<PAGE>
================================================================================
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
SEMTECH 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.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
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Notes:
<PAGE>
[LOGO OF SEMTECH]
Today's Results...Tomorrow's Vision
Semtech Corporation
652 Mitchell Road
Newbury Park, California 91320
May 5, 1999
DEAR STOCKHOLDER:
This year's Annual Meeting (the "Meeting") of Stockholders of Semtech
Corporation (the "Company" or "Semtech") will be held on June 10, 1999 at 1:00
PM at the Hyatt Westlake Plaza, 880 S. Westlake Boulevard, Westlake Village,
California 91361 (Westlake Village Boulevard exit off the 101 Freeway).
The Notice of Annual Meeting of Stockholders and the Proxy Statement
accompanying this letter describe the business we will consider at the Meeting.
This year we are seeking to elect six Directors to hold office until the next
annual meeting (or until their successors are duly elected and qualified) and to
approve the appointment of Arthur Andersen LLP as the Company's independent
public accountants for the ensuing year.
Your vote is very important. I urge you to sign, date and return the
enclosed proxy card in the envelope provided in order to be certain your shares
are represented at the Meeting, even if you plan to attend the Meeting. We
look forward to meeting those of you who are able to attend the meeting and
discussing any questions which you may have.
Sincerely,
/s/ John D. Poe
John D. Poe
Chairman of the Board,
President and Chief Executive Officer
<PAGE>
SEMTECH CORPORATION
_______________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held June 10, 1999
Notice is hereby given that the Annual Meeting of Stockholders of Semtech
Corporation will be held at the Hyatt Westlake Plaza, 880 S. Westlake Boulevard,
Westlake Village, California 91361 (Westlake Village Boulevard exit off the 101
Freeway) at 1:00 p.m., Pacific Standard time, for the following purposes:
1. To elect six Directors to hold office until the next annual meeting or
until their successors are duly elected and qualified.
2. To ratify and approve the appointment of Arthur Andersen LLP as the
independent public accountants for the Company.
3. To transact any other business which may properly come before the
Meeting or any adjournment or postponements thereof.
The record date for the determination of the stockholders entitled to notice
of and to vote at the Annual Meeting was the close of business on April 15,
1999.
IT IS IMPORTANT THAT YOUR STOCK BE REPRESENTED AT THE MEETING. PLEASE
COMPLETE, DATE, SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY IN ORDER THAT YOUR
SHARES MAY BE VOTED.
This Proxy Statement, proxy and the Company's Annual Report to Stockholders
are being mailed on or about May 5, 1999.
A return envelope is enclosed for your convenience.
By Order of the Board of Directors
/s/ David G. Franz, Jr.
David G. Franz, Jr.
Vice President of Finance
and Secretary
Newbury Park, California
May 5, 1999
2
<PAGE>
Semtech Corporation
Proxy Statement
----------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
GENERAL INFORMATION
June 10, 1999
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Semtech Corporation (the "Company") of proxies to be voted
at the Annual Meeting of Stockholders to be held on Thursday, June 10, 1999 and
at any adjournment thereof. The mailing of proxy materials will commence on or
about May 5, 1999. The following is important information in a question-and-
answer format regarding the Annual Meeting and this Proxy Statement.
Q: What am I voting on?
- Election of six directors (Mr. John Poe, Mr. Rock Hankin, Mr. James
Burra, Mr. Allen Orbuch, Mr. James Schraith, Mr. Jack Vance)
- Ratification of Arthur Andersen LLP as the Company's independent public
accountants.
Q: Who is entitled to vote?
Stockholders as of the close of business on April 15, 1999 (the "Record
Date") are entitled to vote at the Annual Meeting. Each shareholder is
entitled to one vote for each share of common stock held on the Record
Date.
Q: How do I vote?
Sign and date each proxy you receive and return it in the prepaid
envelope. If you return your signed proxy but do not indicate your voting
preferences, we will vote FOR the two proposals on your behalf. You have
the right to revoke your proxy any time before the meeting by (1)
notifying the Company's Secretary, or (2) returning a later-dated proxy.
You may also revoke your proxy by voting in person at the meeting.
Q: What does it mean if I get more than one proxy card?
It means you hold shares registered in more than one account. Sign and
return all proxies to ensure that all your shares are voted.
Q: Who will count the vote?
Representatives of ChaseMellon Shareholder Services will tabulate the
votes and act as inspectors of election.
3
<PAGE>
Q: Who can attend the Annual Meeting?
All shareholders as of the Record Date can attend.
Q: What constitutes a quorum?
A majority of the outstanding shares, present or represented by proxy,
constitutes a quorum for the Annual Meeting. As of the Record Date,
15,047,147 shares of Semtech Corporation common stock were issued and
outstanding. Proxies submitted by brokers that do not indicate a vote for
some of the proposals because the holders do not have discretionary voting
authority and have not received instructions from the beneficial owners on
how to vote on those proposals are called "broker non-votes."
Q: How many votes are needed for approval of each item?
There are differing vote requirements for the various proposals.
Directors will be elected by a plurality of the votes cast at the Annual
Meeting, meaning the six nominees receiving the most votes will be elected
directors. A stockholder may not cumulate his or her votes for individual
directors. Abstentions, broker non-votes, and instructions on the
accompanying proxy to withhold authority to vote for one or more of the
nominees will result in those nominees receiving fewer votes. However,
such action will not reduce the number of votes otherwise received by the
nominee.
Ratification of the auditors requires that the number of votes cast for
ratification exceed those cast against ratification. Abstentions and
broker non-votes will have no effect on this vote.
Q: What percentage of stock do the directors and officers own?
Together, they own approximately 9.1% of Semtech common stock as of
January 31, 1999. (See pages 6-7 for details).
Q: Who are the largest principal shareholders?
Chartwell Investment Partners held 879,820 shares (or 5.8%), as of January
31, 1999; Fidelity Management and Research Corporation owned 799,420
shares (or 5.3%) as of January 31, 1999. (See page 5 for details).
Q: When are shareholder proposals for the 2000 meeting due?
To be considered for inclusion in next year's Proxy Statement, stockholder
proposals must be submitted in writing by January 5, 2000, to the
Company's Secretary, 652 Mitchell Road, Newbury Park, California 91361.
Copies of the By-laws are available to stockholders free of charge upon
request to the Company's Secretary. In addition, notice of a stockholder
proposal submitted other than in the Company's Proxy Statement will be
considered untimely if not received by the Company by March 21, 2000.
Q: How do I receive additional copies of these proxy materials:
Any stockholder desiring additional proxy materials should contact Gigi
Auchter, Assistant Secretary, Semtech Corporation, (805) 498-2111.
4
<PAGE>
PRINCIPAL STOCKHOLDERS
The following are all persons known to the Company who own beneficially more
than 5% of the Common Stock as of January 31, 1999:
<TABLE>
<CAPTION>
Amount and Percent
Name and Address of Nature of Beneficial of
Beneficial Owner Ownership (1) Class(2)
- ---------------- ------------- --------
<S> <C> <C>
Chartwell Investment Partners 879,820 5.8%
1235 Westlake Dr.
Suite 330
Berwyn, Pennsylvania 19312
FMR Corp. 799,420 5.3%
82 Devonshire Street
Boston, Massachusetts 02109
</TABLE>
(1) Each stockholder listed has sole voting and investment power with respect
to the shares listed.
(2) Each of the respective percentages are calculated using a figure of
15,193,980 shares outstanding as of January 31, 1999 adjusted as required
by rules promulgated by the SEC.
ELECTION OF DIRECTORS
(Proposal No. 1)
Six directors are to be elected at the Meeting, each to serve until the
following annual meeting or until a successor is elected and qualified. The
nominees named below were elected to their present terms of office by the
stockholders. All of the nominees have consented to be named and have indicated
their intent to serve if elected. Unless a proxy directs otherwise, it is
intended that the proxies solicited by management will be voted for the election
of the nominees listed in the following table. If any nominee should refuse or
be unable to serve, the proxyholders will vote the shares for such other person,
if any, as shall be designated by the Board of Directors. THE BOARD OF
DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THE NOMINEES LISTED
BELOW:
John D. Poe Rock N. Hankin
James P. Burra Allen H. Orbuch
James T. Schraith Jack O. Vance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors, executive officers and
holders of more than 10% of the Company's Common Stock to file with the
Securities and Exchange Commission initial reports of ownership and reports of
changes of ownership of Common Stock and other equity securities of the Company.
The company believes that during the fiscal year ended January 31, 1999, its
officers and directors complied with all Section 16(a) filing requirements. In
making these statements the Company has relied on its review of
5
<PAGE>
Forms 3, 4 and 5 provided to the Company with respect to its most recent fiscal
year by its officers and directors.
The chart below indicates the number of shares and exercisable stock options
held by each director, each executive officer named in the Summary Compensation
Table below and by the directors and officers as a group as of January 31, 1999:
<TABLE>
<CAPTION>
Beneficial
Ownership of
Common Stock (1)
Director ------------------------
Name Office Age Since Number % (2)
---- ------ --- ----- ------ -----
<S> <C> <C> <C> <C> <C>
John D. Poe Chairman of the Board, 47 1985 851,600(3) 5.5%
President and Chief
Executive Officer
Rock N. Hankin Vice Chairman of the Board, 52 1988 69,334(4) *
Member of the Audit
Committee and Compensation
Committee
Allen H. Orbuch Director, Member of the 70 1991 71,334(4) *
Audit Committee and
Compensation Committee
James P. Burra Director, Member of the 56 1991 62,234(4) *
Audit Committee and
Compensation Committee
Jack O. Vance Director, Member of the 74 1995 52,334(5) *
Audit Committee and
Compensation Committee
James T. Schraith Director, Member of the 41 1995 48,334(5) *
Audit Committee and
Compensation Committee
Raymond E. Bregar Executive Vice President 51 - 76,000(6) *
David G. Franz, Jr. Vice President and CFO 37 - 107,700(7) *
Jean-Claude Zambelli Vice President 54 - 25,000(8) *
Wylie Plummer Vice President 42 1998 62,224(8) *
All Officers and 1,448,682(9) 9.1%
Directors as a Group
(12 persons)
</TABLE>
___________________
* Less than 1%
(1) Unless otherwise indicated below, each person has sole voting and
investment power with respect to the shares listed.
(2) Each of the respective percentages is based upon the 15,193,980 shares
outstanding as of January 31, 1999, plus, if applicable, the shares
which each officer or director has the right to acquire within 60 days
thereof through the exercise of stock options.
6
<PAGE>
(3) Includes 325,000 shares issuable pursuant to options exercisable within
60 days of January 31, 1999.
(4) Includes 51,334 shares issuable pursuant to options exercisable within
60 days of January 31, 1999
(5) Includes 48,334 shares issuable pursuant to options exercisable within
60 days of January 31, 1999.
(6) Includes 20,000 shares issuable pursuant to options exercisable within
60 days of January 31, 1999.
(7) Includes 51,000 shares issuable pursuant to options exercisable within
60 days of January 31, 1999.
(8) Includes 25,000 shares issuable pursuant to options exercisable within
60 days of January 31, 1999.
(9) Includes 718,002 shares issuable pursuant to options exercisable within
60 days of January 31, 1999.
Background of Nominees
Mr. Poe has been President, Chief Executive Officer and a Director of the
Company since October 1985. In March 1998, Mr. Poe was also elected to the
position of Chairman of the Company's Board of Directors. Since October 1985,
Mr. Poe has also served as Managing Director of the Company's subsidiary,
Semtech Ltd. In addition, Mr. Poe currently serves as sole Director and
President of the Company's wholly owned subsidiaries, Semtech Corpus Christi
Corporation, Edge Semiconductor Incorporated and Semtech Santa Clara, Inc.
Mr. Hankin has been a Director of the Company since May 1988. In March
1998, Mr. Hankin was elected Vice Chairman of the Company's Board of Directors.
He currently serves as Chief Executive of Hankin & Co., a diversified business
advisory firm, where he has held such position since June 1986. Mr. Hankin also
serves on the Board of Directors of Alpha Microsystems, Sparta, Inc.,
Techniclone and a number of private companies. Within the past year he was
chairman of the board of House of Fabrics and a member of the board of Quidel,
Inc.
Mr. Orbuch has been a Director of the Company since March 1991. He
currently serves as a management consultant. He retired in 1994 from his
position as Group Executive of Teledyne, Inc. He had served in that position
for more than five years.
Mr. Burra has been a Director of the Company since June 1989. Mr. Burra
has served as Chief Executive Officer of the Endural Division of Hoover
Materials Handling Group, Inc. and its predecessor W. D. Adam Co., Inc., a
manufacturer selling a proprietary line of vacuum formed, high density
polyethylene containers. He serves on the board of Hoover Group, Inc., the
Parent of Endural, and the board of American Microwave Technology, Inc., a
manufacturer of radio frequency and microwave power amplifiers.
Mr. Vance became a Director of the Company in April 1995. Mr. Vance is a
retired Managing Director of the Los Angeles office of McKinsey & Company, a
management consulting firm. He now runs his own firm, Management Research,
Inc., which serves a few selective clients. Mr. Vance has authored 30 articles
on subjects such as corporate planning and strategy. Mr. Vance is also a
director of International Rectifier, Mathers Fund, First Consulting Group, and
four privately held corporations.
7
<PAGE>
Mr. Schraith became a Director of the Company in June 1995. Mr. Schraith is
currently President and CEO of ShareWave, Inc. Prior to that Mr Schraith was
Vice President and General Manager, North America for Compaq Computer. Prior to
that Mr. Schraith was Chief Executive Officer and a Director of the Cerplex
Group, Inc. From 1987 to 1995, Mr. Schraith was employed at AST Research, Inc.,
most recently serving as President, Chief Operating Officer and Director. Mr.
Schraith also serves on the board of Diamond Multimedia Systems, Inc and Digital
Archaeology Corporation.
Mr. Bregar joined the Company and was elected an officer of the Company in
February 1988. From fiscal 1989 through fiscal 1993, Mr. Bregar served as Vice
President of Discrete Products. Currently Mr. Bregar serves as Executive Vice
President, a position he has held since February 1993. Prior to joining the
Company, Mr. Bregar served as business manager of Power Discretes with Fairchild
Semiconductor where he directed the research and development and manufacturing
of the power mosfet and power rectifier product lines.
Mr. Franz became Vice President, Finance, Chief Financial Officer, and
Secretary and was elected an officer of the Company in August of 1993. Prior to
joining the Company, Mr. Franz was Director of Finance of the Large Computer
Systems Division (formerly Teradata Corporation) of AT&T from May 1990 through
August 1993. Prior to that position Mr. Franz was employed by the Wickes
Companies and Arthur Andersen LLP. Mr. Franz is a Certified Public Accountant.
Mr. Plummer joined the Company as Vice President, ATE Division as a result of
the April 1997 acquisition of Edge Semiconductor and was elected an officer in
June 1998. Mr. Plummer co-founded Edge Semiconductor and served as its
president until the acquisition. Prior to Edge, Mr. Plummer held positions with
Brooktree, Intel and National Semiconductor.
Mr. Zambelli was named Vice President of Sales and Marketing and elected an
officer of the Company in December of 1996. Mr. Zambelli has more than 25 years
of experience in the semiconductor industry and has held senior management
positions with several companies. Most recently, Mr. Zambelli was vice
president of sales for Exar Corporation.
None of the officers has any family relationship to any other officer. The
officers are elected annually by the Board of directors and serve at the
discretion of the Board.
Committees and Compensation of the Board of Directors.
The Company has a standing Compensation and Stock Option Committee and an
Audit Committee. The Company has no nominating committee. During the Company's
last fiscal year, the Board of Directors held four regular meetings and two
special meetings. During such fiscal year each of the incumbent Directors
attended 75% or more of the sum of the number of such meetings plus the number
of meetings of the Committees of which such person is a member. It is expected
that the Board will meet on a regular basis during the ensuing year.
Compensation and Stock Option Committee
The Compensation and Stock Option Committee ("Compensation Committee"),
comprised of Mr. Hankin, Mr. Burra, Mr. Schraith, Mr. Vance and Mr. Orbuch, met
five times during fiscal year 1999. The Compensation Committee administers the
Company's Long-Term Stock Incentive Plan. It also makes recommendations to the
Board on incentive compensation, stock options and other compensation matters.
8
<PAGE>
Audit Committee
The Audit Committee, which consists of Mr. Hankin, Mr. Burra, Mr. Orbuch,
Mr. Schraith and Mr. Vance, met two times during fiscal year 1999. The Audit
Committee makes recommendations concerning the engagement of the Company's
independent public accountants, consults with the independent public accountants
concerning the audit plan, reviews the comments and recommendations resulting
from the Report of Independent Public Accountants and management letter and
reviews the Company's accounting and control policies and procedures.
Compensation
During the first six months of fiscal 1999, directors who were not employees
of the Company were paid $2,500 for each regular Board meeting attended, a $500
monthly retainer and were reimbursed for their actual expenses incurred in
attending the meeting. Directors did not receive separate compensation for
committee meetings attended. During March 1998, the directors were converted
from the above mentioned cash compensation program, to 100% equity based
compensation. On July 15, 1998 each non-employee director received a stock
option grant which vests pro-rata over the next five years. This option grant
will compensate the non-employee directors for their service over the next five
years and is being granted in lieu of the former cash compensation. The number
of options were computed by multiplying the forgone cash compensation over the
following five years by four (multiplier), and then dividing that amount by the
Company's stock price, on the date of grant, to compute the number of options to
be granted. The multiplier was set to recognize the relative risk of taking
share options, compared to cash compensation. As a result Mr. Hankin, Vice-
Chairman of the Board, was granted 49,485 share options, and Mr. Burra, Mr.
Orbuch, Mr. Schraith and Mr. Vance were each granted 32,990 share options at the
market price on July 15, 1998. This plan was developed by an independent
consulting firm, and was set-up to align the interests of the Board with those
of shareholders, to reduce the expense associated with directors' compensation
and to attract and retain high quality directors.
Non-employee directors also participate in the Company's Long Term Stock
Incentive Plan. New non-employee directors receive an initial grant of 15,000
shares. Each existing non-employee director receives annual grants of options
to purchase a total of 10,000 shares at the market price as of the date of
grant. The annual grant was formerly 15,000 annually. The specific
provisions of the plan are set forth in the Long Term Stock Incentive Plan, a
copy of which is on file with the Securities and Exchange Commission. Directors
who are Company employees are not paid fees or additional compensation for
attending Board or committee meetings. Mr. Poe is currently the only employee
on the Board.
Compensation Committee Interlocks and Insider Participation
No member of the Compensation Committee was, during fiscal year 1999, an
officer or employee of the Company or any of its subsidiaries; or was formerly
an officer of the Company or any of its subsidiaries. During fiscal year 1999,
no executive officer of the Company served as a director or member of the
compensation committee (or other board committee performing equivalent
functions, or in the absence of such committee, the entire board of directors)
of another entity, one of whose executive officers served as a member of the
Compensation Committee, or as a director, of the Company.
9
<PAGE>
EXECUTIVE COMPENSATION
The following table shows, as to the Chief Executive Officer and each of the
executive officers of the Company who received total compensation from the
Company and its subsidiaries in excess of $100,000 for the fiscal year ended
January 31, 1999 (collectively, the "Named Executive Officers"), information
concerning compensation paid for services to the Company in all capacities
during the fiscal years ended January 31, 1999, February 1, 1998 and January 26,
1997:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term (4)
-------------------- ------------
Other Stock All
Fiscal Salary Annual Options Other
Name and Title Year ($)(1) Bonus($) Comp.($)(2) Awarded(#) Comp.($)(3)
-------------- ---- ------- ------- ------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
John D. Poe 1999 265,387 182,500 11,079 310,000 110,741
Chairman of the Board 1998 246,152 120,600 9,948 120,000 79,959
President and CEO 1997 221,921 75,600 9,925 60,000 594,287
Raymond E. Bregar 1999 186,160 105,827 8,769 50,000 32,778
Executive Vice 1998 174,159 72,480 10,224 80,000 31,570
President 1997 156,383 50,000 10,777 50,000 28,117
David G. Franz, Jr. 1999 149,431 73,050 8,421 35,000 27,209
Vice President and 1998 137,699 13,040 9,607 100,000 22,501
CFO 1997 116,805 40,000 9,857 50,000 17,179
Jean-Claude Zambelli 1999 169,621 82,080 7,051 40,000 29,588
Vice President 1998 165,006 12,000 6,030 60,000 17,963
1997 12,693 - - 120,000 -
Wylie Plummer 1999 178,333 67,932 9,595 25,000 2,187
Vice President 1998 160,000 49,324 2,945 100,000 1,979
1997 150,833 9,855 - - 1,010
</TABLE>
___________
(1) Salaries for fiscal years 1999, 1998 and 1997 each reflect 26 pay periods.
(2) "Other Annual Compensation" includes (a) premiums on life insurance and (b)
auto allowance.
(3) "All Other Compensation" for 1998, 1997 and 1996 includes, respectively, (a)
Company contributions to 401K savings plan of $5,000, $4,577, and $4,589 on
behalf of Mr. Poe; $4,774, $4,366, and $3,858 on behalf of Mr. Bregar;
$4,497, $3,006, and $3,855 on behalf of Mr. Franz; $4,036 and $2,123 for Mr.
Zambelli; and $2,187, $1,979 and $1,011 on behalf of Mr. Plummer; and (b)
deferred compensation of $105,741, $75,382 and $92,698 for Mr. Poe; $28,004,
$27,204 and $24,259 for Mr. Bregar; $22,712, $19,215 and $18,646 for Mr.
Franz; and $25,552 and $15,840 on behalf of Mr. Zambelli; and (c) income of
$497,000 related to debt relief for Mr. Poe in 1997, respectively.
(4) During the years indicated, restricted stock and long-term incentive plan
payouts were not granted.
10
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table shows, as to the Named Executive Officers, information
concerning stock options granted during the fiscal year ended January 31, 1999.
<TABLE>
<CAPTION>
Individual Grants
-----------------------------------------------------------------
Potential Realizable
% of Total Value at Assumed
Number of Options Annual Rates of
Securities Granted Stock Appreciation
Underlying to Exercise for Option Term
Options Employees Price Expiration ----------------------
Name Granted in Fiscal Year ($/Share) Date 5% 10%
---- ------- -------------- --------- --------- ----- -----
<S> <C> <C> <C> <C> <C> <C>
John D. Poe 310,000 (1) 18.7% $12.125 7/15/08 $2,363,858 $5,990,479
Raymond E. Bregar 60,000 3.0% $ 23.50 4/16/08 $ 738,951 $1,872,647
David G. Franz, Jr. 35,000 2.1% $ 15.75 10/14/08 $ 346,678 $ 878,551
Jean-Claude Zambelli 40,000 2.4% $ 15.75 10/14/08 $ 396,204 $1,004,058
Wylie Plummer 25,000 1.5% $ 15.75 10/14/08 $ 247,627 $ 627,536
</TABLE>
(1) Included in the stock option grants to Mr. Poe was a special grant of
250,000 stock options, made to Mr. Poe on July 15, 1999. This grant was
made to retain Mr. Poe's services for the next five years. The vesting of
these shares is based upon the achievement of certain stock appreciation
targets.
AGGREGATED OPTION EXERCISES IN
LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
The following table shows, as to the Named Executive Officers, information
concerning stock options exercised during the fiscal year ended January 31,
1999, the number of unexercised options and the value of "in-the-money"
unexercised options.
<TABLE>
<CAPTION>
Value of Unexercised
Shares Number of Unexercised In-the-Money Options
Acquired Options at FY End(#) at FY End ($)(2)
on Value -------------------- -----------------
Name Exercise(#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John D. Poe 65,000 $1,502,500 295,000 180,000 $7,144,687 $4,678,125
Raymond E. Bregar 95,000 $1,195,000 0 135,000 $ 0 $2,937,813
David G. Franz, Jr. 59,334 $1,144,611 41,000 135,000 $ 963,750 $2,894,063
Jean Claude Zambelli 40,000 $ 951,875 25,000 145,000 $ 507,500 $3,192,500
Wylie Plummer 0 0 25,000 125,000 $ 362,500 $1,587,500
</TABLE>
(2) Based upon the $35.75 per share closing price of the Company's common stock
on the NASDAQ National Market System on January 31, 1999.
11
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
To: The Board of Directors
The Compensation and Stock Option Committee (the "Committee"), a committee
composed entirely of Directors who have never served as officers of the Company,
determines and administers the compensation of the Company's executive officers.
This report, prepared by the Committee, sets forth the Company's compensation
policies for the year ended January 31, 1999, as such policies affected the
Company's executive officers.
Compensation Philosophy. At the direction of the Board of Directors and
pursuant to the charter of the Committee, the Committee endeavors to ensure that
the compensation programs for executive officers of the Company and its
subsidiaries are effective in attracting and retaining key executives
responsible for the success of the Company and are administered in an
appropriate fashion in the long-term interests of the Company and its
stockholders. The Committee seeks to align total compensation for senior
management with both annual and long-term corporate performance.
The Committee believes that the Company's overall financial performance
should be an important factor in the total compensation of the Company's
executive officers. At the executive officer level, the Committee has a policy
that a greater proportion of total compensation should consist of variable,
performance-based components, such as bonuses, which can increase or decrease to
reflect changes in corporate and individual performance. These incentive
compensation programs are intended to reinforce management's commitment to
enhancement of profitability and stockholder value. The performance goals upon
which payment to the Company's executive officers are based include growth in
revenue, net income, cash flow, new order generation and returns on assets.
The Committee also compares the Company's total compensation package with
those of other analog semiconductor companies of comparable size. The Committee
uses this data primarily as benchmarks to ensure that the executive compensation
program as a whole is within the broad middle range of comparative pay for
similar sized companies. The Committee does not target a specific position in
the range of comparative data for each individual or for each component of
compensation. Individual amounts are established in view of the comparative
data and such other factors as level of responsibility, prior experience and the
Committee's subjective judgment as to individual contribution. These factors
are not assigned specific mathematical weights, rather, the Committee exercises
its judgement and discretion in the information it reviews and the analysis it
considers.
The Company also retains independent compensation and benefits consultants
to assist in evaluating executive compensation programs. The use of independent
consultants provides additional assurance that the Company's programs are
reasonable and appropriate to the Company's objectives.
Compensation Program. The Company has a comprehensive compensation program
which consists of cash compensation, both fixed and variable, and equity-based
compensation. The program has three principal components:
Cash-Based Compensation
Base Salary--Base salary is predicated on industry and peer group
comparisons and on performance judgments as to the past and expected future
contribution of the individual executive officer. In general, salaries are set
based on median salaries for similar executives of similar sized companies in
the high technology industry.
Bonuses--The Company has a discretionary key employee incentive pool
pursuant to which executive officers and other key employees may receive annual
cash bonuses. Individual payments are made based on the achievement of order,
revenue, net income and cash flow growth targets and upon the individual's
personal and departmental performance. In fiscal 1999, executive officers were
given the
12
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option of receiving up to 50% of their bonuses in the form of stock options.
Such election was made early in the year. The number of options granted in lieu
of bonus is calculated by multiplying the forgone cash bonus by four and
dividing the result by the market price on the date of grant. The calculated
number of options are priced at the market price on the date of grant. The
percentage of bonus to be received in stock options is selected at least six
months prior to the actual grant date.
Equity-Based Compensation
Stock Options--Stock options are granted periodically to provide additional
incentive to executives and other key employees to work to maximize long-term
total return to stockholders. The options vest over three- and four-year
periods to encourage option holders to continue in the employ of the Company.
In granting options, the Committee takes into account the number of shares,
outstanding options held by the individual and the individual's performance and
contribution to Semtech's success.
Chief Executive Officer Compensation. In accordance with the compensation
philosophy, stated above, and the Company's results, Mr. Poe's base salary
during fiscal year 1999 was $300,000 which represents a 20% increase over fiscal
1998. Mr. Poe was not paid at this rate throughout fiscal 1999, due to the
Company's performance. As a result his actual base compensation was
approximately $265,000 during FY99. His base salary is designed to be
competitive with base salaries paid to other chief executive officers of
corporations with similar revenues and scope of operations. During fiscal 1999,
Mr. Poe was paid a bonus of $182,500, which was 91% of target performance
thresholds which were met during fiscal 1998. For fiscal 1999, a bonus of
$151,200, which was 63% of target, was accrued for Mr. Poe as of January 31,
1999. Mr. Poe elected to receive 30% of this bonus in stock options. As a
result, on March 4, 1999, Mr. Poe was granted options to purchase 6,783 shares
of Semtech common stock at a price of $26.75. The remainder of the bonus,
$105,840, was paid in cash in early March 1999. During fiscal 1999, the
Committee granted Mr. Poe 310,000 stock options with an exercise price at fair
market value as of the date of the grant. Included in these stock option grants
was a special grant of 250,000 stock options, made to Mr. Poe on July 15, 1999.
This grant was made to retain Mr. Poe's services for the next five years. The
vesting of these shares is based upon the achievement of certain stock
appreciation targets. This grant included provisions which limit Mr. Poe's
ability to sell his existing holdings of Semtech common stock, excluding
options, to 10% of such holdings per year.
Section 162 (m). Section 162 (m) of the Internal Revenue Code (the "Code")
limits the Company to deduction for federal income tax purposes of no more than
$1 million of compensation paid to the chief executive officer and the four
other most highly paid executive officers in a taxable year. Compensation above
$1 million may be deducted if it is "performance-based compensation" within the
meaning of the Code.
The Board has determined that stock options shall be treated as
"performance-based compensation." The Company's stockholders previously approved
the option plans, which would generally allow any compensation recognized by an
executive officer named in the Summary Compensation Table as a result of the
grant of such a stock option to be deductible by the Company.
Summary
The Committee believes that a fair and motivating compensation program plays
a critical role in the performance of the Company. The Committee reviews this
program on an ongoing basis to evaluate its continued effectiveness.
Compensation Committee
James P. Burra Rock N. Hankin
Allen H. Orbuch James T. Schraith
Jack O. Vance
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PERFORMANCE GRAPH
Comparison of Five Year Cumulative Total Return The following performance
chart shows the value of an investment of $100 on January 30, 1994 in cash of
(i) the Company's Common Stock, (ii) the Nasdaq Stock Market, and (iii) the
Nasdaq Electronic Components Sub-Index. All values assume reinvestment of the
full amount of all dividends and are calculated as of January 30 of each year.
Note that historic stock price performance is not necessarily indicative of
future stock price performance.
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C>
Semtech Corp. $ 100 $ 263 $ 931 $1,074 $2,125 $3,268
Nasdaq Stock Market $ 100 $ 95 $ 135 $ 177 $ 209 $ 326
Nasdaq Electronic Stocks $ 100 $ 109 $ 174 $ 358 $ 351 $ 568
</TABLE>
The disclosure under the captions "Report of The Compensation Committee" and
"Performance Graph" is not "soliciting material," and is not deemed filed with
the SEC and is not incorporated by reference in any filing of the Company under
the 1933 Act or the 1934 Act whether made before or after the date hereof and
irrespective of any general incorporation language in any such filing.
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<PAGE>
APPROVAL OF APPOINTMENT
OF INDEPENDENT PUBLIC ACCOUNTANTS
(Proposal No. 2)
The firm of Arthur Andersen LLP, certified public accountants, has been the
Company's independent public accountants since the Company's inception and has
been selected by the Board of Directors to serve as its independent public
accountants for the fiscal year ending January 30, 2000. Professional services
rendered by Arthur Andersen LLP for the fiscal year ended January 31, 1999
consisted of an audit of the Company's financial statements, consultation on
interim financial statements, services related to filings with the Securities
and Exchange Commission, meetings with the Company's Audit Committee and
consultation on various matters relating to accounting, tax and financial
reporting. The Audit Committee of the Board of Directors met periodically with
representatives of Arthur Andersen LLP during the past fiscal year. The members
of the Audit Committee are Messrs. Hankin, Burra, Orbuch, Schraith and Vance.
Representatives of Arthur Andersen LLP are expected to be present at the
Meeting. They will have the opportunity to make a statement, if they so desire,
and respond to appropriate questions from stockholders. THE BOARD OF DIRECTORS
RECOMMENDS A VOTE "FOR" APPROVAL OF THE APPOINTMENT OF THE AUDITORS.
ANNUAL REPORTS
The Company hereby undertakes to provide upon written request a copy of the
Company's Annual Report on Form 10-K, including the financial statements and the
schedules thereto, for the fiscal year ended January 31, 1999 without charge to
any person whose proxy is solicited by this statement. Such written request is
to be directed to Gisela Auchter, Semtech Corporation, 652 Mitchell Road,
Newbury Park, California 91320-2289.
OTHER MATTERS
The management of the Company knows of no other matters that may properly
be, or which are likely to be, brought before the meeting. However, if any
other matters are properly brought before the meeting, the persons named in the
enclosed proxy or their substitutes will vote in accordance with their best
judgment on such matters.
STOCKHOLDER PROPOSALS
Stockholder proposals for the 2000 Annual Meeting must be received by the
Company no later than 120 days prior to May 5, 2000 in order to be considered
for inclusion in the Company's proxy materials.
By Order of the Board of Directors
David G. Franz, Jr.
Vice President of Finance and Secretary
Dated: May 5, 1999
15
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[LOGO OF SEMTECH]
Today's Results...Tomorrow's Vision
<PAGE>
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SEMTECH CORPORATION
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned stockholder of Semtech Corporation hereby appoints John D.
Poe and David G. Franz, Jr., and each of them, as attorneys and proxies for
the undersigned, each with full power to act without the other and with the
power of substitution to represent the undersigned at the Annual Meeting of
Stockholders of Semtech Corporation to be held on June 10, 1999 at 1:00 p.m.,
Los Angeles time, and at any adjournment or postponement thereof, and to vote
all of the shares of Common Stock of Semtech Corporation which the undersigned
is entitled to vote in accordance with the instructions below and on the
reverse hereof.
This Proxy, when properly executed, will be voted as directed, or if no
direction is indicated, it will be voted FOR proposals 1, and 2.
(Continued and to be Signed on the reverse side)
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<PAGE>
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[X] Please mark
your votes
as this
The Board of Directors unanimously recommends a vote "FOR" Proposals 1 and 2:
FOR all nominees WITHHOLD
listed below AUTHORITY
(except as to vote for all
marked to the nominees listed
contrary below) below
(1) ELECTION OF DIRECTORS [ ] [ ]
James P. Burra, Rock N. Hankin,
Allen H. Orbuch, John D. Poe,
James T. Schraith, Jack O. Vance
INSTRUCTION: To withhold authority to vote for any individual nominee, strike a
line through the nominee's name in the list above.
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(2) PROPOSAL TO FOR AGAINST ABSTAIN
RATIFY THE [ ] [ ] [ ]
SELECTION OF
ARTHUR ANDERSEN
LLP as the independent
public accountants of the
Company for the current
fiscal year
With discretionary authority to FOR AGAINST ABSTAIN
vote such shares with respect [ ] [ ] [ ]
to the transaction of such
other business as may
properly come before the
meeting.
The undersigned hereby revokes any other proxy to vote at such Annual Meeting
of Stockholders and hereby ratifies and confirms all that said proxies, and
each of them, may lawfully do by virtue hereof. The undersigned also
acknowledges receipt of the Notice of Annual Meeting of Stockholders to be held
June 10, 1999 and the Proxy Statement furnished herewith.
Dated:
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Stockholder's Signature
Note: Please sign name exactly as imprinted above. When signing as attorney,
administrator, executor, trustee or guardian, please give full title as such;
if a corporation, sign in full corporate name by an authorized officer; and, if
a partnership, sign in partnership name by authorized person. If more than one
name appears hereon, all persons named should sign. PLEASE MARK, SIGN, DATE AND
RETURN THE PROXY CARD PROMPTLY IN THE ENCLOSED ENVELOPE.
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FOLD AND DETACH HERE
