Other Matters
Except for the election of eleven directors and the ratification of the
appointment of KPMG LLP as our independent registered public accounting firm for
the current fiscal year, Applied's Board does not intend to bring any other
matters to be voted on at the meeting. Applied's Board is not currently aware of
any other matters that will be presented by others for action at the meeting.
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ITEM 1-ELECTION OF DIRECTORS
Nominees
Applied's Board is elected each year at the Annual Meeting of Stockholders.
Applied currently has twelve directors. Mr. Armacost will be retiring as a
member of the Board and will not be standing for re-election. Upon his
retirement, the number of authorized directors will decrease to eleven. The
eleven nominees receiving the highest number of votes will be elected at the
meeting. In the event a nominee is unable or declines to serve as a director,
the proxies will be voted for any nominee who may be designated by the Board to
fill the vacancy. As of the date of this Proxy Statement, the Board is not aware
of any nominee who is unable or will decline to serve as a director. Each
director will serve until Applied's 2009 Annual Meeting of Stockholders and
until he or she is succeeded by another qualified director who has been elected,
or until his or her earlier death, resignation or removal. Each nominee listed
in the following table is currently a director of Applied. Each nominee is
standing for re-election, except for Dr. de Geus and Mr. Powell, who are
standing for election for the first time. Dr. de Geus was identified as a
candidate for the Board by several non-employee directors, Applied's Chairman of
the Board and Applied's President and Chief Executive Officer, who were all
familiar with Dr. de Geus' industry and technology knowledge, global experience,
leadership skills and broad-based expertise. Based on his knowledge of Mr.
Powell's financial expertise, experience with mergers and acquisitions, and
experience in leading a world-class finance organization, Applied's Chairman of
the Board identified Mr. Powell as a candidate for the Board. After a screening
process and recommendation by the Corporate Governance and Nominating Committee,
the Board appointed Dr. de Geus and Mr. Powell as new directors on July 23, 2007
and September 11, 2007, respectively.
Director
Name of Nominee Age Principal Occupation Since
James C. Morgan 69 Chairman of Applied Materials, Inc. 1977
Michael R. Splinter 57 President, Chief Executive Officer of Applied 2003
Materials, Inc.
Robert H. Brust 64 Retired Chief Financial Officer and Executive 2006
Vice President of Eastman Kodak Company
Deborah A. Coleman 55 General Partner of SmartForest Ventures LLC 1997
Aart J. de Geus 53 Chairman and Chief Executive Officer of 2007
Synopsys, Inc.
Philip V. Gerdine 68 Retired Executive Director (Overseas 1976
Acquisitions) of Siemens AG
Thomas J. Iannotti 51 Senior Vice President and Managing 2005
Director, Technology Solutions Group,
Americas for Hewlett-Packard Company
Charles Y.S. Liu 57 Senior Managing Partner of Hao Capital 2005
China Fund
Gerhard H. Parker 64 Retired Executive Vice President, New 2002
Business Group of Intel Corporation
Dennis D. Powell 60 Executive Vice President, Chief Financial 2007
Officer of Cisco Systems, Inc.
Willem P. Roelandts 63 Chairman of Xilinx, Inc. 2004
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Applied's Corporate Governance Guidelines include a majority voting policy for
the election of directors. This policy states that in the event that a nominee
for director in an uncontested election receives more "withhold" votes for his
or her election than "for" votes, the director must submit a resignation to the
Board. The Board must take action on the resignation following a recommendation
by the Corporate Governance and
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Nominating Committee. The policy is discussed further under the section entitled
"Corporate Governance- Majority Voting Policy."
There is no family relationship among any of the nominees, directors and/or any
of Applied's executive officers. Applied's executive officers serve at the
discretion of the Board. Detailed information about Applied's directors,
including each of the director nominees, is provided below.
Directors
James C. Morgan has been Chairman of Applied since 1987. Mr. Morgan served as
Chief Executive Officer of Applied from February 1977 to April 2003, and as
President of Applied from 1976 to 1987.
Michael R. Splinter has been President, Chief Executive Officer of Applied since
April 2003. From 1984 to April 2003, Mr. Splinter was employed by Intel
Corporation, a manufacturer of chips and computer, networking and communications
products, where he was last Executive Vice President and Director of the Sales
and Marketing Group. Mr. Splinter previously held various executive positions at
Intel, including Executive Vice President and General Manager of the Technology
and Manufacturing Group. Prior to joining Intel, Mr. Splinter worked for 10
years at Rockwell International.
Michael H. Armacost, 70, has been a Shorenstein Distinguished Fellow at the
Asia/Pacific Research Center, Stanford University, since September 2002. From
October 1995 to June 2002, he was President of The Brookings Institution, a
non-partisan public policy research organization. From September 1993 through
September 1995, he was a Distinguished Senior Fellow and Visiting Professor at
the Asia/Pacific Research Center, Stanford University. From 1989 to 1993, he was
the U.S. Ambassador to Japan. Mr. Armacost is a director of AFLAC Incorporated
and USEC Inc. Mr. Armacost has been a member of Applied's Board since 1994. His
term as a director will end at the meeting and he is not standing for
re-election to the Board.
Robert H. Brust served as Executive Vice President of Eastman Kodak Company, a
provider of products and services to the photographic, graphic communications
and healthcare markets, from November 2006 until his retirement in February
2007. Mr. Brust also served as Chief Financial Officer and Executive Vice
President of Eastman Kodak from January 2000 to October 2006. From 1997 to 1999,
Mr. Brust served as Senior Vice President and Chief Financial Officer of Unisys
Corporation, a global information services and technology company. Prior to
joining Unisys, Mr. Brust held a variety of financial and financial management
positions during his 31-year career at General Electric Company, most recently
directing the finance operations of the company's plastics business. Mr. Brust
is a director of Delphi Corporation and Covidien Ltd.
Deborah A. Coleman has been General Partner of SmartForest Ventures LLC, a
venture capital firm, since October 1999. From March 1994 to September 2001, she
was the Chairman of Merix Corporation, a manufacturer of interconnect solutions
for use in electronic equipment, and she served as Chief Executive Officer of
Merix Corporation from March 1994 to September 1999. Merix Corporation was a
spinoff of Tektronix, Inc., where Ms. Coleman served as Vice President of
Materials/Operations from November 1992 through March 1994. Prior to joining
Tektronix, Ms. Coleman spent 11 years with Apple Computer, Inc. in various
positions, including Vice President, Worldwide Operations, Chief Financial
Officer, and Vice President, Information Systems and Technology. Ms. Coleman is
a director of Synopsys, Inc.
Aart J. de Geus is a co-founder of Synopsys, Inc., a provider of electronic
design automation (EDA) software and related services for semiconductor design
companies, and currently serves as Chairman of its Board of Directors and Chief
Executive Officer. Since 1986, Dr. de Geus has served as a director of and held
various positions at Synopsys, including President, Senior Vice President of
Engineering and Senior Vice President of Marketing. From 1982 to 1986, Dr. de
Geus was employed by General Electric Company, where he was the Manager of the
Advanced Computer-Aided Engineering Group.
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Philip V. Gerdine served from 1988 until his retirement in 1998 as Executive
Director of Siemens Aktiengesellschaft (AG), a German manufacturer of electrical
and electronic equipment and services for the global power generation, medical,
information technology, and communications industries. From 1989 until 1998, he
was also Managing Director of The Plessey Company, PLC, a British engineering
company that manufactured communications, semiconductor and electronics
products. Dr. Gerdine previously served from 1973 to 1988 as the Manager of
Acquisitions and Mergers for the General Electric Company, and held other
management positions with The Boston Consulting Group, GE Venture Capital Fund
and Price Waterhouse LLP. He is a certified public accountant and taught
accounting and finance at Fordham University Graduate School and the University
of New Haven for 10 years.
Thomas J. Iannotti has been Senior Vice President and Managing Director,
Technology Solutions Group, Americas for Hewlett-Packard Company, a technology
solutions provider to consumers, businesses and institutions globally, since
February 2008. From 2002 to January 2008, Mr. Iannotti held various executive
positions at Hewlett-Packard, including most recently as Senior Vice President
and Managing Director, Asia-Pacific and Japan. From 1978 to 2002, Mr. Iannotti
worked at Digital Equipment Corporation and at Compaq Computer Corporation after
its acquisition of Digital Equipment Corporation.
Charles Y.S. Liu has been Senior Managing Partner of Hao Capital China Fund, a
private equity investment firm in China, since November 2005, and has been a
Principal of On Capital China Technology Fund, which invests in early-stage
Chinese technology companies, since August 2004. From 1993 to 1999, Mr. Liu
served as Managing Director of Lazard Asia Ltd., a financial advisory and
management firm. Mr. Liu previously worked at the United Nations in various
roles, including as a negotiations secretary for numerous international economic
conferences.
Gerhard H. Parker served as Executive Vice President, New Business Group, of
Intel Corporation, a manufacturer of chips and computer, networking and
communications products, from 1998 until his retirement in May 2001. From 1988
to 1998, Dr. Parker was Senior Vice President of Intel's Technology and
Manufacturing Group. Dr. Parker is a director of FEI Company and Lattice
Semiconductor Corporation.
Dennis D. Powell is Executive Vice President, Chief Financial Officer of Cisco
Systems, Inc., a provider of networking products and services. Effective
February 15, 2008, Mr. Powell is expected to resign as Cisco's Executive Vice
President and Chief Financial Officer and will instead serve as an Executive
Advisor to Cisco. Since joining Cisco in 1997, Mr. Powell has served as Senior
Vice President, Corporate Finance and Vice President, Corporate Controller.
Before joining Cisco, Mr. Powell was employed by Coopers & Lybrand LLP for 26
years, where he was last a senior partner. Mr. Powell currently serves as a
member of the board of directors of Intuit, Inc. and VMware, Inc.
Willem P. Roelandts has been Chairman of the Board of Directors of Xilinx, Inc.,
a supplier of programmable logic solutions, since July 2003 and a director since
1996. Mr. Roelandts served as President and Chief Executive Officer of Xilinx
from January 1996 to January 2008. Prior to joining Xilinx, Mr. Roelandts held
various executive positions during a 29-year career at Hewlett-Packard Company,
where he last served as Senior Vice President and General Manager of Computer
Systems Organizations. Mr. Roelandts serves on the Board of Directors of the
Semiconductor Industry Association and the Technology Network. He is also a
member of the Advisory Board of the Center for Science, Technology and Society
at Santa Clara University.
Corporate Governance
Corporate Governance Guidelines. Applied has adopted Corporate Governance
Guidelines (the "Guidelines") that outline, among other matters, the role and
functions of the Board, the responsibilities of various Board committees, and
the procedures for reporting concerns to the Board. These Guidelines are
available, along with other important corporate governance materials, on our
website at www.appliedmaterials.com/investors/corporate_governance.html.
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The Guidelines provide, among other things, that:
a majority of the directors must be independent;
the Board designate a lead independent director who, among other duties, is
responsible for presiding over executive sessions of independent directors;
the Board appoint all members of the Board committees;
the Audit, Human Resources and Compensation, and Corporate Governance and
Nominating Committees must consist solely of independent directors;
the independent directors meet in executive sessions without the presence
of the non-independent directors or members of Applied's management at
least twice a year during regularly scheduled Board meeting days and from
time to time as deemed necessary or appropriate; and
directors should submit their resignations from the Board if they do not
receive the votes of a majority of the shares voted in an uncontested
election.
As the operation of the Board is a dynamic process, the Board regularly reviews
changing legal and regulatory requirements, evolving best practices and other
developments. The Board may modify the Guidelines from time to time, as
appropriate.
Director Nominations. The Corporate Governance and Nominating Committee of the
Board considers candidates for director nominees proposed by directors and
stockholders. This committee may retain recruiting professionals to assist in
identifying and evaluating candidates for director nominees. As set forth in the
Guidelines, the Corporate Governance and Nominating Committee strives for a mix
of skills and diverse perspectives (functional, cultural and geographic) that is
effective for the Board. Every effort is made to complement and supplement
skills within the existing Board and strengthen any identified insufficiencies.
In selecting the nominees, the Board assesses the independence, character and
acumen of candidates and endeavors to collectively establish a number of areas
of core competency of the Board, including business judgment, management,
accounting and finance, industry and technology knowledge, understanding of
manufacturing, leadership, strategic vision, and knowledge of international
markets and marketing. Additional criteria include a candidate's personal and
professional ethics, integrity and values, as well as his or her willingness to
devote sufficient time to prepare for and attend meetings and participate
effectively on the Board.
The Corporate Governance and Nominating Committee or a screening committee of
the Board evaluates and interviews potential board candidates. All members of
the Board may interview the final candidates. The Corporate Governance and
Nominating Committee also will consider nominations by stockholders. The same
identifying and evaluating procedures apply to all candidates for director
nomination, including candidates submitted by stockholders.
If you would like the Corporate Governance and Nominating Committee to consider
a prospective candidate, in accordance with our Bylaws, please submit the
candidate's name and qualifications to: Joseph J. Sweeney, Secretary, Applied
Materials, Inc., 2881 Scott Boulevard, P.O. Box 58039, M/S 2064, Santa Clara,
California 95052-8039.
Majority Voting Policy. The Guidelines include a majority voting policy for the
election of directors. This policy states that in the event that a nominee for
director in an uncontested election receives more "withhold" votes for his or
her election than "for" votes, the director must submit a resignation to the
Board. The Board's Corporate Governance and Nominating Committee, composed
entirely of independent directors, will evaluate and make a recommendation to
the Board with respect to the proffered resignation. The Board must take action
on the recommendation within 90 days following certification of the stockholder
vote. No director who tenders a resignation may participate in the Committee's
or the Board's consideration of the matter. Applied will publicly disclose the
Board's decision including, as applicable, the reasons for rejecting a
resignation.
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Standards of Business Conduct. Applied has long-standing Standards of Business
Conduct, which embody our commitment to ethical and legal business practices.
The Board expects Applied's directors, officers and all other members of its
workforce to act ethically at all times and to acknowledge their commitment to
Applied's Standards of Business Conduct. The Standards of Business Conduct are
available on our website at
www.appliedmaterials.com/investors/corporate_governance.html.
Stock Ownership Guidelines. The Board has adopted stock ownership guidelines to
more closely align the interests of our directors and named executive officers
with those of our stockholders. The guidelines provide that non-employee
directors should each maintain an investment in Applied stock with a value of at
least $200,000. The Chief Executive Officer and Chairman of the Board should
each maintain an investment in Applied stock that is equal to at least five
times his or her annual salary. Named executive officers other than the Chief
Executive Officer should each maintain an investment that is equal to at least
three times his or her annual salary. In each case, such investment levels
should be achieved within a specified period or, in any event, no later than
five years following a director's or officer's initial election or appointment.
Stockholder Communications. Any stockholder wishing to communicate with any of
our directors regarding Applied may write to the director, c/o Joseph J.
Sweeney, Secretary, Applied Materials, Inc., 2881 Scott Boulevard, P.O. Box
58039, M/S 2064, Santa Clara, California 95052-8039. The Secretary will forward
these communications directly to the director(s). The independent directors of
the Board review and approve the stockholders communication process periodically
to ensure effective communication with stockholders.
Director Independence
Applied has adopted standards for director independence pursuant to Nasdaq
listing standards and SEC rules. An "independent director" means a person other
than: an officer or employee of Applied or its subsidiaries, or any other
individual having a relationship that, in the opinion of the Board, would
interfere with the exercise of independent judgment in carrying out the
responsibilities of a director. To be considered independent, the Board must
affirmatively determine that neither the director nor any member of his or her
immediate family has had any direct or indirect material relationship with
Applied within the last three years.
The Board considered relationships, transactions and/or arrangements with each
of the directors and concluded that none of the non-employee directors or any of
his or her immediate family members has any relationships with Applied that
would impair his or her independence. The Board has determined that each member
of the Board, other than Messrs. Morgan, Powell and Splinter, is an independent
director under applicable Nasdaq listing standards and SEC rules. Messrs. Morgan
and Splinter do not meet the independence standards because they are employees
of Applied. Mr. Powell does not meet the independence standards because he
currently serves, and until February 15, 2008, is expected to serve, as an
executive officer of Cisco Systems, Inc. where, until November 2006, Mr. Morgan
served as a member of the Compensation Committee of its Board of Directors.
In addition, the Board has also determined that:
all directors who serve on the Audit, Human Resources and Compensation, and
Corporate Governance and Nominating Committees are independent directors
under applicable Nasdaq listing standards and SEC rules, and
all members of the Audit Committee did not directly or indirectly receive
compensation from Applied other than their compensation as directors.
The independent directors meet in executive sessions without the presence of the
non-independent directors or members of Applied's management at least twice per
year during regularly scheduled Board meeting days and from time to time as
deemed necessary or appropriate. The lead independent director presides over
these executive sessions.
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Board and Committee Meetings
The Board met seven times during fiscal 2007. Each director attended at least
75% of all Board and applicable committee meetings held during his or her term
as a member of the Board during fiscal 2007. Applied's policy is to strongly
encourage its Board members to attend the Annual Meeting of Stockholders, and
all who were serving as Board members at that time, except for Ms. Coleman,
attended Applied's 2007 Annual Meeting of Stockholders.
The Board has standing Audit, Human Resources and Compensation, and Corporate
Governance and Nominating Committees. The primary functions of each of these
committees are described in the tables below. In addition, members of the Board
serve on one or more of the Investment, Stockholder Rights Plan Review, and
Strategy Committees, which are described in Applied's Corporate Governance
Guidelines.
Each of the Audit, Human Resources and Compensation, and Corporate Governance
and Nominating Committees has a written charter approved by the Board that is
reviewed regularly by the respective committees, which may recommend appropriate
changes for approval by the Board. Copies of the current amended and restated
charters for the Audit, Human Resources and Compensation, and Corporate
Governance and Nominating Committees can be found on our website at
www.appliedmaterials.com/investors/corporate_governance.html.
Number of
Meetings
Held in Fiscal
Audit Committee Primary Functions 2007
Members: oversee Applied's financial statements, system of internal 8
control over financial reporting, and auditing, accounting and
Robert H. Brust* financial reporting processes
Deborah A. Coleman** appoint, compensate, evaluate and, when appropriate,
Philip V. Gerdine*** replace Applied's independent registered public accounting
Charles Y.S. Liu**** firm
Gerhard H. Parker oversee Applied's tax, legal, regulatory and ethical
compliance
review with Applied's management and Internal Auditor the
annual audit plan and matters relating to the Internal Audit
department
review annually the Audit Committee Charter
review and pre-approve audit and permissible non-audit
services
review and approve related-party transactions for which
approval is required by applicable law
oversee and review Applied's ethics policies and
procedures, including procedures for receiving, retaining and
treating complaints or concerns
* Chair and Audit Committee Financial Expert
** Ethics Ombudsman
*** Dr. Gerdine stepped down as Chair of the Audit Committee on June 19, 2007
after 31 years of service in that position. Dr. Gerdine currently serves as
an Audit Committee member and an Audit Committee Financial Expert.
**** Mr. Liu stepped down as a member of the Audit Committee on September 11,
2007.
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Number of
Human Resources and Meetings
Compensation Held in Fiscal
Committee Primary Functions 2007
Members: evaluate and oversee Applied's primary 9
strategies for employee and executive
Michael H. Armacost development
Thomas J. Iannotti determine compensation policies applicable
Willem P. Roelandts* to Applied's executive officers
determine the compensation of the Chief
Executive Officer and Applied's other executive
officers
administer the Senior Executive Bonus Plan
oversee significant employee benefits
programs, policies and plans relating to
Applied's employees and executives
oversee human resources programs,
compensation and benefits matters
adopt, amend and oversee the administration
of all equity-related incentive plans, senior
executive bonus plans and major retirement and
deferred compensation programs
review and approve any employment,
severance and/or change-in-control arrangements
for Applied's executive officers
review matters relating to management
succession and executive organization
development
approve the compensation of the members of
the Board
review and consult with Applied's
management regarding the Compensation
Discussion and Analysis that is included in
Applied's proxy statement for each Annual
Meeting of Stockholders
* Chair
Number of
Corporate Governance Meetings
and Nominating Held in Fiscal
Committee Primary Functions 2007
Members: develop, maintain and oversee 4
implementation of Applied's Corporate
Michael H. Armacost* Governance Guidelines
Thomas J. Iannotti oversee the composition, structure and
Willem P. Roelandts evaluation of the Board and its committees
identify qualified candidates for election
to the Board
establish procedures for director candidate
nomination and evaluation
monitor and safeguard the independence of
the Board
consider director resignations and
recommend appropriate action to the Board in
accordance with Applied's majority voting
policy
* Chair and Lead Independent Director
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