UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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Soliciting Material Pursuant to §240.14a-12
TRANSMETA CORPORATION
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TRANSMETA
CORPORATION
2540
Mission College Boulevard
Santa Clara, California 95054
August 25, 2008
To our stockholders:
You are cordially invited to attend the 2008 Annual Meeting of
Stockholders of Transmeta Corporation to be held at the Hilton
Santa Clara located at 4949 Great America Parkway,
Santa Clara, California 95054, on Thursday,
September 18, 2008 at 8:00 a.m., Pacific Daylight Time.
The matters expected to be acted upon at the meeting are:
(i) the election of three Class II directors to our
Board of Directors, and (ii) the ratification of Burr,
Pilger & Mayer LLP as our independent registered
public accounting firm for the fiscal year ending
December 31, 2008. Each of these proposals is described in
detail in the accompanying Notice of the 2008 Annual Meeting of
Stockholders and Proxy Statement.
Please use this opportunity to take part in Transmetas
affairs by voting on the business to come before the meeting.
Whether or not you plan to attend the meeting in person,
please vote as soon as possible. You may vote via the Internet,
by telephone or by mailing a completed proxy card in the
enclosed postage-paid envelope, in each case before the meeting
so that your shares will be represented at the meeting.
Voting by any of these methods does not deprive you of your
right to attend the meeting and to vote your shares in person.
We hope to see you at the meeting.
Sincerely,
Lester M. Crudele
President and Chief Executive Officer
This Proxy Statement is dated August 25, 2008, and will
first be mailed to the stockholders of Transmeta Corporation on
or about August 25, 2008.
TRANSMETA
CORPORATION
2540 Mission College Boulevard
Santa Clara, California 95054
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
To our stockholders:
The 2008 Annual Meeting of Stockholders of Transmeta Corporation
will be held at the Hilton Santa Clara located at 4949
Great America Parkway, Santa Clara, California 95054, on
Thursday, September 18, 2008 at 8:00 a.m., Pacific
Daylight Time.
At the meeting, you will be asked to consider and vote upon the
following matters:
1. To elect three Class II directors, each for a term
of three years and until his successor has been elected and
qualified or until his earlier resignation, death or removal. At
the meeting, our Board of Directors intends to present the
following nominees for election as Class II directors:
Robert V. Dickinson
Bryant R. Riley
T. Peter Thomas
2. To ratify the selection of Burr, Pilger &
Mayer LLP as our independent registered public accounting firm
for the fiscal year 2008.
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
attached proxy statement. Only stockholders of record at the
close of business on August 19, 2008 are entitled to notice
of, and to vote at, the meeting or any adjournment or
postponement of the meeting. A list of such stockholders will be
available for inspection at our offices located at 2540 Mission
College Boulevard, Santa Clara, California 95054, during
ordinary business hours for the
10-day
period preceding the meeting.
By Order of our Board of Directors
John OHara Horsley
Secretary
Santa Clara, California
August 25, 2008
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE
COMPLETE, DATE, SIGN AND PROMPTLY RETURN THE ACCOMPANYING PROXY
CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE PRIOR TO THE MEETING
SO THAT YOUR SHARES WILL BE REPRESENTED AT THE MEETING. ANY
STOCKHOLDER ATTENDING THE MEETING MAY VOTE IN PERSON EVEN IF HE,
SHE OR IT PREVIOUSLY RETURNED A PROXY. PLEASE NOTE, HOWEVER,
THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR
OTHER NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST
BRING TO THE MEETING A LETTER FROM THE BROKER, BANK OR OTHER
NOMINEE, CONFIRMING YOUR BENEFICIAL OWNERSHIP OF THE
SHARES TO BE VOTED.
TABLE OF CONTENTS
TRANSMETA
CORPORATION
2540
Mission College Boulevard
Santa Clara, California 95054
PROXY
STATEMENT
The accompanying proxy is solicited on behalf of the Board of
Directors of Transmeta Corporation, a Delaware corporation, for
use at the 2008 Annual Meeting of Stockholders to be held at the
Hilton Santa Clara located at 4949 Great America Parkway,
Santa Clara, California 95054, on Thursday,
September 18, 2008, at 8:00 a.m., Pacific Daylight
Time. This proxy statement and the accompanying form of proxy
will be first mailed to stockholders on or about August 25,
2008. Our annual report for fiscal year 2007 is enclosed with
this proxy statement.
In accordance with rules and regulations recently adopted by the
U.S. Securities and Exchange Commission (the
SEC), we have elected to provide access to our proxy
materials to our stockholders by providing access to such
documents on the Internet. In addition, a Notice of Internet
Availability of Proxy Materials (the Notice) will be
mailed to most of our stockholders holding their shares in
street name on or about August 25, 2008.
Stockholders will have the ability to access the proxy materials
on a website referred to in the Notice or request that a printed
set of the proxy materials be sent to them, by following the
instructions in the Notice.
Record
Date
Only holders of record of our common stock and preferred stock
at the close of business on August 19, 2008 (the
record date) will be entitled to vote at the
meeting. At the close of business on the record date, we had
12,166,950 shares of common stock and 1,000,000 shares
of preferred stock outstanding and entitled to vote.
Quorum
A majority of the shares outstanding on the record date, present
in person or represented by proxy, will constitute a quorum for
the transaction of business at the meeting. If stockholders
cause abstentions to be recorded or brokers holding their
clients shares of record cause broker
non-votes (as described below) or abstentions to be
recorded, these shares will be considered present and entitled
to vote at the meeting and will be counted toward determining
whether or not a quorum is present.
Voting
Rights
The holders of our common stock and our preferred stock will
vote together as a single class on each of the proposals
described in this proxy statement. Each share of our common
stock is entitled to one vote. Each share of our preferred stock
is entitled to 0.71347 votes (that number equal to the number of
shares of common stock into which one share of preferred stock
could have been converted on the record date). The inspector of
elections appointed for the meeting will separately tabulate
affirmative and negative votes, abstentions and broker non-votes
(described below) for each proposal.
Brokers who hold shares for the accounts of their clients may
vote such shares either as directed by their clients or, in the
absence of such direction, in their own discretion if permitted
by the stock exchange or other organization of which they are
members. Members of the New York Stock Exchange are permitted to
vote their clients proxies in their own discretion as to
certain routine proposals, such as the proposals to
be voted on at the meeting. If a broker votes shares that are
not voted by its clients for or against a proposal, those shares
are considered present and entitled to vote at the meeting, and
will be counted towards determining whether or not a quorum is
present. Those shares will also be taken into account in
determining the outcome of the proposals to be voted on at the
meeting. Where a proposal is not routine, a broker
who has received no instructions from its clients generally does
not have discretion to vote its clients unvoted shares on
that proposal. When a broker indicates on a proxy that it does
not
have discretionary authority to vote certain shares on a
particular proposal, the missing votes are referred to as
broker non-votes. Those shares would be considered
present for purposes of determining whether or not a quorum is
present, but would not be considered entitled to vote on the
proposal and would not be taken into account in determining the
outcome of the non-routine proposal.
Required
Votes
Proposal One.
Directors are elected by a
plurality of the votes of the shares present in person or
represented by proxy at the meeting and entitled to vote on the
election of directors. This means that the three nominees for
election to our Board of Directors who receive the highest
number of affirmative votes at the meeting will be elected to
fill the open seats.
Proposal Two.
Ratification of Burr,
Pilger & Mayer LLP as our independent registered
public accounting firm for the fiscal year ending
December 31, 2008 requires the affirmative vote of the
majority of shares present in person or represented by proxy at
the meeting.
Voting
Electronically via the Internet
If your shares are registered in the name of a bank or
brokerage, you may be eligible to vote your shares
electronically over the Internet or by telephone. A large number
of banks and brokerage firms are participating in the Broadridge
Investor Communication Services online program, which provides
eligible stockholders who receive a paper copy of the proxy
statement with the opportunity to vote via the Internet or by
telephone. If your bank or brokerage firm is participating in
Broadridges program, your voting form from the bank or
brokerage firm will provide instructions. If your voting form
does not reference Internet or telephone information, please
complete and return the accompanying paper proxy card in the
enclosed self-addressed, postage-paid envelope.
Voting of
Proxies
The proxy card accompanying this Proxy Statement is solicited on
behalf of our Board of Directors for use at our 2008 Annual
Meeting of Stockholders. Stockholders are asked to complete,
date and sign the accompanying proxy card and promptly return it
in the enclosed envelope or otherwise mail it to us. All
executed, returned proxies that are not revoked will be voted in
accordance with the included instructions. Signed proxies that
are returned without instructions as to how they should be voted
on a particular proposal at the meeting will be counted as votes
FOR
such proposal (or, in the case of the
election of directors, as a vote
FOR
election
to our Board of Directors of all of the nominees presented by
our Board of Directors). We are not aware of any other matters
to be brought before the meeting. However, as to any business
that may properly come before the meeting, the proxies that are
executed and returned prior to the meeting will be voted in
accordance with the judgment of the persons holding such proxies.
In the event that sufficient votes in favor of the proposals are
not received by the date of our 2008 Annual Meeting of
Stockholders, the persons named as proxies may propose one or
more adjournments of the meeting to permit further solicitation
of proxies. Any such adjournment would require the affirmative
vote of the majority of the outstanding shares present in person
or represented by proxy at our 2008 Annual Meeting of
Stockholders.
We are paying the expenses of soliciting the proxies to be voted
at our 2008 Annual Meeting of Stockholders. Following the
original mailing of the proxies and other soliciting materials,
we will request that brokers, custodians, nominees and other
record holders of our capital stock forward copies of the proxy
and other soliciting materials to persons for whom they hold
shares of capital stock and request authority for the exercise
of the proxies. In these cases, we may, upon their request,
reimburse such record holders for their reasonable expenses.
Proxies may also be solicited by some of our directors, officers
and regular employees, without additional compensation, in
person or by telephone.
Revocability
of Proxies
A stockholder may revoke a proxy at any time before it is voted.
A proxy may be revoked by signing and returning a proxy with a
later date, by delivering a written notice of revocation to us
stating that the proxy is revoked
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or by attending the meeting and voting in person, although
attendance of the meeting in person will not in and of itself
revoke a valid proxy that was previously delivered. Please note,
however, that if a stockholders shares are held of record
by a broker, bank or other nominee and that stockholder wishes
to vote at the meeting, the stockholder must bring to the
meeting a letter from the broker, bank or other nominee
confirming the stockholders beneficial ownership of the
shares and that the broker, bank or other nominee is not voting
the shares at the meeting.
Internet
and Electronic Availability of Proxy Materials
As permitted by the SEC, we are sending the Notice to most of
our stockholders instead of a paper copy of this Proxy
Statement. All such stockholders will have the ability to access
this Proxy Statement and our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2007 as filed with
the SEC (the Annual Report)
at
http://www.transmeta.com/corporate/ir/annual_reports.html
or to request a printed set of these materials and a proxy
card at no charge by following the instructions set forth in the
Notice. Voting instructions for stockholders receiving the
Notice are set forth in the Notice. All stockholders who do not
receive a Notice will receive a paper copy of the proxy
materials by mail. We believe this process will reduce the
environmental impact and lower the costs of printing and
distributing our proxy materials.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Our Board of Directors currently consists of eight directors
with one vacancy. Effective immediately prior to the 2008 Annual
Meeting of Stockholders, our Board of Directors will be
decreased from eight directors to seven directors upon the
retirement of William P. Tai. Our Board of Directors is divided
into three classes of three directors each with overlapping
three-year terms. A director serves in office until his or her
respective successor is duly elected and qualified or until his
or her earlier resignation, death or removal. Any increase or
diminution in the number of directorships resulting from a
change in the number of directors will be distributed among the
three classes so that, as nearly as possible, each class will
consist of an equal number of directors.
Three Class II directors are to be elected at the meeting
for a three-year term ending in 2011. Our Board of Directors has
nominated, upon the recommendation of the Nomination and
Corporate Governance Committee of our Board of Directors, Robert
V. Dickinson, Bryant R. Riley and T. Peter Thomas for election
as the Class II directors. Messrs. Dickinson and
Thomas are currently members of our Board of Directors and were
previously elected by our stockholders. Mr. Riley was
nominated to our Board of Directors by entities and persons
affiliated with Riley Investment Management, LLC (collectively,
the Riley Group), with whom we have entered into a
settlement agreement and release. Please see the description of
the settlement agreement and release below under the section
entitled Settlement Agreement and Release.
The table and biographies below present information about each
of the nominees recommended by our Board of Directors. Shares
represented by the accompanying proxy will be voted
FOR
the election of the three nominees
recommended by our Board of Directors unless the proxy is marked
to withhold authority to vote. If any nominee for any reason is
unable to serve or for good cause will not serve, the proxies
may be voted for a substitute nominee as the proxy holder may
determine. We are not aware of any nominee who will be unable
to, or for good cause will not, serve as a director.
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Nominees
for Election to our Board of Directors
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Name of Director Nominee
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Age
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Principal Occupation
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Director Since
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Robert V. Dickinson(1)(2)(3)
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66
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President, Chief Executive Officer, and a member of the board of
directors of California Micro Devices Corporation
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2005
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Bryant R. Riley
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41
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Managing Member of Riley Investment Management LLC and Chairman
of B. Riley & Co.
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N/A
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T. Peter Thomas(3)
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61
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Managing Director of ATA Ventures Management LLP and General
Partner of Institutional Venture Management
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1995
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(1)
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Member of the Nominating and Corporate Governance Committee of
the Board of Directors.
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(2)
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Member of the Audit Committee of the Board of Directors.
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(3)
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Member of the Compensation Committee of the Board of Directors.
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Robert V. Dickinson
has served as a director of Transmeta
since May 2005. Mr. Dickinson has served since April 2001
as President, Chief Executive Officer, and a member of the board
of directors of California Micro Devices Corporation, a supplier
of application specific analog semiconductor products for the
mobile handset, personal computer and digital consumer
electronics markets. From August 1999 to April 2001, he was Vice
President and General Manager of the Optical Storage Division of
Cirrus Logic, Inc., a semiconductor manufacturer, where
previously, starting in 1992, he served in several other senior
executive roles, including President of its Japanese subsidiary.
From 1988 to 1992, Mr. Dickinson held senior management
positions at Western Digital Corporation, a semiconductor and
disk drive manufacturer, following its acquisition of Verticom,
Inc., where he served as President and Chief Executive Officer
from 1987 to 1988. Mr. Dickinson holds an A.B. from
University of California at Berkeley and an M.S. from the
University of Washington, both in physics. He was also a Sloan
Fellow at the Stanford Graduate School of Business.
Bryant R. Riley
has been the Managing Member and founder
of Riley Investment Management LLC and founder and Chairman of
B. Riley & Co., LLC, a Southern California-based
brokerage and investment banking firm providing research and
trading ideas primarily to institutional investors since 1997.
Riley Investment Management LLC is an investment adviser, which
provides investment management services, and is the general
partner of Riley Investment Partners Master Fund, L.P. Prior to
1997, Mr. Riley held a variety of positions in the
brokerage industry, primarily as an Institutional Salesman and
Trader. From October 1993-January 1997, he was a co-head of
Equity at Dabney-Resnick, Inc., a Los Angeles based brokerage
firm. From 1991 to 1993, he was a co-founder of
Huberman-Riley,
a Texas based brokerage firm. He also serves on the board of
directors of Alliance Semiconductor, Aldila, Inc., DDi
Corporation, and Silicon Storage Technology, Inc. Mr. Riley
graduated from Lehigh University in 1989 with a B.S. in finance.
T. Peter Thomas
has served as a director of
Transmeta since December 1995. Mr. Thomas has served as
Managing Director of ATA Ventures Management LLP since April
2004 and has been a General Partner of Institutional Venture
Management since November 1985. Prior to being in the venture
capital business, Mr. Thomas spent 14 years in
industry in engineering, marketing, and strategic planning
roles, the most recent at Intel Corporation. Mr. Thomas
also serves on the board of directors of several privately held
companies. Mr. Thomas holds a B.S. in electrical
engineering from Utah State University and an M.S. in computer
science from Santa Clara University.
Our Board of Directors recommends a vote FOR the election of
each of the above director nominees.
4
DIRECTORS
CONTINUING IN OFFICE
The table and biographies below present information about each
director whose term of office continues after the meeting:
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Name of Director
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Age
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Principal Occupation
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Director Since
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R. Hugh Barnes(1)(2)
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62
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Chairman of the Board of Directors of Transmeta.
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1998
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Lester M. Crudele
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59
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President, Chief Executive Officer and Director of Transmeta.
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2005
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Murray A. Goldman(1)
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70
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Independent Technology Consultant.
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1998
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J. Michael Gullard(3)
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63
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General Partner of Cornerstone Management.
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2008
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Rick Timmins(2)
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56
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Retired.
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2003
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(1)
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Member of the Nominating and Corporate Governance Committee of
the Board of Directors.
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(2)
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Member of the Audit Committee of the Board of Directors.
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(3)
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Member of the Compensation Committee of the Board of Directors.
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R. Hugh Barnes
has served as Chairman of the Board
of Directors since May 2007 and as a director of Transmeta since
November 1998. Mr. Barnes also served as President and
Chief Operating Officer of Transmeta from October 2001 to April
2002 and as a business advisor to Transmeta from March 1997 to
November 1998. From April 1984 to January 1997, Mr. Barnes
was employed at Compaq Computer Corporation, a computer
manufacturer, where he held a variety of positions, most
recently as Vice President and Chief Technical Officer.
Mr. Barnes also serves on the boards of directors of
several privately held companies. Mr. Barnes holds a B.S.
in electrical engineering from Iowa State University.
Lester M. Crudele
has served as a director of Transmeta
since June 2005 and was appointed as President and Chief
Executive Officer of Transmeta in February 2007. From February
2006 to June 2006, Mr. Crudele served on an acting basis as
President and Chief Operating Officer of Quickfilter
Technologies, Inc., a privately held fabless semiconductor
company and developer of mixed signal integrated circuits. From
November 2000 to May 2004, Mr. Crudele served on the board
of directors of Banderacom, a privately held InfiniBand
semiconductor company, for which he also served as President and
Chief Executive Officer from November 2000 to October 2002. From
December 1999 to November 2000, Mr. Crudele served on the
board of directors and as a management consultant for Quantum
Effect Devices, or QED, a developer of high-performance embedded
microprocessors, until QED was acquired by PMC-Sierra in 2000.
From 1997 to 1999, Mr. Crudele was employed by Compaq
Computer Corporation, a computer manufacturer, where he served
as vice president and general manager of Compaqs
Workstation Products Division. Mr. Crudele began his career
in 1972 at Motorola, Inc., a provider of integrated
communications solutions and embedded electronic solutions,
where he later served as chief architect for several Motorola MC
68000-series microprocessors and also served in a variety of
management positions, most recently returning to Motorola in
1990 and serving as Vice President and General Manager of its
RISC Microprocessor Division from 1991 to 1997. Mr. Crudele
holds a B.S. in electrical engineering from Florida Atlantic
University.
Murray A. Goldman
has served as a director of Transmeta
since November 1998, as Chairman of our Board of Directors from
November 1998 to May 2007 and as Chief Executive Officer from
October 2001 to April 2002. Dr. Goldman served as a
business advisor to Transmeta from March 1997 to November 1998.
From July 1969 to January 1997, Dr. Goldman was employed at
Motorola, a provider of integrated communications solutions and
embedded electronic solutions, where he held a variety of
positions, most recently as Executive Vice President and
Assistant General Manager of the Semiconductor Products Sector.
Dr. Goldman holds a B.S. in electrical engineering from the
University of Pittsburgh and an M.S. and a Ph.D. in electrical
engineering from New York University.
J. Michael Gullard
has served as a director of
Transmeta since July 2008. Since 1984, Mr. Gullard has
served as a general partner of Cornerstone Management, a venture
capital and consulting firm that provides strategic focus and
direction for technology companies, primarily in the software
and data communications industries. From 1992 to 2004, he served
as Chairman of NetSolve, Incorporated, a provider of IT
infrastructure management services on an outsourced basis. From
1996 to 2004, Mr. Gullard also served as Chairman of Merant
PLC (formerly Micro Focus Group Ltd.), a provider of change
management software tools. Earlier in his career,
Mr. Gullard held several
5
executive and management positions at Telecommunications
Technology Inc. and Intel Corporation. He also serves on the
board of directors of Alliance Semiconductor, DynTek, Inc., JDA
Software Group, Inc., Proxim Wireless, Inc. and Planar Systems,
Inc. Mr. Gullard holds a B.A. degree in economics from
Stanford University and an M.B.A. degree from the Stanford
Graduate School of Business.
Rick Timmins
has served as a director of Transmeta since
May 2003. From January 1996 until his retirement in April 2007,
Mr. Timmins was employed at Cisco Systems, Inc., a computer
networking products company, where he held a series of financial
management positions, most recently as Vice President of
Finance. From January 1974 until December 1995, Mr. Timmins
was employed at Motorola, a provider of integrated
communications solutions and embedded electronic solutions,
where he held a series of financial management positions, most
recently as Vice President and Controller of the Microprocessor,
Memory and Microcontroller Group. Mr. Timmins also serves
on the board of directors of Ultratech Stepper, Inc., a
developer and manufacturer of photolithography equipment used in
the fabrication of semiconductor and nanotechnology components.
He holds a B.S. in Accounting and Finance from the University of
Arizona and an M.B.A. from St. Edwards University in
Austin, Texas. Mr. Timmins is a certified public accountant.
DIRECTOR
RETIRING FROM OFFICE
In August 2008, William P. Tai, a member of our Board of
Directors since December 1995, informed us that he plans to
retire from the Board of Directors effective as of the 2008
Annual Meeting of Stockholders. Mr. Tai informed us that
his pending retirement is not due to any disagreement with the
Company or its policies, and that he will complete his service
on the Board of Directors and as a member of its Compensation
Committee and its Nominating and Corporate Governance Committee
to and until the Companys 2008 Annual Meeting of
Stockholders.
DIRECTOR
INDEPENDENCE
The Nominating and Corporate Governance Committee of our Board
of Directors has determined that each of Messrs. Barnes,
Dickinson, Goldman, Gullard, Tai, Thomas and Timmins, each a
non-employee director of Transmeta, is independent under the
rules of the NASDAQ Stock Market. Mr. Crudele is no longer
independent based upon his appointment in February 2007 to serve
as our President and Chief Executive Officer. In making its
independence determinations, the Nominating and Corporate
Governance Committee each year reviews any transactions and
relationships between the director, or any member of his or her
immediate family, and is based on information provided by the
director, our records and publicly available information during
the year. Specifically, the Nominating and Corporate Governance
Committee will consider the following types of relationships and
transactions: (i) principal employment of and other public
company directorships held by each non-employee director;
(ii) contracts or arrangements that are ongoing or which
existed during any of the past three fiscal years between us and
any entity for which the non-employee director, or his or her
immediate family member, is an executive officer or
greater-than-10% stockholder; and (iii) contracts or
arrangements that are ongoing or which existed during any of the
past three fiscal years between us and any other public company
for which the non-employee director serves as a director. During
2007, there were no relationships or transactions in these
categories reviewed by the Nominating and Corporate Governance
Committee, nor were there any other similar relationships or
transactions that the Nominating and Corporate Governance
Committee considered.
BOARD OF
DIRECTORS MEETINGS AND COMMITTEES
During 2007, our Board of Directors met 14 times, including
telephone conference meetings, and acted by unanimous written
consent one time. Each of our directors attended more than 75%
of the total number of meetings held by our Board of Directors
while he was a director. Further, each of our directors attended
more than 75% of the total number of meetings held by all
committees of our Board of Directors on which that director
served, with the exception of Rick Timmins, who attended four of
six meetings (including more than 75% of the regular meetings)
of the Audit Committee during 2007. The independent members of
our Board of Directors meet on a regular basis in executive
session outside of the presence of management.
6
Standing committees of our Board of Directors include an Audit
Committee, a Compensation Committee and a Nominating and
Corporate Governance Committee.
The Audit Committee monitors the periodic reviews and audits of
the adequacy of the accounting and financial reporting processes
and systems of internal control that are conducted by our
independent registered public accounting firm and our financial
and senior management, appoints and reviews, and evaluates the
independence and performance of, our independent registered
public accounting firm, and facilitates communication among our
independent registered public accounting firm and our financial
and senior management. The current members of the Audit
Committee are Messrs. Barnes, Dickinson and Timmins, who is
the committee chair. Our Board of Directors has determined that
each member of the Audit Committee is independent within the
meaning of the rules of the SEC and The NASDAQ Stock Market, and
is able to read and understand fundamental financial statements
as contemplated by such rules. Mr. Timmins is the
designated Audit Committee financial expert within the meaning
of the rules and regulations of the SEC and is financially
sophisticated within the meaning of the rules of The NASDAQ
Stock Market. Mr. Timmins is also considered
independent as the term is used in
Item 7(d)(3)(iv) of Schedule 14A under the Securities
Exchange Act of 1934, as amended (the Exchange Act).
The Audit Committee met six times during 2007. A copy of the
Audit Committees charter is posted on our company website
at
http://www.transmeta.com/corporate/ir/corp_governance.html
.
The Compensation Committee reviews and approves, on behalf of
our Board of Directors, all compensation to be provided to our
Chief Executive Officer and other executive officers, reviews
and proposes to our Board of Directors compensation to be
provided to members of our Board of Directors and its committees
and administers our incentive compensation plans and
equity-based compensation awards. Since January 2007, the
members of our Compensation Committee have included
Messrs. Dickinson, Tai and Thomas, who served as the
committee chair. Mr. Gullard was appointed to our
Compensation Committee in July 2008. In August 2008,
Mr. Tai informed us that he will retire as a member of the
Compensation Committee immediately prior to our 2008 Annual
Meeting of Stockholders. Mr. Crudele served on the Compensation
Committee as the committee chair until January 2007, when he was
appointed as our President and Chief Executive Officer, at which
time Messrs. Dickinson and Thomas were appointed as members of
the Compensation Committee and Mr. Thomas was appointed was
appointed as the committee chair. Each of
Messrs. Dickinson, Gullard, Tai and Thomas is an
independent director as defined by The NASDAQ Stock Market, a
non-employee director within the meaning of Section 16 of
the Exchange Act, and an outside director within the
meaning of Section 162(m) of the Internal Revenue Code.
Although our Chief Executive Officer, Chief Financial Officer
and General Counsel attend portions of some of the meetings of
the Compensation Committee, they do not participate in
deliberations that relate to their own compensation. The
Compensation Committee met seven times and acted by unanimous
written consent one time during 2007. A copy of the Compensation
Committees charter is posted on our company website at
http://www.transmeta.com/corporate/ir/corp_governance.html
.
The Nominating and Corporate Governance Committee recommends for
nomination by our Board of Directors candidates for membership
on our Board of Directors, recommends our corporate governance
guidelines, oversees the evaluation of our Board of Directors
and board committees, and advises our Board of Directors on
corporate governance matters. The current members of the
Nominating and Corporate Governance Committee are
Messrs. Barnes, Dickinson and Tai and Dr. Goldman, who
is the committee chair. Mr. Tai has informed us that he
will retire as a member of the Nominating and Corporate
Governance Committee immediately prior to our 2008 Annual
Meeting of Stockholders. Our Board of Directors has determined
that each of Dr. Goldman and Messrs. Barnes, Dickinson
and Tai is independent within the meaning of the rules of The
NASDAQ Stock Market. The Nominating and Corporate Governance
Committee met one time during 2007. A copy of the Nominating and
Corporate Governance Committees charter is posted on our
company website at
http://www.transmeta.com/corporate/ir/corp_governance.html
.
DIRECTOR
COMPENSATION
Our directors are reimbursed for their reasonable expenses
associated with their attendance at meetings of our Board of
Directors. In addition, each non-employee director is paid cash
compensation as follows:
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an annual retainer of $50,000 for his or her services as a
director;
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7
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an annual retainer of $5,000 for his or her service on either of
the Audit Committee or Compensation Committee;
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an annual retainer of $5,000 if he or she is the chairperson of
either of the Audit Committee or Compensation Committee; and
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an annual retainer of $5,000 if he or she serves as the lead
non-employee director of our Board of Directors.
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In 2007 and for the first half of 2008, each of our non-employee
directors received a cash retainer payment in accordance with
the schedule described above, except that the annual retainer
payment for service as a director was increased from $20,000 to
$50,000 effective July 1, 2008, as more fully described
below. In 2007, the Compensation Committee approved a revised
schedule providing for the payment of those annual retainers to
our non-employee directors on a regular quarterly basis.
Previously, the retainer payments were made annually following
the annual meeting of stockholders.
Members of our Board of Directors are also eligible to
participate in our 2000 Equity Incentive Plan. Our 2000 Equity
Incentive Plan permits discretionary option grants, and provides
for automatic and non-discretionary option grants, to
non-employee directors. In addition, under our 2000 Equity
Incentive Plan, each non-employee director who becomes a member
of our Board of Directors will be granted an automatic option to
purchase 1,500 shares of our common stock, plus a
discretionary option to purchase 8,500 shares of our common
stock, as of the date that such director joins our Board of
Directors. Immediately after each annual meeting of our
stockholders, each non-employee director will be granted an
additional automatic option to purchase 750 shares of our
common stock, plus a discretionary option to purchase
1,750 shares of our common stock, as long as the
non-employee director is a member of our Board of Directors on
that date and has served continuously as a member of our Board
of Directors for at least 12 months since the last option
grant to that non-employee director. If less than 12 months
has passed, then the aggregate number of shares subject to those
options granted after the annual meeting will be equal to 2,500
multiplied by a fraction, the numerator of which is the number
of days that have elapsed since the last option grant to that
director and the denominator of which is 365 days. The
exercise price will be 100% of the fair market value of our
common stock on the date of grant. Each option will have a
ten-year term and will terminate three months after the date the
director ceases to be a director or consultant or 12 months
if the termination is due to death or disability. All options
granted to non-employee directors will vest over three years at
a rate of one-third of the total shares subject to the option on
the first anniversary of the date of grant, and 2.78% of the
total shares subject to the option each month thereafter, so
long as the non-employee director remains a director or
consultant to us. In the event of our dissolution, liquidation
or a change in control transaction, options granted to our
non-employee directors under the 2000 equity incentive plan will
vest and be exercisable in full.
The following table provides information about the total
compensation earned by Transmetas non-employee directors
in 2007:
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Change in
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Pension
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Value and
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Fees
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Nonqualified
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Earned
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Non-Equity
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Deferred
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or Paid
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Stock
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Option
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Incentive Plan
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Compensation
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All Other
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in Cash
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Awards
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Awards
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Compensation
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Earnings
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Compensation
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Total
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Name
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($)
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($)
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($)(1)(2)
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($)
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($)
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($)
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($)
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R. Hugh Barnes
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27,500
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50,929
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(3)
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78,429
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Robert V. Dickinson
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30,000
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60,493
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(4)
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90,493
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Murray A. Goldman
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22,500
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50,929
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(5)
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73,429
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William P. Tai
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25,000
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50,656
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(6)
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75,656
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T. Peter Thomas
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27,500
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50,656
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(7)
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78,156
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Rick Timmins
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30,000
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57,359
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(8)
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87,359
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(1)
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This column represents the dollar amounts recognized for
financial statement reporting purposes in accordance with
SFAS 123(R) in fiscal years 2007 and 2006 in connection
with stock options granted in those years and in prior fiscal
years. Pursuant to SEC rules, the amounts shown exclude the
impact of estimated forfeitures related
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8
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to service-based vesting conditions. For information on the
valuation assumptions, refer to Note 2 of the Notes to the
Consolidated Financial Statements our Annual Report on
Form 10-K
for the year ended December 31, 2007, as filed with the
SEC. For information on the valuation assumptions with respect
to grants made prior to 2007, refer to the note on Other
Stock-Related Information for the Annual Reports on
Form 10-K
for the respective year-end. See the 2007 Grants of Plan-Based
Awards table for information on options granted in 2007. These
amounts reflect our accounting expense disregarding the estimate
of forfeitures and do not correspond to the actual value that
may be realized by members of our Board of Directors.
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(2)
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On August 1, 2007, each director received a grant of
2,500 shares with a grant date fair value of $18,311,
computed in accordance with SFAS 123(R).
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(3)
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At December 31, 2007, Mr. Barnes held outstanding
options to purchase an aggregate of 25,500 shares of our
common stock.
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(4)
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At December 31, 2007, Mr. Dickinson held outstanding
options to purchase an aggregate of 16,301 shares of our
common stock.
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(5)
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At December 31, 2007, Dr. Goldman held outstanding
options to purchase an aggregate of 25,500 shares of our
common stock.
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(6)
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At December 31, 2007, Mr. Tai held outstanding options
to purchase an aggregate of 15,500 shares of our common
stock.
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(7)
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At December 31, 2007, Mr. Thomas held outstanding
options to purchase an aggregate of 17,000 shares of our
common stock.
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(8)
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At December 31, 2007, Mr. Timmins held outstanding
options to purchase an aggregate of 18,250 shares of our
common stock.
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Upon his election to our Board of Directors in July 2008,
Mr. Gullard received a stock option to purchase
10,000 shares of our common stock under our 2000 Equity
Incentive Plan with an exercise price of $13.11, the market
closing price on the date of grant. The Compensation Committee
also recommended in July 2008, and our Board of Directors
ratified and approved in August 2008, a payment to J. Michael
Gullard of a $35,000 cash bonus in consideration of
Mr. Gullards joining our Board of Directors as a
non-employee director upon his election effective July 15,
2008.
In July 2008, the Compensation Committee evaluated the
compensation plan for our non-employee directors for their
service on our Board of Directors and its committees. After
considering the general demands of public company board service,
specific demands of service on our Board of Directors and its
various committees, compensation amounts and trends among peer
companies, company performance, and other factors, the
Compensation Committee recommended in July 2008, and our that
the Board of Directors ratified and approved in August 2008, an
increase in the amount of the annual service retainer payable to
non-employee members of the Board of Directors from $20,000 to
$50,000, effective as of the quarter beginning July 1, 2008.
CONSIDERATION
OF DIRECTOR NOMINEES
Our Nominating and Corporate Governance Committee identifies,
considers and recommends for nomination by our Board of
Directors candidates for membership on our Board of Directors.
The committee generally identifies nominees based upon
recommendations by our directors and management. In addition,
our Nominating and Corporate Governance Committee also considers
recommendations properly submitted by our stockholders. The
committee may retain recruiting professionals to assist in the
identification and evaluation of candidates for director
nominees. To date, we have not paid any third parties to assist
us in this process.
In selecting nominees for our Board of Directors, the Nominating
and Corporate Governance Committee considers candidates based on
the need to satisfy the applicable rules and regulations of the
SEC and the rules of The NASDAQ Stock Market, including the
requirements for independent directors and an Audit Committee
financial expert. Our Nominating and Corporate Governance
Committee also evaluates candidates in accordance with its
charter, assessing a number of factors, including the extent to
which the candidate contributes to the range of talent, skill
and expertise appropriate for our Board of Directors generally,
and the candidates integrity, business acumen,
understanding of our companys business and industry,
diversity, availability, the number of other boards on which
9
the candidate serves, independence of thought, and overall
ability to represent the interests of all stockholders of our
company. The Nominating and Corporate Governance Committee uses
the same standards to evaluate nominees proposed by our
directors, management and stockholders.
Stockholders can recommend qualified candidates for our Board of
Directors by writing to our corporate secretary at Transmeta
Corporation, 2540 Mission College Boulevard, Santa Clara,
California 95054. When making recommendations, a stockholder
should submit recommendations for individuals that meet at least
the criteria outlined above. Such recommendations should be
accompanied by the information required by our bylaws and
Regulation 14A under the Exchange Act, which includes
evidence of the nominating stockholders ownership of
Transmeta capital stock, biographical information regarding the
candidate, and the candidates written consent to serve as
a director if elected. We require that any such recommendations
for inclusion in our proxy materials for our 2009 Annual Meeting
of Stockholders be made no later than April 27, 2009 to
ensure adequate time for meaningful consideration by the
committee. The date by which any such recommendations must be
submitted to us may be earlier if our 2009 Annual Meeting of
Stockholders is held before August 19, 2009, in which case
recommendations must be submitted to us a reasonable time before
we begin to print and mail the proxy materials for our 2009
Annual Meeting of Stockholders. In any case, properly submitted
recommendations will be forwarded to our Nominating and
Corporate Governance Committee for review and consideration. The
committee may consider in the future whether we should adopt a
more formal policy regarding stockholder nominations.
On May 15, 2008, Riley Investment Partners Master Fund,
L.P. delivered to us a letter (the Nomination
Letter) regarding the nomination of directors for election
to our Board of Directors at the meeting and concurrently filed
a Schedule 14A with the SEC announcing its intent to
solicit proxies for the election of its own opposition slate of
nominees for election to our Board of Directors at the meeting.
In connection with the settlement agreement and release we
entered into with the Riley Group in July 2008, we agreed, among
other things, to nominate Mr. Riley for election to our
Board of Directors at the meeting and the Riley Group agreed to
withdraw the Nomination Letter and terminate its opposition
proxy solicitation.
After evaluating Messrs. Dickinson, Riley and Thomas, our
Nominating and Corporate Governance Committee recommended to our
Board of Directors in accordance with its charter, and our Board
of Directors approved, the nomination of these current directors
for election to our Board of Directors at the meeting.
SETTLEMENT
AGREEMENT AND RELEASE
In July 2008, we entered into a settlement agreement and release
with the Riley Group. Pursuant to the settlement agreement and
release, we agreed to increase the authorized size of our Board
of Directors from seven to nine and to elect Mr. Gullard to
our Board of Directors as a Class I director and appoint
him to the Compensation Committee. We also agreed to include
Mr. Riley in this proxy statement as a nominee for election
to our Board of Directors as a Class II director. The Riley
Group agreed to withdraw the Nomination Letter, terminate its
opposition proxy solicitation and vote in favor of our Board of
Directors slate of nominees for election to our Board of
Directors at the meeting and at all future annual meetings of
our stockholders for so long as Mr. Riley is a member of
our Board of Directors;
provided
that the Riley Group is
not otherwise specifically instructed by its client(s) to vote
in another manner. The Riley Group also agreed to vote in favor
of each proposal submitted by our Board of Directors at all
further annual meetings of our stockholders for so long as
Mr. Riley is a member of our Board of Directors;
provided
that Mr. Riley has voted in favor of such
proposal as a member of our Board of Directors and the Riley
Group is not otherwise specifically instructed by its client(s)
to vote in another manner. In addition, the Riley Group has
agreed to abide by certain standstill provisions, including an
agreement not to acquire an aggregate beneficial ownership
position of more than 13% of our outstanding common stock, until
the earlier of the date of our 2010 annual meeting of
stockholders or September 20, 2010.
As contemplated by the settlement agreement and release, we and
the Riley Group filed a joint stipulation to dismiss with
prejudice the shareholder derivative action filed by Riley
Investment Management, LLC against our directors and officers
and entered into a mutual release of claims. Pursuant to the
stipulation, the court ordered that the shareholder derivative
action filed by Riley Investment Management, LLC be dismissed
with prejudice, with each party bearing its own costs and
attorneys fees incurred in the action.
10
STOCKHOLDER
COMMUNICATION WITH OUR BOARD OF DIRECTORS
Our stockholders may communicate with our Board of Directors or
any of our individual directors by submitting correspondence by
mail to our corporate secretary at Transmeta Corporation, 2540
Mission College Boulevard, Santa Clara, California 95054.
Our corporate secretary or his or her designee will review such
correspondence and provide such correspondence or summaries
thereof, as appropriate, to our Board of Directors. The Chair of
the audit committee of our Board of Directors, and our corporate
secretary or his or her designee, will handle correspondence
relating to accounting, internal controls or auditing matters in
accordance with our Policy Regarding Accounting Complaints and
Concerns, which policy is available on our company website at
http://www.transmeta.com/corporate/ir/corp_governance.html
.
Please note that information on our website is not incorporated
by reference in this proxy statement. Our Nominating and
Corporate Governance Committee will periodically review our
process for stockholders to communicate with our Board of
Directors to ensure effective communications.
BOARD
ATTENDANCE AT ANNUAL MEETINGS
We encourage the members of our Board of Directors to attend our
annual meetings of stockholders. We do not have a formal policy
regarding attendance of annual meetings by the members of our
Board of Directors. We may consider in the future whether we
should adopt a more formal policy regarding director attendance
at annual meetings. In 2007, five of the seven members of our
Board of Directors at that time attended our annual meeting of
stockholders.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table presents information about the beneficial
ownership of each class of our capital stock as of July 31,
2008 by:
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Each person or entity known by us to be the beneficial owner of
more than 5% of our common stock;
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Each director and director nominee;
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Each named executive officer; and
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All directors and executive officers as a group.
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The percentage of beneficial ownership of each class of our
capital stock for the table is based on 12,166,025 shares
of our common stock outstanding as of July 31, 2008. To our
knowledge, except under community property laws or as otherwise
noted, the persons and entities named in the table have sole
voting and sole investment power over their shares of our
capital stock. Unless otherwise indicated, each entity or person
listed below maintains a mailing address of
c/o Transmeta
Corporation, 2540 Mission College Boulevard, Santa Clara,
California 95054.
Beneficial ownership is determined under the rules of the SEC
and does not necessarily indicate beneficial ownership for any
other purpose. Under these rules, beneficial ownership includes
those shares of our capital stock over which the stockholder has
sole or shared voting or investment power. It also includes
shares of our capital stock that the stockholder has the right
to acquire within 60 days after July 31, 2008, through
the exercise of any option or warrant. However, the percentage
ownership of the capital stock is based on the assumption, as
required by the rules
11
of the SEC, that only the person or entity whose ownership is
being reported has converted options or warrants into shares of
our capital stock.
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Percentage of Class Beneficially
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Number of Shares Beneficially Owned (#)
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Owned (%)(1)
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Total Common
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Options
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Stock and Options
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Series B
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Common Stock and
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Series B
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Common
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Exercisable in
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Exercisable in
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Preferred
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Options Exercisable in
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Preferred
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Stock
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60 Days
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60 Days
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Stock
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60 Days
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Stock
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5% Stockholders:
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Advanced Micro Devices, Inc.(2)
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713,470
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713,470
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1,000,000
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5.54
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%
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100.00
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%
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One AMD Place, Sunnyvale, CA 94088
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Entities affiliated with Riley Investment Management LLC(3)
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1,474,998
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1,474,998
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12.12
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%
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11100 Santa Monica Blvd., Suite 810
Los Angeles, CA 90025
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Officers, Directors and Director Nominees:
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Bryant R. Riley(3)
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1,474,998
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1,474,998
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12.12
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%
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T. Peter Thomas(4)
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583,415
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14,625
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598,040
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4.91
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%
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William P. Tai(5)
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184,631
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13,125
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197,756
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1.62
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%
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Lester M. Crudele
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132,358
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132,358
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1.08
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%
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John OHara Horsley
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176
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128,555
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128,731
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|
|
|
|
|
1.05
|
%
|
|
|
|
|
Murray A. Goldman
|
|
|
34,000
|
|
|
|
23,125
|
|
|
|
57,125
|
|
|
|
|
|
|
|
|
*
|
|
|
|
|
Sujan Jain
|
|
|
|
|
|
|
44,010
|
|
|
|
44,010
|
|
|
|
|
|
|
|
|
*
|
|
|
|
|
R. Hugh Barnes
|
|
|
7,566
|
|
|
|
23,125
|
|
|
|
30,691
|
|
|
|
|
|
|
|
|
*
|
|
|
|
|
Rick Timmins
|
|
|
|
|
|
|
15,875
|
|
|
|
15,875
|
|
|
|
|
|
|
|
|
*
|
|
|
|
|
Robert V. Dickinson
|
|
|
|
|
|
|
13,993
|
|
|
|
13,993
|
|
|
|
|
|
|
|
|
*
|
|
|
|
|
J. Michael Gullard
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
|
|
|
Dan Hillman
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
|
|
|
David R. Ditzel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
|
|
|
Art Swift
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
|
|
|
Ralph Harms
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
|
|
|
Robert Bismuth
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
|
|
|
All current directors, director nominees and executive offices
as a group (12 persons)
|
|
|
2,284,786
|
|
|
|
408,791
|
|
|
|
2,693,577
|
|
|
|
|
|
|
|
21.42
|
%
|
|
|
|
|
|
|
|
*
|
|
Less than 1% ownership.
|
|
(1)
|
|
Percentage of shares beneficially owned is based on
12,166,025 shares of common stock and 1,000,000 shares
of Series B Preferred Stock outstanding as of July 31, 2008.
|
|
(2)
|
|
As reported on Schedule 13G filed on July 13, 2007.
The 1,000,000 shares of Series B Preferred Stock owned
by Advanced Micro Devices, Inc. are convertible, at any time at
the option of Advanced Micro Devices, Inc., into
713,470 shares of common stock.
|
|
(3)
|
|
As reported on Schedule 13D/A filed on July 15, 2008.
Because Riley Investment Management LLC has sole voting and
investment power over security holdings of Riley Investment
Partners Master Fund, L.P.s and certain managed accounts
of its investment advisory clients and Mr. Riley, in his
role as the sole manager of Riley Investment Management LLC,
controls its voting and investment decisions, each of Riley
Investment Partners Master Fund, L.P., Riley Investment
Management LLC, and Mr. Riley may be deemed to have
beneficial ownership of the 639,674 shares of common stock
held by Riley Investment Partners Master Fund, L.P. and
132,829 shares held in managed accounts by its investment
advisory clients. Riley Investment Management LLC has shared
voting and dispositive power over 618,495 shares of common
stock held in accounts of its investment advisory clients,
500,861 of which are held in accounts indirectly affiliated with
Mr. Riley or Riley Investment Partners Master Fund, L.P.
Includes 5,000 shares held by the B. Riley & Co.
Retirement Trust, of which Mr. Riley is the trustee.
Includes 29,000 shares held by B. Riley & Co.,
LLC over which Mr. Riley has sole voting and dispositive
power. B. Riley & Co., LLC has shared voting and
dispositive power over 50,000 shares of common stock held
by managed accounts, with which it is indirectly affiliated.
|
12
|
|
|
|
|
Mr. Riley is the Chairman and sole indirect equity owner of
B. Riley & Co., LLC. The address of the entities
affiliated with Riley Investment Management Fund LLC is
11100 Santa Monica Boulevard, Suite 810, Los Angeles,
CA 90025. Includes 117,634 shares held by an investment
advisory account of Riley Investment Management LLC, with
respect to which beneficial ownership is disclaimed.
|
|
(4)
|
|
Includes 7,581 shares held by Mr. Thomas that he may
be deemed to own beneficially. Also includes 8,194 shares
held by Institutional Venture Management VI, L.P,
378,485 shares held by Institutional Venture Partners VI,
L.P. and 24,155 shares held by IVP Founders Fund I,
L.P. T. Peter Thomas and seven other individuals are general
partners of Institutional Venture Management VI, L.P., which is
a general partner of each of Institutional Venture Partners VI,
L.P. and IVP Founders Fund I, L.P. Also includes
1,333 shares held by Institutional Venture Management VII,
L.P. and 64,667 shares held by Institutional Venture
Partners VII, L.P. T. Peter Thomas, William P. Tai and
eight other individuals are general partners of Institutional
Venture Management VII, L.P., which is a general partner of
Institutional Venture Partners VII, L.P. Also includes
97,500 shares held by Institutional Venture Partners VIII,
L.P., 1,050 shares held by IVM Investment Fund VIII,
LLC and 450 shares held by IVM Investment
Fund VIII-A,
LLC. T. Peter Thomas, William P. Tai and nine other individuals
are general partners of Institutional Venture Management VIII,
L.P., which is a general partner of Institutional Venture
Partners VIII, L.P., IVM Investment Fund VIII, LLC and IVM
Investment
Fund VIII-A,
LLC. Each general partner disclaims beneficial ownership of the
shares held by these funds except to the extent of his or her
pecuniary interest in these shares. The address of Institutional
Venture Partners is 3000 Sand Hill Road, Building Two,
Suite 290, Menlo Park, California 94025.
|
|
(5)
|
|
Includes 19,496 shares held by Mr. Tai. Also includes
165,000 shares held by entities affiliated with
Institutional Venture Partners, as to which Mr. Tai shares
voting and dispositive power. The address of Institutional
Venture Partners is 3000 Sand Hill Road, Building Two,
Suite 290, Menlo Park, California 94025. Also includes
135 shares held of record by Steven Kay and Augustus Owen
Tai, as trustee for the Beauchamp Tai Irrevocable
Childrens Trust dated October 1, 2000.
|
EQUITY
COMPENSATION PLAN INFORMATION
Securities
Authorized for Issuance under Equity Compensation
Plans
The following table sets forth certain information, as of
December 31, 2007, concerning securities authorized for
issuance under all our equity compensation plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
|
|
|
|
|
|
Remaining Available
|
|
|
|
|
|
|
Weighted-Average
|
|
|
for Future Issuance
|
|
|
|
Number of Securities
|
|
|
Exercise Price
|
|
|
Under Equity
|
|
|
|
to be Issued Upon
|
|
|
of Outstanding
|
|
|
Compensation Plans
|
|
|
|
Exercise of Outstanding
|
|
|
Options and
|
|
|
(Excluding Securities
|
|
|
|
Options and Rights
|
|
|
Rights
|
|
|
Reflected in Column (a)
|
|
|
|
(#)
|
|
|
($)
|
|
|
(#)
|
|
Plan Category
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
Equity compensation plans approved by security holders
|
|
|
1,892,868
|
|
|
|
19.02
|
|
|
|
2,045,055
|
(1)
|
Equity compensation plans not approved by security holders
|
|
|
4,500
|
(2)
|
|
|
190.00
|
|
|
|
205,363
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,897,368
|
|
|
|
19.42
|
|
|
|
2,250,418
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Includes 2,030,264 shares available for issuance under our
2000 Equity Incentive Plan, all of which may be issued as stock
options, restricted stock or stock bonuses, and
14,791 shares available for issuance under our 2000
Employee Stock Purchase Plan.
|
|
(2)
|
|
Includes options to purchase 4,500 shares outstanding as of
December 31, 2007 that were issued by us under non-plan
options granted in 2000.
|
13
Transmeta
Non-Plan Option Grants
Options granted to two individuals outside of any equity
compensation plan adopted by us remained outstanding as of
December 31, 2007 (Non-Plan Options). All of
the Non-Plan Options were granted in 2000 and prior to our
initial public offering in November 2000. The Non-Plan Options
include (i) a Non-Plan Option held by T. Peter Thomas, a
member of our Board of Directors, to purchase up to
1,500 shares of our common stock at an exercise price of
$190 per share, and (ii) Non-Plan Options held by a retired
former member of our Board of Directors to purchase an aggregate
of 3,000 shares of our common stock at a weighted average
exercise price of $190 per share. Such Non-Plan Option grants
were made pursuant to the terms of a
form Non-Plan
Stock Option Agreement, with each such grant authorized by our
Board of Directors or the Compensation Committee of our Board of
Directors. The Non-Plan Option grants have not been approved by
our stockholders.
All of the Non-Plan Options are non-qualified stock options and
were issued with an exercise price equal to 100% of the fair
market value of the corresponding shares of common stock on the
date of such grant. Each of the Non-Plan Options held was fully
vested as of December 31, 2007 and has a ten-year term
expiring in 2010 on the anniversary its date of grant. The
Non-Plan Options grant agreement provides for the payment of the
exercise price by any of the following means: (1) in cash
(by check); (2) by cancellation of indebtedness of
Transmeta to the participant; (3) at the discretion of our
Board of Directors, by surrender of shares of our common stock;
(4) at the discretion of our Board of Directors, by tender
of a full recourse promissory note; (5) by waiver of
compensation due or accrued to the participant for services
rendered; (6) through a same day sale
commitment from the participant and a broker-dealer that is a
member of the National Association of Securities Dealers (an
NASD Dealer); or (7) through a
margin commitment from the participant and an NASD
Dealer; or (8) by any combination of the foregoing.
In the event of a merger, consolidation, dissolution or
liquidation of Transmeta, the sale of substantially all of our
assets or any other similar corporate transaction, the successor
corporation may assume or substitute for the Non-Plan Options.
In the event such successor corporation refuses to assume,
replace or substitute the Non-Plan Option, as provided above,
then the Non-Plan Option will expire on such transaction at such
time and on such conditions as our Board of Directors will
determine.
EXECUTIVE
OFFICERS
The following table presents the names, offices, and positions
of each of our executive officers, as of August 25, 2008:
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Position
|
|
Lester M. Crudele
|
|
|
59
|
|
|
President, Chief Executive Officer and Director
|
Daniel L. Hillman
|
|
|
61
|
|
|
Vice President of Engineering
|
John OHara Horsley
|
|
|
47
|
|
|
Executive Vice President, General Counsel
and Secretary
|
Sujan Jain
|
|
|
36
|
|
|
Executive Vice President and Chief Financial Officer
|
Lester M. Crudele
was appointed as our President and
Chief Executive Officer in February 2007 and has served as a
director of Transmeta since June 2005. From February 2006 to
June 2006, Mr. Crudele served on an acting basis as
President and Chief Operating Officer of Quickfilter
Technologies, Inc., a privately held fabless semiconductor
company and developer of mixed signal integrated circuits. From
November 2000 to May 2004, Mr. Crudele served on the board
of directors of Banderacom, a privately held InfiniBand
semiconductor company, for which he also served as President and
Chief Executive Officer from November 2000 to October 2002. From
December 1999 to November 2000, Mr. Crudele served on the
board of directors and as a management consultant for Quantum
Effect Devices, or QED, a developer of high-performance embedded
microprocessors, until QED was acquired by
PMC-Sierra
in 2000. From 1997 to 1999, Mr. Crudele was employed by
Compaq Computer Corporation, a computer manufacturer, where he
served as vice president and general manager of Compaqs
Workstation Products Division. Mr. Crudele began his career
in 1972 at Motorola, Inc., a provider of integrated
communications solutions and embedded electronic solutions,
where he later served as chief architect for several Motorola MC
68000-series microprocessors and also served in a variety of
management positions, most recently returning to Motorola in
1990
14
and serving as Vice President and General Manager of its RISC
Microprocessor Division from 1991 to 1997. Mr. Crudele
holds a B.S. in electrical engineering from Florida Atlantic
University.
Daniel L. Hillman
joined Transmeta in December 2007 as
our Vice President of Engineering. Mr. Hillman served as
Vice President of Engineering for MOSAID Technology, a licensor
of semiconductor intellectual property, from October 2005 to
April 2007. Mr. Hillman joined MOSAID as a result of
MOSAIDs acquisition of Virtual Silicon Technology, a
privately held supplier of semiconductor intellectual property,
where Mr. Hillman served as Vice President of Engineering
from February 2003 through its acquisition by MOSAID in October
2005. Before joining Virtual Silicon, Mr. Hillman served
from April 2002 to December 2002 as Vice President of
Engineering for inSilicon, a provider of communications
semiconductor intellectual property, which was acquired by
Synopsys in 2002. Mr. Hillman has also held various
engineering management positions at Apple Computer, Synopsys and
Nazomi Communications. Mr. Hillman holds a B.S. in
electrical engineering from Purdue University.
John OHara Horsley
has served as our General
Counsel since joining Transmeta in July 2000, as Secretary since
May 2002, and as Executive Vice President since October 2005. In
addition, Mr. Horsley served as our Chief Financial Officer
on an interim basis from June 2004 to September 2004. From
November 1997 to July 2000, Mr. Horsley served at the
Federal Trade Commission in appointed positions within the
Bureau of Competition, most recently as Chief Counsel for
Intellectual Property and Technology Matters. From October 1988
to October 1997, Mr. Horsley practiced law as an associate
and partner with Pillsbury Madison & Sutro, where he
specialized in litigation and strategic counseling in
intellectual property, antitrust and securities law matters.
Mr. Horsley holds a B.A. in Philosophy and a B.A. in
English from the University of Utah and a J.D. from the
University of California at Berkeley.
Sujan Jain
joined Transmeta in August 2007 as our Chief
Financial Officer and was appointed an Executive Vice President
in April 2008. Mr. Jain worked from April 2004 to August
2007 at NanoAmp Solutions, Inc., a privately held provider of
low-power memory solutions for the wireless and medical markets,
where he most recently served as Chief Financial Officer and
Secretary. From May 2002 to April 2004, Mr. Jain served as
Chief Financial Officer of PhotonWorx, a privately held optical
technology company. Before joining PhotonWorx, Mr. Jain
held investment banking and operating roles at Lazard,
J.P. Morgan Chase and Schlumberger. In addition,
Mr. Jain has been an advisor to several publicly and
privately held high-tech companies and has been an
Entrepreneur-in-Residence at SRI International, previously
Stanford Research Institute. Mr. Jain holds the
U.S. equivalent of a B.S. degree in electronics and
computer engineering from Delhi Institute of Technology in India
and an M.B.A. degree in finance and management of organization
from Columbia University. He is also a certified public
accountant.
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
Administration
of Executive Compensation Program
The Compensation Committee of our Board of Directors makes
decisions regarding executive compensation and stock option
grants to executives. The Compensation Committee determines base
salary levels and target bonuses for our executive officers. The
Compensation Committee also supervises the administration of our
equity compensation plans. The Compensation Committee approves
all grants of stock options to executive officers, directors and
each grant to other employees and consultants that exceeds
15,000 shares. The Compensation Committee has delegated to
our Chief Executive Officer authority to approve any stock
option grant to purchase up to 15,000 shares to employees
and consultants who are not executive officers or members of our
Board of Directors, subject to certain stock administration and
other internal controls. Prior to December 11, 2007, our
Chief Executive Officer had the authority to approve any stock
option grant to purchase up to 3,750 shares to employees
and consultants who are not executive officers or members of our
Board of Directors. The Compensation Committee considered the
effect of our
one-for-20
reverse stock split in 2007 in increasing the authority of the
Chief Executive Officer to grant stock options.
15
Since January 2007, the members of our Compensation Committee
have included Messrs. Dickinson, Tai and Thomas, who is the
committee chair. Mr. Gullard was appointed to the
Compensation Committee in July 2008. In August 2008,
Mr. Tai informed us that he will retire as a member of the
Compensation Committee immediately prior to our 2008 Annual
Meeting of Stockholders. Mr. Crudele served on the
Compensation Committee as the committee chair until January
2007, when he was appointed as our President and Chief Executive
Officer, at which time Messrs. Dickinson and Thomas were
appointed as members of the Compensation Committee and
Mr. Thomas was appointed the committee chair. Each of
Messrs. Dickinson, Gullard, Tai and Thomas is an
independent director as defined by the NASDAQ Stock Market, a
non-employee director within the meaning of Section 16 of
the Exchange Act, and an outside director within the
meaning of Section 162(m) of the Internal Revenue Code.
Although our Chief Executive Officer, Chief Financial Officer
and General Counsel attend portions of some of the meetings of
the Compensation Committee, they do not participate in
deliberations that relate to their own compensation.
General
Compensation Policy
In general, the Compensation Committee follows a pay for
performance philosophy to compensate executive officers.
The committees compensation philosophy for executive
officers is to relate compensation directly to corporate
performance, while providing a total compensation package that
is competitive relative to companies of similar size and
complexity within the industry and enables us to attract,
motivate, reward and retain key executives and employees. Our
compensation policy, which applies to executive officers and our
other key employees, relates a portion of each individuals
total compensation to corporate objectives. Consistent with this
policy, a designated portion of the compensation of our
executive officers is contingent on achievement of corporate
objectives that are approved by the Compensation Committee
during each of the two semi-annual performance periods. Each
executive officers compensation package may, in one or
more years, be comprised of the following three elements:
|
|
|
|
|
Base salary that is designed primarily to be competitive with
base salary levels in effect at high technology companies
(Peer Group) that are of comparable size to us and
with which we compete for talent. For 2007, the Peer Group
included Advanced Analogic Technologies, Inc., American
Superconductor Corporation, Atheros Communications, Inc.,
California Micro Devices Corp., Cascade Microtech, Inc.,
Catapult Communications Corp., FARO Technologies, Inc.,
Integrated Silicon Solution, Inc., Microtune, Inc., MIPS
Technologies, Inc., Monolithic Power Systems, Inc., Nanometrics,
Inc., Optical Communications Products, Inc.,
Pericom Semiconductor Corp., PLX Technology, Inc., Rudolph
Technologies, Inc., Sigma Designs, Inc., Supertex, Inc., Tessera
Technologies, Inc., TranSwitch Corp., Virage Logic Corp.,
Volterra Semiconductor Corporation and Zygo Corp.
|
|
|
|
Variable performance awards tied to the achievement of corporate
objectives that are approved by the Compensation Committee
during each of the two semi-annual performance periods; and
|
|
|
|
Long-term equity incentives to strengthen the mutuality of
interests between our executive officers and our stockholders.
|
The Compensation Committee determines the appropriate level for
each compensation component based in part, but not exclusively,
on competitive benchmarking consistent with our recruiting and
retention goals, our view of internal equity and consistency,
overall company performance and other considerations it deems
relevant. In furtherance of this, the Compensation Committee
reviews in-depth analysis conducted by management and external
consultants. During 2007, the Compensation Committee engaged
Radford Surveys + Consulting (Radford), an Aon
Consulting Company, which is a human resources consulting firm,
to assist the Compensation Committee in reviewing the
compensation program for our executive officers. Radford does
not perform any other services for us. Radford utilizes publicly
available information from the companies in our Peer Group and
executive compensation surveys including the Radford Executive
Compensation Report, which is prepared by Radford, to assist the
Compensation Committee in assessing the competitiveness and
appropriateness of our compensation programs. The Compensation
Committee set specific criteria for determining market rates by
examining business of similar scope and complexity defined as
other high-tech and semiconductor companies with an average
$80 million in revenue. This reflected the current business
model for the Company at the time of the analysis. The
Compensation Committee reviews the information described above
together with our Chief Executive Officer for each executive
16
level position, but solely within the Compensation Committee
with respect to the Chief Executive Officers total
compensation. In addition, the Compensation Committee reviews
each executive officers performance for the last year and
objectives for the upcoming year, together with the executive
officers responsibility level and our fiscal performance,
as compared to the objectives for the last year and our
performance targets for the upcoming year.
The Compensation Committees current intent is to perform
at least annually a strategic review of our executive
officers compensation levels to determine whether they
provide adequate incentives and motivation to our executive
officers and whether they adequately compensate our executive
officers relative to comparable officers in other companies with
which we compete for executives. The Compensation Committee
reviews all forms of pay provided to our executive team
including base pay levels, incentive plan design and target
incentive as a percent of salary, equity grant levels including
the Black-Scholes value of grants in addition to grants as a
percent of company, and total dilution under the equity plan as
measured by gross and net burn rate and equity grants
outstanding. On behalf of the Compensation Committee, management
provides the independent consultant pay information for each
executive and access to our current plans, but management does
not participate in the assessment process. The Compensation
Committee and Chief Executive Officer review Radfords
findings and recommendations in support of the pay decisions
taken by the Compensation Committee. The committee also examines
the retention value of the equity plan by examining current
vested and unvested value for the executives and other key
contributors as part of a total value review of the plan.
Together with the base salary, total cash and equity
compensation, the committee is provided a total direct
compensation review to ensure all of the plans are considered
when determining the appropriateness of pay levels for the named
executive officers.
Accounting
and Tax Considerations
We account for equity compensation paid to our employees under
the rules of SFAS No. 123(R), which requires us to
estimate and record an expense over the service period of the
award. Accounting rules also require us to record cash
compensation as an expense at the time the obligation is
accrued. We structure cash bonus compensation so that it is
taxable to our executives at the time it becomes available to
them. With respect to equity compensation awards, while any gain
recognized by employees from nonqualified options should be
deductible, to the extent that an option constitutes an
incentive stock option gain recognized by the optionee, such
gain will not be deductible if there is no disqualifying
disposition by the optionee. In addition, if we grant restricted
stock or restricted stock unit awards that are not subject to
performance vesting, they may not be fully deductible by us at
the time the award is otherwise taxable to the employee.
Under Section 162(m) of the Internal Revenue Code, a
limitation was placed on tax deductions of any publicly-held
corporation for individual compensation to certain executives of
such corporation exceeding $1,000,000 in any taxable year,
unless the compensation is performance-based. Stock option
grants made under our 2000 Equity Incentive Plan currently do
not meet the requirements for performance-based grants as
defined in Section 162(m) of the Internal Revenue Code, so
they are subject to the $1,000,000 deduction limitation. In
addition, variable performance awards under our management
incentive plan and cash bonuses earned in 2007 do not qualify as
performance-based compensation for purposes of the Internal
Revenue Code Section 162(m). None of our executives were
paid non-performance based compensation in 2007 in excess of the
Internal Revenue Code Section 162(m) tax deduction
limitation.
Base
Salary
Salaries for executive officers for fiscal 2007 were generally
determined on an individual basis by evaluating each
executives scope of responsibility, performance, prior
experience and salary history, as well as the salaries for
similar positions at companies in our Peer Group.
To attract and retain talented officers, the Compensation
Committee generally sets executive officers salaries at a
level that is at or near the 50th percentile of salaries of
executives with similar roles at comparable companies. In
instances where an executive officer is uniquely key to our
success, the Compensation Committee may provide compensation in
excess of this percentile. The Committee established a
50
th
percentile
pay level as a way to manage cash burn as well as to minimize
the fixed compensation aspect of the plan. The Committee
believes this allows for a greater focus on the Companys
pay for performance philosophy by managing fixed expenses to be
below or just at
17
market. During 2007, however, as part of our cash management
strategy, the Compensation Committee set the base salaries of
new executive officers below the 50th percentile of
salaries of executives with similar roles at comparable peer
companies and did not adjust the salaries of
Messrs. Crudele and Horsley during the Compensation
Committees annual review in June 2007.
As such, in August 2007 and December 2007, in connection with
the appointments of Sujan Jain as our Chief Financial Officer
and Daniel L. Hillman to the position of Vice President of
Engineering, respectively, we entered into employment offer
letters with them that provided them with starting annual base
salaries of $225,000 and $205,000, respectively, which the
Compensation Committee believed, based on market data, were the
minimum cash compensation levels that would allow us to attract
talented individuals such as Messrs. Jain and Hillman to
these key positions with the Company.
Incentive
Compensation
Our named executive officers are eligible to participate in the
management incentive plan. In general, we award cash bonuses to
our executive officers based upon the extent to which we achieve
semi-annual corporate performance objectives, as determined by
the Compensation Committee in its discretion, based on the
overall operating plan that is approved by the Board. In making
the semi-annual determination of these corporate performance
objectives, the Compensation Committee generally considers the
specific circumstances facing us, our expectations regarding
company performance during the coming year and our strategic
plan. The Compensation Committee also determines the targets and
actual bonus payments. The current cash bonus incentive target
for executive officers is 50% of the individuals base
compensation, or, in the case of the Chief Executive Officer,
75% of his base compensation. Performance is measured at the end
of each semi-annual period. These target incentive opportunities
are reviewed as part of the executive compensation review and
were deemed by the Compensation Committee to be in line with
industry practice and consistent with a pay for performance
philosophy placing
cash-at-risk
tied to the achievement of specific corporate objectives.
In 2007, the Compensation Committee approved our corporate
performance objectives and related bonuses on a semi-annual
basis in accordance with the management incentive plan. Our
corporate performance objectives for 2007 included the
definition and implementation of a major corporate restructuring
plan, completion of our obligations under our major commercial
agreements with third parties including Sony and Microsoft,
attraction of new capital investment sufficient to continue our
restructured operations as a going concern, satisfaction of all
requirements for the continued listing of our common stock on
the Nasdaq Global Market, control of our expenses consistent
with our restructuring plan, enforcement of our patent rights in
litigation against Intel Corporation (Intel),
achievement of technology development milestones, and strategic
marketing goals and plans for developing new markets and our
customer base.
Based upon managements achievement of corporate
performance objectives in 2007, the Compensation Committee
approved management incentive bonuses for each eligible
executive officer at 77% and 90% of the incentive bonus target
for the first and second halves of 2007, respectively. In
approving those incentive bonuses, the Compensation Committee
considered, among other things, managements progress in
implementing our restructuring plan, completing our obligations
under our major contracts, attracting new investment sufficient
to continue our restructured operations as a going concern,
satisfying requirements for the continued listing of our common
stock on the Nasdaq Global Market, controlling expenses
consistent with our restructuring plan, resolving successfully
our patent litigation with Intel, achieving certain technology
development milestones, and defining goals and plans for market
and customer development.
To facilitate retention, payment of half, and in the case of our
Chief Executive Officer, all, of the bonus earned in the first
half of fiscal year 2007 was withheld until after the end of the
fiscal year and was paid with the bonus earned in the second
half of the year.
We have historically not paid any automatic or guaranteed
bonuses to our executive officers. However, we have from time to
time paid signing or retention bonuses in connection with our
initial hiring or appointment of an executive officer, or a
change in a persons position and responsibilities with us.
For example, in connection with the appointment of
Mr. Crudele as Chief Executive Officer, we paid him a
one-time, lump-sum cash bonus of $162,500.
18
Incentive
Retention Agreement with John Horsley
In May 2006, the Compensation Committee of the Board of
Directors began considering potential variable compensation
arrangements to reward extraordinary achievements and to retain
and incentivize key executives. As part of its process, the
Compensation Committee obtained the advice and services of
Radford, which was engaged by the Compensation Committee in
October 2006 to, among other things, provide the Compensation
Committee with data and information regarding incentive plans
utilized by other companies, benchmarking executive
compensation, and employee incentive compensation. Between May
2006 and February 2007, the Compensation Committee discussed
potential terms for an incentive retention agreement with
Mr. Horsley at seven separate meetings. Mr. Horsley
was not present during any of these discussions. The
Compensation Committee evaluated possible arrangements designed
to retain Mr. Horsley and provide appropriate incentives in
connection with his management and successful resolution of our
litigation against Intel, especially in light of
Mr. Horsleys deep personal and institutional
knowledge of the facts and strategies underlying our claims, his
substantial professional expertise in litigating complex patent
and intellectual property claims, his prior experience in
litigating and resolving claims adverse to Intel, and his
indispensible role in the litigation. The Compensation Committee
determined that an arrangement providing Mr. Horsley with a
potential incentive bonus contingent upon our actual recovery in
the Intel litigation would meet these objectives, ensuring that
his interests were fully aligned with those of the Company. The
Compensation Committee, consulting with Radford on the structure
of comparable incentive arrangements and data on incentive plans
utilized by other companies in order to provide an incentive for
key employees to remain with such companies and oversee the
successful completion of corporate transactions, analyzed
various approaches and considered the amount of contingent fees
typically paid to outside counsel in similar litigation. The
Compensation Committee analyzed data under various scenarios,
including a straight percentage on potential amounts recovered
and a percentage based on net recovery after expenses, modeled
the payouts under each against a range of potential settlement
values (including the possibility of no recovery by us), as well
as the compensation arrangements that would be required to
replace Mr. Horsley if he were to leave the Company, and
concluded that the incentive arrangement ultimately entered into
with Mr. Horsley best met our objectives and served our
interests. The Compensation Committee also considered the
retention value of Mr. Horsleys equity holdings and
the fact that 100% of the outstanding equity was materially
underwater, creating retention concerns for the Company. The
Compensation Committee decided to take the expenses incurred in
the lawsuit into account in determining the final bonus amount
in order to provide incentives to both maximize our recovery and
control our litigation costs. Following negotiations between us
and our outside legal counsel, on the one hand, and
Mr. Horsley and his separate legal counsel, on the other
hand, and after review and approval of the agreement by the
Compensation Committee, we entered into the incentive retention
agreement with Mr. Horsley on February 27, 2007.
Under the incentive retention agreement, we agreed to pay
Mr. Horsley a bonus equal to one quarter of the excess, if
any, of 25% of the present value of all net cash payments to be
made to us as a direct result of the lawsuit with Intel minus
the sum of all expenses incurred and ultimately paid by us in
connection with that lawsuit, subject to further reduction to
reflect the annual payments, if any, made to him during the
pendency of the lawsuit, as described below. In addition, during
the pendency of the lawsuit, we agreed to pay Mr. Horsley,
contingent on his continued employment with us through the date
of such payment, $250,000 at the end of each fiscal year
(commencing with fiscal year 2007) as an advance payment
creditable toward the incentive bonus. These annual payments
were intended to be the fundamental element of
Mr. Horsleys annual target bonus compensation during
the pendency of the lawsuit, although he was also eligible to
continue to participate in our regular management incentive
bonus program, in the discretion of the Compensation Committee
and consistent with our applicable compensation policies, based
upon his other management contributions to the Company. Based on
the settlement agreement with Intel entered into on
December 31, 2007 and the expenses we incurred in the
litigation, the amount of Mr. Horsleys cash bonus
under the incentive retention agreement was $12,480,723.
Bonuses
to Lester Crudele and Sujan Jain
On December 15, 2007, the Compensation Committee approved
cash bonuses to Messrs. Crudele and Jain in the amounts of
$1,000,000 and $200,000, respectively, in connection with our
litigation settlement and licensing agreement with Intel. These
bonuses to Messrs. Crudele and Jain were first discussed by
our Board of Directors at a
19
meeting held on October 30, 2007, and were discussed by the
Compensation Committee at a meeting on December 15, 2007.
Neither Mr. Crudele nor Mr. Jain was present during
any of these discussions. The Compensation Committee determined
that the bonus to Mr. Crudele was appropriate to reward him
for his contributions to the resolution of the Intel litigation,
including his role in helping to set and pursue case strategy,
his participation in mediation and settlement negotiations, his
role managing the Company during a time of uncertainty, and his
successful efforts to close our securities offering in September
2007 (which, by providing needed working capital, improved our
financial position and practical ability to achieve a successful
resolution of our litigation with Intel). The Compensation
Committee determined that the bonus to Mr. Jain was
appropriate to reward him for his contributions to the
resolution of the Intel litigation, including his role in
managing the Company during a time of uncertainty, his
successful efforts to close our securities offering in September
2007 (which, as noted above, improved our financial position and
practical ability to achieve a successful resolution of the
litigation), and his analysis toward maximizing our financial
benefits under our definitive settlement agreement with Intel.
Stock
Options
Stock options are an essential element of our executive
compensation philosophy and package. The Compensation Committee
believes that equity-based compensation in the form of stock
options links the interests of management and stockholders by
focusing employees and management on increasing stockholder
value. The actual value of the equity-based compensation depends
entirely on appreciation of our common stock. Stock options have
value for the executive only if the price of our common stock
increases above the fair market value on the grant date and the
executive remains in our employ for the period required for the
options or shares to vest. Substantially all of our full-time
employees are granted employee stock options.
The number of shares subject to each stock option granted to an
executive officer is within the discretion of the Compensation
Committee and is based on, among other things, anticipated
future contribution and ability to impact corporate results or
on consistency within the executives peer group. In
determining the amount of equity granted to named executive
officers, the Compensation Committee reviews the number of
shares and the grant date fair value of equity grants within the
competitive market and as reported in third party industry
survey data as outlined above. The Compensation Committee also
takes into account company objectives, external competitive
circumstances and existing equity held by executives, in
addition to each named executive officers performance and
contribution during the fiscal year. The stock options are
granted at a price that is equal to 100% of the fair market
value of our common stock on the date of grant. The stock
options typically vest over a four-year period, although from
time to time we have granted options with vesting schedules of
three years or less, as we did in 2005 and 2007. The
Compensation Committee may also grant additional stock options
to executives in connection with a significant change in
responsibilities, to achieve equity within a peer group or for
other reasons. In determining whether to grant additional stock
options to an executive officer, the Compensation Committee
takes into account the number of unvested options held by the
executive officer. In the discretion of the Compensation
Committee, executive officers may also be granted stock options
to provide greater incentives to continue their employment with
us and to strive to increase the value of our common stock. The
Compensation Committee approved guidelines and the size of the
equity pool to be used for new hires, performance and promotion
grants annually proving management with guidance to administer
the plan within these limits.
In connection with Mr. Crudeles initial hiring and
appointment as our President and Chief Executive Officer in
February 2007, we agreed to grant him three stock options, each
exercisable to purchase 50,000 shares of our common stock,
at an exercise price of $13.40, $11.00 and $12.02 respectively,
which were the market closing prices on the respective grant
dates of these stock options on March 1, 2007,
August 1, 2007 and November 9, 2007 respectively.
These stock options will vest over a period of three years, with
one-third of the total shares vesting on the one-year
anniversary of Mr. Crudeles employment start date and
approximately 1/36th of the shares each month thereafter.
In connection with his initial hiring and appointment as our
Chief Financial Officer in August 2007, Mr. Jain was
granted an option to purchase 37,500 shares of our common
stock. This option has an exercise price of $10.04 per share,
which was the market closing price on the date of grant, and
vests as to 25% of the shares on the one-year anniversary of
Mr. Jains employment start date and as to
1/48th of the shares each month thereafter.
20
In connection with his initial hiring and appointment as our
Vice President of Engineering in December 2007, Mr. Hillman
was granted an option to purchase 125,000 shares of our
common stock. This option has an exercise price of $13.36 per
share, which was the market closing price on the date of grant,
and vests as to 25% of the shares on the one-year anniversary of
Mr. Hillmans employment start date and as to
1/48th of the shares each month thereafter.
In December 2007, we granted stock options to purchase
150,000 shares, 125,000 shares and 150,000 shares
of our common stock to Messrs. Crudele, Jain and Horsley,
respectively. Each of these options has an exercise price of
$13.36 per share, which was the market closing price on the date
of grant, and vests as to 25% of the shares on August 22,
2008 and as to 1/48th of the shares each month thereafter.
In February 2008, we approved a grant to Mr. Crudele of a
stock option to purchase 175,000 shares of our common
stock. This option was granted on May 12, 2008, which was
the second full trading day following the widespread public
release by us of our first quarter 2008 financial results, and
has an exercise price of $14.41 per share, which was the market
closing price on the date of grant. This option will vest over
four years, with the first 25% of the total option shares
vesting on February 6, 2009 and 1/48th of the shares
vesting each month thereafter.
In connection with the termination of the employment of Arthur
L. Swift, our former President and Chief Executive Officer, in
January 2007 and his entering into a consulting agreement with
us, his options ceased vesting but remained exercisable until
the termination of his consulting engagement with us. These
options expired unexercised on December 31, 2007.
In connection with the termination of the employment of David R.
Ditzel, our former Chief Technology Officer, in March 2007 and
his entering into a consulting agreement with us, his options
ceased vesting but remained exercisable until the termination of
his consulting engagement with us. These options expired
unexercised on May 15, 2008.
In connection with the termination of the employment of Robert
Bismuth, our former Vice President of Strategic Alliances in
June 2007 and his entering into a consulting agreement with us,
his options ceased vesting but remained exercisable until the
termination of his consulting engagement with us. These options
expired unexercised on March 31, 2008.
21
Potential
Payments on Severance and Change of Control
Payments
In 2003, our Board of Directors adopted a retention and
severance plan, which, as amended in 2004, provides severance
benefits to our various executives in the event of our change of
control. Under that plan, if the employment of a person in a
position with our company referred to in the chart below is
terminated not for cause, or that person resigns for
good reason, within 12 months following our
change of control, then (1) that person will be paid a lump
sum cash severance payment as described in the chart below and
(2) the vesting of that persons options and
restricted stock will accelerate as described in the chart below.
|
|
|
|
|
Position/Category
|
|
Lump Sum Cash Severance
|
|
Option and Restricted Stock Vesting
|
|
Chief Executive Officer
|
|
2 years base salary and 200% of target annual bonus for the
year of termination of employment
|
|
full acceleration of vesting
|
Category 1 Person
(as designated by our Board of Directors)
|
|
1
1
/
2
years
base salary and 112.5% of target annual bonus for the year of
termination of employment
|
|
2 years of additional vesting
|
Category 2 Person
(as designated by our Board of Directors)
|
|
1 year base salary and 50% of target annual bonus for the
year of termination of employment
|
|
1 year of additional vesting
|
Category 3 Person
(as designated by our Board of Directors)
|
|
6 months base salary and 25% of target annual bonus for the
year of termination of employment
|
|
1 year of additional vesting
|
For purposes of the retention and severance plan,
cause means: (1) a good faith determination by
our Board of Directors or our Chief Executive Officer that the
person in question willfully failed to follow the lawful written
directions of our Board of Directors or Chief Executive Officer,
(2) engagement in gross misconduct which is materially
detrimental to us, (3) willful and repeated failure or
refusal to comply in any material respect to the proprietary
information, inventions assignment and confidentiality
agreement, or any other of our policies applicable to the person
in question where non-compliance would be materially detrimental
to us, or (4) conviction of, or plea of guilty to, a felony
that our Board of Directors or Chief Executive Officer
reasonably believes would reflect adversely on us. For purposes
of the retention and severance plan, good reason
includes: (1) a significant diminution in the nature or
scope of the authority, title, function or duties of the person
in question from that persons authority, title, function
or duties in effect immediately preceding the change of control,
(2) a reduction in the persons base salary or target
annual bonus or commission opportunity in effect immediately
preceding the change of control, (3) a requirement that the
person be based at any office or location more than fifty miles
from the office where the person was employed immediately
preceding the change of control, or (4) any material breach
by us of the terms of the persons employment offer letter
or agreement with us, or of the retention and severance plan.
Upon Mr. Crudeles appointment as our Chief Executive
Officer, he became eligible to participate in the retention and
severance plan as the Chief Executive Officer. In addition, we
agreed to pay him the equivalent one year of his base salary and
100% of his target annual bonus and to accelerate the vesting of
his stock options such that they collectively will be
exercisable for 50,000 shares in the event that he was
terminated by us without cause prior to the one-year anniversary
of his employment start date and he signs a release. The
aforementioned one-year guarantee as described in the preceding
sentence is no longer in effect as a result of Mr. Crudele
reaching his one-year anniversary as our Chief Executive Officer
on January 31, 2008.
Each of Messrs. Jain, Horsley and Hillman participates in
our executive retention and severance plan as a Category
1 Person. In addition, we agreed to pay Mr. Jain the
equivalent of six months of his base salary in the event that he
is terminated by us without cause prior to the one-year
anniversary of his employment start date and he signs a release.
The aforementioned one-year guarantee as described in the
preceding sentence is no longer in effect as a result of
Mr. Jain reaching his one-year anniversary on
August 19, 2008.
22
Prior to the termination of their employment with us,
Mr. Swift participated in the retention and severance plan
as the Chief Executive Officer and each of Messrs. Ditzel,
Harms and Bismuth participated in the retention and severance
plan as a Category 1 Person.
If a change of control and termination of employment had
occurred as of December 31, 2007, we estimate that the
value of the benefits to our named executive officers under the
retention and severance plan and other severance arrangements
described above would have been as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance Not in Connection
|
|
Severance Following
|
|
|
with a Change of Control
|
|
Change in Control
|
|
|
Lump Sum
|
|
|
|
Lump Sum
|
|
|
|
|
Cash
|
|
Accelerated Vesting
|
|
Cash
|
|
Accelerated Vesting
|
|
|
Severance
|
|
of Options
|
|
Severance
|
|
of Options
|
Name and Position
|
|
($)(1)
|
|
($)(2)
|
|
($)(3)
|
|
($)(2)
|
|
Lester M. Crudele
President and Chief Executive Officer
|
|
|
568,750
|
(4)
|
|
|
76,000
|
(6)
|
|
|
1,137,500
|
(7)
|
|
|
273,000
|
(9)
|
Sujan Jain
Executive Vice President and Chief Financial Officer
|
|
|
112,500
|
(5)
|
|
|
|
|
|
|
464,063
|
(8)
|
|
|
173,250
|
(10)
|
John OHara Horsley
Executive Vice President, General Counsel and Secretary
|
|
|
|
|
|
|
|
|
|
|
579,356
|
(8)
|
|
|
45,000
|
(10)
|
Daniel L. Hillman
Vice President of Engineering
|
|
|
|
|
|
|
|
|
|
|
422,813
|
(8)
|
|
|
37,500
|
(10)
|
Arthur L. Swift
Former President and Chief Executive Officer
|
|
|
431,402
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ralph J. Harms
Former Chief Financial Officer
|
|
|
43,699
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David R. Ditzel
Former Chief Technology Officer
|
|
|
215,319
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert Bismuth
Former Vice President of Strategic Alliances
|
|
|
117,522
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
With respect to Messrs. Crudele and Jain, amounts in this
column represent cash severance payable had they been
involuntary terminated during their first year of employment.
With respect to Messrs. Swift, Harms, Ditzel and Bismuth,
amounts in this column represent actual severance payments in
connection with their employment terminations.
|
|
(2)
|
|
Accelerated vesting of stock option amounts was determined by
measuring the difference between the closing price of the common
stock as of December 31, 2007 and the exercise price of the
accelerated portion of the named executive officers
unvested stock options.
|
|
(3)
|
|
Based on salaries as of December 31, 2007.
|
|
(4)
|
|
Mr. Crudele would receive one year base salary and 100% of
target annual bonus for involuntary termination during his first
year of employment.
|
|
(5)
|
|
Mr. Jain would receive six months of base salary for
involuntary termination by us without cause during his first
year of employment.
|
|
(6)
|
|
Mr. Crudele would receive acceleration in vesting of his
stock options such that they collectively would be exercisable
for 50,000 shares for involuntary termination during his
first year of employment.
|
|
(7)
|
|
Mr. Crudele would receive two years base salary and 200% of
target annual bonus for the year of termination of employment.
|
|
(8)
|
|
Represents one and one-half years base salary and 112.5% of
target annual bonus for the named executive officer.
|
|
(9)
|
|
Represents full acceleration in vesting for stock options
granted to Mr. Crudele.
|
|
(10)
|
|
Represents two years of additional vesting for stock options
granted to the named executive officer.
|
23
Our Board of Directors determined to adopt the retention and
severance plan in order to mitigate some of the risk that exists
for executives working in a dynamic technology company, an
environment where there is a meaningful likelihood that we may
be acquired. These arrangements are intended to attract and
retain qualified executives that have alternatives that may
appear to them to be less risky absent these arrangements, and
to mitigate a potential disincentive to consideration and
execution of such an acquisition, particularly where the
services of these executive officers may not be required by the
acquirer.
In connection with the termination of Mr. Swifts
employment in January 2007, we entered into a separation
agreement with Mr. Swift, pursuant to which we paid him a
lump sum severance of $420,000 in 2007. We also paid
Mr. Swifts health insurance coverage until
January 31, 2008. In addition, we and Mr. Swift agreed
to a mutual release of claims. We and Mr. Swift also
entered into a consulting agreement that outlined the terms of
his engagement to provide certain consulting services relating
to sales, marketing and the development of business
opportunities for us following the termination of his employment
with us until December 31, 2007, unless earlier terminated
by either us or Mr. Swift at any time for any reason after
August 30, 2007 with 30 days notice. The consulting
agreement with Mr. Swift was terminated on
December 31, 2007 and we paid no consulting fees to
Mr. Swift. In addition, the consulting agreement provided
that all employee stock options that we previously granted to
Mr. Swift ceased vesting as of January 31, 2007, but
remained exercisable until 90 days following the
termination of this consulting agreement. These options expired
unexercised on December 31, 2007.
In connection with the termination of Mr. Ditzels
employment in June 2007, we entered into a separation agreement
with Mr. Ditzel, pursuant to which we paid him severance of
$160,000 in 2007 and $50,000 in July 2008, subject to
Mr. Ditzels continued compliance with the covenants
set out in the agreement. We also paid Mr. Ditzels
group health benefits until September 30, 2007. Pursuant to
that separation agreement, Mr. Ditzel retired from and
resigned his position as a member of our Board of Directors
effective June 15, 2007. We and Mr. Ditzel also agreed
to a mutual release of claims. We also entered into a consulting
agreement with Mr. Ditzel providing for Mr. Ditzel to
perform certain consulting services relating to technology
licensing and the development of business opportunities for
licensing our technologies after the termination of
Mr. Ditzels employment with us and until
June 30, 2008, unless earlier terminated by either us or
Mr. Ditzel at any time for any reason with 30 days
notice. The consulting agreement with Mr. Ditzel was
terminated on February 15, 2008 and we paid no consulting
fees to Mr. Ditzel. In addition, the consulting agreement
with Mr. Ditzel provided that all employee stock options
that we previously granted to Mr. Ditzel ceased vesting as
of June 15, 2007, but remained exercisable until
90 days following the termination of this consulting
agreement. These options expired unexercised on May 15,
2008.
In connection with the termination of Mr. Bismuths
employment in June 2007, we entered into a separation agreement
with Mr. Bismuth, pursuant to which we paid him severance
of $111,825 in 2007. We also paid Mr. Bismuths group
health benefits until December 31, 2007. We and
Mr. Bismuth agreed to a mutual release of claims. We also
entered into a consulting agreement with Mr. Bismuth
providing for Mr. Bismuth to perform certain consulting
services relating to development of business opportunities for
licensing our technologies after the termination of
Mr. Bismuths employment with us and until
June 30, 2008, unless earlier terminated by either us or
Mr. Bismuth at any time for any reason with 30 days
notice. The consulting agreement with Mr. Bismuth
terminated on December 31, 2007 and we have paid no
consulting fees to Mr. Bismuth. In addition, the consulting
agreement with Mr. Bismuth provided that all employee stock
options that we previously granted to Mr. Bismuth ceased
vesting as of June 29, 2007, but remained exercisable until
90 days following the termination of
Mr. Bismuths consulting agreement. These options
expired unexercised on March 31, 2008.
In connection with the termination of Mr. Harms
employment in August 2007, we entered into a separation
agreement with Mr. Harms, pursuant to which we paid him
severance payment of $41,667. We also paid Mr. Harms
group health benefits until October 31, 2007. We and
Mr. Harms agreed to a mutual release of claims.
Other
Benefits
Executive officers are eligible to participate in all of our
employee benefit plans, such as medical, dental, vision, group
life, disability, and accidental death and dismemberment
insurance and our 401(k) plan, in each case on the same basis as
other employees. There were no special benefits or perquisites
provided to any executive officer in 2007.
24
In connection with Mr. Crudeles appointment as our
President and Chief Executive Officer in February 2007, we
agreed to reimburse him for the reasonable expenses incurred by
him for relocating his primary residence to the
San Francisco Bay Area and to provide him a housing
allowance to pay for interim rental housing expenses during 2007
in an amount not to exceed $50,000. For 2007, Mr. Crudele
incurred a housing allowance of $43,018 and travel expenses of
$25,413. In addition, the Compensation Committee approved an
income tax gross up related to these payments of $57,709.
Executive
Compensation Tables
Summary
Compensation Table
The following table provides information regarding all plan and
non-plan compensation awarded to, earned by or paid to in 2007
to each person who served as our principal executive officer
during the 2007 year, each person who served as our
principal financial officer during the 2007 year, our other
most highly compensated executive officers who served as an
executive officer at the end of December 31, 2007, and our
two additional other most highly compensated executive officers
who did not serve as an executive officer at the end of
December 31, 2007. Besides Messrs. Crudele, Jain and
Horsley, none of our executive officers who served as such at
the end of December 31, 2007 received total compensation in
excess of $100,000 during 2007. We refer to the seven executive
officers identified in this table as our named executive
officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
|
|
Incentive Plan
|
|
Compensation
|
|
All Other
|
|
|
|
|
|
|
Salary
|
|
Bonus
|
|
Stock
|
|
Awards
|
|
Compensation
|
|
Earnings
|
|
Compensation
|
|
Total
|
Name and Title
|
|
Year
|
|
($)(1)
|
|
($)(2)
|
|
Awards ($)
|
|
($)(3)
|
|
($)(4)
|
|
($)
|
|
($)(5)
|
|
($)
|
|
Lester M. Crudele(6)
President and Chief Executive Officer
|
|
|
2007
|
|
|
|
312,689
|
|
|
|
1,162,500
|
|
|
|
|
|
|
|
290,791
|
|
|
|
203,125
|
|
|
|
|
|
|
|
128,209
|
|
|
|
2,097,315
|
|
Art L. Swift(7)
|
|
|
2007
|
|
|
|
44,546
|
|
|
|
|
|
|
|
|
|
|
|
79,528
|
|
|
|
|
|
|
|
|
|
|
|
431,468
|
|
|
|
555,542
|
|
Former President & Chief Executive Officer
|
|
|
2006
|
|
|
|
325,000
|
|
|
|
|
|
|
|
|
|
|
|
114,848
|
|
|
|
93,351
|
|
|
|
|
|
|
|
787
|
|
|
|
533,987
|
|
Sujan Jain(8)
Executive Vice President and Chief Financial Officer
|
|
|
2007
|
|
|
|
82,813
|
|
|
|
200,000
|
|
|
|
|
|
|
|
35,278
|
|
|
|
37,099
|
|
|
|
|
|
|
|
|
|
|
|
355,190
|
|
Ralph J. Harms(9)
|
|
|
2007
|
|
|
|
175,582
|
|
|
|
|
|
|
|
|
|
|
|
115,285
|
|
|
|
23,958
|
|
|
|
|
|
|
|
44,817
|
|
|
|
359,642
|
|
Former Chief Financial Officer
|
|
|
2006
|
|
|
|
108,901
|
|
|
|
|
|
|
|
|
|
|
|
75,558
|
|
|
|
29,165
|
|
|
|
|
|
|
|
629
|
|
|
|
214,253
|
|
John OHara Horsley
|
|
|
2007
|
|
|
|
280,900
|
|
|
|
|
|
|
|
|
|
|
|
165,637
|
|
|
|
12,597,765
|
|
|
|
|
|
|
|
669
|
|
|
|
13,044,971
|
|
Executive Vice President, General Counsel and Secretary
|
|
|
2006
|
|
|
|
280,900
|
|
|
|
|
|
|
|
|
|
|
|
42,178
|
|
|
|
84,422
|
|
|
|
|
|
|
|
669
|
|
|
|
408,168
|
|
David R. Ditzel(10)
|
|
|
2007
|
|
|
|
172,827
|
|
|
|
|
|
|
|
|
|
|
|
44,082
|
|
|
|
|
|
|
|
|
|
|
|
215,852
|
|
|
|
432,761
|
|
Former Chief Technology Officer
|
|
|
2006
|
|
|
|
313,500
|
|
|
|
1,000
|
|
|
|
|
|
|
|
43,011
|
|
|
|
93,153
|
|
|
|
|
|
|
|
3,258
|
|
|
|
453,922
|
|
Robert Bismuth(11)
|
|
|
2007
|
|
|
|
131,072
|
|
|
|
37,275
|
|
|
|
|
|
|
|
57,224
|
|
|
|
|
|
|
|
|
|
|
|
118,212
|
|
|
|
343,783
|
|
Former Vice President of Strategic Alliances
|
|
|
2006
|
|
|
|
220,988
|
|
|
|
|
|
|
|
|
|
|
|
95,245
|
|
|
|
60,299
|
|
|
|
|
|
|
|
772
|
|
|
|
377,304
|
|
|
|
|
(1)
|
|
The amounts in this column include any salary contributed by the
named executive officer to our 401(k) plan and payments in
respect of accrued vacation, holidays and sick days.
|
|
(2)
|
|
The amounts in this column include the following: (a) with
respect to Messrs. Crudele and Jain bonuses in the amounts
of $1,000,000 and $200,000, respectively, as approved by the
Compensation Committee in connection with our litigation
settlement and licensing agreement with Intel; (b) with
respect to Mr. Crudele, a one-time lump-sum hiring bonus of
$162,500; (c) with respect to Mr. Ditzel, a patent
bonus of $1,000; and (d) with respect to Mr. Bismuth,
as a result of restructuring, a retention bonus was awarded for
continued service in the amount of $37,275.
|
25
|
|
|
(3)
|
|
This column represents the dollar amounts recognized for
financial statement reporting purposes in accordance with
SFAS 123(R) in fiscal years 2007 and 2006 in connection
with stock options granted in those years and in prior fiscal
years. Pursuant to SEC rules, the amounts shown exclude the
impact of estimated forfeitures related to service-based vesting
conditions. For information on the valuation assumptions, refer
to Note 2 of the Notes to the Consolidated Financial
Statements our Annual Report on
Form 10-K
for the year ended December 31, 2007, as filed with the
SEC. For information on the valuation assumptions with respect
to grants made prior to 2007, refer to the note on Other
Stock-Related Information for the Annual Reports on
Form 10-K
for the respective year-end. See the 2007 Grants of Plan-Based
Awards table for information on options granted in 2007. These
amounts reflect our accounting expense disregarding the estimate
of forfeitures and do not correspond to the actual value that
may be realized by the named executive officers.
|
|
(4)
|
|
The amounts in this column include the bonus earned for services
rendered in fiscal years 2007 and 2006 under our management
incentive plan. The amounts in this column also include, with
respect to Mr. Horsley, his incentive retention bonus of
$12,480,723 under the incentive retention agreement entered into
on February 27, 2007.
|
|
(5)
|
|
The amounts in this column includes the following: (a) with
respect to Mr. Crudele, a housing allowance of $43,018,
travel expenses of $25,413, income tax gross up of $57,709 and
insurance premiums on life insurance coverage in excess of
$50,000; (b) with respect to Mr. Swift, severance
payment of $431,402 including $11,402 of post-termination health
benefits and insurance premiums on life insurance coverage in
excess of $50,000; (c) with respect to Mr. Harms,
severance payment of $43,699 including $2,032 of
post-termination health benefits and insurance premiums on life
insurance coverage in excess of $50,000; (d) with respect
to Mr. Horsley, insurance premiums on life insurance
coverage in excess of $50,000; (e) with respect to
Mr. Ditzel, severance payment of $215,319 including $5,319
of post-termination health benefits and insurance premiums on
life insurance coverage in excess of $50,000, and a
travel-related payment of $2,500; and (f) with respect to
Mr. Bismuth, severance payment of $117,522 including $5,697
of post-termination health benefits and insurance premiums on
life insurance coverage in excess of $50,000.
|
|
(6)
|
|
Mr. Crudele was appointed as our President and Chief
Executive Officer effective February 1, 2007.
|
|
(7)
|
|
Mr. Swifts employment with us as our President and
Chief Executive Officer terminated on January 31, 2007.
Mr. Swift forfeited options representing 60,680 shares
of common stock that were unvested at the time his employment
with us was terminated.
|
|
(8)
|
|
Mr. Jain was appointed as our Chief Financial Officer
effective August 20, 2007 and as an Executive Vice
President effective April 3, 2008.
|
|
(9)
|
|
Mr. Harms employment with us as our Chief Financial
Officer terminated on August 20, 2007. Mr. Harms
forfeited options representing 27,346 shares of common
stock that were unvested at the time his employment with us was
terminated.
|
|
(10)
|
|
Mr. Ditzels employment with us as our Chief
Technology Officer terminated on March 31, 2007.
Mr. Ditzel forfeited options representing
16,855 shares of common stock that were unvested at the
time his employment with us was terminated.
|
|
(11)
|
|
Mr. Bismuths employment with us as our Vice President
of Strategic Alliances terminated on June 29, 2007.
Mr. Bismuth forfeited options representing
12,202 shares of common stock that were unvested at the
time his employment with us was terminated.
|
26
2007
Grants of Plan-Based Awards
The following table provides information with regard to awards
made in 2007, and include estimated possible payouts under our
non-equity incentive plans for fiscal year 2007 and with regard
to each stock option granted to a named executive officer during
2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Awards:
|
|
Exercise
|
|
Grant Date
|
|
|
|
|
Estimated Future Payouts Under
|
|
Estimated Future Payouts
|
|
Number of
|
|
Number of
|
|
or Base
|
|
Fair Value
|
|
|
|
|
Non-Equity Incentive
|
|
Under Equity Incentive
|
|
Shares of
|
|
Securities
|
|
Price of
|
|
of Stock
|
|
|
|
|
Plan Awards(1)
|
|
Plan Awards
|
|
Stock or
|
|
Underlying
|
|
Option
|
|
and Option
|
|
|
Grant
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Units
|
|
Options
|
|
Awards
|
|
Awards
|
Name
|
|
Date
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
(#)
|
|
(#)(2)
|
|
($/Share)
|
|
($)(3)
|
|
Lester M. Crudele
|
|
|
12/17/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
|
|
|
13.36
|
|
|
|
1,435,035
|
|
|
|
|
11/9/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
12.02
|
|
|
|
430,365
|
|
|
|
|
8/1/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
11.00
|
|
|
|
366,215
|
|
|
|
|
3/1/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
13.40
|
|
|
|
435,600
|
|
|
|
|
|
|
|
|
195,000
|
|
|
|
243,750
|
|
|
|
292,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arthur L. Swift(4)
|
|
|
|
|
|
|
195,000
|
|
|
|
243,750
|
|
|
|
292,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sujan Jain
|
|
|
12/17/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
125,000
|
|
|
|
13.36
|
|
|
|
1,195,862
|
|
|
|
|
8/20/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,500
|
|
|
|
10.04
|
|
|
|
250,691
|
|
|
|
|
|
|
|
|
32,977
|
|
|
|
41,221
|
|
|
|
49,465
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ralph J. Harms(4)
|
|
|
|
|
|
|
100,000
|
|
|
|
125,000
|
|
|
|
150,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John OHara Horsley
|
|
|
12/17/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
|
|
|
13.36
|
|
|
|
1,435,035
|
|
|
|
|
|
|
|
|
112,360
|
|
|
|
140,450
|
|
|
|
168,540
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,480,723
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David R. Ditzel(4)
|
|
|
|
|
|
|
125,400
|
|
|
|
156,750
|
|
|
|
188,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert Bismuth(4)
|
|
|
|
|
|
|
89,460
|
|
|
|
111,825
|
|
|
|
134,190
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The amounts show estimated possible payouts under our management
incentive plan for fiscal year 2007 based on certain assumptions
about the achievement of company performance objectives and with
respect to Mr. Horsley, his incentive retention bonus under
the incentive retention agreement entered into on
February 27, 2007. The actual bonuses award to the named
executive officers for fiscal year 2007 are reported in the
Summary Compensation Table under the column entitled
Non-Equity Incentive Plan Compensation. The
threshold amount under the management incentive plan is 80% of
the target amount and the maximum amount is 120% of the target
amount.
|
|
(2)
|
|
Represents stock options granted in connection with the hiring
of Messrs. Crudele and Jain. In addition, plan based stock
options for fiscal 2007 were granted on December 17, 2007.
Each of the option granted on December 17, 2007 vests with
respect to 1/4th of the shares underlying that option on the one
year anniversary of the grant date and with respect to 1/48th of
the shares underlying that option each month thereafter until
fully vested. Each of the options granted to Mr. Crudele on
November 9, 2007, August 1, 2007 and March 1,
2007 vests with respect to 1/3rd of the shares underlying that
option on the one year anniversary of Mr. Crudeles
employment commencement date and with respect to 1/36th of the
shares underlying that option each month thereafter until fully
vested. The option granted to Mr. Jain on August 20,
2007 vests with respect to 1/4th of the shares underlying that
option on the one year anniversary of Mr. Jains
employment commencement date and with respect to 1/48th of the
shares underlying that option each month thereafter until fully
vested. The vesting of all of these options may also be
accelerated under certain circumstances as described above in
Severance and Change of Control Payments.
|
|
(3)
|
|
Represents the full grant date fair value calculated in
accordance with SFAS 123(R) of each option granted to a
named executive officer in 2007. There can be no assurance that
the options will ever be exercised (in which case no value will
be realized by the named executive officer) or that the value on
exercise will equal the SFAS 123(R) grant date fair value.
The option exercise price has not been deducted from the amounts
indicated above. Regardless of the value placed on a stock
option on the grant date, the actual value of the option to the
optionee will depend on the market value of our common stock at
such date in the future when the option is exercised.
|
|
(4)
|
|
The employment of each of these named executive officers was
terminated in 2007. The amounts shown on this table for each of
these named executive officers represent the possible payouts
under our management incentive plan for fiscal 2007 had these
named executive officers been employed by us through the end of
2007.
|
27
|
|
|
(5)
|
|
Mr. Horsley earned an incentive retention bonus of
$12,480,723 under his incentive retention agreement entered into
on February 27, 2007. Pursuant to this agreement, we agreed
to pay Mr. Horsley a bonus equal to one quarter of the
excess, if any, of 25% of the present value of all cash payments
to be made to us as a direct result of the lawsuit with Intel
minus the sum of all expenses incurred and ultimately paid by us
in connection with that lawsuit.
|
Outstanding
Equity Awards at December 31, 2007
The following table provides information regarding each
unexercised stock option held by each of our named executive
officers as of December 31, 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
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|
Equity
|
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|
|
|
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|
Incentive
|
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|
Plan Awards:
|
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|
Number of
|
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|
Number of
|
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|
Number of
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
Securities
|
|
|
Securities
|
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|
Underlying
|
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|
Underlying
|
|
|
Underlying
|
|
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|
|
|
|
|
|
|
Exercisable
|
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|
Unexercised
|
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|
Unexercised
|
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|
Option
|
|
|
|
|
|
|
Options
|
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|
Options
|
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Unearned
|
|
|
Exercise
|
|
|
Option
|
|
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|
(#)
|
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|
(#)
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|
Options
|
|
|
Price
|
|
|
Expiration
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
(#)
|
|
|
($)
|
|
|
Date
|
|
|
Lester M. Crudele
|
|
|
8,325
|
|
|
|
1,675
|
|
|
|
|
|
|
|
14.40
|
|
|
|
6/7/2015
|
(1)
|
|
|
|
773
|
|
|
|
343
|
|
|
|
|
|
|
|
24.60
|
|
|
|
11/17/2015
|
(1)
|
|
|
|
1,243
|
|
|
|
1,257
|
|
|
|
|
|
|
|
29.60
|
|
|
|
6/1/2016
|
(1)
|
|
|
|
|
|
|
|
50,000
|
|
|
|
|
|
|
|
13.40
|
|
|
|
2/28/2017
|
(2)
|
|
|
|
|
|
|
|
50,000
|
|
|
|
|
|
|
|
11.00
|
|
|
|
7/31/2017
|
(2)
|
|
|
|
|
|
|
|
50,000
|
|
|
|
|
|
|
|
12.02
|
|
|
|
11/8/2017
|
(2)
|
|
|
|
|
|
|
|
150,000
|
|
|
|
|
|
|
|
13.36
|
|
|
|
12/16/2017
|
(3)
|
Arthur L. Swift(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sujan Jain
|
|
|
|
|
|
|
37,500
|
|
|
|
|
|
|
|
10.04
|
|
|
|
8/19/2017
|
(5)
|
|
|
|
|
|
|
|
125,000
|
|
|
|
|
|
|
|
13.36
|
|
|
|
12/16/2017
|
(3)
|
Ralph J. Harms
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John OHara Horsley
|
|
|
6,000
|
|
|
|
|
|
|
|
|
|
|
|
120.00
|
|
|
|
7/19/2010
|
(6)
|
|
|
|
4,000
|
|
|
|
|
|
|
|
|
|
|
|
165.00
|
|
|
|
9/11/2010
|
(6)
|
|
|
|
1,750
|
|
|
|
|
|
|
|
|
|
|
|
62.20
|
|
|
|
7/25/2011
|
(6)
|
|
|
|
13,250
|
|
|
|
|
|
|
|
|
|
|
|
47.00
|
|
|
|
8/27/2011
|
(6)
|
|
|
|
9,000
|
|
|
|
|
|
|
|
|
|
|
|
49.20
|
|
|
|
4/14/2012
|
(6)
|
|
|
|
11,000
|
|
|
|
|
|
|
|
|
|
|
|
21.00
|
|
|
|
11/12/2012
|
(6)
|
|
|
|
8,000
|
|
|
|
|
|
|
|
|
|
|
|
31.40
|
|
|
|
5/29/2013
|
(6)
|
|
|
|
6,250
|
|
|
|
|
|
|
|
|
|
|
|
43.00
|
|
|
|
5/26/2014
|
(6)
|
|
|
|
18,643
|
|
|
|
3,007
|
|
|
|
|
|
|
|
15.00
|
|
|
|
5/8/2015
|
(7)
|
|
|
|
4,686
|
|
|
|
7,814
|
|
|
|
|
|
|
|
29.60
|
|
|
|
6/1/2016
|
(8)
|
|
|
|
|
|
|
|
150,000
|
|
|
|
|
|
|
|
13.36
|
|
|
|
12/16/2017
|
(3)
|
David R. Ditzel(9)
|
|
|
12,500
|
|
|
|
|
|
|
|
|
|
|
|
62.20
|
|
|
|
7/25/2011
|
(6)
|
|
|
|
12,001
|
|
|
|
|
|
|
|
|
|
|
|
49.20
|
|
|
|
4/14/2012
|
(6)
|
|
|
|
6,500
|
|
|
|
|
|
|
|
|
|
|
|
21.00
|
|
|
|
11/12/2012
|
(6)
|
|
|
|
5,000
|
|
|
|
|
|
|
|
|
|
|
|
31.40
|
|
|
|
5/29/2013
|
(6)
|
|
|
|
5,000
|
|
|
|
|
|
|
|
|
|
|
|
43.00
|
|
|
|
5/26//2014
|
(6)
|
|
|
|
14,432
|
|
|
|
|
|
|
|
|
|
|
|
15.00
|
|
|
|
5/8/2015
|
(10)
|
|
|
|
2,863
|
|
|
|
|
|
|
|
|
|
|
|
29.60
|
|
|
|
6/1/2016
|
(10)
|
Robert Bismuth(11)
|
|
|
5,000
|
|
|
|
|
|
|
|
|
|
|
|
68.00
|
|
|
|
11/20/2013
|
(6)
|
|
|
|
2,500
|
|
|
|
|
|
|
|
|
|
|
|
43.00
|
|
|
|
5/26/2014
|
(6)
|
|
|
|
1,757
|
|
|
|
|
|
|
|
|
|
|
|
24.20
|
|
|
|
9/16/2014
|
(10)
|
|
|
|
6,666
|
|
|
|
|
|
|
|
|
|
|
|
15.00
|
|
|
|
5/8/2015
|
(10)
|
|
|
|
2,500
|
|
|
|
|
|
|
|
|
|
|
|
29.60
|
|
|
|
6/1/2016
|
(10)
|
|
|
|
(1)
|
|
Each of these options vests with respect to 1/3rd of the shares
on one year anniversary of the grant date and with respect to
1/36th of the shares each month thereafter until fully vested.
|
28
|
|
|
(2)
|
|
Each of these options vests with respect to 1/3rd of the shares
on one year anniversary of Mr. Crudeles employment
commencement date and with respect to 1/36th of the shares each
month thereafter until fully vested.
|
|
(3)
|
|
Each of these options vests with respect to 1/4th of the shares
on August 22, 2008 and with respect to 1/48th of the shares
each month thereafter until fully vested.
|
|
(4)
|
|
The exercise period for each of the options held by
Mr. Swift was extended to December 31, 2007.
|
|
(5)
|
|
Each of these options vests with respect to 1/4th of the shares
on one year anniversary of Mr. Jains employment
commencement date and with respect to 1/48th of the shares each
month thereafter until fully vested.
|
|
(6)
|
|
Each of these options is fully vested as of December 31,
2007.
|
|
(7)
|
|
Each of these options vests with respect to 1/6th of the shares
six months from the grant date and with respect to 1/36ths of
the shares each month thereafter until vested.
|
|
(8)
|
|
Each of these options vests with respect to 1/36th of the shares
each month starting one month after the grant date until fully
vested.
|
|
(9)
|
|
The exercise period for each of the options held by
Mr. Ditzel was extended to May 15, 2008 and the
options expired unexercised on May 15, 2008.
|
|
(10)
|
|
The unvested portion of each of these options was cancelled upon
the employment termination of the holder of that option.
|
|
(11)
|
|
The exercise period for each of the options held by
Mr. Bismuth was extended to March 31, 2008 and the
options expired unexercised on March 31, 2008.
|
2007
Option Exercises
There were no exercises of options by named executive officers
during 2007.
Nonqualified
Deferred Compensation
Currently, we have no deferred compensation plan for our
executive officers.
Compensation
Committee Report
The material in the following Compensation Committee Report
shall not be deemed to be (i) soliciting
material, (ii) filed with the SEC,
(iii) subject to Regulations 14A or 14C of the Exchange
Act, or (iv) subject to the liabilities of Section 18
of the Exchange Act. The Compensation Committee Report shall not
be deemed incorporated by reference into any of our other
filings under the Securities Act of 1933, as amended (the
Securities Act), or the Exchange Act, except to the
extent we specifically incorporate the report by reference into
such filing.
The Compensation Committee of our Board of Directors has
reviewed and discussed the Compensation Discussion and Analysis
required by Item 402(b) of
Regulation S-K
with management, and, based on such review and discussions, the
Compensation Committee recommended to our Board of Directors
that the Compensation Discussion and Analysis be included in
this Proxy Statement.
Compensation Committee Members:
T. Peter Thomas
Robert V. Dickinson
J. Michael Gullard
William P. Tai
29
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of our Board of Directors currently
consists of Messrs. Dickinson, Gullard, Tai and Thomas, who
is the committee chair, none of whom has any interlocking
relationships as defined by the SEC. Mr. Crudele served on
the Compensation Committee as the committee chair until
January 2007, when he was appointed as our President and
Chief Executive Officer, at which time Messrs. Dickinson
and Thomas were appointed as members of the Compensation
Committee and Mr. Thomas was appointed as the committee
chair. Mr. Gullard was appointed as a member of the
Compensation Committee in July 2008. The Compensation Committee
makes decisions regarding the long-term strategy of employee
compensation, the types of stock and other compensation plans to
be used by the Company, and executive compensation and stock
option grants to executives. Our Board of Directors has
determined that each member of the Compensation Committee is
independent within the meaning of the rules of the NASDAQ Stock
Market, a non-employee director within the meaning of
Section 16 of the Securities Exchange Act, and an outside
director within the meaning of Section 162(m) of the
Internal Revenue Code. In addition, none of our executive
officers serves as a member of the board of directors or
Compensation Committee of any company that has one or more of
its executive officers serving as a member of our Board of
Directors or Compensation Committee.
30
COMPANY
STOCK PRICE PERFORMANCE
The stock price performance graph below is required by the
SEC. It shall not be deemed filed with the SEC or incorporated
by reference by any general statement incorporating this Report
by reference into any filing under the Securities Act or under
the Exchange Act, except to the extent that we specifically
incorporate this information by reference.
The graph below compares the cumulative total stockholder return
on our common stock with the cumulative total return on the
NASDAQ Composite Index and the RDG Semiconductor Composite Index
over the same period. The graph assumes that $100 was invested
in our common stock, the NASDAQ Composite Index and the RDG
Semiconductor Composite Index on December 31, 2002, and
calculates the annual return through December 31, 2007, and
assumes the reinvestment of dividends, if any. The stock price
performance shown in the graph below is based on historical data
and does not necessarily indicate future stock price performance.
COMPARISON
OF 5 YEAR CUMULATIVE TOTAL RETURN
Among Transmeta Corporation, The NASDAQ Composite Index
And The RDG Semiconductor Composite Index
|
|
|
*
|
|
$100 invested on December 31, 2002 in stock or
index-including reinvestment of dividends. Fiscal year ending
December 31.
|
31
PROPOSAL NO. 2
RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
The Audit Committee has appointed Burr, Pilger & Mayer
LLP as our independent registered public accounting firm to
audit our financial statements for the current fiscal year.
Representatives of the firm of Burr, Pilger & Mayer
LLP are expected to be present at the meeting and will have an
opportunity to make a statement if they so desire and will be
available to respond to any appropriate questions.
Ratification by our stockholders of the selection of Burr,
Pilger & Mayer LLP as our independent registered
public accounting firm is not required by applicable law, our
Certificate of Incorporation, our bylaws or otherwise. However,
our Board of Directors is submitting the selection by our Audit
Committee of Burr, Pilger & Mayer LLP to our
stockholders for ratification as a matter of good corporate
practice. If our stockholders fail to ratify this selection, our
Audit Committee will reconsider whether to retain that firm.
Even if the selection is ratified, our Audit Committee in its
discretion may direct the selection of a different independent
registered public accounting firm at any time during the year if
it determines that such a change would be in the best interests
of Transmeta and its stockholders.
The aggregate fees billed by Burr, Pilger & Mayer LLP,
our independent registered public accounting firm, for
professional services provided for fiscal years ended
December 31, 2007 and December 31, 2006, respectively,
were as follows:
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
Audit Fees
|
|
$
|
822,755
|
|
|
$
|
842,275
|
|
Audit-Related Fees
|
|
|
17,640
|
|
|
|
4,250
|
|
Tax Fees
|
|
|
|
|
|
|
|
|
All Other Fees
|
|
|
|
|
|
|
|
|
Audit Fees.
Consists of fees billed for
professional services rendered for the audit of our annual
consolidated financial statements and review of the quarterly
consolidated financial statements and services that are normally
provided by Burr, Pilger & Mayer LLP in connection
with statutory and regulatory filings or engagements and fees
for the audit of our internal control over financial reporting
as of December 31, 2007 and December 31, 2006,
respectively, in accordance with Section 404 of the
Sarbanes Oxley Act of 2002.
Audit-Related Fees.
Consists of fees billed
for assurance and related services that are reasonably related
to the performance of the audit or review of our consolidated
financial statements and are not reported under Audit
Fees.
Tax Fees.
Consists of fees billed for
professional services for tax compliance, tax advice and tax
planning.
All Other Fees.
Consists of fees for products
and services other than the services reported above
Pre-Approval
of Audit and Non-Audit Services of Independent Registered Public
Accounting Firm
Section 10A(i)(1) of the Securities Exchange Act requires
that all audit and non-audit services to be performed by our
principal accountants be approved in advance by our Audit
Committee, subject to certain exceptions relating to non-audit
services accounting for less than 5% of the total fees paid to
our principal accountants that are subsequently ratified by our
Audit Committee. Pursuant to Section 10A(i)(1) of the
Securities Exchange Act, our Audit Committees policy is to
pre-approve all audit and permissible non-audit services
provided by the independent registered public accounting firm.
Pre-approval is generally provided for up to one year and any
pre-approval is detailed as to the particular service or
category of services and is generally subject to a specific
budget. The independent registered public accounting firm and
management are required to periodically report to our Audit
Committee regarding the extent of services provided by the
independent registered public accounting firm in accordance with
this pre-approval, and the fees for the services performed to
date. Our Audit Committee may also pre-approve particular
services on a
case-by-case
basis.
All of the services described above respecting Audit-Related
Fees, Tax Fees and All Other Fees were pre-approved by our Audit
Committee pursuant to the pre-approval policy.
Our Board of Directors recommends a vote FOR the ratification
of the selection of Burr, Pilger & Mayer LLP as our
independent registered public accounting firm for the fiscal
year 2008.
32
REPORT OF
THE AUDIT COMMITTEE
The following is the report of the Audit Committee with respect
to Transmetas audited financial statements for fiscal year
2007. It shall not be deemed to be incorporated by reference by
any general statement incorporating this proxy statement by
reference into any filing under the Securities Act of 1933 or
under the Securities Exchange Act of 1934, except to the extent
that we specifically incorporate this information by reference.
Also, it shall not otherwise be deemed soliciting material or
filed under these Acts.
The Audit Committees purpose is to oversee our accounting
and financial reporting processes and the audits of our
financial statements, by monitoring the periodic reviews and
audits of the adequacy of the accounting and financial reporting
processes and systems of internal control that are conducted by
our independent registered public accounting firm and our
financial and senior management; appointing and reviewing, and
evaluating the independence and performance of, our independent
registered public accounting firm; and facilitating
communication among our independent registered public accounting
firm and our financial and senior management. The Audit
Committee is composed of three independent non-employee
directors. The current members of the Audit Committee are
Messrs. Barnes, Dickinson and Timmins, who is the committee
chair. The committee operates under a charter that is posted on
our company website at
http://www.transmeta.com/corporate/ir/corp_governance.html
.
Management is responsible for the preparation, presentation and
integrity of our financial statements, accounting and financial
reporting principles and internal controls and procedures
designed to assure compliance with accounting standards and
applicable laws and regulations. Our independent registered
public accounting firm, Burr, Pilger & Mayer LLP, was
responsible for performing an independent audit of our fiscal
2007 consolidated financial statements in accordance with
generally accepted auditing standards. The Audit Committee
discusses with our independent registered public accounting firm
the overall scope and plans for the audit. The Audit Committee
meets with our independent registered public accounting firm,
with and without management present, to discuss the results of
their examinations, their evaluations of our internal controls
and the overall quality of our accounting principles.
In performing its oversight role, the Audit Committee considered
and discussed the audited financial statements with management
and the independent registered public accounting firm. The
committee also discussed with the independent registered public
accounting firm the matters required to be discussed by
Statement on Auditing Standards No. 61,
Communication
with Audit Committees.
The committee received the written
disclosures and the letter from the independent registered
public accounting firm required by Independence Standards Board
Standard No. 1,
Independence Discussions with Audit
Committees.
The committee also considered whether the
provision of non-audit services by the independent registered
public accounting firm is compatible with maintaining the
registered public accounting firms independence and has
discussed with the independent registered public accounting firm
the registered public accounting firms independence. Based
on the reports and discussions described in this report, and
subject to the limitations on the role and responsibilities of
the committee referred to below and in its charter, the Audit
Committee recommended to our Board of Directors that the audited
financial statements be included in the Annual Report on
Form 10-K
for fiscal year 2007. The Audit Committee recommended the
selection of Burr, Pilger & Mayer LLP as our
independent registered public accounting firm to audit our
financial statements for fiscal year 2008.
The members of the Audit Committee rely without independent
verification on the information provided to them and on the
representations made by management and the independent
registered public accounting firm. Accordingly, the Audit
Committees oversight does not provide an independent basis
to determine that management has maintained appropriate
accounting and financial reporting principles or appropriate
internal controls and procedures designed to assure compliance
with accounting standards and applicable laws and regulations.
Furthermore, the Audit Committees considerations and
discussions referred to above do not assure that the audit of
our financial statements has been carried out in accordance with
generally accepted auditing standards, that the financial
statements are presented in accordance with generally accepted
accounting principles or that Burr, Pilger & Mayer LLP
is in fact independent as required by the rules of
The NASDAQ Stock Market.
AUDIT COMMITTEE:
R. Hugh Barnes
Robert V. Dickinson
Rick Timmins
33
RELATED
PARTY TRANSACTIONS
Policies
and Procedures for Approving Transactions with Related
Persons
The Audit Committee of our Board of Directors is responsible for
reviewing and approving all related party transactions, either
in advance or when we become aware of a related person
transaction that was not approved in advance. Related parties
include any of our directors or executive officers, certain of
our stockholders and their immediate family members. To identify
any related party transactions, each year, we submit and require
our directors and officers to complete director and officer
questionnaires identifying any transactions with us in which the
executive officer or director or their family members has an
interest. In addition, the Nominating and Corporate Governance
Committee of our Board of Directors determines, on an annual
basis, which members of our Board of Directors meet the
definition of independent director as defined in the rules of
The NASDAQ Stock Market and reviews and discusses any
relationships with directors that would potentially interfere
with his exercise of independent judgment in carrying out the
responsibilities of a director.
Transactions
with Related Persons
Other than the compensation arrangements described in
Director Compensation, Executive
Compensation and Employment Contracts, Termination
of Employment and Change in Control Arrangements and the
transactions described below, since January 1, 2007, there
has not been nor is there currently proposed, any transaction or
series of similar transactions to which we were or will be a
party to which the amount involved exceeds $120,000 and in which
any executive officer, director or beneficial owner of more than
5% of our common stock had or will have a direct or indirect
material interest.
Settlement
Agreement and Release
In July 2008, we entered into a settlement agreement and release
with the Riley Group, a beneficial owner of more than 5% of our
common stock, whereby we and the Riley Group filed a joint
stipulation to dismiss with prejudice the shareholder derivative
action filed by Riley Investment Management, LLC against our
directors and officers and entered into a mutual release of
claims. Pursuant to the stipulation, the court entered an order
dismissing the shareholder derivative action filed by Riley
Investment Management, LLC with prejudice, with each party
bearing its own costs and attorneys fees incurred in the
action.
In addition, we agreed to elect J. Michael Gullard to our Board
of Directors in July 2008 and to nominate Bryant R. Riley for
election to our Board of Directors at our 2008 annual meeting of
stockholders. The Riley Group agreed to withdraw its letter
nominating an opposition slate of directors for election to our
Board of Directors, to terminate its opposition proxy
solicitation and to vote in favor of our Board of
Directors slate of nominees for election to our Board of
Directors at the meeting and at all future annual meetings of
our stockholders for so long as Mr. Riley is a member of
our Board of Directors;
provided
that the Riley Group is
not otherwise specifically instructed by its client(s) to vote
in another manner. The Riley Group also agreed to vote in favor
of each proposal submitted by our Board of Directors at all
future annual meetings of our stockholders for so long as
Mr. Riley is a member of our Board of Directors;
provided
that Mr. Riley has voted in favor of such
proposal as a member of our Board of Directors and the Riley
Group is not otherwise specifically instructed by its client(s)
to vote in another manner. The Riley Group has also agreed to
abide by certain standstill provisions, including an agreement
not to acquire an aggregate beneficial ownership position of
more than 13% of our outstanding common stock, until the earlier
of the date of our 2010 annual meeting of stockholders or
September 20, 2010.
Indemnification
of Officers and Directors
Our Certificate of Incorporation limits the liability of our
directors for monetary damages arising from breach of their
fiduciary duties as directors, except to the extent otherwise
required by the Delaware law, and our bylaws provide for the
indemnification of our directors and officers to the fullest
extent permitted by Delaware law. In addition, since
January 1, 2007, we have entered into our standard form
indemnification agreement with Sujan Jain, our Executive Vice
President and Chief Financial Officer; Daniel L. Hillman, our
Vice President of Engineering; and J. Michael Gullard, a
non-employee member of the Board of Directors. These agreements
provide for the indemnification of the Companys directors
and officers for all expenses and liabilities incurred in
connection with any action or proceeding brought against him by
reason of the fact that he is or was an agent of Transmeta.
34
STOCKHOLDER
PROPOSALS
Proposals of stockholders intended to be presented at our 2009
annual meeting of stockholders must be received at our principal
executive offices no later than April 27, 2009 in order to
be included in our proxy statement and form of proxy relating to
that meeting. The date by which any such proposals must be
submitted to us may be earlier if our 2009 annual meeting of
stockholders is held before August 19, 2009, in which case
proposals must be submitted to us a reasonable time before we
begin to print and mail the proxy materials for our 2009 annual
meeting of stockholders. Stockholders wishing to bring a
proposal before our 2009 annual meeting of stockholders (but not
include the proposal in our proxy materials) must provide
written notice of the proposal to the Secretary of Transmeta at
our principal executive offices on or after June 5, 2009
and on or before August 6, 2009. As described below, the
date by which any such proposals must be submitted to us may be
earlier if our 2009 annual meeting of stockholders is held
before August 19, 2009. In addition, stockholders must
comply with the procedural requirements in our bylaws. Under our
bylaws, notice must be delivered to the Secretary of Transmeta
at our principal executive offices no less than 75 days and
no more than 105 days before the first anniversary of the
2009 annual meeting. If the annual meeting in 2009 is more than
30 days before or more than 60 days after the first
anniversary of the 2009 annual meeting, then stockholders must
give us notice of any proposal no less than 75 days before
the meeting or 10 days after we publicly announce the date
of the meeting and no more than 105 days before the
meeting. The stockholders notice must specify, as to each
proposed matter: (a) a description of the business and
reason for conducting the business at the meeting; (b) the
name and address as they appear on our books of the stockholder
proposing the business, or the name of the beneficial holder or
other party on whose behalf the proposal is made; (c) the
class and number of shares of our capital stock owned by the
stockholder, beneficial holder or other party on whose behalf
the proposal is made; and (d) any material interest in the
matter of the stockholder or beneficial holder or other party on
whose behalf the proposal is made. Stockholders can obtain a
copy of our bylaws from us upon request. Our bylaws are also on
file with the SEC. The proxy holders will vote all proxies
received for the annual meeting in 2008 according to their
judgment on all stockholder proposals that we receive after
August 25, 2009.
SECTION 16(A)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 of the Securities Exchange Act requires our
directors, executive officers and persons who own more than 10%
of a registered class of our equity securities to file initial
reports of ownership and reports of changes in ownership with
the SEC. The SEC regulations also require these persons to
furnish us with a copy of all Section 16(a) forms that they
file. Based solely on our review of the copies of the forms
furnished to us by such persons and written representations from
our executive officers and directors, we believe that all
Section 16(a) filing requirements were met in a timely
manner during 2007.
CODE OF
ETHICS AND CONDUCT
We have adopted a Code of Ethics for Chief Executive Officer and
Senior Financial Officers that applies to our Chief Executive
Officer and senior finance professionals. We have also adopted a
Code of Conduct that applies to all of our directors, officers
and employees. In addition, we have adopted a Statement of
Policy Regarding Accounting Complaints and Concerns. These
corporate policies are posted on our company website
at
http://www.transmeta.com/corporate/ir/corp_governance.html.
We intend to disclose on our company website any amendments
or waivers to our Code of Ethics and Code of Conduct that would
otherwise be required to be disclosed in a report on
Form 8-K.
35
OTHER
BUSINESS
Our Board of Directors does not intend to bring any other
business before the meeting, and, so far as is known to our
Board of Directors, no matters are to be brought before the
meeting except as specified in the notice of the meeting. As to
any business that may properly come before the meeting, however,
it is intended that proxies, in the form enclosed, will be voted
in accordance with the judgment of the proxy holders. A matter
is considered properly brought before the 2008 annual meeting if
we receive notice of the matter in the manner provided in our
bylaws. Under our bylaws, notice must have been delivered to the
Secretary of Transmeta at our principal executive offices no
later than May 16, 2008.
Whether or not you plan to attend the meeting in person,
please complete, date, sign and promptly return the enclosed
proxy card in the enclosed postage-paid envelope before the
meeting so that your shares will be represented at the
meeting.
IMPORTANT
NOTICE REGARDING THE INTERNET AVAILABILITY OF PROXY MATERIALS
FOR THE ANNUAL MEETING
The Proxy Statement and Annual Report to Stockholders will be
available
at
http://www.transmeta.com/corporate/ir/annual_reports.html
on or about August 25, 2008.
36
TRANSMETA CORPORATION
2540 MISSION COLLEGE BLVD.
SANTA CLARA, CA 95054
Your Internet or telephone vote authorizes the named proxies to vote
these shares in the
same manner as if you had marked, signed and
returned your proxy card.
Internet and telephone voting are available through 11:59 P.M. Eastern Time the day prior to the annual meeting date.
VOTE
BY
INTERNET-
www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up
until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card
in hand when you access the web site and follow the instructions to obtain your records and to
create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE SHAREHOLDER COMMUNICATIONS
If you would like to reduce the costs
incurred by Transmeta Corporation in mailing proxy materials, you can consent to receiving all
future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet.
To sign up for electronic delivery, please follow the instructions above to vote using the
Internet and, when prompted, indicate that you agree to receive or access shareholder
communications electronically in future years.
VOTE BY PHONE -1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time
the day before the cut-off date or meeting date. Have your proxy card in hand when you call and
then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or
return it to Transmeta Corporation, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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TRNSM1
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KEEP THIS PORTION FOR YOUR RECORDS
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DETACH AND RETURN THIS PORTION ONLY
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THIS
PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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TRANSMETA CORPORATION
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For
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Withhold
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For All
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To withhold authority to vote for any individual nominees(s), mark For All Except
and write the number(s) of the nominee(s) on the line below.
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The Board of Directors recommends that you
vote FOR the nominees on Proposal 1 and FOR
Proposal 2.
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All
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All
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Except
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Vote On Directors
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1. Election of Class II Directors:
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Nominees:
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01) Robert V. Dickinson, 02) Bryant R. Riley, 03) T. Peter Thomas
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Vote On Proposals
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For
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Against
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Abstain
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2. A proposal to ratify the selection of Burr, Pilger & Mayer
LLP as our independent registered public accounting firm for the fiscal
year 2008.
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3. To transact such other business that may properly come before the
meeting or any adjournment or postponement thereof.
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WE ENCOURAGE YOU TO TAKE ADVANTAGE OF INTERNET OR TELEPHONE VOTING. BOTH ARE AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK.
If you vote your proxy by Internet or telephone, you do NOT need to mail back your proxy card.
(NOTE:
Please sign exactly as your name(s) appear(s) hereon. All holders must sign. When
signing as attorney, executor, administrator, or other fiduciary, please give full title as
such. Joint owners should each sign personally. If a corporation, please sign in full
corporate name, by authorized officer. If a partnership, please sign in partnership name by
authorized person.)
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For address changes and/or comments,
please check this box and
write them on
the back where indicated.
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Please indicate if you plan to attend this meeting.
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Yes
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No
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Signature [PLEASE SIGN WITHIN BOX]
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Date
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Signature (Joint
Owners)
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Date
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TRANSMETA CORPORATION
2008 Annual Meeting of Stockholders
September 18, 2008
You are cordially invited to attend the 2008 Annual Meeting of Stockholders that will
be held on Thursday, September 18, 2008, beginning at 8:00 a.m. Pacific Daylight Time,
at:
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Hilton Santa Clara
4949 Great American Parkway
Santa Clara, California
ADMITTANCE TICKET
This
ticket entitles you, the stockholder, and one guest to attend the 2008 Annual Meeting.
Please bring it with you. Only stockholders and their guests will be admitted.
We look forward to welcoming you on Thursday, September 18, 2008.
TRANSMETA CORPORATION
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD SEPTEMBER 18, 2008
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANYS BOARD OF DIRECTORS
The undersigned, a stockholder of Transmeta Corporation, a Delaware corporation, acknowledges
receipt of a Notice of Annual Meeting of Stockholders, the accompanying Proxy Statement and the
Annual Report to Stockholders for fiscal year ended December 31, 2007, and, revoking any proxy
previously given, hereby constitutes and appoints Lester M. Crudele and John OHara Horsley, and
each of them, the true and lawful agents and proxies of the undersigned with full power of
substitution in each, to represent and vote the shares of Common Stock of Transmeta Corporation
standing in the name of the undersigned on September 18, 2008 at the Annual Meeting of Stockholders
of Transmeta Corporation, to be held at the Hilton Santa Clara at 4949 Great America Parkway, Santa
Clara, California 95054, on Thursday, September 18, 2008 at 8:00 a.m., local time, and at any
adjournment or postponement thereof with respect to the proposals listed 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 the election of the nominees
listed in Proposal 1 and FOR Proposal 2.
This proxy will be voted in accordance with the judgment of the proxy holders named herein on any
other business that may properly come before the meeting or any adjournment or postponement
thereof, to the extent authorized by Rule 14a-4(c) under the Securities Exchange Act of 1934.
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Address Changes/Comments:
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(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)
(continued and to be signed on the reverse side)
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