SCHEDULE 14A INFORMATION
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 Section 240.14a-12
RadiSys Corporation
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than Registrant)
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(1) Title of each class of securities to which transaction applies:
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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.
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 21, 2002
To the Shareholders of RadiSys Corporation:
The Annual Meeting of Shareholders of RadiSys Corporation, an Oregon
corporation (the "Company"), will be held at the Company's headquarters, located
at 5445 NE Dawson Creek Drive, Hillsboro, Oregon, on May 21, 2002 at 8:30 a.m.
for the following purposes:
1. To elect seven directors, each to serve until the next Annual
Meeting of Shareholders or until a successor has been elected and
qualified;
2. To transact any other business as may properly come before the
meeting or any adjournment thereof.
Only shareholders of record at the close of business on April 5, 2002 are
entitled to notice of and to vote at the meeting or any adjournments thereof.
Please sign and date the enclosed proxy and return it promptly in the
enclosed reply envelope. If you are able to attend the meeting, you may, if you
wish, revoke the proxy and vote personally on all matters brought before the
meeting.
A list of shareholders will be available for inspection by the shareholders
commencing April 19, 2002 at the corporate headquarters of the Company, located
at 5445 NE Dawson Creek Drive, Hillsboro, Oregon 97124.
By Order of the Board of Directors,
/s/ Annette M. Mulee
Annette M. Mulee
Corporate Secretary
April 19, 2002
Hillsboro, Oregon
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING IN
PERSON, PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING
ENVELOPE SO THAT YOUR STOCK WILL BE VOTED. THE ENVELOPE REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES.
RADISYS CORPORATION
PROXY STATEMENT
SOLICITATION AND REVOCABILITY OF PROXY
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of RadiSys Corporation, an Oregon corporation
(the "Company"), to be voted at the Annual Meeting of Shareholders to be held at
the Company's headquarters, located at 5445 NE Dawson Creek Drive, Hillsboro,
Oregon, on May 21, 2002 at 8:30 a.m. for the purposes set forth in the
accompanying Notice of Annual Meeting. All proxies in the enclosed form that are
properly executed and received by the Company before or at the Annual Meeting
and not revoked will be voted at the Annual Meeting or any adjournments in
accordance with the instructions on the proxy. Any proxy given pursuant to this
solicitation may be revoked by the person giving it at any time before it is
voted. Proxies may be revoked by (i) filing with the Secretary of the Company,
at or before the taking of the vote at the Annual Meeting, a written notice of
revocation bearing a later date than the date of the proxy, (ii) duly executing
a subsequent proxy relating to the same shares and delivering it to the
Secretary of the Company before the Annual Meeting or (iii) attending the Annual
Meeting and voting in person (although attendance at the Annual Meeting will not
in and of itself constitute a revocation of a proxy). Any written notice
revoking a proxy should be sent to RadiSys Corporation, 5445 NE Dawson Creek
Drive, Hillsboro, Oregon 97124, Attention: Corporate Secretary, or hand
delivered to the Secretary at or before the taking of the vote at the Annual
Meeting.
The mailing address of the principal executive offices of the Company is
5445 NE Dawson Creek Drive, Hillsboro, Oregon 97124. This Proxy Statement and
the accompanying Notice of Annual Meeting and the Proxy Card are first being
mailed to the shareholders on or about April 19, 2002.
The cost of preparing, printing and mailing this Proxy Statement and of the
solicitation of proxies by the Company will be borne by the Company.
Solicitation will be made by mail and, in addition, may be made by directors,
officers and employees of the Company personally, or by telephone or telegram.
The Company will request brokers, custodians, nominees and other like parties to
forward copies of proxy materials to beneficial owners of stock and will
reimburse these parties for their reasonable and customary charges or expenses
in this connection.
The record date for determination of shareholders entitled to receive
notice of and to vote at the Annual Meeting is April 5, 2002. At the close of
business on April 5, 2002, 17,456,904 shares of Common Stock of the Company were
outstanding and entitled to vote at the Annual Meeting. Each share of Common
Stock is entitled to one vote with respect to each matter to be voted on at the
Annual Meeting.
THE COMPANY WILL PROVIDE TO ANY PERSON WHOSE PROXY IS SOLICITED BY THIS
PROXY STATEMENT, WITHOUT CHARGE, UPON WRITTEN REQUEST TO 5445 NE DAWSON CREEK
DRIVE, HILLSBORO, OREGON 97124, ATTENTION: TREASURER, A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001.
ELECTION OF DIRECTORS
The Board of Directors of the Company consists of seven members. The
directors are elected at the Annual Meeting of Shareholders to serve until the
next Annual Meeting of Shareholders and until their successors are elected and
qualified. Proxies received from shareholders, unless directed otherwise, will
be voted FOR the election of the following nominees: Dr. Glenford J. Myers,
James F. Dalton, Richard J. Faubert, C. Scott Gibson, Carl W. Neun, Jean-Pierre
D. Patkay and Jean-Claude Peterschmitt.
If no instructions are given, proxies will be voted for the election of the
seven nominees named below. All of the nominees are now directors of the
Company. The Company is not aware that any nominee is or will be unable to stand
for reelection. If any nominee is not available as a candidate for director, the
number of directors constituting the Board of Directors may be reduced before
the Annual Meeting or the proxies may be voted for any other candidate or
candidates that are nominated by the Board of Directors, in accordance with the
authority conferred in the proxy. Directors will be elected by a plurality of
the votes of the shares present in person or represented by proxy at the meeting
and entitled to vote on the election of directors. Abstentions and broker
non-votes are counted for purposes of determining whether a quorum exists at the
Annual Meeting, but have no effect on the determination of whether a plurality
exists with respect to a given nominee.
Set forth in the table below is the name, age and position with the Company
of each of the nominees for director of the Company. Additional information
about each of the nominees is provided below the table and in "Security
Ownership of Certain Beneficial Owners and Management." There are no family
relationships among the directors and executive officers of the Company.
NAME AGE POSITION WITH THE COMPANY
---- --- -------------------------
Dr. Glenford J. Myers................. 55 Chairman of the Board, President and
Chief Executive Officer
James F. Dalton....................... 43 Director
Richard J. Faubert.................... 54 Director
C. Scott Gibson....................... 49 Director
Jean-Pierre D. Patkay................. 51 Director
Jean-Claude Peterschmitt.............. 68 Director
Carl W. Neun.......................... 58 Director
DR. GLENFORD J. MYERS founded the Company in March 1987 and has served as
the Company's Chairman of the Board, President and Chief Executive Officer since
that time. From 1981 to 1987, he held various management positions with Intel
Corporation in microprocessor development. From 1968 to 1981, Dr. Myers held
various engineering and management positions with IBM. Dr. Myers holds a Ph.D.
from the Polytechnic Institute of New York, an M.S. from Syracuse University and
a B.S.E.E. from Clarkson College. He is the author of eight books on computer
architecture, software design and software testing.
JAMES F. DALTON has served as a Director since December 1993. Since April
1989, Mr. Dalton has been employed by Tektronix, Inc., a test, measurement and
monitoring technology company. He now serves as Vice President, Corporate
Development of Tektronix and also serves as General Counsel and Secretary of
Tektronix. He formerly served as Director of Corporate Development at Tektronix.
RICHARD J. FAUBERT has served as a Director since June 1993. From 1986
through 1992, Mr. Faubert served as Vice President of Product Development of
GenRad, Inc. From 1992 through 1998, Mr. Faubert was employed by Tektronix,
first as General Manager of its Instruments Business Unit and then as Vice
President and General Manager of the Television and Communications Business
Unit, Measurement Business Division. Since that time, Mr. Faubert has served as
President and CEO of SpeedFam-IPEC, Inc., a semiconductor capital equipment
manufacturing company. Mr. Faubert also serves on the Board of Directors of
SpeedFam-IPEC, Inc. and the North American Board of Semiconductor Equipment and
Materials International (SEMI).
C. SCOTT GIBSON has served as a Director since June 1993. From January 1983
through February 1992, Mr. Gibson co-founded and served as President of Sequent
Computer Systems, Inc., a computer systems
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company. Before co-founding Sequent, Mr. Gibson served as General Manager,
Memory Components Operation, at Intel. Since March 1992, Mr. Gibson has been a
director and consultant to high technology companies. Mr. Gibson serves on the
boards of several other companies, including Triquint Semiconductor, Inc.,
Cenquest, Inc., etrieve, Inc., Flatrock, Inc., LiveBridge, Inc., Oregon Health
Sciences University and the Oregon Community Foundation. Mr. Gibson holds a
B.S.E.E. and an M.B.A. from the University of Illinois.
CARL W. NEUN has served as a Director since June 2000. From March 1993 to
January 2000, Mr. Neun was Senior Vice President and Chief Financial Officer of
Tektronix. From January 2000 through January 2002, Mr. Neun served as Chairman
of the Board of Directors of WireX Communications, Inc., a server appliance
software company. Mr. Neun also serves on the Board of Directors of Planar
Systems, Inc., Powerwave Technologies, Inc., SpeedFam-IPEC, Inc. and Sabrix,
Inc.
JEAN-PIERRE D. PATKAY has served as a Director since July 1998. From 1973
to 1990, Mr. Patkay held a variety of engineering, manufacturing and general
management positions with Hewlett-Packard Company. From 1990 to 1994, Mr. Patkay
was Vice President of Operations for Quantum Corp., a diversified mass storage
company. From 1994 through March 2000, Mr. Patkay was employed by 3Com
Corporation, a computer networking company, serving first as Vice President of
Worldwide Manufacturing and later as Vice President and General Manager, 3Com
OEM. Since April 2000 Mr. Patkay has been employed by TollBridge Technologies,
Inc., a telecom equipment company. Mr. Patkay serves as the Chief Operating
Officer of TollBridge Technologies, Inc. He formerly served as Vice President of
Operations at TollBridge.
JEAN-CLAUDE PETERSCHMITT has served as a Director since July 1996. From
1967 to 1987, Mr. Peterschmitt served in various capacities with Digital
Equipment Corporation, a corporate information systems supplier, most recently
as General Manager, Vice President, Europe and Chairman of the European Board of
Directors. Before then Mr. Peterschmitt was a member of Arthur D. Little's
European Operations Research Group. He serves on the advisory and supervisory
boards of Euroventures B.V., a European venture fund, Le Reseau, a network
structure for the creation and development of high-technology enterprises in
Switzerland, and various private American and European companies. Mr.
Peterschmitt received an engineering degree from Eidgenossiche Technische
Hochscule (Zurich) and an M.S. degree from the MIT Sloan School of Business.
BOARD COMMITTEES AND MEETINGS
The Board of Directors held nine meetings during the fiscal year ended
December 31, 2001. Each director, other than Carl W. Neun, attended or
participated in at least 75 percent of the aggregate number of meetings of the
Board of Directors and committees of which the director was a member. Mr. Neun
participated in 71% of the aggregate number of meetings of the Board of
Directors and the committee of which he is a member.
The Company maintains an Audit Committee consisting of C. Scott Gibson,
James F. Dalton and Carl W. Neun. All of the members of the Audit Committee are
"independent directors" within the meaning of Rule 4200(a)(14) of the National
Association of Securities Dealers' listing standards. The Audit Committee
assists the Board of Directors in fulfilling its oversight responsibilities
relating to corporate accounting, the Company's reporting practices and the
quality and integrity of the Company's financial reports; compliance with law
and the maintenance of ethical standards by the Company; and the Company's
maintenance of effective internal controls. The Audit Committee met five times
in the last fiscal year. For additional information about the Audit Committee,
see "Audit Committee Matters."
The Company maintains a Compensation Committee consisting of Richard J.
Faubert, C. Scott Gibson, Jean-Pierre D. Patkay and Jean-Claude Peterschmitt.
None of the members of the Compensation Committee are current or former officers
or employees of the Company. The Compensation Committee assists the Board of
Directors in fulfilling its oversight responsibilities relating to the Company's
compensation policies and benefit plans, particularly policies relating to
executive compensation and performance. The Compensation Committee also
establishes executive compensation levels and makes grants to corporate officers
under the Company's 1995 Stock Incentive Plan. The Compensation Committee met
seven times in the last fiscal year.
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For additional information about the Compensation Committee, see "Compensation
Committee Report on Executive Compensation."
The Company maintains a Nominating and Governance Committee consisting of
Richard J. Faubert and James F. Dalton. The Nominating and Governance Committee
met two times in the last fiscal year. The Nominating and Governance Committee
assists the Board of Directors in fulfilling its oversight responsibilities
relating to seeking candidates for membership on the Board of Directors,
assessing the corporate governance policies and processes of the Board of
Directors and reviewing from time to time the policies of the Board of Directors
related to director qualifications, compensation, tenure and retirement. The
Nominating and Governance Committee will consider nominees recommended by
shareholders of the Company. Recommendations for nominees should be sent to 5445
NE Dawson Creek Drive, Hillsboro, Oregon 97124, Attention: Corporate Secretary.
DIRECTOR COMPENSATION
Each non-employee director of the Company receives an annual cash retainer
of $19,800 for serving on the Board of Directors. For serving on the Audit
Committee, the Compensation Committee or the Nominating and Governance Committee
of the Board of Directors, each non-employee director receives additional annual
cash compensation equal to $2,250 per committee. These amounts reflect a 10%
reduction for the cash compensation paid to members of the Board of Directors
implemented at the October 16, 2001 meeting. The reduction will be effective
until the completion of a fiscal quarter in which the Company is profitable on a
cash earnings per share basis. Directors are also reimbursed for reasonable
expenses incurred in attending meetings. Pursuant to the terms of the 1995 Stock
Incentive Plan, each individual who becomes a non-employee director of the
Company after August 7, 1995 is automatically granted, on the date the
individual joins the Board of Directors, a non-statutory stock option to
purchase 15,000 shares of Common Stock. If the non-employee director's employer
prohibits the non-employee director from receiving such a grant, no such grant
is made until the time, if ever, when the employer restrictions are removed. In
addition, each non-employee director of the Company is automatically granted on
an annual basis a non-statutory stock option to purchase 5,000 shares of Common
Stock, beginning in the calendar year following the year in which the
non-employee director was granted a non-statutory stock option to purchase
15,000 shares of Common Stock. The exercise price of options automatically
granted to non-employee directors is the fair market value of the Common Stock
on the date of grant, the term of each option is ten years and each option is
exercisable in full on the date one year following the grant of the option.
Non-employee directors are expected to acquire and hold a minimum of 5,000
shares or $100,000 worth of the Company's Common Stock, whichever is the lesser
value, and that minimum amount is expected to be reached within three to five
years of becoming a director. Directors who are employees of the Company receive
no separate compensation as directors.
RECOMMENDATION BY THE BOARD OF DIRECTORS. The Board of Directors
recommends that shareholders vote for the election of the nominees named in this
Proxy Statement.
4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of the Common Stock of the Company as of March 31, 2002 by (i) each
person known to the Company to be the beneficial owner of more than 5% of the
Company's Common Stock, (ii) each of the Company's directors and nominees for
director, (iii) each individual named in the Summary Compensation Table and (iv)
all directors and executive officers of the Company as a group. Unless otherwise
noted in the footnotes to the table, the persons named in the table have sole
voting and investment power with respect to all outstanding shares of Common
Stock shown as beneficially owned by them.
SHARES PERCENTAGE OF
BENEFICIALLY COMMON
NAME OWNED STOCK
---- ------------ -------------
Dr. Glenford J. Myers(1).................................... 526,570 3.02%
Ronald A. Dilbeck(2)........................................ 90,145 *
Stephen F. Loughlin(3)...................................... 7,378 *
Arif Kareem(4).............................................. 58,371 *
Stuart Cohen(5)............................................. 63,895 *
James F. Dalton(6).......................................... 32,800 *
Robert Dunne(7)............................................. 1,420 *
Richard J. Faubert(8)....................................... 40,000 *
C. Scott Gibson(9).......................................... 60,442 *
Jean-Pierre D. Patkay(10)................................... 41,419 *
Jean-Claude Peterschmitt(11)................................ 35,000 *
Carl W. Neun(12)............................................ 20,500 *
Fidelity Management & Research Co.(13)...................... 2,095,060 12.0%
82 Devonshire Street, E35A
Boston, MA 02109-3614
Becker Capital Management................................... 1,427,000 8.18%
1211 SW 5th Ave. Suite 2185
Portland, OR 97204
Brown Capital Management, Inc............................... 1,593,200 9.13%
1201 N. Calvert Street
Baltimore, MD 21202
Lord, Abbett & Co........................................... 1,390,000 7.96%
767 Fifth Avenue
New York, NY 10153
Intel Corporation........................................... 1,104,300 6.33%
2200 Mission College Blvd.
Santa Clara, CA 95052
All directors and executive officers as a group (11
persons)(14).............................................. 969,142 5.55%
---------------
* Less than 1%
(1) Includes options to purchase 177,500 shares of Common Stock exercisable
within 60 days after March 31, 2002. Includes 4,725 shares of Common Stock
held by Dr. Myers' minor child.
(2) Includes options to purchase 77,390 shares of Common Stock exercisable
within 60 days after March 31, 2002.
(3) Mr. Loughlin resigned as Chief Financial Officer of the Company on June 30,
2001.
(4) Includes options to purchase 55,410 shares of Common Stock exercisable
within 60 days after March 31, 2002.
5
(5) Includes options to purchase 61,150 shares of Common Stock exercisable
within 60 days after March 31, 2002.
(6) Includes options to purchase 27,500 shares of Common Stock exercisable
within 60 days after March 31, 2002.
(7) Mr. Dunne resigned as Vice President of Sales on February 24, 2002.
(8) Includes options to purchase 40,000 shares of Common Stock exercisable
within 60 days after March 31, 2002.
(9) Includes options to purchase 40,000 shares of Common Stock exercisable
within 60 days after March 31, 2002.
(10) Includes options to purchase 40,000 shares of Common Stock exercisable
within 60 days after March 31, 2002.
(11) Includes options to purchase 25,000 shares of Common Stock exercisable
within 60 days after March 31, 2002.
(12) Includes options to purchase 5,000 shares of Common Stock exercisable
within 60 days after March 31, 2002.
(13) Based solely on information set forth in Schedule 13G/A dated February 14,
2002, filed with the Securities and Exchange Commission.
(14) Does not include shares beneficially owned by Mr. Loughlin or Mr. Dunne
because they are no longer executive officers of the Company. Includes
options to purchase 548,950 shares of Common Stock exercisable within 60
days after March 31, 2002. Also includes 4,725 shares held by members of
the families of executive officers and directors.
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EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth information
concerning compensation paid or accrued for services to the Company in all
capacities for each of the last three fiscal years for
- the chief executive officer;
- the most highly compensated executive officers whose total annual salary
and bonus exceeded $100,000 and who were serving as executive officers at
the end of fiscal year 2001; and
- one corporate officer of the Company who formerly was an executive
officer of the Company and one former executive officer of the Company
for whom disclosure would have been provided but for the fact that these
individuals were not serving as executive officers at the end of the last
completed fiscal year.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION(*) SHARES
-------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) OPTIONS COMPENSATION
--------------------------- ---- -------- -------- ---------- ------------
Glenford J. Myers...................... 2001 $366,535 $ 0 67,000(3) $ 5,100(2)
Chairman of the Board, President and 2000 $349,987 $167,300 65,000(4) $ 5,100(2)
Chief Executive Officer 1999 $259,692 $216,100 75,000(5) $ 4,800(2)
Ronald A. Dilbeck...................... 2001 $243,039 $ 0 41,350(3) $ 2,872(2)
Senior Vice President and General 2000 $220,000 $ 84,125 10,000(4) $ 5,100(2)
Manager of Telecom Division(6) 1999 $164,938 $ 73,670 30,000(5) $ 4,800(2)
Stephen F. Loughlin(7)................. 2001 $118,577 $ 0 20,000(3) $238,554(8)
2000 $225,000 $ 73,750 20,000(4) $ 5,100(2)
1999 $155,769 $ 58,606 60,001(5) $ 751(2)
Arif Kareem............................ 2001 $223,977 $ 0 31,210(3) $ 5,100(2)
Senior Vice President for Corporate 2000 $220,000 $ 67,345 25,000(4) $ 5,100(2)
Marketing and Business Development(9) 1999 $164,769 $119,900 30,000(5) $ 4,800(2)
Stuart F. Cohen........................ 2001 $170,385 $ 0 21,000(3) $ 0
Vice President of Strategic
Alliances(10) 2000 $191,923 $ 44,265 35,000(4) $ 0
1999 $155,481 $ 68,500 60,000(5) $ 0
Robert F. Dunne(11).................... 2001 $144,519 $ 50,000 61,125(3) $ 75,000(12)
2000 $ 0 $ 0 0 $ 0
1999 $ 0 $ 0 0 $ 0
---------------
(1) Represents amounts paid under the Incentive Compensation Plan. See
"Compensation Committee Report on Executive Compensation -- Incentive
Compensation Plan."
(2) Represents amounts contributed by the Company under the Company's 401(k)
plan.
(3) Represents options issued in 2001.
(4) Represents options issued in 2000.
(5) Represents options issued in 1999.
(6) During Fiscal Year 2001, Mr. Dilbeck served as Chief Operating Officer. On
February 20, 2002, Mr. Dilbeck's title changed to Senior Vice President and
General Manager of the Telecom Division, and the position of Chief
Operating Officer was eliminated.
(7) Stephen F. Loughlin resigned as Chief Financial Officer in June 2001.
(8) Represents amount received under the severance provision of Mr. Loughlin's
letter agreement dated March 31, 1999.
(9) During Fiscal Year 2001, Mr. Kareem served as Senior Vice President and
General Manager of the Telecommunications Division. On February 20, 2002,
Mr. Kareem's title changed to Senior Vice President.
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(10) During Fiscal Year 2001, Mr. Cohen's title was Vice President of Marketing.
In October 2001, Mr. Cohen's title changed to Vice President of Strategic
Alliances.
(11) Robert F. Dunne resigned as Vice President of Sales in February 2002.
(12) Represents amount received as a signing bonus.
* The Company typically implements salary increases in the first week of
February of each year. In 2001, the Company delayed implementing salary
increases for executive officers until April 2, 2001. On June 25, 2001, the
Company implemented a 10% salary cut for all corporate officers. This
salary cut will remain in effect until the Company regains profitability.
Stock Option Grants in 2001. The following table sets forth information
concerning individual grants of stock options made by the Company in 2001 to
each of the officers of the Company named in the Summary Compensation Table.
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS POTENTIAL REALIZABLE VALUE
UNDERLYING GRANTED TO EXERCISE AT ASSUMED ANNUAL RATES
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION OF STOCK PRICE APPRECIATION
NAME GRANTED(1) FISCAL YEAR(2) SHARE DATE(3) FOR OPTION TERM(4)
---- ---------- -------------- --------- ---------- ---------------------------
5% 10%
Glenford J. Myers......... 2,000 0.13% $19.99 07/17/08 $ 16,276 $ 37,930
3,733 0.25% $26.78 01/04/08 $ 40,700 $ 94,848
61,267 4.14% $26.78 01/04/08 $667,974 $1,556,664
------ ---- -------- ----------
Total................ 67,000 4.52% $724,950 $1,689,442
Ronald A. Dilbeck......... 5,000 0.34% $14.05 10/16/08 $ 28,599 $ 66,647
7,466 0.50% $26.78 01/04/08 $ 81,399 $ 189,695
1,350 0.09% $19.99 07/17/08 $ 10,986 $ 25,603
27,534 1.86% $26.78 01/04/08 $300,194 $ 699,580
------ ---- -------- ----------
Total................ 41,350 2.79% $421,178 $ 981,525
Stephen F. Loughlin(5).... 3,733 0.25% $26.78 01/04/08 $ 40,700 $ 94,848
16,267 1.10% $26.78 01/04/08 $177,354 $ 413,310
------ ---- -------- ----------
Total................ 20,000 1.35% $218,054 $ 508,158
Arif Kareem............... 1,210 0.08% $19.99 07/17/08 $ 9,847 $ 22,947
26,267 1.77% $26.78 01/04/08 $286,381 $ 667,389
3,733 0.25% $26.78 01/04/08 $ 40,700 $ 94,848
------ ---- -------- ----------
Total................ 31,210 2.10% $336,928 $ 785,184
Stuart F. Cohen........... 1,000 0.07% $19.99 07/17/08 $ 8,138 $ 18,965
3,733 0.25% $26.78 01/04/08 $ 40,700 $ 94,848
16,267 1.10% $26.78 01/04/08 $177,354 $ 413,310
------ ---- -------- ----------
Total................ 21,000 1.42% $226,192 $ 527,123
Robert F. Dunne(6)........ 1,125 0.08% $19.99 07/17/08 $ 9,155 $ 21,335
41,820 2.82% $16.50 04/17/06 $190,643 $ 421,270
18,180 1.23% $16.50 04/17/06 $ 82,876 $ 183,135
------ ---- -------- ----------
Total................ 61,125 4.13% $282,674 $ 625,740
---------------
(1) All option grants were made pursuant to the Company's 1995 Stock Incentive
Plan. The options granted to Messrs. Cohen, Dilbeck, Kareem, Loughlin and
Dr. Myers with expiration dates of January 4, 2008 and the options granted
to Mr. Dilbeck with an expiration date of October 16, 2008 were originally
granted on January 1, 2001 and October 16, 2001, respectively, and thus have
a term of seven years. These options are not exercisable for two years after
the date of grant, after which the options are exercisable for one-half of
the total option shares and become exercisable in full three years after the
date of grant. The options granted to Mr. Dunne with an expiration date of
April 17, 2006 were originally granted on April 17, 2001. These options are
not exercisable for one year after the date of grant, after which the
options are exercisable for one-third of the total option shares and become
exercisable in monthly increments equal to 1/36th of the total option
shares, cumulatively, each month thereafter,
8
becoming fully exercisable three years after the date of grant. The options
granted to Messrs. Cohen, Dilbeck, Kareem and Dr. Myers with expiration
dates of July 17, 2008 were originally granted on July 17, 2001, and thus
have a term of seven years. These options became exercisable in full on
January 1, 2002.
(2) In 2001, the Company granted options for a total of 513,411 shares of Common
Stock under the 1995 Stock Incentive Plan and 997,616 shares of Common Stock
under the 2001 Nonstatutory Stock Option Plan and those numbers were used in
calculating the percentages set forth in this column.
(3) Options expire before this date (i) if the optionee's employment is
terminated for any reason (other than death or disability), in which case
options vested but unexercised at the date of termination may be exercised
at any time before the expiration date of the options or the expiration of
30 days after the date of termination, whichever is the shorter period, or
(ii) if employment terminates because of death or disability, in which case
options vested but unexercised at the date of termination may be exercised
at any time before the expiration date of the options or the expiration of
12 months after the date of termination, whichever is the shorter period. If
employment (or service as a director, as applicable) is terminated by death
of the optionee, the options generally may be exercised by persons to whom
the optionee's rights pass by will or the laws of descent or distribution.
Remaining vested but unexercised options terminate at the end of the
earliest of the above described periods, as applicable.
(4) In accordance with the rules of the Securities and Exchange Commission,
these amounts are the hypothetical gains or "option spreads" that would
exist for the respective options based on assumed rates of annual compound
stock price appreciation of 5% and 10% from the date the options were
granted over the full option term.
(5) Stephen F. Loughlin resigned as Chief Financial Officer in June 2001 and all
of his options have terminated.
(6) Robert F. Dunne resigned as Vice President of Sales in February 2002 and all
of his options have terminated.
Aggregated Option Exercises. The following table sets forth information,
on an aggregated basis, concerning each exercise of stock options during the
fiscal year 2001 by each of the officers of the Company named in the Summary
Compensation Table and the fiscal year-end value of unexercised options.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 2001
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
NUMBER OF OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 2001 DECEMBER 31, 2001(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
Glenford J. Myers........ 0 $ 0 175,500 132,000 $ 44,775 $ 0
Ronald A. Dilbeck........ 0 $ 0 61,040 73,451 $ 0 $151,177
Stephen F. Loughlin...... 20,001 $26,530 0 0 $ 0 $ 0
Arif Kareem.............. 0 $ 0 37,200 83,210 $159,840 $ 86,400
Stuart F. Cohen.......... 0 $ 0 35,150 66,000 $ 9,305 $ 7,400
Robert F. Dunne.......... 0 $ 0 0 61,125 $ 0 $189,600
---------------
(1) Options are "in-the-money" at the fiscal year-end if the fair market value
of the underlying securities on such date exceeds the exercise price of the
option. The amounts set forth represent the difference between the fair
market value of the securities underlying the options on December 31, 2001
based on the closing sale price of $19.66 per share of Common Stock on that
date (as reported on the Nasdaq National Market) and the exercise price of
the options, multiplied by the applicable number of shares.
9
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION(1)
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation:
The Compensation Committee of the Board of Directors (the "Committee") is
composed of four independent, non-employee directors and, pursuant to authority
delegated by the Board, determines the compensation to be paid to the Chief
Executive Officer and each of the other executive officers of the Company. The
Committee is also responsible for developing and making recommendations to the
Board with respect to the Company's executive compensation policies.
The Company's objectives for executive compensation are to
- attract and retain key executives important to the long-term success of
the Company;
- reward executives for performance and enhancement of shareholder value;
and
- align the interests of the executive officer with the success of the
Company by basing a portion of the compensation upon corporate
performance.
COMPENSATION PRINCIPLES
To achieve the Company's executive compensation objectives, the Committee
adheres to several principles in structuring the compensation packages for the
Chief Executive Officer and the other executive officers of the Company. These
are:
Compensation for performance. A high percentage of total compensation is
linked directly to the performance of the Company and the executive's individual
performance in attaining the Company's objectives and supporting the Company's
mission statement. The Committee believes this structure aligns the executives'
interests with the interests of the Company's shareholders.
Competitive compensation. Total compensation levels of the Company's
executive officers are set relative to similar companies in the electronics
industry. The compensation packages are designed to allow an opportunity to earn
at a level above median industry practices and market competitors when Company
performance exceeds the results of comparable companies. The opportunity to earn
at higher levels provides a significant challenge to the executive officers.
Executive ownership. A substantial component of executive compensation is
equity based. The executive officers' and shareholders' interests can be more
closely aligned by creating a strong and direct link between compensation and
shareholder value. The Committee believes that equity-based compensation
properly balances the rewards for long-term versus short-term results. The
Company has established ownership guidelines for executive officers to further
align their interests and objectives with the Company's shareholders. Under
these guidelines, each executive officer is expected to accumulate stock
ownership over time so that, after three years of employment, the executive owns
Company common stock with an aggregate value at least equal to the executive's
base annual salary.
Management development. Executive compensation packages are also designed
to attract and retain qualified executives with the leadership skills and other
key abilities required to meet the Company's objectives and to enhance
shareholder value. To this end, in determining compensation the Committee also
takes into account individual experience, job responsibilities, and individual
performance.
---------------
(1) This Compensation Committee Report, in addition to the section entitled
"Report of the Audit Committee" and the section entitled "Comparison of
Cumulative Total Return" are not "soliciting material," are not deemed
"filed" with the Securities and Exchange Commission and are not to be
incorporated by reference in any filing of the Company under the Securities
Act of 1933 or the Securities Act of 1934, regardless of date or any general
incorporation language in such filing.
10
COMPONENTS OF EXECUTIVE COMPENSATION PROGRAM
The Company's executive officer compensation program consists of base
salary, annual bonus, and long term incentive compensation in the form of stock
options. The Committee annually reviews each component of compensation and total
compensation for the executive officers of the Company. The review includes a
market survey of compensation and changes in compensation for similar positions
in comparable companies in the electronics industry.
Base salary. Base salaries for executive officers are set near the average
levels believed by the Committee to be sufficient to attract and retain
qualified executive officers. Base salary adjustments are provided to executive
officers based upon an evaluation of each executive's performance, as well as
the performance of the Company as a whole. Although the Committee does not
establish a specific formula or target to determine base salaries, the Committee
does review detailed survey data from a number of independent sources and
services regarding the base salaries of executive officers in comparable
companies in the electronics industry. In addition, the Committee considers the
success of the executive officers in developing and executing the Company's
strategic plans, developing management employees and demonstrating leadership.
Incentive Compensation Plan. The Company maintains an Incentive
Compensation Plan (the "Compensation Plan") pursuant to which executive officers
are eligible for potential bonuses based upon their ability to achieve planned
profit targets and the achievement of specific operational objectives. If
minimum target results are not achieved, no bonus will be paid. At its
discretion, the Board of Directors, which administers the Compensation Plan, may
reduce the incentive compensation to be paid pursuant to the Compensation Plan.
For 2001, the Committee established a cash bonus potential under the
Compensation Plan for the Company's executive officers ranging from
approximately 40% to 80% of base salaries. No cash bonuses or other incentive
compensation were paid to executive officers other than the Vice President of
Sales for 2001.
Stock Options. The Company's stock option program is intended as a
long-term incentive plan for executives, managers and other employees within the
Company. The Company's 1995 Stock Incentive Plan provides for the award of
incentive stock options to selected employees and the award of nonqualified
stock options, restricted stock, stock appreciation rights, bonus rights and
other incentive grants to selected employees, independent contractors and
consultants. The Company's 2001 Nonqualified Stock Option Plan provides for the
award of nonqualified stock options only to employees who are not executive
officers or directors of the Company.
Market surveys of long-term incentives are reviewed to establish
competitive practices. Management makes recommendations to the Committee on the
size of a grant, if any, for each executive based on the individual's ability to
improve financial performance, the executive's past performance, and
expectations of the executive's future contributions. Option grants provide an
effective incentive for management to create shareholder value over the long
term because the full benefit of the compensation package cannot be realized
unless the Company's common stock price appreciates over a number of years.
Options to purchase a total of 291,685 shares of the Company's common stock
were granted to executive officers in 2001 with an exercise price equal to the
fair market value of the underlying common stock on date of grant. No
performance-based options were granted either to the Chief Executive Officer or
other executive officers in 2001. Options granted to newly hired executive
officers in 2001 are not exercisable for one year after the grant, after which
the options are exercisable for one-third of the total option shares, and become
exercisable in monthly increments equal to 1/36th of the total option shares,
cumulatively, each month thereafter, becoming fully exercisable four years after
the date of grant. The new hire options terminate on the fifth anniversary of
the grant date. Options granted to existing executive officers, or "refresher"
options, in 2001 are not exercisable for two years after the grant, after which
the options are exercisable for one-half of the total option shares, and become
exercisable in full three years after the date of grant. The refresher options
terminate on the seventh anniversary of the grant date.
11
DEDUCTIBILITY OF COMPENSATION
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), limits to $1,000,000 per person the amount that the Company may deduct
for compensation paid to the Company's Chief Executive Officer and four highest
compensated officers (other than the Chief Executive Officer) in any year. The
levels of salary and bonus generally paid by the Company do not exceed this
limit. Many of the options granted under the Company's 1995 Stock Incentive Plan
are intended to qualify as incentive stock options. The Company receives no tax
deduction upon exercise of an incentive stock option unless the optionee
disposes of the acquired shares before satisfying specific holding period
requirements. The $1,000,000 cap on deductible compensation applies to
compensation income recognized by an optionee if the optionee disposes of the
shares acquired upon exercise of an incentive stock option before satisfying the
holding period requirements, as well as compensation income recognized by the
optionee upon exercise of a nonqualified stock option, unless the option meets
various requirements. The Company's policy generally is to grant options that
meet applicable requirements so that any compensation recognized by an optionee
in connection with an option will be fully deductible. The Committee believes
that the grant of incentive stock options, despite their general
nondeductibility, benefits the Company by encouraging the long-term ownership of
the Company's stock by officers and other employees.
Because options granted under the 2001 Nonqualified Stock Plan are only
available to employees who are not executive officers or directors of the
Company, the limitations under Section 162(m) of the Code do not apply to those
options. Upon exercise of options granted under the 2001 Nonqualified Stock
Plan, the Company is entitled to a deduction in the amount of the difference
between the exercise price and the fair market value of the shares on the date
of exercise. The optionee is taxed on the same amount as ordinary income.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Committee determined the Chief Executive Officer compensation for 2001
consistent with the executive compensation principles and components described
above. The Committee increased Dr. Myers' annual base salary by 14% for 2001 to
be competitive with the median base salary paid to chief executive officers of
comparable companies in the electronics industry. Dr. Myers did not receive any
annual cash incentive for 2001 in accordance with the Compensation Plan. Dr.
Myers received a grant of incentive stock options for 3,733 shares of the
Company's common stock at an exercise price of $26.78 per share. Dr Myers also
received grants of nonstatutory stock options for 63,267 shares of the Company's
common stock, 61,267 of which have an exercise price of $26.78 per share and
2,000 of which have an exercise price of $19.99 per share. All exercise prices
are equal to the fair market value of the Company's common stock on the date of
grant. The number of shares granted to Dr. Myers for 2001 was based on a
subjective determination of the number of shares needed as part of the Company's
long-term incentive program.
The Committee believes the key executive team of the Company will receive
appropriate rewards under this program of corporate incentives, but only if they
achieve the performance goals established for them and the Company and if they
succeed in building increased value for the Company's shareholders.
Jean-Pierre Patkay, Chairman
Richard J. Faubert
C. Scott Gibson
Jean-Claude Peterschmitt
12
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors is responsible for monitoring
the integrity of the Company's consolidated financial statements, the Company's
system of internal controls and the independence and performance of its
independent auditors. The Audit Committee is composed of three non-employee
directors and operates under a written charter that it has adopted and approved
pursuant to authority delegated to it by the Board. Each Audit Committee member
meets the independence requirements of The Nasdaq Stock Market.
The Company's management is responsible for the financial reporting
process, including the system of internal controls, and for the preparation of
consolidated financial statements in accordance with generally accepted
accounting principles. The Company's independent auditors are responsible for
auditing those financial statements and expressing an opinion as to their
conformity with generally accepted accounting principles. The Audit Committee
acts in an oversight capacity, and its responsibility is to monitor and review
these processes. In its oversight role the Audit Committee relies, without
independent verification, on
- management's representation that the Company's consolidated financial
statements have been prepared with integrity and objectivity and in
conformity with generally accepted accounting principles, and
- the report of the Company's independent auditors, PricewaterhouseCoopers
LLP, with respect to the Company's consolidated financial statements.
In this context, the Audit Committee held five meetings in 2001. At each of
these meetings, the Audit Committee met with senior members of the Company's
financial management team, the Company's counsel and the Company's independent
auditors. The Audit Committee also held private sessions at each of its meetings
with PricewaterhouseCoopers, at which candid discussions of financial
management, accounting and internal control issues took place. The Audit
Committee reviewed with PricewaterhouseCoopers the overall scope and plans for
their audit, the results of audit examinations, evaluations by the auditors of
the Company's internal controls and the quality of the Company's financial
reporting.
The Audit Committee reviewed the audited consolidated financial statements
for the year ended December 31, 2001 with management and PricewaterhouseCoopers,
including a discussion of the quality, not simply the acceptability, of the
accounting principles, the reasonableness of significant judgments, and the
clarity of disclosures in the consolidated financial statements. In addressing
the quality of management's accounting standards, the Audit Committee sought
management's representation that the audited consolidated financial statements
of the Company have been prepared in conformity with generally accepted
accounting principles.
The Audit Committee also discussed with PricewaterhouseCoopers matters
required to be discussed with audit committees under generally accepted auditing
standards, including, among other things, matters related to the conduct of the
audit of the Company's consolidated financial statements and the matters
required to be discussed by Statement on Auditing Standards No. 61, as amended
(Communication with Audit Committees). SAS 61 requires the Company's independent
auditors to provide the Audit Committee with additional information regarding
the scope and results of their audit of the Company's consolidated financial
statements, including with respect to:
- their responsibility under generally accepted auditing standards,
- significant account policies,
- management judgments and estimates,
- any significant audit adjustments,
- any disagreements with management, and
- any difficulties encountered in performing the audit.
13
The Audit Committee also discussed with PricewaterhouseCoopers their
independence, and PricewaterhouseCoopers provided the Audit Committee with
written disclosures and the letter required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees) to the effect
that, in their professional judgment, PricewaterhouseCoopers is independent of
the Company within the meaning of the federal securities laws. When considering
PricewaterhouseCoopers' independence, the Audit Committee discussed whether
PricewaterhouseCoopers' provision of services to the Company beyond those
rendered in connection with their audit and review of the Company's consolidated
financial statements was compatible with maintaining their independence. The
Audit Committee also reviewed, among other things, the amount of fees paid to
PricewaterhouseCoopers for audit and non-audit services.
Based on the Audit Committee's review and these meetings, discussions and
reports, and subject to the limitations of the Audit Committee's role and
responsibilities referred to above and in the Audit Committee Charter, the Audit
Committee recommended to the Board that the Company's audited consolidated
financial statements for the year ended December 31, 2001 be included in the
Company's Annual Report on Form 10-K. The Audit Committee, pursuant to authority
delegated to it by the Board, has selected PricewaterhouseCoopers as the
Company's independent auditors for the year ending December 31, 2002.
C. Scott Gibson
James F. Dalton
Carl W. Neun, Chairman
PRINCIPAL ACCOUNTING FIRM FEES
The Company incurred the following fees for services performed by the
Company's principal accounting firm, PricewaterhouseCoopers LLP, in 2001:
Audit Fees.................................................. $247,667(1)
Financial Information Systems Design and Implementation
Fees...................................................... $ 0(2)
All Other Fees.............................................. $161,035(2)(3)
--------
Total....................................................... $408,702
========
---------------
(1) Fees for the audit of the Company's annual financial statements for the year
ended December 31, 2001 and the reviews of the financial statements included
in the Company's Forms 10-Q for the year ended December 31, 2001 are
$247,667, of which an aggregate amount of $154,625 has been billed through
December 31, 2001.
(2) The Audit Committee has considered whether the provision of the services
covered by these fees is compatible with maintaining the principal
accountant's independence.
(3) Represents the aggregate fees billed for all other services rendered by
PricewaterhouseCoopers LLP for the year ended December 31, 2001. Includes
fees for statutorily required audits in various locations outside the United
States where the Company has operations and tax consulting, and $12,800 in
acquisition consulting fees.
14
COMPARISON OF CUMULATIVE TOTAL RETURN
The following graph sets forth the Company's total cumulative shareholder
return as compared to the CIBC Embedded Systems Index, the Nasdaq Composite
Index and the Standard and Poor's 500 Index for the period December 31, 1996
through December 31, 2001. Total shareholder return assumes $100 invested at the
beginning of the period in each of
- the Common Stock of the Company,
- the stocks represented in the CIBC Embedded Systems Index,
- the stocks represented in the Nasdaq Composite Index, and
- the stocks represented in the Standard and Poor's 500 Index.
Total return also assumes reinvestment of dividends. The Company has never paid
dividends on its Common Stock.
Historical stock price performance should not be relied upon as indicative
of future stock price performance.
RADISYS CORPORATION
STOCK PRICE PERFORMANCE
DECEMBER 31, 1996 -- DECEMBER 31, 2001
[STOCK PRICE PERFORMANCE CHART]
---------------------------------------------------------------------------------------
TOTAL RETURN ANALYSIS 12/29/96 12/31/97 12/31/98 12/31/99 12/1/00 12/29/01
---------------------------------------------------------------------------------------
RadiSys Corp. $100.00 $ 76.41 $ 61.54 $156.92 $ 79.62 $ 60.49
CIBC Embedded
Systems Index $100.00 $108.48 $ 93.71 $215.20 $178.06 $129.47
NASDAQ Composite $100.00 $122.11 $171.08 $318.11 $193.63 $153.36
S&P 500 $100.00 $133.10 $170.82 $206.50 $187.85 $165.59
Source: Carl Thompson Associates www.ctaonline.com (800) 959-9677. Data from
BRIDGE Information Systems, Inc.
15
EMPLOYMENT CONTRACTS AND SEVERANCE ARRANGEMENTS
On February 8, 2000, the Company entered into an Executive Severance
Agreement with Dr. Myers providing for severance pay in a cash amount equal to
12 months of Dr. Myers' annual base pay at the rate in effect immediately before
the date of termination. Dr. Myers is entitled to receive the severance pay if
his employment with the Company is terminated by the Company other than for
cause, death or disability. Upon such a termination, and in addition to
severance pay, Dr. Myers is also entitled to receive COBRA benefits and an
amount equal to a prorated portion of Dr. Myers' target bonus amount under any
cash incentive plans in effect at the time of termination. In addition, all
stock options granted to Dr. Myers under the Company's 1995 Stock Incentive Plan
or any other equity plan that would vest during the 12-month period following
the date of termination will become immediately exercisable in full.
If Dr. Myers' employment with the Company is terminated by the Company
(other than for cause, death or disability) within 18 months following a change
of control of the Company, Dr. Myers is entitled to receive severance pay in a
cash amount equal to 24 months of Dr. Myers' annual base pay at the rate in
effect immediately before the date of termination. Upon such a termination, and
in addition to severance pay, Dr. Myers is also entitled to receive COBRA
benefits and an amount equal to Dr. Myers' full target bonus amount for the year
and any partial year period in which the termination occurred under any cash
incentive plans in effect at the time of termination, and all stock options
granted to Dr. Myers under the Company's 1995 Stock Incentive Plan or any other
equity plan will become immediately exercisable in full.
On December 27, 2000, the Company entered into Executive Change of Control
Agreements with each of Ronald A. Dilbeck, Arif Kareem and Stuart F. Cohen
providing for severance pay in a cash amount equal to 12 months of the executive
officer's annual base pay at the rate in effect immediately before the date of
termination. Each of these executive officers is entitled to receive the
severance pay if his employment with the Company is terminated by the Company
(other than for cause, death or disability) within three months before, or
within 12 months after, a change in control of the Company. Upon such a
termination, and in addition to severance pay, each of these executive officers
is also entitled to receive COBRA benefits, and all stock options granted to
each of these executive officers under the Company's 1995 Stock Incentive Plan
or any other equity plan will become immediately exercisable in full. The
Executive Change of Control Agreement executed with Mr. Dilbeck also provides
that if Mr. Dilbeck's employment with the Company is terminated by the Company
(other than for cause, death or disability) before January 1, 2003, all stock
options granted to Mr. Dilbeck under the Company's 1995 Stock Incentive Plan or
any other equity plan will become immediately exercisable in full.
On October 3, 2001, the Company entered into an Executive Change of Control
Agreement with Julia Harper providing for severance pay in a cash amount equal
to 12 months of Ms. Harper's annual base pay at the rate in effect immediately
before the date of termination. Ms. Harper is entitled to receive the severance
pay if her employment with the Company is terminated by the Company (other than
for cause, death or disability) within three months before, or within 12 months
after, a change in control of the Company. Upon such a termination, and in
addition to severance pay, Ms. Harper is also entitled to receive COBRA
benefits, and all stock options granted to Ms. Harper under the Company's 1995
Stock Incentive Plan or any other equity plan will become immediately
exercisable in full.
Mr. Loughlin is party to a letter agreement dated March 31, 1999 with the
Company providing for severance pay equal to one year of Mr. Loughlin's annual
base pay if Mr. Loughlin's employment with the Company is terminated by the
Company without cause. In connection with Mr. Loughlin's termination of
employment with the Company in June 2001, the Company paid Mr. Loughlin
$238,554.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company and Tektronix are parties to multiple design agreements
pursuant to which the Company agreed to design and develop specified products
required by Tektronix. One of the Company's directors, Mr. Dalton, is an officer
of Tektronix. Sales to Tektronix accounted for approximately one percent of the
Company's revenues in 2001.
16
The Company and Intel are parties to multiple design agreements and a
master framework agreement pursuant to which the Company agreed to design and
develop specified products required by Intel. Royalty payments from and sales to
Intel accounted for approximately one percent of the Company's revenues in 2001.
In connection with the master framework agreement, Intel entered into a lock-up
agreement relating to 1,779,251 shares of the Company's Common Stock then owned
by Intel. Pursuant to the terms of the lock-up agreement and subject to various
exceptions, Intel agreed that it would not publicly sell or transfer, on a
cumulative basis, more than 37,068 shares per month during the twelve-month
period beginning June 28, 2000, more than 44,489 shares per month during the
twelve-month period beginning June 28, 2001, or more than 66,722 shares per
month during the twelve-month period beginning June 28, 2002. Additionally,
Intel is a key supplier of components to the Company. The Company received
approximately $5.8 million worth of components from Intel in 2001. As of March
31, 2002, Intel beneficially owned approximately 6.3% percent of the Company's
outstanding Common Stock.
The Company employs two sons of Dr. Glenford Myers, the Company's President
and Chief Executive Officer. Each was hired pursuant to the Company's standard
hiring practices and neither serves as an executive officer or reports directly
to Dr. Myers. The annual compensation of these employees is approximately
$71,000 and $76,000, respectively, and each is compensated at a rate within the
standard range for employees in the applicable category.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers and persons who own more than 10% of the
outstanding Common Stock of the Company to file with the Securities and Exchange
Commission reports of changes in ownership of the Common Stock of the Company
held by such persons. Officers, directors and greater than 10% shareholders are
also required to furnish the Company with copies of all forms they file under
this regulation. Based solely on a review of the copies of the reports received
by the Company during and with respect to fiscal 2001 and on written
representations of certain reporting persons, the Company believes that all
transactions were reported on a timely basis.
INDEPENDENT ACCOUNTANTS
Representatives of PricewaterhouseCoopers LLP, the Company's independent
accountants, will be present at the Annual Meeting and will be available to
respond to appropriate questions. They do not plan to make any statement, but
will have the opportunity to make a statement if they wish.
SHAREHOLDER PROPOSALS FOR 2003 ANNUAL MEETING
The Company's bylaws require shareholders to give the Company advance
notice of any proposal or director nomination to be submitted at an annual
meeting of shareholders. A copy of the relevant provisions of the bylaws will be
provided to any shareholder upon written request to 5445 NE Dawson Creek Drive,
Hillsboro, Oregon, Attention: Corporate Secretary. The bylaws prescribe the
information to be contained in any such notice. To be timely, a shareholder's
notice must be delivered to or mailed and received by the Secretary not less
than 50 days nor more than 75 days before the annual meeting, provided, however,
that if less than 65 days' notice or prior public disclosure of the date of the
meeting is given to shareholders, notice by the shareholder, to be timely, must
be received by the Secretary not later than the close of business on the tenth
day following the earlier of the day on which the notice of the date of the
meeting was mailed or public disclosure was made. The Company's 2003 annual
meeting of shareholders is expected to be held on May 20, 2003. Any notice
relating to a shareholder proposal for the 2003 annual meeting, to be timely,
must be received by the Company between March 6, 2003 and March 31, 2003.
Shareholders wishing to submit proposals for inclusion in the Company's proxy
statement for the 2003 annual meeting of shareholders must submit the proposals
for receipt by the Company not later than December 14, 2002.
17
DISCRETIONARY AUTHORITY
Although the Notice of the Annual Meeting of Shareholders provides for
transaction of any other business that properly comes before the meeting, the
Board of Directors has no knowledge of any matters to be presented at the
meeting other than the matters described in this proxy statement. The enclosed
proxy, however, gives discretionary authority to the proxy holders to vote in
accordance with their judgment if any other matters are presented.
For this year's annual meeting of shareholders, if notice of a shareholder
proposal to be raised at the annual meeting of shareholders is received at the
principal executive offices of the Company after April 1, 2002 or before March
7, 2002, proxy voting on that proposal when and if raised at the annual meeting
will be subject to the discretionary voting authority of the designated proxy
holders. For the 2003 annual meeting of shareholders, if notice of a shareholder
proposal to be raised at the meeting is received at the principal executive
offices of the Company after March 31, 2003 or before March 6, 2003, proxy
voting on that proposal when and if raised at the annual meeting will be subject
to the discretionary voting authority of the designated proxy holders.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WE URGE
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING IN PERSON TO EXECUTE AND
RETURN THE ENCLOSED PROXY IN THE REPLY ENVELOPE PROVIDED.
By Order of the Board of Directors,
/s/ Annette M. Mulee
Annette M. Mulee
Corporate Secretary
April 19, 2002
Hillsboro, Oregon
18
PROXY
RADISYS CORPORATION
ANNUAL MEETING, MAY 21, 2002
PROXY SOLICITED BY BOARD OF DIRECTORS
PLEASE SIGN AND RETURN THIS PROXY
The undersigned hereby appoints Dr. Glenford J. Myers and Julia A. Harper, and
each of them, proxies with power of substitution to vote on behalf of the
undersigned all shares that the undersigned may be entitled to vote at the
annual meeting of shareholders of RadiSys Corporation (the "Company") on May 21,
2002 and any adjournments thereof, with all powers that the undersigned would
possess if personally present, with respect to the following:
(CONTINUED AND TO BE SIGNED ON THE OTHER SIDE.)
--------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
THE ANNUAL MEETING OF SHAREHOLDERS OF RADISYS CORPORATION WILL BE HELD ON MAY PLEASE MARK
21, 2002 AT 8:30 AM., PACIFIC DAYLIGHT TIME, AT THE CORPORATE HEADQUARTERS AT YOUR VOTES [X]
5445 NE DAWSON CREEK DRIVE, HILLSBORO, OREGON. AS INDICATED
IN THIS
EXAMPLE
1. Election of Directors: 2. Transaction of any business that properly comes before the meeting
or any adjournments thereof. A majority of the proxies or
FOR all nominees WITHHOLD AUTHORITY substitutes at the meeting may exercise all the powers granted
except as marked to vote for hereby.
to the contrary all nominees
below. listed below.
[ ] [ ]
(Instructions: TO WITHHOLD AUTHORITY THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED
TO VOTE FOR ANY INDIVIDUAL, STRIKE A LINE ABOVE, BUT IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR
THROUGH THE NOMINEE'S NAME BELOW.) THE ELECTION OF ALL DIRECTORS. THE PROXIES MAY VOTE IN THEIR
DISCRETION AS TO OTHER MATTERS THAT MAY COME BEFORE THIS MEETING.
01 Dr. Glenford J. Myers, 02 James F.
Dalton, 03 Richard J. Faubert, 04 C.
Scott Gibson, 05 Jean-Pierre D. Patkay,
06 Jean-Claude Peterschmitt and 07 Carl
W. Neun
Please Note: Any shares of stock of the
Company held in the name of fiduciaries,
custodians or brokerage houses for the
benefit of their clients may only be
voted by the fiduciary, custodian or
brokerage house itself--the beneficial
owner may not directly vote or appoint a
proxy to vote the shares and must
instruct the person or entity in whose
name the shares are held how to vote the
shares held for the beneficial owner.
Therefore, if any shares of stock of the
Company are held in "street name" by a
brokerage house, only the brokerage
house, at the instructions of its
client, may vote or appoint a proxy to
vote the shares.
SIGNATURE ___________________________________________ SIGNATURE ___________________________________________ DATE ___________________
PLEASE DATE AND SIGN AS NAME IS IMPRINTED HEREON, INCLUDING DESIGNATION AS EXECUTOR, TRUSTEE, ETC., IF APPLICABLE. A CORPORATION
MUST SIGN ITS NAME BY THE PRESIDENT OR OTHER AUTHORIZED OFFICER.
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