Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by Registrant / X /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ X / Definitive Proxy Statement
/ / Definitive Additional Material
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
_________________________________________________________________
LSI LOGIC CORPORATION
_________________________________________________________________
David E. Sanders
Vice President, General Counsel, Secretary
LSI Logic Corporation
Payment of Filing Fee:
/ X / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
/ / Fee computed per table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
(1) Title of each class 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 Rule 0-11:
___________________________________________________
(4) Proposed maximum aggregate value of transaction:
__________________________________________________
Set forth the amount on which the filing fee is
calculated and state how it was determined.
/ / 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.:
___________________________________________________
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_________________________________________________
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__________________________________________________
LSI LOGIC CORPORATION
Notice of Annual Meeting of Stockholders
May 10, 1996
To the Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of
Stockholders of LSI Logic Corporation (the "Company"), a Delaware
corporation, will be held on May 10, 1996 at 11:00 a.m., local
time, at The St. Regis Hotel located at 2 East 55th Avenue, New
York, New York 10022, for the following purposes:
1. To elect directors to serve for the ensuing year and
until their successors are elected.
2. To ratify the appointment of Price Waterhouse as
independent accountants of the Company for its 1996 fiscal year.
3. To transact such other business as may properly come
before the meeting and any adjournments thereof.
The foregoing items of business are more fully described in
the Proxy Statement accompanying this Notice.
Only stockholders of record at the close of business on
March 15, 1996 are entitled to notice of and to vote at the
meeting.
All stockholders are cordially invited to attend the meeting
in person. However, to assure your representation at the meeting,
you are urged to mark, sign and return the enclosed proxy card as
promptly as possible in the postage-prepaid envelope enclosed for
that purpose. Any stockholder attending the meeting may vote in
person even if he or she returned a proxy.
Sincerely,
David E. Sanders
Secretary
Milpitas, California
March 29, 1996
YOUR VOTE IS IMPORTANT
In order to assure your representation at the meeting, you
are requested to complete, sign and date the enclosed proxy card
as promptly as possible and return it in the enclosed envelope
(to which no postage need be affixed if mailed in the United
States).
LSI LOGIC CORPORATION
_________________
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed Proxy is solicited on behalf of LSI Logic
Corporation (the "Company") for use at the Annual Meeting of
Stockholders to be held on May 10, 1996 at 11:00 a.m., local
time, or at any adjournment(s) thereof, for the purposes set
forth herein and in the accompanying Notice of Annual Meeting of
Stockholders. The Annual Meeting will be held at The St. Regis
Hotel at 2 East 55th Avenue, New York, New York. The Company's
principal executive offices are located at 1551 McCarthy
Boulevard, Milpitas, California 95035 and its telephone number is
(408) 433-8000.
These proxy solicitation materials were mailed on or about
March 29, 1996 to all stockholders entitled to vote at the
meeting.
Record Date
Stockholders of record at the close of business on March 15,
1996 are entitled to notice of and to vote at the meeting. As of
the record date 128,461,781 shares of the Company's Common Stock,
$0.01 par value, were issued and outstanding.
Revocability of Proxies
Any Proxy given pursuant to this solicitation may be revoked
by the person giving it at any time before its use by delivering
to the Company a written notice of revocation or a duly executed
proxy bearing a later date or by attending the meeting and voting
in person.
Voting and Solicitation
On all matters other than the election of directors, each
share has one vote. The required quorum for the transaction of
the Annual Meeting is a majority of the shares of Common Stock
outstanding on the record date. The Company intends to include
abstentions and broker non-votes as present or represented for
purposes of establishing a quorum for the transaction of
business. See "ELECTION OF DIRECTORS - REQUIRED VOTE."
The cost of soliciting proxies will be borne by the Company.
The Company has retained the services of Skinner & Co. to aid in
the solicitation of proxies from brokers, bank nominees and other
institutional owners. The Company estimates that it will pay
Skinner & Co. a fee not to exceed $4,000 for its services and
will reimburse it for certain out of pocket expenses estimated to
be $15,000. In addition, the Company may reimburse brokerage
firms and other persons representing beneficial owners of shares
for their expenses in forwarding solicitation material to such
beneficial owners. Proxies may be solicited by certain of the
Company's directors, officers and regular employees, without
additional compensation, personally or by telephone or telegram.
Deadline for Receipt of Stockholder Proposals
Proposals of stockholders of the Company which are intended
to be presented by such stockholders at the Company's 1997 Annual
Meeting must be received by the Company no later than November
30, 1996, and be otherwise in compliance with applicable laws and
regulations in order that such proposals may be included in the
proxy statement and form of proxy relating to that meeting.
SECURITY OWNERSHIP
Principal Stockholders
As of March 15, 1996, the following persons were known to
the Company to be beneficial owners of more than 5% of the
Company's Common Stock:
<TABLE>
<CAPTION>
Name and Address Number of Shares Owned Percentage of
Total
<S> <C> <C>
Jennison Associates 8,543,960 6.65%
Capital Corp. <F1>
466 Lexington Avenue
New York, NY 10017
The Prudential Insurance 8,759,304 6.81%
Company of America <F2>
Prudential Plaza
Newark, NJ 07102
Wilfred J. Corrigan <F3> 6,737,452 5.24%
1551 McCarthy Blvd.
Milpitas, CA 95035
_______________
<FN>
<F1> Information obtained from a Schedule 13G dated February 1,
1996 filed with the Securities and Exchange Commission.
Jennison Associates Capital Corp. is an institutional
investor and is considered the beneficial owner only as a
result of its position as manager of the funds which own
the shares of Common Stock of the Company. Jennison
Associates Capital Corp. (Jennison Capital) is an
autonomous subsidiary of The Prudential Insurance Company
of America (Prudential). The shares of Common Stock
reported by Jennison Capital are also included in the
shares of Common Stock reported by Prudential in its
Schedule 13G. See note 2 below.
<F2> Information obtained from a Schedule 13G dated February 12,
1996 filed with the Securities and Exchange Commission.
Prudential may have direct or indirect voting and/or
investment discretion over the shares of Common Stock
reported which are held for the benefit of its clients by
its separate accounts, externally managed accounts,
registered investment companies, subsidiaries and/or other
affiliates. Prudential combines the holdings of these
entities for administrative convenience. The number of
shares of Common Stock set forth herein includes the shares
listed as held by Jennison Capital. See note 1 above.
<F3> Includes 412,500 shares, options for which are presently
exercisable or will become exercisable within 60 days of
March 15, 1996.
</TABLE>
Security Ownership of Management
The following table sets forth the beneficial ownership of
Common Stock of the Company as of March 15, 1996 by all directors
and nominees, each of the named executive officers set forth in
the Summary Compensation Table (the "Named Executive Officers")
and by all directors and current executive officers as a group:
<TABLE>
<CAPTION>
Approximate
Amount Percentage
Name Owned Owned
<S> <C> <C>
Wilfred J. Corrigan <F1>........... 6,737,452 5.24%
T.Z. Chu <F2>...................... 45,000 *
Malcolm R. Currie <F3>............. 110,000 *
James H. Keyes <F4>................ 64,500 *
R. Douglas Norby <F5>.............. 52,500 *
Brian L. Halla <F6>................ 147,815 *
Cyril F. Hannon <F7>............... 137,916 *
Albert A. Pimentel <F8>............ 132,919 *
Moshe N. Gavrielov <F9>............ 51,751 *
All directors and executive
officers as a group
(13 persons) <F10>............... 7,767,645 6.05%
__________________
* Less than 1%
<FN>
<F1> Includes 412,500 shares, options for which are presently
exercisable or will become exercisable within 60 days of
March 15, 1996.
<F2> Includes 15,000 shares, options for which are presently
exercisable or will become exercisable within 60 days of
March 15, 1996.
<F3> Includes 37,500 shares, options for which are presently
exercisable or will become exercisable within 60 days of
March 15, 1996.
<F4> Includes 35,000 shares, options for which are presently
exercisable or will become exercisable within 60 days of
March 15, 1996.
<F5> Includes 30,000 shares, options for which are presently
exercisable or will become exercisable within 60 days of
March 15, 1996.
<F6> Includes 137,500 shares, options for which are presently
exercisable or will become exercisable within 60 days of
March 15, 1996. Excludes options to purchase 25,000 shares
of the common stock of LSI Logic Europe plc, a 98% owned
affiliate of the Company.
<F7> Includes 90,000 shares, options for which are presently
exercisable or will become exercisable within 60 days of
March 15, 1996. Excludes ownership by Mr. Hannon of 20,000
shares of the common stock of LSI Logic K.K., a 91% owned
affiliate of the Company. Excludes options to purchase
75,000 shares of the common stock of LSI Logic Europe plc, a
98% owned affiliate of the Company.
<F8> Includes 120,000 shares, options for which are presently
exercisable or will become exercisable within 60 days of
March 15, 1996.
<F9> Includes 51,750 shares, options for which are presently
exercisable or will become exercisable within 60 days of
March 15, 1996.
<F10>Includes 1,169,250 shares, options for which are presently
exercisable or will become exercisable within 60 days of
March 15, 1996. Excludes ownership of 20,000 shares of the
common stock of LSI Logic K.K., a 91% owned affiliate of the
Company. Excludes options to purchase 100,000 shares of the
common stock of LSI Logic Europe plc, a 98% owned affiliate
of the Company.
</TABLE>
PROPOSAL ONE
ELECTION OF DIRECTORS
Nominees
A board of five directors is to be elected at the meeting.
Unless otherwise instructed, the proxy holders will vote the
proxies received by them for the Company's five nominees named
below, all of whom are presently directors of the Company. If
any nominee of the Company is unable or declines to serve as a
director at the time of the Annual Meeting, the proxies will be
voted for such nominee as shall be designated by the present
Board of Directors to fill the vacancy. If additional persons
are nominated for election as directors, the proxy holders intend
to vote all proxies received by them in such a manner in
accordance with cumulative voting as will assure the election of
as many of the nominees of the Board of Directors as possible
and, in such event, the specific nominees to be voted for will be
determined by the proxy holders. The term of office of each
person elected as a director will continue until the next Annual
Meeting of Stockholders or until his successor has been elected
and qualified.
The names of the nominees for election to the Board of
Directors, their ages as of March 29,1996 and certain other
information about them, are set forth below.
<TABLE>
<CAPTION>
Director
Name of Nominee Age Principal Occupation Since
<S> <C> <C> <C>
Wilfred J. Corrigan 58 Chairman of the Board 1981
of Directors and Chief
Executive Officer of
the Company
James H. Keyes 55 Chairman and Chief 1983
Executive Officer of
Johnson Controls, Inc.
T.Z. Chu 61 President 1992
Hoefer Pharmacia
Biotech, Inc.
Malcolm R. Currie 69 Chairman and Chief Executive 1992
Officer Electric Bicycle Co.
R. Douglas Norby 60 Senior Vice President 1993
and Chief Financial
Officer of Mentor
Graphics Corporation
</TABLE>
Except as set forth below, each of the nominees has been
engaged in his principal occupation set forth above during the
past five years. There are no family relationships between or
among any directors or executive officers of the Company.
Mr. Corrigan, a founder of the Company, has served as Chief
Executive Officer and a director of the Company since its
organization in January 1981. He served as President of the
Company from its incorporation until April 1985. He presently
serves on the board of directors of Brooktree Corporation.
Mr. Keyes has served as Chairman and Chief Executive Officer
of Johnson Controls, Inc., a manufacturer of automated building
controls, batteries, automotive seating and plastics, since
January 1993. From January 1988 until January 1993, Mr. Keyes
served as President and Chief Executive Officer of Johnson
Controls, Inc. From January 1986 to January 1988, Mr. Keyes
served as President, Chief Operating Officer and a director of
Johnson Controls, Inc.; from April 1985 to January 1986, Mr.
Keyes served as Executive Vice President, Chief Operating Officer
and a director of Johnson Controls, Inc.; from January 1985 to
April 1985, he served as Executive Vice President of Johnson
Controls, Inc.
Mr. Chu has served as President of Hoefer Pharmacia Biotech,
Inc. since March 1995. From August 1993 until March 1995, Mr.
Chu served as President and Chief Executive Officer of Hoefer
Scientific Instruments. From January 1992 until August 1993, Mr.
Chu acted as a consultant to Hambrecht & Quist and to Thermo
Instrument Systems, Inc. From 1990 until December 31, 1991, Mr.
Chu served as the President of Finnigan Corporation. From 1969
until 1990, he served as the Principal Executive Officer and
Director of Finnigan Corporation at which time it was acquired by
Thermo Instrument Systems, Inc.
Mr. Currie has served as Chairman and Chief Executive Officer of
Electric Bicycle Co. since December 1994. He served as Chairman and Chief
Executive Officer of Hughes Aircraft Company from March 1988 until his
retirement in July 1992. From January 1976 until March 1988, Mr. Currie
served as President and Chief Executive Officer of Delco Electronics.
He presently serves on the boards of directors of Unocal
Corporation, Investment Company of America and Moltech Corporation.
Mr. Norby has served as Senior Vice President and Chief
Financial Officer of Mentor Graphics Corporation since September
1993. From July 1992 until September 1993, Mr. Norby served as
President and Chief Executive Officer of Pharmetrix Corporation,
a health care company. Mr. Norby served as President and Chief
Operating Officer of Lucasfilm, Ltd. from February 1985 until May
1992. Additionally, from 1989 until May 1992, Mr. Norby served
as Chairman, President and Chief Executive Officer of LucasArts
Entertainment Company, a subsidiary of Lucasfilm, Ltd. Mr. Norby
serves on the board of directors of Epitope, Inc.
Board Meetings and Committees
The Board of Directors of the Company held a total of four
meetings during the fiscal year ended December 31, 1995. The
Board of Directors has an Audit Committee and a Compensation
Committee. It does not have a separate nominating committee.
The Audit Committee, which consists of Mr. Currie (who
serves as its chairman), Mr. Keyes and Mr. Norby, held three
meetings during the last fiscal year. The Audit Committee
recommends engagement of the Company's independent accountants,
and is primarily responsible for approving the services performed
by the Company's independent accountants and for reviewing and
evaluating the Company's accounting principles and its system of
internal accounting controls. The Compensation Committee, which
consists of Mr. Keyes (who serves as its chairman), Mr. Chu, Mr.
Currie and Mr. Norby, held three meetings during the last fiscal
year. The Compensation Committee reviews and approves the
Company's executive compensation policy and makes recommendations
concerning the Company's employee benefit plans.
During the fiscal year ended December 31, 1995, all
incumbent directors attended at least 75% of the aggregate number
of meetings of the Board of Directors and meetings of the
committees of the Board on which they served.
Compensation of Directors
Members of the Board of Directors who are not employees of
the Company receive an annual fee of $20,000 paid on a prorated
basis and $1,250 for each meeting they attend, plus expenses.
The Company s 1995 Director Option Plan (the 1995 Director Plan
), as adopted by the Board of Directors and approved by the
stockholders, provides for the grant of nonstatutory stock
options to non-employee directors of the Company ("Outside
Director"). Each Outside Director shall be granted an option to
purchase 15,000 shares of Common Stock (the "First Option") on
the date on which he or she first becomes an Outside Director;
provided, however, that no Outside Director who was an Outside
Director immediately prior to the effective date of the 1995
Director Plan (June 1, 1995) will receive a First Option. In
addition, on April 1 of each year (commencing in 1996), each
Outside Director shall automatically be granted an option to
purchase 7,500 shares of Common Stock of the Company (a
"Subsequent Option"), if on such date he or she shall have served
on the Board of Directors for at least six months. The 1995
Director Plan provides for neither a maximum nor a minimum
number of option shares that may be granted to any one
non-employee director but does provide for the number of shares
which may be included in any grant and the method of making a
grant. Options granted pursuant to the 1995 Director Plan have a
term of ten years and are exercisable cumulatively to the extent
of 25% of the shares subject to the grant on each of the first
four anniversaries of the date of grant. Options granted
pursuant to the 1995 Director Plan may be exercised only while
the optionee is a director of the Company or within 12 months
after death or within three months after the optionee ceases to
serve as a director of the Company but in no event after its ten
year term has expired.
REQUIRED VOTE
Directors shall be elected by a plurality of the votes of
the shares of the Company's Common Stock entitled to vote and
represented in person or by proxy at the Annual Meeting. Every
stockholder voting for the election of directors may cumulate
such stockholder's votes and give one candidate a number of votes
equal to the number of directors to be elected multiplied by the
number of votes to which the stockholder's shares are entitled,
or may distribute the stockholder's votes on the same principle
among as many candidates as the stockholder thinks fit, provided
that votes cannot be cast for more than five candidates.
However, no stockholder shall be entitled to cumulate votes
unless the candidate's name has been placed in nomination prior
to the voting and the stockholder, or any other stockholder, has
given notice at the meeting prior to the voting of the intention
to cumulate the stockholder's votes. The Company will exercise
discretionary authority to cumulate votes in the event that
additional persons are nominated at the Annual Meeting for
election of directors.
While there is no definitive statutory or case law in
Delaware as to the proper treatment of abstentions in the
election of directors, the Company believes that abstentions
should be counted for purposes of determining whether a quorum is
present at the Annual Meeting for the transaction of business.
In the absence of controlling precedent to the contrary, the
Company intends to treat abstentions with respect to the election
of directors in this manner. In a 1988 Delaware case, Berlin v.
Emerald Partners, the Delaware Supreme Court held that broker
non-votes may be counted as present or represented for purposes
of determining the presence or absence of a quorum for the
transaction of business. Accordingly, the Company intends to
treat broker non-votes with respect to the election of directors
in this manner. Votes against, votes withheld and broker
non-votes have no legal effect on the election of directors due
to the fact that such elections are by a plurality.
MANAGEMENT RECOMMENDS A VOTE FOR THE NOMINEES LISTED ABOVE.
PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected Price Waterhouse L.L.P.,
independent accountants, to audit the consolidated financial
statements of the Company for its 1996 fiscal year and recommends
that the stockholders vote for ratification of such appointment.
If there is a negative vote on such ratification, the Board of
Directors will reconsider its selection. Price Waterhouse has
audited the Company's consolidated financial statements since the
fiscal year ended December 31, 1981. Representatives of Price
Waterhouse are expected to be present at the Annual Meeting with
the opportunity to make a statement if they desire to do so, and
are expected to be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF PRICE WATERHOUSE AS THE
INDEPENDENT ACCOUNTANTS FOR THE 1996 FISCAL YEAR. THE EFFECT OF
AN ABSTENTION IS THE SAME AS THAT OF A VOTE AGAINST THE
RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT ACCOUNTANTS.
EXECUTIVE COMPENSATION
The following table shows, as to the Chief Executive Officer
and each of the four other most highly compensated executive
officers whose salary plus bonus exceeded $100,000, information
concerning all reportable compensation awarded to, earned by or
paid to each for services to the Company in all capacities during
the fiscal year ended December 31, 1995, as well as such
compensation for each such individual for the Company's previous
two fiscal years.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation
Other Annual
Name and Compensation
Principal Position Year Salary($) Bonus($) ($)<F1>
<S> <C> <C> <C> <C>
Wilfred J. Corrigan 1995 $600,769 $730,000 $ 13,100
Chief Executive 1994 $563,846 $575,000 $ 9,600
Officer 1993 $530,077 $400,000 $ 16,600
Brian L. Halla 1995 $319,231 $300,000 $ 10,225
Executive Vice 1994 $299,231 $250,000 $ 12,274
President, LSI Logic 1993 $280,481 $200,000 $ 8,500
Products
Cyril F. Hannon 1995 $291,923 $250,000 $ 9,479
Executive Vice 1994 $279,615 $175,000 $ 8,400
President, Worldwide 1993 $261,538 $170,000 $ 8,400
Operations
Albert A. Pimentel 1995 $251,923 $200,000 $ 8,400
Senior Vice President 1994 $236,923 $160,000 $ 9,295
Finance and Chief 1993 $222,923 $150,000 $ 9,400
Financial Officer
Moshe N. Gavrielov 1995 $226,923 $165,000 $172,014
Senior Vice President 1994 $186,038 $100,000 $ 7,200
International 1993 $163,438 $ 65,000 $ 7,200
Marketing and Sales
<FN>
<F1> Includes amounts paid for car allowance, tax planning, and,
in the case of Mr. Gavrielov foreign relocation payments.
SUMMARY COMPENSATION TABLE
Long Term Compensation
Awards Payouts
All
Restricted Other
Stock Options/ LTIP Compen-
Year Awards SARs Payouts sation
($)<F2> (#)<F3> ($)<F4> ($)<F5>
<S> <C> <C> <C> <C> <C>
Wilfred J. Corrigan 1995 0 1,400,000 0 $37,823
1994 0 0 0 $41,351
1993 0 250,000 0 $23,483
Brian L. Halla 1995 0 200,000 0 $19,211
1994 0 30,000 0 $20,636
1993 0 100,000 0 $14,322
Cyril F. Hannon 1995 0 100,000 0 $21,638
1994 0 30,000 0 $23,313
1993 0 100,000 0 $17,931
Albert A. Pimentel 1995 0 40,000 0 $16,665
1994 0 20,000 0 $15,336
1993 0 30,000 0 $10,316
Moshe N. Gavrielov 1995 0 40,000 0 $13,353
1994 0 20,000 0 $10,606
1993 0 40,000 0 $ 7,744
<FN>
<F2> The Company has not granted any restricted stock rights.
<F3> The Company has not granted any stock appreciation rights.
The number of options granted has been adjusted to give
effect to the two for one stock split in the form of a stock
dividend paid to stockholders of record on May 23, 1995.
<F4> The Company does not have any Long Term Incentive Plans as
that term is defined in the regulations.
<F5> All Other Compensation is itemized as follows:
- In 1995, Mr. Corrigan received $31,523 for profit
sharing and $6,300 for group term life insurance. In
1994, Mr. Corrigan received $34,301 for profit sharing,
$750 for a patent award, and $6,300 for group term life
insurance. In 1993, Mr. Corrigan received $22,183 for
profit sharing and $6,300 for group term life
insurance.
- In 1995, Mr. Halla received $16,775 for profit sharing
and $2,436 for group term life insurance. In 1994, Mr.
Halla received $18,200 for profit sharing and $2,436
for group term life insurance. In 1993, Mr. Halla
received $11,886 for profit sharing and $2,436 for
group term life insurance.
- In 1995, Mr. Hannon received $15,337 for profit sharing
and $6,300 for group term life insurance. In 1994, Mr.
Hannon received $17,013 for profit sharing and $6,300
for group term life insurance. In 1993, Mr. Hannon
received $11,091 for profit sharing and $6,300 for
group term life insurance.
- In 1995, Mr. Pimentel received $13,737 for profit
sharing and $1,428 for group term life insurance. In
1994, Mr. Pimentel received $14,412 for profit sharing
and $924 for group term life insurance. In 1993, Mr.
Pimentel received $9,392 for profit sharing and $924
for group term life insurance.
- In 1995, Mr. Gavrielov received $11,925 for profit
sharing and $1,428 for group term life insurance. In
1994, Mr. Gavrielov received $9,245 for profit sharing
and $1,361 for group term life insurance. In 1993, Mr.
Gavrielov received $6,956 for profit sharing and $788
for group term life insurance.
</TABLE>
Stock Option Grants and Exercises
The following tables set forth the stock options granted to
the Named Executive Officers under the Company's stock option
plans and the options exercised by such Named Executive Officers
during the fiscal year ended December 31, 1995.
The Option/SAR Grant Table sets forth hypothetical gains or
"option spreads" for the options at the end of their respective
ten-year terms. Each gain is based on an arbitrarily assumed
annualized rate of compound appreciation of the market price at
the date of grant of 5% and 10% from the date the option was
granted to the end of the option term. The 5% and 10% rates of
appreciation are specified by the rules of the Securities and
Exchange Commission and do not represent the Company s estimate
or projection of future Common Stock price growth. Actual gains,
if any, on option exercises are dependent on the future
performance of the Company's Common Stock and overall market
conditions, the Company s future performance and the timing of
options exercised, if any.
<TABLE>
OPTION/SAR<F1> GRANTS IN LAST FISCAL YEAR
LSI Logic Corporation 1991 Equity Incentive Plan<F2>
<CAPTION>
Individual Grants
Percent of
total options/ Exercise
Options/ SARs granted or base Expir-
SARS to employees price ation
Name granted(#) in fiscal year ($/share) Date
<S> <C> <C> <C> <C>
Wilfred J. Corrigan 1,400,000 32.5% $25.31 02/13/05
Brian L. Halla 200,000 4.6% $25.31 02/13/05
Cyril F. Hannon 100,000 2.3% $25.31 02/13/05
Albert A. Pimentel 40,000 1.0% $25.31 02/13/05
Moshe N. Gavrielov 40,000 1.0% $25.31 02/13/05
<FN>
<F1> The Company has not granted any stock appreciation rights.
The number of options granted has been adjusted to give
effect to the stock split in the form of a two for one stock
dividend paid to stockholders of record on May 23, 1995.
<F2> The material terms of the grants (other than those set forth
in the table) are: (a) The exercise price of the options is
the fair market value of Common Stock as of the date of
grant; (b) The options vest cumulatively in equal 25%
increments on each of the first four anniversaries of the
date of grant; (c)To the extent unexercised, the options
lapse after ten years; (d) The options are non-transferrable
and are only exercisable during the period of employment of
the optionee (or within three months following termination
of employment), subject to limited exceptions in the cases
of certain terminations, death or permanent disability of
the optionee.
Potential Realizable Value
Assumed Annual Rate of Stock Price Appreciation for Option Term
Name 5% 10%
<S> <C> <C>
Wilfred J. Corrigan $22,286,453 $56,478,248
Brian L. Halla $ 3,183,779 $ 8,068,321
Cyril F. Hannon $ 1,591,890 $ 4,034,161
Albert A. Pimentel $ 636,756 $ 1,613,664
Moshe N. Gavrielov $ 636,756 $ 1,613,664
</TABLE>
<TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND YEAR-END VALUES <F1>
LSI Logic Corporation 1991 Equity Incentive Plan
<CAPTION>
Name Number of Shares
Acquired on Exercise Value Realized
<S> <C> <C>
Wilfred J. Corrigan 62,500 $2,847,243
Brian L. Halla 227,500 $7,344,469
Cyril F. Hannon 200,000 $8,011,375
Albert A. Pimentel 40,000 $1,253,750
Moshe N. Gavrielov 28,750 $ 682,859
<FN>
<F1> The Company has not granted any stock appreciation rights.
The number of options granted has been adjusted to give
effect to a stock split in the form of a two for one stock
dividend paid to stockholders of record on May 23, 1995.
Name Total Number of Unexercised Options
Held at Fiscal Year End
Exercisable Unexercisable
<S> <C> <C>
Wilfred J. Corrigan 0 1,525,000
Brian L. Halla 22,500 310,000
Cyril F. Hannon 22,500 187,500
Albert A. Pimentel 97,500 132,500
Moshe N. Gavrielov 17,500 134,250
Name Total Value <F2> of Unexercised,
In-the-Money Options Held at
Fiscal Year End
Exercisable Unexercisable
<S> <C> <C>
Wilfred j. Corrigan $0 $10,768,750
Brian L. Halla $ 534,688 $ 3,807,344
Cyril F. Hannon $ 528,750 $ 2,649,063
Albert A. Pimentel $2,669,375 $ 2,646,250
Moshe N. Gavrielov $ 201,094 $ 1,835,453
<FN>
<F2> Total value of vested options based on fair market value of
Company's Common Stock of $30.75 per share as of December
31, 1995.
</TABLE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Overview and Philosophy
The Compensation Committee (the "Committee") of the Board of
Directors establishes the overall executive compensation
strategies of the Company and approves compensation elements for
the chief executive officer and other executive officers. The
Committee periodically reviews its approach to executive
compensation.
The Committee is comprised of all of the outside,
non-employee members of the Board of Directors (four), none of
whom have interlocking relationships as defined by the Securities
and Exchange Commission. The Committee has available to it such
external compensation advice and data as the Committee deems
appropriate to obtain.
The compensation philosophy of the Committee is to provide a
comprehensive compensation package for each executive officer
that is well suited to support accomplishment of the Company's
business strategies, objectives and initiatives. For
incentive-based compensation, the Committee considers the
desirability of structuring such compensation arrangements so as
to qualify for deductibility under Section 162(m) of the Internal
Revenue Code. As the Committee applies this compensation
philosophy in determining appropriate executive compensation
levels and other compensation factors, the Committee reaches its
decisions with a view towards the Company's overall financial
performance.
Executive Officer Compensation
The Committee's approach is based upon a belief that a
substantial portion of aggregate annual compensation for
executive officers should be contingent upon the Company's
performance and an individual's contribution to the Company's
success. In addition, the Committee strives to align the
interests of the Company's executive officers with the long-term
interests of stockholders through stock option grants that can
result in ownership of the Company's Common Stock. The Committee
endeavors to structure each executive officer's overall
compensation package to be consistent with this approach and to
enable the Company to attract, retain and reward personnel who
contribute to the success of the Company.
The Company's compensation program for executive officers is
based on the following guidelines:
- Establishment of salary levels and participation in
generally available employee benefit programs based on
competitive compensation package practices.
- Utilization of a performance-based, cash incentive plan.
- Inclusion of equity opportunities that create long term
incentives based upon increases in stockholder return.
For 1995, the Committee approved and made awards pursuant to
a cash incentive plan that provided for bonus awards to be made
to the executive officers and other members of senior management
subject to an aggregate budget for all awards under the plan.
The plan established a minimum level of operating income to be
achieved by the Company for the year before any payments would be
made under the plan. The plan also allowed upward adjustments in
awards to be made if the minimum operating income target was
exceeded. In addition, pursuant to the plan's provisions, except
as to his own eligibility for an award under the plan, the CEO
was authorized to determine individual bonus award amounts
pursuant to his judgment of each participant's relative personal
contributions to the Company's performance, subject to the
approval by the Committee of awards to executive officers.
The Company's operating income exceeded the target
established under the plan. As a result, the bonus awards to
executive officers under the plan were increased over plan
targets, as permitted by the plan, and upon the recommendation of
the CEO were approved by the Committee. The total of all
payments under the plan were within the budget approved
previously by the Committee.
Based upon the guidelines set forth above, during 1995 the
Committee approved a budget for increases in executive officers'
base salary levels. Increases in base salary amounts for
individual executive officers were then made pursuant to the
CEO's judgment and discretion in satisfying the Company's
compensation philosophy set forth above, which increases, in the
aggregate, were within the budget that had been approved by the
Committee. The general level of compensation of the Company's
executive officers is in the median of ranges of compensation
information sources against which the Company makes competitive
comparisons.
The Company maintains a set of guidelines for use in making
recommendations to the Committee on individual grants of stock
options, including the size of such grants, to executive
officers. Options to purchase the Common Stock of the Company
were granted to the executive officers by reference to the
guidelines. These guidelines are developed by reference to
external published surveys and other information that are
believed to fairly reflect the competitive environment in which
the Company operates and which are consistent with the
compensation principles set forth above.
Chief Executive Officer Compensation
Mr. Corrigan has been CEO of the Company since its founding
in 1980. His base salary prior to the beginning of fiscal 1995
was $580,000, which was increased to $625,000 during 1995, based
upon reference to external competitive pay practices, the above
described compensation approach to executive officers and an
independent assessment by this Committee of Mr. Corrigan's
performance.
The Committee also awarded Mr. Corrigan a cash bonus in the
amount of $730,000, based upon its evaluation of Mr. Corrigan's
performance under the provisions of the incentive plan applicable
to the other executive officers. Competitive pay practice data
evaluated by the Committee was derived from an information base
comprised of a group of other technology companies, many of which
are included in the Hambrecht & Quist Technology Index, as
compiled by an externally generated information source. The base
salary established by the Committee for the CEO falls in the
median of the range of such information used for competitive
comparisons.
During 1995, the Committee granted to Mr. Corrigan an option to
purchase 700,000 shares of common stock which vests in equal
increments over four years. The Committee believes Mr. Corrigan
has managed the Company well, and has achieved distinguished
results, including in terms of revenue, gross margin, operating
income and net income growth.
MEMBERS OF THE COMPENSATION COMMITTEE
February 16, 1996 James H. Keyes
T.Z. Chu
Malcolm R. Currie
R. Douglas Norby
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee are set forth in
the preceding section as well as in Proposal One. There are no
members of the Compensation Committee who were: officers or
employees of the Company or any of its subsidiaries during the
fiscal year, formerly officers of the Company, or had any
relationship otherwise requiring disclosure hereunder.
PERFORMANCE GRAPH
The stock price performance shown on the graph following is
not necessarily indicative of future price performance.
<TABLE>
<CAPTION>
Comparison of Five Year Cumulative Total Return
Among LSI Logic Corporation*, S&P 500 Index
and Hambrecht & Quist Technology Index
Year LSI Logic Standard & Hambrecht &
(12/31) Corporation Poors 500 Quist
<S> <C> <C> <C>
1990 $100 $100 $100
1991 $103 $148 $130
1992 $172 $170 $140
1993 $254 $186 $155
1994 $646 $215 $157
1995 $1048 $323 $215
* The Company operates on a 52/53 week fiscal year which ends
on the Sunday closest to December 31. Accordingly, the
Company's last trading day of its fiscal year may vary. For
consistent presentation and comparison to the industry
indices shown herein, the Company has calculated its stock
performance graph assuming a December 31 year end.
The numbers for 1995 have been adjusted to give effect to a
stock split in the form of two for one stock dividend paid
to stockholders of record on May 23, 1995.
CERTAIN TRANSACTIONS
Section 16(a) of the Exchange Act requires the Company's
executive officers, directors, and persons who own 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 New York
Stock Exchange. Executive officers, directors and greater than
ten percent stockholders are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they
file.
Based solely on its review of the copies of such forms
received by it and written representations received from those
reporting persons recognized by the Company as being subject to
filing requirements that they have complied with the relevant
filing requirements, the Company believes that all other filing
requirements applicable to its executive officers and directors
were complied with as of December 31, 1995.
OTHER MATTERS
The Company knows of no other matters to be submitted to the
meeting. If any other matters properly come before the meeting,
it is the intention of the persons named in the enclosed form of
Proxy to vote the shares they represent as the Board of Directors
may recommend.
THE BOARD OF DIRECTORS
March 29, 1996 FORM OF PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
LSI LOGIC CORPORATION
1996 ANNUAL MEETING OF STOCKHOLDERS
The undersigned stockholder of LSI Logic Corporation, a
Delaware corporation, hereby acknowledges receipt of the Notice
of Annual Meeting of Stockholders and Proxy Statement, each dated
March 29, 1996, and hereby appoints Wilfred J. Corrigan and David
E. Sanders, or either of them, proxies and attorneys-in-fact,
with full power to each of substitution, on behalf and in the
name of the undersigned, to represent the undersigned at the 1996
Annual Meeting of Stockholders of LSI Logic Corporation to be
held on May 10, 1995, at 11:00 a.m. local time, at The St. Regis
hotel, 2 East 55th Street, New York, New York, and at any
adjournment(s) thereof and to vote all shares of Common Stock
which the undersigned would be entitled to vote if then and there
personally present, on the matters set forth below:
1. ELECTION OF DIRECTORS:/ / FOR all nominees listed below
(except as listed below)
/ / WITHHOLD authority to vote
for all nominees listed below.
If you wish to withhold authority to vote for any individual
nominee, strike a line through that nominee's name in the list
below:
Wilfred J. Corrigan; Malcolm R. Currie; T.Z. Chu; James H. Keyes;
R. Douglas Norby.
2. PROPOSAL TO RATIFY THE APPOINTMENT OF PRICE WATERHOUSE, LLP
AS THE INDEPENDENT ACCOUNTANTS OF THE COMPANY:
/ / FOR / / AGAINST / / ABSTAIN
and, in their discretion, upon such other matter or matters which
may properly come before the meeting and any adjournment(s)
thereof.
<PAGE>
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY
DIRECTION IS INDICATED, WILL BE VOTED FOR THE ELECTION OF
DIRECTORS, FOR RATIFICATION OF THE APPOINTMENT OF THE COMPANY'S
INDEPENDENT ACCOUNTANTS, AND AS SAID PROXIES DEEM ADVISABLE ON
SUCH OTHER MATTERS AS MAY COME BEFORE THE MEETING AND ANY
ADJOURNMENT(S) THEREOF.
Dated:_________________, 1996
______________________________
Signature
______________________________
Signature
(This Proxy should be marked, dated, signed by the stockholder(s)
exactly as his or her name appears hereon, and returned promptly
in the enclosed envelope. Persons signing in a fiduciary
capacity should so indicate. If shares are held by joint tenants
or as community property, both should sign.)
</TABLE>
