SCHEDULE 14A
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INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
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TRIQUINT SEMICONDUCTOR, INC.
- -------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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TRIQUINT SEMICONDUCTOR, INC.
2300 N.E. Brookwood Parkway
Hillsboro, Oregon 97124
April 15, 2003
Dear Stockholders:
Our 2003 Annual Meeting of Stockholders will be held on Wednesday, May 21,
2003, at 1:30 p.m., local time, at our Texas manufacturing facility located at
500 West Renner Road, Richardson, Texas 75080. 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 on Form 10-K for the year ended December 31, 2002 are
enclosed.
I hope that you will be able to attend the meeting in person. Whether or
not you plan to attend, please sign and return the enclosed proxy card
promptly. A prepaid reply envelope is provided for this purpose. You may also
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.
/s/ RALPH G. QUINSEY
RALPH G. QUINSEY
President and Chief Executive Officer
TRIQUINT SEMICONDUCTOR, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Wednesday, May 21, 2003
1:30 p.m.
TO OUR STOCKHOLDERS:
The 2003 Annual Meeting of Stockholders of TriQuint Semiconductor, Inc., a
Delaware corporation ("TriQuint", "we", "us" or "our company"), will be held on
Wednesday, May 21, 2003 at 1:30 p.m., local time, at 500 West Renner Road,
Richardson, Texas 75080, for the following purposes:
1. To elect ten directors to serve until the next annual meeting of
stockholders or until their successors are duly elected and qualified;
2. 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 31,050,000
shares;
3. To approve an amendment to our 1996 stock incentive program to amend
the formula grant mechanism for non-employee directors as described
herein;
4. To vote upon a proposal submitted by a stockholder, if properly
presented at the meeting; and
5. To transact such other business as may properly come before the annual
meeting, including any motion to adjourn to a later date to permit
further solicitation of proxies, if necessary, or before any
adjournment thereof.
The foregoing items of business are more fully described in the proxy
statement accompanying this notice. Stockholders who owned shares of our common
stock at the close of business on Wednesday, April 2, 2003 are entitled to
attend and vote at the annual meeting. A complete list of these stockholders
will be available during normal business hours for ten days prior to the meeting
at our headquarters located at 2300 N.E. Brookwood Parkway, Hillsboro, Oregon
97124. A stockholder may examine the list for any legally valid purpose relating
to the meeting. The list will also be available during the annual meeting for
inspection by any stockholder present at the meeting.
Whether or not you plan to attend the annual meeting, please complete,
sign, date and return the enclosed proxy card as promptly as possible in the
accompanying reply envelope. You may also vote electronically via the internet
or by telephone. For specific instructions, please refer to the information
provided with your proxy card.
For the Board of Directors of
TRIQUINT SEMICONDUCTOR, INC.
/s/ Raymond A. Link
Raymond A. Link
Vice President, Finance and
Administration, Chief Financial Officer
and Secretary
Hillsboro, Oregon
April 15, 2003
YOUR VOTE IS IMPORTANT.
PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AS
PROMPTLY AS POSSIBLE AND RETURN IT IN THE ACCOMPANYING REPLY ENVELOPE
OR VOTE VIA THE TELEPHONE OR INTERNET AS SOON AS POSSIBLE.
TRIQUINT SEMICONDUCTOR, INC.
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PROXY STATEMENT FOR THE
2003 ANNUAL MEETING OF STOCKHOLDERS
----------------
GENERAL INFORMATION
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 2003 Annual Meeting of Stockholders, or at
any adjournment. The annual meeting will be held on Wednesday, May 21, 2003 at
1:30 p.m., local time, for the purposes set forth in the accompanying notice of
annual meeting of stockholders. The annual meeting will be held at 500 West
Renner Road, Richardson, Texas 75080. Our telephone number at that location is
(972) 994-8200.
This proxy statement and the enclosed proxy card were mailed on or about
April 15, 2003, together with our 2002 Annual Report on Form 10-K for the year
ended December 31, 2002, 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, 2003 are
entitled to attend and vote at the annual meeting. On the record date,
133,198,418 shares of our common stock were outstanding and held of record by
512 stockholders. On the record date, $268,755,000 of our 4% convertible
subordinated notes due 2007 were outstanding and were convertible at the option
of the holders thereof to an aggregate of 3,963,938 shares of our common stock.
The closing price of our common stock on the Nasdaq National Market on the
record date was $3.14 per share. The closing price of our 4% convertible
subordinated notes due 2007 on the PORTAL market on the record date was $823.75
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
The two persons named as proxies on the enclosed proxy card, Ralph G.
Quinsey, our president and chief executive officer, and Raymond A. Link, our
vice president, finance and administration, chief financial officer and
secretary, 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 instructions you
indicate on the proxy card. If you submit the proxy card, but do not indicate
your voting instructions, your shares will be voted as follows:
o FOR Proposal No. 1 to elect the nominees for directors proposed by the
board of directors;
o FOR Proposal No. 2 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
31,050,000 shares;
o FOR Proposal No. 3 to approve an amendment to our 1996 stock incentive
program to amend the formula grant mechanism for non-employee
directors; and
o AGAINST Proposal No. 4, if presented
1
Other than the proposals listed above, our board of directors does not
intend to present any other matters to be voted on at the meeting. Our board of
directors is not currently aware of any other matters that will be presented by
others for action at the meeting. However, if other matters are properly
presented at the meeting and you have signed and returned your proxy card, the
proxy holders will have discretion to vote your shares on these matters to the
extent authorized under the Securities Exchange Act of 1934, as amended.
Proxy Solicitation Costs
We will bear the entire cost of this proxy solicitation, including the
preparation, assembly, printing and mailing of proxy materials. In addition, we
may reimburse brokerage firms and other custodians for their reasonable
out-of-pocket expenses for forwarding these proxy materials to you. 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 $15,000. We expect our transfer agent Mellon Investor Services
LLC to tabulate the proxies.
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 ten
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. The 4% subordinated convertible notes due 2007 are
not entitled to vote on any matter until such time as they 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 ten nominees for election as
directors who receive the greatest number of votes, in person or by proxy,
will be elected directors.
Proposal Two -- Amendment to 1996 Stock Incentive Program to Increase the
Aggregate Number of Shares Available for Stock Option Grants. This
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.
Proposal Three -- Amendment to 1996 Stock Incentive Program to Amend the
Formula Grant Mechanism for Non-Employee Directors. This 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.
Proposal Four -- Stockholder Proposal. The stockholder proposal 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 proposals to amend our 1996 stock incentive program and the stockholder
proposal.
Abstentions and Broker Non-Votes
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 proposal to elect
directors, your abstention will
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have no effect on the outcome of the vote with respect to this proposal. If you
abstain from voting on the proposals to amend the 1996 stock incentive program
and the stockholder proposal, your abstention will have the same effect as a
vote against the proposals.
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.
However, the New York Stock Exchange has proposed new regulations that would
require brokers or other nominees that are NYSE member organizations from
voting in favor of proposals relating to equity compensation plans unless they
receive specific instructions from the beneficial owner of the shares to vote
in that manner. This new rule may become effective before the meeting, in which
case, for shares held through a broker or other nominee who is a NYSE member
organization, your shares will only be voted in favor of Proposal No. 2 and
Proposal No. 3 if you have provided specific voting instructions to your broker
or other nominee to vote your shares in favor of that proposal.
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. The internet and telephone voting
procedures are designed to authenticate the stockholder's identity and to allow
stockholders to vote their shares and confirm that their voting instructions
have been properly recorded.
3
PROPOSAL ONE
ELECTION OF DIRECTORS
Nominees
A board of ten directors is to be elected at the annual meeting. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
for the ten 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, 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 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 April 2,
2003:
Name of Nominee Age Position with TriQuint Since
- --------------- --- ---------------------- -----
Francisco Alvarez 57 Director 2000
Dr. Paul A. Gary 62 Director 1996
Charles Scott Gibson 50 Director 1992
Nicolas Kauser 63 Director 1999
Steven P. Miller 55 Director 2001
Ralph G. Quinsey 47 President and Chief Executive Officer, 2002
Director
Dr. Walden C. Rhines 56 Director 1995
Steven J. Sharp 61 Chairman of the Board, Director 1992
Edward F. Tuck 71 Director 1994
Willis C. Young 62 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 chairman of the board
of RadiSys Corporation, and is a director of Livebridge, Inc., Pixelworks,
Inc., and Northwest Natural Gas Company. Mr. Gibson also serves on the Oregon
Health and Sciences University Governing and Foundation Board of Trustees and
the Oregon Community Foundation. He received a B.S. degree in Electrical
Engineering and an 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,
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Seattle, Washington (formerly McCaw Cellular Communications, Inc.). From 1984
through 1990, Mr. Kauser was 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 1998. 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 Inc.'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. Mr. Miller also serves as Chairman of the Board
of Directors of Xytrans, Inc. Mr. Miller has a B.S. degree in Electrical
Engineering from South Dakota School of Mines and Technology.
Mr. Quinsey joined our company in July 2002 as President and Chief
Executive Officer and a director. Mr. Quinsey was Vice President and General
Manager of the Analog Division of ON Semiconductor Corporation, a manufacturer
of semiconductors for various applications, from September 1999 to January
2002. From 1979 to September 1999, Mr. Quinsey was employed by Motorola, Inc.,
a manufacturer of semiconductors and communications equipment, in various
positions including most recently as Vice President and General Manager for the
RF/IF Circuits Division. Mr. Quinsey has a B.S. degree in electrical
engineering from Marquette University.
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, an M.S. degree and
Ph.D. in Materials Science and Engineering from Stanford University and an
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 an 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 Corporation. 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, Mr. Tuck 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.
5
Meetings and Committees of the Board of Directors
Our board of directors held nine meetings during 2002. No director
attended fewer than 75% of the meetings of the board of directors and
committees thereof in 2002 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 and governance committee.
In 2002, the audit committee consisted of directors Young, who serves as
Chairman, Gary and Tuck. The audit committee is responsible for appointing and
overseeing actions taken by our independent accountants, reviewing our external
financial reports and filings with the Securities and Exchange Commission ("the
SEC") and reviewing our internal financial controls. The audit committee held
eight meetings in 2002. No director attended fewer than 75% of the audit
committee meetings in 2002 during the period that he was a member of the audit
committee.
In 2002, the compensation committee consisted of directors Gibson, who
serves as Chairman, Gary, Kauser and Rhines. 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 four meetings
in 2002. No director attended fewer than 75% of the compensation committee
meetings in 2002 during the period that he was a member of the compensation
committee.
In 2002, the nominating and governance committee consisted of directors
Alvarez, who also serves as Chairman, Gary, Gibson, Kauser, Miller, Rhines,
Tuck and Young. The nominating and governance committee was formed in September
2002 and had one meeting in 2002. Each member of the nominating and governance
committee attended the sole meeting.
The purpose of the nominating and governance committee is to ensure that
the board of directors is properly constituted to meet its fiduciary
obligations to stockholders and our company and that we have and follow
appropriate governance standards. To carry out this purpose, the nominating and
governance committee shall: (1) assist the board of directors by identifying
prospective director nominees and to recommend to the board of directors the
director nominees for the next annual meeting of stockholders; (2) develop and
recommend to the board of directors the governance principles applicable to us;
(3) oversee the evaluation of the board of directors and management; and (4) to
recommend director nominees for each committee. The board of directors has
adopted a written charter for the nominating and governance committee and it is
attached hereto on Annex A.
The nominating and governance committee of the board of directors
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 and governance 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.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THE ELECTION OF EACH OF THE
NOMINEES NAMED ABOVE.
6
PROPOSAL TWO
AMENDMENT TO THE 1996 STOCK INCENTIVE PROGRAM TO INCREASE
THE AGGREGATE NUMBER OF SHARES OF COMMON STOCK
AVAILABLE FOR STOCK OPTIONS
The board of directors has approved an amendment to our 1996 stock
incentive program to increase the aggregate number of shares of our common
stock that may be issued under the 1996 stock incentive program by 6,500,000
shares to a total of 31,050,000 shares. At the annual meeting, our stockholders
are being asked to approve the amendment which is described below. As of the
record date, options to purchase 17,416,698 shares of our common stock were
outstanding under the 1996 stock incentive program, 7,319,774 of which were
vested.
The board of directors adopted the amendment to the 1996 stock incentive
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 stock incentive program to provide sufficient shares for
anticipated grants to be issued to both new and existing employees through May
2004. 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. The 1996 stock incentive
program helps us attract and retain 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 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 been adjusted only once since 2000 for most of
our employees;
o a profit sharing plan, which did not make any payments to employees in
2002 and made limited payments in 2001. Amounts listed as 2001 bonus
payments on the summary compensation table for certain executive
officers generally relate to amounts earned in 2000 but paid in 2001;
and
o a key employee incentive plan for management that did not make any
payments for fiscal 2002 results.
We did not re-price any stock options in 2002, nor did we grant any stock
options at less than fair market value from the 1996 stock incentive program.
In 2002, the board amended all of our option plans to prohibit re-pricing of
options and grants of stock options at less than fair market values. In 2002
and early 2003, we completed the acquisition of three business units: the
gallium arsenide operations of Infineon AG; a portion of the silicon germanium
business from IBM; and a portion of the optoelectronics business from Agere
Systems, Inc. In total we acquired approximately 400 employees and granted
stock options totaling 4,709,543 shares of which 3,189,671 were granted from
the 1996 stock incentive program and 1,519,872 from the 1998 nonstatutory stock
option plan. The impact of this was to reduce our pool of available stock
options.
The following summary of the 1996 stock incentive program is qualified in
its entirety by the specific language of the 1996 stock incentive program, a
copy of which is available upon written request to the secretary of our
company.
Background
The 1996 stock incentive program, approved by our board of directors in
February 1996 and our stockholders in May 1996, provides for the grant of
incentive stock options and nonstatutory stock options to officers and other
employees of our company or any parent or subsidiary of our company.
Additionally, the 1996 stock incentive program provides for the grant of
nonstatutory stock options to directors and consultants. As of the record date,
the persons eligible to participate in the 1996 stock incentive program
included 13 officers, eight non-employee directors and approximately 1,500
other employees of our company and its subsidiaries. During the year ended
December 31, 2002, options to purchase 4,355,426 shares of common stock were
granted under the 1996 stock incentive program at an average exercise price of
approximately $7.03 per share. At the time of its adoption,
7
2,400,000 shares were authorized and reserved for issuance under the 1996 stock
incentive program. In May 1997, the stockholders approved an amendment to the
1996 stock incentive 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 stock incentive 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 stock incentive 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 stock incentive 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 stock incentive program to increase the number of shares of common stock
reserved for issuance thereunder by 3,900,000 shares. In May 2002, the
stockholders approved an amendment to the 1996 stock incentive program to
increase the number of shares of common stock reserved for issuance thereunder
by 6,500,000 shares. As of the record date, options to purchase an aggregate of
17,416,698 shares of our common stock were outstanding, with an average
exercise price of $13.42 per share, and 10,179,473 shares (including the
6,500,000 shares subject to stockholder approval at this annual meeting) were
available for future grant. In addition, as of the record date 3,453,829 shares
have been purchased pursuant to exercise of stock options under the 1996 stock
incentive program. At the annual meeting, you are being asked to approve an
amendment of the 1996 stock incentive 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 stock incentive program in accordance with its
terms and to determine all questions arising in connection with its
interpretation and application. The compensation committee is currently
comprised of directors Gibson, Gary, Kauser and Rhines none of whom are
employees of our company. In any calendar year, no person may be granted
options under the 1996 stock incentive program exercisable for more than
750,000 shares, except the president who may not receive options under the 1996
stock incentive program exercisable for more than 1,500,000 shares.
Minimum Option Price
The exercise price of incentive stock options granted under the 1996 stock
incentive 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 our common stock or of
our subsidiary companies), and the exercise price of nonstatutory stock options
must equal or exceed 100% of the fair market value of common stock on the date
of grant. As defined in the 1996 stock incentive 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 stock
incentive 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
nonstatutory stock options, (ii) ten years from the date of grant in the case
of incentive stock options generally and (iii) five years from the date of
grant in the case of incentive stock options granted to employees who hold 10%
or more of the voting power of our common stock or any of our subsidiary
companies.
Means of Exercising Options
The board of directors or its 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
8
together with such other documentation as the administrator and the broker, 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 stock incentive program became effective when adopted by the
board of directors. The 1996 stock incentive 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 stock incentive program
at any time, provided, however, that we must obtain stockholder approval of any
amendment to the extent necessary and desirable to comply with 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 stock incentive 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 stock
incentive program is assignable or transferable by the optionee except by will
or by the laws of descent and distribution.
Federal Tax Effects of Incentive Stock Options
We intend that incentive stock options granted under the 1996 stock
incentive program will qualify as incentive stock options under Section 422 of
the Code. An optionee acquiring stock pursuant to an incentive stock option
receives favorable tax treatment in that the optionee does not recognize any
taxable income at the time of the grant of the incentive stock option or upon
its exercise (unless the alternative minimum tax applies, discussed below). The
tax treatment of the disposition of incentive stock option stock depends upon
whether the stock is disposed of within the holding period, which is the later
of two years from the date the incentive stock option is granted or one year
from the date the incentive stock option is exercised. If the optionee disposes
of incentive stock option 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 incentive stock option
stock, i.e. the option's exercise price. If the optionee disposes of incentive
stock option stock before the holding period expires, it is considered a
disqualifying disposition and the optionee must recognize all or part of the
gain on the disposition as ordinary income in the year of the disqualifying
disposition. Generally, the amount of ordinary income recognized will equal the
difference between the option's exercise price and the stock's fair market
value at the time the option is exercised (the "bargain purchase element") or,
if lower, the difference between the amount realized upon disposition and the
option exercise price. While the exercise of an incentive stock option does not
result in taxable income, there are implications with regard to the alternative
minimum tax. When calculating income for alternative minimum tax purposes, the
favorable tax treatment granted incentive stock options is disregarded and the
bargain purchase element of the incentive stock option will be considered as
part of alternative minimum tax income. Just as the optionee does not recognize
any taxable income on the grant or exercise of an incentive stock option, we
are not entitled to a deduction on the grant or exercise of an incentive stock
option. Upon a disqualifying disposition of incentive stock option 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.
9
Federal Tax Effects of Nonstatutory Stock Options
If an option does not meet the statutory requirements of Section 422 of
the Code and therefore does not qualify as an incentive stock option, 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 income recognized by an
employee. Although an optionee will generally realize ordinary income at the
time the nonstatutory stock option 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 and we will receive a corresponding tax deduction.
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.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THE APPROVAL OF THE
AMENDMENT TO OUR 1996 STOCK INCENTIVE PROGRAM TO INCREASE THE AGGREGATE NUMBER
OF SHARES OF COMMON STOCK AVAILABLE FOR STOCK OPTIONS.
10
PARTICIPATION IN THE 1996 PROGRAM
All option grants to executive officers under the 1996 stock incentive
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. The
administrator of the 1996 stock incentive program currently plans to make
grants to non-employee directors of 17,500 shares per each non-employee
director elected at the annual meeting if our stockholders approve Proposal No.
3. Therefore, except for these grants to non-employee directors, future awards
are not determinable. Effective on the date of the annual meeting, the
following non-employee directors, if elected and our stockholders approve
Proposal No. 3, would receive options to purchase the number of shares
specified:
Name Grants
- ---- ------
Francisco Alvarez 17,500 shares
Dr. Paul A. Gary 17,500 shares
Charles Scott Gibson 17,500 shares
Nicolas Kauser 17,500 shares
Steven P. Miller 17,500 shares
Dr. Walden C. Rhines 17,500 shares
Edward F. Tuck 17,500 shares
Willis C. Young 17,500 shares
The table below depicts the issuance of grants under the 1996 stock
incentive program during 2002 to (i) each of our directors, (ii) the chief
executive officer and the next four most highly compensated executive officers
in 2002 (the "Named Executive Officers"), (iii) current executive officers as a
group, (iv) non-employee directors as a group and (v) all other employees
(including all current officers who are not executive officers) as a group.
Name Grants 2002
- ---- -----------
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 10,000 shares
Ralph G. Quinsey(1) 500,000 shares
Dr. Walden C. Rhines 10,000 shares
Steven J. Sharp 20,000 shares
Edward F. Tuck 10,000 shares
Willis C. Young 10,000 shares
Thomas V. Cordner 42,500 shares
Raymond A. Link 47,500 shares
J. David Pye 37,500 shares
Ronald R. Ruebusch 37,500 shares
All current executive officers as a group (12 persons) 915,000 shares
All non-employee directors as a group (8 persons) 80,000 shares
All other employees (including all current officers who
are not executive officers) as a group 3,360,426 shares
- ---------------
(1) Mr. Quinsey was granted an option to purchase 500,000 shares of common
stock in July 2002 upon his appointment as our President and Chief
Executive Officer.
11
PROPOSAL THREE
AMENDMENT TO THE 1996 STOCK INCENTIVE PROGRAM TO AMEND
FORMULA GRANT MECHANISM FOR NON-EMPLOYEE DIRECTORS
The board of directors has approved an amendment to our 1996 stock
incentive program to amend the non-discretionary grant mechanism for the grant
of options to non-employee directors. At the annual meeting, our stockholders
are being asked to approve the amendment which is described below. As of the
record date, options to purchase 17,416,698 shares of our common stock were
outstanding under the 1996 stock incentive program, 7,319,774 of which were
vested.
Our 1996 stock incentive program currently provides for the grant of
options to purchase our common stock to non-employee directors pursuant to a
non-discretionary, automatic grant mechanism, whereby each such director is
automatically granted an option to purchase up to 10,000 shares on the date of
each annual meeting (the "Annual Option"). In addition, our 1996 stock
incentive program currently provides that each non-employee director, upon
first becoming a member of the board of directors on a date other than the date
of an annual meeting, is granted an initial option to purchase a number of
shares of our common stock equal to 10,000 multiplied by a fraction the
numerator of which is 12 minus the number of whole months that have elapsed
since the date of the last annual stockholder meeting and the denominator of
which is 12 (the "Partial Annual Option"). Each Annual Option and Partial
Annual Option has a five year term (subject to earlier termination upon the
individual's termination as a member of our board of directors) and vests as to
25% of the shares subject to such option six months after its date of grant and
as to an additional 12.5% of the shares subject to such option each calendar
quarter thereafter, so that 100% of the shares subject to such option shall be
exercisable two years after its date of grant.
Our 1996 stock incentive program also currently provides that upon the
date each non-employee director becomes a non-employee director (other than
employee directors who become non-employee directors by ceasing to be
employees), he or she will receive an option to purchase 33,000 shares of our
common stock (the "Initial Option"). An Initial Option has a ten year term
(subject to earlier termination upon the individual's termination as a member
of our board of directors) and vests and becomes exercisable as to 28% of the
shares subject to such option one year after its date of grant and as to an
additional 2% of the shares subject to such option each calendar month
thereafter, so that 100% of the shares subject to such option shall be
exercisable four years after the date of grant.
The board of directors adopted the amendment to the 1996 stock incentive
program, which is contingent upon shareholder approval, to amend the formula
grant mechanism with respect to the Annual Option and the Partial Annual
Option. For the Annual Option, each non-employee director will be automatically
granted an option to purchase up to 17,500 shares on the date of each annual
meeting, provided that he or she will continue to serve as a non-employee
director through such date. For the Partial Annual Option, each non-employee
director, upon first becoming a member of the board of directors on a date
other than the date of an annual meeting, will be automatically granted an
initial option to purchase a number of shares of our common stock equal to
17,500 multiplied by a fraction the numerator of which is 12 minus the number
of whole months that have elapsed since the date of the last annual stockholder
meeting and the denominator of which is 12, provided that he or she will
continue to serve as a non-employee director through such date. The amendment
does not impact the Initial Option or the vesting or the term of the Annual
Option or the Partial Annual Option.
In February 2003, the board of directors, upon review of comparable
company data and in light of the added governance responsibilities for
non-employee directors, restructured compensation for our board members. The
board approved the amendment described above after reviewing stock option data
provided by the Radford Survey of 13 semiconductor companies of a size similar
to TriQuint and a peer review of nine other companies. See page 22 for a
discussion of the additional changes that the board of directors approved with
respect to director compensation. The board of directors believes the amendment
to the formula grant mechanism is necessary in order to provide additional
long-term incentives to our current non-employee directors, as well as to
attract and retain the best available candidates for these positions in the
future.
For a summary of the 1996 stock incentive program, please see Proposal No.
2. The summary is qualified in its entirety by the specific language of the
1996 stock incentive program, a copy of which is available upon written request
to the secretary of our company.
12
For information about the issuance of option grants to directors,
executive officers and all other employees under the 1996 stock incentive
program, please see Proposal No. 2.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THE APPROVAL OF THE
AMENDMENT TO OUR 1996 STOCK INCENTIVE PROGRAM TO AMEND THE FORMULA GRANT
MECHANISM FOR NON-EMPLOYEE DIRECTORS.
13
PROPOSAL FOUR
STOCKHOLDER PROPOSAL
We expect Calvert Asset Management Company, Inc., 4550 Montgomery Avenue,
Bethesda, Maryland 20814, a holder of 627 shares of our common stock, to
present the following resolution for adoption at the annual meeting (the
"Proposal"), for the reasons stated. We recommend that you vote against the
Proposal and ask you to read through our response, which follows the Proposal.
Proposal
WHEREAS, TriQuint Semiconductor is a leading integrated circuit
manufacturer, and competes in a global marketplace with companies that conform
to international environmental, health and safety (EHS) standards.
Leading semiconductor companies, though the International Technology
Roadmap for Semiconductors (ITRS), have created such a guide for microchip
manufacturers by detailing relevant EHS standards. Energy efficiency, water
efficiency, hazardous chemical consumption, and waste reduction rank among the
most important environmental indicators identified by the Roadmap. Conformance
to S2 Safety Guidelines and S8 Ergonomic/ Human Factor Guidelines are
similarly identified as crucial health and safety elements of manufacturing.
TriQuint Semiconductor currently does not disclose any environment, safety
and health data mentioned above. The company does not show environmental
awareness through an environmental management system or environmental
certification, nor does it publicly promote any health and safety policies or
programs. The company makes no mention of energy and water efficiency, or
hazardous chemical and waste reduction anywhere in its public documents.
We believe that environment, health and safety data are important
indicators, which reflect the overall state of TriQuint's business. Indeed,
even the Semiconductor Industry Association (SIA), whose member companies
comprise 90 percent of U.S. semiconductor production, has made the link between
EHS disclosure and good business stewardship. We further believe that
shareholders should be apprised of this data, as transparency ensures proper
corporate governance and oversight.
BE IT RESOLVED, THAT we request that TriQuint prepare a report at
reasonable cost, which may exclude confidential information. This report shall
be made available to shareholders and employees, within 6 months of the
company's 2003 annual general meeting of shareholders and shall include:
1. A table identifying the following environmental indicators, both in
absolute amount and in production-adjusted or revenue-adjusted amounts:
a. Energy Consumption
b. Water Consumption
c. Hazardous Chemical Consumption
d. Chemical Waste Treatment/Disposal
2. A summary of policies and initiatives to promote sound environmental
management, including ISO 14001 certification, EPA partnerships, and voluntary
programs.
3. A description of policies and programs in place to ensure the health
and safety of clean room workers, including S2 Safety Guidelines, S8
Ergonomic/Human Factor Guidelines, and efforts to mitigate the effects of
handling hazardous chemicals during the manufacturing process.
Supporting Statement
The report should disclose the company's energy consumption, water
consumption, hazardous chemical consumption and chemical waste
treatment/disposal if our current public disclosure of such environmental
impact indicators are not adequate. The company should demonstrate
environmental awareness through implementation of an environmental management
system or environmental certification. The report should summarize the policies
and initiatives to promote sound environmental management, including ISO 14001
certification, EPA partnerships and
14
voluntary programs if our current public disclosures do not adequately inform
the public of our commitment to good environmental stewardship. Finally, the
report should discuss policies and programs in place to ensure the health and
safety of our clean room workers and efforts to mitigate the effects of
handling hazardous chemicals during the manufacturing process if our policies
and programs do not adequately minimize environmental safety hazards to our
workers.
Recommendation of the Board of Directors of TriQuint
We believe the Proposal does not serve the best interests of our company
or our stockholders and recommend a vote against it.
We believe that implementation of the Proposal, though well-intentioned,
would burden us and our stockholders with additional requirements and cost and
that we would not realize any offsetting added benefit to the environment or
stockholders. We are firmly committed to operating in an environmentally
responsible, efficient and safe manner, and we are proud of our environmental
stewardship to date. We recognize that concern for the quality of the
environment warrants extraordinary efforts on the part of those in a position
to protect and improve it. Accordingly, we have adopted and implemented
policies which, in many respects, go beyond legal mandates. Moreover, our
products, plants and production processes are updated, rebuilt, redesigned or
replaced to produce less waste and be more energy efficient.
Our environmental stewardship extends to responsibility for our products
as well as to our employees. We are aware of the possible consequences of
improper waste management and disposal and take our responsibilities to our
customers and the planet seriously. We have made significant progress in this
area and we see promise in our future product plans for making still more
environmentally friendly products, including new technologies that will reduce
hazardous waste and energy consumption.
Today we are engaged in numerous initiatives that benefit the environment
and the health concerns of our employees. For example, we have internal
policies that promote quality and sound environmental management, our
facilities are ISO 9000 and 9001 certified and we adhere to a variety of
federal, state and local environmental rules and regulations. The proponent
even noted our adherence to social responsibility and on December 12, 2002,
sent us a letter of congratulations and included our company as part of the
Calvert Social Index[TM].
The Proposal would require, among other things, that we prepare and
release a lengthy and complex report in six months. Members of management
already have addressed the potential environmental impact of our operations as
they and we deem appropriate in light of detailed knowledge of our operations,
and we continue to evaluate environmental policy on an ongoing basis. We do not
believe that the costly study and report proposed by the stockholder is
necessary or appropriate. We have considered the Proposal, supporting statement
and the additional obligations sought to be imposed on us, and do not believe
any significant benefit to the environment, or to our stockholders or us, would
result from this additional administrative effort and cost.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "AGAINST" THE PROPOSAL.
15
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table provides information regarding the beneficial
ownership of our common stock as of April 2, 2003 by:
o each stockholder known by us to beneficially own more than 5% of our
common stock;
o each of our directors and director nominees;
o each of our executive officers named in the summary compensation table
on page 18; and
o all of our directors and 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.
Number of Number of Percent of
Shares Shares Total Shares Shares
Beneficially Underlying Beneficially Beneficially
Beneficial Owners (1) Owned Options Owned Owned (%) (2)
- --------------------- ------------ ---------- ------------ -------------
5% Stockholders:
Sawtek Inc. Employee Stock Ownership 8,306,231 -- 8,306,231 6.24%
and 401(k) Plan (3) (the "ESOP")
c/o GreatBanc Trust Company
1301 W. 22nd Street
Oak Brook, IL 60523
Directors and Named Executive Officers:
Francisco Alvarez 31,495 37,440 68,935 *
Dr. Paul A. Gary 10,000 114,440 124,440 *
Charles Scott Gibson (4) 18,600 189,000 207,600 *
Steven P. Miller (5) 1,271,914 20,840 1,292,754 *
Nicolas Kauser 4,000 124,200 128,200 *
Ralph G. Quinsey 30,000 -- 30,000 *
Dr. Walden C. Rhines (6) 6,000 126,000 132,000 *
Steven J. Sharp (7) 202,352 977,582 1,179,934 *
Edward F. Tuck 38,000 161,000 199,000 *
Willis C. Young (8) 16,109 24,676 40,785 *
Thomas V. Cordner 34,523 209,420 243,943 *
Raymond A. Link (9) 86,201 212,247 298,448 *
J. David Pye 50,105 198,272 248,377 *
Ronald R. Ruebusch 97,033 118,956 215,989 *
All directors and executive officers as a
group (21 persons) 2,159,183 3,353,865 5,513,048 4.14%
- ------------
* 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 133,198,418 shares of common
stock outstanding as of April 2, 2003 together with applicable options for
such stockholders. Beneficial ownership is determined in accordance
16
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 April 2, 2003 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) GreatBanc Trust Company 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 7,474,632
shares allocated to participants' accounts and 831,599 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) Includes 18,600 shares held in trust by Mr. Gibson.
(5) 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.
(6) Includes 6,000 shares held by Dr. Rhines' wife.
(7) Includes 13,600 shares held in a charitable trust by Mr. Sharp.
(8) Includes 16,109 shares held in trust by Mr. Young.
(9) Includes 45,572 shares held in the ESOP for Mr. Link.
17
EXECUTIVE COMPENSATION AND OTHER MATTERS
Summary of Cash and Certain Other Compensation
The following table provides certain summary information for 2002, 2001
and 2000 concerning compensation awarded to, earned by or paid to our named
executive officers.
SUMMARY COMPENSATION TABLE
Long Term
Compensation
Award
-------------
Annual Compensation Securities All Other
Name and ------------------------------ Underlying Compensation
Principal Position Year Salary ($) Bonus ($) (1) Options (#) ($) (5)
- ------------------------------------------------------------------------------------------------------------
Ralph G. Quinsey (2) 2002 148,590 25,000 500,000 68,464
President and 2001 -- -- -- --
Chief Executive Officer 2000 -- -- -- --
Steven J. Sharp (3) 2002 288,982 -- 20,000 500
Chairman of the Board 2001 178,797 143,433 20,000 500
2000 300,000 142,503 120,000 1,000
Thomas V. Cordner 2002 219,850 -- 42,500 500
Vice President, TriQuint Texas 2001 208,000 66,205 53,500 500
2000 208,112 79,284 40,000 1,000
Raymond A. Link (4) 2002 225,632 -- 47,500 40,696
Vice President, Finance and 2001 196,322 1,263 112,020 300,423
Administration, Chief Financial 2000 -- -- -- --
Officer and Secretary
J. David Pye 2002 249,309 -- 37,500 500
Vice President, TriQuint Oregon 2001 230,850 76,713 53,500 500
2000 234,116 92,283 40,000 1,000
Ronald R. Ruebusch 2002 209,415 -- 37,500 500
Vice President, TriQuint Oregon 2001 205,000 64,615 53,500 500
2000 196,539 75,788 40,000 1,000
- ------------
(1) Represents payments under the company-wide profit sharing program and
payments under the Key Employee Incentive Plan.
(2) Mr. Quinsey joined TriQuint in July 2002 as President and Chief Executive
Officer. Included in all other compensation for Mr. Quinsey is $67,964 for
moving and relocation costs. Mr. Quinsey received a $25,000 sign on bonus.
(3) Mr. Sharp was President and Chief Executive Officer until July 2002.
(4) Mr. Link joined TriQuint in July 2001 upon the merger with Sawtek Inc.
Prior to July 2001, Mr. Link was Chief Financial Officer at Sawtek Inc.
Included in all other compensation for Mr. Link is a $40,196 contribution
from the Sawtek Inc. Employee Stock Ownership and 401(k) Plan ("ESOP") in
2002, a contribution of $199,923 from the ESOP in 2001, and a payment of
$100,000 for moving and relocation in 2001.
(5) Includes matching contributions to the company 401(k) plan.
18
Stock Option Grants in 2002
The following table sets forth information concerning stock option grants
under the 1996 stock incentive program to each of the named executive officers
during 2002.
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable Value
At Assumed Annual Rates
of Stock Price Appreciation
Individual Grants (1) for Option Term (2)
----------------------------------------------------------- ---------------------------
Number of Percent of
Securities Total Options
Underlying Granted to Exercise
Options Employees in Price Expiration
Name Granted Fiscal Year (3) Per Share Date 5% ($) 10% ($)
- ---- ---------- --------------- --------- ---------- ----------- -----------
Ralph G. Quinsey (4) 500,000 11.69% $7.21 7/16/12 $2,267,165 $5,745,441
Steven J. Sharp (5) 20,000 0.47% 9.69 4/29/12 121,879 308,867
Thomas V. Cordner (6) 21,250 0.50% 9.69 7/1/12 129,497 328,171
Thomas V. Cordner (6) 21,250 0.50% 6.25 7/1/12 83,525 211,668
Raymond A. Link (6) 23,750 0.56% 9.69 7/1/12 144,732 366,779
Raymond A. Link (6) 23,750 0.56% 6.25 7/1/12 93,352 236,571
J. David Pye (6) 18,750 0.44% 9.69 7/1/12 114,262 289,563
J. David Pye (6) 18,750 0.44% 6.25 7/1/12 73,698 186,766
Ronald R. Ruebusch (6) 18,750 0.44% 9.69 7/1/12 114,262 289,563
Ronald R. Ruebusch (6) 18,750 0.44% 6.25 7/1/12 73,698 186,766
- ------------
(1) Options granted under the 1996 stock incentive 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 2002, we granted options covering a total of 4,275,426 shares to our
employees under the 1996 stock incentive program.
(4) Option vests 28% on July 16, 2003, then 2% monthly until fully vested on
July 16, 2006.
(5) Option vests in equal monthly installments from June 1, 2002, through July
1, 2003.
(6) One-third of total option vests in equal monthly installments from June 1,
2003, through June 1, 2004; and two-thirds of total option vests in equal
monthly installments from June 1, 2004, through June 1, 2005.
19
Stock Option Exercises and Holdings
The following table provides information relating to option exercises by
the executive officers identified in the Summary Compensation Table during
2002. In addition, it indicates the number and value of vested and unvested
options held by these executive officers as of December 31, 2002.
The "Value Realized" on option exercises is equal to the difference
between the fair market value of our common stock on the date of exercise less
the exercise price. The "Value of Unexercised In-the-Money Options at Fiscal
Year-End" is based on $4.24 per share, the closing sales price of our common
stock in trading on the Nasdaq National Market on December 31, 2002, less the
exercise price, multiplied by the aggregate number of shares subject to
outstanding options.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Shares Options at Fiscal Year-End (#) at Fiscal Year-End ($)
Acquired on Value ----------------------------- -----------------------------
Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
------------ ------------ ------------ -------------- ------------ --------------
Ralph G. Quinsey -- -- -- 500,000 -- --
Steven J. Sharp 75,000 565,725 877,574 220,008 608,870 --
Thomas V. Cordner -- -- 177,162 155,758 24,066 --
Raymond A. Link -- -- 196,116 154,774 119,280 --
J. David Pye -- -- 166,022 150,750 134,621 --
Ronald R. Ruebusch 10,000 62,833 102,254 149,750 77,666 --
Equity Compensation Plan Information
The following table provides information as of December 31, 2002 about our
common stock that may be issued upon the exercise of options and rights granted
to employees, consultants or members of our board of directors under all
existing equity compensation plans including the 1987 Stock Incentive Program,
the 1996 Stock Incentive Program, the 1998 Nonstatutory Stock Option Plan, the
1998 Employee Stock Purchase Plan, the Sawtek Inc. Second Stock Option Plan and
the Sawtek Inc. Stock Option Plan for Acquired Companies:
Number of securities
remaining available for
Number of securities future issuance under
to be issued upon Weighted average equity compensation
exercise of exercise price of plans (excluding
outstanding options, outstanding options, securities reflected in
warrants and rights warrants and rights column (a))
-------------------- -------------------- -----------------------
Plan category (a) (b) (c)
- ------------- -------------------- -------------------- -----------------------
Equity compensation plans approved by
securityholders 19,030,746 (1) $15.00 (3) 7,208,674
Equity compensation plans not approved
by securityholders 1,644,642 (2) $14.27 1,533,959
Total 20,675,388 $14.94 (3) 8,742,633
- ------------
(1) Of these shares of common stock, 385,358 shares were subject to outstanding
options under the 1987 Stock Incentive Program, 15,422,570 shares were
subject to outstanding options under the 1996 Stock Incentive Program,
1,686,065 shares were subject to outstanding options under the Sawtek Inc.
Second Stock Option Plan and 29,629 shares were subject to outstanding
options under the Sawtek Inc. Stock Option Plan for Acquired Companies. In
addition, there are 1,507,124 shares of our common stock reserved for
future issuance under our 1998 Employee Stock Purchase Plan. The 1998
Employee Stock Purchase Plan provides for an automatic increase up to
2,400,000 shares in May of each year.
20
(2) Of the 1,533,959 shares of common stock available for future issuance under
the 1998 Nonstatutory Stock Option Plan as of December 31, 2002, we granted
1,519,872 options to purchase our common stock in January 2003 to new
employees from the acquisition of the Agere optoelectronics business.
(3) The weighted average exercise price excludes 1,507,124 shares in the 1998
Employee Stock Purchase Plan. We are unable to ascertain with specificity
the number of securities to be issued upon exercise of outstanding rights
under the 1998 Employee Stock Purchase Plan or the weighted average
exercise price of outstanding rights under the 1998 Employee Stock Purchase
Plan. The 1998 Employee Stock Purchase Plan provides that shares of our
common stock may be purchased at a per share price equal to 85% of the fair
market value of the common stock on the beginning of the offering period or
a purchase date applicable to such offering period, whichever is lower.
1998 Nonstatutory Stock Option Plan
In January 1998, the board of directors approved the 1998 Nonstatutory
Stock Option Plan (the "1998 Plan"). The 1998 Plan was subsequently amended and
restated in March 2002. The 1998 Plan has not been submitted to our
stockholders for approval.
The material terms of the 1998 Plan are summarized as follows:
Purpose
The purposes of the 1998 Plan are to attract and retain the best available
personnel for positions of substantial responsibility, to provide additional
incentive to employees and consultants and to promote the success of our
business.
Eligibility to Participate in the 1998 Plan
Nonstatutory stock options may be granted to our consultants and our
employees who are not officers or directors.
Number of Shares Covered by the 1998 Plan
The board of directors initially reserved 500,000 shares of our common
stock for issuance under the 1998 Plan. Our shares of common stock have split
three times (3 for 2 stock split in July 1999, 2 for 1 in February 2000 and 2
for 1 in July 2000), thus producing an equivalent effect of a 6 for 1 stock
split. Due to these stock splits, the shares of our common stock reserved for
issuance under the 1998 Plan increased from 500,000 to 3,000,000 shares. In
December 2002, the board of directors amended the 1998 Plan to increase the
aggregate number of shares of common stock authorized for issuance by 1,000,000
due to the grant of stock options to our new employees from businesses that we
acquired in 2002 and early 2003. As of April 2, 2003, options to acquire
821,399 shares were exercised, options to acquire 3,138,966 shares were
outstanding and options to acquire 39,635 shares remain to be granted under the
1998 Plan, out of the 4,000,000 shares reserved for issuance.
Awards Permitted under the 1998 Plan
The 1998 Plan authorizes the granting of nonstatutory stock options only.
Terms of Options
The exercise price of an option may not be less than the fair market value
of our common stock on the date of grant and the term of each option shall be
stated in the stock option agreement. All of the options that are currently
outstanding under the 1998 Plan vest and become exercisable over a four-year
period beginning at the grant date. Payment of the exercise price may be made
by cash, check, promissory note, cashless exercise, other shares of our common
stock, any other form of consideration permitted by applicable law or any
combination of the foregoing methods of payment. Options may be made
exercisable only under the conditions the board of directors or its appointed
committee may establish. If an optionee's employment terminates for any reason,
the option remains exercisable for a fixed period of three months or such
longer period as may be fixed by the board of directors or its appointed
committee up to the remainder of the option's term.
21
Capital Changes
The number of shares available for future grant and previously granted but
unexercised options are subject to adjustment for any future stock dividends,
splits, mergers, combinations, reclassification of the common stock or other
changes in capitalization as described in the 1998 Plan.
Merger or Change of Control
In the event of a merger of our company with or into another corporation,
or the sale of substantially all of our assets, each outstanding option under
the 1998 Plan must be assumed or an equivalent option or right substituted by
the successor corporation or a parent or subsidiary of such successor
corporation. If the successor corporation refuses to assume or substitute for
the option, the optionee will fully vest in and have the right to exercise the
option as to all of the optioned stock, including shares as to which it would
not otherwise be vested or exercisable.
Termination and Amendment
The 1998 Plan provides that the board of directors may amend or terminate
the 1998 Plan without stockholder approval, but no amendment or termination of
the 1998 Plan or any award agreement may adversely affect any award previously
granted under the 1998 Plan without the written consent of the optionee.
DIRECTOR COMPENSATION
Directors who are employees of our company receive no additional or
special remuneration for serving as directors. Each non-employee director
currently receives, in addition to reimbursement for out-of-pocket expenses:
o An annual retainer of $15,000, payable in four equal quarterly
installments;
o An annual fee of $3,000 for members of the audit committee or the
compensation committee; and
o An annual fee of $2,000 for the chairman of each of the audit
committee, the compensation committee, and the nominating and
governance committee.
The 1996 stock incentive 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 stock incentive program also provides for an automatic,
nondiscretionary annual grant, effective at each annual meeting of
stockholders, of an option to purchase 10,000 shares (17,500 if Proposal No. 3
is approved) 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.
The board of directors upon review of comparable company data and in light
of the added governance responsibilities restructured the compensation in
February 2003 to reflect the above compensation levels. The board of directors
felt that compensation needed to reflect the responsibilities of committee
assignments and chairmanships, not mere attendance at meetings, so it
eliminated the per-meeting fees and structured compensation aimed at
responsibility. In 2002, non-employee directors received an annual retainer of
$9,000, a fee of $1,500 per board meeting attended in person, a fee of $500 per
meeting attended by telephone, and a fee of $500 per committee meeting not held
in conjunction with a board meeting. In addition, upon review of stock option
data provided by the Radford Survey of 13 similar size semiconductor companies
and a peer review of nine other companies, the board of directors increased the
number of shares under an annual automatic grant mechanism for non-employee
directors from an option to purchase 10,000 shares of common stock to an option
to purchase 17,500 shares of common stock, subject to shareholder approval of
Proposal No. 3.
22
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND
CHANGE-OF-CONTROL ARRANGEMENTS
Employment Contracts and Termination of Employment Arrangements
In September 1991, under the terms of his acceptance of employment, Steven
J. Sharp, our chairman of the board of directors, entered into a letter
agreement with us. In the event that we desire to terminate Mr. Sharp's
employment, we must provide Mr. Sharp with one year's advance notice or, in
lieu of such notice, a payment equal to one year's salary.
In June 2002, under the terms of his acceptance of employment, Ralph G.
Quinsey, our president and chief executive officer, entered into a letter
agreement with us pursuant to which he was to receive an annual base salary of
$330,200, subject to annual review, an annual target bonus of 50% of his base
salary subject to compliance with performance against a corporate wide bonus
plan and a stock option grant for 500,000 shares of our common stock (vesting
28% on first anniversary of option grant, then 2% monthly thereafter until
fully vested), a moving and relocation allowance consistent with our corporate
polices, with a tax equalization adjustment, and a signing bonus of $25,000. In
the event that we desire to terminate Mr. Quinsey's employment without cause,
we must provide Mr. Quinsey a lump sum payment equal to one year's compensation
at Mr. Quinsey's then-current base salary and health and life benefits at
company expense for 12 months. The agreement also provides for a change of
control benefit of full vesting of 12 months' worth of unvested options in the
event Mr. Quinsey is terminated without cause or resigns for good reason within
12 months of a change of control.
In November 2002, we entered into an employment agreement with Raymond A.
Link, our vice president of finance and administration, chief financial officer
and secretary. Pursuant to the agreement, Mr. Link receives an annual base
salary of $225,750, subject to annual review, an annual bonus consistent with
our bonus programs and an annual option grant in accordance with our current
guidelines. The agreement also 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 granted to
Mr. Link in July 2001 in the event of (i) a change of control or (ii) a merger
of our company resulting in an ownership change of less than 50% and greater
than 30% in which Mr. Link is not retained as the Chief Financial Officer of
the surviving entity for a period of not less than one year.
Change-of-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, 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.
23
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Our compensation committee is responsible for determining salaries,
incentives and other forms of compensation for directors and executive
officers. Our compensation committee consists of Messrs. Gibson, Gary, Kauser
and Rhines. Mr. Quinsey, our chief executive officer, participates in all
discussions and decisions regarding salaries and incentive compensation for all
of our executive officers, except during discussions regarding his own salary
and incentive compensation. No interlocking relationship exists between any
member of our compensation committee and any member of any other company's
board of directors or compensation committee.
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 compensation committee reviews and approves TriQuint's executive
compensation policies. The compensation committee operates under a written
charter adopted by the board of directors in September 2002 which is attached
hereto as Annex B. The following is the report of the compensation committee
describing compensation policies and the rationale applicable to the
compensation paid to TriQuint's executive officers for fiscal 2002.
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 established by the compensation 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 TriQuint's long-term performance and
stockholder interests.
The compensation 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 compensation 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 and other executive
officers of TriQuint are reviewed annually by the compensation committee. The
compensation 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 chief executive officer and other executive officers of TriQuint. The
24
compensation committee and full board of directors set the base salary for Mr.
Quinsey on his date of hire in July 2002 at $330,200 per year subject to annual
review. The compensation committee will review Mr. Quinsey's compensation as
part of his annual review after he has been with TriQuint for approximately one
year.
Quarterly Profit Sharing
All employees participate in TriQuint's profit sharing program. Profit
sharing is paid quarterly and equals a percentage of the employees' quarterly
W-2 income. The profit sharing pool is 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 profit sharing amounts.
There were no profit sharing payments to any employee or officer from this
program in 2002 and substantially all of the payments listed in the summary
compensation table for 2001 were amounts earned based on the financial results
for 2000, but the actual payment was made in 2001.
Officer and Key Employee Incentive Plan
In February 2003, the compensation committee of the board of directors
approved the officer and key employee incentive plan for 2003. Participants
must be employed full-time by TriQuint during the year to be eligible for a
bonus. The bonus is based on actual versus budget operating income adjusted for
certain one-time gains and charges. The bonuses vary with the level of
achievement of budgeted operating income. There were no payments in 2001 and
2002 to any officer or employee pursuant to the bonus program.
Long-Term Incentives
TriQuint provides its executives, including the chief executive officer,
long-term incentives through the grant of stock options under its 1996 stock
incentive program. The purpose of the 1996 stock incentive 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
compensation 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.
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:
Mr. Charles Scott Gibson -- Chairman
Dr. Paul Gary
Mr. Nicolas Kauser
Dr. Walden C. Rhines
25
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 currently consists of three non-employee, independent
directors: Willis C. Young, Paul Gary and Edward Tuck. The audit committee
evaluates audit performance, manages relations with our independent accountants
and evaluates policies and procedures relating to internal accounting functions
and controls. The board of directors has adopted a written charter for the
audit committee which details the responsibilities of the audit committee and
is attached hereto as Annex C. This report relates to the activities undertaken
by the audit committee in fulfilling such responsibilities.
On July 30, 2002, the Sarbanes-Oxley Act was signed into law. In September
2002, the committee met with representatives of management, legal counsel and
our independent accountants to further understand the provisions of the
Sarbanes-Oxley Act. We also reviewed processes that already are in place as
well as those that will be implemented to comply with the requirements of the
Sarbanes-Oxley Act as they become effective.
The audit committee members are not active professional accountants or
auditors, and their functions are not intended to duplicate or to certify the
activities of management and the independent accountants. The audit committee
oversees our financial reporting process on behalf of the board of directors.
Management has the primary responsibility for the financial statements and
reporting process, including the systems of internal controls. In fulfilling
its oversight responsibilities, the audit committee reviewed with management
the audited financial statements included in the Annual Report on Form 10-K for
the fiscal year ended December 31, 2002. This review included a discussion of
the quality and the acceptability of the financial reporting and controls,
including the clarity of disclosures in the financial statements.
The audit committee also reviewed with KPMG LLP, the company's independent
accountants, who are responsible for expressing an opinion on the conformity of
our audited financial statements with accounting principles generally accepted
in the United States, their judgments as to the quality and the acceptability
of our financial reporting and such other matters required to be discussed with
the audit committee under auditing standards generally accepted in the United
States, including Statement on Auditing Standards No. 61, as amended. The audit
committee has received the written disclosures and the letter from the
independent accountants required by Independence Standards Board Statement No.
1. The audit committee discussed with KPMG LLP their independence from
management and TriQuint, including the matters in their written disclosures
required by Independence Standards Board Statement No. 1.
The audit committee further discussed with our independent accountants the
overall scope and plans for their audits. The audit committee meets
periodically with the independent accountants, with and without management
present, to discuss the results of the independent accountants' evaluations of
our internal controls, and the overall quality of our financial reporting.
In reliance on the reviews and discussions referred to above, the audit
committee recommended to the board of directors (and the board has approved)
that the audited financial statements be included in the Annual Report on Form
10-K for the fiscal year ended December 31, 2002 for filing with the Securities
and Exchange Commission.
SUBMITTED BY THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS:
Mr. Willis C. Young -- Chairman
Dr. Paul Gary
Mr. Edward Tuck
26
INDEPENDENT ACCOUNTANTS
The audit committee of the board of directors has selected KPMG LLP,
independent accountants, to audit our financial statements for the fiscal year
ending December 31, 2003. We expect that a representative of KPMG LLP will be
present at the annual meeting and will be available to answer any appropriate
questions.
Audit Fees
Audit fees billed to us by KPMG LLP totaled $433,125 for the audit of our
consolidated annual financial statements for the fiscal year 2002 included in
our Annual Report on Form 10-K and review of the financial statements included
in our quarterly reports on Form 10-Q.
Financial Information Systems Design and Implementation Fees
We did not engage KPMG LLP to provide advice to us regarding financial
information systems design and implementation during the fiscal year ended
December 31, 2002.
All Other Fees
Fees billed to us by KPMG LLP during fiscal 2002 for all other services
totaled $199,515, which includes $188,015 for tax related services and $11,500
for audits of financial statements of certain employee benefit plans. Before
selecting KPMG LLP, the audit committee carefully considered KPMG LLP's
qualifications as independent accountants. This included a review of the
qualifications of the engagement team, the quality control procedures the firm
has established, any issues raised by the most recent quality control review of
the firm, as well as its reputation for integrity and competence in the fields
of accounting and auditing. The audit committee's review also included matters
to be considered under the SEC's Rules of Auditor Independence, including the
nature and extent of non-audit services, to ensure that the accountants'
independence will not be impaired. The audit committee expressed its
satisfaction with KPMG LLP in all of these respects. The audit committee of our
board of directors has determined that the provision of services by KPMG LLP
other than for audit related services is compatible with maintaining the
independence of KPMG LLP as our independent accountants.
27
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.
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 the SIC Code 3674 --
Semiconductors and Related Devices Index for the period commencing December 31,
1997 and ending on December 31, 2002.
TOTAL SHAREHOLDER RETURNS
[DATA BELOW IS REPRESENTED BY A LINE CHART IN THE ORIGINAL REPORT]
Base Years Ending
Period
Company Name / Index Dec97 Dec98 Dec99 Dec00 Dec01 Dec02
- ------------------------------- ------------------------------------------------
TRIQUINT SEMICONDUCTOR INC - 100 95.06 824.07 1294.44 363.26 125.63
NASDAQ U.S. INDEX 100 140.99 261.48 157.42 124.89 86.33
PEER GROUP 100 155.44 310.15 247.62 217.15 103.17
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.
28
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Since January 1, 2002, 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 our common stock, 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 and Other
Matters." We intend that any such future transactions 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. Steven P.
Miller, one of our directors, is the Chairman of the Board of Directors of
Xytrans, Inc. In 2002, we made an equity investment in Xytrans in the amount of
approximately $700,000 and have a total investment in Xytrans of approximately
$1.7 million. In addition, in 2002, we sold products to Xytrans totaling
approximately $250,000. We believe that our transactions with Xytrans were on
terms no more favorable than those with unrelated parties. Edward F. Tuck, one
of our directors, is the Chairman of the Board of Directors and Chief Executive
Officer of Wavestream Corporation. In 2002, we made an equity investment in
Wavestream in the amount of approximately $266,000 and we have a total
investment of approximately $276,000. We believe that our transaction with
Wavestream was on terms no more favorable than those with unrelated parties. In
2002, we provided Mr. Ralph G. Quinsey with a relocation and moving package of
approximately $67,964 and provided Mr. Link with an apartment with rent of
approximately $9,060. In 2001, we provided Mr. Link with a relocation and
moving package of approximately $100,000 plus rental on an apartment totaling
approximately $3,775.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 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 regulations 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 during the fiscal year ended December 31, 2002 all executive officers,
directors and greater than 10% stockholders complied with all applicable filing
requirements.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS FOR 2004 ANNUAL MEETING
As a stockholder, you may be 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 2004 annual
meeting of stockholders, the proposal must be received by us no later than
December 17, 2003 to be considered for inclusion in the proxy statement and
form of proxy relating to that meeting.
If you intend to present a proposal at our 2004 annual meeting and the
proposal is not intended to be included in our proxy statement relating to that
meeting, you must give us advance notice of such proposal in accordance with
our bylaws. Pursuant to our bylaws, in order for a stockholder proposal to be
deemed properly presented under such circumstances, a stockholder must deliver
notice of such proposal to our corporate secretary at our principal executive
offices no later than the close of business on December 17, 2003. However, if
the date of the 2004 annual meeting is more than 30 days before May 21, 2004,
the first anniversary of this year's annual meeting, stockholders must give us
notice of any stockholder proposals within a reasonable time before the mailing
date of the proxy statement. If a stockholder does not provide us with notice
of a stockholder proposal in accordance with the deadlines described above, the
stockholder will not be permitted to present the proposal to the stockholders
for a vote at the meeting.
The SEC rules establish a different deadline with respect to discretionary
voting (the "Discretionary Vote Deadline") for stockholder proposals that are
not intended to be included in a company's proxy statement. The Discretionary
Vote Deadline for our 2004 annual meeting is March 1, 2004, which is 45
calendar days prior to the anniversary of the mailing date of this proxy
statement. If a stockholder gives notice of a proposal after the Discretionary
Vote Deadline, our 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 our 2004 annual meeting. Because the stockholder
29
proposal deadline provided for in our bylaws cannot be determined until we
publicly announce the date for our 2004 annual meeting, it is possible that the
bylaw deadline may occur after the Discretionary Vote Deadline. In such a case,
a stockholder proposal received after the Discretionary Vote Deadline but
before the bylaw deadline would be eligible to be presented at the next year's
annual meeting, but we believe that our proxy holders would be allowed to use
the discretionary authority granted by the proxy card to vote against the
proposal at the meeting without including any disclosure of the proposal in the
proxy statement relating to such meeting.
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 proxy card to vote the shares they represent
as the board of directors may recommend.
THE BOARD OF DIRECTORS OF
TRIQUINT SEMICONDUCTOR, INC.
30
ANNEX A
TRIQUINT SEMICONDUCTOR, INC.
NOMINATING AND GOVERNANCE COMMITTEE CHARTER
(Adopted September 25, 2002)
PURPOSE:
The purpose of the Nominating and Governance Committee of the Board of
Directors (the "Board") of TriQuint Semiconductor, Inc. (the "Company") is to
ensure that the Board is properly constituted to meet its fiduciary obligations
to stockholders and the Company and that the Company has and follows
appropriate governance standards. To carry out this purpose, the Nominating and
Governance Committee shall: (1) assist the Board by identifying prospective
director nominees and to recommend to the Board the director nominees for the
next annual meeting of stockholders; (2) develop and recommend to the Board the
governance principles applicable to the Company; (3) oversee the evaluation of
the Board and management; and (4) recommend to the Board director nominees for
each committee.
COMMITTEE MEMBERSHIP AND ORGANIZATION:
o The Nominating and Governance Committee shall be comprised of no fewer
than three members.
o The members of the Nominating and Governance Committee shall meet the
independence requirements of The Nasdaq Stock Market.
o The members of the Nominating and Governance Committee shall be
appointed and replaced by the Board.
COMMITTEE RESPONSIBILITIES AND AUTHORITY:
o Evaluate the current composition, organization and governance of the
Board and its committees, determine future requirements and make
recommendations to the Board for approval.
o Determine on an annual basis desired Board qualifications, expertise
and characteristics and conduct searches for potential Board members
with corresponding attributes. Evaluate and propose nominees for
election to the Board. In performing these tasks, the Nominating and
Governance Committee shall have the sole authority to retain and
terminate any search firm to be used to identify director candidates.
o Ensure that independent members of the Board convene executive
sessions regularly.
o Review the appropriateness of each Board member's continued service
every three years.
o Oversee the Board performance evaluation process including conducting
surveys of director observations, suggestions and preferences.
o Form and delegate authority to subcommittees when appropriate.
o Evaluate and make recommendations to the Board concerning the
appointment of directors to Board committees, the selection of Board
committee chairs and proposal of the Board slate for election.
Consider stockholder nominees for election to the Board.
o Evaluate and recommend termination of membership of individual
directors in accordance with the Board's governance principles, for
cause or for other appropriate reasons.
o Review, approve and monitor the Company's code of ethics for senior
financial officers.
o Conduct an annual review on succession planning, report its findings
and recommendations to the Board, and work with the Board in
evaluating potential successors to executive management positions.
o Coordinate and approve Board and committee meeting schedules.
o Maintain minutes of its meetings, which minutes will be filed with the
minutes of the meetings of the Board.
A-1
o Make regular reports to the Board.
o Review and re-examine this Charter annually and make recommendations
to the Board for any proposed changes.
o Annually review and evaluate its own performance.
o In performing its responsibilities, the Nominating and Governance
Committee shall have the authority to obtain advice, reports or
opinions from internal or external counsel and expert advisors.
o Review the independence of the Board and the Chief Executive Officer
and Chief Financial Officer.
A-2
ANNEX B
TRIQUINT SEMICONDUCTOR, INC.
COMPENSATION COMMITTEE CHARTER
(Adopted September 25, 2002)
Purpose
The purpose of the Compensation Committee (the "Committee") of the Board
of Directors (the "Board") of TriQuint Semiconductor, Inc. (the "Company")
shall be to discharge the Board's responsibilities relating to compensation of
the Company's executive officers. The Committee has overall responsibility for
approving and evaluating the executive officer compensation plans, policies and
programs of the Company.
The Committee is also responsible for producing an annual report on
executive compensation for inclusion in the Company's proxy statement.
The Committee has the authority to undertake the specific duties and
responsibilities listed below and will have the authority to undertake such
other specific duties as the Board from time to time prescribes.
Membership and Organization
The Committee will be appointed by and will serve at the discretion of the
Board. The Committee shall consist of no fewer than two members. The members of
the Committee shall meet the (i) independence requirements of the listing
standards of The Nasdaq Stock Market, (ii) non-employee director definition of
Rule 16b-3 promulgated under Section 16 of the Securities Exchange Act of 1934,
as amended, and (iii) the outside director definition of Section 162(m) of the
Internal Revenue Code of 1986, as amended.
The members of the Committee will be appointed by the Board. Committee
members will serve at the discretion of the Board.
The Committee will maintain written minutes of its meetings, which minutes
will be filed with the minutes of the meetings of the Board.
Responsibilities and Authority
1. The Committee shall annually review and approve for the Chairman, the
Chief Executive Officer and President and the executive officers of the
Company: (a) the annual base salary, (b) the annual incentive bonus, including
the specific goals and amount, (c) equity compensation, (d) employment
agreements, severance arrangements and change in control agreements/provisions,
and (e) any other benefits, compensation or arrangements.
2. The Committee may make recommendations to the Board with respect to
incentive compensation plans.
3. The Committee shall approve at least annually a matrix for grants
pursuant to the Company's incentive compensation plans for newly-hired
non-executive employees and shall delegate to the Company's Chief Executive
Officer and Chief Financial Officer the authority to make such grants in
accordance with such matrix.
4. The Committee may form and delegate authority to subcommittees when
appropriate.
5. The Committee shall make regular reports to the Board.
6. The Committee shall review and reassess the Committee's charter,
structure, processes and membership requirements at least annually and submit
any recommended changes to the Board for its consideration.
7. The Committee shall annually review its own performance.
8. The Committee shall have the sole authority to retain and terminate any
compensation consultant to be used by the Company to assist in the evaluation
of Chief Executive Officer or executive officer compensation and shall have
sole authority to approve the consultant's fees and other retention terms.
9. The Committee shall have the authority to obtain advice and assistance
from internal or external legal, accounting or other advisors.
B-1
ANNEX C
TRIQUINT SEMICONDUCTOR, INC.
AUDIT COMMITTEE CHARTER
(Adopted as of June 5, 2000)
(Amended September 25, 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
compliance with legal and regulatory requirements, the Company's accounting and
system of internal controls, the quality and integrity of the Company's
financial reports and the independence, qualification and performance of the
Company's outside auditor and to prepare the report that the rules of the
Securities and Exchange Commission (the "SEC") require be included in the
Company's annual proxy statement.
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 operation 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 judgment 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, the 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 judgment 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. Members of the Committee
member shall satisfy the following criteria (as well as any criteria required
by the SEC):
1. Each member will be an independent director, as defined in (i) NASDAQ
Rule 4200, (ii) the rules of the SEC and (iii) the Sarbanes-Oxley Act of 2002;
2. Each member will be able to read and understand fundamental financial
statements, in accordance with the NASDAQ National Market Audit Committee
requirements; and
3. At least one member will have past employment experience in finance or
accounting, requisite professional certification in accounting, or other
comparable experience or background, including a current or past position as a
principal financial officer or other senior officer with financial oversight
responsibilities.
Committee Organization, Procedures and Reports
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 four 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, any senior
internal audit manager 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
C-1
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.
4. The Committee will maintain minutes of its meetings, which minutes will
be filed with the minutes of the meetings of the Board.
5. The Committee shall review and reassess the Committee's charter,
structure, processes and membership requirements at least annually and submit
any recommended changes to the Board for its consideration.
6. 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.
7. 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 SEC.
Oversight
Outside Auditor
1. 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 and oversee the
independence and performance of and select the outside auditor and shall
annually appoint the outside auditor and recommend to the Board the nomination
of the outside auditor for stockholder approval at any meeting of stockholders
and approve the fees to be paid to the outside auditor, and any other terms of
the engagement of the outside auditor.
2. 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 any disclosed
relationships or services that, in the view of the Committee, may 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.
3. The Committee shall pre-approve audit and non-audit services provided
to the Company by the outside auditor (or subsequently approve non-audit
services in those circumstances where a subsequent approval is necessary and
permissible); in this regard, the Committee shall have the sole authority to
approve the hiring and firing of the outside auditor, all audit engagement fees
and terms and all non-audit engagements, as may be permissible, with the
outside auditor.
4. The Committee shall review the outside auditor's peer review conducted
every three years.
5. The Committee shall review the reports submitted to the Committee by
the outside auditor in accordance with the applicable SEC requirements.
Annual Audit
1. 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.
2. 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.
3. The Committee shall discuss with the outside auditor the matters
required to be discussed by Statement on Auditing Standards No. 61 relating to
the conduct of the annual audit.
4. The Committee shall, based on the review and discussions 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
C-2
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.
5. The Committee shall conduct a post-audit review of the financial
statements and audit findings, including any significant suggestions for
improvements provided to management by the outside auditor.
Quarterly Review
1. The Committee shall direct the outside auditor to review the interim
financial statements to be included in any Quarterly Report on 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 SEC 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 judgments,
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.
2. The Committee shall review before release the unaudited quarterly
operating results in the Company's quarterly earnings release.
Internal Controls
1. The Committee shall review on a continuing basis the adequacy and
effectiveness of the accounting and financial controls of the Company and
consider any recommendations for improvement of such internal control
procedures. Such review shall include meeting periodically with the outside
auditor, management and any senior internal audit manager to review the
adequacy of such controls and to review before release the disclosure regarding
such system of internal controls required under the rules of the SEC to be
contained in the Company's periodic filings and the attestations or reports by
the outside auditor relating to such disclosure.
2. 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.
3. The Committee shall establish procedures for receiving, retaining and
treating complaints received by the Company regarding accounting, internal
accounting controls or auditing matters and procedures for the confidential,
anonymous submission by employees of concerns regarding questionable accounting
or auditing matters.
Miscellaneous
1. The Committee shall review legal and regulatory matters that may have a
material impact on the financial statements and related compliance policies and
programs.
2. The Committee shall review and approve in advance any proposed related
party transactions.
3. The Committee shall obtain, as appropriate, advice and assistance from
outside legal, accounting or other advisors.
4. The Committee shall, if necessary, institute special investigations
with full access to all books, records, facilities and personnel of the
Company.
5. The Committee shall provide oversight and review at least annually of
the Company's risk management policies, including its investment policies.
6. The Committee shall oversee compliance with the requirements of the SEC
for disclosure of auditor's services and audit committee members, member
qualifications and activities.
7. The Committee shall annually review and evaluate its own performance.
C-3
Compensation
Members of the Committee shall receive such fees, if any, for their
service as Committee members as may be determined by the Board in its sole
discretion. Such fees may include retainers or per meeting fees. Fees may be
paid in such form of consideration as is determined by the Board.
Members of the Committee may not receive any compensation from the Company
except the fees that they receive for service as a member of the Board or any
committee thereof.
Delegation of Authority
The Committee may delegate to one or more designated members of the
Committee the authority to pre-approve audit and permissible non-audit
services, provided such pre-approval decision is presented to the full
Committee at its scheduled meetings.
C-4
Exhibit I
TRIQUINT SEMICONDUCTOR, INC.
1996 STOCK INCENTIVE PROGRAM
(AS AMENDED AND EFFECTIVE FEBRUARY 2003)
1. Purposes of the Program. The purposes of this Stock Incentive Program are
to attract and retain the best available personnel for positions of
substantial responsibility, to provide additional incentive to the
Employees, Consultants and certain Outside Directors of the Company and to
promote the success of the Company's business.
Options granted hereunder may be either Incentive Stock Options or
Nonstatutory Stock Options, at the discretion of the Board and as reflected
in the terms of the written option agreement. The Program also provides for
automatic grants of Nonstatutory Stock Options to Outside Directors who are
neither representatives nor employees or stockholders owning more than one
percent (1%) of the outstanding shares of the Company.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" shall mean the Board or any of its Committees as shall
be administering the Program, in accordance with Section 4 of the
Program.
(b) "Applicable Laws" means the requirements relating to the
administration of stock option plans under U.S. state corporate laws,
U.S. federal and state securities laws, the Code, any stock exchange
or quotation system on which the Common Stock is listed or quoted and
the applicable laws of any foreign country or jurisdiction where
Options or Stock Purchase Rights are, or will be, granted under the
Plan.
(c) "Board" shall mean the Board of Directors of the Company.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(e) "Common Stock" shall mean the Common Stock of the Company.
(f) "Company" shall mean TriQuint Semiconductor, Inc., a Delaware
corporation.
(g) "Committee" shall mean a Committee appointed by the Board of Directors
in accordance with Section 4 of the Program.
(h) "Consultant" shall mean any person who is engaged by the Company or
any Parent or Subsidiary to render consulting services and is
compensated for such consulting services; provided that the term
Consultant shall not include directors who are not compensated for
their services; or are paid only a director's fee by the Company.
(i) "Director" shall mean a member of the Board.
(j) "Continuous Status as an Employee, Consultant or Outside Director"
shall mean the absence of any interruption or termination of service
as an Employee, Consultant or Outside Director. Continuous Status as
an Employee, Consultant or Outside Director shall not be considered
interrupted in the case of sick leave, military leave, or any other
leave of absence approved by the Administrator; provided that such
leave is for a period of not more than 90 days or reemployment upon
the expiration of such leave is guaranteed by contract or statute.
(k) "Employee" shall mean any person, including officers and directors,
employed by the Company or any Parent or Subsidiary of the Company.
The payment of a director's fee by the Company shall not be sufficient
to constitute "employment" by the Company.
(l) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(m) "Incentive Stock Option" shall mean an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the
Code and the regulations promulgated thereunder.
(n) "Nonstatutory Stock Option" shall mean an Option not intended to
qualify as an Incentive Stock Option.
Exhibit I-1
(o) "Officer" shall mean a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(p) "Option" shall mean a stock option granted pursuant to the Program.
(q) "Optioned Stock" shall mean the Common Stock subject to an Option.
(r) "Optionee" shall mean an Employee, Consultant or Outside Director who
holds an outstanding Option.
(s) "Outside Director" shall mean a member of the Board of Directors of
the Company who is not an Employee.
(t) "Parent" shall mean a "parent corporation", whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(u) "Program" shall mean this 1996 Stock Incentive Program.
(v) "Rule 16b-3" shall mean Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being
exercised with respect to the Program.
(w) "Share" shall mean a share of the Common Stock, as adjusted in
accordance with Section 10 of the Program.
(x) "Subsidiary" shall mean a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Program. Subject to the provisions of Section 10 of
the Program, the maximum aggregate number of shares under the Program is
31,050,000 shares of Common Stock. The Shares may be authorized, but
unissued, or reacquired Common Stock.
If an Option should expire or become unexercisable for any reason without
having been exercised in full, the unpurchased Shares which were subject
thereto shall, unless the Program shall have been terminated, become
available for future grant under the Program. Notwithstanding the above,
however, if Shares are issued upon exercise of an Option and later
repurchased by the Company, such Shares shall not become available for
future grant or sale under the Program.
4. Administration of the Program.
(a) Procedure.
(i) Multiple Administrative Bodies. The Plan may be administered by
different Committees with respect to different groups of Service
Providers.
(ii) Section 162(m). To the extent that the Administrator determines
it to be desirable to qualify Options granted hereunder as
"performance-based compensation" within the meaning of Section
162(m) of the Code, the Plan shall be administered by a
Committee of two or more "outside directors" within the meaning
of Section 162(m) of the Code.
(iii) Rule 16b-3. To the extent desirable to qualify transactions
hereunder as exempt under Rule 16b-3, the transactions
contemplated hereunder shall be structured to satisfy the
requirements for exemption under Rule 16b-3.
(iv) Other Administration. Other than as provided above, the Plan
shall be administered by (A) the Board or (B) a Committee, which
committee shall be constituted to satisfy Applicable Laws.
(b) Power of the Administrator. Subject to the provisions of the Program,
the Administrator shall have the authority, in its discretion: (i) to
grant Incentive Stock Options or Nonstatutory Stock Options; (ii) to
determine, upon review of relevant information and in accordance with
Section 7 of the Program, the fair market value of the Common Stock;
(iii) to determine the exercise price per share of Options to be
granted, which exercise price shall be determined in accordance with
Section 7 of the Program; (iv) to determine the Employees or
Consultants to whom, and the time or times at which, Options shall be
granted and the number of shares to be represented by each Option
(except with respect to automatic Option grants made to certain
Outside Directors); (v) to interpret the Program; (vi) to prescribe,
amend and rescind rules and regulations relating to the Program;
Exhibit I-2
(vii) to determine the terms and provisions of each Option granted
(which need not be identical) and, with the consent of the holder
thereof, modify or amend each Option; (viii) to authorize any person
to execute on behalf of the Company any instrument required to
effectuate the grant of an Option previously granted by the
Administrator; (ix) to allow Optionees to satisfy withholding tax
obligations by electing to have the Company withhold from the Shares
to be issued upon exercise of an Option that number of Shares having a
Fair Market Value equal to the amount required to be withheld; (x) to
reduce the exercise price of any Option to the then current Fair
Market Value if the Fair Market Value of the Common Stock covered by
such Option shall have declined since the date the Option was granted;
provided, however, that the Administrator must seek the prior consent
of the Board of Directors and stockholders of the Company to effect
such action; and (xi) to make all other determinations deemed
necessary or advisable for the administration of the Program. However,
with respect to Options granted to certain Outside Directors pursuant
to Section 8(b)(ii) hereof, the Administrator shall exercise no
discretion and such awards shall be administered solely according to
their terms.
(c) Effect of Administrator's Decision. All decisions, determinations and
interpretations of the Administrator shall be final and binding on all
Optionees and any other holders of any Options granted under the
Program.
5. Eligibility.
(a) Options may be granted to Employees and Consultants; Options may also
be granted to Outside Directors who are neither employees nor
representatives of stockholders owning more than one percent (1%) of
the outstanding shares of the Company. However, (i) Incentive Stock
Options may be granted only to Employees, and (ii) Options may only be
granted to Outside Directors who are neither employees nor
representatives of stockholders owning more than one percent (1%) of
the outstanding shares of the Company in accordance with the
provisions of Section 8(b)(ii) hereof. An Employee, Consultant or
Outside Director who has been granted an Option may, if he is
otherwise eligible, be granted an additional Option or Options.
(b) To the extent that the aggregate fair market value of Shares subject
to an Optionee's incentive stock options granted by the Company, any
Parent or Subsidiary, which become exercisable for the first time
during any calendar year (under all plans or programs of the Company
or any Parent or Subsidiary) exceeds $100,000, such excess Options
shall be treated as Nonstatutory Stock Options. For purposes of this
Section 5(b), incentive stock options shall be taken into account in
the order in which they were granted, and the fair market value of the
Shares shall be determined as of the time of grant.
(c) Neither the Program nor any Option shall confer upon any Optionee any
right with respect to continuation of employment or consulting
relationship with the Company, nor shall it interfere in any way with
the Optionee's right or the Company's right to terminate such
employment or consulting relationship at any time with or without
cause.
(d) The following limitations shall apply to grants of Options under the
Program (defined below):
(i) The President of the Company shall not be granted, in any fiscal
year of the Company, options to purchase more than 1,500,000
Shares, and no other Employee shall be granted, in any fiscal
year of the Company, Options to purchase more than 750,000
Shares.
(ii) The foregoing limitations shall be adjusted proportionately in
connection with any change in the Company's capitalization as
described in Section 10.
(iii) If an Option is canceled in the same fiscal year of the Company
in which it was granted (other than in connection with a
transaction described in Section 10), the canceled Option will
be counted against the limit set forth in Section (i) above. For
this purpose, if the exercise price of an Option is reduced, the
transaction will be treated as a cancellation of the Option and
the grant of a new Option.
(iv) The foregoing limitations set forth in this Section 5(d) are
intended to satisfy the requirements applicable to Options
intended to qualify as "performance-based compensation" (within
the meaning of Section 162(m) of the Code). In the event the
Administrator determines that such limitations are not required
to qualify Options as performance-based compensation, the
Administrator may modify or eliminate such limitations.
Exhibit I-3
6. Term of Program. The Program shall become effective upon the earlier to
occur of its adoption by the Board of Directors or its approval by vote of
the stockholders of the Company as described in Section 16 of the Program.
It shall continue in effect for a term of ten (10) years unless sooner
terminated under Section 12 of the Program.
7. Exercise Price and Consideration of Shares.
(a) The per Share exercise price for the Shares to be issued pursuant to
exercise of a Nonstatutory Stock Option shall be such price as is
determined by the Administrator, but in no event shall it be (i) less
than 100% of the fair market value per Share on the date of grant and
(ii) in the case of an Incentive Stock Option, not less than 100% of
the fair market value per Share on the date of grant. In the case of
an Incentive Stock Option granted to an Employee who, at the time of
grant of such Incentive Stock Option owns stock representing more than
ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the per Share exercise price
shall be no less than 110% of the fair market value per Share on the
date of grant.
(b) The fair market value shall be determined by the Administrator;
provided, however, in the event that the Common Stock is listed on any
established stock exchange or a national market system, including
without limitation the Nasdaq National Market or The Nasdaq SmallCap
Market of The Nasdaq Stock Market, its fair market value shall be the
closing sales price for such stock (or the closing bid, if no sales
were reported) as quoted on such exchange or system for the trading
day that is the time of determination (or if such time of
determination does not occur on a trading day, the last trading day
prior to the time of determination), as reported in THE WALL STREET
JOURNAL or such other source as the Administrator deems reliable; or
in the event that the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the fair market
value of a Share of Common Stock shall be the mean between the high
bid and low asked prices for the Common Stock on the last market
trading day prior to the day of determination, as reported in THE WALL
STREET JOURNAL or such other source as the Administrator deems
reliable.
(c) The consideration to be paid for the Shares to be issued upon exercise
of an Option, including the method of payment, shall be determined by
the Board and may consist entirely of:
(i) cash,
(ii) check,
(iii) promissory note,
(iv) other Shares of Common Stock which (i) either have been owned by
the Optionee for more than six (6) months on the date of
surrender or were not acquired, directly or indirectly, from the
Company, and (ii) 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, if
applicable, shall require to effect an exercise of the Option
and delivery to the Company 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 Sections 408 and 409 of the
California General Corporation Law.
In making its determination as to the type of consideration to accept,
the Administrator shall consider if acceptance of such consideration
may be reasonably expected to benefit the Company.
However, with respect to Options granted to certain Outside Directors
pursuant to Section 8(b)(ii) hereof, the consideration to be paid for
the Shares to be issued upon exercise of an Option, including the
method of payment, shall consist entirely of:
(i) cash,
(ii) check,
Exhibit I-4
(iii) other Shares of Common Stock which (i) either have been owned by
the Optionee for more than six (6) months on the date of
surrender or were not acquired, directly or indirectly, from the
Company, and (ii) 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,
(iv) delivery of a properly executed exercise notice together with
such other documentation as the Administrator and the broker, if
applicable, shall require to effect an exercise of the Option
and delivery to the Company of the sale or loan proceeds
required to pay the exercise price, or
(iv) any combination of such methods of payment.
8. Options.
(a) Term of Option. The term of each Option shall be ten (10) years from
the date of grant thereof or such shorter term as may be provided in
the Incentive Stock Option Agreement in the form attached hereto as
Exhibit A. The term of each Option that is not an Incentive Stock
Option shall be ten (10) years and one (1) day from the date of grant
thereof or such shorter term as may be provided in the Nonstatutory
Stock Option Agreement in the form attached hereto as Exhibit B-1 or
B-2. However, in the case of an Option granted to an Optionee who, at
the time the Option is granted, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, (a) if the Option is an Incentive
Stock Option, the term of the Option shall be five (5) years from the
date of grant thereof or such shorter time as may be provided in the
Incentive Stock Option Agreement, or (b) if the Option is not an
Incentive Stock Option, the term of the Option shall be five (5) years
and one (1) day from the date of grant thereof or such shorter term as
may be provided in the Nonstatutory Stock Option Agreement. However,
with respect to Options granted to certain Outside Directors pursuant
to Section 8(b)(ii) hereof the term shall be as stated in such
Section.
(b) Exercise of Option.
(i) Procedure for Exercise; Rights as a Stockholder. Any Option
granted hereunder, except for Options granted to certain Outside
Directors in accordance with Section 8(b)(ii) below, shall be
exercisable at such times and under such conditions as determined
by the Administrator, including performance criteria with respect
to the Company and/or the Optionee, and shall be permissible
under the terms of the Program.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company either by a signed
writing or electronic transmission in accordance with the terms
of the Option by the person entitled to exercise the Option and
full payment for the Shares with respect to which the Option is
exercised has been received by the Company. Full payment may, as
authorized by the Administrator, consist of any consideration and
method of payment allowable under Section 7(c) of the Program.
Until the issuance (as evidenced by the appropriate entry on the
books of the Company or of a duly authorized transfer agent of
the Company) of the stock certificate evidencing such Shares,
which issuance shall be made as soon as is practicable, no right
to vote or receive dividends or any other rights as a stockholder
shall exist with respect to the Optioned Stock, notwithstanding
the exercise of the Option. The Company shall issue (or cause to
be issued) such stock certificate promptly upon exercise of the
Option. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the stock
certificate is issued, except as provided in Section 10 of the
Program.
Exercise of an Option in any manner shall result in a decrease in
the number of Shares which thereafter may be available, both for
purposes of the Program and for sale under the Option, by the
number of Shares as to which the Option is exercised.
(ii) Automatic Option Grants to Certain Outside Directors. The
provisions set forth in this Section 8(b)(ii) shall not be
amended more than once every six months, other than to comport
with changes in the Code, the Employee Retirement Income Security
Act of 1974 as amended, or the rules or regulations promul-
Exhibit I-5
gated thereunder. All grants of Options to Outside Directors
under this Program shall be automatic and non-discretionary and
shall be made strictly in accordance with the following
provisions:
(A) No person shall have any discretion to select which Outside
Directors shall be granted Options or to determine the
number of shares to be covered by Options granted to Outside
Directors; provided, however, that nothing in this Program
shall be construed to prevent an Outside Director from
declining to receive an Option under this Program.
(B) On the date of each annual meeting of the Company's
stockholders, each person who is then an Outside Director
(including any person who first becomes an Outside Director
as of such date) and who is not a representative of
stockholders owning more than one percent (1%) of the
outstanding shares of the Company shall automatically
receive an Option to purchase 17,500 Shares (the "Complete
Annual Grant").
(C) Each Outside Director who is not a representative of
stockholders owning more than one percent (1%) of the
outstanding shares of the Company and who first becomes an
Outside Director as of a date other than the date of an
annual meeting of the Company's stockholders shall
automatically receive, upon such date, an Option (the
"Partial Annual Grant" and collectively with the Complete
Annual Grant, the "Annual Grants") to purchase that number
of Shares obtained by multiplying 17,500 by a fraction, the
numerator of which is the difference obtained by subtracting
from 12 the number of whole calendar months that have
elapsed since the date of the previous annual meeting of the
Company's stockholders and the denominator of which is 12.
(D) Upon such person's election or appointment as an Outside
Director, each person who becomes an Outside Director shall
automatically receive an Option (the Initial Grant") to
purchase 33,000 Shares; provided, however that an Inside
Director who ceases to be an Inside Director but who remains
a Director shall not receive such automatic grant.
(E) Immediately following the 1999 Annual Meeting of
Stockholders upon the approval of a related proposal at such
meeting, each person who is then an Outside Director
(including any person who first becomes an Outside Director
as of such date) and who is not a representative of
stockholders owning more than one percent (1%) of the
outstanding shares of the Company shall automatically
receive an Option to purchase 72,000 Shares (the "One-Time
Grant").
(F) The terms of an Option granted pursuant to this Section
8(b)(ii) shall be as follows:
(1) the term of the Annual Grants shall be five (5) years
and the term of the Initial Grants and the One-Time
Grants shall be 10 years;
(2) except as provided in Sections 8(b)(iii) and 8(b)(iv)
of this Program, the Option shall be exercisable only
while the Outside Director remains a director;
(3) the exercise price per share of Common Stock shall be
100% of the fair market value on the date of grant of
the Option, provided that, with respect to the Options
granted on the date on which the Company's registration
statement on Form S-1 (or any successor form thereof)
is declared effective by the Securities and Exchange
Commission, the fair market value of the Common Stock
shall be the Price to Public as set forth in the final
prospectus filed with the Securities and Exchange
Commission pursuant to Rule 424 under the Securities
Act of 1933, as amended;
(4) the Annual Grants shall become exercisable in
installments cumulatively with respect to twenty-five
percent (25%) of the Optioned Stock six months after
the date of grant and as to an additional twelve and
one-half percent (12.5%) of the Optioned Stock each
calendar quarter thereafter, so that one hundred
percent (100%) of the Optioned Stock shall be
exercisable two years after the date of grant;
provided, however, that in no event shall any Option be
exercisable prior to obtaining stockholder approval of
the Program.
Exhibit I-6
(5) the One-Time Grants and the Initial Grants shall become
exercisable in installments cumulatively with respect
to twenty-eight percent (28%) of the Optioned Stock one
year after the date of grant and as to an additional
two percent (2%) of the Optioned Stock each calendar
month thereafter, so that one hundred percent (100%) of
the Optioned Stock shall be exercisable four years
after the date of grant.
(iii) Termination of Status as an Employee, Consultant or Outside
Director. In the event of termination of an Optionee's
Continuous Status as an Employee, Consultant or Outside
Director, such Optionee may, but only within three (3) months
(or, for Options not granted pursuant to Section 8(b)(ii)
hereof, for such other period of time, not exceeding three (3)
months in the case of an Incentive Stock Option or six (6)
months in the case of a Nonstatutory Stock Option, as is
determined by the Administrator, with such determination in the
case of an Incentive Stock Option being made at the time of
grant of the Option) after the date of such termination (but in
no event later than the date of expiration of the term of such
Option as set forth in the Option Agreement), exercise his or
her Option to the extent that the Optionee was entitled to
exercise it as of the date of such termination. To the extent
that the Optionee was not entitled to exercise the Option at the
date of such termination, or if the Optionee does not exercise
such Option (which the Optionee was entitled to exercise) within
the time specified herein, the Option shall terminate.
(iv) Disability of Optionee. Notwithstanding the provisions of
Section 8(b)(iii) above, in the event of termination of an
Optionee's Continuous Status as an Employee, Consultant or
Outside Director as a result of his or her total and permanent
disability (as defined in Section 22(e)(3) of the Code), the
Optionee may, but only within six (6) months (or, for Options
not granted pursuant to Section 8(b)(ii) hereof, for such other
period of time not exceeding twelve (12) months as is determined
by the Board, with such determination in the case of an
Incentive Stock Option being made at the time of grant of the
Option) from the date of such termination (but in no event later
than the date of expiration of the term of such Option as set
forth in the Option Agreement), exercise his or her Option to
the extent the Optionee was entitled to exercise it at the date
of such termination. To the extent that the Optionee was not
entitled to exercise the Option at the date of termination, or
if the Optionee does not exercise such Option (which the
Optionee was entitled to exercise) within the time specified
herein, the Option shall terminate.
(v) Death of Optionee. In the event of the death of an Optionee:
(A) during the term of the Option, where the Optionee is at the
time of his or her death an Employee, Consultant or Outside
Director of the Company and where such Optionee shall have
been in Continuous Status as an Employee, Consultant or
Outside Director since the date of grant of the Option, the
Option may be exercised, at any time within one (1) year
following the date of death, by the Optionee's estate or by
a person who acquired the right to exercise the Option by
bequest or inheritance, to the extent that he and she was
entitled to exercise it at the date of death; or
(B) within three (3) months after the termination of Continuous
Status as an Employee, Consultant or Outside Director for
any reason other than for cause or a voluntary termination
initiated by the Optionee, the Option may be exercised, at
any time within one (1) year following the date of death, by
the Optionee's estate or by a person who acquired the right
to exercise the Option by bequest or inheritance, but only
to the extent of the right to exercise that had accrued at
the date of termination.
(vi) Buyout Provisions. The Administrator may at any time offer to
buy out for a payment in cash or Shares, an Option previously
granted based on such terms and conditions as the Administrator
shall establish and communicate to the Optionee at the time that
such offer is made; provided, however, that the Administrator
shall not offer to buy out any Options granted pursuant to
Section 8(b)(ii) of the Program.
9. Non-Transferability of Options. During the lifetime of the Optionee, an
Option shall be exercisable only by the Optionee or the Optionee's
guardian, legal representative or permitted transferees. Except as
specified below, no Option shall be assignable or transferable by the
Optionee except by will or by the laws of descent and distribution. At the
sole discretion of the Administrator, and subject to such terms and
conditions as the Administrator deems advisable, the Administrator may
allow, by means of a writing to the Optionee, for all
Exhibit I-7
or part of a vested NonStatutory Stock Option to be assigned or
transferred, including by means of sale, during an Optionee's lifetime to a
member of the Optionee's immediate family or to a trust, LLC or partnership
for the benefit of any one or more members of such Optionee's immediate
family. "Immediate family" as used herein means the spouse, lineal
descendants, father, mother, brothers and sisters of the Optionee. In such
case, the transferee shall receive and hold the Option subject to the
provisions of this Section 9, and there shall be no further assignation or
transfer of the Option. The terms of Options granted hereunder shall be
binding upon the transferees, purchasers, executors, administrators, heirs,
successors and assigns of the Optionee.
10. Adjustments Upon Changes In Capitalization or Merger. Subject to any
required action by the stockholders of the Company, the number of shares of
Common Stock covered by each outstanding Option, and the number of shares
of Common Stock which have been authorized for issuance under the Program
but as to which no Options have yet been granted or which have been
returned to the Program upon cancellation or expiration of an Option, as
well as the price per share of Common Stock covered by each such
outstanding Option, shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock resulting from a
stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in
the number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been
"effected without receipt of consideration." Such adjustment shall be made
by the Administrator, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no issuance by
the Company of shares of stock of any class, or securities convertible into
shares of stock of any class, shall affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of shares of
Common Stock subject to an Option.
In the event of the proposed dissolution or liquidation of the Company, the
Board shall notify the holder of an Option at least fifteen (15) days prior
to such proposed action. To the extent it has not been previously
exercised, the Option will terminate immediately prior to the consummation
of such proposed action.
In the event of a merger of the Company with or into another corporation,
or the sale of all or substantially all of the Company's assets, the Option
shall be assumed or an equivalent option shall be substituted by such
successor corporation or a parent or subsidiary of such successor
corporation, unless the Board determines, in the exercise of its sole
discretion and in lieu of such assumption or substitution, that the
Optionee shall have the right to exercise the Option as to all of the
Optioned Stock, including as to Shares as to which the Option would not
otherwise be exercisable. If the Board makes an Option fully exercisable in
lieu of assumption or substitution in the event of a merger or sale of
assets, the Board shall notify the Optionee that the Option shall be fully
exercisable for a period of thirty (30) days from the date of such notice,
and the Option will terminate upon the expiration of such period. Provided,
however, that notwithstanding any other provision of this Program, Options
granted pursuant to Section 8(b)(ii) hereof shall, in the event of a merger
of the Company with or into another corporation or the sale of all or
substantially all of the Company's assets, be assumed or an equivalent
option shall be substituted by such successor corporation or a parent or
subsidiary of such successor corporation; provided, further, however, that
in the event the successor corporation or a parent or subsidiary of such
successor corporation refuses to so assume or substitute such options, such
options shall become fully vested and exercisable including as to Shares as
to which such options would not otherwise be exercisable. For the purposes
of this paragraph, the Option shall be considered assumed if, following the
merger or asset sale, the option confers the right to purchase, for each
Share of Optioned Stock subject to the Option immediately prior to the
merger or asset sale, the consideration (whether stock, cash, or other
securities or property) received in the merger or asset sale by holders of
Common Stock for each Share held on the effective date of the transaction
(and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding
Shares); provided, however, that if such consideration received in the
merger or sale of assets was not solely common stock of the successor
corporation or its Parent, the Administrator may, with the consent of the
successor corporation, provide for the consideration to be received upon
the exercise of the Option, for each Share of Optioned Stock subject to the
Option, to be solely common stock of the successor corporation or its
Parent equal in fair market value to the per share consideration received
by holders of Common Stock in the merger or sale of assets.
Exhibit I-8
11. Time of Granting Options. The date of grant of an Option shall be the date
on which the Administrator makes the determination granting such Option,
except with respect to the date of grant of Options to certain Outside
Directors, which is set by the terms of the Program. Notice of the
determination shall be given to each Employee or Consultant to whom an
Option is granted within a reasonable time after the date of such grant.
12. Amendment and Termination of the Program.
(a) Amendment and Termination. The Board may at any time amend, alter,
suspend or terminate the Program.
(b) Stockholder Approval. The Company shall obtain stockholder approval of
any Program amendment to the extent necessary and desirable to comply
with Section 422 of the Code (or any successor rule or statute or
other applicable law, rule or regulation, including the requirements
of any exchange or quotation system on which the Common Stock is
listed or quoted). Such stockholder approval, if required, shall be
obtained in such a manner and to such a degree as is required by the
applicable law, rule or regulation. In addition, should the
Administrator determine that it is appropriate to reduce the exercise
price of any Option pursuant to Section 4(b)(xi) of the Plan, the
Administrator shall seek the prior consent of the stockholders to
effect such action.
(c) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Program shall impair the rights of
any Optionee, unless mutually agreed otherwise between the Optionee
and the Administrator, which agreement must be in writing and signed
by the Optionee and the Company.
13. Conditions Upon Issuance of Shares. Shares shall not be issued pursuant to
the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities
Act of 1933, as amended (the "Securities Act"), the Exchange Act, the rules
and regulations promulgated thereunder, and the requirements of any stock
exchange upon which the Shares may then be listed, and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.
As a condition to the exercise of an Option, the Company may require the
person exercising such Option or making such purchase to represent and
warrant at the time of any such exercise that the Shares are being
purchased only for investment and without any present intention to sell or
distribute such Shares if, in the opinion of counsel for the Company, such
a representation is required by any of the aforementioned relevant
provisions of law.
14. Reservation of Shares. The Company, during the term of this Program, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Program.
Inability of the Company to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company's counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the failure to issue or
sell such Shares as to which such requisite authority shall not have been
obtained.
15. Option Agreements. Each Option shall be designated in a written option
agreement as either an Incentive Stock Option or a Nonstatutory Stock
Option. Such agreements shall be subject to amendment from time to time as
shall be determined by the Administrator; provided, however, that
agreements reflecting option grants pursuant to Section 8(b)(ii) hereof
shall contain only the terms and conditions as set forth in this Program.
16. Stockholder Approval. Continuance of the Program shall be subject to
approval by the stockholders of the Company within twelve months before or
after the date the Program is adopted. Such stockholder approval shall be
obtained in the manner and to the degree required under applicable federal
and state law.
Exhibit I-9
This proxy is solicited by the Board Of Directors of Please
TriQuint. If no specific direction is given as to any of the Mark Here
below items, this proxy will be voted FOR each of the for Address |_|
nominees named in Proposal 1, FOR Proposal 2, FOR Proposal 3 Change or
and AGAINST Proposal 4. Comments
SEE REVERSE SIDE
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES
NAMED BELOW.
PROPOSAL 1: ELECTION OF DIRECTORS.
FOR all WITHHOLD
nominees listed AUTHORITY
(except as marked to vote for all
to the contrary) nominees listed
|_| |_|
Nominees:
01 Francisco Alvarez
02 Dr. Paul A. Gary
03 Charles Scott Gibson
04 Nicolas Kauser
05 Steven P. Miller
06 Ralph G. Quinsey
07 Dr. Walden C. Rhines
08 Steven J. Sharp
09 Edward F. Tuck
10 Willis C. Young
(Instructions: To withhold authority to vote for any individual nominee, strike
a line through the nominee's name in the list above.)
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE APPROVAL OF
PROPOSAL 2.
PROPOSAL 2: To approve an amendment to the TriQuint Semiconductor, Inc. 1996
Stock Incentive Program to increase the aggregate number of shares
of common stock that may be issued thereunder by 6,500,000 shares.
FOR AGAINST ABSTAIN
|_| |_| |_|
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE APPROVAL OF
PROPOSAL 3.
PROPOSAL 3: To approve an amendment to the TriQuint Semiconductor, Inc. 1996
Stock Incentive Program to amend the formula grant mechanism for
non-employee directors, as more fully described in the accompanying
Proxy Statement.
FOR AGAINST ABSTAIN
|_| |_| |_|
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "AGAINST" THE APPROVAL OF
PROPOSAL 4.
PROPOSAL 4: Proposal submitted by a stockholder that TriQuint prepare a report
regarding certain environmental, health and safety matters, as more
fully described in the accompanying Proxy Statement.
FOR AGAINST ABSTAIN
|_| |_| |_|
PROPOSAL 5: Upon such other matters as may properly come before or incident to
the conduct of the Annual Meeting, the proxy holders shall vote in
such manner as they determine to be in the best interests of
TriQuint. TriQuint is not presently aware of any such matters to be
presented for action at the meeting.
I (WE) PLAN TO ATTEND THE MEETING |_|
Stockholder Name____________________ Signature____________________ Date_________
Please sign exactly as your name appears on this Proxy Card. If shares are
registered in more than one name, the signatures of all such persons are
required. A corporation should sign in its full corporate name by a duly
authorized officer, stating his/her title. Trustees, guardians, executors and
administrators should sign in their official capacity, giving their full title
as such. If a partnership, please sign in the partnership name by authorized
person(s). If you receive more than one Proxy Card, please sign and return all
such cards in the accompanying envelope.
- --------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
Vote by Internet or Telephone or Mail
24 Hours a Day, 7 Days a Week
Internet and telephone voting is available through 11PM Eastern Time
the day prior to annual meeting day.
Your Internet or telephone vote authorizes the named proxies to vote your shares
in the same manner as if you marked, signed and returned your proxy card.
- ------------------------------------ ------------------------------------ ---------------------
Internet Telephone Mail
http://www.eproxy.com/tqnt 1-800-435-6710
Use the Internet to vote your proxy. Use any touch-tone telephone to Mark, sign and date
Have your proxy card in hand when vote your proxy. Have your proxy your proxy card
you access the web site. You will be OR card in hand when you call. You will OR and
prompted to enter your control be prompted to enter your control return it in the
number, located in the box below, to number, located in the box below, enclosed postage-paid
create and submit an electronic and then follow the directions envelope.
ballot. given.
- ------------------------------------ ------------------------------------ ---------------------
If you vote your proxy by Internet or by telephone,
you do NOT need to mail back your proxy card.
TRIQUINT SEMICONDUCTOR, INC.
Proxy for Annual Meeting of Stockholders to be Held on May 21, 2003
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting of Stockholders and Proxy Statement, each dated April 15, 2003, and
hereby names, constitutes and appoints Ralph G. Quinsey and Raymond A. Link, or
either of them acting in absence of the other, with full power of substitution,
my true and lawful attorneys and proxies for me and in my place and stead to
attend the Annual Meeting of the Stockholders of TriQuint Semiconductor, Inc.
("TriQuint") to be held at 1:30 p.m. on Wednesday, May 21, 2003, and at any
adjournment or postponement thereof, and to vote all the shares of Common Stock
held of record in the name of the undersigned on April 2, 2003, with all the
powers that the undersigned would possess if personally present.
________________________________________________________________________________
Address Change/Comments (Mark the corresponding box on the reverse side)
________________________________________________________________________________
________________________________________________________________________________
- --------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
You can now access your TriQuint Semiconductor, Inc. account online.
Access your TriQuint Semiconductor, Inc. shareholder account online via Investor
ServiceDirect(R) (ISD).
Mellon Investor Services LLC, transfer agent for TriQuint Semiconductor, Inc.,
now makes it easy and convenient to get current information on your shareholder
account. After a simple, and secure process of establishing a Personal
Identification Number (PIN), you are ready to log in and access your account to:
o View account status
o View certificate history
o View book-entry information
o View payment history for dividends
o Make address changes
o Obtain a duplicate 1099 tax form
o Establish/change your PIN
Visit us on the web at http://www.melloninvestor.com
and follow the instructions shown on this page.
Step 1: FIRST TIME USERS - Establish a PIN
You must first establish a Personal Identification Number (PIN) online by
following the directions provided in the upper right portion of the web screen
as follows. You will also need your Social Security Number (SSN) or Investor ID
available to establish a PIN.
The confidentiality of your personal information is protected using secure
socket layer (SSL) technology.
o SSN or Investor ID
o PIN
-------------
o Then click on the Establish PIN button
-------------
Please be sure to remember your PIN, or maintain it in a secure place for future
reference.
Step 2: Log in for Account Access
You are now ready to log in. To access your account please enter your:
o SSN or Investor ID
o PIN
------
o Then click on the Submit button
------
If you have more than one account, you will now be asked to select the
appropriate account.
Step 3: Account Status Screen
You are now ready to access your account information. Click on the appropriate
button to view or initiate transactions.
o Certificate History
o Book-Entry Information
o Issue Certificate
o Payment History
o Address Change
o Duplicate 1099
For Technical Assistance Call 1-877-978-7778 between
9am-7pm Monday-Friday Eastern Time