SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-12
SILICON LABORATORIES INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(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:
-----------------------------------------------------------------------
[LOGO] S
SILICON LABORATORIES
SILICON LABORATORIES INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 24, 2003
TO THE STOCKHOLDERS OF SILICON LABORATORIES INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Silicon Laboratories Inc., a Delaware corporation, will be held on April 24,
2003, at 9:30 a.m. Central Time at the Lady Bird Johnson Wildflower Center, 4801
La Crosse Avenue, Austin, Texas 78739, for the following purposes, as more fully
described in the Proxy Statement accompanying this Notice:
1. To elect two Class II directors to serve on the Board of Directors
until our 2006 annual meeting of stockholders, or until their
successors are duly elected and qualified;
2. To ratify the appointment of Ernst & Young LLP as our independent
auditors for the fiscal year ending January 3, 2004; and
3. To transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.
Only stockholders of record at the close of business on February 24,
2003 are entitled to notice of and to vote at the Annual Meeting. A list of
stockholders entitled to vote at the Annual Meeting will be available for
inspection at our executive offices.
All stockholders are cordially invited to attend the meeting in person.
Whether or not you plan to attend, please sign and return the Proxy in the
envelope enclosed for your convenience, or vote your shares by telephone or
internet as promptly as possible. Should you receive more than one Proxy because
your shares are registered in different names and addresses, each Proxy should
be signed and returned, or voted by telephone or internet to assure that all
your shares will be voted. You may revoke your Proxy at any time prior to the
Annual Meeting. If you attend the Annual Meeting and vote by ballot, your Proxy
will be revoked automatically and only your vote at the Annual Meeting will be
counted.
Sincerely,
/s/ Navdeep S. Sooch
--------------------
Navdeep S. Sooch
CHIEF EXECUTIVE OFFICER AND
CHAIRMAN OF THE BOARD
Austin, Texas
March 17, 2003
YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. PLEASE
READ THE ATTACHED PROXY STATEMENT CAREFULLY AND VOTE YOUR SHARES BY TELEPHONE,
BY INTERNET OR BY COMPLETING, SIGNING AND DATING THE ENCLOSED PROXY CARD AS
PROMPTLY AS POSSIBLE AND RETURNING IT IN THE ENCLOSED ENVELOPE.
SILICON LABORATORIES INC.
4635 BOSTON LANE
AUSTIN, TEXAS 78735
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 24, 2003
GENERAL
The enclosed Proxy is solicited on behalf of the Board of Directors of
Silicon Laboratories Inc., a Delaware corporation, for use at the Annual Meeting
of Stockholders to be held on April 24, 2003 at 9:30 a.m. Central Time at the
Lady Bird Johnson Wildflower Center, 4801 La Crosse Avenue, Austin, Texas 78739.
These proxy solicitation materials were mailed on or about March 17, 2003, to
all stockholders entitled to vote at the Annual Meeting.
VOTING
The specific proposals to be considered and acted upon at the Annual
Meeting are summarized in the accompanying notice and are described in more
detail in this Proxy Statement. On February 24, 2003, the record date for
determination of stockholders entitled to notice of and to vote at the Annual
Meeting, there were 48,988,084 shares of our common stock outstanding and no
shares of our preferred stock were outstanding. Each stockholder is entitled to
one vote for each share of common stock held by such stockholder on February 24,
2003. The presence, in person or by proxy, of the holders of a majority of our
shares entitled to vote is necessary to constitute a quorum at this Annual
Meeting. Stockholders may not cumulate votes in the election of directors. The
vote of a plurality of the shares of our common stock present in person or
represented by proxy at this meeting and entitled to vote on the election of
directors is necessary for the election of a director. The nominees receiving
the greatest number of votes at this meeting will be elected to our Board of
Directors, even if they receive less than a majority of such shares.
All votes will be tabulated by the inspector of election appointed for
the meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes (i.e., a Proxy submitted by a broker or nominee
specifically indicating the lack of discretionary authority to vote on the
matter). Abstentions and broker non-votes will be counted as present for
purposes of determining the presence or absence of a quorum for the transaction
of business, but will not be counted for purposes of determining whether each
proposal has been approved.
PROXIES
If the enclosed form of Proxy is properly signed and returned or you
properly follow the instructions for telephone or internet voting, the shares
represented thereby will be voted at the Annual Meeting in accordance with the
instructions specified thereon. If the Proxy does not specify how the shares
represented thereby are to be voted, the Proxy will be voted FOR the election of
the directors proposed by the Board of Directors unless the authority to vote
for the election of such directors is withheld and, if no contrary instructions
are given, the Proxy will be voted FOR the approval of the selection of Ernst &
Young LLP as our independent auditors. You may revoke or change your Proxy at
any time before the Annual Meeting by filing with our Secretary at our principal
executive offices at 4635 Boston Lane, Austin, Texas 78735, a notice of
revocation or another signed Proxy with a later date. You may also revoke your
Proxy by attending the Annual Meeting and voting in person.
SOLICITATION
We will bear the entire cost of solicitation, including the
preparation, assembly, printing and mailing of this Proxy Statement, the Proxy
and any additional solicitation materials furnished to the stockholders. Copies
of solicitation materials will be furnished to brokerage houses, fiduciaries and
custodians holding shares in their names that are beneficially owned by others
so that they may forward this solicitation material to such beneficial owners.
In addition, we may reimburse such persons for their costs in forwarding the
solicitation materials to such beneficial owners. The original solicitation of
proxies by mail may be supplemented by a solicitation by telephone or other
means by directors, officers or employees. No additional compensation will be
paid to these individuals for any such services. Except as described above, we
do not presently intend to solicit Proxies other than by mail.
DEADLINE FOR RECEIPT OF FUTURE STOCKHOLDER PROPOSALS
Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934,
stockholder proposals to be presented at our 2004 Annual Meeting of Stockholders
and in our proxy statement and form of proxy relating to that meeting must be
received by us at our principal executive offices in Austin, Texas, addressed to
our Chief Financial Officer, not later than November 18, 2003, the date which is
120 days prior to March 17, 2004. These proposals must comply with applicable
Delaware law, the rules and regulations promulgated by the Securities and
Exchange Commission and the procedures set forth in our bylaws. Unless we
receive notice in the manner specified in the previous sentence, the Proxy
holders shall have discretionary authority to vote against any proposal
presented at our 2004 Annual Meeting of Stockholders.
2
MATTERS TO BE CONSIDERED AT ANNUAL MEETING
PROPOSAL ONE: ELECTION OF DIRECTORS
GENERAL
The Board of Directors is divided into three classes, designated Class
I, Class II and Class III. Each class is as nearly equal in size as practicable,
with staggered three-year terms. The term of office of the Class II directors,
David R. Welland and H. Berry Cash, expires at this Annual Meeting. Mr. Welland
and Mr. Cash have been nominated to continue as Class II Directors. The two
directors elected as Class II Directors at the Annual Meeting will serve for a
term of three years expiring at the 2006 annual meeting of stockholders, or
until their successor(s) have been duly elected and qualified or until their
earlier death, resignation or removal.
Each nominee for election has agreed to serve if elected, and
management has no reason to believe that the nominees will be unavailable to
serve. In the event a nominee is unable or declines to serve as a director at
the time of the Annual Meeting, the Proxies will be voted for any nominee who
may be designated by our present Board of Directors to fill the vacancy. Unless
otherwise instructed, the Proxy holders will vote the Proxies received by them
FOR the nominees named below.
NOMINEES FOR CLASS II DIRECTORS WITH TERMS EXPIRING IN 2006
David R. Welland, 47 ..... co-founded Silicon Laboratories in August 1996 and
has served as a Vice President and as a director
since our inception. From November 1991 until
founding Silicon Laboratories, Mr. Welland held
various positions at Crystal Semiconductor/Cirrus
Logic, including Senior Design Engineer. Mr. Welland
holds a B.S. in electrical engineering from the
Massachusetts Institute of Technology.
H. Berry Cash, 64 ........ has served as a director of Silicon Laboratories
since June 1997. Mr. Cash has served as general
partner of InterWest Partners, a venture capital
firm, since 1986. Mr. Cash currently serves on the
Board of Directors of the following public companies:
Microtune, a designer and manufacturer of RF silicon
and systems "gateway" solutions for the broadband
communications and consumer electronics markets; i2
Technologies, a provider of intelligent e-business
and marketplace solutions; Ciena Corporation, a
designer and manufacturer of dense wavelength
division multiplexing systems for fiber optic
networks; Airspan Networks, a provider of broadband
fixed wireless access communication systems; and
Liberte Investors, an investment company. Mr. Cash
holds a B.S. in electrical engineering from Texas A&M
University and a M.B.A. from Western Michigan
University.
OTHER DIRECTORS
Set forth below is information concerning our other directors whose
term of office continues after this Annual Meeting.
CONTINUING CLASS III DIRECTORS WITH TERMS EXPIRING IN 2004
Jeffrey W. Scott, 41 .... co-founded Silicon Laboratories in August 1996 and
has served as a Vice President and as a director
since our inception. From October 1989 until founding
Silicon Laboratories, Mr. Scott held various
positions at Crystal Semiconductor/Cirrus Logic,
including Vice President of Engineering (Computer
Products), Design Manager and Design Engineer. From
1985 until 1989, Mr. Scott served as a Design
Engineer with AT&T Bell Labs. Mr. Scott holds a B.S.
in electrical engineering from Lehigh University and
a M.S. in electrical engineering from the
Massachusetts Institute of Technology.
William G. Bock, 52 ...... has served as a director of Silicon Laboratories
since March 2000. Since April 2002, Mr. Bock has been
a general partner of CenterPoint Ventures, a venture
capital firm. From April 2001 to March 2002, Mr. Bock
served as a partner of Verity Ventures, a venture
capital firm. From June 1999 to March 2001, Mr. Bock
served as a Vice President and General Manager at the
Hewlett-Packard Company. Mr. Bock held the position
of President and Chief Executive Officer of DAZEL
Corporation from February 1997 until its acquisition
by the Hewlett-Packard Company in June 1999.
3
From October 1994 to February 1997, Mr. Bock served
as Chief Operating Officer of Tivoli Systems, a
client server software company, which was acquired by
IBM in March 1996. Mr. Bock holds a B.S. in Computer
Science from Iowa State University and a M.S. in
Industrial Administration from Carnegie Mellon
University.
CONTINUING CLASS I DIRECTORS WITH TERMS EXPIRING IN 2005
Navdeep S. Sooch, 40 .... co-founded Silicon Laboratories in August 1996 and
has served as our Chief Executive Officer and
Chairman of the Board since our inception. From March
1985 until founding Silicon Laboratories, Mr. Sooch
held various positions at Crystal
Semiconductor/Cirrus Logic, a designer and
manufacturer of integrated circuits, including Vice
President of Engineering, as well as Product Planning
Manager of Strategic Marketing and Design Engineer.
From May 1982 to March 1985, Mr. Sooch was a Design
Engineer with AT&T Bell Labs. Mr. Sooch holds a B.S.
in electrical engineering from the University of
Michigan, Dearborn and a M.S. in electrical
engineering from Stanford University.
William P. Wood, 47 ..... has served as a director of Silicon Laboratories
since March 1997. Since 1984, Mr. Wood has been a
general partner, and for certain funds created since
1996, a special limited partner, of various funds
associated with Austin Ventures, a venture capital
firm. Since 1996, Mr. Wood has also served as general
partner of Silverton Partners, an investment firm.
Mr. Wood serves on the Board of Directors of
Crossroads Systems, a provider of storage routers for
storage area networks. Mr. Wood holds a B.A. in
history from Brown University and a M.B.A. from
Harvard University.
BOARD COMMITTEES AND MEETINGS
During fiscal 2002, our Board of Directors held eight meetings and
acted by unanimous written consent one time. The Board of Directors has an Audit
Committee, a Compensation Committee and a Special Stock Option Committee. Each
director attended or participated in 75% or more of the aggregate of (i) the
total number of meetings of the Board of Directors and (ii) the total number of
meetings held by all committees of the Board of Directors on which such director
served during fiscal 2002.
AUDIT COMMITTEE. The Audit Committee reports to the Board of Directors
with regard to the selection of our independent auditors, the scope of the
annual audits, the fees to be paid to the independent auditors, the performance
of our independent auditors, compliance with our accounting and financial
policies, and management's procedures and policies relative to the adequacy of
our internal accounting controls. The Board of Directors has adopted a written
charter for the Audit Committee. The members of the Audit Committee are
independent as defined in Rule 4200(a)(15) of the National Association of
Securities Dealers' listing standards. The members of the Audit Committee are
Messrs. Bock, Cash and Wood. Mr. Bock serves as Chairman of the Audit Committee.
The Audit Committee held four meetings during fiscal 2002.
COMPENSATION COMMITTEE. The Compensation Committee reviews and makes
recommendations to the Board of Directors regarding our compensation policies
and all forms of compensation to be provided to our executive officers and other
employees. In addition, the Compensation Committee has authority to administer
our stock option and stock purchase plans. The members of the Compensation
Committee are Messrs. Bock, Cash and Wood. Mr. Wood serves as Chairman of the
Compensation Committee. The Compensation Committee held two meetings and acted
by unanimous written consent one time during fiscal 2002.
SPECIAL STOCK OPTION COMMITTEE. The Special Stock Option Committee,
which is composed of Mr. Sooch, approves grants of options from our 2000 Stock
Incentive Plan to non-executive officers and employees. The Board of Directors
generally reviews the grants made by the Special Stock Option Committee at the
next meeting of the Board of Directors. The Special Stock Option Committee acted
25 times by written consent at regular intervals during fiscal 2002.
4
DIRECTOR COMPENSATION AND INDEMNIFICATION ARRANGEMENTS
Non-employee directors receive option grants at periodic intervals
under the automatic option grant program of our 2000 Stock Incentive Plan. Under
the automatic option grant program, each individual who first becomes a
non-employee director receives an option grant to purchase 30,000 shares of
common stock on the date such individual joins the board. In addition, on the
date of each annual stockholders meeting, each non-employee director who
continues to serve as a non-employee director is automatically granted an option
to purchase 5,000 shares of common stock, provided such individual has served as
a non-employee director for at least six months. Under this program, on the date
of our 2002 annual meeting of stockholders, Messrs. Bock, Cash and Wood each
received an option grant to purchase 5,000 shares of common stock at an exercise
price per share of $30.15. In addition, directors are eligible to receive option
grants under the discretionary option grant program of the 2000 Stock Incentive
Plan. During fiscal 2002, Messrs. Bock, Cash and Wood also each received an
option grant to purchase 5,000 shares of common stock at an exercise price per
share of $24.30 under the discretionary option grant program. The automatic
grants and discretionary grants are each immediately exercisable, vest on the
first anniversary of the date of grant and have exercise prices equal to fair
market value as of the grant date.
In October 2002, the Board of Directors unanimously approved a cash
compensation plan which provides $25,000 per year in cash compensation for each
non-employee director and $20,000 per year in additional cash compensation for
the chairman of the audit committee. Such payments are paid in equal quarterly
installments on the last day of each calendar quarter. Messrs. Bock, Cash and
Wood were each paid one quarterly installment of the cash compensation plan for
non-employee directors of $6,250 during fiscal 2002. Additionally, Mr. Bock was
paid one quarterly installment of $5,000 for his service as chairman of the
audit committee during fiscal 2002. This cash compensation plan was instituted,
based on a review of compensation provided to directors of similarly situated
companies, to provide incentives to retain directors as well as to attract
additional highly-qualified and motivated individuals to serve on our Board of
Directors.
We reimburse directors for all reasonable out-of-pocket expenses
incurred in attending board and committee meetings.
Our certificate of incorporation limits the personal liability of our
board members for breaches by them of their fiduciary duties. Our bylaws require
us to indemnify our directors to the fullest extent permitted by Delaware law.
We have also entered into indemnification agreements with all of our directors
and have purchased directors' and officers' liability insurance.
RECOMMENDATION OF THE BOARD OF DIRECTORS
OUR BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
ELECTION OF THE NOMINEES FOR CLASS II DIRECTORS LISTED ABOVE.
5
PROPOSAL TWO: RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC AUDITORS
Our Audit Committee appointed the firm of Ernst & Young LLP as our
independent public auditors for the fiscal year ending January 3, 2004. Ernst &
Young LLP has audited our financial statements since our inception in 1996. A
representative of Ernst & Young LLP is expected to be present at the Annual
Meeting, will have an opportunity to make a statement if he or she so desires
and will be available to respond to appropriate questions.
AUDIT FEES: Audit fees billed to us by Ernst & Young LLP for fiscal
2002 totaled $146,000 for the audit of our annual financial statements included
in our Form 10-K and the review of our financial statements included in our
quarterly reports on Form 10-Q.
OTHER FEES: All other fees were $230,500, including tax-related
services of $205,800 and audit-related fees of $24,700. Audit-related services
included fees for statutory audits, accounting consultations and review of SEC
registration statements.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES: We did
not engage Ernst & Young LLP to provide advice regarding financial information
systems design and implementation during fiscal 2002.
Our Audit Committee has reviewed the fees described above and believes
that such fees are compatible with maintaining the independence of Ernst & Young
LLP.
Stockholder ratification of the appointment of Ernst & Young LLP as our
independent public auditors is not required by our bylaws or other applicable
legal requirement. However, the appointment of Ernst & Young LLP is being
submitted to the stockholders for ratification. If the stockholders fail to
ratify the appointment, the Audit Committee will reconsider whether or not to
retain the firm. Even if the appointment is ratified, the Audit Committee at its
discretion may direct the appointment of a different independent accounting firm
at any time during the year if it determines that such a change would be in the
best interests of the company and its stockholders.
RECOMMENDATION OF THE BOARD OF DIRECTORS
UPON THE RECOMMENDATION OF OUR AUDIT COMMITTEE, OUR BOARD OF DIRECTORS
RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF
ERNST & YOUNG LLP TO SERVE AS OUR INDEPENDENT AUDITORS FOR THE FISCAL YEAR
ENDING JANUARY 3, 2004.
OTHER MATTERS
We know of no other matters that will be presented for consideration at
the Annual Meeting. If any other matters properly come before the Annual
Meeting, it is the intention of the persons named in the enclosed form of Proxy
to vote the shares they represent as the Board of Directors may recommend.
Discretionary authority with respect to such other matters is granted by the
execution of the enclosed Proxy.
6
OWNERSHIP OF SECURITIES
The following table sets forth certain information known to us with
respect to the beneficial ownership of our common stock as of January 31, 2003
by (i) all persons who are beneficial owners of five percent or more of our
common stock, (ii) each director and nominee for director, (iii) the executive
officers named in the Summary Compensation Table of the Executive Compensation
section of this Proxy Statement and (iv) all current directors and executive
officers as a group. Unless otherwise indicated, each of the stockholders has
sole voting and investment power with respect to the shares beneficially owned,
subject to community property laws, where applicable.
PERCENTAGE OF
SHARES OUTSTANDING SHARES
BENEFICIALLY BENEFICIALLY
BENEFICIAL OWNER(1) OWNED OWNED(2)
--------------------------------------------- -------------- --------------------
Navdeep S. Sooch(3) ......................... 6,120,895 12.5%
David R. Welland ............................ 5,240,131 10.7%
Jeffrey W. Scott(4) ......................... 3,238,331 6.6%
Daniel A. Artusi(5) ......................... 255,638 *
Gary R. Gay(6) .............................. 219,609 *
Bradley J. Fluke(7) ......................... 370,978 *
Jonathan D. Ivester(8) ...................... 429,928 *
William P. Wood(9) .......................... 3,438,399 7.0%
H. Berry Cash(10) ........................... 494,346 1.0%
William G. Bock(11) ......................... 73,487 *
Entities deemed to be affiliated with
AXA Financial, Inc(12) ...................... 7,847,930 16.0%
Entities deemed to be affiliated with FMR
Corp. ("Fidelity")(13) ...................... 6,156,634 12.6%
Entities deemed to be affiliated with
Putnam, LLC(14) ............................. 4,870,777 9.9%
Entities deemed to be affiliated with
Austin Ventures(15) ......................... 3,880,448 7.9%
Entitles deemed to be affiliated with
Pilgram Baxter & Associates(16) ............. 2,666,200 5.4%
All directors and executive officers as
a group (13 persons)(17) .................... 20,162,300 40.6%
---------------------------
* Represents beneficial ownership of less than one percent.
(1) Unless otherwise indicated in the footnotes, the address for the beneficial
owners named above is 4635 Boston Lane, Austin, Texas 78735.
(2) Percentage of ownership is based on 48,982,487 shares of common stock
outstanding on January 31, 2003. Shares of common stock subject to stock
options which are currently exercisable or will become exercisable within
60 days after January 31, 2003 are deemed outstanding for computing the
percentage of the person or group holding such options, but are not deemed
outstanding for computing the percentage of any other person or group.
7
(3) Includes 184,500 shares held in trusts for the benefit of Mr. Sooch's
children, 235,000 shares held in a family limited partnership, and 108,000
shares issuable upon the exercise of stock options. Mr. Sooch shares voting
and investment power with respect to the 184,500 shares held in trusts for
the benefit of his children and the 235,000 shares held in the family
limited partnership.
(4) Includes 63,000 shares issuable upon the exercise of stock options.
(5) Includes 126,666 shares issuable upon the exercise of stock options.
(6) Includes 49,609 shares issuable upon the exercise of stock options.
(7) Includes 89,942 shares issuable upon the exercise of stock options and
12,860 shares held in trusts. Mr. Fluke has shared voting and investment
power with respect to 4,860 of the shares held in the trusts.
(8) Includes 81,332 shares issuable upon exercise of stock options and 118,000
shares held in a family trust. Mr. Ivester has shared voting and investment
power with respect to the 118,000 shares held in trust.
(9) Includes 2,713,434 shares indicated as owned by Mr. Wood due to his
affiliation with certain funds affiliated with Austin Ventures. Mr. Wood is
a general partner of AV Partners IV, L.P., the general partner of Austin
Ventures IV-A, L.P. and Austin Ventures IV-B, L.P. and a special limited
partner of AV Partners V, L.P., the General Partner of Austin Ventures V,
L.P. and Austin Ventures V Affiliates Fund, L.P. Mr. Wood disclaims
beneficial ownership of the shares held by such entities, except to the
extent of his pecuniary interest in such shares. Also includes 4,400 shares
held by the Silverton Foundation, a nonprofit corporation of which Mr. Wood
is a trustee, 100,422 shares held by Silverton Partners, of which Mr. Wood
is the general partner, 172,196 shares held directly by Mr. Wood, 225,752
shares held by Mr. Wood as custodian for certain family members, 172,195
shares held by Mr. Wood's spouse and 50,000 shares issuable upon exercise
of stock options. Mr. Wood's address is c/o Austin Ventures, 300 W. Sixth
Street, Suite 2300, Austin, Texas 78701.
(10) Includes 109,346 shares held in two trusts for the benefit of Mr. Cash's
family members and 20,000 shares issuable upon the exercise of stock
options. Mr. Cash has sole voting and investment power over the 109,346
shares held in the trusts.
(11) Includes 53,375 shares issuable upon exercise of stock options.
(12) Pursuant to a Schedule 13G/A dated February 12, 2003 filed with the
Securities and Exchange Commission, AXA Financial, Inc. reported that as of
December 31, 2002, it and certain related entities had sole voting power
over 3,900,050 shares, shared voting power over 3,933,980 shares, and sole
dispositive power over 7,847,930 shares and that its address is 1290 Avenue
of Americas, New York, New York 10104.
(13) Pursuant to a Schedule 13G/A dated February 14, 2003 filed with the
Securities and Exchange Commission, FMR Corp. reported that as of December
31, 2002, it and certain related entities had sole voting power over
593,687 shares and sole dispositive power over 6,156,634 shares and that
its address is 82 Devonshire Street, Boston, MA 02109.
(14) Pursuant to a Schedule 13G/A dated February 5, 2003 filed with the
Securities and Exchange Commission, Putnam LLC reported that as of December
31, 2002, it and certain related entities had shared voting power over
596,211 shares and shared dispositive power over 4,870,777 shares and that
its address is One Post Office Square, Boston, MA 02109.
(15) Pursuant to a Schedule 13G/A dated February 11, 2003 filed with the
Securities and Exchange Commission, includes:
o 11,854 shares held by AV Partners IV, L.P.
o 315,688 shares held by Austin Ventures IV-A, L.P
o 662,312 shares held by Austin Ventures IV-B, L.P.
o 1,555,894 shares held by Austin Ventures V, L.P.
o 167,686 shares held by Austin Ventures V Affiliates Fund, L.P.
o 131,873 shares held by Joseph C. Aragona, of which 127,473 are held
directly by Mr. Aragona and 4,400 are held directly by the Aragona
Foundation, of which Mr. Aragona is a trustee.
o 174,138 shares held by Kenneth P. DeAngelis, of which 73,092 are held
directly by Mr. DeAngelis and 101,046 are held directly by DeAngelis
Ltd., of which Mr. DeAngelis is the sole general partner.
o 48,161 shares held by John D. Thornton, of which 3,342 are directly
held by Mr. Thornton and 44,819 are directly owned by a family limited
partnership, of which Mr. Thornton is the general partner.
o 87,877 shares held by Blaine Wesner.
o 724,965 shares held by Mr. Wood (see footnote 9).
The address of Austin Ventures is 300 W. Sixth Street, Suite 2300, Austin,
Texas 78701.
(16) Pursuant to a Schedule 13G dated February 10, 2003 filed with the
Securities and Exchange Commission, Pilgram Baxter & Associates reported
that as of December 31, 2002, it and certain related entities had sole
voting power over 2,412,000 shares and sole dispositive power over
2,666,200 shares and that its address is 1400 Liberty Ridge Drive, Wayne,
PA 19087-5593.
(17) Includes an aggregate of 709,590 shares issuable upon exercise of stock
options.
8
CERTAIN TRANSACTIONS
REGISTRATION RIGHTS. According to the terms of the investors' rights
agreement among us, investors who purchased shares of our preferred stock in
financings prior to our initial public offering and Messrs. Sooch, Scott,
Welland and our former Chief Financial Officer John McGovern, investors in our
preferred stock holding an aggregate of at least two-thirds of the shares of
common stock issued upon conversion of the preferred stock are entitled to
demand that we file a registration statement with respect to the registration of
their shares under the Securities Act of 1933, provided that those investors
request that such registration statement register the resale of at least half of
the outstanding shares held by them. We are not required to effect more than two
such registrations or more than one such registration during any 365 day period.
In addition, certain holders of shares of our common stock, including
Messrs. Sooch, Scott, Welland, McGovern, and Cash, Silverton Partners and
entities affiliated with Austin Ventures and other stockholders have "piggyback"
registration rights with respect to the future registration of shares of our
common stock under the Securities Act. If we propose to register any shares of
our common stock under the Securities Act, the holders of shares having
piggyback registration rights are entitled to receive notice of such
registration and are entitled to include their shares in the registration.
Holders of registration rights may also require us to file up to three
registration statements on Form S-3 under the Securities Act with respect to
their shares of common stock.
These registration rights are subject to conditions and limitations,
including the right of the underwriters of an offering to limit the number of
shares of common stock to be included in the registration. We are generally
required to bear all of the expenses of all registrations under the investors'
rights agreement, except underwriting discounts and commissions. The investors'
rights agreement also contains our commitment to indemnify holders of
registration rights for certain losses they may incur in connection with
registrations under the agreement. Registration of any of the shares of common
stock held by security holders with registration rights would result in those
shares becoming freely tradable without restriction under the Securities Act.
STOCK OPTIONS GRANTED TO DIRECTORS AND EXECUTIVE OFFICERS. For more
information regarding the grant of stock options to executive officers and
directors, please see "Director Compensation and Indemnification Arrangements"
above and "Stock Options" below.
INDEMNIFICATION, INSURANCE AND LIMITATION OF LIABILITY. Our bylaws
require us to indemnify our directors and executive officers to the fullest
extent permitted by Delaware law. We have entered into indemnification
agreements with all of our directors and executive officers and have purchased
directors' and officers' liability insurance. In addition, our certificate of
incorporation limits the personal liability of the members of our Board of
Directors for breaches by the directors of their fiduciary duties.
9
AUDIT COMMITTEE REPORT
The following is the report of the Audit Committee with respect to the
audit of our fiscal 2002 audited consolidated financial statements:
Management is responsible for the company's internal controls and the
financial reporting process. The independent auditors are responsible for
performing an independent audit of the company's consolidated financial
statements in accordance with auditing standards generally accepted in the
United States and to issue a report thereon. The Committee's responsibility is
to monitor and oversee these processes.
In this context, the Committee has met and held discussions with
management and the independent auditors. Management represented to the Committee
that the company's consolidated financial statements in the Annual Report were
prepared in accordance with accounting principles generally accepted in the
United States, and the Committee has reviewed and discussed the consolidated
financial statements in the Annual Report with management and the independent
auditors. The Committee discussed with the independent auditors matters required
to be discussed by Statement on Auditing Standards No. 61 (Communication with
Audit Committees).
The company's independent auditors also provided to the Committee the
written disclosures required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), and the Committee discussed
with the independent auditors that firm's independence. The Audit Committee
reviewed non-audit services provided by its independent auditors for the last
fiscal year, and determined that those services are not incompatible with
maintaining the auditors' independence.
Based upon the Committee's discussion with management and the
independent auditors and the Committee's review of the representation of
management and the report of the independent auditors to the Committee, the
Committee recommended that the Board of Directors include the audited
consolidated financial statements in the company's Annual Report on Form 10-K
for the year ended December 28, 2002 filed with the Securities and Exchange
Commission.
Submitted by the Audit Committee of the Board of Directors:
William G. Bock (Chairman)
H. Berry Cash
William P. Wood
10
EXECUTIVE COMPENSATION
EXECUTIVE OFFICERS AND DIRECTORS
Set forth below is information regarding the executive officers and
directors of Silicon Laboratories as of January 31, 2003.
NAME AGE POSITION
----- ----- ---------
Navdeep S. Sooch ............ 40 Chief Executive Officer and Chairman of the Board
Daniel A. Artusi ............ 48 President and Chief Operating Officer
Russell J. Brennan .......... 48 Chief Financial Officer
Jeffrey W. Scott ............ 41 Vice President and Director
David R. Welland ............ 47 Vice President and Director
Gary R. Gay ................. 52 Vice President
Bradley J. Fluke ............ 41 Vice President
Jonathan D. Ivester ......... 47 Vice President
David P. Bresemann .......... 37 Vice President
Edmund G. Healy ............. 48 Vice President
William P. Wood ............. 47 Director
H. Berry Cash ............... 64 Director
William G. Bock ............. 52 Director
Navdeep S. Sooch ......... co-founded Silicon Laboratories in August 1996 and
has served as our Chief Executive Officer and
Chairman of the Board since our inception. From March
1985 until founding Silicon Laboratories, Mr. Sooch
held various positions at Crystal
Semiconductor/Cirrus Logic, a designer and
manufacturer of integrated circuits, including Vice
President of Engineering, as well as Product Planning
Manager of Strategic Marketing and Design Engineer.
From May 1982 to March 1985, Mr. Sooch was a Design
Engineer with AT&T Bell Labs. Mr. Sooch holds a B.S.
in electrical engineering from the University of
Michigan, Dearborn and a M.S. in electrical
engineering from Stanford University.
Daniel A. Artusi.......... has served as our Chief Operating Officer since
August 2001 and as President since January 2003.
Prior to joining Silicon Laboratories, Mr. Artusi
held various positions at Motorola. From August 1999
to August 2001, Mr. Artusi served as Corporate Vice
President and General Manager of Motorola's
Networking and Computing Systems Group. Mr. Artusi
served as Vice President and General Manager of
Motorola's Wireless Infrastructure Systems Division
from May 1997 to August 1999 and as General Manager
of Motorola's RF Products Division from April 1996 to
May 1997. Mr. Artusi currently serves on the Board of
Directors of Powerwave Technologies. Mr. Artusi
studied electronics engineering at the Instituto
Tecnologico de Buenos Aires, Argentina from 1972
through 1976.
Russell J. Brennan........ has served as our Vice President and Chief Financial
Officer since September 2002. Mr. Brennan worked for
Analog Devices, Inc., a designer and manufacturer of
integrated circuits, from January 1988 to September
2002, where he most recently served as Vice President
of Finance and Corporate Controller. From 1984 to
1988, Mr. Brennan served as Controller for the Analog
Unit of Fairchild Semiconductor, a designer and
manufacturer of semiconductors for multiple end
market applications prior to its acquisition by
National Semiconductor. From 1982 to 1984, Mr.
Brennan served as Controller for Schlumberger Well
Services, a supplier for the oil and gas industry.
From 1978 to 1982, Mr. Brennan served in various
financial roles at Texas Instruments. Mr. Brennan
holds a B.A. in Economics from Boston College and a
M.B.A. with a concentration in Finance and Accounting
from New York University Graduate School of Business.
11
Jeffrey W. Scott ......... co-founded Silicon Laboratories in August 1996 and
has served as a Vice President and as a director
since our inception. From October 1989 until founding
Silicon Laboratories, Mr. Scott held various
positions at Crystal Semiconductor/Cirrus Logic,
including Vice President of Engineering (Computer
Products), Design Manager and Design Engineer. From
1985 until 1989, Mr. Scott served as a Design
Engineer with AT&T Bell Labs. Mr. Scott holds a B.S.
in electrical engineering from Lehigh University and
a M.S. in electrical engineering from the
Massachusetts Institute of Technology.
David R. Welland ......... co-founded Silicon Laboratories in August 1996 and
has served as a Vice President and as a director
since our inception. From November 1991 until
founding Silicon Laboratories, Mr. Welland held
various positions at Crystal Semiconductor/Cirrus
Logic, including Senior Design Engineer. Mr. Welland
holds a B.S. in electrical engineering from the
Massachusetts Institute of Technology.
Gary R. Gay .............. joined Silicon Laboratories in October 1997 as Vice
President. Previously, Mr. Gay was with Crystal
Semiconductor/Cirrus Logic from 1985 to September
1997 where he most recently served as Vice President
of North American Sales. From 1979 to 1985, Mr. Gay
was International Sales Manager and Asia Pacific
Sales Manager with Burr-Brown Corporation, a designer
and manufacturer of semiconductor components. Mr. Gay
holds a B.S. in electrical engineering from the
Rochester Institute of Technology.
Bradley J. Fluke ......... has served as a Vice President since April 1997.
Previously, he served as the Director of Marketing of
the Computer Products Division of Crystal
Semiconductor/Cirrus Logic from June 1990 to April
1997. From 1984 to 1990, Mr. Fluke held various
marketing positions in the Data Converter Group for
Analog Devices Inc. Mr. Fluke holds a B.S. in
electrical engineering from Rochester Institute of
Technology.
Jonathan D. Ivester ...... joined Silicon Laboratories in September 1997 as Vice
President. From May 1984 to September 1997, Mr.
Ivester was with Applied Materials and served as
Director of Manufacturing and Director of U.S.
Procurement in addition to various engineering and
manufacturing management positions. Mr. Ivester was a
scientist at Bechtel Corporation, an engineering and
construction company, from 1980 to 1982 and at Abcor,
Inc., an ultrafiltration company and subsidiary of
Koch Industries, from 1978 to 1980. Mr. Ivester holds
a B.S. in chemistry from the Massachusetts Institute
of Technology and a M.B.A. from Stanford University.
David P. Bresemann ....... joined Silicon Laboratories in July 1998 as Marketing
Director and has served as Vice President since May
2002. From February 1992 to July 1998, Mr. Bresemann
worked as Director of Marketing for Crystal
Semiconductor/Cirrus Logic. Mr. Bresemann also worked
as a Key Account Sales Engineer for Analog Devices
Inc. from July 1988 to January 1992. Mr. Bresemann
holds a B.S. in electrical engineering from the
University of Arizona.
Edmund G. Healy .......... has served as Vice President since June 1998. From
September 1992 to June 1998, Mr. Healy worked as
General Manager of the Magnetic Storage Division at
Crystal Semiconductor/Cirrus Logic. Mr. Healy held
various Senior Marketing and Product Planning
positions for Zilog, a designer and manufacturer of
application specific standard products, and GEC
Plessey Semiconductor, from 1987 to 1992. From 1983
to 1987, Mr. Healy was an Assistant Professor of
Electrical Engineering at the United States Military
Academy after serving as an Infantry Officer from
1976 to 1981. Mr. Healy holds a B.S. in electrical
engineering from the United States Military Academy,
a M.S. in electrical engineering from Georgia
Institute of Technology and a M.S. in management from
Stanford University.
FOR INFORMATION ON OUR NON-EMPLOYEE DIRECTORS, SEE PROPOSAL ONE.
12
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides certain summary information concerning the
compensation earned, by our Chief Executive Officer and each of the four other
most highly compensated executive officers whose salary and bonus for fiscal
2002 was in excess of $100,000, for services rendered in all capacities to us
and our subsidiaries for the fiscal year ended December 28, 2002.
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------------------- ---------------------------
OTHER
ANNUAL RESTRICTED SECURITIES
NAME AND COMPENSATION STOCK UNDERLYING
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) ($)(1) AWARDS ($) OPTIONS
------------------ ------ ----------- --------- ------------ ------------ ------------
Navdeep S. Sooch ................... 2002 $291,923 $435,000 $1,500 -- 200,000
Chief Executive Officer 2001 262,500 37,500 -- -- 283,000
and Chairman of the Board 2000 243,846 33,995 1,500 -- --
Daniel A. Artusi ................... 2002 280,000 406,500 1,500 -- 100,000
President and 2001 96,923 100,000(2) -- $3,035,985(3) 400,000
Chief Operating Officer
Gary R. Gay ........................ 2002 175,000 210,350 1,500 -- 35,000
Vice President 2001 166,346 35,000 1,500 -- 70,000
2000 159,231 70,806 1,500 -- 20,000
Bradley J. Fluke ................... 2002 170,288 179,010 1,500 -- 40,000
Vice President 2001 166,346 20,000 1,500 -- 70,000
2000 158,462 49,968 1,500 -- 20,000
Jonathan D. Ivester ................ 2002 164,116 176,800 1,500 -- 35,000
Vice President 2001 157,308 20,000 1,500 -- 65,000
2000 140,962 49,611 1,500 -- 20,000
----------------------
(1) "Other Annual Compensation" represents contributions made by the Company to
match the first $1,500 of contributions made by the named executive officer
to his 401(k) plan.
(2) Includes a $50,000 reporting bonus.
(3) On August 27, 2001, Daniel Artusi purchased 150,000 shares of restricted
stock at their par value of $0.0001 per share. The closing price of the
company's Common Stock on the Nasdaq National Market on that day was $20.24
per share. The shares vest in a series of seven equal annual installments
measured from the date of issuance. To the extent the company declares any
dividend on its Common Stock, such dividend would be payable on such
restricted stock. As of December 28, 2002, Mr. Artusi held 128,572 shares
of restricted stock, valued at $2,565,011 based on the closing price of the
company's Common Stock on the Nasdaq National Market of $19.95 per share.
13
STOCK OPTIONS
The following table contains information concerning the stock options
granted to our executive officers named in the Summary Compensation Table of the
Executive Compensation section of this Proxy Statement during the 2002 fiscal
year. All the grants were made under our 2000 Stock Incentive Plan. Unless
otherwise indicated, the exercise prices represent the fair market value of the
common stock on the grant date.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
----------------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS MARKET PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE PRICE ON FOR OPTION TERM (1)
OPTIONS EMPLOYEES IN PRICE DATE OF EXPIRATION --------------------------
NAME GRANTED FISCAL YEAR(2) ($/SH)(3) GRANT DATE 5% ($) 10% ($)
---- ------------ -------------- --------- -------- ---------- ----------- -----------
Navdeep S. Sooch ........ 200,000(4) 9.49% $24.30 $24.30 06/12/2012 $3,056,428 $7,745,588
Daniel A. Artusi ........ 100,000(4) 4.75% 24.30 24.30 06/12/2012 1,528,214 3,872,794
Gary R. Gay.............. 15,000(4) 0.71% 24.30 24.30 06/12/2012 229,232 580,919
20,000(5) 0.95% 20.19 20.19 10/23/2012 253,948 643,553
Bradley J. Fluke......... 20,000(4) 0.95% 24.30 24.30 06/12/2012 305,643 774,559
20,000(5) 0.95% 20.19 20.19 10/23/2012 253,948 643,553
Jonathan D. Ivester ..... 15,000(4) 0.71% 24.30 24.30 06/12/2012 229,232 580,919
20,000(5) 0.95% 20.19 20.19 10/23/2012 253,948 643,553
------------------------
(1) The potential realizable value is calculated from the closing price of
Common Stock on the dates of grants to executive officers. These amounts
represent certain assumed rates of appreciation only. There can be no
assurance provided to any executive officer or other holder of our
securities that the actual stock price appreciation over the ten-year
option term will be at the assumed 5% and 10% levels or at any other
defined level. Unless the market price of our common stock appreciates over
the option term, no value will be realized from those option grants which
were made to our executive officers named in the Summary Compensation Table
of the Executive Compensation section of this Proxy Statement with an
exercise price equal to the fair market value of the option shares on the
grant date.
(2) Percentage is based on 2,106,850 shares underlying options granted to
employees during the fiscal year ended December 28, 2002 from the 2000
Stock Incentive Plan.
(3) The exercise price may be paid in cash or in shares of our common stock
valued at fair market value on the exercise date. Alternatively, the option
may be exercised through a cashless exercise procedure. Outstanding options
will become exercisable on an accelerated basis if we are acquired and (i)
such options are not assumed or (ii) upon termination under certain
circumstances within 18 months following an acquisition.
(4) Options were granted on June 13, 2002 and become exercisable in a series of
twelve equal successive monthly installments over the twelve-month period
following June 13, 2005.
(5) Options were granted on October 24, 2002 and become exercisable in a series
of twelve equal successive monthly installments over the twelve-month
period following October 24, 2005.
14
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table provides information, with respect to our executive
officers named in the Summary Compensation Table of the Executive Compensation
section of this Proxy Statement, concerning the exercise of options during the
2002 fiscal year and unexercised options held by them at of the end of that
fiscal year.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT FISCAL YEAR-END FISCAL YEAR-END ($)(1)
ACQUIRED ON VALUE ----------------------------- ------------------------------
NAME EXERCISE REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------ ------------- --------------- ------------- ----------------
Navdeep S. Sooch ........ -- -- 95,500 387,500 $463,175 $909,375
Daniel A. Artusi -- -- 106,666 393,334 -- --
Gary R. Gay ............. -- -- 43,442 109,558 563,250 196,050
Bradley J. Fluke ........ -- -- 82,387 107,613 1,214,860 175,840
Jonathan D. Ivester...... -- -- 75,416 104,584 1,198,695 192,005
----------------------
(1) Based upon the closing selling price per share of our common stock on the
Nasdaq National Market on the last day of the 2002 fiscal year, which was
$19.95, less the option exercise price payable per share.
15
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
The Compensation Committee of the Board of Directors, as Plan
Administrator of the 2000 Stock Incentive Plan, has the authority to provide for
accelerated vesting of the shares of our common stock subject to any outstanding
options held by any executive officer or any unvested share issuances actually
held by such individual, in connection with certain changes in control of us or
the subsequent termination of the officer's employment following the change in
control event.
Our 2000 Stock Incentive Plan, which governs the options granted to the
named executive officers, includes the following change in control provisions
which may result in the accelerated vesting of outstanding option grants and
stock issuances:
o In the event that we are acquired, each outstanding option under
the discretionary option grant program will, unless assumed or
replaced by the successor or otherwise continued in effect, will
immediately become exercisable for all the option shares, and all
outstanding unvested shares will immediately vest, except to the
extent our repurchase rights with respect to those shares are
assigned to the successor or otherwise continued in effect.
o The plan administrator has the authority under the discretionary
option grant program to provide that those options will
automatically vest in full (i) upon an acquisition of the company,
whether or not those options are assumed or replaced, (ii) upon a
hostile change in control of the company effected through a tender
offer for more than 50% of our outstanding voting stock or by
proxy contest for the election of board members, or (iii) in the
event the individual's service is terminated, whether
involuntarily or for good reason, within a designated period (not
to exceed 18 months) following an acquisition in which those
options are assumed or replaced or a hostile change in control.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of our executive officers serves as a member of the Board of
Directors or Compensation Committee of any entity that has one or more of its
executive officers serving as a member of our Board of Directors or Compensation
Committee. No member of the Compensation Committee serves or has previously
served as one of our officers or employees.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
It is the duty of the Compensation Committee to review and determine
the salaries and bonuses of our executive officers, including the Chief
Executive Officer, and to establish the general compensation policies for such
individuals. The Compensation Committee also has the sole and exclusive
authority to make discretionary option grants to our executive officers under
our 2000 Stock Incentive Plan.
The Compensation Committee believes that the compensation programs for
our executive officers should reflect our performance and the value created for
our stockholders. In addition, the compensation programs should support our
short-term and long-term strategic goals and values and should reward individual
contribution to our success. We are engaged in a very competitive industry, and
our success depends upon our ability to attract and retain qualified executives
through the competitive compensation packages we offer to such individuals.
GENERAL COMPENSATION POLICY. The Compensation Committee's policy is to
provide our executive officers with compensation opportunities that are based
upon their personal performance, our financial performance and their
contribution to that performance and which are competitive enough to attract and
retain highly skilled individuals. Each executive officer's compensation package
is comprised of three elements: (i) base salary that is competitive with the
market and reflects individual performance, (ii) variable performance awards
payable in cash and tied to our achievement of financial performance goals and
individual accomplishments and (iii) long-term stock-based incentive awards
designed to strengthen the mutuality of interests between the executive officers
and our stockholders. As an officer's level of responsibility increases, a
greater proportion of his or her total compensation will be variable and
dependent upon our financial performance and stock price appreciation rather
than base salary.
FACTORS. The principal factors that were taken into account in
establishing each executive officer's compensation package for the 2002 fiscal
year are described below. However, the Compensation Committee may in its
discretion apply entirely different factors, such as different measures of
financial performance, for future fiscal years.
16
BASE SALARY. In setting base salaries, the Compensation Committee
reviewed published compensation survey data for its industry. The Committee also
identified a group of companies for comparative compensation purposes for which
it reviewed detailed compensation data incorporated into their proxy statements.
This group was comprised of approximately fifteen companies. The base salary for
each officer reflects the salary levels for comparable positions in the
published surveys and the comparative group of companies, as well as the
individual's personal performance. The relative weight given to each factor
varies with each individual in the sole discretion of the Compensation
Committee. Each executive officer's base salary is evaluated periodically on the
basis of (i) the Compensation Committee's evaluation of the officer's personal
performance for the year and (ii) the competitive marketplace for persons in
comparable positions. Our performance and profitability may also be a factor in
determining the base salaries of executive officers.
VARIABLE PERFORMANCE AWARDS. The variable performance awards have
typically been paid in cash quarterly payments based on the preceding quarterly
results. These payments, when the criteria are satisfied, are paid out shortly
after the release of the quarterly financial results. The cash awards are tied
to a blend of overall company financial performance metrics, individual
financial metrics driven by the performance of major product areas and
company-wide operating profits before non-cash charges as a percent of revenue.
A personalized plan is styled for each executive officer based on the metrics
that best reflect their impact over the four quarters of the year. Typically,
the Compensation Committee reviews the plans in conjunction with the fiscal year
operating plan discussions. During fiscal year 2002, the cash awards were
proportionately higher in the second half of the year as compared to the first
half of the year, reflecting the corresponding earnings pattern for the company
for those periods. In addition to these metric-driven award calculations, the
Chief Executive Officer may cancel or decrease a plan payout at his sole
discretion for any or all executive officers.
The company maintains for all other non-officer employees a variable
cash compensation plan that is typically paid quarterly to eligible individuals
based on the overall Company financial performance. The chief executive officer
selects the quarterly payment amount, which typically has been in the range of 4
to 11% of base salary for most employees.
LONG TERM INCENTIVES. Generally, stock option grants are made from
time-to-time by the Compensation Committee to each of the company's executive
officers. Each grant is designed to align the interests of the executive officer
with those of the stockholders and provide each individual with a significant
incentive to manage the company from the perspective of an owner with an equity
stake in the business. Each grant allows the officer to acquire shares of the
company's common stock at a fixed price per share (the market price on the grant
date) over a specified period of time (up to ten years). Each option becomes
exercisable in a series of installments over a multi-year period, contingent
upon the officer's continued employment with the company. Accordingly, the
option will provide a return to the executive officer only if he or she remains
employed by the company during the vesting period, and then only if the market
price of the shares appreciates over the option term.
The size of the option grant to executive officers is set by the
Compensation Committee at a level that is intended to create a meaningful
opportunity for stock ownership based upon the individual's current position
with the company, the individual's personal performance in recent periods and
his or her potential for future responsibility and promotion over the option
term. The Compensation Committee also takes into account the number of unvested
options held by the executive officer in order to maintain an appropriate level
of equity incentive for that individual. The relevant weight given to each of
these factors varies from individual to individual. The Compensation Committee
has established certain guidelines with respect to the option grants made to the
executive officers but has the flexibility to make adjustments to those
guidelines at its discretion.
CEO COMPENSATION. In setting the total compensation payable to the
company's Chief Executive Officer for the 2002 fiscal year, the Compensation
Committee considered that compensation competitive with the compensation paid to
the chief executive officers of the companies in the surveyed group.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M). Section 162(m) of
the Internal Revenue Code disallows a tax deduction to publicly held companies
for compensation paid to certain of their executive officers to the extent that
compensation exceeds one million dollars per covered officer in any fiscal year.
The limitation applies only to compensation that is not considered to be
performance-based. Non-performance based compensation paid to the company's
executive officers for the 2002 fiscal year did not exceed the one million
dollar limit per officer, and the Compensation Committee does not anticipate
that the non-performance based compensation to be paid to the company's
executive officers for fiscal 2003 will exceed that limit. The company's 2000
Stock Incentive Plan has been structured so that any compensation deemed paid in
connection with the exercise of option grants made under that plan with an
exercise price equal to the fair market value of the option shares on the grant
date will qualify as
17
performance-based compensation which will not be subject to the one million
dollar limitation. Because it is unlikely that the cash compensation payable to
any of the company's executive officers in the foreseeable future will approach
the one million dollar limit, the Compensation Committee has decided at this
time not to take any action to limit or restructure the elements of cash
compensation payable to the company's executive officers. The Compensation
Committee will reconsider this decision should the individual cash compensation
of any executive officer ever approach the one million dollar level.
It is the opinion of the Compensation Committee that the executive
compensation policies and plans provide the necessary total remuneration program
to properly align the company's performance and the interests of the company's
stockholders through the use of competitive and equitable executive compensation
in a balanced and reasonable manner, for both the short and long-term.
Submitted by the Compensation Committee of the Board of Directors:
William P. Wood (Chairman)
William G. Bock
H. Berry Cash
18
STOCK PERFORMANCE GRAPH
The graph depicted below shows a comparison of cumulative total
stockholder returns for an investment in Silicon Laboratories Inc. common stock,
the Nasdaq Stock Market (U.S.) Index and the Nasdaq Electronics Components
Index.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG SILICON LABORATORIES INC.,
THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE NASDAQ ELECTRONIC COMPONENTS INDEX
[PERFORMANCE GRAPH]
INDEXED RETURNS
BASE YEAR ENDING
PERIOD
COMPANY/INDEX 3/24/00 12/30/00 12/29/01 12/28/02
--------------------------------------------------------------------------------
SILICON LABORATORIES INC. 100 46.37 109.77 64.35
NASDAQ STOCK MARKET (U.S) 100 49.44 40.00 27.39
NASDAQ ELECTRONIC COMPONENTS 100 48.15 33.64 17.97
(1) The graph covers the period from March 24, 2000, the commencement of our
initial public offering of shares of our common stock, through December 28,
2002.
(2) The graph assumes that $100 was invested in our common stock on March 24,
2000 at our initial public offering price of $31.00 per share and in each
index at the market close on March 24, 2000, and that all dividends were
reinvested. No cash dividends have been declared on our common stock.
(3) Stockholder returns over the indicated period should not be considered
indicative of future stockholder returns.
NO INCORPORATION BY REFERENCE OF CERTAIN PORTIONS OF THIS PROXY STATEMENT
Notwithstanding anything to the contrary set forth in any of our previous
filings made under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate future filings made by
us under those statutes, neither the preceding Stock Performance Graph, the
Audit Committee Report nor the Compensation Committee Report is to be
incorporated by reference into any such prior filings, nor shall such graph or
report be incorporated by reference into any future filings made by us under
those statutes.
19
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
The members of our Board of Directors, the executive officers and
persons who hold more than 10% of our outstanding common stock are subject to
the reporting requirements of Section 16(a) of the Securities Exchange Act of
1934 which require them to file reports with respect to their ownership of the
common stock and their transactions in such common stock. Based upon (i) the
copies of Section 16(a) reports which we received from such persons for their
2002 fiscal year transactions in the common stock and their common stock
holdings, and (ii) the written representations received from one or more of such
persons that no annual Form 5 reports were required to be filed by them for the
2002 fiscal year, we believe that all reporting requirements under Section 16(a)
for such fiscal year were met in a timely manner by its directors, executive
officers and greater than ten percent beneficial owners
ANNUAL REPORT
A copy of the annual report for the 2002 fiscal year has been mailed
concurrently with this Proxy Statement to all stockholders entitled to notice of
and to vote at the Annual Meeting. The annual report is not incorporated into
this Proxy Statement and is not considered proxy solicitation material.
FORM 10-K
We filed an annual report on Form 10-K with the Securities and Exchange
Commission on January 22, 2003. Stockholders may obtain a copy of this report,
without charge, by writing to our Chief Financial Officer, at our principal
executive offices located at 4635 Boston Lane, Austin, Texas 78735.
THE BOARD OF DIRECTORS OF SILICON LABORATORIES INC.
Dated: March 17, 2003
20
SILICON LABORATORIES INC.
C/O EQUISERVE TRUST COMPANY N.A.
P.O. BOX 8694
EDISON, NJ 08818-8694
VOTER CONTROL NUMBER
--------------------------------
--------------------------------
YOUR VOTE IS IMPORTANT. PLEASE VOTE IMMEDIATELY.
--------------------------------------------------------------- ----------------------------------------------------------------
VOTE-BY-INTERNET [PICTURE] VOTE-BY-TELEPHONE [PICTURE]
--------------------------------------------------------------- ----------------------------------------------------------------
1. LOG ON TO THE INTERNET AND GO TO 1. CALL TOLL-FREE
HTTP://WWW.EPROXYVOTE.COM/SLAB 1-877-PRX-VOTE (1-877-779-8683)
2. ENTER YOUR VOTER CONTROL NUMBER LISTED ABOVE 2. ENTER YOUR VOTE CONTROL NUMBER LISTED ABOVE AND
AND FOLLOW THE EASY STEPS OUTLINED ON THE SECURED WEBSITE. FOLLOW THE EASY RECORDED INSTRUCTIONS/
--------------------------------------------------------------- ----------------------------------------------------------------
IF YOU VOTE OVER THE INTERNET OR BY TELEPHONE,
PLEASE DO NOT MAIL YOUR CARD.
DETACH HERE IF YOU ARE RETURNING YOUR PROXY CARD BY MAIL ZSILC1
PLEASE MARK
[X] VOTES AS IN
THIS EXAMPLE.
FOR AGAINST ABSTAIN
1. The election of directors: 2. To ratify the appointment of Ernst & Young LLP [ ] [ ] [ ]
as independent auditors of Silicon Laboratories
CLASS II NOMINEES: (01) David R. Welland Inc. for the fiscal year ending January 3, 2004.
(02) H. Berry Cash
In accordance with the discretion of the proxy holders, to act upon all
matters incident to the conduct of the meeting and upon other matters
FOR WITHHOLD as may properly come before the meeting.
ALL [ ] [ ] FROM ALL
NOMINEES NOMINEES
[ ]______________________________________________ The Board of Directors recommends a vote IN FAVOR OF the directors
(FOR ALL NOMINEES EXCEPT FOR THOSE WHOSE NUMBER listed above and IN FAVOR OF the appointment of Ernst & Young LLP.
YOU WRITE ON THE BLANK ABOVE.) This Proxy, when properly executed, will be voted as specified above. IF
NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED IN FAVOR OF THE
ELECTION OF THE DIRECTORS LISTED ABOVE AND IN FAVOR OF THE
APPOINTMENT OF ERNST & YOUNG LLP.
MARK HERE MARK HERE
IF YOU PLAN FOR ADDRESS
TO ATTEND [ ] CHANGE AND [ ]
THE MEETING NOTE AT LEFT
NOTE: Please sign exactly as name appears hereon. Joint owners should
each sign. When signing as attorney, executor, administrator, trustee
or guardian, give full name and title as such.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ACCOMPANYING ENVELOPE.
Signature:___________________________________ Date:_______________ Signature:___________________________________ Date:______________
DETACH HERE IF YOU ARE RETURNING YOUR PROXY CARD BY MAIL ZSILC2
SILICON LABORATORIES INC.
PROXY
ANNUAL MEETING OF STOCKHOLDERS, APRIL 24, 2003
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
SILICON LABORATORIES INC.
The undersigned revokes all previous proxies, acknowledges receipt of the Notice of Annual Meeting of Stockholders (the "Annual
Meeting") of Silicon Laboratories Inc., a Delaware corporation, ("Silicon Laboratories") and the Proxy Statement and appoints
Navdeep S. Sooch and Russell J. Brennan, and each of them, the Proxy of the undersigned, with full power of substitution, to vote
all shares of Silicon Laboratories which the undersigned is entitled to vote, either on his or her own behalf or on behalf of any
entity or entities, at the Annual Meeting of Stockholders of Silicon Laboratories to be held at the Lady Bird Johnson Wildflower
Center, 4801 La Crosse Avenue, Austin, Texas 78739 on Thursday, April 24, 2003 at 9:30 a.m. Central Time, and at any adjournment or
postponement thereof, with the same force and effect as the undersigned might or could do if personally present thereat. The shares
represented by this Proxy shall be voted in the manner set forth on the reverse side.
----------------- -----------------
SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
----------------- -----------------