<Page>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
<Table>
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
</Table>
STANDARD MICROSYSTEMS CORPORATION
-------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
<Table>
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
----------------------------------------------------------
(2) Aggregate number of securities to which transaction
applies:
----------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
----------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------
(3) Filing Party:
----------------------------------------------------------
(4) Date Filed:
----------------------------------------------------------
</Table>
<Page>
STANDARD MICROSYSTEMS CORPORATION
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JULY 10, 2002
------------------------
To the Stockholders of
STANDARD MICROSYSTEMS CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Standard
Microsystems Corporation ("SMSC") will be held on July 10, 2002, at 10:00 A.M.,
at Chase Conference Center, 270 Park Avenue, 11th Floor, New York, New York for
the following purposes:
(1) Elect directors;
(2) Adopt and approve the 2002 Stock Option and Restricted Stock Plan;
(3) Ratify the selection of PricewaterhouseCoopers LLP as independent
public accountants for SMSC for the fiscal year ending February 28, 2003;
and
(4) Transact such other business as may properly come before the meeting
or any adjournment thereof.
In accordance with the bylaws of SMSC, the board of directors has fixed the
close of business on May 17, 2002 as the record date for the determination of
the stockholders entitled to notice of and to vote at the meeting.
By order of the Board of Directors,
/s/ David C. Fischer
DAVID C. FISCHER
SECRETARY
Dated: May 31, 2002
AFTER READING THE FOLLOWING PROXY STATEMENT, PLEASE SEE THE ENCLOSED PROXY
CARD FOR DETAILS ABOUT VOTING BY PHONE OR BY INTERNET. HAVE YOUR CONTROL
NUMBER, SET FORTH ON THE ENCLOSED PROXY, AVAILABLE WHEN YOU VOTE BY PHONE OR
BY INTERNET. TO VOTE BY MAIL, PLEASE SIGN AND MAIL THE ENCLOSED PROXY IN THE
ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<Page>
STANDARD MICROSYSTEMS CORPORATION
80 ARKAY DRIVE
HAUPPAUGE, NEW YORK 11788
------------------------
PROXY STATEMENT
------------------------
ANNUAL MEETING OF STOCKHOLDERS, JULY 10, 2002
This statement is furnished in connection with the solicitation of proxies
by the board of directors of Standard Microsystems Corporation, a Delaware
corporation ("SMSC"), for use at the annual meeting of stockholders of SMSC to
be held on July 10, 2002 and at any adjournment thereof. The approximate date on
which this statement and the accompanying proxy are first being mailed to
stockholders is May 31, 2002.
ELECTION OF DIRECTORS
At the annual meeting, two directors are to be elected for terms expiring in
2005.
NOMINEES OF THE BOARD OF DIRECTORS
The persons named in the proxy hereby solicited intend to vote for the
election as directors the two nominees of the board who are named below, unless
otherwise specified in the proxy. Should any nominee become unable to accept
nomination or election (which is not anticipated), the persons designated as
proxies intend to vote for the election of any remaining nominee and for any
substitute nominee as the board may designate.
Set forth below is certain information with respect to each nominee and each
other person whose term as a director will continue after the annual meeting:
<Table>
<Caption>
OTHER POSITIONS WITH SMSC, PRINCIPAL OCCUPATION, CERTAIN OTHER DIRECTOR
NAME DIRECTORSHIPS AND AGE AS OF MAY 17, 2002 SINCE
- ---- -------------------------------------------------------------- ----------
NOMINEES TO SERVE UNTIL THE 2005 ANNUAL MEETING:
Steven J. Bilodeau.......... Chairman, President and Chief Executive Officer; 43 1999
Peter F. Dicks.............. Corporate Director; Directorships include, among others, 1992; also
Enterprise Capital Trust, Polar Capital Technology Trust, 1976-1991
Foreign & Colonial Ventures Trust, Sportingbet.com (UK) Plc,
Gartmore Fledging Index Trust; 59
DIRECTORS TO SERVE UNTIL THE 2004 ANNUAL MEETING:
James R. Berrett............ Retired corporate executive; until January 1996, Office of the 1996
Chairman and Chief Operating Executive of NEC Corporation,
manufacturer of computers, telecommunications products, and
semiconductors; 62
Andrew M. Caggia............ Senior Vice President and Chief Financial Officer; 53 2001
Ivan T. Frisch.............. Executive Vice President and Provost, Polytechnic University; 1992
64
DIRECTORS CONTINUING TO SERVE UNTIL THE 2003 ANNUAL MEETING:
Robert M. Brill............. General Partner, Newlight Associates, L.P., General Partner, 1994
Newlight Associates II, L.P.; General Partner, Poly Ventures
II, L.P.; venture capital investment in high technology; 55
James J. Boyle.............. Chairman and President, Cardinal Resources, Inc., independent 2000
oil and gas producer; Director, The New Ireland Fund, Inc.;
Trustee, Alvernia College; Councilor, American Geographical
Society; 62
</Table>
<Page>
The principal occupation for the last five years of each nominee and
director continuing in office is stated above, except that (1) Mr. Bilodeau was
employed by Robotic Vision Systems Inc. ("RVSI") as President of the
Semiconductor Equipment Group, which supplies inspection equipment to the
semiconductor industry, during 1997 and 1998 and (2) Mr. Caggia was employed as
Senior Vice President and Chief Financial Officer of General Semiconductor,
Inc., between July 1997 and February 2000 and prior thereto was Senior Vice
President of Finance of General Instrument Corporation's Power Semiconductor
Division.
COMMITTEES AND MEETINGS OF THE BOARD
SMSC's board of directors held 14 meetings during the last fiscal year. Its
audit committee held six meetings, its compensation committee held three
meetings, and its corporate governance committee did not meet during the last
fiscal year. The members of the audit committee are Robert M. Brill, Peter F.
Dicks, and Ivan T. Frisch; the members of the compensation committee are James
R. Berrett, Peter F. Dicks, and Ivan T. Frisch; and the members of the corporate
governance committee are James R. Berrett, James J. Boyle, and Robert M. Brill.
The compensation committee makes recommendations to the board with respect
to the compensation of SMSC's officers. Members of the compensation committee
also constitute the committees that administer SMSC's employee stock option and
restricted stock plans.
Among other responsibilities, the corporate governance committee recommends
criteria and qualifications for nominations for director, identifies possible
candidates, and recommends to the board for nomination those whom the committee
deems best qualified. The corporate governance committee will consider
recommendations for director nominations made by stockholders. Stockholder
recommendations should be in writing and mailed to the Secretary of SMSC.
AUDIT COMMITTEE REPORT
The audit committee of the board of directors is composed of three
independent directors, as that term is defined in the listing standards of the
National Association of Securities Dealers, and operates under a written charter
adopted by the board of directors. The audit committee reviews the adequacy of
its charter at least annually, or more frequently as circumstances dictate, and
a copy of the committee's current charter was most recently included in the
Company's proxy statement for its July 11, 2001 Annual Meeting of Stockholders.
The primary function of the audit committee is to assist the board of
directors in its oversight responsibilities on matters relating to the Company's
financial reporting, systems of internal controls, and auditing. The audit
committee provides advice, guidance and direction to management and to the
Company's independent auditors, using information shared through a free and open
line of communication among the committee, management and the independent
auditors and, as appropriate, initiates inquiries into various aspects of the
Company's financial affairs. The committee meets each quarter with management
and the independent auditors to review the Company's financial results before
such results are publicly released. The audit committee is also responsible for
considering and recommending the appointment of, and reviewing fee arrangements
with, the Company's independent auditors.
Management is responsible for preparing the Company's financial statements,
and the independent auditors are responsible for auditing those financial
statements. Although each member of the audit committee is financially literate,
as the board of directors interprets that qualification, they are not
professional accountants or auditors. Their responsibilities do not include
planning or conducting audits or to determine that the Company's financial
statements are complete and accurate and are presented in accordance with
generally accepted accounting principles. The committee's role also does not
include
2
<Page>
a professional evaluation of the quality of the audits performed by the
independent auditors or that those audits were performed using generally
accepted auditing standards.
In fulfilling its oversight responsibilities, the audit committee reviewed
and discussed the Company's financial statements for the fiscal year ended
February 28, 2002 with management and with Arthur Andersen LLP, the Company's
independent auditors for fiscal 2002. The audit committee also discussed and
reviewed with Arthur Andersen LLP the matters required to be discussed by
Statement on Auditing Standards No. 61, "Communications with audit committees",
as amended. This review included a discussion of the independent auditors'
judgments as to the quality, not just the acceptability, of the Company's
accounting principles, and such other matters that generally accepted auditing
standards require to be discussed with the audit committee. The audit committee
also received the written disclosures and the letter from Arthur Andersen LLP
required by Independence Standards Board Standard No. 1, "Independence
Discussion with audit committees", and has discussed with Arthur Andersen LLP
their independence, including the compatibility of non-audit services with
Arthur Andersen LLP's independence.
Based upon the audit committee's review and the discussions noted above, the
audit committee recommended to the Board, and the Board approved, the inclusion
of the audited financial statements in the Company's Annual Report on Form 10-K
for the fiscal year ended February 28, 2002 for filing with the Securities and
Exchange Commission.
The audit committee also recommended, and the board approved, subject to
shareholder ratification, the appointment of PricewaterhouseCoopers LLP as the
Company's independent auditors for fiscal 2003.
By the audit committee:
Robert M. Brill Peter F. Dicks Ivan T. Frisch
3
<Page>
VOTING SECURITIES OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The management of SMSC has been informed that, as of May 17, 2002, the
persons and groups identified in the table below, including all directors,
nominees and executive officers, owned beneficially, within the meaning of
Securities and Exchange Commission ("SEC") Rule 13d-3, the shares of SMSC common
stock reflected in such table. As of May 17, 2002, each director, nominee or
executive officer of SMSC disclaims beneficial ownership of securities of any
subsidiary of SMSC. Except as otherwise noted, the named beneficial owner claims
sole investment and voting power as to the securities reflected in the table.
<Table>
<Caption>
NUMBER OF PERCENT
BENEFICIAL OWNER SHARES OF CLASS
- ------------------------------------------------------ ---------- --------
James R. Berrett...................................... 45,422(1) *
Steven J. Bilodeau.................................... 325,517(2) 1.97
Robert M. Brill....................................... 36,969(3) *
James J. Boyle........................................ 178,664(4) 1.10
Andrew M. Caggia...................................... 130,332(5) *
Peter F. Dicks........................................ 79,887(6) *
Ivan T. Frisch........................................ 71,489(7) *
George W. Houseweart.................................. 118,330(8) *
Eric M. Nowling....................................... 82,834(9) *
All directors and executive officers as a group
(9 persons)......................................... 1,069,444(10) 6.32
Citigroup Inc.
153 East 53rd Street
New York, NY 10043
and
Salomon Brothers Holding Company Inc., Salomon Smith
Barney Inc., and Salomon Smith Barney Holdings Inc.
388 Greenwich Street
New York, NY 10013.................................. 3,819,365(11) 22.58
Dimensional Fund Advisors Inc.
1299 Ocean Ave.
11th Floor
Santa Monica, CA 90401.............................. 1,097,500(12) 6.49
Intel Corporation
2200 Mission College Boulevard
Santa Clara, CA 95052-8119.......................... 1,542,506(13) 9.12
</Table>
- ------------------------
* Less than 1%.
(1) Includes 32,333 shares covered by currently exercisable options and 5,589
phantom share units pursuant to SMSC's Plan for Deferred Compensation in
Common Stock for Outside Directors (the "Deferred Compensation Plan").
(2) Includes 301,250 shares covered by currently exercisable options.
(3) Includes 20,333 shares covered by currently exercisable options and 11,179
phantom share units pursuant to the Deferred Compensation Plan.
(4) Includes shares held by various entities of which Mr. Boyle is the sole
owner or beneficiary, 19,229 shares covered by currently exercisable
options, and 3,619 phantom share units pursuant to the Deferred
Compensation Plan.
(5) Includes 112,500 shares covered by currently exercisable options.
(6) Includes 45,332 shares covered by currently exercisable options and 5,589
phantom share units pursuant to the Deferred Compensation Plan.
(7) Includes 45,332 shares covered by currently exercisable options and 5,589
phantom share units pursuant to the Deferred Compensation Plan.
4
<Page>
(8) Includes 4,600 shares owned jointly with spouse, 1,000 shares owned by
spouse, and 43,049 shares covered by currently exercisable options.
(9) Includes 66,086 shares covered by currently exercisable options.
(10) Includes 685,444 shares covered by currently exercisable options and 31,565
phantom share units pursuant to the Deferred Compensation Plan.
(11) Voting power and investment power are shared as to all shares. Information
is furnished in reliance on Amendment No. 9 to Schedule 13G dated
February 4, 2002 of the named persons, filed with the SEC.
(12) Information is furnished in reliance on Amendment No. 1 to Schedule 13G
dated January 30, 2002 of the named person, filed with the SEC.
(13) Information is furnished in reliance on Amendment No. 1 to Schedule 13D
dated March 22, 2000 of the named person, filed with the SEC.
EXECUTIVE COMPENSATION
The following table sets forth all plan and non-plan compensation for
services rendered by the named executive officers in all capacities to SMSC and
its subsidiaries during the three years ended February 28, 2002.
SUMMARY COMPENSATION TABLE
<Table>
<Caption>
LONG-TERM
COMPENSATION
AWARDS
------------------------------
SHARES OF
ANNUAL COMPENSATION(1) STOCK
------------------------------ RESTRICTED UNDERLYING
FISCAL SALARY BONUS STOCK OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR ($) ($) AWARDS($)(2) GRANTED(#) COMPENSATION($)(3)
- ----------------------------------- -------- -------- -------- ------------ ----------- ------------------
Steven J. Bilodeau................. 2002 410,000 574,000 -0- 125,000 26,021
Chairman, Chief Executive Officer 2001 410,000 328,000 123,000 120,000 317,563
and President 2000 371,000 280,000 -0- 280,000 163,804
Andrew M. Caggia................... 2002 250,000 187,500 -0- 50,000 19,062
Senior Vice President 2001 250,000 125,000 31,250 -0- 18,130
and Chief Financial 2000 9,615 50,000 -0- 200,000 205,804
Officer
George W. Houseweart............... 2002 263,670 20,000 10,000 5,000 12,175
Senior Vice President and General 2001 247,722 20,007 164,538 35,000 15,294
Counsel 2000 239,700 37,512 12,600 40,000 4,247
Eric M. Nowling.................... 2002 171,600 13,000 5,000 4,000 16,356
Vice President and Controller 2001 171,600 8,000 28,530 -0- 15,253
2000 171,600 -0- 15,000 50,000 4,404
</Table>
- ------------------------
(1) Excludes perquisites and other personal benefits aggregating less than the
lesser of $50,000 or 10% of the total salary and bonus reported for the
named person.
(2) Restricted stock awards vest on each of the first and second anniversaries
of the grant date, to the extent of one-quarter of the shares awarded, and
on the third anniversary as to the remaining balance. Holders of restricted
stock awards are entitled to dividends to the same extent as owners of
unrestricted shares. The number of shares granted to each named executive
officer as restricted stock awards are as follows:
<Table>
<Caption>
2002 2001 2000
-------- -------- --------
Steven J. Bilodeau.......................................... -- 8,339 0
Andrew M. Caggia............................................ -- 2,119 0
George W. Houseweart........................................ 446 8,431 1,694
Eric M. Nowling............................................. 223 1,881 2,017
</Table>
5
<Page>
As of February 28, 2002, the market value of each named executive officer's
holdings of restricted stock was as follows: Steven Bilodeau, $138,427,
Andrew Caggia, $35,175, George W. Houseweart, $128,069, Eric Nowling,
$46,082.
(3) Reflects SMSC contributions under SMSC's Incentive Savings and Retirement
Plan, automobile allowances, and life insurance.
Mr. Bilodeau and SMSC have entered into an employment agreement providing
for his employment as President and Chief Executive Officer of SMSC until March
18, 2003. Mr. Bilodeau's current annual base salary is $410,000.
Mr. Caggia and SMSC have entered into an employment agreement providing for
his employment as Senior Vice President and Chief Financial Officer of SMSC
until February 14, 2003. Mr. Caggia's current annual base salary is $250,000.
These employment agreements also provide for:
- automatic extensions for one-year periods after the initial term, unless
either party elects not to extend the term by providing at least six
months prior notice to the other;
- bonuses determined in accordance with SMSC's executive incentive
compensation policy described below;
- early termination by the executive following a change in control of SMSC,
and, in the case of Mr. Bilodeau, if SMSC's stockholders fail to elect him
as a director of SMSC;
- upon termination of executive's employment by SMSC other than for cause,
or by the executive following a change in control, immediate vesting of
certain stock options, stock grants and deferred compensation, payment of
an amount equal to one year's base salary plus bonus, and paid coverage
for life and group health insurance for 18 months or until the executive
sooner obtains full-time employment;
- such benefits as are provided generally to SMSC's senior executive
officers;
- vesting under the below described Executive Retirement Plan of 50% after
five years and the remaining 50% ratably over the next five years; and
- customary provisions regarding assignment of inventions, trade secrets,
works of authorship, nondisclosure and noncompetition by the executive.
For recent fiscal years, SMSC implemented plans to pay certain of its
executives, including executive officers named in the preceding table, incentive
compensation, based on financial performance of SMSC and achievement of
strategic goals, as determined by the compensation committee of the board of
directors. Part of such incentive compensation was paid in the form of
restricted stock awards, as set forth in the table. The board of directors has
authorized a similar arrangement for fiscal 2003.
Under SMSC's Executive Retirement Plan, officers, including executive
officers, whose employment terminates, generally after 10 years of continuous
service or a change in control or by reason of total and permanent disability
(or the beneficiary of a deceased participant), are entitled to receive, for 10
years, in equal monthly installments, beginning at age 65 or such officer's
later retirement date, an annual benefit equal to 35% of the participant's Base
Annual Salary, as defined in the plan. As of March 1, 2002, the annual benefit
that would be payable to each of the executive officers named in the table on
reaching age 65 is as follows (assuming full vesting in the case of Messrs.
Bilodeau and Caggia): Steven J. Bilodeau, $138,950; Andrew M. Caggia, $87,500;
George W. Houseweart $87,627; Eric M. Nowling, $60,060.
In case of a change in control of SMSC, each of the named executive officers
in entitled to a "gross-up" payment in amount sufficient to offset the effect of
any excise tax incurred in accordance with IRS Code Section 280G.
6
<Page>
The following table sets forth information regarding individual grants of
stock options to the named executive officers during the 2002 fiscal year.
Options generally become exercisable in four or five equal annual installments
commencing on the first anniversary of grant and may be exercised cumulatively
at any time before expiration.
OPTION GRANTS IN LAST FISCAL YEAR
<Table>
<Caption>
POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED
NUMBER OF SHARES SUBJECT ANNUAL RATES OF STOCK
SECURITIES TO OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM
OPTIONS GRANTED EMPLOYEES IN PRICE EXPIRATION -----------------------
EXECUTIVE OFFICER (# OF SHARES) FISCAL YEAR ($ PER SHARE) DATE 5%($) 10%($)
- -------------------------------- --------------- -------------- ------------- ---------- ---------- ----------
Steven J. Bilodeau.............. 125,000 10.98 14.75 4/4/11 1,159,524 2,938,463
Andrew M. Caggia................ 50,000 4.39 14.75 4/4/11 463,810 1,175,385
George W. Houseweart............ 5,000 .44 14.49 4/23/11 45,563 115,467
Eric M. Nowling................. 4,000 .35 14.49 4/23/11 36,451 92,373
</Table>
The following table sets forth aggregate information concerning stock option
exercises during fiscal 2002 by each of the named executive officers, together
with the year-end values of unexercised options.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<Table>
<Caption>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR-END(#) AT FISCAL YEAR-END($)
SHARES ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------- --------------- ----------- ----------- ------------- ----------- -------------
Steven J. Bilodeau........... -0- -- 170,000 355,000 1,375,530 1,757,200
Andrew M. Caggia............. -0- -- 100,000 150,000 291,300 383,800
George W. Houseweart......... -0- -- 34,299 77,500 193,556 435,201
Eric M. Nowling.............. -0- -- 56,284 63,002 402,909 537,354
</Table>
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth aggregate information regarding our equity
compensation plans in effect as of February 28, 2002:
<Table>
<Caption>
NUMBER OF SECURITIES
WEIGHTED-AVERAGE REMAINING AVAILABLE FOR
NUMBER OF SECURITIES EXERCISE PRICE OF FUTURE ISSUANCE UNDER
TO BE ISSUED UPON OUTSTANDING EQUITY COMPENSATION
EXERCISE OF OPTIONS, PLANS (EXCLUDING
OUTSTANDING OPTIONS, WARRANTS AND SECURITIES REFLECTED IN
WARRANTS AND RIGHTS RIGHTS COLUMN (A))
PLAN CATEGORY (A) (B) (C)
- ------------- -------------------- ----------------- -----------------------
Equity compensation plans approved by
security holders....................... 4,476,267 $12.62 1,506,519
Equity compensation plans not approved by
security holders....................... -0- -0- -0-
========== ====== ==========
Total.................................. 4,476,267 $12.62 1,506,519
</Table>
7
<Page>
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The compensation committee of the board of directors is composed entirely of
outside directors and is responsible for developing and making recommendations
to the board of directors with respect to compensation of SMSC's officers,
directors and certain other employees, as well as any bonuses for officers.
The committee has developed and implemented compensation programs that seek
to enhance the profitability of SMSC and improve stockholder value by closely
aligning the financial interests of SMSC's senior management team with those of
its stockholders. A significant part of each executive's compensation depends on
appreciation of SMSC's common stock. Each executive's compensation is composed
of two elements: (1) current compensation composed of base salary and cash
bonuses and (2) long-term compensation tied directly to stockholder value,
composed of restricted stock awards and stock options.
Base pay is designed to be competitive with salary levels at similar
industry companies for equivalent positions. From time to time, the committee
utilizes independent consultants or survey information to ensure that executive
salaries are within a competitive range. Each executive is eligible to receive
an annual incentive bonus.
Long-term compensation is tied directly to stockholder return. Under the
current program, executives have typically received stock options that vest over
four or five years and restricted stock awards that vest over either three or
four years. The purposes of this program are to motivate SMSC's executives to
enhance SMSC's market capitalization and hence, its stockholders' return, and to
create an incentive for the executive to remain with SMSC.
Base salary and additional compensation for certain of the named executive
officers are fixed by employment agreement, as described following the Summary
Compensation Table.
Section 162(m) of the Internal Revenue Code limits to $1,000,000 the amount
of "applicable employee remuneration" deductible by SMSC for "covered" employees
for any taxable year. No policy has been adopted with respect to Section 162(m)
of the Code for executive officers, since their "applicable employee
remuneration" levels are not expected to exceed $1,000,000. It is the
committee's policy to the extent feasible, to keep compensation within the
deductible limits.
By the compensation committee: James R. Berrett Peter F. Dicks Ivan T. Frisch
8
<Page>
PERFORMANCE GRAPH
The following line graph compares cumulative total stockholder return data
as compiled by Research Data Group, Inc. for SMSC common stock, the Nasdaq Stock
Market (US Companies), the Philadelphia Semiconductor Index and the Nasdaq
Computer Manufacturers Stocks, assuming an investment of $100 in each in
February 1997 and the monthly reinvestment of dividends. SMSC has included the
NASDAQ Computer Manufacturer's Index in the performance graph since the
performance graph was first required. Over the last four to five years, SMSC has
concentrated on being a worldwide designer and supplier of integrated circuits
used in personal computers, peripherals and as embedded products. Therefore,
SMSC's management believes that changing its peer group index from the NASDAQ
Computer Manufacturer's index to the Philadelphia Semiconductor Index is now
appropriate. The performance shown on the graph is not necessarily indicative of
future performance.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<Table>
<Caption>
SMSC NASDAQ MARKET PHILADELPHIA SEMINCONDUCTOR NASDAQ COMPUTER MANUFACTURERS
2/28/97 $100.00 $100.00 $100.00 $100.00
2/27/98 $111.76 $136.64 $120.73 $159.57
2/26/99 $97.06 $177.96 $159.71 $291.52
2/29/00 $188.98 $363.60 $370.12 $701.66
2/28/01 $184.56 $165.62 $174.23 $273.27
2/28/02 $195.29 $134.68 $170.93 $192.85
</Table>
Pursuant to SEC rules, the material under the caption Audit Committee Report
and under the caption Board Compensation Committee Report on Executive
Compensation through and including the line graph and related explanatory
material is not to be deemed either "soliciting material" or "filed" with the
SEC. It is specifically excluded from any material incorporated by reference in
SMSC filings under the Securities Act of 1933 or Securities Exchange Act of
1934, whether such filings occur before or after the date of this proxy
statement and notwithstanding anything to the contrary set forth in any such
filing.
------------------------
9
<Page>
DIRECTOR COMPENSATION
Directors who are not officers of SMSC receive an annual basic retainer of
$20,000 and committee members receive an additional annual retainer of $2,000
per committee.
SMSC's Plan for Deferred Compensation in Common Stock for Outside Directors
provides for deferred payment at the election of the director, of 100%, or 50%
of such director's annual retainer and each committee retainer to which the
director is entitled, in shares of SMSC common stock. The deferred amount is
payable in cash or stock, at the election of the director, when the director
ceases to be a director for any reason, or in cash only, upon the occurrence of
a change in control of SMSC.
Under SMSC's 2001 Director Stock Option Plan, options to purchase an
aggregate of 250,000 shares of SMSC common stock are authorized for grant to
directors who are not employees of SMSC or any subsidiary of SMSC. Pursuant to
the plan, each eligible director, upon initial election, automatically is
granted a vesting option to purchase 36,000 shares. Vesting options become
exercisable to the extent of one-third of the number of shares granted on each
of the first three anniversaries of the date of grant. Each eligible director
incumbent for at least three years automatically is granted annually an
immediately exercisable option to purchase 12,000 shares (18,000, in the case of
the audit committee chairman, and 13,000 in the case of each other audit
committee member). Following the July 2002 annual grant, options for one-fourth
of such amounts will be granted quarterly. The per share exercise price of each
option equals the fair market value of a share of the common stock on the date
of grant. In general, options are not transferable. Options expire ten years
after grant, or, if earlier, three years after the holder ceases to be a
director. The similar 1994 Directors Stock Option plan has terminated, except
with respect to outstanding options.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In 1987, SMSC and Intel entered into an agreement providing for, among other
things, a broad, worldwide, non-exclusive patent cross-license between the two
companies, covering manufacturing processes and products, thereby providing each
company access to the other's current and future patent portfolios.
In March 1997, SMSC and Intel entered into a Common Stock and Warrant
Purchase Agreement whereby Intel purchased 1,542,606 newly issued shares of
SMSC's common stock for $9.50 per share, or $14.7 million. So long as Intel
continues to hold its initial investment, the agreement provides Intel a right
of first refusal upon certain corporate transactions, including proposed sales
of all or substantially all of the assets of SMSC, certain sales of common stock
of SMSC and certain other transactions which would result in or relating to a
change in control of SMSC. The agreement also provides Intel certain other
rights, including demand registration rights with respect to shares acquired
under the agreement, a right for Intel to designate a representative to serve on
SMSC's board of directors, and antidilution rights. The agreement also imposes
certain restrictions upon Intel, including limitations, in certain
circumstances, on Intel's ability to acquire additional shares of SMSC's common
stock (referred to as a standstill arrangement), and restrictions on the
transfer of shares acquired pursuant to the agreement.
In September 1999, SMSC and Intel announced a technology exchange agreement
that would allow SMSC to accelerate SMSC's ongoing development of
Intel-compatible chipset products. Chipset products are integrated circuits that
communicate with the microprocessor (CPU) and assist in controlling the flow of
information within a personal computer or similar application. The agreement
provides, among other things, for Intel to transfer certain intellectual
property related to Intel chipset architectures to SMSC, and provides SMSC the
opportunity to supply Intel chipset components along with its own chipset
solutions. The agreement also limits SMSC's rights regarding Northbridges and
Intel Architecture Microprocessors under the 1987 agreement.
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The agreement includes provisions for its termination under certain
circumstances. Under one such provision, beginning in the third year of the
agreement and annually thereafter, SMSC can elect to terminate the agreement
should SMSC not achieve certain minimum chipset revenue amounts set forth in the
agreement, unless Intel pays SMSC an amount equal to the shortfall between the
minimum revenue amount and the actual revenue for that period. Should the
agreement terminate under this provision, the limitations imposed by the
agreement on the Northbridge rights under the 1987 agreement terminate
immediately, and the limitations imposed by the agreement on the microprocessor
rights under the 1987 agreement terminate 12 months later. Should Intel elect to
make the revenue amount shortfall payment, the provisions of the agreement will
remain in force for the subsequent 12-month period, for which another minimum
revenue amount will be applicable, and at the end of which a similar termination
event may arise. Minimum chipset revenue amounts are $30 million, $45 million,
and $60 million for the 12 months ending September 21, 2001, 2002, and 2003,
respectively, and increase by 10% for each succeeding 12-month period following
2003, until expiration of the agreement in July 2007.
In September 2001, SMSC notified Intel of a chipset revenue shortfall of
approximately $29.6 million for the 12 months ended September 21, 2001. In
November 2001, SMSC received a $29.6 million payment from Intel which is
reported as licensing revenue on SMSC's consolidated statements of operations
for the year ended February 28, 2002. There can be no assurance whatsoever that
Intel will elect to pay any future revenue shortfalIs to SMSC under the
Agreement.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on a review of copies of reports and written representations
furnished to SMSC by its executive officers and directors, SMSC believes that
all reports required to be filed by its executive officers and directors in the
2002 fiscal year were filed timely.
2002 STOCK OPTION AND RESTRICTED STOCK PLAN
Following the acquisition of Gain Technology Corporation as announced on
April 29, 2002, SMSC expects to grant options and restricted stock awards
covering approximately 750,000 to 800,000 shares to Gain employees who are
expected to play a critical role in the development of new products that will
make a significant contribution to SMSC's future revenue growth. These grants
will greatly reduce the remaining capacity of SMSC's existing 2001 Stock Option
and Restricted Stock Plan. SMSC's board of directors has, therefore adopted the
2002 Stock Option and Restricted Stock Plan, subject to stockholder approval.
The board of directors believes that this new plan is desirable to preserve
SMSC's ability to attract and retain executives and other key employees and
consultants of outstanding ability.
Under the plan, awards of restricted common stock and options to purchase
common stock covering not more than 1,200,000 shares in total may be granted
from time to time to salaried employees of SMSC or any subsidiary of SMSC,
including executive officers, or individuals, excluding nonemployee directors,
who are consultants to SMSC.
The number of shares subject to options granted to a single individual
during any fiscal year may not exceed 120,000. All full-time salaried employees,
approximately 430 persons, including four executive officers, are expected to be
eligible to participate in the plan.
The plan authorizes awards, to management employees, of shares of SMSC stock
that may not be transferred, and are subject to forfeiture upon termination of
employment with SMSC, until such restrictions lapse. Unless the committee
otherwise determines in respect of a particular award, the restrictions lapse as
to 25% of the shares awarded on each of the first and second anniversaries of
the date of grant, and the restrictions lapse as to the remaining 50% of the
shares on the third anniversary of the date of grant, or upon the earlier death
or disability of the employee while employed by SMSC.
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The awards are made primarily as sign-on bonuses and in part payment of bonuses
under SMSC's executive incentive compensation policy, which are earned if SMSC
achieves quarterly financial or other strategic objectives, or the employee
meets other goals, set by the compensation committee or SMSC's CEO.
Approximately 40 employees were eligible to receive restricted stock awards in
fiscal year 2002.
The plan is to be administered by the 2002 stock option and restricted stock
plan committee. The committee may in general exercise all of the powers of the
board in relation to the plan. The committee is generally empowered to interpret
the plan, to prescribe rules and regulations relating thereto, to determine the
terms of option and restricted stock agreements, to amend them with the consent
of the optionee, to determine the optionees to whom options are to be granted,
and to determine the number of shares subject to each option granted.
The per share exercise price of each option is established by the 2002 stock
option and restricted stock plan committee and in each instance will not be less
than the fair market value of a share of common stock on the date the option is
granted (110% of fair market value on the date of grant of an ISO (as
hereinafter defined) if the optionee owns stock possessing more than 10% of the
total combined voting power of all classes of stock of SMSC or any of its
subsidiaries). Upon exercise of an option, the optionee may pay the purchase
price with cash and, unless the 2002 stock option and restricted stock plan
committee shall otherwise determine, securities of SMSC previously acquired by
the optionee (excluding restricted stock).
Options will be exercisable for a term determined by the 2002 stock option
plan committee, which term will not be greater than 10 years from the date of
grant. Unless otherwise provided in an option agreement, generally, an option
will have a ten-year term and become fully exercisable four or five years after
the date of grant. Prior thereto, each option will become exercisable, as to
one-quarter or one-fifth of the number of shares covered thereby, cumulatively
upon each anniversary of the date of the grant. Except in the event of certain
terminations of employment or death or permanent and total disability, no option
granted to an employee may be exercised unless the holder is then an employee of
SMSC or a subsidiary. Any impact on the exercisability of options granted to a
consultant of the termination of the optionee's consulting relationship with
SMSC will be specified in the option agreement. Options will not be transferable
other than by will or the laws of descent and distribution and may be exercised
during the optionee's lifetime only by the optionee or the optionee's guardian
or legal representative.
Options granted pursuant to the plan may be designated as incentive stock
options ("ISOs"), with the attendant tax benefits provided under Sections 421
and 422 of the Internal Revenue Code of 1986 (the "Code"). Accordingly, the plan
provides that the aggregate fair market value (determined at the time an ISO is
granted) of the common stock subject to ISOs exercisable for the first time by
an employee during any calendar year (under all plans of SMSC and any
subsidiary) may not exceed $100,000.
Shares subject to the plan may be either authorized but unissued shares or
issued shares reacquired by SMSC. The number of shares subject to each option
and the exercise price of options are subject to adjustment as the board
considers appropriate in the event of changes in the outstanding common stock by
reason of stock dividends, recapitalizations, mergers, and similar events. In
the event of certain basic changes in SMSC, including a change in control of
SMSC, the board of directors may determine that each option shall become fully
exercisable, regardless of whether any installment is then exercisable and
restrictions on shares subject to restricted stock awards lapse.
The board of directors may suspend, terminate, modify or amend the plan,
provided, however, that (except for adjustments by reason of stock dividends,
recapitalizations, mergers, and similar events) any increase in the aggregate
number of shares subject to the plan, any reduction in the purchase price of the
common stock covered by any option, any extension of the period during which
options or awards
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may be granted, any increase in the maximum term of options, and any material
modification in the requirements as to eligibility for participation in the plan
shall be subject to the approval of stockholders. No suspension, termination,
modification or amendment of the plan may, without the consent of the plan
participant, adversely affect the participant's rights under an option or award
theretofore granted.
No option or award may be granted under the plan after April 3, 2012.
On May 17, 2002, the closing sale price reported on the Nasdaq National
Market for SMSC common stock was $24.36 per share.
The plan is set forth as Exhibit A to this proxy statement.
TAX CONSEQUENCES
SMSC has been advised as follows regarding the federal income tax
consequences with respect to the grant of the award and the grant and exercise
of stock options and the payment in stock of the exercise price of options under
the plan. Grantees of restricted stock generally do not recognize income at the
time of a restricted stock grant. Grantees are taxed, at ordinary income tax
rates, when the shares of restricted stock are no longer subject to a
substantial risk of forfeiture, in an amount equal to the fair market value of
the stock at such time, less the amount paid, if any, for the stock.
Alternatively, the grantee of restricted stock may elect to recognize income at
the time of the grant of the stock award, based on the fair market value of the
stock at such time, less the amount paid, if any, for the stock. If such
election is made, no further tax is due at the time the restrictions lapse. To
receive such treatment, the grantee must file an election with the Internal
Revenue Service, under Section 83(b) of the Code, not later than 30 days after
the restricted stock is issued. SMSC is entitled to a deduction for the
restricted stock grant at the time and in the amount that the grantee recognizes
income from issuance of the stock to the grantee, based on whether the grantee
has made a Section 83(b) election, if SMSC complies with applicable reporting
requirements.
Optionees will not be taxed upon the grant of an option. At the time of
exercise of an option other than an ISO, the optionee generally will realize
ordinary income equal to the excess of the fair market value of the shares over
the exercise price, SMSC will be entitled to a deduction in the same amount
(provided applicable reporting requirements are met), and the shares so acquired
will have a basis to the optionee equal to their fair market value. Upon the
sale of a share so acquired, any gain or loss will result in a capital gain or
loss measured by the difference between the optionee's basis and the amount
realized on such sale, provided the share is a capital asset in the hands of the
holder.
At the time of exercise of an ISO, the optionee will realize no income and
SMSC will not be entitled to any deduction. However, the optionee generally will
have an item of adjustment, for purposes of calculating alternative minimum
taxable income, equal to the excess of the fair market value of the shares at
such time over the exercise price. Upon the sale of a share acquired pursuant to
the exercise of an ISO, any gain or loss will result in a capital gain or
capital loss (measured by the difference between the amount realized on such
sale and the exercise price), provided the share sold is a capital asset in the
hands of the holder. However, if at the time of sale or other disposition of
such share, the optionee has held the share for less than one year, or less than
two years have elapsed since the grant of the ISO (a "premature disposition"), a
portion (or all) of any gain will be taxed at ordinary income rates at the time
of the disposition in an amount equal to the excess of the fair market value of
the shares on the date of exercise (or, if less, the amount realized upon
disposition) over the exercise price, and SMSC will be entitled to a deduction
in the same amount.
If an optionee uses previously acquired shares of common stock to pay the
exercise price of an option, the optionee will not ordinarily recognize any
taxable income to the extent that the number of new shares of common stock
received upon exercise of the option does not exceed the number of
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previously acquired shares so used. If non-recognition treatment applies to the
payment for option shares with previously acquired shares, the tax basis of the
option shares received without recognition of taxable income is the same as the
basis of the shares surrendered as payment. If a greater number of shares of
common stock is received upon exercise than the number of shares surrendered in
payment of the option price, if an ISO is being exercised, such excess shares
will have a zero basis in the hands of the optionee; if an option other than an
ISO is being exercised, the optionee will be required to include in gross income
(and SMSC will be entitled to deduct) an amount equal to the fair market value
of the additional shares on the date the option is exercised less any cash paid
for the shares, and the excess shares will have a basis equal to the fair market
value of such shares on the exercise date.
Moreover, if stock previously acquired by exercise of an ISO is transferred
in connection with the exercise of an ISO, and if, at the time of such transfer,
the stock so transferred has not been held for the holding period required in
order to receive favorable treatment under the rules governing ISOs, such
transfer will be treated as a premature disposition. Accordingly, with respect
to the shares so transferred, an optionee will recognize ordinary income under
the rules governing a premature disposition discussed earlier in this section.
Nonetheless, the shares acquired upon exercise can still qualify for ISO
treatment, if all of the other ISO requirements are fulfilled.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THE 2002 STOCK
OPTION AND RESTRICTED STOCK PLAN.
SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
Subject to ratification by the stockholders, the board of directors has
selected PricewaterhouseCoopers LLP as independent public accountants for SMSC
for the fiscal year ending February 28, 2003. Arthur Andersen LLP was the
independent public accountant for SMSC for its fiscal year ended February 28,
2002. Representatives of Arthur Andersen and PricewaterhouseCoopers are expected
to be present at the annual meeting, with the opportunity to make a statement,
if they desire to do so, and are expected to be available to respond to
appropriate questions.
If the selection of PricewaterhouseCoopers is not ratified, or if prior to
the next annual meeting of stockholders such firm shall decline to act or
otherwise become incapable of acting, or if its engagement shall be otherwise
discontinued by the board of directors, the board of directors will appoint
other independent auditors whose selection for any period subsequent to the next
annual meeting will be subject to stockholder ratification at such meeting.
On April 30, 2002, SMSC replaced Arthur Andersen as its independent
accountants. The audit committee recommended, and the board approved, the
decision to change independent accountants.
Arthur Andersen's report on the registrant's financial statements for either
of the past two fiscal years contained no adverse opinion or disclaimer of
opinion and was not qualified or modified as to uncertainty, audit scope or
accounting principles.
During the registrant's two most recent fiscal years and any subsequent
period through April 30, 2002, there was no disagreement with Arthur Andersen on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreement if not resolved
to the satisfaction of Arthur Andersen would have caused it to make reference
thereto in its report on SMSC's consolidated financial statements, and there
were no reportable events, as defined in Regulation S-K Item 304(a)(1)(v).
On May 7, 2002, SMSC engaged PricewaterhouseCoopers as its new independent
accountants for the fiscal year ending February 28, 2003. During SMSC's two most
recent fiscal years and any subsequent period through April 30, 2002, SMSC has
not consulted with PricewaterhouseCoopers regarding either (i) the application
of accounting principles to a specified transaction, either completed
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or proposed; or the type of audit opinion that might be rendered on SMSC's
financial statements, in respect of which either a written report was provided
to SMSC or oral advice was provided that PricewaterhouseCoopers concluded was an
important factor considered by SMSC in reaching a decision as to the accounting,
auditing or financial reporting issue; or (ii) any matter that was either the
subject of a disagreement, as that term is defined in Item 304(a)(1)(iv) of
Regulation S-K and the related instructions to Item 304 of Regulation S-K, or a
reportable event.
AUDIT FEES
The fees billed or expected to be billed by Arthur Andersen for professional
services rendered for the audit of SMSC's annual financial statements for the
fiscal year ended February 28, 2002 and the reviews of the financial statements
included in SMSC's Quarterly Reports on Form 10-Q for the fiscal year totaled
approximately $176,900.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
Arthur Andersen did not perform any financial information systems design and
implementation services for SMSC for the fiscal year ended February 28, 2002.
ALL OTHER FEES
The aggregate fees billed or expected to be billed by Arthur Andersen for
other services rendered to SMSC for the fiscal year ended February 28, 2002
totaled approximately $153,900.
The audit committee has considered whether Arthur Andersen's provision of
non-audit services to SMSC is compatible with maintaining Arthur Andersen's
independence.
VOTING PROCEDURES
Every stockholder of SMSC is entitled to cast, in person or by proxy, one
vote for each share of SMSC common stock held at the close of business on
May 17, 2002, the record date for the annual meeting. At that date, SMSC had
outstanding 16,199,484 shares. The proxy hereby solicited is revocable at any
time prior to its exercise in any manner permitted by law.
The election of directors is decided by a plurality of the votes cast. A
majority of the votes cast is required to approve each other matter to be acted
on at the meeting. Abstentions and broker non-votes have no effect on the
proposals being acted upon.
The proxies named in the enclosed form of proxy or their substitutes will
vote the shares represented by the enclosed form of proxy, if the proxy appears
to be valid on its face, and, where a choice is specified on the form of proxy,
the shares will be voted in accordance with the specification so made.
GENERAL
The cost of preparing, assembling and mailing the proxy statement and
related material will be borne by SMSC. In addition to soliciting proxies by
mail, SMSC may make requests for proxies by telephone, facsimile transmission or
messenger or by personal solicitation by officers, directors, or employees of
SMSC, at nominal cost to SMSC, or by any one or more of the foregoing means.
Georgeson Shareholder has been retained by SMSC to assist in the solicitation of
proxies, for fees anticipated to aggregate approximately $5,000, plus reasonable
out-of-pocket expenses. SMSC will reimburse brokerage firms and other nominees
in accordance with the New York Stock Exchange schedule of charges for the cost
of forwarding proxy material to beneficial owners of SMSC common stock.
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STOCKHOLDER PROPOSALS AND OTHER MATTERS
Stockholder proposals intended for inclusion in the proxy statement for the
next annual meeting must be received by SMSC by February 1, 2003 and should be
sent to the Vice President and Controller, Standard Microsystems Corporation, 80
Arkay Drive, P.O. Box 18047, Hauppauge, New York 11788. The persons named on the
form of proxy to be sent in connection with the solicitation of proxies on
behalf of SMSC's board of directors for the next annual meeting will vote in
their own discretion on any matter as to which SMSC shall not have received
notice by April 17, 2003.
By order of the Board of Directors,
/s/ David C. Fischer
Dated: May 31, 2002
DAVID C. FISCHER
SECRETARY
YOUR PROXY IS IMPORTANT WHETHER YOU OWN FEW OR MANY SHARES. PLEASE VOTE BY
PHONE, INTERNET OR MAIL TODAY.
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EXHIBIT A
2002 STOCK OPTION AND RESTRICTED STOCK PLAN
OF
STANDARD MICROSYSTEMS CORPORATION
1. PURPOSE OF THE PLAN
The purpose of this Plan is to provide a method whereby present and future
officers and key employees of, and individuals, excluding non-employee
directors, who are consultants to, Standard Microsystems Corporation, a Delaware
corporation ("SMSC"), who are responsible for the management, growth and
promotion of the business and who are making and can continue to make
substantial contributions to the success of the business, may be encouraged to
acquire capital stock ownership in the Company, thus increasing their
proprietary interest in the business, or may be rewarded for outstanding
performance, providing them with greater incentive, encouraging their
continuance in the service of the Company and promoting the interests of the
Company and all its stockholders. Accordingly, the Company will, from time to
time, on or before April 3, 2012, grant (i) to such employees and consultants as
may be selected in the manner hereinafter provided, options ("options") to
purchase shares of common stock, $.10 par value, of SMSC ("Common Stock") or
(ii) to employees so selected awards of restricted Common Stock ("awards")
subject to the conditions hereinafter provided.
2. ADMINISTRATION OF THE PLAN
(a) This Plan will be administered by a 2002 Stock Option and Restricted
Stock Committee (the "Committee") consisting of not fewer than two directors of
the Company, who shall be appointed and serve at the pleasure of the Board of
Directors (the "Board"). All members of the Committee shall be both
"Non-Employee Directors" within the meaning of paragraph (b)(3)(i) of Rule 16b-3
promulgated under the Securities Exchange Act of 1934 (the "Exchange Act") and
"outside directors" within the meaning of Section 162(m) of the Internal Revenue
Code of 1986, as amended (the "Code") and Treasury Regulations promulgated
thereunder. The Committee shall have and may exercise all of the powers of the
Board under the Plan, other than the power to appoint a director to committee
membership. A majority of the Committee shall constitute a quorum, and acts of
the majority of members present at any meeting at which a quorum is present
shall be deemed the acts of the Committee. The Committee may also act by
instrument signed by all members of the Committee.
(b) The Committee shall have plenary authority in its discretion, subject to
and consistent with the express provisions of the Plan, to direct the grants of
options; to determine the numbers of shares of Common Stock covered by each
option or award, the purchase price of the Common Stock covered by each option,
the individuals to whom and the time or times at which, options or awards shall
be granted or options may be exercised; to prescribe, amend and rescind
rules and regulations relating to the Plan, including, without limitation, such
rules and regulations as it shall deem advisable so that transactions involving
options or awards may qualify for exemption under such rules and regulations as
the Securities and Exchange Commission may promulgate from time to time
exempting transactions from Section 16(b) of the Exchange Act; to determine the
terms and provisions of, and to cause the Company to enter into, agreements with
optionees in connection with options or employees in connection with awards that
may be granted under the Plan ("Agreements"), which Agreements may vary from one
another, as the Committee shall deem appropriate; to amend any such Agreement
from time to time, with the consent of the optionee or awardee; and to make all
other determinations the Committee may deem necessary or advisable for the
administration of the Plan.
(c) Each option under this Plan shall be deemed to have been granted when
the determination of the Committee with respect to such option is made. Once an
option has been granted, all conditions
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and requirements of this Plan with respect to such option shall be deemed to be
conditions upon the exercise of the option but not upon the grant thereof.
(d) Every action, decision, interpretation or determination by the Committee
or the Board with respect to the application or administration of this Plan
shall be final and binding upon the Company and each person holding or claiming
any right or interest pursuant to any option or award granted under this Plan.
3. STOCK SUBJECT TO THIS PLAN
(a) The shares to be issued upon exercise of options or constituting awards
granted under this Plan shall be made available, at the discretion of the Board,
either from the authorized but unissued shares of Common Stock or from shares of
Common Stock reacquired by the Company, including shares purchased in the open
market. The aggregate number of shares of Common Stock for which options and
awards may be granted under this Plan shall not exceed 1,200,000. The maximum
number of shares that may be subject to options granted to any one individual
within one fiscal year shall be 120,000. Such aggregate numbers shall be subject
to adjustment as provided in paragraph 12. If any option granted under this Plan
shall expire or terminate for any reason without having been exercised in full,
or if any Common Stock subject to an award shall be forfeited, the unpurchased
or forfeited shares shall (unless this Plan shall have been terminated) become
available for grant of options or awards to other individuals.
(b) In the discretion of the Board, but subject to the provisions of the
Plan and Section 422 of the Code, options granted to employees may, at the time
of grant, be designated as incentive stock options ("ISOs") with the attendant
tax benefits provided under Sections 421 and 422 of the Code. The aggregate fair
market value (determined at the time an ISO is granted) of the Common Stock
covered by ISOs exercisable for the first time by an employee during any
calendar year (under all plans of the Company), may not exceed $100,000.
(c) An employee to whom an award has been made shall have, after delivery to
him of, or after notification that there is being held in custody for him, a
certificate or certificates for the number of shares of Common Stock awarded,
absolute ownership of such shares including the right to vote the same and to
receive dividends thereon, subject however, to the terms, conditions and
restrictions described in this Plan and in any Agreement relating to the award.
4. ELIGIBILITY OF OPTIONEES AND AWARDEES
(a) Options or awards may be granted only to salaried employees (including
officers) of, and individuals, excluding Non-Employee Directors, who are
consultants to, the Company. In determining to whom an option or award shall be
granted and the number of shares to be covered by any Agreement, the Committee
shall take into account the duties of the individual, the present and potential
contributions of the individual to the success of the Company, the number of
years of service remaining before the anticipated retirement of the individual,
and other factors deemed relevant by the Committee in connection with
accomplishing the purpose of this Plan.
(b) An individual who has been granted an option or award of restricted
stock under this Plan or otherwise may, if the Committee shall so determine, be
granted one or more additional options or awards.
5. OPTION PRICE
(a) The purchase price per share of Common Stock under each option shall be
established by the Committee, but shall not be less than the fair market value
(as hereinafter defined) of a share of Common Stock on the date such option is
granted.
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(b) In the case of an individual who at the time the option is granted owns
stock possessing more than 10% of the total combined voting power of all classes
of stock of the Company, the purchase price of the Common Stock covered by any
ISO shall in no event be less than 110% of the fair market value of the Common
Stock on the date such ISO is granted.
6. RESTRICTIONS
(a) No option granted under this Plan shall be transferable by the grantee,
either voluntarily or by operation of law, otherwise than by last will and
testament or by laws of descent and distribution, and such option shall be
exercised during the lifetime of the grantee, only by the grantee, or by his or
her guardian or legal representative.
(b) Until the restrictions set forth in this paragraph 6(b) shall lapse
pursuant to paragraph 6(c) or 6(d), shares of Common Stock awarded to an
employee pursuant to an award:
(i) shall not be sold, assigned, transferred, pledged, hypothecated or
otherwise disposed of, and
(ii) shall, if delivered to or to the order of the employee, be returned
to the Company forthwith, and all rights of the employee to such shares
shall immediately terminate without any payment of consideration by the
Company, if the employee's continuous employment with the Company or any of
its subsidiaries shall terminate for any reason, except as provided in
paragraph 6(d); provided, however, that the Board of Directors shall have
the right to waive such forfeiture, in whole or in part, and in connection
with such waiver to impose any terms or restrictions on the continued
ownership of such shares by the employee under the Plan. If the employee's
interests in the shares of Common Stock granted pursuant to an award shall
be terminated pursuant to this clause (ii), the employee shall forthwith
deliver to the Secretary or any Assistant Secretary of the Company the
certificates for shares of Common Stock so terminated, accompanied by such
instrument of transfer as may be required by the Secretary or any Assistant
Secretary of the Company.
(c) Unless the Committee shall fix a different schedule in an Agreement
relating to an award, except as set forth in paragraph 6(d), the restrictions
set forth in paragraph 6(b) hereof shall lapse to the extent of 25% of the
shares covered by an award on each of the first and second anniversaries of the
date of grant of the award and as to the remaining 50% on the third anniversary
of the date of grant.
(d) Any provision of paragraph 6(b) hereof to the contrary notwithstanding,
if an employee who has been in the continuous employment of the Company or of
any subsidiary since the date on which an award was granted to him shall, while
in such employment, die, terminate employment by reason of disability as defined
in this paragraph 6(d), or attain age 65, and any of such events shall occur
more than one year after the date on which an award shall have been granted to
him, then the restrictions set forth in paragraph 6(b) hereof shall lapse, as to
all shares of Common Stock awarded to such employee pursuant to such award, on
the date of such event. As used in this paragraph 6(d) the term "disability"
shall mean a condition that the Committee determines has rendered an employee
substantially unable to perform the duties of his regular occupation.
(e) Each employee granted a restricted stock award shall agree that, subject
to the provisions of paragraph 6(f):
(i) no later than the date of the lapse of the restrictions mentioned in
paragraph 6(b) hereof and in any Agreement respecting the award, the
employee will pay to the Company, or make arrangements satisfactory to the
Committee regarding payment of, any federal, state or local withholding
taxes of any kind required by law to be paid by the Company or its
subsidiaries with respect to the shares of Common Stock subject to the
award, and
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(ii) the Company and its subsidiaries shall, to the extent permitted by
law, have the right to deduct from any payment of any kind otherwise due to
the employee any federal, state or local taxes of any kind required by law
to be withheld with respect to the shares of Common Stock subject to the
award.
(f) If an employee granted an award properly files with the Internal Revenue
Service a written election within 30 days of the date of grant, to include in
gross income for federal income tax purposes an amount equal to the fair market
value of the shares of Common Stock awarded on the date of grant, the employee
shall make arrangements satisfactory to the Committee to pay in the year of such
grant any federal, state or local withholding taxes required to be paid by the
Company or its subsidiaries with respect to such shares. If the employee shall
fail to make such payments, the Company and its subsidiaries shall, to the
extent permitted by law, have the right to deduct from any payment of any kind
otherwise due to the employee any federal, state or local taxes of any kind
required by law to be withheld with respect to such shares of Common Stock.
(g) Certificates evidencing shares of Common Stock subject to awards shall
bear an appropriate legend referring to the terms, conditions, and restrictions
described in the Plan and in any Agreement relating to the award. Any attempt to
dispose of any such shares of Common Stock in contravention of the terms,
conditions and restrictions described in the Plan or any related Agreement shall
be ineffective. The shares acquired, together with stock powers (if required by
the Company) or other instruments of transfer appropriately endorsed in blank by
the employee, shall be held by the Company, for the use and benefit and subject
to the rights of such employee as owner thereof. After the lapse of all
restrictions with respect to particular shares, the Company shall deliver the
certificates for such shares held by the Company to the employee concerned.
7. EXERCISE OF OPTION
(a) Each option granted under this Plan shall by its terms expire not later
than ten years from the date on which it was granted.
(b) Unless the Committee shall fix a different schedule at the time a
particular option is granted, each option granted under this Plan shall become
exercisable, to the extent of one-quarter of the aggregate number of shares
optioned thereby, one year after the date of grant and, cumulatively, to the
extent of an additional one-quarter, at the expiration of each year thereafter,
so that, four years after the date of grant, each option shall be fully
exercisable, subject to the provisions set forth elsewhere in the Plan.
Notwithstanding the foregoing, the Committee may declare any outstanding option
immediately and fully exercisable (but in no event prior to the first
anniversary of the date of grant).
(c) A person electing to exercise an option shall give written notice to the
Company of such election and of the number of shares he or she has elected to
purchase; provided that no option may be exercised as to fewer than 100 shares
unless it is then exercised as to all of the shares then purchasable thereunder.
Such notice shall be accompanied by payment to the Company of the full purchase
price in cash; provided that, unless otherwise determined by the Committee, the
purchase price may be paid in whole or in part, by surrender or delivery to the
Company of Common Stock of the Company having a fair market value on the date of
exercise equal to the portion of the purchase price being so paid. In addition,
an employee shall, upon notification of the amount due and prior to or
concurrently with delivery to the employee of a certificate representing such
shares, pay, in cash, any amount necessary to satisfy federal, state and local
tax requirements.
(d) No person shall have the rights of a stockholder with respect to shares
covered by an option until such person becomes the holder of record of such
shares.
(e) Except as provided in paragraph 8 or paragraph 9, no option granted to
an employee may be exercised, unless, at the time of exercise, the optionee is
an employee of the Company. Options granted
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under the Plan to an employee shall not be affected by any change of duties or
position so long as the optionee continues to be an employee of the Company.
(f) Notwithstanding any other provision of this Plan, the Company shall not
be required to issue or deliver any share of stock upon the exercise of an
option prior to (a) the admission of such share to listing on any stock exchange
or automated quotation system on which the Company's Common Stock may then be
listed and (b) the completion of such registration or other qualification of
such share under any state or federal law, rule or regulation as the Company
shall determine to be necessary or advisable.
8. TERMINATION OF OPTIONEE'S RELATIONSHIP TO THE COMPANY
(a) In the case of an option granted to an employee of the Company, if the
optionee shall cease to be an employee of the Company, other than by reason of
death or permanent and total disability, any option held by such optionee may be
exercised (to the extent that the optionee was entitled to exercise such option
at the termination of such employment) at any time within three months after
such termination, but not later than the expiration date of such option;
provided, however, that any option held by an employee whose employment shall be
terminated by the Company for cause shall, to the extent not theretofore
exercised, forthwith terminate.
(b) Notwithstanding the provisions of paragraph 7 specifying the
installments in which an option shall be exercisable, in the case of an option
granted to an employee of the Company, unless the Committee specifies otherwise
at the time a particular option is granted, upon an optionee's actual retirement
at age 65 or thereafter, the option shall be exercisable (within the time
periods set forth in paragraph 8(a)) as to all shares of Common Stock remaining
subject to the option.
(c) Any Agreement may contain such provisions as the Board shall approve
with reference to the determination of the date employment terminates for
purposes of the Plan (which provisions may allow periods of consultancy to be
treated as periods of employment) and the effect of leaves of absence, which
provisions may vary from one another.
(d) In the case of an option granted to an individual who is a consultant
to, and not an employee of the Company, the option agreement shall specify the
impact, if any, that a termination of the optionee's consultancy relationship
with the Company shall have on the exercisability of the option.
(e) Nothing in the Plan or in any Agreement shall confer upon any employee
or consultant any right to continue in the employ or consultancy of the Company
or affect the right of the Company to terminate such employment or consultancy
relationship at any time for any reason, or for no reason.
9. DEATH OR DISABILITY OF OPTIONEE
Notwithstanding the provisions of paragraph 7 specifying installments in
which an option shall be exercisable, unless the Committee specifies otherwise
at the time a particular option is granted, if an optionee shall die or become
permanently and totally disabled within the meaning of Section 22(e)(3) of the
Code, while he or she is employed by the Company or within three months after
the termination of his or her employment (other than termination by the Company
for cause or voluntarily on the part of the optionee and without the consent of
the Company), such option may be exercised, as to all shares of Common Stock
remaining subject to the option, within the later to occur of (a) three months
after the termination of the optionee's employment or (b) thirty days after the
appointment of a legal representative or guardian, but in no case more than one
year after termination of employment and in no case after the original
expiration date of the option.
10. AMENDMENTS TO THE PLAN
The Board may at any time terminate or from time to time modify, amend or
suspend this Plan, including any amendment for the purpose of complying with or
securing the benefit of any change in
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the Exchange Act or the Code or any regulation adopted under either; provided
that no such modification without the approval of stockholders shall increase
the aggregate number of shares subject hereto, permit the granting of options at
an option price less than 100% of the fair market value of the Common Stock at
the date of the grant, reduce the exercise price of outstanding options (except
pursuant to paragraph 12), extend the period during which options or awards are
granted, extend the period during which options may be exercised, or otherwise
materially increase the benefits accruing to optionees or awardees under this
Plan or materially modify the requirements as to eligibility of optionees or
awardees under this Plan, except that any increase, reduction or change that may
result from any adjustment authorized by paragraph 12 or any modification based
on any revision to the Code or any regulation promulgated thereunder (to the
extent permitted by the Code or the Internal Revenue Service) shall not require
such approval. No suspension, termination, modification or amendment of the Plan
may, without the consent of the individual to whom an option or award of
restricted stock shall theretofore have been granted, materially and adversely
affect the rights of such individual under such option or award of restricted
stock.
11. GRANTING OF OPTIONS AND AWARDS
(a) The grant of any option pursuant to the Plan shall be entirely in the
discretion of the Committee, and nothing in the Plan shall be construed to
confer on any officer, employee, or consultant any right to receive any option
or award under the Plan.
(b) Subject to the terms, conditions and restrictions of the Plan, the
Committee shall, in its sole discretion, select from among the key employees of
the Company those employees to whom awards are to be granted. The Committee
shall also have power to determine (i) whether awards are to be made, (ii) the
number of shares of Common Stock covered by each award, (iii) the time or times
when restricted stock awards will be made, and (iv) in accordance with
paragraph 6, the restrictions applicable to shares of Common Stock awarded
pursuant to restricted stock awards.
(c) The grant of an option or award pursuant to the Plan shall not
constitute an agreement or an understanding, express or implied, to employ the
optionee or awardee for any specified period.
12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
(a) The Board may at any time make such provision as it shall consider
appropriate for the adjustment of the number and class of shares covered by each
option or award and the price as to which an option shall be exercisable, in the
event of changes in the outstanding Common Stock of the Company by reason of any
stock dividend, split-up, reorganization, liquidation, and the like. In the
event of any such change in the outstanding Common Stock of the Company, the
aggregate number of shares as to which options and awards may be granted under
the Plan shall be appropriately adjusted by the Board, whose determination shall
be conclusive. No adjustment shall be made in the requirements set forth in
paragraph 7 with respect to the minimum number of shares that must be purchased
upon any exercise of an option.
(b) In the event (i) of a dissolution, liquidation, merger or consolidation
of the Company or (ii) of a sale of all or substantially all of the assets of
the Company or the sale of substantially all of the assets or stock of a
subsidiary of which an optionee or awardee is then an employee, or (iii) a
change in control (as hereinafter defined) of the Company has occurred or is
about to occur, then, the Board may determine that each option under the Plan,
if such event shall occur with respect to the Company, or each option granted to
an employee or consultant of such subsidiary, shall become immediately and fully
exercisable or that restrictions on shares subject to any award shall
immediately lapse.
13. EFFECTIVE DATE OF THE PLAN
Options or awards may be granted under the Plan, subject to its
authorization and adoption by the stockholders of the Company, at any time or
from time to time after its adoption by the Board, but no
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option shall be exercised under this Plan until this Plan shall have been
authorized and adopted at a meeting of stockholders of the Company. If so
adopted by stockholders, this Plan shall become effective as of April 4, 2002,
the date of its adoption by the Board of Directors.
14. SEVERABILITY
In the event that any one or more provisions of the Plan or any Agreement,
or any action taken pursuant to the Plan or such Agreement, should, for any
reason, be unenforceable or invalid in any respect under the laws of the United
States, any state of the United States or any other government, such
unenforceability or invalidity shall not affect any other provision of the Plan
or of such or any other Agreement, but in such particular jurisdiction and
instance the Plan and the affected Agreement shall be construed as if such
unenforceable or invalid provision had not been contained therein or as if the
action in question had not been taken thereunder.
15. EFFECT ON PRIOR OPTION PLANS
The adoption of the 2002 Plan shall have no effect on outstanding options or
awards granted by the Company under any other plan.
16. CERTAIN DEFINITIONS
(a) The terms "parent" and "subsidiary" shall have the meanings
respectively, of "parent corporation" and "subsidiary corporation" as set forth
in Sections 424(e) and (f) of the Code, respectively.
(b) The term "fair market value" of a share of Common Stock shall mean, as
of the date on which such fair market value is to be determined, the closing
price (or the average of the latest bid and asked prices) of a share of Common
Stock as reported in The Wall Street Journal (or a publication or reporting
service deemed equivalent to The Wall Street Journal for such purpose by the
Board or the Committee) for the over-the-counter market or any national
securities exchanges and other securities markets which at the time are included
in the stock price quotations of such publication. In the event that the Board
or the Committee shall determine such stock price quotation is not
representative of fair market value, the Board or the Committee may determine
fair market value in such a manner as it shall deem appropriate under the
circumstances.
(c) The term "termination of employment for cause" or words to like effect
shall mean termination by the Company of the employment of the optionee by
reason of the optionee's (i) willful refusal to perform his or her obligations
to the Company, (ii) willful misconduct, contrary to the interests of the
Company, or (iii) commission of a serious criminal act, whether denominated a
felony, misdemeanor or otherwise. In the event of any dispute whether a
termination for cause has occurred, the Board may by resolution resolve such
dispute and such resolution shall be final and conclusive on all parties.
(d) The term "Company" shall include SMSC and any parent or subsidiary of
SMSC.
(e) The term "change in control" shall mean an event or series of events
that would be required to be described as a change in control of the Company on
Form 8-K promulgated under the Exchange Act. The determination whether and when
a change in control has occurred or is about to occur shall be made by vote of a
majority of the Non-Employee Directors who shall have constituted the Board
immediately prior to the occurrence of the event or series of events
constituting such change in control.
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Please Detach and Mail in the Envelope Provided
STANDARD MICROSYSTEMS CORPORATION
PROXY - Annual Meeting of Stockholders - July 10, 2002
STEVEN J. BILODEAU and GEORGE W. HOUSEWEART, and each of them, each with
full power of substitution, hereby are authorized to vote, by a majority of
those or their substitutes present and acting at the meeting, or, if only one
shall be present and acting, then that one, all of the shares of Standard
Microsystems Corporation that the undersigned would be entitled, if
personally present, to vote at the 2002 annual meeting of stockholders, and
at any adjournment thereof, upon such business as may properly come before
the meeting, including the items set forth on the reverse side hereof and in
the notice of annual meeting.
PLEASE DATE AND SIGN THIS PROXY ON THE REVERSE SIDE, AND MAIL IT IN THE
ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
(CONTINUED, AND TO BE DATED AND SIGNED ON OTHER SIDE)
<Page>
ANNUAL MEETING OF STOCKHOLDERS OF
STANDARD MICROSYSTEMS CORPORATION
JULY 10, 2002
TO VOTE BY MAIL
Please date, sign and mail your proxy card in the envelope provided as soon
as possible.
TO VOTE BY TELEPHONE (TOUCH-TONE PHONE ONLY)
Please call toll-free 1-800-PROXIES and follow the instructions. Have your
control number and the proxy card available when you call.
TO VOTE BY INTERNET
Please access the web page at "www.voteproxy.com" and follow the on-screen
instructions. Have your control number available when you access the web page.
------------------------------------
YOUR CONTROL NUMBER IS
------------------------------------
<Page>
Please Detach and Mail in the Envelope Provided
<Table>
A /X/ PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1, 2 AND 3.
WITHHOLD AUTHORITY
FOR ALL TO VOTE FOR ALL
1. ELECTION OF NOMINEES NOMINEES LISTED
DIRECTORS / / / /
Nominees: Steven J. Bilodeau
Peter F. Dicks
INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.
- ---------------------------------------------------
FOR AGAINST ABSTAIN
2. ADOPTION AND APPROVAL OF THE 2002 STOCK / / / / / /
OPTION AND RESTRICTED STOCK PLAN
FOR AGAINST ABSTAIN
3. SELECTION OF PRICEWATERHOUSECOOPERS LLP / / / / / /
INDEPENDENT PUBLIC ACCOUNTANTS.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. UNLESS OTHERWISE
PROPERLY MARKED, THIS PROXY WILL BE VOTED "FOR" PROPOSALS 1, 2 AND 3 AS
RECOMMENDED BY THE BOARD OF DIRECTORS.
PLEASE DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY.
Date: , 2002
- ------------------------------------ ----------------------------------
Signature (title, if any) Signature, if held jointly
Please sign exactly as your name appears hereon. If the named holder is a
corporation, partnership or other association, please sign its name and add
your own name and title. When signing as attorney, executor, administrator,
trustee, or guardian, please give full title. If shares are held jointly,
EACH holder should sign.
</Table>