<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
April 1, 1999
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 Thursday, May 20,
1999, commencing at 8:30 a.m. at the offices of the Company located at 4401
South Beltwood Parkway, Dallas, Texas 75244.
I am delighted that 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 of the Board, President
and Chief Executive Officer
<PAGE> 3
DALLAS SEMICONDUCTOR CORPORATION
4401 SOUTH BELTWOOD PARKWAY
DALLAS, TEXAS 75244-3292
(972) 371-4000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TIME: 8:30 a.m. on Thursday, May 20, 1999
PLACE: Offices of Dallas Semiconductor Corporation
4401 South Beltwood Parkway
Dallas, Texas 75244
ITEMS OF BUSINESS: (1) To elect directors;
(2) To reapprove the Company's Executive Bonus
Plan, as amended; and
(3) To consider such other business as may
properly come before the meeting.
RECORD DATE: You are entitled to vote if you were a stockholder at
the close of business on Monday, March 22, 1999. The
list of stockholders entitled to vote will be
available for inspection by any stockholder at the
Company's offices, 4401 South Beltwood Parkway,
Dallas, Texas, for ten days prior to the meeting.
VOTING BY PROXY: If you do not expect to attend the Annual
Meeting 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,
so that your shares can be voted at the meeting in
accordance with your instructions.
BY ORDER OF THE BOARD OF DIRECTORS
Marla K. Suggs, Secretary
This proxy statement and accompanying proxy card are being distributed on or
about April 1, 1999.
<PAGE> 4
DALLAS SEMICONDUCTOR CORPORATION
4401 SOUTH BELTWOOD PARKWAY
DALLAS, TEXAS 75244-3292
(972) 371-4000
PROXY STATEMENT
PURPOSE OF PROXY MATERIALS. The Board of Directors (the "Board") of
Dallas Semiconductor Corporation (sometimes referred to as the "Company" or
"Dallas Semiconductor") is providing these proxy materials to you in connection
with the Company's Annual Meeting of Stockholders, which will take place on May
20, 1999. You are invited to attend the meeting and are requested to vote on the
proposals described in this proxy statement.
INFORMATION INCLUDED. The information included in this Proxy Statement
relates to the proposals to be voted on at the meeting, the voting process, the
compensation of directors and our most highly-paid executive officers, and
certain other required information. Our Annual Report on Form 10-K and our
Annual Report to Stockholders covering the fiscal year ended January 3, 1999,
are also enclosed.
PROPOSALS TO BE VOTED ON AND VOTING RECOMMENDATION. There are two
proposals scheduled to be voted on at the meeting: (1) the election of
directors; and (2) reapproval of the Company's Executive Bonus Plan, as amended.
Our Board of Directors recommends that you vote your shares "FOR" each of the
nominees to the Board and "FOR" Proposal No. 2.
SHARES ELIGIBLE TO BE VOTED. All shares owned by you as of March 22,
1999, the Record Date, may be voted by you. These shares include those (1) held
directly in your name as the stockholder of record and (2) held for you as the
beneficial owner through a stockbroker, bank or other nominee. Most Dallas
Semiconductor stockholders hold their shares through a stockbroker, bank or
other nominee rather than directly in their own name. As summarized below, there
are some distinctions between shares held of record and those owned
beneficially.
STOCKHOLDER OF RECORD. If your shares are registered directly
in your name with the Company's Transfer Agent, ChaseMellon Shareholder
Services, LLC, you are considered, with respect to those shares, the stockholder
of record, and these proxy materials are being sent directly to you by Dallas
Semiconductor. As the stockholder of record, you have the right to grant your
voting proxy directly to Dallas Semiconductor or to vote in person at the
meeting. We have enclosed a proxy card for you to use.
<PAGE> 5
VOTING YOUR SHARES IN PERSON. Shares held directly in your name as the
stockholder of record may be voted in person at the Annual Meeting. If you
choose to do so, please bring the enclosed proxy card or proof of
identification. Even if you plan to attend the Annual Meeting, we recommend that
you also submit your proxy as described below so that your vote will be counted
if you later decide not to attend the meeting.
BENEFICIAL OWNER. If your shares are held in a stock brokerage
account or by a bank or other nominee, you are considered the beneficial owner
of shares held in street name, and these proxy materials are being forwarded to
you by your broker or nominee who is considered, with respect to those shares,
the stockholder of record. As the beneficial owner, you have the right to direct
your broker on how to vote. You are also invited to attend the meeting; however,
since you are not the stockholder of record, you may not vote these shares in
person at the meeting. Your broker or nominee has enclosed a voting instruction
card for you to use.
RECEIPT OF ADDITIONAL PROXY OR VOTING INSTRUCTION CARDS. If you receive
more than one proxy or voting instruction card, it means your shares are
registered differently or are in more than one account. Please provide voting
instructions for all proxy and voting instructions cards you receive.
VOTING YOUR SHARES WITHOUT ATTENDING THE MEETING. Whether you hold
shares directly as the stockholder of record or beneficially in street name, you
may direct your vote without attending the meeting. You may vote by granting a
proxy or, for shares held in street name, by submitting voting instructions to
your broker or nominee. You may do this by signing your proxy card or, for
shares held in street name, the voting instruction card included by your broker
or nominee, and mailing it in the enclosed, postage prepaid and addressed
envelope. If you provide specific voting instructions, your shares will be voted
as you instruct. If you sign but do not provide instructions, your shares will
be voted in accordance with the recommendations of the Board.
CHANGING YOUR VOTE. You may change your proxy instructions at any time
prior to the vote at the Annual Meeting. For shares held directly in your name,
you may accomplish this by granting a new proxy or by attending the Annual
Meeting and voting in person. Attendance at the meeting will not cause your
previously granted proxy to be revoked unless you specifically so request. A
proxy may be revoked at any time before it is voted by giving written notice to
Dallas Semiconductor's Corporate Secretary prior to the vote at the Annual
Meeting or by execution of a subsequent proxy and giving such proxy to Dallas
Semiconductor's Corporate Secretary prior to the vote at the Annual Meeting. For
shares held beneficially by you, you may change your proxy instructions by
submitting new instructions to your broker or nominee, provided that such change
in instructions is received by your broker or nominee in sufficient time to
permit your broker or nominee to execute a subsequent proxy and give it to
Dallas Semiconductor's Corporate Secretary prior to the vote at the Annual
Meeting.
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<PAGE> 6
CASTING OF VOTES. In the election of directors, you may vote "FOR" all
of the nominees, or your vote may be "WITHHELD" with respect to one or more of
the nominees. For Proposal No. 2, you may vote "FOR," "AGAINST" or "ABSTAIN." If
you "ABSTAIN," it has the same effect as a vote "AGAINST." If you sign your
proxy card or broker voting instruction card with no further instructions, your
shares will be voted in accordance with the recommendations of the Board.
VOTING REQUIREMENTS TO APPROVE PROPOSALS. In order to be elected a
director, a nominee must receive a plurality of the votes cast at the Annual
Meeting for the election of directors. The seven persons receiving the highest
number of "FOR" votes will be elected. All other proposals require the
affirmative "FOR" vote of a majority of those shares present and entitled to
vote. If you are a beneficial owner and do not provide the stockholder of record
with voting instructions, your shares may constitute broker non-votes as
described in "QUORUM REQUIREMENT FOR MEETING" on page 21. In tabulating the
voting result for any particular proposal, shares which constitute broker
non-votes are not considered entitled to vote.
VOTING RESULTS. We will announce preliminary voting results at the
Annual Meeting and publish final results in our quarterly report on Form 10-Q
for the second quarter of fiscal 1999.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
There are seven nominees for election to our Board this year. All of
the nominees have served as directors since the last annual meeting of
stockholders. Information regarding the business experience of each nominee
during the last five years is provided below. All directors are elected annually
to serve until the next annual meeting of stockholders, or until their
respective successors are elected.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION TO THE BOARD
OF EACH OF THE FOLLOWING NOMINEES:
C. V. PROTHRO Mr. Prothro, age 56, is Chairman of the Board,
President and Chief Executive Officer of Dallas
Semiconductor. Mr. Prothro has served as Chairman
since the Company's organization in 1984 and has
served as Chief Executive Officer and President since
1989. During the past five years, Mr. Prothro has
also served as General Partner of Southwest
Enterprise Associates, L.P., a venture capital fund.
3
<PAGE> 7
CHAO C. MAI Mr. Mai, age 63, has been Senior Vice President of
the Company since 1993 and has served as a director
since 1985.
MICHAEL L. BOLAN Mr. Bolan, age 52, has served as the Company's Vice
President of Marketing and Product Development since
1985. He has been a director since 1989.
RICHARD L. KING Mr. King, age 60, has been a director of the Company
since 1984. He served as General Partner of KBA
Partners L.P., a venture capital fund, during the
period 1987 - 1997. Since 1998, Mr. King has been a
General Partner in Brockleby Venture Partners, a
venture capital firm.
M. D. SAMPELS Mr. Sampels, age 66, is a shareholder in the law firm
of Jenkens & Gilchrist, a Professional Corporation.
Mr. Sampels has served as a director of the Company
since 1985.
CARMELO J. SANTORO Mr. Santoro, age 57, has been a director of the
Company since 1985. From 1994 to 1996, he served as
Chairman and Chief Executive Officer of Platinum
Software Corporation. Mr. Santoro also serves as a
director of S-3, Inc. and Techniclone Corporation.
Currently, he is also a consultant with Santoro
Technology Associates.
E. R. ZUMWALT, JR. Admiral Zumwalt, age 78, has served as a director of
the Company since 1993. He has served as President of
Admiral Zumwalt & Consultants, Inc., a consulting
firm, since 1980. Admiral Zumwalt is also a director
of NL Industries, Inc. and IDT Corporation.
4
<PAGE> 8
PROPOSAL NO. 2
REAPPROVAL OF EXECUTIVE BONUS PLAN
On April 26, 1994, the stockholders of Dallas Semiconductor approved an
Executive Bonus Plan, designed to qualify the cash bonuses payable under the
Plan as "qualified performance-based compensation" under Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"). The Compensation
Committee has amended the Executive Bonus Plan to permit the deferral of all or
any part of an authorized payment under the Plan and to change the formula for
determining the maximum bonus payable under the Plan. Under the provisions of
Code Section 162(m), the Executive Bonus Plan is subject to reapproval by the
Company's stockholders every five years. Accordingly, renewal of approval of the
Executive Bonus Plan, as amended, will be presented for consideration at this
year's Annual Meeting.
The purpose of the Executive Bonus Plan is to motivate and reward
eligible employees of Dallas Semiconductor by making a portion of their annual
cash compensation directly dependent upon the Company's earnings per share,
sales, return on stockholders' equity, or the price appreciation of its Common
Stock, or a combination of these performance-related targets as established
within 90 days after the beginning of the fiscal year by the Executive
Compensation Subcommittee of the Compensation Committee.
Individuals eligible to participate in the Executive Bonus Plan are
officers of the Company at the level of Vice President or above and any other
key employees selected by the Compensation Committee. There are currently six
individuals eligible to participate in the Executive Bonus Plan. Under the
Executive Bonus Plan, as amended, any annual bonus payments awarded by the
Compensation Committee and not deferred are to be made in cash after the end of
each fiscal year.
As originally approved by the stockholders, the maximum annual bonus
payable to any participant under the Executive Bonus Plan was calculated based
upon a multiplier of two and one-half (2-l/2) times the executive's base salary
in effect on January 3, 1994, with such multiplier increasing by one fourth
(1/4) for each fiscal year after 1994, beginning with the 1995 fiscal year. For
the 1998 fiscal year, the multiplier was three and one-half (3-1/2). Recently,
the Compensation Committee amended the Executive Bonus Plan to change the
formula for determining the maximum annual bonuses payable under the Plan. As
amended, the maximum annual bonus payable to any participant under the Plan will
be calculated based upon a fixed multiplier of four (4) times the lesser of (i)
the executive's base salary in effect on the last business day of the fiscal
year for which a bonus is being determined (the "Bonus Year") or (ii) the
executive's base salary in effect on the last business day of the Company's
fiscal year immediately preceding the Bonus Year plus seven and one-half
(7-1/2%) percent. The Compensation Committee is not
5
<PAGE> 9
required to grant any bonus under the Executive Bonus Plan and, subject to the
maximum annual limitation, is not required to pay a bonus in any particular
amount even if the performance targets are partially or fully met.
Because the minimum performance targets were not met, no bonuses were
paid under the Plan for the 1998 fiscal year.
The following table sets forth the maximum annual bonuses payable under
the Executive Bonus Plan for the 1999 fiscal year of the Company to (i) the
executive officers named in the Summary Compensation Table, (ii) all current
executive officers of the Company as a group, (iii) all current directors who
are not executive officers as a group, and (iv) all other employees, including
all current officers who are not executive officers, as a group:
<TABLE>
<CAPTION>
NAME AND POSITION MAXIMUM 1999 BONUS
----------------- ------------------
<S> <C>
C. V. Prothro, Chairman of the Board $ 3,042,250
of Directors, President and Chief
Executive Officer
Chao C. Mai, Senior Vice President $ 1,677,000
Michael L. Bolan, Vice President - $ 1,118,000
Marketing and Product Development
F. A. Scherpenberg, Vice President - $ 1,032,000
Computer Products
Alan P. Hale, Vice President - Finance $ 838,500
Executive Group $ 8,481,750
Non-Executive Director Group $ 0
Non-Executive Officer $ 0
Employee Group
</TABLE>
6
<PAGE> 10
The bonuses payable under the Executive Bonus Plan will be in addition
to any other compensation otherwise payable to each executive under any other
plan, arrangement or policy of the Company. While the Compensation Committee may
amend, modify or terminate the Executive Bonus Plan at any time, any amendment
of the Plan which increases the maximum amount payable under such Plan would be
subject to the stockholder approval requirements of Section 162(m) of the Code,
to the extent Dallas Semiconductor desires to continue to qualify the cash
bonuses payable under the Plan as "qualified performance-based compensation."
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE REAPPROVAL OF THE
COMPANY'S EXECUTIVE BONUS PLAN, AS AMENDED.
COMMON STOCK OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, as of March 22, 1999,
concerning:
* each beneficial owner known to the Company of more than 5% of
Dallas Semiconductor's Common Stock;
* beneficial ownership by all Dallas Semiconductor directors and
the Dallas Semiconductor executive officers named in the
Summary Executive Compensation Table on page 14 (the "Named
Officers"); and
* beneficial ownership by all Dallas Semiconductor directors and
executive officers as a group.
The number of shares beneficially owned by each entity, person,
director or executive officer is determined under rules of the Securities and
Exchange Commission, and the information is not necessarily indicative of
beneficial ownership for any other purpose. Unless otherwise indicated, each
person has sole investment and voting power (or shares such powers with his or
her spouse) with respect to the shares set forth in the following table. Except
for the percentages of certain parties that hold options ("Options") to purchase
shares of the Company's Common Stock indicated in the following table, the
percentages indicated are based on 28,418,360 shares of Dallas Semiconductor
Common Stock issued and outstanding on the Record Date. In the case of parties
holding Options, the percentage ownership is calculated on the assumption that
the shares of Common Stock underlying such Options are outstanding.
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<PAGE> 11
BENEFICIAL OWNERSHIP TABLE
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNERSHIP CLASS
-------------------- ----------
<S> <C> <C>
FMR Corp.(1)
82 Devonshire Street
Boston, Massachusetts 02109 2,106,100(1) 7.4%
Neuberger Berman, LLC(2) 1,988,800(2) 7.0%
Neuberger Berman Management Inc.
605 Third Avenue
New York, New York 10158
J & W Seligman & Co., Incorporated(3) 1,789,700(3) 6.3%
Seligman Communications & Information
Fund, Inc.
William C. Morris
100 Park Avenue - 8th Floor
New York, New York 10006
DIRECTORS AND NAMED OFFICERS
C. V. Prothro, Chairman of the Board, 824,234 Direct(4) 8.9%
President and Chief Executive Officer 1,870,000 Options
Chao C. Mai, Director and 447,100 Direct 2.8%
Senior Vice President 370,000 Options
Michael L. Bolan, Director and
Vice President - Marketing 475,100 Direct 2.5%
and Product Development 242,500 Options
F. A. Scherpenberg, Vice President - 44,183 Direct 1.3%
Computer Products 331,500 Options
Alan P. Hale, Vice President - Finance 1,225 Direct 0.8%
233,750 Options
Richard L. King, Director 10,100 Direct 0.2%
42,700 Options
</TABLE>
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<PAGE> 12
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNERSHIP CLASS
-------------------- -----
<S> <C> <C> <C>
M. D. Sampels, Director 1,005 Direct 0.1%
40,000 Options
Carmelo J. Santoro, Director 1,667 Direct(5) 0.1%
38,000 Options
E.R. Zumwalt, Jr., Director 6,325 Direct 0.1%
26,875 Options
ALL DIRECTORS AND EXECUTIVE OFFICERS AS 1,810,939 Direct(4)(5) 16.0%
A GROUP (10 PERSONS) 3,247,825 Options
</TABLE>
FOOTNOTES TO BENEFICIAL OWNERSHIP TABLE
(1) 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 2,106,100 shares of Common Stock. Various persons
have the right to receive or the power to direct the receipt of
dividends from, or the proceeds from the sale of, Common Stock. The
interest of one person, Fidelity Low-Priced Stock Fund, an investment
company registered under the Investment Company Act of 1940, having its
principal business office at 82 Devonshire Street, Boston,
Massachusetts 02109, amounted to 2,050,000 shares or 7.2% of the Common
Stock outstanding at the Record Date. 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 2,106,100 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 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.
(2) Neuberger Berman, LLC and Neuberger Berman Management Inc. may be
deemed to be beneficial owners of 1,988,800 shares of Common Stock .
Various unrelated clients have the right to receive or the power to
direct the receipt of dividends from, or the proceeds from the sale of,
Common Stock.
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<PAGE> 13
Neuberger Berman, LLC and Neuberger Berman Management Inc. have the
shared power to dispose or to direct the disposition of 1,988,800
shares of the Common Stock, shared power to vote or to direct the vote
of 1,165,000 shares of the Common Stock and sole power to vote or to
direct the vote of 810,500 shares of Common Stock. The remaining
balance of shares are for individual client accounts over which
Neuberger Berman, LLC has shared power to dispose but not vote shares.
Neuberger Berman, LLC and Neuberger Berman Management Inc. serve as
sub-adviser and investment manager, respectively, of Neuberger Berman's
various Mutual Funds, which hold such shares in the ordinary course of
their business and not with the purpose nor with the effect of changing
or influencing the control of the issuer. Neuberger Berman, LLC
disclaims beneficial ownership of 2,000 shares of the Common Stock
owned by principals of Neuberger Berman, LLC.
(3) J & W Seligman & Co., Incorporated ("JWS") may be deemed to
beneficially own 1,789,700 shares of Common Stock, including 1,550,000
shares of Common Stock beneficially owned by Seligman Communications
and Information Fund, Inc., for which JWS acts as investment advisor.
William C. Morris ("Morris"), as the owner of a majority of the
outstanding voting securities of JWS, may be deemed to beneficially own
1,789,700 shares of Common Stock, as to which JWS and Morris share
dispositive power. JWS and Morris share voting power with respect to
1,782,100 shares of Common Stock.
(4) Mr. Prothro expressly disclaims beneficial ownership with respect to an
aggregate of 41,966 shares held for the benefit of his adult children.
(5) Includes 1,167 shares owned by Carmelo J. Santoro and Nancy J. Santoro,
Trustees for the Santoro Family Trust.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires our directors, officers and persons who beneficially own more than 10%
of our Common Stock to file with the Securities and Exchange Commission, the New
York Stock Exchange and the Company reports regarding their ownership and
changes in ownership of our stock. Dallas Semiconductor believes that during
fiscal year 1998, its officers, directors and 10% stockholders complied with all
Section 16(a) filing requirements. In making these statements, the Company has
relied upon a review of copies of such forms received by the Company and the
written representations of its directors and officers.
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<PAGE> 14
BOARD STRUCTURE AND COMPENSATION
Our Board has seven directors and the following three committees: (1)
Audit, (2) Compensation and (3) Executive. The membership during fiscal 1998 and
the function of each committee are described below. During fiscal 1998, the
Board held eight meetings, and each director attended at least 75% of all Board
and applicable committee meetings. All directors served on the Board for the
entire fiscal 1998.
<TABLE>
<CAPTION>
- ---------------------------- -------------------------- -------------------------- --------------------------
NAME OF DIRECTOR AUDIT COMPENSATION EXECUTIVE
- ---------------------------- -------------------------- -------------------------- --------------------------
NON-EMPLOYEE DIRECTORS:
- ---------------------------- -------------------------- -------------------------- --------------------------
<S> <C> <C> <C>
Richard L. King X X
- ---------------------------- -------------------------- -------------------------- --------------------------
M. D. Sampels X* X X
- ---------------------------- -------------------------- -------------------------- --------------------------
Carmelo J. Santoro X*
- ---------------------------- -------------------------- -------------------------- --------------------------
E. R. Zumwalt, Jr. X X
- ---------------------------- -------------------------- -------------------------- --------------------------
EMPLOYEE DIRECTORS:
- ---------------------------- -------------------------- -------------------------- --------------------------
C. V. Prothro X
- ---------------------------- -------------------------- -------------------------- --------------------------
Chao C. Mai
- ---------------------------- -------------------------- -------------------------- --------------------------
Michael L. Bolan
- ---------------------------- -------------------------- -------------------------- --------------------------
NUMBER OF MEETINGS IN 2 3 0
FISCAL 1998
- ---------------------------- -------------------------- -------------------------- --------------------------
</TABLE>
X = Committee member; * = Chair
AUDIT COMMITTEE
The Audit Committee reviews our auditing, accounting, financial
reporting and internal control functions and recommends independent auditors to
the Board. In discharging its duties, the committee, among other things:
* reviews and approves the scope of the annual audit and the
independent accountants' fees;
* meets independently with our internal auditing staff, our
independent accountants and our senior management; and
* reviews the general scope of our accounting, financial
reporting, annual audit and internal audit program, matters
relating to internal control systems, as well as the results
of the annual audit.
Ernst & Young, LLP, which served as the Company's independent public
accountant during the Company's 1998 fiscal year, has been selected to audit
Dallas Semiconductor's consolidated financial statements for the 1999 fiscal
year. Representatives of Ernst & Young are expected to attend the Annual Meeting
where they will be available to respond to questions and, if they desire, to
make a statement.
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<PAGE> 15
COMPENSATION COMMITTEE
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, Executive Deferred Compensation Plan, Profit
Sharing Plan, 1987 Stock Option Plan and 1993 Officer and Director Stock Option
Plan. A Subcommittee of the Compensation Committee, comprised of Messrs.
Santoro, King and Zumwalt, is responsible for the establishment of the
performance targets under the Executive Bonus Plan and certification of the
attainment or non-attainment of those targets to the Compensation Committee.
EXECUTIVE COMMITTEE
The Executive Committee may meet or take written action when the Board
is not otherwise meeting and has the same level of authority as the Board,
except that it cannot amend Dallas Semiconductor's By-laws, recommend any action
that requires the approval of the stockholders or take any other action not
permitted to be delegated to a committee under Delaware law.
DIRECTOR COMPENSATION ARRANGEMENTS
Each of the non-employee directors of the Company receives compensation
as a director in the amount of $9,750 per quarter, plus $1,500 for each Board
meeting attended, $1,000 for each committee meeting attended and $1,500 per
committee meeting chaired. These fees were reduced by 15% for the period April
16, 1998, to December 16, 1998, when they were restored to their previous
levels. 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 1998 for
split-dollar life insurance policies on Messrs. King, Sampels and Santoro
totaled $278,589. 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. All of the non-employee directors served the entire
1998 fiscal year. Directors who are employed by the Company, Messrs. Prothro,
Mai and Bolan, do not receive any compensation for their Board activities.
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<PAGE> 16
STOCK OPTIONS
In October 1998, options were granted to Messrs. King, Sampels, Santoro
and Zumwalt 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. These options were granted at an exercise price of $23.75 per share, which
was the fair market value of Dallas Semiconductor's Common Stock on the date of
grant. The options have a term of 10 years and are exercisable as to 6.25% of
the option shares during each calendar quarter during the term of the options
until becoming fully vested at the end of 16 calendar quarters.
In October 1998, the Board repriced options covering a total of 249,500
shares of Common Stock that had been granted under Dallas Semiconductor's 1987
Stock Option Plan to reflect the fair market value of the Company's Common
Stock. The repricing included options covering 10,000 shares each granted to
Messrs. King, Sampels, Santoro and Zumwalt in October 1997 pursuant to the
automatic grant provision of the Company's 1987 Stock Option Plan. The options
granted to these Directors in October 1997 had an exercise price of $47.625 per
share. The remaining options covering 209,500 shares of Common Stock had
exercise prices ranging from $25.25 to $53.375 per share. The Board accomplished
the repricing by canceling the previously granted options and regranting options
for the same number of shares at an exercise price of $23.75 per share, the
market value of such shares on the date of regrant. Each repriced option has a
term equal to the unexpired term of the canceled option. The repriced options
may not be exercised for a period of one year from the date of grant. Subject to
this restriction, the repriced options granted to Messrs. King, Sampels, Santoro
and Zumwalt are exercisable for 6.25% of the option shares during each calendar
quarter during the term of the options, until becoming fully vested at the end
of 16 calendar quarters. The repricing did not include any options that had
previously been granted to any executive officer of Dallas Semiconductor.
13
<PAGE> 17
EXECUTIVE COMPENSATION ARRANGEMENTS
In addition to receiving a salary, the executive officers and key
employees of Dallas Semiconductor may be granted stock options under the
Company's 1987 Stock Option Plan and 1993 Officer and Director Stock Option
Plan, and receive other compensation under its Executive Bonus Plan, Executive
Deferred Compensation Plan, Profit Sharing Plan and Section 401(k) Plan. See
"Report of the Compensation Committee."
SUMMARY EXECUTIVE COMPENSATION TABLE
The following summary compensation table sets forth the annual
compensation paid or accrued, together with the number of shares covered by
options granted, during each of the Company's 1996, 1997 and 1998 fiscal years
to C. V. Prothro, the Company's Chief Executive Officer, and the Company's next
four most highly-compensated executive officers:
<TABLE>
<CAPTION>
Annual Long Term
Compensation Compensation
---------------------------------
Awards
--------------------- ---------------------------------
Stock
Underlying All Other
Name and Salary Bonus Options Deferred Compensation
Principal Position Year ($)(1) ($)(2) (#)(3) Compensation(4) ($)(5)(6)
------------------ ---- -------- --------- ---------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
C.V. Prothro, Chairman 1998 642,039 0 270,000 0 89,582
of the Board of 1997 606,600 1,214,201 0 400,000 89,516
Directors, President and 1996 575,000 254,156 200,000 0 89,386
Chief Executive Officer
Chao C. Mai, 1998 353,759 0 135,000 0 69,257
Senior Vice President 1997 352,800 412,623 0 250,000 69,151
1996 334,400 102,418 100,000 0 68,977
Michael L. Bolan, 1998 235,833 0 67,500 0 38,747
Vice President- 1997 236,000 308,442 0 180,000 38,734
Marketing and Product 1996 223,700 51,618 50,000 0 38,694
Development
F. A. Scherpenberg, 1998 217,681 0 67,500 0 39,806
Vice President- 1997 219,100 232,838 0 150,000 39,716
Computer Products 1996 207,700 51,052 50,000 0 39,716
Alan P. Hale, 1998 176,945 0 47,250 0 10,766(7)
Vice President- 1997 168,800 206,039 0 130,000 7,672
Finance 1996 160,000 66,281 35,000 0 7,668
</TABLE>
14
<PAGE> 18
FOOTNOTES TO SUMMARY EXECUTIVE COMPENSATION TABLE
(1) Reflects a 15% reduction in base salary for the period April 16, 1998,
to December 16, 1998, when the base salaries of such executive officers
were restored to the levels in effect immediately prior to such
reduction; i.e., $707,500 for Mr. Prothro; $390,000 for Mr. Mai;
$260,000 for Mr. Bolan; $240,000 for Mr. Scherpenberg; and $195,000 for
Mr. Hale. Also includes amounts deferred at the executive officer's
election pursuant to the Company's Section 401(k) Plan.
(2) Includes annual bonuses for the years indicated, 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) To date, the Company has not granted any SARs.
(4) Amounts shown indicate the number of units granted to such officer
pursuant to the Company's Executive Deferred Compensation Plan. See
"Report of Compensation Committee."
(5) Excludes premiums paid by the Company for group term life insurance
generally available to all salaried employees of less than $665 for any
executive officer for 1998.
(6) Amounts shown for 1998 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.
(7) Includes reimbursed non-business travel expense of $3,093.
15
<PAGE> 19
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR(1)
The following table sets forth, with respect to all options granted to
Mr. Prothro and the Company's next four most highly-compensated executive
officers, during the Company's 1998 fiscal year: (i) the number of shares
covered by such options; (ii) the percent that such options represent of total
options granted to all employees of Dallas Semiconductor during the 1998 fiscal
year; (iii) the exercise price; (iv) the expiration date; and (v) the present
value of the options on the grant date.
<TABLE>
<CAPTION>
- ---------------------------- ----------------------------------------------------------------- ----------------------
Grant Date
Individual Grants Value
- ---------------------------- ----------------------------------------------------------------- ----------------------
Number of
Securities % of Total
Underlying Options
Options Granted to Exercise
Granted Employees in Price(4) Expiration Grant Date
Name (#)(2) Fiscal Year(3) ($/Share) Date Present Value ($)(5)
---- ------ -------------- ------------ ----- --------------------
<S> <C> <C> <C> <C> <C>
- ---------------------------- --------------- ------------------ --------------- -------------- ----------------------
C. V. Prothro 270,000 18.3% $23.75 Oct. 2008 2,884,221
- ---------------------------- --------------- ------------------ --------------- -------------- ----------------------
Chao C. Mai 135,000 9.1% $23.75 Oct. 2008 1,442,111
- ---------------------------- --------------- ------------------ --------------- -------------- ----------------------
Michael L. Bolan 67,500 4.6% $23.75 Oct. 2008 721,055
- ---------------------------- --------------- ------------------ --------------- -------------- ----------------------
F. A. Scherpenberg 67,500 4.6% $23.75 Oct. 2008 721,055
- ---------------------------- --------------- ------------------ --------------- -------------- ----------------------
Alan P. Hale 47,250 3.2% $23.75 Oct. 2008 504,739
- ---------------------------- --------------- ------------------ --------------- -------------- ----------------------
- ---------------------------- --------------- ------------------ --------------- -------------- ----------------------
</TABLE>
FOOTNOTES TO OPTION GRANT TABLE
(1) To date, the Company has not granted any SARs.
(2) The options granted in 1998 were granted pursuant to the Company's 1993
Officer and Director Stock Option Plan. The options are exercisable as
to 25% of the number of option shares 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 with each calendar quarter during the term of the
option, provided that the option becomes immediately exercisable in
full upon certain events, including a change of control of the issuer.
(3) The Company granted options representing 1,476,050 shares to employees
in fiscal 1998.
(4) Fair market value on date of grant.
16
<PAGE> 20
(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
promulgated by the Securities and Exchange Commission, 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
6.0 years; a risk-free interest rate of 6%; an annual dividend yield of
0.40%; and volatility of 40%. No adjustment for risk of forfeiture was
made.
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 1998; (ii) the net aggregate dollar value realized upon exercise; (iii) the
total number of unexercised options held at the end of fiscal year 1998; and
(iv) the aggregate dollar value of in-the-money unexercised options held at the
end of fiscal year 1998. 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 1998 Options at 1998
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 222,662 6,409,737 1,653,500 357,500 47,297,188 6,591,563
Chao C. Mai 40,000 1,074,688 231,250 178,750 5,836,719 3,295,781
Michael L. Bolan 0 0 228,125 89,375 6,796,484 1,647,891
F. A. Scherpenberg 100,000 2,982,500 242,125 89,375 6,207,359 1,647,891
Alan P. Hale 10,000 356,938 171,188 62,562 4,577,113 1,153,512
</TABLE>
17
<PAGE> 21
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee of the Board of Directors for
fiscal year 1998 were Carmelo J. Santoro (Chairman), Richard L. King, M. D.
Sampels and Admiral E. R. Zumwalt, Jr. Messrs. Santoro, King and Zumwalt are
also members of the Executive Compensation Subcommittee, which is responsible
for the establishment of the performance targets for the Company's Executive
Bonus Plan and certification of the attainment or non-attainment of those
targets to the Compensation Committee.
REPORT OF THE COMPENSATION COMMITTEE
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, Executive Deferred 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 1998, all of the Company's officers, including the Chief
Executive Officer, received salaries averaging 12.5% over 1997 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 Dallas
Semiconductor were lower than the average of those named in the public documents
of such companies. Effective April 16, 1998, salaries of all the Company's
executive officers and other key employees were reduced by 15%. Effective
December 16, 1998, the salaries were restored by the Compensation Committee to
their prior level.
Under the Executive Bonus Plan, payments are determined based upon the
achievement of certain performance targets, as well as subjective assessments.
See discussion under "Proposal No. 2." The Company did not meet the performance
targets established for 1998, and the Compensation Committee did not award any
bonuses for 1998 under this Plan.
Under the Company's Executive Deferred Compensation Plan, which became
effective on December 28, 1997, long-term incentive awards may be made to a
select group of key employees. One hundred percent of the deferred compensation
is to be invested in the Common Stock of the Company. Each participant's
interest will reflect any gains or losses in the value of such shares on a pro
rata basis. No awards under this Plan were made in 1998.
18
<PAGE> 22
Under the Company's Profit Sharing Plan, quarterly bonuses may be
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 may receive an award equal to a fixed number of hours of
his or her base salary. The profit sharing awards are included in the Bonus
column in the Summary Executive Compensation Table. No quarterly profit sharing
awards were made during 1998.
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. During 1998, options were granted under Dallas Semiconductor's 1993
Stock Option Plan to Messrs. Prothro, Mai, Bolan, Scherpenberg and Hale covering
270,000, 135,000, 67,500, 67,500 and 47,250 shares of Common Stock,
respectively. No stock appreciation rights were granted during 1998 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.
19
<PAGE> 23
STOCK PERFORMANCE GRAPH
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG THE COMPANY, S&P 500 INDEX
& S&P SEMICONDUCTOR INDEX
The graph below shows the five-year cumulative total stockholder return
for the Company at December 31 of each of the last five years as compared 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, 1993 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.
[GRAPHIC]
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
DALLAS SEMICONDUCTOR 100 107.26 134.56 150.02 266.83 268.06
S&P 500 100 101.32 139.40 171.40 228.59 293.91
S&P SEMI INDEX 100 121.36 165.84 258.79 277.42 464.86
</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.
20
<PAGE> 24
ADDITIONAL INFORMATION REGARDING THE ANNUAL MEETING
AND STOCKHOLDER PROPOSALS
VOTING ON OTHER PROPOSALS. Other than the two proposals described in
this Proxy Statement, we do not expect any matters to be presented for a vote at
the Annual Meeting. If you grant a proxy, the persons named as proxy holders, C.
V. Prothro, Dallas Semiconductor's Chairman, President and CEO, and Chao C. Mai,
the Company's Senior Vice President, will have the discretion to vote your
shares on any additional matters properly presented for a vote at the meeting.
If for any unforeseen reason any of our nominees is not available as a candidate
for director, the persons named as proxy holders will vote your proxy for such
other candidate or candidates as may be nominated by the Board.
SHARES ENTITLED TO VOTE. Each share of our Common Stock outstanding as
of the close of business on March 22, 1999, the Record Date, is entitled to one
vote at the Annual Meeting. On the Record Date, we had 28,418,360 shares of
Common Stock issued and outstanding. Stockholders have no cumulative voting
rights.
QUORUM REQUIREMENT FOR MEETING. The quorum requirement for holding the
meeting and transacting business is a majority of the outstanding shares
entitled to be voted. The shares may be present in person or represented by
proxy at the meeting. Both abstentions and broker non-votes are counted as
present for the purpose of determining the presence of a quorum. Generally,
broker non-votes occur when shares held by a broker for a beneficial owner are
not voted with respect to a particular proposal because (1) the broker has not
received voting instructions from the beneficial owner and (2) the broker lacks
discretionary voting power to vote such shares.
TABULATION OF VOTES. A representative of ChaseMellon Shareholder
Services, LLC, Dallas Semiconductor's transfer agent, will tabulate the votes
and act as the inspector of election.
CONFIDENTIALITY OF VOTE. Proxy instructions, ballots and voting
tabulations that identify individual stockholders are handled in a manner that
protects your voting privacy. Your vote will not be disclosed either within
Dallas Semiconductor or to third parties except (1) as necessary to meet
applicable legal requirements, (2) to allow for the tabulation of votes and
certification of the vote, or (3) to facilitate a successful proxy solicitation
by our Board. Occasionally, stockholders provide written comments on their proxy
card which are then forwarded to Dallas Semiconductor's management.
21
<PAGE> 25
RESPONSIBILITY FOR COST OF PROXY SOLICITATION. Dallas Semiconductor
will pay the entire cost of preparing, assembling, printing, mailing and
distributing these proxy materials. We also have retained ChaseMellon
Shareholder Services, LLC to assist us in the distribution of proxy materials
and the solicitation of votes. We will pay ChaseMellon a fee of $5,500 plus
expenses for these services. We will also reimburse brokerage houses and other
custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses
for forwarding proxy and solicitation materials to stockholders.
STOCKHOLDER PROPOSALS. You may submit proposals for consideration at
future stockholder meetings, including director nominations. In order for a
stockholder proposal to be considered for inclusion in Dallas Semiconductor's
proxy statement for next year's annual meeting, presently proposed to be held on
April 25, 2000, the written proposal must be received by Dallas Semiconductor no
later than December 3, 1999. Any such proposal also will need to comply with
Securities and Exchange Commission regulations regarding the inclusion of
stockholder proposals in company-sponsored proxy materials. Similarly, pursuant
to our By-laws, in order for a stockholder proposal to be raised from the floor
during next year's annual meeting, written notice must be received by Dallas
Semiconductor no later than January 26, 2000, and shall contain such information
as required under our By-laws.
Our By-laws also permit stockholders to nominate directors at a
stockholder meeting. In order to make a director nomination at an annual
stockholder meeting, it is necessary that you notify Dallas Semiconductor not
fewer than 90 days in advance of the annual meeting of stockholders. Thus, since
next year's annual meeting is presently proposed to be held on April 25, 2000,
in order for any such nomination notice to be timely for next year's annual
meeting, it must be received by Dallas Semiconductor not later than January 26,
2000. In addition, the notice must meet all other requirements contained in our
By-laws. If such proposal is timely received by Dallas Semiconductor and is in
accordance with our By-laws, management's discretion to vote proxies with
respect to such proposal will be limited by the provisions of Rule 14a-4, which
is one of the proxy rules promulgated by the Securities and Exchange Commission.
You may contact the Dallas Semiconductor Corporate Secretary at our
Company headquarters for a copy of the relevant By-law provisions regarding the
requirements for making stockholder proposals and nominating director
candidates.
22
<PAGE> 26
OTHER MATTERS
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 January 3, 1999, is hereby
incorporated by reference. The Company will furnish to any stockholder
(including any beneficial owner), without charge, a copy of its Annual Report on
Form 10-K, including the attached financial statements and schedules, for the
fiscal year ended January 3, 1999, filed with the Securities and Exchange
Commission pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934, 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 provided to any stockholder upon written request and payment of a
nominal fee.
23
<PAGE> 27
- --------------------------------------------------------------------------------
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 May 20,
1999, or any adjournments(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)
- --------------------------------------------------------------------------------
o FOLD AND DETACH HERE o
<PAGE> 28
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PLEASE MARK
YOUR VOTES AS [X]
INDICATED IN
THIS EXAMPLE
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 (INSTRUCTION: To withhold authority to vote for any individual nominee,
listed to the right AUTHORITY write that nominee's name on the line below.)
(except as marked to vote for all nominees
to the contrary) listed at right ----------------------------------------------------------------------------
[ ] [ ]
2. PROPOSAL TO REAPPROVE THE COMPANY'S 3. IN THE DISCRETION OF THE PROXIES ON ANY OTHER MATTER THAT MAY PROPERLY
EXECUTIVE BONUS PLAN, AS AMENDED. COME BEFORE THE MEETING.
FOR AGAINST ABSTAIN
[ ] [ ] [ ] The undersigned acknowledges receipt of the Notice of the Annual Meeting
and Proxy Statement dated April 1, 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: 1999.
-----------------------------------------------------------,
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
o FOLD AND DETACH HERE o
