SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Amendment No. ______________)
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/ / Confidential, for use of the Commission only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
Integrated Device Technology, Inc.
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
/X/ No fee required.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transactions applies:
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(2) Aggregate number of securities to which transactions applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / 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:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date filed:
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<PAGE>
INTEGRATED DEVICE TECHNOLOGY, INC.
------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 28, 1997
------------
Notice is hereby given that the 1997 Annual Meeting of the Stockholders of
Integrated Device Technology, Inc., a Delaware corporation (the "Company"), will
be held on Thursday, August 28, 1997, at 9:30 a.m., local time, at the offices
of the Company located at 2670 Seeley Road, San Jose, California, for the
following purposes:
1. To elect one Class I director for a term to expire at the 2000 Annual
Meeting of Stockholders;
2. To approve an amendment to the Company's 1994 Stock Option Plan to
increase the number of shares reserved for issuance thereunder from
10,750,000 to 13,500,000;
3. To approve an amendment to the Company's 1984 Employee Stock Purchase
Plan to increase the number of shares reserved for issuance thereunder
from 4,050,000 to 5,050,000;
4. To ratify the appointment of Price Waterhouse LLP as independent
auditors of the Company for fiscal 1998; and
5. To transact such other business as may properly come before the Annual
Meeting or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this notice.
Stockholders of record at the close of business on July 1, 1997 are
entitled to notice of and to vote at the Annual Meeting or any adjournment or
postponement thereof.
The majority of the Company's outstanding shares must be represented at the
Annual Meeting (in person or by proxy) to transact business. To assure a proper
representation at the Annual Meeting, please mark, sign and date the enclosed
proxy and mail it promptly in the enclosed self-addressed envelope. Your proxy
will not be used if you revoke it either before or at the Annual Meeting.
Santa Clara, California
July 21, 1997
By Order of the Board of Directors
/s/ Jack Menache
Jack Menache
Secretary
PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE. YOUR VOTE IS IMPORTANT.
<PAGE>
INTEGRATED DEVICE TECHNOLOGY, INC.
2975 Stender Way
Santa Clara, California 95054
(408) 727-6116
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1997 ANNUAL MEETING OF STOCKHOLDERS
PROXY STATEMENT
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July 21, 1997
The accompanying proxy is solicited on behalf of the Board of Directors of
Integrated Device Technology, Inc., a Delaware corporation (the "Company"), for
use at the Annual Meeting of Stockholders (the "Annual Meeting") to be held on
Thursday, August 28, 1997 at 9:30 a.m., local time, or at any adjournment or
postponement thereof. The Annual Meeting will be held at 2670 Seeley Road, San
Jose, California 95134. Only holders of record of the Company's Common Stock at
the close of business on July 1, 1997 (the "Record Date") are entitled to notice
of, and to vote at, the Annual Meeting. On the Record Date, the Company had
79,891,214 shares of Common Stock outstanding and entitled to vote. A majority
of such shares, present in person or represented by proxy, will constitute a
quorum for the transaction of business. This Proxy Statement and the
accompanying form of proxy were first mailed to stockholders on or about July
21, 1997. An annual report for the fiscal year ended March 30, 1997 is enclosed
with this Proxy Statement.
VOTING RIGHTS AND SOLICITATION OF PROXIES
Holders of the Company's Common Stock are entitled to one vote for each
share held as of the above record date, except that in the election of
directors, each stockholder has cumulative voting rights and is entitled to a
number of votes equal to the number of shares held by such stockholder
multiplied by the number of directors to be elected. The stockholder may cast
these votes all for a single candidate or distribute the votes among any or all
of the candidates. No stockholder will be entitled to cumulate votes for a
candidate, however, unless that candidate's name has been placed in nomination
prior to the voting and the stockholder, or any other stockholder, has given
notice at the Annual Meeting, prior to the voting, of an intention to cumulate
votes. In such an event, the proxy holder may allocate among the Board of
Directors' nominees the votes represented by proxies in the proxy holder's sole
discretion.
Directors will be elected by a plurality of the votes of the shares of
Common Stock present in person or represented by proxy at the Annual Meeting and
entitled to vote on the election of directors. Proposal Nos. 2, 3 and 4 each
require for approval the affirmative vote of the majority of shares of Common
Stock present in person or represented by proxy at the Annual Meeting and
entitled to vote on such proposals. All votes will be tabulated by the inspector
of election appointed for the Annual Meeting who will separately tabulate, for
each proposal, affirmative and negative votes, abstentions and broker non-votes.
Abstentions will be counted towards a quorum and the tabulation of votes cast on
proposals presented to the stockholders and will have the same effect as
negative votes. Broker non-votes will be counted towards a quorum but are not
counted for any purpose in determining whether a matter has been approved.
The expenses of soliciting proxies to be voted at the Annual Meeting will
be paid by the Company. Following the original mailing of the proxies and other
soliciting materials, the Company and/or its agents may also solicit proxies by
mail, telephone, telegraph or in person. The Company has retained a proxy
solicitation firm, Skinner & Co., Inc. to aid it in the solicitation process.
The Company will pay that firm a fee equal to $5,000, plus expenses. Following
the original mailing of the proxies and other soliciting materials, the Company
will request that brokers, custodians, nominees and other record holders of the
Company's Common Stock forward copies of the proxy and other soliciting
materials to persons for whom they hold shares of Common Stock and request
authority for the exercise of proxies. In such cases, the Company, upon request
of the record holders, will reimburse such holders for their reasonable
expenses.
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REVOCABILITY OF PROXIES
Any person signing a proxy in the form accompanying this Proxy Statement
has the power to revoke it prior to the Annual Meeting or at the Annual Meeting
prior to the vote pursuant to the proxy. A proxy may be revoked by (i) a writing
delivered to the Company stating that the proxy is revoked, (ii) by a subsequent
proxy that is signed by the person who signed the earlier proxy and is presented
at the Annual Meeting or (iii) by attendance at the Annual Meeting and voting in
person. Please note, however, that if a stockholder's shares are held of record
by a broker, bank or other nominee and that stockholder wishes to vote at the
Annual Meeting, the stockholder must bring to the Annual Meeting a letter from
the broker, bank or other nominee confirming that stockholder's beneficial
ownership of the shares.
PROPOSAL NO. 1-ELECTION OF DIRECTORS
The Board of Directors consists of five members, divided into three
classes. One Class I director is to be elected at the Annual Meeting to serve a
three-year term expiring at the 2000 Annual Meeting of Stockholders or until a
successor has been elected and qualified. The remaining four directors will
continue to serve for the terms as set forth in the table below.
Leonard C. Perham has been nominated by the Board of Directors to serve as
the Class I director.
Shares represented by the accompanying proxy will be voted for the election
of the nominee recommended by the Board of Directors unless the proxy is marked
in such a manner as to withhold authority so to vote. In the event that a
nominee is unable or declines to serve as a director at the time of the Annual
Meeting, the proxies will be voted for any nominee who shall be designated by
the present Board of Directors to fill the vacancy, or the Board of Directors
may reduce the authorized number of directors in accordance with the Company's
Restated Certificate of Incorporation, as amended, and its Bylaws. The Board of
Directors has no reason to believe that the nominee will be unable to serve.
Directors/Nominees
<TABLE>
The names of the nominee and the other directors of the Company, and
certain information about them, as of July 1, 1997 are set forth below:
<CAPTION>
Name Age Principal Occupation Director Since
- ------------------------------------ ----- ------------------------------------------- ---------------
<S> <C> <C> <C>
Class I Directors-Term expiring at
the 2000 Annual Meeting:
Leonard C. Perham ............... 54 Chief Executive Officer and President of 1986
the Company
Class II Directors-Term expiring at
the 1998 Annual Meeting:
Federico Faggin(1) ............... 55 President and Chief Executive Officer of 1992
Synaptics, Inc.
John C. Bolger(1)(2) ............ 50 Private investor 1993
Class III Directors-Term expiring at
the 1999 Annual Meeting:
D. John Carey ..................... 61 Chairman of the Board of Directors of the 1980
Company
Carl E. Berg(2) .................. 60 Partner, Berg & Berg Industrial 1982
Developers
<FN>
- ------------
(1) Member of the Compensation and Stock Option Committee.
(2) Member of the Audit Committee.
</FN>
</TABLE>
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Mr. Perham joined the Company in October 1983 as Vice President and General
Manager, SRAM Division. In October 1986, Mr. Perham was appointed President and
Chief Operating Officer and a director of the Company. In April 1991, Mr. Perham
was elected Chief Executive Officer. Prior to joining the Company, Mr. Perham
held executive positions at Optical Information Systems Incorporated and Zilog
Inc.
Mr. Faggin has been a director of the Company since 1992. Mr. Faggin has
been President, Chief Executive Officer and a director of Synaptics, Inc., a
neural network research and development company, since 1986. He is a director of
Aptix, Inc., Atesla, Inc. and Orbit Semiconductor.
Mr. Bolger has been a director of the Company since January 1993. Mr.
Bolger is a private investor. He was Vice President of Finance and
Administration of Cisco Systems, Inc., a networking company, from May 1989
through December 1992. Mr. Bolger is a director of Integrated Systems Inc.,
McAfee Associates, Inc., Sanmina Corporation and TCSI Corporation.
Mr. Carey was elected to the Board of Directors in 1980 and has been
Chairman of the Board since 1982. He served as Chief Executive Officer of the
Company from 1982 until his resignation in April 1991 and was President of the
Company from 1982 until 1986. Mr. Carey was a founder of Advanced Micro Devices
in 1969 and was an executive officer there until 1978.
Mr. Berg has been a director of the Company since 1982. Mr. Berg has been a
partner of Berg & Berg Developers, a real estate development partnership, since
1979. He is a director of Valence Technology and Videonics.
Board Meetings and Committees
The Board of Directors of the Company held a total of ten (10) meetings
during the fiscal year ended March 30, 1997 and acted by written consent four
(4) times. In June 1996, the Board of Directors combined separate Compensation
and Stock Option Committees into a single Compensation and Stock Option
Committee. The Board of Directors also has an Audit Committee, but does not have
a Nominating Committee or any committee performing this function.
The Compensation and Stock Option Committee, composed of two disinterested
nonemployee directors, Messrs. Bolger and Faggin, determines the salaries and
incentive compensation for executive officers, including the chief executive
officer and key personnel, and administers the Company's stock option plans,
including determining the number of shares underlying options to be granted to
each employee and the terms of such options. Mr. Bolger is chair of the
Compensation and Stock Option Committee. The Compensation and Stock Option
Committee held two (2) meetings during fiscal 1997 and acted by written consent
eleven (11) times.
The Audit Committee, composed of Messrs. Berg and Bolger, recommends
engagement of the Company's independent auditors and is primarily responsible
for approving the services performed by the Company's independent auditors and
for reviewing and evaluating the Company's accounting practices and its systems
of internal accounting controls. Mr. Bolger is the Chair of the Audit Committee.
The Audit Committee held one (1) meeting during fiscal 1997.
Each director attended at least 75% of the aggregate of the total number of
meetings of the Board of Directors and the total number of meetings held by all
committees on which such director served during fiscal 1997.
Director Compensation
Members of the Board of Directors who are not also officers or employees of
the Company are paid an annual retainer in the amount of $10,000 per fiscal
year, $2,500 per quarterly board meeting attended (except telephone meetings),
$1,000 per additional board meeting attended (except telephone meetings) and
$500 per committee meeting attended if not conducted on the same day as a Board
meeting.
The Company's 1994 Directors Stock Option Plan (the "Directors Plan"),
covering 108,000 shares of Common Stock, was adopted by the Board of Directors
in May 1994 and was approved by the stockholders in August 1994. All members of
the Board of Directors who are not also employees of the Company or of a parent
or subsidiary of the Company ("Nonemployee Directors") are eligible to receive
options under the Directors Plan.
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The Directors Plan provides for the mandatory grant of options on an annual
basis to the Company's Nonemployee Directors. The purchase price of the stock
covered by all options may not be less than 100% of the fair market value of the
Common Stock on the date the option is granted. The fair market value on the
date of grant is defined as the closing price of the Common Stock as reported by
the Nasdaq National Market on the trading day immediately preceding the date on
which the fair market value is determined.
Pursuant to the terms of the Directors Plan, each Nonemployee Director is
granted an option to purchase 16,000 shares of the Company's Common Stock on the
date of such Nonemployee Director's first election or appointment to the Board.
In addition, the Nonemployee Director who chairs the Audit Committee of the
Board of Directors is granted an option to purchase 4,000 shares of the
Company's Common Stock on the date of such Nonemployee Director's first election
or appointment as Chair of the Audit Committee. These options have a term of ten
years and become exercisable in cumulative increments of 25% per year,
commencing on the first anniversary of the date of grant.
Annually thereafter, each Nonemployee Director is granted an option to
purchase 4,000 shares of the Company's Common Stock and an additional 1,000
shares of the Company's Common Stock if the optionee is also Chair of the Audit
Committee. The annual grant is made on the anniversary date of the optionee's
receipt of the initial option granted under the Directors Plan. Such options
become exercisable in full on the fourth anniversary of the date of grant.
As of March 30, 1997, options to purchase 550,024 shares were outstanding
to four Nonemployee Directors under the Directors Plan and the 1994 Stock Option
Plan, at an average exercise price of $4.19 per share expiring in 1997 through
2007, and 34,000 shares remain available for future grant under the Directors
Plan. During fiscal 1997, Mr. Berg purchased 8,000 shares upon exercise of
options granted under the predecessor 1989 Directors Stock Option Plan, for net
value realized of $90,500.
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF
THE NOMINATED DIRECTOR
PROPOSAL NO. 2-APPROVAL OF AMENDMENT TO THE 1994 STOCK OPTION PLAN
Stockholders are being asked to approve an amendment to the Company's 1994
Stock Option Plan (the "1994 Option Plan") to increase the number of shares of
Common Stock reserved for issuance thereunder from 10,750,000 shares to
13,500,000 shares (an increase of 2,750,000 shares). The Board of Directors of
the Company approved the proposed amendment described above on April 29, 1997 to
be effective upon stockholder approval.
Below is a summary of the principal provisions of the 1994 Option Plan
assuming approval of the above amendment, which summary is qualified in its
entirety by reference to the full text of the 1994 Option Plan. The Company will
provide, without charge, to each person to whom a Proxy Statement is delivered,
upon request of such person and by first class mail within one business day of
receipt of such request, a copy of the 1994 Option Plan. Any such request should
be directed as follows: Stock Administrator, Integrated Device Technology
Corporation, 2975 Stender Way, Santa Clara, CA 95054; telephone number (408)
727-6116; facsimile number (408) 654-6742.
1994 Option Plan History
In May 1994, the Board of Directors of the Company adopted the 1994 Option
Plan, and on August 25, 1994 it was approved by the stockholders of the Company.
3,250,000 shares of Common Stock were originally reserved for issuance under the
1994 Option Plan. In May 1995, the Board of Directors approved an amendment to
the 1994 Option Plan to increase the number of shares reserved for issuance
thereunder to 7,250,000, and on August 24, 1995 the amendment was approved by
the stockholders of the Company. In April 1996, the Board of Directors approved
an amendment to the 1994 Option Plan to increase the number of shares reserved
for issuance thereunder to 10,750,000, and on August 28, 1996 the amendment was
approved by the stockholders of the Company. In addition, up to 10,000,000
shares of Common Stock
4
<PAGE>
issuable upon exercise of stock options available for future grant or currently
outstanding pursuant to the Company's 1985 Option Plan that expire or become
unexercisable for any reason without having been exercised in full are available
for issuance under the 1994 Option Plan. The 1994 Option Plan was intended to
replace the 1985 Option Plan, which the Board of Directors terminated upon
stockholder approval of the 1994 Option Plan.
Description of the 1994 Stock Option Plan
Purpose. The purpose of the 1994 Option Plan is to provide incentives to
attract, retain and motivate eligible persons whose present and potential
contributions are important to the success of the Company and its affiliates, by
offering them an opportunity to participate in the Company's future performance
through awards of stock options. The Board of Directors believes that the use of
stock options as a supplement to other forms of compensation paid by the Company
is desirable to secure for the Company and its stockholders the advantages of
stock ownership by participants, upon whose efforts, initiative and judgment the
Company is largely dependent for the successful conduct of its business.
Plan Terms. The 1994 Option Plan provides for the grant of incentive stock
options ("ISOs") and nonstatutory stock options ("NSOs") to employees of the
Company and its affiliates and the grant of NSOs to independent contractors,
consultants and advisors of the Company and its affiliates, including directors
who are also employees or consultants. A maximum of 3,507,333 shares were
available for issuance as of the Record Date pursuant to the 1994 Option Plan
(assuming approval of the proposed amendment). Each optionee will be eligible to
receive options to purchase up to an aggregate maximum of 1,000,000 shares of
Common Stock per fiscal year under the 1994 Option Plan. As of July 1, 1997,
there were approximately 1,700 persons eligible to receive awards of stock
options under the 1994 Option Plan.
The purchase price of the stock covered by all options may not be less than
100% of the fair market value of the Common Stock on the date the option is
granted. The fair market value on the date of grant is defined as the closing
price of the Common Stock as reported by the Nasdaq National Market on the
trading day immediately preceding the date on which the fair market value is
determined. If an employee owns more than 10% of the total combined voting power
of all classes of the Company's stock, the exercise price of an ISO must be at
least 110% of such fair market value. If any option is forfeited or terminates
for any reason before being exercised, then the shares of Common Stock subject
to such option shall again become available for future awards under the 1994
Option Plan.
Plan Administration. The 1994 Option Plan is administered, subject to its
terms, by the Compensation and Stock Option Committee, whose members are
designated by the Board of Directors. The members of the Compensation and Stock
Option Committee, John C. Bolger and Federico Faggin, are "disinterested
persons" within the meaning of Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and "outside directors"
within the meaning of the Internal Revenue Code of 1986, as amended (the
"Code"). Subject to the terms and conditions of the 1994 Option Plan, the
Compensation and Stock Option Committee, in its discretion, designates those
individuals who are to be granted options, whether the options will be ISOs or
NSOs, the number of shares for which an option or options will be awarded, the
exercise price of the option, the periods during which the option may be
exercised and other terms and conditions of the option. The interpretation or
construction by the Compensation and Stock Option Committee of any provision of
the 1994 Option Plan or of any option granted under it is final and binding on
all optionees.
Stock Option Agreements. Each option is evidenced by a written stock option
agreement adopted by the Compensation and Stock Option Committee. Each option
agreement states when and the extent to which options become exercisable, and
the agreements need not be uniform. Options expire not more than ten years after
the date of grant (five years in the case of an ISO granted to a 10%
stockholder), or sooner upon an optionee's termination of employment. With
respect to options granted as ISOs, option agreements contain such other
provisions as necessary to comply with Section 422 of the Code. The exercise
price may be paid in cash or check or, at the discretion of the Compensation and
Stock Option Committee, by delivery of fully paid shares of Common Stock of the
Company that have been owned by the optionee for more than six months, by waiver
of compensation, through a "same day sale," through a "margin commitment" or by
any combination of the foregoing.
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<PAGE>
Termination of Employment. Options granted under the 1994 Option Plan
terminate three months after the optionee ceases to be employed by the Company
unless (i) the termination of employment is due to permanent and total
disability, in which case the option may, but need not, provide that it may be
exercised at any time within 12 months of termination to the extent the option
was exercisable on the date of termination; (ii) the optionee dies while
employed by the Company or within three months after termination of employment,
in which case the option may, but need not, provide that it may be exercised at
any time within 18 months after death to the extent the option was exercisable
on the date of death; or (iii) the option by its terms specifically provides
otherwise. In no event will an option be exercisable after the expiration date
of the option.
Amendment and Termination. The Board of Directors may at any time terminate
or amend the 1994 Option Plan. Rights and obligations under any award granted
before amendment shall not be materially changed or adversely affected by such
amendment except with the consent of the optionee. Amendments to the 1994 Option
Plan are subject to the approval of the Company's stockholders only to the
extent required by applicable laws, regulations or rules. The 1994 Option Plan
will continue in effect until May 2004, subject to earlier termination by the
Board of Directors.
Accelerated Vesting. In the event of (i) a merger or acquisition in which
the Company is not the surviving entity (except for a transaction to change the
state in which the Company is incorporated), (ii) the sale, transfer or other
disposition of all or substantially all of the assets of the Company or (iii)
any other corporate reorganization or business combination that is not approved
by the Board of Directors and in which the beneficial ownership of 50% or more
of the Company's voting stock is transferred, all options outstanding under the
1994 Option Plan shall become fully exercisable immediately before the effective
date of the transaction. Options will not become fully exercisable, however, if
and to the extent that options are either to be assumed by the successor
corporation or parent thereof or to be replaced with a comparable option to
purchase shares of the capital stock of the successor corporation or parent
thereof. Upon the effective date of such transaction, all options outstanding
will terminate and cease to be exercisable, except to the extent they were
previously exercised or assumed by the successor corporation or its parent. In
the event of (i)[00a0]a tender or exchange offer that is not recommended by the
Company's Board of Directors for 25% or more of the Company's voting stock by a
person or related group of persons other than the Company or an affiliate of the
Company or (ii) a contested election for the Board of Directors that results in
a change in a majority of the Board within any period of 24 months or less, all
options outstanding under the 1994 Option Plan will become fully exercisable 15
days following the effective date of such event. In such event, all options
outstanding under the 1994 Option Plan will remain exercisable until the
expiration or sooner termination of the option term specified in the option
agreement. Acceleration of the exercisability of options may have the effect of
depressing the market price of the Company's Common Stock and denying
stockholders a control premium that might otherwise be paid for their shares in
such a transaction and may have the effect of discouraging a proposal for
merger, a takeover attempt or other efforts to gain control of the Company.
Adjustments Upon Changes in Capitalization. If the number of shares of
Common Stock outstanding is changed by a stock dividend, stock split, reverse
stock split, recapitalization, subdivision, combination, reclassification or
similar change in the capital structure of the Company without consideration or
by certain types of acquisitions of the Company, the Compensation and Stock
Option Committee will make appropriate adjustments in the aggregate number of
securities subject to the 1994 Option Plan and the number of securities and the
price per share subject to outstanding options. In the event of the proposed
dissolution or liquidation of the Company, the Board of Directors must notify
optionees at least 15 days before such proposed action. To the extent that
options have not previously been exercised, such options will terminate
immediately before consummation of such proposed action.
Nontransferability. The rights of an optionee under the 1994 Option Plan
are not assignable by such optionee, by operation of law or otherwise, except by
will or the applicable laws of descent and distribution or in the event of an
optionee's divorce or dissolution of marriage. Options granted under the 1994
Option Plan are exercisable during the optionee's lifetime only by the optionee
or the optionee's guardian or legal representative.
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<PAGE>
Federal Income Tax Information
Incentive Stock Options. An optionee does not recognize income upon the
grant of an ISO and incurs no tax on its exercise (unless the optionee is
subject to the alternative minimum tax described below). If the optionee holds
the stock acquired upon exercise of an ISO (the "ISO Shares") for more than one
year after the date the option was exercised and for more than two years after
the date the option was granted, the optionee generally will realize long-term
capital gain or loss (rather than ordinary income or loss) upon disposition of
the ISO Shares. This gain or loss will be equal to the difference between the
amount realized upon such disposition and the amount paid for the ISO Shares. If
the optionee disposes of ISO Shares before the expiration of either required
holding period (a "disqualifying disposition"), then gain realized upon such
disqualifying disposition, up to the difference between the fair market value of
the ISO Shares on the date of exercise (or, if less, the amount realized on a
sale of such ISO Shares) and the option exercise price, will be treated as
ordinary income. Any additional gain will be long-term or short-term capital
gain, depending upon the length of time the optionee held the ISO Shares. The
Company will be entitled to a deduction in connection with the disposition of
ISO Shares only to the extent that the optionee recognizes ordinary income on a
disqualifying disposition of the ISO Shares.
Alternative Minimum Tax. The difference between the exercise price and fair
market value of the ISO Shares on the date of exercise of an ISO is an
adjustment to income for purposes of the alternative minimum tax ("AMT"). The
AMT (imposed to the extent it exceeds the taxpayer's regular tax) is 26% of an
individual taxpayer's alternative minimum taxable income (28% in the case of
alternative minimum taxable income in excess of $175,000). Alternative minimum
taxable income is determined by adjusting regular taxable income for certain
items, increasing that income by certain tax preference items and reducing this
amount by the applicable exemption amount ($45,000 in the case of a joint
return, subject to reduction in certain circumstances). If a disqualifying
disposition of the ISO Shares occurs in the same calendar year as exercise of
the ISO, there is no AMT adjustment with respect to those ISO Shares. Also, upon
a sale of ISO Shares that is not a disqualifying disposition, alternative
minimum taxable income is reduced in the year of sale by the excess of the fair
market value of the ISO Shares at exercise over the amount paid for the ISO
Shares.
Nonstatutory Stock Options. An optionee does not recognize any taxable
income at the time an NSO is granted. However, upon exercise of an NSO, the
optionee must include in income as compensation an amount equal to the
difference between the fair market value of the shares on the date of exercise
(or, in the case of exercise for stock subject to a substantial risk of
forfeiture, at the time such forfeiture restriction lapses) and the amount paid
for that stock upon exercise of the NSO. In the case of stock subject to a
substantial risk of forfeiture, if the optionee makes an 83(b) election, the
included amount must be based on the difference between the fair market value on
the date of exercise and the option exercise price. The included amount must be
treated as ordinary income by the optionee and will be subject to income tax
withholding by the Company. Upon resale of the shares by the optionee, any
subsequent appreciation or depreciation in the value of the shares will be
treated as capital gain or loss. The Company will be entitled to a deduction in
connection with the exercise of an NSO by a domestic optionee to the extent that
the optionee recognizes ordinary income and the Company withholds tax.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT
TO THE 1994 STOCK OPTION PLAN
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PROPOSAL NO. 3-APPROVAL OF AMENDMENT TO THE
1984 EMPLOYEE STOCK PURCHASE PLAN
Stockholders are being asked to approve an amendment to the Company's 1984
Employee Stock Purchase Plan (the "Purchase Plan") to increase the number of
shares of Common Stock reserved for issuance thereunder from 4,050,000 shares to
5,050,000 shares (an increase of 1,000,000 shares). The Board of Directors of
the Company approved the proposed amendment described above on April 29, 1997 to
be effective upon stockholder approval.
Below is a summary of the principal provisions of the Purchase Plan
assuming approval of the above amendment, which summary is qualified in its
entirety by reference to the full text of the Purchase Plan. The Company will
provide, without charge, to each person to whom a Proxy Statement is delivered,
upon request of such person and by first class mail within one business day of
receipt of such request, a copy of the Purchase Plan. Any such request should be
directed as follows: Stock Administrator, Integrated Device Technology
Corporation, 2975 Stender Way, Santa Clara, CA 95054; telephone number (408)
727-6116; facsimile number (408) 654-6742.
1984 Purchase Plan History
In May 1984, the Board of Directors of the Company adopted the Purchase
Plan, and on July 31, 1984, it was approved by the stockholders of the Company.
600,000 shares of Common Stock were originally reserved for issuance under the
Purchase Plan. In June 1993, the Board of Directors amended and restated the
Purchase Plan to increase the number of shares of Common Stock issuable
thereunder by 1,000,000 shares to 4,050,000 and to extend the termination date
of the Purchase Plan to the last day of the Company's 2008-2009 fiscal year, and
on August 25, 1993 the stockholders of the Company approved the amendment and
restatement to the Purchase Plan. A maximum of 1,054,269 shares were available
for issuance as of the Record Date pursuant to the Purchase Plan (assuming
approval of the proposed amendment).
Description of the Purchase Plan
General. The Purchase Plan, which is intended to qualify under the
provisions of section 423 of the Internal Revenue Code of 1986 (the "Code"),
provides for the grant to employees of rights to purchase shares of the
Company's Common Stock.
Administration. The Purchase Plan is administered by a plan administrator
appointed by the Board of Directors (the "Plan Administrator"). The Plan
Administrator has final authority for interpretation of any provisions of the
Purchase Plan or of any right to purchase stock granted under the Purchase Plan.
All costs and expenses associated with the administration of the Purchase Plan
are borne by the Company. In addition, the Purchase Plan provides certain
indemnification provisions.
Eligibility. Employees of the Company (including officers) become eligible
for participating in the Purchase Plan after having completed three months of
continuous employment that customarily entails more than twenty hours a week and
more than five months per calendar year. However, no employee is eligible to
participate in the Purchase Plan if, immediately after the election to
participate, such employee would own stock of the Company (including stock such
employee may purchase under outstanding options) representing 5% or more of the
total combined voting power or value of all classes of stock of the Company. In
addition, no employee is permitted to participate if under the Purchase Plan and
all similar purchase plans of the Company or its subsidiaries, such rights would
accrue at a rate which exceeds $25,000 of the fair market value of such stock
(determined at the time the right is granted) for each calendar year.
Participation. The Purchase Plan is implemented by one or more periods of
not more than twenty-seven months each ("Participation Periods"). The Board of
Directors determines the duration of Participation Periods and commencement
dates. The duration of each Participation Period is generally each of the
Company's fiscal quarters (although the duration of the current Participation
Period is nine months), and each Participation Period generally commences on the
first day of each quarter. Eligible employees become participants in the
Purchase Plan by executing a participation agreement and filing it with the Plan
Administrator no later than the deadline stated on the participation agreement,
and if none is stated, then no later than the first day of the Participation
Period. By enrolling in the Purchase Plan, a participant is deemed to
8
<PAGE>
have elected to purchase the maximum number of whole shares of Common Stock that
can be purchased with the compensation withheld during the Participation Period.
With respect to any Participation Period, no participant is eligible to purchase
more than 2,500 shares of stock (adjusted for Participation Periods longer than
a fiscal quarter and for recapitalizations).
Payroll Deductions. The payroll deductions made for each participant may be
not less than 2% nor more than 10% of a participant's base earnings. Base
earnings is defined in the Purchase Plan as all compensation, including payments
for overtime work and shift differential, but excluding all incentive
compensation, sales commissions and other bonuses. Payroll deductions commence
with the first paycheck issued during the Participation Period and are deducted
from subsequent paychecks throughout the Participation Period unless changed or
terminated as provided in the Purchase Plan. The participant may, if permitted
by the Plan Administrator, decrease the rate of payroll withholding during a
Participation Period by filing a new participation agreement. The new rate
becomes effective the first day of the second payroll period which begins
following the receipt of the new participation agreement. The participant may
increase or decrease the rate of payroll withholding for the next Participation
Period by filing a new participation agreement on or before the date specified
by the Plan Administrator and if none is stated, then no later than the first
day of the Participation Period for which the change is to be effective.
The Company maintains a plan account in the name of each participant and
credits the amount deducted from compensation to such account.
Purchase of Stock; Price. As of the last day of each Participation Period,
each participant's accumulated payroll deductions are applied to the purchase of
whole shares of Common Stock at a price which is the lower of (i) 85% of the
fair market value per share of the Common Stock on the first trading day of the
Participation Period or (ii) 85% of the fair market value per share of the
Common Stock on the last trading day during the Participation Period. The fair
market value of the Common Stock on a given date is defined as the closing price
as reported by the NASDAQ National Market System. In the event that the
aggregate number of shares which all participants elect to purchase during a
Participation Period exceeds the number of shares remaining for issuance under
the Purchase Plan, the available shares will be ratably divided and any excess
cash will be refunded to the participants.
Participants are notified by statements of account as soon as practicable
following the end of each Participation Period as to the amount of payroll
deductions, the number of shares purchased, the purchase price and the remaining
cash balance of their plan account. Certificates representing whole shares are
delivered to a brokerage account and kept in such account pursuant to the
participation agreement. The shares must be kept in the brokerage account for
two years from the date of grant unless sold.
Withdrawal From the Purchase Plan. Participants may withdraw from
participation under the Purchase Plan at any time up to the last day of a
Participation Period by filing the prescribed form with the Plan Administrator.
As soon as practicable after withdrawal, payroll deductions cease and all
amounts credited to the participant's plan account are refunded in cash, without
interest. A participant who has withdrawn from the Purchase Plan shall not be a
participant in future Participation Periods unless he or she re-enrolls pursuant
to the Purchase Plan's guidelines.
Termination of Employment. Termination of a participant's status as a
full-time or permanent part-time employee for any reason, including death, is
treated as an automatic withdrawal from the Purchase Plan. A participant may
designate in writing a beneficiary who is to receive shares and cash in the
event of the participant's death subsequent to the purchase of shares, but prior
to delivery. A participant may also designate a beneficiary to receive cash in
his or her account in the event of such participant's death prior to the last
day of the Participation Period.
Nontransferability. The rights or interests of any participant in the
Purchase Plan or in any shares or cash to which such participant may be
entitled, shall not be transferable by voluntary or involuntary assignment or by
operation of law, or by any other manner than as permitted by the Code, by will
or the laws of descent and distribution. An attempt by a participant to transfer
an interest in violation of the Purchase Plan is treated as an automatic
withdrawal.
Amendment and Termination of the Purchase Plan. The Board of Directors has
the right to amend, modify or terminate the Purchase Plan at any time without
notice; provided, however, stockholder approval shall be obtained when required
by applicable laws, regulations or rules.
9
<PAGE>
Adjustments Upon Changes in Capitalization. In the event of a subdivision
or consolidation of outstanding shares, the payment of a stock dividend or other
increase or decrease in such shares effected without the receipt of
consideration by the Company, the aggregate number of shares offered under the
Purchase Plan, the number and price of shares which any participant may elect to
purchase and the maximum number of shares which a participant may elect to
purchase under the Purchase Plan in any Participation Period, shall be
proportionately adjusted. In the event of a dissolution or liquidation of the
Company, or a merger or consolidation to which the Company is a constituent
corporation, the Purchase Plan shall terminate, unless the plan of merger,
consolidation or reorganization provides otherwise, and all amounts which each
participant has paid towards the stock purchase price shall be refunded.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT
TO THE 1984 EMPLOYEE STOCK PURCHASE PLAN
NEW PLAN BENEFITS
The amounts of future option grants under the 1994 Option Plan are not
determinable because, under the terms of the 1994 Option Plan, such grants are
made in the discretion of the Compensation and Stock Option Committee. Future
option exercise prices are not determinable because they are based upon fair
market value of the Company's Common Stock on the date of grant. Similarly, the
amounts of future stock purchases under the Purchase Plan are not determinable
because, under the terms of the Purchase Plan, purchases are based upon
elections made by participants. Future purchase prices are not determinable
because they are based upon fair market value of the Company's Common Stock.
PROPOSAL NO. 4-RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed Price Waterhouse LLP as the Company's
independent accountants for the fiscal year ending March 30, 1998, and the
stockholders are being asked to ratify such selection. Price Waterhouse LLP has
been engaged as the Company's independent accountants since 1993.
Representatives of Price Waterhouse LLP are expected to be present at the Annual
Meeting, will be given an 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 RATIFICATION OF PRICE
WATERHOUSE LLP AS THE COMPANY'S INDEPENDENT ACCOUNTANTS
10
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of July 1, 1997,
with respect to the beneficial ownership of the Company's Common Stock by: (a)
each stockholder known by the Company to be the beneficial owner of more than
five percent of the Company's Common Stock; (b) each director and nominee; (c)
each Named Executive Officer (as defined below); and (d) all officers and
directors as a group.
<TABLE>
SECURITY OWNERSHIP
<CAPTION>
Name and Address Shares Beneficial Percentage of Beneficial
of Beneficial Owner Owned(1)(2) Ownership
- --------------------------------------------------- ------------------- -------------------------
<S> <C> <C>
5% Stockholders
Merrill Lynch & Co., Inc.(3) ..................... 6,021,923 7.5%
Non-Employee Directors
Carl E. Berg(4) ................................. 2,744,131 3.4
D. John Carey(5) ................................. 1,161,500 1.4
Federico Faggin(6) .............................. 84,000 *
John C. Bolger(7) .............................. 34,000 *
Named Executive Officers
Leonard C. Perham(8) ........................... 841,093 1.0
Chuen-Der Lien(9) .............................. 105,313 *
William Snyder(10) .............................. 82,162 *
Jerry Taylor(11) ................................. 35,000 *
Daniel L. Lewis(12) .............................. 22,266 *
All Executive Officers and Directors as a Group (14
Persons)(13) .................................... 5,299,697 6.5%
<FN>
- ------------
* Less than 1%.
(1) Unless otherwise indicated below, the Company believes that the persons
named in the table have sole voting and sole investment power with respect
to all shares of Common Stock shown in the table to be beneficially owned
by them, subject to community property laws where applicable.
(2) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days upon the exercise of options. Each
stockholder's percentage ownership is determined by assuming that options
that are held by such person (but not those held by any other person) and
that are exercisable within 60 days of July 1, 1997, have been exercised.
(3) Represents shares held by this stockholder reported as being beneficially
owned as of June 30, 1997. Information in respect of the beneficial owner
of Merrill Lynch & Co., Inc. ("ML&Co.") has been partially derived from
Amendment No. 1 to its Schedule 13-G dated April 7, 1997, filed on its
behalf and on behalf of Merrill Lynch Asset Management, L.P. d/b/a Merrill
Lynch Asset Management ("MLAM"), Merrill Lynch Group, Inc. ("ML Group"),
Merrill Lynch Technology Fund, Inc. ("MLTF") and Princeton Services, Inc.
("PSI") with the Securities and Exchange Commission (the "Commission").
Based on such Amendment No. 1 to Schedule 13-G, ML&Co., ML Group and PSI
are parent holding companies, MLAM is a registered investment adviser and
MLTF is a registered investment company (for which MLAM acts as investment
adviser), which has an interest that relates to greater than 5% of the
Common Stock of the Company. The address of ML&Co. is World Financial
Center, North Tower, 250 Vesey Street, New York, NY 10281.
(4) Represents 1,690,908 shares held of record by Mr. Berg, 391,223 shares held
of record by Mr. Berg and Mr. Berg's spouse as joint tenants, 589,000 shares
held of record by West Coast Venture Capital, L.P., of which Mr. Berg is a
general partner, 25,000 shares held of record by Mr. Berg's spouse and
48,000 shares subject to options exercisable within 60 days of July 1, 1997.
(Footnotes continued on next page)
11
<PAGE>
(Footnotes continued from previous page.)
(5) Represents 850,198 shares held of record by Mr. Carey, 7,278 shares held of
record by Mr. Carey's 401(k) plan account, 2,000 shares held of record by
Mr. Carey's daughter and 302,024 shares subject to options exercisable
within 60 days of July 1, 1997.
(6) Represents 84,000 shares subject to options exercisable within 60 days of
July 1, 1997.
(7) Represents 34,000 shares subject to options exercisable within 60 days of
July 1, 1997.
(8) Represents 33,000 shares beneficially owned by Mr. Perham, 8,286 shares
held of record by Mr. Perham's 401(k) plan account and 799,807 shares
subject to options to Mr. Perham exercisable within 60 days of July 1,
1997.
(9) Represents 5,173 shares beneficially owned by Mr. Lien, 2,140 shares held
of record by Mr. Lien's 401(k) plan account and 98,000 shares subject to
options exercisable within 60 days of July 1, 1997.
(10) Includes 81,422 shares subject to options exercisable within 60 days of
July 1, 1997. Mr. Snyder is the former Vice President and Chief Financial
Officer of the Company.
(11) Represents 35,000 shares subject to options exercisable within 60 days of
July 1, 1997.
(12) Represents 600 shares held of record by Mr. Lewis' children and 21,666
shares subject to options exercisable within 60 days of July 1, 1997.
(13) Includes 1,615,918 shares subject to options exercisable within 60 days of
July 1, 1997.
</FN>
</TABLE>
REPORT OF COMPENSATION AND STOCK OPTION COMMITTEE
ON EXECUTIVE COMPENSATION
The report of the Compensation and Stock Option Committee on Executive
Compensation shall not be deemed to be incorporated by reference by any general
statement incorporating by reference this Proxy Statement into any filing under
the Securities Act of 1933 or under the Securities Exchange Act of 1934, except
to the extent that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.
This report is provided by the Compensation and Stock Option Committee of
the Board of Directors of Integrated Device Technology, Inc. to assist
stockholders in understanding the objectives and procedures in establishing the
compensation of the Company's Chief Executive Officer, Leonard C. Perham, and
other executive officers. During the Company's fiscal year ended March 30, 1997,
the Company's compensation program was administered by the Compensation and
Stock Option Committee of the Board of Directors. The role of the Compensation
and Stock Option Committee was to review and approve salaries, cash bonuses and
other compensation of the executive officers and to administer the 1994 Option
Plan, including review and approval of stock option grants to the executive
officers. The Compensation and Stock Option Committee consists solely of outside
directors, Messrs. Bolger and Faggin.
Compensation Philosophy
The Compensation and Stock Option Committee believes that the compensation
of the Company's executive officers should be:
o competitive in the market place;
o directly linked to the Company's profitability and to the value of the
Company's Common Stock; and
o sufficient to attract, retain and motivate well-qualified executives who
will contribute to the long-term success of the Company.
The Company's Human Resources Department, working with an independent
outside consulting firm, developed executive compensation data from a nationally
recognized survey for a group of similar size high technology companies and
provided this data to the Compensation and Stock Option Committee. The factors
used to determine the participants in the survey included annual revenue,
industry, growth rate and geography. The Company's executive level positions,
including the Chief Executive Officer, were matched to
12
<PAGE>
comparable survey positions and competitive market compensation levels to
determine base salary, target incentives and target total cash compensation.
Practices of such companies with respect to stock option grants are also
reviewed and compared.
In preparing the performance graph for this Proxy Statement, the Company
used the S&P Electronic (Semi/Components) Index ("S&P Index") as its published
line of business index. The companies in this survey are substantially similar
to the companies contained in the S&P Index. Approximately two-thirds of the
companies included in the survey group are included in the S&P Index. The
remaining companies included in the survey group were felt to be relevant by the
Company's independent compensation consultants because they compete for
executive talent with the Company notwithstanding that they are not included in
the S&P Index. In addition, certain companies in the S&P Index were excluded
from the survey group because they were determined not to be competitive with
the Company for executive talent, or because compensation information was not
available.
This competitive market data is reviewed with the Chief Executive Officer
for each executive level position and with the Compensation and Stock Option
Committee as to the Chief Executive Officer. In addition, each executive
officer's performance for the last fiscal year and objectives for the subsequent
year are viewed, together with the executive's responsibility level and the
Company's fiscal performance versus objectives and potential performance targets
for the subsequent year.
Key Elements of Executive Compensation
The Company's executive compensation program consists of a cash and an
equity-based component. Base pay and, if warranted, an annual bonus and a
semi-annual award under the Company's Profit Sharing Plan constitute the cash
components. Grants of stock options under the Company's 1994 Option Plan
comprise the equity-based component. The Vice President of Sales is also
eligible to receive a commission-based bonus, which is paid quarterly.
Cash Components. Cash compensation is designed to fluctuate with Company
performance. In years that the Company exhibits superior financial performance,
cash compensation is designed to be above average competitive levels; when
financial performance is below goal, cash compensation is designed generally to
be below average competitive levels. Essentially, this is achieved through the
cash bonus and Profit Sharing Plan awards, which fluctuate generally with
pre-tax profitability.
Base Pay: Base pay guidelines are established for executive officers after
a review of compensation survey data referred to above. Individual base pay
within the guidelines is based on sustained individual performance toward
achieving the Company's goals and objectives. Executive salaries are reviewed
annually. Executive officer salaries were targeted at or near the 50th
percentile of companies included in the survey data and increased by 5.25% over
salaries for fiscal 1996.
Bonus: For fiscal 1997, the Company's bonus policy was to pay an annual
cash bonus to executive officers based on the pre-tax earnings of the Company,
the employee's individual performance and "performance units" assigned to
eligible employees. The Company did not pay bonuses to Named Executive Officers
for fiscal 1997, with the exception of an extraordinary $50,000 bonus paid to
Mr. Taylor.
Beginning in fiscal 1998, the Company will pay an annual cash bonus to
certain executive officers and other key employees based on the pre-tax earnings
of the Company and the employee's individual performance. Payment of bonuses is
usually made in the first quarter of each fiscal year for performance during the
previous year. Under this bonus plan, each eligible employee is assigned a
target bonus based upon the individual's job and area of responsibility relative
to the Company's goals. Payment of bonuses is scaled on the Company's
performance and on the individual's performance based on meeting goals. No
specific allocation is attributable to the Company as compared to individual
performance. Bonuses are contingent upon the Company's meeting at least 70% of
its revenue and pre-tax profit goals. The aggregate amount of all bonuses paid
for any single fiscal year may not exceed 6% of pre-tax profits for the year.
The Compensation and Stock Option Committee approves Company performance
objectives to be used for bonus determination and approves the overall structure
and mechanics of the bonus program.
Profit Sharing Plan: The Profit Sharing Plan is available to all employees
who have at least six months of service with the Company. The Board of Directors
determines the amount of annual contributions under
13
<PAGE>
the Profit Sharing Plan. In fiscal 1997, no contribution to the Profit Sharing
Plan was made. In fiscal year 1996, the Board set aside 7.0% of pre-tax earnings
to be contributed to the Profit Sharing Plan. Additionally, 1% of pre-tax profit
was contributed semiannually to each employee's Section 401(k) Plan account.
Contributions to the Profit Sharing Plan and Section 401(k) Plan are made in
cash and distributed semi-annually. The amount of each participating employee's
distribution is that portion of total funds available for distribution equal to
such employee's base salary divided by the aggregate base salaries of all
participating employees.
Equity-Based Component. Stock options are an essential element of the
Company's executive compensation package. The Compensation and Stock Option
Committee believes that equity-based compensation in the form of stock options
links the interests of management and stockholders by focusing employees and
management on increasing stockholder value. The actual value of such
equity-based compensation depends entirely on appreciation of the Company'
stock. Approximately 40% of the Company's employees participate in the Company's
1994 Option Plan.
During fiscal 1997, the Compensation and Stock Option Committee made stock
option grants to certain executives including the Chief Executive Officer. See
"Executive Compensation Option Grants in Fiscal 1997." Generally, for executive
officers, the stock option grants were at the 65th percentile of grants made by
the survey companies. Stock options typically have been granted to executive
officers when the executive first joins the Company, annually thereafter, in
connection with significant changes in responsibilities, and, occasionally, to
achieve equity within a peer group. The number of shares subject to each stock
option granted takes into account or is based on anticipated future contribution
and ability to impact corporate and/or business unit results, past performance
or consistency within the executive's peer group, prior option grants to the
executive officer and the level of vested and unvested options. The purpose of
these options is to provide greater incentives to those officers to continue
their employment with the Company and to strive to increase the value of the
Company's Common Stock on the date of grant. These options generally vest as to
25% of the total shares one year after the date of grant and then monthly over
the next three years. In addition, the Committee has also granted "fourever"
options, which vest monthly over the one-year period following the third
anniversary of the date of grant. The "fourever" program is intended to provide
continuing incentive to employees to remain with the Company.
Fiscal 1997 CEO Compensation
In evaluating the compensation of Mr. Perham, President and Chief Executive
Officer of the Company, for services rendered in fiscal 1997, the Compensation
and Stock Option Committee examined both quantitative and qualitative factors.
In looking at quantitative factors, the Compensation and Stock Option Committee
reviewed the Company's fiscal 1997 financial results and compared them with the
Company's financial results in fiscal 1996 and with the companies in the S&P
Electronics Index. The Compensation and Stock Option Committee reviewed the
Company's net loss for fiscal 1997, the Company's decrease in earnings per share
in fiscal 1997, the Company's decrease in net sales for fiscal 1997 and other
factors. The Compensation and Stock Option Committee did not apply any specific
quantitative formula which could assign weights to those performance measures or
establish numerical targets for any given factor.
Based on the foregoing and the factors considered in determining the sizes
of the stock option awards discussed above, the Compensation and Stock Option
Committee made the following determinations with respect to Mr. Perham's
compensation for fiscal 1997.
In fiscal 1997, Mr. Perham's base salary was increased to $351,848
(compared to $341,600 in fiscal 1996).
Mr. Perham received no bonus in fiscal 1997. For fiscal 1997, Mr. Perham
also did not receive any payment under the Profit Sharing Plan or the Section
401(k) Plan.
During fiscal 1997, Mr. Perham was granted an option for 120,000 shares.
The Compensation and Stock Option Committee believes such option is appropriate
for Mr. Perham's level of responsibility and is well within competitive
practice, taking into account prior option grant history, the level of vested
versus unvested shares and the number of shares Mr. Perham already owned. The
Compensation and Stock Option Committee determined that this new option granted
provided the necessary incentive to Mr. Perham.
14
<PAGE>
Tax Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code of 1986, as amended ("Section
162(m)"), generally provides that publicly held corporations may not deduct in
any taxable year certain compensation in excess of $1 million paid to the chief
executive officer and the next five most highly compensated executive officers.
The 1994 Option Plan and the 1995 Executive Performance Plan are in compliance
with Section 162(m) and the Company believes that its compensation programs will
generally satisfy the requirements for deductibility of all cash and
stock-related incentive compensation to be paid to the Company's executive
officer under Section 162(m). However, the Compensation and Stock Option
Committee considers one of its primary responsibilities to be providing a
compensation program that will attract, retain and reward executive talent
necessary to maximize shareholder returns. Accordingly, the Compensation and
Stock Option Committee believes that the Company's interests are best served in
some circumstances to provide compensation (such as salary and perquisites)
which might be subject to the tax deductibility limitation of Section 162(m).
COMPENSATION AND
STOCK OPTION COMMITTEE
John C. Bolger Federico Faggin
15
<PAGE>
EXECUTIVE COMPENSATION
<TABLE>
The following table shows certain information concerning the compensation
of each of the Company's Chief Executive Officer and the Company's four most
highly compensated executive officers other than the Chief Executive Officer of
the Company who were serving as executive officers at the end of fiscal 1997 for
services rendered in all capacities to the Company for the fiscal years ended
1997, 1996 and 1995 (together, the "Named Executive Officers"). This information
includes the dollar values of base salaries, bonus awards, the number of stock
options granted and certain other compensation, if any, whether paid or
deferred. The Company does not grant stock appreciation rights and has no long
term compensation benefits other than stock options.
<CAPTION>
Summary Compensation Table
Long-Term
Compensation
Annual Compensation Awards
------------------------------------------------------- -----------------
Shares
Name and Fiscal Other Annual Underlying All Other
Principal Position Year Salary($) Bonus($)(1) Compensation($)(2) Options(#) Compensation($)(3)
- -------------------------- -------- ----------- ------------- -------------------- ----------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Leonard C. Perham ...... 1997 $351,848 $ - - 120,000 $ -
Chief Executive Officer 1996 341,600 1,369,003 - 400,000(4) 1,045
1995 277,776 947,329 - 160,000 677
Jerry Taylor(5) ......... 1997 131,539 150,000 23,275 150,000 -
Vice President, 1996 - - - - -
Manufacturing 1995 - - - - -
and Memory Products
Daniel L. Lewis ......... 1997 163,246 105,326 - 15,000 -
Vice President, Sales 1996 157,200 294,664 - 40,000(4) 1,045
1995 141,102 219,287 - 20,000 677
Chuen-Der Lien ......... 1997 191,557 13,850 - 30,000 -
Vice President, 1996 180,480 425,125 - 160,000(4) 1,045
Technology Development 1995 155,124 378,710 - 32,000 677
William D. Snyder(6) ... 1997 200,751 - 120 21,000 -
Vice President, Finance, 1996 179,520 265,745 120 84,000(4) 1,045
and Chief Financial 1995 165,009 203,973 120 28,000 677
Officer
<FN>
- ------------
(1) Amounts listed in this column for fiscal 1997, 1996 and 1995 include cash
paid under the Company's Profit Sharing Plan, as follows: Mr. Perham, $0,
$52,183 and $30,729; Mr. Taylor, $0, $0 and $0; Mr. Lewis, $0, $24,077 and
$15,213; Mr. Lien, $0, $27,625 and $17,160; and Mr. Snyder, $0, $27,548 and
$18,253. In fiscal 1997, Mr. Taylor received a bonus of $100,000 in
connection with commencing his employment with the Company and an
extraordinary performance bonus of $50,000.
(2) The amount reflected for Mr. Taylor represents a housing relocation
allowance. The amounts reflected for Mr. Snyder represent health club dues.
(3) Amounts listed in this column for 1995 and 1996 are the Company's
contributions to the individual 401(k) accounts of each of the Named
Executive Officers for 1995 and 1996, respectively.
(4) Represents an option for 160,000 shares granted in 1995 and repriced in
1996 and an option for 120,000 shares granted in 1996 and repriced in 1996
for Mr. Perham; an option for 20,000 shares granted in 1996 and repriced in
1996 for Mr. Lewis; an option for 32,000 shares granted in 1995 and
repriced in 1996 and options for 64,000 shares granted in 1996 and repriced
in 1996 for Mr. Lien; and an option for 28,000 shares granted in 1995 and
repriced in 1996 and an option for 28,000 shares granted in 1996 and
repriced in 1996 for Mr. Snyder.
(5) Mr. Taylor joined the Company in June 1996.
(6) Mr. Snyder ceased to be an executive officer of the Company in July 1997.
</FN>
</TABLE>
16
<PAGE>
<TABLE>
The following table contains information concerning the grant of stock
options under the Company's 1994 Option Plan to the Named Executive Officers
during fiscal 1997. In addition, there are shown the hypothetical gains or
"option spreads" that would exist for the respective options based on
assumed rates of annual compound stock appreciation of 5% and 10% from the date
of grant over the full option term. Actual gains, if any, on option exercises
are dependent on the future performance of the Company's Common Stock. The
hypothetical gains shown in this table are not intended to forecast possible
future appreciation, if any, of the stock price.
<CAPTION>
Option Grants in Fiscal 1997
Potential Realizable
Value
at Assumed Annual Rates
of Stock Price
Appreciation
Individual Grants for Option Term(1)
- ---------------------------------------------------------------------------------------------- ------------------------
Number of % of Total
Shares Options
Underlying Granted to Exercise
Options Employees Price Expiration
Name Granted(2) in Fiscal 1996 ($/Share)(2) Date(3) 5% 10%
- -------------------------- ----------------- ---------------- -------------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Leonard C. Perham ...... 120,000 3.4% $ 9.125 10/3/03 $436,944 $1,015,020
Jerry Taylor ............ 120,000(4) 3.4% 10.125 6/24/03 375,703 847,331
30,000(5) 0.8% 11.359 3/15/07 214,314 543,114
Daniel L. Lewis ......... 15,000 0.4% 10.125 7/30/03 62,773 146,648
Chuen-Der Lien ......... 30,000 0.8% 10.125 8/10/03 126,178 295,013
William Snyder ......... 21,000 0.6% 11.938 4/22/03 102,385 238,725
<FN>
- ------------
(1) In accordance with Securities and Exchange Commission (the "SEC") rules,
these columns show gains that might exist for the respective options over a
period of ten years. This valuation model is hypothetical. If the stock
price does not increase over the exercise price, compensation to the Named
Executive Officer would be zero.
(2) Except as otherwise noted, the options shown in the table are non-qualified
stock options that vest in 12 equal monthly increments beginning
approximately three years after the date of grant. The terms of the 1994
Option Plan provide that these options may become exercisable in full in
the event of a change in control (as defined in the 1994 Option Plan).
(3) All stock options are granted at the fair market value on the date of
grant. The exercise price and tax withholding obligations related to
exercise may be paid by delivery of shares already owned and tax
withholding obligations related to exercise may be paid by offset of the
underlying shares, subject to certain conditions.
(4) This option vests as to 25% of the shares on the first anniversary of the
date of grant and thereafter for three years at the rate of 1/48th of the
shares for each full month that the optionee renders services to the
Company.
(5) This option is a non-qualified stock option that vests on the seventh
anniversary of the date of grant, subject to earlier vesting based on
performance targets.
</FN>
</TABLE>
17
<PAGE>
<TABLE>
The following table shows the number of shares of Common Stock acquired by
each of the Named Executive Officers upon the exercise of stock options during
fiscal 1997, the net value realized upon exercise, the number of shares of
Common Stock represented by outstanding stock options held by each of the Named
Executive Officers as of March 30, 1997 and the value of such options based on
the closing price of the Company's Common Stock at fiscal year-end ($10.1875).
<CAPTION>
Aggregated Option Exercises in Fiscal 1997 and Fiscal Year-End Option Values
Number of Shares
Underlying Unexercised Value of Unexercised
Options at Fiscal In-the-Money Options
Year-End(#)(1) at Fiscal Year-End($)(2)
------------------------------- ------------------------------
Shares
Acquired on Value
Name Exercise(#) Realized(1) Exercisable Unexercisable Exercisable Unexercisable
- -------------------------- ------------- ------------- ------------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Leonard C. Perham ...... - $ - $746,473 $453,334 $5,223,706 $425,003
Jerry Taylor ............ - - - 150,000 - 7,500
Daniel L. Lewis ......... 15,000 178,594 18,333 61,667 95,207 33,856
Chuen-Der Lien ......... - - 81,332 126,668 453,415 57,085
William Snyder ......... - - 69,755 79,334 539,881 33,109
<FN>
- ------------
(1) "Value Realized" represents the fair market value of the shares underlying
the options on the date of exercise less the aggregate exercise price.
(2) These values, unlike the amounts set forth in the column entitled "Value
Realized," have not been, and may never be, realized, and are based on the
positive spread between the respective exercise prices of outstanding
options and the closing price of the Company's Common Stock on March 27,
1997, the last day of trading for fiscal 1997.
</FN>
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION IN COMPENSATION DECISIONS
The Company has a Compensation and Stock Option Committee of the Board of
Directors, comprised of John C. Bolger and Federico Faggin, both of whom are
outside directors. This Committee makes decisions regarding option grants to
employees including executive officers. No interlocking relationship exists
between the Board or the Compensation and Stock Option Committee and the board
of directors or compensation committee of any other company, nor did any such
interlocking relationship exist during fiscal 1997.
PERFORMANCE GRAPH
The Performance Graph shall not be deemed to be incorporated by reference
by any general statement incorporating by reference this Proxy Statement into
any filing under the Securities Act of 1933 or under the Securities Exchange Act
of 1934, except to the extent that the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
The Securities and Exchange Commission requires that the Company include in
this Proxy Statement a line-graph presentation comparing cumulative, five-year
stockholder returns on an indexed basis with (i) a broad equity market index and
(ii) an industry index or peer group. Set forth below is a line graph comparing
the percentage change in the cumulative total stockholder return on the
Company's Common Stock against the cumulative total return of the Standard &
Poors 500 Index and the Standard & Poors Electronics (Semi/Components) Index for
a period of five fiscal years. The Company's fiscal year ends on a different day
each year because the Company's year ends at midnight on the Sunday nearest to
March 31 of each calendar year. However, for convenience, the amounts shown
below are based on a March 31 fiscal year end. "Total return," for the purpose
of this graph, assumes reinvestment of all dividends.
18
<PAGE>
<TABLE>
Comparison of Five Year Cumulative Total Return*
Among Integrated Device Technology, Inc., the S & P 500 Index
and the S & P Electronic (Semi/Components) Index
[The following descriptive data is supplied in accordance with Rule 304(d) of
Regulation S-T]
<CAPTION>
Cumulative Total Return
--------------------------------------------------------------------------
03/31/92 03/31/93 03/31/94 03/31/95 03/31/96 03/31/97
<S> <C> <C> <C> <C> <C> <C>
Integrated Device Technology, Inc. 100 132 432 630 387 340
S & P 500 Index 100 115 117 135 179 214
S & P Electronics (Semiconductor) Index 100 187 251 301 332 705
<FN>
- ------------
* $100 Invested on 3/31/92 in Stock or Index Including Reinvestment of
Dividends. Fiscal Year Ending March 31.
</FN>
</TABLE>
19
<PAGE>
CERTAIN TRANSACTIONS
Through the second quarter of fiscal 1997, the Company leased its Salinas
facility from Baccarat Silicon ("Baccarat"), a company wholly owned by Carl E.
Berg, a director of the Company, and his brother, under a lease expiring in
2005. During fiscal 1997, the Company incurred rent expenses due Baccarat of
$517,000. Late in fiscal 1996, the Company entered an agreement with Mr. Berg to
acquire the Salinas facility in a transaction structured as a tax-free
reorganization. This transaction was completed in December 1996 when the Company
exchanged 782,445 shares of its Common Stock for all the outstanding shares of
Baccarat. The transaction was valued at $8,509,000, based upon a per-share value
of the Company's Common Stock of $10.875.
The Company has from time to time retained Phillip Perham, a contractor and
the brother of Leonard C. Perham, as an independent contractor to perform
certain construction services in connection with improvements and repairs to
various Company facilities. The Company paid Phillip Perham an aggregate of
approximately $703,000 for such services during fiscal 1997, of which
approximately $280,000 was reimbursed to the Company by the landlords of certain
facilities leased by the Company.
COMPLIANCE UNDER SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16 of the Securities Exchange Act of 1934, as amended, requires the
Company's directors and officers, and persons who own more than 10% of the
Company's Common Stock to file initial reports of ownership and reports of
changes in ownership with the SEC and the Nasdaq National Market. Such persons
are required by SEC regulation to furnish the Company with copies of all Section
16(a) forms that they file.
Based solely on the Company's review of the copies of such forms furnished
to it and written representations from the executive officers and directors, the
Company believes that all Section 16(a) filing requirements were met, except for
one Form 4 that was filed late for Mr. Berg.
STOCKHOLDER PROPOSALS TO BE PRESENTED AT NEXT ANNUAL MEETING
Proposals of stockholders that are intended to be presented by such
stockholders at the Company's 1998 Annual Meeting must be received by the
Company no later than March 23, 1998.
OTHER MATTERS
The Company knows of no other matters to be submitted to the Annual
Meeting. However, if any other matters properly come before the Annual Meeting
or any adjournment or postponement thereof, 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.
By Order of the Board of Directors
/s/ Jack Menache
Jack Menache
Secretary
Dated: July 21, 1997
Santa Clara, California
20
<PAGE>
Appendix A
DETACH HERE
INTEGRATED DEVICE TECHNOLOGY, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
P AUGUST 28, 1997
R The undersigned hereby appoints Leonard C. Perham and Jack Menache, or
either of them, each with power of substitution, to represent the
O undersigned at the Annual Meeting of Stockholders of Integrated Device
Technology, Inc. (the "Company") to be held at 2670 Seeley Road, San Jose,
X California 95054 on August 28, 1997, at 9:30 a.m. P.D.T., and at any
adjournment thereof, and to vote the number of shares the undersigned would
Y be entitled to vote if personally present at the meeting on the following
matters set forth on the reverse side.
------------
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE
------------
<PAGE>
<TABLE>
DETACH HERE
[X]Please mark
votes as in
this example.
The Board of Directors recommends a vote FOR the nominee for election and FOR Proposals 2, 3 and 4. THIS PROXY WILL BE VOTED AS
DIRECTED. IN THE ABSENCE OF DIRECTION, THIS PROXY WILL BE VOTED FOR THE COMPANY'S NOMINEE FOR ELECTION AND FOR PROPOSALS 2, 3 AND
4. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting or
any adjournment thereof to the extent authorized by Rule 14a-4(c) promulgated by the Securities and Exchange Commission. THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
<CAPTION>
<S> <C> <C> <C> <C>
FOR AGAINST ABSTAIN
1. ELECTION OF CLASS I DIRECTOR 2. AMENDMENT OF 1994 STOCK
Nominees: Leonard C. Perham OPTION PLAN. [ ] [ ] [ ]
FOR WITHHELD
[ ] [ ] 3. AMENDMENT OF 1984 EMPLOYEE
STOCK PURCHASE PLAN. [ ] [ ] [ ]
MARK HERE 4. RATIFICATION OF SELECTION OF
FOR ADDRESS PRICE WATERHOUSE LLP AS THE
CHANGE AND [ ] COMPANY'S INDEPENDENT
NOTE BELOW AUDITORS. [ ] [ ] [ ]
Please sign exactly as your name(s) appear(s) on your stock certificate.
If shares are held of record in the names of two or more persons or in the
name of husband and wife, whether as joint tenants or otherwise, both or
all of such persons should sign the proxy. If shares of stock are held of
record by a corporation, the proxy should be executed by the president or
vice president and the secretary or assistant secretary. Executors,
administrators, or other fiduciaries who execute the above proxy for a
deceased stockholder should give their full title. Please date the proxy.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE,
SIGN AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED, POSTAGE PAID ENVELOPE
SO THAT YOUR SHARES MAY BE REPRESENTED AT THE MEETING.
Signature:_______________________________ Date:_________________ Signature:_______________________________ Date:_________________
</TABLE>
