[Executive Compensation]
I wasn't referring to any one person but to the insider selling discussion.
To settle everyone's fears I've researched the Executive Compensation plan and am posting for all to study in detail. Please note Tac Berry has 200,000 options.
Regards,
Pat
[For ease of reading tables, cut and paste and then print in landscape format.]
<<<ITEM 11. EXECUTIVE COMPENSATION
The sections entitled "Executive Compensation" appearing in the Company's 1996 Proxy Statement is incorporated herein by reference.
BOARD COMPENSATION
Each director who was not also an officer or employee of the Company
received a fee of $2,000 per quarter in fiscal 1996. In addition, each such director received a fee of $2,000 for each Board meeting attended and $2,000 for each Audit Committee meeting attended during fiscal 1994. Board resolutions adopted April 26, 1996 discontinues the payment of quarterly and attendance fees. The Company has a policy of reimbursing directors for reasonable travel and related expenses incurred in attending Board and Committee meetings. Donald L. Lucas, a director of the Company, did not receive any of the aforementioned payments; however, Mr. Lucas in fiscal 1996 received $21,600 in consulting fees for services rendered to the Company.
Directors who are not employees of the Company or an affiliate of the Company are eligible to participate in the Company's 1990 Non-Employee Directors' Stock Option Plan. Pursuant to such plan, on September 1, 1995, each non-employee Director received an option to purchase up to 10,000 shares of the Company's Common Stock on September 1, 1995 at an exercise price of $4.63 per share. Grants are automatically made annually under this plan.
35
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The section entitled "Security Ownership of Certain Beneficial Owners and Management" appearing in the Company's 1996 Proxy Statement is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
36
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(A)(1) INDEX TO FINANCIAL STATEMENTS
The following consolidated financial statements are included in Part II,
Item 8:
PAGE
---------
Report of Independent Public Accountants.................................................................. 18
Consolidated Balance Sheets as of July 29, 1995 and July 27, 1996......................................... 19-20
Consolidated Statements of Operations for the Three Years Ended July 27, 1996............................. 21
Consolidated Statements of Stockholders' Equity for the Three Years Ended July 27, 1996................... 22
SECURITY OWNERSHIP OF DIRECTORS, OFFICERS AND PRINCIPAL STOCKHOLDERS
The following table sets forth the number of shares of the Company's Common Stock beneficially owned as of September 27, 1996, by (i) each stockholder known to the Company to be a beneficial owner of more than 5% of the Company's Common Stock, (ii) each director, and (iii) each executive officer named in the Summary Compensation Table below, and (iv) all executive officers and directors as a group. Except as otherwise indicated, each of the listed persons or entities has
sole voting and investment power with respect to the shares listed as
beneficially owned by them, subject to community property laws, where
applicable.
AMOUNT AND NATURE OF
BENEFICIAL PERCENT
NAME OWNERSHIP(1) OF CLASS
- ------------------------------------------------------------ ------------------ -------------
<S> <C> <C>
Dr. John Cioffi............................................. 1,170,408(2) 6.2
Dr. James Gibbons........................................... 312,885(3) 1.7
Donald L. Lucas............................................. 52,216(4) *
Aamer Latif................................................. 75,000(5) *
James Steenbergen........................................... 112,500(6) *
Benjamin Berry.............................................. 44,000(7) *
David Bivolcic.............................................. 6,250(8) *
Ronald Carlini.............................................. 18,250(9) *
James Hood.................................................. 30,000(10) *
All directors and executive officers, as a group
(12 persons).............................................. 1,863,826(11) 9.5
</TABLE>
- ------------------------
* Less than 1%.
(1) Based upon information supplied or confirmed by officers, directors and the principal stockholders. The percentage of class assumes the exercise of all options and warrants held by the named individual that are exercisable on September 27, 1996, or within sixty days thereafter, but not the exercise of any other options or warrants that are outstanding.
(2) Includes 221,380 shares that are deemed beneficially owned by Dr. Cioffi by virtue of options held by him that are exercisable within 60 days of September 27, 1996. Dr. Cioffi also holds options to purchase up to 1,188,015 shares that will vest over the next three years.
(3) Includes 93,258 shares that are deemed beneficially owned by Dr. Gibbons by virtue of options held by him that are exercisable within 60 days of September 27, 1996.
(4) Includes 27,500 shares that are deemed beneficially owned by Mr. Lucas by virtue of options held by him that are exercisable within 60 days of September 27, 1996. Also includes 23,716 shares that are held in a living trust for Mr. Lucas and his wife. As trustee of the joint trusts, Mr. Lucas holds voting and investment power with respect to such shares.
(5) Includes 75,000 shares that are deemed beneficially owned by Mr. Latif by virtue of options held by him that are exercisable within 60 days of September 27, 1996.
(6) Includes 112,500 shares that are deemed beneficially owned by Mr.
Steenbergen by virtue of options held by him that are exercisable within 60 days of September 27, 1996.
(7) Includes 44,000 shares that are deemed beneficially owned by Mr. Berry by virtue of options held by him that are exercisable within 60 days of September 27, 1996.
4
<PAGE>
(8) Includes 6,250 shares that are deemed beneficially owned by Mr. Bivolcic by virtue of options held by him that are exercisable within 60 days of September 27, 1996.
(9) Includes 16,250 shares that are deemed beneficially owned by Mr. Carlini by virtue of options held by him that are exercisable within 60 days of September 27, 1996.
(10) Includes 30,000 shares that are deemed beneficially owned by Mr. Hood by virtue of options held by him that are exercisable within 60 days of September 27, 1996.
(11) In addition to the items discussed in footnotes (2) through (10) above, this amount includes 39,567 shares that are deemed beneficially owned by executive officers not individually listed on the table by virtue of options that are exercisable by such officers within 60 days of September 27, 1996.
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
--------------------------------- UNDERLYING
BONUS OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) EARNED ($) (#) COMPENSATION ($)
- ---------------------------------------- ----- ---------- ------------- ------------ ----------------
James Steenbergen....................... 1996 124,994 75,000 500,000 4,125(1)
President, CEO, CFO
Aamer Latif............................. 1996 80,420 115,582(2)
Former CEO 1995 163,750 114,000 198(3)
1994 150,000 75,000 198(3)
Benjamin Berry.......................... 1996 87,577 34,000 200,000 4,000(1)
Vice President of Marketing
David J. Bivolcic....................... 1996 142,638 50,000 165,000 198(3)
Senior Vice President 1995 132,000 57,000 198(3)
1994 120,000 50,000 198(3)
Ronald Carlini.......................... 1996 110,000 50,000 170,000 1,350(3)
Vice President of 1995 100,000 15,000 40,000 1,350(3)
Corporate Development
James Hood ............................. 1996 88,428 30,000 200,000 --
Vice President of Engineering
</TABLE>
- ------------------------
(1) Car allowances for Messrs. Steenbergen and Berry.
(2) Includes $115,384 paid to Mr. Latif as part of his severance agreement with the Company and $198 paid by the Company for premiums on a group life insurance policy for Mr. Latif.
(3) Payments made by the Company for premiums on group life insurance policies for Messrs. Latif, Bivolcic and Carlini.
6
<PAGE>
The following table sets forth certain information with respect to the options granted during the fiscal year ended July 27, 1996 to the Executive Officers named in the Summary Compensation Table.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
--------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF STOCK
SECURITIES PERCENT OF TOTAL PRICE APPRECIATION FOR
UNDERLYING OPTIONS GRANTED EXERCISE OF OPTION TERM(1)
OPTIONS TO EMPLOYEES IN BASE PRICE EXPIRATION ----------------------
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
- ----------------------------------- ----------- ----------------- ----------- ------------ ---------- ----------
James Steenbergen.................. 500,000(2) 9.5 4.25 11-27-2005 1,338,750 3,378,750
Aamer Latif........................ 0 -- N/A N/A 0 0
Benjamin Berry..................... 200,000(2) 3.8 6.88 12-04-2005 866,880 2,187,840
David J. Bivolcic.................. 25,000(2) * 6.88 12-04-2005 108,360 273,480
140,000(3) 3.1 10.75 7-26-2006 948,150 2,392,950
Ronald Carlini..................... 25,000(2) * 6.88 12-04-2005 108,360 273,480
145,000(3) 3.2 10.75 7-26-2006 982,013 2,478,413
James Hood......................... 200,000(2) 3.8 8.13 01-02-2006 1,024,380 2,585,340
</TABLE>
- ------------------------
* Less than 1%
(1) Potential realizable value is based on certain assumed rates of appreciation
over the term of the option. The amounts are calculated based on rules of
the Securities and Exchange Commission, and do not represent the Company's
estimate or projection of future stock price growth.
(2) Exercisable with respect to 25% of shares granted six months from the date
of grant and with respect to 25% of shares granted each year thereafter. All
options are granted at the fair market value of the Company's Common Stock
on the date of grant.
(3) Exercisable with respect to 25% of shares granted twelve months from the
date of grant and with respect to 25% of shares granted each year
thereafter. All options are granted at the fair market value of the
Company's Common Stock on the date of grant.
7
<PAGE>
The following table sets forth certain information regarding options
exercised during the last fiscal year and held at the end of such year by the
Executive Officers named in the Summary Compensation Table.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
FISCAL YEAR 1996
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED VALUE OF UNEXERCISED
OPTIONS IN-THE-MONEY OPTIONS
VALUE AT FY-END (#) AT FY-END ($)
SHARES ACQUIRED REALIZED EXERCISABLE/ EXERCISABLE/
ON EXERCISE (#) ($)(1) UNEXERCISABLE UNEXERCISABLE(2)
--------------- -------------- ----------------- ----------------------
<S> <C> <C> <C> <C>
James Steenbergen.................... 12,500 $ 341,562 112,500/375,000 $731,250/$1,437,500
Aamer Latif.......................... 215,500 $ 1,005,064 75,000/0 $468,770/$0
Benjamin Berry....................... 6,000 $ 136,470 44,000/150,000 $170,280/$580,500
David J. Bivolcic.................... 100,500 $ 472,927 6,250/28,750 $24,188/$168,763
Ronald Carlini....................... 10,000 $ 31,023 16,250/38,750 $119,788/$263,763
James Hood........................... 20,000 $ 211,338 30,000/150,000 $78,600/$393,000
</TABLE>
- ------------------------
(1) Value realized is the aggregate market value of the underlying securities at
exercise date less the aggregate exercise price.
(2) Aggregate market value of underlying securities at fiscal year-end less the
aggregate exercise price of "in the money" options. On July 27, 1996, the
closing price for the Company's common stock as reported on the Nasdaq
National Market System was $10.75.
COMPENSATION OF DIRECTORS
Each director who was not also an officer or employee of the Company
received a fee of $2,000 per quarter in fiscal 1996. In addition, each such
director received a fee of $2,000 for each Board meeting attended and $2,000 for
each Audit Committee meeting attended during fiscal 1996. Board resolutions
adopted April 26, 1996, discontinued the payment of quarterly and attendance
fees to directors. The Company has a policy of reimbursing directors for
reasonable travel and related expenses incurred in attending Board and Committee
meetings. Donald L. Lucas, a director of the Company, did not receive any of the
aforementioned payments; however, Mr. Lucas earned $21,600 in consulting fees
for services rendered to the Company in fiscal 1996.
Directors who are not employees of the Company or any affiliate of the
Company are eligible to participate in the Company's 1990 Non-Employee
Directors' Stock Option Plan. Pursuant to such plan, (i) each individual elected
to the Company's Board as a non-employee Director for the first time was granted
an option to purchase up to 25,000 shares of the Company's Common Stock at an
exercise price equal to the fair market value of such stock on the date of
grant; and (ii) each non-employee Director then in office (other than
individuals receiving first-time grants as described in (i) above) received an
option to purchase up to 10,000 shares of the Company's Common Stock on
September 1, 1995, at an exercise price of $4.63 per share. Beginning with the
grants made to each continuing non-employee Director in office on September 1,
1996, each continuing non-employee Director shall receive an option to purchase
up to 20,000 shares of the Company's Common Stock at an exercise price equal to
the fair market value of the Company's Common Stock on such grant date. Grants
are automatically made annually under this plan. In lieu of participating in the
1990 Non-Employee Directors' Stock Option Plan on an annual basis, Dr. James
Gibbons received a one-time grant of an option to purchase up to 25,000 shares
of the Company's
8
<PAGE>
Common Stock under this plan and an additional option to purchase up to 125,000
shares pursuant to the 1990 Supplemental Stock Option Plan, both at an exercise
price equal to the fair market value of the Company's Common Stock on the date
of grant of such options.
BOARD COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is responsible for
establishing compensation policies applicable to the Company's executive
officers and, pursuant to such policies, determining the compensation payable to
the Company's Chief Executive Officer and, taking into account recommendations
of the Chief Executive Officer, all other executive officers. The following
report relates to compensation payable to the Company's executive officers for
the year-ended July 27, 1996.
COMPONENTS OF COMPENSATION
There are three components to the compensation payable to the Company's
executive officers: (1) base salary; (2) annual incentive compensation in the
form of cash bonuses; and (3) equity-based incentive compensation in the form of
stock options.
COMPENSATION POLICIES
The compensation policies of the Compensation Committee are (i) to establish
base salaries which are competitive with those payable by regional
high-technology companies with which the Company competes in the recruitment of
senior management and which fall within the top one-half of salaries payable by
such regional high-technology companies; (ii) to tie cash bonuses to achievement
of pre-established company goals; and (iii) to use stock options to promote
equity ownership in the Company at percentage levels appropriate to executive
positions within the Company.
COMPENSATION PAYABLE TO EXECUTIVE OFFICERS
BASE SALARIES. Base salaries for executive officers are reviewed and
adjusted annually based on information regarding competitive salaries, including
salary survey data provided by third parties regarding regional high-technology
companies and information prepared by management regarding salaries payable by
the Company's competitors. The average increase in base salaries for all
executive officers corresponds to the average percentage increase in salaries
payable to all employees. Individual increases are established by the
Compensation Committee, taking into account recommendations of the Chief
Executive Officers concerning the overall effectiveness of each executive.
CASH BONUSES. Cash bonuses are determined under the Company's senior
executive incentive program, adopted by the Compensation Committee, which
annually establishes Company goals, and the percentage of target bonus for each
executive officer (a percentage of base salary). If all applicable goals are
achieved, the bonus is paid in full to each executive. No bonus is payable
unless a minimum threshold of the Company's goals are achieved, and larger
bonuses, up to a maximum, are payable in the event the goals are exceeded.
STOCK OPTIONS. Stock options are granted by the Compensation Committee to
provide equity-based, long term incentive compensation to the Company's
executive officers. The Compensation Committee establishes the maximum amount of
options which may be granted to all employees each year. Individual grants to
executive officers are then made by the Compensation Committee, taking into
account recommendations of the Chief Executive Officer, to reflect the
executive's overall effectiveness, as well as the equity ownership goal for each
executive. The Compensation Committee believes that encouraging equity ownership
through stock options will enhance management incentives to improve shareholder
value. In addition, the grant of stock options which vest over time also
encourages executives to remain with the Company and to focus on longer-term
results.
9
<PAGE>
CHIEF EXECUTIVE OFFICER COMPENSATION
Compensation payable to the Company's Chief Executive Officer consists of
the same three components described above, and is determined by the Compensation
Committee following the same policies utilized for all executives. Base salary
is reviewed and adjusted annually, utilizing regional salary survey data
provided by outside sources and comparable company information generated by
management, based on the Compensation Committee's evaluation of the Chief
Executive Officer's overall effectiveness. The Chief Executive Officer is
entitled to a bonus under the senior executive incentive program, although his
target bonus represents a greater percentage of base salary than for other
executive officers. The Chief Executive Officer's bonus is primarily tied to the
achievement of Company goals established for the entire year. Consequently, the
Chief Executive Officer's total compensation is more dependent on the Company's
performance than is compensation for other executive officers of the Company. In
addition, the Chief Executive Officer is granted stock options based on the
Compensation Committee's evaluation of the Chief Executive Officer's overall
effectiveness.
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
DONALD L. LUCAS
AAMER LATIF
PERFORMANCE GRAPH
The following line graph illustrates a five-year comparison of the
cumulative total stockholder return on the Company's Common Stock against the
cumulative total return of the S&P 500 Index and the Hambrecht & Quist
Technology Index, assuming $100 invested in the Common Stock and the two indexes
on July 27, 1991.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AMATI COMMUNICATIONS HAMBRECHT & QUIST
CORPORATION S & P 500 TECHNOLOGY
<S> <C> <C> <C>
7/91 100 100 100
7/92 460 113 113
7/93 190 123 125
7/94 160 129 139
7/95 440 163 243
7/96 1800 190 240
</TABLE>
10
<PAGE>
PROPOSAL 2
APPROVAL OF THE 1996 STOCK OPTION PLAN
BACKGROUND
The Company's Board of Directors adopted the 1996 Stock Option Plan covering
1,000,000 shares of Common Stock (the "Plan") on July 12, 1996. The Plan
provides for the granting of stock options to employees, officers, directors and
consultants of the Company. Approximately 78 employees, 10 officers, 3 directors
and no consultants would be eligible to participate in the Plan as of October
30, 1996. At the Annual Meeting, the stockholders of the Company will consider
and vote upon the approval of the Plan. The purpose of this proposal is to
obtain stockholder approval of the Plan.
APPROVAL OF THE PLAN
The Plan is intended to strengthen the Company by providing added incentive
to employees, officers, directors and consultants of the Company for high levels
of performance and for unusual efforts to increase the earnings of the Company
through the opportunity for stock ownership. The Plan authorizes the granting of
both options which are incentive stock options, within the meaning of the
Internal Revenue Code ("ISOs"), and nonstatutory options to which Section 421 of
the Code does not apply ("NSOs", and together with ISOs, "Options"). As of July
27, 1996, the Company had Options outstanding to purchase 652,500 shares under
the Plan and an aggregate of 5,033,549 Options to purchase Shares under all
stock option plans of the Company.
The Board of Directors believes that it would be in the best interests of
the Company to approve the Plan. To permit the grant of ISOs under the Plan,
stockholder approval of the Plan is required within 12 months of the Board's
action on July 12, 1996.
DESCRIPTION OF THE PLAN
The following is a general summary of the principal provisions of the Plan.
Any stockholder who desires to review the actual text of the Plan may obtain
copies by writing the Company's Secretary.
The Plan provides for the granting to employees (including employees who are
officers or directors) of ISOs and for the granting of NSOs to employees,
nonemployee directors, and consultants of the Company. The Plan is administered
by the Board of Directors of the Company (the "Administrator") or by a committee
designated thereby, which determines the terms of options granted under the
Plan, including the exercise price, the number of shares subject to the Option
and the schedule pursuant to which such shares shall become exercisable. The
exercise price of each ISO and NSO granted under the Plan must be at least equal
to 100% and 85%, respectively, of the fair market value of the underlying shares
on the date of grant, and the maximum term of each ISO is 10 years. With respect
to any participant who owns stock possessing more than 10% of the voting rights
of the Company's outstanding capital stock, the exercise price of any Option
must be at least 110% of the fair market value of the Common Stock on the date
of grant and the term of any ISO may be no longer than five years. Under the
terms of the Plan, no employee may receive ISOs which first become exercisable
in any calendar year to purchase Common Stock with an aggregate fair market
value in excess of $100,000 at the time of grant. Options may be exercised for
three months after the recipient of an Option ("Optionee") leaves the Company
and, if the Optionee's employment is terminated by reason of death or
disability, for twelve months after the death, or eighteen months after the
permanent and total disability of, the Optionee, but in either case not beyond
the original term of the Option. Unless otherwise specifically determined by the
Administrator, Options are not transferable or assignable except by the laws of
descent and distribution, and each Option is exercisable, during the lifetime of
the Optionee, only by the Optionee.
At the time an Option is exercised, in whole or in part, or at such other
time as the amount of such obligations becomes determinable, the Optionee is
required to make adequate provision for federal and
11
<PAGE>
state withholding and employment tax obligations of the Company, if any,
resulting from the exercise. The exercise price of Options may be paid in cash
or, in accordance with the provisions of the Plan, by delivery of a full
recourse promissory note or shares of Common Stock. In the event of a merger of
the Company with or into another corporation or a sale of substantially all of
the Company's assets, outstanding Options shall be assumed by the surviving
entity or equivalent options shall be substituted therefor. If the successor
does not agree to assume or substitute for such outstanding options, Options
will expire upon such event.
The Plan expires on July 12, 2006, unless terminated earlier by the Board of
Directors. The Board may at any time terminate or amend the Plan, provided that
stockholder approval shall be required if (a) such approval is required to
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