SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
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
RadiSys Corporation
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11
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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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* Set forth the amount on which the filing fee is calculated and state
how it was determined.
[ ] 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
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<PAGE>
RADISYS CORPORATION
Notice of Annual Meeting of Shareholders
to be Held May 19, 1998
To the Shareholders of RadiSys Corporation:
The Annual Meeting of Shareholders of RadiSys Corporation, an Oregon
corporation, (the "Company") will be held at the Company's headquarters, 5445 NE
Dawson Creek Drive, Hillsboro, Oregon, on May 19, 1998 at 8:30 a.m. for the
following purposes:
1. To elect six directors, each to serve until the next Annual Meeting of
Shareholders or until a successor has been elected and qualified;
2. To transact any other business as may properly come before the meeting
or any adjournment or thereof.
Only shareholders of record at the close of business on March 24, 1998 are
entitled to notice of and to vote at the meeting or any adjournments thereof.
Please sign and date the enclosed proxy and return it promptly in the enclosed
reply envelope. If you are able to attend the meeting, you may, if you wish,
revoke the proxy and vote personally on all matters brought before the meeting.
A list of shareholders will be available for inspection by the shareholders
commencing May 1, 1998 at the corporate headquarters of the Company, 5445 NE
Dawson Creek Drive, Hillsboro, Oregon 97124.
By Order of the Board of Directors,
Brian V. Turner
Chief Financial Officer
and Vice President of
Finance and Administration
April 10, 1998
Hillsboro, Oregon
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING IN
PERSON, PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING
ENVELOPE SO THAT YOUR STOCK WILL BE VOTED. THE ENVELOPE REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES.
<PAGE>
RADISYS CORPORATION
---------------
PROXY STATEMENT
---------------
SOLICITATION AND REVOCABILITY OF PROXY
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of RadiSys Corporation, an Oregon corporation,
(the "Company") to be voted at the Annual Meeting of Shareholders to be held at
the Company's headquarters, 5445 NE Dawson Creek Drive, Hillsboro, Oregon, on
May 19, 1998 at 8:30 a.m. and for the purposes set forth in the accompanying
Notice of Annual Meeting. All proxies in the enclosed form that are properly
executed and received by the Company prior to or at the Annual Meeting and not
revoked will be voted at the Annual Meeting or any adjournments thereof in
accordance with the instructions thereon. Any proxy given pursuant to this
solicitation may be revoked by the person giving it at any time before it is
voted. Proxies may be revoked by (i) filing with the Secretary of the Company,
at or before the taking of the vote at the Annual Meeting, a written notice of
revocation bearing a later date than the date of the proxy, (ii) duly executing
a subsequent proxy relating to the same shares and delivering it to the
Secretary of the Company before the Annual Meeting or (iii) attending the Annual
Meeting and voting in person (although attendance at the Annual Meeting will not
in and of itself constitute a revocation of a proxy). Any written notice
revoking a proxy should be sent to RadiSys Corporation, 5445 NE Dawson Creek
Drive, Hillsboro, Oregon 97124, Attention: Corporate Secretary, or hand
delivered to the Secretary at or before the taking of the vote at the Annual
Meeting. For purposes of proposals other than the election of directors,
abstentions are counted as no votes and broker non-votes are not counted for any
purpose in determining whether a proposal is approved.
The mailing address of the principal executive offices of the Company is
5445 NE Dawson Creek Drive, Hillsboro, Oregon 97124. This Proxy Statement and
the accompanying Notice of Annual Meeting and the Proxy Card are first being
mailed to the Shareholders on or about April 10, 1998.
The cost of preparing, printing and mailing this Proxy Statement and of the
solicitation of proxies by the Company will be borne by the Company.
Solicitation will be made by mail and, in addition, may be made by directors,
officers and employees of the Company personally, or by telephone or telegram.
The Company will request brokers, custodians, nominees and other like parties to
forward copies of proxy materials to beneficial owners of stock and will
reimburse such parties for their reasonable and customary charges or expenses in
this connection.
The record date for determination of shareholders entitled to receive
notice of and to vote at the Annual Meeting is March 24, 1998. At the close of
business on March 20, 1998, 7,858,383 shares of Common Stock of the Company were
outstanding and entitled to vote at the Annual Meeting. Each
<PAGE>
share of Common Stock is entitled to one vote with respect to each matter to be
voted on at the annual meeting.
The Company will provide to any person whose proxy is solicited by this
proxy statement, without charge, upon written request to its Corporate
Secretary, a copy of the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1997.
ELECTION OF DIRECTORS
The Board of Directors of the Company consists of six directors who are
elected at the Annual Meeting to serve until the next Annual Meeting of
Shareholders and until their successors are elected and qualified. Proxies
received from shareholders, unless directed otherwise, will be voted FOR the
election of the following nominees: Dr. Glenford J. Myers, James F. Dalton,
Richard J. Faubert, C. Scott Gibson, Dr. William W. Lattin, and Jean-Claude
Peterschmitt.
If any nominee is unable to stand for election, the persons named in the
proxy will vote the same for a substitute nominee. If no instructions are given,
proxies will be voted for the election of the six nominees named below. All of
the nominees are currently directors of the Company. The Company is not aware
that any nominee is or will be unable to stand for reelection. If any nominee is
not available as a candidate for director, the number of directors constituting
the Board of Directors may be reduced prior to the Annual Meeting or the proxies
may be voted for such other candidate or candidates as are nominated by the
Board of Directors, in accordance with the authority conferred in the proxy.
Directors shall be elected by a plurality of the votes of the shares present in
person or represented by proxy at the meeting and entitled to vote on the
election of directors. Abstentions and broker non-votes are accounted for
purposes of determining whether a quorum exists at the Annual Meeting, but have
no effect on the determination of whether a plurality exists with respect to a
given nominee.
Set forth below is the name, position with the Company, principal
occupation and age of each of the nominees for director of the Company. Certain
of the information about each of the nominees is described below and in
"Security Ownership of Certain Beneficial Owners and Management." There are no
family relationships among the directors and executive officers of the Company.
Name Age Position with the Company
---- --- -------------------------
Dr. Glenford J. Myers 51 Chairman of the Board, President
and Chief Executive Officer
James F. Dalton 39 Director
Richard J. Faubert 49 Director
C. Scott Gibson 45 Director
Dr. William W. Lattin 57 Director
Jean-Claude Peterschmitt 64 Director
2
<PAGE>
Dr. Glenford J. Myers co-founded the Company in March 1987 and has served
as the Company's Chairman of the Board, President and Chief Executive Officer
since that time. From 1981 to 1987, he held various management positions with
Intel Corporation ("Intel"), including Manager of Microprocessor Product Line
Architecture and Manager of the Microprocessor Strategic Business Segment. While
at Intel, Dr. Myers had primary management responsibility for the feasibility
and design of Intel's 386 and 80960 microprocessor chips, both of which became
industry standards in their respective application areas. From 1968 to 1981, Dr.
Myers held various engineering and management positions with IBM. Dr. Myers
holds a Ph.D. from the Polytechnic Institute of New York, M.S. from Syracuse
University and B.S.E.E. from Clarkson College.
James F. Dalton has served as a Director since December 1993. Since April
1989, Mr. Dalton has been employed by Tektronix, Inc. ("Tektronix"), an
electronics manufacturing company. He presently serves as Tektronix' Vice
President and General Counsel. Prior to that he served as Director of Corporate
Development. Additionally, Mr. Dalton serves as a director and Vice President of
Tektronix Development Company ("Tektronix Development").
Richard J. Faubert has served as a Director since June 1993 and a member of
the Compensation Committee since December 1993. From 1986 through 1992, Mr.
Faubert served as Vice President of Product Development of GenRad, Inc. Since
that time, Mr. Faubert has been employed by Tektronix, first as General Manager
of its Instruments Business Unit and most recently as Vice President and General
Manager of the Television and Communications Business Unit, Measurement Business
Division.
C. Scott Gibson has served as a Director since June 1993 and as a member of
the Compensation Committee since January 1995. From January 1983 through
February 1992, Mr. Gibson co-founded and served as President of Sequent Computer
Systems, Inc. ("Sequent"). Prior to co-founding Sequent Mr. Gibson served as
General Manager, Memory Components Operation, at Intel. Since August 1992, Mr.
Gibson has served as the Chairman of the Board for Adaptive Solutions, Inc.
Currently, Mr. Gibson is the Chairman of the Board of Trustees of Oregon
Graduate Institute. Mr. Gibson also serves on the boards of several other
companies, including Inference Corporation, Triquint Semiconductor, Inc.,
Integrated Measurement Systems, Inc., Health Systems Technologies, Inc. and
Webridge Inc. Mr. Gibson holds a B.S.E.E. and a M.B.A. from the University of
Illinois.
Dr. William W. Lattin has served as a Director since September 1987 and
Chair of the Compensation Committee since July 1993. From September 1986 through
February 1994, Dr. Lattin served as President and Chief Executive Officer of
Logic Modeling Corp. From February 1994 through October 1994, he
3
<PAGE>
was employed by Synopsys, Inc. as President of the Logic Modeling Group until
his appointment in October 1994 to Executive Vice President, in which capacity
he presently serves. From 1975 to 1986, Dr. Lattin held various engineering and
management positions with Intel, the most recent being Corporate Vice President
and General Manager of Intel's Systems Group. Dr. Lattin also serves as a
director on the boards of the Oregon Graduate Institute, of EasyStreet Online
Services, Inc., and of Synopsys, Inc. Dr. Lattin holds a Ph.D. from Arizona
State University and M.S.E.E. and B.S.E.E. from the University of
California-Berkeley.
Jean-Claude Peterschmitt has served as a Director since July 1996. From
1967 to 1987, Mr. Peterschmitt served in various capacities with Digital
Equipment Corporation, a corporate information systems supplier, most recently
as General manager, Vice President, Europe and Chairman of the European Board of
Directors. Prior to that time, Mr. Peterschmitt was a member of Arthur D.
Little's European Operations Research Group. He currently serves on the
supervisory boards of Adaptive Solutions, Inc., Euroventures B.V., a European
venture funds, LeRoseau, a network structure for the creation and development of
high-technology enterprises in Switzerland, and various private American and
European companies. Mr. Peterschmitt received an engineering degree from
Eidgenossiche Technische Hochscule (Zurich) and an M.S. degree from the MIT
Sloan School of Business.
Board Committees and Meetings
The Board of Directors met 8 times during the fiscal year ended December
31, 1997. Each director (other than William W. Lattin) attended at least 75
percent of the aggregate of the meetings of the Board of Directors and the
committees of which the director was a member.
The Company maintains an Audit Committee comprised of C. Scott Gibson and
James Dalton. The Audit Committee oversees actions taken by the Company's
independent auditors. The Audit Committee met three times in the last fiscal
year.
The Company maintains a Compensation Committee comprised of William W.
Lattin, Richard J. Faubert and C. Scott Gibson. None of the members of the
Compensation Committee are current or former officers or employees of the
Company. The Compensation Committee reviews and determines the compensation of
the Company's executive officers. Additionally, the Compensation Committee makes
grants to executive officers under the Stock Incentive Plan. The Compensation
Committee met 4 times in the last fiscal year.
Director Compensation
Directors do not receive any fees for serving on the Company's Board of
Directors or any committee thereof but are reimbursed for reasonable expenses
4
<PAGE>
incurred in attending meetings. Pursuant to the terms of the 1997 Stock
Incentive Plan, each individual who becomes a non-employee director of the
Company after August 7, 1995 is automatically granted, on the date the
individual joins the Board of Directors, a non-statutory option to purchase
15,000 shares of Common Stock. In addition, each non-employee director of the
Company automatically is granted an annual, non-statutory option to purchase
5,000 shares of Common Stock. No such grants are made, however, if the
non-employee director's employer prohibits the non-employee director from
receiving such options. The exercise price of options automatically granted to
non-employee directors will be the fair market value of the Common Stock on the
date of grant. The Company's 1995 Stock Option Plan authorized the Company to
grant non-statutory stock options to non-employee directors. Pursuant to the
terms of the 1995 Stock Option Plan, Mr. Gibson, Dr. Lattin and Mr. Peterschmitt
each received a non-statutory stock option in 1997 to purchase 5,000 shares of
Common Stock for their services as directors of the Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE ELECTION OF THE
NOMINEES NAMED IN THIS PROXY STATEMENT.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock of the Company as of March 20, 1998 by (i) persons
known to the Company to be the beneficial owner of more than 5% of the Company's
Common Stock, (ii) each of the Company's directors and nominees for director,
(iii) each executive officer of the Company named in the Summary Compensation
Table and (iv) all directors and executive officers of the Company as a group.
Unless otherwise noted in the footnotes to the table, the persons named in the
table have sole voting and investment power with respect to all outstanding
shares of Common Stock shown as beneficially owned by them.
5
<PAGE>
<TABLE>
<CAPTION>
Shares Percentage
Beneficially of Common
Name Owned Stock
---- ------------ ----------
<S> <C> <C>
Dr. Glenford J. Myers (1) 240,026 3.0%
Ronald A. Dilbeck (2) 20,950 *
Brian V. Turner (3) 25,258 *
Stephen J. Verleye (4) 30,663 *
John D. Watkins (5) 55,349 *
James F. Dalton (6) 200 *
Richard J. Faubert (6) 0 *
C. Scott Gibson (7) 23,628 *
Dr. William W. Lattin (8) 46,849 *
Jean-Claude Peterschmitt (9) 20,000 *
Intel Corporation
2200 Mission College Blvd.
Santa Clara, CA 95052 (10) 1,186,167 15.1%
Dresdner RCM Capital
Four Embarcadero Center
San Francisco, CA 94111(10) 798,100 10.1%
All directors and officers as a group
(12 persons) (11) 473,423 5.9%
* Less than 1%
(1) Includes options to purchase 16,000 shares of Common Stock exercisable
within 60 days after March 24, 1998. Excludes options to purchase 95,000
shares of Common Stock not exercisable within 60 days after March 24, 1998.
Includes 800 shares of Common Stock held by Dr. Myers' minor child.
(2) Includes options to purchase 16,667 shares of Common Stock exercisable
within 60 days after March 24, 1998. Excludes options to purchase 70,083
shares of Common Stock not exercisable within 60 days after March 24, 1998.
(3) Includes options to purchase 20,000 shares of Common Stock exercisable
within 60 days after March 24, 1998. Excludes options to purchase 40,000
shares of Common Stock not exercisable within 60 days after March 24, 1998.
(4) Includes options to purchase 10,000 shares of Common Stock exercisable
within 60 days after March 24, 1998. Excludes options to purchase 50,000
shares of Common Stock not exercisable within 60 days after March 24, 1998.
(5) Includes options to purchase 18,061 shares of Common Stock exercisable
within 60 days after March 24, 1998. Excludes options to purchase 55,060
shares of Common Stock not exercisable within 60 days after March 24, 1998.
6
<PAGE>
(6) Excludes 282,151 shares held by Tektronix Development, a wholly owned
subsidiary of Tektronix. Mr. Dalton is a director and Vice President of
Tektronix Development and serves as Tektronix' Vice President and General
Counsel. Mr. Faubert is Vice President and General Manager of the
Television and Communications Test Business Unit, Measurement Business
Division of Tektronix.
(7) Includes options to purchase 10,000 shares of Common Stock exercisable
within 60 days after that date.
(8) Includes options to purchase 14,456 shares of Common Stock exercisable
within 60 days after March 24, 1998.
(9) Includes options to purchase 20,000 shares of Common Stock exercisable
within 60 days after March 24, 1998.
(10) Based solely on information provided as of December 31, 1997 in a Schedule
13G filed by the shareholder.
(11) Includes options to purchase 135,184 shares of Common Stock exercisable
within 60 days after March 24, 1998. Excludes options to purchase 394,143
shares of Common Stock not exercisable within 60 days after March 24, 1998.
</TABLE>
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth, for the chief
executive officer and the four most highly compensated executive officers,
information concerning compensation paid or accrued for services to the Company
in all capacities for each of the last three fiscal years. One other executive
officer of the Company other than the persons shown below received total annual
salary and bonus for fiscal 1997 in excess of $100,000.
7
<PAGE>
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation Shares
Name and ---------------------------- Underlying
Principal Position Year Salary Bonus(1) Options
- ------------------ ---- -------- -------- ----------
<S> <C> <C> <C> <C>
Glenford J. Myers 1997 $227,500 $133,800 35,000 (2)
Chairman of the Board, 1996 $169,375 $ 24,400 35,000
President and Chief 1995 $154,708 $ 32,250 50,000
Executive Officer
Ronald Dilbeck (3) 1997 $159,792 $ 41,169 20,000 (2)
Vice President and 1996 $ 88,802 50,000
General Manager of
Automation Controls Division
Brian V. Turner 1997 $143,875 $ 46,920 15,000 (2)
Chief Financial Officer 1996 $117,917 $ 4,880 15,000
and Vice President of 1995 $ 24,167 30,000
Finance and
Administration
Stephen J. Verleye 1997 $139,392 $ 54,600 20,000 (2)
Vice President and 1996 $124,967 $ 9,150 20,000
General Manager of 1995 $124,241 $ 16,813 20,000
Commercial Equipment Division
John D. Watkins 1997 $157,932 $ 49,980 20,000 (2)
Executive Vice 1996 $134,289 $ 12,200 20,000
President of Sales 1995 $139,798 $ 17,635 45,182
(1) Represents amounts paid under the Incentive Compensation Plan. See
"Compensation Committee Report on Executive Compensation - Incentive
Compensation Plan".
(2) Represents options issued in 1997 in replacement of canceled options
granted during 1996 at higher exercise prices. See "Canceled 1996 Stock
Options". No new options were granted to these officers in 1997 (excluding
options issued to replace canceled options).
(3) Joined Company during 1996.
</TABLE>
8
<PAGE>
Stock Option Grants in Fiscal 1997. The following table sets forth information
concerning individual grants of stock options made by the Company during fiscal
1997 to each of the officers of the Company named in the Summary Compensation
Table.
<TABLE>
<CAPTION>
Percent of Potential Realizable
Number of Total Value at Assumed
Securities Options Annual Rates of Stock
Underlying Granted to Exercise Price Appreciation
Options Employees Price for Option Term(4)
Granted in Fiscal Per Expiration -----------------------
Name (1) Year (2) Share Date (3) 5% 10%
- ------------------ --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Glenford J. Myers 35,000 5.39% $38.00 11/1/02 $352,658 $845,094
Ronald A. Dilbeck 20,000 3.08% $38.00 11/1/03 $249,595 $607,202
Brian V. Turner 15,000 2.31% $38.00 11/1/02 $151,139 $362,183
Stephen J. Verleye 20,000 3.08% $38.00 11/1/02 $201,519 $482,911
John D. Watkins 20,000 3.08% $38.00 11/1/02 $201,519 $482,911
(1) All option grants were made pursuant to the Company's 1995 Stock Incentive
Plan.
(2) In fiscal 1997, the Company granted options for a total of 656,402 shares
of Common Stock under the 1995 Stock Incentive Plan and this number was
used in calculating the percentages set forth in this column.
(3) Options expire prior to this date (i) if the optionee's employment is
terminated for any reason (other than death or disability), in which case
options vested but unexercised at the date of termination may be exercised
within 30 days after the date of termination, or (ii) if employment
terminates because of death or disability, in which case options vested but
unexercised at the date of termination may be exercised within 12 months
after the date of termination. If employment (or service as a director, as
applicable) is terminated by death of the optionee, the option generally
may be exercised by persons to whom the optionee's rights pass by will or
the laws of descent or distribution. Remaining vested but unexercised
options terminate at the end of the earliest of the above described
periods, as applicable.
(4) In accordance with the rules of the Securities and Exchange Commission,
these amounts are the hypothetical gains or "option spreads" that would
exist for the respective options based on assumed rates of annual compound
stock price appreciation of 5% and 10% from the date the options were
granted over the full option term.
</TABLE>
9
<PAGE>
Aggregated Option Exercises. The following table sets forth information (on an
aggregated basis) concerning each exercise of stock options during fiscal 1997
by each of the officers of the Company named in the Summary Compensation Table
and the fiscal year-end value of unexercised options.
<TABLE>
<CAPTION>
Aggregated Option Exercises in Fiscal Year 1997
and Fiscal Year-End Option Values
Number Number of
of Securities Underlying Value of Unexercised
Shares Unexercised Options at In-the-Money Options at
Acquired Value December 31, 1997 December 31, 1997 (1)
on Real- ---------------------------- ----------------------------
Name Exercise ized Exercisable Unexercisable Exercisable Unexercisable
- ------------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Glenford J. Myers 25,000 60,000 $656,250 $656,250
Ronald A. Dilbeck 3,250 $ 39,000 13,417 53,333 $164,358 $370,954
Brian V. Turner 20,000 25,000 $525,000 $262,500
Stephen J. Verleye 27,273 $950,737 10,000 30,000 $262,500 $262,500
John D. Watkins 6,061 $182,557 22,061 35,060 $623,771 $439,987
(1) Options are "in-the-money" at the fiscal year-end if the fair market value
of the underlying securities on such date exceeds the exercise price of the
option. The amounts set forth represent the difference between the fair
market value of the securities underlying the options on December 31, 1997
based on the last sale price of $37.25 per share of Common Stock on that
date (as reported on the Nasdaq National Market) and the exercise price of
the options, multiplied by the applicable number of shares.
</TABLE>
Ten Year Option Repricing
As discussed in the Compensation Committee Report on Executive Compensation, in
May 1997 the Committee approved the offering to all employees, including
executive officers, holding stock options the opportunity to cancel unexercised
stock options in exchange for new options equal to the then current fair market
value defined as the highest closing price for the Company's common stock for
the five trading days preceding May 30, 1997 (the date of issue). New options
were issued at a price of $38.00 per share. The committee concluded that, with
the decline in the market price of the stock, certain outstanding options no
longer provided a significant incentive to management and employees and that the
options were no longer serving the purposes intended. With the exception of
options granted to officers, the new options issued to employees retained the
same term of the canceled options, however, the term started anew from May 30,
1997. For options granted to officers, the new options issued retained the same
term of the canceled
10
<PAGE>
options, however, the initial exercise dates were deferred
by one year from the initial exercise date of the canceled option.
<TABLE>
<CAPTION>
Number of Market Exercise Months of
Shares Price of Price of Original option
Underlying Stock at Stock at New Term Remaining
Options Time of Time of Exercise at Date of
Name Date Canceled Amendment Amendment Price Amendment
- ------------------ ------- -------- --------- --------- -------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Glenford J. Myers 5/30/97 35,000 $36.75 $57.88 $38.00 65
Ronald A. Dilbeck 5/30/97 20,000 $36.75 $57.88 $38.00 77
John S. Sonneborn 5/30/97 15,000 $36.75 $57.88 $38.00 77
Brian V. Turner 5/30/97 15,000 $36.75 $57.88 $38.00 65
Stephen J. Verleye 5/30/97 20,000 $36.75 $57.88 $38.00 65
John D. Watkins 5/30/97 20,000 $36.75 $57.88 $38.00 65
</TABLE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION/1
The Compensation Committee of the Board of Directors has furnished the following
report on executive compensation:
The Compensation Committee of the Board of Directors (the "Committee") is
composed of three outside directors and, pursuant to authority delegated by the
Board, determines the compensation to be paid to the Chief Executive Officer and
each of the other executive officers of the Company. The Committee is also
responsible for developing and making recommendations to the Board with respect
to the Company's executive compensation policies.
The Company's objectives for executive compensation are to (i) attract and
retain key executives important to the long term success of the Company; (ii)
reward executives for performance and enhancement of shareholder value; and
(iii) align the interests of the executive officer with the success of the
Company by basing a portion of the compensation upon corporate performance.
Base salary levels for the Company's executive officers are set relative to
similar companies in the electronics industry. In determining salaries, the
Company also takes into account individual experience, job responsibilities, and
individual performance.
Executive Officer Compensation Program. The Company's executive officer
compensation program is comprised of base salary, annual bonus, and long term
incentive compensation in the form of stock options. Compensation based upon
- ---------------
1/ This Section is not "soliciting material," is not deemed "filed" with
the Securities and Exchange Commission and is not to be incorporated by
reference in any filing of the Company under the Securities Act of 1933 or the
Securities Exchange Act of 1934, regardless of date or any general incorporation
language in such filing.
11
<PAGE>
sales is also part of the compensation program for certain executive officers
with sales responsibility.
Stock Options. The Company's stock option program is intended as a long term
incentive plan for executives, managers and other employees within the company.
The objectives of the program are to align employee and shareholder long term
interests by creating a strong and direct link between compensation and
shareholder value. The Company's Stock Option Plans provide for the award of
incentive stock options to selected employees and the award of nonqualified
stock options, restricted stock, stock appreciation rights, bonus rights and
other incentive grants to selected employees, independent contractors and
consultants.
Canceled 1996 Stock Options. In May 1997 the Committee approved the offering to
all employees, including executive officers, holding stock options the
opportunity to cancel unexercised stock options in exchange for new options
equal to the then current fair market value defined as the highest closing price
for the Company's common stock for the five trading days preceding May 30, 1997
(the date of issue). New options were issued at a price of $38.00
per share. The committee concluded that, with the decline in the market price of
the stock, certain outstanding options no longer provided a significant
incentive to management and employees and that the options were no longer
serving the purposes intended. With the exception of options granted to
officers, the new options issued to employees retained the same term of the
canceled options, however, the term started anew from May 30, 1997. For options
granted to officers, the new options issued retained the same term of the
canceled options, however, the initial exercise dates were deferred by one year
from the initial exercise date of the canceled option.
In fiscal 1997, the Board of Directors made the following option grants under
the 1997 Stock Option Plan to executive officers: Dr. Glenford J. Myers - 35,000
options, John D. Watkins - 20,000 options, Stephen J. Verleye - 20,000 options,
Ronald Dilbeck - 20,000 options, Brian V. Turner - 15,000 options, John
Sonneborn - 15,000 and Arif Kareem - 24,000 options. With the exception of Mr.
Kareem, represents options issued in 1997 in replacement of canceled options
granted during 1996 at higher exercise prices. No new options were granted to
these officers in 1997 (excluding options issued to replace canceled options).
Options granted to Mr. Kareem were upon his initial employment, which vest in
equal portions over three years from the grant date.
Incentive Compensation Plan. The Company maintains an Incentive Compensation
Plan (the "Compensation Plan") pursuant to which all employees of the Company in
good standing for one pay period following the plan period are eligible to
receive incentive compensation if certain six-month operational income and other
Company goals are achieved. At its discretion, the Board of Directors, which
administers the Compensation Plan, may reduce the incentive compensation to be
paid pursuant to the Compensation Plan to executive officers of the Company.
12
<PAGE>
Chief Executive Officer Compensation. The Committee determined the Chief
Executive Officer compensation for 1997 based upon a number of factors and
criteria. The Chief Executive Officer's base salary was determined based upon a
review of the salaries of chief executive officers for similar companies of
comparable size and complexity and upon a review by the Committee of the Chief
Executive Officer's performance. The Chief Executive Officer received a bonus
for 1997 based on satisfaction of the Company's performance objectives for the
year established under the Company's Compensation Plan described above and his
individual performance as evaluated by the Committee.
During 1997 the Chief Executive Officer was issued an option to purchase 35,000
shares of the Company's Common Stock to replace canceled 1996 options. This
option is part of an ongoing program to provide Mr. Myers with significant
ongoing incentives to remain with the Company and to further align his long-term
interests with shareholder interests. The number of shares granted in 1997 was
based on a subjective determination of the number of shares needed in 1997 as
part of this long-term program.
Deductibility of Compensation. Section 162(m) of the Internal Revenue Code of
1986 limits to $1,000,000 per person the amount that the Company may deduct for
compensation paid to any of its most highly compensated officers in any year.
The levels of salary and bonus generally paid by the Company do not exceed this
limit. Many of the options granted under the Company's 1995 Stock Incentive Plan
have been Incentive Stock options. The Company receives no tax deduction from
the exercise of an Incentive Stock Option unless the optionee disposes of the
acquired shares before satisfying certain holding periods. Under IRS
regulations, the $1,000,000 cap on deductibility applies to compensation
recognized by an optionee upon such an early disposition, as well as
compensation recognized upon the exercise of a Nonstatutory Stock Option, unless
the option meets certain requirements. It is the Company's policy generally to
grant options that meet the requirements of the IRS regulations so that any such
compensation recognized by an optionee will be fully deductible. The Committee
believes that the grant of Incentive Stock Options, despite the general
nondeductibility, benefits the Company by encouraging the long-term ownership of
Company's stock by officers and other employees.
Richard J. Faubert
C. Scott Gibson
William W. Lattin
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of directors Richard J. Faubert, C. Scott
Gibson and William W. Lattin. Mr. Faubert is the Vice-President and general
Manager of the Television and Communications Test Business Unit, Measurement
13
<PAGE>
Division of Tektronix. Tektronix beneficially owns approximately 3.6 percent of
the Company's outstanding Common Stock. The Company and Tektronix are parties to
multiple design agreements pursuant to which the Company agrees to design and
develop certain products as specified and required by Tektronix. Sales to
Tektronix accounted for approximately 2.5 percent of the Company's revenues in
1997.
COMPARISON OF CUMULATIVE TOTAL RETURN/2
The following graph sets forth the Company's total cumulative shareholder
return as compared to the Standard and Poor's 500 Composite Index and the
Hambrecht and Quist Computer Hardware Sector Index for the period October 20,
1995 (the date of the Company's initial public offering) through December 31,
1997. Total shareholder return assumes $100 invested at the beginning of the
period in the Common Stock of the Company, the stocks represented in the
Standard and Poor's 500 Composite Index and the stocks represented in the
Hambrecht and Quist Computer Hardware Sector Index, respectively. Total return
also assumes reinvestment of dividends; the Company has never paid dividends on
its Common Stock.
Historical stock price performance should not be relied upon as indicative
of future stock price performance.
[graphic line chart depicting performance:
Total Return to Stockholders
(Assumed $100 investment on 10/20/95)
Total Return Analysis
10/20/95 12/29/95 12/31/96 12/31/97
-------- -------- -------- --------
RadiSys Corporation $ 100 $ 78 $ 325 $ 248
H&Q Computer Hardware $ 100 $ 104 $ 138 $ 188
S&P 500 $ 100 $ 105 $ 130 $ 173]
- ---------------
/2 This Section is not "soliciting material," is not deemed "filed" with
the Securities and Exchange Commission and is not to be incorporated by
reference in any filing of the Company under the Securities Act of 1933 or the
Securities Exchange Act of 1934, regardless of date or any general incorporation
language in such filing.
14
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company's 1995 Stock Option Plan permitted the Company to grant
non-statutory stock options to non-employees who provided important services to
the Company. As compensation for their services rendered as directors of the
Company, the Company granted under the 1995 Stock Option Plan non-statutory
stock options to purchase 5,000 shares of Common Stock to each Mr. Gibson, Dr.
Lattin and Mr. Jean-Claude Peterschmitt. In addition, the Company has entered
into a consulting arrangement with Mr. Gibson pursuant to which the Company pays
Mr. Gibson $20,000 per year.
The Company and Tektronix are parties to multiple Design Agreement pursuant
to which the Company agreed to design and develop certain products as specified
and required by Tektronix. Tektronix beneficially owns approximately 3.6 percent
of the Company's outstanding Common Stock and is affiliated with two of the
Company's directors, Mr. Dalton and Mr. Faubert. Sales to Tektronix accounted
for approximately 2.5 percent of the Company's revenues in 1997.
The Company and Intel are parties to multiple Design Agreement pursuant to
which the Company agreed to design and develop certain products as specified and
required by Intel. Sales to Intel accounted for less than one percent of the
Company's revenues in 1997. Additionally, Intel is a key supplier of components
to the Company. The Company purchased approximately $3.5 million of components
from Intel in 1997. Intel beneficially owns approximately 15.1 percent of the
Company's outstanding Common Stock.
SECTION 16(a) BENEFICIAL
OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers and persons who own more than 10% of the
outstanding Common Stock of the Company to file with the Securities and Exchange
Commission reports of changes in ownership of the Common Stock of the Company
held by such persons. Officers, directors and greater than 10% shareholders are
also required to furnish the Company with copies of all forms they file under
this regulation. Based solely on a review of the copies of the reports received
by the Company and on written representations of certain reporting persons, the
Company believes that during fiscal 1997, all persons required to report under
Section 16(a) of the Securities Exchange Act of 1934 filed timely reports with
the exception of Mr. Dilbeck and Dr. Lattin who filed one late Form 4 each with
respect to one transaction.
15
<PAGE>
INDEPENDENT ACCOUNTANTS
Representatives of Price Waterhouse LLP, the Company's independent
accountants, will be present at the Annual Meeting and will be available to
respond to appropriate questions. They do not plan to make any statement but
will have the opportunity to make a statement if they wish.
SHAREHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
Any proposal by a shareholder of the Company to be considered for inclusion
in proxy materials for the Company's 1999 Annual Meeting of Shareholders must be
received in proper form by the Company at its principal office no later than
December 9, 1998.
DISCRETIONARY AUTHORITY
The Board of Directors of the Company is not aware of any matters other
than the aforementioned matters that will be presented for consideration at the
Annual Meeting. If other matters properly come before the Annual Meeting, it is
the intention of the persons named in the enclosed proxy to vote thereon in
accordance with their best judgment.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, SHAREHOLDERS
WHO DO NOT EXPECT TO ATTEND THE MEETING IN PERSON ARE URGED TO EXECUTE AND
RETURN THE ENCLOSED PROXY IN THE REPLY ENVELOPE PROVIDED.
By Order of the Board of Directors,
Brian V. Turner
Chief Financial Officer
and Vice President of
Finance and Administration
April 10, 1998
Hillsboro, Oregon
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<PAGE>
PROXY
RADISYS CORPORATION
Annual Meeting, May 19 1997
PROXY SOLICITED BY BOARD OF DIRECTORS
PLEASE SIGN AND RETURN THIS PROXY
The undersigned hereby appoints Dr. Glenford J. Myers, James F. Dalton, Richard
C. Faubert, C. Scott Gibson, Dr. William W. Lattin, and Jean-Claude Peterschmitt
and each of them, proxies with power of substitution to vote on behalf of the
undersigned all shares that the undersigned may be entitled to vote at the
annual meeting of shareholders of RadiSys Corporation (the "Company") on May 19,
1998 and any adjournments thereof, with all powers that the undersigned would
possess if personally present, with respect to the following:
1. Election of Directors: [ ] FOR all nominees [ ] WITHHOLD AUTHORITY
except as marked to vote for all
to the contrary nominees listed
below. below.
(Instructions: To withhold authority to vote for any individual, strike a
line through the nominee's name below.)
Dr. Glenford J. Myers, James F. Dalton, Richard C. Faubert, C. Scott
Gibson, Dr. William W. Lattin, and Jean-Claude Peterschmitt
2. Transaction of any business that properly comes before the meeting or any
adjournments thereof. A majority of the proxies or substitutes at the meeting
may exercise all the powers granted hereby.
(Continued and to be signed on the other side.)
<PAGE>
The shares represented by this proxy will be voted as specified on the
reverse hereof, but if no specification is made, this proxy will be voted
for the election of directors and adoption of the Plan The proxies may vote
in their discretion as to other matters that may come before this meeting.
Shares:
Date:_________________________________, 1997
P
R
0 ____________________________________________
X Signature or Signatures
Y
Please date and sign as name is imprinted
hereon, including designation as executor,
trustee, etc., if applicable. A corporation
must sign its name by the president or other
authorized officer.
The Annual Meeting of Shareholders of
RadiSys Corporation will be held on May 19,
1997 at 8:30 am., Pacific Daylight Time, at
the corporate headquarters at 5445 N.E.
Dawson Creek Drive, Hillsboro, Oregon.
Please Note: Any shares of stock of the Company held in the name of fiduciaries,
custodians or brokerage houses for the benefit of their clients may only be
voted by the fiduciary, custodian or brokerage house itself--the beneficial
owner may not directly vote or appoint a proxy to vote the shares and must
instruct the person or entity in whose name the shares are held how to vote the
shares held for the beneficial owner. Therefore, if any shares of stock of the
Company are held in "street name" by a brokerage house, only the brokerage
house, at the instructions of its client, may vote or appoint a proxy to vote
the shares.
