SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT [ ]
FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
AMKOR TECHNOLOGY, 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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(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):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] 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:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
[AMKOR LOGO]
1345 ENTERPRISE DRIVE
WEST CHESTER, PENNSYLVANIA 19380
July 2, 2003
To our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders of
Amkor Technology, Inc. The Annual Meeting will be held on Wednesday, July 30,
2003 at 11:00 a.m., at The Wyndham Suites Valley Forge, located at 888
Chesterbrook Boulevard, Wayne, Pennsylvania 19087, telephone number (610)
647-6700.
The actions expected to be taken at the Annual Meeting are described in
detail in the attached Proxy Statement and Notice of Annual Meeting of
Stockholders.
We also encourage you to read the Annual Report. It includes information
about our Company, as well as our audited financial statements. A copy of our
Annual Report is included with this Proxy Statement.
Please use this opportunity to take part in the affairs of Amkor by voting
on the business to come before this meeting. WHETHER OR NOT YOU PLAN TO ATTEND
THE MEETING, PLEASE COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY IN
THE ENCLOSED POSTAGE-PAID ENVELOPE. Returning the proxy does NOT deprive you of
your right to attend the meeting and to vote your shares in person for the
matters acted upon at the meeting.
We look forward to seeing you at the annual meeting.
Sincerely,
/s/ JAMES J. KIM
James J. Kim
Chairman of the Board and
Chief Executive Officer
AMKOR TECHNOLOGY, INC.
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 30, 2003
Dear Amkor Stockholder:
On Wednesday, July 30, 2003, Amkor Technology, Inc., a Delaware
corporation, will hold its 2003 Annual Meeting of Stockholders at The Wyndham
Suites Valley Forge, located at 888 Chesterbrook Boulevard, Wayne, Pennsylvania
19087, telephone number (610) 647-6700. The meeting will begin at 11:00 a.m.
Only stockholders who held stock at the close of business on June 20, 2003
can vote at this meeting or any adjournments that may take place. At the meeting
we will:
1. Elect the Board of Directors.
2. Approve the ratification of the appointment of our independent
accountants for 2003.
3. Attend to other business properly presented at the meeting.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF THE TWO
PROPOSALS OUTLINED IN THIS PROXY STATEMENT.
The approximate date of mailing for this proxy statement and card is July
2, 2003.
THE BOARD OF DIRECTORS
July 2, 2003
West Chester, Pennsylvania
YOUR VOTE IS IMPORTANT
TO ASSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, YOU ARE REQUESTED TO
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE AND RETURN IT
IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES.
AMKOR TECHNOLOGY, INC.
------------------------
PROXY STATEMENT
------------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
This proxy statement is furnished in connection with the solicitation by
the Board of Directors of Amkor Technology, Inc. of proxies to be voted at the
Annual Meeting of Stockholders to be held on Wednesday, July 30, 2003, at 11:00
a.m., and at any adjournment that may take place.
The Annual Meeting will be held at The Wyndham Suites Valley Forge, located
at 888 Chesterbrook Boulevard, Wayne, Pennsylvania 19087, telephone number (610)
647-6700. Our principal executive offices are located at 1345 Enterprise Drive,
West Chester, Pennsylvania 19380. Our telephone number is (610) 431-9600.
We mailed these proxy materials on or about July 2, 2003 to stockholders of
record who held our common stock on June 20, 2003.
The following is important information in a question-and-answer format
regarding the Annual Meeting and this Proxy Statement.
Q: WHAT MAY I VOTE ON?
A: (1) The election of eight nominees to serve on our Board of Directors;
AND
(2) The ratification of the appointment of PricewaterhouseCoopers LLP as
our independent accountants for 2003.
Q: HOW DOES THE BOARD RECOMMEND I VOTE ON THE PROPOSALS?
A: The Board recommends a vote FOR each of the nominees and FOR the
appointment of PricewaterhouseCoopers LLP as independent accountants for
2003.
Q: WHO IS ENTITLED TO VOTE?
A: Stockholders as of the close of business on June 20, 2003 (the "Record
Date") are entitled to vote at the Annual Meeting. Each stockholder is
entitled to one vote for each share of common stock held on the Record
Date. As of the Record Date, 166,211,909 shares of the Company's common
stock were issued and outstanding and held by 399 holders of record
(including shares held in "street name").
Q: HOW DO I VOTE?
A: You may vote in person at the Annual Meeting or by signing and dating
each proxy card you receive and returning it in the prepaid envelope.
Q: HOW CAN I CHANGE MY VOTE OR REVOKE MY PROXY?
A: You have the right to revoke your proxy and change your vote at any time
before the meeting by notifying the Company's Secretary, Kevin Heron,
c/o Amkor Technology, Inc. 1345 Enterprise Drive, West Chester, PA
19380, by returning a later-dated proxy card, by voting in person at the
meeting or by mailing a written notice of revocation to the attention of
the Company's Secretary.
Q: WHAT DOES IT MEAN IF I GET MORE THAN ONE PROXY CARD?
A: It means you hold shares registered in more than one account. Sign and
return all proxies to ensure that all your shares are voted.
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Q: WHO WILL COUNT THE VOTE?
A: Representatives of the Company's counsel, Wilson, Sonsini, Goodrich &
Rosati, will count the votes and act as the inspector of elections. The
Company believes that the procedures to be used by the inspector of
elections to count the votes are consistent with Delaware law concerning
voting of shares and determination of a quorum.
Q: WHAT IS A "QUORUM"?
A: A "quorum" is a majority of the outstanding shares. They may be present
at the meeting or represented by proxy. There must be a quorum for the
meeting to be held and action to be validly taken. If you submit a
properly executed proxy card, even if you abstain from voting, then you
will be considered part of the quorum. Abstentions are not counted in
the tally of votes FOR or AGAINST a proposal. A withheld vote is the
same as an abstention. If a broker indicates on a proxy that it does not
have discretionary authority as to certain shares to vote on a
particular matter (broker non-votes), those shares will not be counted
as present or represented for purposes of determining whether
stockholder approval of that matter has been obtained but will be
counted for purposes of establishing a quorum.
Q: WHO CAN ATTEND THE ANNUAL MEETING?
A: All stockholders as of the Record Date can attend. If your shares are
held in the name of a broker or other nominee, please bring proof of
share ownership with you to the Annual Meeting. A copy of your brokerage
account statement or an omnibus proxy (which you can get from your
broker) will serve as proof of share ownership.
Q: HOW WILL VOTING ON ANY OTHER BUSINESS BE CONDUCTED?
A: Although we do not know of any business to be considered at the 2003
Annual Meeting other than the proposals described in this proxy
statement, if any other business is properly presented at the Annual
Meeting, your signed proxy card gives authority to James J. Kim, Amkor's
Chief Executive Officer, and Kenneth T. Joyce, Amkor's Chief Financial
Officer, to vote your shares on such matters at their discretion.
Q: HOW AND WHEN MAY I SUBMIT PROPOSALS FOR THE 2004 ANNUAL MEETING?
A: To have your proposal included in the Company's proxy statement for the
2004 Annual Meeting, you must submit your proposal in writing on or
about March 2, 2004 to the Company's Secretary, c/o Amkor Technology,
Inc., 1345 Enterprise Drive, West Chester, Pennsylvania 19380.
If you submit a proposal for the 2004 Annual Meeting after the
above-referenced deadline, the proxy for the 2004 Annual Meeting may
confer upon management discretionary authority to vote on your proposal.
You should also be aware of certain other requirements you must meet to
have your proposal brought before the 2004 Annual Meeting, and these
requirements are explained in Rule 14a-8 of the Securities Exchange Act
of 1934.
Q: WHO IS SOLICITING PROXIES?
A: This solicitation of proxies is made by the Company's Board of
Directors, and all related costs will be borne by the Company.
The Company has retained the services of Georgeson Shareholder to aid in
the distribution of annual meeting materials to brokers, bank nominees
and other institutional owners. The Company estimates it will pay
Georgeson Shareholder a fee of approximately $3,500 for such services.
Proxies may also be solicited by certain of the Company's officers and
regular employees, without additional compensation, in person or by
telephone or facsimile.
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PROPOSALS YOU MAY VOTE ON
PROPOSAL ONE
ELECTION OF DIRECTORS
There are eight (8) candidates nominated for election to the Board of
Directors ("Board of Directors" or "Board") this year. Unless otherwise
instructed, the proxy holders will vote the proxies received by them for the
election of the eight nominees named below, each of whom is presently a
director. Each nominee has consented to be named a nominee in this proxy
statement and to continue to serve as a director if elected. Should any nominee
become unable or decline to serve as a director or should additional persons be
nominated at the meeting, the proxy holders intend to vote all proxies received
by them in such a manner as will assure the election of as many nominees as
possible (or, if new nominees have been designated by the Board, in such manner
as to elect such nominees) and the specific nominees to be voted for will be
determined by the proxy holders. All directors are elected annually and serve a
one-year term until our next annual meeting, or until their successor is duly
elected. We expect that each nominee will be able to serve as a director.
REQUIRED VOTE
Directors are elected by a plurality of votes cast. Votes withheld and
broker non-votes are not counted toward the total votes cast in favor of a
nominee.
YOUR BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE
ELECTION OF EACH OF THE NOMINATED DIRECTORS BELOW.
NOMINEES FOR THE BOARD OF DIRECTORS
The following table sets forth the names and the ages as of February 28,
2003 of our incumbent directors who are being nominated for re-election to the
Board of Directors:
NAME AGE POSITION
---- --- --------
James J. Kim.............................. 67 Chief Executive Officer and Chairman
John N. Boruch............................ 60 Chief Operating Officer, President and
Director
Winston J. Churchill(1)(2)(3)............. 62 Director
Thomas D. George(1)....................... 62 Director
Gregory K. Hinckley(2).................... 56 Director
Juergen Knorr............................. 70 Director
John B. Neff(2)(3)........................ 71 Director
James W. Zug(2)........................... 62 Director
---------------
(1) Member of Compensation Committee.
(2) Member of Audit Committee.
(3) Member of the Nominating Committee.
JAMES J. KIM. James J. Kim, 67, has served as our Chief Executive Officer
and Chairman since September 1997. Mr. Kim founded our predecessor, Amkor
Electronics, Inc., in 1968 and served as its Chairman from 1970 to April 1998.
Mr. Kim is a director of Electronics Boutique Holdings Corp., an electronics
retail chain.
JOHN N. BORUCH. John N. Boruch, 60, has served as our President and a
director since September 1997 and our Chief Operating Officer since February
1999. Mr. Boruch served as President of Amkor Electronics, Inc., our
predecessor, from February 1992 through April 1998. From 1991 to 1992, he served
as our predecessor's Corporate Vice President in charge of sales. Mr. Boruch
joined us in 1984. Prior to this he was with Motorola, a communications and
electronics company, for 18 years. Mr. Boruch earned a B.A. in Economics from
Cornell University. Mr. Boruch is also a director of the Fabless Semiconductor
Association.
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WINSTON J. CHURCHILL. Winston J. Churchill, 62, has been a director of our
Company since July 1998. Mr. Churchill is a managing general partner of SCP
Private Equity Management, L.P. ("SCP"), which manages private equity funds for
institutional investors. Mr. Churchill is also Chairman of CIP Capital
Management, Inc. Previously, Mr. Churchill was a managing partner of Bradford
Associates, which managed private equity funds on behalf of Bessemer Securities
Corporation and Bessemer Trust Company. From 1967 to 1983 he practiced law at
the Philadelphia firm of Saul, Ewing, Remick & Saul where he served as Chairman
of the Banking and Financial Institutions Department, Chairman of the Finance
Committee and was a member of the Executive Committee. Mr. Churchill is a
director of Griffin Land and Nurseries, Inc., Innovated Solutions and Support,
Inc. and of various SCP portfolio companies. In addition, he serves as a
director of various charities and educational institutions including American
Friends of New College, Oxford, England, Georgetown University, Fordham
University, the Gesu School and the Young Scholars Charter School. From 1989 to
1993 he served as Chairman of the Finance Committee of the Pennsylvania Public
School Employees' Retirement System. Mr. Churchill is also a member of the
Executive Committee of the Council of Institutional Investors.
THOMAS D. GEORGE. Thomas D. George, 62, has been a director of our Company
since November 1997. Mr. George was Executive Vice President, and President and
General Manager, Semiconductor Products Sector ("SPS") of Motorola, Inc., from
April 1993 to May 1997. Prior to that, he held several positions with Motorola,
Inc., including Executive Vice President and Assistant General Manager, SPS,
from November 1992 to April 1993 and Senior Vice President and Assistant General
Manager, SPS, from July 1986 to November 1992. Mr. George is currently retired
and is a director of Ultratech Stepper, Inc.
GREGORY K. HINCKLEY. Gregory K. Hinckley, 56, has been a director of our
Company since November 1997. Mr. Hinckley has served as Director, President and
Chief Operating Officer of Mentor Graphics Corporation, an electronics design
automation software company, since November 2000. From January 1997 until
November 2000, he held the position of Executive Vice President, Chief Operating
Officer and Chief Financial Officer of Mentor Graphics Corporation. From
November 1995 until January 1997, he held the position of Senior Vice President
with VLSI Technology, Inc., a manufacturer of complex integrated circuits. From
August 1992 until December 1996, Mr. Hinckley held the position of Vice
President, Finance and Chief Financial Officer with VLSI Technology, Inc.
JUERGEN KNORR. Juergen Knorr, 70, has been a director of our Company since
February 2001. Dr. Knorr is the former CEO and Group President of Siemens
Semiconductor Group, and a former member of the Executive Board of Siemens AG.
Following his retirement from Siemens in 1996, Dr. Knorr has taken an active
role in advancing the European semiconductor industry as a member of the Joint
European Submicron Silicon Initiative, as past president of the European
Electronics Components Manufacturer Association, and as president and chairman
of Micro Electronics Development for European Applications (MEDEA).
JOHN B. NEFF. John B. Neff, 71, has been a director of our Company since
January 1999. Mr. Neff was portfolio manager for the Windsor Fund and the Gemini
II mutual fund from 1964 until his retirement in 1995. He was also Senior Vice
President and Managing Partner of Wellington Management, one of the largest
investment management firms in the United States. From 1996 to 1998, Mr. Neff
was a director with Chrysler Corporation. He is a member of the Board of
Directors of Crown Holdings, Inc. and Greenwich Associates and on the executive
Board of Directors of Invemed Catalyst Fund, LLP.
JAMES W. ZUG. James W. Zug, 62, has been a director of our Company since
January 2003. Mr. Zug retired from PricewaterhouseCoopers LLP in 2000 following
a 37-year career at PricewaterhouseCoopers and Coopers & Lybrand. From 1998
until his retirement Mr. Zug was Global Leader -- Global Deployment for
PricewaterhouseCoopers. From 1993 to 1998 he was Managing Director International
for Coopers & Lybrand. PricewaterhouseCoopers is Amkor's independent accountant;
however, Mr. Zug was not involved with servicing Amkor during his tenure at
PricewaterhouseCoopers. Mr. Zug serves on the Boards of Directors of SPS
Technologies, Inc., Stackpole Ltd, Brandywine Fund Inc., and Brandywine Blue
Fund Inc. He is also on the Boards of Directors of the Philadelphia Orchestra
Association, the Kimmel Center for the Performing Arts, the Episcopal Academy,
and the Merion Golf Club.
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DIRECTOR COMPENSATION
We do not compensate directors who are also employees or officers of our
Company for their services as directors. Non-employee directors, however, are
eligible to receive: (1) an annual retainer of $25,000 as of January 2003, (2)
$2,000 per meeting of the Board of Directors that they attend, (3) $2,000 per
meeting of a committee of the Board of Directors that they attend and (4) $500
per non-regularly scheduled telephonic meeting of the Board of Directors in
which they participate. We also reimburse non-employee directors for travel and
related expenses incurred by them in attending board and committee meetings.
1998 Director Option Plan: Our Board of Directors adopted the 1998
Director Option Plan (the "Director Plan") in January 1998. A total of 300,000
shares of common stock have been reserved for issuance under the Director Plan.
The option grants under the Director Plan are automatic and non-discretionary.
As of January 1, 2003, the Director Plan provides for an initial grant of
options to purchase 20,000 shares of common stock to each new non-employee
director of the Company when such individual first becomes a non-employee
director. In addition, each non-employee director will automatically be granted
subsequent options to purchase 10,000 shares of common stock on each date on
which such director is re-elected by the stockholders of the Company, provided
that as of such date such director has served on the Board of Directors for at
least six months. The exercise price of the options is 100% of the fair market
value of the common stock on the grant date. The term of each option is ten
years and each option granted to a non-employee director vests over a three year
period. The Director Plan will terminate in January 2008 unless sooner
terminated by the Board of Directors.
If all or substantially all of our assets are sold to another entity or we
merge with or into another corporation, that acquiring entity or corporation may
either assume all outstanding options under the Director Plan or may substitute
equivalent options. Following an assumption or substitution, if the director is
terminated other than upon a voluntary resignation, any assumed or substituted
options will vest and become exercisable in full. If the acquiring entity does
not either assume all of the outstanding options under the Director Plan or
substitute an equivalent option, each option issued under the Director Plan will
immediately vest and become exercisable in full.
BOARD MEETINGS & COMMITTEES
Our Company's Board of Directors meets three or four times a year in
regularly scheduled meetings, but will meet more often if necessary. The Board
of Directors held three meetings and acted by unanimous written consent on four
occasions during 2002 and all of the directors attended all of the Board of
Directors meetings and Committee meetings of which they were members.
The full Board of Directors considers all major decisions of our company.
However, the Board of Directors has established a compensation committee, an
audit committee and a nominating committee.
Compensation Committee
The Compensation Committee is presently comprised of Messrs. George and
Churchill. The Compensation Committee: (1) reviews and approves annual salaries,
bonuses, and grants of stock options pursuant to our 1998 Stock Plan and (2)
reviews and approves the terms and conditions of all employee benefit plans or
changes to these plans. During 2002, the Compensation Committee met three times
apart from regular meetings with the entire Board of Directors.
Audit Committee
The Audit Committee is comprised of Messrs. Churchill, Hinckley, Neff and
Zug all of whom meet the independence and experience requirements set forth in
the rules of the NASDAQ listing standards and all of whom are audit committee
financial experts. The Audit Committee: (1) recommends to the Board of Directors
the annual appointment of our independent accountants, (2) discusses and reviews
in advance the scope and the fees of the annual audit, (3) reviews the results
of the annual audit with the independent
5
accountants and discusses the foregoing with the Company's management, (4)
reviews and approves non-audit services of the independent accountants, (5)
reviews the activities, organizational structure and qualifications of the
Company's internal audit function, (6) reviews management's analysis of the
Company's procedures and policies relating to the adequacy of our internal
accounting controls and compliance with applicable laws relating to accounting
practices and (7) reviews and discusses with our independent accountants their
independence. The Audit Committee met ten times apart from regular meetings with
the entire Board. In connection with the execution of the responsibilities of
the Audit Committee including the review of the Company's quarterly earnings
prior to the public release of the information, the Audit Committee members
communicated throughout 2002 with the Company's management and independent
accountants.
Nominating Committee
The Nominating Committee is comprised of Messrs. Churchill and Neff. The
Nominating Committee reviews prospective candidates for the Board of Directors,
and makes recommendations to the entire Board of Directors with regard to such
candidates.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee, (the "Committee"), of the Company's Board of
Directors currently consists of Mr. Winston Churchill (Chairman), and Mr. Thomas
George. Both members were designated by the Board on November 10, 1998. No
member of the Committee during 2002 was an employee of the Company or any of its
subsidiaries. Each member meets the definition of "non-employee director" under
Rule 16b-3 of the Securities Exchange Act of 1934, as amended, and is an
"outside director" within the meaning of Section 162(m) of the Internal Revenue
Code of 1986, as amended, (the "Code").
The Committee has overall responsibility for the Company's executive
compensation policies and practices. The Committee's functions include:
- Determining the compensation of the Chief Executive Officer of the
Company.
- Reviewing and approving all other executive officers' compensation,
including salary and payments under the executive bonus plan, in each
case based in part upon the recommendation of the Chief Executive Officer
of the Company.
- Granting awards to executive officers under the Company's stock option
incentive plans.
- Reviewing and making recommendations to the Board of Directors regarding
compensation goals and guidelines for the Company's employees and
criteria by which bonuses to the Company's employees are determined.
- Administering the Company's 1998 Stock Plan and its Employee Stock
Purchase Plan.
Compensation Philosophy
The Company's compensation philosophy is to attract and retain top talent
within the packaging industry through a multifaceted compensation approach. This
includes aligning base pay with companies with whom the Company competes with
for top talent. These companies are within both the semiconductor and printed
circuit board manufacturing sectors. The Company's approach to total cash
compensation is that it should vary with the performance of the Company in
obtaining the financial and operational objectives of the Company. The Company
has an incentive program for all employees which is proportional to Company
profitability. In addition, the Company has an executive bonus program that is
based on annual operational performance.
6
Salaries
It is the Committee's objective to establish base salaries at levels that
are comparable to those paid to executives with comparable qualifications,
experience and responsibilities at other companies in the electronics industry,
including semiconductor and printed circuit board companies. The Committee
believes that it is necessary to attract and retain the leaders in the packaging
industry, as the Company competes with these companies for executive talent. At
the end of the fiscal year, each executive officer is reviewed by Mr. Kim. The
review of executive officers made in fiscal 2002 for performance related to
their specific function within the organization and results achieved by them
relative to key performance factors. The Committee reviewed independently these
recommendations and approved, with any modifications that it deemed appropriate,
the annual salary, including salary increases, for the executive officers.
Industry, peer group and national survey results were also considered in making
salary determinations to maintain parity of the Company's pay practices within
the electronics and wafer fabrication industries.
Compensation for the Chief Executive Officer
In fiscal 2002, James J. Kim served as the Chairman of the Board and Chief
Executive Officer of the Company. The Committee's criteria for determining Mr.
Kim's compensation were driven by several factors: the competitive marketplace,
the Company's position in the rapidly evolving technology sector in which it
operates, the Company's operating and financial performance in 2002, Mr. Kim's
relative ownership interest in the Company and, most importantly, his leadership
and establishment and implementation of strategic direction for the Company.
The Committee believes that Mr. Kim's performance throughout the fiscal
year ended December 31, 2002 was outstanding and that he continues to
demonstrate highly effective leadership.
Annual Incentive Compensation
Each executive officer's performance, as well as their total cash
compensation on a peer-market level was evaluated by the Committee to determine
the appropriate cash bonus award. Additionally, industry standards regarding
cash bonuses as a percentage of total base pay were reviewed to ensure alignment
within the industry.
Executive Incentive Bonus Plan
An executive incentive plan was established by the Compensation Committee
in 1999. This Executive Incentive Bonus Plan (the "EIBP"), is a cash based
incentive bonus program. The purpose of this plan is to align executive
officers' as well as key employees' performance with Company objectives and
operating income and revenue growth. The EIBP establishes performance targets
for each of these three measures, and determines, by individual, the targeted
bonus level for performance. In 2002, no bonuses were paid.
Employee Profit Sharing Plan
Most employees of the Company are eligible to participate in a cash bonus
program which is proportional to corporate profitability. Annually, a percentage
of the Company's profit before taxes is allocated to the profit sharing pool.
This allocation is distributed as a percentage of employees' base pay, to
eligible participants within the Company. In 2002, no bonuses were paid.
Long-Term Incentive Compensation
Long-term incentive compensation currently consists solely of stock
options. The Committee is responsible for the administration of the Company's
stock option program. Option grants are made under the Stock Option Plan, as
amended, at the fair market price on the date of grant and expire up to ten
years after the date of the grant. The Committee believes that stock options are
a competitive necessity in the electronics industry.
7
As a general rule, the Committee believes that a certain portion of the
compensation package for all Executive Officers should be based on long-term
incentives.
Winston J. Churchill, Chair
Thomas D. George
REPORT OF THE AUDIT COMMITTEE
The role of the Audit Committee is to review the Company's financial
reporting process on behalf of the Board of Directors. The Committee is
comprised solely of independent directors, as defined in the NASDAQ listing
standards, and it operates under a written charter adopted by the Board of
Directors, a copy of which is attached to this proxy statement as Appendix A.
As set out in the charter, the Committee's overall responsibility is one of
oversight. Management is responsible for the preparation, presentation and
integrity of the Company's consolidated financial statements, accounting and
financial reporting principles, internal control and procedures designed to
ensure compliance with accounting standards, applicable laws and regulations.
The independent accountants are responsible for auditing the Company's
consolidated financial statements and expressing an opinion in accordance with
generally accepted auditing standards. The Committee meets with the independent
accountants, with and without management present, to discuss the results of
their audit, the evaluation of the Company's internal controls and the overall
quality of the Company's financial reporting.
In performing its oversight function, the Committee considered and
discussed the Company's audited consolidated financial statements with
management and the independent accountants. The Committee discussed significant
accounting policies applied by the Company in its consolidated financial
statements, as well as alternative treatments. Management represented to the
Committee that the Company's consolidated financial statements were prepared in
accordance with generally accepted accounting principles. The Committee
discussed with the independent accountants the matters required for discussion
by Statement on Auditing Standards No. 61, Communication with Audit Committees.
The Committee discussed with the independent accountants their independence from
the Company and its management and obtained the written disclosures from the
independent accountants required by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees. The Committee considered whether
the provision of other non-audit services by the independent accountants to the
Company is compatible with maintaining the independent accountants'
independence. The Committee concluded that the independent accountants are
independent from the Company and its management.
Based on all of the foregoing, the Committee recommended to the Board of
Directors, and the Board approved, that the Company's audited consolidated
financial statements be included in the Company's Annual Report on Form 10-K for
the year ended December 31, 2002. The Committee selected and the Board of
Directors ratified, subject to shareholder approval, the selection of the
Company's independent accountants for the audit of the consolidated financial
statements for the year ending December 31, 2003.
James W. Zug, Chair
Winston J. Churchill
Gregory K. Hinckley
John B. Neff
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COMPENSATION COMMITTEE INTERLOCKS
The Compensation Committee currently consists of Messrs. Churchill and
George. No member of the Compensation Committee was an officer or employee of
Amkor or any of Amkor's subsidiaries during fiscal 2002. None of Amkor's
Compensation Committee members or executive officers has served on the Board of
Directors or on the compensation committee of any other entity one of whose
executive officers served on our Board of Directors or on our Compensation
Committee.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We have had a long-standing relationship with Anam Semiconductor, Inc.
("ASI"). ASI was founded in 1956 by Mr. H. S. Kim, the father of Mr. James Kim,
our Chairman and Chief Executive Officer. Through our supply agreements with
ASI, we historically had a first right to substantially all of the packaging and
test services capacity of ASI and the exclusive right to all of the wafer output
of ASI's wafer fabrication facility. With our acquisition of K1, K2 and K3 in
May 2000, we no longer received packaging and test services from ASI. Under the
wafer fabrication services supply agreement which was consummated in January
1998 and terminated as of February 28, 2003, we had the exclusive right but not
the requirement to purchase all of the wafer output of ASI's wafer fabrication
facility on pricing terms negotiated annually. As part of our strategy to sell
our investment in ASI and to divest our wafer fabrication services business, we
entered into a series of transactions beginning in the second half of 2002:
- In September 2002, we sold 20 million shares of ASI common stock to
Dongbu Group for $58.1 million in net cash proceeds and 42 billion Korean
Won (approximately $35.4 million at a spot exchange rate as of December
31, 2002) of interest bearing notes from Dongbu Corporation payable in
two equal principal payments in September 2003 and February 2004. The
Dongbu Group comprises Dongbu Corporation, Dongbu Fire Insurance Co.,
Ltd. and Dongbu Life Insurance Co., Ltd., all of which are Korean
corporations and are collectively referred herein as "Dongbu."
Additionally, we divested one million shares of ASI common stock in
connection with the payment of certain advisory fees related to this
transaction.
- As of February 28, 2003, we sold our wafer fabrication services business
to ASI for total consideration of $62 million.
- In separate transactions designed to facilitate a future merger between
ASI and Dongbu, (i) we acquired a 10% interest in Acqutek from ASI for
$1.9 million; (ii) we acquired the Precision Machine Division (PMD) of
Anam Instruments, a related party to Amkor, for $8 million; and (iii)
Anam Instruments, which had been partially owned by ASI, utilized the
proceeds from the sale of PMD to us to buy back all of the Anam
Instruments shares owned by ASI. Acqutek supplies materials to the
semiconductor industry and is publicly traded in Korea. An entity
controlled by the family of James Kim, our Chairman and Chief Executive
Officer, held a 25% ownership interest in Acqutek at the time of our
acquisition of our interest in Acqutek. We have historically purchased
and continue to purchase leadframes from Acqutek. PMD supplies
sophisticated die mold systems and tooling to the semiconductor industry
and historically over 90% of its sales were to Amkor. At the time of our
acquisition of PMD, Anam Instruments was owned 20% by ASI and 20% by a
family member of James Kim.
Each of the transactions with Dongbu, ASI and Anam Instruments are
interrelated and it is possible that if each of the transactions were viewed on
a stand-alone basis without regard to the other transactions, we could have had
different conclusions as to fair value.
As of February 28, 2003, we sold our wafer fabrication services business to
ASI. In addition, pursuant to the definitive agreements with Dongbu, (1) Amkor
and Dongbu agreed to use reasonable best efforts to cause Dongbu Electronics and
ASI to be merged together as soon as practicable, (2) Amkor and Dongbu agreed to
cause ASI to use the proceeds ASI received from its sale of stock to Dongbu to
purchase shares in Dongbu Electronics and (3) Amkor and Dongbu agreed to use
their best efforts to provide releases and indemnifications to the chairman,
directors and officers of ASI, either past or incumbent, from any and all
liabilities arising out of the performance of their duties at ASI between
January 1, 1995 and December 31, 2001. The
9
last provision would provide a release and indemnification for James Kim, our
CEO and Chairman, and members of his family. We are not aware of any claims or
other liabilities which these individuals would be released from or for which
they would receive indemnification.
At January 1, 2002 Amkor owned 47.7 million shares or 42% of ASI's voting
stock. During 2002, we divested 21 million shares of ASI stock and at December
31, 2002 Amkor owned 26.7 million shares of ASI or 21%. The carrying value of
our remaining investment in ASI at December 31, 2002 was $77.5 million, or $2.90
per share. On March 24, 2003, we sold an additional 7 million shares of ASI
common stock to an investment bank for 24.4 billion Korean won ($19.5 million
based on the spot exchange rate as of the transaction date) which approximates
the carrying value of those shares. As part of that sale, we purchased a
nondeliverable call option for $6.7 million that expires December 2003 and is
indexed to ASI's share price with a strike price of $1.97 per share. The net
proceeds from the exercise of the option could be less than the current carrying
value and could expire unexercised losing our entire investment in the option.
As of March 24, 2003, we owned 19.7 million shares of ASI, or 16% of ASI's
voting stock. Beginning March 24, 2003, we ceased accounting for our investment
in ASI under the equity method of accounting and commenced accounting for our
investment as a marketable security that is available for sale.
Historically, we have had other relationships with ASI affiliated companies
for financial services, construction services, materials and equipment. Each of
these transactions was conducted on an arms-length basis in the ordinary course
of business. In addition, ASI's former construction subsidiary is currently in
reorganization and its affairs are managed by a number of creditor banks; all
transactions between Amkor and this entity are subject to review and approval by
these banks. Total purchases from ASI and its affiliates included in cost of
revenue for the years ended December 31, 2002, 2001 and 2000 were $212.6
million, $161.6 million and $499.8 million. Additionally, financial services
performed by ASI and its affiliates included in interest expense for the year
ended December 31, 2000 was $1.6 million. Construction services and equipment
purchases received from ASI and its affiliates capitalized during the years
ended December 31, 2002, 2001 and 2000 were $2.8 million, $14.7 million and
$38.8 million, respectively.
Total purchases from Acqutek included in cost of revenue for 2002, 2001 and
2000 were $16.0 million, $14.0 million and $29.2 million, respectively. We
believe these transactions with Acqutek were conducted on an arms-length basis
in the ordinary course of business.
We entered into indemnification agreements with our officers and directors.
These agreements contain provisions which may require us, among other things, to
indemnify the officers and directors against certain liabilities that may arise
by reason of their status or service as directors or officers (other than
liabilities arising from willful misconduct of a culpable nature). We also
agreed to advance them any expenses for proceedings against them that we agreed
to indemnify them from.
As of December 31, 2002, Mr. James Kim and members of his immediate family
beneficially owned approximately 44% of our outstanding common stock.
Amkor Electronics, Inc. (AEI), which was merged into our Company just prior
to the initial public offering of our Company in May 1998, elected to be taxed
as an S Corporation under the provisions of the Internal Revenue Code of 1986
and comparable state tax provisions. As a result, AEI did not recognize U.S.
federal corporate income taxes. Instead, the stockholders of AEI were taxed on
their proportionate share of AEI's taxable income. Accordingly, no provision for
U.S. federal income taxes was recorded for AEI. Just prior to the initial public
offering, AEI terminated its S Corporation status at which point the profits of
AEI became subject to federal and state income taxes at the corporate level. We
consummated a tax indemnification agreement between us, our predecessor and
James Kim and his family (collectively, the "Kim Family"). James Kim, is our
founder and significant stockholder, and currently serves as our Chairman and
CEO. Under the terms of the tax indemnification agreement, Amkor indemnifies the
former owners of AEI for the settlement of AEI's S Corporation federal and state
tax returns and any adjustments to the reported taxable income. At the time AEI
was converted to a C Corporation, AEI and the Kim Family identified certain
federal and state tax overpayments associated with the results of AEI during S
Corporation status years and AEI, in May 1998, paid such amounts to the Kim
Family. These amounts, which principally related to the finalization of AEI's
federal tax return, are reflected as a receivable from stockholder in the
stockholders'
10
equity section of our balance sheets. As the refunds are paid by the associated
taxing authorities and received by the Kim Family, the Kim Family, in turn,
remits the funds to Amkor. During 2002, $0.4 million of tax refunds were
received by the Kim Family and used to pay down the stockholder loan. The loan
balance will be further reduced as AEI's tax returns are finalized and refunds
remitted by the associated taxing authorities.
We lease office space in West Chester, Pennsylvania from certain of our
stockholders. The lease expires in 2006. We have the option to extend the lease
for an additional 10 years through 2016. Amounts paid for this lease in 2002
were $1.2 million.
We have historically maintained split-value life insurance policies on the
joint lives of James J. Kim and Agnes C. Kim for the benefit of the Trust of
James J. Kim dated September 30, 1992 (the "1992 Trust"). No premium payments
were made by Amkor in 2002. In the event of the death of James J. Kim or Agnes
C. Kim we will receive in death benefits an amount equal to the lesser of the
total net premiums paid in cash by us or the net cash surrender value of the
policy as of the date of such death.
In January 1998, we loaned $120,000 to Mr. Boruch, our President and Chief
Operating Officer, of which $99,000 was outstanding as of December 31, 2002 and
repaid in 2003. This loan was interest bearing at a rate of 7% per year.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires our officers
and directors, and persons who own more than ten percent of a registered class
of our equity securities, to file reports of ownership on Form 3 and changes in
ownership on Form 4 or 5 with the Securities and Exchange Commission (the "SEC")
and the National Association of Securities Dealers, Inc. Such officers,
directors and ten-percent stockholders are also required by SEC rules to furnish
Amkor with copies of all forms that they file pursuant to Section 16(a). Based
solely on our review of the copies of such forms received by us, or written
representations from certain reporting persons that no other reports were
required for such persons, Amkor believes that all Section 16(a) filing
requirements applicable to our officers, directors and ten-percent stockholders
were complied with in a timely fashion.
DIRECTORS AND OFFICERS
JAMES J. KIM. For a brief biography on Mr. Kim, please see "Proposal
One -- Election of Directors -- Nominees for the Board of Directors."
JOHN N. BORUCH. For a brief biography on Mr. Boruch, please see "Proposal
One -- Election of Directors -- Nominees for the Board of Directors."
BRUCE J. FREYMAN. Bruce J. Freyman, 42, has served as our Executive Vice
President of Manufacturing and Product Operations since January 2002. Prior to
his appointment as Executive Vice President, Mr. Freyman served in a number of
positions at Amkor, including Corporate Vice President of Manufacturing and
Product Operations (March 2001 to January 2002), Corporate Vice President of
Product Operations (September 1998 to March 2001), and Corporate Vice President
of laminate Products (January 1997 to September 1998). Before joining Amkor, Mr.
Freyman spent several years with Motorola, last serving as the Semiconductor
Packaging Manager for Motorola's Communications Sector. Mr. Freyman holds an
M.B.A. from Florida Atlantic University, and a B.S. in Chemical Engineering from
the University of Massachusetts.
KENNETH T. JOYCE. Kenneth T. Joyce, 55, has served as our Executive Vice
President and Chief Financial Officer since July 1999. Prior to his election as
our Chief Financial Officer, Mr. Joyce served as our Vice President and
Operations Controller since 1997. Prior to joining our Company, he was Chief
Financial Officer of Selas Fluid Processing Corporation, a subsidiary of Linde
AG. Mr. Joyce is also former Vice President, Finance and Chief Financial officer
of Selas Corporation of America (Amex: SLS) and was responsible for the sale of
Selas' Fluid Processing business to Linde AG. Mr. Joyce began his accounting
11
career in 1971 at KPMG Peat Marwick. Mr. Joyce is a certified public accountant.
Mr. Joyce earned a B.S. in Accounting from Saint Joseph's University and an
M.B.A. in Finance from Drexel University.
WINSTON J. CHURCHILL. For a brief biography on Mr. Churchill, please see
"Proposal One -- Election of Directors -- Nominees for the Board of Directors."
THOMAS D. GEORGE. For a brief biography on Mr. George, please see "Proposal
One -- Election of Directors -- Nominees for the Board of Directors."
GREGORY K. HINCKLEY. For a brief biography on Mr. Hinckley, please see
"Proposal One -- Election of Directors -- Nominees for the Board of Directors."
DR. JUERGEN KNORR. For a brief biography on Dr. Knorr, please see "Proposal
One -- Election of Directors -- Nominees for the Board of Directors."
JOHN B. NEFF. For a brief biography on Mr. Neff, please see "Proposal
One -- Election of Directors -- Nominees for the Board of Directors."
JAMES W. ZUG. For a brief biography on Mr. Zug, please see "Proposal
One -- Election of Directors -- Nominees for the Board of Directors."
EXECUTIVE COMPENSATION
Summary Compensation. The following table sets forth compensation earned
during each of the three years in the period ending 2002 by our Chief Executive
Officer and the four employees representing the Company's other most
highly-compensated executive officers (collectively, the "Named Executive
Officers").
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION
COMPENSATION SECURITIES
--------------------- UNDERLYING ALL OTHER
NAME YEAR SALARY BONUS(1) OPTIONS(2) COMPENSATION(3)
---- ---- -------- ---------- ------------ ---------------
James J. Kim(4).................... 2002 $790,000 $ -- 250,000 $ 8,454
Chief Executive Officer 2001 $790,000 $ 79,000 250,000 $ 8,173
and Chairman 2000 $783,800 $1,740,000 250,000 $ 8,200
John N. Boruch(5).................. 2002 $580,000 $ -- 225,000 $ 9,326
Chief Operating Officer and 2001 $580,000 $ 58,000 175,000 $ 14,780
President 2000 $575,400 $ 633,625 150,000 $ 15,400
Bruce J. Freyman(7)................ 2002 $385,000 $ -- 200,000 $ 9,807
Executive Vice President, 2001 $352,692 $ 35,000 150,000 $ 6,000
Manufacturing and Product 2000 $326,923 $ 301,813 150,000 $ 6,000
Operations
Kenneth T. Joyce(6)(7)............. 2002 $235,000 $ -- 70,000 $ 8,286
Executive Vice President and
Chief 2001 $235,000 $ 23,500 40,000 $106,000
Financial Officer 2000 $231,200 $ 218,500 40,000 $ 6,000
Eric R. Larson(7)(8)............... 2002 $275,000 $ -- 70,000 $ 15,609
Executive Vice President,
Corporate 2001 $275,000 $ 27,500 40,000 $ 6,000
Development and Wafer Fab 2000 $273,100 $ 219,600 40,000 $ 6,000
---------------
(1) Bonus amounts include incentive compensation earned in the year indicated
but that were approved by our Board of Directors and paid in the following
year and payments under the Employee Profit Sharing Plan for the year
indicated for the prior year's results. No incentive compensation was earned
in 2002.
(2) Long-term compensation represents stock options issued under the 1998 Stock
Plan.
12
(3) All other compensation for all of the named executive officers includes
$6,000 paid to each executive's 401(k) plan.
(4) All other compensation for Mr. Kim includes a reimbursement for vehicle
expenses.
(5) All other compensation for Mr. Boruch includes reimbursement for vehicle
expenses and in 2001 and 2000 imputed loan interest.
(6) All other compensation for Mr. Joyce in 2001 includes a reimbursement for
relocation costs.
(7) All other compensation for Messrs. Freyman, Joyce and Larson in 2002
includes a reimbursement for vehicle expenses.
(8) Mr. Larson ceased to be an executive officer of the Company in March 2003.
OPTION GRANTS IN FISCAL 2002
The following table provides information concerning each grant of options
to purchase our common stock made during 2002 to the Named Executive Officers.
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
------------------------------------- MINUS EXERCISE PRICE AT
ASSUMED ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK PRICE APPRECIATION FOR
SECURITIES OPTIONS EXERCISE -----------------------------
UNDERLYING GRANTED TO PRICE PER OPTION TERM(2)
OPTIONS EMPLOYEES IN SHARE EXPIRATION -----------------------------
NAME GRANTED(1) FISCAL YEAR ($/SH) DATE 5% 10%
---- ---------- ------------ --------- ---------- ------------- -------------
James J. Kim................ 250,000(3) 6.3% $13.00 2/22/12 $2,043,908 $5,179,663
Chief Executive Officer
and Chairman
John N. Boruch.............. 225,000(3) 5.6% $13.00 2/22/12 $1,839,517 $4,661,697
Chief Operating Officer
and President
Bruce J. Freyman............ 200,000(3) 5.0% $13.00 2/22/12 $1,635,126 $4,143,731
Executive Vice President,
Manufacturing and Product
Operations
Kenneth T. Joyce............ 70,000(3) 1.75% $13.00 2/22/12 $ 572,295 $1,450,306
Executive Vice President
and Chief Financial
Officer
Eric R. Larson(4)........... 70,000(3) 1.75% $13.00 2/22/12 $ 572,295 $1,450,306
Executive Vice President,
Corporate Development and
Wafer Fab
---------------
(1) All options shown granted in fiscal 2002 become exercisable as to 25% of the
share subject to the option exercisable starting one year after the date of
grant and an additional 1/48 of such shares subject to the option becoming
exercisable each month thereafter.
(2) Potential realizable value is based on the assumption that: (1) our common
stock will appreciate at the compound annual rate shown from the date of
grant until the expiration of the option term and (2) that the option is
exercised at the exercise price and sold on the last day of its term at the
appreciated price. We assume stock appreciation of 5% and 10% pursuant to
rules promulgated by the Securities and Exchange Commission, and these
percentages do not reflect our estimate of future stock price growth.
(3) Each of the Named Executive Officers surrendered these options pursuant to a
voluntary stock option replacement program initiated on November 8, 2002.
This program allowed employees and members of our Board of Directors to
surrender their existing options and to receive new option grants six months
and one day after the tendered options were cancelled. We will issue new
option grants equal to the same number of shares surrendered by the
employees and members of our Board of Directors. The exercise price will
equal the fair market value of common stock as of the new grant date which
is expected to be no earlier than June 12, 2003.
(4) Mr. Larson ceased to be an executive officer of the Company in March 2003.
13
YEAR-END OPTION VALUES
The following table shows the number of shares covered by both exercisable
and non-exercisable stock options held by the Named Executive Officers as of
December 31, 2002. Also reported are the values for "in-the-money" options which
represent the positive spread between the exercise price of any such existing
stock options and the year-end price of our common stock.
NUMBER OF SECURITIES DOLLAR VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 2002(1) DECEMBER 31, 2002(2)
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
James J. Kim................. -- -- -- -- -- --
Chief Executive Officer and
Chairman
John N. Boruch............... 50,000 $414,450 137,317 10,418 -- --
Chief Operating Officer and
President
Bruce Freyman................ -- -- 150,207 3,647 -- --
Executive Vice President,
Operations
Kenneth T. Joyce............. -- -- 22,166 834 -- --
Executive Vice President
and Chief Financial Officer
Eric R. Larson(3)............ -- -- 103,874 3,126 -- --
Executive Vice President,
Corporate Development and
Wafer Fab
---------------
(1) On November 8, 2002, we initiated a voluntary stock option replacement
program which allowed employees and members of our Board of Directors to
surrender their existing options and to receive new option grants six months
and one day after the tendered options were cancelled. We will issue new
option grants equal to the same number of shares surrendered by the
employees and members of our Board of Directors. The exercise price will
equal the fair market value of common stock as of the new grant date, which
is expected to be no earlier than June 12, 2003. On December 11, 2002, the
following Named Executive Officers surrendered the following number of stock
options pursuant to the program:
SHARES
SURRENDERED
-----------
James J. Kim................................................ 750,000
John N. Boruch.............................................. 900,000
Bruce J. Freyman............................................ 500,000
Kenneth T. Joyce............................................ 150,000
Eric Larson................................................. 150,000
(2) None of the options held by the Named Executive Officers as of December 31,
2002 had an exercise price less than $4.76, the value of our common stock as
of December 31, 2002 as reported by the Nasdaq Stock Market.
(3) Mr. Larson ceased to be an executive officer of the Company in March 2003.
14
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
The following table sets forth certain information regarding the beneficial
ownership of our outstanding common stock as of May 31, 2003 by:
- each person or entity who is known by us to beneficially own 5% or more
of our outstanding common stock;
- each of our directors; and
- the Named Executive Officers.
BENEFICIAL OWNERSHIP(A)
------------------------
NUMBER OF PERCENTAGE
NAME AND ADDRESS SHARES OWNERSHIP
---------------- ----------- ----------
James J. Kim Family Control Group(b)(m)..................... 73,238,641 44.3%
1345 Enterprise Drive
West Chester, PA 19380
J. & W. Seligman & Co. Incorporated(c)...................... 9,515,860 5.8
100 Park Avenue
New York, New York 10017
Winston J. Churchill(d)(m).................................. 30,000 *
Thomas D. George(e)......................................... 40,000 *
Gregory K. Hinckley(f)...................................... 38,000 *
Dr. Juergen Knorr(m)........................................ -- *
John B. Neff(g)............................................. 225,000 *
James W. Zug................................................ 5,100 *
John N. Boruch(h)(m)........................................ 208,550 *
Eric R. Larson(i)(m)........................................ 114,399
Kenneth T. Joyce(j)(m)...................................... 41,547 *
Bruce J. Freyman(k)(m)...................................... 180,963 *
All directors and Named Executive Officers(l)............... 74,122,200 44.6
---------------
* Represents less than 1%.
(a) The number and percentage of shares beneficially owned is determined in
accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as
amended. The information is not necessarily indicative of beneficial
ownership for any other purpose. Under this rule, beneficial ownership
includes any share over which the individual or entity has voting power or
investment power. In computing the number of shares beneficially owned by a
person and the percentage ownership of that person, shares of our common
stock subject to options held by that person that will be exercisable on or
before July 30, 2003 are deemed outstanding. Unless otherwise indicated,
each person or entity has sole voting and investment power with respect to
shares shown as beneficially owned.
(b) Represents 29,727,093 shares held by James J. and Agnes C. Kim; 139,516
shares issuable upon the conversion of convertible debt held by Mrs. Kim
that is convertible on or before July 30, 2003; 14,457,344 shares held by
the David D. Kim Trust of December 31, 1987; 14,457,344 shares held by the
John T. Kim Trust of December 31, 1987; 6,257,344 shares held by the Susan
Y. Kim Trust of December 31, 1987; and 8,200,000 shares held by the Trust
of Susan Y. Kim dated April 16, 1998 established for the benefit of Susan
Y. Kim's minor children, with Susan Y. Kim as the Trustee. James J. and
Agnes C. Kim are husband and wife and, accordingly, each may be deemed to
beneficially own shares of our common stock held in the name of the other.
David D. Kim, John T. Kim and Susan Y. Kim are children of James J. and
Agnes C. Kim. Each of the David D. Kim Trust of
15
December 31, 1987, John T. Kim Trust of December 31, 1987 and Susan Y. Kim
Trust of December 31, 1987 has in common Susan Y. Kim and John F.A. Earley
as co-trustees, in addition to a third trustee (John T. Kim in the case of
the Susan Y. Kim Trust and the John T. Kim Trust, and David D. Kim in the
case of the David D. Kim Trust) (the trustees of each trust may be deemed
to be the beneficial owners of the shares held by such trust). All of the
above-referenced trusts, together with their respective trustees and James
J. and Agnes C. Kim may be considered a "group" under Section 13(d) of the
Exchange Act on the basis that the trust agreement for each of these trusts
encourages the trustees of the trusts to vote the shares of our common
stock held by them, in their discretion, in concert with James Kim's
extended family. This group may be deemed to have beneficial ownership of
73,238,641 shares or approximately 44.3% of the outstanding shares of our
common stock. Each of the foregoing persons stated that the filing of their
beneficial ownership reporting statements shall not be construed as an
admission that such person is, for the purposes of Section 13(d) or 13(g)
of the Exchange Act, the beneficial owner of the shares of our common stock
reported as beneficially owned by the other such persons.
(c) J. & W. Seligman & Co. Incorporated ("JWS") reported in a Schedule 13G/A
filed with the Commission on February 11, 2003 that it beneficially owned
these shares as of December 31, 2002. JWS also reported that William C.
Morris, as the owner of a majority of the outstanding voting securities of
JWS, may be deemed to beneficially own the shares beneficially owned by
JWS. JWS is the investment adviser for Seligman Communications and
Information Fund, Inc. (the "Fund"). Of the 9,515,860 shares that JWS
beneficially owns, the Fund beneficially owns 9,060,000 shares.
(d) Includes 20,000 shares issuable upon the exercise of stock options that are
exercisable by Mr. Churchill on or before July 30, 2003.
(e) Includes 30,000 shares issuable upon the exercise of stock options that are
exercisable by Mr. George on or before July 30, 2003.
(f) Includes 30,000 shares issuable upon the exercise of stock options that are
exercisable by Mr. Hinckley on or before July 30, 2003.
(g) Includes 25,000 shares issuable upon the exercise of stock options that are
exercisable by Mr. Neff on or before July 30, 2003.
(h) Includes 158,392 shares issuable upon the exercise of stock options that are
exercisable by Mr. Boruch on or before July 30, 2003.
(i) Includes 107,000 shares issuable upon the exercise of stock options that
are exercisable by Mr. Larson on or before July 30, 2003. Mr. Larson ceased
to be an executive officer of the Company in March 2003.
(j) Includes 23,000 shares issuable upon the exercise of stock options that are
exercisable by Mr. Joyce on or before July 30, 2003.
(k) Includes 153,854 shares issuable upon the exercise of stock options that
are exercisable by Mr. Freyman on or before July 30, 2003.
(l) Includes 547,246 shares issuable upon the exercise of stock options that
are exercisable on or before July 30, 2003.
(m) On November 8, 2002, we initiated a voluntary stock option replacement
program which allowed employees and members of our Board of Directors to
surrender their existing options and to receive new option grants six months
and one day after the tendered options are cancelled. We will issue new
option grants equal to the same number of shares surrendered by the
employees and members of our Board of Directors. The exercise price will
equal the fair market value of common stock as of the new grant date which
is expected to be no earlier than June 12, 2003. The vesting terms of the
new options will be similar to the tendered options except the new options
contain an additional one year vesting period prior
16
to any options becoming exercisable. On December 11, 2002, the following
Named Executive Officers and Directors surrendered the following number of
stock options pursuant to the program:
SHARES
SURRENDERED
-----------
James J. Kim................................................ 750,000
John N. Boruch.............................................. 900,000
Bruce J. Freyman............................................ 500,000
Kenneth T. Joyce............................................ 150,000
Eric Larson................................................. 150,000
Winston J. Churchill........................................ 15,000
Juergen Knorr............................................... 20,000
The calculation of beneficial ownership does not include any shares that
were surrendered pursuant to the voluntary stock option replacement program.
PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Audit Committee has recommended, and the Board has approved, the
appointment of PricewaterhouseCoopers LLP ("PricewaterhouseCoopers") as our
independent accountants for fiscal 2003 subject to your approval.
PricewaterhouseCoopers has served as our independent accountants since 2000. The
Board of Directors expects that representatives of PricewaterhouseCoopers will
attend the Annual Meeting to answer appropriate questions.
The following table shows the fees paid or accrued by our Company for the
audit and other services provided by PricewaterhouseCoopers for fiscal year
2002.
Audit Fees(1)............................................... $1,234,000
Financial Information Systems Design and Implementation
Fees...................................................... --
All Other Fees(2)........................................... 324,000
----------
Total....................................................... $1,558,000
==========
(1) Audit services of PricewaterhouseCoopers for 2002 consisted of the
audit of our consolidated financial statements and of the consolidated financial
statements of ASI, an equity investment of our Company. Such audit services also
included quarterly reviews of our and ASI's financial statements.
(2) "All Other Fees" includes $230,000 for audit-related services,
including, among other items, services performed in connection with debt
financings, statutory reporting, and filings made with the Securities and
Exchange Commission, and $94,000 for other services, including, among other
items, tax consulting services and due diligence procedures related to mergers
and acquisitions.
REQUIRED VOTE
The ratification of the selection of PricewaterhouseCoopers requires the
affirmative vote of the holders of the majority of shares of Common Stock
present or represented and entitled to vote at the Annual Meeting. Abstentions
and broker non-votes will be counted as present for purposes of determining
whether a quorum is present, and broker non-votes will not be treated as
entitled to vote on this matter at the Annual Meeting.
YOUR BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE RATIFICATION OF APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT ACCOUNTANTS FOR 2003.
17
STOCK PERFORMANCE GRAPH
COMPARISON OF 56 MONTH CUMULATIVE TOTAL RETURN
The following performance graph compares the monthly cumulative total
stockholder return on Amkor common stock with the Standard & Poor's 500 Stock
Index and the Philadelphia Semiconductor Sector Index from (using Amkor's
initial public offering price of $11.00) May 1, 1998 through market close on
December 31, 2002. The graph is based on the assumption that $100 was invested
on May 1, 1998 in each of Amkor common stock, the Standard & Poor's 500 Stock
Index and the Philadelphia Semiconductor Sector Index.
The stock price performance graph depicted below shall not be deemed
incorporated by reference by any general statement incorporating by reference
this annual report into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934. The stock price performance on the graph is not
necessarily an indicator of future price performance.
COMPARISON OF 56 MONTH CUMULATIVE TOTAL RETURN*
AMONG AMKOR TECHNOLOGY, INC., THE S & P 500 INDEX
AND THE PHILADELPHIA SEMICONDUCTOR SECTOR INDEX
[STOCK PERFORMANCE GRAPH]
PHILADELPHIA
AMKOR TECHNOLOGY, SEMICONDUCTOR
INC. S & P 500 SECTOR
----------------- --------- -------------
5/98 100 100 100
6/98 84.94 102.27 87.73
9/98 44.32 92.1 91.02
12/98 98.3 111.71 133.09
3/99 71.59 117.28 141.89
6/99 93.18 125.55 161.49
9/99 146.59 117.71 186.64
12/99 256.82 135.22 234.48
3/00 482.39 138.32 357.08
6/00 321.03 134.65 339.54
9/00 237.5 133.34 231.87
12/00 141.05 122.91 170.92
3/01 148.3 108.34 147.75
6/01 200.91 114.68 164.58
9/01 95.64 97.85 112.02
12/01 145.73 108.3 155.62
3/02 202.82 108.6 163.93
6/02 56.55 94.05 109.01
9/02 21.64 77.8 74.71
12/02 43.27 84.37 81.44
* $100 INVESTED ON 5/1/98 IN STOCK OR INDEX --
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
18
APPENDIX A
CHARTER FOR THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
OF
AMKOR TECHNOLOGY, INC.
(AS REVISED ON JUNE 27, 2003)
PURPOSE:
The purpose of the Audit Committee of the Board of Directors of Amkor
Technology, Inc. (the "COMPANY") shall be to:
- Oversee the accounting and financial reporting processes of the Company
and audits of the financial statements of the Company;
- Assist the Board in oversight and monitoring of (i) the integrity of the
Company's financial statements, (ii) the Company's compliance with legal
and regulatory requirements, (iii) the independent auditor's
qualifications, independence and performance, and (iv) the Company's
internal accounting and financial controls;
- Provide the Company's Board with the results of its monitoring and
recommendations derived therefrom; and
- Provide to the Board such additional information and materials as it may
deem necessary to make the Board aware of significant financial matters
that require the attention of the Board.
In addition, the Audit Committee will undertake those specific duties and
responsibilities listed below and such other duties as the Board of Directors
may from time to time prescribe or as may be required by law from time to time.
MEMBERSHIP:
The Audit Committee members will be appointed by, and will serve at the
discretion of, the Board of Directors. The Audit Committee will consist of at
least three members of the Board of Directors, all of whom in the judgment of
the Board of Directors shall be independent in accordance with listing standards
of the Nasdaq Stock Market. Each member shall in the judgment of the Board of
Directors have the ability to read and understand the Company's financial
statements. At least one member of the Audit Committee shall in the judgment of
the Board of Directors be an audit committee financial expert in accordance with
the rules and regulations of the Securities and Exchange Commission ("SEC") and
at least one member (who may also serve as the audit committee financial expert)
shall in the judgment of the Board of Directors have accounting or related
financial management expertise in accordance with the listing standards of the
Nasdaq Stock Market. In addition, Audit Committee members will satisfy any
additional requirements mandated by rules and regulations of the SEC or the
listing standards of the Nasdaq Stock Market. The Audit Committee will review
its membership annually for compliance with the above requirements and provide a
certification to the Board of Directors of the Company that each of its members
complies with the foregoing requirements.
RESPONSIBILITIES:
The responsibilities of the Audit Committee shall include:
- Pre-approving all audit services provided to the Company by the
independent auditors; in this regard the Audit Committee shall have the
sole authority to approve the hiring and firing of the independent
auditors, all audit engagement fees and terms and all non-audit
engagements, as may be permissible, with the independent auditors;
19
- Pre-approving non-audit services provided to the Company by the
independent auditors (or subsequently approving non-audit services in
those circumstances where a subsequent approval is necessary and
permissible); in this regard the Audit Committee shall have the authority
to appoint a sub-Committee of one or more members of the Audit Committee
and/or to pre-approve non-audit services by establishing detailed
pre-approval policies as to the particular service, provided that the
Audit Committee is informed of each service pre-approved (no less
frequently than at each meeting of the Audit Committee) and that no
pre-approval shall be delegated to management of the Company. In
considering whether to pre-approve any non-audit services, the Audit
Committee or its delegees shall consider whether the provision of such
services is compatible with maintaining the independence of the Company's
independent auditors.
- Sole authority for overseeing the work of the independent auditors
(including resolving disagreements between management and the independent
auditors regarding financial reporting) for the purpose of preparing or
issuing an audit report or related work;
- Reviewing and providing guidance with respect to the external audit and
the Company's relationship with its independent auditors by (i) reviewing
the independent auditors' proposed audit scope, approach and
independence; (ii) obtaining on a periodic basis a statement from the
independent auditors regarding relationships and services with the
Company which may impact independence and presenting this statement to
the Board of Directors, and to the extent there are relationships,
monitoring and investigating them; (iii) receiving and reviewing a report
by the independent auditors describing any material issues raised by the
most recent internal quality control review, or peer review, of the
independent auditing firm, or by any inquiry or investigation by
governmental or professional authorities and any steps taken to deal with
any such issues; (iv) discussing with the Company's independent auditors
the financial statements and audit findings, including any significant
adjustments, management judgments and accounting estimates, significant
new accounting policies and disagreements with management and any other
matters described in SAS No. 61, as may be modified or supplemented; and
(v) reviewing reports submitted to the Audit Committee by the independent
auditors in accordance with the applicable SEC requirements;
- Ensuring that the Company's independent auditors meet current standards
for independence, including any standards promulgated under the
Sarbanes-Oxley Act ("SOA"), the rules of the SEC or the Public Accounting
Oversight Board;
- Reviewing and discussing with management and the independent auditors the
annual audited financial statements and quarterly unaudited financial
statements, including the Company's disclosures under "Management's
Discussion and Analysis of Financial Condition and Results of
Operations," prior to filing the Company's Annual Report on Form 10-K and
Quarterly Reports on Form 10-Q, respectively, with the SEC;
- Reviewing and discussing with management and the Company's independent
auditors the preparation and content of any officer certifications
required by the SOA or the SEC to be filed with the Company's Quarterly
Report on Form 10-Q, Annual Report on Form 10-K or any other periodic
report;
- Discussing with management and internal audit representatives the
activities, organizational structure and qualifications of the Company's
internal audit function;
- Reviewing any reports by management or internal auditors regarding the
effectiveness of, or any deficiencies in, the design or operation of
internal controls and any fraud, whether or not material, that involves
management or other employees who have a significant role in the
Company's internal controls and reviewing before release the disclosure
regarding the Company's system of internal controls required under SEC
rules to be contained in the Company's periodic filings and the
attestations or reports by the independent auditors relating to such
disclosure;
- Overseeing compliance with the requirements of the SEC for disclosure of
auditor's services and Audit Committee members, member qualifications and
activities;
20
- Instituting special investigations with full access to all books,
records, facilities and personnel of the Company as and when the Audit
Committee determines appropriate and necessary for the conduct of its
duties;
- Engage and determine funding for outside legal, accounting or other
advisors as and when the Audit Committee determines appropriate and
necessary for the conduct of its duties;
- Reviewing its own charter, structure, processes and membership
requirements;
- Providing such report in the Company's proxy statement and other
disclosure documents as required by the rules of the SEC; and
- Establishing procedures for receiving, retaining and treating complaints
received by the Company regarding accounting, internal accounting
controls or auditing matters and procedures for the confidential,
anonymous submission by employees of concerns regarding questionable
accounting or auditing matters.
MEETINGS:
The Audit Committee will meet at least four times each year.
The Audit Committee will meet separately with the Chief Executive Officer
and separately with the Chief Financial Officer of the Company at such times as
are appropriate to review the financial affairs of the Company. The Audit
Committee will meet separately with the independent auditors of the Company, at
such times as it deems appropriate, to fulfill the responsibilities of the Audit
Committee under this charter.
MINUTES:
The Audit Committee will maintain written minutes of its meetings, which
minutes will be filed with the minutes of the meetings of the Board of
Directors.
REPORTS:
In addition to preparing the report in the Company's proxy statement in
accordance with the rules and regulations of the SEC, the Audit Committee will
summarize its examinations and recommendations to the Board of Directors as may
be appropriate, consistent with the Committee's charter.
COMPENSATION:
Members of the Audit Committee shall receive such fees, if any, for their
service as Audit Committee members as may be determined by the Board of
Directors in its sole discretion. Such fees may include retainers or per meeting
fees. Fees may be paid in such form of consideration as is determined by the
Board of Directors.
Members of the Audit Committee may not receive any compensation from the
Company except the fees that they receive for service as a member of the Board
of Directors or any committee thereof.
DELEGATION OF AUTHORITY:
The Audit Committee may delegate to one or more designated members of the
Audit Committee the authority to pre-approve audit and permissible non-audit
services, provided such pre-approval decision is presented to the full Audit
Committee at its scheduled meetings.
LIMITATION OF AUDIT COMMITTEE'S ROLE:
While the Audit Committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the Audit Committee to plan or conduct
audits, to establish the scope or procedures for the Company's internal audit
processes or to determine that the Company's financial statements and
disclosures are complete and accurate and are in accordance with generally
accepted accounting principles and applicable rules and regulations. These are
the responsibilities of management and the independent auditors.
21
PROXY
AMKOR TECHNOLOGY, INC.
1345 ENTERPRISE DRIVE
WEST CHESTER, PENNSYLVANIA 19380
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR
THE ANNUAL MEETING OF STOCKHOLDERS, JUNE 25, 2003
The undersigned hereby appoints James J. Kim and Kenneth T. Joyce the proxies
(each with power to act alone and with power of substitution) of the undersigned
to represent and vote the shares of stock which the undersigned is entitled to
vote at the Annual Meeting of Stockholders of Amkor Technology, Inc. to be held
on July 30, 2003, and at any adjournment or postponement thereof, as hereinafter
specified and, in their discretion, upon such other matters as may properly come
before the Meeting.
1. Election of Directors. Nominees:
James J. Kim, John N. Boruch, Winston J. Churchill,
Thomas D. George, Gregory K. Hinckley, John B. Neff, Juergen Knorr,
James Zug
2. Ratification of appointment of independent auditors.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICE BY MARKING THE APPROPRIATE BOXES ON
THE REVERSE SIDE. ON MATTERS ON WHICH YOU DO NOT SPECIFY A CHOICE, YOUR SHARES
WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATION OF AMKOR'S BOARD OF
DIRECTORS. PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE
ENCLOSED ENVELOPE.
-----------
SEE REVERSE
SIDE
-----------
--------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
[AMKOR TECHNOLOGY LOGO]
[X] PLEASE MARK YOUR 3060
VOTES AS IN THIS
EXAMPLE.
IF THIS CARD IS PROPERLY EXECUTED, SHARES WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2.
--------------------------------------------------------------------------------
Amkor's Board of Directors recommends a vote FOR election of
directors and Proposal 2.
--------------------------------------------------------------------------------
FOR WITHHELD
1. Election of Directors. [ ] [ ]
(see reverse)
For, except vote withheld from the following nominee(s):
--------------------------------
FOR AGAINST ABSTAIN
2. Ratification of appointment of [ ] [ ] [ ]
Independent Auditors.
Please sign exactly as name appears above.
Joint owners should each sign. When signing
as attorney, executor, administrator,
trustee or guardian, please give full title
as such.
--------------------------------------------
--------------------------------------------
SIGNATURE (S) DATE
--------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
[AMKOR TECHNOLOGY LOGO]
1345 Enterprise Drive
West Chester, Pennsylvania 19380
May 24, 2002
To our Stockholders:
You are cordially invited to attend the Annual
Meeting of Stockholders of Amkor Technology, Inc. The Annual
Meeting will be held on Wednesday, June 30, 2003 at 11:00 a.m.,
at Wyndham Suites Valley Forge, 888 Chesterbrook Boulevard,
Wayne, Pennsylvania 19087, telephone number (610) 647-6700.
The actions expected to be taken at the Annual
Meeting are described in detail in the attached Proxy
Statement and Notice of Annual Meeting of Stockholders.
We also encourage you to read the Annual Report. It
includes information about our company, as well as our audited
financial statements. A copy of our Annual Report was
previously sent to you or is included with this Proxy
Statement.
Please use this opportunity to take part in the
affairs of Amkor by voting on the business to come before this
meeting. Whether or not you plan to attend the meeting, please
complete, sign, date and return the accompanying proxy in the
enclosed postage-paid envelope. Returning the proxy does NOT
deprive you of your right to attend the meeting and to vote
your shares in person for the matters acted upon at the
meeting.
We look forward to seeing you at the Annual Meeting.
Sincerely,
/s/ James J. Kim
James J. Kim
Chairman of the Board and Chief
Executive Officer