SCHEDULE 14A
(Rule 14(a)-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14a INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary proxy statement [ ] Confidential, for use of the
[ ] Definitive proxy statement Commission only (as permitted
[ ] Definitive additional materials by Rule 14a-6(e)(2))
[ ] Soliciting material under Rule 14a-12
Microchip Technology Incorporated
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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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 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
1) Amount Previously Paid:
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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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[MICROCHIP LOGO]
MICROCHIP TECHNOLOGY INCORPORATED
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
AUGUST 16, 2002
TIME: 9:00 A.M. Arizona Time
PLACE: Microchip Auditorium
Offices of Microchip Technology Incorporated
2355 West Chandler Boulevard
Chandler, Arizona
ITEMS OF
BUSINESS: (1) To elect directors to serve until the next annual meeting of
stockholders and until their successors are elected and
qualified.
(2) To approve an amendment to our Certificate of Incorporation
to increase our shares of authorized common stock from 300
Million shares to 450 Million shares.
(3) To approve an amendment to our Employee Stock Purchase Plan
to increase by 500,000 shares the number of shares of common
stock reserved for issuance under the Purchase Plan.
(4) To approve an amendment to our 1993 Stock Option Plan to
increase (x) from 5,000 to 6,000 the number of shares of common
stock for which options are automatically granted annually to
non-employee directors, and (y) from 10,000 to 12,000 the number
of shares of common stock for which options are granted following
a non-employee director's initial appointment or election to the
board.
(5) To approve an amendment to our 1993 Stock Option Plan to
provide for a special one-time option grant to non-employee
directors to acquire 3,000 shares of common stock.
(6) To ratify the appointment of Ernst & Young LLP as our
independent auditors for the fiscal year ending March 31, 2003.
(7) To transact such other business as may properly come before
the Meeting or any adjournment thereof.
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RECORD DATE: Holders of Microchip common stock of record at the close of
business on June 19, 2002 are entitled to vote at the Meeting.
ANNUAL REPORT: Microchip's 2002 annual report, which is not a part of the proxy
soliciting material, is enclosed.
PROXY: It is important that your shares be represented and voted at the
Meeting. You can vote your shares by completing and returning the
proxy card sent to you. Stockholders who hold their shares in
"street name" may also have a choice of voting their shares over
the Internet or by telephone. If Internet or telephone voting is
available to you, voting instructions are printed on the proxy
card sent to you. You can revoke a proxy at any time prior to its
exercise at the Meeting by following the instructions in the
accompanying proxy statement.
/s/ Mary K. Simmons
Chandler, Arizona Mary K. Simmons
July __, 2002 Secretary
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[MICROCHIP LOGO]
MICROCHIP TECHNOLOGY INCORPORATED
2355 WEST CHANDLER BOULEVARD
CHANDLER, ARIZONA 85224-6199
PROXY STATEMENT
You are cordially invited to attend our Annual Meeting on Friday, August
16, 2002, beginning at 9:00 a.m., Arizona time. The Annual Meeting will be held
in the Microchip Auditorium, located at our facility at 2355 West Chandler
Boulevard, Chandler, Arizona 85224.
We are providing these proxy materials in connection with the solicitation
by the Board of Directors of Microchip Technology Incorporated of proxies to be
voted at Microchip's 2002 Annual Meeting of Stockholders and at any Meeting
following adjournment thereof.
Our fiscal year begins on April 1 and ends on March 31. References in this
proxy statement to the year 2002 or fiscal 2002 refer to the 12-month period
from April 1, 2001 through March 31, 2002.
On May 8, 2002, we effected a 3-for-2 split of our common stock. Unless
otherwise noted, all shares, share prices and related figures in this proxy
statement are restated to reflect the stock split.
On June __, 2002, the closing price of a share of our common stock as
reported by the Nasdaq National Market was $_____.
We anticipate first mailing this proxy statement and accompanying form of
proxy on July __, 2002 to holders of Microchip's common stock on June 19, 2002,
the Record Date for the Annual Meeting.
PROXIES AND VOTING PROCEDURES
YOUR VOTE IS IMPORTANT. Because many stockholders cannot attend the Meeting
in person, it is necessary that a large number be represented by proxy.
Stockholders who hold their shares in "street name" may have a choice of voting
over the Internet, by using a toll-free telephone number or by completing a
proxy card and mailing it in the postage-paid envelope provided. Please refer to
your proxy card or the information forwarded by your bank, broker or other
holder of record to see which options are available to you. Under Delaware law,
stockholders may submit proxies electronically. Please be aware that if you vote
over the Internet, you may incur costs such as telephone and Internet access
charges for which you will be responsible.
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You can revoke your proxy at any time before it is exercised by timely
delivery of a properly executed, later-dated proxy (including an Internet or
telephone vote if these options are available to you) or by voting by ballot at
the Meeting.
The method by which you vote will in no way limit your right to vote at the
Meeting if you later decide to attend in person. If your shares are held in the
name of a bank, broker or other holder of record, you must obtain a proxy,
executed in your favor, from the holder of record, to be able to vote at the
Meeting.
All shares entitled to vote and represented by properly completed proxies
received prior to the Meeting and not revoked will be voted at the Meeting in
accordance with your instructions. IF YOU DO NOT INDICATE HOW YOUR SHARES SHOULD
BE VOTED ON A MATTER, THE SHARES REPRESENTED BY YOUR PROPERLY COMPLETED PROXY
WILL BE VOTED AS THE BOARD OF DIRECTORS RECOMMENDS.
If any other matters are properly presented at the Meeting for
consideration, including, among other things, consideration of a motion to
adjourn the Meeting to another time or place, the persons named as proxies and
acting thereunder will have discretion to vote on those matters according to
their best judgment to the same extent as the person delivering the proxy would
be entitled to vote. At the date this proxy statement went to press, we did not
anticipate that any other matters would be raised at the Meeting.
STOCKHOLDERS ENTITLED TO VOTE
Stockholders of record at the close of business on the Record Date, June
19, 2002, are entitled to notice of and to vote at the Meeting. Each share is
entitled to one vote on each matter properly brought before the Meeting. On the
Record Date, there were ______ shares of our common stock issued and
outstanding.
In accordance with Delaware law, a list of stockholders entitled to vote at
the Meeting will be available at the Meeting on August 16, 2002, and for 10 days
prior to the Meeting at 2355 West Chandler Boulevard, Chandler, Arizona, between
the hours of 9:00 a.m. and 4:30 p.m., Arizona time.
REQUIRED VOTE
QUORUM, ABSTENTIONS AND BROKER NON-VOTES
The presence, in person or by proxy, of the holders of a majority of the
shares entitled to vote at the Meeting is necessary to constitute a quorum at
the Meeting. Abstentions and broker "non-votes" are counted as present and
entitled to vote for purposes of determining a quorum. A broker "non-vote"
occurs when a nominee holding shares for a beneficial owner (i.e., in "street
name") does not vote on a particular proposal because the nominee does not have
discretionary voting power with respect to that item and has not received
instructions from the beneficial owner. Under the rules of the New York Stock
Exchange, which apply to NYSE member brokers trading in non-NYSE stock, brokers
have discretionary authority to vote shares on certain routine matters if
customer instructions are not provided. The proposals to be considered at the
Meeting may be treated as routine matters. Consequently, if you do not return a
proxy card, your broker may have discretion to vote your shares on the matters
presented.
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ELECTION OF DIRECTORS
A plurality of the votes duly cast is required for the election of
Directors (i.e., the nominees receiving the greatest number of votes will be
elected). Abstentions and broker "non-votes" are not counted for purposes of the
election of Directors.
AMENDMENT TO CERTIFICATE OF INCORPORATION
The affirmative vote of the holders of a majority of the shares of common
stock outstanding on the Record Date is required to approve the proposed
amendment to our Certificate of Incorporation. Abstentions and broker
"non-votes" have the same effect as a vote against this proposal.
OTHER MATTERS
The affirmative vote of the holders of a majority of shares of common stock
present in person or represented by proxy and entitled to vote is required to:
* adopt the amendment to our Employee Stock Purchase Plan
* adopt the amendments to our 1993 Stock Option Plan, and
* ratify the appointment of our independent auditors.
Abstentions have the same effect as voting against these proposals. Broker
"non-votes" ARE NOT counted for purposes of approving the amendment to our
Employee Stock Purchase Plan, approving the amendments to our 1993 Stock Option
Plan or ratifying the appointment of our independent auditors.
ELECTRONIC ACCESS TO PROXY STATEMENT AND ANNUAL REPORT
This proxy statement and our 2002 Annual Report are available on our
Internet site at http://www.microchip.com. Our stockholders can elect to view
future proxy statements and annual reports over the Internet instead of
receiving paper copies in the mail.
If you are a stockholder of record, you can choose this option and save
Microchip the cost of producing and mailing these documents by marking the
appropriate box on your proxy card. You can also choose between paper documents
and electronic access by calling Microchip's Investor Relations Department at
480-792-7761.
If you choose to view future proxy statements and annual reports over the
Internet, you will receive a proxy card in the mail next year with instructions
containing the Internet address of those materials. Your choice will remain in
effect until you contact Microchip's Investor Relations Department and instruct
us otherwise. You do not have to elect Internet access each year.
If you hold your Microchip stock through a bank, broker or other holder of
record, please refer to the information provided by that entity for instructions
on how to elect to view future proxy statements and annual reports over the
Internet.
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Most stockholders who hold their Microchip stock through a bank, broker or
other holder of record and who elect electronic access will receive an e-mail
message next year containing the Internet address to use to access Microchip's
proxy statement and annual report.
COST OF PROXY SOLICITATION
Microchip will pay the cost of soliciting proxies. Proxies may be solicited
on behalf of the company by Directors, officers or employees of the company in
person or by telephone, facsimile or other electronic means. We may also, at our
expense, engage a proxy solicitation firm to assist us in the distribution and
solicitation of proxies. If we do so, we believe that the expense will not
exceed $50,000. We will also reimburse brokerage firms and other custodians,
nominees and fiduciaries for their expenses incurred in sending proxies and
proxy materials to beneficial owners of Microchip common stock.
THE BOARD OF DIRECTORS
MEETINGS OF THE BOARD OF DIRECTORS
During fiscal 2002, our Board of Directors held seven meetings. Each
Director attended at least 75% of his Board of Directors and Board committee
meetings, except Wade Meyercord, who attended 69% of his Board of Directors and
committee meetings.
COMMITTEES OF THE BOARD OF DIRECTORS
During fiscal 2002, our Board of Directors maintained two standing
committees: the Audit Committee and the Compensation Committee. Matthew Chapman
is the Chairman of our Audit Committee. For more information on our Audit
Committee, please turn to the "REPORT OF THE AUDIT COMMITTEE" at page 5, below.
Albert Hugo-Martinez is the Chairman of our Compensation Committee. For more
information on our Compensation Committee, please turn to the "BOARD
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION" at page 20, below.
During fiscal 2002, the Audit Committee met nine times and the Compensation
Committee met four times.
The Board of Directors also maintains a Stock Option Committee. The Stock
Option Committee administers the company's stock option plans and determines the
timing, amount and vesting of stock options to be granted to the executive
officers. Currently, the Compensation Committee also serves as the Stock Option
Committee.
The Board of Directors does not have a nominating committee or any
committee that performs the functions of a nominating committee.
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REPORT OF THE AUDIT COMMITTEE
The Audit Committee focuses on three areas:
* the adequacy of the company's internal controls and financial
reporting process
* review of the company's quarterly and annual financial statements,
significant accounting and tax matters and the scope of the annual
audit with the company's management and independent auditors, and
* the independence and performance of the company's independent
auditors.
We meet with management periodically to consider the adequacy of the
company's internal controls, the objectivity of its financial reporting and the
company's critical accounting policies. We discuss these matters with the
company's independent auditors and with appropriate company management,
financial and legal personnel.
We also meet periodically with the independent auditors, both with and
without company management present.
We also recommend to the Board of Directors the appointment of the
independent auditors and review periodically their performance and independence
from the company.
The Directors who serve on the Audit Committee meet the independence and
experience requirements of the National Association of Securities Dealers. What
this means is that the Board of Directors has determined that no member of the
Audit Committee has a relationship to Microchip that may interfere with such
member's independence from Microchip and its management, and that all members
have the required knowledge and experience to perform their duties as committee
members.
The Board of Directors has adopted a written charter setting out the
purposes and responsibilities of the Audit Committee. The Board and the Audit
Committee review and assess the adequacy of the charter on an annual basis. A
copy of that charter is attached to this proxy statement as Appendix A.
Management has primary responsibility for the preparation, presentation and
integrity of Microchip's financial statements and the overall reporting process,
including the company's system of internal controls; accounting and financial
reporting principles; internal controls; and procedures designed to ensure
compliance with accounting standards, applicable laws and regulations.
Ernst & Young, Microchip's independent auditing firm, audits the annual
financial statements prepared by management, expresses an opinion as to whether
those financial statements fairly present the financial position, results of
operations and cash flows in conformity with generally accepted accounting
principles, and discusses with us any issues they believe should be raised with
us.
The Audit Committee members are not professional accountants or auditors,
and our functions are not intended to duplicate or to certify the activities of
management and the independent auditors, nor can the Audit Committee certify
that the independent auditors are "independent" under applicable rules.
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The Audit Committee serves an oversight role at the board level, in which
we provide guidance and counsel to management and the auditors on the basis of
information we receive, discussions with management and the auditors and our
experience in business, financial and accounting matters.
In fiscal year 2002, we reviewed Microchip's audited annual financial
statements included in its annual report on Form 10-K and filed with the
Securities and Exchange Commission, as well as the unaudited financial
statements filed with the company's quarterly reports on Form 10-Q. We also met
with both management and Ernst & Young LLP, the company's independent auditors
for fiscal 2002, to discuss those financial statements. Management has
represented to us that the financial statements were prepared in accordance with
generally accepted accounting principles.
We have received from Ernst & Young the written disclosure and the letter
required by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees). These items related to Ernst & Young's
independence from Microchip. We also discussed with Ernst & Young any matters
required to be discussed by Statement on Auditing Standards No. 61
(Communications with Audit Committees).
Based on these reviews and discussions, we recommended to the Board of
Directors that the company's audited financial statements be included in the
company's Annual Report on Form 10-K for the fiscal year ended March 31, 2002.
By the Audit Committee of the Board of Directors(1):
Matthew W. Chapman (Chairman) Wade F. Meyercord Albert J. Hugo-Martinez
DIRECTOR COMPENSATION
DIRECTOR FEES
Non-employee Directors currently receive a $13,000 annual retainer (which
will increase to $13,600 on July 1, 2002), paid in quarterly installments, and
$1,600 (which will increase to $1,700 on July 1, 2002) for each meeting attended
in person. Directors do not receive any compensation for telephonic meetings of
the Board or for meetings of committees of the Board.
STOCK OPTIONS
Under the terms of our 1993 Stock Option Plan, each non-employee Director
is automatically granted:
* an option to purchase 10,000 shares of common stock upon his or her
first election to the Board of Directors, and
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(1) The Report of the Audit Committee is not "soliciting" material and is not
deemed "filed" with the Securities and Exchange Commission, and is not
incorporated by reference into any filings of Microchip under the
Securities Act of 1933 or the Securities Exchange Act of 1934, whether made
before or after the date of this proxy statement and irrespective of any
general incorporation language contained in such filings.
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* an additional option to purchase 5,000 shares of common stock
immediately following the annual election of directors, granted as of
the first business day of the month in which the annual stockholders'
meeting is held.
On August 17, 2001, Mr. Hugo-Martinez, Mr. Day, Mr. Chapman and Mr.
Meyercord were each granted an option to acquire 5,000 shares of common stock at
an exercise price of $37.05 per share(2). Each such option vests in a series of
12 equal and successive monthly installments starting one month after the grant
date.
As discussed at page 14, below, under "Proposals to Amend the 1993 Stock
Option Plan," our stockholders are being asked to approve amendments to our 1993
Stock Option Plan to:
* increase from 5,000 to 6,000 the number of shares of common stock for
which options are automatically granted to non-employee directors
following the annual election of directors, and
* increase from 10,000 to 12,000 the number of shares of common stock
for which options are automatically granted following a non-employee
director's initial appointment or election to the Board of Directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In fiscal 2002, Mr. Hugo-Martinez and Mr. Day, two of our independent
Directors, served on the Compensation Committee. Neither Mr. Hugo-Martinez nor
Mr. Day had any contractual or other relationship or transaction with the
company during fiscal 2002 except as a Director, and neither has ever served as
an officer or employee of the company.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our
Directors, executive officers and stockholders holding more than 10% of our
common stock to file reports of holdings and transactions in Microchip stock
with the Securities and Exchange Commission. Directors, executive officers and
stockholders holding more than 10% of our common stock are required by
regulations under the Securities Exchange Act of 1934 to furnish us with copies
of all Section 16(a) forms they file. Based solely on our review of the copies
of such forms received by us during fiscal 2002, and written representations
from our Directors and executive officers that no other reports were required,
we believe that all Section 16(a) filing requirements applicable to our
Directors, executive officers and stockholders holding more than 10% of our
common stock with respect to fiscal 2002 were met.
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(2) Neither the number of shares nor the option exercise price set forth above
have been adjusted to reflect the 3-for-2 split of our common stock
effected on May 8, 2002. To the extent such options had not been exercised
on May 8, 2002, the number of unexercised options and the exercise price
were adjusted to reflect the stock split.
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PROPOSAL ONE
ELECTION OF DIRECTORS
A board of five Directors will be elected at the Meeting. The persons named
in the proxy card will vote such proxy for the election of each of the nominees
named below, unless you indicate that your vote should be withheld. Each of the
nominees is currently serving as a Director. If any of the nominees becomes
unable or declines to serve as a Director at the time of the Meeting, the
persons named in the proxy card will vote such proxy for any nominee designated
by the current Board of Directors to fill the vacancy. We do not expect that any
of the nominees will be unable or will decline to serve as a Director.
The term of office of each person who is elected as a Director at the
Meeting will continue until the 2003 annual Meeting of stockholders and until a
successor has been elected and qualified.
INFORMATION ON NOMINEES FOR DIRECTOR
NAME AGE POSITION(S) HELD
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Steve Sanghi........................ 46 Chairman, President and CEO
Albert J. Hugo-Martinez (l) (2)..... 56 Director
L.B. Day (1)........................ 57 Director
Matthew W. Chapman (2).............. 51 Director
Wade F. Meyercord (2)............... 61 Director
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(1) Member of the Compensation Committee
(2) Member of the Audit Committee
STEVE SANGHI is currently, and has been since August 1990, a Director and
President of the company. Since October 1991, he has served as CEO of the
company, and since October 1993, as Chairman of the Board of Directors.
ALBERT HUGO-MARTINEZ has served as a Director of the company since October
1990. Since February 2000, he has served as Chief Executive Officer of
Hugo-Martinez Associates, a consulting and advisory firm. From February 1999 to
February 2000, he served as Chairman and Chief Executive Officer of Network
Webware, Inc., an Internet software company. From March 1996 until November
1999, he served as President and Chief Executive Officer and a member of the
board of directors of GTI Corporation, a manufacturer of ISDN-ADSL and local
area network subcomponents. Mr. Hugo-Martinez is also a member of the board of
directors of Ramtron International Corporation.
L.B. DAY has served as a Director of the company since December 1994. Since
1976, he has served as President of L.B. Day & Company, Inc., a management
consulting firm specializing in organizational development and strategic
planning.
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MATTHEW CHAPMAN has served as a Director of the company since May 1997.
Since January 2002, he has served as President and CEO of Centrisoft
Corporation, an emerging software provider in the field of network bandwidth
management and quality of service. From August 2000 to January 2002, Mr. Chapman
served as an advisor to early-stage technology companies in connection with
developing business plans and securing funding. From 1988 until August 2000, he
served as Chief Executive Officer, and from 1991 until August 2000 as Chairman
of Concentrex Incorporated, a supplier of integrated software solutions and
services to financial institutions throughout the United States.
WADE MEYERCORD has served as a Director of the company since June 1999.
Since June 1999, he has served as Senior Vice President and Chief Financial
Officer of Rioport.com, an Internet applications service provider for the music
industry. From October 1997 to June 1999, he served as Senior Vice President,
e-commerce and Quality Assurance of Diamond Multimedia Systems, Inc., a supplier
of Internet multimedia appliances. From 1987 to 1997, he served as President of
Meyercord & Associates, a management consulting firm specializing in strategy
and infrastructure improvement. Mr. Meyercord is also a member of the board of
directors of California Micro Devices Corporation.
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS,
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information concerning the beneficial
ownership of our common stock as of April 26, 2002 for: (a) each Director, (b)
our CEO and the four other most highly compensated executive officers named in
this proxy statement, (c) all Directors and executive officers as a group, and
(d) each person who is known to us to own beneficially more than five percent of
our common stock. Except as otherwise indicated in the footnotes to this table,
and subject to applicable community property laws and joint tenancies, the
persons named in this table have sole voting and investment power with respect
to all shares of common stock held by such person:
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NUMBER OF SHARES PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) COMMON STOCK
- ------------------------------------ --------------------- ------------
AIM Management Group Inc. (3)............................... 16,138,599 12.30%
Capital Research & Management Co. (4)....................... 15,071,250 11.48%
Steve Sanghi (5)............................................ 4,826,238 2.36%
Timothy B. Billington (1)(2)................................ 215,472 *
Matthew W. Chapman (6)...................................... 66,625 *
L.B. Day (1)................................................ 40,000 *
Albert J. Hugo-Martinez (1)................................. 146,079 *
David S. Lambert (1)........................................ 731,951 *
Mitchell R. Little (1)...................................... 36,778 *
Wade F. Meyercord (1)....................................... 65,125 *
Gordon W. Parnell (7)....................................... 96,863 *
All Directors and executive officers as a
group (10 people) (1)...................................... 6,535,116 3.18%
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* Less than 1% of the outstanding shares of common stock
(1) As indicated below, the number of shares beneficially owned includes shares
of common stock issuable to the identified person pursuant to stock options
and stock purchase rights that may be exercised within 60 days of April 26,
2002. In calculating the percentage of ownership, such shares are deemed to
be outstanding for the purpose of computing the percentage of shares of
common stock owned by such person but are not deemed to be outstanding for
the purpose of computing the percentage of shares of common stock owned by
any other stockholder:
* Timothy B. Billington -- 211,992 shares * David S. Lambert -- 466,177 shares
* L.B. Day -- 40,000 shares * Wade F. Meyercord -- 65,125 shares
* Albert J. Hugo-Martinez -- 146,079 shares * Other executive officers -- 209,640 shares
* Mitchell R. Little -- 35,986 shares * Directors and executive officers as a group
(10 people) -- 4,236,437 shares.
(2) Mr. Billington retired from Microchip effective March 31, 2002.
(3) Address is 11 Greenway Plaza, Suite 100, Houston, TX 77046. Information is
based on the Schedule 13G filed by AIM Management Group Inc. dated February
6, 2002. Such Schedule 13G indicates that AIM Management Group Inc. has
sole power to vote or direct the vote and to dispose of and direct the
disposition of the common stock. AIM Management Group Inc. is the parent
holding company of a group of investment management companies that hold
investment power and, in some case, voting power over the securities
reported in the referenced Schedule 13G.
(4) Address is 333 South Hope Street, Los Angeles, CA 90071. Information is
based on a Schedule 13G filed by Capital Research & Management Co. dated
February 11, 2002. Such Schedule 13G indicates that Capital Research &
Management Co. is the beneficial owner of 15,071,250 shares of common stock
as a result of acting as an investment adviser to investment companies
registered under Section 8 of the Investment Company Act of 1940. According
to such Schedule 13G, Capital Research & Management Co. has sole power to
dispose of or direct the disposition of the common stock, and no power to
vote or direct the voting of the common stock.
(5) Includes 2,926,493 shares issuable upon exercise of options and 1,024,395
shares held of record by Steve Sanghi and Maria T. Sanghi as trustees.
(6) Includes 53,125 shares issuable upon exercise of options, 262 shares held
in Testamentary Trust of Regan Chapman and 135 shares held by Mr. Chapman's
minor children.
(7) Includes 81,820 shares issuable upon exercise of options and 4,936 shares
held of record by Gordon W. Parnell and Jeanette Parnell as trustees.
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PROPOSAL TWO
PROPOSAL TO AMEND OUR CERTIFICATE OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
Our Certificate of Incorporation currently authorizes us to issue two
classes of stock:
* 300 Million shares of common stock, $0.001 par value per share, and
* 5 Million shares of Preferred Stock, $0.001 par value per share.
The Board of Directors has unanimously approved an amendment to the
Certificate of Incorporation to increase the number of authorized shares of
common stock to 450 Million shares. The Board of Directors believes that the
current capital structure does not provide sufficient flexibility to allow for
our future growth. We are asking stockholders to approve the proposed increase
to our authorized common stock.
If the stockholders approve the proposed amendment, paragraph (A) of
Article IV of our Certificate of Incorporation would be amended to read as
follows:
"(A) Classes of Stock. This corporation is authorized to issue two classes
of stock to be designated, respectively, `Common Stock' and `Preferred
Stock.' The total number of shares which the corporation is authorized to
issue is three hundred five million (305,000,000) shares. Three hundred
million (300,000,000) shares shall be Common Stock, par value $0.001 per
share, and five million (5,000,000) shares shall be Preferred Stock, par
value $0.001 per share."
As of the Record Date, _____________ shares of common stock were issued and
outstanding. Also as of the Record Date, and without giving effect to the
proposed amendment to our Employee Stock Purchase Plan described at page 12,
below, 61,155,173 shares of common stock are reserved for future issuance upon
the exercise of outstanding options under our various stock plans.
WHY WE ADOPTED THE AMENDMENT AND THE EFFECT OF THE AMENDMENT
The principal purpose of the proposed amendment is to help ensure that we
will have sufficient shares of common stock to, among other things:
* effect future stock splits or stock dividends
* raise additional capital through the sale of securities, or
* acquire another company or its business or assets through the issuance
of securities.
We have no arrangements, agreements or understandings at the present time
for the issuance or use of the additional shares of common stock proposed to be
authorized. The Board of Directors does not intend to issue any common stock
except on terms that the Board of Directors deems to be in the best
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interests of the company and our stockholders. Any future issuance of common
stock will be subject to the rights of holders of outstanding shares of any
preferred stock that we may issue in the future.
Depending on the price, the issuance of additional shares of common stock
may have a dilutive effect on earnings per share and, for persons who do not
purchase additional shares to maintain their pro rata interest in the company,
on such stockholders' percentage voting power.
The authorized shares of common stock in excess of those issued will be
available for issuance at such times and for such corporate purposes as the
Board of Directors may consider advisable, without further action by the
stockholders, except as may be required by applicable law or by the rules of any
stock exchange or national securities association trading system on which the
common stock may be listed or traded. Upon issuance, such shares will have the
same rights as the outstanding shares of common stock. Holders of common stock
have no preemptive rights.
If approved by the stockholders, the proposed amendment will become
effective upon the filing of a certificate of amendment to the Certificate of
Incorporation, which will occur as soon as reasonably practicable. If the
stockholders do not approve the proposed amendment, the authorized number of
shares of common stock will not change.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" PROPOSAL
TWO. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS
STOCKHOLDERS SPECIFY OTHERWISE IN THEIR PROXIES.
PROPOSAL THREE
PROPOSAL TO AMEND OUR
EMPLOYEE STOCK PURCHASE PLAN TO INCREASE
THE NUMBER OF SHARES THAT CAN BE ISSUED UNDER THE PLAN
We are asking our stockholders to approve the addition of 500,000 shares of
common stock to our Employee Stock Purchase Plan, referred to as the ESPP.
Since the adoption of the ESPP, a total of 1,900,000 shares of common stock
have been reserved for issuance under the ESPP. As of the Record Date, no shares
of common stock had been issued, as the ESPP only became effective on March 1,
2002 and there have not yet been any purchases under the ESPP. The first
purchase will occur on September 1, 2002. A prior employee stock purchase plan,
which had been in place since March 1993, was terminated in February 2002.
As of March 31, 2002, approximately 1,571 employees were eligible to
participate in the ESPP, and 1,374 of these employees were participants.
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The principal features of the ESPP are described at "Appendix B -
Description of the Microchip Technology Incorporated 2001 Employee Stock
Purchase Plan."
WHY WE APPROVED THE PROPOSED INCREASE IN SHARES
The ESPP is intended to promote the best interests of Microchip and our
stockholders by providing all eligible employees, including officers, with the
opportunity to become stockholders by purchasing common stock at discounted
prices through payroll deductions. The Board of Directors believes that the ESPP
encourages employees to remain in the company's employ, and aligns the
employees' collective interests with those of our stockholders. Our continued
success depends upon our ability to attract and retain talented employees.
Equity incentives are necessary for us to remain competitive in the marketplace
for qualified personnel, and an employee stock purchase plan is a key element of
our equity incentive package.
We believe that over the term of the current offering period, we will
experience headcount growth and that participation in the ESPP will increase.
The number of shares consumed in the ESPP during the current offering period
requires us to estimate the number of employees who will participate in the ESPP
and their level of participation and our stock price at four measurement points.
Also, it is critical that the ESPP have sufficient shares at the start of each
two-year purchase period to meet the purchase requirements of the entire
two-year period in order to avoid potential adverse accounting consequences and
allow our ESPP program to continue uninterrupted.
Based on the above factors, the Board of Directors believes that the shares
currently reserved for issuance under the ESPP may not be sufficient to meet
anticipated purchase requirements at the beginning of the next two-year offering
period commencing March 1, 2004.
We believe that the ESPP is an indispensable equity incentive made
available to our employees that allows us to remain a competitive employer.
Thus, we believe it is in the best interests of the company and our stockholders
to ensure that our ESPP program continues uninterrupted.
OTHER MATTERS
The Board of Directors has not determined what action it will take if the
additional shares are not approved by stockholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR PROPOSAL
THREE. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS
STOCKHOLDERS SPECIFY OTHERWISE IN THEIR PROXIES.
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PROPOSALS FOUR AND FIVE
PROPOSALS TO AMEND OUR 1993 STOCK OPTION PLAN
PROPOSAL 4: PROPOSAL TO INCREASE THE NUMBER OF SHARES FOR WHICH OPTIONS ARE
AUTOMATICALLY GRANTED TO NON-EMPLOYEE DIRECTORS
We are asking our stockholders to approve an amendment to our 1993 Stock
Option Plan, referred to as our 1993 Plan, to:
* increase from 5,000 to 6,000 the number of shares of common stock with
respect to which options are automatically granted to non-employee
directors following each annual meeting of stockholders, and
* increase from 10,000 to 12,000 the number of shares of common stock
for which options are automatically granted following a non-employee
director's initial appointment or election to the Board of Directors.
The 1993 Plan is intended to promote Microchip's best interests by
providing executive officers, non-employee Directors and independent contractors
who provide valuable services to Microchip the opportunity to acquire, or
otherwise increase, their equity interest in the company as an incentive to
remain in service to Microchip and to align their collective interests with
those of the stockholders.
The automatic grants are provided for under the 1993 Plan's Automatic
Option Grant Program. The Automatic Option Grant Program, as well as the other
principal features of the 1993 Plan, is described at "Appendix C - Description
of the 1993 Stock Option Plan."
Currently, non-employee directors elected at each annual meeting of
stockholders are automatically granted an option to acquire 5,000 shares of
common stock at the fair market value of the common stock as of the first
business day of the month in which the annual meeting was held. The 1993 Plan
also currently provides that, upon a non-employee director's initial appointment
or election to the Board, the director receives an option to acquire 10,000
shares of common stock at the fair market value of the common stock on the date
of such appointment or election. Options granted to non-employee directors have
a maximum term of 10 years from the date of grant.
WHY WE APPROVED THE AMENDMENT
The proposed amendment to the 1993 Plan specifically acknowledges that the
grant of stock options to non-employee directors is necessary to compensate
those qualified individuals who are willing to serve on the board of directors
of a public company. The terms of the Automatic Option Grant Program provide
that the number of shares subject to the options that are automatically granted
to non-employee directors DOES NOT change in the case of certain events, such as
stock dividends, stock splits, etc. Thus, the 5,000 share annual grant and the
10,000 share initial grant have not changed since the stockholders last approved
an increase in 1996, despite the fact that the company has effected four
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stock splits in the form of stock dividends since 1996. If the 1993 Plan did
provide for the number of shares to be adjusted in the case of a stock split
then, giving effect to our four stock splits since 1996, non-employee directors
would be receiving annual option grants to acquire 25,313 shares of common stock
and initial option grants to acquire 50,625 shares of common stock.
We believe that adjusting the automatic grants as proposed would create
parity for our Directors who have served Microchip over the last few years and
will ensure that we remain competitive in attracting, retaining and motivating
such individuals to serve on our Board of Directors. We also believe that a
competitive disadvantage would result if we do not enhance our stock option
program for non-employee directors. Thus, the Board of Directors believes that
it is in the best interests of Microchip and our stockholders to increase the
number of shares with respect to which options are automatically granted to
non-employee directors under the Automatic Option Grant Program.
EFFECT OF THE AMENDMENT
Stockholder approval of the proposed amendment means that, except as
described in the next paragraph: (a) each non-employee director elected at
annual stockholders' meetings, or any other meeting of our stockholders where
directors are elected, will automatically be granted an option to acquire 6,000
shares of common stock at an exercise price equal to the fair market value of
the common stock on the first business day of the month in which the meeting is
held, and (b) upon a director's initial appointment or election to the Board,
they will automatically be granted an option to acquire 12,000 shares of common
stock at the fair market value of the common stock on the date of such
appointment or election.
With respect to the automatic option grant following the Meeting, if
stockholders approve the proposed amendment at the Meeting, then non-employee
directors elected at the Meeting will automatically be granted:
* an option to acquire 5,000 shares of common stock as of the date of
the first business day of the month in which the Meeting is held, and
* an option to acquire 1,000 shares of common stock as of the date of
the Meeting,
each such option to vest in a series of 12 equal and successive monthly
installments one month following the first business day of the month in which
the Meeting is held.
If the proposed amendment is not approved, then the non-employee directors
elected at the Meeting will automatically be granted an option to acquire 5,000
shares of common stock as of the first business day of the month in which the
Meeting is held. Such options would vest in a series of 12 equal and successive
monthly installments starting one month after the grant date.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR PROPOSAL FOUR.
PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS STOCKHOLDERS
SPECIFY OTHERWISE IN THEIR PROXIES.
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PROPOSAL 5: PROPOSAL TO APPROVE A SPECIAL ONE-TIME OPTION GRANT TO
NON-EMPLOYEE DIRECTORS FOR 3,000 SHARES OF COMMON STOCK
We are asking our stockholders to approve an amendment to our 1993 Plan to
provide for a special one-time grant to each of our non-employee Directors of an
option to acquire 3,000 shares of common stock. Four non-employee Directors
currently serve on our Board of Directors.
TERMS OF THE PROPOSED ONE-TIME GRANT
If the stockholders approve the proposed grant, then following the Meeting
each non-employee Director would be granted an option to acquire 3,000 shares of
common stock as of the date of the Meeting. The exercise price would be the fair
market value of the common stock on the date of the Meeting. One thousand shares
would vest in full 12 months from the grant date, and the remaining 2,000 shares
would vest ratably over the succeeding 24 months (i.e., 83.33 shares per month
in months 13-36).
WHY WE APPROVED THE SPECIAL ONE-TIME GRANT
Fiscal 2002 was a challenging time for Microchip. We endured a very severe
downturn in the semiconductor industry, remaining profitable throughout while
many of our peer companies lost money, and gaining market share in our key
microcontroller market. In addition, our stock price remained strong, increasing
65.3% in fiscal 2002. Our success during this critical time is due in no small
part to the continued guidance and oversight of our non-employee Directors. We
have structured our Board so that they will be accessible at all time to our CEO
and other senior executives. However, we do not compensate our Directors for
telephonic meetings, nor for the more informal communications that take place
between formally convened meetings. Because our executives are always sensitive
to expense control, we believe that if we paid cash compensation for telephonic
meetings and interactions, this could actually serve to chill communications
between our executives and the Board.
We also believe, that in relation to our peer companies, both the annual
cash compensation paid to our non-employee Directors, and the size of stock
option grants to our non-employee Directors, are at the lower range of the
compensation their counterparts receive at such companies. We believe that this
one-time grant will reward our Directors for their invaluable service during
fiscal 2002 and will also ensure that we remain competitive in retaining and
motivating such individuals.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR PROPOSAL FIVE.
PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS STOCKHOLDERS
SPECIFY OTHERWISE IN THEIR PROXIES.
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PROPOSAL SIX
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed Ernst & Young LLP, independent
auditors, to audit the company's consolidated financial statements for the
fiscal year ending March 31, 2003. Ernst & Young has audited the company's
financial statements since the fiscal year ended March 31, 2002 and has served
as our auditors since June 6, 2001.
In the event of a negative vote on such ratification, the Board of
Directors will reconsider its selection.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR PROPOSAL SIX.
PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS STOCKHOLDERS
SPECIFY OTHERWISE IN THEIR PROXIES.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
CHANGE IN INDEPENDENT AUDITORS
In June 2001 the Board of Directors, upon the recommendation of the Audit
Committee, determined not to renew the engagement of KPMG LLP as the company's
independent auditors. KPMG had served as our independent auditors for the fiscal
years ended March 31, 1993 through and including March 31, 2001. The decision to
not renew KPMG's engagement did not occur due to any existing or previous
accounting disagreements with KPMG, and KPMG has expressed no disclaimer of
opinion, adverse opinion, qualification or limitation regarding our financial
statements or the audit process, for the fiscal years ended March 31, 2001 or
2000, or the interim period beginning April 1, 2001. Neither have there been any
accounting disagreements nor reportable events within the meaning of Item
304(a)(1)(iv) and Item 304(a)(1)(v) of Securities and Exchange Commission
Regulation S-K for those periods. KPMG concurred with the foregoing statements
in this paragraph in a letter addressed to the Securities and Exchange
Commission. That letter is included in our Current Report on Form 8-K filed with
the Securities and Exchange Commission on May 22, 2001, Exhibit 16.
Upon the recommendation of the Audit Committee, on June 6, 2001, the Board
of Directors engaged Ernst & Young to audit the company's consolidated financial
statements for the fiscal year ending March 31, 2002. We did not seek the advice
of Ernst & Young on specific audit issues relating to our consolidated financial
statements prior to engagement of that firm. We reported the engagement of Ernst
& Young in our Current Report on Form 8-K filed June 7, 2001.
We anticipate that representatives of Ernst & Young will be present at the
Meeting, that they will have the opportunity to make a statement if they desire,
and that they will be available to respond to appropriate questions.
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AUDIT FEES
Audit fees billed by Ernst & Young for fiscal 2002, including the audit of
the company's financial statements set forth in the company's fiscal 2002 Annual
Report on Form 10-K and the review of the company's quarterly financial
statements set forth in the company's Quarterly Reports on Form 10-Q for the
quarters ended June 30, 2001, September 30, 2001 and December 31, 2001, were
approximately $314,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
We did not engage Ernst & Young to provide any services related to the
design or implementation of financial information systems in fiscal 2002.
ALL OTHER FEES
Fees billed to Microchip by Ernst & Young during fiscal 2002 for all other
fees were approximately $828,000, including audit related services of
approximately $33,000, and non-audit related services of approximately $795,000.
Audit related services generally include fees for pension and statutory audits,
accounting consultations, and SEC registration statements. Non-audit services
related primarily to tax consulting services associated with our research and
development tax credits.
Our Audit Committee has determined that the non-audit services rendered by
Ernst & Young during fiscal 2002 were compatible with maintaining the
independence of Ernst & Young.
PERFORMANCE GRAPH
The following graph provides an indicator of cumulative total stockholder
return for Microchip as compared with the CRSP Total Return Index for the Nasdaq
Stock Market (U.S.) and the Philadelphia Semiconductor Index weighted by market
value at the beginning of the measurement period. The graph covers the period of
time from March 31, 1997 through March 31, 2002.
HISTORIC STOCK PRICE PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE
STOCK PERFORMANCE.
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FY2002 RELATIVE STOCK PRICE PERFORMANCE
AMONG MICROCHIP TECHNOLOGY INC. AND BROAD MARKET INDICES
03/31/97 06/30/97 09/30/97 12/31/97 03/31/98 06/30/98 09/30/98 12/31/98 03/31/99 06/30/99
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Microchip Technology Inc. 100.00 99.17 150.52 100.00 70.00 87.08 72.92 123.33 115.42 157.92
Nasdaq US Composite 100.00 118.32 138.32 129.51 151.57 155.75 140.53 182.61 204.79 223.98
SOXX 100.00 113.72 141.94 98.06 111.10 91.47 79.14 130.39 137.89 180.19
09/30/99 12/31/99 03/31/00 06/30/00 09/30/00 12/31/00 03/30/01 06/30/01 09/30/01 12/31/01
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Microchip Technology Inc. 171.25 228.13 328.76 291.34 247.98 164.54 189.85 250.73 201.01 290.56
Nasdaq US Composite 229.55 339.29 380.91 331.20 304.77 204.08 152.34 179.52 124.56 161.92
SOXX 185.63 262.06 439.61 424.23 316.75 214.47 202.73 232.13 139.00 194.22
03/31/02
--------
Microchip Technology Inc. 313.73
Nasdaq US Composite 153.41
SOXX 221.40
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EXECUTIVE COMPENSATION
BOARD COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
THE COMPENSATION COMMITTEE
The Compensation Committee, presently comprised of Mr. Hugo-Martinez and
Mr. Day, reviews the performance of the executive officers and makes
compensation decisions regarding the executive officers. The Compensation
Committee generally seeks input from Mr. Sanghi when discussing the performance
of, and compensation levels for, the executive officers other than Mr. Sanghi.
Mr. Sanghi does not participate in deliberations relating to his own
compensation.
OUR COMPENSATION POLICY
Our compensation policy for officers and key employees is based on a
"pay-for-performance" philosophy. This "pay-for-performance" philosophy
emphasizes variable compensation, primarily by placing a large portion of pay at
risk. We believe that this philosophy meets the following objectives:
* rewards performance that increases the value of your stock
* attracts, retains, motivates and rewards individuals with competitive
compensation opportunities
* aligns an executive's total compensation with our business objectives
* fosters a team environment among our management that focuses their
energy on achieving our financial and performance objectives,
consistent with our guiding values
* balances short-term and long-term strategic goals, and
* builds and encourages ownership of our common stock.
Compensation decisions also include subjective determinations and
consideration of various factors with the weight given to a particular factor
varying from time to time and in various individual cases.
We believe that the overall compensation levels for the executive officers
in fiscal 2002 were consistent with our "pay-for-performance" philosophy and are
commensurate with the company's fiscal 2002 performance.
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ELEMENTS OF COMPENSATION
Our executive compensation program is currently comprised of four major
elements:
* annual base salary
* incentive cash bonuses
* stock options, and
* compensation and employee benefits generally available to all
Microchip employees.
BASE SALARIES. We review the base salaries of the executive officers each
year, primarily by considering the salaries of executive officers in similar
positions with comparably sized companies in the semiconductor industry.
When setting base salaries, we also review the performance objectives for
the company as a whole, as well as the performance objectives for each of the
individual officers relative to their respective areas of responsibility. This
review encompasses the objectives for both the immediately preceding fiscal year
and the upcoming fiscal year. Performance objectives are initially developed by
the individual officers, in conjunction with their respective operating units,
and then discussed with and approved by the CEO to generate the company's fiscal
year operating objectives. The operating objectives are then reviewed and
approved by the Board of Directors.
We also consider subjective factors when reviewing and setting base
salaries, such as an executive's experience and tenure in the industry and the
perceived value of the executive's position to the company as a whole.
In response to industry conditions and the company's own excess capacity
situation, all Microchip employees, including the CEO and all executive
officers, participated in two unpaid one-week shut-downs during fiscal 2002: one
occurred during the first quarter of fiscal 2002, and the second occurred in the
second quarter of fiscal 2002. As a result of these shutdowns, and after
consideration of the other factors described above, average base salaries for
the executive officers decreased by approximately 2.1% in fiscal 2002.
INCENTIVE CASH BONUSES. Quarterly incentive cash bonuses may be payable to
officers and key employees under the Management Incentive Compensation Plan,
referred to as "MICP." The Board of Directors approves any quarterly payments
under the MICP in conjunction with its review of the company's quarterly
operating results.
The MICP is an aggregate bonus pool derived from a percentage of our annual
operating profit. This bonus pool may then be allocated among the eligible
participants based upon the company's operating results and various subjective
determinations. Other than the financial performance targets established for
determining whether payments will be made under the MICP for any particular
quarter, no particular weight is assigned to any one particular objective or
subjective factor. Mr. Sanghi is generally permitted wide discretion with
respect to the designation of employees eligible to participate in the MICP, as
well as the amount of any MICP bonus to be awarded to each participant,
including executive officers other than himself. We determine the MICP bonus, if
any, to be awarded to
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Mr. Sanghi. In fiscal 2002, approximately 590 employees, including the executive
officers and the CEO, were eligible to participate in the MICP.
We maintain a split-dollar life insurance program for certain of our key
executives. The split-dollar life insurance program provides key executives with
an incentive to remain in the long-term employ of the company, an insurance
benefit, and a cash value benefit payable in the future when the executive is no
longer employed with the company. We determine what portion of an executive's
overall MICP bonus will be paid in cash or into the split-dollar life insurance
program. During fiscal 2002, none of the executive officers participated in the
split-dollar life insurance program because no MICP bonuses were paid in fiscal
2002 as described in the next paragraph.
Consistent with our "pay-for-performance" philosophy, due to our operating
results throughout fiscal 2002 and the uncertain and volatile conditions in the
semiconductor industry, no MICP bonus payments were made during fiscal 2002.
This compares to fiscal 2001, when the average MICP bonus for the executive
officers, excluding Mr. Sanghi, was approximately 40% of base salary.
STOCK OPTIONS. Stock options constitute a significant portion of our
incentive compensation program because we believe that officers and key
employees should hold substantial, long-term equity stakes in the company to
align their collective interests with your interests. At March 31, 2002,
approximately 61% of our employees worldwide held options to purchase common
stock.
In granting stock options to executive officers, we consider numerous
factors, including:
* the individual's position and responsibilities
* the individual's future potential to influence the company's mid- and
long-term growth
* the vesting schedule of the options awarded, and
* the number of options previously granted.
See the table under "Option Grants in Last Fiscal Year," at page 25, below,
for information regarding options to purchase common stock granted during fiscal
2002 to the CEO and each of the four other most highly compensated executive
officers named in this proxy statement.
OTHER COMPENSATION AND EMPLOYEE BENEFITS GENERALLY AVAILABLE TO ALL
EMPLOYEES. We maintain compensation and employee benefits that are generally
available to all company employees, including:
* the employee stock purchase plan
* medical, dental and life insurance benefits
* a 401(k) retirement savings plan, and
* a cash bonus plan.
The cash bonus plan awards each eligible employee with up to two and
one-half days of pay, based on base salary, every quarter, if certain operating
profitability objectives are achieved. No cash bonuses were paid for the first
three quarters of fiscal 2002. For the fourth quarter of fiscal 2002, each
eligible employee received 50% of the target cash bonus payment permitted under
the cash bonus plan.
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We also maintain a supplementary retirement plan for certain employees,
including the CEO and the executive officers, who receive compensation in excess
of the 401(k) contribution limits imposed under the Internal Revenue Code.
CEO COMPENSATION
We use the same factors and criteria described above in making compensation
decisions regarding the CEO. Mr. Sanghi's base salary decreased by approximately
2.4% in fiscal 2002 due to the two shutdowns described above under BASE
SALARIES.
Mr. Sanghi did not receive any MICP bonus for fiscal 2002, due to the
company's performance and industry conditions. This compares to fiscal 2001 when
his total MICP bonus payment was approximately 125.2% of his base salary.
During fiscal 2002, Mr. Sanghi was granted options to acquire 267,557
shares of common stock at a weighted average exercise price of $16.74 per share.
For additional information concerning these option grants, including vesting
information, refer to the table under "Option Grants in Last Fiscal Year," at
page 25, below. We determined that the amounts of the grants and the vesting
terms provide an appropriate long-term incentive for Mr. Sanghi.
We believe that Mr. Sanghi's fiscal 2002 compensation was:
* consistent with Microchip's "pay-for-performance" philosophy
* commensurate with Microchip's fiscal 2002 operating objectives, and
* reasonable based on Microchip's overall performance in fiscal 2002 and
Microchip's performance compared to the semiconductor industry as a
whole.
TAX CODE CONCERNS
Section 162(m) of the Internal Revenue Code disallows a corporate income
tax deduction for executive compensation paid to senior executives in excess of
$1 million per year, unless that income meets permitted exceptions. We
anticipate that a substantial portion of each executive officer's compensation
will be "qualified performance-based compensation," that is not limited under
Internal Revenue Code Section 162(m). We, therefore, do not currently anticipate
that any executive officer's compensation will exceed that limitation of
deductibility in fiscal 2003. We intend to review the deductibility of executive
compensation from time to time to determine whether any additional actions are
advisable to maintain deductibility.
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CONCLUSION
We believe that the executive team provided outstanding service to
Microchip. We will work to assure that the executive compensation programs
continue to meet Microchip's strategic goals as well as the overall objectives
discussed in this Report.
By the Compensation Committee of the Board of Directors(3):
Albert J. Hugo-Martinez (Chair) L.B. Day
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------- ----------------
AWARDS
----------------
SECURITIES
UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION (1) YEAR SALARY BONUS (2) OPTIONS/SARS (#) COMPENSATION
- ------------------------------- ---- ------ --------- ---------------- ------------
Steve Sanghi, 2002 $426,839 $ 2,134 267,557 $ 2,148(3)
President and 2001 437,408 201,413 247,500 361,949
CEO 2000 414,595 15,041 282,482 332,565
Timothy B. Billington, 2002 213,582 0 56,193 0 (3)
VP, Manufacturing and 2001 218,562 110,613 67,500 0
Technology Group (4) 2000 206,473 89,603 76,878 0
Mitch R. Little, 2002 200,265 1,001 53,499 1,980 (3)
VP, Worldwide Sales and 2001 202,450 92,620 67,500 2,941
Applications 2000 189,342 66,804 66,405 9,400
Gordon W. Parnell, 2002 182,826 914 45,609 1,956 (3)
VP, Chief Financial Officer (5) 2001 187,480 6,216 60,750 75,263
David S. Lambert, 2002 173,669 868 44,946 1,943 (3)
Vice President, Fab
Operations (6)
- ----------
(1) Includes those individuals who in fiscal 2002 were the CEO or one of the
four other most highly compensated executive officers as measured by salary
and bonus for fiscal 2002.
(2) Includes portion of MICP bonus and cash bonus payments under the company's
cash bonus plan earned in year shown but not paid until the following year.
(3) Except as otherwise noted, consists of: (a) the company-matching
contributions to the company's 401(k) retirement savings plan, which for
fiscal 2002 were $2,148 for Mr. Sanghi, $0 for Mr. Billington, $1,980 for
Mr. Little, $1,956 for Mr. Parnell, and $1,943 for Mr. Lambert, and (b) an
additional payment by the company in connection with a split-dollar life
insurance program which is distributable to the individual executive
officer when he is no longer an employee. There were no payments made under
the split-dollar life insurance program during fiscal 2002.
(4) Mr. Billington retired from Microchip effective March 31, 2002.
(5) Mr. Parnell was named an executive officer effective May 19, 2000.
(6) Mr. Lambert was named an executive officer effective January 22, 2001.
- ----------
(3) The Board Compensation Committee Report on Executive Compensation is not
"soliciting" material and is not deemed "filed" with the Securities and
Exchange Commission, and is not incorporated by reference into any filings
of Microchip under the Securities Act of 1933 or the Securities Exchange
Act of 1934 whether made before or after the date hereof and irrespective
of any general incorporation language contained in such filings.
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OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
--------------------------------------------------
PERCENT POTENTIAL REALIZABLE
NUMBER OF OF TOTAL VALUE AT ASSUMED
SECURITIES OPTIONS ANNUAL RATES OF STOCK
UNDERLYING GRANTED TO PRICE APPRECIATION
OPTIONS EMPLOYEES EXERCISE OR OPTION TERM
GRANTED IN FISCAL BASE PRICE EXPIRATION ------------------------
NAME (#)(1) YEAR ($/SH) DATE 5% (5) 10% (5)
---- ---------- --------- ----------- ---------- ---------- ----------
Steve Sanghi............ 165,000(1) 3.5% $ 15.92 4/2/11 $1,651,635 $4,185,566
71,343(2) 1.5% 15.92 4/2/11 714,137 1,809,763
4,757(3) 0.1% 15.86 6/1/11 47,443 120,229
26,457(4) 0.6% 24.27 1/22/12 403,765 1,023,220
Timothy B. Billington... 37,500(1) 0.8% $ 15.92 4/2/11 $375,371 $951,265
11,900(2) 0.3% 15.92 4/2/11 119,113 301,855
2,380(3) 0.1% 15.86 6/1/11 23,744 60,171
4,413(4) 0.1% 24.27 1/22/12 67,348 170,671
Mitchell R. Little...... 37,500(1) 0.8% $ 15.92 4/2/11 $375,371 $951,265
10,043(2) 0.2% 15.92 4/2/11 100,524 254,749
2,232(3) 0.0% 15.86 6/1/11 22,263 56,418
3,724(4) 0.1% 24.27 1/22/12 56,840 144,044
Gordon W. Parnell....... 32,400(1) 0.7% $ 15.92 4/2/11 $324,321 $821,893
8,150(2) 0.2% 15.92 4/2/11 81,575 206,729
2,037(3) 0.0% 15.86 6/1/11 20,318 51,489
3,022(4) 0.1% 24.27 1/22/12 46,127 116,895
David S. Lambert........ 32,400(1) 0.7% $ 15.92 4/2/11 $324,321 $821,893
7,740(2) 0.2% 15.92 4/2/11 77,477 196,341
1,935(3) 0.0% 15.86 6/1/11 19,300 48,911
2,871(4) 0.1% 24.27 1/22/12 43,815 111,035
- ----------
(1) Each stock option becomes exercisable over a one-year vesting period, in 12
successive monthly installments commencing on March 31, 2005, and has a
maximum term of 10 years from the date of grant. Vesting may be accelerated
under certain circumstances in connection with an acquisition of the
company or a change of control. The exercise price may be paid in cash,
shares of common stock or through a cashless exercise procedure involving a
same-day sale of the purchased shares.
(2) Each stock option becomes fully exercisable on July 2, 2002, and has a
maximum term of 10 years from the date of the grant. Vesting may be
accelerated under certain circumstances in connection with an acquisition
of the company or a change in control. The exercise price may be paid in
cash, shares or common stock or through a cashless exercise procedure
involving a same-day sale of the purchased shares.
(3) Each stock option becomes fully exercisable on June 1, 2002, and has a
maximum term of 10 years from the date of the grant. Vesting may be
accelerated under certain circumstances in connection with an acquisition
of the company or a change in control. The exercise price may be paid in
cash, shares of common stock or through a cashless exercise procedure
involving a same-day sale of the purchased shares.
(4) Each stock option becomes fully exercisable on February 17, 2003, and has a
maximum term of 10 years from the date of the grant. Vesting may be
accelerated under certain circumstances in connection with an acquisition
of the company or a change in control. The exercise price may be paid in
cash, shares of common stock or through a cashless exercise procedure
involving a same-day sale of the purchased shares.
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(5) No assurance can be given that the actual stock price appreciation over the
10-year option term will be at the assumed 5% and 10% levels or at any
other defined level. The rates of appreciation are specified by rules of
the Securities and Exchange Commission and are for illustrative purposes
only; they do not represent our estimate of future stock price. Unless the
market price of the common stock does, in fact, appreciate over the option
term, no value will be realized from the option grant. The exercise price
of each of the options was equal to the closing sales price of the common
stock as quoted on the Nasdaq National Market on the date of grant.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
ACQUIRED ON VALUE AT MARCH 31, 2002 (#) AT MARCH 31, 2001 (2)
NAME EXERCISE (#) REALIZED (1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------ ------------ ----------- ------------- ----------- -------------
Steve Sanghi ................... 459,296 $ 9,959,293 3,075,018 1,201,307 $72,236,995 $17,531,082
Timothy B. Billington (3) ...... 72,335 1,247,212 211,992 0 4,438,658 0
Mitchell R. Little ............. 165,738 2,399,005 13,504 296,499 255,546 4,304,544
Gordon W. Parnell .............. 78,000 1,329,207 67,221 225,609 1,186,114 3,184,429
David S. Lambert ............... 73,500 1,799,515 452,430 230,796 10,649,936 3,429,034
- ----------
(1) Calculated based on the market price per share of the common stock at date
of exercise multiplied by the number of shares issued upon exercise less
the total exercise price of the options exercised.
(2) Calculated based on $27.887 per share, which was the closing sales price
per share of the common stock as quoted on the Nasdaq National Market on
March 29, 2002, multiplied by the number of applicable shares in-the-money
less the total exercise price for such shares.
(3) Mr. Billington retired from Microchip effective March 31, 2002.
EQUITY COMPENSATION PLAN INFORMATION
The table below provides information about our common stock that, as of
March 31, 2002, may be issued upon the exercise of options and rights under the
following existing equity compensation plans (which are all of our equity
compensation plans):
* Microchip 1993 Stock Option Plan
* Microchip 1997 Nonstatutory Stock Option Plan
* Microchip 2001 Employee Stock Purchase Plan
* Microchip International Employee Stock Purchase Plan
* TelCom Semiconductor, Inc. 1994 Stock Option Plan
* TelCom Semiconductor, Inc. 1996 Director Stock Option Plan, and
* TelCom 2000 Nonstatutory Stock Option Plan.
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(a) NUMBER OF (c) NUMBER OF SECURITIES
SECURITIES TO BE REMAINING AVAILABLE FOR
ISSUED UPON EXERCISE (b) WEIGHTED-AVERAGE FUTURE ISSUANCE UNDER
OF OUTSTANDING EXERCISE PRICE OF EQUITY COMPENSATION PLANS (d) TOTAL OF
OPTIONS, OUTSTANDING OPTIONS, (EXCLUDING SECURITIES SECURITIES REFLECTED
PLAN CATEGORY WARRANTS AND RIGHTS WARRANTS AND RIGHTS REFLECTED IN COLUMN (A)) IN COLUMNS (A) AND (C)
- ------------- ------------------- ------------------- ------------------------ ----------------------
Equity Compensation
Plans Approved by
Stockholders 9,615,012 $11.45 11,884,493 21,499,505
Equity Compensation
Plans Not Approved by
Stockholders 15,051,799 $12.55 8,702,193 23,753,992
Total
MICROCHIP TECHNOLOGY INCORPORATED 1997 NONSTATUTORY STOCK OPTION PLAN. In
November 1997, our Board of Directors approved the Microchip 1997 Nonstatutory
Stock Option Plan. Under our 1997 Plan, nonqualified stock options may be
granted to our employees who are not officers or directors of Microchip and to
our consultants. The 1997 Plan has not been submitted to our stockholders for
approval. As of March 31, 2002, options to acquire 13,893,232 shares were
outstanding under the 1997 Plan and 8,671,084 shares were available for future
grant.
Our 1997 Plan is intended to promote Microchip's and our stockholders' best
interests by providing our employees and consultants with the opportunity to
acquire or otherwise increase their equity interest in Microchip as an incentive
to remain in service to Microchip and to align their collective interests with
those of our stockholders. The participation of employees in stock option plans
has always been an essential component of Microchip's "pay-for-performance"
compensation program. Approximately 61% of our employees worldwide (excluding
officers who cannot participate in the 1997 Plan) have been granted options
under the 1997 Plan.
The expiration date, maximum number of shares purchasable and other
provisions of options granted under the 1997 Plan, including vesting provisions,
are established by either the board's compensation committee or the employee
committee appointed by the board at the time of grant, provided that the
exercise price of an option may not be less than the fair market value of our
Common Stock on the date of grant and no option may have a term of more than 10
years. If Microchip is acquired by merger, consolidation or asset sale, each
outstanding option that is not assumed by the successor corporation or otherwise
replaced with a comparable option will automatically accelerate and vest in
full. In connection with a change of control of Microchip by tender offer or
proxy contest for board membership, our board of directors can accelerate
outstanding options. Our board of directors or the board's compensation
committee may amend or terminate the 1997 Plan without stockholder approval, but
no amendment or termination of the 1997 Plan may adversely affect any award
previously granted under the 1997 Plan without the written consent of the stock
option holder.
MICROCHIP INTERNATIONAL EMPLOYEE STOCK PURCHASE PLAN. In June 1994, our
Board of Directors adopted the International ESPP to provide eligible employees
of non-U.S. subsidiaries of Microchip the opportunity to acquire shares or our
common stock through payroll deductions in the currency in which they are paid.
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The International ESPP has not been submitted to our stockholders for approval.
As of March 31, 2002, 192,485 shares had been issued under the International
ESPP and 31,109 shares were available for future purchases.
Participants may authorize payroll deductions, in the currency in which
they are paid, of up to 10% of their base salary. Common stock is offered for
purchase under the International ESPP through a series of successive purchase
periods, each of six months' duration. Purchase periods run from the first U.S.
business day of December to the last U.S. business day of May, and from the
first U.S. business day in June to the last U.S. business day of November. The
purchase price per share of common stock is equal to the lesser of (a) the
market price of the common stock on the first day of the six-month purchase
period or (b) the market price of the common stock on the purchase date. The
International ESPP is administered, with respect to a participating foreign
subsidiary's employees, by a committee of at least two members of that foreign
subsidiary's senior management. Committee members are appointed by Microchip's
Board of Directors and may be removed by Microchip's Board of Directors at any
time. All questions of interpretation or application of the International ESPP
are determined by the committee and, subject to ratification by Microchip's
Board of Directors, are final and binding upon all participants. Our Board of
Directors may alter or amend the provisions of the International ESPP following
the close of any purchase period, and such action will be binding upon all
participants, effective as of the start of the next purchase period.
TELCOM SEMICONDUCTOR, INC. 2000 NONSTATUTORY STOCK OPTION PLAN. On April
18, 2000, the TelCom board of directors adopted a nonstatutory stock option plan
pursuant to which nonqualified stock options to acquire TelCom common stock
would be granted to non-executive employees of and consultants to TelCom. The
TelCom nonstatutory stock option plan was not submitted to the TelCom
stockholders for approval. On January 16, 2001, TelCom merged with Microchip and
Microchip assumed the outstanding options under the TelCom nonstatutory stock
option plan. As a result, upon exercise of such options, participants will be
issued shares of Microchip Common Stock. From and after January 16, 2001, no
further options could be granted under the TelCom nonstatutory stock option
plan. As of March 31, 2002, options to acquire 328,136 shares of Microchip
common stock remained outstanding under the TelCom nonstatutory stock option
plan.
The expiration date, maximum number of shares purchasable and other
provisions of options granted under the TelCom nonstatutory stock option plan,
including vesting provisions, were established by either the compensation
committee of TelCom's board or by the employee committee appointed by the TelCom
board at the time of grant, provided that no option may have a term in excess of
10 years.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
We do not have employment contracts with our CEO or any of the four other
most highly compensated executive officers named in this proxy statement.
Our CEO and certain of the other most highly compensated executive officers
named in this proxy statement have entered into an Executive Officer Severance
Agreement. These agreements provide for the automatic acceleration of vesting
and exercisability of all unvested stock options upon the first to occur of any
of the following events:
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* as of the date immediately preceding a change of control in the event
any such stock options are or will be terminated or canceled (except
by mutual consent) or any successor to Microchip fails to assume and
agree to perform all such stock option agreements at or prior to such
time as any such person becomes a successor to Microchip, or
* as of the date immediately preceding such change in control if the
executive does not or will not receive upon exercise of such
executive's stock purchase rights under any such stock option
agreement the same identical securities and/or other consideration as
is received by all other stockholders in any merger, consolidation,
sale, exchange or similar transaction occurring upon or after such
change of control, or
* as of the date immediately preceding any involuntary termination of
such executive occurring upon or after any such change of control, or
* as of the date six months following the first such change of control,
provided that the executive shall have remained an employee of the
company continuously throughout such six-month period.
OTHER MATTERS
OTHER MATTERS TO BE PRESENTED AT THE MEETING
At the date this proxy statement went to press, we did not anticipate that
any other matters would be raised at the Meeting.
DEADLINE FOR RECEIPT OF STOCKHOLDERS' PROPOSALS FOR THE 2003 ANNUAL MEETING OF
STOCKHOLDERS; DISCRETIONARY AUTHORITY TO VOTE ON STOCKHOLDER PROPOSALS
Stockholders may submit proposals that they believe should be voted upon at
an annual Meeting or nominate persons for election to the Board of Directors.
Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, some
stockholder proposals may be eligible for inclusion in the company's 2003 proxy
statement. Any such stockholder proposals must be submitted in writing to the
company's Secretary no later than March 10, 2003. Stockholders interested in
submitting such a proposal are advised to contact knowledgeable counsel with
regard to the detailed requirements of applicable securities laws. The
submission of a stockholder proposal does not guarantee that it will be included
in the company's proxy statement.
For matters that are not included in the company's proxy statement, the
company's By-Laws establish an advance notice procedure with regard to
stockholder nominations for Directors or for other business to be properly
brought before an annual Meeting. For nominations or other business to be
properly brought before an annual Meeting by a stockholder, such stockholder
must provide the company's Secretary with written notice at least 90 days prior
to the anniversary of the date on which the company first mailed its proxy
statement to stockholders in connection with the previous year's annual Meeting
of stockholders. Accordingly, a stockholder who intends to submit a nomination
or proposal for the company's 2003 annual Meeting must do so no later than April
9, 2003. If, however, the date of the 2002 annual Meeting is advanced or delayed
by more than 30 days from the anniversary of the 2002
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annual Meeting, the stockholder must submit any such proposal or nomination no
later than the close of business on the later of the 90th day prior to the 2003
annual Meeting or the 10th day following the day on which public announcement of
the date of such Meeting is first made. The stockholder's submission must
include certain specified information concerning the proposal or nominee, as the
case may be, and information as to the stockholder's ownership of common stock.
Proposals or nominations not meeting these requirements will not be considered
at the 2003 annual Meeting. If a stockholder does not comply with the
requirements of this advance notice provision, the proxies may exercise
discretionary voting authority under proxies it solicits to vote in accordance
with its best judgment on any such proposal or nomination submitted by a
stockholder.
To make any submission or to obtain additional information as to the proper
form and content of submissions, stockholders should contact the company's
Secretary in writing at 2355 W. Chandler Boulevard, Chandler, AZ 85224.
DATE OF PROXY STATEMENT
The date of this proxy statement is July __, 2002.
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APPENDIX A
CHARTER FOR THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
OF
MICROCHIP TECHNOLOGY INCORPORATED
ADOPTED JUNE 12, 2000
AMENDED MAY 6, 2002
PURPOSE:
The purpose of the Audit Committee of the Board of Directors of Microchip
Technology Incorporated (the "Company") shall be:
* to provide oversight and monitoring of Company management and the
independent auditors and their activities with respect to the
Company's financial reporting process and internal controls;
* to provide the Company's Board of Directors with the results of its
monitoring and recommendations derived therefrom;
* to nominate to the Board of Directors independent auditors to audit
the Company's financial statements and oversee the activities and
independence of the auditors; and
* to provide to the Board of Directors such additional information and
materials as it may deem necessary to make the Board of Directors
aware of significant financial matters that require the attention of
the Board of Directors.
The Audit Committee will undertake those specific duties and
responsibilities listed below and such other duties as the Board of Directors
may from time to time prescribe.
MEMBERSHIP:
The Audit Committee members will be appointed annually by, and will serve
at the discretion of, the Board of Directors and will consist of at least three
members of the Board of Directors. The members will meet the following criteria:
1. Each member will be an independent director, in accordance with the
Nasdaq National Market Audit Committee requirements;
2. Each member will be able to read and understand fundamental financial
statements, in accordance with the Nasdaq National Market Audit
Committee requirements; and
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3. At least one member will have past employment experience in finance or
accounting, requisite professional certification in accounting, or
other comparable experience or background, including a current or past
position as a chief executive or financial officer or other senior
officer with financial oversight responsibilities.
RESPONSIBILITIES:
The responsibilities of the Audit Committee shall include:
* Providing oversight and monitoring of Company management and the
independent auditors and their activities with respect to the
Company's financial reporting process, accounting policies, tax
matters and internal controls;
* Recommending the selection and, where appropriate, replacement of the
independent auditors to the Board of Directors;
* Reviewing fee arrangements with the independent auditors;
* Reviewing the independent auditors' proposed audit scope, approach and
independence;
* Reviewing the performance of the independent auditors, who shall be
accountable to the Board of Directors and the Audit Committee;
* Requesting from the independent auditors of a formal written statement
delineating all relationships between the auditor and the Company,
consistent with Independent Standards Board Standard No. 1, and
engaging in a dialogue with the auditors with respect to any disclosed
relationships or services that may impact the objectivity and
independence of the auditors;
* Directing the Company's independent auditors to review before filing
with the SEC the Company's interim financial statements included in
Quarterly Reports on Form 10-Q, using professional standards and
procedures for conducting such reviews;
* Discussing with the Company's independent auditors the matters
required to be discussed by Statement on Accounting Standard No. 61,
as it may be modified or supplemented;
* Reviewing and discussing with management, before filing with the
Securities and Exchange Commission, the audited financial statements
and Management's Discussion and Analysis in the Company's Annual
Report on Form 10-K;
* Reviewing and discussing with management, before release, the
quarterly earnings press releases;
* Reviewing and discussing with management and the independent auditors
their respective evaluations of the Company's internal controls;
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* Providing the Audit Committee Report in the Company's proxy statement
as required by Item 306 of Regulation S-K, as well as the additional
disclosures required by Item 7(d) (3) of Schedule 14A;
* Reviewing the Audit Committee's own structure, processes and
membership requirements; and
* Performing such other duties as may be requested by the Board of
Directors.
MEETINGS:
The Audit Committee will meet at least quarterly during each fiscal year,
or more frequently as circumstances dictate. The Audit Committee may establish
its own schedule, which it will provide to the Board of Directors in advance.
The Audit Committee will meet separately with the independent auditors as
well as members of the Company's management, as it deems appropriate in order to
review the financial controls of the Company.
MINUTES:
The Audit Committee will maintain written minutes of its Meetings, which
minutes will be filed with the minutes of the Meetings of the Board of
Directors.
REPORTS:
Apart from the report prepared pursuant to Item 306 of Regulation S-K and
Item 7(e) (3) of Schedule 14A, the Audit Committee will summarize its
examinations and recommendations to the Board from time to time as may be
appropriate, consistent with the Committee's charter.
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APPENDIX B
DESCRIPTION OF OUR 2001 EMPLOYEE STOCK PURCHASE PLAN
BACKGROUND
The 2001 Employee Stock Purchase Plan, referred to as the ESPP, was adopted
by the Board of Directors in May 2001 and approved by the stockholders at the
2001 annual Meeting. 1,900,000 shares of common stock are currently reserved for
issuance under the ESPP. At the 2002 Annual Meeting, the stockholders are being
asked to approve the reservation of 500,000 additional shares under the ESPP.
ADMINISTRATION
The ESPP is administered by a committee made up of members of the Board of
Directors. The committee has full power to interpret the ESPP, and its decisions
will be final and binding upon all participants.
ELIGIBILITY
Generally, all employees of the company or any of the subsidiaries
designated by the committee are eligible to participate in the ESPP. However, no
employee who normally works less than 20 hours per week or five months in a
calendar year is eligible to participate. Also, no employee will be eligible to
participate in the ESPP if, immediately after the grant of an option to purchase
stock under the ESPP, that employee would own 5% of either the voting power or
the value of the common stock. No employee's rights to purchase the common stock
pursuant to the ESPP may accrue at a rate that exceeds $25,000 per calendar
year.
Non-employee Directors are not eligible to participate in the ESPP.
PARTICIPATION AND PURCHASES
Under the ESPP a participant must authorize payroll deductions, which may
not exceed 10% of their eligible compensation. Generally, when an employee
terminates employment with the company or any designated subsidiary, the
employee's right to participate in the ESPP terminates.
The ESPP provides for offering periods of up to 24 months. Each offering
period will include one or more purchase periods. The duration of each offering
period and purchase period are determined by the committee. Currently, the ESPP
is implemented with overlapping 24 month offering periods beginning on the first
business day of March and the first business day of September of each year, and
each offering period consists of four approximately six-month purchase periods.
The first day of each offering period is referred to as an entry date.
Eligible employees participate in the ESPP through accumulated payroll
deductions. At the end of each approximately six-month purchase period, these
accumulated payroll deductions are used to purchase shares of common stock at a
price per share equal to the lower of 85% of the closing price of a share of
common stock on (1) the relevant entry date or (2) the relevant purchase date,
whichever is less. Currently, purchase dates under the ESPP are the first
business day of March and the first business day
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of September of each year. The ESPP also provides that no participant may
purchase more than 7,500 shares of common stock in any one purchase period. This
limitation may be changed by the committee.
TERMINATION OF EMPLOYMENT
Termination of a participant's employment other than by reason of death or
disability immediately cancels his or her option and participation in the ESPP.
If this occurs, the payroll deductions credited to the participant's account
will be returned without interest to him or her. If a participant dies, or
terminates employment due to disability, at the election of the participant (or
if applicable the participant's estate), his or her accumulated payroll
deductions will be used to purchase shares on the next purchase date or the
accumulated payroll deductions will be refunded to the participant or his
estate.
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, MERGER OR SALE OF ASSETS
In the event of any stock split, stock dividend, spin-off,
reclassification, recapitalization or other similar event affecting the common
stock, adjustments may be made in the number of shares of stock subject to the
ESPP, the number and kind of shares of stock to be purchased pursuant to each
option and the price per share of common stock covered by each option. Any such
adjustment will be made by the committee, whose determination shall be final. In
the event of a proposed sale of all or substantially all of the assets of the
company or the merger or consolidation of the company with another company each
option will be assumed by, or an equivalent option substituted, by the successor
company or an affiliate. If the successor company or affiliate refuses to assume
or substitute for the option, the next purchase date will be automatically
accelerated to the date immediately before the proposed sale or merger.
AMENDMENT AND TERMINATION
Generally, the Board of Directors may terminate or amend the ESPP at any
time. The ESPP will continue until all of the shares authorized for the ESPP are
sold unless terminated sooner by the Board of Directors.
WITHDRAWAL
If a participant chooses to withdraw from a purchase period, the
participant may elect to have all accumulated payroll deductions refunded or
have the accumulated payroll deductions used to purchase common stock on the
next purchase date. The committee may also establish rules limiting the
frequency with which participants may withdraw and may establish a waiting
period for participants wishing to re-authorize payroll deductions.
U.S. FEDERAL INCOME TAX CONSEQUENCES
Since our stockholders have approved the ESPP, the ESPP, and the right of
participants to make purchases thereunder, qualify for treatment under the
provisions of Internal Revenue Code Sections 421 and 423. Under these
provisions, no income will be taxable to a participant until the shares
purchased under the ESPP are sold or otherwise disposed of.
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Upon sale or other disposition of the shares, the participant will
generally be subject to tax and the amount of the tax will depend upon the
holding period. If the shares are sold or otherwise disposed of more than two
years from the applicable entry date and more than one year from the applicable
purchase date, then the participant generally will recognize ordinary income
measured as the lesser of
* the excess of the fair market value of the shares at the time of such
sale or disposition over the purchase price, or
* an amount equal to 15% of the fair market value of the shares as of
the applicable entry date.
Any additional gain should be treated as long-term capital gain.
If the shares are sold or otherwise disposed of before the expiration of
this holding period, the participant will recognize ordinary income generally
measured as the excess of the fair market value of the shares on the date the
shares are purchased over the purchase price. Any additional gain or loss on
such sale or disposition will be long-term or short-term capital gain or loss,
depending on the holding period.
The company is not entitled to a deduction for amounts taxed as ordinary
income or capital gain to a participant except to the extent ordinary income is
recognized by a participant upon a sale or disposition of shares prior to the
expiration of the holding period(s) described above. In all other cases, no
deduction is allowed to the company.
The foregoing discussion is not intended to cover all tax consequences of
participation in the ESPP. The tax consequences outlined above apply only with
respect to an employee whose income is subject to United States federal income
tax during the period beginning with the grant of an option and ending with the
disposition of the common stock acquired through the exercise of the option.
Different or additional rules may apply to individuals who are subject to income
tax in a foreign jurisdiction and/or are subject to state/local income tax in
the United States.
PLAN BENEFITS
Participation in the ESPP is voluntary. Because benefits under the ESPP
depend on employees' elections to participate and the fair market value of the
common stock at various future dates, it is not possible to determine the
benefits that will be received by executive officers and other employees.
We maintained a prior employee stock purchase plan that was terminated on
February 28, 2002. The following table sets forth, as to the CEO and the four
other most highly compensated executive officers named in this proxy statement,
all current executive officers as a group and all other employees who
participated in the prior employee stock purchase plan: (a) the number of shares
of common stock purchased under the prior employee stock purchase plan during
fiscal 2002 , and (b) the dollar value of the benefit, which is calculated as
the fair market value per share of the common stock on the date of purchase,
minus the purchase price per share of common stock under the existing purchase
plan:
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PLAN BENEFITS UNDER EXISTING
EMPLOYEE STOCK PURCHASE PLAN
NAME OF INDIVIDUAL OR NUMBER OF SHARES DOLLAR VALUE
IDENTITY OF GROUP AND POSITION PURCHASED (#) OF BENEFIT
------------------------------ ---------------- ------------
Steve Sanghi
Director, Chairman, President and CEO...................... 1,617 $ 15,599
Timothy B. Billington
Vice President, Manufacturing and Technology Group......... 844 8,147
Mitchell R. Little
Vice President, Worldwide Sales and Applications........... 1,524 15,439
Gordon W. Parnell
Vice President, Chief Financial Officer.................... 1,390 14,086
David S. Lambert
Vice President, Fab Operations............................. 1,321 13,387
All current executive officers as a group (6 people)....... 7,852 78,357
All other employees as a group............................. 523,923 5,263,621
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APPENDIX C
DESCRIPTION OF OUR 1993 STOCK OPTION PLAN
GENERAL INFORMATION
The 1993 Plan, which is a successor plan to our 1989 Stock Option Plan, was
adopted by the Board of Directors in January 1993 and approved by the
stockholders in February 1993. The Board of Directors has amended the plan on
several occasions since 1993.
Since the 1993 Plan's initial adoption, a total of 57,028,984 shares of
common stock have been reserved for issuance under the 1993 Plan. As of the
Record Date, ___________ shares had been issued upon exercise of options,
_______________ shares are currently subject to outstanding options and
_______________ are shares with respect to which options may be granted in the
future. If any outstanding option expires or terminates prior to exercise, the
shares subject to that option may become the subject of subsequent grants under
the 1993 Plan.
Since August 2000, only non-statutory stock options have been granted under
the 1993 Plan. Prior to that time, incentive stock options meeting the
requirements of Internal Revenue Code Section 422 could be granted.
No employee may be granted under the 1993 Plan, in any fiscal year, options
to purchase more than 1,518,750 shares, except that an employee may be granted
an additional 2,531,250 options in connection with the employee's initial
employment.
In the event that the common stock changes by reason of any stock split,
stock dividend, recapitalization, combination of shares, exchange of shares or
other similar change in our capital structure effected without receipt of
consideration, appropriate adjustments shall be made in the number and class of
shares of stock subject to the 1993 Plan, the number and class of shares of
stock subject to any option outstanding under the 1993 Plan, the exercise price
of any such outstanding option, and the fiscal year grant limits referred to in
the preceding paragraph.
Except as determined otherwise by the Board of Directors or its committee,
options granted under the 1993 Plan are nontransferable other than by will or by
the laws of descent and distribution upon the death of the option holder and,
during the lifetime of the option holder, are exercisable only by such option
holder.
Unauthorized use or disclosure of Microchip's trade secrets or confidential
information or termination of service at any time for misconduct immediately
terminates all options held by the optionee.
ADMINISTRATION
The 1993 Plan is administered by our Board of Directors or a committee made
up of members of the Board of Directors as applicable, referred to as the
administrator. The administrator has full power to interpret the 1993 Plan and
make any determination deemed necessary and advisable for the 1993 Plan, and its
decisions are final and binding upon all participants.
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THE DISCRETIONARY OPTION GRANT PROGRAM
Option grants under the Discretionary Option Grant Program may be made to
officers, key employees, non-employee members of the Board of Directors, and
other independent contractors who provide valuable services to Microchip. As of
March 31, 2002, there were approximately 24 persons eligible to participate in
the Discretionary Option Grant Program.
The expiration date, maximum number of shares purchasable and the other
provisions of the options granted under the Discretionary Option Grant Program,
including vesting provisions, are established by the administrator in its
discretion at the time of grant. Options may be granted for terms of up to 10
years and become exercisable in whole or in one or more installments at such
time as may be determined by the administrator upon the grant of the options.
The exercise price of options granted is no less than the fair market value of
the common stock at the time of the grant, as determined in accordance with the
terms of the 1993 Plan.
The 1993 Plan permits the following alternative means of payment for shares
issued upon exercise of an option granted under the Discretionary Option Grant
Program: cash, check, other shares of common stock (with some restrictions),
cashless exercises, or certain combinations of the above methods.
If an optionee's service relationship with Microchip or any parent or
subsidiary terminates for any reason (excluding death), then the optionee
generally may exercise the option, to the extent vested on the date of
termination, within 90 days of such termination, or such shorter or longer
period as determined by the administrator, not to exceed 12 months (but in no
event later than the expiration of the term of such option as set forth in the
option agreement). The administrator has discretion to accelerate vesting for
options upon an optionee's termination.
If an optionee's service relationship with Microchip or any parent or
subsidiary terminates due to the optionee's death, the optionee's personal
representative or the person who acquires the right to exercise the option by
bequest or inheritance, as the case may be, generally may exercise the option.
Options granted on or after April 1, 2002, shall vest in full upon the
termination of the optionee's service relationship with the Company due to death
and shall generally remain exercisable for six (6) months following termination
or such longer term as determined by the administrator in its discretion (but in
no event later than the expiration of the term of such option as set forth in
the option agreement).
If Microchip is acquired by merger, consolidation or asset sale, each
outstanding option under the Discretionary Option Grant Program that is not
assumed by the successor corporation or otherwise replaced with a comparable
option or cash payment will automatically accelerate and become exercisable in
full unless the administrator imposes limitations on such acceleration at the
time of grant. Any options so assumed may be accelerated if the optionee's
employment is terminated within a designated period following the acquisition.
In connection with a change in control of Microchip by hostile tender offer or
proxy contest for board membership, the administrator can accelerate outstanding
options. The administrator also has authority to extend these acceleration
provisions to one or more outstanding options under the 1989 Plan incorporated
into the 1993 Plan.
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THE AUTOMATIC OPTION GRANT PROGRAM
The Automatic Option Grant Program provides for the automatic grant of
stock options to non-employee directors. Currently, and without giving effect to
the proposed amendment to the 1993 Plan described at page 14 above, an option to
acquire 5,000 shares of common stock is automatically granted to each
non-employee director on the first business day of the month in which the annual
stockholders' Meeting is held. Such options vest in a series of 12 equal and
successive monthly installments beginning one month after the annual automatic
grant date.
Also, currently, and without giving effect to the proposed amendment to the
1993 Plan described at page 14 above, each new non-employee member of the Board
of Directors receives an automatic grant of an option to acquire 10,000 shares
of common stock on the date of their first appointment or election to the Board
of Directors. Such options vest in a series of 36 equal and successive monthly
installments beginning one month after the automatic grant date. A non-employee
member of the Board of Directors is not eligible to receive the 5,000 share
automatic option grant if that option grant date is within 30 days of such
non-employee member receiving the initial 10,000 share grant. If Microchip is
acquired by merger, consolidation or asset sale, or in connection with a change
in control of Microchip by hostile tender offer or proxy contest for board
membership, each outstanding option under the Automatic Option Grant Program
will automatically accelerate and immediately vest in full.
Options granted on or after April 1, 2002, shall vest in full upon the
termination of Board service due to death and shall generally remain exercisable
for twelve (12) months following such termination.
The exercise price of each option granted under the Automatic Option Grant
Program shall be equal to 100% of the fair market value of the stock on the
grant date. The 1993 Plan permits the following alternative means for payment
for shares issued upon exercise of an option granted under the Automatic Option
Grant Program: cash, check, other shares of the common stock (with some
restrictions), cashless exercises, or certain combinations of the above methods.
AMENDMENT AND TERMINATION
Generally, the Board of Directors may amend, suspend or terminate the 1993
Plan at any time. However, the Board of Directors may not, without stockholder
approval:
* disqualify any option previously granted under the 1993 Plan for
treatment as an incentive stock option, except with optionee consent
* adversely affect rights and obligations with respect to options
outstanding under the 1993 Plan, except with optionee consent
* increase, except in the case of certain organic changes to the
company, the maximum number of shares of common stock subject to the
1993 Plan
* extend the term of the 1993 Plan
* materially change the class of persons eligible to receive options, or
* materially increase the benefits accruing to participants under the
1993 Plan.
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The 1993 Plan will terminate upon the earlier of:
* January 19, 2013, or
* the date on which all shares available for issuance under the 1993
Plan have been issued upon the exercise of options granted under the
1993 Plan.
U.S. FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of the effect of U.S. federal income tax
laws upon nonstatutory stock options granted under the 1993 Plan based on U.S.
federal income tax laws in effect on the date of this proxy statement.
With respect to non-statutory stock options:
* No income is recognized by the optionee at the time the option is
granted
* Generally, at the exercise of a non-statutory stock option, ordinary
income is recognized by the optionee in an amount equal to the
difference between the option exercise price paid for the shares and
the fair market value of the shares on the date of exercise, and
Microchip is entitled to a tax deduction in the same amount, and
* Upon disposition of the shares, any gain or loss is treated as
long-term or short-term capital gain or loss, depending on the holding
period.
* In the case of an optionee who is also an employee at the time of
grant, any income recognized upon exercise of an NSO will constitute
wages for which withholding will be required.
PLAN BENEFITS
The grant of options under the 1993 Plan, including grants to the CEO and
the four other most highly compensated executive officers, is discretionary. As
of the date of this Proxy Statement, there has been no determination with
respect to future awards under the 1993 Plan. Accordingly, the amount of any
future discretionary awards is not determinable.
The future award of options under the Automatic Option Grant Program to
non-employee Directors is subject to the (re)election of such individuals as
directors and the fair market value of the common stock on the first business
day of the month in which such directors is (re)elected.
The following table sets forth information with respect to the grant of
options during the fiscal year ended March 31, 2002 to: (i) non-employee
directors; (ii) the CEO and the four other most highly compensated executive
officers; (iii) all current executive officers as a group; and (iv) all other
employees as a group:
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AMENDED PLAN BENEFITS
1993 STOCK OPTION PLAN (1)
NUMBER OF SHARES
SUBJECT TO OPTIONS
NAME OF INDIVIDUAL OR IDENTITY OF GROUP AND POSITION GRANTED (#) GRANT PRICE(2)
---------------------------------------------------- ----------- --------------
Steve Sanghi
Chairman, President and Chief Executive Officer.................. 267,557 $ 16.74
Timothy B. Billington,
Vice President, Manufacturing and Technology Group .............. 56,193 16.57
Mitchell R. Little
Vice President, Worldwide Sales and Applications................. 53,499 16.50
Gordon W. Parnell
Vice President, Chief Financial Officer.......................... 45,609 16.47
David S. Lambert
Vice President, Fab Operations................................... 44,946 16.45
All current executive officers as a group (6 people) 507,608 16.62
All current directors who are not executive officers as
a group (4 people)............................................... 30,000 24.70
All other employees as a group................................... 4,168,846 16.91
- ----------
(1) See also the table under "Option Grants," above.
(2) Represents the weighted average per share grant price.
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PROXY PROXY
[MICROCHIP LOGO] MICROCHIP TECHNOLOGY INCORPORATED
2355 WEST CHANDLER BLVD THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
CHANDLER, AZ 85224 2002 ANNUAL MEETING OF STOCKHOLDERS
I (whether one or more of us) appoint Steve Sanghi and Gordon W. Parnell,
and each of them, each with full power of substitution, to be my Proxies. The
Proxies may vote on my behalf, in accordance with my instructions, all of my
shares entitled to vote at the 2002 Annual Meeting of Stockholders of Microchip
Technology Incorporated. The meeting is scheduled for August 16, 2002, at 9:00
a.m., local time, at the company's facilities at 2355 West Chandler Boulevard,
Chandler, Arizona, but this Proxy includes any adjournment(s) of that meeting.
The Proxies may vote on my behalf as if I were personally present at the
meeting.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR THE ELECTION OF DIRECTORS; FOR THE AMENDMENT TO THE
CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF
COMMON STOCK; FOR THE AMENDMENT OF THE EMPLOYEE STOCK PURCHASE PLAN TO ADD
ADDITIONAL SHARES; FOR THE AMENDMENTS TO THE 1993 STOCK OPTION PLAN TO (A)
INCREASE THE ANNUAL AUTOMATIC GRANT TO NON-EMPLOYEE DIRECTORS FROM 5,000 TO
6,000 SHARES OF COMMON STOCK AND INCREASE THE INITIAL AUTOMATIC GRANT TO
NON-EMPLOYEE DIRECTORS FROM 10,000 TO 12,000 SHARES OF COMMON STOCK, AND (B) TO
PROVIDE FOR A ONE-TIME SPECIAL OPTION GRANT OF 3,000 SHARES OF COMMON STOCK TO
THE NON-EMPLOYEE MEMBERS OF OUR BOARD OF DIRECTORS; RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS OF THE COMPANY FOR THE
FISCAL YEAR ENDING MARCH 31, 2003; AND AS MY PROXIES DEEM ADVISABLE ON SUCH
OTHER MATTERS AS MAY COME BEFORE THE MEETING. ALL PROPOSALS DESCRIBED IN THE
ACCOMPANYING PROXY STATEMENT HAVE BEEN PROPOSED BY THE BOARD OF DIRECTORS.
IF VOTING BY MAIL, PLEASE COMPLETE, DATE AND SIGN ON REVERSE SIDE AND
RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
Dear Stockholder,
Microchip offers our stockholders the opportunity to access future proxy
statements, annual reports and other stockholder communications electronically
through the Internet instead of receiving paper copies in the mail. This reduces
our costs as we can reduce the number of such materials we must print and mail.
PLEASE NOTE THAT THERE MAY BE COSTS ASSOCIATED WITH ELECTRONIC ACCESS, SUCH AS
USAGE CHARGES FROM INTERNET SERVICE PROVIDERS AND TELEPHONE COMPANIES, THAT MUST
BE BORNE BY THE STOCKHOLDER. To choose this option, please check the box under
the signature block of the proxy card and mail in your proxy card.
We also request that you notify us if you are receiving multiple copies of
our proxy statement and annual report at your household. You can do so by
checking the box under the signature block of the proxy card and mailing in your
proxy card. If you do so, we can reduce the number of these materials we must
print and mail.
YOUR VOTE IS IMPORTANT!
Thank you in advance for participating in our 2002 annual meeting.
PRELIMINARY COPIES
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2, 3, 4, 5 AND 6
1. Election of directors: 01 Steve Sanghi 04 Matthew W. Chapman [ ] Vote FOR [ ] Vote WITHHELD
02 Albert J. Hugo-Martinez 05 Wade F. Meyercord all nominees from all nominees
03 L. B. Day
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDICATED NOMINEE,
WRITE THE NUMBER(S) OF THE NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.)
2. Proposal to amend our Certificate of Incorporation to increase the [ ] For [ ] Against [ ] Abstain
authorized shares of common stock from 300 Million to 450 Million.
3. Proposal to amend the Employee Stock Purchase Plan to increase the number [ ] For [ ] Against [ ] Abstain
of shares reserved for issuance under the Purchase Plan by 500,000 shares.
4. Proposal to amend the 1993 Stock Option Plan to increase the annual [ ] For [ ] Against [ ] Abstain
automatic grant to non-employee directors from 5,000 shares to 6,000 shares
and the initial grant from 10,000 shares to 12,000 shares.
5. Proposal to amend the 1993 Stock Option Plan to provide for a special one [ ] For [ ] Against [ ] Abstain
time option grant to non-employee directors of 3,000 shares of common stock.
6. Proposal to ratify the appointment of Ernst & Young LLP as our independent [ ] For [ ] Against [ ] Abstain
Auditors for the fiscal year ending March 31, 2003.
[ ] Multiple stockholder publications. Please check here to stop mailing of Date _______________________
stockholder publications for this account, since multiple copies come to this
address.
[ ] Yes, I have access to the world wide web and by checking this box I elect ----------------------------------------------------
to obtain all future proxy statements, annual reports and other stockholder
communications by accessing the electronic form made available on the Internet
instead of having paper copies delivered to me by mail. ----------------------------------------------------
Address Change? Mark Box [ ] Indicate changes below: Signature(s) in Box
(Please sign exactly as name appears. When shares
are held by joint tenants, both should sign. When
signing as attorney, executor, administrator,
trustee or guardian, please give full title as
such. If a corporation, partnership or other
entity, please sign in the entity's full name by
an authorized officer. Please date the proxy.)