<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:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[LOGO]
LATTICE SEMICONDUCTOR CORPORATION
5555 NE MOORE COURT
HILLSBORO, OREGON 97124-6421
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
AUGUST 9, 1999
------------------------
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Lattice
Semiconductor Corporation (the "Company") will be held at the Embassy Suites
Hotel, 9000 SW Washington Square Road, Tigard, Oregon 97223, on Monday, August
9, 1999, at 1:00 p.m., Pacific Time, for the following purposes:
1. To elect two Class I directors to serve a term of three years or until
their successors are elected;
2. To ratify the appointment of PricewaterhouseCoopers LLP as independent
accountants of the Company for the fiscal year ending April 1, 2000; and
3. 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 17, 1999 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 12, 1999
<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 1999 Annual
Meeting of Stockholders (the "Annual Meeting") to be held at the Embassy Suites
Hotel, 9000 SW Washington Square Road, Tigard, Oregon 97223, on Monday, August
9, 1999 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) 268-8000.
These proxy solicitation materials were mailed on or about July 12, 1999,
together with the Company's 1999 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
17, 1999 consisted of 23,711,652 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 17, 1999 (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 I directors are to be elected at the Annual Meeting
for a three-year term ending in 2002. The proxy holders intend to vote the
proxies received by them for Mr. Merlo and Mr. Sonsini, 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. Merlo or Mr. Sonsini 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 2002 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>
DIRECTOR TERM
NOMINEES AGE PRINCIPAL OCCUPATION AND OTHER DIRECTORSHIPS SINCE EXPIRES CLASS
- --------------------- ------- -------------------------------------------------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Harry A. Merlo 74 President of Merlo Corporation, a holding company 1983 1999 I
(since July 1995); President and Chairman of the
Board of Louisiana-Pacific Corporation, a
building materials company (until June 1995).
Larry W. Sonsini 58 Chairman of the Executive Committee of Wilson 1991 1999 I
Sonsini Goodrich & Rosati, Professional
Corporation; Director of Novell, Inc. and Pixar.
DIRECTORS WHOSE TERMS CONTINUE
Daniel S. Hauer 62 Consultant to Epson Electronics America (which 1987 2000 II
merged with S-MOS Systems), a supplier of CMOS
integrated circuits and silicon wafers (since
November 1998): Chairman of the Board of S-MOS
Systems (until November 1998), President and
Chief Executive Officer of S-MOS Systems, Inc.
(until October 1994).
Douglas C. Strain 79 Vice Chairman and Founder of Electro Scientific 1986 2000 II
Industries, Inc., a manufacturer of industrial
lasers and electro-optical equipment.
Mark O. Hatfield 76 Former United States Senator from Oregon (until 1997 2001 III
January 1997).
Cyrus Y. Tsui 53 Chairman, President and Chief Executive Officer of 1988 2001 III
the Company.
</TABLE>
2
<PAGE>
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 I
directors. See "Information Concerning Solicitation and Voting - General".
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" HARRY A.
MERLO AND LARRY W. SONSINI AS THE CLASS I DIRECTORS OF THE COMPANY.
BOARD MEETINGS AND COMMITTEES
In fiscal 1999, the Company's Board of Directors held four regularly
scheduled meetings and one special meeting. 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 1999.
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.
During fiscal 1999, the Compensation Committee was composed of Mr. Strain and
Mr. Merlo and met once.
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 1999, 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.
The Nominating Committee held no meetings in fiscal 1999. 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. These options are issued from the stockholder-approved
1993 Outside Directors Stock Option Plan (the "1993 Directors Plan") which
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
1997. 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 and expire five years from the grant date.
TRANSACTIONS WITH MANAGEMENT
Mr. Hauer, a director of the Company, is a business consultant to Epson
Electronics America, Inc. ("EEA"). The Company has a manufacturing agreement
with EEA for the production and delivery of silicon wafers. In July 1994, the
Company signed an agreement with Seiko Epson Corporation ("Seiko Epson") and its
affiliated U.S. distributor Epson Electronics America (EEA), under which it
advanced $44
3
<PAGE>
million to be used to finance additional sub-micron wafer manufacturing capacity
and technological development. The advance was completely repaid in the form of
semiconductor wafers over a multi-year period ending in fiscal 1998. In March
1997, the Company entered into a second advance payment production agreement
with Seiko Epson and EEA under which it agreed to advance approximately $86
million to Seiko Epson to finance construction of a wafer manufacturing
facility. The advance is to be repaid with semiconductor wafers over a
multi-year period. $51.3 million in payments have been made to Seiko Epson on
this agreement through fiscal 1999. Total payments of approximately $86 million
(with an option for an additional $60 million) may be made by the end of fiscal
2000, depending upon completion of specific milestones. No wafers have yet been
delivered to the Company in connection with this advance payment agreement. In
fiscal 1999, cash wafer purchases by the Company from S-MOS totaled
approximately $20.8 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 during fiscal 1999 were Mr. Strain
and Mr. Merlo. Neither Mr. Strain nor Mr. Merlo was or is an officer or employee
of the Company. No executive officer of the Company serves as a member of the
board of directors or compensation committee of any entity which has one or more
executive officers serving as a member of the Company's Board of Directors or
Compensation Committee.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee, comprised of non-employee Directors, sets,
reviews and administers the executive compensation program 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.
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 total compensation packages 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 paid under the Executive Incentive Plan
and stock options.
4
<PAGE>
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
April 3, 1999, a profitable year for the Company, the salaries of the named
executive officers (as subsequently defined) comprised 34% to 50% of their total
cash compensation.
The Executive Incentive Plan ("EIP") is a bonus plan 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. The total bonus pool available under the EIP is
based directly on the operating profit of the Company. With respect to the Chief
Executive Officer, an individual bonus is determined by formula based on the
total bonus pool and his base salary. The bonus derived from such formula is
paid to the Chief Executive Officer in a combination of Company stock and cash,
pursuant to the 1996 Stock Incentive Plan. With respect to other executives,
individual cash bonuses are determined by formula based on the total bonus pool,
the executive's base salary and his or her individual performance relative to
key objectives as determined by the Chief Executive Officer.
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.
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. Stock options
are also occasionally granted for promotions or other special achievements.
Initial stock option grants vest over a period of four years. The purpose of the
annual replenishment program is to ensure that an executive always has options
that vest in increments over the subsequent four-year period. Stock options
provide a means of retention and motivation for senior level executives of the
Company and also align the executive's interests with long-term stock price
appreciation. In addition, executives are eligible to participate in a payroll
deduction employee stock purchase plan pursuant to which Company stock may be
purchased at 85% of the fair market value at the beginning or end of each
offering period, whichever is less (up to a maximum of $25,000 worth of stock
per calendar year or 10% of salary, whichever is less).
Executives also participate in the Company's Profit Sharing Plan under which
a specified percentage of operating profit is set aside and distributed among
all domestic employees based on Company tenure. Other elements of executive
compensation include the ability to participate in a Company-wide life insurance
program, supplemental life insurance, long-term disability insurance,
Company-wide medical benefits and the ability to defer compensation pursuant to
both a Company-wide 401(k) plan and a supplemental deferred compensation plan.
Discretionary Company contributions to the Company-wide 401(k) plan of up to 5%
of eligible base pay were made in fiscal 1999.
Compensation Committee of the
Board of Directors
Douglas C. Strain, Chairman
Harry A. Merlo
5
<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 April 3, 1999, March 28, 1998, and March 29, 1997:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION -------------
------------------------------------------ STOCK OPTION
FISCAL OTHER ANNUAL GRANTS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS(2) COMPENSATION(3) (# OF SHARES) COMP.
- --------------------------------------------- --------- --------- ------------ --------------- ------------- -----------
Tsui, Cyrus Y. 1999 $560,100 $ 1,071,623(4) $ 3,779 262,500(5) $49,098(6)
President & CEO 1998 509,172 1,531,705(4) 6,365 131,250 38,651(7)
1997 462,876 1,266,199(4) 4,403 131,250 34,834(8)
<S> <C> <C> <C> <C> <C> <C>
Laub, Steven A. 1999 $243,300 $ 358,000 $ 3,779 90,000(5) $16,855(6)
Senior V.P. & COO 1998 222,779 516,000 6,365 45,000 14,941(7)
1997 207,730 435,000 4,403 80,000 14,684(8)
Skaggs, Stephen A. 1999 $200,000 $ 268,000 $ 3,779 70,000(5) $13,583(6)
Senior V.P. & CFO 1998 177,231 373,000 6,365 35,000 13,543(7)
1997 162,304 295,000 4,403 60,000 6,300(8)
Donovan, Stephen M. 1999 $180,000 $ 208,000 $ 3,779 70,000(5) $ 4,983(6)
Corporate V.P. - Sales 1998(9) -- -- -- -- --
1997(9) -- -- -- -- --
Yu, Kenneth K. 1999 $182,700 $ 180,000 $ 0 40,000(5) $ 7,345(6)
V.P. & Managing Director, Lattice Asia 1998 172,401 293,000 3,277 20,000 7,422(7)
1997 166,399 262,000 4,403 15,000 3,624(8)
</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) Represents participation in the Company's profit sharing plan.
(4) Bonus was paid in Company stock and cash, pursuant to the 1996 Stock
Incentive Plan and based on attainment of performance goals established by
the Board. For fiscal 1999, Mr. Tsui received $267,940 in cash, and shares
as follows: 7,805 shares worth $245,858 for the quarter ended June 27, 1998,
7,387 shares worth $247,926 for the quarter ended September 26, 1998, and
7,080 shares worth $298,245 for the quarter ended April 3, 1999. For fiscal
1998, Mr. Tsui received $466,346 in cash, and shares as follows: 3,068
shares worth $197,886 for the quarter ended September 27, 1997, 2,731 shares
worth $141,671 for the quarter ended December 27, 1997, and 2,987 shares
worth $143,003 for the quarter ended March 28, 1998. For fiscal 1997, Mr.
Tsui received 5,842 shares worth $140,938 for the quarter ended June 26,
1996, 4,716 shares worth $139,712 for the quarter ended September 28, 1996,
3,346 shares worth $150,988 for the quarter ended December 28, 1996, and
3,908 shares worth $175,860 for the quarter ended March 29, 1997. The
remainder of the bonus in each year was paid in cash to provide
reimbursement for taxes.
(5) Includes options granted in fiscal 1999 replacing cancelled grants
previously issued in fiscal 1998 and earlier in fiscal 1999. These
replacement grants were made on November 10, 1998, and were priced at
$31.00, the fair market value on that day. The new grants vest in increments
of 6.25% each quarter beginning on February 10, 1999, until they are fully
vested on November 10, 2002, and expire on November 10, 2008. The
replacement option grants are for 131,250 shares for Mr. Tsui, 45,000 shares
for Mr. Laub, 35,000 shares for Mr. Skaggs, 60,000 shares for Mr. Donovan,
and 20,000 shares for Mr. Yu.
(6) Includes payments made by the Company during fiscal 1999 for life and
disability insurance in the amounts of $31,598 for Mr. Tsui, $6,643 for Mr.
Laub, $4,031 for Mr. Skaggs, $4,637 for Mr. Donovan, and $7,345 for Mr. Yu.
Also includes contributions made to the 401(k) plan by the Company in the
amounts of $10,000 for Mr. Tsui, $10,212 for Mr. Laub, $9,552 for Mr.
Skaggs, and $346 for Mr. Donovan. Also includes a patent award payment of
$3,500 and a ten year service award of $4,000 for Mr. Tsui.
(7) Includes payments made by the Company during fiscal 1998 for life and
disability insurance in the amounts of $27,796 for Mr. Tsui, $5,790 for Mr.
Laub, $3,735 for Mr. Skaggs, and $7,422 for Mr. Yu. Also includes
contributions made to the 401(k) plan by the Company in the amounts of
$9,455 for Mr. Tsui, $9,151 for Mr. Laub, and $8,808 for Mr. Skaggs. Also
includes a patent award payment by the Company for Mr. Tsui of $1,400 and an
anniversary bonus of $1,000 for Mr. Skaggs.
(8) Includes payments made by the Company during fiscal 1997 for life and
disability insurance in the amounts of $25,344 for Mr. Tsui, $5,112 for Mr.
Laub, $1,298 for Mr. Skaggs, and $3,624 for Mr. 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, and $5,002 for Mr. Skaggs.
(9) Mr. Donovan was not a named executive officer in either of the two preceding
fiscal years.
6
<PAGE>
OPTIONS GRANTED AND OPTIONS EXERCISED IN THE LAST FISCAL YEAR
The following tables set forth information regarding stock options granted
to and exercised by the named executive officers during the last fiscal year, as
well as options held by the named executive officers as of April 3, 1999:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE
AT ASSUMED ANNUAL
RATES
OF STOCK PRICE
APPRECIATION
INDIVIDUAL GRANTS (THROUGH EXPIRATION
-------------------------------------------------------- DATE)
OPTIONS % OF TOTAL EXERCISE --------------------
GRANTS OPTIONS PRICE EXPIRATION 5% PER 10% PER
NAME AND PRINCIPAL POSITION (# OF SHS)(1) GRANTED(1) ($/SH)(2) DATE YEAR $(3) YEAR $(3)
- ---------------------------------------- ------------- --------------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Tsui, Cyrus Y. 131,250 8.0% $ 31.50 8/10/08 $2,600,086 $6,589,129
President & CEO 131,250(4) 8.0% 31.00 11/10/08 2,558,815 6,484,540
Laub, Steven A. 45,000 2.7% $ 31.50 8/10/08 $ 891,458 $2,259,130
Senior V.P. & COO 45,000(4) 2.7% 31.00 11/10/08 877,308 2,223,271
Skaggs, Stephen A. 35,000 2.1% $ 31.50 8/10/08 $ 693,356 $1,757,101
Senior V.P. & CFO 35,000(4) 2.1% 31.00 11/10/08 682,351 1,729,211
Donovan, Stephen M. 10,000 0.6% $ 31.50 8/10/08 $ 198,102 $ 502,029
Corporate V.P. - Sales 20,000(4) 1.2% 31.00 11/10/08 389,915 988,120
40,000(5) 2.4% 31.00 11/10/08 779,829 1,976,241
Yu, Kenneth K. 20,000 1.2% $ 31.50 8/10/08 $ 396,204 $1,004,058
V.P. & Managing Director, Lattice Asia 20,000(4) 1.2% 31.00 11/10/08 389,915 988,120
</TABLE>
- ------------------------------
(1) For purposes of calculating the percentage of total options granted in the
table, the Company has excluded the effect of replacement grants.
(2) Unless otherwise noted, these options were granted under the Company's 1996
Stock Incentive Plan in August 1998, and have an exercise price equal to the
fair market value of the Company's Common Stock as of the date of the grant.
These grants vest quarterly over a four-year period ending in August 2002.
(3) 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.
(4) These grants in fiscal 1999 replaced cancelled grants previously issued in
fiscal 1998. These replacement grants were made on November 10, 1998, and
were priced at $31.00, the fair market value on that day. The new grants
vest in increments of 6.25% each quarter beginning on February 10, 1999,
until they are fully vested on November 10, 2002, and expire on November 10,
2008.
(5) This grant in fiscal 1999 replaced a cancelled grant previously issued in
fiscal 1999. This replacement grant was made on November 10, 1998, and was
priced at $31.00, the fair market value on that day. The new grant vests in
increments of 6.25% each quarter beginning on February 10, 1999, until it is
fully vested on November 10, 2002, and it expires on November 10, 2008.
7
<PAGE>
OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED
OPTIONS AT VALUE OF UNEXERCISED
FISCAL YEAR END IN THE MONEY OPTIONS
SHARES ------------------------ AT FISCAL YEAR END($)
ACQUIRED ON VALUE VESTED UNVESTED ----------------------
NAME AND PRINCIPAL POSITION EXERCISE(#) REALIZED (# OF SHRS) (# OF SHRS) VESTED(1) UNVESTED(1)
- --------------------------------------- ------------- --------- ----------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Tsui, Cyrus Y. 5,469 $ 9,571 288,281 306,250 $5,764,153 $5,276,660
President & CEO
Laub, Steven A. 25,000 $ 523,568 81,969 117,031 $1,520,277 $2,055,879
Senior V.P. & COO
Skaggs, Stephen A. 7,500 $ 6,875 54,312 87,688 $1,013,477 $1,546,273
Senior V.P. & CFO
Donovan, Stephen M. 13,750 $ 410,914 27,265 71,485 $ 449,502 $1,223,154
Corporate V.P. - Sales
Yu, Kenneth K. 10,000 $ 17,500 39,140 44,610 $ 782,471 $ 763,935
V.P. & Managing Director, Lattice
Asia
</TABLE>
- ------------------------------
(1) Represents the difference between the exercise prices of the options and the
closing price of the Company's Common Stock on April 2, 1999.
8
<PAGE>
COMPARISON OF TOTAL CUMULATIVE STOCKHOLDER RETURN
The following two graphs show five-year and seven-year comparisons of
cumulative stockholder return on Common Stock for the Company, the S&P 500
Index, and the S&P Technology Sector (previously named the S&P High Technology
Index) from March 31, 1994 through March 31, 1999 and from March 31, 1992
through March 31, 1999. 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. Historic stock price performance is not necessarily indicative
of future stock price performance. (All data points are at March 31st.)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
LATTICE CUMULATIVE RETURN OVER 5 YEARS
<S> <C> <C> <C>
LATTICE SEMICONDUCTOR S&P 500 S&P Technology Sector
1994 $100 $100 $100
1995 $154 $116 $127
1996 $177 $153 $171
1997 $286 $183 $231
1998 $321 $271 $349
1999 $285 $321 $560
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
LATTICE CUMULATIVE RETURN OVER 7 YEARS
<S> <C> <C> <C>
LATTICE SEMICONDUCTOR S&P Technology Sector S&P 500
1992 $100 $100 $100
1993 $179 $112 $112
1994 $156 $132 $110
1995 $240 $167 $128
1996 $277 $225 $168
1997 $446 $305 $202
1998 $502 $461 $300
1999 $445 $739 $354
</TABLE>
9
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth, as of June 17, 1999, 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
BENEFICIAL OWNER SHARES(1) OF CLASS
- ------------------------------------------------------------------------ ---------- -----------
<S> <C> <C>
J. & W. Seligman & Co., Inc. 3,377,927(2) 14.2%
100 Park Avenue
NY, NY 10017
Merrill Lynch 2,450,363(2) 10.3%
PO Box 9011
Princeton, NJ 08543
State Farm Mutual Automobile Insurance Company 1,625,000(2) 6.9%
One State Farm Plaza
Bloomington, IL 61710
Firstar Corporation 1,555,500(2) 6.6%
777 East Wisconsin Avenue
Milwaukee, WI 53202
Cyrus Y. Tsui 636,415(3) 2.7%
Chairman of the Board
President and Chief Executive Officer
Steven A. Laub 114,040(4) *
Senior Vice President and COO
Stephen A. Skaggs 84,233(5) *
Senior Vice President and CFO
Stephen M. Donovan 43,120(6) *
Corporate Vice President - Sales
Kenneth K. Yu 72,295(7) *
Vice President and Managing Director, Lattice Asia
Mark O. Hatfield 11,250(8) *
Director
Daniel S. Hauer 36,090(9) *
Director
Harry A. Merlo 34,425 10) *
Director
Larry W. Sonsini 11,340 11) *
Director
Douglas C. Strain 16,125 12) *
Director
All directors and executive officers
as a group (17 persons) 1,304,444 13) 5.3%
</TABLE>
10
<PAGE>
* 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 on Schedule 13G filings under the
Securities Exchange Act of 1934, as amended.
(3) Includes 284,375 shares exercisable under options within 60 days of the
Record Date. Also includes 22,272 shares held for the benefit of Mr. Tsui
by the Company's deferred compensation plan.
(4) Includes 107,906 shares exercisable under options within 60 days of the
Record Date.
(5) Includes 72,062 shares exercisable under options within 60 days of the
Record Date. Also includes 2,903 shares held for the benefit of Mr. Skaggs
by the Company's deferred compensation plan.
(6) Includes 39,609 shares exercisable under options within 60 days of the
Record Date. Also includes 1,344 shares held for the benefit of Mr. Donovan
by the Company's deferred compensation plan.
(7) Includes 48,359 shares exercisable under options within 60 days of the
Record Date.
(8) Includes 11,250 shares exercisable under options within 60 days of the
Record Date.
(9) Includes 9,000 shares exercisable under options within 60 days of the
Record Date.
(10) Excludes an aggregate of 15,815 shares as to which Mr. Merlo disclaims
beneficial ownership, which are held by the Harry A. Merlo Charitable
Remainder Trusts and the Domenic W. Merlo Educational Trust; includes
9,000 shares exercisable under options within 60 days of the Record Date.
(11) Includes 9,000 shares exercisable under options within 60 days of the
Record Date.
(12) Includes 9,000 shares exercisable under options within 60 days of the
Record Date.
(13) Includes 788,949 shares exercisable under options within 60 days of the
Record Date. Also includes 26,519 shares held for the benefit of executive
officers by the Company's deferred compensation plan.
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 April 3, 1999,
all Section 16(a) filing requirements applicable to its officers, directors and
10% stockholders were complied with.
PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
In May 1999, the Board of Directors appointed PricewaterhouseCoopers LLP to
act as the independent accountants of the Company for the fiscal year ending
April 1, 2000, subject to ratification of the appointment by the stockholders.
PricewaterhouseCoopers LLP has served as the Company's independent accountants
for the last twelve fiscal years. Representatives of PricewaterhouseCoopers 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 PricewaterhouseCoopers 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 PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S INDEPENDENT
ACCOUNTANTS FOR THE FISCAL YEAR ENDING APRIL 1, 2000.
11
<PAGE>
ANNUAL REPORT
The Company's Annual Report to Stockholders for the fiscal year ended April
3, 1999 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 17, 1999, 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 2000 Annual Meeting of Stockholders must be received by the
Company not later than March 8, 2000 in order that it may be included in the
Proxy Statement and form of proxy relating to that meeting.
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 12, 1999
12
<PAGE>
LATTICE SEMICONDUCTOR CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS, AUGUST 9, 1999
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 12, 1999, 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 9, 1999, at 1:00 p.m., Pacific Time, at the Embassy Suites Hotel, 9000
SW Washington Square Road, Tigard, Oregon 97223, 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 below:
TRIANGLE FOLD AND DETACH HERE TRIANGLE
<PAGE>
Please mark
your votes as
indicated in /X/
this example
1. Election of Harry A. Merlo and Larry W. Sonsini as Class I Directors:
FOR all nominees listed above WITHHOLD authority to vote
except as noted below. for all nominees listed above.
/ / / /
______________________________________________________________________________
2. Proposal to ratify the appointment of PricewaterhouseCoopers LLP as the
independent accountants of the Company for the fiscal year ending April 1,
2000:
FOR AGAINST ABSTAIN
/ / / / / /
3. 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 AND FOR THE RATIFICATION OF THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS 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) _____________ (Signature) _______________ DATED: ______, 1999
(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.)
TRIANGLE FOLD AND DETACH HERE TRIANGLE
