<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] 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:
(1) 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 LOGO AND LETTERHEAD]
March 13, 1998
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 21, 1998,
commencing at 8:30 a.m. at the offices of the Company located at 4401 South
Beltwood Parkway, Dallas, Texas 75244.
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 21, 1998
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 21, 1998, 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 1998 fiscal
year; and
3. 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, 1998, 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 13, 1998
<PAGE> 4
DALLAS SEMICONDUCTOR CORPORATION
4401 SOUTH BELTWOOD PARKWAY
DALLAS, TEXAS 75244-3292
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 21, 1998
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 21, 1998, and is being mailed with proxies to such
stockholders on or about March 13, 1998. 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 28, 1997, 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,
1998. At the close of business on that date the Company had issued,
outstanding and entitled to vote at the meeting 27,891,409 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, 1998, the following persons were known to the
Company to be the beneficial owners 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 2,480,600 8.9%
Pilgrim Baxter & Associates, Ltd.(3)
825 Duportail Road
Wayne, Pennsylvania 19087 1,955,000 7.0%
AMVESCAP PLC(4)
11 Devonshire Square
London EC2M 4YR
England 1,689,500 6.1%
</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 2,472,234 shares of Common Stock, or 8.3% 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 2,480,600 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 1,500,000 shares or 5.5% 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 2,480,600 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) Pilgrim Baxter & Associates, Ltd., in its capacity as an in investment
advisor, may be deemed to be the beneficial owner of 1,955,000 shares
of Common Stock.
2
<PAGE> 6
(4) AMVESCAP PLC ("AMVESCAP"), as the parent holding company of AVZ,
Inc., A I M Management Group Inc., AMVESCAP Group Services, Inc.,
INVESCO, Inc., INVESCO North American Holdings, Inc. (each a holding
company in accordance with Rule 13d-1(b)(ii)(G)) ,and INVESCO
Management and Research, Inc., an investment adviser, may be deemed to
be the beneficial owner of 1,689,500 shares of Common Stock acquired
by the aforesaid subsidiaries, over which AMVESCAP exercises shared
voting and shared dispositive powers with the aforesaid subsidiaries
and with its subsidiaries INVESCO Funds Group, Inc., INVESCO Capital
Management, Inc., and INVESCO Realty Advisers, Inc.
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 January
3, 1999; and (iii) 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, 1998
NAME AGE PUBLIC COMPANIES COMPANY SINCE AND % OF CLASS (1)
---- --- ---------------- ------------- ------------------------
<S> <C> <C> <C> <C>
C.V. Prothro 55 Chairman of the Board, Chief 1984 2,597,234
(E) Executive Officer and 8.7%
President of the Company;
General Partner of Southwest
Enterprise Associates, L.P., a
venture capital fund, since
1983
Chao C. Mai 62 Senior Vice President of the 1985 722,100
Company 2.6%
Michael L. Bolan 51 Vice President-Marketing and 1989 650,100
Product Development of the 2.3%
Company
Richard L. King 59 General Partner of KBA 1984 80,100
(A)(C) Partners L.P., a venture 0.3%
capital fund during the period
1987 - 1997
M.D. Sampels 65 Shareholder, Jenkens & 1985 31,005
(A)(C)(E) Gilchrist, a Professional 0.1%
Corporation
Carmelo J. 56 Consultant; Director, Platinum 1985 29,667
Santoro Software Corporation, S-3, 0.1%
(C) Inc. and Techniclone
Corporation
</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, 1998
NAME AGE PUBLIC COMPANIES COMPANY SINCE AND % OF CLASS (1)
---- --- ---------------- ------------- ------------------------
<S> <C> <C> <C> <C>
E. R. Zumwalt, Jr. 77 President of Admiral Zumwalt & 1993 23,200
Consultants, Inc., a 0.1%
(A)(C) consulting firm; Director of
NL Industries, Inc. and IDT
Corporation
</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 308,183
1.1%
Alan P. Hale 187,625
0.7%
Total shares beneficially owned
by directors and executive 4,629,214
officers as a group (9 persons) 15.7%
</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: 1,888,662 shares for Mr. Prothro,
290,000 shares for Dr. Mai, 250,000 shares for Mr. Bolan, 70,000
shares for Mr. King, 30,000 shares for Mr. Sampels, 28,000 shares for
Mr. Santoro, 16,875 shares for Adm. Zumwalt, 264,000 shares for Mr.
Scherpenberg, 186,500 shares for Mr. Hale, and 3,024,037 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 1,167
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 1997.
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 two
meetings during 1997. 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 1997, 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 1997 for
split-dollar life insurance policies on Messrs. King, Sampels and Santoro
totaled $277,779. 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 1997, 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 $47.625, 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
EXECUTIVE DEFERRED COMPENSATION PLAN
The Board of Directors of the Company adopted the Dallas Semiconductor
Corporation Executive Deferred Compensation Plan (the "Deferred Compensation
Plan"), effective as of December 28, 1997 ("Effective Date"), for the benefit
of a select group of key employees designated by the Compensation Committee.
Under the Deferred Compensation Plan, a total of $2,240,000 in cash will be
deposited into an irrevocable grantor trust within the meaning of the Internal
Revenue Code of 1986, as amended (the "Rabbi Trust"), which, during the first
half of 1998, will use the money to purchase such number of shares of the
Company's Common Stock on the open market as have a market value at the time of
purchase equal to $2,240,000. Subsequent contributions by the Company, if any,
will be allocated pro rata among participants employed on the date such
contribution is received. It is anticipated that shares of Common Stock will
be virtually the only assets owned by the Rabbi Trust. Dividends received in
cash by the Rabbi Trust will be invested as provided in the Rabbi Trust.
Key employees participating in the Deferred Compensation Plan will
have participation units ("Units") credited to their accounts, with the
contractual right to receive the cash value of such Units at the Realization
Date (defined below). No shares of Common Stock will be distributed under the
Deferred Compensation Plan. The holder of Units will not have any voting
rights or any other rights of a stockholder of the Company, unless otherwise
provided by the Board of Directors of the Company.
Although an employer's contributions to a Rabbi Trust are generally
irrevocable, the assets placed in the Rabbi Trust must remain subject to the
claims of the employer's creditors.
6
<PAGE> 10
As of the Effective Date, Messrs. C.V. Prothro, Chao C. Mai, Michael
L. Bolan, F.A. Scherpenberg and Alan P. Hale were granted 400,000, 250,000,
180,000, 150,000 and 130,000 Units under the Deferred Compensation Plan,
respectively (collectively, the "Initial Contribution"). For purposes of
allocation, each Unit has a value of One Dollar ($1.00).
The date at which the Company will value each participant's Units
under the Deferred Compensation Plan (the "Realization Date") will be December
31, 2004, the date a Change of Control (as defined in the Deferred
Compensation Plan) occurs or the date of the participant's termination of
employment, whichever applies first to a participant. Generally, the amount
earned by a participant on the original award of the Units will be determined
by the Common Stock's performance over the period of time between the Effective
Date and the Realization Date. The Deferred Compensation Plan provides that if
the participant is employed on December 31, 2004 (or had retired from the
Company prior to the Realization Date), he will be paid a cash amount equal to
the market value of his pro rata share of the value of the assets held in the
Rabbi Trust on the Realization Date. If a participant's employment is
terminated prior to the Realization Date for reasons other than his retirement,
he will be paid a cash amount equal to his share of the Initial Contribution
reduced by his proportionate share of the net decline in the fair market value
of the Common Stock prior to the date of the termination, if any, and in no
event shall his award exceed his share of the Initial Contribution. The
payment date is expected to be between January 1, 2005 and March 15, 2005.
However, if a participant's employment terminates because of his death,
distribution will occur as soon as possible after a beneficiary is determined,
and if a Change of Control occurs so that the Realization Date becomes the date
the Change of Control occurred, distribution will occur on the Realization
Date.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee of the Board of Directors
for fiscal year 1997 were Carmelo J. Santoro (Chairman), Richard L. King, M.
D. Sampels and Admiral E. R. Zumwalt, Jr. 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 administering the
Company's Executive Bonus Plan, Deferred Executive Compensation Plan, Profit
Sharing Plan, 1987 Stock Option Plan and 1993 Officer and Director Stock Option
Plan (the "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 1997 all of the Company's officers, including the Chief
Executive Officer, received salaries averaging 5.5% over 1996 levels. 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 the average of those named in the public documents of such
companies.
Under the Executive Bonus Plan, payments are determined based upon the
achievement of performance targets, as well as subjective assessments, and for
1997 were limited to 3.25 times an officer's base compensation on January 3,
1994. The Compensation Committee allocated a bonus of $1,192,500 to Mr. Prothro
for 1997 under the Executive Bonus Plan, and bonuses to other executive
officers under such Plan ranged from $200,000 to $400,000. Total bonuses paid
to this group pursuant to the Executive Bonus Plan were less than 4% of profits
after tax.
7
<PAGE> 11
Under the Deferred Compensation Plan, long-term incentive awards are
made to a select group of key employees, the value of which awards will
eventually be affected by any increase or decrease in the value of the
Company's Common Stock. These awards are given in order to more closely align
the interests of the key employees with those of the Company's other
stockholders. The amount of the initial contribution to the Deferred
Compensation Plan came from the undistributed incentive cash benefits available
under the Company's Executive Bonus Plan and was allocated among the
participants based on each participant's position in the Company and his
performance during 1997. The Company's executive officers, Messrs. C. V.
Prothro, Chao C. Mai, Michael L. Bolan, F.A. Scherpenberg and Alan P. Hale,
were granted 400,000, 250,000, 180,000, 150,000 and 130,000 Units,
respectively, under the Deferred Compensation Plan, as of December 28, 1997.
For purposes of allocation, each Unit has a value of One Dollar ($1.00). For a
description of the Deferred Compensation Plan, see "Executive Deferred
Compensation Plan."
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 1997, such quarterly profit sharing awards ranged from
16 to 20 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. No stock options or stock appreciation rights were granted during 1997
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.
8
<PAGE> 12
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 $100 investment made on December 31, 1992
and reinvestment of all dividends. The Company's fiscal year ends on the
Sunday closest to December 31 of each year. This table uses December 31 as the
comparison point for each year. The stockholder return shown on the following
graph is not necessarily indicative of future stock performance.
CUMULATIVE TOTAL RETURN COMPARISON
Among Dallas Semiconductor Corp, S&P 500 Index, and S&P
Electronics (Semiconductor) Index
Fiscal Year Ending December 31st
[LINE GRAPH]
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Dallas Semiconductor 100 116 124 156 174 309
S&P 500 100 110 112 153 189 252
S&P Semi Index 100 158 192 262 408 438
</TABLE>
The companies included in the S&P Semi Index are: Advanced Micro Devices, Inc.,
Applied Materials, Inc., Intel Corporation, KLA-Tencor Corporation, LSI Logic
Corporation, Micron Technology, Inc., Motorola, Inc., National Semiconductor
Corporation and Texas Instruments Incorporated.
9
<PAGE> 13
SUMMARY EXECUTIVE COMPENSATION TABLE
The following summary compensation table sets forth the annual
compensation paid or accrued, together with the number of shares covered by
options granted, during each of the Company's 1995, 1996 and 1997 fiscal years
to C. V. Prothro, the Company's Chief Executive Officer, and the Company's
four most highly compensated executive officers other than Mr. Prothro:
<TABLE>
<CAPTION>
Annual Long Term
Compensation Compensation
--------------------------
Awards
--------------------------
Stock
Underlying All Other
Name and Salary Bonus Options Deferred Compensation
Principal Position Year ($)(1) ($)(2) (#)(3) Compensation(4) ($)(5)(6)
------------------ ---- -------- --------- ---------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
C.V. Prothro, Chairman 1997 606,600 1,214,201 0 400,000 89,516
of the Board of 1996 575,000 254,156 200,000 0 89,386
Directors, President and 1995 540,000 1,016,875 0 0 89,268
Chief Executive Officer
Chao C. Mai, 1997 352,800 412,623 0 250,000 69,151
Senior Vice President 1996 334,400 102,418 100,000 0 68,977
1995 314,000 334,813 0 0 68,831
Michael L. Bolan, 1997 236,000 308,442 0 180,000 38,734
Vice President- 1996 223,700 51,618 50,000 0 38,694
Marketing and Product 1995 210,000 191,562 0 0 42,157
Development
F. A. Scherpenberg, 1997 219,100 232,838 0 150,000 39,716
Vice President- 1996 207,700 51,052 50,000 0 39,716
Computer Products 1995 195,000 181,094 0 0 40,048
Alan P. Hale, 1997 168,800 206,039 0 130,000 7,672
Vice President- 1996 160,000 66,281 35,000 0 7,668
Finance 1995 135,000 104,219 0 0 7,666
</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 did not grant any SARs in fiscal 1997.
(4) Amounts shown indicate the number of units granted to such individual
pursuant to the Company's Executive Deferred Compensation Plan. See
"Executive Deferred Compensation Plan."
10
<PAGE> 14
(5) Excludes premiums paid by the Company for group term life insurance
generally available to all salaried employees of less than $600 for
any executive officer for 1997.
(6) Amounts shown for 1997 represent premiums paid by the Company for
split-dollar life insurance policies on these executive officers. The
cash values under such policies accrue for the benefit of the Company
to cover the premium costs, pursuant to a collateral assignment of
each policy to the Company.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
No stock options were granted to the executive officers of the Company
during fiscal 1997. To date, the Company has not granted any SARs.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END
OPTION/SAR VALUES
The following table sets forth, for Mr. Prothro and the other four
most highly compensated executive officers of the Company: (i) the number of
shares of the Company's Common Stock acquired upon exercise of options during
fiscal year 1997; (ii) the net aggregate dollar value realized upon exercise;
(iii) the total number of unexercised options held at the end of fiscal year
1997; and (iv) the aggregate dollar value of in-the-money unexercised options
held at the end of fiscal year 1997. To date, the Company has not issued any
SARs.
<TABLE>
<CAPTION>
Number of Value of
Shares Underlying Unexercised
Shares Unexercised In-the-Money
Acquired Options at 1997 Options at 1997
on Value Fiscal Year End (#) Fiscal Year End($)
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ----------- -------------------------- --------------------------
<S> <C> <C> <C> <C> <C> <C>
C. V. Prothro 66,372 3,031,105 1,813,662 150,000 47,826,956 2,925,750
Chao C. Mai 35,000 1,547,931 240,000 75,000 5,506,825 1,462,875
Michael L. Bolan 0 0 212,500 37,500 5,722,937 731,437
F. A. Scherpenberg 108,000 2,015,250 326,500 37,500 7,482,132 731,437
Alan P. Hale 10,000 197,500 170,250 26,250 4,100,789 512,006
</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 January 3, 1999, 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 ability
of the Board of Directors 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 1999 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 12, 1998. 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 1997, its officers, directors and
holders of more than 10% of the Company's Common Stock complied with all
Section 16(a) filing requirements, except that M. D. Sampels filed late one
Form 4 reporting one transaction. 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.
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 ChaseMellon Shareholder
Services, LLC to assist in the solicitation of proxies at a cost of $5,500 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.
12
<PAGE> 16
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 and upon
Company records. 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 28, 1997, 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 28, 1997, 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.
13
<PAGE> 17
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 21,
1998 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
PROPOSAL 2. 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.
CONTINUED ON REVERSE SIDE
<PAGE> 18
<TABLE>
<S> <C> <C>
[X]
------
COMMON
1. ELECTION OF DIRECTORS: C.V. Prothro, Chao C. Mai, Michael L. Bolan, Richard L. King,
M.D. Sampels, Carmelo J. Santoro, E.R. Zumwalt, Jr.
FOR all nominees WITHHOLD
listed to the right AUTHORITY (INSTRUCTION: To withhold authority to vote for any individual
(except as marked to vote for all nominees nominee, write that nominee's name on the line below.)
to the contrary) listed at right
[ ] [ ]
2. PROPOSAL TO RATIFY THE APPOINTMENT OF INDEPENDENT 3. IN THE DISCRETION OF THE PROXIES ON ANY OTHER MATTER
AUDITORS FOR THE 1998 FISCAL YEAR: THAT MAY PROPERLY COME BEFORE THE MEETING.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
The undersigned acknowledges receipt of the Notice
of the Annual Meeting and Proxy Statement dated
March 13, 1998.
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 a corporation, the proxy should be
signed by a duly authorized officer.
PLEASE DATE, SIGN AND MAIL THIS PROXY CARD IN THE
ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED
IN THE UNITED STATES.
Dated: , 1998
</TABLE>
