<PAGE>
================================================================================
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 Section 240.14a-11(c) or Section 240.14a-12
MICROSEMI CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(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:
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Notes:
<PAGE>
MICROSEMI CORPORATION
___________________________
NOTICE OF ANNUAL MEETING ON FEBRUARY 24, 1998
AND PROXY STATEMENT
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
PROXY STATEMENT.............................................................. 1
GENERAL INFORMATION.......................................................... 1
ANNUAL REPORT................................................................ 2
OUTSTANDING VOTING SECURITIES................................................ 2
VOTING PROCEDURES............................................................ 2
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT............... 3
ELECTION OF DIRECTORS........................................................ 6
DIRECTORS.................................................................... 6
EXECUTIVE OFFICERS........................................................... 7
INFORMATION REGARDING THE BOARD OF DIRECTORS AND ITS COMMITTEES.............. 8
EXECUTIVE COMPENSATION....................................................... 9
SUMMARY COMPENSATION TABLE................................................... 9
OPTION GRANTS IN LAST FISCAL YEAR............................................ 10
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES...................................................................... 10
EXECUTIVE COMPENSATION AGREEMENTS............................................ 11
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS............................... 13
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE...................... 13
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION.................. 14
COMPENSATION COMMITTEE REPORT FOR FISCAL YEAR 1997 OF MICROSEMI CORPORATION.. 14
THE COMPENSATION COMMITTEE................................................... 16
PERFORMANCE GRAPH............................................................ 17
STOCKHOLDER PROPOSALS........................................................ 18
INDEPENDENT ACCOUNTANTS...................................................... 18
OTHER MATTERS................................................................ 18
</TABLE>
<PAGE>
MICROSEMI CORPORATION
P.O. Box 26890
Santa Ana, California 92799-6890
_______________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on February 24, 1998
_______________________
TO THE STOCKHOLDERS OF MICROSEMI CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of MICROSEMI
CORPORATION (the "Company") will be held at the offices of the Company, 2830
South Fairview Street, Santa Ana, California 92704, on Tuesday, February 24,
1998 at 10:00 a.m., Pacific Standard Time, for the following purposes:
1. To elect five (5) directors, each for the term of one (1) year or
until his successor shall have been duly elected and qualified
(Proposal 1); and
2. To transact such other business as may properly come before the
meeting or any adjournments or postponements thereof.
Only stockholders of record at the close of business on January 12, 1998
are entitled to notice of and to vote at the meeting or any adjournments or
postponements thereof.
By Order of the Board of Directors,
Santa Ana, California /s/ DAVID R. SONKSEN
January 24, 1998 --------------------
David R. Sonksen
Secretary
<PAGE>
IT IS IMPORTANT THAT ALL STOCKHOLDERS BE REPRESENTED AT THE ANNUAL MEETING.
STOCKHOLDERS, WHETHER THEY EXPECT TO ATTEND THE MEETING IN PERSON OR NOT, ARE
REQUESTED TO MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY. PROXIES ARE
REVOCABLE AT ANY TIME PRIOR TO BEING VOTED AT THE ANNUAL MEETING, AND
STOCKHOLDERS OF RECORD WHO ARE PRESENT AT THE MEETING MAY WITHDRAW THEIR PROXIES
AND VOTE IN PERSON IF THEY SO DESIRE.
Additional copies of proxy materials should be requested in writing, addressed
to:
Microsemi Corporation, P.O. Box 26890, Santa Ana, California 92799-6890,
Attention: David R. Sonksen, Secretary.
<PAGE>
MICROSEMI CORPORATION
P. O. Box 26890
Santa Ana, California 92799-6890
_______________________
PROXY STATEMENT
GENERAL INFORMATION
The accompanying Proxy is solicited by the Board of Directors and
Management of Microsemi Corporation (the "Company") to be used at the Annual
Meeting of Stockholders to be held on Tuesday, February 24, 1998, at 10:00 a.m.,
Pacific Standard Time, at the offices of the Company, 2830 South Fairview
Street, Santa Ana, California 92704, and at any adjournments or postponements
thereof (the "Meeting"). Shares represented by a valid Proxy in the enclosed
form ("Proxy") will be voted as specified if executed and received in time for
the Meeting. If a choice is not specified in the Proxy, the Proxy will be voted
FOR the election of all of the director nominees listed.
A stockholder who executes and returns the accompanying Proxy may revoke it
at any time prior to its being voted by signing another Proxy bearing a later
date, or by signing a written notice of revocation and, in either case,
delivering the proxy or notice to the Secretary of the Company by mail prior to
the Meeting or in person at the Meeting. Execution of the Proxy will not in any
way affect a stockholder's privilege to attend the Meeting and to vote in
person, provided that the stock is held of record in the stockholder's name.
The costs of Proxy solicitation will be paid by the Company. It is
contemplated that Proxies will be solicited principally through the use of the
mails. The Company will reimburse banks, brokerage houses, and other custodians,
nominees or fiduciaries for their reasonable expenses in forwarding proxy
material to the beneficial owners of the shares held by them. Proxies may be
solicited by directors, officers or other regular employees of the Company in
person or by telephone or facsimile as part of their regular duties and without
special payment therefor, except reimbursement of incidental costs.
This Notice of Annual Meeting, Proxy Statement and Proxy are first being
mailed to stockholders on or about January 24, 1998.
1
<PAGE>
ANNUAL REPORT
-------------
The Annual Report to Stockholders for the fiscal year ended September 28,
1997, including the audited financial statements, accompanies this Proxy
Statement. Such report is not to be regarded as proxy soliciting material and
is not incorporated into this Proxy Statement. THE ANNUAL REPORT TO
STOCKHOLDERS AND THE FORM 10-K, INCLUDING ANNUAL FINANCIAL STATEMENTS, CAN BE
OBTAINED BY ANY STOCKHOLDER ENTITLED TO VOTE AT THE MEETING UPON WRITTEN
REQUEST. SEND REQUESTS TO MICROSEMI CORPORATION, P.O. BOX 26890, SANTA ANA,
CALIFORNIA 92799-6890, ATTENTION: DAVID R. SONKSEN, SECRETARY.
OUTSTANDING VOTING SECURITIES
-----------------------------
The Company's Common Stock, $.20 par value per share ("Common Stock"),
constitutes the only class of outstanding securities of the Company entitled to
notice of and to vote at the Meeting, including any adjournments or
postponements thereof. On January 12, 1998 ("Record Date") the Company had
issued and outstanding 9,214,676 shares of Common Stock (exclusive of shares
held in the treasury). Only holders of record of the Common Stock at the close
of business on the Record Date will be entitled to vote at the Meeting,
including any adjournments or postponements thereof. Each such holder of record
is entitled, for all purposes, to one vote for each share so held on each matter
submitted to a vote of stockholders.
VOTING PROCEDURES
-----------------
A quorum sufficient for the conduct of business at the Meeting will consist
of a majority of the outstanding shares of Common Stock at the close of business
on the Record Date.
Proxies marked as abstentions and proxies for shares held in street name
designated by brokers as not voted will be treated as shares present for
purposes of determining the presence of a quorum at the Meeting.
Proposal 1, the election of directors, will be determined by a plurality
vote, i.e., the stockholders elect those individuals up to the number of
individuals to be elected receiving a number of votes greater than the number of
votes for any other nominees who are not elected and receive votes.
2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------
The following table sets forth as of December 1, 1997, information
concerning ownership of the Company's Common Stock by each director or executive
officer, all officers and directors as a group, and each person known by the
Company to own beneficially more than 5% of its outstanding Common Stock.
<TABLE>
<CAPTION>
Name of Beneficial Owner
(and Address of Each 5%
Beneficial Owner)or Amount and Nature of Percentage
Number of Persons in Group Beneficial Ownership of Class
- -------------------------- -------------------- ----------
<S> <C> <C>
Norman J. Wechsler
105 South Bedford Road, Suite 310
Mount Kisco, NY 10549 1,827,700(2) 18.0%
Philip Frey, Jr.
P. O. Box 26890
Santa Ana, CA 92799-6890 945,538(3) 10.1%
FMR Corp.
82 Devonshire Street
Boston, MA 02109 915,800(1)(4) 10.0%
Rockefeller & Co., Inc.
30 Rockefeller Plaza
New York, NY 10112 607,850(1) 5.5%
Froley Revy Investment Company, Inc.
10900 Wilshire Blvd., Suite 1050
Los Angeles, CA 90024 686,724(5) 7.0%
Dimensional Fund Advisors, Inc.
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401 467,134(1)(15) 5.1%
Joseph M. Scheer 14,000(6) *
Martin H. Jurick 10,000(7) *
Brad Davidson 21,000(8) *
Robert B. Phinizy 11,000(9) *
David R. Sonksen 48,289(10) *
Harold R. McKeighan 41,750(11) *
Andy T. S. Yuen 46,100(12) *
James M. Thomas 31,340(16) *
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Name of Beneficial Owner
(and Address of Each 5%
Beneficial Owner) or Amount and Nature of Percentage
Number of Persons in Group Beneficial Ownership of Class
- -------------------------- -------------------- ----------
<S> <C> <C>
Eduardo R. Fernandez - *
Lane Jorgensen 29,913(13) *
All executive officers and
directors as a group (11) 1,198,930(14) 12.6%
*Indicates less than 1%
</TABLE>
(1) Based upon information in a Schedule 13D or Schedule 13G, or amendments
thereto, as filed with the Securities and Exchange Commission pursuant to
the Securities Exchange Act of 1934.
(2) Includes 980,590 shares issuable upon conversion of convertible debentures.
Includes 1,610,664 shares beneficially owned by Wechsler & Co., Inc. and
13,070 shares owned by others and over which there is shared voting and
dispositive power.
(3) Includes 70,775 shares under an option exercisable as of the date of this
information or within 60 days, 104,133 shares issuable upon conversion of
convertible debentures.
(4) Beneficial ownership of these shares consists of sole power to dispose or
direct the disposition of the shares. Includes 870,800 shares owned by
Fidelity Low-Priced Stock Fund.
(5) Includes 686,724 issuable upon conversion of convertible debentures.
(6) Includes 10,000 shares under options exercisable as of the date of this
information or within 60 days thereafter.
(7) Includes 10,000 shares under options exercisable as of the date of this
information or within 60 days thereafter.
(8) Includes 11,000 shares under options exercisable as of the date of this
information or within 60 days thereafter.
(9) Includes 11,000 shares under options exercisable as of the date of this
information or within 60 days thereafter.
(10) Includes 13,850 shares under options exercisable as of the date of this
information or within 60 days thereafter.
(11) Includes 18,350 shares under options exercisable as of the date of this
information or within 60 days thereafter and 100 shares held in an IRA
account.
4
<PAGE>
(12) Includes 38,350 shares under options exercisable as of the date of this
information or within 60 days thereafter.
(13) Includes 29,913 shares under options exercisable as of the date of this
information or within 60 days thereafter.
(14) Includes 217,101 shares under options exercisable as of the date of this
information or within 60 days thereafter.
(15) Includes 135,875 shares owned by DFA Investment Dimensions Group Inc. And
3,000 shares owned by DFA Investment Trust Company.
(16) Includes 27,477 shares owned by others and over which there is share voting
and dispositive power and 3,863 shares under option exercisable as of the
date of this information or within 60 days thereafter.
5
<PAGE>
ELECTION OF DIRECTORS
---------------------
(Proposal 1)
The Bylaws of the Company allow for a Board of Directors consisting of not
less than three (3) and up to thirteen (13) members as fixed by the Board from
time to time, and the Board has fixed the number of directors at five (5).
Accordingly, five (5) directors shall be elected at the Meeting, and the five
(5) nominees named below, are proposed by Management. The nominees proposed for
election as directors will serve for a term of one year or until their
successors are elected and qualified. All nominees have consented to be named
and have indicated their intent to serve if elected. While Management has no
reason to believe that any nominee will be unable to or will not serve as a
director, should any nominee become unable to serve or will not, for good cause,
so serve, the persons named in the enclosed Proxy will have authority to vote
for any substitute nominee designated by the Board of Directors.
The five (5) candidates in the election of directors receiving the highest
number of affirmative votes will be elected. Votes against a candidate or votes
withheld, including abstentions and broker non-votes, have no legal effect on
the election; however all such votes count as a part of the quorum. The names
and certain information concerning the persons to be nominated as Directors by
the Board of Directors at the Meeting are set forth below. Your Board of
Directors recommends that you vote for the election of each of the nominees
---
named below.
DIRECTORS
---------
<TABLE>
<CAPTION>
<C> <S> <C> <C>
Name Position With Company (in Addition to Director) Age Director
and Principal Occupation during Last Five Years Since
- ----------------------------------------------------------------------------------------------------
Philip Frey, Jr. Chairman of the Board since February 26, 1987; 70 1972
President and Chief Executive Officer since 1971
Brad Davidson President of Securities Pricing and Research, Inc. 42 1984
since 1986.
Robert B. Phinizy Private investor and consultant; Chairman, Chief 71 1992
Executive Officer and President of Genisco
Technology Corp., from 1972 to 1986; Captain,
United States Navy Retired; and currently Director
of Biosonics Corp.
Joseph M. Scheer Private investor and consultant; Director of 71 1994
Rawson-Koenig Inc., Houston, Texas since 1991;
Member Advisory Board Soligen Inc., Northridge,
California since 1994; Director of Laserform,
Inc., Auburn Hills, Michigan from 1989-1994.
Martin H. Jurick Senior Vice President of Corporate Planning and 60 1995
Director of Silicon Systems, Inc. since 1978;
Director of Level One Communications since 1991
</TABLE>
6
<PAGE>
EXECUTIVE OFFICERS
------------------
Officers are elected on an annual basis by the Board of Directors and serve
at the discretion of the Board. Information is provided under the heading
"Directors" for Mr. Philip Frey, Jr.
<TABLE>
<CAPTION>
Name Position with Company and Principal Occupation Age Officer
during Last Five Years Since
- -----------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
David R. Sonksen Vice President-Finance, Chief Financial Officer, 52 1986
Treasurer and Secretary since 1986
Harold R. McKeighan Vice President and General Manager of Microsemi 55 1985
Corporation-Scottsdale since 1985
Andy T.S. Yuen Vice President International Operations since 45 1989
1989
James M. Thomas Vice President Human Resources since 1989 60 1989
Eduardo R. Fernandez Vice President Marketing and Sales since 1997; 53 1997
formerly President Signal Processing
Technologies Inc. 1992 to 1995.
Lane Jorgensen Vice President and General Manager of Microsemi 56 1992
Corporation-Santa Ana since 1992
</TABLE>
7
<PAGE>
INFORMATION REGARDING THE BOARD OF
----------------------------------
DIRECTORS AND ITS COMMITTEES
----------------------------
During the 1997 fiscal year, the Board of Directors held a total of four
(4) regularly scheduled or special meetings.
The Audit Committee, consisting of directors Brad Davidson, Robert B.
Phinizy and Joseph M. Scheer, reviews matters relating to the Company's internal
and external audits. The Audit Committee held a total of two (2) meetings in
fiscal year 1997 to review the fiscal year 1996 financial statements and audit
and to review the plans for the fiscal year 1997 audit.
The Compensation Committee, consisting of directors Brad Davidson, Martin
H. Jurick and Robert B. Phinizy, considers and approves the grant of stock
options to and compensation for the Company's key employees. The Compensation
Committee held three (3) meetings in fiscal year 1997.
No standing committee of the Company has a function similar to the function
of a "Nominating Committee."
No director, during the period while serving as a Director or on any
committees, attended fewer than 75% of the aggregated number of meetings held in
fiscal year 1997 of the Board of Directors and of all relevant committees.
During fiscal year 1997, directors who were not also officers of the
Company each were paid a quarterly retainer fee of $2,650, plus fees of $1,060
for each Board of Directors meeting attended and for each committee meeting
attended committee members were paid the following:
<TABLE>
<S> <C> <C>
Compensation Committee Chairman $2,400
Member $1,200
Audit Committee Chairman $1,400
Member $ 700
</TABLE>
8
<PAGE>
EXECUTIVE COMPENSATION
----------------------
The following table sets forth, for the fiscal year ended September 28,
1997, compensation received by Messrs. Frey, Sonksen, McKeighan, Yuen and
Jorgensen. The notes to these tables provide additional specific information
regarding compensation.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
---------------------------------------- ---------------------------------
Long-Term
Restricted Incentive
Stock Plan All Other
Name and Fiscal Salary Bonus Other Award(s) Options Payouts Compensation
Principal Position Year ($) ($) ($) ($) (#) ($) ($)401(k)
- ---------------------------- ------- --------- ------- ----- --------- ------- --------- ------------
(2)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Philip Frey, Jr.
President, Chairman of 1997 323,841 264,000 (1) - 9,800 - 3,274
the Board, Director and 1996 310,000 194,434 (1) - 9,800 - 3,781
Chief Executive Officer 1995 285,969 206,864 (1) - 11,600 - 2,429
David R. Sonksen
Vice President-Finance, 1997 176,869 107,474 (1) - 6,100 - 5,084
Treasurer, Secretary 1996 169,770 79,860 (1) - 6,100 - 5,041
and Chief Financial 1995 158,000 83,426 (1) - 6,300 - 4,149
Officer
Harold R. McKeighan
Vice President, General 1997 160,424 96,169 (1) - 6,100 - 3,169
Manager-Microsemi 1996 156,415 62,748 (1) - 6,100 - 2,823
Scottsdale 1995 143,834 84,335 (1) - 6,300 - 2,854
Andy T.S. Yuen
Vice President 1997 134,430 81,795 (1) - 6,100 - 3,861
International Operations 1996 128,627 60,506 (1) - 6,100 - 3,499
1995 116,938 61,743 (1) - 6,300 - 2,771
Lane Jorgensen
Vice President, General 1997 128,574 80,034 (1) - 6,100 - 5,600
Manager-Microsemi 1996 114,130 68,352 (1) - 6,100 - 4,843
Santa Ana 1995 103,016 47,291 (1) - 6,300 - 3,172
</TABLE>
(1) The Company has concluded that the aggregate amount of perquisites and other
personal benefits paid in such period did not exceed the lesser of 10% of
such officer's total annual salary and bonus for each of 1997, 1996 and
1995, respectively, or $50,000. Such perquisites have not been included in
the table.
(2) Represents amounts contributed in 1997, 1996 and 1995 under the Company's
401(k) plan under which the Company matches, up to the annual federally
mandated maximum amounts, an employee's contributions of up to 3% of such
employee's annual salary.
9
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
<TABLE>
<CAPTION>
Potential Realizable
% of Total Value at Assumed
Options Annual Rates of Stock
Granted to Price Appreciation
Options Employees Exercise Grant Date For Option Term(1)
Granted in Fiscal Price Expiration Present -----------------------
Name (#) Year ($/Share) Date Value ($) 5%($) 10%($)
- ---------------------- ------- ---------- -------- ---------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Philip Frey, Jr. 9,800 7.0% $11.25 11/21/2006 $110,250 $69,336 $175,710
David R. Sonksen 6,100 4.4% $11.25 11/21/2006 $ 68,625 $43,158 $109,391
Harold R. McKeighan 6,100 4.4% $11.25 11/21/2006 $ 68,625 $43,158 $109,391
Andy T.S. Yuen 6,100 4.4% $11.25 11/21/2006 $ 68,625 $43,158 $109,391
Lane Jorgensen 6,100 4.4% $11.25 11/21/2006 $ 68,625 $43,158 $109,391
</TABLE>
(1) The Potential Realizable Value is calculated based on the fair market value
of the Common Stock on the date of grant, which is equal to the exercise
price of options granted in fiscal 1997, assuming that the stock appreciates
in value from the date of grant until the end of the option term at the
specified annual rates (5% and 10%). Potential Realizable Value is net of
the option exercise price. The assumed rates of appreciation are specified
in rules of the SEC, and do not represent the Company's estimate or
projection of future stock price. Actual gains, if any, resulting from
stock option exercises and Common Stock holdings are dependent on the future
performance of the Common Stock, overall stock market conditions, as well as
the option holders' continued employment through the exercise/vesting
period. There can be no assurance that the amounts reflected in this table
will be achieved.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION VALUES
---------------------------------------------------
<TABLE>
<CAPTION>
Shares Number of Unexercised Value of Unexercised
Acquired Value Options at Fiscal In-the-Money Options
on Exercise Realized Year End (#) at Fiscal Year End ($)
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ------------------- ----------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Philip Frey, Jr. 150,000 1,856,250 77,750 21,425 1,220,869 369,581
David R. Sonksen - - 13,850 12,650 238,913 218,213
Harold R. McKeighan - - 18,350 12,650 316,538 218,213
Andy T. S. Yuen - - 38,350 12,650 661,538 218,213
Lane Jorgensen - - 29,913 10,637 515,999 183,488
</TABLE>
10
<PAGE>
EXECUTIVE COMPENSATION AGREEMENTS
---------------------------------
In fiscal year 1993, the Company adopted a Supplemental Employee Retirement
Plan ("SERP"), in which the only participants are eight (8) then long-standing
employees, including Mr. Frey. The SERP agreements provide annual payments for
10 years following the participant's retirement (age 66 or later). The annual
payments range from 20% to 30% (30% for Mr. Frey) of the participant's final or
designated year's salary. It is not possible to state in advance the exact
amount of future commitments under the SERP. The amounts that would be due
annually, after retirement , to Mr. Frey would be estimated at $93,000.
The Company has entered into agreements with Messrs. Frey and Sonksen to
assure their unbiased counsel and continued dedication in the event of an
unsolicited tender offer or other occurrence that may result in a change of
control. Each agreement will continue in effect until two (2) years after
either part notifies the other of an intention to terminate the agreement. The
terms of the agreements provide that, in the event of a change of control, as
defined therein, and the termination of the executive's employment at any time
during the term of such agreement, the executive will be paid amounts equal to a
multiplier (the "Multiplier") times the sum of his annual salary rate in effect
prior to termination of employment and his highest annual bonus paid during the
prior 3-year period. The Multiplier is equal to the sum of three plus the
number of years of service of the executive, all divided by twelve; provided,
however, in the event of involuntary termination by the Company or termination
by the executive for "Good Reason", the Multiplier will in no event be less than
two (2). Presently Mr. Frey has 25 years of service and Mr. Sonksen has 11
years of service. Additionally: (i) all options that the executive has received
under any option plans will remain exercisable for one year; (ii) medical,
dental, vision and life insurance premiums will continue to be paid by the
Company for a number of years equal to the Multiplier; (iii) his automobile
allowance continues, subject to earlier termination if the executive becomes a
full time employee elsewhere, up to a number of years equal to the Multiplier;
and (iv) he will receive all other benefits then accrued under the Company's
compensation plans. Upon an involuntary termination or a termination for "Good
Reason" following a change of control, all of the executive's unvested stock
options, or similar equity incentives, vest and become exercisable. Also, to
the extent that payments to the executive pursuant to his agreement (together
with any other payments or benefits) would result in the triggering of the
provisions of Sections 280G and 4999 of the Internal Revenue Code ("Code"), the
agreement provides for the payment of an additional amount such that the
executive would receive, net of excise taxes, the amount he would have been
entitled to receive in the absence of the excise tax provided in Section 4999 of
the Code.
On August 26, 1997, Dr. George ("Jiri") Sandera entered into an agreement
with Microsemi that provides for Dr. Sandera to commence "retired employee"
status as of the close of business on September 30, 1997, making him eligible
for benefits under the SERP, under which he will receive an annual benefit of
$44,100 for ten years. On September 30, 1997, Dr. Sandera received all pay and
allowances due, a lump sum payment of $44,100, and his fiscal year 1997 bonus
will be pro-rated and paid according to the normal schedule in January and July
1998. Dr. Sandera also agreed to serve in the consulting capacity as "Special
Engineering and Research Advisor to the Chairman" for a period of two years. The
retainer for the first year will be $73,500, paid on a monthly basis, based upon
half normal time worked. The second year retainer and hours will be negotiated
subject to available work. Microsemi will also provide Dr. Sandera supplemental
Medical Insurance, secondary to Medicare payments, and coverage for his daughter
until she is eighteen. Microsemi also will continue to pay the premiums for a
$50,000 life insurance policy. In addition, the Board
11
<PAGE>
accelerated the vesting of all unexercisable options held by Dr. Sandera and
permitted all of his options to be exercisable within one (1) year of September
30, 1997.
12
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
No person who acted as a director or an executive officer of the Company
and no security holder known to the Company to own of record or beneficially
more than five percent of any class of the Company's voting securities, or any
members of their respective immediate families, is known to have any material
interest, direct or indirect, in any transaction or proposed transaction during
the fiscal year ended September 28, 1997 in which the amount involved exceeds
$60,000 and to which the Company or any subsidiary was or during the next fiscal
year is to be a party.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
-------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers, directors and persons who own beneficially more than ten
percent of a registered class of the Company's equity securities to file reports
of ownership and changes in ownership with the Securities and Exchange
Commission (the "SEC") and the Nasdaq Stock Market ("NASDAQ"). Executive
officers, directors and greater than ten-percent stockholders are required by
SEC regulation to furnish the Company with copies of all Section 16(a) forms
concurrently when they file them with the SEC and NASDAQ.
To the Company's knowledge based solely on its review of the copies of
Section 16(a) forms furnished to the Company and any written representations
that no Form 5 reports were required, none of the Company's officers, directors
or greater than ten-percent beneficial owners known to the Company failed to
file in a timely manner Section 16(a) reports during or with respect to fiscal
1997, except as follows:
<TABLE>
<CAPTION>
Number of Reports
-----------------------------
Name Not Timely Filed Not Filed
------------------ ---------------- ---------
<S> <C> <C>
Philip Frey, Jr. 1 0
David R. Sonksen 1 0
Martin H. Jurick 1 0
Robert B. Phinizy 1 0
Joseph M. Scheer 1 0
</TABLE>
13
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
- -----------------------------------------------------------
No member of the Compensation Committee during the 1997 fiscal year was an
officer or employee of the Company or any of its subsidiaries; or was formerly
an officer of the Company or any of its subsidiaries.
COMPENSATION COMMITTEE REPORT FOR FISCAL YEAR 1997 OF
MICROSEMI CORPORATION
The compensation programs for executive management and certain other key
employees are reviewed each year by the Compensation Committee. The committee
considers the program's impact on each operating unit as well as the effect on
corporate growth, profit, market position and goals set for that year, as well
as for changes in corporate market focus and strategic goals for the next fiscal
year. The committee reviews with the management of the company the business
plans for the new fiscal year and compares them to the prior year. This review
defines the relative potential contribution for each operating unit and together
with discussions between corporate management and the managers of each unit,
establishes goals for revenue and profits for participating profit center
managers. The Compensation Committee then establishes the rewards to be
received by each key executive relative to their contributions to net earnings
from both their direct operating responsibility and the overall profits of the
corporation. The committee also decides which operating units will be included
in this measured program. Certain special profit centers are removed from the
measured plan where the strategic goal assignments are not properly measured
quantitatively. These smaller or special profit centers are placed into a
second award pool from which bonus payments are allocated based on the
achievement of the more subjective goals set by the corporate management. The
Compensation Committee reviews these yearly with the corporate management and
monitors the allocation process.
In addition, the operating unit key executives are responsible for meeting other
strategic goals mutually agreed to between that key executive and the CEO. The
goals typically are strategic opportunities and challenges available to the
company in a changing market with competitive environments. In every reward
review, the key executive is evaluated on: corporate earnings, divisional
earnings, and subjective analysis on the goals achieved or progress achieved.
Executive Compensation Philosophy
The primary thrust of the compensation programs in the company continue to
follow the belief that compensation must reflect the value created for the
stockholders - both immediate and long term and consequently, the compensation
programs reflect the following specific thesis:
. Rewards are tailored to fit the unique opportunities available to each
business unit as well as the contributions each business unit makes to the
corporate earnings and growth.
. The program utilizes short term achievement awards & long term incentives,
normally stock options granted each year. The stock option grants are
reviewed by the Compensation Committee, which manages the program. Grants
can be in either or both qualified and non-qualified stock options. The
executives with the potential to impact the future growth and profitability
of the company are granted new options each year. Options typically have a
5 year
14
<PAGE>
vesting schedule and provide for executives' incentives to increase the
value of the company over the long term.
. Salary reviews for the top executives are conducted each year. The
committee conducted a formal study with an outside consultant to guide the
company in setting salary levels. The Company has followed the consultant's
study results which yielded industry comparatives, for overall increase in
pay and benefits. Only minor adjustments were required.
The Executive Compensation components are:
. Base Salary: Salaries are set at levels approximating the fiftieth
-----------
percentile for similar marketplace orientations. This year the CEO and the
Compensation Committee reviewed each of the 14 highest paid executives and
set the following year's pay for these executives. Factors considered,
although subjectively and informally applied, are actual achievement, level
of market opportunity, management skill in achieving goals and
contributions to the overall corporate success. In fiscal 1997, the
increases for key executives based on these factors ranged from 3% to 15%
of base salary.
. The Cash Bonus Program: The Plan, as in prior years, provides cash awards
----------------------
to executives and has been the means of achieving superior corporate
results with slightly lower over-all executive compensation as compared to
similar business units. These programs are formalized and consistently
administered throughout the company. The bonus award can range from 0% to
80% of executive's annual salary. The bonus award components are based on
overall corporate profit performance, direct profit results controlled by
the executive and on subjective goals. For fiscal 1997, the goals that were
set for the company's executive officers were considered generally to have
been achieved, and executive bonuses were established that ranged from 5%
to 80% of base salary, with 80% of base salary being the maximum possible
bonus.
. Stock Options: Based on the current stock option plan as approved by the
-------------
stockholders, up to an additional 2% of the current outstanding shares of
common stock are available annually for award to new and existing
executives. Under this program key executives are allocated portions of
the total annual award based upon the executive's responsibility level and
other subjective measures. The company continues to believe that the
stockholders' value is being significantly enhanced by this stock option
program. Executives who are deemed to have the potential to impact the
future growth and profitability of the company are granted new options each
year, without regard to the number of options or shares that may already
have been issued to such executives.
Mr. Frey's Fiscal Year 1997 Compensation:
Mr. Frey's compensation for fiscal year 1997 consisted of a base salary, bonus,
stock options and amounts under certain employee benefit plans. Mr. Frey's base
salary is deemed to be competitive with companies of a similar size based on the
outside consultant survey. His annual bonus can range from 0% to 80% of his
annual salary based upon two factors, 80% of this amount is based upon the
overall financial performance of the Company and 20% upon his individual
performance as an executive officer. The long-term portion of Mr. Frey's
compensation is based primarily on stock options. The value of the stock option
award is designed to be consistent with competitive practices of similar sized
companies based on informal comparisons. In fiscal year 1997, Mr. Frey's salary
increased 6.5% over fiscal year 1996 levels. The cash bonus was established at
an amount that is approximately 80% of his salary compared with 63% in fiscal
year 1996. The salary increase was attributable to corporate performance
15
<PAGE>
improvements, including earnings increases in fiscal 1997, as well as various
subjective factors considered by the committee.
The compensation committee has reviewed the performance of the company and its
executives for 1997 and believes that the executive and company's superior
performances in fiscal 1997 speak well for the reward system administered by the
committee.
THE COMPENSATION COMMITTEE
Brad Davidson Marty Jurick Robert Phinizy
16
<PAGE>
PERFORMANCE GRAPH
-----------------
The following graph compares the five-year cumulative total return on the
Company's Common Stock to the total returns of 1) NASDAQ Stock Market and 2)
NASDAQ Stock - Electronic & Electrical Equipment & Components, excluding
Computer Equipment. This comparison assumes in each case that $100 was invested
on September 25, 1992 and all dividends were reinvested. The Company's fiscal
year ends on or about September 30 each year.
[GRAPH OF FIVE YEAR CUMULATIVE TOTAL RETURNS COMPARISON]
<TABLE>
<CAPTION>
09/25/92 10/01/93 09/30/94 09/29/95 09/27/96 09/26/97
<S> <C> <C> <C> <C> <C> <C>
MICROSEMI 100.0 250.0 180.0 470.6 392.5 690.0
NASDAQ STOCK MARKET 100.0 132.3 133.4 184.3 219.4 299.6
NASDAQ ELECTRONIC COMPONENTS STOCKS 100.0 200.1 191.5 381.8 459.3 802.4
</TABLE>
17
<PAGE>
STOCKHOLDER PROPOSALS
---------------------
Stockholder proposals intended to be considered at the 1999 Annual Meeting
of Stockholders must be received by the Company no later than September 25,
1998. Such proposals may be included in next year's Proxy Statement if they
comply with certain rules and regulations promulgated by the SEC.
INDEPENDENT ACCOUNTANTS
-----------------------
Price Waterhouse, independent accountants for the Company for the fiscal
year ended September 28, 1997, has been selected by the Board of Directors to
serve in the same capacity for the current fiscal year.
A representative of Price Waterhouse is expected to be present at the
Meeting with the opportunity to make a statement if he or she so desires and to
be available to respond to appropriate questions.
OTHER MATTERS
-------------
The Board of Directors is not aware of any matter which will be presented
for action at the Meeting other than the matters set forth herein; but should
any other matter requiring a vote of the stockholders arise, it is intended that
the enclosed Proxy include discretionary authority to vote on such other matters
in accordance with the interests of the Company, in the best judgment of the
person or persons voting the Proxies. In addition, the enclosed Proxy is
intended to include discretionary authority to postpone or adjourn the meeting,
to vote for any person's election to a position for which a bona fide nominee is
named herein if such nominee named herein is unable to serve or for good cause
will not serve, approval of minutes of the prior meeting without ratifying the
actions taken at such meeting and any matters incident to the conduct of the
Meeting.
All stockholders are urged to complete, sign, date and promptly return the
enclosed Proxy.
By Order of the Board of Directors,
/s/ DAVID R. SONKSEN
Santa Ana, California
January 24, 1997 David R. Sonksen, Secretary
18
<PAGE>
PROXY SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF MICROSEMI CORPORATION
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 24, 1998
The undersigned shareholder of MICROSEMI CORPORATION hereby appoints Philip
Frey, Jr. and David R. Sonksen, or either of them, the attorneys and proxies,
with full power of substitution, to vote for the undersigned all shares of
Common Stock, par value $0.20 per share, of MICROSEMI CORPORATION, which the
undersigned would be entitled to vote if personally present at the Annual
Meeting of Stockholders to be held on February 24, 1998, at 10:00 A.M.,
(California time), and at any adjournments or postponements thereof, upon the
matters described in the accompanying Proxy Statement and upon any other
business that may properly come before the meeting or any adjournment thereof.
The undersigned acknowledges receipt of this proxy and a copy of the Notice of
Annual Meeting and Proxy Statement dated January 24, 1998. Said proxies are
directed to vote or to refrain from voting pursuant to the Proxy Statement as
checked on the reverse side hereon upon the following matters, and otherwise in
their discretion.
Please mark, sign, date and return this proxy card promptly.
1. ELECTION OF DIRECTORS
<TABLE>
<CAPTION>
<S> <C>
[_] FOR all nominees listed below [_] WITHHOLD AUTHORITY to vote
(except as indicated to the for all nominees listed below
contrary below)
</TABLE>
(INSTRUCTION: to withhold authority to vote for any individual nominee,
strike a line through that nominee's name in the list below.)
<TABLE>
<CAPTION>
<S> <C> <C>
Philip Frey, Jr. Joseph M. Scheer Robert B. Phinizy
Martin H. Jurick Brad Davidson
</TABLE>
2. In their discretion, upon such other matters as may properly come before the
meeting, this proxy when properly executed will be voted in the manner
directed herein by the undersigned stockholder.
IF NO DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR EACH OF THE
PROPOSALS.
____________________
SIGNATURE OF
STOCKHOLDER
Dated: _______, 199__
______________________
SIGNATURE OF
STOCKHOLDER
Dated: _______, 199__
IMPORTANT: Please date
this proxy and sign
exactly as your name or
names appear(s) on your
stock certificate. If
stock is held jointly,
signature should
include both names.
Executors,
administrators,
trustees, guardians and
others signing in a
representative capacity
please give their
titles. If a
corporation, please
sign in full corporate
name by president or
other authorized
officer. If a
partnership, please
sign in partnership
name by authorized
person.
