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
SOLECTRON CORPORATION
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
SOLECTRON 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:
- ----------------------------------------------------------------------------
(4) Date filed:
- ----------------------------------------------------------------------------
<PAGE>
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SOLECTRON CORP LOGO
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SOLECTRON CORPORATION
---------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
---------------
To the Shareholders of Solectron Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Solectron
Corporation (the "Company"), a California corporation, will be held on Tuesday,
January 9, 1996, at 9:00 a.m., local time, at the Santa Clara Marriott, 2700
Mission College Blvd., Santa Clara, CA 95052, for the following purposes:
1. To elect eight (8) directors to serve for the ensuing year and until
their successors are duly elected and qualified.
2. To ratify the appointment of KPMG Peat Marwick LLP as independent
accountants of the Company for the fiscal year ending August 31, 1996.
3. 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 November 15, 1995 are entitled to notice of and to vote at the
meeting and any adjournment thereof.
All shareholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to mark,
sign and return the enclosed proxy card as promptly as possible in the
postage-paid envelope enclosed for that purpose. Any shareholder attending the
meeting may vote in person even if he or she has already returned a proxy.
Sincerely,
/s/ Susan Wang
------------------------------
Susan Wang
Secretary
Milpitas, California
December 1, 1995
<PAGE>
SOLECTRON CORPORATION
---------------
PROXY STATEMENT
---------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of Solectron Corporation, for use
at the Annual Meeting of Shareholders to be held on Tuesday, January 9, 1996, at
9:00 a.m., local time, or at any adjournment or postponement 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 Santa Clara Mariott, 2700
Mission College Blvd., Santa Clara, CA 95052. The Company's telephone number is
(408) 957-8500.
These proxy solicitation materials were mailed on or about December 1, 1995
to all shareholders of record at the close of business on November 15, 1995 (the
"Record Date"). A copy of the Company's Annual Report to Shareholders for the
year ended August 31, 1995 ("fiscal 1995"), including financial statements, was
sent to the Shareholders prior to or concurrently with this Proxy Statement.
RECORD DATE; OUTSTANDING SHARES
Shareholders of record at the close of business on the Record Date are
entitled to notice of and to vote at the Annual Meeting and any adjournment
thereof. At the Record Date, 49,824,866 shares of the Company's Common Stock
were issued and 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 Company (Attention:
Susan Wang, Secretary) a written notice of revocation or a duly executed proxy
bearing a later date, or by attending the meeting and voting in person.
VOTING AND SOLICITATION
On all matters other than the election of directors, each share has one vote.
See Proposal One--"ELECTION OF DIRECTORS--Required Vote."
The cost of soliciting proxies will be borne by the Company. In addition, the
Company may reimburse brokerage firms and other persons representing beneficial
owners of shares for expenses incurred in forwarding solicitation materials to
such beneficial owners. Proxies may be solicited by certain of the Company's
directors, officers and regular employees, without additional compensation,
personally or by telephone, telegram or letter.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS FOR ANNUAL MEETING FOR FISCAL
YEAR 1996
Proposals of shareholders of the Company which are to be presented by such
shareholders at the Company's Annual Meeting for the year ended August 31, 1996
("fiscal 1996") must be received by the Company no later than August 17, 1996 in
order that they may be included in the Proxy Statement and form of proxy
relating to that meeting.
1
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
NOMINEES
A Board of eight (8) directors is to be elected at this meeting. Unless
otherwise instructed, the proxyholders will vote the proxies received by them
for the Company's nominees named below. All of the nominees 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 present
Board of Directors to fill the vacancy. In the event that additional persons are
nominated for election as directors, the proxyholders 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
proxyholders. The Company is not aware of any nominee who will be unable or will
decline to serve as a director. 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>
Charles A. Dickinson (1) 72 Chairman of the Board of the Company, 1984
President, Solectron Europe
Dr. Koichi Nishimura 57 President and Chief Executive Officer 1991
of the Company
Dr. Winston H. Chen (1) 54 Chairman, Paramitas Foundation 1978
Richard A. D'Amore (2) 42 General Partner, North Bridge 1985
Venture Partners
Dr. Kenneth E. Haughton (3) 67 Independent Consultant 1985
Dr. Paul R. Low (2) 62 President, PRL Associates 1993
W. Ferrell Sanders (3) 58 General Partner, Asset Management Co. 1986
Osamu Yamada (1) 66 Advisor, The Mitsubishi Bank, Limited 1994
<FN>
- ----------
(1) Member of the Nominating Committee.
(2) Member of the Audit Committee.
(3) Member of the Compensation Committee.
</FN>
</TABLE>
Except as set forth below, each of the nominees has been engaged in his
principal occupation set forth above during the past five years. There is no
family relationship between any director or executive officer of the Company.
Mr. Charles A. Dickinson has served as a director of the Company since 1984,
and as Chairman of the Board of Directors from 1986 to 1990 and from March 1994
to the present. He served as an independent managment consultant to the Company
from 1991 to November 1993. He has served as President, Solectron France, S.A.
from 1992 to 1993, and has served as President, Solectron Europe since September
1993. From 1986 to 1990, he was Chairman of the Board of Directors, President
and Chief Executive Officer of Vermont Microsystems, Inc., a manufacturer of
microcomputer-based graphics cards. He also serves as a director of National
Micronetics, Inc., a manufacturer of disk drive components, and Trident
Microsystems, Inc., a designer, developer and marketer of integrated circuit
graphics products.
2
<PAGE>
Dr. Koichi Nishimura has served as a director since 1991, Chief Executive
Officer since 1992 and President since 1990. He was Co-Chief Executive Officer
from 1991 to 1992 and Chief Operating Officer from 1988 to 1991. From 1964 to
1988, Dr. Nishimura was employed by International Business Machines Corporation
("IBM") in various technology and management positions. He also serves as a
director of Merix Corporation, a manufacturer of technologically advanced
electronic interconnect products.
Dr. Winston H. Chen has served as a director of the Company since 1978,
Chairman of the Board from 1990 to March 1994, President from 1979 to 1990,
Chief Executive Officer from 1984 to 1991, and as Co-Chief Executive Officer
from 1991 to 1992. Dr. Chen is currently Chairman of Paramitas Foundation. From
1970 to 1978, Dr. Chen served as Process Technology and Development Manager of
IBM. He also serves as a director of Intel Corporation, Megatest Corporation and
SCEcorp.
Mr. Richard A. D'Amore has served as a director of the Company since 1985.
Mr. D'Amore has been a general partner of various venture capital funds
affiliated with Hambro International Venture Funds since 1982 and a general
partner of North Bridge Venture Partners since 1992. He also serves as a
director of Math Soft, Inc., and VEECO.
Dr. Kenneth E. Haughton has served as a director of the Company since 1985.
Dr. Haughton is currently an independent consultant. From 1990 to 1991, he was
Vice President of Engineering at Da Vinci Graphics, a computer graphics firm.
From 1989 to 1990, Dr. Haughton was an independent consultant, and from 1982 to
1989, he served as Dean of Engineering at Santa Clara University. He also serves
as a director of Seagate Technology, a manufacturer of disk drives.
Dr. Paul R. Low has served as a director of the Company since March 1993. Dr.
Low is currently the President of PRL Associates. Prior to founding PRL
Associates, Dr. Low worked for IBM from 1957 to 1992. Dr. Low held senior
management and executive positions with successively increasing responsibility,
including President, General Technology Division and IBM Corporate Vice
President; President of General Products Division; and General Manager,
Technology Products business line, also serving on IBM's corporate management
board. He also serves as a director of Applied Materials, Inc., VEECO, Nexgen
and Number Nine.
Mr. W. Ferrell Sanders has served as a director of the Company since 1986.
Since 1987, Mr. Sanders has been a general partner of Asset Management
Associates Venture Fund, a venture capital management firm. From 1981 to 1987,
he was an independent management consultant. He also serves as a director of
Adaptec, Inc., a manufacturer of computer input/output devices.
Mr. Osamu Yamada has served as a director of the Company since January 1994.
Mr. Yamada is currently an advisor to The Mitsubishi Bank, Limited. From 1990 to
1991, he was Chairman and Chief Executive Officer of BankCal Tri-State
Corporation, a wholly owned subsidiary of The Mitsubishi Bank, Limited. From
1987 to 1990, he was Senior Managing Director of The Mitsubishi Bank, Limited,
and in an overlapping period from 1985 to 1990, he was also Chairman, President
and Chief Executive Officer of Bank of California. Prior to 1985, he held a
number of key management positions with The Mitsubishi Bank, Limited
organization. Mr. Yamada currently serves on a number of boards of major
universities and cultural centers. He also serves as a director of PictureTel.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of seven (7) meetings
during fiscal 1995.
During fiscal 1995, each director attended all of the meetings of the Board
of Directors and meetings of committees upon which such director served.
The Audit Committee of the Board of Directors currently consists of Richard
D'Amore and Paul Low. Osamu Yamada was a member of the committee until July
1995, and was replaced by Paul Low. This committee oversees the Company's
internal financial control systems and procedures, reviews and approves the
Company's financial statements and coordinates and approves the activities of
the Company's auditors. The Audit Committee held a total of three (3) meetings
during fiscal 1995.
3
<PAGE>
The Compensation Committee of the Board of Directors is currently composed of
Kenneth Haughton and W. Ferrell Sanders. Paul Low was a member of the committee
through September 27, 1995, and was replaced by Kenneth Haughton. This committee
is responsible for establishing compensation guidelines for executives of the
Company, reviewing and approving executive bonus plans and providing guidance
with respect to other compensation issues, such as incentive stock option
grants. The Compensation Committee held a total of three (3) meetings during
fiscal 1995.
The Nominating Committee of the Board of Directors currently consists of
Winston Chen, Charles Dickinson and Osamu Yamada. Kenneth Haughton was a member
of the committee until the end of fiscal year 1995, and was replaced by Osamu
Yamada. This committee is responsible for the development of a general criteria
regarding the qualifications and selection of board members and reccomends
candidates for election to the Board of Directors. The Nominating Committee held
one (1) meeting during fiscal 1995.
DIRECTOR COMPENSATION
Directors who are not employees of the Company ("Outside Directors") receive
annual retainers of $16,800. In addition, each Outside Director was paid $2,200
for each Board meeting attended, as well as $500 for each telephonic meeting
held in fiscal 1995. Outside Directors may also receive consulting fees for
projects completed at the request of management. Employee directors are not
compensated for their service on the Board of Directors or on committees of the
Board.
Options to purchase shares of the Company's common stock may be granted to
Outside Directors under the 1992 Stock Option Plan (the "Option Plan"), as
amended by the shareholders in January, 1995. The Option Plan, provides, with
respect to Outside Directors, for an automatic grant on December 1 of each year
of a nonstatutory option to purchase six thousand (6,000) shares (pro rated for
the portion of the first fiscal year of service as an Outside Director) of the
Company's Common Stock at a per share exercise price of 100% of the fair market
value on the date of grant. All Outside Directors, serving in such capacity on
December 1, 1994, received a grant of six thousand (6,000) shares, except Osamu
Yamada who received a grant of four thousand five hundred (4,500) shares, and
Winston Chen who received a grant of three thousand (3,000) shares.
REQUIRED VOTE
Each 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 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 candidates than the number of directors to be elected.
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 meeting, prior to
the voting, of the intention to cumulate the shareholder's votes. Votes withheld
from any director are counted for purposes of determining the presence or
absence of a quorum, but have no legal effect under California law. Abstentions
and shares held by brokers that are present but not voted, because the brokers
were prohibited from exercising discretionary authority ("broker non- votes"),
will be counted as present for purposes of determining the presence or absence
of a quorum.
MANAGEMENT RECOMMENDS A VOTE "FOR" THE NOMINEES LISTED ABOVE.
4
<PAGE>
PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected KPMG Peat Marwick LLP ("KPMG"),
independent public accountants, to audit the financial statements of the Company
for fiscal 1996. KPMG has audited the Company's financial statements since
fiscal 1985. Representatives of KPMG are expected to be present at the meeting
with the opportunity to make a statement if they desire to do so, and are
expected to be available to respond to appropriate questions. Ratification,
under California law, of the appointment of KPMG requires the affirmative vote
of a majority of the Votes Cast.
REQUIRED VOTE
The affirmative vote of a majority of the votes cast will be required under
California law to approve the appointment of KPMG. For this purpose, the "Votes
Cast" are defined under California law to be the shares of the Company's Common
Stock represented and "voting" at the Annual Meeting. In addition, the
affirmative votes must constitute at least a majority of the required quorum,
which quorum is a majority of the shares outstanding on the Record Date. Votes
that are cast against the proposal will be counted for purposes of determining
(i) the presence or absence of a quorum and (ii) the total number of Votes Cast
with respect to the proposal. Abstentions will have the same effect as a vote
against the proposal. Broker non-votes will be counted for purposes of
determining the presence or absence of a quorum for the transaction of business,
but will not be counted for purposes of determining the number of Votes Cast
with respect to the proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR"
RATIFICATION OF THE APPOINTMENT OF KPMG AS INDEPENDENT ACCOUNTANTS. THE EFFECT
OF AN ABSTENTION IS THE SAME AS THAT OF A VOTE AGAINST THE RATIFICATION OF THE
APPOINTMENT OF KPMG AS INDEPENDENT ACCOUNTANTS.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's executive officers,
directors, and persons who own more than ten percent (10%) of a registered class
of the Company's equity securities to file reports of ownership and changes in
ownership with the Securities and Exchange Commission.
Mr. Edward J. Hayes, the former Senior Vice President Sales and Marketing of
the Company, filed a late Form 4 with respect to two transactions in June 1995.
CERTAIN TRANSACTIONS
The Company has entered into indemnification agreements with its executive
officers, directors and certain significant employees containing provisions
which are in some respects broader than the specific indemnification provisions
contained in the California General Corporation Law. These agreements provide,
among other things, for indemnification of the executive officers, directors and
certain significant employees in proceedings brought by third parties and in
shareholder derivative suits. Each agreement also provides for advancement of
expenses to the indemnified party. The agreements have been approved by the
majority vote of the disinterested shareholders of the Company.
5
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table except as otherwise indicates sets forth as of November
15, 1995 information relating to the beneficial ownership of the Company's
Common Stock by each person known by the Company to be the beneficial owner of
more than five percent (5%) of the outstanding shares of Common Stock, by each
director, by each of the executive officers named in the Summary Compensation
Table, and by all directors and executive officers as a group.
APPROXIMATE
PERCENTAGE
NAME AMOUNT OWNED OWNED
- ----------------------------------------- ------------ -----------
FMR Corporation 5,310,498 (1) 10.7%
82 Devonshire Street
Boston, Massachusetts 02109
Northern Trust Corporation 3,225,135 (2) 6.5%
50 South LaSalle Street
Chicago, Illinois 60675
The Equitable Companies Incorporated 2,788,397 (3) 5.5%
787 Seventh Avenue
New York, New York 10019
Dr. Winston H. Chen 963,500 (4) 1.9%
Susan Wang 274,359 (5) *
Dr. Koichi Nishimura 201,843 (6) *
Walter W. Wilson 118,638 (7) *
Charles A. Dickinson 88,418 (8) *
W. Ferrell Sanders 60,430 (9) *
Ken Tsai 58,763 (10) *
Dr. Kenneth E. Haughton 51,700 (11) *
Richard A. D'Amore 29,500 (12) *
Dr. Paul R. Low 9,500 (13) *
Osamu Yamada 1,625 (14) *
All directors and executive officers as a
group (14 persons) 1,999,239 (15) 4.0%
- ----------
* Less than one percent (1%).
6
<PAGE>
(1) Calculated as of June 30, 1995.
(2) Calculated as of October 31, 1995.
(3) Calculated as of November 10, 1995 and includes 493,082 shares issuable
upon conversion of the Company's Liquid Yield Option Notes due 2012 (Zero
Coupon--Subordinated) at a conversion rate of 20.792 shares per note.
(4) Includes 3,500 shares issuable upon the exercise of stock options that are
exercisable on or before January 14, 1996.
(5) Includes 48,018 shares issuable upon the exercise of stock options that are
exercisable on or before January 14, 1996.
(6) Includes 150,208 shares issuable upon the exercise of stock options that
are exercisable on or before January 14, 1996.
(7) Includes 48,021 shares issuable upon the exercise of stock options that are
exercisable on or before January 14, 1996.
(8) Includes 51,750 shares issuable upon the exercise of stock options that are
exercisable on or before January 14, 1996.
(9) Includes 32,500 shares issuable upon the exercise of stock options that are
exercisable on or before January 14, 1996.
(10) Includes 44,684 shares issuable upon the exercise of stock options that are
exercisable on or before January 14, 1996.
(11) Includes 26,500 shares issuable upon the exercise of stock options that are
exercisable on or before January 14, 1996.
(12) Includes 29,500 shares issuable upon the exercise of stock options that are
exercisable on or before January 14, 1996.
(13) Includes 9,500 shares issuable upon the exercise of stock options that are
exercisable on or before January 14, 1996.
(14) Includes 1,625 shares issuable upon the exercise of stock options that are
exercisable on or before January 14, 1996.
(15) Includes 548,713 shares issuable upon the exercise of stock options that
are exercisable on or before January 14, 1996.
7
<PAGE>
EXECUTIVE OFFICER COMPENSATION
SUMMARY COMPENSATION TABLE
<TABLE>
The following table shows, as to the Chief Executive Officer and each of the
four other most highly compensated executive officers, information concerning
compensation for services to the Company in all capacities.
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION (1) COMPENSATION (2)
----------------------- ----------------
ALL OTHER
COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS/SARS(#)(2) ($)(3)
- ---------------------------------- ---- ---------- --------- ------------------ --------------
<S> <C> <C> <C> <C> <C>
Dr. Koichi Nishimura 1995 $375,000 $412,500 20,000 $ 1,744
President and Chief 1994 247,706 292,851 50,000 1,010
Executive Officer 1993 225,384 308,369 50,000 1,270
Charles A. Dickinson (4) 1995 279,177 220,823 25,000 0
Chairman of the Board 1994 514,480 0 6,000 8,600
President, Solectron Europe 1993 470,000 0 10,000 19,400
Walter W. Wilson 1995 177,323 308,668 10,000 880
Senior Vice President and 1994 165,712 160,022 60,000 788
President, Solectron North America 1993 136,899 178,971 20,000 995
Ken Tsai 1995 140,203 263,528 15,000 985
Senior Vice President, and 1994 116,171 82,551 70,000 600
President, Solectron Asia 1993 112,869 13,912 10,000 587
Susan Wang 1995 169,243 231,757 10,000 665
Senior Vice President, Chief 1994 147,711 147,379 60,000 593
Financial Officer and Secretary 1993 133,089 151,119 20,000 745
<FN>
- ----------
(1) Perquisites are not included since the aggregate amount is less than the
lesser of $50,000 or 10% of salary and bonus, in accordance with regulations
promulgated by the Securities and Exchange Commission (the "SEC");
therefore, Other Annual Compensation has not been included in this table.
(2) The Company has not granted any stock appreciation rights or restricted
stock awards and does not have any Long-Term Incentive Plans as that term is
defined in regulations promulgated by the SEC.
(3) Amounts represent the Company's contributions to a 401(k) plan and the
taxable benefit of premium payments under split dollar life insurance
policies for which the Company will be reimbursed for premiums paid.
(4) Charles A. Dickinson became an employee of the Company in November 1993.
Prior to this time he served as an independent management consultant and as
an Outside Director for the Company. Compensation for his services in these
capacities has been included in this table.
</FN>
</TABLE>
8
<PAGE>
STOCK OPTION GRANTS AND EXERCISES
<TABLE>
The following tables set forth the stock options granted to the named
executive officers under the Company's stock option plans and the options
exercised by such named executive officers during fiscal 1995.
STOCK OPTION GRANTS IN FISCAL 1995
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM (2)
- ------------------------------------------------------------------------ ---------------------------
PERCENT OF
TOTAL
OPTIONS
OPTIONS GRANTED TO EXERCISE OR
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION
NAME (#)(1) FISCAL YEAR ($/SHARE) DATE 5% ($) 10% ($)
- -------------------- --------- -------------- ------------- ------------ -------- --------
<S> <C> <C> <C> <C> <C> <C>
DR. KOICHI NISHIMURA 20,000 2.57% $26.625 11/09/2001 $216,781 $505,192
CHARLES A. DICKINSON 25,000 3.21 26.625 11/09/2001 270,976 631,490
WALTER W. WILSON 10,000 1.28 26.625 11/09/2001 108,390 252,596
KEN TSAI 5,000 .64 26.625 11/09/2001 54,195 126,298
10,000 1.28 29.125 3/28/2002 118,568 276,314
SUSAN WANG 10,000 1.28 26.625 11/09/2001 108,390 252,596
<FN>
- ----------
(1) These options become exercisable as to one forty-eighth of the shares after
each month from the date of grant, except for the options granted to Charles
A. Dickinson, a former Outside Director, which became fully exercisable on
the date of grant.
(2) Potential realizable value is based on an assumption that the stock price of
the Common Stock appreciates at the annual rates shown (compounded annually)
from the date of grant until the end of the seven (7) year option term.
Potential realizable value is shown net of exercise price. These numbers are
calculated based on the regulations promulgated by the SEC and do not
reflect the Company's estimate of future stock price growth.
</FN>
</TABLE>
AGGREGATED OPTION EXERCISES IN FISCAL 1995 AND YEAR-END VALUES
<TABLE>
<CAPTION>
TOTAL NUMBER OF VALUE OF UNEXERCISED,
UNEXERCISED OPTIONS HELD AT IN-THE-MONEY OPTIONS HELD AT
SHARES FISCAL YEAR END (#) FISCAL YEAR END (1)($)
ACQUIRED VALUE ----------------------------- -----------------------------
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------- --------------- ------------ ------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Dr. Koichi Nishimura 0 0 130,625 69,375 $2,619,509 $892,991
Charles A. Dickinson 0 0 61,000 0 1,082,000 0
Walter W. Wilson 0 0 58,124 51,876 1,065,951 417,799
Ken Tsai 0 0 43,767 60,733 593,777 397,442
Susan Wang 0 0 78,122 51,878 1,742,185 417,815
<FN>
- ----------
(1) Calculated based upon the August 25, 1995 fair market value share price of
$35.75 less the share price to be paid upon exercise. There is no guarantee
that if and when these options are exercised they will have this value.
</FN>
</TABLE>
9
<PAGE>
COMPENSATION COMMITTEE REPORT
INTRODUCTION
The Compensation Committee of the Board of Directors (the "Committee") is
made up of two members who are also members of the Company's full Board of
Directors. The Committee meets at the beginning of each fiscal year to establish
target base compensation levels for the Company's executive officers for the
following fiscal year and to finalize bonuses for the previous fiscal year.
COMPENSATION PHILOSOPHY
The Company's executive compensation policies are designed to attract and
retain qualified personnel by providing competitive compensation and to
reinforce strategic performance objectives through the use of incentive
compensation programs. In order to provide incentive to executive officers, a
large percentage of their annual compensation is paid as a bonus. The amount of
the bonus for each person is determined on the basis of several indicators of
corporate performance as outlined below.
COMPENSATION PLANS
The following are the key components of the Company's executive officer
compensation:
Base Compensation. The Committee establishes base salaries for executive
officers based on its review of base salaries of executive officers in companies
of comparable size and in similar industries. A majority of the companies used
by the Committee in its review of salaries of other companies are a part of the
Hambrecht & Quist Technology Index used in the "Performance Graph" below.
Bonuses. The Company's Executive Bonus Plan (the "Bonus Plan") covers the
Company's executive officers and other key employees. The Bonus Plan provides
for incentive compensation to those covered and is determined cumulatively on a
quarterly basis based principally on certain performance measures. The
performance measures include worldwide corporate performance, site performance
and individual performance. Worldwide and site performance are measured based on
targets with respect to profit before taxes, inventory turns, days sales
outstanding and return on assets. The Committee believes that these factors are
indicative of overall corporate performance and shareholder value. Individual
performance is measured based on goals related to each person's function within
the organization. Employees accrue bonuses each quarter based on performance
against year to date profit and asset utilization targets. However, only
approximately 26% of such accrued bonuses vest and are payable quarterly. The
remaining accrued bonus balances vest at fiscal year end and are payable upon
final determination of earned bonuses.
Long Term Incentive Compensation. The Company's Option Plan provides for long
term incentive compensation for employees of the Company, including executive
officers. A significant portion of the total compensation package for the
Company's executive officers is in the form of stock option awards. These awards
give employees an equity interest in the Company, thereby aligning the interests
of executive officers and shareholders and providing incentive to maximize
shareholder value.
COMPANY PERFORMANCE AND CEO COMPENSATION
The compensation for the Company's CEO for fiscal 1995 was comprised of a
base salary component and a bonus component. The Committee met at the beginning
of fiscal 1995 and reviewed CEO compensation for companies of comparable size
and similar industries in order to establish a base salary for the Company's
CEO. The Committee established a close tie between Company performance and CEO
compensation by designating a large portion of total annual compensation as
bonus. The Committee established corporate performance goals including profit
before taxes, inventory turns, days sales outstanding and return on assets. At
the beginning of fiscal 1996, the Committee evaluated the Company's performance
in light of the goals established in the previous year. The Committee found that
these corporate performance target levels had been met or exceeded
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and that in addition, the Company's CEO had exceeded his personal performance
goals for strategic leadership, growth, increase in shareholder value and
organizational and human resource development thereby entitling him to his full
bonus payment.
MEMBERS OF THE COMPENSATION COMMITTEE FOR FISCAL YEAR 1996
Dr. Kenneth Haughton
W. Ferrell Sanders
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PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total shareholder
return, calculated on a dividend reinvested basis, from August 31, 1990 through
August 25, 1995 for Solectron, the S&P 500 Index and the H&Q Technology Index.
The graph assumes that $100 was invested in each of these three on August 31,
1990.
8/90 8/91 8/92 8/93 8/94 8/95
-------- -------- -------- -------- ---------- ----------
Solectron ....... 100.00 162.22 435.56 711.11 1,093.33 1,271.11
S&P 500 ......... 100.00 124.12 137.15 156.66 165.68 201.98
H&Q Technology... 100.00 135.80 139.29 166.81 196.66 316.29
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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 form of Proxy to vote the shares they represent as
the Company may recommend.
THE BOARD OF DIRECTORS
Dated: December 1, 1995
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