SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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
[X] Definitive Proxy Statement Commission Only (as permitted by
[ ] Definitive Additional Materials Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
SPECTRIAN
----------------------------------------------------------
(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 transactions applies:
(2) Aggregate number of securities to which transactions 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>
SPECTRIAN CORPORATION
---------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held August 30, 2000
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Spectrian
Corporation, a Delaware corporation (the "Company"), will be held on Wednesday,
August 30, 2000, at 10:00 a.m. local time, at 160 Gibraltar Court, Sunnyvale,
California 94089, for the following purposes:
1. To elect six (6) directors to serve for the ensuing year and until their
successors are duly elected and qualified.
2. To approve an amendment to the 1992 Stock Plan to increase the number of
shares of Common Stock reserved for issuance thereunder by 400,000 shares.
3. To ratify the appointment of PricewaterhouseCoopers LLP as independent
accountants of the Company for the fiscal year ending March 31, 2001.
4. To transact such other business as may properly come before the Annual
Meeting, including any motion to adjourn to a later date to permit further
solicitation of proxies if necessary, or before any adjournments thereof.
The foregoing items of business are more fully described in the proxy
statement accompanying this notice. Only stockholders of record at the close of
business on July 1, 2000 are entitled to notice of and to vote at the meeting.
All stockholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to mark,
sign, date and return the enclosed proxy as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Any stockholder attending
the meeting may vote in person even if he or she has returned a proxy.
Sincerely,
/s/ Thomas H. Waechter
Thomas H. Waechter
President and Chief Executive Officer
Sunnyvale, California
July 28, 2000
--------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT.
IN ORDER TO ASSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE REQUESTED TO
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE AND RETURN IT
IN THE ENCLOSED ENVELOPE.
--------------------------------------------------------------------------------
<PAGE>
SPECTRIAN CORPORATION
---------------
PROXY STATEMENT FOR 2000
ANNUAL MEETING OF STOCKHOLDERS
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed Proxy is solicited on behalf of the Board of Directors (the
"Board") of SPECTRIAN CORPORATION, a Delaware corporation (the "Company" or
"Spectrian"), for use at the Annual Meeting of Stockholders (the "Annual
Meeting") to be held Wednesday, August 30, 2000, at 10:00 a.m. local time, or at
any adjournment thereof, for the purposes set forth herein and in the
accompanying Notice of Annual Meeting of Stockholders. The Annual Meeting will
be held at 160 Gibraltar Court, Sunnyvale, California 94089. The Company's
principal executive offices are located at 350 W. Java Drive, Sunnyvale,
California 94089, and its telephone number at that location is (408) 745-5400.
These proxy solicitation materials and the Annual Report on Form 10-K for
the year ended March 31, 2000 ("fiscal 2000"), including financial statements,
were first mailed on or about July 28, 2000 to all stockholders entitled to vote
at the meeting.
Record Date; Outstanding Shares
Stockholders of record at the close of business on July 1, 2000 (the "Record
Date") are entitled to notice of and to vote at the meeting. The Company has one
series of Common Shares outstanding, designated Common Stock, $.001 par value
per share. As of July 1, 2000, 11,948,721 shares of the Company's Common Stock
were issued and 10,948,721 shares of the Company's Common Stock were outstanding
and held of record by 218 stockholders.
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 (a) delivering to the Secretary of the
Company a written notice of revocation or a duly executed proxy bearing a later
date or (b) attending the meeting and voting in person.
Voting
Each stockholder is entitled to one vote for each share held. Every
stockholder voting for the election of directors (Proposal One) may cumulate
such stockholder's votes and give one candidate a number of votes equal to the
number of directors to be elected multiplied by the number of shares that such
stockholder is entitled to vote, or distribute such stockholder's votes on the
same principle among as many candidates as the stockholder may select, provided
that votes cannot be cast for more than six candidates. However, no stockholder
shall be entitled to cumulate votes unless the candidate's name has been placed
in nomination prior to the voting and the stockholder, or any other stockholder,
has given notice at the meeting, prior to the voting, of the intention to
cumulate the stockholder's votes. On all other matters, each share of Common
Stock has one vote.
-1-
<PAGE>
Solicitation of Proxies
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. Proxies
may also be solicited by certain of the Company's directors, officers and
regular employees, without additional compensation, personally or by telephone
or telegram.
Quorum; Abstentions; Broker Non-votes
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the Inspector of Elections (the "Inspector") who will be an employee of the
Company's Transfer Agent. The Inspector will also determine whether or not a
quorum is present. Except in certain specific circumstances, the affirmative
vote of a majority of shares present in person or represented by proxy at a duly
held meeting at which a quorum is present is required under Delaware law for
approval of proposals presented to stockholders. In general, Delaware law also
provides that a quorum consists of a majority of shares entitled to vote and
present or represented by proxy at the meeting.
The Inspector will treat shares that are voted "WITHHELD" or "ABSTAIN" as
being present and entitled to vote for purposes of determining the presence of a
quorum but will not be treated as votes in favor of approving any matter
submitted to the stockholders for a vote. When proxies are properly dated,
executed and returned, the shares represented by such proxies will be voted at
the Annual Meeting in accordance with the instructions of the stockholder. If no
specific instructions are given, the shares will be voted for the election of
the nominees for the directors set forth herein; for the amendment of the 1992
Stock Option Plan to increase the number of shares available for issuance
thereunder by 400,000 shares; for the ratification of PricewaterhouseCoopers LLP
as independent accountants of the Company for the fiscal year ending March 31,
2001; and at the discretion of the proxyholders, upon such other business as may
properly come before the Annual Meeting or any adjournment thereof.
If a broker indicates on the enclosed proxy or its substitute that such
broker does not have discretionary authority as to certain shares to vote on a
particular matter ("Broker Non-Votes"), those shares will not be considered as
present with respect to that matter. The Company believes that the tabulation
procedures to be followed by the Inspector are consistent with the general
statutory requirements in Delaware concerning voting of shares and determination
of a quorum.
Deadline for Receipt of Stockholder Proposals
Stockholders are entitled to present proposals for action at a forthcoming
meeting if they comply with the requirements of the proxy rules established by
the Securities and Exchange Commission. Proposals of stockholders of the Company
that are intended to be presented by such stockholders at the Company's 2001
Annual Meeting of Stockholders must be received by the Company no later than May
2, 2001 in order that they may be considered for inclusion in the proxy
statement and form of proxy relating to that meeting.
The attached proxy card grants the proxy holders discretionary authority to
vote on any matter raised at the Annual Meeting. If a stockholder intends to
submit a proposal at the Company's Annual Meeting, which is not eligible for
inclusion in the proxy statement relating to the meeting, the stockholder must
give the Company notice in accordance with the requirements set forth in the
Securities Exchange Act of 1934, as amended, no later than July 16, 2001. If
such a stockholder fails to comply with the foregoing notice provision the proxy
holders will be allowed to use their discretionary authority when and if the
proposal is raised at the Company's Annual Meeting in 2001.
-2-
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of Common Stock of the Company as of July 1, 2000 as to (i) each
person who is known by the Company to own beneficially more than 5% of the
outstanding shares of Common Stock, (ii) each director, (iii) each of the
executive officers named in the Summary Compensation Table as of March 31, 2000
below and (iv) all directors and executive officers as of March 31, 2000 as a
group.
<TABLE>
<CAPTION>
Five Percent Stockholders, Common Stock
Directors and Certain Executive Officers(1) Beneficially Owned Percentage Owned(2)
------------------------------------------- ------------------ -------------------
<S> <C> <C>
Kopp Investment Advisors, Inc.(3).................................. 2,547,850 23.3%
7701 France Avenue South
Suite 500
Edina, MN 55435
State of Wisconsin Investment Board(4)............................. 1,376,700 12.6
121 East Wilson Street
Madison, WI 53702
Becker Capital Management, Inc.(5)................................. 580,751 5.3
1211 SW Fifth Avenue, Suite 2185
Portland, Oregon 97204
Garrett A. Garrettson(6)........................................... 219,525 2.0
Thomas H. Waechter................................................. -- *
James A. Cole(7)................................................... 13,646 *
Martin Cooper(8)................................................... 28,646 *
Charles D. Kissner(9).............................................. 6,250 *
Robert W. Shaner(10)............................................... 2,500 *
Robert C. Wilson(11)............................................... 13,646 *
Christopher J. Tubis (12).......................................... 34,658 *
Warren M. Dumanski(13)............................................. 16,813 *
David S. Piazza(14)................................................ 54,794 *
Darien R. Spencer(15).............................................. 31,249 *
Joseph M. Veni(16)................................................. 63,588 *
Gerald D. Corcoran................................................. -- *
All Directors and executive officers as a group (17 persons)(17)... 521,738 4.8
------------------------
* Less than 1%
<FN>
(1) Unless otherwise indicated, the address for each listed stockholder is c/o
Spectrian Corporation, 350 West Java Drive, Sunnyvale, California 94089.
Except as otherwise indicated, and subject to applicable community
property laws, the persons named in the table have sole voting and
investment power with respect to all shares of Common Stock held by them.
(2) Applicable percentage ownership is based on 10,948,721 shares of Common
Stock outstanding as of July 1, 2000 together with applicable options for
such stockholder. Beneficial ownership is determined in accordance with
the rules of the Securities and Exchange Commission (the "Commission"),
and includes voting and investment power with respect to shares. Shares of
Common Stock subject to options currently exercisable or exercisable
within 60 days after July 1, 2000 are deemed outstanding for computing the
percentage ownership of the person holding such options, but are not
deemed outstanding for computing the percentage of any other person.
(3) Reflects ownership as reported on Schedule 13D/A dated February 17, 2000
with the Commission by Kopp Investment Advisors, Inc. ("KIA"). Represents
shares beneficially owned by (i) KIA, a registered investment advisor,
(ii) Kopp Holding Company ("Holding"), (iii) Kopp Emerging Growth Fund
("Growth") and (iv) LeRoy C. Kopp individually and through his ownership
of a controlling interest in KIA and his control over Holding and Growth.
KIA has sole voting power over 1,022,000 shares of the Company's Common
Stock, sole dispositive power over 750,000 shares of the Company's Common
Stock and shared dispositive power over 1,797,850 shares of the Company's
Common Stock. Holding has beneficial ownership of 2,547,850 shares of the
Company's Common Stock. Growth has beneficial ownership of 700,000 shares
of the Company's Common Stock. Mr. Kopp has beneficial ownership of
2,847,850 shares of the Company's Common Stock and sole voting and
dispositive power over 300,000 shares of the Company's Common Stock.
(4) Reflects ownership as reported on Schedule 13G/A dated March 10, 2000
filed with the Commission by the State of Wisconsin Investment Board
("WIB"). WIB is a registered investment advisor pursuant to the Investment
Advisors Act of 1940, as amended. WIB has sole voting and dispositive
power over 1,376,700 shares of the Company's Common Stock.
(5) Reflects beneficial ownership as reported on Schedule 13G filed with the
Commission by Becker Capital Management, Inc. ("Becker") on January 28,
2000. Becker is a registered investment advisor pursuant to the Investment
Advisors Act of 1940, as amended. Becker has sole voting and dispositive
power over 580,751 shares of the Company's Common Stock.
(6) Includes 214,789 shares issuable pursuant to options exercisable within 60
days of July 1, 2000.
(7) Includes 13,646 shares issuable pursuant to options exercisable within 60
days of July 1, 2000.
(8) Includes 28,646 shares issuable pursuant to options exercisable within 60
days of July 1, 2000.
(9) Includes 6,250 shares issuable pursuant to options exercisable within 60
days of July 1, 2000.
(10) Includes 2,500 shares issuable pursuant to options exercisable within 60
days of July 1, 2000.
(11) Includes 13,646 shares issuable pursuant to options exercisable within 60
days of July 1, 2000.
(12) Includes 33,854 shares issuable pursuant to options exercisable within 60
days of July 1, 2000.
(13) Includes 14,937 shares issuable pursuant to options exercisable within 60
days of July 1, 2000.
(14) Includes 47,164 shares issuable pursuant to options exercisable within 60
days of July 1, 2000.
(15) Includes 31,249 shares issuable pursuant to options exercisable within 60
days of July 1, 2000.
(16) Includes 63,588 shares issuable pursuant to options exercisable within 60
days of July 1, 2000.
(17) Includes 429,164 shares issuable pursuant to options exercisable within 60
days of July 1, 2000.
</FN>
</TABLE>
-3-
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
Nominees
A board of six directors is to be elected at the Annual Meeting of
Stockholders. Unless otherwise instructed, the proxy holders will vote the
proxies received by them for the Company's six nominees named below each of whom
is presently a director of the Company. In the event that any nominee of the
Company is unable or declines to serve as a director at the time of the Annual
Meeting of Stockholders, 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. In the event that additional persons are nominated for election as
directors, the proxy holders intend to vote all proxies received by them in such
a manner (in accordance with cumulative voting) as will assure the election of
as many of the nominees listed below as possible, and, in such event, the
specific nominees to be voted for will be determined by the proxy holders. The
term of office for each person elected as a director will continue until the
next Annual Meeting of Stockholders or until a successor has been elected and
qualified
Vote Required
If a quorum is present and voting, the six nominees receiving the highest
number of votes will be elected to the Board of Directors. Abstentions and
broker non-votes are not counted in the election of directors.
Nominees
The names of the nominees and certain information about them are set forth
below:
<TABLE>
<CAPTION>
Director
Name of Nominee Age Position with Company Since
--------------- --- --------------------- -----
<S> <C> <C> <C>
Thomas H. Waechter...................... 47 President, Chief Executive Officer and Director 2000
Garrett A. Garrettson................... 56 Chairman of the Board 1996
Martin Cooper (2)....................... 71 Director 1994
Charles D. Kissner (1),(2).............. 53 Director 1998
Robert W. Shaner(2)..................... 52 Director 1999
Robert C. Wilson (1),(2)................ 80 Director 1995
----------------------
<FN>
(1) Member of Human Resources Committee during fiscal 2000.
(2) Member of Audit Committee during fiscal 2000.
</FN>
</TABLE>
There is no family relationship between any director or executive officer of
the Company.
Thomas H. Waechter joined the Company in March 2000 as President, Chief
Executive Officer and director. Between January 2000 and March 2000 he was
Senior Vice President of Global Business Operations at Asyst Technology, Inc., a
company that provides mini-environment and manufacturing automation systems.
From September 1986 until January 2000, Mr. Waechter was employed by
Schlumberger Ltd. in various management positions, most recently as its Vice
President of Global Business Operations at Schlumberger Test & Transactions, a
provider of systems and services for testing semiconductor devices and a
subsidiary of Schlumberger Ltd. He received his B.B.A. in Business Management
from the College of William and Mary.
Garrett A. Garrettson has been a director of the Company since April 1996.
From April 1996 to March 2000 he served as President and Chief Executive Officer
of the Company. Between March 1993
-4-
<PAGE>
and March 1996 he was President and Chief Executive Officer of Censtor
Corporation, a company that designs and sells technology related to magnetic
recording heads for the disk drive industry. From November 1986 to March 1993,
he served as a Vice President of the Imprimis subsidiary of Control Data
Corporation, a computer systems company, and subsequently a subsidiary of
Seagate Technology, Inc., ("Seagate") a company that designs and manufactures
disk drives, when Seagate acquired the Imprimis subsidiary in 1989. Prior to
1986, Mr. Garrettson held a variety of positions with Hewlett Packard Company
and served in the U.S. Navy. Mr. Garrettson also serves on the boards of
directors of Benton Oil and Gas Company and HealthHelper Corporation. He
received his B.S. and M.S. in Engineering Physics and a Ph.D. in Mechanical
Engineering from Stanford University.
Martin Cooper has been a director of the Company since January 1994. Mr.
Cooper has served as Chairman and Chief Executive Officer of ArrayComm,
Incorporated, a wireless technology manufacturer, since April 1992 and as
Chairman of Dyna, Incorporated, a consulting company, since 1986. From 1985 to
December 1992, he served as President of Cellular Pay Phone Incorporated, a
cellular pay telephone company. From 1982 to 1986, he was a co-founder, Chairman
and Chief Executive Officer of Cellular Business Systems, Inc., a management
information company. From 1954 to 1983, Mr. Cooper served in a variety of
positions including Corporate Vice President, Division Manager and Corporate
Director of Research and Development of Motorola, Inc. Mr. Cooper currently
serves on the board of directors of Conductus, Inc., a superconducting products
company. He is a Fellow of the IEEE and of the Radio Club of America and a
recipient of the IEEE Centennial medal. He serves on the Advisory Board of the
International National Electronics Consortium and serves on its Board of
Directors. He received a B.S. and an M.S. in Electrical Engineering from the
Illinois Institute of Technology.
Charles D. Kissner has served as a director of the Company since March 1998.
Mr. Kissner has served as the Chairman of the Board and a director of DMC
Stratex Networks, Inc., ("DMC") formerly known as Digital Microwave Corporation,
a wireless telecommunications equipment company, since August 1996. Mr. Kissner
joined DMC in July 1995 as its President and Chief Executive Officer and served
in that position until May 2000. Prior to joining DMC, Mr. Kissner served from
July 1993 to July 1995 as Vice President and General Manager of the
Microelectronics Division of M/A-COM, Inc., a manufacturer of radio and
microwave communication products. From February 1990 to July 1993, Mr. Kissner
served as president, Chief Executive Officer and a director of Aristacom
International, Inc., a communications software company. From 1971 to 1990, Mr.
Kissner was an executive with AT&T and Fujitsu in a variety of positions. Mr.
Kissner is also a director of SonicWALL, Inc., a supplier of Internet
infrastructure security products, Littlefeet, Inc., a wireless infrastructure
provider, and American Flight Support, Inc., a non-profit provider of medical
transportation services. Mr. Kissner received a B.S. in Industrial Management
and Electrical Engineering from California State Polytechnic University and a
M.B.A. from the University of Santa Clara.
Robert W. Shaner has served as a director of the Company since April 1999.
Since November 1999, Mr. Shaner has been the Regional President of SBC Wireless,
Inc., a provider of wireless communication services to consumers and businesses.
Mr. Shaner served as the President and Chief Executive Officer of Pacific Bell
Wireless from August 1998 to November 1999. Prior to assuming that position, Mr.
Shaner served as President of SBCI Europe and Middle East for SBC International,
Inc. from March 1997 to July 1998. From 1995 to February 1997, Mr. Shaner held
the position of President and Chief Executive Officer for SBC International
Wireless in France. From 1991 to 1995, Mr. Shaner served as Executive Vice
President for Southwestern Bell Mobile System in Dallas. Prior to 1991, Mr.
Shaner held various other management positions at Southwestern Bell
Telephone/Telecom and Cellular One. Mr. Shaner earned a B.A. from Central
Methodist College, did graduate work at Southern Illinois University and
completed Stanford University's Advanced Management Program.
Robert C. Wilson has served as a director of the Company since October 1995.
Mr. Wilson has been Chairman of Wilson & Chambers, a venture capital and
consulting firm, since December 1982. Mr. Wilson served as President, Chief
Executive Officer and Chairman of the Board at Memorex
-5-
<PAGE>
Corporation from 1974 until 1980. From 1971 to 1974, Mr. Wilson served as
President and Chief Executive Officer of Collins Radio Company, a communications
company. From 1969 to 1971, Mr. Wilson was employed by Rockwell International, a
diversified manufacturing company, first as President of Commercial Products and
later as Executive Vice President. He is currently a member of the board of
directors of Gigatronics Inc., a microwave instrument supplier. Mr. Wilson
received a B.S. in Engineering from the University of California at Berkeley.
Board Meetings and Committees
The Board of Directors of the Company held a total of 13 meetings during
fiscal 2000. No director attended fewer than 75% of the meetings of the Board of
Directors and committees thereof, if any, upon which such director served. The
Board of Directors has an Audit Committee and a Human Resources Committee,
formerly known as the Compensation Committee. The Board of Directors has no
nominating committee or any committee performing such functions.
The Audit Committee, which consisted of Messrs. Cooper, Kissner, Shaner and
Wilson during fiscal 2000, is responsible for overseeing actions taken by the
Company's independent auditors and reviews the Company's internal financial
controls. The Audit Committee met seven times during fiscal 2000.
The Human Resources Committee, which during fiscal 2000, consisted of James
A. Cole, a director of the Company who is not seeking re-election, and Messrs.
Kissner and Wilson, met seven times during fiscal 2000. The duties of the Human
Resources Committee include determining salaries, incentives and other forms of
compensation for directors, officers and other employees of the Company and
administering various incentive compensation and benefit plans.
Human Resources Committee Interlocks and Insider Participation
The Human Resources Committee consisted of Messrs. Cole, Kissner and Wilson
during fiscal 2000. Mr. Garrettson, the former President and Chief Executive
Officer of the Company, participated in all discussions and decisions regarding
salaries and incentive compensation for all employees and consultants to the
Company until April 2000, except that Mr. Garrettson was excluded from
discussions regarding his own salary and incentive compensation. Since April
2000, Mr. Waechter has participated in all discussions and decisions regarding
salaries and incentive compensation for all employees and consultants to the
Company, except that Mr. Waechter was excluded from discussions regarding his
own salary and incentive compensation.
-6-
<PAGE>
PROPOSAL TWO
AMENDMENT OF 1992 STOCK PLAN
At the Annual Meeting, the stockholders are being asked to approve an
amendment of the Company's 1992 Stock Plan (the "Plan") to increase the number
of shares of Common Stock reserved for issuance thereunder by 400,000 shares.
The adoption of the Plan was approved by the Board of Directors in July 1992 and
subsequently by the stockholders. In June 1996 the stockholders approved an
amendment to the Plan to increase the number of shares of Common Stock reserved
for issuance thereunder by 625,000 shares and to make certain changes to the
Plan in order that it comply with the performance-based criteria of Section
162(m) of the Code. In July 1997, the stockholders approved an amendment to the
Plan to increase the number of shares of Common Stock reserved for issuance
thereunder by 350,000 shares. In July 1999, the stockholders approved an
amendment to the Plan to increase the number of shares of Common Stock reserved
for issuance thereunder by 450,000 shares. As of July 1, 2000, options to
purchase an aggregate of 1,522,329 shares of the Company's Common Stock were
outstanding under the Plan, with a weighted average exercise price of $19.57 per
share, and 438,147 shares (including the 400,000 shares subject to stockholder
approval at this Annual Meeting) were available for future grant. In addition,
2,190,410 shares have been purchased pursuant to exercise of stock options under
the Plan.
The Plan authorizes the Board of Directors to grant stock options to
eligible employees and consultants of the Company. The Plan is structured to
allow the Board of Directors broad discretion in creating equity incentives in
order to assist the Company in attracting, retaining and motivating the best
available personnel for the successful conduct of the Company's business. The
Company has had a longstanding practice of linking key employee compensation to
corporate performance because it believes that this increases employee
motivation to improve stockholder value. The Company has, therefore,
consistently included equity incentives as a significant component of
compensation for a broad range of the Company's employees. This practice has
enabled the Company to attract and retain the talent that it continues to
require.
The Board of Directors believes that the remaining shares available for
grant under the Plan are insufficient to accomplish the purposes of the Plan
described above. The Company anticipates there will be a need to hire additional
technical or management employees during fiscal 2001 and it will be necessary to
offer equity incentives to attract and motivate these individuals, particularly
in the extremely competitive job market in Silicon Valley. In addition, in order
to retain the services of valuable employees as the Company matures and its
employee base grows larger, it will be necessary to grant additional options to
current employees as older options become fully vested.
For these reasons, the Board of Directors recommends that the stockholders
vote "FOR" approval of the amendment to the Plan.
Vote Required
The affirmative vote of a majority of the Votes Cast will be required to
approve the amendment to the Plan. In addition, the affirmative votes must
constitute at least a majority of the required quorum, which quorum is a
majority of the shares outstanding at the Record Date. Votes that are cast
against the proposal will be counted for purposes of determining both (i) the
presence or absence of a quorum and (ii) the total number of Votes Cast with
respect to the proposal. Abstentions will be counted for purposes of determining
both (i) the presence or absence of a quorum for the transaction of business and
(ii) the total number of Votes Cast with respect to the proposal. Accordingly,
abstentions will have the same effect as a vote against the proposal. Broker
non-votes will be counted for purposes of determining the presence or absence of
a quorum for the transaction of business, but will not be counted for purposes
of determining the number of Votes Cast with respect to this proposal.
-7-
<PAGE>
The essential terms of the Plan are summarized as follows:
Purpose
The purposes of the Plan are to attract, retain and motivate the best
available personnel for positions of substantial responsibility, to provide
additional incentive to employees and consultants of the Company and to promote
the success of the Company's business.
Administration
The Plan provides for administration by the Board of Directors of the
Company or by a committee of the Board. The Plan is currently being administered
by the Human Resources Committee of the Board of Directors, except that grants
to executive officers are approved by the entire Board of Directors. The Board
or the committee appointed to administer the Plan are referred to in this
description as the "Administrator." The Administrator determines the terms of
options granted, including the exercise price, which shall not be less than fair
market value on the date of the grant, the number of shares subject to the
option and the exercisability thereof. All questions of interpretation are
determined by the Administrator and its decisions are final and binding upon all
participants. Members of the Board receive no additional compensation for their
services in connection with the administration of the Plan.
Eligibility
The Plan provides that either incentive or nonqualified stock options may be
granted to employees (including officers and employee directors) of the Company
or any of its designated subsidiaries. In addition, the Plan provides that
nonqualified stock options may be granted to consultants of the Company or any
of its designated subsidiaries. The Administrator elects the optionees and
determines the number of shares to be subject to each option. In making such
determination, there are taken into account the duties and responsibilities of
the optionee, the value of the optionee's services, the optionee's present and
potential contribution to the success of the Company and other relevant factors.
The Plan provides a limit of $100,000 on the aggregate fair market value of
shares subject to all incentive options which are exercisable for the first time
in any one calendar year. To the extent that the aggregate fair market value of
the shares subject to all incentive options which are exercisable for the first
time in any one calendar year exceed the $100,000 limit, such excess options
shall be treated as Nonstatutory Stock Options.
Terms of Options
Each option is evidenced by a stock option agreement between the Company and
the optionee to whom such option is granted and is subject to the following
additional terms and conditions:
(1) Exercise of the Option: The Administrator determines when options
granted under the Plan may be exercised. An option is exercised by giving
written notice of exercise to the Company, specifying the number of shares of
Common Stock to be purchased and tendering payment to the Company of the
purchase price. Payment for shares issued upon exercise of an option may consist
of cash, check, promissory note, delivery of already-owned shares of the
Company's Common Stock, subject to certain conditions. Payment may also be made
by a cashless exercise procedure under which the optionee provides irrevocable
instructions to a brokerage firm to sell the purchased shares and to remit to
the Company, out of the sale proceeds, an amount equal to the exercise price
plus all applicable withholding taxes or such other consideration as determined
by the Administrator.
Options may be exercised at any time on or following the date the options
are first exercisable. An option may not be exercised for a fraction of a share.
(2) Option Price: The option price of all incentive stock options and
nonqualified stock options under the Plan is determined by the Administrator,
but in no event shall it be less than the fair
-8-
<PAGE>
market value of the Common Stock on the date the option is granted. For purposes
of the Plan, fair market value is defined as the closing price per share of the
Common Stock on the date of grant as reported on the Nasdaq National Market. In
the case of an option granted to an optionee who at the time of grant owns stock
representing more than 10% of the voting power of all classes of stock of the
Company, the option price must be not less than 110% of the fair market value on
the date of grant.
(3) Termination of Employment: The Plan provides that if the optionee's
employment by the Company is terminated for any reason, other than death or
disability, options may be exercised within 30 days (or such other period of
time, not exceeding three months in the case of incentive stock options, as is
determined by the Administrator) after such termination and may be exercised
only to the extent the options were exercisable on the date of termination.
(4) Death: If an optionee should die while an employee or a consultant of
the Company, options may be exercised at any time within six months after the
date of death but only to the extent that the options were exercisable on the
date of death and in no event later than the expiration of the term of such
option as set forth in the Notice of Grant.
(5) Disability: If an optionee's employment is terminated due to a
disability, options may be exercised at any time within twelve months from the
date of such termination, but only to the extent that the options were
exercisable on the date of termination of employment and in no event later than
the expiration of the term of such option as set forth in the notice of grant.
(6) Termination of Options: Options granted under the Plan expire no later
than ten years from the date of grant. However, incentive stock options granted
to an optionee who, immediately before the grant of such option, owned more than
10% of the total combined voting power of all classes of stock of the Company or
a parent or subsidiary corporation, may not have a term of more than five years.
No option may be exercised by any person after such expiration.
(7) Nontransferability of Options: An option is nontransferable by the
optionee, other than by will or the laws of descent and distribution or a
qualified domestic relations order, and is exercisable only by the optionee
during his or her lifetime or, in the event of death, by a person who acquires
the right to exercise the option by bequest or inheritance or by reason of the
death of the optionee.
Adjustment upon Changes in Capitalization
In the event any change, such as a stock split or dividend, is made in the
Company's capitalization which results in an increase or decrease in the number
of outstanding shares of Common Stock without receipt of consideration by the
Company, an appropriate adjustment shall be made in the option price and in the
number of shares subject to each option. In the event of the proposed
dissolution or liquidation of the Company, all outstanding options automatically
terminate. In the event of a merger of the Company with or into another
corporation or sale of substantially all of the assets of the Company, all
outstanding options shall be assumed or an equivalent option substituted by the
successor corporation. The Administrator may in its discretion make provision
for accelerating the exercisability of shares subject to options under the Plan
in such event.
Amendment and Termination
The Board of Directors may amend the Plan at any time or from time to time
or may terminate it without approval of the stockholders, provided, however,
that stockholder approval is required for any amendment which increases the
number of shares which may be issued under the Plan, materially changes the
standards of eligibility or materially increases the benefits which may accrue
to participants under the Plan. However, no action by the Board of Directors or
stockholders may alter or impair any option previously granted under the Plan
without the consent of the optionee.
-9-
<PAGE>
Tax Information
Options granted under the Plan may be either "incentive stock options," as
defined in Section 422 of the Code, or nonqualified options.
An optionee who is granted an incentive stock option will not recognize
taxable income either at the time the option is granted or upon its exercise,
although the exercise may subject the optionee to the alternative minimum tax.
Upon the sale or exchange of the shares more than two years after grant of the
option and one year after exercising the option, any gain or loss will be
treated as long-term capital gain or loss. If these holding periods are not
satisfied, the optionee will recognize ordinary income at the time of sale or
exchange equal to the difference between the exercise price and the lower of (i)
the fair market value of the shares at the date of the option exercise or (ii)
the sale price of the shares. A different rule for measuring ordinary income
upon such a premature disposition may apply if the optionee is also an officer,
director, or 10% stockholder of the Company. Generally, the Company will be
entitled to a deduction in the same amount as the ordinary income recognized by
the optionee. Any gain or loss recognized on such a premature disposition of the
shares in excess of the amount treated as ordinary income will be characterized
as long-term or short-term capital gain or loss, depending on the holding
period.
All other options which do not qualify as incentive stock options are
referred to as nonqualified options. An optionee will not recognize any taxable
income at the time he or she is granted a nonqualified option. However, upon its
exercise, the optionee will recognize ordinary income generally measured as the
excess of the then fair market value of the shares purchased over the purchase
price. Any taxable income recognized in connection with an option exercise by an
optionee who is also an employee of the Company will be subject to tax
withholding by the Company. Upon resale of such shares by the optionee, any
difference between the sales price and the optionee's purchase price, to the
extent not recognized as taxable income as described above, will be treated as
long-term or short-term capital gain or loss, depending on the holding period.
Generally, the Company will be entitled to a tax deduction in the same
amount as the ordinary income recognized by the optionee with respect to shares
acquired upon exercise of a nonqualified option.
The foregoing is only a summary of the effect of federal income taxation
upon the optionee and the Company with respect to the grant and exercise of
options under the Plan, does not purport to be complete, and does not discuss
the tax consequences of the optionee's death or the income tax laws of any
municipality, state or foreign country in which an optionee may reside.
Participation in the Plan
The grant of options under the Plan to executive officers, including the
officers named in the Summary Compensation Table is subject to the discretion of
the Administrator. As of the date of this proxy statement, there has been no
determination by the Administrator with respect to future awards under the Plan.
Accordingly, future awards are not determinable. The table of option grants
under "Executive Compensation and Other Matters--Option Grants in Last Fiscal
Year" provides information with respect to the grant of options to the executive
officers named in the Summary Compensation Table during fiscal 2000. No
non-employee Directors received any option grants under the Plan in fiscal 2000.
During fiscal 2000, all current executive officers as a group and all other
employees as a group received options to purchase 290,000 shares and 493,844
shares, respectively, pursuant to the Plan. As of March 31, 2000, approximately
600 persons were eligible to participate in the Plan.
-10-
<PAGE>
PROPOSAL THREE
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected PricewaterhouseCoopers LLP, independent
accountants, to audit the consolidated financial statements of the Company for
the fiscal year ending March 31, 2001, and recommends that stockholders vote for
ratification of such appointment. Although action by stockholders is not
required by law, the Board of Directors has determined that it is desirable to
request approval of this selection by the stockholders. Notwithstanding the
selection, the Board of Directors, in its discretion, may direct the appointment
of new independent accountants at any time during the year, if the Board of
Directors feels that such a change would be in the best interest of the Company
and its stockholders. In the event of a negative vote on ratification, the Board
of Directors will reconsider its selection.
Representatives of PricewaterhouseCoopers LLP are expected to be present at
the meeting with the opportunity to make a statement if they desire to do so and
are expected to be available to respond to appropriate questions.
Changes in Certifying Accountants
On January 11, 2000, the Company filed a current report on Form 8-K (the
"Form 8-K") regarding its dismissal of KPMG LLP ("KPMG") as its independent
accountants and the engagement of PricewaterhouseCoopers LLP ("PWC") as the
Company's independent accountants. The contents of that report are as follows:
Item 4. Changes in Registrant's Certifying Accountant.
On January 5, 2000, Spectrian Corporation (the "Company") dismissed KPMG as
the Company's independent public accountants, a capacity in which the firm had
served for several years, and on such date also selected PWC to replace KPMG in
this role. The decision to change the Company's independent accountants was
approved by the Company's full Board of Directors.
During the Company's two most recent fiscal years and the subsequent interim
period preceding the change in accountants, there were no disagreements with
KPMG on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements, if not resolved
to the satisfaction of KPMG, would have caused KPMG to make reference to the
subject matter of the disagreements in connection with its reports on the
Company's financial statements for the two most recent fiscal years. In
addition, KPMG's reports on the financial statements of the Company for the past
two years contained unqualified opinions.
KPMG's letter to the Audit Committee related to its audit of the Company's
consolidated financial statements of the fiscal year ended March 31, 1999
included reportable conditions that (1) the Company was not reconciling balance
sheet accounts maintained in the general ledger on a monthly basis and (2) the
reduced production of the Company's products in the fiscal year ended March 31,
1999 resulted in an under absorption of overhead and the resulting variances
were not adequately allocated between cost of sales and inventory on hand. The
Company believes it has resolved these reportable conditions noted above. The
subject matter of the reportable conditions were discussed with the Company's
Audit Committee as were the subsequent remedial actions taken and the informal
assessments by KPMG of those actions in subsequent interim periods.
The Company authorized KPMG to respond fully to the inquiries of PWC. The
Company also provided KPMG with a copy of the disclosures it is making in this
Item 4. KPMG has furnished the Company with a letter addressed to the Commission
stating that it agrees with the statements made by the
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<PAGE>
Company herein. The Company has filed a copy of KPMG's letter as Exhibit 99.1 to
this Report and is hereby incorporated by reference herein.
During the two most recent fiscal years and through the date of this report,
the Company has not consulted with PWC on items which (i) were or should have
been subject to SAS 50 or (ii) concerned the subject matter of a disagreement or
reportable event with KPMG as described in Item 304(a)(2) of Regulation S-K. PWC
currently advises the Company on federal, state and local tax matters.
Exhibit 99.1 to Form 8-K -- Response of KPMG LLP
On January 7, 2000, KPMG furnished the Company with the following response
letter which the Company filed with the Commission as an exhibit to the Form 8-K
filed on January 11, 2000.
January 7, 2000
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Ladies and Gentlemen:
We were previously independent auditors for Spectrian Corporation (the
"Company") and in our report dated April 29, 1999, we reported on the
consolidated financial statements of the Company and its subsidiaries as of and
for each of the fiscal years in the three year period ended March 31,1999. On
January 5, 2000, our appointment as the Company's independent auditors was
terminated. We have read the Company's statements included under item 4 of its
Current Report on Form 8-K dated January 7, 2000, and we agree with the
statements set forth therein, except that we are not in a position to agree or
disagree with the Company's statements that (i) subsequent to the close of the
fiscal year ended March 31, 1999, the Company has resolved the reportable
conditions cited therein and (ii) the change of the Company's independent
auditors was approved by the Company's full board of directors.
Very truly yours,
/s/ KPMG LLP
KPMG LLP
Mountain View, California
The Board unanimously recommends a vote "For" the ratification of the
appointment of PricewaterhouseCoopers LLP as independent auditors of the Company
for the fiscal year ending March 31, 2001.
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<PAGE>
EXECUTIVE COMPENSATION AND OTHER MATTERS
Executive Compensation
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table sets forth certain information
regarding the compensation of the Chief Executive Officer of the Company and the
other four most highly compensated executive officers of the Company (the "Named
Executive Officers") for services rendered in all capacities to the Company in
the fiscal year ended March 31, 2000.
<TABLE>
<CAPTION>
Long-Term
Compensation
Awards
------
Number of
Annual Compensation(1) Securities
Fiscal ------------------------ Underlying
Name and Principal Position Year Salary($) Bonus($) Options(#)
--------------------------- ---- --------- -------- ----------
<S> <C> <C> <C> <C>
Garrett A. Garrettson.............................. 2000 $ 303,357 -- 50,000
Former President, Former Chief Executive 1999 284,073 -- 35,000
Officer and Chairman of the Board (3) 1998 275,000 $54,000 25,000
Thomas H. Waechter................................. 2000 -- -- 250,000
President, Chief Executive Officer and Director 1999 -- -- --
(4) 1998 -- -- --
Christopher J. Tubis............................... 2000 152,564 -- 125,000
President, UltraRF Division (5) 1999 -- -- --
1998 -- -- --
Warren M. Dumanski................................. 2000 166,123 5,625 (2) 19,000
Vice President, Sales and Marketing -Amplifier 1999 112,343 26,013 10,668
Division (6) 1998 46,154 12,217 11,070
David S. Piazza.................................... 2000 156,333 -- --
Vice President, Development & Engineering - 1999 133,154 -- 31,435
Amplifier Division 1998 122,915 28,064 1,656
Darien R. Spencer.................................. 2000 158,545 -- 76,000
Vice President, Operations - Amplifier Division 1999 129,715 -- 6,449
(7) 1998 66,827 20,000 30,383
Joseph M. Veni..................................... 2000 190,689 -- --
Former Executive Vice President and General 1999 154,961 -- 45,000
Manager of Single Carrier Products (8) 1998 145,192 33,824 10,000
Gerald D. Corcoran................................ 2000 237,402 43,434 40,000
Former Vice President, Chief Process Officer (9) 1999 124,814 -- 10,000
1998 110,577 16,000 20,000
----------------------------
<FN>
(1) Other than salary and bonus described herein, the Company did not pay the
persons named in the Summary Compensation Table any compensation, including
incidental personal benefits, in excess of 10% of such Named Executive
Officer's salary.
(2) Represents bonuses relating to performance of services for the Company in
fiscal 1999, which was paid in fiscal 2000.
(3) Mr. Garrettson became President, Chief Executive Officer and director of
the Company in April 1996. Mr. Garrettson terminated his position as
President and Chief Executive Officer of the Company in March 2000 and
became Chairman of the Board effective the same date.
(4) Mr. Waechter joined the Company as President, Chief Executive Officer and
Director on March 31, 2000.
(5) Mr. Tubis joined the Company as President, UltraRF Division in July 1999.
(6) Mr. Dumanski joined the Company in September 1997 as Director, Nortel
Account. In March 2000, he was named Vice President, Sales and Marketing -
Amplifier Division.
(7) Mr. Spencer joined the Company in September 1997 as Vice President,
Operations - Amplifier Division.
(8) Mr. Veni resigned effective March 31, 2000. See "--Employment Contracts and
Change in Control Arrangements."
(9) Mr. Corcoran resigned effective March 25, 2000.
</FN>
</TABLE>
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<PAGE>
Option Grants in Last Fiscal Year
The following table provides information concerning each grant of options to
purchase the Company's Common Stock made during the fiscal year ended March 31,
2000 to the Named Executive Officers.
<TABLE>
<CAPTION>
Potential Realizable Value
Number of % of Total Minus Exercise Price at
Securities Options Stock Price Appreciation
Underlying Granted to Exercise for Option Term(1)
Option Employees in Price Per ------------------
Name Granted(2) Fiscal Year Share (3) Expiration Date 5% 10%
---- ---------- ----------- --------- --------------- -- ---
<S> <C> <C> <C> <C> <C> <C>
Garrett A. Garrettson......... 50,000 2.6% $15.00 9/01/09 $471,671 $1,195,307
Thomas H. Waechter (4)........ 250,000 13.0 23.06 3/30/10 3,625,971 9,188,921
Christopher J. Tubis.......... 125,000 6.5 14.25 7/09/09 1,120,219 2,838,854
Warren M. Dumanski............ 4,000 0.2 14.75 6/25/09 37,105 94,031
Warren M. Dumanski............ 7,000 0.4 27.63 3/10/10 121,613 308,190
Warren M. Dumanski............ 8,000 0.4 24.19 3/15/10 121,691 308,389
Darien R. Spencer............. 16,000 0.8 14.75 6/25/09 148,419 376,123
Darien R. Spencer............. 40,000 2.1 24.19 3/15/10 608,456 1,541,946
Darien R. Spencer............. 20,000 1.0 24.75 3/16/10 311,303 788,902
Gerald D. Corcoran............ 20,000 1.0 14.75 6/25/09 185,523 470,154
Gerald D. Corcoran............ 20,000 1.0 12.75 5/25/09 160,368 406,404
--------------------
<FN>
(1) Potential realizable value is based on the assumption that the Common Stock
of the Company appreciates at the annual rate shown (compounded annually)
from the date of grant until the expiration of the 10 years option term.
These numbers are calculated based on the requirements promulgated by the
Commission and do not reflect the Company's estimate of future stock price
growth.
(2) Except as noted, all options shown granted in fiscal 2000 are exercisable
starting one year after the date of grant, with 1/48th% of the shares
becoming exercisable each at the end of every month thereafter, with full
vesting occurring on the fourth anniversary of the date of grant. Under the
1992 Stock Plan, the Board of Directors retains the discretion to modify
the terms, including the price, of outstanding options.
(3) Options were granted at an exercise price equal to the fair market value of
the Company's Common Stock, as determined by reference to the closing price
reported on the Nasdaq National Market on the date of grant.
(4) Options were granted outside of the Company's stock plans.
</FN>
</TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth certain information regarding the exercise of
stock options during fiscal 2000 and the value of options held as of March 31,
2000 by the Named Executive Officers.
<TABLE>
Number of Securities Value of Unexercised In-the-
Underlying Unexercised Money Options at March 31,
Shares Options at March 31, 2000 2000($)(2
Acquired on Value --------------------------- ----------------------------
Name Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable
---- -------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Garrett A. Garrettson.......... 24,900 $488,357 199,042 91,058 $1,500,957 $ 655,781
Thomas H. Waechter............. -- -- -- 250,000 -- --
Christopher J. Tubis........... -- -- -- 125,000 -- 1,031,250
Warren M. Dumanski............. -- -- 6,721 11,017 38,966 73,003
David S. Piazza................ -- -- 40,725 23,762 452,031 239,251
Darien R. Spencer.............. -- -- 9,082 23,750 29,725 150,117
Joseph M. Veni................. 23,437 506,941 49,839 44,895 373,422 318,019
Gerald D. Corcoran............. 34,135 403,935 656 -- 6,396 --
--------------------------
<FN>
(1) Market value of the Company's Common Stock at the exercise date minus the
exercise price.
(2) Market value of the Company's Common Stock at fiscal year-end minus the
exercise price.
</FN>
</TABLE>
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<PAGE>
Employment Contracts and Change-in-control Arrangements
During fiscal 2000, the Company entered into a form of Change of Control
Severence Agreement (collectively the "Agreements") with each of Thomas H.
Waechter, Garrett A. Garrettson, Michael D. Angel, Richard A. Johanson,
Christopher A. Menicou, Darien R. Spencer, Christopher J. Tubis, John P. Quinn,
and Joseph M. Veni (collectively the "Employees"). Other than the Agreements,
the Employees are employed at-will by the Company and are eligible to
participate in the Company's employee benefit plans and executive compensation
programs.
Under the terms of the Agreements, if the Employees' employment with the
Company terminates as a result of an involuntary termination after a change of
control, (1) the Employees are entitled to receive a sum equal to twelve (12)
months of his or her annualized base salary and targeted bonus, (2) the Company
will continue to make avaliable to the Employees and their spouses and
dependents all group health, life and other similar insurance plans that he or
she is a participant, and (3) the Employees' options granted by the Company
shall be immediately fully vested and exercisable.
In April 1996, the Company appointed Garrett A. Garrettson as the Company's
President, Chief Executive Officer and director of the Company. Mr. Garrettson
entered into an employment agreement with the Company pursuant to which he
received an annual base salary of $275,000 and received a one-time signing bonus
of $25,000 in fiscal 1997. The agreement provides for additional variable
compensation in the target amount of $100,000 per year starting in fiscal year
1997. During fiscal 1999, Mr. Garrettson's salary was increased to $294,300 and
his variable compensation target was increased to $150,000. Effective April 1,
2000, Mr. Garrettson resigned from his positions of President and Chief
Executive Officer and accepted the position of Chairman of the Board of
Directors under the terms of a new employment agreement that supercedes his
original employment agreement. The new employment agreement does not effect the
terms of his change of control severance agreement described above or his
participation in the Company's benefit plans. In his new capacity, Mr.
Garrettson will work full-time for the Company, primarily on strategic matters,
until April 1, 2001 and part-time for two years thereafter. During this three
year period, Mr. Garrettson shall not provide services to any entity other than
the Company without the written consent of the Company. For the year ended March
31, 2001, Mr. Garrettson will receive an annual base salary of $294,300 and be
eligible for a target variable compensation bonus of 55% of his base salary. For
the two years ended March 31, 2003, Mr. Garrettson will receive an annual base
salary of $147,150 and be eligible for a target variable compensation bonus of
55% of his base salary. If Mr. Garrettson's employment with the Company is
terminated prior April 1, 2003, he will continue to receive his base salary and
at least 50% of the target variable compensation bonus through March 31, 2003.
The Company also granted Mr. Garrettson options to purchase 250,000 shares
of Common Stock shortly after he commenced employment with the Company. These
shares are subject to vesting over four years and were priced at the fair market
value of the Company's Common Stock at the time of grant in April 1996. On
August 27, 1996, the Board of Directors of the Company authorized the reduction
of the exercise price of options to purchase 250,000 shares of the Company's
Common Stock granted to Mr. Garrettson in April 1996 in connection with his
employment agreement. Mr. Garrettson's hiring package included an agreement by
the Company to protect the value of Mr. Garrettson's options from a significant
decrease in the price of the Company's Common Stock in the period following his
hiring by the Company. Mr. Garrettson's April 1996 options had exercise prices
of $21.375 per share, and such exercise price was substantially higher than the
$13.75 per share market price of the Company's Common Stock at the time of the
reissuance. Mr. Garrettson's April 1996 options were exchanged as of August 27,
1996 for nonstatutory options with exercise prices of $14.50 per share. The
vesting periods and expiration dates of Mr. Garrettson's options were unchanged
as a result of the reissuance. In fiscal 1999 and fiscal 2000, Mr. Garrettson
was granted options to purchase an additional 35,000 shares and 50,000 shares of
Common Stock, respectively, at an exercise price equal to the fair market value
of the Common Stock on the date of grant. Mr. Garrettson's current employment
agreement also provides that in the event that Mr. Garrettson's employment is
terminated by the Company, for any reason other than
-15-
<PAGE>
misconduct, his options will become fully vested and exercisable for twelve
months following the termination date.
The Company had employment agreements with Stephen B. Greenspan and Bruce R.
Wright, former employees of the Company, that resulted in certain liabilities
during fiscal 2000, as described below.
In April 1996, in connection with his acceptance of employment with the
Company, Stephen B. Greenspan, Former Chief Operating Officer, entered into an
employment agreement with the Company pursuant to which he received an annual
base salary of $175,000. The agreement provides for additional variable
compensation in the target amount of $100,000 per year starting in fiscal year
1997. The Company also granted Mr. Greenspan options to purchase 80,000 shares
of Common Stock shortly after he commenced employment with the Company. The
agreement also provides that in the event that Mr. Greenspan's employment is
terminated by the Company, for any reason other than misconduct, the Company
will continue Mr. Greenspan's base salary for six months. Mr. Greenspan was
granted an additional option to purchase 10,000 shares of the Company's Common
Stock in August 1996 at an exercise price of $14.50 per share and subject to
four years vesting. In fiscal 1999, Mr. Greenspan was granted options to
purchase an additional 20,000 shares of Common Stock. These shares are subject
to vesting over four years and are priced at the fair market value of the Common
Stock at the time of grant. Stephen B. Greenspan resigned as an officer of the
Company effective March 31, 1999. Pursuant to a separation agreement dated March
23, 1999, the Company and Mr. Greenspan agreed that Mr. Greenspan would receive
a severance payment of $100,000, or six months salary, and would serve as a
consultant to the Company for 12 months commencing April 1, 1999. The Company
also agreed to pay Mr. Greenspan's group medical, vision and dental premiums
until March 21, 2000. The Company also agreed to continue to fund Mr.
Greenspan's executive life insurance until March 31, 2000. With respect to
options held by Mr. Greenspan to purchase 110,000 shares of the Company's Common
Stock, Mr. Greenspan will continue to vest until the earlier of the date he
ceases to be a Company consultant or March 31, 2000. Mr. Greenspan's options
will also continue to be subject to acceleration upon a change in control during
this period. The terms of the change of control were similar to those described
above. Mr. Greenspan will be entitled to exercise such options until June 29,
2000. Mr. Greenspan agreed to release the Company for any and all claims or any
liability for compensation except as set forth in the separation agreement.
In May 1997 the Company appointed Bruce R. Wright as the Company's Executive
Vice President, Finance and Administration, Chief Financial Officer and
Secretary. Mr. Wright entered into an Employment Offer Letter with the Company
pursuant to which he receives an annual base salary of $200,000. Mr. Wright is
also eligible for up to $100,000 of variable compensation per year in connection
with the Company's Executive Variable Compensation Plan. Mr. Wright received an
option to acquire 100,000 shares of the Company's Common Stock shortly after he
commenced employment with the Company. In fiscal 1999, Mr. Wright was granted
options to purchase an additional 25,000 shares of Common Stock. All shares are
subject to vesting over four years and are priced at the fair market value of
the Company's Common Stock at the date of grant. Bruce R. Wright resigned as an
officer of the Company on May 8, 1999. In connection with a separation agreement
dated May 7, 1999, the Company and Mr. Wright agreed that Mr. Wright would
receive monthly payments of $250.00 through May 8, 2000. Mr. Wright agreed to
provide 2.5 hours per month of consulting services to the Company without
additional payment. Mr. Wright agreed to provide additional consulting services
as requested at $100 per hour. The Company pays Mr. Wright's group medical,
vision and dental insurance premiums until the earlier of June 1, 2000 or he
accepts full-time employment. Mr. Wright was entitled to continue to participate
in the Exec-U-Care executive reimbursement program until June 1, 2000, and the
Company paid the related premiums. Mr. Wright's options to purchase the
Company's Common Stock continued to vest until the earlier of May 8, 2000 or he
ceases to be reasonably available as a consultant to the Company. During the
period Mr. Wright's options continued to vest, they were subject to acceleration
of vesting upon a change in control. No such acceleration occurred. The terms of
the change of control were similar to those described above. Mr. Wright has
until November 4, 2000 to exercise such options.
-16-
<PAGE>
Mr. Wright released the Company from any and all claims or any liability for
compensation except as set forth in the separation agreement.
Compensation of Directors
Non-employee directors currently receive a quarterly retainer of $3,000, a
fee of $2,000 for attendance at each Board of Directors meeting, $1,000 for
Chairmen of the Audit and Human Resources Committees, and $500 for other
Directors' attendance at each committee meeting for services provided in that
capacity and are reimbursed for out-of-pocket expenses incurred in connection
with attendance at meetings of the Board of Directors and committees of the
Board. The Company's 1994 Director Plan provides that options may be granted to
non-employee directors of the Company who do not represent stockholders holding
more than 1% of the Company's outstanding Common Stock pursuant to an automatic
nondiscretionary grant mechanism. Each Outside Director is automatically granted
an Option to purchase 5,000 shares (the "First Option") on the date on which
such person first becomes an Outside Director. After the First Option has been
granted to an Outside Director, such Outside Director is thereafter
automatically granted an Option to purchase 5,000 shares at the next meeting of
the Board of Directors following the Annual Meeting of Stockholders in each
year, if, on such date, he shall have served on the Board for at least six (6)
months. The "First Option" granted shall be exercisable only while the Outside
Director remains a director with the Company, and vests in installments
cumulatively as to 25% of the Shares subject to the Option on each anniversary
of its date of grant. Subsequent option grants are exercisable only while the
Outside Director remains a director of the Company, and vest as to 2.08% of the
Shares subject to the Option on each monthly anniversary of its date of grant.
Report of the Board of Directors on Executive Compensation
During the fiscal year ended March 31, 2000, the Company's executive
compensation program was approved by the Board of Directors as a whole rather
than the Human Resources Committee of the Board of Directors. The following is
the report of the Board of Directors with respect to the compensation paid to
the Company's executive officers during fiscal 2000. Actual compensation earned
during the fiscal year by the Named Executive Officers is shown in the Summary
Compensation Table above.
Compensation Philosophy
The Company's philosophy in setting its compensation policies for executive
officers is to maximize stockholder value over time. The primary goal of the
Company's executive compensation program is therefore to closely align the
interests of the executive officers with those of the Company's stockholders. To
achieve this goal the Company attempts to (i) offer compensation opportunities
that attract and retain executives whose abilities are critical to the long-term
success of the Company, motivate individuals to perform at their highest level
and reward outstanding achievement, (ii) maintain a significant portion of the
executive's total compensation at risk, tied to achievement of financial,
organizational and management performance goals, and (iii) encourage executives
to manage from the perspective of owners with an equity stake in the Company.
The compensation program for the Company's executive officers consists of
the following components:
o Base Salary
o Quarterly and Annual Cash Incentives
o Long-Term Stock Option Incentives
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<PAGE>
Base Salary
The Board of Directors reviewed and approved fiscal 2000 base salaries for
the Chief Executive Officer and other Named Executive Officers at the beginning
of the fiscal year. Base salaries were established by the Board based upon
competitive compensation data, an executive's job responsibilities, level of
experience, individual performance and contribution to the business. In
addition, the level of base salaries of each of Mr. Garrettson, Mr. Greenspan
and Mr. Wright were governed by employment agreements entered into with such
executives in connection with their original employment with the Company, and
such employment agreements were reviewed and approved by the Board of Directors.
The terms of these employment agreements are described in the section entitled,
"Employment Contracts and Change-In-Control Arrangements." Officer salaries have
been targeted at or above the average rates paid by competitors to enable the
Company to attract, motivate, reward and retain highly skilled executives. In
order to evaluate the Company's competitive posture in the industry, the Board
reviewed and analyzed the compensation packages, including base salary levels,
offered by other high technology companies. The competitive information was
obtained from surveys prepared by national consulting companies or industry
associations (e.g., Radford Associates and the American Electronics
Association). The surveys include, but are not limited to, data from all
industries represented in the Standard & Poor's Communication Equipment
Manufacturer Index, the "line of business index" used in the stock performance
graph set forth below. See "Performance Graph." In making base salary decisions,
the Board exercised its discretion and judgment based upon these factors. No
specific formula was applied to determine the weight of each factor. Mr.
Garrettson's base salary remained unchanged at $294,300 in fiscal 2000.
Quarterly and Annual Cash Incentives
Quarterly and annual incentive bonuses for executive officers are intended
to reflect the Board's belief that a significant portion of the compensation of
each executive officer should be contingent upon the performance of the Company,
as well as the individual contribution of each executive officer. To carry out
this philosophy, the Company has implemented a Variable Compensation Bonus Plan,
which compensates officers in the form of quarterly and annual cash bonuses. At
the beginning of fiscal 2000, the Board of Directors established target bonuses
for each executive officer as a percentage of the officer's base salary. The
target level of bonuses which the executive officers were eligible to receive
varied from 25% to 50% of base salaries. The Variable Compensation Bonus Plan is
intended to motivate and reward executive officers by directly linking the
amount of any cash bonus to specific Company-based performance targets and
specific individual-based performance targets. The Named Executive Officers must
successfully achieve these performance targets which are submitted by management
to the Board for its evaluation and approval at the beginning of each fiscal
quarter. The Company-based performance goals are tied to different indicators of
Company performance, such as achievement of specific levels of orders, sales and
pre-tax profits. These Company-based performance goals vary from quarter to
quarter, may be subjective in nature and are competitively sensitive to the
Company's business and operations. The individual's performance goals are tied
to different indicators of the individual Named Executive Officer's performance,
such as having received an order from a specific customer, achieved an R&D
project milestone, or achieved a desired on-time customer delivery. The Board
evaluates the completion of the Company and individual goals and approves a
performance rating relative to the goals so completed. This scoring is
subjective and is influenced by the Board's perception of the importance of the
various corporate and individual goals. At the end of the fiscal year, when
determining the bonus payment for the fourth fiscal quarter, the Board considers
the overall performance of the Company and each individual during the entire
fiscal year, including the fourth quarter. Performance based bonuses of $44,000
were awarded during fiscal 2000 and paid in fiscal 2001. The Board of Directors
did not award Mr. Garrettson any variable compensation in fiscal 2000, as the
Company did not meet its performance targets.
-18-
<PAGE>
Long-Term Stock Option Incentives
The Board provides the Company's Named Executive Officers with long-term
incentive compensation through grants of options to purchase the Company's
Common Stock. The Board believes that stock options provide the Company's Named
Executive Officers with the opportunity to purchase and maintain an equity
interest in the Company and to share in the appreciation of the value of the
Company's Common Stock. The Board believes that stock options directly motivate
an executive to maximize long-term stockholder value. The options also utilize
vesting periods that encourage key executives to continue in the employ of the
Company. With the exception of the regrant of options to Mr. Garrettson noted
below (which was at a price above then-current fair market value), all options
granted to executive officers to date have been granted at the fair market value
of the Company's Common Stock on the date of grant. The Board considers the
grant of each option subjectively, reviewing factors such as the individual
performance of the Named Executive Officer and the anticipated contribution of
the Named Executive Officer to the attainment of the Company's long-term
strategic performance goals. Long-term incentives granted in prior years are
also taken into account. On March 31, 2000, the Board of Directors granted Mr.
Waechter options to purchase 250,000 shares of Common Stock at an exercise price
of $23.06 per share, the closing price of the Company's Common Stock on the date
of grant. Such grants reflect the Board of Directors' policy of fixing
compensation, including long-term incentive compensation, at or above the
average rates paid by its competitors. These options vest at the rate of
one-quarter of the shares subject to the options on the first anniversary of the
date of grant and the remaining shares vest monthly at a rate of 1/48 of the
total of each grant per month. The Board of Directors believes that this vesting
structure provides appropriate alignment of the Named Executive Officers'
interests with those of the Company's stockholders while also providing them
with incentives to remain at the Company.
Section 162(m)
The Board has considered the potential future effects of Section 162(m) of
the Internal Revenue Code on the compensation paid to the Company's executive
officers. Section 162(m) disallows a tax deduction for any publicly-held
corporation for individual compensation exceeding $1.0 million in any taxable
year for any of the Named Executive Officers, unless compensation is
performance-based. The Company has adopted a policy that, where reasonably
practicable, the Company will seek to qualify the variable compensation paid to
its executive officers for an exemption from the deductibility limitations of
Section 162(m).
Respectfully submitted by:
Garrett A. Garrettson Robert W. Shaner
James A. Cole Thomas H. Waechter
Martin Cooper Robert C. Wilson
Charles D. Kissner
-19-
<PAGE>
Performance Graph
Set forth below is a line graph comparing the annual percentage change in
the cumulative return to the stockholders of the Company's Common Stock with the
cumulative return of the Standard & Poor's 500 Index and of the Standard &
Poor's Communication Equipment Manufacturer Index for the period commencing
March 31, 1995 and ending on March 31, 2000. Returns for the indices are
weighted based on market capitalization at the beginning of each fiscal year.
<TABLE>
<CAPTION>
[Graph Omitted]
3/31/95 3/31/96 3/31/97 3/31/98 3/31/99 3/31/00
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Spectrian Corporation 100 74 37 55 39 75
S&P 500 Index 100 132 158 234 278 327
S&P Communications Equipment Index 100 145 170 286 398 794
-----------------
<FN>
(1) The graph assumes that $100 was invested on March 31, 1995 in the
Company's Common Stock and in the Standard & Poor's 500 Index and in the
Standard & Poor's Communication Equipment Manufacturer Index and that all
dividends were reinvested. No dividends have been declared or paid on the
Company's Common Stock. Stockholder returns over the indicated period
should not be considered indicative of future stockholder returns.
</FN>
</TABLE>
-20-
<PAGE>
The information contained above under the captions "Report of the Board of
Directors on Executive Compensation" and "Performance Graph" shall not be deemed
to be "soliciting material" or to be "filed" with the Securities and Exchange
Commission, nor shall such information be incorporated by reference into any
future filing under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, except to the extent that the Company
specifically incorporates it by reference into such filing.
Section 16 Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's executive officers and directors, and
persons who own more than ten percent of a registered class of the Company's
equity securities to file reports of ownership and changes in ownership with the
Securities and Exchange Commission ("Commission") and the National Association
of Securities Dealers, Inc. Executive officers, directors and greater than ten
percent stockholders are required by Commission regulation to furnish the
Company with copies of all Section 16(a) forms they file. Based solely on its
review of the copies of such forms received by it, or written representations
from certain reporting persons, the Company believes that, during fiscal 2000
all executive officers and directors of the Company complied with all applicable
filing requirements.
CERTAIN TRANSACTIONS
The Company had no transactions that were reportable pursuant to Item 404 of
Regulation S-K during fiscal 2000 other than as set forth elsewhere in this
Proxy Statement under the caption "Executive Compensation - Employeement
Contracts and Change-in-Control Arrangements". All future transactions,
including loans, between the Company and its officers, directors, principal
stockholders and their affiliates will be approved by a majority of the Board of
Directors, including a majority of the independent and disinterested outside
directors, and will continue to be on terms no less favorable to the Company
than could be obtained from unaffiliated third parties.
OTHER MATTERS
The Company knows of no other matters to be submitted at the meeting. If any
other matters properly come before the meeting, it is the intention of the
persons named in the enclosed form of Proxy to vote the shares they represent as
the Board of Directors may recommend.
THE BOARD OF DIRECTORS
Dated: July 28, 2000
-21-
<PAGE>
PROXY
SPECTRIAN CORPORATION PROXY
2000 ANNUAL MEETING OF STOCKHOLDERS
August 30, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of SPECTRIAN CORPORATION, a Delaware
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement, each dated July 28, 2000, and hereby appoints
Thomas H. Waechter and Michael D. Angel each as proxy and attorney-in-fact, with
full power of substitution, on behalf and in the name of the undersigned, to
represent the undersigned at the 2000 Annual Meeting of Stockholders of
SPECTRIAN CORPORATION to be held on August 30, 2000 at 10:00 a.m. local time, at
160 Gibraltar Court, Sunnyvale, California 94089 and at any adjournment or
adjournments thereof, and to vote all shares of Common Stock which the
undersigned would be entitled to vote if then and there personally present, on
the matters set forth on the reverse side.
(Continued, and to be signed on the other side)
<PAGE>
<TABLE>
<CAPTION>
-------- ---------------------------------------------------------------- ------------- ----------------- -------------
<S> <C> <C> <C> <C>
1. ELECTION OF DIRECTORS:
NOMINEES: WITHHOLD
FOR FOR ALL
Garrett A. Garrettson, Martin Cooper, |_| |_|
Charles D. Kissner, Robert W. Shaner,
Thomas H. Waechter, Robert C. Wilson
INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's name in the space provided below
-------- ---------------------------------------------------------------- ------------- ----------------- -------------
FOR AGAINST ABSTAIN
-------- ---------------------------------------------------------------- ------------- ----------------- -------------
2. Amendment of 1992 Stock Plan |_| |_| |_|
-------- ---------------------------------------------------------------- ------------- ----------------- -------------
3. Appointment of PricewaterhouseCoopers LLP as independent |_| |_| |_|
accountants of Spectrian Corporation for the fiscal year
ending March 31, 2001
-------- ---------------------------------------------------------------- ------------- ----------------- -------------
</TABLE>
and, in their discretion, upon such other matter or matters which may properly
come before the meeting or any adjournment or adjournments thereof. THIS PROXY
WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED, WILL BE
VOTED FOR THE ELECTION OF DIRECTORS, THE AMENDMENT TO THE 1992 STOCK PLAN, AND
THE APPOINTMENT OF PricewaterhouseCoopers LLP, OR AS SAID PROXIES DEEM ADVISABLE
ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING, INCLUDING, AMONG
OTHER THINGS, CONSIDERATION OF ANY MOTION MADE FOR ADJOURNMENT OF THE MEETING.
Signature Dated , 2000
----------------------------------------- -------------
Signature Dated , 2000
----------------------------------------- -------------
This proxy should be marked, dated and signed by the stockholder(s) exactly as
his or her name appears hereon, and returned promptly in the enclosed envelope.
Persons signing in a fiduciary capacity should so indicate. If shares are held
by joint tenants or as community property, both should sign.
