<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 Cororation
- - --------------------------------------------------------------------------------
(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] No fee required.
[ ] 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:
Set forth amount on which the filing is calculated and state how it was
determined.
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE> 2
[DALLAS SEMICONDUCTOR LETTERHEAD]
March 3, 1997
To the Stockholders:
I am pleased to invite you to attend the Annual Meeting of the stockholders of
Dallas Semiconductor Corporation to be held on Tuesday, April 22, 1997,
commencing at 8:30 a.m. at the offices of the Company located at 4401 South
Beltwood Parkway, Dallas, Texas 75244. The meeting this year will focus on
the election of directors and appointment of independent accountants. We will
also discuss certain stockholder proposals, which I believe will be soundly
defeated.
I am delighted you have chosen to invest in Dallas Semiconductor and hope that,
whether or not you plan to attend the Annual Meeting, you will complete, sign
and return the enclosed Proxy as soon as possible in the envelope provided.
Your vote is important to us. Returning the signed proxy card will ensure your
representation at the Annual Meeting if you do not attend in person.
Sincerely,
/s/ C. V. Prothro
C. V. Prothro
Chairman, President
and Chief Executive Officer
<PAGE> 3
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 22, 1997
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 22, 1997, beginning at 8:30 a.m., Dallas time, at the
offices of the Company, 4401 South Beltwood Parkway, Dallas, Texas 75244, 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 ratify the appointment of
independent auditors for the Company for the 1997 fiscal year;
3. To act upon ten stockholder proposals which are set forth in the
attached Proxy Statement; 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 February 24, 1997, 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 3, 1997
<PAGE> 4
DALLAS SEMICONDUCTOR CORPORATION
4401 SOUTH BELTWOOD PARKWAY
DALLAS, TEXAS 75244-3292
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 22, 1997
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
22, 1997, and is being mailed with proxies to such stockholders on or about
March 3, 1997. 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 29, 1996, are 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 February 24, 1997.
At the close of business on that date the Company had issued, outstanding and
entitled to vote at the meeting 26,877,587 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> 5
CERTAIN BENEFICIAL OWNERS
As of February 24, 1997, 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>
FMR Corp.(2)
82 Devonshire Street
Boston, Massachusetts 02109 1,904,000 7.1%
Neuberger & Berman, LLC(3)
605 Third Avenue
New York, New York 10158-3698 1,859,400 6.9%
Wellington Management Company, LLP(4)
75 State Street
Boston, Massachusetts 02109 1,827,723 6.8%
Jurika & Voyles, L.P.(5)
1999 Harrison Street
Suite 700
Oakland, California 94612 1,434,112 5.3%
</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 2,391,934 shares of
Common Stock, or 8.9% of the shares of Common Stock deemed to be
outstanding.
(2) FMR Corp. ("FMR"), acting through its subsidiary Fidelity Management &
Research Company ("Fidelity"), in its capacity as investment advisor to
various investment companies ("Funds"), may be deemed to be the beneficial
owner of 1,904,000 shares of Common Stock. The ownership of one investment
company, Fidelity Low-Priced Stock Fund, having its principal business
office at 82 Devonshire Street, Boston, Massachusetts 02109, amounts to
1,525,000 shares or 5.7% of the Common Stock outstanding. Members of the
Edward C. Johnson III family and trusts established for the benefit thereof
may be deemed to form a controlling group with respect to FMR. Edward C.
Johnson III, Chairman of FMR, and FMR (through its control of Fidelity and
the funds) each has sole power to dispose of the 1,904,000 shares owned by
the Funds. Neither FMR nor Edward C. Johnson III has the sole power to
vote or direct the voting of the shares of Common Stock owned directly by
the Fidelity Funds, which power resides with the Funds' Boards of Trustees.
Fidelity carries out the voting of such shares under written guidelines
established by the Funds' Boards of Trustees.
(3) Neuberger & Berman, LLC ("Neuberger"), in its capacity as an investment
advisor, may be deemed to be the beneficial owner of 1,859,400 shares of
Common Stock, over which Neuberger exercises shared dispositive power.
Neuberger has the sole power to vote or to direct the vote of 1,074,900
shares of Common Stock and, together with Neuberger & Berman Management
Inc, shares the power to vote 401,700 shares.
2
<PAGE> 6
(4) Wellington Management Company, LLP ("Wellington"), in its capacity as
investment advisor, may be deemed to be the beneficial owner of 1,827,723
shares of Common Stock. Wellington shares the power to dispose of all such
shares and shares the power to vote 546,923 of such shares.
(5) Jurika & Voyles, L.P. ("Jurika & Voyles"), in its capacity as an investment
advisor, may be deemed to be the beneficial owner of 1,434,112 shares of
Common Stock, over which Jurika & Voyles exercises shared dispositive
power. Jurika & Voyles shares the power to vote 1,269,902 of such shares.
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 ratification of the appointment of the
independent auditors for the Company for the fiscal year ending December 28,
1997; (iii) against each of the ten stockholder proposals discussed below (see
"Certain Stockholder Proposals"); 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> 7
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 OWNED
DIRECTORSHIPS OF THE ON FEBRUARY 24,1997
NAME AGE PUBLIC COMPANIES COMPANY SINCE AND % OF CLASS (1)
- - ---- --- ---------------- ------------- ------------------------
<S> <C> <C> <C> <C>
C.V. Prothro 54 Chief Executive Officer and 1984 2,654,434
(E) President of the Company since 9.2%
1989; Chairman of the Board of
the Company since 1984; General
Partner of Southwest Enterprise
Associates, L.P., a venture
capital fund, since 1983.
Chao C. Mai 61 Senior Vice President of the 1985 788,269
Company since January 1993; prior 2.9%
thereto Vice President-Wafer
Fabrication and Technology
Development of the Company
Michael L. Bolan 50 Vice President-Marketing and 1989 650,100
Product Development of the 2.4%
Company
Richard L. King 58 General Partner of KBA Partners 1984 130,100
(A)(C) L.P., a venture capital fund 0.5%
during the period 1987 - 1996;
President of King Brothers &
Associates (China) Inc., a
venture capital fund, since 1994.
M.D. Sampels 64 Shareholder, Jenkens & Gilchrist, 1985 121,005
(A)(C)(E) a Professional Corporation 0.5%
</TABLE>
4
<PAGE> 8
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DURING SERVED AS SHARES OF COMMON
LAST FIVE YEARS AND DIRECTOR OF STOCK BENEFICIALLY OWNED
DIRECTORSHIPS OF THE ON FEBRUARY 24,1997
NAME AGE PUBLIC COMPANIES COMPANY SINCE AND % OF CLASS (1)
- - ---- --- ---------------- ------------- ------------------------
<S> <C> <C> <C> <C>
Carmelo J. Santoro 55 Director, Platinum Software 1985 89,667
(C) Corporation and S3 Inc. 0.3%
E. R. Zumwalt, Jr. 76 President of Admiral Zumwalt & 1993 108,425
(A)(C) Consultants, Inc., a consulting 0.4%
firm, since 1980; Director of
Fleet Aerospace, Inc., Fleet
Aerospace Corporation and NL
Industries, Inc.
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:
F.A. Scherpenberg 408,183
1.5%
Douglas L. Powell 50,000
0.2%
Total shares beneficially owned by 5,197,908
directors and executive officers 19.9%
as a group (10 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: 2,030,034 shares for Mr. Prothro, 350,000 shares
for Dr. Mai, 250,000 shares for Mr. Bolan, 120,000 shares for Mr. King,
120,000 shares for Mr. Sampels, 88,000 shares for Mr. Santoro, 107,125
shares for Adm. Zumwalt, 364,000 shares for Mr. Scherpenberg, 50,000
shares for Mr. Powell, and 3,675,659 shares for all directors and
executive officers as a group. Mr. Prothro 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.
5
<PAGE> 9
The Board of Directors of the Company held eight meetings during 1996.
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 1996. 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 1996, each of the non-employee 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 non-employee directors for expenses incurred in attending meetings
and provides for air travel and expenses of its non-employee directors on
Company business. Premiums paid by the Company during 1996 for split-dollar
life insurance policies on Messrs. King, Sampels and Santoro totaled $277,077.
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. In October 1996, options were granted to Messrs. Santoro, King,
Zumwalt and Sampels to purchase 10,000 shares each of the Company's Common
Stock pursuant to the automatic grant provision of the Company's 1987 Stock
Option Plan. The options were granted at an exercise price of $17.875,
representing the fair market value of the Company's Common Stock on the date of
grant, and have a term of 10 years. The options are exercisable as to 6.25% of
the aggregate number of shares covered thereby during each calendar quarter
during the term of the options, until the options become fully vested at the
end of 16 calendar quarters.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee of the Board of Directors for
fiscal year 1996 were Carmelo J. Santoro (Chairman), Admiral E. R. Zumwalt,
Jr., Richard L. King (whose service on the Committee commenced on April 23,
1996), and M. D. Sampels. Messrs. Santoro, Zumwalt and King are also members
of the Executive Compensation Subcommittee, which is responsible for the
establishment of the performance goals for the Company's Executive Bonus Plan
and certification of the attainment or non-attainment of those goals to the
Compensation Committee.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation 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.
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 and competitive conditions. Sales growth,
profitability and shareholders' equity are among a group of indices reviewed.
No particular weight is assigned to one index over another.
During 1996 the Company's officers received salaries ranging from 6.5% to
18.5% over 1995 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 of the Company were lower than those named in the public
documents of such companies.
6
<PAGE> 10
Under the Executive Bonus Plan, payments are determined based upon 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 Compensation Committee allocated a bonus of
$250,000 to Mr. Prothro, and bonuses to other executive officers ranged from
$50,000 to $100,000. Total bonuses paid to this group were less than 3% 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 1996, such quarterly profit sharing awards ranged from 0 to 8
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
Compensation 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. See "Option/SAR Grants in Last Fiscal Year" for a discussion of stock
options granted during 1996 to the Company's executive officers.
Beginning in 1994, certain executive officers of the Company became subject
to the $1 million limitation on deductibility of compensation under Section
162(m) of the Internal Revenue Code. The Compensation 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 Compensation Committee, therefore, does not anticipate any executive
officer's compensation to exceed the limitation on deductibility.
COMPENSATION COMMITTEE
Carmelo J. Santoro (Chairman)
Richard L. King
M. D. Sampels
Adm. E. R. Zumwalt, Jr.
7
<PAGE> 11
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 $100 investment made on December 31, 1991 and
reinvestment of all dividends. The Company's fiscal year ends on the Sunday
closest to December 31 of each year. This table uses December 31 as the
comparison point for each year. The stockholder return shown on the following
graph is not necessarily indicative of future stock performance.
[GRAPH]
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------
1991 1992 1993 1994 1995 1996
- - ----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Dallas Semiconductor 100 170 1197 211 265 295
- - ----------------------------------------------------------------------
S&P 500 100 108 118 120 165 203
- - ----------------------------------------------------------------------
S&P Semi Index 100 163 252 294 400 618
- - ----------------------------------------------------------------------
</TABLE>
The companies included in the S&P Semi Index are: Advanced Micro Devices,
Inc., Intel Corporation, LSI Logic Corporation, Micron Technology, Inc.,
National Semiconductor Corporation and Texas Instruments Incorporated.
8
<PAGE> 12
SUMMARY EXECUTIVE COMPENSATION TABLE
The following summary compensation table sets forth the annual compensation
paid or accrued, together with the number of shares covered by options granted,
during each of the Company's 1994, 1995 and 1996 fiscal years to C. V.
Prothro, the Company's Chief Executive Officer, and the Company's four most
highly compensated executive officers other than Mr. Prothro:
<TABLE>
<CAPTION>
Annual Long Term
Compensation Compensation
------------------
Awards
------------------------------------------------
Stock
Underlying All Other
Salary Bonus Options Compensation
<S> Name and <C> <C> <C> <C> <C>
Principal Position Year ($)(1) ($)(2) (#)(3) ($)(4)(5)
------------------ ---- -------- -------- -------- ---------
C.V. Prothro, Chairman 1996 575,000 254,156 200,000 89,386
of the Board of 1995 540,000 1,016,875 0 89,268
Directors, President and 1994 490,000 309,337 0 107,110
Chief Executive Officer
Chao C. Mai, 1996 334,400 102,418 100,000 68,977
Senior Vice President 1995 314,000 334,813 0 68,831
1994 286,000 180,552 0 65,106
Michael L. Bolan, 1996 223,700 51,618 50,000 38,694
Vice President- 1995 210,000 191,562 0 42,157
Marketing and Product 1994 195,000 123,104 0 47,652
Development
F. A. Scherpenberg, 1996 207,700 51,502 50,000 39,716
Vice President- 1995 195,000 181,094 0 40,048
Computer Products 1994 180,000 113,634 0 40,096
Douglas L. Powell(6), 1996 195,000 76,476 0 0
Vice President- 1995 161,763 180,469 100,000 0
Sales and Strategic Marketing 1994 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 $600 for any
executive officer for 1996.
(5) Amounts shown for 1996 represent premiums paid by the Company for
split-dollar life insurance policies on these executive officers. The cash
values under such policies accrue for the benefit of the Company to cover
the premium costs, pursuant to a collateral assignment of each policy to
the Company.
(6) Mr. Powell joined the Company in January 1995.
9
<PAGE> 13
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR(1)
The following table sets forth, with respect to all options granted to Mr.
Prothro and the Company's other four most highly compensated executive
officers, during the Company's 1996 fiscal year: (i) the number of shares
covered by such options; (ii) the percent that such options represent of total
options granted to all Company employees during the 1996 fiscal year; (iii) the
exercise price; (iv) the expiration date; and (v) the present value of the
options on the grant date.
<TABLE>
<CAPTION>
Grant Date
Individual Grants Value
-------------------------------------------------------------- ---------------------
Number of
Securities % of Total
Underlying Options
Options Granted to Exercise
Granted Employees in Price(4) Expiration Grant Date
Name (#)(2) Fiscal Year(3) ($/Share) Date Present Value ($)(5)
---- ------------- ---------------- ------------ ------------ ---------------------
<S> <C> <C> <C> <C> <C>
C. V. Prothro 200,000 20.7% $17.875 Oct. 2006 $1,494,440
Chao C. Mai 100,000 10.3% $17.875 Oct. 2006 $ 747,220
Michael L. Bolan 50,000 5.2% $17.875 Oct. 2006 $ 373,610
F. A. Scherpenberg 50,000 5.2% $17.875 Oct. 2006 $ 373,610
Douglas L. Powell 0 0.0% N/A N/A N/A
</TABLE>
FOOTNOTES TO OPTION GRANT TABLE
(1) To date, the Company has not granted any SARs.
(2) The options granted in 1996 were granted pursuant to the Company's 1993
Officer & Director Stock Option Plan. The options are exercisable as to
25% of the aggregate number of shares covered thereby at the end of the
first year of the term of the option. Thereafter, the option is
exercisable for an additional 6.25% of the aggregate number of shares
covered by the option beginning withe each calendar quarter during the term
of the option, provided that the option becomes immediately exercisable in
full upon certain events constituting a change of control of the issuer.
(3) The Company granted options representing 966,900 shares to employees in
fiscal 1996.
(4) Fair market value on date of grant.
(5) The Company believes that the value of unvested options is indeterminable
by reason of the vagaries of the stock market and other factors and opposes
any requirement to place a value on an option grant. However, to comply
with Item 402(c) of Regulation S-K, the Company used the Black-Scholes
model even though it does not believe that this or any other model is
indicative of the present value of an option grant. Values for the named
executive officers are based on an option term of 5.92 years; an interest
rate of 6%; an annual dividend yield of .6%; and volatility of 34.54%. No
adjustment for risk of forfeiture was made.
10
<PAGE> 14
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 1996; (ii) the net aggregate dollar value realized upon exercise; (iii)
the total number of unexercised options held at the end of fiscal year 1996;
and (iv) the aggregate dollar value of in-the-money unexercised options held at
the end of fiscal year 1996. To date, the Company has issued no SARs.
<TABLE>
<CAPTION>
Number of Value of
Shares Underlying Unexercised
Unexercised In-the-Money
Shares Options at 1996 Options at 1996
Acquired on Value Fiscal Year End Fiscal Year End
Name Exercise (#) Realized ($) (#) ($)
- - -------------------- ------------ ------------ ----------------------------- -----------------------------
<S> <C><C> <C> <C> <C> <C>
Exercisable Unexercisable Exercisable Unexercisable
------------- -------------- ------------ -------------
C. V. Prothro 0 $ 0 1,642,534 387,500 $19,939,354 $2,281,250
Chao C. Mai 0 $ 0 212,500 137,500 $ 2,034,375 $ 718,750
Michael L. Bolan 0 $ 0 181,250 68,750 $ 2,312,500 $ 359,375
F. A. Scherpenberg 0 $ 0 366,875 105,125 $ 3,816,063 $ 632,188
Douglas L. Powell 0 $ 0 43,750 56,250 $ 311,719 $ 400,781
</TABLE>
11
<PAGE> 15
APPOINTMENT OF INDEPENDENT AUDITORS
Item No.2 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 28, 1997 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.
Items Nos. 4 - 13 on Proxy
CERTAIN STOCKHOLDER PROPOSALS
Ten proposals, which include one proposal signed by Bob Bagley of Bullish
Bob Bagley Securities, Inc., one proposal signed by Bob Bagley's son, one
proposal signed by Bob Bagley's mother and seven proposals signed by other
customers of Bullish Bob Bagley Securities, Inc., were received by the Company
for inclusion in the Proxy Statement. These proposals will be referred to as
the "Bagley Proposals" and are identified below as Items 4 through 13.
Most of the Bagley Proposals make no sense, some would be impossible to
implement and others constitute an unwarranted intrusion into the
responsibilities of the Board of Directors. Some of the Bagley Proposals, even
if they were approved and could be implemented, would require the Company to
incur massive and crippling debt and would eviscerate the intent and purpose of
the Company's compensation plans, severely hampering the Company's ability to
retain or attract qualified individuals to manage and conduct its business, and
others would require the Board to make other decisions that are clearly not in
the best interest of the stockholders. Your Board of Directors is elected
annually by stockholders to manage the business and affairs of the Company
through the exercise of its business judgment. To supplant that responsibility
by adopting the Bagley Proposals would run counter to effective oversight and
business judgment so important for the long-term vitality of the Company.
Each of the Bagley Proposals, reproduced below, has been carefully
evaluated by the Board of Directors. A full discussion of each Bagley Proposal
and the Board's reasons to vote AGAINST each of them can be found on pages 14
through 17, which the Board asks you to PLEASE READ CAREFULLY. In the opinion
of the Board, the Bagley Proposals either make no sense, would produce negative
results, or their adoption would be contrary to the best interests of the
stockholders. THEREFORE, THE BOARD OF DIRECTORS UNANIMOUSLY OPPOSES EACH OF
THE PROPOSALS AND ASKS THE STOCKHOLDERS TO VOTE AGAINST EACH OF THEM. YOUR
PROXIES WILL BE VOTED AGAINST ALL OF THE PROPOSALS UNLESS YOU SPECIFY
OTHERWISE.
The Bagley Proposals are prefaced by the following statement: "The
shareholders of Dallas Semiconductor Corporation request the Board of Directors
take the necessary steps to amend the Company governing instruments to adopt
the following" and read as follows:
Item No. 4 on Proxy:
That the Board of Directors institute within three (3) months hereof, a
share Repurchase Plan to repurchase at least six (6) million of the shares
of the Company's common stock on the public market within the next twelve
(12) months.
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<PAGE> 16
Item No. 5 on Proxy:
That the Board of Directors of the company immediately take all steps
necessary to modify all existing company Stock Option plans empowering the
grant of any options to purchase shares of any class of stock to any
individual or entity to provide that any stock option grant exercised on
the date hereof shall only be exercisable thereafter by the grantee thereof
under any condition only after the expiration of a calendar period of three
(3) years from the date of the exercise of the option and that any future
stock option plan require a holding period of at least three (3) years by
any grantee following exercise of any such future option grant.
Item No. 6 on Proxy:
That the Board of Directors of the Company immediately take all steps
necessary to modify all currently existing Company Stock Option plans and
to adopt a policy statement as to future such plans to provide that all
issued option grants unexercised as of the date hereof become unexercisable
if not exercised by the grantee thereof at least ninety (90) days prior to
the first public announcement of any offer to purchase the Company entirely
or at least a majority of the issued and outstanding shares thereof
provided only that any such future acquisition or share purchase so
completed or agreed to upon the originally announced or better terms within
a period of fifteen months from the date of the original announcement.
Item No. 7 on Proxy:
That in no calendar year shall the Chairman, President or Chief Executive
Officer or any other Officer, Director or Employee of the Company receive a
salary, bonus, or any other form of compensation, any amount of similar
compensation paid in the preceding calendar year by the most highly
compensated Officer, Director, or Employee of EXXON Corporation.
Item No. 8 on Proxy:
That beginning on the earliest possible fixed year of the company, all
non-employee members of the Board of Directors total compensation will be
solely in shares of Dallas Semiconductor Corporation common stock each
year, and all such shares of stock shall have a holding period of 9 years
or a 100% stock market price appreciation from the date of issuance before
a permitted sale. No other compensation of any kind will or may be paid by
the company.
Item No. 9 on Proxy:
That the shareholders assembled in person and by proxy, recommend 1.) that
all future non-employee directors not be granted any company paid or
financed pension benefits and 2.) current non-employee directors
voluntarily relinquish their pension benefits.
Item No. 10 on Proxy:
That the shareholders of the Company assembled in annual meeting in person
and by proxy, hereby request the Board of Directors to take the steps
necessary to tie all compensation paid or payable in the future by the
Company to the factors of the growth of the Company's profit per share in
the past years to account for 25% of total compensation paid in the next
year; growth of the net asset value per share of the total issued and
outstanding shares in the past year to account for 25% of the total
compensation paid in the next year and the percentage of growth in the
market price per share in the preceding year to account for 50% of total
compensation paid in the next year.
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<PAGE> 17
Item No. 11 on Proxy:
That the shareholders recommend that the Board of Directors adopt a policy
against entering into future agreements with officers and directors of the
company which provide any compensation contingent upon a change of control
of the company, unless such compensation agreements are submitted in toto
to a vote of the shareholders and approved by a majority of shares present
and voting on the issue, and that the Board of Directors take this
resolution as it is the sense of the shareholders that any such existing
agreements be terminated at the earliest practicable date.
Item No. 12 on Proxy:
That each year the Company fully disclose each year in the proxy, any
transaction between the Company and any Officer or Director of the Company
exceeding one hundred (100) dollars of value and adopt a policy to not
present or propose any individual for service as a Director who in the
previous year had transactions with the Company exceeding one hundred
thousand (100,000) dollars of value.
Item No. 13 on Proxy:
That no director currently serving shall be presented for re-election (and
that the Board of Directors shall adopt a policy that no individual shall
be proposed for a election as a Director) that has not purchased on the
open market a minimum of 1,000 shares of the common stock of the
Corporation.
OBJECTIONS TO THE PROPOSALS
The Board of Directors considers the Bagley Proposal represented as Proxy
Item No. 4 to be indicative of the entire group of proposals -- that is, ill
conceived. This Bagley Proposal would have the Company repurchase 6,000,000 of
its shares in the open market within a period of 12 months. If this proposal
were implemented at, for example, an average share repurchase price of $25, the
cost to the Company would be $150 million. Since the Company had only
approximately $70 million in cash at the end of 1996, the proposal would
require the Company to borrow in excess of $80 million in order to repurchase
all of the 6,000,000 shares. After completing the repurchase, the Company
would then be required to seek funds elsewhere to support operations, fund
future growth and to service the new debt forced upon the Company by compliance
with the Bagley Proposals. Presumably the only other source of funds
available to the Company for this purpose would be the proceeds from a sale of
its Common Stock or some other form of equity. Thus, this Bagley Proposal
could require the Company to sell stock in order to repurchase stock -- not a
very sensible thing to do.
The Board has long recognized that there may be circumstances in which the
repurchase of its shares of Common Stock is warranted. It is for that reason
that the Board adopted a share repurchase plan in 1994, which reads as follows:
RESOLVED, that [Dallas Semiconductor Corporation] may repurchase up to
500,000 shares of its Common Stock, $0.02 par value per share, such
repurchases to be effected from time to time on the New York Stock Exchange
as determined by the officers of the Corporation, in accordance with the
terms of applicable federal and state securities laws and regulations.
As of December 29, 1996, the Company had repurchased 215,900 shares of its
Common Stock pursuant to this policy at a cumulative average price of $15.96,
at a cost totaling $3,446,000. The Company will continue to repurchase shares
pursuant to this policy when and if it appears prudent to do so.
The Bagley Proposals embodied in Proxy Items Nos. 5 - 13 all deal with
compensation issues, benefits or qualifications of officers and directors. The
Board of Directors opposes these proposals for each of several reasons. First,
all existing compensation and benefits of the Company's officers and directors
are governed by plans which were carefully prepared and submitted to the
stockholders for approval. These plans include the Company's Officer and Key
Employee
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<PAGE> 18
Compensation Plan, Executive Bonus Plan, the Company's 1984 Stock Option Plan,
1987 Stock Option Plan and 1993 Officer & Director Stock Option Plan (the
"Plans"). The Plans have received the support of the stockholders over the
past 9 years and have been approved in one form or another on 8 different
occasions. The Plans are structured to provide a mix of long-term and
short-term incentives and are designed to emphasize the importance of
increasing stockholder value over the long term by aligning further the
interests of directors and stockholders. All incentive stock options are
designed to motivate the holder to increase the value of the Company and
contain other provisions standard to the semiconductor industry. Between 1987
and the end of the Company's 1996 fiscal year, the Company has produced over
$475 million in stockholder value through stock price appreciation. During the
same period stockholder equity has grown by over $200 million, and during the
same period the Company's revenue and earnings have enjoyed an annual
compounded rate of growth in excess of 25%.
Apparently Bagley Proposal Item 11 complains of a provision in the
Company's 1993 Officer & Director Stock Option Plan providing that stock
options granted under that Plan are subject to accelerated vesting in the event
of a "change of control" of the Company. This is a typical provision found in
many corporate plans and was approved by the stockholders of the Company at its
Annual Meeting in April of 1994. Among other things, this provision creates an
incentive or eliminates a disincentive for officers and directors to maximize
value for stockholders when considering an extraordinary transaction -- most
notably, a tender offer or other acquisition proposal which contemplates a
change in control of the Company. Second, the Compensation Committee of the
Board, composed of outside Directors, is responsible for administering these
Plans. Third, both the Plans and their administration by the Compensation
Committee are believed by the Board as a whole to be fair, reasonable and
effective. Neither the Board nor the management of the Company can change
these Plans. Any changes to these Plans must be submitted to and approved by
the stockholders. Fourth, these Bagley Proposals, should they be implemented,
would hamper the Company in obtaining, retaining and motivating the highly
talented, capable, knowledgeable and experienced people essential to good
management and Company performance. Companies with which the Company competes
are not hobbled by the restraints which would result from implementing these
Bagley Proposals.
The Board of Directors also oppose Bagley Proposals Items 4 through 13 for
the following additional reasons:
In addition to requiring the Company to incur massive and crippling debt
and, in all likelihood, to sell stock, Bagley Proposal Item 4 would require the
Board of Directors to attempt to outguess market performance of its stock over
the course of the next 12 months. If, for example, the Company waited to buy,
expecting a better price, it could find itself required to purchase 6,000,000
shares over a compressed period of time -- in theory, in one day. If it did
not wait, the Company could find itself purchasing shares at increasingly new
highs of its stock -- hardly a prudent decision in either case. In any event,
if the repurchases were made equally over a period of 12 months, the result
would be a purchase of over 25,000 shares per day, equaling approximately 25%
of the average trading volume of the Company's stock during 1996. The
artificial activity created by Bagley Proposal Item 4 would harm the Company
and be contrary to the best interests of the stockholders. Given that the
Company operates in a cyclical, capital intensive industry, the Board believes
the buy-back proposal is fundamentally ill conceived and irresponsible. The
Company has had a longstanding policy of retaining adequate cash balances to
support its capital requirements and strongly believes that that policy is
sound and should be continued.
A "stock option grant exercised on the date hereof," as contemplated in the
Bagley Proposal submitted as Proxy Item No. 5, has already been exercised and
cannot be exercised again. If the proposal means that a "stock option grant
unexercised on the date hereof," that option cannot be "exercisable ... only
after ... three (3) years from the date of exercise." It would appear
impossible to implement Stockholder Proposal Item 5. The stockholders should
know that all options vest in installments over a minimum period of four years
and may not be exercised until vested. All stock options granted by the
Company are governed by plans containing terms and conditions standard in the
industry and which have received stockholder approval. Proxy Item No. 5 would
impair the intended purpose of the plans, diminish the value of the options and
result in a severe competitive disadvantage for retaining and attracting
qualified personnel.
The Bagley Proposal constituting Proxy Item No. 6 would apparently make an
option unexercisable because of some event which might occur as long as 90 days
after the option was exercised and some other event which might occur as long
as 15 months after the option was exercised. One result of implementing this
proposal would be to make options permanently unexercisable, since no one can
know what might happen 90 days or 15 months later. If an option could be and
was exercised, the Company would have to try to reverse the exercise (get back
the stock and pay back the money) as long as 15 months after the exercise.
Both alternatives would make the options worthless, and the second would be
costly, impractical and perhaps impossible. Under the Company's stock option
plans, each option's exercise price is 100% of the market price of the
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<PAGE> 19
Company's Common Stock on the date of grant. Thus, for the option to be of
value to the employee, the market price of the Common Stock must increase over
the market price on the date of the grant. To suggest that an employee who has
earned the benefits of an option may have the benefits eradicated due to an
unforeseeable future event makes no sense. A stock option serves to link
directly the financial interests of key employees with those of the
stockholders, which helps to focus employee attention on the strategies and
actions needed to create and enhance value for stockholders over the long term.
Modifying this program, as proposed, would, in the Board's view, weaken this
link and, therefore, not be in the stockholders' interest. The Company adopted
its first stock option plan in 1984 and, with approval of the stockholders, has
adopted successor plans since that time. The Board believes that the vote of
stockholders approving plans providing for grants of stock options demonstrates
clearly that the Company's stockholders strongly support and endorse the making
of grants in accordance with such plans.
The Bagley Proposal submitted as Proxy Item No. 7 is difficult, if not
impossible, to understand. Read literally, this garbled proposal would prevent
anyone at the Company from receiving in one year any compensation ". . . paid
by the most highly compensated officer, director or employee of Exxon in the
previous year." Of course, no one at Exxon pays compensation to anyone at the
Company. If the proposal means to say that no one at the Company should be
paid more than the most highly compensated person in a similar position at
Exxon, it would be equally ridiculous because of the difficulty of comparing
positions in two very different companies and in discovering how much Exxon
paid the most highly compensated person in each of those positions. If all
this could be accomplished, it would make Company employees slaves to Exxon's
compensation procedures and reduce the Board's responsibility to that of a
mere mechanic. It would undoubtedly significantly increase the Company's
employment costs as the Bagley Proposal would apply to every single employee
from hourly workers to the most highly qualified personnel. To suggest that
the Company's compensation practices mirror those of Exxon, a huge corporation
with over 30,000 employees in the United States alone, is without any sense or
logic. Executive Compensation is currently administered by the Compensation
Committee, comprised only of outside Directors, in accordance with
stockholder-approved plans. These plans are based on the achievement of
performance targets such as individual performance, competitor pay practices
and other relevant items. This Bagley Proposal would undermine the sensible
provisions currently practiced by the Company.
The Bagley Proposals embodied in Proxy Items Nos. 8 and 9 are apparently
intended to punish the Company's four outside Directors. Paying directors in
stock as proposed would subject them to immediate tax and deprive them of
current value. The director would recognize taxable income and pay a tax based
on the value of the stock in the year the stock was issued, but then have to
wait as long as 9 years to have stock that could be sold. This is the
equivalent of requiring a director to pay cash for a stock option that is not
exercisable until the expiration of 9 years. To propose a holding period of 9
years for stock unless the Company's stock doubles is contrary to any standard
accepted in the semiconductor or any other industry and, if implemented, would
result in the Company's being unable to retain qualified Directors.
The Company does not have any pension plans for any officer, director or
employee that are assumed to exist by the Bagley Proposal submitted as Proxy
Item No. 9.
The Board of Directors considers any effort to tie compensation in the
inflexible manner requested in the Bagley Proposal submitted as Proxy Item No.
10 to be unwise and unwarranted and, if approved, would significantly
demotivate the Company's employees and be contrary to the long-term interest of
all its stockholders. The Board has been and remains committed to long-term
growth. Since the Company's initial public offering in 1987, it has realized
a compounded 25% growth in both sales and earnings. Any compensation plan
having its primary focus on short-term stock market return would be ill advised
and dangerous to the long-term future of the Company. The Company does not
want its employees dedicated to short-term results. The Company's Officer and
Key Employee Compensation Plan, as amended to include the Company's Executive
Bonus Plan approved by the Company's stockholders on April 26, 1994, is focused
on the long-term performance of the Company and is structured to permit the
Company to compensate its officers and key employees in a manner to enhance the
employment, retention and motivation of those most directly responsible for the
Company's success, including growth in earnings and assets. Any plan that
would remove the exercise of judgment in balancing the several factors
comprising compensation criteria is ill advised and could result in
excessively high, as well as excessively low or even no, compensation.
The Bagley Proposal submitted as Proxy Item No. 11 would suggest taking an
action to prohibit a future action. No such proposal is justified and it would
interfere with the exercise of the judgment of the Board of Directors and the
loyalty and commitment of its key employees in the future. Implementation of
such proposal could well hamper the ability of the Board to retain its key
management in circumstances in which their retention is most critical and
establish an artificial impediment
16
<PAGE> 20
to the evaluation and consideration of an opportunity for the stockholders.
The Company does not have an employment agreement with any of its officers or
directors, has no "poison pill" to thwart a "take-over," or any "golden" or
"platinum" "parachutes" with its employees. The wholesale prohibition
contemplated by this Bagley Proposal is infinitely unwise and should not be
approved.
With respect to the Bagley Proposal represented by Proxy Item No. 12, the
Company complies fully with the requirements of the Securities and Exchange
Commission in connection with related-party and affiliation disclosures
required in the proxy statement.
The Bagley Proposal submitted as Proxy Item No. 13 is moot and is
unnecessary since it is already the policy of the Company for each Director to
own at least 1,000 shares of the Company's Common Stock. Further, how or when
the shares are acquired or disposed of by the Directors is up to them. At
present, each Director owns at least 1,000 shares of the Company's stock.
FOR THE FOREGOING REASONS, THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST
PROXY ITEMS NOS. 4 - 13.
The proponents of the Bagley Proposals, all of whom represented that they
were holders of the Company's stock when the proposals were submitted, state
that they intend to present them at the Company's Annual Meeting. If the
proponents meet the requirements for presenting the Proposals and if properly
presented, the stockholders will have the opportunity to vote on each proposal.
The name and address of each stockholder submitting the Proposals, together
with the number of shares of the Company's Common Stock held by each, will be
furnished by the Company, either orally or in writing as requested, promptly
upon receipt of any oral or written request therefor. Requests to the Company
should be directed to the Corporate Secretary.
STOCKHOLDER PROPOSALS - GENERAL
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 1998 must be
submitted in accordance with the rules of the Securities and Exchange
Commission and received by the Secretary 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 2, 1997. 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 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).
The Company believes that during fiscal year 1996, its officers, directors
and holders of more than 10% of the Company's Common Stock complied with all
Section 16(a) filing requirements. In making these statements, the Company has
relied upon the written representations of its directors and officers and
copies of the forms furnished to the Company.
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<PAGE> 21
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 D. F. King & Co. 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 29, 1996 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 29, 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.
MATTERS NOT DETERMINED AT THE TIME OF SOLICITATION
The Board is not aware of any matters to come before the meeting other than
those specified in the attached Notice of the meeting. If any other matter
should come before the meeting, then the persons named in the enclosed form of
proxy will have discretionary authority to vote all proxies with respect
thereto in accordance with their judgment.
VOTE OF PROXIES
All shares represented by duly executed proxies will be voted FOR the
election of the nominees named above as directors unless authority to vote for
the proposed slate of directors or any individual director has been withheld.
If for any unforeseen reason any of such nominees should not be available as a
candidate for director, the proxies will be voted in accordance with the
authority conferred in the proxy for such other candidate or candidates as may
be nominated by the Board of Directors. With respect to the proposal to
approve the appointment of Ernst & Young LLP as the Company's independent
accountants, all such shares will be voted for or against, or not voted, as
specified on each proxy. If no choice is indicated, a proxy will be voted FOR
the proposal to approve Ernst & Young LLP as the Company's independent
accountants. With respect to the proposals identified as items Nos. 4 - 13 on
the proxy, all such shares will be voted for or against, or not voted, as
specified on each proxy. IF NO CHOICE IS INDICATED, A PROXY WILL BE VOTED
AGAINST EACH OF PROPOSALS 4 - 13.
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<PAGE> 22
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 22,
1997, 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, FOR
PROPOSAL 2 AND IN THE DISCRETION OF THE PROXIES ON ITEM NO. 3. THIS PROXY WILL
BE VOTED AGAINST PROPOSALS 4 THROUGH 13. 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.
THE UNDERSIGNED ACKNOWLEDGES RECEIPT OF THE NOTICE OF THE ANNUAL MEETING AND
PROXY STATEMENT DATED MARCH 3, 1997.
(CONTINUED ON REVERSE SIDE)
- - --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 23
PLEASE DATE, SIGN AND MAIL THIS PROXY CARD IN THE ENCLOSED ENVELOPE. NO
POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
your votes
as indicated [X]
in this example
<TABLE>
<S> <C> <C>
FOR all
nominees WITHHOLD
listed to the AUTHORITY
1. right to vote for all C.V. Prothro, Chao C. Mai, Michael L. Bolan, Richard 8. FOR AGAINST ABSTAIN
(Except as nominees L. King, M.D. Sampels, Carmelo J. Santoro, E.R. [ ] [ ] [ ]
marked listed at right Zurnwalt, Jr.
for the
contrary)
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY
[ ] [ ] INDIVIDUAL NOMINEE, WRITE THAT NOMINEE'S NAME ON THE
LINE BELOW.)
9. FOR AGAINST ABSTAIN
[ ] [ ] [ ]
---------------------------------------------------------
2. FOR AGAINST ABSTAIN 4. FOR AGAINST ABSTAIN 6. FOR AGAINST ABSTAIN 10. FOR AGAINST ABSTAIN
[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
3. FOR AGAINST ABSTAIN 5. FOR AGAINST ABSTAIN 7. FOR AGAINST ABSTAIN 11. FOR AGAINST ABSTAIN
[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
12. FOR AGAINST ABSTAIN
[ ] [ ] [ ]
13. FOR AGAINST ABSTAIN
[ ] [ ] [ ]
NOTE: SEE BELOW FOR CORRESPONDING
PROPOSALS.
</TABLE>
Signature
-----------------------------------------
Signature
-----------------------------------------
Date
----------------------------------------------
Please date this proxy and sign your name exactly as it appears hereon. When
there is more then one owner, each should sign. When signing as an attorney,
administrator, executor, guardian or trustee, please add your title as such.
If executed by a corporation, the proxy should be signed by a duly authorized
officer.
- - --------------------------------------------------------------------------------
FOLD AND DETACH HERE
PLEASE MARK YOUR VOTES IN THE CORRESPONDING BOXES ABOVE
1. ELECTION OF DIRECTORS
2. PROPOSAL TO RATIFY THE APPOINTMENT OF INDEPENDENT AUDITORS FOR THE 1997
FISCAL YEAR.
3. IN THE DISCRETION OF THE PROXIES ON ANY OTHER MATTER THAT MAY PROPERLY COME
BEFORE THE MEETING. THE BOARD OF DIRECTORS RECOMMENDS AND WILL VOTE AGAINST
THE FOLLOWING STOCKHOLDER PROPOSALS (UNLESS OTHERWISE DIRECTED); FOR A FULL
DISCUSSION, PLEASE SEE "CERTAIN STOCKHOLDER PROPOSALS" IN THE ACCOMPANYING
PROXY STATEMENT.
4. STOCKHOLDER PROPOSAL THAT THE BOARD OF DIRECTORS INSTITUTE WITHIN THREE (3)
MONTHS HEREOF. A SHARE REPURCHASE PLAN TO REPURCHASE AT LEAST SIX (6) MILLION
OF THE SHARES OF THE COMPANY'S COMMON STOCK ON THE PUBLIC MARKET WITHIN THE
NEXT (12) MONTHS.
5. STOCKHOLDER PROPOSAL THAT THE BOARD OF DIRECTORS OF THE COMPANY IMMEDIATELY
TAKE ALL STEPS NECESSARY TO MODIFY ALL EXISTING COMPANY STOCK OPTION PLANS
EMPOWERING THE GRANT OF ANY OPTIONS TO PURCHASE SHARES OF ANY CLASS OF STOCK TO
ANY INDIVIDUAL OR ENTITY TO PROVIDE THAT ANY STOCK OPTION GRANT EXERCISED ON
THE DATE HEREOF SHALL ONLY BE EXERCISABLE THEREAFTER BY THE GRANTEE THEREOF
UNDER ANY CONDITION ONLY AFTER THE EXPIRATION OF A CALENDAR PERIOD OF THREE (3)
YEARS FROM THE DATE OF THE EXERCISE OF THE OPTION AND THAT ANY FUTURE STOCK
OPTION PLAN REQUIRE A HOLDING PERIOD OF AT LEAST THREE (3) YEARS BY ANY GRANTEE
FOLLOWING EXERCISE OF ANY SUCH FUTURE OPTION GRANT.
6. STOCKHOLDER PROPOSAL THAT THE BOARD OF DIRECTORS OF THE COMPANY IMMEDIATELY
TAKE ALL STEPS NECESSARY TO MODIFY ALL CURRENTLY EXISTING COMPANY STOCK OPTION
PLANS AND TO ADOPT A POLICY STATEMENT AS TO FUTURE SUCH PLANS TO PROVIDE THAT
ALL ISSUED OPTION GRANTS UNEXERCISED AS OF THE DATE HEREOF BECOME
UNEXERCISABLE. IF NOT EXERCISED BY THE GRANTEE THEREOF AT LEAST NINETY (90)
DAYS PRIOR TO THE FIRST PUBLIC ANNOUNCEMENT OF ANY OFFER TO PURCHASE THE
COMPANY ENTIRELY OR AT LEAST A MAJORITY OF THE ISSUED AND OUTSTANDING SHARES
THEREOF PROVIDED ONLY THAT ANY SUCH FUTURE ACQUISITION OR SHARE PURCHASE SO
COMPLETED OR AGREED TO UPON THE ORIGINALLY ANNOUNCED OR BETTER TERMS WITHIN A
PERIOD OF FIFTEEN MONTHS FROM THE DATE OF THE ORIGINAL ANNOUNCEMENT.
7. STOCKHOLDER PROPOSAL THAT IN NO CALENDAR YEAR SHALL THE CHAIRMAN, PRESIDENT
OR CHIEF EXECUTIVE OFFICER OR ANY OTHER OFFICER, DIRECTOR OR EMPLOYEE OF THE
COMPANY RECEIVE A SALARY, BONUS, OR ANY OTHER FORM OF COMPENSATION, ANY AMOUNT
OF SIMILAR COMPENSATION PAID IN THE PRECEDING CALENDAR YEAR BY THE MOST HIGHLY
COMPENSATED OFFICER, DIRECTOR, OR EMPLOYEE OF EXXON CORPORATION.
8. STOCKHOLDER PROPOSAL THAT BEGINNING ON THE EARLIEST POSSIBLE FIXED YEAR OF
THE COMPANY, ALL NON-EMPLOYEE MEMBERS OF THE BOARD OF DIRECTORS TOTAL
COMPENSATION WILL BE SOLELY IN SHARES OF DALLAS SEMICONDUCTOR CORPORATION
COMMON STOCK EACH YEAR, AND ALL SUCH SHARES OF STOCK SHALL HAVE A HOLDING
PERIOD OF 9 YEARS OR A 100% STOCK MARKET PRICE APPRECIATION FROM THE DATE OF
ISSUANCE BEFORE A PERMITTED SALE. NO OTHER COMPENSATION OF ANY KIND WILL OR
MAY BE PAID BY THE COMPANY.
9. STOCKHOLDER PROPOSAL THAT THE SHAREHOLDERS ASSEMBLED IN PERSON AND BY PROXY,
RECOMMEND 1.) THAT ALL FUTURE NON-EMPLOYEE DIRECTORS NOT BE GRANTED ANY COMPANY
PAID OR FINANCED PENSION BENEFITS AND 2.) CURRENT NON-EMPLOYEE DIRECTORS
VOLUNTARILY RELINQUISH THEIR PENSION BENEFITS.
10. STOCKHOLDER PROPOSAL THAT THE SHAREHOLDERS OF THE COMPANY ASSEMBLED IN
ANNUAL MEETING IN PERSON AND BY PROXY, HEREBY REQUEST THE BOARD OF DIRECTORS TO
TAKE THE STEPS NECESSARY TO TIE ALL COMPENSATION PAID OR PAYABLE IN THE FUTURE
BY THE COMPANY TO THE FACTORS OF THE GROWTH OF THE COMPANY'S PROFIT PER SHARE
IN THE PAST YEARS TO ACCOUNT FOR 25% OF TOTAL COMPENSATION PAID IN THE NEXT
YEAR; GROWTH OF THE NET ASSET VALUE PER SHARE OF THE TOTAL ISSUED AND
OUTSTANDING SHARES IN THE PAST YEAR TO ACCOUNT FOR 25% OF THE TOTAL
COMPENSATION PAID IN THE NEXT YEAR AND THE PERCENTAGE OF GROWTH IN THE MARKET
PRICE PER SHARE IN THE PRECEDING YEAR TO ACCOUNT FOR 50% OF TOTAL COMPENSATION
PAID IN THE NEXT YEAR.
11. STOCKHOLDER PROPOSAL THAT THE SHAREHOLDERS RECOMMEND THAT THE BOARD OF
DIRECTORS ADOPT A POLICY AGAINST ENTERING INTO FUTURE AGREEMENTS WITH OFFICERS
AND DIRECTORS OF THE COMPANY WHICH PROVIDE ANY COMPENSATION CONTINGENT UPON A
CHANGE OF CONTROL OF THE COMPANY, UNLESS SUCH COMPENSATION AGREEMENTS ARE
SUBMITTED IN TOTO TO A VOTE OF THE SHAREHOLDERS AND APPROVED BY A MAJORITY OF
SHARES PRESENT AND VOTING ON THE ISSUE, AND THAT THE BOARD OF DIRECTORS TAKE
THE RESOLUTION AS ITS THE SENSE OF THE SHAREHOLDERS THAT ANY SUCH EXISTING
AGREEMENTS BE TERMINATED AT THE EARLIEST PRACTICABLE DATE.
12. STOCKHOLDER PROPOSAL THAT EACH YEAR THE COMPANY FULLY DISCLOSE EACH YEAR IN
THE PROXY, ANY TRANSACTION BETWEEN THE COMPANY AND ANY OFFICER OR DIRECTOR OF
THE COMPANY EXCEEDING ONE HUNDRED (100) DOLLARS OF VALUE AND ADOPT A POLICY TO
NOT PRESENT OR PROPOSE ANY INDIVIDUAL FOR SERVICE AS A DIRECTOR WHO IN THE
PREVIOUS YEAR HAD TRANSACTIONS WITH THE COMPANY EXCEEDING ONE HUNDRED THOUSAND
(100,000) DOLLARS OF VALUE.
13. STOCKHOLDER PROPOSAL THAT NO DIRECTOR CURRENTLY SERVING SHALL BE PRESENTED
FOR RE-ELECTION (AND THAT THE BOARD OF DIRECTORS SHALL ADOPT A POLICY THAT NO
INDIVIDUAL SHALL BE PROPOSED FOR ELECTION AS A DIRECTOR) THAT HAS NOT PURCHASED
ON THE OPEN MARKET A MINIMUM OF 1,000 SHARES OF THE COMMON STOCK OF THE
CORPORATION.
