SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_]CONFIDENTIAL, FOR USE OF THE
[_] Preliminary Proxy Statement COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
OPTI INC.
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(Name of Registrant as specified in its charter)
OPTI INC.
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies: N/A
(2) Aggregate number of securities to which transaction applies: N/A
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange ActRule 0-11: N/A
(4) Proposed maximum aggregate value of transaction: N/A
(5) Total fee paid: N/A
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: N/A
(2) Form, Schedule or Registration Statement No.: N/A
(3) Filing Party: N/A
(4) Date Filed: N/A
OPTI INC.
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
AUGUST 25, 1998
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TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of Shareholders of OPTi
Inc., a California corporation ("OPTi" or the "Company"), will be held on
August 25, 1998 at 3:30 p.m., local time, at the Embassy Suites Hotel 901 East
Calaveras Blvd, Milpitas, California 95035, for the following purposes:
1. To elect four directors to serve for the ensuing year and until their
successors are elected;
2. To ratify the appointment of Ernst & Young LLP as independent auditors
of the Company for the fiscal year ending December 31, 1998; and
3. To transact such other business as may properly come before the meeting
or any postponement or adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only shareholders of record at the close of business on July 7, 1998 are
entitled to notice of and to vote at the meeting and any postponement or
adjournment thereof.
All shareholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to mark,
sign, date and return the enclosed proxy as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Any shareholder attending
the meeting may vote in person even if he or she has returned a proxy.
Sincerely,
/s/ Michael Mazzoni
Michael Mazzoni
Secretary
Milpitas, California
July 31, 1998
IMPORTANT: ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL
MEETING IN PERSON. HOWEVER, TO ENSURE YOUR REPRESENTATION AT THE MEETING,
YOU ARE URGED TO MARK, SIGN, DATE, AND RETURN THE ENCLOSED PROXY CARD AS
PROMPTLY AS POSSIBLE IN THE POSTAGE-PREPAID ENVELOPE ENCLOSED FOR THAT
PURPOSE. ANY SHAREHOLDER ATTENDING THE MEETING MAY VOTE IN PERSON EVEN IF
SUCH SHAREHOLDER RETURNED A PROXY CARD.
OPTI INC.
PROXY STATEMENT FOR 1998 ANNUAL MEETING OF SHAREHOLDERS
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INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of OPTi Inc. ("OPTi" or the
"Company") for use at the Annual Meeting of Shareholders (the "Annual
Meeting") to be held on August 25, 1998 at 3:30 p.m., local time, or at any
postponement or adjournment thereof, for the purposes set forth herein and in
the accompanying Notice of Annual Meeting of Shareholders. The Annual Meeting
will be held at the Embassy Suites Hotel, 901 East Calaveras Blvd., Milpitas,
California 95035. The telephone number at that location is (408) 942-0400.
These proxy solicitation materials were mailed on or about July 31, 1998 to
all shareholders entitled to vote at the meeting.
PURPOSES OF THE ANNUAL MEETING
The purposes of the Annual Meeting are to (i) elect four directors to serve
for the ensuing year and until their successors are duly elected and
qualified, (ii) ratify the appointment of Ernst & Young LLP as the Company's
independent auditors for the fiscal year 1998, and (iii) transact such other
business as may properly come before the Annual Meeting and at any and all
postponements or adjournments thereof.
RECORD DATE AND SHARE OWNERSHIP
Only shareholders of record at the close of business on July 7, 1998 (the
"Record Date") are entitled to receive notice of and to vote at the Annual
Meeting. At the Record Date, 13,298,191 shares of the Company's Common Stock
were issued and outstanding. For information regarding security ownership by
management and by 5% shareholders, see "OTHER INFORMATION--Share Ownership of
Directors, Officers and Certain Beneficial Owners." The closing price of the
Company's Common Stock on the Nasdaq National Market on the Record Date was
$6.9375 per share.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Secretary of the
Company at its principal executive offices, 1440 McCarthy Boulevard, Milpitas,
California, 95035, a written notice of revocation or a duly executed proxy
bearing a later date or by attending the Annual Meeting and voting in person.
Attending the Annual Meeting in and of itself will not constitute a revocation
of a proxy.
VOTING AND SOLICITATION
Every shareholder voting in the election of directors may cumulate such
shareholder's votes and give one candidate a number of votes equal to the
number of directors to be elected multiplied by the number of shares held by
such shareholder, or distribute the shareholder's votes on the same principle
among as many candidates as the shareholder deems fit, provided that votes
cannot be cast for more than four (4) candidates. However, no shareholder
shall be entitled to cumulate votes unless the candidate's name has been
placed in nomination prior to the voting and the shareholder, or any other
shareholder, has given notice at the Annual Meeting prior to the voting of the
intention to cumulate the shareholder's votes. On all other matters, each
share has one (1) vote.
Shares of Common Stock represented by properly executed proxies will, unless
such proxies have been previously revoked, be voted in accordance with the
instructions indicated thereon. In the absence of specific instructions to the
contrary, properly executed proxies will be voted: (i) FOR the election of
each of the Company's nominees as a director; and (ii) FOR ratification of the
appointment of Ernst & Young LLP as independent auditors for fiscal 1998. No
business other than that set forth in the accompanying Notice of Annual
Meeting of Shareholders is expected to come before the Annual Meeting. Should
any other matter requiring a vote of shareholders properly arise, the persons
named in the enclosed form of proxy will vote the shares they represent as the
Board of Directors may recommend.
The cost of this solicitation will be borne by the Company. The Company may
reimburse brokerage firms and other persons representing beneficial owners of
shares for their expenses in forwarding solicitation material to such
beneficial owners. Proxies may also be solicited by certain of the Company's
directors, officers and regular employees, without additional compensation,
personally or by telephone, telegram or letter.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
The required quorum for the transaction of business at the Annual Meeting is
a majority of the shares of Common Stock issued and outstanding on the Record
Date. Shares that are voted "FOR" or "AGAINST" a matter are treated as being
present at the meeting for purposes of establishing a quorum and are also
treated as shares "represented and voting" at the Annual Meeting (the "Votes
Cast") with respect to such matter.
While there is no definitive statutory or case law authority in California
as to the proper treatment of abstentions or broker non-votes, the Company
believes that both abstentions and broker non-votes should be counted for
purposes of determining the presence or absence of a quorum for the
transaction of business. The Company further believes that neither abstentions
nor broker non-votes should be counted as shares "represented and voting" with
respect to a particular matter for purposes of determining the total number of
Votes Cast with respect to such matter. In the absence of controlling
precedent to the contrary, the Company intends to treat abstentions and broker
non-votes in this manner. Accordingly, abstentions and broker non-votes will
not affect the determination as to whether the requisite majority of Votes
Cast has been obtained with respect to a particular matter.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
Proposals of shareholders of the Company which are intended to be presented
by such shareholders at the 1999 Annual Meeting of Shareholders must be
received by the Company no later than December 31, 1998 in order to have them
included in the proxy statement and form of proxy relating to that meeting.
FISCAL YEAR END
The Company's fiscal year ends on December 31. Fiscal 1997 ended on December
31, 1997 and is referred to herein as the "Last Fiscal Year."
2
PROPOSAL NUMBER 1
ELECTION OF DIRECTORS
DIRECTORS AND NOMINEES FOR DIRECTORS
A board of four directors is to be elected at the Annual Meeting. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
for the Company's four (4) nominees named below, all of whom are presently
directors of the Company. In the event that any nominee of the Company is
unable or declines to serve as a director at the time of the Annual Meeting,
the proxies will be voted for any nominee who shall be designated by the
present Board of Directors to fill the vacancy. In the event that additional
persons are nominated for election as directors, the proxy holders intend to
vote all proxies received by them in such a manner in accordance with
cumulative voting as will assure the election of as many of the nominees
listed below as possible, and, in such event, the specific nominees to be
voted for will be determined by the proxy holders. The Company is not aware of
any nominee who will be unable or will decline to serve as a director. The
term of office of each person elected as a director will continue until the
next Annual Meeting of Shareholders or until a successor has been duly elected
and qualified.
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS A
VOTE "FOR" THE NOMINEES LISTED BELOW.
NOMINEES FOR DIRECTOR
The names of the nominees, each of whom is currently a director of the
Company, and certain information about them is set forth below, including
information furnished by them as to their principal occupations for the last
five (5) years and their ages as of the Record Date.
DIRECTOR
NAME OF NOMINEE AGE POSITION WITH THE COMPANY SINCE
--------------- --- ------------------------- --------
Bernard T. Marren........... 62 Acting President, Chief Executive 1994
Officer and Chairman of the Board
Stephen A. Dukker........... 45 Director 1993
Kapil K. Nanda(1)........... 52 Director 1996
William H. Welling.......... 65 Director
- --------
(1) Member of the Audit Committee and the Compensation Committee.
Bernard T. Marren has served as Acting President and Chief Executive Officer
of the Company since May 1998. Mr. Marren was elected as a director in May
1996. Mr. Marren was Chairman and Chief Executive Officer of Die Enhancements,
a processor of silicon wafers to produce fully tested die for the multi-chip
module market. From 1977 to 1994, Mr. Marren founded and served as President
of Western Microtechnology Inc., a distributor of electronic systems and
semiconductor devices. From 1972 to 1976 Mr. Marren was President of American
Microsystems. He also founded and was the first President of SIA (the
Semiconductor Industry Association). Mr. Marren is also a director of two
private companies.
Stephen A. Dukker was elected as a director of the Company in January 1993.
He currently is employed at Computer City as Senior Vice President,
Merchandising where he has been employed since October 1997. He served as
President of the Company from January of 1996 to October 1997. From May 1994
to mid 1995, Mr. Dukker served as President of VideoLogic, Inc., a supplier of
video and graphics add-on boards. From June 1991 through October 1993, he
served as a Senior Vice President of CompUSA, Inc., a chain of discount
computer superstores. During that time he was also a member of the Executive
Committee of CompUSA and President of its Compudyne Computer manufacturing and
mail order subsidiaries. Prior to joining CompUSA, Mr. Dukker was President of
PC Brand, Inc., a manufacturer and mail order distributor of PC products from
January 1988 to May 1991.
3
Kapil K. Nanda was elected as a director in May 1996. Mr. Nanda is currently
President of Infosoft, Inc., a software and development consulting company,
which he founded in 1990. Prior to 1990, Mr. Nanda held various positions at
Altos Computer Systems, a personal computer manufacturing company, from 1981
to 1989, the most recent position being Vice President of Engineering. From
1974 to 1981, Mr. Nanda was employed at Intel Corporation, where his most
recent position was Manager, Software Engineering. Mr. Nanda holds a B.S. in
Engineering from the University of Punjab, India, an M.S. in Engineering from
the University of Kansas, and an M.B.A. form the University of Southern
California.
William H. Welling has been nominated for election as a director of the
Company. He is currently Chairman and CEO of Xiox Corporation, a
telecommunications software company. Since 1983 he has been Managing Partner
of Venture Growth Associates, an investment firm. Since April 1993 he has been
director of Genesis Microchip, Inc., a fabless semiconductor company that
designs, develops and markets high quality digital image manipulation
integrated circuit solutions. Mr. Welling also serves as a director on the
boards of several private companies.
VOTE REQUIRED
The four (4) nominees receiving the highest number of affirmative votes of
the shares entitled to be voted for them shall be elected as directors. Votes
withheld from any director are counted for purposes of determining the
presence or absence of a quorum for the transaction of business, but have no
other legal effect in the election of directors under California law.
BOARD MEETINGS AND COMMITTEES
During the Last Fiscal Year, the Board of Directors held a total of thirteen
(13) meetings. No incumbent director attended less than 75% of the aggregate
of all meetings of the Board of Directors and any committees of the Board on
which he served, if any, during his tenure as a director.
The Audit Committee was established to review, in consultation with the
independent auditors, the Company's financial statements, accounting and other
policies, accounting systems and system of internal controls. The Audit
Committee also recommends the engagement of the Company's independent auditors
and reviews other matters relating to the relationship of the Company with its
auditors. The members of the Audit Committee were Tor Braham, Kapil Nanda and
Bernard Marren. The Audit Committee met one (1) time during the Last Fiscal
Year.
The Compensation Committee was established to review and act on matters
relating to compensation levels and benefit plans for key executives of the
Company, among other things. The members of the Compensation Committee were
Tor Braham, Kapil Nanda and Bernard Marren. The Compensation Committee met two
(2) times during the Last Fiscal Year.
The Board of Directors currently has no nominating committee or other
committee performing a similar function.
DIRECTOR COMPENSATION
Non-employee members of the Board of Directors are currently compensated at
the rate of $1,000 per Board meeting attended, plus out-of-pocket expenses for
attending such meetings. In addition, non-employee directors are eligible to
participate in the Company's 1993 Director Stock Option Plan. During the Last
Fiscal Year, each of directors Tor Braham, Bernard Marren and Kapil Nanda were
automatically granted options to purchase 4,000 shares of the Company's Common
Stock at an exercise price of $5.31 per share.
4
PROPOSAL NUMBER 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young LLP, independent auditors,
to audit the financial statements of the Company for the fiscal year ending
December 31, 1998. In the event of a negative vote on such ratification, the
Board of Directors will reconsider its selection.
Ernst & Young LLP has audited the Company's financial statements for each
fiscal year since the Company's inception. Representatives of Ernst & Young
LLP are expected to be present at the meeting with the opportunity to make a
statement if they desire to do so, and are expected to be available to respond
to appropriate questions.
RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
RATIFICATION OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR
THE FISCAL YEAR ENDING DECEMBER 31, 1998.
VOTE REQUIRED
The affirmative vote of a majority of the Votes Cast will be required to
ratify the appointment of Ernst & Young LLP as the Company's independent
auditors for the fiscal year ending December 31, 1998.
5
OTHER INFORMATION
EXECUTIVE OFFICERS
In addition to Messrs. Marren, the following person was an executive Officer
of the Company as of the Record Date:
NAME AGE POSITION
---- --- --------
Michael Mazzoni....................... 35 Chief Financial Officer and Secretary
Michael Mazzoni was appointed Chief Financial Officer of the Company in
January 1998. Mr. Mazzoni joined OPTi in October 1993 as Manager, Investor
Relations and served as Corporate Controller from mid 1995 until his
appointment as Chief Financial Officer. Prior to joining the Company, he
served in various accounting positions at Everex Systems, Inc., a personal
computer manufacturer from April 1992 to October 1993, with his last position
being Corporate Controller. From March 1986 to March 1992, Mr. Mazzoni was
employed at Santa Cruz Operation, Inc. ("SCO") in various treasury, accounting
and finance positions. At the time of his departure from SCO he was serving as
Manager, Corporate Finance.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than 10% of a registered
class of the Company's equity securities, to file certain reports regarding
ownership of, and transactions in, the Company's securities with the
Securities and Exchange Commission (the "SEC") and with Nasdaq. Such officers,
directors and 10% shareholders are also required by SEC rules to furnish the
Company with copies of all Section 16(a) forms that they file.
Based solely on its review of copies of Forms 3 and 4 and amendments thereto
furnished to the Company pursuant to Rule 16a-3(e) and Forms 5 and amendments
thereto furnished to the Company with respect to the Last Fiscal Year, and any
written representations referred to in Item 405(b)(2)(i) of Regulation S-K
stating that no Forms 5 were required, the Company believes that, during the
Last Fiscal Year, all Section 16(a) filing requirements applicable to the
Company's officers, directors and 10% shareholders were complied with.
6
SHARE OWNERSHIP OF DIRECTORS, OFFICERS AND CERTAIN BENEFICIAL OWNERS
The following nominee table sets forth the beneficial ownership of Common
Stock of the Company as of July 7, 1998 by: (i) each present director of the
Company; (ii) each of the officers named in the table under the heading
"EXECUTIVE COMPENSATION--Summary Compensation Table"; (iii) all current
directors and executive officers as a group; and (iv) each person known to the
Company who beneficially owns 5% or more of the outstanding shares of its
Common Stock. The number and percentage of shares beneficially owned is
determined under the rules of the SEC, and the information is not necessarily
indicative of beneficial ownership for any other purpose. Under such rules,
beneficial ownership includes shares as to which the individual has sole or
shares voting power or investment power and also any shares which the
individual has the right to acquire within sixty (60) days of July 7, 1998
through the exercise of any stock option or other right. Unless otherwise
indicated, each person has sole voting and investment power (one shares such
powers with his or her spouse) with respect to the shares shown as
beneficially owned. Unless otherwise indicated, officers and directors can be
reached at the Company's principal executive offices. A total of 13,298,191
shares of the Company's Common Stock were issued and outstanding as of July 7,
1998.
SHARES BENEFICIALLY OWNED
-----------------------------
NAME NUMBER PERCENT
- ---- --------------- -------------
Jerry Chang (1)................................... 730,418 5.5%
Stephen Dukker (2)................................ 101,000 *
Tor R. Braham (3)................................. 23,333 *
Bernard T. Marren (4)............................. 17,666 *
Kapil K. Nanda (5)................................ 7,666 *
David Zacarias.................................... 1 *
Patrick Ang....................................... 0 *
Michael Mazzoni (6)............................... 48,687 *
Caxton International.............................. 814,500 6.1%
Schaenen Fox Capital Management LLC............... 1,194,980 9.0%
All Directors and Executive Officers as a group (6
persons) (7)..................................... 198,352 1.5%
- --------
* Represents less than one percent.
(1) Includes 130,417 shares subject to stock options exercisable as of July 7,
1998 or within sixty (60) days thereafter.
(2) Includes 24,445 shares subject to stock options exercisable as of July 7,
1998 or within sixty (60) days thereafter.
(3) Includes 23,333 shares subject to stock options exercisable as of July 7,
1998 or within sixty (60)
days thereafter.
(4) Includes 7,666 shares subject to stock options exercisable as of July 7,
1998 or within sixty (60)
days thereafter.
(5) Includes 7,666 shares subject to stock options exercisable as of July 7,
1998 or within sixty (60)
days thereafter.
(6) Includes 48,687 shares subject to stock options exercisable as of July 7,
1998 or within sixty (60)
days thereafter.
(7) Includes shares pursuant to noters (2), (3), (4), (5), and (6). Excludes
shares beneficially owned by Mr. Chang, Mr. Zacarias and Mr. Ang who were
officers during the Last Fiscal Year but are neither a director nor an
executive officer of the Company on July 7, 1998.
7
SUMMARY COMPENSATION TABLE
The following table sets forth certain information with respect to the
compensation paid by the Company for services rendered during fiscal years
1997, 1996, 1995 to Jerry Chang, Stephen Dukker, David Zacarias and Patrick
Ang (the "Named Officers"). The table lists the principal position held by
each Named Officer in the Last Fiscal Year.
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
FISCAL -------------------- -------------- ALL OTHER
YEAR SALARY ($) BONUS ($) OPTIONS (#)(6) COMPENSATION
------ ---------- --------- -------------- ------------
Jerry Chang (1)........................... 1997 209,747 16,450 -- --
Chief Executive Officer and President 1996 193,128 15,385 150,000 --
1996 171,384 168 20,000 --
Stephen Dukker (2)........................ 1997 166,666 41,667 -- --
President 1996 193,205 47,916 152,000 22,834(3)
1995 -- -- -- --
David Zacarias (4)........................ 1997 209,747 16,450 -- --
Chief Operating & Financial Officer 1996 193,128 28,655 90,000 --
1995 170,634 168 20,000 --
Patrick Ang (5)........................... 1997 124,693 -- -- --
President, NetMedia 1996 129,000 125,000 100,000 --
1995 107,103 160,000 40,000 --
- --------
(1) On May 15, 1998, Mr. Chang resigned from the Company as Chief Executive
Officer/President and Chairman of the Board.
(2) On October 31, 1997, Mr. Dukker resigned from his position as President of
the Company.
(3) Represents consulting fees paid to Mr. Dukker prior to his joining the
Company as President in January 1996.
(4) On January 30, 1998, Mr. Zacarias resigned from his position as Chief
Operating and Financial Officer.
(5) On November 26, 1997, Mr. Ang resigned from the Company as part of the
asset transaction with Creative Technologies, Ltd.
(6) Does not include options granted to Messrs. Chang, Dukker, Zacarias, and
Ang to purchase from the Company 73,750, 14,750, 14,750 and 14,750 shares
(post split), respectively, of Common Stock of Tripath Technology, Inc., a
private California corporation. These shares were issued as four year
options on November 7, 1996.
8
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information with respect to options granted in
the Last Fiscal Year to the Named Officers.
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
----------------------------------------------------- VALUE AT ASSUMED
ANNUAL RATES
SHARES OF PERCENT OF OF STOCK
COMMON STOCK TOTAL OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO FOR OPTION TERM(3)
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION ---------------------
NAME GRANTED (#)(1) FISCAL YEAR(2) PRICE ($/SH) DATE 5% 10%
---- -------------- -------------- ------------ ---------- ---------- ----------
Jerry Chang............. -- -- -- -- -- --
Stephen Dukker.......... -- -- -- -- -- --
David Zacarias.......... -- -- -- -- -- --
Patrick Ang............. -- -- -- -- -- --
- --------
(1) All options to Named Officers are granted under the Company's 1993 Stock
Option Plan at an exercise price equal to the fair market value on the
date of grant. These stock options vest and become exercisable as to 1/8
of the shares beginning six (6) months following the vesting commencement
date and as to 1/48 of the shares on the first day of each month
thereafter. Under the terms of the Option Plan, the option plan
administrator retains the discretion, subject to certain limitations
within the plan, to modify, extend, renew or accelerate the vesting of
options and to reprice outstanding options. In particular, subject to
Board approval, the stock plan administrator may reduce the exercise price
of an option to the current fair market price of the underlying stock if
the price of such stock has declined since the date on which the option
was granted.
(2) Based on 525,500 options granted to employees during the Last Fiscal Year
under the 1993 and 1995 Stock Option Plan(s).
(3) The 5% and 10% assumed rates of appreciation are mandated by the rules of
the Securities and Exchange Commission and do not represent the Company's
estimate or projection of the future Common Stock price.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
The following table provides information with respect to option exercises in
the Last Fiscal Year by the Named Officers and the value of such officer's
unexercised options at December 31, 1997.
TOTAL VALUE OF
TOTAL NUMBER OF UNEXERCISABLE IN-THE-
SHARES UNEXERCISED OPTIONS AT MONEY-OPTIONS AT FISCAL
ACQUIRED FISCAL YEAR END (#) YEAR END ($)(1)
ON VALUE ------------------------- -------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- -------- ----------- ------------- ----------- -------------
Jerry Chang............. -- -- 498,748 108,751 2,560,873 204,715
Stephen Dukker.......... -- -- 77,278 83,333 124,105 139,250
David Zacarias.......... -- -- 150,458 73,542 186,247 122,828
Patrick Ang............. -- -- 82,196 -- 136,308 --
- --------
(1) Market value of underlying securities based on the closing price of the
Company's Common Stock on December 31, 1997 on the Nasdaq National Market,
minus the exercise price.
9
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In February 1993, the Company established a compensation committee of the
Board of Directors which currently consists of Messrs. Braham and Mr. Lin.
Wilson Sonsini Goodrich & Rosati, Professional Corporation, of which Mr.
Braham is a partner, was retained as legal counsel by the Company during the
Last Fiscal Year.
CERTAIN TRANSACTIONS
See "EXECUTIVE COMPENSATION--Compensation Committee Interlocks and Insider
Participation" above.
The Company's policy is that it will not make loans to, or enter into other
transactions with, directors, officers or affiliates unless such loans or
transactions are (i) approved by a majority of the Company's independent
disinterested directors, (ii) may reasonably be expected to benefit the
Company, and (iii) will be on terms no less favorable to the Company than
could be obtained in arm's length transactions with unaffiliated third
parties.
The Company has entered into indemnification agreements with each of its
directors and executive officers. Such agreements require the Company to
indemnify such individuals to the fullest extent permitted by California law.
10
REPORT OF COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors establishes the general
compensation policies of the Company as well as the compensation plans and
specific compensation levels for executive officers. It also administers the
Company's employee stock benefit plans and the 1993 Bonus Plan (the "Bonus
Plan"). The Compensation Committee is currently composed of independent, non-
employee directors who have no interlocking relationships as defined by the
Securities and Exchange Commission.
The Compensation Committee believes that the compensation of the executive
officers, including that of the Chief Executive Officer (collectively, the
"Executive Officers") should be influenced to a very significant extent by the
Company's financial performance. The Committee establishes the salaries of all
of the Executive Officers by considering various factors, including the
following: (i) the Company's financial performance for the past year, (ii) the
opportunity of the Executive to participate in the Company's success through
equity ownership and stock options, (iii) the salaries of executive officers
in similar positions of comparably-sized companies, and (iv) the critical
importance of cost control in the Company's business in light of ongoing
competition. In addition to salary, the cash portion of the Company's
executive compensation packages includes discretionary bonuses which are paid
quarterly based on the Company's operating results. The Committee believes
that the Company's executive Officer salaries and cash compensation are
currently less than or comparable to the compensation paid to executives at
similarly-sized businesses in the industry.
The Company's Bonus Plan provides that the maximum aggregate bonuses to be
paid to any individual Executive Officer in the year will in no event exceed
two (2) times the base salary of such Executive Officer. In addition, the
aggregate quarterly bonuses which may be paid to all Executive Officers will
not exceed 5% of the Company's pre-tax, pre-bonus income for the quarter.
Acting with the advice of the Committee, the Board of Directors periodically
grants options to Executive Officers. The Committee views stock option grants
as an important component of its long-term, performance-based compensation
philosophy. Since the value of an option bears a direct relationship to the
Company's stock price, the Committee believes that options motivate Executive
Officers to manage the Company in a manner which will also benefit
shareholders. Options are granted at the current market price on the date of
grant.
The compensation package for the Company's Chief Executive Officer, Bernard
T. Marren, includes three elements: (i) base salary, (ii) performance bonus
and (iii) stock options. The base salary was determined through a comparison
of base salaries paid with respect to chief executive officers of other
publicly-traded semiconductor companies located in Northern California. The
performance bonus element has been established to provide variable bonus
compensation to the CEO based on the Company's actual operating results during
fiscal 1996 and thereafter, including both sales and net income measurements.
The stock option award is intended to provide long-term compensation to the
CEO based on the stock performance of the Company. The options vest over a
four (4) year period. In general, the Committee believes that the compensation
package of the CEO is closely tied to the financial performance of the Company
and has a high degree of variability based on such performance.
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Tor R. Braham
11
PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total shareholder
return, calculated on a dividend reinvested basis, from the effective date of
the initial public offering of the Company's Common Stock (May 13, 1993)
through the Last Fiscal Year end (December 31, 1997) for OPTi Inc., the CRSP
Index for Nasdaq Stock Market (U.S. Companies) (the "Nasdaq Index') and the
CRSP Index for Nasdaq Electronic Components Stocks (the "Nasdaq Electronic
Components Index"). The graph assumes that $100 was invested in the Company's
Common Stock on May 13, 1993 at the initial public offering price and in the
Nasdaq Index and the Nasdaq Electronic Components Index on May 13, 1993. Note
that historic stock price performance is not necessarily indicative of future
stock price performance.
COMPARISON OF FIVE YEAR-CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH FOR
OPTI INC.
APPEARS HERE
Prepared by the Center for Research in Security Prices
Produced on 04/01/98 including data to 12/31/97
CRSP TOTAL RETURNS
INDEX FOR: 5/13/93 12/31/93 12/30/94 12/29/95 12/31/96 12/31/97
- ------------------ ------- -------- -------- -------- -------- -------
- -
OPTi Inc. 100.0 108.6 155.6 80.2 50.6 67.3
Nasdaq Stock Market
(US Companies) 100.0 115.2 112.6 159.2 195.8 240.4
Nasdaq Electronic
Components Stocks
SIC 3670-3679 US &
Foreign 100.0 127.8 141.2 233.9 404.4 424.0
Notes:
A: The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B: The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C: If the monthly interval, based on the fiscal year-end, is not a trading
day, the preceding trading day is used.
D: The index level for all series was set to $100.0 on 05/13/93.
12
OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting. If any
other matters properly come before the meeting, it is the intention of the
persons named in the enclosed proxy to vote the shares they represent as the
Board of Directors may recommend.
It is important that your shares of stock be represented at the meeting,
regardless of the number of shares which you hold. You are, therefore, urged
to execute and return, at your earliest convenience, the accompanying proxy in
the envelope which has been enclosed.
FOR THE BOARD OF DIRECTORS
/s/ Michael Mazzoni
Michael Mazzoni
Secretary
Dated: July 31, 1998
13
DETACH HERE
PROXY
OPTi INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
JULY 31, 1998
The undersigned shareholder of OPTi Inc. (the "Company"), hereby appoints
Bernard T. Marren and Michael Mazzoni and each of them, with power of
substitution to each, true and lawful attorneys, agents and proxyholders of the
undersigned, and hereby authorizes them to represent and vote, as specified
herein, all the shares of Common Stock of the Company held of record by the
undersigned on July 7, 1998, at the 1998 Annual Meeting of Shareholders of the
Company to be held on Tuesday, August 25, 1998 at 3:30 p.m., local time, at the
Embassy Suites Hotel, 901 East Calveras Blvd., Milpitas, California 95035, and
any adjournments or postponements thereof.
- ----------- -----------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
- ----------- -----------
DETACH HERE
Please mark
votes as in
[X] this example
The shares represented by this proxy will be voted in the manner directed. In
the absence of any direction, the shares will be voted FOR Proposal 1 and 2.
the undersigned acknowledges receipt of the Notice of Annual Meeting of
Shareholders and the Proxy Statement dated July 31, 1998.
1. ELECTION OF DIRECTORS
Nominees: Bernard T. Marren, Stephen A. Dukker, Kapil K. Nanda and William
H. Welling
FOR WITHHELD
[_] [_]
MARK HERE
FOR ADDRESS
[_] ___________________________________________ CHANGE AND
For all nominees except as noted above NOTE BELOW [_]
FOR AGAINST ABSTAIN
2. APPOINTMENT OF INDEPENDENT AUDITORS [_] [_] [_]
To ratify the appointment of Ernst & Young LLP as
independent auditors of the Company for the fiscal
year ending December 31, 1998.
3. In their discretion, the proxyholders are authorized to vote upon such
other business as may properly come before the meeting, or any adjournments
or postponements thereof.
Please mark, sign and date this proxy and return it promptly whether you plan
to attend the meeting or not. If you do attend, you may vote in person if you
desire.
Please sign exactly as name appears hereon. Joint owners should each sign.
Trustees and others acting in a representative capacity should indicate the
capacity in which they sign and give their full title. If a corporation,
please sign in full corporate name by an authorized officer. If a partnership
please sign in partnership name by an authorized person.
Signature: _______________ Date: _______ Signature: ______________ Date: _______