SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No.________
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
LINEAR TECHNOLOGY CORPORATION
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(Name of Registrant as Specified in Its Charter)
LINEAR TECHNOLOGY CORPORATION
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(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
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(4) Proposed maximum aggregate value of transaction:
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee 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:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
LINEAR TECHNOLOGY CORPORATION
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Notice of Annual Meeting of Shareholders
To Be Held on November 6, 1996
TO THE SHAREHOLDERS;
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Linear Technology Corporation, a California corporation (the "Company"), will be
held on November 6, 1996 at 3:00 p.m., local time, at the Company's principal
executive offices, located at 1630 McCarthy Boulevard, Milpitas, California
95035 for the following purposes:
1. To elect five directors to serve until the next Annual
Meeting of Shareholders and until their successors are elected.
2. To adopt the 1996 Incentive Stock Option Plan.
3. To adopt the Senior Executive Bonus Plan.
4. To ratify the appointment of Ernst & Young LLP as
independent auditors of the Company for the fiscal year ending June 29,
1997.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only shareholders of record at the close of business on September 9,
1996 are entitled to notice of and to vote at the Annual Meeting and any
adjournment thereof.
All shareholders 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 shareholder
attending the Annual Meeting may vote in person even if such shareholder has
returned a proxy.
FOR THE BOARD OF DIRECTORS
Arthur F. Schneiderman
Secretary
Milpitas, California
October 4, 1996
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WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN, DATE AND RETURN
THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED ENVELOPE
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LINEAR TECHNOLOGY CORPORATION
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PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed Proxy is solicited on behalf of the Board of Directors of
Linear Technology Corporation, a California corporation (the "Company"), for use
at the Annual Meeting of Shareholders to be held November 6, 1996 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 Shareholders. The Annual Meeting
will be held at the Company's principal executive offices, located at 1630
McCarthy Boulevard, Milpitas, California 95035. The telephone number at that
location is (408) 432-1900.
These proxy solicitation materials and the Company's Annual Report to
Shareholders for the year ended June 30, 1996, including financial statements,
were mailed on or about October 4, 1996 to all shareholders entitled to vote at
the meeting.
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 it to the Company
(Attention: Paul Coghlan, Vice President of Finance and Chief Financial Officer)
a written notice of revocation or a duly executed proxy bearing a later date or
by attending the Annual Meeting and voting in person.
Voting and Solicitation
Each shareholder voting for the election of directors may cumulate such
shareholder's votes and give one candidate a number of votes equal to the number
of directors to be elected multiplied by the number of shares held by such
shareholder, or may distribute such shareholder's votes on the same principle
among as many candidates as the shareholder may select, provided that votes
cannot be cast for more than five directors. However, no shareholder will be
entitled to cumulate votes unless the candidate's name has been placed in
nomination prior to the voting, and the shareholder, or any other shareholder,
has given notice at the meeting prior to the voting of the intention to cumulate
votes. If any shareholder gives such notice, all shareholders may cumulate their
votes for the candidates in nomination. 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. See "Proposal 1--Election of
Directors." On all other matters, each share has one vote.
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 or personal solicitation by directors,
officers or regular employees of the Company. No additional compensation will be
paid to such persons for such services.
Deadline for Receipt of Shareholder Proposals
Proposals of shareholders of the Company which are intended to be
presented by such shareholders at the Company's 1997 Annual Meeting must be
received by the Company no later than June 6, 1997 in order that they may be
included in the proxy statement and form of proxy relating to that meeting.
Record Date and Voting Securities
Shareholders of record at the close of business on September 9, 1996
are entitled to notice of and to vote at the meeting. At the record date,
74,328,759 shares of the Company's Common Stock, no par value,
were issued and outstanding. No shares of the Company's Preferred Stock are
outstanding. Based on the last reported sale on the Nasdaq National Market on
September 9, 1996, the market value of one share of the Company's Common Stock
was $32.625.
PROPOSAL 1--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 shall be 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 in
accordance with cumulative voting 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 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
Shareholders or until his successor has been elected and qualified.
The names of the nominees, and certain information about them, are set
forth below.
Name Of Nominee Age Principal Occupation Director Since
--------------- --- ----------------------------- --------------
Robert H. Swanson, Jr. ... 58 President and Chief Executive 1981
Officer of the Company
David S. Lee ............. 59 Chairman, Cortelco Systems 1988
Holding Corp.
Leo T. McCarthy........... 66 President, The Daniel Group 1994
Richard M. Moley.......... 57 Senior Vice President, Cisco 1994
Systems, Inc.
Thomas S. Volpe........... 45 Chief Executive Officer, 1984
Volpe, Welty & Company
There are no family relationships among the Company's directors and
executive officers.
Mr. Swanson, a founder of the Company, has served as President, Chief
Executive Officer and a director of the Company since its incorporation in
September 1981. 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 has been Chairman of the Board of Cortelco Systems Holding
Corp., a telecommunications systems and products company, since August 1993.
From 1985 until October 1993, he served as President, Chief Executive Officer,
and a director of Data Technology Corporation ("DTC"). DTC, a producer of
computer peripheral equipment, changed its name to Qume Corporation ("Qume") in
June 1988 in connection with the acquisition by DTC of Qume, another producer of
computer peripheral equipment. Mr. Lee co-founded Qume in 1973, and served as
its Executive Vice President until ITT Corporation ("ITT") acquired Qume in
1978. After the acquisition, Mr. Lee held the positions of Executive Vice
President of ITT Qume Corporation ("ITT Qume") through 1981 and President from
1981 to 1983. From 1983 to 1985, Mr. Lee served as a Vice President of ITT and
as a Group Executive and Chairman of ITT's Business Information Systems Group,
which was comprised of ITT Qume, Courier Terminal Systems and ITT Information
Systems Division. Mr. Lee also serves as a director of CMC Industries, Inc. and
Chairman of DTC Data Technology Corporation.
Mr. McCarthy currently serves as President of The Daniel Group, an
international trade consulting firm. Prior to joining The Daniel Group in
January 1995, he served three terms as Lieutenant Governor of the State of
California. As Lieutenant Governor, Mr. McCarthy served as chair of the
California Commission for Economic Development where he was primarily
responsible for helping businesses start and grow. In addition, as Lieutenant
Governor, Mr. McCarthy served on the California World Trade
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Commission. He led numerous delegations of California companies on selling
missions to overseas markets, primarily in Asia. Mr. McCarthy also serves as
Chairman of Mednet, Inc., a pharmacy benefit management company.
Mr. Moley is Senior Vice President, Cisco Systems, Inc., a provider of
computer internetworking solutions. 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. in July 1996. Mr. Moley served
in various executive positions at ROLM Corporation, a telecommunications
company, from 1973 to 1986, most recently as a Group Vice President. Prior to
joining ROLM, he held management positions in software development and marketing
at Hewlett-Packard Company. Mr. Moley also serves as a director of CIDCO, Inc.
Mr. Volpe is Chief Executive Officer of Volpe, Welty & Company, a
private investment banking and risk capital firm. 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. From 1978
to 1981, Mr. Volpe was Vice President and Director of the Science and Technology
Group for Blyth Eastman Paine Webber, Inc., an investment banking firm. Mr.
Volpe is also a director of National Insurance Group, PharmChem Laboratories,
Inc. and a number of privately-held companies.
Vote Required and Recommendation of the Board of Directors
The nominees receiving the highest number of affirmative votes of the
shares entitled to be voted, up to the number of directors to be elected, shall
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
California law.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR"
THE NOMINEES SET FORTH HEREIN.
PROPOSAL TWO--ADOPTION OF 1996 INCENTIVE STOCK OPTION PLAN
In July 1996, the Board of Directors adopted and approved the 1996
Incentive Stock Option Plan (the "1996 Plan") and reserved 4,000,000 shares for
issuance thereunder, subject to Shareholder approval. As of August 31, 1996, no
options or rights have been granted pursuant to the 1996 Plan. The 1996 Plan
will replace the Company's 1988 Incentive Stock Option Plan (the "1988 Plan")
with respect to future option grants. A total of 16,000,000 shares of Common
Stock are currently reserved for issuance under the 1988 Plan, and, as of August
31, 1996, an aggregate of 2,080,360 shares were available for issuance under the
1988 Plan. The Company anticipates continuing to grant options under the 1988
Plan until all such available shares are issued.
The 1996 Plan provides for the granting to employees of incentive stock
options within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the "Internal Revenue Code"), and for the granting to employees and
consultants of non-statutory stock options. Unless terminated sooner, the 1996
Plan will terminate automatically in July 2006.
The Company believes that stock options play a key role in the
Company's ability to recruit, reward and retain executives and key employees.
Companies like Linear Technology have historically used stock options as an
important part of recruitment and retention packages. The Company competes
directly with these companies for key employees and believes that it must be
able to offer comparable packages to attract the caliber of individual necessary
to the Company's business.
Vote Required and Recommendation of the Board of Directors
The affirmative vote of a majority of the votes cast will be required
to approve the 1996 Plan, provided such affirmative vote also constitutes a
majority of the quorum.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF THE
1996 PLAN.
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The complete 1996 Plan is attached to this Proxy Statement as Appendix
A. The essential provisions of the 1996 Plan are outlined below.
Administration
The 1996 Plan is administered by the Board or a committee appointed by
the Board. Such committee may consist of (i) two or more "non-employee"
directors in order to grant options to officers and directors in compliance with
Rule 16b-3 promulgated under the Securities Exchange Act of 1934 (the "Exchange
Act") or (ii) two or more "outside" directors in order to grant options intended
to qualify as "performance-based compensation" under the tax laws. The
administrators of the 1996 Plan are referred to herein as the "Administrator."
Eligibility; Limits on Grants
The 1996 Plan provides that options may be granted to employees,
including officers, directors and consultants to the Company, its parent or
subsidiaries. Incentive stock options may be granted only to employees,
including employee directors and officers. The Administrator approves the
participants, the time or times at which options are granted and the number of
shares subject to each. The 1996 Plan is administered so as to satisfy certain
requirements under the federal securities laws, including under the Exchange
Act, and the Internal Revenue Code.
The 1996 Plan limits the discretion allowed to the Administrator in
granting options. This limitation is intended to preserve the Company's ability
to deduct for federal income tax purposes the compensation expense relating to
options granted to certain executive officers under the 1996 Plan. Without this
provision in the 1996 Plan, the federal tax legislation enacted in August 1993
might limit the Company's ability to deduct such compensation expense. The
limitation provides that under the 1996 Plan no employee may be granted in any
one fiscal year options to receive more than 500,000 shares of Common Stock
(excluding option grants in connection with such person's commencement of
service for the Company, in which case such person may receive options for no
more than 500,000 shares). See discussion below under "Tax Information" for a
summary of the more general rules governing the availability to the Company of
tax deductions in connection with stock options granted under the 1996 Plan.
Terms of Options
The terms of options granted under the 1996 Plan are determined by the
Administrator but may not be longer than ten years. Each option is evidenced by
a written agreement between the Company and the optionee to whom such option is
granted and is subject to the following additional terms and conditions:
(a) Exercise of the Option: The Administrator determines when
options may be exercisable. The Administrator may accelerate the
vesting of any outstanding option. The purchase price of the shares to
be purchased upon exercise of any option may be paid, at the discretion
of the Administrator, in cash, check, cashless exercise, or other
shares of Common Stock (with some restrictions), or, if specified in
the optionee's option agreement, promissory note or other legally
permitted consideration at the discretion of the Administrator.
(b) Exercise Price: The exercise price under the 1996 Plan is
determined by the Administrator, provided that, generally in the case
of an incentive stock option, the exercise price may not be less than
100% of the fair market value of the Common Stock on the date the
option is granted, and, provided further, that, in the case of an
incentive stock option granted to an employee who, at the time of such
grant, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any parent or
subsidiary of the Company, the exercise price may be no less than 110%
of the fair market value of the Common Stock on the date the option is
granted.
(c) Termination of Employment: If the optionee's status as an
employee or consultant terminates for any reason other than death or
disability, an option under the 1996 Plan may be exercised for such
period of time as is specified in the option agreement (or if no such
time is specified, an option may be exercised for ninety days) after
such termination (but in no event later than the date of expiration of
the term of the option) and may be exercised only to the extent such
option was exercisable and vested on the date of termination.
4
(d) Disability of Optionee: If an optionee should become
totally and permanently disabled (as defined in the Internal Revenue
Code) while employed by the Company, an option may be exercised within
such period of time as is specified in the option agreement (or if no
such time is specified, an option may be exercised for twelve months)
after termination of employment due to such disability (but in no event
later than the date of expiration of the term of the option), but only
to the extent such option was exercisable and vested on the date of
termination.
(e) Death of Optionee: If an optionee should die while
employed by the Company, an option may be exercised at any time within
such period of time as is specified in the option agreement (or if no
such time is specified, an option may be exercised for twelve months)
after the date of death (but in no event later than the date of
expiration of the term of the option), but only to the extent such
options were exercisable and vested on the date of death.
(f) Termination of Options: Stock options granted under the
1996 Plan expire as determined by the Administrator, but in no event
later than ten years from the date of grant. However, in the case of an
incentive stock option granted to an employee who, at the time of such
grant, owns stock representing more than 10% of the voting power of all
classes of stock of the Company or any parent or subsidiary of the
Company, the term of the option may not be greater than five years.
Under the form of option agreement currently used by the Company,
options generally expire ten years from the date of grant.
(g) Non-transferability of Options: Unless otherwise specified
by the Administrator, options are non-transferable by the optionee
other than by will or by the laws of descent or distribution and are
exercisable during the optionee's lifetime only by the optionee.
(h) Other Provisions: The option agreement may contain such
other terms, provisions and conditions not inconsistent with the 1996
Plan as may be determined by the Administrator.
Changes in Capitalization
In the event a change, such as a stock split or stock dividend payable
in Common Stock, is made in the Company's capitalization which results in an
exchange of Common Stock for a greater or lesser number of shares without
receipt of consideration by the Company, appropriate adjustment will be made in
the number of shares reserved for issuance under the 1996 Plan and in the number
of shares subject to outstanding options under the 1996 Plan, as well as in the
price per share of Common Stock covered by such options. Such adjustment will be
made by the Board of Directors, whose determination is final, binding and
conclusive.
In the event of the proposed dissolution or liquidation of the
Company, options outstanding under the 1996 Plan will terminate immediately
prior to such action. In the event of a proposed sale of all or substantially
all of the assets of the Company, or the merger of the Company into another
corporation, outstanding options must be assumed or an equivalent option must be
substituted by the successor entity, unless the Administrator determines, in its
sole discretion, to make the options fully vested and immediately exercisable
for a period of thirty days, after which they will terminate.
Amendment and Termination of the Plan
The Board of Directors may amend the 1996 Plan at any time, or may
terminate the 1996 Plan, without approval of the Shareholders; provided,
however, that Shareholder approval is required for any amendment to the 1996
Plan for which Shareholder approval would be required under the Internal Revenue
Code or other applicable rules, and no action by the Board of Directors or
Shareholders may unilaterally impair any option previously granted under the
1996 Plan. In any event, the 1996 Plan will terminate in July 2006. Any options
outstanding under the 1996 Plan at the time of its termination will remain
outstanding until they expire by their terms.
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Tax Information
The following is a summary of the effect of federal income taxation
with respect to the grant and exercise of options under the 1996 Plan. It does
not purport to be complete and does not discuss the tax consequences of the
optionee's death or the income tax laws of any municipality, state or foreign
country in which a participant may reside.
Incentive Stock Options
An optionee who is granted an incentive stock option will not recognize
taxable income either at the time the option is granted or upon its exercise,
although the exercise may subject the optionee to the alternative minimum tax.
Upon the sale or exchange of the shares more than two years after grant of the
option and one year after exercising the option, any gain or loss will be
treated as long-term capital gain or loss. If these holding periods are not
satisfied, the optionee will recognize ordinary income at the time of sale or
exchange equal to the difference between the exercise price and the lower of (i)
the fair market value of the shares at the date of the option exercise or (ii)
the sale price of the shares. A different rule for measuring ordinary income
upon such a premature disposition may apply if the optionee is also an officer,
director, or 10% shareholder of the Company. The Company will be entitled to a
deduction in the same amount as the ordinary income recognized by the optionee.
Any gain or loss recognized on such a premature disposition of the shares in
excess of the amount treated as ordinary income will be characterized as
long-term or short-term capital gain or loss, depending on the holding period.
Non-statutory Stock Options
All other options which do not qualify as incentive stock options are
referred to as non-statutory stock options. An optionee will not recognize any
taxable income at the time he or she is granted a non-statutory stock option.
However, upon the option's exercise, the optionee will recognize taxable income,
generally measured as the excess of the then fair market value of the shares
purchased over the exercise price. Any taxable income recognized in connection
with an option exercise by an optionee who is also an employee of the Company
will be subject to tax withholding by the Company. The Company will be entitled
to a tax deduction in the same amount as the ordinary income recognized by the
optionee. Upon resale of such shares by the optionee, any difference between the
sales price and the exercise price, to the extent not recognized as taxable
income as described above, will be treated as long-term or short-term capital
gain or loss, depending on the holding period.
Participation in the 1996 Plan
The grant of options under the 1996 Plan to eligible employees and
consultants, including the officers listed in the Summary Compensation Table
below (the "Named Officers"), is subject to the discretion of the Administrator.
No options have been granted pursuant to the 1996 Plan.
The foregoing description of the 1996 Plan is merely a summary and is
qualified by reference to the 1996 Plan itself, which is attached as Appendix A.
For more detailed information regarding the 1996 Plan see Appendix A.
PROPOSAL THREE--ADOPTION OF THE SENIOR EXECUTIVE BONUS PLAN
The Senior Executive Bonus Plan (the "Bonus Plan") provides the
Company's senior key executives with the opportunity to earn incentive awards
based on the achievement of goals relating to the performance of the Company.
The Compensation Committee (the "Committee") of the Board of Directors has
approved the adoption of the Bonus Plan.
Background and Reasons for Adoption
The Company has a performance-based bonus plan similar to the Bonus
Plan, pursuant to which the Company rewards management for achieving certain
performance objectives. However, under section 162(m) of the Internal Revenue
Code, the federal income tax deductibility of compensation paid to the Company's
Chief Executive Officer and to each of its four other most highly compensated
executive officers may be limited to the extent that such compensation exceeds
$1 million in any one year. Under
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section 162(m), the Company may deduct compensation in excess of that amount if
it qualifies as "performance-based compensation," as defined in section 162(m).
The Bonus Plan is designed to qualify payments thereunder as performance-based
compensation, so that the Company may continue to receive a federal income tax
deduction for the payment of incentive bonuses to its executives. The Company
will continue to operate its current bonus plan, as well, for the compensation
of senior executives and other key employees for whom section 162(m) is not an
issue.
Vote Required and Recommendation of the Board of Directors
The affirmative vote of a majority of the votes cast will be required
to approve the Bonus Plan, provided such affirmative vote also constitutes a
majority of the quorum.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF THE
SENIOR EXECUTIVE BONUS PLAN.
Description of the Bonus Plan
The following paragraphs provide a summary of the principal features of
the Bonus Plan and its operation.
Purpose of the Bonus Plan
The Bonus Plan is intended to increase shareholder value and the
success of the Company by aligning senior executive compensation with the
Company's business objectives and performance.
Administration of the Bonus Plan
The Bonus Plan will be administered by the Committee in accordance with
(1) the express provisions of the Bonus Plan and (2) the requirements of section
162(m).
Eligibility to Receive Awards
Participation in the Bonus Plan is determined annually in the
discretion of the Committee. In selecting participants for the Bonus Plan, the
Committee will choose officers of the Company who are likely to have a
significant impact on Company performance and be highly compensated. For fiscal
1997, the participants in the Bonus Plan are Messrs. Swanson and Davies.
Participation in future years will be in the discretion of the Committee, but it
currently is expected that two to nine officers will participate each year.
Target Awards and Performance Goals
For each fiscal year, the Committee will establish: (1) a target award
for each participant, (2) the performance goals which must be achieved in order
for the participant to be paid the target award, and (3) a formula for
increasing or decreasing a participant's actual award depending upon how actual
performance compares to the pre-established performance goals. The performance
measures which the Committee may use are: (1) annual revenue, and (2) operating
income expressed as a percent of sales.
For fiscal 1997, the Committee has established for the two Bonus Plan
participants a combined performance goal with respect to: (1) operating profit
return on sales (i.e. fiscal 1997 operating profit as a percentage of revenue),
and (2) revenue growth from fiscal 1996 to fiscal 1997. The Committee has also
established a formula, with such measurements as variables, which will determine
actual awards.
Determination of Actual Awards
After the end of each fiscal year, the Committee must certify in
writing the extent to which the performance goals applicable to each participant
were achieved or exceeded. The actual award (if any) for each participant will
be determined by applying the formula to the level of actual performance which
has been certified by the Committee. However, the Committee retains discretion
to eliminate or reduce the actual award payable to any participant below that
which otherwise would be payable under the applicable formula. Also, no
participant's actual award under the Bonus Plan may exceed $3 million for any
fiscal year.
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The Bonus Plan contains a continuous employment requirement. If a
participant terminates employment with the Company prior the end of a fiscal
year, he or she generally will not be entitled to the payment of an award for
the fiscal year. However, if the participant's termination is due to retirement,
disability or death, the Committee will proportionately reduce (or eliminate)
his or her actual award based on the date of termination and such other
considerations as the Committee deems appropriate.
Awards under the Bonus Plan generally will be payable in cash after the
end of the fiscal year during which the award was earned.
PROPOSAL 4--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 29, 1997, and recommends that the shareholders vote for ratification of
such appointment. 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 of Shareholders and will have the opportunity to make a statement if
they so desire. The representatives also are expected to be available to respond
to appropriate questions from shareholders.
Vote Required and Recommendation of the Board of Directors
The affirmative vote of a majority of the votes cast will be required
to approve the appointment of Ernst & Young LLP as the Company's Independent
Auditors.
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 29, 1997.
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OTHER INFORMATION
REGARDING SECURITY OWNERSHIP,
DIRECTORS AND OFFICERS
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 September
9, 1996, by (a) each beneficial owner of more than 5% of the Company's Common
Stock, (b) the Named 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.
Percentage
Shares Beneficially Beneficially
Beneficial Owner Owned Owned
- ------------------------------------ ------------------- ------------
FMR Corp. (1) ........................... 9,905,780 13.3%
82 Devonshire Street
Boston, MA 02109
Robert H. Swanson, Jr.(2) ............... 304,864 *
Robert C. Dobkin(3) ..................... 314,838 *
Clive B. Davies(4) ...................... 401,064 *
Paul Coghlan(5) ......................... 254,612 *
Hans J. Zapf(6) ......................... 122,800 *
Thomas S. Volpe(7) ...................... 24,000 *
David S. Lee(8) ......................... 16,000 *
Leo T. McCarthy(8) ...................... 16,000 *
Richard M. Moley(7) ..................... 24,000 *
All directors and executive officers
as a group (14 persons)(2)(3)(9) ...... 1,695,178 2.3
- ---------------------------
* Less than one percent of the outstanding Common Stock.
(1) As reported by FMR Corp. ("FMR") as of September 9, 1996. Includes
7,987,540 shares beneficially owned by Fidelity Management & Research
Company ("FMRC") and 1,918,240 shares beneficially owned by Fidelity
Management Trust Company ("FMTC"), both wholly-owned subsidiaries of FMR.
FMR has sole voting power with respect to 1,050,240 shares and has sole
investment power with respect to 9,905,780 shares beneficially owned by
FMRC and FMTC.
(2) Includes 219,864 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/D/T dated May 27, 1976. Includes 85,000 shares issuable
pursuant to options exercisable within 60 days of September 9, 1996.
(3) Includes 229,838 shares issued in the name of Robert C. Dobkin and
Kathleen C. Dobkin Trustees of the Dobkin Family Trust U/D/T 9/16/91.
Includes 85,000 shares issuable pursuant to options exercisable within 60
days of September 9, 1996.
(4) Includes 242,000 shares issuable pursuant to options exercisable within 60
days of September 9, 1996.
(5) Includes 236,000 shares issuable pursuant to options exercisable within 60
days of September 9, 1996.
(6) Includes 111,000 shares issuable pursuant to options exercisable within 60
days of September 9, 1996.
(7) Consists of 24,000 shares issuable pursuant to options exercisable within
60 days of September 9, 1996.
(8) Consists of 16,000 shares issuable pursuant to options exercisable within
60 days of September 9, 1996.
(9) Includes 1,056,000 shares issuable pursuant to options exercisable within
60 days of September 9, 1996.
9
Board Meetings And Committees
The Board of Directors of the Company held a total of four meetings
during the fiscal year ended June 30, 1996. No director attended fewer than 75%
of the meetings of the Board of Directors and its 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 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 Compensation Committee of the Board of Directors currently consists
of directors Lee, McCarthy, Moley and Volpe, and held 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 incentive stock plans.
Director Compensation
The Company currently pays to 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.
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.
Compliance With Section 16(a) of the Exchange Act
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 changes in ownership on Forms 4 or 5
with the Securities and Exchange Commission. Such executive officers, directors
and 10% shareholders are also required by the Securities and Exchange 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 received by it, or
written representations from certain reporting persons that no filings were
required for such persons, the Company believes that during the year ended June
30, 1996, all Section 16(a) filing requirements applicable to its executive
officers and directors were complied with, except that Hans J. Zapf, Vice
President International Sales, failed to report one transaction on a Form 4 in a
timely manner on one occasion.
10
Executive 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
June 30, 1996, by the Named Officers:
Summary Compensation Table
Underlying All Other
Name and Principal Position Year Salary Bonus(1) Options Compensation(2)
- ----------------------------- ---- ------- -------- ---------- ---------------
Robert H. Swanson, Jr ......... 1996 $234,135 $958,361 200,000 $32,936
President and Chief 1995 227,415 679,974 -- 23,586
Executive Officer 1994 225,263 525,344 200,000 17,223
Clive B. Davies ............... 1996 218,621 774,366 100,000 28,470
Vice President and 1995 205,341 547,263 -- 20,087
Chief Operating Officer 1994 195,660 430,019 100,000 13,788
Paul Coghlan .................. 1996 209,733 697,141 70,000 26,836
Vice President, Finance and 1995 198,525 500,906 -- 18,784
Chief Financial Officer 1994 185,814 392,960 70,000 12,411
Robert C. Dobkin .............. 1996 215,214 733,649 150,000 27,933
Vice President, 1995 199,241 511,381 -- 19,022
Engineering 1994 188,423 394,810 150,000 12,757
Hans J. Zapf .................. 1996 210,191(3) 407,883 70,000 27,298
Vice President, 1995 193,229(3) 260,430 -- 18,353
International Sales 1994 186,048(3) 175,502 40,000 12,155
<FN>
- ---------------------------
(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 by the
officer during the fiscal year.
(3) Includes sales commissions earned by Mr. Zapf for the fiscal year.
</FN>
11
Option Grants in Last Fiscal Year
The following table shows, as to the Named Officers, information
concerning stock options granted during the year ended June 30, 1996.
Individual Grants
-------------------------------------------------------- Potential Realizable Value at
Number of Percent of Assumed Annual Rates of
Securities Total Options Stock Price Appreciation
Underlying Granted to for Option Term(3)
Options Employees in Exercise Price Expiration -----------------------------
Name Granted Fiscal Year(1) Per Share Date(2) 5% 10%
- -------------------------------- ----------- -------------- -------------- ---------- ----------- -------------
Robert H. Swanson, Jr. ......... 200,000(4) 7.3% $34.125 7/25/05 $4,299,000 $10,851,000
Clive B. Davies................. 100,000(5) 3.6 34.125 7/25/05 2,149,500 5,425,500
Paul Coghlan.................... 70,000(5) 2.6 34.125 7/25/05 1,504,650 3,797,850
Robert C. Dobkin................ 150,000(5) 5.5 34.125 7/25/05 3,224,250 8,138,250
Hans J. Zapf.................... 70,000(5) 2.6 34.125 7/25/05 1,504,650 3,797,850
- ---------------------------
<FN>
(1) The Company granted to employees in fiscal 1996 options to purchase
2,744,500 shares of Common Stock.
(2) Options may terminate before their expiration upon the termination of
optionee's status as an employee 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 at such rates from the price at the date of the above grants
($34.125 per share) over the next 10 years, the resulting stock price at
5% and 10% appreciation would be $55.62 per share and $88.38 per share,
respectively. The 5% and 10% assumed annual rates of compounded stock
price appreciation are mandated by rules of the SEC and do not represent
the Company's estimate or projection of future stock price growth.
(4) This non-statutory stock option was granted under the 1988 Incentive
Stock Option Plan and has an exercise price equal to the fair market value
on the date of grant. The option has a ten-year term and vests over five
years at a rate of 20% of the shares subject thereto at the end of one
year from the date of grant and 10% at the end of each six months
thereafter. Subsequent to the end of fiscal 1996, the option was canceled
and exchanged for an option with an exercise price of $24.75, which price
represented the fair market value of the Common Stock as of the date of
grant of such replacement option. In exchange for this new option, all
vesting under the canceled option was lost and a new five-year vesting
period was started.
(5) These non-statutory stock options were granted under the 1988 Incentive
Stock Option Plan, and have exercise prices equal to the fair market value
on the date of grant. All options have ten-year terms and vest over five
years at a rate of 10% of the shares subject thereto at the end of six
months from the date of grant and 10% at the end of each six months
thereafter. Subsequent to the end of fiscal 1996, all options described
above were canceled and exchanged for options with an exercise price of
$24.75, which price represented the fair market value of the Common Stock
as of the date of grant of such replacement options. In exchange for these
new options, all vesting under the canceled options was lost and a new
five-year vesting period was started.
</FN>
12
Option Exercises And Holdings
The following table provides information with respect to option
exercises in fiscal 1996 by the Named Officers and the value of such officers'
unexercised options at June 30, 1996:
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values
Number of Shares Underlying Value of Unexercised In-the-
Unexercised Options At Fiscal money Options at fiscal Year-
Shares Year-end end(2)
Acquired Value ------------------------------ -----------------------------
Name On Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable
- ---------------------- ----------- ----------- ------------ --------------- ----------- --------------
Robert H. Swanson, Jr. ..... 25,000 $ 671,250 65,000 300,000 $ 893,750 $1,375,000
Clive B. Davies ............ 50,664 1,843,709 234,000 156,000 5,128,625 1,029,500
Paul Coghlan ............... 22,000 884,430 230,000 110,000 5,419,746 737,750
Robert C. Dobkin ........... 5,000 145,000 85,000 210,000 962,500 1,031,250
Hans J. Zapf ............... 10,000 430,625 114,000 83,000 2,624,750 275,000
- ---------------------------
<FN>
(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 Company's Common
Stock on the Nasdaq National Market of $30.00 per share on June 28, 1996
(the last trading day for fiscal 1996), minus the exercise price.
</FN>
13
PERFORMANCE GRAPH
The following graph shows a five-year comparison of cumulative total
shareholder 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 1991 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
Jun-91 100 100 100
Jun-92 117 201 118
Jun-93 246 310 148
Jun-94 261 475 148
Jun-95 492 717 196
Jun-96 451 654 249
14
- --------------------------------------------------------------------------------
COMPENSATION COMMITTEE REPORT
Introduction
The Compensation Committee of the Board of Directors (the "Committee")
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 of 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 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 amount 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.
Equity-Based Compensation
Stock options are granted periodically to provide additional incentive
to executives and other key employees to work to maximize long-term total return
to shareholders. The options vest over a five-year period to encourage option
holders to continue in the employ of the Company. Approximately 33% of worldwide
employees have received stock options. In granting options, the Compensation
Committee takes into account the number of shares and outstanding options held
by the individual.
- --------------------------------------------------------------------------------
15
- --------------------------------------------------------------------------------
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)
(the "Section") of the Internal Revenue Code adopted under the federal Revenue
Reconciliation Act of 1993. The Section 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 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. However, the Committee believes that its primary responsibility is to
provide a compensation program that will attract, retain and reward the
executive talent necessary to the Company's success. Consequently, the Committee
recognizes that the loss of a tax deduction may be necessary in some
circumstances, as was the case in fiscal 1996. The Company has proposed for
shareholder approval a Senior Executive Bonus Plan, which would mitigate this
exposure in fiscal 1997 and thereafter. (See "Proposal 3 -- Adoption of Senior
Executive Bonus Plan).
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
Thomas S. Volpe
Leo T. McCarthy
Richard M. Moley
- --------------------------------------------------------------------------------
16
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 4, 1996
17
APPENDIX A
LINEAR TECHNOLOGY CORPORATION
1996 INCENTIVE STOCK OPTION PLAN
1. Purposes of the Plan. The purposes of this Stock Plan are:
o to attract and retain the best available personnel for positions
of substantial responsibility,
o to provide additional incentive to Employees, Directors and
Consultants, and
o to promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or
Non-statutory Stock Options, as determined by the Administrator at the time of
grant.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or any of its Committees as shall
be administering the Plan, in accordance with Section 4 of the Plan.
(b) "Applicable Laws" means the requirements relating to the
administration of stock option plans under U. S. state corporate laws, U.S.
federal and state securities laws, the Internal Revenue Code, any stock
exchange or quotation system on which the Common Stock is listed or quoted
and the applicable laws of any foreign country or jurisdiction where
Options are, or will be, granted under the Plan.
(c) "Board" means the Board of Directors of the Company.
(d) "Internal Revenue Code" means the Internal Revenue Code of 1986,
as amended.
(e) "Committee" means a committee of Directors appointed by the Board
in accordance with Section 4 of the Plan.
(f) "Common Stock" means the Common Stock of the Company.
(g) "Company" means Linear Technology Corporation, a California
corporation.
(h) "Consultant" means any person, including an advisor, engaged by
the Company or a Parent or Subsidiary to render services to such entity.
(i) "Director" means a member of the Board.
(j) "Disability" means total and permanent disability as defined in
Section 22(e)(3) of the Internal Revenue Code.
(k) "Employee" means any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. A
Service Provider shall not cease to be an Employee in the case of (i) any
leave of absence approved by the Company or (ii) transfers between
locations of the Company or between the Company, its Parent, any
Subsidiary, or any successor. For purposes of Incentive Stock Options, no
such leave may exceed ninety days, unless reemployment upon expiration of
such leave is guaranteed by statute or contract. If reemployment upon
expiration of a leave of absence approved by the Company is not so
guaranteed, on the 181st day of such leave any Incentive Stock Option held
by the Optionee shall cease to be treated as an Incentive Stock Option and
shall be treated for tax purposes as a Non-statutory Stock Option. Neither
service as a Director nor payment of a director's fee by the Company shall
be sufficient to constitute "employment" by the Company.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(m) "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the
Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq
Stock Market, its Fair Market Value shall be the closing bid price for
such
A-1
stock as quoted on such exchange or system for the last market trading
day prior to the time of determination, as reported in The Wall Street
Journal or such other source as the Administrator deems reliable;
(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market
Value of a Share of Common Stock shall be the mean between the high
bid and low asked prices for the Common Stock on the last market
trading day prior to the day of determination, as reported in The Wall
Street Journal or such other source as the Administrator deems
reliable;
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the
Administrator.
(n) "Incentive Stock Option" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Internal
Revenue Code and the regulations promulgated thereunder.
(o) "Non-statutory Stock Option" means an Option not intended to
qualify as an Incentive Stock Option.
(p) "Notice of Grant" means a written or electronic notice evidencing
certain terms and conditions of an individual Option grant. The Notice of
Grant is part of the Option Agreement.
(q) "Officer" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(r) "Option" means a stock option granted pursuant to the Plan.
(s) "Option Agreement" means an agreement between the Company and an
Optionee evidencing the terms and conditions of an individual Option grant.
The Option Agreement is subject to the terms and conditions of the Plan.
(t) "Option Exchange Program" means a program whereby outstanding
options are surrendered in exchange for options with a lower exercise
price.
(u) "Optioned Stock" means the Common Stock subject to an Option.
(v) "Optionee" means the holder of an outstanding Option granted under
the Plan.
(w) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Internal Revenue Code.
(x) "Plan" means this 1996 Incentive Stock Option Plan.
(y) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any successor
to Rule 16b-3, as in effect when discretion is being exercised with respect
to the Plan.
(z) "Section 16(b)" means Section 16(b) of the Exchange Act.
(aa) "Service Provider" means an Employee, Director or Consultant.
(bb) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 13 of the Plan.
(cc) "Subsidiary" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Internal Revenue
Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 13 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 4,000,000 Shares. The Shares may be authorized, but unissued,
or reacquired Common Stock.
If an Option expires or becomes unexercisable without having been
exercised in full, or is surrendered pursuant to an Option Exchange Program, the
unpurchased Shares which were subject thereto shall become available for future
grant or sale under the Plan (unless the Plan has terminated); provided,
A-2
however, that Shares that have actually been issued under the Plan, whether upon
exercise of an Option or Right, shall not be returned to the Plan and shall not
become available for future distribution under the Plan.
4. Administration of the Plan.
(a) Procedure.
(i) Multiple Administrative Bodies. The Plan may be administered
by different Committees with respect to different groups of Service
Providers.
(ii) Section 162(m). To the extent that the Administrator
determines it to be desirable to qualify Options granted hereunder as
"performance-based compensation" within the meaning of Section 162(m)
of the Internal Revenue Code, the Plan shall be administered by a
Committee of two or more "outside directors" within the meaning of
Section 162(m) of the Internal Revenue Code.
(iii) Rule 16b-3. To the extent desirable to qualify transactions
hereunder as exempt under Rule 16b-3, the transactions contemplated
hereunder shall be structured to satisfy the requirements for
exemption under Rule 16b-3.
(iv) Other Administration. Other than as provided above, the Plan
shall be administered by (A) the Board or (B) a Committee, which
committee shall be constituted to satisfy Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions of the
Plan, and in the case of a Committee, subject to the specific duties
delegated by the Board to such Committee, the Administrator shall have the
authority, in its discretion:
(i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom Options may be
granted hereunder;
(iii) to determine the number of shares of Common Stock to be
covered by each Option granted hereunder;
(iv) to approve forms of agreement for use under the Plan;
(v) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any Option granted hereunder. Such terms and
conditions include, but are not limited to, the exercise price, the
time or times when Options may be exercised (which may be based on
performance criteria), any vesting acceleration or waiver of
forfeiture restrictions, and any restriction or limitation regarding
any Option or the shares of Common Stock relating thereto, based in
each case on such factors as the Administrator, in its sole
discretion, shall determine;
(vi) to reduce the exercise price of any Option to the then
current Fair Market Value if the Fair Market Value of the Common Stock
covered by such Option shall have declined since the date the Option
was granted;
(vii) to institute an Option Exchange Program;
(viii) to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan;
(ix) to prescribe, amend and rescind rules and regulations
relating to the Plan, including rules and regulations relating to
sub-plans established for the purpose of qualifying for preferred tax
treatment under foreign tax laws;
(x) to modify or amend each Option (subject to Section 15(c) of
the Plan), including the discretionary authority to extend the
post-termination exercisability period of Options longer than is
otherwise provided for in the Plan;
(xi) to allow Optionee to satisfy withholding tax obligations by
electing to have the Company withhold from the Shares to be issued
upon exercise of an Option that number of Shares having a Fair Market
Value equal to the amount required to be withheld. The Fair Market
Value
A-3
of the Shares to be withheld shall be determined on the date that the
amount of tax to be withheld is to be determined. All elections by an
Optionee to have Shares withheld for this purpose shall be made in
such form and under such conditions as the Administrator may deem
necessary or advisable;
(xii) to authorize any person to execute on behalf of the Company
any instrument required to effect the grant of an Option previously
granted by the Administrator;
(xiii) to make all other determinations deemed necessary or
advisable for administering the Plan.
(c) Effect of Administrator's Decision. The Administrator's decisions,
determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options.
5. Eligibility. Non-statutory Stock Options may be granted to Service
Providers. Incentive Stock Options may be granted only to Employees.
6. Limitations.
(a) Each Option shall be designated in the Option Agreement as either
an Incentive Stock Option or a Non-statutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair
Market Value of the Shares with respect to which Incentive Stock Options
are exercisable for the first time by the Optionee during any calendar year
(under all plans of the Company and any Parent or Subsidiary) exceeds
$100,000, such Options shall be treated as Non-statutory Stock Options. For
purposes of this Section 6(a), Incentive Stock Options shall be taken into
account in the order in which they were granted. The Fair Market Value of
the Shares shall be determined as of the time the Option with respect to
such Shares is granted.
(b) Neither the Plan nor any Option shall confer upon an Optionee any
right with respect to continuing the Optionee's relationship as a Service
Provider with the Company, nor shall they interfere in any way with the
Optionee's right or the Company's right to terminate such relationship at
any time, with or without cause.
(c) The following limitations shall apply to grants of Options:
(i) No Service Provider shall be granted, in any fiscal year of
the Company, Options to purchase more than 500,000 Shares.
(ii) In connection with his or her initial service, a Service
Provider may be granted Options to purchase up to an additional
500,000 Shares which shall not count against the limit set forth in
subsection (i) above.
(iii) The foregoing limitations shall be adjusted proportionately
in connection with any change in the Company's capitalization as
described in Section 13.
(iv) If an Option is canceled in the same fiscal year of the
Company in which it was granted (other than in connection with a
transaction described in Section 13), the cancelled Option will be
counted against the limits set forth in subsections (i) and (ii)
above. For this purpose, if the exercise price of an Option is
reduced, the transaction will be treated as a cancellation of the
Option and the grant of a new Option.
7. Term of Plan. Subject to Section 19 of the Plan, the Plan shall
become effective upon its adoption by the Board. It shall continue in effect for
a term of ten (10) years unless terminated earlier under Section 15 of the Plan.
8. Term of Option. The term of each Option shall be stated in the Option
Agreement. In the case of an Incentive Stock Option, the term shall be ten (10)
years from the date of grant or such shorter term as may be provided in the
Option Agreement. Moreover, in the case of an Incentive Stock Option granted to
an Optionee who, at the time the Incentive Stock Option is granted, owns stock
representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the term of the Incentive
Stock Option shall be five (5) years from the date of grant or such shorter term
as may be provided in the Option Agreement.
A-4
9. Option Exercise Price and Consideration.
(a) Exercise Price. The per share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time the Incentive
Stock Option is granted, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the per Share exercise price
shall be no less than 110% of the Fair Market Value per Share on
the date of grant.
(B) granted to any Employee other than an Employee described
in paragraph (A) immediately above, the per Share exercise price
shall be no less than 100% of the Fair Market Value per Share on
the date of grant.
(ii) In the case of a Non-statutory Stock Option, the per Share
exercise price shall be determined by the Administrator. In the case
of a Non-statutory Stock Option intended to qualify as
"performance-based compensation" within the meaning of Section 162(m)
of the Internal Revenue Code, the per Share exercise price shall be no
less than 100% of the Fair Market Value per Share on the date of
grant.
(iii) Notwithstanding the foregoing, Options may be granted with
a per Share exercise price of less than 100% of the Fair Market Value
per Share on the date of grant pursuant to a merger or other corporate
transaction.
(b) Waiting Period and Exercise Dates. At the time an Option is
granted, the Administrator shall fix the period within which the Option may
be exercised and shall determine any conditions which must be satisfied
before the Option may be exercised.
(c) Form of Consideration. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the
method of payment. In the case of an Incentive Stock Option, the
Administrator shall determine the acceptable form of consideration at the
time of grant. Such consideration may consist entirely of:
(i) cash;
(ii) check;
(iii) promissory note;
(iv) other Shares which (A) in the case of Shares acquired upon
exercise of an option, have been owned by the Optionee for more than
six months on the date of surrender, and (B) have a Fair Market Value
on the date of surrender equal to the aggregate exercise price of the
Shares as to which said Option shall be exercised;
(v) consideration received by the Company under a cashless
exercise program implemented by the Company in connection with the
Plan;
(vi) a reduction in the amount of any Company liability to the
Optionee, including any liability attributable to the Optionee's
participation in any Company-sponsored deferred compensation program
or arrangement;
(vii) any combination of the foregoing methods of payment; or
(viii) such other consideration and method of payment for the
issuance of Shares to the extent permitted by Applicable Laws.
10. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any Option
granted hereunder shall be exercisable according to the terms of the Plan
and at such times and under such conditions as determined by the
Administrator and set forth in the Option Agreement. Unless the
Administrator provides otherwise, vesting of Options granted hereunder
shall be suspended during any unpaid leave of absence. An Option may not be
exercised for a fraction of a Share.
A-5
An Option shall be deemed exercised when the Company receives: (i)
written or electronic notice of exercise (in accordance with the Option
Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized
by the Administrator and permitted by the Option Agreement and the Plan.
Shares issued upon exercise of an Option shall be issued in the name of the
Optionee or, if requested by the Optionee, in the name of the Optionee and
his or her spouse. Until the Shares are issued (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or
any other rights as a shareholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. The Company shall issue
(or cause to be issued) such Shares promptly after the Option is exercised.
No adjustment will be made for a dividend or other right for which the
record date is prior to the date the Shares are issued, except as provided
in Section 13 of the Plan.
Exercising an Option in any manner shall decrease the number of Shares
thereafter available, both for purposes of the Plan and for sale under the
Option, by the number of Shares as to which the Option is exercised.
(b) Termination of Relationship as a Service Provider. If an Optionee
ceases to be a Service Provider, other than upon the Optionee's death or
Disability, the Optionee may exercise his or her Option within such period
of time as is specified in the Option Agreement to the extent that the
Option is vested on the date of termination (but in no event later than the
expiration of the term of such Option as set forth in the Option
Agreement). In the absence of a specified time in the Option Agreement, the
Option shall remain exercisable for three (3) months following the
Optionee's termination. If, on the date of termination, the Optionee is not
vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall revert to the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified by
the Administrator, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.
(c) Disability of Optionee. If an Optionee ceases to be a Service
Provider as a result of the Optionee's Disability, the Optionee may
exercise his or her Option within such period of time as is specified in
the Option Agreement to the extent the Option is vested on the date of
termination (but in no event later than the expiration of the term of such
Option as set forth in the Option Agreement). In the absence of a specified
time in the Option Agreement, the Option shall remain exercisable for
twelve (12) months following the Optionee's termination. If, on the date of
termination, the Optionee is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall revert to the
Plan. If, after termination, the Optionee does not exercise his or her
Option within the time specified herein, the Option shall terminate, and
the Shares covered by such Option shall revert to the Plan.
(d) Death of Optionee. If an Optionee dies while a Service Provider,
the Option may be exercised within such period of time as is specified in
the Option Agreement (but in no event later than the expiration of the term
of such Option as set forth in the Notice of Grant), by the Optionee's
estate or by a person who acquires the right to exercise the Option by
bequest or inheritance, but only to the extent that the Option is vested on
the date of death. In the absence of a specified time in the Option
Agreement, the Option shall remain exercisable for twelve (12) months
following the Optionee's termination. If, at the time of death, the
Optionee is not vested as to his or her entire Option, the Shares covered
by the unvested portion of the Option shall immediately revert to the Plan.
The Option may be exercised by the executor or administrator of the
Optionee's estate or, if none, by the person(s) entitled to exercise the
Option under the Optionee's will or the laws of descent or distribution. If
the Option is not so exercised within the time specified herein, the Option
shall terminate, and the Shares covered by such Option shall revert to the
Plan.
(e) Buyout Provisions. The Administrator may at any time offer to buy
out for a payment in cash or Shares, an Option previously granted based on
such terms and conditions as the Administrator shall establish and
communicate to the Optionee at the time that such offer is made.
A-6
11. Non-Transferability of Options. Unless determined otherwise by the
Administrator, an Option may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee. If the Administrator makes an Option
transferable, such Option shall contain such additional terms and conditions as
the Administrator deems appropriate.
12. Adjustments Upon Changes in Capitalization, Dissolution, Merger or
Asset Sale.
(a) Changes in Capitalization. Subject to any required action by the
shareholders of the Company, the number of shares of Common Stock covered
by each outstanding Option, and the number of shares of Common Stock which
have been authorized for issuance under the Plan but as to which no Options
have yet been granted or which have been returned to the Plan upon
cancellation or expiration of an Option, as well as the price per share of
Common Stock covered by each such outstanding Option, shall be
proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock resulting from a stock split, reverse stock
split, stock dividend, combination or reclassification of the Common Stock,
or any other increase or decrease in the number of issued shares of Common
Stock effected without receipt of consideration by the Company; provided,
however, that conversion of any convertible securities of the Company shall
not be deemed to have been "effected without receipt of consideration."
Such adjustment shall be made by the Board, whose determination in that
respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify
each Optionee as soon as practicable prior to the effective date of such
proposed transaction. The Administrator in its discretion may provide for
an Optionee to have the right to exercise his or her Option until ten (10)
days prior to such transaction as to all of the Optioned Stock covered
thereby, including Shares as to which the Option would not otherwise be
exercisable. In addition, the Administrator may provide that any Company
repurchase option applicable to any Shares purchased upon exercise of an
Option shall lapse as to all such Shares, provided the proposed dissolution
or liquidation takes place at the time and in the manner contemplated. To
the extent it has not been previously exercised, an Option will terminate
immediately prior to the consummation of such proposed action.
(c) Merger or Asset Sale. In the event of a merger of the Company with
or into another corporation, or the sale of substantially all of the assets
of the Company, each outstanding Option shall be assumed or an equivalent
option substituted by the successor corporation or a Parent or Subsidiary
of the successor corporation, unless the Administrator determines, in the
exercise of its sole discretion and in lieu of such assumption or
substitution, that the Optionee shall fully vest in and have the right to
exercise the Option as to all of the Optioned Stock, including Shares as to
which it would not otherwise be vested or exercisable. If an Option becomes
fully vested and exercisable in lieu of assumption or substitution in the
event of a merger or sale of assets, the Administrator shall notify the
Optionee in writing or electronically that the Option shall be fully vested
and exercisable for a period of thirty (30) days from the date of such
notice, and the Option shall terminate upon the expiration of such period.
For the purposes of this paragraph, the Option shall be considered assumed
if, following the merger or sale of assets, the option confers the right to
purchase or receive, for each Share of Optioned Stock subject to the Option
immediately prior to the merger or sale of assets, the consideration
(whether stock, cash, or other securities or property) received in the
merger or sale of assets by holders of Common Stock for each Share held on
the effective date of the transaction (and if holders were offered a choice
of consideration, the type of consideration chosen by the holders of a
majority of the outstanding Shares); provided, however, that if such
consideration received in the merger or sale of assets is not solely common
stock of the successor corporation or its Parent, the Administrator may,
with the consent of the successor corporation, provide for the
consideration to be received upon the exercise of the Option, for each
Share of Optioned Stock
A-7
subject to the Option, to be solely common stock of the successor
corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the merger or
sale of assets.
13. Date of Grant. The date of grant of an Option shall be, for all
purposes, the date on which the Administrator makes the determination granting
such Option, or such other later date as is determined by the Administrator.
Notice of the determination shall be provided to each Optionee within a
reasonable time after the date of such grant.
14. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time amend, alter,
suspend or terminate the Plan.
(b) Shareholder Approval. The Company shall obtain shareholder
approval of any Plan amendment to the extent necessary and desirable to
comply with Applicable Laws.
(c) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any
Optionee, unless mutually agreed otherwise between the Optionee and the
Administrator, which agreement must be in writing and signed by the
Optionee and the Company. Termination of the Plan shall not affect the
Administrator's ability to exercise the powers granted to it hereunder with
respect to options granted under the Plan prior to the date of such
termination.
15. Conditions Upon Issuance of Shares.
(a) Legal Compliance. Shares shall not be issued pursuant to the
exercise of an Option unless the exercise of such Option and the issuance
and delivery of such Shares shall comply with Applicable Laws and shall be
further subject to the approval of counsel for the Company with respect to
such compliance.
(b) Investment Representations. As a condition to the exercise of an
Option, the Company may require the person exercising such Option to
represent and warrant at the time of any such exercise that the Shares are
being purchased only for investment and without any present intention to
sell or distribute such Shares if, in the opinion of counsel for the
Company, such a representation is required.
16. Inability to Obtain Authority. The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.
17. Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
18. Shareholder Approval. The Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months after the date the Plan is
adopted. Such shareholder approval shall be obtained in the manner and to the
degree required under Applicable Laws.
A-8
EDGAR APPENDIX A
ADOPTION OF THE SENIOR EXECUTIVE BONUS PLAN
The Compensation Committee (the "Committee") of the Board of Directors
has approved the adoption of a new Senior Executive Bonus Plan (the "Plan").
Adoption of the Plan is subject to the approval of a majority of the shares of
the Company's Common Stock which are present in person or by proxy and entitled
to vote at the Annual meeting. The Plan provides the Company's senior key
executives with the opportunity to earn incentive awards based on the
achievement of goals relating to the performance of the Company.
Background and Reasons for Adoption
The Company has a performance-based bonus plan similar to the Plan,
pursuant to which the Company rewards management for achieving certain
performance objectives. However, under new section 162(m) of the Internal
Revenue Code, the federal income tax deductibility of compensation paid to the
Company's Chief Executive Officer and to each of its four other most highly
compensated executive officers may be limited to the extent that such
compensation exceeds $1 million in any one year. Under section 162(m), the
Company may deduct compensation in excess of that amount if it qualifies as
"performance-based compensation," as defined in section 162(m). The Plan is
designed to qualify payments thereunder as performance-based compensation, so
that the Company may continue to receive a federal income tax deduction for the
payment of incentive bonuses to its executives. The Company will continue to
operate its current bonus plan, as well, for the compensation of senior
executives and other key employees for whom section 162(m) is not an issue.
Description of the Plan
The following paragraphs provide a summary of the principal features of
the Plan and its operation.
Purpose of the Plan
The Plan is intended to increase stockholder value and the success of
the Company by aligning senior executive compensation with the Company's
business objectives and performance.
Administration of the Plan
The Plan will be administered by the Committee in accordance with (1)
the express provisions of the Plan and (2) the requirements of section 162(m).
Eligibility to Receive Awards
Participation in the Plan is determined annually in the discretion of
the Committee. In selecting participants for the Plan, the Committee will choose
officers of the Company who are likely to have a significant impact on Company
performance and be highly compensated. For fiscal 1997, the participants in the
Plan are Messrs. Swanson and Davies. Participation in future years will be in
the discretion of the Committee, but it currently is expected that two to nine
officers will participate each year.
E-1
Target Awards and Performance Goals
For each fiscal year, the Committee will establish: (1) a target award
for each participant, (2) the performance goals which must be achieved in order
for the participant to be paid the target award, and (3) a formula for
increasing or decreasing a participant's actual award depending upon how actual
performance compares to the pre-established performance goals.
Each participant's target award will be expressed as a percentage of
his or her base salary. Base salary under the Plan means the lesser of: (1) 125%
of the participant's annual salary rate on the first day of the fiscal year, or
(2) the participant's annual salary rate on the last day of the fiscal year.
There are several performance measures which the Committee may use in
setting the performance goals for any fiscal year. Specifically, the performance
goals applicable to any participant will provide for a targeted level of
achievement using one or more of the following measures: (1) annual revenue, and
(2) operating income expressed as a percent of sales.
For fisal 1997, the Committee has established for the two Plan
participants a combined performance goal with respect to: (1) operating profit
return on sales (i.e. fiscal 1997 operating profit as a percentage of revenue),
and (2) revenue growth from fiscal 1996 to fiscal 1997. The Committee has also
established a formula, with such measurements as variables, which will determine
actual awards.
Determination of Actual Awards
After the end of each fiscal year, the Committee must certify in
writing the extent to which the performance goals applicable to each participant
were achieved or exceeded. The actual award (if any) for each participant will
be determined by applying the formula to the level of actual performance which
has been certified by the Committee. However, the Committee retains discretion
to eliminate or reduce the actual award payable to any participant below that
which otherwise would be payable under the applicable formula. Also, no
participant's actual award under the Plan may exceed $3 million for any fiscal
year.
The Plan contains a continuous employment requirement. If a participant
terminates employment with the Company prior to the end of a fiscal year, he or
she generally will not be entitled to the payment of an award for the fiscal
year. However, if the participant's termination is due to retirement, disability
or death, the committee will proportionately reduce (or eliminate) his or her
actual award based on the date of termination and such other considerations as
the Committee deems appropriate.
Awards under the Plan generally will be payable in cash after the end
of the fiscal year during which the award was earned.
E-2
EDGAR APPENDIX B
LINEAR TECHNOLOGY CORPORATION
1996 ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
P The undersigned shareholder of Linear Technology Corporation, a
R California corporation, hereby acknowledges receipt of the Notice of Annual
O Meeting of Shareholders and Proxy Statement, each dated September 25, 1996
X and hereby appoints Robert H. Swanson, Jr. and Paul Coghlan, or either of
Y them, proxies and attorneys-in-fact, with full power to each of substitution,
on behalf and in the name of the undersigned, to represent the undersigned at
the 1996 Annual Meeting of Shareholders of Linear Technology Corporation to
be held on November 6, 1996, at 3:00 p.m. local time, at the Company's
principal offices, 1630 McCarthy Boulevard, Milpitas, California, and at any
adjournment(s) 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(s) 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 adoption of the 1996 Incentive Stock Option Plan, FOR the
adoption of the Senior Executive Bonus Plan, 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
CONTINUED AND TO BE SIGNED ON REVERSE SIDE 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 ADOPTION OF THE 1996 INCENTIVE STOCK OPTION PLAN, FOR THE ADOPTION OF THE SENIOR EXECUTIVE BONUS
PLAN, 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 THE MEETING.
1. ELECTION OF DIRECTORS FOR AGAINST ABSTAIN
Nominees: Robert H. Swanson, Jr.; David S. Lee; Leo T. McCarthy; 2. PROPOSAL TO ADOPT THE
Richard M. Moley; Thomas S. Volpe. 1996 INCENTIVE STOCK [ ] [ ] [ ]
OPTION PLAN:
FOR WITHHELD 3. PROPOSAL TO ADOPT THE
[ ] [ ] MARK HERE SENIOR EXECUTIVE BONUS [ ] [ ] [ ]
FOR ADDRESS PLAN:
[ ] CHANGE AND [ ]
-------------------------------------- NOTE BELOW 4. PROPOSAL TO RATIFY THE
For all nominees except as noted above APPOINTMENT OF ERNST & [ ] [ ] [ ]
YOUNG LLP AS THE INDE-
PENDENT AUDITORS OF THE
COMPANY:
In their discretion, upon such other matter or matters which
may properly come before the meeting and any adjournment(s)
thereof.
This Proxy should be marked, dated, signed by the
shareholder(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