Zoran (ZRAN) DEF 14A Definitive proxy

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934

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Zoran Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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June 13, 2007

Dear Stockholder:

This year’s annual meeting of stockholders will be held on July 18, 2007, at 9:00 a.m. local time, at Zoran’s headquarters located at 1390 Kifer Road, Sunnyvale, California. You are cordially invited to attend.

The Notice of Annual Meeting of Stockholders and a Proxy Statement, which describe the formal business to be conducted at the meeting, follow this letter.

It is important that you use this opportunity to take part in Zoran’s affairs by voting on the business to come before this meeting. After reading the Proxy Statement, please promptly mark, sign, date and return the enclosed proxy card in the prepaid envelope to assure that your shares will be represented. Regardless of the number of shares you own, your careful consideration of, and vote on, the matters before our stockholders is important.

A copy of Zoran’s Annual Report to Stockholders is also enclosed for your information. At the annual meeting we will review Zoran’s activities over the past year and our plans for the future. The Board of Directors and management look forward to seeing you at the annual meeting.

Sincerely yours,

Levy Gerzberg, Ph.D.

President and Chief Executive Officer

ZORAN CORPORATION
1390 Kifer Road
Sunnyvale, California 94086

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To Be Held July 18, 2007

TO THE STOCKHOLDERS:

Notice is hereby given that the annual meeting of the stockholders of Zoran Corporation, a Delaware corporation, will be held on July 18, 2007, at 9:00 a.m. local time, at Zoran’s headquarters located at 1390 Kifer Road, Sunnyvale, California, for the following purposes:

1.     To elect eight persons to serve on our Board of Directors.

2.     To ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2007.

3.     To transact such other business as may properly come before the meeting.

Stockholders of record at the close of business on May 31, 2007 are entitled to notice of, and to vote at, this meeting and any adjournment or postponement. For 10 days prior to the meeting, a complete list of stockholders entitled to vote at the meeting will be available for examination by any stockholder, for any purpose relating to the meeting, during ordinary business hours at our principal offices located at 1390 Kifer Road, Sunnyvale, California.

	By order of the Board of Directors,
	Levy Gerzberg, Ph.D
	President and Chief Executive Officer
Sunnyvale, California
June 13, 2007

IMPORTANT: Please fill in, date, sign and promptly mail the enclosed proxy card in the accompanying postage-paid envelope to assure that your shares are represented at the meeting. If you attend the meeting, you may choose to vote in person even if you have previously sent in your proxy card.

ZORAN CORPORATION
1390 Kifer Road
Sunnyvale, California 94086

PROXY STATEMENT

FOR ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD JULY 18, 2007

Why am I receiving these proxy materials?

We sent you this proxy statement and the accompanying proxy card because the Board of Directors of Zoran Corporation is soliciting your proxy to vote at its 2007 Annual Meeting of Stockholders. You are invited to attend the annual meeting to vote on the proposals described in this proxy statement. However, you do not need to attend the meeting to vote your shares. Instead, you may simply complete, sign and return the accompanying proxy card.

We mailed this proxy statement, the accompanying proxy card and our annual report on or about June 18, 2007 to all stockholders of record entitled to vote at the annual meeting.

Who can vote at the annual meeting?

Only stockholders of record at the close of business on May 31, 2007, the record date for the annual meeting, will be entitled to vote at the annual meeting. At the close of business on the record date, there were 49,715,132 shares of common stock outstanding and entitled to vote.

Stockholder of Record: Shares Registered in Your Name

If at the close of business on the record date, your shares were registered directly in your name with our transfer agent, American Stock Transfer & Trust Company, or AST, then you are a stockholder of record. As a stockholder of record, you may vote in person at the meeting or vote by proxy. Whether or not you plan to attend the meeting, we urge you to fill out and return the accompanying proxy card to ensure your vote is counted.

Beneficial Owner: Shares Registered in the Name of a Broker, Bank or Other Agent

If at the close of business on the record date, your shares were not issued directly in your name, but rather were held in an account at a brokerage firm, bank or other agent, then you are the beneficial owner of shares held in “street name” and these proxy materials are being forwarded to you by your broker, bank or other agent. The broker, bank or other agent holding your shares in that account is considered to be the stockholder of record for purposes of voting at the annual meeting.

As a beneficial owner, you have the right to direct your broker, bank or other agent on how to vote the shares in your account. You are also invited to attend the annual meeting. However, since you are not the stockholder of record, you may not vote your shares in person at the meeting unless you request and obtain a valid proxy issued in your name from your broker, bank or other agent.

What am I being asked to vote on?

There are two matters scheduled for a vote at the annual meeting:

·the election of eight members of the Board of Directors to hold office until our 2008 Annual Meeting of Stockholders; and

·the ratification of the selection by the Audit Committee of our Board of Directors of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2007.

How do I vote?

For the election of directors, you may either vote “For” the eight nominees or you may “Withhold” your vote for any nominee you specify. For any other matter to be voted on, you may vote “For” or “Against” or abstain from voting. The procedures for voting are as follows:

Stockholder of Record: Shares Registered in Your Name

If you are a stockholder of record, you may vote in person at the annual meeting. Alternatively, you may vote by proxy by using the accompanying proxy card. Whether or not you plan to attend the meeting, we urge you to vote by proxy to ensure your vote is counted. You may still attend the meeting and vote in person if you have already voted by proxy.

·To vote in person, come to the annual meeting and we will give you a ballot when you arrive.

·To vote by proxy, simply complete, sign and date the accompanying proxy card and return it promptly in the envelope provided. If you return your signed proxy card to us before the annual meeting, we will vote your shares as you direct.

Beneficial Owner: Shares Registered in the Name of Broker, Bank or Other Agent

If you are a beneficial owner of shares registered in the name of your broker, bank or other agent, you should have received a voting instruction card and voting instructions with these proxy materials from that organization rather than from us. Simply complete and mail the voting instruction card to ensure that your vote is counted. To vote in person at the annual meeting, you must obtain a valid proxy from your broker, bank or other agent. Follow the instructions from your broker, bank or other agent included with these proxy materials, or contact your broker, bank or other agent to request a proxy form.

How many votes do I have?

On each matter to be voted on, you have one vote for each share of common stock you owned as of the close of business on May 31, 2007, the record date for the annual meeting.

What if I return a proxy card but do not make specific choices?

If you return a signed and dated proxy card without marking any voting selections, your shares will be voted “For” the election of the eight nominees for director and “For” the ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm. If any other matter is properly presented at the meeting, then one of the individuals named on your proxy card as your proxy will vote your shares using his best judgment.

Who is paying for this proxy solicitation?

We will pay for the entire cost of soliciting proxies. Our directors, officers and employees may also solicit proxies in person, by telephone, or by other means of communication. Directors, officers, and employees will not be paid any additional compensation for soliciting proxies. We may also reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners.

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What does it mean if I receive more than one proxy card?

If you receive more than one proxy card, your shares are registered in more than one name or are registered in different accounts. Please complete, sign and return each proxy card to ensure that all of your shares are voted.

Can I change my vote after submitting my proxy?

Yes. You can revoke your proxy at any time before the applicable vote at the meeting. If you are the record holder of your shares, you may revoke your proxy in any one of three ways:

·you may submit another properly completed proxy with a later date,

·you may send a written notice that you are revoking your proxy to our Secretary at 1390 Kifer Road, Sunnyvale, California  94086, or

·you may attend the annual meeting and vote in person (however, simply attending the meeting will not, by itself, revoke your proxy).

If your shares are held by your broker, bank or other agent, you should follow the instructions provided by them.

When are stockholder proposals due for next year’s annual meeting?

To be considered for inclusion in next year’s proxy materials, a stockholder proposal must be submitted in writing by February 15, 2008, to our Secretary at 1390 Kifer Road, Sunnyvale, California 94086. If you wish to submit a proposal that is not included in next year’s proxy materials, your proposal generally must be submitted in writing to the same address no later than May 15, 2008.

How are votes counted?

Votes will be counted by the inspector of elections appointed for the meeting, who will separately count “For” and “Withhold” votes with respect to the election of directors and, with respect to any proposals other than the election of directors, “For” and “Against” votes, abstentions and broker non-votes. A “broker non-vote” occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that proposal and has not received instructions with respect to that proposal from the beneficial owner, despite voting on at least one other proposal for which it does have discretionary authority or for which it has received instructions. Abstentions will have no effect on the outcome of the election of directors but will be counted as “Against” votes with respect to any proposals other than the election of directors. Broker non-votes have no effect and will not be counted towards the vote total for any proposal.

If your shares are held by your broker, bank or other agent as your nominee (that is, in “street name”), you will need to obtain a proxy form from the institution that holds your shares and follow the instructions included on that form regarding how to instruct your broker, bank or other agent to vote your shares. If you do not give instructions, then your broker, bank or other agent may vote your shares with respect to “discretionary” items, but not with respect to “non-discretionary” items. Discretionary items are proposals considered routine under the rules of the New York Stock Exchange, such as the vote for directors and ratification of our independent registered public accounting firm.

How many votes are needed to approve each proposal?

·For the election of directors, the eight nominees receiving the most “For” votes (among votes properly cast in person or by proxy) will be elected.

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·To be approved, the ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm must receive a “For” vote from a majority of shares present and entitled to vote either in person or by proxy.

What is the quorum requirement?

A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present if at least a majority of the outstanding shares as of the close of business on the record date are represented by stockholders present at the meeting or by proxy. At the close of business on the record date, there were 49,715,132 shares outstanding and entitled to vote. Therefore, in order for a quorum to exist, 24,857,567 shares must be represented by stockholders present at the meeting or by proxy.

Your shares will be counted towards the quorum only if you submit a valid proxy (or one is submitted on your behalf by your broker, bank or other agent) or if you vote in person at the meeting. Abstentions and broker non-votes will be counted towards the quorum requirement. If there is no quorum, a majority of the votes present at the meeting may adjourn the meeting to another date.

How can I find out the results of the voting at the annual meeting?

Preliminary voting results will be announced at the annual meeting. Final voting results will be published in our Quarterly Report on Form 10-Q for the third quarter of 2007.

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PROPOSAL NO. 1

ELECTION OF DIRECTORS

We have a Board of Directors consisting of eight directors who will serve until the next annual meeting of stockholders and until their respective successors are duly elected and qualified. Management’s nominees for election at the annual meeting are Levy Gerzberg, Ph.D., Uzia Galil, Raymond A. Burgess, James D. Meindl, Ph.D, James B. Owens, Jr., David Rynne, Arthur B. Stabenow and Philip M. Young. If elected, the nominees will serve as directors until our annual meeting of stockholders in 2008 and until their successors are elected and qualified. If any of the nominees declines to serve or becomes unavailable for any reason, or if a vacancy occurs before the election (although we know of no reason to anticipate that this will occur), the proxies may be voted for such substitute nominees as we may designate.

If a quorum is present and voting, the eight nominees for director receiving the highest number of votes will be elected as directors. Abstentions and broker non-votes have no effect on the vote.

The Board of Directors recommends a vote “FOR” the nominees named above.

The following table sets forth, for the nominees for election at the annual meeting, information with respect to their ages and background.

Name	Principal Occupation	Age	Director Since
Levy Gerzberg, Ph.D.	President and Chief Executive Officer of Zoran	62	1981
Uzia Galil	Chairman and Chief Executive Officer of Uzia Initiative and Management Ltd.; Chairman of Board of Directors of Zoran	82	1983
Raymond A. Burgess	President and Chief Executive Officer of TeraVicta Technologies Inc.	48	2005
James D. Meindl, Ph.D.	Professor of Microelectronics, Georgia Institute of Technology	74	1986
James B. Owens, Jr.	Consultant	57	2003
David Rynne	Retired	65	2003
Arthur B. Stabenow	Private Investor	68	1990
Philip M. Young	General Partner, U.S. Venture Partners	67	1986

Levy Gerzberg co-founded Zoran in 1981 and has served as Zoran’s President and Chief Executive Officer since December 1988 and as a director since 1981. Dr. Gerzberg also served as Zoran’s President from 1981 to 1984 and as Zoran’s Executive Vice President and Chief Technical Officer from 1985 to 1988. Prior to co-founding Zoran, Dr. Gerzberg was Associate Director of Stanford University’s Electronics Laboratory. Dr. Gerzberg has over 25 years of experience in the high technology industry in the areas related to integrated circuits, software and systems utilizing digital signal processing in communication, consumer electronics and PC markets. Dr. Gerzberg holds a Ph.D. in Electrical Engineering from Stanford University and an M.S. in Medical Electronics and a B.S. in Electrical Engineering from the Technion-Israel Institute of Technology in Haifa, Israel.

Uzia Galil has been a director of Zoran since 1983 and has served as Chairman of the Board of Directors since October 1993. Mr. Galil currently serves as Chairman and Chief Executive Officer of Uzia Initiative and Management Ltd., a company specializing in the promotion and nurturing of new businesses associated with mobile communication, electronic commerce and medical informatics, which he founded in November 1999. From 1962 until November 1999, Mr. Galil served as President and Chief Executive

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Officer of Elron Electronic Industries Ltd., an Israeli high technology holding company, where he also served as Chairman of the Board of Directors. From January 1981 until leaving Elron, Mr. Galil also served as Chairman of the Board of Directors of Elbit Ltd., an electronic communication affiliate of Elron, and as a member of the Board of Directors of Elbit Systems Ltd., a defense electronics affiliate of Elron, and all other private companies held in the Elron portfolio. Mr. Galil currently serves as a director of Orbotech Ltd., NetManage Inc. and Partner Communications Ltd. From 1980 to 1990, Mr. Galil served as Chairman of the International Board of Governors of the Technion. Mr. Galil holds an M.S. in Electrical Engineering from Purdue University and a B.S. from the Technion. Mr. Galil has also been awarded an honorary doctorate in technical sciences by the Technion in recognition of his contribution to the development of science-based industries in Israel, an honorary doctorate in philosophy by the Weizmann Institute of Science, an honorary doctorate in engineering by Polytechnic University, New York, an honorary doctorate from the Ben-Gurion University of the Negev in Israel, and the Solomon Bublick Prize Laureate from the Hebrew University of Jerusalem. Mr. Galil is also a recipient of the Israel Prize.

Raymond A. Burgess has been a director of Zoran since April 2005. Since November 2006, Mr. Burgess has been Chief Executive Officer of TeraVicta Technologies Inc., a provider of broadband MEMS switches and modules. From November 2005 to September 2006, Mr. Burgess was Chief Executive Officer of Tao Group, a private software company engaged in the development and sale of embedded software to enable multimedia in consumer and mobile communications devices. From July 2004 to November 2005, Mr. Burgess was engaged as a consultant to companies in the semiconductor industry and related fields. From April 2004 to July 2004, Mr. Burgess served as Senior Vice President, Strategy, Marketing and Communications of Freescale Semiconductor, Inc. From September 2000 to March 2004, Mr. Burgess served as Corporate Vice President, Strategy, Marketing and Communications for the Semiconductor Products Sector of Motorola, Inc., and he held a variety of other executive positions during a 20 year career at Motorola.

James D. Meindl has been a director of Zoran since March 1986. Dr. Meindl has been Joseph M. Pettit Chair Professor in microelectronics at Georgia Institute of Technology since November 1993. From September 1986 to November 1993, Dr. Meindl served as Provost and Senior Vice President of Academic Affairs at Renssalaer Polytechnic Institute. Prior thereto, Dr. Meindl was a professor of electrical engineering and Director of the Stanford Electronics Laboratory and Center for Integrated Systems at Stanford University. Dr. Meindl is also a director of SanDisk, Inc. and Stratex Networks.

James B. Owens, Jr. has been a director of Zoran since May 2003. Since January 2005, Mr. Owens has been principally engaged as a consultant to companies in the semiconductor industry. From January 2002 to January 2005, Mr. Owens served as President and Chief Executive Officer and a director of Strasbaugh, a provider of semiconductor manufacturing equipment. From December 1999 to August 2001, Mr. Owens served as President and Chief Executive Officer of Surface Interface, a supplier of high-end metrology equipment to the semiconductor and hard disk markets. From August 1998 to December 1999, Mr. Owens served as President of Verdant Technologies, a division of Ultratech Stepper. Mr. Owens holds a B.S. in Physics from Stetson University, an M.S. in Management from the University of Arkansas and an M.S.E.E. from Georgia Institute of Technology.

David Rynne has been a director of Zoran since August 2003. Mr. Rynne is a retired senior financial executive with more than 35 years of experience in growing technology companies. Most recently, Mr. Rynne served as Chief Executive Officer of Receipt.com from July to December 1999 and as Vice President of Nortel Networks from August 1998 to June 1999. He served as Chief Financial Officer of Bay Networks from January 1997 to August 1998. Prior to joining Bay Networks, Mr. Rynne served as Chief Financial Officer at Tandem Computers from June 1983 to December 1996, and held a variety of financial management positions during an 18 year career at Burroughs Corporation. He is currently Chairman of the Board of Directors of Netfuel, Inc., a programmable network company, and serves on the Board of

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Directors of PD-LD, Inc., a fiber optic component company, and Synnex Corporation, an IT product distribution company.

Arthur B. Stabenow has been a director of Zoran since November 1990. Mr. Stabenow has been principally engaged as a private investor since January 1999. From March 1986 to January 1999, Mr. Stabenow was Chief Executive Officer of Micro Linear Corporation, a semiconductor company. Mr. Stabenow also serves as a director of Applied Micro Circuits Corporation.

Philip M. Young has been a director of Zoran since January 1986. Mr. Young has been a managing principal of U.S. Venture Partners, a venture capital management company, since April 1990, and a general partner or managing member of the general partners of various venture capital funds managed by that company. Mr. Young is also a director of several private companies.

Independence of the Board of Directors and its Committees

The Board of Directors has determined that Uzia Galil, Raymond A. Burgess, James D. Meindl, James B. Owens, Jr., David Rynne, Arthur B. Stabenow, and Philip M. Young are “independent directors” for purposes of the rules of the Nasdaq Stock Market (“Nasdaq”), as currently in effect.

Board Meetings and Committees

The Board of Directors held 13 meetings during the year ended December 31, 2006. The Board of Directors has an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. During the year ended December 31, 2006, no director attended fewer than 75% of the total number of meetings of the Board and all of the committees of the Board on which such director served that were held during that period.

Audit Committee.   The members of the Audit Committee are Messrs. Burgess, Owens, Rynne and Stabenow. Mr. Stabenow is Chairman of the committee. The Board of Directors has determined that each of the members of the Audit Committee is independent for purposes of the applicable rules of Nasdaq and the Securities and Exchange Commission (“SEC”). The Board has also determined that Messrs. Burgess, Owens, Rynne and Stabenow also qualify as audit committee financial experts, as defined in the rules of the SEC. The functions of the Audit Committee include overseeing the quality of our financial reports and other financial information, retaining our independent registered public accounting firm, reviewing their independence, reviewing and approving the planned scope of our annual audit, reviewing and approving any fee arrangements with our independent registered public accounting firm, overseeing their audit work, reviewing and pre-approving any non-audit services that may be performed by them, reviewing the adequacy of accounting and financial controls, reviewing our critical accounting policies and reviewing and approving any related party transactions. The Audit Committee held 11 meetings during 2006.

Compensation Committee.   The members of the Compensation Committee are Mr. Galil, Mr. Stabenow and Dr. Meindl. Mr. Galil is Chairman of the committee. The Board of Directors has determined that each of the members of the Compensation Committee is independent for purposes of the Nasdaq rules. The Compensation Committee reviews the performance of our executive officers and approves their salaries and incentive compensation. The Compensation Committee held seven meetings during 2006.

Nominating and Corporate Governance Committee.   The members of the Nominating and Corporate Governance Committee are Messrs. Owens, Stabenow and Young. Mr. Young is Chairman of the committee. The Board of Directors has determined that each of the members of the Nominating and Corporate Governance Committee is independent for purposes of the Nasdaq rules. The Nominating and Corporate Governance Committee is responsible for identifying and considering qualified candidates for appointment and nomination for election to the Board of Directors and for making recommendations

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concerning such candidates, recommending corporate governance principles, codes of conduct and compliance mechanisms for Zoran and providing oversight in the evaluation of the Board and its committees. The Nominating and Corporate Governance Committee held four meetings during 2006.

Director Nominations

The Nominating and Corporate Governance Committee is responsible for the selection, and recommendation to the Board, of nominees for election as director. When considering the nomination of directors for election at an annual meeting, the Nominating and Corporate Governance Committee reviews the needs of the Board of Directors for various skills, background, experience and expected contributions, and the qualification standards established from time to time by the Nominating and Corporate Governance Committee. When reviewing potential nominees, including incumbents, the Nominating and Corporate Governance Committee considers the perceived needs of the Board of Directors, the candidate’s relevant background, experience and skills and expected contributions to the Board of Directors, as well as the following factors:

·the appropriate size of Zoran’s Board of Directors and its committees;

·diversity, age and skills, such as understanding of relevant technology, manufacturing operations, finance, marketing and international business operation, in the context of the perceived needs of Zoran and the Board at the time;

·the relevant skills, background, reputation, and business experience of nominees compared to the skills, background, reputation, and business experience already possessed by other members of the Board;

·nominees’ independence from management;

·applicable regulatory and listing requirements, including independence requirements and legal considerations, such as antitrust compliance;

·the benefits of a constructive working relationship among directors; and

·the desire to balance the benefits associated with continuity with the benefits of the fresh perspective provided by new members.

The Nominating and Corporate Governance Committee also seeks appropriate input from the Chief Executive Officer from time to time in assessing the needs of the Board of Directors for relevant background, experience and skills of its members.

The Nominating and Corporate Governance Committee’s goal is to assemble a Board of Directors that brings to Zoran a diversity of experience at policy-making levels in business and technology, and in areas that are relevant to Zoran’s global activities. Directors should possess the highest personal and professional ethics, integrity and values and be committed to representing the long-term interests of our stockholders. They must have an inquisitive and objective outlook and mature judgment. They must also have experience in positions with a high degree of responsibility and be leaders in the companies or institutions with which they are affiliated. Director candidates must have sufficient time available in the judgment of the Nominating and Corporate Governance Committee to perform all Board and committee responsibilities that will be expected of them. Members of the Board of Directors are expected to rigorously prepare for, attend and participate in all meetings of the Board of Directors and applicable committees. Other than the foregoing, there are no specific minimum criteria for director nominees, although the Nominating and Corporate Governance Committee believes that it is preferable that at least one member of the Board of Directors should meet the criteria for an “audit committee financial expert” as defined by SEC rules. Under applicable Nasdaq listing requirements, at least a majority of the members of the Board of Directors must meet the definition of “independent director” set forth in such

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requirements and our Corporate Governance Guidelines. The Nominating and Corporate Governance Committee also believes it appropriate for one or more key members of Zoran’s management, including the Chief Executive Officer, to serve on the Board of Directors.

The Nominating and Corporate Governance Committee will consider candidates for director proposed by directors or management, and will evaluate any such candidates against the criteria and pursuant to the policies and procedures set forth above. If the Nominating and Corporate Governance Committee believes that the Board of Directors requires additional candidates for nomination, the Nominating and Corporate Governance Committee may engage, as appropriate, a third party search firm to assist in identifying qualified candidates. All incumbent directors and nominees will be required to submit a completed directors’ and officers’ questionnaire as part of the nominating process. The process may also include interviews and additional background and reference checks for non-incumbent nominees, at the discretion of the Nominating and Corporate Governance Committee.

The Nominating and Corporate Governance Committee will also consider candidates for director recommended by a stockholder, provided that any such recommendation is sent in writing to General Counsel, Zoran Corporation, 1390 Kifer Road, Sunnyvale, CA 94086, at least 120 days prior to the anniversary of the date definitive proxy materials were mailed to stockholders in connection with the prior year’s annual meeting of stockholders and contains the following information:

·the candidate’s name, age, contact information and present principal occupation or employment; and

·a description of the candidate’s qualifications, skills, background and business experience during at least the last five years, including his or her principal occupation and employment and the name and principal business of any company or other organization where the candidate has been employed or has served as a director.

The Nominating and Corporate Governance Committee will evaluate any candidates recommended by stockholders against the same criteria and pursuant to the same policies and procedures applicable to the evaluation of candidates proposed by directors or management.

In addition, stockholders may make direct nominations of directors for election at an annual meeting, provided the advance notice requirements set forth in our Bylaws have been met. Under our Bylaws, written notice of such nomination, including certain information and representations specified in the Bylaws, must be delivered to our principal executive offices, addressed to the General Counsel, at least 120 days prior to the anniversary of the date definitive proxy materials were mailed to stockholders in connection with the prior year’s annual meeting of stockholders, except that if no annual meeting was held in the previous year or the date of the annual meeting has been advanced by more than 30 days from the date contemplated at the time of the previous year’s proxy statement, such notice must be received not later than the close of business on the tenth day following the day on which the public announcement of the date of such meeting is first made.

Communications with Directors; Attendance at Annual Meetings

Stockholders may communicate with the Board of Directors, or any individual director, by mail addressed to the intended recipient c/o General Counsel, Zoran Corporation, 1390 Kifer Road, Sunnyvale, CA 94086, by facsimile to (408) 523-6501 or by email to board.directors@zoran.com. The General Counsel will maintain a log of such communications and transmit them promptly to the identified recipient except in the case of communications that are in bad taste or present security concerns, or communications that relate primarily to commercial matters unrelated to the sender’s interests as a stockholder. The intended recipient will be advised of any communication withheld for such reasons.

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Zoran does not have a policy regarding directors’ attendance at annual meetings. Other than Dr. Gerzberg, no directors attended the 2006 annual meeting of stockholders.

Committee Charters and Other Corporate Governance Materials

The Board has adopted a charter for each of the committees described above. Copies of the charters of the Audit Committee, the Compensation Committee and Nominating and Corporate Governance Committee are available on our website at http://www.zoran.com/Corporate-Governance.

The Board has also adopted Corporate Governance Guidelines that address the composition of the Board, criteria for Board membership, director stock ownership guidelines and other Board governance matters. Links to these materials are available on our website at http://www.zoran.com/Corporate-Governance.

Code of Business Conduct and Ethics

We have adopted a Code of Business Conduct and Ethics that applies to all of our officers, directors and employees, including our Chief Executive Officer, Chief Financial Officer and Controller. This code is available on our website at http://www.zoran.com/Corporate-Governance. If we make any substantive amendments to the code or grant any waiver from a provision of the code to any executive officer or director, we will promptly disclose the nature of the amendment or waiver on our website, as well as via any other means then required by Nasdaq listing standards or applicable law.

PROPOSAL NO. 2

RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee of our Board of Directors has selected PricewaterhouseCoopers LLP as Zoran’s independent registered public accounting firm to audit the consolidated financial statements of Zoran for the year ending December 31, 2007. A representative of PricewaterhouseCoopers LLP is expected to be present at the annual meeting, with the opportunity to make a statement if the representative desires to do so, and is expected to be available to respond to appropriate questions.

Neither our bylaws nor other governing documents or law require stockholder ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm. However, the Audit Committee is submitting the selection of PricewaterhouseCoopers LLP to our stockholders for ratification as a matter of good corporate practice. If our stockholders fail to ratify the selection, the Audit Committee will reconsider whether to retain PricewaterhouseCoopers LLP. Even if the selection is ratified, the Audit Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if they determine that such a change would be in the best interests of Zoran and our stockholders.

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To be approved, the ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm must receive a “For” vote from a majority of shares present and entitled to vote either in person or by proxy.

The following table sets forth the aggregate fees billed to Zoran for the years ended December 31, 2005 and 2006 by PricewaterhouseCoopers LLP:

	2005		2006
Audit fees(1)	$	1,101,366	$	3,829,639
Tax fees(2)	$	54,765	$	23,572
All other fees(3)	$	5,500	$	1,500
Total	$	1,161,631	$	3,854,711

(1)Audit fees consist of fees billed for professional services rendered for the audit of Zoran’s consolidated annual financial statements and review of the interim consolidated financial statements included in quarterly reports and services that are normally provided by PricewaterhouseCoopers LLP in connection with statutory and regulatory filings or engagements. Audit fees also include fees related to PricewaterhouseCoopers LLP’s audit of the effectiveness of Zoran’s internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act. Audit fees for 2006 also includes $2,421,372 associated with services provided in connection with the Company’s review of historical stock option practices and the associated restatements.

(2)Tax fees consist of fees billed for professional services rendered for tax compliance, tax advice and tax planning (domestic and international). These services include assistance regarding federal, state and international tax compliance, acquisitions and international tax planning.

(3)Other fees include fees for accounting library software and other miscellaneous services.

Company policy requires the Audit Committee to pre-approve all audit and permissible non-audit services provided by our independent registered public accounting firm. Management is responsible for reporting to the Audit Committee on a quarterly basis regarding expenditures for non-audit services made in accordance with this pre-approval.

Vote Required and Board of Directors Recommendation

Approval of this proposal requires the affirmative vote of a majority of the shares present and entitled to vote either in person or by proxy, as well as the presence, either in person or by proxy, of a quorum representing a majority of all outstanding shares of common stock of Zoran. Abstentions and broker non-votes will each be counted as present for purposes of determining the presence of a quorum. Abstentions will be counted as “Against” votes with respect to the proposal, but broker non-votes will have no effect on the outcome of the proposal.

The Board of Directors unanimously recommends a vote “FOR” the appointment of PricewaterhouseCoopers LLP as Zoran’s independent registered public accounting firm for the year ending December 31, 2007.

PRINCIPAL STOCKHOLDERS AND STOCK OWNERSHIP BY MANAGEMENT

The following table sets forth, as of May 31, 2007, certain information with respect to the beneficial ownership of Zoran’s common stock by (i) each stockholder known by Zoran to be the beneficial owner of more than 5% of Zoran’s common stock, (ii) each director and director-nominee of Zoran, (iii) each executive officer named in the Summary Compensation Table below, and (iv) all directors and executive officers of Zoran as a group. The number of shares beneficially owned by each stock holder is calculated

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on the basis of 49,715,132 shares of common stock outstanding as of May 31, 2007, provided that any additional shares of common stock that a stockholder has the right to acquire within 60 days after May 31, 2007 are deemed to be outstanding and beneficially owned for the purpose of calculating that stockholder’s percentage beneficial ownership. They are not, however, deemed to be outstanding and beneficially owned for the purpose of computing the percentage ownership of any other person.

Beneficial Owner(1)	Number of Shares Beneficially Owned		Percent
Barclays Global Investors, NA. and affiliated entities(2)		3,209,282		6.46	%
AXA and affiliated entities(3)		3,017,102		6.07	%
Dimensional Fund Advisors, Inc.(4)		2,345,383		4.72	%
Levy Gerzberg, Ph.D.(5)		1,261,464		2.48	%
Isaac Shenberg, Ph.D.(6)		491,219		*
Karl Schneider(7)		389,175		*
Arthur B. Stabenow(8)		187,446		*
Uzia Galil(9)		135,373		*
Philip M. Young(10)		118,200		*
David Rynne(11)		101,733		*
James D. Meindl, Ph.D.(12)		98,620		*
James B. Owens, Jr.(13)		75,000		*
Raymond A. Burgess(14)		30,000		*
All directors and executive officers as a group (10 persons)(15)		2,888,230		5.53	%

* Less than 1%.

(1) Except as otherwise indicated, the persons named in this table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them, subject to community property laws where applicable and to the information contained in the footnotes to this table.

(2) Based on information contained in a Schedule 13G filed by the stockholder with the SEC on January 23, 2007. Includes 2,457,588 shares beneficially held by Barclays Global Investors, NA., 2,284,696 shares for which it possesses sole voting power and 2,457,588 shares for which it possesses sole dispositive power. Of those shares beneficially held by Barclays Global Investors, NA., 751,694 shares are beneficially held by Barclays Global Fund Advisors for which it possesses shared dispositive power. The address of Barclays Global Investors, NA. is 45 Fremont Street, 17th Floor, San Francisco, CA 94105.

(3) Based on information contained in a Schedule 13G filed by the stockholder with the SEC on February 13, 2007. AXA is the parent holding company for several entities that hold our common stock as investment advisors, including AllianceBernstein L.P. Collectively these entities have shared voting power with respect to 26,225 shares and shared dispositive power with respect to 75 shares. The address of AXA is 25, avenue Matignon, 75008 Paris, France.

(4) Based on information contained in a Schedule 13G filed by the stockholder with the SEC on February 9, 2007. According to the Schedule 13G, all securities are beneficially owned by advisory clients of Dimensional Fund Advisors, Inc., no one of which, to the knowledge of Dimensional Fund Advisors, Inc., owns more than 5% of the class. Dimensional Fund Advisors, Inc. disclaims beneficial ownership of all such securities. The address of Dimensional Fund Advisors, Inc. is 1299 Ocean Avenue, 11th Floor, Santa Monica, CA 90401.

(5) Includes options to purchase 1,080,326 shares of common stock.

(6) Includes options to purchase 479,219 shares of common stock.

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(7) Includes options to purchase 368,750 shares of common stock.

(8) Includes options to purchase 130,050 shares of common stock.

(9) Includes 4,510 shares held by Mr. Galil’s spouse. Mr. Galil may be deemed to be a beneficial owner of these shares, although Mr. Galil disclaims such beneficial ownership. Also includes options to purchase 111,000 shares of common stock.

(10) Includes of options to purchase 111,000 shares of common stock.

(11) Consists of options to purchase 101,733 shares of common stock.

(12) Includes 111 shares held jointly with Dr. Meindl’s spouse and 1,909 shares held by James and Frederica Meindl as trustees of the Meindl Trust dated February 4, 1972. Also includes options to purchase 96,600 shares of common stock.

(13) Consists of options to purchase 75,000 shares of common stock.

(14) Consists of options to purchase 30,000 shares of common stock.

(15)See notes 5 through 14. Includes an aggregate of 2,583,678 shares issuable upon exercise of options.

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

This section discusses the principles underlying our executive compensation policies and decisions, and the most important factors relevant to an analysis of these policies and decisions. We provide qualitative information regarding how our executive officers are compensated, and provide perspective on the data presented in the tables and narrative that follow this section.

Our executive compensation program for executive officers is designed to attract individuals who have the skills we need to achieve our business plan, to motivate those individuals, to reward them fairly over time, and to retain those who continue to perform at or above the levels that we expect. Our program is also designed to reinforce a sense of ownership, urgency and overall entrepreneurial spirit among executive officers, and to link rewards to measurable corporate and individual performance.

Compensation Program

Our executive compensation program currently has three primary components:

·Base salary

·Annual performance-based cash bonus

·Equity

Executive officers are eligible to participate in all of our respective local employee benefit plans, which may include medical, dental, vision, group life, employee assistance program, short term and long term disability, accidental death and dismemberment insurance, our 401(k) plan, or other benefit plans, in each case on the same basis as other employees.

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We view the three primary components of executive compensation as related, but we do not believe that compensation should be derived entirely from one component, or that significant compensation from one component should necessarily reduce compensation from other components. Our Compensation Committee determines the appropriate levels for each compensation component based primarily on:

·competitive benchmarking consistent with our recruiting and retention goals;

·internal consistency; and

·other relevant considerations such as rewarding extraordinary performance.

We fix executive officer base compensation at salary levels we believe enable us to hire and retain individuals in a competitive environment and to reward satisfactory individual performance and a satisfactory level of contribution to our overall business goals. We also take into account the base compensation that is payable by companies that we believe to be our competitors and by other private and public companies with which we believe we generally compete for executives. To this end, we access executive compensation surveys and other databases and review them when making crucial executive officer hiring decisions and annually when we review executive compensation. We designed our executive bonus plan to focus our management on achieving key corporate financial objectives, to motivate certain desired individual behaviors and to reward substantial achievement of these company financial objectives and individual goals. We utilize cash bonuses to reward performance achievements with a time horizon of one year or less, and we utilize salary as the base amount necessary to match our competitors for executive talent. We utilize stock options to reward long-term performance, with excellent corporate performance and extended officer tenure producing potentially significant value for the officer.

We believe that, as is common in the technology sector, stock option awards are the primary compensation-related motivator in attracting and retaining senior level employees, and that salary and bonus levels are secondary considerations for most senior level employees. Our Compensation Committee has adopted no formal or informal policies or guidelines (except as described below) for allocating compensation between long-term and current compensation, between cash and non-cash compensation, or among different forms of non-cash compensation. However, our Compensation Committee’s philosophy is to make a greater percentage of an employee’s compensation performance-based as he or she becomes more senior and to keep cash compensation to the minimum competitive level while providing the opportunity to be well rewarded through equity if the company performs well over time.

Our Compensation Committee intends to continue its practice of performing an annual strategic review of our executive officer compensation to determine whether it provides adequate incentive and motivation to our executive officers and whether it adequately compensates our executive officers relative to comparable officers in other companies with which we compete for executives. These companies may or may not be public companies or even in technology companies. Compensation Committee meetings often include other directors and typically include, for all or a portion of each meeting, our Chief Executive Officer, Chief Financial Officer, Vice President, Human Resources and our external counsel. For compensation decisions, including equity compensation decisions, relating to executive officers other than our Chief Executive Officer, our Compensation Committee typically considers recommendations from the Chief Executive Officer.

Base Salary

For 2006, our Compensation Committee set executive officer salaries at approximately the 50th percentile of salaries of executives with similar roles at comparable public companies, based on the semiannual Radford Surveys, with reference to companies having revenues in the range of $200 million to $500 million.

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For 2007, our Compensation Committee approved salary increases of four percent for each of our named executive officers, to maintain those salaries at approximately the 50th percentile under the Radford Surveys, which are expected to show an increase of this magnitude in 2007.

Annual Performance-Based Cash Bonuses

We use incentive cash bonuses to reward performance and achievements with a time horizon of approximately one year. Compensation Committee approved bonus arrangements for 2006 (“2006 Bonus Plan”) that were designed to reward executives for achieving key financial objectives and individual goals. The 2006 Bonus Plan was an unwritten plan, the material elements of which are described in our Current Report on Form 8-K dated March 30, 2006. The Compensation Committee determined the amount of the target bonus for an executive as a percentage of the executive’s base salary, and selected the financial targets and individual goals that would result in payment of the bonus. The committee also retained discretion to adjust the targets or pay discretionary bonuses as appropriate.

For 2006, our Compensation Committee set executive officer incentive bonus levels at approximately the 75th percentile of incentive bonus compensation for executives with similar roles at comparable public companies.

Under the 2006 Bonus Plan, Chief Executive Officer Levy Gerzberg was eligible to receive a bonus of 100% of his base salary, Chief Financial Officer Karl Schneider was eligible to receive a bonus of 70% of his base salary, and Senior Vice President, Business Development Isaac Shenberg was eligible to receive a bonus of 60% of his base salary. Dr. Gerzberg’s 2006 target bonus was earned by the degree to which the Company achieved the financial targets selected by the Compensation Committee (revenue and non-GAAP earnings per share) and set by the Board of Directors by their approval of the Company’s 2006 annual operating plan. For Mr. Schneider and Dr. Shenberg, two-thirds of the target bonus was earned by achievement of those same financial targets, and one-third was earned by achievement of specific management objectives recommended by the Chief Executive Officer and approved by the Compensation Committee. In all cases, a proportional amount of the bonuses may be earned if the financial targets are achieved at the level of 80% or more, and proportional extra bonus may be earned if the financial targets are over-achieved, to a cap to 120%. When multiple financial targets are measured, the results on each are combined for a blended result in calculating bonus achievement. In 2006, the financial targets for bonus purposes were a revenue target of $520.3 million and a non-GAAP earnings-per-share target of $0.92. The Company’s actual revenues were below target and its earnings per share were above target, with the result that the executive officers were entitled to bonuses below target levels. We define non-GAAP earnings per share, for bonus purposes, to mean the non-GAAP earnings per share that we report in connection with our quarterly announcement of financial results.

The Compensation Committee recently approved a performance-based cash bonus plan for 2007 (the “2007 Bonus Plan”), in which all vice presidents, including the named executive officers, are eligible to participate. The target bonus pool for all employees, including the named executive officers, is 10% of non-GAAP net income for 2007 before any bonus deduction, of which no more than 25% may be paid to executive officers and non-executive vice presidents. The 2007 Bonus Plan is substantially the same as the 2006 Bonus Plan, and the Compensation Committee has again selected revenue and non-GAAP earnings-per-share measured, fixed at particular targets by Board approval of our 2007 annual operating plan, and has selected particular management objectives for executives other than the Chief Executive Officer.

Generally, the Committee tries to establish both target financial objectives and individual objectives each year so that the relative difficulty of achieving the objectives is roughly consistent from year to year. Over the past several years, the Company’s performance has ranged from exceeding the target level corporate objectives, to meeting the objectives and failing to achieve the objectives. The level of achievement of individual performance objectives has also varied by individual in any given year, as well as by the named executive officers as a group from year to year. The amounts of actual bonus payments under

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the 2007 Bonus Plan could be higher or lower than the target levels, at the discretion of the Committee, based on achievement of Company and individual goals.

The Compensation Committee felt that the largest portion of each bonus should be based on our executive officers’ success as a team and thus based on corporate financial goals. Each component of the bonus is independent of the other components, and we will pay the applicable percentage of the bonus if an objective is attained, regardless of whether any or all of the other objectives are attained. The Compensation Committee chose revenues and non-GAAP net income per share because it believed that, as a “growth company,” we should reward revenue growth, but only if that revenue growth is achieved cost effectively. Likewise, it believed a “profitable company” with little or no growth was not acceptable. Thus, the Compensation Committee considered the chosen metrics to be the best indicators of financial success and stockholder value creation. The individual performance objectives are determined by the Chief Executive Officer.

Our bonus plan does not formally provide for the exercise of discretion, but our Compensation Committee may exercise discretion such as awarding an exceptional bonus amount for specific performance achievement beyond established goals. There were no such discretionary awards in 2006. Further details about our executive bonus plan are provided below in the footnotes to the “2006 Grants of Plan-Based Awards” table, which shows the “threshold” and “maximum” bonus amounts that could have been earned by each named executive officer in 2006.

Stock Options

We use stock options as a long-term incentive vehicle for several reasons:

·In the technology sector, equity awards are the primary factor in attracting and retaining executive officers, while salary and bonus levels are secondary considerations to most executives.

·Stock options foster attention to stock ownership and focus executives on increasing long-term value for the stockholders. Thus, options align the interests of executives with those of our stockholders.

·Stock options are performance-based. Their value depends entirely on an increase in the stock price above the option exercise price. Our stock options are granted with an exercise price no less than the fair market value of the stock on the grant date.

·The vesting period for stock options granted to executives is four years, which encourages executive retention.

In 2005, we used restricted stock units as an element of equity incentive compensation, in conjunction with stock option grants. In 2006, our compensation committee consulted with our management and determined that management believed that the options provided them with a greater incentive to enhance shareholder value. Accordingly, in 2006 and 2007, our Compensation Committee has used stock options as the exclusive equity incentive compensation mechanism.

Our 2005 Equity Incentive Plan (“2005 Equity Incentive Plan”) was approved by our stockholders at our annual meeting of stockholders in 2006. The 2005 Equity Incentive Plan gives the Compensation Committee latitude to design stock-based incentive compensation by awarding stock options, restricted stock, stock bonuses, stock appreciation rights, and restricted stock units in order to promote high performance and achievement of corporate goals, and to encourage the growth of stockholder value.

In determining the number of options to be granted to executive officers, the Committee takes into account: the individual’s position and scope of responsibility; the vesting period (and thus, retention value) remaining on the executive’s existing options; the executive’s ability to affect profitability and stockholder value; the individual’s historic and recent job performance; equity compensation for similar positions at comparable companies; and the value of stock options in relation to other elements of total compensation.

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Despite the Compensation Committee’s belief that the 75th percentile was the appropriate target for executive equity incentive compensation, for 2006, our Compensation Committee set executive officer equity incentive compensation levels that were at or below approximately the 50th percentile of equity incentive compensation for executives with similar roles at comparable public companies. This reduction from target compensation levels was due to the fact that the Company had a limited number of shares available for grants to employees generally, so the executive option grants were reduced.

In April 2007 the Compensation Committee gave final approval to executive officer stock option grants that it had reviewed in October 2006, but had not determined with finality until the Company’s release of quarterly results after it was once again current with its period reports under the Securities Exchange Act of 1934.

Tax and Accounting Considerations

We record cash compensation as an expense at the time the obligation is incurred. Historically, all cash compensation we have paid has been tax deductible for us. Under Section 162(m) of the Internal Revenue Code, compensation in excess of $1,000,000 per year to named executive officers is not tax deductible to us unless certain requirements are met. The deductibility of compensation to the named executive officers in 2006 was affected by the limitations of Section 162(m) and it is conceivable that future compensation may also be non-deductible under Section 162(m).

We account for equity compensation paid to our executives and employees under the rules of SFAS No. 123R, which requires us to estimate and record a non-cash expense over the vesting period of the equity compensation award. Any gain recognized by employees from nonqualified stock options is tax-deductible for us. However, gains recognized by an employee with respect to an incentive stock option will not be deductible unless there is a “disqualifying disposition” of the shares by the employee. A disqualifying disposition occurs when an employee sells or disposes of incentive stock option shares within two years after the grant date or within one year after the exercise date. The employee is taxed on the gain at ordinary income tax rates. In addition, if in the future we grant restricted stock or restricted stock unit awards that are not subject to performance vesting, they may not be fully deductible by us at the time the award is otherwise taxable to the employee.

Overview of the Executive Compensation Process

The Compensation Committee makes all decisions regarding compensation (including salary and bonus levels and specific bonus and equity awards) for all of our executive officers, including our named executive officers. The Committee meets on a regularly scheduled basis and at other times as needed. At the Committee’s request, Committee meetings typically have included, for all or a portion of each meeting, our Chief Executive Officer, our Chief Financial Officer, our Vice President, Human Resources, our Vice President, Legal and our outside corporate legal counsel.

The Committee generally conducts an annual review of our executive officer compensation to assess whether compensation programs and decisions are aligned with our corporate goals, provide appropriate incentives and motivation to our executive officers, and are competitive with compensation for comparable officers in companies with which we compete for executives. The Chief Executive Officer annually evaluates the performance of each member of the senior executive team other than himself. He makes recommendations to the Committee regarding salary adjustments for the current year, as well as performance bonus payments and equity awards based on performance of the company and individual performance of each executive during the preceding year. The conclusions reached and recommendations based on these evaluations are presented to the Committee. The Committee, in its sole discretion, determines whether to accept, modify or reject any recommended adjustments or awards to the senior executives. The Committee evaluates the performance of the Chief Executive Officer each year and makes all decisions regarding salary adjustments, bonus payments and equity awards.

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Benchmarking of Executive Compensation

In January 2006, our Compensation Committee decided to set executive officer salaries and executive officer incentive cash bonus target compensation at approximately the 50th percentile and 75th percentile, respectively, for executives with similar roles at comparable public companies. Our Compensation Committee believes that the 50th percentile for base salaries and the 75th percentile for incentive cash bonus is the minimum cash compensation level that would allow us to attract and retain talented officers. Our Compensation Committee also set executive officer equity incentive compensation at approximately the 75th percentile for executives in similar positions at comparable companies. Although no stock options were granted to our executive officers in 2006, the Compensation Committee believes that this greater focus on equity incentive compensation is appropriate given the Company’s growth objectives. For benchmarking information on salary and incentive cash bonus compensation, the Company uses the semiannual Radford Surveys with reference to companies having revenues in the range of $200 million to $500 million. For benchmarking information on equity incentive compensation for executives the Company engaged a consultant to survey face value of equity awards to executives at comparable companies selected by Company management. Benchmarking of equity incentive compensation amounts was a gross measure of the number of shares covered by the award and the fair market value of the comparable company shares on the date of grant.

For 2007, our Compensation Committee approved salary increases of four percent for each of our named executive officers, to maintain those salaries at approximately the 50th percentile under the Radford Surveys, which is expected to show an increase of this magnitude in 2007.

Our Compensation Committee realizes that using benchmarks may be inappropriate in some circumstances, but believes that it is generally the best approach at this point in the life cycle of our company. In instances where an executive officer is uniquely key to our success, our Compensation Committee may provide compensation in excess of stated percentiles. Our Compensation Committee’s judgments about market levels of equity incentive compensation awards were based on a report obtained from an independent consulting firm specializing in executive compensation, which was engaged by the Company. Our Compensation Committee used this report to assist in the adjustment of the equity incentive compensation to our executives; the report compared the Company’s executive compensation with that of our competitors and other similar sized companies in the semiconductor industry. The Compensation Committee’s choice of the stated percentiles to apply to the data in the report reflected consideration of our stockholders’ interests in paying what was necessary, but not significantly more than necessary, to achieve our corporate goals, while conserving cash and equity as much as practicable.

Stock Option Practices

In 2006 we adopted new policies governing stock option grants and other equity awards, including the following:

·All awards including awards to executive officers are granted by the Compensation Committee or the Board of Directors.

·Awards are generally considered at regularly scheduled quarterly meetings of the Board or Committee, and action may not be taken by unanimous written consent.

·Awards are generally granted effective as of the later of (i) the second trading day following the Company’s public announcement of its financial results for the preceding quarter or (ii) the date of the Compensation Committee or Board of Directors meeting.

·Except as otherwise provided in the 2005 Equity Incentive Plan with respect to the grant of incentive stock options to certain large stockholders, the exercise price of stock options and stock appreciation rights is the closing price of the Company’s common stock on the grant date, as reported by the Nasdaq National Market.

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·Key terms and conditions of awards shall be communicated to recipients promptly.

Severance and Change of Control Payments

We maintain an Executive Retention and Severance Plan (“Retention Plan”) that provides for benefits for our executive officers and key employees upon a change in control of Zoran. We maintain the Retention Plan to provide severance and change of control arrangements to enable us to induce these executives to work at a dynamic and rapidly growing company where their longer-term compensation largely depends on future stock appreciation. The arrangements also mitigate a potential disincentive for executives when they are evaluating a potential acquisition of the company, particularly when the services of the executive officers may not be required by the acquiring company. For a detailed description of these severance and change of control benefits, please see the discussion under “—Change of Control Agreements” below. Absent a change of control event, no executive officer is entitled upon termination to either equity vesting acceleration or cash severance payments.

Other Benefits

Executive officers are eligible to participate in all of our respective local employee benefit plans, which may include medical, dental, vision, group life, employee assistance program, short term and long term disability, and accidental death and dismemberment insurance, our 401(k) plan or other such benefit plans, in each case on the same basis as other employees. There were no special benefits or perquisites provided to any executive officer in 2006.

Executive Compensation Tables

The following table summarizes the compensation earned during the year ended December 31, 2006, by our Chief Executive Officer, our Chief Financial Officer and each other executive officer serving as such at the end of 2006  (collectively, “named executive officers”).

Summary Compensation Table

Name and Principal Position	Year		Salary ($)		Bonus ($)		Stock Awards ($) (1)			Option Awards ($) (1)			Non-Equity Incentive Plan Compensation ($)			All Other Compensation  ($)				Total ($)
Levy Gerzberg, Ph.D.		2006	$	437,500		—		$	216,291		$	2,238,193		$	398,600		$	2,594	(2)	$	3,293,178
President and Chief
Executive Officer
Karl Schneider		2006	$	275,000		—		$	72,095		$	737,398		$	167,500		$	2,522	(2)	$	1,254,515
Senior Vice President,
Finance and Chief
Financial Officer
Isaac Shenberg, Ph.D.		2006	$	210,000		—		$	64,887		$	752,359		$	109,300		$	36,953	(3)	$	1,173,499
Senior Vice President,
Business Development

(1)These amounts reflect the dollar amount recognized for financial statement reporting purposes for the year ended December 31, 2006 in accordance with FAS 123(R), with the exception that estimated forfeitures related to service-based vesting were disregarded in these amounts. Assumptions used in the calculation of this amount for purposes of our financial statements for the years ended December 31, 2004, 2005 and 2006 are included in Note 11 of Notes to Consolidated Financial Statements for the year ended December 31, 2006 included in our Annual Report on Form 10-K filed with the SEC. In 2006, no stock options were awarded to our named executive officers.

(2)Represents matching contributions to the named executive officer’s 401(k) plan, and premiums paid by Zoran with respect to term life insurance for the benefit of the named executive officer.

(3)Consists of premiums paid under an insurance/pension policy that covers certain severance and other benefits totaling $22,779, payments towards the lease of an automobile totaling $11,000 and continuing education contributions totaling $3,174.

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The following table provides certain information concerning grants of options to purchase our common stock made to the named executive officers during the year ended December 31, 2006. The table also provides information with regard to cash bonuses for 2006 under our performance-based, non-equity incentive plan to each named executive officer.

2006 Grants of Plan-Based Awards

	Grant		Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1)									All Other Stock Awards: Number of Shares of Stock		All Other Option Awards: Number of Securities Underlying		Exercise or Base Price of Option
Name	Date		Threshold ($)			Target ($)			Maximum ($)			or Units ($)		Options ($)		Awards ($/sh)
Levy Gerzberg, Ph.D.		N/A		$	350,000		$	437,500		$	525,500		—		—		n.a.
President and Chief Executive Officer
Karl Schneider		N/A		$	154,000		$	192,500		$	231,000		—		—		n.a.
Senior Vice President,
Finance and Chief Financial Officer
Isaac Shenberg, Ph.D.		N/A		$	100,800		$	126,000		$	151,200		—		—		n.a.
Senior Vice President,
Business Development

(1)In 2006 the compensation committee put in place a bonus plan under which the named executive officers could earn bonus payments if objectives and targets were met. The actual bonus amounts that were earned are reflected in the Summary Compensation Table above.

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The following table provides certain information concerning each unexercised stock option held by the named executive officers as of December 31, 2006.

Outstanding Equity Awards at December 31, 2006

	Option Awards									Stock Awards
Name	Number of Securities Underlying Unexercised Options (#) Exercisable		Number of Securities Underlying Unexercised Options (#) Unexercisable		Option Exercise Price ($)		Option Expiration Date			Number of Shares or Units of Stock That Have Not Vested (#)		Market Value of Shares or Units of Stock That Have Not Vested ($)
Levy Gerzberg, Ph.D.		29,218		—	$	13.5833		8/4/2009	(1)
President and		135,000		—	$	27.3333		7/28/2010	(1)
Chief Executive Officer		42,375		—	$	12.3600		8/9/2012	(1)
		304,679		—	$	24.7800		7/15/2013	(1)(5)
		304,679		—	$	24.7800		7/15/2013	(2)(6)
		60,000		120,000	$	13.5900		8/19/2015	(3)
		178,125		—	$	14.6900		8/9/2012	(1)
											27,500		$	400,950	(4)
Karl Schneider		45,000		—	$	27.3333		7/28/2010	(1)
Senior Vice President,		11,563		—	$	11.5200		9/19/2011	(1)
Finance and Chief		43,750		—	$	12.3600		8/9/2012	(1)
Financial Officer		100,000		—	$	24.7800		7/15/2013	(1)(7)
		100,000		—	$	24.7800		7/15/2013	(2)(8)
		20,000		40,000	$	13.5900		8/19/2015	(3)
		31,250		—	$	14.6900		8/9/2012	(1)
		8,437		—	$	15.4700		9/19/2011	(1)
											9,167		$	133,655	(4)
Isaac Shenberg, Ph.D.		20,625		—	$	13.5833		8/4/2009	(1)
Senior Vice President,		60,000		—	$	27.3333		7/28/2010	(1)
Business Development		40,500		—	$	10.3333		2/7/2011	(1)
		49,719		—	$	11.5200		9/19/2011	(1)
		82,500		—	$	12.3600		8/9/2012	(1)
		100,000		—	$	24.7800		7/15/2013	(1)(7)
		100,000		—	$	24.7800		7/15/2013	(2)(8)
		18,000		36,000	$	13.5900		8/19/2015	(3)
											8,250		$	120,285	(4)

(1)Option is immediately exercisable and vests over four years with 1/48th of the shares vesting each month.

(2)Option is immediately exercisable and vests over four years, 25% of the shares vesting after one year, and 1/48th of the shares vesting each month thereafter.

(3)Option vests over four years, with 25% vested and exercisable after one year, and 1/48th of the shares vesting each month thereafter.

(4)Restricted stock unit award, vesting over four years with 25% of the units vested after one year and 1/16th of the units vesting each quarter thereafter. Market value based on the closing price of Zoran common stock on December 29, 2006.

(5)44,432 shares were unvested as of December 31, 2006.

(6)120,602 shares were unvested as of December 31, 2006.

(7)14,583 shares were unvested as of December 31, 2006.

(8)39,583 shares were unvested as of December 31, 2006.

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The following table provides information with respect to options exercised during 2006 by the named executive officers.

2006 Option Exercises and Stock Vested

	Option Awards					Stock Awards
	Number of Shares Acquired on Exercise (#)		Value Realized on Exercise ($)			Number of Shares Acquired on Vesting (#)		Value Realized on Vesting ($)
Levy Gerzberg, Ph.D.		30,937		$	304,781
President and Chief		70,000		$	606,548
Executive Officer		36,000		$	387,720
		96,000		$	1,429,498
							2,500		$	39,400
							10,000		$	170,600
Karl Schneider		28,200		$	655,086
Senior Vice President,		22,500		$	306,151
Finance and Chief Financial		37,500		$	632,126
Officer		25,000		$	391,750
							833		$	13,128
							3,333		$	56,861
Isaac Shenberg, Ph.D.		14,482		$	340,037
Senior Vice President,		18,000		$	427,320
Business Development		5,518		$	130,997
		13,500		$	228,960
		9,000		$	158,040
							750		$	11,820
							3,000		$	51,180

Potential Payments upon Termination or Change-in-Control

Change-in-Control Agreements

Zoran maintains an Executive Retention and Severance Plan (“Retention Plan”), which provides for certain benefits for Zoran’s executive officers and certain key employees upon a change in control of Zoran. The Retention Plan provides that if, in the event of a change in control of Zoran, the company acquiring Zoran does not assume, continue or substitute for the outstanding options, stock appreciation rights or restricted stock units of the participants in the Retention Plan, then the vesting, exercisability and settlement of such awards will be accelerated in full immediately prior to, but conditioned upon, the consummation of the change in control. The Retention Plan provides for additional benefits if a participant is terminated without “cause” (as that term is defined in the Retention Plan) or resigns as a result of certain adverse circumstances described in the Retention Plan, within 18 months after a change in control. Upon such termination, a participant would be entitled to a lump sum payment in an amount equal to the aggregate amount of his monthly salary and prorated annual bonus for a period of 36 months in the case of the chief executive officer, 18 months in the case of other executive officers and nine months in the case of other eligible key employees, with the applicable annual bonus amount to be determined at the time of termination. The annual bonus amount will equal the greatest of (i) the aggregate of all bonuses earned by the participant (whether or not paid) for the fiscal year immediately preceding the fiscal year of the change in control, (ii) the aggregate of all bonuses earned by the participant (whether or not paid) for the fiscal year immediately preceding the fiscal year of the participant’s termination within 18 months following a change in control, or (iii) the aggregate of all targeted bonus the participant would

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have earned (assuming attainment of 100% of all applicable performance goals) for the fiscal year of the participant’s termination within 18 months following a change in control. In addition, Zoran will arrange to provide health (including medical and dental) benefits to the participant and his or her dependents and life insurance benefits to the participant for 36 months in the case of the chief executive officer, 18 months in the case of other executive officers and nine months in the case of other eligible key employees. Zoran may satisfy its obligation to provide continued health insurance benefits by paying that portion of a participant’s premiums under the Consolidated Omnibus Budget Reconciliation Act (i.e., COBRA) that exceed the amount of premiums that the participant would have been required to pay had he or she continued in employment. The Retention Plan also provides that, upon such termination of a participant within 18 months following a change in control, the vesting of outstanding equity awards of such participant will be accelerated in full. In addition, options and stock appreciation rights held by such participant will generally remain exercisable for a period of one year after such termination. Additionally, the Retention Plan provides that Zoran will indemnify the participant for claims or actions arising out of a participant’s services to Zoran and Zoran will also maintain directors’ and officers’ liability insurance for six years following the date of the participant’s termination. Finally, pursuant the Retention Plan, if the benefits described above or otherwise received by a participant in connection with a change in control would cause a participant to be subject to any excise tax under Section 4999 of the Internal Revenue Code of 1986, as amended, the payments under the Retention Plan will be automatically reduced if such reduction would result in a greater after-tax benefits to such participant.

Agreements Separate from a Change of Control

In December 1997, the Company issued an offer letter to Karl Schneider, pursuant to which, if Mr. Schneider’s employment with the Company is terminated, either by Mr. Schneider or Zoran, for a reason other than “cause,” as such term is defined in the offer letter, the other party to the letter is entitled to three months notice; provided, however, that if Mr. Schneider accepts an offer of employment from another company while still employed with Zoran, Mr. Schneider must notify Zoran within 12 hours of acceptance of such offer, and Zoran may terminate Mr. Schneider’s employment without providing advance notice.

Managers’ Insurance and Education Fund

We offer to make contributions on behalf of all of our full time Israeli employees, including our named executive officer who is resident in Israel, to a fund known as Managers’ Insurance. This fund provides a combination of retirement plan, insurance and severance pay benefits to the employee, giving the employee or his or her estate payments upon retirement, disability or death and securing the severance pay, if legally entitled, upon termination of employment. Each full-time employee is entitled to participate in the plan, and each employee who participates contributes an amount equal to 5% of his or her salary to the retirement plan and we contribute between 13.33% and 15.83% of his or her salary (consisting of 5% to the retirement plan, 8.33% to secure severance payments and up to 2.5% for disability insurance). Under the retirement plan component of the Managers’ Insurance, all of the contributions made by the company and by the employee are immediately vested and non-forfeitable upon contribution to the Managers’ Insurance.

We also provide all of our full-time Israeli employees, including our named executive officer who is resident in Israel, with an education fund benefit. We contribute to the education fund an amount equal to 7.5% of the employee’s monthly salary and the employee contributes an additional amount equal to 2.5% of his or her monthly salary. The amounts contributed up to the legally recognized limit are available to the employee on a tax-free basis after the lapse of six years from the initial contribution.

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Potential Payments

The following table describes the dollar value of vacation benefits to our named executive officers in the event they voluntarily terminate their employment or are terminated due to death or disability.

Name	Accrued Vacation
Levy Gerzberg		$	77,405
Karl Schneider		$	46,538
Issac Shenberg		$	40,000

The following table describes the dollar value of payments upon a termination of employment of our named executive officers in the event of their termination without cause or good reason (as is applicable) within 18 months following a change of control, assuming that termination took place on December 29, 2006.

Name	Salary		Perquisites and Benefits			Accrued Vacation			Bonus(1)
Levy Gerzberg	$	1,312,500		$	35,475		$	77,405	$	1,312,500
Karl Schneider	$	412,500		$	27,536		$	46,538	$	288,750
Isaac Shenberg	$	315,000		$	169		$	40,000	$	189,000

(1)For 2006, bonus means the greater of (i) the aggregate of all bonuses earned by the participant (whether or not actually paid) for 2005, (ii) the aggregate of all bonuses earned by the participant (whether or not actually paid) for 2005, or (iii) the targeted bonus the participant would have earned (assuming attainment of 100% of all applicable performance goals) for 2006.

The following table describes the dollar value of payments and benefits upon termination of employment of our named executive officers in the event of their termination without cause or good reason (as applicable) within 18 months following a change of control, assuming that termination took place on December 29, 2006 and that the price per share of our common stock was $14.58, the closing price of our stock as reported on the Nasdaq Global Select Market on that date.

Name	Acceleration of Equity Awards
Levy Gerzberg		$	410,400
Karl Schneider		$	136,805
Isaac Shenberg		$	123,120

DIRECTOR COMPENSATION

Cash Compensation

For serving as a member of our Board of Directors, each independent director receives an annual retainer of $20,000 and a fee of $2,000 for each Board meeting attended. Board committee chairs receive $2,500 per quarter, and other committee members receive $1,500 per quarter, and all committee members receive $750 for each committee meeting attended. In addition, Special Committee members received a quarterly fee of $2,500 plus $750 for each conference attended (regardless of whether it was a formal committee meeting) in 2006, with a cap of $10,000 per quarter.

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Stock Options

Upon appointment or election to the Board of Directors, each independent director receives an option to purchase 30,000 shares of common stock, vesting in four equal annual installments. Thereafter, on the date following each annual meeting of stockholders, each incumbent independent director receives an annual grant of an option to purchase 15,000 shares of our common stock, vesting in full on the day preceding the next annual meeting of stockholders, subject to the director’s continued service. All such options are effective and priced at the closing price of our common stock on the date of grant. These options expire after 10 years.

The following table provides information for 2006 regarding all compensation awarded to, earned by or paid to each person who served as a director for some portion or all of 2006. Other than as set forth in the table and the narrative that follows it, to date we have not paid any fees to or reimbursed any expenses of our directors, made any equity or non-equity awards to directors, or paid any other compensation to directors.

Name	Fees Earned or Paid in Cash ($)			Option Awards(1) ($)			All Other Compensation ($)		Total ($)
Levy Gerzberg, Ph.D.(2)		—			—			—	—
Uzia Galil		$	63,000		$	237,658		—	$	300,658
Raymond A. Burgess		$	76,250		$	166,494		—	$	242,744
James D. Meindl		$	52,500		$	237,658		—	$	290,158
James B. Owens, Jr.		$	67,250		$	277,067		—	$	344,317
David Rynne		$	74,500		$	237,658		—	$	312,158
Arthur B. Stabenow		$	80,500		$	237,658		—	$	318,158
Philip M. Young		$	57,000		$	237,658		—	$	294,658

(1)These amounts reflect the dollar amount of expense recognized for financial statement reporting purposes for the year ended December 31, 2006 in accordance with FAS 123(R), with the exception that estimated forfeitures related to service-based vesting were disregarded in these amounts. Assumptions used in the calculation of this amount for purposes of our financial statements for the years ended December 31, 2004, 2005 and 2006 are included in Note 11 of Notes to Consolidated Financial Statements for the year ended December 31, 2006 included in our Annual Report on Form 10-K. At December 31, 2006, the following directors had outstanding options to purchase the number of shares of Zoran common stock set forth following their respective names:  Mr. Galil, 111,000 shares; Mr. Burgess, 45,000 shares; Dr. Meindl, 103,800 shares; Mr. Owens, 75,000 shares; Mr. Rynne, 101,733 shares; Mr. Stabenow, 130,050 shares; Mr. Young, 111,000 shares.

(2)Dr. Gerzberg receives no compensation for serving as a member of the Board of Directors.

Director Stock Ownership Guidelines

The Board of Directors adopted stock ownership guidelines requiring minimum stock ownership levels for our non-employee directors. Holdings include Zoran shares from all sources, including personal and trust holdings, restricted stock, restricted stock units, stock options and stock appreciation rights. The current members of the Board of Directors are expected are each expected to own, by May 25, 2008, a number of shares of Zoran common stock that have a value at least equal to three times the annual cash retainer paid for Board service. New members of the Board of Directors have three years after their initial election or appointment to comply with this guideline.

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Compensation Committee Interlocks and Insider Participation

The members of the Compensation Committee are Mr. Galil, Mr. Stabenow and Dr. Meindl. Mr. Galil is Chairman of the committee. The Board of Directors has determined that each of the members of the Compensation Committee is independent for purposes of the Nasdaq rules. The Compensation Committee reviews the performance of our executive officers and approves their salaries and incentive compensation.

Compensation Committee Report

The members of the Compensation Committee have reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussion, the members of the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in the Annual Report on Form 10-K.

THE COMPENSATION COMMITTEE

Uzia Galil, Chairman

James Meindl

Arthur B. Stabenow

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Transactions with Related Persons

In Fiscal Year 2006, Zoran has not participated, and is not currently participating in, any transaction or proposed transaction in which the amount involved exceeded $120,000, and in which any related person had or will have a direct or indirect material interest.

Review, Approval or Ratification of Transactions with Related Persons

The Audit Committee reviews and approves all related person transactions.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers and directors and persons who beneficially own more than 10% of our common stock to file initial reports of beneficial ownership and reports of changes in beneficial ownership with the SEC. Such persons are required by SEC regulations to furnish us with copies of all Section 16(a) forms filed by such person.

Based solely on our review of such forms furnished to us and written representations from certain reporting persons, we believe that all filing requirements applicable to our executive officers, directors and greater-than-10% stockholders were complied with, except that one statement of changes in beneficial ownership of securities in connection with options granted to directors on June 23, 2006 was filed late for each of Messrs. Galil, Burgess, Meindl, Owens, Rynne, Stabenow and Young.

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REPORT OF THE AUDIT COMMITTEE

The Audit Committee oversees the quality of Zoran’s financial statements and financial reporting process on behalf of the Board of Directors. Management has the primary responsibility for the financial statements and the reporting process, including internal control systems. PricewaterhouseCoopers LLP, Zoran’s independent registered public accounting firm, is responsible for expressing an opinion as to the conformity of our audited financial statements with generally accepted accounting principles.

During the year ended December 31, 2006, the Audit Committee consisted of four directors, each of whom, in the judgment of the Board, is an “independent director” as defined in the listing standards for The Nasdaq Stock Market. The Audit Committee acts pursuant to a written charter that has been adopted by the Board of Directors.

The Audit Committee has discussed and reviewed with the independent registered public accounting firm all matters required to be discussed pursuant to Statement on Auditing Standards No. 61 (Communication with Audit Committees).

The Audit Committee has received from PricewaterhouseCoopers LLP a formal written statement describing all relationships between the independent registered public accounting firm and the Company that might bear on the auditors’ independence consistent with Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees), discussed with the auditors any relationships that may impact their objectivity and independence, and satisfied itself as to the auditors’ independence.

The Audit Committee has met with PricewaterhouseCoopers LLP, with and without management present, to discuss the overall scope of PricewaterhouseCoopers LLP’s audit, the results of its examinations, its evaluations of the Company’s internal controls and the overall quality of its financial reporting. The Audit Committee has reviewed and discussed with management and PricewaterhouseCoopers LLP the audited financial statements.

Based on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that our audited financial statements be included in our annual report on Form 10-K for the year ended December 31, 2006.

AUDIT COMMITTEE

Arthur B. Stabenow

James B. Owens, Jr.

Raymond A. Burgess

David Rynne

STOCKHOLDER PROPOSALS TO BE PRESENTED
AT NEXT ANNUAL MEETING

Stockholder proposals may be included in our proxy materials for an annual meeting so long as they are provided to us on a timely basis and satisfy the other conditions set forth in applicable SEC rules. For a stockholder proposal to be included in our proxy materials for the 2008 annual meeting, the proposal must be received at our principal executive offices, addressed to the General Counsel, not later than February 15, 2008. Should a stockholder proposal be brought before the 2008 annual meeting, regardless of whether it is included in our proxy materials, our management proxy holders will be authorized by our proxy form to vote for or against the proposal, in their discretion, if we do not receive notice of the proposal, addressed to the General Counsel at our principal executive offices, prior to the close of business on May 13, 2008.

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TRANSACTION OF OTHER BUSINESS

At the date of this Proxy Statement, the Board of Directors knows of no other business that will be conducted at the 2007 annual meeting other than as described in this Proxy Statement. If any other matter or matters are properly brought before the meeting, or any adjournment or postponement of the meeting, it is the intention of the persons named in the accompanying form of proxy to vote the proxy on such matters in accordance with their best judgment.

	By order of the Board of Directors
	Levy Gerzberg, Ph.D.
	President and Chief Executive Officer
Sunnyvale, California
June 13, 2007

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ZORAN CORPORATION

Proxy for the Annual Meeting of Stockholders

To be held on July 18, 2007

Solicited by the Board of Directors

The undersigned hereby appoints Levy Gerzberg, Ph.D. and Karl Schneider, and each of them, with full power of substitution, to represent the undersigned and to vote all of the shares of stock in Zoran Corporation, a Delaware corporation (the “Company”), which the undersigned is entitled to vote at the Annual Meeting of Stockholders of the Company to be held at the Company’s principal executive offices, 1390 Kifer Road, Sunnyvale, California 94086 on July 18, 2007, at 9:00 a.m. local time, and at any adjournment or postponement thereof (1) as hereinafter specified upon the proposals listed on the reverse side and as more particularly described in the Proxy Statement of the Company dated June 14, 2007 (the “Proxy Statement”), receipt of which is hereby acknowledged, and (2) in their discretion upon such other matters as may properly come before the meeting.

THE SHARES REPRESENTED HEREBY SHALL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, SUCH SHARES SHALL BE VOTED FOR PROPOSALS 1 AND 2.

CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE

o Please mark
votes as in
this example

A vote FOR the following proposals is recommended by the Board of Directors:

1.To elect the following eight (8) persons directors to hold office until their respective successors are elected and qualified:

o       FOR all nominees listed	o       Levy Gerzberg, Ph.D.
below (except as marked	o       Uzia Galil
to the contrary below.)	o       Raymond A. Burgess
	o       James D. Meindl, Ph.D.
o       WITHHOLD AUTHORITY	o       James B. Owens, Jr.
to vote for all nominees	o       David Rynne
listed below.	o       Arthur B. Stabenow
	o       Philip M. Young

(INSTRUCTION: To withhold authority to vote for any individual nominee, strike a line through that nominee’s name in the list below.)

		FOR	AGAINST	ABSTAIN
2.	To ratify the appointment of PricewaterhouseCoopers LLP as independent registered public accounting firm for the Company for the fiscal year ending December 31, 2007.	o	o	o

WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO SIGN AND PROMPTLY MAIL THIS PROXY IN THE RETURN ENVELOPE SO THAT YOUR STOCK MAY BE REPRESENTED AT THE MEETING.

MARK HERE FOR ADDRESS
CHANGE AND
NOTE AT LEFT o MARK HERE IF YOU PLAN
TO ATTEND
THE
MEETING o

Please sign here. If shares of stock are held jointly, both or all of such persons should sign. Corporate or partnership proxies should be signed in full corporate or partnership name by an authorized person. Persons signing in a fiduciary capacity should indicate their full titles in such capacity.

Signature:	Date:
Signature:	Date: