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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
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 Rule 14a-11(c) or Rule 14a-12
FAIRCHILD SEMICONDUCTOR INTERNATIONAL, 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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
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previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
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[FAIRCHILD SEMICONDUCTOR
LETTERHEAD]
FAIRCHILD SEMICONDUCTOR
INTERNATIONAL, INC.
82 Running Hill Road
South Portland, ME 04106
(207) 775-8100
March 27, 2001
Fellow stockholder:
On behalf of your board of directors, I am pleased to invite you to attend the
2001 annual meeting of stockholders of Fairchild Semiconductor International,
Inc.
The notice of annual meeting, proxy statement and proxy card accompanying this
letter describe the business to be conducted at the meeting, including the
election of directors. In addition to me, the board of directors has nominated
Joseph R. Martin, Richard M. Cashin, Jr., Charles M. Clough, Paul C. Schorr IV,
Ronald W. Shelly and William N. Stout for re-election to the board and William
T. Comfort III for election to the board. Stockholders are also being asked to
approve an amendment to our corporate charter to increase the number of shares
the company is authorized to issue.
It is important that your shares be represented and voted at the annual meeting.
Even if you are planning to attend the meeting in person, please fill in, sign,
date and mail the proxy card in the enclosed, postage-paid envelope as soon as
possible to ensure your votes are represented. You may also be able to give your
proxy by telephone or on the Internet (see the proxy card for more information).
In any case, the proxy is revocable and will not affect your right to vote at
the meeting if you do attend.
We look forward to seeing you at the meeting.
Yours very truly,
/s/ Kirk P. Pond
Kirk P. Pond
Chairman, President and
Chief Executive Officer
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC.
TIME.......................... 9:30 a.m., Wednesday, April 25, 2001
PLACE......................... Fairchild Semiconductor International, Inc.
World Wide Headquarters
82 Running Hill Road
South Portland, Maine
ITEMS OF BUSINESS............. 1. Elect directors.
2. Approve an amendment to the company's
Restated Certificate of Incorporation
authorizing the issuance of additional
shares of common stock.
3. Attend to such other business as may
properly come before the meeting or any
postponement or adjournment of the meeting.
RECORD DATE................... Stockholders of our Class A Common Stock of
record as of the close of business on March 9,
2001 are entitled to receive this notice and to
vote at the meeting.
HOW TO VOTE................... You can attend the meeting in person or you can
fill in, sign, date and mail the proxy card
included with this notice and attached proxy
statement. You may be able to vote by telephone
or on the Internet if your shares are held by a
bank or broker. See the proxy card to find out
if you can vote on the Internet and for more
information.
IMPORTANT..................... WHETHER YOU PLAN TO ATTEND THE MEETING OR NOT,
PLEASE SUBMIT YOUR PROXY AS SOON AS POSSIBLE IN
ORDER TO AVOID ADDITIONAL SOLICITING EXPENSE TO
THE COMPANY. THE PROXY IS REVOCABLE AND WILL
NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IN THE
EVENT YOU FIND IT CONVENIENT TO ATTEND THE
MEETING.
By order of the board of directors,
/s/ Daniel E. Boxer
Daniel E. Boxer
Executive Vice President,
General Counsel and Secretary
82 Running Hill Road
South Portland, ME 04106
March 27, 2001
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PROXY STATEMENT
TABLE OF CONTENTS
GENERAL INFORMATION......................................... 1
Revocability of Proxy..................................... 1
Voting at the Annual Meeting.............................. 1
PROPOSALS TO BE VOTED ON AT THE MEETING..................... 2
1. Election of Directors............................... 2
2. Proposal to amend the company's Restated Certificate
of Incorporation to increase the number of shares
that the company is authorized to issue............. 4
3. Other business...................................... 5
BOARD MEETINGS AND COMMITTEES............................... 5
Report of the Audit Committee............................. 6
DIRECTOR COMPENSATION....................................... 6
EXECUTIVE COMPENSATION...................................... 7
Summary Compensation Table................................ 7
Options Granted in Last Fiscal Year....................... 8
Option Values at End of Last Fiscal Year.................. 8
Report of the Compensation Committee...................... 8
Employment Agreements..................................... 10
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............. 11
STOCK OWNERSHIP BY 5% STOCKHOLDERS, DIRECTORS AND CERTAIN
EXECUTIVE OFFICERS........................................ 12
STOCKHOLDER RETURN PERFORMANCE.............................. 13
INDEPENDENT PUBLIC AUDITORS................................. 13
2002 STOCKHOLDER PROPOSALS.................................. 14
APPENDIX A -- CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF
DIRECTORS................................................. A-1
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[FAIRCHILD SEMICONDUCTOR
LETTERHEAD]
FAIRCHILD SEMICONDUCTOR
INTERNATIONAL, INC.
82 Running Hill Road
South Portland, ME 04106
(207) 775-8100
ANNUAL MEETING OF STOCKHOLDERS
APRIL 25, 2001
PROXY STATEMENT
GENERAL INFORMATION
This proxy statement and the enclosed proxy card are being sent to you on
behalf of the board of directors of Fairchild Semiconductor International, Inc.
in connection with its solicitation of proxies for use at the annual meeting of
stockholders of the company, to be held on April 25, 2001, and at any
adjournments of the meeting. Fairchild Semiconductor International's annual
report to stockholders, including financial statements, accompanies this proxy
statement but is not incorporated as part of the proxy statement and is not to
be regarded as part of the proxy solicitation material. The proxy card and this
proxy statement are being mailed to stockholders on or about March 27, 2001.
Proxies are solicited by the board of directors in order to provide each
stockholder an opportunity to vote on all matters scheduled to come before the
meeting, whether or not he or she attends the meeting in person. When the
enclosed proxy card is returned properly signed, the shares represented by the
proxy card will be voted by the proxy holders named on the proxy card in
accordance with the stockholder's directions. You are urged to specify your
choices by marking the appropriate boxes on the proxy card. If the proxy card is
signed and returned without specifying choices, the shares will be voted as
recommended by the board of directors.
The cost of preparing, assembling and mailing the notice of annual meeting,
proxy statement and proxy card will be borne by the company. In addition to the
use of the mail, proxies may be solicited by directors, officers and regular
employees of the company, without additional compensation, in person or by
telephone or other electronic means. In addition, the company has retained
Corporate Investor Communications, Inc. to assist in the distribution of proxy
materials and the solicitation of proxies, for a fee of $6,000 plus out-of-
pocket expenses and additional fees for follow-up contacts. Fairchild
Semiconductor International will reimburse brokerage houses and other nominees
for their expenses in forwarding proxy material to beneficial owners of the
company's Class A Common Stock.
REVOCABILITY OF PROXY
Executing and returning the enclosed proxy card will not affect your right
to attend the annual meeting and vote in person. If you do attend, you may, if
you wish, vote by ballot at the meeting, thereby effectively canceling any
proxies previously given. In addition, a stockholder giving a proxy may revoke
it at any time before it is voted at the meeting by filing with the secretary of
the company any instrument revoking it, or by filing with the company a duly
executed proxy bearing a later date.
VOTING AT THE ANNUAL MEETING
Who May Vote. Only holders of shares of Fairchild Semiconductor
International Class A Common Stock of record at the close of business on March
9, 2001 are entitled to receive notice of, and to vote at, the annual meeting.
At that date there were 99,277,935 shares of Class A Common Stock outstanding.
The holders of a majority of the shares of Class A Common Stock entitled to vote
must be present in person or by proxy at the annual meeting to constitute a
quorum for the purpose of transacting business at the meeting.
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Voting Rights of Stockholders. In the election of directors, stockholders
have cumulative voting rights. Accordingly, each stockholder is entitled to as
many votes as equals the number of shares of Class A Common Stock held by that
stockholder on the record date multiplied by the number of directors to be
elected. Each stockholder may cast all of his or her votes for a single
candidate or may distribute them among two or more candidates as he or she sees
fit. The enclosed proxy grants discretionary authority for the exercise of such
cumulative voting rights. In all matters other than the election of directors,
stockholders are entitled to one vote for each share of Class A Common Stock
held.
Votes Required to Approve Proposals. In the election of directors, the
candidates who receive the most votes will be elected to the available positions
on the board. The proposed amendment to the company's Restated Certificate of
Incorporation will be approved if a majority of outstanding shares are voted in
favor of the proposal. If you return a signed proxy card or attend the meeting,
but choose in either case to abstain from voting on that proposal, your
abstention will have the same effect as if you vote against that proposal.
Similarly, a "broker non-vote," where a broker withholds authority to cast a
vote as to a certain proposal, would have the same effect as a vote against that
proposal. Broker non-votes occur when nominees, such as brokers and banks,
holding shares on behalf of beneficial owners do not receive voting instructions
from the beneficial owners sufficiently in advance of the annual meeting. In
this event, the nominees may vote those shares only on proposals deemed routine
by the New York Stock Exchange, such as the election of directors. On
non-routine proposals, nominees cannot vote and there is a so-called broker
non-vote on that proposal. Therefore, it is important that you complete and
return your proxy early so that your vote may be recorded. Because directors are
elected by a plurality of votes, abstentions and broker non-votes will not have
an impact on their election.
Votes cast by proxy or in person at the annual meeting will be tabulated by
the inspectors of election appointed for the meeting, who will also determine
whether or not a quorum is present.
PROPOSALS TO BE VOTED ON AT THE MEETING
1. ELECTION OF DIRECTORS.
Kirk P. Pond, Joseph R. Martin, Richard M. Cashin, Jr., Charles M. Clough,
Paul C. Schorr IV, Ronald W. Shelly and William N. Stout, each of whom is
currently serving as a director and whose term is scheduled to expire at the
2001 annual meeting, have been nominated for re-election for one-year terms or
until their successors have been qualified and elected. The board of directors
has increased the size of the board to eight from seven positions, and William
T. Comfort III has been nominated for election to fill the resulting vacancy for
a one-year term or until his successor has been qualified and elected. Unless
otherwise specified by the stockholders, it is intended that the shares
represented by proxies will be voted for the eight nominees for director listed
above. Each nominee has consented to his nomination and, so far as the board of
directors and management are aware, will serve as a director if elected.
However, if any nominee should become unavailable prior to the election, the
shares represented by proxies may be voted for the election of such other
persons as the board of directors may recommend. Proxies cannot be voted for
more than eight persons. The persons named on the proxy card will have
discretionary authority to vote proxies cumulatively in the election of
directors so as to elect the maximum number of the following nominees. Your
shares will not be voted for any nominee as to whom you instruct votes to be
withheld.
Information follows about the directors nominated for election.
KIRK P. POND, AGE 56, CHAIRMAN OF THE BOARD OF DIRECTORS, PRESIDENT AND CHIEF
EXECUTIVE OFFICER.
Mr. Pond became a director in March 1997 and has been President of
Fairchild Semiconductor since June 1996. Since 1987, Mr. Pond had held several
executive positions with National Semiconductor, most recently Executive Vice
President and Chief Operating Officer. Prior executive management positions were
with Fairchild Semiconductor Corporation, Texas Instruments and Timex
Corporation.
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JOSEPH R. MARTIN, AGE 53, EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER.
Mr. Martin became a director in March 1997 and has been Executive Vice
President and Chief Financial Officer of Fairchild Semiconductor since June
1996. Mr. Martin had held several senior financial positions with National
Semiconductor since 1989, most recently as Vice President of Finance, Worldwide
Operations. Prior to joining National Semiconductor, Mr. Martin was Senior Vice
President and Chief Financial Officer of VTC Incorporated. Mr. Martin is a
director of ChipPAC, Inc.
RICHARD M. CASHIN, JR., AGE 47, PRINCIPAL, CASHIN CAPITAL PARTNERS.
Mr. Cashin became a director in March 1997. Since April 2000, he has been a
principal of Cashin Capital Partners, a private equity investment firm. From
1980 to 2000, Mr. Cashin was employed by Citicorp Venture Capital Ltd., where he
was President from 1994 to 2000. Mr. Cashin is a director of Lifestyle
Furnishings International, Euramax International plc, Delco Remy International,
Gerber Childrenswear, MSX International, and Titan Wheel International.
CHARLES M. CLOUGH, AGE 72, FORMER PRESIDENT, WYLE INTERNATIONAL.
Mr. Clough became a director in January 2001. Until his retirement in 1995,
he was employed by Wyle Electronics where he served as Chief Executive Officer
and Chairman of the Board. Prior to joining Wyle Electronics, Mr. Clough served
27 years with Texas Instruments, most recently as Vice President. He is a
director of Altera Corporation.
WILLIAM T. COMFORT III, AGE 34, CONSULTANT TO CITICORP VENTURE CAPITAL LTD.
Mr. Comfort is nominated for election to the board of directors effective
as of the 2001 annual stockholders' meeting. He became a consultant to Citicorp
Venture Capital Ltd. in 2000. Mr. Comfort was previously a director of CVC
Capital Partners Ltd. from 1995 to 2000. He is a director of Ergo Science Corp.
PAUL C. SCHORR IV, AGE 34, MANAGING DIRECTOR, CITICORP VENTURE CAPITAL LTD.
Mr. Schorr became a director in March 1997. He has been employed by
Citicorp Venture Capital since 1996, where he was a Vice President until being
named a Managing Director in January 2000. Prior to joining Citicorp Venture
Capital Ltd., Mr. Schorr was employed by McKinsey & Company, Inc. from 1993 to
1996 as an associate and then as an engagement manager. He is a director of
KEMET Corporation, American Microsystems, ChipPAC, Inc. and Paper-Pak Products,
Inc.
RONALD W. SHELLY, AGE 57, FORMER PRESIDENT, SOLECTRON TEXAS.
Mr. Shelly became a director in June 1998. Until 1999, he was employed by
Solectron Texas, an electronic manufacturing services company, where he served
as its President from April 1996 until his retirement. Mr. Shelly has more than
30 years experience in the semiconductor industry. Prior to joining Solectron,
he was employed by Texas Instruments for 30 years, most recently as Executive
Vice President, Custom Manufacturing Services. He currently serves as a director
of Intelligent Reasoning Systems and Symtx.
WILLIAM N. STOUT, AGE 62, CHAIRMAN AND CHIEF EXECUTIVE OFFICER, STERLING HOLDING
COMPANY.
Mr. Stout became a director in March 1997. He has been Chairman and Chief
Executive Officer of Sterling Holding Company, an affiliate of Citicorp Venture
Capital Ltd., and Sterling's subsidiaries since 1988. Sterling is engaged,
through subsidiaries including Trompeter Electronics Inc. and Semflex, Inc. in
the manufacture and sale of coaxial connectors, coaxial cable and coaxial cable
assemblies. From 1985 to 1988, Mr. Stout was a private investor and consultant.
From 1979 to 1985, Mr. Stout was President and Chief Executive Officer of Lundy
Electronics & Systems, which manufactured electronic products and systems.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RE-ELECTION TO THE BOARD
OF DIRECTORS OF MESSRS. POND, MARTIN, CASHIN, CLOUGH, SCHORR, SHELLY AND STOUT
AND "FOR" THE ELECTION TO THE BOARD OF DIRECTORS OF MR. COMFORT.
2. PROPOSAL TO AMEND THE COMPANY'S RESTATED CERTIFICATE OF INCORPORATION TO
INCREASE THE NUMBER OF SHARES OF COMMON STOCK THAT THE COMPANY IS AUTHORIZED
TO ISSUE.
Our Restated Certificate of Incorporation currently authorizes the company
to issue 140,000,000 shares of Class A Common Stock and 140,000,000 shares of
Class B Common Stock. On March 9, 2001, there were 99,277,935 shares of Class A
Common Stock outstanding, 20,232,108 shares of Class A Common Stock reserved for
issuance upon the exercise of employee stock options and no shares of Class B
Common Stock outstanding. The company has also reserved 10,000,000 shares of
Class A Common Stock that have been registered under the Securities Act of 1933
for issuance from time to time in connection with strategic acquisitions
authorized by the board of directors. The board of directors believes that it is
desirable for the stockholders to consider and act upon a proposal to amend the
company's Restated Certificate of Incorporation to increase the number of shares
authorized. The proposed amendment provides that our authorized capital would
consist of 170,000,000 shares of Class A Common Stock and 170,000,000 shares of
Class B Common Stock. Our current Restated Certificate of Incorporation also
authorizes the issuance of 100,000 shares of preferred stock in limited
circumstances relating to the adoption of a stockholder rights plan. No shares
of preferred stock are presently issued or outstanding, the company has no
present plans to issue any shares of preferred stock, and the proposed amendment
in no way affects provisions of our Restated Certificate of Incorporation
relating to preferred stock.
Shares of our Class A Common Stock and Class B Common Stock are identical
in all respects, except that Class B shares have no voting rights, other than as
provided by law, and there is no public market for Class B shares. A holder of
shares of either class of common stock may convert such shares into shares of
the other class at any time by following the procedures set forth in our
Restated Certificate of Incorporation. The company is required to reserve enough
authorized but unissued shares of each class for issuance in the event of such
conversions. As a result, the number of shares of each class authorized for
issuance is identical.
Taking into account the number of shares outstanding, the number of shares
reserved for issuance upon the exercise of stock options, the number of shares
reserved for issuance upon conversion and the number of shares that may be
issued in connection with acquisitions, the board of directors believes it would
be advisable for the company to have additional shares authorized for issuance.
Additional shares could be issued at the discretion of the board of directors
without any further action by the stockholders, except as required by applicable
law or regulation, in connection with stock splits, acquisitions, efforts to
raise additional capital for the company, issuances in connection with stock
option exercises by directors, executives and other employees, and for other
corporate purposes. Except for commitments underlying director, executive and
employee stock-based compensation plans, and issuances contemplated from time to
time in connection with acquisitions as discussed above, the company currently
has no plans or commitments that would involve the issuance of additional shares
of Class A or Class B Common Stock.
This proposal is not the result of management's knowledge of any specific
effort to accumulate the company's securities or to obtain control of the
company by means of a merger, tender offer, proxy solicitation in opposition to
management or otherwise. The proposed amendment may have the effect of
permitting the company to frustrate efforts by another party to acquire a
controlling interest. The board of directors is not aware of any attempt to take
control of the company, however, and the board has not presented this proposal
with the intent that it be used as a type of anti-takeover device.
Authorizing the company to issue more shares than currently authorized by
the Restated Certificate of Incorporation will not affect materially any
substantive rights, powers or privileges of holders of outstanding Class A
Common Stock or Class B Common Stock. Other than increasing the authorized
shares of Class A Common Stock and Class B Common Stock, in each case, from
140,000,000 to 170,000,000, the proposed amendment in no way changes our
Restated Certificate of Incorporation.
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Pursuant to the proposal, Section 5 of our Restated Certificate of
Incorporation would be amended to read, in its entirety, as follows:
5. Authorized Capital. The aggregate number of shares of
stock which the Corporation shall have authority to issue is
340,100,000 shares, divided into three classes consisting of
100,000 shares of Preferred Stock, par value $.01 per share
("Preferred Stock"); 170,000,000 shares of Class A Common Stock,
par value $.01 per share ("Class A Common Stock"); and
170,000,000 shares of Class B Common Stock, par value $.01 per
share ("Class B Common Stock"). Class A Common Stock and Class B
Common Stock are hereinafter sometimes individually or
collectively referred to as "Common Stock."
The board of directors has adopted resolutions setting forth the proposed
amendment, declaring its advisability and directing that the proposed amendment
be submitted to the stockholders for their approval at the annual meeting. If
adopted by the stockholders, the amendment will become effective upon filing as
required by the General Corporation Law of Delaware.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF PROPOSAL 2.
3. OTHER BUSINESS
The board of directors is not aware of any other business to be presented
at the 2001 annual meeting of stockholders. If any other matter should properly
come before the annual meeting, however, the enclosed proxy confers
discretionary authority with respect to such matter.
BOARD MEETINGS AND COMMITTEES
The board of directors held five meetings during 2000. All of the directors
nominated for re-election who were members of the board during 2000 attended 75%
or more of the meetings of the board of directors and the committees of the
board on which they served during 2000. Mr. Clough became a member of the board
in January 2001.
The board of directors currently has two standing committees, the
compensation committee and the audit committee. The board does not have a
standing nominating committee.
Compensation Committee. The compensation committee reviews and recommends
actions to the board of directors on such matters as salary and other
compensation of officers and the administration of certain benefit plans. The
compensation committee also has the authority to administer, grant and award
stock and stock options under the company's stock option and employee stock
purchase plans. The compensation committee held three meetings in 2000. The
current chairman of the compensation committee is Mr. Schorr and its other
current members are Messrs. Shelly and Stout.
Audit Committee. The audit committee meets with management, the company's
independent auditors and its internal auditors to consider the adequacy of the
company's internal controls and other financial reporting matters. The audit
committee recommends to the board of directors the engagement of the company's
independent auditors, discusses with the independent auditors their audit
procedures, including the proposed scope of their audit, the audit results and
the accompanying management letters and, in connection with determining their
independence, reviews the services performed by the independent auditors. Mr.
Shelly and Mr. Clough are the current members of the audit committee. The audit
committee held four meetings during 2000.
Effective January 31, 2000, the Securities and Exchange Commission (SEC)
adopted new rules relating to companies' disclosure about their audit
committees. Based in large part on recommendations made by the Blue Ribbon
Committee on Improving the Effectiveness of Corporate Audit Committees, the new
rules require that, for all votes of stockholders occurring after December 15,
2000, the proxy statement must contain a report of the audit committee
addressing several matters identified in the rules. The report of Fairchild
Semiconductor's audit committee follows this paragraph. In addition, the SEC
recommends and the New
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York Stock Exchange now requires that audit committees adopt written charters.
Audit committee charters must be included as an exhibit to the proxy statement
at least once every three years. Fairchild Semiconductor's audit committee
charter is attached at the back of this proxy statement as Exhibit A. The
company's audit committee currently consists of two members, each of whom is
independent from the company and its management as independence is defined in
the New York Stock Exchange rules.
REPORT OF THE AUDIT COMMITTEE
In accordance with the audit committee charter, the audit committee reviews
the company's financial reporting process on behalf of the board. In fulfilling
its responsibilities, the committee has reviewed and discussed the audited
financial statements contained in the company's 2000 annual report on SEC Form
10-K with the company's management and independent auditors. Management is
responsible for the financial statements and the reporting process, including
the system of internal controls, and has represented to the audit committee that
such financial statements were prepared in accordance with generally accepted
accounting principles. The independent auditors are responsible for expressing
an opinion on the conformity of those audited financial statements with
accounting principles generally accepted in the United States.
The audit committee discussed with the independent auditors the matters
required to be discussed by Statement on Auditing Standards No. 61,
Communications with Audit Committees, as amended. In addition, the committee has
discussed with the independent auditors the auditors' independence from the
company and its management, including the matters in the written disclosures and
letter which were received by the committee from the independent auditors as
required by Independence Standard Board No. 1, Independence Discussions with
Audit Committees, as amended. The audit committee also considered whether the
independent auditors' provision of non-audit services to the company is
compatible with the auditors' independence.
Based on the reviews and discussions referred to above, the committee
recommends to the board that the audited financial statements be included in the
company's annual report on SEC Form 10-K for the year ended December 31, 2000.
AUDIT COMMITTEE
RONALD W. SHELLY
CHARLES M. CLOUGH
DIRECTOR COMPENSATION
Messrs. Cashin, Clough, Shelly and Stout receive $20,000 per year for
service on the board of directors, plus $1,500 for meetings of the board
attended in person and $500 for meetings attended by teleconference. Mr. Schorr
does not receive and, if elected, Mr. Comfort will not receive, cash
compensation for their services as directors. Under the company's current
director option program, non-employee directors receive a grant of options to
purchase 10,000 shares of Class A Common Stock upon their first election to the
board, which options are fully vested upon grant, and annual grants of options
to purchase 7,000 shares of Class A Common Stock, which options vest one year
following grant. All such options have exercise prices equal to the fair market
value of the underlying shares on the grant date. Messrs. Pond and Martin, who
are employees of the company, do not receive any fees or additional compensation
or stock options for service as members of the board. All directors are
reimbursed for expenses incurred in attending board meetings.
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EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation
received by our chief executive officer and our four other most highly
compensated executive officers.
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
---------------
ANNUAL COMPENSATION NUMBER OF
FISCAL --------------------- OTHER ANNUAL STOCK OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(2) COMPENSATION(3) (IN SHARES)(4) COMPENSATION(5)
- --------------------------- ------- -------- ---------- ---------------- --------------- ----------------
Kirk P. Pond.................. 2000 $648,462 $1,188,000 $ 547 1,058,202 $55,074
Chairman of the Board of 1999S(1) 351,922 630,000 2,870,493 200,000 26,422
Directors, President and
Chief 1999 450,008 297,000 3,559,453 -- 40,321
Executive Officer 1998 449,994 435,969 -- -- 39,844
Joseph R. Martin.............. 2000 392,308 560,000 2,758 634,921 43,025
Executive Vice President and 1999S(1) 210,581 273,000 1,406,446 100,000 22,355
Chief Financial Officer and 1999 284,600 128,700 1,779,730 -- 36,363
Director 1998 262,024 152,240 -- -- 19,818
Daniel E. Boxer............... 2000 362,308 444,000 7,476 317,461 17,848
Executive Vice President and 1999S(1) 192,500 231,000 578,964 75,000 10,298
Chief Administrative
Officer, 1999 275,002 108,900 732,627 -- 18,723
General Counsel and
Secretary 1998 262,024 152,240 -- -- 254,283
Jerry M. Baker................ 2000 319,231 420,000 11,125 317,461 15,913
Executive Vice President, 1999S(1) 175,000 175,000 592,898 50,000 8,505
Global Operations 1999 250,010 82,500 732,627 -- 13,624
1998 250,009 138,406 -- -- 12,598
Keith Jackson................. 2000 307,692 320,000 392 158,731 16,240
Executive Vice President and 1999S(1) 174,038 175,000 114,455 50,000 8,454
General Manager, Analog 1999 275,002 82,500 151,380 -- 8,091
Group 1998 63,462 38,060 -- -- 69,000
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(1) Beginning in 2000, the company changed its fiscal year-end from the end of
May to the end of December. The last full fiscal year under the old
accounting calendar was the year ended May 30, 1999. The first full fiscal
year under the new accounting calendar was the year ended December 31, 2000.
The intervening seven-month transition period, which began May 31, 1999 and
ended December 26, 1999, is referred to as "Stub Year 1999" and in the table
above as "1999S." Amounts shown for Stub Year 1999 reflect compensation paid
or earned from May 31, 1999 to December 26, 1999. Base salaries reported for
that period reflect annual salaries as follows: $600,000 for Mr. Pond,
$360,000 for Mr. Martin, $330,000 for Mr. Boxer and $300,000 for each of Mr.
Jackson and Mr. Baker.
(2) Reflects bonuses earned based on the company's financial performance in the
respective years but paid in the following year.
(3) Amounts shown for fiscal year 1999 reflect compensation resulting from the
lapse of risks of forfeiture by our executive officers with respect to their
stock in our company. As a result, each executive had individual income tax
liabilities. Loans of $1,686,164 to Mr. Pond, $843,094 to Mr. Martin,
$347,060 to Mr. Boxer, $70,340 to Mr. Jackson and $350,600 to Mr. Baker were
made by Fairchild International to discharge their individual tax
liabilities in June 1998. These loans accrued interest at 6% per year. The
loans, together with accrued interest, were cancelled in connection with the
completion of our initial public offering on August 9, 1999, resulting in
compensation income (including gross-ups for resulting income taxes paid by
Fairchild International) for each executive officer equal to the respective
amounts reported for Stub Year 1999, except for Mr. Pond, who received
$2,812,885 in such income and $57,608 in other compensation. See "Certain
Relationships and Related Transactions" below.
(4) For 2000, reflects options granted under the 2000 Executive Stock Option
Plan. See "Options Granted in Last Fiscal Year" below.
(5) Amounts shown reflect contributions and allocations to defined contribution
retirement plans and the value of insurance premiums for term life insurance
and disability insurance. In addition, for fiscal year 1998, for Mr. Boxer
the amount includes $238,262, representing a one-time signing bonus, and for
Mr. Jackson, the amount reflects relocation expenses.
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OPTIONS GRANTED IN LAST FISCAL YEAR
The following table sets forth information concerning stock options granted
to the executive officers named in the Summary Compensation Table during 2000.
POTENTIAL REALIZABLE VALUE
PERCENTAGE OF AT ASSUMED ANNUAL RATES
NUMBER OF ALL OPTIONS OF STOCK PRICE APPRECIATION
SECURITIES GRANTED TO ALL FOR OPTION TERM(2)
UNDERLYING EMPLOYEES IN EXERCISE EXPIRATION ---------------------------
OPTIONS(1) 2000 PRICE DATE 5% 10%
---------- -------------- -------- ---------- ------------ ------------
Kirk P. Pond........... 1,058,202 13.3% $42.75 4/6/10 $28,450,020 $72,097,937
Joseph R. Martin....... 634,921 8.0% 42.75 4/6/10 17,070,007 43,258,749
Daniel E. Boxer........ 317,461 4.0% 42.75 4/6/10 8,535,017 21,629,408
Jerry M. Baker......... 317,461 4.0% 42.75 4/6/10 8,535,017 21,629,408
Keith Jackson.......... 158,731 2.0% 42.75 4/6/10 4,267,522 10,814,738
- ---------------
(1) All options vest in their entirety on April 5, 2005 or earlier as follows:
20% will vest if the per share price of the company's Class A Common Stock
reaches $55.00 and stays at or above that price for 20 trading days during
any period of 30 consecutive trading days; 20% will vest if the per share
price of the company's Class A Common Stock reaches $64.00 and stays at or
above that price for 20 trading days during any period of 30 consecutive
trading days; 30% will vest if the per share price of the company's Class A
Common Stock reaches $77.00 and stays at or above that price for 20 trading
days during any period of 30 consecutive trading days; and the remaining 30%
will vest if the per share price of the company's Class A Common Stock
reaches $90.00 and stays at or above that price for 20 trading days during
any period of 30 consecutive trading days. The foregoing vesting target
prices are not intended to forecast future appreciation in the price of the
company's Class A Common Stock.
(2) Reflects net pre-tax gains which would be recognized at the end of the
option's ten-year term if an executive exercised all of his options on the
last day of the term and our stock price had grown over that term at the 5%
and 10% assumed annual growth rates set by the Securities and Exchange
Commission. The amounts shown are not intended to forecast future
appreciation in the price of the company's Class A Common Stock.
OPTION VALUES AT END OF LAST FISCAL YEAR
The following table sets forth information regarding the number and value
of stock options exercised during 2000 and held at the end of 2000 by the
executive officers named in the Summary Compensation Table.
NUMBER OF SECURITIES NET VALUE OF
UNDERLYING UNEXERCISED UNEXERCISED IN-THE-MONEY
OPTIONS AT YEAR-END OPTIONS AT YEAR-END(1)
SHARES ACQUIRED VALUE --------------------------- ---------------------------
ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
--------------- ---------- ----------- ------------- ----------- -------------
Kirk P. Pond........... 0 $ 0 120,000 1,138,202 $ -- --
Joseph R. Martin....... 40,000 1,080,950 20,000 674,921 -- --
Daniel E. Boxer........ 22,500 571,250 22,500 347,461 -- --
Jerry M. Baker......... 0 0 30,000 337,461 -- --
Keith Jackson.......... 10,000 295,000 220,000 178,731 2,863,000 --
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(1) Reflects net pre-tax amounts determined by subtracting the exercise price
from $14.44 per share, the fair market value of our Class A Common Stock on
the last trading day of 2000.
REPORT OF THE COMPENSATION COMMITTEE
The role of the compensation committee of the board of directors is to
recommend, establish, oversee and direct the company's executive compensation
policies and programs and to recommend to the board of directors compensation
for executive officers. In carrying out this role, we believe it is important to
align executive compensation with company values and objectives, business
strategies, management initiatives, business financial performance and enhanced
stockholder value.
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The following is a summary of policies which the committee analyzed in
determining the compensation for the officers of the company in 2000. The
committee has followed the same general policies in determining the compensation
for the officers of the company in 2001.
Compensation Philosophy. The committee intends to apply a consistent
philosophy to compensation for all employees, including executive officers,
which is based on the premise that the achievements of the company result from
the coordinated efforts of all individuals working toward common objectives. The
company strives to achieve those objectives by meeting the expectations of
customers and stockholders.
Under the supervision of the compensation committee, the company has
developed a compensation policy that is designed to:
1. Attract and retain qualified senior executives, especially those who
have been key to the company's success to date;
2. Reward executives for actions that result in the long-term
enhancement of stockholder value; and
3. Reward results with respect to the financial and operational goals of
the company.
The guiding principle of the committee is to establish a compensation
program that aligns executive compensation with the company's objectives and
business strategies as well as with operational and financial performance.
Accordingly, each executive officer's compensation package is comprised of three
elements: (a) base salary which reflects an individual's responsibilities,
performance and expertise and is designed to be competitive with salary levels
in effect at high-technology companies of the same size; (b) annual cash bonuses
tied to the company's achievement of specified financial goals; and (c) stock
options which strengthen the alignment of interests between the executive
officers and the company's stockholders.
Base Salary. The company establishes salaries for the chief executive
officer and other officers on the basis of personal performance, consultation
with executive compensation experts and by reviewing available data, including
published salary surveys and data from information filed with the SEC regarding
compensation of officers of comparably sized semiconductor and high-technology
companies. The committee has reviewed the base salaries of the executive
officers for 2000 and is of the opinion that such salaries are in line with
those paid by comparable high-technology companies.
Annual Cash Bonuses. Under the company's Executive Officer Incentive Plan,
the chief executive officer and each executive officer can earn an annual bonus
of between 40% and 90% of base salary (the "target amount") if the company
achieves target financial performance goals established for each fiscal year.
Exceeding the financial targets can result in bonuses of up to 200% of the
target amount.
Stock Options. The company grants stock options to provide long-term
incentives for executive officers. Option grants are designed to align the
interests of executive officers with those of the stockholders and to provide
each individual with a significant incentive to manage the company from the
perspective of an owner and to remain employed by the company. The number of
shares subject to each option grant is based on the officer's level of
responsibility and relative position within the company as well as a review of
grants to similar executives in similar positions in comparable companies. The
compensation committee participated in the development and adoption of the 2000
Executive Stock Option Plan, which was designed to provide significant
incentives to members of the management team if the company achieves
pre-established stockholder returns. Based on its review of other long-term
incentive programs offered to executives of high-technology companies to retain
those employees and increase stockholder value, as well as the reports and
analysis of independent executive compensation consultants, the committee
believes the terms of the 2000 Executive Option Plan, and the grants awarded
under that plan, were reasonable and in line with long-term incentives of
comparable high-technology companies under similar circumstances. Option granted
under that plan in 2000 are subject to accelerated vesting if the company's
Class A Common Stock achieves and maintains per share price targets established
in the terms of the option grants. See "Options Granted in Last Fiscal Year"
above. Accordingly, the options are designed to provide a return to the
executive officer to the extent the market price of the company's common stock
appreciates during the option term.
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Deductibility of Compensation. Section 162(m) of the Internal Revenue Code
imposes a $1 million limit on the deductibility of compensation paid to certain
executive officers of public companies, unless the compensation meets certain
requirements for "performance-based" compensation. In determining executive
compensation, the compensation committee considers, among other factors, the
possible tax consequences to the company and to the executives. However, tax
consequences, including but not limited to tax deductibility by the company, are
subject to many factors (such as changes in the tax laws and regulations or
interpretations thereof and the timing and nature of various decisions by
executives regarding options and other rights) that are beyond the control of
either the compensation committee or the company. In addition, the compensation
committee believes that it is important for it to retain maximum flexibility in
designing compensation programs that meet its stated objectives. For all of the
foregoing reasons, the compensation committee, while considering tax
deductibility as one of its factors in determining compensation, will not limit
compensation to those levels or types of compensation that will be deductible.
The compensation committee will, of course, consider alternative forms of
compensation, consistent with its compensation goals, that preserve
deductibility.
Conclusion. The committee believes the company has a compensation program
that is competitive in the semiconductor industry and that is appropriately
linked to the company's financial goals and stockholder returns.
COMPENSATION COMMITTEE
PAUL C. SCHORR IV, Chairman
RONALD W. SHELLY
WILLIAM N. STOUT
EMPLOYMENT AGREEMENTS
The company has entered into employment agreements, effective March 11,
2000, with each of Kirk P. Pond, Joseph R. Martin and Daniel E. Boxer. The
respective agreements provide that Mr. Pond be employed as President and Chief
Executive Officer, that Mr. Martin be employed as Executive Vice President and
Chief Financial Officer and that Mr. Boxer be employed as Executive Vice
President, Chief Administrative Officer and General Counsel. Each agreement has
a three-year term. The agreements with Mr. Pond and Mr. Martin may be renewed
for up to two additional one-year terms. Under the respective agreements, Mr.
Pond's base salary is $660,000, Mr. Martin's base salary is $400,000 and Mr.
Boxer's base salary is $370,000 or, in each case, such higher salary as the
compensation committee determines. Mr. Pond's annual incentive target amount
under the company's Executive Officer Incentive Plan is 90% of his base salary,
Mr. Martin's target amount is 70% of his base salary and Mr. Boxer's target
amount is 60% of his base salary (actual bonus amounts range from 0% to 200% of
the target amount, depending on whether the company achieves or exceeds
pre-established financial performance goals). The respective agreements provide
for the option grants awarded under the 2000 Executive Stock Option Plan. These
options will vest in their entirety on April 5, 2005, with earlier vesting if
certain per share stock price targets are achieved. See "Options Granted in Last
Fiscal Year" above. Each agreement further provides that, beginning in 2001, the
executive may be considered for further competitive, incentive and compensation
plan based compensation under broad-based compensation, option and benefit plans
to ensure that the executive's long term incentives remain competitive.
The agreements provide that if the executive retires after the initial
three-year term, he is entitled to health coverage for himself and his family
until the later of his or his spouse's death. The agreements with Mr. Pond and
Mr. Martin also provide that if the executive retires after the initial
three-year term, he is entitled to life insurance coverage with a face value of
$1.5 million on his life until his death. All of the agreements provide that, if
the executive retires after the initial term of the agreement, all of his
options granted under the company's broad-based stock option plans will vest and
he may continue to exercise such options for their full term. The grant of
options under the 2000 Executive Option Plan will continue to vest under the
normal schedule following retirement and each executive would have until the
seventh anniversary of the grant date to exercise such options. Each executive's
retirement benefits are subject to his not violating the non-compete and
confidentiality provisions in his employment agreement.
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Each agreement also provides that the executive cannot compete with the
company during the term of the agreement and for a period following termination
of employment equal to the greater of 12 months or the time remaining in the
initial term of the agreement at the time of termination.
Each agreement also provides for severance pay equal to three times (for
Messrs. Pond and Martin) or two times (for Mr. Boxer) the executive's base
salary and target annual bonus amount if the executive is terminated without
cause by the company or resigns for "good reason" (as such terms are defined in
the agreements) and, in such events, all of the executive's options under the
company's broad-based option plans become fully exercisable for their remaining
term. Options under the 2000 Executive Option Plan would continue to vest under
the normal schedule and the executive would have until the seventh anniversary
of the grant date to exercise those options. If a change in control of the
company occurs, the executive is entitled to accelerated vesting of his options
unless the change in control is initiated by the company and the executive
remains employed in the same position after the change in control. The
agreements with Mr. Pond and Mr. Martin also provide for tax restoration
payments to the extent any of the cash or equity severance benefits are subject
to an excise tax imposed under the Internal Revenue Code.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Court Square Capital Limited, an indirect wholly owned subsidiary of
Citigroup Inc., owns approximately 26% of Fairchild Semiconductor's outstanding
capital stock. Citicorp Venture Capital Ltd., also an indirect wholly owned
subsidiary of Citigroup Inc., indirectly owns approximately 39% of the
outstanding common stock of Intersil Holding Corporation. On March 16, 2001,
Fairchild Semiconductor acquired Intersil's discrete power products business for
approximately $338 million in cash.
Citicorp Venture Capital Ltd. indirectly owns an interest in ChipPAC, Inc.
Joseph R. Martin and Paul C. Schorr IV are members of the Fairchild
Semiconductor board of directors and the ChipPAC board of directors.
In connection with the company's acquisition of QT Optoelectronics, Inc. in
May 2000, Stephen C. Sherman, President and Chief Executive Officer of that
company and now Senior Vice President and General Manager of Fairchild
Semiconductor's Optoelectonics Group, received a loan of $1,308,244 from QT
Optoelectronics to fund federal and state income tax withholding obligations
incurred as a result of his exercise of options to purchase QT Optoelectronics
common stock immediately before the acquisition. As a result of the acquisition,
QT Optoelectronics became an indirect wholly owned subsidiary of the Company.
The loan bears interest at a 6.5% annual rate and must be repaid in full on or
before November 28, 2001 or earlier if Mr. Sherman's employment terminates for
any reason other than his death or permanent disability.
In connection with the company's employment in April 2000 of John M.
Watkins, Jr., Senior Vice President and Chief Information Officer, the company
made a loan of $359,000 to Mr. Watkins to fund federal and state income tax
withholding obligations as a result of the grant to him of restricted stock. The
loan bears interest at a 6.5% annual rate and must be repaid in full on or
before April 3, 2002 or earlier if Mr. Watkins' employment terminates for any
reason.
In connection with the company's acquisition of the power device business
of Samsung Electronics Co., Ltd. in April 1999, Citicorp Mezzanine Partners,
L.P., the general partner of which is an affiliate of Citigroup Venture Capital
Ltd., contributed $50.0 million in cash to the company in exchange for a 12.5%
Subordinated Note Due 2008 and a warrant to purchase 3,538,228 shares of our
common stock. The 12.5% Subordinated Note was repaid in full with proceeds of
our initial public offering in August 1999, at which time the warrant became no
longer exercisable.
Keith Jackson, Executive Vice President, Analog, Mixed Signal and
Non-Volatile Memory Products Group, received a loan in the amount of $100,000
from the company on April 15, 1998 in order to assist him in covering the costs
of relocating to take that position. The loan bore interest at 6% per year and
was repaid in full in January 2000.
In connection with the recapitalization of the Fairchild Semiconductor
business in March 1997, the then-existing stockholders of our company entered
into a Stockholders' Agreement containing agreements relating
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to the capital stock and corporate governance of our company and our wholly
owned subsidiary, Fairchild Semiconductor Corporation. Amendments to the
Stockholders' Agreement in May 1998 resulted in the termination of some rights
of the company to repurchase stock held by some executive officers. As a result,
those executives incurred federal and state income tax liabilities in 1998.
Fairchild Semiconductor Corporation made loans to the executive officers in June
1998 to enable them to fund such tax liabilities. The loans were in the
following amounts: Kirk P. Pond -- $1,686,164; Joseph R. Martin -- $843,094;
Daniel E. Boxer -- $347,060; Keith Jackson -- $70,340; and Jerry M.
Baker -- $350,600. The loans bore interest at a 6% annual rate. The loans
(including accrued but unpaid interest) were cancelled upon the company's
initial public offering in August 1999, resulting in compensation income
(including gross-ups for resulting income taxes paid by the company) to the
executive officers as follows: Kirk P. Pond -- $2,812,885; Joseph R.
Martin -- $1,406,446; Daniel E. Boxer -- $578,964; Keith Jackson -- $114,455;
and Jerry M. Baker -- $592,898. See "Summary Compensation Table" above.
STOCK OWNERSHIP BY 5% STOCKHOLDERS,
DIRECTORS AND CERTAIN EXECUTIVE OFFICERS
The following table sets forth stock ownership information for each
stockholder known to the company to beneficially own 5% or more of our Class A
Common Stock, for each director and director nominee, for each executive officer
named in the Summary Compensation Table above and for all directors, director
nominees and executive officers (including those not named in the Summary
Compensation Table) as a group. Except as otherwise noted, figures are based on
beneficial ownership and the number of shares outstanding as of March 9, 2001.
% OF CLASS A
NUMBER OF COMMON STOCK
SHARES OUTSTANDING
---------- -------------
Court Square Capital Limited............................. 25,331,396 25.5%
c/o Citicorp Venture Capital Ltd.
399 Park Avenue, 14th Floor
New York, NY 10022
FMR Corp.(1)............................................. 7,873,900 7.9%
82 Devonshire Street
Boston, MA 02109
Kirk P. Pond(2).......................................... 1,197,932 1.2%
Joseph R. Martin(2)...................................... 1,225,000 1.2%
Daniel E. Boxer(2)....................................... 395,836 *
Jerry M. Baker(2)........................................ 630,387 *
Keith Jackson(2)......................................... 270,000 *
Richard M. Cashin, Jr.(2)................................ 878,131 *
Paul C. Schorr IV(2)(3).................................. 57,496 *
Ronald W. Shelly(2)...................................... 12,800 *
William N. Stout(2)...................................... 32,746 *
Charles M. Clough(2)..................................... 10,000 *
William T. Comfort III(2)(3)............................. 320,104 *
All directors, director nominees and executive officers
as a group (20 persons)(2)(3).......................... 6,249,697 6.3%
- ---------------
* Less than 1%
(1) Information reported is based on the stockholder's filings with the
Securities and Exchange Commission as of February 13, 2001.
(2) Shares reported include those underlying options to purchase Class A Common
Stock that were vested on March 9, 2001 or that become vested within 60 days
after that date.
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(3) Does not include shares held by Court Square Capital Limited. Paul C. Schorr
IV, one of the company's directors, is Managing Director of Citicorp Venture
Capital Ltd., an affiliate of Court Square Capital. William T. Comfort III,
who is nominated for election to the board, is a consultant to Citicorp
Venture Capital Ltd. As a result of these affiliations, each of Messrs.
Schorr and Comfort may be deemed to beneficially own the shares held by
Court Square Capital. Each of Messrs. Schorr and Comfort disclaims
beneficial ownership of the shares held by Court Square Capital.
STOCKHOLDER RETURN PERFORMANCE
The following graph compares the percentage change in cumulative total
stockholder return on the company's Class A Common Stock against the cumulative
total return of the Standard & Poor's 500 Index and the Philadelphia Stock
Exchange Semiconductor Index from August 4, 1999, the first day our Class A
Common Stock was traded on the New York Stock Exchange, to December 29, 2000,
the last trading day in 2000. Cumulative total return to stockholders is
measured by dividing (1) the sum of total dividends for the period (assuming
dividend reinvestment) and the per-share price change for the period by (2) the
share price at the beginning of the period. The graph assumes that investments
of $100 were made on August 4, 1999 in our Class A Common Stock and in each of
the indexes.
[RETURN PERFORMANCE LINE GRAPH]
PHILADELPHIA STOCK
EXCHANGE|SEMICONDUCTOR
FAIRCHILD SEMICONDUCTOR STANDARD & POOR'S 500 INDEX
----------------------- --------------------- ----------------------
Aug. 4, 1999 100 100 100
Dec. 23, 1999 141.89 110.3 141.48
Dec. 29, 2000 78.05 99.86 117.21
INDEPENDENT PUBLIC AUDITORS
Since 1997, the company has retained KPMG LLP as its independent auditors
and it intends to retain KPMG for the current year ending December 30, 2001.
Representatives of KPMG are expected to be present at the annual meeting of
stockholders, where they will have an opportunity to make a statement if they
desire to do so and will be available to respond to appropriate questions.
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DISCLOSURE OF AUDITOR FEES
The following is a description of the fees billed to Fairchild
Semiconductor by KPMG during the year ended December 31, 2000:
Audit Fees: Audit fees paid by the company to KPMG in connection with
KPMG's review and audit of the company's annual financial statements for
the year ended December 31, 2000 and KPMG's review of the company's interim
financial statements included in its quarterly reports on Forms 10-Q during
that year totaled approximately $607,000.
Financial Information Systems Design and Implementation
Fees: Fairchild Semiconductor did not engage KPMG to provide advice to the
company regarding financial information systems design and implementation
during the year ended December 31, 2000.
All Other Fees: Fees billed to Fairchild Semiconductor by KPMG during
the year ended December 31, 2000 for all other non-audit services totaled
approximately $1,276,185.
2002 STOCKHOLDER PROPOSALS
In the event that a stockholder desires to have a proposal included in the
proxy statement and form of proxy for the annual meeting of stockholders to be
held in 2002, the proposal must be received by the company in writing on or
before November 24, 2001, by certified mail, return receipt requested, and must
comply in all respects with applicable rules and regulations of the Securities
and Exchange Commission and the laws of the State of Delaware. Stockholder
proposals may be mailed to
Corporate Secretary
Fairchild Semiconductor International, Inc.
82 Running Hill Road
South Portland, ME 04106
In addition, our bylaws require that any stockholder wishing to make a
nomination for director, or wishing to introduce a proposal or other business,
at the 2002 annual meeting of stockholders must give the company at least 60
days advance written notice, and that notice must meet certain requirements set
forth in the bylaws. Stockholders may request a copy of the bylaws from the
corporate secretary by writing to the above address.
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APPENDIX A
FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC.
CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
I. AUDIT COMMITTEE PURPOSE
The audit committee is appointed by the board of directors to assist the
board in fulfilling its oversight responsibilities. The audit committee's
primary duties and responsibilities are to:
- Monitor the integrity of the Company's financial reporting process and
systems of internal controls regarding finance, accounting, legal
compliance, and ethics compliance.
- Monitor the independence and performance of the Company's independent
auditors and internal auditing function.
- Provide an avenue of communication among the independent auditors,
management, the internal auditing function, and the board of directors.
The audit committee has the authority to conduct any investigation
appropriate to fulfilling its responsibilities, and it has direct access to the
independent auditors as well as anyone in the organization. The audit committee
has the ability to retain, at the Company's expense, special legal, accounting,
or other consultants or experts it deems necessary in the performance of its
duties.
II. AUDIT COMMITTEE COMPOSITION AND MEETINGS
Audit committee members shall meet the requirements of the New York Stock
Exchange. The audit committee shall be comprised, by no later than June 1, 2001,
of three or more directors as determined by the board, each of whom shall be
independent nonexecutive directors, free from any relationship that would
interfere with the exercise of his or her independent judgment. All members of
the committee shall have a basic understanding of finance and accounting
practices and be able to read and understand fundamental financial statements,
and at least one member of the committee shall have accounting or related
financial management expertise.
Audit committee members shall be appointed by the board. If an audit
committee chair is not designated or present, the members of the committee may
designate a chair by majority vote of the committee membership.
The committee shall meet at least four times annually. Meetings of the
committee shall be conducted as the members shall decide. As part of its job to
foster open communication, the committee should meet at least annually with
management, a representative of its internal audit service provider, and the
independent auditors in separate executive sessions to discuss any matters that
the committee or each of these groups believes should be discussed privately.
The committee, or at least the chair should meet with the independent
accountants and management to review the company's 10-Q prior to its filing.
III. AUDIT COMMITTEE RESPONSIBILITIES AND DUTIES
Review Procedures
1. Review and reassess the adequacy of this charter at least annually.
Submit the charter to the board of directors for approval and have the document
published at least every three years in accordance with SEC regulations.
2. Review the Company's annual audited financial statements prior to filing
with the Securities and Exchange Commission. Review should include discussion
with management and independent auditors of significant issues regarding
accounting principles, practices, and judgments.
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3. In consultation with the management, the independent auditors, and the
internal auditors, consider the integrity of the Company's financial reporting
processes and controls. Discuss significant financial risk exposures and the
steps management has taken to monitor, control, and report such exposures.
Review significant findings prepared by the independent auditors and the
internal auditing department together with management's responses.
4. Consider and approve, if appropriate, major changes to the Company's
accounting principles as suggested by the independent auditors, management, or
the internal audit service provider and any items required to be communicated by
the independent auditors in accordance with SAS 61 (see item 9). The chair of
the committee may represent the entire audit committee for purposes of this
review.
Independent Auditors
5. The independent auditors are ultimately accountable to the audit
committee and the board of directors. The audit committee shall review the
independence and performance of the auditors and annually recommend to the board
of directors the appointment of the independent auditors or approve any
discharge of auditors when circumstances warrant. The audit committee and the
board of directors have the ultimate authority and responsibility to select,
evaluate and, where appropriate, replace the independent auditors.
6. On an annual basis, the committee should review and discuss with the
independent auditors all significant relationships they have with the Company
that could impair the auditors' independence.
7. Prior to filing the annual financial statements with the Securities and
Exchange Commission, discuss the results of the audit with the independent
auditors. Discuss certain matters required to be communicated to the audit
committee in accordance with AICPA SAS 61.
8. Consider the independent auditors' judgments about the quality and
appropriateness of the Company's accounting principles as applied in its
financial reporting.
Internal Audit and Legal Compliance
9. Review the budget, plan, changes in plan, activities, organizational
structure and qualifications of the internal audit function, as needed.
10. Review the appointment, performance and replacement of the internal
audit service provider.
11. Review significant reports prepared by the internal audit service
provider together with management's response and follow-up to these reports.
12. On at least an annual basis, review with the Company's counsel, any
legal matters that could have a significant impact on the organization's
financial statements, the Company's compliance with applicable laws and
regulations, and inquiries received from regulators or governmental agencies.
Other Audit Committee Responsibilities
13. Annually prepare a report to shareholders as required by the Securities
and Exchange Commission. The report should be included in the Company's annual
proxy statement.
14. Perform any other activities consistent with this Charter, the
Company's bylaws, and governing law, as the committee or the board deems
necessary or appropriate.
15. Maintain minutes of meetings and periodically report to the board of
directors on significant results of the foregoing activities.
16. Monitor compliance with the company's Code of Ethical Conduct.
Special Note on Audit Committee Responsibilities
The audit committee is responsible for the duties set forth in this charter
but is not responsible for either the preparation of the financial statements or
the auditing of the financial statements. Management has the
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responsibility for preparing the financial statements and implementing internal
controls and the independent accountants have the responsibility for auditing
the financial statements and testing the effectiveness of the internal controls.
The review of the financial statements by the audit committee is not of the same
quality as the audit performed by the independent accountants. In carrying out
its responsibilities, the audit committee believes its policies and procedures
should remain flexible in order to best react to a changing environment.
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22
1897-PS-01
23
PROXY
[FAIRCHILD LOGO]
FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC.
82 RUNNING HILL ROAD, SOUTH PORTLAND, ME 04106
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS ON APRIL 25, 2001
The undersigned hereby appoints KIRK P. POND and DANIEL E. BOXER, or either
of them, with power of substitution, attorneys and proxies to vote, as indicated
on the reverse hereof, all shares of Class A Common Stock of Fairchild
Semiconductor International, Inc., a Delaware corporation (the "Company"), which
the undersigned is entitled to vote at the annual meeting of stockholders to be
held at the Company's executive offices, 82 Running Hill Road, South Portland,
Maine, on Wednesday, April 25, 2001, at 9:30 a.m., local time, or at any
adjournments thereof, with all the powers the undersigned would possess,
including cumulative voting rights, if then and there personally present, upon
the matters described in the notice of annual meeting of stockholders and proxy
statement, dated March 27, 2001, receipt of which is hereby acknowledged, and
upon any other business that may come before the meeting or any such
adjournment.
The nominees for election as directors are (01) Kirk P. Pond, (02) Joseph R.
Martin, (03) Richard M. Cashin, Jr., (04) Charles M. Clough, (05) William T.
Comfort III, (06) Paul C. Schorr IV, (07) Ronald W. Shelly and (08) William N.
Stout.
PLEASE MARK, SIGN AND DATE ON REVERSE SIDE AND RETURN IN THE ACCOMPANYING
ENVELOPE.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE.
24
SEE REVERSE SIDE. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE
MANNER DIRECTED BELOW BY THE UNDERSIGNED STOCKHOLDER.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF ALL OF THE
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS AND FOR ALL PROPOSALS LISTED
BELOW.
1. ELECTION OF DIRECTORS.
Nominees: Kirk P. Pond, Joseph R. Martin, Richard M. Cashin, Jr., Charles M.
Clough, William T. Comfort III, Paul C. Schorr IV, Ronald W. Shelly, William N.
Stout
For all nominees [ ] [ ] Withheld from all nominees
[ ]
-------------------------------------------------
Withhold vote from the nominees that I/we have written on the above line, or
cumulate votes as I/we have instructed on the above line.
2. PROPOSAL TO AMEND THE RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE
NUMBER OF SHARES OF COMMON STOCK THE COMPANY IS AUTHORIZED TO ISSUE.
For Against Abstain
[ ] [ ] [ ]
[ ] MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT
[ ] MARK HERE IF YOU PLAN TO ATTEND THE MEETING
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Please sign exactly as your name appears. When shares are held by joint
tenants, both should sign. When signing as attorney, 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.
SIGNATURE: _______________________________ DATE: ________________