<PAGE>
=============================================================================
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
Commission Only (as permitted
[X] Definitive proxy statement by Rule 14a-6(e)(2))
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Micrel, Incorporated
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
_______________________________________________________________________
(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>
[MICREL LOGO]
MICREL, INCORPORATED
1849 Fortune Drive
San Jose, California 95131
Notice of Annual Meeting of Shareholders
To Be Held May 21, 1998
To the Shareholders of Micrel, Incorporated:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the
"Annual Meeting") of Micrel, Incorporated, a California corporation (the
"Company"), will be held at the Company's offices located at 1931 Fortune
Drive, San Jose, California 95131 on May 21, 1998 at 12 noon, local time, for
the following purposes:
1. ELECTION OF DIRECTORS. To elect five directors of the Company to
serve until the 1999 Annual Meeting or until their successors are
duly elected and qualified;
2. SELECTION OF INDEPENDENT AUDITORS. To ratify the appointment of
Deloitte & Touche LLP as the Company's independent auditors for the
fiscal year ending December 31, 1998; and
3. To transact such other business as may properly come before the
Annual Meeting and any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement which is attached hereto and made a part hereof. The Annual Meeting
will be open to shareholders of record, proxy holders, and others by
invitation only. Beneficial owners of shares held by a broker or nominee must
present proof of such ownership to attend the meeting.
The Board of Directors has fixed the close of business on April 2, 1998
as the record date for determining the shareholders entitled to notice of and
to vote at the 1998 Annual Meeting of Shareholders and any adjournment or
postponement thereof.
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING OF SHAREHOLDERS IN
PERSON, YOU ARE URGED TO MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD
AS PROMPTLY AS POSSIBLE IN THE POSTAGE-PREPAID ENVELOPE PROVIDED TO ENSURE
YOUR REPRESENTATION AND THE PRESENCE OF A QUORUM AT THE ANNUAL MEETING. IF
YOU SEND IN YOUR PROXY CARD AND THEN DECIDE TO ATTEND THE ANNUAL MEETING TO
VOTE YOUR SHARES IN PERSON, YOU MAY STILL DO SO. YOUR PROXY IS REVOCABLE IN
ACCORDANCE WITH THE PROCEDURES SET FORTH IN THE PROXY STATEMENT.
By Order of the Board of Directors,
/s/ Raymond D. Zinn
Raymond D. Zinn
President, Chief Executive Officer and
Chairman of the Board of Directors
San Jose, California
April 16, 1998
<PAGE>
[MICREL LOGO]
MICREL, INCORPORATED
1849 Fortune Drive
San Jose, California 95131
----------------
PROXY STATEMENT
----------------
Annual Meeting of Shareholders
May 21, 1998
The enclosed proxy is solicited on behalf of the Board of Directors of
Micrel, Incorporated, a California corporation (the "Company"), for use at the
Annual Meeting of Shareholders (the "Annual Meeting") to be held at 12 noon,
local time, at the Company's offices at 1931 Fortune Drive, San Jose,
California 95131, on May 21, 1998, and at any adjournment or postponement
thereof. Only holders of the Company's Common Stock of record on April 2,
1998 will be entitled to vote. Holders of Common Stock are entitled to one
vote for each share held. There is no cumulative voting. At the close of
business on the record date, there were approximately 19,667,230 shares of the
Company's Common Stock outstanding. All Common Stock numbers in this Proxy
Statement have been adjusted to reflect the effect of the two for one stock
dividend declared by the Company payable August 19, 1997.
The presence in person or by proxy of a majority of the shares entitled
to vote is necessary to constitute a quorum at the Annual Meeting.
Abstentions and broker non-votes will be counted for purposes of determining
the presence or absence of a quorum but are not counted for any purpose in
determining whether a matter is approved. "Broker non-votes" are shares held
by brokers or nominees which are present in person or represented by proxy for
quorum purposes, but which are not voted on a particular matter.
Any person giving a proxy in the form accompanying this Proxy Statement
has the power to revoke it prior to its exercise. A proxy may be revoked by
filing an instrument revoking it, or a duly executed proxy bearing a later
date, with the Secretary of the Company prior to the meeting, or by attending
the Annual Meeting and electing to vote in person.
The shares represented by a duly executed and unrevoked proxy in the form
accompanying this Proxy Statement will be voted in accordance with the
instructions contained therein, and in the absence of instructions, such
shares will be voted FOR the nominees for director named herein, and FOR the
ratification of auditors and according to the discretion of the proxy holders
on any other matters that may properly come before the Annual Meeting.
This Proxy Statement and the accompanying proxy were first sent by mail
to shareholders on or about April 16, 1998. The costs of this solicitation
are being borne by the Company. 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 personally or by telephone, facsimile or telegram by certain of
the Company's directors, officers and regular employees, without additional
compensation.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
As set by the Board of Directors pursuant to the Bylaws of the Company,
the authorized number of directors to be elected is five. Directors will hold
office from the time of their election until the next Annual Meeting or until
their successors are duly elected and qualified. The nominees receiving the
highest number of affirmative votes will be
1
<PAGE>
elected as directors. Only votes cast for a nominee will be counted in
determining whether that nominee has been elected as director. Shareholders
may withhold authority to vote for the entire slate as nominated or, by
writing the name of an individual nominee in the space provided on the proxy
card, withhold the authority to vote for any individual nominee. Votes
withheld from any director are counted for purposes of determining the
presence or absence of a quorum, but have no other legal effect under
California law.
The following five persons have been nominated by the Board of Directors
for election to the Board: Raymond D. Zinn, Warren H. Muller, Larry L.
Hansen, George Kelly and Dale L. Peterson. All of the nominees are incumbent
directors. If any of the nominees should decline or be unable to act as a
director, the shares may be voted for such substitute nominees as the persons
appointed by proxy may in their discretion determine.
The experience and background of each of the nominees are set forth
below.
Raymond D. Zinn, age 60, is a co-founder of the Company and has been its
President, Chief Executive Officer and Chairman of its Board of Directors
since the Company's inception in 1978. Prior to co-founding the Company, Mr.
Zinn held various management and manufacturing executive positions in the
semiconductor industry at Electromask TRE, Electronic Arrays, Inc., Teledyne,
Inc., Fairchild Semiconductor Corporation and Nortek, Inc. He holds a B.S. in
Industrial Management from Brigham Young University and a M.S. in Business
Administration from San Jose State University.
Warren H. Muller, age 59, is a co-founder of the Company and has served
as a member of the Company's Board of Directors and as its Vice President of
Test Operations since the Company's inception in 1978. He was previously
employed in various positions in semiconductor processing and testing at
Electronic Arrays, Inc. and General Instruments Corporation. Mr. Muller holds
a B.S.E.E. from Clarkson College.
Larry L. Hansen, age 69, joined the Company's Board of Directors in June
1994. From October 1988 to January 1991, Mr. Hansen served as Executive Vice
President of Tylan General, Inc. From February 1964 to September 1988, Mr.
Hansen was employed by Varian Associates, where he last served as Executive
Vice President. From 1975 to 1979, Mr. Hansen served as Chairman of the U.S.
Department of Commerce Technical Advisory Committee on Semiconductor
Manufacturing Equipment. Mr. Hansen serves on the Board of Directors of
Signal Technology Corp. and Electro Scientific Industries, Inc.
George Kelly, age 63, joined the Company's Board of Directors in June
1994. He is a retired partner of Deloitte & Touche LLP, where he worked for
thirty years until his retirement in June 1989. He is also an adjunct
lecturer at Santa Clara University and serves on the Board of Directors of Ion
Systems, Inc., a private company.
Dale L. Peterson, age 62, joined the Company's Board of Directors in June
1994. He is currently Chief Executive Officer and Chairman of the Board of
Directors of Signal Technology Corp., where he has been employed since 1989.
Mr. Peterson served as President of Signal Technology Corp. until 1993.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR THE ELECTION OF EACH NAMED NOMINEE
2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to the Company
with respect to beneficial ownership of the Company's Common Stock as of
March 15, 1998, by (i) each shareholder known to the Company to own
beneficially more than 5% of the Company's Common Stock, (ii) each of the
Company's directors and nominees, (iii) the Chief Executive Officer and each
of the four other most highly compensated executive officers of the Company
(collectively, the "Named Executive Officers") and (iv) all executive
officers and directors of the Company as a group.
5% SHAREHOLDERS, DIRECTORS, NOMINEES AND NAMED EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
Number of Shares
Beneficially Owned(1)
----------------------------
<S> <C> <C>
5% Shareholders, Directors, Nominees and
- ----------------------------------------
Named Executive Officers Number Percent(2)
------------------------ ------------ -------------
FMR Corp. and Fidelity Management Trust Company
82 Devonshire Street
Boston, MA 02109(3)......................... 2,107,800 10.7%
Pilgrim Baxter & Associates, Ltd. and PBHG
Growth Fund
825 Duportail Road
Wayne, PA 19087(4).......................... 1,860,500 9.5%
Wasatch Advisors, Inc.
68 South Main Street, Suite 400
Salt Lake City, Utah 84101(5).............. 1,021,128 5.2%
Raymond D. Zinn(6).............................. 3,057,100 15.5%
Warren H. Muller(7)............................. 2,936,200 14.9%
John D. Husher.................................. 224,094 1.1%
Robert J. Barker(8)............................. 80,000 *
George Anderl................................... --- *
Larry L. Hansen(9).............................. 17,500 *
George Kelly(10)................................ 17,500 *
Dale L. Peterson(11)............................ 17,500 *
All executive officers and directors as a group
(9 persons)(12)................................. 6,547,094 33.0%
=====================
*Less than 1%
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange 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 held by that person
that are currently exercisable or exercisable within 60 days of March
15, 1998 are deemed outstanding. Such shares, however, are not deemed
outstanding for the purposes of computing the percentage ownership of
each other person. Except as indicated in the footnotes to this table
and pursuant to applicable community property laws, the persons named
in the tables have sole voting and investment power with respect to
the shares set forth opposite such person's name.
(2) Percentage beneficially owned is based on 19,662,880 share outstanding
as of March 15, 1998.
(3) Based on a Schedule 13GA dated March 10, 1998, FMR Corp. and Fidelity
Management Trust Company have the sole voting and dispositive power
with respect to 2,107,800 shares of the Company's Common Stock as of
February 28, 1998. Fidelity Management Trust Company is a wholly
owned subsidiary of FMR Corp.
(4) Based on a Schedule 13GA dated February 17, 1998, Pilgrim Baxter &
Associates, Ltd. and PBHG Growth Fund have shared voting power with
respect to 1,860,500 shares of the Company's Common Stock and sole
dispositive power with respect to 1,860,500 shares of the Company's
Common Stock as of December 31, 1997.
3
<PAGE>
(5) Based on a Schedule 13GA dated February 11, 1998, Wasatch Advisors,
Inc. has sole voting and dispositive power with respect to 1,021,128
shares of the Company's Common Stock as of December 31, 1997.
(6) Includes 14,000 shares subject to stock options exercisable within 60
days of March 15, 1998.
(7) Includes 6,000 shares subject to stock options exercisable within 60
days of March 15, 1998.
(8) Includes 80,000 shares subject to stock options exercisable within 60
days of March 15, 1998.
(9) Includes 17,500 shares subject to stock options exercisable within 60
days from March 15, 1998.
(10) Includes 15,000 shares subject to stock options exercisable within 60
days of March 15, 1998.
(11) Includes 15,500 shares subject to stock options exercisable within 60
days of March 15, 1998.
(12) Includes 152,000 shares subject to stock options exercisable within
60 days of March 15, 1998.
</TABLE>
Relationships Among Directors or Executive Officers
There are no family relationships among any of the directors or executive
officers of the Company.
Committees and Meetings of the Board of Directors
The Board of Directors held four regularly scheduled or special meetings
during the fiscal year ended December 31, 1997 (the "Fiscal Year"). Each
current member of the Board of Directors attended at least 75% of the
aggregate of the total number of meetings of the Board of Directors and of the
Committees on which he served during the Fiscal Year. The Company has
standing Audit and Compensation Committees of the Board of Directors. The
Board of Directors does not have a nominating committee or committee
performing the functions of a nominating committee.
Audit Committee. The Audit Committee, consisting of Messrs. Peterson and
Kelly, reviews with the Company's independent auditors and management the
scope and results of the annual audit, the scope of other services provided by
the Company's independent auditors, proposed changes in the Company's
financial and accounting standards and principles, and the Company's policies
and procedures with respect to its internal accounting, auditing and financial
controls and makes recommendations to the Board of Directors on the engagement
of the independent auditors, as well as other matters which may come before it
or as directed by the Board of Directors. The Audit Committee met four times
during the Fiscal Year.
Compensation Committee. The Compensation Committee consists of Messrs.
Kelly and Hansen. The Compensation Committee makes recommendations to the
Board of Directors regarding all forms of compensation to executive officers
and all bonus and stock compensation to employees, administers the Company's
stock option plans and performs such other duties as may from time to time be
determined by the Board of Directors. The Compensation Committee met four
times during the Fiscal Year.
Employment Agreements
None of the Named Executive Officers has an employment agreement with
the Company.
Compensation of Directors
Non-employee directors of the Company received $1,000 in compensation for
each Board of Directors meeting attended and $1,000 for each Committee meeting
not held in conjunction with a Board meeting.
The Company's 1994 Stock Option Plan (the "1994 Option Plan") provides
for annual automatic grants of nonqualified stock options to continuing non-
employee directors. On the date of each annual shareholders' meeting, each
individual who is at the time continuing to serve as a non-employee director
will automatically be granted an option to purchase 5,000 shares (which number
was not increased as a result of the stock dividend) of the Company's Common
Stock. All options automatically granted to non-employee directors will have
an exercise price equal to
4
<PAGE>
100% of the fair market value on the date of grant and become exercisable at a
rate of 25% per year commencing on the first anniversary of the date of grant,
such that the option is fully exercisable four years from the grant date. On
May 22, 1997, Messrs. Kelly, Hansen and Peterson received an automatic stock
option grant under the Company's 1994 Option Plan for 5,000 (which number was
subsequently adjusted for the stock dividend to 10,000) shares each of the
Company's Common Stock at an exercise price of $25.625 per share.
Compensation Committee Report on Executive Compensation
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933, as amended, or
the Securities Exchange Act of 1934, as amended, that might incorporate future
filings, including this Proxy Statement, in whole or in part, the following
report and the Performance Graph which follows shall not be incorporated by
reference into any such filings, nor shall they be deemed to be soliciting
material or deemed filed with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, or under the Securities Exchange Act of
1934, as amended.
Compensation Philosophy. The Committee believes that the primary goal of
the Company's compensation program should be related to creating shareholder
value. The Committee seeks to offer the Company's executive officers
competitive compensation opportunities based upon their personal performance,
the financial performance of the Company and their contribution to that
performance. The executive compensation program is designed to attract and
retain executive talent that contributes to the Company's long-term success,
to reward the achievement of the Company's short-term and long-term strategic
goals, to link executive officer compensation and shareholder interests
through equity-based plans, and to recognize and reward individual
contributions to Company performance.
The compensation of the Company's executive officers consists of three
principal components: salary, bonus and long-term incentive compensation.
Salary. Salaries for the Company's executive officers are determined
primarily on the basis of the executive officer's responsibility, general
salary practices of peer companies and the officer's individual qualifications
and experience. The base salaries are reviewed annually and may be adjusted
by the Committee in accordance with certain criteria which include (i)
individual performance, (ii) the functions performed by the executive officer,
(iii) the scope of the executive officer's on-going duties, (iv) general
changes in the compensation peer group in which the Company competes for
executive talent and (v) the Company's financial performance, generally. The
weight given such factors by the Committee may vary from individual to
individual.
Bonus. In order to increase incentives for outstanding performance, a
portion of each executive officer's compensation is paid in the form of
contingent cash bonuses. The bonus amounts for executive officers are
dependent in part on the Company's net income performance, as well as
individualized criteria such as achievement of specified goals for the
department or divisions for which the executive officer has responsibility and
satisfactory completion of special projects supervised by the executive
officer.
Long-Term Incentive Awards. Stock options serve to further align the
interests of management and the Company's shareholders by providing executive
officers with an opportunity to benefit from the stock price appreciation that
can be expected to accompany improved financial performance. Options also
enhance the Company's ability to attract and retain executives. The number of
option shares granted and other option terms, such as vesting, are determined
by the Committee, based on recommendations of management in light of, among
other factors, each executive officer's level of responsibility, prior
performance and other compensation. However, the Company does not provide any
quantitative method for weighing these factors, and a decision to grant an
award is primarily based upon an evaluation of the past as well as the future
anticipated performance and responsibilities of the individual in question.
Chief Executive Officer Compensation. The compensation of the Chief
Executive Officer is reviewed annually on the same basis as discussed above
for all executive officers. Raymond D. Zinn's base salary for fiscal 1997 was
$268,406. Mr. Zinn's base salary for 1997 was established, in part, by
comparing the base salaries of chief executive
5
<PAGE>
officers at other companies of similar size and geographic location using
published compensation sources. Mr. Zinn's compensation is also based on his
position and responsibilities, his past and expected contribution to the
Company's future success and on the financial performance of the Company.
Policy Regarding Deductibility of Compensation. The Company is required
to disclose its policy regarding qualifying executive compensation for
deductibility under Section 162(m) of the Internal Revenue Code which provides
that, for purposes of the regular income tax and the alternative minimum tax,
the otherwise allowable deduction for compensation paid or accrued with
respect to the executive officers of a publicly-held corporation, which is not
performance-based compensation is limited to no more than $1 million per year
per officer. It is not expected that the compensation to be paid to the
Company's executive officers for fiscal 1998 will exceed the $1 million limit
per officer. Under Treasury regulations, any compensation realized by an
executive officer with respect to stock options granted under the Company's
1989 Stock Option Plan prior to the date of this Annual Meeting is expected to
qualify as performance-based compensation not subject to the $1 million
limitation. Option grants under the 1994 Stock Option Plan are intended to
qualify as performance-based compensation not subject to the $1 million
limitation.
COMPENSATION COMMITTEE
Larry L. Hansen, Chairman
George Kelly
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table sets forth the annual compensation earned during the
years ended December 31, 1997, 1996 and 1995 by the Company's Chief Executive
Officer and each of the Named Executive Officers:
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Long-Term
Compensation Compensation
-------------------------- ------------
Securities All Other
Name and Bonus Underlying Compensation
Principal Position Year Salary($)(1) ($)(2) Options(#) ($)(3)
- ------------------------ ---- ------------ --------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Raymond D. Zinn,........ 1997 $268,406 $300,000 -- $ 18,072(4)
President, Chief 1996 215,792 100,000 70,000 39,310(5)
Executive Officer 1995 222,257 30,000 -- 1,390
and Chairman of
the Board
Warren H. Muller,....... 1997 185,163 100,000 -- 7,729
Vice President 1996 168,580 23,000 30,000 7,665
and Secretary 1995 164,188 5,000 -- 1,390
John D. Husher,......... 1997 158,121 100,000 -- 10,623
Vice President, 1996 145,932 18,000 20,000 8,342
Wafer Fabrication 1995 138,299 5,000 -- 1,763
Division
Robert J. Barker,....... 1997 155,179 103,000 -- 1,010
Vice President, 1996 141,277 23,000 -- 913
Finance and Chief 1995 132,954 6,000 -- 615
Financial Officer
George Anderl,.......... 1997 161,687 129,800 -- 1,670
Vice President, 1996 83,654 10,000 200,000 913
Sales and
Marketing (6)
- --------------
(1) All salaries for a particular year reflect amounts paid in that
year. Due to the timing of actual payroll dates, salaries reflect
27 bi-weekly payments in 1997 and 26 bi-weekly payments in 1996 and
1995.
(2) All bonuses for a particular year reflect amounts earned in that year
whether accrued or paid.
6
<PAGE>
(3) Represents premiums paid on term life insurance and in 1996 and 1997,
an automobile allowance of $6,000 for each of Messrs. Muller and
Husher.
(4) Includes an automobile allowance of $6,375 and $11,697 in premiums
paid on Mr. Zinn's behalf for life and disability insurance policies.
(5) Includes an automobile allowance of $6,375 and $32,935 in premiums
paid on Mr. Zinn's behalf for life and disability insurance policies.
(6) Mr. Anderl joined the Company on June 3, 1996.
</TABLE>
Option Grants In Last Fiscal Year
No stock options were granted to the Named Executive Officers during the
fiscal year ended December 31, 1997.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Values
The following table sets forth for each of the Named Executive Officers
certain information concerning the number of shares subject to both
exercisable and unexercisable stock options as of December 31, 1997. Also
reported are values for "in-the-money" options that represent the positive
spread between the respective exercise prices of outstanding stock options
and the fair market value of the Company's Common Stock as of December 31,
1997.
<TABLE>
<CAPTION>
Number of Securities Value of
Underlying Unexercised Unexercised
Options at In-the-Money Options at
December 31, 1997(#) December 31, 1997($)(2)
------------------------- -------------------------
Shares
Acquired Value
Name on Exercise(#) Realized($)(1) Exercisable Unexercisable Exercisable Unexercisable
---- -------------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Raymond D. Zinn... -- $ -- 14,000 56,000 $286,090 $1,144,360
Warren H. Muller.. -- -- 6,000 24,000 122,610 490,440
John D. Husher.... 4,000 119,750 -- 16,000 -- 338,000
Robert J. Barker.. 80,000 1,642,500 -- 160,000 -- 4,280,000
George Anderl..... 40,000 1,125,000 -- 160,000 -- 3,380,000
- -------------
(1) Calculated by determining the difference between the fair market
value of the securities underlying the option on the date of
exercise and the exercise price of the Named Executive Officers'
respective options.
(2) Calculated by determining the difference between the fair market
value of the securities underlying the option at December 31, 1997
($28.00 per share) and the exercise price of the Named Executive
Officers' respective options.
</TABLE>
Stock Performance Graph
The following graph compares the percentage change in the cumulative
total shareholder return on the Company's Common Stock from the date of the
Company's initial public offering (December 9, 1994) through the end of the
Company's last fiscal year (December 31, 1997), with the percentage change in
the cumulative total return for The Nasdaq Stock Market (U.S. Companies) and
the Hambrecht & Quist Technology Index. The comparison assumes an investment
of $100 on December 9, 1994 in the Company's Common Stock and in each of the
foregoing indices and assumes reinvestment of dividends. The stock price
performance shown on the graph below is not necessarily indicative of future
price performance.
7
<PAGE>
[PERFORMANCE GRAPH FOR THE PERIOD DECEMBER 9,
1994 THROUGH DECEMBER 31, 1997 APPEARS HERE]
The following table sets forth the data points used in preparing the
Performance Graph:
<TABLE>
<CAPTION>
H&Q Technology Nasdaq Stock
Dates Micrel, Inc. Index Market - U.S.
--------- ------------ -------------- -------------
<S> <C> <C> <C>
12/09/94 100.00 100.00 100.00
12/31/94 161.11 106.35 104.56
01/31/95 173.61 104.79 105.14
02/28/95 197.22 113.88 110.70
03/31/95 194.44 119.09 113.98
04/30/95 197.22 128.01 117.57
05/31/95 234.72 132.60 120.61
06/30/95 255.56 148.56 130.38
07/31/95 261.11 162.12 139.97
08/31/95 311.11 163.98 142.80
09/30/95 311.11 167.90 146.09
10/31/95 252.78 170.25 145.25
11/30/95 183.33 168.16 148.66
12/31/95 216.67 159.02 147.87
01/31/96 208.33 161.37 148.60
02/29/96 168.06 169.45 154.25
03/31/96 158.33 162.08 154.76
04/30/96 188.89 184.48 167.60
05/31/96 183.33 187.26 175.30
06/30/96 186.11 173.62 167.40
07/31/96 191.67 155.78 152.49
08/31/96 202.78 165.21 161.03
09/30/96 263.89 184.31 173.35
10/31/96 227.78 181.67 171.43
11/30/96 279.17 203.09 182.03
12/31/96 351.39 197.64 181.87
01/31/97 423.61 218.80 194.79
02/28/97 377.78 200.93 184.03
03/31/97 322.22 188.38 172.01
04/30/97 486.11 195.35 177.39
05/31/97 588.89 224.75 197.50
06/30/97 566.67 226.74 203.54
07/31/97 729.17 263.22 225.03
08/31/97 794.44 263.97 224.68
09/30/97 940.27 274.80 237.97
10/31/97 797.22 245.44 225.60
11/30/97 769.44 242.88 226.72
12/31/97 622.22 231.71 223.18
</TABLE>
PROPOSAL NO. 2
RATIFICATION OF INDEPENDENT AUDITORS
The Board of Directors has selected Deloitte & Touche LLP ("Deloitte &
Touche") as the Company's independent auditors for the fiscal year ending
December 31, 1998. Deloitte & Touche has been the Company's independent
auditors since 1980. In the event that ratification of this selection of
auditors is not approved by a majority of the shares of the Company's Common
Stock voting at the Annual Meeting in person or by proxy, management will
reconsider its future selection of auditors.
A representative of Deloitte & Touche is expected to be present at the
Annual Meeting and will have an opportunity to make a statement if he or she
so desires. Moreover, he or she will be available to respond to appropriate
questions from the shareholders.
8
<PAGE>
Unless marked to the contrary, proxies received will be voted "FOR" the
ratification of the appointment of Deloitte & Touche as the independent
auditors for the Company for the fiscal year ending December 31, 1998.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE "FOR" RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE
AS THE COMPANY'S INDEPENDENT AUDITORS
OTHER MATTERS
Annual Report and Financial Statements
The 1997 Annual Report of the Company, which includes its audited
financial statements for the fiscal year ended December 31, 1997, has
accompanied or preceded this Proxy Statement.
Section 16(a) Beneficial Ownership Reporting Compliance
Under the securities laws of the United States, the Company's directors,
executive officers, and any persons holding more than ten percent of the
Company's Common Stock ("Reporting Persons") are required to report, to the
Securities and Exchange Commission and to the Nasdaq Stock Market, their
initial ownership of the Company's stock and any subsequent changes in that
ownership. Specific due dates for these reports have been established, and
the Company is required to disclose in this Proxy Statement any failure to
file these reports on a timely basis.
Based solely on its review of the copies of such reports received by it
or written representations from certain Reporting Persons that no Forms 3, 4
or 5 were required, the Company believes that during fiscal 1997, all
Reporting Persons complied with all applicable filing requirements.
Shareholder Proposals
Subject to Securities and Exchange Commission regulations, proposals of
shareholders intended to be presented at the 1999 Annual Meeting must be
received by the Secretary of the Company no later than December 18, 1998 to
be included in the Company's 1999 Proxy Statement.
Other Business
The Board of Directors knows of no other business which will be
presented at the Annual Meeting. If any other business is properly brought
before the Annual Meeting, it is intended that proxies in the enclosed form
will be voted in respect thereof in accordance with the judgments of the
persons voting the proxies.
It is important that the proxies be returned promptly and that your
shares be represented. Shareholders are urged to fill in, sign and promptly
return the accompanying form in the enclosed envelope.
By Order of the Board of Directors,
/s/ Raymond D. Zinn
Raymond D. Zinn
President, Chief Executive Officer and
Chairman of the Board of Directors
April 16, 1998
San Jose, California
9
<PAGE>
PROXY
MICREL, INCORPORATED
1849 FORTUNE DRIVE
SAN JOSE, CA 95131
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING ON MAY 21, 1998
Raymond D. Zinn and Robert J. Barker, or any one of them, each with the
power of substitution, are hereby authorized to represent and vote the shares
of the undersigned, with all the powers which the undersigned would possess if
personally present, at the Annual Meeting of Shareholders of Micrel,
Incorporated (the "Company"), to be held on Thursday, May 21, 1998, and any
adjournment or postponement thereof.
Election of Five directors (or if any nominee is not available for
election, such substitute as the Board of Directors or the proxy holders may
designate). Nominees: Raymond D. Zinn, Warren H. Muller, Larry L. Hansen,
George Kelly and Dale L. Peterson.
(Continued, and to be signed on the other side)
FOLD AND DETACH HERE
[MICREL LOGO]
Annual Shareholder Meeting
Thursday, May 21, 1998
12:00 pm
1931 Fortune Drive
San Jose, CA 95131
IMPORTANT Reminder
Whether or not you plan to attend this meeting, your vote is important to us.
We urge you to complete, detach and mail the proxy card as soon as possible in
the enclosed envelope.
We look forward to seeing you at the meeting. On behalf of the management and
directors of Micrel, Incorporated, we want to thank you for your support.
<PAGE>
<TABLE>
<CAPTION>
Please Mark
your votes as [X]
indicated in
this example
<S> <C>
The Board of Directors recommends a vote FOR the election of Directors and
FOR proposal 2.
Shares represented by this proxy 2.To ratify the FOR AGAINST ABSTAIN
will be voted as directed by the appointment of [ ] [ ] [ ]
shareholder. If no such directions Deloitte &
are indicated, the Proxies will Touche LLP as
have authority to vote FOR the the Company's
election of all directors, and independent
FOR item 2. Auditors for
the Fiscal year
ending December
31, 1998.
3.In their discretion, the Proxies are
1.Election of Directors authorized to vote upon such other
(see reverse) business as may properly come before
FOR WITHHOLD the Annual Meeting.
[ ] [ ]
MARK HERE FOR ADDRESS
FOR, except vote withheld from CHANGE AND NOTE AT RIGHT [ ]
the following nominee(s):
______________________________ PLEASE MARK, SIGN, DATE AND RETURN
THIS PROXY CARD PROMPTLY USING THE
______________________________ ENCLOSED REPLY ENVELOPE.
Signature __________________________________________ Date __________,1998
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
</TABLE>
FOLD AND DETACH HERE
Travel Directions
to Micrel
(for meeting appointments)
From San Francisco Int'l Airport
or San Francisco via US 101:
Take US 101 south (towards San
Jose); exit Montague Expwy.;
right at Trade Zone Blvd.; immedi-
ate right at Ringwood Ave., left on
Fortune Dr.
From San Jose Int'l Airport: (MAP TO MICREL OFFICE
AREA DISPLAYED HERE)
Take Airport Parkway (becomes
Brokaw Rd. then Murphy Rd.); left
on Ringwood Ave.; right on
Fortune Dr.
From San Francisco via I-280
Take I-280 South (toward San
Jose); exit I-880 north (toward
Oakland); exit Montague Expwy.
east; right at Trade Zone Blvd.;
immediate right at Ringwood
Ave., left on Fortune Dr.
<PAGE>
