<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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
[X] Definitive Proxy Statement Rule 14a-6(e)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
KULICKE AND SOFFA INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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:/1/
_____________________________________________________________________
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:
_____________________________________________________________________
/1/ Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE>
[Kulicke and Soffa Industries, Inc. logo]
2101 Blair Mill Road, Willow Grove, PA 19090
---------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
February 11, 1997
---------------------------
The Annual Meeting of Shareholders of Kulicke and Soffa
Industries, Inc. (the "Company") will be held on Tuesday, February 11,
1997, at 4:30 p.m. at the offices of the Company, 2101 Blair Mill
Road, Willow Grove, Pennsylvania, for the following purposes:
1. Election of directors;
2. Ratification of the appointment of Price Waterhouse LLP as the
Company's independent accountants for the year ending
September 30, 1997; and
3. Transaction of such other business as may properly come before
the meeting.
The Board of Directors has fixed the close of business on
December 16, 1996, as the record date for the determination of holders
of Common Shares entitled to notice of and to vote at the meeting.
All shareholders are cordially invited to attend the meeting, but
whether or not you expect to attend the meeting in person, please sign
and date the enclosed proxy and return it promptly in order that your
stock may be voted. If you attend the meeting, you may revoke your
proxy and vote in person.
By Order of the Board of Directors
SUSAN WATERS
Secretary
January 2, 1997
<PAGE>
[Kulicke and Soffa Industries, Inc. logo]
2101 Blair Mill Road, Willow Grove, PA 19090
---------------
PROXY STATEMENT
---------------
January 2, 1997
The enclosed proxy is solicited by the Board of Directors of the Company.
The proxy is revocable at any time prior to its use by delivering a subsequently
executed proxy or written notice of revocation to the Secretary of the Company.
The Board of Directors has fixed the close of business on December 16,
1996, as the record date for determination of the shareholders entitled to vote
at the Annual Meeting. As of the record date, there were 19,462,099 Common
Shares outstanding. Each such share is entitled to one vote on all matters to
be presented to the meeting, except that cumulative voting is permitted in the
election of directors. See "ELECTION OF DIRECTORS." This proxy statement and
the enclosed proxy are being mailed on or about January 7, 1997. A copy of the
Company's 1996 Annual Report to Shareholders (which includes the Company's
Annual Report on Form 10-K) is also enclosed.
The only persons or groups of persons shown by the Company's latest records
or by Securities and Exchange Commission records to own beneficially more than
5% of the outstanding Common Shares of the Company are as follows:
Number of Percent of
Name and Address Shares Class
- ---------------- --------- ----------
Capital Guardian Trust 1,048,900 5.4%
15th Floor
11100 Santa Monica Boulevard
Los Angeles, CA 90025
<PAGE>
ELECTION OF DIRECTORS
The Board of Directors currently consists of eight directors, divided
into four classes of two directors each. The Board intends to cause Messrs.
Allison F. Page and C. William Zadel, the members of the class whose terms
expire at the 1997 Annual Meeting, to be nominated for re-election at the 1997
Annual Meeting to serve until the 2001 Annual Meeting and until their successors
have been duly elected and qualified. Each shareholder who so chooses may
cumulate votes in the election of directors (i.e. may multiply the number of
votes the shareholder is entitled to cast by the total number of directors to be
elected (i.e., two) and cast the whole number of votes for one candidate or
distribute them among some or all candidates). The proxy agents reserve the
right to vote the proxies cumulatively, if necessary, in order that one or both
of Messrs. Page and Zadel will be re-elected to the Board of Directors. If
either of the nominees should be unavailable at the time of the election, the
persons named in the proxy may vote the proxies for such other persons as they
may choose, unless the Board of Directors reduces the number of the directors to
be elected.
Assuming a quorum is present, the two nominees receiving the highest
number of votes cast at the annual meeting will be elected directors. For such
purposes, the withholding of authority to vote or the specific direction not to
cast a vote, such as a broker non-vote, will not constitute the casting of a
vote in the election of directors.
The following table provides certain information concerning (i)
Messrs. Page and Zadel, (ii) the persons whose terms as directors will continue
after the Annual Meeting, and (iii) the executive officers named in the Summary
Compensation Table herein, including their ages, principal occupations and, as
of December 1, 1996, beneficial shareholdings. To the best knowledge of the
Company, each of the persons listed below has sole voting and investment power
with respect to the beneficial shareholdings set forth, unless otherwise
indicated.
<TABLE>
<CAPTION>
Present Common Shares
Director Term Beneficially Owned
Name, Age and Occupation Since Expires On December 1, 1996
- ------------------------ -------- ------- -------------------
Number Percent
------ -------
<S> <C> <C> <C> <C>
James W. Bagley (57), 1993 1999 13,000/(1)/ /(2)/
Chairman of the Board and
Chief Executive Officer of
OnTrak Systems, Inc., a
developer and marketer of
semiconductor wafer processing
equipment, since June
1996, and formerly Vice
Chairman of the Board of
Directors of Applied
Materials, Inc., the largest
supplier of wafer fabrication
systems to the semi-conductor
industry. Director of Tencor
Instruments, a manufacturer of
wafer defect inspection and
metrology systems, and of
Teradyne, Inc., a manufacturer
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Present Common Shares
Director Term Beneficially Owned
Name, Age and Occupation Since Expires On December 1, 1996
- ------------------------ -------- ------- -------------------
Number Percent
------ -------
<S> <C> <C> <C> <C>
of semi-conductor equipment.
Formerly a Director of
Extraction Systems, Inc.,
manufacturer of carbon filters.
C. Scott Kulicke (47), 1975 1999 609,802/(3)/ 3.1
Chairman of the Board and Chief
Executive Officer of the Company.
Frederick W. Kulicke, Jr. (79), 1956 2000 5,000/(4)/ /(2)/
retired co-founder of the
Company; Co-Chairman of the
Board of Directors and senior
executive officer from 1951
until his retirement in 1979.
Father of C. Scott Kulicke.
John A. O'Steen (52), 1988 1998 13,000/(5)/ /(2)/
Chairman and Chief Executive
Officer of Cinmar, L.P., a mail
order catalog company since 1991;
a Director of International
Cornerstone Group, Inc., a mail
order catalog holding company since
1995; and a Director of Bill's Dollar
Stores, Inc., a chain of retail
convenience stores, since 1996.
Formerly, President, Chief
Executive Officer and a director of
Cincinnati Microwave, Inc.,
a manufacturer of electronic products.
Allison F. Page (73), 1962 1997 10,520/(6)/ /(2)/
retired partner in the Philadelphia
law firm of Pepper, Hamilton &
Scheetz.
MacDonell Roehm, Jr. (57), 1984 1998 12,000/(6)/ /(2)/
Chairman, President and Chief
Executive Officer of Bill's Dollar
Stores, Inc., a chain of retail
convenience stores, since 1994.
Formerly, Managing Director of
AEA Investors, Inc., a private
investment firm.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Present Common Shares
Director Term Beneficially Owned
Name, Age and Occupation Since Expires On December 1, 1996
- ------------------------ -------- ------- -------------------
Number Percent
------ -------
<S> <C> <C> <C> <C>
Larry D. Striplin, Jr. (67), 1995 2000 30,000 /(2)/
Chairman of the Board and Chief
Executive Officer of Nelson-Brantley
Glass Contractors, Inc., a glass
contractor, and Clearview Properties, a real
estate rental company. Chairman of Circle "S"
Industries, Inc. and AFW (as defined) prior
to their acquisition by the Company.
Director of Capstone Capital
Corporation, a real estate trust, and
MedPartners, Inc., a physician
practice management company.
Mr. Striplin was elected a director
of the Company by the Board on
December 12, 1995 and by the Share-
holders on February 13, 1996.
C. William Zadel (53), 1989 1997 10,000/(6)/ /(2)/
President and Chief Executive
Officer of Millipore Corporation, a
global manufacturer of filtration
and purification products and former
President and Chief Executive Officer
of Ciba-Corning Diagnostics Corp., a
manufacturer and distributor of
medical diagnostic products. Director
of Matritech, Inc., a developer and
manufacturer of cancer diagnostic
equipment and Zoll Medical Corporation,
which designs, manufactures and markets
a line of cardiac resuscitation
devices and electrodes.
Morton K. Perchick (59), -- -- 25,821/(7)/ /(2)/
Executive Vice President of the
Company.
Clifford G. Sprague (53), -- -- 29,994/(8)/ /(2)/
Senior Vice President and Chief
Financial Officer of the Company.
Walter E. Von Seggern (56), -- -- 18,290/(9)/ /(2)/
Vice President, Engineering
and Technology of the Company/(9)/.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Present Common Shares
Director Term Beneficially Owned
Name, Age and Occupation Since Expires On December 1, 1996
- ------------------------ -------- ------- -------------------
Number Percent
------ -------
<S> <C> <C> <C> <C>
Moshe Jacobi (54) -- -- 21,665/(10)/ /(2)/
Senior Vice President; President of
Packaging Materials Group
All directors and executive officers
as a group (13 persons) -- -- 812,894/(11)/ 4.1
</TABLE>
- ----------------------
(1) Includes 3,000 shares subject to options that are currently exercisable.
(2) Less than 1.0%.
(3) Includes 383,557 shares jointly held with Mr. Kulicke's wife and 131,260
shares subject to options that are currently exercisable.
(4) Consists of 5,000 shares subject to options that are currently exercisable.
(5) Consists of 8,000 shares jointly held with Mr. O'Steen's wife and 5,000
shares subject to options that are currently exercisable.
(6) Includes 10,000 shares subject to options that are currently exercisable.
(7) Includes 23,440 shares subject to options that are currently exercisable.
(8) Includes 6,400 shares jointly held with Mr. Sprague's wife and 22,654
shares subject to options that are currently exercisable.
(9) Subsequently elected Senior Vice President. Shareholdings include 14,960
shares subject to options that are currently exercisable.
(10) Includes 21,460 shares subject to options that are currently exercisable.
(11) Includes 269,494 shares subject to options that are currently exercisable
12,720 of which are held by Asuri Raghavan, Senior Vice President and
President Equipment Group. See also footnotes (1) and (3) through (10)
above.
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
In the absence of instructions to the contrary, proxies will be voted in
favor of ratification of the reappointment of Price Waterhouse LLP as
independent accountants of the Company for the fiscal year ending September 30,
1997. The election of independent accountants by the shareholders is not
required by law or by the Company's By-laws. Traditionally, the Company has
submitted this matter to the shareholders for ratification and believes that it
is good practice to continue to do so. A majority of the votes cast in favor of
the election of Price Waterhouse LLP is necessary to approve this matter. For
such purposes, the withholding of authority to vote or the specific direction
not to cast a vote, such as a broker non-vote, will not constitute the casting
of a vote in favor of the election. If a majority of the votes cast on this
matter are not cast in favor of the reappointment of Price Waterhouse LLP, the
Company will appoint other independent accountants as soon as is practical and
before the close of the 1997 fiscal year.
A representative of Price Waterhouse LLP is expected to be present at the
Annual Meeting to make a statement if desired and will be available to respond
to any appropriate questions.
5
<PAGE>
ADDITIONAL INFORMATION
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities and Exchange Act of 1934, as amended,
requires the Company's executive officers and directors and persons who own more
than ten percent of a registered class of the Company's equity securities
(collectively, the "reporting persons") to file reports of ownership and changes
in ownership with the Securities and Exchange Commission and to furnish the
Company with copies of these reports.
Based on the Company's review of the copies of these reports received
by it, and written representations, if any, received from reporting persons with
respect to the filing of reports on Forms 3, 4 and 5, the Company believes that
all filings required to be made by the reporting persons for fiscal 1996 were
made on a timely basis.
Summary Compensation Table
The following table sets forth information with respect to the
compensation received by the Chief Executive Officer and the four other most
highly compensated executive officers of the Company (together with the Chief
Executive Officer, the "named executive officers") for the fiscal year ended
September 30, 1996 ("Fiscal 1996"), as well as the compensation received by each
such individual for the Company's previous two fiscal years ("Fiscal 1995" and
"Fiscal 1994," respectively).
<TABLE>
<CAPTION>
Annual Long Term
Compensation Compensation
------------------------------ ------------
Awards
------ All
Other Securities Other
Annual Underlying Compen-
Name and Fiscal Salary Bonus Compen- Options sation
Principal Position Year ($) ($)/(1)/ sation($)/(2)/ (#) ($)/(3)/
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
C. Scott Kulicke 1996 $300,000 $ -0- $ 4,922 31,700 $ 16,472
Chairman of the Board and 1995 260,000 268,268 4,926 55,400 3,608
Chief Executive Officer 1994 240,000 50,000 3,277 10,000 3,571
Morton K. Perchick 1996 $210,623 $ 63,205 $ 5,883 15,000 $ 16,644
Executive Vice President 1995 189,750 119,808 4,371 30,600 1,386
1994 172,500 27,000 4,543 7,800 1,349
Clifford G. Sprague 1996 $179,550 $ 22,445 $ 4,816 11,200 $ 9,214
Senior Vice President and 1995 157,500 99,445 4,058 24,600 1,386
Chief Financial Officer 1994 150,000 25,000 3,807 6,600 1,349
Walter E. Von Seggern 1996 $161,500 $ 29,070 $ 4,215 9,600 $ 10,376
Vice President, Engineering 1995 150,000 54,912 4,218 15,000 1,386
and Technology 1994 140,000 14,500 4,630 5,400 830
Moshe O. Jacobi 1996 $184,275 $ 33,900 $41,469 11,000 $ 56,589
Senior Vice President, 1995 131,151 65,916 7,728 12,400 28,393
Packaging Materials Group 1994 114,317 33,816 7,521 3,600 25,126
</TABLE>
- ----------------------
(1) These amounts represent incentive payments to the named executive officers
as participants in the Company's Executive Incentive Compensation Plan
(with respect to the fiscal year indicated). See "Compensation Committee
Report on Executive Compensation" herein.
6
<PAGE>
(2) These amounts represent reimbursement for taxes paid by Messrs. Kulicke,
Perchick, Sprague and Von Seggern on Company-provided automobiles. The
amounts set forth for Mr. Jacobi for Fiscal 1994 and 1995 represent
reimbursement for taxes paid by Mr. Jacobi on Company-provided automobiles.
The amount set forth for Mr. Jacobi for Fiscal 1996 includes amounts for
reimbursement of taxes paid by Mr. Jacobi on Company-provided automobiles,
$11,977 for travel expenses for accompanying family members and $27,412 for
relocation benefits paid to Mr. Jacobi in connection with his move from
Israel to the United States.
(3) Amount indicated for Mr. Kulicke for Fiscal 1994, 1995 and 1996 includes
the Company's matching contribution to the 401(k) Incentive Savings Plan,
and $2,222 of forgiveness of interest and principal on a loan made by the
Company pursuant to a 1978 loan program which was established to permit
certain officers of the Company to purchase Common Shares. This column
also includes, for Fiscal 1994, 1995 and 1996, the Company's matching
contribution to the 401(k) Incentive Savings Plan with respect to Messrs.
Perchick, Sprague, and Von Seggern. With respect to Mr. Jacobi, this column
contains, for Fiscal 1994 and 1995, the Company's matching contribution to
an Israeli voluntary matched savings plan and its contribution to an
Israeli pension and severance insurance plan in which Mr. Jacobi
participates (see "Pension Plan Table" below), and, for Fiscal 1996, the
Company's matching contributions of $16,223 for the Israeli voluntary
matched savings plan and $6,554 for the Company's 401(k) Incentive Savings
Plan and its contribution of $33,812 to the Israeli pension and severance
insurance plan. Effective January 1, 1996, the Company enhanced the 401(k)
Incentive Savings Plan, including an increase in the Company's matching
contribution, to offset the freezing of benefits under the pension plan.
See "Pension Plan Table" below.
Stock Option Tables
The following tables set forth information with respect to stock option
grants by the Company to the named executive officers in Fiscal 1996, and the
number of unexercised options and the value of unexercised in-the-money options
at the Fiscal 1996 year-end, respectively. All share data have been adjusted to
reflect the two-for-one stock split of the Company's Common Shares in July 1995.
Option Grants in Fiscal 1996
<TABLE>
<CAPTION>
Individual Grants Potential Realizable Value
------------------------------------------ at Assumed Annual Rates of
% of Total Stock Price Appreciation for
Options Granted Exercise Option Term/(3)/
Options to Employees in Price Expiration ------------------------------
Name Granted/(1)/ Fiscal Year/(2)/ Per Share Date 5% 10%
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
C. Scott Kulicke 31,700 12.16% $33.00 10-19-05 $657,882 $1,667,210
Morton K. Perchick 15,000 5.75% $33.00 10-19-05 $311,300 $ 788,900
Clifford G. Sprague 11,200 4.30% $33.00 10-19-05 $232,437 $ 589,045
Walter E. Von Seggern 9,600 3.68% $33.00 10-19-05 $199,231 $ 504,896
Moshe O. Jacobi 11,000 4.22% $33.00 10-19-05 $228,286 $ 578,527
</TABLE>
- ----------------------------
(1) All options granted to named executive officers in Fiscal 1996 were granted
under the 1994 Employee Stock Option Plan and generally become exercisable
one year from the date of grant in installments of 25% per year.
(2) The Company granted options to employees to purchase a total of 260,700
shares during Fiscal 1996.
(3) These amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on assumed rates of stock appreciation of 5% and 10% compounded
annually from the date the respective options were granted to their
expiration date.
7
<PAGE>
Aggregated Option Exercises in Fiscal 1996 and 1996 Fiscal Year-End
Option Values
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Options at Fiscal In-the-Money Options
Year-End at Fiscal Year-End/(1)/
Shares ---------------------- ------------------------
Acquired on Exercis- Unexercis- Exercis- Unexercis-
Name Exercise Value Realized able able able able
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
C. Scott Kulicke....... -- -- 110,000 87,540 $707,729 $192,464
Morton K. Perchick..... -- -- 11,440 48,040 $ 51,679 $113,217
Clifford G. Sprague.... -- -- 13,054 38,120 $ 62,604 $ 92,355
Walter E. Von Seggern.. -- -- 6,520 29,720 $ 30,677 $ 81,230
Moshe O. Jacobi........ -- -- 15,380 24,920 $ 98,679 $ 48,170
</TABLE>
- ------------------------
(1) In-the-money options are those where the fair market value of the
underlying securities exceeds the exercise price of the option. The
closing price of the Company's Common Shares on September 30, 1996, the end
of its 1996 fiscal year, was $11.375 per share.
Pension Plan Table
The Company has maintained a tax-qualified defined benefit pension plan,
which covered U.S. employees who had reached age 21 and completed one year of
service. Retirement benefits are determined under a formula based on length of
service and average compensation in the three consecutive calendar years out of
the last ten producing the highest average (subject to certain Internal Revenue
Code limits). The following table shows the annual benefits under the Company's
qualified pension plan upon normal retirement at age 65 to persons in specified
salary classifications, assuming election of payment in the form of an annuity
for the employee's life. Amounts set forth in the table are subject to a
reduction allowing for social security benefits paid for by the Company.
Effective December 31, 1995, benefit accruals under the Company's pension plan
were frozen. As a consequence, employees' accrued benefits will not increase
after December 31, 1995 as a result of their subsequent service or compensation.
Annual Benefit Assuming Years of Service As Indicated
<TABLE>
<CAPTION>
Remuneration/(1)/ 10 Years 20 Years 30 Years 40 Years
- ----------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
$100,000......................... $15,198 $30,396 $45,594 $ 53,193
120,000......................... 18,627 37,253 55,880 65,193
150,000/(2)/.................... 23,770 47,539 71,309 83,193/(3)/
</TABLE>
- ----------------------
(1) Average annual cash compensation during the last three calendar years prior
to retirement, which includes amounts not included in the above Summary
Compensation Table, such as certain personal benefits.
(2) Represents the maximum annual compensation limit under which annual
benefits could be computed in Fiscal 1995.
(3) Represents the maximum annual benefit which may be paid.
8
<PAGE>
The estimated credited years of service under the pension plan for the
named executive officers were as follows: Mr. C. Scott Kulicke, 23 years; Mr.
Perchick, 16 years; Mr. Sprague, 7 years; and Mr. Von Seggern, 3 years.
Prior to 1996, Moshe Jacobi, a named executive officer of the Company, was
an officer of Micro-Swiss Ltd., one of the Company's Israeli subsidiaries.
Under Israeli law, Micro-Swiss is required to make severance payments to
dismissed employees. In order to fund this severance obligation, provide
pension benefits required by a general industry collective agreement regarding
comprehensive pensions, and provide death and disability benefits to its
employees, Micro-Swiss has obtained, over time, certain insurance plans offered
by Israeli insurance companies. Each of the plans provides severance, pension
and disability benefits for covered employees in consideration of the payment of
premiums based upon the employee's monthly salary. For pension benefits, Micro-
Swiss makes a matching payment of approximately 5% of the employee's monthly
salary; for severance benefits, Micro-Swiss makes a payment of approximately
8.3% of the employee's monthly salary; and for disability benefits, Micro-Swiss
makes a payment of approximately 2.5% of the employee's monthly salary. The
Company continued making these severance, pension and disability premium
payments on behalf of Mr. Jacobi during 1996. Upon retirement, participating
employees like Mr. Jacobi are entitled to the amount in their pension plan
account which they may elect to receive in a lump-sum payment or in the form of
an annuity.
Termination of Employment Agreements
The Company has Termination of Employment Agreements with its executive
officers which provide that in the event of certain changes in control, as
defined in the Agreements, the officer who is a party to such agreement and
whose employment terminates, other than voluntarily or for cause, within 18
months after such change in control, will be entitled to termination pay equal
to the lesser of a specified number of months' base salary or $10 less than the
amount which would subject the officer to excise tax with respect to such
payment under Section 4999 of the Internal Revenue Code or would make payment
thereof non-deductible by the Company under Section 280G of the Code. Such
agreements are all currently scheduled to expire on December 31, 1997 unless
extended. The named executive officers' Termination of Employment Agreements
provide for payment of the following number of months' base salary: Mr. C.
Scott Kulicke, 30 months; Mr. Perchick, 18 months; Mr. Sprague, 18 months; Mr.
Von Seggern, 18 months; and Mr. Jacobi, 18 months.
In addition to the payments described above, Mr. Jacobi is entitled to
receive certain severance payments under the private insurance company plan
described under the heading "Pension Plan Table" above.
Board Matters
The Company has standing Audit and Compensation Committees. There is no
standing nominating committee.
The Audit Committee, comprised of Messrs. MacDonell Roehm, Jr., Chairman,
Frederick W. Kulicke, Jr. and Allison F. Page, met twice during Fiscal 1996.
The principal duties of the Audit
9
<PAGE>
Committee are to recommend independent public accountants for appointment by the
Company; review with the independent accountants the planned scope and results
of the annual audit and their reports and recommendations; and review with the
independent accountants matters relating to the Company's system of internal
controls.
The Compensation Committee, comprised of Messrs. John A. O'Steen, Chairman,
James W. Bagley and C. William Zadel, met twice during Fiscal 1996. The
principal duties of the Compensation Committee are to approve compensation
arrangements for the executive officers and senior managers of the Company and
to administer the Company's stock option plans.
In Fiscal 1996, the Board of Directors met eight times. Five of such
meetings were regular meetings and three of such meetings were special meetings.
Directors who are not officers of the Company receive a quarterly retainer of
$3,000, plus $2,000 for each regular meeting of the Board attended and $1,000
for each special meeting of the Board attended. Committee Chairmen also are
paid an annual retainer of $2,000, and committee members are paid $1,000 for
each committee meeting not held on the date of a Board meeting. All of the
incumbent directors attended at least 75% of the Board and applicable committee
meetings in Fiscal 1996.
Each member of the Board who is not also an officer or employee of the
Company is eligible to participate in the Company's 1988 Non-Qualified Stock
Option Plan for Non-Officer Directors (the "Director Plan"). Pursuant to the
Director Plan, options to purchase 5,000 Common Shares are automatically granted
to each eligible director on the last day of each February on which the
Company's shares are publicly traded in each of the years 1990 through 1998 at
an exercise price equal to 100% of the fair market value of the Company's Common
Shares on the date of grant. Options granted under the Director Plan become
exercisable in 20% annual increments commencing on the first anniversary of the
date they are granted.
See also "Certain Relationships and Related Transactions" below.
Certain Relationships and Related Transactions
On October 2, 1995, the Company acquired American Fine Wire Corporation
("AFW") through the merger of a subsidiary of the Company into Circle "S"
Industries, Inc., the parent corporation of AFW ("Circle S"). AFW is a
manufacturer of fine gold and aluminum wire for use in the wire bonding process
and has facilities in Selma, Alabama, Singapore and Zurich, Switzerland.
The purchase price for the AFW acquisition, including transaction costs,
totaled $54.7 million. Of the $54.7 million paid, in accordance with the terms
of the acquisition agreements, approximately $34.4 million was paid by delivery
of notes to the stockholders of Circle S (the "AFW Notes"). Larry D. Striplin,
Jr., a director of the Company and former director of Circle S, and various
members of his family and related trusts owned slightly more than a majority of
the outstanding Common Shares of Circle S. The AFW Notes bore interest at the
rate of 6.4375% per year, less costs (1% per year) of the letters of credit
securing the AFW Notes, and matured and were repaid on January 5, 1996.
The AFW acquisition agreements provide for the indemnification of the
Company by certain former stockholders of Circle S (including Mr. Striplin)
against breaches of or inaccuracies in various representations and warranties
and covenants of Circle S in the acquisition agreements and against certain
types of possible liabilities.
10
<PAGE>
In connection with the AFW acquisition, the Company's Board agreed to
elect, and on December 12, 1995 did elect, Larry D. Striplin, Jr. as a director
of the Company. Mr. Striplin subsequently was reelected a director of the
Company at its 1996 Annual Meeting of Shareholders for a four-year term.
Pursuant to the AFW acquisition, the Company also assumed a 1990 employment and
non-competition agreement between Circle S and Mr. Striplin providing for
payments to him or his estate of $200,000 per year for five years following the
date of the AFW acquisition. Mr. Striplin's employment by Circle S and AFW
terminated at the time of such acquisition.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Company's Board of Directors, comprised
entirely of outside directors, is responsible for approving compensation
arrangements for the officers and senior managers of the Company.
The Compensation Committee seeks to achieve the following goals with the
Company's executive compensation programs: to attract and retain key
executives; to motivate and reward executives for the attainment of corporate
and individual performance objectives; and to provide executives with an
opportunity to acquire an equity interest in the Company. The Compensation
Committee seeks to foster a performance-oriented environment by tying a
significant portion of each executive's cash compensation to the achievement of
objectives that are important to the Company.
The Company's Executive Incentive Compensation Plan is currently comprised
of three components: base salary; cash incentive; and equity incentive in the
form of stock options.
Target Total Cash Compensation
Target total cash compensation for each executive is established based on
marketplace data. For this purpose, in Fiscal 1996 the Company utilized
principally the median data for companies with sales between $200 million and
$499 million as reported by nationwide participants in the Alexander & Alexander
Consulting Group/Radford Associates' 1995 Management Compensation Report.
Participants in that nationwide survey are not limited to the companies included
in the peer group established to compare shareholder returns in the performance
graph included below because the Compensation Committee believes that the
Company's competitors for executive talent are not limited to that peer group.
Base Salary and Cash Incentive
Once target total cash compensation has been established for each
executive, the total compensation is divided into a base salary portion and a
cash incentive portion. The higher the level of responsibility of the executive
within the Company, the greater the portion of that executive's target total
cash compensation that consists of the cash incentive component. At budgeted
performance levels, targeted cash incentive ranges from approximately 33% to 56%
of targeted total cash compensation (50% to 125% of base salary) for the named
executive officers.
11
<PAGE>
In Fiscal 1996, the cash incentive portion of the compensation of
participants in the Executive Incentive Compensation Plan was based upon
achievement of specified operating profit margins, return on assets and
performance goals. Based principally upon achievement of individual performance
goals, an aggregate of $931,000 was awarded to participants in the Plan.
Equity Incentive
The Company grants stock options annually to all participants in the
Executive Incentive Compensation Plan. The purpose of these grants is to give
participants a stake in the success of the Company as measured by the stock
market's assessment of the Company's performance. The number of options granted
to each participant is generally determined on the basis of a percentage of base
salary that varies depending on the participant's level of responsibility. The
extent of existing options or stock ownership is not generally considered in
granting options, except that the Company sometimes grants an initial round of
options to newly recruited executives to provide them with some stake in the
Company's success from the commencement of their employment.
In Fiscal 1996, option grants to Executive Incentive Compensation Plan
participants amounted to approximately 2.6% of the Company's outstanding Common
Shares.
Chief Executive Officer Compensation
The Compensation Committee uses the same factors in determining the
compensation of the Chief Executive Officer as it does for the other
participants in the Executive Incentive Compensation Plan. Following an
analysis of marketplace data and a subjective assessment of the Chief Executive
Officer's performance, the Compensation Committee recommended, and the Board of
Directors approved, an increase in the annual salary of the Chief Executive
Officer from $260,000 to $300,000 for Fiscal 1996. Since the Company did not
achieve its operating profit margin or return on assets targets in Fiscal 1996,
the Chief Executive Officer did not receive a cash incentive payment for Fiscal
1996.
THE COMPENSATION COMMITTEE
JOHN A. O'STEEN, CHAIRMAN
JAMES W. BAGLEY
C. WILLIAM ZADEL
Performance Graph
The graph set forth below compares, for Fiscal 1992 through Fiscal 1996,
the yearly change in the cumulative total returns to holders of Common Shares of
the Company with the cumulative total return of a peer group selected by the
Company and of the NASDAQ Stock Market-US Index. The peer companies are all
among the top 25 semiconductor capital equipment suppliers in the world and were
selected by the Company based principally on nature of business, revenues,
employee base, technology base, market share, customer and customer
relationships. The peer group is composed of Advanced Semiconductor Materials
International N.V., Applied Materials, Inc., BTU International, Inc., Electro
Scientific Industries, Inc., FSI International, Inc., Genus, Inc., KLA
Instruments Corp., Lam Research Corp., LTX Corp., Novellus Systems, Inc.,
Silicon Valley Group, Inc., Teradyne Inc. and Varian
12
<PAGE>
Associates, Inc. The graph assumes that the value of the investment in the
relevant stock or index was $100 at September 30, 1991 and that all dividends
were reinvested. Total returns are calculated based on a fiscal year ending
September 30. The closing market price of the Company's Common Shares as of
September 30, 1996 was $11.375. The closing market price of such shares on
December 26, 1996 was $19.75.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG THE COMPANY, A PEER GROUP AND
THE NASDAQ STOCK MARKET-US INDEX
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Sept. 30, Sept. 30, Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1991 1992 1993 1994 1995 1996
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Kulicke & Soffa Industries 100 78 451 255 1,145 357
Peer Group 100 120 281 367 748 409
NASDAQ Stock Market-US 100 112 147 148 204 243
</TABLE>
13
<PAGE>
SHAREHOLDER PROPOSALS
Proposals which shareholders desire to have included in the Company's Proxy
Statement for the Annual Meeting in 1998 pursuant to Securities Exchange Act
Regulation 14a-8 must be addressed to the Secretary of the Company and received
by the Company on or before September 9, 1997.
OTHER MATTERS
The cost of soliciting proxies will be borne by the Company. In addition to
solicitation by mail, officers and regular employees of the Company may solicit
proxies personally and by telephone, telegraph or other means, for which they
will receive no compensation in addition to their normal compensation.
Arrangements may also be made with brokerage houses and other custodians,
nominees and fiduciaries for the forwarding of solicitation material to the
beneficial owners of stock held of record by such persons, and the Company may
reimburse them for their reasonable out-of-pocket and clerical expenses.
Although the Company knows of no business which will be presented at the
Annual Meeting other than those described herein, proxies in the accompanying
form will confer discretionary authority with respect to any other matters which
may come before the meeting.
By Order of the Board of Directors
SUSAN WATERS
Secretary
14
<PAGE>
Appendix
--------
KULICKE AND SOFFA INDUSTRIES, INC.
This Proxy Is Solicited On Behalf Of The Board Of Directors
The undersigned, revoking all prior proxies, hereby appoints C. Scott
Kulicke and Clifford G. Sprague, or either of them, with full power of
substitution, as the undersigned's proxies to vote at the Annual Meeting of
Shareholders of Kulicke and Soffa Industries, Inc. (the "Company") called for
February 11, 1997 and any adjournment thereof.
[x] Please mark your votes as in this example.
1. ELECTION OF For All Withhold Nominees: Allison F. Page
DIRECTORS Nominees Authority To C. William Zadel
Listed Vote For All
(INSTRUCTION: To withhold Nominees
authority to vote for any Listed
individual nominee, write [_] [_]
that nominee's name in
the space provided below)
- ------------------------------
By signing this Proxy,authority
is given to cumulate votes in the
discretion of Proxies for less
than all nominees listed.
2. Appointment of Price For Against Abstain
Waterhouse LLP as [_] [_] [_]
independent public
accountants for the
Company for the year
ending September 30,
1997.
<PAGE>
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
You are urged to sign and return this proxy so that you may be sure that your
Shares will be voted.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSAL 2.
YOUR VOTE IS IMPORTANT TO US. PLEASE COMPLETE, DATE AND SIGN THE ABOVE PROXY
CARD AND RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE.
______________________________________
Signature of Shareholder
______________________________________
Signature of Shareholder
Date_______________________________1997
Note: Please sign exactly as your name appears hereon. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in the partnership name by authorized
person.
