SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. __)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the
Commission only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 240.14a-11(c) or Rule 240.14a-12
PCTEL, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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(PCTEL LOGO)
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
---------------------
TUESDAY, JUNE 7, 2005
10:00 A.M.
---------------------
To Our Stockholders:
The 2005 Annual Meeting of Stockholders of PCTEL, Inc., a Delaware
corporation, will be held on Tuesday, June 7, 2005 at 10:00 a.m. local time at
our headquarters, located at 8725 West Higgins Road, Suite 400, Chicago,
Illinois 60631 for the following purposes:
1. To elect three Class III directors whose terms will expire at the
2008 annual stockholders' meeting;
2. To ratify the appointment of PricewaterhouseCoopers LLP as our
independent registered public accounting firm for the fiscal year ending
December 31, 2005; and
3. To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the proxy
statement accompanying this notice. Only stockholders of record at the close of
business on April 19, 2005 are entitled to notice of and to vote at the meeting.
All stockholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to deliver
your proxy by telephone or the Internet or to mark, sign, date and return the
enclosed proxy as promptly as possible in the postage-prepaid envelope enclosed
for that purpose. Any stockholder attending the meeting may vote in person even
if he or she has previously returned a proxy.
Sincerely,
/s/ Martin H. Singer
MARTIN H. SINGER
Chief Executive Officer and
Chairman of the Board of Directors
Chicago, Illinois
April 25, 2005
YOUR VOTE IS IMPORTANT.
PLEASE SUBMIT YOUR PROXY AS PROMPTLY AS POSSIBLE
BY FOLLOWING THE INSTRUCTIONS ON THE ENCLOSED PROXY CARD.
PCTEL, INC.
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PROXY STATEMENT FOR THE
2005 ANNUAL MEETING OF STOCKHOLDERS
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GENERAL INFORMATION
The board of directors of PCTEL, Inc. is soliciting proxies for the 2005
Annual Meeting of Stockholders. This proxy statement contains important
information for you to consider when deciding how to vote on the matters brought
before the meeting. Please read it carefully.
Our board of directors has set April 19, 2005 as the record date for the
meeting. Stockholders of record at the close of business on April 19, 2005 are
entitled to vote at and attend the meeting, with each share entitled to one
vote. There were 21,163,708 shares of our common stock outstanding on the record
date. On the record date, the closing price of our common stock on The Nasdaq
National Stock Market was $6.85 per share.
This proxy statement is being mailed on or about April 25, 2005 to
stockholders entitled to vote at the meeting.
In this proxy statement:
- "We" and "PCTEL" mean PCTEL, Inc.
- If you hold shares in "street name," it means that your shares are held
in an account at a brokerage firm and the stock certificates and record
ownership are not in your name.
- "NASD" means the National Association of Securities Dealers.
- "SEC" means the Securities and Exchange Commission.
- "Beneficial ownership" of stock is defined under various SEC rules in
different ways for different purposes, but it generally means that,
although you (or the person or entity in question) do not hold the shares
of record in your name, you do have investment or voting control, and/or
an economic or "pecuniary" interest, in the shares through an agreement,
relationship or the like.
QUESTIONS AND ANSWERS
Q: WHEN AND WHERE IS THE STOCKHOLDER MEETING?
A: Our annual meeting of stockholders is being held on Tuesday, June 7, 2005 at
10:00 a.m. at our headquarters, located at 8725 West Higgins Road, Suite 400,
Chicago, Illinois 60631.
Q: WHY AM I RECEIVING THIS PROXY STATEMENT AND PROXY CARD?
A: You are receiving this proxy statement and the accompanying proxy card
because you are the stockholder of record on the record date. This proxy
statement describes issues on which we would like you, as a stockholder, to
vote. It also gives you information on these issues so that you can make an
informed decision. The proxy card is used for voting.
Q: WHAT IS THE EFFECT OF SIGNING AND RETURNING MY PROXY CARD?
A: When you sign and return the proxy card, you appoint Martin H. Singer and
John W. Schoen as your representatives at the meeting. Dr. Singer is our
Chief Executive Officer and Chairman of the Board and Mr. Schoen is our Chief
Financial Officer. Messrs. Singer and Schoen will vote your shares at the
meeting as you have instructed them on the proxy card. This way, your shares
will be voted whether or not you attend the annual meeting. Even if you plan
to attend the meeting, it is a good idea to complete, sign and return your
proxy card or vote via the Internet or telephone in advance of the meeting
just in case your plans change. You can vote in person at the meeting even if
you have already sent in your proxy card.
If an issue comes up for a vote at the meeting that is not described in this
proxy statement, Messrs. Singer and Schoen will vote your shares, under your
proxy, in their discretion.
If you do not indicate on the proxy card how you want your votes cast, the
proxies (as your representatives) will vote your shares FOR each of the
proposals.
Q: WHAT AM I VOTING ON?
A: You are being asked to vote on the following two proposals:
- the election of three Class III directors whose terms will expire at the
2008 annual meeting of stockholders; and
- the ratification of the appointment of PricewaterhouseCoopers LLP as our
independent registered public accounting firm for the fiscal year ending
December 31, 2005.
Q: HOW DO I VOTE?
A: There are four methods by which you may vote. Please see the detailed
instructions provided on your proxy card for more information on each method.
- Place your vote by telephone;
- Place your vote via the Internet;
- Mail in your completed, signed and dated proxy card; or
- Vote in person by attending our annual meeting.
Q: WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE PROXY CARD?
A: It means that you have multiple accounts with the transfer agent and/or with
stockbrokers. Please sign and return all proxy cards to ensure that all of
your shares are voted.
Q: WHAT IF I CHANGE MY MIND AFTER I RETURN MY PROXY CARD?
A: You may revoke your proxy (that is, cancel it) and change your vote at any
time prior to the voting at the annual meeting by providing written notice to
our Corporate Secretary at the following address: 8725 West Higgins Road,
Suite 400, Chicago, Illinois 60631, Attn: John Schoen.
You may also do this by:
- Signing another proxy card with a later date;
- Voting in person at the meeting; or
- Voting via the Internet or by telephone on a date after the date on your
proxy card (your latest proxy is counted).
Q: WILL MY SHARES BE VOTED IF I DO NOT SIGN AND RETURN MY PROXY CARD?
A: If your shares are held in street name, your brokerage firm may either vote
your shares on "routine matters" (such as the election of directors) or leave
your shares unvoted. Your brokerage firm may not vote on "non-routine
matters."
Q: HOW MANY VOTES MAY BE CAST AT THE MEETING?
A: As of the record date, 21,163,708 shares of common stock were outstanding.
Each outstanding share of common stock entitles the holder of such share to
one vote on all matters covered in this proxy statement. Therefore, there are
a maximum of 21,163,708 votes that may be cast at the meeting.
Q: WHAT IS A "QUORUM"?
A: A "quorum" is the number of shares that must be present, in person or by
proxy, in order for business to be transacted at the meeting. The required
quorum for the annual meeting is a majority of the shares outstanding on the
record date. There must be a quorum present for the meeting to be held. All
completed and signed proxy cards, Internet votes, telephone votes and votes
cast by those stockholders who attend the annual meeting in person, whether
representing a vote FOR, AGAINST, WITHHELD, ABSTAIN, or a broker non-vote,
will be counted toward the quorum.
Q: HOW ARE ABSTENTIONS COUNTED?
A: If you return a proxy card that indicates an abstention from voting in all
matters, the shares represented will be counted as present for the purpose of
determining a quorum, but they will not be voted on any matter at the annual
meeting.
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Q: WHAT IS A "BROKER NON-VOTE?"
A: Under the rules that govern brokers who have record ownership of shares that
are held in "street name" for their clients (who are the beneficial owners of
the shares), brokers have the discretion to vote such shares on routine
matters, but not on non-routine matters. Thus, if the proposals to be acted
upon at the meeting include both routine and non-routine matters, the broker
may turn in a proxy card for uninstructed shares that votes "FOR" routine
matters, but expressly states that the broker is NOT voting on the
non-routine matters. The vote with respect to the non-routine matter in this
case is referred to as a "broker non-vote."
Q: HOW ARE BROKER NON-VOTES COUNTED?
A: Broker non-votes are counted for the purpose of determining the presence or
absence of a quorum, but are not counted for determining the number of votes
cast for or against a proposal.
Q: WHAT IS THE REQUIRED VOTE FOR EACH OF THE PROPOSALS TO PASS?
A: - The three director nominees receiving the highest number of votes, in
person or by proxy, will be elected as directors.
- For the proposal to ratify the appointment of PricewaterhouseCoopers LLP,
our independent registered public accounting firm, the required vote is the
affirmative (i.e. "FOR") vote of a majority of the shares present,
represented and voting at the annual meeting.
The votes cast on a particular proposal include votes FOR, AGAINST and
ABSTAIN, but do not include broker non-votes.
Q: WHO IS SOLICITING MY VOTE?
A: We are making and will bear the entire cost of this proxy solicitation,
including the preparation, assembly, printing and mailing of proxy materials.
We may reimburse brokerage firms and other custodians for their reasonable
out-of-pocket expenses for forwarding these proxy materials to you. We expect
our transfer agent, Wells Fargo Bank, N.A., to tabulate the proxies and to
act as the inspector of the election. In addition to this solicitation by
mail, proxies may be solicited by our directors, officers and other employees
by telephone, the Internet or fax, in person or otherwise. None of these
persons will receive any additional compensation for assisting in the
solicitation.
We shall provide without charge to each stockholder solicited by these
proxy solicitation materials a copy of our Annual Report on Form 10-K, together
with the financial statements and financial statement schedules required to be
filed with the Annual Report, upon written request sent to PCTEL, Inc., 8725
West Higgins Road, Suite 400, Chicago, Illinois 60631, Attn: John Schoen, Chief
Financial Officer.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS AND NOMINATIONS FOR 2006 ANNUAL
MEETING
Stockholders are entitled to present proposals for action and director
nominations at the 2006 annual meeting of stockholders only if they comply with
the applicable requirements of the proxy rules established by the Securities
Exchange Commission and the applicable provisions of our bylaws. Stockholders
must ensure that such proposals and nominations are received by our Corporate
Secretary at the following address: 8725 West Higgins Road, Suite 400, Chicago,
Illinois 60631, Attn: Corporate Secretary, on or prior to the deadline for
receiving such proposals and nominations.
Proposals for the 2006 annual meeting of stockholders that are intended to
be considered for inclusion in the proxy statement and form of proxy relating to
such meeting must be received no later than December 26, 2005, and must comply
with the procedures of Rule 14a-8 under the Securities Exchange Act of 1934 (the
"Exchange Act") and the provisions of our bylaws.
If a stockholder intends to submit a proposal or director nomination for
consideration at our 2006 annual meeting of stockholders outside the processes
of Rule 14a-8 under the Exchange Act, the stockholder must comply with the
requirements of our bylaws and we are not required to include such proposal or
nomination in the proxy statement and form of proxy relating to such meeting.
Our bylaws contain an advance notice provision that requires stockholders to
submit a written notice containing certain information not less than 120 days
prior to the date of our proxy statement for the previous year's annual meeting
of stockholders. For
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purposes of the 2006 annual meeting of stockholders, this means that such
proposals or nominations must also be received by December 26, 2005. A copy of
the relevant bylaw provision is available upon written request to our Corporate
Secretary at the address provided above.
The attached proxy card grants the proxy holders discretionary authority to
vote on any business raised at the annual meeting. If you fail to comply with
the advance notice provisions set forth above in submitting a proposal or
nomination for the 2006 annual meeting of stockholders, the proxy holders will
be allowed to use their discretionary voting authority if such proposal or
nomination is raised at that meeting.
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SUMMARY OF PROPOSALS
The board of directors has included two proposals on the agenda for our
2005 annual meeting of stockholders. The following is a brief summary of the
matters to be considered and voted upon by our stockholders.
ELECTION OF DIRECTORS
We have a classified board of directors that currently consists of seven
directors. Each director serves a three-year term. The first proposal on the
agenda for our annual meeting is the election of three Class III directors to
serve until our 2008 annual meeting of stockholders. Our board of directors has
nominated Richard D. Gitlin, Giacomo Marini and Martin H. Singer to serve as our
Class III directors. Additional information about the election of directors and
a brief biography of each nominee begins on page 7.
OUR BOARD RECOMMENDS A VOTE "FOR" EACH OF THE THREE NOMINEES.
RATIFY APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The second proposal is the ratification of the appointment of
PricewaterhouseCoopers LLP as our independent registered public accounting firm.
More information about this proposal begins on page 12.
OUR BOARD RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
OTHER MATTERS
Other than the proposals listed above, our board of directors does not
intend to present any other matters to be voted on at the meeting. Our board is
not currently aware of any other matters that will be presented by others for
action at the meeting. However, if other matters are properly presented at the
meeting and you have signed and returned your proxy card or voted on the
Internet or by telephone, the proxies will have discretion to vote your shares
on these matters to the extent authorized under the Exchange Act.
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PROPOSAL #1
ELECTION OF DIRECTORS
CLASSIFICATION OF BOARD OF DIRECTORS
We have a classified board of directors currently consisting of two Class I
directors, Brian J. Jackman and John Sheehan, whose terms will expire at our
2006 annual meeting of stockholders; two Class II directors, Richard C.
Alberding and Carl A. Thomsen, whose terms will expire at our 2007 annual
meeting of stockholders; and three Class III directors, Richard D. Gitlin,
Giacomo Marini and Martin H. Singer, whose terms are expiring at this 2005
annual meeting of stockholders. At each annual meeting of stockholders,
directors are elected for a term of three years to succeed those directors whose
terms expire on the annual meeting dates.
NOMINEES
The nominees for election at the 2005 annual meeting of stockholders as
Class III directors are Richard D. Gitlin, Giacomo Marini and Martin H. Singer.
If elected, Messrs. Gitlin, Marini and Singer will serve as directors, and their
terms shall expire at the annual meeting of stockholders in 2008.
The proxy holders may not vote the proxies for a greater number of persons
than the number of nominees named. Unless otherwise instructed, the proxy
holders will vote the proxies received by them for our three Class III director
nominees. In the event that any of our nominees is unable or declines to serve
as a director at the time of the annual meeting, the proxies will be voted for
any nominee who shall be designated by the present board of directors to fill
the vacancy. We are not aware that any of our nominees will be unable or will
decline to serve as a director.
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
IF A QUORUM IS PRESENT AND VOTING, THE THREE NOMINEES RECEIVING THE HIGHEST
NUMBER OF VOTES WILL BE ELECTED TO THE BOARD OF DIRECTORS. ABSTENTIONS AND
"BROKER NON-VOTES" ARE NOT COUNTED IN THE ELECTION OF DIRECTORS. The board of
directors has unanimously approved the director nominees and recommends that
stockholders vote "FOR" the election of the director nominees listed above.
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DIRECTORS AND NOMINEES
The following table sets forth certain information regarding our current
directors and nominees for directors to be elected at our 2005 annual meeting of
stockholders:
DIRECTOR
NAME AGE POSITION WITH PCTEL SINCE
---- --- ------------------- --------
CLASS I DIRECTORS WHOSE TERMS EXPIRE AT THE
2006 ANNUAL MEETING OF STOCKHOLDERS:
Brian J. Jackman.......................... 64 Director 2002
John Sheehan.............................. 68 Director 2002
CLASS II DIRECTORS WHOSE TERMS EXPIRE AT THE
2007 ANNUAL MEETING OF STOCKHOLDERS:
Richard C. Alberding...................... 74 Director 1999
Carl A. Thomsen........................... 60 Director 2001
CLASS III DIRECTORS NOMINEES TO BE ELECTED
AT THE 2005 ANNUAL MEETING OF STOCKHOLDERS
WHOSE TERMS SHALL EXPIRE AT THE 2008
ANNUAL MEETING OF STOCKHOLDERS:
Richard D. Gitlin......................... 62 Director 2002
Giacomo Marini............................ 53 Director 1996
Martin H. Singer.......................... 53 Chief Executive Officer and 1999
Chairman of the Board of
Directors
Mr. Brian J. Jackman has been a director since February 2002. In September
2001, Mr. Jackman retired from Tellabs, a communications company that he had
been with since 1982. Mr. Jackman served as President, Global Systems and
Technology, and Executive Vice President of Tellabs since 1998, and he was
President of Tellabs Operations from 1993 to 1998. Mr. Jackman held various
management positions in sales and marketing for IBM from 1965 to 1982. He is
currently on the board of directors of Open Text, Inc., an enterprise content
management solutions company. Mr. Jackman holds a bachelor of arts in English
literature from Gannon University in Erie, Pennsylvania and a masters degree in
business administration from Penn State University.
Mr. John Sheehan has been a director since October 2002. Mr. Sheehan has
served as a senior consultant in the London Perret Roche Group in Red Bank, New
Jersey since October 2001. He began his career at Bell Laboratories in 1962. In
his 33 years at Bell Laboratories, Western Electric and AT&T, he worked in
senior positions in development, manufacturing, strategic planning and general
management of business units. Since leaving AT&T in 1996, Mr. Sheehan has held
senior management positions in three startup companies. Mr. Sheehan received a
bachelors of science degree in electrical engineering from Drexel University and
a masters of science degree in electrical engineering from New York University.
Mr. Richard C. Alberding has been a director since August 1999. Mr.
Alberding retired from Hewlett-Packard, then a computer, peripherals and
measurement products company, in June 1991, serving at that time as an Executive
Vice President with responsibility for worldwide company sales, support and
administration activities for measurement and computation products, as well as
all corporate level marketing activities. Mr. Alberding is a director of Stratex
Networks, Inc., a provider of wireless transmission solutions, and Sybase, Inc.,
an enterprise software company. Mr. Alberding holds a bachelor of arts in
business administration and marketing from Augustana College, and an associate
of science degree in electrical engineering from DeVry Technical Institute in
Chicago.
Mr. Carl A. Thomsen has been a director since March 2001. Since February
1995, Mr. Thomsen has served as Chief Financial Officer of Stratex Networks,
Inc., a provider of wireless transmission solutions. Currently, he serves as its
Senior Vice President, Chief Financial Officer and Corporate Secretary.
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Mr. Thomsen holds a bachelor of science in business administration from
Valparaiso University and a masters degree in business administration from the
University of Michigan. He is also a certified public accountant.
Dr. Richard D. Gitlin has been a director since May 2002. Dr. Gitlin
retired as vice president, technology of NEC Laboratories America, Inc. in April
2004, a position he held since November 2001. Prior to that, Dr. Gitlin was with
Lucent Technologies, a global communications networking company, for thirty-two
years. At Lucent, Dr. Gitlin held several senior executive positions, including
Chief Technical Officer and Vice President of Research and Development for the
data networking systems business unit. Dr. Gitlin also served as Senior Vice
President for communication sciences research at Bell Labs, with responsibility
for managing and leading research in wireless systems, broadband and optical
networking, multimedia communications and access technologies. Dr. Gitlin holds
a doctorate in engineering science from Columbia University, where he has also
been a visiting professor and adjunct professor of electrical engineering. He
holds forty-three patents in telecommunications. He is a member of the National
Academy of Engineering, a Fellow of the IEEE and a Bell Labs Fellow.
Mr. Giacomo Marini has been a director since October 1996. Mr. Marini has
been the managing partner of Cypress Ventures/CIR Ventures, an early-stage
technology venture capital firm, since March 2002, and he has served as managing
member of Marini Group LLC, a private investment and management consulting
business that invests in and advises high technology companies, since January
1998. From February 1998 to February 1999, Mr. Marini also served as interim
Chief Executive Officer of FutureTel, a digital video capture company. From
August 1993 to February 1995, Mr. Marini served as President and Chief Executive
Officer of Common Ground Software (formerly No Hands Software), an electronic
publishing software company. Prior to this, Mr. Marini was the co-founder,
Executive Vice President and Chief Operating Officer of Logitech, a computer
peripherals company, and had previously held technical and management positions
with Olivetti and IBM. He is currently on the boards of several private
companies. Mr. Marini holds a computer science laureate degree from the
University of Pisa, Italy.
Dr. Martin H. Singer has been our Chief Executive Officer and Chairman of
the Board since October 2001. Prior to that, Dr. Singer served as our
non-executive Chairman of the Board from February 2001 until October 2001, and
he has been a director since August 1999. From October 2000 to May 2001, Dr.
Singer was an independent consultant. From December 1997 to August 2000, Dr.
Singer served as President and Chief Executive Officer of SAFCO Technologies, a
wireless communications company. He left SAFCO in August 2000 after its sale to
Agilent Technologies. From September 1994 to December 1997, Dr. Singer served as
Vice President and General Manager of the wireless access business development
division for Motorola, a communications equipment company. Prior to this period,
Dr. Singer held senior management and technical positions in Motorola, Tellabs,
AT&T and Bell Labs. Dr. Singer holds a bachelor of arts in psychology from the
University of Michigan, and a master of arts degree and a Ph.D. in experimental
psychology from Vanderbilt University. Dr. Singer currently serves as the
Chairman of the Midwest council of the AeA and he is on the advisory board for
the MMM program at Northwestern University (Kellogg).
BOARD AND COMMITTEE MEETINGS
Our board of directors held a total of nine meetings during fiscal 2004.
The board of directors has an audit committee, a compensation committee and a
nominating and governance committee. Each member of the audit committee,
compensation committee and nominating and governance committee meets the Nasdaq
independence and experience requirements. The board has determined that Mr.
Thomsen qualifies as an "audit committee financial expert" as defined under the
rules and regulations of the Securities and Exchange
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Commission. During our last fiscal year, each of our directors attended at least
75% of the total number of meetings of the board of directors and any committee
on which such director served.
MEETINGS
HELD IN
MEMBERS DURING FISCAL DATE CURRENT WRITTEN FISCAL
COMMITTEE 2004 COMMITTEE FUNCTIONS CHARTER ADOPTED 2004
--------- ------------------------ ------------------------------- ---------------------- ---------
Audit.............. Carl Thomsen (Chair) - Selects our independent Originally adopted 11
Richard Alberding auditors August 1999; last
Giacomo Marini - Oversees our internal amended November 2004
financial reporting and
accounting controls
- Consults with and reviews the
services provided by our
independent auditors
Compensation....... Richard Alberding - Reviews and recommends to the Originally adopted 8
(Chair) board of directors the August 1999; last
John Sheehan compensation and benefits of amended March 2005
Brian Jackman our chief executive officer
- Determines the compensation
and benefits of all of our
other executive officers and
directors
- Establishes and reviews
general policies relating to
the compensation and benefits
of our employees
Nominating and John Sheehan (Chair) - Assists the board of Originally adopted 3
Governance....... Brian Jackman directors in identifying and February 2004; last
selecting prospective director amended March 2005
nominees for the annual
meeting of stockholders
- Reviews and makes
recommendations on matters
regarding corporate
governance, board
composition, evaluation and
nominations, board committees
and conflicts of interest
- Establishes, maintains and
improves corporate governance
guidelines
A copy of each of the charters for our board committees is available on our
website located at www.pctel.com. They may be found on the website as follows:
1. From our main web page, click on "Investor Relations,"
2. Next, click on "Corporate Governance,"
3. Finally, click on the name of the desired committee charter.
COMPENSATION OF DIRECTORS
Directors currently receive a yearly cash retainer of $12,500 and shares of
restricted common stock equivalent to $4,000. They also receive $2,500 per board
meeting attended (unless the board meeting is conducted by teleconference, in
which case directors receive $1,000 for each such telephonic meeting in which
they participate) and $1,000 per committee meeting attended. In addition, our
directors annually receive additional shares of restricted stock as set forth
below:
- the chairs of our compensation committee and nominating and governance
committee each receive shares of restricted common stock equivalent to
$7,000;
- our lead director and audit committee chair receive shares of restricted
common stock equivalent to $10,000; and
- the chairs of our intellectual property committee and business
development committee (two additional advisory committees of our board of
directors) receive shares of restricted common stock equivalent to
$3,000.
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All of the shares of restricted common stock received by our directors vest
six months after the date of grant. The number of shares granted is based on the
total dollar value divided by the per share closing price of our stock on the
date of grant.
Our 1998 Director Option Plan provides for the non-discretionary, automatic
grant of options to each of our non-employee directors. Each new non-employee
director is automatically granted an option to purchase 15,000 shares on the
date on which such person first becomes a director. These initial grants vest
over a period of three years, with one-third of the number of shares granted
vesting on each anniversary of the date of grant, provided that the optionee
continues to serve as a director on these dates. Furthermore, each non-employee
director is automatically granted an additional option to purchase 10,000 shares
of common stock on January 1 of each year, provided that he or she has served on
the board of directors for at least six months. These subsequent grants vest
fully on the first anniversary of the date of grant, provided that the optionee
continues to serve as a director on such date. Under the terms of our 1998
Director Option Plan, the exercise price of options granted to non-employee
directors must be 100% of the fair market value of our common stock on the last
trading day preceding the date of grant.
DIRECTOR NOMINATION PROCESS
STOCKHOLDER RECOMMENDATIONS AND NOMINATIONS.
It is the policy of our nominating and governance committee to consider
director candidates recommended by our stockholders holding on the date of
submission of such recommendation at least 1% of the then outstanding shares of
our common stock continuously for at least 12 months prior to such date.
Stockholders desiring to recommend a candidate for election to the board of
directors should send their recommendation in writing to the attention of our
Corporate Secretary, at our offices located at 8725 West Higgins Road, Suite
400, Chicago, Illinois 60631. This written recommendation must include the
information and materials required by our bylaws as well as the candidate's
name, home and business contact information, detailed biographical data,
relevant qualifications, a signed letter from the candidate confirming
willingness to serve, information regarding any relationships between the
candidate and PCTEL within the last three years and evidence of the required
ownership of our common stock by the recommending stockholder. A copy of the
relevant bylaw provision is available upon written request to our Corporate
Secretary at the address provided above.
In accordance with the advance notice provision in our bylaws, director
nominations to be considered at the next annual meeting of stockholders must be
received not less than 120 days prior to the date of our proxy statement for the
previous year's annual meeting of stockholders. For purposes of our 2006 annual
meeting of stockholders, director nominations must be received by December 26,
2005.
IDENTIFYING AND EVALUATING NOMINEES FOR DIRECTOR.
The nominating and governance committee uses the following procedures for
identifying and evaluating any individual recommended or offered for nomination
to the board of directors:
- The committee considers candidates recommended by stockholders in the
same manner as candidates recommended by other sources.
- The committee considers the following factors in its evaluation of
candidates:
- The current size and composition of the board of directors and the needs
of the board of directors and the respective committees of the board of
directors.
- The candidate's judgment, independence, character and integrity, age,
area of expertise, diversity of experience, length of service and
potential conflicts of interest.
- Other factors that the committee considers appropriate.
10
The nominating and governance committee requires the following minimum
qualifications to be satisfied by any candidate recommended or offered for
nomination to the board of directors:
- The highest personal and professional ethics and integrity.
- Proven achievement and competence in the candidate's field and the
ability to exercise sound business judgment.
- Skills that are complementary to those of the existing board of
directors.
- The ability to assist and support management and make significant
contributions to our success.
- An understanding of the fiduciary responsibilities that are required of a
member of the board of directors and the commitment of time and energy
necessary to diligently carry out those responsibilities.
STOCKHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS
Stockholders who wish to communicate directly with our independent
directors may do so by sending an e-mail message to Varda Goldman, our Vice
President and General Counsel, at generalcounsel@pctel.com. Ms. Goldman monitors
these communications, consults with Brian Jackman, our current lead independent
director, and provides a summary of all received messages to the board of
directors at its regularly scheduled meetings. Where the nature of the
communication warrants, Ms. Goldman may determine to obtain more immediate
attention of the appropriate committee or independent director of the board of
directors, of independent advisors or of our management. Ms. Goldman may decide
in her judgment whether a response to any stockholder communication is
necessary.
ATTENDANCE AT THE ANNUAL MEETING OF THE STOCKHOLDERS
All directors are welcome to attend the 2005 annual meeting of stockholders
and it is expected that our lead independent director will be in attendance at
every annual meeting of stockholders. At the 2004 annual meeting of
stockholders, Martin H. Singer was the only director in attendance.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 2004, none of the members of the compensation committee were
officers or employees of PCTEL while they served as members of the compensation
committee. In addition, no executive officer of PCTEL served as a member of the
board of directors or compensation committee of any entity that has one or more
executive officers serving as a member of our board of directors or compensation
committee.
11
PROPOSAL #2
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Our audit committee has appointed PricewaterhouseCoopers LLP, independent
registered public accounting firm, to audit our financial statements for the
fiscal year ending December 31, 2005. This appointment is being presented to our
stockholders for ratification at the meeting.
Before selecting PricewaterhouseCoopers LLP as our independent registered
public accounting firm for fiscal year 2005, our audit committee carefully
considered the firm's qualifications as independent auditors. This included a
review of the qualifications of the engagement team, the quality control
procedures the firm has established and its reputation for integrity and
competence in the fields of accounting and auditing. The audit committee's
review also included matters required to be considered under the SEC's rules on
auditor independence, including the nature and extent of non-audit services, to
ensure that PricewaterhouseCoopers LLP's independence will not be impaired. The
audit committee expressed its satisfaction with PricewaterhouseCoopers LLP in
all of these respects.
PricewaterhouseCoopers LLP has been conducting independent audits of our
financial statements since May 2002. Representatives of PricewaterhouseCoopers
LLP are expected to be present at the 2005 annual meeting of stockholders. They
will have the opportunity to address the audience at the meeting, and will be
available to answer appropriate questions from stockholders.
SUMMARY OF FEES
The following table summarizes the approximate aggregate fees billed to us
or expected to be billed to us by our independent registered public accounting
firm for our 2004 and 2003 fiscal years:
TYPE OF FEES FISCAL YEAR 2004 FISCAL YEAR 2003
------------ ---------------- ----------------
Audit Fees(1).......................................... $ 863,230 $357,965
Audit-Related Fees(2).................................. -- 56,750
Tax Fees(3)............................................ 195,760 203,775
All Other Fees(4)...................................... -- --
---------- --------
Total Fees............................................. $1,058,990 $618,490
========== ========
---------------
(1) Audit Fees -- These are fees for professional services performed by
PricewaterhouseCoopers LLP for auditing our annual financial statements and
reviewing our quarterly financial statements, and services that are normally
provided in connection with statutory and regulatory filings or engagements.
In 2004, audit fees also include fees for professional services performed by
PricewaterhouseCoopers LLP for the audits of management's assessment of the
effectiveness of internal control over financial reporting.
(2) Audit-Related Fees -- These are fees for the assurance and related services
performed by PricewaterhouseCoopers LLP that are reasonably related to the
performance of the audit or review of the Company's financial statements.
For 2003, these services consisted primarily of due diligence related to our
asset acquisition of Dynamic Telecommunications, Inc.
(3) Tax Fees -- These are fees for professional services performed by
PricewaterhouseCoopers LLP with respect to various advisory services related
principally to tax preparation services and tax consultation services. In
2005, we engaged another audit firm to perform these services.
(4) All Other Fees -- These are fees for permissible services performed by
PricewaterhouseCoopers LLP that do not fall within the above categories. For
2004 and 2003, PricewaterhouseCoopers LLP did not perform any services that
fell within this category.
12
PRE-APPROVAL OF INDEPENDENT AUDITOR SERVICES AND FEES
Our audit committee reviewed and pre-approved all audit and non-audit fees
for services provided by PricewaterhouseCoopers LLP and has determined that the
firm's provision of such services to us during fiscal 2004 is compatible with
and did not impair PricewaterhouseCoopers LLP's independence. It is the practice
of the audit committee to consider and approve in advance all auditing and
non-auditing services provided to us by our independent registered public
accounting firm in accordance with the applicable requirements of the Securities
and Exchange Commission.
VOTE REQUIRED AND RECOMMENDATION
Stockholder ratification of the selection of PricewaterhouseCoopers LLP as
our independent registered public accounting firm is not required by our bylaws
or other applicable legal requirement. However, our board of directors is
submitting the selection of PricewaterhouseCoopers LLP to our stockholders for
ratification as a matter of good corporate practice. If the stockholders fail to
ratify the selection, our audit committee will reconsider whether or not to
retain PricewaterhouseCoopers LLP as our independent registered public
accounting firm. Even if the selection is ratified, our audit committee, at its
discretion, may direct the appointment of a different firm to act as our
independent registered public accounting firm at any time during the year if it
determines that such a change would be in our best interests and in the best
interests of our stockholders.
The affirmative vote of the holders of a majority of the shares of our
common stock present or represented by proxy and entitled to vote at the annual
meeting will be required to approve this proposal. OUR BOARD OF DIRECTORS
RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE RATIFICATION OF
PRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of our common stock as of March 31, 2005 by:
- each stockholder known by us to beneficially own more than 5% of our
common stock;
- each of our directors, including director nominees;
- each of our executive officers named in the summary compensation table on
page 16; and
- all of our directors and executive officers as a group, including
director nominees.
Beneficial ownership is determined based on the rules of the Securities and
Exchange Commission. Percent of beneficial ownership is based upon 21,192,508
shares of our common stock outstanding as of March 31, 2005. In addition, shares
of common stock subject to options that are exercisable as of March 31, 2005 or
will become exercisable on or before May 30, 2005 (60 days subsequent to March
31), are treated as outstanding and beneficially owned by the person holding the
options for the purpose of computing the percentage ownership of such person and
are listed below under the "Number of Shares Underlying Options" column below,
but those option shares are not treated as outstanding for the purpose of
computing the percentage ownership of any other person. Unless otherwise
indicated, we believe the stockholders listed below
13
have sole voting or investment power with respect to all shares listed beside
each stockholder's name, subject to applicable community property laws.
PERCENT OF
NUMBER OF NUMBER OF TOTAL SHARES
SHARES SHARES SHARES BENEFICIALLY
BENEFICIALLY UNDERLYING BENEFICIALLY OWNED
BENEFICIAL OWNERS OWNED OPTIONS OWNED (%)
----------------- ------------ ---------- ------------ ------------
5% STOCKHOLDERS
Entities affiliated with Barclays Global
Investors, NA.................................. 1,199,992 -- 1,199,992 5.7%
45 Fremont Street
San Francisco, CA 94105(1)
Royce & Associates LLC......................... 1,795,000 -- 1,795,000 8.5%
1414 Avenue of the Americas
New York, NY 10019(2)
Entities affiliated with Cannell Capital LLC... 1,016,612 -- 1,016,612 4.8%
150 California Street, Fifth Floor
San Francisco, CA 94111(3)
Dimensional Fund Advisors Inc. ................ 1,446,692 -- 1,446,692 6.8%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401(4)
Whitman Partners............................... 1,063,939 -- 1,063,939 5.0%
525 University Avenue, Suite 701
Palo Alto, CA 94301(5)
DIRECTORS AND NAMED EXECUTIVE OFFICERS
Martin H. Singer(6)............................ 206,178 344,298 550,476 2.6%
John W. Schoen................................. 157,900 110,785 268,685 1.3%
Jeffrey A. Miller(7)........................... 85,800 153,517 239,317 1.1%
Biju Nair...................................... 132,300 104,767 237,067 1.1%
Brian J. Jackman............................... 1,578 32,500 34,078 *
Richard C. Alberding(8)........................ 993 47,500 48,493 *
Carl A. Thomsen(9)............................. 1,264 40,000 41,264 *
Richard D. Gitlin.............................. 946 32,500 33,446 *
Giacomo Marini................................. 32,267 40,000 72,267 *
John Sheehan(10)............................... 1,183 20,000 21,183 *
All directors, director nominees and current
executive officers as a group (10
persons).................................... 620,409 925,867 1,546,276 7.0%
---------------
* Less than 1% of the outstanding shares of common stock.
(1) Information with respect to the number of shares beneficially owned is
based solely on the Schedule 13G filed with the SEC by Barclays Global
Investors, NA, Barclays Global Fund Advisors, Barclays Global Investors,
LTD, Barclays Global Investors Japan Trust and Banking Company Limited,
Barclays Life Assurance Company Limited, Barclays Bank PLC, Barclays
Capital Securities Limited, Barclays Capital Inc., Barclays Private Bank &
Trust (Isle of Man) Limited, Barclays Private Bank and Trust (Jersey)
Limited, Barclays Bank Trust Company Limited, Barclays Bank (Suisse) SA,
Barclays Private Bank Limited, Bronco (Barclays Cayman) Limited, Palomino
Limited and HYMF Limited on February 14, 2005.
(2) Information with respect to the number of shares beneficially owned is
based solely on the Schedule 13G/A filed with the SEC by Royce & Associates
LLC on February 1, 2005. Royce & Associates LLC, in its capacity as an
investment advisor, possesses sole dispositive control and voting power
over such shares, which are held of record by its clients.
14
(3) Information with respect to the number of shares beneficially owned is
based solely on the Schedule 13G/A filed with the SEC by Cannell Capital,
LLC, J. Carlo Cannell, The Anegada Master Fund Limited, The Cuttyhunk Fund
Limited, Tonga Partners, L.P., GS Cannell Portfolio, LLC and Pleiades
Investment Partners, L.P. on December 28, 2004. Cannell Capital, LLC, in
its capacity as an investment advisor, possesses shared dispositive control
and shared voting power over such shares, which are held of record by its
clients. J. Carlo Cannell is the managing member and majority owner of
Cannell Capital and, as a consequence, is deemed to control Cannell Capital
and is thereby deemed to beneficially own such shares.
(4) Information with respect to the number of shares beneficially owned is
based solely on the Schedule 13G/A filed with the SEC by Dimensional Fund
Advisors Inc. on February 9, 2005. Dimensional Fund Advisors Inc., in its
capacity as an investment advisor, possesses sole dispositive control and
voting power over such shares which are held of record by its clients.
Dimensional disclaims beneficial ownership of such securities.
(5) Information with respect to the number of shares beneficially owned is
based solely on the Schedule 13G filed with the SEC by Whitman Partners on
February 15, 2005.
(6) Includes 1,000 shares of common stock held by the Andrea Singer Trust,
53,000 shares of common stock held by the Martin H. Singer Trust and 18
shares held by his son.
(7) Includes 25,800 shares of common stock held by the Loreana Miller Trust.
(8) Includes 550 shares of common stock held by the Alberding Family Trust.
(9) Includes 550 shares of common stock held by the Thomsen Family Trust.
(10) Includes 314 shares of common stock held by Two Rivers Associates LLC ("Two
Rivers"). Mr. Sheehan is the Managing Director of Two Rivers.
15
EXECUTIVE COMPENSATION AND OTHER MATTERS
The following table presents the compensation earned, awarded or paid for
services rendered to us in all capacities for the fiscal years ended December
31, 2004, 2003 and 2002, respectively, by our chief executive officer and our
other executive officers whose salary and bonus for fiscal 2004 exceeded
$100,000. We refer to these individuals elsewhere in this proxy as "named
executive officers." Bonuses for a given fiscal year include bonuses earned and
paid in that fiscal year as well as bonuses earned in that fiscal year but paid
in subsequent years. No dividends will be paid on any of the shares of
restricted stock granted to the named executive officers as described below.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION AWARDS
------------------------------
ANNUAL COMPENSATION RESTRICTED SECURITIES
-------------------- STOCK UNDERLYING ALL OTHER
FISCAL SALARY BONUS AWARDS OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($)
--------------------------- ------ -------- -------- ------------ ---------- ------------
Martin H. Singer 2004 $385,000 $196,607 $466,000(1) 100,000 $45,712(2)
Chief Executive Officer
and 2003 367,500 302,281 580,000(3) 160,000 41,906
Chairman of the Board 2002 354,132 225,000 497,250(4) 100,000 18,348
John Schoen................. 2004 225,000 84,380 371,400(5) 67,000 33,712(6)
Chief Financial Officer 2003 222,083 131,161 -- 50,000 31,501
2002 193,866 50,000 497,250(4) 80,000 16,877
Jeffrey A. Miller........... 2004 213,333 58,450 309,500(7) 52,000 33,712(6)
Vice President, Global
Sales 2003 203,750 120,117 -- 40,000 31,501
2002 193,008 50,000 497,250(4) 80,000 16,877
Biju Nair................... 2004 213,333 56,440 309,500(7) 62,000 34,112(8)
Vice President and General 2003 203,750 120,117 -- 40,000 31,515
Manager, Mobility
Solutions 2002 177,089 49,000(9) 497,250(4) 200,000 14,268
Group
---------------
(1) The executive was awarded 40,000 shares of restricted common stock on July
1, 2004. The closing sales price of our common stock on July 1, 2004 as
reported by The Nasdaq National Market was $11.65. Our repurchase right with
respect to 20% of such shares shall lapse on August 1 of each year beginning
on August 1, 2005, such that our repurchase right shall lapse with respect
to all such shares on August 1, 2009. Based on the $7.93 closing sales price
of our common stock as reported by The Nasdaq National Market on December
31, 2004, the value of the executive's shares on such date was $317,200.
(2) Other compensation for fiscal 2004 consisted of (i) $669 in premiums paid
for term life insurance, (ii) $15,843 in premiums paid for health insurance,
(iii) an $18,000 car allowance, (iv) $8,200 in matching contributions under
our 401(k) plan and (v) $3,000 in matching contributions under our Executive
Deferred Compensation Plan.
(3) The executive was awarded 50,000 shares of restricted common stock on
September 2, 2003. The closing sales price of our common stock on September
2, 2003 as reported by The Nasdaq National Market was $11.60. Our repurchase
right with respect to 100% of such shares shall lapse on August 1, 2008.
Based on the $7.93 closing sales price of our common stock as reported by
The Nasdaq National Market on December 31, 2004, the value of the
executive's shares on such date was $396,500.
(4) The executive was awarded 75,000 shares of restricted common stock on
December 30, 2002. The closing sales price of our common stock on December
30, 2002 as reported by The Nasdaq National Market was $6.63. Our repurchase
right with respect to 20% of such shares lapsed on November 1, 2004. Our
repurchase right with respect to 20% of such shares shall continue to lapse
on November 1 of each year beginning on November 1, 2005, such that our
repurchase right shall lapse with respect to all such shares on November 1,
2008. Based on the $7.93 closing sales price of our common stock as reported
by The
16
Nasdaq National Market on December 31, 2004, the value of the executive's
shares on such date was $594,750.
(5) The executive was awarded 30,000 shares of restricted common stock on
February 11, 2004. The closing sales price of our common stock on February
11, 2004 as reported by The Nasdaq National Market was $12.38. Our
repurchase right with respect to 20% of the shares shall lapse on February
11 of each year beginning on February 11, 2005, such that our repurchase
right shall lapse with respect to all such shares on February 11, 2009.
Based on the $7.93 closing sales price of our common stock as reported by
The Nasdaq National Market on December 31, 2004, the value of the
executive's shares on such date was $237,900.
(6) Other compensation for fiscal 2004 consisted of (i) $669 in premiums paid
for term life insurance, (ii) $15,843 in premiums paid for health insurance,
(iii) a $9,000 car allowance and (iv) $8,200 in matching contributions under
our 401(k) plan.
(7) The executive was awarded 25,000 shares of restricted common stock on
February 11, 2004. The closing sales price of our common stock on February
11, 2004 as reported by The Nasdaq National Market was $12.38. Our
repurchase right with respect to 20% of the shares shall lapse on February
11 of each year beginning on February 11, 2005, such that our repurchase
right shall lapse with respect to all such shares on February 11, 2009.
Based on the $7.93 closing sales price of our common stock as reported by
The Nasdaq National Market on December 31, 2004, the value of the
executive's shares on such date was $198,250.
(8) Other compensation for fiscal 2004 consisted of (i) $669 in premiums paid
for term life insurance, (ii) $15,843 in premiums paid or health insurance,
(iii) a $9,000 car allowance, (iv) $8,200 in matching contributions under
our 401(k) plan and (v) $400 in matching contributions under our Executive
Deferred Compensation Plan.
(9) Mr. Nair received a signing bonus of $9,000 when he joined us in February
2002, and a year-end bonus of $40,000.
OPTION GRANTS DURING LAST FISCAL YEAR
The following table shows information regarding stock options granted to
the named executive officers during fiscal year 2004. Potential realizable
values with respect to such options are computed by:
- Multiplying the number of shares of common stock underlying each option
by the exercise price,
- Assuming that the total stock value derived from that calculation
compounds at the annual 5% or 10% rate shown in the table for the entire
ten-year term of the option, and
- Subtracting from that result the total option exercise price.
The 5% and 10% annual return rate is based on the rules of the SEC and do
not reflect projections or estimates of future stock price growth. Actual gains,
if any, on stock option exercises will be dependent on the future performance of
our common stock.
The percentage of total options is based on an aggregate of 1,821,155
options granted by us to our employees, directors and consultants, including the
named executive officers, during fiscal 2004. We did not grant any options under
our 2001 Nonstatutory Stock Option Plan in fiscal 2004. The 1,821,155 shares of
common stock subject to options granted in fiscal 2004 does not include 292,788
shares of common stock awarded to our employees and directors, including the
named executive officers, pursuant to restricted stock grants made in fiscal
2004. See the summary compensation table on page 16 for a discussion of the
restricted stock awards that were made to our named executive officers.
17
The per share exercise price of stock option grants is equal to the closing
sales price of our common stock as reported by The Nasdaq National Market on the
date of grant.
POTENTIAL REALIZABLE VALUE
NUMBER OF AT ASSUMED ANNUAL RATES
SECURITIES PERCENT OF TOTAL OF STOCK APPRECIATION FOR
UNDERLYING OPTIONS GRANTED EXERCISE OPTION TERM ($)
OPTIONS TO EMPLOYEES PRICE PER EXPIRATION ---------------------------
NAME GRANTED (#) DURING PERIOD (%) SHARE($) DATE 5% 10%
---- ----------- ----------------- --------- ---------- ----------- -------------
Martin H. Singer...... 100,000 5.49% $11.65 7/1/14 $732,662 $1,856,710
John W. Schoen........ 67,000 3.68 11.84 2/11/14 557,542 1,357,564
Jeffrey A. Miller..... 52,000 2.86 11.84 2/11/14 432,797 1,053,632
Biju Nair............. 62,000 3.40 11.84 2/11/14 516,027 1,256,253
AGGREGATE OPTION EXERCISES DURING LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table presents information regarding the named executive
officers concerning option exercises for fiscal 2004 and exercisable and
unexercisable options held by such individuals as of December 31, 2004. The
"Value Realized" on option exercises is equal to the difference between the
closing sales price of our common stock as reported by The Nasdaq National
Market on the date of exercise less the option exercise price. The "Value of
Unexercised In-the-Money Options at December 31, 2004" is based on a price of
$7.93, the closing sales price of our common stock on December 31, 2004 as
reported by The Nasdaq National Market, minus the weighted average per share
exercise price of options with an exercise price less than $7.93 per share held
by such named executive officer, multiplied by the aggregate number of shares
underlying the unexercised options held by such officer. The option exercise
information in the table does not include the 120,000 shares of common stock
awarded to our named executive officers in fiscal 2004. Please see the summary
compensation table on page 16 for more information regarding the restricted
stock awards made to named executive officers in fiscal 2004.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 2004 DECEMBER 31, 2004
ACQUIRED ON VALUE ----------------------------------- -----------------------------------
EXERCISE (#) REALIZED ($) EXERCISABLE (#) UNEXERCISABLE (#) EXERCISABLE ($) UNEXERCISABLE ($)
------------ ------------ --------------- ----------------- --------------- -----------------
Martin H. Singer..... 44,000 204,942 301,121 236,979 $238,232 $69,079
John Schoen.......... 112,500 444,088 70,417 119,083 13,855 36,020
Jeffrey A. Miller.... 80,000 341,834 118,333 98,667 24,383 28,817
Biju Nair............ 108,333 348,476 54,167 139,500 11,083 28,817
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of December 31, 2004 about our
common stock that may be issued upon the exercise of options and rights under
all of our existing equity compensation plans, including our 1997 Stock Plan,
1998 Director Stock Option Plan, 1998 Employee Stock Purchase Plan and 2001
Nonstatutory Stock Option Plan.
NUMBER OF SECURITIES
REMAINING AVAILABLE FOR
NUMBER OF SECURITIES WEIGHTED-AVERAGE NUMBER OF SECURITIES
TO BE ISSUED EXERCISE PRICE OF FUTURE ISSUANCE UNDER EQUITY
UPON EXERCISE OF OUTSTANDING OPTIONS, COMPENSATION PLANS
OUTSTANDING OPTIONS WARRANTS AND RIGHTS (EXCLUDING SECURITIES REFLECTED
PLAN CATEGORY AND RIGHTS (#) ($) IN THE FIRST COLUMN) (#)
------------- -------------------- ---------------------- -------------------------------
Equity compensation plans
approved by security
holders(1).................. 4,367,930(3) $9.900(3) 2,835,190(4)
Equity compensation plans not
approved by security
holders(2).................. 104,934 $7.999 584,244(5)
--------- ------ ---------
TOTAL......................... 4,472,864 $9.855 3,419,434
========= ====== =========
18
---------------
(1) Information is provided with respect to our 1997 Stock Plan, 1998 Director
Stock Option Plan and 1998 Employee Stock Purchase Plan.
(2) Information is provided with respect to our 2001 Nonstatutory Stock Option
Plan and with respect to our grant of options to purchase 150,000 shares of
our common stock outside of a formalized plan to each of John W. Schoen and
Jeffrey A. Miller on November 15, 2001 in connection with their initial
employment with us. Under the terms of our 2001 Nonstatutory Stock Option
Plan, no options may be granted under such plan to our officers or
directors.
(3) We are unable to ascertain with specificity the number of securities to be
issued upon exercise of outstanding rights under our 1998 Employee Stock
Purchase Plan or the weighted average exercise price of outstanding rights
under our 1998 Employee Stock Purchase Plan. The 1998 Employee Stock
Purchase Plan provides that shares of our common stock may be purchased at a
per share price equal to 85% of the fair market value of the common stock at
the beginning of the offering period or a purchase date applicable to such
offering period, whichever is lower.
(4) This number includes 794,267 shares available for future issuance under our
1997 Stock Plan, 190,000 shares available for future issuance under our 1998
Director Stock Option Plan and 1,850,923 shares available for future
issuance under our 1998 Employee Stock Purchase Plan as of December 31,
2004. In addition, the 1997 Stock Plan provides that the number of
securities available for issuance under such plan shall automatically
increase on the first day of each fiscal year by the lesser of (i) 700,000
shares, (ii) 4% of the outstanding shares on such date or (iii) a lesser
amount determined by the board of directors. The 1998 Employee Stock
Purchase Plan provides that the number of securities available for issuance
under such plan shall automatically increase on the first day of each fiscal
year by the lesser of (i) 350,000 shares, (ii) 2% of the outstanding shares
on such date or (iii) a lesser amount determined by the board of directors.
(5) All such shares are available for future issuance under our 2001
Nonstatutory Stock Option Plan.
19
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Since January 1, 2004, we have not entered into any transactions or series
of similar transactions in which the amount exceeds $60,000, and in which any
director, executive officer, nominee for election as a director, holder of more
than 5% of our common stock, or any member of the immediate family of any of the
foregoing persons had or will have a direct or indirect material interest, other
than the change in control arrangements and employment agreements with the named
executive officers that are described under "Employment Agreements and Change in
Control Arrangements" on page 21.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our executive officers and
directors and persons who own more than ten percent of a registered class of our
equity securities to file reports of ownership and changes in ownership with the
SEC and the National Association of Securities Dealers, Inc. Executive officers,
directors and greater than ten percent stockholders are required by SEC
regulation to furnish us with copies of all Section 16(a) forms they file. Based
solely on our review of the copies of such forms received by us, or written
representations from certain reporting persons, except as noted below, we
believe that during fiscal 2004 all of our executive officers, directors and
greater than ten percent stockholders complied with all applicable filing
requirements.
Larry Swift was delinquent in the filing of a Form 3 relating to Mr. Swift
becoming a reporting person under Section 16(a).
Steve Deppe was delinquent in the filing of a Form 3 relating to Mr. Deppe
becoming a reporting person under Section 16(a). Mr. Deppe was also delinquent
in the filing of a Form 4 relating to the purchase of shares under our 1998
Employee Stock Purchase Plan.
20
EMPLOYMENT AGREEMENTS AND CHANGE OF CONTROL ARRANGEMENTS
MANAGEMENT RETENTION AGREEMENTS
In March 2000, our board of directors authorized the implementation of a
management retention program with members of our management and certain other
key employees. Upon the involuntary termination of such individual's employment
within 12 months following a change of control transaction such as a merger or
sale of our company or the sale of all or substantially all of the company's
assets, such executive officers and key employees will receive the following
benefits:
- Chief Executive Officer: cash severance equal to (i) 200% of annual
compensation plus (ii) 100% of targeted bonus compensation and 12 months
of continued health benefits;
- Vice-Presidents: cash severance equal to (i) 150% of annual compensation
plus (ii) 100% of targeted bonus compensation and 12 months of continued
health benefits;
- Director-level and other key employees: cash severance equal to (i) 75%
of annual compensation plus (ii) 100% of targeted bonus compensation and
12 months of continued health benefits.
In addition, the vesting with respect to all equity awards held by the
participants in our management retention program will accelerate so such equity
awards shall become fully vested. To date, the participants in the program at
the director level or below have not been designated. Each of our named
executive officers has entered into a management retention agreement.
EMPLOYMENT AGREEMENTS
In addition to our standard form of confidentiality agreement prohibiting
the disclosure of any of our confidential or proprietary information and
providing that, upon termination, the former employee will not solicit our
employees, we have executed employment agreements with the following named
executive officers:
Martin H. Singer. Martin H. Singer is our Chief Executive Officer and
Chairman of the Board and we entered into an original employment agreement with
Dr. Singer in October 2001, which has been subsequently amended. Our employment
agreement with Dr. Singer provides for a five-year term of employment through
2008 and annual base compensation that is reviewed and adjusted annually by our
Compensation Committee and Board of Directors. Under the terms of the agreement,
Dr. Singer is entitled to receive two annual bonuses. One annual bonus, first
paid in 2004, is equal to an amount up to 100% of Dr. Singer's then-current base
salary, based on Dr. Singer's individual performance and the attainment of
specified corporate objectives. For 2004, this bonus was $129,940. The second
annual bonus, first paid in 2005, was $66,667 and was based on the attainment of
individual and corporate objectives measured over the 2003/2004 period. In March
2005, on the approval of our Board of Directors, Dr. Singer agreed to a revision
to the second annual bonus arrangement that permits him to earn up to $200,000
annually (unchanged from the bonus arrangement prior to revision), based on the
attainment of specified corporate-level objectives during the fiscal year. In
addition, in 2004, we granted to Dr. Singer (i) stock options to purchase
100,000 shares of our common stock at a purchase price of $11.60, with all of
the shares subject to such stock option vesting ratably on a monthly basis over
four years, and (ii) 50,000 shares of restricted common stock with our
repurchase right lapsing with respect to all of such restricted shares on August
1, 2008, subject to Dr. Singer's continued employment with PCTEL on that date.
The agreement further provides that in the event Dr. Singer's employment is
involuntarily terminated by PCTEL (other than for cause, death or disability) or
voluntarily by Dr. Singer for good reason (other than following a change of
control where the benefits to be received under such scenario are governed by
the management retention agreements described above), Dr. Singer will receive 24
months continued salary, 100% of targeted bonus compensation (excluding the
second annual bonus described above) for the fiscal year in which such
termination occurs, up to 18 months continued health benefits and accelerated
vesting with respect to his equity awards for the number of shares that would
have vested, or been released from our repurchase right, had Dr. Singer
continued his employment with us for an additional 12 months following his
termination date.
21
In September 2003, we entered into an addendum to Dr. Singer's employment
agreement, which provides that at any time prior to July 1, 2008, Dr. Singer may
require us to obtain, at our expense, an individual health care policy for the
benefit of Dr. Singer and his immediate family. As long as Dr. Singer remains
employed by us, we will pay for his health care coverage. If Dr. Singer elects
to have us obtain an individual health care policy and satisfies the five-year
term of his employment agreement (which five-year term shall be deemed fulfilled
if Dr. Singer's employment with PCTEL is terminated without cause or due to
death or disability), Dr. Singer will be responsible following his employment
termination for payment of premiums under the policy until he reaches age 62.
Thereafter, we will be responsible for payment of such premiums until Dr. Singer
and his wife reach age 65. Upon Dr. Singer and his wife reaching age 65, our
obligation to pay the premiums necessary to maintain the policy will terminate
and we will instead be obligated to pay the premiums necessary to maintain a
Medicare supplemental policy for the remainder of the lives of Dr. Singer and
his wife.
John W. Schoen. In November 2001, John Schoen joined us initially as our
Chief Financial Officer, Chief Operating Officer and Corporate Secretary. Mr.
Schoen's "at-will" employment agreement sets forth his annual salary and
targeted bonus compensation, which is subject to certain milestones. Such
employment agreement also provides that in the event Mr. Schoen's employment is
involuntarily terminated other than for cause (other than following a change of
control where the benefits to be received under such scenario are governed by
the management retention agreements referenced above), Mr. Schoen will receive
12 months continued salary, up to 12 months continued health benefits and
continued vesting with respect to his equity awards for the 12 months following
his termination date.
Jeffrey A. Miller. In November 2001, Jeffrey A. Miller joined us initially
as our Vice President, Engineering and Development. Mr. Miller's "at-will"
employment agreement sets forth his annual salary and targeted bonus
compensation, which is subject to certain milestones. Such employment agreement
also provides that in the event Mr. Miller's employment is involuntarily
terminated other than for cause (other than following a change of control where
the benefits to be received under such scenario are governed by the management
retention agreements referenced above), Mr. Miller will receive 12 months
continued salary, up to 12 months continued health benefits and continued
vesting with respect to his equity awards for the 12 months following his
termination date.
22
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
Notwithstanding any statement to the contrary in any of our previous or
future filings with the SEC, this report of the audit committee of the board of
directors shall not be deemed "filed" with the SEC or "soliciting material"
under the Exchange Act, and shall not be incorporated by reference into any such
filings.
The audit committee of our board of directors was formed in March 2000 and
consists of Mr. Thomsen, Mr. Alberding and Mr. Marini, each of whom meets the
Nasdaq independence and experience requirements. The audit committee operates
under a written charter. Upon the recommendation of the audit committee, the
board of directors adopted the original charter for the audit committee in
August 1999, and last amended the charter for the audit committee in November
2004. A copy of the current charter is attached to this proxy statement as
Appendix A.
The audit committee reviews the procedures of management for the design,
implementation and maintenance of a comprehensive system of disclosure controls
and procedures focused on the accuracy of our financial statements and the
integrity of our financial reporting systems and disclosure contained in our
periodic reports. As part of this review, the audit committee discusses with
management and our independent auditors their evaluation of the effectiveness of
our internal control over financial reporting, including improvements to our
internal control that may be warranted. The audit committee provides our board
of directors with the results of the committee's examinations and
recommendations and reports to the board of directors as the committee may deem
necessary to make the board aware of significant financial matters that require
the board's attention.
The audit committee does not conduct auditing reviews or procedures. The
audit committee relies on management's representation that our financial
statements have been prepared accurately and in conformity with United States
generally accepted accounting principles and on the representations of the
independent auditors included in their report on our financial statements and on
the effectiveness of our internal control over financial reporting. The audit
committee has also adopted a written policy that is intended to encourage our
employees to bring to the attention of management and the audit committee any
complaints regarding the integrity of our internal financial controls or the
accuracy or completeness of financial or other information related to our
financial statements.
The audit committee reviews reports and provides guidance to our
independent registered public accounting firm with respect to their annual audit
and approves in advance all audit and non-audit services provided by our
independent registered public accounting firm in accordance with applicable
regulatory requirements. The audit committee also considers, in advance of the
provision of any non-audit services by our independent registered public
accounting firm, whether the provision of such services is compatible with
maintaining the independence of the external auditors.
In accordance with its responsibilities, the audit committee has reviewed
and discussed with management the audited financial statements for the year
ended December 31, 2004 and the process designed to achieve compliance with
Section 404 of the Sarbanes-Oxley Act of 2002. The audit committee has also
discussed with PricewaterhouseCoopers LLP the matters required to be discussed
by SAS No. 61, Communication with Audit Committees. The audit committee has
received the written disclosures and the letter from PricewaterhouseCoopers LLP
required by Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees, and has discussed with PricewaterhouseCoopers
LLP its independence, including whether PricewaterhouseCoopers LLP's provision
of non-audit services is compatible with its independence.
23
Based on these reviews and discussions, the audit committee recommended to
our board of directors that our audited financial statements for the year ended
December 31, 2004 be included in our Annual Report on Form 10-K.
Respectfully submitted by:
THE AUDIT COMMITTEE
Carl Thomsen (Chair)
Richard Alberding
Giacomo Marini
24
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Notwithstanding any statement to the contrary in any of our previous or
future filings with the SEC, this report of the compensation committee of the
board of directors shall not be deemed "filed" with the SEC or "soliciting
material" under the Exchange Act, and shall not be incorporated by reference
into any such filings.
The compensation committee of our board of directors was formed in March
2000 and currently consists of Mr. Alberding, Mr. Sheehan and Mr. Jackman, each
of whom is an independent, non-management director of the company.
Recommendations concerning the compensation of our chief executive officer are
made to the board of directors by the compensation committee. Decisions
concerning the compensation of all of our other executive officers are made by
the compensation committee and may be reviewed periodically by the full board of
directors.
The original charter of the compensation committee was adopted by the board
of directors in August 1999 and has been modified from time to time to clarify
the responsibilities of the committee in recognition of our corporate governance
needs as well as current industry requirements and practices. During 2004, the
compensation committee met, either in person or by conference telephone, a total
of eight times. The committee maintains minutes of its meetings, and reports to
the board of directors as the committee may deem necessary to make the board
aware of significant matters that require the board's attention.
RESPONSIBILITIES OF THE COMMITTEE
Acting on behalf of the board of directors, the compensation committee's
responsibilities include the following:
- Reviewing the performance of the chief executive officer and our other
executive officers, taking into consideration performance evaluations
from the other members of the board in the case of the chief executive
officer;
- Recommending to the board of directors the total compensation package for
the chief executive officer and determining the compensation for the
other executive officers;
- Providing guidance with respect to the compensation philosophies and
goals for all of our employees, including the chief executive officer and
other executive officers; and
- Administering our employee stock option and employee stock purchase
plans, including determining eligibility and the number and type of
options to be granted and the terms of such grants.
COMPENSATION PHILOSOPHY
Our philosophy in setting compensation policies for executive officers is
to maximize stockholder value over time. The primary goal of our executive
compensation program is, therefore, to closely align the interests of the
executive officers with those of our stockholders. To achieve this goal, we
attempt to offer competitive compensation opportunities that give us the ability
to attract and retain executives whose skills are critical to our long-term
success, motivate individuals to perform at their highest level, and reward
outstanding achievement. In addition, we attempt to maintain a significant
portion of each executive's total compensation at risk and tied to our
achievement of financial, organizational and management performance goals, thus
encouraging executives to manage from the perspective of owners with an equity
stake in our company. To achieve these goals, the compensation committee has
established an executive compensation program primarily consisting of cash
compensation (salary and bonus), stock options, restricted stock grants and
other compensation and benefit programs generally available to other employees.
It is our committee's practice to review at least annually all components
of compensation for our executive officers to ensure that the amount and
structure of total compensation for each officer is consistent with our
compensation philosophies and objectives. This review also enables our committee
to compare the relationship that exists between the total compensation we pay to
our chief executive officer to compensation levels with our other executive
officers and other managers within the company.
25
Our committee relies significantly upon the services of independent
compensation consultants in exercising our business judgment as to appropriate
levels and components of compensation for the executive officers and key
management in our company. In 2004, we replaced our previous independent
compensation consultant and retained the services of The Delves Group, an
independent, Chicago-based compensation consulting firm, to assist us in
establishing our compensation goals and objectives, to provide relevant survey
data on the compensation practices of other companies, and to advise on industry
trends in executive compensation. Our independent consultant has reporting
responsibility directly to the compensation committee. Our committee's practice
is to invite a representative of our compensation consulting firm to attend all
committee meetings.
EXECUTIVE OFFICER COMPENSATION
The executive officers of the company in 2004 consisted of Martin H.
Singer, Chief Executive Officer; John W. Schoen, Chief Financial Officer;
Jeffrey A. Miller, Vice President, Global Sales; and Biju Nair, Vice President
and General Manager, Mobility Solutions Group. We also have within our
management a number of other vice presidents and key managers that report to Dr.
Singer or our other executive officers.
The cash component of total compensation, which consists of base salary and
bonus, is designed to compensate our management at a level that equates to a
range between the median and the 75th percentile of cash compensation among a
peer group of companies that are considered by the committee to be comparable in
industry sector, revenue level and size of operations. The compensation
committee, on an annual basis, reviews and recommends to the board of directors
the base salary and bonus (with associated milestones) for the chief executive
officer and reviews and approves the base salaries and target bonuses (with
associated milestones) for our other executives and key managers.
The salary compensation of our executive management in 2004 was established
by the compensation committee based upon both corporate-level and
individual-level goals. At the individual level, the committee considers each
executive's scope of job responsibilities, level of experience, past
performance, contribution to our business, and data on prevailing compensation
levels in relevant markets for comparable officer positions. Regarding the
latter measure, certain companies included in the peer group index of the stock
performance graph under the caption "Company Performance" (page 29 of this proxy
statement) are also included in surveys reviewed by the compensation committee
in reviewing salary levels for our chief executive officer and other executive
officers. At the corporate level, the committee in 2004 took into account the
amount of our overall operating expenses, including the cash components of
management compensation, as well as the fact that we only partially attained our
targeted corporate goals and objectives. Based on these considerations, the
committee modestly increased the 2004 annual salaries of our executive officers
in amounts ranging from zero to approximately five percent.
We pay annual cash bonuses to our executive officers under our Short Term
Incentive Bonus Plan. These annual bonuses are intended to provide a direct link
between management compensation and the achievement of corporate and individual
objectives. The amount of bonus for 2004 performance was determined based upon
the achievement by the executive and our company of identified goals and
milestones, which were approved in the summer of 2004 by the board of directors
for our chief executive officer and approved in the beginning of 2004 by our
committee for our other executive officers. Because these goals were only
partially attained, the bonus amounts approved for payment to our executive
officers ranged from approximately 26% to 34% of the potential maximum for these
individuals.
We provide long-term incentives through the grant of restricted stock and
stock options under our stock option plans, particularly our 1997 Stock Plan and
our 1998 Employee Stock Purchase Plan. The purpose of our 1997 Stock Plan is to
attract and retain the best employee talent available and to create a direct
link between compensation and our long-term performance. The compensation
committee believes that stock grants and stock options directly motivate an
executive to maximize long-term stockholder value. The committee takes into
consideration survey information of comparable companies provided by its
independent compensation consultant and other information from management to
establish competitive levels of equity
26
compensation and to align the long-term incentive interests of our management
with the financial interests of our stockholders.
Our use of stock grants and stock options typically include vesting periods
to encourage key executives to continue in our employment. All stock options
granted to executive officers to date have been granted at the fair market value
of our common stock on the date of grant. Because the value of a stock option to
an executive officer is dependent upon an increase in the price of our common
stock, this portion of the executive's compensation is directly aligned with an
increase in stockholder value. When determining the number of shares of stock or
the number of stock options to be awarded on an annual basis to an executive
officer, the compensation committee considers stock and stock option levels for
the executive at the beginning of each fiscal year in light of long-term
strategic and performance objectives, the executive's current and anticipated
contributions to our future performance, the retention value associated with the
executive's existing or proposed equity incentive position, and comparisons to
formal and informal surveys of executive stock and option grants made by other
peer companies.
In 2004, our committee began evaluating the anticipated effect of option
expensing under Financial Accounting Standard 123R, effective for public
companies beginning with the first interim or annual reporting period of such
companies' first fiscal year beginning on or after June 15, 2005, as well as
industry trends in respect of incentive award practices by peer companies. Our
committee also has evaluated from time to time the level of stock reserves
available under our various equity incentive plans, the dilution to stockholders
resulting from our historical use of stock options as management incentives, the
perception of our stockholders of our equity incentive programs, and the
retention value of restricted stock as distinguished from stock options. Based
on this evaluation, our committee determined to begin placing greater emphasis
beginning in 2005 on the use of restricted stock grants for incentive purposes
at the management level.
2004 CHIEF EXECUTIVE OFFICER COMPENSATION
The compensation committee reviews the chief executive officer's
compensation using substantially the same criteria and policies as are employed
for our other executive officers. As set forth in the five-year employment
agreement that we entered into with Dr. Singer in 2003, the principal components
of his compensation for 2004 include annual salary, a cash bonus under our Short
Term Incentive Bonus Plan, a cash "stretch" bonus under our 2003/2004 CEO
Stretch Plan (which has been revised for purposes of 2005 performance by Dr.
Singer), stock option grants and grants of restricted stock under our 1997 Stock
Plan, life insurance, matching contributions from us in connection with Dr.
Singer's participation in both our Executive Deferred Compensation Plan and our
401(k) plan, a car allowance, and health care benefits to be provided to Dr.
Singer and his family during and following the course of his employment with our
company.
Our committee based its compensation recommendations for Dr. Singer's 2004
salary, bonus under the Short Term Incentive Bonus Plan for 2004 and "stretch"
bonus under the 2003/2004 CEO Stretch Plan on a variety of factors, including
Dr. Singer's performance in attaining identified corporate and individual goals,
the scope and nature of his responsibilities as the chief executive officer, and
comparisons of chief executive officer compensation levels for peer companies.
In addition, based on benchmarking information of chief executive equity
compensation at peer companies and advice from our independent consultant, our
committee believed that, as with the other executive officers, a better
alignment of management incentives with the interests of our stockholders could
be achieved by increasing Dr. Singer's equity interest in our company through
equity incentives.
Taking these considerations into account, upon the recommendation of our
committee and the approval of the board of directors:
- Dr. Singer received an annual salary of $385,000;
- based on the partial attainment of identified corporate and individual
goals, Dr. Singer's bonus under the Short Term Incentive Bonus Plan for
performance in 2004 was $129,940 of a total maximum of $385,000;
27
- based on the partial attainment of identified corporate goals for the
2003/2004 CEO Stretch Plan, Dr. Singer was paid $66,667 of a possible
maximum of $200,000
- Dr. Singer received a 40,000 share restricted stock grant, vesting over a
five-year period in equal annual amounts;
- Dr. Singer received an option grant for 100,000 shares, vesting over a
four-year period, with 25% vesting at the end of the first year and the
balance in equal monthly increments.
QUALIFYING COMPENSATION
In general, it is our policy to qualify, to the maximum extent possible,
our executives' compensation for deductibility under applicable tax laws. The
compensation committee has considered the potential impact of Section 162(m) of
the Internal Revenue Code on the compensation paid to our executive officers.
None of the executive officers named in the proxy statement were compensated
over $1.0 million in 2004.
Respectfully submitted by:
THE COMPENSATION COMMITTEE
Richard C. Alberding (Chair)
John Sheehan
Brian J. Jackman
28
COMPANY PERFORMANCE
Notwithstanding any statement to the contrary in any of our previous or
future filings with the SEC, this company performance graph shall not be deemed
"filed" with the SEC or "soliciting material" under the Exchange Act and shall
not be incorporated by reference into any such filings.
The graph below compares the annual percentage change in the cumulative
return to our stockholders with the cumulative return of the Nasdaq Stock Market
Index and of the S&P Technology Sector Index from the date of our initial public
offering (October 19, 1999) and ending on December 31, 2004. Returns for the
indices are weighted based on market capitalization at the beginning of each
measurement point. Note that historic stock price performance is not necessarily
indicative of future stock price performance.
COMPARISON OF 50 MONTH CUMULATIVE TOTAL RETURN*
AMONG PCTEL, INC., THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE S&P INFORMATION TECHNOLOGY INDEX
(PERFORMANCE GRAPH)
--------------------------------------------------------------------
12/99 12/00 12/01 12/02 12/03 12/04
--------------------------------------------------------------------
PCTEL, INC. 100.00 20.48 18.50 12.91 20.48 15.10
NASDAQ STOCK MARKET
(U.S.) 100.00 72.62 50.23 29.12 44.24 47.16
S&P INFORMATION
TECHNOLOGY 100.00 59.10 43.81 27.42 40.37 41.40
* $100 invested on 10/19/99 in stock or on 9/30/99 in index-including
reinvestment of dividends. Fiscal year ending December 31.
Copyright(C) 2002, Standard & Poor's, a division of The McGraw-Hill Companies,
Inc. All rights reserved. www.researchdatagroup.com/S&P.htm
OTHER MATTERS
We know of no further matters to be submitted at the meeting. If any other
matters properly come before the meeting, it is the intention of the persons
named in the enclosed form of proxy to vote the shares they represent as the
board of directors may recommend.
THE BOARD OF DIRECTORS
Dated: April 25, 2005
29
APPENDIX A
CHARTER
FOR THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
OF
PCTEL, INC.
(AS AMENDED NOVEMBER 4, 2004)
PURPOSE:
The purpose of the Audit Committee of the Board of Directors (the "BOARD")
of PCTEL, Inc. (the "COMPANY") shall be to oversee the accounting and financial
reporting processes of the Company and audits of the Company's financial
statements by:
- Assisting the Board in monitoring of (i) the integrity of the Company's
financial statements, (ii) the Company's accounting policies and
procedures, (iii) the Company's compliance with legal and regulatory
requirements, (iv) the independent auditor's qualifications, independence
and performance, (v) the Company's disclosure controls and procedures and
(vi) the Company's internal controls; and
- Providing to the Board such additional information and materials as it
may deem necessary to make the Board aware of significant financial
matters that require the attention of the Board.
In addition, the Audit Committee will undertake those specific duties and
responsibilities listed below and such other duties as the Board may from time
to time prescribe.
MEMBERSHIP:
The Audit Committee members will be appointed by, and will serve at the
discretion of, the Board. The Audit Committee will consist of at least three
members of the Board. Members of the Audit Committee must meet the following
criteria:
- Each member will be an independent director, as defined in (i) Nasdaq
Rule 4200 and (ii) the rules of the Securities and Exchange Commission
(the "SEC"), as in effect from time to time;
- Each member will be able to read and understand fundamental financial
statements, in accordance with the Nasdaq National Market Audit Committee
requirements;
- No member will have participated in the preparation of the financial
statements of the Company or any current subsidiary of the Company at any
time during the past three years; and
- At least one member will have past employment experience in finance or
accounting, requisite professional certification in accounting, or other
comparable experience or background, including a current or past position
as a chief executive officer, chief financial officer or other senior
officer with financial oversight responsibilities.
RESPONSIBILITIES:
The responsibilities of the Audit Committee shall include:
- Reviewing the reports by management and the independent auditors
concerning the design, implementation and maintenance for the Company's
system of internal controls and meeting periodically with the Company's
management and the independent auditors to review their assessment of the
adequacy of such internal controls;
- Exercising direct responsibility for appointing, compensating (including
all audit engagement fees and terms), overseeing the work of, and
terminating the services of, the independent auditors for the purpose of
preparing or issuing an audit report or other audit, review or attest
services;
A-1
- Approving the audit and permitted non-audit services provided to the
Company by the independent auditors in accordance with the applicable
requirements of the SEC;
- Reviewing the independence of the outside auditors, including (i)
obtaining on a periodic basis a formal written statement from the
independent auditors regarding relationships and services with the
Company that may impact independence, as defined by applicable standards
and SEC requirements, (ii) presenting this statement to the Board, and
(iii) to the extent there are relationships or services that may impact
the objectivity and independence of the auditors, actively engaging in a
dialogue with the auditors and taking, or recommending that the full
Board take, appropriate action to oversee the independence of the outside
auditors;
- Reviewing and providing guidance with respect to the external audit by
(i) reviewing the independent auditors' proposed audit scope and
approach; (ii) discussing with the Company's independent auditors the
financial statements and audit findings, including any significant
adjustments, management judgments and accounting estimates, significant
new accounting policies and disagreements with management and any other
matters described in SAS No. 61,; and (iii) reviewing reports submitted
to the audit committee by the independent auditors in accordance with the
applicable SEC requirements;
- Reviewing and discussing with management and the independent auditors the
annual audited financial statements and quarterly unaudited financial
statements, including the Company's disclosures under "Management's
Discussion and Analysis of Financial Condition and Results of
Operations," prior to filing the Company's Annual Report on Form 10-K and
Quarterly Reports on Form 10-Q, respectively, with the SEC (which for
purposes of the annual report shall include a recommendation to the Board
as to whether the audited financial statements should be included in the
Company's Annual Report on Form 10-K);
- Reviewing the audit findings, including any suggestions for improvements,
provided to management by the independent auditors and management's
response to such findings;
- Reviewing with the Company's management and the independent auditors
before release the unaudited quarterly operating results in the Company's
quarterly earnings release;
- Reviewing the procedures of management for the design, implementation and
maintenance for the Company's system of disclosure controls (including
any reports by management relating to such controls and procedures) and
meeting periodically with the Company's management, independent auditors
and legal counsel to review their assessment of such disclosure controls
and procedures;
- If necessary, instituting special investigations with full access to all
books, records, facilities and personnel of the Company;
- Engaging, as appropriate, outside legal, accounting or other advisors to
advise or assist the Audit Committee;
- Reviewing and approving in advance any proposed related-party
transactions;
- Reviewing the Audit Committee charter annually;
- Providing a report in the Company's proxy statement in accordance with
the rules and regulations of the SEC; and
- Establishing the procedures for receiving, retaining and treating
complaints received from the Company's employees regarding accounting,
internal accounting controls or auditing matters and the confidential,
anonymous submission by employees of the Company of concerns regarding
questionable accounting or auditing matters.
MEETINGS:
The Audit Committee will meet at least four times each year. The Audit
Committee will meet separately with the Chief Financial Officer of the Company
at such times as are appropriate to review the financial affairs
A-2
of the Company. The Audit Committee will meet separately with the independent
auditors of the Company, at such times as it deems appropriate, to fulfill the
responsibilities of the Audit Committee under this charter.
MINUTES:
The Audit Committee will maintain written minutes of its meetings, which
minutes will be filed with the minutes of the meetings of the Board.
REPORTS:
In addition to preparing the report in the Company's proxy statement in
accordance with the rules and regulations of the SEC, the Audit Committee will
summarize its discussions, reviews and recommendations to the Board as may be
appropriate, consistent with the Committee's charter.
DELEGATION OF AUTHORITY:
The Audit Committee may delegate to one or more designated members of the
Audit Committee the authority to pre-approve audit and permitted non-audit
services, provided such pre-approval decision is presented to the full Audit
Committee at its scheduled meetings.
RESOURCES:
The Audit Committee shall have the resources as determined by the Committee
and authority appropriate to discharge its duties and responsibilities,
including the authority to select, retain, terminate, and approve the fees and
other retention terms of special counsel, accountants or other experts or
consultants and the authority to approve any other ordinary administrative
expenses of the Committee that are necessary or appropriate in carrying out its
duties, as it deems appropriate, without seeking approval of the Board or
management.
A-3
PCTEL, INC.
ANNUAL MEETING OF STOCKHOLDERS
---------------------
TUESDAY, JUNE 7, 2005
10:00 A.M. LOCAL TIME
---------------------
PCTEL, INC.
8725 WEST HIGGINS ROAD
SUITE 400
CHICAGO, ILLINOIS 60631
--------------------------------------------------------------------------------
This proxy is solicited on behalf of the board of directors for use at the
annual meeting of stockholders on June 7, 2005.
The undersigned stockholder of PCTEL, Inc., a Delaware corporation, hereby
acknowledges receipt of the Notice of Annual Meeting of Stockholders and Proxy
Statement, each dated April 25, 2005, and hereby appoints Martin H. Singer and
John W. Schoen, and each of them, proxies and attorneys-in-fact, with full power
to each of substitution, on behalf and in the name of the undersigned, to
represent the undersigned at the 2005 Annual Meeting of Stockholders of PCTEL,
Inc. to be held on June 7, 2005 at 10:00 a.m. local time at our headquarters,
located at 8725 West Higgins Road, Suite 400, Chicago, Illinois 60631, and at
any adjournment or adjournments thereof, and to vote all shares of common stock
which the undersigned would be entitled to vote if then and there personally
present on the matters set forth on the reverse side.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED: FOR ALL NOMINEES TO THE BOARD OF DIRECTORS; FOR THE RATIFICATION OF
PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM; AND AS THE PROXY HOLDER MAY DETERMINE IN HIS DISCRETION WITH
REGARD TO ANY OTHER MATTER PROPERLY BROUGHT BEFORE THE MEETING.
PLEASE VOTE BY TELEPHONE OR THE INTERNET OR MARK, SIGN, DATE
AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
See reverse for voting instructions.
COMPANY #
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THERE ARE THREE WAYS TO VOTE YOUR PROXY.
Your telephone or Internet vote authorizes the named proxies to vote your shares
in the same manner as if you marked, signed and returned your proxy card.
VOTE BY PHONE -- TOLL FREE -- 1-800-560-1965 -- QUICK***EASY***IMMEDIATE
o Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days
a week, until 12:00 noon (CT) on June 6, 2005.
o Please have your proxy card and the last four digits of your Social
Security Number or Tax Identification Number available. Follow the
simple instructions the voice provides you.
VOTE BY INTERNET -- HTTP://WWW.EPROXY.COM/PCTI/ -- QUICK***EASY***IMMEDIATE
o Use the Internet to vote your proxy 24 hours a day, 7 days a week,
until 12:00 noon (CT) on June 6, 2005.
o Please have your proxy card and the last four digits of your Social
Security Number or Tax Identification Number available. Follow the
simple instructions to obtain your records and create an electronic
ballot.
VOTE BY MAIL
o Mark, sign and date your proxy card and return it in the postage-paid
envelope we've provided or return it to PCTEL, Inc., c/o Shareowner
Services, P.O. Box 64873, St. Paul, MN 55164-9397.
IF YOU VOTE BY PHONE OR THE INTERNET, PLEASE DO NOT MAIL YOUR PROXY CARD.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE FOLLOWING PROPOSALS:
1. Election of Class III 01 Richard D. 02 Giacomo 03 Martin H. [ ] Vote FOR all [ ] Vote WITHHELD
directors to serve until Gitlin Marini Singer nominees (except as from all nominees
2008 marked)
(Instructions: To withhold authority to vote for any indicated nominees write ------------------------------------------------
the number(s) of the nominee(s) in the box provided to the right.)
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2. Ratification of the appointment of PricewaterhouseCoopers LLP as the independent [ ] FOR [ ] AGAINST [ ] ABSTAIN
registered public accounting firm of PCTEL, Inc. for the fiscal year ending
December 31, 2005
IN THEIR DISCRETION, the proxyholders are authorized to vote upon such
other business as may properly come before the meeting or any adjournments or
postponement thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED OR, IF NO
DIRECTION IS GIVEN, WILL BE VOTED FOR ALL PROPOSALS.
I plan to attend the annual meeting [ ]
Address Change?
Mark Box [ ] Indicate changes below:
Date
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Signature(s) in Box
Please sign exactly as name appears hereon. When
shares are held by joint tenants, both should
sign. When signing as attorney, executor,
administrator, trustee or guardian, please give
title as such. If a corporation, please sign in
full corporate name by president or other
authorized officer. If a partnership, please
sign in partnership name by authorized person.