SCHEDULE 14A INFORMATION
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 |
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| ¨ |
Definitive Additional Materials |
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| ¨ |
Soliciting Material Pursuant to § 240.14a-12 | |||||
MICROSEMI CORPORATION
(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 one appropriate box):
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Fee paid previously with preliminary materials | |||
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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
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MICROSEMI CORPORATION
NOTICE OF ANNUAL MEETING ON FEBRUARY 18, 2003
AND PROXY STATEMENT
TABLE OF CONTENTS
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MICROSEMI CORPORATION
2381 Morse Avenue
Irvine, California 92614
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on February 18, 2003
TO THE STOCKHOLDERS OF MICROSEMI CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of
Stockholders of MICROSEMI CORPORATION (the “Company”) will be held at 2830 S. Fairview St., Santa Ana, CA 92704, on Tuesday, February 18, 2003 at 10:00 a.m., Pacific Standard Time, for the following purposes:
1. |
To elect eight (8) directors, each to serve for the term of one (1) year or until his successor shall have been duly elected and qualified (Proposal 1); and
|
2. |
To transact such other business as may properly come before the meeting or any adjournments or postponements thereof. |
Only stockholders of record at the close of business on January 10, 2003 are entitled to notice of and to vote at the meeting
or any adjournments or postponements thereof.
By Order of the Board of Directors,
David R. Sonksen
Secretary
Irvine, California
January 17, 2003
IT IS IMPORTANT THAT ALL OF OUR STOCKHOLDERS BE REPRESENTED AT OUR ANNUAL MEETING AND AT ANY
ADJOURNMENTS OR POSTPONEMENTS THERE OF. STOCKHOLDERS, WHETHER YOU EXPECT TO ATTEND THE MEETING IN PERSON OR NOT, ARE REQUESTED TO PLEASE MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY TO ASSURE THAT YOU ARE REPRESENTED. PROXIES ARE REVOCABLE BY
HOLDERS AT ANY TIME PRIOR TO BEING VOTED AT THE ANNUAL MEETING, AND STOCKHOLDERS OF RECORD WHO ARE PRESENT AT THE MEETING MAY WITHDRAW THEIR PROXIES AND VOTE IN PERSON IF THEY NOTIFY US AT THE MEETING.
Additional copies of proxy materials should be requested in writing, addressed to:
Microsemi Corporation, 2381 Morse Avenue, Irvine, California 92614,
Attention: David R. Sonksen, Secretary.
MICROSEMI CORPORATION
2381 Morse Avenue
Irvine, California 92614
The accompanying Proxy is solicited by the Board of Directors and
Management of Microsemi Corporation (the “Company”) to be used at the Annual Meeting of Stockholders to be held on Tuesday, February 18, 2003, at 10:00 a.m., Pacific Standard Time, at 2830 S. Fairview St., Santa Ana, CA 92704, and at any
adjournments or postponements thereof (the “Meeting”). Shares represented by a valid Proxy in the enclosed form (“Proxy”) will be voted as specified if executed and received in time for the Meeting. If a choice is not specified
in the Proxy, the Proxy will be voted FOR the election of all of the director nominees listed. The Proxy may be voted in the discretion of the proxy holders on any other business as may properly come before the Meeting.
A stockholder who executes and returns the accompanying Proxy may revoke it at any time prior to its being voted by (a) signing another
Proxy bearing a later date, or a written notice of revocation and, in either case, delivering the Proxy or notice to the Secretary of the Company by mail prior to the Meeting or (b) voting in person at the Meeting. Execution of the Proxy will not in
any way affect a stockholder’s privilege to attend the Meeting and to vote in person, provided that the stock can only be voted in person when held of record in the stockholder’s name or when the stockholder has been given an appropriate
proxy to vote at the Meeting.
The costs of Proxy solicitation will be paid by the Company. It is contemplated
that Proxies will be solicited principally through the use of the mail. The Company will reimburse banks, brokerage houses, and other custodians, nominees or fiduciaries for their reasonable expenses in forwarding proxy material to the beneficial
owners of the shares held by them. Proxies may be solicited by directors, officers or other regular employees of the Company in person or by telephone or facsimile as part of their regular duties and without special payment therefore, except
reimbursement of incidental costs.
This Notice of Annual Meeting, Proxy Statement and Proxy are first being
mailed to stockholders on or about January 20, 2003.
1
The Annual Report to Stockholders and Form 10-K for the fiscal year ended
September 29, 2002 accompany this Proxy Statement. Such Reports are not to be regarded as proxy soliciting material and are not incorporated into this Proxy Statement. Such Reports do not incorporate the information of the sections of this Proxy
Statement entitled “Report of Compensation Committee” or “Performance Comparison.” THE ANNUAL REPORT TO STOCKHOLDERS AND THE FORM 10-K, INCLUDING ANNUAL FINANCIAL STATEMENTS, CAN BE OBTAINED BY ANY STOCKHOLDER ENTITLED TO VOTE AT
THE MEETING UPON WRITTEN REQUEST. SEND REQUESTS TO MICROSEMI CORPORATION, 2381 MORSE AVENUE, IRVINE, CALIFORNIA 92614, ATTENTION: DAVID R. SONKSEN, SECRETARY.
The Company’s Common Stock, $.20 par value per share
(“Common Stock”), constitutes the only class of outstanding securities of the Company whose holders are entitled to notice of and to vote at the Meeting, including any adjournments or postponements thereof. Each such holder of record is
entitled, for all purposes, to one vote for each share so held on each matter submitted to a vote of stockholders. On January 10, 2003 (“Record Date”) the Company had issued and outstanding 28,929,410 shares of Common Stock (exclusive of
shares held in the treasury).
A quorum sufficient for the conduct of business at the Meeting will
consist of a majority of the outstanding shares of Common Stock at the close of business on the Record Date in accordance with our Certificate of Incorporation, our Bylaws and the Delaware General Corporation Law.
Proxies marked as abstentions and Proxies for shares held in street name designated by brokers as not voted will be treated as shares
present for purposes of determining the presence of a quorum at the Meeting.
Proposal 1, the election of
directors, will be determined by a plurality vote, i.e., the eight (8) candidates in the election of directors receiving the highest number of affirmative votes will be elected. The stockholders each can cast one (1) vote per share of Common Stock
FOR up to eight (8) individuals who are nominated for election. In this election, any votes cast against a candidate or votes withheld, including abstentions and broker non-votes, shall have no legal effect.
2
OWNERS AND MANAGEMENT
The following table sets forth as of December 1, 2002, information concerning ownership of the Company’s Common Stock by each person known by the Company to own
beneficially more than 5% of its outstanding Common Stock, each director or executive officer and all officers and directors as a group.
| Name of Beneficial Owner (and Address of Each 5% Beneficial Owner) or Number of Persons in Group |
Amount and Nature of Beneficial Ownership |
Percentage of Class |
||||
| Kern Capital Management LLC |
3,300,000 |
|
11.6 |
% | ||
| 114 W. 47th Street |
||||||
| New York, NY 10036 |
||||||
| FMR |
2,898,500 |
|
10.2 |
% | ||
| 82 Devonshire Street |
||||||
| Boston, MA 02109 |
||||||
| Philip Frey Jr. |
1,675,028 |
(1) |
5.8 |
% | ||
| 2830 S. Fairview Street |
||||||
| Santa Ana, CA 92704 |
||||||
| Thomas R. Anderson |
30,000 |
(2) |
* |
| ||
| H.K. Desai |
32,000 |
(3) |
* |
| ||
| Martin H. Jurick |
59,000 |
(4) |
* |
| ||
| Dennis R. Leibel |
30,000 |
(5) |
* |
| ||
| Robert B. Phinizy |
44,000 |
(6) |
* |
| ||
| Carmelo J. Santoro, Ph.D. |
20,000 |
(7) |
* |
| ||
| Nick E. Yocca |
50,000 |
(8) |
* |
| ||
| William L. Healey |
— |
|
||||
| William E. Bendush |
— |
|
||||
| Harold A. Blomquist |
— |
|
||||
| James J. Peterson |
123,167 |
(9) |
* |
| ||
| David R. Sonksen |
105,605 |
(10) |
* |
| ||
| Ralph Brandi |
51,865 |
(11) |
* |
| ||
| William Kelly |
55,975 |
(12) |
* |
| ||
| James Gentile |
18,525 |
(13) |
* |
| ||
| All officers and Directors as a group (28 persons) |
2,774,890 |
(14) |
9.3 |
% |
* Indicates less than 1%
3
(1) |
Includes 208,750 shares under an option exercisable as of the date of this information or within 60 days thereafter. |
(2) |
Includes 30,000 shares under an option exercisable as of the date of this information or within 60 days thereafter. |
(3) |
Includes 32,000 shares under an option exercisable as of the date of this
information or within 60 days thereafter. |
(4) |
Includes 44,000 shares under an option exercisable as of the date of this
information or within 60 days thereafter. |
(5) |
Includes 30,000 shares under an option exercisable as of the date of this
information or within 60 days thereafter. |
(6) |
Includes 44,000 shares under an option exercisable as of the date of this
information or within 60 days thereafter. |
(7) |
Includes 20,000 shares under an option exercisable as of the date of this
information or within 60 days thereafter. |
(8) |
Includes 50,000 shares under an option exercisable as of the date of this
information or within 60 days thereafter. |
(9) |
Includes 123,167 shares under an option exercisable as of the date of this
information or within 60 days thereafter. |
(10) |
Includes 104,305 shares under an option exercisable as of the date of this information or within 60 days thereafter. |
(11) |
Includes 51,275 shares under an option exercisable as of the date of this information or within 60 days thereafter. |
(12) |
Includes 52,975 shares under an option exercisable as of the date of this information or within 60 days thereafter. |
(13) |
Includes 15,775 shares under an option exercisable as of the date of this information or within 60 days thereafter. |
(14) |
Includes 1,176,097 shares under an option exercisable as of the date of this information or within 60 days thereafter. |
4
(Proposal 1)
The Bylaws of the Company allow for a Board of Directors consisting of not less than three (3) and up to thirteen (13) members as fixed by the Board from time to time, and the Board currently has fixed
the number of directors at eight (8). Accordingly, eight (8) directors shall be elected at the Meeting, and the eight (8) nominees named below are proposed by our Company’s current Board of Directors and Management. The nominees proposed
for election as directors will serve for a term of one year or until their successors are elected and qualified. All nominees have consented to be named and have indicated their intent to serve if elected. While Management has no reason to believe
that any proposed nominee will be unable to or will not serve as a director, should any nominee become unable to serve or will not, for good cause, so serve, then the persons named in the enclosed Proxy will have authority to vote for any substitute
nominee designated by the Company’s current Board of Directors.
The eight (8) candidates in the election of
directors receiving the highest number of affirmative votes will be elected. Votes against a candidate or votes withheld, including abstentions and broker non-votes, have no legal effect on the election; however all such votes count as a part of the
quorum. The names and certain information concerning the persons to be nominated as directors by the Board of Directors at the Meeting are set forth below. Your Board of Directors recommends that you vote FOR the election of each of the
nominees named below.
| Name |
Position With Company (in Addition to Director) and Principal Occupation during Last Five Years |
Age |
Director Since | |||
| James J. Peterson |
President and CEO since December 2000; Vice President and General Manager of the Linfinity Division from 1999 to 2000; President of Linfinity
Microelectronics from 1997 to 1999; Vice President of Sales of Linfinity Microelectronics from 1996 to 1997. |
47 |
2000 | |||
| Martin H. Jurick |
Private investor and consultant; Senior Vice President of Corporate Planning and Director of Silicon Systems, Inc. (later of a division of Texas Instruments)
from 1978 to 1999; Director of Level One Communications from 1991 to 1999. |
65 |
1995 | |||
| Nick E. Yocca |
Private investor and consultant; founder and partner of the law firm Stradling Yocca Carlson & Rauth, P.C., since 1975. |
73 |
2002 |
5
| Thomas R. Anderson |
A retired executive, consultant and private investor; Vice President and Chief Financial Officer of QLogic Corporation from 1993 to 2002. |
58 |
2002 | |||
| Dennis R. Leibel |
Private investor and consultant; President of Leibel and Associates, Management Consulting since 1997. |
58 |
2002 | |||
| William E. Bendush |
Private investor and consultant; Senior Vice President and Chief Financial Officer of Applied Micro Circuits Corporation since 1999; Senior Vice President
and Chief Financial Officer of Silicon Systems, Inc. from 1985 to 1999. |
53 |
Nominee | |||
| William L. Healey |
Private Investor and consultant; Director of Sypris Solutions, Inc. and Orangewood Children’s Foundation; President and Chief Executive Officer of Cal
Quality Electronics, Inc. since 2002; President and Chief Executive Officer of Smart Flex Systems, Inc. from 1989 to 1999. |
58 |
Nominee | |||
| Harold A. Blomquist |
Private Investor and consultant; Management Consultant for HAB Ventures, Inc. since 2001; President, Chief Executive Officer and Director of ZMD America, Inc.
in 2001; Senior Vice President, Business Operations of American Microsystems, Inc. from 1999 to 2001; Director of Interworks Computer Products from 1999 to 2000; Director of Advanced Photonix, Inc. from 1998 to 1999; Director of GA-Tek, holding
company to AMI and Gould from 1998 to 2000; Director of AMI from 1996 to 2000. |
50 |
Nominee |
6
Officers are elected on an annual basis by the Board of Directors
and serve at the discretion of the Board. Information is provided under the heading “Directors” for Mr. James J. Peterson.
| Name |
Position with Company and Principal Occupation during Last Five Years |
Age |
Officer Since | |||
| David R. Sonksen |
Executive Vice President since 2000; Vice President–Finance, Chief Financial Officer, Treasurer and Secretary since 1986. |
57 |
1986 | |||
| Ralph Brandi |
Executive Vice President, Chief Operating Officer since 2002; Vice President–Operations since 2000; Vice President–Operations of Linfinity Division
from 1999 to 2000; Vice President–Operations of Linfinity Microelectronics, Inc. from 1995 to 1999. |
58 |
2000 | |||
| Harold R. McKeighan |
Vice President and General Manager of Microsemi Corporation–Scottsdale since 1985. |
60 |
1985 | |||
| Lane Jorgensen |
Vice President and General Manager of Microsemi Corporation–Santa Ana since 1992. |
61 |
1992 | |||
| John M. Holtrust |
Vice President–Human Resources since 2000; Vice President–Human Resources of Silicon Systems Inc. from 1990 to 2000. |
52 |
2000 | |||
| James H. Gentile |
Vice President–Worldwide Sales since 2001; Vice President, Sales and Marketing of Micro Power Products Division from 1999 to 2001; North America Sales
Manager of Mitel Semiconductor, Inc. from 1997 to 1999. |
46 |
2001 | |||
| John J. Petersen |
Vice President–Quality and Business Process Improvement since 2001; Vice President, Quality, Technology Storage Products Group of Texas Instruments,
Inc. from 1994 to 2001. |
58 |
2001 | |||
| Paul R. Bibeau |
Vice President–Marketing and Business Development since 2002; Marketing Director, Technology Storage Products Group of Texas Instruments, Inc. from 1992
to 2001. |
45 |
2002 | |||
| William Jones |
Vice President and General Manager of Microsemi Corp.–Integrated Products since 2000, Vice President of Linfinity Division from 1999 to 2000; Vice
President of Linfinity Microelectronics, Inc. from 1997 to 1999. |
45 |
2000 |
7
DIRECTORS AND ITS COMMITTEES
During the 2002 fiscal year, the Board of Directors held a total of eight (8) regularly scheduled or special meetings.
The Audit Committee, which consisted of directors Thomas R. Anderson, Robert B. Phinizy and Dennis R. Leibel during the 2002 fiscal year, reviews matters relating to
the Company’s internal and external audits. The Audit Committee held a total of seven (7) meetings in fiscal year 2002 to review the fiscal year 2001 financial statements and audit and to review the plans for the fiscal year 2002 audit. The
Company’s Board of Directors has adopted a written charter for the Audit Committee, a copy of which was included as an appendix to the Company’s Proxy Statement filed January 15, 2001. The members of the Audit Committee are independent, as
independence is defined in Rule 4200(a)(15) of the National Association of Securities Dealers listing standards. The Audit Committee Report for the 2002 fiscal year is included in this Proxy Statement.
The Compensation Committee, which consisted of directors Martin H. Jurick, H.K. Desai and Dennis R. Leibel during the 2002 fiscal
year, considers and approves the grant of stock options, compensation as well as other matters related to compensation for the Company’s key employees. The Compensation Committee held five (5) meetings in fiscal year 2002.
The Compliance Committee, which consisted of directors Dennis R. Leibel, Thomas R. Anderson and Nick E. Yocca during the
2002 fiscal year, is responsible for insuring compliance with all applicable federal and state laws and regulations concerning corporate governance. The Compliance Committee was established in 2002 and held one (1) meeting in fiscal year 2002.
The Nominating Committee, which consisted of directors Nick E. Yocca, Martin H. Jurick and H.K. Desai during the
2002 fiscal year, considered matters related to selection of individuals to be nominated for election to the Board of Directors. The Nominating Committee was established in 2002 and held two (2) meetings in fiscal year 2002.
While serving as a Director or on any committees, no director, except H.K. Desai, attended fewer than 75% of the aggregated number of
meetings held in fiscal year 2002 of the Board of Directors and of all such committees.
During fiscal year 2002,
directors who were not also officers of the Company each were paid a quarterly retainer fee of $5,000, plus fees of $1,800 for each Board of Directors’ meeting attended. Each committee Chairman and member was paid $1,600 and $1,200,
respectively, for each committee meeting attended.
On the last day of each fiscal year, each non employee
director receives fully vested 10-year options to purchase 10,000 shares of Common Stock at the market price of the Common Stock on the date of grant.
8
For the 2002 fiscal year and the period from September 2002 to his retirement in
December 2002, Mr. Frey received $60,000 as compensation for his services as Chairman. Mr. Frey will also receive the retirement benefits described below for directors.
Directors who are also officers or employees of the Company or its subsidiaries receive no additional compensation for their services as directors. The independent
directors of the Company receive compensation consisting of a $20,000 annual retainer, $1,800 for each Board meeting attended in person and $1,200 for each committee meeting attended in person, except that directors serving as a committee Chair
receive $1,600 per committee meeting attended in person and directors receive only 60% of the in-person compensation for meetings attended by telephone. All directors are reimbursed for out-of-pocket and travel expenses. No additional compensation
is paid for actions taken by the Board or committees by written consent.
Pursuant to the Company’s 1987
Stock Option Plan, as amended, upon initial appointment or election to the Board of Directors, as the case may be, each independent director receives a stock option to purchase 20,000 shares of the Company’s Common Stock, and on the last day of
each fiscal year, each non employee director receives an additional stock option to purchase 10,000 shares of the Company’s Common Stock. Such option grants to directors have an exercise price equal to the fair market value of the Common Stock
on the date of grant, are fully vested upon grant, and have a term of up to ten (10) years.
For a period of seven
(7) years after retirement from the Board of Directors, each director who served for at least five (5) years is paid fifty percent (50%) of the retainer that they were paid upon retirement, on the condition that the director continues to be
available to provide up to twenty-five hours of consulting support annually, and continues to be eligible to exercise stock options that were received by the director prior to retirement.
9
The following table sets forth, for the fiscal year ended
September 29, 2002, compensation received by Messrs. Peterson, Sonksen, Brandi, Jones and Gentile. The notes to these tables provide additional specific information regarding compensation.
| Annual Compensation |
Long Term Compensation | ||||||||||||||||
| Name and Principal Position |
Fiscal Year |
Salary ($) |
Bonus ($) |
Other ($) |
Restricted Stock Award(s) ($) |
Options (#) |
Long-Term Incentive Plan Payouts ($) |
All Other Compen- sation ($) | |||||||||
| | |||||||||||||||||
| (2) |
(3) | ||||||||||||||||
| James J. Peterson |
2002 |
459,063 |
— |
(1 |
) |
— |
36,800 |
— |
10,026 | ||||||||
| President and Chief Executive Officer |
2001 |
306,568 |
308,250 |
(1 |
) |
— |
140,000 |
— |
6,386 | ||||||||
| 2000 |
202,040 |
138,188 |
(1 |
) |
— |
44,400 |
— |
5,158 | |||||||||
| David R. Sonksen |
2002 |
270,110 |
— |
(1 |
) |
— |
24,300 |
— |
5,674 | ||||||||
| Executive Vice President, Chief Financial Officer, Treasurer and Secretary |
2001 |
245,887 |
132,875 |
(1 |
) |
— |
80,000 |
— |
6,004 | ||||||||
| 2000 |
208,214 |
126,260 |
(1 |
) |
— |
64,400 |
— |
4,859 | |||||||||
| Ralph Brandi |
2002 |
235,986 |
— |
(1 |
) |
— |
93,700 |
— |
3,309 | ||||||||
| Executive Vice President, Chief Operating Officer |
2001 |
172,578 |
94,378 |
(1 |
) |
— |
36,000 |
— |
3,235 | ||||||||
| 2000 |
172,578 |
81,288 |
(1 |
) |
— |
28,400 |
— |
3,574 | |||||||||
| William Jones |
2002 |
228,873 |
— |
(1 |
) |
— |
21,700 |
— |
3,405 | ||||||||
| Vice President, General Manager Microsemi Corp.–Integrated Products |
2001 |
201,596 |
61,572 |
(1 |
) |
— |
36,000 |
— |
3,640 | ||||||||
| 2000 |
160,819 |
81,288 |
(1 |
) |
— |
28,400 |
— |
3,277 | |||||||||
| James Gentile |
2002 |
206,389 |
— |
75,980 |
|
— |
19,300 |
— |
5,604 | ||||||||
| Vice President, Worldwide Sales |
2001 |
168,698 |
56,721 |
(1 |
) |
— |
16,000 |
— |
4,902 | ||||||||
| 2000 |
117,157 |
— |
(1 |
) |
— |
24,000 |
— |
— | |||||||||
(1) |
The Company has concluded that the aggregate amount of perquisites and other personal benefits paid in such period did not exceed the lesser of 10% of such
officer’s total annual salary and bonus for each respective period or $50,000. Such perquisites have not been included in the table. |
(2) |
The number of options granted have been adjusted to reflect a 2-for-1 stock split which became effective as of August 28, 2001. |
(3) |
Represents amounts contributed by the Company in the period under the Company’s 401(k) plan under which the Company matches an employee’s
contributions of up to 3% of such employee’s annual salary. |
10
Individual Grants
| Name |
Options Granted (#) |
% of Total Options Granted to Employees in Fiscal Year |
Price ($/Share) |
Exercise Expiration Date |
Grant Date Present
Value ($) |
Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation For Option Term(1) | |||||||||
| 5%($) |
10%($) | ||||||||||||||
| James J. Peterson |
25,000 |
1.70 |
% |
30.94 |
12/20/11 |
773,500 |
486,450 |
1,232,760 | |||||||
| James J. Peterson |
11,800 |
0.80 |
% |
17.24 |
03/15/12 |
203,432 |
127,937 |
324,218 | |||||||
| David R. Sonksen |
16,500 |
1.12 |
% |
30.94 |
12/20/11 |
510,510 |
321,057 |
813,621 | |||||||
| David R. Sonksen |
7,800 |
0.53 |
% |
17.24 |
03/15/12 |
134,472 |
84,569 |
214,314 | |||||||
| Ralph Brandi |
16,100 |
1.09 |
% |
30.94 |
12/20/11 |
498,134 |
313,274 |
793,897 | |||||||
| Ralph Brandi |
7,600 |
0.52 |
% |
17.24 |
03/15/12 |
131,024 |
82,400 |
208,819 | |||||||
| Ralph Brandi |
70,000 |
4.75 |
% |
5.75 |
07/30/12 |
402,500 |
253,130 |
641,481 | |||||||
| William Jones |
14,700 |
1.00 |
% |
30.94 |
12/20/11 |
454,818 |
286,033 |
724,863 | |||||||
| William Jones |
7,000 |
0.48 |
% |
17.24 |
03/15/12 |
120,680 |
75,895 |
192,333 | |||||||
| James Gentile |
13,100 |
0.89 |
% |
30.94 |
12/20/11 |
405,314 |
254,900 |
645,966 | |||||||
| James Gentile |
6,200 |
0.42 |
% |
17.24 |
03/15/12 |
106,888 |
67,221 |
170,352 | |||||||
(1) |
The Potential Realizable Value is calculated based on the fair market value
of the Common Stock on the date of grant, which is equal to the exercise price of options granted in fiscal 2002, assuming that the stock appreciates in value from the date of grant until the end of the option term at the specified annual rates (5%
and 10%). Potential Realizable Value is net of the option exercise price. The assumed rates of appreciation are specified in rules of the SEC, and do not represent the Company’s estimate or projection of future stock price. Actual gains, if
any, resulting from stock option exercises and Common Stock holdings are dependent on the future performance of the Common Stock, overall stock market conditions, as well as the option holders’ continued employment through the exercise/vesting
period. There can be no assurance that the amounts reflected in this table will be achieved. |
| Name |
Shares Acquired on Exercise (#) |
Value Realized ($) |
Number of Unexercised Options at
Fiscal Year End (#) |
Value of Unexercised In-the-Money
Options at Fiscal Year End ($) | ||||||||
| Exercisable |
Unexercisable |
Exercisable |
Unexercisable | |||||||||
| James J. Peterson |
6,388 |
175,191 |
123,162 |
141,650 |
134,728 |
115,113 | ||||||
| David R. Sonksen |
19,520 |
591,832 |
104,305 |
86,275 |
125,933 |
20,588 | ||||||
| Ralph Brandi |
8,050 |
180,043 |
51,275 |
128,775 |
101,776 |
450,773 | ||||||
| William Jones |
4,000 |
127,276 |
52,975 |
57,125 |
84,322 |
48,273 | ||||||
| James Gentile |
7,750 |
168,919 |
15,775 |
41,525 |
9,063 |
9,063 | ||||||
11
In fiscal year 1993, the Company adopted a
Supplemental Employee Retirement Plan (“SERP”), in which the only participants are eight (8) then long-standing employees or former employees. Benefits under the SERP will be provided solely from the general assets of the Company. The SERP
agreements provide annual payments for 10 years following the participant’s retirement (age 66 or later) or death while employed. The annual rate of payment range from 20% to 30% of the participant’s final or designated year’s salary.
The retirement benefit to Mr. Frey, the former CEO, under the SERP began to be payable on December 18, 2000. The annual amount due to Mr. Frey under the SERP was approximately $117,000. On June 28, 2002, the Company paid Mr. Frey $728,119, pursuant
to an agreement to discharge and extinguish fully the Company’s then remaining obligations to Mr. Frey under the SERP.
Mr. Frey retired as a full-time employee in December 2000. At such time, the Company and Mr. Frey entered into an agreement as of December 18, 2000 in the form of a letter with the subject of “Transition and Consulting”.
The agreement had two general subjects. First, Mr. Frey agreed to serve as a consultant to the Company until December 17, 2001. The Company agreed to pay Mr. Frey $25,000 per month for the minimum 12 months term and any extensions, $1,000 per month
as a car allowance, an estimated $1,000 per month in premiums for continuing medical, dental and life insurance coverage, and a $34,000 annual premium for Mr. Frey’s existing life insurance policy for 12 months. Over the minimum 12-month period
the aggregate of these payments was approximately $358,000. The compensation continued through the minimum 12-month period, and the consulting agreement was not extended by mutual agreement. The termination of the consulting period did not have any
effect on the other matters dealt with in the agreement, which are described hereafter. The second general subject of the agreement was Mr. Frey’s retirement from the Company on December 18, 2000. Upon that retirement date, Mr. Frey received a
payout of all his accrued vacation along with his Executive Performance Bonus (“EPB”) for fiscal year 2000 in the amount of $310,818. The benefits owed by the Company under the SERP described above were not affected by this agreement. The
Company also agreed, in recognition of Mr. Frey’s long service and significant contributions as Chairman, President and CEO, to pay the lifetime benefit of a Medicare Supplemental Insurance policy, effective January 1, 2002. The estimated cost
thereof initially is $3,000 per year. Mr. Frey was also given options for 20,000 shares of the Company’s stock upon retirement and received options for 10,000 shares annually as long as he served as Chairman of the Board. The agreement provides
options granted to Mr. Frey through December 2000 would continue to vest until the earlier to occur of Mr. Frey’s death or the latest expiration date of the option; and therefore retirement from active service will not result in Mr. Frey’s
options held as of December 2000 ceasing thereafter to continue to vest. In addition, Mr. Frey is to receive the Company’s indemnification, and the Company has agreed to forebear from amending its certificate of incorporation or bylaws for a
period of ten years if the effect would be to limit or reduce the Company’s legal ability or obligation to indemnify
12
Mr. Frey from claims arising from his status or conduct as a director, officer or employee. This agreement states that Mr. Frey will not participate in any benefit plans of Microsemi or
subsidiaries, except to the extent described above. This agreement expressly terminates all prior agreement between the Company and Mr. Frey relating to employment or retirement benefits, with the express exception of the Supplemental Executive
Retirement Plan, and expressly terminates the change of control agreement between the Company and Mr. Frey that had been entered into in 1997.
Mr. Frey retired from the Board of Directors in December 2002. Upon that event he became eligible for benefits as described under the heading “INFORMATION REGARDING THE BOARD OF DIRECTORS AND
ITS COMMITTEES”.
The Company has entered into agreements with Messrs. Peterson and Sonksen intended to
assure their unbiased counsel and continued dedication in the event of an unsolicited tender offer or other occurrence that may result in a change of control. Each agreement will continue in effect until two (2) years after the Company notifies the
executive of an intention to terminate that agreement. The terms of each agreement provide that, in the event of a change of control, as defined therein, and the subsequent termination of the executive’s employment at any time during the term
of such agreement, the executive will be paid amounts equal to a multiplier (the “Multiplier”) times the sum of his annual salary rate in effect prior to termination of employment and his highest annual bonus paid during the prior 3-year
period. The Multiplier is a number equal to the sum of three plus the number of years of service of the executive, all divided by twelve; provided, however, in the event of involuntary termination by the Company or termination by the executive for
“Good Reason”, the Multiplier will be equal to two (2). Provided, further, that in all other events the Multiplier shall be at least one (1) and not more than one and one-half (1½). Presently Mr. Peterson has 4 years of service and
Mr. Sonksen has 16 years of service. Additionally: (i) all options that the executive has received under any option plans will remain exercisable for a number of years equal to the Multiplier; (ii) medical, dental, vision and life insurance
premiums will continue to be paid by the Company for a number of years equal to the Multiplier; (iii) his automobile allowance continues, subject to earlier termination if the executive becomes a full time employee elsewhere, up to a number of years
equal to the Multiplier; and (iv) he will receive all other benefits then accrued at the time of a termination under the Company’s compensation plans. Upon an involuntary termination or a termination for “Good Reason,” in either case
only following a change of control, all of the executive’s unvested stock options, or similar equity incentives, vest and become exercisable. Also, to the extent that payments to the executive pursuant to his agreement (together with any other
payments or benefits) would result in the triggering of the provisions of Sections 280G and 4999 of the Internal Revenue Code (“Code”), the agreement provides for the payment of an additional amount such that the executive would receive,
net of excise taxes, the amount he would have been entitled to receive in the absence of the excise tax provided in Section 4999 of the Code. Mr. Sonksen’s current agreement restates and supersedes the similar agreement entered into in 1997.
13
Section 16(a) of the
Securities Exchange Act of 1934 requires the Company’s executive officers, directors and persons who own beneficially more than ten percent of a registered class of the Company’s equity securities to file reports of ownership and changes
in ownership with the Securities and Exchange Commission (the “SEC”) and the NASDAQ Stock Market (“NASDAQ”). Executive officers, directors and greater than ten-percent stockholders are required by SEC regulation to furnish the
Company with copies of all Section 16(a) forms concurrently when they file them with the SEC and NASDAQ.
To the
Company’s knowledge, based solely on its review of the copies of Section 16(a) forms furnished to the Company and any written representations that no Form 5 reports were required, none of the Company’s officers, directors or greater
than ten-percent beneficial owners known to the Company failed to file in a timely manner Section 16(a) reports during or with respect to fiscal year 2002, except with respect to the following:
| Form 4 Number of Reports
| ||||
| Name |
Not Timely Filed |
Not Filed | ||
| Thomas Kachel |
1 |
— | ||
14
No member of the
Compensation Committee during the 2002 fiscal year was an officer or employee of the Company or any of its subsidiaries or was formerly an officer of the Company or any of its subsidiaries. No member of the Compensation Committee had any
relationship requiring disclosure by the Company under any paragraph of Item 404 of Regulation S-K. Additionally, no member of the compensation committee had a relationship that requires disclosure under Item 402(j)(3) of Regulation S-K.
MICROSEMI CORPORATION
The compensation programs for executive management and certain other key employees are reviewed each year by the Compensation Committee.
The committee considers the potential impact of each operating unit as well as the effect on corporate wide growth, profit, market position and goals set for that year, as well as changes in corporate market focus and strategic goals for the next
fiscal year. The committee reviews with the management of the Company the business plans for the new fiscal year relative to the prior year. The compensation programs establish the rewards to be received by each key executive relative to their
contributions to net earnings from both their direct operating responsibility and the overall profits of the corporation. The committee also decides which operating units will be included in this measured program. Certain special profit centers are
removed from the measured plan where the strategic goal assignments are not effectively measured quantitatively. These special profit centers are placed into a second award pool from which bonus payments are allocated based on the achievement of key
subjective goals set by the corporate management. The Compensation Committee reviews these yearly with the corporate management and monitors the allocation process.
In addition, each operating unit key executive is responsible for meeting other strategic goals mutually agreed to between that key executive and the CEO. The goals
typically are strategic opportunities and challenges available to the Company in a changing market in a competitive environment. In every reward review, the key executive is evaluated on: corporate earnings, divisional earnings, and subjective
analysis on the goals achieved or progress achieved.
Executive Compensation Philosophy
The primary thrust of the compensation programs in the Company continues to follow the belief that compensation must reflect the value
created for the stockholders—both immediate and long term and consequently, the compensation programs reflect the following specific thesis:
· |
Rewards are tailored to fit the unique opportunities available to each business unit as well as the contributions each business unit makes to the corporate
earnings and
|
15
growth. The program utilizes short-term achievement awards and long-term incentives; normally stock options granted each year. The stock option grants are reviewed by the Compensation Committee,
which manages the program. Grants can be in either or both qualified and non-qualified stock options. The executives and key employees with the potential to impact the future growth and profitability of the Company are granted new options each year.
Options typically have a 5-year vesting schedule and provide incentives for executives to increase the value of the Company over the long term. |
Salary reviews for the top executives are conducted each year. The committee utilizes data from established salary surveys together with guidelines from an outside
consultant study to guide the Company in setting salary levels. The Company has followed the consultant’s study results, which yielded industry comparatives, for overall increases in pay and benefits. Only minor adjustments have been required.
The Executive Compensation components are:
· |
Base Salary: Salaries are set at levels approximating the fiftieth percentile for similar marketplace orientations. Factors
considered for salary increases, although subjectively and informally applied, are actual achievement, level of market opportunity, management skill in achieving goals and contributions to the overall corporate success. In fiscal 2002, the increases
for key executives based on these factors ranged from 0% to 36% of base salary. |
· |
The Cash Bonus Program: The Plan provides cash awards to executives as a means of achieving superior corporate results with
slightly lower overall executive compensation as compared to similar companies. These programs are formalized and consistently administered throughout the Company. The bonus award can range from 0% to 150% of an executive’s annual salary. The
bonus award components are based on overall corporate profit performance, direct profit results controlled by the executive and on subjective goals. A mid-year assessment of the fiscal year 2002 goals that were set for the Company’s key
executives were generally below the expected nominal performance level, primarily due to adverse economic and market conditions. And based upon this, cash bonuses for fiscal year 2002 were eliminated. Instead, options were issued on a formula basis
to executives participating in the bonus program. |
· |
Stock Options: Based on the current stock option plan as approved by the stockholders, up to 4% of the current outstanding
shares of Common Stock are available annually for award to new and existing key employees and executives. Under this program, key executives are allocated portions of the total annual award based upon the recipient’s responsibility level and
other subjective measures. In November 2002, the Company implemented an option exchange program whereby eligible employees could exchange existing options with an exercise price equal to
|
16
or greater than $14 per share for replacement options to purchase shares of Common Stock. Certain corporate officers and all Directors of the Company were ineligible to participate in the option
exchange program. Eligible employees participating in the exchange were deemed ineligible for grants under the fiscal year 2002 option grant. The offer to participate in the option exchange program expired in December 2002.
|
Compensation of the Chief Executive Officer in Fiscal Year 2002:
Compensation of the chief executive officer is determined in a manner similar to that for all other executive officers; however, the chief executive officer’s
strategic goals are mutually agreed to between the chief executive officer and the Board of Directors. The Compensation Committee believes, based on its review of publicly available information concerning companies in its industry, that its chief
executive officer compensation is within the range of compensation packages provided to executives of similar rank and responsibility in comparable companies.
In September 2001, Mr. Peterson’s salary was increased from $300,000 to $450,000 and therefore he received no salary increase in fiscal 2002. For fiscal 2002 Mr. Peterson received no cash bonus as
a result of the mid-year assessment of fiscal year 2002 goals, which eliminated cash bonuses for fiscal year 2002. As a result of the elimination of cash bonuses for 2002, Mr. Peterson received an option for 11,800 shares of stock at an exercise
price of $17.24 per share.
The long-term portion of Mr. Peterson’s compensation is based primarily on stock
options. As a corporate officer, Mr. Peterson was not eligible for the option exchange program. He remained eligible for the Fiscal Year 2002 Incentive Option Plan.
Note on Stock Options: The exercise price of each stock option
mentioned in this Compensation Committee Report is equal to 100% of the fair market value of the Common Stock as of the date when the option was granted.
The Compensation Committee has reviewed the performance of the Company and its executives for fiscal year 2002.
| Dennis R. Leibel |
H.K. Desai |
Martin H. Jurick |
17
The following graph compares the five-year cumulative total return
on the Company’s Common Stock to the total returns of 1) NASDAQ Stock Market and 2) NASDAQ Stock Market–Electronics & Electrical Equipment & Components Index, excluding Computer Equipment. This comparison assumes in each case that
$100 was invested on or about September 30, 1997 and all dividends were reinvested. The Company’s fiscal year ends on or about September 30 each year.
COMPARISON OF 5 YEARS’ CUMULATIVE TOTAL RETURN *
Among Microsemi Corporation, the NASDAQ stock
market (US) index
and the NASDAQ Electronic Components Index
* $100 invested on September 26, 1997 in stock or index, including reinvestment of dividends
| Cumulative Total Return | ||||||||||||
| 9/26/97 |
9/25/98 |
10/1/99 |
10/1/00 |
9/30/01 |
9/29/02 | |||||||
| MICROSEMI CORPORATION |
100.00 |
43.12 |
43.12 |
221.01 |
302.03 |
69.33 | ||||||
| NASDAQ STOCK MARKET (U.S.) |
100.00 |
104.65 |
165.48 |
220.50 |
90.12 |
72.67 | ||||||
| NASDAQ ELECTRONIC COMPONENTS |
100.00 |
82.07 |
162.46 |
282.99 |
79.76 |
55.93 | ||||||
18
The Audit Committee has reviewed and discussed the audited
financial statements with management. The Audit Committee has also discussed with the independent accountants the matters required to be discussed by SAS 61. The Audit Committee has received the written disclosures and the letter from the
independent accountants required by Independence Standards Board Standard No. 1 and has discussed with the independent accountants the independent accountants’ independence. Based on the review and discussions of the foregoing, the Audit
Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the 2002 fiscal year for filing with the Securities and Exchange Commission.
| Thomas R. Anderson |
Robert B. Phinizy |
Dennis R. Leibel |
The foregoing Compensation Committee Report, Performance Graph and
Audit Committee Report are not deemed to be “soliciting material” or to be “filed” with the Securities and Exchange Commission or subject to Regulation 14A or to the liabilities of Section 18 of the Securities Exchange Act. They
are not deemed to be incorporated by reference into any document that the Company may file at any time with the Securities and Exchange Commission, unless in a particular instance it is therein expressly and specifically incorporated by reference by
the Company.
Stockholder proposals intended to be considered at the 2004
Annual Meeting of Stockholders must be received by the Company no later than September 26, 2003. Such proposals may be included in next year’s Proxy Statement if they furthermore comply with certain rules and regulations promulgated by the
Securities and Exchange Commission. Subject to the immediately preceding sentence, matters will not be acted upon at the meeting unless the proposal is made timely and in appropriate form in accordance with our then applicable Bylaws and resolutions
of our Board.
19
PricewaterhouseCoopers LLP, independent accountants for the
Company for the fiscal year ended September 29, 2002, has been selected by the Board of Directors to serve in the same capacity for the current fiscal year.
A representative of PricewaterhouseCoopers LLP is expected to be present at the Meeting with the opportunity to make a statement if he or she so desires and to be available to respond to appropriate
questions.
AUDIT FEES
PricewaterhouseCoopers LLP billed the Company $541,500 for professional services rendered for the audit of the annual financial statements for fiscal year 2002 and the reviews of the financial
statements included in Forms 10-Q for that fiscal year.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION
FEES
PricewaterhouseCoopers LLP did not bill the Company for any professional services rendered for operating
or designing information systems (on the terms and subject to the exceptions as described in Rule 2-01(c)(4)(ii) of Regulation S-X) for fiscal year 2002.
ALL OTHER FEES
PricewaterhouseCoopers LLP billed the
Company $636,000 for services rendered that are not described above. Such amounts were comprised of $617,000 for income tax compliance and related tax services and $19,000 for the audit of the Company’s employee benefit plan. The Audit
Committee considered whether the provision of the services included in this category is compatible with maintaining PricewaterhouseCoopers’ independence.
20
The Board of Directors is not aware of any matter which will be
presented for action at the Meeting other than the matters set forth herein; but should any other matter requiring a vote of the stockholders arise, it is intended that the enclosed Proxy shall include discretionary authority to vote on such other
matters in accordance with the interests of the Company, in the best judgment of the person or persons voting the Proxies or consistent with any instructions given to such persons by the Board of Directors. In addition, the enclosed Proxy is
intended to include discretionary authority to vote for any person’s election to a position for which a bona fide nominee is named herein if such nominee named herein is unable to serve or for good cause will not serve, approval of minutes of
the prior meeting without ratifying the actions taken at such meeting and the disposition of any matters incident to the conduct of the Meeting, including any adjournments or postponements.
All stockholders are urged to complete, sign, date and promptly return the enclosed Proxy.
By Order of the Board of Directors,
David R. Sonksen
Secretary
Irvine, California
January 17, 2003
21
PROXY SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF MICROSEMI CORPORATION
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON FEBRUARY 18, 2003
The undersigned stockholder of MICROSEMI CORPORATION hereby appoints James J. Peterson and David R.
Sonksen, or either of them, the attorneys and proxies, with full power of substitution, to vote for the undersigned all shares of Common Stock, par value $0.20 per share, of MICROSEMI CORPORATION, which the undersigned would be entitled to
vote if personally present at the Annual Meeting of Stockholders to be held on February 18, 2003 at 10:00 A.M. (California time), and at any adjournments or postponements thereof, upon the matters described in the accompanying Proxy Statement and
upon any other business that may properly come before the meeting or any adjournments or postponements thereof. The undersigned acknowledges receipt of this proxy and a copy of the Notice of Annual Meeting and Proxy Statement dated January 20, 2003.
This proxy, when properly executed and dated, will be voted in the manner directed on this card upon the following matters. Please mark, sign, date and return this proxy card promptly.
1. ELECTION OF DIRECTORS
| ¨ |
FOR all nominees (except as indicated to the contrary below) |
¨ |
WITHHOLD AUTHORITY to vote for all nominees listed below |
(INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through that nominee’s name in the list below.)
| James J. Peterson |
Martin H. Jurick |
Nick E. Yocca |
Thomas R. Anderson | |||
| Dennis R. Leibel |
William E. Bendush |
William L. Healey |
Harold A. Blomquist |
(continued and to be signed on the reverse side)
Pursuant to the Proxy Statement, said proxies are directed to vote or to refrain from voting, in their
sole discretion, upon any other matters that come before the meeting.
IF NO DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR EVERY PROPOSAL HEREON. |
Signature of Stockholder
Dated
, 2003
Signature of Stockholder
Dated
, 2003
IMPORTANT: Please date this proxy and sign exactly as your name or names appear(s) on your stock certificate. All joint owners should sign. Executors, administrators, trustees, guardians and
others holding stock in a representative capacity, should sign and also give their title. If a corporation, please sign in full corporate name by the president or other authorized officer. If a partnership, please sign in full partnership name by an
authorized person.