SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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
[X] Definitive Proxy Statement Commission Only (as permitted by
[ ] Definitive Additional Materials Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
Sigma Designs, Inc.
----------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
----------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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 transactions applies:
(2) Aggregate number of securities to which transactions applies:
(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):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] 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>
SIGMA DESIGNS, INC.
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
June 11, 1999
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 11, 1999 at 2:00 p.m., local time, at the principal executive
offices of the Company at 355 Fairview Way, Milpitas, California 95035, for the
following purposes:
1. To elect three (3) 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 4,400,000.
3. To ratify the appointment of Deloitte & Touche LLP as independent
auditors of the Company for the fiscal year ending January 31, 2000.
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 14, 1999 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
Thinh Q. Tran
Chairman of the Board of Directors,
President and Chief Executive Officer
Milpitas, California
May 14, 1999
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
<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 11, 1999, 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 355 Fairview Way, Milpitas, California 95035. The
Company's telephone number is (408) 262-9003.
These proxy solicitation materials were mailed on or about May 14, 1999 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 three (3) 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 4,400,000; (iii) to ratify the appointment of Deloitte
& Touche LLP as independent auditors of the Company for the fiscal year ending
January 31, 2000; 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 14, 1999 (the
"Record Date") are entitled to notice of, and to vote at the Annual Meeting. At
the Record Date, 15,596,462 shares of the Company's Common Stock were
outstanding and 1,400 shares of Series C Preferred Stock were outstanding. For
information regarding security ownership by management and by beneficial owners
of more than 5% of the Company's Common Stock, see "Security Ownership of
Certain Beneficial Owners and Management."
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 three (3) 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 ratification and
approval of an amendment to the Company's 1994 Stock Plan; and (iii) FOR
ratification of the appointment of Deloitte & Touche
1
<PAGE>
LLP as independent auditors for the fiscal year ending January 31, 2000. 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 intended to be presented at the next Annual
Meeting (i) must be received by the Company at 355 Fairview Way, Milpitas,
California 95035 no later than January 17, 2000 and (ii) must satisfy the
conditions established by the Securities and Exchange Commission for
shareholder proposals to be included in the Company's Proxy Statement for that
meeting. If a shareholder intends to submit a proposal at the Company's 2000
Annual Meeting which is not submitted in time to be eligible for inclusion in
the proxy statement relating to that meeting, the shareholder must give notice
to the Company not less than 90 days nor more than 120 days prior to the
meeting in accordance with the requirements set forth in the Company's bylaws.
If such a shareholder fails to comply with the foregoing notice provisions, the
proposal may not be brought before the meeting.
2
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Nominees
A board of three (3) 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 three (3) nominees named below, all of whom are
presently directors of the Company. The Company's Bylaws provide for 4
directors. 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. The term of office of each person elected as a director
will continue until the next Annual Meeting of Shareholders or until his or her
successor has been elected and qualified. It is not expected that any nominee
will be unable or will decline to serve as a director.
<TABLE>
The name of and certain information regarding each nominee is set forth
below.
<CAPTION>
Director
Name of Nominee Age Principal Occupation Since
- ---------------------------- ----- ------------------------------------------------- ----------
<S> <C> <C> <C>
Thinh Q. Tran ............ 45 Chairman of the Board, President and Chief 1982 1982
Executive Officer of the Company
William J. Almon(1)(2) ... 66 Chairman of the Board and Chief Executive 1994
Officer of StorMedia, Inc.
William Wang(1)(2) ......... 35 Chairman of the Board, Chief Executive Officer 1995
and President of Princeton Graphic Systems
<FN>
- ------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
</FN>
</TABLE>
Except as set forth below, each of the nominees has been engaged in his
principal occupation described above during the past five (5) years. There are
no family relationships among the directors or executive officers of the
Company.
Mr. Tran, a founder of the Company, has served as President, Chief
Executive Officer and Chairman of the Board 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. Almon has served as a Director of the Company since April 1994. In May
1994, he became Chairman of the Board and Chief Executive Officer of StorMedia,
Inc., a manufacturer of thin film disks. StorMedia filed for protection under
Chapter 11 of the federal bankruptcy laws in October 1998. From December 1989
until February 1993, Mr. Almon served as President 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 October 1995. From January
1995 to the present, Mr. Wang has served as Chairman of the Board, Chief
Executive Officer and President of Princeton Graphic Systems (a supplier of
computer monitors) and has served since January 1996 as a Director of Diva
LABS. From 1990 to April 1997, Mr. Wang served as Chairman of the Board and
Chief Executive Officer of MAG Innovision Co., Inc., a company that 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 three (3) 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.
3
<PAGE>
Board Meetings and Committees
The Board of Directors of the Company held a total of four (4) meetings
during the fiscal year ended January 31, 1999 (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.
Almon and Mr. Wang, met once 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 Com-pany'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 once 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. Almon and Mr.
Wang were automatically granted options to purchase 2,500 shares of the
Company's Common Stock at an exercise price of $2.91 per share pursuant to the
Company's 1994 Director Option Plan, as amended.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" EACH OF THE
NOMINEES LISTED ABOVE.
PROPOSAL NO. 2
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 3,400,000 shares of Common Stock reserved for issuance
under the Stock Plan. As of January 31, 1999, options to purchase approximately
2,959,123 shares were outstanding under the Stock Plan and an aggregate of
33,319 shares were available for future grant thereunder.
Proposal
In April 1999, 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 4,400,000 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.
4
<PAGE>
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 and directors. Nonstatutory Stock
Options may be granted to employees or consultants of the Company.
Limitations
Section 162(m) of the Code places limits on the deductibility for federal
income tax purposes of compensation paid to certain executive officers of the
Company. In order to preserve the Company's ability to deduct the compensation
income associated with options and stock purchase rights granted to such
persons, the Plan provides that no employee may be granted, in any fiscal year
of the Company, options and stock purchase rights to purchase more than 400,000
shares of Common Stock.
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
generally subject to the following additional terms and conditions:
(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|M/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 at the
time the options are granted. In the case of an incentive stock option
granted to an employee, the option price may 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 may 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.
5
<PAGE>
(c) Termination of Employment or Consulting Relationship: 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) Death or Disability of Optionee: If an optionee should die or
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) Term of Option: 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.
(f) Non-transferability of Options: Unless otherwise determined by the
administrator, 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.
(g) 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.
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 the Company shall obtain shareholder approval for any
amendment to the Stock Plan to the extent necessary to comply with applicable
law. No such 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.
Federal Income Tax Consequences
(a) Incentive Stock Options: An optionee who is granted an incentive
stock option does not recognize taxable income at the time the option is
granted or upon its exercise, although the exercise is an adjustment item
for alternative minimum tax purposes and may subject the optionee to the
alternative minimum tax. Upon a disposition of the shares more than two
years after grant of the
6
<PAGE>
option and one year after exercise of the option, any gain or loss is
treated as long-term capital gain or loss. Net capital gains on shares held
more than 12 months may be taxed at a maximum federal rate of 20%. Capital
losses are allowed in full against capital gains and up to $3,000 against
other income. If these holding periods are not satisfied, the optionee
recognizes ordinary income at the time of disposition equal to the
difference between the exercise price and the lower of (i) the fair market
value of the shares at the date of the option exercise or (ii) the sale
price of the shares. Any gain or loss recognized on such a premature
disposition of the shares in excess of the amount treated as ordinary
income is treated as long-term or short-term capital gain or loss,
depending on the holding period. 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. Unless limited by
Section 162(m) of the Code, the Company is entitled to a deduction in the
same amount as the ordinary income recognized by the optionee.
(b) Nonstatutory Stock Options: An optionee does not recognize any
taxable income at the time he or she is granted a nonstatutory stock
option. Upon exercise, the optionee recognizes taxable income generally
measured by the excess of the then fair market value of the shares over the
exercise price. Any taxable income recognized in connection with an option
exercise by an employee of the Company is subject to tax withholding by the
Company. Unless limited by Section 162(m) of the Code, the Company is
entitled to a deduction in the same amount as the ordinary income
recognized by the optionee. Upon a disposition of such shares by the
optionee, any difference between the sale price and the optionee's exercise
price, to the extent not recognized as taxable income as provided above, is
treated as long-term or short-term capital gain or loss, depending on the
holding period. Net capital gains on shares held more than 12 months may be
taxed at a maximum federal rate of 20%. Capital losses are allowed in full
against capital gains and up to $3,000 against other income.
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, 2000 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.
7
<PAGE>
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, 2000.
OTHER INFORMATION
Executive Officers
<TABLE>
In addition to Mr. Tran, the following persons were executive officers
during the Last Fiscal Year and executive officers of the Company as of the
Record Date:
<CAPTION>
Name Age Position
- --------------------------- ----- ------------------------------------------------------------
<S> <C> <C>
Silvio Perich ............ 50 Senior Vice President, Worldwide Sales
Jacques Martinella ...... 43 Vice President, Engineering
William Wong ............ 51 Vice President, Marketing
Kit Tsui .................. 49 Director of Finance, Chief Financial Officer and Secretary
</TABLE>
Mr. Perich joined the Company in September 1985 as Director, Sales. In
September 1992, Mr. Perich became Senior Vice President, Worldwide Sales of the
Company. 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 1972 until
September 1979, Mr. Perich served in several sales management roles at
Siliconix Inc., a specialty semiconductor manufacturer.
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 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.
Mr. Wong joined the Company in June 1998 as Vice President, Marketing. From
1995 to 1998 Mr. Wong served as Business Development Director at National
Semiconductor Corporation. From 1993 to 1995 Mr. Wong served as Vice President
of Marketing for Diamond Multimedia Systems. Prior to 1993, Mr. Wong held
several senior marketing and sales management positions at Intel Corporation for
18 years.
Ms. Tsui joined the Company in November 1982 as its Accounting Manager.
Ms. Tsui was promoted to Director of Finance in February 1990, acting Chief
Financial Officer and Secretary in December 1996 and became Chief Financial
Officer in July 1997.
Section 16(a) Beneficial Ownership Reporting Compliance
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.
8
<PAGE>
Security Ownership of Certain Beneficial Owners and Management
<TABLE>
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:
<CAPTION>
Shares Beneficially
Owned(1)(2)
-----------------------
Name Number Percent
- ------------------------------------------------------------------ ----------- ---------
<S> <C> <C>
Thinh Q. Tran(3) ................................................ 1,074,380 6.3%
Silvio Perich(4) ................................................ 178,249 1.0
Jacques Martinella(5) .......................................... 70,047 *
William J. Almon(6) ............................................. 36,875 *
William Wang(7) ................................................ 13,500 *
All Directors and Executive Officers at fiscal year end as a group
(7 persons)(8) ................................................ 1,473,269 8.6
<FN>
- ------------
* 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 14, 1999 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. Unless otherwise noted, the
address for all persons shall be the principal executive office of the
Company.
(3) Includes 585,289 shares issuable upon exercise of outstanding options which
were exercisable at April 14, 1999 or within sixty (60) days thereafter.
(4) Includes 175,249 shares issuable upon the exercise of outstanding options
which were exercisable at April 14, 1999 or within sixty (60) days
thereafter.
(5) Includes 70,047 shares issuable upon the exercise of outstanding options
which were exercisable at April 14, 1999 or within sixty (60) days
thereafter.
(6) Includes 16,875 shares issuable upon the exercise of outstanding options
which were exercisable at April 14, 1999 or within sixty (60) days
thereafter.
(7) Includes 12,500 shares issuable upon the exercise of outstanding options
which were exercisable at April 14, 1999 or within sixty (60) days
thereafter.
(8) Includes 927,382 shares issuable upon the exercise of outstanding options
held by seven (7) officers and directors which were exercisable at April
14, 1999 or within sixty (60) days thereafter.
</FN>
</TABLE>
9
<PAGE>
Executive Compensation
<TABLE>
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, 1999:
<CAPTION>
Long-Term Compensation
Annual Compensation Awards
------------------------------- ------------------------------
Securities
Fiscal Underlying All
Name and Principal Position Year Salary Bonus Options (#) Compensation
- ---------------------------- -------- ----------- ----------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Thinh Q. Tran ............ 1999 $ 220,500 -- 200,000 --
Chairman of the Board, 1998 215,816 -- 320,000 --
President and Chief 1997 186,923 -- -- --
Executive Officer
Silvio Perich ............ 1999 131,250 $ 46,460(1) 75,000 --
Senior Vice President, 1998 131,250 11,299(1) 35,000 --
Worldwide Sales 1997 103,769 57,621(1) -- --
Jacques Martinella ......... 1999 $ 136,500 $ 37,250(2) 50,000 --
Vice President, Engineering 1998 136,500 27,100(2) 50,000 --
1997 127,261 10,000(2) -- --
<FN>
- ------------
(1) Represents total amount of commission paid to Mr. Perich for such fiscal year.
(2) Represents a performance bonus paid to Mr. Martinella for such fiscal year.
</FN>
</TABLE>
Option Grants in Last Fiscal Year
<TABLE>
The following table shows, as to each of the Named Officers, option grants
during the Last Fiscal Year and the potential realizable value of options,
assuming 5% and 10% appreciation, at the end of their term:
<CAPTION>
Number of % of Total Potential Realizable
Securities Options Value at Assumed
Underlying Granted To Annual Rates of
Options Employees in -----------------------
Name Granted Fiscal Year(1) Exercise Price Expiration Date 5%(2) 10%(2)
- -------------------------- --------------- ---------------- ---------------- ----------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Thinh Q. Tran ............ 200,000(3) 17.8% $ 2.91 3/17/08 $364,714 $925,483
Silvio Perich ............ 25,000(3) 2.2 2.91 3/17/08 45,589 115,685
50,000(3) 4.4 1.00 10/8/08 31,445 79,687
Jacques Martinella ...... 30,000(3) 2.7 2.91 3/17/08 54,707 138,822
20,000(3) 1.8 1.00 10/8/08 12,578 31,875
<FN>
- ------------
(1) The Company granted options representing 1,124,000 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 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|M/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.
</FN>
</TABLE>
10
<PAGE>
Aggregate Option Exercises in Last Fiscal Year End Option Values
<TABLE>
The following table shows, as to 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
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-money Options at
Shares Options at Fiscal Year End Fiscal Year End(1)
Acquired on Value ------------------------------- -------------------------------
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- -------------------------- ------------- ------------- ------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Thinh Q. Tran ............ 0 -- 467,909 532,910 $1,214,434 $1,265,566
Silvio Perich ............ 0 -- 162,416 117,584 422,282 356,218
Jacques Martinella ...... 0 -- 56,882 89,500 147,893 240,900
<FN>
- ------------
(1) Calculated by determining the difference between the closing price of the
securities underlying the options at January 29, 1999 ($4.91) as reported
on the Nasdaq National Market and the exercise price of the options.
</FN>
</TABLE>
Report of the Compensation Committee
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, (iii) 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 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. 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 profitability.
Chief Executive Officer Compensation
Thinh Q. Tran, in his capacity as the Chief Executive Officer,
participates in the same compensation programs as the other Named Officers. The
Compensation Committee has targeted Mr. Tran's total compensation, including
compensation derived from the stock option plan, at a level it believes is
competitive with the average amount paid by other multimedia software and
hardware companies with similar revenues and growth rates.
11
<PAGE>
In fiscal year 1999, there were no increases to Mr. Tran's base salary nor
that of any other executive officer. The Committee believes a stock option
granted to Mr. Tran during fiscal 1999 is competitive in the industry and a
necessary retention component.
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 a
member of the Company's Board of Directors or Compensation Committee.
12
<PAGE>
Company Stock Price Performance
The following graph shows a comparison of cumulative total shareholder
return, calculated on a dividend reinvested basis, for the five-year period
beginning January 31, 1994 and ending January 29, 1999 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, 1994 and in the Nasdaq Index and the
Nasdaq Computer Manufacturers' Index on January 31, 1994. Note that historic
stock price performance is not necessarily indicative of future stock price
performance.
Comparison of Five-Year Cumulative Total Return
<TABLE>
[The following descriptive data is supplied in accordance with Rule 304(d) of
Regulation S-T]
<CAPTION>
1/31/94 1/31/95 1/31/96 1/31/97 1/30/98 1/29/99
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Sigma Designs, Inc. 100 46.5 53.9 71.1 22.4 34.4
Nasdaq Stock Market 100 95.4 134.9 176.7 208.8 326.8
Nasdaq Computer Manufacturers Stocks 100 102.3 165.4 240.5 291.7 714.4
</TABLE>
Notes:
A. The lines represent yearly index levels derived from compounded daily
returns that include all dividends.
B. If the yearly interval, based on the fiscal year-end, is not a trading
day, the preceding trading day is used.
C. The index level for all series was set to $100.0 on 01/31/94.
The Stock Price Performance Graph shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement (or any portion thereof) into any filing under the Securities Act of
1933 or the Securities Exchange Act of 1934, except to the extent the Company
specifically incorporated this performance by reference, and shall not
otherwise by deemed filed under such Acts.
13
<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
Thinh Q. Tran
Chairman of the Board of Directors,
President and Chief Executive Officer
Dated: May 14, 1999
14
<PAGE>
APPENDIX A
- --------------------------------------------------------------------------------
PROXY SIGMA DESIGNS, INC. PROXY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
June 11, 1999
The undersigned shareholder of Sigma Designs, Inc. (the "Company"), hereby
appoints Thinh Q. Tran and Kit Tsui and each of them, with power of
substitution to each, true and lawful attorneys, agents and proxyholders of the
undersigned, and hereby authorizes them to represent and vote, as specified
herein, all the shares of Common Stock of the Company held of record by the
undersigned on April 14, 1999, at the 1999 Annual Meeting of Shareholders of
the Company to be held on Friday, June 11, 1999 at 2:00 p.m., local time, at
the Company's principal executive offices at 355 Fairview Way, Milpitas,
California 95035, and any adjournments or postponements thereof.
(Continued, and to be signed on the other side)
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
<PAGE>
- --------------------------------------------------------------------------------
[ X ] Please mark
your votes
as this
WITHHOLD
FOR FOR ALL
1. ELECTION OF DIRECTORS: [ ] [ ]
Nominees: Thinh Q. Tran,
William J. Almon and
William Wang
INSTRUCTION: If you wish to withhold authority
to vote for any individual nominee, write that
nominee's name in the space provided below.
- --------------------------------------------------
FOR AGAINST ABSTAIN
2. APPROVAL OF AMENDMENT TO THE 1994 STOCK [ ] [ ] [ ]
PLAN. 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 4,400,000 shares.
3. APPOINTMENT OF INDEPENDENT AUDITORS. To [ ] [ ] [ ]
ratify the appointment of Deloitte & Touche
LLP as independent auditors of the Company
for the fiscal year ending January 31,
2000.
4. In their discretion, the proxyholders are
authorized to vote upon such other business
as may properly come before the meeting, or
any adjournments or postponements thereof.
The shares represented by this proxy will be
voted in the manner directed. In the absence
of any direction, the shares will be voted
FOR Proposals 1, 2 and 3. The undersigned
acknowledges receipt of the Notice of Annual
Meeting of Shareholders, Proxy Statement
dated May 14, 1999 and 1999 Annual Report to
Shareholders.
Please mark, sign and date this proxy and
return it promptly whether you plan to attend
the meeting or not. If you do attend, you may
vote in person if you desire.
Signature(s) _____________________________ Dated ________________________ , 1999
Please sign exactly as name appears hereon. Joint owners should each sign.
Trustees and others acting in a representative capacity should indicate the
capacity in which they sign and give their full title. If a corporation, please
sign in full corporate name by an authorized officer. If a partnership please
sign in partnership name by an authorized person.
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
