[ACTEL LOGO OMITTED]
ACTEL CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held on May 28, 1999
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Actel
Corporation, a California corporation (the "Company"), will be held on May 28,
1999, at 9:00 a.m., local time, at the principal executive offices of the
Company, located at 955 East Arques Avenue, Sunnyvale, California 94086, for the
following purposes:
1. To elect directors to serve until the next Annual Meeting
of Shareholders and until their successors are elected.
2. To ratify the appointment of Ernst & Young LLP as the
Company's independent auditors for the fiscal year ending January 2,
2000.
3. To transact such other business as may properly come before
the Annual Meeting or any adjournments thereof.
Only shareholders of record at the close of business on March 29, 1999,
are entitled to notice of and to vote at the Annual Meeting.
All shareholders are cordially invited to attend the Annual Meeting in
person. However, to assure your representation at the Annual Meeting, you are
urged to sign and return the enclosed Proxy as promptly as possible in the
postage-prepaid, self-addressed envelope enclosed for that purpose. Any
shareholder attending the Annual Meeting may vote in person even if such
shareholder has returned a proxy.
BY ORDER OF THE BOARD OF DIRECTORS
David L. Van De Hey
Secretary
Sunnyvale, California
April 20, 1999
<PAGE>
ACTEL CORPORATION
--------------------------------------
PROXY STATEMENT FOR
1999 ANNUAL MEETING OF SHAREHOLDERS
The enclosed Proxy is solicited on behalf of the Board of Directors of
Actel Corporation, a California corporation (the "Company"), for use at the
Annual Meeting of Shareholders to be held on Friday, May 28, 1999, at 9:00 a.m.,
local time, and at any adjournments thereof, for the purposes set forth herein
and in the accompanying Notice of Annual Meeting of Shareholders. The Annual
Meeting will be held at the principal executive offices of the Company, which
are located at 955 East Arques Avenue, Sunnyvale, California 94086. The
Company's telephone number at that address is (408) 739-1010.
These proxy solicitation materials were mailed on or about April 23,
1999, to all shareholders entitled to vote at the Annual Meeting.
INFORMATION CONCERNING SOLICITATION AND VOTING
Record Date
Holders of record of the Company's Common Stock at the close of
business on March 29, 1999 (the "Record Date"), are entitled to notice of and to
vote at the Annual Meeting. At the Record Date, 21,460,317 shares of the
Company's Common Stock were issued and outstanding.
Revocability of Proxies
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before its use by (i) delivering to the Secretary
of the Company a written notice of revocation or a duly executed proxy bearing a
later date or (ii) attending the Annual Meeting and voting in person.
Voting and Solicitation
Each shareholder is entitled to one vote for each share held on all
matters.
This solicitation of proxies is made by the Company, and all related
costs will be borne by the Company. In addition, the Company may reimburse
brokerage firms and other persons representing beneficial owners of shares for
their expenses in forwarding solicitation material to such beneficial owners.
Original solicitation of proxies by mail may be supplemented by telephone,
telefacsimile, or personal solicitation, without payment of additional
compensation, by directors, officers, or regular employees of the Company.
Required Vote
The quorum required to conduct business at the Annual Meeting or any
adjournments thereof is a majority of the shares of Common Stock issued and
outstanding on the Record Date. If a quorum is present, the five candidates
receiving the highest number of affirmative votes shall be elected directors;
votes against any candidate and votes withheld shall have no legal effect. On
all other proposals set forth herein, the affirmative vote of the majority of
the shares represented at the Annual Meeting and "voting" shall be the act of
the shareholders.
Although there is no definitive statutory or case law in California as
to the proper treatment of abstentions and broker nonvotes, the Company believes
that both abstentions and broker nonvotes should be counted for purposes of
determining the presence or absence of a quorum for the transaction of business.
The Company also believes that neither abstentions nor broker nonvotes should be
counted for purposes of determining the total number of shares represented and
"voting" on each matter submitted to a vote of the shareholders. In the absence
of controlling precedent to the contrary, the Company intends to treat
abstentions and broker nonvotes in the manner described in this paragraph.
Deadline for Receipt of Shareholder Proposals
Proposals of shareholders of the Company that are intended to be
presented by such shareholders at the Company's 2000 Annual Meeting of
Shareholders must be received by the Company no later than December 25, 1999, in
order to be considered for inclusion in the proxy statement and form of proxy
relating to that meeting.
Share Ownership
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock by each person who is known
to the Company to have owned beneficially more than five percent of the
outstanding shares of the Company's Common Stock as of the Record Date:
<TABLE>
<CAPTION>
Amount and
Nature of
Beneficial Percent of
Name and Address of Beneficial Owner Ownership Class (1)
- ---------------------------------------------------------------------------------- ---------------- ----------------
<S> <C> <C>
Crabbe Huson Group, Inc......................................................... 3,223,117 (2) 15.0%
121 SW Morrison, Suite 1400
Portland, Oregon 97204
Thomson Horstmann & Bryant, Inc................................................. 1,171,950 (3) 5.5%
Park 80 West, Plaza Two
Saddle Brook, New Jersey 07663
Mr. Jeffrey N. Vinik............................................................ 2,053,800 (4) 9.6%
260 Franklin Street
Boston, Massachusetts 02110
- ---------------------------------------
<FN>
(1) Calculated as a percentage of shares of Common Stock outstanding as of
the Record Date.
(2) As reported by the beneficial owner as of December 31, 1998, in a
Schedule 13G (Amendment No. 1) filed with the Securities and Exchange
Commission ("SEC") and dated February 12, 1999, the beneficial owner,
which is an investment adviser registered under Section 203 of the
Investment Advisers Act of 1940, has shared voting power with respect
to 2,401,617 shares of Common Stock and shared dispositive power with
respect to all of the shares of Common Stock beneficially owned. The
beneficial owner does not directly own any shares of Common Stock and
disclaims beneficial ownership of all shares owned by each of its
clients and employees and also disclaims that a "group" within the
meaning of Rule 13d-5(b) under the Securities Exchange Act of 1934
("Exchange Act") has been or will be formed.
(3) As reported by the beneficial owner as of December 31, 1998, in a
Schedule 13G filed with the SEC and dated January 22, 1999, the
beneficial owner, which is an investment adviser registered under
Section 203 of the Investment Advisers Act of 1940, has sole voting
power with respect to 793,500 shares of Common Stock, shared voting
power with respect to 18,500 shares of Common Stock, and sole
dispositive power with respect to all of the shares of Common Stock
beneficially owned.
(4) As reported by the beneficial owner as of December 31, 1998, in a
Schedule 13G (Amendment No. 1) filed with the SEC and dated February
16, 1999, Vinik Partners, L.P. ("Vinik Partners") has the power to
dispose of and the power to vote the 912,100 shares of Common Stock
beneficially owned by it, which power may be exercised by its general
partner, VGH Partners, L.L.C. ("VGH"). VGH owns directly no shares of
Common Stock. By reason of the provisions of Rule 13d-3 of the Exchange
Act, VGH may be deemed to own beneficially the shares owned by Vinik
Partners. Vinik Overseas Fund, Ltd. ("Vinik Overseas") is a party to an
investment management agreement with Vinik Asset Management, L.P. ("VAM
LP") pursuant to which VAM LP has investment authority with respect to
securities held in such account. Such authority includes the power to
dispose of and the power to vote the 1,141,700 shares of Common Stock
held in such account. Such power may be exercised by VAM LP's general
partner, Vinik Asset Management, L.L.C. ("VAM LLC"). Neither VAM LP nor
VAM LLC owns directly any shares of Common Stock. By reason of the
provisions of Rule 13d-3 of the Exchange Act, VAM LP and VAM LLC may
each be deemed to own beneficially shares held by Vinik Overseas. Mr.
Vinik, as the senior managing member of VGH and VAM LLC, and Messrs.
Michael S. Gordon and Mark D. Hostetter, as managing members thereof,
have shared power to dispose of and shared power to vote the Common
Stock beneficially owned by VGH and VAM LLC. Messrs. Vinik, Gordon, and
Hostetter own directly no shares of Common Stock. By reason of the
provisions of Rule 13d-3 of the Exchange Act, each may be deemed to
beneficially own the shares beneficially owned by Vinik Partners and by
Vinik Overseas.
</FN>
</TABLE>
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
Nominees
A board of five directors is to be elected at the Annual Meeting.
Unless otherwise instructed, the proxy holders will vote the proxies received by
them for the Company's nominees named below. If any nominee of the Company is
unable or declines to serve as a director at the time of the Annual Meeting, the
proxies will be voted for any nominee who shall be designated by the present
Board of Directors to fill the vacancy. The Company is not aware of any nominee
who will be unable or will decline to serve as a director. The term of office of
each person elected as a director will continue until the next Annual Meeting
and until a successor has been elected.
The Board of Directors recommends that shareholders vote "FOR" the
nominees listed below:
<TABLE>
<CAPTION>
Director
Name of Nominee Age Principal Occupation Since
- ------------------------------------------------------- ----- ----------------------------------------- -----------
<S> <C> <C> <C>
John C. East........................................ 54 President and Chief Executive Officer 1988
Actel Corporation
Jos C. Henkens (1)(2)............................... 46 General Partner 1988
Advanced Technology Ventures
Jacob S. Jacobsson (2).............................. 45 President and Chief Executive Officer 1998
SCS Corporation
Frederic N. Schwettmann (1)(2)...................... 59 Retired 1990
Robert G. Spencer (1)............................... 55 Principal 1989
The Spencer Group
- ---------------------------------------
<FN>
(1)......Member of Audit Committee.
(2)......Member of Compensation Committee.
</FN>
</TABLE>
Mr. East has served as President, Chief Executive Officer, and a
director of the Company since December 1988. Mr. East also serves, at the
Company's request, as a director of Adaptec, Inc. and SCS Corporation, a private
company located in San Diego.
Mr. Henkens has been a director of the Company since April 1988. He
also served as a director of the Company from October 1985 to July 1986. Mr.
Henkens has been a general partner of Advanced Technology Ventures, a venture
capital firm, for the past ten years. Mr. Henkens also serves as a director of
Accel Graphics, Inc., Credence Systems Corporation, Objectshare, Inc., and
various private companies.
Mr. Jacobsson has been a director of the Company since May 1998. He has
been President, Chief Executive Officer, and a director of SCS Corporation, a
privately-held, fabless semiconductor company in the Radio Frequency
Identification area. Mr. Jacobsson also serves as a director of another private
company.
Mr. Schwettmann has been a director of the Company since April 1990. He
is retired. Mr. Schwettmann was President, Chief Operating Officer, and a
director of Read-Rite Corporation, the leading independent supplier of thin-film
magnetic recording heads for Winchester disk drives, from May 1993 until
September 1997. From June 1990 to May 1993, Mr. Schwettmann served on the
Company's Board of Directors as the representative of Hewlett-Packard Company,
where he was Vice President and General Manager of the Circuit Technologies
Group. Mr. Schwettmann also serves as a director of SDL Incorporated.
Mr. Spencer has been a director of the Company since February 1989. He
has been the principal of The Spencer Group, a consulting firm, for the past
five years.
There is no family relationship between any director or executive
officer of the Company and any other director or executive officer of the
Company.
Board Meetings and Committees
During the Company's 1998 fiscal year, which ended January 3, 1999, the
Board of Directors held five meetings, the Board's Audit Committee held three
meetings, and the Board's Compensation Committee held two meetings. No director
attended fewer than 75% of the aggregate of (i) the number of meetings of
regularly scheduled and special meetings of the Board of Directors (held during
the period for which he has been a director) and (ii) the total number of
meetings held by all committees of the Board of Directors on which he served
(during the periods that he served).
The Audit Committee, which currently consists of Messrs. Henkens,
Schwettmann, and Spencer, reviews the results and scope of the audit and other
services provided by the Company's independent auditors. The Compensation
Committee, which currently consists of Messrs. Henkens, Jacobsson, and
Schwettmann, approves salary, benefit, and incentive compensation matters. The
Board of Directors does not have a nominating committee or a committee
performing the functions of a nominating committee.
Director Compensation
Cash Compensation
Directors who are not employees of the Company receive compensation for
their services as directors at the rate of $1,500 per Board meeting attended and
$1,000 per committee meeting attended. In addition, nonemployee directors
receive an annual retainer of $12,000. Directors are reimbursed for reasonable
out-of-pocket expenses incurred in the performance of their duties.
1993 Directors' Stock Option Plan
The Company's 1993 Directors' Stock Option Plan (the "Director Plan")
provides for the grant of nonstatutory stock options to nonemployee directors of
the Company. If the Company's nominees are elected, four of the Company's
directors (Messrs. Henkens, Jacobsson, Schwettmann, and Spencer) will be
eligible to receive option grants under the Director Plan.
<PAGE>
PROPOSAL NO. 2 -- RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young LLP to audit the
financial statements of the Company for the current fiscal year, which ends
January 2, 2000. The Board of Directors recommends that shareholders vote "FOR"
ratification of the selection of Ernst & Young LLP as the Company's independent
auditors. In the event of a negative vote, the Board will reconsider its
selection.
Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting, will have the opportunity to make a statement if they so desire,
and are expected to be available to respond to appropriate questions.
OTHER INFORMATION
Security Ownership of Management
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of the Record Date by (i)
each director, (ii) each officer named in the Summary Compensation Table, and
(iii) all directors and officers as a group:
<TABLE>
<CAPTION>
Shares Percentage
Beneficially Beneficially
Name Owned (1) Owned (2)
- ---------------------------------------------------------------------------------- --------------- -----------------
<S> <C> <C>
John C. East (3)................................................................ 271,147 1.3%
Carl N. Burrow (4).............................................................. 14,650 *
Esmat Z. Hamdy (5).............................................................. 61,290 *
Jos C. Henkens (6).............................................................. 14,422 *
Jacob S. Jacobsson (7).......................................................... 3,750 *
Henry L. Perret (8)............................................................. 33,275 *
Frederic N. Schwettmann (9)..................................................... 20,000 *
Robert J. Smith II (10)......................................................... 46,233 *
Robert G. Spencer (9)........................................................... 32,666 *
All Directors and Executive Officers as a Group (14 persons) (11)............... 559,910 2.6%
- ---------------------------------------
<FN>
* Less than one percent.
(1) Except as indicated in the footnotes to this table and pursuant to
applicable community property laws, the persons and entities named in
the table have sole voting and sole investment power with respect to
all shares of Common Stock beneficially owned.
(2) Calculated as a percentage of shares of Common Stock outstanding as of
the Record Date.
(3) Includes 193,000 shares issuable pursuant to stock options that are
exercisable within 60 days after the Record Date.
(4) Includes 12,284 shares issuable pursuant to stock options that are
exercisable within 60 days after the Record Date.
(5) Includes 22,235 shares issuable pursuant to stock options that are
exercisable within 60 days after the Record Date.
(6) Includes 10,625 shares issuable pursuant to stock options that are
exercisable within 60 days after the Record Date.
(7) Includes 3,750 shares issuable pursuant to stock options that are
exercisable within 60 days after the Record Date.
(8) Includes 27,834 shares issuable pursuant to stock options that are
exercisable within 60 days after the Record Date.
(9) Includes 20,000 shares issuable pursuant to stock options that are
exercisable within 60 days after the Record Date.
(10) Includes 40,998 shares issuable pursuant to stock options that are
exercisable within 60 days after the Record Date.
(11) Includes 407,980 shares issuable pursuant to stock options that are
exercisable within 60 days after the Record Date.
</FN>
</TABLE>
Certain Transactions
On July 24, 1997, the Company lent $349,000.00 to Robert J. Smith II
and his spouse in connection with Mr. Smith's employment by Actel as Vice
President of Software and the consequent relocation to California of Mr. and
Mrs. Smith, who jointly and severally executed and delivered a full recourse
promissory note to the Company. Under the terms of the promissory note, interest
accrues every six months and upon any payment, whether at the stated maturity
date or upon prepayment, at the rate of 5.98% per annum, and all accrued
interest is added to the principal every six months. The principal, including
all compounded interest, and all accrued interest thereon is due and payable on
the earlier of (i) thirty (30) days after the sale of the Smiths' Austin, Texas
residence and (ii) July 24, 2000. The largest aggregate indebtedness outstanding
at any time during 1999 was $370,182.20, and there is no indebtedness currently
outstanding.
Executive Compensation
Summary of Officer Compensation
The following table sets forth information concerning the compensation
of the five mostly highly compensated executive officers who were serving as
executive officers of the Company at the end of the last completed fiscal year:
<TABLE>
<CAPTION>
Summary Compensation Table (1)
Long Term
Compensation
Annual Compensation Awards
---------------------------------------------- -----------------
Securities
Other Annual Underlying
Name and Principal Position Year Salary Bonus (2) Compensation Options
- ----------------------------------------- ------- ------------ ------------ ------------------ -----------------
<S> <C> <C> <C> <C> <C>
John C. East........................... 1998 $ 328,468 $ 92,643 $ 0 120,000
President and 1997 319,731 36,323 0 90,000
Chief Executive Officer 1996 278,609 237,375 0 60,000
Carl N. Burrow......................... 1998 218,750 51,975 0 108,333
Vice President of Marketing 1997 144,995 42,225 5,750 (3) 9,342
Esmat Z. Hamdy......................... 1998 237,975 55,787 0 65,000
Senior Vice President of 1997 212,908 21,517 0 23,700
Technology & Operations 1996 192,167 129,765 0 49,613 (4)
Henry L. Perret........................ 1998 194,701 47,025 0 92,998 (5)
Vice President of Finance & Chief 1997 154,064 17,362 58,219 (6) 51,125
Financial Officer
Robert J. Smith II..................... 1998 243,316 56,767 2,137 (7) 145,000 (8)
Vice President of Software 1997 180,683 16,784 65,182 (9) 91,000
- ---------------------------------------
<FN>
(1) Except as set forth in this table, there was no reportable compensation
awarded to, earned by, or paid to the named executive officers in 1998.
(2) The Company paid bonuses in the year following that in which the
bonuses were earned.
(3) Other compensation in 1997 related to car allowance.
(4) Includes 21,750 options granted in 1995 that were repriced in 1996.
(5) Includes 26,250 options granted in 1997 that were repriced in 1998.
(6) Other compensation in 1997 related to expenses incurred in relocating
to California and a relocation bonus.
(7) Other compensation in 1998 related to expenses incurred in relocating
to California.
(8) Includes 75,000 options granted in 1997 that were repriced in 1998.
(9) Other compensation in 1997 related to expenses incurred in relocating
to California and a relocation bonus.
</FN>
</TABLE>
<PAGE>
Option Grants
The following table sets forth certain information with respect to
stock options granted during 1998 to each of the executive officers named in the
Summary Compensation Table:
<TABLE>
<CAPTION>
Option Grants in Last Fiscal Year
Potential Realizable Value at Assumed
Annual Rates of Stock Price Appreciation
Individual Grants (1) for Option Term (2)
------------------------------------------------------- ------------------------------------------
% of Total
Number of Granted to
Securities Employees Per Share
Name Underlying in Fiscal Exercise Expiration
Options (3) Year Price Date 0% 5% 10%
- ------------------------------- ------------- ------------ ------------- ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
John C. East................. 120,000 (4) 3.32% $ 10.063 07/28/08 $ 0 $ 759,390 $ 1,924,444
Carl N. Burrow............... 40,000 (5) 1.12 11.125 01/09/08 0 279,858 709,215
24,583 (6) 0.68 11.875 01/23/08 0 183,589 465,250
43,750 (7) 1.21 10.063 07/28/08 0 276,861 701,620
Esmat Z. Hamdy............... 20,000 (8) 0.55 11.750 01/26/08 0 147,790 374,529
45,000 (9) 1.25 10.063 07/28/08 0 284,771 721,667
Henry L. Perret.............. 26,250 (10) 0.73 11.750 01/26/08 0 193,975 491,570
18,906 (6) 0.52 11.875 01/23/08 0 141,192 357,809
47,842 (11) 1.33 10.063 07/28/08 0 302,756 767,244
Robert J. Smith II........... 20,000 (12) 0.55 11.125 01/09/08 0 139,929 354,608
75,000 (13) 2.08 11.750 01/26/08 0 554,213 1,404,486
25,000 (6) 0.69 11.875 01/23/08 0 186,703 473,142
25,000 (14) 0.69 10.063 07/28/08 0 158,206 400,926
- --------------------------------------------
<FN>
(1) The exercise price of these options is equal to the fair market value
of the Company's Common Stock on the date of grant, as determined by
the Company's Board of Directors. The options expire 10 years from the
date of grant, are not transferable by the optionee (other than by will
or the laws of descent and distribution), and are exercisable during
the optionee's lifetime only by the optionee. To the extent exercisable
at the time of termination, options may be exercised within 30 days
following termination of the optionee's employment with the Company,
unless termination is the result of total and permanent disability, in
which case the options may be exercised at any time within six months
following termination, or unless termination is the result of death, in
which case the options become fully vested and may be exercised at any
time within 12 months following death by the optionee's estate or a
person who acquired the right to exercise the option by bequest or
inheritance.
(2) The 0%, 5%, and 10% assumed annual rates of appreciation are mandated
by the rules of the SEC and do not represent the Company's estimate or
projection of future Common Stock prices. The "potential realizable
value" at the assumed rates of appreciation were calculated using the
applicable exercise price as the base.
(3) Options vest and are fully exercisable upon an involuntary termination
other than "for cause," or a voluntary termination "for good reason,"
following a "change of control" of the Company.
(4) Option begins vesting as to 45,000 shares on December 31, 1998, at the
rate of 3,750 shares per quarter through December 31, 2001. The
remaining 75,000 shares vest 100% on August 1, 2002.
(5) Option begins vesting on October 27, 1997, and is exercisable quarterly
as to 9,712 shares in 1998, 9,943 shares in 99, 10,408 shares in 2000,
and 9,937 shares in 2001.
(6) Vests and is exercisable 100% six months following a "change of
control" of the Company.
(7) Option begins vesting as to 18,750 shares on December 31, 1998, at the
rate of 1,562 or 1,563 shares per quarter through December 31, 2001.
The remaining 25,000 shares vest 100% on August 1, 2002.
(8) Option begins vesting on January 26, 1998 at the rate of 1,250 shares
per quarter through January 26, 2002.
(9) Option begins vesting as to 20,000 shares on December 31, 1998, at the
rate of 1,250 shares per quarter through December 31, 2002. The
remaining 25,000 shares vest 100% on August 1, 2002.
(10) Option begins vesting on January 26, 1998, and is exercisable quarterly
as to 9,843 shares in 1998, 6,563 shares in 1999, 6,562 shares in 2000
and 3,282 shares in 2001.
(11) Option begins vesting as to 22,842 shares on December 31, 1998, and is
exercisable quarterly as to 10,437 shares in 1999, 8,188 shares in 2000
and 4,217 shares in 2001. The remaining 25,000 shares vest 100% on
August 1, 2002.
(12) Option begins vesting on November 17, 1997, and is exercisable
quarterly as to 7,000 shares in 1999, 7,000 shares in 2000 and 6,000
shares in 2001.
(13) Option begins vesting on January 26, 1998, and is exercisable quarterly
as to 32,812 shares in 1998, 18,750 shares in 1999, 18,750 shares in
2000 and 4,688 shares in 2001.
(14) Option vests 100% on August 1, 2002.
</FN>
</TABLE>
<PAGE>
Option Values
The following table sets forth certain information concerning the
number of options exercised during 1998 by the executive officers named in the
Summary Compensation Table, as well as the number and aggregate value of shares
covered by both exercisable and unexercisable stock options held by such
executive officers as of January 3, 1999, the end of the fiscal year.
<TABLE>
<CAPTION>
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year End Option Values
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Options at Fiscal Year-End Fiscal Year-End (1)
-------------------------- ----------------------------
Shares
Acquired Value Not Not
Name On Exercise Realized (2) Exercisable Exercisable Exercisable Exercisable
- ---------------------------------------------- ------------ ------------- ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
John C. East................................ 6,000 $ 70,500 192,000 360,000 $ 2,154,095 $ 2,722,875
Carl N. Burrow.............................. 30,161 241,653 2,188 124,583 9 1,045,364
Esmat Z. Hamdy.............................. 17,963 175,112 17,463 142,066 126,078 1,146,613
Henry L. Perret............................. 7,382 45,215 19,585 118,906 143,422 947,202
Robert J. Smith II.......................... 0 0 32,812 128,188 270,699 1,035,113
- ------------------------------------------------------
<FN>
(1) Calculated on the basis of the difference between the closing market
price as of the fiscal year end ($20.00) and the exercise price.
(2) Calculated on the basis of the difference between the closing market
price as of the exercise date and the exercise price, or in the case
where the exercised option is sold on the same day, the difference
between the sale price and the exercise price.
</FN>
</TABLE>
<PAGE>
Change-in-Control Arrangements
The Company and its executive officers have entered into Management
Continuity Agreements, which are designed to ensure continued service in the
event of a "change of control." The Agreements provide for accelerated vesting
of an officer's stock options if following a change of control the officer's
employment is terminated other than for "cause" or the officer voluntarily
terminates his or her employment "for good reason."
The Board of Director's Compensation Committee has granted to the
Company's executive officers options that vest six months after a "change of
control." These options are intended to approximate the benefit that the
executive officers would receive if they were eligible under the Company's
Employee Retention Plan. The Employee Retention Plan provides that all Company
employees other than executive officers who hold unvested stock options under
the Option Plan as of the date of any "change of control" of the Company shall
receive, upon remaining in the employ of the Company for six months following
the date of such change of control (or earlier, if terminated other than for
"cause" prior to the end of such six month period), an amount equal to one-third
of the aggregate "spread" on their unvested options as of the date of such
change of control. Payment shall be made in common stock of the acquirer. For
this purpose, the "spread" is defined as the difference between the
change-of-control price and the option exercise price.
"Change of control" is defined as (i) acquisition by any person of
beneficial ownership of more than 30% of the combined voting power of the
Company's then-outstanding securities; (ii) a change of the majority of the
Board of Directors within a two-year period; (iii) the consummation of a merger
or consolidation of the Company with any other corporation that has been
approved by the shareholders of the Company, other than a merger or
consolidation that would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent at least 50% of
the total voting power represented by the voting securities of the Company or
the surviving entity outstanding immediately after such merger or consolidation;
or (iv) approval by the shareholders of the Company of a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets.
Compensation Committee Report
The following report is provided to shareholders by the members of the
Compensation Committee of the Board of Directors.
Background
Since the Company's incorporation in 1986, the Compensation Committee,
which is a standing committee of the Board of Directors, has been primarily
responsible for establishing and reviewing the Company's management compensation
policies. Since the Company's initial public offering in August 1993, the
Compensation Committee has formally administered the Company's management
compensation policies and plans, including the 1986 Incentive Stock Option Plan
and the 1993 Employee Stock Purchase Plan. The Compensation Committee has the
same authority as the Board to act on all compensation matters, except for
actions requiring shareholder approval or related to the compensation of
directors.
No member of the Compensation Committee is a former or current officer
or employee of the Company. The current members of the Compensation Committee
are Jos C. Henkens, Jacob S. Jacobsson, and Frederic N. Schwettmann. Mr. Henkens
has been a member of the Compensation Committee since 1986, Mr. Jacobsson since
1998, and Mr. Schwettmann since 1993. Meetings of the Compensation Committee are
attended by the Company's Vice President of Human Resources, who provides
background and market information and makes executive compensation
recommendations but does not vote on any matters before the Compensation
Committee.
Compensation Policy
There are three major elements of the Company's executive compensation
program. The first element is annual cash compensation in the form of base
salary and incentive bonuses. The second element is long-term incentive stock
options, which are designed to align compensation incentives with shareholder
goals. The third element is compensation and employee benefits generally
available to all employees of the Company, such as the 1993 Employee Stock
Purchase Plan, health insurance, and a 401(k) plan.
The Compensation Committee establishes the compensation of each officer
principally by considering the average compensation for officers in similar
positions with 20 companies in the semiconductor Software, and CAE industries
that have annual revenues between $100 million and $999 million (the "Reference
Group"). The purpose of monitoring the Reference Group is to provide a stable
and continuing frame of reference for compensation decisions. Most of the
companies in the Reference Group are included in the Nasdaq Electronic Component
Stocks index (see "Company Stock Performance" below). The composition of the
Reference Group is subject to change from year to year based on the Committee's
assessment of comparability, including the extent to which the Reference Group
reflects changes occurring within the Company and in the industry as a whole.
The Company's policy is to have officer compensation near the average of the
Reference Group.
After analyzing Reference Group base salaries as compared with salaries
of the Company's officers, the Compensation Committee determines an annual
salary increase budget. In August 1998, the Committee approved base salary
increases averaging approximately 8% for the Company's officers. The salary
increase budget is then allocated among officers on the basis of individual
performance (during the preceding 12 months) against objectives related to their
respective areas of responsibility. Performance objectives are proposed by
individual officers, negotiated by the executive staff, and approved by the
Compensation Committee with the advice of the Chief Executive Officer.
Under the Company's Executive Bonus Plan for 1998, incentive cash
payments were based on the Company's revenues and profits, the achievement of
corporate goals, and the growth of the Company relative to its principal
competitors. The revenue and profitability objectives were established in the
Plan on a sliding scale, so that the percentage achievement of each was
determinable objectively at the end of the year. The corporate goals for 1998
included engineering, selling, marketing, operational, and financial objectives,
which were weighted in the order indicated. The engineering objectives included
silicon, software, and process goals. The selling objectives included design win
and hiring goals. The marketing objectives included training, sales collateral,
and product planning goals. The operational and financial objectives included
gross margin, cost reduction, and customer service goals. The revenue and
profitability objectives were each given 30% weight under the Executive Bonus
Plan and the corporate goals were given 40% weight. This measure of performance
was then to be multiplied by the target bonus under the Plan, which was 50% of
base salary for each officer (other than the Chief Executive Officer). This, in
turn, was then subject to a "competitive adjustment" multiple, which ranged from
70% to 150% and was also determinable objectively at the end of the year. In
1998, the Company achieved 50% (of 200%, or one-quarter) of the revenue and
profitability objectives, which equals 15% after applying the 30% weighting
factor. In January 1999, the Compensation Committee determined that the Company
had achieved 75% (of 100%, or three-quarters) of the corporate goals, which
equals 30% after applying the 40% weighting factor. The sum of these two
weighted numbers equals 45%, which was multiplied by the 50% target bonus under
the Plan. In 1998, the "competitive adjustment" multiple was neutral (i.e., 100%
of target). The result was bonus payments to officers (other than the Chief
Executive Officer) for 1998 that averaged approximately 22.5% of base salary.
Bonuses were paid under the Executive Bonus Plan in January of 1999. The
Committee believes the bonus amount for 1998 was reasonable in light of the
Company's operating results and performance relative to competitors.
The Company believes that executive officers should hold substantial,
long-term equity stakes in the Company so that the interests of executive
officers will coincide with the interests of the shareholders. As a result,
stock or stock options constitute a significant portion of the compensation paid
by the Company to its officers. After analyzing the practices of the Reference
Group, the Compensation Committee determines an annual budget for option grants
to the Company's employees and officers. In granting stock options to officers,
the Compensation Committee considers a number of factors, such as the officer's
position, responsibility, and equity interest in the Company, and evaluates the
officer's past performance and future potential to influence the long-term
growth and profitability of the Company. After taking these considerations into
account, the Compensation Committee in 1998 granted options to purchase 120,000,
43,750, 45,000, 47,842, and 25,000 shares of Common Stock to Messrs. East,
Burrow, Hamdy, Perret, and Smith, respectively. All of such options were granted
at an exercise price of $10.0625 per share, which was the value of the Company's
Common Stock on the date of grant.
Compensation of Chief Executive Officer
The Compensation Committee generally uses the same factors and criteria
described above in making compensation decisions regarding the Chief Executive
Officer. In 1998, Mr. East's annual base salary was adjusted from $318,000 to
$343,122, an increase of 8%. Mr. East's 1998 bonus was determined under the
Company's Executive Bonus Plan in the manner described above (except that his
target bonus is equal to 60% of his base salary) and resulted in a payment of
$92,643, or approximately 27% of his base salary.
Repricing of Options
On January 16, 1998, the Compensation Committee unanimously approved
management's request that the holders of outstanding options to purchase Common
Stock of the Company at exercise prices in excess of $11.75 per share, the
then-current fair market value of the Company's Common Stock, be offered the
opportunity to exchange their higher priced options for new options with an
exercise price of $11.75. The options of officers were not repriced, except for
those individuals who had become officers during the previous year. Options
representing the right to purchase a total of 1,702,141 shares of Common Stock
were repriced, of which 101,250 (or approximately 6%) were held by executive
officers. The Committee also approved management's recommendation that the
exchanged options generally not be exercisable for six months. The Compensation
Committee concluded that the exchange would greatly assist the Company in
retaining qualified employees in an extraordinarily competitive environment and
in maintaining a highly motivated group of employees, and therefore was in the
best interests of the Company and its shareholders. In deciding to approve
management's repricing recommendations, the Committee was of the opinion that
the downturn in the value of the Company's Common Stock was more the result of
general market forces than the Company's performance. For example, the
then-current fair market value of the Company's Common Stock was only about 24%
higher than the Company's initial public offering price of $9.50, even though
the Company's annual revenues and earnings had more than doubled.
The following table sets forth information concerning the repricing of
options held by any executive officer while the Company has been a public
company.
<TABLE>
<CAPTION>
Option Repricings
Length of
Number of Market Original
Securities Price of Exercise Option Term
Underlying Stock at Price at New Remaining at
Options Time of Time of Exercise Date of
Name Date Repriced Repricing Repricing Price Repricing
- ------------------------------ ---------- -------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Michelle A. Begun............ 01/05/96 13,250 $10.625 $13.00 $10.625 9.5 Years
Esmat Z. Hamdy............... 01/05/96 21,750 $10.625 $13.00 $10.625 9.5 Years
Arthur S. Mandell............ 01/05/96 17,500 $10.625 $11.00 $10.625 7.8 Years
Arthur S. Mandell............ 01/05/96 21,750 $10.625 $13.00 $10.625 9.5 Years
Dennis F. Nye................ 01/05/96 10,176 $10.625 $11.00 $10.625 7.8 Years
Dennis F. Nye................ 01/05/96 21,750 $10.625 $13.00 $10.625 9.5 Years
Henry L. Perret.............. 01/26/98 26,250 $11.750 $16.38 $11.750 9.4 Years
Jeffrey M. Schlageter........ 01/05/96 21,750 $10.625 $13.00 $10.625 9.5 Years
Robert J. Smith II........... 01/26/98 75,000 $11.750 $21.13 $11.750 9.2 Years
David M. Sugishita........... 01/05/96 75,000 $10.625 $16.75 $10.625 9.5 Years
David L. Van De Hey.......... 01/05/96 32,500 $10.625 $13.00 $10.625 9.5 Years
</TABLE>
Deductibility of Executive Compensation
Beginning in 1994, the Code limited the federal income tax
deductibility of compensation paid to the Company's chief executive and to each
of the other four most highly compensated executive officers. For this purpose,
compensation can include, in addition to cash compensation, the difference
between the exercise price of stock options and the value of the underlying
stock on the date of exercise. The Company may deduct compensation with respect
to any of these individuals only to the extent that during any fiscal year such
compensation does not exceed $1 million or meets certain other conditions (such
as shareholder approval). Considering the Company's current compensation plans
and policy, the Company and the Compensation Committee believe that, for the
near future, there is little risk that the Company will lose any significant tax
deduction relating to executive compensation. If the deductibility of executive
compensation becomes a significant issue, the Company's compensation plans and
policy will be modified to maximize deductibility if the Company and the
Compensation Committee determine that such action is in the best interests of
the Company.
/s/ Jos C. Henkens
/s/ Jacob S. Jacobsson
/s/ Frederic N. Schwettmann
Compensation Committee Interlocks and Insider Participation
No member of the Compensation Committee is an officer or employee of
the Company or any of its subsidiaries, and no officer or employee of the
Company or any of its subsidiaries has served as a member of the Compensation
Committee since the Company's initial public offering.
Company Stock Performance
The following graph shows a comparison of cumulative total return for
the Company's Common Stock, The Nasdaq Stock Market (US), and Nasdaq Electronic
Component Stocks. In preparing the graph, it was assumed that (i) $100 was
invested on December 31, 1993, in the Company's Common Stock, The Nasdaq Stock
Market (US), and Nasdaq Electronic Component Stocks and (ii) all dividends were
reinvested.
Comparison of Cumulative Total Return
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Nasdaq Stock Market.................. $100 $ 98 $138 $170 $209 $293
Nasdaq Electronic Components Stocks.. $100 $110 $183 $317 $332 $513
Actel Corporation.................... $100 $ 72 $ 93 $207 $110 $174
</TABLE>
The closing price of the Company's Common Stock on December 31, 1998, was
$20.00. The closing price of the Company's Common Stock on April 20, 1999, was $
16.625.
<PAGE>
COMPLIANCE WITH SECTION 16(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company, all directors, officers, and beneficial
owners of more than ten percent of Common Stock of the Company filed with the
SEC on a timely basis all reports required by Section 16(a) of the Exchange Act
during the Company's most recent fiscal year, except that Mr. Jacobsson's Form 3
was filed late due to an error made in transmitting the report.
OTHER MATTERS
The Company knows of no other matters to be submitted to the Annual
Meeting. If any other matters properly come before the Annual Meeting, it is the
intention of the persons named in the enclosed proxy card to vote the shares
they represent as the Board of Directors may recommend.
BY ORDER OF THE BOARD OF DIRECTORS
David L. Van De Hey
Secretary
Dated: April 20, 1999
THE COMPANY WILL MAIL WITHOUT CHARGE TO ANY SHAREHOLDER UPON WRITTEN REQUEST A
COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED JANUARY 3,
1999, INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULE AND A LIST OF EXHIBITS.
REQUESTS SHOULD BE SENT TO INVESTOR RELATIONS, ACTEL CORPORATION, 955 EAST
ARQUES AVENUE, SUNNYVALE, CALIFORNIA 94086-4533.
<PAGE>
ACTEL CORPORATION
ANNUAL MEETING OF SHAREHOLDERS OF
May 28, 1998
9:00 a.m. Pacific Daylight Time
955 East Arques Avenue
Sunnyvale, CA 94086
PROXY
This proxy is solicited by the Board of Directors for use at the annual Meeting
on May 28, 1999. The shares of stock you hold in your account or in a dividend
reinvestment account will be voted as you specify below.
If no choice is specified, the proxy will be voted "FOR" Items 1 and 2.
By signing the proxy, you revoke all prior proxies and appoint John C. East and
Jos C. Henkens, and each of them, with full power of substitution, to vote your
shares on the mattes shown on the verse side and any other matters which may
come before the Annual Meeting and all adjournments.
See reverse for voting instructions.
<PAGE>
The Board of Directors Recommends a Vote FOR Items 1 and 2.
1. Election of Directors: 01 John C. East
02 Jos C. Henkens
03 Jacob S. Jacobsson
04 Frederic N. Schwettmann
05 Robert G. Spencer
-- Vote FOR all nominees -- Vote WITHHELD from all nominees
(Instructions: To withhold authority to
vote for any indicated nominee, write
the number(s) of the nominee(s) in the -----------------------------------
box provided to the right.)
2. To ratify the appointment of Ernst & -- FOR -- AGAINST -- ABSTAIN
Young LLP as the Company's independent
auditors.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION
IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL.
Address Change? Mark Box --
Indicate changes below:
Date:
---------------------------------
----------------------------------------
----------------------------------------
Signature(s) in Box.
Please sign exactly as your name(s)
appear on Proxy. If held in joint
tenancy, all persons must sign.
Trustees, administrators, etc., should
include title and authority.
Corporations should provide full name of
corporation and title of authorized
officer signing the proxy.
