<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:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
/X/ Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
DIODES INCORPORATED
- --------------------------------------------------------------------------------
(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/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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:
----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
----------------------------------------------------------------------
<PAGE> 2
DIODES INCORPORATED
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 14, 1996
NOTICE IS HEREBY GIVEN THAT THE ANNUAL MEETING ("MEETING") OF
THE STOCKHOLDERS ("STOCKHOLDERS") OF DIODES INCORPORATED (THE "COMPANY") WILL
BE HELD AT THE RADISSON HOTEL, 30100 AGOURA ROAD, AGOURA HILLS, CALIFORNIA
91301, ON FRIDAY, JUNE 14, 1996 AT THE HOUR OF 10:00 A.M. FOR THE FOLLOWING
PURPOSES:
TO RECEIVE AND CONSIDER:
The report of the Board of Directors on the business of the
Company and the Company's audited financial statements for the fiscal year
ended December 31, 1995, together with the report of Moss Adams LLP, the
Company's independent accountants for such period, on those audited financial
statements.
TO ACT ON:
PROPOSAL 1:
To elect seven persons to the Board of Directors of the
Company, each to serve until the next annual meeting of shareholders and until
their successors have been elected and qualified. The Board of Directors'
nominees are: Michael R. Giordano, David Lin, M.K. Lu, Shing Mao, Michael A.
Rosenberg, Leonard M. Silverman, and Raymond Soong.
ONLY PERSONS WHO ARE STOCKHOLDERS OF RECORD AT THE CLOSE OF
BUSINESS ON APRIL 30, 1996 ARE ENTITLED TO VOTE IN PERSON OR BY PROXY AT THE
MEETING OR ANY ADJOURNMENT THEREOF.
The Proxy Statement which accompanies this Notice contains
additional information regarding the proposals to be considered at the Meeting,
and Stockholders are encouraged to read it in its entirety.
As set forth in the enclosed Proxy Statement, proxies are
being solicited by and on behalf of the Board of Directors of the Company. All
proposals set forth above are proposals of the Company. It is expected that
these materials will be first mailed to Stockholders on or about May 10, 1996.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE MARK,
DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE TO BE SURE THAT YOUR STOCK IS VOTED. YOUR VOTE IS IMPORTANT, WHETHER
YOU OWN A FEW SHARES OR MANY.
Dated at Westlake Village, California, this 3rd day of May,
1996,
By Order of the Board of Directors,
/s/ Joseph Liu
Joseph Liu,
Secretary
<PAGE> 3
DIODES INCORPORATED
PROXY STATEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
GENERAL INFORMATION FOR STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
MATTERS TO BE CONSIDERED AT ANNUAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Costs of Solicitations of Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Outstanding Securities and Voting Rights; Revocability of Proxies . . . . . . . . . . . . . . . 1
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT . . . . . . . . . . . . . . . . . . . 3
PROPOSAL ONE - ELECTION OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Board of Directors, Nominees and Executive Officers . . . . . . . . . . . . . . . . . . . . . 5
The Board of Directors and Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Compensation of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934 . . . . . . . . . . . . . . . . . 8
EXECUTIVE COMPENSATION AND RELATED INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Summary of Cash and Certain Other Compensation . . . . . . . . . . . . . . . . . . . . . . . . 9
Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Option Exercises and Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Employment Contracts and Termination of Employment and Change in Control Arrangements . . . . 12
Report of the Compensation Committee of the Board of Directors to Stockholders . . . . . . . 12
Compensation Committee Interlocks and Insider Participation . . . . . . . . . . . . . . . . . 13
Performance Graph . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . . . . . . . . 15
PROPOSALS OF STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ANNUAL REPORT AND FORM 10-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 16
OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
i
<PAGE> 4
DIODES INCORPORATED
3050 EAST HILLCREST DRIVE
WESTLAKE VILLAGE, CALIFORNIA 91362
(805) 446-4800
PROXY STATEMENT
ANNUAL MEETING: JUNE 14, 1996
GENERAL INFORMATION FOR STOCKHOLDERS
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors ("Board of Directors") of
Diodes Incorporated (the "Company") for use at the annual meeting ("Meeting")
of the stockholders ("Stockholders") of the Company to be held on Friday, June
14, 1996, at the Radisson Hotel 30100 Agoura Road, Agoura Hills, California
91301, at 10:00 a.m. and at any adjournment thereof. Joseph Liu and Carl
Wertz, the designated proxyholders ("Proxyholders"), are members of the
Company's management. This Proxy Statement and the enclosed proxy card
("Proxy") and other enclosures will be first mailed to Stockholders on or about
May 10, 1996. Only Stockholders of record on April 30, 1996 ("Record Date")
are entitled to notice of and to vote in person or by proxy at the Meeting or
any adjournment thereof.
MATTERS TO BE CONSIDERED AT ANNUAL MEETING
The matters to be considered and voted upon at the Meeting
will be:
PROPOSAL 1:
To elect seven persons to the Board of Directors of
the Company, each to serve until the next Annual Meeting and until
their successors have been elected and qualified. The Board of
Directors' nominees are: Michael R. Giordano, David Lin, M.K. Lu,
Shing Mao, Michael A. Rosenberg, Leonard M. Silverman, and Raymond
Soong.
AND, to transact such other business as may properly be transacted at the
Meeting or at any adjournment thereof.
COSTS OF SOLICITATIONS OF PROXIES
This solicitation of proxies will be made by mail and may be
supplemented by telephone or other personal contact to be made without special
compensation by regular officers and employees of the Company. If it should
appear desirable to do so to ensure adequate representation at the Meeting,
officers and regular employees may communicate with Stockholders, banks,
brokerage houses, custodians, nominees and others, by telephone, facsimile
transmissions, telegraph, or in person to request that Proxies be furnished.
The Company will reimburse banks, brokerage houses, and other custodians,
nominees and fiduciaries, for their reasonable expenses in forwarding proxy
materials to their principals. The total estimated cost for the solicitation
of proxies is $9,000.
OUTSTANDING SECURITIES AND VOTING RIGHTS; REVOCABILITY OF PROXIES
The authorized capital of the Company consists of 9,000,000
shares of common stock ("Common Stock"), $0.66-2/3 par value, of which
4,958,679 shares were issued and outstanding on the Record Date with an
additional 717,115 shares held as Treasury Stock. In addition, 1,000,000
shares of Class A Preferred Stock, $1.00 par value ("Class A Preferred Stock"),
are authorized of which no shares were issued and outstanding on the Record
Date (the Common Stock and the Class A Preferred Stock shall herein be
collectively referred to as the "Stock"). Each share of Class A Preferred
Stock is entitled to one vote and is convertible into one share of Common
Stock. A majority of the outstanding shares of the Stock constitutes a quorum
for the conduct of business at the Meeting. Abstentions will be treated as
shares present and entitled to vote for purposes of determining the presence of
a quorum.
The Company's Certificate of Incorporation authorizes
cumulative voting. Each Stockholder has the right to cumulate votes in the
election of directors, provided that the candidates' names have been properly
placed in nomination prior to commencement of voting and a Stockholder has
given notice prior to voting of his or her intention to cumulate votes.
Cumulative voting entitles a Stockholder to give one candidate a number of
votes equal to the number of
1
<PAGE> 5
directors to be elected multiplied by the number of votes to which such
Stockholder's shares are entitled, or to distribute such Stockholder's votes on
the same principle among as many candidates as the Stockholder shall think fit,
and the candidates receiving the highest number of votes up to the number of
directors to be elected, shall be elected.
As to any matters, other than the election of directors, which
may properly come before the Meeting, each Stockholder is entitled to cast one
vote for each share held of record on the Record Date. In the election of
directors, the seven persons receiving the highest number of votes will be
elected.
On the Record Date, there were a total of 4,958,679 voting
shares of Stock issued and outstanding consisting of the Common Stock and the
Class A Preferred Stock referred to herein. Each such share of Stock is
entitled to one vote at the Meeting. Of these voting shares of Stock,
1,995,093 (or approximately 40.2%) (the "Shares") were held in name by Lite-On
Power Semiconductor Corporation ("LPSC"), a subsidiary controlled by Silitek
Corporation ("Silitek"). Silitek has disclaimed beneficial ownership of the
Shares. See "Security Ownership of Certain Beneficial Owners and Management"
and "Certain Relationships and Related Transactions" for a discussion of the
relationship between Silitek, LPSC and the Company. LPSC has informed the
Company that it will vote "FOR" the election of the nominees to the Board of
Directors identified herein.
Each proposal described herein, other than the election of
directors, requires the affirmative vote of a majority of the outstanding
shares of Common Stock present in person or represented by proxy and entitled
to vote at the Meeting. Accordingly, broker non- votes and abstentions from
voting on any matter, other than the election of directors, will have the
effect of a vote "AGAINST" such matter.
A Proxy for use at the Meeting is enclosed. The Proxy must be
signed and dated by you or your authorized representative or agent.
Telegraphed or cabled Proxies are also valid. You may revoke a Proxy at any
time before it is exercised at the Meeting by submitting a written revocation
to the Secretary of the Company or a duly executed Proxy bearing a later date
or by voting in person at the Meeting.
Brokers and nominees holding Common Stock in "street name"
which are members of a stock exchange are required by the rules of the exchange
to transmit this Proxy Statement to the beneficial owner of the Common Stock
and to solicit voting instructions with respect to the matters submitted to the
Shareholders. In the event any such broker or nominee has not received
instructions from the beneficial owner by the date specified in the statement
accompanying such material, the broker or nominee may give or authorize the
giving of a Proxy to vote such Common Stock on the matters to be considered at
the Meeting; provided, however, that the broker or nominee may not give or
authorize the giving of a Proxy for any matter if it has notice of any contest
with respect to any matter, and, provided further, that the broker or nominee
may not vote the Common Stock "FOR" and matter which substantially affects the
rights or privileges of the Common Stock without specific instructions from the
beneficial owner. If you hold your Stock in "street name" and you fail to
instruct your broker or nominee as to how to vote your Stock, your broker or
nominee may, in its discretion, vote your Stock "FOR" the election of the Board
of Director's nominees.
Unless revoked, the shares of Stock represented by Proxies
will be voted in accordance with the instructions given thereon. Discretionary
authority to cumulate votes in the election of directors is hereby solicited
and the return of the Proxy shall grant such authority. In the absence of any
instruction in the Proxy, your shares of Stock will be voted "FOR" the election
of the nominees for director set forth herein.
The enclosed Proxy confers discretionary authority with
respect to any other proposals which properly may be brought before the
Meeting. As of the date hereof, management is not aware of any other matters
to be presented for action at the Meeting. However, if any other matters
properly come before the Meeting, the Proxies solicited hereby will be voted
by the Proxyholders in accordance with the recommendations of the Board of
Directors. Such authorization includes authority to appoint a substitute
nominee or nominees to the Board of Directors' nominees identified herein where
death, illness or other circumstances arise which prevent any management
nominee or nominees for directors from serving in such positions and to vote
such proxy for such substitute nominee or nominees.
2
<PAGE> 6
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of
Common Stock as of the Record Date by (i) each person known to the Company to
be the beneficial owner of more than five percent of the outstanding shares of
Common Stock, (ii) each executive officer (i.e., President and Chief Executive
Officer; Executive Vice President; and Vice President-Operations, Chief
Financial Officer and Secretary of the Company), director and nominee for
director of the Company, and (iii) all directors and executive officers as a
group:
<TABLE>
<CAPTION>
AMOUNT AND
NAME AND ADDRESS NATURE OF
OF BENEFICIAL BENEFICIAL
OWNER(1) OWNERSHIP(2) TITLE OF CLASS PERCENT OF CLASS(3)
- ------------------------- ------------- -------------- -------------------
<S> <C> <C> <C>
Silitek Corporation 1,995,093(4) Common Stock 40.2%
Raymond Soong, Chairman 66,667(5) Common Stock 1.3%
of the Board
David Lin, 23,667(6) Common Stock *
President, Chief
Executive Officer,
Director
Michael R. Giordano, 21,000(7) Common Stock *
Director
M.K. Lu, 10,000(8) -- *
Director
Shing Mao, 63,333(9) Common Stock 1.3%
Director
Michael A. Rosenberg, 15,000(10) Common Stock *
Director
Leonard M. Silverman, 10,000(11) -- *
Director
Pedro Morillas, Executive 0 -- *
Vice President
Joseph Liu, 70,000(12) Common Stock 1.4%
Vice President -
Operations, Chief
Financial Officer and
Secretary
Directors and Executive 279,667(13) Common Stock 5.6%
Officers as a group (9
persons)
* Less than 1%.
</TABLE>
(1) The address of Silitek is 10 FL. NO. 25, Sec. 1, Tung Hua S. Rd.,
Taipei, Taiwan, Republic of China. The address of the directors and
executive officers of the Company is 3050 E. Hillcrest Drive,
Westlake Village, California 91362.
(2) The named shareholder has sole voting power and investment power with
respect to the shares listed, except as indicated subject to community
property laws where applicable.
(Footnotes continued on following page)
3
<PAGE> 7
(Footnotes continued from previous page)
(3) Shares which the person (or group) has the right to acquire within 60
days after April 30, 1996 are deemed to be outstanding in calculating
the percentage ownership of the person (or group) but are not deemed to
be outstanding as to any other person or group. Percent of class total
does not take into account 717,115 shares held as treasury stock.
(4) Includes 1,995,093 shares of Common Stock to which Silitek disclaims
beneficial ownership. LPSC, which holds 1,995,093 shares of Common
Stock, as the record holder, is a controlled subsidiary of Silitek.
The address of LPSC is 28-1 Wu Shin St., Ta Wu Lung Industrial Zone,
Keelung, Taiwan, Republic of China.
The 1,995,093 shares of Common Stock to which Silitek disclaims
beneficial ownership and which are held in name by LPSC included (less
stock sales); (a) 1,945,800 shares of Common Stock transferred to LPSC
from Silitek during the year ended December 31, 1991 in connection with
a consolidation of the semiconductor rectifier activities of Silitek
into its LPSC subsidiary; (b) 214,987 shares of Common Stock and; (c)
169,629 shares of Preferred Stock which are convertible into Common
Stock on a one share to one share basis, acquired in May 1993 pursuant
to a private placement transaction with the Company. Silitek purchased
the 214,987 shares of Common Stock and the 169,629 shares of Preferred
Stock for investment purposes for its own benefit. On July 12, 1995,
LPSC converted its 169,629 shares of Preferred Stock into 169,629 shares
of Common Stock. Silitek intends to continue to review its investment
in the Common Stock with the view to maximizing its investment. Future
actions by Silitek, if any, will be made in light of the then current
financial conditions of Silitek, LPSC and the Company, prevailing market
prices, and other factors deemed relevant by Silitek.
(5) Represents 66,667 shares of Common Stock which Mr. Soong has the right
to acquire within 60 days of April 30, 1996, by the exercise of vested
stock options.
(6) Represents 23,667 shares of Common Stock which Mr. Lin has the right to
acquire within 60 days of April 30, 1996 by the exercise of vested
stock options.
(7) Represents 1,000 shares of Common Stock held in the name of PaineWebber
Trust for the IRA of Mr. Giordano and 20,000 shares of Common Stock
which Mr. Giordano has the right to acquire within 60 days of April 30,
1996 by the exercise of vested stock options.
(8) Represents 10,000 shares of Common Stock which Mr. Lu has the right to
acquire within 60 days of April 30, 1996 by the exercise of vested
stock options.
(9) Represents 63,333 shares of Common Stock which Dr. Mao has the right to
acquire within 60 days of April 30, 1996 by the exercise of vested
stock options.
(10) Represents 15,000 shares of Common Stock which Mr. Rosenberg has the
right to acquire within 60 days of April 30, 1996 by the exercise of
vested stock options.
(11) Represents 10,000 shares of Common Stock which Dr. Silverman has the
right to acquire within 60 days of April 30, 1996 by the exercise of
vested stock options.
(12) Includes 40,000 shares of Common Stock which Mr. Liu has the right to
acquire within 60 days of April 30, 1996 by the exercise of vested
stock options.
(13) Includes 268,667 shares which the Directors and Officers have the right
to acquire within 60 days of April 30, 1996 by the exercise of vested
stock options.
Other than as disclosed in the foregoing table, to the
knowledge of the Company, no other person (other than Cede & Co., a depository
company) owns of record or beneficially more than 5 percent of the issued and
outstanding Common Stock of the Company.
On July 12, 1995, LPSC converted its 169,629 shares of Class A
Preferred Stock into 169,629 shares of Common Stock. As of April 30, 1996,
there were no share outstanding of the Company's Class A Preferred Stock.
4
<PAGE> 8
PROPOSAL ONE - ELECTION OF DIRECTORS
BOARD OF DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
The Company's Bylaws provide that the number of directors
shall be determined from time to time by the Board of Directors but may not be
less than five nor more than seventeen. The number of directors is currently
set at seven. The Bylaws further provide for the election of each director at
each annual meeting of Stockholders.
All nominees have indicated their willingness to serve and
unless otherwise instructed, Proxies will be voted in such a way as to affect,
if possible, the election of all nominees. In the event that any of the
nominees should be unable to serve as a director, it is intended that the
Proxies will be voted for the election of such substitute nominees, if any, as
shall be designated by the Board of Directors. The Board of Directors has no
reason to believe that any nominee will be unavailable.
None of the directors, nominees for director or executive
officers were selected pursuant to any arrangement or understanding, other than
with the directors and executive officers of the Company acting within their
capacity as such. There are no family relationships among directors or
executive officers of the Company as of the date hereof, and, except as set
forth above, as of the date hereof, no directorships are held by any director
in a company which has a class of securities registered pursuant to Section 12
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or
subject to the requirements of Section 15(d) of the Exchange Act or any company
registered as an investment company under the Investment Company Act of 1940.
The following table sets forth certain biographical
information of the nominees for director and the executive officers of the
Company:
<TABLE>
<CAPTION> DIRECTOR
OFFICERS AND DIRECTORS AGE POSITION WITH THE COMPANY SINCE (1)
--------------------- --- ------------------------- ---------
<S> <C> <C> <C>
Raymond Soong (2) . . . . . . 54 Chairman of the Board 1993
David Lin (3) . . . . . . . . . 49 President and Chief Executive Officer; 1991
Director
Michael R. Giordano (4) . . . . 49 Director 1990
M.K. Lu (5) . . . . . . . . . . 48 Director 1995
Shing Mao (6) . . . . . . . . . 60 Director 1990
Michael A. Rosenberg (7) . . . 67 Director 1989
Leonard M. Silverman (8) . . . 56 Director 1995
Pedro Morillas (9) . . . . . . 50 Executive Vice President N/A
Joseph Liu (10) . . . . . . . . 54 Vice President-Operations, Chief N/A
Financial Officer and Secretary
</TABLE>
(1) Directors are elected at each annual meeting of Stockholders.
(2) Mr. Soong has been the Chairman of the Board of Silitek since 1990 and
has been Chairman of the Board of LPSC since 1992. See "Security
Ownership of Certain Beneficial Owners and Management" and "Certain
Relationships and Related Transactions" for a discussion of the
relationship between Silitek, LPSC and the Company. Since 1995, Mr.
Soong has also been a director of FabTech, with whom the Company
entered into an agreement with in February 1996, whereby Diodes will
gain a new supply of processed wafers used in the manufacture of
several types of discrete semiconductors. FabTech is a newly-created
subsidiary of LPSC. See "Certain Relationships and Related
Transactions" for a discussion of the relationship between FabTech,
LPSC and the Company. Mr. Soong is a graduate of the National Taipei
Institute of Technology's Electronic Engineering
(Footnotes continued on following page)
5
<PAGE> 9
(Footnotes continued from previous page)
Department. After serving as a senior engineer for RCA and as a chief
engineer for Texas Instruments, Mr. Soong, together with several of
his coworkers, found Taiwan Liton Electronic Co. Ltd., a Taiwan
corporation ("Taiwan Liton"), in 1975. Taiwan Liton, which
manufactures electronic components and subsystems, is an affiliate of
Silitek through common control, and its stock is listed on the Taipei
Stock Exchange. Mr. Soong is also Chairman of the Board of Taiwan
Liton, and the newly formed Kai Hong joint venture. See "Certain
Relationships and Related Transactions" for a discussion of the
relationship between Kai Hong and the Company.
(3) Since 1991, Mr. Lin has served as a director of the Company. Mr. Lin
has served as President and Chief Executive Officer of the Company
since March 1993. Mr. Lin is also President of Silitek and had served
as Executive Vice President of Silitek since 1990, prior to becoming
President. See "Security Ownership of Certain Beneficial Owners and
Management" and "Certain Relationships and Related Transactions" for a
discussion of the relationship between Silitek, LPSC and the Company.
Mr. Lin was previously President of Texas Instruments Asia, Limited, in
Taiwan from 1982 to 1990. Mr. Lin has been a director of LPSC since
1991 and a director of Maxi Switch, Inc., since 1990. Mr. Lin is also
a director of the newly formed Kai Hong joint venture. See "Certain
Relationships and Related Transactions" for a discussion of the
relationship between Kai Hong and the Company.
(4) Mr. Giordano joined the investment banking firm of PaineWebber
Incorporated as a Senior Vice President-Investments, when PaineWebber
acquired his previous firm, Kidder Peabody and Company, Inc. Mr.
Giordano advises corporations, foundations, trusts, and municipal
governments in investments and finance. Mr. Giordano was with Kidder
Peabody since 1979. Formerly a captain and pilot in the USAF, Mr.
Giordano received his Bachelors of Science degree in Aerospace
Engineering from California State Polytechnic University and his
Masters degree in Business Administration (Management and Finance) from
the University of Utah. Mr. Giordano also did post graduate work in
International Investments at Babson College.
(5) Since 1991, Mr. Lu has been President and a director of LPSC. From
1983 to 1990, Mr. Lu was General Manager/Vice President of Silitek.
See "Security Ownership of Certain Beneficial Owners and Management"
and "Certain Relationships and Related Transactions" for a discussion
of the relationship between Silitek, LPSC and the Company. Since 1995,
Mr. Lu has also been a director of FabTech. See "Certain Relationships
and Related Transactions" for a discussion of the relationship between
FabTech, LPSC and the Company. Mr. Lu earned his Bachelor of E.E. at
Tatung Institute of Technology and is a graduate of the Institute of
Administration at National Chengchi University. Mr. Lu is also a
present member of the Chinese Management Association and the Chinese
Association for Advancement of Management. Mr. Lu is also a director
of the newly formed Kai Hong joint venture. See "Certain Relationships
and Related Transactions" for a discussion of the relationship between
Kai Hong and the Company.
(6) From 1988 to present, Dr. Mao has been Chairman of the Board of
Lite-On, Inc., a California corporation located in Milpitas, California
("Lite-On Milpitas"), a wholly owned subsidiary of Taiwan Liton. See
"Security Ownership of Certain Beneficial Owners and Management" and
"Certain Relationships and Related Transactions" for a discussion of
the relationship between Silitek, LPSC and the Company. Dr. Mao has
been a director of Dyna Investment Co., Ltd. of Taiwan, a venture
capital company, and a director of LPSC, both since 1989. Since 1995,
Dr. Mao has also been a director of FabTech. See "Certain
Relationships and Related Transactions" for a discussion of the
relationship between FabTech, LPSC and the Company. Before joining
Lite-On, Dr. Mao served in a variety of management positions with
Raytheom Company for four years, with Texas Instruments for 11 years,
and with UTL Corporation (later acquired by Boeing Aircraft
Company) for seven years. Dr. Mao earned his Ph.D. degree in electrical
engineering at Stanford University in 1963.
(7) From 1992 to present, Mr. Rosenberg serves as an independent consultant
to Vishay Company, a Fortune 500 Company. Vishay is a major
international passive component manufacturer with 50 operating
plants located in 11 countries. Until 1991, Mr. Rosenberg was
President, Principal Operating Officer a director of SFE
Technologies. Prior to that, Mr. Rosenberg served since 1970 as
Vice President Technology. SFE Technologies, with principal offices
in San Fernando, California, was a manufacturer of electronic
components.
(Footnotes continued on following page)
6
<PAGE> 10
(Footnotes continued from previous page)
(8) From 1984 to present, Dr. Leonard Silverman has been the Dean of
Engineering at the University of Southern California ("USC"), and
has been employed by USC since 1968. Dr. Silverman is
internationally known for his pioneering work in the theory and
application of multi-variable control systems and signal processing
and has more than 100 publications to his credit. Dr. Silverman has
been honored as a Fellow of the IEEE, as a Distinguished Member of
the IEEE Control Society, and has received a Centennial Medal of the
IEEE. He has also received election to the National Academy of
Engineering, one of the highest honors that can be bestowed
on an engineer. Dean Silverman also serves on the Board of Directors
for Advanced Micro Devices, as well as for the Colachis Foundation,
the Lord Foundation, and the M.C. Gill Foundation. Dr. Silverman
earned his A.B., B.S., M.S. and Ph.D. degrees in electrical
engineering at Columbia University during the period 1961 through
1966.
(9) Mr. Morillas joined the Company in 1993. Prior to becoming Executive
Vice President of the Company, Mr. Morillas was associated with
National Semiconductor for over 10 years, most recently as Vice
President, Asia Marketing, in Hong Kong for four years. Mr. Morillas is
a director of the newly formed Kai Hong joint venture. See "Certain
Relationships and Related Transactions" for a discussion of the
relationship between Kai Hong and the Company.
(10) Mr. Liu has served as Vice President, Operations of the Company
since 1994 and Chief Financial Officer and Secretary since 1990. Mr.
Liu has been the Company's Vice President, Administration from 1990 to
1994. Prior to joining the Company, Mr. Liu held various management
positions with Texas Instruments ("TI"), Dallas, since 1971, including
Planning Manager, Financial Planning Manager, Treasury Manager, Cost
Accounting Manager and General Accounting Manager with TI Taiwan, Ltd.
in Taipei; from 1981-1986 as Controller with TI Asia in Singapore and
Hong Kong; from 1986-1989 as Financial Planning Manager, TI Latin
America Division (for TI Argentina, TI Brazil, and TI Mexico) in Dallas
and from 1989-1990 Chief Coordinator of Strategic Business Systems for
TI Asia Pacific Division in Dallas. Mr. Liu is a director of the newly
formed Kai Hong joint venture. See "Certain Relationships and Related
Transactions" for a discussion of the relationship between Kai Hong and
the Company.
THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors has a standing Audit Committee and a
Compensation and Options Committee. The Board of Directors does not have a
standing Nominating Committee.
The members of the Audit Committee are Dr. Shing Mao, Michael
Giordano and Michael A. Rosenberg. The Audit Committee met twice during fiscal
year 1995. The Audit Committee makes recommendations to the Board regarding
the engagement of the Company's independent auditors, reviews the plan, scope
and results of the audit, reviews with management the Company's policies and
procedures with respect to internal accounting and financial controls and
reviews changes in accounting policy and the scope of the non-audit services
which may be performed by the Company's independent auditors. The Audit
Committee also monitors policies to prohibit unethical, questionable or illegal
activities by the Company's employees.
The Compensation and Options Committee, presently consisting
of Michael A. Rosenberg and Michael R. Giordano, makes recommendations to the
Board regarding compensation, benefits and incentive arrangements for officers
and other key managerial employees of the Company including awards under the
Company's Incentive Bonus Plan. The Compensation and Options Committee also
administers the Company's 1993 Incentive Stock Option Plan ("1993 ISO Plan"),
the Company's 1993 Non-Qualified Stock Option Plan ("1993 NQO Plan"), and the
Company's 1984 Non-Qualified Stock Option Plan ("1984 NQO Plan").
The 1993 ISO Plan provides for the issuance of up to 1,000,000
shares of the Company's authorized but unissued Common Stock. Options granted
under the 1993 ISO Plan are not transferable, except by will or the laws of
descent or distribution. A vested but unexercised option is normally
exercisable for 90 days after termination of employment, other than by death or
retirement. In the event of death, unmatured options are accelerated to
maturity. An option granted under the 1993 ISO Plan may not be priced at less
than 100% of fair market value on the date of grant and expires 10 years from
the date of grant.
7
<PAGE> 11
The 1993 NQO Plan became effective retroactively to July 6,
1993, upon approval by the shareholders at the Company's 1994 annual meeting.
The 1993 NQO Plan provides for the issuance of up to 1,000,000 shares of the
Company's authorized but unissued Common Stock. Options may be exercised by
the optionee during his or her lifetime or after his or her death by those who
have inherited by will or intestacy. A vested but unexercised option is
normally exercisable for 90 days after termination of employment, other than by
death or retirement. In the event of death, unmatured options are accelerated
to maturity. The Stock Option Committee, which administers the 1993 NQO Plan,
has full discretion to determine whether or not options granted under the 1993
NQO Plan shall have a right to relinquish up to one-half of an unexercised
position of an option for an amount of cash, if concurrently, the holder of the
option exercises a portion of the option and purchases a number of shares of
stock at least equal to the number of shares which could have been purchased
under the portion of the option relinquished ("SAR"). However, the Board has
expressly stated that it has not and does not intend to grant such SAR. The
shares to be issued upon exercise of options under the 1993 NQO Plan require a
three-year vesting period. The option price is 100% of the fair market value
of such shares on the date the option is granted. Options expire ten years
from the grant of the option.
The 1984 NQO Plan provides for the issuance of up to 300,000
shares of the Company's authorized but unissued Common Stock. Options granted
under the 1984 NQO Plan are not transferable, except by will or the laws of
descent or distribution. A vested but unexercised option is normally
exercisable for 90 days after termination of employment, other than by death or
retirement. In the event of death, unmatured options are accelerated to
maturity. An option granted under the 1984 NQO Plan may not be priced at less
than 100% of fair market value on the date of grant and expires 10 years from
the date of grant.
The Board of Directors met three times during fiscal year
1995. The Compensation and Options Committee met twice during fiscal year 1995.
All of the persons who were directors of the Company during fiscal year 1995
attended at least 75% of (1) the total number of Board meetings and (2) the
total number of meetings held by all committees on which they served during
fiscal year 1995.
COMPENSATION OF DIRECTORS
All directors each receive $750 for each board meeting
attended during the year ended December 31, 1995. No additional amounts are
paid to directors for committee participation or special assignments. Both
employee and non-employee directors are eligible to receive grants of stock
options.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THE ELECTION OF THE BOARD OF DIRECTORS' NOMINEES.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Under Section 16(a) of the Securities Exchange Act of 1934,
the Company's directors, executive officers and any persons holding ten percent
or more of the Common Stock are required to report their ownership of Company
stock and any changes in that ownership to the Securities and Exchange
Commission (the "SEC") and to furnish the Company with copies of such reports.
Specific due dates for these reports have been established and the Company is
required to report any failure to file on a timely basis by such persons.
Based solely upon a review of copies of reports filed with the SEC during the
fiscal year ended December 31, 1995, all reporting persons filed reports on a
timely basis.
8
<PAGE> 12
EXECUTIVE COMPENSATION AND RELATED INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth certain summary information
concerning compensation paid or accrued by the Company with respect to each
person who acted in the capacity of an executive officer of the Company
(determined as of the end of the last fiscal year) (the "Named Executives") for
each of the fiscal years ended December 31, 1995, 1994 and 1993:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
------------------------------------
Annual Compensation Awards Payouts
-------------------------------- ---------------------- -----------
Other Securities All
Name and Annual Restricted Underlying Other
Principal Compen- Stock Options/ LTIP Compen-
Position Year Salary($) Bonus($) sation($) Awards($) SARs(#) Payouts($) sation($)
--------- ---- --------- -------- --------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
DAVID LIN 1995 --(1) -- -- -- -- -- --
President 1994 -- -- -- -- -- -- --
and Chief 1993 -- -- -- -- 70,000(2) -- --
Executive
Officer
PEDRO 1995 128,003 146,481 --(3) -- -- -- --
MORILLAS 1994 125,169 71,504 --(3) -- -- -- --
Executive 1993 96,062(4) 14,836 --(3) -- 50,000(5) -- --
Vice
President
JOSEPH LIU 1995 115,564 73,240 --(6) -- -- -- --
Vice 1994 115,560 45,300 --(6) -- 40,000(7) -- --
President- 1993 115,776 13,094 -- -- 20,000(8) -- --
Operations,
Chief
Financial
Officer
and
Secretary
</TABLE>
(1) Mr. Lin receives no direct cash compensation from the Company, other
than issuance of the Company's stock options. However, Mr. Lin
receives cash compensation directly from Silitek for his services as
President of Silitek, which, through its subsidiary LPSC, supplies a
significant volume of the semiconductors products distributed by the
Company. As disclosed elsewhere in this Proxy Statement, Silitek is
also the beneficial owner of 1,995,093 shares of the Company's
Common Stock.
(2) These options were granted pursuant to the Company's 1993 Non-
Qualified Stock Option Plan ("1993 NQO Plan") at an exercise price of
$1.875. The 1993 NQO Plan became effective retroactively to July 6,
1993, upon approval by the shareholders at the Company's 1994 annual
meeting. The 1993 NQO Plan provides for the issuance of up to
1,000,000 shares of the Company's authorized but unissued Common
Stock. Options granted shall terminate and be of no force and effect
with respect to any shares not previously taken up by optionee upon
the expiration of ten years from the date of grant. A vested but
unexercised option is normally exercisable for 90 days after
termination of employment, other than by death or retirement. In the
event of death, unmatured options are accelerated to maturity. The
Stock Option Committee, which administers the 1993 NQO Plan, has full
discretion to determine whether or not options granted under the 1993
NQO Plan shall have a right to relinquish up to one-half of an
unexercised position of an option for an amount of cash, if
concurrently, the holder of the option exercises a portion of the
option and purchases a number of shares of stock at least equal to
the number of shares which could have been purchased under the
portion of the option relinquished ("SAR"). However, the Board has
expressly stated that it has not and does not intend to grant such
SAR. The shares to be issued upon exercise of options under the 1993
NQO Plan require a three-year vesting period. The option price is
100% of the
(Footnotes continued on following page)
9
<PAGE> 13
(Footnotes continued from previous page)
fair market value of such shares on the date the option is granted.
Options expire ten years from the grant of the option.
(3) Mr. Morillas receives the benefit of a Company-owned automobile and a
life insurance premium; the aggregate value is less than 10% of his
total annual salary and is not included in this total. Effective
September 1, 1994, the Company implemented a Deferred Profit Sharing
Plan ("401(k) Plan") whereby employees shall be permitted to make
elective deferrals in any amount from 2% to 15% of their compensation.
The Company contributes an additional and discretionary 50% of the
employee's contribution, not to exceed 3% of the employee's
compensation. Under the Company's 401(k) Plan, the employee then
directs funds into selected investments. Mr. Morillas participates in
the 401(k) Plan and the Company's discretionary contribution is 3% of
his compensation from September 1, 1994. In addition, Mr. Morillas
receives the benefit of the Company's group health insurance plan,
which is partially funded by the Company; the value of such benefit is
less than 10% of his salary and is not included in this total. Mr.
Morillas also received a one time moving expense in 1993 of $12,400
in connection with his and his family's move to the Los Angeles area,
which is less than 10% of his salary and is not included in the 1993
total.
(4) Such compensation was paid from the date of commencement of Mr.
Morillas' employment on March 16, 1993 through December 31, 1993.
(5) Mr. Morillas' options were issued pursuant to the Company's 1993
Incentive Stock Option Plan ("1993 ISO Plan") at an exercise price of
$1.875 and are exercisable annually in three equal amounts over a
three year vesting period. The 1993 ISO Plan provides for the
issuance of up to 1,000,000 shares of the Company's authorized but
unissued Common Stock. Options granted under the 1993 ISO Plan are
not transferable, except by will or the laws of descent or
distribution. An vested but unexercised option is normally exercisable
for 90 days after termination of employment, other than by death or
retirement. In the event of death, unmatured options are accelerated
to maturity. An option granted under the 1993 ISO Plan may not be
priced at less than 100% of fair market value on the date of grant and
expires 10 years from the date of grant.
(6) Mr. Liu receives the benefit of a Company-owned automobile and a life
insurance premium; the aggregate value is less than 10% of his total
annual salary and is not included in this total. Mr. Liu participates
in the Company's 401(k) Plan and the Company's contribution is 3% of
his compensation from September 1, 1994. In addition, Mr. Liu
receives the benefit of the Company's group health insurance plan,
which is funded by the Company, the value of such benefit is less than
10% of his salary and is not included in this total.
(7) Mr. Liu's options granted in 1994 were issued pursuant to the Company's
1993 ISO Plan at an exercise price of $7.875 and become exercisable
with respect to 50% of the options on June 17, 1995 and the remaining
50% of the options on June 17, 1996.
(8) The options granted to Mr. Liu in 1993 were issued pursuant to the
Company's 1993 ISO Plan at an exercise price of $1.875. All 20,000
stock options were immediately exercisable upon their grant on July 6,
1993.
10
<PAGE> 14
STOCK OPTIONS
The following table contains information concerning the grant
of stock options during fiscal year ended December 31, 1995 to the Named
Executives:
OPTION/SAR GRANTS IN FISCAL YEAR 1995
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation
Individual Grants for Option Term (1)
- ----------------------------------------------------------------------------------- -----------------------
Number of Percent
Securities of Total
Underlying Options/SARs
Options/SARs Granted to Exercise or
Granted Employees Base Price Expiration
Name (#) in FY 1995 ($/Sh) Date 5%($) 10%($)
--------------- --------------- --------------- ------------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
DAVID LIN -- -- -- -- -- --
PEDRO MORILLAS -- -- -- -- -- --
JOSEPH LIU -- -- -- -- -- --
</TABLE>
(1) The Potential Realizable Value is the product of (a) the difference
between (i) the product of the closing sale price per share at the
date of grant and the sum of (A) 1 plus (B) the assumed rate of
appreciation of the Common Stock compounded annually over the term of
the option and (ii) the per share exercise price of the option and (b)
the number of shares of Common Stock underlying the option at December
31, 1995. These amounts represent certain assumed rates of
appreciation only. Actual gains, if any, on stock option exercises
are dependent upon a variety of factors, including market conditions
and the price performance of the Common Stock. There can be no
assurance that the rate of appreciation presented in this table can be
achieved.
OPTION EXERCISES AND HOLDINGS
The following table contains information with respect to the
Named Executives concerning the exercise of options during the fiscal year
ended December 31, 1995 and unexercised options held by the Named Executives as
of December 31, 1995:
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1995
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Shares
Acquired Value Value of Unexercised
on Exercise Realized Number of Unexercised "In-the-Money"
Name (#) ($) Options/SAR's at 12/31/95 (#) Options/SAR at 12/31/95 ($)(1)
-------------- ------------- ----------- ------------------------------ --------------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
DAVID LIN 23,000 212,750 23,667 23,333 204,128 201,247
PEDRO MORILLAS 16,667 189,576 -- 16,667 -- 143,753
JOSEPH LIU 15,000 176,250 40,000 20,000 225,000 52,500
</TABLE>
(1) Value of unexercised "in-the-money" options is the difference between
the market price of the Common Stock on December 29, 1995 ($10.50 per
share) and the exercise price of the option, multiplied by the number
of shares subject to the option.
11
<PAGE> 15
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
Effective March 16, 1993, the Company entered into an
employment agreement with Pedro Morillas, the Company's Executive Vice
President. Under such employment agreement, Mr. Morillas is entitled to, among
other things, (i) receive an annual base salary and performance bonus subject
to the determination and evaluation of the Company's Compensation Committee on
a yearly basis, (ii) participate in all plans sponsored by the Company for
employees in general, (iii) usage of a Company car, and (iv) receive an option
to purchase from the Company up to 50,000 shares of the Company's Common Stock
at $1.875 per share (exercisable in three equal installments commencing June
10, 1994 and expiring on the tenth anniversary of the date of grant).
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS TO STOCKHOLDERS
The report of the Compensation and Options Committee of the
Board of Directors to Stockholders shall not be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
The Compensation and Options Committee (the "Committee")
consists of two directors, Michael A. Rosenberg and Michael R. Giordano, who
are not employees or former employees of, or consultants to, the Company. The
Committee approves salary practices for executive personnel, reviews the
performance of the Company and the executive officers, sets performance
objectives, establishes the compensation of executive officers, and authorizes
the grant of options under the Company's various stock option plans. In May
1995, the Committee set salary levels for the executive officers of the
Company.
The Company's general approach to compensating executive
officers is to pay cash salaries which are competitive with salaries paid to
executives of other companies in the Company's industry, which are of similar
size and engaged in a similar line of business and to employ a subjective
assessment of the individual's experience and past and potential contribution
to the Company.
The Company's policy in compensating executive officers is to
establish methods and levels of compensation that will provide strong
incentives to promote the profitability and growth of the Company and reward
superior performance. Compensation of executive officers includes base salary,
performance-based incentive bonuses and stock-based programs. Salaries are
established by the Committee based on the Committee's subjective assessment of
the executive's scope of responsibility, level of experience, individual
performance, and contribution to the business.
The Company believes that the emphasis on performance-based
and stock-based compensation serves to align the interests of the executive
officers with the interests of the Company's Stockholders. The Company also
seeks to establish overall compensation levels that are sufficiently
competitive to attract, retain, and motivate highly competent management
personnel. Mr. Morillas' base salary is paid in accordance with the terms and
conditions of a compensation agreement based upon the aforementioned subjective
criteria of the Committee. See "Employment Contracts and Termination of
Employment and Change in Control Arrangements." Mr. Liu's base salary is also
paid in accordance with subjective criteria set by the Committee.
The Company's performance, for purposes of compensation
decisions, is measured under the annual bonus plan against goals established
prior to the start of the fiscal year by the Committee, and is reviewed and
approved by the Committee. The Company's annual bonus plan is based on
specific financial performance results. Bonuses, set at a fixed amount and
paid as a percentage of the total, are based upon reaching a percentage between
80 and 120% of the goal. Bonus compensation paid to Mr. Morillas is based upon
goals set by the Committee for net sales and profit before tax. Mr. Liu's
bonus is based on targets set by the Committee for net sales, and profit before
tax, as well as, return on assets.
12
<PAGE> 16
COMPENSATION FOR THE PRESIDENT AND CHIEF EXECUTIVE OFFICER
No cash compensation is paid by the Company to Mr. David Lin,
the Company's President and Chief Executive Officer. Because Mr. Lin also
serves as President of Silitek Corporation, he is compensated directly from
Silitek. Mr. Lin, is however, eligible to participate in, and receive stock
option grants through the Company's 1993 Non-Qualified Stock Option Plan.
Shares that have been granted to Mr. Lin were based upon the Committee's
subjective assessment of the performance of Mr. Lin and the Company.
STOCK OPTIONS
The Committee strongly believes that the interests of senior
management must be closely aligned with those of the Stockholders. Stock options
are granted to officers, other executives and selected employees whose
contributions and skills are important to the long-term success of the Company.
Stock options granted to executive officers are granted at the fair market value
as of the date of grant with a ten year term. If employment is terminated, the
term of the grant is 90 days from the termination date. To encourage retention,
the ability to exercise options granted under the plans is subject to vesting
restrictions. The Committee's policy is to award an initial grant at the date
of employment, which vests over three years, and is in recognition of the
executive officer's potential contribution to the Company. The three year
vesting period may be increased or decreased at the Committee's discretion.
After three years, it is at the Committee's discretion to award additional
grants based upon future contribution. Decisions made by the Committee
regarding the timing and size of other option grants take into consideration
Company and individual performance, competitive market practices, and the size
and term of option grants made in prior years. The Committee does not consider
current option holdings when granting additional options.
The Company's Stock Option Plans have been amended and approved
by the Stockholders so stock options that have been awarded can qualify for
exclusion under Section 162(m) of the Internal Revenue Code of 1986 as
performance-based compensation.
Dated April 3, 1996,
/s/ Michael R. Giordano
Michael R. Giordano
/s/ Michael A. Rosenberg
Michael A. Rosenberg
Compensation Committee of the Board of Directors
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No person who served as a member of the Company's Compensation
Committee during the 1995 fiscal year has ever been an officer or employee of
the Company or any of its subsidiaries.
David Lin, the President, Chief Executive Officer and Director
of the Company, during fiscal year 1995, was President and a director of
Silitek. Silitek's entire Board of Directors participated in compensation
decisions for Silitek in the absence of its Compensation Committee during
fiscal year 1995.
Silitek controls LPSC, its subsidiary. LPSC is the record
owner of 40.2% of the Company's issued and outstanding Common Stock, excluding
Treasury Stock, and as of April 30, 1996, continues to be the record owner of
40.2% of all of the Company's issued and outstanding securities, excluding
Treasury Stock. Thus, since LPSC is a controlled subsidiary of Silitek,
Silitek is the beneficial owner of 40.2% of the Company's outstanding voting
securities. However, although Silitek could be considered the ultimate
beneficial owner of all of the Company's securities held of record by LPSC,
Silitek has disclaimed beneficial ownership of the 1,995,093 shares of Common
Stock held by LPSC. See "Security Ownership of Certain Beneficial Owners and
Management" and "Certain Relationships and Related Transactions" for a
discussion of the relationship between Silitek, LPSC and the Company.
During the years ended December 31, 1995 and 1994,
approximately 16% and 18%, respectively, of the purchases of products for
resale by the Company, amounting to approximately $6,512,000 and $5,048,000,
respectively, were from LPSC. These products, which were also available
generally from other sources, were purchased in transactions
13
<PAGE> 17
negotiated at prices competitive with prices charged by other vendors of
similar products in similar quantities. There are no special or exclusive
trading agreements or understandings between the Company and LPSC, other than
the Company's marketing agreement with LPSC.
PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly
percentage change in the cumulative total stockholder return of the Company's
Common Stock against the cumulative total return of the American Stock Exchange
Market Index ("AMEX Market Index") and a Company-constructed electronics
manufacturing and distribution peer group for the five fiscal years ending
December 31, 1995. The graph is not necessarily indicative of future price
performance.
The graph shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act or under the Exchange Act, except to the extent
that the Company specifically incorporates this information by reference, and
shall not otherwise be deemed filed under such Acts.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG DIODES INCORPORATED, AMEX MARKET INDEX AND PEER GROUP INDEX (1)
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C>
Diodes Incorporated $ 100 $ 88.89 $122.22 $477.78 $444.44 $ 933.33
AMEX Market Index 100 123.17 124.86 148.34 131.04 168.90
Peer Group Index (Weighted Average) 100 164.22 319.06 465.57 556.24 1,124.09
</TABLE>
(1) Assumes $100 invested on December 31, 1990 in the Common Stock of
Diodes Incorporated, the stock of the companies in the AMEX Market
Index, and in the stocks of the peer group companies, and that all
dividends received within a quarter, if any, were reinvested in that
quarter. The peer group companies consist of Microsemi Corporation,
Nu-Horizons Electronics Corporation, Siliconix, Inc., Semtech
Corporation, Sterling Electronics Corporation, Unitrode Corporation,
and Western Microtechnology, Inc.
14
<PAGE> 18
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
LPSC is the record owner of 40.2% of the Company's issued and
outstanding Common Stock, excluding treasury stock, at December 31, 1995, and
as of April 30, 1996, continues to be the record owner of 40.2% of all of the
Company's issued and outstanding securities, excluding treasury stock. Thus,
since LPSC is a controlled subsidiary of Silitek, Silitek is the beneficial
owner of 40.2% of the Company's outstanding voting securities. However,
although Silitek could be considered the ultimate beneficial owner of all of
the Company's securities held of record by LPSC, Silitek has disclaimed
beneficial ownership of the 1,995,093 shares of Common Stock. See "Security
Ownership of Certain Beneficial Owners and Management" and "Certain
Relationships and Related Transactions" for a discussion of the relationship
between Silitek, LPSC and the Company.
During the years ended December 31, 1995 and 1994,
approximately 16% and 18%, respectively, of the purchases of products for
resale by the Company, amounting to approximately $6,512,000 and $5,048,000,
respectively, were from LPSC. These products, which were also available
generally from other sources, were purchased in transactions negotiated at
prices competitive with prices charged by other vendors of similar products in
similar quantities. There are no special or exclusive trading agreements or
understandings between the Company and LPSC.
Silitek is affiliated through common ownership and control
with Taiwan Liton, and both companies are members of the Lite-On Group of
companies in Taiwan. Both Silitek and Taiwan Liton are public corporations in
Taiwan with stock registered on the Taipei Stock Exchange. Taiwan Liton owns
100% of the voting shares of Lite-On Milpitas.
In February 1996, the Company announced an agreement with
FabTech, Inc. whereby Diodes will gain a new supply of processed wafers used in
the manufacture of several types of discrete semiconductors. The Company will
provide FabTech with approximately $2.5 million in working capital to be used
in upgrading, reconfiguring, and starting up operations at an existing wafer
fabrication facility located in the AT&T building in Lee's Summit, Missouri.
FabTech is a newly-created subsidiary of LPSC.
In March 1996, the Company entered into a joint venture with
Shanghai Kai Hong Electronics Co., Ltd. ("Kai Hong") for the development of
additional manufacturing capacity in Shanghai. The Kai Hong joint venture,
originally signed as a compensation trade agreement in June 1995, allows for
the manufacturing and sales of diodes and associated electronic components.
The Company will have a 70% controlling interest, will be responsible for
production and management, and will receive 100% of the production, mainly in
SOT-23 packaged components. The venture parties have agreed to make
significant equity contribution to the joint venture and anticipate that a
portion of the cost of developing the project will be debt financed. The
capital contribution will be made in several phases over 3 years. The project
will be implemented in phases according to market demand.
Raymond Soong, who became a director and Chairman of the Board
of the Company effective March 16, 1993, is also the Chairman of the Board of
Silitek, LPSC, Taiwan Liton, and the newly formed Kai Hong joint venture.
David Lin, who has been a director of the Company since 1991
and effective March 16, 1993 became President and Chief Executive Officer of
the Company, is also the President and a director of Silitek and his salary is
fully paid by Silitek. See "Executive Compensation." Mr. Lin is also a
director of the newly formed Kai Hong joint venture.
During 1995, Mr. Michael R. Giordano, a member of the
Company's Board of Directors and Senior Vice President-Investments at the
investment banking firm of PaineWebber, Inc., assisted members of the Board of
Directors and Executive Officers of the Company in stock option exercises and
subsequent stock sales of the Company's Common Stock. Mr. Giordano also
assisted LPSC in stock transactions. Compensation received by Mr. Giordano for
services rendered to the Company and LPSC was approximately $17,000 in fiscal
1995.
Mr. M.K. Lu, who has been a director of the Company since
1995, is also the President and a director of LPSC since 1991. From 1983 to
1990, Mr. Lu was General Manager/Vice President of Silitek. Mr. Lu is also a
director of the newly formed Kai Hong joint venture.
Dr. Shing Mao, who is a director of the Company, is Chairman
of the Board of Lite-On Milpitas. Dr. Mao is also a director of LPSC, and
since 1995, has also been a director of FabTech.
15
<PAGE> 19
Mr. Pedro Morillas, Executive Vice President of the Company is
also a director of the newly formed Kai Hong joint venture.
Mr. Joseph Liu, Vice President, Operations, Chief Financial
Officer and Secretary of the Company, is also a director of the newly formed
Kai Hong joint venture.
PROPOSALS OF STOCKHOLDERS
Under certain circumstances, Stockholders are entitled to
present proposals at Stockholder meetings. Any such proposal to be included in
the Proxy Statement for the Company's 1997 Annual Meeting of Stockholders must
be submitted by a Stockholder prior to January 15, 1997, in a form that
complies with applicable regulations.
ANNUAL REPORT AND FORM 10-K
The Company's Annual Report of the fiscal year ended December
31, 1995 accompanies this Proxy Statement. The Annual Report contains
consolidated financial statements of the Company and its subsidiaries and the
report thereon of Moss Adams LLP, the Company's independent auditors for the
fiscal years ended December 31, 1995, 1994 and 1993.
STOCKHOLDERS MAY OBTAIN WITHOUT CHARGE, A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K, INCLUDING FINANCIAL STATEMENTS REQUIRED
TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO THE
EXCHANGE ACT, FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995, BY WRITING TO THE
COMPANY; ATTN: JOSEPH LIU, 3050 EAST HILLCREST DRIVE, WESTLAKE VILLAGE,
CALIFORNIA 91362.
OTHER MATTERS
Management knows of no business which will be presented for
consideration at the Meeting other than as stated in the Notice of Meeting.
If, however, other matters are properly brought before the Meeting, it is the
intention of the Proxyholders to vote the shares represented thereby on such
matters in accordance with the recommendation of the Board of Directors and
authority to do so is included in the Proxy.
Dated at Westlake Village, California, this 3rd day of May,
1996,
By Order of the Board of Directors,
/s/ Joseph Liu
Joseph Liu,
Secretary
16
<PAGE> 20
REVOCABLE PROXY REVOCABLE PROXY
DIODES INCORPORATED
ANNUAL MEETING OF STOCKHOLDERS - JUNE 14, 1996
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned stockholder(s) of Diodes Incorporated (the "Company")
hereby nominates, constitutes and appoints David Lin and Joseph Liu, and each
of them, the attorney, agent and proxy of the undersigned, with full power of
substitution, to vote all stock of the Company which the undersigned is
entitled to vote at the Annual Meeting of Stockholders of the Company (the
"Meeting") to be held at The Radisson Hotel, 30100 Agoura Road, Agoura Hills,
California 91301, on Friday, June 14, 1996 at 10:00 a.m., and any adjournments
thereof, as fully and with the same force and effect as the undersigned might
or could do if personally thereat, as follows:
1. ELECTION OF DIRECTORS
FOR all Company nominees listed below WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees
listed below
Discretionary Authority to cumulate votes is granted
Nominees: Michael R. Giordano; David Lin; M.K. Lu: Shing Mao; Michael A.
Rosenberg; Leonard M. Silverman and Raymond Soong.
(Instructions: To withhold authority to vote for any one or more nominees,
write that nominee's or nominees' name(s) in the space provided below)
________________________________________________________________________________
Please Sign And Date On Reverse Side
<PAGE> 21
REVOCABLE PROXY REVOCABLE PROXY
THE BOARD OF DIRECTORS RECOMMENDS A VOTE OF "FOR" THE ELECTION OF EACH
OF THE NOMINEES LISTED ABOVE. ALL PROPOSALS TO BE ACTED UPON ARE PROPOSALS OF
THE COMPANY. IF ANY OTHER BUSINESS IS PRESENTED AT THE MEETING, THIS PROXY
SHALL BE VOTED BY THE PROXYHOLDERS IN ACCORDANCE WITH THE RECOMMENDATIONS OF A
MAJORITY OF THE BOARD OF DIRECTORS.
The undersigned hereby ratifies and confirms all that said attorneys
and proxyholders, or either of them, or their substitutes, shall lawfully do or
cause to be done by virtue hereof, and hereby revokes any and all proxies
heretofore given by the undersigned to vote at the Meeting. The undersigned
hereby acknowledges receipt of the Notice of Annual Meeting and the Proxy
Statement accompanying said notice.
Date:
---------------------
------------------------------
(Number of Shares)
------------------------------
(Name of Stockholder, Printed)
------------------------------
(Signature of Stockholder)
------------------------------
(Name of Stockholder, Printed)
------------------------------
(Signature of Stockholder)
(Please date this Proxy and sign your name
as it appears on your stock certificate(s).
Executors, administrators, trustees, etc.,
should give their full titles. All joint
owners should sign.)
I (We) do do not expect to attend the Meeting.
This Proxy will be voted "FOR" the election of all nominees unless
authority to do so is withheld for all nominees or for any individual nominees.
PLEASE SIGN, DATE AND RETURN THIS PROXY AS PROMPTLY AS POSSIBLE IN THE POSTAGE
PREPAID ENVELOPE PROVIDED.
