<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by Registrant: [x]
Filed by a Party other than the Registrant: [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for use of the Commission only (as permitted by Rule
14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Materials Pursuant to Section 240.14a-11(c) or Section
240.14a-12
DALLAS SEMICONDUCTOR CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
DALLAS SEMICONDUCTOR CORPORATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which 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:(1)
4) Proposed maximum aggregate value of transaction:
(1) Set forth amount on which the filing is calculated and state how it was
determined.
[x] 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: $125
2) Form, Schedule or Registration Statement No.: Schedule 14A
3) Filing Party: Registrant
4) Date Filed: February 22, 1996
<PAGE> 2
[LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 23, 1996
To the Stockholders of
Dallas Semiconductor Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders
of Dallas Semiconductor Corporation, a Delaware corporation (the "Company"),
will be held on Tuesday, April 23, 1996, beginning at 8:30 a.m., Dallas time,
at the offices of the Company, 4401 South Beltwood Parkway, Dallas, Texas, for
the following purposes:
1. To elect seven directors to serve until the next
Annual Meeting of Stockholders or until their
respective successors are elected and qualified;
2. To consider and vote upon a proposal to amend the
Company's 1987 Stock Option Plan;
3. To consider and vote upon a proposal to ratify the
appointment of independent auditors for the Company
for the 1996 fiscal year; and
4. To transact such other business as may properly come
before the meeting or any adjournment thereof.
The Board of Directors of the Company has fixed March 1, 1996, as the
record date for determining the stockholders entitled to notice of, and to vote
at, this meeting or any adjournment thereof. The list of stockholders entitled
to vote will be available for inspection by any stockholder at the offices of
the Company, 4401 South Beltwood Parkway, Dallas, Texas, for ten days prior to
the meeting.
You are cordially invited to attend this meeting in person, if
possible. If you do not expect to be present in person, please sign and date
the enclosed proxy and return it in the enclosed envelope, which requires no
postage if mailed in the United States.
BY ORDER OF THE BOARD OF DIRECTORS
Marla K. McLaughlin, Secretary
Dallas, Texas
March 12, 1996
<PAGE> 3
DALLAS SEMICONDUCTOR CORPORATION
4401 SOUTH BELTWOOD PARKWAY
DALLAS, TEXAS 75244-3292
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 23, 1996
This Proxy Statement is furnished to stockholders of Dallas
Semiconductor Corporation, a Delaware corporation (the "Company"), in
connection with the solicitation by order of the Board of Directors of the
Company of proxies to be voted at the Annual Meeting of Stockholders of the
Company to be held on April 23, 1996, and is being mailed with proxies to such
stockholders on or about March 12, 1996. Proxies in the form enclosed,
properly executed by stockholders and returned to the Company, which are not
revoked, will be voted at the meeting. A proxy may be revoked at any time
before it is voted by written notice thereof to the Secretary of the Company or
by execution of a subsequent proxy.
The Company's Annual Report on Form 10-K and Annual Report to
Stockholders covering the fiscal year ended December 31, 1995, is being mailed
herewith to stockholders.
OUTSTANDING CAPITAL STOCK
The record date for stockholders entitled to notice of and to vote at
the Annual Meeting of Stockholders was the close of business on March 1, 1996.
At the close of business on that date the Company had issued, outstanding and
entitled to vote at the meeting 26,377,041 shares of Common Stock, $.02 par
value per share (the "Common Stock").
QUORUM AND VOTING
The presence, in person or by proxy, of the holders of a majority of
the outstanding Common Stock is necessary to constitute a quorum at the
meeting. In deciding all questions, a holder of Common Stock shall be entitled
to one vote, in person or by proxy, for each share of Common Stock in the
Stockholder's name on the record date. Stockholders have no cumulative voting
rights.
<PAGE> 4
CERTAIN BENEFICIAL OWNERS
As of March 1, 1996, the following persons were known to the Company
to be the beneficial owner of more than 5% of the Common Stock, and, except as
noted, are believed to have sole voting power and sole investment power with
respect to such shares:
<TABLE>
<CAPTION>
SHARES
NAME AND ADDRESS OF BENEFICIALLY PERCENT
BENEFICIAL OWNER (1) OWNED OF CLASS
-------------------- ----------- --------
<S> <C> <C>
Jurika & Voyles, Inc.(2)
1999 Harrison Street
Suite 700
Oakland, California 94612 1,736,768 6.6%
Wellington Management Company(3)
75 State Street
Boston, Massachusetts 02109 1,674,323 6.3%
</TABLE>
_______________
(1) See "Election of Directors" for information regarding beneficial
ownership of stock by C. V. Prothro, whose address is 4401 South
Beltwood Parkway, Dallas, Texas 75244. Excluding options not
exercisable within 60 days, Mr. Prothro may be deemed to be the
beneficial owner of 2,016,934 shares of Common Stock, or 7.6% of the
shares of Common Stock deemed to be outstanding.
(2) Jurika & Voyles, Inc. ("Jurika & Voyles"), in its capacity as an
investment advisor, may be deemed to be the beneficial owner of
1,736,768 shares of Common Stock, over which Jurika & Voyles exercises
shared dispositive power. Jurika & Voyles shares the power to vote
1,662,268 of such shares.
(3) Wellington Management Company ("Wellington"), acting through its
subsidiary Wellington Trust Company, N.A., in its capacity as
investment advisor, may be deemed to be the beneficial owner of
1,674,323 shares of Common Stock. Wellington shares the power to
dispose of all such shares and shares the power to vote 492,723 of
such shares.
2
<PAGE> 5
ACTION TO BE TAKEN AT THE MEETING
The accompanying proxy, unless the stockholder specifies otherwise
therein, will be voted (i) for the election of each of the seven nominees named
herein for the office of director; (ii) for the approval of amendments to the
Company's 1987 Stock Option Plan; (iii) for the ratification of the appointment
of the independent auditors for the Company for the fiscal year ending December
31, 1996; and (iv) in the discretion of the proxy holders on any other matters
that may properly come before the meeting or any adjournment thereof.
In order to be elected a director, a nominee must receive a plurality
of the votes cast at the meeting for the election of directors. Since the
seven nominees receiving the largest number of affirmative votes will be
elected, shares represented by proxies that are marked "withhold authority" or
"abstain" will have no effect on the outcome of the election. Approval of each
of the other matters requires the affirmative vote of at least a majority of
the votes present at the meeting and entitled to vote on such matter. Shares
represented by proxies that are marked "abstain" as to any such matter will be
counted as votes cast, which will have the same effect as a negative vote on
such matter. Under Delaware law, proxies relating to "street name" shares that
are not voted by brokers on one or more, but less than all, matters will be
treated as shares present for purposes of determining the presence of a quorum
but will not be treated as shares entitled to vote as to such matter or matters
not voted upon.
As of the date hereof, the Board of Directors knows of no other
business that will be presented for action by the stockholders at this meeting.
However, if other proper matters are brought before the meeting, a vote may be
cast pursuant to the accompanying proxy in accordance with the judgment of the
proxy holders.
Should any nominee named herein for the office of director become
unwilling or unable to accept nomination or election, the proxy holders will
vote for the election in his place of such other person, if any, as management
may recommend; however, management has no reason to believe that any of the
nominees will be unwilling or unable to serve if elected. Each nominee has
expressed to management his intention, if elected, to serve the entire term for
which his election is sought.
3
<PAGE> 6
ELECTION OF DIRECTORS
Item No. 1 on Proxy
Seven directors are to be elected at the meeting to hold office until
the next Annual Meeting of Stockholders or until their respective successors
are duly elected and qualified. All of the nominees are currently directors of
the Company.
The Board of Directors' nominees for the office of director are as
follows:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DURING SERVED AS SHARES OF COMMON
LAST FIVE YEARS AND DIRECTOR OF STOCK BENEFICIALLY
DIRECTORSHIPS OF THE OWNED ON MARCH 1, 1996
NAME AGE PUBLIC COMPANIES COMPANY SINCE AND % OF CLASS (1)
---- --- ---------------- ------------- ------------------------
<S> <C> <C> <C> <C>
C.V. Prothro 53 Chairman of the Board and 1984 2,454,434
(E) President of the Company since 8.7%
1989; Chairman of the Board of
the Company since 1984;
General Partner of Southwest
Enterprise Associates, L.P., a
venture capital fund, since
1983; Director of Platinum
Software Corporation.
Chao C. Mai 60 Senior Vice President of the 1985 688,269
Company since January 1993; 2.6%
prior thereto Vice President-
Wafer Fabrication and
Technology Development of the
Company
Michael L. Bolan 49 Vice President-Marketing and 1989 600,100
Product Development of the 2.3%
Company
Richard L. King 57 General Partner of KBA 1984 120,100
(A)(C) Partners L.P., a venture 0.5%
capital fund, since 1987 and
President of King Brothers &
Associates (China) Inc., a
venture capital fund, since
1994; Director of Oak
Technology, Inc.
M.D. Sampels 63 Attorney-at-Law; Shareholder 1985 120,884
(A)(C)(E) in the law firm of Jenkens & .05%
Gilchrist, a Professional
Corporation
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DURING SERVED AS SHARES OF COMMON
LAST FIVE YEARS AND DIRECTOR OF STOCK BENEFICIALLY
DIRECTORSHIPS OF THE OWNED ON MARCH 1, 1996
NAME AGE PUBLIC COMPANIES COMPANY SINCE AND % OF CLASS (1)
---- --- ---------------- ------------- ------------------------
<S> <C> <C> <C> <C>
Carmelo J. 54 Chairman or President/CEO of 1985 120,167
Santoro Silicon Systems Inc., since 0.5%
(A)(C) 1981, a supplier of custom and
application specific
integrated circuits; Chairman
and CEO of Platinum Software
Corporation; Director of AST
Research, Inc., S3 Inc.,
Platinum Software Corporation
and Smartflex Systems, Inc.
E.R. Zumwalt, Jr. 75 President of Admiral Zumwalt & 1993 100,300
(A)(C) Consultants, Inc., a 0.4%
consulting firm, since 1980;
Director of Fleet Aerospace,
Inc., Fleet Aerospace
Corporation and NL Industries,
Inc.
</TABLE>
Beneficial ownership of shares of Common Stock by all other executive officers
of the Company named in "Executive Compensation" herein and by all directors
and executive officers as a group, was as follows:
<TABLE>
<S> <C> <C>
F.A. Scherpenberg 466,183
1.7%
Douglas L. Powell 100,000
0.4%
Total shares beneficially owned 4,943,162
by directors and executive 13.0%
officers as a group (11
persons)
</TABLE>
_______________
(A) Member of the Audit Committee.
(C) Member of the Compensation Committee.
(E) Member of the Executive Committee.
(1) Except as otherwise noted, each person has sole voting and investment
power over the Common Stock shown as beneficially owned, subject to
community property laws where applicable. All outstanding options
held by the following persons are included, regardless of whether such
options are currently exercisable: 1,830,034 shares for Mr. Prothro,
250,000 shares for Dr. Mai, 200,000 shares for Mr. Bolan, 110,000
shares for Mr. King, 120,000 shares for both Mr. Sampels and Mr.
Santoro, 100,000 shares for Adm. Zumwalt, 422,000 shares for Mr.
Scherpenberg, 100,000 shares for Mr. Powell and 3,423,534 shares for
all directors and executive officers as a group. Mr. Prothro
5
<PAGE> 8
disclaims beneficial ownership with respect to an aggregate of 41,966
shares held for the benefit of his adult children. Includes 167
shares held in trust for members of Mr. Santoro's family.
The Board of Directors of the Company held eight meetings during 1995.
During such fiscal year, all of the directors attended 75% or more of the
aggregate meetings of the Board of Directors meetings and the Committees on
which they serve. The Audit Committee of the Company recommends independent
auditors to the Board and reviews the scope and results of audits conducted and
the Company's internal control procedures. The Audit Committee held three
meetings during 1995. The Company has no Nominating Committee. See "Executive
Compensation - Report of Compensation Committee on Executive Compensation" for
a discussion regarding the membership, scope of authority and report of the
Company's Compensation Committee.
DIRECTOR COMPENSATION
During 1995, each of the nonemployee directors of the Company received
compensation as a director in the amount of $9,750 per quarter, plus $1,500 for
each board meeting attended and $1,000 for each committee meeting attended.
Committee chairmen received $1,500 per committee meeting chaired. The Company
reimburses nonemployee directors for expenses incurred in attending meetings
and provides for air travel and expenses of its nonemployee directors on
Company business. Premiums paid by the Company during 1995 for split-dollar
life insurance policies on Messrs. King, Sampels and Santoro totaled $269,696.
The cash values under such policies accrue for the benefit of the Company to
cover the premium costs, pursuant to a collateral assignment of each policy to
the Company.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee for fiscal year 1995 were M.
D. Sampels, Carmelo J. Santoro (Chairman) and Admiral E.R. Zumwalt, Jr.
Richard L. King served on the Compensation Committee from January 1, 1995 to
April 25, 1995.
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee")
is responsible for establishing the level of compensation of the executive
officers of the Company and administers the Company's Executive Bonus Plan,
Profit Sharing Plan and stock option plans.
6
<PAGE> 9
The Company's 1995 performance was reviewed by the Committee for the
purpose of determining salary increases and bonus allocations for officers and
employees. The salary review and evaluation is conducted by comparing the
performance of various indices of the Company with others in its industry, as
well as considering general economic conditions. This evaluation is
subjective. Sales growth, profitability and shareholders' equity are among a
group of indices reviewed. No particular weight is assigned to one index over
another.
During 1995 the Company's officers received salaries ranging from 6.5%
to 18.5% over 1994 levels. This included an increase in the Chief Executive
Officer's base salary of 6.5%. In comparison to the salary levels of the chief
executive officers of companies within the Standard and Poor's Electronics
(Semiconductor) Index, Mr. Prothro was below average. Likewise the salaries of
other executives was lower than those named in their public documents.
Under the Executive Bonus Plan, payments are determined based on the
achievement of performance targets, as well as subjective assessments, and are
limited in any one case to three times the executive's base compensation. The
plan limits a maximum distribution to all executives under these bonus plans to
6% of profits after tax. The Committee allocated a bonus of $1,000,000 to Mr.
Prothro, and bonuses to Company officers ranged from $100,000 to $325,000.
Total bonuses paid to this group were less than 6% of profits after tax.
Under the Company's Profit Sharing Plan, quarterly bonuses are awarded
to all full-time employees of the Company, including the executive officers.
Under this Plan these profit sharing awards are allocated so that each eligible
employee receives an award equal to a fixed number of hours of his or her base
salary. During 1995, such quarterly profit sharing awards ranged from 15 to 17
hours of base salary for each eligible employee. The profit sharing awards are
included in the Bonus column in the Summary Executive Compensation Table that
follows.
The executive officers are also granted stock options from time to
time under the Company's Stock Option Plans. The timing of such grants and the
size of the overall option pools and their allocations are determined by the
Committee based upon market conditions, as well as corporate and individual
performance. Emphasis is placed on the long-term performance of the Company
and is subjective with no particular emphasis being placed on any one factor.
During 1995, no options were granted to Mr. Prothro or to other members of the
executive group.
Certain executive officers of the Company will be subject to the $1
million limitation on deductibility of compensation under Section 162(m) of the
Internal Revenue Code, beginning in 1994. The Committee anticipates that a
substantial portion of each executive's compensation will be "qualified
performance-based compensation," which is not limited under Section 162(m).
The Committee therefore does not anticipate any executive officer's
compensation to exceed the limitation on deductibility.
COMPENSATION COMMITTEE
Carmelo J. Santoro (Chairman)
M. D. Sampels
Adm. E.R. Zumwalt, Jr.
7
<PAGE> 10
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG THE COMPANY, S&P 500
INDEX & S&P SEMICONDUCTOR INDEX
The following table compares total stockholder returns for the Company
at December 31 of each of the last five years to the Standard & Poor's 500
Stock Index ("S&P 500") and the Standard & Poor's Electronics (Semiconductors)
Index ("S&P Semi Index") assuming a $100 investment made on December 31, 1990
and reinvestment of all dividends. The Company's fiscal year ends on the
Sunday closest to December 31 of each year. This table uses December 31 as the
comparison point for each year. The stockholder return shown on the following
graph is not necessarily indicative of future stock performance.
[GRAPH]
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Dallas Semiconductor Corp 100 129 218 253 271 341
- --------------------------------------------------------------------------------
S&P 500 Index 100 130 140 155 157 215
- --------------------------------------------------------------------------------
S&P Semi Index 100 125 204 315 368 500
- --------------------------------------------------------------------------------
</TABLE>
The companies included in the S&P Semi Index are: Advanced Micro Devices,
Inc., Applied Materials, Inc. Intel Corporation, LSI Logic Corporation, Micron
Technology, Inc., Motorola, Inc., National Semiconductor Corporation and Texas
Instruments Incorporated.
8
<PAGE> 11
SUMMARY EXECUTIVE COMPENSATION TABLE
The following summary compensation table sets forth the annual
compensation paid or accrued, together with the number of shares covered by
options granted, during each of the Company's 1993, 1994 and 1995 fiscal years
to C. V. Prothro, the Company's Chief Executive Officer, and the Company's
four most highly compensated executive officers other than Mr. Prothro:
<TABLE>
<CAPTION>
Annual Long Term
Compensation Compensation
----------------------------- ------------
Awards
------------
Stock
Underlying All Other
Name and Salary Bonus Options Compensation
Principal Position Year ($)(1) ($)(2) (#)(3) ($)(4)(5)
------------------ ---- ------ ------ ---------- ------------
<S> <C> <C> <C> <C> <C>
C.V. Prothro, Chairman 1995 540,000 1,016,875 0 89,268
of the Board of 1994 490,000 309,337 0 107,110
Directors, President and 1993 375,000 582,811 1,000,000 0
Chief Executive Officer
Chao C. Mai, 1995 314,000 334,813 0 68,831
Senior Vice President 1994 286,000 180,552 0 65,106
1993 220,000 231,898 200,000 0
Michael L. Bolan, 1995 210,000 191,562 0 42,157
Vice President- 1994 195,000 123,104 0 47,652
Marketing and Product 1993 185,000 157,459 100,000 250
Development
F. A. Scherpenberg, 1995 195,000 181,094 0 40,048
Vice President- 1994 180,000 113,634 0 40,096
Computer Products 1993 155,000 132,124 294,000 250
Douglas L. Powell (6) 1995 161,763 180,469 100,000 0
Vice President-Sales 1994 0 0 0 0
and Strategic Marketing 1993 0 0 0 0
</TABLE>
(1) Includes amounts deferred at the executive officer's election pursuant
to the Company's Section 401(k) Plan.
(2) Includes annual bonuses as well as amounts accrued and distributable
under the Company's Profit Sharing Plan in which all full-time employees
of the Company are eligible to participate.
(3) The Company has not granted any SARs.
(4) Excludes premiums paid by the Company for group term life insurance
generally available to all salaried employees of less than $600 for any
executive officer for 1995.
(5) Amounts shown for 1995 represent premiums paid by the Company for
split-dollar life insurance policies on these executive officers. The
cash values under such policies accrue for the benefit of the Company to
cover the premium costs, pursuant to a collateral assignment of each
policy to the Company.
(6) Mr. Powell joined the Company as of January 1, 1995.
9
<PAGE> 12
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END
OPTION/SAR VALUES
The following table sets forth, for Mr. Prothro and the other four
most highly compensated executive officers of the Company: (i) the number of
shares of the Company's Common Stock acquired upon exercise of options during
fiscal year 1995; (ii) the net aggregate dollar value realized upon exercise;
(iii) the total number of unexercised options held at the end of fiscal year
1995; and (iv) the aggregate dollar value of in-the-money unexercised options
held at the end of fiscal year 1995. To date, the Company has issued no SARs.
<TABLE>
<CAPTION>
Number of Value of
Shares Underlying Unexercised
Unexercised In-the-Money
Shares Options at 1995 Options at 1995
Acquired on Value Fiscal Year End Fiscal Year End
Name Exercise (#) Realized ($) (#) ($)
-------------------- ------------ ------------ -------------------------- --------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
C. V. Prothro 3,300 $ 57,750 1,392,534 437,500 $15,975,552 $2,625,000
Chao C. Mai 31,169 $ 647,536 162,500 87,500 $ 1,415,625 $ 525,000
Michael L. Bolan 290,000 $ 4,637,250 156,250 43,750 $ 1,890,625 $ 262,500
F. A. Scherpenberg 0 0 290,875 131,125 $ 2,793,187 $ 803,312
Douglas L. Powell 0 0 0 100,000 0 $ 562,500
</TABLE>
10
<PAGE> 13
AMENDMENT OF 1987 STOCK OPTION PLAN
Item No. 2 on Proxy
GENERAL
On January 23, 1996, the Board of Directors approved, subject to
stockholder approval, a proposal to amend the 1987 Stock Option Plan (the
"Plan"). The proposal includes two amendments to the Plan. The first
amendment would provide that the maximum number of shares of Common Stock
available for issuance under the Plan would be increased, on and as of January
1 of each calendar year from and including January 1, 1996, by a number of
shares equal to one percent (1%) of the number of shares of Common Stock
outstanding on December 31 of the preceding year subject to adjustment by the
Board of Directors to reflect, as deemed appropriate by the Board of Directors,
any stock dividend, stock split, share combination, recognition,
recapitalization or the like, of or by the Company. The Plan currently
provides that the maximum number of shares of Common Stock available for
issuance under the Plan is 4,860,000. The proposed amendment will provide the
Company with the ability to continue the purpose of the Plan by providing
additional incentives to attract and retain qualified and competent employees,
non-employee directors and consultants, upon whose judgment the success of the
Company is largely dependent.
The second amendment would provide that options granted under the Plan
would be freely assignable by optionees if such assignment is permitted by Rule
16b-3 promulgated by the Securities and Exchange Commission ("SEC") and if so
authorized by the Compensation Committee of the Board of Directors. Rule 16b-3
provides an exemption from the operation of the "short-swing profit" recovery
provisions of Section 16(b) of the Exchange Act of 1934, as amended, with
respect to the acquisition of stock options, transactions relating to stock
appreciation rights and the use of already owned shares of Common Stock as
payment for the exercise price of stock options. Currently, Rule 16b-3
requires that options be nonassignable, other than by will or by laws of
descent and distribution, in order for the Plan to be in compliance with such
rule. However, an amendment to Rule 16b-3 has been proposed by the SEC that
would remove the restriction on transferability. Adoption of the proposed
amendment to the Plan by the stockholders of the Company would result in the
Compensation Committee of the Board of Directors having the authority to grant
options under the Plan that are freely assignable if and when such an amendment
to Rule 16b-3 is adopted by the SEC. There can be no assurance that the
proposed amendment to Rule 16b-3 will be adopted in the form proposed.
The Company has previously registered under the Securities Act of
1933, as amended, 4,860,000 shares currently issuable under the Plan. The
Company intends to register the additional shares of Common Stock issuable
under this amendment, assuming the stockholders approve the proposal to
increase the number of available shares.
PURPOSE
The purpose of the Plan is to advance the interest of the Company by
providing additional incentives to attract and retain qualified and competent
employees, non-employee directors and consultants, upon whose efforts and
judgment the success of the Company is largely dependent, through the
encouragement of stock ownership in the Company by such persons.
ELIGIBILITY
Those persons who are either (i) employees of the Company, (ii) under
written contract to provide consulting services to the Company (a
"Consultant"), or (iii) non-employee directors of the Company are eligible to
participate in the Plan. As of the date hereof, substantially all of the
Company's full-time employees were eligible to receive options under the Plan.
As of March 1, 1996, there were approximately 1,082 officers, non-employee
directors and employees of the Company.
11
<PAGE> 14
TYPES OF OPTIONS
The Plan authorizes (i) the granting of incentive stock options
("Incentive Options") to purchase Common Stock to eligible persons, (ii) the
granting of nonqualified stock options ("Nonqualified Options") to purchase
Common Stock to eligible persons and (iii) the use of already owned Common
Stock as full or partial payment for the exercise price of options granted
under the Plan. Unless the context otherwise requires, the term "Option"
includes both Incentive Options and Nonqualified Options.
ADMINISTRATION
The Plan is currently administered by the Compensation Committee of
the Board of Directors (the "Plan Administrator"). The Plan Administrator
consists of disinterested persons in accordance with the provisions of Rule
16b-3.
EXERCISE PRICE OF OPTIONS
The Incentive Options may not be granted with an exercise price per
share that is less than the fair market value of the Common Stock at the date
of grant. The Nonqualified Options may be granted with any exercise price
determined by the Plan Administrator.
PAYMENT OF EXERCISE PRICE
The exercise price of an Option may be paid in cash, by certified or
cashier's check, by money order, by personal check or by delivery of already
owned shares of Common Stock having a fair market value equal to the exercise
price, or by delivery of a combination of cash and already owned shares of
Common Stock; provided, however, that if the optionee acquired such stock
directly or indirectly from the Company, he shall have owned such stock to be
surrendered for six months prior to tendering such stock for the exercise of an
Option.
SPECIAL PROVISIONS FOR INCENTIVE STOCK OPTIONS
An eligible employee may receive more than one Incentive Option, but
the maximum aggregate fair market value of the Common Stock (determined when
the Incentive Option is granted) with respect to which Incentive Options are
first exercisable by such employee in any calendar year cannot exceed $100,000.
In addition, no Incentive Option may be granted to an employee owning directly
or indirectly stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company unless the exercise price is set at not
less than 110% of the fair market value of the shares subject to such Incentive
Stock Option on the date of grant and such Incentive Option expires not later
than five (5) years from the date of grant. Awards of Nonqualified Options are
not subject to these special limitations.
NONTRANSFERABILITY OF OPTIONS
No Option granted under the Plan is assignable or transferable, other
than by will or by laws of descent and distribution. During the lifetime of an
optionee, his Option is exercisable only by him. However, these provisions are
the subject of a proposed amendment discussed above.
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EXERCISABILITY OF OPTIONS
The Plan Administrator, in its sole discretion, may limit the
optionee's right to exercise all or any portion of an Option until one or more
dates subsequent to the date of grant. The Plan Administrator also has the
right, exercisable in its sole discretion, to accelerate the date on which all
or any portion of an Option may be exercised.
EXPIRATION OF OPTIONS
The expiration date of an Option is determined by the Plan
Administrator at the time of the grant, but in no event may an Option be
exercisable after the expiration of 10 years from the date of grant of the
Option.
If terminated for cause, all rights of an optionee under the Plan
cease and the Options granted to such optionee become null and void for all
purposes. The Plan further provides that in most instances an Option must be
exercised by the optionee within 30 days after the termination of the
consulting contract between such optionee and the Company or termination of the
optionee's employment with the Company, as the case may be (for any reason
other than termination for cause, mental or physical disability or death), if
and to the extent such Employee Option was exercisable on the date of such
termination.
Generally, if an optionee's employment is terminated due to retirement
or permanent disability, the optionee will have the right to exercise the
Option for the shares that were immediately purchasable at the date of
expiration or three months after the date of such termination, whichever occurs
first. If an optionee dies while actively employed by the Company, the Option
may be exercised (to the extent otherwise exercisable on the date of death)
within one year of the date of the optionee's death by the optionee's legal
representative or legatee.
ADJUSTMENTS
The Plan provides for adjustments to the number of shares under which
Options may be granted, to the number of shares subject to outstanding Options
and to the exercise price of such outstanding Options in the event of a
declaration of a stock dividend or any recapitalization resulting in a stock
split-up, combination or exchange of shares of Common Stock.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Grants of Options
Under current tax laws, the grant of an Option will not be a taxable
event to the recipient optionee and the Company will not be entitled to a
deduction with respect to such grant.
Exercise of Nonqualified Options and Subsequent Sale of Stock
Upon the exercise of a Nonqualified Option, an optionee will recognize
ordinary income at the time of exercise equal to the excess of the then fair
market value of the shares of Common Stock received over the exercise price.
The taxable income recognized upon exercise of a Nonqualified Option will be
treated as compensation income subject to withholding and the Company will be
entitled to deduct as a compensation expense an amount equal to the ordinary
income an optionee recognizes with respect to such exercise. When Common Stock
received upon the exercise of a Nonqualified Option subsequently is sold or
exchanged in a taxable transaction, the holder thereof generally will recognize
capital gain (or loss) equal to the difference between the total amount
realized and the fair market value of the Common Stock on the date of exercise;
the character of such gain or loss as long-term or short-term capital gain or
loss will depend upon the holding period of the shares following exercise.
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Exercise of Incentive Options and Subsequent Sale of Stock
The exercise of an Incentive Option will not be taxable to the
optionee, and the Company will not be entitled to any deduction with respect to
such exercise. However, to qualify for this favorable tax treatment of
incentive stock options under the Internal Revenue Code (the "Code"), the
optionee may not dispose of the shares of Common Stock acquired upon the
exercise of an Incentive Option until after the later of two years following
the date of grant or one year following the date of exercise. The surrender of
shares of Common Stock acquired upon the exercise of an Incentive Option in
payment of the exercise price of an Option within the required holding period
for incentive stock options under the Code will be a disqualifying disposition
of the surrendered shares. Upon any subsequent taxable disposition of shares
of Common Stock received upon exercise of a qualifying Incentive Option, the
optionee generally will recognize long-term or short-term capital gain (or
loss) equal to the difference between the total amount realized and the
exercise price of the Option.
If an Option that was intended to be an incentive stock option under
the Code does not qualify for favorable incentive stock option treatment under
the Code due to the failure to satisfy the holding period requirements, the
optionee may recognize ordinary income in the year of the disqualifying
disposition. Provided the amount realized in the disqualifying disposition
exceeds the exercise price, the ordinary income an optionee shall recognize in
the year of a disqualifying disposition shall be the lower of (i) the excess of
the amount realized over the exercise price or (ii) excess of the fair market
value of the Common Stock at the time of the exercise over the exercise price.
In addition, the optionee shall recognize capital gain on the disqualifying
disposition in the amount, if any, by which the amount realized in the
disqualifying disposition exceeds the fair market value of the Common Stock at
the time of the exercise. Such capital gain shall be taxable as long-term or
short-term capital gain, depending on the optionee's holding period for such
shares.
Notwithstanding the favorable tax treatment of Incentive Options for
regular tax purposes, as described above, for alternative minimum tax purposes,
an Incentive Option is generally treated in the same manner as a Nonqualified
Option. Accordingly, an optionee must generally include in alternative minimum
taxable income for the year in which an Incentive Option is exercised the
excess of the fair market value on the date of exercise of the shares of Common
Stock received over the exercise price. If, however, an optionee disposes of
shares of Common Stock acquired upon the exercise of an Incentive Option in the
same calendar year as the exercise, only an amount equal to the optionee's
ordinary income for regular tax purposes with respect to such disqualifying
disposition will be recognized for the optionee's calculation of alternative
minimum taxable income in such calendar year.
APPOINTMENT OF INDEPENDENT AUDITORS
Item No. 3 on Proxy
It is proposed that the appointment by the Board of Directors of the
firm of Ernst & Young LLP as the independent auditors of the Company for the
fiscal year ending December 31, 1996 be ratified. Ernst & Young has served as
the Company's independent auditors since 1984. A representative of such firm
is expected to be present at the meeting and will be available to answer
questions and will be afforded an opportunity to make a statement if desired.
The appointment of independent auditors does not require ratification by
stockholders and ratification of this appointment will not limit the Board of
Director's ability to discharge its independent auditors and engage another
firm to act in such capacity.
STOCKHOLDER PROPOSALS
Any proposals from stockholders to be presented for consideration for
inclusion in the proxy material in connection with the next annual meeting of
stockholders of the Company scheduled to be held in April 1997 must be
submitted in accordance with the rules of the Securities and Exchange
Commission and received by the Secretary
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<PAGE> 17
of the Company at the mailing address set forth on the first page of this
statement no later than the close of business on November 12, 1996. The
Company's By-laws also require that the Company be given notice of all
proposals and nominees to be presented by stockholders at an annual meeting at
least ninety (90) days in advance of the meeting.
COMPLIANCE WITH SECTION 16(A)
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors, officers and persons who own more than 10% of
a registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Directors, officers and greater than 10% beneficial owners are required by
applicable regulations to furnish the Company with copies of all forms they
file with the Securities and Exchange Commission pursuant to Section 16(a).
Based solely upon a review of the copies of the forms furnished to the
Company, the Company believes that during fiscal 1995 all filing requirements
applicable to its directors, executive officers and greater than 10 percent
beneficial owners were satisfied.
OTHER MATTERS
The accompanying proxy is being solicited on behalf of the Board of
Directors of the Company. The expense of preparing, printing and mailing the
form of proxy and the material used in the solicitation thereof will be borne
by the Company. In addition to the use of the mails, proxies may be solicited
by personal interview, telephone and telegram by directors, officers and
employees of the Company. The Company has engaged Chemical Bank to assist in
the solicitation of proxies at a cost of $7,000 plus certain expenses.
Arrangements have also been made with brokerage houses, banks and other
custodians, nominees and fiduciaries for the forwarding of soliciting materials
to the beneficial owners of Common Stock held of record by such persons, and
the Company will reimburse them for reasonable out-of-pocket expenses incurred
by them in connection therewith.
All information contained in this Proxy Statement relating to the
occupations, affiliations and securities holdings of directors and officers of
the Company and their relationship and transactions with the Company is based
upon information received from the individual directors and officers. All
information relating to any beneficial owner of more than 5% of the Company's
Common Stock is based upon information contained in reports filed by such owner
with the Securities and Exchange Commission.
The information contained in Items 7 and 8 of the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1995 is hereby
incorporated by reference. The Company will furnish without charge a copy of
its Annual Report on Form 10-K, including the financial statements and
schedules thereto, for the fiscal year ended December 31, 1996 filed with the
Securities and Exchange Commission pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 to any stockholder (including any beneficial
owner) upon written request to Alan P. Hale, Vice President- Finance, 4401
South Beltwood Parkway, Dallas, Texas 75244-3292. A copy of the exhibits to
such report will be furnished to any stockholder upon written request therefor
and payment of a nominal fee.
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PROXY
DALLAS SEMICONDUCTOR CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints C.V. Prothro and Chao C. Mai, and each
of them severally, as their proxies with full power of substitution and
resubstitution for and in the name, place and stead of the undersigned to vote
upon and act with respect to all of the shares of Common Stock of the Company
standing in the name of the undersigned, or with respect to which the
undersigned is entitled to vote and act, at the meeting to be held on April 23,
1996 or any adjournment(s) thereof.
THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE,
THIS PROXY WILL BE VOTED FOR EACH OF THE LISTED NOMINEES FOR DIRECTOR AND FOR
PROPOSALS 2 AND 3. If more than one of the proxies named shall be present in
person or by substitution at the meeting or at any adjournment thereof, the
majority of the proxies so present and voting, either in person or by
substitute, shall exercise all of the powers hereby given.
<PAGE> 19
<TABLE>
<S> <C>
1. ELECTION OF DIRECTORS: C.V. Prothro, Chao C. Mai, Michael L. Bolan, Richard L. King, M.D. Sampels,
FOR all nominees WITHHOLD Carmelo J. Santoro, E.R. Zumwalt, Jr.
listed to the right AUTHORITY
(except as marked to vote for all nominees (INSTRUCTION: To withhold authority to vote for any individual nominee,
to the contrary) listed at right write that nominee's name on the line below.)
[ ] [ ]
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4. THE DISCRETION OF THE PROXIES ON ANY OTHER MATTER THAT
MAY PROPERLY COME BEFORE THE MEETING.
For Against Abstain
[ ] [ ] [ ]
2. PROPOSAL TO APPROVE THE AMENDMENT TO THE The undersigned acknowledges receipt of the Notice of the Annual
COMPANY'S 1987 STOCK OPTION PLAN: Meeting and Proxy statement dated March 12, 1996.
For Against Abstain Please date this proxy and sign your name exactly as it appears
[ ] [ ] [ ] hereon. When there is more than one owner, each should sign.
When signing as an attorney, administrator, executor, guardian or
trustee, please add your title as such. If executed by the
corporation, the proxy should be signed by a duly authorized
officer.
3. PROPOSAL TO RATIFY THE APPOINTMENT OF PLEASE DATE, SIGN AND MAIL THIS PROXY CARD IN THE ENCLOSED
INDEPENDENT AUDITORS FOR THE 1996 FISCAL YEAR: ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
For Against Abstain Dated: , 1996
[ ] [ ] [ ] ----------------------------------------------------
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Signature of Stockholder
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Signature of Stockholder
</TABLE>
