<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant To Section 14(A) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240. 14a-11(c) or Rule 14a-12
RF MICRO DEVICES, INC.
----------------------
(Name of Registrant as Specified In Its Charter)
----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
RF MICRO DEVICES, INC.
7625 THORNDIKE ROAD
GREENSBORO, NORTH CAROLINA 27409-9421
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 28, 1998
TO THE SHAREHOLDERS OF RF MICRO DEVICES, INC.:
Notice is hereby given that the Annual Meeting of Shareholders of RF Micro
Devices, Inc. (the "Company") will be held on Tuesday, July 28, 1998 at 10:00
A.M. local time, at the Company's principal executive offices at 7625 Thorndike
Road, Greensboro, North Carolina, for the following purposes:
(1) To elect seven directors for one-year terms and until their
successors are duly elected and qualified;
(2) To ratify the appointment of Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending March 31, 1999; and
(3) To transact such other business as may properly come before the
meeting.
Pursuant to the provisions of the North Carolina Business Corporation Act,
June 15, 1998 has been fixed as the record date for the determination of holders
of Common Stock entitled to notice of and to vote at the Annual Meeting of
Shareholders or any adjournment thereof. Accordingly, only shareholders of
record at the close of business on the record date will be entitled to notice of
and to vote at the Annual Meeting or any adjournment thereof. It is important
that your shares of the Company's Common Stock be represented at this meeting in
order that the presence of a quorum may be assured.
A copy of the Annual Report containing the financial statements of the
Company for the fiscal year ended March 31, 1998 is enclosed herewith.
By Order of the Board of Directors
/s/ Powell T. Seymore
Powell T. Seymour
Secretary
June 26, 1998
Even if you plan to attend the meeting in person, please date and execute
the enclosed proxy and mail it promptly. If you attend the meeting, you may
revoke your proxy and vote your shares in person. A postage-paid,
return-addressed envelope is enclosed.
<PAGE> 3
RF MICRO DEVICES, INC.
7625 THORNDIKE ROAD
GREENSBORO, NORTH CAROLINA 27409-9421
PROXY STATEMENT
The enclosed proxy, for use only at the Annual Meeting of Shareholders to
be held July 28, 1998, at 10:00 A.M. local time, and any adjournment thereof, is
solicited on behalf of the Board of Directors of RF Micro Devices, Inc. (the
"Company"). The approximate date this proxy material is first being sent to
shareholders is July 2, 1998. Such solicitation is being made by mail and may be
made in person or by fax or telephone by officers or employees of the Company.
All expenses incurred in such solicitation will be paid by the Company. Banks,
brokerage houses and other institutions, nominees and fiduciaries will be
requested to forward the soliciting material to beneficial owners and to obtain
authorization for the execution of proxies. The Company will, upon request,
reimburse such parties for their reasonable expenses in forwarding proxy
material to beneficial owners.
The accompanying proxy is for use at the meeting if a shareholder either
will be unable to attend in person or will attend but wishes to vote by proxy.
The proxy may be revoked by the shareholder at any time before it is exercised
by filing with the Secretary of the Company an instrument revoking it, filing a
duly executed proxy bearing a later date or by attending the meeting and
electing to vote in person. All shares of the Company's common stock (the
"Common Stock") represented by valid proxies received pursuant to this
solicitation, and not revoked before they are exercised, will be voted in the
manner specified therein. If no specification is made, the proxies will be voted
in favor of: (1) electing seven directors for one-year terms expiring in 1999;
and (2) ratifying the appointment of Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending March 31, 1999.
Under the laws of North Carolina, the persons receiving a plurality of the
votes cast by the shares entitled to vote will be elected as directors. The
proposal to ratify the appointment of auditors for 1998 will be approved if the
votes cast in favor of the proposal exceed the votes cast against it.
Abstentions, shares which are withheld as to voting with respect to nominees for
director and shares held as of record by a broker, as nominee, that are not
voted with respect to the proposals will not be counted as a vote in favor of or
against such proposals and, therefore, will have no effect on the proposal to
elect the nominees for directors or the proposal to ratify the appointment of
auditors.
VOTING SECURITIES OUTSTANDING
Pursuant to the provisions of the North Carolina Business Corporation Act,
June 15, 1998 has been fixed as the record date for the determination of holders
of Common Stock entitled to notice of and to vote at the Annual Meeting of
Shareholders. Each share of the Company's Common Stock issued and outstanding on
June 15, 1998 is entitled to one vote on all proposals at the meeting, except
that shares held in a fiduciary capacity by the Company may only be voted in
accordance with the instruments creating the fiduciary capacity. Holders of
shares of Common Stock vote together as a voting group on all proposals. As of
the close of business on June 15, 1998, there were 16,141,141 shares of Common
Stock of the Company outstanding and entitled to vote.
<PAGE> 4
SECURITY OWNERSHIP
The following table sets forth information with respect to the beneficial
ownership of Common Stock as of June 15, 1998 by (i) each person known by the
Company to own beneficially five percent or more of the Company's outstanding
shares of Common Stock, (ii) each director and nominee for director of the
Company, (iii) the Named Executives (as defined in "Compensation of Executive
Officers," below) and (iv) all current directors and executive officers as a
group. Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission (the "Commission"). In computing the number
of shares beneficially owned by a person and the percentage ownership of that
person, shares of Common Stock subject to options or warrants held by that
person that are currently exercisable or that are or may become exercisable
within 60 days of June 15, 1998 are deemed outstanding. Such shares, however,
are not deemed outstanding for the purposes of computing the percentage
ownership of any other person. Except as indicated in the footnotes to this
table and pursuant to applicable community property laws, each shareholder named
in the table has sole voting and investment power with respect to the shares set
forth opposite such shareholder's name.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
---------------------
NUMBER OF
SHARES PERCENT
---------- --------
<S> <C> <C>
TRW Inc.(1)................................................. 5,621,487 32.8
Robert G. Paul(2)........................................... 987,562 6.1
Allen Telecom(3)............................................ 965,224 6.0
Brantley Ventures Partners II, L.P.(4)...................... 923,449 5.7
Walter H. Wilkinson, Jr.(5)................................. 765,293 4.7
William J. Pratt(6)......................................... 357,575 2.2
Dr. Albert E. Paladino(7)................................... 352,780 2.2
Powell T. Seymour(8)........................................ 134,223 *
Jerry D. Neal(9)............................................ 112,536 *
David A. Norbury(10)........................................ 111,743 *
Erik H. van der Kaay(11).................................... 22,669 *
Arthur E. Geissberger(12)................................... 14,000 *
Robert C. Fleming(13)....................................... 10,000 *
Directors and executive officers
as a group (12 persons)(14)............................... 1,916,501 11.8
</TABLE>
- ---------------
* Indicates less than one percent
(1) Includes 1,000,000 shares of Common Stock issuable upon the exercise of a
warrant issued to TRW Inc. ("TRW") that is currently exercisable. Terri D.
Zinkiewicz, who is a director of the Company, is Controller of TRW's Space
and Electronics Group. Ms. Zinkiewicz does not hold any voting or
investment power over such shares. TRW's address is 1900 Richmond Road,
Cleveland, Ohio 44124.
(2) Includes 965,224 shares of Common Stock held by Allen Telecom Inc. ("Allen
Telecom"). Mr. Paul is President and Chief Executive Officer of Allen
Telecom. Mr. Paul disclaims beneficial ownership of such shares.
(3) Does not include (i) 22,669 shares of Common Stock held by Erik H. van der
Kaay, who is a director of the Company and who was, until March 1998,
Executive Vice President of Allen Telecom, (ii) 22,338 shares of Common
Stock held by Robert G. Paul, who is President and Chief Executive Officer
of Allen Telecom, (iii) 25,338 shares of Common Stock held by Phillip W.
Colburn, who is Chairman of the Board of Directors of Allen Telecom, and
(iv) 12,609 shares of Common Stock held by Robert A. Youdelman, who is
Executive Vice President and Chief Financial Officer of Allen Telecom.
Allen Telecom's address is 25101 Chagrin Boulevard, Beachwood, Ohio 44122.
(4) Includes 15,000 shares held by Brantley Capital Corporation, which is
affiliated with Brantley Ventures Partners II, L.P. ("Brantley").
Brantley's address is Suite 1150, Tower East, 20600 Chagrin Boulevard,
Cleveland, Ohio 44122.
2
<PAGE> 5
(5) Includes (i) 755,293 shares of Common Stock held by Kitty Hawk Capital
Limited Partnership II and (ii) 10,000 shares of Common Stock issuable upon
the exercise of options granted under the Nonemployee Directors' Stock
Option Plan (the "Directors' Plan"). See "Compensation of Directors,"
below. Mr. Wilkinson, who is a director of the Company, is a general
partner of Kitty Hawk Partners Limited Partnership, which is a general
partner of Kitty Hawk Capital Limited Partnership II. Mr. Wilkinson shares
voting and investment power over such shares held by Kitty Hawk Capital
Limited Partnership II with W. Chris Hegele, who is also a general partner
of Kitty Hawk Partners Limited Partnership.
(6) Includes 32,575 shares of Common Stock issuable upon the exercise of
options granted under the 1992 Option Plan. See "Compensation of Executive
Officers," below.
(7) Includes (i) 308,578 shares of Common Stock held by Advanced Technology
Ventures III, L.P. and (ii) 10,000 shares of Common Stock issuable upon the
exercise of options granted under the Directors' Plan. See "Compensation of
Directors," below. Dr. Paladino, who is a director of the Company, is a
general partner of ATV Associates III, L.P., which is a general partner of
Advanced Technology Ventures III, L.P. Dr. Paladino shares voting and
investment power over shares held by Advanced Technology Ventures III, L.P.
with Jos C. Henkens and Pieter J. Schiller, each of whom is also a general
partner of ATV Associates III, L.P. Dr. Paladino disclaims beneficial
ownership of such shares.
(8) Includes (i) 2,000 shares of Common Stock held by each of Leah B. Seymour
and Christopher M. Seymour, who are children of Mr. Seymour and (ii) 20,223
shares of Common Stock issuable upon the exercise of options granted under
the 1992 Option Plan. See "Compensation of Executive Officers," below. Does
not include 2,000 shares of Common Stock held by each of Wendy L. Hicks and
James M. Mecum, Jr., who are children of Mr. Seymour.
(9) Includes 20,759 shares of Common Stock issuable upon the exercise of
options granted under the 1992 Option Plan. See "Compensation of Executive
Officers," below. Does not include 2,000 shares of Common Stock held by
each of Jerry D. Neal, II and Judith M. Neal, and 2,500 shares of Common
Stock held by each of James A. Pendergrass and Annette L. Neal-Smith, all
of whom are children of Mr. Neal.
(10) Includes 18,857 shares of Common Stock issuable upon the exercise of
options granted under the 1992 Option Plan. See "Compensation of Executive
Officers," below.
(11) Includes 10,000 shares of Common Stock issuable upon the exercise of
options granted under the Directors' Plan. See "Compensation of Directors,"
below. Does not include 965,224 shares of Common Stock held by Allen
Telecom, of which Mr. van der Kaay was, until March 1998, Executive Vice
President.
(12) Includes 14,000 shares of common stock issuable upon the exercise of
options granted under the 1992 Option Plan. See "Compensation of Executive
Officers," below.
(13) Includes 10,000 shares of Common Stock issuable upon the exercise of
options granted under the Directors' Plan. See "Compensation of Directors,"
below.
(14) Includes (i) 308,578 shares of Common Stock held by Advanced Technology
Ventures III, L.P., of which Dr. Paladino is a general partner of the
general partner; (ii) 755,293 shares of Common Stock held by Kitty Hawk
Capital Limited Partnership II, of which Mr. Wilkinson is a general partner
of the general partner; (iii) 117,436 shares of Common Stock issuable upon
the exercise of options granted under the 1992 Option Plan; and (iv) 40,000
shares of Common Stock issuable upon the exercise of options granted under
the Director's Plan.
3
<PAGE> 6
PROPOSAL 1 -- ELECTION OF DIRECTORS
Pursuant to the Company's bylaws, the Board of Directors consists of seven
to nine members, as determined by the Board or the shareholders from time to
time. The Board has determined that the number of directors within the range
shall be seven. Directors are elected annually to serve for one-year terms and
until their successors are duly elected and qualified. There are no family
relationships among any of the directors or officers of the Company. All
nominees presently serve as directors. It is intended that the persons named in
the accompanying form of proxy will vote to elect the seven nominees listed
below as directors, unless authority so to vote is withheld. Although management
expects that each of the nominees will be available for election, in the event a
vacancy in the slate of nominees occurs, it is intended that shares of the
Company's Common Stock represented by proxies will be voted for the election of
a substitute nominee selected by the persons named in the accompanying form of
proxy.
The names of the nominees for election to the Board of Directors, their
principal occupations and certain other information with respect to such persons
are as follows.
NOMINEES FOR ELECTION AS DIRECTORS
<TABLE>
<CAPTION>
DIRECTOR OF
THE COMPANY
NAME AGE SINCE
- ---- --- -----------
<S> <C> <C>
David A. Norbury............................................ 47 1992
William J. Pratt............................................ 55 1991
Robert C. Fleming........................................... 41 1993
Dr. Albert E. Paladino...................................... 65 1992
Erik H. van der Kaay........................................ 58 1996
Walter H. Wilkinson, Jr..................................... 52 1992
Terri D. Zinkiewicz......................................... 43 1997
</TABLE>
David A. Norbury has been President and Chief Executive Officer and a
director of the Company since September 1992.
William J. Pratt, a founder of the Company, was President of the Company
from February 1991 to September 1992 and has been Chairman and Chief Technical
Officer since September 1992. He has also been a director of the Company since
its inception.
Robert C. Fleming became a director of the Company in November 1993. Mr.
Fleming founded Prism Venture Partners I L.P., a venture capital firm based in
Westwood, Massachusetts, in November 1995 and has been a general partner of that
firm since that time. From July 1993 to April 1995, he was a general partner
with Norwest Venture Capital, a Wellesley, Massachusetts-based venture capital
firm. From 1989 to June 1993, he was a general partner of Orien Ventures II
L.P., a venture capital firm affiliated with The Vista Group of Del Mar,
California.
Dr. Albert E. Paladino became a director of the Company in March 1992. Dr.
Paladino has been a general partner of Advanced Technology Ventures, a Boston,
Massachusetts-based venture capital firm focused on investments in early stage
high technology companies, since 1981.
Erik H. van der Kaay became a director of the Company in July 1996. Mr. van
der Kaay has been President and Chief Executive Officer of Datum, Inc., a
synchronization products company based in Irvine, California since April 1998.
He was employed in various capacities with Allen Telecom, a telecommunications
company based in Beachwood, Ohio, from August 1992 to March 1998.
Walter H. Wilkinson, Jr. became a director of the Company in March 1992.
Mr. Wilkinson is a general partner of Kitty Hawk Capital, a venture capital firm
based in Charlotte, North Carolina that he founded in 1980.
4
<PAGE> 7
Terri D. Zinkiewicz became a director of the Company in February 1997. Ms.
Zinkiewicz has been employed with TRW in various capacities during the past 17
years, most recently as Controller of the Space and Electronics Group.
Certain of the above directors are also directors of other publicly held
companies. Dr. Paladino is a director of TranSwitch Corporation. Mr. van der
Kaay is a director of Datum, Inc., SSE Telecom, Inc. and TranSwitch Corporation.
BOARD COMMITTEES
The Board of Directors has two standing committees, a Compensation
Committee and an Audit Committee. The Compensation Committee has the authority
to (i) establish and implement the cash and noncash compensation of each
officer, salaried employee and agent of or consultant to the Company (subject to
any employment or other agreement such officer, employee, agent or consultant
may have with the Company) on an annual, semi-annual or other periodic basis;
and (ii) establish and implement every personnel policy, collective bargaining
agreement, health or dental insurance plan, retirement plan, profit sharing
plan, deferred compensation plan, stock option or other stock-based benefit
plan, bonus plan, incentive or any other employee benefit plan or agreement
provided by the Company to its employees, officers, directors or consultants.
The members of the Compensation Committee are Messrs. van der Kaay, Paladino and
Wilkinson, none of whom is an employee of the Company.
The Audit Committee has the authority to (i) nominate an independent public
accounting firm to serve as the Company's external auditor for approval by the
whole Board of Directors and recommend the compensation of the external auditors
to the whole Board of Directors for its approval, (ii) discuss with the
Company's external auditors the scope and timing of their examination of the
financial records of the Company, with particular attention to those areas where
either the Committee or the external auditors believe special attention should
be directed, (iii) implement, and solicit the advice of external auditors on,
such internal accounting controls, procedures and systems, including an internal
auditor department, as may help to ensure accountability and the preparation of
complete and correct financial statements, (iv) direct, monitor and discuss with
the Company's internal auditors the scope of their examinations, the
effectiveness of internal controls, the revision or establishment of new
controls and the findings of their audits and their recommendations with respect
thereto, (v) direct the internal and external auditors to perform such
supplemental reviews or audits as it in its discretion deems appropriate and
(vi) review the external auditor's annual findings and recommendations to
management and advise the whole Board of Directors with respect thereto. The
members of the Audit Committee are Ms. Zinkiewicz and Messrs. Fleming and
Wilkinson, none of whom is an employee of the Company.
All Directors attended at least 75% of the Board meetings and assigned
committee meetings during the fiscal year ended March 31, 1998. The Board held
five meetings during the year, the Compensation Committee held four meetings,
and the Audit Committee held one meeting.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the Company's directors,
executive officers and beneficial owners of more than 10% of the Common Stock
are required to report their beneficial ownership of the Common Stock and any
changes in that ownership to the Commission. Specific dates for such reporting
have been established and the Company is required to report in this Proxy
Statement any failure to file by the established dates during the last fiscal
year. In the last fiscal year, to the Company's knowledge, all of these filing
requirements were satisfied by the Company's directors, executive officers and
principal shareholders, except that Jerry D. Neal and William A. Priddy each
failed to file on a timely basis one report relating to the exercise of options
to acquire shares of Common Stock. In making this statement, the Company has
relied on the written representations of such reporting persons and copies of
the reports that have been filed with the Commission.
5
<PAGE> 8
EXECUTIVE OFFICERS
The current executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
David A. Norbury........................ 47 President, Chief Executive Officer and
Director
William J. Pratt........................ 55 Chairman of the Board, Chief Technical
Officer and Director
Powell T. Seymour....................... 55 Vice President of Operations and Secretary
Jerry D. Neal........................... 53 Vice President of Sales and Marketing
William A. Priddy, Jr................... 37 Chief Financial Officer, Vice President of
Administration and Treasurer
Arthur E. Geissberger................... 45 Vice President of Wafer Fabrication
Operations
Paul R. Lewis........................... 43 Vice President of Quality Assurance
</TABLE>
Set forth below is certain information with respect to the Company's
executive officers. Officers are appointed to serve at the discretion of the
Board of Directors. There are no family relationships between executive officers
or directors of the Company. Information on Messrs. Norbury and Pratt is
included in the Director profiles above.
Powell T. Seymour, a founder of the Company, has been Vice President of
Operations and Secretary of the Company since its inception in February 1991.
Jerry D. Neal, a founder of the Company, has been its Vice President of
Sales and Marketing since May 1991.
William A. Priddy, Jr. was Controller of the Company from December 1991 to
December 1993 and became Treasurer in December 1993 and Vice President of
Finance from December 1994 to July 1997. He became Chief Financial Officer and
Vice President of Administration in July 1997.
Arthur E. Geissberger has been Vice President of Wafer Fabrication
Operations since July 1996. From February 1991 to July 1996, Mr. Geissberger was
employed with Alpha Industries, Inc., a manufacturer of microwave and
millimeter-wave frequency components and subsystems based in Methuen,
Massachusetts, as GaAs Wafer Fabrication Manager and Manager of Foundry
Operations.
Paul R. Lewis has been Vice President of Quality Assurance since May 1998.
From October 1996 to January 1998 he was employed as Director of Manufacturing
with Samsung Austin Semiconductor, an integrated circuit manufacturer based in
Austin, Texas, and from June 1989 to October 1996 he was employed as Director of
Quality Assurance with Hitachi Semiconductor (America), an integrated circuit
manufacturer based in Irving, Texas.
6
<PAGE> 9
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table presents information relating to total compensation
during the fiscal years ended March 31, 1998 and 1997, of the Chief Executive
Officer and the four next most highly compensated executive officers of the
Company (the "Named Executives"):
<TABLE>
<CAPTION>
LONG TERM
AWARDS COMPENSATION
ANNUAL COMPENSATION ---------------------
------------------------- SECURITIES UNDERLYING
NAME AND PRINCIPAL POSITIONS YEAR SALARY ($) BONUS ($)(1) OPTIONS/SARS (#)
- ---------------------------- ---- ---------- ------------ ---------------------
<S> <C> <C> <C> <C>
David A. Norbury............................... 1998 $179,615 $ 0 0
President and Chief 1997 164,615 64,000 50,000
Executive Officer
William J. Pratt............................... 1998 $159,769 $ 0 0
Chairman and Chief 1997 148,558 49,350 50,000
Technical Officer
Jerry D. Neal.................................. 1998 $140,385 $ 0 0
Vice President of 1997 125,016 36,000 30,000
Sales and Marketing
Arthur E. Geissberger.......................... 1998 $139,200 $ 0 0
Vice President of 1997 104,616 0 45,000
Wafer Fabrication Operations
Powell T. Seymour.............................. 1998 $120,769 $ 0 0
Vice President of 1997 104,616 30,000 20,000
Operations and
Secretary
</TABLE>
- ---------------
(1) The Compensation Committee has adopted a discretionary bonus program
pursuant to which bonuses may be awarded to officers of the Company from
time to time in amounts reflecting the Compensation Committee's evaluation
of such officers' contributions to the Company.
No options to purchase shares of Common Stock were granted to the Named
Executives during the fiscal year ended March 31, 1998.
The following table provides information concerning options for the Common
Stock exercised by each of the Named Executives in fiscal 1998, and the value of
options held by each at March 31, 1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
SHARES NUMBER OF SECURITIES IN-THE-MONEY
ACQUIRED UNEXERCISED OPTIONS/SARS OPTIONS/SARS
ON VALUED AT MARCH 31, 1998 (#) AT MARCH 31, 1998 ($)
EXERCISE REALIZED --------------------------- ---------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David A. Norbury............. 100,386 $1,408,775 18,494 68,525 $195,741 $710,618
William J. Pratt............. -- -- 32,211 57,817 392,108 566,132
Jerry D. Neal................ 37,277 377,350 20,395 50,245 243,936 552,275
Powell T. Seymour............ -- -- 19,859 26,780 256,189 277,812
Arthur E. Geissberger........ -- -- 9,000 36,000 99,950 399,800
</TABLE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The objectives of the Compensation Committee are to enhance the Company's
ability to recruit and retain qualified management, motivate executives to
achieve established performance goals and to ensure an element of congruity
between the financial interests of the Company's management and its
shareholders.
7
<PAGE> 10
The Compensation Committee considers the following factors in setting the
compensation of the Chief Executive Officer and the other executive officers of
the Company:
(1) The overall performance of the Company during the fiscal year in
question.
(2) Individual performance appraisals of the executive officers and
their contributions toward the Company's performance goals and other
objectives as established by the Company's Board of Directors and the
Compensation Committee.
(3) The compensation packages for executives at other U.S.
manufacturers of integrated circuits with similar ranks and levels of
responsibility.
(4) The overall compensation level of all employees of the Company.
Compensation arrangements adopted by the Compensation Committee include up
to four components: (1) a base salary; (2) the grant of options to purchase
shares of the Company's Common Stock; (3) a discretionary bonus program pursuant
to which bonuses may be awarded to executive officers of the Company from time
to time in amounts based both on objective criteria established by the
Compensation Committee, such as attainment of revenue, profit and gross margin
goals, and on the Compensation Committee's subjective evaluation of such
officers' contributions to the Company; and (4) other compensation and employee
benefits generally available to all employees of the Company, such as health
insurance and participation in the Company's 401(k) plan.
The Compensation Committee encourages the Company's employees to commit a
portion of their base salary to the purchase of the Company's Common Stock
through the Employee Stock Purchase Plan. The Compensation Committee believes
that substantial equity ownership encourages management to take action favorable
to shareholders of the Company.
During fiscal 1998, Mr. Norbury earned a base salary of $179,615, which
represents a 9% increase over his base salary during the preceding fiscal year.
At this level, Mr. Norbury's base salary is approximately 3.5 times the average
Company employee's salary. Mr. Norbury did not receive a bonus during fiscal
1998, having received a bonus of $64,000 during the previous fiscal year. Mr.
Norbury was not awarded any stock options during fiscal 1998 because the
Compensation Committee believes that he already has a substantial equity
interest in the Company as a result of prior option grants. The Compensation
Committee feels that the adjustment in Mr. Norbury's base salary for fiscal 1998
were justified by the results being achieved by the Company -- particularly its
steady growth in revenues and its profitability during fiscal 1997 and most of
fiscal 1998 -- and by other significant developments then occurring, including
the successful completion of the Company's initial public offering and the rapid
progress in the construction of the Company's wafer fabrication facility, and
believes based on its review of publicly available information concerning the
Company's competitors that Mr. Norbury's compensation is well within the range
of compensation provided to executives of similar rank and responsibility. The
Committee believes that competition for qualified executives in the integrated
circuit industry is extremely strong, and that to attract and retain such
persons the Company must maintain an overall compensation package similar to
those offered by its peer companies.
Recommendations regarding the base salary of the Company's executive
officers other than Mr. Norbury are made to the Compensation Committee by Mr.
Norbury and are subject to its approval. Recommendations are made based on a
review of such officers' performance and their attainment of mutually agreed
upon goals.
In general, compensation in excess of $1 million to any of the Named
Executive Officers may be subject to limitations on deductibility by the Company
under Section 162(m) of the Internal Revenue Code of 1986, as amended. The
limits on deduction do not apply to performance-based compensation that
satisfies certain requirements. No officer of the Company is expected to earn
compensation in excess of $1 million during fiscal 1999, and the Compensation
Committee has not adopted any policies with respect to Section 162(m).
8
<PAGE> 11
This report has been prepared by members of the Compensation Committee.
Members of this committee are:
Walter H. Wilkinson, Jr. (Chairman)
Erik H. van der Kaay
Dr. Albert E. Paladino
EMPLOYEE BENEFIT PLANS
Equity Plans
1997 Key Employees' Stock Option Plan. The Company has adopted the 1997
Key Employees' Stock Option Plan (the "1997 Plan"), which provides for the grant
of options to purchase Common Stock to key employees and independent contractors
in the service of the Company. The 1997 Plan permits the granting of both
incentive options and nonqualified options. The aggregate number of shares of
Common Stock that may be issued pursuant to options granted under the 1997 Plan
may not exceed 1,300,000 shares, subject to adjustment in the event of certain
events affecting the Company's capitalization.
The 1997 Plan is administered by the Compensation Committee of the Board of
Directors, which is authorized, subject to the provisions of the 1997 Plan, to
determine to whom and at what time options may be granted, the designation of
the option as either an incentive option or a nonqualified option, the per share
exercise price, the duration of each option, the number of shares subject to
each option, the rate and manner of exercise and the timing and form of payment.
As of March 31, 1998, options to purchase 1,032,139 shares of the Company's
common stock had been granted to employees, including the Named Executive
Officers, and were outstanding under the 1997 Plan and under the Company's 1992
Stock Option Plan, which was terminated in 1997 but pursuant to which options
granted thereunder remain outstanding. The options outstanding at March 31, 1998
had exercise prices ranging from $0.15 to $23.13, with a weighted average
exercise price of $5.52 per share and a weighted average remaining contractual
life of 8.24 years.
Employee Stock Purchase Plan. The Company has adopted the Employee Stock
Purchase Plan (the "Stock Purchase Plan"), which is intended to qualify as an
"employee stock purchase plan" under Section 423 of the Code. The Plan is
intended to encourage stock ownership through means of payroll deductions. All
regular full-time employees of the Company (including officers) and all other
employees whose customary employment is for more than a specified number of
months in any calendar year or more than a specified number of hours per week,
who in either case have been employed by the Company on the commencement date of
the first purchase period under the Stock Purchase Plan for at least three
months, may participate in the Stock Purchase Plan. Directors who are not
employees are not eligible to participate. An aggregate of 500,000 shares of
Common Stock have been reserved for offering under the Stock Purchase Plan and
are available for purchase thereunder, subject to anti-dilution adjustments in
the event of certain changes in the capital structure of the Company.
The Company makes no cash contributions to the Stock Purchase Plan, but
bears the expenses of its administration. The Stock Purchase Plan is
administered by the Compensation Committee, which has authority to establish the
number and duration of the purchase periods during the term of the Stock
Purchase Plan, and to make rulings and interpretations thereunder.
Retirement Plan
401(k) Plan. Each employee is eligible to participate in the Company's
fully qualified 401(k) plan after three months of service. An employee may
invest a maximum of 15% of pretax earnings in the plan. Employer contributions
to the plan are made at the discretion of the Company and the Board of
Directors. An employee is fully vested in the employer contribution portion of
the plan after completion of five continuous years of service. The Company made
contributions to the plan of approximately $110,000 during the fiscal year ended
March 31, 1998.
9
<PAGE> 12
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to the formation of the Compensation Committee in March 1994, the
Board of Directors made all determinations with respect to executive officer
compensation. No interlocking relationships exist between the Company's Board of
Directors or Compensation Committee and the board of directors or compensation
committee of any other company. During the fiscal year ended March 31, 1998, Mr.
van der Kaay served on the Compensation Committee. Until March 1998, Mr. van der
Kaay was Executive Vice President of Allen Telecom, from which the Company
obtained a total of $1.5 million in bridge financing in 1995. Each of the
Company's directors, or an affiliate thereof, has purchased securities of the
Company, except for Mr. Fleming. Mr. Fleming was formerly associated with
Norwest Equity Partners IV and Norwest Equity Partners V, both of which own
securities of the Company. See also "Certain Transactions," below.
COMPENSATION OF DIRECTORS
Each director who is not an employee of the Company is eligible to receive
$6,000 per year for service as a member of the Board of Directors and $2,000 per
year for service on each committee of the Board of Directors on which he or she
serves. In addition, all directors are reimbursed for expenses incurred by them
in their capacity as directors. Other than the reimbursement of expenses,
directors who are employees of the Company do not receive additional
compensation for service.
The Company has adopted the Nonemployee Directors' Option Plan (the
"Directors' Option Plan"). Pursuant to the Directors' Option Plan, each director
who was not an employee of the Company at the time of consummation of the
initial public offering in June 1997, and each nonemployee director of the
Company who is first elected to the Board of Directors thereafter, received or
will receive options to purchase 10,000 shares of Common Stock of the Company.
In addition, each nonemployee director of the Company is eligible to receive an
annual award of options to purchase 5,000 shares of Common Stock upon the
anniversary of his or her initial grant so long as he or she remains a member of
the Board of Directors.
10
<PAGE> 13
PERFORMANCE GRAPH
The graph set forth below compares, for the period beginning immediately
after the Company's initial public offering on June 3, 1997, the "cumulative
shareholder return" to shareholders of the Company as compared with the return
of The Nasdaq Stock Market Index (U.S. Companies) (the "Nasdaq Market Index")
and of the Nasdaq Electronic Components Index (the "Electronic Components
Index"), the Company's industry index. The two Nasdaq indices were prepared by
the Center for Research Studies in Securities Prices at the University of
Chicago. "Cumulative shareholder return" has been computed assuming an
investment of $100 at the beginning of the period indicated in the Common Stock
of the Company and the stock of the companies included in the Nasdaq Market
Index and the Electronic Components Index, and assuming the reinvestment of
dividends.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG RF MICRO DEVICES, INC.,
NASDAQ MARKET INDEX AND ELECTRONIC COMPONENTS INDEX
<TABLE>
<CAPTION>
ELECTRONIC
MEASUREMENT PERIOD NASDAQ COMPONENTS RF MICRO
(FISCAL YEAR COVERED) MARKET INDEX INDEX DEVICES, INC.
<S> <C> <C> <C>
6/3/97 100.0 100.0 100.0
6/30/97 103.9 98.6 137.5
9/30/97 121.7 129.1 147.9
12/31/97 110.0 95.4 91.7
3/28/98 132.8 106.5 120.8
</TABLE>
The stock price performance graph depicted above shall not be deemed
incorporated by reference by any general statement incorporating by reference
this proxy statement into any filing under the Securities Act of 1933 or under
the Securities Exchange Act of 1934. The stock price performance on the graph is
not necessarily an indicator of future price performance.
11
<PAGE> 14
CERTAIN TRANSACTIONS
TRW
On June 6, 1996, the Company initiated a strategic alliance with TRW and
entered into agreements pursuant to which the Company issued to TRW (i) 826,446
shares of Class C Preferred Stock in exchange for $5,000,000 in cash (which
shares converted on a one-for-one basis into Common Stock upon the closing of
the Company's initial public offering in June 1997); (ii) 2,683,930 shares of
Common Stock in exchange for TRW's execution and performance of the license
agreement described below (the "License Agreement"), all of which shares were
initially subject to certain voting and transfer restrictions as described
below; (iii) a convertible note in the maximum principal amount of $10,000,000,
convertible into up to 1,111,111 shares of Common Stock (the "TRW Convertible
Note"); and (iv) a warrant (the "TRW Warrant") for the purchase, under certain
circumstances, of up to 1,000,000 shares of Common Stock at $10.00 per share.
The Company also entered into a supply agreement (the "Supply Agreement"), which
provides for the purchase by the Company from TRW of certain minimum quantities
of GaAs HBT wafers and GaAs epitaxial wafers during the years 1996 to 2000, and
TRW has agreed to refrain from taking certain actions regarding control of the
Company during the five years following this offering.
License Agreement
Pursuant to the License Agreement, TRW granted to the Company fully paid
up, royalty-free worldwide licenses with respect to certain of TRW's existing
and future GaAs HBT patent rights and MBE process patent rights, in each case
with accompanying know-how and technical information, to design, develop,
manufacture, market, service and repair certain existing products of the Company
and any product with an emitter with a width of one to three microns, in either
case provided such products are for commercial wireless communication
applications and operate on signals having a frequency of less than 10 GHz. The
license with respect to the GaAs HBT patent rights was effective immediately,
and the MBE patent right license becomes effective on June 15, 1998, which was
the date that the Company's GaAs HBT wafer fabrication facility becomes
operational. Both licenses are exclusive as to all persons including TRW, except
that TRW has reserved the right to fulfill existing contractual obligations and
to provide to customers on an ongoing basis certain specified foundry services.
At the option of TRW, the license will become non-exclusive if the Company fails
to meet the following revenue goals, as measured in accordance with GAAP,
following the date on which the Company's GaAs HBT wafer fabrication facility
became operational (June 15, 1998): during the first year, $30 million; during
the second year, $65 million; and during the third year, $125 million.
TRW also granted certain non-exclusive licenses to the Company and agreed
to provide certain technical assistance to the Company in connection with the
design, construction and operation of the Company's GaAs HBT wafer fabrication
facility. The License Agreement provides that TRW will offer to the Company, on
the same terms as are offered to third parties, certain non-GaAs HBT process
technologies that it develops in the future for a period of ten years following
June 15, 1998. The Company has agreed to share with TRW any modifications or
improvements and to grant TRW a non-exclusive, royalty-free license to use such
modifications or improvements outside the Company's field of use.
Restricted Stock Agreement
In connection with its investment in the Company in June 1996, TRW had
granted to David A. Norbury, President and Chief Executive Officer of the
Company, an irrevocable proxy to vote 2,683,930 of the 4,621,487 shares of
common stock beneficially owned by TRW. In accordance with its terms, such proxy
will expire on July 15, 1998, 30 days after the date on which the Company's
wafer fabrication facility became "operational" for purposes of the agreements
between the Company and TRW.
12
<PAGE> 15
TRW Convertible Note
Under the terms of the TRW Convertible Note, the Company borrowed $10
million from TRW. This note, pursuant to its terms, was converted into 1,111,111
shares of Common Stock upon consummation of the Company's initial public
offering in June 1997.
TRW Warrant
The TRW Warrant provides for the purchase of up to 1,000,000 shares of
Common Stock at a price of $10.00 per share. The TRW Warrant became exercisable
on June 15, 1998, which was the date on which the Company's wafer fabrication
facility became operational, and must be exercised by September 14, 1998.
Supply Agreement
Under the terms of the Supply Agreement, the Company has agreed to purchase
from TRW, and TRW has agreed to sell to the Company, certain minimum quantities
of three-inch GaAs HBT processed wafers and four-inch GaAs epitaxial wafer
starting material until December 31, 2000. The estimated minimum annual
purchases under the Supply Agreement are $35.0 million, $23.9 million, and $14.9
million in calendar years 1998, 1999 and 2000, respectively.
Standstill Agreement
TRW has agreed with the Company and the current holders of Preferred Stock
that, before June 6, 2002 (the fifth anniversary of the closing of the Company's
initial public offering), it will not, and will cause its affiliates not to, (i)
acquire, offer to acquire or agree to acquire, directly or indirectly, any
voting securities or rights or options to acquire any assets of the Company or
any voting securities of the Company in excess of the lesser of (a) 40% of the
Company's equity securities or (b) the actual maximum percentage of the
Company's equity securities owned by TRW (assuming conversion by TRW of all of
its convertible securities and the exercise of any warrants or options held by
TRW), calculated on a fully diluted basis; (ii) make any public announcement
with respect to, or submit any proposal for, any extraordinary transaction
involving the Company or its securities or assets; (iii) make, or in any way
participate in, any solicitation of proxies to vote, or seek to advise or
influence any person or entity with respect to the voting of, any voting
securities of the Company; (iv) form, join or in any way participate in a
"group" within the meaning of the Exchange Act with respect to any voting
securities of the Company; and (v) solicit or encourage any person to propose a
business combination or similar transaction with, or a change in control of, the
Company. Notwithstanding the foregoing, if any party makes a bona fide offer to
purchase all of the outstanding shares of the Company, TRW will be entitled
during the 30-day period following notification of such offer to make a
counterproposal for all outstanding shares of the Company on the same or better
terms and conditions as provided in the offer.
OTHER TRANSACTIONS
On August 4, 1995, the Company entered into a note and warrant purchase
agreement with a subsidiary of Allen Telecom, which is a shareholder of the
Company and of which Erik H. van der Kaay, who is a director of the Company, and
was, until March 1998, Executive Vice President. This agreement provided for the
borrowing by the Company of up to $2,000,000 and for the issuance to such
subsidiary of warrants to purchase up to 109,091 shares of Common Stock at a
price of $2.75 per share. On August 7, 1995, the Company borrowed $1,000,000
from such subsidiary pursuant to this agreement, which amount earned interest at
a rate equal to the prime rate of interest as reported in the Wall Street
Journal plus one percent, and issued a warrant for the purchase of up to 54,546
shares of Common Stock for $2.75 per share. On November 10, 1995, the Company
borrowed an additional $500,000 pursuant to this agreement, at the same rate of
interest, and issued a warrant for the purchase of 27,272 shares of Common Stock
for $2.75 per share. Pursuant to the terms of this second warrant, and by virtue
of the closing of the sale of 1,818,783 shares of Class C Preferred Stock on
November 22, 1995, the number of shares purchasable under this warrant was
reduced to 12,400 and the purchase price was increased to $6.048 per share. The
Company satisfied its obligations to pay principal and interest on amounts
borrowed under this agreement on November 22, 1995,
13
<PAGE> 16
when it repaid $454,279 in cash and issued an aggregate of 178,071 shares of
Class C Preferred Stock to the Allen Telecom subsidiary, which shares are now
owned directly by Allen Telecom. On March 4, 1998, the Company issued to Allen
Telecom an aggregate of 66,946 shares of Common Stock upon the exercise of the
warrants described above.
The Company and all of the current holders of Preferred Stock are party to
an agreement pursuant to which such holders have certain rights to require the
Company to register the sale of equity securities of the Company held by them,
or to include such securities in a registration initiated by the Company.
PROPOSAL 2 -- RATIFICATION OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS
The Audit Committee has appointed the firm of Ernst & Young LLP as
independent auditors to examine the books of the Company for the fiscal year
ending March 31, 1999, and to report on the consolidated balance sheets,
statements of income and other related statements of the Company. Ernst & Young
LLP has served as independent auditors for the Company continuously since 1992.
Representatives of Ernst & Young LLP are expected to be represent at the Annual
Meeting, will have an opportunity to make a statement if they desire to do so
and will be available to respond to questions posed by the shareholders.
THE BOARD RECOMMENDS A VOTE "FOR" APPROVAL OF THE PROPOSAL TO RATIFY THE
APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE
FISCAL YEAR ENDING MARCH 31, 1999.
PROPOSALS FOR 1999 ANNUAL MEETING
Under regulations of the Commission, any shareholder desiring to make a
proposal to be acted upon at the 1999 Annual Meeting of Shareholders must
present such proposal to the Company at its principal office in Greensboro,
North Carolina by March 2, 1999 for the proposal to be considered for inclusion
in the Company's proxy statement.
In addition to any other applicable requirements, for business to be
properly brought before the annual meeting by a shareholder even if the proposal
is not to be included in the Company's proxy statement, the Company's bylaws
provide that the shareholder must give timely notice in writing to the Secretary
of the Company not less than 60 nor more than 90 days prior to the date one year
from the date of the immediately preceding annual meeting. As to each matter,
the notice must contain a written statement of the shareholder's proposal and
the reasons for submitting the proposal and additional specific information if
the proposal relates to director nominations, all as stated in the bylaws of the
Company.
OTHER BUSINESS
The Board of Directors knows of no other matter to come before the Annual
Meeting. However, if any other matter requiring a vote of the shareholders
arises, it is the intention of the persons named in the accompanying proxy to
vote such proxy in accordance with their best judgment.
By Order of the Board of Directors
/s/ William J. Pratt
William J. Pratt
Chairman
Dated: June 26, 1998
14
<PAGE> 17
APPENDIX A
PROXY
RF MICRO DEVICES, INC.
ANNUAL MEETING JULY 28, 1998
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF RF MICRO DEVICES, INC.
The undersigned shareholder of RF Micro Devices, Inc., a North Carolina
corporation (the "Company"), appoints David A. Norbury and William A. Priddy,
Jr., or either of them, with full power to act alone, the true and lawful
attorneys-in-fact of the undersigned, with full power of substitution and
revocation, to vote all shares of stock of the Company which the undersigned is
entitled to vote at the annual meeting of shareholders of the Company to be held
at the Company's principal executive offices at 7625 Thorndike Road, Greensboro,
North Carolina on July 28, 1998 at 10:00 A.M., local time and at any adjournment
thereof, with all powers the undersigned would possess if personally present, as
follows:
THIS PROXY WILL BE VOTED "FOR" THE PROPOSALS DESCRIBED HEREIN IF NO
INSTRUCTION TO THE CONTRARY IS INDICATED. IF ANY OTHER BUSINESS IS PRESENTED AT
THE MEETING, THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF
THE BOARD OF DIRECTORS.
<TABLE>
<S> <C> <C> <C> <C>
1. Proposal to elect seven directors of the Company for FOR AGAINST ABSTAIN
one-year term expiring in 1999
[ ] [ ] [ ]
David A. Norbury, William J. Pratt, Robert C. Fleming, Dr. Albert E. Paladino, Erik H.
van der Kaay, Walter H. Wilkinson, Jr., Terri D. Zinkiewicz
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE THAT
NOMINEE'S NAME IN THE FOLLOWING SPACE. IF AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE IS NOT WITHHELD, THIS PROXY WILL BE VOTED IN FAVOR OF SUCH NOMINEE.)
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
2. Proposal to ratify the appointment of Ernst & Young LLP as FOR AGAINST ABSTAIN
the Company's auditors for the fiscal year ending March 31,
1999 [ ] [ ] [ ]
3. Any other matter that may be submitted to a vote of FOR AGAINST ABSTAIN
shareholders at the Meeting.
[ ] [ ] [ ]
</TABLE>
THE UNDERSIGNED HEREBY RATIFIES AND CONFIRMS ALL THAT SAID ATTORNEYS-IN-FACT,
OR EITHER OF THEM OR THEIR SUBSTITUTES, MAY LAWFULLY DO OR CAUSE TO BE DONE BY
VIRTUE HEREOF, AND ACKNOWLEDGES RECEIPT OF THE NOTICE OF THE MEETING AND THE
PROXY STATEMENT ACCOMPANYING IT.
Dated this day of 1998.
--- -------
----------------------------------
(SEAL)
----------------------------------
(SEAL)
PLEASE INSERT DATE OF SIGNING.
SIGN EXACTLY AS NAME APPEARS AT
LEFT. WHERE STOCK IS ISSUED IN TWO
OR MORE NAMES, ALL SHOULD SIGN. IF
SIGNING AS ATTORNEY,
ADMINISTRATOR, EXECUTOR, TRUSTEE
OR GUARDIAN, GIVE FULL TITLE AS
SUCH. A CORPORATION SHOULD SIGN BY
AN AUTHORIZED OFFICER AND AFFIX
SEAL.
(YOU ARE REQUESTED TO COMPLETE, SIGN AND RETURN THIS PROXY PROMPTLY.)
