<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, For Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
MAXIM INTEGRATED PRODUCTS, INC.
- --------------------------------------------------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
- --------------------------------------------------------------------------------
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (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:
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[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or schedule
and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
MAXIM INTEGRATED PRODUCTS, INC.
120 SAN GABRIEL DRIVE
SUNNYVALE, CALIFORNIA 94086
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 13, 1997
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Maxim
Integrated Products, Inc., a Delaware corporation (the "Company"), will be held
at the Company's offices, 120 San Gabriel Drive, Sunnyvale, California 94086 on
Thursday, November 13, 1997 at 11:00 a.m., Pacific Standard Time, to consider
and vote upon the following proposals:
1. To elect five (5) directors of the Company to serve for the ensuing
year and until their successors are elected and qualified.
2. To ratify and approve the increase in the number of shares
available under the Company's 1996 Stock Incentive Plan.
3. To approve an amendment to the Company's Certificate of
Incorporation to increase the authorized number of shares of the Company's
capital stock.
4. To approve a Bonus Plan for the Company's Executive Officers.
5. To ratify the retention of Ernst & Young LLP as the Company's
independent auditors for fiscal year ending June 30, 1998.
6. To transact such other business as may properly come before the
Annual Meeting or any adjournment or postponement thereof.
The foregoing items of business, including the nominees for directors, are
more fully described in the Proxy Statement which is attached and made a part of
this Notice.
The Board of Directors has fixed the close of business on September 15,
1997 as the record date for determining the stockholders entitled to notice of
and to vote at the Annual Meeting and any adjournment or postponement thereof.
By Order of the Board of Directors
John F. Gifford
President, Chief Executive Officer and
Chairman of the Board
Sunnyvale, California
September 29, 1997
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, YOU ARE URGED TO
PLEASE COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS
POSSIBLE IN THE ENCLOSED POSTAGE-PREPAID ENVELOPE TO ENSURE YOUR REPRESENTATION
AND THE PRESENCE OF A QUORUM AT THE ANNUAL MEETING. IF YOU SEND IN YOUR PROXY
CARD AND THEN DECIDE TO ATTEND THE ANNUAL MEETING TO VOTE YOUR SHARES IN PERSON,
YOU MAY STILL DO SO. YOUR PROXY IS REVOCABLE IN ACCORDANCE WITH THE PROCEDURES
SET FORTH IN THE PROXY STATEMENT.
<PAGE> 3
MAXIM INTEGRATED PRODUCTS, INC.
120 SAN GABRIEL DRIVE
SUNNYVALE, CALIFORNIA 94086
------------------------
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 13, 1997
This Proxy Statement is furnished to stockholders in connection with the
solicitation of proxies by the Board of Directors of Maxim Integrated Products,
Inc., a Delaware corporation ("Maxim" or the "Company"), for use at its Annual
Meeting of Stockholders to be held at 11:00 a.m., local time, on November 13,
1997 at the Company's offices located at 120 San Gabriel Drive, Sunnyvale,
California and at any adjournment or postponement of that meeting. The
approximate mailing date for this Proxy Statement and the enclosed proxy is
September 29, 1997. The proxy holders will vote all proxies in accordance with
the instructions contained in the proxy, and if no choice is specified the proxy
holders will vote in favor of the proposals set forth in the Notice of Meeting.
Proxies will confer upon the proxy holders discretionary authority to vote upon
matters which the Board does not know as of the date hereof are to be presented
at the Annual Meeting and upon matters incident to the conduct of the meeting.
The Board of Directors has fixed the close of business on September 15,
1997 as the record date (the "Record Date") for the determination of
stockholders entitled to vote at the Annual Meeting. At that time, there were
outstanding 64,276,009 shares of Common Stock. The presence of a majority of, or
32,138,005 of these shares of the Common Stock, either in person or by proxy,
will constitute a quorum for the transaction of business at the Annual Meeting.
Any person signing a proxy in the form accompanying this proxy statement
has the power to revoke it prior to or at the meeting. A proxy may be revoked by
a writing delivered to the Secretary of the Company stating that the proxy is
revoked, by a subsequent proxy signed by the person who signed the earlier
proxy, or by attendance at the meeting and voting in person.
Holders of Common Stock are entitled to one vote for each share held. In
the election of directors, however, each stockholder has cumulative voting
rights and is entitled to as many votes as equal the number of shares held by
such stockholder multiplied by the number of directors to be elected (five). If
cumulative voting is requested at the meeting, stockholders' votes may be cast
for a single candidate or distributed among any or all of the candidates. In the
event of cumulative voting, proxy holders may distribute votes among the
nominees in such manner as they deem advisable. Discretionary authority to
cumulate votes is solicited by the Board.
All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Broker non-votes are counted towards a
quorum, but are not counted in determining whether a matter has been approved.
The Company will bear the cost of soliciting proxies. 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. Original solicitation of proxies by mail may be supplemented
by telephone, telegram, facsimile or personal solicitation by directors,
officers or other regular employees of the Company or, at the Company's request,
a private proxy solicitation firm. No additional compensation will be paid to
directors, officers or other regular employees for such services, but any
private proxy solicitation firm will be paid their customary fee by the Company,
estimated to be $5,000.
<PAGE> 4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership
of the Company's Common Stock as of June 30, 1997 by: (i) each director and
nominee for director; (ii) each of the executive officers named in the Summary
Compensation Table; (iii) all executive officers, directors and nominees as a
group; and (iv) all those known by the Company to be beneficial owners of more
than five percent of its Common Stock.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP(1)
---------------------------------------
BENEFICIAL OWNER NUMBER OF SHARES PERCENT OF TOTAL
- ------------------------------------------------------------ ---------------- ----------------
<S> <C> <C>
FMR Corp. .................................................. 7,997,980(2) 12.6%
Putnam Investments, Inc. ................................... 6,501,728(3) 10.2%
T. Rowe Price Associates, Inc. ............................. 5,851,500(4) 9.2%
John F. Gifford............................................. 1,027,454(5) 1.6%
Tunc Doluca................................................. 247,155(6) *
Robert F. Scheer............................................ 104,532(7) *
James R. Bergman............................................ 50,000(8) *
Robert F. Graham............................................ 45,000(8) *
A.R. Frank Wazzan........................................... 27,200(9) *
Frederick G. Beck........................................... 24,000(7) *
William N. Levin............................................ 18,000(7) *
B. Kipling Hagopian......................................... 13,912(9) *
All executive officers and directors as a group
(16 persons).............................................. 2,740,106(10) 4.2%
</TABLE>
- ---------------
* Less than one percent
(1) This table is based upon information supplied by officers, directors,
nominees for director, principal stockholders and the Company's transfer
agent, and contained in Schedules 13G filed with the SEC. Unless otherwise
indicated, the address of each person or entity listed is Maxim Integrated
Products, Inc., 120 San Gabriel Drive, Sunnyvale, California 94086. Unless
otherwise indicated in the footnotes to this table and subject to community
property laws where applicable, each of the stockholders named in this
table has sole voting and investment power with respect to the shares
indicated as beneficially owned. Applicable percentages are based on
63,729,252 shares outstanding on June 30, 1997, adjusted as required by
rules promulgated by the SEC.
(2) FMR Corp. holds sole dispositive power over all shares shown, and sole
voting power over 885,200 shares. The address of FMR Corp. is 82 Devonshire
Street, Boston, Massachusetts 02109. The table is based upon information
supplied in a Schedule 13G/A dated February 14, 1997.
(3) Certain Putnam Investments, Inc. investment managers (together with their
parent corporation, Putnam Investments, Inc. and its parent corporation,
Marsh & McLennan Companies, Inc.) are considered beneficial owners of these
shares which were acquired for certain of their advisory clients. Putnam
Investments, Inc. holds shared dispositive power over all shares shown and
shared voting power over 93,244 shares. The address of Putnam Investments,
Inc. is One Post Office Square, Boston, MA 02109. The address of Marsh &
McLennan Companies, Inc. is 1166 Avenue of the Americas, New York, NY
10036. The table is based upon information supplied in a Schedule 13G dated
February 4, 1997.
(4) These securities are owned by various individual and institutional
investors for which T. Rowe Price Associates, Inc. serves as investment
adviser with power to direct investments and/or sole power to vote the
securities. For purposes of the reporting requirements of the Securities
Exchange Act of 1934, T. Rowe Price Associates, Inc. is deemed to be a
beneficial owner of such securities; however T. Rowe Price Associates, Inc.
expressly disclaims that it is, in fact, the beneficial owner of such
securities. T. Rowe Price Associates, Inc. holds dispositive power over all
the shares shown, and sole voting power over 470,450 shares. The address of
T. Rowe Price Associates, Inc. is 100 East Pratt Street, Baltimore,
2
<PAGE> 5
MD 21202. The table is based upon information supplied in a Schedule 13G/A
dated February 14, 1997.
(5) Includes 496,969 shares subject to options exercisable within 60 days of
June 30, 1997. Does not include shares held in trust for the benefit of Mr.
Gifford's children.
(6) Includes 153,667 shares subject to options exercisable within 60 days of
June 30, 1997.
(7) Represents shares subject to options exercisable within 60 days of June 30,
1997.
(8) Includes 15,000 shares subject to options exercisable within 60 days of
June 30, 1997.
(9) Includes 5,000 shares subject to options exercisable within 60 days of June
30, 1997.
(10) Includes 1,714,395 shares subject to options exercisable within 60 days of
June 30, 1997. Does not include shares held in trust for the benefit of Mr.
Gifford's children.
There is no family relationship between any of the directors, or between
any of such directors and any of the Company's executive officers.
PROPOSAL 1
ELECTION OF DIRECTORS
Action is to be taken at the Annual Meeting with respect to the election of
directors to fill the five board positions presently authorized. Each director
to be elected will hold office until his successor is elected and qualified, or
until his earlier death, resignation or removal. Stock represented by the
accompanying proxy will be voted for the election of the five nominees
recommended by the Board of Directors, who are named in the following table,
subject to discretionary power to cumulate votes, unless the proxy is marked in
such a manner as to withhold authority so to vote. Except for B. Kipling
Hagopian, all of the nominees were elected directors by a vote of the
stockholders at the last Annual Meeting of Stockholders which was held on
November 14, 1996. The candidates receiving the highest number of votes, up to
the number of directors to be elected, will be elected. If any nominee for any
reason is unable to serve or for good cause will not serve, the proxy may be
voted for such substitute nominee as the persons appointed in the proxy may in
their discretion determine. Stock represented by the accompanying proxy cannot
be voted for a greater number of persons than the number of nominees (five).
The following is information regarding the nominees, including information
furnished by them as to their principal occupations for the preceding five-year
period, certain directorships, and their ages as of September 29, 1997.
<TABLE>
<CAPTION>
NAME AGE DIRECTOR SINCE
------------------------------------------------ --- --------------
<S> <C> <C>
James R. Bergman................................ 55 1988
John F. Gifford................................. 56 1983
Robert F. Graham................................ 68 1990
B. Kipling Hagopian............................. 55 1997
A. R. Frank Wazzan.............................. 62 1990
</TABLE>
Mr. Bergman has been a general partner of DSV Associates since 1974 and a
founder of DSV Partners, DSV Partners III and DSV Partners IV. These firms
provide venture capital and management assistance to emerging companies,
primarily in high technology. Since August 1996, Mr. Bergman has been a partner
of Brantley Venture Management, L.P., the General Partner of Brantley Venture
Partners, III, a private venture capital partnership. Since October, 1996 Mr.
Bergman has served as Vice President of Brantley Capital Corporation, a
publicly-held business development company traded on the Nasdaq SmallCap Market.
He is also a director of Quad Systems Corporation and DeCrane Aircraft Holdings,
Inc., both publicly held and traded on Nasdaq National Market.
Mr. Gifford, a founder of the Company, has served as Maxim's President and
Chief Executive Officer since its incorporation in April 1983.
3
<PAGE> 6
Mr. Graham was Chairman of the Board of Novellus Systems, Inc., a
manufacturer of vapor deposition equipment for use in semiconductor fabrication,
until his retirement in May of 1996. He was employed at Novellus since 1986.
Mr. Hagopian was a founder of Brentwood Associates, a venture capital
investment company, and was a general partner of all of the funds started by
Brentwood from inception in 1972 until 1989. He has been a Special Limited
Partner (active on a part-time basis) of each of the three Brentwood funds
started since then. Mr. Hagopian is also Chairman and President of Segue
Productions, a feature film production company, and a partner of Apple Oaks
Partners LLC, a private investment company which manages his own capital and the
capital of one other individual. Mr. Hagopian served as a director of the
Company from May 1983 through November 1989, and was appointed to fill a vacancy
on the Board of Directors in March 1997.
Dr. Wazzan is Dean of the School of Engineering and Applied Science,
University of California, Los Angeles, a position he has held since 1987. He has
been employed by UCLA since 1962.
FURTHER INFORMATION CONCERNING THE BOARD
During the fiscal year ended June 30, 1997, the Board of Directors held
four meetings. The Company has a standing Audit Committee, which met once during
the fiscal year and a standing Compensation Committee, which met four times
during the fiscal year. During the fiscal year ended June 30, 1997, all members
of the Board attended all meetings of the Board and of the committees on which
each served.
The Audit Committee is comprised of Messrs. Bergman, Graham and Hagopian
and Dr. Wazzan. Among the committee's functions are recommending engagement of
the Company's independent auditors and meeting with such auditors to consider
the scope and results of the annual audit, and to receive and consider the
auditors' comments on internal controls, accounting staff and similar matters.
The Compensation Committee is comprised of Messrs. Bergman, Graham and
Hagopian and Dr. Wazzan. The Compensation Committee determines salaries and
incentive compensation for the president and other executive officers, awards
stock options to employees and consultants under the Company's stock option
plans and performs such other functions regarding compensation as the Board may
delegate.
Nonemployee directors of the Company receive a $4,000 annual retainer and
fees of $1,000 per meeting attended.
Directors participate in the 1996 Stock Incentive Plan (the "1996 Plan")
which authorizes the granting of incentive stock options and non-qualified stock
options with respect to an aggregate of 7,250,000 shares of the Company's Common
Stock (subject to adjustments provided therein).
4
<PAGE> 7
EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
The compensation for the Company's Chief Executive Officer at June 30, 1997
and the four most highly compensated executive officers other than the CEO who
were serving as executive officers at June 30, 1997 for all services rendered in
all capacities to the Company and its subsidiaries during the fiscal years ended
June 30, 1997, 1996 and 1995 is set forth below.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
NAME AND ---------------------- UNDERLYING
PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#)
--------------------------------- ---- --------- -------- ------------
<S> <C> <C> <C> <C>
John F. Gifford.................. 1997 $ 264,023 $ * 400,000
President, Chief 1996 264,023 788,840 --
Executive Officer and 1995 264,023 600,000 --
Chairman of the Board
Frederick G. Beck................ 1997 170,000 * 35,000
Vice President 1996 170,000 234,810 40,000
1995 170,000 147,763
Tunc Doluca...................... 1997 170,000 * 70,000
Vice President 1996 158,000 158,017 --
1995 139,000 148,747 --
William N. Levin................. 1997 170,000 * 60,000
Vice President 1996 171,103 123,916 --
1995 174,410 103,241 --
Robert F. Scheer................. 1997 170,000 * 35,000
Vice President 1996 164,375 117,939 40,000
1995 146,375 144,614 --
</TABLE>
- ---------------
* The Company has accrued $3,943,000 for executive officer performance bonuses
relating to fiscal 1997. The Company has not yet determined and the
Compensation Committee has not yet approved the specific bonus amounts for the
executive officers. However, it has set a range of up to $2,000,000 for the
Company's chief executive officer and up to $500,000 for a vice president.
OPTIONS GRANTED TO EXECUTIVE OFFICERS
The Board of Directors currently has authority to grant stock options to
employees under the 1996 Plan. The following three tables set forth certain
information regarding stock options granted to, exercised by and owned by the
executive officers named in the foregoing Summary Compensation Table during
fiscal 1997.
OPTION GRANTS ATTRIBUTABLE TO FISCAL YEAR 1996
ISSUED IN FISCAL YEAR 1997
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT
------------------------------------------------------- ASSUMED ANNUAL RATE
NUMBER OF PERCENT OF OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM (1)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ---------------------
NAME GRANTED FISCAL YEAR ($/SH) DATE (2) 5%($) 10%($)
- ------------------------------ ---------- ------------- ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
John F. Gifford............... 200,000(3) 4.69% 29.875 8/16/06 3,757,645 9,522,611
Tunc Doluca................... 30,000(3) .70 29.875 8/16/06 563,647 1,428,392
William N. Levin.............. 30,000(3) .70 29.875 8/16/06 563,647 1,428,392
</TABLE>
- ---------------
(1) The dollar amounts under these columns are the result of calculations at the
5% and 10% annual rates of stock appreciation prescribed by the Securities
and Exchange Commission and are not intended to forecast possible future
appreciation, if any, of the Company's stock price. No gain to the optionees
is
5
<PAGE> 8
possible without an increase in the price of the Company's stock, which will
benefit all stockholders commensurately.
(2) The options were granted for a term of ten years, but are subject to earlier
termination under certain circumstances relating to termination of
employment or a change of control of the Company. Options may be repriced
under certain limited circumstances.
(3) The options were granted on 8/16/96 and will become exercisable on a
quarterly basis during the year ending July 1, 2000.
OPTION GRANTS ATTRIBUTABLE TO FISCAL YEAR 1997
ISSUED IN FISCAL YEAR 1997
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT
------------------------------------------------------- ASSUMED ANNUAL RATE
NUMBER OF PERCENT OF OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM (1)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ----------------------
NAME GRANTED FISCAL YEAR ($/SH) DATE (2) 5%($) 10%($)
- ----------------------------- ---------- ------------- ----------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
John F. Gifford.............. 200,000(3) 4.69% 38.00 11/19/06 4,779,599 12,112,443
Frederick G. Beck............ 35,000(3) .82 38.00 11/19/06 836,430 2,119,677
Tunc Doluca.................. 40,000(3) .94 38.00 11/19/06 955,920 2,422,489
William N. Levin............. 30,000(4) .70 38.00 11/19/06 716,941 1,816,866
Robert F. Scheer............. 35,000(3) .82 38.00 11/19/06 836,430 2,119,677
</TABLE>
- ---------------
(1) The dollar amounts under these columns are the result of calculations at the
5% and 10% annual rates of stock appreciation prescribed by the Securities
and Exchange Commission and are not intended to forecast possible future
appreciation, if any, of the Company's stock price. No gain to the optionees
is possible without an increase in the price of the Company's stock, which
will benefit all stockholders commensurately.
(2) The options were granted for a term of ten years, but are subject to earlier
termination under certain circumstances relating to termination of
employment or a change of control of the Company. Options may be repriced
under certain limited circumstances.
(3) The options were granted on 11/19/96 and will become exercisable on a
quarterly basis during the year ending July 1, 2001.
(4) The options were granted on 11/19/96 and will become exercisable on a
quarterly basis from July 1, 2000 through July 1, 2022.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1997
AND JUNE 30, 1997 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT OPTIONS AT
ACQUIRED JUNE 30, 1997 JUNE 30, 1997($)(1)
ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John F. Gifford............ 286,373 9,808,298 426,969 990,000 21,454,826 36,462,031
Frederick G. Beck.......... 36,000 1,368,500 12,000 183,000 540,000 6,460,625
Tunc Doluca................ 87,000 4,061,113 141,667 202,000 7,305,742 7,658,375
William N. Levin........... 72,000 2,874,762 -- 198,000 -- 7,791,313
Robert F. Scheer........... 143,000 5,628,653 89,532 210,000 4,486,749 7,835,781
</TABLE>
- ---------------
(1) Based on a price per share of $56.875, which was the price of a share of
Common Stock on the Nasdaq National Market at the close of business on June
30, 1997.
6
<PAGE> 9
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with each of Messrs.
Beck, Doluca, Levin and Scheer. The agreements do not grant the executive
officers any right to be retained by the Company, and the Company may terminate
employment of each executive officer either with or without cause. In the event
of termination of employment by the Company with or without cause, all
compensation and benefits, except benefits provided by law (e.g., COBRA health
insurance continuation benefits) immediately cease to accrue. However, in the
event of termination of employment by the Company without cause, severance
payments are to be made in accordance with the Company's normal policy or as
mutually agreed between the Company and the executive officer.
If the executive officer terminates his full-time employment with the
Company and his written notice of termination provides that he is willing to act
as a consultant to the Company, the Company will make health insurance coverage
available to the executive officer and his family. The terms of the consultancy,
unless otherwise agreed, will provide for part-time consulting (up to one day
per month) and annual compensation equal to at least 5% of the executive
officer's base salary at the time of termination. Health insurance coverage
means coverage under any group health plan the Company maintains for its
employees.
During the ten-year period following the notice of termination, the
executive officer pays the same amount for health coverage as a similarly
situated full-time employee is required to pay for coverage under the Company's
group health plan. After the ten-year period, the executive officer pays the
Company's cost of the coverage. In the event of the executive officer's death
while receiving health insurance coverage, the executive officer's spouse is
eligible for health insurance coverage until her death so long as she pays for
the coverage in an amount equal to the cost for an employee with identical
coverage. In the event the executive officer becomes disabled while receiving
health insurance coverage, he is deemed to be a consultant to the Company during
the disability.
Mr. Gifford entered into an employment agreement with the Company in 1987,
which was amended and restated in February 1994. The agreement provides that Mr.
Gifford shall propose annually the amount of his bonus to the Board of
Directors, which shall reflect the Company's achievements and profitability for
the preceding year, and shall be reflective of the accomplishments of the
management group as a whole. The Board of Directors, in its discretion, shall
approve or modify such proposed bonus; provided that any bonus awarded shall not
be less than the bonus paid to any officer. The employment agreement provides
vesting for 100% of the unvested portion of his stock options either upon Mr.
Gifford's death or upon his disability, which results in his termination of
employment, while employed by the Company. The employment agreement also
provides that in the event Mr. Gifford becomes disabled while employed by the
Company, as long as Mr. Gifford remains disabled, the Company will provide for
continuation of his base salary (offset by any earnings) for life through
insurance or direct payment, or both. In addition, if Mr. Gifford's employment
with the Company is terminated due to disability, the Company will provide to
Mr. Gifford the post-employment health insurance coverage on the same terms as
the other officers described above. In addition, in the event Mr. Gifford's
employment is terminated without cause as defined in the agreement, the Company
will retain Mr. Gifford as a consultant and Mr. Gifford agrees to remain
available to the Company as a consultant for a period of either (i) one (1) year
in the event that his employment is terminated with justification as defined in
the agreement or (ii) two (2) years if his employment is terminated without
justification as defined in the agreement. During the period that Mr. Gifford
serves as a consultant to the Company, he shall not be required to devote more
than two (2) days a week to such consulting activities. During the period of Mr.
Gifford's retention as a consultant, he shall be entitled to full pay, which is
defined as his average annual total compensation (salary plus bonus) received
during the previous two years, normal employee benefits, and his stock options
and shares of restricted stock shall continue to vest. In addition, if Mr.
Gifford's employment is terminated without cause or justification, the vesting
of his stock options and shares of restricted stock shall be immediately
accelerated so that the options and stock that would otherwise have vested over
the two (2) year period commencing two (2) years after the date of termination
shall become immediately exercisable. Thus, if his termination is without cause
or justification, Mr. Gifford will vest a total of four (4) years of options and
restricted stock, two (2) years tied to continuing consulting retention and two
(2) years by acceleration of vesting that would otherwise have occurred if he
had remained employed for the third and fourth years after
7
<PAGE> 10
the date of his termination. The employment agreement also provides that upon a
"change of control" of the Company, as such term is defined in his employment
agreement, 50% of his unvested stock and options shall become fully vested on
the date of the sale or merger. The remainder of the stock and options shall
become fully vested within one year of the sale or merger provided that Mr.
Gifford is willing (whether or not he is actually requested to do so) to remain
as CEO for the remaining vesting period of his options up to a maximum of one
year. The employment agreement provides Mr. Gifford fringe benefits
substantially equal to other officers. If Mr. Gifford terminates his full-time
employment with the Company and his written notice of termination provides that
he is willing to act as a consultant to the Company, the Company will provide to
Mr. Gifford the post employment health insurance coverage on the substantially
same terms as the other officers described above.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION(1)
The Compensation Committee of the Board of Directors reviews and approves
cash and equity compensation for the Company's chief executive officer and other
executive officers. Cash compensation is comprised of a salary and bonus, and
equity compensation has been comprised of stock options.
The level of compensation is related to both corporate and individual
performance. Corporate performance is judged based upon results in the current
year, but more importantly on the Company's performance over the longer term.
Individual performance is measured based upon particular responsibilities of
each function, performance to specified goals and general management skills.
Salary. The Compensation Committee meets at least annually to review and
approve each executive officer's salary for the ensuing fiscal year. The base
salary component of compensation is intended to reward an executive officer for
normal levels of performance, as opposed to the bonus component which is
intended to compensate for performance exceeding expected levels. When reviewing
base salaries, the Compensation Committee considers the following factors:
individual performance, corporate performance (such as that described below
under CEO Compensation), levels of responsibility and prior experience. The
Compensation Committee also reviews published information regarding the
compensation of executive officers at companies comparable to Maxim to determine
that the Company's compensation is both competitive and reasonable, but does not
attempt to set compensation within any particular range or level by comparison
with the compensation reviewed.
Bonus. Based upon the quality of corporate performance over time, the
Compensation Committee annually approves a maximum bonus pool for the CEO and
other executive officers of a percentage of profit before tax for the applicable
fiscal year. The actual cash bonus for each individual executive officer, aside
from the CEO (discussed below), is then determined by first setting a maximum
bonus for each officer position based upon perfect performance of that position
and the total bonus pool available, and then considering the individual
performance of the executive officer involved. Although executive officer
bonuses for fiscal 1997 have not yet been determined, the Compensation Committee
has set a range of up to $500,000 for any executive officer (other than the
CEO).
Stock Options. Given the Company's limited resources and commitment to the
bottom line, the Company believes it cannot rely solely on cash compensation to
compete for and to provide incentives to its employees. Stock options are,
therefore, used by the Company to provide long-term incentives to executive
officers. The Company has attempted for a number of years to provide for each
executive officer, and for most other employees who participate in the Company's
stock option program, a number of shares subject to option that will vest over a
continuous period of usually four to five years into the future. To accomplish
this the Company has added one to two years of unvested options every one to
three years. The number of options per officer is determined by an assessment
principally of the significance of the function performed by the officer and
also of the officer's individual past, current and expected future contribution
to the success of the Company.
- ---------------
1This Section is not "soliciting material," is not deemed filed with the SEC
and is not to be incorporated by reference in any filing of the Company under
the 1933 Act or the 1934 Act whether made before or after the date hereof and
irrespective of any general incorporation language in any such filing.
8
<PAGE> 11
CEO Compensation. Under the terms of Mr. Gifford's Employment Agreement,
his annual bonus "shall reflect the Company's achievements and profitability for
the preceding year, and shall be reflective of the accomplishments of the
management group as a whole." Although Mr. Gifford's bonus for fiscal 1997 has
not yet been determined, the Compensation Committee has set a range of up to
$2,000,000 for Mr. Gifford.
Section 162(m). Section 162(m) of the Internal Revenue Code (the "Code")
limits the Company to a deduction for federal income tax purposes of no more
than $1 million of compensation paid to the chief executive officer and the four
other most highly paid executive officers in a taxable year. Compensation above
$1 million may be deducted if it is "performance-based compensation" within the
meaning of the Code.
The Board has determined that stock options shall be treated as
"performance-based compensation." The Company's stockholders previously approved
the option plans, which would generally allow any compensation recognized by an
executive officer named in the Summary Compensation Table as a result of the
grant of such a stock option to be deductible by the Company.
COMPENSATION COMMITTEE
Robert F. Graham
James R. Bergman
B. Kipling Hagopian
A.R. Frank Wazzan
9
<PAGE> 12
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file with the SEC
initial reports of ownership and reports of changes in ownership of Common Stock
and other equity securities of the Company. Officers, directors and greater than
ten percent stockholders are required by SEC regulation to furnish the Company
with copies of all Section 16(a) forms they file.
To the best of the Company's knowledge, based solely on a review of the
copies of such reports furnished to the Company and written representations that
no other reports were required, during the fiscal year ended June 30, 1997, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with.
CERTAIN TRANSACTIONS
The Company employs in various positions Tracy Jones, Cameron Jones and
Kevin Lynch, the daughter, son-in-law and son-in-law, respectively, of the
Company's Chief Executive Officer, and employs Robert Bergman, the son of
Director James R. Bergman. Mrs. Jones received $40,359 of cash compensation in
fiscal 1997 and became vested in options to purchase 3,758 shares of the
Company's Common Stock at a weighted average exercise price of $5.05 per share.
Mr. Jones received $49,700 of cash compensation in fiscal 1997 and became vested
in options to purchase 4,300 shares of Common Stock at a weighted average
exercise price of $10.02 per share. Mr. Lynch received $79,410 of cash
compensation in fiscal 1997 and became vested in options to purchase 9,000
shares of Common Stock at a weighted average exercise price of $10.34 per share.
Mr. Bergman received $37,048 of cash compensation in fiscal 1997 and became
vested in options to purchase 800 shares of Common Stock at a weighted average
exercise price of $33.88 per share. The Company believes that the terms of each
such individuals' employment, including their cash compensation and option
grants, are commensurate with other employees in comparable positions. In
addition, Laurel Lynch, daughter of the Company's Chief Executive Officer, and
Jill Scheer, wife of Company Vice President Robert F. Scheer, are engaged to
perform certain services for the Company. In fiscal 1997, Mrs. Lynch became
vested in options to purchase 2,405 shares at a weighted average exercise price
of $2.88 per share and Mrs. Scheer became vested in options to purchase 1,400
shares at a weighted average exercise price of $15.69 per share. The exercise
price of each option grant made to these individuals was at 100% of the fair
market value of the Company's Common Stock on the date of grant.
10
<PAGE> 13
PERFORMANCE GRAPH
The following chart shows the value of an investment of $100 on June 30,
1992 in cash of (i) the Company's Common Stock, (ii) the Nasdaq Stock Market
Composite Index and (iii) the Nasdaq Electronic Components Stock Index. All
values assume reinvestment of the full amount of all dividends and are
calculated as of June 30 of each year.(1)
<TABLE>
<CAPTION>
Measurement Period Maxim Integrated Nasdaq Electronic Nasdaq Stock
(Fiscal Year Covered) Products, Inc. Components Market (U.S.)
<S> <C> <C> <C>
1992 100 100 100
1993 163 172 126
1994 248 190 127
1995 486 391 169
1996 520 414 218
1997 1083 679 265
</TABLE>
- ---------------
(1) This Section is not "soliciting material," is not deemed filed with the SEC
and is not to be incorporated by reference in any filing of the Company under
the 1933 Act or the 1934 Act whether made before or after the date hereof and
irrespective of any general incorporation language in any such filing.
11
<PAGE> 14
PROPOSAL 2
RATIFICATION AND APPROVAL OF THE INCREASE
IN THE NUMBER OF SHARES AVAILABLE UNDER THE
1996 STOCK INCENTIVE PLAN
The Company's stockholders are being asked to act upon a proposal to ratify
and approve the action of the Board of Directors amending the 1996 Stock
Incentive Plan (the "Plan") to increase the number of shares of Common Stock
issuable under the 1996 Plan by 3,750,000 shares (the "Increase"). Ratification
of the Increase requires the approval of a majority of the shares represented in
person or by proxy and voting at the Annual Meeting.
A general description of the principal terms of the 1996 Plan, the Increase
approved by the Board of Directors, and the purpose of such Increase are set
forth below. Unless otherwise marked, all properly signed and returned proxies
will be voted FOR Proposal No. 2. The Board of Directors recommends a vote FOR
this proposal.
The 1996 Plan was adopted by the Board of Directors on August 16, 1996 and
approved by the stockholders on November 14, 1996.
The Company has determined that substantial equity participation for
employees is critically important to creating an organization to which talented
employees will be attracted, retained and motivated for very long periods of
time and the option plans are designed to contribute toward this goal.
As of June 30, 1997, 22,580,340 stock options remain outstanding from all
of the Company's option plans, of which 8,108,881 options were vested and
exercisable while the remaining 14,471,459 options vest over the next ten years
as follows:
<TABLE>
<CAPTION>
YEAR ENDING JUNE 30, NUMBER OF OPTIONS TO VEST
------------------------------------- -------------------------
<S> <C>
1998............................ 3,971,007
1999............................ 3,562,708
2000............................ 3,204,663
2001............................ 2,403,441
2002............................ 852,266
2003............................ 367,172
2004............................ 67,524
2005............................ 36,674
2006............................ 3,504
2007............................ 2,500
14,471,459
</TABLE>
The principal purposes for the Increase are to provide for option grants
for recruiting employees by offering a means by which their creativity and
dedicated efforts will allow them to participate in the increased stockholder
value; and for grants to existing employees generally for periods vesting beyond
2001, by adding option grants at the end of an employee's current vesting
period. The Board of Directors believes that the attraction and retention of
highly qualified personnel are essential to the Company's continued growth and
success and that an incentive plan such as the 1996 Plan is necessary for the
Company to remain competitive in its compensation practices. In the absence of
the Increase, no additional shares are available for future option grants under
the 1996 Plan, except to the extent that shares become available upon
termination or cancellation of outstanding options. For these reasons, the Board
of Directors has approved an amendment to the 1996 Plan to increase the number
of shares of Common Stock available for option grants thereunder by 3,750,000 to
an aggregate of 7,250,000 shares. The specific individuals and classes of
individuals who are to receive grants pursuant to the Increase, and the specific
amounts of such grants, have not yet been determined and are not currently
determinable. All outstanding options granted under such increase prior to
obtaining stockholder approval will remain valid regardless of whether
stockholder approval of the Increase is obtained.
12
<PAGE> 15
THE MATERIAL FEATURES OF THE 1996 PLAN ARE AS FOLLOWS:
Purpose
The purpose of the 1996 Plan is to increase stockholder value, which is
accomplished largely as a result of the Company's successful, on-going stock
option programs in which 1,011 salaried employees (approximately 90% of all
salaried employees) currently participate. The Company believes that Maxim's
long-term commitment to employee ownership of Maxim stock has significantly
contributed to limiting turnover among employees. The Company also strongly
believes that the employee ownership of Maxim is largely responsible for Maxim's
consistent and impressive growth.
The 1996 Plan originally authorized the granting of incentive stock options
and non-qualified stock options (the "Options") with respect to an aggregate of
3,500,000 shares of the Company's Common Stock and has been amended by the Board
of Directors to authorize the granting of options with respect to an additional
3,750,000 shares. The 1996 Plan replaced the Company's 1987 Supplemental Stock
Option Plan which expired on June 1, 1997, and the Company's Incentive Stock
Option Plan and Supplemental Nonemployee Stock Option Plan which will both
expire on August 12, 2002 (the 1987 Supplemental Stock Option Plan, Incentive
Stock Option Plan and Supplemental Nonemployee Stock Option Plan are
collectively referred to as the "Option Plans"). Any shares or options returned
to the Option Plans will increase the number of shares available for Options
under the 1996 Plan. At June 30, 1997, the 3,814,452 shares available for grant
under the 1996 Plan equalled approximately 5% of the Company's common and common
equivalent shares. The closing price of the Company's Common Stock on the Nasdaq
National Market on September 15, 1997 was $70 3/8.
The Common Stock covered by the 1996 Plan may be either authorized but
unissued shares or treasury shares. If there is a lapse, expiration, termination
or cancellation of any Option granted under the 1996 Plan without the issuance
of shares or payment of cash thereunder, or if shares are issued under any
Option under the 1996 Plan and thereafter are reacquired at their original
purchase price by the Company pursuant to rights reserved upon the issuance
thereof, or pursuant to the payment of the purchase price of shares under
options by delivery of other Common Stock of the Company, the shares subject to
or reserved for such Option, or so reacquired, may again be used for new Options
under the 1996 Plan. However, the Common Stock issued under the 1996 Plan that
is not reacquired by the Company pursuant to rights reserved upon the issuance
thereof or pursuant to payment of the purchase price of shares under options by
delivery of other Common Stock of the Company may not exceed the total number of
shares reserved for issuance under the 1996 Plan.
The following summary of certain provisions of the 1996 Plan is qualified
in its entirety by reference to the 1996 Plan, a copy of which has been filed
electronically with the Securities and Exchange Commission as an appendix to the
Company's 1996 Proxy Statement.
Administration
The 1996 Plan provides that grants of Options and other determinations
under the 1996 Plan shall be made by (i) the Board of Directors or (ii) a
Committee designated by the Board (the "Administrator") which, in case of grants
of Options to employees who are officers or directors of the Company, is
constituted in a manner to permit the grants and related transactions under the
1996 Plan to be exempt from Section 16(b) of the Exchange Act in accordance with
Rule 16b-3 of the Securities Exchange Commission and which, in the case of
grants to "covered employees," is intended to constitute "performance-based
compensation" is made up solely of two or more "outside directors" as such terms
are defined under Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code").
Performance Based Compensation
Section 162(m) of the Code limits to $1 million annually the deduction a
public corporation may claim for compensation paid to any of its top five
executive officers, except in limited circumstances. One such exception is for
"performance based compensation," which is defined as compensation paid solely
on account of the attainment of one or more performance goals, but only (1) if
the goals are determined by a
13
<PAGE> 16
compensation committee of the Board of Directors comprised of two or more
outside directors, (2) the performance goals are disclosed to stockholders and
approved by a majority vote before the remuneration is paid, and (3) before the
remuneration is paid, the compensation committee certifies that the performance
goals and any other material terms were in fact satisfied.
Internal Revenue Service regulations provide that compensation attributable
to a stock option will be deemed to satisfy the requirement that performance
goals be pre-established if the grant of the Option is made by the compensation
committee; the plan under which the Option is granted states the maximum number
of shares with respect to which options or rights may be granted during a
specified period to any employee; and, under the terms of the Option, the amount
of compensation the employee could receive is based solely on an increase in the
value of the stock after the date of the grant.
The 1996 Plan includes features intended to permit the Administrator to
grant Options to employees that will qualify as performance-based compensation.
The 1996 Plan limits the number of shares with respect to which incentive stock
options and non-qualified stock options may be granted in any one fiscal year of
the Company to any one participant to 3,000,000 shares.
Eligibility
Selected employees, directors, consultants, advisors, independent
contractors, vendors, customers and others having a past, current or prospective
business relationship with the Company and any parent or subsidiaries will be
eligible to receive Options under the 1996 Plan. Options may be granted to
eligible persons residing in foreign jurisdictions under additional terms and
conditions to accommodate local laws and to provide such eligible persons
favorable treatment under local laws, provided that no such terms are
inconsistent with the 1996 Plan.
Duration
The 1996 Plan will continue in effect until terminated by the Board of
Directors, except that no Option may be granted more that ten years after the
date of adoption of the 1996 Plan by the Board of Directors.
Adjustments
The 1996 Plan provides for adjustment in the number of shares reserved and
in the shares covered by each outstanding Option in the event of a stock
dividend or stock split and may provide in the Administrator's discretion for
vesting of Options and removal of restrictions on Options in the event of
certain corporate transactions, including a change of ownership or control of
the Company. Generally, a change in control will occur for purposes of the 1996
Plan in the event of the acquisition by any person of beneficial ownership of
50% or more of the Company's voting stock, other than an acquisition directly
from the Company or as part of a business combination approved by the Board of
Directors.
Options
The 1996 Plan provides that the purchase price of any incentive stock
option shall be at least 100% of the fair market value of the Common Stock at
the time the option is granted. The 1996 Plan further provides that the purchase
price of any non-qualified stock option shall be not less that 85% of fair
market value at the time the option is granted, provided that the exercise price
may be less than 100% of fair market value only if the Administrator determines
in writing in good faith that (i) such grants are made infrequently, (ii) there
is a good business reason for the grant that outweighs the normal presumption of
per share exercise price of not less than one hundred percent of the fair market
value per share on the date of grant, and (iii) the aggregate number of shares
subject to such option does not exceed 5% of the total number of shares
available under the 1996 Plan, as amended from time to time. The 1996 Plan
provides that the aggregate fair market value (determined as of the time the
option is granted) of the Common Stock with respect to which incentive stock
options may become exercisable for the first time by any individual during any
calendar year may not exceed $100,000. The Administrator may provide for the
payment of the purchase price in cash, by delivery of other Common Stock of the
Company having a market value equal to the purchase price of such shares, or by
any other method, such as delivery of promissory notes. A participant may pay
the purchase price by delivery of an
14
<PAGE> 17
exercise notice accompanied by a copy of irrevocable instructions to a broker to
deliver promptly to the Company sale or loan proceeds to pay the purchase price.
The Administrator may permit or require a participant to pay all or a
portion of the federal, state and local taxes, including FICA and Medicare
withholding tax, arising in connection with the exercise of a non-qualified
stock option by having the Company withhold shares or by delivering shares
received in connection with the Option or previously acquired, having a fair
market value approximating the amount to be withheld.
The period of any Option will be ten years from the date it is granted,
except that the period for Options granted to non-employee directors shall be
five years. Options are exercisable for a period of 90 days after termination or
retirement, 547 days after termination due to death, or 365 days after
termination due to disability.
Amendments and Discontinuance
The Plan is subject to amendment or termination by the Board of Directors
without stockholder approval as deemed in the best interests of the Company.
However, no such amendment shall, without the consent of the holder, reduce the
amount of any Option or adversely change the terms and conditions thereof.
The terms and conditions applicable to any Options granted and outstanding
may at any time be amended, modified, or canceled by mutual agreement between
the Administrator and the participant so long as any amendment or modification
does not increase the number of shares of Common Stock issuable under the 1996
Plan. In addition, options granted under the Option Plans may only be repriced
by the Board or the Compensation Committee under the following limited
conditions: (i) the number of options subject to repricing in any 12 month
period may not exceed 5% of the aggregate pool of shares reserved for issuance
under the 1996 Plan and the Company's 1987 Employee Stock Participation Plan,
and (ii) repricing should occur only infrequently and must not be solely due to
poor operating performance by the Company.
Federal Income Tax Consequences
In fiscal 1997, exercises of employee stock options resulted in over $52.4
million of cash savings as a result of tax deductions for the Company and in
$31.2 million of cash to the Company from stock option exercises, for total cash
generated of over $83.6 million, a significant contribution to the strength of
the Company's balance sheet and a material reduction to any dilutive effect of
such programs. Approximately $80.7 million of the proceeds have been used to
repurchase 1,940,500 shares on the open market, reducing the dilutive effect of
the option program. The Company plans to continue repurchasing its common stock.
Under existing law and regulations, the grant of non-qualified stock
options will not result in income taxable to the employee or provide a deduction
to the Company. However, the exercise of a non-qualified stock option results in
taxable income to the holder, and the Company is entitled to a corresponding
deduction. At the time of the exercise of a non-qualified stock option, the
amount so taxable and so deductible will be the difference between the fair
market value of the shares purchased and the exercise price.
No income is recognized by an optionee when an incentive stock option is
granted or exercised. If the holder holds the shares received on exercise of an
incentive stock option for at least two years from the date of grant and one
year from date of receipt of the optioned stock, any gain realized by the holder
on the disposition of the stock will be accorded long-term capital gain
treatment, and no deduction will be allowed to the Company. If the holding
period requirements are not satisfied, the employee will recognize ordinary
income at the time of disposition equal to the lessor of (i) the gain realized
on the disposition, or (ii) the difference between the option price and the fair
market value of the shares on the date of exercise. Any additional gain on the
disposition not reflected above will be long-term or short-term capital gain,
depending upon the length of time the shares are held. The Company will be
entitled to an income tax deduction equal to the amount of ordinary income
recognized by the employee.
The foregoing discussion is not a complete description of the federal
income tax aspects of Options under the 1996 Plan. In addition, administrative
and judicial interpretations of the application of the federal income tax laws
are subject to change. Furthermore, no information is given with respect to
state or local taxes that
15
<PAGE> 18
may be applicable to any Options. Participants in the 1996 Plan who are
residents of or are employed in a country other than the United States may be
subject to taxation in accordance with the tax laws of that particular country
in addition to or in lieu of United States federal income taxes.
PROPOSAL 3
AMENDMENT OF CERTIFICATE OF INCORPORATION
TO AUTHORIZE 120 MILLION ADDITIONAL SHARES OF COMMON STOCK
The Board of Directors believes the current capital structure does not
provide sufficient flexibility for the potential future needs of the Company.
Therefore, the Board has unanimously approved an amendment to the Company's
Certificate of Incorporation to increase the number of authorized shares of the
Company's Common Stock from 120,000,000 to 240,000,000. The Board of Directors
recommends such amendment to the Company's stockholders for adoption. If the
amendment is adopted, it will become effective upon filing of a Certificate of
Amendment of the Company's Certificate of Incorporation with the Secretary of
State of the State of Delaware. At June 30, 1997, 63,729,252 shares were issued
and outstanding, 22,580,340 shares were subject to outstanding options,
3,814,452 shares were available for future issuance pursuant to all of the
Company's stock option plans and 600,000 shares were issuable upon exercise of a
warrant granted to Tektronix Inc. in connection with the acquisition of the
Tektronix integrated circuit operations, leaving a balance of 29,275,956
authorized shares.
Authorization of an additional 120,000,000 shares of the Company's Common
Stock will give the Board of Directors the express authority, without further
action of the stockholders, to issue such shares of Common Stock from time to
time as the Board deems necessary. The Board of Directors believes it is
desirable to have the ability to issue such additional Common Stock for general
corporate purposes. The proposed increase in the number of authorized shares
would provide the Company with the flexibility to effect a stock split should it
choose to do so in the future and could also be used for various purposes
including, without limitation, raising capital, providing equity incentives to
employees, officers or directors, establishing strategic relationships with
other companies and expanding the Company's business or product lines through
the acquisition of other businesses or products. The additional Common Stock
would be available for issuance by the Board of Directors without further action
by the stockholders, unless such action were specifically required by applicable
law or the rules of any stock exchange on which the Company's securities may
then be traded. The Nasdaq National Market, on which the issued shares of the
Company's Common Stock are currently included for quotation, requires
stockholder approval as a prerequisite to continued inclusion of the shares in
several situations, including acquisition transactions in which the issuance of
additional shares could result in an increase in the number of shares of capital
stock outstanding by 20 percent or more.
Although at present the Board of Directors has no plans to issue the
additional shares of Common Stock, it is considering, and may approve in the
near future, a stock dividend that would be substantially equivalent to a stock
split. The Board is considering this action in order to improve the liquidity of
the Company's stock for the benefit of the stockholders.
The additional Common Stock authorized by approval of the amendment would
have rights identical to the currently outstanding Common Stock of the Company.
Adoption of the proposed amendment and issuance of the additional Common Stock
would not affect the rights of the holders of currently outstanding Common Stock
of the Company, except for effects incidental to increasing the number of shares
of the Company's Common Stock outstanding, including dilution of the equity
interests of existing stockholders or reduction of the voting power of existing
stockholders.
Adoption of the amendment to the Company's Certificate of Incorporation to
authorize additional shares of Common Stock requires the approval of a majority
of the shares outstanding. Unless otherwise marked, all properly signed and
returned proxies will be voted FOR Proposal No. 3. The Board of Directors
recommends a vote FOR this proposal.
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<PAGE> 19
PROPOSAL 4
APPROVAL OF THE EXECUTIVE OFFICERS' BONUS ARRANGEMENTS
The Compensation Committee of the Board of Directors adopted bonus
arrangements for the Company's executive officers (the "Bonus Plan").
Stockholders are being asked to consider and approve the Bonus Plan. Section
162(m) of the Internal Revenue Code limits the federal income tax deduction that
the Company may take for compensation paid to "Covered Employees," unless
certain requirements are satisfied. For any given year, "Covered Employees" are
the Company's Chief Executive Officer and its four other most highly compensated
officers for that year, as determined under Securities and Exchange Commission
executive compensation disclosure rules. Section 162(m) places a $1,000,000 per
year limit on the deduction that may be taken for compensation paid to any
Covered Employee unless the compensation is based on the attainment of objective
performance goals established in advance by a committee of two or more outside
directors and the material terms of the performance goal under which the
compensation is to be paid are disclosed to and approved by the Company's
stockholders . Stockholder approval of the Bonus Plan is required to preserve
the deductibility of incentive compensation paid to the Company's executive
officers.
Under the Bonus Plan, a bonus pool will be created up to a maximum of 3% of
the Company's pre-tax earnings, with the specific amount of the pool determined
by equal weighting of two performance criteria: (a) the rate of growth in the
Company's earnings per share and (b) the increase in the market price of its
stock. The bonus pool will be based on the Company's actual achievement related
to these objective performance criteria versus a target growth of 30% per year.
From this pool, each executive officer will receive a bonus in respect of each
fiscal year, in an amount to be determined by the Compensation Committee based
on the same objective performance criteria. The maximum bonus that may be paid
in any fiscal year to any executive officer, including the Chief Executive
Officer, is one-half of the pool. After the end of each fiscal year, the
Compensation Committee is to determine and certify the Company's performance as
compared to the criteria set for that fiscal year, and to determine the amount
of each executive officer's bonus for such year. The Compensation Committee
reserves the right to pay any executive officer less than the maximum bonus
determined under the objective performance criteria based upon the Compensation
Committee's determination of that executive officer's individual performance
during the year.
EFFECT OF STOCKHOLDER APPROVAL
If approved by the stockholders, the Bonus Plan will be effective as of the
beginning of fiscal year 1998 and awards paid under the Bonus Plan will be
exempt from the deduction limitation of Section 162(m). It would be necessary
for the stockholders to approve the material terms of the Bonus Plan at their
annual meeting held in 2002 for awards paid under the Bonus Plan thereafter to
be exempt from the deductions limitation of Section 162(m).
Approval of the Bonus Plan requires the approval of a majority of the
shares of Common Stock present or represented in person or by proxy and voting
at the Annual Meeting. Unless otherwise marked, all properly signed and returned
proxies will be voted FOR Proposal No. 4. The Board of Directors recommends a
vote FOR this proposal.
IF THE STOCKHOLDERS FAIL TO APPROVE THE BONUS PLAN, THE COMPENSATION
COMMITTEE WOULD MEET THEREAFTER AND DETERMINE AN APPROPRIATE LEVEL OF
COMPENSATION FOR THE EXECUTIVE OFFICERS. THE COMPENSATION COMMITTEE MAY ADOPT
THE SAME TYPES OF CRITERIA OR FORMULAS FOR BONUSES AS PROPOSED HEREIN, ALTHOUGH
THE COMPANY HAS MADE NO COMMITMENT TO DO SO. BONUSES PAID PURSUANT TO SUCH
CRITERIA OR FORMULAS WOULD BE SUBJECT TO THE DEDUCTION LIMITATION OF SECTION
162(m). THERE CAN BE NO ASSURANCES THAT THE COMPENSATION COMMITTEE WOULD NOT
ADOPT THE SAME TYPES OF CRITERIA OR FORMULAS FOR BONUSES OR THAT THE BONUSES
WOULD NOT BE PAID IN SIMILAR OR GREATER AMOUNTS PURSUANT TO ANY SUCH CRITERIA OR
FORMULAS IF STOCKHOLDERS DO NOT APPROVE THE BONUS PLAN.
17
<PAGE> 20
PROPOSAL 5
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young LLP as the Company's
independent auditors for the year ending June 30, 1998, and has further directed
that management submit the selection of independent auditors for ratification by
the stockholders at the Annual Meeting. Representatives of Ernst & Young LLP are
expected to be present at the Annual Meeting, will have an opportunity to make a
statement if they so desire and will be available to respond to appropriate
questions.
Stockholder ratification of the selection of Ernst & Young LLP as the
Company's independent auditors is not required by the Company's By-laws or
otherwise. However, the Board is submitting the selection of Ernst & Young LLP
to the stockholders for ratification as a matter of good corporate practice. In
the event the stockholders fail to ratify the selection, the Board will
reconsider whether or not to retain that firm. Even if the selection is
ratified, the Board in its discretion may direct the appointment of different
independent auditors at any time during the year if the Board feels that such a
change would be in the best interests of the Company and its stockholders.
In order to be adopted, this proposal requires the affirmative vote of a
majority of the shares represented in person or by proxy and voting at the
Annual Meeting. The Board of Directors recommends a vote FOR this proposal.
OTHER MATTERS
The Board of Directors does not know of other matters which may come before
the meeting. However, if any other matters are properly presented to the
meeting, it is the intention of the persons named in the accompanying proxy to
vote, or otherwise to act, in accordance with their judgment on such matters.
STOCKHOLDER PROPOSALS -- 1998 ANNUAL MEETING
Proposals of stockholders which are intended to be presented at the
Company's 1998 Annual Meeting of Stockholders must be received by the Company no
later than May 25, 1998 in order to be included in the proxy statement and proxy
relating to that meeting.
John F. Gifford
President, Chief Executive Officer and
Chairman of the Board
September 29, 1997
THE BOARD OF DIRECTORS HOPES THAT STOCKHOLDERS WILL ATTEND THIS MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, SIGN AND RETURN
THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. STOCKHOLDERS WHO ATTEND THE
MEETING MAY VOTE THEIR SHARES PERSONALLY EVEN THOUGH THEY HAVE SENT IN THEIR
PROXIES.
18
<PAGE> 21
PROXY
MAXIM INTEGRATED PRODUCTS, INC.
120 San Gabriel Drive
Sunnyvale, CA 94086
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING ON NOVEMBER 13, 1997.
The undersigned hereby appoints John F. Gifford and Michael J. Byrd,
and each of them, as proxies of the undersigned, with full power of
substitution, to vote all of the shares of stock of Maxim Integrated Products,
Inc. which the undersigned may be entitled to vote at the Annual Meeting of
Stockholders of Maxim Integrated Products, Inc. to be held on November 13, 1997
at 11:00 a.m., Pacific Daylight Time, and at any adjournment or postponement
thereof, with all powers that the undersigned would possess if personally
present, upon and in respect of the following materials and in accordance with
the following instructions, with discretionary authority as described in the
proxy statement as to any and all other matters that may properly come before
the meeting or any adjournment or postponement thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTOR
AND FOR PROPOSALS 2, 3, 4 AND 5.
THIS PROXY WILL BE VOTED AS SPECIFIED OR, IF NO CHOICE IS SPECIFIED,
WILL BE VOTED FOR THE NOMINEES FOR DIRECTOR AND FOR PROPOSALS 2, 3, 4 AND 5.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
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<PAGE> 22
Please mark
your choice
like this in blue [X]
or black ink.
ALL MATTERS ARE PROPOSED BY MAXIM INTEGRATED PRODUCTS, INC. THE BOARD OF
DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES AND FOR PROPOSALS 2, 3 AND 4.
1. Election of Directors
Nominees: JAMES R. BERGMAN JOHN F. GIFFORD FOR WITHHELD
ROBERT F. GRAHAM B. KIPLING HAGOPIAN [ ] [ ]
A.R. FRANK WAZZAN
FOR, except vote withheld from the following nominees(s):
---------------------------------------------------------------------------
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FOR WITHHELD ABSTAIN
2. To ratify and approve the increase in the number of [ ] [ ] [ ]
shares available under the Company's 1996 Stock
Incentive Plan.
3. To approve an amendment to the Company's Certificate FOR WITHHELD ABSTAIN
of Incorporation in order to increase the authorized
number of shares of the Company's Common Stock. [ ] [ ] [ ]
4. To approve a Bonus Plan for the Company's FOR WITHHELD ABSTAIN
Executive Officers.
[ ] [ ] [ ]
5. To ratify and approve the retention of Ernst & Young FOR WITHHELD ABSTAIN
LLP as the Company's independent auditors for fiscal
1998. [ ] [ ] [ ]
MARK HERE FOR
ADDRESS CHANGE [ ]
AND NOTE AT RIGHT
Shares represented by this proxy will
be voted as directed by the stockholder.
IF NO SUCH DIRECTIONS ARE INDICATED,
THE PROXIES WILL HAVE AUTHORITY TO VOTE
FOR THE ELECTION OF ALL DIRECTORS, AND
FOR ITEMS 2, 3, 4 AND 5.
PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY USING THE ENCLOSED
REPLY ENVELOPE.
Signature(s)________________________________________________Date_______________
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such. If a corporation, please sign in full corporate
name by president or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
- --------------------------------------------------------------------------------
-FOLD AND DETACH HERE-
