<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
<TABLE>
<S> <C>
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 Section 240.14a-11(c) or Section
240.14a-12
</TABLE>
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:
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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
MAY 2, 2000
------------------------
TO OUR STOCKHOLDERS:
The Annual Meeting of Stockholders of Lattice Semiconductor Corporation will
be held at our Corporate Headquarters, 5505 NE Moore Court, Hillsboro, OR 97124,
on Tuesday, May 2, 2000, at 1:00 p.m., Pacific Time, for the following purposes:
1. To elect one Class II director, for a term of three years;
2. To ratify the appointment of PricewaterhouseCoopers LLP as our
independent accountants for the fiscal year ending December 30, 2000;
3. To approve an amendment to our Certificate of Incorporation, to increase
the number of shares of common stock we are authorized to issue; and
4. To transact such other business as may properly come before the meeting.
Only stockholders of record at the close of business on March 16, 2000 are
entitled to vote at the meeting or any adjournment thereof.
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 PROXY CARD 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
April 7, 2000
<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
Our board of directors is soliciting proxies to be used at the 2000 annual
meeting of stockholders to be held at our Corporate Headquarters, 5505 NE Moore
Court, Hillsboro, Oregon, on Tuesday, May 2, 2000, at 1:00 p.m., Pacific Time,
or at any adjournment thereof.
This proxy statement, the accompanying proxy card and our Annual Report were
mailed on or about April 7, 2000, to all stockholders entitled to vote at the
meeting.
WHO CAN VOTE
Record holders of common stock at the close of business on March 16, 2000,
may vote at the meeting. On March 16, 2000, 49,163,765 shares of common stock
were outstanding. Each stockholder has one vote for each share of common stock.
The common stock does not have cumulative voting rights.
HOW TO VOTE
Stockholders may vote by mail by signing, dating and mailing the enclosed
proxy card. Stockholders who hold their shares through a bank or broker should
vote their shares in the manner prescribed by their brokers. If you do not
specify how to vote your shares on your proxy card, we will vote them for the
nominee for director, for the approval of the proposals presented, and in
accordance with the recommendations of our board of directors on any other
business which may properly come before the meeting.
REVOKING YOUR PROXY
You may revoke your proxy at any time before it is exercised by:
- sending a written notice of revocation to the Secretary of Lattice;
- submitting a properly signed proxy with a later date; or
- voting in person at the meeting.
REQUIRED VOTES
A majority of the shares of common stock issued and outstanding on
March 16, 2000, present in person at the meeting or represented at the meeting
by proxy, will constitute a quorum. Shares that are voted "FOR", "AGAINST",
"ABSTAIN" or "WITHHELD" from a proposal are treated as being present at the
meeting for purposes of establishing a quorum.
The total number of votes that could be cast at the meeting is the number of
votes actually cast plus the number of abstentions. Abstentions are counted as
"shares present" at the meeting for purposes of determining whether a quorum
exists and have the effect of a vote "against" any matter as to which they are
specified. Proxies submitted by brokers that do not indicate a vote for some or
all of the proposals because they don't have discretionary voting authority and
haven't received instructions as to how to vote on those proposals (so-called
"broker non-votes") are not considered "shares present" and will not affect the
outcome of the vote.
FISCAL YEAR END
On November 9, 1999, we changed to a fiscal year ending on the Saturday
closest to December 31st. Due to the change, our last fiscal year was a nine
month period which began April 4, 1999 and ended January 1, 2000. All references
in this proxy statement to fiscal period 1999 are to this nine month period
unless otherwise stated.
<PAGE>
PROPOSAL 1: ELECTION OF DIRECTORS
Our board of directors is divided into three classes. Directors are elected
to serve staggered three-year terms, such that the term of one class of
directors expires each year. Two classes consist of two directors, and one class
consists of one director. One Class II director will be elected at the meeting
for a three-year term ending in 2003. We will vote your shares as you specify
when providing your proxy. If you do not specify how you want your shares voted
when you provide your proxy, we will vote them for the election of the nominee
listed below. If unforeseen circumstances (such as death or disability) make it
necessary for the board of directors to substitute another person for the
nominee, we will vote your shares for that other person.
The following table briefly describes the nominee for director and the
directors whose terms will continue. Mr. Strain is retiring when his term
expires in 2000. Except as otherwise noted, each has held his principal
occupation for at least five years. There are no family relationships among any
of our directors or officers.
<TABLE>
<CAPTION>
DIRECTOR
NOMINEE AGE PRINCIPAL OCCUPATION AND OTHER DIRECTORSHIPS SINCE TERM EXPIRES CLASS
- ------- -------- -------------------------------------------- -------- ------------ --------
<S> <C> <C> <C> <C> <C>
Daniel S. Hauer 63 Business consultant (since November 1998); 1987 2003 II
Chairman of the Board of Epson Electronics
America, a supplier of CMOS integrated
circuits and silicon wafers (until November
1998).
CONTINUING DIRECTORS
- --------------------
Harry A. Merlo 74 President of Merlo Corporation, a holding 1983 2002 I
company (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 Wilson Sonsini Goodrich & 1991 2002 I
Rosati, Professional Corporation, a law
firm; Director of Novell Inc., Echelon
Corporation, Brocade Communications Systems
Inc. and Pixar.
Mark O. Hatfield 77 Former United States Senator from Oregon 1997 2001 III
(until January 1997).
Cyrus Y. Tsui 54 Our Chairman, President and Chief Executive 1988 2001 III
Officer.
RETIRING DIRECTOR
- --------------------
Douglas C. Strain 80 Founder of Electro Scientific Industries, 1986 2000 II
Inc., a manufacturer of industrial lasers
and electro-optical equipment; Vice
Chairman of Electro Scientific Industries,
Inc. (until September 1999).
</TABLE>
REQUIRED VOTE
The nominee receiving the highest number of affirmative votes of the votes
cast at the meeting on this matter shall be elected as the Class II director.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
REELECTION OF DANIEL S. HAUER AS THE CLASS II DIRECTOR OF THE COMPANY.
2
<PAGE>
BOARD MEETINGS AND COMMITTEES
In fiscal period 1999, the board of directors held three regularly scheduled
meetings and four special meetings and acted twice by unanimous consent. Each
director attended at least 75% of the total number of meetings of the board of
directors and of all committees of which he was a member during fiscal period
1999.
The board of directors currently has three standing committees: the
compensation committee, the audit committee and the nominating committee.
COMPENSATION 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.
Prior to August 9, 1999, the compensation committee was composed of Mr. Strain
and Mr. Merlo. Effective August 9, 1999, the compensation committee membership
was changed to include Mr. Strain and Mr. Hauer. During fiscal period 1999, the
compensation committee met once.
AUDIT COMMITTEE
The audit committee recommends engagement of the independent accountants and
is primarily responsible for reviewing and approving the scope of the audit and
other services performed by our independent accountants and for reviewing and
evaluating our accounting principles and its systems of internal accounting
controls. The audit committee meets with management and our independent
accountants, who have access to the audit committee with and without the
presence of management representatives. Prior to August 9, 1999, the audit
committee was composed of Mr. Merlo and Mr. Hauer. Effective August 9, 1999, the
audit committee membership changed to include Mr. Merlo and Mr. Hatfield. During
fiscal period 1999, the audit committee met twice.
NOMINATING COMMITTEE
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 during fiscal period 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 also our employees (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 our common
stock. These options are issued under our 1993 Outside Directors Stock Option
Plan which provides for automatic grants of stock options to non-employee
directors. Under this plan, each non-employee director received a grant of
36,000 shares (as adjusted for the two-for-one stock split effective August 26,
1999) in August 1997. A new non-employee director receives a grant for 36,000
shares on the date he is appointed to the board of directors. In addition, each
non-employee director will receive a grant of 36,000 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.
3
<PAGE>
TRANSACTIONS WITH MANAGEMENT
Mr. Sonsini, one of our directors, is Chairman of Wilson Sonsini Goodrich &
Rosati, Professional Corporation, a law firm based in Palo Alto, California.
This firm serves as our primary outside legal counsel.
EMPLOYMENT AGREEMENTS
In September 1988, we entered into an employment letter with Mr. Tsui
pursuant to which Mr. Tsui serves as President and Chief Executive Officer. 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 Lattice as described
in the letter, then any unvested options to purchase our common stock held by
Mr. Tsui shall become fully vested. Additionally, in the event Mr. Tsui is
involuntarily terminated other than for cause, we 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 period 1999 were
Mr. Strain, Mr. Merlo, and Mr. Hauer. Neither Mr. Strain, Mr. Merlo, nor
Mr. Hauer was or is one of our officers or employees. None of our executive
officers serves as a member of the board of directors or compensation committee
of any entity that has one or more executive officers serving as a member of our
board of directors or compensation committee.
REPORT OF THE COMPENSATION COMMITTEE
The compensation committee, comprised of non-employee directors, sets,
reviews and administers our executive compensation program. The role of the
compensation committee is to establish and approve the salary of our Chief
Executive Officer and incentive compensation paid to our executive officers. The
committee also administers our employee stock option plan, and reviews and
approves stock option grants to all employees.
COMPENSATION PHILOSOPHY. Our compensation philosophy is that cash incentive
compensation of executive officers should be directly linked to our short-term
performance 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 our officers and
employees to the interests of our stockholders. In addition, the compensation
committee believes that total compensation packages must be competitive with
other companies in the industry to ensure that Lattice can continue to attract,
retain and motivate key employees who are critical to our long-term success.
COMPONENTS OF EXECUTIVE COMPENSATION. The principal components of executive
compensation are base salary, bonuses paid under the Executive Incentive Plan
and stock options.
Base salaries are set based on competitive factors and the historic salary
structure for various levels of responsibility within Lattice. The compensation
committee periodically conducts surveys of companies in our industry in order to
determine whether our executive base salaries are in a competitive range.
Generally, salaries are set at the middle to high end of the range. In addition,
we rely on variable compensation in order to emphasize the importance of
performance.
The Executive Incentive Plan is a bonus plan linked directly to our
profitability. This plan in particular emphasizes the compensation committee's
belief that, when we are successful, our executives should be highly
compensated, but that, conversely, if we are not successful and are not
profitable, no bonuses should be paid absent extraordinary circumstances. The
total bonus pool available under the plan is based directly on our operating
profit excluding charges associated with amortization of intangible assets. With
respect to the Chief Executive Officer, an individual bonus is determined by
formula based on the total bonus pool
4
<PAGE>
and his base salary. The bonus derived from such formula is paid to the Chief
Executive Officer in a combination of stock and cash, pursuant to our 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. As a result, in fiscal period 1999, a profitable
period for us, the base salaries of the named executive officers (as
subsequently defined) comprised 25% to 38% of their total cash compensation.
The 1996 Stock Incentive Plan was approved by the stockholders at the 1996
annual meeting. This plan allows us 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 our employee
stock option program. Stock options are generally granted when an executive
joins us 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 our senior level
executives 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 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 our profit sharing plan under which a
specified percentage of operating profit is set aside and distributed among all
domestic employees based on 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. We made
discretionary contributions to the company-wide 401(k) plan of up to 5% of
participating employees eligible base pay in fiscal period 1999.
Compensation Committee of the
Board of Directors
Douglas C. Strain, Chairman
Daniel S. Hauer
5
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY OF COMPENSATION
On November 9, 1999, our board of directors approved a change in the month
of our fiscal year end from March to December. The following table provides
certain summary information concerning compensation paid to or accrued for our
Chief Executive Officer and each of our four other most highly compensated
executive officers (our "named executive officers") for the twelve month period
ended December 31, 1999, and the fiscal years ended April 3, 1999 and March 28,
1998:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ----------------
--------------------------------------------- STOCK OPTION
NAME AND PRINCIPAL OTHER ANNUAL GRANTS ALL OTHER
POSITION FISCAL YEAR SALARY(1) BONUS(2) COMPENSATION(3) (# OF SHARES)(4) COMP.
- ------------------ --------------- --------- ----------------- --------------- ---------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Tsui, Cyrus Y. 12 month period
President & CEO ended 12/31/99 $581,105 $1,343,069(5)(6) $4,689 262,500 $42,110(8)
1999 560,100 1,071,623(5) 3,779 525,000(7) 49,098(9)
1998 509,172 1,531,705(5) 6,365 262,500 38,651(10)
Laub, Steven A. 12 month period
Senior VP & COO ended 12/31/99 $255,180 $ 500,000(6) $4,689 90,000 $16,421(8)
1999 243,300 358,000 3,779 180,000(7) 16,855(9)
1998 222,779 516,000 6,365 90,000 14,941(10)
Skaggs, Stephen A. 12 month period
Senior VP & CFO ended 12/31/99 $222,500 $ 360,000(6) $4,689 70,000 $13,455(8)
1999 200,000 268,000 3,779 140,000(7) 13,583(9)
1998 177,231 373,000 6,365 70,000 13,543(10)
Donovan, Stephen M. 12 month period
Corporate VP Sales ended 12/31/99 $188,250 $ 240,000(6) $4,689 25,000 $15,231(8)
1999 180,000 208,000 3,779 140,000(7) 4,983(9)
1998(11) -- -- -- -- --
Yu, Jonathan K. 12 month period
Corporate VP ended 12/31/99 $181,875 $ 226,000(6) $4,689 30,000 $23,123(8)
Business Development 1999 174,000 170,000 3,779 60,000(7) 22,148(9)
1998 163,452 260,000 6,365 30,000 20,735(10)
</TABLE>
- ------------------------------
(1) Salary includes amounts deferred pursuant to our 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 our profit sharing plan.
(4) All grants have been adjusted to reflect the two-for-one split effective
August 26, 1999.
(5) Bonus was paid in our common stock and cash, pursuant to the 1996 Stock
Incentive Plan and based on attainment of performance goals established by
the board of directors. For fiscal period 1999, Mr. Tsui received $336,107
in cash, and shares as follows: 8,142 shares worth $348,071 for the quarter
ended October 2, 1999, and 12,071 shares worth $644,290 for the quarter
ended December 31, 1999. For fiscal year 1999, Mr. Tsui received $267,940
in cash, and shares as follows: 15,610 shares worth $245,858 for the
quarter ended June 27, 1998, 14,774 shares worth $247,926 for the quarter
ended September 26, 1998, and 14,160 shares worth $298,245 for the quarter
ended April 3, 1999. For fiscal year 1998, Mr. Tsui received $466,346 in
cash, and shares as follows: 6,136 shares worth $197,886 for the quarter
ended September 27, 1997, 5,462 shares worth $141,671 for the quarter ended
December 27, 1997, and 5,974 shares worth $143,003 for the quarter ended
March 28, 1998. The remainder of the bonus in each year was paid in cash to
provide reimbursement for taxes. (All shares have been adjusted to reflect
the two-for-one split effective August 26, 1999.)
(6) Bonus for fiscal period 1999 includes only amounts paid in relation to the
nine month fiscal period.
(7) Includes options granted in fiscal year 1999 replacing cancelled grants
previously issued in fiscal year 1998 and earlier in fiscal year 1999.
These replacement grants were made on November 10, 1998, and were priced at
fair market value, $15.50. 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 262,500 shares for Mr. Tsui, 90,000 shares for
6
<PAGE>
Mr. Laub, 70,000 shares for Mr. Skaggs, 120,000 shares for Mr. Donovan, and
30,000 shares for Mr. Yu. (All shares and prices have been adjusted to
reflect the two-for-one split effective August 26, 1999.)
(8) Includes payments we made during fiscal period 1999 for life and disability
insurance in the amounts of $32,110 for Mr. Tsui, $6,421 for Mr. Laub,
$3,703 for Mr. Skaggs, $3,968 for Mr. Donovan, and $14,088 for Mr. Yu. Also
includes contributions we made to the 401(k) plan in the amounts of $10,000
for Mr. Tsui, $10,000 for Mr. Laub, $9,752 for Mr. Skaggs, $7,263 for
Mr. Donovan, and $9,035 for Mr. Yu. Also includes a ten year service award
of $4,000 for Mr. Donovan.
(9) Includes payments we made during fiscal year 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 $13,331 for Mr. Yu. Also
includes contributions we made to the 401(k) plan in the amounts of $10,000
for Mr. Tsui, $10,212 for Mr. Laub, $9,552 for Mr. Skaggs, $346 for
Mr. Donovan, and $8,817 for Mr. Yu. Also includes a patent award payment of
$3,500 and a ten year service award of $4,000 for Mr. Tsui.
(10) Includes payments we made during fiscal year 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 $12,421 for Mr. Yu. Also includes contributions
we made to the 401(k) plan in the amounts of $9,455 for Mr. Tsui, $9,151
for Mr. Laub, $8,808 for Mr. Skaggs, and $8,314 for Mr. Yu. Also includes
a patent award payment by the Company for Mr. Tsui of $1,400 and a five
year service award of $1,000 for Mr. Skaggs.
(11) Mr. Donovan was not a named executive officer in fiscal 1998.
7
<PAGE>
OPTIONS GRANTED AND OPTIONS EXERCISED IN THE LAST FISCAL PERIOD
The following tables set forth information regarding stock options granted
to and exercised by the named executive officers from April 4, 1999 to
December 31, 1999, as well as options held by the named executive officers as of
December 31, 1999. All share amounts have been adjusted to reflect the two-for-
one split effective August 26, 1999.
OPTION GRANTS IN LAST FISCAL PERIOD
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL
INDIVIDUAL GRANTS RATES OF STOCK PRICE
-------------------------------------------- APPRECIATION (THROUGH
OPTIONS % OF EXPIRATION DATE)
GRANTS TOTAL EXERCISE ---------------------------
(# OF OPTIONS PRICE EXPIRATION 5% PER 10%
NAME AND PRINCIPAL POSITION SHS) GRANTED ($/SH)(1) DATE YEAR $(2) PER YEAR $(2)
- --------------------------- -------- -------- --------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Tsui, Cyrus Y. 262,500 6.8% $29.75 8/10/09 $4,912,974 $12,451,422
President & CEO
Laub, Steven A. 90,000 2.3% $29.75 8/10/09 $1,684,448 $ 4,269,059
Senior VP & COO
Skaggs, Stephen A. 70,000 1.8% $29.75 8/10/09 $1,310,127 $ 3,320,379
Senior VP & CFO
Donovan, Stephen M. 25,000 0.6% $29.75 8/10/09 $ 467,902 $ 1,185,850
Corporate VP Sales
Yu, Jonathan K. 30,000 0.8% $29.75 8/10/09 $ 561,483 $ 1,423,020
Corporate VP
Business Development
</TABLE>
- ------------------------------
(1) These options were granted under our 1996 Stock Incentive Plan in
August 1999, and have an exercise price equal to the fair market value of
our common stock as of the date of the grant. These grants vest quarterly
over a four-year period ending in August 2003.
(2) The 5% and 10% assumed rates of appreciation are mandated by the rules of
the Securities and Exchange Commission and do not represent our estimate or
projection of future prices for our common stock.
OPTION EXERCISES IN LAST FISCAL PERIOD
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN THE MONEY OPTIONS
FISCAL PERIOD END AT FISCAL PERIOD END($)
----------------------------- -------------------------
SHARES ACQUIRED VESTED UNVESTED
NAME AND PRINCIPAL POSITION ON EXERCISE (#) VALUE REALIZED (#OF SHRS) (#OF SHRS) VESTED(1) UNVESTED(1)
- --------------------------- --------------- -------------- ---------------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Tsui, Cyrus Y. 223,700 $4,217,520 555,205 672,657 $17,341,814 $17,791,553
President & CEO
Laub, Steven A. 58,000 $ 738,968 186,250 243,750 $ 5,971,283 $ 6,533,906
Senior VP & COO
Skaggs, Stephen A. 0 0 165,250 188,750 $ 5,271,375 $ 5,054,375
Senior VP & CFO
Donovan, Stephen M. 0 0 91,562 130,938 $ 2,853,008 $ 3,808,867
Corporate VP Sales
Yu, Jonathan K. 25,000 $ 504,688 80,625 76,875 $ 2,513,555 $ 2,033,320
Corporate VP
Business Development
</TABLE>
- ------------------------------
(1) Represents the difference between the exercise prices of the options and the
closing price of our common stock on December 31, 1999.
8
<PAGE>
COMPARISON OF TOTAL CUMULATIVE STOCKHOLDER RETURN
The following graph shows the five-year comparison of cumulative stockholder
return on our common stock, the S&P 500 Index, and the S&P Technology Sector
(previously named the S&P High Technology Index) from March 1994 through
December 1999. Cumulative stockholder return assumes $100 invested at the
beginning of the period in our common stock, the S&P 500, and the S&P Technology
Sector. Historical stock price performance is not necessarily indicative of
future stock price performance. (Data points are at the 31st of the month
indicated on the graph.)
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
--------------------------------------------------------------------------
LATTICE SEMICONDUCTOR CORP (LSCC) 3/94 3/95 3/96 3/97 3/98 3/99 12/99
- --------------------------------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
LATTICE SEMICONDUCTOR CORPORATION.................... 100 154 177 286 321 285 589
S & P 500............................................ 100 116 153 183 271 321 370
S & P TECHNOLOGY SECTOR.............................. 100 127 171 231 349 560 876
</TABLE>
9
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 16, 2000, information about
(i) persons known to us to be the beneficial owners of more than five percent of
our outstanding common stock, (ii) each director and named executive officer and
(iii) all directors and executive officers as a group:
<TABLE>
<CAPTION>
BENEFICIAL OWNER NUMBER OF SHARES(1) PERCENT OF CLASS
- ---------------- ------------------- ----------------
<S> <C> <C>
J. & W. Seligman & Co., Inc. ............................... 6,433,846(2) 13.1%
100 Park Avenue
New York, NY 10006
Merrill Lynch .............................................. 4,261,587(2) 8.7%
World Financial Center, North Tower
250 Vesey Street
New York, NY 10281
State Farm Mutual Automobile Insurance Company ............. 3,254,426(2) 6.6%
One State Farm Plaza
Bloomington, IL 61701
Cyrus Y. Tsui .............................................. 1,223,483(3) 2.5%
Chairman of the Board, President and Chief Executive
Officer
Stephen A. Skaggs, Senior Vice President and CFO............ 171,729(4) *
Steven A. Laub, Senior Vice President and COO............... 163,260(5) *
Jonathan K. Yu, Corporate Vice President 113,891(6) *
Business Development......................................
Stephen M. Donovan, Corporate Vice President Sales.......... 85,050(7) *
Harry A. Merlo, Director.................................... 75,150(8) *
Daniel S. Hauer, Director................................... 48,180(9) *
Larry W. Sonsini, Director.................................. 29,430(10) *
Douglas C. Strain, Director................................. 27,750(11) *
Mark O. Hatfield, Director.................................. 2,250(12) *
All directors and executive officers as a group (20 2,478,393(13) 4.9%
persons)..................................................
</TABLE>
- ------------------------
* 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 Schedule 13G filings under the
Securities Exchange Act of 1934, as amended.
(3) Includes 508,593 shares exercisable under options within 60 days of the
Record Date. Also includes 52,686 shares held for the benefit of Mr. Tsui
by our deferred compensation plan.
(4) Includes 146,500 shares exercisable under options within 60 days of the
Record Date. Also includes 5,806 shares held for the benefit of Mr. Skaggs
by our deferred compensation plan.
(5) Includes 150,000 shares exercisable under options within 60 days of the
Record Date.
(6) Includes 95,625 shares exercisable under options within 60 days of the
Record Date.
(7) Includes 77,187 shares exercisable under options within 60 days of the
Record Date. Also includes 3,155 shares held for the benefit of
Mr. Donovan by our deferred compensation plan.
(8) Excludes an aggregate of 31,630 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
24,750 shares exercisable under options within 60 days of the Record Date.
(9) Includes 4,500 shares exercisable under options within 60 days of the
Record Date.
10
<PAGE>
(10) Includes 24,750 shares exercisable under options within 60 days of the
Record Date.
(11) Includes 13,500 shares exercisable under options within 60 days of the
Record Date. Mr. Strain is retiring when his term expires in 2000.
(12) Includes 2,250 shares exercisable under options within 60 days of the
Record Date.
(13) Includes 1,474,769 shares exercisable under options within 60 days of the
Record Date. Also includes 61,647 shares held for the benefit of executive
officers by our deferred compensation plan.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
our officers and directors, and persons who own more than 10% of a registered
class of our 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. Such officers, directors and 10% stockholders are also required by
SEC rules to furnish us with copies of all Section 16(a) forms they file.
Based solely on our review of the copies of such forms received by us, or
written representations from certain reporting persons, we believe that, for
fiscal period 1999, all Section 16(a) filing requirements applicable to its
officers, directors and 10% stockholders were complied with, with one exception.
Kenneth K. Yu, VP & Managing Director of Lattice Asia, inadvertently failed to
file one report on Form 4 relating to the sale of 8,000 shares (16,000 after
adjustment for the two-for-one split effective August 26, 1999) by the
appropriate Form 4 filing date. The Form 4 was filed in March 2000.
PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
In February 2000, the Board of Directors appointed PricewaterhouseCoopers
LLP to act as our independent accountants for the fiscal year ending
December 30, 2000, subject to ratification of the appointment by the
stockholders. PricewaterhouseCoopers LLP has served as our independent
accountants for the last thirteen 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. 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 DECEMBER 30, 2000.
11
<PAGE>
PROPOSAL 3: APPROVAL OF PROPOSED AMENDMENT TO RESTATED CERTIFICATE OF
INCORPORATION
Our certificate of incorporation currently fixes our authorized capital
stock at 100,000,000 shares of common stock. The board of directors is
recommending an amendment to increase the number of authorized shares of common
stock to 300,000,000. Stockholders last approved an amendment in 1993 to
increase the authorized amount of common stock from 30 million to 100 million.
The rights of the additional authorized shares would be identical to the
shares now authorized. Although the authorization would not, in itself, have any
effect on your rights as a stockholder, issuance of additional shares of common
stock for any purpose other than a stock split or dividend could have a dilutive
effect on earnings per share. If approved, the amendment would allow the board
of directors to authorize the issuance of additional shares up to the new
maximum without further stockholder approval, unless that approval is required
under applicable law or stock exchange regulations. This proposal is not in
response to any known effort to accumulate our common stock or to obtain control
of Lattice.
As of December 31, 1999, we had 100,000,000 shares of authorized common
stock, of which 48,285,719 shares were issued and outstanding. In addition,
there were 4,034,400 shares reserved for issuance under our various stock plans.
While we do not have any current plans to issue additional shares of common
stock, other than under previously authorized benefit and compensation plans,
the amendment would enhance the board of directors' flexibility in possible
future actions, such as stock splits, stock dividends, acquisitions, and other
corporate activities involving the common stock.
The proposed amendment requires the affirmative vote of a majority of the
outstanding shares. Therefore, failure to vote will have the same effect as a
vote against the amendment.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
ANNUAL REPORT
Our Annual Report to Stockholders for fiscal period 1999 was sent to our
stockholders together with this proxy statement. We will furnish without charge,
upon the written request of any person who was a stockholder or a beneficial
owner of our common stock at the close of business on March 16, 2000, a copy of
our Annual Report on Form 10-K filed with the Securities and Exchange Commission
for our most recent fiscal year, including financial statement schedules but not
including exhibits. Requests should be directed to the attention of the
Secretary of Lattice 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 that 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 Lattice. In addition to
solicitation by mail, our employees, for no additional compensation, may request
the return of proxies personally or by telephone, telecopy or telegram. We 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 our stock to execute
proxies.
12
<PAGE>
STOCKHOLDER PROPOSALS
A stockholder proposal to be considered for inclusion in proxy material for
our 2001 annual meeting of stockholders must be in writing and received by the
Secretary of Lattice not later than December 8, 2000 in order that it may be
included in the proxy statement and form of proxy relating to that meeting. In
addition, our bylaws require that in order for any business to be properly
brought before any meeting of stockholders, including nominations for the
election of directors, a stockholder must provide written notice delivered to
the Secretary of Lattice not less than 60 days nor more than 90 days prior to
the meeting; provided, however, that in the event that less than 60 days' notice
or prior public disclosure of the date of the meeting is given or made to
stockholders, the stockholder notice, in order to be timely, must be received
not later than the close of business on the tenth day following the day on which
such notice of the date of the meeting was mailed or such public disclosure was
made.
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
April 7, 2000
13
<PAGE>
LATTICE SEMICONDUCTOR CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS, MAY 2, 2000
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 April 7, 2000, 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 May 2, 2000, at 1:00 p.m., Pacific Time, at our Corporate
Headquarters, 5505 NE Moore Court, Hillsboro, OR 97124, 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:
- -------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
<PAGE>
Please mark
your votes as /X/
indicated in
this example
1. Election of Daniel S. Hauer as
Class II Director:
FOR the nominee WITHHOLD authority
listed above to vote for the
except as nominee listed
noted below. above.
/ / / /
_____________________________________
FOR AGAINST ABSTAIN
2. Proposal to ratify the appointment of
PricewaterhouseCoopers LLP as Lattice's / / / / / /
independent accountants for the fiscal
year ending December 30, 2000:
3. Proposal to approve an amendment to
Lattice's Certificate of Incorporation, to / / / / / /
increase the number of shares of Common
Stock Lattice is authorized to issue.
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 NOMINEE FOR DIRECTOR, FOR THE
RATIFICATION OF THE APPOINTMENT OF
PRICEWATERHOUSE COOPERS LLP AS
INDEPENDENT ACCOUNTANTS OF THE
COMPANY, AND FOR APPROVAL OF THE
INCREASE OF THE NUMBER OF SHARES WE
ARE AUTHORIZED TO USE. 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:_________, 2000
(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.)
- -------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
