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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
DIODES, INC.
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (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
previously paid. 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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DIODES INCORPORATED
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 11, 2001
NOTICE IS HEREBY GIVEN THAT THE ANNUAL MEETING (THE "MEETING") OF
THE STOCKHOLDERS OF DIODES INCORPORATED (THE "COMPANY") WILL BE HELD AT THE
RENAISSANCE HOTEL, 30100 AGOURA ROAD, AGOURA HILLS, CALIFORNIA, 91301, ON
MONDAY, JUNE 11, 2001 AT 10:00 A.M. (CALIFORNIA TIME) FOR THE FOLLOWING
PURPOSES:
TO ACT ON:
1. ELECTION OF DIRECTORS. To elect eight persons to the Board of
Directors of the Company, each to serve until the next annual meeting
of stockholders and until their successors have been elected and
qualified. The Board of Directors' nominees are: C.H. Chen, Michael
R. Giordano, Keh-Shew Lu, M.K. Lu, Shing Mao, Leonard M. Silverman,
Raymond Soong, and John M. Stich.
2. APPROVAL OF THE 2001 OMNIBUS EQUITY INCENTIVE PLAN. To approve the
Company's 2001 Omnibus Equity Incentive Plan.
3. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS. To ratify the
appointment of Moss Adams LLP as the Company's independent certified
public accountants for the year ended December 31, 2001.
4. OTHER BUSINESS. To transact such other business as properly may come
before the Meeting or any adjournment thereof.
Only persons who are stockholders of record (the "Stockholders")
at the close of business on April 27, 2001 are entitled to notice of and to vote
in person or by proxy at the Meeting or any adjournment thereof.
The Proxy Statement, which accompanies this Notice, contains
additional information regarding the proposals to be considered at the Meeting,
and Stockholders are encouraged to read it in its entirety.
As set forth in the enclosed Proxy Statement, proxies are being
solicited by and on behalf of the Board of Directors of the Company. All
proposals set forth above are proposals of the Company. It is expected that
these materials first will be mailed to Stockholders on or about April 30, 2001.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE MARK, DATE
AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE TO
BE SURE THAT YOUR SHARES ARE VOTED. YOUR VOTE IS IMPORTANT, WHETHER YOU OWN A
FEW SHARES OR MANY. IF YOU ATTEND THE MEETING, YOU MAY REVOKE YOUR PROXY AND
VOTE YOUR SHARES IN PERSON. THE PROXY MAY BE REVOKED AT ANY TIME PRIOR TO ITS
EXERCISE.
Dated at Westlake Village, California, this twenty-seventh day of
April, 2001.
By Order of the Board of Directors,
DIODES INCORPORATED
/s/ Carl Wertz
Carl Wertz,
Secretary
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DIODES INCORPORATED
3050 EAST HILLCREST DRIVE
WESTLAKE VILLAGE, CALIFORNIA 91362
(805) 446-4800
PROXY STATEMENT
ANNUAL MEETING: JUNE 11, 2001
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors (the "Board of Directors") of
Diodes Incorporated (the "Company") for use at the annual meeting (the
"Meeting") of the stockholders of the Company to be held on Monday, June 11,
2001, at the Renaissance Hotel, 30100 Agoura Road, Agoura Hills, California,
91301, at 10:00 a.m. (California time) and at any adjournment or postponement
thereof. C.H. Chen and Carl Wertz, the designated proxyholders (the
"Proxyholders"), are members of the Company's management. Only stockholders of
record (the "Stockholders") on April 27, 2001 (the "Record Date") are entitled
to notice of and to vote in person or by proxy at the Meeting or any adjournment
or postponement thereof. This Proxy Statement and the enclosed proxy card (the
"Proxy") first will be mailed to Stockholders on or about April 30, 2001.
MATTERS TO BE CONSIDERED
The matters to be considered and voted upon at the Meeting will
be:
1. ELECTION OF DIRECTORS. To elect eight persons to the Board of
Directors of the Company, each to serve until the next annual meeting
of stockholders and until their successors have been elected and
qualified. The Board of Directors' nominees are: C.H. Chen, Michael
R. Giordano, Keh-Shew Lu, M.K. Lu, Shing Mao, Leonard M. Silverman,
Raymond Soong, and John M. Stich.
2. APPROVAL OF THE 2001 OMNIBUS EQUITY INCENTIVE PLAN. To approve the
Company's 2001 Omnibus Equity Incentive Plan.
3. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS. To ratify the
appointment of Moss Adams LLP as the Company's independent certified
public accountants for the year ended December 31, 2001.
4. OTHER BUSINESS. To transact such other business as properly may come
before the Meeting or any adjournment thereof.
COST OF SOLICITATION OF PROXIES
This Proxy solicitation is made by the Board of Directors of the
Company, and the Company will bear the costs of this solicitation, including the
expense of preparing, assembling, printing and mailing this Proxy Statement and
any other material used in this solicitation of Proxies. This solicitation of
Proxies will be made by mail and may be supplemented by telephone or other
personal contact to be made without special compensation by regular officers and
employees of the Company. If it should appear desirable to do so to ensure
adequate representation at the Meeting, officers and regular employees may
communicate with Stockholders, banks, brokerage houses, custodians, nominees and
others, by telephone, facsimile transmissions, telegraph, or in person to
request that Proxies be furnished. The Company will reimburse banks, brokerage
houses, and other custodians, nominees and fiduciaries, for their reasonable
expenses in forwarding proxy materials to their principals. The total estimated
cost for the printing and solicitation of Proxies is $10,000.
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OUTSTANDING SECURITIES AND VOTING RIGHTS; REVOCABILITY OF PROXIES
The authorized capital of the Company consists of (i) 30,000,000
shares of common stock ("Common Stock"), $0.66-2/3 par value, of which 8,146,533
shares were issued and outstanding on the Record Date (with an additional
1,075,672 shares held as treasury stock) and (ii) 1,000,000 shares of Class A
Preferred Stock, $1.00 par value ("Class A Preferred Stock"), none of which were
issued and outstanding on the Record Date. The Common Stock and the Class A
Preferred Stock are collectively referred to as the "Stock." A majority of the
outstanding shares of the Common Stock constitutes a quorum for the conduct of
business at the Meeting. Abstentions and "broker non-votes" (as defined below)
will be treated as shares present and entitled to vote for the purpose of
determining the presence of a quorum.
Each Stockholder is entitled to one vote, in person or by proxy,
for each share of Common Stock standing in his or her name on the books of the
Company as of the Record Date on any matter submitted to the Stockholders,
except that in connection with the election of directors, each Stockholder has
the right to cumulate votes, provided that the candidates' names have been
properly placed in nomination prior to commencement of voting and a Stockholder
has given notice prior to commencement of voting of his or her intention to
cumulate votes. If a Stockholder has given such notice, all Stockholders may
cumulate their votes for all nominated candidates. Cumulative voting entitles a
Stockholder to give one candidate a number of votes equal to the number of
directors to be elected multiplied by the number of shares of Common Stock owned
by such Stockholder, or to distribute such Stockholder's votes on the same
principle among as many candidates as the Stockholder shall think fit. The
candidates receiving the highest number of votes, up to the number of directors
to be elected, shall be elected. Discretionary authority to cumulate votes is
hereby solicited by the Board of Directors and the return of the Proxy shall
grant such authority.
A Proxy for use at the Meeting is enclosed. The Proxy must be
signed and dated by you or your authorized representative or agent. Telegraphed,
cabled or telecopied Proxies are also valid. You may revoke a Proxy at any time
before it is exercised at the Meeting by submitting a written revocation to the
Secretary of the Company or a duly executed Proxy bearing a later date or by
voting in person at the Meeting.
Brokers holding Common Stock in "street name" which are members
of a stock exchange are required by the rules of the exchange to transmit this
Proxy Statement to the beneficial owner of the Common Stock and to solicit
voting instructions with respect to the matters submitted to the Stockholders.
In the event any such broker has not received instructions from the beneficial
owner by the date specified in the statement accompanying such material, the
broker may give or authorize the giving of a Proxy to vote such Common Stock in
his discretion as to the election of directors or the appointment of independent
auditors. Certain other proposals, however, are non-discretionary, and brokers
or nominees who have received no instructions from their clients do not have
discretion to vote on such proposals without specific instructions from the
beneficial owner. When a broker or nominee votes a client's shares on some but
not all proposals, the missing votes are referred to as "broker non-votes." If
you hold Common Stock in "street name" and you fail to instruct your broker or
nominee as to how to vote such Common Stock, your broker or nominee may, in its
discretion, vote such Common Stock "FOR" the election of the Board of Director's
nominees and "FOR" the appointment of Moss Adams LLP as the Company's
independent auditors, but not with respect to the approval of the 2001 Omnibus
Equity Incentive Plan.
Each proposal described herein, other than the election of
directors, requires the affirmative vote of a majority of the outstanding shares
of Common Stock present in person or represented by proxy and entitled to vote
at the Meeting. Abstentions with respect to any proposal submitted to the
Stockholders, other than the election of directors, will be included in the
number of votes cast on such proposal and, accordingly, will have the effect of
a vote "AGAINST" such proposal. However, broker non-votes with respect to a
proposal submitted to the Stockholders will not be included in the number of
shares counted as being present for the purposes of voting on such proposed and,
accordingly, have no effect on the approval of the proposal.
Unless revoked, the shares of Common Stock represented by Proxies
will be voted in accordance with the instructions given thereon. In the absence
of any instruction in the Proxy, your shares of Common Stock will be voted "FOR"
the election of the nominees for director set forth herein and "FOR" the other
proposals described herein.
Of the shares of Common Stock outstanding on the Record Date,
3,067,639 (or approximately 37.7%) (the "Shares") were held in the name of
Lite-On Semiconductor Corporation ("LSC"), formerly named Lite-On Power
Semiconductor ("LPSC"). See "General Information - Security Ownership of Certain
Beneficial Owners and Management" and "Proposal One - Election of Directors -
Certain Relationships and Related Transactions" for a discussion of the
relationship between LPSC, LSC and the Company. An additional 65,312 shares (or
approximately
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0.8%) were owned by directors and executive officers of the Company on the
Record Date. LSC and each director and executive officer has informed the
Company that they will vote "FOR" the election of the nominees to the Board of
Directors identified herein, "FOR" the 2001 Omnibus Equity Incentive Plan, and
"FOR" the appointment of Moss Adams LLP as the Company's independent auditors.
Recently, the Securities and Exchange Commission (the "SEC")
amended its rule governing a company's ability to use discretionary proxy
authority with respect to stockholder proposals with were not submitted by the
stockholders in time to be included in the proxy statement. As a result of that
rule change, in the event a stockholder proposal was not submitted to the
Company prior to March 23, 2001, the enclosed Proxy will confer authority on the
Proxyholders to vote the shares in accordance with their best judgment and
discretion if the proposal is presented at the Meeting. As of the date hereof,
no stockholder proposal has been submitted to the Company, and management is not
aware of any other matters to be presented for action at the Meeting. However,
if any other matters properly come before the Meeting, the Proxies solicited
hereby will be voted by the Proxyholders in accordance with the recommendations
of the Board of Directors. Such authorization includes authority to appoint a
substitute nominee or nominees to the Board of Directors' nominees identified
herein where death, illness or other circumstances arise which prevent any such
nominee for directors from serving in such position and to vote such Proxy for
such substitute nominee.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of Common
Stock as of the Record Date by (i) each person known to the Company to be the
beneficial owner of more than five percent of the outstanding shares of Common
Stock (other than depositories), (ii) each executive officer, director and
nominee for director of the Company, and (iii) all directors and executive
officers as a group:
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER (1) OWNERSHIP(2) OF CLASS(3)
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Lite-On Semiconductor Corporation ("LSC") 3,067,639(4) 37.7%
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Fidelity Management & Research Company ("FMR") 434,300 5.3%
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Raymond Soong 347,500(5) 4.1%
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C.H. Chen 50,000(5) *
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Michael R. Giordano 77,625(5)(6) *
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Keh-Shew Lu -- *
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M.K. Lu 60,000(5) *
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Shing Mao 111,000(5) 1.3%
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Leonard M. Silverman 66,000(5) *
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John M. Stich 6,000(5)(7) *
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Joseph Liu 240,000(5) 2.9%
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Mark King 119,749(5) 1.4%
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Carl Wertz 47,187(5) *
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Walter Buchanan -- *
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All directors, nominees and executive officers as a group (12 persons) 1,125,061(8) 12.2%
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* Less than 1%.
(Footnotes continued on following page)
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(Footnotes continued from previous page)
(1) The address of LSC is 9F. No. 233-2, Pao-Chiao Road, Hsin-Tien,
Taipei-hsien 23115, Taiwan, R.O.C. The address of the directors and
executive officers of the Company is 3050 East Hillcrest Drive, Westlake
Village, California 91362. The address of FMR is 82 Devonshire Street,
Boston, MA 02109-3614.
(2) The named stockholder has sole voting power and investment power with
respect to the shares listed, except as indicated and subject to
community property laws where applicable.
(3) Shares which the person (or group) has the right to acquire within 60
days after the Record Date are deemed to be outstanding in calculating
the beneficial ownership and the percentage ownership of the person (or
group) but are not deemed to be outstanding as to any other person or
group.
(4) LSC, which holds 3,067,639 shares of Common Stock, as the record holder,
is a public company listed on the Taiwan OTC and a member of the Lite-On
Group of companies. See "Proposal One - Election of Directors - Certain
Relationships and Related Transactions" for a discussion of the
relationship among LSC, the Company and certain directors and executive
officers of the Company.
(5) Represents the following shares of Common Stock which the named
individual has the right to acquire within 60 days after the Record Date
by the exercise of vested stock options.
NAMED INDIVIDUAL SHARES
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Raymond Soong 347,500
C.H. Chen 50,000
Michael R. Giordano 37,500
M.K. Lu 60,000
Shing Mao 105,000
Leonard M. Silverman 66,000
John M. Stich 5,000
Joseph Liu 225,000
Mark King 119,749
Carl Wertz 44,000
(6) Includes 1,500 shares of Common Stock held in the name of PaineWebber
Trust for the IRA of Mr. Giordano.
(7) Includes 1,000 shares of Common Stock held in a Joint Living Trust with
Mr. Stich's spouse.
(8) Includes 1,059,749 shares which the directors and executive officers have
the right to acquire within 60 days after the Record Date, by the
exercise of vested stock options, but excludes an additional 337,000
shares which the directors and executive officers will have the right to
acquire upon the exercise of stock options, which options will become
exercisable in installments more than 60 days after the Record Date.
PROPOSAL ONE - ELECTION OF DIRECTORS
DIRECTORS AND EXECUTIVE OFFICERS
The Company's Bylaws provide that the number of directors shall
be determined from time to time by the Board of Directors, but may not be less
than five nor more than seventeen. Currently, the Board of Directors has fixed
the number of directors at eight. The Bylaws further provide for the election of
each director at each annual meeting of stockholders.
The persons named below have been nominated for election to the
Board of Directors to serve until the next annual meeting of stockholders and
until their successors have been elected and qualified. All nominees have
indicated their willingness to serve and, unless otherwise instructed, Proxies
will be voted in such a way as to elect as many of these nominees as possible
under applicable voting rules. In the event that any of the nominees should be
unable to serve as a director, it is intended that the Proxies will be voted for
the election of such substitute nominees, if any, as shall
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be designated by the Board of Directors. The Board of Directors has no reason to
believe that any nominee will be unavailable.
None of the directors, nominees for director or executive
officers were selected pursuant to any arrangement or understanding, other than
with the directors and executive officers of the Company acting within their
capacity as such. There are no family relationships among directors or executive
officers of the Company as of the date hereof, and, except as set forth, as of
the date hereof, no directorships are held by any director in a company which
has a class of securities registered pursuant to Section 12 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or subject to the
requirements of Section 15(d) of the Exchange Act or any company registered as
an investment company under the Investment Company Act of 1940. Officers serve
at the discretion of the Board of Directors.
The following table sets forth certain biographical information
considering the nominees for director and the executive officers of the Company
as of the Record Date.
DIRECTOR
OFFICERS AND DIRECTORS AGE POSITION WITH THE COMPANY SINCE
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Raymond Soong(1)......... 59 Chairman of the Board of Directors 1993
C.H. Chen(2)............. 58 President and Chief Executive Officer; Director 2000
Michael R. Giordano(3)... 54 Director 1990
Keh-Shew Lu(4)........... 54 Director Nominee --
M.K. Lu(5)............... 52 Director 1995
Shing Mao(6)............. 65 Director 1990
Leonard M. Silverman(7).. 61 Director 1995
John M. Stich(8)......... 59 Director 2000
Joseph Liu(9)............ 59 Vice President, Far East Operations --
Mark King(10)............ 42 Vice President, Sales and Marketing --
Carl Wertz(11)........... 46 Chief Financial Officer, Secretary and Treasurer --
Walter Buchanan (12)..... 48 President, Diodes-FabTech --
(1) Mr. Soong has been the Chairman of the Board of Silitek Corporation since
1990 and has been Chairman of the Board of LSC, formerly LPSC since 1992.
See "General Information - Security Ownership of Certain Beneficial
Owners and Management" and "Certain Relationships and Related
Transactions" for a discussion of the relationships among Silitek, LPSC,
LSC and the Company. Since 1996, Mr. Soong has also been Chairman of the
Board of FabTech, Inc. (formerly a subsidiary of LSC, acquired by the
Company in December 2000). Mr. Soong is a graduate of the National Taipei
Institute of Technology's Electronic Engineering Department. After
serving as a senior engineer for RCA and as a chief engineer for Texas
Instruments, Mr. Soong, together with several of his coworkers, founded
Taiwan Liton Electronic Co. Ltd. ("Taiwan Liton") in 1975. Taiwan Liton,
which manufactures electronic components and subsystems, is an affiliate
of Silitek through common control, and its stock is listed on the Taipei
Stock Exchange. Mr. Soong is also Chairman of the Board of Taiwan Liton,
and the Company's manufacturing subsidiary in Shanghai, China
("Diodes-China").
(2) Mr. Chen was appointed President and Chief Executive Officer of the
Company on March 30, 2000. From 1969 to 1990, Mr. Chen held various
positions at Texas Instruments, most recently as Vice President of Texas
Instruments-Taiwan. In 1990, he left Texas Instruments to found Dyna
Image Corp. (a public company listed on the Taiwan OTC market), a Lite-On
Group company and the world's leading supplier of contact image sensors
(CISs), which are key components in fax machines and scanners. In
December 2000, Dyna Image Corp. acquired LPSC to form LSC. Mr. Chen is
currently the Vice Chairman of LSC and is Chairman of the Company's
Executive Committee.
(Footnotes continued on following page)
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(Footnotes continued from previous page)
(3) Mr. Giordano joined the investment-banking firm of PaineWebber
Incorporated as a Senior Vice President-Investment Consulting when
PaineWebber acquired his previous employer, Kidder Peabody and Co., Inc.
In November 2000, PaineWebber merged with UBS AG and is now called UBS
PaineWebber. Mr. Giordano advises corporations, foundations, trusts, and
municipal governments in investments and finance. Mr. Giordano was with
Kidder Peabody since 1979. Formerly a captain and pilot in the United
States Air Force, Mr. Giordano received his Bachelor of Science degree in
Aerospace Engineering from California State Polytechnic University and
his Masters degree in Business Administration (Management and Finance)
from the University of Utah. Mr. Giordano also did post-graduate work in
International Investments at Babson College. Mr. Giordano was Chairman of
the Board and Chief Executive Officer of the Leo D. Fields Co. from 1980
to 1990, when it was acquired by GWC Holdings. Mr. Giordano is Chairman
of the Company's Audit Committee and Compensation and Stock Options
Committee, and is a member of the Executive Committee.
(4) Dr. Lu was appointed Senior Vice President of Texas Instruments ("TI")
and manager of Worldwide Mixed-Signal Products--Semiconductor Group in
June 1998. His responsibilities include all aspects of the mixed-signal
system and end-equipment businesses for TI worldwide, including design,
process development, product development, manufacturing and marketing.
Dr. Lu's business areas include the mixed-signal portion of TI's digital
signal processing solutions, display solutions, and mixed-signal wireless
communications and RF. From April 1998 to June 1998, Dr. Lu was manager
of TI's worldwide memory business. In addition, he served as President of
TI Asia from 1994 until April 1998, where he had responsibility for all
of TI's activities in Asia (excluding Japan). Since beginning his career
at TI in 1974, Dr. Lu has held a number of technical and managerial
positions within TI's Semiconductor Group, including Vice President and
division manager of the Linear Products Division. Dr. Lu holds a
bachelor's degree in engineering from the National Cheng Kung University
in Taiwan, and a master's degree and doctorate in electrical engineering
from Texas Tech University.
(5) Mr. Lu has served as the President of LSC, formerly LPSC since 1999.
Since 1998, Mr. Lu has been Group Vice President of the Lite-On Group and
President and Chief Executive Officer of Actron Technology Corporation, a
manufacturer of pressfit diodes. From 1991 to June 1998, Mr. Lu was
President and a director of LPSC. Mr. Lu was also re-appointed President
of LPSC in March 2000. From 1983 to 1990, Mr. Lu was General Manager/Vice
President of Silitek. See "General - Security Ownership of Certain
Beneficial Owners and Management" and "Certain Relationships and Related
Transactions" for a discussion of the relationship among Silitek, LPSC,
LSC and the Company. Since 1995, Mr. Lu has been a director of FabTech.
Mr. Lu earned his Bachelor degree in Electrical Engineering at Tatung
Institute of Technology and is a graduate of the Institute of
Administration at National Chengchi University. Mr. Lu is also a member
of the Chinese Management Association and the Chinese Association for
Advancement of Management, and is a director of Diodes-China. Mr. Lu is a
member of the Company's Executive Committee.
(6) In 2000, Dr. Mao retired as Chairman of the Board of Lite-On, Inc., a
California corporation located in Milpitas, California, and a wholly
owned subsidiary of Taiwan Liton, in which position he served since 1988.
See "General Information - Security Ownership of Certain Beneficial
Owners and Management" and "Certain Relationships and Related
Transactions" for a discussion of the relationship among Silitek, LSC and
the Company. Since 1989, Dr. Mao has been a director of Dyna Investment
Co., Ltd. of Taiwan, a venture capital company, and a director of LSC.
Since 1996, Dr. Mao has also been a director of FabTech. Before joining
Lite-On, Dr. Mao served in a variety of management positions with
Raytheon Company for four years, with Texas Instruments for 11 years, and
with UTL Corporation (later acquired by Boeing Aircraft Company) for
seven years. Dr. Mao earned his Ph.D. degree in electrical engineering at
Stanford University in 1963. Dr. Mao is a member of the Company's
Executive Committee and the Compensation and Stock Options Committee.
(7) Since 1984, Dr. Silverman has been the Dean of Engineering at the
University of Southern California ("USC"), and has been employed by USC
since 1968. Dr. Silverman is internationally known for his pioneering
work in the theory and application of multi-variable control systems and
signal processing and has more than 100 publications to his credit. Dr.
Silverman has been honored as a Fellow of the IEEE, as a Distinguished
Member of the IEEE Control Society, and has received a Centennial Medal
of the IEEE. He has also been elected to the
(Footnotes continued on following page)
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(Footnotes continued from previous page)
National Academy of Engineering, one of the highest honors that can be
bestowed on an engineer. Dr. Silverman serves on the Board of Directors
for Advanced Micro Devices, Inc. and Netter Digital Entertainment, Inc.,
as well as for the Colachis Foundation, the Lord Foundation, and the M.C.
Gill Foundation. Dr. Silverman earned his A.B., B.S., M.S. and Ph.D.
degrees in Electrical Engineering at Columbia University during the
period 1961 through 1966. Dr. Silverman is a member of the Company's
Executive Committee, the Audit Committee, and the Compensation and Stock
Options Committee.
(8) Mr. Stich currently serves as the President and Chief Executive Officer
of The Asian Network; a consulting company that specializes in assisting
hi-tech companies to expand their business in Asia. Prior to this
position, Mr. Stich was the Chief Marketing Officer for TI in Japan with
responsibility for TI's sales and marketing in Japan from 1994 to 1999.
Mr. Stich joined TI in 1964, and has served in various management
positions, including Marketing Manager for TI Asia in Tokyo from 1970 to
1972, Marketing Director in Taiwan from 1978 to 1982, Managing Director
of TI-Hong Kong from 1982 to 1991, and Vice President-Semiconductors for
TI Asia from 1991 to 1994. Mr. Stich has also been active in leading
various industry associations, including serving as Governor for the
American Chamber of Commerce in Japan and in Hong Kong, and as Chairman
of the Semiconductor Industry Association (Japan Chapter). Mr. Stich is a
member of the Company's Audit Committee and the Executive Committee.
(9) In May 1998, Mr. Liu was appointed President of Vishay/LPSC and Vice
President, Far East Operations for the Company, the former position in
which he served until March 2000, when Vishay agreed to sell its 65%
interest in the Vishay/LPSC joint venture to the Lite-On Group, the 35%
owner. Mr. Liu continues to serve as the Company's Vice President, Far
East Operations. Mr. Liu served as Vice President, Operations of the
Company from 1994 to 1998 and Chief Financial Officer and Secretary from
1990 to 1998. Mr. Liu was the Company's Vice President, Administration
from 1990 to 1994. Prior to joining the Company, Mr. Liu held various
management positions with TI, Dallas, since 1971, including Planning
Manager, Financial Planning Manager, Treasury Manager, Cost Accounting
Manager and General Accounting Manager with TI Taiwan, Ltd. in Taipei;
from 1981 to 1986 as Controller with TI Asia in Singapore and Hong Kong;
from 1986 to 1989 as Financial Planning Manager, TI Latin America
Division (for TI Argentina, TI Brazil, and TI Mexico) in Dallas; and from
1989 to 1990 as Chief Coordinator of Strategic Business Systems for TI
Asia Pacific Division in Dallas. Mr. Liu is also President and a director
of Diodes-China. See "Certain Relationships and Related Transactions" for
a discussion of the relationship between Diodes-China and the Company.
(10) Mr. King, the Company's Vice President, Sales since 1991, was appointed
the Company's Vice President, Sales and Marketing in May 1998. Before
joining the Company, Mr. King served for nine years in various sales
management positions at Lite-On, Inc., a California corporation located
in Milpitas, California, and a manufacturer of optoelectronic products.
(11) Mr. Wertz, the Company's Controller since 1993, was appointed the
Company's Chief Financial Officer, Secretary and Treasurer in 1998.
Before joining the Company, Mr. Wertz served in various financial and
accounting positions, most recently as Controller of Westco Products, a
manufacturer and distributor of food products, headquartered in Pico
Rivera, California. Mr. Wertz, a licensed CPA, began his accounting
career with Deloitte & Touche LLP.
(12) Mr. Buchanan has served as FabTech's President since its inception in
1996, and joined the Company when FabTech was acquired on December 1,
2000. From 1991 to 1995, Mr. Buchanan was employed at Torex International
Incorporated, a manufacturer of silicon wafers and wafer products located
in Japan, where he served in various international sales and marketing
positions. Prior to this, Mr. Buchanan held positions in process and
product development for various semiconductor companies, most notably
Fairchild Semiconductor International and Siliconix, Inc. Mr. Buchanan
holds several patents in semiconductor technologies and has over 24 years
of semiconductor industry experience.
8
10
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has a standing Audit Committee, a
Compensation and Stock Options Committee, and an Executive Committee, each of
which consists of two or more directors who serve at the discretion of the Board
of Directors. The members of each Committee are as follows:
AUDIT COMMITTEE COMPENSATION AND OPTIONS COMMITTEE EXECUTIVE COMMITTEE
- --------------- ---------------------------------- -------------------
Michael R. Giordano* Michael R. Giordano* C.H. Chen*
Dr. Leonard M. Silverman Dr. Shing Mao Michael. R. Giordano
John M. Stich Dr. Leonard M. Silverman M.K. Lu
Dr. Shing Mao
Dr. Leonard M. Silverman
* Chairman John M. Stich
The Audit Committee makes recommendations to the Board of
Directors regarding the engagement of the Company's independent auditors,
reviews the plan, scope and results of the audit, reviews with management the
Company's policies and procedures with respect to internal accounting and
financial controls and reviews changes in accounting policy and the scope of the
non-audit services which may be performed by the Company's independent auditors.
The Audit Committee also monitors policies to prohibit unethical, questionable
or illegal activities by the Company's employees.
The Compensation and Stock Options Committee makes
recommendations to the Board of Directors regarding compensation, benefits and
incentive arrangements for officers and other key employees of the Company
including awards under the Company's Incentive Bonus Plan. The Compensation and
Stock Options Committee also administers the Company's 1993 Incentive Stock
Option Plan ("1993 ISO Plan"), the 1993 Non-Qualified Stock Option Plan ("1993
NQO Plan"), the Incentive Bonus Plan, and the Company's 401(k) profit sharing
plan (the "401(k) Plan"), and will administer the proposed 2001 Omnibus Equity
Incentive Plan, if it is approved by the stockholders.
The Executive Committee promotes communication between the
management and the Board of Directors by receiving the periodic reports of the
management of the Company on the business, results of operations and prospects
of the Company.
The Board of Directors met nine times during calendar year 2000.
The Compensation and Stock Options Committee met three times, the Audit
Committee five times, and the Executive Committee met one time during calendar
year 2000. All of the persons who were directors of the Company or members of
committees were present for at least 75% of the meetings during calendar year
2000.
EMPLOYEE BENEFITS PLANS
1993 ISO Plan. The 1993 Incentive Stock Option Plan (the "1993
ISO Plan") provides for the grant of incentive stock options within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), to
purchase up to 1,500,000 shares of the Company's Common Stock. Options granted
under the 1993 ISO Plan are not transferable, except by will or the laws of
descent or distribution. A vested but unexercised option is normally exercisable
for 90 days after termination of employment, other than by death or retirement.
In the event of death, unvested options are accelerated to maturity. An option
granted under the 1993 ISO Plan may not be priced at less than 100% of fair
market value on the date of grant and expires ten years from the date of grant.
As of the Record Date, 397,513 shares have been issued on the exercise of
options granted under the 1993 ISO Plan, 889,391 shares were subject to
outstanding options, and 213,069 shares were available for issuance upon the
exercise of options, granted under the 1993 ISO Plan.
1993 NQO Plan. The 1993 Non-Qualified Stock Option Plan (the
"1993 NQO Plan") became effective retroactively to July 6, 1993, upon approval
by the shareholders at the Company's 1994 annual meeting. The 1993 NQO Plan
provides for the grant of options that do not qualify as incentive stock options
under Section 422 of the Code to purchase up to 1,500,000 shares of the
Company's Common Stock. The optionee may exercise options during his or her
lifetime or after his or her death by those who have inherited by will or
intestacy. A vested but unexercised option is normally exercisable for 90 days
after termination of employment, other than by death or retirement. In the event
of death, unvested options are accelerated to maturity. The shares to be issued
upon exercise of options under the 1993 NQO Plan require a three-year vesting
period. An option granted under the 1993 NQO Plan may not be priced at less than
100% of
9
11
fair market value on the date of grant and expires ten years from the date of
grant. As of the Record Date, 451,500 shares have been issued on the exercise of
options granted under the 1993 NQO Plan, 1,035,700 shares were subject to
outstanding options, and 12,800 shares were available for issuance upon the
exercise of options, granted under the 1993 NQO Plan.
2001 Omnibus Equity Incentive Plan. For a description of the
proposed 2001 Omnibus Equity Incentive Plan, see "Proposal 2. Approval of the
2001 Omnibus Equity Incentive Plan."
Incentive Bonus Plan. The Company's Incentive Bonus Plan provides
that the Board of Directors may fix a dollar value to an employee bonus and
determine to pay such bonus in the form of shares of the Common Stock of the
Company. The number of shares to be awarded to the employee is determined by
dividing the dollar amount of the bonus by the fair market value of one share of
Common Stock. The Board of Directors may elect to grant a number of shares of
Common Stock to the employee. As of the Record Date, 186,000 were available for
issuance under the Incentive Bonus Plan.
401(k) Plan. The parent Company maintains a 401(k) profit sharing
plan ("401(k) Plan") for the benefit of qualified employees. Employees who
participate may elect to make salary deferral contributions to the 401(k) Plan
up to 15% of the employees' eligible payroll, subject to annual Internal Revenue
Code maximum limitations. The Company makes a contribution of $1 for every $2
contributed by the participant, up to 6% of the participant's eligible payroll.
In addition, the Company may make a discretionary contribution to the entire
qualified employee pool, in accordance with the 401(k) Plan.
The Company's recently acquired subsidiary, FabTech, maintains a
separate 401(k) Plan for the benefit of qualified employees. Employees may
contribute up to 20% of their eligible compensation, subject to annual Internal
Revenue Code maximum limitations. FabTech may make discretionary contributions
up to 40% of the first 5% of each employee's annual contribution. The Company
intends to combine its 401(k) Plan with FabTech's 401(k) Plan to form a new
401(k) Plan during 2001.
COMPENSATION OF DIRECTORS
Each director of the Company receives (i) a fee of $750 for each
meeting of the Board of Directors or Committee meeting attended, and (ii) a fee
of $500 for each meeting in which such director participates by telephone. The
Board of Directors may modify such compensation in the future. Both employee and
non-employee directors are eligible to receive stock option grants.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Under Section 16(a) of the Exchange Act, the Company's directors,
executive officers and any persons holding ten percent or more of the Common
Stock are required to report their ownership of Common Stock and any changes in
that ownership to the Securities and Exchange Commission (the "SEC") and to
furnish the Company with copies of such reports. Specific due dates for these
reports have been established and the Company is required to report any failure
to file on a timely basis by such persons. Based solely upon a review of copies
of reports filed with the SEC during the calendar year ended December 31, 2000,
all reporting persons filed reports on a timely basis. To avoid the inadvertent
failure of directors and executive officers to timely file these reports, the
Company periodically advises such persons of their filing obligations.
10
12
EXECUTIVE COMPENSATION AND RELATED INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth certain information concerning
compensation paid or accrued by the Company to its Chief Executive Officer and
to each of the other four most highly compensated executive officers (the "Named
Executives") for each of the fiscal years ended December 31, 1998, 1999 and
2000:
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
--------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
--------------------------------------- ---------------------- ---------
OTHER SECURITIES ALL
ANNUAL RESTRICTED UNDERLYING OTHER
NAME AND COMPEN- STOCK OPTIONS/ LTIP COMPEN-
PRINCIPAL POSITION YEAR SALARY($) BONUS($) SATION($)(1) AWARDS($) SARS(#) PAYOUTS($) SATION($)
- ----------------------------------------------------------------------------------------------------------------------
C.H. CHEN 2000 112,500(2) 290,000 -- -- 150,000 -- --
President
and Chief
Executive Officer
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
JOSEPH LIU 2000 160,000 244,000 52,000 -- 108,000 -- --
Vice President, 1999 150,000 199,200 59,200 -- -- -- --
Far East Operations 1998 140,000 49,600 43,200 -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
MARK KING 2000 160,000 244,000 -- -- 18,000 -- --
Vice President, 1999 150,000 199,200 37,700 -- -- -- --
Sales and 1998 110,000 35,000 19,200 -- 60,000 -- --
Marketing
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
CARL WERTZ 2000 120,000 176,000 -- -- 13,500 -- --
Chief Financial 1999 107,000 116,200 29,600 -- -- -- --
Officer, 1998 87,000(3) 27,300 13,500 -- 37,500 -- --
Secretary and
Treasurer
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
WALTER BUCHANAN 2000 21,845(4) -- -- -- -- -- --
President,
Diodes-FabTech
- ----------------------------------------------------------------------------------------------------------------------
(1) Certain of the Company's executive officers receive personal benefits in
addition to salary and cash bonuses, including, but not limited to, auto
allowances, life insurance payable at the direction of the employee,
contributions under the Company's 401(k) Plan, and group health
insurance. This amount is reported only when the aggregate amount of such
personal benefits exceeds the lesser of $50,000 or 10% of the total
annual salary and bonus reported for the individual Named Executive.
(2) Mr. Chen was appointed President and Chief Executive Officer of the
Company on March 30, 2000 at a base salary of $150,000 per year.
(3) Mr. Wertz, the Company's Controller since 1993, was appointed as the
Company's Chief Financial Officer, Secretary and Treasurer on May 28,
1998.
(Footnotes continued on following page)
11
13
(Footnotes continued from previous page)
(4) Mr. Buchanan joined the Company on December 1, 2000 as part of the
Company's acquisition of FabTech, Inc. Under the terms of his employment
agreement, Mr. Buchanan's base salary is $262,140. See "Employment
Contracts."
STOCK OPTION GRANTS
The following table contains certain information concerning the grant of
stock options during the fiscal year ended December 31, 2000 to the Named
Executives:
OPTION/SAR GRANTS IN FISCAL YEAR 2000
- ----------------------------------------------------------------------------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS(1) FOR OPTION TERM(2)
- ----------------------------------------------------------------- ------------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL
UNDERLYING OPTIONS/SARs EXERCISE OR
OPTIONS/SARs GRANTED TO BASE PRICE EXPIRATION
NAME GRANTED(#) EMPLOYEES(%) ($/SH) DATE 5%($) 10%($)
- ---- ------------ ------------ ----------- ----------- --------- ---------
C.H. CHEN 150,000 33.7 20.0833 4/24/10 1,894,542 4,801,141
- ----------------------------------------------------------------------------------------------
JOSEPH LIU 90,000 20.2 20.5833 8/1/10 1,165,025 2,952,403
- ----------------------------------------------------------------------------------------------
JOSEPH LIU 18,000 4.0 23.9167 6/12/10 270,740 686,107
- ----------------------------------------------------------------------------------------------
MARK KING 18,000 4.0 23.9167 6/12/10 270,740 686,107
- ----------------------------------------------------------------------------------------------
CARL WERTZ 13,500 3.0 23.9167 6/12/10 203,055 514,580
- ----------------------------------------------------------------------------------------------
(1) All stock options have been adjusted to account for the Company's
three-for-two stock split in July 2000.
(2) The Potential Realizable Value is the product of (a) the difference
between (i) the product of the closing sale price per share at the date
of grant and the sum of (A) 1 plus (B) the assumed rate of appreciation
of the Common Stock compounded annually over the term of the option and
(ii) the per share exercise price of the option and (b) the number of
shares of Common Stock underlying the option at December 31, 2000. These
amounts represent certain assumed rates of appreciation only. Actual
gains, if any, on stock option exercises are dependent upon a variety of
factors, including market conditions and the price performance of the
Common Stock. There can be no assurance that the rate of appreciation
presented in this table can be achieved.
12
14
STOCK OPTION EXERCISES AND HOLDINGS
The following table contains certain information with respect to
the Named Executives concerning the exercise of options during the fiscal year
ended December 31, 2000 and unexercised options held by the Named Executives as
of December 31, 2000:
AGGREGATED OPTION/SAR EXERCISES IN FISCAL YEAR 2000
AND FISCAL YEAR-END OPTION VALUES (1)
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED "IN-THE-MONEY" OPTIONS/SARS
SHARES OPTIONS/SARS AT 12/31/00(#) AT 12/31/00($)(2)
ACQUIRED ON VALUE ----------------------------- ----------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ----------- ------------- ----------- -------------
- ------------------------------------------------------------------------------------------------------------------------
C.H. CHEN -- -- -- 150,000 -- --
- ------------------------------------------------------------------------------------------------------------------------
JOSEPH LIU -- -- 225,000 48,000 1,059,375 --
- ------------------------------------------------------------------------------------------------------------------------
MARK KING 13,334 224,253 113,750 37,999 681,719 74,163
- ------------------------------------------------------------------------------------------------------------------------
CARL WERTZ -- -- 40,000 26,000 250,833 46,354
- ------------------------------------------------------------------------------------------------------------------------
WALTER BUCHANAN -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------
(1) All stock options have been adjusted to account for the Company's
three-for-two stock split in July 2000.
(2) The value of unexercised "in-the-money" options is the difference between
the closing sale price of the Company's Common Stock on December 29, 2000
($10.375 per share) and the exercise price of the option, multiplied by
the number of shares subject to the option.
EMPLOYMENT CONTRACTS
Mr. Buchanan joined the Company on December 1, 2000 as President
of FabTech. Under the terms of an employment contract, Mr. Buchanan is entitled
to (i) an annual base salary of $262,140, (ii) participation in the Company's
stock option plans, (iii) benefits and vacation leave as generally made
available to similarly situated employees, (iv) the use of an automobile.
As an at-will employment relationship, either the Company or Mr.
Buchanan may terminate the relationship for any reason, with or without cause,
on thirty (30) days' prior written notice. In the event that employment is
terminated by the Company without cause (as defined), Mr. Buchanan will be
entitled to receive a severance payment in the amount of six months' salary.
13
15
REPORT OF THE COMPENSATION AND OPTIONS COMMITTEE
OF THE BOARD OF DIRECTORS TO STOCKHOLDERS
The Report of the Compensation and Options Committee of the Board
of Directors shall not be deemed incorporated by reference by any general
statement incorporating by reference this Proxy Statement into any filing under
the Securities Act of 1933 or under the Securities Exchange Act of 1934, except
to the extent that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.
REPORT OF THE COMPENSATION AND STOCK OPTIONS COMMITTEE
GENERAL
The Compensation and Stock Options Committee (the "Committee")
consists of three directors, Michael R. Giordano, Dr. Shing Mao, and Dr. Leonard
M. Silverman who are not employees or former employees of the Company. The
Committee makes recommendations to the Board of Directors regarding
compensation, benefits and incentive arrangements for officers and other key
employees of the Company including awards under the Company's Incentive Bonus
Plan. The Committee also administers the Company's 1993 ISO Plan, and the
Company's 1993 NQO Plan, and will, upon shareholder approval, administer the
Company's 2001 Omnibus Equity Incentive Plan.
The Company's policy in compensating executive officers is to
establish methods and levels of compensation that will provide strong incentives
to promote the profitability and growth of the Company and reward superior
performance. Compensation of executive officers includes base salary,
performance-based incentive bonuses and stock-based programs. The Company's
general approach to compensating executive officers is to pay cash salaries
which are competitive with salaries paid to executives of other companies in the
Company's industry, which are of similar size and engaged in a similar line of
business. Salaries are established by the Committee based on the Committee's
subjective assessment of the executive's scope of responsibility, level of
experience, individual performance, and past and potential contribution to the
Company's business.
The Committee believes that the emphasis on performance-based and
stock-based compensation serves to align the interests of the executive officers
with the interests of the Company's stockholders. The Committee also seeks to
establish overall compensation levels that are sufficiently competitive to
attract, retain, and motivate highly competent management personnel. Base
salaries for Messrs. Chen, King, Liu and Wertz are paid in accordance with
subjective criteria set by the President and Chief Executive Officer of the
Company. The performance-based incentive bonuses are paid in accordance with
subjective criteria, which are based on specific financial performance results
against goals established prior to the start of the calendar year.
COMPENSATION FOR THE PRESIDENT AND CHIEF EXECUTIVE OFFICER
Mr. C.H. Chen was appointed President, Chief Executive Officer,
and a director of the Company on March 30, 2000 at a base salary of $150,000 per
year. Mr. Chen also serves as the Vice Chairman of LSC, a Lite-On Group company
(now listed on the Taiwan OTC market), for which he is also compensated by LSC.
Stock options granted to Mr. Chen will be based upon the Committee's subjective
assessment of the performance of Mr. Chen and the Company.
STOCK OPTIONS
The Committee believes that the interests of senior management
must be closely aligned with those of the Company's stockholders. Stock options
are granted to officers and selected employees whose contributions and skills
are important to the long-term success of the Company. Stock options granted to
executive officers to date have been granted at no less than the fair market
value of the Common Stock as of the date of grant with a ten-year term. If
employment is terminated, the option expires 90 days from the termination date.
To encourage retention, the ability to exercise options granted under the plans
is subject to vesting restrictions. The Committee's policy is to award an
initial grant at the date of employment, which vests over three years, and is in
recognition of the executive officer's potential contribution to the Company.
The three-year vesting period may be increased or decreased at the Committee's
discretion. After three years, it is at the Committee's discretion to award
additional stock option grants to incentivize future contributions. Decisions
made by the Committee regarding the timing and size of other option grants take
into
14
16
consideration Company's and individual's performance, competitive market
practices, and the size and term of option grants made in prior years.
The Company's stock option plans have been amended and approved
by the stockholders so stock options that have been awarded can qualify for
exclusion under Section 162(m) of the Internal Revenue Code of 1986 as
performance-based compensation.
Dated: April 6, 2001
Compensation and Options Committee of the Board of Directors
Michael R. Giordano
Shing Mao
Leonard M. Silverman
COMPENSATION AND OPTIONS COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation and Options Committee consists of three
directors, Michael R. Giordano, Dr. Shing Mao, and Dr. Leonard M. Silverman. No
person who served as a member of the Company's Compensation and Options
Committee during the 2000 calendar year has ever been an officer or employee of
the Company or any of its subsidiaries.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS TO STOCKHOLDERS
The Report of the Audit Committee of the Board of Directors shall
not be deemed incorporated by reference by any general statement incorporating
by reference this Proxy Statement into any filing under the Securities Act of
1933 or under the Securities Exchange Act of 1934, except to the extent that the
Company specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board of Directors of Diodes
Incorporated (the "Company") is comprised of three directors, Michael R.
Giordano, Leonard M. Silverman, and John M. Stich, each of whom is considered
"independent" under Rule 4200(a)(14) of the National Association of Securities
Dealers' listing standards. The Audit Committee is responsible for overseeing
the Company's accounting functions and controls, as well as recommending to the
Board of Directors an independent accounting firm to audit the Company's
financial statements. The Audit Committee has adopted a charter to set forth its
responsibilities (the "Charter"). A copy of the Charter is attached to this
Proxy Statement as Exhibit A.
As required by the Charter, the Audit Committee received and
reviewed the report of Moss Adams LLP regarding the results of their audit, as
well as the written disclosures and the letter from Moss Adams LLP required by
Independence Standards Board Standard No. 1. The Audit Committee reviewed the
audited financial statements with the management of the Company. A
representative of Moss Adams LLP also discussed with the Audit Committee the
independence of Moss Adams LLP from the Company, as well as the matters required
to be discussed by Statement of Auditing Standards 61. Discussions between the
Audit Committee and the representative of Moss Adams LLP included the following:
- Moss Adams LLP's responsibilities in accordance with generally accepted
auditing standards
- The initial selection of, and whether there were any changes in,
significant accounting policies or their application
- Management's judgments and accounting estimates
- Whether there were any significant audit adjustments
- Whether there were any disagreements with management
- Whether there was any consultation with other accountants
- Whether there were any major issues discussed with management prior to
Moss Adams LLP's retention
- Whether Moss Adams, LLP encountered any difficulties in performing the
audit
- Moss Adams LLP's judgments about the quality of the Company's accounting
principles
15
17
- Moss Adams LLP's responsibilities for information prepared by management
that is included in documents containing audited financial statements
Based on its review of the financial statements and its
discussions with management and the representative of Moss Adams LLP, the Audit
Committee did not become aware of any material misstatements or omissions in the
financial statements. Accordingly, the Audit Committee recommended to the Board
of Directors that the audited financial statements be included in the Annual
Report on Form 10-K for the year ended December 31, 2000 to be file with the
Securities and Exchange Commission.
Dated: April 6, 2001
Audit Committee of the Board of Directors of Diodes Incorporated,
Michael R. Giordano
Leonard M. Silverman
John M. Stich
AUDIT COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Audit Committee consists of three directors, Michael R.
Giordano, Dr. Leonard M. Silverman and John M. Stich. No person who served as a
member of the Company's Audit Committee during the 2000 calendar year has ever
been an officer or employee of the Company or any of its subsidiaries.
16
18
PERFORMANCE GRAPH
On June 19, 2000, the Company's Common Stock commenced trading on
the NASDAQ Stock Market, National Market System ("Nasdaq"), under the symbol
"DIOD." From November 10, 1966 to June 16, 2000, the Company's Common Stock
traded on the American Stock Exchange ("Amex"), under the symbol "DIO." Set
forth below is a line graph comparing the yearly percentage change in the
cumulative total stockholder return of the Company's Common Stock against the
cumulative total return of the Nasdaq Composite, Amex, a Company-constructed
electronics manufacturing and distribution peer group, and the Nasdaq Industrial
Index for the five calendar years ending December 31, 2000. The graph is not
necessarily indicative of future price performance.
The Company has switched from a Company-generated peer group to
the Nasdaq Industrial Index in order to provide a more representative comparison
to the Company's recently initiated vertical integration strategy.
The graph shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act or under the Exchange Act, except to the extent
that the Company specifically incorporates this information by reference, and
shall not otherwise be deemed filed under such Acts.
TOTAL RETURN TO STOCKHOLDERS
(ASSUMES $100 INVESTMENT ON 12/31/95)
[CHART]
- -----------------------------------------------------------------------------------------------------
TOTAL RETURN ANALYSIS 1995 1996 1997 1998 1999 2000
- -----------------------------------------------------------------------------------------------------
DIODES INCORPORATED $100 $ 69.04 $ 92.85 $ 47.62 $204.75 $148.26
- -----------------------------------------------------------------------------------------------------
NASDAQ COMPOSITE INDEX 100 122.71 149.25 208.40 386.77 234.81
- -----------------------------------------------------------------------------------------------------
AMEX MARKET INDEX 100 105.52 130.61 157.39 188.65 174.34
- -----------------------------------------------------------------------------------------------------
NASDAQ INDUSTRIAL INDEX 100 115.03 126.57 135.20 232.09 153.73
- -----------------------------------------------------------------------------------------------------
PEER GROUP INDEX (WEIGHTED AVERAGE) 100 84.63 136.10 170.35 788.55 808.13
- -----------------------------------------------------------------------------------------------------
(1) The graph assumes $100 invested on December 31, 1995 in the Common Stock
of the Company, the stock of the companies in the Nasdaq Composite Index,
the Amex Index, the Nasdaq Industrial Index, and in the stocks of the
peer group companies, and that all dividends received within a quarter,
if any, were reinvested in that quarter. The peer group consists of
Microsemi Corporation, Nu-Horizons Electronics Corporation, Siliconix,
Inc., Semtech Corporation, Sterling Electronics Corporation, Savior
Technology Group, and Taitron Components, Inc. Savior Technology Group
was acquired in June 2000.
17
19
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In December 2000, Dyna Image (a Lite-On Group company) acquired
Lite-On Power Semiconductor Corporation ("LPSC") to form Lite-On Semiconductor
Corporation ("LSC"), a public company listed on the Taiwan OTC market.
LSC was the record owner of 37.8% and 37.7% of the Company's
issued and outstanding Common Stock, excluding treasury stock, at December 31,
2000 and the Record Date, respectively. In August 1997, the ownership of LSC was
transferred to Vishay/LPSC, a joint venture between the Lite-On Group (a
Taiwanese consortium of manufacturers of power semiconductors, computer
peripherals and communication products) and Vishay Intertechnology ("Vishay").
In March 2000, Vishay agreed to sell its 65% interest in the Vishay/LPSC joint
venture to the Lite-On Group, the 35% owner.
For the year ended December 31, 2000, approximately $16,705,000,
or 14%, of the Company's sales were from product manufactured by LSC. These
products, which were also available generally from other sources, were
negotiated at prices competitive with those charged by other vendors of similar
products in similar quantities. There are no special or exclusive trading
agreements or understandings between the Company and LSC, other than the
Company's volume purchase agreement and marketing agreement with LSC, which have
been filed with the Securities and Exchange Commission.
In February 1996, under a compensation-trade agreement, the
Company advanced $2.5 million in cash to FabTech, Inc. At that time, FabTech was
a wholly-owned subsidiary of LPSC. Interest accrued monthly at an interest rate
equal to the Company's borrowing interest rate on its long-term bank loan.
Amounts advanced, including interest, were payable beginning in 1999 and
expiring February 2001 when any outstanding balances would become due on demand.
The compensation-trade agreement allowed the Company to recover interest and
principal due by deducting a fixed amount per unit for products (silicon wafers)
purchased from FabTech. In December 2000, this indebtedness was contributed to
FabTech's capital upon the Company's acquisition of FabTech.
For a description of the terms of the Company's acquisition of
FabTech, see the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2000.
Mr. Soong, who became a director and Chairman of the Board of the
Company effective March 1993, is also the Chairman of the Board of the Lite-On
Group, Silitek, LSC, Taiwan Liton, Diodes-China and Diodes-FabTech.
Mr. Chen, who was appointed President and Chief Executive Officer
of the Company on March 30, 2000, also serves as Vice Chairman of LSC, a Lite-On
Group company listed on the Taiwan OTC market.
Silitek is affiliated through common ownership and control with
Taiwan Liton, and both companies are members of the Lite-On Group. Both Silitek
and Taiwan Liton, members of the Lite-On Group of companies, are public
corporations in Taiwan with stock registered on the Taipei Stock Exchange.
Dr. Mao, who is a director of the Company, retired in 2000 as
Chairman of the Board of Lite-On Milpitas, a wholly-owned subsidiary of Taiwan
Liton. Dr. Mao is also a director of LSC, and since 1996, has also been a
director of FabTech.
Mr. Lu, who has been a director of the Company since 1995, is
also Group Vice President of the Lite-On Group and President of LSC. From 1983
to 1990, Mr. Lu was General Manager/Vice President of Silitek. Mr. Lu is also a
director of Diodes-China.
Mr. Giordano, a director of the Company and Senior Vice
President-Investment Consulting at the investment banking firm of PaineWebber,
Inc. (who recently merged with UBS AG to form UBS PaineWebber), has, from time
to time, assisted directors and executive officers of the Company in stock
option exercises and subsequent stock sales of the Company's Common Stock. Mr.
Giordano is also the pension consultant for the Company's 401(k) plan and has,
from time to time, in such capacity assisted LSC in stock transactions.
Compensation received by Mr. Giordano for services rendered to the Company and
LSC for services other than as a director in 2000 was less than $25,000.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THE ELECTION OF THE BOARD OF DIRECTORS' NOMINEES.
PROPOSAL TWO - APPROVAL OF THE 2001 OMNIBUS EQUITY INCENTIVE PLAN
GENERAL
In April 2001, the Board of Directors of the Company (the
"Board") adopted the 2001 Omnibus Equity Incentive Plan (the "2001 Incentive
Plan") pursuant to which employees, non-employee directors and consultants of
the Company and its subsidiaries are eligible to receive shares of Common Stock
of the Company or other securities or benefits with a value derived from the
value of the Common Stock of the Company. A copy of the 2001 Incentive Plan is
attached to this Proxy Statement as Exhibit B. The following is a brief summary
of the 2001 Incentive Plan, which is qualified in its entirety by reference to
Exhibit B.
The purpose of the 2001 Incentive Plan is to enable the Company
to attract, retain and motivate employees, non-employee directors and
consultants by providing for or increasing their proprietary interests in the
Company and, thereby, further align their interests with those of the Company's
stockholders.
The maximum number of shares of Common Stock that may be issued
pursuant to awards granted under the 2001 Incentive Plan may not exceed the sum
of (i) 1,000,000 shares and (ii) on each January 1, an additional number of
shares equal to 1% of the total number of shares of Common Stock outstanding on
the immediately preceding December 31; provided, however, that the maximum
number of shares of Common Stock that may be issued pursuant to incentive stock
options under the 2001 Incentive Plan may not exceed 2,000,000 shares.
ADMINISTRATION
The 2001 Incentive Plan is administered by a committee (the
"Committee") of two or more directors appointed by the Board, each of whom is an
"outside director" within the meaning of Section 162(m) of the Internal Revenue
Code of 1986, as amended (the "Code"), and who otherwise comply with the
requirements of Rule 16b-3 promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"). The Committee has full and final
authority to select the recipients of awards and to grant such awards. Subject
to the provisions of the 2001 Incentive Plan, the Committee has a wide degree of
flexibility in determining the terms and conditions of awards and the number of
shares to be issued pursuant thereto, including conditioning the receipt or
vesting of awards upon the achievement by the Company of specified performance
criteria. The expenses of administering the 2001 Incentive Plan are borne by the
Company.
TERMS OF AWARDS
GENERAL
The 2001 Incentive Plan authorizes the Committee to enter into
any type of arrangement with an eligible recipient that, by its terms, involves
or might involve the issuance of Common Stock or any other security or benefit
with a value derived from the value of Common Stock. Awards are not restricted
to any specified form or structure and may include, without limitation, sales or
bonuses of stock, restricted stock, stock options, reload options, stock
appreciation rights, phantom stock, dividend equivalents, performance units or
performance shares. An award may consist of one such security or benefit or two
or more of them in tandem or in the alternative.
An award granted under the 2001 Incentive Plan may include a
provision accelerating the receipt of benefits upon the occurrence of specified
events, such as a change of control of the Company or a dissolution,
liquidation, merger, reclassification, sale of substantially all of the property
and assets of the Company or other significant corporate transactions. The
Committee may grant options that either are intended to be "incentive stock
options" as defined under Section 422 of the Code, or are not intended to be
incentive options ("non-qualified stock options"). Incentive stock options may
be granted only to employees.
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No incentive stock option may be granted under the 2001 Incentive
Plan to any person who, at the time of the grant, owns (or is deemed to own)
stock possessing more than 10% of the total combined voting power of the Company
or any affiliate of the Company, unless the option exercise price is at least
110% of the fair market value of the stock subject to the option on the date of
the grant and the term of the option does not exceed five years from the date of
the grant. In addition, the aggregate fair market value, determined at the time
of the grant, of the shares of Common Stock with respect to which incentive
stock options are exercisable for the first time by an optionee during any
calendar year (under all such plans of the Company and its subsidiaries) may not
exceed $100,000. As a result of enactment of Section 162(m) of the Code, and to
provide the Committee flexibility in structuring awards, the 2001 Incentive Plan
states that in the case of stock options and stock appreciation rights, no
person may receive in any year a stock option to purchase more than 100,000
shares or a stock appreciation right measured by more than 100,000 shares.
If awards granted under the 2001 Incentive Plan expire, are
canceled or otherwise terminate without being exercised, the Common Stock not
purchased pursuant to the award again becomes available for issuance under the
2001 Incentive Plan.
PAYMENT OF EXERCISE PRICE
An award may permit the recipient to pay all or part of the
purchase price of the shares or other property issuable pursuant thereto, or to
pay all or part of such recipient's tax withholding obligation with respect to
such issuance, by (i) delivering previously owned shares of capital stock of the
Company or other property or (ii) reducing the amount of shares or other
property otherwise issuable pursuant to the award or (iii) delivering a
promissory note, the terms and conditions of which will be determined by the
Committee. The exercise price and any withholding taxes are payable in cash by
consultants and non-employee directors, although the Committee at its discretion
may permit such payment by delivery of shares of Common Stock, or by delivery of
broker instructions authorizing a loan secured by the shares acquired upon
exercise or payment of proceeds from the sale of such shares.
AMENDMENT
Subject to limitations imposed by law, the Board may amend or
terminate the 2001 Incentive Plan at any time and in any manner. However, no
such amendment or termination may deprive the recipient of any award previously
granted under the 2001 Incentive Plan or any rights thereunder without the
recipient's consent.
SECTION 16(b)
Pursuant to Section 16(b) of the Exchange Act, directors, certain
officers and ten percent shareholders of the Company are generally liable to the
Company for repayment of any "short-swing" profits realized from any non-exempt
purchase and sale of Common Stock occurring within a six-month period. Rule
16b-3, promulgated under the Exchange Act, provides an exemption from Section
16(b) liability for certain transactions by an officer or director pursuant to
an employee benefit plan that complies with such Rule. Specifically, the grant
of an option under an employee benefit plan that complies with Rule 16b-3 will
not be deemed a purchase of a security for purposes of Section 16(b). The 2001
Incentive Plan is designed to comply with Rule 16b-3.
TERM
Awards may not be granted under the 2001 Incentive Plan on or
after the tenth anniversary of the adoption of the 2001 Incentive Plan. Although
any ward that was duly granted on or prior to such date may thereafter be
exercised or settled in accordance with its terms, no shares of Common Stock may
be issued pursuant to any award on or after the twentieth anniversary of the
adoption of the 2001 Incentive Plan.
PERFORMANCE GOALS
The business criteria on which performance goals are based under
the 2001 Incentive Plan will be determined on a case-by-case basis, except that
with respect to stock options and stock appreciation rights compensation is
based on increases in the value of the Common Stock after the date of grant of
award. Similarly, the maximum amount of compensation that could be paid to any
participant or the formula used to calculate the amount of compensation to be
paid to the participant if a performance goal is obtained will be determined on
a case-by-case basis, except that in the case of stock options the maximum
possible compensation will be calculated as the difference
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between the exercise price of the option and the fair market value of the Common
Stock on the date of option exercise, times the maximum number of shares for
which grants may be made to any participant.
ADJUSTMENTS
If there is any change in the stock subject to the 2001 Incentive
Plan or subject to any award made under the 2001 Incentive Plan (through merger,
consolidation, reorganization, recapitalization, stock dividend, dividend in
kind, stock split, liquidating dividend, combination or exchange of shares,
change in corporate structure or otherwise), the 2001 Incentive Plan and shares
outstanding thereunder will be appropriately adjusted as to the class and the
maximum number of shares subject to the 2001 Incentive Plan and the class,
number of shares and price per share of stock subject to such outstanding
options as determined by the Committee to be fair and equitable to the holders,
the Company and the shareholders. In addition, the Committee may also make
adjustments in the number of shares covered by, and the price or other value of
any outstanding awards under the 2001 Incentive Plan in the event of a spin-off
or other distribution (other than normal cash dividends) of Company assets to
shareholders.
SECURITIES ACT REGISTRATION
The Company intends to register under the Securities Act of 1933,
as amended, the shares of Common Stock issuable pursuant to the 2001 Incentive
Plan.
FEDERAL INCOME TAX TREATMENT
The following is a brief description of the federal income tax
treatment that generally will apply to awards made under the 2001 Incentive
Plan, based on federal income tax laws in effect on the date hereof. The exact
federal income tax treatment of any award will depend on the specific nature of
such award. Such an award may, depending on the conditions applicable to the
award, be taxable as an option, an award of restricted or unrestricted stock, an
award which is payable in cash or otherwise. The following discussion is based
on present federal tax laws and regulations and does not purport to be complete.
Participants may also be subject to foreign, state and local taxes which are not
described below.
INCENTIVE STOCK OPTIONS
Pursuant to the 2001 Incentive Plan, participants may be granted
options which are intended to qualify as incentive stock options. Generally, the
optionee is not taxed, and the Company is not entitled to a deduction, on the
grant or exercise of an incentive stock option. However, if the optionee sells
the shares acquired upon the exercise of an incentive stock option at any time
within (i) one year after the date of exercise of the option or (ii) two years
after the date of grant of the option (a "disqualifying disposition"), then the
optionee will recognize ordinary income in an amount equal to the excess, if
any, of the lesser of the sale price or the fair market value on the date of
exercise over the exercise price of the option. The Company generally will be
entitled to a deduction in an amount equal to the amount of ordinary income
recognized by the optionee.
In addition to the regular income tax, an optionee may be subject
to the federal alternative minimum tax if his or her alternative minimum taxable
income ("AMTI") exceeds certain amounts. The excess of the fair market value of
the stock received upon exercise of an incentive stock option over the exercise
price generally is includable in the participant's AMTI. In the case of a
participant who exercises an incentive stock option within six months after its
date of grant and whose sale of stock could subject him or her to suit under
Section 16(b) of the Exchange Act, generally the excess of the fair market value
over the exercise price on the date six months following the date of grant is
includable in AMTI. However, if a disqualifying disposition occurs at a loss in
the same taxable year that the excess was includable in AMTI, the includable
amount is limited to the excess of the amount realized on the disqualifying
disposition over the exercise price. For the purpose of the alternative minimum
tax, the gain or loss on sale of stock is calculated by including a basis
adjustment for the amount included in AMTI upon exercise.
If the holder of an incentive stock option pays the exercise
price with previously acquired shares of stock, the exchange should not affect
the incentive stock option tax treatment of the option exercised. However, if
stock previously acquired through the exercise of an incentive stock option is
used to pay the exercise price, then the exchange of the previously acquired
shares of stock will be considered a disposition of such shares for the purpose
of determining whether a disqualifying disposition has occurred. Otherwise,
generally no gain or loss in recognized on the
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exchange, and the shares of stock received by the participant which are equal in
number to the previously acquired shares exchanged therefore will have the same
basis and holding period for long-term capital gain purposes as the previously
acquired shares. However, the optionee will not be able to utilize the old
holding period for the purpose of satisfying the incentive stock option one-year
and two-year holding period requirements. Shares of stock received by the
optionee in excess of the number of previously acquired shares generally will
have a basis of zero and a holding period which commences as of the date the
shares of stock are issued to the optionee upon exercise of the incentive stock
option.
NON-QUALIFIED STOCK OPTIONS
The grant of an option or other similar right to acquire stock
that does not qualify for treatment as an incentive stock option generally is
not a taxable event for the optionee. Upon exercise of such an option, the
optionee generally will recognize ordinary income in an amount equal to the
excess of the fair market value of the stock acquired upon exercise (determined
as of the date of exercise) over the exercise price of such option, and the
Company will be entitled to a deduction equal to such amount.
Special rules will apply, however, if the optionee is subject to
Section 16 of the Exchange Act and during any period of time (the "Section 16(b)
Period") a sale of the stock acquired upon exercise of the option could subject
such optionee to suit under Section 16. In such case, the optionee will not
recognize ordinary income, and the Company will not be entitled to a deduction,
until the expiration of the Section 16(b) Period. Upon such expiration, the
optionee will recognize ordinary income, and the Company will be entitled to a
deduction, equal to the excess of the fair market value of the stock (determined
as of the expiration of the Section 16(b) Period) over the option exercise
price. Such an optionee may elect under Section 83(b) of the Code to recognize
ordinary income on the date of exercise, in which case the Company would be
entitled to a deduction at that time equal to the amount of the ordinary income
recognized. Such an election must be filed within 30 days after the stock is
considered to be received for income tax purposes.
If a holder of a non-qualified stock option pays the exercise
price in cash, his or her basis in the shares acquired is equal to the fair
market value of the stock on the date ordinary income is recognized and, upon
subsequent disposition, any further gain or loss is taxable either as a
short-term or long-term capital gain or loss, depending on how long the shares
of stock are held. The holding period for such shares commences as of the date
ordinary income is recognized.
If a holder of a non-qualified stock option pays the exercise
price with previously acquired shares of stock, he or she will recognize
ordinary income in an amount equal to the excess of the fair market value of the
stock received over the exercise price. No additional gain or loss is recognized
as a result of the disposition of previously acquired shares of stock. The
shares of stock received by the participant, equal in number to the previously
acquired shares exchanged therefor, will have the same basis and holding period
as such previously acquired shares. The shares of stock received by the
participant in excess of the number of previously acquired shares will have a
basis equal to the fair market value of such additional shares as of the date
ordinary income is recognized. The holding period for such additional shares
will commence as of the date ordinary income is recognized.
Generally, gain or loss from a disposition of shares is
characterized as "short-term" for shares held for 12 months or less, and "long
term" if held more than 12 months. Short-term capital gains are taxed at
ordinary income rates, while long-term capital gains are normally taxed at a
rate of twenty percent (20%).
OTHER TYPES OF AWARDS
Awards under the 2001 Incentive Plan may also include stock
sales, stock bonuses or other grants of stock. Stock issued pursuant to these
awards may be subject to certain restrictions. Pursuant to Section 83 of the
Code, stock sold or granted under the 2001 Incentive Plan will give rise to
taxable income at the earliest time at which such stock is not subject to a
substantial risk of forfeiture or is freely transferable for purposes of Section
83. At that time, the holder will recognize ordinary income equal to the excess
of the fair market value of the shares (determined as of such time) over the
purchase price, and the Company will be entitled to a deduction equal to such
amount. If the holder of the stock is a person subject to Section 16(b) and if
the sale of the stock at a profit could subject such person to suit under
Section 16(b), income will be recognized in accordance with the rules described
above regarding stock issued to
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such persons upon the exercise of such an option, unless the holder makes a
timely election under Section 83(b) to recognize income on the date the stock is
issued.
Awards may also be granted under the 2001 Incentive Plan that do
not fall clearly into the categories described above. The federal income tax
treatment of these awards will depend upon the specific terms of such awards.
WITHHOLDING
The Company generally will be required to withhold applicable
taxes with respect to any ordinary income recognized by a participant upon
exercise of a non-qualified stock option or recognition of income in connection
with awards made under the Plan.
LIMITATIONS ON DEDUCTIBILITY
The terms of the agreements pursuant to which specific awards are
made under the 2001 Incentive Plan may provide for accelerated vesting or
payment of an award in connection with a change in ownership or control of the
Company. In that event and depending upon the individual circumstances of the
recipient, certain amounts with respect to such awards may constitute "excess
parachute payments" under the golden parachute provisions of the Code. Pursuant
to such provisions, an employee will be subject to a 20% excise tax on any
"excess parachute payment," and the Company will be denied any deduction with
respect to such excess parachute payment.
In addition, Section 162(m) of the Code renders nondeductible to
the Company certain compensation paid to the Chief Executive Officer and four
other most highly compensated executives in excess of $1,000,000 in any year
unless such excess compensation is "performance-based" (as defined in the Code)
or is otherwise exempt from these limitations on deductibility. Options granted
under the 2001 Incentive Plan at an exercise price equal to their fair market
value at the date of grant are intended to qualify for the exemption for
performance-based compensation under Section 162(m). However, in light of the
ambiguities in Section 162(m) and uncertainties regarding the ultimate
interpretation and application in these circumstances, no assurances can be
given that the compensation paid under the 2001 Incentive Plan to any such
executive officer will in fact be deductible, if it should, together with other
non-exempt compensation paid to such executive officer, exceed the $1,000,000
limit.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THE PROPOSED 2001 OMNIBUS EQUITY INCENTIVE PLAN.
PROPOSAL THREE - RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS
The firm of Moss Adams LLP, certified accountants, has been the
Company's independent accountants since 1993 and has been selected by the Board
of Directors to serve as its independent accountants for the calendar year
ending December 31, 2001. Professional services rendered by Moss Adams LLP for
the calendar year ended December 31, 2000 consisted of an audit of the Company's
financial statements, consultation on interim financial statements, services
related to filings with the SEC, meetings with the Company's Audit Committee and
consultation on various matters relating to accounting and financial reporting.
All professional services rendered by Moss Adams LLP during calendar 2000 were
furnished at customary rates and terms. The Audit Committee of the Board of
Directors met with representatives of Moss Adams LLP during the past calendar
year. The members of the Audit Committee are Messrs. Giordano, Silverman, and
Stich. Representatives of Moss Adams LLP are expected to be present at the
Meeting. They will have the opportunity to make a statement, if they so desire,
and respond to appropriate questions from Stockholders.
AUDIT FEES, FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES, AND
ALL OTHER FEES
Fees charged by Moss Adams LLP during the calendar year ended
December 31, 2000 for audit services and quarterly review of financial
statements were approximately $103,000, financial information systems design and
implementation fees were approximately $0, and all other fees were approximately
$170,000. Other fees generally include income tax return preparation, income tax
consultation, business acquisitions, accounting consulting and similar matters.
Moss Adams LLP has advised the Company that neither the firm, nor any member of
the firm, has any financial interest, direct or indirect, in any capacity in the
Company or its subsidiaries.
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Stockholders are being asked to ratify the appointment of Moss
Adams LLP as the Company's independent public accountants for the calendar year
ending December 31, 2001. Ratification of the proposal requires the affirmative
vote of a majority of the shares of Common Stock represented and voting at the
Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THE RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS.
PROPOSALS OF STOCKHOLDERS
Under certain circumstances, stockholders are entitled to present
proposals at stockholder meetings. Any such proposal to be included in the proxy
statement for the Company's 2002 annual meeting of stockholders must be
submitted by a stockholder prior to January 4, 2002, in a form that complies
with applicable regulations. Recently, the SEC amended its rule governing a
company's ability to use discretionary proxy authority with respect to
stockholder proposals which are not submitted by the stockholders in time to be
included in the proxy statement. As a result of that rule change, in the event a
stockholder proposal is not submitted to the Company prior to March 15, 2002,
the proxies solicited by the Board of Directors for the 2002 annual meeting of
shareholders will confer authority of the holders of the proxy to vote the
shares in accordance with their best judgment and discretion if the proposal is
presented at the 2002 annual meeting of stockholders without any discussion of
the proposal in the proxy statement for such meeting.
ANNUAL REPORT AND FORM 10-K
The Company's annual report to stockholders for the calendar year
ended December 31, 2000 accompanies or has preceded this Proxy Statement. The
annual report contains consolidated financial statements of the Company and its
subsidiaries and the report thereon of Moss Adams LLP, the Company's independent
auditors, for the calendar years ended December 31, 1998, 1999 and 2000.
STOCKHOLDERS MAY OBTAIN WITHOUT CHARGE A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-K, INCLUDING FINANCIAL STATEMENTS REQUIRED TO BE FILED
WITH THE SEC PURSUANT TO THE EXCHANGE ACT, FOR THE CALENDAR YEAR ENDED DECEMBER
31, 2000, BY WRITING TO THE COMPANY; ATTN: INVESTOR RELATIONS, 3050 EAST
HILLCREST DRIVE, WESTLAKE VILLAGE, CALIFORNIA 91362, OR EMAIL THE REQUEST TO
DIODES-FIN@DIODES.COM.
OTHER MATTERS
Management knows of no business that will be presented for
consideration at the Meeting other than as stated in the Notice of Meeting. If,
however, other matters are properly brought before the Meeting, it is the
intention of the Proxyholders to vote the shares represented by the Proxies on
such matters in accordance with the recommendation of the Board of Directors and
authority to do so is included in the Proxy.
Dated at Westlake Village, California, this twenty-seventh day of
April, 2001.
By Order of the Board of Directors,
DIODES INCORPORATED
/s/ Carl Wertz
Carl Wertz,
Secretary
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EXHIBIT A
AUDIT COMMITTEE CHARTER
The Audit Committee is appointed by the Board to assist the Board
in monitoring (1) the integrity of the financial statements of the Company, (2)
the compliance by the Company with legal and regulatory requirements and (3) the
independence and performance of the Company's internal and external auditors.
The members of the Audit Committee shall meet the independence
and experience requirements of the Nasdaq Stock Exchange. The members of the
Audit Committee shall be appointed by the Board.
The Audit Committee shall have the authority to retain special
legal, accounting or other consultants to advise the Committee. The Audit
Committee may request any officer or employee of the Company or the Company's
outside counsel or independent auditor to attend a meeting of the Committee or
to meet with any members of, or consultants to, the Committee.
The Audit Committee shall make regular reports to the Board.
The Audit Committee shall:
1. Review and reassess the adequacy of this Charter annually and recommend
any proposed changes to the Board for approval.
2. Review the annual audited financial statements with management,
including major issues regarding accounting and auditing principles and
practices as well as the adequacy of internal controls that could
significantly affect the Company's financial statements.
3. Review an analysis prepared by management and the independent auditor of
significant financial reporting issues and judgments made in connection
with the preparation of the Company's financial statements.
4. Review with management and the independent auditor the Company's
quarterly financial statements prior to the filing of its Form 10-Q.
5. Meet periodically with management to review the Company's major
financial risk exposures and the steps management has taken to monitor
and control such exposures.
6. Review major changes to the Company's auditing and accounting principles
and practices as suggested by the independent auditor, internal auditors
or management.
7. Recommend to the Board the appointment of the independent auditor, which
firm is ultimately accountable to the Audit Committee and the Board.
8. Approve the fees to be paid to the independent auditor.
9. Receive periodic reports from the independent auditor regarding the
auditor's independence consistent with Independence Standards Board
Standard 1, discuss such reports with the auditor, and if so determined
by the Audit Committee, take or recommend that the Board take
appropriate action to oversee the independence of the auditor.
10. Evaluate together with the Board the performance of the independent
auditor and, if so determined by the Audit Committee, recommend that the
Board replace the independent auditor.
11. Review the appointment and replacement of the senior internal auditing
executive, if any.
12. Review any significant reports to management prepared by the internal
auditing department, if any, and management's responses.
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13. Meet with the independent auditor prior to the audit to review the
planning and staffing of the audit.
14. Obtain from the independent auditor assurance that Section 10A of the
Securities Exchange Act of 1934 has not been implicated.
15. Obtain reports from management, the Company's senior internal auditing
executive, if any, and the independent auditor that the Company's
subsidiary/foreign affiliated entities are in conformity with applicable
legal requirements and the Company's code of conduct.
16. Discuss with the independent auditor the matters required to be
discussed by Statement on Auditing Standards No. 61 relating to the
conduct of the audit.
17. Review with the independent auditor any problems or difficulties the
auditor may have encountered and any management letter provided by the
auditor and the Company's response to that letter. Such review should
include:
a. Any difficulties encountered in the course of the audit work,
including any restrictions on the scope of activities or access to
required information.
b. Any changes required in the planned scope of the audit.
c. The responsibilities, budget and staffing of the internal audit
department, if any.
18. Supervise preparation of the report required by the rules of the
Securities and Exchange Commission to be included in the Company's
annual proxy statement.
19. Advise the Board from time to time with respect to the Company's
policies and procedures regarding compliance with applicable laws and
regulations and with the Company's code of conduct.
20. Meet with the Company's legal counsel to review legal matters that may
have a material impact on the financial statements, the Company's
compliance policies and any material reports or inquiries received from
regulators or governmental agencies.
21. Meet at least annually with the Chief Financial Officer, the senior
internal auditing executive, if any, and the independent auditor in
separate executive sessions.
While the Audit Committee has the responsibilities and powers set
forth in this Charter, it is not the duty of the Audit Committee to plan or
conduct audits or to determine that the Company's financial statements are
complete and accurate and are in accordance with generally accepted accounting
principles. This is the responsibility of management and the independent
auditor. Nor is it the duty of the Audit Committee to conduct investigations, to
resolve disagreements, if any, between management and the independent auditor or
to assure compliance with laws and regulations and the Company's code of
conduct.
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EXHIBIT B
DIODES INCORPORATED
2001 OMNIBUS EQUITY INCENTIVE PLAN
Diodes Incorporated, a Delaware corporation (the "Company"), by
action of its Board of Directors, hereby adopt the Diodes Incorporated 2001
Omnibus Equity Incentive Plan (the "Plan") with the following provisions:
1. PURPOSE. The purpose of the Plan is to promote and advance the
interests of the Company and its stockholders by enabling the
Company and its Subsidiaries to attract, retain and motivate
officers, directors, employees and independent contractors by
providing for performance-based benefits, and to strengthen the
mutuality of interests between such persons and the Company's
stockholders. The Plan is designed to meet this intent by
offering performance-based stock and cash incentives and other
equity-based incentive awards, thereby providing a proprietary
interest in pursuing the long-term growth, profitability and
financial success of the Company.
2. DEFINITIONS. For purposes of this Plan, the following terms shall
have the meanings set forth below:
"Affiliate" shall mean any parent or subsidiary (as defined in
Sections 424(e) and (f) of the Code) of the Company.
"APB 25" shall mean Opinion 25 of the Accounting Principles
Board, as amended, and any successor thereof.
"Award" means an award or grant made to a Participant under
Sections 6 through 10, inclusive, of the Plan.
"Board" means the Board of Directors of the Company.
"Change in Control" means the occurrence of any one (or more) of
the following events:
(i) Any person, including a group as defined in Section
13(d)(3) of the Exchange Act, becomes the beneficial owner
of stock of the Company with respect to which twenty-five
percent (25%) or more of the total number of votes for the
election of the Board may be cast;
(ii) As a result of, or in connection with, any cash tender
offer, exchange offer, merger or other business
combination, sale of assets or contested election, or
combination of the foregoing, persons who were directors
of the Company just prior to such event shall cease to
constitute a majority of the Board;
(iii) The stockholders of the Company shall approve an agreement
providing either for a transaction in which the Company
will cease to be an independent publicly owned corporation
or for a sale or other disposition of all or substantially
all the assets of the Company; or
(iv) A tender offer or exchange offer is made for the shares of
the Common Stock (other than one made by the Company) and
the shares of the Common Stock are acquired thereunder.
Notwithstanding the foregoing, the formation of a holding company
for the Company in which the stockholdings of the holding company after its
formation are substantially the same as for the Company prior to the holding
company formation does not constitute a Change in Control for purposes of this
Plan.
"Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time, or any successor thereto, together with rules,
regulations and authoritative interpretations promulgated thereunder.
"Committee" means the committee of the Board that is provided for
in Section 3 of the Plan.
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"Common Stock" means the common stock of the Company or any
security of the Company issued in substitution, exchange or lieu thereof.
"Company" means Diodes Incorporated, a Delaware corporation.
"Consultant" means any natural person who performs bona fide
services for the Company or an Affiliate as a consultant or advisor, excluding
Employees and Non-Employee Directors.
"Date of Grant" means the date the Committee (or the Board, as
the case may be) takes formal action designating that a Participant shall
receive an Award, notwithstanding the date the Participant accepts the Award,
the date the Company and the Participant enter into a written agreement with
respect to the Award, or any other date.
"Disability" means total and permanent disability as defined in
Section 22(e)(3) of the Code.
"Employee" means any individual who is a common-law employee of
the Company or an Affiliate.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended and in effect from time to time, or any successor thereto.
"Fair Market Value" means on any given date, the closing price
for the Common Stock on such date, or, if the Common Stock was not traded on
such date, on the next preceding day on which the Common Stock was traded,
determined in accordance with the following rules:
(i) If the Common Stock is admitted to trading or listing on a
national securities exchange registered under the Exchange
Act, the closing price for any day shall be the last
reported sale price, or in the case no such reported sale
takes place on such date, the average of the last reported
bid and ask prices, in either case on the principal
national securities exchange on which the Common Stock is
admitted to trading or listed;
(ii) If not listed or admitted to trading on any national
securities exchange, the last sale price of the Common
Stock on the National Association of Securities Dealers
Automated Quotation National Market System ("NMS") or, in
the case no such reported sale takes place, the average of
the closing bid and ask prices on such date;
(iii) If not quoted on the NMS, the average of the closing bid
and ask prices of the Common Stock on the National
Association of Securities Dealers Automated Quotation
System ("NASDAQ") or any comparable system; or
(iv) If the Common Stock is not listed on NASDAQ or any
comparable system, the closing bid and ask prices as
furnished by any member of the National Association of
Securities Dealers, Inc., selected from time to time by
the Committee for that purpose.
"FASB" means the Financial Accounting Standards Board.
"Incentive Stock Option" means any Stock Option granted pursuant
to the provisions of Section 6 of the Plan that is intended to be and is
specifically designated as an "incentive stock option" within the meaning of
Section 422 of the Code.
"Mature Shares" means shares of Common Stock that had been held
by the Participant for a meaningful period of time such as six months or such
other period of time that is consistent with FASB's interpretation of APB 25.
"Non-Employee Director" means a non-Employee member of the Board.
"Non-Qualified Stock Option" means any Stock Option granted
pursuant to the provisions of Section 6 of the Plan that is not an Incentive
Stock Option.
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"Optioned Stock" means the shares of Common Stock that are
subject to a Stock Option.
"Participant" means an Employee, Non-Employee Director, or
Consultant of the Company or a Subsidiary who is granted an Award under the
Plan.
"Performance Award" means an Award granted pursuant to the
provisions of Section 9 of the Plan, the vesting of which is contingent on the
attainment of specified performance criteria.
"Performance Share Grant" means an Award of units representing
shares of Common Stock granted pursuant to the provisions of Section 9 of the
Plan.
"Performance Unit Grant" means an Award of monetary units granted
pursuant to the provisions of Section 9 of the Plan.
"Plan" means this Diodes Incorporated 2001 Omnibus Equity
Incentive Plan, as set forth herein and as it may be hereafter amended and from
time to time in effect.
"Qualified Note" means a recourse note, with a fixed market rate
of interest, that may, at the discretion of the Committee, be secured by the
Optioned Stock or otherwise.
"Restricted Award" means an Award granted pursuant to the
provisions of Section 8 of the Plan.
"Restricted Stock Grant" means an Award of shares of Common Stock
granted pursuant to the provisions of Section 8 of the Plan.
"Restricted Unit Grant" means an Award of units representing
shares of Common Stock granted pursuant to the provisions of Section 8 of the
Plan.
"Service" means the performance of services for the Company (or
any Affiliate) by an Employee, Non-Employee Director, or Consultant, as
determined by the Committee in its sole discretion. Service shall not be
considered interrupted in the case of (i) any leave of absence approved by the
Company or (ii) transfers between locations of the Company or between the
Company and any Affiliate, or any successor. A leave of absence approved by the
Company shall include sick leave, military leave, or any other personal leave
approved by an authorized representative of the Company. For purposes of
Incentive Stock Options, no such leave may exceed 90 days, unless reemployment
upon expiration of such leave is guaranteed by statute or contract, including
Company policies. If reemployment upon expiration of a leave of absence approved
by the Company is not so guaranteed, on the 91st day of such leave any Incentive
Stock Option held by the Optionee shall cease to be treated as an Incentive
Stock Option and shall be treated for tax purposes as a Non-Qualified Stock
Option.
"Stock Appreciation Right" means an Award to benefit from the
appreciation of Common Stock granted pursuant to the provisions of Section 7 of
the Plan.
"Stock Option" means an Award to purchase shares of Common Stock
granted pursuant to the provisions of Section 6 of the Plan.
"Subsidiary" means any corporation or entity which is a
subsidiary of the Company within the meaning of Section 424(f) of the Code.
"Ten Percent Stockholder" means a person who owns stock (after
taking into account the constructive ownership rules of Section 424(d) of the
Code) possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company (or any Affiliate).
"Termination Date" means the date on which a Participant's
Service terminates, as determined by the Committee in its sole discretion.
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3. ADMINISTRATION.
(a) The Plan shall be administered by a committee appointed by the
Board. The Committee shall be comprised solely of not less than
two persons who are "outside directors" within the meaning of
Section 162(m)(4)(C) of the Code and "non-employee directors"
within the meaning of Rule 16b-3 of the Exchange Act. Members of
the Committee shall serve at the pleasure of the Board and the
Board may from time to time remove members from, or add members
to, the Committee. No person who is not an "outside director"
within the meaning of Section 162(m)(4)(C) of the Code and a
"non-employee director" within the meaning of Rule 16b-3 of the
Exchange Act may serve on the Committee. Appointment to the
Committee of any person who is not an "outside director" and a
"non-employee director" shall automatically be null and void, and
any person on the Committee who ceases to be an "outside director"
and a "non-employee director" shall automatically and without
further action cease to be a member of the Committee.
(b) A majority of the members of the Committee shall constitute a
quorum for the transaction of business. Action approved in writing
by a majority of the members of the Committee then serving shall
be as effective as if the action had been taken by unanimous vote
at a meeting duly called and held.
(c) The Committee is authorized to construe and interpret the Plan, to
promulgate, amend, and rescind rules and procedures relating to
the implementation of the Plan, and to make all other
determinations necessary or advisable for the administration of
the Plan. Any determination, decision, or action of the Committee
in connection with the construction, interpretation,
administration, or application of the Plan shall be binding upon
all Participants and any person claiming under or through any
Participant. Although the Committee is anticipated to make certain
Awards that constitute "performance-based compensation" within the
meaning of Section 162(m)(4)(C) of the Code, the Committee is also
expressly authorized to make Awards that do not constitute
"performance-based compensation" within the meaning of that
provision. By way of example, and not by way of limitation, the
Committee, in its sole and absolute discretion, may issue an Award
that is not based on a performance goal, as set forth in (i)
below, but is based solely on continued service to the Company.
(d) The Committee may employ or retain persons other than members of
the Committee to assist the Committee to carry out its
responsibilities under such conditions and limitations as it may
prescribe, except that the Committee may not delegate its
authority with regard to selection for participation of and the
granting of Awards to persons subject to Section 16 of the
Exchange Act or with regard to any of its duties under Section
162(m) of the Code necessary for awards under this Plan to qualify
as "performance-based compensation" for purposes of Section
162(m)(4)(C) of the Code.
(e) The Committee is expressly authorized to make such modifications
to the Plan as are necessary to effectuate the intent of the Plan
as a result of any changes in the income tax, accounting, or
securities law treatment of Participants and the Plan.
(f) The Company shall effect the granting of Awards under the Plan in
accordance with the determinations made by the Committee, by
execution of instruments in writing in such form as approved by
the Committee.
(g) The Committee may not increase an Award once granted, although it
may grant additional Awards to the same Participant.
(h) The Committee shall keep the Board informed as to its actions and
make available to the Board its books and records. Although the
Committee has the authority to establish and administer the Plan,
the Board reserves the right at any time to abolish the Committee
and administer the Plan itself.
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(i) In the case of an Award that is intended to qualify as
"performance-based compensation" for purposes of Code Section
162(m)(4)(C), the Committee shall establish in writing at the time
of making the Award the business criterion or criteria that must
be satisfied for payment pursuant to the Award and the amount
payable upon satisfaction of those standards. Those standards are
also referred to herein as performance goals. Such criterion or
criteria shall be established prior to the Participant rendering
the services to which they relate and while the outcome is
substantially uncertain or at such other time permitted under
Treasury Regulations Section 1.162-27(e)(2). In carrying out these
duties, the Committee shall use objective written standards for
establishing both the performance goal and the amount of
compensation such that a third party with knowledge of the
relevant facts would be able to determine whether and to what
extent the goal has been satisfied and the amount of compensation
payable. The Committee shall provide a copy the document setting
forth such standards to the affected Participant and shall retain
such written material in its permanent books and records.
(j) In the case of remuneration that is intended to qualify as
"performance-based compensation" for purposes of Code Section
162(m)(4)(C), the Committee and the Board shall disclose to the
stockholders of the Company the material terms under which such
remuneration is to be paid under the Plan, and shall seek approval
of the stockholders by a majority vote in a separate stockholder
vote before payment of such remuneration. For these purposes, the
material terms include the individuals (or class of individuals)
eligible to receive such compensation, a description of the
business criterion or criteria on which the performance goal is
based, either the maximum amount of the compensation to be paid
thereunder or the formula used to calculate the amount of
compensation if the performance goal is attained, and such other
terms as required under Code Section 162(m)(4)(C) and the Treasury
Regulations thereunder determined from time to time. The foregoing
actions shall be undertaken in conformity with the rules of Code
Section 162(m)(4)(C)(ii) and Treasury Regulations promulgated
thereunder. Such remuneration shall not be payable under this Plan
in the absence of such an approving stockholder vote. In the case
of remuneration that is not intended to qualify as
performance-based compensation under Code Section 162(m)(4)(C),
the Committee and the Board shall make such disclosures to and
seek such approval from the stockholders of the Company as they
reasonably determine are required by law.
(k) To the extent required under Code Section 162(m)(4)(C), before any
payment of remuneration under this Plan, the Committee must
certify in writing that the performance goals and any other
material terms of the Award were in fact satisfied. Such
certification shall be kept with the permanent books and records
of the Committee, and the Committee shall provide the affected
Participant with a copy of such certification.
(l) The Committee shall use its good faith best efforts to comply with
the requirements of Section 162(m)(4)(C) of the Code for Awards
that are intended to qualify under that section as
"performance-based compensation," but shall have no liability to
the Company or any recipient in the event one or more Awards do
not so qualify.
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4. DURATION OF AND COMMON STOCK SUBJECT TO THE PLAN.
(a) TERM. The Plan shall become effective as of June 11, 2001, the
date of its adoption by the Board, subject to ratification by the
stockholders of the Company within twelve (12) months after the
effective date. In the event that the stockholders of the Company
do not ratify the Plan within twelve (12) months after the
effective date, any Awards granted pursuant to the Plan shall be
rescinded automatically. Unless sooner terminated by the Board,
the Plan shall continue until June 11, 2011, one day prior to the
tenth (10th) anniversary of the Plan's effective date, when it
shall terminate and no Awards may be granted under the Plan
thereafter. The termination of the Plan shall not affect the
Awards that are outstanding on the termination date.
(b) SHARES OF COMMON STOCK SUBJECT TO THE PLAN. The maximum total
number of shares of Common Stock with respect to which aggregate
stock Awards may be granted under the Plan shall be one-million
(1,000,000), plus the additional number of shares of Common Stock
provided for in the following sentence. During the term of the
Plan, on each January 1st, the maximum total number of shares of
Common Stock with respect to which aggregate stock Awards may be
granted under the Plan shall automatically increase by the number
of shares equal to one percent (1%) of the total number of shares
of Common Stock outstanding on the immediately preceding December
31st. For illustrative purposes only, if the number of shares of
Common Stock outstanding as of December 31, 2001 is eight-million
(8,000,000), then the number of shares available for purposes of
the Plan will be increased as of January 1, 2002 by an additional
eighty thousand (80,000) shares of Common Stock. Notwithstanding
the foregoing, the maximum number of shares of Common Stock which
may be issued pursuant to Incentive Stock Options under this Plan
may not exceed two-million (2,000,000).
(i) All of the amounts stated in this Paragraph (b) is subject
to adjustment as provided in Section 15 below.
(ii) For the purpose of computing the total number of shares of
Common Stock available for Awards under the Plan, there
shall be counted against the foregoing limitations the
number of shares of Common Stock subject to issuance upon
exercise or used for payment or settlement of Awards.
(iii) If any Awards are forfeited, terminated, expire
unexercised, settled or paid in cash in lieu of stock or
exchanged for other Awards, the shares of Common Stock
which were theretofore subject to such Awards shall again
be available for Awards under the Plan to the extent of
such forfeiture or expiration of such Awards.
(c) SOURCE OF COMMON STOCK. Common Stock which may be issued under the
Plan may be either authorized and unissued stock or issued stock
which have been reacquired by the Company. No fractional shares of
Common Stock shall be issued under the Plan.
5. ELIGIBILITY. Incentive Stock Options may only be granted to Employees of
the Company or a Subsidiary. Employees, Non-Employee Directors, and
Consultants of the Company or a Subsidiary are eligible to receive
Non-Qualified Stock Options, Stock Appreciation Rights, Restricted
Awards, Performance Awards and other Awards under the Plan.
6. STOCK OPTIONS. Stock options granted under the Plan may be in the form
of Incentive Stock Options or Non-Qualified Stock Options (collectively
referred to as "Stock Options"). Stock Options shall be subject to the
terms and conditions set forth below. Each written Stock Option
agreement shall contain such additional terms and conditions, not
inconsistent with the express provisions of the Plan, as the Committee
shall deem desirable.
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(a) GRANT. Stock Options shall be granted under the Plan on such terms
and conditions not inconsistent with the provisions of the Plan
and pursuant to written agreements with the Participant in such
form as the Committee may from time to time approve in its sole
and absolute discretion. The terms of individual Stock Option
agreements need not be identical. Each Stock Option agreement
shall state specifically whether it is intended to be an Incentive
Stock Option agreement or a Non-Qualified Stock Option agreement.
Stock Options may be granted alone or in addition to other Awards
under the Plan. No person may be granted (in any calendar year)
options to purchase more than one-hundred thousand (100,000)
shares of Common Stock (subject to adjustment pursuant to Section
15 below). The foregoing sentence is an annual limitation on
grants and not a cumulative limitation. Any Stock Option repriced
during a year shall count against this annual limitation.
(b) EXERCISE PRICE. Except as otherwise provided for in Paragraph (f)
below, the exercise price per share of Common Stock purchasable
under a Stock Option shall be determined by the Committee at the
time of grant.
(c) OPTION TERM. The term of each Stock Option shall be fixed by the
Committee. However, the term of any Stock Option shall not exceed
ten (10) years after the Date of Grant of such Stock Option.
(d) EXERCISABILITY. A Stock Option shall be exercisable at such time
or times and subject to such terms and conditions as shall be
determined by the Committee at the Date of Grant and set forth in
the written Stock Option agreement. A written Stock Option
agreement may, if permitted pursuant to its terms, become
exercisable in full upon the occurrence of events selected by the
Committee that are beyond the control of the Participant
(including, but not limited to, a Change in Control).
(e) METHOD OF EXERCISE. A Stock Option may be exercised, in whole or
in part, by giving written notice of exercise to the Committee
specifying the number of shares of Common Stock to be purchased.
Such notice shall be accompanied by payment in full of the
exercise price (i) in cash or (ii) if acceptable to the Committee,
in Mature Shares or a Qualified Note. The Committee may also
permit Participants, either on a selective or aggregate basis, to
simultaneously exercise Stock Options and sell the shares of
Common Stock thereby acquired, pursuant to a brokerage or similar
arrangement, approved in advance by the Committee, and use the
proceeds from such sale as payment of part or all of the exercise
price of such shares; provided, however, that such payment of the
exercise price would not cause the Company to recognize
compensation expense for financial reporting purposes.
(f) SPECIAL RULES FOR INCENTIVE STOCK OPTIONS. The terms specified
below shall be applicable to all Incentive Stock Options. Stock
Options which are specifically designated as Non-Qualified Stock
Options when issued under the Plan shall not be subject to the
terms of this Paragraph.
(i) Exercise Price. In the case of an Incentive Stock Option,
the exercise price of such Stock Option may not be less
than one hundred percent (100%) of the Fair Market Value
of the Common Stock on the Date of the Grant of such Stock
Option.
(ii) Ten Percent Stockholder. If any Employee to whom an
Incentive Stock Option is granted is a Ten Percent
Stockholder, then the exercise price of the Incentive
Stock Option shall not be less than one hundred and ten
percent (110%) of the Fair Market Value of the Common
Stock on the Date of Grant of such Incentive Stock Option,
and the term of the Incentive Stock Option shall not
exceed five (5) years measured from the Date of Grant of
such option.
(iii) Dollar Limitation. In the case of an Incentive Stock
Option, the aggregate Fair Market Value of the Optioned
Stock (determined as of the Date of Grant of each Stock
Option) with respect to Stock Options granted to any
Employee under the
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Plan (or any other option plan of the Company or any
Affiliate) that may for the first time become exercisable
as Incentive Stock Options during any one calendar year
shall not exceed the sum of one hundred thousand dollars
($100,000). To the extent the Employee holds two or more
such Stock Options which become exercisable for the first
time in the same calendar year, the foregoing limitation
on the exercisability of such Stock Options as Incentive
Stock Options shall be applied on the basis of the order
in which such Stock Options are granted. Any Stock Options
in excess of such limitation shall automatically be
treated as Non-Qualified Stock Options.
7. STOCK APPRECIATION RIGHTS. The grant of Stock Appreciation Rights under
the Plan shall be subject to the following terms and conditions.
Furthermore, the Stock Appreciation Rights shall contain such additional
terms and conditions, not inconsistent with the express terms of the
Plan, as the Committee shall deem desirable. The terms of each Stock
Appreciation Right granted shall be set forth in a written agreement
between the Company and the Participant receiving such grant. The terms
of such agreements need not be identical.
(a) STOCK APPRECIATION RIGHTS. A Stock Appreciation Right is an Award
determined by the Committee entitling a Participant to receive an
amount equal to the excess of the Fair Market Value of a share of
Common Stock on a fixed date, which shall be the date concluding a
measuring period set by the Committee upon granting the Stock
Appreciation Right, over the Fair Market Value of a share of
Common Stock on the Date of Grant of the Stock Appreciation Right,
multiplied by the number of shares of Common Stock subject to the
Stock Appreciation Right. No Stock Appreciation Rights granted in
any calendar year to any person may be measured by an amount of
shares of Common Stock in excess of one-hundred thousand (100,000)
shares, subject to adjustment under Section 15 below. The
foregoing sentence is an annual limitation on grants and not a
cumulative limitation.
(b) GRANT. A Stock Appreciation Right may be granted in addition to or
completely independent of any other Award under the Plan. Upon
grant of a Stock Appreciation Right, the Committee shall select
and inform the Participant regarding the number of shares of
Common Stock subject to the Stock Appreciation Right and the date
that constitutes the close of the measuring period.
(c) MEASURING PERIOD. A Stock Appreciation Right shall accrue in value
from the Date of Grant over a time period established by the
Committee. In the written Stock Appreciation Right agreement, the
Committee may also provide (but is not required to provide) that a
Stock Appreciation Right shall be automatically payable on one or
more specified dates prior to the normal end of the measuring
period upon the occurrence of events selected by the Committee
(including, but not limited to, a Change in Control) that are
beyond the control of the Participant. The Committee may provide
(but is not required to provide) in the Stock Appreciation Right
agreement that in the case of a cash payment such acceleration in
payment shall also be subject to discounting of the payment to
reasonably reflect the time value of money using any reasonable
discount rate selected by the Committee in accordance with
Treasury Regulations under Code Section 162(m).
(d) FORM OF PAYMENT. Payment pursuant to a Stock Appreciation Right
may be made (i) in cash, (ii) in shares of Common Stock, (iii) a
promissory note or (iv) in any combination of the above, as the
Committee shall determine in its sole and absolute discretion. The
Committee may elect to make this determination either at the time
the Stock Appreciation Right is granted, at the time of payment or
at any time in between such dates. However, any Stock Appreciation
Right paid upon or subsequent to the occurrence of a Change in
Control shall be paid in cash.
8. RESTRICTED AWARDS. Restricted Awards granted under the Plan may be in
the form of either Restricted Stock Grants or Restricted Unit Grants.
Restricted Awards shall be subject to the following terms and
conditions. Furthermore, the Restricted Awards shall be pursuant to a
written
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agreement executed both by the Company and the Participant, which
agreement shall contain such additional terms and conditions, not
inconsistent with the express provisions of the Plan, as the Committee
shall deem desirable in its sole and absolute discretion. The terms of
such written agreements need not be identical.
(a) RESTRICTED STOCK GRANTS. A Restricted Stock Grant is an Award of
shares of Common Stock transferred to a Participant subject to
such terms and conditions as the Committee deems appropriate, as
set forth in Paragraph (d) below.
(b) RESTRICTED UNIT GRANTS. A Restricted Unit Grant is an Award of
units (with each unit having a value equivalent to one share of
Common Stock) granted to a Participant subject to such terms and
conditions as the Committee deems appropriate, including, without
limitation, the requirement that the Participant forfeit all or a
portion of such units upon termination of Service for specified
reasons within a specified period of time, and restrictions on the
sale, assignment, transfer or other disposition of such units.
(c) GRANTS OF AWARDS. Restricted Awards may be granted under the Plan
in such form and on such terms and conditions as the Committee may
from time to time approve. Restricted Awards may be granted alone
or in addition to other Awards under the Plan. Subject to the
terms of the Plan, the Committee shall determine the number of
Restricted Awards to be granted to a Participant and the Committee
may impose different terms and conditions (including performance
goals) on any particular Restricted Award made to any Participant.
Each Participant receiving a Restricted Stock Grant shall be
issued a stock certificate in respect of such shares of Common
Stock. Such certificate shall be registered in the name of such
Participant, shall be accompanied by a stock power duly executed
by such Participant, and shall bear an appropriate legend
referring to the terms, conditions and restrictions applicable to
such Award. The certificate evidencing the shares shall be held in
custody by the Company until the restrictions imposed thereon
shall have lapsed or been removed.
(d) RESTRICTION PERIOD. Restricted Awards shall provide that in order
for a Participant to vest in such Awards, the Participant must
continuously provide Services, subject to relief for specified
reasons, for such period as the Committee may designate at the
time of the Award ("Restriction Period"). If the Committee so
provides in the written agreement with the Participant, a
Restricted Award may also be subject to satisfaction of such
performance goals as are set forth in such agreement. During the
Restriction Period, a Participant may not sell, assign, transfer,
pledge, encumber, or otherwise dispose of shares of Common Stock
received under a Restricted Stock Grant. The Committee, in its
sole discretion, may provide for the lapse of restrictions during
the Restriction Period upon the occurrence of events selected by
the Committee that are beyond the control of the Participant
(including, but not limited to, a Change in Control). The
Committee may provide (but is not required to provide) in the
written agreement with the recipient that in the case of a cash
payment such acceleration in payment shall also be subject to
discounting of the payment to reasonably reflect the time value of
money using any reasonable discount rate selected by the Committee
in accordance with Treasury Regulations under Code Section 162(m).
Upon expiration of the applicable Restriction Period (or lapse of
restrictions during the Restriction Period where the restrictions
lapse in installments or by action of the Committee), the
Participant shall be entitled to receive his or her Restricted
Award or portion thereof, as the case may be.
(e) PAYMENT OF AWARDS. A Participant who receives a Restricted Stock
Grant shall be paid solely by release of the restricted stock at
the termination of the Restriction Period (whether in one payment,
in installments or otherwise). A Participant shall be entitled to
receive payment for a Restricted Unit Grant (or portion thereof)
in an amount equal to the aggregate Fair Market Value of the
shares of Common Stock covered by such Award upon the expiration
of the applicable Restriction Period. Payment in settlement of a
Restricted Unit Grant shall be made as soon as practicable
following the conclusion of the specified Restriction Period (i)
in cash, (ii) in shares of Common Stock equal to the number of
units granted under the Restricted Unit Grant with respect to
which such payment is made, or
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(iii) in any combination of the above, as the Committee shall
determine in its sole and absolute discretion. The Committee may
elect to make this determination either at the time the Award is
granted, at the time of payment or at any time in between such
dates.
(f) RIGHTS AS A STOCKHOLDER. A Participant shall have, with respect to
the shares of Common Stock received under a Restricted Stock
Grant, all of the rights of a stockholder of the Company,
including the right to vote the stock, and the right to receive
any cash dividends. Such cash dividends shall be withheld,
however, until their release upon lapse of the restrictions under
the Restricted Award. Stock dividends issued with respect to the
shares covered by a Restricted Stock Grant shall be treated as
additional shares under the Restricted Stock Grant and shall be
subject to the same restrictions and other terms and conditions
that apply to shares under the Restricted Stock Grant with respect
to which the dividends are issued.
9. PERFORMANCE AWARDS. Performance Awards granted under the Plan may be in
the form of either Performance Share Grants or Performance Unit Grants.
Performance Awards shall be subject to the terms and conditions set
forth below. Furthermore, the Performance Awards shall be subject to
written agreements which shall contain such additional terms and
conditions, not inconsistent with the express provisions of the Plan, as
the Committee shall deem desirable in its sole and absolute discretion.
Such agreements need not be identical.
(a) PERFORMANCE SHARE GRANTS. A Performance Share Grant is an Award of
units (with each unit equivalent in value to one share of Common
Stock) granted to a Participant subject to such terms and
conditions as the Committee deems appropriate, including, without
limitation, the requirement that the Participant forfeit such
units (or a portion of such units) in the event certain
performance criteria are not met within a designated period of
time.
(b) PERFORMANCE UNIT GRANTS. A Performance Unit Grant is an Award of
units (with each unit representing such monetary amount as
designated by the Committee) granted to a Participant subject to
such terms and conditions as the Committee deems appropriate,
including, without limitation, the requirement that the
Participant forfeit such units (or a portion of such units) in the
event certain performance criteria are not met within a designated
period of time.
(c) GRANTS OF AWARDS. Performance Awards shall be granted under the
Plan pursuant to written agreements with the Participant in such
form as the Committee may from time to time approve. Performance
Awards may be granted alone or in addition to other Awards under
the Plan. Subject to the terms of the Plan, the Committee shall
determine the number of Performance Awards to be granted to a
Participant and the Committee may impose different terms and
conditions on any particular Performance Award made to any
Participant.
(d) PERFORMANCE GOALS AND PERFORMANCE PERIODS. Performance Awards
shall provide that, in order for a Participant to vest in such
Awards, the Company must achieve certain performance goals
("Performance Goals") over a designated performance period
selected by the Committee ("Performance Period"). The Performance
Goals and Performance Period shall be established by the
Committee, in its sole and absolute discretion. The Committee
shall establish Performance Goals for each Performance Period
before the commencement of the Performance Period and while the
outcome is substantially uncertain or at such other time permitted
under Treasury Regulations Section 1.162-27(e)(2). The Committee
shall also establish a schedule or schedules for such Performance
Period setting forth the portion of the Performance Award which
will be earned or forfeited based on the degree of achievement of
the Performance Goals actually achieved or exceeded. In setting
Performance Goals, the Committee may use such measures as return
on equity, earnings growth, revenue growth, comparisons to peer
companies, or such other measure or measures of performance in
such manner as it deems appropriate.
(e) PAYMENT OF AWARDS. In the case of a Performance Share Grant, the
Participant shall be entitled to receive payment for each unit
earned in an amount equal to the aggregate Fair
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Market Value of the shares of Common Stock covered by such Award
as of the end of the Performance Period. In the case of a
Performance Unit Grant, the Participant shall be entitled to
receive payment for each unit earned in an amount equal to the
dollar value of each unit times the number of units earned. The
Committee, pursuant to the written agreement with the Participant,
may make such Performance Awards payable in whole or in part upon
the occurrence of events selected by the Committee that are beyond
the control of the Participant (including, but not limited to, a
Change in Control). The Committee may provide (but is not required
to provide) in the written agreement with the recipient that, in
the case of a cash payment, acceleration in payment of a
Performance Award shall also be subject to discounting to
reasonably reflect the time value of money using any reasonable
discount rate selected by the Committee in accordance with
Treasury Regulations under Code Section 162(m). Payment in
settlement of a Performance Award shall be made as soon as
practicable following the conclusion of the Performance Period (i)
in cash, (ii) in shares of Common Stock, or (iii) in any
combination of the above, as the Committee may determine in its
sole and absolute discretion. The Committee may elect to make this
determination either at the time the Award is granted, at the time
of payment, or at any time in between such dates.
10. OTHER STOCK-BASED AND COMBINATION AWARDS.
(a) The Committee may grant other Awards under the Plan pursuant to
which Common Stock is or may in the future be acquired, or Awards
denominated in stock units, including ones valued using measures
other than market value. Such other stock-based grants may be
granted either alone or in addition to any other type of Award
granted under the Plan.
(b) The Committee may also grant Awards under the Plan in combination
with other Awards or in exchange of Awards, or in combination with
or as alternatives to grants or rights under any other employee
plan of the Company, including the plan of any acquired entity.
(c) Subject to the provisions of the Plan, the Committee shall have
authority to determine the individuals to whom and the time or
times at which the Awards shall be made, the number of shares of
Common Stock to be granted or covered pursuant to such Awards, and
any and all other conditions and/or terms of the Awards. 11.
DEFERRAL ELECTIONS. The Committee may permit a Participant to
elect to defer his or her receipt of ---------------------------
the payment of cash or the delivery of shares of Common Stock that
would otherwise be due to such Participant by virtue of the
exercise, earn out or vesting of an Award made under the Plan. If
any such election is permitted, the Committee shall establish
rules and procedures for such payment deferrals, including the
possible (a) payment or crediting of reasonable interest on such
deferred amounts credited in cash, and (b) the payment or
crediting of dividend equivalents in respect of deferrals credited
in units of Common Stock. The Company and the Committee shall not
be responsible to any person in the event that the payment
deferral does not result in deferral of income for tax purposes.
12. DIVIDEND EQUIVALENTS. Awards of Stock Options, Stock Appreciation
Rights, Restricted Unit Grants, Performance Share Grants, and other
stock-based Awards may, in the sole and absolute discretion of the
Committee, earn dividend equivalents. In respect of any such Award which
is outstanding on a dividend record date for Common Stock, the
Participant may be credited with an amount equal to the amount of cash
or stock dividends that would have been paid on the shares of Common
Stock covered by such Award had such shares been issued and outstanding
on such dividend record date. The Committee shall establish such rules
and procedures governing the crediting of dividend equivalents,
including the timing, form of payment, and payment contingencies of such
dividend equivalents, as it deems appropriate or necessary.
13. TERMINATION OF SERVICE. The terms and conditions under which an Award
may be exercised after a Participant's termination of Service shall be
determined by the Committee and reflected in the written agreement with
the Participant concerning the Award.
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14. NON-TRANSFERABILITY OF AWARDS. No Award under the Plan, and no rights or
interest therein, shall be assignable or transferable by a Participant
except by will or the laws of descent and distribution. Subject to the
foregoing, during the lifetime of a Participant, Awards are exercisable
only by, and payments in settlement of Awards will be payable only to,
the Participant or his or her legal representative if the Participant is
Disabled.
15. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, ETC.
(a) The existence of the Plan and the Awards granted hereunder shall
not affect or restrict in any way the right or power of the Board
or the stockholders of the Company to make or authorize any
adjustment, recapitalization, reorganization or other change in
the Company's capital structure or its business, any merger or
consolidation of the Company, any issue of bonds, debentures,
preferred or prior preference stocks ahead of or affecting the
Common Stock or the rights thereof, the dissolution or liquidation
of the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding.
(b) In the event of any change in capitalization affecting the Common
Stock after the effective date of this Plan, such as a stock
dividend, stock split, recapitalization, merger, consolidation,
split-up, combination, exchange of stock, other form of
reorganization, or any other change affecting the Common Stock,
such proportionate adjustments, if any, as the Committee in its
discretion may deem appropriate to reflect such change shall be
made with respect to (i) the aggregate number of shares of Common
Stock for which Awards in respect thereof may be granted under the
Plan, (ii) the maximum number of shares of Common Stock which may
be sold or awarded to any Participant, (iii) the number of shares
of Common Stock covered by each outstanding Award, and (iv) the
price per share in respect of outstanding Awards. Such adjustments
shall be made by the Committee so that the adjustments shall not
result in an accounting consequence under APB 25 and FASB
Interpretation No. 44, as amended, and any successor thereof. The
Committee's determination with respect to the adjustments shall be
final, binding, and conclusive.
(c) The Committee may also make such adjustments in the number of
shares covered by, and the price or other value of any outstanding
Awards in the event of a spin-off or other distribution (other
than normal cash dividends) of Company assets to stockholders.
16. CHANGE IN CONTROL.
(a) Except as otherwise provided for in Paragraph (b) below, in the
event of a Change in Control, and except as otherwise provided in
Award agreements:
(i) All Stock Options and Stock Appreciation Rights then
outstanding shall become fully exercisable as of the date
of the Change in Control (and shall terminate at such time
as specified in the Award agreement);
(ii) All restrictions and conditions of all Restricted Stock
Grants and Restricted Unit Grants then outstanding shall
be deemed satisfied as of the date of the Change in
Control; and
(iii) All Performance Share Grants and Performance Unit Grants
shall be deemed to have been fully earned as of the date
of the Change in Control.
(b) In the event that any payment under this Plan (alone or in
conjunction with other payments) would otherwise constitute an
"excess parachute payment" under Section 280G of the Code (in the
sole judgment of the Committee), such payment shall be reduced or
eliminated to the extent the Committee determines necessary to
avoid deduction disallowance under Section 280G of the Code or the
imposition of excise tax under Section 4999 of the Code. The
Committee may consult with a Participant regarding the application
of Section 280G and/or Section 4999 to payments otherwise due to
such Participant under the Plan, but the
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judgment of the Committee as to applicability of those provisions,
the degree to which a payment must be reduced to avoid those
provisions, and which Awards shall be reduced, is final.
17. AMENDMENT AND TERMINATION. Without further approval of the stockholders,
the Board may at any time terminate the Plan, or may amend it from time
to time in such respects as the Board may deem advisable. However, the
Board may not, without approval of the stockholders, make any amendment
which would (a) increase the aggregate number of shares of Common Stock
which may be issued under the Plan (except for adjustments pursuant to
Section 15 above), (b) materially modify the requirements as to
eligibility for participation in the Plan, or (c) materially increase
the benefits accruing to Participants under the Plan. Notwithstanding
the above, the Board may amend the Plan to take into account changes in
applicable securities laws, federal income tax laws and other applicable
laws. Further, should the provisions of Rule 16b-3, or any successor
rule, under the Exchange Act be amended, the Board may amend the Plan in
accordance with any modifications to that rule without the need for
stockholder approval. Notwithstanding the foregoing, the Plan may not be
amended more than once every six months other than to comply with the
changes in the Code.
18. MISCELLANEOUS MATTERS.
(a) TAX WITHHOLDING.
(i) The Company's obligation to deliver Common Stock and/or
pay any amount under the Plan shall be subject to the
satisfaction of all applicable federal, state, local, and
foreign tax withholding requirements.
(ii) The Committee may, in its discretion, provide the
Participants or their successors with the right to use
previously vested Common Stock in satisfaction of all or
part of the taxes incurred by such Participants in
connection with the Plan; provided, however, that this
form of payment shall be limited to the withholding amount
calculated using the minimum statutory rates. Such right
may be provided to any such holder in either or both of
the following formats.
1. Stock Withholding: The election to have the Company withhold, from
the Common Stock otherwise issuable under the Plan, a portion of the Common
Stock with an aggregate Fair Market Value equal to the taxes calculated using
the minimum statutory rates.
2. Stock Delivery: The election to deliver to the Company, at the time
the taxes are required to be withheld, one or more shares of Common Stock
previously acquired by the Participant or his or her successor with an aggregate
Fair Market Value equal to the taxes calculated using the minimum statutory
rates.
(b) NOT AN EMPLOYMENT OR SERVICE CONTRACT. Neither the adoption of the
Plan nor the granting of any Award shall confer upon any
Participant any right to continue in the Service of the Company or
an Affiliate, as the case may be, nor shall it interfere in any
way with the right of the Company or an Affiliate to terminate the
Services of any of its Employees, Non-Employee Directors, or
Consultants at any time, with or without cause.
(c) UNFUNDED PLAN. The Plan shall be unfunded and the Company shall
not be required to segregate any assets that may at any time be
represented by Awards under the Plan. Any liability of the Company
to any person with respect to any Award under the Plan shall be
based solely upon any written contractual obligations that may be
effected pursuant to the Plan. No such obligation of the Company
shall be deemed to be secured by any pledge of, or other
encumbrance on, any property of the Company.
(d) ANNULMENT OF AWARDS. The grant of any Award under the Plan payable
in cash is provisional until cash is paid in settlement thereof.
The grant of any Award payable in Common Stock is provisional
until the Participant becomes entitled to the certificate in
settlement thereof. Payment under any Awards granted pursuant to
the Plan is wholly
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contingent upon stockholder approval of the Plan. Where approval
for an Award sought pursuant to Section 162(m)(4)(C)(ii) is not
granted by the Company's stockholders, the Award shall be annulled
automatically. In the event the Service of a Participant is
terminated for cause (as defined below), any Award which is
provisional shall be annulled as of the date of such termination
for cause. For purposes of the Plan, the term "terminated for
cause" means any discharge because of personal dishonesty, willful
misconduct, breach of fiduciary duty involving personal profit,
continuing intentional or habitual failure to perform stated
duties, violation of any law (other than minor traffic violations
or similar misdemeanor offenses not involving moral turpitude), or
material breach of any provision of an employment or independent
contractor agreement with the Company.
(e) OTHER COMPANY BENEFIT AND COMPENSATION PROGRAMS. Payments and
other benefits received by a Participant under an Award made
pursuant to the Plan shall not be deemed a part of a Participant's
regular, recurring compensation for purposes of the termination
indemnity or severance pay law of any state. Furthermore, such
benefits shall not be included in, nor have any effect on, the
determination of benefits under any other employee benefit plan or
similar arrangement provided by the Company or a Subsidiary unless
expressly so provided by such other plan or arrangement, or except
where the Committee expressly determines that inclusion of an
Award or portion of an Award should be included. Awards under the
Plan may be made in combination with or in addition to, or as
alternatives to, grants, awards or payments under any other
Company or Subsidiary plans. The Company or any Subsidiary may
adopt such other compensation programs and additional compensation
arrangements (in addition to this Plan) as it deems necessary to
attract, retain, and motivate officers, directors, employees or
independent contractors for their service with the Company and its
Subsidiaries.
(f) SECURITIES LAW RESTRICTIONS. No shares of Common Stock shall be
issued under the Plan unless counsel for the Company shall be
satisfied that such issuance will be in compliance with applicable
federal and state securities laws. Certificates for shares of
Common Stock delivered under the Plan may be subject to such
stock-transfer orders and other restrictions as the Committee may
deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock
exchange upon which the Common Stock is then listed, and any
applicable federal or state securities law. The Committee may
cause a legend or legends to be put on any such certificates to
make appropriate reference to such restrictions.
(g) AWARD AGREEMENT. Each Participant receiving an Award under the
Plan shall enter into a written agreement with the Company in a
form specified by the Committee agreeing to the terms and
conditions of the Award and such related matters as the Committee
shall, in its sole and absolute discretion, determine.
(h) COSTS OF PLAN. The costs and expenses of administering the Plan
shall be borne by the Company.
(i) GOVERNING LAW. The Plan and all actions taken thereunder
shall be governed by and construed in accordance with the
laws of the State of Delaware.
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REVOCABLE PROXY REVOCABLE PROXY
DIODES INCORPORATED
ANNUAL MEETING OF STOCKHOLDERS -- JUNE 11, 2001
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned stockholder(s) of Diodes Incorporated (the "Company") hereby
nominates, constitutes and appoints C.H. Chen and Carl Wertz, the attorneys,
agents and proxies of the undersigned, with full power of substitution, to vote
all stock of the Company which the undersigned is entitled to vote at the annual
meeting of stockholders of the Company (the "Meeting") to be held at the
Renaissance Hotel, 30100 Agoura Road, Agoura Hills, California 91301, on Monday,
June 11, 2001 at 10:00 a.m. (California time), and any adjournments thereof, as
fully and with the same force and effect as the undersigned might or could do if
personally thereat, as follows:
1. ELECTION OF DIRECTORS [ ] FOR all nominees listed below
(except as marked to the contrary below)
Discretionary authority to cumulate votes is granted
1. ELECTION OF DIRECTORS [ ] WITHHOLD AUTHORITY
to vote for all nominees listed below
Nominees: C.H. Chen, Michael R. Giordano, Keh-Shew Lu, M.K. Lu, Shing Mao,
Leonard M. Silverman, Raymond Soong, and John M. Stich.
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY ONE OR MORE NOMINEES, WRITE
THAT NOMINEE'S OR NOMINEES' NAME(S) IN THE SPACE PROVIDED)
- --------------------------------------------------------------------------------
2. APPROVAL OF THE 2001 OMNIBUS EQUITY INCENTIVE PLAN. To approve the Company's
2001 Omnibus Equity Incentive Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS. To ratify the
appointment of Moss Adams LLP as the Company's independent certified public
accountants for the year ending December 31, 2001.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. OTHER BUSINESS. In their discretion, the Proxyholders are authorized to
transact such other business as properly may come before the Meeting and any
adjournment thereof.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Please Sign And Date On Reverse Side
43
REVOCABLE PROXY REVOCABLE PROXY
THE BOARD OF DIRECTORS RECOMMENDS A VOTE OF "FOR" THE ELECTION OF EACH OF THE
NOMINEES, "FOR" THE 2001 OMNIBUS EQUITY INCENTIVE PLAN, AND "FOR" RATIFICATION
OF MOSS ADAMS LLP AS THE COMPANY'S INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS FOR
THE YEAR ENDING DECEMBER 31, 2001. ALL PROPOSALS TO BE ACTED UPON ARE PROPOSALS
OF THE COMPANY. IF ANY OTHER BUSINESS IS PRESENTED AT THE MEETING, THIS PROXY
SHALL BE VOTED BY THE PROXYHOLDERS IN ACCORDANCE WITH THE RECOMMENDATIONS OF A
MAJORITY OF THE BOARD OF DIRECTORS.
The undersigned hereby ratifies and confirms all that said attorneys and
Proxyholders, or either of them, or their substitutes, shall lawfully do or
cause to be done by virtue hereof, and hereby revokes any and all proxies
heretofore given by the undersigned to vote at the Meeting. The undersigned
hereby acknowledges receipt of the Notice of Annual Meeting and the Proxy
Statement accompanying said notice.
Date:
(Name of Stockholder, Printed)
(Signature of Stockholder)
(Name of Stockholder, Printed)
(Signature of Stockholder)
(Please date this Proxy and sign
your name as it appears on your
stock certificate(s). Executors,
administrators, trustees, etc.
should give their full titles.
All joint owners should sign.)
I (We) do [ ] do not [ ] expect
to attend the Meeting.
This Proxy will be voted "FOR" the election of all nominees whose names appear
above unless authority to do so is withheld. Unless "AGAINST" or "ABSTAIN" is
indicated, the Proxy will be voted "FOR" the 2001 Omnibus Equity Incentive Plan,
and "FOR" the ratification of the appointment of Moss Adams LLP as the Company's
independent auditors. PLEASE SIGN, DATE AND RETURN THIS PROXY AS PROMPTLY AS
POSSIBLE IN THE POSTAGE PREPAID ENVELOPE PROVIDED.