UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
TRIQUINT SEMICONDUCTOR, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(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):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| 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:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
TRIQUINT SEMICONDUCTOR, INC.
2300 N.E. Brookwood Parkway
Hillsboro, Oregon 97124
April 17, 2002
Dear Stockholders:
Our Annual Meeting of Stockholders will be held on Wednesday, May 22,
2002, at 2:00 p.m., Eastern Daylight Time, at Sawtek Inc., our wholly owned
subsidiary located at 1818 South Highway 441, Apopka, Florida 32703. You are
invited to attend this meeting to give us an opportunity to meet you personally
and to allow us to introduce to you the key management and members of the board
of directors of our company.
The formal Notice of Meeting, the Proxy Statement, the proxy card and a
copy of the Annual Report to Stockholders for the year ended December 31, 2001
are enclosed.
I hope that you will be able to attend the meeting in person. Whether or
not you plan to attend the meeting, please sign and return the enclosed proxy
card promptly. A prepaid return envelope is provided for this purpose. You may
vote electronically via the Internet or by telephone. Please see "Voting by
Internet or Telephone" and the attached proxy card for further details. Your
shares will be voted at the meeting in accordance with your proxy regardless of
the voting method used.
If you have shares in more than one name, or if your stock is registered
in more than one way, you may receive multiple copies of the proxy materials.
If so, please sign and return each proxy card you receive so that all of your
shares may be voted. I look forward to meeting you at the Annual Meeting.
Very truly yours,
TRIQUINT SEMICONDUCTOR, INC.
STEVEN J. SHARP
Chairman of the Board, President
and Chief Executive Officer
TRIQUINT SEMICONDUCTOR, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 22, 2002
TO OUR STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of TRIQUINT
SEMICONDUCTOR, INC., a Delaware corporation ("TriQuint", "we", "us" or "our
company"), will be held on Wednesday, May 22, 2002 at 2:00 p.m., Eastern
Daylight Time, at Sawtek Inc. ("Sawtek"), our wholly owned subsidiary located
at 1818 South Highway 441, Apopka, Florida 32703, for the following purposes:
1. To elect nine directors to serve until the next Annual Meeting of
Stockholders or until their successors are duly elected and qualified
(Proposal No. 1);
2. To ratify the appointment of KPMG LLP as our independent accountants
for the fiscal year ending December 31, 2002 (Proposal No. 2);
3. To approve an amendment to our 1996 Stock Incentive Program to
increase the aggregate number of shares of common stock that may be
issued under such program by 6,500,000 shares to a total of 24,550,000
shares (Proposal No. 3); and
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. Only stockholders of record at the close of
business on April 2, 2002 are entitled to notice of, and to vote at, the Annual
Meeting.
All stockholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to mark,
sign, date and return the enclosed Proxy as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Any stockholder attending
the meeting may vote in person even if he or she has returned a Proxy. You may
vote electronically via the Internet or by telephone. Please see "Voting by
Internet or Telephone" and the attached proxy card for further details. The
telephone and Internet voting procedures are designed to authenticate
stockholder identities, to allow stockholders to give their voting instructions
and to confirm that stockholders' instructions have been recorded properly.
By Order of the Board of Directors:
Raymond A. Link
Vice President, Finance and
Administration, Chief Financial Officer
and Secretary
Hillsboro, Oregon
April 17, 2002
YOUR VOTE IS IMPORTANT.
IN ORDER TO ASSURE YOUR REPRESENTATION AT THE MEETING,
YOU ARE REQUESTED TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD
AS PROMPTLY AS POSSIBLE AND RETURN IT IN THE ENCLOSED ENVELOPE.
TRIQUINT SEMICONDUCTOR, INC.
2300 N.E. Brookwood Parkway
Hillsboro, Oregon 97124
April 17, 2002
------------
PROXY STATEMENT FOR 2002
ANNUAL MEETING OF STOCKHOLDERS
To Be Held on May 22, 2002
General
The enclosed Proxy is solicited on behalf of the Board of Directors of
TriQuint Semiconductor, Inc., a Delaware corporation ("TriQuint", "we", "us" or
"our company"), for use at our 2002 Annual Meeting of Stockholders (the "Annual
Meeting"), or at any adjournment. The Annual Meeting will be held Wednesday,
May 22, 2002 at 2:00 p.m., Eastern Daylight Time, for the purposes set forth in
the accompanying Notice of Annual Meeting of Stockholders. The Annual Meeting
will be held at Sawtek Inc. ("Sawtek"), our wholly owned subsidiary located at
1818 South Highway 441, Apopka, Florida 32703. Our telephone number at that
location is (407) 886-8860.
This Proxy Statement and the enclosed proxy card were mailed on or about
April 17, 2002, together with our 2001 Annual Report to Stockholders, to all
stockholders entitled to vote at the Annual Meeting.
Record Date and Shares Outstanding
Only stockholders of record at the close of business on April 2, 2002 (the
"Record Date") are entitled to notice of, and to vote at, the Annual Meeting.
At the Record Date, 131,400,892 shares of our common stock were outstanding and
held of record by 464 stockholders. For information regarding security
ownership by management and by the beneficial owners of more than 5% of our
common stock, see "Security Ownership of Certain Beneficial Owners and
Management." As of the Record Date, $296,500,000 of our 4% Convertible
Subordinated Notes due 2007 were outstanding and were convertible at the option
of the holders thereof to an aggregate of 4,373,167 shares of our common stock.
The closing price of our common stock on the Nasdaq National Market on the
Record Date was $11.56 per share. The closing price of our 4% Convertible
Subordinated Notes due 2007 on the PORTAL market on the Record Date was $772.50
per $1,000 principal amount of note.
Revocability of Proxies
Any proxy submitted pursuant to this solicitation may be revoked by the
person making such submission at any time before its use by (i) delivering to
the Secretary of our company a written notice of revocation or a duly executed
proxy bearing a later date, or (ii) by attending the Annual Meeting and voting
in person. Attendance at the Annual Meeting, by itself, will not revoke a
proxy.
Voting and Solicitation
The two persons named as proxies on the enclosed proxy card, Steven J.
Sharp and Raymond A. Link, were designated by the Board of Directors. All
properly executed proxies will be voted (except to the extent that authority to
vote has been withheld) and where a choice has been specified by the
stockholder as provided in the proxy card, it will be voted in accordance with
the specification so made. Proxies submitted without specification will be
voted:
o FOR Proposal No. 1 to elect the nominees for directors proposed by the
Board of Directors;
o FOR Proposal No. 2 to ratify the appointment of KPMG LLP as our
independent accountants; and
o FOR Proposal No. 3 to approve an amendment to our 1996 Stock Incentive
Program to increase the aggregate number of shares of our common stock
that may be issued under such program by 6,500,000 shares to a total
24,550,000 shares.
1
We will bear all expenses associated with this solicitation. In addition,
we may reimburse brokerage firms and other persons representing beneficial
owners of shares for their expenses in forwarding solicitation material to such
beneficial owners. Proxies may also be solicited by certain of our directors,
officers and other employees, without additional compensation, personally or by
telephone or telegram. We may also retain an outside proxy solicitation firm,
the expense of which we do not expect to exceed $10,000.
Voting at the Meeting
Every stockholder voting for the election of directors (Proposal No. 1)
may cumulate such stockholder's votes and (i) give one candidate a number of
votes equal to the number of directors to be elected multiplied by the number
of shares that such stockholder is entitled to vote or (ii) distribute such
stockholder's votes on the same principle among as many candidates as the
stockholder may select, provided that votes cannot be cast for more than nine
candidates. However, no stockholder is entitled to cumulate votes unless the
candidate's name has been placed in nomination prior to the voting and the
stockholder, or any other stockholder, has given notice at the meeting and,
prior to the voting, of the intention to cumulate the stockholder's votes. On
all matters other than Proposal No. 1, each share of common stock outstanding
on the Record Date is entitled to one vote per share at the Annual Meeting.
Holders of the 4% Convertible Subordinated Notes due 2007 are not entitled to
vote at the Annual Meeting until such time as the notes are converted to our
common stock.
The vote required and method of calculation for the proposals to be
considered at the Annual Meeting are as follows:
Proposal One -- Election of Directors. The nine nominees for election as
Directors who receive the greatest number of votes, in person or by proxy,
will be elected Directors.
Proposal Two -- Ratification of KPMG LLP as Independent Accountants.
Ratification of the appointment of KPMG LLP as our independent accountants
will be approved if the number of votes cast in favor of the proposal
exceeds the number of votes cast against it.
Proposal Three -- Amendment to 1996 Stock Incentive Program. The amendment
to the 1996 Stock Incentive Program will require the affirmative vote of a
majority of the shares present at the Annual Meeting, in person or by
proxy.
You may vote either "for" or "withhold" your vote for the nominees for
election as Directors. You may vote "for," "against," or "abstain" from voting
on the proposal to ratify the appointment of KPMG LLP as our independent
accountants. You may vote "for," "against," or "abstain" from voting on the
proposal to amend our 1996 Stock Incentive Program.
If you return a proxy card that indicates an abstention from voting in all
matters, the shares represented will be counted as present for the purpose of
determining a quorum, but they will not be voted on any matter at the Annual
Meeting. Consequently, if you abstain from voting on the proposals to elect
Directors and to ratify the appointment of KPMG LLP as our independent
accountants, your abstention will have no effect on the outcome of the vote
with respect to these proposals. If you abstain from voting on the proposal to
amend the 1996 Stock Incentive Program, your abstention will have the same
effect as a vote against the proposal.
Under the rules that govern brokers who have record ownership of shares
that are held in "street name" for their clients, who are the beneficial owners
of the shares, brokers have discretion to vote these shares on routine matters
but not on non-routine matters. Thus, if you do not otherwise instruct your
broker, the broker may turn in a proxy card voting your shares "for" routine
matters but expressly instructing that the broker is NOT voting on non-routine
matters. A "broker non-vote" occurs when a broker expressly instructs on a
proxy card that it is not voting on a matter, whether routine or non-routine.
Broker non-votes are counted for the purpose of determining the presence or
absence of a quorum but are not counted for determining the number of votes
cast for or against a proposal. Your broker will have discretionary authority
to vote your shares on each of the proposals, which are all routine matters. To
the extent your brokerage firm submits a broker non-vote with respect to your
shares on these routine proposals, your shares will be counted as present for
the purpose of determining whether a quorum
2
exists with respect to consideration of that proposal but will not be deemed
"votes cast" with respect to that proposal. Accordingly, broker non-votes will
have no effect on the outcome of the vote with respect to each of the
proposals.
Voting by Internet or Telephone
Instead of submitting your proxy vote with the enclosed paper proxy card,
you may vote electronically via the Internet or by telephone in accordance with
the procedures set forth on the proxy card.
3
ELECTION OF DIRECTORS
(Proposal No. 1)
Nominees
A board of nine directors is to be elected at the Annual Meeting. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
for the Board of Directors' nine nominees named below, all of whom are
presently directors of our company. In the event that any nominee of our
company is unable or declines to serve as a director at the time of the Annual
Meeting of Stockholders, the proxies will be voted for any nominee who shall be
designated by the present Board of Directors to fill the vacancy. The term of
office for each person elected as a director will continue until the next
Annual Meeting of Stockholders or until a successor has been elected and
qualified. The following table lists the persons nominated by the Board of
Directors to be elected as directors and their ages as of March 18, 2002:
Name of Nominee Age Position with TriQuint Since
- --------------- --- ---------------------- -----
Francisco Alvarez 56 Director 2000
Dr. Paul A. Gary 61 Director 1996
Charles Scott Gibson 49 Director 1992
Nicolas Kauser 62 Director 1999
Steven P. Miller 53 Director 2001
Dr. Walden C. Rhines 55 Director 1995
Steven J. Sharp 60 Chairman of the Board, President and 1991
Chief Executive Officer
Edward F. Tuck 70 Director 1994
Willis C. Young 61 Director 2001
There is no family relationship between any director and/or executive
officer of our company.
Mr. Alvarez has been a director of our company since October 2000. Mr.
Alvarez was employed with Intel Corporation from 1979 until his retirement in
June 2000. During that time, he was responsible for a number of wafer
fabrication and assembly/test operations in the United States, Israel, Ireland
and Costa Rica. His last position was as Vice President and General Manager of
Systems Manufacturing. From 1969 until 1979, Mr. Alvarez served in various
wafer fabrication management capacities for National Semiconductor Corporation.
Mr. Alvarez also serves as a director of Therma-Wave, Inc. Mr. Alvarez holds a
B.A. degree in Physics from Carthage College and a B.S. degree in Electrical
Engineering from the University of Illinois.
Dr. Gary has been a director of our company since May 1996. Dr. Gary has
been retired since 1996. From 1967 until 1996, he served in various capacities
for Bell Laboratories, Western Electric Corporation and the Microelectronics
division of AT&T Corp. (now Lucent Technologies, Inc.), with his last position
being Vice President of the Netcom IC Business Unit. He also serves as Chairman
of the Board of Directors of Data I/O Corporation. Dr. Gary holds a B.S. degree
in Electrical Engineering from Lafayette College, a M.S. degree in Electrical
Engineering from Stanford University and a Ph.D. in Electrical Engineering from
Stanford University.
Mr. Gibson has been a director of our company since September 1992. Since
March 1992, Mr. Gibson has been a director and consultant to high technology
companies. He co-founded Sequent Computer Systems Inc., a computer systems
company, in 1983 (which was acquired by International Business Machines
Corporation), and served as its President from January 1988 to February 1992.
From 1976 to 1983, Mr. Gibson was employed at Intel Corporation as General
Manager, Memory Components Operations. He also serves as a director of RadiSys
Corporation. Mr. Gibson is also the Chairman of the Board of the Oregon
Graduate Institute of Science and Technology and serves on the Oregon Health
Sciences University Foundation Board of Trustees. He received a B.S. degree in
Electrical Engineering and a M.B.A. from the University of Illinois.
Mr. Kauser has been a director of our company since December 1999. From
1990 through his retirement in 1998, Mr. Kauser served as Executive Vice
President and Chief Technology Officer of AT&T Wireless Services, Seattle,
Washington (formerly McCaw Cellular Communications, Inc.). From 1984 through
1990, Mr. Kauser was
4
employed by Rogers Cantel, Inc., a Canadian wireless service provider, as Vice
President of Engineering and later, Senior Vice President of Network
Operations. He was a member of Cantel's Board of Directors from 1990 to 1999.
Mr. Kauser currently serves on the Board of Directors of XO Communications,
Inc. Mr. Kauser received a B.S. degree in Electrical Engineering from McGill
University, Montreal, Canada.
Mr. Miller has been a director of our company since July 2001. Mr. Miller
was Sawtek's Chief Executive Officer from 1986 to 1999, Chairman from 1996 to
July 2001 and President from 1979 to 1997. Prior to co-founding Sawtek in 1979,
he was Manager of SAW Device Engineering and Development Laboratory at Texas
Instruments Incorporated a semiconductor manufacturer. Mr. Miller has a B.S.
degree in Electrical Engineering from South Dakota School of Mines and
Technology.
Dr. Rhines has been a director of our company since May 1995. Dr. Rhines
has been the President, Chief Executive Officer and a director of Mentor
Graphics Corporation, an electronic design automation company, since 1993 and
is currently its Chief Executive Officer and Chairman of the Board of
Directors. Prior to joining Mentor Graphics, he spent 21 years at Texas
Instruments Incorporated, with his most recent position having responsibility
for directing its worldwide semiconductor business as the Executive Vice
President of Texas Instruments' Semiconductor Group. Dr. Rhines also serves as
a director of Cirrus Logic, Inc. Dr. Rhines holds a B.S. degree in
Metallurgical Engineering from the University of Michigan, a M.S. degree and
Ph.D. in Materials Science and Engineering from Stanford University and a
M.B.A. from Southern Methodist University.
Mr. Sharp joined our company in September 1991 as Director, President and
Chief Executive Officer. In May 1992 he became Chairman of our Board.
Previously, Mr. Sharp was the founder and served as Chief Executive Officer of
Power Integrations, Inc., a semiconductor manufacturing company. Prior to that
time, Mr. Sharp was employed for 14 years by Signetics Corporation (since
acquired by Philips Electronics N.V.) and for nine years by Texas Instruments
Incorporated. Mr. Sharp also serves as a director of Power Integrations, Inc.
He received a B.S. degree in Mechanical Engineering from Southern Methodist
University, a M.S. degree in Engineering Science from California Institute of
Technology and a M.B.A. from Stanford University.
Mr. Tuck has been a director of our company since November 1994. Mr. Tuck
is currently the Chairman of the Board of Directors and Chief Executive Officer
of Wavestream Wireless Technologies, Inc. Since 1990 he has been a general
partner of Kinship Venture Management LLP, which is the general partner of
Kinship Partners II, a venture capital fund. From 1986 to 1995 he was a general
partner of Boundary, the general partner of The Boundary Fund, a venture
capital fund. He spent most of his career in the telecommunications industry,
serving in various positions with GTE Corporation and as Vice President and
Technical Director of ITT North America Telecommunications, among others. Mr.
Tuck holds a B.S. degree in Electrical Engineering from the University of
Missouri at Rolla.
Mr. Young has been a director of our company since July 2001. Prior to
joining our Board, he was a director of Sawtek from 1996 until 2001. Mr. Young
retired in July 2000. Mr. Young was a Senior Partner in the Atlanta office of
BDO Seidman, LLP, an international accounting and consulting firm, from January
1996 to June 2000. From April 1995 to December 1995, Mr. Young was the Chief
Financial Officer for Hayes Microcomputer Products, Inc., a manufacturer of
modems and communication equipment. From 1965 to 1995, Mr. Young held various
positions with BDO Seidman, LLP, and from 1988 to 1995 he was Vice Chairman and
a member of BDO Seidman's Executive Committee. Mr. Young has a B.S. degree in
Accounting from Ferris State University. He is a Certified Public Accountant.
Meetings and Committees of the Board of Directors
Our Board of Directors held a total of eight meetings during 2001. No then
current director attended fewer than 75% of the meetings of the Board of
Directors and committees thereof, if any, during the period that he was a
member of the Board of Directors. The Board of Directors has an Audit
Committee, a Compensation Committee and a Nominating Committee.
The Audit Committee consists of directors Gary, Tuck and Young. The Audit
Committee is responsible for overseeing actions taken by our independent
accountants and reviews our internal financial controls. The Audit
5
Committee held a total of seven meetings in 2001. No then current director
attended fewer than 75% of the Audit Committee meetings during the period that
he was a member of the Audit Committee. Mr. Young became Chairman of the Audit
Committee in January 2002.
The Compensation Committee consists of directors Gibson, who serves as
Chairman, Rhines and Gary. The Compensation Committee is responsible for
determining salaries, incentives and other forms of compensation for our
executive officers as well as overseeing the administration of various
incentive compensation and benefit plans, including our 1996 Stock Incentive
Program. The Compensation Committee had two meetings in 2001.
The Nominating Committee consists of Directors Alvarez, who serves as
chairman, and Miller. The Nominating Committee did not meet in 2001. The
Nominating Committee considers nominees for election to the Board of Directors
proposed by the stockholders. Any stockholder who wants to recommend a
prospective nominee for the Nominating Committee's consideration may do so by
giving the candidate's name and qualifications in writing to the Secretary of
our company at the following address: 2300 N.E. Brookwood Parkway, Hillsboro,
Oregon 97124.
In the absence of contrary specifications, the shares represented by the
proxies will be voted FOR the election of each of the nominees named above.
The nine nominees receiving the greatest number of votes will be elected
to the Board of Directors. Abstentions and broker non-votes will have no effect
on the outcome of the vote.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THE ELECTION OF EACH OF THE
NOMINEES NAMED ABOVE.
6
RATIFICATION OF APPOINTMENT OF
INDEPENDENT ACCOUNTANTS
(Proposal No. 2)
The Board of Directors has selected KPMG LLP, independent accountants, to
audit our financial statements for the fiscal year ending December 31, 2002.
KPMG LLP has audited our financial statements annually since 1991.
Representatives of KPMG LLP are expected to be present at the meeting and will
have the opportunity to make a statement if they desire to do so and are
expected to be available to respond to appropriate questions. In the event of a
negative vote on ratification, the Board of Directors will reconsider its
selection.
2001 audit fees and other fees billed to us by KPMG LLP during the fiscal
year ended December 31, 2001 are set forth in the following table:
2001 audit fees (including quarterly reviews) $273,000
Financial information systems design and implementation --
Non-audit tax services $261,888
Audit-related services including $132,500 in conjunction
with Sawtek merger $250,498
Our Audit Committee has considered whether the services provided by KPMG
LLP in connection with fees other than audit fees is compatible with
maintaining the independence of KPMG LLP.
In the absence of contrary specifications, the shares represented by the
proxies will be voted FOR the ratification of the appointment of KPMG LLP as
our independent accountants for the fiscal year ending December 31, 2002.
This proposal will be approved if the number of votes cast in favor of the
proposal exceeds the number of votes cast against it. Abstentions and broker
non-votes will have no effect on the outcome of the vote.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THE RATIFICATION OF THE
APPOINTMENT OF KPMG LLP AS OUR INDEPENDENT ACCOUNTANTS FOR THE FISCAL YEAR
ENDING DECEMBER 31, 2002.
7
AMENDMENT TO THE 1996 STOCK INCENTIVE PROGRAM
(Proposal No. 3)
The Board of Directors has approved an amendment to our 1996 Stock
Incentive Program (the "1996 Program") to increase the aggregate number of
shares of our common stock that may be issued under the 1996 Program by
6,500,000 shares to a total of 24,550,000 shares. For a description of the 1996
Program, see "1996 Stock Incentive Program Summary" below. As of the Record
Date, options to purchase 15,691,210 shares of our common stock have been
granted pursuant to the 1996 Program, 4,823,745 of which were vested.
The Board of Directors adopted the amendment to the 1996 Program in order
to provide additional long-term incentives to all of our employees as well as
to maintain competitive compensation packages for our key employees. This
proposal increases the number of shares authorized for issuance under the 1996
Program to provide sufficient shares for anticipated grants to be issued to
both new and existing employees through May 2003. We intend to utilize the
options available for grant to attract and retain both executive and other key
employees.
The Board of Directors strongly believes that stock options are a key part
of the overall compensation package for our employees. All full-time employees
in the U.S. receive a stock option grant at date of hire and all are eligible
for an annual grant based on individual merit. Most all of our non-U.S.
management level employees also receive stock option grants. Our compensation
package is a variable compensation program with stock options designed to align
the interest of our employees with those of our stockholders. Furthermore, our
compensation program includes:
o base salaries set normally below the mid point based on salary
surveys;
o base salaries that have not been adjusted since June 2000 for TriQuint
employees and December 2000 for Sawtek employees;
o a key employee incentive plan for management that did not have any
payments based on 2001 results. The payments listed in this Proxy
Statement were payments made in 2001 for our record results in 2000.
Our stock option program helps us attract and retain our employees. We
have not re-priced any stock option in 2001, nor have we ever granted an option
at less than fair market value from this program. The Board recently amended
all of our option plans to prohibit re-pricing of options and grants of stock
options at less than fair market values.
In the absence of contrary specifications, the shares represented by
proxies will be voted FOR the amendment to our 1996 Program to increase the
aggregate number of shares of common stock that may be issued under the 1996
Program by 6,500,000 to 24,550,000.
The affirmative vote of the holders of at least a majority of the shares
of common stock present in person or represented by proxy and entitled to vote
at the Annual Meeting is required to adopt this proposal. Abstentions will have
the same effect as voting against the proposal and broker non-votes will have
no effect on the outcome of the vote. The award of options under the 1996
Program is at the discretion of the Compensation Committee of the Board of
Directors. See "Executive Compensation and Other Matters" below.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THE APPROVAL OF THE
AMENDMENT TO OUR 1996 STOCK INCENTIVE PROGRAM.
8
1996 STOCK INCENTIVE PROGRAM SUMMARY
The following summary of the 1996 Program is qualified in its entirety by
the specific language of the 1996 Program, a copy of which is available to any
stockholder upon written request to the Secretary of our company.
Background. The 1996 Program, approved by our Board of Directors in
February 1996 and our stockholders in May 1996, provides for the grant of
incentive stock options ("ISOs") and non-qualified stock options ("NQSOs") to
officers, other employees of our company or any parent or subsidiary of our
company. Additionally, the 1996 Program provides for the grant of NQSOs to
directors and consultants. As of the Record Date, the persons eligible to
participate in the 1996 Program included ten officers, eight directors and
approximately 1,600 non-executive officer employees of our company. During the
year ended December 31, 2001, options to purchase 3,662,201 shares of common
stock had been granted under the 1996 Program at an average exercise price of
approximately $15.09 per share. At the time of its adoption, 2,400,000 shares
were authorized and reserved for issuance under the 1996 Program. In May 1997,
the stockholders approved an amendment to the 1996 Program to increase the
number of shares of common stock reserved for issuance thereunder by 2,400,000
shares. In May 1998, the stockholders approved an amendment to the 1996 Program
to increase the number of shares of common stock reserved for issuance
thereunder by 2,700,000 shares. In May 1999, the stockholders approved an
amendment to the 1996 Program to increase the number of shares of common stock
reserved for issuance thereunder by 2,850,000 shares. In May 2000, the
stockholders approved an amendment to the 1996 Program to increase the number
of shares of common stock reserved for issuance thereunder by 3,800,000 shares.
In May 2001, the stockholders approved an amendment to the 1996 Program to
increase the number of shares of common stock reserved for issuance thereunder
by 3,900,000 shares. As of the Record Date, options to purchase an aggregate of
12,942,637 shares of our common stock were outstanding, with a weighted average
exercise price of $17.05 per share, and 8,858,790 shares (including the
6,500,000 shares subject to stockholder approval at this Annual Meeting) were
available for future grant. In addition, 2,748,843 shares have been purchased
pursuant to exercise of stock options under the 1996 Program. At the Annual
Meeting, the stockholders are being asked to approve an amendment of the 1996
Program to increase the number of shares of common stock reserved for issuance
thereunder by 6,500,000 shares.
Administration. The Board of Directors has vested the Compensation
Committee with full authority to administer the 1996 Program in accordance with
its terms and to determine all questions arising in connection with the
interpretation and application of the 1996 Program. The Compensation Committee
is currently comprised of directors Gibson, Rhines and Gary, none of whom are
employees of our company. In any calendar year, no person may be granted
options under the 1996 Program exercisable for more than 750,000 shares, except
the President who may not receive options under the 1996 Program exercisable
for more than 1,500,000 shares.
Minimum Option Price. The exercise price of ISOs granted under the 1996
Program must equal or exceed the fair market value of the common stock on the
date of grant (110% of the fair market value in the case of employees who hold
10% or more of the voting power of the common stock (a "10% Stockholder")), and
the exercise price of NQSOs must equal or exceed 100% of the fair market value
of common stock on the date of grant. As defined in the 1996 Program, "fair
market value" means the last reported sales price of the common stock on the
Nasdaq National Market System on the date of grant.
Duration of Options. Subject to earlier termination of the option as a
result of termination of employment, death or disability, each option granted
under the 1996 Program expires on the date specified by the Compensation
Committee, but in no event more than (i) ten years from the date of grant in
the case of NQSOs, (ii) ten years from the date of grant in the case of ISOs
generally, and (iii) five years from the date of grant in the case of ISOs
granted to a 10% Stockholder.
Means of Exercising Options. The Board of Directors, or the Compensation
Committee, as the case may be, may determine the consideration to be paid for
the shares to be issued upon exercise of an option, including the method of
payment, and may consist entirely of: (i) cash, (ii) check, (iii) promissory
note, (iv) other shares of our common stock which (a) either have been owned by
the optionee for more than six months on the date of surrender or were not
acquired, directly or indirectly, from our company, and (b) have a fair market
value on the date of surrender equal to the aggregate exercise price of the
shares as to which said option shall be exercised, (v) delivery of a properly
executed exercise notice together with such other documentation as the
Administrator and the broker,
9
if applicable, shall require to effect an exercise of the option and delivery
to us of the sale or loan proceeds required to pay the exercise price, or (vi)
any combination of such methods of payment, or such other consideration and
method of payment for the issuance of shares to the extent permitted under
state law.
Term and Amendment of the 1996 Program. The 1996 Program became effective
when adopted by the Board of Directors. The 1996 Program will continue in
effect until February 1, 2006 unless earlier terminated in accordance with its
terms. The Board of Directors may terminate or amend the 1996 Program at any
time, provided, however, that we must obtain stockholder approval of any
amendment to the extent necessary and desirable to comply with Securities and
Exchange Commission (the "SEC") Rule 16b-3 or with Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), or any successor rule,
regulation or statute. In addition, we must obtain stockholder approval in
order to reduce the exercise price of any outstanding option under the 1996
Program prior to making any such change. Stockholder approval, if required,
must be obtained in such a manner and to such a degree as is required by the
applicable law, rule or regulation.
Assignability. Unless otherwise indicated, no option granted under the
1996 Program is assignable or transferable by the optionee except by will or by
the laws of descent and distribution.
Federal Tax Effects of ISOs. We intend that ISOs granted under the 1996
Program will qualify as incentive stock options under Section 422 of the Code.
An optionee acquiring stock pursuant to an ISO receives favorable tax treatment
in that the optionee does not recognize any taxable income at the time of the
grant of the ISO or upon exercise. The tax treatment of the disposition of ISO
stock depends upon whether the stock is disposed of within the holding period,
which is the later of two years from the date the ISO is granted or one year
from the date the ISO is exercised. If the optionee disposes of ISO stock after
completion of the holding period, the optionee will recognize as capital gains
income the difference between the amount received in such disposition and the
basis in the ISO stock, i.e. the option's exercise price. If the optionee
disposes of ISO stock before the holding period expires, it is considered a
disqualifying disposition and the optionee must recognize the gain on the
disposition as ordinary income in the year of the disqualifying disposition.
Generally, the gain is equal to the difference between the option's exercise
price and the stock's fair market value at the time the option is exercised and
sold (the "bargain purchase element"). While the exercise of an ISO does not
result in taxable income, there are implications with regard to the alternative
minimum tax ("AMT"). When calculating income for AMT purposes, the favorable
tax treatment granted ISOs is disregarded and the bargain purchase element of
the ISO will be considered as part of AMT income. Just as the optionee does not
recognize any taxable income on the grant or exercise of an ISO, we are not
entitled to a deduction on the grant or exercise of an ISO. Upon a
disqualifying disposition of ISO stock, we may deduct from taxable income in
the year of the disqualifying disposition an amount generally equal to the
amount that the optionee recognizes as ordinary income due to the disqualifying
disposition.
Federal Tax Effects of NQSOs. If an option does not meet the statutory
requirements of Section 422 of the Code and therefore does not qualify as an
ISO, the difference, if any, between the option's exercise price and the fair
market value of the stock on the date the option is exercised is considered
compensation and is taxable as ordinary income to the optionee in the year the
option is exercised. We may deduct the amount of expense recognized by an
employee as compensation expense. Although an optionee will generally realize
ordinary income at the time the NQSO is exercised, if the stock issued upon
exercise of the option is considered subject to a "substantial risk of
forfeiture" and if the employee has not filed a "Section 83 Election," then the
optionee is not taxed when the option is exercised, but rather when the
forfeiture restriction lapses. At that time, the optionee will realize ordinary
income in an amount equal to the difference between the option's exercise price
and the fair market value of the stock on the date the forfeiture restriction
lapses.
The foregoing summary of federal income tax consequences of stock options
does not purport to be complete, nor does it discuss the provisions of the
income tax laws of any state or foreign country in which the optionee resides.
Participation in the 1996 Program. All option grants to executive officers
under the 1996 Program are subject to the discretion of the Compensation
Committee of the Board of Directors. As of the date of this Proxy Statement,
the Administrator has not made any determination with respect to future option
grants. Therefore, except for automatic option grants to certain non-employee
directors, future awards are not determinable. Effective on the date
10
of the 2002 Annual Meeting, the following non-employee directors, if elected,
would receive options to purchase the number of shares specified:
Name Grants
---- ------
Francisco Alvarez 10,000 shares
Dr. Paul A. Gary 10,000 shares
Charles Scott Gibson 10,000 shares
Steven P. Miller 10,000 shares
Nicolas Kauser 10,000 shares
Dr. Walden C. Rhines 10,000 shares
Edward F. Tuck 10,000 shares
Willis C. Young 10,000 shares
The table below depicts the issuance of grants under the 1996 Program
during 2001 to (i) each of our directors, (ii) the Chief Executive Officer and
the next four most highly compensated executive officers in 2001 (the "Named
Executive Officers") and (iii) the directors and the executive officers as a
group. Additionally, 322,500 were reserved for executive officers to to be
granted in 2002. No determination had been made on allocation of the 322,500
among our executive officers.
Name Grants
---- ------
Francisco Alvarez 10,000 shares
Dr. Paul A. Gary 10,000 shares
Charles Scott Gibson 10,000 shares
Nicolas Kauser 10,000 shares
Steven P. Miller 33,000 shares
Dr. Walden C. Rhines 10,000 shares
Steven J. Sharp 20,000 shares
Edward F. Tuck 10,000 shares
Willis C. Young 33,000 shares
Thomas V. Cordner 53,500 shares
J. David Pye 53,500 shares
Ronald R. Ruebusch 53,500 shares
Total of all directors and executive
officers as a group (18 persons) 589,602 shares
11
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of our common stock as of March 18, 2002 for (i) each
person who is known by us to own beneficially 5% or more of the outstanding
shares of common stock, (ii) each of our directors and director nominees, (iii)
the Named Executive Officers and (iv) the directors and the executive officers
as a group. Except as otherwise indicated below and subject to applicable
community property laws, each owner has sole voting and sole investment powers
with respect to the common stock listed.
Common Stock Approximate
Beneficially Percentage
Name and Address (1) Owned Owned (2)
-------------------- ----- ---------
Sawtek Inc. Employee Stock Ownership 8,889,587 6.77%
and 401(k) Plan (3) (the "ESOP")
c/o HSBC Bank USA
140 Broadway
New York, NY 10005-1180
Firsthand Capital Management, Inc. 6,984,600 5.32%
125 South Market
San Jose, CA 95113 (4)
Francisco Alvarez (5) 49,105 *
Dr. Paul A. Gary (6) 81,360 *
Charles Scott Gibson (7) 204,880 *
Steven P. Miller (8) 1,271,914 *
Nicolas Kauser (9) 89,800 *
Dr. Walden C. Rhines (10) 98,280 *
Steven J. Sharp (11) 980,316 *
Edward F. Tuck (12) 145,280 *
Willis C. Young (13) 18,027 *
Thomas V. Cordner (14) 175,212 *
Donald H. Mohn (15) 182,305 *
J. David Pye (16) 177,288 *
Ronald R. Ruebusch (17) 147,177 *
All directors and executive officers as a 4,514,119 3.32%
group (19 persons) (15)
- ------------
* Less than 1%
(1) The address of all directors and Named Executive Officers is the address of
our company: 2300 NE Brookwood Parkway, Hillsboro, Oregon 97124.
(2) Applicable percentage of ownership is based on 131,386,739 shares of common
stock outstanding as of March 18, 2002 together with applicable options for
such stockholders. Beneficial ownership is determined in accordance with
the rules of the SEC, and includes voting and investment power with respect
to shares. Shares of common stock subject to options currently exercisable
or exercisable within 60 days after March 18, 2002
12
are deemed outstanding for computing the percentage ownership of the person
holding such options, but are not deemed outstanding for computing the
percentage of any other person.
(3) HSBC Bank USA is the Trustee of the ESOP. The ESOP, through its Trustee,
exercises sole dispositive and voting control over these shares, all of
which are held by the ESOP as record owner. Includes 7,170,823 shares
allocated to participants' accounts and 1,718,764 shares not yet allocated
to participants' accounts. Each ESOP participant, with respect to certain
matters, controls the voting of shares allocated to his or her account by
instructing the Trustee how such shares shall be voted. The Trustee
controls the voting of all unallocated shares.
(4) Reflects ownership as reported on a Schedule 13G filed on May 23, 2001 with
the SEC showing ownership as of December 31, 2000.
(5) Includes 17,610 shares issuable pursuant to options exercisable as of March
18, 2002 or within 60 days of such date.
(6) Includes 71,360 shares issuable pursuant to options exercisable as of March
18, 2002 or within 60 days of such date.
(7) Includes 18,600 shares held in trust by Mr. Gibson and 186,280 shares
issuable pursuant to options exercisable as of March 18, 2002 or within 60
days of such date.
(8) Includes 378,605 shares held by Sawmill Investment, LP and 893,309 shares
held by Via Capri Investment, LP both of which Mr. Miller is partner.
(9) Includes 85,800 shares issuable pursuant to options exercisable as of March
18, 2002 or within 60 days of such date.
(10) Includes 6,000 shares held by Mr. Rhines' wife and 92,280 shares issuable
pursuant to options exercisable as of March 18, 2002 or within 60 days of
such date.
(11) Includes 793,206 shares issuable pursuant to options exercisable as of
March 18, 2002 or within 60 days of such date.
(12) Includes 127,280 shares issuable pursuant to options exercisable as of
March 18, 2002 or within 60 days of such date.
(13) Includes 1,918 shares issuable pursuant to options exercisable as of March
18, 2002 or within 60 days of such date.
(14) Includes 143,586 shares issuable pursuant to options exercisable as of
March 18, 2002 or within 60 days of such date.
(15) Includes 164,887 shares issuable pursuant to options exercisable as of
March 18, 2002 or within 60 days of such date.
(16) Includes 128,771 shares issuable pursuant to options exercisable as of
March 18, 2002 or within 60 days of such date.
(17) Includes 66,003 shares issuable pursuant to options exercisable as of
March 18, 2002 or within 60 days of such date.
(18) Includes 2,620,458 shares issuable pursuant to options exercisable as of
March 18, 2002 or within 60 days of such date.
13
EXECUTIVE COMPENSATION AND OTHER MATTERS
Summary of Cash and Certain Other Compensation
The following table provides certain summary information for 2001, 2000
and 1999 concerning compensation awarded to, earned by or paid to our Named
Executive Officers.
SUMMARY COMPENSATION TABLE
Long Term
Compensation
Awards
-------------
Annual Compensation Securities All Other
Name and ---------------------------- Underlying Compensation
Principal Position Year Salary($) Bonus($) (1) Options (#) ($) (2)
- ----------------------------- ------ ----------- -------------- ------------- -------------
Steven J. Sharp 2001 178,797 143,433 20,000 2,056
Chairman of the Board, 2000 300,000 142,503 120,000 2,322
President and Chief 1999 288,230 36,269 160,000 4,050
Executive Officer
Thomas V. Cordner 2001 208,000 66,205 53,500 1,889
Vice President and General 2000 208,112 79,284 40,000 1,813
Manager, Millimeter Wave 1999 187,616 24,021 68,000 2,349
Communications
Donald H. Mohn (3) 2001 196,000 62,247 -- 616
Formerly Vice President, 2000 189,231 73,663 35,000 589
Strategic Marketing and 1999 172,365 21,966 52,000 1,011
Business Development
J. David Pye 2001 230,850 76,713 53,500 1,157
Vice President, 2000 234,116 92,283 40,000 1,150
Manufacturing 1999 216,877 27,748 52,000 1,255
Ronald R. Ruebusch 2001 205,000 64,615 53,500 994
Vice President and General 2000 196,539 75,788 40,000 943
Manager, Wireless 1999 176,622 22,493 54,000 1,404
Communications
- ------------
(1) Represents payments under the company-wide profit sharing program and the
Key Employee Incentive Plan.
(2) Represents premiums for group term life insurance.
(3) Mr. Mohn was no longer an executive officer of TriQuint as of February
2002.
14
Stock Option Grants
The following table sets forth information concerning stock option grants
under the 1996 Program to each of the Named Executive Officers during 2001.
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable Value
At Assumed Annual Rates
of Stock Price
Appreciation
Individual Grants (1) for Option Term (2)
- ---------------------------------------------------------------------------------------- -------------------------
Number of % of Total
Securities Options
Underlying Granted to
Options Employees in Exercise Expiration
Name Granted Fiscal Year (3) Price Date 5% ($) 10% ($)
- ------------------------- ------------ ----------------- ---------- ------------ ----------- -----------
Steven J. Sharp (4) 20,000 0.55% $ 11.19 12/21/2011 $140,747 $356,680
Thomas V. Cordner (5) 16,000 0.44% 10.38 4/4/2011 104,397 264,561
Thomas V. Cordner (6) 37,500 1.02% 11.19 12/21/2011 263,890 668,774
Donald H. Mohn -- -- -- -- -- --
J. David Pye (7) 16,000 0.44% 10.38 4/4/2011 104,397 264,561
J. David Pye (8) 37,500 1.02% 11.19 12/21/2011 263,890 668,774
Ronald R. Ruebusch (9) 16,000 0.44% 10.38 4/4/2011 104,397 264,561
Ronald R. Ruebusch (10) 37,500 1.02% 11.19 12/21/2011 263,890 668,774
- ------------
(1) Options granted under the 1996 Program include both incentive stock options
and nonqualified stock options. All option grants are subject to the
discretion of the Compensation Committee of the Board of Directors.
(2) These calculations are based on certain assumed annual rates of
appreciation as required by SEC rules and regulations governing the
disclosure of executive compensation. Under these rules, an assumption is
made that the shares underlying the stock options shown in this table could
appreciate at rates of 5% and 10% per annum on a compounded basis over the
ten-year term of the stock options. Actual gains, if any, on stock option
exercises are dependent on the future performance of our common stock and
overall stock market conditions. There can be no assurance that the gains
reflected in this table will be achieved.
(3) In fiscal 2001, we granted options covering a total of 3,579,201 shares to
our employees under the 1996 Program.
(4) Option vests in equal monthly installments from 6/1/2002 through 6/1/2003.
(5) Option vests in equal monthly installments from 6/1/2003 through 6/1/2004.
(6) Option vests in equal monthly installments from 6/1/2002 through 6/1/2005.
(7) Option vests in equal monthly installments from 6/1/2003 through 6/1/2004.
(8) Option vests in equal monthly installments from 6/1/2002 through 6/1/2005.
(9) Option vests in equal monthly installments from 6/1/2003 through 6/1/2004.
(10) Option vests in equal monthly installments from 6/1/2002 through 6/1/2005.
15
Stock Option Exercises and Holdings
The following table sets forth information concerning Named Executive
Officers' option exercises during 2001 and option holdings at December 31,
2001.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Shares Value Options at Fiscal Year-End (#) at Fiscal Year-End ($) (1)
Acquired on Realized ------------------------------- -------------------------------------
Name Exercise (#) ($) (2) Exercisable Unexercisable Exercisable Unexercisable
- -------------------- -------------- ------------ ------------- --------------- ----------------- --------------
Steven J. Sharp 180,000 2,630,150 780,702 371,880 6,811,341 684,011
Thomas V. Cordner -- -- 132,112 158,308 1,018,857 109,433
Donald H. Mohn 105,000 3,200,954 144,884 112,004 1,310,738 230,494
J. David Pye 12,000 93,280 108,768 170,504 976,979 300,779
Ronald R. Ruebusch 10,000 153,333 56,000 168,504 472,977 300,779
- ------------
(1) Market value of the underlying securities, based on the $12.26 closing
price of our common stock on December 31, 2001 on the Nasdaq National
Market, minus the exercise price of the unexercised options.
(2) Market value of the underlying securities at exercise date, minus the
exercise price of the options.
DIRECTOR COMPENSATION
Directors who are employees of our company, receive no additional or
special remuneration for serving as directors. Each non-employee director
receives, in addition to reimbursement for out-of-pocket expenses:
o $1,500 per Board meeting attended in person;
o $500 per Board meeting attended via telephone;
o $500 per Committee meeting not held in conjunction with a Board
Meeting; and
o An annual retainer of $9,000 payable in four equal quarterly
installments beginning January 1, 2001.
The 1996 Program provides for an automatic, one-time grant of an option to
purchase 33,000 shares of common stock to each non-employee director, effective
on the date of each such director's initial appointment or election. The
exercise price per share of the option is equal to the fair market value of our
common stock as of the date of grant, and the option vests at a rate of 28% on
the first anniversary of the grant date and 2% per month thereafter so long as
the optionee remains a director of our company.
The 1996 Program also provides for an automatic, nondiscretionary annual
grant, effective at each annual meeting of stockholders, of an option to
purchase 10,000 shares of common stock to each non-employee director who does
not represent stockholders owning more than 1% of our outstanding common stock.
All such options have an exercise price equal to the fair market value of our
common stock as of the date of grant and vest at a rate of 25% six months after
grant date and 12.5% per calendar quarter thereafter following the date of
grant so long as the optionee remains a director of our company.
EMPLOYMENT CONTRACT AND TERMINATION OF EMPLOYMENT AND
CHANGE-IN-CONTROL ARRANGEMENTS
Employment Contracts and Termination of Employment Arrangements
Steven J. Sharp. In September 1991, under the terms of his acceptance of
employment, Steven J. Sharp, our Chairman of the Board of Directors, President
and Chief Executive Officer, entered into a letter agreement with us pursuant
to which he was to receive an annual base salary of $225,000, subject to annual
review, and a quarterly bonus of $18,750 if we achieved our operating income
goals in the relevant quarter.
16
In the event that we desire to terminate Mr. Sharp's employment for any
reason, we must provide Mr. Sharp with one year's advance notice or, in lieu of
such notice, a payment equal to one year's compensation at Mr. Sharp's
then-current rate.
Raymond A. Link. In connection with the merger with Sawtek Inc., we
entered into an employment agreement with Raymond A. Link, Sawtek's Senior Vice
President and Chief Financial Officer to become our Vice President of Finance
and Administration, Chief Financial Officer and Secretary. As part of the
agreement, Mr. Link is to receive a base pay of $215,000, subject to annual
review, an annual bonus consistent with our bonus programs, an option to
purchase 60,000 shares of our common stock at the fair market value at the date
of the merger, and a $100,000 moving and relocation allowance. The agreement
runs through September 30, 2002, and provides for a change of control benefit
of one year's base pay as a lump sum and full vesting of the 60,000 options.
Change-in-Control Arrangements
In January 1995, the Board approved an amendment to each stock option held
by our then-current executive officers, and to each stock option granted to our
future executive officers (collectively, "Executive Officers"), as determined
from time to time by the Board of Directors or a committee thereof, to provide
that, in the event we experience a change of control, certain outstanding stock
options held by each Executive Officer at the time of any such
change-of-control, regardless of whether such stock options are then
exercisable in accordance with their terms, shall become vested and exercisable
as follows:
1. The Chief Executive Officer shall become immediately vested for those
shares that would have otherwise become vested over the last twelve
months of the options' vesting schedules.
2. The Chief Financial Officer shall become immediately vested for those
shares that would otherwise have become vested over the last eight
months of the options' vesting schedules.
3. All other Executive Officers shall become immediately vested for those
shares that would have otherwise become vested over the last four
months of the options' vesting schedules.
This arrangement is applicable to all stock options held by our current
executive officers.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee (the "Committee") consists of directors Gibson,
Rhines and Gary. Mr. Sharp, who is our Chairman of the Board of Directors,
President and Chief Executive Officer, participates in discussions and
decisions regarding salaries and incentive compensation for all of our
executive officers, except during discussions regarding his own salary and
incentive compensation.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Notwithstanding any statement to the contrary in any of our previous or
future filings with the Securities and Exchange Commission, this Board
Compensation Committee Report on Executive Compensation shall not be deemed
"filed" with the Commission or "soliciting material" under the Securities
Exchange Act of 1934, as amended, and shall not be incorporated by reference
into any such filings.
The Committee reviews and approves TriQuint's executive compensation
policies. The following is the report of the Committee describing compensation
policies and rationale applicable to TriQuint's executive officers with respect
to the compensation paid to such executive officers for 2001.
Compensation Philosophy and Policies for Executive Officers
TriQuint's executive compensation program is designed to align the
interests of executives with the interest of the stockholders by creating a
performance-oriented environment that rewards performance related to the goals
of TriQuint. TriQuint's executive compensation program is also designed to
attract and retain qualified executives in the highly competitive high
technology marketplace in which TriQuint competes. In this regard, the levels
of executive compensation
17
established by the Committee are designed to be consistent with those available
to other executives in the industry. TriQuint's executive compensation program
consists primarily of the following integrated components:
1. Base Salary--which is designed to compensate executives competitively
within the industry and the marketplace;
2. Quarterly Profit Sharing--which provides a direct link between
executive compensation and the quarterly performance of TriQuint;
3. Key Employee Incentive Plan -- which provides a direct link between
executive compensation and the quarterly and annual performance of
TriQuint and
4. Long Term Incentives--which consist of stock options that link
management decision making with long-term Company performance and
stockholder interests.
The Committee has considered the potential impact of Section 162(m) of the
Internal Revenue Code on the compensation paid to TriQuint's executive
officers. Section 162(m) disallows a tax deduction for any publicly held
corporation for individual compensation exceeding $1.0 million in any taxable
year for any of the Named Executive Officers, unless compensation is
performance-based. In general, it is the Committee's policy to qualify, to the
maximum extent possible, its executives' compensation for deductibility under
applicable tax laws.
Base Salaries
Base salary levels for the Chief Executive Officer (the "CEO") and other
executive officers of TriQuint are reviewed annually by the Compensation
Committee. The Committee's current policy is to maintain base salary levels in
the second quartile for the industry when compared with those of executives
holding similar positions with other companies in the high technology and
semiconductor industries that are similar in size to TriQuint. Certain
companies included in the peer group index of the stock performance graph are
also included in surveys reviewed by TriQuint in determining salary levels for
the CEO and other executive officers of TriQuint. Mr. Sharp voluntarily reduced
his base salary from an annual $300,000 to $6.50 per hour, the federal minimum
wage, from July 2001 to December 31, 2001, reducing his total base compensation
to $178,797 in 2001. Mr. Sharp's salary was re-instated at $300,000 for 2002.
Quarterly Profit Sharing
All employees participate in the profit sharing program. Profit sharing is
paid quarterly and equals a percentage of the employees' quarterly W-2 income.
In 2001, the profit sharing pool was equal to 10% of adjusted operating income.
For all employees employed in the United States, one half of the profit sharing
amount is paid quarterly in cash, with the other half paid as an employer
contribution to each eligible employee's 401(k) account. Only employees who are
employees the entire quarter receive the profit sharing. Profit sharing
amounts, as a percentage of Base Salary, were 10.60%, 3.16%, 4.7% and -0-% for
the first, second, third and fourth quarters of 2001, respectively, for the CEO
and the Named Executive Officers. The CEO received $15,582 in cash under the
profit sharing program in 2001.
Key Employee Incentive Plan
TriQuint provides bonuses to its key employees. Participants must be
employed full-time by TriQuint during the entire fiscal quarter to be eligible
for a bonus that quarter. The bonus is based on actual versus budget operating
income after profit sharing and bonus. The bonuses vary linearly with the level
of achievement of budgeted operating income between 80% and 150% of
achievement. Individual bonuses are reduced by the amount of profit sharing,
both cash and 401(k) contributions, earned by each participant. The CEO
received $127,851 in cash under the key employee incentive plan in 2001 which
related to our 2000 results. Neither the CEO nor any executive officers were
granted a payment under the Key Employee Incentive Plan for 2001 results.
18
Long-term Incentives
TriQuint provides its executives, including the CEO, long-term incentives
through the grant of stock options under its 1996 Program. The purpose of the
1996 Program is to create a direct link between compensation and the long-term
performance of TriQuint. Stock options under this program are generally granted
at an exercise price equaling 100% of fair market value, have a ten-year term
and generally vest in installments over four years. Because the receipt of
value by an executive officer under a stock option is dependent upon an
increase in the price of TriQuint's common stock, this portion of the
executives' compensation is directly aligned with an increase in stockholder
value. The primary stock options granted to executive officers are generally in
conjunction with each executive officer's acceptance of employment with
TriQuint, or upon promotion to executive officer. When determining the number
of stock options to be awarded to an executive officer, the Compensation
Committee considers (i) the executive's current contribution to TriQuint's
performance, (ii) the executive's anticipated contribution in meeting
TriQuint's long-term strategic performance goals and (iii) comparisons to an
internally generated informal survey of executive stock option grants made by
other high technology and semiconductor companies at a similar stage of
development as TriQuint. Individual considerations, such as the executive's
current and anticipated contributions to TriQuint's performance, may be more
subjective and less measurable by financial results at the corporate level. In
this respect, the Committee exercises significant judgment in measuring the
contribution or anticipated contribution to TriQuint's performance. The
Compensation Committee also periodically reviews the stock options granted to
insure equitable distribution of such options among the officers.
Under the guidelines stated above, the Compensation Committee reviewed and
granted stock options on December 21, 2001 to the CEO and Named Executive
Officers as described above under the heading "Executive Compensation and Other
Matters--Stock Option Grants."
Other
TriQuint's executive officers are also eligible to participate in
compensation and benefit programs generally available to other employees,
including TriQuint's Employee Stock Purchase Plan.
SUBMITTED BY THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS:
Charles Scott Gibson
Dr. Walden C. Rhines
Dr. Paul Gary
19
REPORT OF THE AUDIT COMMITTEE OF
THE BOARD OF DIRECTORS
Notwithstanding any statement to the contrary in any of our previous or
future filings with the Securities and Exchange Commission, this Report of the
Audit Committee of the Board of Directors shall not be deemed "filed" with the
Commission or "soliciting material" under the Securities Exchange Act of 1934,
as amended, and shall not be incorporated by reference into any such filings.
The Audit Committee of the Board of Directors (the "Audit Committee") is
comprised of three non-employee, independent directors: Willis C. Young, Edward
Tuck and Paul Gary. Management has the primary responsibility for the financial
statements and the reporting process, including the system of internal
controls. The independent auditors are responsible for performing an
independent audit of TriQuint's consolidated financial statements in accordance
with accounting principles generally accepted in the United States and to issue
a report thereon. The Committee is responsible for the oversight of TriQuint's
internal accounting and financial reporting process and the review of the
audited financial statements, together with a discussion of pertinent matters
with the management of TriQuint and TriQuint's independent auditors in
connection with the audited financials.
The Audit Committee acts under a written charter adopted and approved by
the Board of Directors of TriQuint. The members of the Audit Committee are
"independent" as the term is defined under applicable National Association of
Securities Dealers listing standards. The Audit Committee has reviewed and
discussed the audited financial statements for the year ended December 31, 2001
with management and has discussed with KPMG LLP, TriQuint's independent
auditors, the matters required to be discussed by SAS 61 (Codification of
Statements on Auditing Standards, AU[sec]380), as may be modified or
supplemented. Additionally, the Audit Committee has received the written
disclosures from KPMG LLP required by Independence Standards Board Standard No.
1, as may be modified or supplemented and has discussed with KPMG LLP the
auditor's independence.
Based on the foregoing reviews and discussions, the Audit Committee has
recommended to the Board of Directors that the audited financial statements be
included in TriQuint's Annual Report on Form 10-K for the year ended December
31, 2001 for filing with the Securities and Exchange Commission.
SUBMITTED BY THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS:
Willis C. Young
Edward Tuck
Paul Gary
20
STOCK PERFORMANCE GRAPH
Notwithstanding any statement to the contrary in any of our previous or
future filings with the Securities and Exchange Commission, the following
information relating to the price performance of our common stock shall not be
deemed "filed" with the Commission or "soliciting material" under the
Securities Exchange Act of 1934, as amended, and shall not be incorporated by
reference into any such filings.
The SEC requires that registrants include in their proxy statement a
line-graph presentation comparing cumulative five-year stockholder returns on
an indexed basis, assuming a $100 initial investment and reinvestment of
dividends, of (i) our company, (ii) a broad-based equity market index and (iii)
an industry-specific index or a registrant-constructed peer group index. Set
forth below is a line graph comparing the annual percentage change in the
cumulative return to the stockholders of our common stock with the cumulative
return of the Nasdaq U.S. Index and of the SIC Code 3674 -- Semiconductors and
Related Devices Index for the period commencing December 31, 1996 and ending on
December 31, 2001.
Total Shareholder Returns
[THE FOLLOWING INFORMATION WAS ALSO REPRESENTED AS A LINE CHART IN THE PRINTED
MATERIAL]
Base Years Ending
Period
Company Name / Index Dec96 Dec97 Dec98 Dec99 Dec00 Dec01
- -----------------------------------------------------------------------------------------------------
TRIQUINT SEMICONDUCTOR INC 100 76.78 72.99 632.70 993.84 278.90
NASDAQ US INDEX 100 122.48 172.70 320.87 193.00 153.15
PEER GROUP 100 105.83 164.14 336.80 262.04 217.07
No cash dividends have been declared or paid on our common stock.
Stockholder returns over the indicated period should not be considered
indicative of future stockholder returns.
The peer group index used, SIC Code 3674 -- Semiconductors and Related
Devices, utilizes the same methods of presentation and assumptions for the
total return calculation as our company and the Nasdaq U.S. Index. All
companies in the peer group index are weighted in accordance with their market
capitalizations.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Since January 1, 2001, we believe that, except as described below, there
has not been, nor is there currently proposed, any transaction or series of
similar transactions to which we were or are to be a party in which the amount
involved exceeds $60,000 and in which any director, executive officer or holder
of more than 5% of any class of our voting securities, or members of any such
person's immediate family, had or will have a direct or indirect material
interest, other than the compensation agreements described in "Executive
Compensation." We intend that any such future transactions, including loans
between our company and our officers, directors, principal stockholders and
their affiliates, will be approved by a majority of the Board of Directors,
including a majority of the independent and disinterested outside directors,
and will be on terms no less favorable to our company than could be obtained
from unaffiliated third parties. Mr. Raymond A. Link was provided with a
relocation and moving package during fiscal year 2001 of approximately
$100,000.
21
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires our executive officers and directors, and persons who own more than
10% of a registered class of our equity securities to file reports of ownership
and changes in ownership with the SEC and the National Association of
Securities Dealers, Inc. Executive officers, directors and greater than 10%
stockholders are required by SEC regulation to furnish us with copies of all
Section 16(a) forms they file. Based solely on our review of the copies of such
forms we have received, or written representations from certain reporting
persons, we believe that, except as described below, during fiscal 2001 all
executive officers, directors and greater than 10% stockholders complied with
all applicable filing requirements. Stephanie J. Welty was late in filing a
Form 4 that disclosed one transaction in which Ms. Welty exercised stock
options. Steven P. Miller was late in filing a Form 4 that disclosed purchases
of our common stock through Sawmill Investment, LP. Both have since made the
required filings.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS FOR 2003 ANNUAL MEETING
As a TriQuint stockholder, you are entitled to present proposals for
action at a forthcoming meeting if you comply with the requirements of the
proxy rules established by the SEC. If you intend to present a proposal at our
2003 annual meeting of stockholders, the proposal must be received by us no
later than December 18, 2002 to be considered for inclusion in the proxy
statement and form of proxy relating to that meeting. The enclosed Proxy grants
the proxy holders discretionary authority to vote on any matter raised at the
Annual Meeting. If you intend to submit a proposal at our 2003 annual meeting
of stockholders that is not eligible for inclusion in the proxy statement
relating to that meeting and you fail to give us notice in accordance with the
requirements set forth in the Exchange Act, no later than March 3, 2002, then
the proxy holders will be allowed to use their discretionary voting authority
when and if the proposal is raised at our 2003 annual meeting of stockholders.
OTHER MATTERS
We know of no other matters to be submitted at the Annual Meeting. If any
other matters properly come before the Annual Meeting, it is the intention of
the persons named in the enclosed form of Proxy to vote the shares they
represent as the Board of Directors may recommend.
BY ORDER OF THE BOARD OF DIRECTORS
22
EXHIBIT A
TRIQUINT SEMICONDUCTOR, INC.
AUDIT COMMITTEE CHARTER
(Adopted as of June 5, 2000)
(Amended January 30, 2002)
Purpose
The purpose of the Audit Committee (the "Committee") is to provide
assistance to the Board of Directors (the "Board") of TriQuint Semiconductor,
Inc. (the "Company") in fulfilling the Board's oversight of the Company's
accounting and system of internal controls, the quality and integrity of the
Company's financial reports and the independence and performance of the
Company's outside auditor.
In the exercise of its oversight, it is not the duty of the Committee
to plan or conduct audits or to determine that the Company's financial
statements fairly present the Company's financial position and results of
operations and are in accordance with generally accepted accounting principles.
Instead, such duties remain under the oversight of management and the outside
auditor. Nothing contained in this charter is intended to alter or impair the
operation of the "business judgement rule" as interpreted by the courts under
the Delaware General Corporation Law (the "Delaware Law"). Further, nothing
contained in this charter is intended to alter or impair the right of the
members of the Committee under the Delaware Law to rely, in discharging their
oversight role, on the records of the Company and on other information presented
to the Committee, Board or the Company by its officers or employees or by
outside experts such as the outside auditor. It is acknowledged that all of the
areas of oversight listed below may not be relevant to all of the matters and
tasks that the Committee may consider and act upon from time to time, and the
members of the Committee in their judgement may determine the relevance thereof
and the attention such items will receive in any particular context.
Membership
The Committee shall consist of three to five members of the Board as
determined from time to time. The members shall be appointed by action of the
Board and shall serve at the discretion of the Board. The Committee shall
satisfy the independence and experience requirements of the Nasdaq Stock Market,
including any exceptions thereto.
Committee Organization and Procedures
1. The members of the Committee shall appoint a Chair of the Committee by
majority vote. The Chair (or in her or his absence, a member
designated by the Chair) shall preside at all meetings of the
Committee.
2. The Committee shall meet at least three times in each fiscal year, and
more frequently as the Committee in its discretion deems desirable.
3. The Committee may include in its meetings members of the Company's
financial management, representatives of the outside auditor, and
other financial personnel employed or retained by the Company. The
Committee may meet with the outside auditor in separate executive
sessions to discuss any matters that the Committee believes should be
addressed privately, without management's presence. The Committee may
also meet privately with management, as it deems appropriate.
A-1
Oversight
Outside Auditor
4. The outside auditor shall be ultimately accountable to the Committee
and the Board in connection with the audit of the Company's annual
financial statements and related services. The Committee shall review
the independence and performance of the outside auditor and annually
recommend to the Board the appointment of the outside auditor and
approve the fees to be paid to the outside auditor.
5. The Committee shall receive from the outside auditor, at least
annually, a written statement delineating all relationships between
the outside auditor and the Company, consistent with Independence
Standards Board Standard No. 1. The Committee shall discuss with the
outside auditor with respect to any disclosed relationships or
services that, in view of the Committee, any impact the objectivity
and independence of the outside auditor. If the Committee determines
that further inquiry is advisable, the Committee shall recommend that
the Board take any appropriate action in response to the outside
auditor's independence.
Annual Audit
6. The Committee shall meet with the outside auditor and management in
connection with each annual audit to discuss the scope of the audit
and the procedures to be followed.
7. The Committee shall meet with the outside auditor and management prior
to the public release of the financial results of operations for the
year under audit and discuss with the outside auditor any matters
within the scope of the pending audit that have not yet been
completed.
8. The Committee shall discuss with the outside auditor the matters
required to be discussed by Statement of Auditing Standards No. 61
relating to the conduct of the annual audit.
9. The Committee shall, based on the review and discussion in paragraphs
7 and 8 above, and based on the disclosures received from the outside
auditor regarding its independence and discussions with the auditor
regarding such independence in paragraph 5 above, recommend to the
Board whether the audited financial statements should be included in
the Company's Annual Report on Form 10-K for the fiscal year subject
to the audit.
Quarterly Review
10. The outside auditor shall review the interim financial statements to
be included in any Quarterly Report of Form 10-Q of the Company using
professional standards and procedures for conducting such reviews, as
established by generally accepted auditing standards as modified or
supplemented by the Securities and Exchange Commission and in
accordance with Statement on Auditing Standards No. 71, prior to the
filing of the Form 10-Q. The Committee shall discuss with management
and the outside auditor the results of the quarterly reviews including
such matters as significant adjustments, management judgements,
accounting estimates, significant new accounting policies and
disagreements with management. The Chair or Acting Chair may represent
the entire Committee for purposes of this discussion.
Internal Controls
11. The Committee shall discuss with the outside auditor and the senior
internal audit manager, at least annually, the adequacy and
effectiveness of the accounting and financial controls of the Company,
and consider any recommendations for improvement of such internal
control procedures.
A-2
12. The Committee shall discuss with the outside auditor and with
management any significant management letter provided by the outside
auditor and any other significant matters brought to the attention of
the Committee by the outside auditor as a result of its annual audit.
Miscellaneous
13. The Committee shall review and reassess the Committee's charter at
least annually and submit any recommended changes to the Board for its
consideration.
14. The Committee shall review legal and regulatory matters that may have
material impact on the financial statements and related compliance
policies and programs.
15. The Committee shall provide the report for inclusion in the Company's
Annual Proxy Statement required by Item 306 of Regulation S-K of the
Securities and Exchange Commission.
16. The Committee, through its Chair, shall report periodically, as deemed
necessary or desirable by the Committee, but at least annually, to the
full Board regarding the Committee's actions and recommendations, if
any.
A-3