UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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 toss.240.14a-12
SYMBOL TECHNOLOGIES, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required
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SYMBOL TECHNOLOGIES, INC.
One Symbol Plaza
Holtsville, New York 11742-1300
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 26, 2004
To Our Stockholders:
The Annual Meeting of Stockholders of Symbol Technologies, Inc., a
Delaware corporation ("Symbol" or the "Company") will be held at 10:00 A.M.,
local time, on April 26, 2004 at Symbol Technologies, Inc., World Headquarters,
One Symbol Plaza, Holtsville, New York, for the purpose of considering and
acting upon the following:
Proposal 1. The election of six directors to the Board of
Directors of Symbol;
Proposal 2. The approval of the amendment and restatement of the
Symbol Technologies, Inc. Executive Bonus Plan;
Proposal 3. The approval of the Symbol Technologies, Inc. 2004
Equity Incentive Award Plan;
Proposal 4. The ratification of the appointment of Ernst & Young
LLP as the Company's independent auditor for the
fiscal year ending December 31, 2004; and
Proposal 5. The transaction of any other business that is
properly brought before the meeting or any
adjournments or postponements thereof.
Stockholders of record at the close of business on March 1, 2004 are
entitled to receive notice of and to vote at the meeting and any adjournments or
postponements thereof. You may vote your shares by completing, signing, dating
and returning the enclosed proxy card or by telephone or via the Internet.
Submitting your instructions by any of these methods will not affect your right
to attend the meeting and vote.
By Order of the Board of Directors,
/s/ PETER M. LIEB
-------------------------------------------
PETER M. LIEB
Secretary
Dated: March 31, 2004
Holtsville, New York
If you plan to attend the Annual Meeting in Person:
Admission to the Annual Meeting will be on a first-come, first-served
basis and an admission ticket and picture identification will be required to
enter the meeting. If you are a stockholder of record, you will find an
admission ticket attached to the proxy card sent to you. If you plan to attend
the meeting in person, please retain the admission ticket and bring it with you
to the meeting along with picture identification. Stockholders holding stock in
a bank or brokerage account will find an admission ticket attached to the proxy
card sent to you by your bank or broker. In the event you have not received an
admission ticket or have misplaced it, you can obtain an admission ticket in
advance by sending a written request to your bank or broker, or you may present
yourself at the meeting along with such proof of ownership (such as a brokerage
statement) as of the record date and picture identification. Cameras, recording
devices and other electronic devices will not be permitted at the Annual
Meeting.
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SYMBOL TECHNOLOGIES, INC.
One Symbol Plaza
Holtsville, New York 11742-1300
PROXY STATEMENT
We are providing these proxy materials because the Board of Directors
of Symbol Technologies, Inc. ("Symbol" or the "Company") is soliciting your
proxy to vote at Symbol's Annual Meeting of Stockholders at 10:00 A.M., local
time on April 26, 2004, at the Symbol Technologies, Inc. World Headquarters,
One Symbol Plaza, Holtsville, New York, and at any adjournments or postponements
of this meeting. This Proxy Statement contains information about the items being
voted on at the 2004 Annual Meeting and information about Symbol. Commencing on
or about April 2, 2004, copies of this Proxy Statement and the proxy card,
together with a copy of the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 2003, are being mailed to stockholders.
QUESTIONS AND ANSWERS
WHO IS ENTITLED TO VOTE?
Stockholders who own Symbol Common Stock, par value $.01 per share (the
"Common Stock") as of the close of business on March 1, 2004 will be entitled to
vote at the Annual Meeting. On that date there were 231,357,703 shares of Common
Stock outstanding and entitled to vote. Each share is entitled to one vote on
each matter properly brought before the meeting.
HOW DO I VOTE?
Symbol is offering you four methods of voting.
o You may indicate your vote on the enclosed proxy card, sign and date
the card and return the card in the enclosed prepaid envelope.
o You may vote by telephone by calling the toll free number that appears
on the enclosed proxy card and following the instructions given.
o You may vote via the Internet. Internet voting instructions are
provided on the enclosed proxy card.
o You may attend the meeting and vote in person.
All shares entitled to vote and represented by a properly completed and
executed proxy received before the meeting and not revoked will be voted at the
meeting as you instruct in a proxy delivered before the meeting. If you do not
indicate how your shares should be voted on a matter, the shares represented by
your properly completed and executed proxy will be voted as the Board of
Directors recommends.
WHAT DO I NEED TO KNOW IN ORDER TO ATTEND THE 2004 ANNUAL MEETING?
You are cordially invited to attend the Annual Meeting, which will
begin at 10:00 A.M., local time on April 26, 2004. The meeting will be held at
the Symbol Technologies, Inc. World Headquarters, One Symbol Plaza, Holtsville,
New York 11742. Stockholders will be admitted beginning at 9:00 A.M., local
time. The location is accessible to handicapped persons.
YOU WILL NEED AN ADMISSION TICKET TO ENTER THE MEETING. Admission to
the Annual Meeting will be on a first-come, first-served basis and an admission
ticket and picture identification will be required to enter the meeting. If you
are a stockholder of record, you will find an admission ticket attached to the
proxy card sent to you. If you plan to attend the meeting in person, please
retain the admission ticket and bring it with you to the meeting along with
picture identification. Stockholders holding stock in a bank or brokerage
account will find an admission ticket attached to the proxy card sent to you by
your bank or broker. In the event you have not received an admission
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ticket, you can obtain an admission ticket in advance by sending a written
request to your bank or broker, or you may present yourself at the meeting along
with such proof of ownership (such as a brokerage statement) as of the record
date and picture identification.
WHAT CAN I VOTE ON?
o The election of six directors to the Board of Directors of Symbol to
serve for a term of one year;
o The approval of the amendment and restatement of the Symbol
Technologies, Inc. Executive Bonus Plan;
o The approval of the Symbol Technologies, Inc. 2004 Equity Incentive
Award Plan;
o The ratification of the appointment of Ernst & Young LLP as the
Company's independent auditors for the fiscal year ending December 31,
2004; and
o The transaction of any other business that is properly brought before
the meeting or any adjournments or postponements thereof.
HOW DOES THE BOARD RECOMMEND I VOTE ON THE PROPOSALS?
The Board recommends a vote:
o FOR each of the nominees for the Board of Directors;
o FOR the approval of the amendment and the restatement of the Symbol
Technologies, Inc. Executive Bonus Plan;
o FOR the approval of the Symbol Technologies, Inc. 2004 Equity
Incentive Award Plan; and
o FOR the ratification of the appointment of Ernst & Young LLP as the
Company's independent auditors for the fiscal year ending December 31,
2004.
MAY I CHANGE MY VOTE?
You can revoke your proxy at any time before it is voted by delivery of
a properly completed and executed, later-dated proxy card or telephone or
Internet vote or by voting in person by ballot at the 2004 Annual Meeting.
HOW MANY VOTES ARE REQUIRED TO HOLD A MEETING?
A quorum is necessary to hold a valid meeting of stockholders. The
presence, in person or by proxy, of stockholders representing a majority of the
shares of the Common Stock outstanding and entitled to vote constitutes a
quorum. Shares represented by proxies that reflect abstentions or broker
"non-votes" are counted as present and entitled to vote for determination of a
quorum.
An abstention is a properly executed proxy marked ABSTAIN for any
matter. A broker "non-vote" occurs when you hold your shares in "street name"
through a broker or other nominee and you do not give your broker or nominee
instructions on how to vote on matters over which your broker or nominee does
not have voting discretion. If you do not provide voting instructions, your
shares may not be voted on these matters.
HOW MANY VOTES ARE REQUIRED TO PASS A PROPOSAL?
A favorable vote of a plurality of the shares present in person or
represented by proxy and entitled to vote is required for the election of
directors. This means that the nominees who receive the greatest number of votes
for each open seat will be elected. Abstentions will not affect the election of
nominees receiving a plurality of votes. Votes withheld and broker "non-votes"
are not counted for purposes of electing directors.
The affirmative vote of a majority of the shares present in person or
represented by proxy and entitled to vote is required for the approval of the
amendment and restatement of the Symbol Technologies, Inc. Executive Bonus Plan
and the 2004 Equity Incentive Award Plan and the ratification of the appointment
of Ernst & Young
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LLP as the Company's independent auditors. Abstentions will have the effect of a
negative vote, while broker "non-votes" will be treated as not entitled to vote
for purposes of determining the approval of these proposals and will not have
any effect on the outcome of the vote.
HOW WILL VOTING ON ANY OTHER BUSINESS BE CONDUCTED?
We do not know of any business or proposals to be considered at the
2004 Annual Meeting other than the items described in this Proxy Statement. If
any other business is properly brought before the Annual Meeting or any
adjournments or postponements thereof, the signed proxies received from you and
other stockholders give the proxies the authority to vote on the matter
according to their judgment.
WHO RECEIVES PROXY MATERIALS?
This Proxy Statement and enclosed proxy card are first being mailed to
stockholders on or about April 2, 2004. Each registered owner of Common Stock as
of the close of business on March 1, 2004 is entitled to receive a copy of
Symbol's 2003 Annual Report on Form 10-K and to vote.
The Securities and Exchange Commission (the "SEC" or the "Commission")
has adopted rules that permit companies and intermediaries such as brokers to
satisfy delivery requirements for proxy statements with respect to two or more
stockholders sharing the same address by delivering a single proxy statement
addressed to those stockholders. This process, which is commonly referred to as
"householding," potentially provides extra convenience for stockholders and cost
savings for companies. The Company and some brokers household proxy materials,
delivering a single proxy statement to multiple stockholders sharing the same
last name and address unless contrary instructions have been received from the
affected stockholders. Once you have received notice from your broker or us that
they or we will be householding materials to your address, householding will
continue until you are notified otherwise or until you revoke your consent. If,
at any time, you no longer wish to participate in householding and would prefer
to receive a separate proxy statement, or if you are receiving multiple copies
of the proxy statement and wish to receive only one, please notify your broker,
if your shares are held in a brokerage account, or us, if you hold registered
shares. You can notify us by sending a written request to the address set forth
below under "How can I contact Symbol to request materials or information
referred to in these questions and answers?" If you revoke your consent, you
will be sent separate copies of documents mailed within 30 days after receipt of
your revocation.
If you have not received the Company's 2003 Annual Report on Form 10-K,
please contact us as directed below under "How can I contact Symbol to request
materials or information referred to in these questions and answers?" and we
will send a copy without exhibits at no expense to you. Symbol will provide any
exhibit requested upon payment of a specified reasonable fee limited to Symbol's
reasonable expenses in furnishing such exhibit.
MAY I INSPECT THE STOCKHOLDER LIST?
In accordance with Delaware law and the Company's By-Laws, a list of
stockholders entitled to vote at the meeting will be available for examination
by any stockholder, for any purpose germane to the meeting, for 10 days prior to
the meeting at the location of the Annual Meeting, Symbol's World Headquarters,
between the hours of 9:00 A.M. and 4:00 P.M., Eastern Standard Time.
WHO BEARS THE COSTS OF SOLICITING PROXIES?
Symbol pays the costs of soliciting proxies. We have also made arrangements
with brokerage houses and other custodians, nominees and fiduciaries of shares
to send proxy materials to stockholders of record on March 1, 2004. We will,
upon request, reimburse brokerage firms and others for their reasonable expenses
in forwarding solicitation material to the beneficial owners of stock as of the
record date. Certain of Symbol's officers and directors may solicit the
submission of proxies authorizing the voting of shares in accordance with the
Board of Directors' recommendations, but no additional remuneration will be paid
by the Company for the solicitation of proxies by the Company's officers and
directors. We have retained Innisfree M&A Incorporated, 501 Madison Avenue, 20th
Floor,
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New York, New York 10004, to aid in the solicitation of proxies for the 2004
Annual Meeting. For these services, we will pay Innisfree a fee of $15,000 and
reimburse it for certain out-of-pocket disbursements and expenses.
HOW CAN I CONTACT SYMBOL TO REQUEST MATERIALS OR INFORMATION REFERRED TO IN
THESE QUESTIONS AND ANSWERS?
You may contact us:
o By mail addressed to:
Symbol Technologies, Inc.
One Symbol Plaza
Mail Stop: A-4
Holtsville, NY 11742
Attention: Investor Relations;
o By calling (631) 738-4104; or
o By visiting our website at http://www.symbol.com/investors and
clicking on "Info Request" and filling out the request form.
STOCKHOLDER PROPOSALS AND NOMINATIONS
The deadline for stockholders to submit a proposal under Rule 14a-8 of
the Commission's proxy rules for inclusion in the Company's proxy statement for
the 2005 Annual Meeting is December 1, 2004. Any such proposals submitted under
Rule 14a-8 must be received by the Company on or before that date. Please send
proposals to the Secretary of the Company at the Company's principal executive
offices.
In addition, eligible stockholders may submit proposals for
consideration at the 2005 Annual Meeting (aside from a stockholder proposal
under Rule 14a-8 to be included in the Company's proxy statement, as discussed
above) in accordance with the provisions of the Company's By-Laws. If a
stockholder intends to submit a proposal in this manner, he or she must give the
Company written notice containing the information specified in the Company's
By-Laws. Such written notice must be received by the Secretary of the Company at
the Company's principal executive offices not more than 120 days and not less
than 90 days before the date of the Annual Meeting. For the 2005 Annual Meeting,
such notice must be received between January 1, 2005 and January 31, 2005. If
the date of the 2005 Annual Meeting is set for more than 30 days before or more
than 60 days after April 26, 2005, notice by the stockholder must be delivered
not earlier than 120 days prior to the meeting and not later than the later of
90 days prior to the meeting or the 10th day following the date on which public
disclosure of the date of the meeting is first made by the Company.
Eligible stockholders may also nominate persons for election to the
Board of Directors at the 2005 Annual Meeting in accordance with the Company's
By-Laws. Stockholders who wish to make a nomination in this manner must give the
Company written notice containing the information specified in the Company's
By-Laws. Such written notice must be received by the Secretary of the Company at
the Company's principal executive by the same deadlines set forth in the
paragraph above regarding stockholder proposals. In addition, if the number of
directors to be elected at the 2005 Annual Meeting is increased and there is no
public announcement by the Company naming all of the nominees for director or
specifying the size of the increased Board of Directors by January 31, 2005,
notice of director nominations by stockholders will be considered timely with
respect to nominees for any new positions created by such increase if it is
delivered to the Secretary of the Company at the Company's principal executive
offices no later than the 10th day following the day on which such announcement
is first made by the Company.
6
SECURITY OWNERSHIP
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of the Common
Stock by (i) those persons known by Symbol to own beneficially more than 5% of
the outstanding Common Stock; (ii) each current executive officer named in the
Summary Compensation Table; (iii) each director (which includes the nominees for
director); and (iv) all directors and executive officers of Symbol, as a group.
NAME OF INDIVIDUAL OR AMOUNT AND NATURE OF PERCENT OF
IDENTITY OF GROUP BENEFICIAL OWNERSHIP (1) COMMON STOCK (2)
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FMR Corp
82 Devonshire Street
Boston, Massachusetts 02109.................................... 34,529,105 (3) 14.9%
Raymond R. Martino............................................. 700,952 (4) *
Harvey P. Mallement............................................ 435,290 (5) *
William R. Nuti................................................ 600,000 (6) *
Richard Bravman................................................ 549,609 (7) *
George Bugliarello............................................. 299,739 (8) *
Leo A. Guthart................................................. 167,500 (9) *
Carole DeMayo.................................................. 108,445 (10) *
James Simons................................................... 68,750 (11) *
Mark T. Greenquist............................................. 40,000 (12) *
Todd A. Abbott................................................. 30,000 (13) *
Todd Hewlin.................................................... -- *
Salvatore Iannuzzi............................................. -- *
Robert Chrenc.................................................. -- *
Melvin A. Yellin............................................... -- *
George Samenuk................................................. -- *
Edward Kozel................................................... -- *
All executive officers and directors as a group
(consisting of 18 individuals)................................. 2,440,678 (14) 1.1%
- ----------------
* Less than 1%.
(1) The amounts shown are the number of shares of the Common Stock owned
beneficially (as determined in accordance with Rule 13d-3(d)(1) of the
Securities Exchange Act of 1934 (the "Exchange Act")) as of February 15,
2004 (except for FMR Corp., where the amounts are as of February 17, 2004).
The persons identified in this table have sole voting and investment power
over the shares of the Common Stock stated above, except as stated
otherwise in these footnotes. This chart was prepared from information the
directors and executive officers have given to us and from publicly
available documents filed or furnished to the Commission.
(2) The percentages shown represent the percentages beneficially owned of the
outstanding Common Stock as of February 15, 2004 (except for FMR Corp.,
where the amounts are as of February 17, 2004).
(3) All information regarding FMR Corp. and its affiliates is based on
information disclosed in a Schedule 13G/A filed by FMR Corp., Edward C.
Johnson 3rd and Abigail P. Johnson on February 17, 2004 (the "FMR Schedule
13G/A"). According to the FMR Schedule 13G/A, Fidelity Management &
Research Company, a wholly-owned subsidiary of FMR Corp., is the beneficial
owner of 31,586,280 shares and the sole power to vote or direct the vote of
these 31,586,280 shares resides with Edward C. Johnson 3d, FMR Corp. and
the Boards of Trustees of the various Fidelity funds. Fidelity Management
Trust Company, a wholly-owned subsidiary of FMR Corp., is the beneficial
owner of 2,415,662 shares and the sole power to vote or direct the vote of
these 2,415,662 shares resides with Edward C. Johnson 3d and FMR Corp.
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Through Strategic Advisers, Inc., a wholly-owned subsidiary of FMR Corp.,
FMR owns 1,363 shares of Symbol. Fidelity International Limited ("FIL") is
the beneficial owner of 525,800 shares of Symbol. FMR Corp. and FIL are of
the view that they are not acting as a "group" for purposes of Section
13(d) under the Exchange Act and that they are not otherwise required to
attribute to each other the "beneficial ownership" of securities
"beneficially owned" by the other entity within the meaning of Rule 13d-3
promulgated under the Exchange Act. Therefore, they are of the view that
the shares held by the other entity need not be aggregated for purposes of
Section 13(d).
(4) This number includes 162,500 shares that may be acquired upon the exercise
of options within 60 days of February 15, 2004 and 538,452 shares owned by
Mr. Martino.
(5) This number includes 269,368 shares that may be acquired upon the exercise
of options within 60 days of February 15, 2004 and 165,922 shares owned by
Mr. Mallement.
(6) This number includes 200,000 shares that may be acquired upon the exercise
of options within 60 days of February 15, 2004 and 400,000 restricted
shares owned by Mr. Nuti.
(7) This number includes 417,437 shares that may be acquired upon the exercise
of options within 60 days of February 15, 2004 and 132,172 shares owned by
Mr. Bravman.
(8) This number includes 288,350 shares that may be acquired upon the exercise
of options within 60 days of February 15, 2004 and 11,389 shares owned
jointly by Dr. Bugliarello and his wife.
(9) This number includes 140,000 shares that may be acquired upon the exercise
of options within 60 days of February 15, 2004 and 27,500 shares owned by
Dr. Guthart.
(10) This number includes 106,834 shares that may be acquired upon the exercise
of options within 60 days of February 15, 2004 and 1,613 shares owned by
Ms. DeMayo.
(11) This number includes 61,250 shares that may be acquired upon the exercise
of options within 60 days of February 15, 2004 and 7,500 shares owned by
Dr. Simons.
(12) This number represents 40,000 shares that may be acquired upon the exercise
of options within 60 days of February 15, 2004 by Mr. Greenquist.
(13) This number represents 30,000 shares that may be acquired upon the exercise
of options within 60 days of February 15, 2004 by Mr. Abbott.
(14) This number includes 1,288,302 shares that may be acquired upon the
exercise of options within 60 days of February 15, 2004 and excludes the
number of shares beneficially owned by Mr. Bravman as he was no longer an
executive officer as of such date.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors and executive
officers (as defined therein), and persons who beneficially own more than 10% of
a registered class of Symbol's equity securities, to file reports of holdings
and transactions in Symbol's equity securities and derivative securities with
the Commission and the New York Stock Exchange (the "NYSE") and to furnish us
with copies of all Section 16(a) forms they file. Based solely on a review of
the copies of the forms and amendments received by the Company, we believe that,
during 2003, executive officers, directors and persons who beneficially own more
than 10% of Symbol's equity securities complied with all Section 16(a) filing
requirements applicable to them.
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GOVERNANCE OF THE COMPANY
WHO ARE THE CURRENT MEMBERS OF THE BOARD OF DIRECTORS?
The members of the Board of Directors on the date of this Proxy
Statement, and the committees of the Board of Directors on which they serve, are
identified below.
NOMINATING AND
CORPORATE GOVERNANCE
AUDIT COMPENSATION COMMITTEE
COMMITTEE COMMITTEE
George Bugliarello+ *
Robert J. Chrenc **
Leo A. Guthart+ * * *
Salvatore Iannuzzi, Chairman * * **
Edward Kozel *
Harvey P. Mallement+ * * *
Raymond R. Martino+
William R. Nuti
George Samenuk *
James Simons+
Melvin A. Yellin ** *
* Member.
** Chair.
+ Retiring effective as of the date of the Company's 2004 Annual Meeting.
WHAT ARE THE BOARD'S COMMITTEES AND WHAT ARE THEIR ROLES?
The Board of Directors has standing Audit, Nominating and Corporate
Governance and Compensation Committees.
AUDIT COMMITTEE. The functions of the Audit Committee are described
below under the heading "Report of the Audit Committee". The charter of the
Audit Committee is attached to this Proxy Statement as Annex I and is available
on the Company's Investor Relations website (http://www.symbol.com/investors).
The Audit Committee met 13 times during fiscal 2003.
On December 15, 2003, the Board appointed Mr. Bugliarello, Mr. Chrenc,
Mr. Guthart and Mr. Mallement as the members of the Audit Committee for the
coming year, as shown above.
On February 9, 2004, Mr. Chrenc was named Chairman of the Audit
Committee. On March 24, 2004, the Board appointed Mr. Samenuk and Mr. Ianuzzi as
members of the Audit Committee.
Also on February 9, 2004, the Board of Directors formed the Risk
Subcommittee of the Audit Committee. The purpose of the Risk Subcommittee of the
Audit Committee is to work with the Company's management to (a) regularly survey
all areas of significant potential business and legal risk to the Company and
(b) ensure that reasonable and prudent proactive mitigation strategies are in
place and are executed effectively.
The Board has determined that all of the members of the Audit Committee
are independent within the meaning of SEC regulations, the listing standards of
the NYSE and the Company's Corporate Governance Guidelines. The Board has
determined that Mr. Chrenc is qualified as an independent audit committee
financial expert within the meaning of SEC regulations and that he has
accounting and related financial management expertise within the meaning of the
listing standards of the NYSE.
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NOMINATING AND CORPORATE GOVERNANCE COMMITTEE. The Nominating and
Corporate Governance Committee is responsible for developing and implementing
policies and practices relating to corporate governance, including reviewing and
monitoring the implementation of the Company's Corporate Governance Guidelines.
In addition, this Committee develops and reviews background information on
candidates for the Board and makes recommendations to the Board regarding such
candidates. The Nominating and Corporate Governance Committee also supervises
the Board's annual review of director independence and the Board's performance
self-evaluation. The charter of the Nominating and Corporate Governance
Committee is available on the Company's Investor Relations website
(http://www.symbol.com/investors). The Committee did not meet during fiscal
2003.
On January 15, 2004, the Board appointed Mr. Iannuzzi and Mr. Yellin,
as Chairman and member, respectively, to the Nominating and Corporate Governance
Committee for the coming year.
The Board has determined that all of the members of the Nominating and
Corporate Governance Committee are independent within the meaning of the listing
standards of the NYSE and the Company's Corporate Governance Guidelines.
COMPENSATION COMMITTEE. The function of the Compensation Committee is
described in "Executive Compensation" below, under the heading "Report of the
Compensation Committee." The charter of the Compensation Committee is available
on the Company's Investor Relations website (http://www.symbol.com/investors).
In fiscal 2003, the Compensation Committee met eight times.
On January 19, 2004, Messrs. Yellin and Iannuzzi were appointed as
members of the Compensation Committee. On February 9, 2004, Mr. Yellin was named
Chairman of the Compensation Committee. On March 24, 2004, the Board appointed
Mr. Kozel as a member of the Compensation Committee.
The Board has determined that all of the members of the Compensation
Committee are independent within the meaning of the listing standards of the
NYSE and the Company's Corporate Governance Guidelines.
WHO IS THE BOARD'S CHAIR?
On December 30, 2003, Salvatore Iannuzzi was appointed the
non-executive Chairman of the Board. In addition, Mr. Iannuzzi shall preside
over all executive sessions of the non-management directors.
HOW DOES THE BOARD SELECT NOMINEES FOR THE BOARD?
The Nominating and Corporate Governance Committee considers candidates
for Board membership suggested by its members and other Board members, as well
as by management and the Company's stockholders. As set forth in the Company's
Corporate Governance Guidelines, the Board's Nominating and Corporate Governance
Committee annually reviews with the Board the appropriate characteristics,
skills and experience for the Board as a whole and its individual members, and
recommends to the Board of Directors candidates for Board membership in
accordance with the characteristics, skills and experience set forth by the
Committee, the Corporate Governance Guidelines and the selection criteria
outlined in the Committee's charter. The Nominating and Corporate Governance
Committee, in evaluating the suitability of individual candidates and
recommending candidates to stand for election takes into account many factors,
including a candidate's ability to make independent analytical inquiries,
general understanding of technology, manufacturing, marketing, finance and other
elements relevant to the success of the Company in today's business environment,
as well as the candidate's educational and professional background. The
Nominating and Corporate Governance Committee evaluates each individual in the
context of the Board as a whole, with the objective of assembling a group that
can best advance the success of the Company and represent stockholder interests
through the exercise of sound judgment and calling upon the group's diversity of
experience in these various areas. In searching for qualified director
candidates to stand for election to the Board and to fill vacancies on the
Board, the Board solicits current directors for the names of potential qualified
candidates and may ask directors to pursue their own business contacts for the
names of potentially qualified candidates. In connection with the reconstitution
of the Board in advance of the 2004 Annual Meeting, the Nominating and Corporate
Governance Committee used the services of Heidrick & Struggles and DHR
International to assist in the search for qualified director candidates and paid
customary fees for such services. In
10
the future, the Nominating and Corporate Governance Committee may retain these
or other search firms or consult with outside advisors to assist in the search
for qualified candidates.
In addition, the Nominating and Corporate Governance Committee will
consider candidates proposed by stockholders. Stockholders who wish to propose a
candidate to the Nominating and Corporate Governance Committee must send written
notice to the Committee containing all of the information relating to such
proposed candidate as is required to be disclosed in solicitations of proxies
for elections of directors pursuant to Regulation 14A under the Exchange Act, as
amended. Such written notice must be sent to the Nominating and Corporate
Governance Committee, c/o the Secretary of the Company at the Company's
principal executive offices, generally not more than 120 days and not less than
90 days before the date of the next Annual Meeting. In addition, if the number
of directors to be elected at the next Annual Meeting is increased and there is
no public announcement by the Company naming all of the nominees for director or
specifying the size of the increased Board of Directors at least 90 days prior
to the Annual Meeting, notice of proposed director candidates by stockholders
will be considered timely with respect to nominees for any new positions created
by such increase if it is delivered to the Secretary of the Company at the
Company's principal executive offices no later than the 10th day following the
day on which such announcement is first made by the Company. The Nominating and
Corporate Governance Committee will use the same evaluation criteria in
considering the suitability of stockholder candidates as for candidates proposed
by the Company, the Board of Directors or the Nominating and Corporate
Governance Committee.
Once the Nominating and Corporate Governance Committee has identified a
prospective nominee, the Committee makes a determination as to whether to
conduct a full evaluation of the candidate. This initial determination is based
on whatever information is provided to the Committee at the time of the
recommendation of the prospective candidate, as well as the Committee's own
knowledge of the prospective candidate, which may be supplemented by inquiries
to the person making the recommendation or others. The preliminary determination
is based primarily on the need for additional Board members to fill vacancies or
expand the size of the Board and the likelihood that the prospective nominee can
satisfy the evaluation factors described below. If the Committee determines, in
consultation with the Chairman of the Board and other Board members, as
appropriate, that additional consideration is warranted, it may request a
third-party search firm to gather additional information about the prospective
nominee's background and experience and to report its findings to the Committee.
The Committee then evaluates the prospective nominee against the standards and
qualifications set forth in the Committee's Charter and as set forth in the
Company's Corporate Governance Guidelines, including:
o the prospective nominee's personal and professional integrity, ethics
and values;
o the prospective nominee's experience in corporate management, such as
serving as an officer or former officer of a publicly held company;
o the prospective nominee's experience in Symbol's industry and with
relevant social policy concerns;
o the prospective nominee's experience as a board member of another
publicly held company;
o the nature of and time involved in a prospective nominee's service on
other boards and/or committees;
o the prospective nominee's academic expertise in an area of Symbol's
operations; and
o the extent of the prospective nominee's practical and mature business
judgment.
The Committee also considers such other relevant factors as it deems
appropriate, including the current composition of the Board, the balance of
management and independent directors, the need for business expertise in
additional or different areas and the evaluations of other prospective nominees.
After completing this evaluation and interview, the Committee makes a
recommendation to the full Board as to the persons who should be nominated by
the Board, and the Board determines the nominees after considering the
recommendation and report of the Committee.
HOW DOES THE BOARD DETERMINE WHICH DIRECTORS ARE CONSIDERED INDEPENDENT?
In January 2004, the Board enhanced its Corporate Governance
Guidelines. The Guidelines adopted by the Board meet or exceed the new listing
standards adopted during the year by the NYSE. The full text of the Guidelines
can be found in the Investor Relations section of the Company's website
(http://www.symbol.com/investors). A copy may also be obtained upon written
request from the Company's Secretary.
11
Pursuant to the Guidelines, the Board undertook its annual review of
director independence in March 2004. During this review, the Board considered
transactions and relationships between each director or any member of his or her
immediate family and the Company and its subsidiaries and affiliates, including
those reported under "Certain Relationships and Related Transactions" below. The
Board also examined transactions and relationships between directors or their
affiliates and members of the Company's senior management or their affiliates.
As provided in the Guidelines, the purpose of this review was to determine
whether any such relationships or transactions were inconsistent with a
determination that the director is independent.
As a result of this review, the Board affirmatively determined that all
of the directors nominated for election at the annual meeting are independent of
the Company and its management under the standards set forth in the Corporate
Governance Guidelines, with the exception of William Nuti. Mr. Nuti is
considered an inside director because of his employment as President and Chief
Executive Officer of the Company. Additionally, while Messrs. Nuti and Kozel
were both previously employed by Cisco Systems, Inc., at no time during their
respective periods of employment at Cisco did either Mr. Nuti or Mr. Kozel have
a reporting relationship to the other. Accordingly, the Board determined that
their sharing a former common employer did not impair Mr. Kozel's independence
from management of the Company.
HOW OFTEN DID THE BOARD MEET DURING FISCAL 2003?
The Board met 16 times during fiscal 2003. All incumbent Directors who
are nominees for election to the Board have attended all of the aggregate number
of meetings of the Board and meetings of the Committees thereof on which he was
a member. Under the Company's Corporate Governance Guidelines, each Director is
expected to dedicate sufficient time, energy and attention to ensure the
diligent performance of his or her duties, including by attending all meetings
of the stockholders of the Company, the Board and Committees of which he or she
is a member. At Symbol's 2002 Annual Meeting, all members of the Board and
nominees for election to the Board were present. Symbol did not hold an annual
meeting of its stockholders during 2003.
HOW ARE DIRECTORS COMPENSATED?
BASE COMPENSATION. Members of the Board of Directors who are not
employees of the Company are paid an annual retainer of $15,000, in equal
quarterly installments. They also receive a fee of $2,500 for each Board of
Directors meeting they attend or each meeting of a committee that is not held in
conjunction with a Board of Directors meeting. The chairman of the Audit
Committee and the chairman of the Compensation Committee are each paid an
annual retainer of $5,000 in equal quarterly installments.
Directors who are employees do not receive additional compensation for
serving as directors or for attending Board of Directors or committee meetings.
Symbol reimburses directors for their expenses in connection with attending
meetings of the Board of Directors or committees of the Board of Directors.
OPTIONS. Non-employee directors also receive an option to purchase
50,000 shares of Common Stock upon their initial election to the Board of
Directors pursuant to the 2000 Directors' Stock Option Plan (the "2000 Plan").
Under the 2000 Plan, each option has a ten-year term; twenty-five percent (25%)
of the options become exercisable on the first anniversary of the date of the
grant and twenty-five percent (25%) of the options become exercisable each year
thereafter. The options have an option exercise price equal to the closing price
of shares of the Common Stock on the date of the grant. Messrs. Iannuzzi, Chrenc
and Yellin, whose terms as directors began on December 15, 2003, each received a
grant of an option to purchase 50,000 shares of Common Stock at a price of
$16.79, the closing price of the Common Stock on the NYSE on that date. Messrs.
Kozel and Samenuk, whose terms as Directors began on March 10, 2004, each
received a grant of an option to purchase 50,000 shares of Common Stock at a
price of $13.89, the closing price of the Common Stock on the NYSE on that date.
The options are generally not transferable except in the event of a
participant's death.
Non-employee directors are entitled to additional option awards
pursuant to the 2002 Directors' Stock Option Plan (the "2002 Plan"). The 2002
Plan authorizes the Compensation Committee of the Board of Directors to grant
options to purchase 20,000 shares of Common Stock to each person who is not a
full-time employee of Symbol or one of its subsidiaries, who has been a director
for at least eleven (11) months and is re-elected at the Annual Meeting of
stockholders. Each option has a ten-year term; ten percent (10%) becomes
exercisable on the
12
first anniversary of the date of grant and fifteen percent (15%) becomes
exercisable every six (6) months thereafter; the options have an option exercise
price equal to 100 percent of the closing price of shares of Common Stock on the
NYSE on the date of grant. The options are generally not transferable except to
the extent that options may be exercised by an executor or administrator,
provided, however, with the prior approval of the Board of Directors, options
under the 2002 Directors' Plan may be transferred to an optionee's spouse,
children, grandchildren or trusts or partnerships for the benefit of such
persons. No options were granted to non-employee Directors under the 2002
Directors' Plan in 2003.
The compensation of directors may be modified from time to time by the
Board of Directors if it determines such modification is necessary or
appropriate in light of the Company's needs, best market practices or applicable
legal and regulatory changes. In connection with its review of the Company's
compensation policies, the Compensation Committee is reviewing the remuneration
of members of the Board of Directors and will present its recommendations to the
entire Board upon completion of its review.
HOW DO STOCKHOLDERS COMMUNICATE WITH THE BOARD?
Stockholders and other parties interested in communicating directly
with the non-executive chairman, with the non-executive directors as a group or
individual members of the Board may do so by writing to the person(s), c/o Peter
M. Lieb, Senior Vice President, General Counsel & Secretary, Symbol
Technologies, Inc., One Symbol Plaza, Holtsville, New York 11742-1300 or by
visiting our website at http://www.symbol.com/investors, clicking on the "Email
the Board" link and sending an email to the non-executive chairman, the
non-management directors as a group or individual members of the Board. Such
communications will be distributed to specific Director(s) as directed by the
stockholder in the email or, if addressed generally to the Board of Directors,
to specific members of the Board of Directors as may be appropriate. For
example, if a communication relates to accounting, internal accounting controls
or auditing matters, unless otherwise specified, the communication will be
forwarded to the Chairman of the Company's Audit Committee.
DOES THE COMPANY HAVE A CODE OF ETHICS?
The Company has adopted a Statement of Corporate Policy and Code of
Conduct which is applicable to all employees of the Company, including the
principal executive officer, the principal financial officer and the principal
accounting officer and controller, as well as the Directors. The Statement of
Corporate Policy and Code of Conduct is available on the Company's Investor
Relations website (http://www.symbol.com/investors). A copy may also be obtained
upon written request from the Company's Secretary at Symbol Technologies, Inc.,
One Symbol Plaza, Holtsville, New York 11742. The Company intends to post
amendments to or waivers from its Statement of Corporate Policy and Code of
Conduct (to the extent applicable to the Company's chief executive officer,
principal financial officer, principal accounting officer and controller or any
director) at this location on its website.
13
REPORT OF THE COMPENSATION COMMITTEE
The following Report of the Compensation Committee and the performance graph
included elsewhere in this Proxy Statement do not constitute soliciting material
and should not be deemed filed or incorporated by reference into any other
Company filing under the Securities Act of 1933 or the Securities Exchange Act
of 1934, except to the extent the Company specifically incorporates this report
or the performance graph by reference therein.
The Compensation Committee is responsible for setting and administering
the Company's policies that govern executive compensation and for establishing
the compensation of the Company's executive officers. The Compensation Committee
consists of only non-employee Directors who are "independent" within the meaning
of the Company's Corporate Governance Guidelines.
In January 2004, the Compensation Committee retained the compensation
consulting firm of Pearl Meyer & Partners and the law firm of Latham & Watkins
LLP (the Company's primary outside counsel) to assist it in a comprehensive
strategic and legal review of the Company's compensation policies, which review
is ongoing. Pearl Meyer & Partners and Latham & Watkins LLP report directly to
the Compensation Committee in connection with the review. Pursuant to the
review, the Compensation Committee intends to revise the Company's compensation
plans and policies to the extent it deems necessary or appropriate to reflect
current best market practices and applicable legal standards. As a result of the
review, the Compensation Committee is recommending that the Company's
stockholders approve the Symbol Technologies, Inc. 2004 Equity Incentive Award
Plan and the Amended and Restated Symbol Technologies, Inc. Executive Bonus
Plan, each of which is described further below. The Compensation Committee
believes that that the approval of such plans will enhance the Company's ability
to provide its executives and other employees with appropriate long-term and
annual performance-based compensation in a manner that is tax-efficient for the
Company.
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation for calendar year 2003.
COMPENSATION PHILOSOPHY
The general philosophy of the Compensation Committee is to provide
executive compensation designed to enhance stockholder value, including annual
compensation, consisting of salary and bonus awards, and long-term compensation,
consisting of stock options and other equity based compensation. To this end,
the Compensation Committee designs compensation plans and incentives to link the
financial interests of the Company's executive officers to the interests of its
stockholders, to encourage support of the Company's long-term goals, to tie
executive compensation to the Company's performance, to attract and retain
talented leadership and to encourage significant ownership of the Common Stock
by executive officers.
In making decisions affecting executive compensation, the Compensation
Committee reviews the nature and scope of the executive officer's
responsibilities as well as his or her effectiveness in supporting the Company's
long-term goals. The Compensation Committee also considers the compensation
practices of companies that are of similar size to the Company as well as those
providing similar services and products to similar markets and customers. The
Company does not have a policy to predetermine specific compensation relative to
the compensation paid by other companies.
There are two primary types of compensation provided to the Company's
executive officers:
o Annual compensation, which includes base salary intended to
provide a stable annual salary at a level consistent with
individual contributions, and annual performance bonuses intended
to link officers' compensation to the Company's performance as
well as the performance of the individual executive officer.
o Long-term compensation, which includes stock options and other
equity based compensation intended to encourage actions to
maximize stockholder value.
14
BASE SALARY
Consistent with the Company's philosophy relative to salary, the Chief
Executive Officer reviews data for executives in similar positions in comparable
companies as provided by an independent consultant and compiled by the Company
and recommends a specific salary for each executive officer (other than himself)
to the Compensation Committee for its consideration and approval. In determining
such salaries, the performance of each executive officer, his or her experience
and the performance of the business unit for which he or she is responsible, as
well as the performance of the Company as a whole, are all taken into account.
Additionally, pursuant to the Compensation Committee Charter adopted by the
Board of Directors in January 2004, the Compensation Committee reviews, on an
annual basis, the base salaries of all executive officers, directors and other
employees of the Company or its subsidiaries in excess of $250,000.
ANNUAL INCENTIVE
IN GENERAL. As of December 31, 2003, annual bonuses were payable
pursuant to the Symbol Technologies, Inc. Executive Bonus Plan (the "Executive
Bonus Plan"). Pursuant to the Executive Bonus Plan, the Chief Executive Officer
of the Company recommends to the Compensation Committee (i) the employees
eligible for awards under the Executive Bonus Plan, (ii) the amount of the
recommended award (by individual or class of individuals and stated as a dollar
amount or a percentage of base salary), and (iii) any factors that should be
considered by the Compensation Committee or the Board of Directors in connection
with their consideration of the Chief Executive Officer's recommendations (the
"Recommendations") in their determinations. The Compensation Committee considers
the Recommendations and may approve the Recommendation with respect to any or
all recommended employees, approve an award of a different amount for any or all
recommended employees or deny awards to any or all recommended employees. Any
awards approved by the Compensation Committee are then submitted to the Board of
Directors for its consideration and approval. Awards are limited to a maximum of
200% of the employee's base earnings for the plan year.
2004 EXECUTIVE BONUS PLAN. In March 2004, the Compensation Committee
recommended, and the Board of Directors adopted, the amended and restated
Executive Bonus Plan (the "2004 Executive Bonus Plan") which has been submitted
to the Company's stockholders for their approval in connection with this Proxy
Statement. The Compensation Committee adopted the 2004 Executive Bonus Plan in
order to maximize the deductibility of bonuses payable to the Company's senior
executives for federal income tax purposes. The terms of the 2004 Executive
Bonus Plan are described in further detail in the section of this Proxy
Statement entitled "Proposal 2. Proposal to Approve the Amendment and
Restatement of the Symbol Technologies, Inc. Executive Bonus Plan."
LONG-TERM COMPENSATION
The Compensation Committee is committed to long-term incentive programs
for executive officers that promote the long-term growth of the Company. The
Compensation Committee believes that executive officers of the Company should be
rewarded with a proprietary interest in the Company for continued long-term
performance and to attract, motivate and retain qualified and capable
executives. In connection with the Compensation Committee's strategic review of
existing equity compensation plans and arrangements, the Compensation Committee
began in January 2004 to evaluate the desirability of granting "performance
vesting" options or other equity compensation awards to any of the Company's
employees. Based upon the review, the Compensation Committee currently intends
to grant "performance vesting" options or other equity compensation awards to a
select group of senior executives. As currently contemplated, the vesting of
such options or other equity compensation awards will occur (or will be
significantly accelerated) only if the Company attains certain pre-established
financial goals. The Compensation Committee is currently evaluating the
performance metrics and other terms that may be utilized with respect to such
awards.
EQUITY BASED COMPENSATION
IN GENERAL. As of December 31, 2003, the Company maintained several
option plans pursuant to which the Compensation Committee could grant to
executive officers options to purchase shares of the Company's Common Stock. In
2003, the Compensation Committee granted options to purchase an aggregate of
7,067,930 shares of the Company's Common Stock to the Company's employees. In
addition, during 2003 options to purchase
15
an aggregate of 150,000 shares of the Company's Common Stock were granted to
non-employee directors of the Company. All such options were granted with an
exercise price equal to the closing price of the Common Stock on the NYSE on the
date of grant, have a maximum term of ten years and, subject to the optionee's
continued employment (or continued services as a director, as applicable),
become vested and exercisable in installments over a four to five year term.
2004 EQUITY PLAN. In March 2004, the Compensation Committee
recommended, and the Board of Directors adopted, the Symbol Technologies, Inc.
2004 Equity Incentive Award Plan (the "2004 Equity Plan"), which has been
submitted to the Company's stockholders for their approval in connection with
this Proxy Statement. The 2004 Equity Plan is intended to provide the
Compensation Committee with the flexibility to grant various types of equity
compensation awards in addition to stock options, including restricted stock,
stock appreciation rights, performance shares, performance stock units, dividend
equivalents, stock payments, deferred stock, restricted stock units, other
stock-based awards, and performance-based awards. The actual types of awards
granted under the 2004 Equity Plan will be determined by the Compensation
Committee, taking into account factors such as the relative financial accounting
impact of various types of awards, the potential stockholder dilution impact of
such awards and other factors determined appropriate by the Compensation
Committee. All of the Company's employees will be eligible to participate in the
2004 Equity Plan (as well as the Company's non-employee directors and certain
consultants to the Company). The Compensation Committee has amended all existing
Company stock option plans to provide that, on and following the date the 2004
Equity Plan becomes effective, no further options will be granted under the
Company's other option plans. The terms of the 2004 Equity Plan are described in
further detail in the section of this Proxy Statement entitled "Proposal 3.
Proposal to Approve the Company's 2004 Equity Incentive Award Plan."
STOCK OWNERSHIP GUIDELINES
In 2002, the Company adopted the 2002 Executive Stock Ownership and
Retention Program which replaced a similar program that had been in existence
since 1995. Under the Program, the Company has established for executive
officers a stock ownership and option retention program that the Company
administers. The Compensation Committee firmly believes that the long term
interests of the Company's shareholders are best served when management
maintains a significant, equity-based interest in the Company. The Company
considers both vested, unexercised options and shares owned as meaningful
expressions of such interest. The Company developed a program with target levels
of equity interest for each executive officer. Under the program, without the
Compensation Committee's prior permission, if an executive has not attained the
minimum requirements described below, his ability to exercise options or sell
shares is limited. Executive officers must agree to participate in the program
to be eligible to receive option awards after May 6, 2002. All current executive
officers have agreed to participate in the program. In connection with its
review of the Company's compensation policies, the Compensation Committee is
currently evaluating the 2002 Executive Stock Option Ownership and Retention
Program and intends to present its recommendations regarding the adoption of a
new program to the full Board of Directors upon completion of its review.
The program limits the exercise of vested options unless the executive
either (i) retains all shares acquired upon exercise (net of shares used to pay
for the exercise price and taxes resulting from any exercise) or (ii) meets and
will continue to meet the equity interest requirement described below after the
exercise and sale of shares acquired upon exercise. The equity interest
requirement provides that the combined value of the Common Stock and vested
options held by the executive, each valued at the then current market price of
the Common Stock, must be equal to or greater than a designated multiple of the
executive's annual base salary plus target bonus.
If the equity interest requirement is satisfied, the program allows for
the exercise of vested options within strict limits. Generally, at least 50% of
the net after tax proceeds obtainable upon the exercise of any option (other
than options awarded in connection with an executive's initial hire or initial
promotion to an executive officer position, or options already held by a person
prior to such promotion) must be retained in the form of shares of the Common
Stock unless and until the executive owns shares of Common Stock having a market
value equal to a specified multiple of his base salary.
16
EQUITY INTEREST SHARE OWNERSHIP
POSITION REQUIREMENT REQUIREMENT
- ------------------------------- ------------------------------------- -------------------
Chairman of the Board 7 times base salary plus target bonus 5 times base salary
CEO/COO 5 times base salary plus target bonus 3 times base salary
Executive/Senior Vice President 3 times base salary plus target bonus 2 times base salary
Vice President 2 times base salary plus target bonus 1 times base salary
COMPENSATION OF CHIEF EXECUTIVE OFFICER
IN GENERAL. Richard Bravman served as the Company's Chief Executive
Officer during the period beginning on January 1, 2003 and ending on December
30, 2003. William Nuti (who was formerly the Company's President and Chief
Operating Officer) became the Company's President, Chief Executive Officer and
Chief Operating Officer on December 30, 2003. On that date, Mr. Nuti was also
appointed a director. All components of compensation payable to Messrs. Bravman
and Nuti in respect of calendar year 2003 were determined pursuant to the terms
of their respective Employment Agreements, except that the amount of Mr. Nuti's
annual base salary was increased from $600,000 to $1,000,000 in connection with
his promotion to President and Chief Executive Officer. With respect to 2003,
compensation under the Employment Agreements of Messrs. Bravman and Nuti was
determined based upon a review of competitive industry compensation levels and
the overall compensation package required to attract and retain someone of their
respective calibers to the Company. The Compensation Committee and the full
Board of Directors approved each of Mr. Bravman's and Mr. Nuti's Employment
Agreement in 2002. The Company and Mr. Nuti entered into a new Employment
Agreement in March 2004 in connection with his promotion to President and Chief
Executive Officer that superceded Mr. Nuti's prior Employment Agreement. In
connection with the negotiation of Mr. Nuti's new Employment Agreement, the
Compensation Committee retained the compensation consulting firm of Pearl Meyer
& Partners and the law firm of Latham & Watkins LLP. The terms of Mr. Bravman's
Employment Agreement and Separation Letter Agreement and the terms of Mr. Nuti's
Employment Agreement are described in this Proxy Statement in the section
entitled "Employment Agreements," below.
OPTION GRANTS. In June 2003, Mr. Bravman and Mr. Nuti were each granted
an option to purchase 250,000 shares of the Common Stock at an exercise price of
$14.02 per share (which is equal to the closing price per share of the Common
Stock on the date the options were granted) in accordance with the usual annual
option grants to certain Symbol employees. The terms of such options are
described in further detail in the table set forth below in this Proxy Statement
entitled "Option Grants in Last Fiscal Year" and the footnotes to such table.
INTERNAL REVENUE CODE SECTION 162(M)
In determining executive compensation, the Compensation Committee
considers, among other factors, the possible tax consequences to the Company and
to the Company's executive officers, including the potential impact of Section
162(m) of the Internal Revenue Code of 1986, as amended ("Section 162(m)").
Section 162(m) disallows a tax deduction for any publicly held corporation for
individual compensation exceeding $1 million in any taxable year for the Chief
Executive Officer and the other senior executive officers, other than
compensation that is performance-based under a plan that is approved by the
stockholders of the Company and that meets certain other technical requirements.
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.
17
CONCLUSION
The Compensation Committee believes that the compensation policies and
plans of the Company are generally properly integrated with the Company's
business plan and aligned with the best interests of the Company's stockholders.
The Compensation will continue to review and revise the Company's compensation
policies and plans in light of the Company's needs, best market practices and
legal and regulatory changes.
Compensation Committee
Melvin A. Yellin, Chairman
Dr. Leo A. Guthart
Salvatore Iannuzzi
Edward Kozel
Harvey P. Mallement
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Our Compensation Committee of our Board of Directors is composed
entirely of independent directors. Messrs. Guthart and Mallement were, for the
majority of 2003, the only members of the Compensation Committee. Mr. Yellin
became a member of this committee in December 2003, Mr. Iannuzzi joined the
Committee in January 2004 and Mr. Kozel joined the Committee in March 2004.
During the last ten years, none of them has been an officer or employee of
Symbol.
None of Symbol's executive officers currently serves, or in the past,
has served, on the Board of Directors or compensation committee (or committee
performing equivalent functions) of any other company that has or had one or
more executive officers serving on Symbol's Board of Directors or Compensation
Committee.
18
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following summary compensation table sets forth information
concerning total compensation earned or paid to (i) each individual who served
as our Chief Executive Officer during 2003, (ii) the four other most highly
compensated executive officers of the Company who served in such capacities as
of December 31, 2003 and (iii) two additional executive officers of the Company
who would have been included under clause (ii), above, but for the fact that
they were no longer employed by the Company as executive officers as of December
31, 2003, in each case for services rendered to the Company during each of the
past three fiscal years.
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- ----------------------
RESTRICTED
STOCK SECURITIES ALL OTHER
SALARY BONUS OTHER ANNUAL AWARDS UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) COMPENSATION ($) OPTIONS (#) ($)(c)
- ------------------------------- ---- ------- ------- ------------ ---------- ----------- -----------
Richard Bravman................ 2003 750,006 562,205 -- -- 250,000 5,000
Former Vice Chairman 2002 580,067 -- -- -- 634,000 5,000
of the Board, Former 2001 390,330 -- -- -- 90,000 4,250
Chief Executive Officer (a)
William R. Nuti................ 2003 600,018 450,013 -- -- 250,000 6,000
President and Chief 2002 242,315 -- -- 2,992,000(d) 800,000 --
Executive Officer (b)
Todd Abbott.................... 2003 362,237 271,678 -- -- 50,000 321,728(e)
Senior Vice President-- 2002 48,462 48,462 -- -- 300,000 --
Worldwide Sales
Mark Greenquist................ 2003 363,849 136,443 -- -- 400,000 13,415(f)
Senior Vice President--
Chief Financial Officer
Carole DeMayo.................. 2003 251,163 75,349 -- -- 37,500 6,236
Senior Vice President-- 2002 215,738 -- -- -- 59,000 5,736
Human Resources 2001 186,682 -- -- -- 72,500 5,336
Todd Hewlin.................... 2003 209,136 156,484(g) -- -- 400,000 377,125(h)
Senior Vice President--
Global Products Group
Jerome Swartz.................. 2003 523,078 -- -- -- 69,635(i)
Chief Scientist Emeritus, 2002 1,000,002 -- -- 583,000 76,797(i)
Former Chief Scientist, 2001 1,000,002 -- -- 300,000 75,325(i)
Former Executive
Chairman of the Board,
Former Director
Satya P. Sharma................ 2003 224,618 -- -- 50,000 292,926(j)
Former Senior Vice 2002 400,005 -- -- 176,000 5,500
President & GM Corporate 2001 349,566 -- -- 120,000 5,100
Quality and Operations
(a) Mr. Bravman resigned the positions of Vice Chairman of the Board and
Chief Executive Officer effective as of December 30, 2003.
(b) Mr. Nuti became President and Chief Executive Officer as of December
30, 2003.
19
(c) Except as otherwise specifically set forth in an individual footnote,
represents Company matching contributions made to Symbol's 401(k) plan.
(d) Represents a grant of 400,000 restricted shares of Common Stock which
had a market value on the date of issuance equal to $2,992,000. These
shares of Common Stock are deemed to be "restricted securities" as the
term is defined in Rule 144 promulgated pursuant to the Securities Act
of 1933, as amended, and accordingly, Mr. Nuti's ability to resell
these shares is restricted by applicable federal securities laws. In
addition, in connection with his employment agreement with Symbol, Mr.
Nuti has agreed not to resell or otherwise transfer these shares prior
to August 1, 2004 unless he is no longer employed by Symbol. As of
December 31, 2003, the aggregate value of these shares was $6,756,000.
(e) Represents relocation expenses paid by Symbol in connection with Mr.
Abbott's relocation to the Long Island, New York region.
(f) Represents $6,000 in Company matching contributions made to Symbol's
401(k) plan; and $7,415 in relocation expenses paid by Symbol in
connection with Mr. Greenquist's relocation to the Long Island, New
York region.
(g) Includes $78,058 in a signing bonus.
(h) Represents $6,000 in Company matching contributions made to Symbol's
401(k) plan; and $371,125 in relocation expenses paid by Symbol in
connection with Mr. Hewlin's relocation to the Long Island, New York
region.
(i) With respect to 2003, represents $6,000 in Company matching
contributions to Symbol's 401(k) plan; $42,172 as compensation paid for
unused vacation days in connection with Dr. Swartz's resignation as
Executive Chairman of the Board of Directors and Chief Scientist of
Symbol on July 7, 2003; and a non-reimbursable expense allowance of
$20,923. With respect to 2002, represents $5,500 in Company matching
contributions to Symbol's 401(k) plan; $31,297 for premiums paid on Dr.
Swartz's behalf on term life insurance policies, under which Dr.
Swartz's family members are the beneficiaries, and the estimated
economic benefit of insurance premium payments made by Symbol for a
split-dollar whole life insurance arrangement as projected on an
actuarial basis (Dr. Swartz's family members are beneficiaries of these
split-dollar policies but, under the arrangement, Symbol will recover
all of its premiums paid); and a non-reimbursable expense allowance of
$40,000. With respect to 2001, represents $5,100 in Company matching
contributions to Symbol's 401(k) plan; $30,225 for premiums paid on Dr.
Swartz's behalf on term life insurance policies, under which Dr.
Swartz's family members are the beneficiaries, and the estimated
economic benefit of insurance premium payments made by Symbol for a
split-dollar whole life insurance arrangement as projected on an
actuarial basis (Dr. Swartz's family members are beneficiaries of these
split-dollar policies but, under the arrangement, Symbol will recover
all of its premiums paid); and a non-reimbursable expense allowance of
$40,000. Following the adoption of the Sarbanes-Oxley Act of 2002, no
further payments were made by the Company in connection with split
dollar life insurance.
(j) Represents $6,000 in Company matching contributions to Symbol's 401(k)
deferred compensation plan; $102,308 paid as compensation for unused
vacation days; and $184,618 in severance pay in connection with Dr.
Sharma's termination of employment effective as of July 11, 2003.
20
OPTION GRANTS IN LAST FISCAL YEAR
The following table shows all grants of stock options made to the
individuals named above in the Summary Compensation Table during the fiscal year
ended December 31, 2003:
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION FOR OPTION
INDIVIDUAL GRANTS TERM ($) (a)
------------------------------------------------- ------------------------
% OF TOTAL
OPTIONS
GRANTED TO
OPTIONS EMPLOYEES IN EXERCISE
GRANTED FISCAL PRICE EXPIRATION
NAME (#) (b) YEAR ($/SHARE) DATE 5% 10%
------------------- ----------- --------- ---------- ---------- --------- ---------
Richard Bravman 250,000 3.54% 14.02 06/08/13 2,204,276 5,586,067
William R. Nuti 250,000 3.54 14.02 06/08/13 2,204,276 5,586,067
Todd Abbott 50,000 0.71 14.02 06/08/13 440,855 1,117,213
Mark Greenquist 400,000 5.66 10.25 03/09/13 2,578,468 6,534,344
Carole DeMayo 37,500 0.53 14.02 06/08/13 330,641 837,910
Todd Hewlin 400,000 5.66 14.02 06/08/13 3,526,841 8,937,708
Jerome Swartz -- -- -- -- -- --
Satya P. Sharma 50,000(c) 0.71 14.02 06/08/13 440,855 1,117,213
- ---------------------------
(a) Potential realizable value is net of exercise price, but before
deduction of taxes associated with exercise. A zero percent gain in
stock price will result in zero dollars for the optionee. The dollar
amounts indicated in these columns are the result of calculations
assuming growth rates required by the SEC. These growth rates are not
intended to forecast future appreciation, if any, in the price of our
Common Stock.
(b) Subject to the optionee's continued employment with us, each option
will become vested and exerciseable with respect to (i) 10% shares
covered thereby on the first anniversary of the date of grant and (ii)
an additional 15% of the shares covered thereby on each six month
anniversary thereafter (until the option becomes fully vested and
exercisable with respect to all shares covered thereby on the fourth
anniversary of the date of grant).
(c) As of July 11, 2003, these options were cancelled in connection with
Dr. Sharma's termination of employment with Symbol.
21
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table shows information about unexercised options to
purchase the Common Stock on December 31, 2003 and the value realized upon the
exercise of options in 2003 by the individuals named in the Summary Compensation
Table.
VALUE OF UNEXERCISED
NUMBER OF SECURITIES UNDERLYING IN-THE-MONEY
NUMBER OF UNEXERCISED OPTIONS HELD AT OPTIONS HELD AT
SHARES DECEMBER 31, 2003 DECEMBER 31, 2003
ACQUIRED ON (#) ($) (a)
EXERCISE IN VALUE -------------------------------- -------------------------------
2003 REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- -------- ----------- ------------- ----------- -------------
Richard Bravman -- -- 308,837 875,350 1,341,394 5,619,554
William R. Nuti -- -- 80,000 970,000 603,200 6,146,300
Todd Abbott -- -- 30,000 320,000 218,100 2,106,400
Mark Greenquist -- -- -- 400,000 -- 2,656,000
Carole DeMayo -- -- 83,209 142,350 352,096 578,289
Todd Hewlin -- -- -- 400,000 -- 1,148,000
Jerome Swartz(b) -- -- 8,697,746 -- 82,684,453 --
Satya P. Sharma(c) -- -- 919,711 -- 7,697,346 --
- ---------------------------
(a) Options were "in-the-money" as of December 31, 2003 if the market
value of the Common Stock on that date exceeded the exercise price of
the options. The amounts set forth represent the difference between
the closing price of the Common Stock on the NYSE on December 31, 2003
($16.89) and the exercise price payable for those shares.
(b) Includes options to purchase 2,715,937 shares held by trusts for the
benefit of his children. The value of these exercisable options was
$21,816,822. Dr. Swartz disclaims beneficial ownership of the options
held by these trusts. As of June 30, 2003, all of Dr. Swartz's and the
trusts' unvested options were canceled in connection with his
resignation as Executive Chairman of the Board and Chief Scientist of
Symbol.
(c) As of July 11, 2003, all of Dr. Sharma's unvested options were canceled
in connection with Dr. Sharma's termination of employment with Symbol.
EMPLOYMENT AGREEMENTS
WILLIAM R. NUTI. In March 2004 we entered into a new employment
agreement with Mr. Nuti, the initial term of which expires in July 2009 (subject
to year-to-year extensions if neither party gives notice of its intention not to
extend the term). Pursuant to the new agreement, Mr. Nuti will receive an annual
base salary of $1,000,000. Mr. Nuti's salary will be reviewed annually but may
not be decreased. Mr. Nuti also participates in Symbol's Executive Bonus Plan.
The target amount of his annual bonus is 100% of his base salary; and the
maximum annual bonus that he may receive is 200% of his base salary. If Mr.
Nuti's employment is terminated during the term of his employment agreement for
any reason (other than due to his death or disability, his termination by the
Company for Cause (as defined in the employment agreement) or his voluntary
resignation without Good Reason (as defined in the employment agreement), Mr.
Nuti will receive severance payments equal to 1.5 times the sum of (a) his then
current annual base salary and (b) the greater of the bonus paid him in the
fiscal year ending immediately prior to the date of termination or 50% of his
target bonus for such year. If the Company does not extend the term of the Mr.
Nuti's employment agreement, then Mr. Nuti will receive severance payments equal
to the sum of (x) his then current annual base salary and (y) the greater of the
bonus paid him in the fiscal year ending immediately prior to the date of
termination or 50% of his target bonus for such year. If there is a Change in
Control of the Company (as defined in the employment agreement) and Mr. Nuti's
employment is terminated without Cause or for Good Reason during the period
beginning six months prior to the Change in Control and ending 18 months after
the Change in Control, then Mr. Nuti will receive payments equal to three times
the sum of (i) his then current annual base salary and (ii) the target bonus
payable to him for the fiscal year ending immediately prior to the date of
termination. If any payments made to Mr. Nuti in connection with a Change in
Control are subject to an excise tax payable under Section 4999 of the Internal
Revenue Code of 1986, as amended, then the Company will pay Mr. Nuti an
additional "gross-up" payment sufficient to place Mr. Nuti in the same after-tax
position as he would have been in had the excise tax not applied. The employment
agreement also contains restrictive covenants preventing Mr. Nuti from competing
with the Company or soliciting the Company's employees, customers or suppliers
for defined periods following the termination of his employment with the
Company, requires him to maintain in perpetuity the confidential information of
the Company, and prohibits him from intentionally disparaging the Company and
its products, among other things. If Mr. Nuti violates any of these covenants,
he will forfeit any severance payments not paid to him prior to such violation.
The employment agreement that we entered into with Mr. Nuti in March 2004
supersedes an employment agreement that we previously entered into with Mr. Nuti
in July 2002 except that the provisions related to the grant of restricted stock
to Mr. Nuti in connection with his original employment by Symbol (and limiting
his ability to sell such shares prior to August 1, 2004) are incorporated into,
and are not superceded by, the March 2004 agreement.
AGREEMENTS WITH FORMER EXECUTIVES
RICHARD BRAVMAN. In a letter dated February 19, 2004 and countersigned
by Mr. Bravman on March 1, 2004, we entered into an agreement with Mr. Bravman
that provides for his continued employment by Symbol as a senior advisor to Mr.
Nuti and the Board of Directors until July 15, 2004. This letter agreement
augments a prior employment agreement between us and Mr. Bravman pursuant to
which Mr. Bravman had received an annual base salary of $750,000. Mr. Bravman
will continue to be paid a base salary at an annual rate of $750,000 for his
22
employment with Symbol through July 15, 2004 and he will continue to be eligible
to participate in all applicable employee benefits plans of the Company through
such date (except that Mr. Bravman will not be eligible to receive any bonus for
his services in 2004). Additionally, Mr. Bravman will be entitled to receive all
severance payments as set forth in his original employment agreement with Symbol
(subject to adjustment for repayment of Mr. Bravman's loans from Symbol).
JEROME SWARTZ. On July 7, 2003, we entered into a separation, release
and employment agreement with Dr. Swartz. Pursuant to this separation agreement,
Dr. Swartz will be employed as chief scientist emeritus until July 1, 2004, at
base salary of $1 for the term of his employment by Symbol; Dr. Swartz will not
be eligible to participate in Symbol's Executive Bonus Plan. This separation
agreement supersedes an employment agreement in effect between us and Dr. Swartz
through July 7, 2003, pursuant to which Dr. Swartz had received an annual base
salary of $1,000,000.
LEONARD GOLDNER. In December 2000, we entered into an employment
agreement with Mr. Goldner that was scheduled to terminate on December 31, 2005.
Mr. Goldner received an annual base salary of $465,775 until his resignation as
of June 30, 2003.
On July 8, 2003, we entered into an interim resignation agreement with
Mr. Goldner for his resignation effective June 30, 2003 that provides that,
until a definitive agreement is negotiated between the parties with respect to
the terms and conditions of his resignation, Mr. Goldner may serve as a legal
consultant to Symbol, at a rate of $475 per hour, primarily in connection with
our current and ongoing intellectual property litigation matters. Symbol may
terminate this arrangement at any time in its sole and absolute discretion. In
this interim resignation agreement, neither Symbol nor Mr. Goldner waived any
rights, remedies or claims against the other.
TOMO RAZMILOVIC. In 2000, we entered into an employment agreement with
Mr. Razmilovic, our former President and Chief Executive Officer, that was
scheduled to terminate on June 30, 2005. Under that agreement, Mr. Razmilovic
received a base salary at an annual rate of $1,000,000 until his resignation
from Symbol, effective as of February 14, 2002. In February 2002, we entered
into new agreements with Mr. Razmilovic that superseded and replaced the earlier
agreement. The new agreements provide for:
o the payment to Mr. Razmilovic of Five Million Dollars in March
2002;
o the payment to Mr. Razmilovic of Two Million Dollars in May 2003;
and
o the termination and cancellation of 1,818,750 outstanding stock
options previously granted to Mr. Razmilovic.
The new agreements provide for Mr. Razmilovic to remain as a full-time
employee through May 6, 2002 at an annual salary of $1,000,000 and then to be
employed on a part-time and consulting basis for a period of five years
beginning May 7, 2002. Pursuant to these new agreements, Mr. Razmilovic was
entitled to receive $200,000 per annum during this five year period and was to
continue to participate in fringe benefit programs in effect as of February 14,
2002.
On May 6, 2003, we entered into a tolling agreement with Mr.
Razmilovic, that suspends the obligations of both parties under the 2002
agreements for a period of twelve months beginning April 1, 2003 and ending
March 31, 2004. Pursuant to the tolling agreement, the payment to Mr. Razmilovic
of $2,000,000 in May 2003 was not made by the Company. On March 18, 2004, the
parties entered into an agreement to extend the tolling period under the tolling
agreement until December 31, 2004. Mr. Razmilovic will bear the full expense of
participating in any fringe benefit programs during this suspension period. Both
parties have reserved all rights and claims against the other in connection with
this agreement and have agreed that neither party will commence any legal
actions against each other during the period that the tolling agreement is in
effect.
SATYA SHARMA. In October 2003 the Company and Mr. Sharma entered into
an agreement concerning the termination of his employment effective July 11,
2003. Under the Agreement Mr. Sharma received severance payments for six months
plus a lump sum payment of $50,000, less applicable deductions. Mr. Sharma also
received "COBRA" coverage under the Company's group health insurance at the
Company's expense through January 11, 2004. In return for these benefits, Mr.
Sharma provided the Company with a release of any claims
23
arising out of his employment relationship with the Company, except that the
release did not affect his COBRA benefits, vested stock options, benefits under
Symbol's Executive Retirement Plan, or any entitlement to indemnification
pursuant to the By-Laws of the Company and the laws of the State of Delaware.
EQUITY COMPENSATION PLANS
We currently maintain two stock option plans, the 2001 Non-Executive
Stock Option Plan (the "2001 Plan") and the 1997 Employee Stock Option Plan (the
"1997 Plan"), pursuant to which options may currently be granted to our
employees. We also maintain two additional option plans for the benefit of our
non-employee directors. Under these plans, options are granted to selected
employees and non-employee directors of Symbol. As of March 1, 2004, the total
number of options outstanding under all of the Company's option plans (including
all director option plans) was 40,758,724. The weighted average exercise price
of such options was $13.6145 per share and the weighted average term to
expiration was 5.98 years.
In March 2004, the Company adopted the 2004 Equity Incentive Award
Plan, which has been submitted to the Company's stockholders for their approval
in connection with this Proxy Statement and which will become effective upon
such stockholder approval. All existing Company stock option plans (including
the 2001 Plan and the 1997 Plan) have been amended to provide that, on and
following the date the 2004 Equity Incentive Award Plan becomes effective, no
further options will be granted under the Company's other option plans. Pursuant
to the 2004 Equity Incentive Plan, the Compensation Committee currently intends
to grant "performance vesting" options or other equity compensation awards to
certain senior executives of the Company. Such awards would be intended to align
the interests of such senior executives with the interests of the Company's
stockholders and to support the retention of such senior executives. The
Compensation Committee is currently evaluating performance metrics that may be
utilized with respect to such awards.
Options outstanding under the 2001 Plan generally (a) have a maximum
term of 10 years; (b) have an exercise price equal to 100% of the fair market
value of our Common Stock on the date of grant; and (c) become vested with
respect to 20% of the shares covered thereby on the first anniversary of the
date of grant and with respect to 10% of the shares covered thereby every six
months thereafter. Options granted to executive officers and outstanding under
the 1997 Plan generally (x) have a maximum term of 10 years; (y) have an
exercise price equal to 100% of the fair market value of our Common Stock on the
date of grant; and (z) become vested with respect to 10% of the shares covered
thereby on the first anniversary of the date of grant and with respect to 15% of
the shares covered thereby every six months thereafter. Option grants to
non-executive officers and outstanding under the 1997 Plan generally (i) have a
maximum term of 10 years; (ii) have an exercise price equal to 100% of the fair
market value of our Common Stock on the date of grant; and (iii) become vested
with respect to 20% of the shares covered thereby on the first anniversary of
the date of grant and with respect to 10% of the shares covered thereby every
six months thereafter.
As previously disclosed in our Annual Report on Form 10-K, due to the
inability of Symbol to make timely filings with the Commission, our stock option
plans were held in abeyance, meaning that our employees could not exercise their
options until we became current with our filings. Effective as of March 31,
2003, as an accommodation to both current and former Symbol associates whose
options have been impacted by this suspension, the Compensation Committee of the
Board approved an abeyance program that allows associates whose options are
affected during the suspension period the right to exercise such options up to
90 days after the end of the suspension period, including employees who
terminate their employment with the Company during the suspension period. As of
February 25, 2004, the Company was current with its filings with the Commission.
The abeyance program will end on May 24, 2004.
401(K) PLAN
Our U.S. employees are eligible to participate in a 401(k) deferred
compensation plan after 90 days of service. With some limitations, a participant
may make pre-tax contributions to the plan. Except for participants over the age
of 50, the maximum contribution a participant was allowed to make in 2003 was
$12,000 and in 2004 is $13,000. Participants over the age of 50 were entitled to
contribute a maximum of $14,000 in 2003 and will be entitled to contribute up to
$16,000 in 2004. The Plan matches 50% of up to 6% of eligible compensation
contributed by each participant during each pay period. The employee's
contribution is vested immediately. Our
24
contribution is 100% vested after one year of service. Amounts accumulated under
this Plan are normally paid to a participant on retirement or termination of
employment. Payments depend on the following: the amounts contributed by the
participant; the manner in which contributions have been invested; the amount of
any prior withdrawal; and other factors as detailed in the Plan.
EXECUTIVE RETIREMENT PLAN
We maintain an Executive Retirement Plan for a select group of senior
management employees. The Executive Retirement Plan is a non-qualified deferred
compensation plan. The Compensation Committee of the Board of Directors selects
participants. The following table illustrates the estimated annual retirement
benefits payable under the Executive Retirement Plan to a participant at
specified average compensation levels and years of service.
PENSION PLAN TABLE
YEARS OF SERVICE
3-YEAR AVERAGE
ANNUAL COMPENSATION 5 10 15
------------------- ------------ ----------- -----------
$ 400,000 $ 100,000 $ 200,000 $ 200,000
800,000 200,000 400,000 400,000
1,200,000 300,000 600,000 600,000
1,600,000 400,000 800,000 800,000
2,000,000 500,000 1,000,000 1,000,000
2,400,000 600,000 1,200,000 1,200,000
On January 1, 2004, Mr. Abbott, Mr. Bravman, Mr. Nuti and Ms. DeMayo
had one, 16, one and two years of credited service, respectively. On January 1,
2004, Mr. Greenquist and Mr. Hewlin each had 0 years of credited service.
Benefits under the Executive Retirement Plan are not offset for Social Security
benefits. Benefits payable under the Executive Retirement Plan will be reduced
by the value of any retirement income of the participant attributable to
contributions by us to any qualified pension plan adopted by us (excluding our
current 401(k) retirement plan).
Under the Executive Retirement Plan, the maximum benefit a participant
may be paid is the participant's average compensation (base salary plus accrued
bonus) for the three highest fiscal years in the five-year period immediately
prior to the date the participant is no longer a plan participant multiplied by
five (the "Benefit Ceiling Amount"). After five successive years of
participation in the Executive Retirement Plan, a participant is entitled to 50%
of the Benefit Ceiling Amount. After each additional full year of participation
in the Executive Retirement Plan up to five additional years of participation, a
participant is entitled to an additional 10% of the Benefit Ceiling Amount.
Benefits are normally payable in equal monthly installments over a 10-year
period after retirement, beginning after the participant attains age 65 or age
60 with at least 15 years of credited service. Participants with more than 10
years of credited service will receive 12 equal monthly installments for each
full year of creditable service above 10 years, with a maximum of five
additional years of service. Upon death or disability, payment is accelerated
and made in a lump sum but the amount is reduced to the then present value of
the benefit payments which would have been made under the normal mode of
payment. Currently, Messrs. Abbott, Bravman, Bruno, Greenquist, Hewlin, Lieb,
Nuti and Ms. DeMayo are participants in the Executive Retirement Plan.
25
EQUITY COMPENSATION PLAN INFORMATION (AS OF DECEMBER 31, 2003 AND MARCH 1, 2004)
(C)
NUMBER OF SECURITIES
(A) REMAINING AVAILABLE FOR
NUMBER OF SECURITIES TO BE (B) FUTURE ISSUANCE UNDER
ISSUED UPON EXERCISE OF WEIGHTED-AVERAGE EXERCISE EQUITY COMPENSATION PLANS
OUTSTANDING OPTIONS, WARRANTS PRICE OF OUTSTANDING (EXCLUDING SECURITIES
AND RIGHTS OPTIONS, WARRANTS AND RIGHTS REFLECTED IN COLUMN (A))
- ----------------------- ----------------------------- ------------------------------ ---------------------------
PLAN CATEGORY 12/31/03 3/01/04 12/31/03 3/01/04 12/31/03 3/01/04
------------- -------- ------- -------- ------- -------- -------
Equity compensation
plans
approved by security
holders (a).............. 19,276,745 17,599,782 $10.64 $11.90 8,023,013(c) 7,078,418(c)
Equity compensation
plans
not approved by security
holders (b).............. 20,767,405 22,422,450 $14.40 $14.82 4,528,845 2,306,876
---------- ---------- ------ ------ ---------- ---------
Total*................... 41,161,947(d) 40,754,424(e) $12.75 $13.61 12,551,858 9,385,294
- ---------------------------
* These amounts include stock options that Symbol assumed under the 1990
Employee and 1990 Non-Employee Stock Option plans of Telxon Corporation,
pursuant to which such stock options are exercisable for 1,117,797 shares
of Common Stock and 732,192 shares of Common Stock effective December 31,
2003 and March 1, 2004, respectively. These options have a weighted average
exercise price of $18.56 per share and $17.80 per share effective December
31, 2003 and March 1, 2004, respectively. No awards have been made under
these plans since their assumption by the Company.
(a) Approved Plans: 1991 Employee Stock Plan, 1994 Directors' Stock Option
Plan, 1997 Employee Stock Option Plan, 1997 Employee Stock Purchase Plan,
2000 Directors' Stock Option Plan and the 2002 Directors' Stock Option
Plan.
(b) Non-Approved Plans: 1990 Non-Executive Stock Option Plan, 1998 Directors'
Warrants, 1999 Directors' Warrants and 2001 Non-Executive Stock Option
Plan.
Under the 1990 Non-Executive Stock Option Plan, the Compensation Committee
of the Board of Directors was permitted to grant options to key employees
of Symbol and its subsidiaries other than executive officers, with similar
terms and vesting periods as those contained in the 2001 Plan. The 1990
Non-Executive Stock Option Plan terminated on April 30, 2003.
In January 1998, pursuant to the 1998 Directors' Warrants, certain members
of the then current Board of Directors, including Messrs. Mallement and
Bugliarello, were awarded warrants to purchase 15,000 shares (pre-split) of
Common Stock at an exercise price of $24.88 (pre-split) per share, which
was the closing price of Symbol's Common Stock on the date such warrants
were granted. The warrants have a term of ten years; all such warrants are
currently exercisable.
In May 1999, pursuant to the 1999 Directors' Warrants, certain members of
the then current Board of Directors, including Messrs. Mallement and
Bugliarello, were awarded warrants to purchase 15,000 shares (pre-split) of
Common Stock. The exercise price of those options and warrants was $35.54
(pre-split) per share, which was the closing price of Symbol's Common Stock
on the date the warrants were granted. The warrants have a term of ten
years; all such warrants are currently exercisable.
(c) Of these shares, 1,804,575 shares remain available for purchase under the
1997 Employee Stock Purchase Plan.
(d) The weighted average term for these options is 5.1 years.
(e) The weighted average term for these options is 5.9 years.
26
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
The following chart shows a comparison of the yearly performance change
in an investment of $100 in the Common Stock compared to an investment of
$100 in the Standard & Poor's Composite 500 Stock Index and the Standard &
Poor's Technology Sector Index for a five year period beginning January 1, 1998
and ending December 31, 2003. The chart assumes that all dividends will be
reinvested.
[GRAPHIC]
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG SYMBOL TECHNOLOGIES, INC., THE S & P 500 INDEX
AND THE S & P INFORMATION TECHNOLOGY INDEX
12/98 12/99 12/00 12/01 12/02 12/03
------ ------ ------ ----- ----- -----
SYMBOL TECHNOLOGIES, INC. 100.00 149.25 126.84 84.00 43.57 89.68
S & P 500 100.00 121.04 110.02 96.95 75.52 97.18
S & P INFORMATION TECHNOLOGY 100.00 178.74 105.63 78.31 49.01 72.16
*$100 invested on 12/31/98 in stock or index-including reinvestment of all dividends. Fiscal year ending December 31.
27
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain of the information required by this Item appears in the
sections entitled "Ownership of Certain Beneficial Owners and Management" and
"Executive Compensation" above.
In 2000, the Company entered into a new employment agreement with
Raymond Martino, a current member of our Board of Directors and a former
President of the Company, that terminates on February 15, 2005. He is employed
as a part-time consultant, assisting the non-executive chairman of the Board of
Directors and the CEO and President. In 2004, Mr. Martino will receive $100,000
pursuant to his agreement.
Raymond Martino's son, Raymond Martino, Jr., is employed by Symbol as
Vice President, Technology Strategy. Mr. Martino, Jr.'s aggregate compensation
for fiscal year 2003 was $294,353. His compensation is not subject to approval
by the Board of Directors. On June 9, 2003, Mr. Martino, Jr. was awarded options
under our 2001 Plan to purchase 10,000 shares of our Common Stock at an exercise
price of $14.02 per share, which was the closing price of our Common Stock on
the NYSE on the date the option was granted. Twenty percent of these options
will vest on June 9, 2004 and 10 percent will vest on December 9, 2004, and each
of the seven next consecutive six-month anniversary dates of that date.
In February 2002, the Company loaned $1,000,000 to Mr. Bravman. This
loan bears interest at an annual rate of LIBOR plus 100 basis points, which
approximated 3.0 percent and 2.4 percent at December 31, 2003 and 2002,
respectively. This loan is payable upon the earlier of: (1) the date he ceases
to be an employee of the Company, (2) the date of sale of his California
residence, or (3) February 19, 2007. In addition, if he or his wife sell any
shares of the Common Stock now owned by either of them or hereafter acquired
(other than shares sold to pay the exercise price and taxes resulting from the
exercise of any options originally granted to Mr. Bravman by us), 100 percent of
the net proceeds of such sales shall be applied immediately to reduce any
outstanding indebtedness under this loan.
In addition, the Company also loaned Mr. Bravman $500,000 in October
1999. This loan bears interest at an annual rate of 7 percent through October
2004, and 2.75 percent above the One Year Treasury Rate through maturity. The
loan is payable upon the earlier of: (1) the date he ceases to be an employee of
the Company, (2) the date of sale of his California residence, or (3) October 5,
2006. This loan is secured by a second mortgage on his California residence. In
addition, if he or his wife sell any shares of the Common Stock now owned by
either of them or hereafter acquired (other than shares sold to pay the exercise
price and taxes resulting from the exercise of any options originally granted to
Mr. Bravman by us), 100 percent of the net proceeds of such sales shall be
applied immediately to reduce any outstanding indebtedness under this loan.
These loans to Mr. Bravman were made prior to the adoption of the Sarbanes-Oxley
Act and thus were "grandfathered" and not subject to the prohibition against
loans to an "officer" as such term is defined in Rule 16a-1(f) of the Exchange
Act and for purposes of Section 16(a) of the Exchange Act.
In January 2003, the Company loaned $500,000, interest free, to John
Bruno, our current Senior Vice President--Business Development and Chief
Information Officer, who, at such time, was not an "officer" as such term is
defined in Rule 16a-1(f) of the Exchange Act and for purposes of Section 16(a)
of the Exchange Act. As of March 1, 2004, this loan had been repaid in full by
Mr. Bruno. On March 10, 2004, the Board appointed Mr. Bruno an executive officer
of Symbol.
28
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The following Report of the Audit Committee does not constitute soliciting
material and should not be deemed filed or incorporated by reference into any
other filing made by the Company under the Securities Act of 1933, as amended or
the Exchange Act, except to the extent the Company specifically incorporates
this Report by reference therein.
The Audit Committee of the Board of Symbol was composed of three
independent directors for the majority of fiscal year 2003. Mr. Chrenc joined
the Board and the Audit Committee on December 15, 2003 and was appointed
Chairman of the Audit Committee on February 9, 2004. The Audit Committee
operates under a charter approved by the Board on February 9, 2004, which is
attached as Annex I to this Proxy Statement and is posted on our website.
As more fully described in its charter, the Audit Committee reviews
Symbol's financial reporting process on behalf of the Board. Management has the
primary responsibility for the financial statements and the reporting process.
Symbol's independent auditors, Deloitte & Touche LLP, are responsible for
performing an audit in accordance with auditing standards generally accepted in
the United States to obtain reasonable assurance that Symbol's consolidated
financial statements are free from material misstatement and for expressing an
opinion on the conformity of the financial statements with accounting principles
generally accepted in the United States. The internal auditors are responsible
to the Audit Committee and the Board for testing the integrity of the financial
accounting and reporting control systems and such other matters as the Audit
Committee and Board determine from time to time.
The Audit Committee of Symbol hereby reports as follows:
1. The Audit Committee has reviewed and discussed the audited financial
statements with Symbol's management.
2. The Audit Committee has discussed with Deloitte & Touche LLP the
matters required to be discussed by Statement of Auditing Standards No. 61, as
amended by Statement of Auditing Standards No. 90 (Audit Committee
Communications).
3. The Audit Committee has received and reviewed the written
disclosures and the letter from Deloitte & Touche LLP required by Independence
Standards Board Standard No. 1 (Independence Discussions with Audit Committees),
has discussed with Deloitte & Touche LLP their independence and considered
whether the provision of non-audit services is compatible with maintaining
Deloitte & Touche LLP's independence.
4. Based on the review and discussion referred to in paragraphs (1)
through (3) above, the Audit Committee recommended to the Board of Directors of
Symbol, and the Board has approved, that the audited financial statements be
included in Symbol's Annual Report on Form 10-K for the fiscal year ended
December 31, 2003, for filing with the Commission.
Robert J. Chrenc, Chairman
Dr. George Bugliarello
Dr. Leo A. Guthart
Salvatore Iannuzzi
Harvey Mallement
George Samenuk
29
FEES TO INDEPENDENT AUDITORS FOR FISCAL 2003 AND 2002
The aggregate fees billed to the Company for each of the last two
fiscal years for professional services rendered by the Company's principal
accounting firm, Deloitte & Touche LLP, the member firms of Deloitte Touche
Tohmatsu, and their respective affiliates (collectively, the "Deloitte
Entities"), are set forth in the table below. All such fees were approved, or
pre-approved as the case may be, by our Audit Committee as discussed under
"Pre-Approval Policies and Procedures" below.
2003 2002
=================== ====================
AUDIT FEES (1) $ 3,367,000 $ 3,450,600
AUDIT-RELATED FEES (2) $ 9,910,400 $ 1,079,000
TAX FEES (3) $ 637,000 $ 1,235,580
ALL OTHER FEES (4) $ 30,338 $ 27,736
------------------------- ------------------- --------------------
TOTAL $ 13,944,738 $ 5,792,916
=================== ====================
(1) Audit fees represent the aggregate fees incurred for the audit of the
Company's financial statements, review of the financial statements
included in the Company's quarterly reports, and services in connection
with statutory and regulatory filings engagements for those fiscal years.
(2) Audit-related fees represent the aggregate fees billed for assurance and
related services that are reasonably related to the performance of the
audit or review of the Company's financial statements and are not
reported under "Audit fees." These services include audit services
rendered in connection with the restatement of the Company's selected
financial data for 1998, 1999, 2000 and 2001, financial statements for
the years ended December 31, 2000 and 2001, and unaudited selected
quarterly information for each of the four quarters of 2001 and the first
three quarters of 2002, planning and compliance with the Sarbanes-Oxley
Act during 2003 and the filing of registration statements in 2002.
(3) Tax fees represent the aggregate fees billed for professional services
for tax compliance, tax advice and tax planning. Fees for tax services
billed in 2003 consisted of $163,000 for tax compliance and $474,000 for
tax planning and advice, all of which were approved by the Audit
Committee. With respect to services rendered after May 6, 2003, the Audit
Committee was presented with a detailed list of services prior to when
they were performed. Projects during 2003 were approved on an
item-by-item basis, although approval was also granted for $50,000 of
various worldwide tax audit, tax compliance and tax planning projects
and/or questions that may arise in connection therewith.
(4) All other fees represent the aggregate fees billed for products and
services that are not included in the "Audit fees," "Audit-related fees"
and "Tax fees" sections, including fees paid to the Deloitte Entities in
connection with expert witness services provided in the Telxon litigation
to which the Company is a party (disclosure on which litigation is
included in the Company's Form 10-K).
PRE-APPROVAL POLICIES AND PROCEDURES
The Audit Committee has adopted a policy that, as of May 6, 2003,
requires the pre-approval of audit and non-audit services rendered by the
Deloitte Entities. Other than the Telxon expert witness fees described in
footnote 4 to the immediately preceding table, all audit and non-audit services
rendered by the Deloitte Entities prior to May 6, 2003 were approved by the
Audit Committee. As of May 6, 2003, all audit and non-audit services rendered by
the Deloitte Entities were pre-approved by the Audit Committee in accordance
with the Audit Committee policy. For audit services, the Company's independent
public accountants will be required to provide the Audit Committee with an audit
services plan during the third quarter of each fiscal year outlining the scope
of the audit services proposed to be performed for the fiscal year and the fees
therefor, which plan must be formally accepted by the
30
Audit Committee. For non-audit services, Company management will submit to the
Audit Committee for approval from time-to-time during the fiscal year the list
of non-audit services that it recommends the Audit Committee engage the
accounting firm to provide for the current and subsequent fiscal years, together
with a budget therefor. Company management and the accounting firm will each
confirm to the Audit Committee that each non-audit service on the list is
permissible under all applicable legal requirements. The Audit Committee will
approve both the list of permissible non-audit services and the budget for such
services. The Audit Committee delegates to its Chair the authority to amend or
modify the list of approved permissible non-audit services and fees. The Chair
will report action taken to the Audit Committee at a subsequent Audit Committee
meeting.
APPOINTMENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As previously disclosed, on March 25, 2004, the Company dismissed
Deloitte & Touche LLP ("D&T") as its independent auditors. D&T's dismissal was
approved by the Company's Audit Committee of the Board of Directors.
The audit reports of D&T on the Company's consolidated financial
statements for the years ended December 31, 2003 and 2002 did not contain an
adverse opinion or a disclaimer of opinion and were not qualified or modified as
to uncertainty, audit scope, or accounting principles. D&T's audit report on the
Company's consolidated financial statements for such years includes an
explanatory paragraph relating to the change in method of accounting in 2002 for
goodwill and other intangibles to conform to Statement of Financial Accounting
Standards (Statement) No. 142, "Goodwill and Other Intangible Assets."
During the fiscal years ended December 31, 2003 and 2002 and the
subsequent interim period through the date of this proxy statement, there were
no disagreements between the Company and D&T on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure, which disagreement, if not resolved to the satisfaction of D&T, would
have caused D&T to make reference to the subject matter of the disagreement in
connection with their reports, except that: subsequent to the issuance of the
Company's 2002 consolidated financial statements, D&T advised the Company that
it believed that the accounting treatment afforded to an available for sale
security for which an other than temporary impairment charge was recorded in the
second quarter of 2002 should be revised. D&T advised the Company that it
believed that an other than temporary impairment of such investment should have
been recognized in 2001. The Company disagreed with D&T's conclusions with
respect to this matter. This accounting matter was resolved, the Company revised
the accounting treatment for this investment and reissued its 2002 financial
statements in an amended filing of its' 2002 Annual Report on Form 10-K/A
(Amendment No. 1) on February 25, 2004.
During the two fiscal years ended December 31, 2003 and 2002 and the
subsequent interim period through the date of this proxy statement, D&T reported
to the Company's Audit Committee that D&T considered matters involving the
Company's internal controls and their operation to be material weaknesses as
follows:
(1) In connection with its audit of the consolidated financial
statements of the Company for the fiscal year ended December 31, 2002, D&T
reported to the Audit Committee the following material weaknesses:
o decentralized accounting structure for operations in the United
States;
o inadequate policies and processes for identifying complex
non-standard transactions, including restructurings and
acquisitions;
o inadequate hiring of qualified and experienced personnel;
o inadequate training and supervision of personnel;
o inadequate systems and systems interfaces;
o errors related to the processing of stock option exercises;
o errors related to the timing and amount of revenue recognized;
o errors in the timing and recording of certain reserves,
including excess and obsolete inventory;
o inadequate support and approval for numerous manual journal
entries; and
o informal and inconsistent policies and procedures related to
account reconciliations.
(2) In connection with its audit of the consolidated financial
statements of the Company for the fiscal year ended December 31, 2003, D&T
reported that a material weakness exists related to the manner in which the
Company processes transactions to record revenue. Additionally, D&T reported
that deficiencies exist relating to the adequacy and timeliness of account
reconciliations, formalized worldwide policies and procedures and the amount of
manual journal entries required to record transactions.
31
The Company has authorized D&T to respond fully to inquiries of the
successor accountant concerning the reportable events discussed above.
On March 25, 2004, the Audit Committee of the Board of Directors of the
Company appointed Ernst & Young LLP ("E&Y") as the Company's independent
auditors for the fiscal year ending December 31, 2004, subject to ratification
by the stockholders of the Company at its Annual Meeting. During the fiscal
years ended December 31, 2003 and 2002 and the subsequent interim period through
the date of this proxy statement, the Company has not consulted with E&Y
regarding the application of accounting principles to a specified transaction,
either completed or proposed, the type of audit opinion that might be rendered
on the Company's consolidated financial statements, or any matter that was the
subject of disagreement or a reportable event as set forth in Items 304(a)(2)(i)
and (ii) of Regulation S-K.
Certain of the Deloitte Entities may continue to be engaged by the
Company or its subsidiaries in non-audit capacities now or in the future.
The Company expects that representatives of D&T and E&Y will be present
at the Annual Meeting of Stockholders. They will have an opportunity to make a
statement at the meeting if they so desire and will be available to respond to
appropriate questions raised orally by stockholders. If the appointment of E&Y
is not ratified, the Audit Committee will evaluate the basis for the
stockholders' vote in determining whether to continue E&Y's engagement.
It is important that your shares be represented at the meeting. If you
are unable to be present in person, you are respectfully requested to sign the
enclosed proxy and return it in the enclosed stamped and addressed envelope or
provide your instructions by telephone or via the Internet as promptly as
possible.
By Order of the Board of Directors,
/s/ Peter M. Lieb
-----------------------------------
Peter M. Lieb
Secretary
Dated: March 31, 2004
Holtsville, New York
32
THE PROPOSALS
PROPOSAL 1.
ELECTION OF DIRECTORS
NOMINEES FOR ELECTION
Directors serve one-year terms and are elected annually. The current
term of office of all of the Company's directors expires at the 2004 annual
meeting. In accordance with the Company's By-Laws, the Board has fixed the
number of directors at 11. The Board proposes that the following nominees, all
of whom are currently serving as directors, be re-elected for a new term of one
year and until their successors are duly elected and qualified. Each of the
nominees has consented to be named and to serve if elected. If any of them
becomes unavailable to serve as a director, the Board may designate a substitute
nominee. In that case, the persons named as proxies will vote for the substitute
nominee designated by the Board. The following information is supplied about the
nominees for election as directors of the Company:
- ----------------------------------------------------------------------------------------------------------------------
SALVATORE IANNUZZI Mr. Iannuzzi was elected a director by the Board on December 15, 2003
Director and Chairman of the Board of and was appointed non-executive Chairman of the Board of Directors as
Directors since 2003 of December 30, 2003. Mr. Iannuzzi is currently an independent
Age: 50 consultant. He was employed as the Chief Administrative Officer of
CIBC World Markets, Inc. from June 2000 to March 2004. From 1982 to
2000, he held several senior positions at Bankers Trust
Company/Deutsche Bank, including senior control officer and head of
corporate compliance.
- ----------------------------------------------------------------------------------------------------------------------
ROBERT J. CHRENC Mr. Chrenc was elected a director by the Board on December 15, 2003.
Director since 2003 Mr. Chrenc was Executive Vice President and Chief Administrative
Age: 59 Officer at ACNielsen, a leading provider of marketing information based
on measurement and analysis of marketplace dynamics and consumer
attitudes and behavior, from February 2001 until his retirement in
December 2001. From June 1996 to February 2001, he served as
ACNielsen's Executive Vice President and Chief Financial Officer.
- ----------------------------------------------------------------------------------------------------------------------
EDWARD KOZEL Mr. Kozel was elected a director by the Board on March 10, 2004. Mr.
Director since 2004 Kozel is currently a managing director of Integrated Finance, Ltd., a
Age: 48 strategic advisory firm, which he joined in January 2004. He was the
managing member of Open Range Ventures, a venture capital firm, from
November 1999 until December 2003. From 1989 to 1997 he worked at
Cisco Systems, Inc. where he held a variety of senior executive roles,
including Senior Vice President Business Development, Chief Technology
Officer, and was a member of the Board of Directors from 1996 to 2002.
Mr. Kozel also serves on the boards of directors of Reuters Group PLC
(where he is a member of the Remuneration Committee) and Yahoo!, Inc.
(where he serves as Chairman of the Audit Committee). At no time
during their respective periods of employment with Cisco did either Mr.
Kozel or Mr. Nuti report to the other.
- ----------------------------------------------------------------------------------------------------------------------
WILLIAM R. NUTI Mr. Nuti was appointed President and Chief Operating Officer of Symbol
President and Chief Executive on August 1, 2002 and was appointed President, Chief Executive Officer
Officer and director on December 30, 2003. Mr. Nuti joined Symbol from Cisco
Director since 2003 Systems, Inc., where he was senior vice president of U.S. Theatre and
Age: 40 Worldwide Service Provider Operations, responsible for Cisco's field
operations, systems engineering, professional services and marketing
for the global service provider arena. In his 10-year career at Cisco,
Mr. Nuti served as president of Europe, the Middle East and Africa
("EMEA") operations, vice president for the Cisco Asia Pacific region
and various sales management positions.
33
- ----------------------------------------------------------------------------------------------------------------------
GEORGE SAMENUK Mr. Samenuk was elected a director by the Board on March 10, 2004. Mr.
Director since 2004 Samenuk has served as chief executive officer and a director of Network
Age: 48 Associates, Inc. since January 2001. In April 2001, Mr. Samenuk was
named Chairman of the Board of Network Associates. From January 2000
to January 2001, Mr. Samenuk served as president and Chief Executive
Officer of TradeOut, Inc., a private online exchange company. From
April 1999 to January 2000, Mr. Samenuk served as general manager,
Americas at IBM Corporation. From August 1996 to April 1999, Mr.
Samenuk was general manager, ASEAN/ South Asia at IBM Corporation.
From January 2001 to September 2002, Mr. Samenuk served as a director
of McAfee.com Corporation, including serving as the chairman of its
board from March 2001 until September 2002, when Network Associates
purchased the minority interest in McAfee.com Corporation.
- ----------------------------------------------------------------------------------------------------------------------
MELVIN A. YELLIN Mr. Yellin was elected a director by the Board on December 15, 2003.
Director since 2003 Mr. Yellin has been the president of Stone Point Corporation since July
Age: 61 2003. Stone Point Corporation concentrates primarily on risk management
and corporate solutions for its corporate clients. From 1999 to 2003,
Mr. Yellin was of counsel to Skadden Arps Slate Meagher & Flom LLP.
Prior to that, Mr. Yellin served as Executive Vice President and
General Counsel of Bankers Trust Company. In 2002, Mr. Yellin served as
chairman and president of the New York Metropolitan Chapter of the
National Association of Corporate Directors and has been a frequent
lecturer for The Conference Board on governance issues.
- -------------------------------------------- -------------------------------------------------------------------------
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" EACH OF THE PERSONS
NOMINATED BY THE BOARD.
34
PROPOSAL 2.
PROPOSAL TO APPROVE THE AMENDMENT AND RESTATEMENT OF THE SYMBOL TECHNOLOGIES,
INC. EXECUTIVE BONUS PLAN
The Symbol Technologies, Inc. Executive Bonus Plan was originally
adopted by the Board of Directors on February 18, 1999 and approved by the
stockholders of the Company on May 10, 1999. The Board of Directors recommends
that the stockholders approve an amendment and restatement of the Symbol
Technologies, Inc. Executive Bonus Plan. We are asking you to approve the
amendment and restatement to preserve Symbol's federal income tax deduction for
compensation paid to its chief executive officer and its four other most highly
compensated executive officers (Symbol's "covered employees"). Section 162(m) of
the Internal Revenue Code of 1986, as amended and the regulations thereunder
(the "Code") limits the federal income tax deduction for compensation paid to
each of the "covered employees" of a publicly held corporation to $1 million per
fiscal year, with exceptions for performance-based compensation made under
qualifying plans. The Board approved the amended and restated Executive Bonus
Plan in March 2004 and has established target awards for fiscal 2004 subject to
stockholder approval of the amendment and restatement. A summary of the
principal features of, and material changes to, the Plan is provided below. The
summary is qualified in its entirety by reference to the full text of the
Executive Bonus Plan (as amended and restated as of March 10, 2004), which is
attached as Annex II to this Proxy Statement.
AWARDS. The Executive Bonus Plan provides for the payment of cash
bonuses to executive officers of Symbol as determined at or following the end of
the respective performance period selected by the Compensation Committee (the
"Committee"), in accordance with targets established at or near the beginning of
the respective performance period. Factors that may be considered in determining
the amount of cash bonuses paid to executive officers will be, among others, the
executive officer's individual performance, which may be measured by the quality
of strategic plans, organizational and management development, special project
leadership and similar indicators of individual performance or other measures,
and the Company's financial performance, which may be measured by net income,
cash flow, earnings per share, return on equity, total return to stockholders in
the form of stock price appreciation and dividends, if paid (as such terms are
defined in the Executive Bonus Plan), or other measures. Notwithstanding the
foregoing, bonuses shall be payable to "covered employees" upon the attainment
of certain performance goals related to the Company's net income, cash flow,
earning per share or other financial metrics determined by the Committee.
Bonuses otherwise payable to any "covered employee" may be decreased (but not
increased) by the Committee in its discretion. The maximum amount that may be
paid under the Plan to an executive officer in any fiscal year is $6 million. In
fiscal year 2004, there are 10 participants.
PLAN ADMINISTRATION. The Committee administers the Executive Bonus
Plan. With respect to covered employees, the Committee shall consist solely of
two or more "outside directors" as defined by Section 162(m) of the Code. The
Committee can make award payments subject to Symbol having a minimum level of
net income, cash flow, earning per share or other financial metrics established
by the Committee at or near the beginning of each performance period, so that
awards paid to "covered employees" within the meaning of Section 162(m) of the
Code can be deducted by the Company for tax purposes. Subject to this
limitation, the award amount with respect to an executive officer is determined
in the sole discretion of the Committee or, in the case of an award to an
officer who is not a "covered employee," in the sole discretion of the Committee
or a person or other committee to whom the Committee or the Board of Directors
has delegated that authority.
OTHER PROVISIONS. The Board may modify or terminate the Executive Bonus
Plan at any time.
MATERIAL CHANGES IN THE AMENDMENT AND RESTATEMENT. The amendment and
restatement modifies the definition of net income. Under the amendment and
restatement, net income will be determined before taxes, and excludes (a)
extraordinary items; (b) cumulative effects of changes in accounting principles;
(c) securities gains and losses; (d) amortization or write-off of goodwill,
acquired intangibles, and purchased in-process research and development; and (e)
nonrecurring items including, but not limited to, gains or losses on asset
dispositions and sales of divisions, business units or subsidiaries,
restructuring and separation charges and gains and losses from qualified benefit
plan curtailments and settlements.
35
TAX RULES. The following is a brief summary of the federal income tax
consequences of payments made under the Executive Bonus Plan based on current
federal income tax laws. This summary is not intended to be exhaustive and does
not describe state or local tax consequences. In general, ordinary income will
be recognized by the executive officers that participate in the Plan at the time
that awards are paid or made available to them. At the time that an executive
officer recognizes ordinary income, Symbol will be entitled to a corresponding
deduction if, among other things, (i) the income meets the test of
reasonableness, is an ordinary and necessary business expense and is not an
"excess parachute payment" within the meaning of Section 280G of the Code and is
not disallowed by the $1 million limitation on compensation paid to "covered
employees" set forth in Section 162(m) of the Code and (ii) any applicable
reporting obligations are satisfied.
Awards made in the future to any executive officer will be based on the
Company's future performance (and, in certain instances, the executive officer's
individual performance). Accordingly, the amount of cash bonuses to be paid in
the future to current or future participating officers cannot be determined at
this time.
THE BOARD RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE AMENDMENT AND RESTATEMENT
OF THE SYMBOL TECHNOLOGIES, INC. EXECUTIVE BONUS PLAN.
36
PROPOSAL 3.
PROPOSAL TO APPROVE THE COMPANY'S
2004 EQUITY INCENTIVE AWARD PLAN
The Board of Directors (the "Board") has adopted, subject to
stockholder approval, the Symbol Technologies, Inc. 2004 Equity Incentive Award
Plan (the "2004 Plan") for members of the Board, employees and consultants of
the Company and its subsidiaries. The 2004 Plan will become effective upon
approval by our stockholders.
The Board believes that the 2004 Plan will promote the success and
enhance the value of the Company by continuing to link the personal interest of
participants to those of Company stockholders and by providing participants with
an incentive for outstanding performance.
The 2004 Plan provides for the grant of both incentive stock options
and nonqualified stock options, restricted stock, stock appreciation rights,
performance shares, performance stock units, dividend equivalents, stock
payments, deferred stock, restricted stock units, other stock-based awards, and
performance-based awards to eligible individuals. A summary of the principal
provisions of the 2004 Plan is set forth below. The summary is qualified by
reference to the full text of the 2004 Plan, which is attached as Annex III to
this Proxy Statement.
ADMINISTRATION
The 2004 Plan will be administered by the Compensation Committee of the
Board. The Compensation Committee may delegate to a committee of one or more
members of the Board the authority to grant or amend awards to participants
other than senior executives of the Company who are subject to Section 16 of the
Exchange Act or employees who are "covered employees" within the meaning of
Section 162(m). The Compensation Committee will include at least two directors,
each of whom qualifies as a non-employee director pursuant to Rule 16b-3 of the
Exchange Act, and an "outside director" pursuant to Section 162(m).
The Compensation Committee will have the exclusive authority to
administer the 2004 Plan, including the power to determine eligibility, the
types and sizes of awards, the price and timing of awards and the acceleration
or waiver of any vesting restriction, provided that the Compensation Committee
will not have the authority to accelerate vesting or waive the forfeiture of any
performance-based awards.
ELIGIBILITY
Persons eligible to participate in the 2004 Plan include all members of
the Board, comprised of six persons following the 2004 Annual Meeting of
Stockholders and the election of each of the nominees, approximately 5,300
employees, and a limited number of consultants of the Company and its
subsidiaries, as determined by the Compensation Committee.
LIMITATION ON AWARDS AND SHARES AVAILABLE
The maximum number of shares of Common Stock available for issuance
under the 2004 Plan is equal to 4,919,281, plus the number of shares of Common
Stock which are or become available for issuance under the 1997 Employee Stock
Option Plan, the 2001 Non-Executive Stock Option Plan, the 1990 Non-Executive
Stock Option Plan, the 1991 Employee Stock Option Plan, the 2002 Directors'
Stock Option Plan, the 2000 Directors' Stock Option Plan, the Telxon Corporation
1990 Employee Stock Option Plan and the 1994 Directors' Stock Option Plan (the
"Prior Plans"), and which are not issued under such plans. As of March 1, 2004,
7,580,719 shares of Common Stock were available for issuance pursuant to the
Prior Plans. Thus, as of March 1, 2004, an aggregate of 12,500,000 shares of
Common Stock would have been available for issuance pursuant to the 2004 Plan,
including shares related to the Prior Plans. As of March 1, 2004, there were
40,754,424 options outstanding with a weighted average exercise price of $13.61
and a weighted average term of 5.9 years.
37
To the extent that an award terminates, expires or lapses for any
reason (including for this purpose any option previously granted pursuant to the
Prior Plans), any shares subject to the award may be used again for new grants
under the 2004 Plan. In addition, shares tendered or withheld to satisfy the
grant or exercise price or any tax withholding obligation (including for this
purpose shares so tendered or withheld with respect to options previously
granted pursuant to the Prior Plans) may be used for grants under the 2004 Plan.
Shares issued in assumption of, or in substitution for, any outstanding awards
of any entity acquired in any form of combination by the Company or any of its
subsidiaries will not be counted against the shares available for issuance under
the 2004 Plan. Notwithstanding the foregoing, no shares will become available(a)
upon the cancellation of existing awards or any similar transactions following
the tenth anniversary of stockholder approval of the 2004 Plan or (b) if the
return of shares would require additional stockholder approval of the 2004 Plan
pursuant to applicable NYSE rules.
The aggregate number of shares of Common Stock available for issuance
under the 2004 Plan will be reduced by 1.65 shares for each share delivered in
settlement of any award (a "Full Value Award") other than an Option, SAR or
other award for which the participant pays the intrinsic value (whether directly
or by foregoing a right to receive a cash payment from the Company). The payment
of dividend equivalents in conjunction with outstanding awards will not be
counted against the shares available for issuance under the 2004 Plan. The
shares of Common Stock covered by the 2004 Plan may be treasury shares,
authorized but unissued shares, or shares purchased in the open market.
The maximum number of shares of Common Stock that may be subject to one
or more awards to a participant pursuant to the 2004 Plan during any rolling
three calendar-year period is 3,000,000. As of the record date for the 2004
Annual Meeting of March 1, 2004, the closing price of the Common Stock on the
NYSE was $17.45 per share. From January 1, 2004 through March 19, 2004,
4,634,234 shares of Common Stock have been acquired by our directors and
employees pursuant to the exercise of outstanding stock options.
AWARDS
The 2004 Plan provides for the grant of both incentive stock options
and nonqualified stock options, restricted stock, stock appreciation rights,
performance shares, performance stock units, dividend equivalents, stock
payments, deferred stock, restricted stock units, other stock-based awards, and
performance-based awards. No determination has been made as to the types or
amounts of awards that will be granted to specific individuals pursuant to the
2004 Plan. See the "Summary Compensation Table" and "Option Grants in Last
Fiscal Year" elsewhere in this Proxy Statement for information on prior awards
to named executive officers.
Stock options, including incentive stock options, as defined under
Section 422 of the Code, and nonqualified stock options may be granted pursuant
to the 2004 Plan. The option exercise price of all stock options granted
pursuant to the 2004 Plan will not be less than 100% of the fair market value of
the Common Stock on the date of grant. Stock options may be exercised as
determined by the Compensation Committee, but in no event after the tenth
anniversary date of grant, provided that a vested nonqualified stock option may
be exercised up to 12 months after the optionee's death. The aggregate fair
market value of the shares with respect to which options intended to be
incentive stock options are exercisable for the first time by an employee in any
calendar year may not exceed $100,000, or such other amount as the Code
provides.
Upon the exercise of a stock option, the purchase price must be paid in
full in either cash or its equivalent, by delivering a promissory note bearing
interest at no less than such rate as shall then preclude the imputation of
interest under the Code, or by tendering previously acquired shares of Common
Stock with a fair market value at the time of exercise equal to the exercise
price (provided such shares have been held for such period of time as may be
required by the Compensation Committee in order to avoid adverse accounting
consequences) or other property acceptable to the Compensation Committee
(including through the delivery of a notice that the participant has placed a
market sell order with a broker with respect to shares then issuable upon
exercise of the option, and that the broker has been directed to pay a
sufficient portion of the net proceeds of the sale to the Company in
satisfaction of the option exercise price, provided that payment of such
proceeds is then made to the Company upon settlement of such sale). However, no
participant who is a member of the Board or an executive officer of the Company
will be permitted to pay the exercise price of an option in any method which
would violate Section 13(k) of the Exchange Act.
38
Restricted stock may be granted pursuant to the 2004 Plan. A restricted
stock award is the grant of shares of Common Stock at a price determined by the
Compensation Committee (including zero), that is nontransferable and may be
subject to substantial risk of forfeiture until specific conditions are met.
Conditions may be based on continuing employment or achieving performance goals.
During the period of restriction, participants holding shares of restricted
stock may have full voting and dividend rights with respect to such shares. The
restrictions will lapse in accordance with a schedule or other conditions
determined by the Compensation Committee.
A stock appreciation right (a "SAR") is the right to receive payment of
an amount equal to the excess of the fair market value of a share of Common
Stock on the date of exercise of the SAR over the fair market value of a share
of Common Stock on the date of grant of the SAR.
The other types of awards that may be granted under the 2004 Plan
include performance shares, performance stock units, dividend equivalents,
deferred stock, restricted stock units, and other stock-based awards.
The Compensation Committee may grant awards to employees who are or may
be "covered employees," as defined in Section 162(m) of the Code, that are
intended to be performance-based awards within the meaning of Section 162(m) of
the Code in order to preserve the deductibility of these awards for federal
income tax. Participants are only entitled to receive payment for a
performance-based award for any given performance period to the extent that
pre-established performance goals set by the Compensation Committee for the
period are satisfied. These pre-established performance goals must be based on
one or more of the following performance criteria: net earnings (either before
or after interest, taxes, depreciation and amortization), economic value-added
(as determined by the Compensation Committee), sales or revenue, net income
(either before or after tax), operating earnings, cash flow (including, but not
limited to, operating cash flow, and free cash flow), cash flow return on
capital, return on net assets, return on stockholders' equity, return on assets,
return on capital, stockholder returns, return on sales, gross or net profit
margin, productivity, expense, margins, operating efficiency, customer
satisfaction, working capital, earnings per share, price per share of Common
Stock, and market share. These performance criteria may be measured in absolute
terms or as compared to any incremental increase or as compared to results of a
peer group. With regard to a particular performance period, the Compensation
Committee shall have the discretion to select the length of the performance
period, the type of performance-based awards to be granted, and the goals that
will be used to measure the performance for the period. In determining the
actual size of an individual performance-based award for a performance period,
the Compensation Committee may reduce or eliminate (but not increase) the award.
Generally, a participant will have to be employed on the date the
performance-based award is paid to be eligible for a performance-based award for
any period.
Notwithstanding any other provision of the 2004 Plan to the contrary,
Full Value Awards made to our employees or consultants shall become vested over
a period of not less than three years (or in the case of vesting based upon the
attainment of any performance goals over a period of not less than one year)
following the date the Full Value Award is made, provided that Full Value Awards
that result in the issuance of an aggregate of up to 5% of the shares of Common
Stock available pursuant to the 2004 Plan may be granted to any one or more
participants without respect to such minimum vesting provisions.
CHANGE IN CONTROL
Except as may otherwise be provided in any award agreement or any other
written agreement entered into by and between the Company and a participant, if
a Change in Control (as defined in the 2004 Plan) of the Company occurs and any
awards made pursuant to the 2004 Plan are not converted, assumed or replaced by
a successor, then all outstanding awards that are not converted, assumed or
replaced will become fully vested and exercisable.
AMENDMENT AND TERMINATION
The Compensation Committee, subject to approval of the Board, may
terminate, amend, or modify the 2004 Plan at any time; provided, however, that
stockholder approval must be obtained for any amendment to the extent necessary
or desirable to comply with any applicable law, regulation or stock exchange
rule, to increase the number of shares available under the 2004 Plan, to permit
the Compensation Committee to grant options with an exercise price below fair
market value on the date of grant, or to extend the exercise period for an
option beyond ten years from the date of grant. In addition, absent stockholder
approval, no option may be amended to reduce the per
39
share exercise price of the shares subject to such option below the per share
exercise price as of the date the option was granted and, except to the extent
permitted by the 2004 Plan in connection with certain changes in capital
structure, no option may be granted in exchange for, or in connection with, the
cancellation or surrender of an option having a higher per share exercise price.
In no event may an award be granted pursuant to the 2004 Plan on or
after the tenth anniversary of the date the stockholders approve the 2004 Plan.
FEDERAL INCOME TAX CONSEQUENCES
With respect to nonqualified stock options, the Company is generally
entitled to deduct and the optionee recognizes taxable income in an amount equal
to the difference between the option exercise price and the fair market value of
the shares at the time of exercise. A participant receiving incentive stock
options will not recognize taxable income upon grant. Additionally, if
applicable holding period requirements are met, the participant will not
recognize taxable income at the time of exercise. However, the excess of the
fair market value of the Common Stock received over the option price is an item
of tax preference income potentially subject to the alternative minimum tax. If
stock acquired upon exercise of an incentive stock option is held for a minimum
of two years from the date of grant and one year from the date of exercise, the
gain or loss (in an amount equal to the difference between the fair market value
on the date of sale and the exercise price) upon disposition of the stock will
be treated as a long-term capital gain or loss, and the Company will not be
entitled to any deduction. If the holding period requirements are not met, the
incentive stock option will be treated as one which does not meet the
requirements of the Code for incentive stock options and the tax consequences
described for nonqualified stock options will apply.
The current federal income tax consequences of other awards authorized
under the 2004 Plan generally follow certain basic patterns: SARs are taxed and
deductible in substantially the same manner as nonqualified stock options;
nontransferable restricted stock subject to a substantial risk of forfeiture
results in income recognition equal to the excess of the fair market value over
the price paid, if any, only at the time the restrictions lapse (unless the
recipient elects to accelerate recognition as of the date of grant); stock-based
performance awards, dividend equivalents and other types of awards are generally
subject to tax at the time of payment. Compensation otherwise effectively
deferred is taxed when paid. In each of the foregoing cases, the Company will
generally have a corresponding deduction at the time the participant recognizes
income, subject to Section 162(m) of the Code with respect to covered employees.
NEW PLAN BENEFITS
No awards will be granted pursuant to the 2004 Plan until it is
approved by the Company's stockholders. In addition, awards are subject to the
discretion of the Compensation Committee. Therefore, it is not possible to
determine the benefits that will be received in the future by participants in
the 2004 Plan or the benefits that would have been received by such participants
if the 2004 Plan had been in effect in the year ended December 31, 2003.
THE BOARD RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE 2004 EQUITY
INCENTIVE AWARD PLAN.
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PROPOSAL 4.
RATIFICATION OF APPOINTMENT OF CERTIFIED INDEPENDENT AUDITORS
The Audit Committee of the Board of Directors has appointed Ernst & Young
LLP as the Company's independent auditors for the fiscal year ending December
31, 2004. As previously disclosed, on March 25, 2004, Deloitte & Touche LLP, the
Company's then current independent auditor, was dismissed and Ernst & Young LLP
was appointed as the Company's independent auditors for fiscal year 2004,
subject to ratification of such appointment by the Company's stockholders.
The Company expects that representatives of Deloitte & Touche LLP and
representatives of Ernst & Young LLP will be present at the Annual Meeting. They
will have an opportunity to make a statement at the meeting if they so desire
and will be available to respond to appropriate questions raised orally by
stockholders.
The Board of Directors has put this proposal before the stockholders
because the Board believes that seeking stockholder ratification of the
selection of the independent financial auditors is good corporate practice. If
the appointment of Ernst & Young LLP is not ratified, the Audit Committee will
evaluate the basis for the stockholders' vote in determining whether to continue
Ernst & Young LLP's engagement.
THE BOARD RECOMMENDS A VOTE "FOR" THE RATIFICATION OF ERNST & YOUNG LLP AS
THE COMPANY'S CERTIFIED INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER
31, 2004.
41
ANNEX I
AUDIT COMMITTEE CHARTER
OF THE AUDIT COMMITTEE
OF SYMBOL TECHNOLOGIES, INC.
This Audit Committee Charter (the "CHARTER") was adopted by the Board
of Directors (the "BOARD") of Symbol Technologies, Inc. (the "COMPANY") on
February 9, 2004.
I. PURPOSE
The purpose of the Audit Committee (the "COMMITTEE") is to assist the
Board with its oversight responsibilities regarding: (i) the integrity of the
Company's financial statements; (ii) the Company's compliance with legal and
regulatory requirements; (iii) the independent auditor's qualifications and
independence; and (iv) the performance of the Company's internal audit function
and independent auditor. The Committee shall prepare the report required by the
rules of the Securities and Exchange Commission (the "SEC") to be included in
the Company's annual proxy statement.
In addition to the powers and responsibilities expressly delegated to
the Committee in this Charter, the Committee may exercise any other powers and
carry out any other responsibilities delegated to it by the Board from time to
time consistent with the Company's bylaws. The powers and responsibilities
delegated by the Board to the Committee in this Charter or otherwise shall be
exercised and carried out by the Committee as it deems appropriate without
requirement of Board approval, and any decision made by the Committee (including
any decision to exercise or refrain from exercising any of the powers delegated
to the Committee hereunder) shall be at the Committee's sole discretion. While
acting within the scope of the powers and responsibilities delegated to it, the
Committee shall have and may exercise all the powers and authority of the Board.
To the fullest extent permitted by law, the Committee shall have the power to
determine which matters are within the scope of the powers and responsibilities
delegated to it.
The Committee's responsibility is limited to oversight. Although the
Committee has the responsibilities set forth in this Charter, it is not the
responsibility of the Committee to plan or conduct audits or to determine that
the Company's financial statements and disclosure are complete and accurate and
are in accordance with generally accepted accounting principles and applicable
laws, rules and regulations. These are the responsibilities of management, the
internal auditor (or others responsible for the internal audit function,
including contracted non-employee or audit or accounting firms engaged to
provide internal audit services) (the "INTERNAL AUDITOR") and the independent
auditor.
Further, auditing literature, particularly Statement of Accounting
Standards No. 71, defines the term "review" to include a particular set of
required procedures to be undertaken by independent auditors. The members of the
Committee are not independent auditors, and the term "review" as used in this
Charter is not intended to have that meaning and should not be interpreted to
suggest that the Committee members can or should follow the procedures required
of auditors performing reviews of financial statements.
II. MEMBERSHIP
The Committee shall consist of no fewer than three directors, as
determined by the Board. Each Committee member shall be financially literate as
determined by the Board in its business judgment or must become financially
literate within a reasonable period of time after his or her appointment to the
Committee. Members of the Committee are not required to be engaged in the
accounting and auditing profession and, consequently, some members may not be
expert in financial matters, or in matters involving auditing or accounting.
However, at least one member of the Committee shall have accounting or related
financial management expertise as determined by the Board in its business
judgment. In addition, either at least one member of the Committee shall be an
"audit committee financial expert" within the definition adopted by the SEC or
the Company shall disclose in its periodic reports required pursuant to the
Securities Exchange Act of 1934 (the "EXCHANGE ACT") the reasons why at least
one member of the Committee is not an "audit committee financial expert."
1
Each Committee member shall satisfy the independence requirements of
the NYSE and Exchange Act Rule 10A-3(b)(1). No Committee member may
simultaneously serve on the audit committee of more than one other public
company, unless the Board determines that such simultaneous service would not
impair the ability of such member to effectively serve on the Committee and such
determination is disclosed in the Company's annual proxy statement.
The members of the Committee, including the Chair of the Committee,
shall be appointed by the Board on the recommendation of the Nominating and
Corporate Governance Committee. Committee members may be removed from the
Committee, with or without cause, by the Board.
III. MEETINGS AND PROCEDURES
The Chair (or in his or her absence, a member designated by the Chair)
shall preside at each meeting of the Committee and set the agendas for Committee
meetings. The Committee shall have the authority to establish its own rules and
procedures for notice and conduct of its meetings so long as they are not
inconsistent with any provisions of the Company's certificate of incorporation
or bylaws that are applicable to the Committee.
The Committee shall meet at least once during each fiscal quarter and
more frequently as the Committee deems necessary or desirable. The Committee
shall meet separately, periodically, with management, with the internal auditor
and with the independent auditor.
All non-management directors that are not members of the Committee may
attend and observe meetings of the Committee, but shall not participate in any
discussion or deliberation unless invited to do so by the Committee, and in any
event shall not be entitled to vote. The Committee may, at its discretion,
include in its meetings members of the Company's management, representatives of
the independent auditor, the internal auditor, any other financial personnel
employed or retained by the Company or any other persons whose presence the
Committee believes to be necessary or appropriate. Notwithstanding the
foregoing, the Committee may exclude from its meetings any persons it deems
appropriate, including, but not limited to, any non-management director that is
not a member of the Committee.
The Committee may retain any independent counsel, experts or advisors
(accounting, financial or otherwise) that the Committee believes to be
necessary, desirable or appropriate. The Committee may also utilize the services
of the Company's regular legal counsel or other advisors to the Company. The
Company shall provide for appropriate funding, as determined by the Committee,
for payment of compensation to the independent auditor for the purpose of
rendering or issuing an audit report or performing other audit, review or attest
services, for payment of compensation to any advisors employed by the Committee
and for ordinary administrative expenses of the Committee that are necessary or
appropriate in carrying out its duties.
The Committee may conduct or authorize investigations into any matters
within the scope of the powers and responsibilities delegated to the Committee.
IV. POWERS AND RESPONSIBILITIES
Interaction with the Independent Auditor
1. Appointment and Oversight. The Committee shall be directly
responsible for the appointment, compensation, retention and oversight of the
work of the independent auditor (including resolution of any disagreements
between Company management and the independent auditor regarding financial
reporting) for the purpose of preparing or issuing an audit report or related
work or performing other audit, review or attest services for the Company, and
the independent auditor shall report directly to the Committee.
2. Pre-Approval of Services. Before the independent auditor is engaged
by the Company or its subsidiaries to render audit or non-audit services, the
Committee shall pre-approve the engagement. Committee pre-approval of audit and
non-audit services will not be required if the engagement for the services is
entered into pursuant to pre-approval policies and procedures established by the
Committee regarding the Company's
2
engagement of the independent auditor, provided the policies and procedures are
detailed as to the particular service, the Committee is informed of each service
provided and such policies and procedures do not include delegation of the
Committee's responsibilities under the Exchange Act to the Company's management.
The Committee may delegate to one or more designated members of the Committee
the authority to grant pre-approvals, provided such approvals are presented to
the Committee at a subsequent meeting. If the Committee elects to establish
pre-approval policies and procedures regarding non-audit services, the Committee
must be informed of each non-audit service provided by the independent auditor.
Committee pre-approval of non-audit services (other than review and attest
services) also will not be required if such services fall within available
exceptions established by the SEC.
3. Independence of Independent Auditor. The Committee shall, at least
annually, review the independence and quality control procedures of the
independent auditor and the experience and qualifications of the independent
auditor's senior personnel that are providing audit services to the Company. In
conducting its review:
(i) The Committee shall obtain and review a report prepared by
the independent auditor describing (a) the auditing firm's internal
quality-control procedures and (b) any material issues raised by the most recent
internal quality-control review, or peer review, of the auditing firm, or by any
inquiry or investigation by governmental or professional authorities, within the
preceding five years, respecting one or more independent audits carried out by
the auditing firm, and any steps taken to deal with any such issues.
(ii) The Committee shall discuss with the independent auditor
its independence from the Company, and obtain and review a written statement
prepared by the independent auditor describing all relationships between the
independent auditor and the Company, consistent with Independence Standards
Board Standard 1 (as may be modified or supplemented from time to time), and
consider the impact that any relationships or services may have on the
objectivity and independence of the independent auditor.
(iii) The Committee shall confirm with the independent auditor
that the independent auditor is in compliance with the partner rotation
requirements established by the SEC.
(iv) The Committee shall consider whether the Company should
adopt a rotation of the annual audit among independent auditing firms.
(v) The Committee shall, if applicable, consider whether the
independent auditor's provision of any permitted information technology services
or other non-audit services to the Company is compatible with maintaining the
independence of the independent auditor.
Annual Financial Statements and Annual Audit
4. Meetings with Management, the Independent Auditor and the Internal
Auditor.
(i) The Committee shall meet with management, the independent
auditor and the internal auditor in connection with each annual audit to discuss
the scope of the audit, the procedures to be followed and the staffing of the
audit.
(ii) The Committee shall review and discuss with management
and the independent auditor: (A) major issues regarding accounting principles
and financial statement presentations, including any significant changes in the
Company's selection or application of accounting principles, and major issues as
to the adequacy of the Company's internal controls and any special audit steps
adopted in light of material control deficiencies; (B) any analyses prepared by
management or the independent auditor setting forth significant financial
reporting issues and judgments made in connection with the preparation of the
Company's financial statements, including analyses of the effects of alternative
GAAP methods on the Company's financial statements; and (C) the effect of
regulatory and accounting initiatives, as well as off-balance sheet structures,
on the Company's financial statements.
(iii) The Committee shall review and discuss the annual
audited financial statements with management and the independent auditor,
including the Company's disclosures under "Management's Discussion and Analysis
of Financial Condition and Results of Operations."
3
5. Separate Meetings with the Independent Auditor.
(i) The Committee shall review with the independent auditor
any problems or difficulties the independent auditor may have encountered during
the course of the audit work, including any restrictions on the scope of
activities or access to required information or any significant disagreements
with management and management's responses to such matters. Among the items that
the Committee should consider reviewing with the Independent Auditor are: (A)
any accounting adjustments that were noted or proposed by the auditor but were
"passed" (as immaterial or otherwise); (B) any communications between the audit
team and the independent auditor's national office respecting auditing or
accounting issues presented by the engagement; and (C) any "management" or
"internal control" letter issued, or proposed to be issued, by the independent
auditor to the Company. The Committee shall obtain from the independent auditor
assurances that Section 10A(b) of the Exchange Act has not been implicated.
(ii) The Committee shall discuss with the independent auditor
the report that such auditor is required to make to the Committee regarding: (A)
all accounting policies and practices to be used that the independent auditor
identifies as critical; (B) all alternative treatments within GAAP for policies
and practices related to material items that have been discussed among
management and the independent auditor, including the ramifications of the use
of such alternative disclosures and treatments, and the treatment preferred by
the independent auditor; and (C) all other material written communications
between the independent auditor and management of the Company, such as any
management letter, management representation letter, reports on observations and
recommendations on internal controls, independent auditor's engagement letter,
independent auditor's independence letter, schedule of unadjusted audit
differences and a listing of adjustments and reclassifications not recorded, if
any.
(iii) The Committee shall discuss with the independent auditor
the matters required to be discussed by Statement on Auditing Standards No. 61,
"Communication with Audit Committees," as then in effect.
6. Recommendation to Include Financial Statements in Annual Report. The
Committee shall, based on the review and discussions in paragraphs 4(iii) and
5(iii) above, and based on the disclosures received from the independent auditor
regarding its independence and discussions with the auditor regarding such
independence pursuant to subparagraph 3(ii) above, determine whether to
recommend to the Board that the audited financial statements be included in the
Company's Annual Report on Form 10-K for the fiscal year subject to the audit.
Quarterly Financial Statements
7. Meetings with Management, the Independent Auditor and the Internal
Auditor. The Committee shall review and discuss the quarterly financial
statements with management and the independent auditor, including the Company's
disclosures under "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
Internal Audit
8. Appointment. The Committee shall review the appointment and
replacement of the internal auditor.
9. Separate Meetings with the Internal Auditor. The Committee shall
meet periodically with the Company's internal auditor to discuss the
responsibilities, budget and staffing of the Company's internal audit function
and any issues that the internal auditor believes warrant audit committee
attention. The Committee shall discuss with the internal auditor any significant
reports to management prepared by the internal auditor and any responses from
management.
Other Powers and Responsibilities
10. The Committee shall discuss with management and the independent
auditor the Company's earnings press releases (with particular focus on any "pro
forma" or "adjusted" non-GAAP information), as well as
4
financial information and earnings guidance provided to analysts and rating
agencies. The Committee's discussion in this regard may be general in nature
(i.e., discussion of the types of information to be disclosed and the type of
presentation to be made) and need not take place in advance of each earnings
release or each instance in which the Company may provide earnings guidance.
11. The Committee shall discuss with management and the independent
auditor any related-party transactions brought to the Committee's attention
which could reasonably be expected to have a material impact on the Company's
financial statements.
12. The Committee shall discuss with management and the independent
auditor any correspondence from or with regulators or governmental agencies, any
employee complaints or any published reports that raise material issues
regarding the Company's financial statements, financial reporting process,
accounting policies or internal audit function.
13. The Committee shall discuss with the Company's General Counsel or
outside counsel any legal matters brought to the Committee's attention that
could reasonably be expected to have a material impact on the Company's
financial statements.
14. The Committee shall request assurances from management, the
independent auditor and the Company's internal auditors that the Company's
foreign subsidiaries and foreign affiliated entities, if any, are in conformity
with applicable legal requirements, including disclosure of affiliated party
transactions.
15. The Committee shall discuss with management the Company's policies
and guidelines with respect to risk assessment and risk management. The
Committee shall discuss with management the Company's significant financial risk
exposures and the actions management has taken to limit, monitor or control such
exposures.
16. The Committee shall set clear hiring policies for employees or
former employees of the Company's independent auditor.
17. The Committee shall cause to be established procedures for the
receipt, retention and treatment of complaints received by the Company regarding
accounting, internal accounting controls or auditing matters. The Committee
shall also cause to be established procedures for the confidential and anonymous
submission of information, written or oral, by employees regarding questionable
accounting or auditing matters.
18. The Committee shall discuss any disclosures made to the Committee
by the Company's Chief Executive Officer or Chief Financial Officer during their
certification process for the Form 10-K and Form 10-Q regarding: (i) any
significant deficiencies in the design or operation of internal controls which
could adversely affect the Company's ability to record, process, summarize and
report financial data and any material weaknesses in internal controls
identified to the independent auditor; and (ii) any fraud, whether or not
material, that involves management or other employees who have a significant
role in the Company's internal controls.
19. If reported to the Committee by any attorney employed by or
performing legal services for the Company, the Committee shall consider any
evidence of a material violation of securities law or breach of fiduciary duty
or similar violation by the Company or any agent of the Company.
20. The Committee shall read management's report (as and when it is
legally required in the Company's Annual Report on Form 10-K) assessing the
effectiveness of the internal control structure and procedures of the Company
for financial reporting and shall discuss with the independent auditor such
auditor's attestation to and report on management's report.
21. The Committee shall provide the Company with the report of the
Committee with respect to the audited financial statements for inclusion in each
of the Company's annual proxy statements.
5
22. The Committee, through its Chair, shall report regularly to, and
review with, the Board any issues that arise with respect to the quality or
integrity of the Company's financial statements, the Company's compliance with
legal or regulatory requirements, the performance and independence of the
Company's independent auditor, the performance of the Company's internal audit
function or any other matter the Committee determines is necessary or advisable
to report to the Board.
23. The Committee may, in its discretion, utilize the services of the
Company's general counsel and regular outside corporate legal counsel with
respect to legal matters or, at its discretion, retain (and determine the
appropriate funding for) other legal counsel if it determines that such counsel
is necessary or appropriate under the circumstances. Furthermore, the Committee
may, in its discretion, retain (and determine the appropriate funding for) any
other experts or advisors (financial or otherwise) as the Committee determines
are necessary or appropriate under the circumstances.
24. The Committee, in its discretion, may conduct or authorize
investigations into any matters within the scope of its responsibilities.
25. The Committee shall at least annually perform an evaluation of the
performance of the Committee and its members, including a review of the
Committee's compliance with this Charter.
26. The Committee shall review and reassess this Charter at least once
each calendar year and submit any recommended changes to the Board for its
consideration.
V. DISCLOSURE OF CHARTER
This Charter shall be made available on the Company's website at
"http://www.symbol.com" and to any stockholder who otherwise requests a copy.
The Company's Annual Report to Stockholders shall state the foregoing.
6
ANNEX II
SYMBOL TECHNOLOGIES, INC.
EXECUTIVE BONUS PLAN
(AMENDED AND RESTATED AS OF MARCH 10, 2004)
SECTION 1. PURPOSE. The purpose of the Symbol Technologies, Inc.
Executive Incentive Plan (the "Plan") is to provide Officers of Symbol
Technologies, Inc. (the "Company") and its affiliates with incentive
compensation based upon the level of achievement of financial and other
performance criteria. The Plan is intended to enhance the ability of the Company
and its affiliates to attract individuals of exceptional managerial talent upon
whom, in large measure, the sustained progress, growth and profitability of the
Company depends.
SECTION 2. DEFINITIONS. As used in the Plan, the following terms shall
have the meanings set forth below:
(a) "AWARD" means a cash bonus payment that may be made pursuant to the
Plan.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CODE" means the Internal Revenue Code of 1986, as amended from time
to time and any successor thereto.
(d) "COMMITTEE" means the Stock Option / Compensation Committee of the
Board (or any successor committee); provided that, with respect to
Awards made to Covered Employees as described in Section 5,
"COMMITTEE" means a committee of the Board (or subcommittee thereof)
consisting solely of two or more members of the Board, each of whom is
an Outside Director.
(e) "COVERED EMPLOYEE" means a "covered employee" within the meaning of
Section 162(m) of the Code.
(f) "MEASUREMENT PERIOD" means a period of time selected by the Committee
for which the Performance Goal will be measured for purposes of
Section 5.
(g) "NET INCOME" means the net income before taxes of the Company as
determined under generally accepted accounting principles, excluding
(a) extraordinary items; (b) cumulative effects of changes in
accounting principles; (c) securities gains and losses; (d)
amortization or write-off of goodwill, acquired intangibles and
purchased in-process research and development; and (e) nonrecurring
items including, but not limited to, gains or losses on asset
dispositions and sales of divisions, business units or subsidiaries,
restructuring and separation charges, and gains and losses from
qualified benefit plan curtailments and settlements.
(h) "OFFICER" means any employee of the Company or any affiliate holding a
position at or above Senior Vice President or any zone level that the
Committee determines, in its sole discretion, is the equivalent
thereof.
(i) "OUTSIDE DIRECTORS" means those members of the Board who are "outside
directors" within the meaning of Section 162(m) of the Code.
(j) "PARTICIPANT" means any person selected by the Committee to
participate in the Plan.
(k) "PERFORMANCE GOAL" has the meaning set forth in Section 5(b).
(l) "PERFORMANCE PERIOD" means a period of time selected by the Committee
to which an Award relates.
(m) "TARGET AWARD" means an Award amount that may be paid if certain
performance criteria are achieved.
SECTION 3. ELIGIBILITY. Persons employed by the Company or any of its
affiliates on the last day of a Performance Period in active service at an
Officer level for all or any part of the Performance
1
Period are eligible to be Participants under the Plan for such Performance
Period (whether or not so employed or living at the date an Award is made) and
may be considered by the Committee for an Award. An Officer is not rendered
ineligible to be a Participant by reason of being a member of the Board.
SECTION 4. AWARDS-GENERAL. The Committee will establish Target Awards
for Participants at the beginning of each Performance Period and the performance
criteria to be applicable to Awards for such Performance Period. Except as
otherwise provided by Section 5, the performance criteria utilized by the
Committee may be based on individual performance, net income, other Company and
business unit financial objectives, customer satisfaction indicators,
operational efficiency measures, and other measurable objectives tied to the
Company's success or such other criteria as the Committee shall determine.
Awards will be made by the Committee following the end of each Performance
Period. Awards shall be paid after the end of the Performance Period, except to
the extent that a Participant has made an election to defer the receipt of such
Award pursuant to an approved deferred compensation plan (and in accordance with
the terms of such deferred compensation plan). Subject to Sections 5 and 6(d),
the Award amount with respect to a Participant shall be determined in the sole
discretion of the Committee or such person or committee empowered by the
Committee or Board. The determination of the Award amount for each Participant
shall be made at the end of each Performance Period and may be less than
(including no Award) or, except as otherwise provided by Section 5(c), greater
than the Target Award.
SECTION 5. AWARDS TO COVERED EMPLOYEES.
(a) If the Committee determines at the time a Target Award is established
for a Participant that such Participant is, or may be as of the end of
the tax year for which the Company would claim a tax deduction in
connection with such Award, a Covered Employee, then the Committee
shall provide that this Section 5 is applicable to such Award under
such terms as the Committee shall determine.
(b) Subject to Section 6(d), the Award amount with respect to a
Participant covered by this Section 5 shall be determined in the sole
discretion of the Committee; provided that, if an Award is subject to
this Section 5, then the payment of cash pursuant thereto shall be
subject to the Company having attained a performance goal relating to
Net Income, Cash Flow, Earnings per Share, Return on Equity, Total
Return to Stockholders in the form of stock price appreciation and
dividends, if paid, or other measures (a "Performance Goal") as
determined in the sole discretion of the Committee for the applicable
Measurement Period. Such Performance Goals shall be established by the
Committee within the time prescribed by Section 162(m) of the Code and
the regulations thereunder in order for the Performance Goal to be
considered "pre-established" for purposes of Section 162(m) of the
Code. The Committee may, in its discretion, reduce the amount of such
an Award at any time prior to payment based on such criteria as it
shall determine, including but not limited to individual merit and the
attainment of specified levels of one or any combination of the
following: net cash provided by operating activities or other cash
flow-based measures, earnings per share from continuing operations,
operating income, revenues, gross margin, return on operating assets,
return on equity, economic value added, stock price appreciation,
total shareowner return (measured in terms of stock price appreciation
and dividend growth), or cost control, of the Company or the affiliate
or division of the Company for or within which the Participant is
primarily employed.
(c) Notwithstanding any contrary provision of this Plan, the Committee may
not adjust upwards the amount payable pursuant to any Award subject to
this Section 5, nor may it waive the attainment of the Performance
Goal requirement contained in Section 5(b), except in the case of the
death or disability of the Participant.
(d) Prior to the payment of any Award subject to this Section 5, the
Committee shall certify in writing that the Performance Goal
applicable to such Award was met.
2
(e) The Committee shall have the power to impose such other restrictions
on Awards subject to this Section 5 as it may deem necessary or
appropriate to ensure that such Awards satisfy all requirements for
"performance-based compensation" within the meaning of Section
162(m)(4)(C) of the Code, the regulations promulgated thereunder, and
any successors thereto.
(f) No amounts shall be paid with respect to any Award subject to this
Section 5 unless and until the Company's stockholders shall have
approved the Plan and the Performance Goals as required by Section
162(m) of the Code. So long as the Plan shall not have been previously
terminated by the Company, it shall be resubmitted for approval by the
Company's stockholders in the fifth year after it shall have first
been approved by the Company's stockholders, and every fifth year
thereafter.
SECTION 6. OTHER CONDITIONS.
(a) No person shall have any claim to an Award under the Plan and there is
no obligation for uniformity of treatment of Participants under the
Plan. Awards under the Plan may not be assigned or alienated.
(b) Neither the Plan nor any action taken hereunder shall be construed as
giving to any Participant the right to be retained in the employ of
the Company or any affiliate.
(c) The Company or any affiliate shall have the right to deduct from any
Award to be paid under the Plan any federal, state or local taxes
required by law to be withheld with respect to such payment.
(d) Notwithstanding any contrary provision of the Plan, the maximum amount
which may be paid to a Participant in any fiscal year is $6 million.
SECTION 7. DESIGNATION OF BENEFICIARIES. A Participant may, if the
Committee permits, designate a beneficiary or beneficiaries to receive all or
part of the Award which may be made to the Participant, or may be payable, after
such Participant's death. A designation of beneficiary shall be made in
accordance with procedures specified by the Company and may be replaced by a new
designation or may be revoked by the Participant at any time. In case of the
Participant's death, an Award with respect to which a designation of beneficiary
has been made (to the extent it is valid and enforceable under applicable law)
shall be paid to the designated beneficiary or beneficiaries. Any Award granted
or payable to a Participant who is deceased and not subject to such a
designation shall be distributed to the Participant's estate. If there shall be
any question as to the legal right of any beneficiary to receive an Award under
the Plan, the amount in question may be paid to the estate of the Participant,
in which event the Company or its affiliates shall have no further liability to
anyone with respect to such amount.
SECTION 8. PLAN ADMINISTRATION.
(a) The Committee shall have full discretionary power to administer and
interpret the Plan and to establish rules for its administration
(including the power to delegate authority to others to act for and on
behalf of the Committee) subject to such resolutions, not inconsistent
with the Plan, as may be adopted by the Board, except that the
Committee (or any subcommittee thereof) shall have the exclusive
authority to exercise any such power with respect to Awards to which
Section 5 is applicable. In making any determinations under or
referred to in the Plan, the Committee (and its delegates, if any)
shall be entitled to rely on opinions, reports or statements of
employees of the Company and its affiliates and of counsel, public
accountants and other professional or expert persons.
(b) The Plan shall be governed by the laws of the State of Delaware and
applicable Federal law.
SECTION 9. MODIFICATION OR TERMINATION OF PLAN. The Board may modify or
terminate the Plan at any time, effective at such date as the Board may
determine. Any amendment to the Plan shall require stockholder approval only to
the extent required by Section 162(m) of the Code or any other applicable law,
rule or regulation.
3
ANNEX III
SYMBOL TECHNOLOGIES, INC.
2004 EQUITY INCENTIVE AWARD PLAN
ARTICLE 1
PURPOSE
The purpose of the Symbol Technologies, Inc. 2004 Equity Incentive Award
Plan (the "Plan") is to promote the success and enhance the value of Symbol
Technologies, Inc. (the "Company") by linking the personal interests of the
members of the Board, Employees, and Consultants to those of Company
stockholders and by providing such individuals with an incentive for outstanding
performance to generate superior returns to Company stockholders. The Plan is
further intended to provide flexibility to the Company in its ability to
motivate, attract, and retain the services of members of the Board, Employees,
and Consultants upon whose judgment, interest, and special effort the successful
conduct of the Company's operation is largely dependent.
ARTICLE 2
DEFINITIONS AND CONSTRUCTION
Wherever the following terms are used in the Plan they shall have the
meanings specified below, unless the context clearly indicates otherwise. The
singular pronoun shall include the plural where the context so indicates.
2.1 "Award" means an Option, a Restricted Stock award, a Stock Appreciation
Right award, a Performance Share award, a Performance Stock Unit award, a
Dividend Equivalents award, a Stock Payment award, a Deferred Stock award, a
Restricted Stock Unit award, an Other Stock-Based Award, or a Performance-Based
Award granted to a Participant pursuant to the Plan.
2.2 "Award Agreement" means any written agreement, contract, or other
instrument or document evidencing an Award.
2.3 "Board" means the Board of Directors of the Company.
2.4 "Change of Control" means and includes each of the following:
(a) The acquisition, directly or indirectly, by any "person" or "group"
(as those terms are defined in Sections 3(a)(9), 13(d) and 14(d) of the Exchange
Act and the rules thereunder) of "beneficial ownership" (as determined pursuant
to Rule 13d-3 under the Exchange Act) of securities entitled to vote generally
in the election of directors ("voting securities") of the Company that represent
25% or more of the combined voting power of the Company's then outstanding
voting securities, other than
(i) An acquisition by a trustee or other fiduciary holding
securities under any employee benefit plan (or related trust) sponsored or
maintained by the Company or
any person controlled by the Company or by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any person controlled by the
Company, or
(ii) An acquisition of voting securities by the Company or a
corporation owned, directly or indirectly by the stockholders of the Company in
substantially the same proportions as their ownership of the stock of the
Company, or
(iii) An acquisition of voting securities pursuant to a transaction
described in Section 2.4(c) below that would not be a Change of Control under
Section 2.4(c);
Notwithstanding the foregoing, neither of the following events shall constitute
an "acquisition" by any person or group for purposes of this Section 2.4: an
acquisition of the Company's securities by the Company which causes the
Company's voting securities beneficially owned by a person or group to represent
50% or more of the combined voting power of the Company's then outstanding
voting securities; provided, however, that if a person or group shall become the
beneficial owner of 50% or more of the combined voting power of the Company's
then outstanding voting securities by reason of share acquisitions by the
Company as described above and shall, after such share acquisitions by the
Company, become the beneficial owner of any additional voting securities of the
Company, then such acquisition shall constitute a Change of Control; or
(b) During any period of two consecutive years, individuals who, at the
beginning of such period, constitute the Board together with any new director(s)
(other than a director designated by a person who shall have entered into an
agreement with the Company to effect a transaction described in Section 2.4(a)
or Section 2.4(c) whose election by the Board or nomination for election by the
Company's stockholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of the
two year period or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority thereof; or
(c) The consummation by the Company (whether directly involving the
Company or indirectly involving the Company through one or more intermediaries)
of (x) a merger, consolidation, reorganization, or business combination or (y) a
sale or other disposition of all or substantially all of the Company's assets or
(z) the acquisition of assets or stock of another entity, in each case other
than a transaction:
(i) Which results in the Company's voting securities outstanding
immediately before the transaction continuing to represent (either by remaining
outstanding or by being converted into voting securities of the Company or the
person that, as a result of the transaction, controls, directly or indirectly,
the Company or owns, directly or indirectly, all or substantially all of the
Company's assets or otherwise succeeds to the business of the Company (the
Company or such person, the "Successor Entity")) directly or indirectly, at
least a majority of the combined voting power of the Successor Entity's
outstanding voting securities immediately after the transaction, and
(ii) After which no person or group beneficially owns voting
securities representing 50% or more of the combined voting power of the
Successor Entity; provided,
2
however, that no person or group shall be treated for purposes of this Section
2.4(c)(ii) as beneficially owning 50% or more of combined voting power of the
Successor Entity solely as a result of the voting power held in the Company
prior to the consummation of the transaction; or
(d) The Company's stockholders approve a liquidation or dissolution of
the Company.
The Committee shall have full and final authority, which shall be exercised in
its discretion, to determine conclusively whether a Change of Control of the
Company has occurred pursuant to the above definition, and the date of the
occurrence of such Change of Control and any incidental matters relating
thereto.
2.5 "Code" means the Internal Revenue Code of 1986, as amended.
2.6 "Committee" means the committee of the Board described in Article 12.
2.7 "Consultant" means any consultant or adviser if:
(a) The consultant or adviser renders bona fide services to the
Company;
(b) The services rendered by the consultant or adviser are not in
connection with the offer or sale of securities in a capital-raising transaction
and do not directly or indirectly promote or maintain a market for the Company's
securities; and
(c) The consultant or adviser is a natural person who has contracted
directly with the Company to render such services.
2.8 "Covered Employee" means an Employee who is, or could be, a "covered
employee" within the meaning of Section 162(m) of the Code.
2.9 "Deferred Stock" means a right to receive a specified number of shares
of Stock during specified time periods pursuant to Article 8.
2.10 "Disability" means that the Participant qualifies to receive long-term
disability payments under the Company's long-term disability insurance program,
as it may be amended from time to time.
2.11 "Dividend Equivalents" means a right granted to a Participant pursuant
to Article 8 to receive the equivalent value (in cash or Stock) of dividends
paid on Stock.
2.12 "Effective Date" shall have the meaning set forth in Section 13.1.
2.13 "Employee" means any officer or other employee (as defined in
accordance with Section 3401(c) of the Code) of the Company or any Subsidiary.
2.14 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
2.15 "Fair Market Value" means, as of any given date, the fair market value
of a share of Stock on the immediately preceding date determined by such methods
or procedures as may
3
be established from time to time by the Committee. Unless otherwise determined
by the Committee, the Fair Market Value of a share of Stock as of any date shall
be the average of the high and low trading prices for a share of Stock as
reported on the New York Stock Exchange (or on any national securities exchange
on which the Stock is then listed) for the immediately preceding date or, if no
such prices are reported for that date, the average of the high and low trading
prices on the next preceding date for which such prices were reported.
2.16 "Full Value Award" means any Award other than an Option, SAR or other
Award for which the Participant pays the intrinsic value (whether directly or by
forgoing a right to receive a cash payment from the Company).
2.17 "Incentive Stock Option" means an Option that is intended to meet the
requirements of Section 422 of the Code or any successor provision thereto.
2.18 "Independent Director" means a member of the Board who is not an
Employee of the Company.
2.19 "Non-Employee Director" means a member of the Board who qualifies as a
"Non-Employee Director" as defined in Rule 16b-3(b)(3) of the Exchange Act, or
any successor definition adopted by the Board.
2.20 "Non-Qualified Stock Option" means an Option that is not intended to
be an Incentive Stock Option.
2.21 "Option" means a right granted to a Participant pursuant to Article 5
of the Plan to purchase a specified number of shares of Stock at a specified
price during specified time periods. An Option may be either an Incentive Stock
Option or a Non-Qualified Stock Option.
2.22 "Other Stock-Based Award" means an Award granted or denominated in
Stock or units of Stock pursuant to Section 8.7 of the Plan.
2.23 "Participant" means a person who, as a member of the Board, Consultant
or Employee, has been granted an Award pursuant to the Plan.
2.24 "Performance-Based Award" means an Award granted to selected Covered
Employees pursuant to Articles 6 and 8, but which is subject to the terms and
conditions set forth in Article 9. All Performance-Based Awards are intended to
qualify as Qualified Performance-Based Compensation.
2.25 "Performance Criteria" means the criteria that the Committee selects
for purposes of establishing the Performance Goal or Performance Goals for a
Participant for a Performance Period. The Performance Criteria that will be used
to establish Performance Goals are limited to the following: net earnings
(either before or after interest, taxes, depreciation and amortization),
economic value-added (as determined by the Committee), sales or revenue, net
income (either before or after taxes), operating earnings, cash flow (including,
but not limited to, operating cash flow and free cash flow), cash flow return on
capital, return on net assets, return on stockholders' equity, return on assets,
return on capital, stockholder returns, return on sales, gross or net profit
margin, productivity, expense, margins, operating efficiency, customer
satisfaction, working
4
capital, earnings per share, price per share of Stock, and market share, any of
which may be measured either in absolute terms or as compared to any incremental
increase or as compared to results of a peer group. The Committee shall, within
the time prescribed by Section 162(m) of the Code, define in an objective
fashion the manner of calculating the Performance Criteria it selects to use for
such Performance Period for such Participant.
2.26 "Performance Goals" means, for a Performance Period, the goals
established in writing by the Committee for the Performance Period based upon
the Performance Criteria. Depending on the Performance Criteria used to
establish such Performance Goals, the Performance Goals may be expressed in
terms of overall Company performance or the performance of a division, business
unit, or an individual. The Committee, in its discretion, may, within the time
prescribed by Section 162(m) of the Code, adjust or modify the calculation of
Performance Goals for such Performance Period in order to prevent the dilution
or enlargement of the rights of Participants (i) in the event of, or in
anticipation of, any unusual or extraordinary corporate item, transaction,
event, or development, or (ii) in recognition of, or in anticipation of, any
other unusual or nonrecurring events affecting the Company, or the financial
statements of the Company, or in response to, or in anticipation of, changes in
applicable laws, regulations, accounting principles, or business conditions.
2.27 "Performance Period" means the one or more periods of time, which may
be of varying and overlapping durations, as the Committee may select, over which
the attainment of one or more Performance Goals will be measured for the purpose
of determining a Participant's right to, and the payment of, a Performance-Based
Award.
2.28 "Performance Share" means a right granted to a Participant pursuant to
Article 8, to receive Stock, the payment of which is contingent upon achieving
certain performance goals established by the Committee.
2.29 "Performance Stock Unit" means a right granted to a Participant
pursuant to Article 8, to receive Stock, the payment of which is contingent upon
achieving certain performance goals established by the Committee.
2.30 "Plan" means this Symbol Technologies, Inc. 2004 Equity Incentive
Award Plan, as it may be amended from time to time.
2.31 "Prior Plans" means, collectively, the following plans of the Company:
(a) 2001 Non-Executive Stock Incentive Plan, (b) 1997 Employee Stock Option
Plan, (c) 1991 Employee Stock Option Plan, (d) 1990 Non-Executive Stock Option
Plan, (e) 2002 Directors' Stock Option Plan, (f) 2000 Directors' Stock Option
Plan, (g) 1999 Directors' Stock Option Plan, (h) 1998 Directors' Stock Option
Plan, (i) the Texlon Corporation 1990 Employee Stock Option Plan and (ii) 1994
Directors' Stock Option Plan, in each case as such plan may be amended from time
to time.
2.32 "Qualified Performance-Based Compensation" means any compensation that
is intended to qualify as "qualified performance-based compensation" as
described in Section 162(m)(4)(C) of the Code.
5
2.33 "Restricted Stock" means Stock awarded to a Participant pursuant to
Article 6 that is subject to certain restrictions and may be subject to risk of
forfeiture.
2.34 "Restricted Stock Unit" means an Award granted pursuant to Section
8.6.
2.35 "Stock" means the common stock of the Company, par value $0.01 per
share, and such other securities of the Company that may be substituted for
Stock pursuant to Article 11.
2.36 "Stock Appreciation Right" or "SAR" means a right granted pursuant to
Article 7 to receive a payment equal to the excess of the Fair Market Value of a
specified number of shares of Stock on the date the SAR is exercised over the
Fair Market Value on the date the SAR was granted as set forth in the applicable
Award Agreement.
2.37 "Stock Payment" means (a) a payment in the form of shares of Stock, or
(b) an option or other right to purchase shares of Stock, as part of any bonus,
deferred compensation or other arrangement, made in lieu of all or any portion
of the compensation, granted pursuant to Article 8.
2.38 "Subsidiary" means any corporation or other entity of which a majority
of the outstanding voting stock or voting power is beneficially owned directly
or indirectly by the Company.
ARTICLE 3
SHARES SUBJECT TO THE PLAN
3.1 Number of Shares.
(a) Subject to Article 11 and Section 3.1(b), the aggregate number of
shares of Stock which may be issued or transferred pursuant to Awards under the
Plan shall be the sum of: (i) 4,936,189 shares; and (ii) any shares of Stock
which as of the Effective Date are available for issuance under any of the Prior
Plans and which following the Effective Date are not issued under such plans;
provided, however, that such aggregate number of shares of Stock available for
issuance under the Plan shall be reduced by 1.65 shares for each share of Stock
delivered in settlement of any Full Value Award. In order that the applicable
regulations under the Code relating to Incentive Stock Options be satisfied, the
maximum number of shares of Stock that may be delivered upon exercise of
Incentive Stock Options shall be the number specified in Section 3.1(a)(i), and,
if necessary to satisfy such regulations, such maximum limit shall apply to the
number of shares of Stock that may be delivered in connection with each other
type of Award under the Plan (applicable separately to each type of Award).
(b) Notwithstanding Section 3.1(a): (i) the Committee may adopt
reasonable counting procedures to ensure appropriate counting, avoid double
counting (as, for example, in the case of tandem or substitute awards), and make
adjustments if the number of shares of Stock actually delivered differs from the
number of shares previously counted in connection with an Award; (ii) shares of
Stock that are potentially deliverable under any Award (or any stock option or
other award granted pursuant to any Prior Plan) that expires or is canceled,
forfeited, settled in cash or otherwise terminated without a delivery of such
shares to the Participant will not be
6
counted as delivered under the Plan or such Prior Plan; (iii) shares of Stock
that have been issued in connection with any Award (e.g., Restricted Stock) or
Prior Plan award that is canceled, forfeited, or settled in cash such that those
shares are returned to the Company will again be available for Awards; and (iv)
shares of Stock withheld in payment of the exercise price or taxes relating to
any Award or Prior Plan award and shares equal to the number surrendered in
payment of any exercise price or taxes relating to any Award or Prior Plan award
shall be deemed to constitute shares not delivered to the Participant and shall
be deemed to be available for Awards under the Plan; provided, however, that, no
shares shall become available pursuant to this Section 3.1(b) to the extent that
(x) the transaction resulting in the return of shares occurs more than ten years
after the date of the most recent shareholder approval of the Plan, or (y) such
return of shares would constitute a "material revision" of the Plan subject to
stockholder approval under then applicable rules of the New York Stock Exchange
(or any other applicable exchange or quotation system). In addition, in the case
of any Award granted in substitution for an award of a company or business
acquired by the Company or a subsidiary or affiliate, shares of Stock issued or
issuable in connection with such substitute Award shall not be counted against
the number of shares reserved under the Plan, but shall be available under the
Plan by virtue of the Company's assumption of the plan or arrangement of the
acquired company or business. This Section 3.1 shall apply to the share limit
imposed to conform to the regulations promulgated under the Code with respect to
Incentive Stock Options only to the extent consistent with applicable
regulations relating to Incentive Stock Options under the Code. Because shares
will count against the number reserved in Section 3.1 upon delivery, the
Committee may, subject to the share counting rules under this Section 3.1,
determine that Awards may be outstanding that relate to a greater number of
shares than the aggregate remaining available under the Plan, so long as Awards
will not result in delivery and vesting of shares in excess of the number then
available under the Plan. The payment of Dividend Equivalents in conjunction
with any outstanding Awards shall not be counted against the shares available
for issuance under the Plan.
3.2 Stock Distributed. Any Stock distributed pursuant to an Award may
consist, in whole or in part, of authorized and unissued Stock, treasury Stock
or Stock purchased on the open market.
3.3 Limitation on Number of Shares Subject to Awards. Notwithstanding any
provision in the Plan to the contrary, and subject to Article 11, the maximum
number of shares of Stock with respect to one or more Awards that may be granted
to any one Participant during a rolling three-year period (measured from the
date of any grant) shall be 3,000,000.
ARTICLE 4
ELIGIBILITY AND PARTICIPATION
4.1 Eligibility.
(a) General. Persons eligible to participate in this Plan include
Employees, Consultants, and all members of the Board, as determined by the
Committee.
(b) Foreign Participants. Notwithstanding any provision of the Plan to
the contrary, in order to comply with the laws in other countries in which the
Company and its
7
Subsidiaries operate or have Employees, Consultants or members 9of the Board,
the Committee, in its sole discretion, shall have the power and authority to:
(i) Determine which Subsidiaries shall be covered by the Plan;
(ii) Determine which Employees, Consultants or members of the Board
outside the Unites States are eligible to participate in the Plan;
(iii) Modify the terms and conditions of any Award granted to
Employees, Consultants or members of the Board outside the United States to
comply with applicable foreign laws;
(iv) Establish subplans and modify exercise procedures and other
terms and procedures, to the extent such actions may be necessary or advisable
(any such subplans and/or modifications shall be attached to this Plan as
appendices); provided, however, that no such subplans and/or modifications shall
increase the share limitations contained in Sections 3.1 and 3.3 of the Plan;
and
(v) Take any action, before or after an Award is made, that it
deems advisable to obtain approval or comply with any necessary local
governmental regulatory exemptions or approvals.
Notwithstanding the foregoing, the Committee may not take any actions hereunder,
and no Awards shall be granted, that would violate the Exchange Act, the Code,
any securities law or governing statute or any other applicable law.
4.2 Participation. Subject to the provisions of the Plan, the Committee
may, from time to time, select from among all eligible individuals, those to
whom Awards shall be granted and shall determine the nature and amount of each
Award. No individual shall have any right to be granted an Award pursuant to
this Plan.
ARTICLE 5
STOCK OPTIONS
5.1 General. The Committee is authorized to grant Options to Participants
on the following terms and conditions:
(a) Exercise Price. The exercise price per share of Stock subject to an
Option shall be determined by the Committee and set forth in the Award
Agreement; provided that the exercise price for any Option shall not be less
than 100% of the Fair Market Value on the date of grant.
(b) Time and Conditions of Exercise. The Committee shall determine the
time or times at which an Option may be exercised in whole or in part; provided
that the term of any Option granted under the Plan shall not exceed ten years;
and, provided, further, that in the case of a Non-Qualified Stock Option, such
Option shall be exercisable for one year after the date of the Participant's
death. The Committee shall also determine the performance or other
8
conditions, if any, that must be satisfied before all or part of an Option may
be exercised.
(c) Payment. The Committee shall determine the methods by which the
exercise price of an Option may be paid, the form of payment, including, without
limitation, cash, promissory note bearing interest at no less than such rate as
shall then preclude the imputation of interest under the Code, shares of Stock
held for longer than 6 months having a Fair Market Value on the date of delivery
equal to the aggregate exercise price of the Option or exercised portion
thereof, or other property acceptable to the Committee (including through the
delivery of a notice that the Participant has placed a market sell order with a
broker with respect to shares of Stock then issuable upon exercise of the
Option, and that the broker has been directed to pay a sufficient portion of the
net proceeds of the sale to the Company in satisfaction of the Option exercise
price; provided that payment of such proceeds is then made to the Company upon
settlement of such sale), and the methods by which shares of Stock shall be
delivered or deemed to be delivered to Participants. Notwithstanding any other
provision of the Plan to the contrary, no Participant who is a member of the
Board or an "executive officer" of the Company within the meaning of Section
13(k) of the Exchange Act shall be permitted to pay the exercise price of an
Option in any method which would violate Section 13(k) of the Exchange Act.
(d) Evidence of Grant. All Options shall be evidenced by a written
Award Agreement between the Company and the Participant. The Award Agreement
shall include such additional provisions as may be specified by the Committee.
5.2 Incentive Stock Options. Incentive Stock Options shall be granted only
to Employees and the terms of any Incentive Stock Options granted pursuant to
the Plan must comply with the following additional provisions of this Section
5.2:
(a) Exercise Price. The exercise price per share of Stock shall be set
by the Committee; provided that the exercise price for any Incentive Stock
Option shall not be less than 100% of the Fair Market Value on the date of
grant.
(b) Expiration of Option. An Incentive Stock Option may not be
exercised to any extent by anyone after the first to occur of the following
events:
(i) Ten years from the date it is granted, unless an earlier time
is set in the Award Agreement.
(ii) One year after the date of the Participant's termination of
employment or service on account of Disability or death. Upon the Participant's
Disability or death, any Incentive Stock Options exercisable at the
Participant's Disability or death may be exercised by the Participant's legal
representative or representatives, by the person or persons entitled to do so
pursuant to the Participant's last will and testament, or, if the Participant
fails to make testamentary disposition of such Incentive Stock Option or dies
intestate, by the person or persons entitled to receive the Incentive Stock
Option pursuant to the applicable laws of descent and distribution.
(c) Individual Dollar Limitation. The aggregate Fair Market Value
(determined as of the time the Option is granted) of all shares of Stock with
respect to which
9
Incentive Stock Options are first exercisable by a Participant in any calendar
year may not exceed $100,000.00 or such other limitation as imposed by Section
422(d) of the Code, or any successor provision. To the extent that Incentive
Stock Options are first exercisable by a Participant in excess of such
limitation, the excess shall be considered Non-Qualified Stock Options.
(d) Ten Percent Owners. An Incentive Stock Option shall be granted to
any individual who, at the date of grant, owns stock possessing more than ten
percent of the total combined voting power of all classes of Stock of the
Company only if such Option is granted at a price that is not less than 110% of
Fair Market Value on the date of grant and the Option is exercisable for no more
than five years from the date of grant.
(e) Transfer Restriction. The Participant shall give the Company prompt
notice of any disposition of shares of Stock acquired by exercise of an
Incentive Stock Option within (i) two years from the date of grant of such
Incentive Stock Option or (ii) one year after the transfer of such shares of
Stock to the Participant.
(f) Expiration of Incentive Stock Options. No Award of an Incentive
Stock Option may be made pursuant to this Plan after the tenth anniversary of
the Effective Date.
(g) Right to Exercise. During a Participant's lifetime, an Incentive
Stock Option may be exercised only by the Participant.
5.3 Substitution of Stock Appreciation Rights. The Committee may provide in
the Award Agreement evidencing the grant of an Option that the Committee, in its
sole discretion, shall have to right to substitute a Stock Appreciation Right
for such Option at any time prior to or upon exercise of such Option, subject to
the provisions of Section 7.2 hereof; provided that such Stock Appreciation
Right shall be exercisable for the same number of shares of Stock as such
substituted Option would have been exercisable for.
5.4 Granting of Options to Independent Directors. The Board may from time
to time, in its sole discretion, and subject to the limitations of the Plan:
(a) Select from among the Independent Directors (including Independent
Directors who have previously been granted Options under the Plan) such of them
as in its opinion should be granted Options;
(b) Subject to Section 3.3, determine the number of shares of Stock to
be subject to Options granted to such selected Independent Directors; and
(c) Subject to the provisions of this Article 5, determine the terms
and conditions of such Options, consistent with the Plan.
Options granted to Independent Directors shall be Non-Qualified Stock Options.
10
ARTICLE 6
RESTRICTED STOCK AWARDS
6.1 Grant of Restricted Stock. The Committee is authorized to make Awards
of Restricted Stock to any Participant selected by the Committee in such amounts
and subject to such terms and conditions as determined by the Committee. All
Awards of Restricted Stock shall be evidenced by a written Restricted Stock
Award Agreement.
6.2 Issuance and Restrictions. Subject to Section 10.6, Restricted Stock
shall be subject to such restrictions on transferability and other restrictions
as the Committee may impose (including, without limitation, limitations on the
right to vote Restricted Stock or the right to receive dividends on the
Restricted Stock). These restrictions may lapse separately or in combination at
such times, pursuant to such circumstances, in such installments, or otherwise,
as the Committee determines at the time of the grant of the Award or thereafter.
6.3 Forfeiture. Except as otherwise determined by the Committee at the time
of the grant of the Award or thereafter, upon termination of employment or
service during the applicable restriction period, Restricted Stock that is at
that time subject to restrictions shall be forfeited; provided, however, that,
except as otherwise provided by Section 10.6, the Committee may (a) provide in
any Restricted Stock Award Agreement that restrictions or forfeiture conditions
relating to Restricted Stock will be waived in whole or in part in the event of
terminations resulting from specified causes, and (b) in other cases waive in
whole or in part restrictions or forfeiture conditions relating to Restricted
Stock.
6.4 Certificates for Restricted Stock. Restricted Stock granted pursuant to
the Plan may be evidenced in such manner as the Committee shall determine. If
certificates representing shares of Restricted Stock are registered in the name
of the Participant, certificates must bear an appropriate legend referring to
the terms, conditions, and restrictions applicable to such Restricted Stock, and
the Company may, at its discretion, retain physical possession of the
certificate until such time as all applicable restrictions lapse.
ARTICLE 7
STOCK APPRECIATION RIGHTS
7.1 Grant of Stock Appreciation Rights. A Stock Appreciation Right may be
granted to any Participant selected by the Committee. A Stock Appreciation Right
may be granted (a) in connection and simultaneously with the grant of an Option,
(b) with respect to a previously granted Option, or (c) independent of an
Option. A Stock Appreciation Right shall be subject to such terms and conditions
not inconsistent with the Plan as the Committee shall impose and shall be
evidenced by an Award Agreement.
7.2 Coupled Stock Appreciation Rights.
(a) A Coupled Stock Appreciation Right ("CSAR") shall be related to a
particular Option and shall be exercisable only when and to the extent the
related Option is exercisable.
11
(b) A CSAR may be granted to a Participant for no more than the number
of shares subject to the simultaneously or previously granted Option to which it
is coupled.
(c) A CSAR shall entitle the Participant (or other person entitled to
exercise the Option pursuant to the Plan) to surrender to the Company
unexercised a portion of the Option to which the CSAR relates (to the extent
then exercisable pursuant to its terms) and to receive from the Company in
exchange therefor an amount determined by multiplying the difference obtained by
subtracting the Option exercise price from the Fair Market Value of a share of
Stock on the date of exercise of the CSAR by the number of shares of Stock with
respect to which the CSAR shall have been exercised, subject to any limitations
the Committee may impose.
7.3 Independent Stock Appreciation Rights.
(a) An Independent Stock Appreciation Right ("ISAR") shall be unrelated
to any Option and shall have a term set by the Committee. An ISAR shall be
exercisable in such installments as the Committee may determine. An ISAR shall
cover such number of shares of Stock as the Committee may determine. The
exercise price per share of Stock subject to each ISAR shall be set by the
Committee; ; provided that the exercise price for any ISAR shall not be less
than 100% of the Fair Market Value on the date of grant; and provided, further,
that, the Committee in its sole and absolute discretion may provide that the
ISAR may be exercised subsequent to a termination of employment or service, as
applicable, or following a Change in Control of the Company, or because of the
Participant's retirement, death or disability, or otherwise.
(b) An ISAR shall entitle the Participant (or other person entitled to
exercise the ISAR pursuant to the Plan) to exercise all or a specified portion
of the ISAR (to the extent then exercisable pursuant to its terms) and to
receive from the Company an amount determined by multiplying the difference
obtained by subtracting the exercise price per share of the ISAR from the Fair
Market Value of a share of Stock on the date of exercise of the ISAR by the
number of shares of Stock with respect to which the ISAR shall have been
exercised, subject to any limitations the Committee may impose.
7.4 Payment and Limitations on Exercise.
(a) Payment of the amounts determined under Sections 7.2(c) and 7.3(b)
above shall be in cash, in Stock (based on its Fair Market Value as of the date
the Stock Appreciation Right is exercised) or a combination of both, as
determined by the Committee.
(b) To the extent any payment under Section 7.2(c) or 7.3(b) is
effected in Stock it shall be made subject to satisfaction of all provisions of
Article 5 above pertaining to Options.
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ARTICLE 8
OTHER TYPES OF AWARDS
8.1 Performance Share Awards. Any Participant selected by the Committee may
be granted one or more Performance Share awards which shall be denominated in a
number of shares of Stock and which may be linked to any one or more of the
Performance Criteria or other specific performance criteria determined
appropriate by the Committee, in each case on a specified date or dates or over
any period or periods determined by the Committee (subject to Section 10.6). In
making such determinations, the Committee shall consider (among such other
factors as it deems relevant in light of the specific type of award) the
contributions, responsibilities and other compensation of the particular
Participant.
8.2 Performance Stock Units. Any Participant selected by the Committee may
be granted one or more Performance Stock Unit awards which shall be denominated
in units of value including dollar value of shares of Stock and which may be
linked to any one or more of the Performance Criteria or other specific
performance criteria determined appropriate by the Committee, in each case on a
specified date or dates or over any period or periods determined by the
Committee (subject to Section 10.6). In making such determinations, the
Committee shall consider (among such other factors as it deems relevant in light
of the specific type of award) the contributions, responsibilities and other
compensation of the particular Participant.
8.3 Dividend Equivalents.
(a) Any Participant selected by the Committee may be granted Dividend
Equivalents based on the dividends declared on the shares of Stock that are
subject to any Award, to be credited as of dividend payment dates, during the
period between the date the Award is granted and the date the Award is
exercised, vests or expires, as determined by the Committee. Such Dividend
Equivalents shall be converted to cash or additional shares of Stock by such
formula and at such time and subject to such limitations as may be determined by
the Committee.
(b) Dividend Equivalents granted with respect to Options or SARs that
are intended to be Qualified Performance-Based Compensation shall be payable,
with respect to pre-exercise periods, regardless of whether such Option or SAR
is subsequently exercised.
8.4 Stock Payments. Any Participant selected by the Committee may receive
Stock Payments in the manner determined from time to time by the Committee;
provided, that unless otherwise determined by the Committee such Stock Payments
shall be made in lieu of base salary, bonus, or other cash compensation
otherwise payable to such Participant. The number of shares shall be determined
by the Committee and may be based upon the Performance Criteria or other
specific performance criteria determined appropriate by the Committee,
determined on the date such Stock Payment is made or on any date thereafter.
8.5 Deferred Stock. Any Participant selected by the Committee may be
granted an award of Deferred Stock in the manner determined from time to time by
the Committee. The number of shares of Deferred Stock shall be determined by the
Committee and may be linked to
13
the Performance Criteria or other specific performance criteria determined to be
appropriate by the Committee, in each case on a specified date or dates or over
any period or periods determined by the Committee (subject to Section 10.6).
Stock underlying a Deferred Stock award will not be issued until the Deferred
Stock award has vested, pursuant to a vesting schedule or performance criteria
set by the Committee. Unless otherwise provided by the Committee, a Participant
awarded Deferred Stock shall have no rights as a Company stockholder with
respect to such Deferred Stock until such time as the Deferred Stock Award has
vested and the Stock underlying the Deferred Stock Award has been issued.
8.6 Restricted Stock Units. The Committee is authorized to make Awards of
Restricted Stock Units to any Participant selected by the Committee in such
amounts and subject to such terms and conditions as determined by the Committee.
At the time of grant, the Committee shall specify the date or dates on which the
Restricted Stock Units shall become fully vested and nonforfeitable, and may
specify such conditions to vesting as it deems appropriate (subject to Section
10.6). At the time of grant, the Committee shall specify the maturity date
applicable to each grant of Restricted Stock Units which shall be no earlier
than the vesting date or dates of the Award and may be determined at the
election of the grantee. On the maturity date, the Company shall transfer to the
Participant one unrestricted, fully transferable share of Stock for each
Restricted Stock Unit scheduled to be paid out on such date and not previously
forfeited. The Committee shall specify the purchase price, if any, to be paid by
the grantee to the Company for such shares of Stock.
8.7 Other Stock-Based Awards. Any Participant selected by the Committee may
be granted one or more Awards that provide Participants with shares of Stock or
the right to purchase shares of Stock or that have a value derived from the
value of, or an exercise or conversion privilege at a price related to, or that
are otherwise payable in shares of Stock and which may be linked to any one or
more of the Performance Criteria or other specific performance criteria
determined appropriate by the Committee, in each case on a specified date or
dates or over any period or periods determined by the Committee (subject to
Section 10.6). In making such determinations, the Committee shall consider
(among such other factors as it deems relevant in light of the specific type of
Award) the contributions, responsibilities and other compensation of the
particular Participant.
8.8 Term. Except as otherwise provided herein, the term of any Award of
Performance Shares, Performance Stock Units, Dividend Equivalents, Stock
Payments, Deferred Stock, Restricted Stock Units or Other Stock-Based Award
shall be set by the Committee in its discretion.
8.9 Exercise or Purchase Price. The Committee may establish the exercise or
purchase price, if any, of any Award of Performance Shares, Performance Stock
Units, Deferred Stock, Stock Payments, Restricted Stock Units or Other
Stock-Based Award; provided, however, that such price shall not be less than the
par value of a share of Stock, unless otherwise permitted by applicable state
law.
8.10 Exercise Upon Termination of Employment or Service. An Award of
Performance Shares, Performance Stock Units, Dividend Equivalents, Deferred
Stock, Stock Payments, Restricted Stock Units and Other Stock-Based Award shall
only be exercisable or
14
payable while the Participant is an Employee, Consultant or a member of the
Board, as applicable; provided, however, that the Committee in its sole and
absolute discretion may provide that an Award of Performance Shares, Performance
Stock Units, Dividend Equivalents, Stock Payments, Deferred Stock, Restricted
Stock Units or Other Stock-Based Award may be exercised or paid subsequent to a
termination of employment or service, as applicable, or following a Change in
Control of the Company, or because of the Participant's retirement, death or
disability, or otherwise; provided, however, that any such provision with
respect to Performance Shares or Performance Stock Units shall be subject to the
requirements of Section 162(m) of the Code that apply to Qualified
Performance-Based Compensation.
8.11 Form of Payment. Payments with respect to any Awards granted under
this Article 8 shall be made in cash, in Stock or a combination of both, as
determined by the Committee.
8.12 Award Agreement. All Awards under this Article 8 shall be subject to
such additional terms and conditions as determined by the Committee and shall be
evidenced by a written Award Agreement.
ARTICLE 9
PERFORMANCE-BASED AWARDS
9.1 Purpose. The purpose of this Article 9 is to provide the Committee the
ability to qualify Awards other than Options and SARs and that are granted
pursuant to Articles 6 and 8 as Qualified Performance-Based Compensation. If the
Committee, in its discretion, decides to grant a Performance-Based Award to a
Covered Employee, the provisions of this Article 9 shall control over any
contrary provision contained in Articles 6 or 8; provided, however, that the
Committee may in its discretion grant Awards to Covered Employees that are based
on Performance Criteria or Performance Goals but that do not satisfy the
requirements of this Article 9.
9.2 Applicability. This Article 9 shall apply only to those Covered
Employees selected by the Committee to receive Performance-Based Awards. The
designation of a Covered Employee as a Participant for a Performance Period
shall not in any manner entitle the Participant to receive an Award for the
period. Moreover, designation of a Covered Employee as a Participant for a
particular Performance Period shall not require designation of such Covered
Employee as a Participant in any subsequent Performance Period and designation
of one Covered Employee as a Participant shall not require designation of any
other Covered Employees as a Participant in such period or in any other period.
9.3 Procedures with Respect to Performance-Based Awards. To the extent
necessary to comply with the Qualified Performance-Based Compensation
requirements of Section 162(m)(4)(C) of the Code, with respect to any Award
granted under Articles 6 and 8 which may be granted to one or more Covered
Employees, no later than ninety (90) days following the commencement of any
fiscal year in question or any other designated fiscal period or period of
service (or such other time as may be required or permitted by Section 162(m) of
the Code), the Committee shall, in writing, (i) designate one or more Covered
Employees, (ii) select the
15
Performance Criteria applicable to the Performance Period, (iii) establish the
Performance Goals, and amounts of such Awards, as applicable, which may be
earned for such Performance Period, and (iv) specify the relationship between
Performance Criteria and the Performance Goals and the amounts of such Awards,
as applicable, to be earned by each Covered Employee for such Performance
Period. Following the completion of each Performance Period, the Committee shall
certify in writing whether the applicable Performance Goals have been achieved
for such Performance Period. In determining the amount earned by a Covered
Employee, the Committee shall have the right to reduce or eliminate (but not to
increase) the amount payable at a given level of performance to take into
account additional factors that the Committee may deem relevant to the
assessment of individual or corporate performance for the Performance Period.
9.4 Payment of Performance-Based Awards. Unless otherwise provided in the
applicable Award Agreement, a Participant must be employed by the Company or a
Subsidiary on the day a Performance-Based Award for such Performance Period is
paid to the Participant. Furthermore, a Participant shall be eligible to receive
payment pursuant to a Performance-Based Award for a Performance Period only if
the Performance Goals for such period are achieved. In determining the amount
earned under a Performance-Based Award, the Committee may reduce or eliminate
the amount of the Performance-Based Award earned for the Performance Period, if
in its sole and absolute discretion, such reduction or elimination is
appropriate.
9.5 Additional Limitations. Notwithstanding any other provision of the
Plan, any Award which is granted to a Covered Employee and is intended to
constitute Qualified Performance-Based Compensation shall be subject to any
additional limitations set forth in Section 162(m) of the Code (including any
amendment to Section 162(m) of the Code) or any regulations or rulings issued
thereunder that are requirements for qualification as qualified
performance-based compensation as described in Section 162(m)(4)(C) of the Code,
and the Plan shall be deemed amended to the extent necessary to conform to such
requirements.
ARTICLE 10
PROVISIONS APPLICABLE TO AWARDS
10.1 Stand-Alone and Tandem Awards. Awards granted pursuant to the Plan
may, in the discretion of the Committee, be granted either alone, in addition
to, or in tandem with, any other Award granted pursuant to the Plan. Awards
granted in addition to or in tandem with other Awards may be granted either at
the same time as or at a different time from the grant of such other Awards.
10.2 Award Agreement. Awards under the Plan shall be evidenced by Award
Agreements that set forth the terms, conditions and limitations for each Award
which may include the term of an Award, the provisions applicable in the event
the Participant's employment or service terminates, and the Company's authority
to unilaterally or bilaterally amend, modify, suspend, cancel or rescind an
Award.
10.3 Limits on Transfer. No right or interest of a Participant in any Award
may be pledged, encumbered, or hypothecated to or in favor of any party other
than the Company or a
16
Subsidiary, or shall be subject to any lien, obligation, or liability of such
Participant to any other party other than the Company or a Subsidiary. Except as
otherwise provided by the Committee, no Award shall be assigned, transferred, or
otherwise disposed of by a Participant other than by will or the laws of descent
and distribution. The Committee by express provision in the Award or an
amendment thereto may permit an Award (other than an Incentive Stock Option) to
be transferred to, exercised by and paid to certain persons or entities related
to the Participant, including but not limited to members of the Participant's
family, charitable institutions, or trusts or other entities whose beneficiaries
or beneficial owners are members of the Participant's family and/or charitable
institutions, or to such other persons or entities as may be expressly approved
by the Committee, pursuant to such conditions and procedures as the Committee
may establish. Any permitted transfer shall be subject to the condition that the
Committee receive evidence satisfactory to it that the transfer is being made
for estate and/or tax planning purposes (or to a "blind trust" in connection
with the Participant's termination of employment or service with the Company or
a Subsidiary to assume a position with a governmental, charitable, educational
or similar non-profit institution) and on a basis consistent with the Company's
lawful issue of securities.
10.4 Beneficiaries. Notwithstanding Section 10.3, a Participant may, in the
manner determined by the Committee, designate a beneficiary to exercise the
rights of the Participant and to receive any distribution with respect to any
Award upon the Participant's death. A beneficiary, legal guardian, legal
representative, or other person claiming any rights pursuant to the Plan is
subject to all terms and conditions of the Plan and any Award Agreement
applicable to the Participant, except to the extent the Plan and Award Agreement
otherwise provide, and to any additional restrictions deemed necessary or
appropriate by the Committee. If the Participant is married and resides in a
community property state, a designation of a person other than the Participant's
spouse as his or her beneficiary with respect to more than 50% of the
Participant's interest in the Award shall not be effective without the prior
written consent of the Participant's spouse. If no beneficiary has been
designated or survives the Participant, payment shall be made to the person
entitled thereto pursuant to the Participant's will or the laws of descent and
distribution. Subject to the foregoing, a beneficiary designation may be changed
or revoked by a Participant at any time provided the change or revocation is
filed with the Committee.
10.5 Stock Certificates. Notwithstanding anything herein to the contrary,
the Company shall not be required to issue or deliver any certificates
evidencing shares of Stock pursuant to the exercise of any Award, unless and
until the Board has determined, with advice of counsel, that the issuance and
delivery of such certificates is in compliance with all applicable laws,
regulations of governmental authorities and, if applicable, the requirements of
any exchange on which the shares of Stock are listed or traded. All Stock
certificates delivered pursuant to the Plan are subject to any stop-transfer
orders and other restrictions as the Committee deems necessary or advisable to
comply with federal, state, or foreign jurisdiction, securities or other laws,
rules and regulations and the rules of any national securities exchange or
automated quotation system on which the Stock is listed, quoted, or traded. The
Committee may place legends on any Stock certificate to reference restrictions
applicable to the Stock. In addition to the terms and conditions provided
herein, the Board may require that a Participant make such reasonable covenants,
agreements, and representations as the Board, in its discretion, deems advisable
in order to comply with any such laws, regulations, or requirements. The
Committee shall have the right to require any Participant to comply with any
timing or other restrictions with
17
respect to the settlement or exercise of any Award, including a window-period
limitation, as may be imposed in the discretion of the Committee.
10.6 Full Value Award Vesting Limitations. Notwithstanding any other
provision of this Plan to the contrary, Full Value Awards made to Employees or
Consultants shall become vested over a period of not less than three years (or,
in the case of vesting based upon the attainment of Performance Goals or other
performance-based objectives, over a period of not less than one year) following
the date the Award is made; provided, however, that, notwithstanding the
foregoing, Full Value Awards that result in the issuance of an aggregate of up
to 5% of the shares of Stock available pursuant to Section 3.1(a) may be granted
to any one or more Participants without respect to such minimum vesting
provisions.
ARTICLE 11
CHANGES IN CAPITAL STRUCTURE
11.1 Adjustments. In the event of any stock dividend, stock split,
combination or exchange of shares, merger, consolidation, spin-off,
recapitalization or other distribution (other than normal cash dividends) of
Company assets to stockholders, or any other change affecting the shares of
Stock or the share price of the Stock, the Committee shall make such
proportionate adjustments, if any, as the Committee in its discretion may deem
appropriate to reflect such change with respect to (a) the aggregate number and
type of shares that may be issued under the Plan (including, but not limited to,
adjustments of the limitations in Sections 3.1 and 3.3 and the numbers of Shares
in Section 5.4); (b) the terms and conditions of any outstanding Awards
(including, without limitation, any applicable performance targets or criteria
with respect thereto); and (c) the grant or exercise price per share for any
outstanding Awards under the Plan. Any adjustment affecting an Award intended as
Qualified Performance-Based Compensation shall be made consistent with the
requirements of Section 162(m) of the Code.
11.2 Acceleration upon a Change of Control. Except as may otherwise be
provided in any Award Agreement or any other written agreement entered into by
and between the Company and a Participant, if a Change of Control occurs and a
Participant's Awards are not converted, assumed, or replaced by a successor,
such Awards shall become fully exercisable and all forfeiture restrictions on
such Awards shall lapse. Upon, or in anticipation of, a Change in Control, the
Committee may cause any and all Awards outstanding hereunder to terminate at a
specific time in the future and shall give each Participant the right to
exercise such Awards during a period of time as the Committee, in its sole and
absolute discretion, shall determine.
11.3 Outstanding Awards - Certain Mergers. Subject to any required action
by the stockholders of the Company, in the event that the Company shall be the
surviving corporation in any merger or consolidation (except a merger or
consolidation as a result of which the holders of shares of Stock receive
securities of another corporation), each Award outstanding on the date of such
merger or consolidation shall pertain to and apply to the securities that a
holder of the number of shares of Stock subject to such Award would have
received in such merger or consolidation.
11.4 Outstanding Awards - Other Changes. In the event of any other change
in the
18
capitalization of the Company or corporate change other than those specifically
referred to in this Article 11, the Committee may, in its absolute discretion,
make such adjustments in the number and class of shares subject to Awards
outstanding on the date on which such change occurs and in the per share grant
or exercise price of each Award as the Committee may consider appropriate to
prevent dilution or enlargement of rights.
11.5 No Other Rights. Except as expressly provided in the Plan, no
Participant shall have any rights by reason of any subdivision or consolidation
of shares of stock of any class, the payment of any dividend, any increase or
decrease in the number of shares of stock of any class or any dissolution,
liquidation, merger, or consolidation of the Company or any other corporation.
Except as expressly provided in the Plan or pursuant to action of the Committee
under the Plan, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number of shares
of Stock subject to an Award or the grant or exercise price of any Award.
ARTICLE 12
ADMINISTRATION
12.1 Committee. The Plan shall be administered by the Compensation
Committee of the Board; provided, however that the Compensation Committee may
delegate to a committee of one or more members of the Board the authority to
grant or amend Awards to Participants other than (a) senior executives of the
Company who are subject to Section 16 of the Exchange Act or (b) Covered
Employees. The Committee shall consist of at least two individuals, each of whom
qualifies as (x) a Non-Employee Director, and (y) an "outside director" pursuant
to Code Section 162(m) and the regulations issued thereunder. Reference to the
Committee shall refer to the Board if the Compensation Committee ceases to exist
and the Board does not appoint a successor Committee.
12.2 Action by the Committee. A majority of the Committee shall constitute
a quorum. The acts of a majority of the members present at any meeting at which
a quorum is present, and acts approved in writing by a majority of the Committee
in lieu of a meeting, shall be deemed the acts of the Committee. Each member of
the Committee is entitled to, in good faith, rely or act upon any report or
other information furnished to that member by any officer or other employee of
the Company or any Subsidiary, the Company's independent certified public
accountants, or any executive compensation consultant or other professional
retained by the Company to assist in the administration of the Plan.
12.3 Authority of Committee. Subject to any specific designation in the
Plan, the Committee has the exclusive power, authority and discretion to:
(a) Designate Participants to receive Awards;
(b) Determine the type or types of Awards to be granted to each
Participant;
(c) Determine the number of Awards to be granted and the number of
shares of Stock to which an Award will relate;
19
(d) Determine the terms and conditions of any Award granted pursuant to
the Plan, including, but not limited to, the exercise price, grant price, or
purchase price, any reload provision, any restrictions or limitations on the
Award, any schedule for lapse of forfeiture restrictions or restrictions on the
exercisability of an Award, and accelerations or waivers thereof, any provisions
related to non-competition and recapture of gain on an Award, based in each case
on such considerations as the Committee in its sole discretion determines;
provided, however, that the Committee shall not have the authority to accelerate
the vesting or waive the forfeiture of any Performance-Based Awards;
(e) Determine whether, to what extent, and pursuant to what
circumstances an Award may be settled in, or the exercise price of an Award may
be paid in, cash, Stock, other Awards, or other property, or an Award may be
canceled, forfeited, or surrendered;
(f) Prescribe the form of each Award Agreement, which need not be
identical for each Participant;
(g) Decide all other matters that must be determined in connection with
an Award;
(h) Establish, adopt, or revise any rules and regulations as it may
deem necessary or advisable to administer the Plan;
(i) Interpret the terms of, and any matter arising pursuant to, the
Plan or any Award Agreement; and
(j) Make all other decisions and determinations that may be required
pursuant to the Plan or as the Committee deems necessary or advisable to
administer the Plan.
12.4 Decisions Binding. The Committee's interpretation of the Plan, any
Awards granted pursuant to the Plan, any Award Agreement and all decisions and
determinations by the Committee with respect to the Plan are final, binding, and
conclusive on all parties.
ARTICLE 13
EFFECTIVE AND EXPIRATION DATE
13.1 Effective Date. The Plan is effective as of the date the Plan is
approved by the Company's stockholders (the "Effective Date"). The Plan will be
deemed to be approved by the stockholders if it receives the affirmative vote of
the holders of a majority of the shares of stock of the Company present or
represented and entitled to vote at a meeting duly held in accordance with the
applicable provisions of the Company's By-Laws.
13.2 Expiration Date. The Plan will expire on, and no Award may be granted
pursuant to the Plan after, the tenth anniversary of the Effective Date. Any
Awards that are outstanding on the tenth anniversary of the Effective Date shall
remain in force according to the terms of the Plan and the applicable Award
Agreement.
20
ARTICLE 14
AMENDMENT, MODIFICATION, AND TERMINATION
14.1 Amendment, Modification, And Termination. With the approval of the
Board, at any time and from time to time, the Committee may terminate, amend or
modify the Plan; provided, however, that (a) to the extent necessary and
desirable to comply with any applicable law, regulation, or stock exchange rule,
the Company shall obtain stockholder approval of any Plan amendment in such a
manner and to such a degree as required, and (b) stockholder approval is
required for any amendment to the Plan that (i) increases the number of shares
available under the Plan (other than any adjustment as provided by Article 11),
(ii) permits the Committee to grant Options with an exercise price that is below
Fair Market Value on the date of grant, (iii) permits the Committee to extend
the exercise period for an Option beyond ten years from the date of grant, or
(iv) results in a material increase in benefits or a change in eligibility
requirements. Notwithstanding any provision in this Plan to the contrary, absent
approval of the stockholders of the Company, no Option may be amended to reduce
the per share exercise price of the shares subject to such Option below the per
share exercise price as of the date the Option is granted and, except as
permitted by Article 11, no Option may be granted in exchange for, or in
connection with, the cancellation or surrender of an Option having a higher per
share exercise price.
14.2 Awards Previously Granted. No termination, amendment, or modification
of the Plan shall adversely affect in any material way any Award previously
granted pursuant to the Plan without the prior written consent of the
Participant.
ARTICLE 15
GENERAL PROVISIONS
15.1 No Rights to Awards. No Participant, employee, or other person shall
have any claim to be granted any Award pursuant to the Plan, and neither the
Company nor the Committee is obligated to treat Participants, employees, and
other persons uniformly.
15.2 No Stockholders Rights. No Award gives the Participant any of the
rights of a stockholder of the Company unless and until shares of Stock are in
fact issued to such person in connection with such Award.
15.3 Withholding. The Company or any Subsidiary shall have the authority
and the right to deduct or withhold, or require a Participant to remit to the
Company, an amount sufficient to satisfy federal, state, local and foreign taxes
(including the Participant's FICA obligation) required by law to be withheld
with respect to any taxable event concerning a Participant arising as a result
of this Plan. The Committee may in its discretion and in satisfaction of the
foregoing requirement allow a Participant to elect to have the Company withhold
shares of Stock otherwise issuable under an Award (or allow the return of shares
of Stock) having a Fair Market Value equal to the sums required to be withheld.
Notwithstanding any other provision of the Plan, the number of shares of Stock
which may be withheld with respect to the issuance, vesting, exercise or payment
of any Award (or which may be
21
repurchased from the Participant of such Award within six months after such
shares of Stock were acquired by the Participant from the Company) in order to
satisfy the Participant's federal, state, local and foreign income and payroll
tax liabilities with respect to the issuance, vesting, exercise or payment of
the Award shall be limited to the number of shares which have a Fair Market
Value on the date of withholding or repurchase equal to the aggregate amount of
such liabilities based on the minimum statutory withholding rates for federal,
state, local and foreign income tax and payroll tax purposes that are applicable
to such supplemental taxable income.
15.4 No Right to Employment or Services. Nothing in the Plan or any Award
Agreement shall interfere with or limit in any way the right of the Company or
any Subsidiary to terminate any Participant's employment or services at any
time, nor confer upon any Participant any right to continue in the employ or
service of the Company or any Subsidiary.
15.5 Unfunded Status of Awards. The Plan is intended to be an "unfunded"
plan for incentive compensation. With respect to any payments not yet made to a
Participant pursuant to an Award, nothing contained in the Plan or any Award
Agreement shall give the Participant any rights that are greater than those of a
general creditor of the Company or any Subsidiary.
15.6 Indemnification. To the extent allowable pursuant to applicable
law, each member of the Committee or of the Board shall be indemnified and held
harmless by the Company from any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by such member in connection with or
resulting from any claim, action, suit, or proceeding to which he or she may be
a party or in which he or she may be involved by reason of any action or failure
to act pursuant to the Plan and against and from any and all amounts paid by him
or her in satisfaction of judgment in such action, suit, or proceeding against
him or her; provided he or she gives the Company an opportunity, at its own
expense, to handle and defend the same before he or she undertakes to handle and
defend it on his or her own behalf. The foregoing right of indemnification shall
not be exclusive of any other rights of indemnification to which such persons
may be entitled pursuant to the Company's Certificate of Incorporation or
By-Laws, as a matter of law, or otherwise, or any power that the Company may
have to indemnify them or hold them harmless.
15.7 Relationship to other Benefits. No payment pursuant to the Plan shall
be taken into account in determining any benefits pursuant to any pension,
retirement, savings, profit sharing, group insurance, welfare or other benefit
plan of the Company or any Subsidiary except to the extent otherwise expressly
provided in writing in such other plan or an agreement thereunder.
15.8 Expenses. The expenses of administering the Plan shall be borne by the
Company and its Subsidiaries.
15.9 Titles and Headings. The titles and headings of the Sections in the
Plan are for convenience of reference only and, in the event of any conflict,
the text of the Plan, rather than such titles or headings, shall control.
15.10 Fractional Shares. No fractional shares of Stock shall be issued and
the Committee shall determine, in its discretion, whether cash shall be given in
lieu of fractional
22
shares or whether such fractional shares shall be eliminated by rounding up or
down as appropriate.
15.11 Limitations Applicable to Section 16 Persons. Notwithstanding any
other provision of the Plan, the Plan, and any Award granted or awarded to any
Participant who is then subject to Section 16 of the Exchange Act, shall be
subject to any additional limitations set forth in any applicable exemptive rule
under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of
the Exchange Act) that are requirements for the application of such exemptive
rule. To the extent permitted by applicable law, the Plan and Awards granted or
awarded hereunder shall be deemed amended to the extent necessary to conform to
such applicable exemptive rule.
15.12 Government and Other Regulations. The obligation of the Company to
make payment of awards in Stock or otherwise shall be subject to all applicable
laws, rules, and regulations, and to such approvals by government agencies as
may be required. The Company shall be under no obligation to register pursuant
to the Securities Act of 1933, as amended, any of the shares of Stock paid
pursuant to the Plan. If the shares paid pursuant to the Plan may in certain
circumstances be exempt from registration pursuant to the Securities Act of
1933, as amended, the Company may restrict the transfer of such shares in such
manner as it deems advisable to ensure the availability of any such exemption.
15.13 Governing Law. The Plan and all Award Agreements shall be construed
in accordance with and governed by the laws of the State of Delaware.
* * * * *
I hereby certify that the foregoing Plan was duly adopted by the Board of
Directors of Symbol Technologies, Inc. on ____________ __, 200__.
* * * * *
I hereby certify that the foregoing Plan was approved by the stockholders
of Symbol Technologies, Inc. on ____________ __, 200__.
Executed on this ____ day of _______________, 200__.
------------------------------
Corporate Secretary
23
SYMBOL TECHNOLOGIES, INC. YOUR VOTE IS IMPORTANT
VOTE BY INTERNET/TELEPHONE
24 HOURS A DAY, 7 DAYS A WEEK
TELEPHONE INTERNET MAIL
--------- -------- ----
1-866-814-2810 HTTPS://WWW.PROXYVOTENOW.COM/SBL
* Use any touch-tone telephone. OR * Go to the website address listed OR * Mark, sign and date your
* HAVE YOUR PROXY CARD READY. above. proxy card.
* Follow the simple recorded * HAVE YOUR PROXY CARD READY. * Detach your proxy card.
instructions. * Follow the simple instructions * Return your proxy card in
that appear on your computer screen. the postage-paid envelope
provided.
Your telephone or Internet vote authorizes the named If you have submitted your proxy by telephone or
proxies to vote your shares in the same manner as if the internet there is no need for you to mail
you marked, signed and returned the proxy card. back your proxy.
CALL TOLL-FREE TO VOTE CONTROL NUMBER FOR TELEPHONE OR INTERNET VOTING
1-866-814-2810 --------------
DETACH PROXY CARD HERE IF YOU ARE NOT VOTING BY TELEPHONE OR INTERNET
(PLEASE SIGN, DATE AND RETURN THIS PROXY CARD IN THE ENCLOSED ENVELOPE.)
VOTES MUST BE INDICATED (X) IN BLACK OR BLUE INK.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" ITEMS 1, 2, 3 AND 4.
1. Election of Six Directors. 3. The 2004 Symbol Technologies, Inc. 2004 Equity
Incentive Award Plan.
Nominees: (01) William R. Nuti FOR AGAINST ABSTAIN
(02) Robert J. Chrenc [ ] [ ] [ ]
(03) Edward Kozel
(04) Salvatore Iannuzzi 4. The ratification of the appointment of Ernst &
(05) George Samenuk Young LLP as the Company's independent auditors for
(06) Melvin A. Yellin fiscal year 2004.
[ ] For All Nominees FOR AGAINST ABSTAIN
[ ] [ ] [ ]
[ ] Withhold Authority for all nominees
[ ] For All Except*
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY 5. In their discretion, the proxies are authorized to
INDIVIDUAL NOMINEES, MARK THE "FOR ALL EXCEPT" BOX AND vote for the election of such substitute nominee(s)
WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.) for directors as such proxies may select in the
event any nominee(s) named in this proxy become
*Exceptions: unable to serve, and upon any other business which
may properly come before the 2004 Annual Meeting or
- ------------------------------------------------------- any adjournments or postponements thereof.
THIS PROXY WILL REVOKE ALL PRIOR PROXIES SIGNED BY YOU.
2. The amendment and restatement of the Symbol
Technologies, Inc. Executive Bonus Plan.
FOR AGAINST ABSTAIN ADDRESS CHANGE AND/OR COMMENTS MARK HERE [ ]
[ ] [ ] [ ]
PLEASE SIGN EXACTLY AS NAME OR NAMES APPEAR ON THIS PROXY. WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR,
TRUSTEE, CUSTODIAN, GUARDIAN OR CORPORATE OFFICER, GIVE FULL TITLE. IF MORE THAN ONE TRUSTEE, ALL SHOULD SIGN. JOINT
OWNERS MUST EACH SIGN. IF THE SIGNER IS A CORPORATION, PLEASE SIGN FULL CORPORATE NAME BY A DULY AUTHORIZED OFFICER,
GIVING TITLE AS SUCH. IF SIGNER IS A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AN AUTHORIZED PERSON.
DATE: _________________________
Shareowner sign here: __________________________________
Co-Owner sign here: ___________________________________
ADMISSION TICKET
SYMBOL TECHNOLOGIES, INC.
ANNUAL MEETING OF STOCKHOLDERS
APRIL 26, 2004 - 10:00 A.M.
One Symbol Plaza
Holtsville, New York
If you plan to attend the Annual Meeting please mark the notification box on the
bottom portion of this card.
You must present this portion of the card (together with picture identification)
in order to be admitted to the Symbol Technologies, Inc. Annual Meeting of
Stockholders on April 26, 2004. Cameras, recording devices and other electronic
devices will not be permitted at the Annual Meeting.
SYMBOL TECHNOLOGIES, INC.
PROXY/VOTING INSTRUCTION CARD
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF SYMBOL TECHNOLOGIES, INC. FOR THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON APRIL 26, 2004.
The undersigned stockholder of Symbol Technologies, Inc. hereby
appoints WILLIAM R. NUTI and PETER M. LIEB, and each of them, proxies, with full
power of substitution in each, to vote the shares of Symbol Technologies, Inc.
Common Stock that the undersigned would be entitled to vote at the Annual
Meeting of Stockholders to be held on April 26, 2004, and at any adjournments or
postponements thereof, as indicated on the reverse side, and in their discretion
upon any other business that may properly come before the meeting or at any
adjournments or postponements thereof.
This proxy, when properly executed, will be voted in the manner
directed herein by the undersigned stockholder. If no direction is given, this
proxy will be voted FOR proposals 1, 2, 3 and 4 and will grant discretionary
authority pursuant to Item 5. The undersigned acknowledges receipt of the
accompanying Proxy Statement dated March 31, 2004.
HOUSEHOLDING ELECTION - If you don't already do so, please indicate if
you consent to receive certain future investor communications in a single
package per household. [YES]
Comments / Address Change:
- --------------------------
SYMBOL TECHNOLOGIES, INC. MARK THIS BOX IF YOU PLAN
- --------------------------------------------------------- P.O. Box 11095 TO ATTEND THE ANNUAL
New York, NY 10203-0095 MEETING [ ]
- ---------------------------------------------------------
- ---------------------------------------------------------
If you have written in the above space, please mark the
comments notification box on the reverse side
(Continued, and to be signed and dated on the reverse side.)