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 by Commission only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Materials Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
Kulicke and Soffa Industries, Inc.
---------------------------------------
Name of Registrant Specified in Charter
Kulicke and Soffa Industries, Inc.
---------------------------------------
Name of Person Filing Proxy Statement
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
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[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid: ____________________
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Registration Statement No.: ____________________
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4) Date Filed: ____________________
<PAGE>
[LOGO]
KULICKE & SOFFA
Industries Inc
2101 Blair Mill Road, Willow Grove, PA 19090
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
FEBRUARY 8, 2000
THE ANNUAL MEETING OF SHAREHOLDERS OF KULICKE AND SOFFA INDUSTRIES,
INC. (the "Company") will be held on Tuesday, February 8, 2000, 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 a director;
2. Ratification of the appointment of PricewaterhouseCoopers LLP
as the Company's independent accountants for the year ending
September 30, 2000; 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 13,
1999, 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 FOLLOW THE
INSTRUCTIONS ACCOMPANYING THE ENCLOSED PROXY IN ORDER THAT YOUR STOCK MAY BE
VOTED BY ONE OF THE VARIOUS MEANS AVAILABLE. 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 3, 2000
<PAGE>
January 3, 2000
[K&S NAME AND LOGO]
2101 Blair Mill Road, Willow Grove, PA 19090
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of the
Company. This proxy statement and the enclosed proxy are being mailed on or
about January 3, 2000. A copy of the Company's 1999 Annual Report to
Shareholders (which includes the Company's Annual Report on Form 10-K) is also
enclosed but is not to be considered as proxy solicitation material.
VOTING AND REVOCABILITY OF PROXIES
The Board of Directors has fixed the close of business on December 13,
1999, as the record date for determination of the shareholders entitled to vote
at the Annual Meeting. As of the record date, there were 23,597,263 Common
Shares outstanding ("Common Shares" or "Common Stock"). Each such share is
entitled to one vote on all matters to be presented to the meeting.
When proxies are properly dated, executed and returned or otherwise
voted in accordance with the accompanying instructions, the shares they
represent will be voted at the Annual Meeting in accordance with the
instructions of the shareholder. If no specific instructions are given, the
shares will be voted FOR (1) the election of the nominee for director set forth
herein; and (2) ratification of the appointment of independent accountants. A
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.
A majority of the shares entitled to vote, represented in person or by
proxy, constitutes a quorum. If a quorum is present, (i) the nominee for
director receiving the highest number of votes cast at the Annual Meeting will
be elected and (ii) the affirmative vote of a majority of the total votes cast
by all shareholders entitled to vote at the Meeting will be required to ratify
the appointment of independent accountants. Abstentions, 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 on any matter.
-1-
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
To the best knowledge of the Company, the only persons or groups of
persons that owned beneficially more than 5% of the outstanding Common Shares of
the Company as of December 1, 1999 (unless otherwise specified), were as
follows:
NUMBER OF PERCENT OF
NAME AND ADDRESS SHARES CLASS
- ---------------- ------ -----
Capital Guardian Trust Company (1).................. 2,586,900 11.1%
333 South Hope Street
Los Angeles, CA 90071
- ----------
(1) Based on information provided pursuant to the Schedule 13G filed with the
Securities and Exchange Commission (the "SEC") on February 8, 1999. This
share amount includes 215,800 shares held by Capital International, Inc.
and 45,100 shares held by Capital International S.A., affiliated entities
of Capital Guardian Trust Co. (the "Reporting Entity"). Previously, The
Capital Group Companies, Inc., the parent holding company of the Reporting
Entity and its listed affiliated entities, reported the beneficial
ownership of all of such shares. On July 9, 1998 it filed a Schedule 13G
indicating that it retained no beneficial ownership of shares held by its
independent investment management affiliates.
ITEM 1 - - ELECTION OF A DIRECTOR
Frederick W. Kulicke, Jr., retired co-founder of the Company, whose
term as director expires at the 2000 Annual Meeting, is not standing for
reelection to the Board. The Company gratefully acknowledges Mr. Kulicke's
numerous contributions and his many years of dedicated service on the Board of
Directors.
In accordance with the Company's By-Laws, the Board has reduced the
number of directors to seven, divided into three classes of two directors and
one class of one director. As a result, only one director will be elected at the
2000 Annual Meeting and cumulative voting will not apply. The Board intends to
cause Larry D. Striplin, Jr., the remaining member of the class whose term
expires at the 2000 Annual Meeting, to be nominated for re-election at the 2000
Annual Meeting to serve until the 2004 Annual Meeting and until his successor
has been duly elected and qualified. If the nominee should be unavailable at the
time of the election, the persons named in the proxy may vote the proxies for
such other person as they may choose, unless the Board of Directors has then
further reduced the number of the directors to be elected so that no director is
to be elected at the meeting.
The following table provides certain information concerning: (i) Larry
D. Striplin, Jr., the nominee for reelection, (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, 1999, beneficial shareholdings.
Unless otherwise specified, such persons have held the positions indicated
(other than directorships) for at least five years. 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.
-2-
<PAGE>
PRESENT COMMON SHARES
DIRECTOR TERM BENEFICIALLY OWNED
NAME, AGE AND OCCUPATION SINCE EXPIRES ON DECEMBER 1, 1999
- ------------------------ ----- ------- ----------------------
NUMBER PERCENT
------ -------
James W. Bagley (60), 1993 2003 25,000(1) (2)
Chairman and Chief
Executive Officer of Lam
Research Corporation, a
leading manufacturer of
semiconductor processing
equipment since August 1997.
From June 1996 to August
1997, Chairman of the Board
and Chief Executive Officer
of OnTrak Systems, Inc., a
developer and marketer of
semiconductor wafer
processing equipment, and
prior to June 1996, Vice
Chairman of the Board of
Directors of Applied
Materials, Inc., the largest
supplier of wafer
fabrication systems to the
semiconductor industry.
Currently, a director of
KLA/Tencor Corporation,
Micron Technology, Inc., and
Teradyne, Inc.
C. Scott Kulicke (50), 1975 2003 715,993(1)(3) 3.0%
Chairman of the Board and
Chief Executive Officer of
the Company. Also serves on
the Board of Directors of
General Semiconductor, Inc.
Son of Frederick W. Kulicke,
Jr.
John A. O'Steen (55), 1988 2002 21,000(1)(4) (2)
Executive Vice President
of Operations (since July
1998) and Executive Vice
President (January to June
1998) of Cornerstone Brands,
Inc., a consumer catalog
company. From 1991 to 1998,
Chairman and Chief Executive
Officer of Cinmar, L.P., a
mail order catalog company
acquired by the predecessor
of Cornerstone Brands in
September 1995. Formerly,
President, Chief Executive
Officer and a director of
Cincinnati Microwave, Inc.,
a manufacturer of electronic
products. Currently, a
director of Cornerstone
Brands, Inc. and Bill's
Dollar Stores, Inc.
-3-
<PAGE>
PRESENT COMMON SHARES
DIRECTOR TERM BENEFICIALLY OWNED
NAME, AGE AND OCCUPATION SINCE EXPIRES ON DECEMBER 1, 1999
- ------------------------ ----- ------- -------------------
NUMBER PERCENT
------ -------
Allison F. Page (76), 1962 2001 15,520(1) (2)
Retired partner in the
Philadelphia law firm of
Pepper Hamilton LLP.
MacDonell Roehm, Jr. (60), 1984 2002 27,000(1) (2)
Chairman and Chief
Executive Officer of Crooked
Creek Capital LLC, a
provider of strategic,
operational and financial
restructuring services,
since 1998. Former Chairman,
President and Chief
Executive Officer of Bill's
Dollar Stores, Inc., a chain
of retail convenience
stores, from 1994 to March
1998. Prior to that time,
Managing Director of AEA
Investors, Inc., a private
investment firm. Also serves
on the Board of Directors of
Tower Technology Pty., Ltd.
Larry D. Striplin, Jr. (70), 1995 2000 6,000(1) (2)
Chairman of the Board and
Chief Executive Officer of
Nelson-Brantley Glass
Contractors, Inc., a glass
contractor, and Clearview
Properties, Inc., a real
estate rental company.
Chairman of Circle "S"
Industries, Inc. and
American Fine Wire Corp.
prior to their acquisition
by the Company in 1995.
Currently, a director of
HealthSouth Corporation, The
Banc Corporation and the
Bank of Birmingham.
C. William Zadel (56), 1989 2001 10,000(2) (2)
Chairman, 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.
Currently, a director of
Matritech, Inc.
-4-
<PAGE>
PRESENT COMMON SHARES
DIRECTOR TERM BENEFICIALLY OWNED
NAME, AGE AND OCCUPATION SINCE EXPIRES ON DECEMBER 1, 1999
- ------------------------ ----- ------- -------------------
NUMBER PERCENT
------ -------
Morton K. Perchick (62), -- -- 79,271(1) (2)
Executive Vice President of
the Company.
Clifford G. Sprague (56), -- -- 54,771(1)(5) (2)
Senior Vice President and
Chief Financial Officer of
the Company.
Walter E. Von Seggern (59), -- -- 45,018(1) (2)
Senior Vice President of
the Company
Laurence P. Wagner (39) -- -- 6,167(1) (2)
Senior Vice President of
the Company
All directors and executive -- -- 1,079,474(6) 4.6%
officers as a group (14
persons).
- ----------
(1) Includes or consists of shares subject to outstanding options that are
currently exercisable or exercisable within 60 days after December 1, 1999
in the following amounts: Mr. Bagley (15,000), Mr. Kulicke (189,980), Mr.
O'Steen (11,000), Mr. Page (15,000), Mr. Roehm (25,000), Mr. Striplin
(6,000), Mr. Zadel (10,000), Mr. Perchick (74,600), Mr. Sprague (43,894),
Mr. Von Seggern (42,880) and Mr. Wagner (5,860).
(2) Less than 1.0%.
(3) Includes 429,071 shares jointly held with Mr. Kulicke's wife.
(4) Includes 1,000 shares jointly held with Mr. O'Steen's wife.
(5) Includes 3,200 shares jointly held with Mr. Sprague's wife.
(6) Includes 507,104 shares subject to options that are currently exercisable
or exercisable within 60 days after December 1, 1999. See also footnote (1)
above. Also includes 3,304 shares held by the spouse of an executive
officer, as to which the officer disclaims beneficial ownership.
For further information concerning Directors and Executive Officers see
"Additional Information" herein.
ITEM 2 - - APPOINTMENT OF INDEPENDENT ACCOUNTANTS
At the recommendation of the Company's Audit Committee, the Board of
Directors has appointed PricewaterhouseCoopers LLP as the Company's independent
accountants for the fiscal year ending September 30, 2000. Price Waterhouse LLP
(which merged with Coopers & Lybrand LLP in 1998 to become
PricewaterhouseCoopers LLP) has served as the Company's independent accountants
for a number of years. 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. If a majority of the
votes cast on this matter are not cast in favor of the reappointment of
PricewaterhouseCoopers LLP, the Company will appoint other independent
accountants as soon as is practical and before the close of the 2000 fiscal
year.
A representative of PricewaterhouseCoopers LLP is expected to be
present at the Annual Meeting to make a statement if he or she so desires and
will be available to respond to any appropriate questions.
-5-
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP.
ADDITIONAL INFORMATION
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act 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 SEC and to
furnish the Company with copies of these reports.
Based solely on the Company's review of the copies of these reports
received by it and written representations received from reporting persons with
respect to the filing of reports on Forms 3, 4 and 5, the Company believes that
all such filings required to be made by the reporting persons for Fiscal 1999
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, 1999 ("Fiscal 1999"), as well as the compensation received by each
such individual for the Company's previous two fiscal years ("Fiscal 1998" and
"Fiscal 1997," respectively).
<TABLE>
<CAPTION>
ANNUAL LONG TERM
COMPENSATION COMPENSATION AWARDS
--------------------------------------------- -------------------
ALL
OTHER SECURITIES OTHER
ANNUAL UNDERLYING COMPEN-
NAME AND FISCAL SALARY BONUS COMPENSA- OPTIONS SATION
PRINCIPAL POSITION YEAR ($)(1) ($)(1)(2) TION($)(3) (#) ($)(4)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
C. Scott Kulicke 1999 $389,430 $348,064 $6,709 47,700 $15,000
Chairman of the Board and 1998 366,928 112,665 6,084 110,200 17,972
Chief Executive Officer 1997 320,765 580,800 4,915 63,000 16,472
Morton K. Perchick 1999 $234,173 $198,137 $6,555 22,300 $17,500
Executive Vice President 1998 220,000 211,673 7,275 49,600 18,375
1997 217,115 168,287 6,127 29,100 17,079
Clifford G. Sprague 1999 $215,660 $109,283 $6,303 16,300 $10,904
Senior Vice President and 1998 203,846 54,799 6,303 37,500 11,469
Chief Financial Officer 1997 186,785 149,978 4,943 21,400 9,709
Walter E. Von Seggern 1999 $197,654 $ 96,680 $5,793 14,900 $14,641
Senior Vice President 1998 187,923 40,555 6,709 42,100 12,176
1997 170,846 142,065 5,149 18,200 9,744
Laurence P. Wagner (5) 1999 $197,308 $204,309 $2,372 18,100 $ 4,692
Senior Vice President 1998 35,808 42,869 -- 29,300 1,145
1997 N/A N/A N/A N/A N/A
</TABLE>
-6-
<PAGE>
- ----------
(1) Includes amounts earned but deferred at the election of executive officers
under the Company's Officers' Deferred Compensation Plan.
(2) 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.)
(3) These amounts represent the Company's reimbursement of taxes paid by the
named executive officers on Company-provided automobiles.
(4) This column includes, for Fiscal 1997, 1998 and 1999, the Company's
matching contribution to its 401(k) Incentive Savings Plan with respect to
Messrs. Kulicke, Perchick, Sprague and Von Seggern. With respect to Mr.
Wagner, this column includes the Company's matching contribution to the
401(k) Incentive Savings Plan for Fiscal 1998 and 1999. Amounts indicated
for Mr. Kulicke for Fiscal 1997 and 1998 include $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. The loan was deemed repaid in 1998.
(5) Mr. Wagner joined the Company in July 1998.
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"
below.
STOCK OPTION TABLES
The following tables set forth information with respect to: (i) stock
option grants by the Company to the named executive officers in Fiscal 1999, and
(ii) the aggregate option exercises by each named executive officer during
Fiscal 1999, and the number of unexercised options and the value of unexercised
in-the-money options held by each named executive officer at the Fiscal 1999
year-end, respectively.
<TABLE>
<CAPTION>
OPTION GRANTS IN FISCAL 1999
INDIVIDUAL GRANTS
--------------------------------------------------------
POTENTIAL REALIZABLE VALUE
NUMBER OF % OF TOTAL AT ASSUMED ANNUAL RATES OF
SHARES OPTIONS STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM (3)
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION --------------------------
NAME GRANTED(1) FISCAL YEAR(2) SHARE DATE 5% 10%
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
C. Scott Kulicke 47,700 5.71% $25.88 9/28/09 $776,205 $1,967,057
Morton K. Perchick 22,300 2.67% $25.88 9/28/09 $362,880 $ 919,609
Clifford G. Sprague 16,300 1.95% $25.88 9/28/09 $265,244 $ 672,181
Walter E. Von Seggern 14,900 1.78% $25.88 9/28/09 $242,462 $ 614,447
Laurence P. Wagner 18,100 2.17% $25.88 9/28/09 $294,535 $ 746,409
</TABLE>
- --------------------
(1) All options granted to named executive officers in Fiscal 1999 were granted
under the Company's 1998 Employee Stock Option Plan and generally become
exercisable commencing one year from the date of grant in installments of
20% per year.
(2) The Company granted options to employees to purchase a total of 835,250
shares during Fiscal 1999.
(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 1999 AND 1999 FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING
UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
YEAR-END AT FISCAL YEAR-END(1)
SHARES ---------------------- -----------------------
ACQUIRED ON VALUE EXERCIS- UNEXERCIS- EXERCIS- UNEXERCIS-
NAME EXERCISE REALIZED ABLE ABLE ABLE ABLE
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
C. Scott Kulicke ....... 14,000 369,250 152,980 197,420 $2,005,683 $1,300,597
Morton K. Perchick ..... -- -- 56,480 91,560 628,421 607,628
Clifford G. Sprague .... 2,500 39,219 30,034 68,540 305,687 459,031
Walter E. Von Seggern .. -- -- 32,060 66,340 333,981 451,169
Laurence P. Wagner .... -- -- 5,860 41,540 63,728 254,910
</TABLE>
- ----------
(1) In-the-money options are those where the fair market value of the
underlying shares exceeds the exercise price of the option. The closing
price of the Company's Common Shares on September 30, 1999, the end of its
1999 fiscal year, was $24.313 per share.
PENSION PLAN
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. Effective December 31, 1995, benefit accruals under the Company's
pension plan were frozen. Retirement benefits under this pension plan are
determined under a formula based on length of service and average compensation
in the three consecutive calendar years during the ten year period ended
December 31, 1995, producing the highest average (subject to certain Internal
Revenue Code limits). Assuming normal retirement at age 65 and election of
payment in the form of an annuity, the named executives would receive the
following annual amounts under the pension plan: C. Scott Kulicke - $57,996;
Morton K. Perchick - $29,951; Clifford G. Sprague - $15,793 and Walter Von
Seggern - $7,374.
TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS
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' target total cash compensation
(base salary plus incentives) for the year in which the change in control occurs
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 were renewed by the Board of Directors in December 1997
and are all currently scheduled to expire on December 31, 2000, unless extended.
The named executive officers' Termination of Employment Agreements provide for
payment of the following number of months' target total cash compensation:
Messrs. C. Scott Kulicke, 30 months; Perchick, 18 months; Sprague, 18 months;
Von Seggern, 18 months; and Wagner, 18 months.
-8-
<PAGE>
Under the Company's 1994 Employee Stock Option Plan and 1998 Employee
Stock Option Plan, in the event of a change in control of the Company (as
defined in those plans), all outstanding options become fully vested and
exercisable. Under the Company's 1997 Non-Qualified Stock Option Plan for
Non-Employee Directors (the "1997 Director Plan"), if the Company is a party to
any merger in which it is not the surviving entity, or any consolidation or
dissolution, all outstanding options will terminate and the optionee will
receive, in cash, from the Company an amount equal to the fair market value of
the shares subject to his or her outstanding options less the amount which would
be required to exercise such options. Under the Company's 1988 Employee Stock
Option Plan and 1988 Non-Qualified Stock Option Plan for Non-Officer Directors
(the "1988 Director Plan"), if the Company is a party to any merger in which it
is not the surviving entity, or any consolidation or dissolution, all
outstanding options will terminate and the optionee will receive, in cash, from
the Company an amount equal to the fair market value of the shares subject to
then exercisable options less the amount which would be required to exercise
such options. Under the Company's Officers' Deferred Compensation Plan, on a
change in control (as defined in that plan) participants receive a lump sum
payment of the value of their accounts.
BOARD MATTERS
In Fiscal 1999, the Board of Directors met five times. Four of such
meetings were regular meetings and one such meeting was a special meeting.
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, with the exception of Frederick W. Kulicke, Jr., who is retiring from
the Board this year, attended at least 75% of the Board and applicable committee
meetings in Fiscal 1999.
Each member of the Board who is not also an officer or employee of the
Company is eligible to participate in the 1988 and 1997 Director Plans. Pursuant
to the 1988 Director Plan (which terminated in 1998), options to purchase 5,000
Common Shares were automatically granted to each eligible director on the last
day of each February on which the Company's shares were publicly traded through
1998. In February 1999, a similar grant was made pursuant to the 1997 Director
Plan, which provides for such grants through 2008. The exercise price of all
such options is equal to 100% of the fair market value of the Company's Common
Shares on the date of grant. Options granted under the 1988 and 1997 Director
Plans 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.
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 1999. The principal duties of the Audit 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 three times during Fiscal 1999. 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.
-9-
<PAGE>
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"). 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 stock of Circle S. 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. Mr. Striplin has been nominated by the
Board for reelection at the 2000 Annual Meeting. 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 principal components: base salary; cash incentive; and equity
incentive in the form of stock options granted under the Company's stock option
plans.
TARGET TOTAL CASH COMPENSATION
Target total cash compensation for each executive is established based
on marketplace data. For this purpose, in Fiscal 1999 the Company utilized
principally the data for companies with sales between $200 million and $499
million as reported by nationwide participants in the Aon Consulting/Radford
Division 1998 Executive Compensation Report. Participants in that nationwide
survey are not limited to the companies included in the Company's 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. Generally, 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
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<PAGE>
incentive ranges from approximately 37.5% to 56% of targeted total cash
compensation (60% to 125% of base salary) for the named executive officers.
In Fiscal 1999, 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 upon achievement of such goals, an aggregate of
$1,104,028 was earned by and awarded to the Company's seven executive officers
under 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
target total cash compensation 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.
The option grants to the seven executive officers on September 28, 1999
amounted to approximately 0.62% of the Company's Common Shares outstanding on or
about the date of the grants.
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 approved an increase in the annual base
salary of the Chief Executive Officer from $370,000 to $385,000 for Fiscal 1999.
As in the case of the other participants in the Executive Incentive Compensation
Plan, the Chief Executive Officer received a cash incentive payment for Fiscal
1999, which amounted to $348,064 based on the considerations described in "Base
Salary and Cash Incentive" above.
The Compensation Committee is mindful of the potential impact upon the
Company of Section 162(m) of the Internal Revenue Code, which prohibits public
companies from deducting certain executive remuneration in excess of $1,000,000.
While reserving the right of the Company to offer such compensation arrangements
as may be from time-to-time necessary to attract and retain top-quality
management, the Compensation Committee intends generally to structure such
arrangements, where feasible, so as to minimize or eliminate the impact of the
limitations of Section 162(m) of the Code.
THE COMPENSATION COMMITTEE
JOHN A. O'STEEN, CHAIRMAN
JAMES W. BAGLEY
C. WILLIAM ZADEL
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<PAGE>
PERFORMANCE GRAPH
The graph set forth below compares, for Fiscal Years 1995 through 1999,
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 - Tencor
Corp., Lam Research Corp., LTX Corp., Novellus Systems, Inc., Silicon Valley
Group, Inc., Teradyne Inc. and Varian Associates, Inc. The graph assumes that
the value of the investment in the relevant stock or index was $100 at September
30, 1994 and that all dividends were reinvested. Total returns are calculated
based on a fiscal year ending September 30. For purposes of the peer group
index, the peer group companies have been weighted based upon their relative
market capitalization. The closing market price of the Company's Common Shares
as of September 30, 1999 was $24.313. The closing market price of such shares on
December 15, 1999 was $33.00.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG KULICKE & SOFFA INDUSTRIES, INC.
THE NASDAQ STOCK MARKET (U.S.) INDEX AND A PEER GROUP
[THE FOLLOWING TABLE WAS REPRESENTED BY
A LINE CHART IN THE PRINTED MATERIAL.]
CUMULATIVE TOTAL RETURN
--------------------------------------
9/94 9/95 9/96 9/97 9/98 9/99
---- ---- ---- ---- ---- ----
KULICKE & SOFFA INDUSTRIES, INC. 100 449 140 570 168 299
PEER GROUP 100 208 110 319 140 399
NASDAQ STOCK MARKET (U.S.) 100 138 164 225 229 372
* $100 INVESTED ON NO 9/30/94 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING SEPTEMBER 30.
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<PAGE>
SHAREHOLDER PROPOSALS
Proposals which shareholders desire to have included in the Company's
proxy statement for the Annual Meeting in 2001 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 6, 2000.
OTHER MATTERS
The cost of soliciting proxies will be borne by the Company. Proxies
may also be solicited by certain officers and regular employees of the Company
personally or by written communication, telephone, facsimile 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 items of business which will be
presented at the Annual Meeting other than those described herein, proxies in
the accompanying form will confer discretionary authority to the proxy agents
with respect to any other matters which may come before the meeting to the
extent permitted by the applicable rules of the SEC. In this regard, the Company
intends to avail itself, until further notice, of the provisions of Rule
14a-4(c)(i) which grants the proxy agents discretionary authority to vote on any
shareholder proposals presented at the meeting of which the Company has not
received notice at least 45 days before the anniversary of the date on which the
Company first mailed its proxy materials for last year's Annual Meeting. The
Company received no notice of any shareholder proposal by such anniversary date
(i.e. November 19, 1999).
THE COMPANY, UPON REQUEST, WILL FURNISH TO RECORD AND BENEFICIAL
HOLDERS OF ITS COMMON STOCK, FREE OF CHARGE, A COPY OF ITS ANNUAL REPORT ON FORM
10-K (INCLUDING FINANCIAL STATEMENTS AND SCHEDULES BUT WITHOUT EXHIBITS) FOR
FISCAL 1999. COPIES OF EXHIBITS TO THE FORM 10-K ALSO WILL BE FURNISHED UPON
REQUEST AND THE PAYMENT OF A FEE OF $.50 PER PAGE. ALL REQUESTS SHOULD BE
DIRECTED TO THE INVESTOR RELATIONS DEPARTMENT OF THE COMPANY AT THE OFFICES OF
THE COMPANY SET FORTH ON PAGE 1 OF THIS PROXY STATEMENT.
In addition, electronic copies of the Company's Fiscal 1999 Annual
Report, Form 10-K and proxy statement will be available on the Company's website
at www.kns.com/ir/proxy/proxy.htm after the reports are mailed to shareholders
in early January 2000.
By Order of the Board of Directors
SUSAN WATERS
Secretary
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<PAGE>
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 8, 2000
and any adjournment thereof.
(continued on reverse side)
ANNUAL MEETING OF SHAREHOLDERS of
KULICKE AND SOFFA INDUSTRIES, INC.
Tuesday, February 8, 2000
PROXY VOTING INSTRUCTIONS
TO VOTE BY MAIL
- ---------------
Please date, sign and mail your proxy card in the envelope provided as soon as
possible.
TO VOTE BY TELEPHONE (TOUCH-TONE PHONE ONLY)
- --------------------------------------------
Please call toll-free 1-800-PROXIES and follow the instructions. Have your
control number and the proxy card available when you call.
TO VOTE BY INTERNET
- -------------------
Please access the web page at "www.voteproxy.com" and follow the on-screen
instructions. Have your control number available when you access the web page.
TO RECEIVE AN ELECTRONIC COPY OF THE PROXY
- ------------------------------------------
Please access the Kulicke and Soffa Industries web page at
http://www.kns.com/ir/proxy/proxy.htm to view the 2000 Proxy and the Fiscal Year
1999 Annual Report, including Form 10-K.
YOUR CONTROL NUMBER IS (arrow) [ ]
[x] Please mark your votes as in this example.
<PAGE>
1. ELECTION OF For Withhold Nominee: Larry D. Striplin, Jr.
DIRECTOR Nominee Authority
Listed To Vote For
Nominee
Listed
[ ] [ ]
2. Appointment of For Against Abstain
PricewaterhouseCoopers [ ] [ ] [ ]
LLP as independent
accountants for the
Company for the fiscal
year ending September
30, 2000
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 follow the voting instructions 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 NOMINEE LISTED IN PROPOSAL 1 AND FOR PROPOSAL 2.
YOUR VOTE IS IMPORTANT TO US. PLEASE FOLLOW THE INSTRUCTIONS ACCOMPANYING THIS
CARD TO BE SURE YOUR SHARES WILL BE VOTED.
- -----------------------------
Signature of Shareholder
- -----------------------------
Signature of Shareholder
Date 2000
------------
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 full corporate name by President or other authorized
officer. If a partnership, please sign in the partnership name by authorized
person.
