0000931763-01-501801.txt : 20011009
0000931763-01-501801.hdr.sgml : 20011009
ACCESSION NUMBER: 0000931763-01-501801
CONFORMED SUBMISSION TYPE: DEF 14A
PUBLIC DOCUMENT COUNT: 1
CONFORMED PERIOD OF REPORT: 20011107
FILED AS OF DATE: 20011002
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: SCIENTIFIC ATLANTA INC
CENTRAL INDEX KEY: 0000087777
STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663]
IRS NUMBER: 580612397
STATE OF INCORPORATION: GA
FISCAL YEAR END: 0630
FILING VALUES:
FORM TYPE: DEF 14A
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-05517
FILM NUMBER: 1750710
BUSINESS ADDRESS:
STREET 1: 5030 SUGARLOAF PARKWAY
CITY: LAWRENCEVILLE
STATE: GA
ZIP: 30044
BUSINESS PHONE: 7709035000
MAIL ADDRESS:
STREET 1: 5030 SUGARLOAF PARKWAY
CITY: LAWRENCEVILLE
STATE: GA
ZIP: 30044
FORMER COMPANY:
FORMER CONFORMED NAME: SCIENTIFIC ASSOCIATES INC
DATE OF NAME CHANGE: 19671024
DEF 14A
1
ddef14a.txt
NOTICE & PROXY
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
SCIENTIFIC ATLANTA INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
[LOGO OF SCIENTIFIC ATLANTA]
Dear Shareholder:
You are cordially invited to attend the annual meeting of shareholders of
Scientific-Atlanta, Inc. to be held on Wednesday, November 7, 2001, at 9:00
a.m., local time, at our offices located at 5030 Sugarloaf Parkway,
Lawrenceville, Georgia 30044. At this year's meeting, the shareholders will
consider the following company proposals, all of which are described in the
attached proxy statement:
1. The election of four directors;
2. A proposal to ratify the selection of Arthur Andersen LLP as our
independent auditors for the 2002 fiscal year; and
3. Such other matters as may properly come before the meeting and at
any adjournments thereof.
This year we will continue to offer the following opportunities:
. We will offer you the flexibility of voting your Scientific-Atlanta
shares by telephone or over the Internet, in addition to the
traditional mail-in method. Telephone and Internet voting give you
the convenience of voting 24 hours a day, seven days a week. Simply
follow the instructions on your proxy card included in your proxy
package.
. We will also offer you the opportunity during this year's voting
process to elect to view future annual reports and proxy material on
the Internet, rather than receive paper copies in the mail. This
service helps Scientific-Atlanta reduce printing and postage costs.
We look forward to seeing you at the annual meeting.
Sincerely,
/s/ William E. Eason, Jr.
William E. Eason, Jr.
Senior Vice President and Secretary
October 2, 2001
Scientific-Atlanta, Inc., 5030 Sugarloaf Parkway, Lawrenceville, Georgia 30044
SCIENTIFIC-ATLANTA, INC.
2001 ANNUAL MEETING OF SHAREHOLDERS
NOTICE OF ANNUAL MEETING AND PROXY STATEMENT
TABLE OF CONTENTS
NOTICE OF ANNUAL MEETING .................................................. i
PROXY STATEMENT............................................................ 1
General Information........................................................ 1
Why am I receiving these annual meeting materials?....................... 1
What is the purpose of the annual meeting?............................... 1
Who may vote?............................................................ 1
How much does each share count?.......................................... 1
How do I give voting instructions?....................................... 1
How do I vote by Internet?............................................... 2
How do I vote by telephone?.............................................. 2
How do I vote by mail?................................................... 2
Will my shares be voted if I do not provide my proxy?.................... 2
What if I return my proxy card but do not provide voting instructions?... 2
How can I revoke a proxy?................................................ 2
What does it mean if I receive more than one proxy card?................. 3
Who will bear the cost of soliciting votes for the meeting?.............. 3
Who counts the votes?.................................................... 3
What are some of the considerations relating to electronic access of
annual meeting materials?............................................... 3
Does the information in this proxy statement reflect the March 2000 stock
split?.................................................................. 3
Certain Beneficial Ownership............................................... 4
Proposal No. 1 (Election of Directors)..................................... 7
Meetings and Committees of the Board of Directors.......................... 10
Report of the Human Resources and Compensation Committee................... 11
Compensation of Officers and Directors..................................... 14
Performance Graph.......................................................... 20
Proposal No. 2 (Selection of Independent Public Accountants)............... 20
Report of the Audit Committee.............................................. 20
Audit Fees................................................................. 21
Financial Information Systems Design and Implementation Fees............... 21
All Other Fees............................................................. 21
Other Matters.............................................................. 21
Section 16(a) Beneficial Ownership Reporting Compliance.................... 22
Form 10-K Annual Report.................................................... 22
Shareholder Proposals and Nominations for 2002 Annual Meeting.............. 22
Appendix A: Audit Committee Charter........................................ A-1
SCIENTIFIC-ATLANTA, INC.
2001 ANNUAL MEETING OF SHAREHOLDERS
NOTICE OF ANNUAL MEETING
Time: 9:00 a.m., Wednesday, November 7, 2001
Place: Scientific-Atlanta, Inc.
5030 Sugarloaf Parkway
Lawrenceville, GA 30044
Items of Business: 1. Elect the following four directors:
.James I. Cash, Jr.
.David W. Dorman
.James F. McDonald
.Terence F. McGuirk
2. Ratify the selection of Arthur Andersen LLP as
our independent auditors for fiscal year 2002.
3. Transact such other business as may properly
come before the meeting, and any adjournment or
postponement.
Who May Vote: You can vote if you were a shareholder of record
at the close of business on September 17, 2001.
Documents: A proxy solicited by our board of directors,
notice of our 2001 Annual Meeting, our 2001 Proxy
Statement and our 2001 Annual Report are included
in this mailing.
Proxy Voting: Your vote is important. Please vote in one of
these ways:
1. Visit the web site listed on your proxy card;
2. Use the toll-free telephone number shown on
your proxy card; or
3. Mark, sign, date and promptly return the
enclosed proxy card in the postage-paid envelope.
Electronic Delivery: During this year's voting process you may consent
to receive future annual meeting materials by
Internet, instead of using the traditional paper-
based delivery system.
By Order of the Board of Directors, William E. Eason, Jr., Secretary, October
2, 2001
i
SCIENTIFIC-ATLANTA, INC.
PROXY STATEMENT FOR THE
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 7, 2001
GENERAL INFORMATION
Why am I receiving these annual meeting materials?
The board of directors of Scientific-Atlanta is providing these materials
for you in connection with our 2001 annual meeting of shareholders and any
adjournments thereof. As a shareholder, you are invited to attend the meeting
and are entitled to vote on the proposals described in this proxy statement.
The meeting will be held at 9:00 a.m., local time, on November 7, 2001 at
our offices located at 5030 Sugarloaf Parkway, Lawrenceville, Georgia 30044.
These proxy materials are first being mailed to shareholders on or about
October 2, 2001.
What is the purpose of the annual meeting?
At the annual meeting, you will act upon the matters outlined in the notice
of meeting, including the following:
. To elect four directors; and
. To ratify the selection of Arthur Andersen LLP as our independent
auditors for the 2002 fiscal year.
Our board of directors recommends that you vote your shares "FOR" each of
the nominees to the board, and "FOR" ratification of the auditors.
In addition, on our proxy card you are being asked to consent to view future
proxy material on the Internet rather than receive paper copies in the mail.
By consenting to receive future annual meeting materials electronically, you
will help us reduce printing and postage costs.
Our management will also report on the performance of Scientific-Atlanta
during fiscal year 2001 and respond to questions from shareholders.
Who may vote?
All shareholders of record as of the close of business on the record date of
September 17, 2001.
As of September 17, 2001, we had 156,035,880 shares of common stock
outstanding and entitled to vote.
How much does each share count?
Each share of Scientific-Atlanta common stock, $0.50 par value per share, is
entitled to one vote. The presence at the meeting, in person or by proxy, of a
majority of the shares of common stock outstanding on the record date will
constitute a quorum at the meeting. Abstentions and broker non-votes will be
counted to determine a quorum.
How do I give voting instructions?
If your shares are registered directly in your name with Scientific-
Atlanta's transfer agent, The Bank of New York, you are considered the
shareholder of record with respect to those shares, and these proxy materials
are being sent directly to you. If you are the shareholder of record, you may
attend the annual meeting and give instructions in person. You may also give
voting instructions by Internet, telephone or mail as described below. The
proxy committee, named on the enclosed proxy card, will vote all properly
executed proxies that are delivered pursuant to this solicitation and not
subsequently revoked in accordance with the instructions given by you.
If your shares are held in a stock brokerage account or by a bank or other
nominees, you are considered the beneficial owner of such shares held in
"street name," and these proxy materials are being forwarded to you by your
broker or nominee, which is considered the shareholder of record with respect
to those shares. Your broker or nominee has enclosed a voting instruction card
for you to use in directing the broker or nominee how to vote your shares. As
the beneficial owner, you are invited to attend the meeting. However, since
you are not the shareholder of record, you may not vote these shares in person
at the meeting unless you have obtained a signed proxy from the record holder
giving you the right to vote the shares.
1
How do I vote by Internet?
If you are a shareholder of record, the web site for Internet voting is
shown on your proxy card. Internet voting is available 24 hours a day, seven
days a week. You will be given the opportunity to confirm that your
instructions have been properly recorded, and you can consent to view future
proxy statements and annual reports on the Internet instead of receiving them
in the mail. If you vote on the Internet, you do NOT need to return your proxy
card. The deadline for voting by Internet is 5:00 p.m. on November 6, 2001. If
you are a beneficial owner, or hold your shares in "street name," please check
your voting instruction card or contact your broker or nominee to determine
whether you will be able to vote by Internet.
How do I vote by telephone?
If you are a shareholder of record, you can vote your shares by telephone by
calling the toll-free telephone number shown on your proxy card. Telephone
voting is available 24 hours a day, seven days a week. Easy-to-follow voice
prompts allow you to vote your shares and confirm that your instructions have
been properly recorded. Our telephone voting procedures are designed to
authenticate the shareholder by using individual control numbers. If you vote
by telephone, you will also be given the opportunity to consent to view future
proxy statements and annual reports on the Internet instead of receiving them
in the mail. If you vote by telephone, you do NOT need to return your proxy
card. The deadline for voting by telephone is 5:00 p.m. on November 6, 2001.
If you are a beneficial owner, or hold your shares in "street name," please
check your voting instruction card or contact your broker or nominee to
determine whether you will be able to vote by telephone.
How do I vote by mail?
If you are a shareholder of record, you may simply mark the enclosed proxy
card, date and sign it, and return it in the postage-paid envelope provided.
If you wish to consent to view future proxy statements and annual reports on
the Internet, check the box provided on the card.
If you hold your shares in street name, you must sign the voting instruction
card included by your broker or nominee and mail it in the postage-paid
envelope provided. If you wish to view future proxy statements and annual
reports on the Internet, please contact your broker or nominee.
Will my shares be voted if I do not provide my proxy?
Your shares may be voted under certain circumstances if they are held in the
name of a brokerage firm. Brokerage firms have the authority under the New
York Stock Exchange rules to vote customers' unvoted shares, which are
referred to as broker non-votes, on certain routine matters. At the meeting,
shares represented by broker non-votes will be counted as voted by the
brokerage firm in the election of directors and the ratification of
independent auditors, but will not be counted for any other matters to be
voted on because these other matters are not considered routine. If you hold
your shares directly in your name, they will not be voted if you do not
provide a proxy.
What if I return my proxy card but do not provide voting instructions?
If you sign and return your proxy, but do not provide voting instructions,
your shares will be voted:
1. "FOR" the election of the nominee directors named in this proxy
statement, and
2. "FOR" the ratification of the selection of Arthur Andersen LLP as
independent auditors for the 2002 fiscal year.
We are not aware of any other matters to be presented to the meeting;
however, the holders of the proxies will vote in their discretion on any other
matters properly presented.
How can I revoke a proxy?
You may revoke a proxy by any one of the following three actions:
1. delivering an instrument revoking the proxy to our Secretary,
2. delivering a later dated proxy to our Secretary, or
3. voting in person.
2
Attendance at the annual meeting, in and of itself, will not constitute a
revocation of a proxy.
What does it mean if I receive more than one proxy card?
You will receive a proxy card for each account you have. Please vote proxies
for all accounts to ensure that all your shares are voted.
Who will bear the cost of soliciting votes for the meeting?
We have engaged Morrow & Co., Inc. to assist in the solicitation of proxies
from brokers, banks and their nominees which are shareholders of record, at a
cost of approximately $8,000, plus reasonable out-of-pocket expenses. We will
pay the costs of this solicitation, including the cost of preparing and
mailing this proxy statement. In addition to solicitations by mail, our
directors and regular employees may solicit proxies in person or by telephone
or other method. In such case, these directors or employees, as the case may
be, would not receive any compensation in addition to their regular
compensation as directors or employees for such solicitation.
Who counts the votes?
Votes cast by proxy or in person at the annual meeting will be counted by
the persons appointed by us to act as the inspectors of election for the
meeting.
What are some of the considerations relating to electronic access of annual
meeting materials?
The following are some things to note about electronic access of future
annual meeting materials:
. Choosing online access of future annual meeting materials is voluntary.
. Accessing your Scientific-Atlanta annual meeting materials online
requires that you have access to the Internet, which may result in
charges to you from your Internet service provider and/or telephone
companies.
. If you elect to access future annual reports and proxy material on the
Internet, you will still receive a paper copy of the notice of annual
meeting of shareholders and a proxy card in the mail to vote your
shares. The proxy card will contain the Internet address for viewing the
annual report and proxy statement, and instructions for electronic
voting.
. Your consent will be effective for accessing all future Scientific-
Atlanta annual reports, notices of annual meeting and proxy statements,
and will continue in effect unless it is revoked by you.
. You may revoke your election if you change your mind after consenting by
calling 1-800-524-4458. Also, even if you elect to view our annual
meeting materials online, you will still be able to request printed
copies of the annual report and proxy statement.
. If you do not sign up for this service, you will continue receiving
paper copies of these documents by U.S. mail.
. Whether you register for Internet access or continue to receive paper
copies of the annual report and proxy statement, you will be able to
choose how you want to vote your shares: via telephone, Internet or U.S.
mail.
Does the information in this proxy statement reflect the March 2000 stock
split?
All share data in this proxy statement has been adjusted retroactively to
account for the two-for-one stock split effected in the form of a stock
dividend on March 27, 2000.
3
CERTAIN BENEFICIAL OWNERSHIP
The following table sets forth information, as of June 29, 2001, as to
shares of Scientific-Atlanta common stock held by persons known to us to be
the beneficial owners of more than five percent of Scientific-Atlanta common
stock based upon information publicly filed by such persons:
Amount of Beneficial Percent of
Name and Address of Beneficial Owner Ownership Class
------------------------------------------ -------------------- ----------
FMR Corp. ................................ 12,372,869 7.7%(/1/)
82 Devonshire Street
Boston, Massachusetts 02109
(1) Based on a Schedule 13G, dated April 10, 2001, filed by FMR Corp. and
related entities. FMR has sole voting power over 359,369 shares and sole
dispositive power over 12,372,869 shares. The percent of class was
computed by the beneficial owner as of the date immediately preceding the
filing of its Schedule 13G with the Securities and Exchange Commission.
The following table sets forth, as of June 29, 2001, unless otherwise
indicated, information regarding the beneficial ownership of Scientific-
Atlanta common stock and common stock equivalents held by each director, by
each executive officer named in the Summary Compensation Table and by all
directors and executive officers as a group:
Amount of Beneficial
Name of Beneficial Owner Ownership(/1/)
-------------------------------------------------------- --------------------
Marion H. Antonini...................................... 126,521(/2/)
James I. Cash, Jr....................................... 2,500
David W. Dorman......................................... 24,006(/3/)
William E. Kassling..................................... 95,717(/4/)
Mylle Bell Mangum....................................... 102,111(/5/)
James F. McDonald....................................... 1,131,903(/6/)
Terence F. McGuirk...................................... --
David J. McLaughlin..................................... 40,070(/7/)
James V. Napier......................................... 168,739(/8/)
Sam Nunn................................................ 64,032(/9/)
Conrad J. Wredberg, Jr.................................. 247,618(/10/)
Dwight B. Duke.......................................... 166,957(/11/)
H. Allen Ecker.......................................... 252,751(/12/)
Wallace G. Haislip...................................... 187,725(/13/)
All Directors and Executive Officers as a Group......... 3,660,426(/14/)
As of June 29, 2001, the total shares beneficially owned by each individual
director and executive officer constituted less than 1% of the outstanding
Scientific-Atlanta common stock, and the aggregate shares beneficially owned
by all directors and executive officers as a group represented approximately
2.2% of the outstanding common stock.
(1) Except as indicated below, each person has sole voting and dispositive
power with respect to the shares shown in this column.
. The number of shares beneficially owned includes shares held in
Scientific-Atlanta's Dividend Reinvestment Plan (DRIP) with respect to
which a beneficial owner has voting and dispositive power.
. Directors and executive officers holding restricted stock have the right
to vote the shares and to receive dividends on the shares, but do not
have the right to dispose of such shares prior to vesting. As a result,
this column includes restricted stock held by the beneficial owner.
4
. With respect to executive officers, the number of shares beneficially
owned includes shares held in the Scientific-Atlanta Voluntary Employee
Retirement and Investment Plan (the 401(k) plan) with respect to which
such officers have voting and dispositive power.
. Certain non-employee directors have deferred stock awards into an award
sub-account and cash compensation into a stock sub-account under the
Deferred Compensation Plan for Non-Employee Directors. Directors with
rights to such deferred shares of common stock disclaim beneficial
ownership of such shares because they do not have the right to vote the
deferred shares and this column does not include such shares.
(2) Includes 4,500 shares of restricted stock and 95,000 shares of common
stock that may be acquired by Mr. Antonini upon exercise of stock options
exercisable as of August 28, 2001. Does not include 92,947 deferred shares
of common stock held through the Deferred Compensation Plan for Non-
Employee Directors.
(3) Includes 17,500 shares of common stock that may be acquired by Mr. Dorman
upon exercise of stock options exercisable as of August 28, 2001. Does not
include 7,500 deferred shares of common stock held through the Deferred
Compensation Plan for Non-Employee Directors.
(4) Includes 4,500 shares of restricted stock and 80,000 shares of common
stock that may be acquired by Mr. Kassling upon exercise of stock options
exercisable as of August 28, 2001. Does not include 10,500 deferred shares
of common stock held through the Deferred Compensation Plan for Non-
Employee Directors.
(5) Includes 84,000 shares of common stock that may be acquired by Ms. Mangum
upon exercise of stock options exercisable as of August 28, 2001. Does not
include 16,500 deferred shares of common stock held through the Deferred
Compensation Plan for Non-Employee Directors.
(6) Includes 46,982 shares of restricted stock and 939,641 shares of common
stock that may be acquired by Mr. McDonald upon exercise of stock options
exercisable as of August 28, 2001.
(7) Includes 1,412 shares of common stock held by Mr. McLaughlin's daughter,
400 shares of common stock held by Mr. McLaughlin's spouse and 2,500
shares of common stock that may be acquired by Mr. McLaughlin upon
exercise of stock options exercisable as of August 28, 2001. Does not
include 57,892 deferred shares of common stock held through the Deferred
Compensation Plan for Non-Employee Directors.
(8) Includes 135,000 shares of common stock that may be acquired by Mr. Napier
upon exercise of stock options exercisable as of August 28, 2001. Does not
include 86,158 deferred shares of common stock held through the Deferred
Compensation Plan for Non-Employee Directors.
(9) Includes 55,000 shares of common stock that may be acquired by Mr. Nunn
upon exercise of stock options exercisable as of August 28, 2001. Does not
include 24,431 deferred shares of common stock held through the Deferred
Compensation Plan for Non-Employee Directors.
(10) Includes 17,586 shares of restricted stock and 229,799 shares of common
stock that may be acquired by Mr. Wredberg upon exercise of stock options
exercisable as of August 28, 2001.
(11) Includes 13,840 shares of restricted stock and 147,402 shares of common
stock that may be acquired by Mr. Duke upon exercise of stock options
exercisable as of August 28, 2001.
(12) Includes 12,829 shares of restricted stock and 201,995 shares of common
stock that may be acquired by Dr. Ecker upon exercise of stock options
exercisable as of August 28, 2001.
(13) Includes 11,768 shares of restricted stock and 145,533 shares of common
stock that may be acquired by Mr. Haislip upon exercise of stock options
exercisable as of August 28, 2001.
(14) Includes 216,412 shares of restricted stock and 2,901,251 shares of
common stock that may be acquired by directors and executive officers
upon exercise of stock options exercisable as of August 28, 2001. Does
not include 295,928 deferred shares of common stock held through the
Deferred Compensation Plan for Non-Employee Directors.
5
[This Page Intentionally Left Blank]
6
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Scientific-Atlanta articles of incorporation provide for the division of
the board of directors into three classes, with the directors in each class
serving for a term of three years. At the annual meeting, four nominees for
director are to be elected to serve until the annual meeting of shareholders
in 2004. The nominees for director are: James I. Cash, Jr., David W. Dorman,
James F. McDonald and Terence F. McGuirk. All of the nominees for election as
directors at this meeting, and all directors whose term of office will
continue after the annual meeting, are currently directors of Scientific-
Atlanta.
Directors are to be elected by a plurality of the votes cast at the annual
meeting in person or by proxy by the holders of shares entitled to vote in the
election. Votes may be cast for or votes may be withheld from each nominee.
Abstentions may not be specified with respect to the election of directors.
The withholding of authority by a shareholder, including broker non-votes,
will not be counted in computing a plurality and thus will have no effect on
the results of the election of such nominees.
The board of directors is informed that all of the nominees are willing to
serve as directors, but if any of them should decline or be unable to act as a
director, the persons designated as proxy holders in the accompanying proxy
card(s) (or their substitutes) will vote for such substitute nominee or
nominee(s) as may be designated by the board of directors unless the board
reduces the number of directors accordingly.
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NOMINEES FOR TERMS EXPIRING IN 2004
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[PHOTO OF JAMES I. CASH, JR.]
JAMES I. CASH, JR. Director since 2001
Age 53
Dr. Cash has been on the faculty of Harvard Business School
since 1976. From 1992 to 1995, Dr. Cash served as chairman
of the MBA program. He is currently serving as chairman of
Harvard Business School Publishing. Dr. Cash is a director
of The Chubb Corporation, General Electric Company, Knight-
Ridder, Inc., Microsoft Corporation and WinStar Corporation.
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[PHOTO OF DAVID W. DORMAN]
DAVID W. DORMAN Director since 1998
Age 47
Mr. Dorman has held the position of President of AT&T
Corporation since December 2000. Prior to that he was Chief
Executive Officer of Concert, an AT&T/British Telecom Global
Venture from April 1999 to November 2000. Mr. Dorman served
as Chairman, President and Chief Executive Officer of
PointCast, Inc. from May 1998 through April 1999. Following
SBC's August 1997 acquisition of Pacific Bell, Mr. Dorman
served as Pacific Bell's Executive Vice President for
strategic planning, long distance and internet business
until May 1998. Mr. Dorman had served as Chairman, President
and Chief Executive Officer of Pacific Bell from July 1994
to August 1997. Mr. Dorman is a director of 3Com
Corporation, SABRE Holdings Corporation and Science
Applications International Corporation.
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7
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[PHOTO OF JAMES F. MCDONALD]
JAMES F. McDONALD Director since 1993
Age 61
Mr. McDonald was elected President and Chief Executive
Officer of Scientific-Atlanta, in July 1993 and Chairman of
the Board of Scientific-Atlanta in November 2000. Mr.
McDonald was a general partner of J. H. Whitney & Company, a
private investment firm, from 1991 until his employment by
Scientific-Atlanta. From 1989 to 1991, he was President and
Chief Executive Officer of Prime Computer, Inc., a supplier
of CAD/CAM software and computer systems. Prior to that
time, he was President and Chief Executive Officer of Gould,
Inc., a computer and electronics company (1984 to 1989), and
held a variety of positions with IBM Corporation (1963 to
1984). Mr. McDonald is a director of Burlington Resources,
Inc., Mirant Corporation and NDCHealth.
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[PHOTO OF TERENCE F. MCGUIRK]
TERENCE F. McGUIRK Director since 2001
Age 50
Mr. McGuirk has held the position of Chief Executive Officer
of Turner Sports Teams since April 2001. He has been Vice
Chairman of Turner Broadcasting System, Inc. since April
2001. From 1996 to 2001 he was chairman and chief executive
officer of Turner Broadcasting System, Inc.
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DIRECTORS WHOSE TERMS WILL EXPIRE IN 2003
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[PHOTO OF DAVID J. MCLAUGHLIN]
DAVID J. McLAUGHLIN Director since 1987
Age 65
Mr. McLaughlin has been Vice Chairman of Troy Biosciences
Incorporated, a biotechnology company, since January 2000,
and President of Pentacle Press LLC, a research, consulting
and publishing company, since December 1999. From July 1996
through 1999, he served as President and Chief Executive
Officer of Troy Biosciences Incorporated. From January 1985
to June 1996, he served as President of McLaughlin and
Company, Inc., a management consulting firm. He is a
director of Smart & Final, Inc. and Troy Biosciences
Incorporated.
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[PHOTO OF JAMES V. NAPIER]
JAMES V. NAPIER Director since 1978
Age 64
Mr. Napier served as the Chairman of Scientific-Atlanta's
board of directors from November 1992 to November 2000. Mr.
Napier served as our interim Chief Executive Officer from
December 1992 until July 1993. From 1986 to 1992, he was an
independent business consultant. From March 1985 until March
1986, he served as President of HBO & Company, which
provides information processing materials and services to
health care facilities. Previously, he was Chief Executive
Officer of Contel Corporation, a telecommunications company.
Mr. Napier is a director of Engelhard Corporation,
Intelligent Systems, Inc., McKesson Corporation, Personnel
Group of America, Vulcan Materials Company and Wabtec
Corporation.
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8
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[PHOTO OF SAM NUNN]
SAM NUNN Director since 1997
Age 63
Mr. Nunn has been a Partner at the law firm of King &
Spalding since January 1997. King & Spalding represents us
in certain legal matters and is expected to represent us on
a variety of legal matters during the current fiscal year.
He is also co-chairman and chief executive officer of the
Nuclear Threat Initiative (NTI), a foundation committed to
reducing the global threat of nuclear and other weapons of
mass destruction. Prior to joining King & Spalding, Mr. Nunn
served as a United States Senator from 1972 to 1996. Mr.
Nunn serves as a director for The Coca-Cola Company, Dell
Computer Corporation, General Electric Company, Internet
Security Systems, Inc., Texaco Inc. and Total System
Services, Inc.
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DIRECTORS WHOSE TERMS WILL EXPIRE IN 2002
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[PHOTO OF MARION H. ANTONINI]
MARION H. ANTONINI Director since 1990
Age 71
Mr. Antonini has been a Principal in Kohlberg & Company, a
private merchant banking firm, since March 1998. Prior to
joining Kohlberg & Company, Mr. Antonini was Chairman of the
Board of Welbilt Corporation from July 1990 to March 1998
and Chief Executive Officer of that company from September
1990 to March 1998. From 1986 to 1990, Mr. Antonini served
as Chairman of KD Equities, a merchant banking firm. Prior
to that, he served as Group Vice President of Xerox
Corporation's Worldwide Operations from 1982 to 1986 and in
other executive positions with that company. Mr. Antonini is
a director of Colorspot Nurseries, Engelhard Corporation,
Holley Performance Products, Inc. and Raedelli Tecna Spa.
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[PHOTO OF WILLIAM E. KASSLING]
WILLIAM E. KASSLING Director since 1990
Age 57
Mr. Kassling has served as Chairman of Wabtec Corporation,
formerly known as Westinghouse Air Brake Company, since
1990. He also served as Chief Executive Officer of Wabtec
Corporation from March 1990 to February 2001. Mr. Kassling
is a director of Aearo Corporation, Parker Hannifin
Corporation and the Pittsburgh Penguins.
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[PHOTO OF MYLLE BELL MANGUM]
MYLLE BELL MANGUM Director since 1993
Age 53
Ms. Mangum has been Chief Executive Officer of MMS
Incentives, LLC, a private equity company concentrating on
high-tech marketing solutions, since May 1999. From March
1997 to May 1999, Ms. Mangum served as Senior Vice
President, Expense Management and Strategic Planning of
Carlson Wagonlit Travel, a travel and hospitality company.
From August 1992 to March 1997, Ms. Mangum was Executive
Vice President--Strategic Management of Holiday Inn
Worldwide. She was also a member of the board of directors
and executive committee of Holiday Inn during her tenure
there. From 1985 until August 1992, Ms. Mangum was Director,
Corporate Planning and Development with BellSouth
Corporation. Ms. Mangum is a director of Haverty's Furniture
Companies and Payless ShoeSource, Inc.
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9
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The board of directors met five times during fiscal year 2001 to consider
matters related to the business of Scientific-Atlanta. The board of directors
has an Executive Committee, an Audit Committee, a Human Resources and
Compensation Committee (HRCC), a Governance and Nominations Committee and a
Pension Investment Committee. Each director attended 75% or more of the
aggregate of the total number of meetings of the board of directors and the
committees of which he or she was a member during the portion of fiscal year
2001 that he or she served as a director or committee member.
The Executive Committee acts for the board of directors between meetings,
subject to certain limitations. The Executive Committee met once during fiscal
year 2001. The members of this committee are directors Antonini, Kassling,
McDonald, Napier and Nunn. Mr. Napier is Chairman.
The Audit Committee makes recommendations as to the selection of independent
auditors, evaluates the audit services and Scientific-Atlanta's financial,
accounting and internal audit policies, functions and systems, and approves
the engagement of independent auditors to provide non-audit services. The
Audit Committee met three times during fiscal year 2001. The members of this
committee are directors Antonini, Dorman, McGuirk, Napier and Nunn. Mr.
Antonini is Chairman.
The HRCC makes determinations as to the compensation and benefits to be paid
to Scientific-Atlanta's officers and key employees. The HRCC met three times
during fiscal year 2001. The members of this committee are directors Cash,
Dorman, Kassling, Mangum and McLaughlin. Mr. Kassling is Chairman.
The Governance and Nominations Committee considers nominations for directors
(and will consider nominees by shareholders) and provides oversight of the
governance of the board of directors, including issues concerning size,
committee structure, membership and compensation of the board of directors.
Nominations should be in writing, addressed to Chairman, Governance and
Nominations Committee, c/o the Office of the General Counsel, Scientific-
Atlanta, Inc., 5030 Sugarloaf Parkway, Lawrenceville, Georgia 30044. The
Governance and Nominations Committee met twice during fiscal year 2001. The
members of this committee are directors Antonini, Kassling, McGuirk, Napier
and Nunn. Mr. Nunn is Chairman.
The Pension Investment Committee monitors the Scientific-Atlanta qualified
retirement plans to determine whether they are adequately funded and that
funds are properly invested, reviews the performance of firms which provide
investment advice and services to Scientific-Atlanta on pension investment
matters, and reviews material changes to Scientific-Atlanta's retirement
plans. The Pension Investment Committee met once during fiscal year 2001. The
members of this committee are directors Cash, Dorman, Mangum, and McLaughlin.
Ms. Mangum is Chairman.
10
REPORT OF THE
HUMAN RESOURCES AND COMPENSATION COMMITTEE
Role of the Committee and the Board
The HRCC sets compensation policies for Scientific-Atlanta's senior management
within guidelines approved by the Board of Directors. The HRCC evaluates
individual and corporate performance from a short-term and long-term
perspective, establishes base salaries and approves annual and long-term
incentives for all officers, and administers Scientific-Atlanta's option and
incentive plans. The HRCC's recommendations regarding the compensation of
Scientific-Atlanta's chief executive officer are subject to the approval of
the full board.
Compensation Philosophy
Scientific-Atlanta's executive compensation program is designed to attract,
motivate and retain highly qualified executives and to encourage the
achievement of superior performance. The program is designed to:
. Foster a performance-oriented environment with a high level of variable
compensation based on the short-term and long-term performance of the
individual, team, business unit and Scientific-Atlanta against demanding
goals and objectives.
. Provide total compensation opportunities that exceed industry medians for
superior financial results and outstanding personal performance.
. Align the interests of Scientific-Atlanta's executives and shareholders
through the use of stock-based compensation plans.
Base Salaries
Scientific-Atlanta positions its base salaries to be fully competitive with
the range of compensation levels of comparably-sized, high-technology
companies and with Scientific-Atlanta's direct business competitors that have
similar market characteristics. National surveys such as Hewitt Associates'
Total Compensation Database and Radford Associates' Management Total
Compensation Report and, periodically, independent compensation consultants
are utilized by the HRCC when determining such salaries.
In determining whether the base salaries of executives, including the Chief
Executive Officer, should be increased, the HRCC takes into account individual
performance, performance of the operations directed by that executive, and the
positioning of compensation within established salary ranges.
Incentive Compensation
Under Scientific-Atlanta's compensation philosophy, the majority of
compensation is intended to be payable under incentive plans. Payments and
awards under these incentive plans are based on the achievement of annual and
long-term goals and, accordingly, are "at risk." Executives of Scientific-
Atlanta are eligible to participate in the following incentive plans, as
determined by the HRCC:
Senior Officer Annual Incentive Plan. This plan has been designed to qualify
as "performance-based" compensation under Internal Revenue Code Section
162(m). Payments under the plan are based upon the achievement of annual
goals. The award determinations for Mr. McDonald and Mr. Wredberg under the
Senior Officer Annual Incentive Plan were determined based on whether Mr.
McDonald and Mr. Wredberg, respectively, satisfied the quantitative objectives
established by the HRCC earlier in the fiscal year. Mr. McDonald's award under
this plan and the basis for such award are discussed in the next section of
this report.
Annual Incentive Plan. Under the Annual Incentive Plan (AIP), awards are made
based on company, business unit and/or region results and assessments of
individual performance. Quantitative and qualitative objectives are weighted
60% and 40%, respectively, in setting "target" awards for staff participants
and 75% and 25%, respectively, for business unit participants.
11
Quantitative objectives, consistent with annual business plans approved by the
Board, are used in determining the amount of the award governed by the
company, group and/or business unit performance. Awards under the quantitative
portion of the AIP are not made if the minimum thresholds are not met. The
HRCC may also take into account non-recurring extraordinary circumstances
unrelated to Scientific-Atlanta's financial performance.
The award for Mr. McDonald under the AIP is discussed in the next section of
this report. AIP awards for Messrs. Duke, Ecker and Haislip were based on the
quantitative performance of Scientific-Atlanta, as measured by earnings per
share, gross margin, revenue and working capital, and an assessment of their
individual performance against personal qualitative objectives. Mr. Wredberg's
AIP award was based on the HRCC's assessment of his individual performance
against personal qualitative objectives.
Senior Officer and AIP awards for the Chief Executive Officer and the four
other most highly compensated executives of Scientific-Atlanta are included in
the "Bonus" column of the Summary Compensation Table.
Long-Term Incentive Plan (LTIP). This plan permits the HRCC to use one or more
long-term incentives to motivate excellent long-term performance. In fiscal
year 2001, performance-based awards were granted in the form of cash and stock
options to 18 key executives, including Messrs. McDonald, Wredberg, Duke,
Ecker and Haislip. These awards will vest over a term of up to ten years,
based on improvement in Scientific-Atlanta's weighted average return on equity
over the previous five-year period. The number of options and cash granted are
shown in the Summary Compensation Table. The dollar values of restricted
shares and cash that vested based on Scientific-Atlanta's fiscal year 2001
performance are shown in the Summary Compensation Table.
Stock Option Plan. A larger group of executives, including the executives
named in the Summary Compensation Table, receive grants of stock options under
the provisions of the LTIP and the provisions of the 1996 Employee Stock
Option Plan (with only non-officers participating in this plan). The objective
of the grants is to align the interests of the executives with the interests
of Scientific-Atlanta's shareholders by affording the executives the
opportunity of a potentially significant financial benefit if their efforts
result in stock price appreciation. The HRCC takes into account the
performance of the individual recipient, the number of options previously
awarded to any individual participant and Scientific-Atlanta's grant levels
compared to competitive practices, targeting near a median grant posture.
Grants made in fiscal year 2001 to Mr. McDonald and the other named executives
are shown in the Summary Compensation Table and in the Option Grants in Last
Fiscal Year Table. During fiscal year 2001, options for a total of 5,334,850
shares were granted to optionees.
Policy Relative to Code Section 162(m)
The Omnibus Budget Reconciliation Act of 1993 (OBRA) limited deductible senior
officer annual compensation to $1,000,000, unless the compensation qualifies
as "performance-based" compensation under Section 162(m) of the Internal
Revenue Code. In general, Scientific-Atlanta will seek to maximize the use of
the "performance-based" exemption provided under Section 162(m). The HRCC also
believes that inclusion of qualitative (non-quantitative) objectives play an
important role in incentive plans. The HRCC will continue to base a portion of
incentive payments on such qualitative assessments, even though they may not
meet the Section 162(m) requirements to qualify as "performance-based"
compensation.
Stock Ownership
The HRCC believes that significant ownership of Scientific-Atlanta common
stock by officers and directors more closely aligns the upside and downside
returns for these individuals with Scientific-Atlanta's other shareholders. As
a result, Scientific-Atlanta's officers and directors agreed during fiscal
year 1994 to increase their ownership over time to a level of one times the
annual salary for officers (three times in the case of the Chief Executive
Officer) and three times the annual retainer for outside directors. As of the
end of fiscal year 2001, officers' holdings averaged 5.5 times base salaries,
and outside director holdings averaged 45 times annual retainers (based on the
closing price of Scientific-Atlanta's common stock at the end of fiscal year
2001). These holdings include restricted stock, whether performance-based or
time-based, which has not yet vested or been "earned out."
12
Chief Executive Officer Compensation
At the beginning of fiscal year 2001, Mr. McDonald's base salary was increased
to maintain a fully competitive position among chief executive officers of
similarly-situated high technology companies. This increase of 7.3 percent was
based also on Mr. McDonald's excellent performance during the previous year.
During fiscal year 2001, Mr. McDonald was granted stock options of 250,000
shares. In combination with the grants of performance-based options and cash,
discussed later in this section, the option grant was designed to be fully
competitive with grants of long-term incentives to Chief Executive Officers by
other comparable high technology companies.
Under the Senior Officer Annual Incentive Plan, Mr. McDonald had an
opportunity to earn a maximum of $676,200 if Scientific-Atlanta achieved its
maximum targeted performance as measured by earnings per share, gross margin
percent, working capital percent and sales (revenue). The results for fiscal
year 2001 approached maximum levels. The HRCC, therefore, approved a payment
of $645,800 according to the provisions of the plan.
Mr. McDonald also had an opportunity to earn additional incentive pay under
the AIP, based on his performance against qualitative objectives. The HRCC
approved payment of $450,800 based on excellent performance. In reaching its
decision, the HRCC noted another successive year of record financial
performance by Scientific-Atlanta. Bookings, sales, net income, earnings per
share, and cash/short-term investments were all time records. Other highlights
included the rollout of several new products, increased international sales
presence, continued exceptional growth of manufacturing capability at the
Juarez facility and growing market share.
In August 2000, Mr. McDonald received a grant of 90,000 stock options and a
right to receive $363,000 under the LTIP. In August 2001, based upon
Scientific-Atlanta's fiscal year 2001 return on equity performance, the
restrictions lapsed on 46,982 performance-based restricted shares granted to
Mr. McDonald under prior LTIP awards. In accordance with the procedures
established under the LTIP, he elected to convert these shares into $2,740,460
in cash and to defer the cash proceeds under the Executive Deferred
Compensation Plan. Also in August 2001, Mr. McDonald received and deferred
$1,753,200 (plus $156,230 in interest) from restricted shares that were
converted into cash and mandatorily deferred during fiscal year 2000 under the
terms of prior restricted stock grants. Stock options for 140,946 shares of
Scientific-Atlanta common stock with a per share exercise price of $55.63 from
a previous LTIP grant vested in August 2001. Lastly, the grant of 90,000 stock
options and the right to receive $363,000 (plus $32,347 in interest) in cash
vested in August 2001, which cash proceeds were deferred by Mr. McDonald.
Other Compensation Plans
Scientific-Atlanta also has various broad-based employee benefit plans.
Executives participate in these plans on the same terms as eligible, non-
executive employees, subject to any legal limits on the amounts that may be
contributed or paid to executives under the plans. Scientific-Atlanta offers
an Employee Stock Purchase Plan pursuant to the provisions of Section 423 of
the Code under which employees may purchase Common Stock. The Voluntary
Employee Retirement and Investment Plan pursuant to the provisions of Section
401(k) of the Code, permits employees to invest in a variety of funds on a
pre-tax basis. Matching contributions under the plan are made in Scientific-
Atlanta common stock.
Scientific-Atlanta also maintains pension, insurance and other benefit plans
for its employees.
Submitted by the Human Resources and Compensation Committee:
William E. Kassling, Chairman
James I. Cash, Jr.
David W. Dorman
Mylle Bell Mangum
David J. McLaughlin
13
COMPENSATION OF OFFICERS AND DIRECTORS
Cash Compensation
The following table sets forth in the prescribed format the compensation
paid to the Chief Executive Officer and the other four most highly compensated
executive officers of Scientific-Atlanta for services rendered in all
capacities during Scientific-Atlanta's last three fiscal years:
Summary Compensation Table
Long-Term
Compensation
-------------------------------
Annual Compensation Awards Payouts
-------------------------------- ---------- ---------------
Other Annual Securities All Other
Name and Fiscal Salary Bonus Compensation Underlying LTIP Compensation
Principal Position Year ($) ($) ($) Options(#) Payouts($)(/1/) ($)
-------------------------- ------ ------ ---------- ------------ ---------- --------------- ------------
James F. McDonald......... 2001 $796,539 $1,096,600 $188,577(/2/) 340,000 $4,856,660 $149,013(/3/)
Chairman of the Board, 2000 743,850 983,850 -- 1,624,641(/4/) 1,806,120 89,846
President and Chief 1999 704,615 695,800 -- 300,000 560,899 90,565
Executive Officer
Conrad J. Wredberg, Jr.... 2001 475,385 552,400 63,711(/2/) 310,000 1,740,751 69,533(/3/)
Senior Vice President and 2000 446,154 498,500 -- 353,549(/4/) 551,016 35,833
Chief Operating Officer 1999 377,115 343,800 -- 70,000 146,822 41,042
Dwight B. Duke............ 2001 336,154 323,400 38,170(/2/) 58,000 1,002,307 34,374(/3/)
Senior Vice President;
President, 2000 308,846 280,100 -- 188,402(/4/) 336,096 17,863
Transmission Networks 1999 272,692 203,000 -- 50,000 92,504 19,810
Systems
H. Allen Ecker............ 2001 351,154 340,500 60,962(/2/) 58,000 935,166 49,228(/3/)
Senior Vice President; 2000 326,462 300,700 5,444(/5/) 210,995(/4/) 520,200 49,827
President, Subscriber 1999 303,923 207,000 4,569(/5/) 50,000 160,903 48,645
Networks
Wallace G. Haislip........ 2001 316,923 307,000 37,459(/2/) 58,000 960,962 39,331(/3/)
Senior Vice President, 2000 297,692 280,100 -- 186,533(/4/) 334,008 23,871
Chief Financial Officer 1999 281,923 192,100 -- 50,000 92,924 23,354
and Treasurer
(1) The amounts shown for fiscal year 1999 represent the fair market value,
as of August 18, 1999, of the performance-based restricted stock awards
that vested as a result of Scientific-Atlanta's performance during fiscal
years 1995 through 1999. The amounts shown for fiscal year 2000 represent
the fair market value, as of August 16, 2000, of the performance-based
restricted stock awards that vested as a result of Scientific-Atlanta's
performance during fiscal years 1996 through 2000. The amounts shown for
fiscal year 2001 represent: (a) the payout of amounts mandatorily
deferred in August 2000 pursuant to the terms of the LTIP grants with
respect to performance-based restricted stock awards that vested as a
result of Scientific-Atlanta's performance during fiscal years 1996
through 2000; (b) the value of the performance-based restricted stock
awards that vested as a result of Scientific-Atlanta's performance during
fiscal years 1997 through 2001 as described below; and (c) the vesting of
long-term incentive cash awards granted with respect to Scientific-
Atlanta's performance during fiscal years 1997 through 2001. The same
dividends paid on Scientific-Atlanta common stock are paid by Scientific-
Atlanta on restricted stock held by such executive officers, and the
executives have the right to vote these shares of restricted stock.
In May 2000, the HRCC awarded to each of the executives who had surrendered
performance based restricted stock awards a number of new shares of
restricted stock equal to one half the shares surrendered plus a number of
options with a per share exercise price of $55.63. The new restricted
shares vested on the same terms and conditions as the restricted shares
surrendered, except that there is a cap on the number of shares that may
vest. Under the cap for fiscal year 2000, restricted shares earned having a
fair market value at the time of vesting which exceeded 5% of our profit
before tax for fiscal year 2000 could not vest. Under the cap for fiscal
year 2001, restricted shares earned having a fair market value at the time
of vesting which exceeded 4% of our profit before tax for fiscal year 2001
could not vest. Any shares which are earned but
14
do not vest are converted into the right to receive cash equal to 125% of
the fair market value of those shares, and that amount is deferred if and
until it can be paid out under the cap. Deferred amounts bear interest at
the same rate as amounts deferred under the Scientific-Atlanta Executive
Deferred Compensation Plan. The amounts of such cash mandatorily deferred
with respect to the performance-based restricted stock awards that vested
in August 2001 as a result of Scientific-Atlanta's performance during
fiscal years 1996 through 2000 were $1,753,200, $534,960, $326,340,
$504,990 and $324,360 for Messrs. McDonald, Wredberg, Duke, Ecker and
Haislip, respectively. As a result of Scientific-Atlanta's performance
during fiscal year 2001, all of such deferred cash awards were paid and are
included in the table.
With respect to the performance-based restricted stock awards that vested
as a result of Scientific-Atlanta's performance during fiscal years 1997
through 2001 described above, upon vesting the recipient may elect to
receive the shares or to convert the shares into cash based on either (a)
the average closing price as reported on the New York Stock Exchange
Composite for the ten trading days following the announcement of third
quarter fiscal year 2001 results or (b) the average closing price as
reported on the New York Stock Exchange Composite for the ten trading days
following the announcement of fourth quarter fiscal year 2001 results and
to defer such cash under the Executive Deferred Compensation Plan. These
two averages were $58.33 and $24.74, respectively. All of the performance-
based restricted shares previously awarded vested in August 2001, and none
of the named executive officers held any shares of restricted stock as of
August 15, 2001. Dr. Ecker received shares having the value of $323,676 as
of August 15, 2001, which is included in the table above. Messrs. McDonald,
Wredberg, Duke and Haislip elected to convert the vested restricted stock
into cash and defer the cash proceeds. As a result, they deferred amounts
of $2,740,460, $1,025,791, $573,967 and $540,602, respectively. These
amounts are included in the table.
In August 2000, the HRCC granted Messrs. McDonald, Wredberg, Duke, Ecker
and Haislip the right to receive long-term incentive cash awards, which
vest based on improvement in Scientific-Atlanta's weighted five-year
average return on equity from the time of the award until the payout date,
of $363,000, $180,000, $102,000, $106,500 and $96,000, respectively. As a
result of Scientific-Atlanta's performance during fiscal year 1997 through
2001, the right to receive such cash vested and is included in the table.
(2) The amounts shown for fiscal year 2001 represent (a) preferential
earnings on deferred compensation under the Scientific-Atlanta 1985
Executive Deferred Compensation Plan earned by Dr. Ecker, (b) interest
earned on the nondiscretionary deferral of restricted shares described in
footnote 1 above, and (c) interest earned on the long-term incentive cash
awards described in footnote 1 above. During fiscal year 2001, Messrs.
McDonald, Wredberg, Duke, Ecker and Haislip earned interest on the
nondiscretionary deferral of restricted shares of $156,230, $47,671,
$29,081, $45,000 and $28,904, respectively. During fiscal year 2001,
Messrs. McDonald, Wredberg, Duke, Ecker and Haislip earned interest on
the long-term incentive cash awards of $32,347, $16,040, $9,089, $9,490
and $8,555, respectively.
(3) For fiscal year 2001, this column includes $83,183, $32,683, $10,468,
$41,578 and $15,840 of life insurance premiums paid by Scientific-Atlanta
on behalf of Messrs. McDonald, Wredberg, Duke, Ecker and Haislip,
respectively. All other amounts in fiscal year 2001 represent matching
contributions by Scientific-Atlanta pursuant to the 401(k) plan and the
Scientific-Atlanta Executive Deferred Compensation Plan.
(4) In fiscal year 2000, there were three grants of options to Scientific-
Atlanta executive officers. The first grant was in August 1999, which was
then the historical normal time for granting options. In February 2000,
the HRCC decided to move the regular date for annual option grants to
February, and grants were made at that time. No regular annual grants of
options were made in August 2000. Finally, Scientific-Atlanta granted
options in May 2000 to certain executive officers who agreed to surrender
previous performance-based restricted stock grants as described in note 1
above.
(5) Represents preferential earnings on deferred compensation under the
Scientific-Atlanta 1985 Executive Deferred Compensation Plan.
15
Stock Options
The following tables set forth certain information in the prescribed formats
with respect to options granted and exercised under Scientific-Atlanta's
various stock option plans and under stock option agreements during fiscal
year 2001:
Option Grants in Last Fiscal Year
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation for
Individual Grants Option Term(/2/)
---------------------------------------------- --------------------
Number of % of Total
Securities Options Exercise
Underlying Granted to or Base
Options Employees Price Expiration
Name Granted(/1/) FY2001 ($/sh) Date 5%($) 10%($)
------------------------ ------------ ---------- -------- ---------- --------- ----------
James F. McDonald....... 90,000(/3/) 1.7 72.00 8/16/10 4,075,237 10,327,451
250,000(/4/) 4.7 51.60 2/17/11 8,112,741 20,559,278
Conrad J. Wredberg,
Jr. ................... 200,000(/5/) 3.7 72.00 8/16/10 9,056,083 22,949,891
35,000(/3/) 0.7 72.00 8/16/10 1,584,814 4,016,230
75,000(/4/) 1.4 51.60 2/17/11 2,433,822 6,167,783
Dwight B. Duke.......... 20,000(/3/) 0.4 72.00 8/16/10 905,608 2,294,989
38,000(/4/) 0.7 51.60 2/17/11 1,233,136 3,125,010
H. Allen Ecker.......... 20,000(/3/) 0.4 72.00 8/16/10 905,608 2,294,989
38,000(/4/) 0.7 51.60 2/17/11 1,233,136 3,125,010
Wallace G. Haislip...... 20,000(/3/) 0.4 72.00 8/16/10 905,608 2,294,989
38,000(/4/) 0.7 51.60 2/17/11 1,233,136 3,125,010
(1) All of these stock options were awarded under the LTIP in August 2000 and
February 2001. If a change of control occurs (as defined in the LTIP),
all options become exercisable immediately. Options granted under the
LTIP in fiscal year 2001 may be exercised within a period of two years
following a termination by reason of retirement, within one year
following a termination by reason of death or disability, and within
thirty days following a termination for other reasons, except for cause,
in which case such options expire immediately upon the giving of the
notice of such termination.
(2) The dollar amounts in these columns were determined using assumed rates
of appreciation set by the SEC and are not intended to forecast future
appreciation, if any, in the market value of Scientific-Atlanta common
stock. Such amounts are based on the assumption that the named persons
hold the options for their full ten-year term. The actual value of the
options will vary in accordance with the market price of Scientific-
Atlanta common stock.
(3) These options were granted as part of the fiscal year 2001 long-term
incentive plan and vest based upon improvement in the average return on
equity. These options will vest in any event six years after the date of
grant. As a result of performance in 2001, all of these options have
vested.
(4) All of these options become exercisable at the rate of 25% per year
commencing on the date of grant.
(5) This option vests on August 16, 2003 if Mr. Wredberg remains employed at
Scientific-Atlanta at that date.
16
Aggregated Option Exercises in Last Fiscal Year
and FY-End Option Values
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money Options/SARs
Options/SARs at Fiscal at Fiscal Year-End
Shares Year-End (#) ($)(/1/)
Acquired on Valued ------------------------- -------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
------------------------ ----------- ----------- ----------- ------------- ----------- -------------
James F. McDonald....... 1,450,000 $79,884,275 546,195 1,493,446 $3,025,313 $5,179,688
Conrad J. Wredberg, Jr.. 97,500 4,946,045 92,041 491,508 0 1,626,375
Dwight B. Duke.......... 57,000 2,753,300 69,382 157,520 0 912,263
H. Allen Ecker.......... 169,500 10,024,567 115,008 166,487 553,200 912,263
Wallace G. Haislip...... 87,500 4,689,644 69,229 155,804 0 912,263
(1) The amounts in these columns are calculated using the difference between
the closing sales price of Scientific-Atlanta common stock as reported on
the New York Stock Exchange Composite on June 29, 2001 of $40.60 and the
option exercise prices.
Long-Term Incentive Awards
The following table provides information concerning the right to receive
long-term incentive cash awards granted during fiscal year 2001. Each
contingent cash incentive award represents the right to receive cash on the
date of payout, the amount of which depends on improvement in Scientific-
Atlanta's weighted five-year average return on equity from the time of the
award until the payout date. In addition to the right to receive the following
cash awards, Scientific-Atlanta also granted options as part of the long-term
incentive plan. See note 3 to the table entitled "Option Grants in Last Fiscal
Year."
Long-Term Incentive Plan--Awards in 2001 Fiscal Year
Estimated Future Payouts
Performance or under Non-Stock
Other Period Price-Based Plans
Amount of until Maturation -----------------------------------------
Name Grant ($) or Payout(/1/) Threshold ($) Target ($)(/2/) Maximum ($)
------------------------ --------- ---------------- ------------- --------------- -----------
James F. McDonald....... $363,000 10 years $36,300 -- $363,000
Conrad J. Wredberg, Jr.. 180,000 10 years 18,000 -- 180,000
Dwight B. Duke.......... 102,000 10 years 10,200 -- 102,000
H. Allen Ecker.......... 106,500 10 years 10,650 -- 106,500
Wallace G. Haislip...... 96,000 10 years 9,600 -- 96,000
(1) Vesting of the right to receive the cash awards is based on the degree of
improvement in Scientific-Atlanta's weighted five-year average return on
equity. Upon achieving the minimum level of improvement, ten percent of
the rights become vested, as shown in the "Threshold" column. Upon
achievement of a specified maximum five-year average return on equity, all
such awards will be vested. No "target," as such, has been established,
but improvements in Scientific-Atlanta's return on equity between the
"threshold" and the "maximum" levels will result in the vesting of a
proportionate number of awards. Based on Scientific-Atlanta's performance
during fiscal year 2001, the maximum awards were paid.
17
Retirement Plans and Other Arrangements
Defined Benefit Retirement Plan. Scientific-Atlanta presently has in effect
a non-contributory retirement plan for the benefit of its employees which
provides for the payment of fixed benefits upon normal retirement at age 65 on
the basis of years of service and all cash compensation of each employee.
Examples of annual retirement benefits payable under the retirement plan are
set forth in the table below. These examples are based on the following: (i)
retirement at the normal retirement age of 65, (ii) "average compensation" is
the average compensation in the highest consecutive five of the last ten
calendar years of service that immediately precede retirement, and (iii) the
benefits are straight life annuities. Benefits under the retirement plan are
not reduced by Social Security benefits. The approximate years of service, as
of June 29, 2001, credited for retirement benefits for the persons named in
the Summary Compensation Table are James F. McDonald, 8 years; Conrad J.
Wredberg, Jr., 6 years; Dwight B. Duke, 23 years; H. Allen Ecker, 25 years;
and Wallace G. Haislip, 12 years.
Years of Service(/1/)
-----------------------------------------------
Average Annual Compensation 10 15 20 25 30 35
---------------------------- ------- ------- ------- ------- ------- -------
$125,000.................... $17,023 $27,793 $27,121 $30,583 $33,180 $35,200
150,000.................... 20,427 27,352 32,545 36,700 39,816 42,240
175,000.................... 22,334 29,905 35,583 40,125 43,532 46,182
200,000.................... 22,334 29,905 35,583 40,125 43,532 46,182
225,000.................... 22,334 29,905 35,583 40,125 43,532 46,182
250,000.................... 22,334 29,905 35,583 40,125 43,532 46,182
500,000.................... 22,334 29,905 35,583 40,125 43,532 46,182
(1) Scientific-Atlanta also maintains a Supplemental Executive Retirement
Plan (SERP) for its executive officers, including Messrs. McDonald,
Wredberg, Duke, Ecker and Haislip. Provisions of the SERP include a ten-
year vesting requirement and a normal retirement age of 65. Benefits are
based upon up to fifty percent of final average pay with offsets for the
retirement plan, Social Security benefits and any retirement defined
benefits payable from former employers.
The Omnibus Budget Reconciliation Act of 1993 (OBRA) changed the Internal
Revenue Code by placing an annual maximum limit of $150,000 on the
compensation which may be considered in determining a participant's
benefits. Previous to this change in the statute, the Internal Revenue Code
allowed a maximum limit of $235,840 (i.e., $200,000, indexed for a cost of
living adjustment). Effective July 1, 1994, Scientific-Atlanta adopted a
non-qualified Restoration Retirement Plan to replace the benefits to
certain participants that had been eliminated by the changes made to the
Internal Revenue Code by OBRA. Thus, effective July 1, 1994, participants'
compensation, as defined in the Restoration Retirement Plan, in excess of
the newly prescribed limit and up to what the limit would have been had
OBRA not been enacted will be considered under the Restoration Retirement
Plan. Participants under the SERP will continue to have all compensation,
as defined in the SERP, in excess of the maximum limit prescribed by the
Internal Revenue Code considered in determining their pension benefits. The
above table does not include any benefits under the Restoration Retirement
Plan.
Agreements with Certain Persons. Scientific-Atlanta has letter agreements
with Messrs. Wredberg, Duke, Ecker, and Haislip which provide for the
continuation of salary and certain benefits for a twelve-month period in the
event of termination of employment without cause. Scientific-Atlanta also has
agreements with Messrs. McDonald, Wredberg, Duke, Ecker, and Haislip which
provide for the payment of two times the executive's compensation plus the
continuation of the executive's benefits for two years in the event the
executive's employment with Scientific-Atlanta is terminated within two years
from the time of a change of control (as defined in the agreement) of
Scientific-Atlanta, unless such termination is for cause.
Director Compensation
Annual Fees. Each director who is not an employee receives a $25,000 annual
cash retainer, paid quarterly, and $1,250 for each meeting of the board and
each meeting of a committee he or she attends. Each
18
committee chair receives an additional annual cash retainer of $5,000 paid
quarterly. Non-employee directors may elect to defer all or a portion of their
retainer and meeting fees under the Deferred Compensation Plan for Non-
Employee Directors.
Non-Employee Director Stock Option Plan. Under this option plan, an initial
option to purchase 40,000 shares of Scientific-Atlanta common stock is granted
to each non-employee director upon joining the Scientific-Atlanta board of
directors. An option to purchase an additional 5,000 shares is granted to each
such director on the date of each annual meeting of shareholders. The exercise
price for each option is the composite closing price of Scientific-Atlanta
common stock on the New York Stock Exchange on the grant date. Each option is
exercisable as to 25% of the shares covered thereby after the expiration of
one year following the date of grant and for an additional 25% of the shares
after the expiration of each succeeding year, except that if a change of
control occurs (as defined in the plan), all options become exercisable
immediately. Options granted under this option plan may be exercised within a
period of one year following the last day of the director's board membership,
and within three years following termination by death or mandatory retirement.
If board membership ceases on account of early retirement, all unexpired
options held by the director on the last day of the director's board
membership, which are then exercisable or would have been exercisable had the
director continued as a member of the board for one additional year, whether
exercisable or not exercisable, shall be immediately exercisable and remain
exercisable for one year following the last day of the director's membership
and shall expire if not exercised within such one year. The options granted
under this option plan are exercisable only by the non-employee director,
except in certain limited circumstances.
Non-Employee Director Stock Plan. This stock plan provides for the grant of
a stock award of 500 shares of Scientific-Atlanta common stock and the grant
of a retirement award of 1,500 shares of Scientific-Atlanta common stock to
each non-employee director on the date of each annual meeting of shareholders.
In addition, under this stock plan, each non-employee director may elect to
receive up to 100% of his or her quarterly compensation, meeting fees and
committee meeting fees from Scientific-Atlanta in the form of shares of
Scientific-Atlanta common stock. Receipt of shares awarded as a stock award,
retirement award or as an elective grant may be deferred under the Deferred
Compensation Plan for Non-Employee Directors. Pursuant to the terms of this
stock plan, each year non-employee directors must elect, as to his or her
annual retirement award, either (a) to receive the 1,500 shares as restricted
stock which cannot be sold or otherwise transferred for two years, or (b) to
defer the 1,500 shares for at least two years under the Deferred Compensation
Plan for Non-Employee Directors.
19
PERFORMANCE GRAPH
The following graph shows a comparison of total return to shareholders for
Scientific-Atlanta, the Standard & Poor's Communications Equipment Index and
the Standard & Poor's 500 for Scientific-Atlanta's last five fiscal years. The
graph assumes that the value of investment in the Scientific-Atlanta common
stock and in each index was $100 on June 29, 1996 and that all dividends were
reinvested. The values in the graph below have been adjusted to take into
account the two-for-one stock split in March 2000.
[PERFORMANCE GRAPH APPEARS HERE]
1996 1997 1998 1999 2000 2001
------- ------- ------- ------- ------- -------
S&P 500 $100 $135 $174 $215 $226 $194
S&P Comm. Equipment $100 $134 $185 $322 $428 $100
Scientific-Atlanta $100 $143 $162 $253 $964 $527
PROPOSAL NO. 2
SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The board of directors has selected Arthur Andersen LLP to be our
independent auditors for the fiscal year ending June 28, 2002, and proposes
that the shareholders ratify this selection at the annual meeting. Arthur
Andersen LLP also acted as our independent auditors for fiscal year 2001.
Representatives of Arthur Andersen LLP are expected to be present at the
annual meeting and will have the opportunity to make a statement if they
desire to do so and will be available to respond to appropriate questions.
Ratification of the selection of Arthur Andersen LLP requires the
affirmative vote of a majority of the shares voting on such proposal (i.e.,
shares voting for or against the proposal). Abstentions and broker non-votes
are not counted for or against this proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THIS
PROPOSAL NO. 2. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED FOR
THIS PROPOSAL UNLESS A VOTE AGAINST THE PROPOSAL OR AN ABSTENTION IS
SPECIFICALLY INDICATED.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of Scientific-Atlanta's Board of Directors consists
entirely of non-employee directors. The members of the Audit Committee meet
the independence and experience requirements of the New York Stock Exchange.
The Board of Directors has adopted a Charter for the Audit Committee. A copy
of the Charter is attached to this Proxy Statement as Appendix A.
20
The Audit Committee assists the Board of Directors in its oversight of
Scientific-Atlanta's financial statements. Management is responsible for the
financial statements and the financial reporting process. The independent
auditors are responsible for expressing an opinion on the conformity of
Scientific-Atlanta's audited financial statements to accounting principles
generally accepted in the United States.
In the performance of our oversight function, we have reviewed and discussed
the audited financial statements with management and the independent auditors.
We have discussed with Arthur Andersen LLP the matters required to be
discussed by Statement on Auditing Standards No. 61, Communication with Audit
Committees, as amended, and issued by the Auditing Standards Board of the
American Institute of Certified Public Accountants.
We have received and reviewed the written disclosures and the letter from
Arthur Andersen LLP required by Independence Standard No. 1, Independence
Discussions with Audit Committees, as amended, and issued by the Independence
Standards Board, and have discussed with the auditors the auditors'
independence. We have also considered whether the provision of non-audit
services provided by Arthur Andersen LLP is compatible with maintaining Arthur
Andersen LLP's independence.
In reliance on the review and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in Scientific-Atlanta's Report on Form 10-K for the
year ended June 29, 2001 for filing with the SEC.
Submitted by the Audit Committee:
Marion Antonini, Chairman
James V. Napier
Sam Nunn
David W. Dorman
Terence F. McGuirk
Audit Fees
The aggregate fees billed by Arthur Andersen LLP for professional services
rendered for the audit of the Company's annual consolidated financial
statements, audits of certain subsidiaries, and interim reviews of the
financial statements were $800,000.
Financial Information Systems Design and Implementation Fees
There were no fees billed by Arthur Andersen LLP for professional services
rendered for financial information systems design and implementation for
fiscal year 2001.
All Other Fees
The aggregate fees billed by Arthur Andersen LLP for professional services
rendered, other than as stated under the captions Audit Fees and Financial
Information Systems Design and Implementation Fees above, were $2,514,000. The
Audit Committee considers the provision of these services to be compatible
with maintaining the independence of Arthur Andersen LLP.
OTHER MATTERS
The board of directors of Scientific-Atlanta knows of no other matters which
are to be brought before the meeting. However, if any such other matters
should be presented for consideration and voting, it is the intention of the
persons named in the enclosed form of proxy to vote the proxy in accordance
with their best judgment.
21
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the officers,
directors, and shareholders of Scientific-Atlanta who own more than ten
percent of a registered class of our equity securities, to file reports of
ownership and changes in ownership with the SEC. Officers, directors and
greater than ten-percent shareholders are required by SEC regulations to
furnish Scientific-Atlanta with copies of all Section 16(a) forms they file.
Based solely on a review of the copies of such forms furnished to us and
written representations submitted by the reporting persons, we believe that
during the last fiscal year all Section 16(a) filing requirements applicable
to its officers, directors and greater than ten-percent beneficial owners were
complied with, except for Mr. Napier's failure to report three transactions on
a timely basis.
FORM 10-K ANNUAL REPORT
A copy of Scientific-Atlanta's Annual Report on Form 10-K, including
financial statements and schedule, filed with the SEC for the fiscal year
ended June 29, 2001, is included in the annual report to Shareholders which
accompanies these proxy materials. Copies of any exhibit(s) to the Form 10-K
will be furnished on request and upon the payment of Scientific-Atlanta's
expenses in furnishing such exhibit(s). Any request for exhibits should be in
writing addressed to William E. Eason, Jr., Senior Vice President and
Secretary, Scientific-Atlanta, Inc., 5030 Sugarloaf Parkway, Lawrenceville,
Georgia 30044.
SHAREHOLDER PROPOSALS AND NOMINATIONS FOR 2002 ANNUAL MEETING
For a shareholder's proposal to be included in our Proxy Statement and form
of proxy for the 2002 annual meeting of shareholders, the proposal must be
submitted in writing to William E. Eason, Jr., Senior Vice President and
Secretary, Scientific-Atlanta, Inc., 5030 Sugarloaf Parkway, Lawrenceville,
Georgia 30044, by no later than May 27, 2002.
In accordance with Scientific-Atlanta's By-Laws, shareholders who do not
submit a proposal for inclusion in the Proxy Statement, as described in the
previous paragraph, but who intend to present a proposal, nomination for
director or other business for consideration at the 2002 annual meeting, are
required to notify the Secretary of Scientific-Atlanta of their proposal,
nomination or other business by no later than sixty (60) days (expected to be
September 8, 2002) and no earlier than ninety (90) days (expected to be August
9, 2002) prior to the 2002 annual meeting. Scientific-Atlanta's By-Laws
contain detailed requirements that the shareholder's notice must satisfy. If a
shareholder does not comply with the notice requirements, including the
deadlines specified above, the persons named as proxies in the form of proxy
for the 2002 annual meeting will use their discretion in voting the proxies on
any such matters raised at the 2002 annual meeting. Any shareholder notice and
any request for a copy of Scientific-Atlanta's By-Laws should be in writing
and addressed to William E. Eason, Jr., Senior Vice President and Secretary,
Scientific-Atlanta, Inc., 5030 Sugarloaf Parkway, Lawrenceville, Georgia
30044.
By Order of the Board of Directors,
/s/ William E. Eason, Jr.
William E. Eason, Jr.
Senior Vice President and Secretary
October 2, 2001
22
APPENDIX A
AUDIT COMMITTEE CHARTER
Membership
The Audit Committee shall be comprised of at least three directors
independent of management and free from any relationship that, in the opinion
of the Board of Directors, would interfere with the exercise of their
independence from management and the Company. Each member of the Committee
shall be financially literate, as such qualification is interpreted by the
Company's Board of Directors in its business judgment, or must become
financially literate within a reasonable period of time after his or her
appointment to the Committee. At least one member of the Committee must have
accounting or related financial management expertise, as the Board of
Directors interprets such qualification in its business judgment.
The Committee members, one of whom shall be Chairman, shall be appointed
annually at the meeting of the Board immediately following the annual meeting
of shareholders.
Responsibilities of the Committee
1. Provide assistance to the Board of Directors in fulfilling its
fiduciary responsibilities relating to corporate accounting and
reporting practices.
2. Discuss with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61, as may be modified
or supplemented.
3. Review with management and the independent auditors the annual audit
scope, significant accounting policies and audit conclusions.
4. Provide a basis for direct exchanges of views and information between
the Directors and independent accountants concerning unresolved
differences between management and the independent accountants arising
from the audit, any perceived failure of internal controls, or any
other significant financial or accounting matters.
5. Provide a basis for direct exchanges of views and information between
the Directors and the Company's internal auditors concerning
significant uncorrected failures of internal control, improper conduct
or other significant financial or accounting matters, which in the
opinion of the internal auditor is not receiving adequate management
attention.
6. Monitor compliance with the Company's Code of Conduct and its Corporate
Compliance Policy, and, in that connection, receive reports
periodically from the Company's Compliance Committee.
7. Evaluate the Company's system of internal controls.
8. Make recommendations to the Board of Directors regarding the selection,
employment and compensation of the independent auditors. The
independent auditors are ultimately accountable to the Board of
Directors and the Audit Committee, and the Audit Committee and the
Board of Directors have the ultimate authority and responsibility to
select, evaluate and, where appropriate, replace the independent
auditors (or to nominate the independent auditors to be proposed for
shareholder approval in any proxy statement).
9. Review compliance by the outside auditors with independence
requirements. The Audit Committee is responsible for ensuring that the
outside auditors submit on a periodic basis to the Audit Committee a
formal written statement delineating all relationships between such
auditors and the Company and the Audit Committee is responsible for
actively engaging in a dialog with the outside auditors with respect to
any disclosed relationships or services that may impact the objectivity
and independence of the outside auditors and for recommending that the
Board of Directors take appropriate action in response to the outside
auditors' report to satisfy itself of the outside auditors'
independence.
A-1
10. Review and discuss with management, Company counsel and the independent
public accountants any significant issues raised by counsel concerning
litigation, contingencies, claims or assessments.
11. Review and reassess the adequacy of the Audit Committee charter on an
annual basis.
12. Report to the full Board of Directors as to the foregoing when
appropriate.
Meetings
There will be three regular meetings per year. In addition, special meetings
may be called by the Chairman as needed.
One regular meeting will be held prior to the start of each regular annual
audit to review the proposed scope of the audit, cost estimates and current
developments in the accounting and regulatory areas which might affect the
Company or its financial statements.
The second regular meeting will be at the conclusion of the audit to review
the audited financial statements of the Company.
The third regular meeting will be held in mid-year to review the status of
the Company's internal controls, accounting principles, and Code of Conduct.
Authority
The Committee shall have all such authority necessary to conduct
investigations of matters within the scope of its functions and to retain
outside counsel and other experts, if necessary, to assist in investigations.
After consulting with the Board of Directors, the Committee shall have
authority to redress identified violations of the Company's Compliance Policy.
A-2
SCIENTIFIC-ATLANTA, INC.
PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON NOVEMBER 7, 2001
The undersigned hereby appoints James F. McDonald and William E. Eason,
Jr., and each of them, with full power of substitution, attorneys and proxies of
the undersigned, to represent the undersigned and to vote the Common Stock as
specified below at the Annual Meeting of Shareholders of Scientific-Atlanta,
Inc. to be held on November 7, 2001 at 9:00 a.m., local time, at Scientific-
Atlanta's offices at 5030 Sugarloaf Parkway, Lawrenceville, GA 30044, and at any
postponement or adjournment thereof, upon the following matters and in
accordance with their best judgment with respect to any other matters which may
properly come before the meeting, all as more fully described in the Proxy
Statement for said Annual Meeting (receipt of which is hereby acknowledged).
THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS INDICATED, THIS
PROXY WILL BE VOTED FOR ALL NOMINEES FOR DIRECTOR LISTED IN PROPOSAL 1 AND FOR
PROPOSAL 2, AND IN ACCORDANCE WITH THE BEST JUDGMENT OF THE DESIGNATED
INDIVIDUALS WITH RESPECT TO MATTERS INCIDENTAL TO THE CONDUCT OF THE MEETING OR
WHICH MAY OTHERWISE PROPERLY COME BEFORE THE MEETING. IF ANY OF THE NOMINEES FOR
DIRECTOR ARE UNABLE TO SERVE OR FOR GOOD CAUSE WILL NOT SERVE, THE PROXYHOLDER
WILL VOTE FOR SUCH OTHER PERSON OR PERSONS AS THE BOARD OF DIRECTORS MAY
RECOMMEND.
SCIENTIFIC-ATLANTA
P.O. BOX 11135
NEW YORK, N.Y. 10203-0135
(Continued and to be dated and signed on the reverse side.)
Two Additional Ways to Vote Your Proxy
SCIENTIFIC-ATLANTA, INC. VOTE BY TELEPHONE OR INTERNET
24 Hours a Day - 7 Days a Week
Save your Company money - It's Fast and Convenient
TELEPHONE
---------
1-866-849-8141
. Use any touch-tone telephone.
. Have your Proxy Form in hand.
. Enter your Control Number
located in the box below.
. Follow the simple recorded instructions.
OR
INTERNET
--------
https://www.proxyvotenow.com/sfa
. Go to the website address listed
above.
. Have your Proxy Form in hand.
. Enter the Control Number, located
in the box below.
. Follow the simple instructions.
OR
MAIL
----
. Mark, sign and date your proxy
card.
. Detach card from Proxy Form.
. Return the card in the
postage-paid envelope provided.
Your telephone or Internet vote authorizes the named proxies to vote your shares
in the same manner as if you marked, signed and returned your proxy card. If you
have submitted your proxy by telephone or the Internet there is no need for you
to mail back your proxy.
1-866-849-8141
CALL TOLL-FREE TO VOTE
CONTROL NUMBER FOR
TELEPHONE / INTERNET VOTING
DETACH PROXY CARD HERE IF YOU ARE NOT VOTING BY TELEPHONE OR INTERNET
--------------------------------------------------------------------------------
Please Detach Here
You Must Detach This Portion of the Proxy Card
Before Returning it in the Enclosed Envelope
The Board of Directors favors an affirmative vote for the nominees for director
listed below and for proposal 2.
1. ELECTION OF DIRECTORS FOR all nominees WITHHOLD AUTHORITY to vote *EXCEPTIONS
listed below. for all nominees listed below.
Nominees: (1) JAMES I. CASH, JR., (2) DAVID W. DORMAN, (3) JAMES F. MCDONALD AND
(4) TERENCE F. MCGUIRK
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the "Exceptions" box and write that nominee's name in the space provided below.)
*Exceptions:
--------------------------------------------------------------------
Change of Address and/or Comments Mark Here
2. Ratification of selection of Arthur Andersen LLP as independent auditors
of Scientific-Atlanta. 2.
FOR[ ] AGAINST[ ] ABSTAIN[ ]
If you agree to access our Annual Report and Proxy Materials electronically in
the future, please mark this box.[ ]
Note: Please date and sign this Proxy exactly as name appears. When signing as
attorney, trustee, administrator, executor or guardian, please give your title
as such. In the case of joint tenants, each joint owner should sign.
Dated , 2001
---------------------------
(SEAL)
---------------------------------
Signature
(SEAL)
---------------------------------
Signature (If held jointly)
Sign, Date and Return this Proxy Card Promptly Using the Enclosed Envelope.
Votes must be indicated (x) in Black or Blue ink. [X]