APPLIED MATERIALS, INC.
3050 Bowers Avenue
Santa Clara, California 95054
PROXY STATEMENT
The accompanying proxy is solicited on behalf of the
Board of Directors of Applied Materials, Inc., a Delaware
corporation (the "Company"), for use at the Annual Meeting
of Stockholders of the Company to be held at 3:00 P.M. on
March 3, 1994, and at any adjournment or postponement
thereof, for the reasons set forth in the accompanying
notice. Only stockholders of record at the close of
business on January 10, 1994 are entitled to notice of and
to vote at the Annual Meeting of Stockholders. On that
date, the Company had outstanding __________ shares of
Common Stock. Holders of Common Stock are entitled to one
vote for each share held. All information contained herein
with respect to numbers and prices of shares gives effect to
a two-for-one stock split in the form of a 100% stock
dividend distributed October 5, 1993.
If the enclosed form of proxy is properly signed and
returned, the shares represented thereby will be voted at
the Annual Meeting of Stockholders in accordance with the
instructions specified thereon. If the proxy does not
specify how the shares represented thereby are to be voted,
the proxy will be voted FOR the election of the ten
directors proposed by the Board unless the authority to vote
for the election of directors (or for any one or more
nominees) is withheld and, if no contrary instructions are
given, the proxy will be voted FOR the approval of the
amendment of the Company's Certificate of Incorporation.
Any stockholder signing a proxy in the form accompanying
this Proxy Statement has the power to revoke it prior to or
at the Annual Meeting of Stockholders. A proxy may be
revoked by a writing delivered to the Secretary of the
Company stating that the proxy is revoked, by a subsequent
proxy signed by the person who signed the earlier proxy or
by attendance at the Annual Meeting of Stockholders and
voting in person. Votes will be tabulated by the inspector
of elections of the Annual Meeting of Stockholders and
results will be announced by the inspector of elections at
the conclusion of such meeting.
With regard to the election of directors, votes may be cast in favor
or withheld; votes that are withheld will be excluded entirely from
the vote and will have no effect. Abstentions may be specified on
all proposals but not on the election of directors. They will be
counted as present for purposes of determining the existence of a
quorum regarding the item on which the abstention is noted. Since
the amendment to the Certificate of Incorporation requires the
approval of a majority of the outstanding shares, abstentions will
have the effect of a negative vote. Under the rules of the New York
Stock Exchange, Inc., brokers who hold shares in street name for
customers have the authority to vote on certain "routine" items when
they have not received instructions from beneficial owners. The
election of directors and the amendment to the Certificate of
Incorporation are deemed to be "routine" items upon which brokers
can vote shares for which they received no instructions; if the
broker votes on one item but not the other, the vote not cast is called
a "broker non-vote". Under applicable Delaware law, a broker non-vote
will have the same effect as a vote against the proposed amendment
to the Certificate of Incorporation, and will have no effect on the
outcome of the election of directors.
The expense of soliciting proxies in the enclosed form
will be paid by the Company. Following the original mailing
of the proxies and soliciting materials, employees of the
Company may solicit proxies by mail, telephone, facsimile
transmission and personal interviews. The Company will
request brokers, custodians, nominees and other record
holders to forward copies of the proxies and soliciting
materials to persons for whom they hold shares of the
Company's Common Stock and to request authority for the
exercise of proxies; in such cases, the Company will
reimburse such holders for their reasonable expenses.
Proxies will also be solicited on behalf of management by
the firm of Skinner & Co., whose fee ($4,000) and expenses
(estimated to be $7,000) will be borne by the Company.
This Proxy Statement was first mailed to stockholders
on or about January __, 1994.
ITEM 1--ELECTION OF DIRECTORS
Nominees
At the Annual Meeting of Stockholders, a Board of ten
directors will be elected, each to hold office until his
successor is elected and qualified, or until his death,
resignation or removal. Shares represented by the
accompanying proxy will be voted for the election of the ten
nominees recommended by the Board of Directors, who are
named in the following table, unless the proxy is marked in
such a manner as to withhold authority so to vote.
Directors shall be elected by a plurality of the votes of the
shares present in person or represented by proxy at the Meeting
and entitled to vote on the election of directos. All of the
nominees except Mr. Armacost were elected directors by a
vote of the stockholders at the last Annual Meeting of
Stockholders which was held on March 3, 1993; Mr. Armacost
was nominated by the Board of Directors in December 1993.
The Company has no reason to believe that the nominees for
election will not be available to serve their prescribed
terms. However, if any nominee for any reason is unable
to serve or will not serve, the proxy may be voted for
such substitute nominee as the persons appointed in the
proxy may in their discretion determine.
The following table sets forth certain information
concerning the nominees which is based on data furnished by
them.
Director
Name of Nominee Age Principal Occupation Since
James C. Morgan 55 Chairman of the Board and Chief
Executive Officer of the Company 1977
James W. Bagley 55 Vice-Chairman of the Board and
Chief Operating Officer of the
Company 1987
Dan Maydan 58 President of the Company and
Co-Chairman of Applied Komatsu
Technology, Inc. 1992
Michael Armacost 56 Distinguished Senior Fellow and
Visiting Professor at the
Asia/Pacific Research Center,
Stanford University ---
Herbert M. Dwight, Jr.** 63 President, Chairman and Chief
Executive Officer of Optical
Coating Laboratory, Inc. 1981
George B. Farnsworth** 70 Former Senior Vice President and
Group Executive, Aerospace
Business Group, of General
Electric Co. 1974
Philip V. Gerdine* 54 Executive Director (Overseas
Acquisitions) of Siemens AG 1976
Paul R. Low* 60 Chief Executive Officer of
P.R.L. Associates 1992
Alfred J. Stein** 61 Chairman and Chief Executive
Officer of VLSI Technology, Inc. 1981
Dr. Hiroo Toyoda* 67 Senior Advisor to NTT Electronics
Technology Corporation 1985
* Member of Audit Committee
** Member of Stock Option and Compensation Committee
There is no family relationship between any of the
foregoing nominees or between any of such nominees and any
of the Company's executive officers. The Company's
executive officers serve at the discretion of the Board of
Directors.
James C. Morgan is Chairman of the Board of the Company
and has been Chief Executive Officer of the Company since
February 1977. Mr. Morgan is a director of Genentech, Inc.
James W. Bagley has been Chief Operating Officer of the
Company since December 1987 and Vice-Chairman of the Board
since December 1993. From December 1987 through December
1993, he was President of the Company. Mr. Bagley is a
director of Kulicke and Soffa Industries, Inc., Tencor
Instruments and Megatest Corp.
Dan Maydan has been President of the Company since
December 1993 and a Chairman of Applied Komatsu Technology,
Inc. (formerly Applied Display Technology, Inc.) since
December 1991. From 1990 through December 1993, he was
Executive Vice President of the Company. During 1989 and
1990, Dr. Maydan was a Group Vice President of the Company.
From March 1984 through February 1989, Dr. Maydan was a Vice
President of the Company.
Michael Armacost has been a Distinguished Senior Fellow
and Visiting Professor at the Asia/Pacific Research Center,
Stanford University since 1993. From 1989 to 1993, he was the
U.S. Ambassador to Japan. From 1984 to 1989, he was
Undersecretary of State for Political Affairs, U.S. Department
of State. Mr. Armacost is a director of TRW, Inc.
Herbert M. Dwight, Jr. has been President, Chairman and
Chief Executive Officer of Optical Coating Laboratory, Inc.,
a manufacturer of thin films and components, since August
1991. From 1988 through 1991, Mr. Dwight was President and
Chief Executive Officer of Superconductor Technologies,
Inc., a high temperature superconductor research and
development company. Mr. Dwight has been Chairman of the
Board of Superconductor Technologies, Inc. since 1988 and is
a director of Applied Magnetics Corporation and Laserscope.
George B. Farnsworth has been retired since January
1986. From September 1981 through January 1986, he was
Senior Vice President and Group Executive, Aerospace
Business Group, of General Electric Co.
Philip V. Gerdine has been Executive Director (Overseas
Acquisitions) of Siemens AG, Munich, Germany, a manufacturer
of electrical and electronic products, since October 1990.
From September 1989 to October 1990, Dr. Gerdine was
Managing Director of The Plessey Company, plc, London. From
September 1988 to September 1989, he was a Vice President of
Siemens Corporation, New York.
Paul R. Low has been President of P.R.L. Associates, a
consulting firm, since July 1992. From July 1990 to July
1992, Dr. Low was a Vice President, and General Manager of
Technical Products, of International Business Machines
Corporation. From July 1987 to July 1990, Dr. Low was a
Vice President, and President of the Storage Division, of
International Business Machines Corporation. Dr. Low is a
director of Solectron Corporation.
Alfred J. Stein has been Chairman and Chief Executive
Officer of VLSI Technology, Inc. since March 1982. Mr.
Stein is a director of Tandy Corporation and Qume
Corporation.
Dr. Hiroo Toyoda has been a senior advisor to NTT
Electronics Technology Corporation, a manufacturer of
electronic products, since June 1992. From June 1990 to
June 1992, Dr. Toyoda was Chairman of NTT Electronics
Technology Corporation. From 1982 until June 1990,
Dr. Toyoda was President of NTT Electronics Technology
Corporation.
Board and Committee Meetings
The Board of Directors met seven times during fiscal
1993. Standing committees of the Board include an Audit
Committee, which met four times during such fiscal year, and
a Stock Option and Compensation Committee, which met four
times during such fiscal year. There is no nominating
committee. However, potential nominees are interviewed by
outside directors, who submit their recommendation to the
Board.
The Audit Committee is comprised of Messrs. Gerdine,
Low and Toyoda. Messrs. Dwight, Farnsworth and Stein are
alternate members. All members and alternate members are
non-employee directors. Among the Committee's functions are
making recommendations to the Board of Directors regarding
engagement of independent auditors, reviewing with Company
financial management the plans for and results of the
independent audit engagement, and reviewing the adequacy of
the Company's system of internal accounting controls.
The Stock Option and Compensation Committee is
comprised of Messrs. Dwight, Farnsworth and Stein.
Messrs. Gerdine and Low are alternate members. All members
and alternate members are non-employee directors. The
Committee's primary functions are to determine remuneration
policies applicable to the Company's executive officers and
to determine the bases of the compensation of the chief
executive officer, including the factors and criteria on
which such compensation is to be based. The Committee also
administers the Company's 1976 Management Stock Option Plan.
Except as described below, no incumbent director during
fiscal 1993 attended fewer than seventy-five percent of the
aggregate of (1) the total number of meetings of the Board
of Directors (held during the period for which he has been a
director) and (2) the total number of meetings held by all
committees of the Board on which he served (during the
periods that he served). Dr. Toyoda attended fewer than
seventy-five percent of such meetings because he did not
participate in three special telephonic Board meetings and
one regular Board meeting.
Compensation of Directors
Directors who are not officers of the Company each
receive a quarterly retainer of $3,000, a fee of $2,000 for
each Board meeting attended and a fee of $500 for each
committee meeting attended if the committee meets on a day
other than when the Board meets. Dr. Toyoda receives an
additional $1,200 for each Board meeting. Directors are
reimbursed for out-of-pocket costs incurred in connection
with attending meetings, and directors who are not residents
of California are reimbursed for the costs of preparing
California tax returns. Dr. Toyoda is also reimbursed for
the costs of preparing a Federal tax return.
Directors who are not officers of the Company do not
participate in any compensation plan except the 1985 Stock
Option Plan for Non-Employee Directors (the "1985 Director
Plan") which was approved by the Company's stockholders at
the 1986 Annual Meeting of Stockholders.
Pursuant to the 1985 Director Plan, as amended, options
to purchase 20,000 shares of the Company's Common Stock are
automatically granted to each non-employee director on the
date such director is for the first time elected or
appointed to the Board of Directors. Thereafter, each such
director is automatically granted options to purchase 6,000
shares on the last day of each fiscal year through and
including 1994, provided that such automatic option grants
will be made only if the director was not an employee of the
Company or any subsidiary for any part of the fiscal year
then ending and has served on the Board of Directors for the
entire fiscal year. Prior to the last day of fiscal 1993,
the initial option grant was for 30,000 shares and the
annual option grant was for 12,000 shares; in December 1993,
the Board amended the Plan effective the last day of fiscal
1993.
The exercise price for an option granted under the 1985
Director Plan is 100% of the fair market value of the shares
covered by the option at the time the option is granted.
All options granted under the 1985 Director Plan will become
exercisable over a four-year period. The options expire
five years after the date of grant or, if earlier, seven
months after the optionee ceases to be a director or one
year after his death.
MANAGEMENT
Security Ownership of Certain Beneficial Owners and
Management
The following table contains certain information
regarding beneficial ownership of the Company's Common Stock
as of November 15, 1993 by (i) each person which is known by
the Company to own beneficially more than 5% of the
Company's Common Stock, (ii) each of the Company's
directors, (iii) the Chief Executive Officer and each of the
Company's four other most highly compensated executive
officers (the five officers shall be referred to as the
"Named Executive Officers"), and (iv) all directors and
executive officers as a group:
Shares Beneficially Owned
Directors, Officers and 5% Stockholders Number Percent
Principal Stockholders:
Investors Research Corporation
4500 Main Street
Kansas City, MO 64141.............. 6,300,000(1) 7.84%
Provident Investment Counsel
300 North Lake Avenue
Pasadena, CA 91101................. 5,644,890(2) 7.02%
Outside Directors:
Herbert M. Dwight, Jr.................. 62,246(3) *
George B. Farnsworth................... 75,000(4) *
Philip V. Gerdine...................... 36,000(5) *
Paul R. Low............................ 0 *
Alfred J. Stein........................ 24,000(6) *
Dr. Hiroo Toyoda....................... 30,000(7) *
Executive Officers:
James C. Morgan........................ 448,262 *
James W. Bagley........................ 225,150 *
Dan Maydan............................. 120,885 *
Tetsuo Iwasaki......................... 101,500 *
David N.K. Wang........................ 185,852(8) *
All Directors and Executive Officers as a
Group (14 persons) 1,559,841(9) 1.94%
____________
* Less than 1%.
(1)These shares are beneficially held by Investors Research
Corporation ("IRC"), Twentieth Century Companies, Inc.
("TCC") and James E. Stowers, Jr., each of the address
reported above. IRC, a registered investment adviser
and a wholly-owned subsidiary of TCC, manages the
investments of three registered investment companies,
Twentieth Century Investors, Inc., Twentieth Century
World Investors, Inc., and TCI Portfolios, Inc., as well
as the assets of institutional investor accounts. The
reported shares are owned by and held for such entities.
Mr. James E. Stowers, Jr. controls TCC by virtue of his
ownership of approximately 60% of the voting stock of
TCC.
(2)Provident Investment Counsel has sole voting power as to
5,644,890 shares and shared investment power as to
5,644,890 shares.
(3)Includes options to purchase 30,000 shares of Common
Stock exercisable by Mr. Dwight within 60 days of
November 15, 1993.
(4)Includes options to purchase 21,000 shares of Common
Stock exercisable by Mr. Farnsworth within 60 days of
November 15, 1993.
(5)Includes options to purchase 30,000 shares of Common
Stock exercisable by Dr. Gerdine within 60 days of
November 15, 1993.
(6)Includes options to purchase 24,000 shares of Common
Stock exercisable by Mr. Stein within 60 days of
November 15, 1993.
(7)Includes options to purchase 30,000 shares of Common
Stock exercisable by Dr. Toyoda within 60 days of
November 15, 1993.
(8)Includes options to purchase 148,000 shares of Common
Stock exercisable by Dr. Wang within 60 days of November
15, 1993.
(9)Includes options to purchase 363,500 shares of Common
Stock exercisable by directors and executive officers
within 60 days of November 15, 1993.
Executive Compensation
The following table contains information concerning
compensation paid to the Named Executive Officers for
services rendered to the Company and its subsidiaries in all
capacities during the three fiscal years ended October 31,
1993:
Summary Compensation Table
Long-Term Compensation
Annual Compensation Awards Payouts
Other All
Annual Restricted Securities Other
Compen- Stock Underlying LTIP Compen-
Name and Fiscal Salary Bonus sation(1) Awards Options Payouts sation(2)
Principal Position Year ($) ($) ($) ($) (#) ($) ($)
James C. Morgan 1993 $485,000 $388,000 $636,572 $0 0 $0 $4,497
Chairman of the 1992 433,238 327,375 117,509 0 100,000 0 -----
Board and Chief 1991 355,653 117,600 117,509 0 100,000 0 -----
Executive Officer
James W. Bagley 1993 390,000 312,000 0 0 0 0 4,497
Vice-Chairman of 1992 354,692 263,250 0 0 80,000 0 -----
the Board and 1991 304,847 100,800 0 0 80,000 0 -----
Chief Operating
Officer
Dan Maydan 1993 335,000 268,000 0 0 0 0 4,497
President of the 1992 312,118 226,125 0 0 96,000 0 -----
Company and 1991 245,193 84,000 0 0 128,000 0 -----
Co-Chairman of
Applied Komatsu
Technology, Inc.
Tetsuo Iwasaki 1993 353,441 117,483 0 0 0 0 0
President of 1992 316,116 54,320 0 0 30,000 0 -----
Applied Komatsu 1991 311,627 52,403 0 0 32,000 0 -----
Technology, Inc.
and Chairman of
Applied Materials
Japan, Inc.
David N.K. Wang 1993 214,884 225,800 0 0 0 0 4,497
Senior Vice 1992 200,000 161,800 0 0 40,000 0 -----
President, 1991 159,578 97,200 0 0 68,000 0 -----
Worldwide Business
Operations
_____________
(1)Represents payments made to Mr. Morgan under the
Supplemental Income Plan, which provides supplemental
income and death and disability benefits to certain
current and former executives who were designated by the
Stock Option and Compensation Committee in 1981. In
fiscal 1993, the Committee elected to pay, and the
Company paid, to Mr. Morgan a lump sum equal to the
discounted present value of all future payments that
would have been paid to him under the Plan. The lump
sum was paid in lieu of such future payments.
(2)Amounts consist of matching contributions made by the
Company under the Employee Savings and Retirement Plan.
Amounts for fiscal 1991 and 1992 are omitted in
accordance with transition provisions accompanying the
new proxy rules.
The following table contains information concerning the
grant of stock options to the Named Executive Officers
during fiscal 1993 under the Company's 1976 Management Stock
Option Plan:
Option Grants in Last Fiscal Year
Individual Grants
Number of % of Total Potential Realizable Value
Securities Options at Assumed Annual Rates
Underlying Granted to of Stock Price Appreciation
Options Employees in Exercise Expiration for Option Term
Name Granted (#) Fiscal Year Price ($/Sh) Date 5% 10%
James C. Morgan 0 0.00% N/A N/A $0 $0
James W. Bagley 0 0.00% N/A N/A 0 0
Dan Maydan 0 0.00% N/A N/A 0 0
Tetsuo Iwasaki 0 0.00% N/A N/A 0 0
David N.K. Wang 0 0.00% N/A N/A 0 0
The Company does not grant stock appreciation rights.
The following table contains information concerning (i)
the exercise of options by the Named Executive Officers
during fiscal 1993 and (ii) unexercised options held by the
Named Executive Officers as of the end of fiscal 1993:
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
Value of Unexercised
Number of Unexercised In-the-Money Options
Options at FY-End (#) at FY-End ($)
Shares
Acquired Value
Name on Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
James C. Morgan 601,632 $11,323,788 0 200,000 $0 $4,850,000
James W. Bagley 80,000 1,795,000 0 160,000 0 3,880,000
Dan Maydan 96,000 1,870,000 0 192,000 0 4,656,000
Tetsuo Iwasaki 64,000 1,272,000 0 62,000 0 1,502,875
David N.K. Wang 74,400 2,431,909 148,000 92,000 3,956,125 2,227,250
Report of the Stock Option and Compensation Committee of the
Board of Directors
Notwithstanding any statement to the contrary in any of
the Company's previous or future filings with the Securities
and Exchange Commission, this Report shall not be
incorporated by reference into any such filings.
Compensation Philosophy. The Stock Option and
Compensation Committee (the "Committee") has two principal
objectives in determining executive compensation policies:
(1) to attract, reward and retain key executive talent, and
(2) to motivate executive officers to perform to the best of
their abilities and to achieve short-term and long-term
corporate objectives that will contribute to the overall
goal of enhancing stockholder value. In furtherance of
these objectives, the Committee has adopted the following
overriding policies:
The Company will compensate competitively with
the practices of other leading companies in
related fields;
Performance at the corporate, business unit and
individual executive officer level will
determine a significant portion of compensation;
The attainment of realizable but challenging
objectives will determine performance based
compensation; and
The Company will encourage executive officers to
hold substantial, long-term equity stakes in
the Company so that the interests of executive
officers will coincide with the interests of
stockholders -- accordingly, stock or stock
options will constitute a significant portion
of compensation.
The Committee's specific executive compensation policies
discussed below are designed to achieve the Committee's
objectives through the implementation of the foregoing
policies. In the following discussion, terms such as
"generally", "typically" or "approximately" indicate that,
while the Committee's initial analysis was based on
quantitative factors, it complemented such analysis with a
consideration of qualitative factors such as overall
performance at the corporate, business unit and/or
individual level.
Elements of Executive Compensation. The elements of
the Company's compensation of executive officers are: (1)
annual cash compensation in the form of base salary and
incentive bonuses paid under the Company's Executive
Incentive Compensation Plan, (2) long-term incentive
compensation in the form of stock options granted under the
Company's 1976 Management Stock Option Plan and (3) other
compensation and employee benefits generally available to
all employees of the Company, such as health insurance and
employer matching contributions under the Company's Employee
Savings and Retirement Plan, a "401(k)" plan.
Total Annual Compensation. Each executive officer's
target total annual compensation (i.e. salary plus bonus) is
determined after a review of independent survey data
regarding similarly situated executives at a group of
approximately twenty companies. To construct the survey
group, the Company chose companies which (1) are in the
electronics industry, (2) have revenues comparable to the
Company's revenues, and/or (3) compete with the Company for
executive talent. Such group is not identical to the group
of companies which comprise the Hambrecht & Quist
Semiconductors Index used in the Performance Graph, because
it was constructed using criteria different from the
criteria used by Hambrecht & Quist. For each executive
officer, the Company seeks to establish a total target
annual compensation level that is at or close to the median
of compensation paid to similarly situated executives at the
companies surveyed. This policy serves the Company's
objectives of attracting, rewarding and retaining key
executive talent.
Bonuses. The Committee's process for determining
annual bonuses is designed to motivate the Company's
executive officers to perform to the best of their abilities
and to enhance stockholder value through the achievement of
corporate objectives. Consequently, the target bonus for an
executive is related to his or her potential impact on
corporate results, while the percentage of the target bonus
received is determined with reference to performance-related
parameters.
The percentages of total target annual compensation
allocated to salary and to bonus differ depending on whether
the officer is a business unit executive or a staff
executive. Given that business unit executives have more
control over the performance of their business unit than
staff executives have over the multiple business units they
support, the target annual compensation of business unit
executives has a higher bonus component than the target
compensation of staff executives. Generally, target bonuses
for business unit executives are on the order of 60-75% of
annual salary, while target bonuses for staff executives are
on the order of 40-50% of annual salary.
The percentage of target bonus that a business unit
executive (other than Mr. Morgan, Mr. Bagley and Dr. Maydan)
receives depends on performance with respect to three
categories of parameters: profitability, market share growth
and customer satisfaction. The weighting of such categories
differs among business units depending on the maturity of
the unit. The parameters within each category are weighted
roughly equally. For example, if there are three parameters
in the profitability category, the weightings within such
category might be 30%, 30%, and 40%.
The percentage of target bonus that a staff executive
receives depends on corporate earnings per share and three
to five specific management-by-objective ("MBO") goals.
Typically, the earnings per share parameter and the MBO
parameter are of roughly equal weight. Within the MBO
parameter, the specific goals are weighted approximately
equally.
For business unit and staff executive officers, the
actual targets for all parameters are set from year to year
at levels that take into account general business conditions
and Company strategies for the year. The Committee
approves all such performance targets and determines,
after discussions with Company management, whether each
executive officer has met, exceeded or fallen below these
targets.
Bonuses paid to Mr. Morgan, Mr. Bagley and Dr. Maydan
are determined by combining two equally weighted factors:
(1) annual revenue growth, and (2) net profit as a
percentage of sales. In determining bonus amounts for these
executive officers, the Committee also takes into
consideration its overall assessment of Company performance.
Stock Options. The Committee believes that the use of
stock options as long term compensation serves to motivate
executive officers to maximize stockholder value and to
remain in the Company's employ. The number of options
granted to each executive is determined by the Committee, in
its discretion. In making its determination, the Committee
considers the executive's position at the Company, his or
her individual performance, the number of options held by
the executive (if any) and other factors, including an
analysis of the estimated amount potentially realizable from
the options. This analysis takes into account: (1) a target
compensation amount equal to a specified percentage of
salary earned in the year of grant, (2) an assumed rate of
appreciation in the Company stock price, and (3) the number
of options which, given the assumed appreciation rate, would
enable the executive to receive (net of the exercise price)
the target amount upon the exercise of the options on the
first date when all the options are exercisable.
Compensation of Chief Executive Officer. The
Committee applies the foregoing principles and policies in
determining the compensation of Mr. Morgan, the Company's
Chief Executive Officer.
During fiscal 1993, Mr. Morgan received a salary of
$485,000. He also was eligible to receive an annual bonus.
The Committee believes that Mr. Morgan, as Chief Executive
Officer, significantly and directly influences the Company's
overall performance. Accordingly, the Committee set Mr.
Morgan's target bonus at 75% of his annual salary. During
fiscal 1993, the Company exceeded Mr. Morgan's bonus target
for the combination of revenue growth and net profit as a
percentage of sales. Based on this performance, the
Committee approved the payment to Mr. Morgan of a cash bonus
for fiscal 1993 of $388,000, which equals 80% of his fiscal
1993 salary.
Mr. Morgan also received compensation pursuant to a
Supplemental Income Plan (the "SIP") which the Committee
adopted in 1981. The SIP was intended to assist the Company
in retaining certain executives during a period when the
Company, due to financial conditions, was unable to pay
competitive compensation. Under the SIP, Mr. Morgan was to
have received annual payments of $117,509 during the ten-
year period ending in fiscal 1999. However, in fiscal 1993,
the Committee elected to pay Mr. Morgan a single lump
sum equal to the discounted present value of all future
payments owed to Mr. Morgan under the SIP.
Accordingly, Mr. Morgan will receive no future payments
under the SIP.
Tax Deductibility of Executive Compensation. Beginning
in the Company's fiscal 1994, the Internal Revenue Code (the
"Code") will limit the federal income tax deductibility of
compensation paid to the Company's chief executive officer
and to each of the other four most highly compensated
executive officers. The Company may deduct such
compensation only to the extent that during any fiscal year
the compensation does not exceed $1 million or meets certain
specified conditions (such as shareholder approval). Based
on the Company's current compensation plans and policies
and recently released proposed regulations interpreting the
Code, the Company and the Committee believe that, for the
near future, there is little risk that the Company will lose
any significant tax deduction for executive compensation.
After the Company and Committee have had additional time to
analyze the new regulations, the Company's compensation
plans and policies will be modified to ensure full
deductibility of executive compensation if the Company and
the Committee determine that such an action is in the best
interest of the Company.
Herbert M. Dwight, Jr.
George B. Farnsworth
Alfred J. Stein
Company Stock Performance
The following graph shows a five-year comparison of
cumulative total return for the Company's stock, the
Standard & Poor's 500 Composite Index and the Hambrecht &
Quist Semiconductors Index, which is a published industry
index. The Hambrecht & Quist Semiconductors Index contains
approximately 21 companies in the semiconductor and
semiconductor equipment industries. Notwithstanding any
statement to the contrary in any of the Company's previous
or future filings with the Securities and Exchange
Commission, the graph shall not be incorporated by reference
into any such filings.
(Performance Graph filed on paper under Form SE in accordance
with Item 304(d) of Regulation S-T.)
Compensation Committee Interlocks and Insider Participation
During fiscal 1993, Herbert M. Dwight, Jr., George B.
Farnsworth, Dr. Hiroo Toyoda and Alfred J. Stein served as
members of the Stock Option and Compensation Committee.
Beginning at the June meeting of the Committee, Mr. Stein
replaced Dr. Toyoda as a Committee member. None of the
Compensation Committee members or Named Executive Officers
have any relationships which must be disclosed under this
caption.
Compliance With Section 16(a) of the Securities Exchange Act
of 1934
Section 16(a) of the Securities Exchange Act of 1934
requires the Company's officers and directors, and holders
of more than 10% of the Company's Common Stock, to file with
the Securities and Exchange Commission (the "SEC") initial
reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company.
Such officers, directors and 10% stockholders are required
by SEC regulation to furnish the Company with copies of all
Section 16(a) forms they file.
Based solely on its review of such forms that it
received, or written representations from reporting persons
that no Form 5s were required for such persons, the Company
believes that, during fiscal 1993, all Section 16(a) filing
requirements were satisfied on a timely basis.
ITEM 2-AMENDMENT OF THE CERTIFICATE OF
INCORPORATION TO AUTHORIZE ADDITIONAL COMMON STOCK
Article FIFTH of the Certificate of Incorporation
presently authorizes the issuance of up to 100,000,000
shares of Common Stock, par value $.01 per share, and
1,000,000 shares of Preferred Stock, par value $.01 per
share. The authorized Common Stock is all of a single class
and with equal voting, distribution, liquidation and other
rights. The Board of Directors now proposes to amend
Article FIFTH in order to increase the number of shares of
Common Stock authorized for issuance to 200,000,000 shares.
The 100% stock dividend distributed on October 5, 1993
to shareholders of record as of September 21, 1993 depleted
the pool of authorized but unissued shares by 40,153,773
shares, thereby reducing that number to 19,692,454.
Consequently, the Board of Directors considers it advisable
to authorize the issuance of an additional 100,000,000 shares
for use in additional stock dividends (if any), the Company's
employee benefit plans, and other corporate purposes. The
Company has no present plans which would result in the
issuance of new shares of Common Stock, except through the
Company's employee benefit plans.
As of November 15, 1993, 80,394,185 shares were
outstanding and 11,918,812 shares were reserved for issuance
under the Company's various employee benefit plans, leaving
a balance of 7,687,003 authorized, unissued and unreserved
shares. If the proposed amendment to the Certificate of
Incorporation is approved, the approximate number of
authorized, unissued and unreserved shares will be
107,687,003.
If this amendment is adopted, the additional shares of
Common Stock may be issued by direction of the Board of
Directors at such times, in such amounts and upon such terms
as the Board of Directors may determine, without further
approval of the stockholders unless, in any instance, such
approval is expressly required by regulatory agencies or
otherwise. Stockholders of the Company have no preemptive
rights to purchase additional shares. The adoption of the
amendment will not of itself cause any change in the capital
accounts of the Company. However, the issuance of
additional shares of Common Stock would dilute the existing
stockholders' equity interest in the Company.
Approval of the proposed amendment requires the
affirmative votes of the holders of a majority of the
outstanding Company Stock.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS
VOTE FOR THE AMENDMENT OF THE CERTIFICATE OF INCORPORATION.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The firm of independent accountants of the Company
recommended by the Audit Committee and selected by the Board
of Directors for the current fiscal year is Price Waterhouse.
The Board of Directors expects that representatives of Price
Waterhouse will be present at the Annual Meeting of
Stockholders, will be given an opportunity to make a statement
at such meeting if they desire to do so and will be
available to respond to appropriate questions.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of
Directors does not intend to bring any other business before
the Annual Meeting of Stockholders and, so far as is known
to the Board of Directors, no matters are to be brought
before the Annual Meeting of Stockholders except as
specified in the notice of the Annual Meeting of
Stockholders. However, as to any other business that may
properly come before the Annual Meeting of Stockholders, it
is intended that proxies, in the form enclosed, will be
voted in respect thereof in accordance with the judgment of
the persons voting such proxies.
STOCKHOLDER PROPOSALS--1995 ANNUAL MEETING
Stockholders are entitled to present proposals for
action at a forthcoming stockholders' meeting if they comply
with the requirements of the proxy rules. Any proposals
intended to be presented at the 1995 Annual Meeting of
Stockholders of the Company must be received at the
Company's offices on or before October __, 1994 in order to
be considered for inclusion in the Company's proxy statement
and form of proxy relating to such meeting.
Donald A. Slichter
Secretary
January __, 1994
Santa Clara, California
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING
IN PERSON. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING,
PLEASE MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY AS
PROMPTLY AS POSSIBLE IN THE ENCLOSED POSTAGE PREPAID
ENVELOPE.
This Proxy Statement was printed on recycled paper.
APPLIED MATERIALS, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS ON MARCH 3, 1994.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints James C. Morgan and
Donald A. Slichter, or either of them, each with full power
of substitution, as proxies of the undersigned, to attend
the Annual Meeting of Stockholders of Applied Materials,
Inc., to be held on Thursday, March 3, 1994, at 3:00 P.M.
and any adjournment or postponement thereof, and to vote the
number of shares the undersigned would be entitled to vote
if personally present on the following:
1. ELECTION OF DIRECTORS
____FOR all nominees listed below _____WITHHOLD AUTHORITY
(except as indicated to the contrary below) (to vote for all nominees listed below)
M. Armacost, J. Bagley, H. Dwight, G. Farnsworth,
P. Gerdine, P. Low, D. Maydan, J. Morgan, A. Stein,
H. Toyoda
INSTRUCTION: To withhold authority to vote for any
individual Nominee, write that Nominee's name
in the space provided below.
____________________________________________________________
____________________________________________________________
The Board of Directors recommends a vote FOR.
2. To approve the amendment of the Company's Certificate
of Incorporation to increase the number of shares of
Common Stock authorized for issuance thereunder to
200,000,000.
FOR _____ AGAINST _____ ABSTAIN _____
The Board of Directors recommends a vote FOR.
3. In their discretion, upon any and all such other
matters as may properly come before the meeting or any
adjournment or postponement thereof.
(Please sign on reverse)
THIS PROXY WILL BE VOTED AS SPECIFIED, OR IF NO CHOICE
IS SPECIFIED, WILL BE VOTED FOR THE TEN NOMINEES FOR
ELECTION AND FOR PROPOSAL 2. (Please sign exactly as your
name appears. When shares are held by joint tenants, both
should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title
as such. If a corporation, please sign in full corporate
name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized
person.)
Dated:____________________________
_________________________________
Signature
_________________________________
Signature, if held jointly
STOCKHOLDERS ARE URGED TO MARK, DATE, SIGN AND RETURN
THIS PROXY IN THE ENVELOPE PROVIDED, WHICH REQUIRES NO
POSTAGE IF MAILED IN THE UNITED STATES.
