SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
CYMER, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
CYMER, INC.
------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 18, 2000
TO THE STOCKHOLDERS OF CYMER, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Annual Meeting") of CYMER, INC., a Nevada corporation (the "Company"), will be
held at 10:00 a.m., local time, on May 18, 2000, at the Company's corporate
offices, 16750 Via Del Campo Court, San Diego, California 92127, for the
following purposes:
1. To elect five (5) directors to serve for the ensuing year and until
their successors are elected.
2. To approve an amendment to the Company's 1996 Stock Option Plan to
increase the shares reserved for issuance thereunder by 1,400,000
shares.
3. To ratify the appointment of KPMG LLP as independent auditors of the
Company for the year ending December 31, 2000.
4. To transact such other business as may properly come before the Annual
Meeting or any postponements or adjournments thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on March 22, 2000
are entitled to notice of and to vote at the Annual Meeting.
All stockholders are cordially invited to attend the Annual Meeting in
person; however, to ensure your representation at the Annual Meeting you are
urged to mark, sign, date and return the enclosed proxy card as promptly as
possible in the postage prepaid envelope enclosed for that purpose. YOU MAY
REVOKE YOUR PROXY IN THE MANNER DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT AT
ANY TIME BEFORE IT HAS BEEN VOTED AT THE ANNUAL MEETING. ANY STOCKHOLDER
ATTENDING THE ANNUAL MEETING MAY VOTE IN PERSON EVEN IF HE OR SHE HAS RETURNED A
PROXY.
BY ORDER OF THE BOARD OF DIRECTORS
William A. Angus, III, Secretary
San Diego, California
April 18, 2000
CYMER, INC.
PROXY STATEMENT FOR THE
2000 ANNUAL MEETING OF STOCKHOLDERS
------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of CYMER, INC., a Nevada
corporation (the "Company") for use at the Annual Meeting of Stockholders (the
"Annual Meeting") to be held on Thursday, May 18, 2000, at 10:00 a.m., local
time, or at any adjournment or postponement thereof, for the purposes set forth
herein and in the accompanying Notice of Annual Meeting of Stockholders. The
Annual Meeting will be held at the Company's corporate offices, 16750 Via Del
Campo Court, San Diego, California 92127. The telephone number at that location
is (858) 385-7300. When proxies are properly dated, executed and returned, the
shares they represent will be voted at the Annual Meeting in accordance with the
instructions of the stockholder. If no specific instructions are given, the
shares will be voted for the election of the nominees for directors set forth
herein, for the ratification of the appointment of KPMG LLP as independent
auditors as set forth herein and, at the discretion of the proxy holders, upon
such other business as may properly come before the Annual Meeting or any
adjournment or postponement thereof.
These proxy solicitation materials and the Annual Report to
Stockholders for the year ended December 31, 1999, including financial
statements, were first mailed on or about April 18, 2000, to all stockholders
entitled to vote at the Annual Meeting.
RECORD DATE AND SHARES OUTSTANDING
Stockholders of record at the close of business on March 22, 2000 (the
"Record Date") are entitled to notice of and to vote at the Annual Meeting. At
the record date, 28,944,953 shares of the Company's Common Stock, $0.001 par
value (the "Common Stock"), were issued and outstanding. No shares of the
Company's Preferred Stock were outstanding.
REVOCABILITY OF PROXIES
Any proxy given pursuant to the solicitation may be revoked by the
person giving it at any time before it is voted. Proxies may be revoked by (i)
filing with the Secretary of the Company at or before the taking of the vote at
the Annual Meeting a written notice of revocation bearing a later date than the
proxy, (ii) duly executing a later dated proxy relating to the same shares and
delivering it to the Secretary of the Company at or before the taking of the
vote at the Annual Meeting or (iii) attending the Annual Meeting and voting in
person (although attendance at the Annual Meeting will not in and of itself
constitute a revocation of a proxy). Any written notice of revocation or
subsequent proxy should be delivered to Cymer, Inc. at 16750 Via Del Campo
Court, San Diego, California 92127, Attention: Secretary, or hand-delivered to
the Secretary of the Company at or before the taking of the vote at the Annual
Meeting.
VOTING AND SOLICITATION
Each stockholder is entitled to one vote for each share of Common Stock
on all matters presented at the Annual Meeting. Stockholders do not have the
right to cumulate their votes in the election of directors.
The costs of soliciting proxies will be borne by the Company. Proxies
may be solicited by directors, officers and employees of the Company in person
or by telephone, telegram or other means of communication. No additional
compensation will be paid for such services.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
The required quorum for the transaction of business at the Annual
Meeting is a majority of the votes eligible to be cast by holders of the shares
of Common Stock issued and outstanding on the Record Date. Shares that are voted
"FOR", "AGAINST" or "WITHHELD" with respect to a matter will be treated as being
present at the meeting for purposes of establishing a quorum. The Company
believes that abstentions (i.e., votes of "WITHHELD") and broker non-votes,
(i.e., the votes of shares held of record by brokers as to which the underlying
beneficial owners have given no voting instructions and such brokers have no
discretionary voting authority) should be counted for purposes of determining
the presence or absence of a quorum for the transaction of business. Thus,
abstentions and broker non-votes will make a quorum more readily obtainable, but
they will not otherwise affect the outcome of voting on a proposal.
STOCKHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
The Company currently intends to hold its 2001 Annual Meeting of
Stockholders in May 2001 and to mail Proxy Statements relating to such meeting
in April 2001. The date by which stockholder proposals must be received by the
Company for inclusion in the Proxy Statement and form of proxy for its 2001
Annual Meeting of Stockholders, is December 14, 2000. In addition, under the
Company's Bylaws, a stockholder wishing to make a proposal at the 2001 Annual
Meeting of Stockholders must submit such proposal to the Company on or prior to
February 27, 2001. All stockholder proposals should be submitted to Cymer, Inc.
at 16750 Via Del Campo Court, San Diego, California 92127, Attention: Secretary.
-2-
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
NOMINEES
A board of five (5) directors is to be elected at the Annual Meeting.
Unless otherwise instructed, the proxy holders will vote the proxies received by
them for the five (5) nominees named below, all of whom are presently directors
of the Company. In the event that any nominee is unable or declines to serve as
a director at the time of the Annual Meeting, the proxies will be voted for a
nominee who shall be designated by the present Board of Directors to fill the
vacancy. In the event that additional persons are nominated for election as
directors, the proxy holders intend to vote all proxies received by them in such
a manner as will assure the election of as many of the nominees listed below as
possible, and, in such event, the specific nominees to be voted for will be
determined by the proxy holders. The Company is not aware of any nominee who
will be unable or will decline to serve as a director. The term of office for
each person elected as a director will continue until the next annual meeting of
the stockholders and until such director's successor has been duly elected and
qualified.
VOTE REQUIRED
The five (5) nominees receiving the highest number of affirmative votes
of the shares entitled to be voted shall be elected to the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
NOMINEES LISTED BELOW.
The names of the nominees and certain information about them as of
March 22, 2000 are set forth below:
DIRECTOR
NAME OF NOMINEE AGE POSITION(S) WITH THE COMPANY SINCE
- --------------------------------------- --------- ------------------------------------------------------- --------
Robert P. Akins 48 Chairman of the Board of Directors, Chief Executive 1986
Officer and President
Richard P. Abraham(1) 70 Director 1987
Kenneth M. Deemer(2) 48 Director 1988
Peter J. Simone(2) 52 Director 1993
Jon D. Tompkins(1) 60 Director 1999
- ---------------------------------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
-3-
ROBERT P. AKINS, a co-founder of the Company, has served as its
President, Chief Executive Officer and Chairman of the Board since its inception
in January 1986. Mr. Akins received a B.S. in Physics and a B.A. in Literature
in 1974, and a Ph.D. in Applied Physics in 1983, from the University of
California, San Diego.
RICHARD P. ABRAHAM has served as a Director of the Company since
October 1987. From October 1994 to the present, Mr. Abraham has served as
Chairman and President of BTR, Inc., which licenses various technologies to the
semiconductor industry. From 1988 to 1996, Mr. Abraham served as a general
partner of Weeden Capital Partners. From 1988 to the present, Mr. Abraham has
served as a director of Rainbow Technologies, Inc., a maker of software
protection devices for the computer industry and encryption chips for the
satellite communications industry. Mr. Abraham received a B.S. in Electrical
Engineering in 1951, and an M.S. in Electrical Engineering in 1954, from
Stanford University.
KENNETH M. DEEMER has served as a Director of the Company since June
1988. Since 1985, Mr. Deemer has been a Vice President of InterVen Partners,
Inc., a venture capital firm and an affiliate of InterVen II, L.P., and InterVen
Ventures 1987. From January 1982 to June 1985, Mr. Deemer served as a Vice
President at First Interstate Capital, a venture capital firm. Mr. Deemer
received a B.S. in Physics and a B.S. in Electrical Engineering in 1975 from
Massachusetts Institute of Technology and an M.B.A. from Carnegie Mellon
University in 1979.
PETER J. SIMONE has served as a Director of the Company since July
1993. Mr. Simone is currently a consultant in private practice. From April 1997
to January 2000, Mr. Simone served as President and Chief Executive Officer and
director of Xionics Document Technologies, Inc., a provider of embedded software
solutions for printer and copier OEMs. From December 1992 to November 1996, he
served as Group Vice President of the Time/Data Systems Division of Simplex Time
Recorder Company, Inc., a manufacturer of time, attendance, building life safety
and security systems. From May 1987 to December 1992, he was President and a
director of GCA Corporation, a manufacturer of wafer stepper photolithography
equipment. Mr. Simone received a B.S. in Accounting from Bentley College in 1970
and an M.B.A. from Babson College in 1974.
JON D. TOMPKINS has served as a Director of the Company since May 1999.
Mr. Tompkins served as Chief Executive Officer of KLA-Tencor Corporation
("KLA-Tencor") from April 1997 until June 1998 and served as Chairman of the
Board of KLA-Tencor Corporation from July 1998 until his retirement in 1999. He
served as President and Chief Executive Officer of Tencor Instruments ("Tencor")
from April 1991 until Tencor's merger with KLA Instruments in April 1997 (the
"Merger") and Chairman of the Board from November 1993 until the Merger. He has
also previously served as President and Chief Executive Officer of
Spectra-Physics, a leader in the commercial laser market. Mr. Tompkins currently
serves on the Board of Directors of Electro Scientific Industries and is
Chairman of the Board of SEMI/SEMATECH, the trade association of United States
Manufacturers of Semiconducting Manufacturing Equipment and Materials. Mr.
Tompkins received a B.S.E.E. from the University of Washington and an M.B.A.
from Stanford University.
There are no family relationships among directors and executive
officers of the Company.
-4-
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of six meetings
during 1999. No director attended fewer than 75% of the total number of meetings
of the Board of Directors or committees of the Board of Directors held in 1999
during the period in which such directors were members of the Board of
Directors. The Board of Directors has a Compensation Committee, an Audit
Committee, and a committee with authority to grant options to purchase up to
25,000 shares of the Company's Common Stock to employees who are not officers of
the Company (the "Stock Option Committee").
The Audit Committee currently consists of Messrs. Simone and Deemer and
met three times during 1999. This committee is primarily responsible for
approving the services performed by the Company's independent auditors and for
reviewing and evaluating the Company's accounting principles and its system of
internal accounting controls.
The Compensation Committee currently consists of Messrs. Tompkins and
Abraham and met eight times during 1999. This committee reviews and approves the
Company's executive compensation policy and options plans.
The Stock Option Committee currently consists solely of Mr. Akins and
took action 27 times during 1999. This committee grants options to non-officer
employees of the Company.
DIRECTOR COMPENSATION
Directors receive $2,000 per meeting for their services as members of
the Board of Directors, $1,000 per committee meeting attended, and are
reimbursed for their expenses in attending out-of-town meetings. In connection
with his joining the Board of Directors in 1999, Mr. Tompkins was granted an
option expiring on May 20, 2009 to purchase 20,000 shares of the Company's
Common Stock at a per share exercise price of $21.84. The option will vest as to
25% of such shares on May 20, 2000, and as to 1/48 of such shares each month
thereafter.
As a result of proposed changes in accounting rules applicable to
options granted to non-employee directors, in January 1999 the Company granted
fully vested rather than gradually vesting options to its non-employee
directors. Accordingly, each non-employee director was granted a fully vested
option expiring on January 13, 2009 to purchase 5,000 shares of the Company's
Common Stock at a per share exercise price of $20.50. In view of the subsequent
rescission of the proposed changes to the accounting rules, the Company has now
returned to its traditional practices with respect to the vesting of options
granted to non-employee directors. Each non-employee director was therefore
granted in January 2000 an option expiring on January 10, 2010 to purchase 5,000
shares of the Company's Common Stock at a per share exercise price of $45.00.
Such options will vest as to 25% of such shares on January 10, 2001, and as to
1/48 of such shares each month thereafter.
-5-
PROPOSAL NO. 2 - APPROVAL OF A 1,400,000 SHARE INCREASE
IN SHARES ISSUABLE UNDER THE 1996 STOCK OPTION PLAN
The Company is seeking stockholder approval of an amendment to the
Company's 1996 Stock Option Plan (the "Stock Option Plan") which would increase
the number of shares issuable under the Stock Option Plan by 1,400,000 shares. A
summary of the Stock Option Plan (which assumes the adoption of the proposed
amendment) is included as APPENDIX A.
The Stock Option Plan was approved by the Board of Directors and by the
stockholders in July 1996. A total of 3,000,000 shares of Common Stock were
initially reserved for issuance under the Stock Option Plan. The Plan was
amended in 1998 and 1999 to add shares reserved for issuance, bringing the total
reserved for issuance to 5,500,000 shares. In February 2000, the Board of
Directors approved a further increase of 1,400,000 shares issuable under the
Stock Option Plan which, if approved by stockholders, would increase the total
shares under the Stock Option Plan since its inception to 6,900,000 shares. The
stockholders are being requested to approve this amendment.
Also in February 2000, the Board of Directors amended the Stock Option
Plan to (i) eliminate the Company's ability to grant options under the Stock
Option Plan having exercise prices less than the fair market value of the
Company's Common Stock at the date of grant (except pursuant to a merger or
other corporate transaction) and (ii) eliminate the Company's ability to lower
the exercise prices of outstanding options or to exchange outstanding options
for new options under the Stock Option Plan having lower exercise prices.
As of March 22, 2000, before giving effect to the proposed amendment,
options to purchase 4,060,056 shares of Common Stock were outstanding under the
Stock Option Plan, 671,768 shares had been issued by the Company upon exercise
of options under the Stock Option Plan and 758,176 shares remained available for
future option grants under the Stock Option Plan.
The Board believes that the proposed increase is in the best interests
of the Company for several reasons. First, the increase will provide an adequate
reserve of shares for issuance under the Stock Option Plan, which is an integral
part of the Company's overall compensation program. Second, the Board of
Directors believes the proposed increase is essential for the Company to compete
successfully against other companies in attracting and retaining key employees,
thereby facilitating the future potential growth of the Company. Third, the
Board of Directors believes the Stock Option Plan is an important contributor to
the alignment of employee and stockholder interests.
Grants were made to the Named Executive Officers (as defined in the
Summary Compensation Table below) and to the Company's non-employee directors
under the Stock Option Plan during the fiscal year ended December 31, 1999.
Options to purchase a total of 1,385,601 shares of Common Stock were issued to
non-executive-officer employees as a group under the Stock Option Plan during
fiscal 1999. All stock options granted under the Stock Option Plan during 1999
were issued at exercise prices ranging from $14.625 to $45.875 per share (which
exercise prices represented the closing prices of the Company's Common Stock on
The Nasdaq National Market on the dates immediately prior to the dates of
grant).
-6-
REQUIRED VOTE
The amendment of the Stock Option Plan to increase the number of shares
issuable thereunder by 1,400,000 shares requires the affirmative vote of the
holders of a majority of the shares of the Company's Common Stock represented in
person or by proxy and entitled to vote on the proposal. See "Voting and
Solicitation" above.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT
TO THE 1996 STOCK OPTION PLAN.
PROPOSAL NO. 3 - RATIFICATION OF
APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected KPMG LLP, independent auditors, as
of April 14, 2000 to audit the consolidated financial statements of the Company
for the fiscal year ending December 31, 2000 and recommends that stockholders
vote for ratification of such appointment. In the event of a negative vote on
such ratification, the Board of Directors will reconsider its selection.
On March 31, 2000, the Company dismissed Deloitte & Touche LLP as its
independent accountants. The decision to dismiss Deloitte & Touche LLP and
engage new auditors was recommended by the Audit Committee of Company's Board of
Directors and approved by the Company's Board of Directors. The Company believes
there were no disagreements with Deloitte & Touche LLP within the meaning of
Instruction 4 of Item 304 of Regulation S-K promulgated by the Securities and
Exchange Commission on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure in connection
with the audits of the Company's financial statements for the years ended
December 31, 1998 or 1999, or with respect to the subsequent period ended March
31, 2000, which disagreements if not resolved to their satisfaction would have
caused Deloitte & Touche LLP to issue an adverse opinion or a disclaimer of
opinion, and neither report contained an adverse opinion or disclaimer of
opinion or was qualified or modified as to uncertainty, audit scope or
accounting principles. During the two most recent fiscal years and through the
present, there have been no reportable events (as defined in Item 304 of
Regulation S-K) with Deloitte & Touche LLP. A letter from Deloitte & Touche LLP
addressed to the Securities and Exchange Commission was included as an exhibit
to the Company's Current Report on Form 8-K dated April 5, 2000. Such letter
states that Deloitte & Touche LLP agrees with the foregoing statements made by
the Company.
Representatives of both KPMG LLP and Deloitte & Touche LLP are expected
to be present at the Annual Meeting with the opportunity to make statements if
they desire to do so and are expected to be available to respond to appropriate
questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR
RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS THE COMPANY'S INDEPENDENT
AUDITORS.
-7-
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation earned in each of the
last three fiscal years by (i) the Chief Executive Officer, (ii) each of the
four other most highly compensated executive officers of the Company, and (iii)
one additional former executive officer of the Company for whom disclosure as
one of the Company's four other most highly compensated executive officers would
have been required but for the fact that such person was not serving as an
executive officer at the end of the last fiscal year (the foregoing collectively
the "Named Executive Officers"):
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------------------- --------------------------------
SECURITIES
UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) OPTIONS(#) COMPENSATION($)(2)
- ------------------------------------------------- --------- ------------- -------------- ------------ ------------------
Robert P. Akins............................... 1999 $ 291,584 $ 382,511 170,000 $ 3,751
Chairman of the Board of Directors, 1998 $ 349,588 $ -- 46,000 $ 4,336
Chief Executive Officer and President 1997 $ 248,654 $ 150,000 -- $ 3,685
William A. Angus, III......................... 1999 $ 194,385 $ 190,453 120,000 $ 4,378
Chief Financial Officer, Senior 1998 $ 223,307 $ -- 22,000 $ 5,898
Vice President and Secretary 1997 $ 198,654 $ 95,000 -- $ 4,254
Pascal Didier................................. 1999 $ 215,820 $ 211,455 60,000 $ 5,430
Senior Vice President, Worldwide 1998 $ 271,548 $ -- 200,000 $ 5,398
Customer Operations 1997 $ 160,846 $ -- -- $ 1,773
Edward P. Holtaway............................ 1999 $ 170,087 $ 166,647 110,000 $ 5,268
Senior Vice President, Process Quality 1998 $ 104,625 $ -- 80,000 $ 4,169
Wallace E. Breitman(3)........................ 1999 $ 116,923 $ 83,498 160,000 $ 2,785
Senior Vice President, Human Resources
and Administration
G. Scott Scholler(4).......................... 1999 $ 223,542 $ 221,603 20,000 $ 5,461
Senior Vice President, Operations 1998 $ 228,786 $ -- 22,000 $ 6,006
1997 $ 198,654 $ 95,000 -- $ 5,525
- ---------------------------------
(1) Due to the Company's financial performance in 1998, there were no
bonuses earned in that year.
(2) For fiscal 1998, the amounts shown include the following: (i) health
insurance premiums paid by the Company: Mr. Akins ($2,346), Mr. Angus
($3,267), Mr. Didier ($4,230), Mr. Holtaway ($4,230), Mr. Breitman
($1,791), and Mr. Scholler ($4,230); (ii) life insurance premiums paid
by the Company: Mr. Akins ($905), Mr. Angus ($611), Mr. Didier ($700),
Mr. Holtaway ($538), Mr. Breitman ($494), and Mr. Scholler ($731); and
(iii) Company contributions to 401(k) plan: Mr. Akins ($500), Mr. Angus
($500), Mr. Didier ($500), Mr. Holtaway ($500), Mr. Breitman ($500),
and Mr. Scholler ($500).
(3) Mr. Breitman joined Cymer on March 1, 1999.
(4) Mr. Scholler served as an executive officer of the Company through
November 6, 1999. He remains an employee of the Company but now serves
in an advisory capacity. His employment contract expires November 6,
2000.
-8-
OPTION GRANTS
The following table shows, as to the Named Executive Officers,
information concerning stock options granted during the fiscal year ended
December 31, 1999:
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS(1)
---------------------------------------------------------- POTENTIAL REALIZABLE VALUE AT
NUMBER OF % OF TOTAL ASSUMED ANNUAL RATES OF
SECURITIES OPTIONS STOCK PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM(2)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ------------------------------
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
- ------------------------------- ---------------- ------------- ------------- ----------- ------------- ---------------
Robert P. Akins................... 20,000 1% $ 20.50 1/13/09 $ 257,847 $ 653,434
150,000 7.5% $ 38.625 12/15/09 $3,643,658 $9,233,745
William A. Angus, III............. 20,000 1% $ 20.50 1/13/09 $ 257,847 $ 653,434
100,000 5% $ 38.625 12/15/09 $2,429,105 $6,155,830
Pascal Didier..................... 20,000 1% $ 20.50 1/13/09 $ 257,847 $ 653,434
40,000 2% $ 38.625 12/15/09 $ 971,642 $2,462,332
Edward P. Holtaway................ 80,000 4% $ 20.50 1/13/09 $1,031,388 $2,613,738
30,000 1.5% $ 38.625 12/15/09 $ 728,732 $1,846,749
Wallace E. Breitman............... 100,000 5% $ 19.125 5/12/09 $1,202,761 $3,048,032
60,000 3% $ 38.625 12/15/09 $1,457,463 $3,693,498
G. Scott Scholler................. 20,000 1% $ 20.50 1/13/09 $ 257,847 $ 653,434
- --------------------------
(1) These options were granted pursuant to the Company's 1996 Stock Option
Plan. All options expire 10 years from the date of grant, are not
transferable by the optionee (other than by will or the laws of descent and
distribution), and are exercisable during the optionee's lifetime only by
the optionee. The options become exercisable at the rate of 25% of the
total grant 12 month after the date of grant and 1/48 of the total grant
each month thereafter. The options are fully vested at four years from the
date of grant. To the extent exercisable at the time of employment
termination, options may be exercised for an additional three months.
(2) Potential gains are net of exercise price, but before taxes associated with
exercise. The amounts represent certain assumed rates of appreciation only,
based on Securities and Exchange Commission rules. Actual gains, if any, on
stock option exercises are dependent on the future performance of the
Common Stock, overall market conditions and option holders' continued
employment through the vesting period. The amounts reflected in this table
may not necessarily be achieved and do not reflect the Company's estimate
of future stock price growth.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES
The following table provides certain information concerning the
exercises of options during the fiscal year ended December 31, 1999, and the
unexercised options held as of December 31, 1999 by each of the Named Executive
Officers:
NUMBER OF SECURITIES VALUE OF UNEXERCISED
NO. OF UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT FY-END(#): OPTIONS AT FY-END($)(2):
ACQUIRED ON VALUE ----------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------ -------------- -------------- ------------ --------------- ------------ -------------
Robert P. Akins............. 305,716 $6,362,555 102,757 202,127 $4,130,982 $2,577,907
William A. Angus, III....... 65,000 $1,627,626 56,498 135,502 $2,295,575 $1,713,361
Pascal Didier............... -- $ -- 87,498 172,502 $2,050,734 $3,441,766
Edward P. Holtaway.......... -- $ -- 32,695 157,305 $ 960,416 $3,395,834
Wallace E. Breitman......... -- $ -- 0 160,000 $ -- $3,130,000
G. Scott Scholler........... 101,999 $3,304,512 79,625 47,376 $3,301,566 $1,465,758
- ------------------------
(1) Market value of underlying securities on date of exercise, minus the
exercise price multiplied by the number of shares.
(2) Market value of underlying securities at fiscal year end, minus the
exercise price multiplied by the number of shares.
-9-
EMPLOYMENT AGREEMENTS; CHANGE-IN-CONTROL ARRANGEMENTS
The Company has entered into agreements with Messrs. Akins, Angus,
Didier, Holtaway and Breitman and certain other officers and key employees under
which such individuals are entitled to certain benefits in the event their
employment with the Company is involuntarily terminated other than for cause
within 18 months after a "change of control" of the Company. In such event, such
individuals are entitled to receive for a specified number of months (i) a
continuation of their monthly base compensation as well as monthly payments
equivalent to one-twelfth of the average of their annual bonus amounts for the
prior three years, (ii) a percentage of the bonus that would otherwise be
payable for the year of termination based on the number of days during the year
in which the individual was employed by the Company, (iii) vesting of all
unvested stock options and (iv) a continuation of medical benefits. Under the
agreements, Mr. Akins would be entitled to benefits for 18 months and Messrs.
Angus, Didier, Holtaway and Breitman would be entitled to benefits for 12
months. Mr. Akins and Mr. Angus are also entitled to similar benefits if they
voluntarily resign from the Company within the 30-day period beginning one year
after a change of control. For purposes of the agreements, involuntary
termination includes a significant reduction in duties or responsibilities, a
substantial reduction without good business reason in facilities and perquisites
available to the employee, a material reduction in compensation, a significant
reduction in the employee's benefits package, relocation without consent,
termination other than for death, disability or cause, and failure of a
successor company to assume the agreement. A mechanism is provided in the
agreements to limit payments in the event they would result in the levy of an
excise tax under Section 4999 of the Internal Revenue Code of 1986.
"Change of control" is defined in the agreements as (i) the acquisition
by a person or entity of 50% of the voting power of the Company, (ii) a change
in the composition of the Board of Directors within a two-year period as a
result of which fewer than a majority of the directors are persons who were
either directors of the Company on the date of the respective agreement or who
were elected or nominated by a majority of such persons, or (iii) a merger
resulting in a 50% or greater change in voting power or a sale of all or
substantially all of the Company's assets.
The agreements do not provide for a specified term of employment, which
remains terminable at will by the Company. The agreements specify minimum base
compensation levels for the executives, namely, $525,000 for Mr. Akins, $220,000
for Mr. Angus, $230,000 for Mr. Didier, $195,000 for Mr. Holtaway, and $135,000
for Mr. Breitman.
In November 1999 Mr. Scholler resigned as an executive officer of the
Company, but will through November 6, 2000 remain an employee of the Company in
an advisory capacity at the same monthly salary and other benefits as prior to
such resignation.
-10-
REPORT OF THE COMPENSATION COMMITTEE
OVERVIEW AND PHILOSOPHY
The Compensation Committee (the "Committee") of the Board of Directors
regularly reviews and approves all executive officer compensation and stock
option grants. Executive compensation includes the following elements: base
salaries, annual incentives, stock options and various benefit plans.
The Committee is composed of two independent, outside directors. It is
the Committee's objective that executive compensation be tied directly to the
achievement of the Company's performance objectives. Specifically, the Company's
executive compensation program is designed to reward exceptional executive
performance that results in enhanced corporate and stockholder values.
The Committee recognizes that the industry sector in which the Company
operates is both highly competitive and undergoing significant globalization,
with the result that there is substantial demand for qualified, experienced
executive personnel. The Committee considers it crucial that the Company be
assured of retaining and rewarding its top caliber executives who are essential
to the attainment of the Company's ambitious long-term, strategic goals.
For these reasons, the Committee believes the Company's executive
compensation arrangements must remain competitive with those offered by other
companies of similar size, scope, performance levels and complexity of
operations, including some, but not all, of the companies comprising the Nasdaq
100 Index and the Nasdaq Computer Industry & DP Index.
ANNUAL CASH COMPENSATION
The Committee believes that the annual cash compensation paid to
executives should be commensurate with both the executive's and the Company's
performance. For this reason, the Company's executive cash compensation consists
of base compensation (salary) and variable incentive compensation (annual
bonus).
Base salaries for executive officers are established considering a
number of factors, including the Company's profitability; the executive's
individual performance and measurable contribution to the Company's success; and
pay levels of similar positions with comparable companies in the industry. The
Committee supports the Company's compensation philosophy of moderation for
elements such as base salary and benefits. Base salary decisions are made as
part of the Company's formal annual review process. Generally, base salaries for
executive officers are maintained at approximately the 50th percentile of
salaries paid by similar size, high technology companies.
-11-
Under the Company's executive incentive plan (EIP), an executive's
annual performance award generally depends on two performance factors: the
overall financial performance of the Company and the executive's individual
performance. The performance objectives of the Company were derived from the
Company's Board-approved 1999 business plan, which included specific financial
performance targets relating to revenue and profits. No payments are made unless
minimum operating income targets are met. These targets are reviewed annually to
meet the changing nature of the Company's business. The maximum bonus as a
percentage of base salary when annual corporate goals are achieved is 100% for
the Chief Executive Officer, 75% for Messrs. Angus, Didier and Holtaway, and 50%
for Mr. Breitman. Under the EIP, each executive's annual performance award may
exceed these stated maximums if the Company's financial performance exceeds 100%
of the financial targets in that year's business plan. In such cases, the actual
percentage of each executive's performance award will vary in relation to the
percentage by which the Company's targets for that year are exceeded. The
Committee annually reviews and approves specific targets and performance
criteria for each executive.
STOCK OPTIONS
During 1999 the Compensation Committee approved all stock option grants
made to executive officers under the Stock Option Plan. The Stock Option Plan is
designed to attract, retain and motivate the Company's officers and other
participants by providing them with a meaningful stake in the Company's
long-term success.
In making its determinations, the Compensation Committee takes into
consideration: (i) grants made to individuals in similar positions in comparable
high technology companies, (ii) participants' contributions to the Company's
performance, both short- and long-term, (iii) prior stock option grants,
especially as they relate to the number of options vested and unvested and (iv)
the impact that total option grants made to all participants have on dilution of
current stockholder ownership and the Company's earnings.
Stock option grants made to the Named Executive Officers are set forth in the
table of option grants during the last fiscal year set forth above. See
"Executive Compensation--Option Grants."
BENEFITS
The Company provides benefits to the named executive officers that are
generally available to all Company employees. The amount of executive level
benefits and perquisites, as determined in accordance with the rules of the
Securities and Exchange Commission relating to executive compensation, did not
exceed 10% of total salary and bonus for fiscal year 1999 for any executive
officer.
-12-
CHIEF EXECUTIVE OFFICER'S COMPENSATION
Compensation for the Chief Executive Officer is determined by a process
similar to that discussed above for executive officers. Mr. Akins' base
compensation for fiscal 1999, which was established by the Compensation
Committee in 1998, was $300,000, which was equal to his 1998 base compensation.
The Committee also established Mr. Akins' bonus for fiscal 1999 in
accordance with the EIP described above. During 1999 Mr. Akins received
incentive bonuses of $382,511 due to the Company's financial performance.
During 1999 Mr. Akins was granted options to purchase 170,000 shares of
the Company's Common Stock.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is composed of Jon D. Tompkins and Richard
P. Abraham who are non-employee directors with no interlocking relationships as
defined by the Securities and Exchange Commission.
Compensation Committee
Jon D. Tompkins
Richard P. Abraham
-13-
PERFORMANCE GRAPH FOR CYMER, INC.
The following line graph compares the cumulative total return to
stockholders of the Company's Common Stock since September 19, 1996 (the date
the Company first became subject to the reporting requirements of the Exchange
Act) to the cumulative total return over such period of (i) the Nasdaq Composite
Index and (ii) the Morgan Stanley High Tech 35 Index. The information contained
in the Performance Graph shall not be deemed to be "soliciting material" or to
be "filed" with the Commission, nor shall such information be incorporated by
reference into any future filing under the Securities Act or the Exchange Act,
except to the extent that the Company specifically incorporates it by reference
into such filing.
The graph assumes that $100 was invested on September 19, 1996 in the
Company's Common Stock at the closing price of $4.75 per share at the end of the
first day of trading in the Common Stock following the Company's initial public
offering (as adjusted to reflect the Company's 2-for-1 stock split effective
August 21, 1997) and in each index, and that all dividends were reinvested. No
dividends have been declared or paid on the Company's Common Stock. Stockholder
returns over the period indicated should not be considered indicative of future
stockholder returns.
CYMER, INC.
NASDAQ COMPOSITE INDEX
MORGAN STANLEY HIGH TECH 35 INDEX
[GRAPH IS ON FACING PAGE]
-14-
Comparison of Five-Year Cumulative Total Returns
Performance Graph for
CYMER, INC.
PREPARED BY THE CENTER FOR RESEARCH IN SECURITY PRICES
Produced on 4/11/2000 including data to 12/31/1999
[GRAPH]
- --------------------------------------------------------------------------------------------
LEGEND
Symbol CRSP Total Returns Index for: 09/1996 12/1996 12/1997 12/1998 12/1999
- -------- ----------------------------- ------- ------- ------- ------- -------
- CYMER, INC. 100.0 353.2 220.2 214.7 675.2
* Nasdaq Stock Market (US Companies) 100.0 106.3 130.2 183.6 339.7
^ Self-determined Peer Group 100.0 113.2 148.3 280.5 509.5
NOTES:
A. The lines represent monthly index levels derived from compounded
daily returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on
the previous trading day.
C. If the monthly interval based on the fiscal year-end is not a
trading day, the preceding trading day is used.
D. The index level for all series was set to $100.00 on 9/19/1996.
E. The Companies in the self-determined peer group are the same as
those in the Morgan Stanley High Technology 35 Index.
- --------------------------------------------------------------------------------------------
-15-
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of March 22, 2000 (except as noted)
certain information with respect to the beneficial ownership of the Company's
Common Stock by (i) each person known by the Company to own beneficially more
than 5% of the outstanding shares of Common Stock, (ii) each director of the
Company, (iii) each of the Named Executive Officers set forth in the Summary
Compensation Table, and (iv) all directors and executive officers as a group.
Except as indicated in the footnotes to this table, the persons and entities
named in the table have sole voting and investment power with respect to all
shares of Common Stock shown as beneficially owned by them, subject to community
property laws where applicable.
SHARES OF COMMON STOCK
BENEFICIALLY OWNED(1)
----------------------------------
PERCENTAGE
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER OWNERSHIP
- --------------------------------------------------------------------------------- ------------------ --------------
Capital Research and Management Company(2) 1,546,800 5.3%
333 South Hope Street, 55th Floor
Los Angeles, CA 90071
Robert P. Akins(3) 478,040 1.6%
William A. Angus, III(3) 86,914 *
Pascal Didier(3) 116,259 *
Edward P. Holtaway(3) 36,939 *
Wallace E. Breitman(3) 27,165 *
G. Scott Scholler(3) 112,635 *
Richard P. Abraham(3) 154,782 *
Kenneth M. Deemer(3) 42,882 *
Peter J. Simone(3) 5,000 *
Jon D. Tompkins(3) 5,000 *
All directors and executive officers as a group (9) persons 1,065,516 3.6%
- --------------------------
* Less than 1%.
(1) Applicable percentage of ownership is based on shares of
Common Stock outstanding as of March 22, 2000 together with
applicable options for such stockholder. Beneficial ownership
is determined in accordance with the rules of the Securities
and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of Common
Stock subject to options or warrants currently exercisable or
exercisable within 60 days are deemed to be beneficially owned
by the person holding such option or warrant for computing the
percentage ownership of such person, but are not treated as
outstanding for computing the percentage of any other person.
(2) Capital Research and Management Company, a registered
investment adviser, claims sole dispositive but no voting
power as to these shares. The Capital Research and Management
Company disclaims beneficial ownership of such shares pursuant
to Rule 13d-4 under the Securities Exchange Act of 1934, as
amended. Information provided in this footnote is based solely
on a Schedule 13G filed February 11, 2000.
-16-
(3) Includes the following number of shares issuable upon exercise
of options exercisable as of, or that will have become
exercisable within 60 days of, March 22, 1999: Mr. Akins,
36,164 shares; Mr. Angus, 1,914 shares; Mr. Didier, 114,996
shares; Mr. Holtaway, 36,664 shares; Mr. Breitman, 27,081
shares; Mr. Scholler, 86,916 shares; Mr. Abraham, 40,000
shares; Mr. Deemer, 20,000 shares; Mr. Simone, 5,000 shares;
and Mr. Tompkins, 5,000 shares.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act of 1934, as amended, and regulations
of the Securities and Exchange Commission (the "SEC") thereunder require the
Company's officers and directors, and persons who own more than 10% of a
registered class of the Company's equity securities, to file reports of initial
ownership and changes in ownership with the SEC. Based solely on its review of
copies of such forms received by the Company, or on written representations from
certain reporting persons that no other reports were required for such persons,
the Company believes that, during or with respect to the period from January 1,
1999 to December 31, 1999, all of the Section 16(a) filing requirements
applicable to its officers, directors and 10% stockholders were complied with,
except that one Form 4 for Mr. Abraham, and one Form 4 for Roger Green, Vice
President of Knowledge Management and Chief Information Officer, were not timely
filed.
OTHER MATTERS
The Company knows of no other matters to be brought before the Annual
Meeting. If any other matters properly come before the Annual Meeting, it is the
intention of the persons named in the accompanying proxy to vote the shares
represented as the Board of Directors may recommend.
THE BOARD OF DIRECTORS
By: William A. Angus, III, Secretary
Dated: April 18, 2000
-17-
APPENDIX A
SUMMARY OF 1996 STOCK OPTION PLAN
GENERAL. The purpose of the Plan is to attract and retain the best
available personnel for positions of substantial responsibility with the
Company, to provide additional incentive to the employees, directors and
consultants of the Company and to promote the success of the Company's business.
Options granted under the Plan may be either "incentive stock options," as
defined in Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), or nonstatutory stock options.
NUMBER OF SHARES ISSUABLE UNDER PLAN. Assuming approval by the
stockholders of the 1,400,000 share increase recommended by the Board of
Directors, the maximum aggregate number of shares of the Company's Common Stock
which may be optioned and sold under the Plan is 6,900,000 shares. If an option
expires or becomes unexercisable without having been exercised in full, the
unpurchased shares which were subject thereto shall become available for future
grant or sale under the Plan. Shares that have actually been issued under the
Plan shall not be returned to the Plan and shall not become available for future
distribution under the Plan, except for any shares of restricted stock which are
repurchased by the Company at their original purchase price.
ADMINISTRATION. The Plan may generally be administered by the Board or
the Committee appointed by the Board (as applicable, the "Administrator"). The
Administrator may make any determinations deemed necessary or advisable for the
Plan. The Administrator does not, however, under the Plan have authority to
lower the exercise prices of outstanding options or to exchange outstanding
options for new options having lower exercise prices.
ELIGIBILITY. Nonstatutory stock options may be granted under the Plan
to employees, directors and consultants of the Company and any parent or
subsidiary of the Company. Incentive stock options may be granted only to
employees. The Administrator, in its discretion, selects the employees,
directors and consultants to whom options may be granted, the time or times at
which such options and stock purchase rights shall be granted, and the number of
shares subject to each such grant.
LIMITATIONS. Section 162(m) of the Code places limits on the
deductibility for federal income tax purposes of compensation paid to certain
executive officers of the Company. In order to preserve the Company's ability to
deduct the compensation income associated with options granted to such persons,
the Plan provides that no employee, director or consultant may be granted, in
any fiscal year of the Company, options to purchase more than 500,000 shares of
Common Stock. Notwithstanding this limit, however, in connection with such
individual's initial employment with the Company, he or she may be granted
options to purchase up to an additional 500,000 shares of Common Stock.
TERMS AND CONDITIONS OF OPTIONS. Each option is evidenced by a stock
option agreement between the Company and the optionee, and is subject to the
following additional terms and conditions:
(a) EXERCISE PRICE. The Administrator determines the exercise
price of options at the time the options are granted. The exercise price of an
option under the Plan may not be less than 100% of the fair market value of the
Common Stock on the date such option is granted; provided, however, the exercise
price of an incentive stock option granted to a 10% stockholder may not be less
than 110% of the fair market value
A-1
of the Common Stock on the date such option is granted. The fair market value of
the Common Stock is generally determined with reference to the closing sale
price for the Common Stock (or the closing bid if no sales were reported) on the
last market trading day prior to the date the option is granted.
(b) EXERCISE OF OPTION; FORM OF CONSIDERATION. The Administrator
determines when options become exercisable, and may in its discretion,
accelerate the vesting of any outstanding option. The means of payment for
shares issued upon exercise of an option is specified in each option agreement.
The Plan permits payment to be made by cash, check, promissory note, other
shares of Common Stock of the Company (with some restrictions), cashless
exercises, a reduction in the amount of any Company liability to the optionee,
any other form of consideration permitted by applicable law, or any combination
thereof.
(c) TERM OF OPTION. The term of an incentive stock option may be
no more than ten (10) years from the date of grant; provided that in the case of
an incentive stock option granted to a 10% stockholder, the term of the option
may be no more than five (5) years from the date of grant. No option may be
exercised after the expiration of its term.
(d) TERMINATION OF EMPLOYMENT. If an optionee's employment or
consulting relationship terminates for any reason (including death or
disability), then all options held by the optionee under the Plan expire on the
earlier of (i) the date set forth in his or her notice of grant or (ii) the
expiration date of such option. The Plan and the option agreement may provide
for a longer period of time for the option to be exercised after the optionee's
death or disability than for other terminations. To the extent the option is
exercisable at the time of such termination, the optionee (or the optionee's
estate or the person who acquires the right to exercise the option by bequest or
inheritance) may exercise all or part of his or her option at any time before
termination.
(e) NONTRANSFERABILITY OF OPTIONS: Unless otherwise determined by
the Administrator, options granted under the Plan are not transferable other
than by will or the laws of descent and distribution, and may be exercised
during the optionee's lifetime only by the optionee.
(f) OTHER PROVISIONS: The stock option agreement may contain other
terms, provisions and conditions not inconsistent with the Plan as may be
determined by the Administrator.
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event that the stock
of the Company changes by reason of any stock split, reverse stock split, stock
dividend, combination, reclassification or other similar change in the capital
structure of the Company effected without the receipt of consideration,
appropriate adjustments shall be made in the number and class of shares of stock
subject to the Plan, the number and class of shares of stock subject to any
option outstanding under the Plan, and the exercise price of any such
outstanding option.
In the event of a liquidation or dissolution, any unexercised options
will terminate. The Administrator may, in its discretion provide that each
optionee shall have the right to exercise all of the optionee's options,
including those not otherwise exercisable, until the date ten (10) days prior to
the consummation of the liquidation or dissolution.
In connection with any merger, consolidation, acquisition of assets or
like occurrence involving the Company, each outstanding option shall be assumed
or an equivalent option or right substituted by the successor corporation. If
the successor corporation refuses to assume the options or to substitute
substantially equivalent options, the optionee shall have the right to exercise
the option as to all the optioned stock,
A-2
including shares not otherwise exercisable. In such event, the Administrator
shall notify the optionee that the option is fully exercisable for fifteen (15)
days from the date of such notice and that the option terminates upon expiration
of such period.
AMENDMENT AND TERMINATION OF THE PLAN. The Board may amend, alter,
suspend or terminate the Plan, or any part thereof, at any time and for any
reason. However, the Company shall obtain stockholder approval for any amendment
to the Plan to the extent necessary and desirable to comply with applicable law.
No such action by the Board or stockholders may alter or impair any option or
stock purchase right previously granted under the Plan without the written
consent of the optionee. Unless terminated earlier, the Plan shall terminate ten
years from the date of its approval by the stockholders or the Board of the
Company, whichever is earlier.
FEDERAL INCOME TAX CONSEQUENCES
INCENTIVE STOCK OPTIONS. An optionee who is granted an incentive stock
option does not recognize taxable income at the time the option is granted or
upon its exercise, although the exercise is an adjustment item for alternative
minimum tax purposes and may subject the optionee to the alternative minimum
tax. Upon a disposition of the shares more than two years after grant of the
option and one year after exercise of the option, any gain or loss is treated as
long-term capital gain or loss. Currently, long-term capital gains may be taxed
at a maximum federal rate of 20%. Capital losses are allowed in full against
capital gains and up to $3,000 against other income. If these holding periods
are not satisfied, the optionee recognizes ordinary income at the time of
disposition equal to the difference between the exercise price and the lower of
(i) the fair market value of the shares at the date of the option exercise or
(ii) the sale price of the shares. Any gain or loss recognized on such a
premature disposition of the shares in excess of the amount treated as ordinary
income is treated as long-term or short-term capital gain or loss, depending on
the holding period. A different rule for measuring ordinary income upon such a
premature disposition may apply if the optionee is also an officer, director, or
10% stockholder of the Company. Unless limited by Section 162(m) of the Code,
the Company is entitled to a deduction in the same amount as the ordinary income
recognized by the optionee.
NONSTATUTORY STOCK OPTIONS. An optionee does not recognize any taxable
income at the time he or she is granted a nonstatutory stock option. Upon
exercise, the optionee recognizes taxable income generally measured by the
excess of the then fair market value of the shares over the exercise price. Any
taxable income recognized in connection with an option exercise by an employee
of the Company is subject to tax withholding by the Company. Unless limited by
Section 162(m) of the Code, the Company is entitled to a deduction in the same
amount as the ordinary income recognized by the optionee. Upon a disposition of
such shares by the optionee, any difference between the sale price and the
optionee's exercise price, to the extent not recognized as taxable income as
provided above, is treated as long-term or short-term capital gain or loss,
depending on the holding period. Currently, long-term capital gains may be taxed
at a maximum federal rate of 20%. Capital losses are allowed in full against
capital gains and up to $3,000 against other income.
THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF FEDERAL INCOME
TAXATION UPON OPTIONEES AND THE COMPANY WITH RESPECT TO THE GRANT AND EXERCISE
OF OPTIONS UNDER THE PLAN. IT DOES NOT PURPORT TO BE COMPLETE, AND DOES NOT
DISCUSS THE TAX CONSEQUENCES OF DEATH OR THE PROVISIONS OF THE INCOME TAX LAWS
OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH THE DIRECTOR, EMPLOYEE OR
CONSULTANT MAY RESIDE.
A-3
CYMER, INC.
16750 VIA DEL CAMPO COURT
SAN DIEGO, CALIFORNIA 92127
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Robert P. Akins and William A. Angus, III as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated below, all the shares of Common
Stock of Cymer, Inc. (the "Company") held of record by the undersigned on
March 22, 2000 at the Annual Meeting of Stockholders to be held on May 18,
2000, or any adjournment thereof.
CYMER, INC.
VOTE ON DIRECTORS
1. Proposal to elect Directors. The nominees for Directors are:
01)Robert P. Akins, 02)Richard P. Abraham, 03)Kenneth M. Deemer,
04)Peter J. Simone, 05)Jon D. Tompkins
For All Withhold All For All Except
[ ] [ ] [ ]
To withhold authority to vote, mark "For All Except" and write the nominee's
number on the line below,
- -------------------------------------------------------------------------
VOTE ON PROPOSALS
2. Proposal to approve an amendment to the Company's 1996 Stock Option Plan
to increase the shares reserved for issuance thereunder by 1,400,000 shares.
For Against Abstain
[ ] [ ] [ ]
3. Proposal to approve the appointment of KPMG LLP as the independent
auditors of the Company
For Against Abstain
[ ] [ ] [ ]
4. In their discretion the proxies are authorized to vote upon such business
as may properly come before the annual meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1,2, AND 3.
PLEASE SIGN BELOW EXACTLY AS NAME APPEARS ON STOCK CERTIFICATE(S). WHEN
SHARES ARE HELD BY JOINT TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS
ATTORNEY, AS EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL
TITLE AS SUCH. IF A CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY
PRESIDENT OR OTHER AUTHORIZED OFFICER. IF A PARTNERSHIP PLEASE SIGN IN
PARTNERSHIP NAME BY AUTHORIZED PERSON.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
- ---------------------------------------- --------------------------------
Signature Date
- ---------------------------------------- ---------------------------------
Signature Date