SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. ________)
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[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
[X] Definitive Proxy Statement Commission Only (as permitted by
[ ] Definitive Additional Materials Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
Asante Technologies, Inc.
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Asante Technologies, Inc.
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ASANTE TECHNOLOGIES, INC.
---------------------------------------------
Notice of Annual Meeting of Stockholders
To Be Held On February 24, 1998
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Asante Technologies, Inc. (the "Company"), a Delaware corporation, will be held
on February 24, 1998, at 10:00 a.m., local time, at the Company's principal
executive offices, located at 821 Fox Lane, San Jose, California 95131 for the
following purposes:
1. To elect directors to serve for the ensuing year and until
their successors are elected.
2. To ratify the appointment of Price Waterhouse LLP as
independent accountants of the Company for the fiscal year
ending October 3, 1998.
3. To transact such other business as may properly come before
the meeting and any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on December 26,
1997, are entitled to notice of and to vote at the meeting and any adjournment
thereof.
All stockholders are cordially invited to attend the meeting in person.
However, to ensure your representation at the meeting, we urge you to mark,
sign, date and return the enclosed proxy card as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Any stockholder attending
the meeting may vote in person even if such stockholder has returned a proxy.
FOR THE BOARD OF DIRECTORS
Robert A. Sheffield
Secretary
San Jose, California
January 22, 1998
ASANTE TECHNOLOGIES, INC.
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed Proxy is solicited on behalf of the Board of Directors of
Asante Technologies, Inc. (the "Company") for use at the Annual Meeting of
Stockholders to be held on February 24, 1998, at 10:00 a.m., local time, or at
any adjournment or postponement thereof, for the purposes set forth herein and
in the accompanying Notice of Annual Meeting of Stockholders. The Annual Meeting
will be held at the Company's principal executive offices, located at 821 Fox
Lane, San Jose, California 95131. The telephone number at that location is (408)
435-8388.
These proxy solicitation materials and the Company's Annual Report to
Stockholders (on Form 10-K) for the year ended September 27, 1997, including
financial statements, were mailed on or about January 28, 1998, to all
stockholders entitled to vote at the meeting.
Record Date and Voting Securities
Stockholders of record at the close of business on December 26, 1997,
are entitled to notice of and to vote at the meeting. At the record date,
9,149,579 shares of the Company's Common Stock, $0.001 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 December 26,
1997, the market value of one share of the Company's Common Stock closed at
$3.59.
Revocability of Proxies
Any proxy given may be revoked by the person giving it at any time
before its use by delivering to the Secretary of the Company a written notice of
revocation or a duly executed proxy bearing a later date or by attending the
meeting and voting in person.
Voting and Solicitation
Each share shall have one vote for the election of directors, unless
cumulative voting is invoked. Each stockholder voting for the election of
directors may cumulate such stockholder's votes and give one candidate a number
of votes equal to the number of directors to be elected (six) multiplied by the
number of shares held by such stockholder, or may distribute such stockholder's
votes on the same principle among as many candidates as the stockholder may
select, provided that votes cannot be cast for more than six directors. However,
no stockholder will be entitled to cumulate votes unless the candidate's name
has been placed in nomination prior to the voting, and the stockholder, or any
other stockholder, has given notice at the meeting prior to the voting of the
intention to cumulate votes. If any stockholder gives such notice, all
stockholders 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.
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The Company will bear the cost of soliciting proxies. The Company will
also 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
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 Stockholder Proposals
Proposals of stockholders of the Company which are intended to be
presented by such stockholders at the Company's 1999 Annual Meeting must be
received by the Company no later than September 24, 1998, in order that they may
be included in the proxy statement and form of proxy relating to that meeting.
PROPOSAL 1 - ELECTION OF DIRECTORS
Nominees
Jeff Lin, Wilson Wong, Edmond Tseng, Cyrus Tsui and Michael Kaufman
were re-elected to the Board of Directors at last year's Annual Meeting of
Stockholders. David Lam was appointed to the Board of Directors on March 3,
1997. There are currently six seats authorized on the Board of Directors, all of
which will be filled by directors to be elected at the Annual Meeting.
Unless otherwise instructed, the proxy holders will vote the proxies
received by them for the Company's six 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 the proxy holders. In any event, the proxy
holders cannot vote for more than six persons. The term of office of each person
elected as a director will continue until the next Annual Meeting of
Stockholders or until such director's successor has been elected and qualified.
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Director
Name Age Principal Occupation Since
- ----------------- --- -------------------- --------
Jeff Yuan-Kai Lin 46 President and Chief Executive Officer of the Company and 1988
Chairman of the Board of Directors
Wilson Wong 50 Chief Executive Officer, Pixo Arts Corporation 1988
Michael D. Kaufman 55 Managing General Partner, MK Global Ventures 1995
David K. Lam 54 President and Chief Executive Officer, Caliper Technologies 1997
Corporation
Edmond Y. Tseng 50 President and Chief Executive Officer, OSE, Inc. 1989
Cyrus Y. Tsui 51 President and Chief Executive Officer, Lattice Semiconductor 1993
Corporation
Mr. Lin co-founded the Company in 1988, and currently serves as
President, Chief Executive Officer and Chairman of the Board of Directors. Mr.
Lin also assumed the position of Vice President of Engineering which position he
will hold until a qualified replacement for Mr. Tommy Leung is hired. From June
1993 through July 1994, he served as Vice President, General Manager of Network
Systems Business for the Company. From 1991 to 1993, he served as the Company's
Chairman of the Board of Directors and Chief Operating Officer. From 1988 to
1991, Mr. Lin served as the Company's Vice President of Operations and
Engineering, Chief Financial Officer and Secretary.
Mr. Wong is Chief Executive Officer of Pixo Arts Corporation. Mr. Wong
co-founded the Company (Asante) in 1988. From 1994 to August 1997, he served as
Vice President and General Manager for the Company. From 1993 to 1994, he served
as Vice President and General Manager for the Company's Client Access products.
From 1988 to 1993, he served as the Company's President and Chief Executive
Officer.
Mr. Kaufman has served as Managing General Partner of MK Global
Ventures, a venture capital management company, since he founded the firm in
1987. Mr. Kaufman also currently serves as a director of Davox Corporation, a
provider of call technology and integration systems; Disc, Inc., a manufacturer
of high-capacity storage libraries; Document Technologies, Inc., a manufacturer
of high-resolution displays for document management systems; HyperMedia
Communications, Inc., a wireless networking products manufacturer; Proxim, Inc.,
a publisher of "New Media" and other internet magazines, and Erox Corporation, a
manufacturer of fragrance and toiletry products.
Dr. Lam has served as a Director of the Company since March 3, 1997.
Dr. Lam serves as President and Chief Executive Officer of Calliper Technologies
Corporation. Dr. Lam also provides consulting services to various technology
oriented companies. Prior to joining Caliper Technologies Corporation, Dr. Lam
served as President and Chief Executive Officer of Expert Edge, a software
company. Dr. Lam currently serves as a Director of Quickturn Design Systems, a
supplier of IC and electronic design verification systems.
- 3 -
Mr. Tseng has served as President and Chief Executive Officer of OSE,
Inc., a semiconductor products company which serves as the exclusive North
American sales representative for Orient Semiconductor Electronics, Ltd., since
January 1990. See "Security Ownership of Directors, Officers and Certain
Beneficial Owners" and "Certain Relationships and Related Transactions." Prior
to that time, Mr. Tseng was the Director of Engineering at Condata, Inc., an
electronics products and engineering consulting company.
Mr. Tsui has served as President, Chief Executive Officer and a
director of Lattice Semiconductor Corporation, a semiconductor products company,
since September 1988. In March 1991, Mr. Tsui became Chairman of the Board of
Directors of Lattice. Prior to joining Lattice, Mr. Tsui was Corporate Vice
President of the Programmable Logic Division of Advanced Micro Devices, Inc., a
semiconductor products company.
There are no family relationships among the directors and executive
officers of the Company.
Board Meetings and Committees
The Board of Directors of the Company held a total of 4 meetings and
acted by written consent 2 times during the fiscal year ended September 27,
1997. During fiscal 1997, Mr. Tsui attended 50% of the meetings of the Board of
Directors, Mr. Lam attended 50% of the meetings of the Board of Directors since
his commencement of service on the Board in March 1997, and Mrs. Koh did not
attend any meetings of the Board just prior to her resignation with the Board in
the early part of fiscal 1997. No other 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 which currently consists
of Mr. Kaufman and Mr. Tseng met 2 times during the last fiscal year. The Audit
Committee is responsible for reviewing annual audited financial statements,
approving the services performed by the Company's independent accountants, and
reviewing and evaluating the Company's accounting principles and its system of
internal accounting controls. The Audit Committee is also responsible for
handling disagreements with the Company's independent accountants or the
termination of their engagement.
At the beginning of the fiscal year, the Compensation Committee of the
Board of Directors consisted of Mrs. Koh and Mr. Tsui. However, Mr. Tsui and
Mrs. Koh resigned from the Compensation Committee effective as of October 25,
1996, and January 17, 1997, respectively, without holding any meetings. Mr.
Kaufman and Mr. Lam were appointed to the Compensation Committee effective as of
October 24, 1997. Therefore, the Compensation Committee held no meetings during
the last fiscal year. The Compensation Committee reviews and approves the
Company's executive compensation policy, including the salaries and target
bonuses of the Company's executive officers. In addition, the Compensation
Committee administers the Company's stock plans, which includes recommending or
approving the grant of options to new and existing employees (including officers
and employee directors). Since the Compensation Committee held no meetings
during the last fiscal year, the Company's compensation policies have been
reviewed and ratified by the Company's Board of Directors.
- 4 -
Compensation of Directors
Directors who are employees of the Company receive no fees for services
provided in that capacity, but are reimbursed for out-of-pocket expenses
incurred in connection with attendance at meetings of the Board of Directors and
its committees. See "EXECUTIVE COMPENSATION."
Directors who are not employees of the Company receive a fee of $1,000
for each meeting attended and are also reimbursed for out-of-pocket expenses
incurred in connection with their attendance of meetings at the Board of
Directors and its committees.
Non-employee Directors are also entitled to participate in the
Company's 1993 Directors' Stock Option Plan (the "Directors' Plan"). The
Directors' Plan, which was adopted by the Board of Directors in September 1993,
and approved by the stockholders in October 1993, authorizes a total of 300,000
shares of Common Stock for issuance pursuant to options granted under the
Directors' Plan. The Directors' Plan provides for an automatic grant of 40,000
shares of Common Stock to each non-employee Director on the date on which such
individual first becomes a director. As approved by stockholders at the 1996
Annual Shareholder's Meeting, the Directors' Plan also provides that each
non-employee Director will be granted additional options for the purchase of
10,000 shares of Common Stock at the Board meeting immediately following the
annual anniversary date of the non-employee Director's commencement of service
on the Board of Directors.
Initial options granted under this plan have terms of ten years and
typically the shares underlying the option vest over four years at the rate of
25% on the one year anniversary date, with the remaining shares vesting monthly
in equal increments over the remaining three years. Subsequent options granted
under this plan have a term of ten years and typically vest over the four years
at the rate of 25% annually from the anniversary date. The exercise price of
each option granted equals 100% of the fair market value of the Common Stock,
based on the closing price of the Common Stock as reported on the NASDAQ
National Market on the date of grant. Options granted under the Directors' Plan
must be exercised within three months following the end of the optionee's tenure
as a director of the Company, or within six months after the termination of a
director's tenure due to death or disability. The Directors' Plan is designed to
work automatically, without administration; to the extent administration is
necessary, however, the Directors' Plan has been structured so that options
granted to non-employee Directors who administer the Company's stock plans shall
qualify as transactions exempt from Section 16(b) of the Securities Exchange Act
of 1934, as amended, pursuant to Rule 16b-3 promulgated thereunder.
In September 1993, Mrs. Koh and Mr. Tseng each received options to
purchase 40,000 shares of Common Stock exercisable at a price of $7.50 per
share. In September 1993, Mr. Tsui received an option to purchase 40,000 shares
of Common Stock exercisable at $9.00 per share. In July 1995, Mr. Kaufman
received an option to purchase 40,000 shares of Common Stock exercisable at
$4.63 per share. In March 1997, Mr. Lam received an option to purchase 40,000
shares of Common Stock exercisable at $4.56.
Pursuant to the amendment of the Directors' Plan approved by the
stockholders at the 1996 Annual Meeting, additional options for the purchase of
10,000 shares of Common Stock were automatically earned on the anniversary of
each non-employee Director's service on the Company's Board and issued as of the
date of the next Board meeting subsequent to such anniversary. Mr. Kaufman
earned annual options for the purchase of 10,000 shares of Common Stock in April
1996, and April 1997, at exercise prices of $5.88 and $6.31, respectively.
Annual options to Mrs. Koh and Mr. Tseng for the purchase of 10,000 shares of
Common Stock were issued in September 1996, at an exercise price of $6.13. Mr.
Tsui's annual option was issued in September 1996, at an exercise price of
$6.63. Subsequent to the last fiscal year, annual options for
- 5 -
the purchase of 10,000 shares of Common Stock were earned by Mr. Tseng and Mr.
Tsui and granted in October 1997, at an exercise price of $5.14.
Vote Required and Recommendation of Board of Directors
The six nominees receiving the highest number of affirmative votes of
the shares present or represented and entitled to be voted for them shall be
elected as Directors. Votes withheld from any director will be counted for
purposes of determining the presence or absence of a quorum for the transaction
of business at the meeting, but have no other legal effect upon election of
directors under Delaware law.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR"
THE NOMINEES SET FORTH HEREIN.
- 6 -
PROPOSAL 2 - RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected Price Waterhouse LLP, independent
accountants, to audit the financial statements of the Company for the year
ending October 3, 1998, and recommends that the stockholders vote for
ratification of such appointment. In the event of a negative vote on such
ratification, the Board of Directors will reconsider its selection.
Price Waterhouse LLP has audited the Company's financial statements
since fiscal 1993. Representatives of Price Waterhouse LLP are expected to be
present at the Annual Meeting 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 stockholders.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR"
THE RATIFICATION OF THE APPOINTMENT OF PRICE WATERHOUSE LLP AS THE COMPANY'S
INDEPENDENT ACCOUNTANTS FOR THE FISCAL YEAR ENDING OCTOBER 3, 1998.
- 7 -
SECURITY OWNERSHIP OF DIRECTORS,
OFFICERS AND CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information known to the Company
with respect to beneficial ownership of the Company's Common Stock as of January
1, 1998, by (i) each beneficial owner of more than 5% of the Company's Common
Stock, (ii) the Company's Chief Executive Officer and each of the four other
most highly compensated executive officers during the year ended September 27,
1997, (collectively, the "Named Officers"), (iii) each director of the Company
and (iv) all directors and executive officers of the Company as a group. Except
as otherwise indicated, each person has sole voting and investment power with
respect to all shares shown as beneficially owned, subject to community property
laws where applicable.
Shares Percentage
Beneficially Beneficially
Beneficial Owner Owned Owned
- ---------------- ------------ ------------
Jeff Yuan-Kai Lin (1)(2) 1,349,041 14.7%
Wilson Wong (3) 1,324,250 14.5%
Dr. Eugene C.Y. Duh(4) 1,191,073 13.0%
OSE, Inc.(5) 71,665 *
MK GVD Fund(6) 528,333 5.8%
Michael D. Kaufman(7) 28,333 *
Vertex Investment Pte Ltd.(8) 417,543 4.6%
Edmond Tseng(9) 85,833 *
Cyrus Y. Tsui(10) 42,500 *
David K. Lam (11) 4,648 *
Jim Cansler(12) 0 *
Paul Smith(13) 90,189 1.0%
Robert Sheffield(14) 77,582 *
William Leung(15) 64,258 *
All directors and executive officers as a group 5,352,021 58.49%
(15 persons)
* Represents less than one percent of the outstanding Common Stock.
- --------------------------------
(1) The address for Mr. Lin is Asante Technologies, Inc., 821 Fox Lane, San
Jose, California 95131.
(2) Includes 26,041 shares issuable under stock options exercisable within
60 days of January 1, 1998.
(3) Mr. Wong resigned as an officer of Company effective August 15, 1997.
The address for Mr. Wong is 11842 Shasta Spring Court Cupertino,
California 95014.
(4) The address for Dr. Duh is Orient Semiconductor Electronics, Ltd., No.
12-2 Nei Huang S. Rd., NEPZ Kaohsiung 81120, Taiwan, ROC.
(5) Dr. Duh is a Director and Mr. Tseng is President of OSE, Inc. As such,
Dr. Duh and Mr. Tseng may be deemed to be a beneficial owners of these
shares.
(6) The address for MK GVD Fund and Mr. Kaufman is 2471 E. Bayshore Road,
Suite 520, Palo Alto, California 94303. Director Michael D. Kaufman,
and Gregory Lahann are general partners of MK GVD Management. Each of
these individuals shares voting and investment power with respect to
the shares held by MK GVD Fund, and therefore may be deemed to be
beneficial owners of such shares.
(7) Represents shares issuable under stock options exercisable within 60
days of January 1, 1998.
(8) The address for Vertex Management (II) Pte Ltd. is 77 Science Park
Drive, #02-15 Cintech III, Singapore Science Park, Singapore 118256.
Mrs. Koh (a former Director of the Company) is an officer of Vertex
Management (II) Pte Ltd., the fund manager for Vertex Investment Pte
Ltd., but does not have sole or shared power to control or direct the
voting of shares held by Vertex Investment Pte Ltd. Accordingly, Mrs.
Koh disclaims beneficial ownership of such shares.
(9) Includes 42,500 shares issuable under stock options exercisable within
60 days of January 1, 1998.
(10) Represents shares issuable under stock options exercisable within 60
days of January 1, 1998.
- 8 -
(11) Represents shares issued for services rendered to the Company prior to
Mr. Lams commencement of service on the Board of Directors of the
Company.
(12) Mr. Cansler resigned from the Company effective as of July 21, 1997.
(13) Includes 61,728 shares issuable under stock options exercisable within
60 days of January 1, 1998.
(14) Includes 59,582 shares issuable under stock options exercisable within
60 days of January 1, 1998.
(15) Includes 58,415 shares issuable under stock options exercisable within
60 days of January 1, 1998.
- 9 -
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth all compensation received by the Named
Officers for services rendered to the Company in all capacities for fiscal years
ended September 30, 1995, September 28, 1996, and September 27, 1997:
Long-Term
Annual Compensation Compensation Awards
------------------- -------------------
---------------------------------------
Number
Restricted of Shares
Name and Principal Position Other Annual Stock Underlying LTIP All Other
- --------------------------- Year Salary Bonus Compensation ($) Awards Options Payouts Compensation (1)
--- ------ ----- ---------------- ------ ------- ------- -----------------
Jeff Yuan-Kai Lin (2) 1997 203,854 15,000 -- -- -- -- 1,412
President and Chief Executive Officer 1996 202,700 9,500 -- -- 50,000 -- 1,270
1995 142,698 5,833 -- -- -- -- 184
Jim Cansler (3)(7) 1997 169,266 48,384 4,850 -- -- -- 36,583
Vice President of Sales 1996 111,296 10,000 3,500 -- 80,000 -- 1,198
Paul Smith (4) 1997 165,237 15,000 -- -- 33,000 -- 686
Senior Vice President of Marketing 1996 143,169 17,925 -- -- 17,000 -- 672
and Sales 1995 47,358 -- -- -- 70,000 -- 49
Robert Sheffield (5) 1997 161,378 12,000 -- -- 10,000 -- 1,371
Chief Financial Officer 1996 85,385 7,600 -- -- 120,000 -- 798
William Leung (6) 1997 160,673 12,000 -- -- 32,000 -- 2,983
Vice President of Operations 1996 141,172 20,450 -- -- -- -- 2,681
1995 12,206 -- -- -- 80,000 -- 43
<FN>
- --------------------------------------------------------------------------------
(1) Except as noted in (7), amount consists of premiums paid by the Company
for life insurance, including compensation relating to over $50,000
Life Insurance and Executive Life.
(2) In January 1996, the Company agreed that Mr. Lin shall be paid an
amount equal to his annual base salary and that his unvested options
will be accelerated in the event Mr. Lin is terminated without cause.
(3) Mr. Cansler joined the Company on March 5, 1996, and resigned on July
21, 1997.
(4) Mr. Smith joined the Company on May 15, 1995.
(5) Mr. Sheffield joined the Company on March 6, 1996.
(6) Mr. Leung joined the Company on August 31, 1995.
(7) Includes service fees paid under severance agreement.
</FN>
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Option Grants in Last Fiscal Year
The following table sets forth certain information with respect to
stock options granted to each of the Named Officers during the fiscal year ended
September 27, 1997. In accordance with the rules of the Securities and Exchange
Commission, also shown below is the potential realizable value over the term of
the option (the period from the grant date to the expiration date) based on
assumed rates of stock appreciation of 5% and 10%, compounded annually. These
amounts are based on certain assumed rates of appreciation and do not represent
the Company's estimate of future stock price. Actual gains, if any, on stock
option exercises will be dependent on the future performance of the Common
Stock.
Option Grants in Last Fiscal Year
Individual Grants
----------------- Potential Realizable
Value at Assumed
Annual Rates of
Number of Stock Price
Shares % of Total Options Appreciation
Underlying Granted to Exercise for Option Term (3)
Options Employees in Price -------------------
Name Granted Fiscal Year (2) Per Share Expiration Date 5% 10%
---- --------------- --------- --------------- ---- ----
Jeff Yuan-Kai Lin -- -- -- -- -- --
Jim Cansler -- -- -- -- -- --
Paul Smith 33,000 (1) 5.84% $3.94 4/11/07 63,443 177,622
Robert Sheffield 10,000 (1) 1.77% $3.94 4/11/07 19,225 53,825
William Leung 32,000 (1) 5.66% $6.64 10/25/06-07/15/07 -- 85,740
<FN>
- --------------------------------------------------------------------------------
(1) All options were granted under either the Company's 1990 Plan or the
Company's Key Executive Stock Plan and have exercise prices equal to
the fair market value on the grant date. The options vest ratably over
a four year period from the grant date and have a ten year term.
(2) Based on options to purchase an aggregate of 565,000 shares granted in
fiscal 1997.
(3) Market value option grants is based on the price of the last reported
sale of the Company's Common Stock on the NASDAQ National Market of
$3.59 per share on December 26, 1997.
</FN>
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Option Exercises and Holdings
The following table provides information with respect to option
exercises in fiscal 1997, by the Named Officers and the value of such officers'
unexercised options at September 27, 1997:
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values
Number of Shares
Underlying Unexercised Value of Unexercised
Options at In-the-Money Options at
Fiscal Year-End Fiscal Year-End (1)
--------------------------- -----------------------------
Shares
Acquired Value
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
Jeff Yuan-Kai Lin -- -- 20,833 29,167 -- --
Jim Cansler -- -- 26,666 -- -- --
Paul Smith -- -- 49,227 70,773 44,269 58,731
Robert Sheffield -- -- 46,041 83,959 1,041 8,959
William Leung -- -- 45,081 66,919 -- --
<FN>
- ------------------------------------
(1) Market value of unexercised options is based on the price of the last
reported sale of the Company's Common Stock on the Nasdaq National
Market of $5.44 per share on September 26, 1997 (the last trading day
for fiscal 1997), minus the exercise price.
</FN>
Compensation Committee Interlocks and Insider Participation
Mrs. Koh and Mr. Tsui served on the Compensation Committee but resigned
during the fiscal year. As of October 24, 1997, the Compensation Committee
consisted of Mr. Kaufman and Mr. Lam. The Company is not aware of any interlocks
or insider participation required to be disclosed under applicable rules of the
Securities and Exchange Commission.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company subcontracts the manufacturing of a substantial portion of
its products through Orient Semiconductor Electronics, Ltd. ("OSE"). Under the
Company's arrangement with OSE, the Company purchases certain components from
third party vendors and sells these components to OSE at cost. OSE purchases or
manufactures other components, assembles printed circuit boards, and tests and
packages products for the Company on a purchase order basis. The Company is
obligated to purchase products only to the extent it has signed firm purchase
commitments with OSE. During fiscal 1995, 1996 and 1997, the Company's purchases
from OSE totaled $16.0 million, $17.9 million and $16.8 million, respectively.
The Company's arrangement with OSE provides for payment terms of 45 days from
date of receipt of product. The Company sells certain component parts to OSE
with payment terms similar to those granted to the Company. OSE and its
affiliates are significant stockholders of the Company. See "Security Ownership
of Directors, Officers and Certain Beneficial Owners."
Prior to his appointment as a Director, Mr. Lam provided business
consulting services to the Company for which he was paid $20,000 and received
4,648 shares of the Company's restricted common stock.
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The information contained in the following report of the Board of
Directors and the Performance Graph set forth on page 18, shall not be deemed to
be "soliciting material" or to be "filed" with the Securities and Exchange
Commission, nor shall such information be incorporated by reference into any
future filing under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, except to the extent that the Company
specifically incorporates such information by reference into such filing.
COMPENSATION REPORT OF THE BOARD OF DIRECTORS
In fiscal 1997, the Compensation Committee ("Committee") consisted of
Mrs. Koh and Mr. Tsui, neither of whom is or has been an employee of the
Company. After the resignations of Mrs. Koh and Mr. Tsui from the Committee in
the first part of the year, and after fiscal 1997, Mr. Kaufman and Mr. Lam were
appointed to the Committee, neither of whom is or has been an employee of the
Company. The Committee is responsible for reviewing the compensation and
benefits for the Company's executive officers, as well as supervising and making
recommendations to the Board on compensation matters generally. The Committee
also administers the Company's stock option and purchase plans and makes grants
to executive officers under the Company's 1990 Plan and Key Executive Stock
Plan.
Since the Committee held no meetings during fiscal 1997, the following
report is submitted on behalf of the Board of Directors.
Compensation Policies
The Company operates in the high technology industry, characterized by
rapid changes and extreme competition. The Board's compensation philosophy is to
provide cash and equity incentives to the Company's executive officers and other
employees to attract highly qualified personnel in order to maintain the
Company's competitive position. The Board's compensation program goals are to:
attract, retain and motivate qualified executive officers and employees who
contribute to the Company's long-term success; align the compensation of
executive officers with the Company's business objectives and performance; and
align incentives for executive officers with the interests of stockholders in
maximizing value.
Compensation Components
The compensation for executive officers generally consists of salary,
annual incentives and stock option awards.
Base Salary. The salaries of each of the executive officers of the
Company are generally based on salary levels of similarly sized companies,
primarily those located in Silicon Valley. The Board reviews generally-available
surveys and other published compensation data. The compensation of the executive
officers, including the Chief Executive Officer, are generally reviewed annually
by the Board and adjusted on the basis of performance, the Company's results for
the previous year and competitive conditions.
Bonuses. The Company's intention is to develop bonus compensation plans
designed to reward the Company's executive officers based on the Company's
financial performance. In April 1997, the Company established an updated bonus
plan for fiscal 1997, under which the executive officers were eligible to earn
quarterly cash bonus payments. Criteria for earning the bonuses under this plan
consists of achieving certain operating profit levels and return on shareholder
equity. This plan was approved by the Board of Directors in fiscal 1997, and
replaced the Company's 1995 bonus plan.
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Equity-Based Compensation. The Company enables all eligible employees,
including executive officers other than Mr. Lin, to purchase the Company's
Common Stock at a discount by participating in the Company's 1993 Employee Stock
Purchase Plan. In addition, the Company periodically grants to its executive
officers stock options under the 1990 Plan, and the Key Executive Plan, and
grants to other employees stock options under the 1990 Plan, in order to provide
additional incentive for such persons. The Board believes that such incentive
promotes the long-term interests of the Company's stockholders. Options
generally vest over a four-year period to encourage option holders to continue
employment with the Company. In granting options, the Board takes into account
each individual's level of responsibility within the Company and such
individual's expected future contribution, as well as the number of shares and
outstanding options already held by the individual. The Board has adopted a
stock option grant policy, pursuant to which employees (including officers
except for Mr. Lin) may receive annual stock option grants, generally on their
review date with the Company, in amounts based on certain criteria including
continuous time with the Company, current salary, responsibilities, and job
performance. Employees may also be entitled to receive additional option grants
where the employee's job has significantly changed through growth or promotion.
The exercise price of all options is the market price on the date of grant.
Compensation of Chief Executive Officer
The process of determining the compensation for the Company's Chief
Executive Officer and the factors taken into consideration in such determination
are generally the same as the process and factors used in determining the
compensation of all of the executive officers of the Company. Under the fiscal
1997 bonus plan described above, Mr. Lin earned $15,000, payable in fiscal 1998.
Tax Deductibility of Executive Compensation
Section 162(m) of the Code limits the federal income tax deductibility
of compensation paid to the Company's Chief Executive Officer and to each of the
other four most highly compensated executive officers. The Company may deduct
such compensation only to the extent that during any fiscal year the
compensation paid to any such individual does not exceed $1,000,000, unless
compensation is performance-based and meets certain specified conditions
(including stockholder approval). Based on the Company's current compensation
plans and policies and the transition rules of Section 162(m), the Company and
the Board do not anticipate, for the near future, that the Company will lose any
significant tax deduction for executive compensation.
This report presented herein was approved by a motion of the Board of Directors.
FOR THE BOARD OF DIRECTORS
Robert A. Sheffield, Secretary
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PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total stockholder
return, calculated on a dividend reinvested basis, for Asante Technologies,
Inc., the NASDAQ Composite Total Return Index (US) and the Hambrecht & Quist
Technology Index. The graph assumes that $100 was invested in the Company's
Common Stock, the NASDAQ Composite Total Return Index (US) and the Hambrecht &
Quist Technology Index from the date of the Company's initial public offering,
December 10, 1993, through September 26, 1997, the last trading day of the
Company's 1997 fiscal year. Because the Company effected its initial public
offering on December 10, 1993, the information in the graph is provided in
quarterly intervals. Historic stock price performance is not necessarily
indicative of future stock price performance.
THE H&Q TOTAL RETURN GROWTH & TECHNOLOGY INDICES
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Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's executive officers and directors, and persons who own
more than 10% of the Company's Common Stock, to file reports of ownership on
Form 3 and changes in ownership on Form 4 or 5 with the Securities and Exchange
Commission (the "SEC"). Such executive officers, directors and 10% stockholders
are also required by SEC 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 on written representations from certain reporting persons
that no other filings were required for such persons, the Company believes that,
during the year ended September 27, 1997, all Section 16(a) filing requirements
applicable to its executive officers, directors and 10% stockholders were
complied with except as follows: Mr. Phil Wang and Mr. Jim Cansler (both former
officers of the Company), and Mr. William Leung, each filed one late report
representing one stock transaction each; Mr. Tommy Leung filed two late reports
each representing one stock transaction; and, subsequent to the Company's 1997
fiscal year end, Mr. David Lam filed one late report representing one stock
transaction.
OTHER MATTERS
The Company knows of no other matters to be submitted at 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.
For the Board of Directors
Robert A. Sheffield
Secretary
Dated: January 22, 1998
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