SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
INTERSIL HOLDING CORPORATION
----------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
-----------------------------------------------------------------------
[LOGO OF INTERSIL]
INTERSIL HOLDING CORPORATION
April 27, 2001
DEAR FELLOW SHAREHOLDER:
You are cordially invited to attend the Annual Meeting of Shareholders
("Annual Meeting") of Intersil Holding Corporation (the "Company") which will be
held at the Hyatt Regency Hotel, located at 17900 Jamboree Boulevard, Irvine,
California 92614 on May 23, 2001 at 9:00 a.m.
Details of the business to be conducted at the Annual Meeting are given in
the attached Notice of Annual Meeting and Proxy Statement.
If you are not certain that you will attend the Annual Meeting in person,
please complete, sign, date and return the enclosed proxy promptly in the
accompanying reply envelope. If you decide to attend the Annual Meeting and wish
to change your proxy vote, you may do so automatically by voting in person at
the Annual Meeting.
We look forward to seeing you at the Annual Meeting. We appreciate your
support and continued interest in Intersil Holding Corporation.
Gregory L. Williams
President, Chief Executive Officer and Director
Irvine, California
April 27, 2001
YOUR VOTE IS IMPORTANT
Your vote is very important. Whether or not you plan to attend the Annual
Meeting, we hope that you will vote as soon as possible. You may vote over the
Internet, as well as by telephone, or by mailing a proxy card. Voting will
ensure your representation at the Annual Meeting if you do not attend in person.
Please review the instructions on the proxy card concerning each of these voting
options. Should you receive more than one proxy, please be sure to sign and
return each proxy to ensure that all your shares will be voted. If your shares
are held of record by a broker, bank, or other nominee, you will not be able to
vote in person at the Annual Meeting unless you first obtain a proxy issued in
your name from the record holder.
[LOGO OF INTERSIL]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 23, 2001
The Annual Meeting of Shareholders ("Annual Meeting") of Intersil Holding
Corporation (the "Company") will be held at the Hyatt Regency Hotel, located at
17900 Jamboree Boulevard, Irvine, California 92614, on May 23, 2001 at 9:00 a.m.
for the following purposes:
1. To elect six directors to serve on the Company's Board of
Directors until the next annual meeting of shareholders, or until their
successors are duly elected and qualified.
2. To ratify the appointment of Ernst & Young LLP as the Company's
independent accountants.
3. To change the name of Intersil Holding Corporation to Intersil
Corporation.
4. To increase the shares available under the 1999 Equity
Compensation Plan.
5. To transact any other business that may properly come before the
Annual Meeting.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. Whether or not you plan to attend the Annual
Meeting, please complete, sign, date and return the enclosed proxy promptly in
the accompanying reply envelope.
You are entitled to vote if you were a shareholder at the close of business
on Monday, April 9, 2001.
By Order of the Board of Directors
Irvine, California
April 27, 2001
Stephen M. Moran
Vice President, General Counsel and Secretary
- --------------------------------------------------------------------------------
Admittance to the meeting will be limited to the shareholders eligible to vote
or their authorized representative(s). Beneficial owners holding shares through
an intermediary such as a bank or broker will be admitted upon proof of
ownership.
INTERSIL HOLDING CORPORATION
7585 IRVINE CENTER DRIVE, SUITE 100
IRVINE, CALIFORNIA 92618
PROXY STATEMENT
This Proxy Statement and the accompanying proxy card are being mailed, beginning
April 27, 2001, to owners of shares of Intersil Holding Corporation (the
"Company") Class A Common Stock in connection with the solicitation of proxies
by the Board of Directors for the 2001 Annual Meeting of Shareholders. This
proxy procedure is necessary to permit all Class A Common Stock shareholders,
many of whom live throughout the United States and in foreign countries and are
unable to attend the Annual Meeting, to vote. The Board of Directors encourages
you to read this document thoroughly and to take this opportunity to vote on the
matters to be decided at the Annual Meeting.
- --------------------------------------------------------------------------------
CONTENTS
Page
Voting Procedures......................................................................... 1
Corporate Governance...................................................................... 2
Election of Directors (Item 1 on Proxy Card).............................................. 4
Ratification of Appointment of Independent Accountants (Item 2 on Proxy Card)............. 6
Changing the Name of Intersil Holding Corporation to Intersil Corporation (Item 3 on Proxy
Card...................................................................................... 6
Increase in Shares Available Under the 1999 Equity Compensation Plan (Item 4 on Proxy
Card)..................................................................................... 7
Submission of Shareholder Proposals and Director Nominations.............................. 8
Audit Committee........................................................................... 8
Executive Compensation.................................................................... 9
Retirement Plans.......................................................................... 15
Stock Performance Graph................................................................... 16
Security Ownership of Certain Beneficial Owners and Directors and Officers................ 17
Executive Officers........................................................................ 20
Section 16(a) Beneficial Ownership Reporting Compliance................................... 21
Employment Agreement...................................................................... 22
Stockholders Agreement.................................................................... 22
Certain Relationships and Related Transactions............................................ 23
Audit Fees................................................................................ 24
Other Business............................................................................ 24
Exhibit A - Audit Committee Charter....................................................... A-1
Exhibit B - Summary of 1999 Equity Compensation Plan...................................... B-1
VOTING PROCEDURES
Your vote is very important. Your shares can only be voted at the Annual Meeting
if you are present or represented by proxy. Whether or not you plan to attend
the Annual Meeting, you are encouraged to vote by proxy to assure that your
shares will be represented. Most shareholders have a choice of voting by means
of the Internet, by using a toll-free telephone number or by completing a proxy
card and mailing it in the postage-paid envelope provided. Please refer to your
proxy card or the information forwarded by your bank, broker or other holder of
record to see which options are available to you. Please be aware that if you
vote over the Internet, you may incur costs such as telephone and Internet
access charges for which you will be responsible. Also note that proxies
submitted by telephone or the Internet must be received by 12:00 midnight, EDT,
on Tuesday, May 22, 2001.
You may revoke your proxy at any time before it is voted by (a) giving written
notice to the Secretary of the Company, (b) submitting a proxy bearing a later
date, or (c) casting a ballot at the Annual Meeting. Properly executed proxies
that are received before the Annual Meeting's adjournment will be voted in
accordance with the directions provided. If no directions are given, your shares
will be voted by one of the individuals named on your proxy card as recommended
by the Board of Directors. If you wish to give a proxy to someone other than
those named on the proxy card, you should cross out those names and insert the
name(s) of the person(s), not more than three, to whom you wish to give your
proxy.
Who can vote? Shareholders of record as of the close of business on April 9,
2001 are entitled to vote. On that day, approximately 68,355,200 shares of Class
A Common Stock were outstanding and eligible to vote. Each share is entitled to
one vote on each matter presented at the Annual Meeting other than the elections
of directors. The Company's Restated Certificate of Incorporation provides for
cumulative voting for directors. With cumulative voting, at each election for
directors, each holder of Class A Common Stock is entitled to as many votes as
would equal the number of shares he or she holds, multiplied by the number of
directors to be elected. The holder may cast all of his or her votes for a
single candidate or may distribute them among any number of candidates. A list
of shareholders eligible to vote will be available at the headquarters of
Intersil Holding Corporation, located at 7585 Irvine Center Drive, Suite 100,
Irvine, CA 92618, beginning May 13, 2001. Shareholders may examine this list
during normal business hours for any purpose relating to the Annual Meeting.
What shares are included in the proxy card? The proxy card represents all the
shares of Class A Common Stock registered to your account. Each share of Class A
Common Stock that you own entitles you to one vote other than the election of
directors. You may cumulate your votes for directors. In the event no directors
are specified, such proxies will be voted FOR the nominees of the Board of
Directors (Item 1), FOR the ratification of the Board of Directors'
reappointment of Ernst & Young LLP as the independent accountants of the Company
for the upcoming year (Item 2), FOR changing
1
the name of the Company to Intersil Corporation (Item 3), and FOR increasing the
shares available under the 1999 Equity Compensation Plan (Item 4).
How are votes counted? The Annual Meeting will be held if a quorum, consisting
of a majority of the outstanding shares of common stock entitled to vote, is
represented. Broker non-votes, votes withheld and abstentions will be counted
for purposes of determining whether a quorum has been reached. Directors are
elected by a plurality of the votes cast, and thus, votes withheld from some or
all nominees for Director could have an effect on the outcome of the election.
Who will count the vote? The Company's transfer agent, Equiserve Trust Company,
will tally the vote, which will be certified by an independent Inspector of
Election.
Who is soliciting this proxy? Solicitation of proxies is made on behalf of the
Board of Directors of the Company, and the cost of preparing, assembling and
mailing the notice of Annual Meeting, proxy statement and form of proxy will be
borne by the Company. Such cost is estimated at $45,000. In addition to the use
of mail, proxies may be solicited by directors, officers and regular employees
of the Company, without additional compensation, in person or by telephone or
other electronic means. The Company will reimburse brokerage houses and other
nominees for their expenses in forwarding proxy material to beneficial owners of
the Company's stock.
- --------------------------------------------------------------------------------
CORPORATE GOVERNANCE
In accordance with Delaware General Corporation Law and the Company's Restated
Certificate of Incorporation and Bylaws, the Company's business, property and
affairs are managed under the direction of the Board of Directors. Although
directors are not involved in the day-to-day operating details, they are kept
informed of the Company's business through written reports and documents
provided to them regularly, as well as by operating, financial and other reports
presented by the Chairman and other officers of the Company at meetings of the
Board of Directors and committees of the Board.
Meetings of the Board. The Board of Directors held two meetings in the six-month
transition period ended December 29, 2000. Each of the incumbent directors
attended 100% of the Board and committee meetings to which the director was
assigned. The incumbent directors in the aggregate attended 100% of their Board
and assigned committee meetings.
Committees of the Board. The Board of Directors has established two standing
committees.
Audit Committee -- recommends the independent accountants to conduct the annual
audit of the books and accounts of the Company, and reviews the adequacy of the
Company's financial reporting, accounting systems and controls. The Audit
Committee also evaluates the Company's
2
internal and external auditing procedures. The Audit Committee Charter is
attached to this proxy statement as Exhibit A. The Committee held one meeting
---------
during the six-month transition period ended December 29, 2000. The members of
the Committee during this period were Jan Peeters, Gary E. Gist and Robert N.
Pokelwaldt. In fiscal year 2001, Mr. Conn replaced Mr. Peeters.
Compensation Committee -- reviews and approves salary and other compensation of
officers and administers certain benefit plans. The Compensation Committee also
has the authority to administer, grant and make awards under the Company's
equity compensation plans. The Committee held one meeting during the six-month
transition period ended December 29, 2000. The members of the Committee during
this period were James A. Urry, Dr. Robert W. Conn and Gary E. Gist. In fiscal
year 2001, Mr. Peeters replaced Mr. Conn.
Director Compensation and Other Certain Relationships and Related Transactions.
Directors who are also officers of Intersil Holding Corporation or Citicorp
Venture Capital Ltd. do not receive compensation for their services as
directors. All other directors receive cash compensation in the amount of $2,000
per board meeting and $1,000 per committee meeting physically attended or $500
per board or committee meeting telephonically attended, except for Gary E. Gist
who, as committee Chairman, receives $2,500 per audit committee meeting
physically attended and $750 per audit committee meeting telephonically
attended. Directors also receive non-cash compensation of a one-time appointment
grant of options to purchase 7,500 shares of our Class A Common Stock (except
for Messrs. Urry and Gist) as well as an annual grant of options to purchase
7,500 shares of our Class A Common Stock. The directors did not receive any
options during the six-month transition period ended December 29, 2000, except
that, on August 31 and October 2, 2000, Mr. Williams received options to
purchase a total of 100,000 shares. All directors will be reimbursed for travel
and other expenses incurred in attending meetings of the Board of Directors or
its committees.
Stockholders Agreement. Each of the Company's shareholders prior to the initial
public offering are parties to a Securities Purchase and Holders Agreement (the
"Stockholders Agreement") dated August 13, 1999 and amendments thereto, in which
they agreed to vote their shares in such a manner so as to elect the entire
Board of Directors of the Company. The parties to the Stockholders Agreement
beneficially own 19% of the outstanding Class A Common Stock and 100% of the
Class B Common Stock.
3
ELECTION OF DIRECTORS
ITEM 1 ON PROXY CARD
The Company's directors are elected at each annual meeting and hold office until
the next election. The Company's Amended and Restated Certificate of
Incorporation, and the Bylaws of the Company, allow for a Board of Directors of
not fewer than three and not more than seven members. The Board has currently
fixed the number of directors at six. Each of the six nominees is currently a
director of the Company. The person named on the accompanying form of proxy will
vote the shares FOR the nominees, unless you instruct otherwise. Each nominee
has consented to stand for election and the Board does not anticipate that any
nominee will be unavailable to serve. In the event that one or more of the
nominees should become unavailable to serve at the time of the Annual Meeting,
the shares represented by proxy will be voted for the remaining nominees and any
substitute nominee(s) designated by the Board. Shareholders may cumulate their
votes for directors, and the director elections are then determined by a
plurality of the votes cast.
The following biographies provide a brief description of each nominee's
principal occupation and business experience, age (as of February 28, 2001) and
directorships held in other public corporations.
Nominees Positions and Offices held with the Company
-------- -------------------------------------------
Gregory L. Williams............ President, Chief Executive Officer, Director
Robert W. Conn................. Director
Gary E. Gist................... Director
Jan Peeters.................... Director
Robert N. Pokelwaldt........... Director
James A. Urry.................. Director
BUSINESS EXPERIENCE OF DIRECTORS
Gregory L. Williams, President, Chief Executive Officer, Director. Mr. Williams
is the President & Chief Executive Officer ("CEO") and one of the Company's
directors. Mr. Williams has been President and CEO, and a director, since
Intersil's inception in August, 1999. From October 1998 to August 1999, Mr.
Williams was President of the semiconductor business of Harris Corporation
("Harris"). From January 1998 to October 1998, Mr. Williams was Vice President
and General Manager of the Power Products Division of Harris. From 1984 to 1998,
Mr. Williams served as Vice President and Assistant General Manager of the
Semiconductor Components Group, Vice President and General Manager of the Power
Products Division, and Vice President and Director of Automotive World Marketing
of Motorola Semiconductor, and from 1977 to 1984, Mr. Williams served with
General Electric Company. Age: 47
Robert W. Conn, Director. Dr. Conn has been one of the Company's directors since
April 2000. Dr. Conn has been the Dean of the Jacobs School of Engineering,
University of California, San
4
Diego, and the Walter J. Zable Endowed Chair in Engineering since 1994. Prior to
joining the University of California, San Diego, Dr. Conn served as Professor of
Engineering and Applied Sciences and founding Director of the Institute of
Plasma and Fusion Research at the University of California, Los Angeles. Dr.
Conn has been editor of the journal Fusion Engineering and Design, since 1986.
Dr. Conn recently served as a member of the President's Committee of Advisors on
Science and Technology Panel on Energy R&D Policy for the 21st Century, which
service ended in 1998. Age: 58
Gary E. Gist, Director. Mr. Gist has been one of the Company's directors since
the Company's inception in August 1999. Mr. Gist has served as the President and
Chief Executive Officer of Palomar Companies, LLC since 1995, a corporation made
up of a diverse group of companies that focus on designing and manufacturing
electronic products including the following companies: AML Wireless Systems,
Inc., Palomar Display Products, Inc., Palomar Products, Inc. and Palomar
Technologies, Inc. From mid-1993 to 1995, he was Division Manager of the
Technology Products Division of Hughes Industrial Electronics Company. Prior to
that, he was President of Transworld Communications. Age: 54
Jan Peeters, Director. Mr. Peeters has been one of the Company's directors since
April 2000. Mr. Peeters is the founder, Chairman, President, Chief Executive
Officer and a major shareholder of Olameter Inc., a communications and data
management service provider that he formed in 1998. Mr. Peeters was a founder,
Vice-Chairman, President and Chief Executive Officer of Fonorola Inc. where he
held the position of President and Chief Executive Officer since 1990 and the
position of Vice-Chairman since 1994, until that company was sold to Call-Net
Enterprises in June 1998. Mr. Peeters serves on the Board of Directors of Call-
Net Enterprises and Cogeco, Inc. Age: 49
Robert N. Pokelwaldt, Director. Mr. Pokelwaldt has been one of the Company's
directors since April 2000. Mr. Pokelwaldt retired as the Chairman and Chief
Executive Officer of YORK International Corporation ("YORK"), an independent
supplier of heating, ventilating, air conditioning and refrigeration products in
the U.S. and internationally in November 1999. He became President and Chief
Executive Officer of YORK in 1991, and Chairman of YORK in January 1993. Mr.
Pokelwaldt joined YORK as President of Applied Systems Worldwide, a YORK
Division, in 1988, and two years later was appointed President and Chief
Operating Officer of YORK International. Mr. Pokelwaldt serves on the Board of
Directors of Mohawk Industries, GPU, Inc. and Carpenter Technology. Age: 64
James A. Urry, Director. Mr. Urry has been one of the Company's directors since
the Company's inception in August 1999. Mr. Urry has been with Citibank, N.A.
since 1981 serving as a Vice President since 1986. He has been a Vice President
of Citicorp Venture Capital Ltd., which is an affiliate of the Company's, since
1989. As provided for under the Stockholders' Agreement, Mr. Urry was designated
as a director by Sterling Holding Company, LLC. He is also a Director of
Airxcel, Inc., IKS Corporation and York. Age: 45
The Board of Directors recommends a vote FOR each of the nominees listed.
5
RATIFICATION OF APPOINTMENT OF
INDEPENDENT ACCOUNTANTS
ITEM 2 ON PROXY CARD
The Board of Directors, acting upon the recommendation of the Audit Committee,
asks that the shareholders ratify the Board's reappointment of the firm of Ernst
& Young LLP as independent accountants to examine the financial statements of
the Company for fiscal year 2001. Ratification requires the affirmative vote of
a majority of eligible shares present at the Annual Meeting, in person or by
proxy, and voting thereon. Unless otherwise specified by the shareholders, the
shares of stock represented by the proxy will be voted FOR ratification of the
appointment of Ernst & Young LLP as independent accountants to audit and report
upon the financial statements of the Company for fiscal year 2001. If this
appointment is not ratified by shareholders, the Audit Committee may reconsider
its recommendation.
One or more representatives of Ernst & Young LLP are expected to be at the
Annual Meeting. They will have an opportunity to make a statement and will be
available to respond to appropriate questions.
The Board of Directors recommends a vote FOR ratification of the appointment of
Ernst & Young as the independent accountant for the Company for the coming year.
- --------------------------------------------------------------------------------
CHANGING THE NAME OF INTERSIL HOLDING CORPORATION
TO INTERSIL CORPORATION
ITEM 3 ON PROXY CARD
The Board of Directors recommends an amendment to the Company's Restated
Certificate of Incorporation to change the name from "Intersil Holding
Corporation" to "Intersil Corporation." The Board of Directors believes that it
would be in the best interests of the Company and its shareholders to change its
name to reflect the fact that the Company is not simply a holding company, but
is actively involved in the operations and supervision of management of its
business, some of which is conducted through its subsidiaries. The name change
will become effective upon the filing of an Amendment to the Restated
Certificate of Incorporation with the Secretary of State of the State of
Delaware, which the Company anticipates will be filed soon after the date of the
Annual Meeting.
The proposed name change will not affect in any way the validity or
transferability of currently outstanding stock certificates or affect the
Company's capital or corporate structure. Shareholders will not be required to
surrender or exchange any stock certificates that they currently hold.
This change will also require that Intersil Corporation, a wholly owned
subsidiary of the Company, change its name to Intersil Communications, Inc.
6
If approved by the shareholders, the full text of Article 1 of the Amended and
Restated Certificate of Incorporation is as follows:
"1. Name. The name of the Corporation is Intersil Corporation."
Approval requires the affirmative vote of a majority of eligible shares present
at the Annual Meeting, in person or by proxy, and voting thereon. Unless
otherwise specified by the shareholders, the shares of stock represented by the
proxy will be voted FOR approval of the name change from Intersil Holding
Corporation to Intersil Corporation.
The Board of Directors recommends a vote FOR changing the name of Intersil
Holding Corporation to Intersil Corporation.
- --------------------------------------------------------------------------------
INCREASE IN SHARES AVAILABLE UNDER
1999 EQUITY COMPENSATION PLAN
ITEM 4 ON PROXY CARD
The Company's 1999 Equity Compensation Plan, as amended (the "Equity Plan"), was
approved by the Board of Directors and by the shareholders of the Company in
1999, with a total of 7,500,000 shares of Common Stock reserved for issuance
under the Equity Plan. Subject to shareholder approval, the Compensation
Committee of the Board of Directors has approved an increase in the number of
shares authorized for issuance under the Equity Plan from 7,500,000 to
17,500,000. A summary description of the Equity Plan is attached to this proxy
statement as Exhibit B. This summary is qualified in its entirety by the full
---------
text of the Equity Plan, copies of which may be obtained by the Company's
shareholders upon request to the Office of the Secretary of the Company.
As of March 30, 2001, options to purchase 4,580,027 shares of Common Stock (net
of cancelled or forfeited options) had been granted under the Equity Plan, and
2,919,973 shares remained available for future grants. However, the Company
believes that the remaining shares may be utilized during the next year for
annual grants, grants to new hires and grants made pursuant to acquisitions. The
closing price of the Common Stock on March 30, 2001 was $18.4375.
The Board of Directors believes that this proposed increase in the number of
shares authorized for issuance under the Equity Plan is in the best interest of
the Company. The Board of Directors believes that this increase will strengthen
the Company's ability to attract and retain individuals with the desired
training, experience and expertise in a highly competitive market. The Board of
Directors also believes that this increase will allow the Company to furnish
additional incentives to key individuals to promote the Company's financial
success and motivate them to increase shareholder value.
The Board of Directors recommends a vote FOR the increase.
7
SUBMISSION OF SHAREHOLDER PROPOSALS AND
DIRECTOR NOMINATIONS
The next shareholder meeting will be held on or about May 22, 2002. Shareholders
wishing to have a proposal included in the Board of Directors' 2002 Proxy
Statement must submit the proposal so that the Secretary of the Company receives
it no later than December 27, 2001, 120 days prior to the date of the Company's
proxy statement released to shareholders in 2001. The Securities and Exchange
Commission rules set forth standards as to what shareholder proposals are
required to be included in a proxy statement.
For any proposal that is not submitted for inclusion in next year's proxy
statement (as described above) but is instead sought to be presented directly at
next year's annual meeting, Securities and Exchange Commission rules permit
management to vote proxies in its discretion if (a) the Company receives notice
of the proposal before the close of business on March 13, 2002 and advises
stockholders in next year's proxy statement about the nature of the matter and
how management intends to vote on such matter, or (b) the Company does not
receive notice of the proposal prior to the close of business on March 13, 2002.
Notices of intention to present proposals at the 2002 Annual Meeting should be
addressed to Stephen M. Moran, Vice President, Secretary and General Counsel of
Intersil Holding Corporation.
- --------------------------------------------------------------------------------
AUDIT COMMITTEE
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
ON THE FINANCIAL STATEMENTS OF THE COMPANY
AND THE INDEPENDENCE OF THE COMPANY'S AUDITORS
Report of the Audit Committee to the Full Board of Directors of Intersil Holding
Corporation
The Audit Committee (the "Committee") oversees the Company's financial reporting
process on behalf of Intersil Holding Corporation's Board of Directors.
Management has the primary responsibility for the financial statements and the
reporting process including the systems of internal controls.
In fulfilling its oversight responsibilities, the Committee reviewed the audited
financial statements in the 2000 Annual Report with management, including a
discussion of the quality, not just the acceptability, of the accounting
principles, the reasonableness of significant judgments and the clarity of
disclosures in the financial statements.
The Committee reviewed with the independent auditors, who are responsible for
expressing an opinion on the conformity of those financial statements with
accounting principles generally
8
accepted in the United States, their judgments as to the quality, not just the
acceptability, of the Company's accounting principles and such other matters as
are required to be discussed with the Committee under auditing standards
generally accepted in the United States. In addition, the Committee has
discussed with the independent auditors disclosures required by the Independence
Standards Board and considered the compatibility of nonaudit services with the
auditor's independence.
The Committee discussed with the Company's independent auditors the overall
scope and plans for their audit. The Committee met with the independent
auditors, with and without management present, to discuss the results of their
examination, their evaluation of the Company's internal controls, and the
overall quality of the Company's financial reporting. The Committee held two (2)
meetings during the combined six-month transition period and fiscal year 2000.
In reliance on the reviews and discussions referred to above, the Committee
recommended to the Board of Directors (and the Board approved) that the audited
financial statements be included in the Annual Report on Form 10-K for the 26
weeks ended December 29, 2000 for filing with the Securities and Exchange
Commission. The Committee and the Board have also recommended, subject to
shareholder approval, the selection of the Company's independent auditors.
AUDIT COMMITTEE
Gary Gist, Committee Chairman
Jan Peeters
Robert Pokelwaldt
- --------------------------------------------------------------------------------
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS OF INTERSIL HOLDING CORPORATION
FOR TRANSITION PERIOD 2000
Compensation Committee Interlocks and Insider Participation
No member of the Compensation Committee during the six-month transition period
was an officer or employee of the Company, or any of its subsidiaries, or was
formerly an officer of the Company or any of its subsidiaries. No member of the
Compensation Committee had any relationship requiring disclosure by the Company
under any paragraph of Item 404 of Regulation S-K. Furthermore, no member of the
Compensation Committee had a relationship that requires disclosure under Item
402(j)(3) of Regulation S-K.
9
Report of the Compensation Committee of the Board of Directors on Executive
Compensation
Role of Committee. The Compensation Committee of the Board of Directors (the
"Committee") establishes, oversees and directs the Company's executive
compensation programs and policies and administers the Company's equity
compensation plans. The Committee seeks to align executive compensation with
Company objectives and strategies, management programs and business financial
performance in order to enhance shareholder value.
The Committee's objectives include (i) attracting and retaining exceptional
individuals as senior executives and (ii) providing key executives with the
incentive to perform to the full extent of their abilities in an effort to
maximize Company performance to deliver enhanced value to the Company's
shareholders. The Committee believes it is important to place a greater
percentage of senior executives' compensation at risk than that of non-
executives by tying senior executives' compensation directly to the performance
of the business and value of the common stock. Accordingly, executive
compensation consists primarily of an annual salary, bonuses linked to the
performance of the Company and long-term equity-based compensation. The
Committee considers the compensation program's impact on each operating business
unit as well as the effect on growth, profitability, market position and goals
set for each year as well as changes in corporate market focus, strategic goals
and key results expected ("KRE's") set for the next fiscal year. The Committee
reviews with management the business plans for the new fiscal year and compares
them to the prior year.
Compensation. The annual salaries of the Company's senior executives are set at
levels designed to attract and retain exceptional individuals by rewarding them
for individual and Company achievements. The Committee reviews the annual salary
of each senior executive in relation to such executive's performance, previous
salaries, general market and industry conditions or trends and makes appropriate
adjustments. The Committee reviews senior executives' salaries annually to
adjust such salaries based on each senior executive's past performance, expected
future contributions, scope and nature of responsibilities, including changes in
such responsibilites, and competitive compensation data relating to such senior
executive.
The Committee believes that a portion of the executives' compensation should be
tied to the financial results of the Company in order to reward individual
performance and overall Company success. Each year, objective targets are
established for each executive including the Company's financial targets, such
as revenue, earnings and return on assets, as well as individual strategic and
operating targets.
The Company has employee stock option plans in order to offer key employees the
opportunity to acquire an equity interest in the Company, thereby aligning the
interests of these employees more closely with the long term interests of
shareholders. Awards under these employee stock option plans may be in the form
of options, restricted stock or stock appreciation rights. Options, which have a
fixed exercise price, vest over a four- or five-year period and have an exercise
price equal
10
to the market value of the Common Stock on the date of grant, were granted to
senior executives and other key employees in 1999. Similar options which vest
over a four-year period were granted in 2000.
Transition Period 2000 President and Chief Executive Officer. The Committee
determined the transition period 2000 compensation of Mr. Williams, President
and Chief Executive Officer, in accordance with the above discussion.
Specifically, the Committee utilized a base salary and an incentive bonus, with
the bonus being based on his individual performance and his overall leadership
and management of the Company. The Committee also issued Mr. Williams stock
options which vest over a period of four years.
Deductibility of Compensation. Section 162(m) of the Internal Revenue Code
provides that publicly held companies may not deduct, in any taxable year,
compensation paid to any of the individuals named in the Summary Compensation
Table in excess of one million dollars that is not "performance-based." The
Committee believes that all of the compensation awarded to the Company's senior
executives will be fully deductible in accordance with this limit.
COMPENSATION COMMITTEE
James A. Urry
Dr. Robert W. Conn
Gary E. Gist
11
COMPENSATION TABLES
Executive Compensation
The following table sets forth, for the six-month transition period ended
December 29, 2000, and for fiscal years 2000 and 1999, information regarding the
cash compensation paid by the Company, as well as other compensation paid or
accrued for such year, to each of the executive officers of the Company named
below, in all capacities in which they served.
Summary Compensation Table
- ---------------------------------------------------------------------------------------------------------
Dollars in thousands
Long-Term
Compensation
---------------------
Annual Compensation Awards Payouts
------------------------------ ----------- -------
Other Annual Securities
Name and Fiscal Compensation Underlying LTIP All Other
Principal Position Year Salary Bonus(1) (2)(3)(4) Options(5) Payouts Compensation(6)
- ------------------- -------- ------ -------- ------------ ----------- ------- ---------------
Gregory L. Williams 2000(S)* $270.2 $274.2 $ 17.9 100,000 -- $52.1
President and 2000 $399.6 $577.7 $430.1 140,000 -- $29.3
Chief Executive 1999 $318.6 $ 64.5 $ 6.9 -- -- $12.2
Officer
Daniel J. Heneghan 2000(S) $150.0 $ 83.1 $273.6 40,000 -- $20.7
Vice President, 2000 $179.7 $212.6 -- 63,334 $17.2 $10.4
Chief Financial 1999 $122.0 $ 29.1 $ 1.9 -- $24.9 $23.8
Officer and
Assistant Secretary
Larry W. Sims 2000(S) $131.9 $110.8 -- 25,000 -- $ 5.3
Vice President, 2000 $239.2 $219.2 $421.2 63,334 -- $ 6.7
General Manager, 1999 $185.8 $159.7 $ 47.2 -- -- $ 1.9
Communications,
IC's
W. Russell Morcom 2000(S) $111.2 $ 69.8 -- 25,000 -- $23.7
Vice President and 2000 $186.9 $272.7 -- 63,334 $49.1 $16.1
General Manager, 1999 $170.0 $ 73.7 $ 10.8 -- $70.9 $57.1
Discrete Power
Larry Ciaccia 2000(S) $110.4 $105.8 -- 25,000 -- $15.9
General Manager, 2000 $147.4 $149.6 -- 63,334 -- $ 0.3
PRISM Wireless 1999 $104.0 $ 22.1 -- -- $ 0.3 $ 0.4
Business
- -----------------
* 2000(S) is the transition period which extended from July 1, 2000 through
December 29, 2000. 2000 is the fiscal year ended June 30, 2000.
12
(1) This category includes the Executive Incentive Plan bonus for all officers
and a sales incentive compensation bonus for Mr. Sims. It also includes a
disruption bonus for Mr. Heneghan in the amount of $25,000 in fiscal year
2000 and a disruption and signing bonus for Mr. Sims in the amount of
$65,000 in fiscal year 1999.
(2) Except for Mr. Heneghan, none of the executive officers named in the
Summary Compensation Table received personal benefits in excess of $50,000
or 10% of annual salary and bonus for the reporting period. Mr. Heneghan's
personal benefit for the reporting period included relocation expenses and
applicable taxes associated with his relocation to the corporate offices in
Irvine, CA.
(3) Except for Mr. Williams and Mr. Sims, none of the executive officers named
in the Summary Compensation Table received personal benefits in excess of
$50,000 or 10% of annual salary and bonus for fiscal year 2000. Mr.
Williams's and Mr. Sims's personal benefits for fiscal year 2000 included
relocation expenses and applicable taxes associated with their relocation
to the corporate offices in Irvine, CA.
(4) Except for Mr. Sims, none of the executive officers named in the Summary
Compensation Table received personal benefits in excess of the lesser of
$50,000 or 10% of annual salary and bonus for fiscal year 1999. Mr. Sims's
personal benefits for fiscal year 1999 included relocation expenses and
applicable taxes associated with his relocation to Melbourne, FL. The other
amounts reported represent dividend equivalent payments on outstanding
performance shares granted under Harris's Stock Incentive Plan for which
the perfomance period had not expired.
(5) All stock options were granted under the Intersil Holding Corporation 1999
Equity Compensation Plan. The stock option grants terminate ten years from
date of grant. Grants issued prior to August 2000 vest over a five year
period -- 20% upon each of the first five anniversary dates of the grant.
Grants issued from August 2000 to date, including those reflected in the
table for this reporting period, vest over a four year period -- 25% upon
each of the first four anniversary dates of the grant -- as authorized by
the Compensation Committee of the Intersil Board of Directors.
(6) Amounts reported reflect contributions and allocations to defined
contribution retirement plans and the value of insurance premiums for term
life insurance and disability insurance.
13
Stock Options
The following table provides information concerning stock options granted to the
executive officers named in the Summary Compensation Table during the transition
period 2000.
Transition Period 2000 Option/SAR Grants
- --------------------------------------------------------------------------------------------------
Individual Grants
---------------------------------------------------
Potential Realizable
Percentage Value at Assumed Annual
Number of of All Options Rates of Stock Price
Securities Granted to All Appreciation for
Underlying Employees Exercise Expiration Option Term (4)
------------------------
Options (1) in Period (2) Price Date (3) 5% 10%
- --------------------------------------------------------------------------------------------------
Gregory L. Williams 50,000 3.8% $54.00 08/31/2010 $1,698,015 $4,303,105
50,000 3.8% $41.56 10/02/2010 $1,306,922 $3,311,996
Daniel J. Heneghan 20,000 1.5% $54.00 08/31/2010 $ 679,206 $1,721,242
20,000 1.5% $41.56 10/02/2010 $ 522,769 $1,324,798
Larry W. Sims 12,500 0.9% $54.00 08/31/2010 $ 424,504 $1,075,776
12,500 0.9% $41.56 10/02/2010 $ 326,730 $ 827,999
W. Russell Morcom 12,500 0.9% $54.00 08/31/2010 $ 424,504 $1,075,776
12,500 0.9% $41.56 10/02/2010 $ 326,730 $ 827,999
Larry J. Ciaccia 12,500 0.9% $54.00 08/31/2010 $ 424,504 $1,075,776
12,500 0.9% $41.56 10/02/2010 $ 326,730 $ 827,999
- --------------------------------------------------------------------------------------------------
(1) These options vest in twenty-five percent increments on the first four
anniversaries of the grant date.
(2) A total of 1,325,350 options were granted to Intersil employees under the
Intersil 1999 Equity Compensation Plan during the transition period from
July 1, 2000 through December 29, 2000.
(3) The options will expire ten years after the grant date.
(4) Represents the potential realizable value of the underlying shares of
Intersil common stock at the expiration date based on an assumed annual
appreciation rate of 5% and 10%, set by the Securities and Exchange
Commission. The amounts shown are not intended to forecast future
appreciation in the price of our Class A Common Stock.
14
The following table sets forth information regarding the number and value of
options held by the executive officers named in the Summary Compensation Table
at the end of calendar year 2000.
Aggregated Option/SAR Exercises in Last Fiscal Year
and Fiscal Year-End Option/SAR Values*
--------------------------------------------------------------------------
Number of Securities Net Value of Unexercised
Underlying Unexercised In-the-Money
Options at Year-End Options at Year-End (1)
-----------------------------------------------------
Exercisable Unexercisable Exercisable Unexercisable
--------------------------------------------------------------------------
Gregory L. Williams 15,142 240,000 $242,386 $ --
Daniel J. Heneghan 3,029 103,334 $ 48,487 $ --
Larry W. Sims 4,543 88,334 $ 72,722 $ --
W. Russell Morcom 4,543 88,334 $ 72,722 $ --
Larry J. Ciaccia -- 88,334 -- $ --
--------------------------------------------------------------------------
* Columns for Shares Acquired on Exercise and Value Realized are not applicable
and have been omitted.
(1) Reflects net pre-tax amounts determined by subtracting the exercise price
from $22.94 per share, the fair market value of common stock at the end of
calendar year 2000.
- --------------------------------------------------------------------------------
RETIREMENT PLANS
Retirement and Savings Program
Intersil Holding Corporation provides retirement benefits to substantially all
employees primarily through a retirement plan having profit-sharing and savings
elements. Contributions by the Company to the retirement plan are based on
profits and employees' savings with no other funding requirements. Intersil
Holding is able to make additional contributions to the fund at its discretion.
The savings element of the retirement plan is a defined contribution plan, which
is qualified under Internal Revenue Service Code Section 401(k). All employees
of the Company may elect to participate in the 401(k) retirement plan (the
"401(k) plan"). Under the 401(k) plan, participating employees may defer a
portion of their pretax earnings up to certain limits prescribed by the Internal
Revenue Service. The Company provides matching contributions under the
provisions of the plan. Employees fully vest in the Company's matching
contributions upon the completion of seven years of service.
Retirement benefits also include an unfunded limited healthcare plan for U.S.-
based retirees and employees on long-term disability. Intersil Holding Company
accrues the estimated cost of these medical benefits, which are not material,
during an employee's active service life.
15
STOCK PERFORMANCE GRAPH
COMPARISON OF THREE QUARTER CUMULATIVE TOTAL RETURN
AMONG INTERSIL HOLDING CORPORATION, THE NASDAQ COMPOSITE
AND THE PHILADELPHIA SEMICONDUCTOR INDEX
The following graph presents a comparison of the Company's stock performance
with that of the NASDAQ Composite and the Philadelphia Semiconductor Index from
February 24, 2000 through December 29, 2000.
ISIL Equity SOX Index CCMP Index
24-Feb 0.00% 0.00% 0.00%
25-Feb 116.00% -2.98% -0.59%
28-Feb 91.00% 0.26% -0.86%
29-Feb 137.50% 10.04% 1.71%
1-Mar 154.00% 10.20% 3.60%
2-Mar 100.25% 6.79% 2.96%
3-Mar 113.25% 13.88% 6.43%
6-Mar 108.50% 16.93% 6.22%
7-Mar 100.75% 18.81% 4.99%
8-Mar 86.00% 16.78% 6.05%
9-Mar 101.25% 21.29% 9.29%
10-Mar 108.00% 25.29% 9.33%
13-Mar 94.00% 23.73% 6.27%
14-Mar 99.50% 15.62% 1.93%
15-Mar 86.00% 12.94% -0.76%
16-Mar 93.00% 15.36% 2.16%
17-Mar 120.00% 17.97% 3.91%
20-Mar 108.00% 13.14% -0.17%
21-Mar 164.00% 12.30% 2.04%
22-Mar 153.50% 22.65% 5.35%
23-Mar 146.50% 20.82% 6.99%
24-Mar 156.00% 21.04% 7.48%
27-Mar 120.50% 22.73% 7.38%
28-Mar 124.00% 18.56% 4.68%
29-Mar 97.50% 12.23% 0.59%
30-Mar 94.25% 8.24% -3.46%
31-Mar 106.75% 11.11% -0.97%
3-Apr 87.50% 2.92% -8.53%
4-Apr 82.00% 0.49% -10.15%
5-Apr 67.75% 6.68% -9.71%
6-Apr 99.50% 8.73% -7.58%
7-Apr 134.00% 15.00% -3.71%
10-Apr 108.00% 9.78% -9.30%
11-Apr 82.25% 6.41% -12.17%
12-Apr 42.50% -2.44% -18.36%
13-Apr 47.50% -5.08% -20.38%
14-Apr 10.00% -16.13% -28.07%
17-Apr 14.00% -5.06% -23.36%
18-Apr 33.00% -1.04% -17.85%
19-Apr 32.50% -4.78% -19.73%
20-Apr 36.00% -3.71% -21.09%
24-Apr 24.00% -6.59% -24.58%
25-Apr 29.50% 1.76% -19.63%
26-Apr 19.50% -0.27% -21.39%
27-Apr 12.25% 6.71% -18.27%
28-Apr 40.00% 10.15% -16.39%
1-May 62.50% 9.43% -14.28%
2-May 67.00% 4.24% -18.02%
3-May 56.00% 0.62% -19.71%
4-May 67.25% 2.25% -19.43%
5-May 71.00% 3.89% -17.34%
8-May 65.00% -1.57% -20.54%
9-May 43.50% -6.55% -22.36%
10-May 31.00% -14.55% -26.70%
11-May 38.13% -9.21% -24.21%
12-May 59.50% -7.67% -23.57%
15-May 66.50% -5.13% -21.87%
16-May 76.00% -1.60% -19.49%
17-May 70.00% -3.38% -21.06%
18-May 70.50% -5.76% -23.37%
19-May 68.50% -10.67% -26.58%
22-May 71.75% -11.38% -27.14%
23-May 63.50% -18.23% -31.47%
24-May 64.00% -13.96% -29.17%
25-May 50.25% -15.23% -30.58%
26-May 43.25% -14.48% -30.59%
30-May 52.00% -5.02% -25.08%
31-May 56.50% -6.14% -26.35%
1-Jun 71.00% 0.34% -22.42%
2-Jun 85.75% 8.84% -17.42%
5-Jun 98.50% 8.39% -17.24%
6-Jun 112.50% 4.56% -18.65%
7-Jun 99.75% 6.20% -16.86%
8-Jun 95.75% 7.42% -17.15%
9-Jun 95.00% 9.88% -16.09%
12-Jun 93.00% 4.75% -18.40%
13-Jun 96.50% 10.04% -16.60%
14-Jun 99.00% 5.31% -17.76%
15-Jun 95.75% 6.47% -16.72%
16-Jun 108.50% 8.89% -16.40%
19-Jun 108.75% 16.09% -13.60%
20-Jun 123.00% 18.90% -13.09%
21-Jun 114.00% 19.33% -11.99%
22-Jun 110.00% 13.78% -14.74%
23-Jun 103.00% 14.44% -16.73%
26-Jun 108.00% 14.37% -15.28%
27-Jun 106.25% 10.27% -16.43%
28-Jun 107.00% 10.00% -14.67%
29-Jun 110.00% 6.06% -16.03%
30-Jun 116.25% 7.22% -14.11%
3-Jul 115.25% 11.02% -13.55%
5-Jul 114.50% 0.67% -16.34%
6-Jul 113.75% 5.21% -14.23%
7-Jul 113.00% 9.09% -12.87%
10-Jul 94.00% 8.38% -13.80%
11-Jul 104.00% 5.49% -14.32%
12-Jul 111.00% 8.94% -11.22%
13-Jul 119.00% 11.78% -9.59%
14-Jul 112.25% 16.49% -8.04%
17-Jul 120.00% 19.06% -7.43%
18-Jul 127.25% 13.54% -9.54%
19-Jul 127.00% 9.09% -12.17%
20-Jul 133.25% 7.75% -9.38%
21-Jul 151.00% 1.77% -11.33%
24-Jul 152.25% 1.09% -13.77%
25-Jul 168.00% 3.81% -12.74%
26-Jul 160.00% -2.77% -13.64%
27-Jul 140.50% -10.70% -16.79%
28-Jul 134.50% -10.00% -20.67%
31-Jul 129.25% -6.57% -18.42%
1-Aug 108.50% -10.14% -20.19%
2-Aug 94.50% -10.29% -20.77%
3-Aug 80.00% -10.63% -18.58%
4-Aug 86.00% -13.41% -17.98%
7-Aug 89.25% -10.31% -16.34%
8-Aug 87.00% -10.62% -16.66%
9-Aug 81.00% -9.39% -16.55%
10-Aug 70.25% -11.38% -18.57%
11-Aug 72.00% -10.34% -17.94%
14-Aug 78.50% -3.43% -16.63%
15-Aug 84.50% -0.30% -16.59%
16-Aug 92.00% 0.91% -16.38%
17-Aug 90.00% 4.45% -14.66%
18-Aug 93.00% 6.69% -14.88%
21-Aug 88.00% 4.50% -14.39%
22-Aug 80.00% 5.69% -14.28%
23-Aug 105.00% 8.77% -13.14%
24-Aug 108.00% 9.38% -12.22%
25-Aug 98.00% 7.52% -12.45%
28-Aug 111.50% 6.65% -11.85%
29-Aug 108.00% 6.44% -11.60%
30-Aug 96.50% 5.13% -11.13%
31-Aug 116.00% 8.39% -8.91%
1-Sep 112.00% 7.41% -8.30%
5-Sep 106.50% 5.46% -10.28%
6-Sep 102.00% -0.57% -13.09%
7-Sep 109.75% 2.90% -11.25%
8-Sep 106.00% -2.23% -13.84%
11-Sep 101.00% -3.14% -15.62%
12-Sep 105.00% -7.03% -16.63%
13-Sep 99.25% -5.33% -15.67%
14-Sep 94.00% -5.53% -15.24%
15-Sep 92.00% -8.38% -16.94%
18-Sep 88.00% -10.57% -19.30%
19-Sep 95.50% -3.31% -16.29%
20-Sep 99.50% -3.09% -15.60%
21-Sep 99.00% -7.44% -17.08%
22-Sep 111.50% -12.90% -17.63%
25-Sep 115.75% -17.24% -18.98%
26-Sep 108.00% -18.15% -20.11%
27-Sep 114.00% -18.71% -20.82%
28-Sep 109.50% -15.24% -18.18%
29-Sep 99.50% -19.94% -20.46%
2-Oct 66.25% -21.65% -22.71%
3-Oct 67.25% -23.57% -25.16%
4-Oct 76.50% -18.86% -23.70%
5-Oct 78.94% -21.74% -24.81%
6-Oct 76.00% -24.85% -27.21%
9-Oct 77.50% -26.11% -27.33%
10-Oct 67.25% -33.58% -29.82%
11-Oct 77.00% -33.58% -31.38%
12-Oct 76.00% -35.22% -33.41%
13-Oct 90.50% -28.71% -28.17%
16-Oct 93.00% -32.83% -28.75%
17-Oct 71.50% -39.07% -30.40%
18-Oct 71.50% -39.15% -31.32%
19-Oct 91.25% -28.67% -25.97%
20-Oct 131.50% -29.22% -24.57%
23-Oct 116.00% -26.93% -24.88%
24-Oct 93.75% -32.65% -25.94%
25-Oct 79.38% -37.47% -30.06%
26-Oct 89.00% -33.63% -29.14%
27-Oct 91.75% -35.55% -29.00%
30-Oct 92.25% -33.91% -30.89%
31-Oct 91.75% -30.26% -27.03%
1-Nov 87.00% -32.88% -27.81%
2-Nov 77.50% -31.12% -25.74%
3-Nov 78.00% -30.37% -25.25%
6-Nov 75.75% -29.89% -26.02%
7-Nov 55.50% -32.73% -26.03%
8-Nov 55.00% -37.50% -30.01%
9-Nov 42.75% -37.14% -30.69%
10-Nov 21.50% -41.32% -34.40%
13-Nov 24.25% -38.78% -35.75%
14-Nov 24.75% -35.28% -32.04%
15-Nov 26.75% -32.78% -31.45%
16-Nov 20.25% -36.54% -34.34%
17-Nov 16.00% -36.87% -34.44%
20-Nov 1.00% -37.76% -37.73%
21-Nov -16.00% -40.71% -37.82%
22-Nov -10.50% -41.70% -40.33%
24-Nov -2.13% -36.57% -37.10%
27-Nov 4.25% -40.95% -37.62%
28-Nov -1.25% -45.74% -40.77%
29-Nov 6.56% -45.81% -41.38%
30-Nov -7.94% -49.52% -43.74%
1-Dec 4.00% -49.39% -42.71%
4-Dec -0.50% -48.15% -43.35%
5-Dec -0.50% -42.90% -37.42%
6-Dec 16.00% -45.46% -39.44%
7-Dec -8.75% -46.46% -40.39%
8-Dec -2.00% -39.99% -36.82%
11-Dec 4.50% -35.81% -34.70%
12-Dec 2.50% -39.81% -36.51%
13-Dec 0.75% -43.71% -38.87%
14-Dec -7.00% -44.29% -40.91%
15-Dec -12.50% -45.59% -42.54%
18-Dec -11.50% -45.27% -43.16%
19-Dec -3.75% -45.76% -45.61%
20-Dec -8.00% -49.27% -49.48%
21-Dec -23.75% -49.67% -49.32%
22-Dec -14.75% -44.80% -45.49%
26-Dec -16.00% -45.58% -46.00%
27-Dec -4.00% -43.25% -45.01%
28-Dec -9.50% -43.29% -44.61%
29-Dec -8.25% -45.79% -46.50%
16
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND DIRECTORS AND OFFICERS
The following table sets forth information as of February 28, 2001 with respect
to shares of each class of Common Stock beneficially owned by (i) each person or
group that is known to the Company to be the beneficial owner of more than 5% of
each class of outstanding Common Stock, (ii) each director and named executive
officer of the Company and (iii) all directors and executive officers of the
Company as a group. Unless otherwise specified, all shares are directly held. In
general, each share of Class A Common Stock is convertible into one share of
Class B Common Stock, and each share of Class B Common Stock is convertible into
one share of Class A Common Stock. This table does not include shares of the
Company's Class A Common Stock issuable upon conversion of the warrants issued
in connection with the 13.5% Subordinated Holding PIK Note.
Unless otherwise indicated, the address of each person owning more than 5% of
the Company's outstanding shares is c/o Intersil Holding Corporation, 7585
Irvine Center Drive, Suite 100, Irvine CA 92618.
Class A Common Stock (1) Class B Common Stock (2) Combined
------------------------ ------------------------ ---------------------------
Shares Shares Shares
Owned Percent (3) Owned Percent (3) Owned Percent (4)
----- ----------- ----- ----------- ----- -----------
Sterling Holding 4,129,821 6.06% 37,206,996 100% 41,336,817 39.25%
Company, LLC (5)
Harris Corporation (6) 3,424,390 5.03% -- -- 3,424,390 3.25%
1025 W. Nasa Blvd.
Melbourne, FL 32919
Gregory L. Williams (7) 1,819,089 2.67% -- -- 1,819,089 1.73%
Daniel J. Heneghan (8) 347,452 * -- -- 347,452 *
Larry W. Sims (9) 496,504 * -- -- 496,504 *
W. Russell Morcom (10) 500,887 * -- -- 500,887 *
Lawrence J. Ciaccia (11) 322,239 * -- -- 322,239 *
Karl McCalley (12) 240,826 * -- -- 240,826 *
Ray D. Odom (13) 313,968 * -- -- 313,968 *
Julie B. Forbes (14) 241,611 * -- -- 241,611 *
Rick Furtney (15) 122,162 * -- -- 122,162 *
Stephen M. Moran (15) 38,001 * -- -- 38,001 *
Glenn E. Boyd (16) 10,054 * -- -- 10,054 *
James A. Urry (17) 39,524 * -- -- 39,524 *
Gary E. Gist (18) 49,674 * -- -- 49,674 *
Robert W. Conn (19) 15,000 * -- -- 15,000 *
Jan Peeters (19) 15,000 * -- -- 18,034 *
Robert N. Pokelwaldt (19) 15,000 * -- -- 15,000 *
All directors and 4,552,559 6.69% -- -- 4,552,559 4.32%
executive officers as
a group (16 persons)
The Williams Gift Trust #1 53,334 * -- -- 53,334 *
U/A DTD 1/28/00
17
Class A Common Stock (1) Class B Common Stock (2) Combined
------------------------ ------------------------ ---------------------------
Shares Shares Shares
Owned Percent (3) Owned Percent (3) Owned Percent (4)
----- ----------- ----- ----------- ----- -----------
The Williams Gift Trust #2 21,334 * -- -- 21,334 *
U/A DTD 1/28/00
The Williams Gift Trust #3 53,334 * -- -- 53,334
U/A DTD 1/28/00
W. Russell Morcom 56,667 * -- -- 56,667 *
Irrevocable Trust
dated 12/23/99 FBO A
Family Member
W. Russell Morcom 56,667 * -- -- 56,667 *
Irrevocable Trust
dated 12/23/99 FBO a
Family Member
Phillip McCalley 19,272 * -- -- 19,272 *
Cinsy McCalley Krehbiel 63,816 * -- -- 63,816 *
Irrevocable Trust U/T/D 12,668 * -- -- 12,668 *
12/29/99 for the
benefit of a family
member of Mr. Odom
Irrevocable Trust U/T/D 12,668 * -- -- 12,668 *
12/29/99 for the
benefit of a family
member of Mr. Odom
Lauren E. Gist 16,779 * -- -- 16,779 *
Ryan C. Gist 16,779 * -- -- 16,779 *
- ---------
* Represents less than 1%
(1) Does not include shares of Class A Common Stock issuable upon conversion of
Class B Common Stock. A holder of Class B Common Stock may convert any or
all of his shares into an equal number of shares of Class A Common Stock,
provided that such conversion would be permitted only to the extent that
the holder of shares to be converted would be permitted under applicable
law to hold the total number of shares of Class A Common Stock which would
be held after giving effect to the conversion.
(2) Does not include shares of Class B Common Stock issuable upon conversion of
Class A Common Stock. A holder of Class A Common Stock may convert any or
all of his shares into an equal number of shares of Class B Common Stock.
(3) Percentages are derived using the number of shares of Class A or Class B
Common Stock and common stock outstanding as of February 28, 2001.
(4) Percentages are derived using the total number of shares of Class A and
Class B Common Stock outstanding as of February 28, 2001.
(5) Citicorp Venture Capital Ltd. owns an interest in Sterling and could have
the right to acquire up to 35,075,292 shares of Class A or Class B Common
Stock. CCT Partners VI, L.P., a partnership and an affiliate of Citicorp
Venture Capital Ltd., owns an interest in Sterling and could have the right
to acquire up to 6,261,525 shares of Class A or Class B Common Stock.
18
(6) The shares reported by Harris Corporation ("Harris") are owned by Manatee
Investment Corporation, a wholly owned subsidiary of Harris. Harris may be
deemed to beneficially own these shares.
(7) Includes 1,753,149 shares owned by Gregory L. Williams and Linda M.
Williams. Does not include 53,334 shares owned by the Williams Gift Trust
#1 U/A DTD 1/28/00, 21,334 shares owned by the Williams Gift Trust #2 U/A
DTD 1/28/00 and 53,334 shared owned by the Williams Gift Trust #3 U/A DTD
1/28/01 for which Mr. Williams disclaims beneficial ownership. Includes
21,798 shares owned by DLJSC, as Trustee for Gregory L. Williams IRA
Account. Includes currently exercisable options to purchase 43,142 shares
of our Class A Common Stock.
(8) Includes 330,756 shares owned by Daniel J. Heneghan and Barbara Heneghan.
Includes currently exercisable options to purchase 15,696 shares of Class A
Common Stock.
(9) Includes 379,294 shares owned by Larry W. Sims and Elizabeth Sims, 100,000
shares owned by Lesgrat No. 00-1, a trust holding shares on behalf of its
beneficial owners. Includes currently exercisable options to purchase
17,210 shares of Class A Common Stock.
(10) Includes 483,677 shares owned by W. Russell Morcom Revocable Trust. Does
not include 56,667 shares owned by W. Russell Morcom Irrevocable Trust FBO
a family member dated 12/23/99 and 56,667 shares owned by W. Russell Morcom
Irrevocable Trust FBO a family member dated 12/23/99 for which Mr. Morcom
disclaims beneficial ownership. Includes currently exercisable options to
purchase 17,210 shares of Class A Common Stock.
(11) Includes 238,570 shares owned by Lawrence J. Ciaccia and Marcia R. Ciaccia,
66,668 shares owned by the Lawrence J. Ciaccia and Marcia R. Ciaccia Trust
dated 1/20/00 and 3,334 shares owned by Joseph Ciaccia. Includes currently
exercisable options to purchase 12,667 shares of Class A Common Stock.
(12) Does not include 19,272 shares owned by Phillip McCalley or 63,816 shares
owned by Cinsy McCalley Krehbiel, of which Karl McCalley disclaims
beneficial ownership. Includes currently exercisable options to purchase
4,667 shares of Class A Common Stock.
(13) Does not include 12,668 shares owned by an Irrevocable Trust U/T/D 12/29/99
for the benefit of a family member and 12,668 shares owned by an
Irrevocable Trust U/T/D 12/29/99 for the benefit of a family member for
which Mr. Odom disclaims beneficial ownership. Includes currently
exercisable options to purchase 13,029 shares of Class A Common Stock.
(14) Includes 105,101 shares owned by the Peter K. Forbes Trust D/T/D 3/23/00,
105,102 shares owned by the Julie B. Forbes Trust D/T/D/ 3/23/00, 8,656
shares owned by the Peter K. Forbes and Julie B. Forbes Trust dated 1/20/00
FBO a family member and 8,656 shares owned by the Peter K. Forbes and Julie
B. Forbes Trust dated 1/20/00 FBO a family member. Includes currently
exercisable options to purchase 13,390 shares of Class A Common Stock.
(15) Includes currently exercisable options to purchase 4,667 shares of Class A
Common Stock.
(16) Includes currently exercisable options to purchase 6,300 shares of Class A
Common Stock.
(17) James A. Urry, a director of Intersil Holding Company, is affiliated with
Sterling in the capacities described under "Election of directors --
Nominees" and footnote 5 above. Mr.
19
Urry disclaims beneficial ownership of all shares held by Sterling, which
he may be deemed to beneficially own as a result of his affiliation with
Sterling, except for those shares reported for Mr. Urry. Includes currently
exercisable options to purchase 7,500 shares of Class A Common Stock.
(18) Includes 37,825 shares owned by Gary E. Gist and Kristin Gist. Does not
include 16,779 shares owned by Lauren E. Gist and 16,779 shares owned by
Ryan C. Gist for which Mr. Gist disclaims beneficial ownership. Includes
currently exercisable options to purchase 7,500 shares of Class A Common
Stock.
(19) Includes currently exercisable options to purchase 7,500 shares of Class A
Common Stock.
- --------------------------------------------------------------------------------
EXECUTIVE OFFICERS AND KEY EMPLOYEES
The executive officers and key employees of the Company are as follows:
Gregory L. Williams, President, Chief Executive Officer, Director. Mr. Williams
is described above as a nominee for director.
Daniel J. Heneghan, Vice President, Chief Financial Officer and Assistant
Secretary. Mr. Heneghan is the Company's Vice President, Chief Financial Officer
and Assistant Secretary. From 1996 to August 1999, Mr. Heneghan was Vice
President and Controller of the semiconductor business at Harris Corporation
("Harris"). From 1994 to 1996, Mr. Heneghan was Vice President of Digital
Products of the semiconductor business at Harris. Mr. Heneghan also served at
various times as Division Controller of the semiconductor business at Harris,
Director of Planning at Harris, Director of Finance at Harris and Senior
Financial Analyst with Royal Crown Cola. Age: 45
Larry Sims, Vice President, General Manager, Communications IC's. Mr. Sims is
the Company's Vice President and General Manager, Communications IC's. From
August 1999 to December 2000, Mr. Sims was our Vice President of Marketing and
Sales. From 1998 to August 1999, Mr. Sims was Vice President, Sales of the
semiconductor business at Harris. From 1979 to 1998, Mr. Sims served in various
sales management positions at Motorola Semiconductor. Age: 43
Lawrence J. Ciaccia, Vice President, General Manager, PRISM(R)Wireless. Mr.
Ciaccia is the Company's Vice President and General Manager, PRISM(R)Wireless.
From February 1998 to December 1999, Mr. Ciaccia was Vice President and Director
of Engineering for the PRISM(R)Wireless Products business at Harris. From 1997
to 1998, Mr. Ciaccia was Director of Strategic and Product Marketing for the
Multimedia Products business at Harris. Mr. Ciaccia also served at various times
from 1993 to 1997 as Director of Engineering for several different semiconductor
businesses at Harris. Age: 42
Rick Furtney, Vice President, General Manager, Power Management. Mr. Furtney is
the Company's Vice President and General Manager, Power Management. From 1999
until July
20
2000, Mr. Furtney was Vice President for Power Management products.
From 1997 until 1999 Mr. Furtney was Director of Marketing for Harris. Since
1985, Mr. Furtney has held numerous management positions in engineering and
marketing at Harris. Age: 41
Glen Boyd, Vice President, Marketing and Sales. Mr. Boyd is the Company's Vice
President, Marketing and Sales. From 2000 until January 2001, Mr. Boyd was the
Company's Vice President, Wireless Segment Sales. From 1996 until 2000, Mr. Boyd
served as a Director of Sales in Western U.S. and then of Wireless Segment Sales
for Harris. From 1991 until 1996, Mr. Boyd served as a Sales Manager for Harris.
Age: 55
Julie Forbes, Vice President, Human Resources. Ms. Forbes joined the Company as
Vice President, Human Resources in August 1999. Prior to joining the Company,
Ms. Forbes was the Vice President and Director of Human Resources for the
Satellite Communications Group of Motorola from 1998 to 1999. From 1992 until
1998, Ms. Forbes served in various other Human Resources positions in the
Semiconductor Products Sector of Motorola. Age: 43
Stephen M. Moran, Vice President, General Counsel and Secretary. Mr. Moran
joined the Company as Vice President, General Counsel and Secretary in January
of 2000. Prior to joining us, Mr. Moran served with Toshiba America, Inc. from
September 1996 until January 2000 and served as the Vice President and General
Counsel for Toshiba America Electronic Components, Inc. (Toshiba America's
Semiconductor Company) from January 1998 to January 2000. From March 1992 until
September 1996, Mr. Moran was the General Counsel of ITT Cannon, Inc., an ITT
Industries corporation. Age: 43
Keith Prettyjohns, Vice President, Broadband Wireless Access. Dr. Prettyjohns is
Vice President of Intersil's Broadband Wireless Access business, sharing general
management responsibility with Ken Schultz. Together they are responsible for
all aspects of Intersil's emerging IC business in broadband point-to-point
digital radios, fixed broadband wireless access networks and software-defined
radios for cellular base stations. Dr. Prettyjohns joined the company in October
2000 as a result of Intersil's acquisition of SiCOM Inc., where he held general
management responsibilities. He had previously been actively involved in
strategic business development and planning for SiCOM, helping the company
through the development of integrated chip set solutions for fixed broadband
wireless markets. During his career, Dr. Prettyjohns has held numerous
marketing, sales and engineering positions, primarily in small, entrepreneurial
high-growth companies. Prior to joining SiCOM, he held senior business
development, marketing and sales positions at Photometrics, Ltd., a digital
imaging systems manufacturer, now a division of Roper Industries. Prior to
Photometrics, he was a co-founder of Wyko Corporation, an optical test
instrumentation manufacturer focused on serving the magnetic media and
semiconductor industries. Age: 44
Ken Schultz, Vice President, Broadband Wireless Access. Mr. Schultz is Vice
President of Intersil's Broadband Wireless Access business, sharing general
management responsibility with Keith Prettyjohns. Together they are responsible
for all aspects of Intersil's emerging IC business in broadband point-to-point
digital radios, fixed broadband wireless access networks and software-defined
radios for cellular base stations. Mr. Schultz joined the company in October
2000 as a
21
result of Intersil's acquisition of SiCOM Inc. At SiCOM, he had
general management responsibility and was instrumental in focusing the company
on the development of wireless communication IC products for fixed wireless
applications. Prior to joining SiCOM, he was Vice President & General Manager,
Broadband Wireless Access at ADC Telecommunications, a leading supplier of
telecommunications equipment for broadband networks. Prior to ADC
Telecommunications, he held senior level positions in product line marketing and
sales at Information Transmission Systems, a privately held developer of
wireless transmission products. He was Vice President of Sales when the company
was acquired by ADC Telecommunications in 1995. Age: 38
Karl McCalley, Vice President, Information Technology. Mr. McCalley is the
Company's Vice President, Information Technology. From 1990 to 1999, Mr.
McCalley was Vice President, Systems for Harris Semiconductor. Prior to this,
Mr. McCalley was Director of Product Development for Telaction, a subsidiary of
JCPenney and Director of Software Engineering for Motorola. Age: 61
Chris W. Henningsen, Vice President, Marketing. Mr. Henningsen is the Company's
Vice President, Marketing. From 1998 until 2001 Mr. Henningsen was V.P. and
Director of Marketing for PRISM Wireless Products. From 1996 until 1998, Mr.
Henningsen was the Director of Marketing for Wireless Communications for Harris.
Since 1990 Mr. Henningsen held numerous management positions in marketing for
Harris. Mr. Henningsen served in various sales and marketing management
positions at Analog Devices, Setra Systems, and Applied Measurements. Age 44
- --------------------------------------------------------------------------------
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The rules of the Securities and Exchange Commission require the Company to
disclose late filings of stock transaction reports by its executive officers and
Directors. Based solely on a review of reports filed by the Company on these
individuals' behalf and written representations from them that no other reports
were required, all Section 16(a) filing requirements have been met during the
six-month transition period ended December 29, 2000 except that Julie Forbes,
Stephen M. Moran, W. Russell Morcom, Larry Sims and James A. Urry each filed a
Form 3 late with respect to fiscal year 2000 and Daniel Heneghan and Gregory L.
Williams each filed Forms 3 and 4 late with respect to fiscal year 2000.
22
EMPLOYMENT AGREEMENT
Intersil Holding Corporation and Intersil Corporation entered into an employment
agreement with Mr. Williams for him to serve as the Company's Chief Executive
Officer and a member of their Board of Directors. His employment agreement
provides for an annual base salary of $425,000, subject to increases and annual
performance bonuses at the discretion of the Board of Directors. The agreement
also provides for Mr. Williams to receive the Company's standard benefits. The
term of the agreement is 60 months from August 13, 1999, subject to automatic
renewal for successive one year terms, unless either the Company or Mr. Williams
gives prior notice of non-renewal. Mr. Williams is subject to a non-competition
covenant during the term of his agreement and for a period of one year following
termination or expiration of the agreement.
- --------------------------------------------------------------------------------
STOCKHOLDERS AGREEMENT
The Board of Directors currently consists of up to seven directors, determined
as follows: the chief executive officer who is currently Gregory L. Williams,
one individual designated by Sterling Holding Company, LLC ("Sterling") who is
currently James A. Urry, up to four independent directors designated by Sterling
(to the extent permitted by applicable law as determined in Sterling's sole
discretion) who are currently Robert W. Conn, Gary E. Gist, Jan Peeters and
Robert N. Pokelwaldt and, in the event the Board includes four independent
directors designated by Sterling, one additional individual designated by
Sterling which position is currently vacant. The holders of a majority of the
outstanding shares of Class A Common Stock (including any shares of Class A
Common Stock held by Sterling) have the right to veto the election of any
independent directors designated by Sterling. Under the Stockholders' Agreement,
each of the companies' shareholders prior to the initial public offering (owning
in the aggregate as of February 28, 2001 about 13,230,000 shares, or about 19%
of the outstanding Class A Common Stock, our only class of voting stock, and
37,206,996 shares, or 100%, of Class B Common Stock which are convertible into
shares of Class A Common Stock on a one-to-one basis) agrees to take all action
necessary (including voting his, her or its shares, calling special meetings and
executing and delivering written consents) to ensure that the Board of Directors
will be composed at all times as described in this paragraph.
23
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Citicorp Mezzanine Partners, L.P. contributed $30.0 million in cash to the
Company in exchange for the 13.5% Subordinated PIK Note due 2010 and warrants to
purchase 3,703,707 shares of the Company's Class A Common Stock. The 13.5%
Subordinated PIK Note due 2010 was repaid in full with the proceeds of the
initial public offering and, as a result of early repayment, the number of
shares subject to such warrants was reduced to 2,222,224 shares. The Company
contributed the $30.0 million from Citicorp Mezzanine Partners, L.P. to Intersil
Corporation as a capital contribution. The general partner of Citicorp Mezzanine
Partners, L.P. is an affiliate of Citicorp Venture Capital Ltd. Citicorp Venture
Capital Ltd. owns an interest in Sterling, one of the Company's principal
shareholders.
Sterling Holding Company, LLC, Harris Corporation and certain members of the
Company's senior management entered into a Stockholders' Agreement containing
certain agreements among the shareholders regarding the Company's capital stock
and corporate governance. The Company exercised its option under the
Stockholders' Agreement to repurchase from Sterling Holding Company, LLC a total
of 1,833,333 shares of Class A Common Stock for an aggregate purchase price of
$137,500 to reissue to the Company's employees.
In June 2000, Intersil Holding Corporation sold its assembly and test facilities
in Malaysia along with related intellectual property to ChipPAC in exchange for
$52.5 million in cash and preferred stock of ChipPAC that has an aggregate
liquidation preference of $17.5 million. The Company also assigned to ChipPAC
patents, copyrights and technical information used exclusively in or associated
exclusively with the assembly and test facilities in Malaysia and granted
ChipPAC a worldwide, nonexclusive, royalty-free license under other of our
patents, copyrights and technical information that is also used in or related to
the operation of the assembly and test facilities in Malaysia. Any intellectual
property rights in the bonding diagrams, test programs, mask works and test
boards uniquely related to the Company's products for which ChipPAC will provide
packaging and test services under the supply agreement are licensed to ChipPAC
only for use in providing those services. The Company also entered into a long
term joint services agreement with ChipPAC in connection with the sale under
which each party is required to assist the other in a smooth transition of each
party's operations following the sale.
Under the Company's supply agreement with ChipPAC, the Company has agreed to
continue to use the Malaysian facility to provide 100% (until June 30, 2003),
90% (from July 1, 2003 to June 30, 2004) and 80% (from July 1, 2004 to June 30,
2005) of the Company's semiconductor package configuration assembly and test
requirements for all products assembled and tested at the Malaysian facility on
the date of the supply agreement and any new or additional products we may
develop after that date. In addition, ChipPAC will ensure that we are allocated
100% of the utilized capacity that was in place on the date of the supply
agreement. One of the principal shareholders of ChipPAC is an affiliate of
Sterling, our principal shareholder. The terms of the agreements listed above
were the result of arms-length negotiations and in the Company's opinion are no
less favorable to the Company than those that could be obtained from non-
affiliated parties.
24
AUDIT FEES
The aggregate fees billed by Ernst & Young LLP for professional services
rendered for the audit of the Company's annual financial statements for the
transition period ended December 29, 2000 and the reviews of the financial
statements included in the Company's Forms 10-Q for that year were $225,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
No professional services were rendered or fees billed by Ernst & Young LLP for
financial information systems design and implementation during the transition
period.
ALL OTHER FEES
The aggregate fees billed by Ernst & Young LLP for professional services
rendered to the Company, other than audit fees, for the transition period ended
December 29, 2000 were $956,000, including audit related services of $681,000
and nonaudit services of $275,000. Audit related services generally include fees
for business acquisitions and divestitures, accounting consultations and SEC
registration statements.
- --------------------------------------------------------------------------------
OTHER BUSINESS
The Company is not aware of any other matters that will be presented for
shareholder action at the Annual Meeting. If other matters are properly
introduced, the person named in the accompanying proxy will vote the shares they
represent in accordance with their judgment.
By Order of the Board of Directors
Stephen M. Moran
Vice President, General Counsel and Secretary
April 27, 2001
25
EXHIBIT A
INTERSIL HOLDING CORPORATION
AUDIT COMMITTEE CHARTER
PURPOSE
The primary function of the Intersil Holding Corporation (the
"Corporation") Audit Committee is to assist the Board of Directors in
fulfilling its oversight responsibilities by reviewing the following: the
financial reports and other financial information provided by the
Corporation to its shareholders, the Securities & Exchange Commission
("SEC") and others; the Corporation's systems of internal controls
regarding finance, accounting, legal compliance and business conduct that
Management and the Board have established; and the Corporation's auditing,
accounting and financial processes generally. Consistent with this
function, the Audit Committee should encourage continuous improvement of
and adherence to these processes and systems. The Audit Committee's primary
duties and responsibilities are to:
. Serve as an independent and objective party to monitor the
Corporation's financial reporting process and internal control
systems;
. Review/1/ and appraise the audit efforts of the Corporation's
independent accountants; and
. Provide an open avenue of communication among the independent
accountants, financial and senior Management and the Board of
Directors.
________________________
/1/ 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 accountants. The members of the
Audit Committee are not independent accountants, and the term "review" as
used in this Audit Committee Charter is not intended to have this meaning.
Consistent with footnote 47 of SEC Release No. 34-42266, any use in this
Audit Committee Charter of the term "review" should not be interpreted to
suggest that the Committee members can or should follow the procedures
required of auditors performing reviews of interim financial statements.
A-1
In the exercise of its oversight responsibilities, it is not the duty of
the Committee to plan or conduct audits or to determine that the
Corporation's financial statements fairly present the Corporation's
financial position and results of operation and are in accordance with
generally accepted accounting principles. Instead, such duties remain the
responsibility of Management and the outside auditor. Nothing contained in
this Charter is intended to alter or impair the operation of the "business
judgment rule" as interpreted by the courts under the Delaware General
Corporation Law. Further, nothing contained in this Charter is intended to
alter or impair the right of the members of the Committee under the
Delaware General Corporation Law to rely, in discharging their
responsibilities, on the records of the Corporation and on other
information presented to the Committee, Board or the Corporation by its
officers or employees or by outside experts.
COMPOSITION OF THE AUDIT COMMITTEE
The Committee shall consist of three members of the Board. The members
shall be appointed by action of the Board and shall serve at the discretion
of the Board. Each Committee member shall satisfy the "independence"
requirements of the NASDAQ Stock Market or other appropriate governing
body, unless the Board otherwise determines. Each Committee member must be
able to read and understand fundamental financial statements, including a
company's balance sheet, income statement and cash flow statement or must
be able to do so within a reasonable period of time after his or her
appointment to the Committee.
Determination of the true, actual and effective independence of any Audit
Committee member that has or had some relationship with the Corporation,
will be made by the Board of Directors with weight given to both prudent
principles and "appearances."
The members of the Audit Committee shall be elected by the Board and shall
hold such position until the next annual meeting or until their successors
shall be duly elected and qualified. The Chairman of the Audit Committee
shall be selected by the Board.
MEETINGS
The Committee shall meet at least four times annually, or more frequently
as circumstances dictate. As part of its job to foster open communication,
the Committee should meet at least twice annually with Management and the
independent accountants in separate executive sessions to discuss any
matters that the Committee believes should be discussed privately. In
addition, the Committee, or at least its Chair, should meet with the
independent accountants and Management quarterly in advance of any release
to review the Corporation's financials consistent with its responsibilities
and duties.
A-2
The Committee shall report to the Board of Directors at each regularly
scheduled Board meeting on significant results of its activities.
The Committee shall have the authority to establish its own rules and
procedures consistent with the bylaws of the Corporation for notice and
conduct of its meetings, should the Committee, in its discretion, deem it
desirable to do so.
The Committee may, in its discretion, utilize the services of the
Corporation's regular corporate legal counsel with respect to legal matters
or, at its discretion, retain other legal counsel if it determines that
such counsel is necessary or appropriate under the circumstances.
RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties, the Audit Committee shall:
Documents/Reports Review
. Review the Corporation's annual and interim financial statements
and any reports or other financial information submitted to the
shareholders, the SEC, and others, including any certification,
report, opinion or review rendered by the independent
accountants.
. Review the regular internal reports to Management prepared by the
internal auditors and Management's response.
. Review with Management and the independent accountants the
Current Reports on Form 10-Q, the Annual Reports on Form 10-K,
and any related public disclosure prior to its filing or prior to
the release of earnings. The Chair of the Committee may represent
the entire Committee for purposes of this review.
Independent Accountants
. After consultation with Management, recommend to the Board of
Directors the selection of the independent accountants,
considering independence and effectiveness, and approve the fees
and other compensation to be paid to the independent accountants.
. Periodically, the Committee should review and discuss with the
independent accountants all significant relationships such
accountants have with the Corporation, which might affect their
independence. In connection with this review, the independent
auditors shall provide the Committee with a written statement
delineating all relationships between the auditors and the
Corporation.
A-3
. Review the performance of the independent accountants with both
Management and the independent accountants.
. Subject to the overall direction of the Audit Committee, the
internal audit function will be managed on a day-to-day
operational basis by the Chief Financial Officer.
. Periodically meet with the independent accountants separately and
privately to hear their views on the Corporation's internal
controls and the qualitative aspects of the Corporation's
financial reporting, including the quality and consistency of
both accounting policies and the underlying judgments.
Financial Reporting Processes
. Review with financial Management and the independent accountants
the quality and consistency, not just the acceptability, of the
judgments and appropriateness of the accounting principles and
financial disclosure practices used by the Corporation. This
discussion shall cover the degree of aggressiveness or
conservatism of both the accounting principles employed and the
underlying judgments.
. Approve any significant changes to the Corporation's auditing and
accounting principles and practices after considering the advice
of the independent accountants and Management.
. Focus on the reasonableness of control processes for identifying
and managing key business, financial and regulatory reporting
risks.
Process Improvement
. Following the completion of the annual audit, review separately
with Management and the independent accountants any significant
difficulties encountered during the course of the audit,
including any restrictions on the scope of work or access to
required information.
. Periodically review processes and policies for communicating with
investors and analysts.
. Review any significant disagreement among Management and the
independent accountants in connection with the preparation of the
financial statements.
A-4
. Review with the independent accountants and Management the extent
to which changes or improvements in financial or accounting
practices, as approved by the Audit Committee, have been
implemented. (This review should be conducted at an appropriate
time subsequent to implementation of changes or improvements, as
decided by the Committee.)
Business Conduct and Legal Compliance
. Approve the Corporation's Code of Business Conduct and review
Management's processes for communicating and enforcing this Code.
. Review Management's monitoring of the Corporation's compliance
with the organization's Code of Business Conduct, and ensure that
Management has the proper review system in place to ensure that
the Corporation's financial statements, reports, and other
financial information are disseminated to governmental
organizations and the public to satisfy legal requirements.
. Review, with the Corporation's counsel, any legal matter that
could have a significant impact on the Corporation's financial
statements.
Other Responsibilities
. Review and reassess the Committee's charter at least annually and
submit any recommended changes to the Board for its
consideration.
. Provide the report for inclusion in the Corporation's Annual
Proxy Statement that is required by Item 306 of Regulation S-K of
the Securities and Exchange Commission.
. Through its Chair, report periodically, as deemed necessary or
desirable by the Committee, but at least annually, to the full
Board regarding the Committee's actions and recommendations, if
any.
. Perform any other activities consistent with this Charter, the
Corporation's By-laws and governing law, as the Committee or the
Board deems necessary or appropriate.
A-5
EXHIBIT B
SUMMARY OF
1999 EQUITY COMPENSATION PLAN
PURPOSE
The Board of Directors adopted the Plan to enable key employees, directors and
consultants of the Company and its subsidiaries to participate in the equity
ownership of the Company through awards of options, restricted stock, stock
appreciation rights and phantom shares under the Plan. The purpose of the Plan
is to:
. align the interests of the eligible individuals with the interests of the
Company's shareholders;
. provide incentives for eligible individuals to exert maximum efforts for
the success of the Company and its subsidiaries;
. attract and retain the best available talent; and
. reward key personnel for their part in increasing the value of the Company.
EFFECTIVE DATE AND TERMINATION
The Plan became effective on August 13, 1999 and shall remain in full force and
effect until the earlier of ten years from the date the Plan was adopted by the
Board of Directors or the date the committee terminates it. Termination of the
Plan will not affect the terms of the awards granted prior to the termination.
ADMINISTRATION
The committee, which consists of at least two directors who are not employees,
administers the Plan. The Board of Directors may from time to time remove
members of the committee and appoint new members. The committee has the power
to:
. construe and interpret the Plan;
. adopt regulations for carrying out the Plan and make changes in such
regulations as it shall from time to time, think advisable;
. select the employees, directors and consultants to whom awards under the
Plan will be granted;
. determine the type and amount of awards to be granted to eligible
individuals; and
. establish the terms and conditions of awards granted under the Plan.
B-1
ADJUSTMENTS UPON A CHANGE IN SHARES OR A CHANGE IN CONTROL
In the event of certain changes to the corporate structure of the Company
affecting its common stock, the committee will adjust the number and kind of
shares available under the Plan, and make adjustments to outstanding awards as
it determines appropriate. Such changes in the Company's common stock might
arise as the result of a reorganization, merger, consolidation, spin-off, stock
dividend, split-up, recapitalization, or other similar changes.
In the event the Company is merged into or acquired by another entity in a
transaction involving a change in control of the Company, the committee may, in
its sole discretion, make certain adjustments to outstanding awards.
AMENDMENT AND TERMINATION OF THE PLAN
The committee may amend, modify, suspend or terminate the Plan, provided they
obtain shareholder approval of any amendment as required by applicable laws or
regulations.
The committee may amend any outstanding award without a participant's consent,
provided the amendment does not adversely impact the participant.
LIMIT ON AWARDS UNDER THE PLAN
No employee may receive options covering more than 666,667 shares of Company
common stock in any calendar year under the Plan.
OPTIONS
An option is a grant by the Company of the right to purchase a specified number
of shares of common stock for a specified time period at a fixed rate. Options
granted under the Plan may be either incentive stock options or non-qualified
stock options. Incentive stock options are intended to meet the requirements of
Section 422 of the Internal Revenue Code. Unless an option is specifically
designated at the time of grant as an incentive stock option and qualifies as
such under Section 422 of the Internal Revenue Code, options granted under the
Plan will be non-qualified stock options.
The committee will establish the terms and conditions governing each option
granted under the Plan in an award agreement at the time the option is granted.
Such terms and conditions will be consistent with the terms of the Plan.
The exercise price of an incentive stock option will be at least equal to the
fair market value of a share of Company common stock on the date the option is
granted. If a grantee owns, directly or indirectly, shares constituting more
than 10% of the Company, the exercise price of an incentive stock option issued
to the grantee will be at least 110% of the fair market value of a share of
B-2
Company common stock on the date the option is granted. The exercise price of an
option shall be paid in cash or, with the committee's consent, in shares of
Company common stock.
The maximum term of a non-qualified stock option may not exceed ten years from
the date of grant of such option. The maximum term of an incentive stock option
may not exceed ten years from the date of grant, unless the grantee owns more
than 10% of the Company, in which case the term may not exceed five years from
the date of grant.
The committee shall address a grantee's ability to exercise an option after his
or her service with the Company ends in the award agreement for the option.
RESTRICTED STOCK
Restricted stock is stock that is subject to certain restrictions, including
forfeiture upon the occurrence of certain events. A recipient of a restricted
stock award will receive certificates for the shares when the award is granted.
Certificates for restricted stock shares have a description of the restrictions
as to the sale, transfer, assignment, or pledge of the stock during the
restriction period. The committee will establish the terms and conditions
governing each grant of restricted stock under the Plan in an award agreement at
the time the restricted stock is granted. Such terms and conditions will be
consistent with the terms of the Plan. Unless otherwise provided in a restricted
stock award agreement, a grantee will be entitled to vote shares of restricted
stock and receive dividends related to the shares. Unless otherwise determined
by the committee, shares of restricted stock which have not yet become vested
will be forfeited when a grantee's service with the Company ends.
PHANTOM SHARES
The award of a phantom share under the Plan gives a grantee the right to receive
payment of the fair market value of a share of common stock upon its exercise.
The committee will establish the terms and conditions of a phantom share award
in an award agreement at the time the ward is granted. Such terms and conditions
shall not be inconsistent with the terms of the Plan. The Committee shall
address a grantee's ability to exercise a phantom share award after his or her
service with the Company ends in the award agreement.
STOCK APPRECIATION RIGHTS
A stock appreciation right ("SAR") allows a recipient to receive, upon exercise
of the right, the increase in the fair market value of a specified number of
shares of common stock from the date of grant to the date of exercise. Payment
upon exercise of an SAR may be made in cash or common stock. An SAR will be
issued in conjunction with an option, and the exercise of an SAR will
automatically cancel the related option. Similarly, the exercise of a related
option will automatically cancel the related SAR. The committee shall address a
grantee's ability to exercise an SAR after his or her service with the Company
ends in the award agreement for the SAR.
B-3
The committee will establish the terms and conditions governing each SAR under
the Plan in an award agreement at the time the SAR is granted. Such terms and
conditions will be consistent with the terms of the Plan.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is a summary of certain federal income tax
considerations that may be relevant to a grantee as a result of awards they
receive under the Plan. The discussion is for general informational purposes
only and does not claim to address specific federal income tax considerations
that may apply to each grantee based on their particular circumstances, nor does
it address state or local income tax or other tax considerations that may be
relevant to them.
NON-QUALIFIED STOCK OPTIONS
A grantee will not have taxable income and the Company is not entitled to a
deduction upon the grant of a non-qualified stock option. Upon the exercise of a
non-qualified stock option, a grantee will have ordinary income equal to the
excess of the fair market value of the shares received over the exercise price
of the option, and, provided that certain requirements of the Internal Revenue
Code are met, the Company will be entitled to a corresponding deduction. A
grantee's tax basis in the shares of Company common stock received upon exercise
of a non-qualified stock option will be equal to the fair market value of such
shares on the exercise date.
If a grantee sells the shares of Company common stock received upon exercise of
a non-qualified stock option, the grantee will generally realize a short-term or
long-term capital gain or loss, depending upon whether the shares have been held
for more than one year. The amount of such gain or loss will be equal to the
difference between the amount received in connection with the sale of the
shares, and the grantee's tax basis in such shares.
INCENTIVE STOCK OPTIONS
A grantee will not have taxable income and the Company is not entitled to a
deduction when an incentive stock option is granted or exercised. Provided that
a grantee meets the applicable holding period requirements for the shares
received upon exercise of an incentive stock option (two years from the date of
grant and one year from the date of exercise), the gain or loss realized upon
the sale of the shares received upon exercise will be a long-term capital gain
or loss, and the Company will not be entitled to a deduction.
However, if a grantee disposes of the shares before meeting the applicable
holding period requirements, the grantee will have ordinary income at that time
equal to the excess of the amount received upon such sale (or, if less, the fair
market value of the shares at the time of exercise of the option) over the
exercise price of the option. The Company generally will be entitled to a
corresponding deduction. Any amount received upon a sale of shares before the
applicable holding requirements are met which is in excess of the fair market
value of the shares on the
B-4
exercise date of the incentive stock option will generally be treated as a
capital gain and will be treated as a long-term capital gain if the shares have
been held for more than one year.
RESTRICTED STOCK
A grantee ordinarily realizes no taxable income, and the Company is not entitled
to a tax deduction, when the Company grants a restricted stock award. However,
when the restrictions on restricted stock lapse, the grantee realizes taxable
ordinary income equal to the fair market value of the shares. If certain
conditions of the Internal Revenue Code are met, the Company will also be
entitled to a corresponding tax deduction. When the grantee sells the shares,
the grantee will realize short-term or long-term capital gain or loss, depending
upon whether the shares have been held for more than one year. The amount of the
gain or loss is the difference between the sale price of the shares and the fair
market value of the shares on the date that the grantee recognized taxable
ordinary income.
A grantee may make an election under Section 83(b) of the Internal Revenue Code
to include immediately the fair market value of the restricted stock on the date
of the award in the grantee's taxable income. Subject to certain requirements of
the Internal Revenue Code, the Company will be entitled to a corresponding tax
deduction at that time. If the 83(b) election is made, the grantee recognizes no
additional income or loss as a result of the lapse of the restrictions on the
restricted stock, and the Company will not be entitled to any additional tax
deductions.
STOCK APPRECIATION RIGHTS
A grantee recognizes no taxable income, and the Company is not entitled to a tax
deduction, when an SAR is granted. Upon exercising an SAR, a grantee will
realize ordinary taxable income equal to the difference between the fair market
value of the stock on the date of exercise and its fair market value on the date
of the grant, and, provided certain conditions of the Internal Revenue Code are
met, the Company will be entitled to a corresponding deduction.
PHANTOM SHARES
A grantee recognizes no taxable income, and the Company is not entitled to a tax
deduction, when a phantom share award is granted. When a grantee exercises a
phantom share award, the grantee will have ordinary income in an amount equal to
the cash or fair market value of the stock received, and, provided certain
conditions of the Internal Revenue Code are met, the Company will be entitled to
a corresponding deduction.
WITHHOLDING
Grantees will be responsible to make appropriate provision for all taxes
required to be withheld in connection with any awards, exercises and transfers
of shares of common stock pursuant to the Plan. This includes responsibility for
all applicable federal, state, local or foreign withholding
B-5
taxes. A grantee may, however, elect to have the Company retain a number of
shares whose value equals the tax withholding in the case of the payment of
awards in common stock, or the exercise of options or SARs.
B-6
INTERSIL HOLDING CORPORATION
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
MAY 23, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned holder of common stock of INTERSIL HOLDING CORPORATION,
a Delaware corporation, hereby appoints Stephen M. Moran, and in the
alternative, Daniel J. Heneghan, with full power to act alone and to designate
substitutes, the true and lawful attorneys and proxies of the undersigned for
and in the name and stead of the undersigned, to vote all shares of Class A
Common Stock of Intersil Holding Corporation which the undersigned would be
entitled to vote if personally present at the Annual Meeting of Shareholders to
be held at the Hyatt Regency Hotel, 17900 Jamboree Boulevard, Irvine, CA 92614,
on May 23, 2001 at 9:00 a.m., and at any and all adjournments and postponements
thereof, as follows:
SEE REVERSE SIDE (CONTINUED, AND TO BE MARKED, DATED AND SIGNED ON THE OTHER
SIDE) SEE REVERSE SIDE
Vote by Telephone Vote by Telephone
It's fast, convenient and immediate! It's fast, convenient and your vote is immediately
Call Toll-Free on a Touch-Tone Phone! confirmed and posted.
1-877-PRX-VOTE (1-877-779-8683).
Follow these four easy steps: Follow these four easy steps:
1. Read the accompanying Proxy 1. Read the accompanying Proxy
Statement/Prospectus and Proxy Card. Statement/Prospectus and Proxy Card.
2. Call the toll-free number 2. Go to the Website
1-877-PRX-VOTE (1-877-779-8683). http://www.eproxyvote.com/isil
3. Enter your 14-digit Voter Control Number 3. Enter your 14-digit Voter Control Number
located on your Proxy Card above your name. located on your Proxy Card above your name.
4. Follow the recorded instructions. 4. Follow the instructions provided.
Your vote is important! Your vote is important!
Call 1-877-PRX-VOTE anytime! Go to http://www.eproxyvote.com/isil anytime!
Do not return your Proxy Card if you are voting by Telephone or Internet
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEM 1, ITEM 2, ITEM 3 AND ITEM
4.
Please mark your votes as in this example. [ X ]
ITEM 1. ELECTION OF DIRECTORS VOTE FOR ALL* WITHHELD FOR ALL
[ ] [ ]
Nominees: James. A. Urry
Gary E. Gist
Dr. Robert W. Conn
Jan Peeters
Robert N. Pokelwaldt
Gregory L. Williams
________________________________________________________________________________
* Withhold votes from the nominees that I/we have written on the above line, or
cumulate votes as I/we have instructed on the above line.
ITEM 2. RATIFICATION OF INDEPENDENT ACCOUNTANTS FOR AGAINST
[ ] [ ]
ITEM 3. CHANGING OF THE NAME OF INTERSIL HOLDING CORPORATION TO INTERSIL
CORPORATION FOR AGAINST
[ ] [ ]
ITEM 4. INCREASE IN SHARES AVAILABLE UNDER THE 1999 EQUITY COMPENSATION PLAN
FOR AGAINST
[ ] [ ]
OTHER MATTERS
In their discretion, the proxies are authorized to vote upon such other matters
as may properly come before the meeting or at any adjournments thereof.
THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED
SHAREHOLDER. IF NO DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR ITEM 1,
ITEM 2, ITEM 3 AND ITEM 4 AND WILL GRANT DISCRETIONARY AUTHORITY IN OTHER
MATTERS.
NOTE: PLEASE DATE THIS PROXY, SIGN YOUR NAME EXACTLY AS IT APPEARS HEREON, AND
RETURN PROMPTLY USING THE ENCLOSED POSTAGE PAID ENVELOPE. JOINT OWNERS SHOULD
EACH SIGN. WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR
GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
Signature(s) _________________________________________ Date _____________