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 ss.240.14a-11(c) or ss.240.14a-12
SILICONIX INCORPORATED
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
[X]No fee required
[ ]Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1)Title of each class of securities to which transaction
applies:
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(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):
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(4)Proposed maximum aggregate value of transaction:
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(5)Total fee paid:
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[ ]Fee paid previously with preliminary materials.
[ ]Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1)Amount Previously Paid: ______________________
(2)Form, Schedule or Registration Statement No.:
- --------------------------------------------------
(3)Filing Party: ________________________________
(4)Date Filed: __________________________________
<PAGE>
[Siliconix logo]
2201 Laurelwood Road
Santa Clara, California 95054
August 12, 1998
Dear Stockholder:
We are pleased to invite you to attend the 1998 Annual Meeting of Stockholders
of Siliconix incorporated, which will be held in the main auditorium at the
Company's corporate headquarters, 2201 Laurelwood Road, Santa Clara, California,
on Thursday, September 10, 1998, at 4:00 p.m. California time.
The Annual Report for the year 1997 is enclosed. At the stockholders' meeting,
we will discuss in more detail the subjects covered in the Annual Report as well
as other matters of interest to stockholders.
The enclosed Proxy Statement explains the items of business to come formally
before the meeting. As a stockholder, it is in your best interest to express
your views regarding these matters by signing and returning your proxy. This
will ensure the voting of your shares if you do not attend the meeting.
Whether or not you plan to attend the meeting, please sign the proxy card and
return it promptly in the enclosed envelope. It requires no stamp if mailed in
the United States. You may revoke any proxy you give at any time before it is
exercised at the meeting.
Sincerely yours,
KING OWYANG
President and Chief
Executive Officer
<PAGE>
SILICONIX INCORPORATED
2201 LAURELWOOD ROAD
SANTA CLARA, CALIFORNIA 95054
Notice of Annual Meeting of Stockholders -- September 10, 1998
TO THE STOCKHOLDERS OF SILICONIX INCORPORATED:
Notice is hereby given that the Annual Meeting of Stockholders of Siliconix
incorporated will be held in the main auditorium at the Company's corporate
headquarters, 2201 Laurelwood Road, Santa Clara, California, on Thursday,
September 10, 1998 at 4:00 p.m. California time, for the following purposes:
1. To elect four directors for the ensuing year.
2. To ratify the appointment of Ernst & Young LLP as the Company's
accountants for the fiscal year ending December 31, 1998.
3. To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
The Board of Directors intends to nominate as directors those individuals listed
in the attached Proxy Statement under the heading "Nominees." August 5, 1998 has
been fixed as the record date for the determination of stockholders entitled to
vote at the Annual Meeting and to receive notice thereof.
BY ORDER OF THE BOARD OF DIRECTORS
DAVID M. ACHTERKIRCHEN
Secretary
Santa Clara, California
August 12, 1998
Please date, sign and return the enclosed proxy in the enclosed envelope. If you
plan to attend in person, please indicate this by checking the space provided on
the proxy.
<PAGE>
PROXY STATEMENT
----------------
ANNUAL MEETING OF STOCKHOLDERS OF
SILICONIX INCORPORATED
SEPTEMBER 10, 1998
------------
SOLICITATION AND VOTING RIGHTS
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of your proxy for use at the Annual Meeting of Stockholders
on Thursday, September 10, 1998, at 4:00 p.m., and at all adjournments thereof,
for the purposes set forth in the attached Notice of Annual Meeting of
Stockholders. This Proxy Statement is first being distributed to stockholders on
approximately August 12, 1998. The Company will pay all expenses incurred in
connection with this solicitation, including postage, printing, handling and the
actual expenses incurred by brokerage houses, custodians, nominees and
fiduciaries in forwarding proxy material to beneficial owners.
The Company, a corporation existing and organized under the laws of the State of
Delaware, has one class of equity securities issued and outstanding, consisting
of 9,959,680 shares of common stock, $0.01 par value (the "Common Stock"). All
of the shares of Common Stock are voting shares, but only those stockholders of
record as of the record date, August 5, 1998, will be entitled to notice of and
to vote at the meeting and at any and all postponements or adjournments of the
meeting. The presence in person or by proxy of the holders of a majority of the
outstanding shares of Common Stock entitled to vote at the meeting will
constitute a quorum for the purpose of transacting business at the meeting.
Each stockholder is entitled to one vote for each share of Common Stock held by
such stockholder of record on each matter which may come before the meeting.
Abstentions and broker non-votes are counted for purposes of determining the
presence or absence of a quorum for the transaction of business. In matters
other than the election of directors, abstentions are counted as votes against
in tabulations of the votes cast on proposals to the stockholders, votes
withheld have no legal effect and broker non-votes are not counted for purposes
of determining whether a proposal has been approved.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is exercised. Proxies may be revoked by giving
written notice to the Secretary of the Company and the issuance of a subsequent
proxy will revoke any prior proxy even though written notice of revocation is
not given.
<PAGE>
The "Company" and "Siliconix incorporated" refer to Siliconix incorporated, a
Delaware corporation, or the predecessor California corporation of the same
name.
PROPOSAL 1--ELECTION OF DIRECTORS
At the Annual Meeting of Stockholders to be held on Thursday, September 10,
1998, the Company will present a slate of four nominees for election to the
Board of Directors. Except as hereinafter stated, management will vote the
shares represented by the enclosed proxy for the four nominees to the Board of
Directors named below, unless indication to the contrary is marked thereon. In
the event of the death, disqualification, or refusal or inability of any of such
nominees to serve, it is the intention of the persons named in the enclosed
proxy to vote for the election of such other person or persons as the persons
named in the enclosed proxy determine in their discretion. The Board of
Directors has no reason to believe that such nominees will be unable or will
decline to serve if elected.
NOMINEES
The following sets forth the name, age and principal occupation of each nominee,
his position with the Company and business experience during the past five
years, and the year each was first elected a director of the Company.
Nominee Age Business Experience During Past Five Years
------- --- ------------------------------------------
King Owyang 52 President and Chief Executive Officer of the Company
(since 1998); Executive Vice President, Technology and
Silicon Operations (1992-1998); first-time nominee to
the Board of Directors.
Everett Arndt 47 Operations Senior Vice President, North America
Administration of Vishay Intertechnology, Inc., the
indirect holder of 80.4% of the Company's outstanding
Common Stock, since 1998; Vice President, Controller of
Vishay Intertechnology, Inc. (1995-1998); Vice
President and Controller of Vitramon (affiliated with
Vishay) (1987-1 995); director of Siliconix since March
1998.
Lori Lipcaman 40 Operations Senior Vice President and Controller of
Vishay Intertechnology, Inc. (since 1998); Vice
President and Controller of Vishay Europe GmbH
(1996-1998); Director of European Accounting of Vishay
Intertechnology, Inc. (1991-1996); Director of Finance
and Accounting of Sprague France (affiliated with
Vishay)(1993-1996); director of Siliconix since March
1998.
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<PAGE>
Glyndwr Smith 59 Assistant to the CEO and Staff Senior Vice President of
Vishay Intertechnology, Inc. (since 1991); director of
Siliconix since March 1998.
DIRECTORS' MEETINGS AND COMMITTEES
The Board of Directors met four times in person in 1997, one time by conference
telephone call, and took action by unanimous written consent on two occasions in
that year. Each director attended at least 75% of the meetings of the Board of
Directors and of the committees, if any, of which he was a member.
The Audit Committee of the Board of Directors consisted of former directors
Richard Kulle, Frank Maier and Robert Wehrli in 1997; the Committee met once in
that year. The principal functions of that committee were to select a firm of
independent certified public accountants to perform an audit of the Company's
financial statements; to review, in consultation with the independent
accountants, the scope and results of and the compensation for such audit,
together with any non-audit services performed by them; to review the Company's
accounting policies and any changes thereof; and to consult with the independent
accountants and Company management, separately as appropriate, with regard to
the adequacy of the Company's internal controls. Following the acquisition by
Vishay Intertechnology, Inc. ("Vishay") of 80.4% of the Common Stock of the
Company on March 2, 1998 (see "Security Ownership" below), Everett Arndt, Lori
Lipcaman and Glyndwr Smith were appointed to the Audit Committee.
The Compensation Committee of the Board of Directors consisted of former
directors Richard Kulle, Frank Maier and Robert Wehrli in 1997; the Committee
met four times in person in that year. Its principal functions were to make
recommendations to the Board of Directors as to remuneration arrangements,
including bonuses, for officers and other employees. See also "Report of
Compensation Committee" below. Following the Vishay acquisition, Everett Arndt,
Lori Lipcaman and Glyndwr Smith were appointed to the Compensation Committee.
The Board of Directors has no standing Nominating Committee.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL OF THE NOMINEES.
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<PAGE>
SECURITY OWNERSHIP
The following table shows the amount of Common Stock of the Company beneficially
owned, as of August 5, 1998, by the only person who to the knowledge of the
Company is the beneficial owner of more than 5% of the outstanding Common Stock
of the Company. Such person has sole investment and voting power with respect to
the shares shown.
Amount
Name and Address Beneficially Percent
of Beneficial Owner Owned of Class
------------------- ----- --------
Vishay TEMIC Semiconductor 8,010,000 80.4%
Acquisition Holdings Corp.
63 Lincoln Highway
Malvern, PA 19355
On March 2, 1998, Vishay Intertechnology, Inc., a Delaware corporation
("Vishay"), through a wholly owned subsidiary, acquired 8,010,000 shares (the
"Shares") of Common Stock of the Company for consideration of approximately
$237,550,000, or $29.66 per share. The Shares represent 80.4% of the issued and
outstanding Common Stock of the Company. The purchase price was funded from a
$1.1 billion revolving credit facility made available to Vishay from its
syndicate of banks, including Comerica Bank and NationsBanc Montgomery
Securities.
In connection with the transfer of the Shares, Hanspeter Eberhardt, Michael
Muhlbayer and Peter Westrick resigned from the Board of Directors and were
replaced by Everett Arndt, Lori Lipcaman and Glyndwr Smith. In addition, in
connection with the transfer of the Shares, Richard Kulle, Frank Maier and
Robert Wehrli also resigned from the Company's Board of Directors and from all
other positions with those companies affiliated with Siliconix incorporated. Dr.
King Owyang assumed the offices of President and Chief Executive Officer of
Siliconix, replacing Richard Kulle. Dr. Owyang was formerly Executive Vice
President, Technology & Silicon Operations and has been employed by Siliconix
for ten years.
The following table shows the number and percentage of shares of Common Stock
beneficially owned, as of August 5, 1998, by (i) each current director and
nominee for director, (ii) each executive officer named in the compensation
table below under "Compensation of Officers and Directors" and (iii) all
directors and executive officers as a group. Each person has sole investment and
voting power with respect to the shares shown.
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<PAGE>
Amount
Name of Bene- Beneficially Percent
ficial Owner Owned of Class
------------ ------------ --------
Everett Arndt 0 0
Lori Lipcaman 0 0
King Owyang 2,587 *
Glyndwr Smith 300 *
Jurgen Biehn 0 0
Richard Kulle 0 0
John Cox 0 0
G. Thomas Simmons 0 0
All directors, nominees and executive
officers as a group (five persons) 2,887 *
- -------------------
*Less than 1%.
COMPENSATION OF OFFICERS AND DIRECTORS
The following table shows, as to the Chief Executive Officer in 1997 and each of
the four other most highly compensated executive officers whose salary plus
bonus for 1997 exceeded $100,000, information concerning compensation paid for
services to the Company in all capacities during the fiscal year ended December
31, 1997, as well as the total compensation paid to each such individual for the
Company's previous two fiscal years (if such person was the Chief Executive
Officer or an executive officer, as the case may be, during any part of such
fiscal year).
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<PAGE>
Summary Compensation Table
- --------------------------
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
------------------- ------------
Name and Other Annual All Other
Principal Position Year Salary Bonus Compensation LTIP Payouts Compensation(1)
- ------------------ ---- ------ ----- ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Richard J. Kulle 1997 $563,921(3) $826,675 $362,727(4) $186,375 $23,474
President and Chief 1996 $400,456 $226,005 $195,198(5) $160,125 $18,884
Executive Officer(2) 1995 $392,491(6) $198,907 $329,622(7) $180,125 $23,820
King Owyang 1997 $332,316 $449,919 $286,411(9) $ 82,500 $23,474
Executive Vice 1996 $324,011 $173,895 $171,172(10) $ 76,200 $18,884
President(8) 1995 $283,067 $200,619 $172,206(11) $ 80,500 $22,818
Jurgen Biehn 1997 $262,338 $206,899 $ 89,322(13) $ 68,799 $18,674
Chief Financial 1996 $253,677 $169,739 $162,272(14) $ 66,210 $ 2,700
Officer(12) 1995 $228,760 $176,514 $192,049(15) $ 73,550 $ 1,728
John Cox 1997 $244,125 0 (17) 0 0
Vice President,
Worldwide Environmental
Health & Safety Affairs(16)
G. Thomas Simmons 1997 $280,390 $435,286 $163,294(19) $ 67,500 $23,474
Vice President, 1996 $271,487 $146,526 $122,203(20) $ 50,625 $19,856
Marketing(18) 1995 $243,881 $143,869 (17) $ 0 $22,547
</TABLE>
- ---------------------
(1)The Company does not have any stock option or stock purchase plans. All Other
Compensation includes Company contributions to the individuals' respective Tax
Deferred Savings Plan and Profit Sharing Plan accounts, and payment by the
Company of group term life insurance premiums on their behalf. In 1997 these
amounts were--Kulle: TDSP, $4,800; PSP, $17,288; insurance, $1,386; Owyang:
TDSP, $4,800; PSP, $17,288; insurance, $1,386; Biehn: PSP, $17,288; insurance,
$1,386; and Simmons: TDSP, $4,800; PSP, $17,288; insurance, $1,386.
(2)Mr. Kulle resigned from all positions with the Company in March 1998.
(3)This amount includes $132,958 of compensation for accrued but unused vacation
time.
(4)This amount includes $160,000 of forgiven real estate loans and $158,387 paid
for reimbursement of income taxes attributable to certain employee benefits
received in 1997.
(5)This amount includes $60,629 paid for reimbursement of income taxes
attributable to certain employee benefits received in 1996.
(6)This amount includes $39,232 of compensation for accrued but unused vacation
time.
(7)This amount includes $90,000 of forgiven real estate loans and $199,958 paid
for reimbursement of income taxes attributable to certain employee benefits
received in 1995 and prior years.
(8)Dr. Owyang became President and Chief Executive Officer in March 1998.
(footnotes continued on following page)
-6-
<PAGE>
(footnotes continued from previous page)
(9)This amount includes $180,000 of forgiven real estate loans and $97,801 paid
for reimbursement of income taxes attributable to certain employee benefits
received in 1997.
(10)This amount includes $50,364 paid for reimbursement of income taxes
attributable to certain employee benefits received in 1996 and $80,000 of
forgiven real estate loans.
(11)This amount includes $62,000 of forgiven real estate loans and $95,663 paid
for reimbursement of income taxes attributable to certain employee benefits
received in 1995 and prior years.
(12)Mr. Biehn resigned from all positions with the Company in April 1998.
(13)This amount includes $30,000 of forgiven real estate loans, $25,180 paid for
reimbursement of income taxes attributable to certain employee benefits received
in 1997 and $24,242 paid for reimbursement of children's education expenses.
(14)This amount includes $60,000 for a forgiven real estate loan and $41,322
paid for reimbursement of income taxes attributable to certain employee benefits
received in 1996.
(15)This amount includes $69,572 paid for reimbursement of income taxes
attributable to certain employee benefits received in 1995 and prior years.
(16)Mr. Cox joined the Company in April 1997.
(17)Other Annual Compensation includes amounts paid for car allowances,
reimbursement of certain medical expenses and income taxes, and other personal
benefits. In these cases, the amounts totaled less than the lesser of (i) 10% of
each officer's salary plus bonus for the year or (ii) $50,000.
(18)Mr. Simmons resigned from all positions with the Company in March 1998.
(19)This amount includes $90,000 of forgiven real estate loans and $53,098 paid
for reimbursement of income taxes attributable to certain employee benefits
received in 1997.
(20)This amount includes $60,000 for a forgiven real estate loan and $37,735
paid for reimbursement of income taxes attributable to certain employee benefits
received in 1996.
The following table shows, as to the Chief Executive Officer in 1997 and
each of the four other executive officers named in the Compensation Table
above, information concerning awards granted under the Company's long-term
incentive plan (the Key Professional Performance Unit Plan) in the fiscal
year ended December 31, 1997. The Plan provides that in the event of a
change in control, a pro rata portion of the bonuses that would have been
paid at the end of the respective bonus periods will instead be paid as
soon as practicable after the consummation of the change in control. Such
pro rata payments were made in early 1998 to Messrs. Kulle, Biehn and
Simmons and Dr. Owyang as a result of the Vishay acquisition. Of the named
officers, only Dr. Owyang is eligible to receive any further benefits under
this Plan.
<TABLE>
<CAPTION>
Performance
Number of or Other Period Estimated Future Payouts
Performance Until Maturation under Non-Stock Based Plans
Name Units or Payout Threshold Target Maximum
- ---- ----- --------- --------- ------ -------
<S> <C> <C> <C> <C> <C>
Richard J. Kulle 1,453 1997-1999 $72,625 $145,250 $217,875
King Owyang 640 1997-1999 $32,000 $ 64,000 $ 96,000
Jurgen Biehn 500 1997-1999 $25,000 $ 50,000 $ 75,000
John Cox 0 -- -- -- --
G. Thomas Simmons 540 1997-1999 $27,000 $ 54,000 $ 81,000
</TABLE>
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<PAGE>
Participation in the Key Professional Performance Unit Plan is limited to
certain key employees who may be expected to have a substantial opportunity to
influence the performance of the Company. The Plan provides for cash bonuses to
be paid to the participants. The amount paid to any participant in the Plan is a
measure of the extent to which specified corporate objectives are achieved over
a three-year period, beginning in the year in which the award of performance
units is made. The corporate objectives consist of the attainment of goals
relating to one or more of the following performance measures: (1) bookings, (2)
revenues, (3) earnings before taxes, (4) return on net assets, (5) return on
equity, (6) stockholder return and (7) net revenue per employee. The
Compensation Committee will determine the target level of performance that must
be achieved with respect to each performance goal in order for that performance
goal to be considered attained.
PENSION CONTRACT
Mr. Biehn has a Pension Contract that was granted by AEG AG, a former affiliate
of the Company. The successor in interest of AEG AG is EHG. Mr. Biehn's benefits
at retirement under this Pension Contract are not presently determinable;
however, as his then employer, the Company contributed $6,845 to Mr. Biehn's EHG
pension account for 1997. The Company has no further obligations to Mr. Biehn
with respect to this pension contract.
DIRECTORS' COMPENSATION
During 1997, the Chairman of the Board received a $3,500 quarterly retainer plus
$1,500 for each directors' meeting attended, and each other non-employee
director received a $2,250 quarterly retainer plus $1,000 for each directors'
meeting attended. The Company reimburses directors who are not employees of the
Company or any affiliated corporation the expenses incurred by them in attending
Board and committee meetings.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended December 31, 1997, the members of the Compensation
Committee of the Company's Board of Directors were Messrs. Richard Kulle, Frank
Maier and Robert Wehrli. Mr. Kulle is the former President and Chief Executive
Officer of the Company. Messrs. Maier and Wehrli were non-employee directors.
All such members resigned from the Compensation Committee concurrently with
their resignations from the Company's Board of Directors in March and April
1998.
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<PAGE>
REPORT OF COMPENSATION COMMITTEE
In 1997, the Board of Directors delegated responsibility for determining
executive pay to a Compensation Committee. During 1997, this committee consisted
of three Board members, Messrs. Kulle, Maier and Wehrli. Mr. Kulle was the only
employee director of this Committee, and he was excused from any discussion
involving his own compensation or benefits.
The responsibilities of the Compensation Committee are to:
o Establish salary levels for all executives of the Company
o Administer the Company's Key Professional Incentive Bonus Plan
o Administer the Company's Key Professional Performance Unit Plan
o Administer the Company's Qualified Retirement Plan
o Establish general wage increase targets for each fiscal year
o Recommend and/or approve all special bonuses or awards
The Compensation Committee met concurrently with each meeting of the full Board
in 1997.
EXECUTIVE COMPENSATION GENERALLY
In 1997, executives of the Company were compensated by base salary and annual
cash incentives (under the Key Professional Incentive Bonus Plan, the Key
Professional Performance Unit Plan and otherwise), as well as other benefits
generally offered to executives by large corporations, such as car allowances
and reimbursement of certain expenses. The amount paid to any participant in the
Key Professional Incentive Bonus Plan was a measure of two annual performance
components, (i) achievement of corporate objectives, which consisted of several
components and were identical for all participants in the Plan, and (ii)
achievement of personal goals, which were unique for each individual
participant. If a target objective was not met, its influence on the awards to
be made was eliminated and the bonus pool was correspondingly reduced.
The amount paid to any participant in the Key Professional Performance Unit Plan
depends on the achievement of corporate objectives over a three-year period.
These objectives consist of several components. If a target objective is not
met, its influence on the awards to be made is eliminated and the bonus pool is
correspondingly reduced. Each of these Plans provides limitations on the
Company's ability to amend the Plan. Each Plan also provides that in the event
of a change in control, a pro rata portion of the bonuses that would have been
paid at the end of the respective bonus periods will instead be paid as soon as
practicable after the consummation of the change in control. Such pro rata
payments were made in early 1998 as a result of the Vishay acquisition.
-9-
<PAGE>
The Compensation Committee evaluated both Company and individual executive
performance against the Company's plan for the year and surveyed like industry
practices at each facility location. Performance against plan was the easiest
measure to use since the Company prepares a three-year plan each year. The
general Company performance, as well as individual performance, was used to
establish relative contribution for each executive.
The more difficult task in determining executive compensation was determining
levels relative to like industry practices within the community. The Company
contracted with a local compensation consulting firm in order to determine low,
average and high compensation levels for each executive position. These relative
numbers included such factors as company location, company size, individual
responsibilities and other executive benefits. The consulting firm's report
included salaries, bonuses and total compensation for each measured period. This
report was then used by the Compensation Committee to determine appropriate
salary changes and bonuses for the current year. The report was used also to
inform the full Board of Directors of relative compensation levels.
Cash compensation has historically been the primary tool that the Company has
used to attract and hold outstanding executives. In 1997, Siliconix did not
maintain stock option or purchase plans of any kind, and since the Northern
California community, in which most of the Company's senior personnel are
located, is very accustomed to generous stock option plans, the Board of
Directors as well as the Compensation Committee determined that the Company
maintain salaries and bonuses at the upper end of community levels to permit
Siliconix to retain its capable staff. The Company's policy has historically
been to pay its senior executives at no less than the 75th percentile of
compensation of comparable executives in the Silicon Valley. The Company also on
occasion has provided its executives with other benefits such as (i) real estate
loans that may be forgiven in increments over a specified number of years,
provided that the executive remains employed by the Company during that period,
(ii) compensation for income taxes attributable to certain employee benefits and
(iii) reimbursement for educational expenses for the children of non-United
States citizens. See "Certain Transactions."
1997 COMPENSATION OF THE PRESIDENT AND CEO
Mr. Kulle's base salary for 1997 was determined by the 1997 Compensation
Committee largely in accordance with the principles described above. In 1996,
the Company achieved a 7% sales increase, to $268.9 million, and a 7% increase
in net income, to $26.0 million; 1996 was a very difficult year generally for
the semiconductor industry generally. The Compensation Committee considered
other factors as well in determining Mr. Kulle's base salary for 1997; for
example, in 1997 Mr. Kulle had responsibility not only for Siliconix, but also
assumed responsibility for the Discrete Components Division of the semiconductor
division of "TEMIC," the microelectronics enterprise within the Daimler-Benz
Group, and was also acting Director of the Infrared Data Communications Product
Unit of the TEMIC Semiconductors Discrete Components Division. In 1997,
Siliconix charged back to the other members of TEMIC
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<PAGE>
Semiconductors costs and expenses that Mr. Kulle and other Siliconix employees
incurred on behalf of such other members.
Another consideration was that the Board of Directors adopted a very aggressive
revenue and profit plan for 1997, and Mr. Kulle agreed that his bonus
compensation for 1997 would be based in part on achievement of that aggressive
plan. Based on the foregoing, therefore, the Committee felt it was appropriate
to compensate Mr. Kulle at the upper end of base salary levels for Presidents
and CEOs generally, based upon the report of the Company's compensation
consultants.
Mr. Kulle's bonuses under the Key Professional Incentive Bonus Plan and the Key
Professional Performance Unit Plan reflected 100% achievement of both his
personal goals and the corporate objectives for 1997. The bonuses under the
Plans were determined in accordance with the formulas mandated thereby.
The policies described in this report were promulgated and implemented by the
1997 Compensation Committee, which consisted of Messrs. Richard Kulle, Frank
Maier and Robert Wehrli, all of whom have since resigned from the Board of
Directors in connection with the Vishay acquisition.
STOCK PRICE PERFORMANCE GRAPH
The following graph shows a five-year comparison of cumulative total stockholder
returns, assuming reinvestment of dividends, for the Company, the S&P 500(R)
Index and the S&P(R) Technology Sector Index. The total stockholder return
assumes $100 invested on December 31, 1992 in Siliconix Common Stock, the S&P
500 Index and the S&P Technology Sector Index. Historic stock price performance
is not necessarily indicative of future stock price performance, and any
comparison or statement made in this analysis should not be considered a
recommendation or comment relative to the purchase or sale of the Company's
stock.
[Graph to be inserted here.]
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
Siliconix $100 $ 90 $165 $493 $313 $573
S&P 500(R) $100 $110 $112 $153 $189 $252
S&P(R) Tech-
nology Sector
Index $100 $123 $143 $207 $290 $366
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<PAGE>
CERTAIN TRANSACTIONS
At December 31, 1997, the Company owed $34.57 million to Daimler-Benz Capital,
Inc., then an affiliated corporation. Subsequent to the acquisition of 80.4% of
the Company's outstanding Common Stock by Vishay in March 1998, this
indebtedness was assigned to Vishay. It bears interest at a floating rate equal
to Vishay's cost of funds, currently 6.25% per annum, and is due in 2001.
In April and May 1998, the Company borrowed $5,000,000 from Vishay for general
corporate purposes. The indebtedness bore interest at a floating rate based on
Vishay's cost of funds, currently 6.25% per annum, and was due in April 1999.
These loans were repaid using the revolving credit facility established
effective May 1998 described below.
Effective May 1998, the Company signed a Revolving Intercompany Promissory Note
payable to Vishay establishing a $35,000,000 revolving credit facility. Under
the Note, the Company may borrow up to $35,000,000 from time to time from Vishay
for general corporate purposes. Amounts borrowed bear interest at a floating
rate equal to Vishay's cost of funds, currently 6.25% per annum, and are due in
2000. There is currently $14.3 million payable to Vishay under the Note.
Effective May 1998, the Company borrowed $16,000,000 from Vishay. This purpose
of this loan was to enable Siliconix Technology C.V., an affiliated limited
partnership, to purchase 40% of the outstanding equity interest in Shanghai
Simconix Co. Ltd. ("Simconix") from the Shanghai Institute of Metallurgy.
Simconix is a joint venture between Siliconix and the Shanghai Institute of
Metallurgy that performs assembly and test services for Siliconix in Shanghai,
China. This indebtedness bears interest at a floating rate equal to Vishay's
cost of funds, currently 6.25% per annum, and is due in 2001.
In 1994, the Company loaned Richard Kulle, President and Chief Executive
Officer, $400,000 to assist Mr. Kulle in the purchase of a new home. Pursuant to
the loan agreement between Mr. Kulle and the Company, $40,000 of the principal
amount was forgiven in each of 1995-1996, $60,000 was forgiven in 1997, $80,000
was forgiven in January 1998 and $180,000 was forgiven in March 1998 in
connection with his resignation from his positions with the Company. Later in
1994, the Company loaned Mr. Kulle an additional $250,000. Pursuant to the loan
agreement between Mr. Kulle and the Company, $50,000 of this amount was forgiven
in 1995, $100,000 was forgiven in 1997 and the remaining $100,000 is payable in
1999. In 1995, the Company loaned Mr. Kulle $400,000 for personal expenses. Of
this amount, $300,000 remains outstanding and is payable in 2000. The principal
amount outstanding from time to time on these loans bears interest at a floating
rate that approximates the Company's cost of money, currently 6.25% per annum.
Interest on these loans was forgiven in 1997.
In January 1998, the Company reimbursed Mr. Kulle in the amount of $158,387 for
income taxes attributable to certain employee benefits received in 1997.
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In 1997, the Company reimbursed Mr. Kulle in the amount of $60,629 for income
taxes attributable to certain employee benefits received in 1996.
In 1996, the Company reimbursed Mr. Kulle in the amount of $199,958 for income
taxes attributable to certain employee benefits received in 1995 and prior
years.
In March 1998, Mr. Kulle resigned as President, Chief Executive Officer and a
director of the Company. Pursuant to an agreement among him, the Company and
Vishay, Mr. Kulle received payments aggregating $1,647,173 in March and April
1998. In March 1999 and March 2000, he will receive payments of $500,000 and
$779,603, respectively, plus interest at 6% per annum on such amounts from March
1998 to the payment date. The $100,000 payment due to the Company from Mr. Kulle
in 1999 and the $300,000 payment due to the Company from Mr. Kulle in 2000 (see
above) will be netted against the foregoing payments. Of said payments to Mr.
Kulle, the amount of $1,279,603 was paid to him in consideration of a
non-competition and non-solicitation agreement, pursuant to which Mr. Kulle
agreed that for a period expiring in March 2000, he will not provide services in
any capacity to any person or entity that competes, directly or indirectly, with
the Company's March 1998 product line. There are some exceptions to these
restrictions, however, primarily that Mr. Kulle will have the right to, directly
or indirectly as an officer, director, employee, consultant or in any other
capacity with any person or entity, assemble, test, develop and manufacture any
products, and to assemble, test and manufacture for other persons or entities,
products that compete with the Company's March 1998 product line, provided that
Mr. Kulle or such person or entity with which Mr. Kulle is affiliated does not
market and sell any product which competes with the Company's March 1998 product
line directly to the market (OEM customers) or to distributors.
In 1988, the Company loaned $150,000 to King Owyang, now President and Chief
Executive Officer, without interest, in connection with Dr. Owyang's relocation
and employment by the Company. Of this amount, $100,000 was repaid, and pursuant
to the loan agreement between Dr. Owyang and the Company, $28,000 was forgiven
in 1994 and $22,000 was forgiven in 1995. In 1993 and 1994, the Company loaned
an additional $250,000 to Dr. Owyang, and in 1996, the Company loaned an
additional $200,000 to Dr. Owyang. Pursuant to the loan agreements between Dr.
Owyang and the Company, $40,000 of the total amount was forgiven in 1995,
$80,000 was forgiven in 1996, $180,000 was forgiven in 1997, and $150,000 will
be forgiven in 1998, provided Dr. Owyang remains employed by the Company during
that period. The principal amount outstanding from time to time on these loans
bears interest at a floating rate that approximates the Company's cost of money,
currently 6.25% per annum. Interest on these loans was forgiven in 1997.
In January 1998, the Company reimbursed Dr. Owyang in the amount of $97,801 for
income taxes attributable to certain employee benefits received in 1997.
In 1997, the Company reimbursed Dr. Owyang in the amount of $50,364 for income
taxes attributable to certain employee benefits received in 1996.
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<PAGE>
In 1996, the Company reimbursed Dr. Owyang in the amount of $95,663 for income
taxes attributable to certain employee benefits received in 1995 and prior
years.
In 1993, the Company loaned Jurgen Biehn, the former Senior Vice President and
Chief Financial Officer, $300,000 to assist Mr. Biehn in the purchase of a new
home. Pursuant to the loan agreement between Mr. Biehn and the Company, $30,000
of this amount was forgiven in 1994-1995, $60,000 was forgiven in 1996, $30,000
was forgiven in 1997, and $150,000 was forgiven in 1998. The principal amount
outstanding from time to time bears interest at a floating rate that
approximates the Company's cost of money, currently between 6.25% per annum.
Interest on this loan was forgiven in 1997.
In January 1998, the Company reimbursed Mr. Biehn in the amount of $25,180 for
income taxes attributable to certain employee benefits received in 1997.
In 1997, the Company reimbursed Mr. Biehn in the amount of $41,322 for income
taxes attributable to certain employee benefits received in 1996.
In 1996, the Company reimbursed Mr. Biehn in the amount of $69,572 for income
taxes attributable to certain employee benefits received in 1995 and prior
years.
In April 1998, Mr. Biehn resigned as Senior Vice President and Chief Financial
Officer of the Company. Mr. Biehn received a severance payment of $669,195 in
April 1998.
In 1994, the Company loaned $50,000 to G. Thomas Simmons, the former Vice
President, Marketing, in connection with Mr. Simmons's relocation and employment
by the Company. Pursuant to the loan agreement between Mr. Simmons and the
Company, $16,667 of this amount was forgiven in 1995 and $16,666 was forgiven in
1996-1997. In 1995, the Company loaned an additional $150,000 Mr. Simmons, to
assist Mr. Simmons in the purchase of a new home. Pursuant to the loan agreement
between Mr. Simmons and the Company, $60,000 of this amount was forgiven in 1996
and $90,000 was forgiven in 1997. The principal amount outstanding on these
loans from time to time bore interest at a floating rate that approximated the
Company's cost of money, currently 6.25% per annum. Interest on these loans was
forgiven in 1997.
In January 1998, the Company reimbursed Mr. Simmons in the amount of $53,098 for
income taxes attributable to certain employee benefits received in 1997.
In 1997, the Company reimbursed Mr. Simmons in the amount of $37,735 for income
taxes attributable to certain employee benefits received in 1996.
In March 1998, Mr. Simmons resigned as Vice President, Marketing of the Company.
Mr. Simmons received a severance payment of $751,869 in April 1998.
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PROPOSAL 2--RATIFICATION OF SELECTION OF
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors proposes the ratification by the stockholders at the
Annual Meeting of the accounting firm of Ernst & Young LLP ("Ernst & Young") as
independent public accountant for the fiscal year ending December 31, 1998. KPMG
Peat Marwick LLP ("KPMG") was the Company's independent public accountant for
the fiscal years ended December 31, 1997 and 1996 and has served as such since
the fiscal year ended December 31, 1991.
Vishay is required to consolidate the Company's financial statements with its
own and Vishay's public accounting firm is Ernst & Young. Therefore, effective
July 31, 1998, the Board of Directors selected Ernst & Young to replace KPMG as
the Company's independent public accountant. One or more representatives of both
Ernst & Young and KPMG are expected to be present at the Annual Meeting and will
have the opportunity to make a statement, if they so desire, and to respond to
appropriate questions from stockholders.
KPMG's audit reports on the Company's financial statements for the fiscal years
ended December 31, 1997 and 1996 did not contain an adverse opinion or
disclaimer of opinion and were not qualified or modified as to uncertainty,
audit scope or accounting principles. During fiscal 1996 and 1997 and the
subsequent interim period preceding this change, there were no disagreements
between the Company and KPMG on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedures which,
if not resolved to KPMG's satisfaction, would have caused them to make reference
to the subject of such disagreement in connection with their reports.
The Board of Directors recommends that the stockholders vote for the
ratification of the selection of Ernst & Young as independent public accountant
for the Company for the year ending December 31, 1998.
Stockholder ratification of the selection of Ernst & Young as the Company's
independent public accountant is not required by the Company's Bylaws or
otherwise. However, the Board is submitting the selection of Ernst & Young to
the stockholders for ratification as a matter of good corporate practice. If the
stockholders fail to ratify the selection, the Board of Directors will consider
whether to retain that firm. Even if the selection is ratified, the Board of
Directors in its discretion may direct the appointment of a different
independent public accounting firm at any time during the year if it determines
that such a change would be in the best interests of the Company and its
stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 2.
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<PAGE>
STOCKHOLDER PROPOSALS
Stockholder proposals must be received by the Company at its principal offices
not later than December 26, 1998 in order for them to be considered for
inclusion in the Company's Proxy Statement with respect to the 1999 Annual
Meeting. No such proposals were received with respect to the 1998 Annual
Meeting.
COMPLIANCE WITH SECTION 16 OF THE SECURITIES EXCHANGE ACT OF 1934
Directors and executive officers are required to comply with section 16 of the
Securities Exchange Act of 1934, which requires generally that such persons file
reports on Form 4 with the Securities and Exchange Commission on or before the
tenth day of the month following any month in which they engage in any
transaction in the Company's Common Stock. King Owyang filed one Form 4 late
with respect to transactions that occurred in the fiscal year ended December 31,
1997. The late Form 4 reflected two transactions in the Company's Common Stock.
ANNUAL REPORT (FORM 10-K)
Upon receipt of a written request from any stockholder, the Company will provide
such stockholder, without charge, a copy of the Company's Annual Report to the
Securities and Exchange Commission on Form 10-K for the fiscal year ended
December 31, 1997, including the financial statements and the schedule thereto.
Stockholders desiring a copy of Form 10-K should send their written request to
the Secretary, Siliconix incorporated, 2201 Laurelwood Road, Santa Clara,
California 95054. If a stockholder making such a request is not a record owner
of the Company's Common Stock, the request of such stockholder must contain a
good-faith representation that, as of August 5, 1998, such stockholder was a
beneficial owner of Common Stock.
MISCELLANEOUS
The only business which the Board of Directors intends to present to the meeting
is the election of a Board of Directors for the ensuing year and the
ratification of the Company's accountants for the current year. The Board of
Directors is not aware at the time of solicitation of the enclosed proxy of any
other matter which may be presented for action at the meeting. In the event that
any other matter should come before the meeting for action, management will vote
the enclosed proxy in such manner as the named proxies determine in accordance
with their best judgment.
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<PAGE>
BY ORDER OF THE BOARD OF DIRECTORS
DAVID M. ACHTERKIRCHEN
Secretary
August 12, 1998
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<PAGE>
SILICONIX INCORPORATED
ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 10, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints and constitutes Everett Arndt and King Owyang,
or either of them, as proxies, each with full power of substitution, to
represent and to vote, as designated below, all shares of the Common Stock of
Siliconix incorporated held by the undersigned at the Annual Meeting of
Stockholders to be held on Thursday, September 10, 1998, at 4:00 p.m., or at any
adjournment or adjournments thereof, for the following purposes, described in
the Proxy Statement dated August 12, 1998, accompanying the notice of said
meeting:
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
Please mark your votes as indicated in this example [X]
1. ELECTION OF DIRECTORS.
WITHHOLD
FOR AUTHORITY to vote FOR
all nominees for all nominees all nominees except: _____________
[ ] [ ] [ ]
E. Arndt, L. Lipcaman, K. Owyang, G. Smith
2. RATIFICATION OF APPOINTMENT OF ERNST & YOUNG LLP.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the meeting.
I plan to attend the meeting [ ]
I do not plan to attend the meeting [ ]
Signature(s) ___________________________ Dated ___________________, 1998
Please sign exactly as name appears above. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
