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 Sec. 240.14a-11(c) or Sec. 240.14a-12
LINEAR TECHNOLOGY CORPORATION
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
LINEAR TECHNOLOGY CORPORATION
------------------------------------------------------------------------
(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) or 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 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:
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(4) Date filed:
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<PAGE>
LINEAR TECHNOLOGY CORPORATION
----------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 8, 1995
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Linear
Technology Corporation, a California corporation (the "Company"), will be held
on November 8, 1995 at 3:00 p.m., local time, at the Company's principal
executive offices, located at 1630 McCarthy Boulevard, Milpitas, California
95035 for the following purposes:
1. To elect five directors to serve until the next Annual Meeting of
Shareholders and until their successors are elected.
2. To ratify the appointment of Ernst & Young LLP as independent auditors of
the Company for the fiscal year ending June 30, 1996.
3. To transact such other business as may properly come before the Annual
Meeting and any adjournment or postponement 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 September 11, 1995
are entitled to notice of and to vote at the Annual Meeting and any adjournment
thereof.
All shareholders are cordially invited to attend the Annual Meeting in
person. However, to ensure your representation at the meeting, you are urged to
mark, sign, date and return the enclosed proxy card as promptly as possible in
the postage-prepaid envelope enclosed for that purpose. Any shareholder
attending the Annual Meeting may vote in person even if such shareholder has
returned a proxy.
FOR THE BOARD OF DIRECTORS
Arthur F. Schneiderman
Secretary
Milpitas, California
October 2, 1995
<PAGE>
LINEAR TECHNOLOGY CORPORATION
----------
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of the Board of Directors of Linear
Technology Corporation, a California corporation (the "Company"), for use at the
Annual Meeting of Shareholders to be held November 8, 1995 at 3:00 p.m., local
time, or at any adjournment 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 Company's principal executive offices, located at 1630
McCarthy Boulevard, Milpitas, California 95035. The telephone number at that
location is (408) 432-1900.
These proxy solicitation materials and the Company's Annual Report to
Shareholders for the year ended July 2, 1995, including financial statements,
were mailed on or about October 2, 1995 to all shareholders entitled to vote at
the meeting.
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 Company (Attention:
Paul Coghlan, Vice President of Finance and Chief Financial Officer) a written
notice of revocation or a duly executed proxy bearing a later date or by
attending the Annual Meeting and voting in person.
VOTING AND SOLICITATION
Each shareholder voting for 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 shares held by such
shareholder, or may 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 directors. However, no shareholder will 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 meeting prior to the voting of the intention to cumulate
votes. If any shareholder gives such notice, all shareholders may cumulate their
votes for the candidates in nomination. In the event that cumulative voting is
invoked, the proxy holders will have the discretionary authority to vote all
proxies received by them in such a manner as to ensure the election of as many
of the Board of Directors' nominees as possible. See "Proposal 1--Election of
Directors." On all other matters, each share has one vote.
The Company will bear the cost of soliciting proxies. In addition, 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. Solicitation of proxies by mail may be supplemented by one or
more of telephone, telegram, facsimile or personal solicitation by directors,
officers or regular employees of the Company. No additional compensation will be
paid to such persons for such services.
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 1996 Annual Meeting must be received by
the Company no later than June 4, 1996 in order that they may be included in the
proxy statement and form of proxy relating to that meeting.
1
<PAGE>
RECORD DATE AND VOTING SECURITIES
Shareholders of record at the close of business on September 11, 1995 are
entitled to notice of and to vote at the meeting. At the record date, 73,775,292
shares of the Company's Common Stock, no par value, were issued and outstanding.
No shares of the Company's Preferred Stock are outstanding. Based on the last
reported sale on the Nasdaq National Market on September 11, 1995, the market
value of one share of the Company's Common Stock was $42.75.
On July 25, 1995, the Company's Board of Directors declared a two-for-one
split of the Company's Common Stock to shareholders of record on August 11,
1995. All share and per share information in this Proxy have been restated to
reflect the stock split.
PROPOSAL 1-- ELECTION OF DIRECTORS
NOMINEES
The Company's Bylaws currently provide for a board of five directors. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
for the Company's five nominees named below, all of whom are currently 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 substitute nominee who shall be designated by the current
Board of Directors to fill the vacancy. It is not expected that any nominee
listed below will be unable or will decline to serve as a director. 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, and, in such event, the specific nominees to
be voted for will be determined by the proxy holders. In any event, the proxy
holders cannot vote for more than five persons. 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.
<TABLE>
The names of the nominees, and certain information about them, are set forth
below.
<CAPTION>
DIRECTOR
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION SINCE
- ---------------------- ----- ----------------------------------------------- ----------
<S> <C> <C> <C>
Robert H. Swanson, Jr. 57 President and Chief Executive Officer of the Company 1981
David S. Lee .......... 58 Chairman, Cortelco Systems Holding Corp. 1988
Leo T. McCarthy ....... 65 President, The Daniel Group 1994
Richard M. Moley ...... 56 Chairman, President and Chief Executive Officer
of StrataCom, Inc. 1994
Thomas S. Volpe ....... 44 General Partner, Volpe, Welty & Company 1984
</TABLE>
There are no family relationships among the Company's directors and executive
officers.
Mr. Swanson, a founder of the Company, has served as President, Chief
Executive Officer and a director of the Company since its incorporation in
September 1981. From August 1968 to July 1981, he was employed in various
positions at National Semiconductor Corporation, a manufacturer of integrated
circuits, including Vice President and General Manager of the Linear Integrated
Circuit Operation and Managing Director in Europe.
Mr. Lee has been Chairman of the Board of Cortelco Systems Holding Corp., a
telecommunications systems and products company, since August 1993. From 1985
until October 1993, he served as President, Chief Executive Officer, and a
director of Data Technology Corporation ("DTC"). DTC, a producer of computer
peripheral equipment, changed its name to Qume Corporation ("Qume") in June 1988
in connection with the acquisition by DTC of Qume, another producer of computer
peripheral equipment. Mr. Lee co-founded Qume in 1973, and served as its
Executive Vice President until ITT Corporation ("ITT") acquired Qume in 1978.
After the acquisition, Mr. Lee held the positions of Executive Vice President of
ITT Qume Corporation ("ITT Qume") through 1981 and President from 1981 to 1983.
From 1983 to 1985, Mr. Lee served as a Vice President of ITT and as a Group
Executive and Chairman of ITT's Business Information Systems Group, which was
comprised of ITT Qume, ITT Courier Terminal Systems and ITT Information Systems
Division. Mr. Lee also serves as a director of CMC Industries, Inc. and Chairman
of DTC Data Technology Corporation.
2
<PAGE>
Mr. McCarthy currently serves as President of The Daniel Group, an
international trade consulting firm. Prior to joining The Daniel Group, he
served three terms as Lieutenant Governor of the State of California. As
Lieutenant Governor, Mr. McCarthy served as chair of the California Commission
for Economic Development where he was primarily responsible for helping
businesses start and grow. In addition, as Lieutenant Governor, Mr. McCarthy
served on the World Trade Commission. Prior to election as Lieutenant Governor,
Mr. McCarthy served in the California Legislature for 14 years, including six
years as Assembly Speaker. Mr. McCarthy also serves as Chairman of Mednet, Inc.
Mr. Moley has served as Chairman, President and Chief Executive Officer of
StrataCom, Inc., a network systems company, since June 1986. Mr. Moley served in
various executive positions at ROLM Corporation, a telecommunications company,
from 1973 to 1986, most recently as a Group Vice President. Prior to joining
ROLM, he held management positions in software development and marketing at
Hewlett-Packard Company. Mr. Moley also serves as a director of CIDCO, Inc.
Mr. Volpe is a General Partner of Volpe, Welty & Company, formerly Volpe &
Covington, a private investment banking and risk capital firm. Until April 1986,
he was President and Chief Executive Officer of Hambrecht & Quist Incorporated,
an investment banking firm with which he had been affiliated since 1981. From
1978 to 1981, Mr. Volpe was Vice President and Director of the Science and
Technology Group for Blyth Eastman Paine Webber, Inc., an investment banking
firm. Mr. Volpe is also a director of National Insurance Group, PharmChem
Laboratories, Inc. and a number of privately-held companies.
VOTE REQUIRED AND RECOMMENDATION OF BOARD OF DIRECTORS
The nominees receiving the highest number of affirmative votes of the shares
entitled to be voted, up to the number of directors to be elected, shall be
elected as directors. Votes withheld will be counted for purposes of determining
the presence or absence of a quorum for the transaction of business at the
meeting, but have no other legal effect upon election of directors under
California law.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR" THE
NOMINEES SET FORTH HEREIN.
PROPOSAL 2 --RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young LLP, independent auditors,
to audit the financial statements of the Company for the year ending June 30,
1996, and recommends that the 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. Ernst & Young LLP has audited the
Company's financial statements since the fiscal year ended June 30, 1982.
Representatives of Ernst & Young LLP are expected to be present at the Annual
Meeting of Shareholders and will have the opportunity to make a statement if
they so desire. The representatives also are expected to be available to respond
to appropriate questions from shareholders.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR" THE
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S
INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING JUNE 30, 1996.
3
<PAGE>
OTHER INFORMATION
REGARDING SECURITY OWNERSHIP,
DIRECTORS AND OFFICERS
<TABLE>
SECURITY OWNERSHIP
The following table sets forth certain information known to the Company
regarding the beneficial ownership of the Company's Common Stock as of September
11, 1995, by (a) each beneficial owner of more than 5% of the Company's Common
Stock, (b) the Named Officers, (c) each director of the Company and (d) all
directors and executive officers of the Company as a group. Except as otherwise
indicated, each person has sole voting and investment power with respect to all
shares shown as beneficially owned, subject to community property laws where
applicable.
<CAPTION>
SHARES PERCENTAGE
BENEFICIALLY BENEFICIALLY
BENEFICIAL OWNER OWNED OWNED
- ----------------------------------------------------------------- -------------- --------------
<S> <C> <C>
FMR Corp.(1) .................................................... 10,715,100 14.5%
Edward C. Johnson 3d(1)
82 Devonshire Street
Boston, MA 02109
Robert H. Swanson, Jr.(2) ........................................ 320,864 *
Robert C. Dobkin(3) .............................................. 316,908 *
Clive B. Davies(4) ............................................... 375,064 *
Paul Coghlan(5) .................................................. 246,000 *
Hans J. Zapf(6) .................................................. 140,800 *
Thomas S. Volpe(7) ............................................... 8,000 *
David S. Lee(7) .................................................. 8,000 *
Leo T. McCarthy(7) ............................................... 8,000 *
Richard M. Moley(7) .............................................. 8,000 *
All directors and executive officers as a group (14
persons)(2)(8) .................................................. 1,690,636 2.3
<FN>
- ----------
* Less than one percent of the outstanding Common Stock.
(1) As reported by FMR Corp. ("FMR") as of August 31, 1995. Includes
9,551,040 shares beneficially owned by Fidelity Management & Research
Company ("FMRC") and 1,154,060 shares beneficially owned by Fidelity
Management Trust Company ("FMTC"), both wholly-owned subsidiaries of FMR.
Also includes 10,000 shares beneficially owned by Fidelity International
Limited ("FIL"). FMR has sole voting power with respect to 529,900 shares
and has sole investment power with respect to 10,705,100 shares beneficially
owned by FMRC and FMTC. FIL has sole voting and dispositive power with
respect to all shares it beneficially owns. Edward C. Johnson 3d, Chairman
of FMR, together with various trusts for the benefit of Johnson family
members, form a controlling group with respect to each of FMR and FIL. Such
controlling group has sole investment power with respect to 10,705,100
shares beneficially owned by FMRC and FMTC.
(2) Includes 260,864 shares issued in the name of Robert H. Swanson, Jr. and
Sheila L. Swanson, Trustees of the Robert H. Swanson, Jr. and Sheila L.
Swanson Trust U/D/T dated May 27, 1976. Includes 60,000 shares issuable
pursuant to options exercisable within 60 days of September 11, 1995.
(3) Includes 60,000 shares issuable pursuant to options exercisable within 60
days of September 11, 1995.
(4) Includes 246,664 shares issuable pursuant to options exercisable within 60
days of September 11, 1995.
(5) Includes 232,000 shares issuable pursuant to options exercisable within 60
days of September 11, 1995.
(6) Includes 107,000 shares issuable pursuant to options exercisable within 60
days of September 11, 1995.
(7) Consists of 8,000 shares issuable pursuant to options exercisable within 60
days of September 11, 1995.
(8) Includes 996,664 shares issuable pursuant to options exercisable within 60
days of September 11, 1995.
</FN>
</TABLE>
4
<PAGE>
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of four meetings during
the fiscal year ended July 2, 1995. No director attended fewer than 75% of the
meetings of the Board of Directors and its committees upon which such director
served. The Board of Directors has an Audit Committee and a Compensation
Committee. The Board of Directors has no nominating committee or any committee
performing similar functions.
The Audit Committee of the Board of Directors currently consists of directors
Lee, McCarthy, Moley and Volpe, and held four meetings 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 principles and its system of internal accounting controls.
The Compensation Committee of the Board of Directors, currently consists of
directors Lee, McCarthy, Moley and Volpe, and held four meetings during the last
fiscal year. The Committee reviews and approves the Company's executive
compensation policy, including the salaries and target bonuses of the Company's
executive officers, and administers the Company's incentive stock plans.
DIRECTOR COMPENSATION
The Company currently pays to each nonemployee director an annual retainer of
$20,000 and a fee of $1,500 for each meeting of the Board of Directors attended.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee currently consists of directors Lee,
McCarthy, Moley and Volpe. No executive officer of the Company served on the
compensation committee of another entity or on any other committee of the board
of directors of another entity performing similar functions during the last
fiscal year.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers and directors, and persons who own more than
ten percent of a registered class of the Company's equity securities, to file
reports of ownership on Form 3 and changes in ownership on Form 4 or 5 with the
Securities Exchange Commission. Such executive officers, directors and 10%
shareholders are also required by the Securities and Exchange Commission rules
to furnish the Company with copies of all Section 16(a) forms they file. Based
solely upon its review of copies of such forms received by it, or written
representations from certain reporting persons that no filings were required for
such persons, the Company believes that during the year ended July 2, 1995, all
Section 16(a) filing requirements applicable to its executive officers and
directors were complied with.
5
<PAGE>
<TABLE>
EXECUTIVE COMPENSATION
The following table sets forth all compensation received for services
rendered to the Company in all capacities, for the last three fiscal years ended
July 2, 1995, by the Named Officers:
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
--------------
NUMBER OF
ANNUAL COMPENSATION SHARES
------------------------ UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) OPTIONS COMPENSATION(2)
- --------------------------- ------ ------------ ----------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Robert H. Swanson, Jr. .... 1995 $ 227,415 $ 679,974 -- $ 23,586
President and Chief 1994 225,263 525,344 200,000 17,223
Executive Officer 1993 204,885 395,488 -- 6,827
Clive B. Davies ............ 1995 205,341 547,263 -- 20,087
Vice President and 1994 195,660 430,019 100,000 13,788
Chief Operating Officer 1993 186,179 330,368 -- 5,670
Paul Coghlan ............... 1995 198,525 500,906 -- 18,784
Vice President, Finance and 1994 185,814 392,960 70,000 12,411
Chief Financial Officer 1993 179,664 297,467 -- 4,798
Robert C. Dobkin ........... 1995 199,241 511,381 -- 19,022
Vice President, Engineering 1994 188,423 394,810 150,000 12,757
1993 172,406 296,740 -- 4,510
Hans J. Zapf ............... 1995 193,229(3) 260,430 -- 18,353
Vice President, 1994 186,048(3) 175,502 40,000 12,155
International Sales 1993 164,939(3) 116,754 -- 4,452
<FN>
- ----------
(1) Includes cash profit sharing and cash bonuses earned for the fiscal year,
whether accrued or paid.
(2) Includes insurance premiums paid by the Company under its life insurance
program. Also includes 401(k) profit sharing distributions earned by the
officer during the fiscal year.
(3) Includes sales commissions earned by Mr. Zapf for the fiscal year.
</FN>
</TABLE>
<TABLE>
OPTION EXERCISES AND HOLDINGS
The Company did not grant options to any Named Officer in fiscal 1995. The
following table provides information with respect to option exercises in fiscal
1995 by the Named Officers and the value of such officers' unexercised options
at July 2, 1995:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<CAPTION>
NUMBER OF SHARES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT FISCAL YEAR-END FISCAL YEAR-END(2)
ACQUIRED ON VALUE ----------------------------- -----------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------- ------------- ----------- ------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Robert H. Swanson, Jr. 10,000 $138,750 50,000 140,000 $ 837,500 $2,345,000
Clive B. Davies ....... 23,336 529,436 238,664 102,000 6,665,916 1,952,500
Paul Coghlan .......... 31,000 777,063 219,000 73,000 6,245,121 1,405,750
Robert C. Dobkin ...... -- -- 45,000 105,000 753,750 1,758,750
Hans J. Zapf .......... 5,000 105,313 97,000 40,000 2,767,000 823,750
<FN>
- ----------
(1) Market value of underlying securities on the exercise date, minus the
exercise price.
(2) Value is based on the last reported sale price of the Company's Common Stock
on the Nasdaq National Market of $33.00 per share on June 30, 1995 (the last
trading day for fiscal 1995), minus the exercise price.
</FN>
</TABLE>
6
<PAGE>
PERFORMANCE GRAPH
The following graph shows a five-year comparison of cumulative total
shareholder return, calculated on a dividend reinvested basis, for Linear
Technology Corporation, the Nasdaq National Market and the Semiconductor
Subgroup of the S&P Electronics Index (the "Semiconductor Index"). The graph
assumes that $100 was invested in the Company's Common Stock in the Nasdaq
National Market and in the Semiconductor Index on the last trading day of the
Company's 1990 fiscal year. Note that historic stock price performance is not
necessarily indicative of future stock price performance.
#############################################################################
IMAGE OMITTED
#############################################################################
Linear S&P Nasdaq
------ --- ------
June 1990 100 100 100
June 1991 149 89 106
June 1992 299 105 127
June 1993 460 223 160
June 1994 706 247 161
June 1995 1,064 463 215
7
<PAGE>
COMPENSATION COMMITTEE REPORT
INTRODUCTION
The Compensation Committee of the Board of Directors (the "Committee") is
composed only of nonemployee directors. It is responsible for reviewing and
recommending for approval by the Board of Directors the Company's compensation
practices, executive salary levels and variable compensation programs, both
cash-based and equity-based. The Committee generally determines base salary
levels for executive officers of the Company at or about the start of each
fiscal year and determines actual bonuses at the end of each six-month fiscal
period based upon Company and individual performance.
COMPENSATION PHILOSOPHY
The Committee has adopted an executive pay-for-performance philosophy
covering all executive officers, including the Chief Executive Officer. This
philosophy emphasizes variable compensation in order to align executive
compensation with the Company's business objectives and performance and to
attract, retain and reward executives who contribute both to the short-term and
long-term success of the Company. Pay is sufficiently variable that
above-average performance results in above-average total compensation, and
below-average performance for the Company or the individual results in
below-average total compensation. The focus is on corporate performance and
individual contributions toward that performance.
COMPENSATION PROGRAM
The Company has a comprehensive compensation program which consists of cash
compensation, both fixed and variable, and equity-based compensation. The
program has four principal components, which are intended to attract, retain,
motivate and reward executives who are expected to manage both the short-term
and long-term success of the Company. These components are:
Cash-Based Compensation
Base Salary--Base salary is predicated on industry and peer group comparisons
and on performance judgments as to the past and expected future contribution of
the individual executive officer. In general, salary increases are made based on
median increases in salaries for similar executives of similar-size companies in
the high technology industry.
Profit Sharing--Profit sharing payments are distributed semi-annually to all
employees, including executives, from a profit sharing pool. The amount of the
pool is largely determined by the magnitude of sales and of operating income for
the six-month period. This pool is distributed to all eligible employees based
on the ratio of their individual salary to total salaries for all employees. A
portion of this profit sharing is paid directly into a 401(k) retirement plan
for all employees.
Bonuses--The Company has a discretionary key employee incentive pool pursuant
to which executive officers and a limited number of key employees may receive
semi-annual cash bonuses. Targets for sales growth and operating income as a
percentage of sales influence the amount of the pool. Individual payments are
made based on the Company's achievement of these targets and upon the
individual's personal and departmental performance.
Equity-Based Compensation
Stock Options--Stock options are granted periodically to provide additional
incentive to executives and other key employees to work to maximize long-term
total return to shareholders. The options vest over a five-year period to
encourage option holders to continue in the employ of the Company. Approximately
27% of worldwide employees have received stock options. In granting options, the
Compensation Committee takes into account the number of shares and outstanding
options held by the individual.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Committee uses the same factors and criteria described above for
compensation decisions regarding the Chief Executive Officer.
8
<PAGE>
COMPENSATION LIMITATIONS FOR TAX PURPOSES
The Committee has considered the potential impact of Section 162(m) (the
"Section") of the Code adopted under the federal Revenue Reconciliation Act of
1993. The Section generally disallows a tax deduction for any publicly-held
corporation for individual compensation exceeding $1 million in any taxable year
for any of the Named Officers, unless compensation is performance-based. The
Company's policy is to qualify, to the extent reasonable, its executive
officers' compensation for deductibility under applicable tax laws. However, the
Committee believes that its primary responsibility is to provide a compensation
program that will attract, retain and reward the executive talent necessary to
the Company's success. Consequently, the Committee recognizes that the loss of a
tax deduction may be necessary in some circumstances.
SUMMARY
The Committee believes that a fair and motivating compensation program has
played a critical role in the success of the Company. The Committee reviews this
program on an ongoing basis to evaluate its continued effectiveness.
Respectfully submitted by:
The Compensation Committee
David S. Lee
Thomas S. Volpe
Leo T. McCarthy
Richard M. Moley
OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting. If any
other matters properly come before the meeting or any adjournment or
postponement thereof, it is the intention of the persons named in the enclosed
form of Proxy to vote the shares they represent as the Board of Directors may
recommend.
BOARD OF DIRECTORS
Dated: October 2, 1995
9
<PAGE>
APPENDIX A
LINEAR TECHNOLOGY CORPORATION
1995 ANNUAL MEETING OF SHAREHOLDERS
P THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
R The undersigned shareholder of Linear Technology Corporation, a
California corporation, hereby acknowledges receipt of the Notice of Annual
O Meeting of Shareholders and Proxy Statement, each dated October 2, 1995,
and hereby appoints Robert H. Swanson, Jr. and Paul Coghlan, or either of
X them, proxies and attorneys-in-fact, with full power to each of
substitution, on behalf and in the name of the undersigned, to represent
Y the undersigned at the 1995 Annual Meeting of Shareholders of Linear
Technology Corporation to be held on November 8, 1995, at 3:00 p.m. local
time, at the Company's principal offices, 1630 McCarthy Boulevard,
Milpitas, California, and at any 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, and, in their discretion, upon such other matter or matters which may
properly come before the meeting and any adjournment(s) thereof.
This proxy will be voted as directed, or, if no contrary direction is
indicated, will be voted FOR the election of the specified nominees as
directors, FOR the ratification of the appointment of Ernst & Young LLP as
independent auditors, 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 | SEE REVERSE |
| SIDE |
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<PAGE>
- ----- Please mark
| X | votes as in
- ----- this example.
THIS PROXY WILL BE VOTED AS DIRECTED, OR, IF NO CONTRARY DIRECTION IS INDICATED,
WILL BE VOTED FOR THE ELECTION OF THE SPECIFIED NOMINEES AS DIRECTORS, FOR THE
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS,
AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY COME BEFORE THE
MEETING.
1. ELECTION OF DIRECTORS: 2. PROPOSAL TO RATIFY FOR AGAINST ABSTAIN
Nominees: Robert H. Swanson, Jr.; THE APPOINTMENT OF ----- ----- -----
David S. Lee; Leo T. ERNST & YOUNG LLP | | | | | |
McCarthy; Richard M. AS THE INDEPENDENT | | | | | |
Moley; Thomas S. Volpe. AUDITORS OF THE ----- ----- -----
FOR WITHHELD COMPANY.
----- -----
| | | |
| | | | In their discretion, upon such
----- ----- other matter or matters which may
- ----- MARK HERE ----- properly come before the meeting
| | FOR ADDRESS | | and any adjournment(s) thereof.
| | CHANGE AND | |
- -------------------------- NOTE BELOW -----
For all nominees except
as noted above (This Proxy should be marked, dated,
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 shares
are held by joint tenants or as community
property, both should sign.)
Signature Date
-------------------- -------
Signature Date
-------------------- -------
