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SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material under Rule 14a-12
QLOGIC CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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QLOGIC CORPORATION
26600 LAGUNA HILLS DRIVE
ALISO VIEJO, CA 92656
(949) 389-6000
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 28, 2001
To the Stockholders of QLOGIC CORPORATION:
You are cordially invited to attend the Annual Meeting of Stockholders of
QLogic Corporation, a Delaware corporation (the "Company"), which will be held
at the Sutton Place Hotel, 4500 MacArthur Boulevard, Newport Beach, California,
at 10:00 a.m., Pacific Daylight Time, on Tuesday, August 28, 2001, to consider
and act upon the following matters, all as more fully described in the
accompanying Proxy Statement which is incorporated herein by this reference:
1. To elect a board of six directors to serve until the next Annual Meeting
of the Company's stockholders and until their successors have been
elected and qualified; and
2. To approve and ratify an amendment to the QLogic Corporation Stock
Awards Plan ("Awards Plan") to increase the maximum number of shares
subject thereto by 2,000,000 from 22,800,000 to 24,800,000; and
3. To approve and ratify an amendment to the Non-Employee Director Stock
Option Plan ("Director Plan") to increase the maximum number of shares
subject thereto by 200,000 from 1,800,000 to 2,000,000; and
4. To approve and ratify an amendment to the Director Plan to extend the
expiration date of the Director Plan from December 31, 2001 to December
31, 2006; and
5. To ratify the selection of KPMG LLP as the Company's independent public
accountants for fiscal year 2002; and
6. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Stockholders of record of the Company's common stock at the close of
business on June 29, 2001, the record date fixed by the Board of Directors, are
entitled to notice of, and to vote at, the meeting.
THOSE WHO CANNOT ATTEND ARE URGED TO SIGN, DATE, AND OTHERWISE COMPLETE THE
ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. ANY STOCKHOLDER
GIVING A PROXY HAS THE RIGHT TO REVOKE IT ANY TIME BEFORE IT IS VOTED.
BY ORDER OF THE BOARD OF DIRECTORS
Michael R. Manning
Secretary
Aliso Viejo, California
July 16, 2001
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QLOGIC CORPORATION
26600 LAGUNA HILLS DRIVE
ALISO VIEJO, CA 92656
(949) 389-6000
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PROXY STATEMENT
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APPROXIMATE DATE PROXY MATERIAL FIRST SENT TO STOCKHOLDERS:
JULY 18, 2001
The following information is provided in connection with the solicitation
of proxies for the Annual Meeting of Stockholders of QLogic Corporation, a
Delaware corporation (the "Company"), to be held at the Sutton Place Hotel, 4500
MacArthur Boulevard, Newport Beach, California, at 10:00 a.m., Pacific Daylight
Time, on Tuesday, August 28, 2001, and adjournments thereof (the "Meeting"), for
the purposes stated in the Notice of Annual Meeting of Stockholders preceding
this Proxy Statement.
SOLICITATION AND REVOCATION OF PROXIES
A FORM OF PROXY IS BEING FURNISHED HEREWITH BY THE COMPANY TO EACH
STOCKHOLDER AND, IN EACH CASE, IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE COMPANY FOR USE AT THE MEETING. The entire cost of soliciting these
proxies will be borne by the Company. The Company may pay persons holding shares
in their names or the names of their nominees for the benefit of others, such as
brokerage firms, banks, depositaries, and other fiduciaries, for costs incurred
in forwarding soliciting materials to their principals. The Company has retained
Georgeson Shareholder to deliver soliciting materials to such record holders for
distribution by them to their principals and to assist the Company in collecting
proxies from such holders. The cost of these services, excluding out-of-pocket
expenses, is not expected to exceed $7,500. Members of the Management of the
Company may also solicit some stockholders in person, or by telephone, telegraph
or telecopy, following solicitation by this Proxy Statement, but will not be
separately compensated for such solicitation services.
Proxies duly executed and returned by stockholders and received by the
Company before the Meeting will be voted FOR the election of all six of the
nominee-directors specified herein, FOR the approval of an increase to the
number of shares under the Awards Plan, FOR the approval of an increase to the
number of shares under the Director Plan, FOR the approval to extend the
expiration date of the Director Plan, and FOR the ratification of the selection
of KPMG LLP as the Company's independent public accountants for fiscal year
2002, unless a contrary choice is specified in the Proxy. Where a specification
is indicated as provided in the Proxy, the shares represented by the Proxy will
be voted and cast in accordance with the specification made. As to other
matters, if any, to be voted upon, the persons designated as proxies will take
such actions as they, in their discretion, may deem advisable. The persons named
as proxies were selected by the Board of Directors of the Company.
Under the Company's bylaws and Delaware law, shares represented by proxies
that reflect abstentions or "broker non-votes" (shares held by a broker or
nominee which are represented at the Meeting, but with respect to which such
broker or nominee is not empowered to vote on a particular proposal) will be
counted as shares that are present at the Meeting for purposes of determining
the presence of a quorum, but only shares voted "For," "Against" or "Abstain"
are treated as shares "present and entitled to vote" at the Meeting with respect
to such matter. Any shares represented at the Meeting but not voted (whether by
abstention, broker non-vote or otherwise) or voted against a nominee will have
no impact in the election of directors, except to the extent that the failure to
vote for an individual results in six other individuals receiving a larger
number of votes. Any shares represented at the Meeting but not voted (whether by
abstention, broker non-vote or otherwise) with respect to the proposals to
approve an increase to the number of shares under the Awards Plan, to approve an
increase to the number of shares under the Director Plan, to approve an
extension to the expiration date of the Director Plan, or to ratify the
selection of KPMG LLP as the Company's independent
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public accountants will have no effect on the vote for such proposals except to
the extent the number of shares not voted causes the number of shares voted in
favor of such proposals not to equal or exceed a majority of the shares present
or represented and entitled to vote at the Meeting (in which case such proposals
would not be approved).
Your execution of the enclosed Proxy will not affect your right as a
stockholder to attend the Meeting and to vote in person. Any stockholder giving
a proxy has the right to revoke it at any time by either (i) a later-dated proxy
voted at the Meeting, (ii) a later-dated proxy or written revocation sent to and
received by the Secretary of the Company prior to the Meeting, or (iii)
attendance at the Meeting and voting in person.
VOTING SECURITIES
The Company has outstanding only common stock, of which 92,469,565 shares
were outstanding as of the close of business on June 29, 2001 (the "Record
Date"). Only stockholders of record on the books of the Company at the close of
business on the Record Date will be entitled to vote at the Meeting. Each share
of common stock is entitled to one vote.
Representation at the Meeting by the holders of a majority of the
outstanding common stock of the Company, either by personal attendance or by
proxy, will constitute a quorum.
STOCK OWNERSHIP OF MANAGEMENT
The following table sets forth as of June 22, 2001, information regarding
beneficial ownership of the Company's common stock by each director and each
executive officer and by all directors and executive officers as a group. As of
June 22, 2001, there were 92,462,691 shares of the Company's common stock
outstanding.
SHARES BENEFICIALLY
OWNED(1)
--------------------
NUMBER PERCENT
--------- -------
H.K. Desai(2)............................................... 979,069 1.1%
Larry R. Carter(3).......................................... 45,334 *
James R. Fiebiger(3)........................................ 21,333 *
Kenneth E. Hendrickson(4)................................... 153,314 *
Carol L. Miltner............................................ 5,400 *
George D. Wells(5).......................................... 36,481 *
Thomas R. Anderson(6)....................................... 216,444 *
Mark K. Edwards(7).......................................... 278,310 *
Lawrence F. Fortmuller, Jr.(8).............................. 226,085 *
Michael R. Manning(9)....................................... 124,492 *
Robert W. Miller(10)........................................ 95,451 *
David M. Race(11)........................................... 110,992 *
David Tovey(12)............................................. 411,488 *
All Directors and Executive Officers as a group (13
Persons).................................................. 2,704,193 2.9%
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* Less than 1% of the outstanding shares of common stock.
(1) Based upon 92,462,691 shares of common stock outstanding. Each named person
and all directors and executive officers as a group are deemed to be the
beneficial owners of shares of common stock that may be acquired within 60
days upon exercise of stock options. Accordingly, the number of shares and
percentages set forth next to the name of such person and all directors and
executive officers as a group include the shares of common stock issuable
upon stock options exercisable within 60 days. However, the shares of
common stock so issuable upon such exercise by any such persons are not
included in calculating the percentage of common stock beneficially owned
by any other stockholder.
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(2) Includes 491,374 shares which may be purchased pursuant to stock options
which are currently, or within the next 60 days will be, exercisable.
(3) Consists entirely of shares which may be purchased pursuant to stock
options which are currently, or within the next 60 days will be,
exercisable.
(4) Includes 21,334 shares which may be purchased pursuant to stock options
which are currently, or within the next 60 days will be, exercisable.
(5) Includes 32,667 shares which may be purchased pursuant to stock options
which are currently, or within the next 60 days will be, exercisable.
(6) Includes 69,224 shares which may be purchased pursuant to stock options
which are currently, or within the next 60 days will be, exercisable.
(7) Includes 159,000 shares which may be purchased pursuant to stock options
which are currently, or within the next 60 days will be, exercisable.
(8) Includes 35,617 shares which may be purchased pursuant to stock options
which are currently, or within the next 60 days will be, exercisable.
(9) Includes 12,750 shares held for the benefit of Mr. Manning's minor children
and 5,000 shares which may be purchased, pursuant to stock options which
are currently, or within the next 60 days will be, exercisable.
(10) Includes 62,290 shares which may be purchased pursuant to stock options
which are currently, or within the next 60 days will be, exercisable.
(11) Includes 87,770 shares which may be purchased pursuant to stock options
which are currently, or within the next 60 days will be, exercisable.
(12) Includes 167,758 shares which may be purchased pursuant to stock options
which are currently, or within the next 60 days will be, exercisable.
PRINCIPAL STOCKHOLDERS
The following table sets forth information regarding ownership of
outstanding shares of our common stock by those individuals or groups who have
advised us that they own more than five percent (5%) of such outstanding shares.
SHARES OWNED AS OF
DATE SET FORTH BELOW
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NAME OF BENEFICIAL OWNER NUMBER PERCENT(1)
------------------------ ---------- ----------
FMR Corp. .................................................. 9,085,910(2) 9.8%
82 Devonshire Street
Boston, MA 02109
Morgan Stanley Dean Witter & Co. ........................... 4,841,784(3) 5.2%
1585 Broadway
New York, NY 10036
Putnam Investments, LLC..................................... 10,094,970(4) 10.9%
One Post Office Square
Boston, Massachusetts 02109
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(1) Based upon 92,462,691 shares of the Company's common stock outstanding as of
June 22, 2001.
(2) Based on its Schedule 13G/A filed February 14, 2001, FMR Corp., a parent
holding company of investment companies with its principal offices at 82
Devonshire Street, Boston, MA 02109, FMR Corp. reports voting and
dispositive power as of February 14, 2001, as follows: Fidelity Management
Research Company, a wholly owned subsidiary of FMR Corp. is the beneficial
owner of 3,198,078 shares; Fidelity Management Trust Company, a wholly-owned
subsidiary of FMR Corp. is the beneficial owner of 4,564,311 shares;
Fidelity International Limited, Pembroke Hall, 42 Crowe Lane, Hamilton,
Bermuda is the beneficial owner of 1,323,521 shares. Edward C. Johnson 3d,
the Chairman of FMR Corp., and FMR Corp., through its control of Fidelity
Management Research Company and Fidelity Funds, each has sole
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dispositive power with respect to 3,198,078 shares, and sole voting power
with respect to such shares resides with the Fidelity Funds' Boards of
Trustees. Edward C. Johnson 3d and FMR Corp., through its control of
Fidelity Management Trust Company, each has sole dispositive power with
respect to 4,564,311 shares and sole voting power with respect to 4,545,711
shares and no voting power with respect to 18,600 shares. Strategic
Advisers, Inc., a wholly-owned subsidiary of FMR Corp. and an investment
adviser registered under Section 203 of the Investment Advisers Act of 1940,
provides investment advisory services to individuals and does not have sole
power to vote or direct the voting of shares of certain securities held for
clients and has sole dispositive power over such securities. As such, FMR
Corp.'s beneficial ownership may include shares beneficially owned through
Strategic Advisers, Inc. Edward C. Johnson 3d, the Chairman of FMR Corp. and
Abigail P. Johnson, a Director of FMR Corp., beneficially owns, and has sole
dispositive power over, 9,085,910 shares, and no sole voting power over such
securities through their ownership of voting common stock and the execution
of the stockholders' voting agreement with respect to FMR.
(3) Based on its Schedule 13G/A filed January 31, 2001, Morgan Stanley Dean
Witter & Co., an investment advisor with their principal offices at 1585
Broadway, New York, NY 10036, beneficially owns 4,841,784 shares of common
stock, including shared voting power over 4,790,984 shares and shared
dispositive power over 4,841,784 shares, as of January 31, 2001.
(4) Based on its Schedule 13G/A filed April 10, 2001, Putnam Investments, LLC.,
with their principal offices at One Post Office Square Boston, Massachusetts
02109, in a joint filing with Marsh & McLennan Companies, Inc., with their
principal offices at 1166 Avenue of the Americas, New York, New York 10036,
and Putnam Investment Management, LLC. and The Putnam Advisory Company,
LLC., each with their principal offices at One Post Office Square Boston,
Massachusetts 02109, reports as of April 10, 2001 as follows: Putnam
Investments, LLC., has shared voting power with respect to 222,940 of the
shares and shared dispositive power with respect to all of the shares;
Putnam Investment Management, LLC. beneficially owns, and has shared
dispositive power with respect to, 8,566,909 of the shares; and Putnam
Advisory Company, LLC. beneficially owns, and has shared dispositive power
with respect to 1,528,061 of the shares, and has shared voting power with
respect to 222,940 of the shares. Putnam Investments, LLC., Marsh & McLennan
Companies, Inc., Putnam Investment Management, LLC. and Putnam Advisory
Company, LLC. reports that no single person other than the persons filing
the Schedule 13G have an economic interest in the shares which relates to
more than 5% of the class of shares. In addition, Putnam Investments, LLC.
and Marsh & McLennan Companies, Inc. disclaim beneficial ownership of all of
the shares reported on the Schedule 13G and further reports that neither of
them have any power to vote or dispose of, or direct the voting or
disposition of, any of such shares.
PROPOSAL ONE
NOMINATION AND ELECTION OF DIRECTORS
The Company's directors are to be elected at each Annual Meeting of
Stockholders to serve until the next Annual Meeting of Stockholders or until
their successors are elected and qualified. The Board of Directors proposes the
election of six directors at the Meeting. Each of the nominated directors named
below was elected as a director of the Company at the Company's 2000 Annual
Meeting of Stockholders.
In the event that any of the nominees for director should become unable to
serve if elected, it is intended that shares represented by proxies which are
executed and returned will be voted for such substitute nominee(s) as may be
recommended by the Company's existing Board of Directors.
The six nominee-directors receiving the highest number of votes cast at the
Meeting will be elected as the Company's directors to serve until the next
Annual Meeting of Stockholders or until their successors are elected and
qualified. Proxies cannot be voted for more than six nominees for director.
Unless authority to vote for directors has been withheld in the Proxy, the
persons named in the enclosed Proxy intend to vote at the Meeting for the
election of the six nominee-directors presented below. Persons named as proxies
may not vote for the election of any person to the office of director for which
a bone fide nominee is not named in the Proxy Statement.
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The Company's bylaws provide that only persons who are nominated in
accordance with specified bylaw procedures shall be eligible for election as
directors. Nominations of persons for election to the Board of Directors may be
made at a meeting of stockholders by or at the direction of the Board of
Directors or by any stockholder entitled to vote for the election of directors
who complies with certain notice procedures set forth in the bylaws. Such
nominations must be made by written notice to the Secretary of the Company and
must be delivered or mailed and received at the principal executive offices of
the Company not less than 60 days or more than 90 days prior to the date of the
meeting. In the event that the first public disclosure of the date of the
meeting is made less than 70 days prior to the date of the meeting, notice by
the stockholder will be timely if received not later than the close of business
on the tenth day following the day on which such public disclosure was first
made. The stockholder's notice must set forth certain information concerning the
proposed nominee and the stockholder giving notice, as set forth in the bylaws.
The names and certain information concerning the six (6) nominees for
election as directors are set forth below.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THE
NOMINEES NAMED BELOW.
NOMINEE(1) POSITION(S) WITH THE COMPANY AGE
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H.K. Desai............................ Chairman of the Board, Chief Executive 55
Officer and President
Larry R. Carter(2).................... Director 58
James R. Fiebiger(2).................. Director 59
Kenneth E. Hendrickson(2)............. Director and Consultant 60
Carol L. Miltner(3)................... Director 58
George D. Wells(3).................... Director 66
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(1) The Company does not have a nominating committee of the Board of Directors.
The nominees for election as directors at the Meeting were selected by the
Board of Directors of the Company.
(2) Member of the Audit Committee of the Board of Directors of the Company,
currently consisting of Mr. Carter, Dr. Fiebiger and Mr. Hendrickson, none
of whom is an employee of the Company.
(3) Member of the compensation committee of the Board of Directors of the
Company, currently consisting of Ms. Miltner and Mr. Wells, neither of whom
is an employee of the Company.
Mr. Desai joined the Company in August 1995 as President and Chief
Technical Officer. Mr. Desai was subsequently promoted to President and Chief
Executive Officer and became a Director in January 1996, and became Chairman of
the Board in May 1999. From May 1995 to August 1995, Mr. Desai was Vice
President, Engineering (Systems Products) at Western Digital Corporation, a
manufacturer of disk drives. From July 1990 until May 1995, Mr. Desai served as
Director of Engineering, and subsequently Vice President of Engineering for
QLogic. Mr. Desai is also a board member of Microsemi Corporation, a supplier of
analog integrated circuits and power and signal discrete semiconductors, and
Lantronix Inc., a supplier of network devices that enable access over the
Internet.
Mr. Carter has served as a director since June 1999. Since January 1995 Mr.
Carter has worked for Cisco Systems, Inc., a computer networking products
company, most recently as Sr. Vice President of Finance and Administration,
Chief Financial Officer and Secretary. In July 2000, Mr. Carter was appointed to
Cisco Systems, Inc.'s Board of Directors. From July 1992 to January 1995, Mr.
Carter served as Vice President and Corporate Controller of Advanced Micro
Devices, Inc. Mr. Carter has also served as Chief Financial Officer for VLSI
Technology, Inc. and for SGS Thompson Microelectronics, Inc. Mr. Carter
currently serves as a member of the Board of Directors of Network Appliance,
Inc., a high performance network attached storage and access device company, and
eSpeed, Inc., a provider of business-to-business electronic marketplace
solutions.
Dr. Fiebiger has served as a director since February 2000. Since December
1999, Dr. Fiebiger has been Chairman and Chief Executive Officer of Lovoltech, a
start-up fabless semiconductor company specializing in
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low voltage devices. Dr. Fiebiger served as Vice Chairman of GateField
Corporation, a fabless semiconductor company, since February 1999, and served as
its President and Chief Executive Officer from June 1996 until February 1999.
From December 1987 to September 1993, he was President and Chief Operating
Officer of VLSI, now Philips Semiconductors, Inc. From October 1993 until June
1996, he was Managing Director and Chairman of Thunderbird Technologies, Inc., a
semiconductor technology licensing company. Dr. Fiebiger has also served as
Corporate Vice President and Assistant General Manager for Motorola
Semiconductor Sector. Dr. Fiebiger is a board member of Mentor Graphics, Artest
Corporation and Thunderbird Technologies.
Mr. Hendrickson has served as a director and a consultant since August
2000. Mr. Hendrickson served as the Chief Executive Officer and as a Director of
Ancor Communications, Incorporated from July 1997 to August 2000, and as their
Chairman of the Board from September 1997 until August 2000, when Ancor
Communications merged with QLogic. Mr. Hendrickson was Executive Vice President
and General Manager of the Microcomputer Products Group of Western Digital
Corporation, a manufacturer of disk drives, from March 1993 to June 1996.
Ms. Miltner has served as a director since February 1994. Ms. Miltner is
currently a senior partner at Impact LLC, a management consulting and seminar
firm, which she founded in February, 1999. In January, 2000, Ms. Miltner was
named Chief Executive Officer of the Global Technology Distribution Council, an
international forum of leaders representing some of the world's largest
technology distributors. From July 1991 to February, 1999 Ms. Miltner was
President of Motivation by Miltner.
Mr. Wells has served as a director since February 1994. Mr. Wells was
President and Chief Executive Officer of Exar Corporation, a manufacturer of
analog and mixed-signal integrated circuits, from June 1992 until he retired in
October 1996. Before joining Exar, Mr. Wells served as President and Chief
Operating Officer of LSI Logic, a manufacturer of HCMOS and BiCMOS application
specific integrated circuits, for seven years. Prior to 1999, he served as a
member of the Boards of Directors of Align Rite Corporation, a manufacturer of
photomasks, Johnson Matthey, a U.K. company involved with advanced materials
technology, and Exar Corporation.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
There were eight meetings of the Board of Directors of the Company during
the fiscal year ended April 2, 2001. The Board of Directors has a standing Audit
Committee and a Compensation Committee. The Compensation Committee held five
meetings and the Audit Committee held eight meetings during the last fiscal
year. Each of the directors of the Company attended 80% or more of the aggregate
of the total number of meetings of the Board of Directors held during the period
in which he or she was a director and the total number of meetings held by all
committees of the Board of Directors on which he or she served during such
period.
The Audit Committee. The Audit Committee reviews, acts on, and reports to
the Board of Directors with respect to auditing and accounting matters,
including the selection of the Company's independent public accountants, the
scope of the annual audits, the nature of nonaudit services, fees to be paid to
the independent public accountants, the performance of the Company's independent
public accountants, and the accounting practices of the Company.
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors reviews the financial
reporting process, the system of internal controls, the audit process and the
process for monitoring compliance with laws and regulations. Each of the Audit
Committee members satisfies the definition of an "independent director" under
the applicable rules of The Nasdaq National Market. The Board of Directors
adopted a written charter for the Audit Committee on February 2001, which is
attached to this Proxy Statement as Appendix 1. The Company operates with a
April 2 to April 1 fiscal year. The Audit Committee met eight times during the
2001 fiscal year.
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The Audit Committee has reviewed the Company's audited financial statements
and discussed such statements with management. The Audit Committee has discussed
with KPMG LLP, the Company's independent auditors, during the 2001 fiscal year
and in early 2001, the matters required to be discussed by Statement of Auditing
Standards No. 61 (Communication with Audit Committees), as amended.
The Audit Committee received from KPMG LLP the written disclosures required
by Independence Standards Board Standard No. 1 and discussed with them their
independence. Based on the review and discussions noted above, the Audit
Committee recommended to the Board of Directors that the Company's audited
financial statements be included in the Company's Annual Report on Form 10-K for
the fiscal year ended April 1, 2001, and be filed with the U.S. Securities and
Exchange Commission (the "SEC").
This report of the Audit Committee 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, as amended (the
"Securities Act"), or the Securities Exchange Act of 1934, as amended (the
"Exchange Act" and together with the Securities Act, the "Acts"), except to the
extent that the Company specifically incorporates this information by reference,
and shall not otherwise be deemed filed under such Acts.
Respectfully submitted:
Audit Committee
Larry R. Carter
James R. Fiebiger
Kenneth E. Hendrickson
The Compensation Committee. The Compensation Committee reviews the
performance of the executive officers of the Company and reviews the
compensation programs for other key employees, including salary and cash
incentive payment levels and option grants under the Awards Plan. There is no
standing nominating committee or other committee performing a similar function.
COMPENSATION OF DIRECTORS
Directors' Fees. For service on the Board of Directors, directors who are
not employees of the Company receive a quarterly retainer of $6,000 plus $1,000
for each meeting of the Board of Directors in excess of five per year, and
reimbursement for travel expenses. In addition, the chairmen of the audit and
compensation committees receive an additional quarterly retainer of $1,000.
Directors who are employees of the Company receive no additional compensation
for serving on the Board of Directors. Directors are entitled to reimbursement
for out-of-pocket expenses in connection with attendance at board and committee
meetings.
Stock Options. On January 12, 1994, the Board of Directors of the Company
adopted the QLogic Corporation Non-Employee Director Stock Option Plan (the
"Director Plan") under which shares of Common Stock of the Company may be issued
pursuant to the exercise of stock options granted under the Director Plan to
directors who are not employees of the Company or any of its subsidiaries. The
Director Plan was approved by Emulex Corporation ("Emulex"), the former parent
corporation and sole stockholder of the Company, prior to the distribution of
all of the Company's outstanding Common Stock by Emulex to the then stockholders
of Emulex on February 28, 1994, as a result of which the Company became a
separate publicly held company.
In June 1996, the Board of Directors adopted, and in August 1996 the
stockholders approved, amendments to the Director Plan to (i) extend the
termination date of the Director Plan by five years to December 31, 2001, (ii)
increase the number of shares of Common Stock subject to the Director Plan by
600,000, (iii) provide for initial grants to new directors of options to
purchase 64,000 shares of Common Stock, and (iv) provide for annual grants to
each non-employee director (other than the Chairman of the Board) of options to
purchase 24,000 shares of Common Stock, and annual grants to a non-employee
Chairman of the Board of options to purchase 40,000 shares of Common Stock. In
June 1999, the Board of
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Directors adopted, and in September 1999 the stockholders approved, an amendment
to the Director Plan to increase annual grants of options to purchase shares of
common stock from 24,000 to 32,000 for each non-employee director (other than
the Chairman of the Board), and from 40,000 to 54,000 for a non-employee
Chairman of the Board. In June 2000, the Board of Directors adopted, and in
September 2000 the stockholders approved, a further amendment to the Director
Plan to increase the number of shares subject to the Director Plan by 200,000
from 1,600,000 to 1,800,000. On June 13, 2001, the Board of Directors further
amended the Director Plan to (i) decrease the number of options to purchase
shares of common stock automatically granted annually to each non-employee
director (other than the Chairman of the Board) from 32,000 shares to 20,000
shares; (ii) decrease the number of options to purchase shares of common stock
automatically granted to new non-employee directors upon initial election to the
Board of Directors from 64,000 shares to 40,000 shares; and (iii) provide that
in the event of a stock dividend, stock split or like change in the
capitalization of the Company occurring after June 13, 2001, the number of
options to purchase shares of common stock automatically granted pursuant to the
terms of the Director Plan to each non-employee director following such event
shall not be correspondingly increased. Stockholder approval was not required
for these amendments.
As amended to date, a total of 1,800,000 shares of Common Stock have been
reserved for issuance under the Director Plan. As of June 15, 2001, an aggregate
of 904,663 shares of Common Stock had been issued upon exercise of stock options
granted under the Director Plan, options for a total of 405,999 shares were
outstanding and the remaining 489,338 shares were available for grant. All stock
options granted under the Director Plan have 10-year terms, and become
exercisable as to one-third of the shares subject to the option on each
anniversary of the date the option is granted if the director to whom the option
is granted is still a director of the Company on such anniversary. All share
quantities described above have been restated to reflect the Company's stock
splits and stock dividends to date.
The Director Plan provisions discussed above do not reflect the amendments
to the Director Plan adopted by the Board of Directors on June 13, 2001 and
subject to approval at this Meeting, which are described in more detail in
Proposals Three and Four of this Proxy Statement.
Other Compensation. The Company has entered into a consulting agreement
with Mr. Hendrickson which provides for a one-year term, commencing on August 1,
2000. Under the consulting agreement, as amended, Mr. Hendrickson received a
lump-sum bonus of $500,000 in recognition of his efforts in assisting in
consummating the Company's merger with Ancor Communications, Incorporated, and
will be paid a consulting fee of $250,000, annualized and payable in
installments over the term of the consulting agreement. Mr. Hendrickson has also
agreed not to compete with or solicit employees from the Company or its
subsidiaries during the term of his consultancy and for a period of one year
after termination.
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EXECUTIVE OFFICERS
The following table and paragraphs set forth the names of and certain
information concerning the executive officers of the Company as of June 29,
2001:
NAME POSITION(S) WITH THE COMPANY AGE
---- ---------------------------- ---
H.K. Desai................................ Chairman of the Board, Chief Executive 55
Officer and President
Thomas R. Anderson........................ Vice President and Chief Financial Officer 57
Mark K. Edwards........................... Sr. Vice President and General Manager, 43
Systems Groups
Lawrence F. Fortmuller, Jr. .............. Vice President, Customer Services 52
Robert W. Miller.......................... Vice President, Operations 45
David M. Race............................. Vice President and General Manager, 45
Management Products
David Tovey............................... Vice President and General Manager, 56
Peripheral Products
Michael R. Manning........................ Secretary and Treasurer 47
For information on the business background of Mr. Desai, see "Nomination
and Election of Directors" above.
Mr. Anderson joined the Company in July 1993 as Vice President and Chief
Financial Officer. Prior to joining the Company, Mr. Anderson was Executive Vice
President, Chief Operating Officer and Chief Financial Officer of HIARC, a
software startup company. From October 1990 to December 1992, Mr. Anderson was
Corporate Senior Vice President and Chief Financial Officer of Distributed Logic
Corporation, a manufacturer of tape and disk controllers and computer
subsystems.
Mr. Edwards joined the Company in September 1996 as Vice President, Sales
and Corporate Marketing, and is currently Sr. Vice President and General
Manager, Systems Groups. Prior to joining the Company, Mr. Edwards served as
Vice President -- Sales and Marketing for the Storage Systems Division of Unisys
Corporation, from August 1994 to September 1996, and as Director -- European
Channels from August 1993 through August 1994. Prior to joining Unisys, Mr.
Edwards served as Regional Sales Manager for Zitel Corporation from April 1991
through August 1993. Prior to joining Zitel, Mr. Edwards held a sales and
management position with Digital Equipment Corporation. In March 2001, Mr.
Edwards was appointed to the Board of Directors of Broadband Storage, Inc., a
network storage solutions provider.
Mr. Fortmuller joined the Company in October 1996 as Vice President and
General Manager, Computer Systems, and is currently Vice President, Customer
Services. Prior to joining the Company, Mr. Fortmuller held various positions
with AST Research, Inc., a manufacturer of microprocessor-based systems, for
nine years, including Vice President -- Americas Marketing from September 1995
to October 1996; Vice President and General Manager -- Server Business Unit from
August 1994 through September 1995; Director of Product Marketing from 1990
through August 1994; and various product marketing positions. Prior to joining
AST Research, Inc., Mr. Fortmuller held various product marketing positions with
Data Card Corporation, MSI Data Corporation and Litton Industries, Inc.
Mr. Miller joined Emulex, a network product manufacturer (QLogic's former
parent company) in June 1990 as a staff engineer and was named Engineering
Manager in August 1992. After joining the Company in 1993, Mr. Miller was named
Director of Engineering in July 1994 and Director of Operations in August 1995.
Mr. Miller was subsequently promoted to Vice President of Operations in July
1997.
Mr. Race joined the Company in August 1998 as Vice President and General
Manager, Management Products. Mr. Race was Co-founder and President of Silicon
Design Resources, Inc. (SDR) from January 1996 until August 1998, when SDR was
acquired by QLogic. From January 1996 to August 1998, Mr. Race also held the
position of Director of Sales at Software.com. From March 1989 to January 1996,
Mr. Race held various positions at Distributed Processing Technology, including
Vice President, Strategic Planning.
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Mr. Tovey has served as Vice President and General Manager, Peripheral
Products since October 1996. From April 1994 to October 1996, Mr. Tovey served
as Vice President, Marketing of the Company. From March 1985 to April 1994, Mr.
Tovey held various positions in the Disk Products Division of Toshiba America
Information Systems, a computer system and disk drive manufacturer, including
Director of Technology Planning and Vice President -- HDD Marketing. Prior to
1985, Mr. Tovey held various marketing and sales management positions with
Unisys Corporation and engineering positions with Ferranti, Ltd. in the U.K.
Mr. Manning joined the Company in June 1993 as Treasurer and Secretary.
Previously, Mr. Manning held various positions at Emulex, including Senior
Director and Treasurer from April 1991 with the additional role of Secretary in
1992. Mr. Manning joined Emulex in July 1983 as Tax Director. Prior to joining
Emulex, Mr. Manning was a Tax Manager at KPMG LLP, independent certified public
accountants.
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EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table sets forth compensation earned for the three fiscal
years ended April 1, 2001 by our Chief Executive Officer and the four next
highest paid executive officers (the "Named Officers") at April 1, 2001.
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
----------------------------
OTHER ALL OTHER
ANNUAL STOCK OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMP.(1) GRANTS(2) ($)(3)
--------------------------- ---- --------- -------- -------- ------------- ------------
H.K. Desai......................... 2001 456,926 442,000 -0- 450,000 shs. 6,010
Chairman of the Board, CEO, 2000 373,434 400,000 -0- 632,000 shs. 11,620
President, and Director(4) 1999 316,224 334,000 -0- 280,000 shs. 11,258
Thomas R. Anderson................. 2001 221,999 140,000 -0- 80,000 shs. 6,971
V.P. and Chief Financial 2000 206,875 146,550 -0- 80,000 shs. 7,443
Officer 1999 179,369 120,000 -0- 80,000 shs. 6,468
Mark K. Edwards.................... 2001 215,190 140,000 -0- 95,000 shs. 5,971
Senior V.P. and General 2000 192,928 136,500 -0- 60,000 shs. 6,309
Manager -- Systems Groups 1999 165,625 120,000 -0- 60,000 shs. 5,447
Lawrence F. Fortmuller, Jr. ....... 2001 181,995 95,000 -0- 30,000 shs. 5,969
V.P. Customer Services 2000 186,342 115,000 -0- 40,000 shs. 6,355
1999 170,667 110,000 -0- 60,000 shs. 6,020
David Tovey........................ 2001 225,208 125,000 -0- 55,000 shs. 7,497
V.P. and General Manager -- 2000 194,078 137,100 -0- 80,000 shs. 6,948
Peripheral Products 1999 168,660 120,000 -0- 60,000 shs. 6,135
- ---------------
(1) Perquisites and other personal benefits did not in the aggregate equal or
exceed the lesser of $50,000 for any named individual or 10% of the total of
annual salary and bonus reported in this table for such person.
(2) The amounts in the table represent shares of the Company's common stock
covered by stock options granted to the named individual under the Awards
Plan. Share quantities for all fiscal years presented have been restated to
reflect the Company's stock splits.
(3) This column includes The Company's contributions to the QLogic Corporation
Retirement Savings Plan and group term life insurance premiums paid with
respect to the named individual.
(4) Mr. Desai served as the Company's Vice President of Engineering from
February 1994, when the Company became a separate publicly-held corporation,
until his resignation on May 1, 1995. Mr. Desai was rehired on August 4,
1995 as President and Chief Technical Officer. Mr. Desai was subsequently
appointed as the Company's President and Chief Executive Officer and became
a director effective January 1996, and became Chairman of the Board in May
1999.
KEY EMPLOYEE RETENTION AGREEMENT
The Company has previously entered into an agreement with Mr. Desai under
which Mr. Desai would be entitled to receive the following payments and benefits
in the event of termination of his employment by the Company without cause or by
Mr. Desai because of a demotion within two years after a change in control of
the Company: (i) a severance payment equal to the present value of two times the
sum of Mr. Desai's annual salary plus the highest annual average of any two of
his last three annual bonuses; (ii) continuation for two years following
termination of employment of his health, life insurance, disability income, tax
assistance, and executive automobile benefits (reduced to the extent similar
benefits are received by him from another employer); and (iii) acceleration of
vesting of his right to exercise his stock options based on the length of his
continued employment following the grant of the option by one year upon the
change in control of the Company and full acceleration of vesting of such
exercise right in the event of termination of his employment without cause or
because of a demotion within two years after the change in control.
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OPTION GRANTS DURING FISCAL 2001
The following table sets forth information on grants of stock options
pursuant to the Awards Plan during the fiscal year ended April 1, 2001, to the
Named Officers:
OPTION GRANTS IN FISCAL YEAR 2001
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
---------------------------------------------------- VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM($)(4)
OPTIONS EMPLOYEES IN PRICE EXPIRATION -----------------------
NAME GRANTED(1) FISCAL YEAR(2) ($/SHARE) DATE(3) 5% 10%
---- ---------- -------------- --------- ---------- ---------- ----------
H.K. Desai................ 450,000 17.26 63.9844 6/21/10 18,107,750 45,888,595
Thomas R. Anderson........ 80,000 3.07 63.9844 6/21/10 3,219,156 8,157,972
Mark K. Edwards........... 80,000 3.07 63.9844 6/21/10 3,219,155 8,157,972
15,000 0.58 85.0000 10/13/10 801,841 2,032,022
Lawrence F. Fortmuller,
Jr. .................... 30,000 1.15 63.9844 6/21/10 1,207,183 3,059,240
David Tovey............... 55,000 2.11 63.9844 6/21/10 2,213,169 5,608,606
- ---------------
(1) The amounts in the table represent shares of the Company's common stock
covered by stock options granted to the named individual under the Awards
Plan. Each option becomes exercisable on a cumulative basis as to 25% of the
option shares one year after the date of grant and as to an additional 6.25%
of the option shares each three month interval thereafter. All share
quantities have been restated to reflect the Company's stock splits and
stock dividends to date.
(2) Options to purchase an aggregate of 2,606,757 shares of common stock were
granted to employees, including the Named Officers, during the fiscal year
ended April 1, 2001.
(3) Options granted have a term of 10 years, subject to earlier termination in
certain events related to termination of employment.
(4) These columns present hypothetical future values of the stock obtainable
upon exercise of the option net of the option's exercise price, assuming
that the market price of the Company's common stock appreciates at a 5% and
10% compound annual rate over the ten year term of the options. The 5% and
10% rates of stock price appreciation are presented as examples pursuant to
the rules and regulations of the SEC and do not necessarily reflect our
estimate or projection of the Company's future stock price performance. The
potential realizable values presented are not intended to indicate the value
of the options.
OPTION EXERCISES IN FISCAL 2001 AND YEAR-END OPTION VALUES
The following table sets forth information concerning stock options which
were exercised during, or held at the end of, fiscal 2001 by the Named Officers:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES(1)
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
ACQUIRED AT FISCAL YEAR END AT FISCAL YEAR END($)(2)
ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED($)(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- -------------- ----------- ------------- ----------- -------------
H.K. Desai................ 138,888 11,228,330 301,868 925,506 2,925,733 1,703,781
Thomas R. Anderson........ 21,572 1,989,418 39,224 149,992 327,893 445,170
Mark K. Edwards........... 10,000 1,130,225 131,500 147,500 2,140,664 333,894
Lawrence F. Fortmuller,
Jr. .................... 80,350 7,519,410 25,854 71,246 148,806 333,913
David Tovey............... 21,000 1,222,015 145,260 118,740 2,146,208 333,806
- ---------------
(1) Share quantities for all transactions have been restated to reflect the
Company's stock splits and stock dividends to date.
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(2) Market value of underlying securities at exercise date or year end, as the
case may be, minus the exercise or base price of "in-the-money" options. The
closing sale price for the Company's common stock as of March 30, 2001 on
The Nasdaq National Market was $22.50.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current Compensation Committee of the Company consists of Mr. Wells and
Ms. Miltner, neither of whom is now, or was at any time during the last
completed fiscal year of the Company, an officer or employee of the Company.
During fiscal year 2001, no executive officer of the Company served as a member
of the Compensation Committee (or its equivalent) or as a director of any entity
whose executive officers served on either the Compensation Committee or the
Board of Directors of the Company.
REPORT OF COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors makes this report on
executive compensation pursuant to Item 402 of Regulation S-K. Notwithstanding
anything to the contrary set forth in any of the Company's previous filings
under the Securities Act or the Exchange Act that might incorporate future
filings, including this Proxy Statement, in whole or in part, this report and
the graph which follows this report shall not be incorporated by reference into
any such filings, and such information shall be entitled to the benefits
provided in Item 402(a)(9).
The Compensation Committee reviews the performance of the executives of the
Company. It makes recommendations to the Board of Directors as to the
compensation of the Chief Executive Officer of the Company and reviews and
determines the compensation programs for other key employees, including salary
and cash incentive payment levels and stock awards under the Awards Plan.
Compensation Policies and Philosophy. The Company's executive compensation
policies are designed to attract, retain and reward executives who contribute to
the Company's success, to provide economic incentives for executives to achieve
the Company's business objectives by linking the executives' compensation to the
performance of the Company, to strengthen the relationship between executive pay
and stockholder value and to reward individual performance. The Company uses a
combination of base salary, cash incentive payments and stock awards to achieve
the aforementioned objectives.
In carrying out these objectives, the Compensation Committee considers a
number of factors, which include the level and types of compensation paid to
executives in similar positions by comparable companies. Some, but not all, of
the comparable companies are included in the Stockholder Return Performance
Presentation set forth immediately following this Report of the Compensation
Committee. In addition, the Compensation Committee evaluates corporate
performance by looking at factors such as performance relative to competitors,
performance relative to business conditions, and the success of the Company in
meeting its financial objectives. The Compensation Committee also reviews the
individual performance of each executive, including a review of the ability of a
given executive to meet individual performance objectives, demonstration of job
knowledge and skills, and the ability to work with others toward the achievement
of the Company's goals.
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), establishes a limitation on the deductibility of compensation payable
in any particular tax year to the Chief Executive Officer and the four most
highly compensated other executive officers. The Company has not paid, and does
not foresee any payment authorized in fiscal 2001 of, any compensation that
would be non-deductible under Section 162(m).
Components of Compensation. Executives' salaries are established in
relation to a range of salaries for comparable positions among a peer group of
other technology companies of comparable size and complexity. The Company seeks
to pay its executives salaries that are commensurate with the qualifications,
duties and responsibilities and that are competitive in the marketplace. In
general, the Company attempts to set executive compensation that equals or
exceeds the 50th percentile of salaries paid to executives of the
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Company's peer group of corporations. In making its annual salary
recommendations, the Compensation Committee looks at the Company's financial
position and performance, the contribution of the individual executive during
the prior fiscal year in helping to meet the Company's financial and business
objectives as well as the executives' performance of their individual
responsibilities.
Executives' annual cash incentive payments are used to provide executives
with financial incentives to meet annual performance targets of the Company.
Performance targets and cash incentive payment recommendations for executives
other than principal executives are proposed by the management of the Company's
principal operating divisions, reviewed and, when appropriate, revised by the
Compensation Committee and approved by the Board of Directors. Personal goals
and cash incentive payment recommendations for the principal executives of the
Company are recommended by the Compensation Committee and approved by the Board
of Directors.
The Compensation Committee believes that equity ownership by executives
provides incentives to build stockholder value and align the interests of
executives with the stockholders. Upon hiring executives, the Compensation
Committee typically recommends stock option or stock awards grants to the
officers under the Awards Plan, subject to applicable vesting periods.
Thereafter, the Compensation Committee periodically considers awarding
additional grants under the Awards Plan. The Compensation Committee believes
that these additional grants provide incentives for executives to remain with
the Company. Stock options and awards generally have value only if the price of
the Company's common stock increases over the exercise or grant price. The size
of options or awards is usually based upon factors such as comparable equity
compensation offered by other technology companies, the seniority of the
executive and the contribution that the executive is expected to make to the
Company. In determining the size of the periodic grants, the Compensation
Committee considers prior grants to the executive, the executive's performance
during the current fiscal year and his or her expected contributions during the
succeeding fiscal year.
Compensation of the Principal Executive Officer. The Compensation Committee
reviews the performance of the principal executive officer of the Company, as
well as other executives of the Company annually. As the principal executive
officer of the Company, Mr. Desai's compensation was determined based on a
subjective consideration of the various factors discussed above, including the
performance of the Company, the individual performance of Mr. Desai, a review of
the compensation packages of executives in technology companies similar in size
and complexity to the Company, and Mr. Desai's performance compared to various
objective and subjective goals established by the Board of Directors. It is the
practice of the Board of Directors to set performance goals at the commencement
of a fiscal year, to give a performance appraisal to the Chief Executive Officer
at the end of the fiscal year, and to set payment of incentive payments based on
the Chief Executive's performance as measured against such objectives.
Respectfully submitted,
Compensation Committee:
George D. Wells
Carol L. Miltner
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STOCKHOLDER RETURN PERFORMANCE PRESENTATION
The graph below compares the cumulative total stockholder return on the
Company's common stock with the cumulative total return on the Nasdaq Composite
Index and the Nasdaq Computer Index for the period beginning April 1, 1996 and
ended April 1, 2001.
COMPARISON OF CUMULATIVE TOTAL RETURN*
QLOGIC CORPORATION COMMON STOCK, NASDAQ COMPOSITE INDEX,
NASDAQ COMPUTER INDEX AND STANDARD & POOR'S 500 STOCK INDEX
COMPARISON GRAPH
[PERFORMANCE GRAPH]
- ---------------------------------------------------------------------------------------
3/31/96 3/30/97 3/29/98 3/28/99 4/2/00 4/1/01
- ---------------------------------------------------------------------------------------
QLOGIC CORPORATION 100.00 237.14 428.57 1,385.71 12,308.57 2,057.14
- ---------------------------------------------------------------------------------------
NASDAQ COMPOSITE
INDEX 100.00 111.15 168.47 227.60 423.35 169.48
- ---------------------------------------------------------------------------------------
NASDAQ COMPUTER
INDEX 100.00 128.36 203.46 343.60 711.01 233.74
- ---------------------------------------------------------------------------------------
STANDARD & POOR'S
500 STOCK INDEX 100.00 119.82 177.34 210.07 247.77 194.06
- ---------------------------------------------------------------------------------------
- ---------------
* Assumes that the value of the investment in the Company's common stock and
each index was $100 on March 31, 1996, and reinvestment of dividends into the
same security.
PROPOSAL TWO
AMENDMENT OF THE STOCK AWARDS PLAN TO INCREASE
THE MAXIMUM NUMBER OF SHARES ISSUABLE UNDER THE PLAN
At the Meeting, the stockholders of the Company will be asked to approve an
amendment to the QLogic Corporation Stock Awards Plan (the "Awards Plan") to
increase the maximum number of shares of common stock of the Company available
for awards granted under the Awards Plan by 2,000,000 shares, from 22,800,000
shares to 24,800,000 shares.
In January 1994, the Company's Board of Directors adopted the Awards Plan
and the Awards Plan was approved by Emulex, the Company's then sole stockholder.
In June 1995, the Board of Directors adopted an
15
18
amendment to the Awards Plan to increase the maximum number of shares of common
stock available for awards granted under the Awards Plan from 8,800,000 shares
to 10,800,000 shares, and the stockholders approved this amendment at the Annual
Meeting held in August 1995. In August 1997, the Board of Directors adopted an
further amendment to the Awards Plan to further increase the maximum number of
shares of common stock available for awards granted under the Awards Plan from
10,800,000 shares to 13,800,000 shares, and to establish a maximum number of
derivative securities that may be granted to any one participant in any calendar
year at 2,000,000, and the stockholders approved this further amendment at the
Annual Meeting held in August 1997. In June 1999, the Board of Directors adopted
a further amendment to the Awards Plan to further increase the maximum number of
shares of common stock available for awards granted under the Awards Plan from
13,800,000 to 19,800,000 shares, and the stockholders approved this further
amendment at the Annual Meeting held in August 1999. All share quantities
described above have been restated to reflect the Company's stock splits and
stock dividends to date. In June 2000, the Board of Directors adopted a further
amendment to the Awards Plan to further increase the maximum number of shares of
common stock available for awards granted under the Awards Plan from 19,800,000
shares to 22,800,000 shares, and the stockholders approved this further
amendment at the Annual Meeting held in September 2000.
THE AMENDMENT
On June 13, 2001, the Board of Directors adopted a further amendment to the
Awards Plan to further increase the maximum number of shares under the Awards
Plan by 2,000,000, from 22,800,000 shares to 24,800,000 shares, subject to
stockholder approval.
PURPOSE OF THE AWARDS PLAN
The purpose of the Awards Plan is to advance the interests of the Company
by encouraging employees who will largely be responsible for the long-term
success and development of the Company to acquire and retain an ownership
interest in the Company. The Awards Plan is also intended to provide flexibility
to the Company in attracting and retaining key employees and stimulating their
efforts on behalf of the Company. The Awards Plan is designed to provide a
competitive and balanced incentive and reward program for participants.
REASONS FOR AMENDMENT OF THE AWARDS PLAN
The amendment to the Awards Plan to increase the number of shares available
thereunder was adopted by the Board of Directors and is recommended for approval
by the Company's stockholders because, due to overall revenue growth, including
by acquisition, the number of employees eligible to participate in the Awards
Plan has increased substantially. The Board of Directors believes that option
grants or other awards under the Awards Plan play an important role in the
Company's ability to attract, motivate and retain employees of outstanding
ability and to reward employees for outstanding performance; if the Company were
unable to grant additional options under the Awards Plan, the Company's future
hiring, promotion and operating plans could be negatively impacted.
DESCRIPTION OF THE AWARDS PLAN
Awards under the Awards Plan may include incentive stock options,
nonqualified stock options, stock appreciation rights, restricted stock awards,
unrestricted stock awards, deferred stock awards, performance unit awards and
other stock-based awards. As of June 15, 2001, of the 22,800,000 shares
authorized under the Awards Plan, an aggregate of 9,041,656 shares of Common
Stock had been issued upon exercise of stock options granted under the Awards
Plan, stock options to purchase an aggregate of 7,691,649 shares were
outstanding under the Awards Plan and an aggregate of 6,066,695 shares were
available for future grants of options or other awards.
The principal features of the Awards Plan are summarized below, but the
summary is qualified in its entirety by reference to the Awards Plan itself.
Copies of the Awards Plan and of the proposed amendment
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19
will be available at the Annual Meeting and can be obtained by writing to the
Corporate Secretary, QLogic Corporation, 26600 Laguna Hills Drive, Aliso Viejo,
California 92656.
Eligibility. Employees of the Company and its subsidiaries, if any, as
selected by the Plan Administrator (defined below), are eligible to receive
awards under the Awards Plan. As of June 15, 2001, substantially all employees
were eligible to receive awards under the Awards Plan.
Administration. The Awards Plan is administered by the Plan Administrator,
which has broad discretion in determining the type and specific terms and
provisions of the various awards described below. The Awards Plan provides that
the Plan Administrator will be the Board of Directors of the Company, if all
members of the Board of Directors are "disinterested persons," within the
meaning of SEC regulations, who are ineligible to receive awards under the
Awards Plan. Alternatively, the Board of Directors may delegate this function to
the Compensation Committee, or to any other committee appointed by the Board of
Directors that includes two or more directors of the Company who are
"disinterested persons." The Awards Plan is currently administered by the
Compensation Committee.
Stock Option Awards. The Awards Plan permits the Plan Administrator to
grant nontransferable stock options that qualify as incentive stock options
under Section 422 of the Code ("ISOs") and stock options that do not so qualify
("NSOs"). All ISO awards under the Awards Plan must have an exercise price that
is equal to at least 100% of the fair market value of the shares to which the
options relate as of the option grant date, and ISOs granted to any employee
possessing more than 10% of the combined voting power of all classes of stock of
the Company or its subsidiaries must be granted at 110% of fair market value as
of the option grant date. Optionees under the Awards Plan may exercise their
options by paying cash, by using the cashless exercise procedure allowed under
Federal Reserve Regulation T or by tendering shares of the Company's common
stock that they already own.
Stock Appreciation Rights. The Awards Plan authorizes the Plan
Administrator to grant stock appreciation rights ("SARs") and to determine the
form of payment therefor. A SAR entitles the recipient to receive an amount in
cash or shares of the Company's common stock, or a combination thereof, having a
value equal to the excess of the fair market value of a share on the date of
exercise over a specified price fixed by the Plan Administrator multiplied by
the number of shares with respect to which the holder is exercising SARs. SARs
may be granted in tandem with any previously or contemporaneously granted option
or independent of any option. The specified price of a tandem SAR will be the
option price of the related option. To the extent a tandem SAR is exercised, the
related option will be cancelled and, to the extent that related option is
exercised, the tandem SAR will be cancelled. ISOs and options which are not ISOs
may provide that in connection with exercises thereof, the holders will receive
cash payments in amounts necessary to reimburse holders for their income tax
liability resulting from such exercise in the payment made pursuant to this
provision.
Restricted Stock Awards. The Awards Plan also permits the Plan
Administrator to grant shares of common stock to a participant subject to the
terms and conditions imposed by the Plan Administrator ("Restricted Stock").
Each certificate for Restricted Stock will be registered in the name of the
participant and deposited, together with a stock power endorsed in blank, with
the Company. There will be established for each Restricted Stock award a
restriction period (the "Restriction Period") determined by the Plan
Administrator during which shares of Restricted Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered. Except for such restrictions on
transfer and such other restrictions as the Plan Administrator may impose, the
participant will have all the rights of a holder of common stock as to such
Restricted Stock.
The Plan Administrator may permit or require the payment of cash dividends
to be deferred and, if it so determines, reinvested in additional Restricted
Stock or otherwise invested. At the expiration of the Restriction Period, the
Company will redeliver to the participant (or the participant's legal
representative or designated beneficiary) the certificates deposited. Except as
may be provided at the time of grant or otherwise, upon a termination of
employment for any reason during the Restriction Period all shares still subject
to restriction shall be forfeited by the participant.
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Unrestricted Stock. In addition to Restricted Stock awards, the Plan
Administrator may grant or sell to any participant shares of common stock free
of restrictions under the Awards Plan ("Unrestricted Stock"). Any purchase of
Unrestricted Stock by a recipient must take place within 60 days after the grant
of the right to purchase such shares. Notwithstanding the foregoing, any shares
of Unrestricted Stock granted to a participant subject to Section 16(b) of the
Exchange Act, may not be sold or otherwise disposed of for value for a period of
six months from the date of grant.
Deferred Stock Awards. The Awards Plan also permits the Plan Administrator
to make a Deferred Stock award. A Deferred Stock award is an award entitling the
recipient to acquire shares of common stock with payment in one or more
installments at a future date or dates, as determined in the Plan
Administrator's discretion. The Plan Administrator may condition such
acquisition on the attainment of specified performance goals or on such other
factors or criteria as the Plan Administrator may deem appropriate.
The deferral period will be determined by the Plan Administrator and set
forth in a Deferred Stock award agreement executed between the Company and the
participant. Subject to the Plan Administrator's approval, a participant may
elect to further defer receipt of the common stock payable under a Deferred
Stock award for a specified period, provided such election is made at least
twelve months prior to the completion of the deferral period specified in the
Deferred Stock award agreement.
Performance Unit Awards. The Awards Plan permits the Plan Administrator to
make awards entitling the recipient to acquire cash or shares of common stock,
or a combination of cash and common stock, upon the attainment of specified
performance goals established by the Plan Administrator at the date of grant.
The performance goals may relate to objectives relating to the Company or the
individual participant. Performance goals may vary from participant to
participant and between groups of participants as determined by the Plan
Administrator. Performance units may be awarded independent of or in combination
with the grant of any other award under the Awards Plan. The specific terms of
the performance unit award, the performance periods, goals and payment terms
shall be set forth in the terms of an award agreement prepared by the Plan
Administrator and executed between the Company and the participant.
Other Stock-Based Awards. Under the Awards Plan, in addition to the types
of awards described above, participants may be awarded other stock-based awards
under which common stock is or may in the future be acquired. Such awards may
include, without limitation, debt securities convertible into or exchangeable
for shares of common stock. Awards will be granted upon such conditions,
including attainment of performance goals, as the Plan Administrator may
determine at the time of grant. However, no other stock-based award will be
exercisable in whole or in part during the first six months following the date
of grant or, if shares of common stock are awarded to a participant on the date
of grant, such stock shall be subject to restrictions against transfer for a
minimum of six months. In addition, no convertible or exchangeable debt may be
issued unless the Plan Administrator provides a means of avoiding any right of
the holders of such debt to prevent a corporate transaction by reason of
covenants in such debt. The Plan Administrator has discretion to determine the
consideration, if any, payable upon the issuance or exercise of any other
stock-based award, the conditions under which any such award could be forfeited,
or other terms and conditions which are to be specified in any award agreement
entered into between the Company and the participant.
Change of Control. In the event of a liquidation of the Company, or a
merger, reorganization, or consolidation of the Company with any other
corporation in which the Company is not the surviving corporation or the Company
becomes a wholly owned subsidiary of another corporation, any unexercised
options or other award rights theretofore granted under the Awards Plan shall be
deemed cancelled unless the surviving corporation in any such transaction elects
to assume such award rights or to substitute other award rights therefor;
provided, however, if such award rights would otherwise be cancelled in
accordance with the foregoing, the award recipient will have the right,
exercisable during a ten-day period ending on the fifth day prior to such
transaction, to exercise the award rights without regard to any restrictions on
exercisability.
Amendment, Modification and Termination. The Awards Plan will terminate on
the earliest to occur of the date when all shares of common stock available
under the Awards Plan have been acquired through the exercise of awards and the
payment of benefits in connection with awards under the Awards Plan, February
28, 2004, or such earlier date as the Board of Directors may determine. The
Board of Directors may
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amend, modify or terminate the Awards Plan, but may not without the approval of
stockholders make any amendments which would (i) materially increase the
benefits accruing to participants under the Awards Plan, (ii) increase the total
number of shares which may be issued under the Awards Plan, or (iii) materially
modify the class of employees eligible to participate in the Awards Plan. No
amendment of the Awards Plan will impair the rights of any participant without
such participant's consent.
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain federal income tax consequences of
participation in the Awards Plan. Such summary should not be relied upon as
being a complete statement. Federal tax laws are complex and subject to change.
Moreover, participation in the Awards Plan may also have consequences under
state and local tax laws which may vary from the federal tax consequences
described below. For such reasons, the Company recommends that each participant
consult his or her personal tax advisor to determine the specific tax
consequences applicable to him or her.
Incentive Options. No taxable income will be recognized by an optionee
under the Awards Plan upon either the grant or the exercise of an incentive
option. Instead, a taxable event will occur upon the sale or other disposition
of the shares acquired upon exercise of an incentive option, and the tax
treatment of the gain or loss realized will depend upon how long the shares were
held before their sale or disposition. As is discussed below, the exercise of an
incentive option and the subsequent disposition of the shares acquired also may
result in items of "tax preference" for purposes of the "alternative minimum
tax."
If a sale or other disposition of the shares received upon the exercise of
an incentive option occurs more than (i) one year after the date of exercise of
the option and (ii) two years after the date of grant of the option, the holder
will recognize long-term capital gain or loss at such time equal to the full
amount of the difference between the proceeds realized and the exercise price
paid. However, a sale, exchange, gift or other transfer of legal title of such
stock before the expiration of either the one-year or two-year period described
above will constitute a "disqualifying disposition." A disqualifying disposition
involving a sale or exchange will result in ordinary income to the optionee in
an amount equal to the lesser of (i) the fair market value of the stock on the
date of exercise minus the exercise price, or (ii) the amount realized on
disposition minus the exercise price. If the amount realized in a disqualifying
disposition exceeds the fair market value of the stock on the date of exercise,
the gain realized, in excess of that taxed as ordinary income as indicated
above, will be taxed as capital gain. A disqualifying disposition as a result of
a gift will result in ordinary income to the optionee in an amount equal to the
difference between the exercise price and the fair market value of the stock on
the date of exercise. Any loss realized upon a disqualifying disposition will be
treated as a capital loss. Capital gains and losses resulting from disqualifying
dispositions will be treated as long-term or short-term depending upon whether
the shares were held for more or less than the applicable statutory holding
period (which currently is one year). The Company will be entitled to a tax
deduction in an amount equal to the ordinary income recognized by the optionee
as a result of the disqualifying disposition.
If legal title to any shares acquired upon exercise of an incentive option
is transferred by sale, gift or exchange, such transfer will be treated as a
disposition for purposes of determining whether a "disqualifying disposition"
has occurred. However, certain transfers will not be treated as dispositions for
such purposes, such as transfers to an estate or by inheritance upon an
optionee's death, a mere pledge or hypothecation, or a transfer into the name of
the optionee and another person as joint tenants.
Section 55 of the Code imposes an "alternative minimum tax" on an
individual's income to the extent the amount of the alternative minimum tax
exceeds the individual's regular tax for the year. For purposes of computing the
alternative minimum tax, the excess of the fair market value (on the date of
exercise) of the shares received upon the exercise of an incentive option over
the exercise price paid is included in alternative minimum taxable income in the
year the option is exercised. If the shares are sold in the same year that the
option is exercised, the regular tax treatment and the alternative tax treatment
will be the same. If the shares are sold during a year subsequent to that in
which the option was exercised, the basis of the stock acquired will equal its
fair market value on the date of exercise for purposes of computing alternative
minimum taxable income in the year of sale. For example, assume that an
individual pays an exercise price of $10 to purchase
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stock having a fair market value of $15 on the date of exercise. The amount
included in alternative minimum taxable income is $5, and the stock has a basis
of $10 for regular tax purposes and $15 for alternative minimum tax purposes. If
the individual sells the stock in a subsequent year for $20, the gain recognized
is $10 for regular tax purposes and $5 for alternative minimum tax purposes.
Under the Awards Plan, the Plan Administrator may permit an optionee to pay
the exercise price of an incentive option by delivering shares of common stock
of the Company already owned by the optionee, valued at their fair market value
on the date of exercise. Generally, if the exercise price of an incentive option
is paid with already-owned shares or by a combination of cash and already-owned
shares, there will be no current taxable gain or loss recognized by the optionee
on the already-owned shares exchanged. A special rule applies, however, if the
shares exchanged were previously acquired through the exercise of an incentive
option and the applicable holding period requirements for favorable tax
treatment of such shares have not been met at the time of the exchange. In such
event, the exchange will be treated as a disqualifying disposition of such
shares and will result in the recognition of income to the optionee, in
accordance with the rules described above for disqualifying dispositions. If
this special rule does not apply, then the new shares received by the optionee
upon the exercise of the option equal in number to the old shares exchanged will
have the same tax basis and holding period for long-term capital gain purposes
as the optionee's basis and holding period in the old shares. The balance of the
shares received by the optionee upon exercise of the option will have a tax
basis equal to any cash paid by the optionee, and if no cash was paid, the tax
basis of such shares will be zero. The holding period of the additional shares
for long-term capital gain purposes will commence on the date of exercise. The
holding period for purposes of the one-year and two-year periods described above
will commence on the date of exercise as to all of the shares received upon the
exercise of an incentive option. If any of the shares subject to the basis
allocation rules described above are subsequently transferred in a disqualifying
disposition, the shares with the lowest tax basis will be treated as being
transferred first.
Nonqualified Options. No taxable income is recognized by an optionee upon
the grant of a nonqualified option. Upon exercise, however, the optionee will
recognize ordinary income in the amount by which the fair market value of the
shares purchased exceeds, on the date of exercise, the exercise price paid for
such shares. The income recognized by the optionee will be subject to income tax
withholding by the Company out of the optionee's current compensation. If such
compensation is insufficient to pay the taxes due, the optionee will be required
to make a direct payment to the Company for the balance of the tax withholding
obligation. The Company will be entitled to a tax deduction equal to the amount
of ordinary income recognized by the optionee, provided certain reporting
requirements are satisfied. If the exercise price of a nonqualified option is
paid by the optionee in cash, the tax basis of the shares acquired will be equal
to the cash paid plus the amount of income recognized by the optionee as a
result of such exercise. If the exercise price is paid by delivering shares of
common stock of the Company already owned by the optionee or by a combination of
cash and already-owned shares, there will be no current taxable gain or loss
recognized by the optionee on the already-owned shares exchanged (however, the
optionee will nevertheless recognize ordinary income to the extent that the fair
market value of the shares purchased on the date of exercise exceeds the price
paid, as described above). The new shares received by the optionee equal in
number to the old shares exchanged will have the same tax basis and holding
period as the optionee's basis and holding period in the old shares. The balance
of the shares received will have a tax basis equal to any cash paid by the
optionee plus the amount of income recognized by the optionee as a result of
such exercise, and will have a holding period commencing with the date of
exercise.
Upon the sale or disposition of shares acquired pursuant to the exercise of
a nonqualified option, the difference between the proceeds realized and the
optionee's basis in the shares will be a capital gain or loss and will qualify
for long-term capital gain or loss treatment if the shares have been held for
more than the applicable statutory holding period.
Restricted Stock. The receipt of Restricted Stock will not result in a
taxable event to the Participant until the expiration of any repurchase rights
retained by the Company with respect to such stock, unless the participant makes
an election under Section 83(b) of the Code to be taxed as of the date of
purchase. If no repurchase rights are retained, or if a Section 83(b) election
is made, the participant will recognize ordinary income in an amount equal to
the excess of the fair market value of such shares on the date of purchase over
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the purchase price paid for such shares. Even if the purchase price and the fair
market value of the shares are the same (in which case there would be no
ordinary income), a Section 83(b) election must be made to avoid deferral of the
date ordinary income is recognized. The election must be filed with the Internal
Revenue Service not later than thirty (30) days after the date of transfer.
If no Section 83(b) election is made or if no repurchase rights are
retained, a taxable event will occur on each date the participant's ownership
rights vest (e.g., when the Company's repurchase rights expire) as to the number
of shares that vest on that date, and the holding period for long-term capital
gain purposes will not commence until the date the shares vest. The participant
will recognize ordinary income on each date shares vest in an amount equal to
the excess of the fair market value of such shares on that date over the amount
paid for such shares.
AWARDS OUTSTANDING UNDER THE AWARDS PLAN
As of June 15, 2001, awards in the form of outstanding options under the
Awards Plan were held by approximately 605 persons to purchase an aggregate of
7,691,649 shares of common stock at an average exercise price of $41.47 per
share, and 6,066,695 shares (excluding those contemplated by the subject
amendment) were available for future grants of options under the Awards Plan.
Grants under the Awards Plan in fiscal 2001 to the Chief Executive Officer and
certain other executive officers are set forth above in the table entitled
"Option Grants During Fiscal 2001." As of June 15, 2001, stock options under the
Awards Plan were held by the following persons: H.K. Desai -- 1,477,374 shares;
Thomas R. Anderson -- 189,216 shares; Mark K. Edwards -- 329,000 shares; Larry
F. Fortmuller, Jr. -- 121,863 shares; Michael R. Manning -- 51,250 shares;
Robert W. Miller -- 152,782 shares; David M. Race -- 213,778 shares; and David
Tovey -- 314,000 shares; all current executive officers as a group (8
persons) -- 2,849,263 shares; all optionees as a group (excluding current
executive officers) (approximately 597 persons) -- 4,842,386 shares. Current
directors or nominees for director who are not employees of the Company have not
been granted any options under the Awards Plan. In addition, no associate of any
current director, nominee for director or executive officer has been granted any
options under the Awards Plan. As of June 15, 2001, options were the only type
of award that had been granted under the Awards Plan.
The market value of the Company's common stock on June 29, 2001 was $64.45
per share.
NEW PLAN BENEFITS
Because no stock options have been granted, and no shares of common stock
have been issued, on the basis of the share increase that is the subject of this
Proposal, the Company believes that the benefits or amounts that have been
received or will be received by any participant under the Awards Plan cannot be
determined.
VOTE REQUIRED FOR APPROVAL OF AMENDMENT TO AWARDS PLAN TO INCREASE THE NUMBER OF
SHARES SUBJECT THERETO; RECOMMENDATION OF BOARD OF DIRECTORS
Approval of this Proposal Two to amend the Awards Plan to increase the
number of shares authorized thereunder by 2,000,000 requires the affirmative
vote of the holders of a majority of the shares of common stock of the Company
present, or represented, and entitled to vote at the Annual Meeting. If Proposal
Two to approve such amendment is not approved by the stockholders, the Awards
Plan, as previously approved, will continue in effect.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF THIS
PROPOSAL TO AMEND THE AWARDS PLAN TO INCREASE THE NUMBER OF SHARES AVAILABLE FOR
OPTION GRANTS THEREUNDER.
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PROPOSAL THREE
AMENDMENT OF THE NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN TO INCREASE
THE MAXIMUM NUMBER OF SHARES ISSUABLE UNDER THE PLAN
At the Meeting, the stockholders of the Company will be asked to approve an
amendment to the QLogic Corporation Non-Employee Director Stock Option Plan (the
"Director Plan"), to increase the maximum number of shares of common stock of
the Company available for option grants under the Director Plan by 200,000
shares, from 1,800,000 shares to 2,000,000 shares. By approving this amendment
the stockholders will also be ratifying further amendments to the Director Plan
adopted by the Board of Directors on June 13, 2001, to (i) decrease the number
of options to purchase shares of common stock automatically granted annually to
each non-employee director (other than the Chairman of the Board) from 32,000
shares to 20,000 shares; (ii) decrease the number of options to purchase shares
of common stock automatically granted to new non-employee directors upon initial
election to the Board of Directors from 64,000 shares to 40,000 shares; and
(iii) provide that in the event of a stock dividend, stock split or like change
in the capitalization of the Company occurring after June 13, 2001, the number
of options to purchase shares of common stock automatically granted pursuant to
the terms of the Director Plan to each non-employee director following such
event shall not be correspondingly increased. Stockholder approval was not
required for these amendments.
In January 1994, the Company's Board of Directors adopted the Director Plan
and the Director Plan was approved by Emulex, the Company's then sole
stockholder. In June 1996, the Board of Directors adopted, and in August 1996
the stockholders approved, amendments to the Director Plan to (i) extend the
termination date of the Director Plan by five years to December 31, 2001, (ii)
increase the number of shares of common stock available for option grants under
the Director Plan by 600,000 (from 1,000,000 to 1,600,000), (iii) provide for
initial grants to new directors of options to purchase 64,000 shares of common
stock and (iv) provide for annual grants to each non-employee director (other
than the Chairman of the Board) of options to purchase 24,000 shares of common
stock, and annual grants to a non-employee Chairman of the Board of options to
purchase 40,000 shares of common stock. In June 1999, the Board of Directors
adopted, and in September 1999 the stockholders approved, a further amendment to
the Director Plan to increase annual grants of options to purchase shares of
common stock from 24,000 to 32,000 for each non-employee director (other than
the Chairman of the Board), and from 40,000 to 54,000 for a non-employee
Chairman of the Board. All share quantities described above have been restated
to reflect the Company's stock splits and stock dividends to date. In June 2000
the Board of Directors adopted, and in September 2000 the stockholders approved,
a further amendment to the Director Plan to increase the maximum number of
shares of common stock of the Company available for option grants under the
Director Plan by 200,000 shares from 1,600,000 shares to 1,800,000 shares. On
June 13, 2001, the Board of Directors further amended the Director Plan to (i)
decrease the number of options to purchase shares of common stock automatically
granted annually to each non-employee director (other than the Chairman of the
Board) from 32,000 shares to 20,000 shares; (ii) decrease the number of options
to purchase shares of common stock automatically granted to new non-employee
directors upon initial election to the Board of Directors from 64,000 shares to
40,000 shares; and (iii) provide that in the event of a stock dividend, stock
split or like change in the capitalization of the Company occurring after June
13, 2001, the number of options to purchase shares of common stock automatically
granted pursuant to the terms of the Director Plan to each non-employee director
following such event shall not be correspondingly increased. Stockholder
approval was not required for these amendments.
THE AMENDMENT
On June 13, 2001, the Board of Directors amended the Director Plan to
increase the maximum number of shares of common stock of the Company available
for option grants under the Director Plan by 200,000 shares, from 1,800,000
shares to 2,000,000 shares, subject to stockholder approval.
PURPOSE OF THE DIRECTOR PLAN
The Director Plan is intended to increase the proprietary and vested
interests of the non-employee directors of the Company and the growth and
performance of the Company by granting to them options to
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purchase shares of common stock of the Company, to encourage them to continue
their services to the Company, and to attract individuals with outstanding
ability to serve on the Board of Directors of the Company.
REASONS FOR AMENDMENT OF THE DIRECTOR PLAN
The foregoing amendment to increase the number of shares available under
the Director Plan was adopted by the Board of Directors and is recommended for
approval by the Company's stockholders because, in conjunction with the overall
growth of the Company, the size of the Board of Directors has increased in the
past several years, and the Board of Directors believes that continued option
grants under the Director Plan play an important role in the Company's efforts
to attract and retain the services of individuals of outstanding ability as
directors of the Company. The Board of Directors also believes that option
grants such as those contemplated in the Director Plan are consistent with a
trend in computer industry companies similar in size and complexity to the
Company to compensate directors with stock options.
DESCRIPTION OF THE DIRECTOR PLAN
The Director Plan provides for the grant of stock options to purchase
shares of the Company's common stock to directors who are not employees of the
Company or any of its subsidiaries.
The principal features of the Director Plan are summarized below, but the
summary is qualified in its entirety by reference to the Director Plan itself.
Copies of the Director Plan and of the proposed amendment will be available at
the Meeting and can be obtained by writing to the Corporate Secretary, QLogic
Corporation, 26600 Laguna Hills Drive, Aliso Viejo, California 92656.
Options granted under the Director Plan are non-qualified stock options not
eligible for favorable tax consequences given to incentive stock options by
Section 422 of the Code. The purchase price per share of the common stock of the
Company issuable upon exercise of the option shall be 100% of the fair market
value per share of such common stock on the date of grant.
No option granted under the Director Plan shall be exercisable after the
expiration of the earlier of (i) ten years following the date the option is
granted, or (ii) one year following the date the optionee ceases to be a
director of the Company for any reason.
Options granted to a director upon becoming an Eligible Director (as
defined below), as well as options granted to a director upon re-election, shall
be exercisable as to one-third of the shares subject to the option on each
anniversary date of the date the option is granted if the director to whom the
option is granted is still a director of the Company on such anniversary.
In the event of the death of an optionee, any option (or unexercised
portion thereof) held by the optionee, to the extent exercisable by him or her
on the date of death, may be exercised by the optionee's personal
representatives, heirs, or legatees in accordance with the Director Plan. No
option shall be transferable by an optionee otherwise than by will or the laws
of descent and distribution, and, during the lifetime of the individual to whom
an option is granted, it may be exercised only by such individual or such
individual's guardian or legal representative.
Eligibility. Each director of the Company shall be eligible to receive an
option under the Director Plan only if such director (i) is not then an employee
of the Company or any of its subsidiaries, and (ii) has not within the three
years immediately preceding such time, received any stock option, stock bonus,
stock appreciation right, or other similar stock award from the Company or any
of its subsidiaries, other than options granted to such director under the
Director Plan (an "Eligible Director"). Only Eligible Directors may receive
options under the Director Plan. All current members of the Board of Directors,
other than Mr. Desai are Eligible Directors.
Administration. The Board of Directors is authorized to administer the
Director Plan in accordance with its terms; however, the Board of Directors
shall have no discretion with respect to the selection of directors to receive
options, the number of shares of common stock of the Company subject to any such
options, or the
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exercise price thereof. The Board of Directors may, in its sole discretion,
delegate any or all of its administrative duties to a committee of not fewer
than two non-employee members of the Board of Directors.
Mergers, Reorganizations and Changes in Control. In the event of a
liquidation of the Company or a merger, reorganization or consolidation of the
Company with any other corporation in which the Company is not the surviving
corporation or the Company becomes a subsidiary of another corporation, any
unexercised options previously granted under the Director Plan shall be deemed
cancelled unless the surviving corporation elects to assume the options or to
use substitute options. However, unless the surviving corporation elects to
assume the options or to use substitute options, the optionee shall have the
right, exercisable during a ten day period ending on the fifth day prior to such
liquidation, merger or consolidation, to fully exercise the optionee's option in
whole or in part without regard to any installment exercise provisions otherwise
provided in the Director Plan. In the event of a change in control of the
Company, as defined in the Director Plan, the vesting of any option granted
under the Director Plan which is not then fully exercisable shall accelerate and
become exercisable with respect to one-half of the then unvested options, in
addition to any options already vested.
Director Plan Amendment. The Director Plan may be terminated or amended by
the Board of Directors as it shall deem advisable. Without the authorization and
approval of the stockholders, however, the Board of Directors may not make any
amendments which would (i) materially increase the benefits accruing to
directors under the Director Plan, (ii) increase the total number of shares
which may be issued under the Director Plan, (iii) materially modify the
eligibility requirements to receive a stock option grant under the Director
Plan, (iv) reduce the exercise price of options granted under the Director Plan,
or (v) extend the exercise date of any option granted under the Director Plan.
Term of Director Plan. The Director Plan expires December 31, 2001,
however, please refer to Proposal Four which proposes to extend the expiration
date of the Director Plan to December 31, 2006.
FEDERAL INCOME TAX CONSEQUENCES
Only non-qualified options which are not intended to meet the incentive
stock option requirements of Section 422 of the Code will be issued under the
Director Plan. Under current federal income tax law, the grant of an option
under the Director Plan will have no federal income tax consequences to the
Company or the Director to whom it is granted. Generally, upon exercise of a
non-qualified stock option granted under the Director Plan, the excess of the
fair market value of the stock at the date of exercise over the option price
(the "Spread") is taxable to the optionee as ordinary income. All such amounts
taxable to an optionee are deductible by the Company as compensation expense.
The deduction will be allowed for the taxable year of the Company in which the
optionee includes an amount in income.
Generally, the shares received on exercise of an option under the Director
Plan are not subject to restrictions on transfer or risks of forfeiture and,
therefore, the optionee will recognize income on the date of exercise of a
nonqualified stock option. However, if the optionee is subject to Section 16(b)
of the Exchange Act, the Section 16(b) restriction will be considered a
substantial risk of forfeiture for tax purposes. Under current law, participants
who are directors of the Company will be subject to restrictions under Section
16(b) of the Exchange Act during their term of service and for up to six months
after termination of such service. SEC Rule 16b-3 provides an exemption from the
restrictions of Section 16(b) for the grant of derivative securities, such as
stock options, under qualifying plans. Because the Director Plan satisfies the
requirements for exemption under SEC Rule 16b-3, the grant of options will not
be considered a purchase and the exercise of the options to acquire the
underlying shares of common stock will not be considered a purchase or sale.
Thus, ordinary income will be recognized and the Spread will be measured on the
date of exercise.
The foregoing discussion, based upon federal tax laws now in effect, is not
intended to cover all relevant tax aspects of the Director Plan.
OPTIONS OUTSTANDING UNDER THE DIRECTOR PLAN
A total of 1,800,000 shares of common stock are reserved for issuance under
the Director Plan. As of June 15, 2001, an aggregate of 904,663 shares of common
stock had been issued upon exercise of stock options
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granted under the Director Plan, options for a total of 405,999 shares at an
average exercise price of $62.31 per share were outstanding and held by the five
non-employee directors of the Company, and the remaining 489,338 shares were
available for grant.
The market value of the Company's common stock on June 29, 2001 was $64.45
per share.
NEW PLAN BENEFITS
No stock options have been granted, and no shares of common stock have been
issued, on the basis of the share increase that is the subject of this Proposal.
However, the following non-employee members of the Board of Directors will
receive an option grant for 20,000 shares of common stock pursuant to the
automatic option grant provisions of the Director Plan described above upon
their reelection to the Board of Directors at the 2001 Annual Meeting: Larry R.
Carter, James R. Fiebiger, Kenneth E. Hendrickson, Carol L. Miltner and George
D. Wells. Each such option will have an exercise price per share equal to the
closing selling price per share of common stock on the date of the Annual
Meeting.
VOTE REQUIRED FOR APPROVAL OF AMENDMENT TO DIRECTOR PLAN TO INCREASE THE NUMBER
OF SHARES SUBJECT THERETO; RECOMMENDATION OF BOARD OF DIRECTORS
Approval of this Proposal Three to amend the Director Plan to increase the
maximum number of shares available for option grants thereunder by 200,000
requires the affirmative vote of the holders of a majority of the shares of
common stock of the Company present, or represented, and entitled to vote at the
Annual Meeting. By approving this amendment the stockholders will also be
ratifying further amendments to the Director Plan adopted by the Board of
Directors on June 13, 2001, to (i) decrease the number of options to purchase
shares of common stock automatically granted annually to each non-employee
director (other than the Chairman of the Board) from 32,000 shares to 20,000
shares; (ii) decrease the number of options to purchase shares of common stock
automatically granted to new non-employee directors upon initial election to the
Board of Directors from 64,000 shares to 40,000 shares; and (iii) provide that
in the event of a stock dividend, stock split or like change in the
capitalization of the Company occurring after June 13, 2001, the number of
options to purchase shares of common stock automatically granted pursuant to the
terms of the Director Plan to each non-employee director following such event
shall not be correspondingly increased. Stockholder approval was not required
for these amendments. If Proposal Three to approve such amendment is not
approved by the stockholders, the Director Plan, as previously approved, will
continue in effect, subject to the outcome of Proposal Four below.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF THIS
PROPOSAL TO AMEND THE DIRECTOR PLAN TO INCREASE THE MAXIMUM NUMBER OF SHARES
AVAILABLE FOR OPTION GRANTS THEREUNDER.
PROPOSAL FOUR
AMENDMENT OF THE NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
TO EXTEND THE EXPIRATION DATE OF THE PLAN
At the Meeting, the stockholders of the Company will be asked to approve an
amendment to the QLogic Non-Employee Director Stock Option Plan (the "Director
Plan"), to extend the expiration date under the Director Plan for five years
from December 31, 2001 to December 31, 2006.
Please refer to Proposal Three for a discussion on the adoption and
subsequent amendments to the Director Plan.
THE AMENDMENT
On June 13, 2001 the Board of Directors amended the Director Plan to extend
the expiration date of the Director Plan by five years, from December 31, 2001
to December 31, 2006, subject to stockholder approval.
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PURPOSE OF THE DIRECTOR PLAN
Please refer to Proposal Three for a discussion on the purpose of the
Director Plan.
REASONS FOR AMENDMENT TO THE DIRECTOR PLAN
The foregoing amendment to extend the expiration date of the Director Plan
was adopted by the Board of Directors and is recommended for approval by the
Company's stockholders because it would allow the Company to continue granting
options under the Director Plan after December 31, 2001 for an additional five
years. The Board of Directors believes that its ability to continue making
grants under the Director Plan plays an important role in the Company's efforts
to attract and retain the services of individuals of outstanding ability as
directors of the Company. Extending the Director Plan also eliminates the costs
and administrative burden associated with creating a new option plan for the
Company's non-employee directors.
DESCRIPTION OF THE DIRECTOR PLAN; FEDERAL INCOME TAX CONSEQUENCES, OPTIONS
OUTSTANDING UNDER THE DIRECTOR PLAN; NEW PLAN BENEFITS
Please refer to Proposal Three for discussions on the description of the
Director Plan, federal income tax consequences, options outstanding under the
Director Plan, and new plan benefits.
VOTE REQUIRED FOR APPROVAL OF AMENDMENT TO DIRECTOR PLAN TO EXTEND THE
EXPIRATION DATE, RECOMMENDATION OF BOARD OF DIRECTORS
Approval of this Proposal Four to amend the Director Plan to extend the
expiration date from December 31, 2001 to December 31, 2006 requires the
affirmative vote of the holders of a majority of the shares of common stock of
the Company present, or represented, and entitled to vote at the Annual Meeting.
If Proposal Four to approve such amendment is not approved by the stockholders,
the Director Plan, as previously approved, will continue in effect, subject to
the outcome of Proposal Three above.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF THIS
PROPOSAL TO AMEND THE DIRECTOR PLAN TO EXTEND THE EXPIRATION DATE OF THE
DIRECTOR PLAN.
PROPOSAL FIVE
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The accounting firm of KPMG LLP serves the Company as its independent
public accountants at the direction of the Board of Directors of the Company and
has served in such capacity since the Company's inception. One or more
representatives of KPMG LLP are expected to be present at the Meeting and will
have an opportunity to make a statement, if they desire to do so, and to be
available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
SELECTION OF KPMG LLP AS THE INDEPENDENT PUBLIC ACCOUNTANTS FOR THE COMPANY FOR
FISCAL YEAR 2002. This matter is not required to be submitted for stockholder
approval, but the Board of Directors has elected to seek ratification of its
selection of the independent public accountants by the affirmative vote of a
majority of the shares represented and voting at the Meeting. The Company has
not determined its intended actions in the event of a negative vote.
AUDIT FEES
The total fees billed for professional services rendered for the audit of
the Company's annual financial statements included in the Company's 10-K and the
reviews of the financial statements included in the Company's 10-Qs were
$189,000 for the year ended April 1, 2001.
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FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
KPMG LLP did not perform any services or bill any fees for direct or
indirect operation and/or supervision of the operation of the Company's
information systems, management of the Company's local area network, and/or
designing or implementing a hardware or software system that aggregates source
data underlying the financial statements or generates information that is
significant to the Company's financial statements taken as a whole for the year
ended April 1, 2001.
ALL OTHER FEES
The total fees billed for all other services rendered were $317,700 for the
year ended April 1, 2001.
The audit committee has considered whether the provision of these other
services is compatible with maintaining KPMG LLP's independence.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers and persons who own more than 10% of a registered class of
the Company's equity securities to file various reports with the SEC and the
National Association of Securities Dealers concerning their holdings of, and
transactions in, securities of the Company. Copies of these filings must be
furnished to the Company. To the Company's knowledge, based solely on review of
the copies of such reports furnished to the Company and written representations
that no other reports were required, during the Company's most recent fiscal
year all Section 16(a) filing requirements applicable to its executive officers,
directors and greater than 10% beneficial owners have been met.
STOCKHOLDER PROPOSALS
Any stockholder desiring to submit a proposal for action at the Company's
2002 Annual Meeting of Stockholders and presentation in the Company's Proxy
Statement with respect to such meeting should arrange for such proposal to be
delivered to the Company at its principal place of business no later than March
20, 2002, which is 120 calendar days prior to the anniversary of this year's
mailing date in order to be considered for possible inclusion in the Proxy
Statement for that meeting. Matters pertaining to such proposals, including the
number and length thereof, eligibility of persons entitled to have such
proposals included and other aspects are regulated by the Exchange Act, Rules
and Regulations of the SEC and other laws and regulations to which interested
persons should refer.
SEC rules also establish a different deadline for submission of stockholder
proposals that are not intended to be included in the Company's Proxy Statement
with respect to discretionary voting (the "Discretionary Vote Deadline"). The
Discretionary Vote Deadline for the 2001 Annual Meeting is June 3, 2002 (45
calendar days prior to the anniversary of the mailing date of this Proxy
Statement). If a stockholder gives notice of such a proposal after the
Discretionary Vote Deadline, the Company's proxy holders will be allowed to use
their discretionary voting authority to vote against the stockholder proposal
when and if the proposal is raised at the Company's 2002 Annual Meeting of
Stockholders.
ANNUAL REPORT TO STOCKHOLDERS
The Annual Report to Stockholders of the Company for the fiscal year ended
April 1, 2001, including audited consolidated financial statements, has been
mailed to the stockholders concurrently herewith, but such report is not
incorporated in this Proxy Statement and is not deemed to be a part of the proxy
solicitation material.
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OTHER MATTERS
The management of the Company does not know of any other matters which are
to be presented for action at the Meeting. Should any other matters come before
the Meeting or any adjournment thereof, the persons named in the enclosed Proxy
will have the discretionary authority to vote all proxies received with respect
to such matters in accordance with their judgment.
ANNUAL REPORT ON FORM 10-K
A copy of the Company's Annual Report on Form 10-K, as filed with the SEC
(exclusive of Exhibits), will be furnished by first-class mail within one
business day of receipt of request without charge to any person from whom the
accompanying Proxy is solicited upon written request to Investor Relations,
QLogic Corporation, 26600 Laguna Hills Drive, Aliso Viejo, California 92656. If
Exhibit copies are requested, a copying charge of $.20 per page will be made.
BY ORDER OF THE BOARD OF DIRECTORS
Michael R. Manning
Secretary
Aliso Viejo, California
July 16, 2001
STOCKHOLDERS ARE URGED TO SPECIFY THEIR CHOICES AND TO DATE, SIGN, AND
RETURN THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE. PROMPT RESPONSE IS HELPFUL
AND YOUR COOPERATION WILL BE APPRECIATED.
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APPENDIX 1
AUDIT COMMITTEE OF
THE BOARD OF DIRECTORS
CHARTER
I. PURPOSE
The function of the Audit Committee of QLogic Corporation is to assist the
Board of Directors in fulfilling its governance responsibilities by reviewing:
the financial reports and other financial information provided by the Company to
any governmental body or the public; the Company's systems of internal controls
regarding finance, accounting, legal compliance and ethics that management and
the Board have established; and the Company's auditing, accounting and financial
reporting processes generally. The Audit Committee's primary duties and
responsibilities are to:
- Serve as an independent and objective committee to monitor the Company's
financial reporting process and internal control system.
- Review and appraise the audit efforts of the Company's independent
accountants.
- Provide an open avenue of communication among the independent
accountants, financial and senior management, and the Board of Directors.
The Audit Committee will primarily fulfill these responsibilities by
carrying out the activities enumerated in Section IV of this Charter.
II. COMPOSITION
The Audit Committee shall be comprised of three outside directors as
determined by the Board, each of whom shall be independent directors, and free
from any relationship that, in the opinion of the Board, would interfere with
the exercise of his or her independent judgement as a member of the Committee.
All members of the Committee shall have a working familiarity with basic finance
and accounting practices, and at least one member of the Committee shall have
accounting or related financial management expertise.
The members of the Committee shall be elected by the Board at the annual
organizational meeting of the Board. The Board of Directors will also elect a
Chair by a majority vote of the full Board.
III. MEETINGS
The Committee shall meet at least four times annually, or more frequently
as circumstances dictate. As part of its responsibilities, the Committee should
meet on a regular basis with management, and representatives of the independent
accountants. It should also meet at least once per year in separate executive
sessions with both groups to discuss matters that the Committee or each of these
groups believes should be discussed privately. In addition, the Committee should
meet with the independent accountants and management quarterly to review the
Corporation's financials.
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Committee will regularly and
proactively review the following:
DOCUMENTS AND REPORTS REVIEW
1. Review and update this Charter, as conditions dictate.
2. Review the Company's annual financial statements and any reports or
other financial information submitted to any governmental body, or the
public, including any certification, report, opinion, or review rendered by
the independent accountants.
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3. Review with financial management and the independent accountants
the results of operations prior to the release of earnings.
INDEPENDENT ACCOUNTANTS
4. Recommend to the Board of Directors the selection of the
independent accountants, considering independence and effectiveness and
approve the fees and other compensation to be paid to the independent
accountants. On an annual basis, the Committee should review and discuss
with the accountants all significant relationships the accountants have
with the Company to determine the accountants' independence.
5. Review the performance of the independent accountants and approve
any proposed discharge of the independent accountants when circumstances
warrant.
6. Periodically consult with the independent accountants out of the
presence of management about internal controls and the completeness and
accuracy of the organization's financial statements.
FINANCIAL REPORTING PROCESSES
7. In consultation with the independent accountants and financial
management, review the integrity of the organization's financial reporting
processes, both internal and external.
8. Consider the independent accountants' judgements about the quality
and appropriateness of the Company's accounting principles as applied in
its financial reporting.
9. Consider and approve, if appropriate, major changes to the
Company's auditing and accounting principles and practices as suggested by
the independent accountants and financial management.
PROCESS IMPROVEMENT
10. Establish regular and separate systems of reporting to the Audit
Committee by the independent accountants, and financial management
regarding any significant judgements made in management's preparation of
the financial statements and the review of each as to the appropriateness
of such judgements.
11. Following the completion of the annual audit, review separately
with management and the independent accountants any significant
difficulties encountered during the course of the audit, including any
restrictions on the scope of the work or access to required information.
12. Review any significant disagreement among management and the
independent accountants in connection with the preparation of the financial
statements.
13. Review with the independent accountants, and management the extent
to which changes or improvements in financial or accounting practices, as
approved by the Audit Committee, have been implemented.
ETHICAL AND LEGAL COMPLIANCE
14. Establish, review and update periodically a Code of Ethical
Conduct and ensure that management has established a system to enforce this
Code.
15. Review management's monitoring of the Corporation's compliance
with the organization's Ethical Code, and ensure that management has the
proper review system in place to ensure that the Company's financial
statements, reports and other financial information disseminated to
governmental organizations, and the public to satisfy legal requirements.
16. Review activities, organizational structure, and qualifications of
the internal audit department.
17. Review, with the Company's Legal Counsel, legal compliance matters
including corporate securities trading policies.
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18. Review, with the Company's General Counsel, any legal matter that
could have a significant impact on the Company's financial statements.
19. Perform any other activities consistent with this Charter, the
Company's By-laws and governing law, as the Chairman of the Board deems
necessary or appropriate.
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PROXY QLOGIC CORPORATION
26600 LAGUNA HILLS DRIVE
ALISO VIEJO, CALIFORNIA 92656
PROXY SOLICITED BY THE BOARD OF DIRECTORS
ANNUAL MEETING OF THE STOCKHOLDERS -- AUGUST 28, 2001
H.K. Desai and Thomas R. Anderson, or either of them, are hereby appointed
attorneys and proxies of the undersigned, each with the power of substitution,
to attend, vote and act for the undersigned at the Annual Meeting of
Stockholders of QLogic Corporation ("QLogic") to be held on August 28, at the
Sutton Place Hotel, 4500 MacArthur Boulevard, Newport Beach, California, at
10:00 a.m., Pacific Daylight Time, on Tuesday, August 28, 2001, and at any
adjournments or postponements thereof, in connection therewith to vote all of
the shares of Common Stock of QLogic which the undersigned would be entitled to
vote as follows:
IMPORTANT--PLEASE SIGN AND DATE ON OTHER SIDE AND RETURN PROMPTLY
35
QLOGIC CORPORATION
THE DIRECTORS RECOMMEND A VOTE "FOR" ITEMS 1, 2, 3, 4 AND 5.
1. ELECTION OF DIRECTORS
Election of the following nominees as directors: H.K. Desai, Larry R.
Carter, James R. Fiebiger, Kenneth E. Hendrickson, Carol L. Miltner, George D.
Wells.
[ ] FOR ALL [ ] WITHHELD ALL [ ] FOR ALL EXCEPT
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE, PRINT THAT
NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
---------------------------------------------------------------------------
2. AMENDMENT TO THE QLOGIC CORPORATION STOCK AWARDS PLAN TO INCREASE THE
NUMBER OF SHARES SUBJECT THERETO BY 2,000,000 TO A TOTAL OF 24,800,000:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. AMENDMENT TO THE NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN TO INCREASE THE
NUMBER OF SHARES SUBJECT THERETO BY 200,000 TO A TOTAL OF 2,000,000:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. AMENDMENT TO THE NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN TO EXTEND THE
EXPIRATION DATE OF THE NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN FROM
DECEMBER 31, 2001 TO DECEMBER 31, 2006:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. RATIFICATION OF KPMG LLP AS INDEPENDENT AUDITORS:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, on such other business as may properly come before the
meeting or any adjournment thereof.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE URGED TO SIGN AND RETURN
THIS PROXY, WHICH MAY BE REVOKED AT ANY TIME PRIOR TO ITS USE.
----------------------------------------
(Signature of stockholder)
Date: , 2001
----------------------------
Please sign your name exactly as it
appears hereon. Executors,
administrators, guardians, officers of
corporations and others signing in a
fiduciary capacity should state their
full titles as such.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
STOCKHOLDER. WHERE NO DIRECTION IS GIVEN, SUCH SHARES WILL BE VOTED "FOR" THE
ELECTION OF THE DIRECTORS NAMED ON THE REVERSE SIDE OF THIS PROXY, "FOR" THE
AMENDMENT TO THE QLOGIC CORPORATION STOCK AWARDS PLAN TO INCREASE THE NUMBER OF
SHARES SUBJECT THERETO, "FOR" THE AMENDMENT TO THE NON-EMPLOYEE DIRECTOR STOCK
OPTION PLAN TO INCREASE THE NUMBER OF SHARES SUBJECT THERETO, "FOR" THE
AMENDMENT TO THE NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN TO EXTEND THE
EXPIRATION DATE OF THE PLAN AND "FOR" RATIFICATION OF KPMG LLP AS INDEPENDENT
AUDITORS.