SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
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 under ss 240.14a-12
LINEAR TECHNOLOGY 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):
[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: ________________
LINEAR TECHNOLOGY CORPORATION
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 7, 2001
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Linear
Technology Corporation, a Delaware corporation (the "Company"), will be held on
November 7, 2001 at 3:00 p.m., local time, at the Company's principal executive
offices, located at 720 Sycamore Drive, Milpitas, California 95035, for the
following purposes:
1. To elect five (5) directors to serve until the next Annual Meeting
of Stockholders and until their successors are elected.
2. To ratify the appointment of Ernst & Young LLP as independent
auditors of the Company for the fiscal year ending June 30, 2002.
3. To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record of the Company's Common Stock at the close of
business on September 10, 2001, the record date, are entitled to notice of and
to vote at the Annual Meeting and any adjournment thereof.
All stockholders are cordially invited to attend the Annual Meeting in
person. However, to ensure your representation at the meeting, you are urged to
mark, sign, date and return the enclosed proxy card as promptly as possible in
the postage-prepaid envelope enclosed for that purpose. Any stockholder
attending the Annual Meeting may vote in person even if such stockholder has
returned a proxy card.
FOR THE BOARD OF DIRECTORS
/s/ Arthur F. Schneiderman
--------------------------
Arthur F. Schneiderman
Secretary
Milpitas, California
October 3, 2001
YOUR VOTE IS IMPORTANT.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN, DATE AND
RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE IN THE ENCLOSED
ENVELOPE.
LINEAR TECHNOLOGY CORPORATION
---------------------
PROXY STATEMENT
FOR
2001 ANNUAL MEETING OF STOCKHOLDERS
---------------------
INFORMATION CONCERNING SOLICITATION
AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of the Board of Directors of
Linear Technology Corporation, a Delaware corporation (the "Company"), for use
at the Annual Meeting of Stockholders to be held November 7, 2001, at 3:00
p.m., local time, or at any adjournment thereof, for the purposes set forth
herein and in the accompanying Notice of Annual Meeting of Stockholders. The
Annual Meeting will be held at the Company's principal executive offices,
located at 720 Sycamore Drive, Milpitas, California 95035. The telephone number
at that location is (408) 432-1900.
These proxy solicitation materials and the Company's Annual Report to
Stockholders for the year ended July 1, 2001, including financial statements,
were mailed on or about October 3, 2001 to all stockholders entitled to vote at
the Annual Meeting.
RECORD DATE AND VOTING SECURITIES
Stockholders of record at the close of business on September 10, 2001 (the
"Record Date") are entitled to notice of and to vote at the meeting. As of the
Record Date, 319,502,056 shares of the Company's Common Stock, par value
$0.001, were issued and outstanding. No shares of the Company's Preferred Stock
are outstanding.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Company (Attention:
Paul Coghlan, Vice President of Finance and Chief Financial Officer) a written
notice of revocation or a duly executed proxy card bearing a later date or by
attending the Annual Meeting and voting in person.
VOTING RIGHTS AND SOLICITATION OF PROXIES
On all matters other than the election of directors, each share has one
vote. Each stockholder voting for the election of directors may cumulate such
stockholder's votes and give one candidate a number of votes equal to the
number of directors to be elected (which number is currently set at five)
multiplied by the number of shares held by such stockholder, or may distribute
such stockholder's votes on the same principle among as many candidates as the
stockholder may select. However, no stockholder will be entitled to cumulate
votes unless a stockholder has, prior to the voting, given notice at the
meeting of the stockholder's intention to cumulate votes. If any stockholder
gives such notice, all stockholders may cumulate their votes for the election
of directors. In the event that cumulative voting is invoked, the proxy holders
will have the discretionary authority to vote all proxies received by them in
such a manner as to ensure the election of as many of the Board of Directors'
nominees as possible.
The Company will bear the cost of soliciting proxies. In addition, the
Company may reimburse brokerage firms and other persons representing beneficial
owners of shares for their expenses in forwarding solicitation material to such
beneficial owners. Solicitation of proxies by mail may be supplemented by one
or more of telephone, telegram, facsimile, e-mail or personal solicitation by
directors, officers or regular employees of the Company. No additional
compensation will be paid to such persons for such services.
1
QUORUM; ABSTENTIONS; BROKER NON-VOTES
Votes cast by proxy or in person at the Annual Meeting will be tabulated
by the Inspector of Elections. The Inspector will also determine whether or not
a quorum is present. Except in certain specific circumstances, the affirmative
vote of a majority of shares present in person or represented by proxy at a
duly held meeting at which a quorum is present is required under Delaware law
and the Company's Bylaws for approval of proposals presented to stockholders.
In general, Delaware law also provides that a quorum consists of a majority of
shares entitled to vote and present or represented by proxy at the meeting.
When proxies are properly dated, executed and returned, the shares
represented by those proxies will be voted at the Annual Meeting in accordance
with the instructions of the stockholder. If no instructions are indicated on a
properly executed proxy, the shares represented by that proxy will be voted as
recommended by the Board of Directors. If any other matters are properly
presented for consideration at the Annual Meeting, the persons named in the
enclosed proxy card and acting thereunder will have discretion to vote on those
matters in accordance with their best judgment. The Company does not currently
anticipate that any other matters will be raised at the Annual Meeting.
Pursuant to Delaware law, the Inspector will treat shares that are voted
"WITHHELD" or "ABSTAIN" as being present and entitled to vote for purposes of
determining the presence of a quorum and as entitled to vote on the particular
subject matter at the Annual Meeting (the "Votes Cast") with respect to that
matter. With respect to broker non-votes, in a 1988 Delaware case, Berlin v.
Emerald Partners, the Delaware Supreme Court held that, although broker
non-votes may be counted for purposes of determining the presence or absence of
a quorum for the transaction of business, broker non-votes should not be
counted for purposes of determining the number of Votes Cast with respect to
the particular proposal on which the broker has expressly not voted. Broker
non-votes with respect to proposals set forth in this Proxy Statement will
therefore not be considered "Votes Cast" and, accordingly, will not affect the
determination as to whether the requisite majority of Votes Cast has been
obtained with respect to a particular matter.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Stockholders are entitled to present proposals for action at a forthcoming
meeting if they comply with the requirements of the Company's Bylaws and the
proxy rules established by the Securities and Exchange Commission. Proposals of
stockholders of the Company that are submitted for inclusion in the proxy
statement and form of proxy card for next year's annual meeting must be
received by the Company no later than one hundred twenty (120) days prior to
the one year anniversary date of the mailing of this Proxy Statement. Assuming
a mailing date of October 3, 2001, the deadline for stockholder proposals for
next year's annual meeting will be June 5, 2002.
In addition, under the Company's Bylaws, a stockholder wishing to make a
proposal at next year's annual meeting must submit such a proposal to the
Company not less than 90 days prior to the meeting; provided, however, that in
the event that less than 100 days notice or prior public disclosure of the date
of the meeting is given or made to stockholders, the stockholder's proposal
must be received by the Company within ten days after the notice of the date of
the meeting was mailed or such public disclosure was made. The Company may
refuse to acknowledge any proposal not made in compliance with the foregoing
procedure. The attached proxy card grants the proxy holders discretionary
authority to vote on any matter raised at this year's Annual Meeting.
2
PROPOSAL ONE
ELECTION OF DIRECTORS
NOMINEES
The Company's Bylaws currently provide for a board of five directors.
Unless otherwise instructed, the proxy holders will vote the proxies received
by them for the Company's five nominees named below, all of whom are currently
directors of the Company. In the event that any nominee of the Company is
unable or declines to serve as a director at the time of the Annual Meeting,
the proxies will be voted for any substitute nominee who is designated by the
current Board of Directors to fill the vacancy. It is not expected that any
nominee listed below will be unable or will decline to serve as a director. In
the event that additional persons are nominated for election as directors, the
proxy holders intend to vote all proxies received by them in such a manner as
will ensure the election of as many of the nominees listed below as possible,
and, in such event, the specific nominees to be voted for will be determined by
the proxy holders. In any event, the proxy holders cannot vote for more than
five persons. The term of office of each person elected as a director will
continue until the next Annual Meeting of Stockholders or until his successor
has been elected and qualified.
The names of the nominees, and certain information about them as of
September 10, 2001, are set forth below.
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION DIRECTOR SINCE
------------------------------ ----- ----------------------------------------------- ---------------
Robert H. Swanson, Jr. ....... 63 Chairman and Chief Executive Officer of the 1981
Company
David S. Lee ................. 64 Chairman, Cortelco Systems Holding Corp. 1988
Leo T. McCarthy .............. 71 President, The Daniel Group 1994
Richard M. Moley ............. 62 Former President and Chief Executive Officer, 1994
StrataCom, Inc.
Thomas S. Volpe .............. 50 Chief Executive Officer, 1984
Volpe Investments LLC
There are no family relationships among the Company's directors and
executive officers.
Mr. Swanson, a founder of the Company, has served as Chairman and Chief
Executive Officer since April 1999. From the Company's incorporation in
September 1981 until April 1999, Mr. Swanson served as President and Chief
Executive Officer. Mr. Swanson has also served as a director of the Company
since its incorporation. From August 1968 to July 1981, he was employed in
various positions at National Semiconductor Corporation, a manufacturer of
integrated circuits, including Vice President and General Manager of the Linear
Integrated Circuit Operation and Managing Director in Europe.
Mr. Lee is Chairman of the Boards of eOn Communication Corp., Cortelco and
Cidco Communications, and a Regent of the University of California. Mr. Lee
co-founded Qume Corporation in 1973 and served as Executive Vice-President of
Qume until it was acquired by ITT Corporation in 1978. After the acquisition,
Mr. Lee held the positions of Executive Vice President of ITT Qume until 1981,
and President of ITT Qume through 1983. From 1983 to 1985, he served as Vice
President of ITT and as Group Executive and Chairman of its Business
Information Systems Group. In 1985, he became President and Chairman of Data
Technology Corp. ("DTC"), and in 1988 DTC acquired and merged with Qume.
Currently, Mr. Lee is a member of the Board of Directors of ESS Technology
Inc., Accela.com, Daily Wellness Co. and Pacific International Center for High
Technology Research. Mr. Lee also serves as a member of the California Chamber
of Commerce and President of Asian Cultural Teachings. Mr. Lee served as an
adviser to Presidents George Bush and Bill Clinton on the Advisory Committee on
Trade Policy and Negotiation (Office of the U.S. Trade Representative/Executive
Office of the President) and to Governor Pete Wilson on the California Economic
Development Corporation (CalEDC) and the Council on California Competitiveness.
Mr. Lee is a past Commissioner of the California Postsecondary Education
Commission, as well as having founded and served as Chairman of the Chinese
Institute of Engineers, the Asian American Manufacturers' Association and the
Monte Jade Science and Technology Association.
3
Mr. McCarthy has served since January 1995 as President of The Daniel
Group, a partnership engaged in international trade and other investment
opportunities. Mr. McCarthy retired from elective office in 1994 after twelve
years as Lieutenant Governor of the State of California. His primary
responsibility as Lieutenant Governor was to help businesses start and grow
through his role as chair of the California Commission for Economic
Development. One major area of focus for Mr. McCarthy was and still remains
international trade and investment, particularly involving Pacific Rim markets.
Mr. McCarthy serves as a director on the boards of two mutual funds, Parnassus
Income Trust and Forward Funds. He also serves as Vice Chair of the Board of
Accela.com, a privately held software company.
Mr. Moley served as Chairman, President and Chief Executive Officer of
StrataCom, Inc., a network systems company, from June 1986 until its
acquisition by Cisco Systems, Inc., a provider of computer internetworking
solutions, in July 1996. Mr. Moley served as Senior Vice President and Board
Member of Cisco Systems until November 1997, when he became a consultant and
private investor. Mr. Moley served in various executive positions at ROLM
Corporation, a telecommunications company, from 1973 to 1986. Prior to joining
ROLM, he held management positions in software development and marketing at
Hewlett-Packard Company. Mr. Moley serves as a director of Netro, Echelon
Corporation and Spirent, plc, a British company.
Mr. Volpe has served as Chief Executive Officer of Volpe Investments LLC
since July 2001. From December 1999 to June 2001, Mr. Volpe served as Chairman
of Prudential Volpe Technology Group. Mr. Volpe served as Chief Executive
Officer of Volpe Brown Whelan & Company, LLC (formerly Volpe, Welty & Company),
a private investment banking and risk capital firm, from its founding in April
1986 until its acquisition by Prudential Securities in December 1999. Until
April 1986, he was President and Chief Executive Officer of Hambrecht & Quist
Incorporated, an investment banking firm with which he had been affiliated
since 1981. Currently, Mr. Volpe is a member of the Board of Directors of
Rigel, Inc.
VOTE REQUIRED AND RECOMMENDATION OF BOARD OF DIRECTORS
The five nominees receiving the highest number of affirmative votes of the
shares entitled to be voted will be elected as directors. Votes withheld will
be counted for purposes of determining the presence or absence of a quorum for
the transaction of business at the meeting, but have no other legal effect upon
election of directors under Delaware law.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR" THE
NOMINEES SET FORTH ABOVE.
4
PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young LLP, independent
auditors, to audit the financial statements of the Company for the year ending
June 30, 2002, and recommends that the stockholders vote for ratification of
such appointment. Although action by stockholders is not required by law, the
Board of Directors believes that it is desirable to request approval of this
selection by the stockholders. In the event of a negative vote on such
ratification, the Board of Directors will reconsider its selection. Ernst &
Young LLP has audited the Company's financial statements since the fiscal year
ended June 30, 1982. Representatives of Ernst & Young LLP are expected to be
present at the Annual Meeting, will have the opportunity to make a statement
and are expected to be available to respond to appropriate questions from
stockholders.
FEES BILLED TO THE COMPANY BY ERNST & YOUNG LLP DURING THE FISCAL YEAR ENDED
JULY 1, 2001
Audit Fees
Audit fees billed to the Company by Ernst & Young LLP during the fiscal
year ended July 1, 2001, for the audit of the Company's annual financial
statements included in the Company's 2001 Annual Report on Form 10-K and the
review of the Company's interim financial statements included in the Company's
quarterly reports on Form 10-Q during fiscal 2001, totaled $178,000.
Financial Information Systems Design and Implementation Fees
The Company did not engage Ernst & Young LLP to provide advice or services
to the Company regarding financial information systems design and
implementation during the fiscal year ended July 1, 2001.
All Other Fees
Fees billed to the Company by Ernst & Young LLP during the Company's
fiscal year ended July 1, 2001 for all other non-audit services rendered to the
Company, including accounting advice and tax services, totaled $126,000. The
audit committee of the Board has determined that the accounting advice and tax
services provided by Ernst & Young LLP are compatible with maintaining Ernst &
Young LLP's independence.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR" THE
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S
INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING JUNE 30, 2002.
5
BENEFICIAL SECURITY
OWNERSHIP OF DIRECTORS, EXECUTIVE
OFFICERS AND CERTAIN OTHER
BENEFICIAL OWNERS
SECURITY OWNERSHIP
The following table sets forth certain information known to the Company
regarding the beneficial ownership of the Company's Common Stock as of the
Record Date, by (a) each beneficial owner of more than 5% of the Company's
Common Stock, (b) the Company's Chief Executive Officer and the Company's four
other most highly compensated executive officers during fiscal 2001
(collectively, the "Named Executive Officers"), (c) each director of the
Company, and (d) all directors and executive officers of the Company as a
group. Except as otherwise indicated, each person has sole voting and
investment power with respect to all shares shown as beneficially owned,
subject to community property laws where applicable.
SHARES BENEFICIALLY PERCENTAGE
BENEFICIAL OWNER OWNED BENEFICIALLY OWNED
--------------------------------------------- --------------------- -------------------
Janus Capital Corporation (1) .......... 46,088,507 14.4%
100 Fillmore Street
Denver, CO 80206-4923
Putnam Investments, LLC (2) ............ 29,964,779 9.4%
One Post Office Square
Boston, MA 02109
Oak Associates, Ltd. (3) ............... 18,171,122 5.7%
3875 Embassy Parkway
Akron, OH 44333
Robert H. Swanson, Jr. (4) ............. 1,127,800 *
Robert C. Dobkin (5) ................... 1,796,112 *
Clive B. Davies (6) .................... 1,242,756 *
Paul Coghlan (7) ....................... 610,948 *
Lothar Maier (8) ....................... 87,000 *
Thomas S. Volpe (9) .................... 228,000 *
David S. Lee (10) ...................... 76,000 *
Leo T. McCarthy (11) ................... 204,900 *
Richard M. Moley (12) .................. 52,000 *
All directors and executive officers
as a group (13 persons) (13) ......... 6,103,262 1.9%
------------
* Less than one percent of the outstanding Common Stock.
(1) Based on information reported to the Company by Janus Capital Corporation
on September 8, 2001.
(2) Based on information reported on Schedule 13G filed with the Securities
and Exchange Commission on February 20, 2001. Putnam Investments, LLC
reports no sole voting power, no sole dispositive power, shared voting
power with respect to 1,993,650 shares and shared dispositive power with
respect to 29,964,779 shares. Includes 24,840,555 shares held by Putnam
Investment Management, LLC and 5,124,224 shares held by The Putnam
Advisory Company, LLC. Putnam Investments, LLC, a wholly owned subsidiary
of Marsh & McLennan Companies, Inc., is the sole owner of Putnam
Investment Management, LLC and The Putnam Advisory Company, LLC.
(3) Based on information reported to the Company by Oak Associates, Ltd. on
September 12, 2001.
(4) Includes 284,800 shares issued in the name of Robert H. Swanson, Jr. and
Sheila L. Swanson, Trustees of the Robert H. Swanson, Jr. and Sheila L.
Swanson Trust U/T/A dated May 27, 1976. Also includes 843,000 shares
issuable pursuant to options exercisable within 60 days of September 10,
2001.
6
(5) Includes 708,112 shares issued in the name of Robert C. Dobkin and
Kathleen C. Dobkin, Trustees of the Dobkin Family Trust U/D/T dated
September 16, 1991. Also includes 1,088,000 shares issuable pursuant to
options exercisable within 60 days of September 10, 2001.
(6) Includes 636,256 shares issued in the name of Clive B. Davies and Carol B.
Davies, Trustees of the Davies Living Trust dated September 9, 1994. Also
includes 606,500 shares issuable pursuant to options exercisable within 60
days of September 10, 2001.
(7) Includes 537,500 shares issuable pursuant to options exercisable within 60
days of September 10, 2001.
(8) Includes 87,000 shares issuable pursuant to options exercisable within 60
days of September 10, 2001.
(9) Consists of 228,000 shares issuable pursuant to options exercisable within
60 days of September 10, 2001.
(10) Consists of 76,000 shares issuable pursuant to options exercisable within
60 days of September 10, 2001.
(11) Includes 18,000 shares issued in the name of Leo and Jacqueline McCarthy
LLC and 10,000 shares issued in the name of the McCarthy Grandchildren's
Trust. Also includes 161,900 shares issuable pursuant to options
exercisable within 60 days of September 10, 2001.
(12) Consists of 52,000 shares issuable pursuant to options exercisable within
60 days of September 10, 2001.
(13) Includes 4,351,900 shares issuable pursuant to options exercisable within
60 days of September 10, 2001.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of four meetings during
the fiscal year ended July 1, 2001. No director attended fewer than 75% of the
meetings of the Board of Directors and the Board committees upon which such
director served. The Board of Directors has an Audit Committee and a
Compensation Committee. The Board of Directors has no nominating committee or
any committee performing similar functions.
The Audit Committee of the Board of Directors currently consists of
directors Lee, McCarthy, Moley and Volpe, and held a total of four meetings
during the last fiscal year. The Audit Committee recommends engagement of the
Company's independent auditors, and is primarily responsible for approving the
services performed by the Company's independent auditors and for reviewing and
evaluating the Company's accounting principles and its system of internal
accounting controls. The Audit Committee has adopted a written charter, which
is attached to this Proxy Statement as Appendix A. Each member of the Company's
Audit Committee is "independent" as defined under Nasdaq's listing standards.
The Compensation Committee of the Board of Directors currently consists of
directors Lee, McCarthy, Moley and Volpe, and held a total of four meetings
during the last fiscal year. The Committee reviews and approves the Company's
executive compensation policy, including the salaries and target bonuses of the
Company's executive officers, and administers the Company's employee stock
plans.
DIRECTOR COMPENSATION
The Company currently pays each non-employee director an annual retainer
of $20,000 and a fee of $1,500 for each meeting of the Board of Directors
attended. Directors are generally eligible to receive options under the
Company's stock option plans. For the fiscal year ended July 1, 2001, Messrs.
Lee, McCarthy, Moley and Volpe each received an option to purchase 20,000
shares.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee currently consists of directors Lee,
McCarthy, Moley and Volpe. No executive officer of the Company served on the
compensation committee of another entity or on any other committee of the board
of directors of another entity performing similar functions during the last
fiscal year.
7
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers and directors, and persons who own more than
ten percent of a registered class of the Company's equity securities, to file
reports of ownership on Form 3 and of changes in ownership on Forms 4 or 5 with
the Securities and Exchange Commission and the National Association of
Securities Dealers, Inc. Executive officers, directors and ten percent
stockholders are also required by Commission rules to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely upon its review of copies of such forms and amendments, if
any, received by the Company, or written representations from certain reporting
persons that no Forms 5 were required for such persons, the Company believes
that its executive officers, directors, and ten percent stockholders complied
with all applicable Section 16(a) filing requirements during the fiscal year
ended July 1, 2001, except that a Form 5 report with respect to one transaction
was inadvertently filed late on behalf of each of the following: V. Paul
Chantalat, Paul Coghlan, Timothy D. Cox, Clive B. Davies, Robert C. Dobkin,
Lothar Maier and Robert H. Swanson.
8
EXECUTIVE OFFICER COMPENSATION
The following table sets forth all compensation received for services
rendered to the Company in all capacities, for the last three fiscal years
ended July 1, 2001, by the Named Executive Officers:
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION COMPENSATION
----------------------------- --------------
SECURITIES ALL OTHER
UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) (1) OPTIONS (#) ($) (2)
--------------------------------------- ------ ------------ --------------- -------------- -------------
Robert H. Swanson, Jr. ................ 2001 $ 302,975 $ 3,169,878 700,000 $ 25,417
Chairman and Chief Executive Officer 2000 274,273 2,263,455 -- 31,980
1999 283,488 1,340,347 200,000 33,064
Clive B. Davies ....................... 2001 $ 277,119 $ 2,305,594 195,000 $ 21,863
President 2000 272,696 1,795,484 -- 23,156
1999 253,615 1,064,105 130,000 22,576
Robert C. Dobkin ...................... 2001 $ 274,253 $ 1,128,868 145,000 $ 21,878
Vice President, Engineering and 2000 261,639 1,140,285 -- 22,397
Chief Technical Officer 1999 249,677 853,018 90,000 22,250
Paul Coghlan .......................... 2001 $ 268,460 $ 1,915,592 145,000 $ 21,540
Vice President, Finance and Chief 2000 255,152 1,452,206 -- 21,693
Financial Officer 1999 244,677 881,256 70,000 21,440
Lothar Maier (3) ...................... 2001 $ 244,428 $ 987,203 75,000 $ 18,825
Vice President and Chief Operating 2000 225,577 448,508 -- 19,875
Officer 1999 31,846 350,000 250,000 78
------------
(1) Includes cash profit sharing and cash bonuses earned for the fiscal year,
whether accrued or paid.
(2) Includes insurance premiums paid by the Company under its life insurance
program. Also includes 401(k) profit sharing distributions earned during
the fiscal year.
(3) Employment effective April 26, 1999.
9
OPTION GRANTS IN LAST FISCAL YEAR
The following table shows, as to the Named Executive Officers, information
concerning stock options granted during the year ended July 1, 2001.
INDIVIDUAL GRANTS
-------------------------------------------------------
PERCENT OF POTENTIAL REALIZABLE VALUE AT
NUMBER OF TOTAL OPTIONS EXERCISE ASSUMED ANNUAL RATES OF STOCK
SECURITIES GRANTED TO PRICE PRICE APPRECIATION FOR OPTION
UNDERLYING EMPLOYEES IN PER TERM(3)
OPTIONS FISCAL SHARE EXPIRATION -------------------------------
NAME GRANTED (#) YEAR(1) ($/SH) DATE(2) 5% ($) 10% ($)
------------------------------- ------------- --------------- ------------ ------------ --------------- ---------------
Robert H. Swanson, Jr. ........ 200,000 2.55% $ 50.25 7/28/10 $ 16,370,000 $ 26,068,000
500,000 6.38 38.25 4/17/11 31,155,000 49,605,000
Clive B. Davies ............... 120,000 1.53 50.25 7/28/10 9,822,000 15,640,800
75,000 0.96 38.25 4/17/11 4,673,250 7,440,750
Robert C. Dobkin .............. 75,000 0.96 50.25 7/28/10 6,138,750 9,775,500
70,000 0.89 38.25 4/17/11 4,361,700 6,944,700
Paul Coghlan .................. 70,000 0.89 50.25 7/28/10 5,729,500 9,123,800
75,000 0.96 38.25 4/17/11 4,673,250 7,440,750
Lothar Maier .................. 45,000 0.57 50.25 7/28/10 3,683,250 5,865,300
30,000 0.38 38.25 4/17/11 1,869,300 2,976,300
------------
(1) The Company granted to employees in fiscal 2001 options to purchase
7,835,650 shares of Common Stock.
(2) Options may terminate before their expiration upon the termination of
optionee's status as an employee, director or consultant, the optionee's
death or disability or an acquisition of the Company.
(3) Potential realizable value assumes that the stock price increases from the
date of grant until the end of the option term (10 years) at the annual
rate specified (5% and 10%). Annual compounding results in total
appreciation of approximately 63% (at 5% per year) and 159% (at 10% per
year). If the price per share of the Company's Common Stock were to
increase from the prices at the date of the above grants ($50.25 and
$38.25 per share) over the next 10 years, the resulting stock prices at 5%
and 10% appreciation would be approximately $81.85 and $62.31 per share at
5% and approximately $130.34 and $99.21 per share at 10%, respectively.
The 5% and 10% assumed annual rates of compounded stock price appreciation
are mandated by rules of the Securities and Exchange Commission and do not
represent the Company's estimate or projection of future stock price
growth.
OPTION EXERCISES AND HOLDINGS
The following table provides information with respect to option exercises
in fiscal 2001 by the Named Executive Officers and the value of such officers'
unexercised options at June 29, 2001.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR-END OPTION VALUES
NUMBER OF SHARES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES FISCAL YEAR-END (#) (1) FISCAL YEAR-END ($) (2)
ACQUIRED ON VALUE ----------------------------- ----------------------------
NAME EXERCISE (#) REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
-------------------------------- -------------- ------------- ------------- --------------- ------------- --------------
Robert H. Swanson, Jr. ......... 30,000 $1,940,001 623,000 1,080,000 $19,693,944 $14,286,484
Clive B. Davies ................ 102,000 6,342,625 508,000 405,000 17,140,140 6,258,303
Robert C. Dobkin ............... 25,000 1,507,375 966,500 403,500 35,464,124 8,346,227
Paul Coghlan ................... 15,000 1,012,313 470,000 280,000 16,886,306 4,359,932
Lothar Maier ................... 50,000 1,904,685 54,500 220,500 747,410 2,320,080
------------
(1) Market value of underlying securities on the exercise date, minus the
exercise price.
(2) Value is based on the last reported sale price of the Common Stock on the
Nasdaq National Market of $45.30 per share on June 29, 2001 (the last
trading day for fiscal 2001), minus the exercise price.
10
PERFORMANCE GRAPH
The following graph shows a five-year comparison of cumulative total
stockholder return, calculated on a dividend reinvested basis, for Linear
Technology Corporation, the Nasdaq National Market and the Semiconductor
Subgroup of the S&P Electronics Index (the "Semiconductor Index"). The graph
assumes that $100 was invested in the Company's Common Stock, in the Nasdaq
National Market and in the Semiconductor Index on the last trading day of the
Company's 1996 fiscal year. Note that historic stock price performance is not
necessarily indicative of future stock price performance.
[The following descriptive data is supplied in accordance with Rule 304(d) of
Regulation S-T]
Year S&P LLTC Nasdaq
---- --- ---- ------
June 1996 100 100 100
June 1997 187 173 122
June 1998 189 203 160
June 1999 328 454 227
June 2000 743 865 335
June 2001 318 600 182
11
AUDIT COMMITTEE REPORT
The following is the Audit Committee's report submitted to the Board of
Directors for the fiscal year ended July 1, 2001.
The Audit Committee of the Board of Directors has:
* reviewed and discussed the Company's audited financial statements for the
fiscal year ended July 1, 2001 with the Company's management;
* discussed with Ernst & Young LLP, the Company's independent auditors, the
materials required to be discussed by Statement of Auditing Standard 61;
and
* reviewed the written disclosures and the letter from Ernst & Young LLP
required by Independent Standards Board No. 1 and has discussed with
Ernst & Young LLP its independence.
Based on the Audit Committee's review of the matters noted above and its
discussions with the Company's independent auditors and the Company's
management, the Audit Committee recommended to the Board of Directors that the
financial statements be included in the Company's 2001 Annual Report on Form
10-K. This report has been provided by David S. Lee, Leo T. McCarthy, Richard
M. Moley and Thomas S. Volpe, the members of the Audit Committee.
Respectfully submitted by:
THE AUDIT COMMITTEE
David S. Lee
Leo T. McCarthy
Richard M. Moley
Thomas S. Volpe
12
COMPENSATION COMMITTEE REPORT
INTRODUCTION
The Compensation Committee of the Board of Directors is composed only of
non-employee directors. It is responsible for reviewing and recommending for
approval by the Board of Directors the Company's compensation practices,
executive salary levels and variable compensation programs, both cash-based and
equity-based. The Committee generally determines base salary levels for
executive officers of the Company at or about the start of each fiscal year and
determines actual bonuses at the end of each six-month fiscal period based upon
Company and individual performance.
COMPENSATION PHILOSOPHY
The Committee has adopted an executive pay-for-performance philosophy
covering all executive officers, including the Chief Executive Officer. This
philosophy emphasizes variable compensation in order to align executive
compensation with the Company's business objectives and performance and to
attract, retain and reward executives who contribute both to the short-term and
long-term success of the Company. Pay is sufficiently variable that
above-average performance results in above-average total compensation, and
below-average performance for the Company or the individual results in
below-average total compensation. The focus is on corporate performance and
individual contributions toward that performance.
COMPENSATION PROGRAM
The Company has a comprehensive compensation program which consists of
cash compensation, both fixed and variable, and equity-based compensation. The
program has four principal components, which are intended to attract, retain,
motivate and reward executives who are expected to manage both the short-term
and long-term success of the Company. These components are:
Cash-Based Compensation
Base Salary--Base salary is predicated on industry and peer group
comparisons and on performance judgments as to the past and expected future
contribution of the individual executive officer. In general, salary increases
are made based on median increases in salaries for similar executives of
similar-size companies in the high technology industry.
Profit Sharing--Profit sharing payments are distributed semi-annually to
all employees, including executives, from a profit sharing pool. The amount of
the pool is largely determined by the magnitude of sales and operating income
for the six-month period. This pool is distributed to all eligible employees
based on the ratio of their individual salary to total salaries for all
employees. A portion of this profit sharing is paid directly into a 401(k)
retirement plan for all United States employees.
Bonuses--The Company has a discretionary key employee incentive pool
pursuant to which executive officers and a limited number of key employees may
receive semi-annual cash bonuses. Targets for sales growth and operating income
as a percentage of sales influence the size of the pool. Individual payments
are made based on the Company's achievement of these targets and upon the
individual's personal and departmental performance.
In 1996, the Company adopted the 1996 Senior Executive Bonus Plan to
facilitate, under Section 162(m) of the Internal Revenue Code, the federal
income tax deductibility of compensation paid to the Company's most highly
compensated executive officers. In fiscal 2001, the participants were Messrs.
Swanson, Davies, Dobkin, Coghlan and Maier. In fiscal 2002, the plan will
include the Chief Executive Officer and each of the Company's four other most
highly compensated executive officers. In July 2000, the Board of Directors
approved an amendment to the plan to increase the maximum amount payable to any
individual in any one year under the plan from $3 million to $5 million. This
amendment was approved by the Company's stockholders in November 2000.
13
Equity-Based Compensation
Stock Options--Stock options are granted periodically to provide
additional incentive to executives and other key employees to work to maximize
long-term total return to stockholders. The options vest over a five-year
period to encourage option holders to continue in the employ of the Company.
Over 34% of worldwide employees have received stock options. In granting
options, the Compensation Committee takes into account the number of shares and
outstanding options already held by the individual.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Committee uses the same factors and criteria described above for
compensation decisions regarding the Chief Executive Officer.
COMPENSATION LIMITATIONS FOR TAX PURPOSES
The Committee has considered the potential impact of Section 162(m) of the
Internal Revenue Code adopted under the federal Revenue Reconciliation Act of
1993. Section 162(m) generally disallows a tax deduction for any publicly-held
corporation for individual compensation exceeding $1 million in any taxable
year for any of the Named Executive Officers, unless compensation is
performance-based. The Company's policy is to qualify, to the extent
reasonable, its executive officers' compensation for deductibility under
applicable tax laws. In 1996, the Company implemented the 1996 Senior Executive
Bonus Plan in order to qualify certain bonus payments to the Named Executive
Officers as performance-based compensation under Section 162(m). The Committee
believes that the implementation of the 1996 Senior Executive Bonus Plan
enables the Company to compensate its executive officers in accordance with its
pay-for-performance philosophy while maximizing the deductibility of such
compensation. However, the Committee recognizes that the loss of a tax
deduction may be necessary in some circumstances.
SUMMARY
The Committee believes that a fair and motivating compensation program has
played a critical role in the success of the Company. The Committee reviews
this program on an ongoing basis to evaluate its continued effectiveness.
Respectfully submitted by:
THE COMPENSATION COMMITTEE
David S. Lee
Leo T. McCarthy
Richard M. Moley
Thomas S. Volpe
14
OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting. If
any other matters properly come before the meeting or any adjournment or
postponement thereof, it is the intention of the persons named in the enclosed
form of proxy to vote the shares they represent as the Board of Directors may
recommend.
BY ORDER OF THE BOARD OF DIRECTORS
Dated: October 3, 2001
15
APPENDIX A
CHARTER FOR THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
OF LINEAR TECHNOLOGY CORPORATION
PURPOSES:
The purpose of the Audit Committee established pursuant to this charter
will be to make such examinations as are necessary to monitor the corporate
financial reporting and the external audits of the corporation, to provide to
the Board of Directors the results of its examinations and recommendations
derived therefrom, to outline to the board improvements made, or to be made, in
internal accounting controls, to nominate independent auditors, and to provide
to the Board such additional information and materials as it may deem necessary
to make the Board aware of significant financial matters which require Board
attention.
In addition, the Audit Committee will undertake those specific duties and
responsibilities listed below and such other duties as the Board of Directors
from time to time prescribe.
MEMBERSHIP:
The Audit Committee will consist of at least three members of the Board
who are independent of management and the Company. The members of the Audit
Committee will be appointed by and will serve at the discretion of the Board of
Directors.
All committee members shall be financially literate and at least one
member shall have accounting or related financial management expertise.
RESPONSIBILITIES:
The responsibilities of the Audit Committee shall include:
1. Nominating the independent auditors;
2. Reviewing the plan for the audit and related services;
3. Meet separately with the independent auditors to review audit results
and financial statements;
4. Reviewing the results of the quarterly review and the committee, or
its chairman, shall review the interim financial statements prior to the filing
of the Company's quarterly report on Form 10Q;
5. Reviewing with management and the independent auditors the financial
statements to be included in the Company's Annual Report on Form 10K;
6. Overseeing the adequacy of the corporation's system of internal
accounting controls, including obtaining from the independent auditors their
management letters or summaries on such internal accounting controls, if
required;
7. Overseeing compliance with SEC requirements for disclosure of
auditor's services and audit committee members and activities.
In addition to the above responsibilities, the Audit Committee will
undertake such other duties as the Board of Directors delegates to it, and will
report, at least annually, to the Board regarding the Committee's examinations
and recommendations. In conducting its responsibilities, the audit committee
will detain from the independent auditors a formal written statement
delineating all relationships between the auditors and the company. The audit
committee will actively engage in a dialogue with the auditors with respect to
any disclosed relationships or services that may impact the objectivity and
independence of the auditors. The audit committee will emphasize the
independent auditor's ultimate accountability to the board of directors and the
audit committee, as representatives of shareholders, and these shareholder
A-1
representatives' ultimate authority and responsibility to select, evaluate,
and, where appropriate, replace the outside auditor (or to nominate the outside
auditor to be proposed for shareholder approval in any proxy statement).
MEETINGS:
The Audit Committee will meet at least four times each year. The Audit
Committee may establish its own schedule which it will provide to the Board of
Directors in advance.
The Audit Committee will meet separately with the Chief Executive Officer
and the Chief Financial Officer of the corporation at least annually to review
the financial affairs of the corporation. The Audit Committee will meet with
the independent auditors of the corporation, at such times as it deems
appropriate, to review the independent auditor's examination and management
report.
REPORTS:
The Audit Committee will record its summaries of recommendations to the
Board in written form which will be incorporated as a part of the minutes of
the Board of Directors meeting at which those recommendations are presented.
MINUTES:
The Audit Committee will maintain written minutes of its meetings, which
minutes will be filed with the minutes of the meetings of the Board of
Directors.
A-2
EDGAR APPENDIX B
----------------
PROXY
LINEAR TECHNOLOGY CORPORATION
2001 ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Linear Technology Corporation, a Delaware
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement, each dated October 3, 2001 and hereby appoints
Robert H. Swanson, Jr. and Paul Coghlan, or either of them, as
attorneys-in-fact, each with full power, on behalf and in the name of the
undersigned, to represent the undersigned at the 2001 Annual Meeting of
Stockholders of Linear Technology Corporation to be held on November 7, 2001, at
3:00 p.m. local time, at the Company's principal executive offices, located at
720 Sycamore Drive, Milpitas, California 95035, and at any postponement or
adjournment thereof, and to vote all shares of Common Stock which the
undersigned would be entitled to vote if then and there personally present, on
the matters set forth on the reverse side, and, in their discretion, upon such
other matter or matters which may properly come before the meeting and any
adjournment thereof.
This proxy will be voted as directed or, if no contrary direction is indicated,
will be voted FOR the election of the specified nominees as directors, FOR the
ratification of the appointment of Ernst & Young LLP as independent auditors,
and as said proxies deem advisable on such other matters as may properly come
before the meeting.
------------------ ----------------
SEE REVERSE SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE SIDE
------------------ ----------------
--------------------------------------------------------------------------------
[X] Please mark
votes as in
this example.
THIS PROXY WILL BE VOTED AS DIRECTED, OR, IF NO CONTRARY DIRECTION IS INDICATED,
WILL BE VOTED FOR THE ELECTION OF THE SPECIFIED NOMINEES AS DIRECTORS, FOR THE
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS,
AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY COME BEFORE THIS
MEETING.
1. To elect five (5) directors to serve until FOR WITHHELD
the next Annual Meeting of Stockholders and ALL FROM ALL
until their successors are elected. [ ] [ ]
Nominees: Robert H. Swanson, Jr.; David S. Lee; Leo T. McCarthy;
Richard M. Moley; Thomas S. Volpe
[ ] For all nominees exactly except as noted ___________________________
2. To ratify the appointment of Ernst & Young FOR AGAINST ABSTAIN
LLP as independent auditors of the Company [ ] [ ] [ ]
for the fiscal year ending June 30, 2002.
In their discretion, upon such other matter or matters which may properly come
before the meeting and any postponement or adjournment thereof.
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 [ ]
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]
This proxy should be marked, dated, signed by the stockholder(s) exactly as his
or her name appears hereon, and returned promptly in the enclosed envelope.
Persons signing in a fiduciary capacity should so indicate. If shares are held
by joint tenants or as community property, both should sign.
Signature: __________ Date: ________ Signature: __________ Date: _________