forward promptly all
such communications to the addressees indicated thereon.
5
Directors
Compensation
On February 22, 2006, the Companys Board of Directors
modified its cash compensation program. From that date forward,
non-employee directors of Conexant receive a base retainer of
$30,000 per year for Board service and an additional retainer
for service on committees of the Board: an annual fee of $7,500
for service as a member of a committee or an annual fee of
$15,000 for service as a committee chairman, except for the
chairman of the Audit Committee, who receives $20,000. In
addition, each non-employee director receives $1,500 per day for
each Board meeting attended in person or by telephone. Each
non-employee director also receives $1,000 for each committee
meeting attended either in person or by telephone. On
May 30, 2008, the Board of Directors amended the cash
compensation program for independent directors to assist the
Company in the recruitment of new independent directors.
Effective May 30, 2008 through the date of the
Companys Annual Meeting of Shareowners on
February 18, 2009, any new independent director appointed
to the Board will receive a one-time supplemental cash payment
of $50,000.
The Conexant Directors Stock Plan provides that upon initial
election to the Board, each non-employee director will be
granted an option to purchase 4,000 shares of Conexant
common stock at an exercise price per share equal to the fair
market value of Conexant common stock on the date of grant. The
stock options will vest and become exercisable in four equal
installments on the anniversary dates of each grant. In
addition, following completion of six months of service on the
Board, each continuing non-employee director is eligible to
receive an option to purchase 1,000 shares following each
Annual Meeting of Shareowners and an option to purchase an
additional 1,000 shares approximately six months from that
date. These options also vest in four equal installments on the
anniversary dates of each grant.
Immediately following the 2008 Annual Meeting of Shareowners on
February 20, 2008, and again on August 20, 2008, each
non-employee director, other than Messrs. Bendush and
Massengill, received options to purchase 1,000 shares of
Conexant common stock with the exercise price per share equal to
the closing market price of Conexant common stock on the grant
date.
Directors are also reimbursed for transportation and other
expenses actually incurred in attending Board and Committee
meetings.
The table below sets forth the compensation for the
Companys non-employee directors during fiscal year 2008.
Director
Compensation for Fiscal Year 2008
|
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|
|
|
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|
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|
|
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|
Option Award
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|
All Other
|
|
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|
|
|
|
Fees Earned or
|
|
|
Grant Values
|
|
|
Compensation
|
|
|
Total
|
|
Name
|
|
Paid in Cash ($)
|
|
|
($)(2)(3)
|
|
|
($)
|
|
|
($)
|
|
|
William E. Bendush
|
|
|
85,750
|
|
|
|
979
|
|
|
|
0
|
|
|
|
86,729
|
|
Steven J. Bilodeau
|
|
|
88,625
|
|
|
|
32,197
|
|
|
|
0
|
|
|
|
120,822
|
|
F. Craig Farrill
|
|
|
64,875
|
|
|
|
24,308
|
|
|
|
0
|
|
|
|
89,183
|
|
Balakrishnan S. Iyer
|
|
|
108,750
|
|
|
|
24,308
|
|
|
|
0
|
|
|
|
133,058
|
|
Matthew E. Massengill
|
|
|
76,000
|
|
|
|
979
|
|
|
|
0
|
|
|
|
76,979
|
|
D. Scott Mercer(1)
|
|
|
41,250
|
|
|
|
24,212
|
|
|
|
0
|
|
|
|
65,462
|
|
Jerre L. Stead
|
|
|
76,000
|
|
|
|
24,308
|
|
|
|
0
|
|
|
|
100,308
|
|
|
|
|
(1) |
|
Mr. Mercer was a non-employee director from October 2007 to
April 14, 2008, when he became an employee and Chief
Executive Officer of the Company. The amounts reflected in the
table reflect his non-employee director compensation for this
time period. |
|
(2) |
|
This column represents the dollar amount recognized for
financial statement reporting purposes with respect to the 2008
fiscal year for the fair value of stock options granted to each
of the directors in the table in fiscal 2008, as well as prior
fiscal years, in accordance with SFAS 123R. Pursuant to SEC
rules, the amounts shown exclude the impact of estimated
forfeitures related to service-based vesting |
6
|
|
|
|
|
conditions. For additional information on the valuation
assumptions with respect to the fiscal 2008 grants, see
note 1 of the Companys financial statements in the
Form 10-K
for the year ended October 3, 2008, as filed with the SEC.
For information on the valuation assumptions with respect to
option grants made prior to fiscal 2008, see the note on Other
Stock-Related information for the Companys financial
statements in the
Form 10-K
for the respective year end. These amounts reflect the
Companys accounting expense for these awards, and do not
correspond to the actual value that will be recognized by the
directors. Each director, other than Messrs. Bendush and
Massengill received 2,000 stock options in fiscal 2008: 1,000 on
February 20, 2008 and 1,000 on August 20, 2008.
Messrs. Bendush and Massengill each received 4,000 stock
options on becoming directors on June 19, 2008 and 1,000 on
August 20, 2008. Mr. Mercer received no stock options
on August 20, 2008. The grant date SFAS 123R fair
market values of these stock options for each director
determined at the time of grant using the Black-Scholes-Merton
option pricing model were as follows: $3,500 for the
February 20, 2008 grants, $14,800 for the June 19,
2008 grants, and $3,590 for the August 20, 2008 grants
based on the closing prices of Conexants common stock on
the grant dates of $5.90, $6.10 and $5.97 per share,
respectively. |
|
(3) |
|
As of fiscal year end, Messrs. Bendush, Bilodeau, Farrill,
Iyer, Massengill, Mercer and Stead held 4,000, 16,594,
34,608,163,870, 4,000, 13,934, and 32,641 stock options,
respectively. |
Executive
Officers
The name, age, office and position held with Conexant, and
principal occupations and employment during the past five years
of each of the executive officers of the Company are as follows:
D. Scott Mercer, age 57 See
Information as to Nominees for Directors and Continuing
Directors for Mr. Mercers biographical
information.
Karen L. Roscher, age 49
Ms. Roscher served as senior vice president and chief
financial officer of Conexant from September 10, 2007 to
December 15, 2008. From June 2007 to September 2007 she was
vice president, corporate financial planning and analysis of
Freescale Semiconductor, Inc. (semiconductors), where she
previously served as vice president, tax from December 2006 to
June 2007 and as vice president and corporate controller from
September 2004 to December 2006. From July 2003 through August
2004, Ms. Roscher served as vice president and financial
planning and analysis director of the semiconductor products
sector of Motorola, Inc. (communications), where she previously
served as vice president and networking & computing
systems group finance director from January 2000 through July
2003.
Christian Scherp, age 43 Mr. Scherp
has served as president of Conexant since April 2008. From June
2005 to April 2008 he was senior vice president of worldwide
sales. From May 2004 to June 2005 Mr. Scherp was the vice
president and general manager of the wireless/wireline
communications group at Infineon Technologies of North America
(semiconductors and related devices), where he served as vice
president of wireline communications products from October 2001
to May 2004.
Sailesh Chittipeddi, age 46
Mr. Chittipeddi has served as executive vice president
global operations and chief technology officer of Conexant since
April 2008. From June 2006 to April 2008, he served as senior
vice president of global operations. From 2001 to 2006 he served
as a director in the global operations organization at Agere
Systems, Inc. (semiconductors and related devices).
Mark D. Peterson, age 46
Mr. Peterson has served as senior vice president, chief
legal officer, and secretary of Conexant since March
2008. From August 2007 to March 2008 he served as senior
vice president, general counsel, and secretary of Targus Group
International, Inc. (mobile computing accessories) From October
1997 to August 2007 he served in various senior roles, including
senior vice president, general counsel, and secretary at Meade
Instruments Corp. (consumer and industrial optical instruments
and equipment)
On December 15, 2008, Jean Hu (age 45) was appointed as Chief
Financial Officer of Conexant. Ms. Hu also remains Senior
Vice President, Business Development of the Company. Ms. Hu
joined Conexant in 1999 as director of Strategy and Business
Development. She was promoted to vice president in January 2001,
and to senior vice president in February 2006.
7
Report of the
Audit Committee
The Audit Committee has furnished the following report on Audit
Committee matters:
The Audit Committee acts pursuant to a written charter that was
adopted by the board of directors on November 30, 1998 and
amended and restated most recently on May 14, 2008. The
Audit Committee reviews and assesses the adequacy of its charter
on an annual basis; a copy of the charter is available on the
Companys website at www.conexant.com. The Audit Committee
consists entirely of independent directors, as defined under
applicable rules of The Nasdaq Stock Market and the SEC, and
each member is an audit committee financial expert
as defined by rules of the SEC.
The Audit Committee has reviewed and discussed the written
disclosures and letter from Deloitte & Touche LLP, the
Companys independent auditors, as required by the Public
Company Accounting Oversight Board regarding the independent
accountants communications with the Audit Committee
concerning independence and discussed with Deloitte &
Touche LLP its independence from Conexant. Non-audit services
provided by Deloitte & Touche LLP were considered in
evaluating their independence. Based upon this review and the
representations by the independent auditors, the Audit Committee
satisfied itself as to the independence of Deloitte &
Touche LLP.
The Audit Committee also reviewed and discussed with
Deloitte & Touche LLP the matters required pursuant to
the Statement on Auditing Standards No. 114 (The
Auditors Communication with Those Charged with Governance)
and SEC
Regulation S-X
Rule 2-07
and the results of the independent auditors examination of
the Companys consolidated financial statements for fiscal
year 2008. The Committee also reviewed and discussed the results
of internal audit examinations and reviewed and discussed the
audited financial statements with management. Based on the
reviews and discussions, the Audit Committee recommended to the
Board of Directors that the Companys audited financial
statements for fiscal year 2008 be included in Conexants
Annual Report on
Form 10-K
for the year ended October 3, 2008 filed with the SEC.
The Audit Committee also reviewed managements report on
its assessment of the effectiveness of internal control over
financial reporting as of October 3, 2008 and the report
from Deloitte & Touche LLP on the effectiveness of
internal control over financial reporting as of October 3,
2008. Based upon the reviews and discussions with management,
the Companys internal auditors, and Deloitte &
Touche LLP, the Audit Committee approved the inclusion of
managements report on its assessment of the effectiveness
of internal control over financial reporting as of
October 3, 2008 and the report of the independent auditors
in Conexants Annual Report on
Form 10-K
for the year ended October 3, 2008 filed with the SEC.
The Audit Committee appointed Deloitte & Touche LLP as
the Companys independent auditors for fiscal year 2009.
Audit Committee
William E. Bendush, Chairman
Steven J. Bilodeau
Balakrishnan S. Iyer
8
Compensation
Discussion and Analysis
The following discusses the material elements of the
compensation programs for the Companys principal executive
officer, principal financial officer and other executive
officers identified in the Summary Compensation Table in this
proxy statement (collectively the named executive
officers or NEOs). The information presented
includes a discussion of the overall objectives of the
Companys compensation programs and each element of
compensation provided to the NEOs.
The Compensation
and Management Development Committee
The Compensation Committee evaluates and approves the
Companys compensation programs and policies applicable to
the named executive officers, including determining all
components of compensation to be paid to the named executive
officers and administering the Companys stock plans
(including reviewing and approving equity grants to executive
officers), and also periodically reviews the compensation of
other senior executive officers who have significant managerial
responsibility. The Compensation Committee also assists the
Board of Directors in developing and evaluating executive
positions and overseeing executive performance and succession. A
more detailed description of the Compensation Committees
composition, function, duties and responsibilities is set forth
in this proxy statement under Board Committees and
Meetings.
Guiding
Principles and Compensation Objectives
The Company believes that executive compensation should be based
on a pay-for-performance philosophy that rewards
executives for performance and focuses management on critical
short-term and long-term objectives. The Companys
compensation programs are intended to link a substantial portion
of each executives total compensation opportunity to
individual performance, business unit performance (where
applicable), the Companys overall business and financial
performance and increases in shareowner value. The Company
believes that this type of performance-based compensation is
appropriate for the Companys business and industry and
provides the flexibility necessary to achieve the primary
objective of attracting, motivating and retaining key talent for
the Companys senior management, other executive officers
and employees generally.
The Company seeks to provide executive compensation that is
competitive in its industry in order to attract, motivate and
retain quality talent through a combination of:
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base salary;
|
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|
a variable pay opportunity linked to short-term
performance; and
|
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|
|
equity compensation opportunities linked to longer-term
increases in shareowner value.
|
The mix of compensation elements is designed to reward recent
results and motivate long-term performance. A key objective of
the Companys compensation programs is to achieve sustained
year-over-year performance by requiring that executive officers
and other key members of senior management have a significant
portion of their compensation tied to shareowner value. At the
senior executive level, this is done by providing an equity
stake in the Company, which serves as a major attraction for new
management talent and ties their performance directly to
shareowner performance. There are also situations in which
time-based equity awards are used as an inducement for the
hiring of new executives as well as to retain existing key
employees. There are a variety of factors, both internal and in
the external market, which are considered when designing and
implementing the Companys compensation programs. The
flexibility of our program based on the Compensation Committee
and the Companys judgment has been a critical factor in
continuing to provide programs and awards appropriate for
employees in the current employment marketplace.
9
Role of
Compensation Consultant
Periodically, the Company, through its human resources
department, has discussed with Semler Brossy Consulting Group,
LLC the design of programs that affect senior executive officer
compensation. The Companys named executive officers have
not participated in the selection of any particular compensation
consultant. Semler Brossy provides market intelligence on
compensation trends along with general views on specific
compensation programs designed by the Companys human
resources personnel and management, with the oversight of the
Compensation Committee. Except for the foregoing, the Company
does not receive any other services from Semler Brossy.
Determining
Compensation Levels
Our chairman and chief executive officer and the senior vice
president, human resources, provide information and context to
assist the Compensation Committee in reaching compensation and
development decisions with respect to the named executive
officers other than the chairman and chief executive officer.
The other named executive officers do not play a role in their
own compensation determination, other than discussing individual
performance objectives with the chairman and chief executive
officer.
Based on the Compensation Committees assessment of
(1) data from industry peers and national surveys,
(2) reports of independent compensation consultants who may
from time to time advise the Compensation Committee and
(3) performance judgments as to the past and expected
future contributions of individual executive officers, the
Compensation Committee establishes base salaries, short-term
annual incentives and long-term incentives for each named
executive officer. For each individual named executive officer,
each component of compensation is generally targeted to be near
the median of the competitive data for comparable positions at
similar companies. However, the Compensation Committee may use
its discretion to set any one or more of the components of
compensation at levels higher or lower than the median depending
on an individuals role, responsibilities and performance,
internal pay equity within the Company and the Companys
need to attract individuals from the external market.
Use of
External Survey Data
Compensation levels for executive officers are established based
on comparisons to executive compensation of
U.S.-based
semiconductor and other high technology companies which are
considered generally comparable to the Company. While there is
no specific formula used to establish executive compensation,
the Compensation Committee considers the total compensation
(earned or potentially available) of the executive officers in
establishing each component of compensation. For fiscal 2008,
the Compensation Committee used the Radford High Tech survey
database which provides data specific to the high technology and
semiconductor industry compensation practices to review pay
levels for the named executive officers as well as for other
select executives being reviewed by the Compensation Committee.
While third party survey data is a reference point for decisions
on compensation, the Company also relies on the judgment of
management and the Compensation Committee regarding appropriate
pay levels. Other factors which may be considered include, but
are not limited to, internal pay equity, achievement of business
objectives and performance over the prior year, size and scope
of current and future responsibilities, long-term potential to
enhance shareowner value, and organizational leadership.
Elements of
Compensation During Fiscal 2008
Base
Salary
Annually, the Compensation Committee reviews the base salaries
of each of the Companys named executive officers in the
context of individual and Company performance, benchmark survey
data, the
10
Companys overall ability to pay, internal equity,
contractual arrangements, and the experience level and
contribution of the executive to the Company. For fiscal 2008,
with the appointment of many of the named executive officers to
new roles in April of 2008, the base salaries were established
or adjusted for some of the named executive officers in
accordance with those new roles and responsibilities.
In April 2008, the Compensation Committee reviewed the
competitiveness of the base salaries of named executive officers
in the context of their new roles and responsibilities, as well
as their current challenges, internally and externally. Upon his
hire as chief executive officer, Mr. Mercer was hired with
a base salary of $550,000 as established in his employment
agreement dated April 14, 2008. In addition, the
Compensation Committee approved the promotion of two named
executive officers, promoting Mr. Scherp to president with
a base salary of $375,000 and promoting Mr. Chittipeddi to
executive vice president, global operations and chief technology
officer, with a base salary of $300,000. Also during 2008, the
Compensation Committee approved the hiring of Mr. Peterson,
as senior vice president, chief legal officer &
secretary, beginning employment with the Company on
March 19, 2008 with a base salary of $312,500. The annual
base salaries for the named executive officers as in effect at
fiscal year end 2008 were as follows:
|
|
|
|
|
Name
|
|
Annual Base Salary
|
|
|
D. Scott Mercer*
|
|
$
|
550,000
|
|
Christian Scherp
|
|
$
|
375,000
|
|
Sailesh Chittippeddi
|
|
$
|
300,000
|
|
Karen L. Roscher**
|
|
$
|
325,000
|
|
Mark D. Peterson***
|
|
$
|
312,500
|
|
Daniel A. Artusi****
|
|
$
|
550,000
|
|
|
|
|
* |
|
Mr. Mercer became an employee and chief executive officer
of the Company on April 14, 2008 and chairman and chief
executive officer on August 14, 2008. Prior to
April 14, 2008, Mr. Mercer was a non-employee director
and was compensated by the Company as a non-employee director.
Mr. Mercers compensation for serving as a
non-employee director prior to April 14, 2008 is reflected
in the Director Compensation for Fiscal Year 2008
table. |
|
** |
|
Ms. Roscher was formerly senior vice president and chief
financial officer of the Company. Her employment with the
Company terminated on January 2, 2009. |
|
*** |
|
Mr. Peterson became an employee and senior vice president,
chief legal officer and secretary on March 19, 2008. |
|
**** |
|
Mr. Artusi was formerly president and chief executive
officer of the Company. Mr. Artusis employment with
the Company terminated on April 25, 2008. |
Short-Term
Incentive Compensation
The Companys short-term incentive program is a broad-based
annual employee bonus plan. This plan is a discretionary
cash-based plan under which certain indicators of the
Companys performance may be considered, including, but not
limited to: revenue growth, operational profitability,
attainment of strategic business development goals and
affordability to the Company. The amount available for payments
under this years annual bonus plan, or incentive pool, was
based primarily on the achievement of expected financial
performance for fiscal year 2008. Each executive officer is
eligible to receive an annual bonus award based upon the
executives target bonus, the executives individual
performance during the fiscal year and the size of the incentive
pool that the Compensation Committee approves for the fiscal
year. The Compensation Committee, in its sole discretion, may
increase or decrease the size of the incentive pool considering
all then existing circumstances that it deems relevant,
including the achievement of performance criteria, market
conditions, forecasts, and anticipated expenses to be incurred
or payable during the fiscal year. If the Company meets or
exceeds the expected performance levels, amounts paid under the
annual bonus plan may exceed target levels. Similarly, if
expected performance levels are not achieved, bonus amounts may
be less than the target levels or potentially zero. The actual
payout of an
11
award for the named executive officers may be further adjusted
by the Compensation Committee in its discretion to reflect
individual performance. The annual bonus plan is generally
cash-based, but has in the past used restricted stock and
performance share awards that vested upon achievement of
operational and financial targets.
In November 2007, the Compensation Committee set the target
bonus levels for the executive officers under the Companys
fiscal 2008 annual bonus plan named the 2008 Peak Performance
Incentive Plan. In April of 2008, the bonus targets for
Mr. Mercer, Mr. Scherp, Mr. Chittipeddi, and
Mr. Peterson were set by the Compensation Committee in
their respective employment agreements. In addition,
Mr. Mercer, Mr. Scherp, Ms. Roscher, and
Mr. Peterson were guaranteed bonus amounts of not less than
$250,000, $50,000, $100,000 and $100,000, respectively, as part
of their employment agreements. The target bonuses (as a
percentage of each named executive officers base salary)
for the named executive officers for fiscal 2008 were as follows:
|
|
|
|
|
Name
|
|
Target Bonus for FY08
|
|
|
D. Scott Mercer*
|
|
|
100
|
%
|
Christian Scherp
|
|
|
80
|
%
|
Sailesh Chittipeddi
|
|
|
70
|
%
|
Karen L. Roscher**
|
|
|
60
|
%
|
Mark D. Peterson***
|
|
|
60
|
%
|
Daniel A. Artusi****
|
|
|
100
|
%
|
|
|
|
* |
|
Mr. Mercer became an employee and chief executive officer
of the Company on April 14, 2008 and chairman and chief
executive officer on August 14, 2008. Prior to
April 14, 2008, Mr. Mercer was a non-employee director
and was compensated by the Company as a non-employee director.
Mr. Mercers compensation for serving as a
non-employee director prior to April 14, 2008 is reflected
in the Director Compensation for Fiscal Year 2008
table. |
|
** |
|
Ms. Roscher was formerly senior vice president and chief
financial officer of the Company. Her employment with the
Company terminated on January 2, 2009. |
|
*** |
|
Mr. Peterson became an employee and senior vice president,
chief legal officer and secretary on March 19, 2008. |
|
**** |
|
Mr. Artusi was formerly president and chief executive
officer of the Company. Mr. Artusis employment with
the Company terminated on April 25, 2008. |
In November 2008, the Compensation Committee reviewed the
Companys overall performance and, based on stronger than
expected financial performance in the second half of fiscal year
2008, we paid a bonus of approximately 15% of the target overall
to participants under the 2008 Peak Performance Plan. The named
executive officers received 2008 payouts as follows:
Mr. Mercer received $300,000 (of which $250,000 was the
minimum guaranteed amount per his employment agreement),
Mr. Scherp received $150,000 (of which $50,000 was the
minimum guaranteed amount per his employment agreement and
payable on January 2, 2009), Mr. Chittipeddi received
$60,000, Ms. Roscher received $100,000, which was the
minimum guaranteed amount per her employment agreement, and
Mr. Peterson received $100,000, which was the minimum
guaranteed amount per his employment agreement.
In November 2008, the Compensation Committee adopted the 2009
Performance Incentive Plan (2009 Plan) for fiscal
2009. All named executive officers and employees worldwide are
eligible to participate in the 2009 Plan, except for employees
who participate in the Companys Sales Incentive Plan,
employees who are subject to a separate bonus plan or those not
otherwise eligible. At the end of fiscal 2009, the Compensation
Committee, in its sole discretion, will determine the size of
the incentive pool, considering all circumstances then existing
that it may deem relevant, including core operating profit,
market conditions, forecasts and expenses incurred, and may, in
its sole discretion, increase or decrease individual awards from
the target levels, based on individual performance and the size
of the available incentive pool. The 2009 Plan design is similar
to the 2008 Plan design and the Compensation Committee
12
retains the authority to determine the final pool amount and the
individual payouts for the named executive officers under the
Plan. Currently, under the 2009 Plan, only Mr. Mercer has a
guaranteed amount of not less than $250,000 per his employment
agreement.
In January 2008, the Compensation Committee also approved a
special payment of $75,000 for Mr. Peterson payable within
the first 30 days of employment as an inducement for him to
accept the position of senior vice president, chief legal
officer & secretary. This award is subject to
repayment under certain circumstances if
Mr. Petersons employment terminates within one year
following the effective date of the employment agreement of
March 19, 2008.
In April and May of 2008, with the appointment of
Mr. Mercer to chief executive officer and to assist him in
retaining his management team during this time of transition,
the Company provided modified employment agreements for the
named executive officers which included a retention bonus to be
earned with continuous service with the Company. Retention
bonuses were awarded to Mr. Scherp, Mr. Chittipeddi,
Ms. Roscher and Mr. Peterson in the amounts of
$675,000, $500,000, $400,000 and $400,000, respectively. The
awards were paid in cash within 30 days of signing the
respective agreements with the exception of
Ms. Roschers retention bonus, which has not been paid
and was not to be paid until it was earned in November, 2009.
Further details of the agreement and specifics of the awards can
be found under the Employment and Separation
Agreements section of this proxy.
Long-Term
Incentive Compensation
The Company has a long-term incentive program that provides a
direct link between management and employee incentives and the
creation of additional shareowner value. Annual long-term
incentive grants for executive officers and employees are a key
element of compensation in the semiconductor industry. Long-term
incentive compensation is delivered through the grant of stock
options (and in certain cases, restricted stock units or
performance shares) to executive officers and most employees,
primarily under the 1999 Long-Term Incentives Plan and the 2000
Non-Qualified Stock Plan.
The Company believes that equity awards assist in the
attraction, retention and motivation of employees and align the
interests of employees with those of the shareowners.
Specifically, stock options have value for an employee only if
the price of Conexant common stock increases and the employee
remains employed by the Company for the period required for the
stock options to vest and become exercisable, thus providing an
incentive to remain employed at the Company. Performance share
awards and restricted stock units (RSUs) have also
been used on a selective basis to provide retention awards for
key members of senior management. These awards have been used as
selective retention awards because the awards have value
regardless of future stock price appreciation but still help to
link the recipients interests with those of our
shareowners, since the ultimate value of the awards is dependent
upon stock price.
The Compensation Committee determines all material aspects of
the long-term incentive awards who receives an
award, the amount of the award, the grant price of the award,
the timing of the awards as well as any other aspect of the
award they may deem material, taking into account many factors
and subject to the terms of the applicable stock plan. In
addition to competitive market data, the Compensation Committee
considers the number of shares of Conexant common stock
outstanding, the amount of equity incentives currently
outstanding and the number of shares available for future grant
under the stock plans. Individual executive stock option awards
may be based on many individual factors such as relative job
scope and contributions made during the prior year and the
number of shares held by the executive officer.
A major factor considered this year by the Compensation
Committee in determining the long-term incentive practices for
the Company was that the Company effected a
1-for-10
reverse stock split of its common stock in June 2008. The
reverse split reduces the number of shares of the Companys
outstanding common stock from approximately 495 million
shares to approximately 49.5 million shares following the
market close on June 27, 2008. The exercise price and
number of common shares related to outstanding four percent
convertible subordinated notes and stock options have
automatically been proportionately adjusted to reflect the
reverse split. Under the terms of the reverse split, shareowners
13
holding more than 10 shares of Conexant common stock at the
close of business on June 27, 2008 received one new
Conexant share for every 10 shares held. Optionees received
one Conexant option for every 10 options held with fractional
shares rounded up to the next whole option. All option strike
prices were multiplied by 10 so that the intrinsic value of the
awards remained constant. All share and option data contained in
this proxy statement reflect equity awards on a post-reverse
stock split basis.
During 2008, there was no broad-based stock grant provided to
all employees or the named executive officers. However, on
occasion, the Compensation Committee provides equity awards
outside of the annual process to serve as a special incentive or
linked to the hiring of an executive. During 2008, the
Compensation Committee assessed the compensation and benefits
necessary to successfully recruit the preferred candidates for
the positions of chief executive officer and chief legal
officer. The Compensation Committee examined the current and
future compensation and benefits these candidates would likely
forego by joining the Company. The Compensation Committee also
examined market compensation for comparable positions as well as
internal pay equity. In addition, in order to balance short-term
recruitment needs with the desire to align executive incentives
with longer-term shareowner interests, the Compensation
Committee examined the mix between stock options and restricted
stock units, some of which are performance based and some of
which vest over time. The Compensation Committee reviewed and
approved awards for certain named executive officers in
recognition of added responsibilities and in an effort to
increase the retention value for these executives.
The following describes other awards provided to named executive
officers during fiscal year 2008:
As an inducement to join the Company, upon commencement of his
employment on April 14, 2008, Mr. Mercer was granted
200,000 RSUs, 100,000 of which vested on the six month
anniversary of the grant and 100,000 of which will vest on the
first-year anniversary of the grant. The Company granted the
RSUs to Mr. Mercer under the Companys 1999 Long-Term
Incentives Plan. In order to make this grant, the Board amended
the 1999 Long-Term Incentives Plan to allow for an increase in
the per-year average limit, over any three-year period, of
awards granted to any individual recipient.
In November 2007, the Compensation Committee reviewed the equity
levels of the senior executive team. In order to provide a
greater retention for key executives, ensure internal equity
with newly hired executives and aligning pay with shareholder
equity, Messrs. Scherp and Chittipeddi both received a
grant of 25,000 performance shares which were granted on
November 14, 2007 and will 100% fully vest on the second
anniversary of the grant date, subject to their continuous
employment with the Company through that date. However, in April
of 2008 with the amendment of their employment agreements, their
performance share awards of November 14, 2007 were amended
to provide for a new cliff vesting date of January 2, 2009
versus the previous vesting date of November 14, 2009,
subject to their continued employment through the amended
vesting date. Their current stock option holdings will continue
to vest per their original current terms and conditions.
Mr. Chittipeddi received a grant of 25,000 stock options on
February 20, 2008 with a strike price of $5.90 per share of
common stock underlying the option that vest in two annual
installments (50% per year), commencing with the first
anniversary of the grant date. The intent of this grant was to
bring Mr. Chittipeddis equity holdings further in
line with internal peers and recognize his importance to the
organizations operations.
As an inducement to join the Company, upon commencement of his
employment on March 19, 2008, Mr. Peterson was granted
85,000 stock options with a strike price of $4.50 per share of
common stock underlying the option, which vests in three annual
installments (331/3% per year), commencing with the first
anniversary of the grant date. Mr. Peterson was also
granted 25,000 RSUs which vest in three annual installments
(331/3%
per year), commencing with the first anniversary of the grant
date.
For information regarding the RSUs, performance shares and
option grants to the named executive officers during fiscal
2008, see the Grants of Plan-Based Awards
Table Fiscal Year 2008 in this proxy statement.
14
In addition to encouraging stock ownership by granting stock
options and other forms of equity awards, the Company also
provides certain of its employees (including the named executive
officers) the opportunity to own Conexant common stock through
the Companys Employee Stock Purchase Plans, or the ESPPs.
The ESPPs allow participants to buy Conexant common stock at a
15% discount to the market price with up to 15% of their salary
and bonuses (subject to certain legal and other limitations).
The program is provided as an element of compensation, which
serves to attract employee talent and provides additional
alignment of employee pay to the creation of shareowner value.
Perquisites
The Company also provided executive perquisites including
financial planning and tax preparation services, physical
examinations, and club memberships. In late 2007, the club
membership perquisite was eliminated for the named executive
officers. During fiscal 2008, the Company also eliminated the
financial planning perquisite provided to the named executive
officers and other selected executives. As of the end of fiscal
year 2008, the only perquisite program for which all named
executive officers are still eligible is the annual physical
exam. For Mr. Mercer and Mr. Scherp, pursuant to their
employment agreements, they are both provided payments of
$10,000 and $7,500 per month (subject to applicable taxes),
respectively, for living and transportation expenses. Details of
the perquisite values for fiscal year 2008 for all named
executive officers can be found in the footnotes to the
Summary Compensation Table Fiscal Years 2008
and 2007.
Until November 2007, the Company sponsored Non-Qualified
Deferred Compensation Plans (the Deferred Compensation
Plans) for directors, officers and certain other employees
of Conexant. Under the Deferred Compensation Plans, employee
participants were allowed to defer up to 100% of base salary and
cash bonus. The plans also allowed executive officers to obtain
the 401(k) company match beyond the IRS-prescribed contribution
and salary limitations of the Companys Retirement Savings
Plan. The Company made contributions to the Deferred
Compensation Plans coincident with the deferrals made by the
participants, which were used to purchase trust owned life
insurance held in a Rabbi trust. The deferred amounts are valued
daily as if invested in one or more investment funds selected by
the individual participant from among the available investment
options.
In November 2007, to reduce administrative costs and streamline
executive perquisites, the Compensation Committee determined to
suspend all future contributions by existing plan participants
and admit no new participants into the Deferred Compensation
Plans. Previously elected distributions will continue as
scheduled.
In May of 2008, the Board of Directors approved termination of
the Companys two deferred compensation plans, which were
open to participation by the members of the Board of Directors
and by senior management. The affairs of the plans are to be
wound-up and
the plans closed as soon as administratively practicable. The
deferred compensation amounts associated with the Deferred
Compensation Plan, as amended and restated effective
April 1, 2000, will be paid out to participants as soon as
administratively practicable. Deferred compensation amounts
associated with the Deferred Compensation Plan, effective
January 1, 2005, as amended November 14, 2007, will be
paid out to participants not less than 12 months nor more
than 24 months from May 30, 2008 in accordance with
the Treasury Regulations under Section 409A of the Internal
Revenue Code. For additional information on deferred
compensation for the named executive officers, see the
Non-Qualified Deferred Compensation Table
Fiscal Year 2008 in this proxy statement.
Severance and
Change of Control Benefits
Severance and change of control benefits are designed to
facilitate the Companys ability to attract and retain
executives as it competes for talented employees in a
marketplace where such protections are commonly offered. The
severance and change of control benefits found in the named
executive officers employment agreements are designed to
encourage employees to remain focused on our business in the
event of rumored or actual fundamental corporate changes. These
benefits include continued base salary
15
payments and certain health and welfare benefits, acceleration
of the vesting of outstanding equity-based awards, such as
options and RSUs (in certain cases without regard to the
satisfaction of any time-based requirements or performance
criteria), extension of post-termination exercise periods for
options and tax
gross-ups
for certain excise taxes.
Termination Provisions. The employment
agreements with the named executive officers provide severance
payments and other benefits in an amount the Company believes is
appropriate, taking into account the time it is expected to take
a separated employee to find another job. The payments and other
benefits are provided because the Company considers a separation
to be a Company-initiated termination of employment that under
different circumstances would not have occurred and which is
beyond the control of a separated employee. Separation benefits
are intended to ease the consequences to an employee of an
unexpected termination of employment. The Company also benefits
by requiring a general release from separated employees. In
addition, the Company has included post-termination non-compete
and non-solicitation covenants in certain individual employment
agreements.
The Company considers it likely that it will take more time for
higher-level employees to find new employment, and therefore
senior management generally is paid severance for a longer
period than is provided to other employees. Additional payments
may be permitted in some circumstances as a result of individual
negotiations with executives, especially where the Company seeks
particular non-disparagement, cooperation with litigation,
noncompetition and non-solicitation terms. See the descriptions
of the individual employment agreements with the named executive
officers under Certain Relationships and Transactions with
Related Persons Employment and Separation
Agreements for additional information.
Change of Control Agreements. Under the
employment agreements with certain of our named executive
officers, change of control benefits generally require a change
of control, followed by a termination of or change in the
executives employment. This so-called double
trigger treatment provides the executive with certain
protections following a change of control, while avoiding
creating a windfall for the executive that might
occur if a single trigger treatment were used. See
the descriptions of the individual change of control employment
agreements with the named executive officers under Certain
Relationships and Related Person Transactions for
additional information.
Retirement
Benefits
Conexant does not sponsor a defined benefit pension plan for any
U.S. employee. For all U.S. employees, including the
named executive officers, the Company provides a 401(k)
Retirement Savings Plan with company matching contributions as
the only qualified retirement plan. With an employee
contribution of 6%, the plan provides a maximum company match of
4% of base salary up to the statutory qualified plan limits.
Except with respect to the Deferred Compensation Plan, the
Companys executive officers are eligible to participate in
the Companys broad-based retirement programs to the same
extent as all other employees.
Tax and
Accounting Implications
Deductibility
of Executive Compensation
Section 162(m) of the Internal Revenue Code places a limit
of $1,000,000 on the amount of compensation that may be deducted
by the Company in any year with respect to each of the
Companys chief executive officer and the next three most
highly compensated officers, not including the chief financial
officer. In view of the Companys substantial accumulated
net operating losses, the deduction limit under
section 162(m) may have little practical impact on the
Company. Certain performance-based compensation that has been
approved by shareowners is not subject to the deduction limit.
Although certain awards under the Companys stock-based
plans constitute performance-based compensation not subject to
the deduction limit under section 162(m), certain other
awards under the plans, such as restricted stock, will not
qualify for this exemption. Since the Compensation Committee
retains discretion with respect to base salaries and certain
other compensation
16
awards, those elements would not qualify as performance
based compensation for section 162(m) purposes. It is
the Compensation Committees objective that, so long as it
is consistent with its overall business, compensation and
retention objectives, Conexant will, to the extent reasonable,
endeavor to keep executive compensation deductible by Conexant
for U.S. federal income tax purposes.
Accounting for
Stock-Based Compensation
Beginning October 1, 2005, the Company adopted Statement of
Financial Accounting Standards No. 123 (Revised 2004),
Share-Based Payments (SFAS 123R), and
began recording stock-based compensation expense in its
financial statements in accordance with SFAS 123R.
Certain Awards
Deferring or Accelerating the Receipt of
Compensation
Section 409A of the Internal Revenue Code, enacted as part
of the American Jobs Creation Act of 2004, imposes certain new
requirements applicable to nonqualified deferred
compensation plans. If a nonqualified deferred
compensation plan subject to section 409A fails to meet, or
is not operated in accordance with, these new requirements, then
all compensation deferred under the plan may become immediately
taxable. The Company intends that awards provided under its
compensation and benefit plans will comply with the requirements
of section 409A and intends to administer and interpret
these plans in such a manner.
17
Report of the
Compensation and Management Development Committee
The Compensation and Management Development Committee (the
Compensation Committee or the Committee)
has reviewed and discussed the Compensation Discussion and
Analysis section of the proxy statement with management of
Conexant and the entire Board, and based on this review and
discussion, recommended to the Board of Directors of Conexant
that such Compensation Discussion and Analysis be
included in the Conexant proxy statement for the 2009 Annual
Meeting of Shareowners for filing with the SEC.
Compensation and Management Development Committee
Jerre L. Stead, Chairman
Steven J. Bilodeau
Balakrishnan S. Iyer
Matthew E. Massengill
Executive
Compensation
Summary
Compensation Table Fiscal Years 2008 and
2007
The following table sets forth the total compensation earned or
paid to our principal executive officer, principal financial
officer and other named executive officers, who served in such
capacities during fiscal year 2008 for services rendered in
fiscal years 2008 and 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
Salary(1)
|
|
|
Bonus
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation(*)
|
|
|
|
|
Name and Principal Position
|
|
Fiscal Year
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Total ($)
|
|
|
D. Scott Mercer
|
|
|
2008
|
|
|
|
253,846
|
|
|
|
|
|
|
|
509,614
|
(3)
|
|
|
|
|
|
|
126,444
|
|
|
|
889,904
|
|
Chairman of the board and chief executive officer (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christian Scherp
|
|
|
2008
|
|
|
|
329,231
|
|
|
|
778,300
|
(5)
|
|
|
184,572
|
(3)
|
|
|
243,961
|
(6)
|
|
|
70,967
|
|
|
|
1,607,031
|
|
President (4)
|
|
|
2007
|
|
|
|
290,000
|
|
|
|
115,682
|
|
|
|
|
|
|
|
166,093
|
|
|
|
27,030
|
|
|
|
598,805
|
|
Sailesh Chittipeddi
|
|
|
2008
|
|
|
|
290,000
|
(8)
|
|
|
558,079
|
(9)
|
|
|
262,072
|
(3)
|
|
|
246,697
|
(6)
|
|
|
11,795
|
|
|
|
1,368,643
|
|
Executive vice president, global operations and chief technology
officer (7)
|
|
|
2007
|
|
|
|
254,808
|
|
|
|
100,817
|
|
|
|
|
|
|
|
151,557
|
|
|
|
13,233
|
|
|
|
520,415
|
|
Karen L. Roscher
|
|
|
2008
|
|
|
|
325,000
|
|
|
|
78,919
|
(10)
|
|
|
216,146
|
(3)
|
|
|
307,803
|
(6)
|
|
|
9,809
|
|
|
|
937,677
|
|
Former senior vice president and chief financial officer
|
|
|
2007
|
|
|
|
18,750
|
|
|
|
150,000
|
|
|
|
15,163
|
|
|
|
16,095
|
|
|
|
|
|
|
|
200,008
|
|
Mark D. Peterson
|
|
|
2008
|
|
|
|
165,865
|
|
|
|
475,000
|
(12)
|
|
|
20,192
|
(3)
|
|
|
37,619
|
(6)
|
|
|
4,257
|
|
|
|
702,933
|
|
Senior vice president, chief legal officer and secretary (11)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel A. Artusi
|
|
|
2008
|
|
|
|
329,067
|
(14)
|
|
|
2,866,438
|
(15)
|
|
|
1,926,172
|
(3)
|
|
|
2,595,295
|
(6)
|
|
|
14,325
|
|
|
|
7,731,297
|
|
Former president and chief executive officer (13)
|
|
|
2007
|
|
|
|
126,923
|
|
|
|
100,000
|
|
|
|
411,173
|
|
|
|
211,533
|
|
|
|
239
|
|
|
|
849,868
|
|
|
|
|
* |
|
See supplemental table (A). |
|
(1) |
|
Includes amounts the Company contributed or accrued for the
named executive officers under the Companys Retirement
Savings Plan and Deferred Compensation Plan II. |
|
(2) |
|
Mr. Mercer became an employee and chief executive officer
of the Company on April 14, 2008 and chairman and chief
executive officer on August 14, 2008. Prior to
April 14, 2008, Mr. Mercer was a non-employee director
and was compensated by the Company as a non-employee director.
See, Directors Compensation. |
|
(3) |
|
This column represents the dollar amount recognized for
financial statement reporting purposes with respect to the 2008
fiscal year for the fair value of time-vesting and performance
restricted stock units |
18
|
|
|
|
|
(RSUs) and performance share awards granted to certain named
executive officers in fiscal 2008, as well as prior fiscal
years, in accordance with SFAS 123R. Pursuant to SEC rules,
the amounts shown exclude the impact of estimated forfeitures
related to service-based vesting conditions. For
time-vesting
RSUs, fair value is calculated using the closing price of
Conexant stock on the date of grant. For additional information,
refer to note 1 of the Conexant financial statements in the
Form 10-K
for the year ended October 3, 2008, as filed with the SEC.
See the Grants of Plan-Based Awards Table for information on
awards made in fiscal 2008. These amounts reflect the
Companys accounting expense for these awards, and do not
correspond to the actual value that will be recognized by the
named executive officers. The performance RSUs are subject to
market conditions and the performance share awards are subject
to performance conditions, as described in the CD&A. In
measuring fair value, SFAS 123R distinguishes between
vesting conditions related to the Companys stock price
(market conditions) and other non-stock price related conditions
(performance conditions). Market conditions, such as those in
the performance RSUs that are tied to Conexants total
shareholder return, reduce the grant-date fair value under
SFAS 123R; performance conditions, such as those in the
performance share awards that are tied to non-stock measures,
such as Conexants operating performance, do not reduce the
grant-date fair value under SFAS 123R but are evaluated at
the end of each reporting period and may be adjusted for changes
in operating performance. This amount reflects the
Companys accounting expense for the performance RSUs and
performance share awards, and does not correspond to the actual
value that will be recognized by the named executive officer,
which depends solely on the achievement of specified performance
objectives over the performance period. |
|
(4) |
|
Mr. Scherp was promoted to president on April 14, 2008. |
|
(5) |
|
Includes a $675,000 retention award and $103,300 paid in
commissions under the Companys sales incentive plan which
ceased to be applicable to Mr. Scherp upon assuming his
current position. |
|
(6) |
|
This column represents the dollar amount recognized for
financial statement reporting purposes with respect to the 2008
fiscal year for the fair value of stock options granted to each
of the named executive officers in fiscal 2008, as well as prior
fiscal years, in accordance with SFAS 123R. Pursuant to SEC
rules, the amounts shown exclude the impact of estimated
forfeitures related to service-based vesting conditions. For
additional information on the valuation assumptions with respect
to the fiscal 2008 grants, refer to note 1 of the
Companys financial statements in the
Form 10-K
for the year ended October 3, 2008, as filed with the SEC.
For information on the valuation assumptions with respect to
option grants made prior to fiscal 2008, see the note on Other
Stock-Related information for the Companys financial
statements in the
Form 10-K
for the respective year-end. See the Grants of Plan-Based Awards
Table for information on options granted in fiscal 2008. These
amounts reflect the Companys accounting expense for these
awards, and do not correspond to the actual value that will be
recognized by the named executive officers. |
|
(7) |
|
Mr. Chittipeddi was promoted to executive vice president,
global operations and chief technology officer on April 14,
2008. |
|
(8) |
|
Includes $11,538 paid to Mr. Chittipeddi in lieu of
vacation. |
|
(9) |
|
Includes a $500,000 retention award and a $58,079 payment for
relocation expenses incurred. |
|
(10) |
|
Represents $78,919 paid for relocation expenses incurred. |
|
(11) |
|
Mr. Peterson became an employee and senior vice president,
chief legal officer and secretary on March 19, 2008. |
|
(12) |
|
Includes a $75,000 sign-on bonus paid in connection with
Mr. Petersons joining the Company and a $400,000
retention award. |
|
(13) |
|
Mr. Artusi was formerly president and chief executive
officer of the Company. Mr. Artusis employment with
the Company terminated on April 25, 2008. |
|
(14) |
|
Includes $8,766 paid to Mr. Artusi in lieu of vacation. |
|
(15) |
|
Includes a $150,000 bonus and a separation payment of $2,716,438
in accordance with Mr. Artusis employment agreement. |
19
(A) The following table provides detail of amounts
shown in the All Other Compensation column of the
Summary Compensation Table Fiscal Years 2008
and 2007 for perquisites paid during fiscal 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
Insurance
|
|
|
Airline/Health
|
|
|
Financial
|
|
|
401(k)
|
|
|
Travel
|
|
|
Director
|
|
|
All Other
|
|
|
|
Premiums(a)
|
|
|
Club
|
|
|
Planning
|
|
|
Match(b)
|
|
|
Allowance(c)
|
|
|
Compensation(d)
|
|
|
Compensation
|
|
Name
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
D. Scott Mercer
|
|
|
982
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
|
|
|
65,462
|
|
|
|
126,444
|
|
Christian Scherp
|
|
|
218
|
|
|
|
989
|
|
|
|
12,746
|
|
|
|
12,014
|
|
|
|
45,000
|
|
|
|
|
|
|
|
70,967
|
|
Sailesh Chittipeddi
|
|
|
810
|
|
|
|
|
|
|
|
|
|
|
|
10,985
|
|
|
|
|
|
|
|
|
|
|
|
11,795
|
|
Karen L. Roscher
|
|
|
810
|
|
|
|
|
|
|
|
|
|
|
|
8,999
|
|
|
|
|
|
|
|
|
|
|
|
9,809
|
|
Mark D. Peterson
|
|
|
411
|
|
|
|
|
|
|
|
|
|
|
|
3,846
|
|
|
|
|
|
|
|
|
|
|
|
4,257
|
|
Daniel A. Artusi
|
|
|
6,591
|
|
|
|
|
|
|
|
|
|
|
|
7,734
|
|
|
|
|
|
|
|
|
|
|
|
14,325
|
|
|
|
|
(a) |
|
Includes imputed income for life insurance. Includes $5,874
COBRA reimbursement paid during fiscal year 2008 to
Mr. Artusi per his separation agreement. |
|
(b) |
|
Includes the Company match made in the qualified plan as well as
the Company match provided above the qualified plan limits for
executives electing to participate in the non-qualified deferred
compensation program. |
|
(c) |
|
Travel allowance paid in connection with the executive assuming
his current role. |
|
(d) |
|
Includes directors fees earned or paid in cash of $41,250
and a total option award grant value of $24,212.
Mr. Mercers compensation for serving as a
non-employee director prior to April 14, 2008 is reflected
in the Director Compensation for Fiscal Year 2008
table. |
Grants of
Plan-Based Awards Fiscal Year 2008
The following table provides information relating to plan-based
awards granted to the named executive officers during the fiscal
year ended October 3, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
Exercise or
|
|
|
Grant Date
|
|
|
|
|
|
Shares of
|
|
|
Securities
|
|
|
Base Price of
|
|
|
Fair Value
|
|
|
|
|
|
Stock or
|
|
|
Underlying
|
|
|
Option
|
|
|
of Stock and
|
|
|
|
|
|
Units
|
|
|
Options
|
|
|
Awards
|
|
|
Option
|
|
Name
|
|
Grant Date
|
|
(#)
|
|
|
(#)
|
|
|
($/share)
|
|
|
Awards ($)(1)
|
|
|
D. Scott Mercer
|
|
April 14, 2008(2)
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
|
1,060,000
|
|
Christian Scherp
|
|
November 14, 2007(3)
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
|
310,000
|
|
Sailesh Chittipeddi
|
|
November 14, 2007(3)
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
|
310,000
|
|
|
|
February 20, 2008(4)
|
|
|
|
|
|
|
25,000
|
|
|
|
5.90
|
|
|
|
82,500
|
|
Mark D. Peterson
|
|
March 19, 2008(5)
|
|
|
|
|
|
|
85,000
|
|
|
|
4.50
|
|
|
|
221,000
|
|
|
|
March 19, 2008(6)
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
|
112,500
|
|
Notes:
|
|
|
(1) |
|
This column shows the full grant date fair value of performance
share awards, RSUs and stock options under SFAS 123R
granted to named executives in fiscal year 2008. Generally, the
full grant date fair value is the amount the Company would
expense in its financial statements over the awards
vesting schedule. For performance shares and RSUs shown above,
fair value is calculated using the closing price of Conexant
common stock on the grant date. For stock options, fair value is
calculated using the Black-Scholes-Merton value on the grant
date. The fair values shown for stock awards and option awards
are accounted for in accordance with SFAS 123R. For
additional information on the valuation |
20
|
|
|
|
|
assumptions, refer to note 1 of the Companys
financial statements in the
Form 10-K
for the year ended October 3, 2008, as filed with the SEC.
These amounts reflect the Companys accounting expense, and
do not correspond to the actual value that will be recognized by
the named executives. |
|
(2) |
|
Mr. Mercers RSUs were granted on April 14, 2008
as part of his new hire package and consist of 200,000 RSUs
which vest 50% on October 14, 2008 and 50% on
April 14, 2009. The fair market value on April 14,
2008 was $5.30 per share of Conexant common stock. |
|
(3) |
|
Messrs. Scherps and Chittipeddis performance
share awards were granted on November 14, 2007 and vest in
full (100%) on the second anniversary of the grant date. The
fair market value on November 14, 2007 was $12.40 per share
of Conexant common stock. On April 14, 2008 with the
amendment of their employment agreements, the performance share
awards of November 14, 2007 were amended to provide for a
new cliff vesting date of January 2, 2009 versus the
current date of November 14, 2009, subject to their
continued employment. |
|
(4) |
|
Mr. Chittipeddis stock options were granted on
February 20, 2008 and vest in two annual installments (50%
per year), commencing with the first anniversary of the grant
date. |
|
(5) |
|
Mr. Petersons stock options were granted on
March 19, 2008 as part of his new hire package and vest in
three annual installments
(331/3%
per year), commencing with the first anniversary of the grant
date. |
|
(6) |
|
Mr. Petersons RSUs were granted on March 19,
2008 as part of his new hire package and consist of 25,000 RSUs
which vest in three annual installments
(331/3%
per year), commencing with the first anniversary of the grant
date. The fair market value on March 19, 2008 was $4.50 per
share of Conexant common stock. |
Outstanding
Equity Awards at Fiscal Year-End Fiscal Year
2008
The following table provides information relating to outstanding
equity awards held by the named executive officers at fiscal
year end, October 3, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
Shares or
|
|
|
Market
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
Units
|
|
|
Value of
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
of Stock
|
|
|
Shares or
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
|
That
|
|
|
Units of
|
|
|
|
Options
|
|
|
Options
|
|
|
Exercise
|
|
|
Option
|
|
Have Not
|
|
|
Stock That
|
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Price
|
|
|
Expiration
|
|
Vested
|
|
|
Have Not
|
|
Name
|
|
(#)
|
|
|
(#)
|
|
|
($)
|
|
|
Date
|
|
(#)
|
|
|
Vested ($)(1)
|
|
|
D. Scott Mercer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
(2)
|
|
|
670,000
|
|
Christian Scherp
|
|
|
22,500
|
|
|
|
7,500
|
|
|
|
15.30
|
|
|
June 20, 2013
|
|
|
|
|
|
|
|
|
|
|
|
8,750
|
|
|
|
8,750
|
|
|
|
27.00
|
|
|
February 7, 2014
|
|
|
|
|
|
|
|
|
|
|
|
11,250
|
|
|
|
11,250
|
|
|
|
14.10
|
|
|
May 15, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
(3)
|
|
|
83,750
|
|
Sailesh Chittipeddi
|
|
|
16,250
|
|
|
|
8,750
|
|
|
|
26.50
|
|
|
June 7, 2014
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
14.10
|
|
|
May 15, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
5.90
|
|
|
February 20, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
(3)
|
|
|
83,750
|
|
Karen L. Roscher
|
|
|
33,334
|
|
|
|
66,666
|
|
|
|
13.70
|
|
|
September 10, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
49,000
|
(4)
|
|
|
164,150
|
|
Mark D. Peterson
|
|
|
|
|
|
|
85,000
|
|
|
|
4.50
|
|
|
March 19, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
(5)
|
|
|
83,750
|
|
Daniel A. Artusi
|
|
|
300,000
|
|
|
|
|
|
|
|
15.30
|
|
|
April 25, 2010
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Based on the closing price of Conexant common stock on
October 3, 2008, the last day of fiscal 2008, of $3.35 per
share. |
|
(2) |
|
Mr. Mercers RSUs were granted on April 14, 2008
as part of his new hire package and vest 50% on October 14,
2008 and 50% on April 14, 2009. |
|
(3) |
|
Messrs. Scherps and Chittipeddis performance
share awards were granted on November 14, 2007 and
following the modification to the awards on April 14, 2008,
the awards vest in full (100%) on January 2, 2009. |
21
|
|
|
(4) |
|
Ms. Roscher was granted 36,000 RSUs on September 10,
2007 and vest in three annual installments, commencing with the
first anniversary of the grant date. Ms. Roscher was also
granted 25,000 performance RSUs which vest based on the
Compensation Committees determination that the following
performance goals have been achieved: one-third if Conexant
common stock sustains an average closing price of $30.00 per
share over a 60
calendar-day
period; one-third if Conexant common stock sustains an average
closing price of $45.00 per share over a 60
calendar-day
period; and one-third if Conexant common stock sustains an
average closing price of $60.00 per share over a 60
calendar-day
period. Any unvested portion of the performance RSUs will be
forfeited five years after the grant date. |
|
(5) |
|
Mr. Petersons RSUs were granted on March 19,
2008 and vest in three annual installments, commencing with the
first anniversary of the grant date. |
Option Exercises
and Stock Vested Fiscal Year 2008
The following table provides information relating to option
exercises by the named executive officers for the period
September 29, 2007 through October 3, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock/Unit Awards
|
|
|
Number of
|
|
|
|
Number of
|
|
|
|
|
Securities
|
|
|
|
Securities
|
|
|
|
|
Acquired
|
|
Value
|
|
Acquired on
|
|
Value
|
|
|
on Exercise
|
|
Realized on
|
|
Vesting
|
|
Realized on
|
Name
|
|
(#)
|
|
Exercise ($)
|
|
(#)
|
|
Vesting ($)
|
|
D. Scott Mercer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christian Scherp
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sailesh Chittipeddi
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Karen L. Roscher
|
|
|
|
|
|
|
|
|
|
|
12,000
|
(1)
|
|
$
|
61,080
|
(2)
|
Mark D. Peterson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel A. Artusi
|
|
|
|
|
|
|
|
|
|
|
150,000
|
(3)
|
|
$
|
735,000
|
(4)
|
|
|
|
(1) |
|
The first vesting of Ms. Roschers RSUs occurred on
September 10, 2008. |
|
(2) |
|
The value realized is based on the closing price of Conexant
common stock on September 10, 2008, which was $5.09 per
share. |
|
(3) |
|
In accordance with his separation agreement with the Company,
the full amount of Mr. Artusis RSU award was
considered earned as of April 25, 2008 and was vested
during the Companys next open trading window in accordance
with the terms of his RSU agreement, and the award became vested
on May 2, 2008. |
|
(4) |
|
The value realized is based on the closing price of Conexant
common stock on May 2, 2008, which was $4.90 per share. |
22
Non-qualified
Deferred Compensation Fiscal Year 2008
The following table provides information relating to
non-qualified deferred compensation balances and contributions
of the named executive officers for fiscal year 2008.
Non-qualified
Deferred Compensation(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate
|
|
|
|
|
|
|
|
|
|
Aggregate
|
|
|
|
|
|
Account
|
|
|
|
|
|
|
|
|
|
Earnings on
|
|
|
Aggregate
|
|
|
Balance at
|
|
|
|
Executive
|
|
|
Conexant
|
|
|
Underlying
|
|
|
Withdrawals/
|
|
|
End of
|
|
|
|
Contributions(2)
|
|
|
Contributions(3)
|
|
|
Investments(4)
|
|
|
Distributions
|
|
|
Fiscal Year(5)
|
|
Name
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
D. Scott Mercer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christian Scherp
|
|
|
4,015
|
|
|
|
1,872
|
|
|
|
(6,213
|
)
|
|
|
|
|
|
|
53,577
|
|
Sailesh Chittipeddi
|
|
|
6,000
|
|
|
|
240
|
|
|
|
(23,569
|
)
|
|
|
|
|
|
|
90,987
|
|
Karen L. Roscher
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark D. Peterson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel A. Artusi
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
On May 30, 2008, the Conexant Systems, Inc. Board of
Directors elected to terminate and liquidate the funds in the
Companys deferred compensation plans. |
|
(2) |
|
Represents contributions to the Companys Deferred
Compensation Plan II by the named executive officer during
the 2008 fiscal year. |
|
(3) |
|
Includes the non-qualified Company matching contributions made
to the Companys Deferred Compensation Plan II during
the 2008 fiscal year in excess of the IRS prescribed
contribution and salary limits under the Companys
Retirement Savings Plan. These amounts are included in the
Summary Compensation Table Fiscal Years 2008
and 2007 under the All Other Compensation
column. |
|
(4) |
|
Represents total market-based earnings for the 2008 fiscal year
on all deferred compensation under the Companys Deferred
Compensation Plan and the Companys Deferred Compensation
Plan II based on the investment returns associated with the
investment choices made by the named executive officer. |
|
(5) |
|
Includes balances in both the Companys Deferred
Compensation Plan, which has been grandfathered for Code
section 409A purposes, and the Companys Deferred
Compensation Plan II, which was established in 2005 and is
section 409A compliant. |
Certain
Relationships and Related Person Transactions
Pursuant to the Audit Committees charter and applicable
Nasdaq rules, the Audit Committee is responsible for reviewing
and approving all related party transactions (as defined by the
Nasdaq rules).
Employment and
Separation Agreements
Named
Executives Officers
D. Scott Mercer. On April 14, 2008,
the Company and Mr. Mercer entered into an employment
agreement setting forth the terms and conditions of
Mr. Mercers employment as chief executive officer of
the Company. The agreement provides that Mr. Mercer will
serve as chief executive officer from April 14, 2008
through April 13, 2009. Following that initial term, the
agreement will be automatically extended for an additional
one-year term, unless either party notifies the other that it
does not wish to extend the initial term. In exchange for his
services, Mr. Mercer will be paid an initial annual base
salary of $550,000 and will be eligible for an annual
performance bonus as determined by the Board of Directors or the
Compensation Committee. His fiscal year 2008 target bonus was
100% of annual base salary (pro-rated for time worked in the
fiscal year), provided that Mr. Mercer will receive bonuses
of not less than $250,000 for each of fiscal
23
years 2008 and 2009, each to be disbursed when normal bonuses
are paid. For future periods, the Board of Directors or the
Compensation Committee will determine Mr. Mercers
annual base salary (which may not be decreased) and annual
target bonus. In lieu of a relocation package, Mr. Mercer
receives payments of $10,000 per month (subject to applicable
taxes) for living and transportation expenses. Pursuant to the
agreement, Mr. Mercer also received 200,000 restricted
stock units, 100,000 of which vested on October 14, 2008
and 100,000 of which will vest on April 14, 2009.
Under the agreement, if the Company terminates
Mr. Mercers employment as chief executive officer
without cause or he resigns as chief executive
officer and board member for good reason (each as
defined in the agreement): (i) the Company will pay him a
cash lump-sum equal to (A) any unpaid base salary (and any
other unpaid amounts) accrued through his termination date,
(B) a pro-rata share of his target bonus for the fiscal
year in which his termination occurs, (C) two times his
base salary, (D) two times his annual target bonus, and
(E) $200,000; (ii) the Company will continue to
provide coverage under the Companys health insurance plan
to him for 18 months after the date of his termination; and
(iii) all of his options and non-performance based
restricted stock units will become fully vested and
Mr. Mercer may exercise all vested options until the
earlier of (A) the second anniversary of his termination
date or (B) the expiration date of such options set forth
in the option awards. Under the agreement, a termination without
cause or Mr. Mercers resignation for good reason will
not be deemed to have occurred if a successor chief executive
officer is elected by the Board of Directors and Mr. Mercer
returns to his continuing role as a director.
In addition, if Mr. Mercers employment terminates due
to his death, all of Mr. Mercers options and
non-performance based restricted stock units will become fully
vested, and Mr. Mercers estate may exercise all
vested options until the earlier of (A) the third
anniversary of his termination date and (B) the expiration
date of such options set forth in the option awards. If
Mr. Mercers employment terminates due to his
disability (as defined in the agreement), the
Company will continue to provide coverage under the
Companys health insurance plan to him for 18 months
after the date of his termination, all of Mr. Mercers
options and non-performance based restricted stock units will
become fully vested, and Mr. Mercer may exercise all vested
options until the earlier of (A) the second anniversary of
his termination date and (B) the expiration date of such
options set forth in the option awards.
Mr. Mercer is restricted from competing with the Company
(to the extent permitted by law) or soliciting employees or
customers of the Company during and for 12 months after the
employment period. Mr. Mercer will generally be made whole
in the event of payment of any excise taxes imposed by the
Internal Revenue Code of 1986, as amended (the
Code), on certain change of control payments and in
the event of any payment of penalty tax and interest imposed by
Code section 409A. For purposes of Mr. Mercers
employment agreement, a change of control is defined
as (1) the acquisition by any individual, entity or group
of beneficial ownership of 30% or more of either the then
outstanding shares of Company common stock or the combined
voting power of the then outstanding voting securities entitled
to vote generally in the election of directors; (2) a
change in the composition of a majority of the Board of
Directors which is not supported by the current Board of
Directors; (3) a major corporate transaction, such as a
reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the Companys
assets, which results in a change in the majority of the Board
of Directors or of more than 50% of the Companys
shareowners; or (4) approval by the Companys
shareowners of the complete liquidation or dissolution of the
Company.
Christian Scherp. On April 14, 2008, the
Company and Mr. Scherp entered into an employment agreement
setting forth the terms and conditions of his employment as
president of the Company. The agreement provides that
Mr. Scherp will serve as president of the Company from
April 14, 2008 through April 13, 2009. Following that
initial term, the agreement will be automatically extended for
additional one-year terms, unless either party notifies the
other that it no longer wishes the extensions to continue. In
exchange for his services, Mr. Scherp will be paid an
initial annual base salary of $375,000 and will be eligible for
an annual performance bonus as determined by the Board of
Directors or the Compensation Committee. His fiscal year 2008
annual target bonus was 80% of annual base salary, provided that
Mr. Scherp will receive a bonus of not less than $50,000
for fiscal year 2008, to be disbursed on the first
24
payroll date in January 2009. Mr. Scherp also received a
special bonus of $675,000, which is subject to repayment if
Mr. Scherp voluntarily terminates his employment for any
reason, other than as a result of death or disability (as
defined in the agreement), or if his employment is terminated by
the Company for cause (as defined in the agreement),
before April 30, 2009. If Mr. Scherp is involuntarily
terminated for any reason other than cause prior to
April 30, 2009, he will not have any repayment obligation
for this bonus. For future periods, the Board of Directors or
the Compensation Committee will determine Mr. Scherps
annual base salary (which may not be decreased) and annual
target bonus. Pursuant to the agreement, Mr. Scherps
outstanding stock options will continue to vest in accordance
with their current terms and conditions, and, upon
Mr. Scherps commencing employment as president, his
performance share award of November 14, 2007 was amended to
provide for an earlier cliff vesting date of January 2,
2009, advanced from the prior date of November 14, 2009,
subject to his continued employment as president through
January 2, 2009. In lieu of a relocation package,
Mr. Scherp receives payments of $7,500 per month (subject
to applicable taxes) for living and transportation expenses.
Under the agreement, if the Company terminates
Mr. Scherps employment as president without
cause: (i) the Company will pay him a cash
lump-sum equal to (A) any unpaid base salary (and any other
unpaid amounts) accrued through his termination date and
(B) $125,000; (ii) the Company will continue to
provide coverage under the Companys health insurance plan
to him for 18 months after the date of his termination; and
(iii) all of his options and non-performance based
restricted stock units will become fully vested and
Mr. Scherp may exercise all such options until the earlier
of (A) the
18-month
anniversary of his termination date and (B) the expiration
date of such options set forth in the option awards. In
addition, if Mr. Scherps employment terminates due to
his death, all of Mr. Scherps options and
non-performance based restricted stock units will become fully
vested, and Mr. Scherps estate may exercise all
vested options until the earlier of (A) the third
anniversary of his termination date and (B) the expiration
date of such options set forth in the option awards. If
Mr. Scherps employment terminates due to his
disability (as defined in the agreement), the
Company will provide continued coverage under the Companys
health insurance plan to him for 18 months after the date
of his termination, all of Mr. Scherps options and
non-performance based restricted stock units will become fully
vested, and Mr. Scherp may exercise all vested options
until the earlier of (A) the
18-month
anniversary of his termination date and (B) the expiration
date of such options set forth in the option awards.
Mr. Scherp is restricted from competing with the Company
(to the extent permitted by law) or soliciting employees or
customers of the Company during and for 12 months after the
employment period.
Sailesh Chittipeddi. On April 14, 2008,
the Company entered into an employment agreement with Sailesh
Chittipeddi as executive vice president, global operations and
chief technology officer of the Company, setting forth the terms
and conditions of his employment. Pursuant to the employment
agreement, Mr. Chittipeddi will serve as executive vice
president, global operations and chief technology officer from
April 14, 2008 through April 13, 2009. Following that
initial term, the agreement will be automatically extended for
additional one-year terms, unless either party notifies the
other that it no longer wishes the extensions to continue. In
exchange for his services, Mr. Chittipeddi will be paid an
initial annual base salary of $300,000 and will be eligible for
an annual performance bonus as determined by the Board of
Directors or the Compensation Committee. His fiscal year 2008
full year annual target bonus was 70% of his annual base salary,
disbursed when normal bonuses are paid. Mr. Chittipeddi
also received a special bonus of $500,000, which is subject to
repayment if Mr. Chittipeddi voluntarily terminates his
employment for any reason, other than as a result of death or
disability (as defined in the agreement), or if his employment
is terminated by the Company for cause (as defined
in the agreement), before April 30, 2009. If
Mr. Chittipeddi is involuntarily terminated for any reason
other than cause prior to April 30, 2009, he will not incur
any repayment obligation for his bonus. For future periods, the
Board of Directors or the Compensation Committee will determine
Mr. Chittipeddis annual base salary (which may not be
decreased) and annual target bonus. Pursuant to the agreement,
Mr. Chittipeddis outstanding stock options will
continue to vest in accordance with their current terms and
conditions and upon Mr. Chittipeddis commencing
employment as executive vice president, global operations and
chief technology officer, his performance share award of
November 14, 2007 was amended to provide for an earlier
cliff vesting date of January 2, 2009, advanced from the
prior date of November 14, 2009, subject to his continued
employment as executive vice president, global operations and
chief technology officer through January 2, 2009.
25
Under the agreement, if the Company terminates
Mr. Chittipeddis employment as executive vice
president, global operations and chief technology officer
without cause: (i) the Company will pay him a
cash lump-sum equal to (A) any unpaid base salary (and any
other unpaid amounts) accrued through his termination date, and
(B) $100,000; (ii) the Company will continue to
provide coverage under the Companys health insurance plan
to him and his eligible dependents for 18 months after the
date of his termination; and (iii) all of his options and
non-performance based restricted stock units will become fully
vested and Mr. Chittipeddi may exercise all vested options
until the earlier of (A) the 15 month anniversary of
his termination date or (B) the expiration date of such
options set forth in the option awards. In addition, if
Mr. Chittipeddis employment terminates due to his
death, all of Mr. Chittipeddis options and
non-performance based restricted stock units will become fully
vested, and Mr. Chittipeddis estate may exercise all
vested options until the earlier of (A) the third
anniversary of his termination date and (B) the expiration
date of such options set forth in the option awards. If
Mr. Chittipeddis employment terminates due to his
disability (as defined in the agreement), the
Company will continue to provide coverage under the
Companys health insurance plan to him and his eligible
dependents for 18 months after the date of his termination,
all of Mr. Chittipeddis options and non-performance
based restricted stock units will become fully vested, and
Mr. Chittipeddi may exercise all vested options until the
earlier of (A) the
15-month
anniversary of his termination date and (B) the expiration
date of such options set forth in the option awards.
Mr. Chittipeddi is restricted from competing with the
Company (to the extent permitted by law) or soliciting employees
or customers of the Company during and for 12 months after
the employment period.
Karen L. Roscher. Ms. Roscher served as
senior vice president and chief financial officer of the Company
from September 10, 2007 to December 15, 2008. On
August 24, 2007, the Company and Ms. Roscher entered
into an employment agreement setting forth the terms and
conditions of Ms. Roschers employment as senior vice
president and chief financial officer. An amendment to the
agreement was entered into on May 29, 2008. The agreement
provides that Ms. Roscher will serve as senior vice
president and chief financial officer from September 10,
2007 through September 9, 2009. Following that initial
term, the agreement will be automatically extended for
additional one-year terms, unless either party notifies the
other that it no longer wishes the extensions to continue. In
exchange for her services, Ms. Roscher will be paid an
initial annual base salary of $325,000 and will be eligible for
an annual performance bonus as determined by the Board of
Directors or the Compensation Committee, with a fiscal year 2008
annual target bonus of 60% of annual base salary, provided that
Ms. Roscher will receive a bonus of not less than $100,000
for fiscal year 2008, to be disbursed when normal bonuses are
paid. Ms. Roscher also received a special bonus of
$150,000, which is subject to repayment if Ms. Roscher
voluntarily terminates her employment for any reason, other than
as a result of death or disability (as defined in
the agreement), or if her employment is terminated by the
Company for cause (as defined in the agreement),
within one year. Pursuant to the agreement, as amended,
Ms. Roscher was to receive a retention bonus of $400,000 on
December 1, 2009, if she continued to be actively employed
by the Company through November 30, 2009. For future
periods, the Board of Directors or the Compensation Committee
was to determine Ms. Roschers annual base salary
(which may not be decreased) and annual target bonus.
Pursuant to the agreement, Ms. Roscher was granted
(i) options to purchase 100,000 shares of Company
Common Stock with an exercise price of $13.70 per share that
vest in three equal installments on the first, second and third
anniversaries of the commencement of her employment, and
(ii) 36,000 restricted stock units, which will vest in
equal installments on the first, second and third anniversaries
of the commencement date. She also received 25,000 performance
restricted stock units that will vest one-third if the Common
Stock sustains an average closing price of $30.00 over a 60
calendar day period, one-third if the Common Stock sustains an
average closing price of $45.00 over a 60 calendar day period
and one-third if the Common Stock sustains an average closing
price of $60.00 over a 60 calendar day period. Any unvested
portion of the performance restricted stock units will be
forfeited five years after the date of grant. In the event of a
change of control of the Company (as defined in the agreement,
which is substantially the same as under the summary for
Mr. Mercers agreement described above) (i) any
of the foregoing stock options and non-performance based
restricted stock units that are not vested will vest and
(ii) if not already vested, one-third of the foregoing
performance restricted stock units will vest if the closing
price of the Common Stock (or the price per share of Common
Stock in the corporate transaction that constitutes the
26
change of control) on the date of the change of control is at
least $30.00, an additional one-third will vest if such price is
at least $45.00 and an additional one-third will vest if such
price is at least $60.00.
Upon commencement of employment, in connection with her
relocation to California, Ms. Roscher received certain
relocation benefits, including allowances and reimbursements of
relocation, home finding, home selling, temporary living and
other expenses. These benefits are subject to (i) repayment
in full if Ms. Roscher voluntarily terminates her
employment or if her employment is terminated by the Company for
cause (as defined in her employment agreement)
within one year of her hire date or (ii) partial repayment
if such a termination occurs between one and two years of her
hire date.
On December 18, 2008, Company executed an agreement with
Karen L. Roscher (the Roscher Agreement) (which
became effective on December 26, 2008), pursuant to which
Ms. Roschers service as Senior Vice President and
Chief Financial Officer of the Company ceased effective as of
December 15, 2008 and on which date Ms. Roscher became
a non-executive employee of the Company, which position she held
through January 2, 2009. Pursuant to the Roscher Agreement,
the Company elected to terminate Ms. Roschers
employment as Senior Vice President and Chief Financial Officer
with the Company per section 8(b)(ii) of the original employment
agreement between Ms. Roscher and the Company dated
August 24, 2007 (and amended May 29, 2008) (the
2007 Agreement). Ms. Roscher will receive certain
compensation and benefits that she is entitled to receive
pursuant to the 2007 Agreement as a result of her termination
without cause (as defined in the 2007 Agreement)
from the Company. Pursuant to her employment agreement, Ms.
Roscher will receive a lump sum separation payment of $570,000
in full and final settlement of matters relating to her
employment with the Company, which payment will be paid within
30 days of January 2, 2009. In addition, all of
Ms. Roschers stock options and shares of
non-performance based restricted stock will vest and all vested
stock options may be exercised for 15 months from the date
of termination, after which time all of her stock options will
expire. In addition, Ms. Roscher is restricted until
January 2, 2010 from soliciting employees or customers of
the Company.
Mark D. Peterson. On February 18, 2008,
the Company and Mr. Peterson entered into an employment
agreement setting forth the terms and conditions of
Mr. Petersons employment as senior vice president,
chief legal officer and secretary of the Company. An amendment
to the agreement was entered into on May 29, 2008. The
agreement provides that Mr. Peterson will serve as senior
vice president, chief legal officer and secretary from
March 19, 2008 through March 18, 2010. Following that
initial term, the agreement will be automatically extended for
additional one-year terms, unless either party notifies the
other that it no longer wishes the extensions to continue. In
exchange for his services, Mr. Peterson will be paid an
annual base salary of $312,500 and will be eligible for an
annual performance bonus as determined by the Board of Directors
or the Compensation Committee. His fiscal year 2008 annual
target bonus was 60% of his base salary (pro-rated for time
worked in the fiscal year), provided that Mr. Peterson will
receive a bonus of not less than $100,000 for fiscal year 2008,
to be disbursed when normal bonuses are paid. Mr. Peterson
also received a special bonus of $75,000, which is subject to
repayment if Mr. Peterson voluntarily terminates his
employment for any reason, other than as a result of death or
disability (as defined in the agreement), or if his employment
is terminated by the Company for cause (as defined
in the agreement), within one year. Pursuant to the agreement,
as amended, Mr. Peterson also received a retention bonus of
$400,000, which is subject to repayment if Mr. Peterson is
terminated by the Company for cause or resigns other
than for good reason, on or before the 18 month anniversary
of the date of the amendment. For future periods, the Board of
Directors or the Compensation Committee will determine
Mr. Petersons annual base salary (which may not be
decreased) and annual target bonus. Pursuant to the agreement,
Mr. Peterson also received equity compensation awards of
(i) options to purchase 85,000 shares of Company
Common Stock with an exercise price of $4.50 per share that
vests in three equal installments on the first, second and third
anniversaries of the commencement of his employment, and
(ii) 25,000 restricted stock units, which will vest in
equal installments on the first, second and third anniversaries
of the commencement date.
Under the agreement, as amended, if the Company terminates
Mr. Petersons employment as senior vice president,
chief legal officer and secretary without cause or
if he resigns as senior vice president, chief legal officer and
secretary for good reason (each as defined in the
agreement), (i) the Company will
27
pay him a cash lump-sum equal to: (A) any unpaid salary
(and any other unpaid amounts) accrued through his termination
date and (B) $150,000; (ii) the Company will continue
to provide coverage under the Companys health insurance
plan to him and his eligible dependents for 18 months after
the date of his termination; and (iii) all of his options
and non-performance based restricted stock units will become
fully vested and Mr. Peterson may exercise all vested
options until the earlier of (A) the fifteen month
anniversary of the termination date and (B) the expiration
date of such options set forth in the option awards. In
addition, if Mr. Petersons employment terminates due
to his death, all of Mr. Petersons options and
non-performance based restricted stock units will become fully
vested, and Mr. Petersons estate may exercise all
vested options until the earlier of (A) the third
anniversary of his termination date and (B) the expiration
date of such options set forth in the option awards. If
Mr. Petersons employment terminates due to his
disability (as defined in the agreement), the
Company will provide continued coverage under the Companys
health insurance plan to him for 18 months after the date
of his termination, all of Mr. Petersons options and
non-performance based restricted stock units will become fully
vested, and Mr. Peterson may exercise all vested options
until the earlier of (A) the third anniversary of his
termination date and (B) the expiration date of such
options set forth in the option awards. Mr. Peterson is
restricted from competing with the Company (to the extent
permitted by law) or soliciting employees or customers of the
Company during and for 12 months after the employment
period.
Daniel A. Artusi. Mr. Artusi served as
president and chief executive officer and a director of the
Company from July 9, 2007 to April 14, 2008. The
Company and Mr. Artusi entered into an employment agreement
setting forth the terms and conditions of his employment as
president and chief executive officer. The agreement provided
that Mr. Artusi would serve as president and chief
executive officer from July 9, 2007 through July 8,
2009. Following that initial term, the agreement was to be
automatically extended for additional one-year terms, unless
either party notified the other that it no longer wished the
extensions to continue. Mr. Artusis initial annual
base salary was $550,000 and he was eligible for an annual
performance bonus as determined by the Board of Directors or the
Compensation Committee. His fiscal year 2007 annual target bonus
was 100% of annual base salary (pro-rated for time worked in the
fiscal year), provided that Mr. Artusi would receive a
bonus of not less than $150,000 for fiscal year 2007 and a bonus
of not less than $275,000 for fiscal year 2008, each to be
disbursed when normal bonuses are paid. Mr. Artusi also
received a special bonus of $100,000, which was subject to
repayment if Mr. Artusi voluntarily terminated his
employment for any reason, other than as a result of death or
disability (as defined in the agreement), or if his employment
was terminated by the Company for cause (as defined
in the agreement), within one year.
Pursuant to the agreement, Mr. Artusi was granted 300,000
stock options with an exercise price of $15.30 per share that
vest in three equal installments on the first, second and third
anniversaries of the grant date, 150,000 restricted stock units,
100,000 of which will vest in equal installments on the first,
second and third anniversaries of the grant date and 50,000 of
which will vest on the first anniversary of the grant date, and
100,000 performance RSUs that vest one-third if Conexant common
stock sustains an average closing price of $30.00 per share over
a 60 calendar day period, one-third if the common stock sustains
an average closing price of $45.00 per share over a 60 calendar
day period and one-third if the common stock sustains an average
closing price of $60.00 per share over a 60 calendar day period.
On April 21, 2008, the Company executed an agreement with
Mr. Artusi (the Artusi Agreement) pursuant to
which Mr. Artusis services as president and chief
executive officer ceased effective April 14, 2008 and
Mr. Artusi became a non-executive employee of the Company
until April 25, 2008. The Company elected to terminate
Mr. Artusis employment as president and chief
executive officer of the Company under the terms of the
employment agreement. As a result, Mr. Artusi will receive
certain compensation and benefits that Mr. Artusi is
entitled to receive pursuant to the employment agreement as a
result of his termination without cause (as defined
in the employment agreement) by the Company. Pursuant to his
employment agreement, the Company paid to him a lump-sum
separation payment of $2,716,438 which is equal to (i) a
pro-rata portion of his 2008 fiscal year bonus, (ii) two
times his annual base salary, (iii) two times his annual
target bonus and (iv) $200,000. The Company will continue
to provide him coverage under the Companys health
insurance plans for 18 months after his termination. All of
Mr. Artusis
28
unvested stock options and shares of non-performance based
restricted stock vested and he is entitled to exercise all
vested options until the earlier of (A) April 25,
2010, the second anniversary of his termination date, or
(B) the expiration date of such options set forth in the
option awards, after which time all his unexercised stock
options will expire. Mr. Artusi is restricted from
competing with the Company (to the extent permitted by law) or
soliciting employees or customers of the Company until
April 25, 2009.
Directors
Dwight W. Decker. On July 9, 2007,
Mr. Decker resigned from his position as chief executive
officer and continued to serve as non-executive chairman of the
Board and an employee of the Company by mutual agreement with
the Company (the Chairmanship Only Resumption) until
August 14, 2008, when he stepped down as chairman of the
Board. In accordance with the Agreement, his continued service
was on terms substantially similar to those contained in the
Prior Agreement. Mr. Decker was to serve as non-executive
chairman of the Board for as long as he continued as a director
of the Company, but at least two years and four months from the
date of his resignation as chief executive officer (i.e.,
the term remaining under the Prior Agreement at the time
Mr. Decker resumed the position of chief executive
officer). During the first four months following the
Chairmanship Only Resumption, Mr. Decker was paid his base
salary in effect at the time of his resignation as chief
executive officer. Beginning November 9, 2007, for each of
the two years of his employment following this four month
period, Mr. Decker was to be paid $100,000. During the
period following a Chairmanship Only Resumption, Mr. Decker
was to be eligible for such annual performance bonuses, if any,
as determined by the Board of Directors or the Compensation
Committee. If during the first year following a Chairmanship
Only Resumption, the Company terminated Mr. Deckers
employment as non-executive chairman of the Board without
cause or if he resigned for good reason,
he would be entitled to the separation benefits described in the
preceding paragraph, except that certain payments would be
calculated using the base salary in effect at the time of his
resignation as chief executive officer and other payments would
be based on two times his annual target bonus. Following the
first year, if the Company terminated Mr. Deckers
employment without cause or if he resigned for
good reason, he would be entitled to lesser
separation benefits and the Company would also pay him, as part
of the cash lump-sum, any unpaid target bonus for the fiscal
year in which his termination occurred. If Mr. Decker
resigned from his position as non-executive chairman of the
Board without good reason, all of his outstanding
unvested equity awards would become fully vested and he would be
able to exercise such awards for two years following his
resignation.
After stepping down as chairman of the Board on August 14,
2008, Mr. Decker continued to serve as a director of the
Company. On December 4, 2008, the Company and
Mr. Decker entered into an employment agreement which
replaces and supersedes any previous employment arrangements or
agreements between Mr. Decker and the Company and its
affiliates. Pursuant to the employment agreement,
Mr. Decker will serve as an advisor to and will report to
the chief executive officer, and his employment will be
considered on a part-time basis and allow Mr. Decker to
pursue other business interests. Mr. Deckers
employment will begin on December 4, 2008 and conclude on
December 31, 2009. Following that initial term, the
agreement will be automatically extended for additional one-year
terms, unless either party notifies the other that it no longer
wishes the extensions to continue. In exchange for his services,
Mr. Decker will be paid an initial annual base salary of
$100,000 through December 31, 2009. For future periods,
Mr. Deckers annual base salary will be determined by
the Board of Directors or the Compensation Committee (and may be
increased or decreased in their discretion). Through
December 31, 2009, if the Company grants equity awards to
members of the Board, the Company will grant Mr. Decker
twice the number of equity awards, and in the same form, granted
to other non-executive members of the Board during that time.
Thereafter, the Company will grant Mr. Decker equity awards
determined by the Board of Directors or Compensation Committee.
Mr. Decker will be entitled to employee benefits such as
health, dental, life and disability insurance and savings plan
participation.
If Mr. Deckers employment terminates for any reason,
the Company will promptly pay him any accrued but unpaid annual
base salary (and any other unpaid amounts) through his
termination date. If the Company terminates the employment
without cause (as defined in the agreement) before
December 31,
29
2009, then the Company will (i) continue to pay
Mr. Decker his annual base salary through December 31,
2009 in accordance with the Companys normal payroll
practices and (ii) continue to provide coverage under the
Companys health insurance plan to Mr. Decker and his
eligible dependents for 18 months following termination. If
Mr. Decker voluntarily terminates his employment, or the
Company terminates his employment without cause, on
or before December 31, 2009, all unvested options to
purchase Company Stock, shares of restricted Company Common
Stock and restricted stock units held by Mr. Decker will
become fully vested on his termination date, and, all vested
stock options may be exercised until the earlier of (A) the
second anniversary of his termination date, and (B) the
expiration date of such options set forth in the option award.
If a change of control (as defined in the agreement, and which
is substantially the same as under Mr. Mercers
agreement described above) occurs on or before December 31,
2009 and the Company terminates Mr. Deckers
employment on or before that date other than due to cause,
disability or death, then (i) the Company will pay to
Mr. Decker a lump-sum payment of $300,000; (ii) the
Company will continue to provide coverage under the
Companys health insurance plan to Mr. Decker and his
eligible dependents for 18 months following termination;
and (iii) all of his options, shares of restricted Company
Common Stock and restricted stock units will become fully vested
on the termination date and all vested stock options may be
exercised until (A) the earlier of the second anniversary
of the termination date and (B) the expiration date of such
options set forth in the option award. Mr. Decker is
restricted from competing with the Company (to the extent
permitted by law) or soliciting employees or customers of the
Company during and for 12 months after the employment
period.
Termination of
Employment and Change of Control Provisions of the Employment
Agreements
Agreements between the Company and each of Messrs. Mercer,
Scherp, Chittipeddi, Peterson, Artusi and Ms. Roscher
contain provisions pursuant to which, if Conexant terminates an
individuals employment without cause, if
Messrs. Mercer or Peterson resign for good
reason (as defined in the employment agreements), or if
the individual dies or is disabled, specified amounts will
become payable by Conexant to the individual and Conexant will
continue to provide certain benefits to the individual for a
specified period after the termination, unless and until the
individual receives similar benefits from another employer. Each
agreement also restricts the individual from competing with
Conexant or soliciting employees or customers of Conexant during
the employment period and for 12 months thereafter.
Pursuant to the agreements, certain outstanding equity awards
will vest upon death, disability, or the occurrence of a change
of control of the Company. In addition, under each agreement,
the individual will generally be made whole for any excise taxes
imposed by the Code on certain change of control payments.
For the purposes of the employment agreements, circumstances of
an executives termination are defined as follows:
1) Termination Due to Disability: An NEOs
employment will have terminated due to disability if, among
other items, the NEO is unable to engage in any substantial
gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in
death or can be expected to last for a continuous period of not
less than 12 months.
2) Termination for Cause: The Company will have
cause for termination if, among other items, the NEO
engages in gross negligence or willful conduct in the
performance of the executives duties which materially
injures the Company or its reputation.
3) Termination for Good Reason: Mr. Mercer may
voluntarily terminate his employment for good reason
if a material diminution in the executives authority,
duties or responsibilities, base salary or geographic location
has occurred. Mr. Peterson may voluntarily terminate his
employment for good reason if, in the absence of a
written consent of the executive, the Company requires the
executive to be based at any office or location more than fifty
miles from Newport Beach, California.
4) Termination Without Cause: The Company will have
terminated an NEO without cause if the NEOs employment has
been terminated by the Company for any reason other than
cause, for good reason, death or
disability.
30
5) After Change of Control, Termination without
Cause: Change of Control is defined generally as:
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the acquisition by any individual, entity or group of beneficial
ownership of 30% or more of either the then outstanding shares
of Conexant common stock or the combined voting power of the
then outstanding voting securities entitled to vote generally in
the election of directors;
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a change in the composition of a majority of the Conexant Board
of Directors which is not supported by the current Board of
Directors;
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a major corporate transaction, such as a reorganization, merger
or consolidation or sale or other disposition of all or
substantially all of Conexants assets, which results in a
change in the majority of the Board of Directors or of more than
50% of Conexants shareowners; or
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approval by Conexants shareowners of the complete
liquidation or dissolution of Conexant.
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Potential
Payments upon Termination of Employment or Change of
Control
The following table sets forth the amount of cash severance
compensation (including the fair market value of accelerated
stock awards valued as of October 3, 2008, which was $3.35
per share, and the assumed value of $0 for stock options, since
such stock options were out of the money with an
exercise price in excess of the $3.35 price per share of Company
common stock) and the estimated cost of health and welfare
benefits payable to each named executive officer upon death,
disability, a voluntary termination or termination for cause, a
termination without cause or for good reason and a termination
following a Change of Control assuming termination of employment
occurred on October 3, 2008. In the event that any of the
severance payments are subject to federal excise taxes under the
golden parachute provisions of the Code, Conexant
will provide certain named executive officers a
gross-up for
any such
31
excise taxes plus any excise, income or payroll taxes owed on
the payment of the
gross-up for
the excise taxes. Where applicable, these amounts are reflected
in the table under the Change of Control column.
Estimated
Potential Incremental Payments Upon Separation
Fiscal Year 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
After
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
Change of
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
|
without
|
|
|
Control,
|
|
|
|
|
|
|
|
|
|
Termination or
|
|
|
Cause
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
or for Good
|
|
|
without
|
|
|
|
Death ($)
|
|
|
Disability ($)
|
|
|
for Cause ($)
|
|
|
Reason(1) ($)
|
|
|
Cause ($)
|
|
|
D. Scott Mercer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,400,000
|
|
|
|
2,400,000
|
|
Health and Welfare Benefits (continuation)
|
|
|
|
|
|
|
7,423
|
|
|
|
|
|
|
|
7,423
|
|
|
|
7,423
|
|
Economic Value of Accelerated Equity(2)
|
|
|
670,000
|
|
|
|
670,000
|
|
|
|
|
|
|
|
670,000
|
|
|
|
670,000
|
|
280G Conditional Tax
Gross-Up
Amount(3)(4)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
954,558
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Estimated Incremental Value
|
|
|
670,000
|
|
|
|
677,423
|
|
|
|
0
|
|
|
|
3,077,423
|
|
|
|
4,031,981
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christian Scherp
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
675,000
|
|
|
|
675,000
|
|
|
|
|
|
|
|
800,000
|
|
|
|
800,000
|
|
Health and Welfare Benefits (continuation)
|
|
|
|
|
|
|
33,033
|
|
|
|
|
|
|
|
33,033
|
|
|
|
33,033
|
|
Economic Value of Accelerated Equity(2)
|
|
|
83,750
|
|
|
|
83,750
|
|
|
|
|
|
|
|
83,750
|
|
|
|
83,750
|
|
280G Conditional Tax
Gross-Up
Amount(5)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Estimated Incremental Value
|
|
|
758,750
|
|
|
|
791,783
|
|
|
|
0
|
|
|
|
916,783
|
|
|
|
916,783
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sailesh Chittipeddi
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
500,000
|
|
|
|
500,000
|
|
|
|
|
|
|
|
600,000
|
|
|
|
600,000
|
|
Health and Welfare Benefits (continuation)
|
|
|
|
|
|
|
20,768
|
|
|
|
|
|
|
|
20,768
|
|
|
|
20,768
|
|
Economic Value of Accelerated Equity(2)
|
|
|
83,750
|
|
|
|
83,750
|
|
|
|
|
|
|
|
83,750
|
|
|
|
83,750
|
|
280G Conditional Tax
Gross-Up
Amount(5)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Estimated Incremental Value
|
|
|
583,750
|
|
|
|
604,518
|
|
|
|
0
|
|
|
|
704,518
|
|
|
|
704,518
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Karen L. Roscher
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
570,000
|
|
|
|
570,000
|
|
Health and Welfare Benefits (continuation)
|
|
|
|
|
|
|
33,033
|
|
|
|
|
|
|
|
33,033
|
|
|
|
33,033
|
|
Economic Value of Accelerated Equity(2)
|
|
|
80,400
|
|
|
|
80,400
|
|
|
|
|
|
|
|
80,400
|
|
|
|
80,400
|
|
280G Conditional Tax
Gross-Up
Amount(3)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Estimated Incremental Value
|
|
|
80,400
|
|
|
|
113,433
|
|
|
|
0
|
|
|
|
683,433
|
|
|
|
683,433
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark D. Peterson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
475,000
|
|
|
|
475,000
|
|
|
|
|
|
|
|
625,000
|
|
|
|
625,000
|
|
Health and Welfare Benefits (continuation)
|
|
|
|
|
|
|
18,683
|
|
|
|
|
|
|
|
18,683
|
|
|
|
18,683
|
|
Economic Value of Accelerated Equity(2)
|
|
|
83,750
|
|
|
|
83,750
|
|
|
|
|
|
|
|
83,750
|
|
|
|
83,750
|
|
280G Conditional Tax
Gross-Up
Amount(5)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Estimated Incremental Value
|
|
|
558,750
|
|
|
|
577,433
|
|
|
|
0
|
|
|
|
727,433
|
|
|
|
727,433
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel A. Artusi(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
2,716,438
|
|
|
|
N/A
|
|
Health and Welfare Benefits (continuation)(7)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
20,560
|
|
|
|
N/A
|
|
Economic Value of Accelerated Equity(2)(8)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
1,190,020
|
|
|
|
N/A
|
|
280G Conditional Tax
Gross-Up
Amount(5)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Estimated Incremental Value
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
3,927,018
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Only Messrs. Mercer and Peterson receive benefits upon
Termination for Good Reason. |
|
(2) |
|
Options are valued at $0 as of October 3, 2008 (Change of
Control date). |
|
(3) |
|
Gross-up
only given if parachute payment is 10% above the IRS safe harbor
amount. |
32
|
|
|
(4) |
|
For Mr. Mercer, the 280G Conditional Tax
Gross-Up
Amount takes into account the annualization of his 2008 salary
and travel allowance paid since he became an employee in
April 2008. |
|
(5) |
|
Not eligible for
gross-up
payment. |
|
(6) |
|
Executive was terminated without cause, effective April 25,
2008. Separation benefits are derived from actual payouts as of
April 25, 2008. |
|
(7) |
|
Based on fourteen months of COBRA benefits yet to be reimbursed
per his employment agreement as of October 3, 2008. |
|
(8) |
|
A Black-Scholes-Merton Stock Option Percentage of 2.9% of the
date of termination stock price has been used to value the
options of Mr. Artusi which can be exercised until the
second anniversary of the Date of Termination. |
Equity
Compensation Plan Information
The following table provides information as of October 3,
2008 about shares of the Companys common stock that may be
issued upon the exercise of options, warrants and rights granted
to employees, consultants or directors under all of the
Companys existing equity compensation plans, including the
Companys 1998 Stock Option Plan, 1999 Long-Term Incentives
Plan, as amended, 2000 Non-Qualified Stock Plan, as amended,
Directors Stock Plan, as amended, Amended and Restated 2001
Employee Stock Purchase Plan, 1999 Non-Qualified Employee Stock
Purchase Plan, as amended, 2001 Performance Share Plan, and 2004
New-Hire Equity Incentive Plan, as well as the GlobespanVirata
1999 Equity Incentive Plan, 1999 Supplemental Stock Options
Plan, and Amended and Restated 1999 Stock Incentive Plan assumed
in the Companys merger with GlobespanVirata, Inc.
(collectively, the Equity Compensation Plans). The
table does not include information with respect to shares
subject to outstanding options granted under equity compensation
plans assumed by the Company in connection with other mergers
and acquisitions of the companies which originally granted those
options. Footnote (8) to the table sets forth the total
number of shares of the Companys common stock issuable
upon exercise of those assumed options as of October 3,
2008 and the weighted average exercise price of those options.
No additional options may be granted under these assumed plans.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Weighted
|
|
|
|
|
|
|
Securities to be
|
|
|
Average
|
|
|
Number of
|
|
|
|
Issued Upon
|
|
|
Exercise Price of
|
|
|
Securities Remaining
|
|
|
|
Exercise of
|
|
|
Outstanding
|
|
|
Available for Future
|
|
|
|
Outstanding
|
|
|
Options,
|
|
|
Issuance Under
|
|
|
|
Options, Warrants
|
|
|
Warrants and
|
|
|
Equity
|
|
|
|
and Rights
|
|
|
Rights
|
|
|
Compensation Plans
|
|
|
Equity compensation plans approved by shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock plans
|
|
|
1,812,527
|
(1)
|
|
$
|
31.44
|
|
|
|
2,910,044
|
(2)
|
ESPP (domestic)
|
|
|
|
|
|
|
|
|
|
|
511,865
|
(3)
|
Directors stock plan
|
|
|
181,822
|
|
|
$
|
27.60
|
|
|
|
97,198
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,994,349
|
|
|
|
|
|
|
|
3,519,107
|
|
Equity compensation plans not approved by shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock plans
|
|
|
5,010,837
|
|
|
$
|
20.39
|
|
|
|
3,517,423
|
|
2004 New Hire plan
|
|
|
560,502
|
(5)
|
|
$
|
13.27
|
|
|
|
1,044,464
|
|
ESPP (international)
|
|
|
|
|
|
|
|
|
|
|
224,884
|
(6)
|
Performance share plan
|
|
|
175,000
|
|
|
|
|
|
|
|
138,805
|
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
5,746,339
|
(8)
|
|
|
|
|
|
|
4,925,576
|
|
Grand Total
|
|
|
7,740,688
|
|
|
|
|
|
|
|
8,444,683
|
|
|
|
|
(1) |
|
Includes 225,000 RSUs which do not have an exercise price. |
|
(2) |
|
Includes shares of Conexant common stock issuable upon exercise
of outstanding options under the GlobespanVirata 1999 Equity
Incentive Plan, 1999 Supplemental Stock Option Plan and Amended |
33
|
|
|
|
|
and Restated 1999 Stock Incentive Plan assumed by Conexant in
connection with the Companys merger with GlobespanVirata,
Inc. |
|
(3) |
|
Includes shares of Conexant common stock subject to purchase
rights accruing under the Amended and Restated 2001 Employee
Stock Purchase Plan. The Amended and Restated 2001 Employee
Stock Purchase Plan provides that the maximum authorized shares
thereunder will be automatically increased by an additional
250,000 shares, or such lesser number as the Board may
determine, on October 1 of each year commencing with
October 1, 2003 and ending on October 1, 2012, for a
maximum increase of 2,500,000 additional shares. |
|
(4) |
|
Effective on October 1, 2007, the maximum number of shares
issuable under the Directors Stock Plan was automatically
increased by 369,272 (pre-reverse split) shares. The Directors
Stock Plan, as amended effective November 14, 2007 (the
Plan) provides that the maximum number of shares
under the Plan is automatically increased on the first day of
each fiscal year by an additional amount equal to the greater of
25,000 or 0.075% of the shares of Conexant common stock
outstanding on that date, subject to the Board of Directors
being authorized and empowered to select the smaller amount. |
|
(5) |
|
Includes 74,000 RSUs which do not have an exercise price. |
|
(6) |
|
Includes shares of Conexant common stock subject to purchase
rights accruing under the 1999 Non-Qualified Employee Stock
Purchase Plan. |
|
(7) |
|
Under the 2001 Performance Share Plan, the performance share
awards may be paid in shares of Conexant common stock, cash or
both. See Equity Compensation Plans Not
Approved by Shareowners Performance Share Plan
below. |
|
(8) |
|
The table does not include information for certain equity
compensation plans assumed by Conexant in connection with
mergers and acquisitions of the companies which originally
established those plans. As of October 3, 2008, a total of
89,777 shares of Conexant common stock were issuable upon
exercise of outstanding options under those assumed plans and
the weighted average exercise price of those outstanding options
was $107.72 per share. No additional options may be granted
under those assumed plans. |
Equity
Compensation Plans Not Approved by Shareowners
1999
Non-Qualified Employee Stock Purchase Plan
The Companys 1999 Non-Qualified Employee Stock Purchase
Plan (the Non-Qualified ESPP) was adopted by the
Board of Directors on May 14, 1999 and was subsequently
amended on August 13, 1999, July 18, 2002,
July 22, 2004, November 2, 2005 and August 15,
2007. The Non-Qualified ESPP has not been approved by the
Companys shareowners. Employees of the Companys
subsidiaries located in certain countries outside the
U.S. who are not officers or directors of the Company may
be eligible to participate in the Non-Qualified ESPP. As of
October 3, 2008, the Board of Directors reserved
590,000 shares of the Companys common stock for
issuance under the Non-Qualified ESPP, subject to adjustment
under certain circumstances.
The Non-Qualified ESPP permits eligible employees to purchase
shares of the Companys common stock at the end of each
offering period at 85% of the lower of the fair market value of
the Companys common stock on the first trading day of the
offering period or on the last trading day of the offering
period. Under the Non-Qualified ESPP, employees may authorize
the Company to withhold up to 15% of their compensation for each
pay period to purchase up to 200 shares per offering
period, subject to certain limitations. Offering periods
generally commence on the first trading day of February and
August of each year and are generally six months in duration,
but may be terminated earlier under certain circumstances. As of
October 3, 2008, an aggregate of 224,884 shares of the
Companys common stock were available for future purchases
under the Non-Qualified ESPP.
As of August 1, 2008, the Company has suspended the
Non-Qualified ESPP.
34
2000
Non-Qualified Stock Plan
The Companys 2000 Non-Qualified Stock Plan (the 2000
Plan) was adopted by the Board of Directors on
November 5, 1999 and was most recently amended on
February 26, 2003. The 2000 Plan has not been approved by
the Companys shareowners. The 2000 Plan authorizes grants
of non-qualified stock options and restricted stock. An
aggregate of 10,230,094 shares of the Companys common
stock are authorized for issuance or delivery under the 2000
Plan, provided that no more than 300,000 shares will be
available for grants of restricted stock, in each case, subject
to adjustment under certain circumstances.
Restricted stock may be granted only to employees, including
officers and directors who are employees, of the Company. Stock
options granted under the 2000 Plan will have an exercise price
per share equal to the fair market value per share of the
Companys common stock at the date of grant. Generally,
each option will vest in installments over a four year period,
with 25% of the shares becoming exercisable each year on the
anniversary of the date of grant. In connection with the
Companys Exchange Offer, replacement options granted on
June 14, 2005 under the 2000 Plan vest in installments over
a three-year period. Stock options granted under the 2000 Plan
may not be exercised after eight years from the date of grant.
As of October 3, 2008, an aggregate of
3,517,423 shares were available for future grants under the
2000 Plan.
At the time of the Companys merger with GlobespanVirata,
Inc. (the Merger), Conexant shareowners approved the
assumption and adoption by Conexant of GlobespanViratas
1999 Equity Incentive Plan, 1999 Supplemental Stock Option Plan
and Amended and Restated 1999 Stock Incentive Plan
(collectively, the GlobespanVirata stock plans).
Additionally, shareowners approved Conexants use of the
shares remaining available for grant under the GlobespanVirata
stock plans at the time of the Merger, as well as any additional
shares that may become available for grant under the
GlobespanVirata stock plans as a result of cancellations,
forfeitures, lapses or other terminations of outstanding awards
(in each case after adjustment to reflect the merger exchange
ratio), for grant of awards by Conexant after the Merger under
the GlobespanVirata stock plans or under Conexants stock
plans, including Conexants 1999 LTIP and the 2000 Plan. As
of October 3, 2008, a total of 2,144,796 shares were
available for issuance under these plans, which are included on
the Equity compensation plans approved by
shareowners section of the Equity Compensation Plan table.
2001 Performance
Share Plan
The Companys 2001 Performance Share Plan (the
Performance Share Plan) was adopted by the Board of
Directors on November 2, 2001. The Performance Share Plan
has not been approved by the Companys shareowners. An
aggregate of 400,000 shares of the Companys common
stock are authorized for grants of performance share awards
under the Performance Share Plan, subject to adjustment under
certain circumstances.
The Performance Share Plan permits eligible employees to receive
grants of performance share awards which vest based on
performance criteria and continued employment with the Company
from the grant date through the time of vesting. The value of
the performance share award will equal the fair market value of
the Companys common stock. Employees whose performance
share awards vest are entitled to receive a payment in the form
of shares of the Companys common stock, cash or both. As
of October 3, 2008, an aggregate of 138,805 shares of
the Companys common stock were available for future grants
under the Performance Share Plan.
2004 New-Hire
Incentive Plan
The Companys 2004 New-Hire Incentive Plan (the
New-Hire Plan) was adopted by the Board of Directors
on February 6, 2004. The New-Hire Plan has not been
approved by the Companys shareowners. An aggregate of
1,200,000 shares of the Companys common stock were
authorized for grants of stock or stock options under the
New-Hire Plan, subject to adjustment under certain
circumstances. The New-Hire Plan has an evergreen feature so
that at the start of each new fiscal year of the Company the
number of
35
shares authorized for grants is adjusted to add as many shares
as needed to bring the aggregate available shares up to
1,000,000.
The New-Hire Plan permits the Company to make grants of equity
compensation to new employees in a merger or acquisition or to
persons not previously a director of or employed by the Company,
or following a bona fide period of non-employment by the
Company, if the equity grant is a material inducement in the
persons entering into employment with the Company. As of
October 3, 2008, an aggregate of 1,044,464 shares of
the Companys common stock were available for future grants
under the New Hire Plan, which number of shares includes
additional shares that may have become available for grant as a
result of cancellations, forfeitures, lapses or other
terminations of outstanding awards.
CERTAIN
RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
Policies and
Procedures for Approval of Related Person
Transactions
Pursuant to the Audit Committees charter and applicable
Nasdaq rules, the Audit Committee is responsible for reviewing
and approving all related party transactions (as defined by the
Nasdaq rules).
Related Person
Transactions
Indemnification
Agreements
The Company has entered into indemnification agreements with
each of its directors and executive officers and with certain
other executives. The indemnification agreements require the
Company to indemnify these individuals to the fullest extent
permitted by Delaware law and to advance expenses incurred by
them in connection with any proceeding against them with respect
to which they may be entitled to indemnification by the Company.
Other
In connection with the spin-off by the Company of Mindspeed
Technologies, Inc. in June 2003, Mindspeed issued to Conexant a
warrant to purchase 6 million shares of Mindspeed common
stock at a price of $17.04 per share, exercisable until
June 27, 2013. Two of Conexants directors,
Messrs. Decker and Stead, are also directors of Mindspeed.
36
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
To Conexants knowledge, the following table sets forth
information regarding ownership of Conexants outstanding
common stock on November 27, 2008 by each director and
Named Executive Officer and all directors and executive officers
as a group. Except as otherwise indicated below and subject to
applicable community property laws, each owner has sole voting
and sole investment power with respect to the stock listed.
Beneficial
Ownership as of November 27, 2008
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
Name
|
|
Shares(1)(2)
|
|
|
Percent of Class(1)
|
|
|
William E. Bendush
|
|
|
|
|
|
|
|
*
|
Steven J. Bilodeau
|
|
|
|
|
|
|
|
*
|
Sailesh Chittipeddi
|
|
|
51,850
|
|
|
|
|
*
|
Dwight W. Decker
|
|
|
496,193
|
|
|
|
|
*
|
F. Craig Farrill
|
|
|
30,523
|
|
|
|
|
*
|
Balakrishnan S. Iyer
|
|
|
161,238
|
|
|
|
|
*
|
Matthew E. Massengill
|
|
|
|
|
|
|
|
*
|
D. Scott Mercer
|
|
|
232,914
|
|
|
|
|
*
|
Mark D. Peterson
|
|
|
|
|
|
|
|
*
|
Karen Roscher
|
|
|
90,143
|
|
|
|
|
*
|
Christian Scherp
|
|
|
68,500
|
|
|
|
|
*
|
Jerre Stead
|
|
|
33,276
|
|
|
|
|
*
|
All of the above persons
|
|
|
1,176,031
|
|
|
|
1.18
|
%
|
|
|
|
* |
|
Less than 1%. |
|
(1) |
|
For purposes of computing the percentage of outstanding shares
beneficially owned by each person, shares of which such person
has a right to acquire beneficial ownership within 60 days
have been included in both the number of shares owned by that
person and the number of shares outstanding, in accordance with
Rule 13d-3(d)(1)
under the Securities Exchange Act of 1934, as amended, or the
Exchange Act. |
|
(2) |
|
Includes 5,636 shares granted to Mr. Stead and
376 shares granted to Mr. Farrill as restricted stock
under the Conexant Directors Stock Plan. |
The following entities reported beneficial ownership of more
than 5% of the outstanding shares of Conexant common stock as of
the dates noted below. This information is based on Schedules
13G filed with the SEC on February 13 and July 17, 2008.
|
|
|
|
|
|
|
|
|
|
|
Percent of Outstanding
|
Name and Address
|
|
Number of Shares
|
|
Common Stock
|
|
T-Rowe Price Associates, Inc.
100 E. Pratt Street
Baltimore, MD 21202
|
|
|
3,104,885(1)
|
|
|
6.3%
|
|
|
|
|
|
|
(as of 12/31/07)
|
|
|
|
(1) |
|
Adjusted for the
1-for-10
reverse stock split effective June 27, 2008. |
Except as noted above, there are no persons known to Conexant to
be beneficial owners of more than 5% of any class of
Conexants voting securities outstanding as of
November 27, 2008.
37
PROPOSAL NO. 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
Deloitte & Touche LLP has been Conexants
independent auditors since 1998 and have been selected by the
Audit Committee of the Board of Directors as Conexants
independent auditors for the fiscal year ending October 2,
2009.
Before the Audit Committee appointed Deloitte & Touche
LLP, it carefully considered the qualifications of that firm,
including its performance in prior years and its reputation for
integrity and for competence in the fields of accounting and
auditing.
We are not required to submit the appointment of
Deloitte & Touche LLP for shareowner approval, but our
Board of Directors has elected to seek ratification of such
appointment. If our shareowners do not ratify this appointment,
the Audit Committee will reconsider its appointment of
Deloitte & Touche LLP and will either continue to
retain this firm or appoint new independent auditors.
A representative of Deloitte & Touche LLP is expected
to be present at the annual meeting and will have an opportunity
to make a statement if he or she so desires. The representative
will also be available to respond to appropriate questions from
shareowners.
The Conexant Board of Directors unanimously recommends a vote
FOR ratification of the appointment of
Deloitte & Touche LLP as independent auditors for
Conexant for the current fiscal year. Unless a contrary choice
is specified, proxies solicited by the Conexant Board of
Directors will be voted FOR ratification of
the appointment.
Principal
Accounting Fees and Services
The following table summarizes fees billed by
Deloitte & Touche LLP, the member firms of Deloitte
Touche Tohmatsu, and their respective affiliates (collectively,
Deloitte & Touche) for professional
services rendered for fiscal years 2007 and 2008.
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
Audit Fees
|
|
$
|
1,248,275
|
|
|
$
|
1,389,000
|
|
Audit-Related Fees
|
|
$
|
225,390
|
|
|
$
|
197,850
|
|
Tax Fees
|
|
$
|
92,007
|
|
|
$
|
51,704
|
|
All Other Fees
|
|
$
|
|
|
|
$
|
1,500
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,565,672
|
|
|
$
|
1,640,054
|
|
|
|
|
|
|
|
|
|
|
Audit Fees. This category includes the audit
of the Companys annual consolidated financial statements
and the audit of the Companys internal control over
financial reporting by Deloitte & Touche. This
category also includes reviews of interim financial statements
included in the Companys
Form 10-Q
quarterly reports.
Audit-Related Fees. This category includes
professional services rendered (i) for international
statutory audits, (ii) for certain
agreed-upon
procedures relating to the Companys credit facility, and
(iii) for certain accounting consultation services.
Tax Fees. This category includes professional
services rendered for tax consultations and tax compliance
matters, including preparation of domestic and foreign tax
returns.
All Other Fees. This category represents fees
billed by Deloitte & Touche for professional
subscription services.
All Audit-Related Fees, Tax Fees, and Other Fees are
pre-approved by the Audit Committee during meetings of the Audit
Committee. Pursuant to the adopted policy of the Audit
Committee, any fees requiring approval prior to an Audit
Committee meeting are pre-approved by the chairman of the Audit
Committee and are subsequently reviewed and approved by the
Audit Committee at its next meeting. All Audit-Related Fees, Tax
Fees, and Other Fees in for services rendered for fiscal years
2007 and 2008 were pre-approved in this manner.
38
OTHER
MATTERS
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires Conexants
directors and executive officers, and persons who own more than
10% of a registered class of Conexants equity securities,
to file reports of ownership of, and transactions in,
Conexants securities with the SEC. Such directors,
executive officers and 10% shareowners are also required to
furnish Conexant with copies of all section 16(a) forms
they file.
Based solely on a review of the copies of such forms received by
it, and on written representations from certain reporting
persons, Conexant believes that during fiscal 2008 its
directors, executive officers and 10% shareowners timely filed
all forms required to be filed under section 16(a).
2010 Shareowner
Proposals or Nominations
Shareowners of the Company may submit proposals that they
believe should be voted upon at the Companys Annual
Meetings of shareowners or nominate persons for election to the
Board of Directors. Pursuant to
Rule 14a-8
under the Exchange Act, some shareowner proposals may be
eligible for inclusion in the Companys proxy statement for
the Companys 2010 Annual Meeting of Shareowners. To be
eligible for inclusion in the Companys 2010 proxy
statement, any such shareowner proposals must be submitted in
writing to the Secretary of the Company no later than
September 4, 2009. The submission of a shareowner proposal
does not guarantee that it will be included in the
Companys proxy statement.
In addition, under the Companys Bylaws, a shareowner
desiring to present a shareowner proposal or nomination at the
Companys 2010 Annual Meeting of Shareowners must deliver
notice of such proposal or nomination in writing to the
Secretary of the Company not less than 90 days nor more
than 120 days prior to the anniversary of the 2009 Annual
Meeting, unless the date of the 2010 Annual Meeting is advanced
by more than 30 days or delayed (other than as a result of
adjournment) by more than 60 days from the anniversary of
the 2009 Annual Meeting. For the Companys 2010 Annual
Meeting, this means that any such proposal or nomination must be
submitted no earlier than October 21, 2009 and no later
than November 20, 2009. If the date of the 2010 Annual
Meeting is advanced by more than 30 days or delayed (other
than as a result of adjournment) by more than 60 days from
the anniversary of the 2009 Annual Meeting, the shareowner must
submit any such proposal or nomination no earlier than the close
of business on the 120th day prior to the 2010 Annual
Meeting and no later than the close of business on the later of
the 90th day prior to the 2010 Annual Meeting or the
10th day following the day on which public announcement of
the date of such meeting is first made. The shareowners
submission must include certain specified information concerning
the proposal or nominee, as the case may be, and information as
to the shareowners ownership of common stock of the
Company. Proposals or nominations not meeting these requirements
will not be entertained at the 2010 Annual Meeting. If the
shareowner does not also comply with the requirements of
Rule 14a-4
under the Exchange Act, the Company may exercise discretionary
voting authority under proxies it solicits to vote in accordance
with its best judgment on any such proposal or nomination
submitted by a shareowner. Shareowners should contact the
Secretary of the Company in writing at 4000 MacArthur Boulevard,
Newport Beach, California
92660-3095
to make any submission or to obtain additional information as to
the proper form and content of submissions.
Annual Report to
Shareowners and Financial Statements
The Companys Annual Report to Shareowners for fiscal year
2008, including the Annual Report on
Form 10-K
for the fiscal year ended October 3, 2008, is being made
available on the Internet and is being mailed to certain of the
Companys shareowners together with this proxy statement.
Copies of the Companys Annual Report on
Form 10-K
for the fiscal year ended October 3, 2008 will also be
furnished to interested shareowners, without charge, upon
written request and is also available on Conexants website
(www.conexant.com) under the Investor Relations section.
Exhibits to the
Form 10-K
will be furnished upon written request and payment of a fee of
fifteen cents per page covering the Companys costs.
Written requests should be directed to the Company at 4000
MacArthur Boulevard, Newport Beach, California
92660-3095,
Attention: Investor Relations
39
Other
Matters
At the date hereof, there are no other matters that the Board of
Directors intends to present, or has reason to believe others
will present, at the Annual Meeting. If other matters come
before the Annual Meeting, the persons named in the accompanying
form of proxy will vote in accordance with their best judgment
with respect to such matters.
Expenses of
Solicitation
The cost of the solicitation of proxies will be borne by the
Company. In addition to the use of the mails, proxies may be
solicited personally, by telephone or other electronic means, or
by a few employees of the Company without additional
compensation. The Company will also reimburse brokers and other
persons holding stock in their names, or in the names of
nominees, for their expenses for sending proxy materials to
principals and obtaining their proxies.
Delivery of
Documents to Shareowners Sharing an Address
The Company is delivering only one Notice of Internet
Availability, proxy statement and annual report to multiple
shareowners that share the same address unless we have received
contrary instructions from one or more of such shareowners. Upon
oral or written request, the Company will deliver promptly a
separate copy of the Notice of Internet Availability, this proxy
statement or the annual report to a shareowner at a shared
address to which a single copy of these documents was delivered.
If you are a shareowner at a shared address to which the Company
delivered a single copy of this proxy statement or the annual
report and you desire to receive a separate copy of the Notice
of Internet Availability, this proxy statement or the annual
report, or if you desire to notify us that you wish to receive a
separate copy of such materials in the future, or if you are a
shareowner at a shared address to which the Company delivered
multiple copies of each of these documents and you desire to
receive one copy in the future, please submit your request by
mail or telephone to the Company at 4000 MacArthur Boulevard,
Newport Beach, California
92660-3095,
Attention: Investor Relations,
(949) 483-4600.
If a broker, bank or other nominee holds your Conexant shares,
please contact the broker, bank or other nominee directly if you
have questions, require additional copies of the Notice of
Internet Availability, this proxy statement or the annual
report, or wish to receive separate copies of such materials in
the future by revoking your consent to householding.
January 6, 2009
40
CONEXANT SYSTEMS, INC.
4000 MACARTHUR BLVD.
NEWPORT BEACH, CA 92660
VOTE BY INTERNET -
www.proxyvote.com
Use the Internet to
transmit your voting
instructions and for
electronic delivery of
information up until 11:59
P.M. Eastern Time on
February 15, 2009 for plan
shares or February 17,
2009 for Registered
shares. Have your proxy
card in hand when you
access the web site and
follow the instructions to
obtain your records and to
create an electronic
voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by
our company in mailing proxy materials, you can
consent to receiving all future proxy statements,
proxy cards and annual reports electronically via
e-mail or the Internet. To sign up for electronic
delivery, please follow the instructions above to
vote using the Internet and, when prompted, indicate
that you agree to receive or access proxy materials
electronically in future years.
VOTE BY PHONE 1-800-690-6903
Use any touch-tone telephone to transmit your voting
instructions up until 11:59 P.M. Eastern Time on
February 15, 2009 for plan shares or February 17,
2009 for Registered shares. Have your proxy card in
hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in
the postage-paid envelope we have provided or return
it to Vote Processing, c/o Broadridge, 51 Mercedes
Way, Edgewood, NY 11717.
If you vote by Internet or
by telephone, you do NOT need to
mail back your proxy card.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
CONEX1 KEEP THIS PORTION FOR YOUR RECORDS
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY
CONEXANT SYSTEMS, INC. For Withhold For All To withhold authority to vote for any individual
All All Except nominee(s), mark For All Except and write the number(s) of the nominee(s) on the
line below.
The Board of Directors recommends a vote FOR proposals 1 and
2. If no voting instructions 0 0 0 are given, the proxy will
be voted as the Board of Directors recommends.
Vote on Directors
1. ELECTION OF FOUR DIRECTORS
Nominees:
01) William E. Bendush
02) Dwight W. Decker
03) F. Craig Farrill
04) Matthew E.
Massengill
Vote on Proposal For Against Abstain
2. RATIFICATION OF APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS. 0 0 0
Note: Please sign as name appears hereon. Joint owners should each sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title as such.
For address changes and/or comments, please check this box
and 0 write them on the back where indicated. |
Please indicate if you plan to attend this meeting. 0 0
Yes No
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date |
CONEXANT SYSTEMS, INC.
2009 Annual Meeting of Shareowners February 18, 2009 8:30 A.M. EST
The Westin Waltham Boston Hotel 70 Third Avenue Waltham, Massachusetts 02451
Important Notice Regarding the Availability of Proxy Materials for the Shareowners Meeting: The
Proxy Statement and 2008 Annual Report to Shareowners are available at www.proxyvote.com. Please
have your proxy card available.
The Board of Directors recommends a vote FOR each of the nominees for director and FOR each of the
other proposals.
CONEX2
PROXY CARD
CONEXANT SYSTEMS, INC.
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints D. Scott Mercer and Mark D. Peterson, and each of them, with
power to act without the other and with full power of substitution, as proxies and
attorneys-in-fact and hereby authorizes them to represent and vote, as provided on the other side,
all the shares of Conexant Systems, Inc. common stock which the undersigned is entitled to vote,
and, in their discretion, to vote upon such other business as may properly come before the Annual
Meeting of Shareowners of the Company to be held on February 18, 2009, or any adjournment thereof,
with all powers the undersigned would possess if present at the Meeting.
If you are a participant in the United Space Alliance Employee Stock Purchase Plan, you have
the right to direct Computershare Trust Company, as trustee (the Trustee) regarding how to vote
the shares of Conexant Systems, Inc. attributable to this account at the Annual Shareowner Meeting
to be held on February 18, 2009. These voting directions will be tabulated confidentially. Only the
Trustee and its affiliates or agents will have access to the individual voting directions.
To vote in accordance with the Board of Directors recommendations just sign and date the
other side; no boxes need to be checked.
Unless otherwise required by law, the shares attributable to this account will be voted as
directed; if no direction is made, if the card is not signed, or if the card is not received by
February 13, 2009, the shares attributable to this account will be voted in the same proportion as
directions received from participants in the plan.
Address Changes/Comments: ___
(If you noted any Address Changes/Comments above, please mark
corresponding box on the reverse side.)
(Continued and to be marked, dated and signed, on the other side) |