SCHEDULE 14A
(Rule 14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for use of the Commission only (as permitted by Rule 14a-
6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-12
Semtech Corporation
-------------------
(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:
2) Aggregate number of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
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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
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number, or the Form or Schedule and the date of its filing.
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4) Date Filed:
[LOGO]
SEMTECH
Semtech Corporation
200 Flynn Road
Camarillo, California 93012-8790
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held June 6, 2002
To our Stockholders:
Notice is hereby given that the Annual Meeting of Stockholders of Semtech
Corporation will be held at the Hyatt Westlake Plaza, 880 S. Westlake Boulevard,
Westlake Village, California 91361 (Westlake Village Boulevard exit off the 101
Freeway) on Thursday, June 6, 2002 at 1:00 p.m., Pacific Daylight Savings time,
for the following purposes:
1. To elect five Directors to hold office until the next annual
meeting or until their successors are duly elected and qualified.
2. To transact any other business which may properly come before the
Meeting or any adjournment or postponements thereof.
The record date for the determination of the stockholders entitled to notice of
and to vote at the Annual Meeting was the close of business on April 19, 2002.
Holders of a majority of the outstanding stock must be present in person or by
proxy in order for the meeting to be held.
IT IS IMPORTANT THAT YOUR STOCK BE REPRESENTED AT THE MEETING. WHETHER OR NOT
YOU EXPECT TO ATTEND THE MEETING, YOU ARE URGED TO COMPLETE, DATE, SIGN AND
PROMPTLY RETURN THE ENCLOSED PROXY WHICH MAY BE REVOKED AT ANY TIME PRIOR TO ITS
USE. A return envelope is enclosed for your convenience.
This Proxy Statement, proxy and the Company's Annual Report to Stockholders are
being mailed on or about May 10, 2002.
By Order of the Board of Directors
/s/ David G. Franz, Jr.
David G. Franz, Jr.
Vice President of Finance and Secretary
May 3, 2002
Camarillo, California
SEMTECH CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
June 6, 2002
------------
PROXY STATEMENT
---------------
The Board of Directors of Semtech Corporation (the "Company") 200 Flynn Road,
Camarillo, California, 93012-8790, furnishes this Proxy Statement in connection
with its solicitation of proxies to be voted at the Annual Meeting of
Stockholders to be held at the Hyatt Westlake Plaza, 880 S. Westlake Boulevard,
Westlake Village, California 91361 (101 Freeway, exit Westlake Boulevard) on
Thursday, June 6, 2002 at 1:00 p.m., Pacific Daylight Savings Time, or at any
adjournments or postponements thereof. The Company is paying the cost of this
solicitation of proxies. The mailing of proxy materials will commence on or
about May 10, 2002. The following is important information in a
question-and-answer format regarding the Annual Meeting and this Proxy
Statement.
What am I voting on?
To elect five directors (Mr. John Poe, Mr. Rockell Hankin, Mr. James Burra, Mr.
Allen Orbuch and Mr. James Schraith) to hold office until the next Annual
Meeting or until their successors are duly elected and qualified.
Who is entitled to vote?
Stockholders as of the close of business on April 19, 2002 (the "Record Date")
are entitled to vote at the Annual Meeting. Each stockholder is entitled to one
vote for each share of common stock held on the Record Date. Stockholders do not
have the right to cumulate votes. These stockholders can also attend the Annual
Meeting.
How do I vote?
Sign and date each proxy you receive and return it in the prepaid envelope. If
you return your signed proxy but do not indicate your voting preferences, we
will vote FOR the proposal on your behalf. You have the right to revoke your
proxy any time before the meeting by (1) notifying the Company's Secretary, or
(2) returning a later-dated proxy. You may also revoke your proxy by voting in
person at the meeting.
What does it mean if I get more than one proxy card?
It means you hold shares registered in more than one account. Please sign and
return all proxies to ensure that all your shares are voted.
Who will count the vote?
Representatives of Mellon Investor Services will tabulate the votes and act as
inspectors of election.
What constitutes a quorum?
A majority of the outstanding shares present or represented by proxy constitutes
a quorum for the Annual Meeting. As of the Record Date, 73,039,368 shares of
Semtech Corporation common stock were issued and outstanding. Proxies submitted
by brokers that do not indicate a vote for some of the proposals because the
holders do not have discretionary voting authority and have not received
instructions from the beneficial owners on how to vote on those proposals are
called "broker non-votes." Abstentions and "broker non-votes" are each included
in the determination of shares present and voting, with each tabulated
separately. Abstentions are counted in tabulations of votes cast on proposals
presented to the stockholders, whereas broker non-votes are not counted for
purposes of determining whether a proposal has been approved.
How many votes are needed for approval of each item?
Directors will be elected by a plurality of the votes cast in person or by proxy
at the Annual Meeting, meaning the five nominees receiving the most votes will
be elected directors. A stockholder may not cumulate his or her votes for
individual directors.
2
What percentages of stock do the directors and officers own?
Together, they own approximately 10.9% of Semtech common stock as of January 27,
2002. (See the section titled "Beneficial Ownership of Securities")
Who are the largest principal shareholders?
The chart on pages 6 and 7 sets forth each owner of greater than 5% of the
Company's common stock.
When are shareholder proposals for the 2003 meeting due?
To be considered for inclusion in next year's Proxy Statement, stockholder
proposals must be submitted in writing by January 10, 2003, to the Company's
Secretary, 200 Flynn Road, Camarillo, California 93012-8790. Copies of the
Bylaws are available to stockholders free of charge upon request to the
Company's Secretary. In addition, notice of a stockholder proposal submitted
other than in the Company's Proxy Statement would be considered untimely if not
received by the Company by March 26, 2003.
How do I receive additional copies of these proxy materials?
Any stockholder desiring additional proxy materials should contact David Franz,
Secretary, Semtech Corporation, (805) 498-2111.
What is the Board's recommendation?
The Board recommends a vote FOR the election of each of the nominated directors.
--------------------------------------------------------------------------------
A copy of the Company's annual report on Form 10-K, including financial
statements and financial statement schedules for the fiscal year ended January
27, 2002 is available to you without charge upon written request to David Franz,
Secretary, 200 Flynn Road, Camarillo, California 93012-8790.
--------------------------------------------------------------------------------
3
ELECTION OF DIRECTORS
(Proposal No. 1)
Five directors are to be elected at the Meeting; each to serve until the
following annual meeting or until a successor is elected and qualified. The
nominees named below were elected to their present terms of office by the
stockholders. All of the nominees have consented to be named and have indicated
their intent to serve if elected. Unless a proxy directs otherwise, it is
intended that the proxies solicited by management will be voted for the election
of the nominees listed in the following table. If any nominee should refuse or
be unable to serve, the proxyholders will vote the shares for such other person,
if any, as shall be designated by the Board of Directors. THE BOARD OF DIRECTORS
RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THE NOMINEES LISTED BELOW:
John D. Poe Rockell N. Hankin
James P. Burra Allen H. Orbuch
James T. Schraith
Background of Nominees
Mr. Poe, 50, has been our President, Chief Executive Officer and a Director
since October 1985. In March 1998, Mr. Poe was also elected to the position of
Chairman of the Board of Directors. Since October 1985, Mr. Poe has served as
Managing Director of our subsidiary, Semtech Limited. In addition, Mr. Poe
currently serves as sole Director of our wholly owned subsidiaries, Semtech
Corpus Christi Corporation, Semtech New York Corporation (formerly USAR Systems
Incorporated) and Semtech San Diego Corporation (formerly Edge Semiconductor
Incorporated). He is President of Semtech Corpus Christi Corporation and Semtech
New York Corporation.
Mr. Hankin, 54, has served as a Director since May 1988. In March 1998, Mr.
Hankin was elected Vice Chairman of our Board of Directors. He currently serves
as Chief Executive of Hankin & Co., a diversified business advisory firm, where
he has held such position since June 1986. Mr. Hankin also serves on the Board
of Directors of Sparta, Inc. and a number of private companies. He was
previously Chairman of the Board of House of Fabrics and a member of the board
of Quidel, Inc, Techniclone, and NQLI.
Mr. Orbuch, 73, has served as a Director since March 1991. He currently serves
as a management consultant. He retired in 1994 from his position as Group
Executive of Teledyne, Inc.
Mr. Burra, 59, has served as a Director of since March 1991. Mr. Burra serves as
Chief Executive Officer of the Endural Division of Hoover Materials Handling
Group, Inc. and its predecessor W. D. Adam Co., Inc., a manufacturer selling a
proprietary line of vacuum formed, high density polyethylene containers, since
June 1989. He serves on the board of Hoover Group, Inc., the Parent of Endural.
Mr. Burra formerly served on the board of American Microwave Technology, Inc.
Mr. Schraith, 44, has served as a Director since June 1995. Mr. Schraith is
currently an advisor and consultant to Quantum Technology Ventures, the
wholly-owned venture capital subsidiary of Quantum Corporation. Mr. Schraith
joined Quantum Corporation in October 1999 as Executive Vice President of
Worldwide Sales & Corporate Marketing. From February 1998 to September 1999, Mr.
Schraith was President & Chief Executive Officer of ShareWave, Inc., a developer
of wireless networking products. From October 1996 to January 1998, Mr. Schraith
was Vice President and General Manager of the North America division of Compaq
Computer. Mr. Schraith also serves as a director of SONICblue, Inc.,
PurchasePro.com, Inc., and several private companies.
4
CERTAIN INFORMATION CONCERNING OUR BOARD OF DIRECTORS
The Company has a standing Compensation and Stock Option Committee and an Audit
Committee. The Company does not have a separately standing nominating committee;
nominating functions are handled by the Compensation and Stock Option Committee,
as discussed below. During the Company's last fiscal year, the Board of
Directors held four regular meetings and one special meeting. During such fiscal
year each of the incumbent Directors attended 75% or more of the sum of the
number of such meetings plus the number of meetings of the committees of which
such person was a member. The average attendance was over 94%. During fiscal
year 2002 the Board of Directors also conducted some business by resolution
without meeting, as provided in the Company's Bylaws. It is expected that the
Board will meet on a regular basis during the ensuing year.
Compensation and Stock Option Committee
The Compensation and Stock Option Committee ("Compensation Committee"),
comprised of Mr. Hankin, Mr. Burra, Mr. Schraith, and Mr. Orbuch, met four times
during fiscal year 2002. The Compensation Committee's responsibilities include
monitoring the performance of the Company's key exeuctives; reviewing and
approving executive compensation, including bonus and other incentive
compensation; reviewing the Company's management succession plan; assessing the
Company's overall compensation and benefit structure; and administering certain
of the Company's benefit plans and the Company's stock option plans. The
Compensation Committee also makes recommendations to the Board of Directors
regarding the size and composition of the Board and the various Board
Committees, reviews the qualifications of potential director candidates and
makes recommendations to the Board with respect to nominees to be submitted to
the stockholders or to be elected by the Board to fill vacancies and newly
created directorships, and recommends assignment of specific directors to
specific committees. The Compensation Committee will consider stockholder
suggestions for nominees for director (other than self-nominations) that are
submitted in writing to the Secretary of the Company and include the candidate's
qualifications.
Audit Committee
The Audit Committee, comprised of Mr. Hankin, Mr. Burra, and Mr. Orbuch met
seven times during fiscal year 2002. The Audit Committee's responsibilities
include recommending the selection of the Company's independent auditor;
reviewing the scope and results of the audit conducted by the independent
auditor; reviewing the Company's accounting and financial reporting policies;
reviewing the Company's financial systems and controls; and reviewing and
approving the financial statements to be included in the Company's Annual Report
on Form 10-K. The Audit Committee meets periodically with the Company's
independent auditor without the presence of Company management. The
responsibilities of the Audit Committee are more fully described in the Audit
Committee's written charter, which was approved by the Board of Directors in
fiscal year 2001 and included as Appendix A to the Proxy Statement for the
Company's Annual Meeting held in May 2001.
Board of Directors Compensation
During fiscal 2002, the directors who are not also employees of our Company were
not paid any cash compensation for their services. In 1998, the directors were
converted from a cash compensation program to 100% equity based compensation. On
July 15, 1998 each non-employee director received a stock option grant which
vests pro-rata over five years. This option grant will compensate the
non-employee directors for their service over the five-year period of July 15,
1998 to July 15, 2003 and has been granted in lieu of cash compensation. The
number of options was computed by multiplying the forgone cash compensation over
the five-year period by four (multiplier), and then dividing that amount by the
Company's stock price on the date of grant, to compute the number of options to
be granted. The multiplier was set to recognize the relative risk of taking
stock options, compared to cash compensation. As a result Mr. Hankin,
Vice-Chairman of the Board, was granted 49,485 stock options, and Mr. Burra, Mr.
Orbuch, and Mr. Schraith were each granted 32,990 stock options. The number of
options has been subsequently adjusted to reflect the two for one stock splits
declared during fiscal 2000 and fiscal 2001. This plan was developed by an
independent consulting firm, and was set-up to align the interests of the Board
with those of stockholders, to reduce the expense associated with directors'
compensation and to attract and retain high quality directors.
Each January 1 and July 1, each non-employee director also receives a stock
option grant to purchase 5,000 shares at the market price as of the date of
grant. These options are governed by the terms of the Company's Long Term Stock
Incentive Plan, which was approved by the stockholders in June 1998 and is on
file with the Securities and Exchange Commission. Directors who are Company
employees are not paid fees or additional compensation for attending Board or
committee meetings. Mr. Poe is currently the only employee serving on the Board.
Compensation Committee Interlocks and Insider Participation
No member of the Compensation Committee was, during fiscal year 2002, an officer
or employee of the Company or any of its subsidiaries; or was formerly an
officer of the Company or any of its subsidiaries. During fiscal year 2002, no
executive officer of the Company served as an executive officer, director or
member of the compensation committee (or other board committee performing
equivalent functions, or in the absence of such committee, the entire board of
directors) of another entity, one of whose executive officers served as a member
of the Compensation Committee or as a director of the Company.
5
BENEFICIAL OWNERSHIP OF SECURITIES
The chart below indicates the number of shares owned by each person known to the
Company to be the beneficial owner of more than 5% of the outstanding shares of
the Company's common stock. All information regarding shareholders who are not
directors or officers is based on the Company's review of information filed with
the Securities and Exchange Commission on Schedule 13G.
This chart also shows the number of shares held as of January 27, 2002, and
stock options exercisable within 60 days of such date, by each director, each
executive officer named in the Summary Compensation Table below and by all
directors and executive officers as a group.
Beneficial Ownership of Common Stock (1)
----------------------------------------
Number of Shares %
---------------- -
FMR Corp. (2) 8,965,996 12.6%
82 Devonshire Street, Boston, MA 02109
Putnam Investments, LLC (3) 6,352,314 9.0%
One Post Office Square, Boston, MA 02019
Franklin Resources, Inc. (4) 3,710,517 5.3%
One Franklin Parkway, San Mateo, CA 94403
John D. Poe (5) (6) 3,580,315 5.0%
Chairman of the Board, President
and Chief Executive Officer of the Company
200 Flynn Road, Camarillo, CA 93012-8790
Rockell N. Hankin (5) (6) 472,514 *
Vice Chairman of the Board
Allen H. Orbuch (5) (6) 452,926 *
Director
James P. Burra (5) (6) 363,426 *
Director
James T. Schraith (5) (6) 330,926 *
Director
David G. Franz, Jr. (5) (6) 864,674 1.2%
Vice President and Chief Financial Officer
Jean-Claude Zambelli (5) (6) 121,561 *
Vice President
Wylie Plummer (5) (6) 537,546 *
Vice President
Jeffrey T. Pohlman (5) (6) 286,400 *
Vice President
All Executive Officers and Directors as a group (18 7,881,797 10.9%
persons including those named above) (5) (6)
* Less than 1%
6
(1) Unless otherwise indicated below, each person has sole voting and
investment power with respect to the shares listed.
(2) As reported in Schedule 13G filed February 14, 2002 by FMR Corp. ("FMR").
FMR reports it has sole voting power with respect to 357,247 of the
reported shares and sole dispositive power with respect to all of the
reported shares. The reported shares include 449,210 shares resulting from
the assumed conversion of $18,970,000 principal amount of the Company's
4.5% convertible subordinated notes due 2017. All but 203,003 of the
reported shares are held by wholly-owned banking and investment adviser
subsidiaries of FMR. Members of the Edward C. Johnson 3d family are the
predominant owners of Class B common stock of FMR and have entered into a
shareholders' voting agreement with all other Class B shareholders.
Accordingly, members of the Edward C. Johnson 3d family may be deemed to
form a controlling group with respect to FMR. The 203,003 reported shares
not held by wholly-owned subsidiaries of FMR are held by Fidelity
International Limited ("FIL") of Hamilton Bermuda, which has sole power to
vote and dispose of the shares. FMR does not believe these shares are
required to be aggregated for reporting purposes, but has voluntarily
reported them as if they are beneficially owned by FMR and FIL on a joint
basis.
( 3) As reported in the Schedule 13G filed February 15, 2002 by Putnam
Investments, LLC ("Putnam") on behalf of itself and Marsh & McLennan
Companies, Inc. ("MMC"), Putnam Investment Management, LLC ("PIM"), and The
Putnam Advisory Company, LLC ("PAC"). PI is a wholly-owned subsidiary of
MMC and owns registered investment advisors PIM, which is advisor to the
Putnam family of mutual funds, and PAC, which is advisor to Putnam's
institutional clients. PIM reports voting power with respect to none of the
shares, as they are voted by the trustees of the various funds, and shared
dispositive power with respect to 5,640,903 shares. PAC reports shared
voting power with respect to 381,849 shares and shared dispositive power
with respect to 711,411 shares. MMC and PI report that neither of them have
any power to vote or dispose of, or direct the voting or dispositon of, the
reported shares.
(4) As reported in Schedule 13G filed February 14, 2002 by Franklin Resources,
Inc ("FRI"). The reported shares are held in closed-end investment
companies or other managed accounts which are advised by Franklin Advisors,
Inc. ("FA")" and Franklin Private Client Group, Inc. ("FPCG"), investment
advisory subsidiaries of FRI. FRI reports that FA has sole voting and
dispositive power with respect to 3,550,200 shares and that FPCG has sole
dispositive power with respect to 160,317 shares. FRI, FA, FPCG, and
Charles B. Johnson and Rupert H. Johnson, Jr., principal shareholders of
FRI, disclaim any economic interest or beneficial ownership of the reported
shares.
(5) This number of shares includes shares which could be acquired within 60
days of January 27, 2002 by the exercise of stock options: for Mr. Poe
1,252,783; Mr. Hankin 442,514; Mr. Orbuch 432,926; Mr. Burra 320,926; Mr.
Schraith 240,926; Mr. Franz 628,334; Mr. Zambelli 111,561; Mr. Plummer
412,250; Mr. Pohlman 136,268; and for the group 4,847,973.
(6) The percentage is based on the 72,148,573 shares outstanding as of
January 27, 2002 and the numerator includes the shares, if any, which the
individual has the right to acquire within 60 days thereof through the
exercise of stock options.
7
..
EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
All personnel listed below are employed on at-will basis. The Board of Directors
elects officers annually and those elected serve at the discretion of the Board.
Age as of
Name January 27, 2002 Position
---- ---------------- --------
John D. Poe 49 Chairman and Chief Executive Officer
David G. Franz, Jr. 40 Vice President, Finance and Chief Financial Officer, and Secretary
Paul D. Peterson 39 Vice President, Sales and Marketing
John T. Shaw 49 Vice President, Worldwide Operations
R. Nejo Necar 58 Vice President, Business Development
Mark R. Drucker 38 Vice President, High Performance Products
Lawrence A. King 43 Vice President, Portable Products
Jeffrey T. Pohlman 52 Vice President, Protection Products
J. Michael Wilson 45 Vice President, Computing and Telecom Products
Stewart Kelly 56 Director, Advanced Communications
John M. Baumann 33 Treasurer
Suzanna Fabos 46 Corporate Counsel and Assistant Secretary
Mr. Franz was elected Vice President of Finance, Chief Financial Officer and
Secretary when he joined us in August 1993. Prior to joining the Company, Mr.
Franz was employed by Teradata Corporation, Wickes Companies and Arthur Andersen
LLP. He serves as a director of Semtech (International) AG and Semtech
Switzerland GmbH, our wholly-owned subsidiaries in Switzerland, and as an
officer of several of our other wholly-owned subsidiaries.
Mr. Peterson was appointed Vice President of Sales and Marketing in January
2002. He joined the Company in August 2000 as Vice President of North American
Sales. Mr. Peterson worked for Advanced Micro Devices for 14 years, where he
last served as Director of Sales, and has also been employed by Texas
Instruments.
Mr Shaw was appointed Vice President of Worldwide Operations in Dec 2000. He has
worked for the Company in various manufacturing roles since March 1991 and was
previously employed by Philips Semiconductor PLC.
Mr. Necar was appointed Vice President of Business Development in November 1999.
He joined us in 1997 as Director of Business Development. Mr. Necar previously
held engineering and marketing management positions with Exar and Interdesign.
Mr. Drucker joined us as a result of the October 1997 acquisition of Edge
Semiconductor, where he was Director of Operations. He was appointed Vice
President, High Performance Products in January 2002. He was previously employed
by Brooktree, Analog Devices, and Westinghouse Electric.
Mr. King joined us as our North Carolina Design Center Manager in April 1998 and
was named Vice President of Portable Products in April 2001. He was employed by
Harris Semiconductor for 10 years, most recently as an Engineering Manager. He
has also been employed by Texas Instruments.
Mr. Pohlman was named Vice President of Protection Products in December 1998 and
has been an elected officer since June 2000. He has worked for the Company in
various engineering roles since February 1988. Mr. Pohlman was previously
employed by Supertex Inc., Fairchild Camera and Instrument, Inc., and National
Semiconductor in various technical and managerial roles.
Mr. Wilson was appointed Vice President of Desktop Computing and Telcom Products
in May 2001. Mr. Wilson joined us as the result of the 1996 acquisition of ECI
Semiconductor where he was Vice President and Chief Operating Officer. He has
more than 20 years experience in the semiconductor industry in a broad range of
technical and management positions.
Mr. Kelly joined the Company in 1997 as Director of Advanced Communications. He
has also been employed by Brooktree/Rockwell, Intel Corporation, GTE
Microcircuits, General Instruments Microelectronics, and Honeywell Computer.
Mr. Baumann joined Semtech in October 1993 and has been an elected officer and
Treasurer since June 1994. Prior to joining Semtech, he held financial related
positions with NCR Corporation and Teredata Corporation.
Ms. Fabos joined us as Corporate Counsel in April 2000 and was elected Assistant
Secretary in June 2000. She had been employed in the legal department of
Lockheed Martin Corporation for twelve years, where her last post was as
Assistant General Counsel - Finance. She has also been employed by
Owens-Illinois, Inc.and Coopers & Lybrand.
8
EXECUTIVE COMPENSATION
The following table shows information regarding total compensation paid to the
Chief Executive Officer and each of the four other mostly highly compensated
executive officers of the Company (collectively, the "Named Executive Officers")
for services rendered to the Company in all capacities during each of the past
three fiscal years:
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term
------------------------------------- -------------
Other Annual Stock Options All Other
Fiscal Salary Bonus Compensation Awarded Compensation
Year ($) (1) ($)(5) ($)(2) (#) (4) (5) ($) (3)
---- ------- ------ ------ ----------- -------
John D. Poe 2002 375,003 259,202 8,845 80,685 155,302
Chairman of the Board and CEO 2001 348,078 273,002 7,351 197,098 141,448
2000 313,470 151,200 11,979 133,566 128,207
David G. Franz, Jr 2002 180,003 116,017 9,371 46,466 31,516
Vice President and CFO 2001 171,928 101,279 7,835 40,074 30,634
2000 158,085 53,640 10,803 33,022 28,243
Jean-Claude Zambelli (6) 2002 199,992 72,476 7,081 12,903 34,534
Vice President 2001 195,691 145,961 6,022 3,658 33,721
2000 186,466 84,924 5,253 25,000 31,924
Wylie Plummer (7) 2002 200,008 134,274 7,572 0 4,192
Vice President 2001 196,786 130,977 10,851 35,000 2,356
2000 184,875 59,085 7,368 20,000 2,919
Jeffrey T. Pohlman 2002 169,998 51,538 6,156 20,000 29,051
Vice President 2001 159,998 89,337 4,800 80,000 25,919
2000 139,851 54,844 4,800 60,000 28,635
(1) Salaries for fiscal years 2002, 2001, and 2000 each reflect 26 pay periods.
(2) "Other Annual Compensation" includes (a) for fiscal year 2000, premiums on
life insurance and (b) auto allowance.
(3) "All Other Compensation" for 2002, 2001 and 2000 includes, respectively,
(a) Company contributions to its 401K savings plan of $4,252, $5,473, and
$5,000 on behalf of Mr. Poe; $4,250, $4,418, and $4,714 on behalf of Mr.
Franz; $4,250, $4,345, and $4,200 for Mr. Zambelli; $4,192, $2,356, and
$2,919 on behalf of Mr. Plummer; and $3,305, $3,348, and $3,201 on behalf
of Mr. Pohlman; and (b) company contributions under deferred its
compensation program of $151,050, $135,975, and $123,207 for Mr. Poe;
$27,266, $26,216, and $23,529 for Mr. Franz; $30,284, $29,376, and $27,724
on behalf of Mr. Zambelli; and $25,746, $22,571, and $25,434 on behalf of
Mr. Pohlman.
(4) During the years indicated, no restricted stock awards, stock appreciation
rights, or long-term incentive plan payouts were granted. Prior year stock
option grants are not adjusted for stock splits.
(5) The "Bonus" column shows the total bonus awarded in the fiscal year based
on perfomance in the prior fiscal year. This amount includes any amount the
executive elected to receive in the form of stock options,. In fiscal year
2002, Mr. Poe, Mr. Franz, and Mr. Zambelli received $129,601, $40,512, and
$18,186, repectively, of their bonus in stock options. In fiscal year 2001,
Mr. Poe, Mr. Franz and Mr. Zambelli received $136,501, $40,512 and $29,192,
respectively, of their bonus in stock options. In fiscal year 2000, Mr. Poe
and Mr. Franz received $45,360 and $26,820, respectively, of their bonus in
options.
(6) Mr. Zambelli, 57, was named Vice President of Sales and Marketing and
elected an officer of our company in December of 1996. Mr. Zambelli has
more than 25 years experience in the semiconductor industry and has held
senior management positions with several companies, including as Vice
President of Sales for Exar Corporation. Subsequent to the end of fiscal
year 2002, Mr. Zambelli relinquished his title of Vice President but agreed
to remain with the Company for one year to assist with certain projects in
his field of expertise. Mr. Paul Peterson succeeds Mr. Zambelli in this
Vice President position.
(7) Mr. Plummer, 46, joined us as Vice President, High Performance Products, as
a result of the October 1997 acquisition of Edge Semiconductor and was
elected an officer in June 1998. Mr. Plummer co-founded Edge Semiconductor
and served as its President until the acquisition. Prior to founding Edge,
Mr. Plummer held positions with Brooktree, Intel and National
Semiconductor. Mr. Plummer resigned from his position with the Company in
February 2002 and Mr. Mark Drucker now serves as Vice President, High
Performance Products.
9
OPTION GRANTS IN LAST FISCAL YEAR
This table gives information about stock options we granted during fiscal 2002
to the Named Executive Officers. The hypothetical present values of stock
options granted in fiscal 2002 are calculated under a modified Black-Scholes
model, a mathematical formula used to value options. The actual amount realized
upon exercise of stock options will depend upon the amount by which the market
price of common stock on the date of exercise is greater than the exercise
price. The officers will not be able to realize a gain from the stock options
granted unless, during the exercise period, the market price of common stock is
above the exercise price of the options.
Number of Percent of Hypothetical
Securities Total Options Present
Underlying Granted to Exercise Value at
Options Employees in Price Expiration Date of
Name Granted (1) FiscalYear ($/Share) Date Grant ($) (2)
---- ----------- ---------- --------- ---- -------------
John D. Poe 60,000 3.66% $25.67 10/03/2011 $1,070,490
20,685 1.26% $25.06 03/01/2011 $363,886
David G. Franz, Jr. 40,000 2.44% $25.67 10/03/2011 $713,660
6,466 0.39% $25.06 03/01/2011 $113,749
Jean-Claude Zambelli 10,000 0.61% $25.67 10/03/2011 $178,415
2,903 0.18% $25.06 10/03/2011 $51,069
Wylie Plummer 0 --- --- --- ---
Jeffrey T. Pohlman 20,000 1.22% $25.67 10/03/2011 $356,830
(1) The grants to Mr. Poe, Mr. Franz and Mr. Zambelli include, respectively,
option grants of 20,685, 6,466 and 2,903 at an option price of $25.06.
These grants, received under the Company's program which allows executive
officers to receive up to 50% of their bonus in stock options, are
immediately exercisable. The 10,000 option grant to Mr. Zambelli has a one
year vesting period, all other grants shown above become exercisable in 25%
increments on the first, second, third, and fourth anniversaries of the
grant.
(2) The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options, which have no vesting
restrictions and are fully transferable. Option valuation models also
require the input of highly subjective assumptions such as expected option
life and expected stock price volatility. The following assumptions were
applied: (i) expected dividend yields of 0% for all periods, (ii) expected
volatility rates of 86%, (iii) expected life of 5 years, and (iv) risk-free
interest rates ranging from 3.88% to 4.74%for all years.
There is no assurance that the hypothetical present value of stock options
presented in the table above represent the actual values of the options, and the
hypothetical values shown should not be viewed as our predictions of the future
value of the Company's common stock.
10
AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR-END OPTION VALUES
The following table shows, as to the Named Executive Officers, information
concerning stock options exercised during the fiscal year ended January 27,
2002, the number of unexercised options and the value of "in-the-money"
unexercised options.
Number of Securities Underlying Value of Unexercised In-the-Money
Unexercised Options at FY End (#) Options at FY End ($) (1)
--------------------------------- -------------------------
SharesAcquired Value
Name on Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- --------------- ------------ ----------- ------------- ----------- -------------
John D. Poe 240,000 9,266,133 1,192,783 375,000 34,690,954 7,047,450
David G. Franz, Jr. 75,000 2,797,695 628,334 126,250 17,929,027 2,209,431
Jean Claude Zambelli 240,000 6,989,972 111,561 75,000 2,779,355 1,640,925
Wylie Plummer 56,700 1,829,284 412,250 71,250 11,414,473 1,520,181
Jeffrey T. Pohlman 0 0 106,268 140,000 2,560,385 2,390,200
(1) Based on the $33.61 per share closing price of the Company's common stock
on the NASDAQ National Market System on January 25, 2002.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), requires the Company's directors, officers and holders of more than 10%
of the Company's Common Stock to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes of ownership of
Common Stock and other equity securities of the Company. Based solely on its
review of the forms received by it, or written representations from reporting
persons that they were not required to file a Form 5, the Company believes that,
with respect to transactions during the fiscal year ended January 27, 2002, its
officers and directors complied with all Section 16(a) filing requirements,
except as noted below. Stock options were granted to Mr. Poe, Mr. Franz, Mr.
Raymond Bregar, and Mr. John Baumann in fiscal years 2000 and 2001 and to Mr.
Zambelli in fiscal year 2000 in place of a portion of their cash bonuses. These
executives did not timely report the grants on Form 5. Each had two late reports
for two transactions, except Mr. Zambelli who had one late report for one
transaction. Each of these individuals reported the grants on a later Form 5.
11
PERFORMANCE GRAPH
Comparison of Five Year Cumulative Total Return
This chart and graph show the value of a $100 cash investment on the last day of
our 1997 fiscal year in (i) the Company's Common Stock, (ii) the NASDAQ Stock
Market - U.S., and (iii) the NASDAQ Electronic Components Stocks. All values
assume reinvestment of all dividends and are calculated as of the last day of
each of our fiscal years. Note that historic stock price performance is not
necessarily indicative of future stock price performance.
[GRAPH]
--------------------------------------- ------------- -------------- ------------- -------------- ------------- --------------
End of End of End of End of End of End of
FY 1997 FY 1998 FY 1999 FY 2000 FY 2001 FY 2002
--------------------------------------- ------------- -------------- ------------- -------------- ------------- --------------
Semtech Corporation $100 $198 $304 $1,065 $921 $1,144
--------------------------------------- ------------- -------------- ------------- -------------- ------------- --------------
NASDAQ Stock Market - US $100 $120 $187 $ 289 $206 $ 144
--------------------------------------- ------------- -------------- ------------- -------------- ------------- --------------
NASDAQ Electronic Component Stocks $100 $104 $167 $ 302 $252 $ 155
--------------------------------------- ------------- -------------- ------------- -------------- ------------- --------------
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEE
Compensation Policies for Executive Officers
The Compensation and Stock Option Committee ("Committee") approves compensation
and benefit policies applicable to the Company's executive officers and
endeavors to ensure that these programs are effective in attracting and
retaining key executives responsible for the success of the Company. The
Committee seeks to align total compensation for senior management with both
annual and long-term corporate performance. The Committee believes that a fair
and motivating compensation program plays a critical role in the performance of
the Company and, to that end, it reviews the program on an ongoing basis to
evaluate its continued effectiveness.
The Committee believes that the Company's overall financial performance should
be a significant consideration in establishing the total compensation of the
Company's executive officers.In the Committee's view, at the executive officer
level, a greater
12
proportion of total compensation should consist of variable, performance-based
components, such as bonuses, which can increase or decrease to reflect changes
in corporate and individual performance. These incentive compensation programs
are intended to reinforce management's commitment to enhancement of
profitability and stockholder value.
From time to time the Commmittee evaluates the Company's total compensation
package in light of those of other analog and mixed-signal semiconductor
companies of comparable size. This data is used primarily to ensure that the
Company's executive compensation program as a whole is within the broad middle
range of comparative pay for similar sized companies. The Committee does not
target a specific position in the range of comparative data for each individual
or for each component of compensation. When deemed appropriate by the Committee,
independent compensation and benefits consultants are retained to assist in
evaluating the Company's executive compensation programs. This provides
additional assurance that the programs are reasonable and appropriate to the
Company's objectives. Individual compensation for each executive officer is
established in view of the comparative data and other relevant factors such as
level of responsibility, prior experience, and the Committee's subjective
judgment as to the individual's contribution.
The Company's compensation program has base salary, bonus, and equity-based
compensation as its three principal components.
. An individual's base salary is predicated on industry and peer group
comparisons and on performance judgments as to the past and expected
future contributions. In general, salaries are set based on median
salaries for similar executives of similar sized companies in the high
technology industry.
. The Company has a discretionary key employee incentive pool pursuant to
which executive officers and other key employees may receive annual
cash bonuses. Individual bonus awards are made based on the Company's
achievement of measurable items such as orders, revenue, and net income
and upon attainment of the individual's personal and departmental goals
and overall performance. Executive officers may elect early in the
fiscal year to receive up to 50% of any bonus that may be earned in
that fiscal year in the form of stock options. If a bonus is awarded
(in the early part of the next fiscal year), the number of options
granted in lieu of bonus is calculated by multiplying the forgone cash
bonus by four and dividing the result by the market price on the date
of grant. The calculated number of options are priced at the market
price on the date of grant, are immediately vested, and are subject to
the terms and conditions of the applicable stock option plan and award
agreement.
. Stock options are granted periodically to provide additional incentive
to executives and other key employees to work to maximize long-term
total return to stockholders. Most options granted by the Company prior
to fiscal year 2001 had a three year vesting schedule. Most options
granted since that date vest over a four year period to further
encourage option holders to continue in the employ of the Company. In
granting options, the Committee takes into account the number of
shares, outstanding options held by the individual and the individual's
performance and contribution to the Company's success.
Chief Executive Officer Compensation
In accordance with the compensation philosophy, stated above, and the Company's
results, Mr. Poe's base salary during fiscal year 2002 was $375,000, which was
the same salary he earned at the end of fiscal year 2001. His base salary is
designed to be competitive with base salaries paid to other chief executive
officers of corporations with similar revenues and scope of operations. During
fiscal year 2002, Mr. Poe received a bonus of $259,202 based upon his
performance during fiscal year 2001. This bonus was paid $129,601 in cash, with
the remaining $129,601 being exchanged for stock options. This bonus was 86% of
Mr. Poe's targeted bonus for fiscal year 2001.
For fiscal year 2002, Mr. Poe earned a bonus of $54,900, which was 18% of
target. Mr. Poe elected to receive 25% of this bonus in stock options. As a
result, on February 28, 2002, Mr. Poe was granted options to purchase 1,728
shares of the Company's common stock at a price of $31.78. The remaining $41,175
was paid in cash in early March 2002. During fiscal year 2002, the Committee
granted Mr. Poe 60,000 stock options with an exercise price at fair market value
as of the date of the grant.
For federal income tax purposes, no more than $1 million of compensation paid to
the chief executive officer and the four other most highly paid executive
officers may be deducted in a taxable year unless the compensation is
perfomanced based. Stock options awarded under the Company's stock option plans
are intended to meet the requirements for deductible performance-based
compensation.
The Compensation and Stock Option Committee
James P. Burra Rockell N. Hankin Allen H. Orbuch James T. Schraith
13
INDEPENDENT ACCOUNTANT FEES
Arthur Andersen LLP ("Andersen") audited the Company's financial statements for
the fiscal year ended January 27, 2002 and consulted on interim financial
statements during that year. Other services rendered by Andersen for fiscal year
2002 included services related to filings with the Securities and Exchange
Commission, audit of the Company's 401K plan, assistance with audits by the IRS
and state taxing authorities, and consultation on various matters relating to
accounting, tax and financial reporting. The Audit Committee of the Board of
Directors has considered the nature and scope of the non-audit services provided
by Andersen and has concluded that Andersen's performance of these services is
compatible with the auditor's independence.
Audit Fees. The total fees for the fiscal year ended January 27, 2002 for the
audit of the Company's financial statements and for reviews of the financial
statements included in the Company's Form 10-Qs by Andersen were $290,000.
Financial Information Systems Design and Implementation Fees. Andersen performed
no services in this category during the fiscal year ended January 27, 2002.
All Other Fees. The total fees for the fiscal year ended January 27, 2002 for
all services rendered by Andersen other than those covered in the preceding
paragraphs were $238,000.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee ("Committee") of the Board of Directors is composed entirely
of independent directors, as defined in the Marketplace Rules of the NASDAQ
Stock Market, Inc. One of the Committee's responsibilites, as specified in its
written charter adopted by the Board of Directors, is oversight of the Company's
financial reporting process In fulfilling these responsibilities, the Committee
has reviewed the Company's audited financial statements for fiscal year 2002 and
discussed them with the Company's management, which has the primary
responsibility for the financial statements and the reporting process. As part
of its review, the Committee discussed the quality, and not just the
acceptability, of the accounting principles, the reasonableness of significant
judgments and estimates, and the adequacy and clarity of disclosures in the
financial statements.
The Committee discussed with Arthur Andersen LLP ("Andersen"), the Company's
independent auditor for fiscal year 2002 who is responsible for expressing an
opinion on the conformity of the Company's audited financial statements with
accounting principles generally accepted in the United States, the matters that
are required to be discussed under Statement on Auditing Standards No. 61,
"Communications with Audit Committees". In addition, the Committee has discussed
with Andersen the auditors' independence from management and the Company and has
received the written disclosures and letter from Andersen that is required by
Independence Standards Board Standard No. 1, "Independence Discussions with
Audit Committees". The Committee also concluded that the non-audit services
provided by Andersen is compatible with the auditor's independence.
Based on the reviews and discussions referred to above, the Committee
recommended to the Board of Directors that the audited financial statements be
included in the Annual Report on Form 10-K for the year ended January 27, 2002
for filing with the Securities and Exchange Commission.
The Audit Committee
James P. Burra Rockell N. Hankin Allen H. Orbuch
14
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANT
The firm of Arthur Andersen LLP ("Andersen"), certified public accountants, has
been the Company's independent public accountant since the Company's inception
and is familiar with our business, accounting system, and financial controls.
Due to the events and uncertainty now surrounding Andersen, we are not asking
stockholders to ratify the appointment of independent accountant to audit the
Company's financial statements for fiscal year 2003. Ratification of the
independent accountant is not required by the Company's Bylaws or applicable
law, but has historically been submitted to stockholders as a matter of good
corporate practice.
Early in fiscal year 2003, Company management, the Audit Committee, and the
Board of Directors reviewed Andersen's qualifications to continue as the
Company's independent accountant and authorized Andersen to complete the audit
of the fiscal year 2002 financial statements then underway. The Company has not
yet selected an independent accountant for fiscal year 2003, but is working with
Andersen in regard to a review of its financial statements for the first quarter
of fiscal year 2003. Management and the Audit Committee continue to carefully
monitor and evaluate Andersen's qualifications and capabilites and may find it
appropriate to change to another independent accountant as the situation
evolves.
Representatives of Andersen are expected to be present at the Meeting. They will
have the opportunity to make a statement, if they so desire, and to respond to
appropriate questions from stockholders.
ANNUAL REPORTS
The Company hereby undertakes to provide upon written request a copy of the
Company's Annual Report on Form 10-K, including the financial statements and the
schedules thereto, for the fiscal year ended January 27, 2002 without charge to
any person whose proxy is solicited by this statement. Such written request
should be directed to David Franz, Semtech Corporation, 200 Flynn Road,
Camarillo, California 93012-8790.
OTHER MATTERS
The management of the Company knows of no other matters that may properly be, or
which are likely to be, brought before the meeting. However, if any other
matters are properly brought before the meeting, the persons named in the
enclosed proxy or their substitutes will vote in accordance with their best
judgment on such matters.
STOCKHOLDER PROPOSALS
The Company must receive stockholder proposals for the 2003 Annual Meeting no
later than 120 days prior to May 10, 2003 in order to be considered for
inclusion in the Company's proxy materials. Furthermore, proposals by
stockholders submitted outside the process of Rule 14a-8 under the Securities
Exchange Act of 1934 will be considered untimely and ineligible to properly come
before the Company's 2003 Annual Meeting if such proposal is not submitted at
least 45 days prior to May 10, 2003.
The information under the captions "Report of the Compensation and Stock Option
Committee, "Report of Audit Committee", and "Performance Graph" is not
"soliciting material," is not deemed "filed" with the SEC, and is not
incorporated by reference in any filing of the Company under the Securities
Act of 1933 or the Securities Exchange Act of 1934 whether made before or after
the date hereof and irrespective of any general incorporation language in any
such filing.
15
[LOGO]
SEMTECH
--------------------------------------------------------------------------------
Today's Results...Tomorrow's Vision
SEMTECH CORPORATION
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned stockholder of Semtech Corporation hereby appoints John D. Poe
and David G. Franz, Jr., and each of them, as attorneys and proxies for the
undersigned, each with full power to act without the other and with the power of
substitution to represent the undersigned at the Annual Meeting of Stockholders
of Semtech Corporation to be held on June 6, 2002 at 1:00 p.m., Los Angeles
time, and at any adjournment or postponement thereof, and to vote all of the
shares of Common Stock of Semtech Corporation which the undersigned is entitled
to vote in accordance with the instructions below and on the reverse hereof.
This Proxy, when properly executed, will be voted as directed, or if no
direction is indicated, it will be voted FOR proposal 1.
(Continued and to be Signed on the reverse side)
--------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
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The Board of Directors unanimously recommends a vote "FOR" Proposal 1: [X] Please mark
your votes
as in this
examples.
FOR all nominees WITHHOLD AUTHORITY
listed (except as TO VOTE FOR THE
marked to the NOMINEES STRUCK
contrary) THROUGH
(1). ELECTION OF DIRECTORS. [_] [_] With discretionary authority of vote such
shares with respect to the transaction of
such other business as may property come
before the meeting.
01 James P. Burra
02 Rockell N. Hankin The undersigned hereby revokes any other
03 Allen H. Orbuch proxy to vote at such Annual Meeting of
04 John D. Poe Stockholders and hereby ratilies and confirms
05 James T. Schraith all that said proxies, and each of them, may
lawfully do by virtue hereof. The undersigned
also acknowledges receipt of Notice of Annual
Meeting of Stockholders to be held June 6.
2002 and the Proxy Statement furnished
herewith.
Instruction: To withhold authority to vote for any individual
nominee strike a line through the nominee's name in the list
above.
_____________________________________________________________
Stockholder's Signature:______________________________________________ Date:________________________________________________________
Note: Please sign name exactly as imprinted above. When signing as attorney, administrator, executor, trustee or guardian, please
give full title as such; if a corporation, sign in full corporate name by an authorized officer, and, if a partnership, sign in
partnership name by authorized person. If more than one name appears hereon, all persons named should sign. PLEASE MARK, SIGN, DATE
AND RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED ENVELOPE.
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. FOLD AND DETACH HERE.