<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
LATTICE SEMICONDUCTOR CORPORATION
- --------------------------------------------------------------------------------
(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)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (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:
-----------------------------------------------------------------------
<PAGE>
[LOGO]
LATTICE SEMICONDUCTOR CORPORATION
5555 NE MOORE COURT
HILLSBORO, OREGON 97124-6421
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
AUGUST 11, 1997
------------------------
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Lattice
Semiconductor Corporation (the "Company") will be held at the Portland Hilton
Hotel, 921 SW 6th Ave, Portland, OR 97204, Monday, August 11, 1997, at 1:00
p.m., Pacific Time, for the following purposes:
1. To elect two Class II directors to serve a term of three years or until
their successors are elected;
2. To approve an amendment to the Company's Employee Stock Purchase Plan
increasing the number of shares reserved for issuance thereunder;
3. To ratify the appointment of Price Waterhouse LLP as independent
accountants of the Company for the fiscal year ending March 28, 1998; and
4. To transact such other business as may properly come before the meeting
or any adjournment of the meeting.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on June 12, 1997 are
entitled to notice of and to vote at the meeting. The meeting is subject to
adjournment from time to time as the stockholders present in person or by proxy
may determine.
All stockholders are invited to attend the meeting in person. WHETHER OR NOT
YOU PLAN TO ATTEND THE MEETING, TO ASSURE YOUR REPRESENTATION AT THE MEETING,
PLEASE PROMPTLY SIGN AND RETURN THE ACCOMPANYING FORM OF PROXY IN THE ENCLOSED
RETURN ENVELOPE. Any stockholder of record attending the meeting may vote in
person even if he or she has returned a proxy.
BY ORDER OF THE BOARD OF DIRECTORS
Stephen A. Skaggs
SECRETARY
Hillsboro, Oregon
July 1, 1997
<PAGE>
[LOGO]
LATTICE SEMICONDUCTOR CORPORATION
5555 NE MOORE COURT
HILLSBORO, OREGON 97124-6421
------------------------
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
---------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
A proxy in the accompanying form is solicited by the Board of Directors of
Lattice Semiconductor Corporation (the "Company") for use at the 1997 Annual
Meeting of Stockholders (the "Annual Meeting") to be held at the Portland Hilton
Hotel, 921 SW 6th Ave, Portland, OR 97204, on Monday, August 11, 1997 at 1:00
p.m., Pacific Time, or at any adjournment thereof. The proxy is solicited for
the purposes set forth herein and in the accompanying Notice of Annual Meeting
of Stockholders. The mailing address of the Company's principal executive office
is 5555 NE Moore Court, Hillsboro, Oregon 97124-6421, and the telephone number
at that address is (503) 681-0118.
These proxy solicitation materials were mailed on or about July 1, 1997,
together with the Company's 1997 Annual Report to Stockholders, to all
stockholders entitled to vote at the meeting.
The power of the proxy holders will be suspended if the stockholder of
record executing the proxy is present at the meeting and elects to vote in
person. Any proxy may be revoked prior to its exercise upon written notice to
the Secretary of the Company or upon delivery to the Secretary of the Company of
a duly executed proxy bearing a later date. The shares represented by each
valid, unrevoked proxy will be voted in accordance with the instructions
specified in the proxy, if given. If a signed proxy is returned without
instructions, it will be voted for the nominees for director, for the approval
of the proposals presented, and in accordance with the recommendations of the
Board of Directors on any other business which may properly come before the
meeting or matters incident to the conduct of the meeting.
The Company's outstanding voting securities at the close of business on June
12, 1997 consisted of 23,066,825 shares of Common Stock, $.01 par value per
share (the "Common Stock"), each of which is entitled to one vote on all matters
to be presented at the meeting. Only stockholders of record at the close of
business on June 12, 1997 (the "record date") are entitled to notice of and to
vote at the meeting or any adjournment thereof. The Common Stock does not have
cumulative voting rights.
The required quorum for the transaction of business at the Annual Meeting is
a majority of shares of Common Stock outstanding on the Record Date. Shares that
are voted "FOR", "AGAINST", "ABSTAIN" or "WITHHELD" from 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.
Abstentions and votes "withheld" will be counted for purposes of determining
both the presence or absence of a quorum for the transaction of business and the
total number of Votes Cast with respect to a particular matter. Broker non-votes
with respect to proposals set forth in this Proxy Statement will be counted only
for purposes of determining the presence or absence of a quorum and will not be
considered "Votes Cast", and will not affect the determination as to whether the
requisite majority of Votes Cast has been obtained with respect to a particular
matter.
<PAGE>
PROPOSAL 1: ELECTION OF DIRECTORS
DIRECTORS
Pursuant to the Company's Certificate of Incorporation as amended and
restated (the "Certificate"), the Board of Directors is divided into three
classes. The directors are elected to serve staggered three-year terms, such
that the term of one class of directors expires each year. Each class consists
of two directors. Two Class II directors are to be elected at the Annual Meeting
for a three-year term ending in 2000. The proxy holders intend to vote the
proxies received by them for Mr. Hauer and Mr. Strain, who have been nominated
to the Board of Directors. If the nominees for director become unavailable for
election for any reason, pursuant to the proxy the proxy holders will have
discretionary authority to vote for suitable substitutes. The Company is not
aware of any reason that Mr. Hauer or Mr. Strain will be unable or will decline
to serve as a director. The terms of office of the persons elected as director
will continue until their terms expire in 2000 or until successors have been
elected and qualified.
The following table briefly describes the Company's nominees for director
and the directors whose terms will continue. Except as otherwise noted, each has
held his principal occupation for at least five years. There are no family
relationships among any directors or officers of the Company.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DIRECTOR TERM
NOMINEES AGE AND OTHER DIRECTORSHIPS SINCE EXPIRES CLASS
- ---------------------------------------- --- -------------------------------------- ----------- ----------- -----
<S> <C> <C> <C> <C> <C>
Daniel S. Hauer 60 Chairman of the Board of S-MOS 1987 1997 II
Systems, Inc., a supplier of CMOS
integrated circuits and silicon
wafers (since August 1994);
President and Chief Executive
Officer of S-MOS Systems, Inc.
(until October 1994).
Douglas C. Strain 77 Vice Chairman and Founder of Electro 1986 1997 II
Scientific Industries, Inc., a
manufacturer of industrial lasers
and electro-optical equipment.
DIRECTORS WHOSE TERMS CONTINUE
- ---------------------------------------------------------------------------------------------
Mark O. Hatfield 74 United States Senator from Oregon 1997 1998 III
(until January 1997).
Cyrus Y. Tsui 51 Chairman of the Board of the Company 1988 1998 III
(effective March 31, 1991);
President and Chief Executive
Officer of the Company (since 1988);
Director of Asante Technologies.
Harry A. Merlo 72 President of Merlo Corporation, a 1983 1999 I
holding company (since July 1995);
President and Chairman of the Board
of Louisiana-Pacific Corporation, a
building materials company (until
June 1995).
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DIRECTOR TERM
NOMINEES AGE AND OTHER DIRECTORSHIPS SINCE EXPIRES CLASS
- ---------------------------------------- --- -------------------------------------- ----------- ----------- -----
<S> <C> <C> <C> <C> <C>
Larry W. Sonsini 56 Chairman of the Executive Committee of 1991 1999 I
Wilson Sonsini Goodrich & Rosati,
Professional Corporation; Director
of Novell, Inc. and Pixar.
</TABLE>
REQUIRED VOTE
The two nominees receiving the highest number of affirmative votes of the
Votes Cast at the Annual Meeting on this matter shall be elected as the Class II
directors. See "Information Concerning Solicitation and Voting--General".
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" DANIEL S.
HAUER AND DOUGLAS C. STRAIN AS THE CLASS II DIRECTORS OF THE COMPANY.
BOARD MEETINGS AND COMMITTEES
In fiscal 1997, the Company's Board of Directors held four regularly
scheduled meetings. No member of the Board of Directors attended fewer than 75%
of the total number of board and committee meetings of the Board of Directors
held during fiscal 1997.
The Board of Directors currently has three standing committees: the
Compensation Committee, the Audit Committee and the Nominating Committee. The
Compensation Committee makes recommendations to the Board of Directors
concerning the salaries and other compensation paid to the executive officers,
the granting of employee stock options and other compensation-related issues.
Mr. Strain and Mr. Sonsini were the compensation committee members through May
1996, when Mr. Sonsini resigned and was replaced by Mr. Merlo. The Compensation
Committee met twice in fiscal 1997.
The Audit Committee recommends engagement of the Company's independent
accountants and is primarily responsible for reviewing and approving the scope
of the audit and other services performed by the Company's independent
accountants and for reviewing and evaluating the Company's accounting principles
and its systems of internal accounting controls. The Audit Committee meets with
management and the Company's independent accountants, who have access to the
Audit Committee with and without the presence of management representatives.
During fiscal 1997, the Audit Committee was composed of Mr. Merlo and Mr. Hauer
and met twice.
A Nominating Committee comprising Mr. Sonsini and Mr. Tsui exists to
identify persons for future nomination for election to the Board of Directors.
Two meetings were held in fiscal 1997 by the Nominating Committee. Stockholders
who wish to submit names to the Nominating Committee for consideration should do
so in writing addressed to the Nominating Committee, c/o Corporate Secretary,
Lattice Semiconductor Corporation, 5555 NE Moore Court, Hillsboro, Oregon
97124-6421.
DIRECTORS' COMPENSATION
Directors who are employees of the Company (currently only Mr. Tsui) receive
no additional or special remuneration for serving as directors. Each
non-employee director receives an annual retainer of $12,000 plus $1,500 for
each board meeting attended and $750 for each committee meeting attended.
Non-employee directors also receive options to purchase shares of the
Company's Common Stock. Prior to May 1993, these options were issued under the
Company's Outside Directors Stock Option Plan (the "1990 Directors Plan"). In
August 1993, the stockholders approved the 1993 Outside Directors Stock Option
Plan (the "1993 Directors Plan") which replaced the 1990 Directors Plan. The
1993 Directors Plan
3
<PAGE>
provides for automatic grants of stock options to non-employee directors. Under
this plan, each outside director received a grant of 18,000 shares in August
1993. A new director receives a grant for 18,000 shares on the date he is
appointed by the Board of Directors. In addition, each outside director will
receive a grant of 18,000 shares on the date any previously granted option
becomes fully vested. These shares generally vest quarterly over a four-year
period.
TRANSACTIONS WITH MANAGEMENT
Mr. Hauer, a director of the Company, is the Chairman of S-MOS Systems, Inc.
("S-MOS"). The Company has a manufacturing agreement with S-MOS for the
production and delivery of silicon wafers. In July 1994, the Company entered
into advance payment and research and development agreements with Seiko Epson
Corporation and its affiliate S-MOS. Pursuant to the terms of these agreements,
the Company made payments of $44 million to Seiko Epson, in approximately even
quarterly amounts from July 1994 to March 1995. A second advance payment
agreement between the Company and Seiko Epson Corporation and its affiliate
S-MOS was entered into in March 1997. Total payments of approximately $90
million (with an option for an additional $60 million) will be made by fiscal
1999. Repayment for the advance payment portions of these agreements will be
made in the form of semiconductor wafers over a multi-year period. In fiscal
1997, approximately $18 million of wafers were delivered to the Company in
connection with these advance payment agreements. Additionally, in fiscal 1997,
cash wafer purchases by the Company from S-MOS totaled $22.8 million.
Mr. Sonsini, a director of the Company, is Chairman of the Executive
Committee of Wilson Sonsini Goodrich & Rosati, Professional Corporation, a law
firm based in Palo Alto, California. This firm serves as the Company's primary
outside legal counsel.
EMPLOYMENT AGREEMENTS
In September 1988, the Company entered into an employment letter with Mr.
Tsui pursuant to which Mr. Tsui serves as President and Chief Executive Officer
of the Company. In addition to providing for an annual base salary and bonus
arrangements, the letter provides that in the event of a change in control of
the Company as described in the letter, then any unvested options to purchase
common stock of the Company held by Mr. Tsui shall become fully vested.
Additionally, in the event Mr. Tsui is involuntarily terminated other than for
cause, the Company will continue to pay his salary for up to six months, or
until Mr. Tsui begins employment elsewhere, whichever occurs sooner, and options
vesting during that period are exercisable.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee through May of 1996 were Mr.
Strain and Mr. Sonsini. During the May 13, 1996 Board Meeting, Mr. Sonsini
resigned from the Compensation Committee and was replaced by Mr. Merlo. Mr.
Sonsini is Chairman of the Executive Committee of the law firm of Wilson Sonsini
Goodrich & Rosati, Professional Corporation, primary outside legal counsel to
the Company.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee sets, reviews and administers the executive
compensation program of the Company and is comprised of the individuals noted
below, both of whom are non-employee directors of the Company. The role of the
Compensation Committee is to establish and approve salaries and other
compensation paid to the executive officers of the Company and to administer the
Company's stock option plan, in which capacity the Compensation Committee
reviews and approves stock option grants to all employees.
4
<PAGE>
COMPENSATION PHILOSOPHY. Lattice's compensation philosophy is that cash
compensation should be directly linked to the short-term performance of the
Company and that longer-term incentives, such as stock options, should be
aligned with the objective of enhancing stockholder value over the long term.
The use of stock options clearly links the interests of the officers and
employees of the Company to the interests of the stockholders. In addition, the
Compensation Committee believes that the total compensation package must be
competitive with other companies in the industry to ensure that the Company can
continue to attract, retain and motivate key employees who are critical to the
long-term success of the Company.
COMPONENTS OF EXECUTIVE COMPENSATION. The principal components of executive
compensation are base salary, bonuses under the Executive Incentive Plan,
participation in the Company-wide Profit Sharing Plan and stock options.
Base salary is set based on competitive factors and the historic salary
structure for various levels of responsibility within the Company. The
Compensation Committee periodically conducts surveys of companies in the
industry in order to determine whether the Company's executive base salaries are
in a competitive range. Generally, salaries are set at the middle to high end of
the range. In addition, the Company relies on variable compensation in order to
emphasize the importance of performance. As a result, in the fiscal year ended
March 29, 1997, which was a profitable year for the Company, the salaries of the
named executive officers (as subsequently defined) comprised only 28% to 41% of
their total cash compensation.
The Executive Incentive Plan is a bonus plan that is linked directly to the
profitability of the Company. This plan in particular emphasizes the
Compensation Committee's belief that, when the Company is successful, the
executives should be highly compensated, but that, conversely, if the Company is
not successful and is not profitable, no bonuses should be paid absent
extraordinary circumstances. Each individual executive officer's portion of the
total bonus pool is determined by a formula that is based on the executive's
base salary and his or her contribution to the Company. With respect to the
Chief Executive Officer the formula is based on his salary and the performance
of the Company, and the bonus derived from such formula is paid in a combination
of stock and cash, pursuant to the 1996 Stock Incentive Plan as approved by the
stockholders. With respect to other executives, a cash bonus is based both on
the formula and on individual performance relative to key objectives as
determined by the Chief Executive Officer. In addition to the Executive
Incentive Plan, the Company has a Profit Sharing Plan under which a specified
percentage of operating profit is set aside and distributed equally among all
employees, including executives.
The principal equity component of executive compensation is the stock option
program. Stock options are generally granted when an executive joins the Company
and on an annual basis thereafter under a replenishment program. Options are
occasionally granted for promotions or other special achievements. The initial
option granted to the executive vests over a period of four years. The purpose
of the annual replenishment option grant program is to ensure that the executive
always has options that vest in increments over the following four-year period.
This provides a method of retention and motivation for the senior level
executives of the Company and also aligns senior management's objectives with
long-term stock price appreciation. In addition to the stock option program,
executives are eligible to participate in a payroll deduction employee stock
purchase plan pursuant to which stock may be purchased at 85% of the fair market
value at the beginning or end of each offering period (up to a maximum of
$25,000 worth of stock per calendar year or 10% of salary, whichever is less).
Other elements of executive compensation are participation in a Company-wide
life insurance program as well as a supplemental life insurance program,
long-term disability insurance, Company-wide medical benefits, the ability to
defer compensation pursuant to a 401(k) plan and a supplemental deferred
compensation plan. Discretionary Company contributions to the 401(k) plan of up
to 5% of eligible base pay were made in fiscal 1997.
5
<PAGE>
The 1996 Stock Incentive Plan was approved by the stockholders at the 1996
Annual Meeting. This Plan allows the Company to grant certain stock-related
benefits and to utilize additional tax deductions which may be available under
Section 162(m) of the Internal Revenue Code of 1986. Section 162(m) limits to $1
million the deductibility of annual compensation paid by a public corporation to
the chief executive officer and the next four most highly compensated executive
officers unless such compensation is performance-based within the meaning of
Section 162(m) and the regulations thereunder.
COMPENSATION COMMITTEE OF THE BOARD OF
DIRECTORS
Douglas C. Strain, Chairman
Harry A. Merlo
6
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY OF COMPENSATION
The following table provides certain summary information concerning
compensation paid to or accrued for the Company's Chief Executive Officer and
each of the four other most highly compensated executive officers of the Company
(hereafter referred to as the "named executive officers") for the fiscal years
ended March 29, 1997, March 30, 1996, and April 1, 1995:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION -------------
--------------------------------------------- STOCK OPTION
NAME AND FISCAL OTHER ANNUAL GRANTS ALL OTHER
PRINCIPAL POSITION YEAR SALARY(1) BONUS(2) COMPENSATION(3) (# OF SHARES) COMP.
- ----------------------------------- --------- ---------- --------------- ---------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Tsui, Cyrus Y. 1997 $ 462,876 $ 1,215,092(4) $ 4,403 131,250 $ 34,834(8)
President & CEO 1996 402,505 1,082,983 10,885(5) 131,250 21,669(6)
1995 350,000 684,078 4,371 87,500 16,935(6)
Laub, Steven A. 1997 $ 207,730 $ 435,000 $ 4,403 80,000 $ 14,684(8)
Senior VP & COO 1996 186,678 381,000 6,175 37,500 4,069(7)
1995 174,164 270,812 4,371 25,000 2,550(7)
Skaggs, Stephen A. 1997 $ 162,304 $ 295,000 $ 4,403 60,000 $ 6,300(8)
Senior VP & CFO
Yu, Kenneth K. 1997 $ 166,399 $ 262,000 $ 4,403 15,000 $ 3,624(8)
VP & Managing Director, 1996 158,099 244,000 6,175 18,750 821(7)
Lattice Asia 1995 147,855 148,874 4,371 10,000 0
Yu, Jonathan K. 1997 $ 158,645 $ 228,000 $ 4,403 15,000 $ 19,496(8)
Corporate VP - Business 1996 151,474 221,000 7,847(5) 18,750 10,488(7)
Development 1995 145,345 141,000 4,371 12,500 7,900(7)
</TABLE>
- ------------------------
(1) Salary includes amounts deferred pursuant to the Company's 401(k) savings
plan.
(2) Bonuses for each year include amounts earned for such year, even if paid in
the subsequent year, and exclude bonuses paid during such year that were
earned for a prior year.
(3) Unless otherwise noted, represents participation in the Company's profit
sharing plan.
(4) Bonus was paid in stock and cash, pursuant to the 1996 Stock Incentive Plan.
Mr. Tsui received 5,842 shares worth $140,938 for the quarter ended 6/29/96,
4,716 shares worth $139,712 for the quarter ended 9/28/96, 3,346 shares
worth $150,988 for the quarter ended 12/28/96, and 3,908 shares worth
$175,860 for the quarter ended 3/29/97. The remainder of the bonus was paid
in cash to provide reimbursement for taxes.
(5) Includes tax payments by the Company related to non-cash compensation during
fiscal 1996 in the amounts of $4,710 and $1,672 for Mr. Tsui and Mr.
Jonathan Yu, respectively.
(6) Includes payments by the Company for patent issuance, $2,900 in 1995 and
$1,400 in 1996, and by the Company for life and disability insurance,
$14,035 in 1995 and $20,269 in 1996.
(7) Represents payments by the Company for life and disability insurance.
(8) Includes payments by the Company for life and disability insurance of
$25,344 for Mr. Tsui, $5,112 for Mr. Laub, $1,298 for Mr. Skaggs, $3,624 for
Mr. Kenneth Yu, and $11,678 for Mr. Jonathan Yu. Also includes contributions
made to the 401(k) plan by the Company in the amounts of $9,490 for Mr.
Tsui, $9,572 for Mr. Laub, $5,002 for Mr. Skaggs, and $7,818 for Mr.
Jonathan Yu.
7
<PAGE>
OPTIONS GRANTED AND OPTIONS EXERCISED IN THE LAST FISCAL YEAR
The following tables set forth information regarding stock options granted
to and exercised by the named executive officers during the last fiscal year, as
well as options held by the named executive officers as of March 29, 1997:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
INDIVIDUAL GRANTS OF STOCK PRICE
---------------------------------------------------- APPRECIATION
OPTION (THROUGH EXPIRATION DATE)
GRANTS % OF TOTAL EXERCISE --------------------------
NAME AND (# OF OPTIONS PRICE EXPIRATION 5% 10%
PRINCIPAL POSITION SHRS)(1) GRANTED ($/SHR)(1) DATE PER YEAR(2) PER YEAR(2)
- --------------------------------------- ------------- ----------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Tsui, Cyrus Y. 131,250 16.2% $ 28.13 8/12/01 $ 1,019,867 $ 2,253,640
President & CEO
Laub, Steven A. 80,000(3) 9.9% $ 28.13 8/12/01 $ 621,634 $ 1,373,648
Senior VP & COO
Skaggs, Stephen A. 60,000(3) 7.4% $ 28.13 8/12/01 $ 466,225 $ 1,030,236
Senior VP & CFO
Yu, Kenneth K. 15,000 1.9% $ 28.13 8/12/01 $ 116,556 $ 257,559
VP & Managing Director,
Lattice Asia
Yu, Jonathan K. 15,000 1.9% $ 28.13 8/12/01 $ 116,556 $ 257,559
Corporate VP -Business
Development
</TABLE>
- ------------------------
(1) These options were granted under the Company's 1988 Stock Incentive Plan in
August 1996, and have an exercise price equal to the fair market value of
the Company's Common Stock as of the date of the grant. Except where noted,
these grants vest quarterly over a four-year period ending in August 2000.
(2) The 5% and 10% assumed rates of appreciation are mandated by the rules of
the Securities and Exchange Commission and do not represent the Company's
estimate or projection of future prices for its Common Stock.
(3) These grants vest 25% after one year, and quarterly thereafter until fully
vested in August 2000.
8
<PAGE>
OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED
OPTIONS AT FISCAL YEAR
END VALUE OF UNEXERCISED
SHARES ------------------------ OPTIONS AT FISCAL YEAR END
NAME AND ACQUIRED ON VALUE VESTED UNVESTED --------------------------
PRINCIPAL POSITION EXERCISE REALIZED (# OF SHRS) (# OF SHRS) VESTED(1) UNVESTED(1)
- -------------------------------- ----------- ------------ ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Tsui, Cyrus Y. 131,250 $ 4,164,625 188,669 248,831 $ 3,771,339 $ 4,131,004
President & CEO
Laub, Steven A. 51,000 $ 1,356,125 35,718 118,282 $ 711,550 $ 1,976,575
Senior VP & COO
Skaggs, Stephen A. 25,000 $ 880,451 8,937 70,563 $ 173,198 $ 1,176,240
Senior VP & CFO
Yu, Kenneth K. 15,500 $ 396,390 26,140 30,860 $ 554,377 $ 500,320
VP & Managing Director,
Lattice Asia
Yu, Jonathan K. 58,375 $ 1,393,464 28,514 32,736 $ 573,992 $ 544,758
Corporate VP - Business
Development
</TABLE>
- ------------------------
(1) Represents the difference between the exercise price of the options and the
closing price of the Company's stock on March 27, 1997.
9
<PAGE>
COMPARISON OF TOTAL CUMULATIVE STOCKHOLDER RETURN
The following graph sets forth the Company's total cumulative stockholder
return as compared to the S&P 500 Index and the S&P Technology Sector* for the
period March 31, 1992 through March 31, 1997. The total stockholder return
assumes $100 invested at the beginning of the period in Common Stock of the
Company, the S&P 500, and the S&P Technology Sector. Historic stock price
performance is not necessarily indicative of future stock price performance.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
LATTICE SEMICONDUCTOR CORP S & P 500 S & P TECHNOLOGY SECTOR
<S> <C> <C> <C>
1992 $ 100 $ 100 $ 100
1993 179 115 110
1994 156 117 129
1995 240 135 164
1996 277 179 221
1997 446 214 299
</TABLE>
- ------------------------
*The S&P Technology Sector was previously named the S&P High Technology Index.
All data points are at March 31.
10
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of June 12, 1997, information about (i)
persons known to the Company to be the beneficial owners of more than five
percent of the Company's outstanding Common Stock, (ii) each director and named
executive officer and (iii) all directors and executive officers as a group:
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
BENEFICIAL OWNER SHARES(1) CLASS
- ---------------------------------------------------------------------- --------- ----------
<S> <C> <C>
J. & W. Seligman & Co., Inc. 3,146,916(2) 13.6%
100 Park Avenue
New York, NY 10017
Fidelity Investments 2,556,400(2) 11.1%
82 Devonshire Street
Boston, MA 02109
State Farm Mutual Automobile Insurance Company 1,625,000(2) 7.0%
One State Farm Plaza
Bloomington, IL 61710
Firstar Corporation 1,158,900(2) 5.0%
777 East Wisconsin Avenue
Milwaukee, WI 53202
Cyrus Y. Tsui, Chairman of the Board,
President and Chief Executive Officer 727,848(3) 3.1%
Steven A. Laub, Senior Vice President and COO 159,068(4) *
Stephen A. Skaggs, Senior Vice President and CFO 80,211(5) *
Kenneth K. Yu, Vice President and Managing Director, Lattice Asia 77,000(6) *
Jonathan K. Yu, Corporate Vice President - Business Development 63,842(7) *
Mark O. Hatfield, Director 18,000(8) *
Daniel S. Hauer, Director 33,145(9) *
Harry A. Merlo, Director 25,875(10) *
Larry W. Sonsini, Director 21,000(11) *
Douglas C. Strain, Director 17,250(12) *
All directors and executive officers as a group (16 persons) 1,615,019(13) 6.7%
</TABLE>
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* Less than one percent.
(1) Unless otherwise indicated, the named beneficial owner has sole voting and
investment power with respect to the shares, subject to community property
laws where applicable.
(2) Based upon information received from the named beneficial owner as of June
12, 1997 or on Schedule 13G filings under the Securities Exchange Act of
1934, as amended.
(3) Includes 437,500 shares issuable upon exercise of options.
(4) Includes 154,000 shares issuable upon exercise of options.
11
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(5) Includes 79,500 shares issuable upon exercise of options.
(6) Includes 57,000 shares issuable upon exercise of options.
(7) Includes 61,250 shares issuable upon exercise of options.
(8) Includes 18,000 shares issuable upon exercise of options.
(9) Includes 11,250 shares issuable upon exercise of options.
(10) Excludes an aggregate of 15,815 shares held by the Harry A. Merlo
Charitable Remainder Trusts and the Domenic W. Merlo Educational Trust;
includes 21,375 shares issuable upon exercise of options.
(11) Includes 21,000 shares issuable upon exercise of options.
(12) Includes 14,750 shares issuable upon exercise of options.
(13) Includes 1,211,375 shares issuable upon exercise of options.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors, and persons who own more than 10% 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 Form 5 with the
Securities and Exchange Commission ("SEC"). Such officers, directors and 10%
stockholders are also required by SEC rules to furnish the Company with copies
of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons, the Company believes
that, during the fiscal year ended March 29, 1997, all Section 16(a) filing
requirements applicable to its officers, directors and 10% stockholders were
complied with, with two exceptions. A trust, of which Harry A. Merlo, a
Director, is a trustee and disclaims beneficial ownership, inadvertently did not
file record of a sale of 10,000 shares by the appropriate Form 4 filing date.
The Form 4 was filed within two months of the sale. 13,904 shares of stock
granted to Cyrus Y. Tsui in the form of a bonus, pursuant to the 1996 Stock
Incentive Plan as approved by stockholders, was inadvertently not reported by
the appropriate Form 5 filing date. The Form 5 was filed within 30 days of the
required date.
PROPOSAL 2: APPROVAL OF AMENDMENT TO EMPLOYEE STOCK PURCHASE PLAN
The Employee Stock Purchase Plan (the "Purchase Plan") was adopted by the
Board of Directors and approved by the stockholders in 1990. The stockholders
approved, in August 1993, an increase of 225,000 shares to the original number
of shares reserved for the Purchase Plan. In May 1997, the Board of Directors
amended the Purchase Plan, subject to stockholder approval, to increase the
shares reserved for issuance from 450,000 shares to 700,000 shares. The Board
believes that increasing the number of shares available under the Purchase Plan
will enable the Company to continue its policy of encouraging employee equity
participation in the Company by enabling employees to purchase the Company's
Common Stock at a discount from the market price through voluntary payroll
deductions. Employee participation in the Purchase Plan has been broadly-based.
Approximately 66% of the Company's eligible employees participated in this plan
during the purchase period ending December 31, 1996. The Board believes that the
increased opportunity for employee equity participation will promote the
attraction, retention and motivation of employees.
PURCHASE PLAN ACTIVITY
Since the Purchase Plan's inception in 1990, and as of June 12, 1997
(without taking into account the proposed amendment to the Purchase Plan), the
Company had issued and sold an aggregate of 392,191 shares of Common Stock
pursuant to the Purchase Plan and 57,809 shares of Common Stock were
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available for future issuance under the Purchase Plan. Participation in the
Purchase Plan is voluntary and is dependent on each eligible employee's election
to participate and his or her determination as to the level of payroll
deductions. Accordingly, future purchases under the Purchase Plan are not
determinable. The following table sets forth certain information regarding
shares purchased under the Purchase Plan during the Company's last fiscal year
by each of the named executive officers, all current executive officers as a
group and all non-executive officer employees as a group:
<TABLE>
<CAPTION>
NUMBER OF
DOLLAR SHARES
NAME OF INDIVIDUAL AND POSITION OR IDENTITY OF GROUP VALUE(1) PURCHASED
- ---------------------------------------------------------------------------------------- ------------ -----------
<S> <C> <C>
Cyrus Y. Tsui, Chairman of the Board, President and CEO $ 47,656 1,036
Steven A. Laub, Senior VP and COO $ 29,918 872
Stephen A. Skaggs, Senior VP and CFO $ 25,028 711
Kenneth K. Yu, VP and Managing Director, Lattice Asia $ 0 0
Jonathan K. Yu, Corporate VP - Business Development $ 26,735 760
All Executive Officers as a group $ 227,315 6,169
All other employees (excluding executive officers) as a group $ 1,813,255 51,252
</TABLE>
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(1) Represents the market value of the shares on the date of purchase. The
purchase price paid by each participant in the Purchase Plan is at least 15%
below the market value. See "Summary of Purchase Plan--Right to Purchase
Shares".
SUMMARY OF THE PURCHASE PLAN
The purpose of the Purchase Plan is to provide a convenient and practical
means for employees of the Company and its participating subsidiaries to
purchase the Company's Common Stock and a method by which the Company may assist
and encourage its employees to become stockholders. The Purchase Plan is
intended to be a permanent program but the Board of Directors may terminate the
Purchase Plan at any time.
ELIGIBILITY. Except as described below, all regular-status employees of the
Company and its participating subsidiaries who have been so employed for at
least six months and work more than twenty hours per week will be eligible to
participate in the Purchase Plan. Any employee who owns or would be deemed to
own five percent or more of the voting power or value of all classes of stock of
the Company will be ineligible to participate in the Purchase Plan.
ADMINISTRATION. The Purchase Plan will be administered by the Board of
Directors or a committee appointed by the Board of Directors. The Board of
Directors may promulgate rules and regulations for the operation of the Purchase
Plan, adopt forms for use in connection with the plan, decide any question of
interpretation of the plan or rights arising thereunder and generally supervise
the administration of the plan.
RIGHT TO PURCHASE SHARES. Eligible employees may participate in the
Purchase Plan by electing to contribute to the plan by means of a payroll
deduction. Participants may contribute to the Purchase Plan from $10 to 10
percent of their total base salary during each pay period in the offering
period. No employee's rights to acquire shares of Common Stock may accrue at a
rate that exceeds $25,000 per calendar year. The $25,000 limit is based on the
fair market value of the shares as of the relevant enrollment date. At the end
of each six-month offering period, June 30 and December 31 each year, the
Company will apply the amount contributed by the participant during the offering
period to the purchase of whole shares of Common Stock reserved under the
Purchase Plan. The purchase price per share of Common Stock is equal to the
lesser of 85 percent of the fair market value of the Common Stock on the
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first trading day of the offering period or the last trading day of the offering
period. Any cash amount remaining after the purchase of whole shares will be
retained in the participant's account for application on the next purchase date.
Neither payroll deductions credited to a participant's account nor any
rights under the Purchase Plan may be assigned, transferred, pledged or
otherwise disposed of in any way by the participant. Upon termination of a
participant's employment because of death, retirement or disability, the payroll
deductions credited to the participant's account will be used to purchase shares
of Common Stock on the next purchase date under the plan. Any remaining balance
is returned to the participant or his or her beneficiary. A participant may
withdraw the entire accumulated balance in his or her account and terminate
participation in the Purchase Plan by giving written notice to the Company,
except that no amounts may be withdrawn within 15 days prior to the last day of
an offering period.
AMENDMENTS. The Board of Directors of the Company may amend the Purchase
Plan, except that without stockholder approval, the Board of Directors may not
increase the number of shares reserved for issuance under the plan, permit the
sale of shares to noneligible employees, materially increase benefits or
materially modify eligibility requirements. The Board of Directors may terminate
the Purchase Plan at any time. Upon termination, amounts credited to
participants' accounts will be returned to participants.
UNITED STATES TAX INFORMATION
The Purchase Plan, and the right of participants to make purchases
thereunder, are intended to qualify under the provisions of Sections 421 and 423
of the Internal Revenue Code of 1986, as amended (the "Code"). Under these
provisions, no income will be taxable to a participant until the shares
purchased under the Purchase Plan are sold or otherwise disposed of. However,
the participant will generally be subject to tax upon the sale or other
disposition of the shares. If the shares are sold or otherwise disposed of more
than two years from the first day of the offering period and one year from the
date the shares are purchased (the "Holding Periods"), the participant will
recognize ordinary income measured as the lesser of (a) the excess of the fair
market value of the shares at the time of such sale or disposition over the
purchase price, or (b) an amount equal to 15 percent of the fair market value of
the shares as of the first day of the offering period. Any additional gain will
be treated as long-term capital gain. If the shares are sold or otherwise
disposed of before the expiration of the Holding Periods, the participant will
recognize ordinary income generally measured as the excess of the fair market
value of the shares on the date the shares are purchased over the purchase
price. Any additional gain or loss on such sale or disposition will be long-term
or short-term capital gain or loss, depending on the holding period. The Company
is not entitled to a deduction for amounts taxed as ordinary income or capital
gain to a participant except to the extent of ordinary income recognized by
participants upon a sale or disposition of shares prior to the expiration of the
Holding Periods.
The foregoing summary of the effect of United States federal income taxation
upon the participant and the Company in connection with the Purchase Plan does
not purport to be complete, and reference should be made to the applicable
provisions of the Code. In addition, this summary does not discuss the
provisions of the income tax laws of any municipality, state or foreign country
in which the participant may reside.
REQUIRED VOTE
The approval of the amendment to the Purchase Plan requires the affirmative
vote of a majority of the Votes Cast on this matter at the Annual Meeting. See
"Information Concerning Solicitation and Voting-- General".
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" APPROVAL
OF THE AMENDMENT TO THE PURCHASE PLAN.
14
<PAGE>
PROPOSAL 3: RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
On May 13, 1997, the Board of Directors appointed Price Waterhouse LLP to
act as the independent accountants of the Company for the fiscal year ending
March 28, 1998, subject to ratification of the appointment by the stockholders.
Price Waterhouse LLP has served as the Company's independent accountants for the
last ten fiscal years. Representatives of Price Waterhouse LLP have been invited
and are expected to attend the Annual Meeting, will be given the opportunity to
make a statement if they wish to do so and are expected to be available to
respond to appropriate questions.
REQUIRED VOTE
The proposal to ratify the appointment of Price Waterhouse LLP requires the
affirmative vote of a majority of the Votes Cast at the Annual Meeting. See
"Information Concerning Solicitation and Voting-- General". In the event of a
negative vote on such ratification, the Board will reconsider its selection.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF PRICE WATERHOUSE LLP AS THE COMPANY'S INDEPENDENT ACCOUNTANTS
FOR THE FISCAL YEAR ENDING MARCH 28, 1998.
ANNUAL REPORT
The Company's Annual Report to Stockholders for the fiscal year ended March
29, 1997 is transmitted herewith. The Company will furnish without charge, upon
the written request of any person who was a stockholder or a beneficial owner of
Common Stock of the Company at the close of business on June 12, 1997, a copy of
the Company's Annual Report on Form 10-K filed with the Securities and Exchange
Commission for its most recent fiscal year, including financial statement
schedules but not including exhibits. Requests should be directed to the
attention of the Secretary of the Company at the address set forth in the Notice
of Annual Meeting immediately preceding this Proxy Statement.
OTHER BUSINESS
The Board of Directors does not intend to present any business for action at
the meeting other than the election of directors and the proposals set forth
herein, nor does it have knowledge of any matters which may be presented by
others. If any other matter properly comes before the meeting, the persons named
in the accompanying form of proxy intend to vote the shares they represent as
the Board of Directors may recommend.
METHOD AND COST OF SOLICITATION
The cost of solicitation of proxies will be paid by the Company. In addition
to solicitation by mail, employees of the Company, for no additional
compensation, may request the return of proxies personally or by telephone,
telecopy or telegram. The Company will, on request, reimburse brokers and other
persons holding shares for the benefit of others for their expenses in
forwarding proxies and accompanying material and in obtaining authorization from
beneficial owners of the Company's stock to execute proxies.
STOCKHOLDER PROPOSALS
A stockholder proposal to be considered for inclusion in proxy material for
the Company's August 1998 Annual Meeting of Stockholders must be received by the
Company not later than March 1, 1998 in order that it may be included in the
Proxy Statement and form of proxy relating to that meeting.
15
<PAGE>
It is important that your shares be represented at the meeting, regardless
of the number of shares that you hold. Therefore, whether or not you expect to
be present at the meeting, please sign the accompanying form of proxy and return
it in the enclosed stamped return envelope.
By Order of the Board of Directors
Stephen A. Skaggs
SECRETARY
Hillsboro, Oregon
July 1, 1997
16
<PAGE>
APPENDIX I
LATTICE SEMICONDUCTOR CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
AS AMENDED AND RESTATED EFFECTIVE MAY 13, 1997
ARTICLE I
PURPOSE
The purpose of the Lattice Semiconductor Corporation Employee Stock
Purchase Plan (the "Plan") is to provide a convenient and practical means by
which employees of Lattice Semiconductor Corporation (the "Corporation") and
the employees of any Participating Subsidiary (as hereinafter defined) may
acquire stock of the Corporation. The Corporation believes that ownership of
its stock by employees will mutually benefit the employees and the
Corporation by creating a greater community of interest between the
Corporation's stockholders and its employees. The Corporation intends that
the Plan shall constitute an "employee stock purchase plan" within the
meaning of Section 423 of the Code (as hereinafter defined). Further the
Corporation intends that the Plan shall satisfy the requirements of Rule
16b-3 under the Securities Exchange Act of 1934, as in effect from time to
time.
ARTICLE II
DEFINITIONS
The following terms, when capitalized, shall have the meaning specified
below unless the context clearly indicates to the contrary.
2.1 ACCOUNT shall mean each separate account maintained for a
Participant under the Plan, collectively or singly as the context requires.
Each Account shall be credited with a Participant's contributions, and shall
be charged for the purchase of Shares. A Participant shall be fully Vested
in the cash contributions to his or her Account at all times. The Plan
Administrator may create special types of accounts for administrative
reasons, even though the Accounts are not expressly authorized by the Plan.
2.2 BOARD OF DIRECTORS shall mean the Board of Directors of the
Corporation.
2.3 CODE shall mean the Internal Revenue Code of 1986, as amended from
time to time.
<PAGE>
2.4 COMMITTEE shall mean the Committee appointed by the Board of
Directors in accordance with Section 8.1 of the Plan, if such a Committee be
appointed.
2.5 COMPENSATION shall mean the total cash compensation paid to an
Employee as base salary in the period in question for the services rendered
to the Employer by the Employee while a Participant. Compensation shall
include the earnings waived by an Employee pursuant to a salary reduction
arrangement under any cash or deferred compensation plan that is maintained
by the Employer and that is intended to be qualified under Section 401(k) or
Section 125 of the Code, but shall not include earnings that are not part of
the Employee's base salary such as overtime pay, severance pay, hiring or
relocation bonuses, or pay in lieu of vacations or sick leave.
2.6 COMMON STOCK shall mean the common stock, $.01 par value of the
Corporation.
2.7 CORPORATION shall mean Lattice Semiconductor Corporation, a Delaware
Corporation.
2.8 DISABILITY shall refer to a mental or physical impairment which is
expected to result in death or which has lasted or is expected to last for a
continuous period of twelve (12) months or more and which causes the Employee
to be unable, in the opinion of the Corporation and two independent
physicians, to perform his or her duties as an employee of the Corporation.
Disability shall be deemed to have occurred on the first day after the
Corporation and two independent physicians have furnished their opinion of
Disability to the Plan Administrator.
2.9 EMPLOYEE shall mean an individual who renders services to his or her
Employer pursuant to a regular-status employment relationship with such
Employer. A person rendering services to an Employer purportedly as an
independent consultant or contractor shall not be an Employee for purposes of
the Plan.
2.10 EMPLOYER shall mean, collectively, the Corporation and any
Participating Subsidiary, or any successor entity that continues the Plan, or
all such entities collectively. All Employees of entities that constitute
the Employer shall be treated as employed by a single company for all Plan
purposes. In contexts in which actions are required or permitted to be taken
or notices to be given, the Employer shall mean the Corporation or any
successor corporation.
2.11 EMPLOYMENT shall mean the period during which an individual is an
Employee. Employment shall commence on the day the individual first performs
services for the Employer as an Employee and shall terminate on the day such
services cease, except as determined under Article X.
2.12 ENROLLMENT DATE shall mean the first day of each Offering Period.
2.13 OFFERING shall mean the offering of Shares pursuant to the Plan
during an Offering Period.
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<PAGE>
2.14 OFFERING PERIOD shall mean any one of the separate 6-month periods
commencing on January 1 and July 1 of each calendar year; provided, however
that the first Offering Period shall commence on the date set by the Plan
Administrator as the Enrollment Date for the first Offering and shall
continue through the earlier of the next succeeding June 30 or December 31,
at which time such Offering shall terminate.
2.15 PARTICIPANT shall mean any Employee who is participating in any
Offering under the Plan pursuant to Article III.
2.16 PARTICIPATING SUBSIDIARY shall mean a Subsidiary that is designated
by the Board of Directors of the Company as a participating employer in the
Plan.
2.17 PAYROLL DEDUCTION AUTHORIZATION FORM shall mean the form provided by
the Corporation on which a Participant shall elect to participate in the Plan
and designate the amount or percentage of his or her Compensation to be
contributed to his or her Account through payroll deductions.
2.18 PLAN shall mean this document.
2.19 PLAN ADMINISTRATOR shall mean the Board of Directors or the
Committee, whichever shall be administering the Plan from time to time in the
discretion of the Board of Directors, as described in Article VIII.
2.20 PURCHASE DATE shall mean the last day of any Offering Period.
2.21 RETIREMENT shall mean a Participant's termination of Employment on
or after attaining the age of 65 or after the Plan Administrator has
determined that a Disability has occurred with respect to the Participant.
2.22 SHARE shall mean one share of Common Stock.
2.23 SUBSIDIARY shall mean any corporation, association or other business
entity at least fifty percent (50%) or more of the total combined voting
power of all classes of stock of which is owned or controlled directly or
indirectly by the Corporation or one or more of such Subsidiaries or both.
2.24 VALUATION DATE shall mean the date upon which the fair market value
of Shares is to be determined for purposes of setting the price of Shares
under Section 5.2 (that is, the Enrollment Date or the applicable Purchase
Date). If the Enrollment Date is not a date on which the fair market value
may be determined in accordance with Section 5.3, the
-3-
<PAGE>
Valuation Date shall be the first day after the Enrollment Date for which
such fair market value may be determined. If the Purchase Date is not a date
on which the fair market value may be determined in accordance with Section
5.3, the Valuation Date shall be the first date prior to the Purchase Date on
which such fair market value may be determined.
2.25 VESTED shall mean non-forfeitable.
ARTICLE III
EMPLOYEE PARTICIPATION
3.1 PARTICIPATION. An Employee who meets the requirements of Section
3.2 below may elect to participate in the Plan, effective as of any future
Enrollment Date, by completing and filing a Payroll Deduction Authorization
Form as provided in Section 4.1. As of each Enrollment Date until the supply
of Shares reserved under the Plan is exhausted, the Corporation hereby grants
a right to purchase Shares under the terms of the Plan to each eligible
Employee who has elected to participate in the Offering commencing on that
Enrollment Date, in the amount and/or on the terms provided in Article V.
3.2 REQUIREMENTS FOR PARTICIPATION
(a) An Employee shall become eligible to participate in the Plan on the
first Enrollment Date on which he or she first meets all of the following
requirements:
(i)The Employee is employed by the Employer on the Enrollment Date for
that offering and has been continuously employed by the Employer for a
period of six months prior to the Enrollment Date;
(ii)The Employee's customary period of Employment is for more than
twenty (20) hours per week; and
(iii)The Employee's customary period of Employment is for more than
five (5) months in any calendar year.
(b) Employees who are also directors or officers of the Corporation may
participate only in accordance with Rule 16b-3 under the Securities Exchange Act
of 1934, as in effect from time to time.
(c) Absent withdrawal from the Plan pursuant to Section 6.3, a Participant
who has elected to participate in the Plan by completing and filing a Payroll
Deduction Authorization Form with respect to an Offering Period will
automatically be re-enrolled in the Plan on the next Enrollment Date immediately
following the expiration of the Offering of which he or she is then a
Participant, and the terms of the Payroll Deduction Authorization Form then on
file with the
-4-
<PAGE>
Corporation shall remain applicable for the subsequent Offering Period until
modified in accordance with Section 4.5.
(d) A Participant shall become ineligible to participate in the Plan and
shall cease to be a Participant when any of the following occurs:
(i)the entity of which the Participant is an Employee ceases to be an
Employer as defined in Section 2.10; or
(ii)the Participant ceases to meet the eligibility requirements of
Section 3.2(a).
The payroll deductions credited to the Account of any Participant who
becomes ineligible during an Offering Period shall be returned to the
Participant, and the ineligible Participant shall have no right to purchase
Shares at the next Purchase Date.
3.3 LIMITATIONS ON PARTICIPATION
(a) No Employee may obtain a right to purchase Shares under the Plan if,
immediately after such right is granted, the Employee owns or is deemed to
own Shares possessing five percent (5%) or more of the combined voting power
or value of all classes of stock of the Corporation or any parent or
Subsidiary of the Corporation. For purposes of determining share ownership,
the rules of Section 424(d) of the Code shall apply and Shares that the
Employee may purchase under any options or rights to purchase, whether or not
Vested, shall be treated as Shares owned by the Employee.
(b) No Employee may obtain a right to purchase Shares under the Plan
that permits the Employee's rights to purchase Shares under the Plan and any
other employee stock purchase plan of the Corporation or any parent or
Subsidiary of the Corporation to which Section 423 of the Code applies to
accrue at a rate that exceeds $25,000 in fair market value of Shares
(determined as of the Enrollment Date) for each calendar year in which such
rights to purchase Shares are outstanding. For this purpose, the right to
purchase Shares accrues on the Purchase Date of an Offering Period. This
section shall be interpreted to permit an Employee to purchase the maximum
number of Shares permitted under Section 423(b)(8) of the Code and
regulations and interpretations adopted thereunder.
3.4 VOLUNTARY PARTICIPATION. Participation in the Plan shall be
voluntary.
ARTICLE IV
PAYROLL DEDUCTIONS
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<PAGE>
4.1 PAYROLL DEDUCTION AUTHORIZATION. An Employee may contribute to the
Plan only by means of payroll deduction. A Payroll Deduction Authorization
Form must be filed with the enrolling individual's payroll office not less
than 15 days prior to the Enrollment Date as of which the payroll deductions
are to take effect.
4.2 AMOUNT OF DEDUCTIONS. A Participant may specify that he or she
desires to make contributions to the Plan at a rate not less than $10.00 and
not more than ten percent (10%) of the Participant's Compensation during each
pay period in the Offering Period, or such other minimum or maximum
percentages as the Plan Administrator shall establish from time to time.
Such specification shall apply during any period of continuous participation
in the Plan, unless modified or terminated as provided in Section 4.5 or as
otherwise provided in the Plan. If a payroll deduction cannot be made in
whole or in part because the Participant's pay for the period in question is
insufficient to fund the deduction after having first withheld all the
amounts otherwise deductible from his or her pay, the amount that was not
withheld cannot be made up by the Participant nor will it be withheld from
subsequent paychecks. If payroll deductions are made by a Participating
Subsidiary, that corporation will promptly remit the amount of the deduction
to the Corporation.
4.3 COMMENCEMENT OF DEDUCTIONS. Payroll deductions for a Participant
shall commence with the first paycheck following the Enrollment Date of the
Offering for which his or her Payroll Deduction Authorization Form is
effective and shall continue indefinitely, unless modified or terminated as
provided in Section 4.5 or as otherwise provided in the Plan.
4.4 ACCOUNTS. All payroll deductions made for a Participant shall be
credited to his or her Account under the Plan. Following each Purchase Date,
the Plan Administrator shall promptly deliver a report to each Participant
setting forth the aggregate payroll deductions credited to such Participant's
Account during the preceding six months and the number of Shares purchased.
4.5 MODIFICATION OF AUTHORIZED DEDUCTIONS.
(a) Participant may, prior to the commencement of each Offering Period
in which he or she will be a Participant, increase or reduce the amount of
his or her payroll deduction, effective for all subsequent payroll periods,
by completing an amended Payroll Deduction Authorization Form and filing it
with his or her payroll office in accordance with Section 4.1; provided,
however that no modification in a Participant's payroll deduction shall cause
such Participant's contribution to be less than $10.00 or more than ten
percent (10%) of such Participant's compensation during any pay period.
(b) A Participant may at any time discontinue his or her payroll
deductions by completing an amended Payroll Deduction Authorization Form and
filing it with his or her payroll office, after which the Participant's
participation in the Offering will terminate without automatic re-enrollment
under Section 3.2(c), and the payroll deductions credited to such
Participant's account shall be returned to the Participant.
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<PAGE>
(c) For purposes of this Section 4.5, an amended Payroll Deduction
Authorization Form shall be effective for a specific pay period when filed at
least 15 days prior to the last day of such period.
ARTICLE V
PURCHASES OF SHARES
5.1 PURCHASE OF SHARES. Subject to the limitations of Article VI, on
each Purchase Date in an Offering Period the Corporation shall apply the
amount credited to each Participant's Account to the purchase of as many full
Shares that may be purchased with such amount at the price set forth in
Section 5.2, and shall issue such Shares to the Participant. Payment for
shares purchased under the Plan will be made only through payroll withholding
in accordance with Article IV.
5.2 PRICE. The price of Shares to be purchased under Section 5.1 on any
Purchase Date shall be the lower of:
(a) Eighty-five percent (85%) of the fair market value of the shares on
the Enrollment Date of the Offering; or
(b) Eighty-five percent (85%) of the fair market value of the Shares on
the Purchase Date of the Offering, provided that in no event shall the price
be less than the book value per share of the Shares on the Purchase Date.
For this purpose, the book value per share shall equal the aggregate book
value of the Corporation on a consolidated basis (total assets minus total
liabilities) at the end of the Company's fiscal quarter that is at the
midpoint of the Offering Period, divided by the total number of shares of
Common Stock (or common stock equivalents) outstanding at the end of the
Company's fiscal quarter ended immediately prior to the Purchase Date.
5.3 FAIR MARKET VALUE.
(a) The fair market value of the Shares on any date shall be equal to
the closing price of such shares on the Valuation Date, as reported on the
NASDAQ National Market System or such other quotation system that supersedes
it.
(b) If prices for the Shares are not publicly quoted, the fair market
value of the Shares shall be determined by the Plan Administrator in good
faith. Such determination shall be conclusive and binding on all persons.
5.4 UNUSED CONTRIBUTIONS. Any amount credited to a Participant's
Account and remaining therein immediately after a Purchase Date because it
was less than the amount required to purchase a full Share shall be carried
forward in such Participant's Account for application on the next succeeding
Purchase Date. No interest will be paid on the amounts accumulated.
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5.5 DELIVERY AND CUSTODY OF SHARES. Shares purchased by Employees
pursuant to the Plan shall be delivered to the Employee or to an investment
or financial firm appointed by the Plan Administrator to act as custodian on
behalf of the Employee.
ARTICLE VI
TERMINATION AND WITHDRAWAL
6.1 TERMINATION OF EMPLOYMENT. Upon termination of a Participant's
Employment for any reason other than as set forth in Section 6.2, the payroll
deductions credited to such Participant's Account shall be returned to the
Participant. A Participant shall have no right to acquire Shares on any
Purchase Date subsequent to termination of his or her Employment.
6.2 TERMINATION UPON DEATH, RETIREMENT OR DISABILITY. Upon termination
of the Participant's Employment because of his or her Death, Retirement or
Disability, the payroll deductions credited to his or her Account shall be
used to purchase Shares as provided in Article V on the next Purchase Date.
Any remaining balance in the participant's Account shall be returned to him
or her or, in the case of death, any Shares purchased and any remaining
balance shall be transferred to the deceased Participant's estate.
6.3 WITHDRAWAL. A Participant may withdraw the entire amount credited
to his or her Account under the Plan and thereby terminate participation in
the current Offering at any time by giving written notice to the Corporation,
but in no case may a Participant withdraw amounts within the 15 days
immediately preceding a Purchase Date for that Offering. Any amount
withdrawn shall be paid to the Participant promptly after receipt of proper
notice of withdrawal and no further payroll deductions shall be made unless a
Payroll Deduction Authorization Form directing further deductions is or has
been submitted.
ARTICLE VII
SHARES PURCHASED UNDER THE PLAN
7.1 SOURCE AND LIMITATION OF SHARES.
(a) The Corporation has reserved for sale under the Plan 700,000 shares
of its Common Stock, subject to adjustment upon changes in capitalization of
the Corporation as provided in Section 9.2. Shares sold under the Plan may
be newly issued shares or shares reacquired in private transactions or open
market purchases, but all shares sold under the Plan regardless of source
shall be counted against the 700,000 Share limitation.
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(b) If there is an insufficient number of Shares to permit the full
exercise of all existing rights to purchase Shares, or if the legal
obligations of the Corporation prohibit the issuance of all Shares
purchasable upon the full exercise of such rights, the Plan Administrator
shall make a pro rata allocation of the Shares remaining available in as
nearly a uniform and equitable manner as possible, based pro rata on the
aggregate amounts then credited to each Participant's Account. In such
event, payroll deductions to be made shall be reduced accordingly and the
Plan Administrator shall give written notice of such reduction to each
Participant affected thereby. Any amount remaining in a Participant's
Account immediately after all available Shares have been purchased will be
promptly remitted to such Participant. Determination by the Plan
Administrator in this regard shall be final, binding and conclusive on all
persons. No payroll deductions shall be permitted under the Plan at any time
when no Shares are available.
7.2 DELIVERY OF SHARES. The rights to purchase Shares granted pursuant
to this Plan will in all respects be subject to the terms and conditions of
the Plan, as interpreted by the Plan Administrator from time to time. The
Participant shall have no interest in Shares purchasable under the Plan until
payment for the Shares has been completed at the close of business on the
relevant Purchase Date. The Plan provides only an unfunded, unsecured
promise by the Employer to pay money or property in the future. Except with
respect to the Shares purchased on a Purchase Date, an Employee choosing to
participate in the Plan shall have no greater rights than an unsecured
creditor of the Corporation. After the purchase of the Shares, the
Participant shall be entitled to all rights of a stockholder of the
Corporation.
ARTICLE VIII
ADMINISTRATION
8.1 PLAN ADMINISTRATOR. At the discretion of the Board of Directors,
the Plan shall be administered by the Board of Directors or by a Committee
appointed by the Board of Directors in accordance with Rule 16b-3 under the
Securities Exchange Act of 1934, as in effect from time to time. Each member
of the Committee shall be either a director, an officer or an Employee of the
Corporation. Each member shall serve for a term commencing on a date
specified by the Board of Directors and continuing until he or she dies,
resigns or is removed from office by the Board of Directors. No members
shall receive any compensation for serving as a member of the Committee.
8.2 POWERS. The Plan Administrator shall be vested with full authority
to make, administer and interpret all rules and regulations as it deems
necessary to administer the Plan. Any determination, decision or act of the
Plan Administrator with respect to any action in connection with the
construction, interpretation, administration or application of the Plan shall
be final, conclusive and binding upon all Participants and any and all other
persons claiming under or through any Participant. The provisions of the
Plan shall be construed in a manner consistent with the requirements of
Section 423 of the Code.
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ARTICLE IX
CHANGES IN CAPITALIZATION, MERGER, ETC.
9.1 RIGHTS OF THE CORPORATION. The grant of a right to purchase Shares
pursuant to this Plan shall not affect in any way the right or power of the
Corporation to make adjustments, reclassification, reorganizations or other
changes of its capital or business structure or to merge or to consolidate or
to dissolve, liquidate or transfer all or any part of its divisions,
subsidiaries, business or assets.
9.2 RECAPITALIZATION. Subject to any required action by the
stockholders, the number of Shares covered by the Plan as provided in Section
7.1 and the price per Share shall be proportionately adjusted for any
increase or decrease in the number of issued Shares of the Corporation
resulting from a subdivision or consolidation of Shares or the payment of a
stock dividend (but only on the Shares). The determination of whether an
adjustment shall be made and the manner of any adjustment shall be made by
the Plan Administrator without any further approval from the stockholders,
which determination shall be conclusive.
9.3 CONSOLIDATION OR MERGER. In the event of the consolidation or
merger of the Corporation with or into any other business entity, or the sale
by the Corporation of substantially all of its assets, the successor may
continue the Plan by adopting the same by resolution of its board of
directors or agreement of its partners or proprietors. If, within 90 days
after the effective date of a consolidation, merger or sale of assets, the
successor corporation, partnership or proprietorship does not adopt the Plan,
the Plan shall be terminated in accordance with Section 12.1.
ARTICLE X
TERMINATION OF EMPLOYMENT
10.1 VACATION, LEAVE OR LAYOFF. A person's Employment shall not
terminate on account of an authorized leave of absence, sick leave or
vacation, or on account of a military leave described in Section 10.2, or a
direct transfer between Employers. Failure to return to work upon expiration
of any leave of absence, sick leave or vacation shall be considered a
termination of Employment for purposes of the Plan, effective as of the
expiration of such leave of absence, sick leave or vacation.
10.2 MILITARY LEAVE. Any Employee who leaves the Employer directly to
perform services in the Armed Forces of the United States or in the United
States Public Health Service under conditions entitling the Employee to
reemployment rights provided by the laws of the United States, shall be on
military leave. An Employee's military leave shall expire if the Employee
voluntarily resigns from the Employer during the leave or if he or she fails
to make application for reemployment within the period specified by such law
for the preservation of employment rights. In
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such event, the individual's employment shall terminate by resignation on the
day the military leave expires.
ARTICLE XI
STOCKHOLDER APPROVAL AND RULINGS
The Plan is expressly made subject (a) to the affirmative vote of the
holders of a majority of the outstanding shares of the Corporation present in
person or by proxy at a meeting of stockholders within 12 months after the
date the Plan is adopted and (b) at the Corporation's election, to the
receipt by the Corporation from the Internal Revenue Service of a ruling in
scope and content satisfactory to counsel to the Corporation, affirming the
qualification of the Plan within the meaning of Section 423 of the Code. If
the Plan is not so approved by the stockholders within 12 months after the
date the Plan is adopted and if, at the election of the Corporation a ruling
from the Internal Revenue Service is sought but is not received on or before
one year after the Plan's adoption by the Board of Directors, the Plan shall
not come into effect. In that case, the Account of each Participant shall
forthwith be paid to the Participant.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1 AMENDMENT AND TERMINATION OF THE PLAN.
(a) The Board of Directors of the Corporation may at any time amend the
Plan. Except as otherwise provided herein, no amendment may adversely affect
or change any right to purchase Shares previously granted to any Participant.
No amendment shall be made without prior approval of the stockholders of the
Corporation if the amendment would:
(i)Permit the sale of more Shares than are authorized under
Section 7.1;
(ii)Permit the sale of Shares to employees of entities which are not
Employers as defined in Section 2.10;
(iii)Materially increase the benefits accruing to individuals subject
to Section 16 of the Securities Exchange Act of 1934, as amended, under the
Plan; or
(iv)Modify the requirements as to eligibility for participation in the
Plan.
(b) The Plan is intended to be a permanent program, but an Employer shall
have the right at any time to declare the Plan terminated completely as to the
Employer. Upon such termination,
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amounts credited to the Accounts of Participants with respect to whom the
Plan has been terminated shall be returned to such Participants.
12.2 NON-TRANSFERABILITY. Neither payroll deductions credited to a
Participant's Account nor any rights with regard to the purchase of Shares
under the Plan may be assigned, transferred, pledged or otherwise disposed of
in any way by the Participant except as provided in Section 6.2, and any
attempted assignment, transfer, pledge, or other disposition shall be null
and void. The Corporation may treat any such act as an election to withdraw
funds in accordance with Section 6.3.
12.3 USE OF FUNDS. All payroll deductions received or held by the
Corporation under the Plan may be used by the Corporation for any corporate
purposes and the Corporation shall not be obligated to segregate the payroll
deductions.
12.4 EXPENSES. All expenses of administering the Plan shall be borne by
the Corporation and its Participating Subsidiaries.
12.5 NO INTEREST. No Participant shall be entitled, at any time, to any
payment or credit for interest with respect to or on the payroll deductions
contemplated herein, or on any other assets held hereunder for the
Participant's Account.
12.6 REGISTRATION AND QUALIFICATION OF SHARES. The Offering of the
Shares hereunder shall be subject to the effecting by the Corporation of any
registration or qualification of the Shares under any federal or state law or
the obtaining of the consent or approval of any governmental regulatory body
which the Corporation shall determine, in its sole discretion, is necessary
or desirable as a condition to, or in connection with, the offering or the
issue or purchase of the Shares covered thereby. The Corporation shall make
every reasonable effort to effect such registration or qualification or to
obtain such consent or approval.
12.7 PLAN NOT A CONTRACT OF EMPLOYMENT. The Plan is strictly a voluntary
undertaking on the part of the Employer and shall not constitute a contract
between the Employer and any Employee, or consideration for an inducement or
a condition of the employment of an Employee. Except as otherwise required
by law, nothing contained in the Plan shall give any Employee the right to be
retained in the service of the Employer or to interfere with or restrict the
right of the Employer, which is hereby expressly reserved, to discharge or
retire any Employee at any time, with or without cause and with or without
notice. Except as otherwise required by law, inclusion under the Plan will
not give any Employee any right or claim to any benefit hereunder except to
the extent such right has specifically become fixed under the terms of the
Plan. The doctrine of substantial performance shall have no application to
any Employee or Participant. Each condition and provision, including
numerical items, has been carefully considered and constitutes the minimum
limit on performance that will give rise to the applicable right.
12.8 SERVICE OF PROCESS. The Secretary of the Corporation is hereby
designated agent for service of legal process on the Plan.
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12.9 NOTICE. All notices or other communications by a Participant to the
Corporation under or in connection with the Plan shall be deemed to have been
duly given when received by the Plan Administrator. Any notice required by
the Plan to be received by the Corporation prior to an Enrollment Date,
payroll period or other specified date, and received by the Plan
Administrator subsequent to such date shall be effective on the next
occurring Enrollment Date, payroll period or other specified date to which
such notice applies.
12.10 GOVERNING LAW. The Plan shall be interpreted, administered and
enforced in accordance with the Code, and the rights of Participants, former
Participants, and all other persons shall be determined in accordance with
it. To the extent that state law is applicable, however the laws of the State
of Oregon shall apply.
12.11 PLURALS. Where the context so indicates, the singular shall
include the plural and vice versa.
12.12 TITLES. Titles of Articles and Sections are provided herein for
convenience only and are not to serve as the basis for interpretation or
construction of the Plan.
12.13 REFERENCES. Unless the context clearly indicates to the contrary,
reference to a Plan provision, statute, regulation or document shall be
construed as referring to any subsequently enacted, adopted or executed
counterpart.
12.14 RESPONSIBILITY. Neither the Corporation, its Board of Directors,
any Participating Subsidiary, nor any officer or employee of any of them
shall be liable to any Employee under the Plan for any mistake of judgment or
for any omission or wrongful act unless resulting from willful misconduct or
intentional misfeasance.
12.15 ADDITIONAL RESTRICTIONS OF RULE 16b-3. The terms and conditions of
rights to purchase Shares granted hereunder to, and the purchase of shares
by, persons subject to Section 16 of the Securities Exchange Act of 1934, as
amended, shall comply with the applicable provisions of Rule 16b-3. This
Plan shall be deemed to contain, and such rights shall contain, and the
shares issued upon exercise thereof shall be subject to, such additional
conditions and restrictions as may be required by Rule 16b-3 to qualify for
the maximum exemption from Section 16 of the Securities Exchange Act of 1934,
as amended, with respect to Plan transactions.
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LATTICE SEMICONDUCTOR CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS, AUGUST 11, 1997
The undersigned stockholder of LATTICE SEMICONDUCTOR CORPORATION, a Delaware
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement, each dated July 1, 1997, and hereby appoints
Cyrus Y. Tsui and Stephen A. Skaggs, and each of them, proxies and
attorneys-in-fact, with full power to each of substitution, on behalf and in the
name of the undersigned, to represent the undersigned at the Annual Meeting of
Stockholders of Lattice Semiconductor Corporation to be held on August 11, 1997,
at 1:00 p.m., Pacific Time, at the Portland Hilton Hotel, 921 SW 6th Ave,
Portland, OR 97204, and at any adjournment or adjournments 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:
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^ FOLD AND DETACH HERE ^
<PAGE>
Please mark your
votes as indicated / X /
in this example
1. Election of Daniel S. Hauer and Douglas C.
Strain as Class II Directors:
/ / FOR all nominees listed / / WITHHOLD authority to vote
above except as noted below. for all nominees listed above.
2. Proposal to approve an amendment to the Company's Employee Stock
Purchase Plan increasing the number of shares reserved for issuance:
/ / FOR / / AGAINST / / ABSTAIN
3. Proposal to ratify the appointment of Price Waterhouse LLP as the
independent accountants of the Company for the fiscal year ending
March 28, 1998:
/ / FOR / / AGAINST / / ABSTAIN
4. In their discretion, the proxies are authorized to vote upon such
other matter or matters which may properly come before the meeting
or any adjournment or adjournments thereof.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED
HEREOF. IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR
THE ELECTION OF THE NOMINEES FOR DIRECTOR, FOR APPROVAL OF THE
AMENDMENT TO INCREASE SHARES IN THE COMPANY'S EMPLOYEE STOCK
PURCHASE PLAN, AND FOR THE RATIFICATION OF THE APPOINTMENT OF PRICE
WATERHOUSE LLP AS INDEPENDENT ACCOUNTANTS OF THE COMPANY. IF ANY
OTHER BUSINESS PROPERLY COMES BEFORE THE MEETING, THIS PROXY WILL
BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF MANAGEMENT.
PLEASE MARK, DATE, SIGN AND
RETURN THE PROXY CARD PROMPTLY.
Signature(s) __________________________________ Dated:________________, 1997
(This proxy should be marked, dated and signed by the stockholder(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.)
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^ FOLD AND DETACH HERE ^
