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 by
Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
STANDARD MICROSYSTEMS CORPORATION
(Name of Registrant as Specified in Its Charter)
STANDARD MICROSYSTEMS CORPORATION
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
|_| $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
|_| 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
STANDARD MICROSYSTEMS CORPORATION
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JULY 22, 1996
------------------------
To the Stockholders of
STANDARD MICROSYSTEMS CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Standard
Microsystems Corporation ("SMC" or the "Company") will be held on July 22, 1996,
at 10:00 A.M., at The Radisson Hotel Islandia, 3635 Expressway Drive North,
Hauppauge, New York for the following purposes:
(1) Election of directors.
(2) Adoption and approval of the 1996 Stock Option Plan.
(3) Ratification of the selection of Arthur Andersen LLP as independent
public accountants for SMC for the fiscal year ending February 28, 1997.
(4) Transaction of such other business as may properly come before the
meeting or any adjournment thereof.
In accordance with the bylaws of SMC, the Board of Directors has fixed the
close of business on June 7, 1996 as the record date for the determination of
the stockholders entitled to notice of and to vote at the meeting.
By Order of the Board of Directors,
HAROLD I. KAHEN
Secretary
Dated: June 21, 1996
AFTER READING THE FOLLOWING PROXY STATEMENT, PLEASE SIGN AND MAIL THE
ENCLOSED PROXY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED
IN THE UNITED STATES.
<PAGE>
STANDARD MICROSYSTEMS CORPORATION
80 ARKAY DRIVE
HAUPPAUGE, NEW YORK 11788
------------------------
PROXY STATEMENT
------------------------
ANNUAL MEETING OF STOCKHOLDERS, JULY 22, 1996
This statement is furnished in connection with the solicitation of proxies
by the Board of Directors of Standard Microsystems Corporation, a Delaware
corporation ("SMC" or the "Company"), for use at the Annual Meeting of
Stockholders of SMC to be held on July 22, 1996 and at any adjournment thereof.
June 21, 1996 is the approximate date on which this statement and the
accompanying proxy are first being mailed to stockholders.
ELECTION OF DIRECTORS
At the annual meeting, two directors are to be elected for terms expiring in
1998 and two for terms expiring in 1999.
NOMINEES OF THE BOARD OF DIRECTORS
It is the intention of the persons named in the proxy hereby solicited to
vote for the election as directors of the four nominees of the Board who are
named below, unless otherwise specified in the proxy. Should any nominee become
unable to accept nomination or election (which is not anticipated), it is the
intention of the persons designated as proxies to vote for the election of any
remaining nominee and for any substitute nominee as the Board may designate.
Set forth below is certain information with respect to each nominee and each
other person whose term of office as a director will continue after the Annual
Meeting:
<TABLE>
<CAPTION>
OTHER POSITIONS WITH SMC, PRINCIPAL OCCUPATION, CERTAIN
OTHER DIRECTOR
NAME DIRECTORSHIPS AND AGE AS OF JUNE 7, 1996 SINCE
- ---------------------- ------------------------------------------------------- -----------
<S> <C> <C>
NOMINEES TO SERVE UNTIL THE 1999 ANNUAL MEETING:
Evelyn Berezin........ Venture capital consultant; Director, DNA Plant 1993
Technology Corp.; 71
Peter F. Dicks........ Corporate Director; Directorships include, among 1992; also
others, The East German Investment Trust PLC, Second 1976-1991
Consolidated Trust PLC, DSI Data Systems
International Ltd PLC, London American Growth; 53
NOMINEES TO SERVE UNTIL THE 1998 ANNUAL MEETING:
James R. Berrett...... Retired corporate executive; until January 1996, Office --
of the Chairman and Chief Operating Executive of NEC
Corporation, manufacturer of computers,
telecommunications products, and semiconductors; 56
Kathleen B. Earley.... Vice President, EasyCommerce Services, AT&T Corp., --
telecommunications services; 44
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
OTHER POSITIONS WITH SMC, PRINCIPAL OCCUPATION, CERTAIN
OTHER DIRECTOR
NAME DIRECTORSHIPS AND AGE AS OF JUNE 7, 1996 SINCE
- ---------------------- ------------------------------------------------------- -----------
<S> <C> <C>
DIRECTOR CONTINUING TO SERVE UNTIL THE 1998 ANNUAL MEETING:
Ivan T. Frisch........ Provost, Polytechnic University; 58 1992
DIRECTORS CONTINUING TO SERVE UNTIL THE 1997 ANNUAL MEETING:
Robert M. Brill....... General Partner, Poly Ventures, L.P. and Poly Ventures 1994
II, L.P., venture capital investment in high
technology; Director, OPAL, Inc.; 49
Herman Fialkov........ General Partner, Poly Ventures, L.P., venture capital 1971
investment in high technology; Director, Laser
Recording Systems, Inc.; 74
Paul Richman.......... Chief Executive Officer and Chairman, SMC; Director, 1974
MOSAID Technologies, Inc.; President, The Consortium
for Technology Licensing, Ltd.; 53
</TABLE>
The principal occupation for the last five years of each nominee and
director continuing in office is stated above, except that (1) until October
1991, Mr. Dicks was Executive Director of Manakin Holdings plc (in members'
voluntary liquidation) (formerly Abingworth plc); (2) Dr. Frisch has been
Provost only since 1992 but has served at Polytechnic University as Professor of
Electrical Engineering and Computer Sciences during the entire period and as
Director of the Center for Advanced Technology in Telecommunications until 1992;
(3) Mr. Richman became Chief Executive Officer in 1995; and (4) prior to January
1994, Ms. Earley was Director, Corporate Business Development, International
Business Machines Corporation, having previously served that corporation in
various information services positions.
COMMITTEES AND MEETINGS OF THE BOARD
The SMC Board of Directors held seven meetings during the last fiscal year.
The audit committee held four meetings, the compensation committee held two
meetings, and the nominating committee held four meetings. The members of the
audit committee are Evelyn Berezin, Robert M. Brill and Ivan T. Frisch; the
members of the compensation committee are Peter F. Dicks, Herman Fialkov and
Raymond Frankel; and the members of the nominating committee are Peter F. Dicks,
Herman Fialkov and Ivan T. Frisch.
The audit committee reviews the internal controls of SMC and the objectivity
of its financial reporting. It meets with appropriate SMC financial personnel
and the independent public accountants in connection with these reviews. It
recommends to the Board the appointment of the firm of independent public
accountants, subject to ratification by the stockholders at the annual meeting,
to serve as auditors for the following year. The compensation committee makes
recommendations to the Board with respect to the compensation of officers of
SMC; members of the compensation committee also constitute the committees that
administer SMC's stock option plans (other than the Director Stock Option Plan)
and restricted stock bonus plan. The nominating committee recommends criteria
and qualifications for nominations for director, identifies possible candidates,
and recommends to the Board for nomination those whom the committee deems best
qualified. The nominating committee will consider recommendations for director
made by stockholders. Such recommendations should be in writing, mailed to the
Secretary of SMC.
VOTING SECURITIES OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The management of SMC has been informed that, as of June 7, 1996, the
persons and group identified in the table below, including all directors,
nominees and executive officers, owned beneficially, within the meaning of
Securities and Exchange Commission ("SEC") Rule 13d-3, the shares of SMC Common
Stock reflected in such table. As of June 7, 1996, each director, nominee or
executive officer
2
<PAGE>
of SMC disclaims beneficial ownership of securities of any subsidiary of SMC.
Except as otherwise noted, the named beneficial owner claims sole investment and
voting power as to the securities reflected in the table.
<TABLE>
<CAPTION>
NUMBER OF
BENEFICIAL OWNER SHARES(1)
- --------------------------------------------------------------------------------- ------------
<S> <C>
Evelyn Berezin................................................................... 22,167(2)
James R. Berrett................................................................. --
Robert M. Brill.................................................................. 16,667(3)
Anthony M. D'Agostino............................................................ 40,554(4)
Peter F. Dicks................................................................... 36,667(3)
Kathleen B. Earley............................................................... --
Herman Fialkov................................................................... 72,670(3)
Raymond Frankel.................................................................. 16,667(3)
Ivan T. Frisch................................................................... 19,167(5)
Gerald E. Gollub................................................................. 32,429(6)
Lance E. Murrah.................................................................. 8,592(7)
Eric M. Nowling.................................................................. 6,894(7)
Paul Richman..................................................................... 181,685(8)
Arthur Sidorsky.................................................................. 50,371(9)
Victor F. Trizzino............................................................... 149,324(10)
All directors and executive officers as a group (11 persons)..................... 472,101(11)
</TABLE>
- ------------
<TABLE>
<C> <S>
(1) Shares held by each beneficial owner constitute less than 1% of the class, except for
all directors and executive officers as a group (3.31%).
(2) Includes 500 shares owned jointly with husband and 21,667 shares covered by currently
exercisable options.
(3) Includes 16,667 shares covered by currently exercisable options.
(4) Includes 20,644 shares covered by currently exercisable options.
(5) Includes 15,667 shares covered by currently exercisable options.
(6) Includes 24,542 shares covered by currently exercisable options. Mr. Gollub served as
an SMC Executive Vice President through July 7, 1995.
(7) Includes 3,250 shares covered by currently exercisable options.
(8) Includes 82,322 shares covered by currently excercisable options.
(9) Includes 18,357 shares owned jointly with wife and 20,868 shares covered by currently
exercisable options.
(10) Includes 64,392 shares covered by currently exercisable options. Mr. Trizzino served as
the Company's President and Chief Executive Officer through July 7, 1995.
(11) Includes 234,336 shares covered by currently exercisable options.
</TABLE>
EXECUTIVE COMPENSATION
The following table sets forth all plan and non-plan compensation paid to
the named executive officers for services rendered in all capacities to SMC and
its subsidiaries during the three years ended February 29, 1996.
3
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
---------------------------
SHARES OF
ANNUAL COMPENSATION(1) STOCK
---------------------------- RESTRICTED UNDERLYING
FISCAL SALARY BONUS STOCK OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR ($) ($) AWARDS($)(2) GRANTED(#) COMPENSATION($)(3)
- ----------------------------- ------ ------- ------- ---------- ---------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Paul Richman................. 1996 360,000 450,000 -0- 116,544 4,393
Chairman and Chief 1995 386,500 386,500 -0- 22,245 4,711
Executive Officer 1994 364,000 559,392 26,607 22,750 4,568
Victor F. Trizzino........... 1996 205,000 -0- -0- -0- 3,812
President and Chief 1995 410,000 287,281 82,000 23,597 4,711
Executive Officer(4) 1994 365,000 277,509 73,000 22,812 4,616
Arthur Sidorsky.............. 1996 264,550 264,550 52,910 14,155 4,597
Executive Vice President 1995 240,500 240,500 48,100 13,842 4,695
1994 222,000 65,600 44,400 13,875 4,611
Anthony M. D'Agostino........ 1996 200,000 25,000 24,995 28,293 4,682
Senior Vice 1995 155,000 108,606 31,000 8,921 4,677
President--Finance 1994 141,000 107,200 28,200 8,812 4,541
and Treasurer
Gerald E. Gollub............. 1996 200,000 -0- -0- -0- 3,306
Executive Vice President(5) 1995 287,500 -0- -0- 16,547 4,801
1994 265,000 191,947 53,000 16,562 4,558
Lance E. Murrah.............. 1996 150,000 45,000 30,000 10,000 4,242
Senior Vice President
Eric M. Nowling.............. 1996 123,000 17,500 24,603 10,000 3,444
Vice President and
Controller
</TABLE>
- ------------
(1) Excludes perquisites and other personal benefits aggregating less than the
lesser of $50,000 or 10% of the total salary and bonus reported for the
named person.
(2) Restricted stock awards vest on each of the second, third, and fourth
anniversaries of the grant date, to the extent of one-third of the shares
awarded. Each award was made in part payment of the executive officer's
fiscal 1996, 1995, or 1994 bonus, following the end of such fiscal year.
Holders of restricted stock awards are entitled to dividends to the same
extent as owners of unrestricted shares. The numbers of shares granted to
each executive officer as restricted stock awards are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
----- ----- -----
<S> <C> <C> <C>
Paul Richman......................................... -0- -0- 1,663
Victor F. Trizzino................................... -0- 4,824 4,563
Arthur Sidorsky...................................... 3,470 2,829 2,775
Anthony M. D'Agostino................................ 1,639 1,824 1,763
Gerald E. Gollub..................................... -0- -0- 3,313
Lance E. Murrah...................................... 1,548 -- --
Eric M. Nowling...................................... 1,514 -- --
</TABLE>
As of February 29, 1996, the market value of each executive officer's holdings
of restricted stock was as follows: Paul Richman, $90,873; Victor F. Trizzino,
$223,978; Arthur Sidorsky, $116,256; Anthony M. D'Agostino, $85,684; Gerald
E. Gollub, $109,160; Lance E. Murrah, $57,831; Eric M. Nowling, $40,732.
(3) Reflects SMC contributions under the Incentive Savings and Retirement Plan.
(4) Mr. Trizzino served as President and Chief Executive Officer of the Company
through July 7, 1995.
(5) Mr. Gollub served as Executive Vice President of the Company through July 7,
1995.
Pursuant to an employment agreement the other substantive terms of which
have expired, Mr. Richman was entitled to receive specified percentages of
certain SMC licensing revenues or revenues from sales of products manufactured
and/or sold by SMC pursuant to any second-sourcing, technology transfer, or
other agreement with an SMC licensee, in total amounts not exceeding $586,000 in
fiscal 1994, $386,500 in fiscal 1995 or $450,000 in fiscal 1996. Such additional
compensation is included in the Summary Compensation Table.
4
<PAGE>
Mr. Sidorsky was employed during the 1996 fiscal year pursuant to an
employment agreement which expired February 29, 1996, that provided for salary
as reflected in the Summary Compensation Table. Mr. Sidorsky and SMC entered
into a new employment agreement as of March 1, 1996 pursuant to which Mr.
Sidorsky will be employed as Executive Vice President until February 28, 1999.
Mr. Sidorsky's initial salary is $296,300, subject to annual increase, in the
discretion of the Board of Directors, after review and recommendation of the
Compensation Committee. SMC may terminate Mr. Sidorsky's employment before the
contract expiration date on notice accompanied by payment equal to one year's
salary.
Messrs. Trizzino and Gollub were employed during SMC's 1996 fiscal year
until they resigned on July 7, 1995. Their respective salaries were at rates
equal to $365,000 and $265,000 per annum. Each entered into a severance
agreement with the Company. Mr. Trizzino agreed that for three years from such
date he would not engage in a business competitive with SMC's. Mr. Gollub agreed
that for such three years, or until his earlier employment, or engagement as a
consultant or an independent contractor, by a business competitive with SMC, he
would be available without additional compensation to consult with the Company.
Pursuant to their respective severance agreements, Mr. Trizzino receives
severance pay at a rate equal to $205,000 per annum and Mr. Gollub receives
severance pay at a rate equal to $200,000 for the first year, $150,000 for the
second year and $81,250 for the third year. The health, life and disability
insurance benefits of both executives continue, and their stock option and
restricted stock terms extend, so long as their compensation continues under
their respective severance agreements.
Mr. Richman and SMC entered into an employment agreement as of March 1,
1995, pursuant to which Mr. Richman will be employed as Chairman of the Board
until February 29, 2000, unless, prior to such time, the Board of Directors
declines to elect him to such position or Mr. Richman declines to serve in such
position, in which case Mr. Richman will continue to render services as a
consultant. Mr. Richman is required to devote 80% of his business time to
rendering services to SMC, subject to the right of either party to reduce such
percentage. Mr. Richman's salary is at a rate equal to $378,000, subject to
annual increases based on changes in the Consumer Price Index and adjustment for
changes in the percentage of his time required to be devoted to SMC. The
agreement continues Mr. Richman's right to receive specified percentages of
certain SMC licensing or sales revenues, described above (or that of his estate
to receive lesser percentages for five years, if Mr. Richman dies while employed
by or acting as consultant to SMC).
For recent fiscal years, SMC has agreed to pay certain of its executives,
including certain of the executive officers named in the preceding table,
incentive compensation based on specified percentages of the consolidated net
income of SMC (or a specified division of SMC) before income taxes, as defined.
The amounts of this incentive compensation are included under the Bonus column
in the Summary Compensation Table. For fiscal 1996, 1995 and 1994, part of such
incentive compensation was paid in cash and is included under the Bonus column,
and the balance was paid in the form of restricted stock awards under the 1991
Restricted Stock Bonus Plan, as set forth in note 2 to the table.
Under SMC's Executive Retirement Plan, officers, including executive
officers, whose employment terminates after 10 years of service or by reason of
total and permanent disability (or the beneficiary of a deceased participant),
are entitled to receive, for 10 years, in equal monthly installments, beginning
at age 65 or such officer's later retirement date, an annual benefit equal to
35% of the participant's Base Annual Salary, as defined. Messrs. Trizzino and
Gollub are entitled to receive annual benefits under the plan in the amounts of
$129,558 and $93,625, respectively. As of March 1, 1996, the amount of such
annual benefit that would be payable to each of the remaining executive officers
named in the table on reaching age 65 is as follows: Paul Richman, $129,558;
Arthur Sidorsky, $84,823; Anthony M. D'Agostino, $57,867; Lance E. Murrah,
$46,667; Eric M. Nowling, $40,017.
SMC has entered into severance pay agreements with certain officers,
including Messrs. Sidorsky, D'Agostino and Murrah, which provide that, in the
event of a change of control of SMC and the subsequent discharge or constructive
discharge (other than for good cause) of such officer, he shall (i) receive
severance pay equal to one year's base salary (18 months' in the case of Mr.
Sidorsky), (ii) be
5
<PAGE>
paid cash for surrender of the officer's stock options and for shares granted
under any restricted stock bonus plan, based on the market price of SMC stock,
and (iii) continue to receive for 18 months following such discharge certain
insurance benefits provided by SMC. If within six months after a change of
control of SMC, the officer voluntarily terminates his employment (otherwise
than by reason of constructive discharge), the severance pay is limited to six
months' base salary, and the officer shall continue to receive such insurance
benefits for six months.
The following table sets forth information regarding individual grants of
stock options to the named executive officers during the 1996 fiscal year.
Options become exercisable in four equal annual installments commencing on the
first anniversary of grant and may be exercised cumulatively at any time before
expiration.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT ASSUMED ANNUAL
NUMBER OF % OF SHARES RATES OF STOCK
SECURITIES SUBJECT TO PRICE APPRECIATION
UNDERLYING OPTIONS GRANTED EXERCISE FOR OPTION TERM
OPTIONS GRANTED TO EMPLOYEES IN PRICE EXPIRATION ------------------
EXECUTIVE OFFICER (# OF SHARES) FISCAL YEAR ($ PER SHARE) DATE 5%($) 10%($)
- ----------------------------------- --------------- --------------- ------------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Paul Richman....................... 16,544 2.0% 18.69 5/5/00 85,428 188,774
28,289 3.4% 16.25 9/14/00 127,006 280,649
71,711 8.7% 16.25 9/14/05 732,853 1,857,194
Victor F. Trizzino................. 21,934 2.7% 18.69 5/5/00 113,261 250,276
Arthur Sidorsky.................... 14,155 1.7% 18.69 5/5/00 73,092 161,515
Anthony M. D'Agostino.............. 8,293 1.0% 18.69 5/5/00 42,823 94,627
20,000 2.4% 16.25 9/14/05 204,391 517,966
Gerald E. Gollub................... 15,383 1.9% 18.69 5/5/00 79,433 175,527
Lance E. Murrah.................... 5,000 0.6% 16.25 9/14/05 51,098 129,492
5,000 0.6% 16.50 12/31/05 51,884 131,484
Eric M. Nowling.................... 10,000 1.2% 16.25 9/14/05 102,195 258,983
</TABLE>
The following table sets forth aggregate information concerning stock option
exercises during fiscal 1996 by each of the named executive officers, together
with the year-end value of unexercised options.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR-END(#) AT FISCAL YEAR-END($)
SHARES ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------- --------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Paul Richman............... -0- -0- 66,938 94,601 -0- -0-
Victor F. Trizzino......... -0- -0- 47,306 51,037 292,500 -0-
Arthur Sidorsky............ -0- -0- 10,399 31,473 -0- -0-
Anthony M. D'Agostino...... -0- -0- 14,137 39,389 73,125 -0-
Gerald E. Gollub........... 12,500 195,250 12,419 36,073 -0- -0-
Lance E. Murrah............ -0- -0- 2,000 14,750 -0- -0-
Eric M. Nowling............ -0- -0- 2,000 13,750 7,725 5,175
</TABLE>
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee") is
composed entirely of outside directors and is responsible for developing and
making recommendations to the Board of
6
<PAGE>
Directors with respect to compensation of the Company's officers, directors and
certain other employees, as well as any bonuses for officers. Mr. Fialkov was
last Vice Chairman of the Company in February 1985.
The Committee has developed and implemented compensation programs which seek
to enhance the profitability of SMC and improve stockholder value by closely
aligning the financial interests of the Company's senior management team with
those of its stockholders. A significant part of each executive's compensation
depends on appreciation of the Company's Common Stock. Each executive's
compensation is composed of two elements: (1) current compensation composed of
basic salary and cash bonuses and (2) long-term compensation tied directly to
stockholder value, composed of restricted stock awards and stock options.
Base pay is designed to be competitive with salary levels at similar
industrial companies for equivalent positions. From time to time, the Committee
utilizes independent consultants and/or survey information to ensure that
executive salaries are within a competitive range. Each executive is eligible to
receive an annual incentive bonus. Certain bonuses earned for fiscal 1996 were
based on performance in excess of a base operating income requirement. Others
were based on recommendations of the Chief Executive Officer reflecting unusual
events during the fiscal year.
Long-term compensation is tied directly to stockholder return. Under the
current program, executives have received stock options which vest over four
years and restricted stock awards which vest over four years. The purposes of
this program are (1) to motivate the Company's executives to enhance the
Company's market capitalization and hence, the stockholders' return, and (2) to
create an incentive for the executive to remain with the Company.
Base salary and additional compensation for the Chief Executive Officer are
fixed by his employment agreement, as described following the Summary
Compensation Table.
Section 162(m) of the Internal Revenue Code limits to $1,000,000 the amount
of "applicable employee remuneration" deductible by SMC for "covered" employees
for any taxable year. No policy has been adopted with respect to Section 162(m)
of the Code for executive officers, since their "applicable employee
remuneration" levels are not expected to exceed $1,000,000. It is the policy of
the Committee, to the extent feasible, to keep compensation within the
deductible limits.
Peter F. Dicks Herman Fialkov Raymond Frankel
7
<PAGE>
The following line graph compares cumulative total stockholder return for
SMC Common Stock, the Center for Research in Security Prices ("CRSP") Total
Return Index for Nasdaq Stock Market (US Companies) and the CRSP Total Return
Index for Nasdaq Computer Manufacturers Stocks, assuming an investment of $100
in each in February 1991 and the monthly reinvestment of dividends. The
performance shown on the graph is not necessarily indicative of future
performance.
[GRAPH]
<TABLE>
<CAPTION>
02/28/91 02/28/92 02/26/93 02/28/94 02/28/95 02/28/96
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Standard Microsystems Corporation 100.0 169.8 348.8 355.8 493.0 295.3
Nasdaq Stock Market (US Companies) 100.0 142.7 151.9 179.8 182.3 255.9
Nasdaq Computer Manufacturers Stocks 100.0 126.8 134.2 142.4 146.2 254.2
SIC 3570-3579 US & Foreign
</TABLE>
8
<PAGE>
Pursuant to SEC rules, the material under the caption Board Compensation
Committee Report on Executive Compensation through and including the line graph
and related explanatory material is not to be deemed either "soliciting
material" or "filed" with the SEC. It is specifically excluded from any material
incorporated by reference in SMC filings under the Securities Act of 1933 or
Securities Exchange Act of 1934, whether such filings occur before or after the
date of this proxy statement and notwithstanding anything to the contrary set
forth in any such filing.
-------------------
Directors who are not officers of SMC receive an annual retainer of $25,000,
plus $1,200 per meeting attended; committee members receive an additional annual
retainer of $3,500 per committee, plus $800 per committee meeting attended.
Under SMC's 1990 Director Stock Option Plan, options to purchase an
aggregate of 200,000 shares of SMC Common Stock were authorized for grant to
directors who were not employees of SMC or any subsidiary ("Eligible
Directors"). Pursuant to the plan, on October 11, 1989, each of the Eligible
Directors was granted an immediately exercisable option to purchase 10,000
shares and a vesting option to purchase 15,000 shares. Any director who became
an Eligible Director upon initial election after October 11, 1989, automatically
was granted a vesting option to purchase 15,000 shares. Vesting options become
exercisable to the extent of 5,000 shares on each of the first three
anniversaries of the date of grant. The per share exercise price of each option
equals the fair market value of a share of the Common Stock on the date of
grant. In general, options are not transferable and expire the earlier of five
years after grant or three years after the holder ceases to be a director. The
1990 Plan has been terminated, except with respect to outstanding options.
Under SMC's 1994 Director Stock Option Plan, options to purchase an
aggregate of 250,000 shares of SMC Common Stock were authorized for grant to
Eligible Directors. Pursuant to the plan, on July 7, 1994, each of the Eligible
Directors who last received an option to purchase SMC Common Stock pursuant to
an SMC stock option plan prior to the 1992 annual meeting of stockholders was
granted a vesting option to purchase 25,000 shares and each of the Eligible
Directors who last received an option to purchase SMC Common Stock pursuant to
an SMC stock option plan immediately following any of the 1992, 1993 or 1994
annual meetings of stockholders was granted a vesting option to purchase 10,000
shares. Any director who becomes an Eligible Director upon initial election
after July 7, 1994 automatically is granted a vesting option to purchase 25,000
shares. Vesting options become exercisable to the extent of one-third of the
number of shares granted on each of the first three anniversaries of the date of
grant. Commencing with the 1997 annual meeting of stockholders, each Eligible
Director automatically will be granted an immediately exercisable option to
purchase 8,333 shares following each annual meeting of stockholders, provided
that such Eligible Director shall have been an Eligible Director for the three
prior annual meetings. The per share exercise price of each option equals the
fair market value of a share of the Common Stock on the date of grant. In
general, options are not transferable and expire the earlier of five years after
grant or three years after the holder ceases to be a director.
SMC's Retirement Plan for Directors provides for the payment to each retired
director, for a maximum of 10 years after retirement, of an amount equal to the
director's retainer in effect at his or her retirement, for service on the Board
and each Board committee of which he or she was then a member. Payments for a
shorter period are made to the spouse of a director who dies while in service or
within 10 years after his or her retirement.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Herman Fialkov, who was one of the founders of SMC, has been engaged by SMC
as a consultant through June 30, 1997, at a fee equivalent to $57,500 per annum.
In the event of Mr. Fialkov's death while so engaged, his compensation is to be
continued for six months following the month in which death occurred. The
agreement requires Mr. Fialkov to keep information received from SMC
confidential, so long as such information is not otherwise publicly disclosed,
and prohibits him, except with SMC's consent, from serving any competitor of SMC
engaged in the design or manufacture of semiconductor
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devices. Mr. Fialkov's duties are to be performed at times and places convenient
to him, and he is not required to devote more than twelve hours in any week nor
more than five days in any calendar month to his consulting activities. The
agreement provides that, if he is called upon to perform services beyond the
scope of ordinary consulting duties, he shall be compensated for such services
on a basis to be agreed between him and SMC. It is contemplated that Mr. Fialkov
will continue to serve in his present capacity as a Director and will be
compensated for such services on the same basis as is applicable to other
directors.
1996 STOCK OPTION PLAN
FOR OFFICERS AND KEY EMPLOYEES
The Board of Directors has adopted the 1996 Stock Option Plan (the "Plan"),
subject to stockholder approval. The Board of Directors believes that the Plan
is desirable to attract and retain executives and other key employees of
outstanding ability.
The Plan is set forth as Exhibit A to this proxy statement, and the
following description is qualified in its entirety by this reference thereto.
Under the Plan, options to purchase an aggregate of not more than 1,000,000
shares of Common Stock may be granted from time to time to salaried employees of
SMC or of any subsidiary of SMC, including executive officers and directors who
are so employed immediately prior to the grant of the option. The number of
shares subject to options granted to a single employee during any fiscal year
may not exceed 50,000. Approximately 500 persons, including 5 executive
officers, are expected to be eligible to participate in the Plan.
The Plan is to be administered by the 1996 Stock Option Plan Committee. Such
Committee may in general exercise all of the powers of the Board in relation to
the Plan. The Committee is generally empowered to interpret the Plan, to
prescribe rules and regulations relating thereto, to determine the terms of the
option agreements, to amend them with the consent of the optionee, to determine
the employees to whom options are to be granted, and to determine the number of
shares subject to each option granted.
The per share exercise price of each option is established by the Committee
and in each instance will not be less than the fair market value of a share of
Common Stock on the date the option is granted (110% of fair market value on the
date of grant of an ISO (as hereinafter defined) if the optionee owns stock
possessing more than 10% of the total combined voting power of all classes of
stock of SMC or any of its subsidiaries). Upon exercise of an option, the
optionee may pay the purchase price with securities of SMC previously acquired
by him or her unless the Committee shall otherwise determine.
Options will be exercisable for a term determined by the Committee, which
term will not be greater than 10 years from the date of grant. Unless otherwise
provided in an option agreement, generally, an option will have a ten-year term
and become fully exercisable four years after the date of grant. Prior thereto,
each option will become exercisable as to one-quarter of the number of shares
covered thereby cumulatively upon each anniversary of the date of the grant.
Except in the event of certain terminations of employment or death or permanent
and total disability, no option may be exercised unless the holder is then an
employee of SMC or a subsidiary. Options will not be transferable other than by
will or the laws of descent and distribution and may be exercised during the
optionee's lifetime only by the optionee or his or her guardian or legal
representative.
Options granted pursuant to the Plan may be designated as incentive stock
options ("ISOs"), with the attendant tax benefits provided under Sections 421
and 422 of the Internal Revenue Code of 1986 (the "Code"). Accordingly, the Plan
provides that the aggregate fair market value (determined at the time an ISO is
granted) of the Common Stock subject to ISOs exercisable for the first time by
an employee during any calendar year (under all plans of SMC and any subsidiary)
may not exceed $100,000.
Shares subject to option may be either authorized but unissued shares or
issued shares reacquired by SMC. The number of shares subject to each option and
the exercise price of options are subject to adjustment as the Board considers
appropriate in the event of changes in the outstanding Common
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Stock by reason of stock dividends, recapitalizations, mergers, and similar
events. In the event of certain basic changes in SMC, including a change in
control of SMC, in the discretion of the Board, each option shall become fully
exercisable, regardless of whether any installment is then exercisable.
The Board of Directors may suspend, terminate, modify or amend the Plan,
provided, however, that (except for adjustments by reason of stock dividends,
recapitalizations, mergers, and similar events) any increase in the aggregate
number of shares issuable upon the exercise of options, any reduction in the
purchase price of the Common Stock covered by any option, any extension of the
period during which options may be granted, any increase in the maximum term of
options, and any material modification in the requirements as to eligibility for
participation in the Plan shall be subject to the approval of stockholders. No
suspension, termination, modification or amendment of the Plan may, without the
consent of the optionee, adversely affect the optionee's rights under an option
theretofore granted.
No option may be granted under the Plan after April 22, 2006.
On June 18, 1996, the closing sale price reported on the Nasdaq National
Market for SMC Common Stock was $16.00 per share.
TAX CONSEQUENCES
SMC has been advised as follows regarding the federal income tax
consequences with respect to the grant and exercise of stock options and the
payment in stock of the exercise price of options under the Plan.
Optionees will not be taxed upon the grant of an option. At the time of
exercise of an option other than an ISO, the optionee generally will realize
ordinary income equal to the excess of the fair market value of the shares over
the option price, SMC will be entitled to a deduction in the same amount
(provided applicable withholding requirements are met), and the shares so
acquired will have a basis to the optionee equal to their fair market value.
Upon the sale of a share so acquired, any gain or loss will result in a capital
gain or loss measured by the difference between the optionee's basis and the
amount realized on such sale, provided the share is a capital asset in the hands
of the holder.
At the time of exercise of an ISO, the optionee will realize no income, and
SMC will not be entitled to any deduction. However, the optionee generally will
have an item of adjustment, for purposes of calculating alternative minimum
taxable income, equal to the excess of the fair market value of the shares at
such time over the option price. Upon the sale of a share acquired pursuant to
the exercise of an ISO, any gain or loss will result in a capital gain or
capital loss (measured by the difference between the amount realized on such
sale and the exercise price), provided the share sold is a capital asset in the
hands of the holder. However, if at the time of sale or other disposition of
such share, the optionee has held the share for less than one year, or less than
two years have elapsed since the grant of the ISO (a "Premature Disposition"), a
portion (or all) of any gain will be taxed at ordinary income rates at the time
of the disposition in an amount equal to the excess of the fair market value of
the shares on the date of exercise (or, if less, the amount realized upon
disposition) over the option price, and SMC will be entitled to a deduction in
the same amount.
If an optionee uses previously acquired shares of Common Stock to pay the
exercise price of an option, the optionee would not ordinarily recognize any
taxable income to the extent that the number of new shares of Common Stock
received upon exercise of the option does not exceed the number of previously
acquired shares so used. If non-recognition treatment applies to the payment for
option shares with previously acquired shares, the tax basis of the option
shares received without recognition of taxable income is the same as the basis
of the shares surrendered as payment. If a greater number of shares of Common
Stock is received upon exercise than the number of shares surrendered in payment
of the option price, if an ISO is being exercised, such excess shares will have
a zero basis in the hands of the optionee; if an option other than an ISO is
being exercised, the optionee will be required to include in gross income (and
SMC will be entitled to deduct) an amount equal to the fair market value of the
additional shares on the date the option is exercised less any cash paid for the
shares.
Moreover, if stock previously acquired by exercise of an ISO is transferred
in connection with the exercise of another option, whether or not an ISO, and
if, at the time of such transfer, the stock so
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transferred has not been held for the holding period required in order to
receive favorable treatment under the rules governing ISOs, then such transfer
will be treated as a Premature Disposition. Accordingly, with respect to the
shares so transferred, an optionee would recognize ordinary income under the
rules governing a Premature Disposition discussed earlier in this section.
Nonetheless, if the option so exercised is an ISO, the shares acquired upon
exercise can still qualify for ISO treatment, if all of the other ISO
requirements are fulfilled.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THE 1996 STOCK
OPTION PLAN.
SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
Subject to ratification by the stockholders, the Board of Directors has
selected Arthur Andersen LLP ("Arthur Andersen") as independent public
accountants for SMC for the fiscal year ending February 28, 1997. Arthur
Andersen was the independent public accountant for SMC for its fiscal year ended
February 29, 1996. A representative of Arthur Andersen is expected to be present
at the Annual Meeting, with the opportunity to make a statement, if he or she
desires to do so, and is expected to be available to respond to appropriate
questions.
If the selection of Arthur Andersen is not ratified, or if prior to the next
annual meeting of stockholders such firm shall decline to act or otherwise
become incapable of acting, or if its engagement shall be otherwise discontinued
by the Board of Directors, the Board of Directors will appoint other independent
auditors whose selection for any period subsequent to the next Annual Meeting
will be subject to stockholder ratification at such meeting.
VOTING PROCEDURES
Every stockholder of SMC is entitled to cast, in person or by proxy, one
vote for each share of SMC Common Stock held at the close of business on June 7,
1996, the record date for the Annual Meeting. At that date, SMC had outstanding
13,684,856 shares. The proxy hereby solicited is revocable at any time prior to
its exercise and may be revoked in any manner permitted by law.
The presence in person or by proxy of stockholders entitled to cast a
majority of the votes at the meeting constitutes a quorum, and the favorable
vote of the holders of a majority of the shares present or represented and
entitled to vote is necessary for the approval of each proposal, except for
election of directors. If a quorum is present, the three persons receiving the
largest number of votes for director will be elected. Votes are in general
counted by optical scanning equipment. Abstentions are counted for quorum
purposes, but not as "for" or "against"; broker non-votes are not counted for
quorum purposes. An abstention on a proposal that requires for its approval the
affirmative vote of the holders of a majority of the shares present or
represented and entitled to vote, such as approval of the 1996 Stock Option
Plan, has the same legal effect as a vote against.
The proxies named in the enclosed form of proxy and their substitutes will
vote the shares represented by the enclosed form of proxy, if the proxy appears
to be valid on its face, and, where a choice is specified on the form of proxy,
the shares will be voted in accordance with the specification so made.
GENERAL
The cost of preparing, assembling and mailing the proxy statement and
related material will be borne by SMC. In addition to soliciting proxies by
mail, SMC may make requests for proxies by telephone, facsimile transmission or
messenger or by personal solicitation by officers, directors, or employees of
SMC, at nominal cost to SMC, or by any one or more of the foregoing means.
Georgeson & Company has been retained by SMC to assist in the solicitation of
proxies, for fees anticipated to aggregate approximately $4,500, plus reasonable
out-of-pocket expenses. SMC will reimburse brokerage firms and other nominees in
accordance with the New York Stock Exchange schedule of charges for the cost of
forwarding proxy material to beneficial owners of SMC stock.
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STOCKHOLDER PROPOSALS AND OTHER MATTERS
Stockholder proposals intended for inclusion in the proxy statement for the
next Annual Meeting must be received by SMC by February 19, 1997 and should be
sent to the Senior Vice President-- Finance, Standard Microsystems Corporation,
80 Arkay Drive, Hauppauge, New York 11788.
As of the date of this proxy statement, the Board of Directors of SMC knows
of no matter, other than the election of directors, adoption and approval of the
1996 Stock Option Plan, and the ratification of the selection of independent
public accountants, to come before the meeting. If any other matter should
properly come before the meeting, it is the intention of the persons named on
the accompanying form of proxy to vote such proxy in accordance with their
judgment on such matter.
By order of the Board of Directors,
HAROLD I. KAHEN
Dated: June 21, 1996
Secretary
YOUR PROXY IS IMPORTANT WHETHER YOU OWN FEW OR MANY SHARES. PLEASE SIGN AND MAIL
IT TODAY.
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EXHIBIT A
1996 STOCK OPTION PLAN
FOR OFFICERS AND KEY EMPLOYEES OF
STANDARD MICROSYSTEMS CORPORATION
1. PURPOSE OF THE PLAN
The purpose of this Plan is to provide a method whereby present and future
officers and key employees of Standard Microsystems Corporation, a Delaware
corporation (the "Company"), who are responsible for the management, growth and
promotion of the business and who are making and can continue to make
substantial contributions to the success of the business, may be encouraged to
acquire capital stock ownership in the Company, thus increasing their
proprietary interest in the business, providing them with greater incentive,
encouraging their continuance in the service of the Company and promoting the
interests of the Company and all its stockholders. Accordingly, the Company
will, from time to time, on or before April 22, 2006, grant to such employees as
may be selected in the manner hereinafter provided, options to purchase shares
of Common Stock, $.10 par value, of the Company ("Common Stock") subject to the
conditions hereinafter provided.
2. ADMINISTRATION OF THE PLAN
(a) This Plan will be administered by a Stock Option Committee (the
"Committee") consisting of not fewer than two directors of the Company, who
shall be appointed and serve at the pleasure of the Board of Directors (the
"Board"). All members of the Committee shall be disinterested persons, as
hereinafter defined, and shall be "outside directors" within the meaning of
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code") and
Treasury Regulations promulgated thereunder. The Committee shall have and may
exercise all of the powers of the Board under the Plan, other than the power to
appoint a director to committee membership. A majority of the Committee shall
constitute a quorum, and acts of the majority of members present at any meeting
at which a quorum is present shall be deemed the acts of the Committee. The
Committee may also act by instrument signed by all members of the Committee.
(b) The Committee shall have plenary authority in its discretion, subject to
and consistently with the express provisions of the Plan, to direct the grant of
options, to determine the number of shares and purchase price of the Common
Stock covered by each option, the employees to whom, and the time or times at
which, options shall be granted and may be exercised; to prescribe, amend and
rescind rules and regulations relating to the Plan, including, without
limitation, such rules and regulations as it shall deem advisable so that
transactions involving options may qualify for exemption under such rules and
regulations as the Securities and Exchange Commission may promulgate from time
to time exempting transactions from Section 16(b) of the Securities Exchange Act
of 1934 (the "Exchange Act"); to determine the terms and provisions of, and to
cause the Company to enter into, agreements with employees in connection with
options granted under the Plan ("Agreements"), which Agreements may vary from
one another, as the Committee shall deem appropriate; to amend any such
Agreement from time to time, with the consent of the optionee; and to make all
other determinations the Committee may deem necessary or advisable for the
administration of the Plan.
(c) Each option granted under this Plan shall be deemed to have been granted
when the determination of the Committee with respect to such option is made.
Once an option has been granted, all conditions and requirements of this Plan
with respect to such option shall be deemed to be conditions upon the exercise
of the option but not upon the grant thereof.
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(d) Every action, decision, interpretation or determination by the Committee
or the Board with respect to the application or administration of this Plan
shall be final and binding upon the Company and each person holding or claiming
any right or interest pursuant to any option granted under this Plan.
3. STOCK SUBJECT TO THIS PLAN
(a) The shares to be issued upon exercise of options granted under this Plan
shall be made available, at the discretion of the Board, either from the
authorized but unissued shares of Common Stock or from shares of Common Stock
reacquired by the Company, including shares purchased in the open market. The
aggregate number of shares of Common Stock for which options may be granted
under this Plan shall not exceed 1,000,000. The maximum number of shares that
may be subject to options granted to any one employee within one fiscal year
shall be 50,000. Such aggregate numbers shall be subject to adjustment as
provided in paragraph 12. If any option granted under this Plan shall expire or
terminate for any reason without having been exercised in full, the unpurchased
shares shall (unless this Plan shall have been terminated) become available for
option to other employees.
(b) In the discretion of the Board, but subject to the provisions of the
Plan and Section 422 of the Code, options may, at the time of grant, be
designated as incentive stock options ("ISOs") with the attendant tax benefits
provided under Sections 421 and 422 of the Code. The aggregate fair market value
(determined at the time an ISO is granted) of the Common Stock covered by ISOs
exercisable for the first time by an employee during any calendar year (under
all plans of the Company), may not exceed $100,000.
4. ELIGIBILITY OF OPTIONEES
(a) Options may be granted only to salaried employees (including officers
and directors who are such employees) of the Company. In its determination of
any employee to whom an option shall be granted and the number of shares to be
covered by such option, the Committee shall take into account the duties of the
employee, the present and potential contributions of the employee to the success
of the Company, the number of years of service remaining before the anticipated
retirement of the employee, and other factors deemed relevant by the Committee
in connection with accomplishing the purpose of this Plan.
(b) An employee who has been granted an option under this Plan or otherwise
may, if the Committee shall so determine, be granted one or more additional
options.
5. OPTION PRICE
(a) The purchase price per share of Common Stock under each option shall be
established by the Committee, but shall not be less than the fair market value
(as hereinafter defined) of a share of Common Stock on the date such option is
granted.
(b) In the case of an individual who at the time the option is granted owns
stock possessing more than 10% of the total combined voting power of all classes
of stock of the Company, the purchase price of the Common Stock covered by any
ISO shall in no event be less than 110% of the fair market value of the Common
Stock on the date such ISO is granted.
6. NONTRANSFERABILITY OF OPTION
No option granted under this Plan shall be transferable by the grantee,
either voluntarily or by operation of law, otherwise than by last will and
testament or by laws of descent and distribution, and such option shall be
exercised during the lifetime of the grantee, only by the grantee, or by his
guardian or legal representative.
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7. EXERCISE OF OPTION
(a) Each option granted under this Plan shall by its terms expire not later
than ten years from the date on which it was granted.
(b) Unless the Committee shall fix a different schedule at the time a
particular option is granted, each option granted under this Plan shall become
exercisable, to the extent of one-quarter of the aggregate number of shares
optioned thereby, one year after the date of grant and, cumulatively, to the
extent of an additional one-quarter, at the expiration of each year thereafter,
so that, four years after the date of grant, each option shall be fully
exercisable, subject to the provisions set forth elsewhere in the Plan.
Notwithstanding the foregoing, the Committee may declare any outstanding option
immediately and fully exercisable (but in no event prior to the first
anniversary of the date of grant).
(c) A person electing to exercise an option shall give written notice to the
Company of such election and of the number of shares he has elected to purchase;
provided that no option may be exercised as to fewer than 100 shares unless it
is then exercised as to all of the shares then purchasable thereunder. Such
notice shall be accompanied by payment to the Company of the full purchase price
in cash; provided that, unless otherwise determined by the Committee, the
purchase price may be paid in whole or in part, by surrender or delivery to the
Company of Common Stock of the Company having a fair market value on the date of
exercise equal to the portion of the purchase price being so paid. In addition,
the employee shall, upon notification of the amount due and prior to or
concurrently with delivery to the employee of a certificate representing such
shares, pay, in cash, any amount necessary to satisfy federal, state and local
tax requirements.
(d) No person shall have the rights of a stockholder with respect to shares
covered by an option until such person becomes the holder of record of such
shares.
(e) Except as provided in paragraph 8 or paragraph 9, no option may be
exercised, unless, at the time of exercise, the optionee is an employee of the
Company. Options granted under the Plan shall not be affected by any change of
duties or position so long as the optionee continues to be an employee of the
Company.
(f) Notwithstanding any other provision of this Plan, the Company shall not
be required to issue or deliver any share of stock upon the exercise of an
option prior to (a) the admission of such share to listing on any stock exchange
or automated quotation system on which the Company's Common Stock may then be
listed and (b) the completion of such registration or other qualification of
such share under any state or federal law, rule or regulation as the Company
shall determine to be necessary or advisable.
8. TERMINATION OF RELATIONSHIP TO THE COMPANY
(a) In the event that any optionee shall cease to be an employee of the
Company, other than by reason of death or permanent and total disability, any
option held by such optionee may be exercised (to the extent that the optionee
was entitled to exercise such option at the termination of such employment) at
any time within three months after such termination, but not later than the
expiration date of such option; provided, however, that any option held by an
employee whose employment shall be terminated either (A) by the Company for
cause (as hereinafter defined) or (B) voluntarily by the employee and without
the consent of the Company (which consent shall be presumed in the case of
retirement at age 65 or thereafter) shall, to the extent not theretofore
exercised, forthwith terminate.
(b) Notwithstanding the provisions of paragraph 7 specifying the
installments in which an option shall be exercisable, upon an optionee's actual
retirement at age 65 or thereafter, the option shall be exercisable (within the
time periods set forth in paragraph 8(a)) as to all shares of Common Stock
remaining subject to the option.
(c) Any Agreement may contain such provisions as the Board shall approve
with reference to the determination of the date employment terminates for
purposes of the Plan and the effect of leaves of absence, which provisions may
vary from one another.
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(d) Nothing in the Plan or in any Agreement shall confer upon any employee
any right to continue in the employ of the Company or affect the right of the
Company to terminate such employment at any time for any reason, or for no
reason.
9. DEATH OR DISABILITY OF OPTIONEE
Notwithstanding the provisions of paragraph 7 specifying installments in
which an option shall be exercisable, if an optionee shall die or become
permanently disabled within the meaning of Section 22(e)(3) of the Code, while
he is employed by the Company or within three months after the termination of
his employment (other than termination by the Company for cause or voluntarily
on the part of the optionee and without the consent of the Company), such option
may be exercised, as to all shares of Common Stock remaining subject to the
option, within the later to occur of (a) three months after the termination of
the optionee's employment or (b) thirty days after the appointment of a legal
representative or guardian, but in no case more than one year after termination
of employment and in no case after the original expiration date of the option.
10. AMENDMENTS TO THE PLAN
The Board may at any time terminate or from time to time modify, amend or
suspend this Plan, including any amendment for the purpose of complying with or
securing the benefit of any change in the Exchange Act or the Code or any
regulation adopted under either; provided that no such modification without the
approval of stockholders shall increase the aggregate number of shares reserved
for issuance upon the exercise of options, permit the granting of options at an
option price less than 100% of the fair market value of the Common Stock at the
date of the grant, extend the period during which options may be exercised or
granted, or otherwise materially increase the benefits accruing to optionees
under this Plan or materially modify the requirements as to eligibility of
optionees under this Plan, except that any increase, reduction or change that
may result from any adjustment authorized by paragraph 12 or any modification
based on any revision to the Code or any regulation promulgated thereunder (to
the extent permitted by the Code or the Internal Revenue Service) shall not
require such approval. No suspension, termination, modification or amendment of
the Plan may, without the consent of the employee to whom an option shall
theretofore have been granted, adversely affect the rights of such employee
under such option.
11. GRANTING OF OPTIONS
(a) The grant of any option pursuant to the Plan shall be entirely in the
discretion of the Committee, and nothing in the Plan shall be construed to
confer on any officer or employee any right to receive any option under the
Plan.
(b) The grant of an option pursuant to the Plan shall not constitute an
agreement or an understanding, express or implied, to employ the optionee for
any specified period.
12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
(a) The Board may at any time make such provision as it shall consider
appropriate for the adjustment of the number and class of shares covered by each
option, the exercise price and the number of shares as to which such option
shall be exercisable, in the event of changes in the outstanding Common Stock of
the Company by reason of any stock dividend, split-up, reorganization,
liquidation, and the like. In the event of any such change in the outstanding
Common Stock of the Company, the aggregate number of shares as to which options
may be granted under the Plan shall be appropriately adjusted by the Board,
whose determination shall be conclusive. No adjustment shall be made in the
requirements set forth in paragraph 7 with respect to the minimum number of
shares that must be purchased upon any exercise.
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(b) In the event (i) of a dissolution, liquidation, merger or consolidation
of the Company or (ii) of a sale of all or substantially all of the assets of
the Company or the sale of substantially all of the assets or stock of a
subsidiary of which the optionee is then an employee, or (iii) a change in
control (as hereinafter defined) of the Company has occurred or is about to
occur, then, if the Board shall so determine, each option under the Plan, if
such event shall occur with respect to the Company, or each option granted to an
employee of such subsidiary, shall become immediately and fully exercisable.
13. EFFECTIVE DATE OF THE PLAN
Options may be granted under the Plan, subject to its authorization and
adoption by the stockholders of the Company, at any time or from time to time
after its adoption by the Board, but no option shall be exercised under this
Plan until this Plan shall have been authorized and adopted at a meeting of
stockholders of the Company. If so adopted by stockholders, this Plan shall
become effective as of April 23, 1996, the date of its adoption by the Board of
Directors.
14. SEVERABILITY
In the event that any one or more provisions of the Plan or any Agreement,
or any action taken pursuant to the Plan or such Agreement, should, for any
reason, be unenforceable or invalid in any respect under the laws of the United
States, any state of the United States or any other government, such
unenforceability or invalidity shall not affect any other provision of the Plan
or of such or any other Agreement, but in such particular jurisdiction and
instance the Plan and the affected Agreement shall be construed as if such
unenforceable or invalid provision had not been contained therein or as if the
action in question had not been taken thereunder.
15. EFFECT ON PRIOR OPTION PLANS
The adoption of the 1996 Plan shall have no effect on outstanding options
granted by the Company under any other option plan.
16. CERTAIN DEFINITIONS
(a) The terms "parent" and "subsidiary" shall have the meanings
respectively, of "parent corporation" and "subsidiary corporation" as set forth
in Sections 425(e) and (f) of the Code, respectively.
(b) The term "disinterested person" shall mean a director who is not, during
the one year prior to service as an administrator of the Plan, or during such
service, granted or awarded equity securities pursuant to the Plan or any other
plan of the Company or any of its affiliates, except that: (A) participation in
a formula plan meeting the conditions in paragraph (c)(2)(ii) of Rule 16b-3
promulgated under the Exchange Act ("Rule 16b-3") shall not disqualify a
director from being a disinterested person, and (B) participation in an ongoing
securities acquisition plan meeting the conditions in paragraph (d)(2)(i) of
Rule 16b-3 shall not disqualify a director from being a disinterested person.
(c) The term "fair market value" of a share of Common Stock shall mean, as
of the date on which such fair market value is to be determined, the closing
price (or the average of the latest bid and asked prices) of a share of Common
Stock as reported in The Wall Street Journal (or a publication or reporting
service deemed equivalent to The Wall Street Journal for such purpose by the
Board or the Committee) for the over-the-counter market or any national
securities exchanges and other securities markets which at the time are included
in the stock price quotations of such publication. In the event that the Board
or the Committee shall determine such stock price quotation is not
representative of fair market value, the Board or the Committee may determine
fair market value in such a manner as it shall deem appropriate under the
circumstances.
A-5
<PAGE>
(d) The term "termination of employment for cause" or words to like effect
shall mean termination by the Company of the employment of the optionee by
reason of the optionee's (i) willful refusal to perform his obligations to the
Company, (ii) willful misconduct, contrary to the interests of the Company, or
(iii) commission of a serious criminal act, whether denominated a felony,
misdemeanor or otherwise. In the event of any dispute whether a termination for
cause has occurred, the Board may by resolution resolve such dispute and such
resolution shall be final and conclusive on all parties.
(e) The term "Company" shall include any parent or subsidiary of the
Company.
(f) The term "change in control" shall mean an event or series of events
that would be required to be described as a change in control of the Company in
a proxy or information statement distributed by the Company pursuant to Schedule
14A or Schedule 14C promulgated under the Exchange Act. The determination
whether and when a change in control has occurred or is about to occur shall be
made by vote of a majority of the disinterested persons who shall have
constituted the Board immediately prior to the occurrence of the event or series
of events constituting such change in control.
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<PAGE>
STANDARD MICROSYSTEMS CORPORATION
PROXY-Annual Meeting of Stockholders-July 22, 1996
PAUL RICHMAN, HERMAN FIALKOV and HAROLD I. KAHEN, and each of them, each
with full power of substitution, hereby are authorized to vote, by a majority of
those or their substitutes present and acting at the meeting or, if only one
shall be present and acting, then that one, all of the shares of Standard
Microsystems Corporation that the undersigned would be entitled, if personally
present, to vote at the 1996 annual meeting of stockholders, and at any
adjournment thereof, upon such business as may properly come before the meeting,
including the items set forth on the reverse side hereof and in the notice of
annual meeting.
Please date and sign this proxy on the REVERSE SIDE, and mail it in the enclosed
envelope, which requires no postage if mailed in the United States.
_____________________________________________________________________________
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<S> <C> <C>
This proxy is solicited on behalf of the Board of Directors. Unless otherwise properly marked, Please mark your
this proxy will be voted for proposals 1, 2 and 3 as recommended by the Board of Directors. votes as indicated /X/
in this example.
Board of Directors recommends a vote FOR the following items:
ELECTION OF DIRECTORS
FOR WITHHOLD Nominees: Evelyn Berezin, James R. Berrett, Peter F. Dicks, Kathleen B. Earley
ALL NOMINEES AUTHORITY
(except as marked to vote for all
to the contrary) nominees listed (INSTRUCTION: To withhold authority to vote for any individual nominee, write that
nominee's name on the space provided below.)
/ / / /
_______________________________________________________________________
ELECTION OF ARTHUR ANDERSEN LLP AS 3. ADOPTION OF 1996 STOCK OPTION PLAN. PLEASE DATE AND
INDEPENDENT PUBLIC ACCOUNTANTS. SIGN THIS PROXY
AND RETURN IT PROMPTLY.
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
/ / / / / / / / / / / /
Signature _______________________________ Signature __________________________________ Date _______________, 1996
Sign exactly as your name appears hereon. If the named holder is a
corporation, partnership or other association, please sign its name and add
your own name and title. When signing as attorney, executor, guarantor,
trustee or guardian, please also give your full title. If shares are held
jointly, EACH holder should sign.)
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