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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
| Filed by the Registrant x | |
| Filed by a Party other than the Registrant o | |
| Check the appropriate box: |
| o Preliminary Proxy Statement | |
| o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
| þ Definitive Proxy Statement | |
| o Definitive Additional Materials | |
| o Soliciting Material Pursuant to §240.14a-12 |
LSI LOGIC 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):
| þ No fee required. | |
| o 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: |
| o Fee paid previously with preliminary materials. |
| o Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
| 1) Amount Previously Paid: |
| 2) Form, Schedule or Registration Statement No.: |
| 3) Filing Party: |
| 4) Date Filed: |
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LSI Logic Corporation
Notice of Annual Meeting of Stockholders
May 12, 2005
To the Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders
of LSI Logic Corporation (the “Company”), a Delaware
corporation, will be held on Thursday, May 12, 2005, at
9:00 a.m. local time, at the Fairmont San Jose located
at 170 South Market Street, San Jose, CA 95113, for
the following purposes:
| 1. To elect eight directors to serve for the ensuing year and until their successors are elected. | |
| 2. To ratify the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm of the Company for its 2005 fiscal year. | |
| 3. To transact such other business as may properly come before the meeting and any adjournment or postponement thereof. |
These items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on
March 18, 2005, are entitled to notice of and to vote at
the meeting.
All stockholders are cordially invited to attend the meeting in
person. However, to assure your representation at the meeting,
you are urged to mark, date, sign and return the enclosed proxy
card as promptly as possible in the postage-prepaid envelope
enclosed for that purpose, or you may vote by Internet or
telephone. Any stockholder attending the meeting may vote in
person even if he or she returned a proxy card.
| Sincerely, | |
| /s/ David G. Pursel | |
|
|
|
| David G. Pursel | |
| Corporate Secretary |
Milpitas, California
April 7, 2005
YOUR VOTE IS IMPORTANT
In order to assure your representation at the meeting, you
are requested to mark, sign and date the enclosed proxy card as
promptly as possible and return it in the enclosed envelope (to
which no postage need be affixed if mailed in the United
States), or vote by Internet or telephone.
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LSI Logic Corporation
Proxy Statement
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed Proxy is solicited on behalf of LSI Logic
Corporation (referred to as “LSI Logic” or the
“Company”), a Delaware corporation, for use at the
Annual Meeting of Stockholders to be held on Thursday,
May 12, 2005, at 9:00 a.m., local time, or at any
adjournment(s) thereof, for the purposes set forth in this proxy
statement and in the accompanying Notice of Annual Meeting of
Stockholders. The annual meeting will be held at the Fairmont
San Jose located at 170 South Market Street,
San Jose, CA 95113. The address of the Company’s
principal executive offices is 1621 Barber Lane, Milpitas,
California 95035, and the Company’s telephone number is
(408) 433-8000.
These proxy solicitation materials were mailed on or about
April 7, 2005, to all stockholders entitled to vote at the
meeting.
Record Date; Shares Outstanding
Stockholders of record at the close of business on the record
date of March 18, 2005 (the “Record Date”), are
entitled to notice of and to vote at the meeting. As of the
Record Date, 387,762,529 shares of the Company’s
common stock, $0.01 par value, were issued and outstanding.
On the Record Date, the closing price of the Company’s
common stock on the New York Stock Exchange was $6.03 per
share.
How to Vote
Stockholders may vote by attending the meeting and voting in
person, by mailing the proxy card in the postage prepaid
envelope provided by the Company, by telephone, using the toll
free telephone number 1-800-690-6903, or by Internet, by using
the Internet voting site www.proxyvote.com. Stockholders
will be asked to enter the 12-digit control number located on
their proxy cards to proceed with voting by telephone or by
Internet.
Revocability of Proxies
Any proxy given pursuant to this solicitation may be revoked by
the person giving it at any time before its use by delivering to
the Corporate Secretary of the Company at the Company’s
principal executive offices a written notice of revocation or a
duly executed proxy bearing a later date, or by attending the
meeting and voting in person.
Voting and Solicitation
On all matters other than the election of directors, each share
has one vote. See “Election of Directors —
Required Vote.” The cost of soliciting proxies will be
borne by the Company. The Company has retained the services of
Georgeson & Company, Inc. to aid in the solicitation of
proxies from brokers, bank nominees and other institutional
owners. The Company estimates that it will pay
Georgeson & Company, Inc. a fee not to exceed $10,000
for its services and will reimburse it for certain out-of-pocket
expenses estimated to be $10,000. In addition, the Company may
reimburse brokerage firms and other persons representing
beneficial owners of shares for their expenses in forwarding
solicitation material to such beneficial owners. Proxies may be
solicited by some of the Company’s directors, officers and
regular employees, without additional compensation, personally
or by telephone.
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Householding
In an effort to reduce printing costs and postage fees, the
Company has adopted a practice approved by the Securities and
Exchange Commission (“SEC”) called
“householding.” Under this practice, stockholders who
have the same address and last name and do not participate in
electronic delivery of proxy materials will receive only one
copy of the Company’s proxy materials unless one or more of
these stockholders notifies the Company that they wish to
continue receiving individual copies. Stockholders who
participate in householding will continue to receive separate
proxy cards.
If you share an address with another stockholder and received
only one set of proxy materials and would like to request a
separate copy of these materials and/or future proxy materials,
please send your request to: LSI Logic Corporation, 1621 Barber
Lane, MS AD-115, Milpitas, CA 95035, Attn: Investor Relations or
call (408) 954-4710, or you may visit the Company’s
website at www.lsilogic.com. You may also contact the
Company if you received multiple copies of the proxy materials
and would prefer to receive a single copy in the future.
Quorum; Abstentions; Broker Non-Votes
The required quorum for the transaction of business at the
annual meeting is a majority of the votes eligible to be cast by
holders of shares of common stock issued and outstanding on the
Record Date. Shares that are voted “For,”
“Against” or “Withheld From” a matter are
treated as being present at the meeting for purposes of
establishing a quorum and are also treated as votes cast at the
annual meeting with respect to that matter (the
“Votes Cast”).
The Company intends to count abstentions for purposes of
determining both the presence and absence of a quorum and the
total number of Votes Cast with respect to any matter
(other than the election of directors). Broker non-votes will be
counted for purposes of determining the presence or absence of a
quorum for the transaction of business, but will not be
considered to be Votes Cast with respect to the particular
proposal on which the broker has expressly not voted.
Accordingly, broker non-votes will not affect the outcome of the
voting on a proposal that requires a majority of the
Votes Cast (such as the ratification of the independent
registered public accounting firm).
Deadline for Receipt of Stockholder Proposals
Proposals of stockholders of the Company that are intended to be
presented by such stockholders at the Company’s 2006 annual
meeting and that stockholders desire to have included in the
Company’s proxy materials relating to such meeting must be
received by the Company no later than December 8, 2005,
which is 120 calendar days prior to the anniversary of this
year’s mail date, and must be in compliance with applicable
laws and regulations in order to be considered for possible
inclusion in the proxy statement and form of proxy for that
meeting.
Stockholder proposals that are not intended to be included in
the proxy materials for such meeting, but that are to be
presented by the stockholder from the floor, are subject to
advance notice provisions described below.
Other Matters
According to the Company’s bylaws, in order to be properly
brought before the meeting, a proposal not intended for
inclusion in the Company’s proxy materials must be received
by the Company no later than January 7, 2006, which is
90 days prior to the anniversary of this year’s mail
date, and the notice must set forth the following: (a) a
brief description of the proposed matter and the reasons for
conducting such business at the meeting; (b) any material
interest of the stockholder in such business; (c) the name
and address of such stockholder as they appear on the
Company’s books; (d) the class and number of shares of
the Company that are beneficially owned by the stockholder; and
(e) all other information relating to such person that is
required to be disclosed pursuant to Regulation 14A of the
Securities Exchange Act of 1934. If the notice does not
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comply with the requirements set forth in the Company’s
bylaws, the presiding officer of the meeting may refuse to
acknowledge the matter.
The Company has not been notified by any stockholder of his or
her intent to present a stockholder proposal (including
nominations for directors) from the floor at this year’s
annual meeting. The enclosed proxy card grants the proxy holders
discretionary authority to vote on any matter properly brought
before the meeting.
SECURITY OWNERSHIP
Security Ownership
The following table sets forth certain information with respect
to the beneficial ownership of the common stock of the Company
and its majority-owned subsidiary, Engenio Information
Technologies, Inc., (“Engenio”) as of the Record Date,
by all persons known to the Company to be beneficial owners of
more than five percent of the Company’s common stock, by
all directors and executive officers named in the Summary
Compensation Table on page 10 of this proxy statement and
by all current directors and executive officers as a group.
| Number of Shares | Approximate | |||||||||||||||
| Beneficially Owned | Percentage Owned | |||||||||||||||
| Name | Company | Subsidiary | Company | Subsidiary(16) | ||||||||||||
|
Merrill Lynch & Co., Inc.(1)
|
47,017,518 | 12.1 | % | |||||||||||||
|
Morgan Stanley(2)
|
24,635,472 | 6.4 | % | |||||||||||||
|
Wilfred J. Corrigan(3)
|
14,126,764 | 3.6 | % | |||||||||||||
|
T.Z. Chu(4)
|
291,900 | * | ||||||||||||||
|
Malcolm R. Currie(5)
|
521,500 | * | ||||||||||||||
|
James H. Keyes(6)
|
285,070 | * | ||||||||||||||
|
R. Douglas Norby(7)
|
127,456 | 27,500 | * | * | ||||||||||||
|
Matthew J. O’Rourke(8)
|
160,000 | 27,500 | * | * | ||||||||||||
|
Gregorio Reyes(9)
|
137,500 | 27,500 | * | * | ||||||||||||
|
Larry W. Sonsini(10)
|
135,589 | 27,500 | * | * | ||||||||||||
|
Thomas Georgens(11)
|
943,552 | 250,000 | * | * | ||||||||||||
|
Bryon Look(12)
|
1,093,415 | * | ||||||||||||||
|
W. Richard Marz(13)
|
1,348,910 | * | ||||||||||||||
|
Joseph M. Zelayeta(14)
|
1,541,500 | * | ||||||||||||||
|
All current directors and executive officers as a group(15)
|
24,889,337 | 360,000 | 6.2 | % | * | |||||||||||
| * | Less than 1% |
| (1) | As reported in Schedule 13G/ A filed February 7, 2005, with the SEC by Merrill Lynch & Co., Inc. (“Merrill Lynch”) on behalf of Merrill Lynch Investment Managers (“MLIM”). Merrill Lynch is a parent holding company. MLIM is an operating division of Merrill Lynch’s indirectly owned asset management subsidiaries. Certain of these subsidiaries hold shares of the Company’s common stock. Merrill Lynch has shared voting power and shared dispositive power over all of the shares. The address for Merrill Lynch is World Financial Center, North Tower, 250 Vesey Street, New York, NY 10381. | |
| (2) | As reported in Schedule 13G/ A filed February 15, 2005, with the SEC by Morgan Stanley (“Morgan Stanley”) and Morgan Stanley & Co. International Limited. (“Morgan Stanley International”). Morgan Stanley is a parent holding company and Morgan Stanley International is a broker-dealer doing business under the laws of the United Kingdom. Morgan Stanley has sole voting and sole dispositive power over 24,511,920 shares and shared voting power and shared dispositive power with respect to |
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| 42,773 shares, and Morgan Stanley International has sole voting and sole dispositive power over 23,864,400 shares. The address for Morgan Stanley is 1585 Broadway, New York, NY 10036, and the address for Morgan Stanley International is 25 Cabot Square, Canary Wharf, London E14 4QA, England. | ||
| (3) | Includes options held by Mr. Corrigan to purchase 4,600,000 shares, which are presently exercisable or will become exercisable within 60 days of the Record Date. | |
| (4) | Includes options held by Mr. Chu to purchase 190,000 shares, which are presently exercisable or will become exercisable within 60 days of the Record Date. | |
| (5) | Includes options held by Dr. Currie to purchase 190,000 shares, which are presently exercisable or will become exercisable within 60 days of the Record Date. | |
| (6) | Includes options held by Mr. Keyes to purchase 190,000 shares, which are presently exercisable or will become exercisable within 60 days of the Record Date. | |
| (7) | Includes options held by Mr. Norby to purchase 105,000 shares, which are presently exercisable or will become exercisable within 60 days of the Record Date. | |
| (8) | Represents options held by Mr. O’Rourke to purchase 160,000 shares, which are presently exercisable or will become exercisable within 60 days of the Record Date. | |
| (9) | Includes options held by Mr. Reyes to purchase 102,500 shares, which are presently exercisable or will become exercisable within 60 days of the Record Date. |
| (10) | Includes options held by Mr. Sonsini to purchase 135,000 shares, which are presently exercisable or will become exercisable within 60 days of the Record Date. |
| (11) | Includes options held by Mr. Georgens to purchase 912,500 shares of the Company, which are presently exercisable or will become exercisable within 60 days of the Record Date. |
| (12) | Includes options held by Mr. Look to purchase 1,065,000 shares, which are presently exercisable or will become exercisable within 60 days of the Record Date. |
| (13) | Includes options held by Mr. Marz to purchase 1,323,750 shares, which are presently exercisable or will become exercisable within 60 days of the Record Date. |
| (14) | Includes options held by Mr. Zelayeta to purchase 1,382,500 shares, which are presently exercisable or will become exercisable within 60 days of the Record Date. |
| (15) | Includes options to purchase an aggregate of 14,426,344 shares of the Company held by 12 executive officers and seven outside directors, which are presently exercisable or will become exercisable within 60 days of the Record Date. The amount in the “Subsidiary” column represents the Engenio options that are presently exercisable or will become exercisable within 60 days of the Record Date. |
| (16) | Based on 50,037,500 shares of Engenio common stock outstanding as of the Record Date. |
PROPOSAL ONE
ELECTION OF DIRECTORS
Nominees
A board of eight directors is to be elected at the meeting. All
directors are elected annually and serve until the next annual
meeting or until his successor has been duly elected and
qualified. The Nominating and Corporate Governance Committee of
the Board of Directors selected and the Board of Directors
accepted the eight nominees named below for election to the
Board of Directors. All nominees are currently directors of the
Company.
The Board of Directors expects all nominees named below to be
available to serve as directors if elected. If any nominee of
the Company is unable or declines to serve as a director at the
time of the annual meeting, the proxies will be voted for a
nominee designated by the current Board of Directors to fill the
vacancy. If additional persons are nominated for election as
directors, the proxy holders intend to vote all proxies received
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by them in accordance with cumulative voting so as to elect as
many of the nominees listed below as possible. In such event,
the proxy holders will determine the specific nominees for whom
to vote.
The names of the nominees for election to the Board of
Directors, and the experience and background of each, are set
forth below. Ages are as of December 31, 2004.
| Director | ||||||||||
| Name of Nominee | Age | Principal Occupation | Since | |||||||
|
Wilfred J. Corrigan
|
66 | Chairman of the Board of Directors and Chief Executive Officer of the Company | 1981 | |||||||
|
T.Z. Chu
|
70 | Consultant; Retired President of Hoefer Pharmacia Biotech, Inc. | 1992 | |||||||
|
Malcolm R. Currie
|
77 | Chief Executive Officer, Currie Technologies, Inc. | 1992 | |||||||
|
James H. Keyes
|
64 | Retired Chairman, Johnson Controls, Inc. | 1983 | |||||||
|
R. Douglas Norby
|
69 | Chief Financial Officer and Senior Vice President, Tessera, Inc. | 1993 | |||||||
|
Matthew J. O’Rourke
|
66 |
Consultant; Retired Partner, Price Waterhouse LLP |
1999 | |||||||
|
Gregorio Reyes
|
63 | Management Consultant; Former Chairman and Chief Executive Officer, Sunward Technologies, Inc. | 2001 | |||||||
|
Larry W. Sonsini
|
63 | Chairman, Wilson Sonsini Goodrich & Rosati, P.C. | 2000 | |||||||
There are no family relationships between or among any directors
or executive officers of the Company.
Mr. Corrigan, a founder of the Company, has served as Chief
Executive Officer and a director of the Company since the
Company was founded in January 1981. Mr. Corrigan also
serves on the board of directors of FEI Company.
Mr. Chu serves as a consultant to various public and
private companies and a director to a number of private
companies and non-profit organizations. Mr. Chu served as
President of Hoefer Pharmacia Biotech, Inc., a biotechnology
company, from March 1995 until his retirement in February 1997.
Dr. Currie has served as Chief Executive Officer of Currie
Technologies, Inc., a manufacturer of electric propulsion
systems for bicycles and other light vehicles, since February
1997. He presently serves on the board of directors for Enova
Systems, Inc., Regal One Corporation and Inamed Corporation.
Mr. Keyes served as Chairman of Johnson Controls, Inc. from
October 2002 until his retirement in December 2003. He served as
Chairman and Chief Executive Officer from January 1993 to
October 2002. Johnson Controls, Inc. is a provider of automotive
systems, batteries and facility management and control.
Mr. Keyes also serves on the board of directors of Pitney
Bowes, Inc. and Navistar International Corporation.
Mr. Norby has been Chief Financial Officer and Senior Vice
President of Tessera, Inc., a semiconductor packaging technology
company, since July 2003. He worked as a management consultant
with Tessera from May 2003 until July 2003. Mr. Norby was a
private investor from March 2003 until May 2003. He served as
Vice President and Chief Financial Officer of Zambeel, Inc., a
data storage systems company, from March 2002 until February
2003, and as Chief Financial Officer of Novalux, Inc., an
optoelectronics company, from December 2000 to March 2002. Prior
to his tenure with Novalux, Inc., Mr. Norby served as
Executive Vice President and Chief Financial Officer of the
Company from November 1996 to November 2000. Mr. Norby also
serves on the board of directors of Alexion Pharmaceuticals,
Inc. and ChipPac, Inc.
Mr. O’Rourke was a partner with the accounting firm
Price Waterhouse LLP from 1972 until his retirement in June
1996. Since his retirement, Mr. O’Rourke has been
engaged as an independent business consultant.
Mr. O’Rourke is also a member of the board of
directors of Infonet Services Corporation.
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Mr. Reyes has been a private investor and management
consultant since 1994. He co-founded Sunward Technologies in
1985 and served as Chairman and Chief Executive Officer until
1994. Mr. Reyes serves on the board of directors of Dialog
Semiconductor and Seagate Technology.
Mr. Sonsini has been a partner of the law firm of Wilson
Sonsini Goodrich & Rosati, P.C., since 1969 and
has served as its Chairman and Chief Executive Officer for more
than the past five years. Until February 2005, Mr. Sonsini
also served as the firm’s Chief Executive Officer.
Mr. Sonsini serves on the board of directors of the
following public companies: Echelon Corporation, PIXAR, Inc. and
Silicon Valley Bancshares.
Board Meetings and Committees
Board of
Directors
The Company’s Board of Directors (the “Board of
Directors” or the “Board”) is the ultimate
decision-making body of the Company except with respect to those
matters reserved for the approval of stockholders. The Board is
responsible for selection of the executive management team,
providing oversight responsibility and direction to management
and evaluating the performance of this team on behalf of the
stockholders. The Board has adopted Corporate Governance
Guidelines to assist it in the performance of its
responsibilities. These Guidelines are available on the
Company’s website at www.lsilogic.com.
The Board of Directors has determined that all the directors
other than Mr. Corrigan, including those who serve on the
committees described below, are “independent” for
purposes of Section 303A of the Listed Company Manual of
the New York Stock Exchange, and that the members of the Audit
Committee are also “independent” for purposes of
Section 10A(m)(3) of the Securities Exchange Act of 1934.
The Board of Directors based these determinations primarily on a
review of the responses of the directors and executive officers
to questions regarding employment and compensation history,
affiliations and family and other relationships, and on
discussions with the directors. The Board also reviewed the
relationships between the Company and companies with which the
Company’s directors are affiliated.
The Board of Directors of the Company held a total of 10
meetings during the fiscal year ended December 31, 2004.
Currently Mr. T.Z. Chu serves as the Board’s lead
independent director. The Board has an Audit Committee, a
Compensation Committee and a Nominating and Corporate Governance
Committee. The Audit, Compensation and Nominating and Corporate
Governance Committees consist solely of non-employee independent
directors as defined by the New York Stock Exchange. The Board
appoints the members and chairs of the committees annually. All
committees operate under charters approved by the Board, which
are available on the Company’s website at
www.lsilogic.com.
You may contact the Board of Directors by sending an email to
lead-director@lsil.com or board@lsil.com. In
accordance with instructions from the Board, the Corporate
Secretary to the Board reviews all correspondence, organizes the
communications for review by the Board, and posts communications
to the full Board or individual directors as appropriate. The
Company’s directors have requested that certain items that
are unrelated to the Board’s duties, such as spam, junk
mail, mass mailings, solicitations, resumes and job inquiries,
not be posted.
The Company customarily schedules Board and committee meetings
on the same day as the annual meeting of shareholders to
encourage and facilitate director attendance at the annual
meeting. Seven of the Company’s eight directors attended
the Company’s annual meeting held in May 2004.
During the year ended December 31, 2004, all incumbent
directors attended more than the required minimum of 75% of the
aggregate number of meetings of the Board of Directors and
meetings of the committees of the Board on which they served.
Audit
Committee
The Audit Committee, which consists of Dr. Currie, who
serves as its chairman, Messrs. Chu, Keyes, Norby and
O’Rourke, held 13 meetings during the last fiscal year. The
Audit Committee reviews the Company’s accounting policies
and practices, internal controls, financial reporting practices,
contingent risks
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and risk management strategies and plans. The Audit Committee
selects and retains the Company’s independent registered
public accounting firm to examine the Company’s accounts,
reviews the independence of the independent registered public
accounting firm as a factor in making these determinations and
pre-approves all audit and non-audit services performed by the
independent registered public accounting firm. The Audit
Committee regularly meets alone with the Company’s
management, independent registered public accounting firm and
the director of the Company’s Internal Audit Department,
and grants them free access to the Audit Committee at any time.
All members of the Audit Committee are financially literate, as
such qualification is interpreted by the Company’s Board of
Directors in its business judgment. In addition,
Messrs. Keyes, Norby and O’Rourke are designated as
financial experts of the Audit Committee, as defined by SEC
rules. Stockholders interested in communicating with the Audit
Committee may do so by sending an email to
auditchair@lsil.com.
| Compensation Committee |
The Compensation Committee, which consists of Mr. Keyes,
who serves as its chairman, Mr. Chu, Dr. Currie,
Mr. O’Rourke and Mr. Reyes, held four meetings
during the last fiscal year. At least annually, the Compensation
Committee reviews the goals of the Company’s executive
officer and director compensation plans, and amends or
recommends that the Board of Directors amend these goals if the
Compensation Committee deems it appropriate. The Compensation
Committee evaluates and reviews, at least annually, the
performance of the Chairman and Chief Executive Officer and
other executive officers in light of those goals. Based upon
such an evaluation, the Compensation Committee establishes the
Company’s overall executive compensation strategy, and, in
particular, determines the compensation structure for the
Chairman and Chief Executive Officer and other executive
officers. The Compensation Committee reviews and approves the
Company’s stock option and other stock incentive award
programs and reviews, as needed (with an independent
consultant), executive compensation matters and significant
issues that relate to executive compensation. Stockholders
interested in communicating with the Compensation Committee may
do so by sending an email to compensationchair@lsil.com.
A copy of the charter of the Compensation Committee is attached
to this proxy statement as Appendix A.
| Nominating and Corporate Governance Committee |
The Nominating and Corporate Governance Committee held two
meetings during the last fiscal year. As of February 2005, the
Nominating and Corporate Governance Committee consists of
Mr. Chu, who serves as its chairman, Dr. Currie and
Messrs. O’Rourke, Reyes and Sonsini. The Nominating
and Corporate Governance Committee provides assistance to the
Board of Directors in recommending to the Board of Directors
individuals qualified to serve as directors of the Company and
on committees of the Board of Directors, recommending to the
Board the director nominees for the next annual meeting of
stockholders, advising the Board of Directors with respect to
Board composition and procedures and whether to form or dissolve
committees. The Nominating and Corporate Governance Committee
also assists in advising the Board of Directors with respect to
the corporate governance principles applicable to the Company
and developing criteria for oversight of the evaluation of the
Board and management. A copy of the charter of the Nominating
and Corporate Governance Committee is attached to this proxy
statement as Appendix B.
Although there are no specific, minimum qualifications for
nominees, each nominee to the Board of Directors is considered
on the basis of his or her likelihood to enhance the
Board’s ability to manage and direct the affairs and
businesses of the Company, including, when applicable, to
enhance the ability of committees of the Board to fulfill their
duties and satisfy any requirements imposed by law, regulation
or exchange listing requirements.
The Nominating and Corporate Governance Committee will consider
properly submitted stockholder recommendations for candidates
for election to the Company’s Board of Directors at the
2006 annual meeting if received no later than December 8,
2005. The Nominating and Corporate Governance Committee uses the
same criteria described above in assessing candidates
recommended by stockholders. The name of any recommended
candidate for director, together with a brief biography, a
document indicating the candidate’s willingness to serve
and evidence of the nominating person’s ownership of
Company stock should be sent to
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the attention of the Nominating and Corporate Governance
Committee at nominatingchair@lsil.com. Stockholders may
use the same email address to communicate other matters to the
Nominating and Corporate Governance Committee.
Compensation of Directors
Members of the Board of Directors who are not employees of the
Company receive an annual fee of $35,000 and $2,000 for each
regular Board meeting they attend in person, plus reimbursement
of expenses for attendance at regular Board and committee
meetings. For additional telephonic meetings, members receive a
fee of $1,000 per meeting. In addition, the lead director
of the Board receives an annual payment of $5,000. Each director
will receive $1,000 for attending a committee meeting if the
committee meeting is not held in conjunction with a meeting of
the Board of Directors. Notwithstanding the foregoing, members
of the Audit Committee receive $1,000 for each Audit Committee
meeting they attend, regardless of whether it is held in
conjunction with a Board of Directors meeting. In addition, the
Audit Committee’s designated financial experts receive an
additional $5,000 for their services annually, and the Audit
Committee chairman receives an additional annual fee of $7,000.
Certain non-employee members of the Board of Directors are also
members of the Board of Directors of Engenio Information
Technologies, Inc., (“Engenio”), which is a
majority-owned subsidiary of the Company. In return for their
services to Engenio, these individuals receive an annual fee of
$30,000, $2,000 for each regularly scheduled meeting and $1,000
for each telephonic meeting. The chairman of the Audit Committee
of Engenio receives an annual fee of $7,000. The financial
expert of the Engenio Audit Committee would receive an annual
fee of $5,000 and the Engenio Board of Directors’
designated lead director would receive an annual fee of $5,000.
Currently the Engenio Board of Directors has not appointed a
lead director. In addition, the Engenio Audit Committee does not
have any members designated as financial experts.
The Company’s Amended 1995 Director Option Plan, as
adopted by the Board of Directors and approved by the
stockholders, provides for the grant of non-statutory stock
options to non-employee directors of the Company. Under a
non-discretionary formula approved by the stockholders, each
non-employee director is granted an initial option to purchase
30,000 shares of common stock on the date on which he or
she first becomes a director. In addition, on April 1 of
each year, each non-employee director is automatically granted a
subsequent option to purchase 30,000 shares of common stock
of the Company, if on the date of grant he or she has served on
the Board of Directors for at least six months. The vesting
schedule for initial options granted under the Amended 1995
Director Option Plan is set at 25% on each of the first four
anniversaries of the grant date. Subsequent option grants become
exercisable in full six months after the date of grant. Options
may be exercised only while the optionee is a director of the
Company, within 12 months after death or within three
months after the optionee ceases to serve as a director of the
Company, but in no event after the ten-year term of the option
has expired. As of the Record Date, a total of
2,000,000 shares have been reserved for issuance under the
1995 Amended Director Option Plan, of which
1,080,000 shares are subject to outstanding options,
15,000 shares have been issued upon exercise of options,
and 905,000 shares remain available for grant. On
April 1, 2004, an option to purchase 30,000 shares was
granted to each of Directors Chu, Currie, Keyes, Norby,
O’Rourke, Reyes and Sonsini having an exercise price of
$9.46 per share.
The Engenio Information Technologies, Inc. Amended and Restated
Equity Incentive Plan (“Engenio Plan”) provides for
the grant of stock options to non-employee directors of Engenio.
Under a non-discretionary formula, each non-employee director of
the subsidiary is granted an initial option to purchase
25,000 shares of Engenio’s common stock as of the date
the individual first becomes a director of Engenio. In addition,
each non-employee director who both (a) is a non-employee
director on the last business day of a fiscal year and
(b) has served as a non-employee director for the entire
fiscal year, which includes such last business day,
automatically shall receive, as of the last business day, an
option to purchase 15,000 shares. The vesting schedule for
the initial and subsequent stock options granted under the
Engenio Plan is set at 100% on the first anniversary of the
grant date. Notwithstanding the preceding, once an individual
ceases to be a director, his or her options that are not then
exercisable shall never become exercisable and shall be
immediately forfeited. Messrs. Norby, O’Rourke, Reyes
and Sonsini each received options to purchase 25,000 shares
of Engenio common stock on the date each individual became a
director of Engenio, which
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options have an exercise price of $10.00 per share, as
determined by the Engenio Board of Directors with assistance
from outside consultants.
In addition, under the Engenio Plan, each non-employee director
who first becomes a non-employee director on or after the
effective date of the Engenio Plan automatically receives
2,500 shares of restricted stock as of the date the
individual becomes a non-employee director. The shares of
restricted stock are held by Engenio in escrow, which ends as to
100% of the shares on the first anniversary of the grant date
and all such shares fully vest on such date. Messrs. Norby,
O’Rourke, Reyes and Sonsini each received 2,500 shares
of restricted stock on the date each individual became a
director of Engenio, which have a grant date fair value of
$10.00 per share, as determined by the Engenio Board of
Directors with assistance from outside consultants.
Required Vote
Directors shall be elected by a plurality vote. The eight
nominees for director receiving the highest number of
affirmative votes of the shares entitled to be voted for them
shall be elected as directors. Votes against, votes withheld and
broker non-votes have no legal effect on the election of
directors due to the fact that such elections are by a plurality.
Every stockholder voting in the election of directors may
cumulate such stockholder’s votes and give one candidate a
number of votes equal to the number of directors to be elected
(eight) multiplied by the number of votes to which the
stockholder’s shares are entitled, or may distribute the
stockholder’s votes on the same principle among as many
candidates as the stockholder thinks fit, provided that votes
cannot be cast for more than eight candidates. However, no
stockholder shall be entitled to cumulate votes for a candidate
unless the candidate’s name has been properly placed in
nomination in accordance with the Company’s bylaws prior to
the meeting, and the stockholder, or any other stockholder, has
given notice at the meeting prior to the voting of the
stockholder’s intention to cumulate votes. The proxy
holders will exercise discretionary authority to cumulate votes
in the event that additional persons are nominated for election
as directors.
Board Recommendation
The Board of Directors unanimously recommends a vote
“FOR” the proposed slate of directors for the current
year. Unless you indicate otherwise, your proxy will be voted
“FOR” each of the Company’s nominees (except as
otherwise noted under “Required Vote” above).
PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has selected PricewaterhouseCoopers LLP, an
independent registered public accounting firm, to audit the
consolidated financial statements of the Company for its 2005
fiscal year and recommends that the stockholders vote for the
ratification of such appointment. If there is a negative vote on
such ratification, the Audit Committee will reconsider its
selection, but the Audit Committee has the ultimate authority to
retain and terminate auditors. PricewaterhouseCoopers LLP (or
its predecessor) has audited the Company’s consolidated
financial statements since the fiscal year ended
December 31, 1981. Representatives of
PricewaterhouseCoopers LLP are expected to be present at the
annual meeting with the opportunity to make a statement if they
desire to do so, and are expected to be available to respond to
appropriate questions.
Required Vote
The affirmative vote of a majority of the Votes Cast at the
annual meeting will be required to approve PROPOSAL TWO.
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Board Recommendation
The Board of Directors recommends a vote “FOR”
ratification of the appointment of PricewaterhouseCoopers LLP as
the independent registered public accounting firm for the 2005
fiscal year. Unless you indicate otherwise, your proxy will be
voted “FOR” the proposal.
EXECUTIVE COMPENSATION
Summary of Compensation
The following table shows, as to (i) the Chief Executive
Officer and (ii) each of the four other most highly
compensated executive officers who were serving as such at
fiscal year end and whose salary plus bonus exceeded $100,000
during fiscal year ended December 31, 2004 (all persons
listed in the table are collectively referred to as the
“Named Executive Officers”), information concerning
all reportable compensation awarded to, earned by or paid to
each for services to the Company in all capacities during 2004,
as well as such compensation for each such individual for the
previous two fiscal years (if such person was an executive
officer during any part of such previous fiscal year).
| Long-Term Compensation Awards(4) | |||||||||||||||||||||||||||||||
| Annual Compensation | |||||||||||||||||||||||||||||||
| Restricted | Securities Underlying | ||||||||||||||||||||||||||||||
| Stock Unit | Options (#) | All Other | |||||||||||||||||||||||||||||
| Other Annual | Awards | Compensation | |||||||||||||||||||||||||||||
| Name and Principal Position | Year | Salary ($)(1) | Bonus ($) | Compensation ($) | ($) | Company | Subsidiary(7) | ($)(8) | |||||||||||||||||||||||
|
Wilfred J. Corrigan
|
2004 | 860,018 | 0 | N/A | 0 | 0 | 0 | 8,576 | |||||||||||||||||||||||
| Chairman and Chief | 2003 | 860,018 | 500,000 | N/A | 0 | 1,000,000 | 0 | 8,476 | |||||||||||||||||||||||
| Executive Officer | 2002 | 793,858 | 0 | N/A | 0 | 0 | 0 | 9,576 | |||||||||||||||||||||||
|
Thomas Georgens
|
2004 | 369,234 | 110,000 | (2) | N/A | 0 | 0 | 1,200,000 | 8,576 | ||||||||||||||||||||||
| Executive Vice President, | 2003 | 350,002 | 270,000 | N/A | 0 | 250,000 | 0 | 7,195 | |||||||||||||||||||||||
| Storage Systems | 2002 | 323,090 | 210,000 | N/A | 0 | 100,000 | 0 | 7,633 | |||||||||||||||||||||||
|
Bryon Look
|
2004 | 369,242 | 0 | N/A | 180,000 | (5) | 200,000 | 0 | 8,556 | ||||||||||||||||||||||
| Executive Vice President | 2003 | 350,002 | 150,000 | N/A | 0 | 250,000 | 0 | 7,195 | |||||||||||||||||||||||
| and Chief Financial Officer | 2002 | 323,090 | 122,500 | N/A | 0 | 0 | 0 | 7,377 | |||||||||||||||||||||||
|
W. Richard Marz
|
2004 | 390,000 | 0 | N/A | 0 | 0 | 0 | 8,576 | |||||||||||||||||||||||
| Executive Vice President | 2003 | 390,000 | 50,000 | N/A | 0 | 100,000 | 0 | 7,442 | |||||||||||||||||||||||
| Worldwide Strategic Marketing | 2002 | 360,000 | 58,500 | N/A | 0 | 300,000 | 0 | 8,212 | |||||||||||||||||||||||
|
Joseph Zelayeta
|
2004 | 415,002 | 0 | 88,159 | (3) | 270,000 | (6) | 200,000 | 0 | 8,576 | |||||||||||||||||||||
| Executive Vice President | 2003 | 415,002 | 130,000 | N/A | 0 | 100,000 | 0 | 7,631 | |||||||||||||||||||||||
| ASIC Technology and Methodology | 2002 | 383,082 | 103,750 | N/A | 0 | 150,000 | 0 | 8,440 | |||||||||||||||||||||||
| (1) | This amount reflects a ten percent voluntary reduction in pay taken by the Named Executive Officers from March 6, 2001, until September 30, 2002. The reduction in pay was reversed effective October 1, 2002, at which point the base salaries of the Named Executive Officers were reinstated to their previous levels. |
| (2) | Mr. Georgens received a bonus as chief executive officer of Engenio Information Technologies, Inc., a majority-owned subsidiary of the Company. |
| (3) | Beginning in 2004, in connection with assuming different executive responsibilities, Mr. Zelayeta’s primary place of employment was changed from Gresham, Oregon to the Company’s headquarters in Milpitas, California. The amount in the column reflects $9,600 in an automobile allowance, $27,720 in payments for an apartment located in California that is leased in the Company’s name and that is used exclusively by Mr. Zelayeta, $25,347 in airfare, car rental and airport parking fees and $25,492 reimbursed to Mr. Zelayeta for payment of income taxes on the apartment rental and commuting fees. |
| (4) | The Company has not granted any stock appreciation rights or long-term incentive plan awards to executive officers. |
| (5) | Represents the grant of restricted stock award units under which the named executive has the right to receive, subject to vesting, 40,000 shares of common stock. The material terms of the restricted stock unit awards, which were granted under the 2003 Equity Incentive Plan (“EIP”), are as follows: (a) the price |
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| of the restricted stock unit is the fair market value of the common stock as of the date of grant (which was $4.50 on August 12, 2004); (b) the restricted stock units vest cumulatively in equal 25% increments on each of the first four anniversaries of the date of grant; (c) in its discretion, the Board of Directors, or a committee of the Board administering the EIP may accelerate the vesting of the balance, or some lesser portion of the balance of the restricted stock units at any time, subject to the terms of the EIP. The value of the restricted stock award units as of December 31, 2004, was $219,200. The fair market value of the stock on December 31, 2004, was $5.48 per share. The restricted stock award units are entitled to dividends or other adjustments or distributions under the EIP. Such dividends and distributions shall be deemed reinvested in stock units. | |
| (6) | Represents the grant of restricted stock award units under which the named executive has the right to receive, subject to vesting, 60,000 shares of common stock. The material terms of the restricted stock unit awards, which were granted under the EIP, are as follows: (a) the price of the restricted stock unit is the fair market value of the common stock as of the date of grant (which was $4.50 on August 12, 2004); (b) the restricted stock units vest cumulatively in equal 25% increments on each of the first four anniversaries of the date of grant; (c) in its discretion, the Board of Directors, or a committee of the Board administering the EIP may accelerate the vesting of the balance, or some lesser portion of the balance of the restricted stock units at any time, subject to the terms of the EIP. The value of the restricted stock award units as of December 31, 2004, was $328,800. The fair market value of the stock on December 31, 2004, was $5.48 per share. The restricted stock award units are entitled to dividends or other adjustments or distributions under the EIP. Such dividends and distributions shall be deemed reinvested in stock units. |
| (7) | The stock option grants listed in this column represent options to purchase common stock of Engenio. |
| (8) | Represents group life insurance and accidental death and dismemberment (“AD&D”) insurance premiums and 401(k) plan Company contributions. In 2004, the Company contributed the following: For Mr. Corrigan, $1,260 for life insurance premiums, $216 for AD&D insurance premiums and $7,100 for matching contributions to the 401(k) plan; For Mr. Georgens, $1,260 for life insurance premiums, $216 for AD&D insurance premiums and $7,100 for matching contributions to the 401(k) plan; For Mr. Look, $1,243 for life insurance premiums, $213 for AD&D insurance premiums and $7,100 for matching contributions to the 401(k) plan; For Mr. Marz, $1,260 for life insurance premiums, $216 for AD&D insurance premiums and $7,100 for matching contributions to the 401(k) plan; and For Mr. Zelayeta, $1,260 for life insurance premiums, $216 for AD&D insurance premiums and $7,100 for matching contributions to the 401(k) plan. In 2003, the Company contributed the following: For Mr. Corrigan, $1,260 for life insurance premiums, $216 for AD&D insurance premiums and $7,000 for matching contributions to the 401(k) plan; For Mr. Georgens, $1,176 for life insurance premiums, $202 for AD&D insurance premiums and $5,817 for matching contributions to the 401(k) plan; For Mr. Look, $1,176 for life insurance premiums, $202 for AD&D insurance premiums and $5,817 for matching contributions to the 401(k) plan; For Mr. Marz, $1,210 for life insurance premiums, $207 for AD&D insurance premiums and $6,025 for matching contributions to the 401(k) plan; and For Mr. Zelayeta, $1,260 for life insurance premiums, $216 for AD&D insurance premiums and $6,155 for matching contributions to the 401(k) plan. For 2002, the Company contributed the following: For Mr. Corrigan, $1,710 for life insurance premiums, $216 for AD&D insurance premiums and $7,650 for matching contributions to the 401(k) plan; For Mr. Georgens, $1,473 for life insurance premiums, $186 for AD&D insurance premiums and $5,974 for matching contributions to the 401(k) plan; For Mr. Look, $1,473 for life insurance premiums, $186 for AD&D insurance premiums and $5,718 for matching contributions to the 401(k) plan; For Mr. Marz, $1,642 for life insurance premiums, $207 for AD&D insurance premiums and $6,363 for matching contributions to the 401(k) plan; and For Mr. Zelayeta, $1,710 for life insurance premiums, $216 for AD&D insurance premiums and $6,514 for matching contributions to the 401(k) plan. |
Change-in-Control and Employment Agreements
In November 2003, the Company entered into change-in-control
severance agreements with each of the Named Executive Officers,
except Mr. Corrigan, to help ensure the continued services
of management to the
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Company. Mr. Corrigan’s employment agreement dated
September 2001 is discussed in this proxy statement in the
section entitled “CEO Employment Agreement,” below.
For purposes of the change-in-control agreements made with the
Named Executive Officers, a change in control of the Company is
deemed to have occurred in the event of (1) the
consummation by the Company of a merger or consolidation of the
Company with any other corporation, other than a merger or
consolidation that would result in the voting securities of the
Company outstanding immediately prior thereto continuing to
represent more than 50% of the total voting power represented by
the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation;
(2) the approval by the shareholders of the Company, or if
shareholder approval is not required, by the Board of Directors,
of a plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of all or
substantially all of the Company’s assets; (3) any
person becoming the beneficial owner, directly or indirectly, of
securities of the Company representing 50% or more of the total
voting power represented by the Company’s then outstanding
voting securities or (4) a change in the composition of the
Board of Directors, as a result of which fewer than a majority
of the directors are incumbent directors. In addition, in the
Company’s change-in-control agreement with Mr. Thomas
Georgens, Executive Vice President, Storage Systems, a change in
control also occurs in the event Engenio ceases to be a
subsidiary of the Company due to a sale of the subsidiary to a
third party.
Under the change-in-control agreements, if the executive
officer’s employment is terminated involuntarily at any
time within 12 months after a change in control, the
executive officer will receive a lump sum payment equal to the
sum of two years’ base salary plus 200% of the executive
officer’s target bonus for the year in which the change in
control occurs, and continued health-care benefits during the
two years following the termination. In addition, the vesting
and exercisability of all unexpired options, unexpired
restricted stock and any other unexpired equity-based
compensation awards that were granted at least six months prior
to the change in control shall be automatically accelerated and
fully vested and exercisable at the date of the involuntary
termination. An additional limited payment will be made to an
executive officer in order to offset the effect of any excise
taxes on payments made to the executive officer under the
change-in-control agreement. These agreements shall terminate in
November 2008, unless a change of control occurs, in which case,
the agreements shall terminate upon the date that all
obligations of the parties have been satisfied.
| CEO Employment Agreement |
In September 2001, the Company entered into an employment
agreement (the “Agreement”) with Wilfred J. Corrigan,
the Company’s Chairman of the Board and Chief Executive
Officer (“CEO”). The Agreement provides for
Mr. Corrigan to continue to serve as CEO and Chairman of
the Company’s Board of Directors, and further provides for
an annual base salary as determined by the Board and an annual
bonus based on performance goals determined by the Compensation
Committee of the Board.
If the Company terminates Mr. Corrigan’s employment
other than for cause, or his employment terminates as a result
of death or disability, Mr. Corrigan will receive
36 months base salary, 300% of his target bonus for the
year in which the employment termination occurs, 24 months
of health, dental and vision benefits, 18 months of life
insurance benefits and vesting of unexpired options granted in
November 1999, April 2001 and after September 2001. With respect
to each such option, Mr. Corrigan will have the full term
of each option to exercise the vested part of the option. An
additional payment will be made to Mr. Corrigan in order to
offset the effect of any excise taxes on payments made to him
under the Agreement. If Mr. Corrigan voluntarily terminates
his employment as CEO for any reason other than death or
disability and the Company does not ask him to remain as the
employee Chairman of the Board, Mr. Corrigan will receive
all of the payments and benefits described above. If
Mr. Corrigan voluntarily resigns for any reason other than
death or disability and the Company asks Mr. Corrigan to
remain as the employee Chairman of the Board and he agrees to do
so, Mr. Corrigan will receive the payments and benefits
described above, except for the accelerated option vesting.
Instead, unexpired options from grants after September 2001 and
from the two option grants made in November 1999 and April 2001,
respectively, will be converted to a monthly vesting schedule
such that all such options will vest within 36 months of
the resignation date. If Mr. Corrigan is terminated for
cause or if he voluntarily resigns and does not remain as the
employee Chairman of the Board
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following a Company request to do so, he will not receive any of
the payments or benefits described above and instead, will
receive only salary and other benefits that accrued prior to his
termination of employment or as may be required by law.
Stock Option Grants and Exercises
The following tables set forth information with respect to the
stock options granted to the Named Executive Officers under the
Company’s stock option plans during the fiscal year ended
December 31, 2004, the options exercised by such Named
Executive Officers during such fiscal year and the options held
by the Named Executive Officers at December 31, 2004.
The Option Grants Table sets forth hypothetical gains or
“option spreads” for the options at the end of their
respective terms, as calculated in accordance with the rules of
the SEC. Each gain is based on an arbitrarily assumed annualized
rate of compound appreciation of the market price of 5% or 10%
from the date the option was granted to the end of the option
term and does not represent the Company’s projection of
future stock price performance. Actual gains, if any, on option
exercises are dependent on the future performance of the
Company’s common stock and overall market conditions.
OPTION (1) GRANTS IN LAST FISCAL YEAR
| Individual Grants | ||||||||||||||||||||||||||||||||||||
| Potential Realizable | ||||||||||||||||||||||||||||||||||||
| Value at Assumed | ||||||||||||||||||||||||||||||||||||
| Number of | Percent of | Annual Rates of Stock | ||||||||||||||||||||||||||||||||||
| Securities Underlying | Total Options | Exercise Price | Price Appreciation for | |||||||||||||||||||||||||||||||||
| Options Granted (#) | Granted to | ($/share) | Expiration Date | Option Term(5) | ||||||||||||||||||||||||||||||||
| Employees in | ||||||||||||||||||||||||||||||||||||
| Name | Company(2) | Subsidiary(3) | Fiscal Year(4) | Company | Subsidiary | Company | Subsidiary | 5% ($) | 10% ($) | |||||||||||||||||||||||||||
|
Wilfred J. Corrigan
|
0 | 0 | N/A | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||||||
|
Thomas Georgens
|
0 | 1,000,000 | 35.1 | N/A | 10.00 | N/A | 2/12/11 | 4,071,004 | 9,487,171 | |||||||||||||||||||||||||||
| 200,000 | 7.0 | 6.00 | 10/29/11 | 488,521 | 1,138,461 | |||||||||||||||||||||||||||||||
|
Bryon Look
|
200,000 | 0 | 2.76 | 10.70 | N/A | 2/12/11 | N/A | 871,195 | 2,030,255 | |||||||||||||||||||||||||||
|
W. Richard Marz
|
0 | 0 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||||||||||
|
Joseph M. Zelayeta
|
200,000 | 0 | 2.76 | 10.70 | N/A | 2/12/11 | N/A | 871,195 | 2,030,255 | |||||||||||||||||||||||||||
| (1) | The Company has not granted any stock appreciation rights. |
| (2) | The options shown in the column were nonstatutory stock options granted under the 1991 Equity Incentive Plan. The material terms of the options are as follows: (a) the exercise price of the options is the fair market value of the common stock as of the date of grant; (b) the options vest cumulatively in equal 25% increments on each of the first four anniversaries of the date of grant; (c) to the extent unexercised, the options lapse after seven years; (d) the options are non-transferable and are only exercisable during the period of employment of the optionee (or within 90 days following termination of employment), subject to limited exceptions in the cases of certain terminations, death or permanent disability of the optionee. These options are subject to acceleration of exercisability in certain events. See “Change-in-Control and Employment Agreements” above. |
| (3) | In 2004, the Board of Directors of Engenio granted stock options to purchase Engenio common stock to Mr. Georgens, pursuant to the Engenio Plan. These options were non-qualified stock options. The material terms of these options are as follows: (a) the exercise price of the options represent the estimated fair value of the Engenio common stock on the date of grant as determined by the Engenio Board of Directors, with assistance from outside consultants; (b) the options vest cumulatively, in equal 25% increments on each of the first four anniversaries of the date of grant; (c) to the extent unexercised, the options lapse after seven years; (d) the options are non-transferable and are only exercisable during the period of employment of the optionee or within three months following termination of employment. These options may be subject to acceleration of exercisability in the discretion of the Engenio Compensation Committee in the event of a change in control, as set forth in Mr. Georgen’s stock option agreement. |
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| (4) | Based on options granted to all employees in fiscal year 2004 to purchase an aggregate of 7,239,629 shares of the Company’s common stock and 2,848,250 shares of Engenio common stock. |
| (5) | These assumed rates of annual appreciation are specified by the SEC and do not represent the Company’s estimate of future stock prices. |
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
| Number of | Value(1) of Unexercised | |||||||||||||||||||||||
| Securities Underlying | In-the-Money | |||||||||||||||||||||||
| Unexercised Options | Options at | |||||||||||||||||||||||
| Shares | at Fiscal Year End (#) | Fiscal Year End($) | ||||||||||||||||||||||
| Acquired on | Value | |||||||||||||||||||||||
| Name | Exercise (#) | Realized ($) | Exercisable | Unexercisable | Exercisable | Unexercisable | ||||||||||||||||||
|
Wilfred J. Corrigan
|
0 | 0 | 5,575,000 | 1,125,000 | 85,000 | 255,000 | ||||||||||||||||||
|
Thomas Georgens
|
0 | 0 | 787,500 | 275,000 | 26,250 | 78,750 | ||||||||||||||||||
|
Bryon Look
|
0 | 0 | 952,500 | 437,500 | 26,250 | 78,750 | ||||||||||||||||||
|
W. Richard Marz
|
0 | 0 | 1,173,750 | 293,750 | 10,500 | 31,500 | ||||||||||||||||||
|
Joseph M. Zelayeta
|
40,000 | 91,428 | 1,275,000 | 425,000 | 10,500 | 31,500 | ||||||||||||||||||
| (1) | Value of unexercised options is based on the difference between the fair market value of Company’s common stock of $5.48 per share as of December 31, 2004 (the last day of the last completed fiscal year), and the exercise price of the unexercised in-the-money options. |
Certain Transactions
Mr. Larry W. Sonsini, a director of the Company, is
Chairman of Wilson Sonsini Goodrich &
Rosati, P.C., a law firm that performed legal services for
the Company during fiscal year 2004 and that is expected to
perform legal services for the Company in the future.
In November 2003, the Company announced its intention to
separate its wholly owned storage systems subsidiary from the
Company and create an independent storage systems company. The
subsidiary, which is currently a majority-owned subsidiary of
the Company, is Engenio Information Technologies, Inc.
(“Engenio”). The separation of Engenio from the
Company, including the transfer of related assets, liabilities
and intellectual property rights, was substantially completed in
December 2003. The Company entered into agreements to address
various arrangements between Engenio and the Company. Effective
February 2004, Mr. Thomas Georgens was named Chief
Executive Officer of Engenio.
REPORT OF THE COMPENSATION COMMITTEE ON CEO AND OTHER
EXECUTIVE OFFICER COMPENSATION FOR LSI LOGIC CORPORATION
Overview and Philosophy
The Compensation Committee of the Board of Directors (the
“Compensation Committee”) administers LSI Logic’s
executive compensation program. The role of the Compensation
Committee is to review and approve salaries and other
compensation of LSI Logic’s executive officers and
administer the chief executive officer and executive officer
incentive plans. The Compensation Committee reviews and approves
other Company compensation policies and matters and oversees LSI
Logic’s stock option plans, including reviewing and
approving stock option grants to LSI Logic’s executive
officers. The Compensation Committee’s charter reflects
these various responsibilities. The Compensation Committee and
the Board of Directors periodically review and revise the
charter, a copy of which is available on the Company’s
website at www.lsilogic.com.
The Compensation Committee is currently comprised of five
non-employee, independent members of the Board of Directors,
none of whom has any interlocking relationships as defined by
the Securities and Exchange Commission. The Compensation
Committee has available to it such external compensation advice
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and data as the Compensation Committee deems appropriate to
obtain. The Compensation Committee engaged a compensation
consulting firm to assist the Compensation Committee in its
review of proposed 2004 compensation for the executive officers.
The philosophy of the Compensation Committee is to provide a
comprehensive compensation package for each executive officer
that is well suited to support accomplishment of the
Company’s business strategies, objectives and initiatives.
For incentive-based compensation, the Compensation Committee
considers the desirability to qualify for deductibility by the
Company under Section 162(m) of the Internal Revenue Code.
Options granted under the Company’s option plan qualify as
“performance-based” compensation, and therefore, are
not subject to the limitations on deductibility of certain
executive compensation under Section 162(m) of the Internal
Revenue Code. To maintain flexibility in compensating executive
officers in a manner designed to promote corporate goals, the
Compensation Committee has not adopted a policy that all
compensation must be deductible. As the Compensation Committee
applies this compensation philosophy in determining appropriate
executive compensation levels and other compensation factors,
the Compensation Committee reaches its decisions with a view
towards the Company’s overall financial performance.
Executive Officer Compensation
The Compensation Committee believes that a substantial portion
of aggregate annual cash compensation for executive officers is
contingent upon the Company’s performance and an
individual’s contribution to the Company’s success.
The Compensation Committee aligns the interests of the
Company’s executive officers with the long-term interests
of shareholders through stock option and restricted stock unit
grants that can result in ownership of the Company’s common
stock. The Compensation Committee structures each executive
officer’s overall compensation package to attract, retain
and reward individuals who contribute to the success of the
Company.
The Company’s compensation program for executive officers
is based on the following guidelines:
| • | Establishment of base salary levels and participation in generally available employee benefit programs based on competitive compensation practices. | |
| • | Utilization of short-term cash incentives that are funded based on Company financial metrics, and vary according to individual contribution to that performance. | |
| • | Inclusion of equity opportunities that create long-term incentives based upon increases in shareholder return. |
The Compensation Committee reviews executive officer
compensation levels utilizing information provided by an
independent consulting firm engaged by the Compensation
Committee to benchmark the Company’s executive pay
practices against industry norms. The Company’s 2004
benchmark study included 25 high technology companies, including
semiconductor, storage systems, storage components and
networking companies.
The Company had a cash incentive plan based on performance in
fiscal year 2004 that provided for bonus awards to be made to
the executive officers (other than the chief executive officer)
and other members of senior management, subject to an aggregate
budget for all awards under the plan. The plan established a
formula of operating income and revenue growth metrics to be
achieved by the Company, as well as for its subsidiary, Engenio
Information Technologies, Inc., on a standalone basis for fiscal
year 2004 before any payments would be made under the plan. In
addition, the plan provides for the Chief Executive Officer to
determine individual bonus award amounts pursuant to his
judgment of each participant’s personal contributions to
the Company’s performance for the year, subject to the
approval of the Compensation Committee. The Company’s
operating income and revenue growth for fiscal year 2004 did not
meet the threshold performance established under the plan.
However, the subsidiary’s operating income for fiscal year
2004 met the threshold performance for the subsidiary.
Therefore, a cash bonus was paid to the chief executive officer
of the subsidiary, who is also a Company 16(b) officer and a
Named Executive Officer.
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The Compensation Committee approved base salary increases on
average of 5% for select incumbent executive officers, effective
January 6, 2004. The increases were the first to be made to
executive base salaries since March 2000. As a result of this
action, base salaries for the executive officers are, on
average, within competitive range of the Company’s market
target of the 60th percentile.
The Company maintains a set of guidelines for use in making
recommendations to the Compensation Committee on individual
option grants to executive officers to purchase common stock of
the Company. Stock option grants were made to certain executive
officers during fiscal year 2004 by reference to the guidelines.
These guidelines are developed with data provided by external
published surveys and other information that are believed to
fairly reflect the competitive environment in which the Company
operates and that are consistent with the compensation
principles set forth above.
The Compensation Committee has reviewed and approved the total
compensation package of all Company 16(b) officers, including
each of the components (base salary, bonus incentive, stock
options, executive perquisites and benefits), and determined the
amounts to be reasonable and competitive for our industry,
utilizing industry benchmarks. Executives do not receive
deferred compensation, retirement benefits or any other benefits
other than eligibility to participate in the same programs and
on the same basis as all other employees.
Chief Executive Officer Compensation
Mr. Corrigan has been Chairman of the Board and Chief
Executive Officer (“CEO”) of the Company since its
founding in 1981. In September 2001, the Company entered into an
employment agreement (the “Agreement”) with
Mr. Corrigan. A summary of the Agreement is set forth in
the section on “CEO Employment Agreement.” The current
base salary of $860,000 for Mr. Corrigan established by the
Compensation Committee falls in the median of the range of such
information used for competitive comparisons.
Mr. Corrigan’s base salary has not been increased
since March 2000.
Mr. Corrigan was eligible to participate in a bonus
compensation plan for the Company’s CEO that is based on
the CEO’s performance, operating income objectives for the
Company and on the overall performance of the Company.
Mr. Corrigan did not receive a bonus with respect to the
Company’s performance during fiscal year 2004. In addition,
Mr. Corrigan did not receive a stock option grant in fiscal
year 2004.
The Compensation Committee is pleased to submit this report to
LSI Logic’s stockholders relating to compensation of its
executive officers.
| Members Of The Compensation Committee | |
| James H. Keyes, Chairman | |
| T.Z. Chu | |
| Dr. Malcolm R. Currie | |
| Matthew J. O’Rourke | |
| Gregorio Reyes |
February 10, 2005
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee of the Board of Directors of LSI Logic
Corporation (“Audit Committee”) assists the Board of
Directors in executing its responsibilities. The Audit Committee
is composed of five non-employee members, each of whom is
independent as defined by the New York Stock Exchange listing
rules and operates under a charter approved by the Board of
Directors. This charter is available on the Company’s
website at www.lsilogic.com. The Audit Committee is
responsible for, among other things, retention and
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termination of the Company’s independent registered public
accounting firm, determining the compensation of the independent
registered public accounting firm and monitoring the integrity
and adequacy of the Company’s financial information,
control systems and reporting practices. The Audit Committee
held 13 meetings during fiscal year 2004.
The Company’s management is responsible for establishing
and maintaining adequate internal control over financial
reporting, for preparing the Company’s financial statements
and for the public reporting process. The Company’s
independent registered public accounting firm,
PricewaterhouseCoopers LLP
(“PricewaterhouseCoopers”), is responsible for
expressing opinions on the conformity of the Company’s
audited financial statements with generally accepted accounting
principles and on management’s assessment of the
effectiveness of the Company’s internal control over
financial reporting. In addition, PricewaterhouseCoopers will
express its own opinion on the effectiveness of the
Company’s internal control over financial reporting.
In this context, the Audit Committee reviewed and discussed with
management and PricewaterhouseCoopers the audited financial
statements for the year ended December 31, 2004,
management’s assessment of the effectiveness of the
Company’s internal control over financial reporting and
PricewaterhouseCoopers’s evaluation of the Company’s
internal control over financial reporting. The Audit Committee
has discussed with PricewaterhouseCoopers certain matters
required under Statement on Auditing Standard No. 61
(Communication with Audit Committees), and has received written
disclosures and the letter required by the Independence
Standards Board Standard No. 1 (Independence Discussion
with Audit Committees) from PricewaterhouseCoopers and has
discussed with them their independence.
The Audit Committee has considered whether the non-audit
services provided by PricewaterhouseCoopers are compatible with
maintaining the independence of PricewaterhouseCoopers and has
concluded that the independence of PricewaterhouseCoopers is
maintained and is not compromised by the services provided.
Based on the review and discussion referred to above, the Audit
Committee recommended to the Board of Directors, and the Board
of Directors approved the Audit Committee’s recommendation,
that the audited financial statements be included in the
Company’s Annual Report on Form 10-K for the fiscal
year ended December 31, 2004, for filing with the
Securities and Exchange Commission.
The Audit Committee also selected PricewaterhouseCoopers to
audit the Company’s consolidated financial statements for
the 2005 fiscal year.
The following represents fees billed by PricewaterhouseCoopers
for professional services provided in connection with the audit
of the Company’s annual financial statements for the fiscal
years 2004 and 2003 and other services during these years.
| Nature of Services | 2004 | 2003 | ||||||
| (In millions) | (In millions) | |||||||
|
Audit Fees(1)
|
$ | 3.50 | $ | 1.76 | ||||
|
Audit-Related Fees(2)
|
$ | 0.10 | $ | 0.30 | ||||
|
Tax Fees(3)
|
$ | 1.60 | $ | 1.50 | ||||
|
All Other Fees
|
$ | 0 | $ | 0 | ||||
| (1) | The increase in audit fees in 2004 as compared to 2003 is primarily related to (a) attestation services relating to the report on the Company’s internal controls as specified in Section 404 of the Sarbanes-Oxley Act and (b) fees associated with the filing of the Registration Statement on Form S-1 and related amendments with the Securities and Exchange Commission for the Company’s majority-owned subsidiary, Engenio Information Technologies, Inc. On July 29, 2004, the Company announced jointly with Engenio the postponement of the initial public offering of Engenio’s common stock due to then-current market conditions. |
| (2) | Audit-related service fees include fees for accounting assistance primarily related to leasing transactions. |
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| (2) | Tax fees represent fees charged for services for tax advice, tax compliance and domestic and international tax planning. |
The Audit Committee has established a policy for pre-approval of
audit and permissible non-audit services. The Audit Committee
reviews and approves the independent registered public
accounting firm’s annual audit plan and any subsequent
engagements. The Audit Committee requires that all audit and
permissible non-audit services be submitted to it for review and
approval in advance. Occasionally, a subcommittee of the Audit
Committee, consisting of one or two members, pre-approves
certain services. The entire Audit Committee ratifies the
subcommittee’s pre-approval in the subsequent meeting of
the Audit Committee. In 2004, the Audit Committee followed these
guidelines in approving all services rendered by
PricewaterhouseCoopers.
| Members Of The Audit Committee | |
| Dr. Malcolm R. Currie, Chairman | |
| T.Z. Chu | |
| James H. Keyes | |
| R. Douglas Norby | |
| Matthew J. O’Rourke |
February 9, 2005
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PERFORMANCE GRAPH
Comparison of Five-Year Cumulative Total Return
Among LSI Logic Corporation, S&P 500 Index
and the Philadelphia Semiconductor Index
| Dec-99 | Dec-00 | Dec-01 | Dec-02 | Dec-03 | Dec-04 | |||||||||||||||||||
|
LSI Logic Corporation
|
$ | 100 | $ | 51 | $ | 47 | $ | 17 | $ | 26 | $ | 16 | ||||||||||||
|
S&P®
|
$ | 100 | $ | 91 | $ | 80 | $ | 62 | $ | 80 | $ | 89 | ||||||||||||
|
Philadelphia Semiconductor Index
|
$ | 100 | $ | 82 | $ | 74 | $ | 41 | $ | 72 | $ | 62 | ||||||||||||
The stock price performance shown on the graph following is not
necessarily indicative of future price performance.
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), requires the
Company’s directors, officers and beneficial owners of more
than 10% of the Company’s common stock to file with the SEC
initial reports of ownership and reports of changes in ownership
of common stock and other equity securities of the Company.
Based solely on its review of the copies of such reports
received by it, or written representations from reporting
persons, the Company believes that during the fiscal year ended
December 31, 2004, its officers, directors and holders of
more than 10% of the Company’s common stock complied with
all Section 16(a) filing requirements.
| THE BOARD OF DIRECTORS | |
| April 7, 2005 |
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Appendix A
CHARTER OF THE
COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
OF
LSI LOGIC CORPORATION
(as adopted by the Board of Directors on April 10, 2003)
PURPOSE
The purpose of the Compensation Committee of the Board of
Directors (the “Committee”) of LSI Logic Corporation
(the “Company”) is to discharge the Board’s
responsibilities relating to compensation of the Company’s
executive officers and directors, as well as to oversee, review
and evaluate the Company’s incentive compensation and
equity based plans and practices and to make recommendations to
the Board with respect to such plans and practices, as the
Committee deems appropriate.
The Committee is also responsible for producing an annual report
on executive officer compensation for inclusion in the
Company’s proxy statement, in accordance with all
applicable rules and regulations.
COMMITTEE MEMBERSHIP AND ORGANIZATION
The members of the Committee shall be nominated by the
Nominating and Corporate Governance Committee and appointed
annually by the Board at the first regular meeting of the Board
following each annual meeting of stockholders. Compensation
Committee members shall serve at the discretion of the Board.
The Committee shall consist of no fewer than two
(2) members. The members of the Committee shall be
“independent” in accordance with the Corporate
Governance Standards of the New York Stock Exchange and shall
meet (i) the non-employee director definition of
Rule 16b-3 promulgated under Section 16 of the
Securities Exchange Act of 1934, as amended (the “Exchange
Act”), and (ii) the outside director definition of
Section 162(m) of the Internal Revenue Code of 1986, as
amended. For purposes of this Charter, the term “executive
officer” shall have the meaning given to
“officer” pursuant to Rule 16a-l(f) of the
Exchange Act.
COMMITTEE RESPONSIBILITIES AND AUTHORITY
| (a) Officer and Director Compensation Plans, Policies and Programs |
The Committee shall review at least annually the executive
officer and director compensation plans, policies and programs
of the Company to ensure that executive officers and directors
of the Company are compensated effectively in a manner
consistent with the goals of the Company and to ensure that the
Company will be able to attract, retain and reward those who
contribute to the success of the Company. If the Committee deems
it appropriate, the Committee may adopt or recommend to the
Board the adoption of new, or the amendment of existing,
executive officer and director compensation plans, policies and
programs.
| (b) Board Committee Service Fees |
The Committee shall make recommendations to the Board regarding
additional fees, if any, for service by members of the Board on
Board committees. Such fees may include retainers, per meeting
fees and special fees for service as a committee member or
chairman. Fees may be paid in such form of consideration as is
determined by the Board, which may include but is not limited to
cash, deferred payment, stock, stock options, phantom stock, and
common stock equivalents.
| (c) Goals of the Officer and Director Compensation Plans |
The Committee shall review at least annually the goals of the
Company relevant to the compensation of the CEO and the
executive officers.
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| (d) CEO and Executive Officer Performance Review |
The Committee shall evaluate and review at least annually the
performance of the Chief Executive Officer and other executive
officers in light of the Company’s goals; and based upon
such evaluation, shall determine for the Chief Executive Officer
and other executive officers of the Company (a) their
annual base salary, (b) their annual incentive bonus,
(c) their equity compensation, (d) and their
employment agreements, severance arrangements, and change in
control agreements/provisions, as applicable, and (e) any
other benefits, perquisites, compensation or arrangements.
| (e) Stock Option Grant Authority |
The Committee shall have the authority to grant stock options
and other stock awards under the Company’s equity incentive
plans, as authorized by the Board.
INVESTIGATIONS, STUDIES AND OUTSIDE ADVISORS
| • | The Committee may conduct or authorize investigations into or studies of matters within the Committee’s scope of responsibilities. | |
| • | The Committee shall have the sole authority to retain at the Company’s expense and terminate any compensation consultant to be used by the Committee to assist in the evaluation of Chief Executive Officer’s or other executive officer’s compensation and Director compensation and shall have sole authority to approve the consultant’s fees and other retention terms. | |
| • | The Committee shall have authority to obtain advice and assistance from internal or external legal, accounting or other advisors, at the Company’s expense. |
EVALUATION OF THE COMMITTEE
| • | The Committee shall evaluate its performance at least annually. The Committee shall review and reassess the adequacy and scope of this Charter annually and recommend any proposed changes to the Board for approval. | |
| • | The Committee shall deliver to the Board a report setting forth the results of its evaluation, including any recommended amendments to this Charter and any recommended changes to the Company’s or the Board’s compensation policies or procedures. |
MEETINGS
The Committee shall meet at least twice each year and shall
establish its own schedule and rules of procedure, consistent
with the Bylaws of the Company and this Charter. The Board shall
designate one member of the Committee as its Chairperson. The
Chairperson or a majority of the members of the Committee may
also call a special meeting of the Committee. A majority of the
members of the Committee present in person or by means of a
conference telephone or other communications equipment by means
of which all persons participating in the meeting can hear and
be heard shall constitute a quorum.
The Committee may form subcommittees for any purpose that the
Committee deems appropriate and may delegate to such
subcommittees such power and authority as the Committee deems
appropriate; provided, however, that the Committee shall not
delegate to a subcommittee any power or authority required by
any law, regulation or listing standard to be exercised by the
Committee as a whole.
The Committee may request that any directors, officers or
employees of the Company, or other persons whose advice and
counsel are sought by the Committee, attend any meeting of the
Committee to provide such pertinent information as the Committee
requests.
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MINUTES
The Committee shall maintain written minutes of its meetings,
which minutes shall be filed and maintained with the books and
records of the Company at the Company’s headquarters.
REPORTS
In addition to preparing the report in the Company’s proxy
statement in accordance with the rules and regulations of the
SEC, the Committee shall deliver a report to the Board following
each of its meetings summarizing its examinations and
recommendations and describing all of the actions taken by the
Committee at the meeting. Such report may be furnished orally or
in writing.
VOTING
Each member of the Committee shall have one vote on any matter
requiring action by the Committee.
COMPENSATION
Members of the Committee shall receive such fees, if any, for
their service as Committee members as may be determined by the
Board of Directors in its sole discretion. Such fees may include
retainers, per meeting fees and special fees for service as
Chair of the Committee. Fees may be paid in such form of
consideration as is determined by the Board of Directors.
The Committee Members of the Committee may not receive any other
compensation from the Company except the fees that they receive
for service as a member of the Board of Directors or any
committee thereof.
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Appendix B
CHARTER OF THE
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
OF THE BOARD OF DIRECTORS
OF
LSI LOGIC CORPORATION
(as adopted by the Board of Directors on April 10, 2003)
PURPOSE
The purpose of the Nominating and Corporate Governance Committee
(“Committee”) of the Board of Directors of LSI Logic
Corporation (the “Company”) is to ensure that the
Board of Directors is properly constituted to meet its fiduciary
obligations to stockholders and the Company and that the Company
has and follows appropriate governance standards. To carry out
this purpose, the Committee shall:
| • | Assist the Board in identifying and recommend to the Board individuals qualified to serve as directors of the Company and on committees of the Board; | |
| • | Recommend to the Board the director nominees for the next annual meeting of stockholders; | |
| • | Advise the Board with respect to Board composition, procedures and whether to form or dissolve committees; | |
| • | Advise the Board with respect to the corporate governance principles applicable to the Company; and | |
| • | Oversee and develop criteria for oversight of the evaluation of the Board and management. |
COMMITTEE MEMBERSHIP AND ORGANIZATION
The members of the Committee shall be nominated by the Committee
and appointed annually by the Board at the first regular meeting
of the Board following each annual meeting of stockholders.
Committee members shall serve at the discretion of the Board.
The Committee shall be comprised of no fewer than three
(3) members who qualify as independent directors
(“Independent Directors”) in accordance with the
Corporate Governance Standards of the New York Stock Exchange,
Inc. (“NYSE”), the rules of the SEC and applicable
law, as in effect from time to time.
COMMITTEE RESPONSIBILITIES AND AUTHORITY
| (a) Board Candidates and Nominees |
The Committee shall:
| • | Establish procedures and criteria for evaluating the suitability of nominees to the Board to ensure nominees possess those characteristics that are expected to contribute to an effective Board. Each nominee should be considered on the basis of his or her likelihood to enhance the Board’s ability to manage and direct the affairs and business of the Company, including when applicable, to enhance the ability of committees of the Board to fulfill their duties and/or to satisfy any independence requirements imposed by law, regulation or NYSE listing requirements. | |
| • | Evaluate and recommend nominees to the Board, and consider stockholder nominees for election to the Board. | |
| • | Conduct searches for potential board members who satisfy the criteria established by the Committee. |
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| (b) Board Composition and Procedures |
The Committee shall:
| • | Review with the Board, at least annually, the composition of the Board. If appropriate, the Committee shall recommend measures to be taken so that the Board as a whole reflects the appropriate balance of the criteria for directors established by the Committee; | |
| • | Ensure that the Board contains at least the minimum number of Independent Directors required by the NYSE; and | |
| • | Coordinate with the Board and approve the Board meeting schedule. |
| (c) Board Committees |
The Committee shall:
| • | Review with the Board, at least annually, the size and composition of each of the Board’s standing committees and recommend individuals qualified to serve as members of each committee and as chairman of each committee, including the Committee, and recommend individuals to fill any vacancy that might occur on a committee, including the Committee. | |
| • | Recommend that the Board establish such special committees as may be desirable or necessary to address ethical, legal or other matters that may arise from time to time. | |
| • | Review annually committee assignments and make any appropriate recommendations to the Board. | |
| • | Review the functioning of the committees of the Board and make recommendations to the Board for any changes, including the creation or elimination of committees. |
| (d) Corporate Governance |
The Committee shall:
| • | Develop and review, at least annually, the corporate governance principles adopted by the Board to assure that they are appropriate for the Company and comply with the requirements of the NYSE and applicable law, and make recommendations to the Board of any desirable changes. | |
| • | Consider any other corporate governance issues that arise from time to time, and develop appropriate recommendations for the Board. |
| (e) Evaluation of the Board and Management |
The Committee shall:
| • | Evaluate the performance of the Board and individual directors, and, if necessary, recommend termination of membership of individual directors in accordance with the board’s governance principles, for cause or for other appropriate reasons. | |
| • | Review the suitability for continued service as a director of each Board member when his or her term expires and when he or she has a significant change in status, including but not limited to an employment change, and to recommend whether or not the director should be re-nominated. | |
| • | The Committee shall evaluate the performance of the Company’s management. The Committee shall conduct an annual review on succession planning, report its findings and recommendations to the Board, and work with the Board in evaluating potential successors to executive management positions. |
INVESTIGATIONS, STUDIES AND OUTSIDE ADVISORS
| • | The Committee may conduct or authorize investigations into or studies of matters within the Committee’s scope of responsibilities. |
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| • | The Committee shall have the sole authority to retain, at the Company’s expense, and terminate any personnel search consultant to be used by the Committee to assist the Committee in identifying qualified Board candidates, and shall have the sole authority to approve the consultant’s fees and other retention terms. | |
| • | The Committee shall have authority to obtain advice and assistance from internal or external legal, accounting or other advisors. |
EVALUATION OF THE COMMITTEE
On an annual basis, the Committee shall evaluate its performance.
The Committee shall review and reassess the adequacy and scope
of this Charter at least annually and recommend any proposed
changes to the Board for approval.
The Committee shall deliver to the Board a report setting forth
the results of its evaluation, including any recommended
amendments to this Charter and any recommended changes to the
Company’s or the Board’s policies or procedures.
MEETINGS
The Committee shall meet at least twice each year and shall
establish its own schedule and rules of procedure, consistent
with the Bylaws of the Company and this Charter. The Board shall
designate one member of the Committee as its Chairperson. The
Chairperson or a majority of the members of the Committee may
also call a special meeting of the Committee. A majority of the
members of the Committee present in person or by means of a
conference telephone or other communications equipment by means
of which all persons participating in the meeting can hear and
be heard shall constitute a quorum. The Committee may form
subcommittees for any purpose that the Committee deems
appropriate and may delegate to such subcommittees such power
and authority as the Committee deems appropriate; provided,
however, that the Committee shall not delegate to a subcommittee
any power or authority required by any law, regulation or
listing standard to be exercised by the Committee as a whole.
The Committee may request that any directors, officers or
employees of the Company, or other persons whose advice and
counsel are sought by the Committee, attend any meeting of the
Committee to provide such pertinent information as the Committee
requests.
MINUTES
The Committee shall maintain written minutes of its meetings,
which minutes shall be filed and maintained with the books and
records of the Company at the Company’s headquarters.
REPORTS
The Committee shall deliver a report to the Board following each
of its meetings summarizing its examinations and recommendations
and describing all of the actions taken by the Committee at the
meeting. Such reports may be furnished orally or in writing.
VOTING
Each member of the Committee shall have one vote on any matter
requiring action by the Committee.
COMPENSATION
Members of the Committee shall receive such fees, if any, for
their service as Committee members as may be determined by the
Board in its sole discretion. Such fees may include retainers,
per meeting fees and special fees for service as Chair of the
Committee. Fees may be paid in such form of consideration as is
determined by the Board of Directors.
Members of the Committee may not receive any other compensation
from the Company except the fees that they receive for service
as a member of the Board of Directors or any committee thereof.
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VOTE BY INTERNET — www.proxyvote.com
Use the Internet to transmit your voting
instructions and for electronic delivery of
information up until 11:59 P.M. Eastern Time the
day before the cut-off date or meeting date. Have
your proxy card in hand when you access the web
site and follow the instructions to obtain your
records and to create an electronic voting
instruction form.
ELECTRONIC DELIVERY OF FUTURE SHAREHOLDER
COMMUNICATIONS
If you would like to reduce the costs incurred by
LSI Logic Corporation in mailing proxy materials,
you can consent to receiving all future proxy
statements, proxy cards and annual reports
electronically via e-mail or the Internet. To
sign up for electronic delivery, please follow the
instructions above to vote using the Internet and,
when prompted, indicate that you agree to receive
or access shareholder communications
electronically in future years.
VOTE BY PHONE — 1-800-690-6903
Use any touch-tone telephone to transmit your
voting instructions up until 11:59 P.M. Eastern
Time the day before the cut-off date or meeting
date. Have your proxy card in hand when you call
and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it
in the postage-paid envelope we have provided or
return it to LSI Logic Corporation, c/o ADP, 51
Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
|
LSILC1 | KEEP THIS PORTION FOR YOUR RECORDS |
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
LSI LOGIC CORPORATION
Vote On Directors
| 1. | Election of Directors | |||||||
| Nominees: | ||||||||
| 01) Wilfred J. Corrigan | 05) R. Douglas Norby | |||||||
| 02) James H. Keyes | 06) Matthew J. O’Rourke | |||||||
| 03) Malcolm R. Currie | 07) Gregorio Reyes | |||||||
| 04) T.Z. Chu | 08) Larry W. Sonsini |
| For | Withhold | For All | ||
| All | All | Except | ||
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¡ | ¡ |
To withhold authority to vote for a particular |
nominee, mark “For All Except” and write the |
nominee’s number on the line below. |
| Vote On Proposal | For | Against | Abstain | |||||
2.
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Ratification of the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm for the 2005 fiscal year. | ¡ | ¡ | ¡ | ||||
| (This Proxy should be marked, dated and signed by the stockholder(s) exactly as his or her name appears hereon, and | ||||||||
| returned promptly in the enclosed envelope. Persons signing in a fiduciary capacity should so indicate. If shares are held | ||||||||
| by joint tenants or as community property, both should sign.) | ||||||||
| For address changes, please check this box and write | ||||||
| them on the other side of this proxy card where indicated. | ¡ |
| Please indicate if you plan to attend this meeting. | ¡ | ¡ | ||||||
| Yes | No |
Signature [PLEASE SIGN WITHIN BOX]
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Date | Signature (Joint Owners) | Date |
Table of Contents
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS
LSI LOGIC CORPORATION
2005 ANNUAL MEETING OF STOCKHOLDERS
The undersigned stockholder of LSI Logic Corporation, a Delaware corporation, hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders and Proxy Statement, each dated April 7, 2005, and hereby appoints Wilfred J. Corrigan and David G. Pursel, or either of them, proxies and attorneys-in-fact, with full power to each of substitution, on behalf and in the name of the undersigned, to represent the undersigned at the 2005 Annual Meeting of Stockholders of LSI Logic Corporation to be held on May 12, 2005, at 9:00 a.m., local time, at the Fairmont San Jose located at 170 South Market Street, San Jose, CA 95113 and at any adjournment(s) thereof, and to vote all shares of Common Stock that the undersigned would be entitled to vote if then and there personally present, on the matters set forth on the reverse side.
THIS PROXY WILL BE VOTED AS DIRECTED OR IF NO CONTRARY DIRECTION IS INDICATED, WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES LISTED AS DIRECTORS AND FOR RATIFICATION OF PRICEWATERHOUSECOOPERS LLP AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
Address Changes: |
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(If you noted any Address Changes above, please mark corresponding box on the reverse side.)
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
SEE REVERSE
SIDE