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:
<Table>
[ ] 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
</Table>
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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(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):
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(4) Proposed maximum aggregate value of transaction:
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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
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
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[FAIRCHILD SEMICONDUCTOR
LETTERHEAD]
FAIRCHILD SEMICONDUCTOR
INTERNATIONAL, INC.
82 Running Hill Road
South Portland, ME 04106
March 25, 2002
Fellow stockholder:
On behalf of your board of directors, I am pleased to invite you to attend the
2002 annual meeting of stockholders of Fairchild Semiconductor International,
Inc.
The notice of annual meeting, proxy statement and proxy card included with 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, Charles P. Carinalli, Richard M. Cashin, Jr., Charles M.
Clough, William T. Comfort III, Paul C. Schorr IV, Ronald W. Shelly and William
N. Stout for re-election to the board.
This year, we are sending you our annual report on SEC Form 10-K with this proxy
statement instead of our usual full-color annual report. The Form 10-K, which is
filed by public companies each year with the Securities and Exchange Commission,
includes our audited 2001 financial statements and other disclosures that, in
the past, have been included in the color annual report, plus additional
information about our company. In addition, the enclosed Summary Report
highlights our business strategy and some of our achievements last year. This
approach costs less overall and provides stockholders with more information
about the company.
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. If your shares are held in a
brokerage or similar account, you can vote 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
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC.
TIME.......................... 9:30 a.m., Wednesday, May 8, 2002
PLACE......................... Fairchild Semiconductor International, Inc.
World Wide Headquarters
82 Running Hill Road
South Portland, Maine
ITEMS OF BUSINESS............. 1. Elect directors.
2. 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 common stock of record as
of the close of business on March 12, 2002 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 can vote by telephone or on the
Internet if your shares are held by a bank or
broker. See the proxy card 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 25, 2002
PROXY STATEMENT
TABLE OF CONTENTS
<Table>
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. Other business...................................... 4
BOARD MEETINGS AND COMMITTEES............................... 4
Report of the Audit Committee............................. 5
DIRECTOR COMPENSATION....................................... 5
EXECUTIVE COMPENSATION...................................... 6
Summary Compensation Table................................ 6
Options Granted in Last Fiscal Year....................... 7
Option Values at End of Last Fiscal Year.................. 8
Report of the Compensation Committee...................... 8
Employment Agreements..................................... 10
CERTAIN RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS........ 11
STOCK OWNERSHIP BY 5% STOCKHOLDERS, DIRECTORS AND CERTAIN
EXECUTIVE OFFICERS........................................ 12
STOCKHOLDER RETURN PERFORMANCE.............................. 14
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
OF 1934................................................... 14
INDEPENDENT PUBLIC AUDITORS................................. 14
2003 STOCKHOLDER PROPOSALS.................................. 15
</Table>
[FAIRCHILD SEMICONDUCTOR
LETTERHEAD]
FAIRCHILD SEMICONDUCTOR
INTERNATIONAL, INC.
82 Running Hill Road
South Portland, ME 04106
ANNUAL MEETING OF STOCKHOLDERS
MAY 8, 2002
PROXY STATEMENT
GENERAL INFORMATION
Fairchild Semiconductor International, Inc., on behalf of its board of
directors, is sending you this proxy statement and the enclosed proxy card in
connection with the company's annual meeting of stockholders on May 8, 2002 and
any adjournments of the meeting. Because the board is soliciting your proxy to
vote your shares of Fairchild stock at the annual meeting, the company is
required by law to provide you with the information in this proxy statement. The
company's annual report on Form 10-K, 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 25, 2002.
The board of directors solicits proxies 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. If you return the enclosed proxy
card, or vote by telephone or on the Internet (if your shares are held by a bank
or broker), your shares will be voted by the proxy holders named on the proxy
card in accordance with your directions. You can specify your choices by marking
the appropriate boxes on the proxy card. If you sign and return the proxy card
without specifying choices, your shares will be voted as recommended by the
board of directors.
The company is paying all costs to prepare, assemble and mail the notice of
annual meeting, proxy statement and proxy card. 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 Georgeson Shareholder 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 will reimburse brokerage houses and
other nominees for their expenses in forwarding proxy material to beneficial
owners of the company's common stock.
YOUR PROXY CAN BE REVOKED
Signing and returning the 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, which would cancel any proxies previously given.
In addition, you can revoke your proxy at any time before your shares are 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 common stock (which we refer to throughout this proxy statement as
our common stock) of record at the close of business on March 12, 2002 are
entitled to receive notice of, and to vote at, the annual meeting. On that date
there were 100,428,121 shares of common stock outstanding. The holders of a
majority of the shares of 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.
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 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 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. If you return a signed proxy card or attend the meeting, but
choose in either case to abstain from voting, you will be considered present at
the meeting and not voting in favor of that proposal. Because directors are
elected by a plurality of votes, abstentions do 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.
PROPOSAL TO BE VOTED ON AT THE MEETING
1. ELECTION OF DIRECTORS.
Kirk P. Pond, Joseph R. Martin, Charles P. Carinalli, Richard M. Cashin,
Jr., Charles M. Clough, William T. Comfort III, 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 2002 annual meeting, have been
nominated for re-election for one-year terms or until their successors have been
qualified and elected. In February 2002, the board of directors increased the
size of the board to nine from eight positions, and elected Charles P. Carinalli
to fill the vacancy created as a result. Unless otherwise specified by the
stockholders, it is intended that the shares represented by proxies will be
voted for the nine 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 becomes
unavailable prior to the election, the shares represented by proxies may be
voted for the election of other persons as the board of directors may recommend.
The persons named on the proxy card will have discretionary authority to vote
proxies cumulatively in the election of directors.
Information follows about the directors nominated for election.
KIRK P. POND, AGE 57, 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. He has 30 years of experience in the
semiconductor industry. 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.
JOSEPH R. MARTIN, AGE 54, 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. He has 23 years of experience in the semiconductor industry. 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.
CHARLES P. CARINALLI, AGE 53, CHAIRMAN AND CHIEF EXECUTIVE OFFICER, ADAPTIVE
SILICON INC.
Mr. Carinalli became a director in February 2002. He has over 30 years of
experience in the semiconductor industry. Since 1999 he has been Chairman and
Chief Executive Officer of Adaptive Silicon
2
Inc. From 1996 to 1999 he was President and CEO of Wavespan Corporation. He
previously worked in several management and executive positions with National
Semiconductor Corporation from 1970 to 1996, including as Senior Vice President
and Chief Technical Officer from 1992 to 1996. Mr. Carinalli is a director of
Extreme Networks, Clearwater Networks, Resonext Communications, TeraBlaze and
Z-Force Communications.
RICHARD M. CASHIN, JR., AGE 48, CHAIRMAN, ONE EQUITY PARTNERS.
Mr. Cashin became a director in March 1997. Since April 2001, Mr. Cashin
has been the Chairman of One Equity Partners, the private equity group of Bank
One. From April 2000, he was 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 Delco Remy International, Gerber Childrenswear and Titan Wheel
International.
CHARLES M. CLOUGH, AGE 73, FORMER CEO AND CHAIRMAN, WYLE ELECTRONICS.
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 35, CONSULTANT TO CITIGROUP VENTURE CAPITAL EQUITY
PARTNERS.
Mr. Comfort became a director in April 2001. He became a consultant to
Citigroup Venture Capital Equity Partners 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, CITIGROUP VENTURE CAPITAL EQUITY
PARTNERS.
Mr. Schorr became a director in March 1997. He has been employed by
Citigroup Venture Capital Equity Partners since 1996, where he was a Vice
President until being named a Managing Director in January 2000. Prior to
joining Citigroup Venture Capital Equity Partners, 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, AMI Semiconductor and
ChipPAC Inc.
RONALD W. SHELLY, AGE 58, 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 of Custom Manufacturing Services. He is a director of Symtx.
WILLIAM N. STOUT, AGE 63, FORMER CHAIRMAN AND CHIEF EXECUTIVE OFFICER, STERLING
HOLDING COMPANY.
Mr. Stout became a director in March 1997. He was Chairman and Chief
Executive Officer of Sterling Holding Company, an affiliate of Citigroup Venture
Capital Equity Partners, and Sterling's subsidiaries from 1988 until 2002. He is
currently a director of Sterling Holding Company, which 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.
3
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE RE-ELECTION
TO THE BOARD OF DIRECTORS OF MESSRS. POND, MARTIN, CARINALLI, CASHIN, CLOUGH,
COMFORT, SCHORR, SHELLY AND STOUT.
2. OTHER BUSINESS
The board of directors is not aware of any other business to be presented
at the 2002 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 12 meetings during 2001. All of the directors
who were members of the board during 2001 except Mr. Cashin attended 75% or more
of the meetings of the board of directors and the committees of the board on
which they served during 2001. Mr. Carinalli became a member of the board in
February 2002.
The board of directors currently has three standing committees -- the
compensation committee, the audit committee and the 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 current chairman of the compensation committee is Mr. Schorr
and its other current members are Mr. Shelly and Mr. Stout. The compensation
committee held four meetings in 2001.
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. The
audit committee held five meetings during 2001. Up to and including the 2001
audit cycle, including the audit committee report included in this proxy
statement, Mr. Shelly has been the chairman of the audit committee and its other
members have been Mr. Cashin and Mr. Clough. For 2002, the members of the audit
committee will be Mr. Carinalli, Mr. Cashin, Mr. Clough and Mr. Stout.
Nominating Committee. The nominating committee is generally responsible
for making recommendations to the board regarding nominees for election to the
board, compensation of the board and the organization and responsibilities of
board committees, and for reviewing the general responsibilities and functions
of the board. Any stockholder who wishes to recommend a prospective board
nominee for the committee to consider can write to the Corporate Secretary,
Fairchild Semiconductor International, Inc., 82 Running Hill Road, South
Portland, Maine 04106. The current members of the nominating committee are Mr.
Carinalli, Mr. Clough, Mr. Comfort and Mr. Shelly.
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 2000, the board of
directors adopted a written charter for the audit committee. The company's audit
committee currently consists of three members and, for 2002, will consist of
four members, each of whom is independent from the company and its management as
independence is defined in the New York Stock Exchange rules.
4
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 2001 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 30, 2001.
AUDIT COMMITTEE
RONALD W. SHELLY, Chairman
RICHARD M. CASHIN, JR.
CHARLES M. CLOUGH
DIRECTOR COMPENSATION
Non-employee directors 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. Under the company's director option
program, non-employee directors receive a grant of options to purchase 20,000
shares of common stock upon their first election to the board, which options are
fully vested upon grant, and annual grants of options to purchase 15,000 shares
of 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. In addition to the foregoing, committee chairs are
paid an additional retainer of $3,000 per year. Also, based upon a
recommendation of independent consultants in 2001, annual cash compensation for
board members will be increased to $25,000 and the meeting compensation to
$2,000 at such time as employee pay cuts instituted in 2001 are restored.
5
EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation
received by our chief executive officer and certain other executive officers of
the company during 2001.
SUMMARY COMPENSATION TABLE
<Table>
<Caption>
LONG TERM
COMPENSATION(4)
---------------
ANNUAL COMPENSATION NUMBER OF
FISCAL --------------------- OTHER ANNUAL STOCK OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(2) COMPENSATION(3) (IN SHARES) COMPENSATION(5)
- --------------------------- ------- -------- ---------- --------------- --------------- ---------------
Kirk P. Pond................... 2001 $634,615 $ 0 $ 108,507 440,000 $ 42,957
Chairman of the Board of 2000 648,462 1,188,000 547 1,058,202 55,074
Directors, President and 1999S(1) 351,922 630,000 2,870,493 200,000 26,422
Chief Executive Officer 1999 450,008 297,000 3,559,453 0 40,321
Joseph R. Martin............... 2001 384,616 0 45,548 264,000 36,791
Executive Vice President and 2000 392,308 560,000 2,758 634,921 43,025
Chief Financial Officer and 1999S(1) 210,581 273,000 1,406,446 100,000 22,355
Director 1999 284,600 128,700 1,779,730 0 36,363
Daniel E. Boxer................ 2001 355,769 0 61,318 132,000 15,701
Executive Vice President and 2000 362,308 444,000 7,476 317,461 17,848
Chief Administrative Officer, 1999S(1) 192,500 231,000 578,964 75,000 10,298
General Counsel and Secretary 1999 275,002 108,900 732,627 0 18,723
Stephen C. Sherman............. 2001 334,615 0 0 50,000 1,453,592
Senior Vice President, 2000 203,316 401,222 0 75,000 0
Optoelectronics Products(6)
Keith Jackson.................. 2001 307,692 0 288 70,000 10,349
Executive Vice President and 2000 307,692 320,000 392 158,731 16,240
General Manager, Analog and 1999S(1) 174,038 175,000 114,455 50,000 8,454
Mixed Signal Products Group 1999 275,002 82,500 151,380 0 8,091
Mixed Signal and Non-Volatile
Memory Products Group
John M. Watkins, Jr............ 2001 277,644 0 1,039 35,000 10,024
Senior Vice President and 2000 248,558 200,508 1,040,610 75,000 12,530
Chief Information Officer(6)
</Table>
- ---------------
(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 Mr.
Jackson.
(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 of the lapse of the risk of forfeiture,
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 and $70,340 to Mr.
Jackson 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-Party Transactions" below. Amount shown
for 2000 for Mr. Watkins consists of the value of 30,000 shares of
restricted common stock granted in connection with Mr. Watkins' employment
with the company. Amounts shown for 2001 for Mr. Pond, Mr. Martin
6
and Mr. Boxer include the value of perquisites, including $41,580, $21,482
and $23,365, respectively, for automobile expenses. All other amounts in
this column reflect foreign taxes paid on behalf of the executive officers.
(4) For years other than 2000, reflects options granted under the Restated Stock
Option Plan. See "Options Granted in Last Fiscal Year" below. For 2000,
reflects options granted under the 2000 Executive Stock Option Plan, which
grants were cancelled in August 2001 in accordance with an option
cancellation and replacement program. See "Option Values at End of Last
Fiscal Year -- Option Cancellation and Replacement Program" below. The value
of a restricted stock award of 30,000 shares of common stock made to Mr.
Watkins in connection with his employment with the company in 2000 is
indicated in the column headed "Other Annual Compensation."
(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. Amount shown for Mr. Sherman in 2001 also includes
amounts accrued to forgive a loan in connection with Mr. Sherman's
termination of employment. See "Certain Relationships and Related-Party
Transactions" below.
(6) Joined the company in 2000.
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 2001.
<Table>
<Caption>
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........... 440,000 6.8% $15.19 2/14/11 $ 4,203,280 $10,651,937
Joseph R. Martin....... 264,000 4.1% $15.19 2/14/11 2,521,968 6,391,162
Daniel E. Boxer........ 132,000 2.0% $15.19 2/14/11 1,260,984 3,195,581
Stephen C. Sherman..... 50,000 0.8% $15.19 2/14/11 477,645 1,210,447
Keith Jackson.......... 70,000 1.1% $15.19 2/14/11 668,704 1,694,626
John M. Watkins,
Jr. ................. 35,000 0.5% $15.19 2/14/11 334,352 847,313
</Table>
- ---------------
(1) Options vest in three installments of 25%, 37.5% and 37.5%, respectively, on
the first three anniversaries of the grant date of February 13, 2001, or
upon retirement after March 11, 2003 in the cases of Messrs. Pond, Martin
and Boxer, as provided in their employment agreements. See "Employment
Agreements" below.
(2) Reflects net pre-tax gains which would be recognized at the end of the
option's ten-year term if an executive remained employed for the full option
term and 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. Amounts shown are not
intended to forecast future appreciation in the price of the company's
common stock.
7
OPTION VALUES AT END OF LAST FISCAL YEAR
The following table sets forth information regarding the number and value
of stock options held at the end of 2001 by the executive officers named in the
Summary Compensation Table.
<Table>
<Caption>
NUMBER OF SECURITIES NET VALUE OF
UNDERLYING UNEXERCISED UNEXERCISED IN-THE-MONEY
OPTIONS AT YEAR-END OPTIONS AT YEAR-END(1)
--------------------------- ---------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
Kirk P. Pond.................................... 160,000 480,000 $1,440,000 $5,776,400
Joseph R. Martin................................ 60,000 284,000 540,000 3,429,840
Daniel E. Boxer................................. 60,000 147,000 540,000 1,759,920
Stephen C. Sherman.............................. 6,250 143,750 -- 615,500
Keith Jackson................................... 240,000 80,000 5,835,000 951,700
John M. Watkins, Jr. ........................... 20,000 65,000 -- 430,850
</Table>
- ---------------
(1) Reflects net pre-tax amounts determined by subtracting the exercise price
from $27.50 per share, the fair market value of our common stock on the last
trading day of 2001. Does not include the value of options cancelled in
August 2001 under the cancellation and replacement program described below,
or the value of replacement grants made under that program in February 2002
in exchange for the cancelled options.
Option Cancellation and Replacement Program. On August 13, 2001, the
company and each of the executive officers who received grants under the 2000
Executive Stock Option Plan and who would remain an executive officer at the end
of 2001, including Messrs. Pond, Martin, Boxer, Jackson and Watkins, agreed to
cancel their grants of options under that plan in exchange for grants, to be
made at a later date, of replacement options to purchase 55% of the number
shares underlying the cancelled options. The program was voluntary, but an
executive officer's agreement to cancel options was not revocable by the officer
after the cancellation date. In order to save compensation expense to the
company, the executive officers and the company agreed that the replacement
grants could not be made for at least six months and one day after the
cancellation date. The agreements provided that the replacement options would
have an exercise price equal to the fair market value of the company's common
stock on the replacement grant date, which exercise price could be lower or
higher than the exercise price of the cancelled options. In addition, the
agreements provided that if the executive officer's employment with the company
were to be terminated for any reason prior to the replacement grant date, he
would not receive replacement options and the cancelled options would not be
reinstated. The program is not expected to result in compensation expense to the
company. The cancelled options, which were originally granted on May 16, 2000,
all had exercise prices of $42.75 per share and were to have vested in full on
May 16, 2005, or earlier, in installments, if the trading price of our common
stock had achieved certain pre-established targets. In total, options to
purchase 2,720,509 shares were cancelled by our executive officers, including
1,058,202 by Mr. Pond, 634,921 by Mr. Martin, 317,461 by Mr. Boxer, 158,731 by
Mr. Jackson and 75,000 by Mr. Watkins. On February 22, 2002, the company granted
replacement options to purchase a total of 1,496,280 shares of common stock to
the executive officers who had cancelled options, including 582,011 to Mr. Pond,
349,207 to Mr. Martin, 174,604 to Mr. Boxer, 87,302 to Mr. Jackson and 41,250 to
Mr. Watkins. All replacement options have an exercise price of $23.80 per share
and will vest in full on May 16, 2005 or earlier if the trading price of our
common stock reaches certain pre-established targets. The replacement grants to
Messrs. Pond, Martin and Boxer would vest in full upon their retirement after
March 11, 2003, in accordance with their employment agreements. See "Employment
Agreements" below.
REPORT OF THE COMPENSATION COMMITTEE
The role of the compensation committee of the board of directors is to
establish, recommend, 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 increased
stockholder value.
8
The following is a summary of policies which the committee analyzed in
determining the compensation for the officers of the company in 2001. The
committee has followed the same general policies in determining the compensation
for the officers of the company in 2002.
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 2001 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,
executive officers 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
option cancellation and replacement program discussed above, which was designed
to realign incentives to members of the management team in light of the fact
that prior option grants under the 2000 Executive Stock Option Plan were made at
a time when the company's stock price was near its highest levels. As a result,
the exercise price of options granted under the plan were significantly higher
than the current trading price of the company's common stock. Under the program,
executives who voluntarily agreed to cancel options on August 13, 2001 received
options to purchase 55% of the number of options cancelled on February 22, 2002.
The program is not expected to result in compensation expense to the company.
Based on its review of similar programs offered to executives of high-technology
companies to retain employees under similar circumstances, as well as the
reports and analysis of independent executive compensation consultants, the
committee believes the terms of the cancellation and replacement option program
and the grants made under that program, were reasonable and in line with
long-term incentives of comparable high-technology companies under similar
circumstances. Options granted under 2000 Executive
9
Stock Option Plan and the cancellation and replacement program are subject to
accelerated vesting if the company's common stock achieves and maintains per
share price targets established in the terms of the option grants. 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.
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 it has designed a compensation program
that is competitive with the overall semiconductor industry and is appropriately
aligned with the company's financial goals and targeted 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. (Each executive, despite his employment
agreement, agreed to reduce his salary by 10% as part of a cost-saving program
implemented in 2001.) 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 provided
for the option grants awarded under the 2000 Executive Stock Option Plan, which
grants were cancelled on August 13, 2001 as described 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
10
granted under any company stock option plan will vest and he may continue to
exercise such options for their full term. Each executive's retirement benefits
are subject to his not violating the non-compete and confidentiality provisions
in his employment agreement.
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 option plans become fully exercisable for their remaining term. 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-PARTY TRANSACTIONS
Court Square Capital Limited, an indirect wholly owned subsidiary of
Citigroup Inc., and its affiliate together owned approximately 25.3% of
Fairchild Semiconductor's outstanding capital stock as of December 30, 2001.
Citigroup Venture Capital Equity Partners, also an indirect wholly owned
subsidiary of Citigroup Inc., indirectly owned approximately 19.1% of the
outstanding common stock of Intersil Holding Corporation as of December 31,
2001. On March 16, 2001, Fairchild Semiconductor acquired Intersil's discrete
power products business for approximately $344.2 million in cash.
Citigroup Venture Capital Equity Partners indirectly owns an interest in
ChipPAC, Inc. Paul C. Schorr IV, who is employed by Citigroup Venture Capital
Equity Partners, is a member of the Fairchild Semiconductor board of directors
and the ChipPAC board of directors. Fairchild Semiconductor subcontracts a
portion of its assembly and test manufacturing operations to ChipPAC.
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, 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. Under its original
terms, the loan bore interest at a 6.5% annual rate and was required to be
repaid in full on or before November 28, 2001 or earlier if Mr. Sherman's
employment were to have terminated for any reason other than his death or
permanent disability. Following the reorganization of the company's
optoelectronics group into the analog and mixed signal products group in 2001,
and in connection with agreements with Mr. Sherman relating to his termination
of employment as a result of the reorganization, the company agreed to cancel
Mr. Sherman's loan and accrued interest effective in July 2002, provided that
Mr. Sherman observes certain agreements with the company prior to that date. The
company recorded compensation expense of $1,439,136 for 2001 in connection with
the loan forgiveness.
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. In
April 2001, the company made an additional loan of $345,349 to Mr. Watkins to
fund additional federal and state tax obligations. The loans bear 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 was an affiliate of Citigroup Venture Capital
Equity Partners, contributed $50.0 million in cash to the company in exchange
for a
11
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.
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 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; and Keith Jackson -- $70,340. 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; and Keith
Jackson -- $114,455. 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 common
stock, for each director, for each executive officer named in the Summary
Compensation Table above and for all directors and executive officers (including
those not named in the Summary Compensation Table) as a group. Figures are based
on beneficial ownership and the number of shares outstanding as of December 30,
2001.
<Table>
<Caption>
% OF
NUMBER OF COMMON STOCK
SHARES OUTSTANDING
---------- ------------
Court Square Capital Limited(1)............................ 25,318,457 25.3%
c/o Citigroup Venture Capital Equity Partners
399 Park Avenue, 14th Floor
New York, NY 10022
FMR Corp.(2)............................................... 13,433,466 13.4%
82 Devonshire Street
Boston, MA 02109
Kirk P. Pond(3)............................................ 1,277,064 1.3%
Joseph R. Martin(3)........................................ 990,980 *
Daniel E. Boxer(3)......................................... 438,630 *
Keith Jackson(3)........................................... 322,500 *
John M. Watkins, Jr.(3).................................... 64,150 *
Stephen C. Sherman(3)...................................... 60,672 *
Charles P. Carinalli(3)(4)................................. -- *
Richard M. Cashin, Jr.(3).................................. 893,531 *
Charles M. Clough(3)....................................... 22,000 *
William T. Comfort III(3)(5)............................... 337,104 *
Paul C. Schorr IV(3)(5).................................... 67,321 *
Ronald W. Shelly(3)........................................ 28,200 *
William N. Stout(3)........................................ 48,146 *
All directors and executive officers as a group (20
persons)(3)(5)........................................... 5,570,989 5.6%
</Table>
- ---------------
* Less than 1%
12
(1) Based on the stockholder's and affiliate's reports of beneficial ownership
filed with the Securities and Exchange Commission through February 27, 2002.
The company has filed a shelf registration statement with the Securities and
Exchange Commission for the sale to the public of up to 9,575,000 shares of
common stock held by Court Square Capital.
(2) Based on the stockholder's and affiliates' reports of beneficial ownership
filed with the Securities and Exchange Commission through February 14, 2002.
(3) Shares reported include those underlying options to purchase common stock
that were vested on December 30, 2001 or that are scheduled to vest within
60 days after that date.
(4) Mr. Carinalli became a director in February 2002.
(5) Does not include shares held by Court Square Capital Limited. Paul C. Schorr
IV, one of the company's directors, is Managing Director of Citigroup
Venture Capital Equity Partners, an affiliate of Court Square Capital.
William T. Comfort III, another director, is a consultant to Citigroup
Venture Capital Equity Partners. As a result of these affiliations, each of
Messrs. Schorr and Comfort may be deemed to beneficially own the shares
beneficially owned by Court Square Capital. Each of Messrs. Schorr and
Comfort disclaims beneficial ownership of the shares held by Court Square
Capital.
13
STOCKHOLDER RETURN PERFORMANCE
The following graph compares the percentage change in cumulative total
stockholder return on the company's 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 common stock was
traded on the New York Stock Exchange, to December 28, 2001, the last trading
day in our fiscal year ended December 30, 2001. 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 common stock and in
each of the indexes.
[RETURN PERFORMANCE LINE GRAPH]
<Table>
<Caption>
PHILADELPHIA STOCK
EXCHANGE SEMICONDUCTOR
FAIRCHILD SEMICONDUCTOR STANDARD & POOR'S 500 INDEX
----------------------- --------------------- ----------------------
Aug. 4, 1999 100.00 100.00 100.00
Dec. 23, 1999 141.89 110.30 141.48
Dec. 29, 2000 78.05 99.86 117.21
Dec. 28, 2001 148.65 87.81 110.85
</Table>
COMPLIANCE WITH SECTION 16(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the company's
directors and executive officers, and persons who own 10% or more of the
company's Class A Common Stock, to file reports of ownership and changes in
ownership of the Class A Common Stock and other equity securities of the company
with the Securities and Exchange Commission and the New York Stock Exchange.
Officers, directors and 10% stockholders are required by SEC regulations to
furnish the company with copies of all forms they file under Section 16(a).
Based solely on its review of the copies of such forms received by the company,
we believe that all officers, directors and 10% stockholders have complied with
all applicable Section 16(a) filing requirements, except that one report of a
sale of stock by Ernesto J. D'Escoubet, an executive officer, was inadvertently
filed after the applicable filing deadline.
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 29, 2002.
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.
14
DISCLOSURE OF AUDITOR FEES
The following is a description of the fees billed to Fairchild
Semiconductor by KPMG during the year ended December 30, 2001:
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 30, 2001 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 $728,810.
Audit-Related Services: Assurance and related services traditionally
performed by auditors or which only the company's auditor could provide
(such as "cold comfort" letters and consents in connection with the
company's filings with the SEC) for the year ended December 30, 2001
totaled approximately $290,988.
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 30, 2001.
All Other Fees: Fees billed by KPMG during the year ended December 30,
2001 for all other non-audit services totaled approximately $475,660.
2003 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 2003, the proposal must be received by the company in writing on or
before November 25, 2002, 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 2003 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.
15
1897-PS-02
----------------
FAIRCHILD
----------------
SEMICONDUCTOR(R)
[1897-FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC.] [FILE NAME: ZFCS12.ELX]
[VERSION-(1)] [03/08/02] [ORIG. 03/08/02]
DETACH HERE ZFCS12
PROXY
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 MAY 8, 2002
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, May 8, 2002, 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 25, 2002, 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) Charles Carinalli, (04) Richard M. Cashin, Jr., (05) Charles M.
Clough, (06) William T. Comfort III, (07) Paul C. Schorr IV, (08) Ronald W.
Shelly, and (09) William N. Stout.
PLEASE MARK, SIGN AND DATE ON REVERSE SIDE AND RETURN IN THE ACCOMPANYING
ENVELOPE.
- ------------- -------------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
- ------------- -------------
FAIRCHILD SEMICONDUCTOR
INTERNATIONAL, INC.
C/O EQUISERVE
P.O. BOX 43068
PROVIDENCE, RI 02940
[1897-FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC.] [FILE NAME: ZFCS12.ELX]
[VERSION-(1)] [03/08/02] [ORIG. 03/08/02]
DETACH HERE ZFCS11
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE.
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.
1. Election of Directors
NOMINEES: (01) Kirk P. Pond, (02) Joseph R. Martin, (03) Charles Carinalli,
(04) Richard M. Cashin, Jr., (05) Charles M. Clough,
(06) William T. Comfort III, (07) Paul C. Schorr IV, (08) Ronald
W. Shelly, (09) 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 xxxxxxx votes as
I/We have xxxxxxxxx on the above line
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: __________ Signature: _______________ Date: _____