<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A-1
Annual report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended June 30, 1999 Commission file number 0-20784
TRIDENT MICROSYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware 77-0156584
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2450 Walsh Avenue
Santa Clara, California 95051-1303
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (408) 496-1085
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to section 12(g) of the Act:
Common Stock, $0.001 Par Value
(Title of class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of Registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates
of the Registrant, based upon the closing price of the Common Stock on August
31, 1999 ($9.125 per share), as reported on the NASDAQ National Market was
approximately $97,389,938. Shares of Common Stock held by executive officers and
directors and by each person who owns 5% or more of the outstanding Common Stock
have been excluded in that such persons may be deemed
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to be affiliate. This determination of affiliate status is not necessarily a
conclusive determination for other purposes.
The number of shares of the registrant's $0.001 par value Common Stock
outstanding on August 31, 1999, was 13,200,454.
2
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Set forth below for all directors are the names, ages, positions with
the Company and period of service as of August 31, 1999. The term of the office
of each person elected as a director will continue until the next annual meeting
of stockholders or until a successor has been elected and qualified or until
resignation or removal.
<TABLE>
<CAPTION>
POSITIONS DIRECTOR
NAME AGE WITH THE COMPANY SINCE
- ---- --- ---------------- --------
<S> <C> <C> <C>
Class I Directors whose terms expire
at the 1999 Annual Meeting
of Stockholders:
Charles A. Dickinson 75 Director 1993
Yasushi Chikagami 60 Director 1994
Class II Director nominated for
election at the 2000 Annual Meeting
of Stockholders:
Millard Phelps 71 Director 1995
John Luke 67 Director 1999
Class III Directors whose terms
expire at the 2001 Annual Meeting
of Stockholders:
Frank C. Lin 54 President, Chief Executive Officer 1987
and Chairman of the Board of
Directors
Glen M. Antle 61 Director 1992
</TABLE>
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
Aavid Thermal Technologies, Inc., a company providing thermal transfer
solutions, Lecroy, a company manufacturing digital oscilloscopes, and Dense Pac
Microsystems, a company manufacturing stacked memory modules.
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.
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 from May 1994 to July
1994, Mr. Phelps served as an advisory director of Hambrecht & Quist when he
retired. Mr. Phelps is also a director of Pericom, a semiconductor corporation,
and three private semiconductor companies.
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Mr. Luke has served as a Director of the Company since January 1999.
From May 1989 to September 1997, Mr. Luke served as President of TSMC, USA and
has been President Emeritus since then. Prior to that, from 1982 to 1989, Mr.
Luke served as Vice President of Sales for Monsanto Electronic Materials, Inc.;
from 1978 to 1982, as Vice President of Worldwide Sales at Signetics
Corporation; from 1976 to 1978, as Vice President of Marketing and International
Sales for American Microsystems, Inc.; from 1974 to 1976, as Vice President of
Marketing and Sales for Monolithic Memories and from 1971 to 1974, as Vice
President of Sales at Fairchild. Mr. Luke also spent 10 years at Texas
Instruments in sales management positions.
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 was 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, prior to its consolidation with UMC.
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 served as
Chairman of the Board of Directors of Quickturn from June 1993 to June 1999.
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.
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 1999, all filing requirements applicable to the
Company's executive officers, directors and more than 10% stockholders were met.
4
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ITEM 11. EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the
compensation during the fiscal years ended June 30, 1999, June 30, 1998 and
June 30, 1997 of the Chief Executive Officer of the Company and each of the
four other most highly compensated executive officers of the Company as of
June 30, 1999, whose salary and incentive compensation for the fiscal year
ended June 30, 1999 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.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ------------
------------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) OPTIONS (#)
--------------------------- ---- ------ ----- --------------- -----------
--------------------------- ---- ------ ----- --------------- -----------
<S> <C> <C> <C> <C> <C>
Frank C. Lin 1999 $360,430 $ 0 $68,364(1) 385,000(2)
President and Chief 1998 $394,994 $ 0 $84,856(1) 220,000(3)
Executive Officer 1997 $352,000 $229,336 $ 0 150,000(4)
Jung-Herng Chang 1999 $192,575 $ 0 $8,740(1) 225,000(5)
Sr. Vice President, Engineering 1998 $211,000 $ 0 $16,801(1) 100,000(6)
1997 $183,500 $ 92,152 $ 0 60,000(7)
Peter Jen 1999 $190,750 $ 0 $23,885(1) 200,000(8)
Sr. Vice President, Asia 1998 $209,000 $ 0 $86,330(9) 100,000(10)
Operations and Chief Accounting 1997 $174,220 $ 0 $85,827(11) 90,000(12)
Officer
Gerry Liu 1999 $173,327 $ 0 $ 0 165,000(13)
Sr. Vice President, Marketing 1998 $194,000 $ 0 $ 0 90,000(14)
1997 $165,000 $ 82,500 $ 0 110,000(15)
W. Steven Rowe 1999 $170,812 $ 0 $13,976(1) 89,050(16)
Vice President, Human 1998 $183,500 $ 0 $ 0 60,000(17)
Resources/Administration and 1997 $148,750 $ 58,000 $ 0 60,300(18)
Acting Chief Financial Officer
</TABLE>
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(1) Accrued vacation pay-out.
(2) Includes an option to purchase 80,000 shares granted on October 12,
1998 in consideration for the cancellation of an option for an
identical number of shares granted in fiscal 1994. Also includes option
to purchase 50,000 shares granted on October 12, 1998 in consideration
for the cancellation of an option for an identical number of shares
granted in fiscal 1995. Also includes option to purchase 50,000 shares
granted on October 12, 1998, in consideration for the cancellation of
an option for an identical number of shares granted in fiscal 1997.
Also includes option to purchase 160,000 shares granted on October 12,
1998, in consideration for the cancellation of an option for an
identical number of shares granted in fiscal 1998.
5
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(3) Includes an option to purchase 100,000 shares granted on January 23,
1998, in consideration for the cancellation of an option for an
identical number of shares granted in fiscal 1997. Also includes an
option to purchase 60,000 shares granted on January 23, 1998, in
consideration for the cancellation of an option for an identical number
of shares granted in fiscal 1998.
(4) Includes an 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.
(5) Includes an option to purchase 70,000 shares granted on October 12,
1998, in consideration for the cancellation of an option for an
identical number of shares granted in fiscal 1993. Also includes an
option to purchase 10,000 shares granted on October 12, 1998, in
consideration for the cancellation of an option for an identical number
of shares granted in fiscal 1994. Also includes an option to purchase
30,000 shares granted on October 12, 1998, in consideration for the
cancellation of an option for an identical number of shares granted in
fiscal 1995. Also includes an option to purchase 20,000 shares granted
on October 12, 1998, in consideration for the cancellation of an option
for an identical number of shares granted in fiscal 1997. Also includes
an option to purchase 70,000 shares granted on October 12, 1998, in
consideration for the cancellation of an option for an identical number
of shares granted in fiscal 1998.
(6) Includes an option to purchase 40,000 shares granted on January 23,
1998, in consideration for the cancellation of an option for an
identical number of shares granted in fiscal 1997. Also includes an
option to purchase 30,000 shares granted on January 23, 1998, in
consideration for the cancellation of an option for an identical number
of shares granted in fiscal 1998.
(7) Includes an 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.
(8) Includes an option to purchase 40,000 shares granted on October 12,
1998, in consideration for the cancellation of an option for an
identical number of shares granted in fiscal 1994. Also includes an
option to purchase 15,000 shares granted on October 12, 1998, in
consideration for the cancellation of an option for an identical number
of shares granted in fiscal 1995. Also includes an option to purchase
50,000 shares granted on October 12, 1998, in consideration for the
cancellation of an option for an identical number of shares granted in
fiscal 1997. Also includes an option to purchase 70,000 shares granted
on October 12, 1998, in consideration for the cancellation of an option
for an identical number of shares granted in fiscal 1998.
(9) Includes $48,815 representing commissions earned and $37,515
representing accrued vacation pay-out.
(10) Includes an option to purchase 40,000 shares granted on January 23,
1998, in consideration for the cancellation of an option for an
identical number of shares granted in fiscal 1997. Also includes option
to purchase 30,000 shares granted on January 23, 1998, in consideration
for the cancellation of an option for an identical number of shares
granted in fiscal 1998.
(11) All amounts shown represent commissions earned.
(12) Includes an 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.
(13) Includes an option to purchase 80,000 shares granted on October 12,
1998, in consideration for the cancellation of an option for an
identical number of shares granted in fiscal 1997. Also includes an
option to purchase 60,000 shares granted on October 12, 1998, in
consideration for the cancellation of an option for an identical number
of shares granted in fiscal 1998.
(14) Includes an option to purchase 30,000 shares granted on January 23,
1998, in consideration for the cancellation of an option for an
identical number of shares granted in fiscal 1997. Also includes an
option to purchase 30,000 shares granted on January 23, 1998, in
consideration for the cancellation of an option for an identical number
of shares granted in fiscal 1998.
(15) Includes an option to purchase 40,000 shares granted on July 25, 1996,
in consideration for the cancellation of an option for an identical
number of shares granted in fiscal 1996.
(16) Includes an option to purchase 44,050 shares granted on January 23,
1998, in consideration for the cancellation of an option for an
identical number of shares granted in fiscal 1997. Also includes an
option
6
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to purchase 30,000 shares granted on January 23, 1998, in
consideration for the cancellation of an option for an identical
number of shares granted in fiscal 1998.
(17) Includes an option to purchase 30,000 shares granted on January 23,
1998, in consideration for the cancellation of an option for an
identical number of shares granted in fiscal 1997.
(18) Includes an option to purchase 28,000 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
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OPTION GRANTS IN LAST FISCAL YEAR
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, 1999 to the persons named in the Summary Compensation Table.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------
NUMBER OF % OF TOTAL POTENTIAL REALIZABLE VALUE AT
SECURITIES OPTIONS ASSUMED ANNUAL RATES OF STOCK
UNDERLYING GRANTED TO EXERCISE PRICE APPRECIATION
OPTIONS EMPLOYEES OR BASE FOR OPTION TERM(3)
GRANTED IN FISCAL PRICE EXPIRATION -----------------------------
NAME (#)(1) YEAR ($/SH)(2) DATE 5% ($) 10% ($)
- -------------------- ---------- ---------- --------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Frank C. Lin 45,000 0.8960% $3.375 10/16/08 $95,513.37 $242,049.64
60,000(4) 1.1946% $3.500 10/12/08 $132,067.87 $334,685.92
80,000(10) 1.5928% $3.500 10/12/08 $176,090.50 $446,247.89
50,000(8) 0.9955% $3.500 10/12/08 $110,056.56 $278,904.93
38,000(5) 0.7566% $3.500 10/12/08 $83,642.99 $211,967.75
12,000(5) 0.2389% $3.500 10/12/08 $26,413.57 $66,937.18
100,000(4) 1.9910% $3.500 10/12/08 $220,113.12 $557,809.86
Jung-Herng Chang 25,000 0.4978% $3.375 10/16/08 $53,062.98 $134,472.02
20,000(12) 0.3982% $3.500 10/12/08 $44,022.62 $111,561.97
50,000(12) 0.9955% $3.500 10/12/08 $110,056.56 $278,904.93
30,000(4) 0.5973% $3.500 10/12/08 $66,033.94 $167,342.96
10,000(10) 0.1991% $3.500 10/12/08 $22,011.31 $55,780.99
30,000(9) 0.5973% $3.500 10/12/08 $66,033.94 $167,342.96
40,000(4) 0.7964% $3.500 10/12/08 $88,045.25 $223,123.94
20,000(5) 0.3982% $3.500 10/12/08 $44,022.62 $111,561.97
Peter Jen 25,000 0.4978% $3.375 10/16/08 $53,062.98 $134,472.02
30,000(5) 0.5973% $3.500 10/12/08 $66,033.94 $167,342.96
40,000(4) 0.7964% $3.500 10/12/08 $88,045.25 $223,123.94
30,000(4) 0.5973% $3.500 10/12/08 $66,033.94 $167,342.96
20,000(5) 0.3982% $3.500 10/12/08 $44,022.62 $111,561.97
15,000(8) 0.2987% $3.500 10/12/08 $33,016.97 $83,671.48
10,000(10) 0.1991% $3.500 10/12/08 $22,011.31 $55,780.99
30,000(11) 0.5973% $3.500 10/12/08 $66,033.94 $167,342.96
Gerry Liu 25,000 0.4978% $3.375 10/16/08 $53,062.98 $134,472.02
40,000(5) 0.7964% $3.500 10/12/08 $88,045.25 $223,123.94
30,000(4) 0.5973% $3.500 10/12/08 $66,033.94 $167,342.96
40,000(7) 0.7964% $3.500 10/12/08 $88,045.25 $223,123.94
30,000(4) 0.5973% $3.500 10/12/08 $66,033.94 $167,342.96
Steven Rowe 15,000 0.2987% $3.375 10/16/08 $31,837.79 $80,683.21
2,250(5) 0.0448% $3.500 10/12/08 $4,952.55 $12,550.72
9,000(7) 0.1792% $3.500 10/12/08 $19,810.18 $50,202.89
1,120(5) 0.0223% $3.500 10/12/08 $2,465.27 $6,247.47
16,380(5) 0.3261% $3.500 10/12/08 $36,054.53 $91,369.26
30,000(4) 0.5973% $3.500 10/12/08 $66,033.94 $167,342.96
15,300(6) 0.3046% $3.500 10/12/08 $33,677.31 $85,344.91
</TABLE>
- ----------
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(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. Under the Option
Plan, the Compensation Committee retains discretion to modify the
terms, including the exercise price, of outstanding options. See
"CHANGE IN CONTROL ARRANGEMENTS."
(2) All options were granted at or above market value on the date of grant
as determined by the Compensation Committee.
(3) 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.
(4) These options represent options that were originally granted on
January 23, 1998 and were repriced on October 12, 1998.
(5) These options represent options that were originally granted on
July 25, 1996 and were repriced on October 12, 1998.
(6) These options represent options that were originally granted on July
24, 1996 and were repriced on October 12, 1998.
(7) These options represent options that were originally granted on July
15, 1996 and were repriced on October 12, 1998.
(8) These options represent options that were originally granted on October
20, 1994 and were repriced on October 12, 1998.
(9) These options represent options that were originally granted on October
13, 1994 and were repriced on October 12, 1998.
(10) These options represent options that were originally granted on October
7, 1993 and were repriced on October 12, 1998.
(11) These options represent options that were originally granted on July
14, 1993 and were repriced on October 12, 1998.
(12) These options represent options that were originally granted on July 7,
1992 and were repriced on October 12, 1998.
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OPTION EXERCISES AND FISCAL 1999 YEAR-END VALUES
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END VALUES
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, 1999, and unexercised options held as of June 30, 1999, by the
persons named in the Summary Compensation Table.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
SHARES NUMBER OF SECURITIES
ACQUIRED UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-MONEY
ON OPTIONS AT FY-END OPTIONS AT FY-END(2)
EXERCISE VALUE ----------------------------- ----------------------------------
NAME (#) REALIZED EXERCISABLE(1) UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------- -------- -------- -------------- ------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Frank Lin 0 $ 0 232,500 152,500 $1,322,343.75 $872,968.75
Jung-Herng Chang 0 $ 0 152,500 72,500 $ 867,343.75 $415,468.75
Peter Jen 0 $ 0 125,834 81,666 $ 734,055.88 $467,600.38
Gerry Liu 0 $ 0 62,500 102,500 $ 355,468.75 $586,093.75
Steven Rowe 0 $ 0 25,567 63,483 $ 145,412.32 $362,934.57
</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, 1999 ($9,1875
per share) and is net of the exercise price of such options.
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 non-employee director (an "Outside
Director"), such Outside Director will automatically receive a grant of an
option to purchase 20,000 shares of the Company's Common Stock and will receive
an additional option to purchase 20,000 shares of the Company's Common Stock on
the date of the first annual meeting of the stockholders following the third
anniversary of his or her previous Outside Directors Plan option grant, provided
that he or she remains in office. Each Outside Director previously granted an
option under the Outside Directors Plan will automatically receive an additional
option to purchase 20,000 shares of the Company's Common Stock on the day
immediately following each third annual meeting of the stockholders of the
Company.
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<PAGE> 11
On December 17, 1998, each Outside Director remaining in office
following last year's Annual Meeting automatically received an option to
purchase 20,000 shares of the Company's Common Stock on the date of the meeting
and will receive an additional option to purchase 20,000 shares of the Company's
Common Stock on the date of each third annual meeting of the stockholders
thereafter, provided that he or she remains in office.
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 and as such was entitled to compensation as a director of that entity. Part
of the joint venture funding facility was destroyed in a fire on October 3,
1997. In June 1999, the Company announced that it received confirmation from UMC
that, subject to the approval of the Taiwanese government, the UICC joint
venture will be consolidated with UMC by the end of 1999. Trident expects to
receive approximately 46.5 million shares of UMC stock in the consolidation.
These shares represent about 0.5% of the outstanding stock of UMC.
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.
COMPENSATION COMMITTEE REPORT ON REPRICING OF OPTIONS
The following is the report of the Compensation Committee of the Board
of Directors describing the repricing of stock options.
In October 1998, the Compensation Committee, consisting of Charles A.
Dickinson and Glen M. Antle, 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 and the 1996
Nonstatutory Stock Option Plan (together, 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.
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<PAGE> 12
The Committee determined (i) that the Company's success in the future
would depend in large part on its ability to retain 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 exercise prices well above the current trading price would
suffer 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 restrictions
on exercise 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 Plans at the optionee's
election, with exercise restrictions and with exercise prices equal to the then
current market value.
Accordingly, in October 1998, the Committee approved an offer,
effective October 12, 1998, to all employees of the Company, including executive
officers, other than those who have given notice of or been notified of their
termination of employment, to exchange certain outstanding options with exercise
prices above the then current trading price for new options with exercise prices
equal to the current trading price ("New Options"). The Committee provided that
New Options would not be exercisable during periods ranging from six to twelve
months depending on the employee's length of service, except in certain limited
circumstances. Such circumstances are (i) the employee's involuntary termination
other than for cause, (ii) the employee's death or permanent and total
disability, or (iii) a merger, liquidation or dissolution of the Company. In
addition, the annual vesting dates for those portions of the New Options not
received in exchange for vested portions of the canceled old options were
delayed for periods ranging from four to eight months depending on the
employee's length of service. All New Options terminate no later than ten years
from the date of the exchange. Optionees who participated in the exchange
received a lower exercise price in exchange for the cancellation of the holder's
exchanged option. In October 1998, the Company canceled outstanding options for
3,643,000 shares with exercise prices greater than $3.50 and reissued the
options with an exercise price of $3.50. In January 1998, the Company canceled
1,702,000 outstanding options granted after July 25, 1996 with exercise prices
greater than $8.63 and reissued the options with an exercise price of $8.63. In
July 1996, the Company cancelled 1,077,000 options outstanding under the option
plan with exercise prices greater than $9.38 and reissued the options with an
exercise price of $9.38. See EXECUTIVE COMPENSATION AND OTHER MATTERS -
"Ten-Year Option Repricings" table for further information concerning the
repricing.
1999 COMPENSATION COMMITTEE
Charles A. Dickinson
Glen M. Antle
12
<PAGE> 13
REPRICING OF STOCK OPTIONS
The following table provides the specified information concerning all
repricings of options to purchase the Company's Common Stock held by any
executive officer of the Company since December 16, 1992, the date of the
Company's initial public offering.
TEN-YEAR OPTION REPRICINGS
<TABLE>
<CAPTION>
EXERCISE
PRICE AT
NUMBER OF MARKET PRICE TIME OF LENGTH OF ORIGINAL
SECURITIES OF STOCK AT REPRICING OPTION TERM
UNDERLYING TIME OF OR NEW REMAINING AT DATE
REPRICING OPTIONS REPRICED REPRICING OR AMENDMENT EXERCISE OF REPRICING OR
NAME AND POSITION DATE OR AMENDED (#) AMENDMENT($) (#) 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(2) $10.31(2) 4 years, 71 days
1/23/98(3) 100,000 $8.63 $11.28(2) $ 8.63 3 years, 229 days
1/23/98(3) 60,000 $8.63 $15.63 $ 8.63 9 years, 179 days
10/12/98(4) 80,000 $3.50 $ 5.63 $ 3.50 4 years, 360 days
10/12/98(4) 50,000 $3.50 $ 7.70(2) $ 3.50 1 year, 8 days
10/12/98(4) 50,000 $3.50 $10.31(2) $ 3.50 2 years, 286 days
10/12/98(4) 60,000 $3.50 $ 8.63 $ 3.50 9 years, 103 days
10/12/98(4) 100,000 $3.50 $ 8.63 $ 3.50 9 years, 103 days
Jung-Herng Chang, Sr. 7/25/96(1) 20,000 $9.38 $18.63 $ 9.38 9 years, 71 days
Vice President, 1/23/98(3) 40,000 $8.63 $10.25 $ 8.63 8 years, 229 days
Engineering 1/23/98(3) 30,000 $8.63 $15.63 $ 8.63 9 years, 179 days
10/12/98(4) 50,000 $3.50 $ 5.00 $ 3.50 3 years, 268 days
10/12/98(4) 20,000 $3.50 $ 5.00 $ 3.50 3 years, 269 days
10/12/98(4) 10,000 $3.50 $ 5.63 $ 3.50 4 years, 360 days
10/12/98(4) 30,000 $3.50 $ 6.00 $ 3.50 6 years, 1 day
10/12/98(4) 20,000 $3.50 $ 9.38 $ 3.50 7 years, 286 days
10/12/98(4) 30,000 $3.50 $ 8.63 $ 3.50 9 years, 103 days
10/12/98(4) 40,000 $3.50 $ 8.63 $ 3.50 9 years, 103 days
Peter Jen, Sr. Vice 7/14/93 30,000 $5.00 $ 5.50 $ 5.00 9 years, 49 days
President, Asia Operations 7/14/93 10,000 $5.00 $ 8.00 $ 5.00 9 years, 95 days
and Chief Accounting 7/25/96(1) 20,000 $9.38 $15.50 $ 9.38 8 years, 261 days
Officer 7/25/96(1) 30,000 $9.38 $18.63 $ 9.38 9 years, 71 days
1/23/98(3) 40,000 $8.63 $10.25 $ 8.63 8 years, 229 days
1/23/98(3) 30,000 $8.63 $15.63 $ 8.63 9 years, 179 days
10/12/98(4) 30,000 $3.50 $ 5.00 $ 3.50 4 years, 275 days
10/12/98(4) 10,000 $3.50 $ 5.63 $ 3.50 4 years, 360 days
10/12/98(4) 15,000 $3.50 $ 7.00 $ 3.50 6 years, 8 days
10/12/98(4) 20,000 $3.50 $ 9.38 $ 3.50 7 years, 286 days
10/12/98(4) 30,000 $3.50 $ 9.38 $ 3.50 7 years, 286 days
10/12/98(4) 30,000 $3.50 $ 8.63 $ 3.50 9 years, 103 days
10/12/98(4) 40,000 $3.50 $ 8.63 $ 3.50 9 years, 103 days
Gerry Liu, Sr. Vice 7/25/96(1) 40,000 $9.38 $13.25 $ 9.38 9 years, 178 days
President, Marketing 1/23/98(3) 30,000 $8.63 $10.25 $ 8.63 8 years, 229 days
1/23/98(3) 30,000 $8.63 $15.63 $ 8.63 9 years, 179 days
10/12/98(4) 40,000 $3.50 $ 9.00 $ 3.50 7 years, 276 days
10/12/98(4) 40,000 $3.50 $ 9.38 $ 3.50 7 years, 286 days
10/12/98(4) 30,000 $3.50 $ 8.63 $ 3.50 9 years, 103 days
10/12/98(4) 30,000 $3.50 $ 8.63 $ 3.50 9 years, 103 days
</TABLE>
13
<PAGE> 14
<TABLE>
<CAPTION>
EXERCISE LENGTH OF ORIGINAL
NUMBER OF PRICE AT OPTION TERM
SECURITIES MARKET PRICE TIME OF REMAINING AT DATE
UNDERLYING OF STOCK AT REPRICING NEW OF REPRICING OR
REPRICING OPTIONS REPRICED TIME OF OR EXERCISE AMENDMENT
NAME AND POSITION DATE OR AMENDED (#) REPRICING OR AMENDMENT PRICE ($)
AMENDMENT($) (#)
----------------- ---------- --------------- ------------ --------- --------- -------------------
<S> <C> <C> <C> <C> <C> <C>
W. Steven Rowe 7/25/96(1) 25,000 $9.38 $16.75 $9.38 8 years, 317 days
Vice President, HR/ 7/25/96(1) 3,000 $9.38 $13.25 $9.38 9 years, 178 days
Administration, Acting 1/23/98(3) 30,000 $8.63 $15.63 $8.63 9 years, 179 days
Chief Financial Officer 10/12/98(4) 9,000 $3.50 $ 9.00 $3.50 7 years, 276 days
10/12/98(4) 15,300 $3.50 $ 9.13 $3.50 7 years, 285 days
10/12/98(4) 19,750 $3.50 $ 9.38 $3.50 7 years, 286 days
10/12/98(4) 30,000 $3.50 $ 8.63 $3.50 9 years, 103 days
Amir Mashkoori, Former 7/25/96(1) 100,000 $9.38 $13.25 $9.38 9 years, 178 days
Sr. Vice President, 1/23/98(3) 30,000 $8.63 $15.63 $8.63 9 years, 179 days
Operations and Business 10/12/98(4) 75,000 $3.50 $ 9.38 $3.50 7 years, 286 days
Development 10/12/98(4) 30,000 $3.50 $ 8.63 $3.50 9 years, 103 days
Richard Hegberg, Former 7/25/96(1) 100,000 $9.38 $10.38 $9.38 9 years, 362 days
Vice President, Worldwide
Sales
James T. Lindstrom, 7/14/93 10,000 $5.00 $ 8.00 $5.00 9 years, 95 days
Former Vice President, 7/25/96(1) 20,000 $9.38 $18.63 $9.38 9 years, 71 days
Finance, Chief Financial
Officer and Secretary
Tung-Liang Chang, Former 7/14/93 30,000 $5.00 $ 8.00 $5.00 9 years, 95 days
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.
(2) Represents 110% of the fair market value of the Company's Common Stock
on the date of grant, as this grant is an incentive stock option and
Mr. Lin holds more than 10% of the Common Stock of the Company.
(3) Options that were repriced on January 23, 1998 continue to vest at the
same rate as applied prior to their repricing but may not exercised
prior to January 24, 1999, except upon the holder's death, permanent
and total disability or involuntary termination other than for cause,
or in the event of a merger, liquidation or dissolution of the Company.
(4) Options that were repriced on October 12, 1998 continue to vest at the
same rate as applied prior to their repricing. However, the remaining
annual vesting dates applicable to shares that have not vested under
the old option prior to the repricing will be delayed for a period of
time determined on the basis of the holder's total length of service
with the Company and its subsidiaries. Each new option, including
vested shares, will be subject to a restriction on exercise during a
restriction period also determined on the basis of optionee's total
length of service, except upon the holder's death, permanent and total
disability or
14
<PAGE> 15
involuntary termination other than for cause, or in the event of
a merger, liquidation or dissolution of the Company. See
"REPORT OF THE COMPENSATION COMMITTEE ON REPRICING OF OPTIONS."
COMPENSATION COMMITTEE
Charles A. Dickinson was the sole member of the Compensation Committee
at the beginning of fiscal 1999. Mr. Antle was appointed to the Committee for
part of the year and was replaced by John Luke in April 1999. 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 COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following is the report of the Compensation Committee of the Board
of Directors describing compensation policies and rationales applicable to the
Company's executive officers for the fiscal year ended June 30, 1999.
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,
particularly those companies located outside the Silicon Valley, where
competition for employees has been intense.
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
commission or performance-based. The Company's policy is to qualify to the
extent reasonable its executive officers' compensation for
15
<PAGE> 16
deductibility under applicable tax laws. 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 Company's 1992 Stock Option Plan as of June 30, 1999 qualified as
performance-based compensation in accordance with the regulations under Section
162(m), the Compensation Committee believes that Section 162(m) generally will
not reduce the tax deduction available to the Company. However, as a result of
the stock option repricing effective October 12, 1998 (See "REPORT OF THE
COMPENSATION COMMITTEE ON REPRICING OF OPTIONS"), options for an aggregate of
460,000 shares granted to persons named in the Summary Compensation Table do not
qualify as performance-based for purposes of Section 162(m).
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. Management determined to reduce
executive salaries by 10% in fiscal 1999 and reported this decision to the
compensation committee.
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. The Plan is approved by the Compensation Committee with Mr. Lin
determining whether executive officers, other than himself, met their individual
MBO goals and with the Compensation Committee making such determination as to
Mr. Lin. 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.
Management determined to maintain management salaries at the same
reduced levels paid in 1998, and not to pay any bonuses for fiscal 1999, whether
or not such bonuses were earned under the terms of the plan. The Compensation
Committee has not met during fiscal 1999.
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,
16
<PAGE> 17
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 October 1998, the Compensation Committee granted options to
executive officers, including Mr. Lin. Mr. Lin received a grant of 45,000 shares
with an exercise price of $3.375. 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 1999 fiscal year.
1999 COMPENSATION COMMITTEE
Charles A. Dickinson
John Luke
17
<PAGE> 18
ITEM 12. STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of August 31,
1999, 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,
1999, whose salary and incentive compensation for the fiscal year ended June 30,
1999 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)............................................. 53,250 *
Yasushi Chikagami(3)......................................... 34,127 *
Charles A. Dickinson(4)...................................... 59,650 *
Frank C. Lin(5).............................................. 1,874,659 14.20%
c/o Trident Microsystems, Inc.
2450 Walsh Avenue
Santa Clara, CA 95051
John Luke.................................................... * *
Millard Phelps(6)............................................ 28,506 *
Jung-Herng Chang(7).......................................... 202,381 1.53%
Peter Jen(8)................................................. 171,138 1.30%
Gerry Liu(9)................................................. 85,056 *
Steven Rowe(10).............................................. 18,817 *
Executive officers and directors
as a group (10 persons)(11).................................. 2,527,584 19.15%
</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 41,250 shares subject to options exercisable by Mr. Antle
within sixty days of August 31, 1999.
(3) Includes 5,000 shares held by a joint tenant account for Mr.
Chikagami's wife, son and daughter. Also includes 29,127 shares subject
to options exercisable by Mr. Chikagami within sixty days of August 31,
1999.
18
<PAGE> 19
(4) Includes 22,500 shares subject to options exercisable by Mr. Dickinson
within sixty days of August 31, 1999.
(5) Includes 247,500 shares subject to options exercisable by Mr. Lin
within sixty days of August 31, 1999. Also includes 10,500 shares held
by Mr. Lin's wife and 29,956 shares held by a custodian for the benefit
of Mr. Lin's two minor children.
(6) Includes 27,551 shares subject to options exercisable by Mr. Phelps
within sixty days of August 31, 1999.
(7) Includes 160,834 shares subject to options exercisable by Mr. Chang
within sixty days of August 31, 1999.
(8) Includes 134,168 shares subject to options exercisable by Mr. Jen
within sixty days of August 31, 1999.
(9) Includes 80,834 shares subject to options exercisable by Mr. Liu within
sixty days of August 31, 1999.
(10) Includes 18,817 shares subject to options exercisable by Mr. Rowe
within sixty days of August 31, 1999.
(11) Includes 762,581 shares subject to options exercisable within sixty
days of August 31, 1999.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 21, 1998, Mr. Mashkoori paid to the Company $72,426.03 as
payment in full for the principal amount and accrued interest owed under the
Company's loan to Mr. Mashkoori originally granted on May 5, 1997 and amended on
May 5, 1998.
On July 9, 1999, the loan originally entered into with W. Steven Rowe
on July 9, 1997 was amended to increase the amount from $159,105 to $167,951.24
and to extend the term for one year, making the loan payable on July 9, 2000
with interest at a rate of 5.32% per annum.
In October 1998, the Board approved a loan to Frank Lin pursuant to
which Mr. Lin could borrow $500,000 from the Company. As of the date of this
proxy statement, the Company and Mr. Lin have not entered into a loan agreement
and Mr. Lin has not borrowed any money from the Company under this arrangement.
19
<PAGE> 20
COMPARISON OF STOCKHOLDER RETURN
In accordance with Exchange Act regulations, 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 Hambrecht &
Quist Semiconductors Sector Index ("H&Q Semiconductor Index") and the Nasdaq
Stock Market Index (U.S. Companies) ("Nasdaq US") for the period commencing on
June 30, 1994 and ending on June 30, 1999. The information contained in the
performance graphs shall not be deemed to be "soliciting material" or to be
"filed" with the Securities and Exchange Commission, nor shall such information
be incorporated by reference into any future filing under the Securities Act of
1933, as amended, or the Exchange Act, except to the extent that the Company
specifically incorporates it by reference into such filing.
COMPARISON OF CUMULATIVE TOTAL RETURN FROM JUNE 30, 1994
THROUGH JUNE 30, 1999(1)
TRIDENT MICROSYSTEMS, INC., HAMBRECHT & QUIST SEMICONDUCTORS SECTOR INDEX
AND THE NASDAQ STOCK MARKET (U.S. COMPANIES)
[GRAPH]
<TABLE>
<CAPTION>
Jun-94 Jun-95 Jun-96 Jun-97 Jun-98 Jun-99
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Nasdaq US $100.00 $132.22 $167.85 $204.26 $288.38 $408.83
Trident Microsystems $100.00 $332.00 $202.00 $180.00 $85.00 $147.00
H&Q Semiconductor Index $100.00 $194.93 $144.52 $261.62 $214.28 $453.81
</TABLE>
- ----------
(1) Assumes that $100.00 was invested on June 30, 1994 in the Company's
Common Stock and each index, 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.
20
<PAGE> 21
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1924, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on October 28, 1999.
TRIDENT MICROSYSTEMS, INC.
(Registrant)
By: /s/ PETER JEN
------------------------------------------------
Peter Jen
Senior Vice President, Asia Operations and Chief
Accounting Officer (Principal Financial and
Accountng Officer)
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
*Frank C. Lin President, Chief Executive Officer and Chairman
- ------------------------- of the Board (Principal Executive Officer)
(Frank C. Lin)
/s/ PETER JEN Senior Vice President, Asia Operations and Chief
- ------------------------- Accounting Officer (Principal Financial and
(Peter Jen) Accounting Officer)
*Glen M. Antle Director
- -------------------------
(Glen M. Antle)
*Yasushi Chikagami Director
- -------------------------
(Yasushi Chikagami)
*Charles A. Dickinson Director
- -------------------------
(Charles A. Dickinson)
*John Luke Director
- -------------------------
(John Luke)
*Millard Phelps Director
- -------------------------
(Millard Phelps)
*By: /s/ PETER JEN
--------------------
Peter Jen
Attorney-in-Fact
</TABLE>
21
