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 [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, For Use of the
Commission only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 240.14a-11(c) or Rule 240.14a-12
PCTEL, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
PCTEL, INC.
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
[LETTERHEAD]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
________________
Tuesday, May 15, 2001
10:00 a.m.
________________
TO OUR STOCKHOLDERS:
The 2001 Annual Meeting of Stockholders of PCTEL, Inc., a Delaware
corporation, will be held on Tuesday, May 15, 2001 at 10:00 a.m. local time at
our headquarters, located at 1331 California Circle, Milpitas, California, for
the following purposes:
1. To elect two directors to serve until the 2004 Annual Meeting of
Stockholders and until their successors are elected;
2. To amend our 1998 Director Option Plan to provide for annual increases
in the authorized number of shares of common stock reserved for
issuance thereunder;
3. To ratify the appointment of Arthur Andersen LLP as our independent
public accountants for the fiscal year ending December 31, 2001; and
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The foregoing items of business are more fully described in the proxy
statement accompanying this notice. Only stockholders of record at the close of
business on April 5, 2001 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,
sign, date and return the enclosed proxy as promptly as possible in the postage-
prepaid envelope enclosed for that purpose. Any stockholder attending the
meeting may vote in person even if he or she has returned a proxy.
Sincerely,
/s/ William F. Roach
---------------------------------------
William F. Roach
President and Chief Executive Officer
Milpitas, California
April 10, 2001
---------------------------------------------------------------------
YOUR VOTE IS IMPORTANT.
PLEASE SUBMIT YOUR PROXY AS PROMPTLY AS POSSIBLE BY FOLLOWING THE
INSTRUCTIONS ON THE ENCLOSED PROXY CARD.
---------------------------------------------------------------------
PCTEL, INC.
_________________
PROXY STATEMENT FOR THE
2001 ANNUAL MEETING OF STOCKHOLDERS
_________________
GENERAL INFORMATION
The board of directors of PCTEL, Inc. is soliciting proxies for the 2001
Annual Meeting of Stockholders. This proxy statement contains important
information for you to consider when deciding how to vote on the matters brought
before the meeting. Please read it carefully.
Our board of directors has set April 5, 2001 as the record date for the
meeting. Stockholders who owned our common stock at the close of business on
April 5, 2001 are entitled to vote at and attend the meeting, with each share
entitled to one vote. There were 18,993,526 shares of our common stock
outstanding on the record date. On the record date, the closing price of our
common stock on the Nasdaq National Stock Market was $7.375 per share.
This proxy statement is being mailed on or about April 10, 2001 to
stockholders entitled to vote at the meeting.
In this proxy statement:
. "We" and "PCTEL" mean PCTEL, Inc.
. Holding shares in "street name" means your shares are held in an
account at a brokerage firm and the stock certificates and record
ownership are not in your name.
. "SEC" means the Securities and Exchange Commission.
. "Beneficial ownership" of stock is defined under various SEC Rules in
different ways for different purposes, but generally means that,
although you (or the person or entity in question) do not hold the
shares of record in your name, you do have investment or voting
control (and/or an economic or "pecuniary" interest) in the shares
through an agreement, relationship or the like.
QUESTIONS AND ANSWERS
Q: When and where is the stockholder meeting?
A: Our annual meeting of stockholders is being held on Tuesday, May 15, 2001
at 10:00 a.m. at our headquarters, located at 1331 California Circle,
Milpitas, California.
Q: Do I need a ticket to attend the stockholder meeting?
A: No, you will not need a ticket to attend the meeting.
Q: Why am I receiving this proxy statement and proxy card?
A: You are receiving a proxy statement and proxy card from us because you
owned shares of our common stock on the record date. This proxy statement
describes issues on which we would like
you, as a stockholder, to vote. It also gives you information on these
issues so that you can make an informed decision. The proxy card is used
for voting.
Q: What is the effect of signing and returning my proxy card?
A: When you sign and return the proxy card, you appoint Andrew D. Wahl and
William F. Roach as your representatives at the meeting. Mr. Wahl and Mr.
Roach will vote your shares at the meeting as you have instructed them on
the proxy card. This way, your shares will be voted whether or not you
attend the annual meeting. Even if you plan to attend the meeting, it is a
good idea to complete, sign and return your proxy card or vote via the
Internet or telephone in advance of the meeting just in case your plans
change. You can vote in person at the meeting even if you have already sent
in your proxy card.
If an issue comes up for a vote at the meeting that is not described in
this proxy statement, Mr. Wahl and Mr. Roach will vote your shares, under
your proxy, in their discretion.
If you do not indicate on the proxy card how you want your votes cast, the
proxies (as your representatives) will vote your shares FOR all of
management's nominees for director, FOR approval of the amendment of the
1998 Director Option Plan, and FOR ratification of the appointment of our
independent public accountants.
Q: What am I voting on?
A: You are being asked to vote on:
. the election of two nominees to serve on our board of directors;
. the amendment of our 1998 Director Option Plan to provide for an
annual increase in the authorized number of shares of common stock
reserved for issuance thereunder; and
. the ratification of the appointment of our independent public
accountants for fiscal year 2001.
Q: How do I vote?
A: There are four ways you may vote. (Please see detailed instructions on your
proxy card.)
. Place your vote by telephone.
Please follow the instructions that came with your proxy statement. If you
vote by telephone, you do not need to mail in your proxy card. Stockholders
with rotary service will not be able to vote by telephone.
OR
. Place your vote via the Internet.
Please follow the instructions that came with your proxy statement. If you
vote on the Internet, you do not need to mail in your proxy card.
OR
. Mail in your completed, signed and dated proxy card.
-2-
If you return a signed card but do not provide voting instructions, your
shares will be voted: FOR the two named nominees for director, FOR approval
of the amendment of the 1998 Director Option Plan, and FOR ratification of
our independent public accountants.
OR
. Vote in person by attending our annual meeting.
We will pass out written ballots to any stockholder who wants to vote in
person at the meeting. If you hold your shares in street name, you must
request a legal proxy from your stock broker in order to vote at the
meeting.
Q: What does it mean if I receive more than one proxy card?
A: It means that you have multiple accounts with the transfer agent and/or
with stock brokers. Please sign and return all proxy cards to ensure that
all of your shares are voted.
Q: What if I change my mind after I return my proxy card?
A: You may revoke your proxy (that is, cancel it) and change your vote at any
time prior to the voting at the annual meeting by providing written notice
to our corporate secretary at the following address: 1331 California
Circle, Milpitas, California 95035, Attn: Andrew D. Wahl.
You may also do this by:
. Signing another proxy card with a later date,
. Voting in person at the meeting, or
. Voting via the Internet or by telephone on a date after the date on
your proxy card (your latest proxy is counted).
Q: Will my shares be voted if I do not sign and return my proxy card?
A: If your shares are held in street name, your brokerage firm may either vote
your shares on "routine matters" (such as election of directors) or leave
your shares unvoted. Your brokerage firm may not vote on "non-routine
matters." We believe that all matters presented for consideration in this
proxy statement are routine.
Q: How many shares can vote at the meeting?
A: As of the record date, 18,993,526 shares of common stock were outstanding.
Each outstanding share of common stock entitles the holder to one vote on
all matters covered in this proxy statement. Therefore, there are a maximum
of 18,993,526 votes that may be cast at the meeting.
Q: What is a "quorum"?
A: A "quorum" is the number of shares that must be present, in person or by
proxy, in order for business to be transacted at the meeting. The required
quorum for the annual meeting is a majority of the shares outstanding on
the record date. There must be a quorum present for the meeting to be held.
All completed and signed proxy cards, Internet votes, telephone votes,
whether representing a vote
-3-
FOR, AGAINST, WITHHELD, ABSTAINED or a broker non-vote, will be counted
toward the quorum.
Q: How are abstentions counted?
A: If you return a proxy card that indicates an abstention from voting in all
matters, the shares represented will be counted as present for the purpose
of determining a quorum, but they will not be voted on any matter at the
annual meeting. Consequently, if you abstain from voting on the proposals
to (a) amend our 1998 Director Option Plan, or (b) ratify the appointment
of Arthur Anderson LLP as our independent public accountants, your
abstention will have the same effect as a vote against the proposal.
Q: What is a "broker non-vote?"
A: Under the rules that govern brokers who have record ownership of shares
that are held in "street name" for their clients, who are the beneficial
owners of the shares, brokers have the discretion to vote such shares on
routine matters, but not on non-routine matters. Thus, if the proposals to
be acted upon at the meeting include both routine and non-routine matters,
the broker may turn in a proxy card for uninstructed shares that votes
"FOR" routine matters, but expressly states that the broker is NOT voting
on the non-routine matters. The vote with respect to the non-routine matter
in this case is referred to as a "broker non-vote."
Q: How are broker non-votes counted?
A: Broker non-votes are counted for the purpose of determining the presence or
absence of a quorum, but are not counted for determining the number of
votes cast for or against a proposal.
Q: What is the required vote for each proposal to pass?
A: For the proposal to elect directors, the two nominees receiving the highest
number of votes, in person or by proxy, will be elected as directors. For
the proposals to amend our 1998 Director Option Plan and to ratify the
appointment of our independent public accountants, the required vote is the
affirmative (i.e. "FOR") vote of a majority of the votes cast. The votes
cast on a particular proposal include votes FOR, AGAINST, WITHHELD, and
ABSTAINED, but do not include broker non-votes.
Q: Who is soliciting my vote?
A: We are making and will bear the entire cost of this proxy solicitation,
including the preparation, assembly, printing and mailing of proxy
materials. We have retained Wells Fargo Bank, MN N.A., at an estimated cost
of $5,000, to assist us in the solicitation of proxies for our annual
meeting. In addition, we may reimburse brokerage firms and other custodians
for their reasonable out-of-pocket expenses for forwarding these proxy
materials to you. We expect our transfer agent, Wells Fargo Bank, MN N.A.,
to tabulate the proxies and to act as inspector of the election. In
addition to this solicitation by mail, proxies may be solicited by our
directors, officers and other employees by telephone, the Internet or fax,
in person or otherwise. None of these persons will receive any additional
compensation for assisting in the solicitation.
We shall provide without charge to each stockholder solicited by these
proxy solicitation materials a copy of our Annual Report on Form 10-K, together
with the financial statements and financial statement
-4-
schedules required to be filed with the Annual Report, upon written request sent
to PCTEL, Inc., 1331 California Circle, Milpitas, California 95035, Attn: Andrew
D. Wahl, Chief Financial Officer.
Deadline for Receipt of Stockholder Proposals for 2002 Annual Meeting
Stockholders are entitled to present proposals for action at a forthcoming
meeting if they comply with the requirements of the proxy rules promulgated by
the Securities and Exchange Commission. Proposals of stockholders intended to
be presented for consideration at our 2002 annual meeting of stockholders must
be received by us no later than December 11, 2001 in order that they may be
considered for inclusion in the proxy statement and form of proxy relating to
that meeting.
The attached proxy card grants the proxy holders discretionary authority to
vote on any matter raised at the annual meeting. If you intend to submit a
proposal at the 2002 annual meeting that is not eligible for inclusion in the
proxy statement and form of proxy relating to that meeting, you must do so no
later than February 24, 2002. If you fail to comply with the foregoing notice
provision, the proxy holders at the 2002 annual meeting will be allowed to use
their discretionary voting authority when the proposal is raised at that
meeting.
-5-
SUMMARY OF PROPOSALS
The board of directors has included three proposals on the agenda for our
annual meeting. The following is a brief summary of the matters to be
considered and voted upon by our stockholders.
Proposal One - Election of Directors
We have a classified board of directors that currently consists of seven
directors. Each director serves a three year term. The first proposal is the
election of two Class II directors to serve until our 2004 annual meeting. Our
board of directors has nominated Richard C. Alberding and Carl A. Thomsen to
serve as our Class II directors. Additional information about the election of
directors and a brief biography of each nominee begins on page 8.
Our board recommends a vote for each of the two nominees.
Proposal Two - Amendment of the 1998 Director Option Plan
The second proposal is to approve an amendment to our 1998 Director Option
Plan to provide for automatic annual increases in the number of shares reserved
for issuance thereunder such that, effective as of January 1 of each year,
beginning on January 1, 2002, the number of shares that may be optioned and sold
under the 1998 Director Option Plan shall be increased by an amount equal to the
lesser of (i) 0.5% of our outstanding shares on such date or (ii) a lesser
amount determined by the board of directors. More information about this
proposal begins on page 13.
Our board recommends a vote to approve the amendment of our 1998 Director Option
Plan.
Proposal Three - Ratification of Appointment of Independent Public Accountants.
The third proposal is the ratification of the appointment of Arthur
Andersen LLP as our independent public accountants. More information about this
proposal begins on page 16.
Our board recommends a vote to ratify the appointment of
Arthur Andersen LLP as our independent public accountants.
Other Matters
Other than the proposals listed above, our board of directors does not
intend to present any other matters to be voted on at the meeting. Our board is
not currently aware of any other matters that will be presented by others for
action at the meeting. However, if other matters are properly presented at the
meeting and you have signed and returned your proxy card or voted on the
Internet or by telephone, the proxies will have discretion to vote your shares
on these matters to the extent authorized under the Securities Exchange Act of
1934.
-6-
PROPOSAL ONE
ELECTION OF DIRECTORS
Nominees
We have a classified board of directors currently consisting of two Class I
directors, Peter Chen and William F. Roach; two Class II directors, Richard C.
Alberding and Carl A. Thomsen; and three Class III directors, Mike Min-Chu Chen,
Giacomo Marini and Martin H. Singer, who will serve until the annual meetings of
stockholders to be held in 2003, 2001, and 2002, respectively, and until their
respective successors are duly elected and qualified. At each annual meeting of
stockholders, directors are elected for a term of three years to succeed those
directors whose terms expire on the annual meeting dates.
In August 2000, William Wen-Liang Hsu and Han Yeh resigned as members of
our board of directors and William F. Roach was appointed as a director. Mr.
Hsu and Mr. Yeh had served as members of our board since our inception in 1994.
Furthermore in March 2001, Wen C. Ko resigned as a member of our board of
directors. Mr. Ko had served as a member of our board since 1999. We would
like to thank Mr. Hsu, Mr. Yeh and Mr. Ko for their service and counsel during
their terms as directors.
Additionally, in February 2001, Peter Chen resigned as our chief executive
officer and as the chairman of our board of directors, but he continues to serve
as the honorary chairman. We would like to thank Mr. Chen for his six years of
service as our chief executive officer and chairman. Martin H. Singer, an
existing director on the board, has been elected by our board to serve as its
non-executive chairman.
The nominees for election at the annual meeting as Class II directors are
Richard C. Alberding and Carl A. Thomsen. Mr. Thomsen was appointed in March
2001 as a director to our board to fill the vacancy created by Mr. Ko's
resignation. If elected, Mr. Alberding and Mr. Thomsen will each serve as a
director until the annual meeting in 2004 and until their respective successors
are elected and qualified. The proxy holders may not vote the proxies for a
greater number of persons than the number of nominees named. Unless otherwise
instructed, the proxy holders will vote the proxies received by them for our two
nominees. In the event that either of our nominees is unable or declines to
serve as a director at the time of the annual meeting, the proxies will be voted
for any nominee who shall be designated by the present board of directors to
fill the vacancy. We are not aware that either nominee will be unable or will
decline to serve as a director. In the event that additional persons are
nominated for election as directors, the proxy holders intend to vote all
proxies received by them in such a manner as will assure the election of as many
of the nominees as possible and, in such event, the specific nominees to be
voted for will be determined by the proxy holders.
-7-
Directors and Nominees
The following table sets forth certain information regarding our directors
and nominees as of March 31, 2001:
Name Age Position with PCTEL Since
------------------------------------------------------------------ --- ------------------- -----
Class I directors whose terms expire at the 2003 annual meeting
of stockholders:
Peter Chen (3).................................................... 46 Chief Executive Officer and 1994
Chairman of the Board (4)
William F. Roach (5).............................................. 57 Chief Operating Officer, 2000
Director (6)
Class II directors to be elected at the 2001 annual meeting:
Richard C. Alberding (1)(2)....................................... 70 Director 1999
Carl A. Thomsen................................................... 56 Director (7) 2001
Class III directors whose terms expire at the 2002 annual meeting
of stockholders:
Mike Min-Chu Chen (1)............................................. 51 Director 1994
Giacomo Marini (1)................................................ 49 Director 1996
Martin H. Singer (2).............................................. 49 Director (8) 1999
_______________________________
(1) Member of audit committee.
(2) Member of compensation committee.
(3) Mr. Chen became a member of the compensation committee on February 15,
2001. Prior to that date, Mr. Chen was an ex officio member of the
compensation committee.
(4) On February 15, 2001, Mr. Chen resigned as chief executive officer and as
chairman of the board. However, Mr. Chen is currently a director and has
been named our honorary chairman of the board.
(5) Mr. Roach became an ex officio member of the compensation committee on
February 15, 2001.
(6) On February 15, 2001, Mr. Roach was named our chief executive officer.
(7) Mr. Thomsen was appointed a director in March 2001.
(8) On February 15, 2001, Dr. Singer was named our non-executive chairman of
the board.
Mr. Peter Chen is one of our co-founders and served as our chief executive
officer from our inception in March 1994 until February 2001. Mr. Chen has over
15 years experience in data communications and modem development at Digicom
Systems, Inc. (a company which he co-founded), Cermetek, Inc., and Anderson-
Jacobson, Inc., all data communications companies. Mr. Chen has a Bachelor of
Science in Control Engineering from National Chiao-Tung University, Taiwan, and
holds a Master of Science in Electrical Engineering from Arizona State
University. Mr. Chen is also the cousin of one of our directors, Dr. Mike Min-
Chu Chen. Mr. Chen resigned as our chief executive officer and as our chairman
of the board in February 2001, and he is now our honorary chairman of the board.
Mr. William F. Roach has been our president and chief executive officer
since February 15, 2001. Prior to that, Mr. Roach was our president and chief
operating officer from August 1999 to February 2001. Mr. Roach has been a
director since August 2000. From January 1997 until August 1999, Mr. Roach
served as a senior vice president, worldwide sales and marketing for Maxtor
Corporation, a data storage company. From November 1996 to January 1997, Mr.
Roach was executive vice president for worldwide marketing for Wyle Electronics,
an electronic component distribution company. From 1989 to November 1996, he
served
-8-
as executive vice president, worldwide sales, for Quantum Corporation, a data
storage company. Mr. Roach received a Bachelor of Science in Industrial
Economics from Purdue University.
Dr. Martin H. Singer has been a director since August 1999 and has been our
non-executive chairman of the board of directors since February 2001.
Currently, Dr. Singer serves as our executive consultant. Since October 2000,
Dr. Singer has been president and chief executive officer of Ultra Fast Optical
Systems, Inc. From December 1997 to August 2000, Dr. Singer served as president
and chief executive officer of SAFCO Technologies, Inc., a wireless
communications company. He left SAFCO in August 2000 after its sale to Agilent
Technologies. From September 1994 to December 1997, Dr. Singer served as vice-
president and general manager of the Wireless Access Business Development
Division for Motorola, Inc., a communications equipment company. Prior to this
period, Dr. Singer held senior management and technical positions in Motorola,
Inc., Tellabs, Inc., AT&T and Bell Labs. Dr. Singer holds a Bachelor of Arts in
Psychology from the University of Michigan, and a Master of Arts and a Ph.D. in
Experimental Psychology from Vanderbilt University.
Mr. Richard C. Alberding has been a director since August 1999. Mr.
Alberding retired from the Hewlett-Packard Company, then a computer, peripherals
and measurement products company, in June 1991, serving at that time as an
executive vice president with responsibility for worldwide company sales,
support and administration activities for measurement and computation products,
as well as all corporate level marketing activities. Mr. Alberding is a
director of Kennametal, Inc., DMC Stratex Networks, Sybase Inc. and Walker
Interactive Systems. Mr. Alberding holds a B.A. degree in Business
Administration/Marketing from Augusta College in Rock Island, Illinois, and an
Associate of Science degree in Electrical Engineering from DeVry Technical
Institute in Chicago.
Dr. Mike Min-Chu Chen has been a director since February 1994 and is the
cousin of our honorary chairman of the board, Peter Chen. Since August 1998,
Dr. Chen has been the chairman and co-founder of 3iNet, a Linux-based Internet
appliances and seamless Internet enabled communications services provider. From
May 1985 to August 1998, Dr. Chen served as the executive vice president, chief
executive officer and director of C&C International Services, Inc., an
engineering and procurement service company. From March 1987 to August 1998,
Dr. Chen served as executive vice president, chief executive officer and
director of Act Engineering, Inc., an engineering design and trading company.
From December 1996 to February 1997, Dr. Chen served as director of ERT Holding,
Inc., a company engaged in the environmental rubber recycling manufacturing
business, and served as president of International Operations from December 1996
to February 1997 and then as chairman from February 1997 to October 1997. He is
currently on the board of various private companies. Dr. Chen holds a Bachelor
of Science in Naval Architecture from National Taiwan Ocean University, a Master
in Science in Mechanical Engineering and Naval Architecture from National Taiwan
University, Taiwan, and a Doctorate in Ocean Engineering from Oregon State
University.
Mr. Giacomo Marini has been a director since October 1996. Since March
1995, Mr. Marini has served as chairman and president of MK Group LLC, a private
investment and management consulting business that invests in and advises high
technology companies, and from February 1998 to February 1999 as interim chief
executive officer at FutureTel, Inc., a digital video capture company. From
August 1993 to February 1995, Mr. Marini served as president and chief executive
officer of Common Ground Software, Inc. (formerly No Hands Software, Inc.), an
electronic publishing software company. Prior to this, Mr. Marini was a
cofounder, executive vice-president and chief operating officer of Logitech, a
computer peripherals company, and he held technical and management positions
with Olivetti and International Business Machines. Mr. Marini is currently on
the board of various private companies. He holds a Computer Science Laureate
Degree from the University of Pisa, Italy.
-9-
Mr. Carl A. Thomsen has been a director since March 2001. Mr. Thomsen has
been with DMC Stratex Networks, Inc., a manufacturer of wireless communication
equipment, since February 1995 and currently is their senior vice president,
chief financial officer and corporate secretary. From 1983 to 1994, Mr. Thomsen
held various senior financial positions, including senior vice president and
chief financial officer with Measurex Corporation, a process control systems
company (now a subsidiary of Honeywell International). Mr. Thomsen holds a BS
degree in Business Administration from Valparaiso University and a Masters in
Business Administration from the University of Michigan, and he is a certified
public accountant.
Vote Required and Board of Directors' Recommendation
If a quorum is present and voting, the two nominees receiving the highest
number of votes will be elected to the board of directors. Abstentions and
"broker non-votes" are not counted in the election of directors. The board of
directors has unanimously approved the director nominees and recommends that
stockholders vote "FOR" the election of the director nominees listed above.
Board and Committee Meetings
Our board of directors held a total of nine meetings during fiscal 2000.
The board of directors has an audit committee and a compensation committee.
Each member of the audit committee is independent (as defined in Rule
4200(a)(15) of the National Association of Securities Dealers' listing
standards). The board of directors has no nominating committee or any committee
performing such functions.
-----------------------------------------------------------------------------------------------------------------------------
Committee Members During Fiscal Committee Functions Date Written Meetings Held in
2000 Charter Adopted Fiscal 2000
-----------------------------------------------------------------------------------------------------------------------------
Audit Richard Alberding . Oversees our internal financial March 13, 2000 Four
Giacomo Marini reporting and accounting controls
Mike Min-Chu Chen . Consults with and reviews the services
provided by our independent public
accountants
-----------------------------------------------------------------------------------------------------------------------------
Compensation Richard Alberding . Reviews and recommends to the board of March 13, 2000 Four
Martin Singer directors the compensation and benefits
of all of our officers and directors,
including stock compensation and loans
. Establishes and reviews general
policies relating to the compensation
and benefits of our employees
-----------------------------------------------------------------------------------------------------------------------------
Compensation of Directors
Directors currently receive a yearly retainer of $5,000 for serving as
directors and receive $2,500 per board meeting attended and $1,000 per committee
meeting attended. Our 1998 Director Option Plan provides for the non-
discretionary, automatic grant of options to each of our non-employee directors.
Each new non-employee director is automatically granted an option to purchase
15,000 shares on the date on which such person first becomes a director.
These initial grants vest over a period of three years, with one-third of the
number of shares granted vesting on each anniversary of the date of grant,
provided that the optionee continues to serve as a director on these dates.
Furthermore, each non-employee director is automatically granted an additional
option to purchase 7,500 shares of common stock on January 1 of each year,
provided that he or she has served on the board of directors for at least six
months. These subsequent grants vest fully on the first anniversary of the date
of grant. The exercise price of options granted to nonemployee directors must
be 100% of the fair market value of our common stock on the date of grant.
-10-
Compensation Committee Interlocks and Insider Participation
During 2000, none of the members of the compensation committee was one of
our officers or employees or was formerly one of our officers. No member of the
compensation committee serves as a member of the board of directors or
compensation committee of any entity that has one or more executive officers
serving as a member of our board of directors or compensation committee.
-11-
PROPOSAL TWO
AMENDMENT OF 1998 DIRECTOR OPTION PLAN
The 1998 Director Option Plan was adopted by the board of directors in May
1998 and became effective on October 19, 1999, the date of the closing of our
initial public offering. The 1998 Director Option Plan has a term of ten years,
unless it is terminated sooner by the board of directors.
Only non-employee directors are entitled to participate in the 1998
Director Option Plan. Currently, a total of 200,000 shares of common stock has
been reserved for issuance under the 1998 Director Option Plan. As of December
31, 2000, options to purchase an aggregate of 60,000 shares of common stock were
outstanding under the 1998 Director Option Plan.
Stockholder Proposal
We are asking that the stockholders approve an amendment to our 1998
Director Option Plan to provide for automatic annual increases in the number of
shares reserved for issuance thereunder such that beginning on January 1, 2002,
effective as of January 1 of each year, the number of shares that may be
optioned and sold under the 1998 Director Option Plan shall be increased by an
amount equal to the lesser of (i) 0.5% of our outstanding shares on such date or
(ii) a lesser amount determined by the board of directors.
Vote Required and Board of Directors' Recommendation
The affirmative vote of the holders of a majority of the shares of our
common stock present or represented and voting at the annual meeting will be
required to approve the amendment of our 1998 Director Option Plan. The board
of directors has unanimously approved the amendment of our 1998 Director Option
Plan and recommends that stockholders vote "FOR" the approval of the proposal to
amend the 1998 Director Option Plan.
Summary of the 1998 Director Option Plan
General. The purposes of the 1998 Director Option Plan are to attract and
retain the best available personnel for service as non-employee directors, to
provide additional incentive to the non-employee directors to serve as our
directors and to encourage their continued service as directors.
Eligibility. Only our non-employee directors are eligible to receive
nonstatutory stock options under the 1998 Director Option Plan.
Administration. Each new non-employee director, upon election to the board
of directors, is automatically granted an option to purchase 15,000 shares of
common stock. These initial grants vest over a period of three years, with one-
third of the number of shares granted vesting on each anniversary of the date of
grant, provided that the optionee continues to serve as a director on these
dates. After the initial 15,000 share option is granted to the non-employee
director, he or she shall automatically be granted an option to purchase 7,500
shares on January 1 of each year, provided that he or she shall have served on
the board of directors for at least six months. These subsequent grants for
7,500 shares shall vest completely on the first anniversary of the date of
grant, provided that the optionee continues to serve as a director on the
vesting date.
Term. All of the options granted under the 1998 Director Option Plan shall
have a term of 10 years from the date of grant. No option may be exercised
after the expiration of its term.
-12-
Exercise Price. The exercise price of all options shall be 100% of the
fair market value per share of the common stock on the date of grant, generally
determined with reference to the closing price of the common stock as reported
on the Nasdaq National Market on the last market trading day prior to the date
the option is granted.
Forms of Consideration. The means of payment for shares issued upon
exercise of an option is specified in each option agreement. The 1998 Director
Option Plan permits payment to be made by cash, check, other shares of our
common stock (with some restrictions), cashless exercise or any combination
thereof.
Termination of Directorship. If an optionee's status as a director
terminates for any reason (other than death or disability), then all options
held by the optionee under the 1998 Director Option Plan expire on the earlier
of (i) the date set forth in his or her notice of grant or (ii) the expiration
date of such option. To the extent the option is exercisable at the time of
such termination, the optionee may exercise all or part of his or her option for
up to three (3) months following the termination or for such other period of
time as determined by the board.
Death or Disability. In the event an optionee's status as a director
terminates as a result of disability or death, the optionee (or the optionee's
estate or a person who acquired the right to exercise the option by bequest or
inheritance) may exercise the option, but only within twelve (12) months
following the date of such termination, and only to the extent that the optionee
was entitled to exercise it on the date of such termination (but in no event
later than the expiration of its ten (10) year term). To the extent that the
optionee was not entitled to exercise an option on the date of such termination,
or if he or she (or the optionee's estate or a person who acquired the right to
exercise such option) does not exercise such option before its expiration, the
option shall terminate.
Nontransferability of Options. Options granted under the 1998 Director
Option Plan are not transferable other than by will or the laws of descent and
distribution, and may be exercised during the optionee's lifetime only by the
optionee.
Other Provisions. The director option agreement may contain other terms,
provisions and conditions not inconsistent with the 1998 Director Option Plan as
may be determined by the administrator under the plan.
Adjustments Upon Changes in Capitalization. In the event that our stock
changes by reason of any stock split, reverse stock split, stock dividend,
combination, reclassification or other similar change in our capital structure
effected without the receipt of consideration, appropriate adjustments shall be
made in the number of shares of stock authorized for issuance under the 1998
Director Option Plan but as to which no options have yet been granted or which
have been returned to the 1998 Director Option Plan upon cancellation or
expiration of an option, the number of shares of stock subject to any option
outstanding under the 1998 Director Option Plan, and the exercise price of any
such outstanding option. The 1998 Director Option Plan further provides that in
the event of a merger of our company with or into another corporation or a sale
of substantially all of our assets, each option or right shall be assumed or an
equivalent option or right substituted by the successor corporation. If the
outstanding options or rights are not assumed or substituted, the board of
directors or a committee of the board shall provide for the optionee to have the
right to exercise the option or stock purchase right as to all of the optioned
stock, including shares that would not otherwise be exercisable, for a period of
thirty days from the date of the notice, and the option or stock purchase right
will terminate upon the expiration of the period.
Amendment and Termination of the 1998 Director Option Plan. The board may
amend, alter, suspend or terminate the 1998 Director Option Plan at any time and
for any reason. However, we shall obtain
-13-
stockholder approval for any amendment to the 1998 Director Option Plan to the
extent necessary to comply with applicable laws. No such action by the board or
stockholders may alter or impair any option previously granted under the 1998
Director Option Plan without the written consent of the optionee.
-14-
PROPOSAL THREE
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The board of directors has selected Arthur Andersen LLP, independent public
accountants, to audit our consolidated financial statements for the fiscal year
ending December 31, 2001 and recommends that stockholders vote for the
ratification of such appointment.
Arthur Andersen LLP has audited our financial statements annually since
1996. Representatives of Arthur Andersen LLP are expected to be present at the
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.
Audit Fees
During the 2000 fiscal year, Arthur Andersen LLP billed us $317,000 in
audit fees for audit of our annual financial statements included in our annual
report on Form 10-K and review of our unaudited internal quarterly financial
statements included in our quarterly reports on Form 10-Q.
Financial Information Systems Design and Implementation Fees
We did not engage Arthur Andersen LLP to provide advice regarding financial
information systems design and implementation during the fiscal year ended
December 31, 2000.
Other Fees
Fees billed to us by Arthur Andersen LLP during the 2000 fiscal year for
all non-audit services rendered, including tax related services, totaled
$390,000. Our audit committee considered whether the rendering of such non-
audit services was compatible with maintaining the independence of Arthur
Andersen LLP.
Vote Required and Board of Directors' Recommendation
Stockholder ratification of the selection of Arthur Andersen LLP as our
independent public accountants is not required by our by-laws or other
applicable legal requirement. However, the board is submitting the selection of
Arthur Andersen LLP to the stockholders for ratification as a matter of good
corporate practice. If the stockholders fail to ratify the selection, the audit
committee and the board will reconsider whether or not to retain that firm.
Even if the selection is ratified, the board may, at its discretion, direct the
appointment of a different independent accounting firm at any time during the
year if it determines that such a change would be in our best interests and in
the best interests of our stockholders. The board unanimously recommends a vote
"FOR" the ratification of the appointment of Arthur Andersen LLP as our
independent public accountants for the fiscal year ending December 31, 2001.
-15-
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of our common stock as of March 31, 2001 by:
. each stockholder known by us to beneficially own more than 5% of our
common stock;
. each of our directors;
. each of our executive officers named in the summary compensation table
on page 19; and
. all of our directors and executive officers as a group.
Beneficial ownership is determined based on the rules of the Securities and
Exchange Commission. The column captioned "Number of Shares Beneficially Owned"
includes all shares held by the indicated stockholder as of March 31, 2001 but
excludes shares of our common stock subject to options held by that person that
are currently exercisable or will become exercisable on or before May 30, 2001.
The number of shares subject to options that each beneficial owner has the right
to acquire on or before May 30, 2001 is listed separately under the column
"Number of Shares Underlying Options." These shares are not deemed exercisable
for purposes of computing the beneficial ownership of any other person. Percent
of beneficial ownership is based upon 18,992,231 shares of our common stock
outstanding as of March 31, 2001. The address for those individuals for which
an address is not otherwise provided is c/o PCTEL, Inc., 1331 California Circle,
Milpitas, California 95035. Unless otherwise indicated, we believe the
stockholders listed have sole voting or investment power with respect to all
shares, subject to applicable community property laws.
Number of Number of Total Percent of
Shares Shares Shares Shares
Beneficially Underlying Beneficially Beneficially
Name and Address of Beneficial Owner Owned Options Owned Owned (%)
------------------------------------------------------ ------------ ------------ --------------- ----------------
5% Stockholders
Wellington Management Company, LLP
75 State Street
Boston, Massachusetts 02109 (1).................... 1,129,100 -- 1,129,100 5.95%
Capital Guardian Trust Company
11100 Santa Monica Blvd.
Los Angeles, CA 90025 (2).......................... 1,547,200 -- 1,547,200 8.15
Kern Capital Management, LLC
70 Rio Robles
San Jose, CA 95134 (3)............................. 1,020,600 -- 1,020,600 5.37
Dimensional Fund Advisors Inc.
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401 (4)......................... 1,051,200 -- 1,051,200 5.53
Entities affiliated with the WK Technology Funds
10th Floor, 115, Sec. 3 Ming Sheng East Road
Taipei, Taiwan 23136 (5)........................... 1,432,051 32,500 (6) 1,464,551 7.70
Directors and Named Executive Officers
Peter Chen............................................ 651,879 (7) 154,059 805,938 4.21
William F. Roach...................................... -- 211,250 211,250 1.10
Derek S. Obata........................................ 23,884 145,938 169,822 *
Andrew D. Wahl........................................ 108,240 80,627 188,867 *
Thomas A. Capizzi..................................... -- 34,687 34,687 *
Richard C. Alberding.................................. -- 5,000 5,000 *
Martin H. Singer...................................... -- 5,000 5,000 *
Giacomo Marini........................................ 31,321 7,500 38,821 *
Mike Min-Chu Chen..................................... 176,788 (8) 32,500 209,288 1.10
Carl A. Thomsen....................................... -- -- -- --
All directors and executive officers as a group
(13 persons)....................................... 993,199 771,835 1,765,034 8.93
______________________________________
Less than 1% of the outstanding shares of common stock.
-16-
(1) Wellington Management Company, LLP, in its capacity as investment adviser,
may be deemed to beneficially own 1,129,100 of our shares which are held of
record by its clients. Those clients have the right to receive, or the
power to direct the receipt of, dividends from, or the proceeds from the
sale of, such securities. No such client is known to have such right or
power with respect to more than five percent of this class of securities.
(2) Capital Guardian Trust Company, a bank as defined in Section 3(a)6 of the
Act, is deemed to be the beneficial owner of 1,547,200 shares as a result
of its serving as the investment manager of various institutional accounts.
Capital Group International, Inc. is the parent holding company of Capital
Guardian Trust Company and a group of other investment management companies
that hold investment power and, in some cases, voting power over
securities. Capital Guardian Trust Company disclaims beneficial ownership
of the shares pursuant to Rule 13d-4.
(3) Robert E. Kern Jr. and David G. Kern are controlling members of Kern
Capital Management, LLC and may be deemed to share the power to direct the
voting or disposition of the securities held by Kern Capital Management,
LLC. Robert Kern and David Kern disclaim beneficial ownership of the shares
held by Kern Capital Management, LLC.
(4) Dimensional Fund Advisors Inc. is an investment advisor registered under
Section 203 of the Investment Advisors Act of 1940. Dimensional furnishes
investment advice to four investment companies registered under the
Investment Company Act of 1940 and serves as investment manager to certain
other commingled group trusts and separate accounts. In its role as
investment adviser or manager, Dimensional possesses voting and/or
investment power over 1,051,200 shares that are owned the four investment
companies. Dimensional disclaims beneficial ownership of such securities.
(5) Includes 361,954 shares held by WK Technology Fund, 305,577 shares held by
WK Technology Fund II, and 764,520 shares held by WK Technology Fund III.
Wen C. Ko is chairman of the WK Technology Funds, and he resigned as one of
our directors on March 30, 2001. Mr. Ko disclaims beneficial ownership of
the shares held by WK Technology Fund, WK Technology Fund II, and WK
Technology Fund III, except to the extent of his pecuniary interest
therein.
(6) Issuable pursuant to an option to purchase 25,000 shares of common stock
granted to WK Associates on January 31, 1997 and an option to purchase
7,500 shares of common stock granted to WK Associates on January 2, 2000.
(7) Includes 167,438 shares held by Mr. Chen with his wife as community
property, 464,691 shares owned by himself individually, 9,250 shares, 9,250
shares and 1,250 shares held by Robert Chen, Michael Chen and Jacqueline
Chen, respectively, Mr. Chen's minor children living at home. Mr. Chen
disclaims beneficial ownership of the shares held by his children, except
to the extent of his pecuniary interest therein.
(8) Includes 157,178 shares owned by Mr. Chen individually. Additionally
includes 19,610 shares held by Thomas L. Chen and Willis F. Chen, Mr.
Chen's children living at home. Mr. Chen disclaims beneficial ownership of
the shares held by his children, except to the extent of his pecuniary
interest therein.
-17-
EXECUTIVE COMPENSATION AND OTHER MATTERS
The following table presents the compensation earned, awarded or paid for
services rendered to us in all capacities for the fiscal year ended December 31,
2000 by our Chief Executive Officer and our four next most highly compensated
executive officers who earned more than $100,000 in salary and bonus during the
fiscal year ended December 31, 2000, whom we refer to collectively as the named
executive officers:
Summary Compensation Table
Long-Term
Compensation
Annual Compensation Awards
---------------------- ----------------
Securities All Other
Underlying Compensation
Name and Principal Position Salary ($) Bonus ($) Options (#) ($) (1)
--------------------------------------------------- ------------ ----------- ---------------- --------------
Peter Chen
Chief Executive Officer (2)................. $ 265,000 $ 251,595 100,000 $ 13,365
William F. Roach
President and Chief Operating Officer (3)... 250,000 294,595 65,000 9,258
Derek S. Obata
Vice President, Sales....................... 176,250 182,079 20,000 6,810
Andrew D. Wahl
Vice President, Finance and
Chief Financial Officer..................... 182,750 82,220 55,000 6,888
Thomas A. Capizzi
Vice President, Human Resources............. 169,154 105,038 155,000 6,805
_____________________________________
(1) Consists of premiums paid by us for term life insurance and car allowances.
(2) Mr. Chen resigned as our chief executive officer in February 2001.
(3) Mr. Roach was appointed our chief executive officer in February 2001.
Option Grants During Last Fiscal Year
The following table shows information regarding stock options granted to
the named executive officers during the fiscal year ended December 31, 2000.
The potential realizable value is based on the assumption that our common stock
appreciates at the annual rate shown, compounded annually, from the date of
grant until the expiration of the ten-year term. These numbers are calculated
based on Securities and Exchange Commission requirements and do not reflect
projections or estimates of future stock price growth. Potential realizable
values are computed by:
. Multiplying the number of shares of common stock underlying each
option by the exercise price,
. Assuming that the total stock value derived from that calculation
compounds at the annual 5% or 10% rate shown in the table for the
entire ten-year term of the option, and
. Subtracting from that result the total option exercise price.
Actual gains, if any, on stock option exercises will be dependent on the
future performance of the common stock. The percentage of total options is
based on an aggregate of 2,516,696 options granted by us to our employees,
directors and consultants, including the named executive officers, during the
fiscal year ended December 31, 2000. Options were granted with an exercise
price equal to the fair market value of our common stock, as determined in good
faith by our board of directors.
-18-
Unless otherwise noted, the per share exercise price of stock option grants
is the fair market value of our common stock on the date of grant. In
determining the fair market value of our common stock for the purpose of
establishing the exercise price of stock option grants, the board of directors
(i) for grants made prior to our initial public offering in October 1999 in
each case took into consideration a number of factors, including our operating
results and financial condition at the time of stock option grant, key
developments affecting our business and, where relevant, the most recent price
of our preferred stock in connection with financing transactions with
independent investors; and (ii) for grants made after our initial public
offering, determined the fair market value based on the closing sales price of
our common stock in trading on the Nasdaq National Market on the trading day
prior to the date of grant.
% of Total
Number of Options Potential Realizable Value at
Securities Granted to Assumed Annual Rates of
Underlying Employees Exercise Stock Appreciation for
Options During Price Expiration Option Term ($)
Name Granted (#) Period Per Share ($) Date 5% 10%
------------------------ --------------- ----------- -------------- ---------- ------------------------------
Peter Chen...................... 100,000 (1) 3.97% $ 33.50 4/28/10 $ 2,106,797 $ 5,339,037
William F. Roach................ 65,000 (2) 2.58 33.50 4/28/10 1,369,418 3,470,374
Derek S. Obata.................. 20,000 (3) 0.79 33.50 4/28/10 421,359 1,067,807
Andrew D. Wahl.................. 55,000 (4) 2.19 33.50 4/28/10 1,158,738 2,936,470
Thomas A. Capizzi............... 100,000 (5) 3.97 59.00 1/31/10 3,710,478 9,403,081
5,000 (6) 0.20 33.50 4/28/10 105,340 266,952
50,000 (7) 1.99 27.56 8/15/10 866,617 2,196,177
_____________________
(1) As of December 31, 2000, no shares of this option to purchase 100,000 shares
of common stock had vested. This option to purchase our common stock vested
as to one fourth of the shares on April 1, 2001 with the remaining shares
vesting ratably on a monthly basis thereafter.
(2) As of December 31, 2000, no shares of this option to purchase 65,000 shares
of common stock had vested. This option to purchase our common stock vested
as to one fourth of the shares on April 1, 2001 with the remaining shares
vesting ratably on a monthly basis thereafter.
(3) As of December 31, 2000, no shares of this option to purchase 20,000 shares
of common stock had vested. This option to purchase our common stock vested
as to one fourth of the shares on April 1, 2001 with the remaining shares
vesting ratably on a monthly basis thereafter.
(4) As of December 31, 2000, no shares of this option to purchase 55,000 shares
of common stock had vested. This option to purchase our common stock vested
as to one fourth of the shares on April 1, 2001 with the remaining shares
vesting ratably on a monthly basis thereafter.
(5) As of December 31, 2000, no shares of this option to purchase 100,000 shares
of common stock had vested. This option to purchase our common stock vested
as to one fourth of the shares on January 14, 2001 with the remaining shares
vesting ratably on a monthly basis thereafter.
(6) As of December 31, 2000, no shares of this option to purchase 5,000 shares
of common stock had vested. This option to purchase our common stock vested
as to one fourth of the shares on April 1, 2001 with the remaining shares
vesting ratably on a monthly basis thereafter.
(7) As of December 31, 2000, no shares of this option to purchase 50,000 shares
of common stock had vested. This option to purchase our common stock vests
as to one fourth of the shares on August 1, 2001 with the remaining shares
vesting ratably on a monthly basis thereafter.
-19-
Aggregate Option Exercises During Last Fiscal Year and Fiscal Year-End Option
Values
The following table presents information regarding the named executive
officers concerning option exercises for the year ended December 31, 2000 and
exercisable and unexercisable options held as of December 31, 2000. The value
of unexercised in-the-money options is based on a price of $10.75 per share, the
fair market value of our stock on December 31, 2000 as reported on the Nasdaq
National Market, minus the per share exercise price, multiplied by the number of
shares underlying the option.
Number of Securities Value of Unexercised
Underlying Options at In-the-Money Options at
Shares December 31, 2000 December 31, 2000
Acquired on Value --------------------------- ----------------------------------
Exercise Realized ($) (1) Exercisable Unexercisable Exercisable ($) Unexercisable($)
------------ ------------------ ------------ ------------- --------------- ----------------
Peter Chen............... 43,856 $ 994,420 109,788 168,854 $ 390,654 $ 129,218
William F. Roach......... -- -- 153,333 311,667 76,667 123,334
Derek S. Obata........... -- -- 108,021 113,958 347,865 343,811
Andrew D. Wahl........... 12,395 592,254 55,314 106,666 280,331 59,638
Thomas A. Capizzi........ -- -- -- 155,000 -- --
(1) Based on the estimated fair market value of our common stock at the time of
exercise less the exercise price, multiplied by the number of shares
purchased.
TRANSACTIONS WITH RELATED PARTIES AND INSIDERS
Since January 1, 2000 there has not been, nor is there currently proposed,
any transaction or series of similar transactions to which we were or are to be
a party in which the amount exceeds $60,000, and in which any director,
executive officer, nominee for election as a director, holder of more than 5% of
our common stock, or any member of the immediate family of any of the foregoing
persons had or will have a direct or indirect material interest other than
compensation agreements and other agreements which are described under
"Executive Compensation and Other Matters" above and "Employment Agreements and
Change of Control Arrangements" below.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our executive officers and
directors and persons who own more than ten percent of a registered class of our
equity securities to file reports of ownership and changes in ownership with the
Securities and Exchange Commission and the National Association of Securities
Dealers, Inc. Executive officers, directors and greater than ten percent
stockholders are required by SEC regulation to furnish us with copies of all
Section 16(a) forms they file. Based solely on our review of the copies of such
forms received by us, or written representations from certain reporting persons,
we believe that, with the exception of the following individuals, during fiscal
2000 all executive officers and directors complied with all applicable filing
requirements: Thomas A. Capizzi filed a late Form 3 to disclose that he became
a reporting person and one other late report covering one transaction; Mike Min-
Chu Chen filed one late report covering three transactions; Peter Chen filed one
late report covering five transactions; Terry Huang filed a late Form 3 to
disclose that he became a reporting person and two other late reports covering a
total of eight transactions; William Wen-Liang Hsu filed one late report
covering two transactions; Wen C. Ko filed one late report covering three
transactions; Giacomo Marini filed one late report covering one transaction;
Navin Rao filed one late report covering one transaction; Mark D. Wilson filed a
late Form 3 to disclose that he became a reporting person; and Han Yeh filed one
late report covering seven transactions. To our knowledge, no officer or
director failed to file a report during fiscal 2000.
-20-
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE OF
CONTROL ARRANGEMENTS
We require each of our employees to enter into confidentiality agreements
prohibiting the employee from disclosing any of our confidential or proprietary
information. In addition, the agreements generally provide that, upon
termination, the employee will not solicit our employees. At the time of
commencement of employment, our employees also generally sign offer letters
specifying basic terms and conditions of employment. In general, our employees
do not have any written employment agreements with us.
We entered into an agreement on March 31, 1998 with Derek S. Obata which
provides that his employment is at-will, he will receive an annual salary of
$150,000, plus commissions, and that in the event of a change of control of our
company, he will be entitled to one year of severance pay.
On February 15, 2001, Mr. Roach was appointed as our chief executive
officer. The compensation and benefits payable to him, effective as of February
1, 2001, shall consist of annual base compensation of $300,000 and bonus
compensation of $300,000. In addition, in connection with his appointment as
our chief executive officer, Mr. Roach was granted a supplemental option to
purchase up to 250,000 shares of common stock with the following vesting
schedule: 125,000 shares will become fully vested after two years and the
remaining 125,000 shares will vest over four years with 25% vested after one
year and the remaining shares vesting ratably on a monthly basis thereafter.
Under an agreement entered into on July 20, 1999, Mr. Roach was granted an
option to purchase up to 400,000 shares of our common stock with the following
vesting schedule: 30% at the end of his first year of employment, 25% in years
two and three and 20% in year four. Vesting after the first twelve months of
employment is on a monthly basis.
In connection with Peter Chen's resignation as our chief executive officer
in February 2001, we entered into a severance agreement and release with Mr.
Chen. In exchange for the covenants and releases in the agreement, we agreed to
pay Mr. Chen a severance payment equal to one year's salary, which is $270,000.
In addition, Mr. Chen's options shall continue to vest for one year from the
date of his resignation, after which his vesting shall cease and he shall have
ninety days to exercise his vested option shares.
On March 13, 2000, the Board authorized the implementation of a management
retention program with members of our management and key employees. Upon
involuntary termination of employment following a change of control, the
officers and other key employees, upon designation by the board of directors,
will receive the following benefits:
. Chief Executive Officer: cash severance equal to 200% of annual
compensation plus 100% of a target bonus and 12 months of continued
health benefits;
. Vice-Presidents: cash severance equal to 150% of annual compensation
plus 100% of a target bonus and 12 months of continued health
benefits;
. Director-level and other key employees: cash severance equal to 75% of
annual compensation plus 100% of a target bonus and 12 months of
continued health benefits.
In addition, upon involuntary termination following a change of control,
all unvested shares held by the participants in our management retention program
will be accelerated. To date, the participants in the program at the director
level or below have not been designated, and no agreements have been entered
into.
-21-
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
Notwithstanding any statement to the contrary in any of our previous or
future filings with the Securities and Exchange Commission, this report of the
audit committee of the board of directors shall not be deemed "filed" with the
Commission or "soliciting material" under the Securities Exchange Act of 1934,
as amended, and shall not be incorporated by reference into any such filings.
The audit committee of the board of directors is composed of three
independent directors (each of which is independent under applicable NASD rules)
appointed by the board of directors, and it operates under a written charter
adopted by the board of directors in March 2000. The members of the audit
committee throughout fiscal 2000 were Richard Alberding, Giacomo Marini and Mike
Min-Chu Chen.
The purpose of the audit committee is to make such examinations as are
necessary to monitor our management and the independent public accountants and
their activities with respect to our financial controls and financial reporting
process. The committee provides the board of directors with the results of the
committee's examinations and recommendations, outlines to the board improvements
made or to be made in internal accounting controls, nominates independent public
accountants and provides the board with any additional information and materials
as the committee may deem necessary to make the board aware of significant
financial matters that require the board's attention.
In this context, the audit committee has met and held discussions
separately and jointly with each of management and Arthur Andersen LLP, our
independent public accountants for the 2000 fiscal year. Management represented
to the audit committee that the consolidated financial statements were prepared
in accordance with generally accepted accounting principles, and the audit
committee has reviewed and discussed the consolidated financial statements with
management and the independent public accountants. The audit committee also
discussed with Arthur Andersen LLP those matters required to be discussed by the
Statement on Auditing Standards No. 61 (Codification of Statements on Auditing
Standards, AU 380).
In connection with new standards for independence of external auditors
promulgated by the Securities and Exchange Commission, during the 2001 fiscal
year, the audit committee will consider, in advance of the provision of any non-
audit services by our independent public accountants, whether the provision of
such services is compatible with maintaining the independence of the external
auditors.
Arthur Andersen LLP also provided to the audit committee the written
disclosures required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), and the audit committee
discussed with the independent public accountants that firm's independence.
Based on the audit committee's discussion with management and the
independent public accountants and the audit committee's review of the
representation of management and the report of the independent public
accountants to the audit committee, the audit committee recommended that the
board of directors include the audited consolidated financial statements in our
annual report on Form 10-K for the year ended December 31, 2000 filed with the
Securities and Exchange Commission.
Respectfully submitted by:
AUDIT COMMITTEE
Richard Alberding
Giacomo Marini
Mike Min-Chu Chen
-22-
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Notwithstanding any statement to the contrary in any of our previous or
future filings with the Securities and Exchange Commission, this report of the
compensation committee of the board of directors shall not be deemed "filed"
with the Commission or "soliciting material" under the Securities Exchange Act
of 1934, as amended, and shall not be incorporated by reference into any such
filings.
The compensation committee of the board of directors reviews and approves
our executive compensation policies. The following is the report of the
compensation committee describing the compensation policies and rationales
applicable to our executive officers with respect to the compensation paid to
such executive officers for the fiscal year ended December 31, 2000.
Responsibilities of the Committee
Acting on behalf of the board of directors, the compensation committee's
responsibilities include the following:
. Reviewing the performance of the chief executive officer and other
executive officers;
. Recommending to the board of directors the total compensation package
for the chief executive officer and determining the compensation for
the other executive officers;
. Reviewing the compensation philosophy for our employees, including the
chief executive officer and other executive officers; and
. Administering our employee stock option and employee stock purchase
plans, including determining eligibility and the number and type of
options to be granted and the terms of such grants.
Compensation Philosophy
Our philosophy in setting compensation policies for executive officers is
to maximize stockholder value over time. The primary goal of our executive
compensation program is, therefore, to closely align the interests of the
executive officers with those of our stockholders. To achieve this goal, we
attempt to offer compensation opportunities that give us the opportunity to
attract and retain executives whose abilities are critical to our long-term
success, motivate individuals to perform at their highest level and reward
outstanding achievement. In addition, we attempt to maintain a portion of each
executive's total compensation at risk and tied to our achievement of financial,
organizational and management performance goals, thus encouraging executives to
manage from the perspective of owners with an equity stake in us. To achieve
these goals, the compensation committee has established an executive
compensation program primarily consisting of cash compensation, stock options,
long-term equity incentives and other compensation and benefit programs
generally available to other employees.
Executive Officer Compensation
The cash component of total compensation, which consists of base salary and
bonus, is designed to compensate executives competitively within the industry
and marketplace. The compensation committee, on an annual basis, reviews and
approves the base salary for the chief executive officer and reviews and
approves the base salaries for our other executives annually. Our executives'
base salaries in fiscal 2000 were established by the compensation committee
based upon each executive's scope of job responsibilities, level of
-23-
experience, past performance, contribution to our business, and data on
prevailing compensation levels in relevant markets for executive talent.
Regarding the latter measure, certain companies included in the peer group index
of the stock performance graph are also included in surveys reviewed by the
compensation committee in reviewing salary levels for our chief executive
officer and other executive officers.
In addition to base salary, we pay quarterly bonuses to our executive
officers. Quarterly bonuses are intended to provide a direct link between
management compensation and the achievement of corporate and individual
objectives. The amount of bonus is determined as a percentage of the base
salary for the executive for the year. At the end of the quarter, performance
is assessed and the amount of bonus payable, if any, is determined. Sales and
marketing executives are also eligible for additional cash payments above their
base salaries for achieving specific performance goals or in connection with
sales commissions.
We provide long-term incentives through the grant of stock options under
our stock option plans, particularly our 1997 Stock Plan and our 1998 Employee
Stock Purchase Plan. The purpose of our 1997 Stock Plan is to attract and
retain the best employee talent available and to create a direct link between
compensation and our long-term performance. The compensation committee believes
that stock options directly motivate an executive to maximize long-term
stockholder value. The options also utilize vesting periods to encourage key
executives to continue in our employ. All options granted to executive officers
to date have been granted at the fair market value of our common stock on the
date of grant. The board considers the grant of each option subjectively,
considering factors such as the individual performance of the executive officer
and the anticipated contribution of the executive officer to the attainment of
our long-term strategic performance goals. Because the receipt of value by an
executive officer under a stock option is dependent upon an increase in the
price of our common stock, this portion of the executive's compensation is
directly aligned with an increase in stockholder value. Generally, stock
options are granted to an executive officer in conjunction with the executive
officer's acceptance of employment. When determining the number of stock
options to be awarded to an executive officer, the compensation committee
considers the individual's current contribution to our performance, the
executive officer's anticipated contribution in meeting our long-term strategic
performance goals, and comparisons to formal and informal surveys of executive
stock option grants made by other peer companies. The compensation committee
also reviews stock option levels for executive officers at the beginning of each
fiscal year in light of long-term strategic and performance objectives and each
executive's current and anticipated contributions to our future performance.
2000 Chief Executive Officer Compensation
The compensation of Peter Chen, our chief executive officer and chairman of
the board during fiscal 2000, consisted of base salary and bonus. Mr. Chen's
base salary for fiscal 2000 was $265,000, and he was paid a cash bonus of
$251,595 for fiscal 2000. The compensation committee reviews the chief
executive officer's salary using the same criteria and policies as are employed
for the other executive officers. Mr. Chen received an increase in base salary
from $199,167 during fiscal 1999 to $265,000 for fiscal 2000. The compensation
committee based its decision to increase Mr. Chen's base salary and pay his cash
bonus on a variety of factors, including the increasing scope and responsibility
of the chief executive officer due to our status as a public company and
comparisons of chief executive officer compensation levels for companies of
similar size and maturity. The compensation committee also focused on our
performance during the 1999 fiscal year in setting the compensation for the 2000
fiscal year.
Qualifying Compensation
The compensation committee has considered the potential impact of Section
162(m) of the Internal Revenue Code on the compensation paid to our executive
officers. Section 162(m) generally disallows a tax deduction for any publicly
held corporation for individual compensation exceeding $1.0 million in any
taxable year for any of the executive officers named in the proxy statement,
unless compensation is
-24-
performance-based. None of the executive officers named in the proxy statement
were compensated over $1.0 million in 2000. In general, it is our policy to
qualify, to the maximum extent possible, our executives' compensation for
deductibility under applicable tax laws. In approving the amount and form of
compensation for our executive officers, the compensation committee will
continue to consider all elements of the cost of providing such compensation,
including the potential impact of Section 162(m).
Respectfully submitted by:
COMPENSATION COMMITTEE
Richard C. Alberding
Martin H. Singer
-25-
COMPANY PERFORMANCE
Notwithstanding any statement to the contrary in any of our previous or
future filings with the Securities and Exchange Commission, this company
performance graph shall not be deemed "filed" with the Commission or "soliciting
material" under the Securities Exchange Act of 1934, as amended, and shall not
be incorporated by reference into any such filings.
The graph below compares the annual percentage change in the cumulative
return to our stockholders with the cumulative return of the Nasdaq Stock Market
Index and of the S&P Technology Sector Index from the date of our initial public
offering (October 19, 1999) and ending on December 31, 2000. Returns for the
indices are weighted based on market capitalization at the beginning of each
measurement point. Note that historic stock price performance is not
necessarily indicative of future stock price performance.
Comparison of Cumulative Total Return
PC-Tel, Inc., the Nasdaq Stock Market (U.S.) Index
and the S&P Technology Sector Index
Cumulative Total Return
--------------------------------------------------------------------
10/19/99 12/31/99 3/31/00 6/30/00 9/30/00 12/31/00
PCTEL, INC. 100.00 308.82 250.00 195.00 130.00 63.24
NASDAQ STOCK MARKET (U.S.) 100.00 147.80 142.00 115.00 105.00 88.86
S & P TECHNOLOGY SECTOR 100.00 134.41 125.00 105.00 97.00 80.71
*ASSUMES $100 INVESTED ON OCTOBER 19, 1999 IN OUR
COMMON STOCK, THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE S&P TECHNOLOGY SECTOR INDEX.
-26-
OTHER MATTERS
We know of no other matters to be submitted at the meeting. If any other
matters properly come before the meeting, it is the intention of the persons
named in the enclosed form of proxy to vote the shares they represent as the
board of directors may recommend.
THE BOARD OF DIRECTORS
Dated: April 10, 2001
-27-
COMPANY #______________
CONTROL #______________
THERE ARE THREE WAYS TO VOTE YOUR PROXY.
Your telephone or Internet vote authorizes the named proxies to vote
your shares in the same manner as if you marked, signed and returned your proxy
card.
Vote By Phone -- Toll Free -- 1-800-240-6326 --
Quick***Easy***Immediate
. Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a
week, until 12:00 p.m. on May 12, 2001.
. You will be prompted to enter your 3-digit company number and your 7-digit
control number, which are located above.
. Follow the simple instructions.
Vote By Internet -- http://www.eproxy.com/pcti/ --
Quick***Easy***Immediate
. Use the Internet to vote your proxy 24 hours a day, 7 days a week, until
12:00 p.m. on May 12, 2001.
. You will be prompted to enter your 3-digit company number and your 7-digit
control number, which are located above, to obtain your records and create
an electronic ballot.
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 PCTEL, Inc., c/o Shareowner Services,
P.O. Box 64873, St. Paul, MN 55164-9397.
If you vote by phone or the Internet, please do not mail your proxy card
Please detach here
PROXY FOR THE
PCTEL, INC.
ANNUAL MEETING OF STOCKHOLDERS
_______________________
Tuesday, May 15, 2001
10:00 a.m.
_______________________
PCTEL, INC.
1331 California Circle
Milpitas, California 95305
--------------------------------------------------------------------------------
This proxy is solicited on behalf of the board of directors for use at the
annual meeting of stockholders on May 15, 2001.
The undersigned stockholder of PCTEL, Inc., a Delaware corporation, hereby
acknowledges receipt of the Notice of Annual Meeting of Stockholders and Proxy
Statement, each dated April 10, 2001, and hereby appoints Andrew Wahl and
William Roach, and each 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 2001 Annual Meeting of Stockholders of PCTEL,
Inc. to be held on May 15, 2001 at 10:00 a.m. local time at our headquarters,
located at 1331 California Circle, Milpitas, California, and at any adjournment
or adjournments thereof, and to vote all shares of common stock which the
undersigned would be entitled to vote if then and there personally present on
the matters set forth below.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED: FOR ALL NOMINEES TO THE BOARD OF DIRECTORS; FOR APPROVAL OF THE
AMENDMENT TO THE 1998 DIRECTOR OPTION PLAN; FOR RATIFICATION OF THE INDEPENDENT
PUBLIC ACCOUNTANTS; AND AS THE PROXY HOLDER MAY DETERMINE IN HIS DISCRETION WITH
REGARD TO ANY OTHER MATTER PROPERLY BROUGHT BEFORE THE MEETING.
PLEASE VOTE BY TELEPHONE OR THE INTERNET OR MARK, SIGN, DATE
AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
See reverse for voting instructions.
The Board of Directors Recommends a Vote "FOR" Items 1, 2 and 3.
1. Election 01 Richard C. 02 Carl A. Thomsen [_] Vote FOR all [_] Vote WITHHELD
of directors Alberding nominees (except from all nominees
as marked)
(Instructions: To withhold authority to vote for any indicated ---------------------------------------------
nominees write the number(s) of the nominee(s) in the box provided to
the right.) ---------------------------------------------
2. Approval of an amendment to our 1998 Director Option Plan to provide for [_] FOR [_] AGAINST [_] ABSTAIN
automatic annual increases in the number of shares reserved for issuance
thereunder such that, effective as of January 1 of each year, beginning on
January 1, 2002, the number of shares that may be optioned and sold under
the 1998 Director Option Plan shall be increased by an amount equal to the
lesser of (i) 0.5% of our outstanding shares on such date or (ii) a lesser
amount determined by the board of directors.
3. Ratification of Arthur Andersen LLP as our independent public accountants. [_] FOR [_] AGAINST [_] ABSTAIN
IN THEIR DISCRETION, the proxy holders are authorized to vote upon such
other business as may properly come before the meeting or any adjournments
thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED OR, IF NO
DIRECTION IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL.
Address Change? Mark Box [_] I plan to attend the annual meeting [_]
Indicate changes below:
Date________________________________
____________________________________
____________________________________
Signature(s) in Box
Please sign exactly as name appears hereon.
When shares are held by joint tenants, both
should sign. When signing as attorney,
executor, administrator, trustee or
guardian, please give title as such. If a
corporation, please sign in full corporate
name by president or other authorized
officer. If a partnership, please sign in
partnership name by authorized person.