<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
SIGMA DESIGNS, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
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SIGMA DESIGNS, INC.
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JUNE 7, 1996
---------------------
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Sigma
Designs, Inc., a California corporation (the "Company"), will be held on
Friday, June 7, 1996 at 2:00 p.m., local time, at the principal executive
offices of the Company at 46501 Landing Parkway, Fremont, California 94538,
for the following purposes:
1. To elect directors to serve for the ensuing year and until their
successors are elected.
2. To ratify and approve the amendment to the Company's 1994 Stock Plan to
increase the number of shares available for grant thereunder by
1,000,000 to a total of 2,400,000.
3. To ratify the appointment of Deloitte & Touche LLP as independent
auditors of the Company for the fiscal year ending January 31, 1997.
4. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only shareholders of record at the close of business on April 10, 1996 are
entitled to receive notice of, to attend and to vote at the meeting and any
adjournment thereof.
All shareholders are cordially invited to attend the meeting in person. Any
shareholder attending the meeting may vote in person even if such shareholder
returned a proxy.
FOR THE BOARD OF DIRECTORS
Q. Binh Trinh
Secretary
Fremont, California
May 1, 1996
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IMPORTANT: WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE
COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE
ENCLOSED ENVELOPE IN ORDER TO ENSURE REPRESENTATION OF YOUR SHARES. NO
POSTAGE NEED BE AFFIXED IF MAILED IN THE UNITED STATES.
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<PAGE>
SIGMA DESIGNS, INC.
---------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
The enclosed Proxy is solicited on behalf of the Board of Directors of Sigma
Designs, Inc. (the "Company") for use at the Company's Annual Meeting of
Shareholders (the "Annual Meeting") to be held Friday, June 7, 1996, at 2:00
p.m., local time, or at any adjournment(s) or postponement(s) thereof, for the
purposes set forth herein and in the accompanying Notice of Annual Meeting of
Shareholders.The Annual Meeting will be held at the principal executive
offices of the Company at 46501 Landing Parkway, Fremont, California 94538.
The Company's telephone number is (510) 770-0100.
These proxy solicitation materials were mailed on or about May 1, 1996 to
all shareholders entitled to vote at the Annual Meeting.
INFORMATION CONCERNING SOLICITATION AND VOTING
PURPOSES OF THE ANNUAL MEETING
The purposes of the Annual Meeting are (i) to elect five (5) directors to
serve for the ensuing year and until their successors are duly elected and
qualified; (ii) to ratify and approve an amendment to the Company's 1994 Stock
Plan to increase the number of shares available for grant thereunder by
1,000,000 to a total of 2,400,000; (iii) to ratify the appointment of Deloitte
& Touche LLP as independent auditors of the Company for the fiscal year ending
January 31, 1997; and (iv) to transact such other business as may properly
come before the meeting or any adjournment thereof.
RECORD DATE AND SHARES OUTSTANDING
Shareholders of record at the close of business on April 10, 1996 (the
"Record Date") are entitled to notice of, and to vote at the Annual Meeting.
At the Record Date, 8,772,197 shares of the Company's Common Stock were
outstanding.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Secretary of the
Company a written notice of revocation or a duly executed proxy bearing a
later date or by attending the Annual Meeting and voting in person. Attending
the Annual Meeting in and of itself will not constitute a revocation of proxy.
VOTING AND SOLICITATION
Every shareholder voting in the election of directors may cumulate such
shareholder's votes and give one candidate a number of votes equal to the
number of directors to be elected multiplied by the number of votes to which
the shareholder's shares are entitled, or distribute such shareholder's votes
on the same principle among as many candidates as the shareholder may select,
provided that votes cannot be cast for more than five (5) candidates. However,
no shareholder shall be entitled to cumulate votes unless the candidate's name
has been placed in nomination prior to the voting and the shareholder, or any
other shareholder, has given notice at the Annual Meeting prior to the voting
of the intention to cumulate the shareholder's votes. On all other matters,
each share has one vote.
Shares of Common Stock represented by properly executed proxies will, unless
such proxies have been previously revoked, be voted in accordance with the
instructions indicated thereon. In the absence of specific instructions to the
contrary, properly executed proxies will be voted: (i) FOR the election of
each of the Company's nominees as a director; (ii) FOR the amendment to the
Company's 1994 Stock
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Plan to increase the number of shares available for grant thereunder by
1,000,000 to a total of 2,400,000; and (iii) FOR ratification of the
appointment of Deloitte & Touche LLP as independent auditors for the fiscal
year ending January 31, 1997. No business other than that set forth in the
accompanying Notice of Annual Meeting of Shareholders is expected to come
before the Annual Meeting. Should any other matter requiring a vote of
shareholders properly arise, the persons named in the enclosed form of proxy
will vote such proxy as the Board of Directors may recommend.
The cost of this solicitation will be borne by the Company. The Company may
reimburse brokerage firms and other persons representing beneficial owners of
shares for their expenses in forwarding solicitation material to such
beneficial owners. Proxies may also be solicited by certain of the Company's
directors, officers and regular employees, without additional compensation,
personally or by telephone, telegram or letter.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
The required quorum for the transaction of business at the Annual Meeting is
a majority of the shares of Common Stock outstanding on the Record Date.
Shares that are voted "FOR" or "AGAINST" a matter are treated as being present
at the meeting for purposes of establishing a quorum and are also treated as
votes eligible to be cast by the Common Stock present in person or represented
by proxy at the Annual Meeting and "entitled to vote on the subject matter"
(the "Votes Cast") with respect to such matter.
While there is no definitive statutory or case law authority in California
as to the proper treatment of abstentions or broker non-votes, the Company
believes that both abstentions and broker non-votes should be counted for
purposes of determining the presence or absence of a quorum for the
transaction of business. The Company further believes that neither abstentions
nor broker non-votes should be counted as shares "represented and voting" with
respect to a particular matter for purposes of determining the total number of
Votes Cast with respect to such matter. In the absence of controlling
precedent to the contrary, the Company intends to treat abstentions and broker
non-votes in this manner. Accordingly, abstentions and broker non-votes will
not affect the determination as to whether the requisite majority of Votes
Cast has been obtained with respect to a particular matter.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
Proposals of shareholders of the Company which are intended to be presented
by such shareholders at the Company's 1997 Annual Meeting must be received by
the Company no later than December 31, 1996 in order to be included in the
proxy statement and form of proxy relating to that meeting.
FISCAL YEAR END
The Company's fiscal year ends on January 31. The Company's fiscal year 1996
ended January 31, 1996, and is referred to herein as the "Last Fiscal Year."
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
NOMINEES
A board of five (5) directors is to be elected at the Annual Meeting. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
for the Company's five (5) nominees named below, all of whom are presently
directors of the Company. In the event that any nominee of the Company is
unable or declines to serve as a director at the time of the Annual Meeting,
the proxies will be voted for any nominee who shall be designated by the
current Board of Directors to fill the vacancy. In the event that additional
persons are nominated for election as directors, the proxy holders intend to
vote all proxies received by them in such a manner in accordance with
cumulative voting as will ensure the election of as many of the nominees
listed below as possible. In such event, the specific nominees for whom such
votes will be cumulated will be determined by the proxy holders. The term of
office of each person elected as a director will continue until the next
Annual Meeting of Shareholders or until his successor has been elected and
qualified. It is not expected that any nominee will be unable or will decline
to serve as a director.
The name of and certain information regarding each nominee is set forth
below.
<TABLE>
<CAPTION>
DIRECTOR
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION SINCE
--------------- --- ----------------------------------------- --------
<S> <C> <C> <C>
Thinh Q. Tran 42 Chairman of the Board, President and 1982
Chief Executive Officer of the Company
Julien Nguyen 38 Co-Chairman of the Board and Chief 1993
Technical Officer of the Company
Q. Binh Trinh (1) 52 Vice President--Finance, Chief Financial 1984
Officer and Secretary of the Company
William J. Almon (1)(2) 63 Chairman of the Board and Chief 1994
Executive Officer of StorMedia, Inc.
William Wang (1)(2) 32 Chairman of the Board and Chief 1995
Executive Officer of MAG Innovision, Inc.
</TABLE>
- ---------------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
Except as set forth below, each of the nominees has been engaged in his
principal occupation described above during the past five (5) years. Mr. Trinh
is the brother-in-law of Mr. Tran. There are no other family relationships
among directors or executive officers of the Company.
Mr. Tran, a founder of the Company, has served as Chairman of the Board,
President and Chief Executive Officer since February 1982. Prior to joining
the Company, Mr. Tran was employed by Amdahl Corporation and Trilogy Systems
Corporation, both of which were involved in the IBM-compatible mainframe
computer market.
Mr. Nguyen has served as Co-Chairman of the Board and Chief Technical
Officer of the Company since January 1995 and as a Director since October
1993. From August 1993 until January 1995, he served as the Vice President,
Engineering and Chief Technical Officer of the Company. From May 1992 until
October 1993, Mr. Nguyen was President and Chief Executive Officer of EMI.
From June 1991 to May 1992, Mr. Nguyen served as the Chairman of Photon
Machines. From 1986 to 1991, Mr. Nguyen worked at Radius Inc. as Director of
Product Development.
Mr. Trinh has been a director of the Company since May 1984, and has served
as Vice President, Finance and Chief Financial Officer of the Company since
November 1984; Mr. Trinh became Secretary of the Company in 1993. From August
1983 to November 1984, Mr. Trinh was employed by Bailard,
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Biehl & Kaiser, Inc., an investment and financial service company, where he
served as Vice President, Controller and Treasurer.
Mr. Almon has served as a Director of the Company since April 1994. In May
1994, he became President and Chief Executive Officer and a Director of
StorMedia Inc., a manufacturer of thin film disks. From December 1989 until
February 1993, Mr. Almon served as President and Chief Executive Officer of
Conner Peripherals, Inc., a manufacturer of computer disk drives and storage
management devices. From 1958 until 1987, Mr. Almon held various management
positions with IBM Corporation, most recently as Vice President, Low End
Storage Products. Mr. Almon also serves as a Director of Read Rite
Corporation.
Mr. Wang became a Director of the Company in December 1995. From 1990 to the
present, Mr. Wang has served as Chairman of the Board and Chief Executive
Officer of MAG Innovision, Inc., a company which acts as the international
sales representative for MAG Technology Co. Ltd. of Taiwan, a supplier of
computer monitors. From 1986 until 1990, Mr. Wang worked at Tatung Company of
America, in the Video Display Division.
REQUIRED VOTE
The five (5) nominees receiving the highest number of affirmative votes of
the shares present or represented and entitled to be voted for them shall be
elected as directors. Votes withheld from any director are counted for
purposes of determining the presence or absence of a quorum for the
transaction of business, but have no further legal effect in the election of
directors under California law.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of six (6) meetings
during the Last Fiscal Year. No incumbent director attended less than 75% of
the aggregate of all meetings of the Board of Directors and any committees of
the Board on which he served, if any, during his tenure as a director. The
Board of Directors has an Audit Committee and a Compensation Committee. It
does not have a nominating committee or a committee performing the functions
of a nominating committee.
The Audit Committee of the Board of Directors, currently consisting of Mr.
Trinh, Mr. Almon and Mr. Wang, met one (1) time during the Last Fiscal Year.
The Audit Committee recommends engagement of the Company's independent
auditors, and is primarily responsible for approving the services performed by
the Company's independent auditors and for reviewing and evaluating the
Company's accounting policies and its systems of internal accounting controls.
The Compensation Committee of the Board of Directors, currently consisting
of Mr. Almon and Mr. Wang, met one (1) time during the Last Fiscal Year. The
Compensation Committee reviews and makes recommendations to the Board
concerning the Company's executive compensation policy.
COMPENSATION OF DIRECTORS
Members of the Board of Directors are currently compensated at the rate of
$500 per Board meeting attended plus out-of-pocket expenses related to the
attendance at such meetings. During the Last Fiscal Year, Mr. Wang, who served
on the Board as a non-employee director, was automatically granted options to
purchase 10,000 shares of the Company's Common Stock at an exercise price of
$5.02 per share pursuant to the Company's 1994 Director Option Plan. In
addition, during the Last Fiscal Year, Mr. Almon was automatically granted
options to purchase 2,500 shares of the Company's Common Stock at an exercise
price of $6.38 per share pursuant to the Company's 1994 Director Option Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" EACH OF THE
NOMINEES LISTED ABOVE.
4
<PAGE>
PROPOSAL NO. 2
APPROVAL OF AMENDMENT TO
THE 1994 STOCK PLAN
GENERAL
The 1994 Stock Plan (the "Stock Plan") was approved in April 1994 by the
Board of Directors and in June 1994 by the shareholders of the Company. There
are currently a total of 1,400,000 shares of Common Stock reserved for
issuance under the Stock Plan. As of January 31, 1996, options to purchase
approximately 1,264,252 shares were outstanding under the Stock Plan and an
aggregate of 135,748 shares were available for future grant thereunder.
PROPOSAL
In April 1996, the Board of Directors approved an amendment to the Stock
Plan to increase the number of shares reserved for issuance thereunder by an
additional 1,000,000 shares, for an aggregate of 2,400,000 shares reserved for
issuance thereunder. At the Annual Meeting, the shareholders are being
requested to approve this amendment. The amendment to increase the number of
shares reserved under the Stock Plan is proposed in order to give the Board of
Directors flexibility to grant stock options. The Company believes that grants
of stock options motivate high levels of performance and provide an effective
means of recognizing employee contributions to the success of the Company. At
present, all newly hired full-time employees are granted options. The Company
believes that this policy is of great value in recruiting and retaining highly
qualified technical and other key personnel who are in great demand. The Board
of Directors believes that the ability to grant options will be important to
the future success of the Company by allowing it to remain competitive in
attracting and retaining such key personnel.
DESCRIPTION OF THE 1994 STOCK PLAN
Purpose
The purpose of the Stock Plan is to attract and retain the best available
personnel for positions of substantial responsibility, to provide additional
incentives to employees and consultants of the Company and to promote the
success of the Company's business.
Administration
The Stock Plan may be administered by the Board of Directors of the Company
or by a committee of the Board. All stock option grants are currently being
administered by the Board of Directors, except for grants to executive
officers, which are currently being administered by the Compensation Committee
of the Board of Directors. All questions of interpretation of the Stock Plan
are determined by the Board of Directors or its committee, and such
determinations are final and binding upon all participants.
Eligibility
The Stock Plan permits participation by employees and consultants of the
Company or its majority-owned subsidiaries. Incentive Stock Options may be
granted only to employees, including officers. Nonstatutory Stock Options may
be granted to employees or consultants of the Company.
Terms of Options Granted to Employees and Consultants
The terms of options granted under the Stock Plan may be determined by the
Board of Directors or its committee and are currently being determined by the
Board of Directors, except for options granted to executive officers, which
are currently being determined by the Compensation Committee of the Board of
Directors. Each option is evidenced by a stock option agreement between the
Company and the employee or consultant to whom such option is granted and is
normally subject to the following additional terms and conditions:
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(a) Exercise of the Option: The Board of Directors of the Company or its
committee determines the vesting terms of the options granted to employees
and consultants under the Stock Plan. The current form of option agreement
for new employees provides that options may be exercised at the rate of
twenty percent (20%) of the shares granted at the end of the first year
after commencement of employment and one-sixtieth (1/60) of the shares at
the end of each month thereafter, for a total vesting period of five (5)
years. The Board or its committee may at any time or from time to time
accelerate the vesting of any outstanding option. An option is exercised by
giving written notice of exercise to the Company, specifying the number of
full shares of Common Stock to be purchased, and tendering payment to the
Company of the purchase price. The purchase price of the shares purchased
upon exercise of any option shall be paid in consideration of such form as
is determined by the Board of Directors or its committee, and such form of
consideration may vary for each option.
(b) Option Price: The price of option grants under the Stock Plan is
determined by the Board of Directors of the Company or its committee. In
the case of an incentive stock option granted to an employee, the option
price must not be less than 100% of the fair market value of the Common
Stock on the date the option is granted, with the exception that in the
case of an option granted to a shareholder who, immediately prior to such
grant, owns stock representing more than 10% of the voting power or value
of all classes of stock of the Company, the exercise price must not be less
than 110% of such fair market value. In the case of a nonstatutory option
granted to any other eligible person, the per share exercise price shall be
no less than 85% of fair market value per share on the date of grant.
(c) Termination of Employment: If the optionee's status as an employee or
consultant terminates for any reason other than death or disability,
options under the Stock Plan may be exercised within such period of time
after such termination as the Board or its committee may determine, up to
ninety (90) days in the case of incentive and nonstatutory stock options,
and may be exercised only to the extent the option was exercisable on the
date of termination.
(d) Disability of Optionee: If an optionee should become totally and
permanently disabled while employed by the Company, options may be
exercised within twelve (12) months from the date of termination, but only
to the extent such options were exercisable on the date of termination and
in no event later than the expiration of the term of such options.
(e) Death of Optionee: If an optionee should die while employed by the
Company, options may be exercisable at any time within twelve (12) months
after death, but only to the extent the options would have been exercisable
had the optionee continued living and remained employed by the Company and
in no event later than the expiration of the term of such options.
(f) Termination of Options: Options granted under the Stock Plan expire
ten (10) years from the date of grant or such shorter term as may be
provided in the notice of grant. However, in the case of an option granted
to an employee who at the time the option is granted owns stock
representing more than ten percent (10%) of the voting power of all classes
of stock of the Company or any parent or subsidiary, the term of an
incentive stock option shall not be greater than five (5) years from the
date of the grant or such shorter term as may be provided in the notice of
grant. No option may be exercised by any person after such expiration.
(g) Non-transferability of Options: An option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner, other
than by will or the laws of descent or distribution, and may be exercised
only by the optionee during his lifetime or, in the event of death, by a
person who acquires the right to exercise the option by bequest or
inheritance or by reason of the death of the optionee.
(h) Other Provisions: The option agreement may contain such other terms,
provisions and conditions not inconsistent with the Stock Plan as may be
determined by the Board of Directors or its committee.
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Adjustments Upon Changes in Capitalization
In the event any change is made in the Company's capitalization which
results from a stock split or payment of a stock dividend or any other
increase or decrease in the number of shares of Common Stock effected without
receipt of consideration, appropriate adjustment shall be made with respect to
shares and options available under the Stock Plan. In the event of the
proposed dissolution or liquidation of the Company, to the extent that an
option has not been previously exercised, it will terminate immediately prior
to the consummation of the proposed action, unless otherwise provided for by
the Board in its sole discretion. In the event of a proposed sale of all or
substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, the option shall be assumed or an equivalent
option or right shall be substituted by the successor corporation unless the
Board makes the option fully exercisable prior to the merger. If the Board
makes an option exercisable in lieu of assumption or substitution in the event
of a merger or sale of assets, the Board shall notify the participant that the
option shall be fully exercisable for a period of fifteen (15) days from the
date of such notice and the option will terminate upon the expiration of such
period.
Amendment and Termination
The Board of Directors may at any time or from time to time amend, alter,
suspend or terminate the Stock Plan without the approval of the shareholders;
provided, however, that shareholder approval is required to the extent
necessary to comply with Rule 16b-3 under the Securities Exchange Act of 1934,
as amended, or applicable provisions of the Internal Revenue Code of 1986, as
amended (the "Code"), or any successor rule or provision or any other
applicable law or regulation. Such shareholder approval, if required, shall be
obtained in such a manner and to such a degree as is required by applicable
law, rule or regulation. No action by the Board or shareholders may
unilaterally alter or impair any rights previously granted under the Stock
Plan without the written consent of the optionee.
TAX INFORMATION REGARDING STOCK OPTIONS
Options granted under the Stock Plan may be either "incentive stock
options," as defined in Section 422 of the Code, or "nonstatutory stock
options."
If an option granted under the Stock Plan is an incentive stock option, the
optionee will recognize no income upon grant of the incentive stock option and
incur no tax liability due to the exercise unless the optionee is subject to
the alternative minimum tax. Upon the sale or exchange of the shares at least
two (2) years after grant of the option and one (1) year after receipt of the
shares by the optionee, any gain or loss will be treated as long-term capital
gain or loss. If these holding periods are not satisfied, the optionee will
recognize ordinary income equal to the difference between the exercise price
and the lower of the fair market value of the stock at the date of the option
exercise or the sale price of the stock. A different rule for measuring
ordinary income upon such a premature disposition may apply if the optionee is
also an officer, director or 10% shareholder of the Company. The Company will
be entitled to a deduction in the same amount as the ordinary income
recognized by the optionee. Any gain or loss recognized on such a premature
disposition of the shares in excess of the amount treated as ordinary income
will be characterized as long-term, or short-term capital gain or loss,
depending on the holding period.
All other options which do not qualify as incentive stock options are
referred to as nonstatutory stock options. An optionee will not recognize any
taxable income at the time he is granted a nonstatutory option. However, upon
its exercise, the optionee will recognize ordinary income for tax purposes
measured by the excess of the then fair market value of the shares over the
option price. In certain circumstances, where the shares are subject to a
substantial risk of forfeiture when acquired or where the optionee is an
officer, director or 10% shareholder of the Company, the date of taxation may
be deferred if the optionee files an election with the Internal Revenue
Service under Section 83(b) of the Code. The income recognized by an optionee
who is also an employee of the Company will be subject to tax withholding by
the Company by payment in cash or out of the current earnings paid to
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<PAGE>
the optionee. Upon resale of such shares by the optionee, any difference
between the sales price and the exercise price, to the extent not recognized
as ordinary income as provided above, will be treated as capital gain or loss.
The Company will be entitled to a tax deduction in the amount and at the
time that the optionee recognizes ordinary income with respect to shares
acquired upon exercise of a nonstatutory stock option.
The foregoing is only a summary of the effect of federal income taxation
upon the optionee and the Company with respect to the grant and exercise of
options under the Stock Plan, does not purport to be complete, and does not
discuss the income tax laws of any municipality, state or foreign country in
which an optionee may reside.
REQUIRED VOTE; RECOMMENDATION OF THE BOARD OF DIRECTORS
The affirmative vote of the holders of a majority of the Common Stock
present or represented at the meeting is required to approve the foregoing
amendment to the Stock Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE AMENDMENT TO
THE STOCK PLAN.
PROPOSAL NO. 3
RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Board of Directors has appointed Deloitte & Touche LLP, independent
auditors, to audit the consolidated financial statements of the Company for
the fiscal year ending January 31, 1997 and recommends that shareholders vote
for ratification of such appointment. In the event of a negative vote on such
ratification, the Board of Directors will reconsider its selection.
Deloitte & Touche LLP has audited the Company's financial statements for
each fiscal year since the Company's inception. Its representatives are
expected to be present at the meeting, will have the opportunity to make a
statement if they desire to do so and are expected to be available to respond
to appropriate questions.
REQUIRED VOTE; RECOMMENDATION OF THE BOARD OF DIRECTORS
The affirmative vote of the holders of a majority of the Common Stock
present or represented at the meeting is required to approve the foregoing
proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE APPOINTMENT
OF DELOITTE & TOUCHE LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE FISCAL
YEAR ENDING JANUARY 31, 1997.
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OTHER INFORMATION
EXECUTIVE OFFICERS
In addition to Messrs. Tran, Trinh and Nguyen, the following persons were
executive officers during the Last Fiscal Year and executive officers of the
Company as of the Record Date:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------------------------------------
<C> <C> <S>
Silvio Perich 47 Senior Vice President, Worldwide Sales
Jacques Martinella 40 Vice President, Engineering
</TABLE>
Mr. Perich joined the Company in September 1985 as Director, Sales. In
September 1992,Mr. Perich became Senior Vice President, Worldwide Sales. Mr.
Perich was a co-founder of Costar Incorporated, a manufacturer's representative
organization for high technology products, where he served as partner from
October 1979 to September 1985. From September 1979 until September 1985, Mr.
Perich served in several sales management roles at Siliconix Inc., a specialty
semiconductor manufacturer. In addition, Mr. Perich was the founder of Mondix
Corporation, an international sales management consultant firm, where he served
as President from December 1979 to October 1983.
Mr. Martinella joined the Company in May 1994 as Director, VLSI Engineering.
In December 1995, Mr. Martinella became Vice President, Engineering. From June
1990 to April 1994, Mr. Martinella served in various engineering and management
positions at Weitek, a microchip manufacturer. In addition,Mr. Martinella was
an engineer at National Semiconductor, a semiconductor manufacturer, from June
1982 to June 1990.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities and Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent
(10%) of a registered class of the Company's equity securities, to file certain
reports regarding ownership of, and transactions in, the Company's securities
with the Securities and Exchange Commission and with the National Association
of Securities Dealers. Such officers, directors, and 10% shareholders are also
required to furnish the Company with copies of all Section 16(a) forms that
they file.
Based solely on its review of copies of Forms 3 and 4 and amendments thereto
furnished to the Company pursuant to Rule 16a-3(e) and Forms 5 and amendments
thereto furnished to the Company with respect to the Last Fiscal Year, and any
written representations referred to in Item 405(b)(2)(i) of Regulation S-K
stating that no Forms 5 were required, the Company believes that, during the
Last Fiscal Year, all Section 16(a) filing requirements applicable to the
Company's officers, directors and 10% shareholders were complied with.
9
<PAGE>
MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of the Record Date by (i) each
person who is known by the Company to own beneficially more than 5% of the
Company's Common Stock, (ii) each of the Company's directors, (iii) the
Company's Chief Executive Officer and each of the four other most highly
compensated individuals who served as executive officers of the Company at
fiscal year end (the "Named Officers") and (iv) all individuals who served as
directors or executive officers at fiscal year end as a group:
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED(1)(2)
-----------------------
DIRECTORS, OFFICERS AND 5% SHAREHOLDERS NUMBER PERCENT
--------------------------------------- ------------ ----------
<S> <C> <C>
Thinh Q. Tran(3) 621,887 7.1
Julien Nguyen 606,000 6.9
Q. Binh Trinh(4) 174,829 2.0
Silvio Perich(5) 99,000 1.1
Jacques Martinella(6) 14,105 *
William J. Almon(7) 2,500 *
William Wang(8) 0 0
All Directors and Executive Officers at fiscal
year end as a group (7 persons)(9) 1,518,321 17.3
</TABLE>
- ---------------------
* Less than 1%.
(1) The number and percentage of shares beneficially owned is determined under
rules of the Securities and Exchange Commission, and the information is
not necessarily indicative of beneficial ownership for any other purpose.
Under such rules, beneficial ownership includes any shares as to which the
individual has sole or shared voting power or investment power and also
any shares which the individual has the right to acquire within sixty (60)
days of April 10, 1996 through the exercise of any stock option or other
right.
(2) The persons named in the table have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by them,
subject to community property laws where applicable and the information
contained in the footnotes to this table.
(3) Includes 290,287 shares issuable upon exercise of outstanding options
which were exercisable at April 10, 1996 or within sixty (60) days
thereafter.
(4) Includes 122,994 shares issuable upon exercise of outstanding options
which were exercisable at April 10, 1996 or within sixty (60) days
thereafter.
(5) Includes 99,000 shares issuable upon the exercise of outstanding options
which were exercisable at April 10, 1996 or within sixty (60) days
thereafter.
(6) Includes 14,105 shares issuable upon the exercise of outstanding options
which were exercisable at April 10, 1996 or within sixty (60) days
thereafter.
(7) Includes 2,500 shares issuable upon the exercise of outstanding options
which were exercisable at April 10, 1996 or within sixty (60) days
thereafter.
(8) Mr. Wang was appointed to the Board of Directors in December 1995, and
currently serves on the Audit and Compensation Committees. Previously
during the Last Fiscal Year, Dr. Alexander Au had served as a director of
the Company. In October 1995, Dr. Au resigned from the Board of Directors,
which resignation was not prompted by any disagreements with management.
(9) Includes 528,886 shares issuable upon the exercise of outstanding options
held by eight (8) officers and directors which were exercisable at April
10, 1996 or within sixty (60) days thereafter.
10
<PAGE>
EXECUTIVE COMPENSATION
The following table shows, as to each of the Named Officers, information
concerning compensation paid for services to the Company in all capacities
during the three fiscal years ended January 31, 1996:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
---------------------------- ------------
SECURITIES
NAME AND PRINCIPAL FISCAL UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUS OTHER OPTIONS (#) COMPENSATION
------------------ ------ -------- ------- ----- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Thinh Q. Tran 1996 $179,654 -- -- 120,000 --
Chairman of the Board, 1995 $157,192 -- -- 400,000 --
President and Chief 1994 $107,146 -- -- 120,000 --
Executive Officer
Julien Nguyen 1996 $130,000 $30,000(1) -- 120,000 --
Co-Chairman of the 1995 $126,116 -- -- -- --
Board and Chief 1994 $ 50,769(2) -- -- -- --
Technical Officer
Silvio Perich 1996 $100,000 $69,854(3) -- 50,000 --
Senior Vice President, 1995 $ 86,615 $18,357(4) -- 20,000 --
Worldwide Sales 1994 $126,776 $ 8,324(5) -- 30,000 --
Q. Binh Trinh 1996 $100,000 -- -- 25,000 --
Vice President,Finance, 1995 $ 91,923 -- -- 40,000 --
Chief Financial Officer, 1994 $ 85,000 -- -- 30,000 --
Secretary and Director
Jacques Martinella 1996 $111,840 -- -- 13,882 --
Vice President, 1995 $ 60,631(6) -- -- 32,500 --
Engineering 1994 $ -- -- -- -- --
</TABLE>
- ---------------------
(1) Represents total amount of performance bonus paid to Mr. Nguyen for the
fiscal year ended January 31, 1996.
(2) Mr. Nguyen joined the Company in August 1993. This amount represents the
total amount of salary paid to Mr. Nguyen for the fiscal year ended
January 31, 1994.
(3) Represents total amount of commission paid to Mr. Perich for the fiscal
year endedJanuary 31, 1996.
(4) Represents total amount of commission paid to Mr. Perich for the fiscal
year endedJanuary 31, 1995.
(5) Represents total amount of commission paid to Mr. Perich for the fiscal
year endedJanuary 31, 1994.
(6) Mr. Martinella joined the Company in May 1994. This amount represents the
total amount of salary paid to Mr. Martinella for the fiscal year ended
January 31, 1995.
11
<PAGE>
The following table shows, as to each of the Named Officers, option grants
during the Last Fiscal Year and the potential realizable value of those
options, assuming 5% and 10% appreciation, at the end of their term:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------
POTENTIAL REALIZABLE VALUE
NUMBER OF % OF TOTAL AT ASSUMED ANNUAL RATES
SECURITIES OPTIONS OF STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO FOR OPTION TERM
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION ---------------------------
NAME GRANTED FISCAL YEAR(1) PRICE DATE 5%(2) 10%(2)
- ---- ---------- -------------- -------- ---------- ---------------------------
<S> <C> <C> <C> <C> <C> <C>
Trinh Q. Tran 120,000(3) 15.3% $4.38 10/18/05 $ 978,000 $ 1,868,400
Julien Nguyen 120,000(3) 15.3% $4.68 07/01/05 $ 942,000 $ 1,832,400
Silvio Perich 50,000(3) 6.4% $4.38 10/18/05 $ 407,500 $ 778,500
Q. Binh Trinh 25,000(3) 3.2% $4.38 10/18/05 $ 203,750 $ 498,750
Jacques Martinella 13,882(3) 1.8% $4.38 10/18/05 $ 113,138 $ 246,143
</TABLE>
- ---------------------
(1) The Company granted options representing 782,055 shares to employees in
the Last Fiscal Year under the Company's 1994 Stock Plan.
(2) The 5% and 10% assumed annual rates of appreciation are mandated by the
rules of the Securities and Exchange Commission and do not represent the
Company's estimate or projection of future Common Stock price.
(3) These options were granted under the Company's 1994 Stock Plan and have
exercise prices equal to the fair market value on the date of grant. The
options become exercisable cumulatively over a period of five (5) years at
the rate of twenty percent (20%) of the shares one (1) year after the
vesting commencement date specified in the grants and one-sixtieth (1/60)
of the shares each month thereafter for the next four (4) years. The
options expire ten (10) years from the date of grant. The 1994 Stock Plan
is currently administered by the Board of Directors, except for grants to
executive officers, which are administered by the Compensation Committee.
The Board of Directors and the Compensation Committee have broad
discretion and authority to amend outstanding options and to reprice
options, whether through an exchange of options or an amendment thereto.
Grants under the Stock Plan are made at the discretion of the Board of
Directors, accordingly, future grants under the Stock Plan are not yet
determinable.
The following table shows, for each of the Named Officers, information
concerning options exercised during the Last Fiscal Year and the value of
options held at fiscal year end:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR--END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR END: AT FISCAL YEAR END($)(1):
------------------------------ -------------------------
SHARES
ACQUIRED ON VALUE
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ------------- -------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Thinh Q. Tran -- -- 255,049 441,142 $921,197 $1,347,854
Julien Nguyen -- -- 0 120,000 $ 0 $ 361,200
Silvio Perich -- -- 96,000 84,000 $333,720 $ 281,380
Q. Binh Trinh -- -- 119,667 60,333 $389,814 $ 189,536
Jacques Martinella -- -- 11,393 34,989 $ 32,203 $ 99,376
</TABLE>
- ---------------------
(1) Calculated by determining the difference between the closing price of the
securities underlying the options at January 31, 1996 ($7.69) as reported
on the Nasdaq National Market and the exercise price of the options.
12
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee of the Board of Directors establishes the general
compensation policies of the Company as well as the compensation plans and
specific compensation levels for executive officers. It also administers the
Company's employee stock benefit plan for executive officers. The Compensation
Committee is currently composed of independent, non-employee directors who
have no interlocking relationships as defined by the Securities and Exchange
Commission.
The Compensation Committee believes that the compensation of the executive
officers, including that of the Chief Executive Officer (collectively, the
"Executive Officers") should be influenced by the Company's performance. The
Committee establishes the salaries of all of the Executive Officers by
considering (i) the Company's financial performance for the past year, (ii)
the achievement of certain objectives related to the particular Executive
Officer's area of responsibility, (ii) the salaries of executive officers in
similar positions of comparably-sized companies and (iv) the relationship
between revenue and executive officer compensation. The Committee believes
that the Company's executive officer salaries in the last fiscal year were
comparable in the industry for similarly-sized business.
In addition to the salary, the Committee from time to time, grants options
to Executive Officers. The Committee thus views stock option grants as an
important component of its long-term, performance-based compensation
philosophy. Since the value of an option bears a direct relationship to the
Company's stock price, the Committee believes that options motivate Executive
Officers to manage the Company in a manner which will also benefit
shareholders. As such, options are granted at the current market price. And
one of the principal factors considered in granting stock options to an
Executive Officer is the Executive Officer's ability to influence the
Company's long-term growth and profitablity.
Compensation Committee of the
Board of Directors
William J. Almon
William Wang
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of William J. Almon and William Wang
each of whom is an independent, non-employee director. No Executive Officer of
the Company serves as a member of the Board of Directors or Compensation
Committee of any entity which has one or more Executive Officers serving as
member of the Company's Board of Directors or Compensation Committee.
13
<PAGE>
COMPANY STOCK PRICE PERFORMANCE
The following graph shows a comparison of cumulative total shareholder
return, calculated on a divided reinvested basis, for the five-year period
beginning January 31, 1991 and ending January 31, 1996 for the Company, the
CRSP Index for the Nasdaq Stock Market (U.S. Companies) (the "Nasdaq Index")
and the CRSP Index for Computer Manufacturers' Stocks (the "Nasdaq Computer
Manufacturers' Index"). The graph assumes that $100 was invested in the
Company's Common Stock on January 31, 1991 and in the Nasdaq Index and the
Nasdaq Computer Manufacturers' Index on January 31, 1991. Note that historic
stock price performance is not necessarily indicative of future stock price
performance.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
LOGO
[PERFORMANCE CHART OF SIGMA DESIGNS, INC.]
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG SIGMA DESIGNS, INC., NASDAQ STOCK MARKET, AND NASDAQ COMPUTER
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
NASDAQ
SIGMA NASDAQ COMPUTER
Measurement Period DESIGNS, STOCK MANUFACTURERS
(Fiscal Year Covered) INC. MARKET STOCKS
- ------------------- ---------- --------- -------------
<S> <C> <C> <C>
Measurement Pt-01/31/91 $100 $100 $100
FYE 01/31/92 $101.8 $153.0 $130.3
FYE 01/29/93 $ 94.5 $173.0 $160.7
FYE 01/31/94 $207.3 $198.9 $152.0
FYE 01/31/95 $ 96.4 $189.8 $155.6
FYE 01/31/96 $111.8 $268.4 $252.0
</TABLE>
14
<PAGE>
OTHER MATTERS
The Company knows of no other matters to be submitted at the meeting. If any
other matters properly come before the meeting, it is the intention of the
persons named in the enclosed proxy to vote the shares they represent as the
Board of Directors may recommend.
It is important that your stock be represented at the meeting, regardless of
the number of shares which you hold. You are, therefore, urged to execute and
return the accompanying proxy in the envelope which has been enclosed, at your
earliest convenience.
FOR THE BOARD OF DIRECTORS
Q. Binh Trinh
Secretary
Dated: May 1, 1996
15
<PAGE>
SIGMA DESIGNS, INC.
PROXY FOR 1996 ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of SIGMA DESIGNS, INC., a California
corporation, hereby acknowledges receipt of the Notice of Annual meeting of
Shareholders and Proxy Statement, each dated May 1, 1996, and hereby appoints
Thinh Q. Tran and Q. Binh Trinh, and each of them, proxies and attorney-in-fact,
with full power to each of substitution and resubstitution, on behalf and in the
name of the undersigned, to represent the undersigned at the 1996 Annual
Meeting of Shareholders of SIGMA DESIGNS, INC. to be held on Friday, June 7,
1996, at 2:00 p.m., local time, at the principal executive offices of the
Company at 46501 Landing Parkway, Fremont, California 94538, and at any
postponement(s) or adjournment(s) thereof, and to vote all shares of Common
Stock which the undersigned would be entitled to vote, if then and there
personally present, on the matters set forth on the reverse side.
Both of such attorneys or substitutes shall be present and shall act at
said meeting of any postponement(s) or adjournment(s) thereof (or if only one
shall be present and acting, then that one) and shall have and may exercise all
of the powers of said attorneys-in-fact hereunder.
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR THE ELECTION OF DIRECTORS, FOR THE AMENDMENT TO THE
1994 STOCK PLAN, FOR THE RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE
LLP AS INDEPENDENT AUDITORS FOR THE COMPANY FOR THE FISCAL YEAR ENDING JANUARY
31, 1997, AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE MEETING.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
FOLD AND DETACH HERE
<PAGE>
PLEASE MARK
YOUR VOTES AS
INDICATED IN
THIS EXAMPLE [X]
1. ELECTION OF DIRECTORS:
FOR WITHHOLD
AUTHORITY
[_] [_]
NOMINEES; THINH Q. TRAN; JULIEN NGUYEN; Q. BINH TRINH; WILLIAM J. ALMON; WILLIAM
WANG
- --------------------------------------------------------------------------------
For all nominees except as noted above
2. PROPOSAL TO APPROVE AN AMENDMENT TO THE COMPANY'S 1994 STOCK PLAN TO INCREASE
THE NUMBER OF SHARES AVAILABLE FOR GRANT THEREUNDER BY 1,000,000 SHARES TO A
TOTAL OF 2,400,000 SHARES:
FOR AGAINST ABSTAIN
[_] [_] [_]
3. PROPOSAL TO RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT
AUDITORS FOR THE COMPANY FOR THE FISCAL YEAR ENDING JANUARY 31, 1997:
FOR AGAINST ABSTAIN
[_] [_] [_]
In their discretion, the proxies are authorized to vote upon such other matter
or matters which may properly come before the meeting or any postponement(s) or
adjournment(s) thereof.
Signature:____________________________ Date:_____________________________
Signature:____________________________ Date:_____________________________
THIS PROXY SHOULD BE MARKED, DATED AND SIGNED BY THE SHAREHOLDER(S) EXACTLY AS
HIS OR HER NAME APPEARS HEREON, AND RETURNED PROMPTLY IN THE ENCLOSED ENVELOPE.
PERSONS SIGNING IN A FIDUCIARY CAPACITY SHOULD SO INDICATE. IF A CORPORATION,
PLEASE SIGN IN FULL CORPORATE NAME BY AUTHORIZED OFFICER. IF A PARTNERSHIP,
PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON. IF SHARES ARE HELD BY
JOINT TENANTS OR AS COMMUNITY PROPERTY, BOTH SHOULD SIGN.
FOLD AND DETACH HERE
