<PAGE> 1
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
ARTISAN COMPONENTS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
ARTISAN COMPONENTS, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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ARTISAN COMPONENTS, INC.
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FEBRUARY 17, 2000
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of ARTISAN
COMPONENTS, INC., a Delaware corporation ("Artisan"), will be held on Thursday,
February 17, 2000 at 10:00 a.m. local time, at Artisan's principal executive
offices located at 1195 Bordeaux Drive, Sunnyvale, California for the following
purposes:
1. To elect four directors to serve until the next Annual Meeting of
Stockholders and until their successors are elected.
2. To ratify the appointment of PricewaterhouseCoopers LLP as independent
accountants of Artisan for the fiscal year ending September 30, 2000.
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. Only stockholders of record at the close of
business on January 5, 2000 are entitled to notice of and to vote at the
meeting.
All stockholders are cordially invited to attend the meeting in person.
However, to ensure your representation at the meeting, you are urged to mark,
sign, date and return the enclosed proxy as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Any stockholder attending
the meeting may vote in person even if he or she has returned a proxy.
Sincerely,
Mark R. Templeton
President and Chief Executive
Officer
Sunnyvale, California
January 24, 2000
YOUR VOTE IS IMPORTANT.
IN ORDER TO ENSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE REQUESTED TO
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE AND RETURN IT
IN THE ENCLOSED ENVELOPE.
<PAGE> 3
ARTISAN COMPONENTS, INC.
------------------------
PROXY STATEMENT FOR 2000
ANNUAL MEETING OF STOCKHOLDERS
------------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of
ARTISAN COMPONENTS, INC., a Delaware corporation ("Artisan"), for use at the
Annual Meeting of Stockholders to be held Thursday, February 17, 2000 at 10:00
a.m. local time, or at any adjournment thereof, for the purposes set forth
herein and in the accompanying Notice of Annual Meeting of Stockholders. The
Annual Meeting will be held at Artisan's principal executive offices located at
1195 Bordeaux Drive, Sunnyvale, California 94089. Its telephone number at that
location is (408) 734-5600.
These proxy solicitation materials and the Annual Report to Stockholders
for the year ended September 30, 1999, including financial statements, were
first mailed on or about January 24, 2000 to all stockholders entitled to vote
at the meeting.
RECORD DATE AND PRINCIPAL SHARE OWNERSHIP
Stockholders of record at the close of business on January 5, 2000 are
entitled to notice of and to vote at the meeting. Artisan has one series of
common shares outstanding, designated Common Stock, $0.001 par value. At the
record date, 14,070,887 shares of Artisan's Common Stock were issued and
outstanding and held of record by 132 stockholders. No shares of Artisan's
preferred stock were outstanding.
<PAGE> 4
The following table sets forth certain information regarding the beneficial
ownership of Common Stock of Artisan as of January 5, 2000 as to (i) each person
who is known by Artisan to own beneficially more than 5% of the outstanding
shares of Common Stock, (ii) each director and nominee for director of Artisan,
(iii) each of the executive officers named in the Summary Compensation Table
below and (iv) all directors and executive officers as a group.
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY PERCENTAGE
FIVE PERCENT STOCKHOLDERS, DIRECTORS AND CERTAIN EXECUTIVE OFFICERS OWNED(1) OWNED(2)
- ------------------------------------------------------------------- ------------ ----------
<S> <C> <C>
Amerindo Investment Advisors Inc.(3)............................ 1,941,100 13.8%
One Embarcadero Center, Suite 2300
San Francisco, CA 94111
State of Wisconsin Investment Board(4).......................... 1,105,000 7.9%
121 East Wilson Street
Madison, WI 53702
Entities Affiliated with U.S. Venture Partners(5)............... 939,950 6.7%
2180 Sand Hill Road, Suite 300
Menlo Park, CA 94025
John G. Malecki................................................. 882,950 6.3%
1195 Bordeaux Drive
Sunnyvale, CA 94089
Lucio Lanza(5).................................................. 968,841 6.9%
Mark R. Templeton............................................... 870,353 6.2%
Scott T. Becker(6).............................................. 690,460 4.9%
Larry J. Fagg(7)................................................ 48,436 *
Dhrumil Gandhi(8)............................................... 320,735 2.3%
Jeffrey A. Lewis................................................ 178,705 1.3%
Dr. Eli Harari.................................................. 19,686 *
All directors and executive officers as a group (8 persons)..... 3,106,528 21.4%
</TABLE>
- ---------------
* Less than 1%
(1) Includes the following shares subject to options to purchase Artisan Common
Stock that are currently exercisable or will be exercisable within 60 days
of January 5, 2000: John G. Malecki 17,500; Lucio Lanza 14,061; Mark R.
Templeton 50,000; Scott T. Becker 25,000; Larry J. Fagg 48,394; Dhrumil
Gandhi 147,941; Jeffrey A. Lewis 152,976; Eli Harari 19,686; and all
executive officers and directors as a group 467,370.
(2) Applicable percentage of ownership is based on 14,070,887 shares of Common
Stock outstanding as of January 5, 2000 together with applicable options for
such stockholder. Beneficial ownership is determined in accordance with the
rules of the Securities and Exchange Commission, and includes voting and
investment power with respect to shares. Shares of Common Stock subject to
options currently exercisable or exercisable within 60 days after January 5,
2000 are deemed outstanding for computing the percentage ownership of the
person holding such options, but are not deemed outstanding for computing
the percentage of any other person.
(3) Reflects information filed with the Securities and Exchange Commission on
Schedule 13G/A on August 13, 1999 by Amerindo Investment Advisors, Inc.
("Amerindo") a registered investment advisor. Amerindo filed on behalf of
itself, Amerindo Investment Advisors, Inc., a Panama corporation ("Panama"),
Alberto W. Vilar and Gary A. Tanaka. Messrs. Vilar and Tanaka are the only
directors and executive officers of Panama and are each directors and
executive officers of Amerindo. Although the Schedule 13G/A was filed
jointly, each of Messrs. Vilar and Tanaka, Amerindo and Panama expressly
disclaim direct membership in any group. Amerindo has shared voting and
dispositive power over 1,498,500 shares of Artisan's Common Stock. Panama
has shared voting and dispositive power over 442,600 shares of Artisan's
Common Stock. Messrs. Vilar and Tanaka have shared voting and dispositive
power over 1,941,100 shares of Artisan's Common Stock.
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(4) Reflects information filed with the Securities and Exchange Commission on
Schedule 13f on September 30, 1999 by the State of Wisconsin Investment
Board ("SWIB"). The Company has no further information with respect to the
nature of SWIB's ownership of Artisan Common Stock.
(5) Includes 798,972 shares held by U.S. Venture Partners IV L.P., 97,650 shares
held by Second Ventures II, L.P. and 43,328 shares held by USVP Entrepreneur
Partners II, L.P. Mr. Lanza, a director of Artisan, is a general partner of
these entities. Mr. Lanza disclaims beneficial ownership of the shares held
by the limited partnerships except to the extent of his respective
proportionate partnership interests therein. The other general partners of
each of U.S. Venture Partners IV, L.P., Second Ventures II, L.P. and USVP
Entrepreneur Partners II, L.P. are William K. Bowes Jr., Irwin B. Federman,
Steven M. Krausz, Dale J. Vogel and Philip M. Young.
(6) Includes 20,400 shares held in trust for Mr. Becker's children over which
Mr. Becker may be deemed to share voting and investment powers.
(7) Mr. Fagg, the Company's Vice President, Worldwide Sales, has announced his
resignation from the Company effective January 31, 2000.
(8) Includes 19,300 shares held in trust for Mr. Gandhi's children and 153,494
shares held in trust for the Gandhi Family Trust. Mr. Gandhi may be deemed
to share voting and investment power over each of these trusts.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Secretary of Artisan a
written notice of revocation or a duly executed proxy bearing a later date or by
attending the meeting and voting in person. Deliveries to Artisan should be
addressed to Mr. Mark R. Templeton, Secretary, 1195 Bordeaux Drive, Sunnyvale,
California 94089.
VOTING AND SOLICITATION
Each stockholder is entitled to one vote for each share held. Every
stockholder voting for the election of directors (Proposal One) may cumulate
such stockholder's votes and give one candidate a number of votes equal to the
number of directors to be elected multiplied by the number of shares that such
stockholder is entitled to vote, or distribute such stockholder's votes on the
same principle among as many candidates as the stockholder may select, provided
that votes cannot be cast for more than four candidates. However, no stockholder
shall be entitled to cumulate votes unless the candidate's name has been placed
in nomination prior to the voting and the stockholder, or any other stockholder,
has given notice at the meeting, prior to the voting, of the intention to
cumulate the stockholder's votes. On all other matters, each share of Common
Stock has one vote. A quorum comprising the holders of the majority of the
outstanding shares of Common Stock on the record date must be present or
represented for the transaction of business at the Annual Meeting. Abstentions
and broker non-votes will be counted in establishing the quorum.
This solicitation of proxies is made by Artisan, and all related costs will
be borne by Artisan. In addition, Artisan may reimburse brokerage firms and
other persons representing beneficial owners of shares for their expenses in
forwarding solicitation material to such beneficial owners. Proxies may also be
solicited by certain of Artisan's directors, officers and regular employees,
without additional compensation, personally or by telephone or telegram.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Stockholders are entitled to present proposals for action at a forthcoming
meeting if they comply with the requirements of the proxy roles promulgated by
the Securities and Exchange Commission. Proposals of stockholders of Artisan
that are intended to be presented by such stockholders at Artisan's 2001 Annual
Meeting of Stockholders must be received by Artisan no later than September 20,
2000 in order that they may be considered for inclusion in the proxy statement
and form of proxy relating to that meeting. The attached proxy card grants the
proxy holders discretionary authority to vote on any matter properly raised at
the Annual Meeting. If a stockholder intends to submit a proposal at the 2001
Annual Meeting, which is not eligible for
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inclusion in the proxy statement and form of proxy relating to that meeting, the
stockholder must do so no later than December 4, 2000. If such stockholder fails
to comply with the foregoing notice provision, the proxy holders will be allowed
to use their discretionary voting authority when the proposal is raised at the
2001 Annual Meeting.
PROPOSAL ONE
ELECTION OF DIRECTORS
NOMINEES
A board of four directors is to be elected at the Annual Meeting of
Stockholders. Unless otherwise instructed, the proxy holders will vote the
proxies received by them for Artisan's four nominees named below. All of the
nominees are presently directors of Artisan. In the event that any nominee of
Artisan is unable or declines to serve as a director at the time of the Annual
Meeting of Stockholders, the proxies will be voted for any nominee who shall be
designated by the present Board of Directors to fill the vacancy. Artisan is not
aware of any nominee who will be unable or will decline to serve as a director.
In the event that additional persons are nominated for election as directors,
the proxy holders intend to vote all proxies received by them in such a manner
(in accordance with cumulative voting) as will assure the election of as many of
the nominees listed below as possible, and, in such event, the specific nominees
to be voted for will be determined by the proxy holders. The term of office for
each person elected as a director will continue until the next Annual Meeting of
Stockholders or until a successor has been duly elected and qualified.
VOTE REQUIRED
If a quorum is present and voting, the four nominees receiving the highest
number of votes will be elected to the Board of Directors. Abstentions and
"broker non-votes" are not counted in the election of directors.
NOMINEES
The names of the nominees and certain information about them are set forth
below:
<TABLE>
<CAPTION>
DIRECTOR
NAME OF NOMINEE AGE POSITION WITH ARTISAN SINCE
--------------- --- --------------------- --------
<S> <C> <C> <C>
Mark R. Templeton.................. 41 President, Chief Executive Officer and Director 1991
Scott T. Becker.................... 39 Chief Technology Officer and Director 1991
Lucio L. Lanza(1)(2)............... 56 Chairman of the Board 1996
Dr. Eli Harari(1)(2)............... 54 Director 1997
</TABLE>
- ---------------
(1) Member of the Compensation Committee
(2) Member of the Audit Committee
There is no family relationship between any director or executive officer
of Artisan.
MARK R. TEMPLETON has served as President, Chief Executive Officer and a
director of Artisan since April 1991 when he co-founded Artisan. From April 1990
to March 1991, Mr. Templeton was director of the Custom IC Design Group at
Mentor Graphics Corporation ("Mentor Graphics"), an EDA company. From October
1984 to March 1990, he held various positions with Silicon Compilers Systems
Corporation ("Silicon Compilers"), an EDA company, with the last position being
Director of the Custom IC Design Group.
SCOTT T. BECKER has served as Chief Technology Officer and a director of
Artisan since April 1991 when he co-founded Artisan. From April 1990 to April
1991, he was the manager of the library development group at the IC Division of
Mentor Graphics. From May 1985 to April 1990, he was responsible for library
development at Silicon Compilers.
LUCIO L. LANZA has served as a director of Artisan since March 1996 and was
named Chairman of the Board of Directors in November 1997. Mr. Lanza joined U.S.
Venture Partners, a venture capital firm, as a
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partner in 1990 and became a general partner in 1996. From 1990 to 1995, Mr.
Lanza also served as an independent consultant to companies in the
semiconductor, communications and computer-aided design industries. From 1986 to
1989, he served as Chief Executive Officer of EDA Systems, Inc., a design
automation software company. Mr. Lanza also serves on the boards of directors of
several private companies including PDF Solutions, Inc., Personify, Inc.,
think3design and Veridicom, Inc.
DR. ELI HARARI has served as a director of Artisan since November 1997. Dr.
Harari is the founder of SanDisk Corporation ("SanDisk"), a flash memory data
storage product company, and has served as the President, Chief Executive
Officer and a director of SanDisk since June 1988. Dr. Harari founded Wafer
Scale Integration, a privately held semiconductor company, in 1983 and was its
President and Chief Executive Officer from 1983 to 1986, and Chairman and Chief
Technical Officer from 1986 to 1988. From 1973 to 1983, Dr. Harari held various
management positions with Honeywell Inc., Intel Corporation and Hughes Aircraft
Microelectronics.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of Artisan held a total of four meetings and acted
by unanimous written consent four times during fiscal 1999. No director attended
fewer than 75% of the meetings of the Board of Directors and committees thereof,
if any, upon which such director served. The Board of Directors has an Audit
Committee and a Compensation Committee. The Board of Directors has no nominating
committee or any committee performing such functions.
The Audit Committee, which consisted of Messrs. Lanza and Harari during
fiscal 1999, is responsible for overseeing actions taken by Artisan's
independent auditors and reviews Artisan's internal financial controls. The
Audit Committee met once during fiscal 1999.
The Compensation Committee, which consisted of Messrs. Lanza and Harari
during fiscal 1999, met once during fiscal 1999, and acted by unanimous written
consent seven times. The Compensation Committee is responsible for determining
salaries, incentives and other forms of compensation for executive officers and
other employees of Artisan and administers various incentive compensation and
benefit plans.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Messrs. Lanza and Harari. Mr.
Templeton, who is President, Chief Executive Officer and a Director of Artisan,
participates in all discussions regarding salaries and incentive compensation
for all employees and consultants to Artisan, except that Mr. Templeton is
excluded from discussions regarding his own salary and incentive compensation.
PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected PricewaterhouseCoopers LLP, independent
accountants to audit the consolidated financial statements of Artisan for the
fiscal period ending September 30, 2000, and recommends that stockholders vote
for ratification of such appointment. In the event of a negative vote on
ratification, the Board of Directors will reconsider its selection.
PricewaterhouseCoopers LLP has audited Artisan's financial statements
annually since 1997. Representatives of PricewaterhouseCoopers LLP are expected
to be present at the meeting with the opportunity to make a statement if they
desire to do so and are expected to be available to respond to appropriate
questions.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT ACCOUNTANTS.
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EXECUTIVE COMPENSATION AND OTHER MATTERS
EXECUTIVE COMPENSATION
The following table sets forth total compensation for the fiscal years
ended September 30, 1997, 1998 and 1999 for the Chief Executive Officer and each
of the next four most highly compensated executive officers (the "Named
Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION(1) NUMBER OF
---------------------------------- SECURITIES
FISCAL OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS(2) COMPENSATION(3)
--------------------------- ------ -------- -------- ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Mark R. Templeton............ 1999 $172,800 $ -- $-- -- $1,105
President and Chief 1998 172,800 -- -- 100,000 1,105
Executive Officer 1997 172,800 2,500 -- -- 4,474
Scott T. Becker.............. 1999 172,800 -- -- -- 1,728
Chief Technology Officer 1998 172,800 -- -- 50,000 1,728
1997 172,800 2,500 -- -- 1,728
Larry J. Fagg(4)............. 1999 140,000 122,290 -- 50,000 --
Vice President, 1998 140,000 84,208 -- -- --
Worldwide Sales 1997 11,671 9,375 -- 109,432 --
Dhrumil Gandhi............... 1999 172,800 -- -- -- 2,500
Vice President, Engineering 1998 172,800 -- -- 50,000 2,500
1997 172,800 2,500 -- -- 2,376
Jeffrey A. Lewis............. 1999 149,567 15,000 -- -- 2,808
Vice President, Market 1998 140,000 21,667 -- 35,000 2,400
and Business Development 1997 140,000 22,500 -- 253,705 2,375
</TABLE>
- ---------------
(1) Other than salary and bonus described herein, Artisan did not pay the
persons named in the Summary Compensation Table any compensation, including
incidental personal benefits, in excess of 10% of such executive officer's
salary.
(2) These shares are subject to stock options granted under the 1993 Stock
Option Plan.
(3) Represents matching contributions under Artisan's 401(k) plan.
(4) Mr. Fagg joined Artisan in August 1997 and has announced his resignation
from Artisan effective January 31, 2000. The entire amount of Mr. Fagg's
1998 and 1999 bonus represents sales commissions.
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OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information concerning each grant of options
to purchase Artisan's Common Stock made during the fiscal year ended September
30, 1999 to the Named Executive Officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
---------------------------------------------------------- MINUS EXERCISE PRICE AT
NUMBER OF PERCENT OF ASSUMED ANNUAL RATES OF
SECURITIES TOTAL OPTIONS STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM(1)
OPTIONS EMPLOYEES IN PRICE EXPIRATION --------------------------
NAME GRANTED FISCAL YEAR PER SHARE(2) DATE 5% 10%
---- ------------ --------------- ------------ ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Mark R. Templeton......... -- -- -- -- -- --
Scott T. Becker........... -- -- -- -- -- --
Larry J. Fagg............. 50,000 6.6% $12.50 7/18/09 $393,059 $996,089
Dhrumil Gandhi............ -- -- -- -- -- --
Jeffrey A. Lewis.......... -- -- -- -- -- --
</TABLE>
- ---------------
(1) Potential realizable value is based on the assumption that the Common Stock
of Artisan appreciates at the annual rate shown (compounded annually) from
the date of grant until the expiration of the 10 year option term. These
numbers are calculated based on the requirements promulgated by the
Securities and Exchange Commission and do not reflect Artisan's estimate of
future stock price growth.
(2) This option becomes exercisable as to 25% of the shares subject to the
option exercisable on the first anniversary of the date of grant and as to
6.25% of such shares quarterly thereafter. The option was granted at an
exercise price equal to the fair market value of Artisan's Common Stock, as
determined by reference to the closing sale price of the Common Stock on the
Nasdaq National Market on the date of grant. Exercise price may be paid in
cash, promissory note, by delivery of already-owned shares subject to
certain conditions, or pursuant to a cashless exercise procedure under which
the optionee provides irrevocable instructions to a brokerage firm to sell
the purchased shares and to remit to Artisan, out of the sale proceeds, an
amount equal to the exercise price plus all applicable withholding taxes.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table shows stock options exercised by Named Executive
Officers during fiscal 1999, including the aggregate value of gains on the date
of exercise. In addition, this table includes the number of shares covered by
both exercisable and non-exercisable stock options as of fiscal year-end. Also
reported are the values for "in-the-money" options, which represent the positive
spread between the exercise price of any such existing stock options and the
year-end price of Artisan's Common Stock.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
NUMBER UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OF SHARES OPTIONS AT IN-THE-MONEY OPTIONS AT
ACQUIRED SEPTEMBER 30, 1999 SEPTEMBER 30, 1999(2)
ON VALUE ---------------------------- ----------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Mark R. Templeton.... -- -- 37,500 62,500 $ 34,688 $ 57,813
Scott T. Becker...... -- -- 18,750 31,250 17,344 28,906
Larry J. Fagg(3)..... -- -- 54,716 104,716 198,346 198,346
Dhrumil Gandhi....... 46,103 $189,022 141,690 31,251 1,072,392 50,783
Jeffrey A. Lewis..... 58,000 $407,769 121,888 85,303 943,101 573,092
</TABLE>
- ---------------
(1) Fair market value of the Common Stock as of the date of exercise minus the
exercise price.
(2) Fair market value of the Common Stock as of September 30, 1999 minus the
exercise price.
(3) At September 30, 1999, 50,000 of the unexercisable shares shown for Mr. Fagg
were not in-the-money.
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EMPLOYMENT CONTRACTS AND CHANGE-IN-CONTROL ARRANGEMENTS
Pursuant to the terms of a September 5, 1996 amendment to his offer letter,
Jeffrey A. Lewis, Vice President, Market and Business Development of Artisan, is
entitled, under specified conditions, to partial acceleration of vesting of an
option to purchase 253,705 shares of Artisan's Common Stock. Specifically, in
the event Mr. Lewis' employment is terminated other than for cause following the
sale or merger of Artisan with another entity, 25% of Mr. Lewis' original option
grant will vest and become immediately exercisable.
Pursuant to the terms of his July 31, 1997 offer letter, Larry J. Fagg,
Vice President, Worldwide Sales of Artisan is entitled, under specified
conditions, to partial acceleration of vesting of options to purchase 109,432
shares of Artisan's Common Stock and certain severance and benefit payments. In
the event Mr. Fagg's employment is terminated other than for cause following a
change of control of Artisan, 50% of the remaining unvested shares of Mr. Fagg's
original option grant will vest and become immediately exercisable, Mr. Fagg
will be entitled to receive a severance payment equal to six month's base salary
and commissions at target and he will be entitled to continue to participate in
Artisan's benefit programs for a period of six months after the effective date
of his termination at no cost to him. For purposes of Mr. Fagg's employment, a
change in control of Artisan is defined as the acceptance by Artisan of any
offer that would result in the acquiror owning more than 50% of Artisan's assets
or voting stock then outstanding. Mr. Fagg has announced his resignation from
Artisan effective January 31, 2000.
COMPENSATION OF DIRECTORS
Directors currently receive no cash fees for serving as directors.
Artisan's 1997 Director Option Plan provides for the non-discretionary automatic
grant of options to each non-employee director of Artisan ("Outside Director").
Each Outside Director was automatically granted an option to purchase 25,000
shares upon the effective date of Artisan's initial public offering which vests
at a rate of 25% on the first anniversary of the date of grant and at a rate of
1/48 of the shares per month thereafter. Each new Outside Director is
automatically granted an option to purchase 25,000 shares upon the date on which
such person first becomes a director which vests at a rate of 25% on the first
anniversary of the date of grant and at a rate of 1/48 of the shares per month
thereafter. Subsequently, each Outside Director is granted an additional option
to purchase 5,000 shares of Common Stock at the next meeting of the Board of
Directors following the Annual Meeting of Stockholders if, on such date, he or
she has served as a director for at least six months, which vests at a rate of
1/48 of the shares per month following the date of grant. The exercise price of
options granted to Outside Directors must be 100% of the fair market value of
Artisan's Common Stock on the date of grant. Pursuant to such automatic grant
mechanism, on April 16, 1999, Messrs. Lanza and Harari were each granted an
option to purchase 5,000 shares of Artisan's Common Stock at an exercise price
of $5.375 per share.
CERTAIN TRANSACTIONS
In June 1999, Artisan and Robert Selvi, Artisan's former Chief Financial
Officer, entered into a letter agreement pursuant to which Mr. Selvi was engaged
as a part-time consultant for the period from June 21, 1999, the date on which
his resignation as Chief Financial Officer was effective, through September 30,
1999. Pursuant to such agreement, Mr. Selvi's stock options continued to vest
during that period and Mr. Selvi was paid $150 per hour for his consulting
services.
Artisan believes that the transaction set forth above was made on terms no
less favorable to Artisan than could have been obtained from an unaffiliated
third party. All future transactions, including loans, between Artisan and its
officers, directors, principal stockholders and their affiliates will be
approved by a majority of the Board of Directors, including a majority of the
independent and disinterested outside directors, and will continue to be on
terms no less favorable to Artisan than could be obtained from unaffiliated
third parties.
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REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee of the Board of Directors reviews and approves
Artisan's executive compensation policies. The following is the report of the
Compensation Committee describing the compensation policies and rationales
applicable to Artisan's executive officers with respect to the compensation paid
to such executive officers for the fiscal year ended September 30, 1999.
Compensation Philosophy
Artisan's philosophy in setting its compensation policies for executive
officers is to maximize stockholder value over time. The primary goal of
Artisan's executive compensation program is therefore to closely align the
interests of the executive officers with those of Artisan's stockholders. To
achieve this goal, Artisan attempts to offer compensation opportunities that
attract and retain executives whose abilities are critical to the long-term
success of Artisan, motivate individuals to perform at their highest level and
reward outstanding achievement. In addition, Artisan attempts to maintain a
portion of the executive's total compensation at risk, tied to achievement of
financial, organizational and management performance goals, and encourage
executives to manage from the perspective of owners with an equity stake in
Artisan. To achieve these goals, the Compensation Committee has established an
executive compensation program primarily consisting of cash compensation and
stock options.
The cash component of total compensation, which consists primarily of base
salary, is designed to compensate executives competitively within the industry
and marketplace. The Compensation Committee reviews and approves base salaries
for the Chief Executive Officer and other executives annually. Base salaries in
fiscal 1999 were established by the Compensation Committee based upon an
executive's job responsibilities, level of experience, individual performance
and contribution to the business.
In addition to base salary, Artisan occasionally pays bonuses to its
executive officers, although Artisan did not have a formal bonus plan in fiscal
1999. Sales and marketing executives are also eligible for additional cash
payments above their base salaries for achieving specific performance goals or
in connection with sales commissions.
Artisan provides long-term incentives through its 1993 Stock Option Plan
(the "Plan"). The purpose of the Plan is to attract and retain its best employee
talent available and to create a direct link between compensation and the
long-term performance of Artisan. The Compensation Committee believes that stock
options directly motivate an executive to maximize long-term stockholder value.
The options also utilize vesting periods that encourage key executives to
continue in the employ of Artisan. All options granted to executive officers to
date have been granted at the fair market value of Artisan's Common Stock on the
date of grant except in the case of executive officers who hold more than 10% of
the outstanding voting stock, in which case the exercise price equals 110% of
the fair market value on the date of grant. The Board considers the grant of
each option subjectively, considering factors such as the individual performance
of the executive officer and the anticipated contribution of the executive
officer to the attainment of Artisan's long-term strategic performance goals.
During fiscal 1999, the compensation of Mark R. Templeton, Artisan's
President and Chief Executive Officer, consisted solely of base salary. Mr.
Templeton's base salary for fiscal 1999 was $172,800. Mr. Templeton was not paid
a cash bonus for fiscal 1999. The Compensation Committee reviews the Chief
Executive Officer's salary using the same criteria and policies as are employed
for the other executive officers.
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Impact of Section 162(m) of the Internal Revenue Code
The Compensation Committee has considered the potential impact of Section
162(m) of the Internal Revenue Code on the compensation paid to Artisan's
executive officers. Section 162(m) generally disallows a tax deduction for any
publicly held corporation for individual compensation exceeding $1.0 million in
any taxable year for any of the executive officers named in the proxy statement,
unless compensation is performance-based. In general, it is Artisan's policy to
qualify, to the maximum extent possible, its executives' compensation for
deductibility under applicable tax laws. As a result, at a Special Meeting of
Stockholders in November 1997, the stockholders approved certain amendments to
the Plan intended to preserve Artisan's ability to deduct the compensation
expense relating to stock options granted under the Plan, and affirmed such
amendment at the 1999 Annual Meeting of Stockholders. In approving the amount
and form of compensation for Artisan's executive officers, the Compensation
Committee will continue to consider all elements of the cost to Artisan of
providing such compensation, including the potential impact of Section 162(m).
Respectfully submitted by:
COMPENSATION COMMITTEE
Lucio L. Lanza
Dr. Eli Harari
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PERFORMANCE GRAPH
Set forth below is a line graph comparing the annual percentage change in
the cumulative return to the stockholders of Artisan's Common Stock with the
cumulative return of the Nasdaq Electronic Components Stock Index and the Nasdaq
Stock Market (U.S.) Index for the period commencing February 3, 1998 (the first
trading date following Artisan's initial public offering) and ending on
September 30, 1999. Note that historic stock price performance is not
necessarily indicative of future stock price performance.
COMPARISON OF 20 MONTH CUMULATIVE TOTAL RETURN(1) AMONG
ARTISAN COMPONENTS, INC., NASDAQ ELECTRONIC COMPONENTS INDEX,
THE NASDAQ STOCK MARKET (U.S.) INDEX
<TABLE>
<CAPTION>
NASDAQ STOCK MARKET NASDAQ ELECTRONIC
ARTISAN COMPONENTS, INC. (U.S.) INDEX COMPONENTS INDEX
------------------------ ------------------- -----------------
<S> <C> <C> <C>
2/3/1998 100.000 100.000 100.000
3/31/1998 180.000 110.248 92.919
6/30/1998 135.000 113.277 86.391
9/30/1998 73.750 102.293 89.798
12/31/1998 53.125 132.744 130.534
3/31/1999 51.875 148.487 135.548
6/30/1999 116.250 162.461 153.840
9/30/1999 86.250 166.165 184.712
</TABLE>
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(1) The graph assumes that $100 was invested on February 3, 1998 (the first
trading date following Artisan's initial public offering) in Artisan's
Common Stock and in the Nasdaq Electronic Components Index and in NASDAQ
Stock Market (U.S.) and that all dividends were reinvested. No dividends
have been declared or paid on Artisan's Common Stock. Stockholder returns
over the indicated period should not be considered indicative of future
stockholder returns.
The information contained above under the captions "Report of the
Compensation Committee of the Board of Directors" and "Performance Graph" shall
not be deemed to be "soliciting material" or to be "filed" with the Securities
and Exchange Commission, nor shall such information be incorporated by reference
into any future filing under the Securities Act of 1933, as amended or
Securities Exchange Act of 1934, as amended, except to the extent that Artisan
specifically incorporates it by reference into such filing.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires Artisan's executive officers and
directors, and persons who own more than ten percent of a registered class of
Artisan's equity securities to file reports of ownership and changes in
ownership with the Securities and Exchange Commission ("SEC") and the National
Association of Securities Dealers, Inc. Executive officers, directors and
greater than ten percent stockholders are required by SEC regulation to furnish
Artisan with copies of all Section 16(a) forms they file. Based solely in its
review
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of the copies of such forms received by it, or written representations from
certain reporting persons, Artisan believes that, during fiscal 1999 all
executive officers and directors of Artisan complied with all applicable filing
requirements, except that Scott Becker filed a Form 4 late with respect to
certain transactions in the month of February 1999.
OTHER MATTERS
Artisan knows of no other matters to be submitted at the meeting. If any
other matters properly come before the meeting, it is the intention of the
persons named in the enclosed form of proxy to vote the shares they represent as
the Board of Directors may recommend.
THE BOARD OF DIRECTORS
Dated: January 24, 2000
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ARTISAN COMPONENTS, INC.
2000 ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 17, 2000
The undersigned stockholder of ARTISAN COMPONENTS, INC., a Delaware
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement, each dated January 24, 2000, and hereby
appoints Mark R. Templeton and Scott T. Becker, and each of them, proxies and
attorneys-in-fact, with full power to each of substitution, on behalf and in the
name of the undersigned, to represent the undersigned at the 2000 Annual Meeting
of Stockholders of ARTISAN COMPONENTS, INC. to be held on February 17, 2000 at
10:00 a.m. local time, at 1195 Bordeaux Drive, Sunnyvale, California and at any
adjournment or adjournments thereof, and to vote all shares of Common Stock
which the undersigned would be entitled to vote if then and there personally
present, on the matters set forth below:
1. ELECTION OF DIRECTORS:
[ ] FOR all nominees listed below [ ] WITHHOLD
(except as indicated)
IF YOU WISH TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, STRIKE A LINE THROUGH THAT NOMINEE'S NAME IN THE LIST
BELOW:
Mark R. Templeton, Scott T. Becker, Lucio L. Lanza and Dr. Eli Harari
2. PROPOSAL TO RATIFY THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS
THE INDEPENDENT ACCOUNTANTS OF ARTISAN FOR THE FISCAL YEAR ENDING
SEPTEMBER 30, 2000:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
and, in their discretion, upon such other matter or matters which may properly
come before the meeting or any adjournment or adjournments thereof.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED,
WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND FOR THE RATIFICATION OF THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT ACCOUNTANTS AND AS SAID
PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING.
Dated: , 2000
------------------
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Signature
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Signature
(This Proxy should be marked, dated and signed by the stockholder(s) exactly as
his or her name appears hereon, and returned promptly in the enclosed envelope.
Persons signing in a fiduciary capacity should so indicate. If shares are held
by joint tenants or as community property, both should sign.)
