SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
KULICKE & SOFFA INDUSTRIES, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
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KULICKE & SOFFA
[LOGO]
2101 Blair Mill Road, Willow Grove, PA 19090
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
FEBRUARY 12, 2002
THE ANNUAL MEETING OF SHAREHOLDERS OF KULICKE AND SOFFA INDUSTRIES,
INC. (the "Company") will be held on Tuesday, February 12, 2002, at 4:30 p.m. at
the offices of the Company, 2101 Blair Mill Road, Willow Grove, Pennsylvania,
for the following purposes:
1. Election of directors;
2. Ratification of the appointment of PricewaterhouseCoopers LLP
as the Company's independent accountants for the year ending
September 30, 2002; and
3. Transaction of such other business as may properly come before
the meeting.
The Board of Directors has fixed the close of business on December 17,
2001, as the record date for the determination of holders of Common Shares
entitled to notice of and to vote at the Annual Meeting.
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING,
BUT WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, PLEASE
SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN ORDER THAT YOUR STOCK
MAY BE VOTED. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY REVOKE YOUR PROXY AND
VOTE IN PERSON.
By Order of the Board of Directors
SUSAN WATERS
Secretary
January 7, 2002
KULICKE & SOFFA
[LOGO]
2101 Blair Mill Road, Willow Grove, PA 19090
PROXY STATEMENT
January 7, 2002
THE ENCLOSED PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE
COMPANY. This proxy statement and the enclosed proxy are being mailed on or
about January 7, 2002. A copy of the Company's 2001 Annual Report to
Shareholders (which includes the Company's Annual Report on Form 10-K) is also
enclosed but is not to be considered as proxy solicitation material.
VOTING AND REVOCABILITY OF PROXIES
The Board of Directors has fixed the close of business on December 17,
2001, as the record date for determination of the shareholders entitled to vote
at the Annual Meeting. As of the record date, there were 49,111,295 Common
Shares outstanding ("Common Shares" or "Common Stock"). Each such share is
entitled to one vote on all matters to be presented to the meeting.
When proxies are properly dated, executed and returned, the shares they
represent will be voted at the Annual Meeting in accordance with the
instructions of the shareholder. If no specific instructions are given, the
shares will be voted FOR the following Items: (1) the election of the nominees
for directors set forth herein; and (2) ratification of the appointment of
independent accountants. A proxy is revocable at any time prior to its use by
delivering a subsequently executed proxy or written notice of revocation to the
Secretary of the Company.
A majority of the shares entitled to vote, represented in person or by
proxy, constitutes a quorum. If a quorum is present, (i) the two nominees for
director receiving the highest number of votes cast at the Annual Meeting will
be elected and (ii) the affirmative vote of a majority of the total votes cast
by all shareholders entitled to vote at the Meeting will be required to ratify
Item 2 above. Abstentions, the withholding of authority to vote or the specific
direction not to cast a vote, such as a broker non-vote, will not constitute the
casting of a vote on any matter.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
To the best knowledge of the Company, the only persons or groups of
persons that owned beneficially more than 5% of the outstanding Common Shares of
the Company based on the number of shares outstanding as of December 17, 2001
were as follows:
NUMBER OF PERCENT OF
NAME AND ADDRESS SHARES CLASS
---------------- ------ -----
Capital Guardian Trust Company 5,634,730 11.5%
333 South Hope Street
Los Angeles, CA 90071(1)
FMR Corp. 5,031,254 10.2%
82 Devonshire Street
Boston, MA 02109(2)
(1) Based on information provided pursuant to Schedule 13G filed with the
Securities and Exchange Commission (the "SEC") on February 14, 2001, Capital
Group International, Inc. is the parent holding company of a group of investment
management companies (including Capital Guardian Trust Company and Capital
International, Inc.) that hold investment power and, in some cases, voting power
over these shares. On the Schedule 13G, Capital Group International also
reported that it does not have investment power or voting power over these
shares but it may be deemed to "beneficially own" these shares by virtue of Rule
13d-3 under the Securities and Exchange Act of 1934, as amended (the "34 Act").
Based on information provided pursuant to Schedule 13G filed with the SEC on
February 14, 2001 by Capital Guardian Trust Company, all 5,634,730 shares are
held by such company.
(2) Based on information provided pursuant to Schedule 13G jointly filed on
August 10, 2001, FMR Corp., Edward C. Johnson 3d, and Abigail P. Johnson,
beneficially own and have sole dispositive power with respect to 5,031,254
shares of Common Stock. The following FMR Corp. subsidiaries have beneficial
ownership: Fidelity Management & Research Company, an investment adviser,
Fidelity Management Trust Company, a bank as defined in the 34 Act and Fidelity
International Limited, which provides investment advisory and management
services.
ITEM 1 - - ELECTION OF DIRECTORS
The Board of Directors currently consists of seven directors, divided
into three classes of two directors and one class of one director. The Board of
Directors intends to nominate John A. O'Steen and MacDonell Roehm, Jr., whose
terms expire at the 2002 Annual Meeting, for re-election at the 2002 Annual
Meeting to serve until the 2006 Annual Meeting and until their successors have
been duly elected and qualified. Each shareholder who so chooses may cumulate
votes in the election of directors (i.e. shareholders may multiply the number of
votes the shareholder is entitled to cast by the total number of directors
elected (i.e. two) and cast the whole number of votes for one candidate or
distribute them among some or all candidates). The proxy agents reserve the
right to vote the proxies cumulatively, if necessary, in order that one or both
of Messrs. John A. O'Steen and MacDonell Roehm, Jr. will be re-elected to the
Board of Directors. If either of the nominees should be unavailable at the time
of the election, the persons named in the proxy may vote the proxies for such
other persons as they may choose, unless the Board of Directors reduces the
number of the directors to be elected.
-2-
The following table provides certain information concerning: (i) John
A. O'Steen and MacDonell Roehm, Jr., the nominees for re-election, (ii) the
persons whose terms as directors will continue after the Annual Meeting, and
(iii) the executive officers named in the Summary Compensation Table herein,
including their ages, principal occupations and, as of December 1, 2001,
beneficial shareholdings. Unless otherwise specified, such persons have held the
positions indicated (other than directorships) for at least five years. To the
best knowledge of the Company, each of the persons listed below has sole voting
and investment power with respect to the beneficial shareholdings set forth,
unless otherwise indicated.
PRESENT COMMON SHARES
DIRECTOR TERM BENEFICIALLY OWNED
NAME, AGE AND OCCUPATION SINCE EXPIRES ON DECEMBER 1, 2001
------------------------ ----- ------- -------------------
NUMBER PERCENT
------ -------
Philip V. Gerdine (62), 2000 2004 100 *
Independent Consultant. From 1989
to September 1998, served as Executive
Director, Siemens AG and the Managing
Director of the Plessey Company PLC.
Formerly, Vice President-Corporate
Development of Siemens Corporation.
Has held senior management positions
with General Electric Co., Price
Waterhouse and The Boston Consulting
Group. Currently a director of Applied
Materials, Inc.
C. Scott Kulicke (52), 1975 2003 1,439,910(1)(2) 2.9%
Chairman of the Board and Chief
Executive Officer of the Company. Also
serves on the Board of Directors of
Xetel Corporation.
John A. O'Steen (57), 1988 2002 30,000(1)(3) *
Executive Vice President of
Operations (since July 1998) and
Executive Vice President (January to
June 1998) of Cornerstone Brands, Inc.,
a consumer catalog company. From 1991
to 1998, Chairman and Chief Executive
Officer of Cinmar, L.P., a mail order
catalog company acquired by the
predecessor of Cornerstone Brands in
September 1995. Formerly, President,
Chief Executive Officer and a director
of Cincinnati Microwave, Inc., a
manufacturer of electronic products.
Currently, a director of Cornerstone
Brands, Inc.
Allison F. Page (78), 1962 2005 11,040(1) *
Retired partner in the Philadelphia
law firm of Pepper Hamilton LLP.
MacDonell Roehm, Jr. (62), 1984 2002 70,000(1) *
Chairman of Australian Ventures
LLC, a private equity fund focusing on
emerging company investments in
Australia and New Zealand, since 1999.
Chairman and Chief Executive Officer of
Crooked Creek Capital LLC, a provider
of strategic, operational and
-3-
financial restructuring services, since
1998. Former Chairman, President and Chief
Executive Officer of Bill's Dollar Stores,
Inc., a chain of retail convenience stores,
from 1994 to March 1998. Prior to that time,
Managing Director of AEA Investors, Inc., a
private investment firm. Also serves on the
Board of Directors of Tower Technology Pty.,
Ltd., SCIA Holdings Pty. Ltd. and JB Hi Fi
Pty. Ltd.
Larry D. Striplin, Jr. (72), 1995 2004 10,000(1) *
Chairman of the Board and Chief
Executive Officer of Nelson-Brantley
Glass Contractors, Inc., a glass
contractor, and Circle "S" Industries,
Inc., a real estate management
company. Mr. Striplin was Chairman of
Circle "S" Industries, Inc. and
American Fine Wire Corp. before their
acquisition by the Company in 1995.
Currently, a director of HealthSouth
Corporation and The Banc Corporation.
C. William Zadel (58), 1989 2005 12,000(1) *
Chairman and Chief Executive
Officer of Mykrolis Corporation, a
multinational company focused on developing,
manufacturing and marketing technically
advanced filtration, purification and
control products for the global
semiconductor industry. Mykrolis is the
former microelectronics division of
Millipore Corporation. Prior to becoming
Chief Executive Officer of Mykrolis at its
separation from Millipore in August 2001,
Mr. Zadel was Chairman and Chief Executive
Officer of Millipore since April of 1996; he
retains his position as Chairman of the
Board of Millipore. Currently, a director of
Matritech, Inc.
Jack Belani (48), -- -- 33,875(1) *
Vice President of the Company and
President of Wire Bonding Division.
Alexander A. Oscilowski (42), -- -- 31,307(1) *
Senior Vice President of the
Company and Office of the President.
Morton K. Perchick (64), -- -- 150,520(1) *
Executive Vice President of the
Company and Office of the President.
-4-
Clifford G. Sprague (57), -- -- 83,853(1) *
Senior Vice President and Chief
Financial Officer of the Company.
All directors and executive officers as -- -- 1,968,653(4) 4.0%
a group (13 persons).
* Less than 1.0%
(1) Includes or consists of shares subject to outstanding options that
are currently exercisable or exercisable within 60 days after
December 1, 2001 in the following amounts: Mr. Kulicke (569,010), Mr.
O'Steen (10,000), Mr. Page (10,000), Mr. Roehm (64,000), Mr. Striplin
(10,000), Mr. Zadel (10,000), Mr. Belani (33,280), Mr. Oscilowski
(30,585), Mr. Perchick (147,795) and Mr. Sprague (81,828).
(2) Includes 696,058 shares jointly held with Mr. Kulicke's wife.
(3) Includes 2,000 shares jointly held with Mr. O'Steen's wife.
(4) Includes 1,054,888 shares subject to options that are currently
exercisable or exercisable within 60 days after December 1, 2001. See
also footnote (1) above.
For further information concerning Directors and Executive Officers see
"Additional Information" herein.
THE BOARD OF DIRECTORS RECOMMENDS VOTING FOR THE ELECTION OF EACH OF THE
NOMINEES FOR DIRECTOR.
-5-
ITEM 2 - - APPOINTMENT OF INDEPENDENT ACCOUNTANTS
At the recommendation of the Company's Audit Committee, the Board of
Directors has appointed PricewaterhouseCoopers LLP as the Company's independent
accountants for the fiscal year ending September 30, 2002.
PricewaterhouseCoopers LLP has served as the Company's independent accountants
for a number of years. The election of independent accountants by the
shareholders is not required by law or by the Company's By-laws. Traditionally,
the Company has submitted this matter to the shareholders for ratification and
believes that it is good practice to continue to do so. If a majority of the
votes cast on this matter are not cast in favor of the reappointment of
PricewaterhouseCoopers LLP, the Company will appoint other independent
accountants as soon as is practical and before the close of the 2002 fiscal
year.
A representative of PricewaterhouseCoopers LLP is expected to be
present at the Annual Meeting to make a statement if he or she so desires and
will be available to respond to any appropriate questions.
AUDIT FEES
The aggregate fees billed to the Company by PricewaterhouseCoopers LLP
for the performance of the audit and the review of the Company's financial
statements during Fiscal 2001 were approximately $610,000.
ALL OTHER FEES
The aggregate fees billed to the Company by PricewaterhouseCoopers LLP
for all non-audit services, including fees for acquisition and tax-related
services during Fiscal 2001 were approximately $1,000,000. Such non-audit
services did not include any financial information systems design and
implementation services.
The Company's Audit Committee has determined that the provision of the
services provided by PricewaterhouseCoopers LLP as set forth herein are
compatible with maintaining PricewaterhouseCoopers' independence.
THE BOARD OF DIRECTORS RECOMMENDS VOTING FOR
RATIFICATION OF THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S
INDEPENDENT ACCOUNTANTS.
ADDITIONAL INFORMATION
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's executive
officers and directors and persons who own more than ten percent of a registered
class of the Company's equity securities (collectively, the "reporting persons")
to file reports of ownership and changes in ownership with the SEC and to
furnish the Company with copies of these reports.
Based solely on the Company's review of the copies of these reports
received by it and written representations received from reporting persons with
respect to the filing of reports on Forms 3, 4 and 5, the Company believes that
all such filings required to be made by the reporting persons for Fiscal 2001
were made on a timely basis.
-6-
SUMMARY COMPENSATION TABLE
The following table sets forth information with respect to the
compensation received by the Chief Executive Officer and the four other most
highly compensated executive officers of the Company (together with the Chief
Executive Officer, the "named executive officers") for the fiscal year ended
September 30, 2001 ("Fiscal 2001"), as well as the compensation received by each
such individual for the Company's previous two fiscal years ("Fiscal 2000" and
"Fiscal 1999," respectively), if applicable.
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
------------------- -------------------
SECURITIES
NAME AND FISCAL OTHER ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY($)(1) BONUS($)(1)(2) COMPENSATION($)(3) OPTIONS(#)(4) COMPENSATION($)(5)
------------------------------------------------------------------------------------------------------------------------------------
C. Scott Kulicke 2001 $484,740 $ 0 $ 7,218 110,600 $15,750
Chairman of the Board 2000 426,495 688,703 6,709 -- 15,750
and Chief Executive 1999 389,430 348,064 6,709 95,400 15,750
Officer
Jack Belani 2001 $230,974 $150,000 $10,902 35,200 $ 3,960
Vice President 2000 190,885 206,292 2,637 -- 3,064
President of Wire 1999 78,269 121,202 -- 61,200 1,786
Bonding Division
Alexander A. Oscilowski 2001 $287,640 $120,000 $ 5,923 49,700 $ 5,203
Senior Vice President 2000 201,169 211,565 2,290 -- 54,797
Office of the President 1999 46,250 50,315 -- 45,400 31,969
Morton K. Perchick 2001 $329,869 $134,400 $12,025 55,500 $18,375
Executive Vice President 2000 268,978 341,014 7,275 -- 18,375
Office of the President 1999 234,173 198,137 6,555 44,600 17,500
Clifford G. Sprague 2001 $266,402 $107,250 $12,206 45,600 $13,125
Senior Vice President 2000 237,646 202,829 6,303 -- 14,713
and Chief Financial 1999 215,660 109,283 6,303 32,600 10,904
Officer
----------
(1) Includes amounts earned but deferred at the election of executive
officers under the Company's Executive Deferred Compensation Plan.
(2) These amounts represent incentive payments to the named executive
officers as participants in the Company's Executive Incentive
Compensation Plan for the fiscal year indicated. (See Compensation
Committee Report on Executive Compensation herein.)
(3) These amounts represent, for Fiscal 1999, 2000 and 2001, the
Company's reimbursement of taxes paid by the named executive officers
on Company-provided automobiles and, for Fiscal 2001, automobile
allowances for Messrs. Perchick and Sprague.
(4) These amounts were adjusted to reflect the two-for-one stock split
effective on July 31, 2000.
(5) This column includes, for Fiscal 1999, 2000 and 2001, the Company's
matching contribution to its 401(k) Incentive Savings Plan with
respect to Messrs. Kulicke, Belani, Oscilowski, Perchick and Sprague
and, for Fiscal 1999 and 2000, reimbursement of relocation expenses
for Mr. Oscilowski.
STOCK OPTION TABLES
The following tables set forth information with respect to: (i) stock
option grants by the Company to the named executive officers in Fiscal 2001, and
(ii) the aggregate option exercises by each named executive officer during
Fiscal 2001, the number of unexercised options and the value of unexercised
in-the-money options held by each named executive officer at the Fiscal 2001
year-end, respectively.
-7-
OPTION GRANTS IN FISCAL 2001
Individual Grants
------------------------------------------------------------------------------------------
% of Total Potential Realizable Value
Number of Options at Assumed Annual Rates of
Shares Granted to Stock Price Appreciation
Underlying Employee in Exercise for Option Term(3)
Options Fiscal Price Expiration --------------------------
Name Granted(1) Year(2) Per Share Date 5% 10%
---- ---------- ------- --------- ---- -- ---
C. Scott Kulicke...... 110,600 4.6% $14.375 10/19/10 $999,864 $2,533,851
Jack Belani........... 35,200 1.5% 14.375 10/19/10 318,221 806,434
Alexander A. Oscilowski 49,700 2.1% 14.375 10/19/10 449,306 1,138,629
Morton K. Perchick.... 55,500 2.3% 14.375 10/19/10 501,740 1,271,508
Clifford G. Sprague... 45,600 1.9% 14.375 10/19/10 412,240 1,044,698
----------
(1) All options granted to named executive officers in Fiscal 2001 were
granted under the Company's 1998 Employee Stock Option Plan and
generally become exercisable commencing one year from the date of
grant in installments of 25% per year.
(2) The Company granted options to employees to purchase a total of
2,380,714 shares during Fiscal 2001.
(3) These amounts represent hypothetical gains that could be achieved for
the respective options if exercised at the end of the option term.
These gains are based on assumed rates of stock appreciation of 5%
and 10% compounded annually from the date the respective options were
granted to their expiration date.
AGGREGATED OPTION EXERCISES IN FISCAL 2001 AND 2001 FISCAL YEAR-END OPTION
VALUES
The following table sets forth information with respect to the
aggregate option exercises by each named executive officer in Fiscal 2001 and
the value of unexercised in-the-money options held by each named executive
officer at the end of Fiscal 2001, respectively.
NUMBER OF SHARES
UNDERLYING
UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
SHARES YEAR-END AT FISCAL YEAR-END(1)
ACQUIRED ON ------------------------------ ----------------------------
NAME EXERCISE VALUE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------------------------------------------------------------------------------------------------------------------------------
C. Scott Kulicke 14,000 $187,292 502,200 281,200 $2,077,035 $375,343
Jack Belani - 0 - - 0 - 24,480 71,920 -- --
Alexander A. Oscilowski - 0 - - 0 - 18,160 76,900 -- --
Morton K. Perchick - 0 - - 0 - 115,920 133,580 328,624 169,756
Clifford G. Sprague - 0 - - 0 - 57,028 103,720 126,902 126,902
----------
(1) In-the-money options are those where the fair market value of the
underlying shares exceeds the exercise price of the option. The
closing price of the Company's Common Shares on September 28, 2001,
the last trading day during Fiscal 2001, was $10.90 per share.
-8-
PENSION PLAN
The Company has maintained a tax-qualified defined benefit pension
plan, which covered U.S. employees who had reached age 21 and completed one year
of service. Effective December 31, 1995, benefit accruals under the Company's
pension plan were frozen. Retirement benefits under this pension plan are
determined under a formula based on length of service and average compensation
in the three consecutive calendar years during the ten year period ended
December 31, 1995, producing the highest average (subject to certain Internal
Revenue Code limits). Assuming normal retirement at age 65 and election of
payment in the form of an annuity, the named executives would receive the
following annual amounts under the pension plan: C. Scott Kulicke - $57,996;
Jack Belani - 0 -; Alexander A. Oscilowski - 0 -; Morton K. Perchick - $29,951;
and Clifford G. Sprague - $15,793.
TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS
The Company has Termination of Employment Agreements with its executive
officers which provide that in the event of certain changes in control, as
defined in the agreements, the officer who is a party to such agreement and
whose employment terminates, other than voluntarily or for cause, within 18
months after such change in control, will be entitled to termination pay equal
to the lesser of a specified number of months' target total cash compensation
(base salary plus incentives) for the year in which the change in control occurs
or $10 less than the amount which would subject the officer to excise tax with
respect to such payment under Section 4999 of the Internal Revenue Code or would
make payment thereof non-deductible by the Company under Section 280G of the
Code. Such agreements were renewed by the Board of Directors in December 2000
and are all currently scheduled to expire on December 31, 2003, unless extended.
The named executive officers' Termination of Employment Agreements provide for
payment of the following number of months' target total cash compensation:
Messrs. C. Scott Kulicke, 30 months; Belani, 18 months; Oscilowski, 18 months;
Perchick, 18 months; and Sprague, 18 months.
Under the Company's 2001 Employee Stock Option Plan ("2001 Plan"), the
1998 Employee Stock Option Plan ("1998 Plan") and the 1994 Employee Stock Option
Plan ("1994 Plan"), in the event of a change in control of the Company (as
defined in those plans), all outstanding options become fully vested and
exercisable. Under the Company's 1997 Non-Qualified Stock Option Plan for
Non-Employee Directors (the "1997 Director Plan"), if the Company is a party to
any merger in which it is not the surviving entity, or any consolidation or
dissolution, all outstanding options will terminate and the optionee will
receive, in cash, from the Company an amount equal to the fair market value of
the shares subject to his or her outstanding options less the amount which would
be required to exercise such options. Under the Company's 1988 Employee Stock
Option Plan and 1988 Non-Qualified Stock Option Plan for Non-Officer Directors
(the "1988 Director Plan"), if the Company is a party to any merger in which it
is not the surviving entity, or any consolidation or dissolution, all
outstanding options will terminate and the optionee will receive, in cash, from
the Company an amount equal to the fair market value of the shares subject to
then exercisable options less the amount which would be required to exercise
such options. Under the Company's Officers' Deferred Compensation Plan, on a
change in control (as defined in that plan) participants receive a lump sum
payment of the value of their accounts.
BOARD MATTERS
In Fiscal 2001, the Board of Directors met six times. Three of such
meetings were regular meetings and three of such meetings were special meetings.
Directors who are not officers of the Company receive a quarterly retainer of
$3,000, plus $2,000 for each meeting of the Board attended and $1,000 for each
telephone meeting of the Board attended. Committee Chairmen also are paid an
annual retainer of $2,000, and committee members are paid $1,000 for each
committee meeting not held on the date of a Board meeting. All
-9-
of the incumbent directors attended at least 75% of the Board and applicable
committee meetings in Fiscal 2001.
Each member of the Board who is not also an officer or employee of the
Company is eligible to participate in the 1988 and 1997 Director Plans. Pursuant
to the 1988 Director Plan (which terminated in 1998), options to purchase 5,000
Common Shares were automatically granted to each eligible director on the last
day of each February on which the Company's shares were publicly traded through
1998. In February 1999, a similar grant was made pursuant to the 1997 Director
Plan, which provides for such grants through 2008. As a result of the
two-for-one stock split effective on July 31, 2000, grants under the 1997
Director Plan were increased to 10,000 Common Shares beginning with the grant
made in February 2001. The exercise price of all such options is equal to 100%
of the fair market value of the Company's Common Shares on the date of grant.
All options granted under the 1988 Director Plan and options granted under the
1997 Director Plan prior to February 13, 2001 become exercisable in 20% annual
increments commencing on the first anniversary of the date they are granted.
Options granted under the 1997 Director Plan after February 13, 2001 become
exercisable in 25% annual increments commencing on the first anniversary of the
date they were granted.
See also "Certain Relationships and Related Transactions" below.
The Company has standing Audit and Compensation Committees. There is no
standing Nominating Committee. The Audit Committee, comprised of Messrs.
MacDonell Roehm, Jr., Chairman, Philip V. Gerdine and Allison F. Page, met five
times during Fiscal 2001. The Audit Committee recommends to the Board for its
approval, and for ratification by the stockholders, the engagement of the
Company's independent accountants to serve the following fiscal year, reviews
the scope of the audit, considers comments made by the independent accountants
with respect to accounting procedures and internal controls and the
consideration given thereto by the Company's management, and reviews internal
accounting procedures and controls with the Company's financial management.
The Compensation Committee, comprised of Messrs. John A. O'Steen,
Chairman, Larry D. Striplin, Jr. and C. William Zadel, met six times during
Fiscal 2001. The principal duties of the Compensation Committee are to approve
compensation arrangements for the executive officers and senior managers of the
Company and to administer the Company's stock option plans.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On October 2, 1995, the Company acquired American Fine Wire Corporation
("AFW") through the merger of a subsidiary of the Company into Circle "S"
Industries, Inc., the parent corporation of AFW ("Circle S"). Larry D. Striplin,
Jr., a director of the Company and former director of Circle S, and various
members of his family and related trusts owned slightly more than a majority of
the outstanding common stock of Circle S. In connection with the AFW
acquisition, the Company's Board agreed to elect, and on December 12, 1995 did
elect, Larry D. Striplin, Jr. as a director of the Company. Mr. Striplin
subsequently was reelected a director of the Company at its 1996 Annual Meeting
of Shareholders for a four-year term and at its 2000 Annual Meeting of
shareholders for an additional four-year term. Pursuant to the AFW acquisition,
the Company also assumed a 1990 employment and non-competition agreement between
Circle S and Mr. Striplin providing for payments to him or his estate of
$200,000 per year for five years following the date of the AFW acquisition. Mr.
Striplin's employment by Circle S and AFW terminated at the time of such
acquisition.
On November 28, 2000, Mackenzie-Childs Ltd. filed a voluntary petition
under Chapter 11 of the United States Bankruptcy Code. At the time of the
Chapter 11 filing, Director MacDonell Roehm, Jr. was Chairman and Chief
Executive Officer of Mackenzie-Childs Ltd. Mr. Roehm was hired by
Mackenzie-Childs
-10-
Ltd. in 2000 to implement remedial action plans. By filing the petition,
Mackenzie-Childs Ltd. sought reorganization to provide a framework under which
those remedial action plans could be executed.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Company's Board of Directors,
comprised entirely of outside directors, is responsible for approving
compensation arrangements for the officers and senior managers of the Company.
The Compensation Committee seeks to achieve the following goals with
the Company's executive compensation programs: to attract and retain key
executives; to motivate and reward executives for the attainment of
Company-based and individual performance objectives; and to provide executives
with an opportunity to acquire an equity interest in the Company. The
Compensation Committee seeks to foster a performance-oriented environment by
tying a significant portion of each executive's cash compensation to the
achievement of objectives that are important to the Company.
The Company's Executive Incentive Compensation Plan is currently
comprised of three principal components: base salary; cash incentive; and equity
incentive in the form of stock options granted under the Company's stock option
plans.
TARGET TOTAL CASH COMPENSATION
Target total cash compensation for each executive is established based
on marketplace data. For this purpose, in Fiscal 2001 the Company utilized
principally the data for companies with sales between $500 million and $1
billion as reported by nationwide participants in the Aon Consulting/Radford
Division 2000 Executive Compensation Report. Participants in that nationwide
survey are not limited to the companies included in the Company's peer group
established to compare shareholder returns in the performance graph included
below because the Compensation Committee believes that the Company's competitors
for executive talent are not limited to that peer group.
BASE SALARY AND CASH INCENTIVE
Once target total cash compensation has been established for each
executive, the total compensation is divided into a base salary portion and a
cash incentive portion. Generally, the higher the level of responsibility of the
executive within the Company, the greater the portion of that executive's target
total cash compensation that consists of the cash incentive component. At
budgeted performance levels, targeted cash incentive ranges from approximately
43% to 56% of targeted total cash compensation (75% to 125% of base salary) for
the named executive officers.
On August 1, 2001, the Company instituted a temporary reduction in the
base salaries of employees, including a 15% reduction in the base salaries of
participants in the Executive Incentive Compensation Plan.
For Fiscal 2001, the Company elected to make no payments under the
Executive Incentive Compensation Plan for achievement of Company-based
performance objectives. The cash incentive portion of the compensation of
participants in the Executive Incentive Compensation Plan for Fiscal 2001 was
based entirely upon achievement of individual performance objectives. Based upon
achievement of such objectives, an aggregate of $869,400 was earned by and
awarded to the Company's executive officers under the Plan.
-11-
EQUITY INCENTIVE
The Company grants stock options annually to all participants in the
Executive Incentive Compensation Plan. The purpose of these grants is to give
participants a stake in the success of the Company as measured by the stock
market's assessment of the Company's performance. The number of options granted
to each participant has generally been determined on the basis of a percentage
of target total cash compensation that varies depending on the participant's
level of responsibility. The extent of existing options or stock ownership is
not generally considered in granting options, except that the Company sometimes
grants an initial round of options to newly recruited executives to provide them
with some stake in the Company's success from the commencement of their
employment.
The option grants to the seven executive officers on October 19, 2000
amounted to approximately .8% of the Company's Common Shares outstanding on or
about the date of the grants.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Compensation Committee uses the same factors in determining the
compensation of the Chief Executive Officer as it does for the other
participants in the Executive Incentive Compensation Plan. Following an analysis
of marketplace data and a subjective assessment of the Chief Executive Officer's
performance, the Compensation Committee approved an increase in the annual base
salary of the Chief Executive Officer from $450,000 to $499,500 for Fiscal 2001.
The Chief Executive Officer, whose cash incentive is based entirely upon
Company-based performance objectives, received no cash incentive payment for
Fiscal 2001.
The Compensation Committee is mindful of the potential impact upon the
Company of Section 162(m) of the Internal Revenue Code, which prohibits public
companies from deducting certain executive remuneration in excess of $1,000,000.
While reserving the right of the Company to offer such compensation arrangements
as may be from time-to-time necessary to attract and retain top-quality
management, the Compensation Committee intends generally to structure such
arrangements, where feasible, so as to minimize or eliminate the impact of the
limitations of Section 162(m) of the Code.
THE COMPENSATION COMMITTEE
JOHN A. O'STEEN, CHAIRMAN
LARRY D. STRIPLIN, JR.
C. WILLIAM ZADEL
-12-
PERFORMANCE GRAPH
The graph set forth below compares, for fiscal years 1997 through 2001,
the yearly change in the cumulative total returns to holders of Common Shares of
the Company with the cumulative total return of a peer group selected by the
Company and of the NASDAQ Stock Market-US Index. The peer companies are all
among the top 25 semiconductor capital equipment suppliers in the world and were
selected by the Company based principally on nature of business, revenues,
employee base, technology base, market share, customer and customer
relationships. The peer group is composed of Advanced Semiconductor Materials
International N.V., Applied Materials, Inc., BTU International, Inc., Electro
Scientific Industries, Inc., FSI International, Inc., Genus, Inc., KLA - Tencor
Corp., Lam Research Corp., LTX Corp., Novellus Systems, Inc. and Teradyne Inc.
The graph assumes that the value of the investment in the relevant stock or
index was $100 at September 30, 1996 and that all dividends were reinvested.
Total returns are calculated based on a fiscal year ending September 30. For
purposes of the peer group index, the peer group companies have been weighted
based upon their relative market capitalization. The closing market price of the
Company's Common Shares as of September 28, 2001 was $10.90. The closing market
price of such shares on December 17, 2001 was $17.71.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG KULICKE & SOFFA INDUSTRIES, INC.,
THE NASDAQ STOCK MARKET (U.S.) INDEX AND A PEER GROUP
[Line Graph]
KULICKE & SOFFA INDS INC
Cumulative Total Return
-----------------------------------------------------------
9/96 9/97 9/98 9/99 9/00 9/01
KULICKE & SOFFA INDUSTRIES, INC. 100.00 407.14 119.78 213.74 234.07 191.65
NASDAQ STOCK MARKET (U.S.) 100.00 137.27 139.44 227.82 302.47 123.64
PEER GROUP 100.00 305.16 134.43 421.01 603.82 329.75
* $100 INVESTED ON 9/30/1996 IN STOCK OR INDEX-
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING SEPTEMBER 30.
-13-
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Company is composed of three independent
directors and operates under a written charter approved by the Audit Committee
and adopted by the Board of Directors. The purpose of the Audit Committee is to
monitor the integrity of the financial statements of the Company, oversee the
independence of the Company's independent accountants, and recommend to the
Board the selection of the independent accountants. Each of the members of the
Audit Committee meets the independence requirements of NASDAQ.
Management is responsible for the Company's internal controls and the
financial reporting process. The independent accountants are responsible for
performing an independent audit of the Company's consolidated financial
statements in accordance with generally accepted auditing standards and to issue
a report thereon. The Audit Committee's responsibility is to monitor and oversee
these processes.
REVIEW WITH MANAGEMENT
The Audit Committee has reviewed and discussed the Company's audited
financial statements for the fiscal year ended September 30, 2001 with
management.
REVIEW AND DISCUSSIONS WITH INDEPENDENT ACCOUNTANTS
The Audit Committee has discussed with PricewaterhouseCoopers LLP, the
Company's independent accountants, the matters required to be discussed by
Statement of Auditing Standards No. 61, "Communications with Audit Committees,"
as amended by Statement of Auditing Standards No. 90, "Audit Committee
Communications."
The Audit Committee has also reviewed the letter from
PricewaterhouseCoopers LLP required by the Independence Standards Board Standard
No. 1, "Independence Discussions with Audit Committees," discussed with the
accountants their independence, and concluded that the nonaudit services
performed by PricewaterhouseCoopers LLP are compatible with maintaining their
independence.
The Audit Committee has instructed the independent accountants that
the Audit Committee expects to be advised if there are any subjects that require
special attention.
CONCLUSION
Based on the review and discussions referred to above, the Audit
Committee recommended to the Company's Board that the Company's audited
financial statements be included in the Company's Annual Report on Form 10-K for
the fiscal year ended September 30, 2001 filed with the Securities and Exchange
Commission.
AUDIT COMMITTEE
MACDONELL ROEHM, JR., CHAIRMAN
PHILIP V. GERDINE
ALLISON F. PAGE
-14-
SHAREHOLDER PROPOSALS
Proposals which shareholders desire to have included in the Company's
proxy statement for the Annual Meeting in 2003 pursuant to Securities Exchange
Act Regulation 14a-8 must be addressed to the Secretary of the Company and
received by the Company on or before September 9, 2002.
OTHER MATTERS
The cost of soliciting proxies will be borne by the Company. Proxies
may be solicited by certain officers and regular employees of the Company
personally or by written communication, telephone, facsimile or other means, for
which they will receive no compensation in addition to their normal
compensation. Arrangements may also be made with brokerage houses and other
custodians, nominees and fiduciaries for the forwarding of solicitation material
to the beneficial owners of stock held of record by such persons, and the
Company may reimburse them for their reasonable out-of-pocket and clerical
expenses.
Although the Company knows of no items of business which will be
presented at the Annual Meeting other than those described herein, proxies in
the accompanying form will confer discretionary authority to the proxy agents
with respect to any other matters which may come before the meeting to the
extent permitted by the applicable rules of the SEC. In this regard, the Company
intends to avail itself, until further notice, of the provisions of Rule
14a-4(c)(1) which grants the proxy agents discretionary authority to vote on any
shareholder proposals presented at the meeting of which the Company has not
received notice at least 45 days before the anniversary of the date on which the
Company first mailed its proxy materials for last year's Annual Meeting. The
Company received no notice of any shareholder proposal by such anniversary date
(i.e. November 26, 2001).
THE COMPANY, UPON REQUEST, WILL FURNISH TO RECORD AND BENEFICIAL
HOLDERS OF ITS COMMON STOCK, FREE OF CHARGE, A COPY OF ITS ANNUAL REPORT ON FORM
10-K (INCLUDING FINANCIAL STATEMENTS AND SCHEDULES BUT WITHOUT EXHIBITS) FOR
FISCAL 2001. COPIES OF EXHIBITS TO THE FORM 10-K ALSO WILL BE FURNISHED UPON
REQUEST FOR A PAYMENT OF A FEE OF $.50 PER PAGE. ALL REQUESTS SHOULD BE DIRECTED
TO THE DIRECTOR OF THE INVESTOR RELATIONS DEPARTMENT OF THE COMPANY AT THE
OFFICES OF THE COMPANY SET FORTH ON PAGE 1 OF THIS PROXY STATEMENT.
In addition, electronic copies of the Company's Fiscal 2001 Annual
Report, Form 10-K and proxy statement will be available on the Company's website
at:
http://www.kns.com/investors/financials/secreports.asp
after the reports are mailed to shareholders in early January 2002.
By Order of the Board of Directors
SUSAN WATERS
Secretary
January 7, 2002
-15-
A [X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
WITHHOLD
FOR AUTHORITY
1. ELECTION NOMINEES TO VOTE FOR
OF LISTED NOMINEES LISTED
DIRECTORS [ ] [ ]
Nominees: John A. O'Steen
MacDonell Roehm, Jr.
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
--------------------------------------------------------------------------------
BY SIGNING THIS PROXY, AUTHORITY IS GIVEN TO CUMULATE VOTES IN THE DISCRETION OF
PROXIES FOR LESS THAN ALL NOMINEES LISTED.
2. Appointment of PricewaterhouseCoopers LLP as independent accountants for the
Company for the fiscal year ending September 30, 2002.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
You are urged to sign and return this proxy so that you may be sure that your
shares will be voted. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR THE NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSAL
YOUR VOTE IS IMPORTANT TO US. PLEASE COMPLETE, DATE AND SIGN THIS PROXY
CARD AND RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE.
-------------------------------------------------
SIGNATURE OF SHAREHOLDER
Dated 2002
---------------------------------------------------- ---------------
SIGNATURE OF SHAREHOLDER
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME APPEARS HEREON. WHEN SHARES ARE HELD
BY JOINT TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF
A CORPORATION, PLEASE SIGN FULL CORPORATE NAME BY PRESIDENT OR OTHER
AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN THE PARTNERSHIP
NAME BY AUTHORIZED PERSON.