<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
MYLEX CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[LOGO]
April 21, 1998
Dear Fellow Stockholder:
The Board of Directors of Mylex Corporation is pleased to invite you to
attend the Company's 1998 Annual Meeting of Stockholders to be held on Thursday,
May 21, 1998, at 2:00 p.m., at the Holiday Inn, located at 625 El Camino Real,
Palo Alto, California 94301.
At the meeting, we will vote to elect seven directors and to ratify the
reappointment of our auditors. We will also report to you on the operations of
the Company. You will have the opportunity to ask questions about the business
that may be of general interest to stockholders.
I urge you to vote your proxy as soon as possible. Your vote is very
important regardless of the number of shares you own. Please mark, sign and date
each proxy card you receive and return it, at your earliest convenience, in the
postage-paid envelope provided, even if you currently plan to attend the Annual
Meeting. Returning your proxy card will not prevent you from voting in person,
but will assure that your vote is counted if you are unable to attend. I
encourage you to vote "FOR" each of the Board's nominees for director and "FOR"
the proposal discussed in the accompanying Notice and Proxy Statement.
Sincerely,
[SIGNATURE]
Al Montross
PRESIDENT AND CHIEF EXECUTIVE OFFICER
<PAGE>
[LOGO]
MYLEX CORPORATION
----------------
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
---------------------
APRIL 21, 1998
TO THE STOCKHOLDER:
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of Stockholders of Mylex
Corporation, a Delaware corporation (the "Company"), will be held on Thursday,
May 21, 1998, at 2:00 p.m., at the Holiday Inn, located at 625 El Camino Real,
Palo Alto, California 94301, for the following purposes.
1. To elect directors to serve for the following year and until their
successors are duly elected.
2. To ratify the appointment of KPMG Peat Markwick LLP as independent
public accountants of the Company for the fiscal year ending December 26,
1998.
3. To transact such other business as may properly come before the meeting
or 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 April 10, 1998, are
entitled to notice of and to vote at the meeting. A list of stockholders
eligible to vote at the Annual Meeting will be available for inspection at the
Annual 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, date and return the enclosed Proxy as promptly as possible in the envelope
enclosed for that purpose. Any stockholder attending the meeting may vote in
person even if he or she previously returned a Proxy.
Sincerely,
[SIGNATURE]
Al Montross
PRESIDENT AND CHIEF EXECUTIVE OFFICER
YOUR VOTE IS IMPORTANT.
IN ORDER TO ASSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE REQUESTED TO
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE AND RETURN IT
IN THE ENCLOSED ENVELOPE.
<PAGE>
[LOGO]
MYLEX CORPORATION
----------------
PROXY STATEMENT
---------------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 21, 1998
GENERAL
The enclosed Proxy is solicited on behalf of Mylex Corporation (the
"Company") for the Annual Meeting of Stockholders to be held on May 21, 1998, at
2:00 p.m. at the Holiday Inn, located at 625 El Camino Real, Palo Alto,
California 94301, or any adjournment or adjournments thereof, for the purposes
set forth herein and in the accompanying Notice of Annual Meeting of
Stockholders. The Company's telephone number is (510) 796-6100.
This Proxy Statement and the accompanying proxy card are first being mailed
on or about April 21, 1998 to all stockholders entitled to notice of and vote at
the Annual Meeting.
RECORD DATE AND SHARES OUTSTANDING
Only stockholders of record at the close of business on April 10, 1998 (the
"Record Date") are entitled to receive notice of and to vote at the Annual
Meeting. The issued and outstanding voting securities of the Company at March
24, 1998 consisted of 20,231,625 shares of Common Stock, par value $0.01.
REVOCABILITY OF PROXIES
The enclosed Proxy is revocable at any time before its use by delivering to
the Secretary of the Company a written notice of revocation or a duly executed
proxy bearing a later date. If a person who has executed and returned a proxy is
present at the meeting and wishes to vote in person, he or she may elect to do
so and thereby suspend the power of the proxy holders with respect to his or her
proxy.
VOTING AND SOLICITATION
Each outstanding share of the Company's Common Stock is entitled to one vote
on all matters submitted to a vote at a meeting of stockholders.
The cost of soliciting proxies will be borne by the Company. 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 also be solicited by certain of
the Company's directors, officers and regular employees, without additional
compensation, personally or by telephone, telegraph, facsimile, or otherwise. If
not otherwise specified, all proxies received pursuant to this solicitation will
be voted FOR each of Management's nominees for director and FOR the proposal
identified in the foregoing Notice and described herein.
1
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QUORUM; ABSTENTIONS; BROKER NON-VOTES
The Company's Bylaws provide that the presence in person or by proxy of
stockholders holding a majority of the shares of stock issued and outstanding
and entitled to vote shall constitute a quorum at an annual meeting of
stockholders.
For determining whether a proposal has received a majority vote, abstentions
will be included in the vote totals, with the result that an abstention will
have the same effect as a negative vote. In instances where brokers are
prohibited from exercising discretionary authority for beneficial holders who
have not returned a proxy (so called "broker non-votes"), those shares will not
be included in the vote totals and, therefore, will have no effect on the
outcome of the vote. However, broker non-votes shares that abstain and shares
for which the authority to vote is withheld on certain matters will be treated
as present for quorum purposes on all matters.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Proposals of stockholders of the Company that are intended to be presented
by such stockholders at the Company's 1999 Annual Meeting must be received by
the Company no later than on January 21, 1999, in order that they may be
considered for inclusion in the proxy statement and form of proxy relating to
that meeting.
PROPOSAL ONE
ELECTION OF DIRECTORS
A board of seven directors is to be elected at the Annual Meeting. Until
otherwise instructed, the proxy holders will vote all of the proxies received by
them for each of the Company's seven nominees named below. Each of the nominees
is currently a director of the Company. In the event that any such 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 current
Board of Directors to fill the vacancy. In the event that additional persons are
nominated for election as directors, the proxy holders intend to vote all
proxies received by them in such a manner as will ensure the election of as many
of the nominees listed below as possible. In such event, the specific nominees
to be voted for will be determined by the proxy holders. It is not expected that
any nominee will be unavailable. The term of office of each person elected as a
director will continue until the next Annual Meeting of Stockholders and until
his successor has been elected and qualified.
NOMINEES
The names of the nominees of management and certain information about them
are set forth below.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE PRINCIPAL OCCUPATION SINCE
- --------------------------------- --- -------------------------------------------------------------- -----------
<S> <C> <C> <C>
Mr. Ismael Dudhia................ 63 Independent Consultant 1991
Dr. M. Yaqub Mirza............... 51 President of Mar-Jac Investments, Inc. 1988
Dr. Inder M. Singh............... 48 Chief Executive Officer and Chairman of Lynx Real-Time System, 1986
Inc.
Mr. Richard Love................. 64 Principal, RJL Capital Management 1993
Mr. Al Montross.................. 61 Chief Executive Officer and President of the Company 1994
Mr. Stephen McKenzie............. 68 Chief Executive Officer of Resource Management 1995
Mr. Walt Wilson.................. 54 President of Solectron Americas and Senior Vice President of 1997
Solectron Corporation
</TABLE>
2
<PAGE>
Except as set forth below, each of the nominees has been engaged in the
principal occupation described above during the past five years.
ISMAEL DUDHIA
Mr. Dudhia was elected Director of the Company in July 1991 and became
Chairman in December 1993. Mr. Dudhia has been an independent consultant since
late 1991. From 1983 until 1991, Mr. Dudhia was Chairman of the Board and active
in the management of Coolidge Bank and Trust Company of Boston, Massachusetts,
which Mr. Dudhia owned from 1986 until 1991. In 1961, Mr. Dudhia obtained a
degree of Barrister-at-Law from Lincolns Inn, an education institution in
England. From November 1993 until April 1994, Mr. Dudhia served as a director of
Northgate Computer Systems, Inc. a Minnesota based computer company
("Northgate"). In late 1994, a liquidation of Northgate under Chapter 7 of the
Federal Bankruptcy Act was converted to a reorganization under Chapter 11 of
that Act.
RICHARD LOVE
Mr. Love has served as a Director of the Company since July 1993 and was
appointed Treasurer in January 1995. Mr. Love is currently a principal of RJL
Capital Management of Santa Barbara, an investment management firm. From 1973 to
1988, Mr. Love served as an investment counselor, then senior partner, with
Loomis, Sayles & Co. Before joining Loomis, Sayles & Co., Mr. Love held
positions with James Capel Investment Banking of San Francisco from 1969 to 1973
and with Stein, Roe & Farnham from 1959 to 1969. Mr. Love attended the
Lawrenceville School and received a Bachelor's degree in Metallurgical
Engineering from Cornell University. He is an ICAA Chartered Investment
Counselor. From July 1992 to September 1993, Mr. Love served as a member of the
Board of Directors of Northgate. In late 1994, a liquidation of Northgate under
Chapter 7 of the Federal Bankruptcy Act was converted to a reorganization under
Chapter 11 of that Act.
STEPHEN MCKENZIE
Mr. McKenzie was appointed Director in January 1995. Mr. McKenzie is
currently Chief Executive Officer of Resource Management, a receivables
financing company. From 1989 to 1991, he was Senior Vice President of Sales and
Marketing and co-founder of Reply Corporation, a manufacturer of microchannel
personal computers. From 1987 to 1989, Mr. McKenzie was President of Acer
America, Inc., a computer clone manufacturer. He currently serves as a member of
the Board of Directors of Microspeed Corporation, a manufacturer of personal
computer input devices. Mr. McKenzie holds a Bachelor's degree in Political
Science from the University of Nebraska.
M. YAQUB MIRZA
Dr. Mirza has served as a Director of the Company since December 1988 and as
Secretary since February 1989. He is currently President and Chief Executive
Officer of Mar-Jac Investments, Inc., an investment and management consulting
firm that is one of the Company's stockholders. He currently serves as a Trustee
and Treasurer on the Board of Trustees of Amana Mutual Funds Trust, a mutual
fund. He is also Chairman of the Board of Jugos Concetrados, S.A., which is
traded on the Santiago, Chile, Stock Exchange. Dr. Mirza also serves as an
officer of Safa Trust. Dr. Mirza holds a Doctorate in Physics from the
University of Texas. From July 1992 until April 1994, Dr. Mirza served as a
member of the Board of Directors of Northgate. In late 1994, a liquidation of
Northgate under Chapter 7 of the Federal Bankruptcy Act was converted to a
reorganization under Chapter 11 of that Act.
AL MONTROSS
Mr. Montross was appointed President and Chief Executive Officer of the
Company in April 1994 and became a Director in May 1994. In September 1993, Mr.
Montross joined the Company as Executive Vice
3
<PAGE>
President and in December 1993 was appointed Acting President and Chief
Operating Officer. From August 1992 to September 1993 he held the position of
Senior Vice President at Distributed Processing Technology of Maitland, Florida,
a computer peripherals manufacturer. From 1989 to 1992, Mr. Montross held the
position of President and Chief Operating Officer at Inacomp Computer Centers,
Inc., of Troy Michigan, a computer equipment and network reseller. He currently
serves as a director of American Speedy Printing Centers, Inc. Mr. Montross
holds a Bachelor's degree in Economics from Siena College in New York.
INDER M. SINGH
Dr. Singh has served as a Director of the Company since December 1986. Since
March 1988, Dr. Singh has been the Chief Executive Officer and Chairman of Lynx
Real-Time System, Inc., a software company. From 1985 to 1988, he was the owner
and operator of Simran Associates, a computer consulting firm. From 1982 to
1985, he served as Chief Executive Officer and President of Excelan, Inc. Before
forming Excelan, Inc., Dr. Singh held executive level positions with Zilog
Incorporated and Amdahl Corporation. Dr. Singh holds a Doctorate in Computer
Science from Yale University.
WALTER WILSON
Mr. Wilson is currently a Senior Vice President of Solectron Corporation and
the President of Solectron Americas, and has been with the electronics
manufacturing services provider since 1989. Mr. Wilson directs all activities
for Solectron Corporation's subsidiaries in Mexico, Brazil, California,
Massachusetts, North Carolina, Texas, and Washington. From 1993 until February
1996, Mr. Wilson served as President of Solectron California Corporation, the
company's Silicon Valley operation. From September 1995 until February 1996, Mr.
Wilson served as President of Solectron North America, a wholly-owned subsidiary
of Solectron Corporation. From June 1990 until February 1996, Mr. Wilson served
as Senior Vice President, Operations, of Solectron. Mr. Wilson has served as a
director of Solectron Corporation since January 1995. Before joining Solectron,
in a 24 year career with the IBM Corporation, Mr. Wilson served in diverse
domestic and overseas management positions, including manufacturing,
headquarters operations, and technology and product development. A graduate of
California State Polytechnic University, Mr. Wilson holds Bachelor of Science
degrees in Electrical Engineering and Applied Mathematics. He earned a Master of
Business Administration degree from Santa Clara University. Mr. Wilson also
serves as a director of Asyst Technologies, Inc.
VOTE REQUIRED AND BOARD OF DIRECTOR'S RECOMMENDATION
The seven nominees for director receiving the highest number of affirmative
votes of the shares entitled to be voted for them shall be elected as directors.
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES LISTED
ABOVE.
PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Management has selected KPMG Peat Markwick LLP, independent public
accountants, to audit the books, records and accounts of the Company for the
current fiscal year ending December 26, 1998. KPMG Peat Markwick LLP has audited
the Company's financial statements since the fiscal year ended December 31,
1987.
The affirmative vote of the holders of a majority of the Company's Common
Stock represented and voting at the Annual Meeting will be required to approve
and ratify the Board's selection of KPMG Peat
4
<PAGE>
Markwick LLP. In the event of a negative vote on such ratification, the Board of
Directors will reconsider its selection.
A representative of KPMG Peat Markwick LLP is expected to be available at
the Annual Meeting to make a statement, if such representative desires to do so,
and to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF KPMG PEAT MARKWICK LLP AS THE INDEPENDENT AUDITORS FOR THE 1998
FISCAL YEAR.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors of the Company (the "Board") held a total of twelve
meetings during fiscal 1997. During fiscal 1997, no director attended fewer than
seventy-five percent (75%) of the meetings of the Board and committees thereof,
if any, upon which such director served. In 1997, the Board had an Audit
Committee, a Compensation Committee and Stock Option Plan Committee. The Board
of Directors does not have a Nominating Committee or any committee performing
similar functions.
During 1997, the Audit Committee, which met one time, consisted of Messrs.
Love, McKenzie, Mirza and Singh. The Audit Committee approves the engagement of
and the services to be performed by the Company's independent auditors and
reviews the Company's accounting principles and its system of internal
accounting controls. The Audit Committee's functions include (i) recommending to
the Board the selection of the independent accountants, (ii) reviewing with the
independent accountants the scope of their examination, (iii) receiving the
reports of the independent accountants and meeting with representatives of such
accountants for the purpose of reviewing and considering questions relating to
their examination and such reports, (iv) reviewing, either directly or through
the independent accountants, the Company's system of internal accounting
controls and the Company's accounting principles, policies and practices, and
financial reporting.
The Stock Option Plan Committee, which met two times in 1997, consisted of
Messrs. Dudhia, Mirza and McKenzie. The charter of the Stock Option Plan
Committee is to review and approve grants of stock options to employees,
including officers, of the Company and to administer the Company's Employee
Stock Purchase Plan. The Compensation Committee, consisting of Messrs. Dudhia,
Love and Singh, met one time in 1997. The Compensation Committee's role is as
described in the Compensation Committee Report in this proxy statement.
COMPENSATION OF DIRECTORS
Each of the Company's directors who do not also serve as employees ("Outside
Directors") is renumerated for each Board meeting he attends. In 1997, the
Outside Directors were paid a fee of $2,000 for each meeting, other than
telephonic meetings, and a $1,000 fee for each telephonic meeting. The Company
also reimburses all directors for their reasonable out-of-pocket expenses
incurred in connection with their attendance at Board or Committee meetings. In
addition, Outside Directors are entitled to participate in the Company's Option
Plan. See a description of the "Stock Option Plan" on Page 8.
5
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table set forth the beneficial ownership of Common Stock as of
the Record Date, (i) by each director, (ii) by each executive officer named in
the Summary Compensation Table, (iii) by all directors and executive officers as
a group and (iv) by all persons known to the Company to be the beneficial owners
of more than five percent of the Company's Common Stock:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
NAME AND ADDRESS(1) BENEFICIAL OWNERSHIP(2) CLASS
- ----------------------------------------------------------- ----------------------- -----------
<S> <C> <C>
Officers and Directors
Mr. Al Montross............................................ 457,989(3) 2.22%
Mr. Alonzo Wilson.......................................... 67,638(4) 0.33%
Mrs. Colleen Gray.......................................... 48,059(5) 0.24%
Mr. Gregory S. Brashier.................................... 3,285(6) 0.02%
Mr. KK Rao................................................. 39,688(7) 0.20%
Mr. Bal Singh.............................................. 21,851(8) 0.11%
Mr. George Peck............................................ 15,194(9) 0.08%
Mr. Ron von Trapp.......................................... -- (10) 0.00%
Mr. Ismael Dudhia.......................................... 87,542(11) 0.43%
Dr. Inder Singh............................................ 325,861(12) 1.61%
Dr. M. Yaqub Mirza......................................... 818,620(13) 4.04%
Mr. Richard Love........................................... 325,741(14) 1.61%
Mr. Stephen McKenzie....................................... 53,291(15) 0.26%
Mr. Walt W. Wilson......................................... 19,618(16) 0.10%
All current directors and executive officers as a group (15 2,303,167(17)
persons):................................................ 11.3%
CERTAIN 5% BENEFICAL OWNERS
The Crabbe Huson Group, Inc................................ 3,358,100(18) 16.6%
Becker Capital Management.................................. 1,764,300(19) 8.7%
Thomas Horstman & Bryant................................... 1,156,300(20) 5.7%
</TABLE>
- ------------------------
(1) All addresses, other than for 5% Beneficial Owners, are at the Company,
34551 Ardenwood Boulevard, Fremont, California 94555.
(2) Includes shares subject to options becoming exercisable on or prior to May
24, 1998.
(3) Includes 69,319 shares owned and options for 388,670 shares.
(4) Includes 2,734 shares owned and options for 64,904 shares.
(5) Includes 8,243 shares owned and options for 39,816 shares.
(6) Includes 785 shares owned and options for 2,500 shares.
(7) Includes options for 39,688.
(8) Includes 842 shares owned and options for 21,009 shares.
(9) Includes 506 shares owned and options for 14,688 shares.
(10) Mr. von Trapp joined the Company in October 1997 and, accordingly, none of
his options will become exercisable by May 24, 1998.
(11) Includes 79,984 shares owned and options for 7,558 shares.
(12) Includes 324,222 shares owned and options for 1,639 shares.
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<PAGE>
(13) Includes 816,259 shares held in the following titles: Dr. Mirza, 106,000;
Mirza Revocable Trust, 60,000; SAFA Trust, 220,259; Mar-Jac Investments,
Inc. 330,000; York International Trust, 100,000; and options for 2,361
shares. Dr. Mirza is an officer of SAFA Trust. Dr. Mirza is an officer and
director of Mar-Jac Investments, and, therefore, may be deemed to
beneficially own the shares held by that stockholder. However, Dr. Mirza
disclaims beneficial ownership of all such shares.
(14) Includes 307,700 shares owned and options for 18,041 shares.
(15) Includes options for 53,291 shares.
(16) Includes options for 19,618 shares.
(17) Includes options to purchase an aggregate of 726,742 shares.
(18) Based upon information provided by The Crabbe Huson Group, Inc. on March
24, 1998. The stockholders' ownership position may have changed since that
date. The stockholders' address is The Crabbe Huson Group, Inc., 121 South
West Morrison, Suite 1400, Portland, OR 97204.
(19) Based upon information provided by Becker Capital Management on March 24,
1998. The stockholders' ownership position may have changed since that
date. The stockholders' address is Becker Capital Management, 1211 South
West Fifth Avenue, Suite 2185, Portland, OR 97204.
(20) Based upon information provided by Thomson Horstmann & Bryant, Inc. on
March 24, 1998. The stockholders' ownership position may have changed
since that date. The stockholders' address is Thomson Horstmann & Bryant,
Inc., Park 80 West, Plaza Two, Saddle Brook, NJ 07663.
7
<PAGE>
EXECUTIVE OFFICER COMPENSATION
The Summary Compensation Table sets forth information with respect to
compensation earned for services rendered to the Company during each of the last
three fiscal years for the Chief Executive Officer and the Company's four other
most highly compensated executive officers whose cash compensation exceeded
$100,000 in 1997.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION -------------
------------------------------------------------ SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($)(3) COMPENSATION ($)(4) OPTIONS (#) COMPENSATION ($)
- --------------------------------- --------- ----------- ------------ --------------------- ------------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
Mr. Al Montross.................. 1997 250,000 0 16,826 716,170 0
President and Chief 1996 250,000 856,232 19,683 630,000 0
Executive Officer 1995 249,038 664,184 11,604 500,000 0
Mr. Alonzo Wilson................ 1997 207,461 0 11,446 125,481 0
Vice President and Chief 1996 161,635 93,159 3,624 100,481 0
Operating Officer 1995(1) -- -- -- -- --
Ms. Colleen Gray................. 1997 201,923 0 4,654 82,003 0
Vice President Finance 1996 171,269 107,609 2,722 65,000 0
and Chief Financial Officer 1995 140,922 20,040 557 78,000 0
Mr. George Peck.................. 1997 166,730 0 5,346 70,000 0
Vice President, Engineering 1996 131,000 29,529 2,589 15,000 0
1995(2) 8,000 0 13 15,000 0
Mr. KK Rao....................... 1997 187,264 0 4,501 109,000 0
Vice President and Chief 1996 162,192 53,103 4,243 60,000 0
Technology Officer 1995 144,999 45,379 1,941 125,000 0
</TABLE>
- ------------------------
(1) Mr. Wilson joined the Company in February 1996.
(2) Mr. Peck joined the Company in December 1995.
(3) Except as described in this footnote, the bonus payments were made pursuant
to the Company's Executive Bonus Plan described below. Mr. Montross' bonuses
were paid pursuant to his employment agreement with the Company (see
"Employment Agreement" below). A portion of the bonus paid to Ms. Gray in
1995 ($30,000) and in 1996 ($45,000) was discretionary and approved by the
Board in recognition of her performance in those years.
(4) Other Annual Compensation consists of certain insurance premiums paid by the
Company, the Company's contributions to the accounts of the officers under
the Company's 401(k) Plan, and, in the case of Mr. Montross, a car
allowance.
EXECUTIVE BONUS PLAN
All executive officers other than the President and Chief Executive Officer
are eligible to receive a quarterly cash bonus under the Company's Executive
Bonus Plan. The amount of the cash bonus payable to each executive officer is a
percentage of the officer's salary and is typically determined based 50% on the
Company's financial performance, and 50% on the officer's personal performance,
during the applicable quarter.
STOCK OPTION AND STOCK PURCHASE PLANS
1993 STOCK OPTION PLAN. The Company's 1993 Stock Option Plan (the "Option
Plan") is administered by the Board or a committee thereof (collectively, the
"Administrator"). The Administrator has the power, except with respect to
certain options to directors, to determine eligibility to receive an option, the
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<PAGE>
terms of each option granted, including the exercise price, the number of shares
subject to the option, and the vesting schedule and the term of the option.
Generally, options become exercisable or "vest," and may be exercised, over a
three to four year period.
The Option Plan covers 4,825,000 shares of the Company's Common Stock. As of
the Record Date, options with respect to 4,089,639 shares of Common Stock were
outstanding, and 143,820 shares of Common Stock were reserved for issuance,
under the Option Plan.
The Option Plan provides that options may be granted to employees, including
officers, and consultants of the Company or any of its majority-owned
subsidiaries, as well as members of the Board who are not officers or employees
of the Company ("Outside Directors"). Incentive stock options may be granted
only to employees. As of the Record Date, there were 355 employees and six
Outside Directors eligible to be granted Options under the Option Plan.
The Option Plan provides that a nonstatutory option to purchase 50,000
shares of the Common Stock (the "First Option") shall be automatically granted
(the "Automatic Grant Program") to Outside Directors who are elected or
appointed to the Board subsequent to May 9, 1993. An additional option (the
"Second Option") to purchase 50,000 shares of the Common Stock will be
automatically granted to Outside Directors who remain on the Board three years
following the grant of the First Option. A Third Option (the "Third Option") to
purchase 50,000 shares of Common Stock will be automatically granted to Outside
Directors who remain on the Board eight years following the grant of the First
Option. The exercise price of options granted under the Automatic Grant Program
is the fair market value of the Common Stock on the date of the automatic grant.
The First Option, Second Option and Third Option become exercisable cumulatively
with respect to 1/36, 1/60 and 1/48, respectively, of the underlying shares on
the first day of each month following the date of grant of such option.
The terms of options granted under the Option Plan (other than options
granted to Outside Directors pursuant to the Automatic Grant Program (the
"Outside Director Options")), are determined by the Administrator. Each option
is subject to the following additional terms:
(a) Exercise of Option. Each option is exercised by giving written notice
of the number of shares of Common Stock to be purchased, and tendering payment
of the purchase price, to the Company. Payment for shares issued upon exercise
of an option may be made by cash, check, promissory note, other shares of the
Common Stock or any combination of such methods of payment, or such other
consideration and method of payment as is permitted under Delaware law.
(b) Exercise Price. The per share exercise price of options under the
Option Plan (other than Outside Director Options) is determined by the
Administrator and, in the case of incentive stock options, may not be less than
100% of the fair market value on the date of grant. The Administrator may grant
nonstatutory stock options at less than fair market value, but, to date, has not
done so. So long as the Common Stock is listed on any established stock exchange
or a national market system, including the NASDAQ-NMS, the fair market value of
a share of Common Stock shall be the closing sale price for such stock as quoted
on such system or exchange on the date of grant of the Option.
(c) Termination of Status. If the optionee's employment or consulting
relationship with the Company or status as an Outside Director is terminated for
any reason (other than death or disability), options may be exercised within six
(6) months after such termination as to all or part of the shares that were
vested at the date of such termination.
(d) Death or Disability of Optionee. Options may be exercised within no
more than twelve (12) months following termination of the employment or
consulting relationship or status as an Outside Director if such termination
occurs due to death or permanent and total disability.
(e) Term. Options granted under the Option Plan may have a term of up to
ten years. No option may be exercised by any person after the expiration of its
term.
9
<PAGE>
In the event a change, such as a stock split or stock dividend payable in
Common Stock, is made in the Company's capitalization that results in an
exchange of Common Stock for a greater or lesser number of shares without
receipt of consideration by the Company, appropriate adjustment shall be made
(i) in the option price and number of shares subject to outstanding options, and
(ii) in the number of shares of Common Stock that remain reserved for issuance
under the Option Plan but are not subject to outstanding options. Such
adjustments shall be made by the Board, whose determination shall be final and
conclusive, subject to any required action by the stockholders of the Company.
In the event of the proposed dissolution or liquidation of the Company,
options outstanding under the Option Plan will terminate immediately prior to
the consummation of such proposed action, unless otherwise provided by the
Board. The Board may, in the exercise of its discretion, declare that any
outstanding option (except an Outside Director Option) shall terminate as of a
date fixed by the Board and give each optionee the right to exercise his or her
option as to all or any part of the optioned stock, including shares as to which
the option would not otherwise be exercisable. In the event of a proposed sale
of all or substantially all of the assets of the Company, or the merger of the
Company with or into another corporation, outstanding options will be assumed or
an equivalent option shall be substituted by such successor corporation (or a
parent or subsidiary of such successor corporation), unless such successor
corporation does not agree to assume the options or to substitute an equivalent
option, in which case the optionee shall have the right to exercise all
outstanding options as to all of the optioned stock, including shares as to
which the option would not otherwise be exercisable.
Except with respect to the Automatic Grant Program, the Board may amend or
terminate the Option Plan from time to time in such respects as the Board may
deem advisable; provided that the Company shall obtain stockholder approval of
such amendment to the extent necessary and desirable to comply with Rule 16b-3
promulgated under the 1934 Act, Section 422 of the Code, or any other applicable
law, rule or regulation. The Automatic Grant Program may not be amended more
than once every six months. Any amendment or termination of the Option Plan
shall not affect options already granted and such options shall remain in full
force and effect as if the Option Plan had not been amended or terminated,
unless mutually agreed otherwise between the optionee and the Board. The Option
Plan shall terminate in 2003. Any options outstanding under the Option Plan at
the time of its termination shall remain outstanding until they expire by their
respective terms.
EMPLOYEE STOCK PURCHASE PLAN. In 1996, the stockholders of the Company
approved the Company's 1995 Employee Stock Purchase Plan (the "Purchase Plan"),
which is intended to qualify under the provisions of Section 421 and 423 of the
Internal Revenue Code of 1986, as amended (the "Code"). The Purchase Plan gives
employees of the Company an opportunity to acquire shares of Common Stock at a
discount from fair market value by means of payroll deductions. The Purchase
Plan, which is administered by the Stock Option Plan Committee of the Board (the
"Independent Committee"), covers an aggregate of 300,000 shares of Common Stock
and terminates in December 2006. Through March 26, 1998, a total of 88,871
shares have been sold under the Purchase Plan, and 211,129 shares are reserved
for issuance. As of that date, there were approximately 353 employees eligible
to participate in the Purchase Plan.
The Purchase Plan is implemented by a series of 24-month (formerly 12-month)
offering periods, with a new offering period commencing on each June 1 and
December 1. The last day of each of the four six-month exercise periods during
each offering period is an exercise date under the Purchase Plan. The purchase
price for the shares is accumulated by voluntary employee payroll deductions of
between 1% and 10% of an employee's eligible compensation during each offering
period. The purchase price per share at which shares are sold under the Purchase
Plan is equal to 85% of the fair market value of the Common Stock on the first
day of each offering period or last day of the applicable exercise period,
whichever price is lower. In the event that the purchase price per share at the
beginning of any offering period is less than the purchase price per share at
the beginning of any prior offering period which has not then ended, the
Independent Committee in its discretion may terminate the participation of all
participants in the prior offering period and enroll them in the new offering
period at the same payroll deduction rate.
10
<PAGE>
No employee will be permitted to purchase, pursuant to the Purchase Plan and
any other similar purchase plans of the Company, more than $25,000 worth of
stock in any calendar year. In addition, no employee who owns 5% or more of the
voting power or value of all classes of stock of the Company will be permitted
to purchase shares under the Purchase Plan. Any participant may withdraw from
the Purchase Plan at any time prior to the end of the applicable offering
period.
Options under the Purchase Plan may not be transferred by a participant
other than by will or under the laws of descent and distribution, and may be
exercised during a participant's lifetime only by the participant. In the event
of a sale, merger, dissolution of liquidation of the Company or a sale of all or
substantially all of the Company's assets, any then current offering periods and
exercise periods will terminate immediately prior to the date on which such
proposed action is to be consummated, unless otherwise determined by the
Independent Committee. Upon any such termination, unless otherwise determined by
the Independent Committee, all options to purchase shares will be exercised
automatically, on such date, to purchase the maximum number of full shares that
may be purchased at the applicable exercise price with each participant's
accumulated payroll deductions. Although the Board may at any time amend or
terminate the Purchase Plan, no amendment may be made that would cause the
Purchase Plan to fail to meet the requirements for employee stock purchase plans
in Section 423 of the Code.
401(k) PROFIT SHARING PLAN
In 1994, the Company adopted its 401(k) Profit Sharing Plan (the "401(k)
Plan"), pursuant to Section 401(k) of the Code. Each Employee may participate in
the 401(k) Plan beginning the first day of the calendar quarter after he or she
has been employed by the Company. Pursuant to the 401(k) Plan, each eligible
participant may contribute up to 15% of his or her eligible compensation to the
maximum amount permitted under the Code. The Company makes an additional
matching contribution each year equal to 50% of each participant's contributions
for the year (up to 6% of such participant's eligible compensation for the year)
up to a maximum of $2,250 per employee. The Company also may contribute such
additional discretionary amount as it may determine. Matching amounts
contributed by the Company for the benefit of its executive officers are
included in the Summary Compensation Table set forth above.
OPTIONS GRANTED IN THE LAST FISCAL YEAR
The following table discloses, for each executive named in the Summary
Compensation Table (the "Named Executives"), options granted during the last
fiscal year and the gain or "spread" that would be realized if the options were
exercised on the expiration date, assuming that the Company's stock had
appreciated at the level indicated, compounded annually over the life of the
options.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
-------------------------------------------------------- VALUE AT ASSUMED ANNUAL
NUMBER OF RATES OF STOCK PRICE
SECURITIES % OF TOTAL APPRECIATION FOR OPTION
UNDERLYING OPTIONS GRANTED TERMS (1)
OPTIONS TO EMPLOYEES IN EXERCISE EXPIRATION ------------------------
NAME GRANTED(#) FISCAL YEAR PRICE ($/SH) DATE 5% ($) 10% ($)
- ------------------------- ----------- --------------- ------------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Al Montross.............. 130,000 7.3% 10.50 1/28/07 858,441 2,175,458
Alonzo Wilson............ 25,000 1.4% 10.50 1/28/07 165,085 418,357
Colleen Gray............. 25,000 1.4% 10.50 1/28/07 165,085 418,357
George Peck.............. 35,000 2.0% 10.50 1/28/07 231,119 585,700
20,000 1.1% 9.75 10/23/07 122,634 310,780
KK Rao................... 15,000 0.8% 10.50 1/28/07 99,051 251,014
34,000 1.9% 8.81 7/17/07 188,433 477,525
</TABLE>
- ------------------------
(1) Potential realizable value less exercise price.
11
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
This table discloses the aggregate dollar value realized upon exercise of
stock options in the last fiscal year by each Named Executive, as well as the
total number of unexercised options and the aggregate dollar value of
unexercised options held at the end of the last fiscal year.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT 1997 1997 FISCAL YEAR-END
SHARES VALUE FISCAL YEAR-END (#) ($)(1)
ACQUIRED ON REALIZED -------------------------- --------------------------
NAME EXERCISE (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------ ------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Al Montross............. 43,830 315,028 296,670 417,500 838,264 339,687
Alonzo Wilson........... -- -- 50,271 75,210 140,164 109,014
Colleen Gray............ 7,997 39,059 20,007 62,000 37,917 22,812
George Peck............. -- -- 3,750 66,250 -- --
KK Rao.................. -- -- 30,000 79,000 60,937 20,313
</TABLE>
- ------------------------
(1) Value of options based on fair market value of Common stock of $8.69 as of
December 27, 1997.
EMPLOYMENT AGREEMENT
The Company and Mr. Montross, the Company's President, entered into an
employment agreement, dated January 1, 1995. The agreement extends for a term of
four years. The basic terms provide for an annual salary of $250,000, a bonus
based upon the Company's performance against operating income and net sales
objectives, and a discretionary bonus based on Mr. Montross' performance. The
terms also provide that Mr. Montross be granted options to purchase shares of
Common Stock as follows: 130,000 shares in January 1995; 130,000 shares in
January 1996; and 110,000 shares in January 1997. Pursuant to the agreement, Mr.
Montross was paid a discretionary bonus of $165,000 and $200,000 for 1995 and
1996, respectively, based on his performance during those years and a
discretionary bonus of $75,000 in 1994, in recognition of his contributions to
the Company prior to 1995. In addition, Mr. Montross was paid a discretionary
bonus of $75,000 in the first quarter of 1998 as a result of recent Company
successes with newly released products, including obtaining design wins for
three new products at several of the Company's customers and one of the products
setting numerous performance testing records.
SEVERANCE AGREEMENTS
The Company has entered into an agreement with each of its executive
officers, other than its President, providing for the following if the officer's
employment with the Company is terminated by the Company in connection with, or
within two years after, the occurrence of a change of control of the Company:
(a) payment to the officer of a pro-rata bonus with respect to the year in which
the termination occurs; (b) payment to the officer of severance pay equal to
between one and two times (based on years of service to the Company as an
officer) the aggregate of the officer's salary and the higher of (i) the
officer's then last annual bonus, and (ii) the average of the officer's annual
bonus for the then last three years; (c) acceleration of vesting of all
outstanding options held by the officer; and (d) continuation of the officer's
insurance benefits, at the Company's expense, for two years after the
termination of employment.
The agreement also provides for the following if the officer is terminated
for other than cause and other than within two years after any change of control
of the Company; (a) payment to the officer of a pro-rata bonus with respect to
the year in which the termination occurs; (b) payment to the officer of
severance pay equal to between two and six months salary (based on years of
service to the Company as an officer); and (c) continuation of the officer's
insurance benefits, at the Company's expense, for the period of such severance
pay. The Board determined that it was in the best interest of the Company to
enter into
12
<PAGE>
a severance agreement with each of its executive officers (other than the
President) because the agreement provides an inducement for each executive
officer to remain in the employ of the Company, particularly in the event of a
threat or the occurrence of a change of control of the Company.
EXECUTIVE OFFICERS
The following provides information about the Company's executive officers
who do not also serve as directors:
GREG BRASHIER
Mr. Brashier, age 46, joined the Company in April 1996 as Director of
Marketing. He was promoted to Vice President of Marketing in February 1998.
Prior to joining the Company, Mr. Brashier served as Vice President of Marketing
for Vinca Corporation, a computer network company, from August 1994 to November
1995. He also served as Vice President of Business Development and Vice
President of Marketing for Storage Dimensions Corporation, a manufacturer of
computer storage peripherals, from March 1988 to August 1994. Prior to these
positions, Mr. Brashier held a variety of management positions in sales and
marketing with several technology companies. Mr. Brasher received an
undergraduate degree in Engineering from Brigham Young University.
COLLEEN M. GRAY
Ms. Gray, age 44, joined the Company in April 1992 as Controller and in
December 1993 she was appointed Chief Financial Officer. She was appointed Vice
President Finance in December 1994. From 1989 until 1991, she served as
Controller of Voicemail International, Inc., a voice messaging equipment
manufacturer. From 1987 through 1989, she was Assistant Controller for Alcatel
Business Systems, Inc. From 1978 to 1987, Ms. Gray held a series of financial
management positions with ITT Courier Terminal Systems. She received a Bachelor
of Science degree in Accounting from Arizona State University.
GEORGE PECK
Mr. Peck, age 42, joined the Company in December 1995 as Senior Director of
the Company's Network Power and Light Division. He was promoted to Vice
President of Engineering in August 1997. Prior to joining the Company, Mr. Peck
served in several positions at Storage Dimensions Corporation, most recently as
Vice President of Engineering, from 1988 to December 1995. Prior to these
positions, Mr. Peck held technical positions with two other high technology
companies. Mr. Peck received an undergraduate degree in Chemistry and Biology
from University of California at San Diego. In addition, Mr. Peck has done
graduate work in computer science at California State University at Fullerton.
KRISHNAKUMAR RAO SURUGUCCHI ("KK RAO")
Mr. Surugucchi, age 42, joined the Company in February 1992, as Director of
Hardware Engineering. He became Vice President of Engineering in July 1994. He
subsequently became Chief Technology Officer and a Vice President in October
1996. Prior to joining the Company, Mr. Surugucchi was Director of Engineering
for the Company's subsidiary, Mylex India, from 1991 to 1992. Prior to these
positions, Mr. Surugucchi was Deputy General Manager for PSI India from 1979 to
1991. Mr. Surgucchi received his undergraduate degree and Masters degree in
Electrical Engineering from the Indian Institute of Technology, Bombay, India.
JOSEPH A. SCHMIDT
Mr. Schmidt, age 54, joined the Company in March 1995 as Vice President,
Human Resources. He served as Vice President, Human Resources and Corporate
Officer to Power Up Software Corp., a utility software developer, from January
1991 to May 1993 and as Director of Corporate Human Resources
13
<PAGE>
Planning for Diasonics, Inc., a medical equipment manufacturer, from 1986
through 1990. Mr. Schmidt holds a Bachelors degree from the University of
Waterloo, and a Masters degree in Human Resources and Manpower Development from
the New School for Social Research.
BAL SINGH
Mr. Singh, age 49, joined the Company in May 1996, as Senior Director of
Product Engineering. He was promoted to Vice President, Operations in December
1996. Prior to joining the Company, Mr. Singh served as Vice
President--Operations for Buslogic, Inc., a manufacturer of host bus adapters,
from June 1995 through April 1996. He also served as the Senior Manager of
Product Engineering for Buslogic from September 1994 through May 1995. The
Company acquired Buslogic in February 1996. Mr. Singh also served as Director of
Quality and Operations for AT&T-EO, a company in the communications industry,
from August 1993 through August 1994. Prior to that position, he served as
Director of Quality and Test Engineering for Comptronix, from July 1990 through
July 1993. Prior to these positions, Mr. Singh held a variety of engineering and
management positions with several technology companies. Mr. Singh received an
undergraduate degree in Engineering from Coventry Technical College in England.
RON VON TRAPP
Mr. Von Trapp, age 50, joined the Company in October of 1997 as Vice
President of World Wide Sales. Prior to joining the Company, Mr. Von Trapp
served as Vice President of Sales and Marketing for Software Services, Inc., a
turnkey software fulfillment and distribution company, from July 1996 to January
1997. He also served as Director of North American Distribution Sales for
Quantum Corporation, a manufacturer of hard disk drives. Mr. Von Trapp has over
twenty-five years of management experience in computer sales, and has held
management positions at NBI, Exxon Office Systems and IBM.
AL WILSON
Mr. Wilson, age 64, joined Mylex, through its acquisition of BusLogic, Inc.
in February 1996, as a Vice President and the General Manager of the Santa Clara
BusLogic facility. He was appointed Chief Operating Officer in June 1996. Mr.
Wilson has more than 20 years of executive management experience in the RAID and
data storage industries. Prior to joining BusLogic in 1995, he was general
manager of Array Technology, a division of EMC. Mr. Wilson's past posts include
Vice President of Engineering with Toshiba America Information Systems, where he
established and managed Toshiba's disk drive development in the U.S. He also
held executive positions at IBM, Memorex Corporation, Priam Corporation, and
Executive Computer Systems.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Montross, the Company's President, is employed pursuant to an employment
agreement, dated January 1, 1995, with the Company. See "Executive Officer
Compensation--Employment Agreement".
In 1996, the Company made loans to certain directors, as listed below,
related to their exercise of options. The loans are evidenced by interest
bearing, full recourse promissory notes with terms described below.
<TABLE>
<CAPTION>
NAME AMOUNT ISSUE DATE MATURITY DATE RATE
- ----------------------------- ---------- ---------------- ---------------- ---------
<S> <C> <C> <C> <C>
Dr. Inder Singh.............. $ 116,250 July 26, 1996 July 26, 1998 6.50%
Mr. Richard Love............. $ 193,750 July 26, 1996 July 26, 1998 6.50%
Mr. Ismael Dudhia............ $ 154,938 Sept. 9, 1996 Sept. 9, 1998 6.50%
----------
$ 464,938
</TABLE>
14
<PAGE>
In 1997, the Company made loans to certain officers, as listed below,
related to their exercise of options. The loans are evidenced by interest
bearing, full recourse promissory notes with terms described below.
<TABLE>
<CAPTION>
NAME AMOUNT ISSUE DATE MATURITY DATE RATE
- ----------------------------- ---------- ---------------- ----------------- ---------
<S> <C> <C> <C> <C>
Mr. Al Montross.............. $ 199,974 March 3, 1997 March 3, 1999 6.50%
Ms. Colleen Gray............. $ 54,907 March 3, 1997 March 3, 1999 6.50%
----------
$ 254,881
</TABLE>
COMPENSATION COMMITTEE REPORT
The Compensation Committee (the "Committee") of the Board of Directors
establishes the general compensation policies of the Company as well as the
compensation plans and specific compensation levels for executive officers. The
Committee is currently composed of three non-employee directors.
The Committee believes that the compensation of the executive officers,
including that of the Chief Executive Officer, (collectively, the "Executive
Officers") should be influenced by the Company's performance. The Committee
establishes the salaries of all the Executive Officers by considering (1) the
salaries of executive officers in similar positions of comparably-sized
companies, (2) the Company's financial performance, and (3) the achievement of
certain objectives related to the particular Executive Officer's area of
responsibility. Key target performance objectives used in determining executive
compensation include the attainment of certain levels of revenue and operating
income. Base salaries for Executive Officers other than the Chief Executive
Officer are set by the Committee, in consultation with the Chief Executive
Officer.
The Company has adopted an Executive Bonus Plan. The purposes of the
Executive Bonus Plan are to tie compensation to achievement of performance
measures that influence the creation of stockholder value, and to ensure
payments are targeted to provide a competitive level of compensation, taking
into account the Company's performance against its revenue and operating income
objectives, which are set annually by the Committee. The Company did not achieve
its operating income objectives in 1997, and as a result no bonuses were paid to
executives with respect to 1997.
The Company's 1993 Stock Option Plan provides for long-term incentive
compensation for employees of the Company, including Executive Officers. An
important objective of the plan is to provide additional incentives to employees
to work to maximize stockholder value. The option program utilizes vesting
periods to encourage retention of employees and Executive Officers and reward
long-term commitment to employment with the Company. The Stock Option Plan
Committee of the Board, in consultation with the Committee and the Chief
Executive Officer, is responsible for determining, subject to the terms of the
Option Plan, the individuals to whom grants should be made, the timing of
grants, the exercise price per share, the number of shares subject to each
grant, and the vesting under each grant.
The terms of the President and Chief Executive Officer's compensation plan,
which is set forth in an Employment Agreement with the Company for a four year
term, commencing January 1, 1995, provides for (1) a base salary of $250,000,
which may be increased annually by the Board, (2) a cash bonus payable on the
achievement of certain objectives based on the Company's operating income and
net sales, and (3) grants of options to purchase shares of the Company's Common
Stock, vesting at a stated percentage per year. The factors taken into
consideration in determining this compensation were generally the same factors
used in determining the compensation of each of the Company's other executive
officers.
Dr. Inder Singh
Mr. Ismael Dudhia
Mr. Richard Love
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Dudhia, Mr. Love and Dr. Singh comprise the Compensation Committee for
the Board. Mr. Love is the current Treasurer of the Company and was appointed in
January 1995.
15
<PAGE>
PERFORMANCE GRAPH FOR MYLEX CORPORATION
FIVE YEAR CUMULATIVE TOTAL RETURN
MYLEX CORPORATION, NASDAQ MARKET (USA)
AND NASDAQ COMPUTER MANUFACTURER STOCK (#357)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
MYLEX NASDAQ MARKET (USA) NASDAQ COMPUTER MANUFACTURER
<S> <C> <C> <C>
1992 100.00 100.00 100.00
1993 108.16 114.79 94.77
1994 182.65 112.21 104.09
1995 312.24 158.68 202.48
1996 204.08 195.19 220.16
1997 146.94 239.63 266.33
</TABLE>
<TABLE>
<CAPTION>
FISCAL YEAR END
----------------------------------------------------------------
1992 1993 1994 1995 1996 1997
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Mylex.................................................. 100.00 108.16 182.65 312.24 204.08 146.94
NASDAQ Market (USA).................................... 100.00 114.79 112.21 158.68 195.19 239.63
NASDAQ Computer Manufacturer........................... 100.00 94.77 104.09 202.48 220.16 266.33
</TABLE>
- ------------------------
Note: Assumes $100 invested on December 31, 1992 in the Company, NASDAQ Market
(USA) and NASDAQ Computer Manufacturer Stock Index. Assumes reinvestment of
dividends on a daily basis.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act 1934 (the "Exchange Act")
requires the Company's officers and directors, and persons who own more than ten
percent of any registered class of the Company's equity securities, to file
certain reports of ownership with the Security and Exchange Commission (the
"SEC"). Such officers, directors and stockholders are also required by SEC rules
to furnish the Company with copies of all Section 16(a) forms that they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons, the Company acknowledges
that each of the following officers of the Company was granted an option, in
January 1997, under the 1993 Stock Option Plan that was reported on a Form 5 in
April 1998 and should have been reported on a Form 5 in February 1998: Al
Montross, President and Chief Executive Officer; Al Wilson, Chief Operating
Officer; Colleen Gray, Vice President Finance and Chief Financial Officer; KK
Rao, Vice President and Chief Technology Officer; Bal Singh, Vice President,
Operations; and Joseph A. Schmidt; Vice President, Human Resources. Mr. Rao was
granted another
16
<PAGE>
option, in July 1997, under the 1993 Stock Option Plan that was reported on a
Form 5 in April 1998 and should have been reported on a Form 5 in February 1998.
Mr. Peck, Senior Vice President, Engineering, was also granted an option, in
October 1997, under the 1993 Stock Option Plan that was reported on a Form 5 in
April 1998 and should have been reported on a Form 5 in February 1998.
The Company believes that the information set forth in the foregoing
paragraph constitutes disclosure that is technical in nature, and that none of
the transactions that were not reported on a timely basis involved violations of
the trading prohibition set forth in Section 16(b) of the Exchange Act.
OTHER MATTERS
Management does not intend to bring before the meeting any matters other
than those set forth herein, and has no present knowledge that any other matters
will or may be brought before the meeting by others. However, 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 proxies in accordance with their
judgment.
ON BEHALF OF THE BOARD OF DIRECTORS
[SIGNATURE]
Al Montross
PRESIDENT AND CHIEF EXECUTIVE OFFICER
17
<PAGE>
DETACH HERE
PROXY
MYLEX CORPORATION
PROXY FOR 1998 ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of MYLEX CORPORATION, a Delaware
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement, each dated April 21, 1998, and hereby
appoints Al Montross, Colleen Gray and Ismael Dudhia, each with the power to
act without the others and with full power of substitution, to vote and
otherwise represent all of the shares registered in the name of the
undersigned at the 1998 Annual Meeting of Stockholders of MYLEX CORPORATION
to be held on Thursday, May 21, 1998, at 2:00 p.m., at the Holiday Inn,
located at 625 El Camino Real, Palo Alto, California 94301, and at any
adjournment or adjournments thereof, with the same effect as if the
undersigned were present and voting such shares, on the matters set forth on
the reverse side.
- ----------- -----------
SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
- ----------- -----------
<PAGE>
DETACH HERE
/X/ Please mark
votes as in
this example
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE
SPECIFICATION MADE. IF NO SPECIFICATION IS MADE, THE SHARES REPRESENTED BY
THIS PROXY WILL BE VOTED FOR EACH OF THE NOMINEES LISTED BELOW AND FOR
PROPOSAL 2, AND FOR SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING, AS THE PROXY HOLDERS DEEM ADVISABLE.
1. Election of Directors.
Nominees: Al Montross, Dr. Inder M. Singh, Dr. M. Yaqub Mirza, Ismael
Dudhia, Richard Love, Stephen McKenzie, and Walter Wilson
FOR WITHHELD
/ / ALL / / FROM ALL
NOMINEES NOMINEES
/ /
------------------------------------------
For all nominees except as noted above
FOR AGAINST ABSTAIN
2. To ratify the appointment of KPMG Peat / / / / / /
Marwick LLP as independent public
accountants of the Company for the fiscal
year ending December 26, 1998.
3. To transact such other business as may properly come before the meeting or
any adjournments thereof.
MARK HERE IF YOU PLAN TO ATTEND THE MEETING / /
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT / /
Please sign exactly as your name appears on your stock certificate. If such
stock is held by joint tenants, both persons should sign. When signing as
attorney, executor, administrator, trustee or guardian, please note your
title as such. If the stock is registered in the name of a corporation,
please sign in the corporation's name by the president or any other
authorized officer. If the stock is registered in the name of a partnership,
please sign in the partnership's name by an authorized person.
<TABLE>
<S><C>
Signature: Date: Signature: Date:
--------------------------- ------------ --------------------------- ------------
</TABLE>
