SEMI survey affirms broad-based employee participation in stock option plans

Sept. 18, 2002 – San Jose, CA – Semiconductor Equipment and Materials International (SEMI), an association of equipment manufacturers and materials suppliers to the semiconductor industry, said that its leading US-based member companies do not support the expensing of stock options.

A survey conducted by SEMI of its US-based public member companies revealed that 74% of industry employees receive stock options, and that over 86% of the total options granted go to rank and file employees, rather than the top members of executive management.

The survey respondents collectively represent a total employment base of over 31,500 industry workers and combined annual sales of $13 billion.

“SEMI believes that stock options are the most effective way to align the contribution of employees to the wealth generation of shareholders,” said Victoria Hadfield, president of SEMI North America. “Our high-tech industry was built on the contributions of highly skilled workers whose ideas have contributed immeasurably to the generation of new products, and whose impact has changed the world. The association believes that more industries should issue stock options to a wider range of employees, in order to unleash the creative energies of all their workers.”

“Our survey shows that stock options are broadly distributed to most workers and have been an essential key to our industry’s success by attracting and retaining the best talent and driving economic growth,” said Hadfield. “Proposals to require expensing of options could curtail the ability of companies to offer these plans more broadly and potentially hurt rank and file workers.”

The survey averages data over a three year period for leading US-based public companies participating in the semiconductor equipment manufacturing industry including: Aehr Test Systems, Applied Materials Inc., Credence Systems Corp., Cymer Inc., Electroglas Inc., Entegris Inc., FSI International Inc., KLA-Tencor Corp., Lam Research Corp., Mattson Technology Inc., Novellus Systems Inc., Photon Dynamics Inc., Teradyne Inc., Therma-Wave Inc., and Ultratech Stepper Inc.

“Our member companies strongly support meaningful accounting reforms and enforcement,” said Hadfield. “However we want to ensure that broad stock-based incentives are not threatened.”

SEMI industry leaders agree that the appropriate way to protect shareholders and employees is not by requiring the expensing of options to be recorded in financial statements, but by ensuring full disclosure of option plan information. This should be carried out quarterly in a transparent format that aids investor understanding. Further, the companies endorsed best practices such as maintenance of broad based options programs, shareholder approval of executive options, and adherence to standardized disclosure reporting format.


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