<PAGE> 1
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 Section 240.14a-11(c) or Section 240.14a-12
TRIDENT MICROSYSTEMS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
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:
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(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> 2
[LOGO]
October 23, 1997
Dear Stockholder:
This year's annual meeting of stockholders will be held on Thursday,
December 4, 1997 at 9:00 a.m. local time, at Trident Microsystems, Inc., 380
North Bernardo Avenue, Mountain View, California. You are cordially invited to
attend.
The Notice of Annual Meeting of Stockholders and a Proxy Statement,
which describe the formal business to be conducted at the meeting, follow this
letter.
After reading the Proxy Statement, please promptly mark, sign, and
return the enclosed proxy in the prepaid envelope to assure that your shares
will be represented. Your shares cannot be voted unless you date, sign, and
return the enclosed proxy or attend the annual meeting in person. Regardless
of the number of shares you own, your careful consideration of, and vote on,
the matters before our stockholders are important.
A copy of the Company's 1997 Annual Report is also enclosed.
The Board of Directors and Management look forward to seeing you at
the annual meeting.
Very truly yours,
FRANK C. LIN
Chairman of the Board of Directors,
President and Chief Executive Officer
<PAGE> 3
TRIDENT MICROSYSTEMS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 4, 1997
To The Stockholders:
Please take notice that the annual meeting of the stockholders of
Trident Microsystems, Inc. (the "Company"), will be held on December 4, 1997,
at 9:00 a.m. at Trident Microsystems, Inc., 380 North Bernardo Avenue, Mountain
View, California, for the following purposes:
1. To elect two Class II directors to hold offices for three-year
terms and until their successors are elected and qualified.
2. To consider and vote upon a proposal to ratify the appointment
of Price Waterhouse LLP as the Company's independent public
accountants for the fiscal year ending June 30, 1998.
3. To transact such other business as may properly come before
the meeting.
Stockholders of record at the close of business on October 14, 1997
are entitled to notice of, and to vote at, this meeting and any adjournments
thereof. For ten days prior to the meeting, a complete list of the
stockholders entitled to vote at the meeting will be available for examination
by any stockholder for any purpose relating to the meeting during ordinary
business hours at the principal office of Trident Microsystems, Inc.
By order of the Board of Directors,
FRANK C. LIN
Chairman of the Board of Directors,
President and Chief Executive Officer
Mountain View, California
October 23, 1997
- --------------------------------------------------------------------------------
IMPORTANT: PLEASE FILL IN, DATE, SIGN AND PROMPTLY MAIL THE ENCLOSED PROXY CARD
IN THE ACCOMPANYING POST- PAID ENVELOPE TO ASSURE THAT YOUR SHARES ARE
REPRESENTED AT THE MEETING. IF YOU ATTEND THE MEETING, YOU MAY CHOOSE TO VOTE IN
PERSON EVEN IF YOU HAVE PREVIOUSLY SENT IN YOUR PROXY CARD.
- --------------------------------------------------------------------------------
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
SOLICITATION AND VOTING OF PROXIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
INFORMATION ABOUT TRIDENT MICROSYSTEMS, INC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Stock Ownership of Certain Beneficial Owners and Management . . . . . . . . . . . . . . . . . . 2
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
EXECUTIVE COMPENSATION AND OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Summary Compensation Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Option Grants In Last Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Option Exercises and Fiscal 1997 Year-End Value . . . . . . . . . . . . . . . . . . . . . . . . 8
Aggregate Option Exercises in Last Fiscal Year And Fiscal Year-End Values . . . . . . . . . . . 8
Repricing of Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Ten-Year Option Repricings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Compensation of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Compensation Committee Interlocks and Insider Participation . . . . . . . . . . . . . . . . . . 10
Change in Control Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 16(a) Beneficial Ownership Reporting Compliance . . . . . . . . . . . . . . . . . . . . 11
REPORT OF THE COMPENSATION COMMITTEE ON REPRICING OF OPTIONS . . . . . . . . . . . . . . . . . . . . . . 12
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . 13
Compensation Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Compensation Philosophy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Forms of Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
COMPARISON OF STOCKHOLDER RETURN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Comparison of Cumulative Total Return From December 15, 1992
through June 30, 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ELECTION OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . . 17
STOCKHOLDER PROPOSALS TO BE PRESENTED AT NEXT ANNUAL MEETING . . . . . . . . . . . . . . . . . . . . . . .18
TRANSACTION OF OTHER BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
-i-
<PAGE> 5
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TRIDENT MICROSYSTEMS, INC.
189 NORTH BERNARDO AVENUE
MOUNTAIN VIEW, CALIFORNIA 94043
The accompanying proxy is solicited by the Board of Directors of
Trident Microsystems, Inc., a Delaware corporation ("Trident" or the
"Company"), for use at the Annual Meeting of Stockholders to be held December
4, 1997, or any adjournment thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting. The date of this Proxy Statement is
October 23, 1997, the approximate date on which this Proxy Statement and the
accompanying form of proxy were first sent or given to stockholders.
SOLICITATION AND VOTING OF PROXIES
The cost of soliciting proxies will be borne by the Company. In
addition to soliciting stockholders by mail through its regular employees, the
Company will request banks and brokers, and other custodians, nominees and
fiduciaries, to solicit their customers who have stock of the Company
registered in the names of such persons and will reimburse them for their
reasonable, out-of-pocket costs. The Company may use the services of its
officers, directors, and others to solicit proxies, personally or by telephone,
without additional compensation.
Only stockholders of record as of the close of business on October 14,
1997, will be entitled to vote at the meeting and any adjournment thereof. As
of that date, there were 12,995,628 shares of common stock of the Company, par
value $.001 per share ("Common Stock"), issued and outstanding. Stockholders
may vote in person or by proxy. Each holder of shares of Common Stock is
entitled to one (1) vote for each share of stock held on the proposals
presented in this Proxy Statement. The Company's By-Laws provide that a
majority of all of the shares of the stock entitled to vote, whether present in
person or represented by proxy, shall constitute a quorum for the transaction
of business at the meeting.
All valid proxies received prior to the meeting will be voted. All
shares represented by a proxy will be voted, and where a stockholder specifies
by means of the proxy a choice with respect to any matter to be acted upon, the
shares will be voted in accordance with the specification so made. If no
choice is indicated on the proxy, the shares will be voted in favor of the
proposal. A stockholder giving a proxy has the power to revoke his or her
proxy, at any time prior to the time it is voted, by delivering to the
Secretary of the Company a written instrument revoking the proxy or a duly
executed proxy with a later date, or by attending the meeting and voting in
person.
An annual report for the fiscal year ended June 30, 1997 is enclosed
with this Proxy Statement.
1
<PAGE> 6
INFORMATION ABOUT TRIDENT MICROSYSTEMS, INC.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of August 31,
1997, with respect to the beneficial ownership of the Company's Common Stock by
(i) all persons known by the Company to be the beneficial owners of more than
5% of the outstanding Common Stock of the Company, (ii) each director and
director-nominee of the Company, (iii) the Chief Executive Officer and the four
other most highly compensated executive officers of the Company as of June 30,
1997, whose salary and incentive compensation for the fiscal year ended June
30, 1997 exceeded $100,000, and (iv) all executive officers and directors of
the Company as a group.
<TABLE>
<CAPTION>
SHARES OWNED (1)
NAME AND ADDRESS OF NUMBER PERCENTAGE
BENEFICIAL OWNERS OF SHARES OF CLASS
----------------- --------- --------
<S> <C> <C>
Glen M. Antle(2) 37,000 *
Shyur-Jen Paul Chien(3) 336,881 2.59%
Yasushi Chikagami(4) 137,887 1.06%
Charles A. Dickinson(5) 25,400 *
Frank C. Lin(6) 1,381,919 10.52%
c/o Trident Microsystems, Inc.
189 North Bernardo Avenue
Mountain View, CA 94043
Leonard Y. Liu(7) 25,712 *
Millard Phelps(8) 12,756 *
Jung-Herng Chang(9) 153,564 1.17%
Richard Hegberg 0 *
Peter Jen(10) 117,387 *
Amir Mashkoori 0 *
Executive officers and directors
as a group (12 persons)(11) 2,228,506 16.62%
</TABLE>
_________________________
* Less than 1%
(1) Except as otherwise noted, the persons named in the table have the
sole voting and investment power with respect to all shares shown as
beneficially owned by them, subject to the information contained in
the footnotes to this table.
(2) Includes 25,000 shares subject to options exercisable by Mr. Antle
within sixty days of August 31, 1997.
(3) Includes 15,000 shares subject to options exercisable by Mr. Chien
within sixty days of August 31, 1997. Also includes 48,376 shares
held by Mr. Chien's wife.
2
<PAGE> 7
(4) Includes 5,000 shares held by a joint tenant account for Mr.
Chikagami's wife, son and daughter. Also includes 12,877 shares
subject to options exercisable by Mr. Chikagami within sixty days of
August 31, 1997.
(5) Includes 6,250 shares subject to options exercisable by Mr. Dickinson
within sixty days of August 31, 1997.
(6) Includes 155,000 shares subject to options exercisable by Mr. Lin
within sixty days of August 31, 1997. Also includes 29,956 shares
held by custodian for the benefit of Mr. Lin's two minor children.
(7) Includes 15,712 shares subject to options exercisable by Mr. Liu
within sixty days of August 31, 1997.
(8) Includes 11,301 shares subject to options exercisable by Mr. Phelps
within sixty days of August 31, 1997.
(9) Includes 115,000 shares subject to options exercisable by Mr. Chang
within sixty days of August 31, 1997.
(10) Includes 80,417 shares subject to options exercisable by Mr. Jen
within sixty days of August 31, 1997.
(11) Includes 436,557 shares subject to options exercisable within sixty
days of August 31, 1997.
3
<PAGE> 8
MANAGEMENT
Directors. This section sets forth the ages and backgrounds of the
Company's current Directors, except for Shyur-Jen Paul Chien, and includes the
Class II nominees to be elected at this meeting. Shyur-Jen Paul is currently a
Class II Director, whose term expires as of the date of this annual meeting; he
will not stand for reelection at such meeting.
<TABLE>
<CAPTION>
POSITIONS DIRECTOR
NAME AGE WITH THE COMPANY SINCE
---- --- ---------------- -----
<S> <C> <C> <C>
Class II Directors nominated for election at the 1997 Annual Meeting of Stockholders:
Leonard Y. Liu 56 Director 1994
Millard Phelps 69 Director 1995
Class III Directors whose terms expire at the 1998 Annual Meeting of Stockholders:
Frank C. Lin 52 President, Chief Executive Officer 1987
and Chairman of the Board of Directors
Glen M. Antle 59 Director 1992
Class I Directors whose terms expire at the 1999 Annual Meeting of Stockholders:
Charles A. Dickinson 73 Director 1993
Yasushi Chikagami 58 Director 1994
</TABLE>
Dr. Liu has served as a Director of the Company since October 1994.
Since June 1995, he has served as President, Chief Executive Officer and
Chairman of the Board of Directors of Walker Interactive Systems, a high-end
financial software company. From January 1993 to March 1995, he served as
Chief Operating Officer of Cadence Design Systems, Inc., an integrated circuit
design software company, and since July 1989 has served as a Director of
Cadence Design Systems, Inc. From April 1989 through May 1992, he served as
President of Acer Group Worldwide and as Chairman of the Board of Directors and
Chief Executive Officer of Acer America Corporation, a computer manufacturing
company.
Mr. Phelps has served as a Director of the Company since September
1995. From September 1984 to May 1994, he served as a senior technology
analyst for Hambrecht & Quist, an investment banking firm and since May 1994,
Mr. Phelps has served as an advisory director of Hambrecht & Quist. Mr. Phelps
serves on Trident's Board in an individual capacity and not as a representative
of Hambrecht & Quist. Mr. Phelps is also a director of DSP Group, Inc., a
semiconductor engineering services company.
Mr. Lin founded the Company and has served as President, Chief
Executive Officer and Chairman of the Board of Directors of the Company since
July 1987. From June 1984 to July 1987, he was Vice President of Engineering
at Genoa Systems, Inc., a graphics and storage product company that he
co-founded. From 1982 to 1984, Mr. Lin was a senior manager at Olivetti
Advanced Technical Center, a PC peripheral equipment design company. Mr. Lin
is also a director of United Integrated Circuits Corporation, a Taiwanese
company jointly formed by Trident, UMC and a number of other fabless
semiconductor companies to build and manage a semiconductor manufacturing
facility located in Taiwan, Republic of China.
4
<PAGE> 9
Mr. Antle has served as a Director of the Company since July 1992.
From July 1996 to August 1997 Mr. Antle was a director of Compass Design
Automation, a company providing EDA tools and libraries. From February 1991 to
June 1993, he served as Chairman of the Board of Directors of PiE Design
Systems, an electronic design automation company, and from August 1992 to June
1993 as its Chief Executive Officer. In June 1993, PiE merged into Quickturn
Design Systems, Inc., also an electronic design automation company, and Mr.
Antle has served as Chairman of the Board of Directors of Quickturn since that
date. From June 1989 to February 1991 Mr. Antle was retired. Mr. Antle was a
co-founder of ECAD, Inc., now Cadence Design Systems, Inc., and served as its
Co-Chairman of the Board of Directors from May 1988 to June 1989 and as
Chairman of the Board of Directors and Chief Executive Officer from August 1982
to May 1988.
Mr. Dickinson has served as a Director of the Company since June 1993.
Since July 1984 Mr. Dickinson has been a member of the Board of Directors of
Solectron Corporation, an electronics manufacturing company. From March 1994
until September 1996, Mr. Dickinson served as the Chairman of the Board of
Directors of Solectron Corporation, and from November 1993 to February 1, 1996
as its President, Europe. From March 1989 to November 1993, Mr. Dickinson was
self employed as a business consultant. Mr. Dickinson is also a Director of
Vermont Microsystems, Inc., a computer graphics company, and Aavid Thermal
Technologies, Inc., a company providing thermal transfer solutions.
Mr. Chikagami has served as a Director of the Company since April
1994. From 1974 to January 1996, Mr. Chikagami served as Chairman of the EI-EN
Group, a group of private companies located in Asia engaged in the electronics
components and computer peripherals business. Since January 1996, Mr.
Chikagami has served as Chairman of KEIAN Corporation, a computer and
communications component company, operating in Japan. Mr. Chikagami has also
served as Vice Chairman of Eastern Computer Group Co. in China since 1988. He
was also a founder of GVC Corporation, a publicly held Taiwanese company
engaged in activities including the manufacture of electronics components and
computer peripherals. Mr. Chikagami is also a director of Silicon Storage
Technology, Inc.
Management's nominees for election at the Annual Meeting of
Stockholders to Class II of the Board of Directors are Leonard Y. Liu and
Millard Phelps, two of the three current Class II Directors. Shyur-Jen Paul
Chien's term as a Class II Director expires as of the date of the upcoming
annual meeting; he will not stand for re-election. Management is not proposing
a nominee for the third Class II Director at this time since it has yet to
identify a suitable candidate. The Board of Directors and Management continue
to evaluate prospective candidates for the Board of Directors.
Meetings of the Board of Directors. During the fiscal year ended June
30, 1997, the Board of Directors held five (5) meetings. Except for Yasushi
Chikagami, all directors attended at least 75% of the aggregate of the number
of meetings of the Board of Directors and of the committees of the Board of
Directors on which such director served during fiscal 1997.
The Company does not have a standing Nominating Committee, but does
have an Audit Committee and a Compensation Committee.
The Audit Committee's function is to review, with the Company's
independent public accountants, Management and the Board of Directors, the
Company's financial reporting processes and internal financial controls. The
Audit Committee reviews the results of the examination of the Company's
financial statements by the independent public accountants and the independent
public accountants' opinion. The Audit Committee also approves all
professional services performed by the independent public accountants,
recommends the retention of the independent public accountants to the Board of
Directors, subject to ratification by the stockholders, and periodically
reviews the Company's accounting policies and internal accounting and financial
controls. During fiscal 1997, the Audit Committee was composed of Glen M.
Antle and Millard Phelps. The Audit Committee held four (4) meetings during
the fiscal year ended June 30, 1997.
The Compensation Committee's primary function is to review and
recommend salary levels of, to approve bonus plans for, and approve stock
option grants to executive officers, and to set the compensation of the Chief
Executive Officer. During fiscal 1997, the Compensation Committee was composed
of Shyur-Jen Paul Chien and Charles A. Dickinson. The Compensation Committee
held one (1) meeting during the fiscal year ended June 30, 1997.
5
<PAGE> 10
EXECUTIVE COMPENSATION AND OTHER MATTERS
The following table sets forth information concerning the compensation
during the fiscal years ended June 30, 1997, June 30, 1996 and June 30, 1995 of
the Chief Executive Officer of the Company and the four other most highly
compensated executive officers of the Company as of June 30, 1997, whose salary
and incentive compensation for the fiscal year ended June 30, 1997 exceeded
$100,000. Amounts under the caption "Bonus" are amounts earned for performance
during the fiscal year including amounts paid after the end of the fiscal year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------------------------------- ------------
SECURITIES
OTHER ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) OPTIONS (#)
- --------------------------- ---- ------ ----- --------------- ------------
<S> <C> <C> <C> <C> <C>
Frank C. Lin 1997 $352,000 $229,336 $ 0 150,000(2)
President and Chief
Executive Officer 1996 $315,791 $150,318 $ 0 50,000
1995 $335,882 $406,728 $ 0 50,000
Jung-Herng Chang 1997 $183,500 $ 92,152 $ 0 60,000(3)
Vice President, Graphics
Engineering 1996 $172,103 $ 55,284 $ 0 20,000
1995 $149,155 $ 83,474 $ 0 40,000
Amir Mashkoori 1997 $179,200 $ 89,600 $ 0 100,000(6)
Vice President, Operationsy
1996 $ 92,727(4) $ 32,666(5) $ 0 100,000
1995 $ 0 $ 0 $ 0 0
Peter Jen 1997 $174,220 $ 0 $ 85,827 90,000(7)
Vice President, Asia
Operations 1996 $162,783 $ 0 $ 87,300 30,000
1995 $133,974 $ 41,250 $ 33,983 45,000
Richard Hegberg 1997 $170,000 $ 0 $ 68,125 200,000(8)
Vice President, Worldwide
Sales 1996 $ 0 $ 0 $ 0 0
1995 $ 0 $ 0 $ 0 0
</TABLE>
__________________________
(1) All amounts shown represent commissions earned.
(2) Includes option to purchase 50,000 shares granted on July 25, 1996, in
consideration for the cancellation of an option for an identical
number of shares granted in fiscal 1996.
(3) Includes option to purchase 20,000 shares granted on July 25, 1996, in
consideration for the cancellation of an option for an identical
number of shares granted in fiscal 1996.
(4) Represents salary for the period from December 1995 to June 1996.
(5) Represents bonus for the period from December 1995 to June 1996.
(6) Includes option to purchase 100,000 shares granted on July 25, 1996,
in consideration for the cancellation of an option for an identical
number of shares granted in fiscal 1996.
(7) Includes option to purchase 50,000 shares granted on July 25, 1996, in
consideration for the cancellation of options for 30,000 shares
granted in fiscal 1996 and 20,000 shares granted in fiscal 1995.
(8) Includes option to purchase 100,000 shares granted on July 25, 1996,
in consideration for the cancellation of an option for an identical
number of shares granted in fiscal 1997.
6
<PAGE> 11
The following table provides the specified information concerning
grants of options to purchase the Company's Common Stock made during the fiscal
year ended June 30, 1997 to the persons named in the Summary Compensation
Table:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM(4)
- ------------------------------------------------------------------------------- ---------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES OR BASE
GRANTED IN FISCAL PRICE EXPIRATION
NAME (#)(1) YEAR ($/SH)(3) DATE 5% ($) 10% ($)
---------- ---------- --------- ---------- ---------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Frank C. Lin 50,000(2) 1.41% $ 10.31 7/25/01 $ 247,919 $ 700,192
100,000 2.82% $ 11.27 9/09/01 $ 542,117 $1,531,086
Jung-Herng Chang 20,000(2) .56% $ 9.37 7/25/06 $ 117,918 $ 298,827
40,000 1.13% $ 10.25 9/09/06 $ 257,847 $ 653,434
Amir Mashkoori 100,000 2.82% $ 9.37 7/25/06 $ 589,589 $1,494,133
Peter Jen 50,000(2) 1.41% $ 9.37 7/25/06 $ 294,794 $ 747,067
40,000 1.13% $ 10.25 9/09/06 $ 257,847 $ 653,434
Richard Hegberg 100,000(2) 2.82% $ 10.37 7/22/06 $ 652,478 $1,653,508
100,000 2.82% $ 9.37 7/25/06 $ 589,589 $1,494,133
</TABLE>
__________________________
(1) Generally, the right to exercise an option under the Company's 1992
Stock Option Plan (the "Option Plan") vests as to one-fourth of the
shares subject to the option on each anniversary of the date of grant.
The Option Plan permits the grant of both incentive stock options
within the meaning of Section 422 of the Internal Revenue Code, as
amended (the "Code"), and nonstatutory stock options. The exercise
price of incentive stock options must at least equal the fair market
value of the Common Stock of the Company on the date of grant. The
exercise price of nonstatutory stock options must equal at least 85% of
the fair market value of the Common Stock of the Company on the date of
grant. The exercise price of incentive stock options granted to any
person who at the time of grant owns stock representing more than 10%
of the voting power of all classes of stock of the Company or any
parent or subsidiary corporations must be at least 110% of the fair
market value of the Common Stock of the Company on the date of grant
and the term of such options cannot exceed five years.
(2) These options represent options that were originally granted in Fiscal
Year 1995, 1996 and 1997 and were repriced on July 25, 1996. Options
that were repriced on July 25, 1996 vest and become exercisable
according to the following schedule: (i) in three substantially equal
annual installments on the first three anniversaries of July 25, 1996,
if the holder of the exchanged option had completed twelve or more
months of continuous service as of July 25, 1996, (ii) 25% of the
number of shares subject to the new option on January 25, 1997 and the
remainder in three substantially equal annual installments on each of
the first three anniversaries of January 25, 1997, if the holder had
completed six months or more but less than twelve months of continuous
service as of July 25, 1996, or (iii) in four substantially equal
annual installments on the first four anniversaries of July 25, 1996,
if the holder had completed less than six
7
<PAGE> 12
months of continuous service as of July 25, 1996. See "REPORT OF THE
COMPENSATION COMMITTEE - Repricing of Options" and "EXECUTIVE
COMPENSATION AND OTHER MATTERS - Ten-Year Option Repricings" table.
(3) All options were granted at or above market value on the date of grant
as determined by the Compensation Committee.
(4) Potential gains are net of exercise price, but before taxes associated
with exercise. These amounts represent certain assumed rates of
appreciation only, based on the Securities and Exchange Commission
rules. Actual gains, if any, on stock option exercises are dependent on
the future performance of the Common Stock, overall market conditions
and the option-holders' continued employment through the vesting
period. The amounts reflected in this table may not necessarily be
achieved.
OPTION EXERCISES AND FISCAL 1997 YEAR-END VALUE
The following table provides the specified information concerning
exercises of options to purchase the Company's Common Stock in the fiscal year
ended June 30, 1997, and unexercised options held as of June 30, 1997, by the
persons named in the Summary Compensation Table.
<TABLE>
<CAPTION>
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END VALUES
SHARES NUMBER OF SECURITIES UNDERLYING
ACQUIRED UNEXERCISED VALUE OF UNEXERCISED IN-THE-MONEY
ON EXERCISE OPTIONS AT FY-END OPTIONS AT FY-END(2)
----------------------------- ------------------------------
VALUE
NAME (#) REALIZED EXERCISABLE(1) UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --- -------- -------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Frank C. Lin 0 $ 0 97,500 182,500 $437,969 $236,406
Jung-Herng Chang 0 $ 0 92,500 77,500 $541,562 $187,187
Amir Mashkoori 0 $ 0 25,000 75,000 $ 46,875 $140,625
Peter Jen 10,000 $162,500 52,500 100,000 $316,812 $200,937
Richard Hegberg 0 $ 0 0 100,000 $ 0 $187,500
</TABLE>
__________________________
(1) Company stock options generally become exercisable as to 25% on the
first anniversary of the date of grant and 25% per year thereafter.
(2) The value of the unexercised in-the-money options is based on the
closing price of the Company's Common Stock on June 30, 1997 ($11.25
per share) and is net of the exercise price of such options.
8
<PAGE> 13
REPRICING OF STOCK OPTIONS
The following table provides the specified information concerning all
repricings of options to purchase the Company's Common Stock held by any
executive officer of the Company since December 16, 1992, the date of the
Company's initial public offering.
<TABLE>
<CAPTION>
TEN-YEAR OPTION REPRICINGS
- -------------------------------------------------------------------------------------------------------------------------------
EXERCISE LENGTH OF
NUMBER OF PRICE AT ORIGINAL OPTION
SECURITIES MARKET PRICE OF TIME OF TERM REMAINING
UNDERLYING STOCK AT TIME REPRICING OR NEW AT DATE OF
REPRICING OPTIONS REPRICED OF REPRICING OR AMENDMENT EXERCISE REPRICING OR
NAME AND POSITION DATE OR AMENDED (#) AMENDMENT($) (#) PRICE ($) AMENDMENT
----------------- ---- -------------- ------------ --- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Frank Lin, President and 7/14/93 120,000 $ 5.00 $ 8.00 $ 5.00 9 years, 94 days
Chief Executive Officer
7/25/96(1) 50,000 $ 9.38 $ 20.49 $ 10.31(2) 4 years, 71 days
Jung-Herng Chang, Vice 7/25/96(1) 20,000 $ 9.38 $ 18.63 $ 9.38 9 years, 71 days
President, Graphics
Engineering
Amir Mashkoori, Vice 7/25/96(1) 100,000 $ 9.38 $ 13.23 $ 9.38 9 years, 178 days
President, Operations
Peter Jen, Vice 7/14/93 30,000 $ 5.00 $ 5.50 $ 5.00 9 years, 49 days
President, Asia 10,000 $ 5.00 $ 8.00 $ 5.00 9 years, 95 days
Operations
7/25/96(1) 20,000 $ 9.38 $ 15.50 $ 9.38 8 years, 261 days
30,000 $ 9.38 $ 18.63 $ 9.38 9 years, 71 days
Richard Hegberg, Vice 7/25/96(1) 100,000 $ 9.38 $ 10.38 $ 9.38 9 years, 362 days
President, Worldwide
Sales
James T. Lindstrom 7/14/93 10,000 $ 5.00 $ 8.00 $ 5.00 9 years, 95 days
Former Vice President,
Finance, Chief Financial
Officer and Secretary
Tung-Liang Chang 7/14/93 30,000 $ 5.00 $ 8.00 $ 5.00 9 years, 95 days
Former Vice President,
ASIC Technology
</TABLE>
- --------------------------
(1) Options that were repriced on July 25, 1996 vest and become exercisable
according to the following schedule: (i) in three substantially equal
annual installments on the first three anniversaries of July 25, 1996,
if the holder of the exchanged option had completed twelve or more
months of continuous service as of July 25, 1996, (ii) 25% of the
number of shares subject to the new option on January 25, 1997 and the
remainder in three substantially equal annual installments on each of
the first three anniversaries of January 25, 1997, if the holder had
completed six months or more but less than twelve months of continuous
service as of July 25, 1996, or (iii) in four substantially equal
annual installments on the first four anniversaries of July 25, 1996,
if the holder had completed less than six months of continuous service
as of July 25, 1996. See "REPORT OF THE COMPENSATION COMMITTEE -
Repricing of Options."
(2) Represents 110% of the fair market value of the Company's Common Stock
on the date of grant, since Mr. Lin holds more than 10% of the Common
Stock of the Company.
9
<PAGE> 14
COMPENSATION OF DIRECTORS
Board members other than the Company's outside directors receive no
compensation for attending Board meetings, except for reimbursement of certain
expenses in connection with attendance at Board meetings and Committee
meetings. The Company's outside directors receive $10,000 per year as an
annual retainer. In addition, each outside director receives $1,250 for each
Board or Committee meeting attended in person, and $750 for each Board or
Committee meeting attended by phone.
The Company's 1994 Outside Directors Stock Option Plan (the "Outside
Directors Plan") provides that on the day immediately following the initial
election or appointment of each new nonemployee director (an "Outside
Director"), such Outside Director will automatically receive a grant of an
option to purchase 5,000 shares of the Company's Common Stock, subject to
proration of the number of shares if appointed to fill a vacancy between annual
meetings of the stockholders. Each Outside Director previously granted an
option under the Outside Directors Plan will automatically receive an
additional option to purchase 5,000 shares of the Company's Common Stock on the
day immediately following each annual meeting of the stockholders of the
Company.
In August 1995, the Company entered into a joint venture agreement
with United Microelectronic Corporation ("UMC") pursuant to which the Company
is committed to invest a certain amount over a three year period for a 10%
equity interest in the joint venture entity, United Integrated Circuits
Corporation ("UICC"), which constructed a wafer fabrication facility in Taiwan.
Following the consummation of this transaction, Frank Lin was appointed as a
director of UICC.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1997, the Compensation Committee was composed of two
independent, non-employee directors of the Company, Shyur-Jen Paul Chien and
Charles A. Dickinson. See "REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE
COMPENSATION."
CHANGE IN CONTROL ARRANGEMENTS
The Company's 1992 Stock Option Plan (the "Option Plan") provides that
in the event of a merger of the Company with or into another corporation,
unless the successor corporation assumes or substitutes equivalent options for
options granted under the Option Plan, the Board of Directors shall provide
that all outstanding options under the Option Plan will be fully exercisable
prior to the merger. Options which are neither assumed or substituted for by
the successor corporation nor exercised prior to the expiration of a 15-day
notice period will terminate upon the expiration of such period. All shares
subject to options granted under the Outside Directors Plan will become fully
vested and exercisable as of the date 15 days prior to a change in control of
the Company as defined in the Outside Directors Plan unless the surviving,
continuing, successor, or purchasing corporation or parent corporation thereof,
as the case may be (the "Acquiring Corporation"), either assumes or substitutes
Acquiring Corporation options for options outstanding under the Outside
Directors Plan. Any such options which are neither assumed or substituted for
by the Acquiring Corporation nor exercised will terminate as of the date of the
change in control.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On January 4, 1997, Frank C. Lin paid to the Company $633,162.51 as
payment in full for the principal amount and accrued interest owed under the
Company's loan to Mr. Lin originally granted in November 1992 and amended in
January 1995.
On May 5, 1997, the Company and Amir Mashkoori entered into a loan
agreement pursuant to which Mr. Mashkoori borrowed $180,000 from the Company,
payable on May 5, 1998 together with interest at a rate of 6.23% per annum. On
September 2, 1997, Mr. Mashkoori paid to the Company $110,000 of the principal
amount of the loan and $3,687 of accrued interest to date. The current balance
of such loan is a principal sum of $70,000 plus interest on such amount.
10
<PAGE> 15
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers, directors and persons who beneficially own more
than 10% of the Company's Common Stock to file initial reports of ownership and
reports of changes in ownership with the Securities and Exchange Commission
("SEC"). Such persons are required by SEC regulations to furnish the Company
with copies of all Section 16(a) forms filed by such persons.
Based solely on the Company's review of such forms furnished to the
Company and written representations from certain reporting persons, the Company
believes that, during fiscal 1997, all filing requirements applicable to the
Company's executive officers, directors and more than 10% stockholders were
met, except that a late statement reporting one transaction was filed by Tung
Liang Chang, late annual statements reporting one and two exempt transactions,
respectively, were filed by Mr. Lin and Mr. Jen, and initial reports timely
filed by each of Messrs. Chien and Mashkoori were amended to include
inadvertently omitted holdings of, respectively, shares of stock by Mr. Chien's
spouse and two employee stock options by Mr. Mashkoori.
11
<PAGE> 16
REPORT OF THE COMPENSATION COMMITTEE
ON REPRICING OF OPTIONS
In July 1996, the Compensation Committee, consisting of Shyur-Jen Paul
Chien and Charles A. Dickinson, considered the options held by the Company's
executive officers and employees and the fact that a broad decline in the price
of the Common Stock of the Company had resulted in a substantial number of
stock options granted pursuant to the Company's 1992 Stock Option Plan (the
"1992 Plan") and the 1996 Nonstatutory Stock Option Plan (the "1996 Plan")
(collectively, the "Plans") having exercise prices well above the recent
historical trading prices of the Common Stock. The Company's Management advised
the Committee that it believed employee turnover was likely to increase in part
because the Company's total compensation package for long-term employees, which
included substantial options with exercise prices well above the then current
trading price, was less attractive than compensation offered by other companies
in the same geographic location, since options granted to new hires at other
companies would be granted at current trading prices.
The Committee determined (i) that the Company's success in the
future would depend in large part on its ability to retain a number of its
highly skilled technical and managerial personnel, (ii) that competition for
such personnel would be intense, (iii) that the loss of key employees could
have a significant adverse impact on the Company's business, (iv) that it would
be important and cost-effective to provide equity incentives to employees and
executive officers of the Company to improve the Company's performance and the
value of the Company for its stockholders, and (v) that the morale of long term
employees holding stock options with an exercise price well below the current
trading price would decrease as more recently hired employees are granted
options with exercise prices set at current, lower market prices. The
Committee recognized that an exchange of existing options with exercise prices
higher than fair market value for options granted at fair market value would
restore incentives to employees because of the increased potential for
appreciation. The Committee also recognized that it could require the new
options to be subject to new vesting restrictions so that optionees
participating in the exchange would have incentives to remain with the Company.
Considering these factors, the Committee determined it to be in the best
interests of the Company and its stockholders to restore the incentives for
employees and executive officers to remain as employees of the Company and to
exert their maximum efforts on behalf of the Company by granting replacement
stock options under the Option Plan at the optionee's election, with restarted
vesting and exercise prices equal to the then current market value.
Accordingly, in July 1996, the Committee approved an offer to all
employees of the Company, including executive officers, to exchange outstanding
options with exercise prices above the then current trading price for new
options with an exercise price equal to the current trading price ("New
Options"). The Committee approved a new vesting schedule for the New Options,
according to which, a New Option vests and becomes exercisable (i) in three
substantially equal annual installments on the first three anniversaries of July
25, 1996, if the holder of the exchanged option had completed twelve or more
months of continuous service as of July 25, 1996, (ii) as to 25% of the number
of shares subject to the New Option on January 25, 1997 and the remainder in
three substantially equal installments on each of the first three anniversaries
of January 25, 1997, if the holder had completed six months or more but less
than twelve months of continuous service as of July 25, 1996, or (iii) in four
substantially equal annual installments on the first four anniversaries of July
25, 1996, if the holder had completed less than six months of continuous service
as of July 25, 1996. All New Options terminate no later than ten (10) years
from the date of the exchange, except that New Options granted to Ten Percent
Stockholders terminate no later than five (5) years from the date of exchange.
Optionees who participated in the exchange received a lower exercise price in
exchange for the cancellation of the holder's exchanged option and forfeiture of
accrued vesting on the exchanged option. The offer to exchange options was
completed on July 25, 1996. Options for 1,077,100 shares with exercise prices
ranging from $10.37 to $25.62 were exchanged for options for an equal number of
shares at an exercise price of $9.37, the fair market value of the Company's
Common Stock on July 25, 1996, the date of the Committee's approval of the
repricing, or at an exercise price of $10.31 for Ten Percent Stockholders. See
EXECUTIVE COMPENSATION AND OTHER MATTERS - "Ten-Year Option Repricings" table
for further information concerning the repricing.
1997 COMPENSATION COMMITTEE
Shyur-Jen Paul Chien
Charles A. Dickinson
12
<PAGE> 17
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE
The Compensation Committee was composed of two independent,
non-employee directors of the Company during the 1997 fiscal year. No such
persons were former employees of the Company. During fiscal 1997, the
Compensation Committee members were Shyur-Jen Paul Chien and Charles A.
Dickinson. The Compensation Committee's primary function is to review and
recommend salary levels of, to approve bonus plans for, and to approve stock
option grants to executive officers, and to set the compensation of the Chief
Executive Officer.
COMPENSATION PHILOSOPHY
The Compensation Committee strives to align executive compensation
with the value achieved by the executive team for the Company's stockholders.
Toward that goal, the Company's compensation program emphasizes both short- and
long-term incentives designed to attract, motivate, and retain highly qualified
executives who will effectively manage the Company and maximize stockholder
value. The Company uses salary, executive officer bonuses and stock options to
motivate executive officers to achieve the Company's business objectives and to
align the incentives of officers with the long-term interests of stockholders.
The Compensation Committee reviews and evaluates each executive officer's base
and variable compensation annually relative to corporate performance and
comparative market information.
In setting total compensation, the Compensation Committee considers
individual and Company performance, as well as market information in the form
of published survey data provided to the Compensation Committee by the
Company's human resources staff. The market data consists primarily of base
salary and total cash compensation rates, as well as incentive bonus and stock
programs, of companies considered by the Compensation Committee to be
comparable technology companies as well as companies in the semiconductor
design industry. The Compensation Committee's policy is generally to target
levels of cash and equity compensation paid to its executive officers so that
such compensation is competitive with that paid by such comparable companies.
In preparing the performance graph for this Proxy Statement, the
Company has selected the H&Q Semiconductors Sector Index, and the Nasdaq Stock
Market-U.S. Index as its peer groups. The companies that the Company included
in its stratified salary surveys are not necessarily those included in the
indices, as such companies may not be competitive with the Company for
executive talent.
The Company has considered the potential impact of Section 162(m) of
the Internal Revenue Code ("Section 162(m)") adopted under the federal Revenue
Reconciliation Act of 1993. Section 162(m) disallows a tax deduction to any
publicly-held corporation for individual compensation exceeding $1 million in
any taxable year paid to the chief executive officers or any of the four other
most highly compensated executive officers, unless the compensation is
performance-based. Since the targeted cash compensation of each of the named
executive officers is well below the $1 million threshold and the Company
believes that compensation attributable to any options granted under the Option
Plan currently qualifies as performance-based in accordance with the
regulations under Section 162(m), the Compensation Committee believes that
Section 162(m) will not reduce the tax deduction available to the Company. The
Company's policy is to qualify to the extent reasonable its executive officers'
compensation for deductibility under applicable tax laws.
13
<PAGE> 18
FORMS OF COMPENSATION
Salary. The Company strives to offer executive officers salaries that
are competitive with comparable companies in the technology sector generally
and in the semiconductor design industry. Frank C. Lin, President and Chief
Executive Officer of the Company, approves executive salaries at the time
executives join the Company, which are subject to review and approval by the
Compensation Committee. Thereafter, Mr. Lin periodically reviews salaries of
the executive officers and recommends adjustments to the base salaries of those
officers which are subject to review and approval by the Compensation
Committee. The Compensation Committee reviews Mr. Lin's performance and makes
adjustments to his salary. Adjustments made by Mr. Lin and the Compensation
Committee are based on individual executive officer performance, cost of living
increases, Company performance, and adjustments to retain qualified personnel.
Mr. Lin's base salary is reviewed annually by the Compensation Committee and
reflects his position, duties, and responsibilities.
Incentive Compensation. The Board of Directors reviews and approves
an executive bonus plan ("Plan") based upon Company and individual performance.
The Compensation Committee believes that significant bonus incentives based on
performance of the Company and personal performance provide substantial
motivations to achieve corporate goals. Under the Plan, Company performance is
measured for the fiscal year on a basis of actual operating profit as compared
with budgeted operating profit. The Company performance portion of any
executive's incentive bonus could be higher if the Company's performance
exceeded the goal. Individual performance against management-by-objective
("MBO") goals comprises a significant component of the bonus for most
executives; however, Company performance is given more weight in any bonus
calculation. For fiscal 1997 the commissions for Peter Jen, who served as Vice
President of Asia Operations, and Richard Hegberg, who served as Vice
President, Worldwide Sales, were based exclusively upon sales performance, and
the target bonus for Mr. Lin, which was 65% of his base salary, was based
exclusively on Company performance. The Plan is administered by the
Compensation Committee with Mr. Lin determining whether executive officers,
other than himself, met their individual MBO goals. The Compensation Committee
believes the incentives paid to the Company's executives on a basis of Company
performance and individual performance are comparable to those paid under
industry standard incentive compensation programs.
The Company exceeded its performance plan for fiscal 1997 and
therefore incentive awards were granted to executive officers. The
Compensation Committee has approved a bonus plan for fiscal 1998 similar to the
plan for fiscal 1997, except that there is no upper limit on the amount of
bonus that may be granted to executive officers under the plan for fiscal 1998.
Mr. Lin's bonus for fiscal 1997 was based entirely on the Company's
performance: specifically, upon a comparison of the Company's operating profit
and budgeted profit. Mr. Lin was paid 100% of his targeted incentive bonus
since the Company exceeded its operating profit goals for fiscal year 1997.
Stock Options. The Compensation Committee strives to maintain the
equity position of all executive officers at levels competitive with comparable
companies. The Compensation Committee believes that equity ownership provides
significant additional motivation to executive officers to maximize value for
the Company's stockholders, and therefore grants stock options under the
Company's 1992 Stock Option Plan at the commencement of an executive officer's
employment and, depending on that officer's performance and the appropriateness
of additional awards to retain key employees, periodically thereafter. Stock
options are granted at the prevailing market price, vest over a period of years
and will only have value if the Company's stock price increases over the
exercise price. Therefore, the Compensation Committee believes that stock
options serve to align the interests of executive officers closely with other
stockholders because of the direct benefit executive officers receive through
improved stock price performance.
In September 1996, the Compensation Committee granted options to
executive officers, including Mr. Lin. Mr. Lin received a grant of 100,000
shares with an exercise price of $11.275. The grant is based on Mr. Lin's
senior position, his responsibilities, and his past and expected contributions
to the Company's future success and was intended to provide competitive equity
compensation for the Company's 1997 fiscal year.
1997 COMPENSATION COMMITTEE
Shyur-Jen Paul Chien
Charles A. Dickinson
14
<PAGE> 19
COMPARISON OF STOCKHOLDER RETURN
Set forth below is a line graph comparing the annual percentage change
in the cumulative total return on the Company's Common Stock with the
cumulative total return of the H&Q Semiconductors Sector Index and the Nasdaq
Stock Market-U.S. Index for the period commencing on December 15, 1992(1) and
ending on June 30, 1997.
<TABLE>
<CAPTION>
COMPARISON OF CUMULATIVE TOTAL RETURN FROM DECEMBER 15, 1992 THROUGH JUNE 30, 1997(2):
TRIDENT MICROSYSTEMS, INC., H&Q SEMICONDUCTORS SECTOR INDEX AND THE NASDAQ
Dec-92 Jun-93 Jun-94 Jun-95 Jun-96 Jun-97
<S> <C> <C> <C> <C> <C> <C>
Nasdaq U.S. Index $ 100.00 $ 108.63 $ 109.67 $ 146.39 $ 187.95 $ 228.57
Trident $ 100.00 $ 30.87 $ 36.75 $ 122.01 $ 74.26 $ 66.15
HQ Semiconductor $ 100.00 $ 138.93 $ 164.65 $ 321.98 $ 239.32 $ 434.00
Index
</TABLE>
(1) The Company's initial public offering commenced on December 16, 1992.
For purposes of this presentation, the Company has assumed that its
initial offering price of $17.00 would have been the closing sales
price on December 15, 1992, the day prior to commencement of trading.
(2) Assumes that $100.00 was invested on December 15, 1992 in the Company's
Common Stock at the Company's initial offering price of $17.00 and at
the closing sales price for each index on that date and that all
dividends were reinvested. No dividends have been declared on the
Company's Common Stock. Stockholder returns over the indicated period
should not be considered indicative of future stockholder returns.
15
<PAGE> 20
ELECTION OF DIRECTORS
The Company has a classified Board of Directors currently consisting
of two Class I Directors (Charles A. Dickinson and Yasushi Chikagami), three
Class II Directors (Leonard Y. Liu, Millard Phelps and Shyur-Jen Paul Chien),
and two Class III Directors (Frank C. Lin and Glen M. Antle), who will serve
until the annual meetings of stockholders to be held in 1999, 1997 and 1998,
respectively, and until their respective successors are duly elected and
qualified. At each annual meeting of stockholders, Directors are elected for a
full term of three years to succeed those Directors whose terms expire on the
annual meeting dates. Vacancies on the Board of Directors resulting from
death, resignation, retirement, disqualification or other cause (other than
removal from office by vote of the stockholders) may be filled by a majority
vote of the Directors then in office, and Directors so chosen shall hold office
for a term expiring at the annual meeting of stockholders at which the term of
office of the class to which they have been elected expires.
The terms of the Class II Directors will expire on the date of the
upcoming annual meeting. Two people are to be elected to serve as Class II
Directors of the Board of Directors at that meeting. Management's nominees for
election by the stockholders to these positions are Leonard Y. Liu and Millard
Phelps, two of the current Class II members of the Board of Directors.
Shyur-Jen Paul Chien will not stand for re- election. Management has not yet
identified a suitable candidate to serve as the third Class II Director, and is
therefore not proposing a third nominee. The Board of Directors and Management
continue to evaluate prospective candidates for the Board of Directors.
If elected, Management's nominees will serve as Directors until the
Company's annual meeting of stockholders in 2000, and until their successors
are elected and qualified. If any of the nominees decline to serve, the
proxies may be voted for such substitute nominees as the Company may designate.
Proxies may not be voted for more than two nominees.
If a quorum is present and voting, the two nominees for Class II
Directors receiving the highest number of votes will be elected as Class II
Directors. Abstentions and shares held by brokers that are present, but not
voted because the brokers were prohibited from exercising discretionary
authority, i.e., "broker non-votes," will be counted as present for purposes of
determining if a quorum is present.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION OF
MESSRS. LIU AND PHELPS.
16
<PAGE> 21
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of the Company has selected Price Waterhouse
LLP as independent public accountants to audit the financial statements of the
Company for the fiscal year ending June 30, 1998. Price Waterhouse LLP has
acted in such capacity since its appointment during the fiscal year ending June
30,1991. A representative of Price Waterhouse LLP is expected to be present at
the annual meeting with the opportunity to make a statement if the
representative desires to do so, and is expected to be available to respond to
appropriate questions.
The affirmative vote of a majority of the votes cast at the annual
meeting of stockholders at which a quorum representing a majority of all
outstanding shares of Common Stock of the Company is present and voting, either
in person or by proxy, is required for approval of this proposal. Abstentions
and "broker non-votes" will each be counted as present for purposes of
determining the presence of a quorum, but will not be counted as having been
voted on the proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE APPOINTMENT OF
PRICE WATERHOUSE LLP AS THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS FOR THE
FISCAL YEAR ENDING JUNE 30, 1998.
17
<PAGE> 22
STOCKHOLDER PROPOSALS TO BE PRESENTED AT NEXT ANNUAL MEETING
Proposals of stockholders intended to be presented at the next annual
meeting of the stockholders of the Company must be received by the Company at
its offices at 189 North Bernardo Avenue, Mountain View, California 94043, no
later than June 25, 1998, and satisfy the conditions established by the
Securities and Exchange Commission for stockholder proposals to be included in
the Company's proxy statement for that meeting.
TRANSACTION OF OTHER BUSINESS
At the date of this Proxy Statement, the only business that the Board
of Directors intends to present or knows that others will present at the
meeting is as set forth above. If any other matter or matters are properly
brought before the meeting, or any adjournment thereof, it is the intention of
the persons named in the accompanying form of proxy to vote the proxy on such
matters in accordance with their best judgment.
By Order of the Board of Directors
FRANK C. LIN
Chairman of the Board of Directors,
President and Chief Executive Officer
October 23, 1997
18
<PAGE> 23
PROXY
TRIDENT MICROSYSTEMS, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Frank C. Lin, with full power of substitution,
to represent the undersigned and to vote all of the shares of stock in Trident
Microsystems, Inc. (the "Company") which the undersigned is entitled to vote at
the Annual Meeting of the Stockholders of the Company to be held at the
principal executive offices of the Company at 380 North Bernardo Avenue,
Mountain View, California 94043 on December 4, 1997 at 9:00 a.m., local time,
and at any adjournment thereof (1) as hereinafter specified upon the proposals
listed below and as more particularly described in the Proxy Statement of the
Company dated October 23, 1997 (the "Proxy Statement"), receipt of which is
hereby acknowledged, and (2) in their discretion, upon such other matters as may
properly come before the meeting. The undersigned hereby acknowledges receipt of
the Company's 1997 Annual Report to Stockholders.
THE SHARES REPRESENTED HEREBY SHALL BE VOTED AS SPECIFIED. IF NO SPECIFICATION
IS MADE, SUCH SHARES SHALL BE VOTED FOR PROPOSALS 1 THROUGH 2.
(Continued and to be signed on reverse side)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 24
A VOTE FOR THE FOLLOWING PROPOSALS IS RECOMMENDED BY THE BOARD OF DIRECTORS:
Please mark
your votes as
indicated in /X/
this example.
1. ELECTION OF CLASS II DIRECTORS. FOR WITHHELD
Nominees: Leonard Y. Liu and all from all
Millard Phelps nominees nominees
/ / / /
except vote withheld from the following nominee(s):
- ---------------------------------------------------
2. PROPOSAL TO RATIFY THE FOR AGAINST ABSTAIN
APPOINTMENT OF PRICE WATERHOUSE LLP / / / / / /
AS THE COMPANY'S INDEPENDENT
ACCOUNTANTS FOR THE FISCAL YEAR
ENDING JUNE 30, 1998.
YES NO
I plan to attend the meeting: / / / /
WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING IN PERSON, YOU ARE URGED TO SIGN
AND PROMPTLY MAIL THIS PROXY IN THE
RETURN ENVELOPE SO THAT YOUR STOCK MAY
BE REPRESENTED AT THE MEETING.
_______________________________________________________Dated:____________, 1997
Please print your name here exactly as it appears on
your stock certificate. (If you are voting as the proxy
for a stockholder, please print the name of that
stockholder).
________________________________________By:_____________________(if applicable)
Please sign here. If shares of stock are
held jointly, both or all of such
persons should sign. Corporate or
partnership proxies should be signed in
full corporate or partnership name by an
authorized person.
Persons signing in a fiduciary capacity
should indicate their full titles in
such capacity.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
