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SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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
\X\ Definitive Proxy Statement
\ \ Definitive Additional Materials
\ \ Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
\ \ Confidential, for the Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
GENERAL SEMICONDUCTOR, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
\X\ No fee required.
\ \ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction
applies:
(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:
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[GENERAL SEMICONDUCTOR LOGO]
GENERAL SEMICONDUCTOR, INC.
TEN MELVILLE PARK ROAD
MELVILLE, NEW YORK 11747
March 30, 2001
Dear Stockholders:
You are cordially invited to attend the 2001 Annual Meeting of Stockholders
of General Semiconductor, Inc., to be held on Wednesday, May 9, 2001, at 10:00
a.m., local time, at the Melville Marriott Hotel, 1350 Old Walt Whitman Road,
Melville, New York 11747.
At the meeting, we will review General Semiconductor's activities over the
past year, as well as the outlook for 2001. The Secretary's formal notice of the
meeting and the Proxy Statement appear on the following pages and describe the
matters to be acted upon at the meeting.
We hope that you will be able to attend the meeting in person. However,
whether or not you plan to attend, please fill in, sign, date and return your
proxy in the enclosed envelope as soon as possible so that your vote will be
counted. If your shares are held in a participating bank or brokerage account,
you may be eligible to vote over the Internet, or by telephone, as an
alternative to mailing the traditional proxy card. Please see "Voting
Electronically via the Internet or Telephone" in the Proxy Statement for further
details.
Sincerely
/s/ Ronald A. Ostertag
Ronald A. Ostertag
Chairman of the Board
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GENERAL SEMICONDUCTOR, INC.
TEN MELVILLE PARK ROAD
MELVILLE, NEW YORK 11747
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 9, 2001
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NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of General
Semiconductor, Inc. (the "Company") will be held at 10:00 a.m., local time, on
May 9, 2001 at the Melville Marriott Hotel, 1350 Old Walt Whitman Road,
Melville, New York 11747 for the following purposes:
1. To elect six directors of the Company to serve until the next annual
meeting of stockholders and until the election and qualification of
their respective successors;
2. To ratify the appointment of Deloitte & Touche LLP, independent public
accountants, as the Company's auditor for the fiscal year ending
December 31, 2001; and
3. To transact such other business as may properly come before the meeting
or any adjournments thereof.
Only holders of record of the Company's common stock at the close of
business on March 14, 2001 are entitled to notice of, and to vote at, the
meeting and any adjournments thereof. Such stockholders may vote in person or by
proxy.
Stockholders who find it convenient are cordially invited to attend the
meeting in person. Whether or not you plan to attend the meeting, please fill
in, sign, date and return the accompanying proxy in the enclosed envelope. No
postage is required if mailed in the United States. If your shares are held in a
participating bank or brokerage account and you elected to receive the Proxy
Statement and Annual Report electronically over the Internet you will not
receive a paper proxy and should vote online, unless you cancel your enrollment.
If your shares are held in a participating bank or brokerage account and you did
not elect to receive materials through the Internet, you may be eligible to vote
your proxy over the Internet or by telephone. Please see "Voting Electronically
via the Internet or Telephone" in the Proxy Statement for further details.
By Order of the Board of Directors,
/s/ Stephen B. Paige
Stephen B. Paige
Secretary
Melville, New York
March 30, 2001
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GENERAL SEMICONDUCTOR, INC.
TEN MELVILLE PARK ROAD
MELVILLE, NEW YORK 11747
-------------------------------
PROXY STATEMENT
-------------------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of General Semiconductor, Inc., a Delaware
corporation (the "Company" or "General Semiconductor"), to be used at the 2001
Annual Meeting of Stockholders (the "Annual Meeting") to be held at 10:00 a.m.,
local time on Wednesday, May 9, 2001, at the Melville Marriott Hotel, 1350 Old
Walt Whitman Road, Melville, New York 11747, and at any adjournments thereof.
Holders of record of the Company's common stock, par value $.01 per share
(the "Common Stock"), as of the close of business on March 14, 2001 (the "Record
Date") will be entitled to vote at the Annual Meeting or any adjournments
thereof. As of the Record Date, there were 37,844,850 shares of Common Stock
outstanding and entitled to vote and a majority, or 18,922,426 of these shares,
will constitute a quorum for the transaction of business. Each share of Common
Stock entitles the holder thereof to one vote on all matters to come before the
Annual Meeting, including election of directors. This Proxy Statement and the
accompanying form of proxy are first being mailed and sent electronically on or
about March 30, 2001 to stockholders entitled to vote at the Annual Meeting.
VOTING AND REVOCATION OF PROXIES
VOTING
Whether or not you are able to attend the Annual Meeting, you are urged to
vote your proxy, which is solicited by the Company's Board of Directors and
which will be voted as you direct on your proxy when properly completed. If no
directions are specified, such proxies will be voted FOR the election of each
person nominated for election as a director, FOR the ratification of the
appointment by the Board of Directors of Deloitte & Touche LLP as the Company's
auditor for the fiscal year ending December 31, 2001, and in the discretion of
the proxy holders, as to other matters that may properly come before the Annual
Meeting.
The holders of a majority of the shares of Common Stock entitled to vote at
the meeting, present in person or by proxy, constitute a quorum. If a quorum is
present: (i) the affirmative vote of the holders of a plurality of the shares
present, in person or by proxy, and entitled to vote thereon will be required
for election of directors; and (ii) the affirmative vote of the holders of a
majority of the shares present, in person or by proxy, and entitled to vote
thereon will be required to ratify the appointment by the Board of Directors of
Deloitte & Touche LLP as the Company's auditor. An automated system administered
by the Company's transfer agent tabulates the votes. For purposes of determining
the number of votes cast with respect to any voting matter, only those cast
"for" or "against" are included; abstentions and broker non-votes are excluded.
For purposes of determining whether the affirmative vote of a majority of the
shares present at the meeting and entitled to vote on a proposal has been
obtained, abstentions will be included in, and broker non-votes will be excluded
from, the number of shares present and entitled to vote. Accordingly,
abstentions will have the effect of a vote "against" the matter (other than the
election of directors) and broker non-votes will have the effect of reducing the
number of affirmative votes required to achieve the majority vote.
VOTING ELECTRONICALLY VIA THE INTERNET OR TELEPHONE
Stockholders whose shares are registered in the name of a participating
bank or brokerage firm and who elected to receive the Company's Annual Report
and this Proxy Statement over the Internet will be receiving an email on or
about March 30, 2001 with information on how to access stockholder information
and instructions for voting. If your shares are registered in the name of a
participating bank or brokerage firm and you have not elected to receive the
Company's Annual Report and this Proxy Statement over the Internet, you
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may be eligible to vote your shares electronically over the Internet or by
telephone. A number of banks and brokerage firms participate in the ADP
Shareholder Preference Database program. This program provides eligible
stockholders who receive a paper copy of a Company's Annual Report and Proxy
Statement with the opportunity to vote via the Internet or by telephone. If your
bank or brokerage firm is participating in the ADP program, your voting form
will provide instructions. If your voting form does not reference Internet or
telephone information, please complete and return the paper proxy card in the
self-addressed postage paid envelope provided.
REVOCATION
A stockholder giving a proxy may revoke it at any time before it is voted
by delivery to the Company's Secretary of a subsequently executed proxy or a
written notice of revocation. In addition, voting by telephone, Internet or mail
will not prevent you from voting in person at the Annual Meeting should you be
present and wish to do so.
ANNUAL REPORT
The Company's Annual Report to Stockholders for the year ended December 31,
2000 is being mailed with this Proxy Statement and the accompanying form of
proxy to stockholders entitled to vote at the Annual Meeting. Copies of the
Company's Annual Report are also available on the Company's World Wide Web site
at www.gensemi.com. Stockholders are referred to that report for financial and
other information about the activities of the Company. The Annual Report is not
incorporated by reference into this Proxy Statement and is not deemed to be a
part of it.
ELECTION OF DIRECTORS
The following table sets forth names and information as to the nominees for
election as directors of the Company. Unless otherwise directed, proxies will be
voted FOR the nominees listed below. If any one or more of the nominees is
unable to serve for any reason or withdraws from nomination, proxies will be
voted for the substitute nominee or nominees, if any, proposed by the Board of
Directors (the "Board").
All of the nominees are presently serving as directors of the Company and
have served since July 1997, except Mr. Kulicke who has served as a director
since July 1999.
NAME, AGE AND CURRENT
PRINCIPAL OCCUPATION INFORMATION
- --------------------- -----------
C. Scott Kulicke, 51 C. Scott Kulicke is Chairman, President and Chief
Chairman, President and Chief Executive Officer of Kulicke & Soffa Industries, Inc., a
Executive Officer of Kulicke & Soffa supplier of semiconductor assembly equipment. He has been
Industries, Inc. a director of Kulicke & Soffa Industries, Inc. since 1975
and served as its President and Chief Executive Officer
since 1980. He was Executive Vice President from 1978 to
1980. He is a director of Xetel Corp.
Ronald A. Ostertag, 60 Ronald A. Ostertag has been Chairman, President and Chief
Chairman, President and Chief Executive Officer of General Semiconductor since July 25,
Executive Officer of the Company 1997. Previously, he held the position of Vice President
of General Instrument Corporation since February 1989 and
President of its Power Semiconductor Division since
September 1990.
Ronald Rosenzweig, 63 Ronald Rosenzweig is Chairman of Anadigics, Inc., an
Chairman of Anadigics, Inc. electronics company he co-founded in 1985. He has been a
director of Anadigics, Inc. since 1985 and served as its
President and Chief Executive Officer from 1985 until
October 1998.
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NAME, AGE AND CURRENT
PRINCIPAL OCCUPATION INFORMATION
- --------------------- -----------
Peter A. Schwartz, 57 Peter A. Schwartz is the Chief Financial Officer of
Chief Financial Officer of Opus360 Opus360 Corporation, a provider of Internet software and
Corporation services. From October 1998 to June 2000, he was the
Chief Financial Officer of InterWorld Corporation, an
Internet commerce software and services provider. Prior
to joining InterWorld in 1998, Mr. Schwartz was Senior
Vice President and Chief Financial Officer of Computer
Associates International, Inc., a business software
company, from April 1987 until June 1998.
Samuel L. Simmons, 71 Samuel L. Simmons was Senior Vice President and
Retired Director -- Corporate Development of ITT Corporation from
1987 until his retirement in 1994.
Prof. Gerard T. Wrixon, 60 Prof. Gerard T. Wrixon is President of University
President of University College, College, Cork, Ireland. Previously, he founded and was
Cork, Ireland Director of National Microelectronics Research Centre
from 1982 until January 1999. Prof. Wrixon has held
teaching and research positions at a number of leading
educational institutions and research facilities,
including Loyola University -- Los Angeles and Bell
Telephone Laboratories. He is a director of DII Group,
Inc. and Farran Technology Ltd.
THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
The Board of Directors of the Company directs the management of the
business and affairs of the Company and conducts its business through meetings
of the Board and three standing committees: Executive, Audit and Compensation.
In addition, special committees may be established under the direction of the
Board when necessary to address specific issues. The Company does not have a
nominating or similar committee.
BOARD MEETINGS; COMMITTEES OF THE BOARD
In 2000 the Board of Directors of the Company held five meetings. Each
incumbent director attended 75% or more of the aggregate of (i) meetings of the
Board held during the period for which he served as a director; and (ii)
meetings of all committees held during the period for which he served on those
committees.
The EXECUTIVE COMMITTEE has the authority, between meetings of the Board of
Directors, to exercise all powers and authority of the Board in the management
of the business and affairs of the Company that may be lawfully delegated to it
under Delaware law and the Company's By-laws. The Executive Committee consists
of: Ronald A. Ostertag, Chairman; C. Scott Kulicke; Ronald Rosenzweig; and Prof.
Gerard T. Wrixon. The Executive Committee held one meeting during 2000.
The COMPENSATION COMMITTEE is responsible for executive compensation,
including recommending to the Board of Directors the base salary to be paid to
the Chief Executive Officer and determining the compensation for all other
executive officers, administering and granting awards under the Company's
equity-based incentive plans and bonus plans, making recommendations to the
Board with respect to the Company's overall compensation policies and employee
benefit plans, and performs such duties as the Board may from time to time
request. The Compensation Committee is composed of three non-employee directors:
Samuel L. Simmons, Chairman; C. Scott Kulicke; and Peter A. Schwartz. The
Compensation Committee held four meetings in 2000.
The AUDIT COMMITTEE's principal functions are to review the scope of the
annual audit of the Company by its independent auditor, review the annual
financial statements of the Company and the related audit report of the Company
as prepared by the independent auditor, recommend the selection of the
independent auditor each year and review audit and any non-audit fees paid to
the Company's independent auditor. The head of the Internal Audit Department and
representatives of the Company's independent
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auditor regularly attend Audit Committee meetings and give reports to and answer
inquiries from the Audit Committee. The Audit Committee is composed of three
non-employee directors: Peter A. Schwartz, Chairman; Ronald Rosenzweig; and
Prof. Gerard T. Wrixon. All members of the Audit Committee are independent,
financially literate and at least one member has accounting and financial
management expertise. The Audit Committee held three meetings in 2000.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board of Directors is providing this report to
enable stockholders to understand how it monitors and oversees the Company's
financial reporting process. The Audit Committee operates pursuant to an Audit
Committee Charter that is reviewed and approved annually by the Board of
Directors. A copy of the Audit Committee Charter approved on February 7, 2001
has been included as Annex A to this Proxy Statement.
This report confirms that the Audit Committee has: (i) reviewed and
discussed the audited financial statements for the year ended December 31, 2000
with management and the Company's independent public accountants; (ii) discussed
with the Company's independent public accountants the matters required to be
reviewed pursuant to the Statement on Auditing Standards No. 61 (Communications
with Audit Committees); (iii) reviewed the written disclosures letter from the
Company's independent public accountants as required by Independence Standards
Board Standard No. 1 (Independence Discussions with Audit Committees); and (iv)
discussed with the Company's independent public accountants their independence
from the Company.
Based upon the above review and discussions, the Audit Committee
recommended to the Board of Directors that the audited financial statements for
the year ended December 31, 2000 be included in the Company's Annual Report on
Form 10-K for filing with the Securities and Exchange Commission.
Respectfully submitted,
Audit Committee
Peter A. Schwartz, Chairman
Ronald Rosenzweig
Prof. Gerard T. Wrixon
COMPENSATION OF DIRECTORS
Employee directors do not receive additional compensation for serving on
the Company's Board. Currently, non-employee directors receive an annual
retainer of $25,000 and committee chairpersons receive an additional $5,000. The
non-employee directors' remuneration is paid quarterly. In addition, each non-
employee director, upon election to the Board, received 1,000 shares of Common
Stock and was granted an option to purchase 20,000 shares of Common Stock at an
exercise price per share equal to the fair market value on the date of grant,
which option becomes exercisable with respect to one-third of the underlying
shares on each of the first three anniversaries of the grant date. If a
non-employee director remains in office, a similar option is expected to be
granted every three years.
On February 7, 2001, the Company's 1998 Long-Term Incentive Plan was
amended to provide that each non-employee director will receive a grant of
nonqualified stock options to purchase 10,000 shares in connection with his or
her election to the Board and an additional option in respect of 7,000 shares
each year as of the date upon which the Company holds its regularly scheduled
October Board of Directors' meeting or if one is not held, on October 31 of such
year.
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is comprised entirely of non-employee directors
none of whom has ever been an officer or employee of the Company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT OF THE COMPANY
The following table sets forth certain information known by the Company
regarding the beneficial ownership of the Common Stock as of March 14, 2001
(except as otherwise specified) by each beneficial owner of more than five
percent of the outstanding Common Stock, by each of the Company's directors, by
each of the executives named in the Summary Compensation Table and by all
current directors and officers of the Company as a group.
NUMBER OF
SHARES BENEFICIALLY PERCENTAGE
NAME OWNED(1) OF CLASS
- ---- ------------------- ----------
State of Wisconsin Investment Board(2)...................... 5,201,700 13.9
FMR Corp.(3)................................................ 4,916,000 13
Wellington Management Company, LLP(4)....................... 3,790,700 10
Vanguard Windsor Funds -- Windsor Fund(4)................... 3,768,600 10
High Rock Capital LLC(5).................................... 3,143,475 8.3
High Rock Asset Management LLC(5)........................... 3,143,475 8.3
Mellon Financial Corporation(6)............................. 2,349,065 6.2
Vincent M. Guercio(7)(12)................................... 204,287 *
W. John Nelson(8)(12)....................................... 289,012 *
Ronald A. Ostertag(9)(12)................................... 636,829 1.7
Stephen B. Paige(10)(12).................................... 111,146 *
John P. Phillips(11)(12).................................... 166,778 *
C. Scott Kulicke(13)........................................ 8,667 *
Ronald Rosenzweig(14)....................................... 23,125 *
Peter A. Schwartz(14)....................................... 27,000 *
Samuel L. Simmons(14)....................................... 21,025 *
Prof. Gerard T. Wrixon(14).................................. 21,000 *
All current directors and executive officers as a group (12
persons)(15).............................................. 1,693,897 4.5
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* The percentage of shares of Common Stock beneficially owned does not
exceed one percent of the outstanding shares of Common Stock.
(1) For purposes of this table, a person or group of persons is deemed to have
"beneficial ownership" of any shares of Common Stock that it has the right
to acquire within 60 days following March 14, 2001. For purposes of
computing the percentage of outstanding shares of Common Stock held by
each person or group of persons named above, any security which it has the
right to acquire within 60 days following March 14, 2001 is deemed to be
outstanding, but is not deemed to be outstanding for the purpose of
computing the percentage ownership of any other person.
(2) This information is obtained from a Schedule 13G, dated February 14, 2001,
filed with the Securities and Exchange Committee by the State of Wisconsin
Investment Board ("Wisconsin Investment Board"). The Wisconsin Investment
Board reports beneficial ownership of 5,201,700 shares. The Wisconsin
Investment Board claims sole voting power over 5,201,700 shares, no shared
voting power, sole dispositive power over 5,201,700, and no shared
dispositive power. The Wisconsin Investment Board's principal business
office is located at P.O. Box 7842, Madison, Wisconsin 53707.
(3) This information is obtained from a Schedule 13G, dated February 14, 2001,
filed with the Securities and Exchange Commission by FMR Corp., a parent
holding company; Fidelity Management &
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Research Company, a wholly-owned subsidiary of FMR Corp. and an investment
advisor; Fidelity Low-Priced Stock Fund, an investment company; and Edward
C. Johnson 3rd ("Mr. Johnson") and Abigail Johnson ("Ms. Johnson"). FMR
Corp., Mr. Johnson and Ms. Johnson each report beneficial ownership of
4,916,000 shares. Fidelity Management & Research Company reported
beneficial ownership of 4,655,900 shares. Fidelity Low-Priced Stock Fund
reported ownership of 3,679,000 shares. Fidelity Management Trust Company,
a wholly owned subsidiary of FMR Corp., reported beneficial ownership of
260,100 shares. FMR Corp. and Mr. Johnson each reported sole voting power
over 260,100 shares and sole dispositive power over 4,655,900 shares. Ms.
Johnson reported no sole voting power and sole dispositive power over
4,916,000 shares. The Schedule 13G states that through their ownership of
voting common stock and the execution of a shareholders' voting agreement,
members of the Johnson family may be deemed, under the Investment Company
Act of 1940, to form a controlling group with respect to FMR Corp. FMR
Corp.'s principal business office is located at 82 Devonshire Street,
Boston, Massachusetts 02109.
(4) Information regarding the ownership of Common Stock by Wellington
Management Company, LLP ("Wellington") was obtained from a Schedule 13G,
dated January 10, 2001, filed with the Securities and Exchange Commission
by Wellington. Wellington reports beneficial ownership of 3,790,700 shares
of Common Stock. The shares are owned of record by clients of Wellington
including Vanguard Windsor Fund. Wellington, in its capacity as investment
advisor, may be deemed to beneficially own the shares that are held of
record by the clients of Wellington. With the exception of Vanguard
Windsor Fund, no such client is known to have the right to receive, or the
power to direct the receipt of, dividends from, or the proceeds from the
sale of, shares representing more than 5% of the outstanding common stock.
Wellington reports shared dispositive power as to all 3,790,700 shares and
shared voting power over 22,100 shares. Wellington's principal business
office is located at 75 State Street, Boston, Massachusetts 02109.
Information regarding the ownership of Common Stock by Vanguard Windsor
Funds Inc. -- Windsor Fund ("Vanguard Windsor") was obtained from a
Schedule 13G, dated February 13, 2001, filed with the Securities and
Exchange Commission by Vanguard Windsor. Vanguard Windsor reports
beneficial ownership of 3,768,600 shares of Common Stock. Vanguard Windsor
shares dispositive power as to all 3,768,600 shares and has sole voting
power as to all 3,768,600 shares.
(5) This information is obtained from a Schedule 13G, dated February 14, 2001,
filed with the Securities and Exchange Commission by High Rock Capital LLC
("HRC") and High Rock Asset Management LLC ("HRAM"), affiliated limited
liability companies. Each reports beneficial ownership of 3,143,475 shares
of Common Stock. HRC reports sole voting power of 2,477,300 shares and
sole dispositive power of 3,119,675 shares. HRC reports record ownership
of 3,119,675 shares and disclaims beneficial ownership of any other
shares. HRAM reports sole voting power of 23,800 shares and sole
dispositive power of 23,800 shares. HRAM reports record ownership of
23,800 shares and disclaims beneficial ownership of any other shares.
HRC's and HRAM's principal place of business is 28 State Street, 18th
Floor, Boston, Massachusetts 02109.
(6) This information is obtained from a Schedule 13G, dated January 16, 2001,
filed with the Securities and Exchange Commission by Mellon Financial
Corporation, a parent holding company. Mellon Financial Corporation
reports beneficial ownership of 2,349,065 shares, sole voting power over
2,107,534 shares, shared voting power over 188,100 shares, sole
dispositive power over 2,335,565 shares and shared dispositive power over
13,500 shares. Mellon Financial Corporation's principal place of business
is One Mellon Center, Pittsburgh, Pennsylvania 15258.
(7) Includes 169,484 shares of Common Stock that may be acquired on the
exercise of options exercisable within 60 days of March 14, 2001.
(8) Includes 270,672 shares of Common Stock that may be acquired on the
exercise of options exercisable within 60 days of March 14, 2001.
(9) Includes (i) 612,874 shares of Common Stock that may be acquired on the
exercise of options exercisable within 60 days of March 14, 2001; and (ii)
225 shares held by the spouse of Ronald A. Ostertag.
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(10) Includes 96,821 shares of Common Stock that may be acquired on the
exercise of options exercisable within 60 days of March 14, 2001.
(11) Includes 161,058 shares of Common Stock that may be acquired on the
exercise of options exercisable within 60 days of March 14, 2001.
(12) Includes the number of shares which were held by the trustee of the
Savings Plan and were allocated to the individual's respective account
under the Savings Plan as of February 28, 2001 as follows: Vincent M.
Guercio, 29,803 shares; W. John Nelson, 8,740 shares; Ronald A. Ostertag,
8,306 shares; Stephen B. Paige, 3,325 shares and John P. Phillips, 2,720
shares.
(13) Includes 6,667 shares of Common Stock that may be acquired on the exercise
of options exercisable within 60 days of March 14, 2001.
(14) Includes 20,000 shares of Common Stock that may be acquired on the
exercise of options exercisable within 60 days of March 14, 2001.
(15) Includes 1,575,193 shares of Common Stock that may be acquired on the
exercise of options exercisable within 60 days of March 14, 2001. Includes
an aggregate of 58,627 shares that were held by the trustees of the
Savings Plan and were allocated to the current officers' respective
accounts under the Savings Plan as of February 28, 2001.
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers and
holders of more than 10% of the outstanding Common Stock to file with the
Securities and Exchange Commission reports of ownership and changes in ownership
of Common Stock and other equity securities of the Company on Forms 3, 4 and 5.
The Company undertakes to make such filings on behalf of its directors and
executive officers. Based on written representations of reporting persons and a
review of those reports, the Company believes that during the year ended
December 31, 2000 its executive officers and directors and holders of more than
10% of the outstanding Common Stock complied with all applicable Section 16(a)
filing requirements.
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table sets forth individual compensation information for all
services rendered in all capacities for the last three fiscal years for the
individual who served as Chief Executive Officer during 2000 and the other four
most highly compensated executive officers of the Company who were serving as
executive officers at December 31, 2000 (the "named executive officers").
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
----------------------------------------------- -------------
OTHER SECURITIES
NAME AND BASE ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($)(a) COMPENSATION(b) OPTIONS(#)(c) COMPENSATION($)(d)
- ------------------ ---- --------- ----------- --------------- ------------- ------------------
Ronald A. Ostertag..... 2000 $495,116 $414,955 $ -- 150,000 $ 6,453
Chairman, President 1999 475,108 -- -- 150,000 6,900
and Chief Executive 1998 450,000 143,000 -- 225,000 167,459
Officer
W. John Nelson......... 2000 $292,729 $240,000 $308,919(e) 100,000 $ 4,911
Chief Operating 1999 258,139 -- 118,449(f) 75,000 5,195
Officer 1998 235,000 52,000 183,707(g) 60,000 94,628
John P. Phillips....... 2000 $269,190 $156,190 $188,253(g) 40,000 $ 5,980
Executive Vice 1999 257,954 -- 83,853(g) 75,000 6,160
President 1998 223,000 42,000 121,295(h) 60,000 68,723
Stephen B. Paige....... 2000 $277,285 $160,886 $ -- 40,000 $ 5,782
Senior Vice
President, 1999 266,049 -- -- 40,000 6,275
General Counsel and 1998 250,000 53,000 -- 60,000 6,672
Secretary
Vincent M. Guercio..... 2000 $239,712 $140,826 $ -- 40,000 $ 4,836
Senior Vice
President, 1999 232,944 -- -- 40,000 5,344
e-commerce 1998 223,000 22,000 -- 60,000 71,863
- ---------------
(a) Amounts reported for 2000 reflect cash bonus awards paid pursuant to the
Company's Annual Incentive Plan in 2001 for performance in 2000. No cash
bonus awards were paid pursuant to the Annual Incentive Plan in 2000 with
respect to performance in 1999. Amounts reported for 1998 reflect
discretionary cash bonus awards paid in 1999 for performance in 1998. No
awards were paid under the Company's Annual Incentive Plan with respect to
performance in 1998.
(b) Unless otherwise indicated, with respect to any individual named in the
above table, the aggregate amount of perquisites and other personal
benefits, securities or property was less than either $50,000 or 10% of the
total annual salary and bonus reported for the named executive officer.
(c) Reflects the number of shares of Common Stock underlying options granted
under the Company's 1998 Long-Term Incentive Plan.
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(d) Reflects (i) payment by the Company in 2000 of premiums for group term life
insurance of $1,653; $111; $1,180; $982 and $36 on behalf of each of Messrs.
Ostertag, Nelson, Phillips, Paige and Guercio, respectively; and (ii) the
matching contribution for 2000 by the Company under the General
Semiconductor Savings Plan in the amount of $4,800 for each of Messrs.
Ostertag, Nelson, Phillips, Paige and Guercio.
(e) Reflects relocation costs and tax gross-up payment with respect to
relocation costs, foreign service premium, cost of living adjustment and
overseas housing allowance.
(f) Reflects foreign service premium, cost of living adjustment, and overseas
housing allowance.
(g) Reflects foreign service premium, cost of living adjustment, overseas
housing allowance, and tax equalization payment.
(h) Reflects relocation costs, foreign service premium, cost of living
adjustment, and overseas housing allowance.
STOCK OPTIONS
The following table sets forth information for the year ended December 31,
2000 with respect to grants to the named executive officers of stock options to
purchase Common Stock. These grants were made pursuant to the Company's 1998
Long-Term Incentive Plan and are reflected in the Summary Compensation Table.
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL
INDIVIDUAL GRANTS REALIZABLE
---------------------------------------------------- VALUE AT ASSUMED
NUMBER ANNUAL RATES OF
OF % OF TOTAL STOCK
SECURITIES OPTIONS EXERCISE/ PRICE APPRECIATION
UNDERLYING GRANTED TO BASE FOR OPTION TERM(c)
OPTIONS EMPLOYEES PRICE EXPIRATION ---------------------
GRANTED(#) IN FISCAL YEAR ($/SH) DATE 5%($) 10%($)
---------- -------------- --------- ---------- -------- ----------
Ronald A. Ostertag........ 150,000(a) 8.88% $ 9.875 10/25/10 $931,550 $2,360,731
W. John Nelson............ 40,000(b) 2.37% 18.000 04/19/10 452,804 1,147,495
60,000(a) 3.55% 9.875 10/25/10 372,620 944,292
John P. Phillips.......... 40,000(a) 2.37% 9.875 10/25/10 248,413 629,528
Stephen B. Paige.......... 40,000(a) 2.37% 9.875 10/25/10 248,413 629,528
Vincent M. Guercio........ 40,000(a) 2.37% 9.875 10/25/10 248,413 629,528
- ---------------
(a) These options will become exercisable with respect to one-third of the
shares covered thereby on October 25, in each of 2001, 2002 and 2003. In the
event of a change in control of the Company, (as defined in the 1998
Long-Term Incentive Plan), all such options shall become immediately and
fully exercisable.
(b) These options will become exercisable with respect to one-third of the
shares covered thereby on April 19, in each of 2001, 2002 and 2003. In the
event of a change in control of the Company, (as defined in the 1998
Long-Term Incentive Plan), all such options shall become immediately and
fully exercisable.
(c) Sets forth potential option gains based on assumed annualized rates of
stock price appreciation from the market price at the date of grant of 5%
and 10% (compounded annually) over the full term of the grant with
appreciation determined as of the expiration date. The 5% and 10% assumed
rates of appreciation are mandated by the rules of the Securities and
Exchange Commission, and do not represent the Company's estimate or
projection of future Common Stock prices.
AGGREGATED OPTION EXERCISES AND YEAR-END VALUE
The following table sets forth as of December 31, 2000, for each of the
named executive officers listed (i) the total number of shares acquired upon
exercise of options during 2000; (ii) the value realized upon such exercise;
(iii) the total number of unexercised options to purchase Common Stock
(exercisable and unexercisable); and (iv) the value of such options which were
in-the-money at December 31, 2000 (based on the difference between the closing
price of Common Stock at December 31, 2000 and the exercise price of the option
on such date).
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AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF VALUE OF
SECURITIES UNEXERCISED
UNDERLYING IN-THE-MONEY STOCK
UNEXERCISED OPTIONS
SHARES OPTIONS AT AT FISCAL YEAR-
ACQUIRED FISCAL YEAR-END(#) END($)(a)
ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#)(b) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- -------------- ----------- ----------- ------------- ----------- -------------
Ronald A. Ostertag... -- -- 587,874 325,000 $0 $0
W. John Nelson....... -- -- 250,671 169,999 0 0
John P. Phillips..... -- -- 154,391 109,999 0 0
Stephen B. Paige..... -- -- 90,154 86,666 0 0
Vincent M. Guercio... -- -- 162,817 86,666 0 0
- ---------------
(a) Based on the difference between the closing price of $6.25 per share at
December 31, 2000, as reported on the New York Stock Exchange Composite
Tape, and the exercise price of the outstanding stock options on such date.
(b) No options were exercised in 2000 by any of the named executive officers.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors is providing this
report to enable stockholders to understand the goals, policies and procedures
relevant to establishing the compensation of the Company's Chief Executive
Officer and other executive officers.
The Compensation Committee is comprised entirely of non-employee directors.
The Compensation Committee considers and recommends to the Board of Directors
the base salary to be paid to the Chief Executive Officer, determines the base
salary for all other executive officers and others as appropriate, administers
and grants awards under the Company's equity-based incentive plans, administers
the bonus plans of the Company with respect to executive officers, makes
recommendations to the Board with respect to the Company's overall compensation
policies and employee benefit plans, and performs such duties as the Board may
from time to time request.
The Company's compensation philosophy is in keeping with the Company's
mission statement and is based on the premise that the achievements of the
Company result from the efforts of employees working toward common goals and
objectives. The Company's compensation program is designed to reward its
executive officers and other employees through a combination of equity-based and
cash compensation and to attract, retain, and motivate highly qualified
employees. The Compensation Committee generally sets compensation levels for
executives based on a review of available data from comparable companies and
relevant survey data. A substantial portion of the Company's total cash
compensation is intended to vary based on the Company's performance and
reinforce the alignment of employee and stockholder interests. Compensation of
executive officers and other management employees, including the Chief Executive
Officer, is comprised of three principal elements: (i) stock ownership, (ii)
base salary and (iii) annual incentive bonuses, each of which is described
below.
STOCK OWNERSHIP
The Compensation Committee believes that executive officers and other
employees, who are in a position to make a substantial contribution to the
long-term success of the Company and to build stockholder value, should have a
significant stake in the Company's ongoing success. Accordingly, one of the
Company's principal methods of motivating executive officers and other employees
is through a stock option program.
Management recommends to the Compensation Committee those executive
officers and other employees to whom options should be granted and the number of
options to be granted to them. The recommendations are based on a review of the
employee's individual performance, position and level of responsibility in the
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Company, long-term potential contribution to the Company and the number of
options previously granted to the employee. Neither management nor the
Compensation Committee assigns specific weights to these factors, although the
executive's position and a subjective evaluation of his or her performance are
considered most important. Generally, the number of options granted to an
executive reflects his or her level of responsibility and position in the
Company.
To encourage employees to remain in the employ of the Company, options
generally vest and become exercisable over a three-year period commencing on the
first anniversary of the date of grant.
During 2000, the Compensation Committee granted a total of 485,667 options
under the 1998 Long-Term Incentive Plan (the "1998 LTIP") to a total of seven
officers, including a total of 220,000 options to the named executive officers
(other than the Chief Executive Officer). The options were granted at the
closing market price per share of Common Stock on the date of grant, to become
exercisable in one-third increments on each succeeding anniversary of the grant.
BASE SALARY
Base salary is intended to provide annual cash compensation that is
consistent with the executive officer's position and contributions, and is
competitive with comparable companies. Salaries paid to executive officers
(other than the Chief Executive Officer) are based on the Chief Executive
Officer's recommendations to the Compensation Committee, which is responsible
for reviewing and approving or disapproving those recommendations. All executive
officers received base salary increases in 2000.
ANNUAL INCENTIVE BONUS
The Company's Annual Incentive Plan is intended to provide a means of
annually rewarding certain employees, including the named executive officers,
based on the performance of the Company. In addition, awards for each executive
officer (other than the Chief Executive Officer) may be adjusted upward or
downward based on the executive officer's achievement of personal performance
objectives. This approach allows management to focus on key business objectives
in the short-term and to support the long-term performance orientation of stock
ownership.
Under the Annual Incentive Plan, a target bonus, expressed as a percentage
of the executive officer's salary is established each year for each executive
officer; the target bonus percentage for executive officers (other than the
Chief Executive Officer) for 2000 ranged from 40% to 55%. The Chief Executive
Officer's target bonus percentage was 65%. Bonuses for executive officers are
generally a function of the Company's achievement of its earnings per share and
outstanding debt performance objectives. Awards are earned if the Company
attains or exceeds 80% of the financial performance objectives referred to in
the preceding sentence. In addition, if a financial performance objective is
exceeded, the portion of the bonus based on that performance objective is
increased above the target bonus level. Because the Company exceeded its
financial performance objectives for 2000, bonus awards earned with respect to
2000 equal 128.8% of each officer's target bonus.
CHIEF EXECUTIVE OFFICER COMPENSATION
Ronald A. Ostertag has been Chairman of the Board, President and Chief
Executive Officer of the Company since July 1997. His 2000 base salary was
increased from an annual rate of $475,500 to an annual rate of $495,500 in
January 2000 based on his performance, and his 2000 target bonus percentage
under the Annual Incentive Plan was 65%. Mr. Ostertag's target bonus percentage
was not changed in 2000. Mr. Ostertag's award earned under the Annual Incentive
Plan for 2000 was $414,955. During 2000, Mr. Ostertag was granted an option
under the 1998 LTIP to purchase 150,000 shares of Common Stock at an exercise
price of $9.875 per share, the closing market price per share of Common Stock on
the date of the grant, to become exercisable in one-third increments on each
succeeding anniversary of the grant. The rationale for Mr. Ostertag's option
grant is described under the caption "Stock Ownership" above.
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COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(m)
Section 162(m) of the Internal Revenue Code of 1986 as amended (the
"Code"), which was enacted in 1993, generally disallows a federal income tax
deduction to any publicly held corporation for compensation paid in excess of $1
million in any taxable year to the chief executive officer or any of the four
other most highly compensated executive officers who are employed by the Company
on the last day of the taxable year. Section 162(m), however, allows a federal
income tax deduction for qualified "performance-based compensation," the
material terms of which are disclosed to and approved by stockholders.
The Compensation Committee has considered the tax deductibility of
compensation awarded under the 1993 LTIP, the 1998 LTIP and the Annual Incentive
Plan in light of Section 162(m). The Company has structured and intends to
administer the stock option and stock appreciation right portions of the 1993
LTIP and the stock option, stock appreciation right, performance share and
performance unit portions of the 1998 LTIP with the intention that the
compensation thereunder may qualify as "performance-based compensation" and, if
so qualified, would be deductible. No executive officer's compensation in 2000
exceeded $1 million. It is not expected that any executive officer's
compensation will be non-deductible in 2001 by reason of the application of
Section 162(m).
Respectfully submitted,
Compensation Committee
Samuel L. Simmons, Chairman
C. Scott Kulicke
Peter A. Schwartz
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PENSION PLAN, SERP AND RETIREMENT AGREEMENT
The following table shows, as of December 31, 2000, estimated aggregate
annual benefits payable upon retirement at age 65 under the General
Semiconductor Pension Plan for Salaried and Hourly Paid Non-Union Employees (the
"Pension Plan") and the General Semiconductor Supplemental Executive Retirement
Plan (the "SERP").
PENSION PLAN TABLE
AVERAGE ANNUAL BASIC ESTIMATED ANNUAL BENEFITS UPON RETIREMENT,
REMUNERATION DURING WITH YEARS OF SERVICE INDICATED
SIXTY CONSECUTIVE CALENDAR --------------------------------------------------------
MONTHS PRIOR TO RETIREMENT 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
-------------------------- -------- -------- -------- -------- --------
$125,000............................... $25,493 $33,990 $42,488 $ 50,985 $ 50,985
150,000............................... 31,118 41,490 51,863 62,235 62,235
175,000............................... 36,743 48,990 61,238 73,485 73,485
200,000............................... 42,368 56,490 70,613 84,735 84,735
225,000............................... 47,993 63,990 79,988 95,985 95,985
250,000............................... 53,618 71,490 89,363 107,235 107,235
300,000............................... 59,243 78,990 98,738 118,485 118,485
The compensation covered by the Company's Pension Plan and the Company's
SERP is substantially that described under the "Base Salary" column of the
Summary Compensation Table. However, pursuant to Section 401(a)(17) of the Code,
the maximum amount of compensation that can be considered in computing benefits
under the Company's Pension Plan for 2000 was $170,000. Under the SERP,
compensation for 2000 in excess of $170,000, but not in excess of $275,000 is
considered in computing benefits. Accordingly, the total compensation covered by
the Company's Pension Plan and the Company's SERP for the calendar year 2000 was
$275,000 for Messrs. Ostertag, Nelson and Paige, $269,190 for Mr. Phillips, and
$239,712 for Mr. Guercio. Credited years of service under both the Pension Plan
and the SERP as of December 31, 2000 are as follows: Mr. Ostertag, 22 years; Mr.
Nelson, 10 years; Mr. Paige, 3 years; Mr. Phillips, 11 years; and Mr. Guercio,
25 years. Estimated benefits set forth in the Pension Plan Table were calculated
on the basis of a single life annuity and Social Security covered compensation
as in effect during 2000. Such estimated benefits are not subject to any
deduction for Social Security or other offset amounts.
In March, 2001, the Company entered into a supplemental retirement
agreement with Mr. Phillips. The supplemental retirement agreement provides that
upon Mr. Phillips' retirement on March 30, 2001, the Company shall pay Mr.
Phillips and his spouse a monthly benefit for their joint lives in an amount
equal to the difference between $4,000 and the benefit payable under the Pension
Plan and the SERP.
Pursuant to the terms of the SERP and Mr. Phillips' supplemental retirement
agreement, in the event of a change in control of the Company (as defined in the
General Semiconductor 1998 Long-Term Incentive Plan), the present value lump sum
actuarial equivalent of each of the named executive officer's supplemental
benefit under the SERP and Mr. Phillips' benefit under the supplemental
retirement agreement on the date of the change in control will be paid to the
individual immediately in a lump sum in cash.
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PERFORMANCE GRAPH
The following graph compares the cumulative total return to stockholders
(stock price appreciation plus reinvested dividends) for General Semiconductor
Common Stock with the cumulative total return on each of two indices: the
Standard & Poor's SmallCap 600 Index ("S&P 600(R)") and the Standard & Poor's
SmallCap Technology Index ("S&P SCT(R)"). The graph assumes:
- An investment of $100 in the Company's Common Stock and in each of the
indices at the closing price on July 28, 1997 (the date on which the
Company's Common Stock began trading on the New York Stock Exchange);
- All dividends were reinvested; and
- The investment was held through December 31, 2000.
The stock price performance shown on the graph below is not necessarily
indicative of future price performance.
ANNUAL PERFORMANCE COMPARISON
[LINE GRAPH]
CUMULATIVE TOTAL
RETURN
-------------------------------------------------------------
7/28/97 12/31/97 12/31/98 12/31/99 12/31/00
--------- ---------- ---------- ---------- ----------
General Semiconductor................. 100 78 56 96 42
S&P 600(R)............................ 100 108 107 120 134
S&P SCT(R)............................ 100 92 94 155 116
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SEVERANCE PROTECTION AND OTHER AGREEMENTS
The Company has entered into severance protection agreements (the
"Severance Agreements") with the Company's Chief Executive Officer and other
executive officers which were automatically extended for one year on January 1,
2000 and which are automatically extended for one year each January 1 thereafter
unless notification is given to either the Company or the executive.
The Severance Agreements provide severance pay and other benefits in the
event of a termination of employment within 24 months of a Change in Control (as
defined in the Severance Agreements) if such termination is:
(1) by the Company without Cause, other than by reason of the
executive's Disability or death (as such terms are defined in the Severance
Agreements), or
(2) by the executive, other than the Chief Executive Officer, for Good
Reason (as defined in the Severance Agreements), or in the case of the
Chief Executive Officer, for any reason.
Such severance pay will be in an amount equal to two and one-half times the
sum of the executive's base salary and the executive's bonus amount that would
be payable to the executive in the year of termination in the case of the Chief
Executive Officer and two times such sum in the case of all other executive
officers. In addition, the Company will pay the executive all accrued but unpaid
compensation and a pro rata bonus, calculated up to the executive's termination
date. The executive's benefits will be continued for either 30 months, in the
case of the Chief Executive Officer, or 24 months in the case of all other
executive officers. The executive will also receive limited reimbursement for
outplacement, tax and financial planning assistance and reimbursement for
relocation under certain circumstances. If the executive's employment is
terminated without Cause:
(1) within six months prior to a Change in Control; or
(2) prior to the date of a Change in Control; but
(a) at the request of a third party who effectuates a Change in
Control; or
(b) otherwise in connection with, or in anticipation of, a
threatened Change in Control which actually occurs,
such termination shall be deemed to have occurred after the Change in Control.
If the executive's employment is terminated by the Company for Cause or
Disability, by reason of the executive's death or by the executive other than
the Chief Executive Officer other than for Good Reason, the Company shall pay to
the executive his accrued compensation. In addition, in the case of a
termination by the Company for Disability or due to the executive's death, the
executive will receive a pro rata bonus in addition to accrued compensation.
The Severance Agreements provide for a gross-up payment by the Company in
the event that the total payments due the executive under the agreement or
otherwise exceed by $10,000 or more the maximum amount which could be paid
without being subject to the excise tax under Section 4999 of the Code. In such
an event, the Company will pay an additional amount so that the executive is
made whole on an after-tax basis from the effect of the excise tax. In the event
that such payments exceed the aforementioned amount by less than $10,000, the
payments shall be reduced to the extent necessary so that no excise tax is
payable.
Except for the Severance Agreements described above, the Company's SERP
(see "Pension Plan, SERP and Retirement Agreement"), the 1993 LTIP, the 1998
LTIP and the Annual Incentive Plan, there are no compensatory plans or
arrangements with respect to any of the named executive officers which are
triggered by, or result from, a change in control of the Company or a change in
such executive's responsibilities or any other termination of such executive's
employment following a change in control.
The following is a brief description of the change in control provisions of
the Company's employee compensation plans.
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ANNUAL INCENTIVE PLAN
The Annual Incentive Plan is the Company's annual cash bonus incentive plan
for the Chief Executive Officer and certain other key employees. In the event of
a Change in Control of the Company (as defined in the Annual Incentive Plan),
within 60 days thereafter, the Company will pay to each participant in the plan
immediately prior to a Change in Control (regardless of whether such participant
remains in the Company's employ following the Change in Control) a pro rata
portion of his or her bonus award assuming that all performance percentages are
100%.
1998 LTIP AND 1993 LTIP
The 1998 LTIP provides for the granting of stock options, stock
appreciation rights ("SARs"), dividend equivalent rights, restricted stock,
performance units, performance shares, phantom stock, director shares and share
awards to the Company's employees, officers, consultants, advisors and directors
and those of the Company's subsidiaries.
Pursuant to the terms of the 1998 LTIP and subject to an optionee's or
grantee's rights under his or her option or award agreement, in the event of a
Change in Control, as defined in the 1998 LTIP, as amended effective as of
February 7, 2001:
(1) all stock options will become immediately and fully exercisable
and, to the extent set forth in the agreement evidencing the grant, the
optionee may elect to receive a cash payment within 60 days of the Change
in Control with respect to all or a portion of any unexercised options;
(2) all SARs will become immediately and fully exercisable and, to the
extent set forth in the agreement evidencing the grant of a SAR unrelated
to an option, the grantee will be entitled to receive a payment of cash or
stock upon exercise of the SAR;
(3) any restrictions on restricted stock shall lapse, unless the
Compensation Committee determined otherwise at the time of the grant;
(4) all or a portion of any performance units will become fully
vested, as determined by the Compensation Committee at the time of grant,
and will entitle the grantee to a cash payment within 10 days of the Change
in Control in an amount as determined by the Compensation Committee at the
time of the grant; and
(5) any restrictions on performance shares shall lapse unless the
Compensation Committee determined otherwise at the time of the grant. In
addition, in the event that an optionee's or grantee's employment, or
service as a director, terminates following a Change in Control, each
option or SAR exercisable as of the date of such termination shall remain
exercisable for the longer of:
(a) the first anniversary of such termination; or
(b) the stated expiration of the term of the option or SAR.
The 1993 LTIP has been terminated with respect to the granting of any new
awards. Stock options and other awards previously granted pursuant to the 1993
LTIP, however, remain outstanding. Under the terms of the 1993 LTIP and subject
to an optionee's rights under his or her option award agreement, in the event of
a Change of Control, as defined in the 1993 LTIP, all stock options granted
under the 1993 LTIP will become immediately and fully exercisable.
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CERTAIN RELATED PARTY TRANSACTIONS
In September, 2000, the Company loaned W. John Nelson and his wife, Paola
Nelson, $500,000 in the form of a secured, promissory note with an interest rate
of 6.23%, per annum. Mr. Nelson is the Company's Chief Operating Officer. The
largest aggregate amount owed under the Promissory Note in 2000 was $510,412.
There remains outstanding $395,213 as of March 1, 2001. The promissory note is
subject to voluntary and mandatory prepayment. The outstanding principal and
unpaid interest accrued thereon are due upon maturity of the promissory note on
September 1, 2007. The loan was made to assist Mr. Nelson with his relocation
from Taiwan to the United States.
CERTAIN LEGAL PROCEEDINGS
On January 7, 1997 the Board of Directors of General Instrument Corporation
("GI") approved a plan to divide GI into three separate public companies. To
effect the transaction, GI distributed all of the outstanding shares of capital
stock of each of NextLevel Systems, Inc. (subsequently renamed General
Instrument Corporation) and CommScope, Inc. to GI's stockholders on a pro rata
basis as a dividend (the "Distribution") in a transaction that was finalized on
July 28, 1997. GI retained no ownership in either NextLevel Systems, Inc. or
CommScope, Inc. Concurrent with the Distribution, GI changed its name to General
Semiconductor, Inc.
A securities class action is presently pending in the United States
District Court for the Northern District of Illinois, Eastern Division, In Re
General Instrument Corporation Securities Litigation. This action, which
consolidates numerous class action complaints filed in various courts between
October 10 and October 27, 1995, is brought by plaintiffs, on their own behalf
and as representatives of a class of purchasers of GI Common Stock during the
period March 21, 1995 through October 18, 1995. The complaint alleges that,
prior to the Distribution, GI and certain of its officers and directors, as well
as Forstmann Little & Co. and certain related entities, violated the federal
securities laws, namely, Sections 10(b) and 20(a) of the Exchange Act, by
allegedly making false and misleading statements and failing to disclose
material facts about GI's planned shipments in 1995 of its CFT 2200 and
DigiCipher II products. On November 21, 2000 the Court dismissed a derivative
action brought on behalf of GI under the same caption. Plaintiffs' complaints
seek, among other things, unspecified damages and attorneys' fees and costs. In
connection with the Distribution, General Instrument Corporation (formerly
"NextLevel Systems, Inc.") agreed to indemnify the Company with respect to its
obligations, if any, relating to these actions. On January 5, 2000, General
Instrument Corporation was acquired by Motorola, Inc.
INDEPENDENT PUBLIC ACCOUNTANTS
Based on the recommendation of the Audit Committee, the Board of Directors
appointed Deloitte & Touche LLP, independent public accountants, to audit and
report on the consolidated financial statements of the Company for the year
ending December 31, 2001 and to perform such other services as may be required
of them. The Board of Directors is asking the stockholders to ratify and approve
this action. Deloitte & Touche LLP has served as the Company's independent
public accountants since September 1990. A representative of Deloitte & Touche
LLP will be present at the Annual Meeting and will be afforded the opportunity,
if so desired, to make a statement or respond to appropriate questions that may
come before the Annual Meeting.
Although such ratification is not required by law, the Board of Directors
believes that stockholders should be given the opportunity to express their
views on the subject. While not binding on the Board of Directors, the failure
of the stockholders to ratify the appointment of Deloitte & Touche LLP as the
Company's independent public accountants would be considered by the Board of
Directors in determining whether to continue with the services of Deloitte &
Touche LLP.
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AUDIT FEES
The aggregate fees billed by Deloitte & Touche LLP for professional
services rendered for the audit of the Company's annual financial statements and
the reviews of the financial statements included in the Company's Forms 10-Q for
the year ended December 31, 2000 amounted to $509,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
Deloitte & Touche LLP did not render any professional services to the
Company for financial information systems design or implementation for the year
ended December 31, 2000.
ALL OTHER FEES
The aggregate fees billed by Deloitte & Touche LLP for professional
services rendered for all other services for the year ended December 31, 2000
amounted to $488,000.
The Audit Committee of the Company's Board of Directors has considered
whether the provision of non-audit professional services rendered by Deloitte &
Touche LLP, as discussed above, is compatible with maintaining their
independence.
STOCKHOLDER PROPOSALS FOR THE COMPANY'S 2002 ANNUAL MEETING
Stockholders who intend to present proposal(s) at the 2002 Annual Meeting,
and who wish to have such proposal(s), included in the proxy statement for such
meeting, must submit such proposal(s) in writing by notice delivered or mailed
by first-class United States mail, postage prepaid, to the Secretary, General
Semiconductor, Inc., 10 Melville Park Road, Melville, New York 11747, which
notice must be received no later than December 1, 2001. Such proposals must meet
the requirements set forth in the rules and regulations of the Securities and
Exchange Commission in order to be eligible for inclusion in the Company's proxy
statement for its 2002 Annual Meeting.
In addition, under the Company's By-laws, stockholders must comply with
specified procedures to nominate directors or introduce an item of business at
an annual meeting. Nominations or an item of business to be introduced at an
annual meeting must be submitted in writing and received by the Company
generally not less than 60 days nor more than 90 days in advance of an annual
meeting. To be in proper written form, a stockholder's notice must contain the
specific information required by the Company's By-laws. A copy of the Company's
By-laws which describes the advance notice procedures can be obtained from the
Secretary of the Company.
SOLICITATION OF PROXIES
Proxies will be solicited electronically, by mail, telephone, or other
means of communication. Solicitation of proxies also may be made by directors,
officers and regular employees of the Company. The Company has retained
Georgeson Shareholder Communications, Inc. to assist in the solicitation of
proxies from stockholders. Georgeson Shareholder Communications, Inc. will
receive a fee of $5,000 plus reimbursement of certain out-of-pocket expenses.
The Company will reimburse brokerage firms, custodians, nominees and fiduciaries
in accordance with the rules of the New York Stock Exchange, for reasonable
expenses incurred by them in forwarding materials to the beneficial owners of
shares. The cost of soliciting proxies will be borne by the Company.
OTHER MATTERS
The Company knows of no other matter to be brought before the Annual
Meeting. If any other matter requiring a vote of the stockholders should come
before the Annual Meeting, it is the intention of the persons named in the proxy
to vote with respect to any such matter in accordance with their best judgement.
18
22
The Company will furnish, without charge, to each person whose proxy is
being solicited upon written request, a copy of its Annual Report on Form 10-K
for the fiscal year ended December 31, 2000, as filed with the Securities and
Exchange Commission (excluding exhibits). Copies of any exhibits thereto also
will be furnished upon the payment of a reasonable duplicating charge. Requests
in writing for copies of any such materials should be directed to General
Semiconductor, Inc., 10 Melville Park Road, Melville, New York 11747, Attention:
Director, Investor Relations.
By Order of the Board of Directors,
/s/ Stephen B. Paige
Stephen B. Paige
Secretary
Dated: March 30, 2001
Melville, New York
19
23
ANNEX A
GENERAL SEMICONDUCTOR, INC.
AUDIT COMMITTEE CHARTER
AS ADOPTED FEBRUARY 7, 2001
AUDIT COMMITTEE CHARTER
The Board of Directors of General Semiconductor, Inc. (the "Company") has
established an Audit Committee (the "Committee") with authority, responsibility
and specific duties as described below.
COMPOSITION:
The Committee shall be comprised of not less than three Directors who shall
meet the requirements of the Securities and Exchange Commission and the New York
Stock Exchange. Committee membership, including the appointment of a
Chairperson, shall be approved by the Board of Directors.
AUTHORITY:
The Committee may investigate any activity of the Company. All employees
are directed to cooperate as requested by the members of the Committee. The
Committee is empowered to retain persons having special competence as necessary
to assist the Committee in fulfilling its responsibility.
RESPONSIBILITY:
The Committee is to serve as a focal point for communication between
non-Committee Directors, the Independent Accountant, Internal Audit Department,
and the Company's Management, as their duties relate to financial accounting,
reporting and controls. The Independent Accountant is ultimately accountable to
the Board of Directors and the Committee. The Committee is to assist the Board
of Directors in fulfilling its fiduciary responsibilities as to accounting
policies and reporting practices of the Company and all its subsidiaries and the
sufficiency of auditing relative thereto. The Committee is the Board of
Directors' principal agent in monitoring the independence of the Company's
Independent Accountant. However, the opportunity for the Independent Accountant
to meet with the entire Board of Directors as needed is not restricted. While
the Committee has the responsibilities and powers set forth in this Charter, it
is not the duty of the Committee to plan or conduct audits or to determine that
the Company's financial statements are complete and accurate and are in
accordance with generally accepted accounting principles. This is the
responsibility of Management and the Independent Accountant.
MEETINGS:
The Committee shall meet a minimum of two times a year and shall conduct
such additional meetings as circumstances require.
ATTENDANCE:
Members of the Committee should endeavor to be present, in person or by
telephone, at all meetings; however, two Committee members shall constitute a
quorum. As necessary, the Chairperson may request members of Management, the
Director of Internal Audit, and representatives of the Independent Accountant to
be present at meetings.
MINUTES OF MEETINGS:
Minutes of each meeting shall be prepared and sent to Committee members and
presented to Company Directors who are not members of the Committee.
A-1
24
SPECIFIC DUTIES:
The Committee is to:
1. Review with the Company's Management, the Independent Accountant, and
the Director of Internal Audit, the Company's policies and procedures,
as appropriate, to reasonably ensure the adequacy of internal
accounting and financial reporting controls.
2. Review the Committee's Charter annually, and update as appropriate.
3. Recommend to the Board of Directors the Independent Accountant to be
selected (subject to ratification by the stockholders), evaluate the
Independent Accountant, approve the compensation of the Independent
Accountant, and review and approve any discharge of the Independent
Accountant.
4. Review and concur in the appointment, replacement, reassignment, or
dismissal of the Director of Internal Audit.
5. Receive periodic written statements from the Independent Accountant
regarding its independence and delineating all relationships between it
and the Company, discuss such reports with the Independent Accountant,
and if so determined by the Committee, recommend that the Board take
appropriate action to ensure the independence of the Independent
Accountant.
6. Become familiar with the accounting and reporting principles and
practices applied by the Company in preparing its financial statements.
Further, the Committee is to make or cause to be made, inquiries of
Management concerning established standards of corporate conduct and
performance, and deviations therefrom.
7. Review with Management and the Director of Internal Audit the adequacy
and the scope of the annual internal audit plan.
8. Review, prior to the annual audit, the scope and general extent of the
Independent Accountant's audit examinations. The Committee review
should entail an understanding from the Independent Accountant of the
factors considered by the accountant in determining the audit scope,
including:
- Industry and business risk characteristics of the Company
- External reporting requirements
- Materiality of the various segments of the Company's consolidated
activities
- Quality of internal accounting controls
- Other areas to be covered in the audit engagement
9. Review with Management and the Independent Accountant, upon completion
of their audit, financial results for the year prior to their release
to the public. Discuss with the Independent Accountant the matters
required to be discussed by the Statement on Auditing Standards No. 61
relating to the conduct of the year-end audit and the interim review of
quarterly financial statements in accordance with the Statement of
Auditing Standards No. 71.
10. Discuss with the Independent Accountant the quality of the Company's
financial accounting personnel, and any relevant recommendations that
the Independent Accountant may have regarding "material weaknesses" or
"reportable conditions". Topics to be considered during this discussion
include improving internal financial controls, the selection of
accounting principles and management reporting systems.
11. Review with Management and the Director of Internal Audit:
- Significant audit findings noted during the year and the implementation
status of audit recommendations of the current year, including open
items of the prior year
A-2
25
- Any difficulties encountered in the course of their audits, including
any restrictions on the scope of their work or access to required
information
- Any changes required in the planned scope of the approved audit plan
- The Internal Audit Department budget and staffing
- The Internal Audit Charter
12. Meet with the Director of Internal Audit, the Independent Accountant,
and Management in separate executive sessions, as desirable, to discuss
any matters that the Committee or these groups believe should be
discussed privately with the Committee.
13. Report Committee actions to the Board of Directors with such
recommendations, as the Committee may deem appropriate.
14. Prepare the report required by the rules of the Securities and Exchange
Commission to be included in the Company's annual proxy statement.
15. Assure that the Company provides written confirmation to the New York
Stock Exchange annually (or sooner if required by a change in the
composition of the Committee membership) regarding: (i) the
independence and financial literacy of Committee members; (ii) the
determination that at least one member has related accounting or
financial management expertise; and (iii) the annual review and
assessment of the adequacy of the Audit Committee Charter.
16. Perform such other functions as may be required by law, the Company's
Certificate of Incorporation or By-Laws.
A-3
26
GENERAL SEMICONDUCTOR, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 9, 2001
The undersigned hereby authorizes and directs State Street Bank and Trust
Company, as Special Fiduciary (the "Special Fiduciary") of the General
Semiconductor, Inc. Savings Plan (the "Plan"), to direct Vanguard Fiduciary
Trust, as Trustee (the "Trustee") of the Plan to vote as Proxy for the
undersigned as herein stated at the Annual Meeting of Stockholders of General
Semiconductor, Inc. (the "Company") to be held at the Melville Marriott Hotel,
1350 Old Walt Whitman Road, Melville, New York 11747, on Wednesday, May 9, 2001
at 10:00 a.m., local time, and at any adjournment thereof, all shares of Common
Stock of General Semiconductor, Inc. allocated to the account of the undersigned
under such Plan, on the proposals set forth on the reverse hereof and in
accordance with the discretion of the Special Fiduciary on any other matters
that may properly come before the meeting or any adjournments thereof. The
undersigned hereby acknowledges receipt of the Notice and Proxy Statement, dated
March 30, 2001.
THE SHARES COVERED BY THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION
IS MADE, THE PROXY WILL BE VOTED BY THE TRUSTEE, AS DIRECTED BY THE SPECIAL
FIDUCIARY, IN ITS SOLE DISCRETION IN THE BEST INTEREST OF THE PLAN PARTICIPANTS
AND BENEFICIARIES.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
(IMPORTANT--TO BE SIGNED AND DATED ON REVERSE SIDE)
SEE REVERSE
SIDE
27
The Board of Directors recommends that stockholders vote FOR Proposals One and
Two.
PROPOSAL ONE: To elect six directors of the Company to serve until the next
annual meeting of stockholders and until the election and qualification of their
respective successors.
FOR \ \ WITHHOLD AUTHORITY \ \
all nominees listed below to vote for all nominees listed below
(except as marked to the contrary)
Nominees: C. Scott Kulicke, Ronald A. Ostertag, Ronald Rosenzweig, Peter A.
Schwartz, Samuel L. Simmons and Prof. Gerard T. Wrixon
INSTRUCTION: TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE
THROUGH THE NOMINEE'S NAME.
PROPOSAL TWO: To ratify the appointment of Deloitte & Touche LLP, independent
public accountants, as the Company's auditor for the fiscal year ending December
31, 2001.
FOR \ \ AGAINST \ \ ABSTAIN \ \
PLEASE MARK, SIGN, DATE
AND RETURN THIS PROXY
CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
Please sign as name appears
hereon. If acting as attorney,
executor, administrator,
trustee, guardian, etc., you
should so indicate when signing.
Signature(s): Date:
28
GENERAL SEMICONDUCTOR, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 9, 2001
The undersigned hereby appoints Stephen B. Paige, Robert J. Gange and Harry S.
Jakubowitz, and each or either of them, their attorneys or agents, with full
power of substitution, to vote as Proxy for the undersigned as herein stated at
the Annual Meeting of Stockholders of General Semiconductor, Inc. (the
"Company") to be held at the Melville Marriott Hotel, 1350 Old Walt Whitman
Road, Melville, New York 11747, on Wednesday, May 9, 2001 at 10:00 a.m., local
time, and at any adjournment thereof, according to the number of votes the
undersigned would be entitled to vote if personally present, on the proposals
set forth on the reverse hereof and in accordance with their discretion on any
other matters that may properly come before the meeting or any adjournments
thereof. The undersigned hereby acknowledges receipt of the Notice and Proxy
Statement, dated March 30, 2001. If this proxy is returned without direction
being given, this proxy will be voted FOR Proposals One and Two.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
(IMPORTANT--TO BE SIGNED AND DATED ON REVERSE SIDE)
SEE REVERSE
SIDE
29
The Board of Directors recommends that stockholders vote FOR Proposals One and
Two.
PROPOSAL ONE: To elect six directors of the Company to serve until the next
annual meeting of stockholders and until the election and qualification of their
respective successors.
FOR \ \ WITHHOLD AUTHORITY \ \
all nominees listed below to vote for all nominees listed below
(except as marked to the contrary)
Nominees: C. Scott Kulicke, Ronald A. Ostertag, Ronald Rosenzweig, Peter A.
Schwartz, Samuel L. Simmons and Prof. Gerard T. Wrixon
INSTRUCTION: TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE
THROUGH THE NOMINEE'S NAME.
PROPOSAL TWO: To ratify the appointment of Deloitte & Touche LLP, independent
public accountants, as the Company's auditor for the fiscal year ending December
31, 2001.
FOR \ \ AGAINST \ \ ABSTAIN \ \
PLEASE MARK, SIGN, DATE
AND RETURN THIS PROXY
CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
Please sign as name appears
hereon. If acting as attorney,
executor, administrator,
trustee, guardian, etc., you
should so indicate when signing.
If shares are held jointly, both
parties must sign and date.
Signature(s): Date:
Signature(s): Date: